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Sub-sector: Banks
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 11 Feb 2026Woori 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, but FY24 profit growth was peer-leading, partially thanks to not having the ELS compensation issue which hit the other three FGs in 1Q24. FY25 performance was softer again due to higher opex and preemptive provisioning.
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 but is closer than ever before to that of its peers on the back of active portfolio management.
Business Description
AS OF 11 Feb 2026- 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 also acquired a 75.34% stake in Tongyang Life and full ownership of ABL Life and has consolidated them since 1 July 2025.
Risk & Catalysts
AS OF 11 Feb 2026Woori FG was for many years majority-owned by the Korean government via the Deposit Insurance Corporation (KDIC), but KDIC has steadily sold 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 KB and Shinhan, 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 since 2024; it relaunched securities business and acquired two insurance companies. However, It will likely take more time than expected for the new non-banking segments to make a meaningful contribution to the group.
Loan growth is expected to be more challenging given tighter regulation on mortgage lending.
Key Metric
AS OF 11 Feb 2026| KRW bn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Pre-Provision Profit ROA | 0.99% | 1.15% | 1.10% | 1.17% | 1.02% |
| ROA | 0.66% | 0.70% | 0.54% | 0.61% | 0.58% |
| ROE | 10.6% | 11.5% | 8.3% | 9.3% | 9.1% |
| Provisions/Loans | 0.17% | 0.26% | 0.53% | 0.45% | 0.53% |
| NPL Ratio | 0.30% | 0.31% | 0.35% | 0.57% | 0.63% |
| Woori Bank CET1 Ratio | 13.0% | 12.7% | 13.2% | 13.1% | 14.1% |
| Equity/Assets | 6.45% | 6.58% | 6.71% | 6.83% | 6.30% |
| Net Interest Margin Bank + Card | 1.62% | 1.84% | 1.82% | 1.70% | 1.73% |
CreditSight View Comment
AS OF 09 Feb 2026Woori FG was for some years the weakest of Korea’s Big 4 Financial Groups. Operating performance had shown an improvement for a few years but disappointed in FY23. FY24 results were peer-leading, mainly supported by non-interest income, but FY25 results lagged again. The group has been seeking opportunities to expand its non-bank businesses. Its new securities entity launched in Aug-24 and the acquisition of two insurance companies were completed in Jul-25. Both the group and the bank CET1 ratios are behind peers, but a strong improvement from earlier. The bank LCR is low at ~107% and NSFR is acceptable at ~112%. As a systemically important bank, government support is assured. We have an Underperform recommendation on it on tight valuations.
Recommendation Reviewed: February 09, 2026
Recommendation Changed: February 03, 2026
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Fundamental View
AS OF 04 Feb 2026Hana 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 04 Feb 2026- 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).
Risk & Catalysts
AS OF 04 Feb 2026Hana FG’s credit costs at ~30 bp in FY24 and FY25 were lower than peers. However, the group’s NPL coverage ratio was also ~20-30 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.
Non-banking businesses have underperformed in recent years, with profit contributions falling from 20–30% in 2019–2021 to around 10%, primarily due to elevated provisions for domestic real estate project financing and valuation losses related to overseas commercial real estate.
Loan growth is expected to be more challenging given tighter regulation on mortgage lending.
Key Metric
AS OF 04 Feb 2026| KRW bn | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Pre-Provision Profit ROA | 1.07% | 1.10% | 1.11% | 1.00% | 1.02% |
| ROA | 0.74% | 0.66% | 0.59% | 0.61% | 0.62% |
| ROE | 10.9% | 10.1% | 9.0% | 9.1% | 9.2% |
| Provisions/Loans | 0.16% | 0.34% | 0.46% | 0.32% | 0.31% |
| NPL Ratio | 0.32% | 0.34% | 0.50% | 0.62% | 0.72% |
| CET1 Ratio | 13.8% | 13.2% | 13.2% | 13.2% | 13.4% |
| Equity/Assets | 6.8% | 6.4% | 6.6% | 6.7% | 6.6% |
| Net Interest Margin | 1.66% | 1.83% | 1.82% | 1.69% | 1.73% |
CreditSight View Comment
AS OF 09 Feb 2026Hana 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. The non-bank segment remains a drag. 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 bank LCR and NSFR are low at 105/109% (3Q25). The group aims to maintain a CET1 ratio of 13-13.5%; its bank level CET1 ratio is the highest amongst peers. Insurance M&A is being considered. We have an Underperform recommendation on tight valuations.
