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Region: Thailand
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 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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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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