Tisco sees record profit in Q2 but NPLs on the rise
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Even though Tisco Financial Group's second-quarter net profit hit a record high of Bt1.16 billion, a rising rate of non-performing instalment loans (NPLs) might pressure profitability for the remainder of the year.
Maybank Kim Eng Securities (Thailand) says it will closely monitor the rate of bad used-car loans after Tisco reported that its NPL rate had risen 19.5 per cent compared with the first quarter.
Tisco is the first financial house to report its financial performance for the second quarter and the first six months. NPLs in the quarter rose to 1.45 per cent from 1.28 per cent in the first three months. Net profit in the first half was Bt2.31 billion against Bt1.76 billion in the same period of 2012.
For the second quarter alone, Tisco reported lending growth of 5.2 per cent quarter on quarter, with instalment loan growing by 3.9 per cent and lending to small and medium-sized enterprises up by 10 per cent.
However, this rate of lending growth was down from the 7.4-per-cent expansion in the first quarter. Net interest margin stood at 2.8 per cent, down from 3 per cent in the second quarter of last year.
Projection
Maybank Kim Eng believes Tisco will be able to maintain quarterly net profits in the range of Bt1.1 billion to Bt1.2 billion even though the momentum of lending will slow in the second half. The securities house has maintained its projection for Tisco’s net profit for 2013 at Bt4.5 billion, an increase of 21 per cent from last year.
Finansia Syrus Securities noted in research that Tisco’s lending in the first six months expanded by 13 per cent but NPLs rose to 1.45 per cent from used-car lending.
The problem is that used-car prices declined because of the first-car scheme.
The brokerage house expects lending in the second half will slow, and even though it has maintained its forecast of 15-per-cent lending growth for Tisco this year, Finansia Syrus expressed concern over the quality of debt, especially loans for used cars.
The trend of NPLs will be accelerated by increasing fuel prices and first-car buyers who are unable to repay debt.
The house revised the loan-loss provision to 1.1 per cent of outstanding loans from 0.95 per cent, causing its projection for Tisco’s net profit this year to declined by 7 per cent to Bt4.13 billion.
Krungsri Securities lowered its forecast for net profit of Tisco this year by 3.2 per cent to Bt4.58 billion base on the assumption of increased loan-loss provision.
