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SMC Global Power
- Sector: Energy
- Sub Sector: Independent Power Producers
- Country: Philippines
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Fundamental View
AS OF 20 Aug 2025We see lower non-call risk for SMC GP’s c.2025 and c.2026 perps owing to strong near-term parental funding support, its recent c.2024 perp refinancing, and recent bond exchange/tender with a new $900 mn c.2029 perp issuance.
We see an improving credit outlook for SMC GP aided by lower thermal coal input costs, new contracts, and capacity additions. Net cash inflows of $2.1-$2.2 bn from the completion of an LNG deal is also positive.
While SMC GP improved its cost passthrough contractual mix from end-FY23 onwards, the company still remains exposed to high thermal coal input costs (~40-50% of contracts).
SMC GP incurs sizable capex that has led to additional debt incurrence and elevated credit metrics.
Business Description
AS OF 20 Aug 2025- SMC GP is a leading power generation and distribution company in the Philippines. Its total generation capacity stands at 4.7 GW, accounting for ~20% of the national grid.
- The bulk of its revenues is derived from power generation (~82%), with the remainder from electricity distribution and retailing (~18%).
- It operates 7 power generating plants across diversified energy sources, comprising coal (~62%), natural gas (~25%), hydro (~12%) and battery energy storage (~1%).
- Through long-term power supply agreements and retail supply contracts, SMC GP either sells electricity directly to customers (including large Philippines power distribution company Manila Electric Company, distribution utilities and other industrial customers), or through the Philippine Wholesale Electricity Spot Market.
- SMC GP acts as the Independent Power Producer Administrator (IPPA) for three power plants (~54% of total capacity), where it has the right to sell electricity generated by the IPPs without having to bear large upfront capital expenditures for plant construction and maintenance.
- SMC GP also distributes and retails electricity services through its wholly-owned subsidiary Albay Power and Energy, which distributes power in the province of Albay, Luzon.
- SMC GP is a wholly-owned unlisted subsidiary of San Miguel Corporation, one of the largest and most diversified conglomerates in the Philippines based on total revenues and assets.
Risk & Catalysts
AS OF 20 Aug 2025SMC GP still has $307 mn/$1.2 bn of c.2025 and c.2026 perps outstanding to be addressed, though we see low non-call risks.
A moderate portion of SMC GP’s off-take contracts do not contain cost pass-through mechanisms. This exposes the company to a rise in thermal coal input costs that could squeeze its EBITDA margins.
SMC GP incurs sizable capex that has spurred additional debt incurrence. Consequently, its credit metrics remain elevated.
Over 80% of SMC GP’s installed capacity is thermal coal or gas-fired, which may be viewed unfavorably from an ESG perspective.
Key Metric
AS OF 20 Aug 2025| PHP bn | FY22 | FY23 | FY24 | 1H24 | 1H25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 69.2% | 62.8% | 64.4% | 62.8% | 59.5% |
| Net Debt to Book Cap | 66.4% | 59.4% | 57.7% | 60.9% | 50.5% |
| Debt/Total Equity | 224.6% | 168.7% | 181.2% | 169.2% | 146.7% |
| Debt/Total Assets | 79.0% | 73.8% | 73.8% | 72.1% | 68.4% |
| Gross Leverage | 19.4x | 12.9x | 11.9x | 10.7x | 10.4x |
| Net Leverage | 18.6x | 12.2x | 10.7x | 10.4x | 8.8x |
| Interest Coverage | 1.4x | 2.2x | 2.3x | 2.4x | 2.2x |
| EBITDA Margin | 13.2% | 26.4% | 26.6% | 30.1% | 37.4% |
CreditSight View Comment
AS OF 02 Oct 2025We lower our rec on SMC GP to M/P from O/P with a preference for its perps c.2029-2030. SMC GP’s c.2025-2026 perps already trade close to par, indicating low non-call concerns among investors and we too think refinancing risk on the c.2025-2026 perps has meaningfully decreased post multiple bond exchange and tender offers. We are comfortable with SMC GP’s improving credit outlook, completion of the $3.3 bn LNG deal, parental support, and management’s willingness and ability to repay the perps. We like SMC GP’s c.2029-2030 perps for their high coupons, and we see the ~8% yields as attractive for a S&SEA HY credit with improving fundamentals. That said, key risks include any weakening of parental funding support (due to SMC’s own sizable infra capex) and overly aggressive capex.
Recommendation Reviewed: October 02, 2025
Recommendation Changed: October 02, 2025
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Search topics about wealth insights and investments.State of Qatar
- Bond: QATAR 3.25 26
- Indicative Yield-to-Maturity (YTM): 3.920%
- Credit Rating : ( Aa2 / AA / AA- )
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Country Overview
AS OF 19 Aug 2025- Hydrocarbon-driven economy: Qatar’s economy is primarily fueled by its vast reserves of oil and natural gas. As the world’s largest exporter of liquefied natural gas (LNG), the country’s economic health and government revenues are highly dependent on global energy prices. This resource has endowed Qatar with one of the world’s highest per capita incomes and significant fiscal strength.
