TMBThanachart Bank Public Company Limited (TTB-R.BK) Earnings Call Transcript & Summary

Thank you, everyone, and welcome you to analyst meeting quarter 3. So before we going to go ahead and get started, my name is Dara, Head of Investor Relations. And we are pleased to have with us today, CEO, Khun Piti, today, he joined online, our CFO, Khun Prapasiri; and Khun Naris, Head of Strategy. So first sessions, I would like to ask Khun Piti to give an overview of 9 months. I'll turn it over to you, Khun Piti.

Good afternoon, and thank you, everyone, for your interest in joining today's session. Maybe I would like to jump into the executive summary to recap and to share with you what had happened in Quarter 3. As I keep mentioning that the interest up pricing cycle is coming. So we have been preparing balance sheet and waiting for this time to come, and it finally comes. And it is just a starting of the hike cycle. So what we have done is, we adjust bought on asset size and liability size to match up with the upcoming trend. We have been prefunding our deposit by using what we call Up and Up term deposit, which would give incentive for a customer to stay as long as 2 years. So that we can lock in the price to match up with our auto loan portfolio, take for example, we also keep adjusting that with the duration of our bond portfolio, and we reduced our foreign exchange exposure and only have exposure for the purpose of facilitating client flow, not doing huge proprietary trade and things like that because we know that this is the time where things can be extremely volatile. Speaking of asset growth, as I mentioned to you, last year that our asset growth target seems to be quite conservative, we aim to grow low-single-digit because I believe that quality remains the issue and bad news will keep coming even after the [indiscernible] which now it is clearly confirmed that or a bit pessimistic will at that time it's no longer a pessimistic will anymore because recession is coming. So we have to be very careful when it comes to asset quality and new lending. So on the last issue, speaking of the asset quality, we have been ramping up our debt management capability. We allocate more and more resource and set up a subsidiary called portfolio team asset management of TMBAM to deal with that asset. And also we streamline and changed a lot of process. And on top of that, we keep selling the part that we think that it would be better to let someone else handle it and keep adjusting our ECL model to make sure that we accurately reflect the cost of risk, which are getting more and more comfortable because every time that we sell our non-performing asset, we do not see extra losses, meaning that our ECL model can really will capture the true cost of risk. Okay. Let's flip into the next page to confirm what I just mentioned. You can see here that during the time that we have too much liquidity and no opportunity to lend because of the COVID. We run out TD. But with the rising rate environment, we start to refund our book with term deposit again. And we will keep ramping up term deposit through the product called Up and Up. And also, we reduced the rate on hybrid deposit that in the past, we use a lot of hybrid deposit, so that customer can switch out from this good yield deposit product to mutual fund. But we all know that the capital market situation is not very promising. So selling mutual fund would not be an attractive proposition to anyone and despite because of the worry of the upcoming recession. So it's no way that we should pay a hybrid deposit, so that customer can easily switch into a mutual fund, easily, a win-win we earn free, customer get flexibility that opportunity is somewhat gone, and it will continue to be that way for quite some time. So we decided to lower the rate for hybrid and up the rate for TD. That is the strategy on the funding side. And we do many other things. For example, we ramp up the foreign currency deposit so that we don't need to rely too much on the foreign funding through loans market. We issue a green bond and blue bond to support our long-term dollar lending initiative. So you can see that our balance sheet is well prepared with one asset and like upside, I will not take you through each bullet, but that is a plan to shorten our asset linked in our life at through TD, move more to floating rate and short-term duration on our one portfolio so that one. Once interest rates start to rise, which is already rising, we will be able to capture those benefits. Move on to next page, please. This is just to confirm that we have been reducing the duration of our bond portfolio. First of all, our bond portfolio mainly is on the government bond, Thai government bond and really high-quality liquid bonds, meaning that we can switch in and out quite easily. And when it comes to the type of the rate, we move more and more towards floating rate. And on the fixed rate, we will wait until the right timing, that's why we opened up the Hold to Collect in the [ O&M ] for to maturity portfolio so that we can start locking in our long-term bond investment without worrying about the mark-to-market loss. Yes, please move on to the next page. When it comes to liquidity, as you see on the right, on the left graph, we're still very, very liquid. This is the preparation for moving this money into a more longer-term on better yield investment or lending when the time comes. You can see that our LDR is still at a good level. We must take the borrowing into account. So our LDR is at the 96% level and our capital is extremely high, I would say too