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Siam Commercial Bank
- Sector: Financial Services
- Sub Sector: Banks
- Country: Thailand
- Region: Thailand
- Bond: SCBTB 3.9 24
- Indicative Yield-to-Maturity (YTM): 5.573% (Indicative as of March 2)
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Fundamental View
AS OF 02 Apr 2025Siam Commercial Bank (SCBTB) has been a sound and profitable bank. It has a focus on the retail segment and targets to increase margins by growing personal unsecured lending. Recent credit costs however have been elevated due to the retail exposure.
It announced a major business overhaul in September 2021 to establish a new parent company called SCB X to segregate the group’s core banking services from its new fintech and digital businesses and to enable greater flexibility and independence. The capital buffer is strong at both the Holdco (SCB X) and Bank (SCB) level.
Business Description
AS OF 02 Apr 2025- Siam Commercial Bank was founded as the "Book Club" in 1904. In 1907, it started operating as a commercial bank and was renamed as "The Siam Commercial Bank". It completed its IPO on the Stock Exchange of Thailand in 1976.
- The bank is 23.58% owned by the King of Thailand, and a further 23.32% is owned by the Vayupak Fund 1, which is controlled by the government.
- SCB is the fourth largest Thai bank by assets and is known for its robust retail franchise.
- Its loan profile was 35% corporate, 17% SME, and 48% retail as of December 2024.
Risk & Catalysts
AS OF 02 Apr 2025The bank’s new strategic direction is sensible given limited domestic growth opportunities, but it comes with execution risk since the fintech and platform space are new to SCB, as well as higher credit costs. However, we take comfort in the ringfencing of the bank unit (SCB) from the Group’s riskier business units, and capital support to the Gen 2/3 businesses is subject to a minimum 16% CET1 ratio being maintained at the bank.
We expect NIMs at the Thai banks to see a further decline this year on the back of policy rate cuts. Margin pressure at SCB X however is mitigated by a strong deposit franchise and a growth focus on higher yielding retail loans. Loan growth however is likely to remain modest in FY25 given a still soft growth outlook for Thailand.
Credit costs are elevated due to SCBX’s greater retail exposure and the macro backdrop of sluggish growth and high household debt. Even so, SCB X’s higher NIM and low-to-mid 40%s cost-income ratio provide comfortable room to absorb its higher credit costs and maintain a similar level of returns as peers.
Key Metric
AS OF 02 Apr 2025| THB mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 2.58% | 2.63% | 2.50% | 2.88% | 2.87% |
| ROA | 0.9% | 1.1% | 1.1% | 1.3% | 1.3% |
| ROE | 6.7% | 8.4% | 8.3% | 9.3% | 9.1% |
| Equity/Assets | 12.6% | 13.4% | 13.5% | 14.1% | 14.2% |
| CET1 Ratio | 17.2% | 17.6% | 17.7% | 17.6% | 17.7% |
| Reported NPL ratio | 3.68% | 3.79% | 3.34% | 3.44% | 3.37% |
| Provisions/Loans | 2.14% | 1.84% | 1.45% | 1.82% | 1.76% |
| Gross LDR | 93% | 93% | 93% | 99% | 97% |
| Liquidity Coverage Ratio | 188% | 202% | 216% | 217% | n/m |
CreditSight View Comment
AS OF 22 Apr 2025SCB is the 4th largest bank in Thailand and has a leading retail franchise. Asset quality during COVID was poor. It created a new HoldCo structure (SCBX) in 2022 to shift digital units and unsecured retail loans outside the bank, and pledged a >16% CET1 ratio at SCB. The BOT has also ringfenced SCB which further reduces the risk for the SCBTB bonds. The NIM has been strong vs. peers as expected. COVID Blue scheme loans though still sit within SCB, and with higher retail exposure amid elevated household debt have resulted in credit costs staying high, but these have been comfortably absorbed. However, we move SCBTB to U/P as we see a significant impact to the Thai economy and banks from potential US tariffs; we think it should trade slightly behind the top Indian and Philippine banks.