Recommendation Reviewed: February 09, 2026
Recommendation Changed: October 31, 2025
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Fundamental View
AS OF 05 Jan 2026BNP’s financial strength is based on its strong franchises across retail, commercial and investment banking, and its wide business and geographic diversification. Profitability is sound and improving, while asset quality has held up well.
Uncertainty around the financial health of the French sovereign and its ratings have the capacity to weigh on BNP’s stock price and its credit spreads. More recently, uncertainty around litigation and Sudan claims circles the bank.
Capital and leverage ratios are run tightly considering BNP’s balance sheet size.
Business Description
AS OF 05 Jan 2026- BNP is one of the most diversified banking groups in Europe, having been created from a merger of the retail/commercial bank BNP and the corporate/investment bank Paribas in 2000.
- Domestic Markets (DM) comprises the Group's four retail banking networks in the eurozone and its three specialised business lines (including leasing and digital banking). The retail banks are French Retail Banking (FRB), BNL in Italy, BNP Paribas Fortis in Belgium and BGL BNP Paribas in Luxembourg.
- International Financial Services (IFS) includes consumer finance, asset management and private banking, and subsidiaries in non-eurozone countries, including TEB in Turkey and BNP Paribas Bank Polska.
- Corporate & Institutional Banking (CIB) is a global provider of financial solutions to corporate and institutional clients and includes BNP's extensive trading and investment banking businesses.
Risk & Catalysts
AS OF 05 Jan 2026BNP Paribas remains the subject of various claims concerning the Madoff matter; amongst other claims. Litigation provisions on the balance sheet stood at €973 mn at 30 June 2025. BNP says the latest claims against it stand at $1.1 bn as of June 2025.
If there was a negative rating action on the sovereign, it is possible that BNP’s ratings will be impacted but it is difficult to say with any uncertainty. France represents around 30% of revenues and gross commitments on balance sheet and sovereign bond holdings are moderate; we discuss more below.
A U.S. court found BNP liable for $21 mn of damages to three Sudanese refugees, in connection with its alleged role in providing banking services to Sudan’s former president and enabling human rights abuses. This is immaterial for the bank, however, the concern is that the case could open the door to similar claims from other victims, via class action or individual suits.
Key Metric
AS OF 05 Jan 2026| mn | Y21 | Y22 | Y23 | Y24 | 3Q25 |
|---|---|---|---|---|---|
| Return On Equity | 8.2% | 8.2% | 9.0% | 9.3% | 9.8% |
| Total Revenues Margin | 1.8% | 1.7% | 1.7% | 1.8% | 1.8% |
| Cost/Income | 67.3% | 60.7% | 62.6% | 61.8% | 60.5% |
| CET1 Ratio (Transitional) | 12.9% | 12.3% | 13.2% | 12.9% | 12.5% |
| CET1 Ratio (Fully-Loaded) | 12.9% | 12.3% | 13.2% | 12.9% | 12.5% |
| Leverage Ratio (Fully-Loaded) | 4.1% | 4.4% | 4.6% | 4.6% | 4.3% |
| Liquidity Coverage Ratio | 143.0% | 129.0% | 148.0% | 137.0% | 138.0% |
| Impaired Loans (Gross)/Total Loans | 3.3% | 2.9% | 2.9% | 2.8% | n/a |
CreditSight View Comment
AS OF 18 Feb 2026BNP remains one of the more diversified bank names in Europe. Its strong business and geographic diversification has helped it maintain good profitability and asset quality. Earnings have been resilient, with CIB a stand-out performer. Liquidity and funding metrics look sound. Asset quality has held up well, although an outlier is the group’s personal finance business. The latter is being restructured, to focus more on auto finance rather than personal lending. BNP’s capital position is tight but it has increased its target going through to 2028. It is looking to expand now in insurance and asset management, likely to grow fee income. BNP is expected higher net income in the next few years from 2025. Several litigation overhangs exist; we maintain a Rich view on its AT1.
