Kasikornbank (KBANK) is a historically sound and profitable bank.

Capitalisation is strong and the bank has among the highest CASA ratios in the banking sector. Asset quality took a surprise turn for the worse in 4Q22 due to its larger SME exposure and the bank has since focused on de-risking its portfolio. Credit costs are improving but remain elevated.

Margins are high compared to most other Thai banks we cover as a result of its strong SME franchise, but the shift in growth focus to the safer but lower yielding segments has diminished its margin lead.

Thai economic growth is expected to slowdown this year from US tariffs. Ripple effects are in the form of lower bank NIMs as more BOT rate cuts come through to support growth, and credit costs remaining relatively elevated. Moody’s and Fitch have downgraded their rating outlook on the Thailand sovereign (and consequently the Thai banks including KBANK at Moody’s, which it currently rates in line with the sovereign) to negative in April and September 2025 respectively on increased risks to Thailand’s economic and fiscal strength.

We see still middling loan growth across the Thai banks due to a focus on quality amid the current backdrop. Trading/investment income is also set to moderate from a high base given a smaller rates tailwind this year, while KBANK’s switch to focus on safer segments will continue to weigh on the NIM.

KBANK has a higher retail/SME loan mix and sizable restructured loans portfolio (~8.8% of total loans). FY26 guidance for credit costs have as such remained in an elevated range of 140-160 bp as we had expected, but KBANK’s higher NIM and low-40%s cost-income ratio provide comfortable room for that to be absorbed.