QFY17 profit off 12.2% y‐y and 15.0% q‐q, below forecast: SCB undershot forecasts with 3QFY17 profit of Bt10.1bn on larger‐than‐expected loan‐loss provisions. In this period, the quarterly profit dipped 12.2% y‐y and 15.0% q‐q, dragged down by higher loan‐loss provisions, mounting expenses and lower net insurance premiums.

3QFY17 loan growth the highest of the year, NPLs also follow loans higher: In 3QFY17, SCB reported its loan book grew 1.2% q‐q at the highest of the year, taking its YTD loan growth to 2.8% from end‐FY16. Much of the loan growth came from corporate and personal loans. Its NPL ratio also followed loans higher to 2.75% in this period from 2.65% in the prior quarter. SME and retail loans largely contributed to the NPL increase in this period. Despite rising NPLs, higher loan‐loss provisions helped push its NPL coverage ratio higher to 136% in this period from 134% in the previous quarter.

FY17 profit view cut to Bt46bn but ‘BUY’ rating intact with downwardly revised FY18 target price of Bt172/share: The bigger‐than‐expected loan‐loss provisions prompt us to slash our FY17 profit outlook for SCB from Bt50bn to Bt46bn, which implies a drop of 3.2% y‐y and cut our FY18 target price to Bt172/share from Bt173/share. Despite target price cut, our ‘BUY’ rating remains intact as the new target still offers some upside from current trading levels.