Recommendation Reviewed: April 22, 2025
Recommendation Changed: April 22, 2025
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Search topics about wealth insights and investments.Kasikornbank
- Sector: Financial Services
- Sub Sector: Banks
- Region: Thailand
- Bond: KBANK 5.458 28
- Indicative Yield-to-Maturity (YTM): 4.77%
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Fundamental View
AS OF 01 Apr 2025Kasikornbank (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.
Business Description
AS OF 01 Apr 2025- KBank is currently the second largest bank in Thailand. It briefly was the largest from 2018 until mid-2020, upon which Bangkok Bank completed its acquisition of Indonesia's Bank Permata and took its place.
- KBank's history can be traced back to 1945 when it was first established as Thai Farmers Bank. It was listed on the Stock Exchange of Thailand in 1976 and changed its name to Kasikornbank in 2003.
- As of end-December 2024, the bank's loan mix by segment consists of 40% corporate, 26% SME, 28% retail and 6% others.
- KBank is known for its strong SME franchise. Its focus industries in SME are construction, construction materials, food & beverage, and hardware.
- It partially owns a life insurance company, Muang Thai Life.
Risk & Catalysts
AS OF 01 Apr 2025Loan 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.
We expect NIMs at the Thai banks to see a further decline this year on the back of policy rate cuts. KBANK’s switch to focus on safer segments is also weighing on the NIM, though it currently remains higher compared to most of its peers.
Credit costs remain elevated compared to peers due to the soft macroeconomic backdrop and challenged SMEs, given KBANK’s larger SME and restructured book. KBANK’s higher NIM and low-40%s cost-income ratio however provide comfortable room to absorb its higher credit costs and maintain a similar level of returns as peers, and the focus on safer segments seems is also helping to stabilize credit costs. Its prolonged balance sheet cleanup has concluded at YE24 and management guided for credit costs to return to a normalized 140-160 bp range this year.
Key Metric
AS OF 01 Apr 2025| THB mn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 2.44% | 2.38% | 2.36% | 2.52% | 2.57% |
| ROA | 0.85% | 0.98% | 0.86% | 0.99% | 1.13% |
| ROAE | 7.0% | 8.3% | 7.3% | 8.2% | 8.9% |
| Equity / Assets | 13.4% | 13.1% | 13.4% | 13.9% | 14.6% |
| CET1 Ratio | 15.5% | 15.5% | 15.9% | 16.5% | 17.3% |
| Gross NPL ratio | 3.93% | 3.76% | 3.19% | 3.19% | 3.18% |
| Provisions / Loans | 2.05% | 1.73% | 2.11% | 2.08% | 1.89% |
| Gross LDR | 96% | 93% | 91% | 92% | 92% |
| Liquidity Coverage Ratio | 161% | 174% | 164% | 195% | n/m |
CreditSight View Comment
AS OF 22 Apr 2025Kasikornbank is the 2nd largest bank in Thailand. We are cautious about its one third loan book exposure to SMEs given the macro backdrop; credit costs spiked in 4Q22 mainly from the SME book and high yield small ticket lending, and the restructured loan book remains sizable compared to peers. The bank however has switched to focus on safer segments, which is weighing on the NIM but helped to stabilize credit costs. Credit costs remain fairly elevated but comfortably absorbed thus far. Capital is high with CET1 above 17%. The NIM though is on a decline from rates coming down. We also see a significant impact to the Thai economy and banks from potential US tariffs, and think it should trade slightly behind the top Indian and Philippine banks. We therefore move KBANK to U/P.
Recommendation Reviewed: April 22, 2025
Recommendation Changed: April 22, 2025
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Fundamental View
AS OF 28 Mar 2025NAB is a leader in business banking, and has improved product and capability in mortgages and personal lending. It retreated from its overseas and insurance operations between 2014-17, to focus on its core business and consumer banking franchises in Australia and New Zealand.
Andrew Irvine, who previously ran Business & Private Banking for a few years, took over as the new CEO in Apr-24.
Capital is strong, and liquidity comfortable; its 90+ DPD mortgage ratio has been steadily worsening but provisions are strong.
Business Description
AS OF 28 Mar 2025- NAB's business banking unit has for long been strong in the Australian middle market. Institutional banking and markets are important but the group's push into global capital markets activities led to losses on higher risk positions during the 2008 crisis and a winding back of some of its wholesale markets business.