high. That is why once we start to accumulate our U.S. dollar through other means, our backup dollar that we issued a few years back in case that we cannot raise enough equity to do the acquisition, merger-acquisition deal between TMB and Thanachart Bank then, that money is no longer needed. So we see it as opportunity to buy back our hybrid Tier 1 partially, that's why we just announced in the stock exchange that we plan to buy back up to $120 million, which the current market price is spreading at around $0.87 per dollar. That would not only save our interest cost, but also give us the potential capital gain because we will buy back at discount. But that remains to be seen because we are doing tender offer, let's wait and see whether the investor will link to sell it back to us because this paper in the next 2 years is no longer be treated at capital anymore, and we need to call it back. So on the funding side, we have too much of dollar anyway. On the capital side, we are highly capitalized. So this is opportunity to earn some money and manage capital to a more proper level. Move on to the -- my last page before I turn it to CFO, and Khun Dararat who can read for the strategy part. This is a target that we gave out to you early in the year. We expect that the loan growth for the year will be 2% because we want to grow very selectively. And we start to see the asset growing as we planned. The asset that we have, the government promissory note start to gradually bring back, meaning that we do not roll over and use that money to go to other part of our lending book and mainly the consumer portfolio of the customer that we know, because we lend new car, used car, home loan, so our plan and also we have large group of payroll customers. So when talking about personal loan or consumer loans, those are the groups that we want to start off with the good return, low risk because we deal with the customer that we know, we have the payment track record. And that's that to yield the result, as you can see that the NIM start to pick up not only because of the rising rate environment, but because of that strategy to grow the asset in a very selective way. On deposit growth, I already mentioned our strategy to prefund and reduce the part that we pay a high rate and would not get any benefit. So in fact, in Q3, deposit costs come down a bit, and we can also lengthen the duration of our deposit book at the same time. On the fee income on non-NII, it remains a challenge. As I mentioned earlier, our fee profile is mainly on bank insurance and mutual fund. Bank insurance, we start to see a good come back with the transformation project that we do together with Prudential, come up with new product, come up with new go-to-market proposition, and we start to see it recover a bit. But on mutual fund, it remains a big challenge because this is not the time to recommend customer to jump into this very volatile and very difficult to predict market. On cost to income, I think we managed it quite well. We achieved the low bar of the range that we gave to you. But moving forward, cost can also be a challenge as well, inflation hitting everyone, including bank and we need to start investing more on to our IT asset and IT people to fit with the strategy that Khun Naris explain to you further that bank would be moving more on to a lot of digital initiatives. But our digital is nothing about those crypto or fintech high. We're doing digital for the sake of better customer experience, better customer proposition, which build around our core strength, which is consumer home loan, auto loan lending and commercial cash management. So the digital will be invest and develop to enhance capability in that area and to enhance ecosystem of the product around those area. On the NPL or Stage 3, things is much better than I originally predict which is good news, because customers who were hit by COVID can get out the risk from the rescue package quite quickly and not many of those come back and request another rescue package. Besides, we can manage to sell and write off a lot to prepare for the tough time ahead next year. That's why our Stage 3 is much lower than expected. And the credit cost is far better than the lower bound because of the above reason that I just mentioned. However, we cannot be too complacent about the situation. recession and inflation will hit the lower income group first, meaning that this possible income would be reduced to the point that they might not be able to get the other debt and might come back and ask for rescue again. TTB does not have that much of a portfolio because we aim for middle income, not lower income. We focus on the secured lending. If it is personal loan, consumer loan, we tend to stick to the mid-income or upper middle income, not low income. However, not just low income will be hit, some of the middle income growth would be hit as well, meaning that the expected -- expecting the risk cost to keep going down might not be the case for Q4 and onwards. However, I do not want to make you worry that it will be a big risk cost that we need to set aside as well because we think that now we can see the trend. And we already managed in advance by putting management overlay, adjusting the profitability, adjust loss given deferral of the portfolio by using data during the COVID to adjust our ECL model that I mentioned to you previously. So that is the Q3 result based on our strategy that I mentioned to you previously in the last quarter. I would like to pass this back to Khun Dara and CFO to further explain to you in details. Thank you.

