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Fundamental View
AS OF 05 Dec 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 has been built back to 18%. Management aims to keep the CET1 ratio above ~16% in preparation 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 relatively better asset quality than most peers in a prolonged sluggish macroeconomic environment.
Business Description
AS OF 05 Dec 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 49% corporate, 16% SME, 12% retail, and 23% international as at September 2025. 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 05 Dec 2025We 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 and Fitch have also downgraded their rating outlook on the Thailand sovereign (and consequently the Thai banks including BBL 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.
NIM pressure is set to continue into the coming quarters on the back of rate cuts to support growth. 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 BBL’s prudent provisioning, high loan loss buffers and safer large corporate book.
The acquisition of Bank Permata of Indonesia in May 2020 provides BBL with exposure to the high growth opportunities of the Indonesian market, but this also presents higher risks.
Key Metric
AS OF 05 Dec 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| PPP ROA | 1.65% | 1.60% | 1.92% | 2.02% | 2.24% |
| ROA | 0.65% | 0.67% | 0.93% | 1.00% | 1.12% |
| ROE | 5.6% | 5.9% | 8.1% | 8.3% | 8.9% |
| Equity / Assets | 11.4% | 11.5% | 11.8% | 12.2% | 12.9% |
| CET1 Ratio | 15.2% | 14.9% | 15.4% | 16.2% | 18.0% |
| Calculated NPL ratio | 3.20% | 3.10% | 2.70% | 2.70% | 3.30% |
| Provisions / Loans | 1.38% | 1.24% | 1.26% | 1.30% | 1.49% |
| Gross LDR | 82% | 84% | 84% | 85% | 82% |
| Liquidity Coverage Ratio | 270% | 271% | 277% | 265% | n/m |
CreditSight View Comment
AS OF 03 Dec 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 ~18%. 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. Disclosure from BBL is less than peers and credit costs rose in 9M25. However, we take comfort in BBL’s strong loss buffers and large corporate book. We also see a meaningful impact to the Thai economy from US tariffs, with ripple effects in the form of lower bank NIMs and continued high credit costs. We are moving it from Underperform to Market perform as its new issues trade at fair levels.
Recommendation Reviewed: December 03, 2025
Recommendation Changed: December 03, 2025
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Fundamental View
AS OF 04 Dec 2025HCA’s volume metrics and EBITDA margins consistently best industry peers, primarily due to strong operational efficiency and an inpatient/outpatient focus within large, healthy markets.
HCA’s credit metrics have improved in recent years and leverage sits near the low end of management’s target net leverage range of 2.75-3.75x.
HCA benefits from substantial financial flexibility provided by strong FCF generation and easy access to the capital markets. The company also maintains sufficient liquidity with a well-laddered maturity schedule.
Business Description
AS OF 04 Dec 2025- HCA operates more than 190 hospitals with ~50k beds and 123 freestanding surgery units (as of 3Q25). The company operates in 20 states and England, but ~50% of its hospitals are located in Texas and Florida. HCA is the largest for-profit hospital operator in the US by revenue. HCA also purchased 41 urgent care centers in Texas from FastMed for an undisclosed amount.
- HCA has gone private twice since its initial public offering in 1969, most recently in 2006. During periods of private ownership the company has engaged in debt-financed special dividends. HCA returned to public ownership in 2011.
- HCA has been an active consolidator in the industry, acquiring General Health Services, Columbia Healthcare, Hospital Affiliates, and Healthcare Corp, among others. In rationalizing its offering of services and market focus, HCA has sold or spun-off hospital groups such as LifePoint, Triad, and HealthTrust.
Risk & Catalysts
AS OF 04 Dec 2025We see some risk of choppy operating performance tied to an unwind of acuity and payor mix benefits experienced through COVID.
HCA is exposed to certain provisions in the Big Beautiful Bill which could result in insured coverage losses and lower supplemental payments.
HCA guides to strong FY25 growth, including revenue growth of 6.2-8.4% and adjusted EBITDA growth of 9.9-12.7%.
HCA’s board recently authorized an additional $10 bn share repurchase program. The company has ~$3.3 bn of share repurchase authorization remaining (as of 3Q25).
