Introduction to TISCO Financial Group PCL

TISCO Financial Group PCL (TISCO TB) is a small yet prominent player in the financial sector with a focus on automobile hire-purchase (HP) lending. This niche accounts for 64% of its loan book, positioning it as a specialist in a competitive market. Despite its compact size, holding roughly 2% of the credit market, TISCO demonstrates notable resilience and strategic agility.

Stock Performance and Key Data

TISCO’s share price stands at Bt98.75, with a target price set at Bt94.00, reflecting a potential downside of -4.8%. Over the past year, the stock has fluctuated between Bt101.50 and Bt90.00. The company’s market capitalization is valued at Bt79.28 billion (approximately USD 2.29 billion).

Key shareholders include CDIB & Partners Investment Holding (10%), Thai NVDR (7.5%), and Tokyo Century (4.9%). TISCO’s FY24 NAV/share is Bt54.01, with a robust FY24 CAR Tier-1 ratio of 18.57%.

4Q24 Results: In Line with Expectations

TISCO reported a net profit of Bt1,706 million for 4Q24, marking a 4% year-on-year (yoy) decline and remaining flat quarter-on-quarter (qoq). These results were in line with both internal and consensus forecasts. Despite the challenges, management highlighted that funding costs have peaked and are expected to gradually decrease, paving the way for a wider net interest margin (NIM) in 2025.

Stock Impact and Key Insights

Credit Cost Guidance

During the analyst meeting, TISCO management shared a slightly cautious outlook, guiding for a credit cost increase to 100-120 basis points (bp) in 2025. This marks a revision from the previous guidance of 100bp. The rise in credit cost is attributed to the bank’s strategy to increase the proportion of high-yield loans, which rose from 37% in 2023 to 41% in 2024.

Loan Growth Outlook

Although TISCO experienced a loan contraction of 1.1% yoy in 2024, management anticipates a turnaround in 2025 with a projected loan growth of 5%. The bank plans to resume lending for hire-purchase of new cars while maintaining a stringent lending policy in light of an uneven economic recovery. Analysts forecast a more conservative loan growth of 3.4% yoy for 2025.

Net Interest Margin (NIM)

Funding cost stabilization is expected to support a wider NIM of approximately 5.1% in 2025, up from 4.85% in 2024. This is largely driven by the bank’s focus on high-yield loans coupled with expectations of a policy rate cut.

Asset Quality and Loan Loss Coverage

TISCO is committed to maintaining good asset quality, with the loan loss coverage ratio projected to remain above 140%. However, the ratio has decreased from 189.8% in 2023 to 155.3% in 2024, and it is expected to decline further to 152% in 2025.

Financial Highlights

Key Financial Metrics

• Net interest income: Bt13,570 million in 2024, forecasted to rise to Bt14,403 million in 2025.
• Non-interest income: Bt5,657 million in 2024, with modest growth to Bt5,735 million in 2025.
• Net profit: Bt6,901 million in 2024, projected to decline to Bt6,412 million in 2025 before recovering to Bt6,967 million by 2027.
• Earnings per share (EPS): Bt8.6 in 2024, falling to Bt8.0 in 2025.
• Dividend yield: 7.7% in 2024, slightly decreasing to 7.3% in 2025.

Balance Sheet Overview

• Total assets: Bt281,877 million in 2024, expected to grow to Bt290,026 million in 2025.
• Customer loans: Bt225,598 million in 2024, forecasted to reach Bt233,596 million in 2025.
• Customer deposits: Bt206,537 million in 2024, anticipated to increase to Bt212,534 million in 2025.

Valuation and Recommendation

UOB Kay Hian maintains a “HOLD” recommendation on TISCO with a revised target price of Bt94.00, derived using the Gordon Growth Model (cost of equity: 11.5%, long-term growth: 2%). This target price implies a 1.74x 2025F P/B ratio, which is -0.5 standard deviations below the historical five-year P/B mean. The downward revision reflects the higher credit cost outlook and reduced earnings forecasts for 2025-26.

Environmental, Social, and Governance (ESG) Initiatives

TISCO has received strong ESG ratings, with a CG Report score of 5 and a SET ESG Rating of AAA. The bank’s ESG efforts include:

Environmental

• Financing initiatives to support the Green Economy Transition.
• Efforts to optimize energy and natural resource utilization.
• Commitment to environmental sustainability initiatives.

Social

• Developing service channels to enhance financial access.
• Promoting a safe and positive working environment for employees.

Governance

• Ensuring equitable and quality service for customers.
• Adhering to high standards of corporate governance, integrity, and transparency.
• Managing risks prudently and with precautionary principles.

Conclusion

TISCO Financial Group PCL remains a resilient and well-managed player in the financial sector, with a strong focus on high-yield loans and asset quality. While the outlook for 2025 presents challenges, particularly with higher credit costs, the bank’s strategic initiatives and robust ESG efforts position it well for long-term growth. Investors are advised to maintain their holdings, keeping an eye on potential catalysts such as a policy rate cut and improved economic conditions.