Beating expectations mainly on non-NII, KKP’s 3Q26 results were solid, supported by easing NPLs and credit cost, a recovery in loan growth, a better NIM, and robust non-NII driven by strong fee income growth and sizable FVTPL gains. We raise 2026F earnings by 5% and now expect 2026F earnings to rise 46% YoY. We maintain our Outperform rating with an unchanged mid-2027 TP of Bt126 on the back of expected solid earnings growth of 46% in 2026 and 15% in 2027, an S-curve from the Dime platform, and a decent dividend yield of 6.55% for 2026.
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KKP – 3Q26: Beat on non-NII
3Q26: Beat on non-NII. 3Q26 net profit was Bt2.39bn (+13% QoQ, +43% YoY), 16% above INVX and consensus forecasts. The beat mainly came from larger-than-expected non-NII. Highlights are summarized below.
1) Asset quality: NPL ratio slipped 7 bps. Credit cost (including losses on repossessed cars) eased 12 bps QoQ (-30 bps YoY) to 1.36%. LLR coverage rose to 155% from 149% in 2Q26.
2) Loan growth: +0.6% QoQ, +2.8% YoY, +3.7% YTD, mainly driven by corporate loans (+2.4% QoQ, +29% YoY, +27% YTDHP loans continued to contract (-1.9% QoQ, -11% YoY, -6.5% YTD).
3) NIM: +9 bps QoQ (+8 bps YoY). Yield on earning assets inched up 3 bps QoQ
(-50 bps YoY). Cost of funds decreased by 5 bps QoQ (-66 bps YoY).
4) Non-NII: +25% QoQ (+28% YoY), beating expectations on fee income and FVTPL gains. Net fee income rose 21% QoQ (+47% YoY), primarily reflecting continued revenue growth from wealth management, digital financial and investment services via the Dime platform, and asset management fees.
5) Cost to income ratio: +307 bps QoQ (-260 bps YoY) to 44.8%. Opex rose 20% QoQ and 8% YoY, primarily due to higher employee expenses in line with business volume expansion.
Raise earnings forecast. We raise our 2026F earnings by 5% to fine-tune with the 3Q26 results, mainly on fee income and FVTPL gains. We now expect 2026F earnings to rise 46% YoY, underpinned by 4% loan growth, a 5 bps rise in NIM, a 21 bps drop in credit cost (on lower losses on repossessed cars), and a 35% rise in non-NII (driven by capital market-related fee income). We expect 4Q26F earnings to decrease QoQ (due to smaller FVTPL gains) but increase YoY from better top-line performance.
Decent dividend yield. We maintain our 2026F DPS at Bt7.5 (71% payout), translating to 6.55% dividend yield.
Maintain OUTPERFORM with an unchanged TP. We maintain OUTPERFORM rating with an unchanged mid-2027 TP of Bt126 (based on DDM) the back of expected solid earnings growth of 46% in 2026 and 15% in 2027, an S-curve from Dime, and a decent dividend yield of 6.55% for 2026.
Key risks: 1) Asset quality risk from the economic slowdown, 2) inflationary pressure, 2) falling used car prices, 3) volatile capital market and 4) ESG risk on market conduct.