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Fundamental View
AS OF 14 May 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.
Business Description
AS OF 14 May 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 YE24, Singapore accounted for 45% of its loan book, with HK (14%), Rest of Greater China (13%), South & Southeast Asia (8%) and Rest of the World (19%) 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 14 May 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.
Non-interest income performance was very strong in FY24, establishing a high baseline for FY25. WM fee income growth remained strong in 1Q25.
Key Metric
AS OF 14 May 2025| SGD mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 1.14% | 1.32% | 1.60% | 1.69% | 1.77% |
| ROA | 1.0% | 1.1% | 1.4% | 1.5% | 1.4% |
| ROE | 12.5% | 15.0% | 18.0% | 18.0% | 17.3% |
| Equity/Assets | 8.38% | 7.65% | 8.40% | 8.32% | 8.17% |
| CET1 Ratio (fully loaded) | 14.4% | 14.6% | 14.6% | 15.1% | 15.2% |
| NPL Ratio | 1.27% | 1.13% | 1.11% | 1.09% | 1.10% |
| Provisions / Loans | 0.01% | 0.06% | 0.14% | 0.14% | 0.28% |
| Liquidity Coverage Ratio | 135% | 146% | 144% | 147% | 145% |
| Net Stable Funding Ratio | 123% | 117% | 118% | 115% | 115% |
CreditSight View Comment
AS OF 09 May 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. Credit costs are very low, despite a 10 bp increase in 1Q25 to build up buffers against tariff uncertainties.
Recommendation Reviewed: May 09, 2025
Recommendation Changed: June 03, 2016
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
How may we help you?
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): 4.500%
- Credit Rating : BBB
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Fundamental View
AS OF 14 May 2025- Bank 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 May 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.
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- 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 71% of its loan book outstanding to corporates, and the balance to MSME and retail as of 1Q25. The bank's target is to grow the MSME and retail segment to a 30% share of loans.
Risk & Catalysts
AS OF 14 May 2025- Any 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 particularly as some businesses put borrowing plans on hold.
- BPI’s strong focus on unsecured retail and MSME growth has put pressure on asset quality, and provision reserves have also been pared down. We see asset quality risks, but BPI’s large corporates-focused book (71% of total loans) provide comfort and provisioning capacity is strong.
- We also expect increased margin pressure with more rate cuts anticipated from the BSP now in 2025 to support growth. However, management expects to maintain a flattish FY25 NIM, supported by RRR reductions and a continued pivot towards better yielding retail/MSME.
Key Metric
AS OF 14 May 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 2.01% | 2.41% | 2.52% | 2.78% | 2.96% |
| Reported ROA (Cumulative) | 1.10% | 1.59% | 1.93% | 1.98% | 2.05% |
| Reported ROE (Cumulative) | 8.4% | 13.1% | 15.4% | 15.1% | 15.4% |
| Net Interest Margin | 3.30% | 3.59% | 4.09% | 4.31% | 4.49% |
| CET1 Ratio | 15.8% | 15.1% | 15.3% | 13.9% | 14.7% |
| Total Equity/Total Assets | 12.1% | 12.2% | 12.4% | 13.0% | 13.7% |
| NPL Ratio | 2.49% | 1.76% | 1.84% | 2.13% | 2.26% |
| Provisions/Loans | 0.91% | 0.58% | 0.22% | 0.32% | 0.53% |
| Liquidity Coverage Ratio | 221% | 195% | 207% | 159% | n/m |
| Net Stable Funding Ratio | 155% | 149% | 154% | 146% | n/m |
Our View
AS OF 21 May 2025Despite the heightened risk associated with growth in non-wholesale loans, BPI continues to demonstrate strong liquidity, a well-managed corporate loan portfolio (which accounts for 73% of total loans), and a solid underwriting track record. With adequate provisioning and a robust capital position, the bank remains a stable and dependable option for bond investors.
Recommendation Reviewed: May 21, 2025
Recommendation Changed: May 21, 2025
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
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Fundamental View
AS OF 09 May 2025Macquarie was tested during the global financial crisis, but managed to steer through the crisis without reporting losses. A strong balance sheet mitigated liquidity problems, but its banking unit had to turn to Australia’s central bank at that time for support.