- Following the sale of Great Western Bank and the UK spin-off of Clydesdale and Yorkshire Banks in 2016, NAB is focused on its core business in Australia and New Zealand where it owns Bank of New Zealand.
- It sold to Nippon Life 80% of its insurance business in 2015 (this was de-consolidated in FY2016) followed by the remaining 20% in Dec-24, and its asset and wealth management unit, MLC Wealth, in Aug-20.
- In Australia, NAB has a market share of ~21% of business lending and ~14% for housing loans. Its area of strength is middle-market commercial lending where it has a 27% market share of SME lending, and credit cards, where it has a ~27% marketshare as a result of acquiring Citi's Australian retail business in 2022.
Risk & Catalysts
AS OF 28 Mar 2025Being the leading business bank in Australia, NAB is exposed to the health of Australia’s middle market companies. High interest rates have started affected business lending asset quality, and NAB’s mortgage book 90+ DPD (1.08% at Sep-24) is the worst amongst the majors. However, FY24 collective provisions / credit RWAs were strong at 1.47%.
Competition has intensified in the business banking segment, particularly from CBA; as the largest player NAB has more to lose.
NAB and CBA took mortgage market share from Westpac and ANZ when the latter two had operational issues processing mortgage applications during COVID-19; we expect it to maintain its market share.
Key Metric
AS OF 28 Mar 2025| AUD mn | Y20 | Y21 | Y22 | Y23 | Y24 |
|---|---|---|---|---|---|
| Return on Equity | 6.4% | 10.6% | 11.7% | 12.9% | 11.6% |
| Total Revenues Margin | 2.0% | 1.9% | 1.8% | 2.0% | 1.9% |
| Cost/Income | 44.7% | 46.5% | 45.2% | 43.7% | 46.6% |
| APRA CET1 Ratio | 11.5% | 13.0% | 11.5% | 12.2% | 12.4% |
| International CET1 Ratio | 15.8% | 18.0% | 16.9% | 17.8% | 18.1% |
| APRA Leverage Ratio | 5.8% | 5.8% | 5.1% | 5.2% | 5.1% |
| Impairment Charge/Avg Loans | 0.5% | (0.0%) | 0.0% | 0.1% | 0.1% |
| Gross Impaired Loans/Gross Loans | 0.3% | 0.2% | 0.2% | 0.2% | 0.2% |
| Liquidity Coverage Ratio | 139% | 122% | 131% | 140% | 137% |
| Net Stable Funding Ratio | 127% | 123% | 119% | 116% | 117% |
CreditSight View Comment
AS OF 07 May 2025NAB is Australia’s leading mid-market business bank. It stumbled during the global financial crisis and profitability was then held back by its under-performing UK operations. These were spun off in 2016; results now reflect its profitable businesses in ANZ. It managed through the pandemic well despite its SME focus, and took mortgage share vs. ANZ and WSTP who had mortgage processing issues. Asset quality is seeing a mild deterioration but the bank has granular collective provisions. In Aug-21 it announced the acquisition of Citi’s Australian consumer business. In May-22, the bank agreed a settlement with financial crimes agency AUSTRAC to improve its AML/CTF controls. FY22/1H23 results for the bank were strong, followed by a challenging 2H23 and 1H24. 1H25 has been better.
Recommendation Reviewed: May 07, 2025
Recommendation Changed: October 05, 2016
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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 Apr 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 loans), which has undergirded its stable asset quality during and post-COVID; it was faced with asset quality challenges in the past, but fundamentals have improved as it de-risked its loan book. We see greater NIM pressure on KTB 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. The CET1 ratio though is solid at ~18% and the loan mix is safer than peers. We have it on M/P as the $ AT1 trades fair versus other SSEA banks.
Recommendation Reviewed: April 22, 2025
Recommendation Changed: April 22, 2025
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Search topics about wealth insights and investments.Commonwealth Bank of Australia
- Sector: Financial Services
- Sub Sector: Banks
- Region: Australia
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Fundamental View
AS OF 28 Mar 2025CBA has a very strong franchise in Australia; it is the leader in the retail market and is making good progress in challenging NAB in business banking.
