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Sector: Financial Services
Sumitomo Mitsui Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 23 Sep 2025After reorganising and building up capital for the full impact of Basel 3, SMFG has recently been acquisitive to build its next phase of growth, and now has a lower capital buffer than Mizuho.
It has a strong retail, mid and large corporate franchise in Japan, but its securities arm SMBC Nikko punches below weight.
Given its size and systemic importance, SMFG is considered too big to fail, and will be supported by the Japanese government if needed.
Business Description
AS OF 23 Sep 2025- The core unit of SMFG is Sumitomo-Mitsui Banking Corp (SMBC), whose main predecessors were Sumitomo Bank and Mitsui Bank.
- SMFG's group companies include the securities firm SMBC Nikko, SMBC Trust Bank, SMBC Card Company, SMBC Consumer Finance, Sumitomo Mitsui Finance and Leasing, SMFG India Credit Company (SMICC), Sumitomo Mitsui DS Asset Management, and SMBC Aviation Capital.
- SMFG does not have a large trust business as Sumitomo Trust and Chuo Mitsui Trust chose not to join SMFG, but merged with each other to form the separate Sumitomo Mitsui Trust Holdings.
- It has been acquisitive over the years, particularly in emerging Asia and leasing assets. In 2021, the group took a 49% stake in Vietnam's FE Credit, 74.9% of Indian NBFI Fullerton Capital (now called SMICC), 4.99% of Philippines' RCBC, and 4.5% of US investment bank Jefferies. In 2022, it increased its stake in RCBC to 20%. In 2023, it acquired a 15% stake in Vietnam's VP Bank, and said it would increase its stake in Jefferies from 4.5% to 15%, and in 2024 took its stake in SMICC to 100%. In 2025 it announced it would take a 24% stake in India's Yes Bank, and increase its Jefferies stake to 20%.
Risk & Catalysts
AS OF 23 Sep 2025SMFG has the strongest Japan retail franchise amongst its peers, and a very strong corporate banking franchise.
Similar to the other megabanks, SMFG aims to focus more on the US, and reduce low return RWAs in Europe and Asia ex-Japan.
SMFG has made a number of acquisitions and taken stakes in banks and NBFIs in Vietnam, the Philippines, India and Indonesia. The group took JPY 135 bn of goodwill impairments in FY24 on its Vietnam investments. RoE on these investments has been poor.
It is increasing its 15% stake in Jefferies to 20%, to develop revenue opportunities for SMBC Nikko. Further investments in SMBC Nikko will be required.
Credit costs have seen volatility and its NPL ratio increased in the last quarter.
Its CET1 ratio is the lowest amongst peers, and it has been tapped by the rating agencies to increase its CET1 ratio buffer.
Key Metric
AS OF 23 Sep 2025| JPY bn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.64% | 0.68% | 0.70% | 0.82% | 0.87% |
| Operating Income/Average Assets | 1.23% | 1.26% | 1.39% | 1.44% | 1.51% |
| Operating Expense/Operating Income | 62% | 61% | 60% | 58% | 55% |
| Pre-Impairment Operating Profit / Average Assets | 0.48% | 0.51% | 0.58% | 0.60% | 0.76% |
| Impairment charge/Average Loans | (0.31%) | (0.22%) | (0.27%) | (0.32%) | (0.27%) |
| ROAA | 0.30% | 0.32% | 0.36% | 0.41% | 0.52% |
| ROAE | 5.9% | 6.5% | 7.0% | 8.0% | 10.3% |
CreditSight View Comment
AS OF 05 Aug 2025SMFG’s banking business had performed well, while its non-bank subsidiaries had underperformed over FY21-22. The group had a better 2H vs a poor 1H23, with improved trading and fee revenues, partially offset by higher credit costs at the non-bank businesses. The group became acquisitive from 2021, taking a 49% stake in a leading Vietnamese NBFI and 15% of its parent (VP Bank), 20% of RCBC of the Philippines, 74.9% of NBFI Fullerton India (now 100%), 4.5% in US IB Jefferies (increasing to 15%), and 20% of India’s Yes Bank for the next stage of growth. Its high CET1 ratio has been whittled down by acquisitions. FY24 results were boosted by share sales and structured investment trusts, 1Q25 was a flat quarter. Govt. support is assured. We like its PerpNC10 AT1s for duration.