The group has an impressive track record of managing risks and achieving good returns, and has built capabilities in a number of areas. Divestments are controlled based on the market environment. It has been a beneficiary of market volatility in the commodity space. Its Australian mortgage book has also shown strong but sensible growth.
Business Description
AS OF 09 May 2025- Macquarie grew out of the Australian business of Hill Samuel Australia, commencing operations in 1969. Macquarie Group Ltd (MGL) is the holding company and listed entity, under which there is the banking group Macquarie Bank Ltd (MBL) which consists of the Banking & Financial Services (BFS) and Commodities & Global Markets (CGM) businesses, and a non-banking group which consists of the Macquarie Asset Management (MAM) and Macquarie Capital (MC) businesses.
- From the 1990s, the group has been associated with the "Macquarie Model" which focused on identifying cash-generating infrastructure assets & packaging them into funds that could be sold, with Macquarie taking fees as banker, arranger and asset manager.
- It acquired asset managers including Delaware Investments in the US and Blackmont Capital in Canada, boutique investment bank Fox-Pitt Kelton and specialists such as Tristone Energy (Canada). It acquired US asset manager, Waddell & Reed in April 2021, which added around US$76 bn of assets under management. It has announced the sale of its public AM business in the US and Europe to Nomura.
- MAM has AUM of ~A$938 bn as of FY24, mostly in "traditional" funds management but also including its specialist infrastructure and real assets funds.
Risk & Catalysts
AS OF 09 May 2025Macquarie has sizable exposures to credit and equity risk, and so could be adversely impacted by falls in asset prices. In addition, volatile/weak markets could impede its ability to exit some of its investments. Its earnings profile partially depends on exits and therefore is lumpy in nature. So far it has managed this risk well.
As a relatively small group operating mainly in wholesale markets, it is vulnerable to a liquidity freeze, but it mitigates this through running a well-matched and liquid balance sheet.
It is a global leader in infrastructure investments and is well positioned for the green transition. It has been a strong beneficiary of volatility in commodity markets, a testament to its risk management capabilities.
Its banking unit, MBL, has been subject to enforcement action in Apr-21 by APRA over the incorrect treatment of some intra-group funding arrangements resulting in a A$500 mn operational risk overlay being applied as well as LCR and NSFR add-ons.
Key Metric
AS OF 09 May 2025| AUD mn | 1H23 | 2H23 | 1H24 | 2H24 | 1H25 |
|---|---|---|---|---|---|
| Operating Income | 8,910 | 10,666 | 8,060 | 9,011 | 8,570 |
| Operating Expense/Operating Income | 62.8% | 61.3% | 73.4% | 68.2% | 69.1% |
| Net Profit | 2,305 | 2,877 | 1,415 | 2,107 | 1,612 |
| ROAE | 15.6% | 18.1% | 8.7% | 12.9% | 9.9% |
| Total Impairments/Op Profit | 8.6% | 4.1% | (5.5%) | (8.8%) | 2.8% |
| Annuity Business Profit Contribution | 43.3% | 27.0% | 36.6% | 36.4% | 44.2% |
| MBL CET1 Ratio (APRA) | 12.8% | 13.7% | 13.2% | 13.6% | 12.8% |
| MBL Liquidity Coverage Ratio | 172% | 214% | 199% | 191% | 194% |
| MBL Net Stable Funding Ratio | 116% | 124% | 114% | 115% | 110% |
CreditSight View Comment
AS OF 13 May 2025Macquarie has a strong record of profitability since its inception. Its asset mgmt business focused on infrastructure, and more recently green assets, is a global leader. It manages risks and returns effectively, and in FY22+23 was a large beneficiary of O&G and power price volatility. The Australian banking business has steadily gained mortgage marketshare. Large investment disposals from asset mgmt and Macquarie Capital led to a record year in FY22; strong commodities outperformance led to another record in FY23. FY24 income was lower on lower a) asset realisations and b) gas & power inventory management and trading income. 2H25 net income was helped by asset sales. Capital is adequate, ALM is conservative, and being APRA regulated is a plus. We like the bank AT1s and short dated T2s.
Recommendation Reviewed: May 13, 2025
Recommendation Changed: July 25, 2024
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
How may we help you?