Thank you, Piti. Maybe I take this on from CEO to call out a few confirmative strategies and the results that CEO has mentioned. On the loan, as we have been talking about with the focus strategy on the customer segment based on data analytics and digitization, we managed to grow the quality loan balance in the car, the home loan and the consumer sector. For the corporate loan balance, nevertheless, excluding the government loans, it's Q-on-Q flat, but having said that, we managed to grow new booking to replace the repayment in the corporate segment as well. Move on to the deposit side, as Piti has mentioned that in Q2, we -- with the intention and the prefunding strategy before the interest rate rise, we managed to reduce the cost of deposits and certain market of deposit customers, as Piti has mentioned, those customers who has low cross-sales opportunities balance has run down in Q3. This is as planned, that we know that if we prefund it Up and Up with a reasonable rate for the customer and reasonable cost for us, then we can reduce the interest rate in this market, and we see them move. Nevertheless, the new account opening in the All Free and the increase in the balance of the TD, the Up and Up continuing to grow as planned as we have seen. So next slide, please. On that, as I've mentioned that the cost of deposit Q-on-Q has been reducing 2 basis points, while the loan yield has been improving 4 basis points Q-on-Q. This is based on the focused strategy and prefunding that we have all along to share with you. Next slide, please. So the NIM of this Q-on-Q, we managed to grow NIM by 9 basis points. As mentioned, 4 basis points on the loan yield, 15 basis point Q-on-Q from the interbank and money market and also on the -- our investment in the HTM and SCC portfolio that CEO has mentioned, that's increased 29 basis points Q-on-Q. So we are growing the loan, growing the deposit as planned. Maybe next slide, please. So on this I will skip, because I assume that you have detailed analysis of our net interest income and the other details already. Maybe I call out the strategy on the next page, please. So this is the total non-NII. As the fee income, as CEO has mentioned, I will talk about it in the next slide. But on this Q-on-Q non -- other NII compared with Q2, in Q2, we have the dividend and some list of settlement. So if excluding that Q-on-Q remains flat. So maybe I move on to the fee basis. On the breakdown of fee, our CEO has mentioned, that the BA segment has grown as planned. This is based on our strategy, which proved to be fruitful. What we did in the BA sector is that we focus on customer pain. And with this customer and product value propositions, we know that each individual will be fear of illness. So we offer the product of easy care plus, whereby the individual customer can buy top-up health protection for himself with core pay scheme and also by for their family and this is the bike size that they can afford. We know also that people will be fear of property, therefore we lease the saving product that suits with the needs and ones. And they also fear of debt, which that's also come with the tax effective products for the wealth transfer. So we have a product category to serve the customer needs and pains. And with the sales and services model that make it clear on the benefits to the customer and with focused customer segment, we managed to grow the BA fee. And also the loan-related fee and the LG fee is growing. I also want to mention that the trade and FX as CEO has mentioned, this is with the volatility in the FX the hedging instruments for the importer has been offered. And this, hence, increased our trade and FX fee. Mutual fund, we -- as CEO has mentioned, we still move alongside with the market situation. Next slide. So I'm not going to talk a lot on the operating income, but on the operating expenses, we'll see that the expense increase Q-on-Q. And basically, this is the investment in our people, the headcount and also the incentive pay for the growth of the business. So that is in a nutshell. What do we see in Q4 as we are projecting also growth in various loan segment and service segment, so we are seeing that cost in terms of the variable expenses for our people and related GE cost will also grow aligned with the Q4 business plan. Cost to income ratio, I will skip because CEO has already mentioned about that. Maybe I'll move to the ECL and credit cost. On the ECL and credit cost in Q3, what we have seen is that the flow to Stage 2 and Stage 3 were as expected. We used data to understand the customer behavior and come up with the plan on where to collect and how to offer them support. Stage 3 formation Q-on-Q has been reducing 3%. But would this means that a proxy for Q4, I think that is yet to be seen as CEO has mentioned, that we are in the high interest rate and high inflation. So we need to keep monitoring on this. And as Q3, I mentioned that the risk cost is flat Q-on-Q, we added management overlay to -- in anticipation of the economic uncertainty, reflecting the higher interest rate and inflation. So that is the credit cost. Then next move on to the asset quality. In terms of the -- this page talk about modified loan portfolio, it's declining from 12% last quarter to 11%. And in this, majority of them are the customer with the COVID threat. The legacy modified portfolio has been running down through the sales and written off. And in the quick support scheme, we only have 3% in the blue deep restructuring, and this is a flat Q-on-Q. Next slide, please. We continue to use our 7 schemes based on customer payment and profile to track their behavior, and we have added the management overlay to cover the accrue interest of the modified portfolio. This is all along based on the portfolio movement and the performance. So I'm going to move to the next slide. This is also talking about that the increase -- we have increased the LLR to total loan to 4%. And as I've been always talking about this, that we have the strict staging based on the help of the customer profile, not only the DPD of that payment. And next slide, please. The NPL Stage 3 is now 2.7% and Stage 2 is 7.7%, slightly increased, but we have put sufficient provision for them. And as CEO has mentioned also that the NPL sales of almost THB 1 billion in this quarter, we had some gain from these sales, which this is an indicator of having a sufficient provision. Last slide that I may want to cover is the LLR ratio in this quarter is 135% is up from the last quarter. I think that would be the key highlight on the performance and asset quality that I want to share with you. Let me...

