Periodic/Sector reports
Finance: 2Q26: Results In Line; Maintain Cautious Lending Policy For 2H26
OVERWEIGHT (Maintained)
Analyst
Analyst
Panjarat Thaweesriprasert
Highlights
Finance companies under our coverage reported a combined net profit of Bt7.06b in 2Q26, up 16% yoy and 2% qoq.
Credit costs were down significantly yoy in 2Q26
Maintain OVERWEIGHT on the sector. Top picks: MTC and KTC.
Analysis
Sector profit went up yoy and qoq. In 2Q26, finance companies under our coverage reported a combined net profit of Bt7.06b, up 16% yoy and 2% qoq, beating our forecasts by 6% but in line with consensus estimates. The sector's pre-provision operating profit (PPOP) rose 7% yoy and 2% qoq.
Loan portfolio grew yoy and qoq. Finance companies under our coverage reported a loan portfolio growth of 5% yoy and 2% qoq in 2Q26. Finance companies had a cautious tone regarding lending policies. MTC cut its 2026 loan growth target from 10-15% to 8-10%. MTC’s CEO said they need to be prudent on lending as they see some risks ahead. Other finance companies also remain prudent on lending. In our view, there is a higher chance that finance companies will miss this year's loan growth target due to them prioritising loan quality.
Credit costs were down significantly yoy in 2Q26. Finance companies under our coverage reported a reduction in credit costs by 46bp yoy in 2Q26. Meanwhile, there was a slight qoq increase of 5bp in credit cost in 2Q26. SAWAD and KTC reported a qoq decline in credit cost in 2Q26, which signals good asset quality outlook. Meanwhile, TIDLOR reported a qoq increase in credit cost due to the low base in 1Q26, in line with the previous guidance to see lower credit costs in 2Q26. However, MTC reported an increase in credit cost qoq in 2Q26. MTC’s CEO was quite concerned about economic conditions and experienced difficulties in repayment from borrowers due to higher oil prices. However, MTC guided that its current collection efficiency has improved yoy. Overall, we believe finance companies will control their asset quality well by maintaining a prudent lending policy, as they have done in recent years.
Cash handouts have helped to stabilise domestic consumption and enhance debt collection. Thai Help Thai Plus 60/40 grants a government subsidy, sponsoring 60% while citizens pay 40%, with a daily limit of Bt200 and a monthly budget of Bt1,000 for four months, totalling Bt4,000 (Jun-Sep 26). The total government budget for this campaign is Bt120b. Finance companies have stated that this campaign has helped to boost mid-to-low income earners and alleviate the cost of living. Further, the sellers and entrepreneurs participating in this campaign have benefitted from the higher sales volume during the softened economic conditions due to higher oil prices. According to finance companies, debt collection remained strong in Jul and Aug 26. Therefore, expect debt collection for the sector to remain good in 3Q26, supported by the cash handout programme.
Highlights
Finance companies under our coverage reported a combined net profit of Bt7.06b in 2Q26, up 16% yoy and 2% qoq.
Credit costs were down significantly yoy in 2Q26
Maintain OVERWEIGHT on the sector. Top picks: MTC and KTC.
Analysis
Sector profit went up yoy and qoq. In 2Q26, finance companies under our coverage reported a combined net profit of Bt7.06b, up 16% yoy and 2% qoq, beating our forecasts by 6% but in line with consensus estimates. The sector's pre-provision operating profit (PPOP) rose 7% yoy and 2% qoq.
Loan portfolio grew yoy and qoq. Finance companies under our coverage reported a loan portfolio growth of 5% yoy and 2% qoq in 2Q26. Finance companies had a cautious tone regarding lending policies. MTC cut its 2026 loan growth target from 10-15% to 8-10%. MTC’s CEO said they need to be prudent on lending as they see some risks ahead. Other finance companies also remain prudent on lending. In our view, there is a higher chance that finance companies will miss this year's loan growth target due to them prioritising loan quality.
Credit costs were down significantly yoy in 2Q26. Finance companies under our coverage reported a reduction in credit costs by 46bp yoy in 2Q26. Meanwhile, there was a slight qoq increase of 5bp in credit cost in 2Q26. SAWAD and KTC reported a qoq decline in credit cost in 2Q26, which signals good asset quality outlook. Meanwhile, TIDLOR reported a qoq increase in credit cost due to the low base in 1Q26, in line with the previous guidance to see lower credit costs in 2Q26. However, MTC reported an increase in credit cost qoq in 2Q26. MTC’s CEO was quite concerned about economic conditions and experienced difficulties in repayment from borrowers due to higher oil prices. However, MTC guided that its current collection efficiency has improved yoy. Overall, we believe finance companies will control their asset quality well by maintaining a prudent lending policy, as they have done in recent years.
Cash handouts have helped to stabilise domestic consumption and enhance debt collection. Thai Help Thai Plus 60/40 grants a government subsidy, sponsoring 60% while citizens pay 40%, with a daily limit of Bt200 and a monthly budget of Bt1,000 for four months, totalling Bt4,000 (Jun-Sep 26). The total government budget for this campaign is Bt120b. Finance companies have stated that this campaign has helped to boost mid-to-low income earners and alleviate the cost of living. Further, the sellers and entrepreneurs participating in this campaign have benefitted from the higher sales volume during the softened economic conditions due to higher oil prices. According to finance companies, debt collection remained strong in Jul and Aug 26. Therefore, expect debt collection for the sector to remain good in 3Q26, supported by the cash handout programme.
OVERWEIGHT (Maintained)
Analyst
Analyst
Panjarat Thaweesriprasert
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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