Thailand’s TISCO maintains strict credit policy as car loans fall

It will maintain its high dividend payout but won’t heed calls to raise it, analysts said.

Thailand-based investment bank and lending firm TISCO Financial Group is maintaining its strict credit policy even as net profits dipped, reports UOB Kay Hian.

Net profit fell by 3% year-on-year to BT1.73b in Q1 compared to the same quarter in 2023, with loan portfolio expanding 7% over the same period. Corporate loans notably grew by 30%.

At the same time, its share of bad loans rose to 2.3% in Q1, from 2.2% in Q4 2023. 

Management has guided 2024's loan growth target in a wide range of 0-7% yoy. However, there is a high probability that the loan growth will come in at the lower end of management's guidance, UOBKH analyst Tanaporn Visaruthaphong and assistant analyst Thanawat Thangchadakorn.

“TISCO revealed that the bank will maintain a strict credit policy due to an uneven economic recovery,” the analysts noted.

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TISCO’s retail lending portfolio– accounting for 68% of all loans– has already fallin by 1.3% in Q1 compared to Q4 2023. Notably, the bank’s cautiousness has led to a 2% quarterly decline in new car hire-purchase loans.

Car loans extended in Malaysia for the first two months of 2024 have contracted by 22%, driven by tightened loan underwriting from financial institutions, UOBKH noted.

TISCO is expected to maintain its high dividend payout ratio of 85%, although it may not raise the dividend payout ratio, which some investors have been asking, the analysts said.

“TISCO revealed that the main shareholders are comfortable with a regular revenue stream rather than volatile  dividend payments. Also, TISCO is comfortable with keeping consistently high dividend payments despite facing a rainy day,” they added.