Recommendation Reviewed: August 05, 2025
Recommendation Changed: August 05, 2025
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Search topics about wealth insights and investments.Mitsubishi UFJ Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 23 Sep 2025MUFG is the largest of Japan’s three megabanks, and has the most diversified operations by business line and geography. It had also been the most acquisitive till the early part of this decade.
Core profitability had been weak due to Japan’s ultra-low interest rates and growth; that improved post an efficiency drive and a CEO change in April 2020; the bank has improved international margins and fee income, and benefits from rising domestic interest rates.
Given its size and systemic importance, MUFG is considered too big to fail, and will be supported by the Japanese government if needed.
Business Description
AS OF 23 Sep 2025- The 2 main banks of MUFG are MUFG Bank (earlier Bank of Tokyo-Mitsubishi UFJ or BTMU) & Mitsubishi UFJ Trust & Banking. In the early stages of Japan's long banking crisis, Bank of Tokyo merged with Mitsubishi Bank, and in the late stages they absorbed UFJ (former Sanwa Bank & Tokai Bank) while Mitsubishi Trust absorbed Toyo Trust & Nippon Trust.
- The group includes consumer lenders Mitsubishi-UFJ NICOS & ACOM, and securities/IB joint ventures with Morgan Stanley. MUFG invested in Morgan Stanley in 2008 and now has a ~20% stake. In Dec-22, it completed the sale of its US retail and commercial bank, MUFG Union Bank, to US Bancorp.
- It has a majority stake in Thailand's Bank of Ayudhya (now Krungsri), 20% stakes in Vietnam's Vietinbank and Philippines' Security Bank, and 100% of Indonesia's Bank Danamon.
- In 2019, it acquired Colonial First State from Commonwealth Bank of Australia to strengthen its global asset management business, in 2020 it invested $700 mn in SE Asia's Grab, and more recently has bought Home Credit's Philippine and Indonesian subsidiaries, Link (an Australian pension fund administrator), auto loan companies in Indonesia, Albacore Capital, StanChart's Indonesian retail operations, and an Indian NBFI.
Risk & Catalysts
AS OF 23 Sep 2025Its recent divisional performance has been strong, with the domestic businesses benefiting from higher BOJ rates, and robust growth in fee income.
Credit costs have been rising because of increased exposure to personal unsecured loans in Japan and Southeast Asia, as well as higher-risk lending in Southeast Asia.
Its close relationship with Morgan Stanley has led it to take large positions in US corporate finance loans, which has been problematic on occasion.
We see limited risk from rising JGB and USD yields as the large equity unrealised gains dwarf the unrealised losses on the bond portfolio.
Key Metric
AS OF 23 Sep 2025| JPY bn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.57% | 0.79% | 0.64% | 0.73% | 0.69% |
| Operating Income/Average Assets | 1.11% | 1.22% | 1.23% | 1.22% | 1.36% |
| Operating Expense/Operating Income | 69% | 65% | 61% | 67% | 60% |
| Pre-Impairment Operating Profit / Average Assets | 0.34% | 0.43% | 0.48% | 0.40% | 0.56% |
| Impairment charge/Average Loans | (0.30%) | (0.61%) | (0.36%) | 0.00% | (0.15%) |
| ROAA | 0.32% | 0.30% | 0.39% | 0.47% | 0.55% |
| ROAE | 6.7% | 6.5% | 8.1% | 9.3% | 10.8% |
| CET1 post Basel 3 reforms excl. secs gains | 10.4% | 10.3% | 10.1% | 10.8% | n/a |
CreditSight View Comment
AS OF 05 Aug 2025MUFG is the largest of the megabanks with more diversified business lines than its peers. Digitalisation and operational efficiency improvements, in addition to higher rates in Japan and the US, has led to much better results in FY24. Lending discipline has lifted international margins; domestic margins though lag its peers. Its ~20% shareholding in Morgan Stanley has been a boon. Acquisitions have become more targeted. Its $ liquidity is the best amongst its peers, and government support is assured. It has guided to a higher CET1 ratio buffer than its current ~230 bp due to accelerated sales of its shareholdings.