- Vision for diversification: Under its Qatar National Vision 2030, the country is actively working to reduce its reliance on hydrocarbons. The government is investing heavily in developing a knowledge-based economy and promoting sectors like finance, logistics, and tourism to create more sustainable and diversified growth.
- Robust Fiscal Position: Due to high energy prices, Qatar has consistently maintained substantial fiscal and current account surpluses. These surpluses have allowed the government to build significant financial reserves and sovereign wealth, providing a strong economic buffer against external shocks and funding major infrastructure projects.
Macro Fundamentals
AS OF 19 Aug 2025- Pegged currency and monetary policy. The Qatari riyal is pegged to the US dollar, which means the Qatar Central Bank's monetary policy decisions are closely linked to those of the US Federal Reserve. This policy provides a stable exchange rate and helps anchor inflation expectations.
- Strong twin surpluses. Qatar’s external position is exceptionally strong, characterized by persistent and large current account and fiscal surpluses. While these surpluses have moderated from their 2022 peaks as energy prices have stabilized, they are projected to remain in positive territory, ensuring financial stability.
- Significant public and private investment. Both public and private sectors are focused on large-scale infrastructure and development projects. Key investments, such as the massive North Field East LNG expansion and continued growth in the services sector (particularly post-World Cup), are central to the country's economic strategy.
CreditSight View Comment
AS OF 30 Oct 2025Recommendation Reviewed:
Recommendation Changed:
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Search topics about wealth insights and investments.Security Bank (PH)
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: SECBPM 5.5 29
- Indicative Yield-to-Maturity (YTM): 4.694%
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Fundamental View
AS OF 18 Aug 2025Security Bank has historically been a wholesale focused bank. Rapid retail expansion pre-pandemic led to a large asset quality hit when COVID-19 struck. The bank completed working through its risk issues at end-2021 and has resumed brisk growth in the retail book since.
The bank had a less well-established deposit franchise than most peers, resulting in a heavy hit to NIMs when rates rose this cycle. This has led it to focus aggressively on growing the higher yielding retail and MSME segments, the latter via forming a new business banking segment in 2022.
Previously high capital ratios have hence fallen; the CET1 ratio is a low 12-13%.
MUFG is a 20% shareholder of Security Bank.
Business Description
AS OF 18 Aug 2025- Security Bank was established in 1951 and obtained its universal banking license from the BSP in 1994. It is today the 9th largest bank in the Philippines.
- The bank is majority-owned by longtime owner Frederick Y. Dy (23.7%) and MUFG Bank (20%), which acquired its stake in April 2016.
- SB Finance, a joint venture between Security Bank and Thailand's Bank of Ayudhya (Krungsri), a consolidated subsidiary of MUFG, was launched in 2019. The unit is a consumer finance company formed to engage in the unsecured loans business in the Philippines, focusing on the lower mass retail segment.
- Security Bank's loan portfolio is 33% consumer, 3% MSME, 29% middle market and 35% corporate at 1Q25. The consumer and MSME book comprises mortgages (45%), auto loans (23%), credit card (23%) and small business loans (9%).
Risk & Catalysts
AS OF 18 Aug 2025Any rating downgrade of the Philippine sovereign would have a negative impact on Security Bank.
Margin pressure from the bank’s earlier weaker deposit franchise is easing with the declining rate environment and growth focus on the higher yielding retail and MSME (business banking) segments. It is now exercising some prudence in retail loan growth given the emergence of stress in credit cards.
Asset quality is showing strains from the brisk growth in riskier segments as we had anticipated. We remain cautious about the asset quality implications given the relatively thin reserve cover and capital buffer.
Capital ratios have fallen due to brisk RWA growth and are now behind peers. We regard this level as low, but do not rule out capital support from MUFG if needed.
Key Metric
AS OF 18 Aug 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| Net Interest Margin | 4.43% | 4.23% | 4.49% | 4.73% | 4.56% |
| ROA | 1.0% | 1.4% | 1.1% | 1.1% | 1.0% |
| ROE | 5.6% | 8.4% | 7.0% | 8.1% | 8.1% |
| PPP ROA | 2.30% | 2.17% | 1.97% | 2.18% | 2.23% |
| CET1 Ratio | 19.1% | 16.1% | 15.3% | 12.9% | 12.3% |
| Total Equity/Total Assets | 17.88% | 14.94% | 15.62% | 12.50% | 12.80% |
| Gross NPL Ratio | 3.94% | 2.95% | 3.36% | 2.85% | 3.16% |
| Net LDR | 85.7% | 83.0% | 88.8% | 84.6% | 75.0% |
| Liquidity Coverage Ratio | 150% | 144% | 158% | 178% | 194% |
| Net Stable Funding Ratio | 138% | 122% | 131% | 130% | 140% |
CreditSight View Comment
AS OF 19 Aug 2025Security Bank has historically been a wholesale focused bank. Rapid retail expansion leading up to the pandemic led to a large asset quality fallout. It has since resumed aggressive growth in higher yielding but riskier retail and MSME segments to counter NIM pressure. This along with improving funding costs from a declining rate environment has supported the NIM. Asset quality however is showing strains from the brisk growth in riskier segments as we had anticipated, leading it to start exercising some prudence in retail loan growth. We remain cautious about the asset quality implications given the relatively thin reserve cover and capital buffer (~12-13% CET1 ratio). We have an Underperform recommendation.
