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.

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 KBANK, 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.

KBANK’s switch to focus on safer segments will also weigh further on the NIM, though it currently remains higher compared to most of its peers.

It also still has a higher retail/SME loan mix and sizable restructured loans portfolio (~7.8% of total loans) and so credit costs remain elevated compared to peers. KBANK’s higher NIM and low-40%s cost-income ratio however provide comfortable room for that to be absorbed. The focus on safer segments seems is also helping to stabilize credit costs; the prolonged balance sheet cleanup has concluded at YE24 credit costs are guided to return to a normalized 140-160 bp range this year.