Recommendation Reviewed: February 18, 2026
Recommendation Changed: October 30, 2018
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Fundamental View
AS OF 05 Jan 2026ING displays robust and consistent asset quality, good earnings and a well-balanced funding profile.
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 although given higher minimum capital requirements, it recently increased its CET1 target.
Business Description
AS OF 05 Jan 2026- 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 05 Jan 2026In 2025, 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 13% target in the coming years, bringing it more in line with other major peers.
Key Metric
AS OF 05 Jan 2026| € mn | Y21 | Y22 | Y23 | Y24 | 3Q25 |
|---|---|---|---|---|---|
| Return On Equity | 8.8% | 7.1% | 14.4% | 12.6% | 14.5% |
| Total Revenues Margin | 2.0% | 1.9% | 2.3% | 2.3% | 2.2% |
| Cost/Income | 60.5% | 60.3% | 51.2% | 53.6% | 51.1% |
| CET1 Ratio (Transitional) | 15.9% | 14.5% | 14.7% | 13.6% | 13.4% |
| CET1 Ratio (Fully-Loaded) | 15.9% | 14.5% | 14.7% | 13.6% | 13.4% |
| Leverage Ratio (Fully-Loaded) | 5.9% | 5.1% | 5.0% | 4.7% | 4.4% |
| Liquidity Coverage Ratio | 139.0% | 134.0% | 143.0% | 143.0% | 140.0% |
| Impaired Loans (Gross)/Total Loans | 1.8% | 1.7% | 1.8% | 1.9% | 1.8% |
CreditSight View Comment
AS OF 11 Feb 2026After 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 income has been supported by volume growth – 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 but in September it was announced the deal has stalled; this will negative impact 2026 results. We moved from Outperform to Market perform on 6 February 2025.
Recommendation Reviewed: February 11, 2026
Recommendation Changed: February 07, 2025
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Fundamental View
AS OF 29 Dec 2025Goldman Sachs’ performance and market share in its core legacy businesses of investment banking and sales and trading have remained very solid, working through soft periods associated with rising rates; with market conditions improving into 2025 these businesses should continue to excel.
With costs related to the exit from consumer businesses in the rear-view, recent results have reflected Goldman’s positioning for re-heating capital markets. Wealth and Asset Management is another likely area of growth in the coming years, where Goldman can leverage its strengths in HNW and alternative asset management as well as growth initiatives.
Business Description
AS OF 29 Dec 2025- Goldman Sachs is now the fifth largest bank holding company in the U.S. with approximately $1.81 tn in assets as of 3Q25 and a market capitalization of $242.8 bn as of November 24th, 2025.
- Goldman Sachs presents its activities through three business segments: Global Banking & Markets, Asset & Wealth Management, and Platform Solutions.
- Goldman's core strengths include equity and FICC sales & trading, investment banking, institutional investment management including alternatives, and high net worth wealth management. It has been expanding its wealth management client base, and adding other stable fee income sources which help diversify its revenue streams.
Risk & Catalysts
AS OF 29 Dec 2025The early 2020’s were a mixed bag– the foray into consumer lending was costly and ultimately was reversed, diverting capital and management attention and providing a meaningful drag on profitability. Goldman has re-focused on its core businesses to much recent success, though its profile will remain less diversified than large GSIB peers.
Goldman could participate in further M&A to achieve its long-term strategic goals, and recent deals have been add-on deals related to asset/wealth management.