Recommendation Reviewed: August 19, 2025
Recommendation Changed: May 21, 2024
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Search topics about wealth insights and investments.Bank of Philippine Islands
- Sector: Financial Services
- Sub Sector: Banks
- Country: Philippines
- Bond: BPIPM 5 30
- Indicative Yield-to-Maturity (YTM): 4.40%
- Credit Rating : BBB
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Fundamental View
AS OF 14 Aug 2025Bank of the Philippine Islands (BPI) is the 3rd largest bank in the Philippines by assets.
We view the bank as too big to fail given its systemic importance in the country. There is also a strong probability of support from the government in addition to its main shareholder, the Ayala Corporation if needed.
BPI has a long history, and we view it as a fundamentally sound bank with strong and improved profitability, and comfortable liquidity. Capital management however has become less conservative, and while asset quality is relatively well managed, we are keeping an eye on strong growth in the non-wholesale book.
Business Description
AS OF 14 Aug 2025- The history of the Bank of the Philippine Islands traces back to 1851. It is the oldest bank in the Philippines and South East Asia. It was first listed on the Philippine Stock Exchange in 1971, and became a universal bank in 1982.
- Ayala Corporation, one of the biggest conglomerates in the country, became BPI's dominant shareholder in 1969. Ayala Corp still holds a 49% stake in the bank.
- BPI has been acquisitive across the years. It merged with Far East Bank and Trust Company and acquired Ayala Insurance Holdings Corp in 2000. It acquired DBS Bank Philippines in 2001 and Prudential Bank Philippines in 2005. DBS was a shareholder of BPI but exited its position in 2013. More recently in January 2024, it completed the acquisition of the Gokongwei conglomerate's Robinsons Bank.
- The bank is predominantly a corporate bank with 70% of its loan book outstanding to corporates, and the balance to MSME and retail as of 2Q25. The bank intends to further raise the MSME and retail segment share of loans.
Risk & Catalysts
AS OF 14 Aug 2025Any rating downgrade of the Philippine sovereign would have a negative impact on BPI.
Direct impact from US tariffs is limited given that the Philippines is not a major goods exporter, but there will be second order effects from a slowdown in regional and global growth. Loan growth will continue to be retail/MSME driven in FY25.
BPI’s strong focus on unsecured retail and MSME growth has put some pressure on asset quality, and provision reserves have been pared down. We see asset quality risks, but BPI’s wholesale-focused book (70% of total loans) provide comfort and provisioning capacity is strong.
There is NIM pressure from declining policy rates, and another 50 bp of cuts are expected in 2H25. BPI however is on track for NIM expansion this year on the back of a strong pivot towards better yielding retail/MSME, as well as by RRR reductions and a reduced liquidity drag.
Key Metric
AS OF 14 Aug 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| PPP ROA | 2.01% | 2.41% | 2.52% | 2.78% | 2.97% |
| Reported ROA (Cumulative) | 1.10% | 1.59% | 1.93% | 1.98% | 2.01% |
| Reported ROE (Cumulative) | 8.4% | 13.1% | 15.4% | 15.1% | 14.9% |
| Net Interest Margin | 3.30% | 3.59% | 4.09% | 4.31% | 4.58% |
| CET1 Ratio | 15.8% | 15.1% | 15.3% | 13.9% | 14.5% |
| Total Equity/Total Assets | 12.1% | 12.2% | 12.4% | 13.0% | 13.5% |
| NPL Ratio | 2.49% | 1.76% | 1.84% | 2.13% | 2.25% |
| Provisions/Loans | 0.91% | 0.58% | 0.22% | 0.32% | 0.64% |
| Liquidity Coverage Ratio | 221% | 195% | 207% | 159% | n/m |
| Net Stable Funding Ratio | 155% | 149% | 154% | 146% | n/m |
Our View
AS OF 19 Aug 2025BPI is the third largest bank in the Philippines with a long history. Its traditionally conservative approach has led to a loss of loan market share in the past, as well as a lower NIM than BDO and MBT. Recent brisk expansion in higher yielding retail and MSME loans has strongly improved profitability levels and driven NIM expansion despite rate cuts. While asset quality has slipped with the loan mix shift, it remains acceptable. However, we are watchful of risks from the strong growth in the non-wholesale book as provision reserves have been pared down to lower levels than peers. Still, we are overall comfortable with BPI given the large wholesale book (70% of loans) and underwriting record, strong provisioning capacity and comfortable liquidity. We have BPI on U/P from an RV standpoint.
