3QFY17 profit up 8.6% y‐y but down 14.0% q‐q: TMB lagged forecasts with 3QFY17 profit of Bt2.0bn as a result of higher‐than‐expected expenses and loan‐loss provisions. In this period, the quarterly profit rose 8.6% y‐y on higher fee income and lower loan‐loss provisions but dropped 14.0% q‐q due to faltering non‐interest income,mounting expenses and soaring loan‐loss provisions.

3QFY17 loans up marginally, NPLs on steady decline after NPL write‐offs: In 3QFY17, TMB reported its loan book grew a paltry 0.4% q‐q, less than the growth rate in the previous two quarters. NIM narrowed as much of the loan growth in this period came from low‐yield mortgage and corporate loans and an increase in lowyielding assets from excess liquidity from access fee from renewal of life bancassurance collaboration with FWD also contributed to the decline. However, NPLs dropped further to 2.44% of total loans in this period from 2.56% in the prior quarter after NPL write‐offs.

FY17 profit downgrade, rating cut to ‘NEUTRAL’ with Bt2.60/share target price: We nudge our FY17 profit outlook for TMB lower to Bt8.5bn from Bt9.4bn as loan growth may be softer than we previously thought after NPL write‐offs and non‐interest income could surprise on the downside but the new profit target still implies a growth of 2.9% y‐y. As current share prices have nearly met our FY18 target price of Bt2.60/share, we therefore lower our rating on TMB to ‘NEUTRAL.’