MTC-TIDLOR Face NPL Pressure on H2 Profits

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KGI Securities (Thailand) stated that the rising NPLs of MTC and TIDLOR in Q2/2026 reflect volatile and fragile asset quality, which could pressure profits in the second half. TIDLOR's NPL increased the most, up 7% quarter-on-quarter but down 8.8% year-on-year, while MTC rose 4% QoQ and 7% YoY, and SAWAD increased 1% QoQ and 6% YoY. This led to an acceleration in credit costs for the group by about 30 basis points QoQ in Q2/2026, expected to remain stable in H2, pressuring MTC and TIDLOR more than SAWAD. Loans of MTC and TIDLOR expanded about 2.5% QoQ and 2% since the start of the year, with TIDLOR driven by motorcycle loans and car title loans, while MTC's growth was broad-based. SAWAD remained cautious with loans barely increasing. Non-bank companies are signaling cautious loan expansion in H2 due to increased risk among lower-tier customers, with only MTC cutting its 2026 loan target to 8-10% from 10-15%. Meanwhile, KGI Securities raised its profit forecast for TIDLOR by lowering the 2026/2027 credit cost assumption to 2.4% from 2.5%, reflecting improved asset quality of truck loans. Under a PE of 9.5 times, the new 12-month target price is 20.2 baht, up from 19.2 baht, but it maintains a Hold recommendation due to limited upside and H1 profits accounting for 54% of the full-year estimate. For MTC, it raised the 2026/2027 credit cost assumption to 2.5% from 2.4% and cut the loan growth rate to 8%/10% from 8%/12% due to a weak economy among low-income groups, thus lowering the PE to 9.5 times with a new target price of 33 baht, down from 36 baht, keeping a Hold recommendation, with H1 profits accounting for 51% of the full-year estimate.

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