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Sector: Financial Services
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Fundamental View
AS OF 26 Jun 2025Macquarie was tested during the global financial crisis, but managed to steer through the crisis without reporting losses. A strong balance sheet mitigated liquidity problems, but its banking unit had to turn to Australia’s central bank at that time for support.
The group has an impressive track record of managing risks and achieving good returns, and has built capabilities in a number of areas. Divestments are controlled based on market conditions. It was a beneficiary of market volatility in the commodity space in F23-24. Its Australian mortgage book has also shown strong but sensible growth.
Business Description
AS OF 26 Jun 2025- Macquarie grew out of the Australian business of Hill Samuel Australia, commencing operations in 1969. Macquarie Group Ltd (MGL) is the holding company and listed entity, under which there is the banking group Macquarie Bank Ltd (MBL) which consists of the Banking & Financial Services (BFS) and Commodities & Global Markets (CGM) businesses, and a non-banking group which consists of the Macquarie Asset Management (MAM) and Macquarie Capital (MC) businesses.
- From the 1990s, the group has been associated with the "Macquarie Model" which focused on identifying cash-generating infrastructure assets & packaging them into funds that could be sold, with Macquarie taking fees as banker, arranger and asset manager.
- It acquired asset managers including Delaware Investments in the US and Blackmont Capital in Canada, boutique investment bank Fox-Pitt Kelton and specialists such as Tristone Energy (Canada). It acquired US asset manager, Waddell & Reed in April 2021, which added around US$76 bn of assets under management. It has announced the sale of its public AM business in the US and Europe to Nomura.
- MAM has AUM of ~A$941 bn as of FY25, mostly in "traditional" funds management but also including its specialist infrastructure and real assets funds.
Risk & Catalysts
AS OF 26 Jun 2025Macquarie has sizable exposures to credit and equity risk, and so could be adversely impacted by falls in asset prices. In addition, volatile/weak markets could and has impeded its ability to exit some of its investments. Its earnings profile partially depends on exits and therefore is lumpy in nature. So far it has managed this risk well.
As a relatively small group operating mainly in wholesale markets, it is vulnerable to a liquidity freeze, but it mitigates this through running a well-matched and liquid balance sheet.
It is a global leader in infrastructure investments and is well positioned for the green transition. It has been a strong beneficiary of volatility in commodity markets, a testament to its risk management capabilities.
Its banking unit, MBL, has been subject to enforcement action in Apr-21 by APRA over the incorrect treatment of some intra-group funding arrangements resulting in a A$500 mn operational risk overlay being applied as well as LCR and NSFR add-ons.
Key Metric
AS OF 26 Jun 2025| AUD mn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Operating Income | 13,298 | 17,833 | 19,576 | 17,071 | 18,130 |
| Cost/Income | 66.7% | 60.5% | 62.0% | 71.4% | 70.5% |
| Net Profit | 3,015 | 4,706 | 5,182 | 3,522 | 3,715 |
| Return on Equity | 14.3% | 18.7% | 16.9% | 10.8% | 11.2% |
| Total Impairments/Op Profit | 11.8% | 7.2% | 6.1% | (7.4%) | 6.0% |
| Annuity Business Profit Contribution | 46.7% | 42.6% | 34.2% | 36.5% | 43.6% |
| MBL CET1 Ratio (APRA) | 12.6% | 11.5% | 13.7% | 13.6% | 12.8% |
| MBL Liquidity Coverage Ratio | 174% | 175% | 214% | 191% | 175% |
| MBL Net Stable Funding Ratio | 115% | 121% | 124% | 115% | 113% |
CreditSight View Comment
AS OF 13 May 2025Macquarie has a strong record of profitability since its inception. Its asset mgmt business focused on infrastructure, and more recently green assets, is a global leader. It manages risks and returns effectively, and in FY22+23 was a large beneficiary of O&G and power price volatility. The Australian banking business has steadily gained mortgage marketshare. Large investment disposals from asset mgmt and Macquarie Capital led to a record year in FY22; strong commodities outperformance led to another record in FY23. FY24 income was lower on lower a) asset realisations and b) gas & power inventory management and trading income. 2H25 net income was helped by asset sales. Capital is adequate, ALM is conservative, and being APRA regulated is a plus. We like the bank AT1s and short dated T2s.