Key Metric
AS OF 04 Dec 2025| $ mn | Y20 | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|---|
| Revenue | 51,533 | 58,752 | 60,233 | 64,968 | 70,603 | 74,372 |
| SWB | 23,874 | 26,779 | 27,685 | 29,487 | 31,170 | 32,416 |
| Supplies | 8,369 | 9,481 | 9,371 | 9,902 | 10,755 | 11,183 |
| Adj. EBITDA | 10,037 | 12,644 | 12,067 | 12,726 | 13,882 | 15,164 |
| Total Debt | 31,004 | 34,579 | 38,084 | 39,593 | 43,031 | 44,511 |
| Gross Leverage | 3.1x | 2.7x | 3.2x | 3.1x | 3.1x | 2.9x |
| Interest Coverage | 6.2x | 8.4x | 7.3x | 6.7x | 7.2x | 6.8x |
CreditSight View Comment
AS OF 02 Dec 2025We maintain an Outperform recommendation on HCA. HCA remains the strongest hospital operator in the for-profit space, exhibiting operational stability and strong FCF generation. These strengths should help the company weather policy-related headwinds in the years ahead. We see HCA as a good alternative to some of the widest BBB-rated credits in our IG Pharma universe, namely Biogen and Viatris.
Recommendation Reviewed: December 02, 2025
Recommendation Changed: May 02, 2018
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Fundamental View
AS OF 04 Dec 2025Stryker benefits from a leading position in orthopedics as well as strong franchises in medical surgery and neurotechnology. The company’s sales and EBITDA growth trajectory bests most of its medical device peers.
Stryker has exhibited discipline with capital allocation. Following larger bolt-on deals in 2022 (Vocera, $3.1 bn) and 2020 (Wright Medical, $5.4 bn) management prioritized debt reduction.
We expect SYK to manage leverage in the low- to mid-2x range as it addresses its M&A needs/wants in the aftermath of the Inari purchase.
Business Description
AS OF 04 Dec 2025- Stryker (SYK) is a global manufacturer of implants used in joint replacement & trauma surgeries; surgical equipment & surgical navigation systems; endoscopic & communications systems; patient handling & emergency medical equipment; neurosurgical, neurovascular & spinal devices among other products. Stryker generated $22.6 bn of revenues in 2024 (versus $20.5 bn in 2023).
- SYK maintains two operating segments: MedSurg & Neurotechnology (60% of 2024 consolidated revenues) and Orthopaedics & Spine (40%).
- SYK's recent sizable acquisitions include: Inari Medical ($4.9 bn) in 2025, which increased its exposure to peripheral vascular diseases; Vocera ($3.1 bn enterprise value) in 2022, which increased its digital care coordination and communication categories; Wright Medical ($5.6 bn including debt) in 2020, which increased its exposure to the trauma & extremities end market; and K2M Group ($1.4 bn) in 2018, which boosted the spine portfolio.
Risk & Catalysts
AS OF 04 Dec 2025Stryker is exposed to medical procedure volumes. While volumes have been positive, owing in part to the resumption of procedures deferred during COVID, volatility could result from economic uncertainty in the year ahead.
Stryker’s M&A interest has leaned bolt-on in nature over the past several years, including the acquisitions of Inari in 2025 ($4.9 bn), Vocera in 2022 ($3.1 bn) and Wright Medical in late 2020 ($5.4 bn).
SYK recently announced a definitive agreement to sell its US Spinal Implants business to Viscogliosi Brothers to create a newly formed company (to be named VB Spine, LLC).
SYK recently held its investor day, which covered expectations for 2026-28. Management expects organic sales growth to be at the ‘high end’ of MedTech and guides to operating margin expansion of ~150 bp through 2028. M&A remains Stryker’s top capital allocation priority.
Key Metric
AS OF 04 Dec 2025| $ mn | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|
| Revenue | 17,108 | 18,449 | 20,498 | 22,595 | 24,381 |
| Gross Profit | 10,968 | 11,578 | 13,058 | 14,440 | 15,611 |
| R&D | (1,235) | (1,454) | (1,388) | (1,466) | (1,580) |
| SG&A | (6,427) | (6,455) | (7,121) | (7,685) | (8,547) |
| Adj. EBITDA | 4,753 | 4,755 | 5,356 | 6,158 | 6,757 |
| Total Debt | 12,479 | 13,048 | 12,995 | 13,597 | 16,595 |
| Gross Leverage | 2.6x | 2.7x | 2.4x | 2.2x | 2.5x |
| Interest Coverage | 14.1x | 14.1x | 15.0x | 15.6x | 17.1x |
CreditSight View Comment
AS OF 31 Oct 2025We maintain our Outperform recommendation on Stryker. SYK exhibits organic growth on strong procedural volumes and relatively healthy capital equipment spending. We would take the spread pickup offered on SYK versus MDT, a name with a weaker organic growth trajectory and similar leverage.