Recommendation Reviewed: August 05, 2025
Recommendation Changed: August 05, 2025
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Fundamental View
AS OF 17 Sep 2025ING displays robust and consistent asset quality, good earnings and a well-balanced funding profile although we expect financial metrics to soften from these peaks.
These attributes are supported by its strong franchise in retail and wholesale banking in the Benelux region and its good geographic diversification.
At the same time, it has sizeable exposures to cyclical industry sectors in its Wholesale Banking division, although these have been reduced in recent years. Capital cushions are being run down over time closing the gap between the bank’s capital position and those of some of its major European peers.
Business Description
AS OF 17 Sep 2025- ING was founded in 1991 by a merger between Nationale-Nederlanden and NMB Postbank Group. It is now the largest Dutch bank by total assets.
- ING is focused on retail and commercial banking in the Benelux countries, with direct banking franchises in Germany, Spain, Italy, Australia, as well as Poland, Romania, Turkey and the Philippines.
- In April 2016, it completed the process of divesting all of its insurance business (in Europe, the US and Asia), under the Restructuring Plan conditions imposed by the European Commission after it received state aid in 2008-2009.
- In November 2016, ING announced that its resolution entity would be its holding company, ING Groep NV. ING Groep is now the issuing entity for all TLAC/MREL-eligible debt (AT1, Tier 2 and senior unsecured), and its sole operating entity is ING Bank N.V.
Risk & Catalysts
AS OF 17 Sep 2025Recently, Moody’s amended the outlook on ING’s senior unsecured debt rating to Positive.
ING is looking to become more acquisitive, so it remains a candidate for M&A in the coming years. In 1H25, it increased its stake in Van Lanschot to 20.3%.
ING’s CET1 ratio will trend down towards its 12.5% target in the coming years, bringing it more in line with other major peers.
Key Metric
AS OF 17 Sep 2025| € mn | Y21 | Y22 | Y23 | Y24 | 2Q25 |
|---|---|---|---|---|---|
| Return On Equity | 8.8% | 7.1% | 14.4% | 12.6% | 13.3% |
| Total Revenues Margin | 2.0% | 1.9% | 2.3% | 2.3% | 2.1% |
| Cost/Income | 60.5% | 60.3% | 51.2% | 53.6% | 53.2% |
| CET1 Ratio (Transitional) | 15.9% | 14.5% | 14.7% | 13.6% | 13.3% |
| CET1 Ratio (Fully-Loaded) | 15.9% | 14.5% | 14.7% | 13.6% | 13.3% |
| Leverage Ratio (Fully-Loaded) | 5.9% | 5.1% | 5.0% | 4.7% | 4.3% |
| Liquidity Coverage Ratio | 139.0% | 134.0% | 143.0% | 143.0% | 141.0% |
| Impaired Loans (Gross)/Total Loans | 1.8% | 1.7% | 1.8% | 1.9% | 1.8% |
CreditSight View Comment
AS OF 02 Sep 2025After divesting its insurance operations, the remaining business, ING Bank, has stayed a solid Benelux-based bank with a strong direct banking arm in several countries. Profitability growth has been supported by a gradual recovery in the Dutch economy. Net interest revenues are declining but fundamentally, the bank looks in good shape versus several other core European banks and fee income is increasing. Capital ratios are trending downwards given distributions on offer to shareholders. In January 2025, it announced its intention to exit Russia, which would appear credit positive. We moved from Outperform to Market perform on 6 February 2025.