Recommendation Reviewed: August 19, 2025
Recommendation Changed: May 21, 2025
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Fundamental View
AS OF 14 Aug 2025UBS agreed to acquire Credit Suisse in March 2023 after the latter collapsed following a severe liquidity crisis.
CS was a large and complex organisation, so the integration, and the inevitable associated losses and costs, will dominate UBS’s strategic outlook and financial performance for several years.
However, UBS was able to negotiate substantial downside protection which should shield it from losses at CS.
Away from CS, UBS has reshaped its business model, with a greater emphasis on wealth management and less focus on investment banking, particularly fixed income.
Its earnings remain somewhat dependent on capital market conditions, but its capital, asset quality and profitability ratios have been among the strongest for European banks.
Business Description
AS OF 14 Aug 2025- Headquartered in Zurich, Switzerland, UBS has private, corporate and institutional clients worldwide and retail clients in Switzerland. It is one of the world's largest wealth managers.
- It completed the acquisition of CS on 12 June 2023. It has merged CS’s domestic Swiss bank (Credit Suisse Schweiz AG) with its own domestic bank (UBS Switzerland AG) in 2024, keeping the CS brand “for the time being”.
- CS’s holding company (Credit Suisse Group AG) has been merged into UBS Group AG, so that the group has a single holding company, and the operating subsidiaries, including UBS AG and Credit Suisse AG, were merged on 31 May 2024.
- UBS operates through its Corporate Center and four business divisions: Global Wealth Management, Personal & Corporate Banking, Asset Management, and the Investment Bank, plus a new Non-core and Legacy division following the acquisition of CS.
- The Investment Bank has been restructured in recent years to scale back fixed income trading and focus on equities trading and origination & advisory business.
Risk & Catalysts
AS OF 14 Aug 2025The acquisition of CS will be a long and complex process, and the necessary restructuring is likely to result in losses and costs, although UBS has substantial protection, not least in the large negative goodwill.
Litigation costs have been a feature of UBS’s results in recent years, although it has agreed settlements in various cases recently.
A French court imposed fines and civil damages of €4.5 bn ($5.1 bn) in February 2019, which UBS appealed. The Court of Appeal retried the case de novo in March 2021 and reduced the fine to €3.75 mn plus civil damages of €800 mn and confiscation of €1 bn. UBS has set aside reserves of €1.1 bn. The French Supreme Court overturned the penalties and damages in November 2023, and the case has been remanded to the Court of Appeal for a retrial.
Key Metric
AS OF 14 Aug 2025| $ mn | 2Q25 | Y24 | Y23 | Y22 | Y21 |
|---|---|---|---|---|---|
| Return On Equity | 10.9% | 6.0% | 38.4% | 13.0% | 12.4% |
| Total Revenues Margin | 3.0% | 3.0% | 2.9% | 3.1% | 3.2% |
| Cost/Income | 80.5% | 84.8% | 95.0% | 72.1% | 73.6% |
| CET1 Ratio (Transitional) | 14.4% | 14.3% | 14.3% | 14.2% | 15.0% |
| CET1 Ratio (Fully-Loaded) | 14.4% | 14.3% | 14.4% | 14.2% | 15.0% |
| Leverage Ratio (Fully-Loaded) | 5.5% | 5.8% | 5.4% | 5.7% | 5.7% |
| Liquidity Coverage Ratio | 182% | 188% | 216% | 164% | 155% |
| Impaired Loans (Gross)/Total Loans | 0.6% | 0.6% | 0.4% | 0.4% | 0.4% |
CreditSight View Comment
AS OF 29 Oct 2025We have Market perform recommendations on UBS AG (operating bank) and UBS Group (holding company) having revised the HoldCo recommendation from Underperform in August 2024. Its rescue and takeover of Credit Suisse in March 2023 was a seminal event that has had major consequences for UBS’s strategy and financial performance, as well as carrying substantial execution risk. However, the integration is on track, and UBS’s performance has been steadily improving. Capital, asset quality and liquidity all look strong, although Swiss regulatory capital requirements are set to increase significantly in coming years.
Recommendation Reviewed: October 29, 2025
Recommendation Changed: August 14, 2024
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Search topics about wealth insights and investments.Meta Platforms
- Sector: TechnologyTechnology Media and Telecommunications
- Sub Sector: Technology
- Country: US
- Bond: META 4.95 33
- Indicative Yield-to-Maturity (YTM): 4.95%
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Fundamental View
AS OF 13 Aug 2025While Meta is executing strongly from a product perspective, we are concerned by its surging AI investments and regulatory risks. Meta acquired a 49% stake in Scale AI for $14 bn in 2Q25. The company expects capex to have “similarly significant” dollar growth in 2026; this implies it could be ~$100 bn or ~45% of sales in 2026.