Recommendation Reviewed: October 31, 2025
Recommendation Changed: May 03, 2022
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Fundamental View
AS OF 03 Dec 2025Pfizer has ample financial resources, strong ability to de-lever, and adequate M&A capacity at current ratings.
Pfizer faces meaningful losses of exclusivity come the middle part of the decade. Management has guided to a ~$17 bn negative revenue impact from patent losses in 2025-30, including for drugs such as Xeljanz (2025), Eliquis (2026), Ibrance (2027), and Xtandi (2027).
Management expects to offset this impact with growth from pipeline development (+$20 bn of revenues by 2030) and business development (+$25 bn of revenues by 2030).
Business Description
AS OF 03 Dec 2025- Pfizer is a research-based, global biopharma company with focuses in immunology, metabolic disease, oncology, vaccines, neuroscience, and rare disease.
- PFE has completed a number of major acquisitions and divestitures in recent years. In 2009, the company acquired Wyeth for $68 bn, increasing its size by approximately 50%. Subsequently, PFE completed the acquisitions of Hospira ($17 bn), Biohaven ($12 bn), Arena ($6 bn), Medivation ($14 bn), Seagen ($43 bn), and Metsera ($7 bn), among others.
Risk & Catalysts
AS OF 03 Dec 2025Pfizer has been active with portfolio repositioning, executing the separations of its Consumer Healthcare and Established Brands (Upjohn) businesses in recent years. These transactions have resulted in weaker diversification and greater exposure to patent expirations.
Due to upcoming patent losses, Pfizer has been extremely active with M&A. The company completed the $43 bn acquisition of Seagen in December 2023, which resulted in well over a turn of leverage deterioration. More recently, PFE acquired Metsera for $7 bn.
Pfizer is also exploring the sale of its hospital drugs unit. The unit was formed through the $17 bn acquisition of Hospira in 2015. We suspect that divestiture proceeds would be used primarily for business development.
Key Metric
AS OF 03 Dec 2025| $ mn | Y20 | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|---|
| Revenue | 41,651 | 81,288 | 101,175 | 59,553 | 63,627 | 62,785 |
| Gross Profit | 33,167 | 50,467 | 66,831 | 34,599 | 45,776 | 46,081 |
| R&D | (8,709) | (10,360) | (11,428) | (10,679) | (10,822) | (10,266) |
| SG&A | (11,597) | (12,703) | (13,677) | (14,771) | (14,730) | (13,906) |
| Adj. EBITDA | 18,027 | 33,354 | 46,153 | 22,904 | 25,865 | 25,812 |
| Total Debt | 39,836 | 38,436 | 35,829 | 71,888 | 64,351 | 61,712 |
| Gross Leverage | 2.2x | 1.2x | 0.8x | 3.1x | 2.5x | 2.4x |
| Interest Coverage | 13.1x | 26.6x | 46.8x | 39.2x | 10.2x | 12.3x |
CreditSight View Comment
AS OF 16 Dec 2025We recently shifted our recommendation on Pfizer to Market perform (from Outperform). While PFE faces growth challenges tied to losses of exclusivity (LOE) and Medicare price negotiation, the company generates strong FCF with conservative leverage metrics. We favor PFE over MRK at similar spreads, but our preference is for LLY and/or ROSW, albeit at modestly tighter levels.
Recommendation Reviewed: December 16, 2025
Recommendation Changed: September 15, 2025
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Fundamental View
AS OF 03 Dec 2025AZN enjoys one of the strongest growth profiles in our coverage, reflecting a portfolio of innovative medicines, particularly in Oncology. The addition of Alexion supports AZN’s growth prospects, bringing strong assets in immune-mediated rare diseases.
AZN also enjoys relatively strong diversification, with core sales coming from multiple therapeutic areas and with depth across its Oncology and Biopharma platforms.
AZN’s capital allocation priorities include investment in the business, the pursuit of value-enhancing bolt-on M&A, and support for the dividend.
Business Description
AS OF 03 Dec 2025- AstraZeneca is a UK-based pharmaceutical company that researches, develops, and manufactures drugs with a focus in (i) Oncology, (ii) Cardiovascular, Renal and Metabolism (CVRM), (iii) Respiratory and Immunology, (iv) Rare Disease, and (v) Vaccines and Immune.
- AstraZeneca operates in five primary segments: Oncology, CVRM (cardiovascular, renal, and metabolism), Respiratory and Immunology, Rare Diseases, and V&I (Vaccines and Immune). AstraZeneca reported FY24 revenues of $54.1 bn, with ~41% from Oncology, ~23% from CVRM, ~15% from Respiratory and Immunology, and ~16% from Rare Diseases.
