TMB Bank - Global Alliance Partners
TMB Bank Earnings Review
Underperform (17E TP Bt2.40) Close Bt2.32
Banking
Beat forecast/Below forecast/In line
July 17, 2017
2Q17 results ahead of forecasts on booking of extra access fee from FWD Results date: April 17, 2017
Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.204
0.246
KT ZMICO vs. consensus Share data
‐2.0%
‐2.4%
Reuters / Bloomberg
TMB.BK/TMB TB
Paid‐up Shares (m)
43,839.86
Par (Bt)
0.95
Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000)
107.00/3,123.00 50.36/37.38 2.54/1.83 163,074.00
NVDR (%)
10.51
Estimated free float (%)
43.92
Beta
0.94
URL
www.tmbbank.com
CGR
Anti‐corruption
Level 4 (Certified)
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Asset quality control still the bank’s challenging task We maintain our Underperform rating and the 17E target price for TMB. We see modest potential upside risk to our current earnings forecast from the recognition of an access fee from FWD following the bank’s renewal of its life bancassurance collaboration with FWD. However, we also expect earnings risk to come from a higher‐than‐expected provision. We still expect TMB to have a challenging task in handling the asset quality issue. 2Q17 net profit ahead of both our forecast and the street estimate TMB posted 2Q17 net profit (NP) of Bt2.33bn (+8% YoY, +11% QoQ), ahead of both our forecast of Bt2.05bn by 14% and the street estimate of Bt1.98bn by 18%. The stronger‐than‐expected 2Q17 results were mainly due to the booking of an extra access fee (~Bt670mn) related to the bank’s move to renew its life bancassurance collaboration with FWD, with an initial term of 15 years effective on 1 January 2017 onwards. Note that TMB will recognize this access fee (totaling ~Bt20bn over 15 years, equivalent to ~Bt1.3bn/year or ~Bt330mn/quarter) over the initial term of 15 years. Excluding such access fee in 2Q17, TMB’s 2Q17 net profit would stand at ~Bt1.8bn (‐16% YoY, ‐14% QoQ). 2Q17 net profit stood at Bt2.3bn (+8% YoY, +11% QoQ) TMB’s strong 2Q17 results were partly due to the extra access fee as mentioned earlier. Its core profit (PPOP) was stable YoY and down 6% QoQ if excluding such extra fee. Meanwhile, loans grew well by 4% YoY, 3% QoQ and 6% YTD, vs. TMB’s performing loan growth target of 8‐10%. NIM remained stable QoQ despite the rate cut impact in 2Q17. Net fee income (excluding the access fee) increased by 13% YoY and 6% QoQ. The bank continued to set a high provision at 148 bps in 2Q17, in line with its guidance of 140‐150bps for 2017. NPLs increased slightly QoQ despite the bank’s loan write‐offs As per the bank’s latest indication that it will remain aggressive in controlling its NPLs through either more aggressive bad loan write‐offs or NPL sales, its NPL ratio for 2Q17 still increased slightly QoQ to 2.56% from 2.53% vs. its indication of 2.3‐2.5% for 2017. Therefore, the reserve‐ to‐NPL ratio for 2Q17 declined QoQ to 140% from 144%, while the reserve to the BoT’s required reserve was lower QoQ to 153% from 158%. Note that TMB did loan write‐offs of Bt2.3bn in 2Q17. Including these loan write‐offs, the NPL ratio would stand at 2.88% for 2Q17. 2017‐18E NP could see upside potential by ~5‐9% from access fee 1H17 net profit of Bt4.4bn (+4% YoY) represented 50% of our FY17 NP forecast. However, we could see slight upside risk to our current NP forecasts by
Underperform (17E TP Bt2.40) Close Bt2.32
Banking
Beat forecast/Below forecast/In line
July 17, 2017
2Q17 results ahead of forecasts on booking of extra access fee from FWD Results date: April 17, 2017
Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.204
0.246
KT ZMICO vs. consensus Share data
‐2.0%
‐2.4%
Reuters / Bloomberg
TMB.BK/TMB TB
Paid‐up Shares (m)
43,839.86
Par (Bt)
0.95
Market cap (Bt bn / US$ m) Foreign limit / actual (%) 52 week High / Low (Bt) Avg. daily T/O (shares 000)
107.00/3,123.00 50.36/37.38 2.54/1.83 163,074.00
NVDR (%)
10.51
Estimated free float (%)
43.92
Beta
0.94
URL
www.tmbbank.com
CGR
Anti‐corruption
Level 4 (Certified)
Prapharas Nonthapiboon Analyst, no 17836 [email protected] 66 (0) 2695‐5872
Asset quality control still the bank’s challenging task We maintain our Underperform rating and the 17E target price for TMB. We see modest potential upside risk to our current earnings forecast from the recognition of an access fee from FWD following the bank’s renewal of its life bancassurance collaboration with FWD. However, we also expect earnings risk to come from a higher‐than‐expected provision. We still expect TMB to have a challenging task in handling the asset quality issue. 2Q17 net profit ahead of both our forecast and the street estimate TMB posted 2Q17 net profit (NP) of Bt2.33bn (+8% YoY, +11% QoQ), ahead of both our forecast of Bt2.05bn by 14% and the street estimate of Bt1.98bn by 18%. The stronger‐than‐expected 2Q17 results were mainly due to the booking of an extra access fee (~Bt670mn) related to the bank’s move to renew its life bancassurance collaboration with FWD, with an initial term of 15 years effective on 1 January 2017 onwards. Note that TMB will recognize this access fee (totaling ~Bt20bn over 15 years, equivalent to ~Bt1.3bn/year or ~Bt330mn/quarter) over the initial term of 15 years. Excluding such access fee in 2Q17, TMB’s 2Q17 net profit would stand at ~Bt1.8bn (‐16% YoY, ‐14% QoQ). 2Q17 net profit stood at Bt2.3bn (+8% YoY, +11% QoQ) TMB’s strong 2Q17 results were partly due to the extra access fee as mentioned earlier. Its core profit (PPOP) was stable YoY and down 6% QoQ if excluding such extra fee. Meanwhile, loans grew well by 4% YoY, 3% QoQ and 6% YTD, vs. TMB’s performing loan growth target of 8‐10%. NIM remained stable QoQ despite the rate cut impact in 2Q17. Net fee income (excluding the access fee) increased by 13% YoY and 6% QoQ. The bank continued to set a high provision at 148 bps in 2Q17, in line with its guidance of 140‐150bps for 2017. NPLs increased slightly QoQ despite the bank’s loan write‐offs As per the bank’s latest indication that it will remain aggressive in controlling its NPLs through either more aggressive bad loan write‐offs or NPL sales, its NPL ratio for 2Q17 still increased slightly QoQ to 2.56% from 2.53% vs. its indication of 2.3‐2.5% for 2017. Therefore, the reserve‐ to‐NPL ratio for 2Q17 declined QoQ to 140% from 144%, while the reserve to the BoT’s required reserve was lower QoQ to 153% from 158%. Note that TMB did loan write‐offs of Bt2.3bn in 2Q17. Including these loan write‐offs, the NPL ratio would stand at 2.88% for 2Q17. 2017‐18E NP could see upside potential by ~5‐9% from access fee 1H17 net profit of Bt4.4bn (+4% YoY) represented 50% of our FY17 NP forecast. However, we could see slight upside risk to our current NP forecasts by
