SCB X PCL Higher yield, higher risk

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SCB X PCL Higher yield, higher risk

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SCB X PCL

Higher yield, higher risk

Rating Change: NEUTRAL | PO: 165.00 THB | Price: 152.50 THB

Asset-quality concerns weaken the risk-reward profile 27 July 2026

We downgrade SCB (Siam Commercial Bank) from Buy to Neutral. Although 2Q26 Equity

earnings were broadly in line with our estimate and 5% above consensus, new NPL

inflows were high at Bt21.9bn, mainly from one corporate account. SCB wrote off

Key ChangesBt14.5bn and sold Bt8.2bn of NPLs, reducing NPL and Stage 2 balance by 4% QoQ.

However, credit costs rose to 1.58% and loan-loss coverage fell to 152%, suggesting to (Bt) Previous Current

us asset quality still requires close monitoring. Inv. Opinion A-1-8 A-2-8

Inv. Rating BUY NEUTRAL

Non-NII income is not enough Price Obj. 160.00 165.00

Non-NII remains solid at 5% YoY in 2Q26, supported by wealth management and capital- 2026E EPS 12.56 12.46

market activities, while NIM pressure should moderate in 2H26. However, we think these 2027E EPS 13.31 12.80

strengths are insufficient to offset asset-quality concerns. Stress remains visible at 2028E EPS 13.79 13.63

AutoX, while the large corporate NPL highlights risks beyond consumer lending. We see

a risk that continued balance-sheet resolution could also keep credit costs elevated and Sarachada Sornsong ^^^

delay the ROE recovery. Research Analyst

Kiatnakin Phatra Securities

High yield is supportive, but upside looks limited +66sarachada.sorn@kkpfg.com2 305 9197

SCB offers the sector’s highest yield, but its payout ratio is already at the maximum

80% level, leaving limited scope for further capital-return upside. With ROE of 8.4%

below its 5 year historical level of 8.9% and asset-quality uncertainty elevated, in our Stock Data