Goldman could be impacted by various risks during periods of market turmoil, but for the most part, has been positively impacted by bouts of volatility which tend to spur more client trading activity– 2025 tariff risks being a recent example. Goldman is subject to significant market and counterparty risks as reflected in the DFAST/SCB regime.
Key Metric
AS OF 29 Dec 2025| $ mn | FY21 | FY22 | FY23 | FY24 | 3Q25 |
|---|---|---|---|---|---|
| ROAE (annual) | 21.3% | 9.7% | 7.3% | 12.0% | 13.6% |
| ROAA (annual) | 1.5% | 0.7% | 0.5% | 0.8% | 0.9% |
| PPNR / Avg. Assets | 1.86% | 1.08% | 3.29% | 3.92% | 1.25% |
| Efficiency Ratio | 54% | 65% | 282% | 266% | 61% |
| Net charge-offs (LTM) / Loans | 0.19% | 0.30% | 0.68% | 0.61% | 0.53% |
| Common Dividend Payout | 10.6% | 28.4% | 158.9% | 129.4% | 24.9% |
| CET1 Ratio | 13.6% | 15.0% | 14.4% | 15.0% | 14.3% |
| Supplementary Leverage Ratio (SLR) | 5.5% | 5.8% | 5.5% | 5.5% | 5.2% |
| Liquidity Coverage Ratio (LCR) | 122% | 129% | 128% | 126% | 128% |
CreditSight View Comment
AS OF 26 Jan 2026We are moving Goldman Sachs to Underperform from Market perform on valuation, seeing Bank of America as a better option at recent spread levels. We also see Goldman Sachs as among the least likely to reduce debt supply in light of lower debt requirements– Goldman’s issuance needs are far more determined by wholesale funding needs for the trading business than managing to regulatory requirements, particularly in active capital markets conditions as we have been in recently. We have no particular fundamental concerns and in fact expect Goldman to continue to benefit from the momentum in the dealmaking environment and secular growth in trading.
Recommendation Reviewed: January 26, 2026
Recommendation Changed: January 13, 2026
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Fundamental View
AS OF 29 Dec 2025Citigroup is a solid global money center bank that has done a decent job cleaning up legacy issues and fortifying the risk profile in the wake of the GFC, though it still lags peers on several fronts including profitability.
Citi has more geographic diversification than peers owing to its international presences, though the retail side is shrinking considerably as Citi exits most of Asia and Mexico, refocusing around a global wealth management/private bank strategy.
Citi lags on the domestic deposit front, with less than half of the deposit base of money center peers and a much smaller physical footprint, though it has been focused on driving deposit flows the past couple of years.
Business Description
AS OF 29 Dec 2025- Citigroup ranks as the 3rd largest U.S. bank by total assets ($2.64 tn) at 3Q25 and 3rd largest by Total Equity ($214 bn).
- Citi currently is the 4th in terms of U.S. deposits with approximately $795.4 bn as of 3Q25 across 668 branches (S&P Capital IQ). Given the significantly smaller branch footprint, Citi does not generally possess leading market shares in most states besides South Dakota (#1).
- Citi's major business lines include U.S. consumer (mortgages and credit cards) and retail banking, global consumer, global corporate & investment banking, and global payments. The company has a plan to exit 13 international consumer markets, refocusing the non-US footprint around four regional hubs and combining wealth management and the private bank to drive synergies out of the hubs.
Risk & Catalysts
AS OF 29 Dec 2025Citi still lags peers on profitability (both ROA and ROTCE); CEO Fraser adopted the profitability gap as a key focus point as well, and we see Fraser’s strategic moves (e.g. int’l consumer exits, headcount reduction in management layers) as aimed at capital and expense optimization to improve ROE with some progress showing up recently.
Citi has had some regulatory mishaps in recent years but has made progress towards resolving issues.
Citi’s global footprint makes it more exposed to emerging markets and non-domestic economies; in the near-term, that could create earnings and capital volatility, though tariff-related disruptions did not ultimately negatively impact Citi in 2025.