Search topics about wealth insights and investments.International Container Terminal Services Inc
- Sector: Transportation
- Sub Sector: Shipping and Infrastructure
- Country: Philippines
- Bond: ICTPM 3.5 31
- Indicative Yield-to-Maturity (YTM): 4.96%
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Fundamental View
AS OF 07 May 2025We expect ICTSI to remain resilient amid global growth slowdown fears owing to yield improvements and strong cost control.
ICTSI has steadily deleveraged over the past 5 years which we see as prudent financial management. Yet management’s recent lean towards growth at the expense of deleveraging could restrain improvements in credit metrics.
While ICTSI is exposed to material EM-related geopolitical risks, we think its geographically diversified revenue base across 20 countries limits country-specific risks.
While sizable capex and high dividend payouts could strain ICTSI’s credit profile, we take comfort in ICTSI’s robust OCF generation that should keep FCFs positive.
Business Description
AS OF 07 May 2025- ICTSI develops and operates common user container terminals, with a focus on those within Origin and Destination (O&D) ports based in emerging markets.
- ICTSI provides integrated ports services that facilitate the receiving, handling and storage of cargo. These are broadly split into four streams: vessel charges (i.e. services relating to moving cargo on and off ships), yard charges (i.e. services relating to moving cargo in the container and storage yards), storage fees (i.e. services relating to cargo and container storage), and other ancillary fees.
- ICTSI currently operates across 32 port concessions in 19 countries. As of end-FY23, ICTSI's revenues are well diversified across the Philippines (27% of total), Other Asia (14%), EMEA (20%) and the Americas (39%).
- ICTSI operates its container terminals under long-dated concession agreements (typically ~25 years) with the relevant local port authorities or governments. For some concessions, fees charged to customers are regulated by the authorities that prescribe maximum price limits and, in some cases, allow for CPI-linked tariff hikes. For other concessions, fees charged are unregulated and allow for greater price-setting flexibility and volatility too.
- ICTSI is required to make periodic fee payments to the respective authorities for the right to operate the concessions. These payments are typically a combination of fixed charges and variable charges based on cargo traffic volume or gross revenues.
Risk & Catalysts
AS OF 07 May 2025ICTSI is exposed to EM-related geopolitical, regulatory and operating risks. That said, we think the impact is mitigated by its geographically diversified revenue base across 20 countries that limits country-specific risks.
Trade uncertainties from Trump’s policies could hamper cargo volume growth.
Growing capex tendencies and high dividend payouts could strain ICTSI’s free cash flows and credit metrics, though we think the impact is mitigated by ICTSI’s robust operating cash flow generation.
While ICTSI is exposed to FX depreciation risks as most of its revenues and cash expenses are in EM currencies, natural hedging has been fairly effective thus far.
Key Metric
AS OF 07 May 2025| $ mn | FY22 | FY23 | FY24 | 1Q24 | 1Q25 |
|---|---|---|---|---|---|
| Debt to Book Cap | 71.9% | 73.0% | 70.1% | 77.0% | 76.3% |
| Net Debt to Book Cap | 58.2% | 61.0% | 52.6% | 60.2% | 63.1% |
| Debt/Total Equity | 255.3% | 269.9% | 233.9% | 334.1% | 321.4% |
| Debt/Total Assets | 62.5% | 60.3% | 58.2% | 63.7% | 59.1% |
| Gross Leverage | 3.1x | 2.9x | 2.5x | 3.1x | 2.3x |
| Net Leverage | 2.5x | 2.4x | 1.9x | 2.4x | 1.9x |
| Interest Coverage | 4.6x | 4.4x | 4.9x | 4.5x | 5.1x |
| EBITDA Margin | 62.8% | 63.0% | 65.0% | 64.9% | 65.7% |
CreditSight View Comment
AS OF 07 May 2025We have a Market perform recommendation on ICTSI. We think ICTSI 2030 and 2031 trades fairly to PLDT 2031 and Globe Telecom 2030. We expect ICTSI’s credit metrics could remain improve slightly in FY25 as steady yield improvements and sturdy domestic trade activity could outweigh high capex, potential M&A, and trade uncertainties from Trump’s policies. While ICTSI is exposed to EM-related geopolitical and operating risks (notably in the Mid East and Russia-Ukraine), we believe these are mitigated by its highly geographically diversified revenues. We also expect ICTSI’s robust cash-generative business to drive positive free cash flows even amid persisting capex and dividends. We see low non-call risk for the ICTSI c.2026 perp
Recommendation Reviewed: May 07, 2025
Recommendation Changed: August 16, 2023
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
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Fundamental View
AS OF 07 May 2025BDO Unibank (BDO) is the largest bank in the Philippines in terms of assets & market share.