Thank you, CFO, and good afternoon, everyone. So the next section is on the update of our strategy execution. If I move on to the next page, I think you may recall this road map, I think it still pursue our strategy execution based on the road map that we communicated to you earlier this year. I think the forecast as a bank is really at this stage around 2 priorities. I think number one, definitely is on the synergy realization. I have a quick update to you in the next 2 slides. But definitely, the revenue synergy realization is something on top of our mind. But of course, I think that needs to be done prudently on the backdrop of high inflation and slow economic growth, which I think we need to make sure that we act prudently and on trade off risk and return too much. The second is the continuation of our effort on the transformation of the digital platform. I have a quick update in terms of the adoption and utilization of the new mobile banking platform that we launched in May this year. Moving on to the next page, I think you may already recall this, I think the message hasn't changed. We are doing very well on balance sheet optimization as well as the cost synergy, the realization to date already exceed our 5-year target, even though we are 2.5, 3 year on this journey. I think the part that we are working on is on the revenue synergy realization. But of course, I think as the picture on the left already indicated, we already expected since the beginning of the merger to need that the revenue synergy will come a bit late given that we need to wait for the entire business transfer to complete to be able to provide seamless experience to the customer from the data privacy point of view. And also, I think on the backdrop of slow economy, COVID-19 things, we have purposely delayed some of the initiative to capture synergy. However, I think a lot of things are ongoing in the background and maybe on the next page, I share some of the early indicators that maybe show that I think there is a lot of progress that we have made on the revenue generation by our view. I think our CFO already shared the Q3 performance. And even though you may notice that the Q-on-Q loan growth is flat. However, when we look into the detail, I think selected area has been growing quite fast. I think the area that we deep dive on this page is around consumer and secured loans. So if you look at the product like Cash Your Car, which is one of the key products that we want to forecast more on going forward, given that there's a lot of cross-selling potential between existing customer base among the homeowner as well as the new to auto loan customer segment as well. So year-on-year growth has been quite high at 40%. And I think given the initial success of CYC, which I think we have been pushing quite some time already, we also apply similar CapEx on other product category as well. I think one of the notable example is on the Cash Your Home or CYH product. We refreshed the product program and launched it in the previous quarter, I think the initial result, we already see 180% growth year-on-year on this product. When we look at new bookings also new product that is called Cash to Go or C2G, which is the unsecured personal loan. Also, we see more than double the new booking year-on-year growth from 9-month performance. So I think in the nutshell, what I'd like to highlight is, even though at the top line level, you may not see significant loan growth. However, as we communicated to you all along that we want to be forecast we want to be selective in terms of where we grow and start with area we feel comfortable with and focus on the existing 2 bank customers. I think this is an example of the pocket of growth that we are working on. And of course, I think we expect to scale the impact on this initiative much more. So it could be the future growth engine for our new loan going forward. However, I think that needs to be done prudently and carefully making sure that we don't trade off short-term loan growth over the long-term balance sheet held. Moving on, I think one of the important engine for us to really capture the revenue synergy is around the digital platform. I think as I have communicated this to the investor over the past quarters, maybe just jump to the next page in terms of the result. As you aware, we launched the new mobile banking platform back in quarter 2. And I think since then, as the