There are also concerns on the regulatory front. We could potentially see a ruling in the next several months from the FTC suit which is seeking to unwind prior acquisitions of Instagram and WhatsApp. In addition, the EC’s DMA decision could require modifications that impact its European revenue. Gross leverage is 0.3x although net cash declined sharply to $18.2 bn in 2Q25. We also think Meta could be in the market fairly soon with a jumbo bond deal.
Business Description
AS OF 13 Aug 2025- Meta Platforms is the largest social networking company in the world. Meta's advertising revenue is primiarly from Facebook and Instagram, although also on Messenger, Whatsapp, Threads, and third-party affiliated websites and apps.
- In 2Q25, Family of Apps was 99% of revenue (98.0% from advertising and 1.2% from other) and Reality Labs was 1% of revenue. Reality Labs generated $18.1 bn in operating losses during LTM 2Q25.
- There are 3.48 bn Family Daily Active People (DAP) as of 2Q25, and the Family Average Revenue per Person (ARPP) was $13.65 quarterly in 2Q25.
- Meta is headquartered in Menlo Park, California. Employee headcount was >75.9k at 2Q25.
Risk & Catalysts
AS OF 13 Aug 2025In December 2020, the FTC filed a lawsuit against Meta seeking to unwind prior acquisitions of Instagram and Whatsapp.
Meta’s business model relies almost entirely on user-generated content, exposing it to customer privacy concerns and regulatory changes (e.g., Section 230 protections).
Surging capex for AI and continued investments in Reality Labs could weaken the balance sheet although Meta has reportedly raised $29 bn in external financing from PIMCO and Blue Owl for its Louisiana data center project.
We continue to expect Meta to be a regular/annual issuer to fund its shareholder returns and massive investments.
A potential ban of TikTok (extended through 9/17/2025) would positively impact Meta and others with short-form video products.
Key Metric
AS OF 13 Aug 2025| $ mn | 2021 | 2022 | 2023 | 2024 | LTM 2Q25 |
|---|---|---|---|---|---|
| Revenue YoY % | 37.2% | (1.1%) | 15.7% | 21.9% | 19.4% |
| EBITDA | 63,882 | 49,622 | 71,955 | 101,568 | 112,933 |
| EBITDA Margin | 54.2% | 42.6% | 53.3% | 61.7% | 63.2% |
| CapEx % of Sales | 16.3% | 27.5% | 20.8% | 23.8% | 30.6% |
| Sh. Ret. % of CFO-CapEx | 116% | 152% | 46% | 68% | 78% |
| Net Debt | (47,998) | (30,815) | (47,018) | (48,989) | (18,239) |
| Gross Leverage | 0.0x | 0.2x | 0.3x | 0.3x | 0.3x |
| EV / EBITDA | 14.0x | 5.8x | 12.3x | 14.5x | 16.6x |
CreditSight View Comment
AS OF 31 Jul 2025While Meta is executing strongly from a product perspective, we are concerned by its surging AI investments and regulatory risks. Meta acquired a 49% stake in Scale AI for $14 bn in 2Q25. The company expects capex to have “similarly significant” dollar growth in 2026; this implies it could be ~$100 bn or ~45% of sales in 2026. There are also concerns on the regulatory front. We could potentially see a ruling in the next several months from the FTC suit which is seeking to unwind prior acquisitions of Instagram and WhatsApp. In addition, the EC’s DMA decision could require modifications that impact its European revenue. Gross leverage is 0.3x although net cash declined sharply to $18.2 bn in 2Q25. We also think Meta could be in the market fairly soon with a jumbo bond deal.
Recommendation Reviewed: July 31, 2025
Recommendation Changed: July 31, 2025
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Search topics about wealth insights and investments.Amazon.com
- Sector: ConsumerTechnology Media and Telecommunications
- Sub Sector: Retail/GrocersTechnology
- Region: US
- Bond: AMZN 4.65 29
- Indicative Yield-to-Maturity (YTM): 3.99%
- Credit Rating : A1/AA/AA-
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Fundamental View
AS OF 13 Aug 2025- We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. While the AWS growth rate is below peers, it is a $123 bn run-rate business with high-teens growth and operating margins in the 30s%. We continue to believe that Amazon will be a winner in Generative AI given the breadth of its cloud business, custom silicon (Trainium, Inferentia), and Bedrock platform.
- Leverage declined slightly to 0.4x gross and 0.9x lease-adjusted gross. While Amazon’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. Also, Amazon’s market cap is $2.4 tn. There are risks related to the FTC suit although we view a breakup as unlikely.
Business Description
AS OF 13 Aug 2025- Amazon is an e-commerce company which sells a wide range of its own products and those of 3rd party sellers. Amazon offers fulfillment services for 3rd party sellers (FBA) and sells cloud computing services (AWS). In 2Q25, 3rd party units were 62% of total paid units, and FBA units are a majority of 3rd party units.
- In LTM 2Q25, NA segment was 60% of sales, International was 22% of sales, and AWS was 17% of sales.
