TISCO Financial Group: A better year ahead
- Upgrade to BUY with a higher TP of THB111
- 3Q25 earnings came in at THB1.7bn (+1.0% y/y, +5.3% q/q), beating expectations by 8%
- Strong fee and non-NII drove 3Q25 results
- 4Q25F earnings to decline y/y and q/q but stabilise in FY26F
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3Q25 results beat expectations. 3Q25 earnings came in at THB1.7bn (+1.0% y/y, +5.3% q/q), beating both the Bloomberg consensus and our estimate by 8%, thanks to higher-than-expected fee income and higher-than-expected gains on financial instrument designated at fair value through profit or loss (FVTPL), despite higher-than-expected credit cost.
The y/y and q/q increases were attributed mainly to higher fee income and higher non-interest income (non-NII; from higher gains on financial instrument designated at FVTPL). However, expected credit loss (ECL) was higher than expected.
Pre-provision operating profit (PPOP) increased 19.6% y/y and 14.8% q/q to THB3.0bn. The y/y and q/q increases were attributed to higher fee income and higher non-NII (largely from higher gains on financial instrument designated at FVTPL).
9M25 earnings accounted for 76% of our revised FY25F forecast.
Loans expanded 0.2% y/y but contracted 2.4% q/q and 1.0% YTD-Sep. The q/q and YTD decreases were due mainly to the decline in corporate loans.
Retail loans (69% of total loans) increased 0.8% q/q, driven mainly by hire purchase (HP) loans (44% of the total loans) (+0.9% q/q). New-car HP expanded 0.2% q/q, thanks to an improvement in TISCO’s car penetration rate for 8M25 to 6.0% (vs. 5.5% for 5M25 and 4.6% for 8M24), while used-car and motorcycle HP also increased 1.8% and 5.8%, respectively, q/q.
In the meantime, auto cash loans (19% of the total loans) increased 0.6% q/q, driven by loan generating through “Somwang” branch channel. Currently, there are 808 “Somwang” loan offices nationwide. Housing loans (3% of the total loans) continued to decrease by 3.1% q/q.
Corporate loans (26% of the total loans) decreased 9.2% q/q from (i) one large corporate loan prepayment and (ii) one corporate client entering loan restructuring through debt settlement by asset transfer.
SME loans (6% of total loans) decreased 2.4% q/q from car inventory financing loan repayments.
NIM expanded on lower cost of funds. Net interest income (NII) increased 1.3% y/y and 3.0% q/q in 3Q25. The y/y increase was thanks to lower cost of funds, as deposits repriced at lower interest rates; however, yield declined y/y, as its floating lending rates declined alongside four policy rate cuts.
The q/q increase was also thanks to lower cost of funds, while the one-off interest income (i.e., prepayment fees) recognition from the prepayment of one large corporate client helped sustain yields, despite the lending rate cuts and the negative impact from loans under the “You Fight, We Help” programme.
As the programme has extended to “You Fight, We Help Phase 2”, the number of TISCO’s eligible clients for both Phase 1 and 2 was approx. THB18.5bn or accounted for 8% of total loans. As of 30 Sep 2025, the number of registered clients was approx. THB5.7bn or 31% of eligible clients, with THB4.6bn of clients having successfully completed the restructuring process.
Recall that the interest income from loans under the “You Fight, We Help” debt restructuring programme must be foregone during the programme period, implying lower loan yield for that respective period. The foregone interest income from the programme will somewhat (around 40-50%) be compensated by accrued other income from FIDF fee savings according to the conditions specified by the programme.
Net-net, net interest margin (NIM) expanded 0.7bps y/y and 15.4bps q/q in 3Q25.
Well-controlled OPEX. Operating expenses (OPEX) declined 0.3% y/y but increased 4.4% q/q. The y/y decline was thanks to the company’s effective operating cost control, while the q/q increase was attributed mainly to higher staff expenses, which normally vary with income. Cost-to-income (C/I) ratio was well-controlled at 43.4% in 3Q25 (vs. 45.7% in 2Q25).
Strong fee and non-NII drove 3Q25 results. Fee income increased 2.0% y/y and 8.1% q/q. The increases were attributed to both banking and asset management fees. For banking fees, (i) bancassurance fees increased in line with new HP lending, while (ii) other banking fees increased from the prepayment fee from one large corporate client.
Non-NII increased 31.6% y/y and 25.9% q/q, thanks mainly to higher mark-to-market gains on investments (e.g., local and foreign equities as well as gold).
Asset quality improved. NPLs decreased 5.9% q/q to THB5.3bn, thanks to the decline in NPLs across all loan segments. This was thanks to TISCO’s cautious lending policy and debt assistance measures provided to borrowers, including the “You Fight We Help” programme, which supported the clients on improving their debt serviceability. Despite loan contraction, NPL ratio also declined to 2.31% at end-3Q25 (vs. 2.41% at end-2Q25).
Furthermore, TISCO conducted debt restructuring for one large corporate client through debt settlement by asset transfer, resulting in lower Stage 2 loans. Therefore, property foreclosed in 3Q25 increased accordingly. Note that the value of this property foreclosed exceeded the financing value by a large amount.
