SCB Jumps 6.5% after Posting a Solid 2Q Performance, Beating Market Forecast

The share price of the Siam Commercial Bank Public Company Limited (SCB) rose ฿6.00/share or 6.58% to ฿97.25/share as of 11:12 local time in Thailand, with a trading value of 2,670 million baht.

KGI Securities (KGI) stated that the result of SCB’s 2Q21 earnings of 18.8 billion baht were 4% above its forecast and 15% above the market consensus due to higher than expected gain on investment. While 1H21 earnings accounted for 60% of KGI’s full-year forecast, the analyst is maintaining its forecast as it expects highly volatile earnings in 2H21. KGI maintains a Neutral rating with a 2022 target price of 100 baht (PBV 0.75x).

SCB reported a net profit of 8,814 million baht in 2Q21, an increase of 5.44% compared to a net profit of 8,359 million baht in 2Q20. Higher net fee income and lower operating expenses were the key drivers of net profit growth, although net gain on investments, net interest income (NII) and net gain on financial instruments measured at FVTPL were lower.

Given the current economic uncertainty, SCB set aside 10.0 billion baht of provisions in the second quarter and 20.0 billion baht in total for the first half.

Non-performing loan (NPL) ratio remained stable at 3.79% at the end of June 2021. This reflected the Bank’s proactive NPL management. Nonetheless, the Bank still maintained an NPL coverage ratio at a high level of 142.3% as well as a strong capital adequacy ratio at 17.9%.