- Amazon disclosed it surpassed 200 mn Prime members in April 2021. The annual membership was increased in February 2022 from $119 to $139 in the US, although fees vary by country. In mid-2019, Amazon Prime began to transition from 2-day to 1-day shipping. Amazon Prime also offers Prime Video, streaming music, and other benefits.
- In 2006, Amazon launched AWS which remains the leader in cloud computing (IaaS/PaaS). Amazon sells its own devices (e-reader, smart speaker, streaming media player, etc.).
Risk & Catalysts
AS OF 13 Aug 2025- We think Amazon has moderate event risk given its large size (~$2.4 tn market cap).
- While Amazon is increasing its Capex spend, we are encouraged by the ~$19.6 bn reduction in lease-adjusted debt from its peak in 1Q23 through 2Q25.
- Amazon continues to face regulatory scrutiny. In September 2023, the FTC and 17 states filed a lawsuit against Amazon and accused the company of (1) punishing sellers for offering lower prices elsewhere and (2) making Prime eligibility conditional on usage of fulfillment services. The biggest risk would be a breakup, although we view that as unlikely.
- Amazon’s $14 bn acquisition of Whole Foods has shown its proclivity for large M&A, although the regulatory environment could make large deals challenging.
Key Metric
AS OF 13 Aug 2025| $ mn | 2020 | 2021 | 2022 | 2023 | 2024 | LTM 2Q25 |
|---|---|---|---|---|---|---|
| Revenue YoY % | 37.6% | 21.7% | 9.4% | 11.8% | 11.0% | 10.9% |
| EBITDA | 57,284 | 71,994 | 74,593 | 110,305 | 144,162 | 156,248 |
| EBITDA Margin | 14.8% | 15.3% | 14.5% | 19.2% | 22.6% | 23.3% |
| CapEx % of Sales | 12.1% | 13.3% | 11.5% | 8.5% | 12.3% | 15.6% |
| Sh. Ret. % of CFO-CapEx | 0% | 0% | n/m | 0% | 0% | 0% |
| Net Debt | (50,497) | (44,453) | 8,516 | (19,451) | (43,051) | (36,925) |
| Gross Leverage | 0.6x | 0.7x | 1.1x | 0.6x | 0.4x | 0.4x |
| EV / EBITDA | 28.3x | 23.3x | 11.7x | 14.4x | 16.1x | 14.9x |
CreditSight View Comment
AS OF 01 Aug 2025We continue to have confidence in CEO Andy Jassy and the company’s long-term business for both AWS and Stores. While the AWS growth rate is below peers, it is a $123 bn run-rate business with high-teens growth and operating margins in the 30s%. We continue to believe that Amazon will be a winner in Generative AI given the breadth of its cloud business, custom silicon (Trainium, Inferentia), and Bedrock platform. We estimate leverage declined slightly to 0.4x gross and 0.9x lease-adjusted gross. While Amazon’s capex has been ramping, along with other hyperscalers, we are encouraged by its debt reduction over the past few years and zero shareholder returns. Also, Amazon’s market cap is $2.5 tn. There are risks related to the FTC suit although we view a breakup as unlikely.
Recommendation Reviewed: August 01, 2025
Recommendation Changed: May 01, 2024
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Fundamental View
AS OF 13 Aug 2025Standard Chartered has been making good progress in the past few years, improving its asset quality and profitability and dealing with legacy litigation issues. Capital, funding and liquidity look solid.
However, tensions between China and the West, including reciprocal trade tariffs between the US and China, and global economic headwinds continue to cloud the near term outlook.
Its unusual business mix – headquartered and regulated in the UK but operating primarily in Asia, Africa and the Middle East – means it is well diversified but sensitive to geopolitical developments and emerging market volatility.
Business Description
AS OF 13 Aug 2025- Standard Chartered PLC is the holding company and listed entity of the group, in which Standard Chartered Bank is the main operating company.
- Although Standard Chartered is headquartered in London and therefore subject to UK banking regulation, its operations are mainly in Asia (Hong Kong is its biggest single market, Africa and the Middle East. It is present in over 60 markets.
- It has the usual variety of businesses across these regions, including corporate and institutional banking, retail banking, commercial banking and private banking. It specialises in trade finance and cross-border cash management.
- It is classified as a G-SIB, with a regulatory capital buffer of 1%.
Risk & Catalysts
AS OF 13 Aug 2025Political tensions in Hong Kong, a slowing economy in China and a weak commercial real estate sector, and a US/China trade war have threatened the growth and stability of some of Standard Chartered’s key markets.
A number of Standard Chartered’s markets have underperformed in the past but are now seen as turnaround stories, including India, Korea, Indonesia and the UAE.
The group has had to improve its AML and sanctions controls. In April 2019, it paid a $947 mn fine to US authorities over breaches of US sanctions and a £102 mn fine to the UK FCA for AML weaknesses.
