- Flat 2021 NIM; expanding high-yield loan biz & lower funding costs
- Good asset quality with normalization of business
- Lining up for a great dividend yield
We are optimistic that TISCO will pay a dividend for 2021 equal to a yield of 7.8%. Our model points to YoY profit growth of 12% YoY, supported by a sustained NIM, strong Non-NII growth, and lighter LLPs. There would be scope for upside to our model if TISCO were to mark lighter OPEX than we currently assume. BUY!
Flat 2021 NIM; expanding high-yield loan biz & lower funding costs
We expect a 2021 NIM of 4.57%, up 2bps YoY (despite, corporate and SME loan interest rate cuts), driven by expansion of the car- and motorbike-for-cash loan biz (a mean yield loan of above 13%; TISCO’s average 1Q21 loan yield was 5.6%) and lower funding costs, due to lower deposit rates and the cut in the required contribution to the FIDF from 0.46% of deposits in 1Q20 to 0.23%. We assume 2021 loan growth of 2.8% YoY.
We expect a 2021 profit of Bt6.7bn, up 12% YoY, driven by a fatter NIM, strong Non-NII growth, and lighter LLPs. Although competitors have launched motorbike-for-cash loan businesses with promotional rates ranging 10-12% in 2Q21, we don’t expect it to affect TISCO much, as its motorbike-for-cash biz comprises only 5-6% of its overall vehicle-for-cash loan portfolio.
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