Tisco reports improvement in loan growth but uncertainty over NPLs still high

TISCO Financial Group Plc (TISCO) said on Friday that it expected its overall loan outlook of 2020 to slightly improve following the demand from big creditors and believed that non-performing loans (NPLs) would still continue to grow.

Chatri Chandrangam, member of Risk Oversight Committee and Executive Vice President of TISCO revealed that investors’ confidence among debentures appeared to be unstable and this led to an increase in large borrowings from financial institutions.

In the past nine months, banking operations has been affected by the spread of COVID-19, resulting in 7.4 per cent contraction in the bank loans.

Retail loans accounted for 79.3 per cent of the total credit given (hire purchase loan 57.3 per cent, auto cash loan 15.5 per cent, and mortgages 6.5 per cent.). While corporate loans stood at 16.1 per cent and SMEs represented 3.6 percent.

So far, TISCO’s outstanding loans are worth around 225 billion baht.

“The bank will continue to operate with caution as the economy will take a while to gradually recover and uncertainty still remains high,” said Chatri.

For NPLs, TISCO expects the amount to increase approximately 1 per cent to 3.36 per cent from the current volume of 2.36 per cent which is worth 5.9 billion baht and said it would rise until the first quarter of 2021.

“In case that the NPLs increase more than expected, we may need to adjust the revision to be more appropriate as some debtors couldn’t repay the loan after the debt moratorium ended, ”said Chatree.

Stock performance

Earlier, TISCO reported third-quarter earnings of 1.6 billion baht, up 14 per cern year-on-year and 21 per cern quarter-on-quarter, exceeding the market expectation by around 20 per cent.

Chalie Kueyen, an analyst at KGI Securities, said that the bank gained higher than expected revenue growth despite loan growth contracting and declined NPLs, saying it’s the top pick in the financial sector.

As a result, KGI maintains an ‘Outperform’ rating on TISCO with the target price of 94 baht per share. While the bank’s share price traded at 80 baht per share at 14.05 p.m. on Friday, down 0.62 per cent with a transaction value of 103.6 million baht.

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