- In recent years, AstraZeneca has acquired Alexion for $39 bn, CinCor for $1.8 bn, Fusion for $2 bn, among other smaller transactions.
Risk & Catalysts
AS OF 03 Dec 2025Given that AZN’s leverage has been largely restored to pre-Alexion levels, we expect limited deliberate improvement from here. However, we expect future shareholder rewards and business development to be managed somewhat conservatively.
AstraZeneca has shown discipline with respect to leverage and capital allocation in recent years. While AstraZeneca pays a relatively aggressive dividend (~31% of LTM FCF), the company has historically been very conservative with share repurchases and has even used share issuance to fund certain acquisitions.
AZN recently lost a patent-infringement lawsuit against Samsung Biologics regarding a biosimilar version of Soliris.
Key Metric
AS OF 03 Dec 2025| $ mn | Y20 | Y21 | Y22 | Y23 | Y24 | LTM 3Q25 |
|---|---|---|---|---|---|---|
| Revenue | 26,617 | 37,417 | 44,351 | 45,811 | 54,073 | 58,127 |
| Gross Profit | 21,318 | 24,980 | 31,960 | 37,543 | 43,866 | 47,887 |
| R&D | (5,991) | (9,736) | (9,762) | (10,935) | (13,583) | (15,047) |
| SG&A | (11,294) | (15,234) | (18,419) | (19,216) | (19,977) | (19,851) |
| Adj. EBITDA | 8,680 | 11,506 | 14,507 | 15,641 | 18,208 | 19,927 |
| Total Debt | 19,699 | 29,794 | 28,279 | 27,494 | 28,843 | 30,874 |
| Gross Leverage | 2.3x | 2.6x | 1.9x | 1.8x | 1.6x | 1.5x |
| Interest Coverage | 11.8x | 16.0x | 17.1x | 14.5x | 13.9x | 15.2x |
CreditSight View Comment
AS OF 01 Dec 2025We acknowledge that AZN trades quite tight, however, we favor it versus peers such as MRK and BMY given its better growth profile and lower risk of leveraging M&A.
Recommendation Reviewed: December 01, 2025
Recommendation Changed: April 01, 2021
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Search topics about wealth insights and investments.Tencent
- Sector: Technology Media and Telecommunications
- Sub Sector: Technology
- Country: China
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Fundamental View
AS OF 28 Nov 2025We maintain our O/P recommendation on Tencent. In 3Q25, revenues accelerated and were ahead of expectations, EBITDA margin expanded on an improved revenue mix, FOCF remained robust, debt metrics improved. We view Tencent as a core holding in China and Asia IG credits, and it is our preferred duration play. While valuations of Tencent is less compelling compared to YE24, its longer duration bonds still offer ~20 bp of spread pick up against Chinese SOEs of similar tenors. We like Tencent’s strong and improving credit outlook compared to its Chinese tech peers, rock solid balance sheet and robust free operating cash flow. We prefer its 2041 bond which offer the highest 20-35 bp spread pick up against Asia A corporate and Chinese SOEs
Business Description
AS OF 28 Nov 2025- Founded in November 1998, Tencent is a leading provider of Internet value added services in China. Since its establishment, Tencent has ventured into instant messaging, social networking, online payments, digital entertainment, and PC and smartphone gaming. Most recently, it has also forayed into high-tech areas such as artificial intelligence, and cloud computing.
- Tencent's leading Internet platforms in China include Weixin/WeChat (online messaging), QQ Instant Messenger (online messaging), Tencent Games (gaming), Tencent Video/Weixin Video Accounts (video platforms), WeChat Pay (payments), and Tencent Cloud. The combined monthly average users (MAU) of Weixin and Wechat reached 1.40 bn as of 31 March 2025.
- In 3Q25, 50% of revenues came from Value Added Services (which consist of Domestic Games, International Games, and Social Networks), 30% came from FinTech and Business Services (e.g. commercial payments and cloud), and 19% from Online Advertising.
- Tencent is currently primarily listed on the Hong Kong Stock Exchange, with a market capitalization of HKD 5.6 tn as of 27 November 2025.
Risk & Catalysts
AS OF 28 Nov 2025While Chinese regulators have adopted a more friendly stance towards tech companies, any regulatory clampdowns abroad and domestically (e.g. antitrust rules, data security, personal information protection laws) may affect Tencent’s business. Tencent’s gaming, music streaming, and online payment units are among those that have come under regulatory scrutiny in the past.