Key Metric
AS OF 29 Dec 2025| $ mn | FY21 | FY22 | FY23 | FY24 | LTM 3Q25 |
|---|---|---|---|---|---|
| ROAE (annual) | 10.9% | 7.5% | 4.5% | 6.1% | 7.0% |
| ROAA (annual) | 0.92% | 0.61% | 0.38% | 0.51% | 0.55% |
| PPNR / Avg. Assets | 1.02% | 0.97% | 3.93% | 3.56% | 4.38% |
| Efficiency Ratio | 68% | 67% | 272% | 283% | 259% |
| Net Interest Margin (Annual) | 1.94% | 2.20% | 2.37% | 2.29% | 2.34% |
| Net charge-offs (LTM) / Loans | 0.70% | 0.55% | 0.95% | 1.29% | 1.27% |
| Common Dividend Payout | 19% | 27% | 130% | 187% | 125% |
| CET1 Ratio | 12.3% | 13.0% | 13.4% | 13.6% | 13.3% |
| Supplementary Leverage Ratio (SLR) | 5.7% | 5.8% | 5.8% | 5.9% | 5.5% |
| Liquidity Coverage Ratio (LCR) | 115% | 118% | 116% | 117% | 115% |
CreditSight View Comment
AS OF 24 Feb 2026We are moving Citi to Market perform from Underperform, seeing decent spread value at the widest name among Big 6 GSIBs, particularly considering the context of improved profitability as well as progress on divesting itself of Banamex, the most significant step remaining in right-sizing its international exposure. We no longer see policy (i.e. tariffs) as a particular concern for Citi. Additionally we see possible technical tailwinds from lower supply as debt requirements notch downwards due to the eSLR changes that went through in late 2025.
Recommendation Reviewed: February 24, 2026
Recommendation Changed: January 13, 2026
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Fundamental View
AS OF 29 Dec 2025JPMorgan is one of the strongest and best positioned banks to navigate the current environment, with a well-diversified business model and good competitive positioning across a variety of lending and capital markets areas.
The company continues to deploy its considerable earnings power into reinvestment, specifically around technology where we are bullish on its ability to drive competitive advantages through strategic enhancements and efficiency gains.
Business Description
AS OF 29 Dec 2025- JPMorgan ranks as the largest U.S. bank by total assets ($4.56 tn at 3Q25) and deposits ($2.55 tn at 3Q25).
- JPMorgan ranks 1st in terms of U.S. deposits with approximately $2.08 tn in deposits at YE24 across 4,970 branches (S&P Capital IQ). JPMorgan's footprint includes New York (#1), Texas (#1), California (#2), Illinois (#1), Michigan (#1), Arizona (#1), Ohio (#5), and Florida (#4), among others.
- JPMorgan's major business lines include investment banking, retail banking, card services, treasury & securities services, commercial banking, and asset & wealth management.
Risk & Catalysts
AS OF 29 Dec 2025Succession planning at JPMorgan has a higher profile than many peers, with CEO Dimon (68 year-old) having held the top spot for over 15 years. Another recent round of shuffling top management yielded a little clarity.
The sector is always exposed to reputational, legislative, administration, and economic risk factors. That said, JPM’s strong capital position and scale leaves it well positioned to adapt to evolving landscapes and macro conditions.
Although not likely a credit risk, JPMorgan may continue to be acquisitive around non-bank financial and ancillary services; but we would expect any deal to be conservatively funded and looking to further technology and fee income strategies (e.g. payments or asset management).
