TISCO reports higher-than-expected 3Q results, stands as top pick in banking sector

Tisco Financial Group Plc (TISCO) reported its 2020 third-quarter earnings of 1.6 billion baht, down 14 per cent year-on-year but up 21 per cent quarter-on-quarter, exceeding analysts’ forecast and the market consensus.

As a response, TISCO share price rose on Friday at 12.31 pm by 3.04 per cent to 67.75 baht per share with a transaction value of 666.4 million baht.

An analyst at KGI securities said that the quarterly result was 22 per cent above their expectations. The company gained 4.4 billion for a nine-month period which accounts for 79 per cent of the full-year forecast.

“There is upside risk, given the high Tier I ratio of 18 per cent, TISCO will be able to pay a high dividend as usual” said a KGI analyst. “We assume a payout ratio of 85% and dividends of 6.00 baht per share, implying a yield of 9 per cent.”

TISCO remains the top pick in the sector with a target price of 94.00 baht, according to KGI securities.

Non-performing loans (NPLs)

TISCO’s gross NPLs fell sharply 21 per cent compared to last quarter but rose 2 per cent year-on-year due to NPL write-off, repayment from large corporate accounts, better efficiency in cash collection, and resumed repayments from loans under the relief program.

With lower NPLs, TISCO’s provisioning expenses fell moderately and implied credit cost of 107 baht per share in the third quarter (down from 152 baht per share in the second quarter) and NPL coverage of 196 per cent (up from 155 per cent in second quarter).

Yuanta Securities said that “TISCO will not have liquidity problems in managing NPLs during the COVID-19 impact and it is likely that it will pass the stress test given from the central bank.”

Yuanta recommended ‘Buy’ on TISCO as the top pick in the banking sector at a target price of 86 baht.

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