Recommendation Reviewed: May 13, 2025
Recommendation Changed: July 25, 2024
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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 18 Jun 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 its non-traditional banking businesses. 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 (Gen 1) from its new fintech and digital businesses and to enable greater flexibility and independence.
Recent credit costs however have been elevated due to the riskier exposure that these entail. However, profitability remains healthy and the capital buffer is strong at both the Holdco (SCB X) and Bank (SCB) level.
Business Description
AS OF 18 Jun 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 36% corporate, 17% SME, and 47% retail as of March 2025.
Risk & Catalysts
AS OF 18 Jun 2025We 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 than earlier guided for this year. Moody’s also downgraded its rating outlook on the Thailand sovereign, and consequently the Thai banks including SCB X, to negative on 29 April 2025, citing increased risks to Thailand’s economic and fiscal strength, partly due to the potential impact of new US tariffs.
Margin pressure at SCB X however is mitigated by a strong deposit franchise and a growth focus on higher yielding retail loans. Loan growth though is likely to remain modest in FY25 given a still soft growth outlook for Thailand.
The group’s 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, SCB X’s higher NIM and low-40%s cost-income ratio provide comfortable room for that to be absorbed. We also take comfort in the ringfencing of the bank unit (SCB) from the Group’s riskier business units, and management’s minimum CET1 ratio of 16% at SCB.
Key Metric
AS OF 18 Jun 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 2.63% | 2.50% | 2.88% | 2.87% | 2.98% |
| ROA | 1.1% | 1.1% | 1.3% | 1.3% | 1.4% |
| ROE | 8.4% | 8.3% | 9.3% | 9.1% | 10.1% |
| Equity/Assets | 13.4% | 13.5% | 14.1% | 14.2% | 14.6% |
| CET1 Ratio | 17.6% | 17.7% | 17.6% | 17.7% | 17.6% |
| Reported NPL ratio | 3.79% | 3.34% | 3.44% | 3.37% | 3.45% |
| Provisions/Loans | 1.84% | 1.45% | 1.82% | 1.76% | 1.59% |
| Gross LDR | 93% | 93% | 99% | 97% | 98% |
| Liquidity Coverage Ratio | 202% | 216% | 217% | n/m | 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 18 Jun 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 18 Jun 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 March 2025, the bank's loan mix by segment consists of 41% corporate, 26% SME, 28% retail and 5% 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 18 Jun 2025We 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 than earlier guided for this year. Moody’s also downgraded its rating outlook on the Thailand sovereign, and consequently the Thai banks including KBANK, to negative on 29 April 2025, citing increased risks to Thailand’s economic and fiscal strength, partly due to the potential impact of new US tariffs.
KBANK’s switch to focus on safer segments will also weigh further on the NIM, though it currently remains higher compared to most of its peers.
It also still has a higher retail/SME loan mix and sizable restructured loans portfolio (~7.8% of total loans) and so credit costs remain elevated compared to peers. KBANK’s higher NIM and low-40%s cost-income ratio however provide comfortable room for that to be absorbed. The focus on safer segments seems is also helping to stabilize credit costs; the prolonged balance sheet cleanup has concluded at YE24 credit costs are guided to return to a normalized 140-160 bp range this year.
