Maybank Securities (Thailand) (MST) has maintained its positive view on TMBThanachart Bank Public Company Limited (SET: TTB), following the announcement on Friday of its 1Q24 earnings that showed 24% growth from the first quarter in 2023.
The brokerage company wrote in a note after the meeting with TTB, stating that the management has maintained all financial targets and guided that NIM to decline at the slower rate in the remaining quarters this year due to change in loan mix towards high yield and slower increase in cost of funds.
TTB has changed the term to realize access to Bancassurance fees to 20 years from 15 years, which would result in declining fee income from THB1.3 billion to THB900 million per year, starting in 2024.
The management added that TTB will focus on high yield lending eg. cash your car, cash your home and personal loan and let go of some low yield corporate loan and high risk SME loan.
Meanwhile, TTB sees some asset quality weakness in retail loans given the weak economy so the bank maintains high NPL write off to clean up the loan portfolio.
In the long run, the bank targets to increase ROE by paying more dividends.
Following this takeaway from TTB’s CEO, MST sees clear earnings visibility due to the tax benefit which could support earnings in the next 2-3 years. The amount of THB14.1 billion remaining of tax benefits are expected to be fully utilized by 3Q26.
Due to these following reasons, MST maintained TTB as its top picks in the banking sector with a BUY recommendation at a target price of THB2.00 per share.