It has been the best managed of the Australian banks for many years, and has outperformed peers. It lost some of its luster in the latter part of the 2010s due to regulatory and compliance lapses amid charges of complacency, but has since improved into a better institution.
Its capital and liquidity position is robust, while asset quality is strong.
Business Description
AS OF 28 Mar 2025- Originally established by the Australian government in 1911, CBA functioned for some time as Australia's central bank until the establishment of the Reserve Bank of Australia in 1959. It remained under government ownership until the early 1990s, after which it underwent a transformation from a bureaucratic public sector bank into a widely respected commercial organisation.
- Over the past twenty years, CBA has consolidated its position as the leading bank in Australia with a 24-28% share in household deposits and lending, helped by its acquisition during the 2008 crisis of Bank of Western Australia.
- In New Zealand it owns ASB Bank, but otherwise has been selling non-core assets, including its life insurance business.
Risk & Catalysts
AS OF 28 Mar 2025CBA’s financial health is closely linked to the Australian economy, in particular retail credit quality, mainly housing loans.
Earnings/NIMs are under pressure from strong mortgage market and deposit competition. Business banking growth however has been stellar and highly profitable.
Losses on housing loans have been minimal; the low stock on the housing market has led to home prices rising from Mar-23 onwards, contrary to expectations. Low rental vacancy rates (1%) and low unemployment rates (~4%) have been very supportive of asset quality. House prices are currently going through a soggy patch, but we are not concerned.
Key Metric
AS OF 28 Mar 2025| AUD mn | Y21 | Y22 | Y23 | Y24 | 1H25 |
|---|---|---|---|---|---|
| Return on Equity | 11.7% | 12.7% | 14.0% | 13.6% | 13.8% |
| Total Revenues Margin | 2.3% | 2.1% | 2.2% | 2.2% | 1.1% |
| Cost/Income | 47.0% | 46.3% | 43.7% | 45.0% | 45.2% |
| APRA CET1 Ratio | 13.1% | 11.5% | 12.2% | 12.3% | 12.2% |
| International CET1 Ratio | 19.4% | 18.6% | 19.1% | 19.1% | 18.8% |
| APRA Leverage Ratio | 6.0% | 5.2% | 5.1% | 5.0% | 4.9% |
| Impairment Charge/Avg Loans | 0.1% | (0.0%) | 0.1% | 0.1% | 0.0% |
| Gross Impaired Loans/Total Loans | 0.4% | 0.3% | 0.4% | 0.4% | 0.5% |
| Liquidity Coverage Ratio | 129% | 130% | 131% | 136% | 127% |
| Net Stable Funding Ratio | 129% | 130% | 124% | 116% | 116% |
CreditSight View Comment
AS OF 06 Mar 2025CBA operates like a well-oiled machine in the Australian banking market. It has the leading position in mortgages and deposits, and is challenging NAB in business banking. An AUSTRAC penalty in 2018 damaged its reputation and remediation costs impacted earnings for a couple of years. The bank sold a number of its non-bank business and equity investments to simplify and focus on its core domestic businesses. Strong mortgage market and deposit competition had capped NIMs despite higher cash rates. Business banking growth has been stellar and highly profitable. Asset quality is comfortable and capital robust. It is our preferred name amongst the Aussie banks. Its seniors are tight but its 03/34 Tier 2 trades fair.
Recommendation Reviewed: March 06, 2025
Recommendation Changed: October 05, 2016
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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
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Search topics about wealth insights and investments.Chile
- Bond: CHILE 3.125 26
- Indicative Yield-to-Maturity (YTM): 4.272%
- Credit Rating : A/A2/A-
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Country Overview
AS OF 28 Mar 2025- Chile is one of Latin America’s largest economies, ranking 46th globally in GDP, with an estimated USD 328.72 billion in 2024.
- It is classified as a developing, upper-middle-income, and emerging market economy, highlighting its progressive economic development and market accessibility.
- The mining sector is the primary driver of economic growth, with copper and carbonates as key exports, mainly to China, the US, and Japan.
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Fundamental View
AS OF 27 Mar 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.
Business Description
AS OF 27 Mar 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 34% shareholding while domestic investors have another 6% as of December 2024.