Recommendation Reviewed: September 02, 2025
Recommendation Changed: February 07, 2025
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Search topics about wealth insights and investments.China CITIC Financial Asset Management (Huarong)
- Sector: Financial Services
- Sub Sector: Banks
- Region: China
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Fundamental View
AS OF 10 Sep 2025A large impairment loss in FY20 brought CITIC AMC (formerly Huarong) to the brink of insolvency, but a state-led rescue plan provided it with liquidity support and brought its capital back above minimum requirements. CITIC has replaced the MoF as its largest shareholder. CITIC AMC remains as one of the Big 5 state-owned AMCs in China and will continue to perform national services.
On the guidance of the authorities, CITIC AMC has divested almost all of its non-core subsidiaries.
We expect its core operations to remain weak and volatile, until China’s economy is back on the upswing, residents regain confidence in the property market, and improved capital markets lead to better valuations on its securities books.
Business Description
AS OF 10 Sep 2025- China CITIC Financial Asset Management (formerly Huarong) is one of the five major state-owned asset management companies in China. It was first set up in 1999 to take over the bad debts of ICBC.
- The AMCs were originally due to be wound up after dealing with these "policy loans" that had come onto the books of the banks under government direction before their commercialisation, but the AMCs found a new role as commercial bad debt managers.
- CITIC AMC was commercialised in 2012 and completed its IPO on the HK stock exchange in 2015. Since then, it expanded its financial services to banking, financial leasing, securities & futures, trust, as well as consumer finance. However, after heavy losses in FY20, the company has divested almost all of its non-core business as directed by the authorities.
- Following the CITIC-led rescue plan and the equity transfer from the Ministry of Finance (MOF) to CITIC, CITIC has become its largest shareholder (26.46%). Other significant shareholders include MOF (24.76%), Zhongbaorongxin (18.08%), Cinda AMC (4.89%), China Life Insurance (4.50%), National Social Security Fund (3.08%), Warburg Pincus (2.57%), and ICBC Financial AM (2.44%). It was renamed to share the "CITIC" brand in Nov-23.
Risk & Catalysts
AS OF 10 Sep 2025CITIC’s support is strong (name change, investment in CEB and CITIC Ltd, subsidiary disposal, new management team, etc.) and more meaningful to the company compared to direct ownership by the government.
Derisking continues with lower property exposure, non-core businesses have largely been disposed of and the company is able to focus on its main DDA business per the guidance of the authorities.
While the company was able to deliver profit growth on the back of CITIC support and its associate interest holdings, core performance remains weak, and there could be continued volatility in the name.
AMCs may find it harder to dispose DDAs at good valuations amid a deceleration economic cycle. Longer holding periods will dampen return yields.
Key Metric
AS OF 10 Sep 2025| CNY mn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| ROA | 0.10% | (2.20%) | 0.02% | 0.75% | 1.10% |
| ROE | 1.0% | (49.8%) | 3.6% | 18.4% | 21.1% |
| Total Capital Ratio | 13.0% | 15.1% | 15.1% | 15.7% | 16.0% |
| Leverage Ratio | 14.2x | 16.1x | 11.5x | 10.1x | 8.6x |
| Equity/Assets | 0.0% | 3.1% | 2.9% | 3.7% | 4.0% |
CreditSight View Comment
AS OF 02 Sep 2025CITIC AMC (ex-Huarong) continued to book profits 1H25, helped by investments in three listed SOEs. Core businesses remained weak and volatile, as the company continues to lower valuations on existing DDAs acquired many years ago. Its non-DDA financial assets also have a more volatile performance than peers. CITIC’s support is strong, derisking continues with a meaningful improvement in the provision coverage ratio, non-core businesses have all been cleared, and the company is able to focus on main DDA business per the authorities’ guidance. The capital adequacy ratio has improved meaningfully to 16%, surpassing Cinda. Disclosure remains poor. We expect it to trade ~30 bp wider than CCAMCL.