Given its size and systemic importance, BDO is considered too big to fail and is strongly likely to be supported by its controlling shareholder SM Investments, as well as the Philippine government in times of stress.
BDO is widely viewed as the soundest bank in the country given its strong fundamentals, well-diversified businesses, and good management.
Business Description
AS OF 07 May 2025- BDO Unibank was established as Acme Savings Bank in 1968, and was then acquired by SM Investments in 1976. It became a commercial bank in 1994 and a universal bank in 1996.
- BDO was listed in May 2002. SM Investments remains the bank's largest shareholder with a 41% stake.
- BDO has expanded through a series of M&As. Among its key transactions, it merged with Dao Heng Bank Philippines in 2001, Banco Santander Philippines in 2003, UOB Philippines in 2005, Equitable PCI Bank in 2007, GE Money Bank in 2009, Citibank Savings, DB Trust and Real Bank in 2014, One Network Bank in 2015 (the largest rural bank in the Philippines), and RB Pandi's banking business in 2019. It also acquired the insurance business of Generali in the Philippines in 2016.
- BDO has the largest distribution network in the country and is ranked the largest bank in terms of consolidated resources, total assets, loans, deposits and trust funds under management.
- Its loan book is split 50% large corporates, 25% middle market, and 25% consumer at 1Q25. 42% of the consumer book comprises mortgages, 27% are credit cards, 13% are auto loans and the remaining are personal loans (13%) and others (5%).
Risk & Catalysts
AS OF 07 May 2025Direct impact from US tariffs is limited given that the Philippines is not a major goods exporter, but the second order effects from a slowdown in regional and global growth are not insignificant.
Loan growth is thus likely to continue to be retail-led in FY25 as businesses put borrowing plans on hold. We see few asset quality risks for BDO given a comfortable NPL cover (1Q25: 143%) and build up of the CET1 ratio (1Q25: 14.4%), as well as BDO’s large corporates book (50% of total loans) and underwriting track record.
We see increased margin pressure with more rate cuts anticipated from the BSP now in 2025 to support growth. An overall NIM reduction in FY25 is likely despite reserve requirement ratio (RRR) cuts and an increasing retail share in the overall loan mix.
Any rating downgrade of the Philippine sovereign would negatively impact BDO.
Key Metric
AS OF 07 May 2025| PHP mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| NIM | 4.05% | 4.14% | 4.37% | 4.35% | 4.31% |
| Reported ROA (Cumulative) | 1.2% | 1.5% | 1.7% | 1.8% | 1.6% |
| Reported ROE (Cumulative) | 10.4% | 13.0% | 15.2% | 15.1% | 13.8% |
| Equity/Assets | 11.7% | 11.3% | 11.5% | 11.8% | 12.1% |
| CET1 Ratio | 13.6% | 13.4% | 13.8% | 14.1% | 14.4% |
| NPL ratio | 2.8% | 2.0% | 1.9% | 1.8% | 1.8% |
| Provisions/Loans | 0.72% | 0.64% | 0.59% | 0.46% | 0.37% |
| PPP ROA | 2.1% | 2.3% | 2.7% | 2.5% | 2.2% |
| Liquidity Coverage Ratio | 145% | 141% | 123% | 132% | 131% |
| Net Stable Funding Ratio | 124% | 124% | 124% | 122% | n/m |
CreditSight View Comment
AS OF 21 May 2025BDO is the largest bank in the Philippines. Management is well-regarded, the business is well-diversified and it is the market leader in many business lines. The NIM has peaked with the turn in policy rates, but non-interest income is close to a third of operating income given good fee generation and overall core profitability is strong. Management aims to sustain returns via normalized credit costs, asset rebalancing towards loans and the reduced RRR requirement. We remain comfortable with BDO given the large corporate book and comfortable NPL cover, as well as underwriting track record, which provide comfort around the robust growth in retail loans. Capital has also been steadily built up with the CET1 ratio at 14.4% at 1Q25. We have BDO on Market perform.
