4Q24: In line; good 2025F growth ahead
In line with INVX and consensus forecasts, 4Q24 results reflected easing NPL inflow and credit cost, decent loan growth, falling NIM and rising cost to income ratio. We maintain our Outperform rating with an unchanged TP of Bt53 as we expect good earnings growth at 17% in 2025, driven by decent loan growth and a gradual ease in credit cost.
4Q24: In line. 4Q24 net profit rose 3% QoQ and 14% YoY to Bt1.54bn, in line with INVX and consensus forecasts.
Highlights:
1. Asset quality: NPLs were stable QoQ in 4Q24. If write-offs are added back, NPLs would rise 19% QoQ (vs. 23% QoQ in 2Q24), suggesting a slight ease in NPL inflow. Stage 2 loans were stable QoQ. Credit cost came down 31 bps QoQ (-82 bps YoY) to 2.85%, better than expected. LLR coverage rose to 135% from 130% at 3Q24. We expect 2025F credit cost to ease 6 bps to 3%.
2. Loan growth: +3% QoQ, +15% YoY. We expect loan growth to slow down to 13% in 2025 as a result of slower branch expansion and base effect.
3. NIM: -30 bps QoQ (-78 bps YoY). Yield on loans fell 15 bps QoQ. Cost of funds rose 21 bps QoQ. We expect NIM to narrow 4 bps in 2025 on a further rise in cost of funds, which we expect to peak in 2Q25.
4. Non-NII: -21% QoQ, -32% YoY.
5. Cost to income ratio: +54 bps QoQ (+173 bps YoY) to 47.46%. Opex rose 1% QoQ and 11% YoY.
Expect good earnings growth in 2025. We forecast good earnings growth at 17% in 2025, driven by decent loan growth of 13%, a 4 bps narrowing in NIM and a 6 bps fall in credit cost.
Maintain Outperform with an unchanged TP. We maintain our Outperform with an unchanged TP of Bt53 (based on 2.6x PBV) as we expect good earnings growth at 17% in 2025, driven by decent loan growth and a gradual ease in credit cost.
Risks. 1) Asset quality risk from an uneven and slower-than-expected economic recovery, 2) credit cost risk from falling used car prices, 3) rising competition from banks, 4) regulatory risk and 5) ESG risk from market conduct.