CGS International Securities (Thailand) (CGSI) noted in its analysis that Muangthai Capital Public Company Limited (SET: MTC) has reported a strong start to 2025, with its first-quarter net profit rising to THB 1.57 billion, marking a 13.1% increase year-on-year and a 1.9% gain quarter-on-quarter. These results align with projections from both the analyst and Bloomberg consensus.
While first-quarter pre-provision operating profit (PPOP) growth was modest, increasing by 3.2% year-on-year but declining 3.3% quarter-on-quarter, the company saw robust loan growth of 13.5% year-on-year and 2.0% quarter-on-quarter. This growth was largely driven by a strong demand for auto-title loans.
MTC’s non-performing loan (NPL) ratio continued its downward trajectory, reducing to 2.6% from 2.75% in the previous quarter. This marks the seventh consecutive quarter of declining NPL ratios, ultimately reducing the company’s credit cost to 238 basis points from 277 basis points in the fourth quarter of 2024.
Additionally, the NPL coverage ratio rose to 143% from 135% seen in the previous quarter.
Despite these positives, the company experienced a 50 basis point drop in loan yield quarter-on-quarter, while funding costs increased by 10 basis points. Consequently, the net interest margin (NIM) dipped to 13.5% from 14.0%.
Net interest income saw a year-on-year growth of 7.4%, though it declined 0.7% quarter-on-quarter.
Non-interest income presented a more challenging picture, with a significant 33.5% year-on-year decrease, though it edged up by 0.4% quarter-on-quarter. This sluggishness was due to slower growth in fee income. MTC’s cost-to-income ratio during 1Q25 surged slightly to 48.8% from 47.5% seen in 4Q24.
The analyst stated that, despite a dip in NIM due to lower loan yields, MTC’s overall financial performance remains robust, bolstered by healthy loan growth and an improving NPL ratio. The first quarter is traditionally slow for loan growth, but an acceleration is anticipated in the second quarter of 2025.
As a result, CGSI maintained an ‘Add’ rating for MTC with a target price for 2025 set at THB 54 per share.
Meanwhile, the company is set to host an analyst briefing on Thursday, May 15, 2025, at 10:30 AM (Bangkok time) to discuss these results further.