Tencent uses variable interest entities (VIEs) to circumvent China’s restrictions on foreign ownership of Internet Content Providers, which poses regulatory risks. Specifically, VIE transactions involving “change in control” will be subject to antitrust regulatory processes.
US-China tension may escalate under the new Trump Administration, including additional chip sanctions, which may result in higher volatility. Failing to secure a stable supply of advanced AI chips and/(or) find domestic alternatives could weigh on the long-term AI development of Tencent against international peers.
Key Metric
AS OF 28 Nov 2025| RMB bn | FY21 | FY22 | FY23 | FY24 | LTM 3Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 27.0% | 31.4% | 29.8% | 25.4% | 24.5% |
| Net Debt to Book Cap | 6.0% | 8.5% | 1.0% | 2.3% | 1.4% |
| Debt/Total Equity | 36.9% | 45.9% | 42.5% | 34.0% | 32.5% |
| Debt/Total Assets | 20.1% | 22.8% | 23.5% | 20.1% | 19.7% |
| Gross Leverage | 1.7x | 1.9x | 1.6x | 1.3x | 1.2x |
| Net Leverage | 0.4x | 0.5x | 0.1x | 0.1x | 0.1x |
| Interest Coverage | 24.7x | 19.0x | 19.9x | 22.5x | 24.4x |
| EBITDA Margin | 34.9% | 34.3% | 38.9% | 42.4% | 45.0% |
CreditSight View Comment
AS OF 14 Nov 2025We maintain our O/P recommendation on Tencent. In 3Q25, revenues accelerated and were ahead of expectations, EBITDA margin expanded on an improved revenue mix, FOCF remained robust, debt metrics improved. We view Tencent as a core holding in China and Asia IG credits, and it is our preferred duration play. While valuations of Tencent is less compelling compared to YE24, its longer duration bonds still offer ~20 bp of spread pick up against Chinese SOEs of similar tenors. We like Tencent’s strong and improving credit outlook compared to its Chinese tech peers, rock solid balance sheet and robust free operating cash flow. We prefer its 2041 bond which offer the highest 20-35 bp spread pick up against Asia A corporate and Chinese SOEs
Recommendation Reviewed: November 14, 2025
Recommendation Changed: August 18, 2022
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Fundamental View
AS OF 27 Nov 2025Rural Electrification Corp Ltd (REC) is an important public sector enterprise as it is the government’s key strategic partner for driving reforms and developments in the power sector, and providing financing to weaker players (particularly distribution companies or “discoms”) to prevent liquidity disruptions to the sector, similar to its parent Power Finance Corp’s (PFC) mandate.
We view REC’s credit profile as underpinned by strong state support due to its majority 52.63% ownership by PFC, which is in turn 55.99% owned by the government of India (GoI), as well as the key role that it plays in an essential sector of the country.
REC is rated in line with both its parent, PFC, and the Indian sovereign at the international credit rating agencies.
Business Description
AS OF 27 Nov 2025- Established in 1969, Rural Electrification Corp Ltd (REC) is an important public sector enterprise of the Government of India (GoI) due to its mandate of helping to support the country's power sector initiatives. It has been designated as a systematically important NBFC by the Reserve Bank of India (RBI).
- REC went public on the Indian stock exchanges in 2008 but continued to be majority owned by the GoI until March 2019, where the GoI sold its 52.63% shareholding in REC to Power Finance Corp (PFC) for INR 145 bn as part of the GoI's efforts to monetise its shareholding in different public sector enterprises; PFC is in turn 56% owned by the GoI. REC’s non-PFC shareholding is broadly similar to that of its parent, with a 20% share of foreign portfolio investors, 12% individuals, 9% mutual funds, and 6% others.
- REC has continued to be run as a standalone institution despite PFC's majority ownership in the entity.
- Similar to its parent, REC primarily provides funding to the public sector (~86% of its loan book) while the private sector is ~14%. By segment, Transmission & Distribution (T&D) is the largest part of the loan asset mix at 49%, followed by conventional and renewable energy generation at 27% and 12% respectively, while Infrastructure (10%) and Others (3%) round up the rest.
Risk & Catalysts
AS OF 27 Nov 2025Given its mandate, REC has concentrated loan exposure to the power sector which is also chunky in nature; power generation projects typically involve large upfront borrowing and have long gestation periods before the projects become operational. Resolutions of stressed exposures have been with delays due to India’s slow moving Insolvency & Bankruptcy Code (IBC) regime despite the ongoing NCLT reforms, but are gaining traction. Earlier lumpy provisioning and now meaningful reversals are the result.
