TTB – 3Q24: In line with estimates

As expected, TTB’s 3Q24 results reflected stable NPLs with easing NPL inflow, QoQ lower credit cost from lower management overlay, loan contraction, better NIM, QoQ stable non-NII and QoQ rise in cost to income ratio. A tax benefit kept its bottom line afloat in the sea of weak results. We expect 2H24 earnings to be stable HoH (higher YoY). We stay Neutral with an unchanged TP of Bt1.9.

3Q24: In line. TTB reported 3Q24 earnings of Bt5.23bn (-2% QoQ, +10% YoY), in line with INVX and consensus forecasts.

Highlights:
1) Asset quality: NPLs were stable QoQ in 3Q24. If write-offs are added back, NPLs would rise 14% QoQ in 3Q24, far less than the 33% QoQ rise in 2Q24. Credit cost fell 12 bps QoQ (+22 bps YoY) to 1.49% in 3Q24 on lower management overlay ECL. LLR coverage slipped to 149% from 152% in 2Q24. We maintain our credit cost forecast at 1.55% (-9 bps) in 2024 and 1.4% (-10 bps) in 2025.
2) Loan growth: -3% QoQ, -8% YoY and -6% YTD. We cut our 2024F loan growth to -7% from -3%.
3) NIM: Better than expected, +4 bps QoQ (-8 bps YoY) in 3Q24. Yield on earning assets inched up 1 bps QoQ. Cost of funds slipped 2 bps QoQ. We expect NIM to narrow 7 bps QoQ in 4Q24 and 8 bps in 2025 as we expect a policy rate cut of 50bps in 4Q24 and 50 bps in 2025.
4) Non-NII: -1% QoQ (-5% YoY) in 3Q24 due to weaker other income. Net fee income rose 2% QoQ (-10% YoY).
5) Cost to income ratio: +81bps QoQ (-81 bps YoY) to 42.63%. Opex rose 1% QoQ (-6% YoY).
6) Tax benefit: TTB realized tax benefit of Bt64mn in 3Q24, far less than the Bt474mn in 2Q24.

4Q24 and 2025 outlook. 9M24 earnings accounted for 76% of our full-year forecast. We expect 4Q24 earnings to be lower QoQ (narrower NIM and seasonally higher opex) but higher YoY (lower ECL). We expect 2025F earnings to be flattish, supported by zero loan growth, an 8 bps squeeze in NIM, a 10 bps reduction in credit cost, stable non-NII and a rise in cost to income ratio.

Maintain Neutral with an unchanged TP. We maintain Neutral with an unchanged TP of Bt1.9 (based on 0.75x PBV for 2025F).

Key risks: 1) Asset quality risk from an uneven economic recovery and a global economic slowdown, 2) falling used car prices, and 3) ESG risk from market conducts and cyber security.