First Read SCB X Q226A: profit beat on trading income, LLR slippage from NPL resolution

研报英文原文证据摘录

First Read SCB X Q226A: profit beat on trading income, LLR slippage from NPL resolution

Forecast returns

Forecast price appreciation -14.8%

Forecast dividend yield 6.5%

Forecast stock return -8.3%

Market return assumption 7.2%

Forecast excess return -15.5%

Company Description

Siam Commercial Bank is the fourth-largest bank in Thailand based on asset size, providing a

full range of banking and financial services throughout Thailand. Major shareholders are King

Rama X and Vayuphak Fund. It has accelerated its digital banking channel since 2017. In

September 2021, SCB announced a reimagined strategy and a holding company

restructuring plan aimed at transforming the bank into a fintech group.

Valuation Method and Risk Statement

We derive our price target from a P/BV versus sustainable ROE (2026-28E) methodology.

Company-specific downside/upside risks include: 1) larger than expected fiscal stimulus

windfalls to credit cost and credit quality cost control during 2026E; 2) faster than expected

operating efficiency improvement at banks and cost consolidation among Gen-2/3

subsidiaries; and 3) a permanent lift of the BOT debt relief measure that could lead to a rise in

NPLs (and hence to higher risk weighted assets (RWA), a lower CET1 ratio, and lower dividend

payout ratio sustainability)), especially for housing loans.

We believe industry downside/upside risks include: 1) new regulations for fintech entrants

(eg, virtual banking licence) and deregulations for other businesses (eg, brokerage) may pose

a threat to conventional banks; 2) BoT continues to cut interest rate ceiling and fee rate

charges to ease household debt burden, compressing banks' profit margin further; 3) BoT

lowering regulation costs for bank and/or reducing market conduct requirements to bring