Key Metric
AS OF 13 Aug 2025| $ mn | 2Q25 | Y24 | Y23 | Y22 | Y21 |
|---|---|---|---|---|---|
| Return on Equity | 12.8% | 8.0% | 7.0% | 5.7% | 4.5% |
| Total Revenues Margin | 2.5% | 2.3% | 2.2% | 2.0% | 1.8% |
| Cost/Income | 57.9% | 64.0% | 64.1% | 66.9% | 74.3% |
| CET1 Ratio (Transitional) | 14.3% | 14.2% | 14.1% | 14.0% | 14.1% |
| CET1 Ratio (Fully-Loaded) | 14.3% | 14.2% | 14.1% | 13.9% | 14.1% |
| Leverage Ratio (Fully-Loaded) | 4.7% | 4.8% | 4.7% | 4.8% | 4.9% |
| Loan Impairment Charge | 0.2% | 0.2% | 0.2% | 0.3% | 0.1% |
| Impaired Loans (Gross)/Total Loans | 2.1% | 2.2% | 2.5% | 2.5% | 2.7% |
CreditSight View Comment
AS OF 13 Aug 2025We revised our recommendation on Standard Chartered HoldCo senior from Underperform to Market perform on 26 April 2023, but we changed our recommendations on Tier 2 and AT1 from Fair to Rich on 10 January 2024. The changes reflect StanChart’s recent resilient performance, while taking into account the potential impact from US tariffs policies and exposure to China. Capital and liquidity ratios are robust, and profitability has improved significantly, but the bank continues to face geopolitical tensions inherent in its extensive operations in Hong Kong, China and the rest of Asia.
Recommendation Reviewed: August 13, 2025
Recommendation Changed: April 26, 2023
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Fundamental View
AS OF 13 Aug 2025UOB has strong stand-alone credit profile and benefits from the high likelihood of support from the government of Singapore, where it is one of the three major local banks.
The bank is more focused on Singapore and Southeast Asia than on Greater China; its traditional strengths are the SME and retail sectors, although its large corporate book is now over 60% of loans.
UOB has been conservatively managed with a sound risk profile, a strong focus on liquidity and a long track record of relatively good performance.
Business Description
AS OF 13 Aug 2025- UOB was established in 1935 as a Chinese family-owned bank catering to the Hokkien (Fujian) community, Singapore's largest Chinese ethnic sub-group. The Wee family owns about 18% of the shares. A further 5.2% is held by the Lien family which previously controlled Overseas Union Bank, which UOB merged within 2001. The Wee family has significant real estate and hospitality interests in Singapore and regionally.
- UOB's main markets are Singapore and Malaysia where its presence dates back to before Singapore's independence. It expanded through acquisitions in Thailand (Bank Radanasin and Bank of Asia) and Indonesia (Bank Buana), and more recently bought over Citi's consumer franchise in Malaysia, Thailand, Indonesia and Vietnam.
- Franchise strengths are in SME and consumer lending. Building & construction accounts for 27% of loans, followed by housing at 24%, financial institutions at 12% and general commerce at 11% at 4Q24.
- Loans by geography comprise Singapore at 50% of loans, Greater China at 14%, Malaysia at 10%, Thailand at 8%, and Indonesia at 3% at 2Q25.
Risk & Catalysts
AS OF 13 Aug 2025UOB has a greater focus on Southeast Asia than its Singapore bank peers, which leaves it open to more asset quality risk in a downturn / high interest rate environment. It has 8% of its loan book in Thailand, where we are cautious about macroeconomic conditions.
The bank has benefited more from the final Basel III rules implementation than its peers – its CET 1 ratio was previously the lowest among the three but now aligns with peers.
Its NPL coverage ratio of 88% is around 50-70 ppt behind peers. However, both collateral and UOB’s SGD 2.8 bn in general provisions will be more than sufficient.
Key Metric
AS OF 13 Aug 2025| SGD mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| PPP ROA | 1.23% | 1.31% | 1.52% | 1.51% | 1.50% |
| ROA | 0.92% | 0.99% | 1.19% | 1.19% | 1.05% |
| ROE | 10.2% | 11.9% | 14.2% | 13.7% | 11.7% |
| Equity to Assets | 9.3% | 8.6% | 8.8% | 9.2% | 9.4% |
| CET1 Ratio (fully-loaded) | 13.5% | 13.3% | 13.4% | 15.4% | 15.1% |
| NPL Ratio | 1.62% | 1.58% | 1.52% | 1.53% | 1.56% |
| Provisions / Loans | 0.20% | 0.20% | 0.25% | 0.27% | 0.34% |
| Liquidity Coverage Ratio | 133% | 147% | 158% | 143% | 142% |
| Net Stable Funding Ratio | 116% | 116% | 120% | 116% | 118% |
CreditSight View Comment
AS OF 08 Aug 2025UOB is conservatively run with a large family ownership and a sound balance sheet. The bank is more focused on Singapore and Southeast Asia than on Greater China. Outside Singapore, its main operations in ASEAN are in Thailand, Malaysia and Indonesia which collectively make up ~20% of its loan book. It acquired Citi’s consumer operations in Thailand, Malaysia, Indonesia and Vietnam, which has been good for the franchise. The bank has benefitted more from the final Basel III rules implementation than its peers – its CET 1 ratio was previously the lowest among the three but now the three banks have similar CET 1 ratios. UOB’s reserve cover is about 50-70 ppt behind the other two peers.