- Corporates accounted for 37% of total loans, consumer for 7%, micro for 11%, SME for 5%, commercial for 18% and subsidiaries 22% at end-December 2024.
Risk & Catalysts
AS OF 27 Mar 2025The liquidity environment has tightened again since Q4 which puts strain NIMs and loan growth. The LDR has reached a tight level (98%), and the outlook remains challenging given the high USDIDR volatility and seasonally tight liquidity in the first half.
While Indonesia’s growth is projected at a reasonable ~5% in 2025 and could pickup over the medium term under the Prabowo administration, current weak investor sentiment towards Indonesia macro over growth slowdown, weak state finances, and policy uncertainty under the Prabowo administration will weigh on spreads. We are cautious of higher dividend payouts under the new government to fund its more aggressive fiscal policies.
There is asset quality stress in the mass retail segment. Asset quality however has trended better than peers due to its loan book and growth focus being predominantly on large corporates, and capital is solid with a >19% CET1 ratio.
Key Metric
AS OF 27 Mar 2025| IDR bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| PPP ROA | 3.4% | 3.5% | 3.9% | 4.1% | 3.8% |
| ROA | 1.2% | 1.7% | 2.2% | 2.6% | 2.4% |
| ROE | 8.5% | 14.2% | 19.0% | 22.4% | 20.5% |
| Equity/Assets | 12.3% | 11.9% | 11.5% | 12.0% | 11.7% |
| CET1 Ratio | 18.4% | 18.4% | 18.6% | 20.8% | 19.6% |
| NPL Ratio | 3.09% | 2.72% | 1.92% | 1.19% | 1.12% |
| Provisions/Average Loans | 2.73% | 1.98% | 1.41% | 0.79% | 0.77% |
| LDR | 83% | 81% | 80% | 87% | 98% |
CreditSight View Comment
AS OF 30 Apr 2025Mandiri is the biggest bank in Indonesia by assets and is 60% government owned. It has weathered the pandemic relatively well as more than 1/3 of the bank’s loan book consists of large corporates, which is a strength in a volatile market, but it is turning to more balanced growth across segments in FY25. Funding cost pressure from the tight liquidity environment remains a headwind and loan growth will hence be a challenge this year. However, fundamentals remain sound; we like Mandiri because of its more resilient asset quality than peers, strong capital and overall healthy profitability. We expect higher dividend payouts to reduce capital ratios over time but are comfortable with a 14-16% CET1 ratio. We have Mandiri to O/P as we like the wide spread on its new $ 3Y senior.
Recommendation Reviewed: April 30, 2025
Recommendation Changed: March 19, 2025
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 27 Mar 2025ICICI Bank is one of the leading private banks in India and has a good diversified business model, with well regarded life and general insurance subsidiaries.
Under its previous CEO, the bank suffered setbacks from sizeable bad debt problems in FY17/18, but the situation has since stabilised following a leadership change and the bank has done well ever since.
Business Description
AS OF 27 Mar 2025- The original Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 by the World Bank, the Government of India and representatives of Indian industry as a financial institution to provide Indian businesses with medium and long-term project financing.
- In 1994, ICICI established a commercial banking subsidiary, ICICI Bank as India's financial sector opened up, and in 2002 ICICI merged with ICICI Bank, keeping the latter's name.
- Retail now accounts for 52% of its loan book, corporates are at 21%, while rural and business banking & SMEs are at 6% and 19% respectively, and overseas (which is being de-emphasised) consists of just 2% at F3Q25.
- The bank has well regarded life insurance (ICICI Prudential) and general insurance (ICICI Lombard) businesses.
Risk & Catalysts
AS OF 27 Mar 2025India banking system liquidity is tight and so the Indian banks have moderated their loan growth to minimize the impact on NIMs and returns, and as the RBI has guided banks to align their loan and deposit growth. ICICI however has continued to deliver both relatively strong loan and deposit growth momentum, while maintaining its leading LDR and profitability, in testament to its strong franchise.
The RBI has commenced the rate cutting cycle with a 25 bp reduction in February, and we do anticipate more rate cuts to come through which will feed through to lower NIMs over the coming quarters.
