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Sector: Financial Services
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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 07 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 07, 2025
Recommendation Changed: November 28, 2023
Who We Recommend
International Container Terminal Services Inc
Woori Financial Group
Shinhan Financial Group
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
International Container Terminal Services Inc
BDO Unibank
Shinhan Financial Group
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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
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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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
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
Search topics about wealth insights and investments.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
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
How may we help you?
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
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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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
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Search topics about wealth insights and investments.Commonwealth Bank of Australia
- Sector: Financial Services
- Sub Sector: Banks
- Region: Australia
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Fundamental View
AS OF 28 Mar 2025CBA has a very strong franchise in Australia; it is the leader in the retail market and is making good progress in challenging NAB in business banking.
It has been the best managed of the Australian banks for many years, and has outperformed peers. It lost some of its luster in the latter part of the 2010s due to regulatory and compliance lapses amid charges of complacency, but has since improved into a better institution.
Its capital and liquidity position is robust, while asset quality is strong.
Business Description
AS OF 28 Mar 2025- Originally established by the Australian government in 1911, CBA functioned for some time as Australia's central bank until the establishment of the Reserve Bank of Australia in 1959. It remained under government ownership until the early 1990s, after which it underwent a transformation from a bureaucratic public sector bank into a widely respected commercial organisation.
- Over the past twenty years, CBA has consolidated its position as the leading bank in Australia with a 24-28% share in household deposits and lending, helped by its acquisition during the 2008 crisis of Bank of Western Australia.
- In New Zealand it owns ASB Bank, but otherwise has been selling non-core assets, including its life insurance business.
Risk & Catalysts
AS OF 28 Mar 2025CBA’s financial health is closely linked to the Australian economy, in particular retail credit quality, mainly housing loans.
Earnings/NIMs are under pressure from strong mortgage market and deposit competition. Business banking growth however has been stellar and highly profitable.
Losses on housing loans have been minimal; the low stock on the housing market has led to home prices rising from Mar-23 onwards, contrary to expectations. Low rental vacancy rates (1%) and low unemployment rates (~4%) have been very supportive of asset quality. House prices are currently going through a soggy patch, but we are not concerned.
Key Metric
AS OF 28 Mar 2025| AUD mn | Y21 | Y22 | Y23 | Y24 | 1H25 |
|---|---|---|---|---|---|
| Return on Equity | 11.7% | 12.7% | 14.0% | 13.6% | 13.8% |
| Total Revenues Margin | 2.3% | 2.1% | 2.2% | 2.2% | 1.1% |
| Cost/Income | 47.0% | 46.3% | 43.7% | 45.0% | 45.2% |
| APRA CET1 Ratio | 13.1% | 11.5% | 12.2% | 12.3% | 12.2% |
| International CET1 Ratio | 19.4% | 18.6% | 19.1% | 19.1% | 18.8% |
| APRA Leverage Ratio | 6.0% | 5.2% | 5.1% | 5.0% | 4.9% |
| Impairment Charge/Avg Loans | 0.1% | (0.0%) | 0.1% | 0.1% | 0.0% |
| Gross Impaired Loans/Total Loans | 0.4% | 0.3% | 0.4% | 0.4% | 0.5% |
| Liquidity Coverage Ratio | 129% | 130% | 131% | 136% | 127% |
| Net Stable Funding Ratio | 129% | 130% | 124% | 116% | 116% |
CreditSight View Comment
AS OF 06 Mar 2025CBA operates like a well-oiled machine in the Australian banking market. It has the leading position in mortgages and deposits, and is challenging NAB in business banking. An AUSTRAC penalty in 2018 damaged its reputation and remediation costs impacted earnings for a couple of years. The bank sold a number of its non-bank business and equity investments to simplify and focus on its core domestic businesses. Strong mortgage market and deposit competition had capped NIMs despite higher cash rates. Business banking growth has been stellar and highly profitable. Asset quality is comfortable and capital robust. It is our preferred name amongst the Aussie banks. Its seniors are tight but its 03/34 Tier 2 trades fair.