highlight on this page. So you see that I think across key dimension, we have seen increasing adoption and utilization of the new platform I think the key metrics have shown a very strong growth in over there mentioned, I think which is a proof point to us that I think the new platform really address the customer experience, the key journey that make it smoother and more seamless from the customer point of view and that translates into higher customer adoption, higher customer engagement. On the next page, I think also when we look at this, I think the migration of the low cost, low value transaction to make sure that we achieve lower cost to serve is something that we focus on. On the left, I think you have seen it before, from a financial transaction, we're already migrating majority of the transaction of the branch, currently only 1% less at the branch. What we focus on is on the right-hand side. So the non-financial transaction like requesting bank statements, updating KYC data, for example, or requesting the credit bureau rating, things like that has been enhanced on the new mobile banking application. And you can see the adoption on the right-hand side that I think across most of the key features, we have seen the volume Q-on-Q more or less double, if not triple, operating, which is a very good sign for us that we really get the adoption from the customer, which internal means that less transaction will be happening at branch. So we can really get all the staff in branch to focus on high-value transaction and cross-selling matter. On the next page, I think this is something that we discussed in the previous quarter. The personalized communication, I think the key stats hasn't changed much. But I think it's been quite successful. And we are in the process of scaling this engine further today is -- can allow us to communicate to 500,000 customers up only given the capacity constraint. We are enhancing our solution on this to make sure that we can really use this engine to communicate to the 3 million, 4 million customer in the mobile banking application. So I think hopefully, Q1, Q2, next year, we will be able to expand this feature to all the mobile banking customers. On the next page, also, I think another proof point around better engagement. So the chart on the right-hand side shows for loan of reward redemption. As a bank, we have a loyalty program that offer the customer reward points. This is what we call [indiscernible] customer then can redeem the points in exchange for tips or service that they like. And you can see here that the non-cash meaning the offline quite redemption has been more or less flat, that has over the past 3 quarters versus the volume that we see from the digital platform, our TTB Touch application, I think, has been more than double net over the past 3 quarters, which is very encouraging because it means that through this, we can build better engagement with our customer base and better engagement. Hopefully, we will also translate into more opportunities for cross-selling and the revenue generations matter. Next, I think this one more or less similar to what I said earlier in terms of new booking net operating, the in collecting side on the new booking of the unsecured loan, largely driven by the digital application as a channel, we get a lot of adoption, a lot of volumes leads coming in from the customers who are interested and that contributed to the encouraging new booking growth that we shared with you a couple of pages earlier. Lastly, I think our effort to really capture the ecosystem play better than. I think we start with the car ecosystem, which had [indiscernible] on our new mobile banking platform. As you can see here, the number of users has grown by 70% Q-on-Q for currently, we have over 300,000 cars in our platform at the moment and that drives some of other engagement app as well, for example, adding Easy Pass, which is the expressway toll device so that the customer can top up. That activity has gone up by 200% Q-on-Q. Again, all of this, hopefully, will also translate into more opportunities for us to better engage the customer to know the customer better in terms of their lifestyle, their need and [indiscernible] ultimately, allow us to offer the right product, right solution to the customer at the right for in time. So I think that's it in terms of strategy update for the third quarter, maybe I pass this back to Khun Dara.

