We expect four of the five lenders to non-bankable credit markets under coverage to mark YoY profit rises for 3Q22. But most of their outlooks for the next couple of years are less attractive than their track records. Hence, we have an UNDERWEIGHT sector call.
3Q22 earnings projected to rise 14% YoY but dip 2% QoQ
Our models for the five lenders to non-bankable credit markets under coverage—KTC, MTC, SAWAD, TIDLOR and TQM (it currently offers loans to clients that buy insurance policies)—point to an aggregate 3Q22 profit of Bt5.4bn, up 14% YoY, driven by loan growth, higher non-NII (chiefly insurance premium sales expansion), and a lower mean cost/income ratio (led by MTC, as its staff costs rose, due to welfare benefits during the COVID-19 era). KTC has already reported 3Q22 earnings expansion of 35% YoY. TIDLOR, MTC, and SAWAD should mark YoY profit growth of 12%, 7% and 6%, respectively. In contrast, we expect TQM to mark a YoY NPAT slide of 15% (as it marked one-off gains to its 3Q21 income statement from its purchase of shares in True Extra Broker Co Ltd and True Life Broker Co Ltd in 3Q21).