TISCO – 3Q26: In line; Good dividend yield

In line with INVX and consensus forecasts, TISCO reported a 3Q26 net profit of Bt1.8bn, up 2% QoQ and 4% YoY. The overall results reflected better asset quality with an easing credit cost, picking-up loan growth, higher NIM, weaker non-NII, and higher opex. We maintain our 2026F earnings growth forecast of 7%, expecting a QoQ and YoY rise in 4Q26F earnings. We maintain our NEUTRAL rating on TISCO with an unchanged mid-2027F TP of Bt125, backed by an expected decent dividend yield of 6.3% for 2026.

3Q26: In line. In line with INVX and consensus forecasts, TISCO reported a 3Q26 net profit of Bt1.8bn, up 2% QoQ and 4% YoY. We summarize the highlights below.

Asset quality: NPLs decreased 4% QoQ and stage 2 loans fell 2% QoQ in 3Q26. Lower than expected, credit cost decreased 10 bps QoQ (-59 bps YoY) to 0.84%. LLR coverage inched up to 193% from 190% in 2Q26. In 3Q26, the bank had already set aside ECL for the potential impact of the recent flood and expects the impact on NPLs to be no higher than Bt100mn.
Loan growth: +1% QoQ, +4% YoY, and +1%YTD, mainly driven by corporate loans.
NIM: +5 bps QoQ (+15 bps YoY), attributable to a 10 bps QoQ decline in cost of funds (-61 bps YoY). Yield on earning assets slipped 2 bps QoQ (-34 bps YoY). We believe its NIM has already peaked as cost of funds bottomed out in 3Q26.
Non-NII: -3% QoQ (-18% YoY), due to lower FVTPL gains and other income. Net fee income declined 1% QoQ (+6% YoY).
Cost to income ratio: +69 bps QoQ (+341 bps YoY). Opex increased 3% QoQ (+5% YoY), mainly from expenses associated with revenue and profit growth.

Earnings outlook. 9M26 earnings accounted for 74% of our full-year forecast. We maintain our 2026F earnings growth forecast of 7%, underpinned by 2% loan growth, a 17 bps NIM expansion, stable credit cost of 1%, 4% growth in non-NII, and a slight easing in the cost to income ratio. We expect 4Q26 earnings to rise QoQ (higher NII from picking-up loan growth and a seasonal rise in fee income) and YoY (higher fee income). For 2027F, we expect earnings to rise 5%, underpinned by 2% loan growth, a 3 bps NIM expansion, stable credit cost of 1%, 2% growth in non-NII, and a slight easing in the cost to income ratio.

Expect decent dividend yield. We expect TISCO to raise DPS from Bt7.75 for 2025 (93% payout ratio) to Bt7.8 for 2026F (88% payout ratio), translating to a good dividend yield of 6.3%.

Maintain NEUTRAL with an unchanged TP. We keep TISCO as NEUTRAL with an unchanged mid-2027F TP of Bt125 (based on DDM).

Key risks: 1) Slower loan demand from an economic slowdown, 2) credit cost risk from an economic slowdown, inflationary pressure and a fall in used car prices, 3) NIM risk from a policy rate hike, and 4) ESG risk from market conduct and cyber security.