Thank you, Khun Naris. So now we open for Q&A. I guess, pretty much investor familiar with the platform already. [Operator Instructions] While looking for live interactions, I already received one question. So it's from Selvie. She asking about the tender offer newly leased about USD120 million additional Tier 1, she wants to know that the durational behind, why $120 million while this size, why not $200 million, $300 million, is there any plan to replenish the capital after tendering? Can I -- over these questions to Khun Piti.

Sure. The number didn't come from fortune teller. The reason is, first, we work with Central Bank for quite some time. We see that the opportunity is coming when the rate is rising. The first thing is how on price would come down, where as I mentioned, we don't need this hybrid capital anymore because we start to have our core Tier 1 coming in once we can generate more and more profit. So we would want to move more to a core Tier 1, not hybrid Tier 1. With this opportunity, the condition is that we receive from Central Bank is, we need to use our profit to fund the buyback. So that hybrid Tier 1 would be replaced by core Tier 1. And we use our first half profit after paying dividend to do this round of buyback. And it might be the only round of buyback because we need to strike a balance to the bondholder as well. We issued back then of $400 million. If we buyback too much, it would not be a good thing as a liquidity for the one that we want to hold. So we need to strike a balance among all the stakeholders. Of course, the shareholder would benefit a lot if we can buy every cent back at good discount, but that would not make regulators very happy. And for those who do not want to sell, if we buy back too much, it would not leave room for liquidity for them to have enough liquidity, if they want to trade or to get out in a later time. So we have to strive balance between all the stakeholders that by $120 million in not being the number.

We received another question from [indiscernible]. So he's asking for Khun Piti to share some colors on your 2023 outlook for key items, for example, like loan growth, credit products, CYI ratio, net interest margin directionally higher on over year-on-year that's also work to, if you cannot share the exact number.

I cannot add an exact number at this point because we are in the process of preparing the MTP to be submitted to the Board. And then we will announce to the public very soon. But I can't give you the directions. The direction would remain pretty much the same, but we would shift gear a bit based on our newly launched digital capability. Our business model is about focusing more into the consumer retail space by leveraging from what we have, meaning that we have very sizable market share on home loan and car loan, where Thai people are facing with the household debt issues. Even good customer when they have liquidity issues and good customer means secure customer, meaning that they borrow to buy car or home from one bank and they have liquidity issues, they would go up to another bank or same bank or even non-bank to get very high-cost borrowing to fund the working capital need and high cost mean high 10% to 20-something percent. So why can bank like us offer something called debt consolidation or the Cash Your Home product or Cash Your Car product that Khun Naris just mentioned, because the collateral is already with the bank, we are willing to give our good customer lower rate because we have much lower risk if we can share collateral or in the case that we don't -- customers don't let us share collateral with the existing lending. They're still a good customer because we can see that good track record, right? So we can do the risk-based pricing on different type of product, challenge collateral or not sharing collateral or a different type of personal loan. So that is something that will be coming that we can selectively grow under the difficult enrollment by not putting too much pressure on to the risk cost because we already become quite a sizable bank in the secured lending space in Thailand. So the next chapter is to use digital capability to penetrate into unsecured or semi-secured personal loan space to improve the yield. That's why we start to refund and continue to push more on the medium -- locking in the medium-term deposit. So that we can use that money to fund those part of higher-yield loan book, the rising rate environment. It will be a win-win for both bank and customer because customers can get lower rate borrowing basically, we refinanced them from non-bank or bank they charge them more by using our low house funding. So win-win for both bank and customer, meaning that you would still see the loan and deposits continue to grow, but again, very selectively. And the team should continue to expand, whereas cost-to-income ratio would not come down sharply like in the past that we can cut the overlapped resources or footprint is now to come to achieve our money, our investment into digital capability. So that we can do business model just like I mentioned, through digital, which would be give us much lower cost point to penetrate into, to lower cost to serve and pass that back into the competitive offering that we can give to the customer. Yes, that is the plan in the nutshell.

Thank you, CEO. From the same person, [indiscernible]. So he wanted for you to share to get to understand more about positive, let's say, the financial key ratio. For example, like NIM impact in basis points from the additional Tier 1 redemptions, partially.

Not that much because the -- you can run the math, basically, the coupon that we pay is at 4.9% in dollar term that would be removed out depending on how much we can buy back. The current trading price is $0.87 per dollar. We are doing the auction time, meaning that we would strike the balance between the pricing and the amount. The lower pricing we can pay with the higher amount that would be good, but we do not want to pay too high the price just to get a bigger amount. So remains to be seen what would be the price that we would achieve. But the current global price is around $0.80 per dollar, $0.87 per dollar.

Thank you, CEO. We received the next question from [indiscernible]. He want to understand how much management overlay did we put it in, in third quarter to maintain on keep ongoing basis. And also, how concerned are you on retail mortgage asset quality given the rising rate environment and any measures that the bank take to manage the pressures there?

