Thailand’s TMB Thanachart Bank to see higher profits in Q3

Net profit is expected to come at around $117.5m, 14% higher than a year ago.

Thailand’s TMB Thanachart Bank (TTB) will enjoy higher profits in Q3 compared to a year ago, although lower than the preceding quarter, according to UOB Kay Hian.

Net profits are expected to be at around $117m (THB4.23b) for Q3, 14% higher than in Q3 2022, but 7% lower compared to Q2 of this year. UOB Kay Hian attributed the higher profits to net interest margin (NIM) expansion arising from loan yields and rising interest rates.

However, the quarterly decline is a result of the high base of bancassurance fees recorded in the previous quarter as well as a slight increase in credit costs. 
“TTB's prudent risk management approach and strategic asset allocation have enabled the bank to navigate the challenging economic environment effectively, contributing to its sustained profitability,” wrote UOB Kay Hian analyst Kwanchai Atiphophai and assistant analyst Thanawat Thangchadakorn.

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Missing target
TTB may face challenges in achieving its loan growth target of 3% for 2023. This comes after TTB logged a 2.3% decline in net loans as of August.

“The bank's conservative lending approach seems to be the primary reason behind this outcome, as it prioritizes prudent risk management over aggressive expansion. Despite the weak loan growth, TTB has demonstrated effective cost management by reducing excess liquidity amid rising interest rates,” noted Atiphophai and Thangchadakorn. 

In the future, however, TTB’s loan initiative should enhance asset quality and push loan growth. TTB has rolled out a debt consolidation programme, offering borrowers the opportunity to consolidate their mortgage loans, credit card loans, and personal loans into a single loan. 

This is expected to help borrowers take advantage of lower interest rates rather than servicing each debt separately, UOB Kay Hian said.

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TTB has also launched a payroll loan product, targeting a loan amount of THB30b in three years. 

“We view these developments positively, as they have the potential to serve as new catalysts for TTB's loan growth while simultaneously contributing to the solidity of the bank's asset quality,” said Atiphophai and Thangchadakorn.