Krung Thai Bank is the 3rd largest bank by assets in Thailand, with a 55.07% state ownership through the Financial Institutions Development Fund. We see strong government support underpinning KTB’s underlying credit profile.

The state influence opens the bank up to potentially government-directed lending; it has secured an increasingly meaningful portion of banking business from government agencies and State Owned Enterprises, which underscored its one-notch upgrade by Fitch in Dec-21.

KTB was faced with asset quality challenges in the past and had the highest NPL ratio and restructured loans among the major Thai banks. It has since de-risked its loan book, and asset quality has proven to be more resilient than its peers with lower COVID-19 restructured loans.

We see a significant impact to the Thai economy from potential US tariffs, with ripple effects in the form of lower bank NIMs and higher credit costs than earlier guided for this year.

Moody’s also downgraded its rating outlook on the Thailand sovereign, and consequently the Thai banks including KTB, to negative on 29 April 2025, citing increased risks to Thailand’s economic and fiscal strength, partly due to the potential impact of new US tariffs.

We anticipate greater NIM pressure on KTB than most peers given the larger corporate book, which has started to come through. Loan growth will also remain middling across the Thai banks due to a focus on quality amid the current backdrop. However, we take comfort in KTB’s conservative focus on the government agencies/SOEs segment, which is supporting asset quality well amid the challenging environment.