Okay. First, as I just realized is a misconception, particularly for the non-Thai in the Thai mortgage loan. Thai mortgage loan is mainly on floating rate. You will see [indiscernible] fixed rate during no more than first 3 year, and now it even lower to 1 or 2 year because banks do not want to take the risk from the rising rate environment, meaning that customer would be facing with floating rate loan throughout that loan life. Normally, bank would push around up to 2%, meaning if you pay, let's say THB 10,000 a month for your mortgage loan for your 30-year mortgage. If the rate do not move up that much, you would not paying your entire loan less than -- within less than 30 years because the THB 10,000 per month already pushing the rise in interest rate. So if the interest rate does not lie that much on that fast, you would end up paying your entire loan less than 30 years. Meaning, if the rates go up, you might be able to pay down your loan in maybe 28, 29 or 30 year. At worst, if it happened in the middle, not very early of your loan life, meaning that you already paid our principal quite a lot. When the rates go up, you continue to pay a THB 10,000 a month, but you might end up needing to pay 31 or 32 years to pay down your mortgage loan. So it's not really a big problem for the entire portfolio. The problem will have him for certain lenders who are very aggressive, meaning that they do not put in much of the cushion. Customer come in and borrow with easer rate just this year or last year before the rate rise, meaning that the monthly installment may lead go to interest payment, not principal. If that's the case, those customers would need to be restructured because there is no equity cushion or the bank who lend to them were too aggressive when it comes to pricing. But I would say 90% of the entire Thai bank industry portfolio already have cushion through customer equity, that customer paying down or the interest cushion when it comes to day 1 pricing. The part that we stood a bit worry more is on the loss given the fault that might continue to increase in certain type of residential property that heavily lie on circulative demand in the past that a group that when bank foreclose the loss given default might increase because speculative demand that support those car market is pretty much gone. But again, that is not the big part of TTB portfolio because we only lend to buyer who want to buy for their real use, not speculative purpose. We look at the number of home or condominium that they purchase. So we are not going to lend them if they are buying multiple units. So I hope that somewhat answered the question.

Yes, Khun Piti. Maybe you missed one question from [indiscernible] actually is representing around 20% of the total buffers that we currently have. Yes, that's 20% of THB 56 billion. So at the moment, we do not see any more questions. We will give 5 minutes for the questions from investors.

Yes. Maybe I back a bit to MO. MO can be just a management call, putting MO, as Khun Dara mentioned, roughly 20%. And the other part, which I prefer is to use data very actively to adjust PD and LGD, meaning that our ECL would be very responsive. Our ECL model would be very responsive to the change in the market environment and to the change is with the customer credit healthiness. So if you may recall that we use the 7 scheme at the scheme to identify the severity of customer health level. So the more they ask for help, meaning that the credit worthiness can be deteriorated, that when we use the PD shift in sing with the request from the customer for the help that they seek from the bank. So with this frequent adjustment, our ECL would be accurately reflect the true situation of the bank risk. I prefer this more than we think high management overlay without knowing the true cost of risk and CFO reaffirm that [Technical difficulty] few quarters consecutively.

Thank you, CEO. I received questions from [indiscernible]. He would like to know the potential on credit cost range outlook next year. Is it one that 20 basis points, which is quite possible? What was the credit cost in third quarter with us in MO?

I think the credit cost during the past 2 quarters is quite stabilized, particularly the third quarter, I do not expect that the credit cost should come up or come down significantly from this point onward, provided there is [Technical difficulty] no event hitting us again particularly. There could be a slight uptick if the high inflation continue, the recession start to hit a certain sector and certain sector, I mean Thai export, who relay export to certain countries on certain products that one the recession hit those countries, the export may come down and affect employee of those industries, then there could be a potential small uptick here and there for a retail business because of the -- those people could be losing their income at the same time hit by the inflation and cost of living. But again, it would not be extreme impact just like what we were facing during the call with a lockdown. It would be like a small hiccup of here and there based on the low whole economic situation, which is very much linked to the global economy.

Thank you. It seems like there are no more questions. Maybe I'll wait for a few minutes. And if there is no questions, we can end today earlier. So seems like there's no more questions, so let's call it for a day. Khun Piti had -- you would like to conclude anything before we leave the meeting call.

Again, I would like to thank you, everyone, for your interest and participation. And I hope that when we see each other again, there would be more and more good news to share. So let's hope for the best, but we're always prepared for the worst or have impact that might happen. So stay safe and see you. Thank you.

Thank you.