In line with expectations, 3Q26 results reflected higher credit cost, muted loan growth, better NIM, and rising opex from IT expenses. We maintain our 2026F earnings growth forecast at 12%, with an expectation of 4Q26F earnings being flattish QoQ and slightly up YoY. We expect a decent dividend yield of 5.3%. We maintain our NEUTRAL rating with an unchanged mid-2027 TP of Bt37.
Research
KTC – 3Q26: In line
3Q26: In line. KTC’s 3Q26 earnings fell 5% QoQ but rose 9 % YoY to Bt2.13bn, in line with INVX and consensus forecasts. Highlights are summarized below.
1) Asset quality: NPL ratio slipped 3 bps QoQ in 3Q26. Credit cost rose 56 bps QoQ (+1 bps YoY) to 5.45%, due to larger write off. LLR coverage increased to 433% from 426% at 2Q26.
2) Loan growth: Flat QoQ, 0.7% YoY, and -3.5% YTD.
3) NIM: +43 bps QoQ (+27 bps YoY), better than expectation. Yield on loans rose 40 bps QoQ. Cost of funds fell 14 bps QoQ.
4) Non-NII: -1% QoQ (-1% YoY). Fee income decreased by 2% QoQ (flat YoY). Bad debt recovery rose 2% QoQ (-9% YoY).
5) Cost to income ratio: +71 bps QoQ (-49 bps YoY). Opex rose 3% QoQ (-1% YoY), due to the commencement of core IT system implementation.
Maintain earnings forecast. 9M26 earnings accounted for 75% of our full-year forecast. We maintain our 2026F earnings growth at 12%, underpinned by modest loan growth, a rise in NIM resulting from lower cost of funds, easing credit cost, a slight increase in non-NII driven by penetration into the insurance brokerage business, and a higher cost-to-income ratio due to the new core IT system. We expect 4Q26F earnings to be flattish QoQ and slightly up YoY.
Decent dividend yield. We expect it to pay a DPS of Bt1.87 for 2026F (55% payout ratio), translating to a decent dividend yield of 5.3%.
Maintain NEUTRAL. We maintain our NEUTRAL rating with an unchanged mid-2027 TP of Bt37 (based on 1.9x PBV for mid-2027).
Key risks: 1) Asset quality risk from the economic slowdown, 2) a rise in cost of funds from a rise in interest rates, and 3) ESG risk from market conduct