Key Metric
AS OF 18 Jun 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 2.38% | 2.36% | 2.52% | 2.60% | 2.67% |
| ROA | 0.98% | 0.86% | 0.99% | 1.14% | 1.27% |
| ROAE | 8.3% | 7.3% | 8.2% | 8.9% | 9.6% |
| Equity / Assets | 13.1% | 13.4% | 13.9% | 14.9% | 15.2% |
| CET1 Ratio | 15.5% | 15.9% | 16.5% | 17.4% | 17.6% |
| Gross NPL ratio | 3.76% | 3.19% | 3.19% | 3.20% | 3.19% |
| Provisions / Loans | 1.73% | 2.11% | 2.08% | 1.90% | 1.60% |
| Gross LDR | 93% | 91% | 92% | 91% | 89% |
| Liquidity Coverage Ratio | 174% | 164% | 195% | n/m | 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 17 Jun 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 17 Jun 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 48% corporate, 17% SME, 11% retail, and 24% international as at March 2025. 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 17 Jun 2025We 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 than earlier guided for this year. Moody’s also downgraded its rating outlook on the Thailand sovereign, and consequently the Thai banks including BBL, to negative on 29 April 2025, citing increased risks to Thailand’s economic and fiscal strength, partly due to the potential impact of new US tariffs.
We anticipate greater NIM pressure on BBL than most peers given the larger corporate book, which has started to come through. Loan growth will also remain middling across the Thai banks due to a focus on quality amid the current backdrop. However, we take comfort in BBL’s strong loss buffers and safer large corporate book.
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 17 Jun 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 1.65% | 1.60% | 1.92% | 2.02% | 2.17% |
| ROA | 0.65% | 0.67% | 0.93% | 1.00% | 1.10% |
| ROE | 5.6% | 5.9% | 8.1% | 8.3% | 9.0% |
| Equity / Assets | 11.4% | 11.5% | 11.8% | 12.2% | 12.2% |
| CET1 Ratio | 15.2% | 14.9% | 15.4% | 16.2% | 15.8% |
| Calculated NPL ratio | 3.20% | 3.10% | 2.70% | 2.70% | 3.00% |
| Provisions / Loans | 1.38% | 1.24% | 1.26% | 1.30% | 1.34% |
| Gross LDR | 82% | 84% | 84% | 85% | 84% |
| Liquidity Coverage Ratio | 270% | 271% | 277% | n/m | 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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Fundamental View
AS OF 17 Jun 2025ING displays robust and consistent asset quality, good earnings, solid capital ratios and a well-balanced funding profile.
These attributes are supported by its strong franchise in retail and wholesale banking in the Benelux region, its good geographic diversification, and its focus on low risk residential mortgage lending.
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.
Business Description
AS OF 17 Jun 2025- ING was founded in 1991 by a merger between Nationale-Nederlanden and NMB Postbank Group. It is now the largest Dutch financial institution by total assets.
- ING Bank 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 Jun 2025ING expects 2025 revenues to be broadly the same as in 2024 (€22.6 bn) and targeted a 5-10% increase in fee income. Total expenses are expected to rise to around €12.5-€12.7 bn (excluding incidental items) (FY24: €12.1 bn). ING notes the outlook excludes the previously announced intended sale of its business in Russia. As a reminder, this is expected to negatively impact its P&L by a net €700 mn and reduce its CET1 ratio by 5 bp.
ING is looking to become more acquisitive, so it remains a candidate for M&A in the coming years.
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 Jun 2025| € mn | Y21 | Y22 | Y23 | Y24 | 1Q25 |
|---|---|---|---|---|---|
| Return On Equity | 8.8% | 7.1% | 14.4% | 12.6% | 11.4% |
| Total Revenues Margin | 2.0% | 1.9% | 2.3% | 2.3% | 2.1% |
| Cost/Income | 60.5% | 60.3% | 51.2% | 53.6% | 56.8% |
| CET1 Ratio (Transitional) | 15.9% | 14.5% | 14.7% | 13.6% | 13.6% |
| CET1 Ratio (Fully-Loaded) | 15.9% | 14.5% | 14.7% | 13.6% | 13.6% |
| Leverage Ratio (Fully-Loaded) | 5.9% | 5.1% | 5.0% | 4.7% | 4.5% |
| Liquidity Coverage Ratio | 139.0% | 134.0% | 143.0% | 143.0% | 142.0% |
| Impaired Loans (Gross)/Total Loans | 1.8% | 1.7% | 1.8% | 1.9% | 1.9% |
CreditSight View Comment
AS OF 02 May 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, but since 2018 heavily affected by higher compliance costs after ING was hit by a money-laundering charge. 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: May 02, 2025
Recommendation Changed: February 07, 2025
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Fundamental View
AS OF 17 Jun 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 17 Jun 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, 25% private corporates, 10% SME, and 20% Government & SOEs at March 2025.
