TMB Plans Auto Loan Spinoff Business

TMB Bank Public Company Limited (TMB) planned the listing of its car title loans unit spinoff on Thai Stock Exchange, similarly, the Ngern Tid Lor Co. (TIDLOR) model, a microfinance company under Bank of Ayudhya Public Company Limited (BAY), as the overall outlook of this business has a high potential growth level, said a source close to the matter.

 

The source stated listing plan is still under the feasibility study and it will be clear after the merger between TMB and Thanachart Bank completes in July.  

 

At present Thanachat is one of the market leaders in auto loan. 

 

As of 31 March 2021, TMB’s loans to customers and accrued interest receivables are 1.34 trillion baht divided to a hire purchase (HP) portfolio of 400 billion baht or accounting to 29%, which consisting of new car 68%, used car 18%, cash your car (CYC) 14%, and cash your book (CYB) of 0.2%, respectively.

 

“The HP business has low risks due to the relatively low NPL in the system and it also has a fast turnover with high margin, compared with other types of loans. Currently, TMB has a special reserve policy to cope with the long-term effects of the Covid-19 epidemic. Therefore, there are little chances of a bank falling or having severe problems.” said the source.

 

KTBST Securities (KTBST) raised a rating on TMB from HOLD to “BUY” with a new target price of ฿1.45/share, up from ฿1.20/share, expecting full-year earnings to stand at 11.6 billion baht, increasing 14% YoY, due to lower ECL. TMB’s share price is currently traded at 0.57x P/BV vs. its peers at 0.73x P/BV, reflecting that TMB is still laggard.