Recommendation Reviewed: May 21, 2025
Recommendation Changed: November 28, 2023
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
How may we help you?
Search topics about wealth insights and investments.Woori Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Country: Korea
- Bond: WOORIB 4.875 28
- Indicative Yield-to-Maturity (YTM): 5.108% (Indicative as of March 2)
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Fundamental View
AS OF 06 May 2025Woori FG’s performance record had been less consistent than some of its more commercially focused peers but improved in FY21-22. Its FY23 performance lagged behind its peers, affected by not only the kitchen sinking provisioning exercise but also uniquely amongst the FGs, taking a hit on its other non-interest income. It posted peer-leading profit growth in FY24, partially thanks to not having the ELS compensation issue which hit the other three FGs in 1Q24, but 1Q25 performance was softer due to the same reason.
Asset quality used to be a strength with the lowest NPL ratios and credit costs among the four FGs but has deteriorated since 2Q23, and we no longer see a gap with the other FGs.
Capital standing is a relative weakness with the CET 1 ratio at 12.4% compared to above 13% at peers.
Business Description
AS OF 06 May 2025- Woori's predecessor banks were rescued by the Korea Deposit Insurance Corporation (KDIC) following the 1997 Asian Financial Crisis.
- Woori Bank is one of Korea's 'Big Four' commercial banks. It previously owned two regional banks, Kwangju and Kyongnam, but these were spun off in 2014. Woori also sold its stake in Woori Investment Securities and its savings bank and life insurance arms to NH Financial Group.
- Woori set up a HoldCo (Woori FG) in January 2019 to expand into more diversified business lines, particularly investment banking. It used to have a HoldCo, but it was dissolved in 2014 when it was merged with Woori Bank.
- Its main subsidiaries are 100%-owned Woori Card, Woori Financial Capital (auto leasing), Woori Investment Bank and 72.3%-owned Woori Asset Trust. In August 2024, the group relaunched securities business by acquiring Korea Foss Securities and merging it with Woori Investment. The group has also obtained conditional approval to take over Tongyang Life Insurance and ABL Life Insurance.
Risk & Catalysts
AS OF 06 May 2025Woori FG was for many years majority-owned by the Korean government via the Deposit Insurance Corporation (KDIC), but KDIC has steadily been selling down its shareholding, and Woori purchased and cancelled the remaining shares in 2024. That said, Woori FG remains a large, systemically important bank with strong potential government backing if needed.
Woori FG is less diversified than its peers, with most of its earnings coming from the bank and small contributions from the card and leasing businesses. The group has accelerated its M&A pace this year, relaunching securities business and in the process of acquiring insurance targets.
Its CET 1 ratio is ~1% behind the other three FGs. Management plans to improve it to 12.5% by 2025-year end and 13% in the mid-long term.
Key Metric
AS OF 06 May 2025| KRW bn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| Pre-Provision Profit ROA | 0.99% | 1.15% | 1.10% | 1.17% | 0.99% |
| ROA | 0.66% | 0.70% | 0.54% | 0.61% | 0.49% |
| ROE | 10.6% | 11.5% | 8.3% | 9.3% | 7.3% |
| Provisions/Loans | 0.17% | 0.26% | 0.53% | 0.45% | 0.45% |
| NPL Ratio | 0.30% | 0.31% | 0.35% | 0.57% | 0.69% |
| Woori Bank CET1 Ratio | 13.0% | 12.7% | 13.2% | 13.1% | 13.5% |
| Equity/Assets | 6.45% | 6.58% | 6.71% | 6.83% | 6.67% |
| Net Interest Margin Bank + Card | 1.62% | 1.84% | 1.82% | 1.70% | 1.70% |
CreditSight View Comment
AS OF 28 Apr 2025Woori FG was for some years the weakest of Korea’s Big 4 Financial Groups with a less consistent track record of managing risk and returns. Operating performance had shown an improvement for the past few years but disappointed in FY23. FY24 results were peer-leading, mainly supported by non-interest income. The group has been seeking opportunities to expand its non-bank businesses. Its new securities entity launched in August 2024 and the group is finalizing a deal to acquire two insurer. The capital impact of the two transactions is small. Both the group and the bank CET1 ratios are behind peers. KDIC’s stake in the group has been completely sold. We have a Market perform recommendation but see the trading levels of its AT1 NC07/29 as attractive.
