According to an analysis by KGI Securities (KGI), SCB X Public Company Limited (SET: SCB) is expected to maintain stable asset quality and non-performing loans (NPLs) as it utilizes the government’s “You Fight, We Help” initiative, which permits restructuring of some problematic retail loans, particularly those related to housing and hire-purchase.
The bank anticipates managing approximately THB 40-50 billion in restructured loans, representing roughly 5-6% of its total housing loan portfolio.
KGI projects a modest increase in NPLs, with expectations of a 2% rise quarter-on-quarter and a 5% increase year-on-year. The credit cost is estimated at 1.6%, matching the first quarter of 2025 but lower than the 1.9% recorded in the second quarter of 2024, which reflected additional provisions for consumer loans.
SCB’s loan book has shown little growth in the second quarter, with flat performance quarter-on-quarter and a marginal 0.8% uptick since the start of the year, signaling a shift toward more conservative lending practices.
Retail lending, which constitutes around 40% of total loans, saw notable declines in unsecured, credit card, and title loans, while hire-purchase loans continued their downward trend and housing loans remained stable. In contrast, money market lending surged by 24% in the second quarter. These shifts are anticipated to compress overall loan yields.
Amid industry-wide trends, SCB’s net interest margin (NIM) is forecast to slip by 7 basis points quarter-on-quarter and 38 basis points year-on-year to 3.6%, as lending moves towards lower-risk, lower-yield assets.
The bank is projected to post a second-quarter net profit of THB 11.6 billion, down 7% from the previous quarter but up 16% year-on-year. Investment gains are expected to remain robust, though down from the exceptional levels seen in the previous quarter, which may weigh on sequential earnings growth.
The strong year-on-year performance is attributed to a low base last year, when the bank incurred significant losses related to its Robinhood platform and investments in Energy Absolute (EA), totaling around THB 1.4–1.5 billion.
Looking at the first half, second-quarter results should bring SCB’s earnings to 55% of the analyst’s full-year projections.
Among Thai bank stocks under KGI’s coverage, SCB is poised to post the most resilient second-quarter earnings, driven by last year’s low base. However, the bank’s near-term outlook is cautious given its exposure to large corporate loans that are currently undergoing restructuring—though this is not expected to disrupt the bank’s dividend payments in 2025.
With the most attractive dividend yield among peers, the brokerage firm maintains a ‘Neutral’ rating for SCB, with a 2025 target price set at THB 120 per share.