Recommendation Reviewed: August 08, 2025
Recommendation Changed: July 04, 2017
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Fundamental View
AS OF 13 Aug 2025DBS Group has sound standalone fundamentals and benefits from its strong home country. Support may be stronger than peers thanks to its longstanding relationship with the government and Temasek’s ~29% stake.
DBS is a major player in Asian corporate banking, and also has strengths in mass market and private banking. It is also one of Asia’s leading digital banks. Acquisitions have been skillfully handled in the past decade or so.
DBS has performed well in recent years, with a high RoE, and its asset quality has been more resilient than that at UOB and OCBC thanks to its greater exposures to large corps.
Business Description
AS OF 13 Aug 2025- DBS was established in 1968 as a development bank but was subsequently privatised and is now commercially run. The Singapore government retains an indirect stake through its investment vehicle, Temasek (~29%).
- In 1998, DBS moved beyond its wholesale bank origins with the acquisition of POSB that brought along a large mass market customer and deposit base. In 2001, it acquired the former Dao Heng Bank in Hong Kong and in 2008, it acquired a part of the failed Bowa Bank in Taiwan, to supplement its Greater China operations. It also regularly acquired wealth management businesses, such as SocGen's Asian private banking business in 2014 and ANZ's Asian retail and wealth management businesses in Singapore, Hong Kong, China, Taiwan and Indonesia in 2018. Recent acquisitions include Lakshmi Vilas Bank in India, a 16.69% stake in China's Shenzhen Rural Commercial Bank, and Citi's consumer business in Taiwan. The bank is also reportedly considering expanding into Malaysia by purchasing Temasek's 29.1% stake in Alliance Bank Malaysia Bhd.
- As of 1H25, Singapore accounted for 45% of its loan book, with HK (13%), Rest of Greater China (13%), South & Southeast Asia (9%) and Rest of the World (20%) accounting for the rest.
- The bank is well regarded as a digital leader in the banking space, and has steadily built capabilities in private banking and markets businesses.
Risk & Catalysts
AS OF 13 Aug 2025Loan growth has been a recent challenge, with ongoing high repayments in Greater China and potential impact from tariffs.
Asset quality has outperformed the other two Singapore majors with very low credit costs.
The bank encountered some operational issues recently. On 30 April 2024, the MAS removed its restriction on DBS’s non-essential activities, which had been imposed in Nov-23 following IT failures. Its retail payments system had another outage on 2 May 2024.
DBS has an estimated 5%+ of its loan book in India, which is facing the threat of 50% US tariffs. While management said that there is a limited first order impact to DBS given its limited exposure in India to the most affected sectors (textiles, jewelry, apparel, etc.), this remains an area to monitor closely.
Key Metric
AS OF 13 Aug 2025| SGD mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| PPP ROA | 1.14% | 1.32% | 1.60% | 1.69% | 1.71% |
| ROA | 1.0% | 1.1% | 1.4% | 1.5% | 1.4% |
| ROE | 12.5% | 15.0% | 18.0% | 18.0% | 17.0% |
| Equity/Assets | 8.38% | 7.65% | 8.40% | 8.32% | 8.14% |
| CET1 Ratio (fully loaded) | 14.4% | 14.6% | 14.6% | 15.1% | 15.1% |
| NPL Ratio | 1.27% | 1.13% | 1.11% | 1.09% | 1.01% |
| Provisions / Loans | 0.01% | 0.06% | 0.14% | 0.14% | 0.21% |
| Liquidity Coverage Ratio | 135% | 146% | 144% | 147% | 147% |
| Net Stable Funding Ratio | 123% | 117% | 118% | 115% | 114% |
CreditSight View Comment
AS OF 13 Aug 2025DBS performed well for several years under CEO Piyush Gupta, who was succeeded by Ms. Tan Su Shan in March 2025. It has comfortable capital and well managed liquidity. Temasek is the main shareholder. DBS has grown its various businesses sensibly and has been a leading bank for adopting digital technology, recent technology outages notwithstanding. It has also steadily grown its fee income and its regional businesses. WM and transaction banking have been focuses, with bolt-on acquisitions/stakes in private banking and Asian retail banking, more recently in India (Lakshmi Vilas Bank), China (SZRCB) and Taiwan (Citi consumer business). It delivered record high FY4 profits and 1H25 results were peer-leading. Credit costs are very low.
Recommendation Reviewed: August 13, 2025
Recommendation Changed: June 03, 2016
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