Key Metric
AS OF 29 Dec 2025| $ mn | FY21 | FY22 | FY23 | FY24 | 3Q25 |
|---|---|---|---|---|---|
| ROAE (annual) | 17.0% | 13.2% | 16.0% | 17.4% | 16.7% |
| ROAA (annual) | 1.3% | 1.0% | 1.3% | 1.4% | 1.3% |
| PPNR / Avg. Assets | 1.32% | 1.39% | 7.06% | 7.71% | 1.86% |
| Efficiency Ratio | 59% | 58% | 214% | 220% | 53% |
| Net Interest Margin (Annual) | 1.63% | 2.00% | 2.70% | 2.63% | 2.52% |
| Net charge-offs (LTM) / Loans | 0.26% | 0.25% | 0.48% | 0.63% | 0.68% |
| Common Dividend Payout | 24% | 32% | 101% | 97% | 27% |
| CET1 Ratio | 13.1% | 13.2% | 15.0% | 15.7% | 14.8% |
| Supplementary Leverage Ratio (SLR) | 5.4% | 5.6% | 6.1% | 6.1% | 5.8% |
| Liquidity Coverage Ratio (LCR) | 110% | 110% | 113% | 113% | 113% |
CreditSight View Comment
AS OF 29 Jan 2026We continue to view JPMorgan as the strongest and most defensive name among the Big 6 issuers, but at recent tight spread levels and considering sound fundamentals across the space, we see relatively better value at Bank of America currently. JPMorgan’s 4Q25 results showed continued solid trends, and guidance looks positive for 2026– net interest income is expected to see moderate growth and investment banking pipelines remain healthy. Profitability remains quite strong with core ROTCE around 20%, and excess capital remains robust.
Recommendation Reviewed: January 29, 2026
Recommendation Changed: January 13, 2026
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Fundamental View
AS OF 19 Dec 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 FY23-24. Its Australian mortgage book has also shown strong but sensible growth.
Business Description
AS OF 19 Dec 2025- Macquarie grew out of the Australian business of Hill Samuel, which commenced 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 recently sold its public AM business in the US and Europe to Nomura. Adjusting for the Nomura transaction, MAM has AUM of A$720 bn.
Risk & Catalysts
AS OF 19 Dec 2025Macquarie Group has sizable exposure 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. It has till recently managed this risk well, but we are now cautious about its declining group capital surplus (it does not commit to a minimum level).
It is a global leader in infra investments and is well positioned for the green transition (though recently selling down these assets has proved difficult). It has been a strong beneficiary of volatility in commodity markets, a testament to its risk management capabilities.
Its banking unit was subject to enforcement action in Apr-21 by APRA over the incorrect treatment of intra-group funding arrangements resulting in an A$500 mn operational risk overlay as well as LCR and NSFR add-ons. The CGM unit also saw higher regulatory remediation-related spend more recently.
Key Metric
AS OF 19 Dec 2025| AUD mn | FY23 | FY24 | FY25 | 1H26 |
|---|---|---|---|---|
| Operating Income | 19,576 | 17,071 | 17,569 | 8,720 |
| Cost/Income | 62.0% | 71.4% | 70.5% | 71.8% |
| Net Profit | 5,182 | 3,522 | 3,715 | 1,655 |
| Return on Equity | 16.9% | 10.8% | 11.2% | 9.6% |
| Total Impairments/Op Profit | 6.1% | (7.4%) | 6.6% | 1.2% |
| Annuity Business Profit Contribution | 34.2% | 36.5% | 43.6% | 51.9% |
| MBL CET1 Ratio (APRA) | 13.7% | 13.6% | 12.8% | 12.4% |
| MBL Liquidity Coverage Ratio | 214% | 191% | 175% | 173% |
| MBL Net Stable Funding Ratio | 124% | 115% | 113% | 113% |
CreditSight View Comment
AS OF 11 Feb 2026Macquarie has a strong record of profitability since its inception. Its AM business focused on infrastructure, including 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 Aus banking business has steadily gained mortgage marketshare. Large investment disposals from AM and Macquarie Capital led to a record year in FY22; strong commodities outperformance led to another record in FY23. FY24 income was affected by asset realisations and gas & power income. FY25 was helped by asset sales, 1H26 was just 3% up YoY but 3Q was better. Group capital surplus is falling but is comfortable at the bank level. ALM is conservative. Senior spreads at both bank and group are tight.
