After a sharp decline in 2Q20, PAB’s earnings regained positive growth of+6.1% YoY in 3Q20. As such, YTD profit contraction narrowed to -5.2% in 9M20YoY from -11.2% YoY in 1H20. Key results highlights are fast pick-up in retailloans, improving asset quality, and robust fee income. We stay upbeat on PAB’s4Q20 outlook, given: 1) strong macro trend, thus waning policy intervention onbanks’ earnings; 2) continued recovery in consumption and retail credit; 3)interbank rates will likely retreat on loose liquidity, easing NIM pressure; and 4)above-peers provision coverage offers room to lower credit cost.
Results positives: 1) Loan growth was solid at 3.1% QoQ, mainly drivenby retail loans (+5.7% QoQ). In particular, new mortgage (+7.5% QoQ) andauto loans (+10.4% QoQ) remained strong, and credit card resumedexpansion (+3.0% QoQ) from 1H20 contraction. Proportion of retail loansincreased to 58% of total loans as of 3Q20. 2) Asset quality improvednotably. PAB accelerated NPL disposal in 3Q