Risk & Catalysts
AS OF 17 Jun 2025We 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 than earlier guided for this year.
Moody’s also downgraded its rating outlook on the Thailand sovereign, and consequently the Thai banks including KTB, to negative on 29 April 2025, citing increased risks to Thailand’s economic and fiscal strength, partly due to the potential impact of new US tariffs.
We anticipate greater NIM pressure on KTB than most peers given the larger corporate book, which has started to come through. Loan growth will also remain middling across the Thai banks due to a focus on quality amid the current backdrop. However, we take comfort in KTB’s conservative focus on the government agencies/SOEs segment, which is supporting asset quality well amid the challenging environment.
Key Metric
AS OF 17 Jun 2025| THB mn | FY21 | FY22 | FY23 | FY24 | 1Q25 |
|---|---|---|---|---|---|
| PPP ROA | 1.83% | 1.98% | 2.40% | 2.45% | 2.56% |
| ROA | 0.63% | 0.94% | 1.01% | 1.20% | 1.25% |
| ROE | 6.1% | 9.2% | 9.4% | 10.6% | 10.5% |
| Equity/Assets | 10.5% | 10.9% | 11.4% | 12.3% | 12.6% |
| CET1 Ratio | 15.6% | 15.6% | 16.5% | 17.9% | 18.2% |
| Calculated NPL ratio | 3.50% | 3.26% | 3.08% | 2.99% | 2.97% |
| Provisions/Loans | 1.31% | 0.93% | 1.43% | 1.18% | 1.23% |
| Gross LDR | 99% | 98% | 104% | 100% | 97% |
| Liquidity Coverage Ratio | 196% | 201% | 202% | n/m | 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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Search topics about wealth insights and investments.State Bank of India
- Sector: Financial Services
- Sub Sector: Banks
- Country: India
- Bond: SBIIN 4.875 28
- Indicative Yield-to-Maturity (YTM): 5.23%
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Fundamental View
AS OF 16 Jun 2025State Bank of India (SBI) is the largest state-owned bank in India and is in some respects the country’s flagship bank. Given the bank’s ~57% government ownership and systemic importance, government support for SBI is very strong.
The bank’s capital buffers are relatively low, but we take comfort in the strong government support.
Business Description
AS OF 16 Jun 2025- State Bank of India is the largest commercial bank in India. Its predecessor banks date back to the 19th century. In the early 20th century, they merged to form the Imperial Bank of India, which became the State Bank of India after India gained independence in 1947.
- The Government of India remains the largest shareholder with a 56.92% stake. Per the SBI Act, the government's shareholding cannot fall below 55%.
- SBI's merged with its 5 associate banks and Bharatiya Mahila Bank in 2018. The merger catapulted SBI into one of the world's 50 largest banks.
- The bank has 85% of its loans in the domestic market, and has steadily increased its international business too over the past few years with offices across all international business centres. The domestic book is split 42% retail, 34% corporates, ~14% SMEs and ~10% to the agri segment as of end-March 2025.
- It has diversified its operations with well regarded subsidiaries in the areas of fund management, credit cards, insurance, and capital markets.
Risk & Catalysts
AS OF 16 Jun 2025SBI does not have a strong buffer vs. the regulatory minimum of 8%, but its size, systemic importance and majority government shareholding confer particularly strong government support. But consequentially, any deterioration in the sovereign ratings will also affect the bank’s credit.
Rate cuts will feed through to the NIM in FY26, but improved system liquidity will provide some support for the NIM and loan growth.