Recommendation Reviewed: September 02, 2025
Recommendation Changed: July 14, 2025
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Search topics about wealth insights and investments.Export-Import Bank of India
- Sector: Financial Services
- Sub Sector: Financial Services
- Region: India
- Indicative Yield-to-Maturity (YTM): 4.92%
- Credit Rating : ( Baa3 / BBB- / BBB- )
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Fundamental View
AS OF 21 Aug 2025The Export-Import Bank of India (EXIMBK) was founded in 1982. Its credit standing is built upon the key role it plays in the promotion of India’s cross border trade and investment development, as India’s official export credit agency.
EXIMBK is 100% owned by the Government of India. Given its crucial policy role, close governmental links and quasi-sovereign status, we view it as inconceivable that the Indian government would fail to provide EXIMBK with support in a timely manner, if needed.
Business Description
AS OF 21 Aug 2025- EXIMBK presently serves as a growth engine for the internationalization efforts of Indian businesses, facilitating the import of technology and export product development, export production, export marketing, pre- and post-shipment, as well as overseas investment.
- As at FY25, EXIMBK's loan portfolio was principally made up of export finance (65%) and term loans to exporters (21%), with the remaining 14% split among the financing of overseas investment, import finance, and export facilitation. 38% come under the policy business/face GOI risk while the remaining 62% are to the commercial business.
- By geography, the bank has a primary exposure of 31% to Africa, 59% to Asia (mainly South Asia), 7% to Europe and the Americas, and the remaining to the rest of the world.
Risk & Catalysts
AS OF 21 Aug 2025As a quasi-sovereign issuer with backstops from the Government of India and the Reserve Bank of India (RBI), it is viewed as a proxy to the sovereign. Any downgrade to India’s sovereign rating will flow through to EXIMBK as well.
EXIMBK’s policy role may require it to, at times, take on exposures that could lead to financial losses. This has led to poor asset quality and high impairment charges similar to the public sector commercial banks during the years leading up to the pandemic.
Capital standing, however, is robust thanks to capital infusions from the Government of India which have been stepped up in recent years – INR 50 bn was injected in FY19, followed by infusions of INR 15 bn and INR 13 bn in FY20 and FY21 respectively. The bank received INR 7.5 bn in FY22 despite capital levels remaining strong during the year. No infusions have been made since FY23 due to the comfortable capital position.
Key Metric
AS OF 21 Aug 2025| INR mn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Net Interest Margin (Annual) | 1.84% | 2.19% | 2.29% | 2.06% | 1.83% |
| ROAA | 0.19% | 0.54% | 1.04% | 1.43% | 1.58% |
| ROAE | 1.49% | 3.97% | 7.76% | 11.47% | 13.16% |
| Equity/Assets | 13.23% | 14.12% | 12.87% | 12.06% | 11.95% |
| Tier 1 Capital Ratio | 24.0% | 28.6% | 23.7% | 19.6% | 23.9% |
| Gross NPA Ratio | 6.69% | 3.56% | 4.09% | 1.94% | 1.71% |
| Provisions/Loans | 2.46% | 0.90% | 1.24% | 0.29% | (0.32%) |
| Pre-Impairment Operating Profit / Average Assets | 2.13% | 2.31% | 2.41% | 2.12% | 1.83% |
CreditSight View Comment
AS OF 06 Jan 2025Exim Bank of India is the country’s key policy bank with full government support. It provides financial assistance to exporters and importers with a view to promote trade in India. It is 100% owned by the Government of India (GoI) and is a proxy to the India sovereign in international debt markets (quasi-sovereign status). The bank cannot be liquidated without the government’s approval and has a track record of government capital infusions. The bank’s asset quality is back on track after some wobbles in previous years. Capital levels are strong. We maintain a Market perform recommendation on the bank.
Recommendation Reviewed: January 06, 2025
Recommendation Changed: January 04, 2021
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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 23 Sep 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: September 23, 2025
Recommendation Changed: August 14, 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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