Recommendation Reviewed: March 06, 2025
Recommendation Changed: October 05, 2016
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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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
Who We Recommend
International Container Terminal Services Inc
BDO Unibank
Woori Financial Group
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Fundamental View
AS OF 27 Mar 2025ICICI Bank is one of the leading private banks in India and has a good diversified business model, with well regarded life and general insurance subsidiaries.
Under its previous CEO, the bank suffered setbacks from sizeable bad debt problems in FY17/18, but the situation has since stabilised following a leadership change and the bank has done well ever since.
Business Description
AS OF 27 Mar 2025- The original Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 by the World Bank, the Government of India and representatives of Indian industry as a financial institution to provide Indian businesses with medium and long-term project financing.
- In 1994, ICICI established a commercial banking subsidiary, ICICI Bank as India's financial sector opened up, and in 2002 ICICI merged with ICICI Bank, keeping the latter's name.
- Retail now accounts for 52% of its loan book, corporates are at 21%, while rural and business banking & SMEs are at 6% and 19% respectively, and overseas (which is being de-emphasised) consists of just 2% at F3Q25.
- The bank has well regarded life insurance (ICICI Prudential) and general insurance (ICICI Lombard) businesses.
Risk & Catalysts
AS OF 27 Mar 2025India banking system liquidity is tight and so the Indian banks have moderated their loan growth to minimize the impact on NIMs and returns, and as the RBI has guided banks to align their loan and deposit growth. ICICI however has continued to deliver both relatively strong loan and deposit growth momentum, while maintaining its leading LDR and profitability, in testament to its strong franchise.
The RBI has commenced the rate cutting cycle with a 25 bp reduction in February, and we do anticipate more rate cuts to come through which will feed through to lower NIMs over the coming quarters.
We are cautious about Indian unsecured retail and microfinance given a stretched urban middle and lower-middle class consumer with high inflation and interest costs, and economic activity in India has slowed as we had anticipated. ICICI’s earlier prudence towards the segment than peers however is keeping asset quality well controlled. We are watchful though of the MSME and business banking segments where growth has been brisk.
Leadership and governance issues under the previous CEO Ms. Chanda Kochhar have been dealt with well, since her replacement in Oct-18.
Key Metric
AS OF 27 Mar 2025| INR bn | FY21 | FY22 | FY23 | FY24 | 9M25 |
|---|---|---|---|---|---|
| NIM | 3.69% | 3.96% | 4.48% | 4.53% | 4.29% |
| ROAA | 1.39% | 1.77% | 2.13% | 2.37% | 2.37% |
| ROAE | 12.3% | 14.7% | 17.2% | 18.7% | 18.2% |
| Equity/Assets | 12.0% | 12.1% | 12.6% | 12.7% | 13.4% |
| CET1 Ratio | 16.7% | 17.3% | 16.9% | 15.4% | 13.9% |
| Gross NPA Ratio | 4.96% | 3.60% | 2.81% | 2.16% | 1.96% |
| Provisions/Loans | 2.05% | 0.97% | 0.65% | 0.30% | 0.37% |
| PPP ROA | 3.13% | 2.97% | 3.28% | 3.36% | 3.41% |
CreditSight View Comment
AS OF 05 May 2025ICICI Bank is a preferred name among the Indian FIs we cover. We like the bank’s robust capital and loan loss buffers, strong asset quality, as well as peer leading margins, profitability and liquidity position. Under its previous CEO, the bank suffered setbacks from sizable bad debt problems in FY17/18 but the situation has since stabilised following a leadership change. The bank has emerged stronger from a capital, asset quality and earnings perspective, as it de-risked its book, and took pro-active actions to protect its capital by raising equity and selling small stakes in its well-regarded insurance subsidiaries to raise funds and set aside more general provisions. ICICI last issued a $ bond in 2017.
Recommendation Reviewed: May 05, 2025
Recommendation Changed: December 07, 2020
Who We Recommend
International Container Terminal Services Inc
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Woori Financial Group