Asset quality is trending well despite a stretched urban middle and lower-middle class consumer class, as SBI’s personal unsecured loans book is ~95% to salaried employees of top tier corporates and the government.
Management announced plans for an INR 250 bn equity fundraise in FY26, which would provide an around 0.6 ppt boost to capital ratios at the consolidated level on a pro-forma basis.
Key Metric
AS OF 16 Jun 2025| INR mn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| NIM | 3.04% | 3.12% | 3.37% | 3.28% | 3.09% |
| ROAA | 0.48% | 0.67% | 0.96% | 1.04% | 1.10% |
| ROAE | 8.4% | 11.9% | 16.5% | 17.3% | 17.3% |
| Equity to Assets | 5.6% | 5.6% | 5.9% | 6.1% | 6.6% |
| CET1 Ratio | 10.3% | 10.3% | 10.6% | 10.6% | 11.1% |
| Gross NPA Ratio | 4.98% | 3.97% | 2.78% | 2.24% | 1.82% |
| Provisions/Loans | 1.77% | 0.91% | 0.54% | 0.14% | 0.38% |
| PPP ROA | 1.65% | 1.58% | 1.59% | 1.60% | 1.72% |
CreditSight View Comment
AS OF 06 May 2025SBI is India’s largest bank and a well-run franchise. Government support underpins SBI’s relative positioning, while fundamentally, it has good operating metrics and business plans, a sufficient (though could be higher) CET1 ratio, and the best management among the public sector banks. SBI’s less tight LDR position than its private sector peers has allowed it to have continued higher loan growth than deposit growth in in F9M25. India’s macro backdrop remains relatively robust and SBI’s lower risk personal unsecured loans clientele is supporting asset quality well. Rate cuts will feed through to the NIM in FY26. Improved system liquidity however will provide some support for the NIM and loan growth. We like the name, but move it back to M/P as it now trades a few bp inside HDFCB.
Recommendation Reviewed: May 06, 2025
Recommendation Changed: April 25, 2025
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Fundamental View
AS OF 16 Jun 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 16 Jun 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 20%, while rural and business banking & SMEs are at 6% and 19% respectively, and overseas (which is being de-emphasised) consists of just 2% at F4Q25.
- The bank has well regarded life insurance (ICICI Prudential) and general insurance (ICICI Lombard) businesses.
Risk & Catalysts
AS OF 16 Jun 2025ICICI has been delivering both relatively strong loan and deposit growth momentum, while maintaining its leading LDR and profitability, in testament to its strong franchise.
Rate cuts will feed through to the NIM in FY26, but improved system liquidity will provide some support for the NIM and loan growth.
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 16 Jun 2025| INR bn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| NIM | 3.69% | 3.96% | 4.48% | 4.53% | 4.32% |
| ROAA | 1.39% | 1.77% | 2.13% | 2.37% | 2.37% |
| ROAE | 12.3% | 14.7% | 17.2% | 18.7% | 17.9% |
| Equity/Assets | 12.0% | 12.1% | 12.6% | 12.7% | 13.7% |
| CET1 Ratio | 16.7% | 17.3% | 16.9% | 15.4% | 15.8% |
| Gross NPA Ratio | 4.96% | 3.60% | 2.81% | 2.16% | 1.67% |
| Provisions/Loans | 2.05% | 0.97% | 0.65% | 0.30% | 0.34% |
| PPP ROA | 3.13% | 2.97% | 3.28% | 3.36% | 3.37% |
CreditSight View Comment
AS OF 16 Jun 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: June 16, 2025
Recommendation Changed: December 07, 2020
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Sultanate of Oman
Korea Electric Power Corp.
Korea Gas Corp.
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Search topics about wealth insights and investments.Sumitomo Mitsui Financial Group
- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 12 Jun 2025After reorganising and building up capital for the full impact of Basel 3, SMFG has in the past few years 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 12 Jun 2025- The core unit of SMFG is Sumitomo-Mitsui Banking Corp (SMBC), whose main predecessors were Sumitomo Bank and Mitsui Bank.