Asset quality risk is also mitigated by a majority public sector exposure; while many state government discoms are in poor health, REC can get funds meant for the states through the GoI/RBI if payments are overdue.
Like most NBFCs, REC is reliant on the confidence sensitive wholesale market for funding. However, its quasi-government status enables it to have diversified funding sources (onshore and offshore) at costs that are close to the sovereign.
Key Metric
AS OF 27 Nov 2025| INR mn | FY22 | FY23 | FY24 | FY25 | 1H26 |
|---|---|---|---|---|---|
| NIM | 4.07% | 3.38% | 3.57% | 3.63% | 3.64% |
| PPP ROAA | 3.91% | 3.17% | 3.24% | 3.60% | 3.42% |
| ROAA | 2.47% | 2.53% | 2.77% | 2.71% | 2.83% |
| ROE (Reported) | 21.3% | 20.4% | 22.2% | 21.5% | 22.1% |
| Total Equity/Total Assets | 12.42% | 12.41% | 12.56% | 12.65% | 12.94% |
| Tier 1 Ratio | 19.6% | 22.8% | 23.3% | 23.8% | 21.7% |
| Total Capital Ratio | 23.6% | 25.8% | 25.8% | 26.0% | 23.7% |
| Gross NPA Ratio | 4.45% | 3.42% | 2.71% | 1.35% | 1.06% |
| Provisions/Avg Loans | 0.91% | 0.03% | (0.29%) | 0.19% | (0.17%) |
CreditSight View Comment
AS OF 27 Nov 2025REC is 52.63% owned by PFC and along with its parent is one of two policy NBFIs that provides funding for power generation and T&D projects, lending largely to state government utilities (86% of loans) vs. the private sector (14%). Operating performance was on an uptrend in recent years, supported by a material improvement in asset quality and resolution of past stressed assets. Margin expansion since FY23 and robust loan growth also supported a strong topline. Growth momentum however is slowing on higher pre-payments and margins have steadied. The CAR ratio is ~24%. Although a number of state government utilities are in poor health, the NBFIs can get funds meant for the states through the GoI/RBI if they don’t get paid in time. We have RECLIN on Market perform.
Recommendation Reviewed: November 27, 2025
Recommendation Changed: May 22, 2025
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Fundamental View
AS OF 27 Nov 2025Bank Negara Indonesia (BNI) is the fourth largest commercial bank in Indonesia.
The bank is majority-owned by the Indonesian government (60%) and receives strong state support in the form of well-established relationships with SOEs, an area that the bank heavily loans to.
BNI’s asset quality has shown a steady improvement after COVID headwinds in Indonesia, through de-risking its loan portfolio by focusing growth on top tier private corporates. It is now going for balanced loan growth across segments.
Business Description
AS OF 27 Nov 2025- Bank Negara Indonesia was founded in 1946, initially as a central bank, before becoming a commercial bank in 1968. It is now the 4th largest commercial bank in Indonesia by assets.
- The bank is majority-owned by the state (60%) and focuses its lending toward SOEs and domestic corporates.
- BNI's loan book is split 56% corporates, 24% small and medium enterprises and 19% retail, with the remaining coming from its subsidiaries at September 2025.
Risk & Catalysts
AS OF 27 Nov 2025The liquidity environment showed a turning point in September, aided by BI rate cuts, smaller SRBI issuance and yields, higher government spending, and the government’s cash injection into key state banks, supporting loan growth momentum.
While Indonesia’s growth is projected at ~5% in 2025 and could pickup over the medium term under the Prabowo administration, volatile sentiment towards Indonesia over growth slowdown concerns, weak state finances, and governance and policy uncertainties could weigh on spreads.
We see governance risks as increased with the move of SOE banks including BNI to Danantara; higher dividend payouts to fund government policies are likely. However, we are comfortable with the CET1 ratio dropping to the 14-16% range of other APAC banks.
Asset quality is showing pressure in retail and medium commercials, yet BNI is shifting its growth focus from large corporates and safer retail to more balanced mix. We see this as margin pressure and possibly policy driven. There could be more state directed lending to less commercially viable projects, but the effects would take a few years to play out.
