Krungthai Bank Public Company Limited (SET: KTB), one of Thailand’s leading state-owned lenders, delivered a solid performance in the second quarter of 2025, surpassing some analyst expectations even as cautious tones persist over macroeconomic uncertainties in the latter half of the year.
Trading Income Buoys Results, Loan Growth Outpaces Peers
The Bangkok-based bank reported a net profit of approximately THB 11 billion for the second quarter, marking a slight 5% decline from the previous quarter and a 1% decrease year-on-year. However, first-half profits reached 53% of full-year consensus forecasts, largely propelled by strong trading income—which now accounts for 70% of some analysts’ full-year estimates.
KTB distinguished itself with robust loan momentum, reporting 0.4% quarter-on-quarter and 4.4% year-on-year growth, outperforming the industry thanks to continued expansion in government, mortgage, and personal lending. This strength offset a contraction in SME loans.
Margins Under Pressure, Fee Income Up
While loan growth stood out, KTB’s net interest margin (NIM) contracted 17 basis points quarter-on-quarter—more sharply than peers—attributable to a greater decline in asset yields. The margin squeeze reflected ongoing shifts in the interest rate environment and loan mix.
On the non-interest side, KTB posted a 2% rise in fees compared to the previous quarter and a 6% jump year-on-year, supported by wealth management, bancassurance, and card-related revenues.
Stable Asset Quality and Capital Strength
Non-performing loan (NPL) ratios remained stable, while the bank improved its coverage ratio to a substantial 194%. Total provisions rose marginally to 6.6% of loans, further reinforcing the bank’s risk buffers. The Common Equity Tier 1 (CET1) ratio climbed to 18.3%, placing KTB ahead of domestic rivals in capitalization. This capital strength allowed the bank to declare a final dividend, with brokers suggesting upside remains in terms of shareholder returns. Current valuations put KTB at 0.6 times twelve-month forward price-to-book, offering a 9.6% return on equity and a 7.5% dividend yield.
Analyst Caution Amid Macroeconomic Risks
Despite commendable results, broker sentiment varied. Citi took an upbeat view, reiterating a “Buy” with a 12-month target price of THB 25.50, citing operating momentum and trading income strength. CLSA also remained constructive after KTB’s earnings met expectations, highlighting stable credit costs and controlled asset quality. The firm gave a target price for KTB at THB 26.00 per share.
However, Morgan Stanley adopted a more cautious stance, rating the stock “Equalweight” while flagging emerging macroeconomic headwinds. The bank itself noted downside risks to GDP growth in the second half of 2025 and into 2026, with ongoing uncertainty surrounding government tariffs and an anticipated slowdown in the broader operating environment.
