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Fundamental View
AS OF 28 Mar 2025Krung 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.
Business Description
AS OF 28 Mar 2025- KTB is the 3rd largest bank by assets in Thailand. The Thai Financial Institutions Development Fund owns 55.07% of the bank, and has a free float of 44.93%.
- Being the largest state-owned bank, it secures a meaningful portion of banking business from government agencies and State Owned Enterprises (SOEs) and per the bank, is the preferred bank for the government and SOE employees.
- Though state owned, the bank runs on a commercial basis and is not considered as a policy bank.
- KTB's loan profile comprised 45% retail, 26% private corporates, 10% SME, and 19% Government & SOEs at end-December 2024.
Risk & Catalysts
AS OF 28 Mar 2025KTB’s conservative focus on the government agencies/SOEs segment is supporting asset quality well amid the challenging macro environment and sluggish growth momentum.
We see KTB’s margin coming under greater pressure than peers as rate cuts come through given the larger corporate/SOE 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.
Key Metric
AS OF 28 Mar 2025| THB mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 2.17% | 1.83% | 1.98% | 2.40% | 2.43% |
| ROA | 0.53% | 0.63% | 0.94% | 1.01% | 1.18% |
| ROE | 4.9% | 6.1% | 9.2% | 9.4% | 10.4% |
| Equity/Assets | 10.7% | 10.5% | 10.9% | 11.4% | 12.4% |
| CET1 Ratio | 15.4% | 15.6% | 15.6% | 16.5% | 17.9% |
| Calculated NPL ratio | 3.81% | 3.50% | 3.26% | 3.08% | 2.99% |
| Provisions/Loans | 2.03% | 1.31% | 0.93% | 1.43% | 1.18% |
| Gross LDR | 99% | 99% | 98% | 104% | 100% |
| Liquidity Coverage Ratio | 188% | 196% | 201% | 202% | n/m |
CreditSight View Comment
AS OF 22 Jan 2025KTB is the 3rd largest bank in Thailand by assets and the largest state-owned bank. It is 55% indirectly owned by the Thai government and thus secures meaningful business from government agencies and SOEs (~20% of total loan book). KTB was faced with asset quality challenges in the past and had the highest NPL ratio among the major Thai banks. Its fundamentals have improved as it de-risked its loan book, so asset quality was more resilient than peers during COVID, and credit costs have remained in the normal ~120 bp range this year. We see greater NIM pressure on KTB than most peers from the turn in base rates, given its larger corporate book and higher CASA mix (~80%). The CET1 ratio is solid at 17.9%. We move it to O/P as we think the $ AT1 should trade at least flat to Thai peers.
Recommendation Reviewed: January 22, 2025
Recommendation Changed: January 22, 2025
Who We Recommend
Siam Commercial Bank
Kasikornbank
National Australia Bank