We are cautious about Indian unsecured retail and microfinance given a stretched urban middle and lower-middle class consumer with high inflation and interest costs, and economic activity in India has slowed as we had anticipated. ICICI’s earlier prudence towards the segment than peers however is keeping asset quality well controlled. We are watchful though of the MSME and business banking segments where growth has been brisk.
Leadership and governance issues under the previous CEO Ms. Chanda Kochhar have been dealt with well, since her replacement in Oct-18.
Key Metric
AS OF 27 Mar 2025| INR bn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| NIM | 3.69% | 3.96% | 4.48% | 4.53% | 4.29% |
| ROAA | 1.39% | 1.77% | 2.13% | 2.37% | 2.37% |
| ROAE | 12.3% | 14.7% | 17.2% | 18.7% | 18.2% |
| Equity/Assets | 12.0% | 12.1% | 12.6% | 12.7% | 13.4% |
| CET1 Ratio | 16.7% | 17.3% | 16.9% | 15.4% | 13.9% |
| Gross NPA Ratio | 4.96% | 3.60% | 2.81% | 2.16% | 1.96% |
| Provisions/Loans | 2.05% | 0.97% | 0.65% | 0.30% | 0.37% |
| PPP ROA | 3.13% | 2.97% | 3.28% | 3.36% | 3.41% |
CreditSight View Comment
AS OF 05 May 2025ICICI Bank is a preferred name among the Indian FIs we cover. We like the bank’s robust capital and loan loss buffers, strong asset quality, as well as peer leading margins, profitability and liquidity position. Under its previous CEO, the bank suffered setbacks from sizable bad debt problems in FY17/18 but the situation has since stabilised following a leadership change. The bank has emerged stronger from a capital, asset quality and earnings perspective, as it de-risked its book, and took pro-active actions to protect its capital by raising equity and selling small stakes in its well-regarded insurance subsidiaries to raise funds and set aside more general provisions. ICICI last issued a $ bond in 2017.
Recommendation Reviewed: May 05, 2025
Recommendation Changed: December 07, 2020
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
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Fundamental View
AS OF 27 Mar 2025Pfizer has ample financial resources, strong ability to de-lever, and sizeable 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 27 Mar 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 $17 bn acquisition of Hospira, ~$12 bn acquisition of Biohaven, ~$6 bn acquisition of Arena, ~$5 bn acquisition of GBT, ~$14 bn takeover of Medivation and ~$43 bn acquisition of Seagen.
- The company has also completed the sale of its Nutrition business to Nestle for $11.9 bn and the disposition of its animal health business, Zoetis. More recently, the company executed the separation of its Consumer and Upjohn businesses through distinct transactions.
Risk & Catalysts
AS OF 27 Mar 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 recently completed the $43 bn acquisition of Seagen, which resulted in well over a turn of leverage deterioration.
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 27 Mar 2025| $ mn | Y19 | Y20 | Y21 | Y22 | Y23 | LTM 4Q24 |
|---|---|---|---|---|---|---|
| Revenue | 41,172 | 41,651 | 81,288 | 101,175 | 59,553 | 63,627 |
| Gross Profit | 32,921 | 33,167 | 50,467 | 66,831 | 34,599 | 45,776 |
| R&D | (8,394) | (8,709) | (10,360) | (11,428) | (10,679) | (10,822) |
| SG&A | (12,750) | (11,597) | (12,703) | (13,677) | (14,771) | (14,730) |
| Adj. EBITDA | 22,447 | 18,027 | 33,354 | 46,153 | 22,904 | 25,867 |
| Total Debt | 52,150 | 39,836 | 38,436 | 35,829 | 71,888 | 64,351 |
| Gross Leverage | 2.3x | 2.2x | 1.2x | 0.8x | 3.1x | 2.5x |
| Interest Coverage | 16.7x | 13.1x | 26.6x | 46.8x | 39.2x | 10.2x |
CreditSight View Comment
AS OF 29 Apr 2025We reiterate our Outperform recommendation on Pfizer. While we are less-than-impressed with Pfizer’s late-stage pipeline, we see the spread pickup over peers such as BMY (M/P) and MRK (U/P) as worthy of adding exposure given PFE’s financial flexibility.
Recommendation Reviewed: April 29, 2025
Recommendation Changed: January 05, 2024
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group