Recommendation Reviewed: April 28, 2025
Recommendation Changed: April 24, 2017
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
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Fundamental View
AS OF 06 May 2025Shinhan FG was the best-managed of the large Korean financial groups over many years. During the Asian Financial Crisis, it took advantage of the opportunity to acquire competitors and other businesses, increasing its scale and expanding its business lines.
Its performance has been more variable in the past few years. After a bumpy 2020, it had a better FY21 and FY22, thanks to rising interest rates. However, operating performance turned weak again in FY23, and its FY24 profit growth was softer than peers, impacted by non-bank performance.
In addition to owning a Big 4 bank in Korea, Shinhan FG also has a diversified non-banking business portfolio, including a leading credit card company and a top 10 securities firm.
Business Description
AS OF 06 May 2025- Shinhan Financial Group (Shinhan FG) is one of Korea's most diversified financial groups and the holding company of the second largest Korean bank - Shinhan Bank. It also has credit cards, securities, asset management and insurance subsidiaries.
- Shinhan Bank was set up in 1982 with seed capital from Korean residents in Japan. It was more professionally managed than the heavily politicised older banks and came through the 1997 Asian Financial Crisis in relatively good shape, taking the opportunity to acquire the larger and much longer-established Chohung Bank in 2003.
- In 2007, it made another timely acquisition, buying LG Card from its creditors after it failed during the 2003 Korean consumer lending crisis. Shinhan Card is the largest card issuer in Korea.
- Shinhan is also looking for overseas opportunities where growth is strong and Korean businesses have a presence, with a focus on Vietnam (where Shinhan Card also bought a consumer finance business in 2019) and Indonesia.
Risk & Catalysts
AS OF 06 May 2025As one of Korea’s “Big Four” financial groups, we believe Shinhan FG would likely receive governmental support if needed.
Asset quality pressure has been rising from domestic real estate project financing at non-bank subsidiaries, with credit costs rising from very low levels. Management expects FY25 credit costs to normalize to the mid-30 bp from 47 bp in FY24, though we remain cautious about this outlook.
Loan growth is expected to slow down this year due to both weaker demand and the need to defend its 13% CET 1 ratio target.
Profit growth may encounter challenges if there is volatility in the KRW, which could lead to significant FX losses, or if the high-rate environment in the US persists, causing further overseas CRE valuation losses.
Key Metric
AS OF 06 May 2025| KRW bn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| Pre-Provision Profit ROA | 1.11% | 1.10% | 3.89% | 3.89% | 1.28% |
| ROA | 0.66% | 0.72% | 0.66% | 0.63% | 0.83% |
| ROE | 9.2% | 10.0% | 8.6% | 8.4% | 11.4% |
| Provisions/Average Loans | 0.28% | 0.34% | 0.78% | 0.66% | 0.41% |
| NPL Ratio | 0.39% | 0.41% | 0.56% | 0.71% | 0.81% |
| CET1 Ratio | 13.10% | 12.79% | 13.17% | 13.06% | 13.27% |
| Equity/Assets | 7.3% | 7.6% | 7.8% | 7.6% | 7.6% |
| Net Interest Margin | 1.81% | 1.96% | 5.91% | 5.85% | 1.91% |
CreditSight View Comment
AS OF 06 May 2025Shinhan FG is one of the four nation-wide commercial banking groups in Korea, with a leading credit card arm. It had over many years the best operating track record, but have shown more consistent performance with peers in recent years. Its topline performance lagged behind its peers in 1Q25, but its ROE was high and just behind KBFG. Shinhan showed commitment to enhancing its NPL coverage ratio, which provides some reassurance, compared to its peers. The group has set an ambitious ROE target of a 50+ bp improvement for FY25, while we maintain a more cautious outlook. We have a Market perform recommendation at both group and bank levels.