Key Metric
AS OF 27 Nov 2025| IDR bn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| PPP ROA | 3.35% | 3.42% | 3.32% | 3.10% | 2.68% |
| ROA | 1.2% | 1.8% | 2.0% | 1.9% | 1.7% |
| ROE | 9.9% | 15.0% | 15.2% | 13.9% | 12.4% |
| Equity/Assets | 12.07% | 12.32% | 13.61% | 14.18% | 12.96% |
| CET1 Ratio | 17.4% | 17.5% | 20.2% | 18.9% | 18.7% |
| NPL Ratio | 3.70% | 2.81% | 2.14% | 1.97% | 1.96% |
| Provisions/Average Loans | 3.23% | 1.83% | 1.41% | 1.08% | 0.95% |
| LDR | 79.9% | 84.0% | 85.7% | 96.3% | 86.9% |
CreditSight View Comment
AS OF 28 Oct 2025BNI is the 4th largest bank in Indonesia by assets and is 60% government owned. It thus has well-established relationships with SOEs. Asset quality was weaker than at Mandiri with a higher NPL ratio and credit costs, but has improved on its pivot to better quality segments since ’21. Funding cost pressure from the tight liquidity environment has eased with recent government stimulus, and loan growth has picked up. Asset quality however is showing strains in retai, despite which it is looking at riskier segments for growth. Fundamentals though remain sound with strong capital and decent profitability. Governance risks have increased with the move to Danantara. We expect capital ratios to decline, but would be fine with a 14-16% CET1 ratio. We currently have BNI on U/P due to tight RV.
Recommendation Reviewed: October 28, 2025
Recommendation Changed: August 04, 2025
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Fundamental View
AS OF 27 Nov 2025Bank Mandiri (Mandiri) is the largest state-owned bank in Indonesia with 60% government ownership. We therefore expect a very high likelihood of government support in times of need.
Mandiri’s strength had been its large corporate loan portfolio, which has allowed the bank to book lower credit costs compared to its peers over the pandemic. Mandiri is well capitalised in line with the other Indonesian banks that have relatively high CET1 ratios in the region, though we expect this to be reduced by higher dividend payouts over time.
Business Description
AS OF 27 Nov 2025- Bank Mandiri was established as a result of the mergers of four state-owned banks, Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia, and Bank Pembangunan Indonesia, in the late 1990s. The bank was first listed in Indonesia Stock Exchange in 2003.
- The Indonesian government holds a 60% stake in the bank. Foreign investors have a 32% shareholding while domestic investors have another 8%.
- Corporates accounted for 38% of total loans, consumer for 7%, micro & payroll for 11%, SME for 5%, commercial for 18% and subsidiaries 21% at September 2025.
Risk & Catalysts
AS OF 27 Nov 2025The liquidity environment showed a turning point in September, aided by BI rate cuts, smaller SRBI issuance and yields, higher government spending, and the government’s cash injection into key state banks, supporting loan growth momentum.
While Indonesia’s growth is projected at ~5% in 2025 and could pickup over the medium term under the Prabowo administration, volatile sentiment towards Indonesia over growth slowdown concerns, weak state finances, and governance and policy uncertainties could weigh on spreads.
We see governance risks as increased with the move of SOE banks including BNI to Danantara; higher dividend payouts to fund government policies are likely. However, we are comfortable with the CET1 ratio dropping to the 14-16% range of other APAC banks.
Asset quality has trended better than peers due to its loan book and growth being predominantly in large corporates. However, we see the possibility of more state directed lending to less commercially viable projects, but the effects would take a few years to play out.
Key Metric
AS OF 27 Nov 2025| IDR bn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| PPP ROA | 3.5% | 3.9% | 4.1% | 3.8% | 3.2% |
| ROA | 1.7% | 2.2% | 2.6% | 2.4% | 2.0% |
| ROE | 14.2% | 19.0% | 22.4% | 20.5% | 17.8% |
| Equity/Assets | 11.9% | 11.5% | 12.0% | 11.7% | 11.0% |
| CET1 Ratio | 18.4% | 18.6% | 20.8% | 19.6% | 18.9% |
| NPL Ratio | 2.72% | 1.92% | 1.19% | 1.12% | 1.19% |
| Provisions/Average Loans | 1.98% | 1.41% | 0.79% | 0.77% | 0.71% |
| LDR | 81% | 81% | 89% | 98% | 94% |
CreditSight View Comment
AS OF 28 Oct 2025Mandiri is the biggest bank in Indonesia by assets and 60% government owned. It weathered the pandemic well given fairly resilient asset quality as large corporates are more than 1/3 of its book. It is however turning to more balanced growth across segments in FY25, and a recent board and management reshuffling could prompt changes to strategy. Funding cost pressure from the tight liquidity environment has eased with recent government stimulus, and loan growth has picked up. Soft economic momentum and higher governance risks however are headwinds. Fundamentals though remain sound with strong capital and healthy profitability. We expect higher dividend payouts to gradually reduce capital ratios but are comfortable with a 14-16% CET1 ratio. We have Mandiri on U/P due to tight RV.