Recommendation Reviewed: February 11, 2026
Recommendation Changed: February 11, 2026
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Fundamental View
AS OF 26 Nov 2025After reorganising and building up capital for the full impact of Basel 3, SMFG has recently been acquisitive to develop 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 26 Nov 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 increased its stake in Jefferies from 4.5% to 15%, and in 2024 took its stake in SMICC to 100%. In 2025 it took a 24% stake in India's Yes Bank, and increased its Jefferies stake to 20%.
Risk & Catalysts
AS OF 26 Nov 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 has increased its 15% stake in Jefferies to 20%, to develop revenue opportunities for SMBC Nikko. Further investments in SMBC Nikko will be required.
Its CET1 ratio buffer is ~200 bp, which we would like to see maintained.
Key Metric
AS OF 26 Nov 2025| JPY bn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.64% | 0.68% | 0.70% | 0.82% | 0.88% |
| Operating Income/Average Assets | 1.23% | 1.26% | 1.39% | 1.44% | 1.58% |
| Operating Expense/Operating Income | 62% | 61% | 60% | 58% | 53% |
| Pre-Impairment Operating Profit / Average Assets | 0.48% | 0.51% | 0.58% | 0.60% | 0.79% |
| Impairment charge/Average Loans | (0.31%) | (0.22%) | (0.27%) | (0.32%) | (0.16%) |
| ROAA | 0.30% | 0.32% | 0.36% | 0.41% | 0.64% |
| ROAE | 5.9% | 6.5% | 7.0% | 8.0% | 12.5% |
CreditSight View Comment
AS OF 02 Feb 2026SMFG’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 20%), and 24% 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, 9M25 showed a large jump on base effects. Govt. support is assured. We like its PerpNC10 AT1s for duration.
Recommendation Reviewed: February 02, 2026
Recommendation Changed: August 05, 2025
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- Sector: Financial Services
- Sub Sector: Banks
- Region: Japan
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Fundamental View
AS OF 26 Nov 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 2020s.
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 26 Nov 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 JVs 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 a stake in an Indian NBFI.
Risk & Catalysts
AS OF 26 Nov 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 yields as the large equity unrealised gains dwarf the unrealised losses on the bond portfolio.
Key Metric
AS OF 26 Nov 2025| JPY bn | FY21 | FY22 | FY23 | FY24 | 1H25 |
|---|---|---|---|---|---|
| Net Interest Revenue/Average Assets | 0.57% | 0.79% | 0.64% | 0.73% | 0.73% |
| Operating Income/Average Assets | 1.11% | 1.22% | 1.23% | 1.22% | 1.48% |
| Operating Expense/Operating Income | 69% | 65% | 61% | 67% | 56% |
| Pre-Impairment Operating Profit / Average Assets | 0.34% | 0.43% | 0.48% | 0.40% | 0.65% |
| Impairment charge/Average Loans | (0.30%) | (0.61%) | (0.36%) | 0.00% | (0.12%) |
| ROAA | 0.32% | 0.30% | 0.39% | 0.47% | 0.65% |
| ROAE | 6.7% | 6.5% | 8.1% | 9.3% | 12.5% |
| CET1 post Basel 3 reforms excl. secs gains | 10.4% | 10.3% | 10.1% | 10.8% | 10.5% |
CreditSight View Comment
AS OF 05 Feb 2026MUFG 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, had 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. Its $ liquidity is the best amongst its peers, and government support is assured. Its CET1 ratio ratio has fallen to ~180 bp, which we see as low; pro-forma for the Shriram acquisition it will fall to a particularly low ~120 bp. However, we see the group’s earnings power improving from BOJ rate rises and so continue with our Market perform recommendation. We see current levels on its 6NC5 of G+68 bp as 5 bp wide.
Recommendation Reviewed: February 05, 2026
Recommendation Changed: August 05, 2025
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