Recommendation Reviewed: May 06, 2025
Recommendation Changed: September 22, 2020
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
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Fundamental View
AS OF 06 May 2025KB Financial Group has grown steadily through the acquisitions of non-bank companies in Korea and small banks in Indonesia and Cambodia. Its banking subsidiary, Kookmin Bank, operates the largest branch network in Korea, with a particularly strong presence in the retail market. This makes it a systemically important bank, with strong potential government support if needed.
The group has a good track record, and its large mass-market franchise gives it a strong customer base. It has a well-diversified business and the highest CET1 ratio among the four major financial groups.
Business Description
AS OF 06 May 2025- KB Financial Group (KBFG) is a well-diversified and well-run group. Its main subsidiaries, in addition to Kookmin Bank (KB), are Kookmin Card, KB Insurance, KB Securities, KB Capital (leasing), and KB Asset Management.
- KB was the result of several mergers after the Asian economic crisis of the late 1990s. Its main predecessors were Citizen's National Bank and Housing & Commercial Bank, both retail-focused banks that have given it the leading position in Korean retail banking.
- For the near term, the group doesn't expect further M&A. It has looked for growth overseas, focusing on Indonesia (where it has taken a 67% stake in Bank Bukopin) and Cambodia (it took a 100% shareholding in Prasac, a micro-finance lender, over 2020-21). It also bought Prudential Financial's Korean insurance business in 2020, which was subsequently merged with KB Insurance.
Risk & Catalysts
AS OF 06 May 2025As one of Korea’s “Big Four” financial groups, we believe that KBFG would likely receive governmental support if needed.
Credit costs normalised to 45 bp in FY24 (from a spike to 73 bp in FY23) – a level more consistent with peers, but 1Q25 credit costs at 54 bp were higher than peers again.
KBFG has the highest NIM among the four FGs, largely thanks to the highest NIM at Kookmin bank among the Big 4 banks.
KBFG is expanding by business line and overseas with a focus on Indonesia and Cambodia—markets with more favourable demographics, growth potential, and profit margins than Korea but also more risk. The profit plan for the Indonesian investment has been slower than expected, and significant provisions have been set aside since 4Q22 for non-viable assets.
Key Metric
AS OF 06 May 2025| KRW bn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| Pre-Provision Profit ROA | 1.14% | 1.05% | 1.36% | 1.37% | 1.54% |
| ROA | 0.69% | 0.57% | 0.65% | 0.68% | 0.90% |
| ROE | 10.2% | 8.8% | 9.1% | 9.7% | 13.0% |
| Provisions/Loans | 0.31% | 0.45% | 0.73% | 0.45% | 0.56% |
| NPL ratio | 0.33% | 0.34% | 0.57% | 0.65% | 0.76% |
| CET1 Ratio | 13.5% | 13.2% | 13.6% | 13.5% | 13.7% |
| Equity/Assets | 7.3% | 7.9% | 8.2% | 7.9% | 7.8% |
| Net Interest Margin | 1.83% | 1.96% | 2.08% | 2.03% | 2.01% |
CreditSight View Comment
AS OF 28 Apr 2025KBFG is one of the “Big 4” finanical groups in South Korea, and its banking subsidiary, Kookmin Bank, enjoys the strongest franchise with a particularly strong presence in the retail market. This makes it a systemically important bank, with strong potential government support if needed. KBFG has a good track record and a well-diversified business. Capital standing is the key strength, with the current highest group CET1 ratio. Credit costs are relatively high compared to peers in recent years, but its NPL coverage ratio is also the highest. More recently, KBFG delivered a relatively better set of 1Q25 results among the Big 4, and it was the only FG to still witness modest profit growth when excluding the impact of ELS compensation costs from 1Q24.
Recommendation Reviewed: April 28, 2025
Recommendation Changed: September 22, 2020
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
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Fundamental View
AS OF 06 May 2025Hana Financial Group (Hana FG) struggled for several years to make its acquisition of the former Korea Exchange Bank a success, but results improved dramatically in 2015 as revenues grew and cost efficiencies improved. It has produced strong results since 2020.