Recommendation Reviewed: October 28, 2025
Recommendation Changed: September 02, 2025
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Search topics about wealth insights and investments.Sumitomo Mitsui Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 26 Nov 2025After reorganising and building up capital for the full impact of Basel 3, SMFG has recently been acquisitive to develop its next phase of growth, and now has a lower capital buffer than Mizuho.
It has a strong retail, mid and large corporate franchise in Japan, but its securities arm SMBC Nikko punches below weight.
Given its size and systemic importance, SMFG is considered too big to fail, and will be supported by the Japanese government if needed.
Business Description
AS OF 26 Nov 2025- The core unit of SMFG is Sumitomo Mitsui Banking Corp (SMBC), whose main predecessors were Sumitomo Bank and Mitsui Bank.
- SMFG's group companies include the securities firm SMBC Nikko, SMBC Trust Bank, SMBC Card Company, SMBC Consumer Finance, Sumitomo Mitsui Finance and Leasing, SMFG India Credit Company (SMICC), Sumitomo Mitsui DS Asset Management, and SMBC Aviation Capital.
- SMFG does not have a large trust business as Sumitomo Trust and Chuo Mitsui Trust chose not to join SMFG, but merged with each other to form the separate Sumitomo Mitsui Trust Holdings.
- It has been acquisitive over the years, particularly in emerging Asia and leasing assets. In 2021, the group took a 49% stake in Vietnam's FE Credit, 74.9% of Indian NBFI Fullerton Capital (now called SMICC), 4.99% of Philippines' RCBC, and 4.5% of US investment bank Jefferies. In 2022, it increased its stake in RCBC to 20%. In 2023, it acquired a 15% stake in Vietnam's VP Bank, and increased its stake in Jefferies from 4.5% to 15%, and in 2024 took its stake in SMICC to 100%. In 2025 it took a 24% stake in India's Yes Bank, and increased its Jefferies stake to 20%.
Risk & Catalysts
AS OF 26 Nov 2025SMFG has the strongest Japan retail franchise amongst its peers, and a very strong corporate banking franchise.
Similar to the other megabanks, SMFG aims to focus more on the US, and reduce low return RWAs in Europe and Asia ex-Japan.
SMFG has made a number of acquisitions and taken stakes in banks and NBFIs in Vietnam, the Philippines, India and Indonesia. The group took JPY 135 bn of goodwill impairments in FY24 on its Vietnam investments. RoE on these investments has been poor.
It has increased its 15% stake in Jefferies to 20%, to develop revenue opportunities for SMBC Nikko. Further investments in SMBC Nikko will be required.
Its CET1 ratio buffer is ~200 bp, which we would like to see maintained.
Key Metric
AS OF 26 Nov 2025| JPY bn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.64% | 0.68% | 0.70% | 0.82% | 0.88% |
| Operating Income/Average Assets | 1.23% | 1.26% | 1.39% | 1.44% | 1.58% |
| Operating Expense/Operating Income | 62% | 61% | 60% | 58% | 53% |
| Pre-Impairment Operating Profit / Average Assets | 0.48% | 0.51% | 0.58% | 0.60% | 0.79% |
| Impairment charge/Average Loans | (0.31%) | (0.22%) | (0.27%) | (0.32%) | (0.16%) |
| ROAA | 0.30% | 0.32% | 0.36% | 0.41% | 0.64% |
| ROAE | 5.9% | 6.5% | 7.0% | 8.0% | 12.5% |
CreditSight View Comment
AS OF 17 Nov 2025SMFG’s banking business had performed well, while its non-bank subsidiaries had underperformed over FY21-22. The group had a better 2H vs a poor 1H23, with improved trading and fee revenues, partially offset by higher credit costs at the non-bank businesses. The group became acquisitive from 2021, taking a 49% stake in a leading Vietnamese NBFI and 15% of its parent (VP Bank), 20% of RCBC of the Philippines, 74.9% of NBFI Fullerton India (now 100%), 4.5% in US IB Jefferies (increasing to 15%), and 24% of India’s Yes Bank for the next stage of growth. Its high CET1 ratio has been whittled down by acquisitions. FY24 results were boosted by share sales and structured investment trusts, 1H25 showed a large jump on base effects. Govt. support is assured. We like its PerpNC10 AT1s for duration.
Recommendation Reviewed: November 17, 2025
Recommendation Changed: August 05, 2025
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