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Fundamental View
AS OF 28 Mar 2025Bangkok Bank is a family run conservative financial institution, with high capital and liquidity levels.
It acquired Indonesia’s Permata Bank in 2020 which resulted in a meaningful decline in its CET1 ratio to 14%. It is back to ~16% range and management aims to keep the CET1 ratio at ~16% in prepartion for Basel III final reforms.
Profitability (ROA and ROE) has historically been below the industry average, due in part to higher exposure to the lower-yielding corporates segment that has resulted in a lower NIM. However, the returns gap has narrowed as this has supported its asset quality outperformance versus peers in a prolonged sluggish macroeconomic environment.
Business Description
AS OF 28 Mar 2025- Bangkok Bank was set up in 1944 and was listed on the Stock Exchange of Thailand in 1975. It is a family-run bank and the current President of the bank, Chartsiri Sophonpanich, is the grandson of the founder of the bank.
- It is the largest bank by assets in Thailand. It was briefly surpassed by Kasikornbank in 2018, but the Bank Permata acquisition has taken BBL back to No.1.
- The bank is corporate-loan focused, and the loan book was split 46% corporate, 17% SME, 12% retail, and 25% international as at end-December 2024. It is by far the most international amongst the Thai banks, with branches in 14 economies.
- BBL's overseas presence has been enhanced by the acquisition of Bank Permata, the 12th largest bank in Indonesia. Bank Permata's asset size is ~10% of that of BBL.
Risk & Catalysts
AS OF 28 Mar 2025Returns have caught up well with peers as the more resilient large corporate book has supported lower credit costs and better BOT rate hike pass through to the NIM, given the backdrop of high household debt, challenged SMEs and sluggish growth momentum. However, we see greater NIM pressure on BBL than most peers henceforth as rate cuts flow through, due to its larger domestic and international corporate loan book (which tend to be floating rate).
Loan growth has been middling across the Thai banks due to a focus on quality amid the current backdrop. A pickup in economic momentum is hoped for in 2025, but we remain cautious of another year of disappointing growth and uneven recovery, particularly with risks from potential US tariffs.
The acquisition of Bank Permata of Indonesia in May 2020 provides BBL with exposure to the high growth opportunities of the Indonesian market, which is the bank’s identified main base for overseas expansion, but this also presents higher risks.
Key Metric
AS OF 28 Mar 2025| THB mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 1.50% | 1.65% | 1.60% | 1.92% | 2.02% |
| ROA | 0.49% | 0.65% | 0.67% | 0.93% | 1.00% |
| ROE | 3.9% | 5.6% | 5.9% | 8.1% | 8.3% |
| Equity / Assets | 11.8% | 11.4% | 11.5% | 11.8% | 12.2% |
| CET1 Ratio | 14.9% | 15.2% | 14.9% | 15.4% | 16.2% |
| Calculated NPL ratio | 3.90% | 3.20% | 3.10% | 2.70% | 2.70% |
| Provisions / Loans | 1.41% | 1.38% | 1.24% | 1.26% | 1.30% |
| Gross LDR | 84% | 82% | 84% | 84% | 85% |
| Liquidity Coverage Ratio | 291% | 270% | 271% | 277% | n/m |
CreditSight View Comment
AS OF 22 Apr 2025Bangkok Bank’s strength has been its large corporate book and strong capital. It completed the acquisition of Indonesia’s Bank Permata (~12% of loans) in 2Q20 which reduced its CET1 ratio to 14%, but it has since rebuilt it to ~16%. Returns though have been lower due to thinner corporate margins, and we see greater NIM pressure on BBL than most peers from the turn in base rates. We also 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. Disclosure from BBL is less than peers and bad loans jumped in 1Q25. However, we take comfort in BBL’s strong loss buffers and large corporate book. Still, we move BBL to U/P as we think it should trade at least flat to the top Indian and Philippine banks.
Recommendation Reviewed: April 22, 2025
Recommendation Changed: April 22, 2025