- 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.
- 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.
- 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 20% stake in India's Yes Bank.
Risk & Catalysts
AS OF 12 Jun 2025Similar 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 taken stakes in FE Credit (49%) and VP Bank (15%) in Vietnam, Fullerton in India (100%, now renamed SMICC), RCBC in the Philippines (20%), and is acquiring 20% of India’s Yes Bank, to increase its exposure to emerging growth areas. It had previously acquired a bank (Danamon) and auto NBFIs in Indonesia. However, FE Credit faced losses in 2022/23 as a result of the Vietnam slowdown in 2022, leading to JPY 135 bn of goodwill impairments in FY24. RoE on these investments has been poor.
It increased its 4.5% stake in Jefferies to 15%, to develop revenue opportunities for SMBC Nikko. Further investments in SMBC Nikko will be required.
Credit costs have seen volatility, but it has the lowest NPL ratio amongst the megabanks.
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 12 Jun 2025| JPY bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.60% | 0.64% | 0.68% | 0.70% | 0.80% |
| Operating Income/Average Assets | 1.27% | 1.23% | 1.26% | 1.39% | 1.41% |
| Operating Expense/Operating Income | 62% | 62% | 61% | 60% | 58% |
| Pre-Impairment Operating Profit / Average Assets | 0.49% | 0.48% | 0.51% | 0.58% | 0.59% |
| Impairment charge/Average Loans | (0.43%) | (0.31%) | (0.22%) | (0.27%) | (0.32%) |
| ROAA | 0.23% | 0.30% | 0.32% | 0.36% | 0.40% |
| ROAE | 4.5% | 5.9% | 6.5% | 7.0% | 8.0% |
CreditSight View Comment
AS OF 16 May 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. Govt. support is assured. We see 20 bp of upside from current levels.
Recommendation Reviewed: May 16, 2025
Recommendation Changed: January 27, 2025
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Sultanate of Oman
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Korea Gas Corp.
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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 12 Jun 2025MUFG is the largest of Japan’s three megabanks, and has the most diversified operations by business line and geography. It has also been the most acquisitive until recently.
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 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 12 Jun 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 August 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 12 Jun 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 could have proven problematic.
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 12 Jun 2025| JPY bn | FY20 | FY21 | FY22 | FY23 | FY24 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.56% | 0.57% | 0.79% | 0.64% | 0.73% |
| Operating Income/Average Assets | 1.16% | 1.11% | 1.22% | 1.23% | 1.22% |
| Operating Expense/Operating Income | 68% | 69% | 65% | 61% | 67% |
| Pre-Impairment Operating Profit / Average Assets | 0.37% | 0.34% | 0.43% | 0.48% | 0.40% |
| Impairment charge/Average Loans | (0.48%) | (0.30%) | (0.61%) | (0.44%) | (0.09%) |
| ROAA | 0.23% | 0.32% | 0.30% | 0.39% | 0.47% |
| ROAE | 4.7% | 6.7% | 6.5% | 8.1% | 9.3% |
| CET1 post Basel 3 reforms excl. secs gains | 9.7% | 10.4% | 10.3% | 10.1% | 10.8% |
CreditSight View Comment
AS OF 16 May 2025MUFG is the largest of the megabanks with more diversified business lines. 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, which are now well higher than the other two. Its ~20% shareholding in Morgan Stanley has been a boon. Acquisitions have become more targeted. Its $ liquidity is also the best amongst its peers, and government support is assured. Accelerated sales of its shareholdings accompanied by buybacks may pressure its CET1 ratio buffer, which is in line with its peers at ~230 bp. We see 20 bp of upside from current levels for its TLAC senior paper.
Recommendation Reviewed: May 16, 2025
Recommendation Changed: January 27, 2025
Who We Recommend
Sultanate of Oman
Korea Electric Power Corp.
Korea Gas Corp.