TISCO set aside a high expected credit loss (ECL) of THB830mn (+132% y/y; +48.6% q/q) or a credit cost of 147bps in 3Q25 (vs. 99bps in 2Q25), reflecting management overlay to cushion against potential risks from various uncertainties that could affect the corporate clients and retail clients who entered “You Fight, We Help” programme.
Coverage ratio increased to 171% at end-3Q25 (vs. 155% at end-2Q25).
4Q25F earnings to decline y/y and q/q. While we expect loan growth to seasonally tick up in 4Q25F, NIM is likely to narrow due to lower yields from (i) a lack of the one-off interest income booked in 3Q25, (ii) negative impact from lending rate cuts, and (iii) potentially one more policy rate cut in 4Q25F. However, its cost of funds is likely to gradually decrease.
Fee income and non-NII growth remain challenging, given one-off fee income recognised in 3Q25 and depending on the economic and capital market conditions in 4Q25F. Meanwhile, C/I ratio is likely to seasonally increase. However, we expect credit cost to decline q/q, given the high management overlay set aside in 3Q25.
Net-net, we expect TISCO’s 4Q25F to be softer y/y and q/q, mainly from a potentially lower top line.
A better year FY26F. We expect FY26F to be a better year for TISCO as we expect its credit cost normalisation to finish in 4Q25F and anticipate its FY26F credit cost to stabilise from FY25F. Loan growth should be stronger from FY25F, given a clearer outlook on geopolitical and overall macro conditions. Cost of funds is expected to gradually decline and drive NIM to expand. We expect the C/I ratio to remain manageable as most of TISCO’s operating expenses vary with top line. Lastly, we anticipate fee income to improve, while non-NII remains a wild card. At this point, we expect TISCO’s FY26F earnings to grow 1.0% y/y (vs. a 3.9% contraction in FY25F).
Upgrade to BUY with a higher TP of THB111. As we incorporate TISCO’s 3Q25 results, fine-tune our assumptions, and roll over our valuation base to FY26F, we derive a higher TP of THB111, based on 2.1x FY26F P/BV, i.e., 1.5SD above its 5-year average P/BV. We believe TISCO’s premium valuation is justified by its highest ROE among its banking peers. At this juncture, we expect TISCO’s earnings to grow 1.0% in FY26F (vs. the 1.8% contraction previously estimated and 3.9% contraction expected in FY25F).
TISCO: 3Q25 results summary
THB mn | 3Q25 | 3Q24 | y/y (%) | 2Q25 | q/q (%) |
NII | 3,428 | 3,385 | 1.3 | 3,328 | 3.0 |
Fee income, net | 1,287 | 1,261 | 2.0 | 1,191 | 8.1 |
Non-NII | 1,845 | 1,402 | 31.6 | 1,465 | 25.9 |
Total operating income | 5,273 | 4,788 | 10.1 | 4,794 | 10.0 |
Total operating expenses | 2,286 | 2,292 | (0.3) | 2,190 | 4.4 |
PPOP | 2,976 | 2,488 | 19.6 | 2,593 | 14.8 |
ECL | 830 | 359 | 131.5 | 559 | 48.6 |
Net profit | 1,730 | 1,713 | 1.0 | 1,644 | 5.3 |
EPS (THB) | 2.16 | 2.14 | 0.9 | 2.05 | 5.4 |
% | 3Q25 | 3Q24 | y/y (ppts) | 2Q25 | q/q (ppts) |
NIM (bps change) | 4.92 | 4.91 | 0.7 | 4.76 | 15.4 |
ROAA | 2.44 | 2.46 | (0.0) | 2.32 | 0.1 |
ROAE | 16.60 | 16.55 | 0.0 | 15.23 | 1.4 |
Cost-to-income ratio | 43.37 | 47.88 | (4.5) | 45.68 | (2.3) |
Credit cost (bps) | 146.98 | 63.90 | 83.1 | 98.63 | 48.4 |
THB bn | 3Q25 | 3Q24 | y/y (%) | 2Q25 | q/q (%) |
Loans | 223 | 223 | 0.2 | 229 | (2.4) |
Deposits | 207 | 205 | 1.2 | 210 | (1.2) |
% | 3Q25 | 3Q24 | y/y (ppts) | 2Q25 | q/q (ppts) |
LDR | 107.76 | 108.89 | (1.1) | 109.03 | (1.3) |
LDR+borrowings | 103.94 | 105.37 | (1.4) | 104.93 | (1.0) |
Coverage ratio | 171.16 | 159.11 | 12.1 | 154.79 | 16.4 |
NPL | 2.31 | 2.44 | (0.1) | 2.41 | (0.1) |
CAR | 19.30 | 19.03 | 0.3 | 19.09 | 0.2 |
T1 | 17.30 | 17.20 | 0.1 | 17.24 | 0.1 |
T2 | 2.00 | 1.83 | 0.2 | 1.85 | 0.1 |
Source of all data: Company, DBSVTH
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