TISCO Financial Group

TISCO Financial Group Plc (TISCO)

Q1 2013A meets estimates. 1Q13A net profit rose 36% YoY and 16% QoQ to
Bt1.15bn, in line with our forecast of Bt1.1bn. TISCO raised provisions as general
reserve to smooth out the bottom line after enjoying a good 77% YoY and 31%
QoQ growth in pre-provision profit driven by phenomenal growth in income from
the equity market from the record-high market turnover plus continued strong
loan growth and bancassurance. 1Q13A earnings accounted for 29% of our full-year
forecast.

Key points:

1. Loan growth: In line with expectations, +7% QoQ (vs. 18% of 2013F), mainly
auto loans with some SME and corporate loans. Auto loans are expected to
slow down for the rest of the year as loans for first-car buyers (buying under
last year’s tax incentive) begin to fade.
2. Net interest margin: As expected, + 2 bps QoQ to 2.8%. Yield on earning assets
fell 17 bps QoQ on the higher proportion of new car loans. Cost of funds fell by
21 bps QoQ, as a result of the lag in the effect of interest cuts in October.
3. Non-interest income: As expected, strong growth of +25% QoQ, driven by
income related to the buoyant equity market with record-high market
turnover along with bancassurance.
4. Cost to income: Seasonal QoQ easing to 43.3%, better than we estimated.5

5. Asset quality: A sharp hike in provision expense (mostly as general reserve and
countercyclical buffer) was made to smooth out the bottom line. NPL ratio
rose to 1.28% from 1.25% at 4Q12, mainly from auto and personal loans. LLR
coverage edged up to 167% from 165% at 4Q12.

Maintain Neutral. We keep TISCO as Neutral with unchanged target price of Bt58
(2.05x 2013F BVPS) as we see a less favorable business environment on: 1) loan
growth will slow throughout the rest of the year as loans under the first-car
program fade out, 2) potential negative implication if interest rates are raised at
the end of this year or next year, and 3) NPL risk from rising household debt.