TISCO reports slight decline in Q2 2024 profit growth on higher reserve amid economic uncertainty

Tisco Financial Group Public Company Limited (SET:TISCO) announced its Q2 2024 consolidated financial report via the Stock Exchange of Thailand, as follows:

TISCO reported a net profit of 1,748.99 million baht, a decrease of 104.90 million baht, or 5.7%, compared with the second quarter of 2023, mainly due to the creation of expected credit loss (ECL).

Total operating income increased by 5.5% (YoY), mainly driven by investment banking fees and recognition of gains on financial instruments measured at fair value through profit or loss (FVTPL), which resulted in non-interest income increasing by 17.1% (YoY). Net interest income increased by 0.9% (YoY) on portfolio expansion, although cost of funds remained on an upward trend. Meanwhile, bank fee and base asset management fee recovered from the same period last year, while brokerage activity was weak amid subdued market trading volumes.

Expected credit loss (ECL) was 408.63 million baht, up from the second quarter of last year and the previous quarter, and accounting for 0.7% of average loans. The ECL spending setup was intended to reflect higher consumer credit risk resulting from growth towards high-yield businesses, as well as fragile economic factors and household debt issues. Non-performing loans (NPL) rose to 2.44% from the last quarter, while the credit loss coverage ratio fell to 162.7%.

Compared to the first quarter of 2024, net profit increased by 15.97 million baht or 0.9% (QoQ), driven by investment banking fee and gain on financial instruments at fair value through profit or loss (FVTPL), leading to an increase in non-interest income of 18.6% (QoQ). In addition, banking fee and asset management fee improved compared to the previous quarter, while brokerage business remained subdued. Net interest income decreased by 0.2% (QoQ) due to an increase in fund costs in line with the increase in interest rate since last year. ECL costs increased compared to the previous quarter to hedge against higher risks.

In Q2 2024, the company reported NPLs of THB 5,696.58 million, up 6.7% (QoQ) and represented an NPL ratio of 2.44% of total loans, up from 2.27% at the end of Q1 2024. The rising NPLs were partly driven by the growth strategy towards high-profitability businesses, along with fragile economic conditions and customers’ credit profile.