The group is looking for inorganic growth in its non-bank businesses as it has fallen behind Shinhan FG and KBFG in this area, but has so far shied away from a large acquisition.
Hana Bank has the highest CET 1 ratio among the Korean Big 4 banks.
Business Description
AS OF 06 May 2025- Hana FG is the third-largest financial group in South Korea. From small origins as a finance company in the 1970s, after the 1997 Asian crisis, Hana grew by acquiring three other banks, including the much older Seoul Bank, which had a banking and trust management business.
- Hana FG bought Korea Exchange Bank (KEB) from Lone Star in 2012 after overcoming many hurdles, but due to staff union opposition, it could not merge with Hana Bank until 2015.
- Hana FG's overseas business is smaller than its peers, and is complemented by KEB's extensive international operations. KEB was started in 1967 as a government-owned bank specializing in foreign exchange. It had a leading share in FX transactions and trade finance among Korean banks.
- Hana FG has shown good growth in its credit card and securities non-bank businesses, but is less diversified than its larger peers KB and Shinhan, which have also acquired insurance companies. Its latest acquisition (in 2019) was a 15% stake in Vietnam's state-owned Bank for Investment & Development (BIDV). In 2023, Hana FG decided not to proceed with the acquisition of KDB Life Insurance after two months of due diligence.
Risk & Catalysts
AS OF 06 May 2025Hana FG’s credit costs at 29 bp in FY24 and 1Q25 were lower than peers (mostly in the range of 40-50 bp). However, the group’s NPL coverage ratio was also ~14-18 ppt behind peers.
NIMs are lower than those of KB and Shinhan at both the group and bank levels. The profit contribution from non-bank entities to group profits is also lagging behind these two peers. Both metrics are comparable to Woori’s.
Loan growth was softer than peers in FY24 and 1Q25 as the bank is putting more focus on RWA management and capital enhancement.
Key Metric
AS OF 06 May 2025| KRW bn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| Pre-Provision Profit ROA | 1.07% | 1.10% | 1.11% | 1.00% | 1.12% |
| ROA | 0.74% | 0.66% | 0.59% | 0.61% | 0.72% |
| ROE | 10.9% | 10.1% | 9.0% | 9.1% | 10.6% |
| Provisions/Loans | 0.16% | 0.34% | 0.46% | 0.32% | 0.29% |
| NPL Ratio | 0.32% | 0.34% | 0.50% | 0.62% | 0.70% |
| CET1 Ratio | 13.8% | 13.2% | 13.2% | 13.2% | 13.2% |
| Equity/Assets | 6.8% | 6.4% | 6.6% | 6.7% | 6.7% |
| Net Interest Margin | 1.66% | 1.83% | 1.82% | 1.69% | 1.69% |
CreditSight View Comment
AS OF 28 Apr 2025Hana FG grew through acquisitions but only in 2015 was it able to merge its two main bank units to form KEB-Hana Bank. Hana’s management has a good record but for some years struggled to extract value from its acquisitions. Its performance for the past few years has generally been strong. More focus has been put on RWA management and capital enhancement since 2H24. There is potential for further improvements in the non-bank segment. Hana’s credit costs were lower than those of its peers, but this has also resulted in the lowest NPL coverage ratio among the four FGs. The group aims to maintain a CET1 ratio of 13-13.5%. We have a Market perform recommendation at both group and bank levels.
Recommendation Reviewed: April 28, 2025
Recommendation Changed: April 24, 2017
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank
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Search topics about wealth insights and investments.Republic of the Philippines
- Country: Philippines
- Bond: PHILIP 0.43 26 PHILIP 3.625 32
- Indicative Yield-to-Maturity (YTM): 0.871% 3.408%
- Credit Rating : Baa2/BBB/BBB
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Country Overview
AS OF 02 May 2025- The Philippines is one of the fastest-growing emerging market economies, though GDP per capita remains relatively low at USD 3,870 per year, comparable to Egypt.
- Key economic drivers include business process outsourcing (BPO) and tourism, alongside a manufacturing sector specializing in electronics, automotive production, and food processing.
- While the country has limited natural resources, it is a significant global supplier of nickel ore.
Who We Recommend
Siam Commercial Bank
Pertamina
Kasikornbank