KKP Securities (KKPS) has upgraded Kasikornbank (SET: KBANK) to a ‘Buy’ rating with a new price objective of THB 190, citing robust core earnings and efficient cost management as driving factors. The upgrade follows KBANK’s impressive third-quarter 2025 results, which surpassed expectations by 15%. Even after stripping out investment windfalls and fair value gains (FVTPL), the bank’s fundamental performance outperformed projections, despite ongoing margin pressures.
Key underpinnings of this outperformance included a notable 10% year-on-year and 14% quarter-on-quarter rise in fee income, largely attributed to asset management (AM) fees. The asset management business grew on the back of a 17% increase in assets under management as of September 2025, and a portfolio mix shift toward higher-fee products. In addition, KBANK posted healthy gains in loan-related, payment, and foreign exchange fees.
Operating expenses remained stable quarter-on-quarter, despite one-off staff costs, and the full effects of the early retirement (ER) program are expected to lower the cost-to-income ratio below 44% for 2025. KKP Securities highlights that the ER program’s completion should yield a 10-20% boost in human resource efficiency.
Asset quality metrics were stable; Stage 2 loans and write-offs held steady while new non-performing loan (NPL) formation declined slightly to 1.4%. While KBANK retains exposure to the vulnerable SME sector, KKP Securities notes that substantial provisioning buffers and potential government support offer risk mitigation. The firm adopts a conservative stance, modeling credit costs at 1.7% under a worst-case scenario for 2026.
Stronger predicted earnings and a targeted 60% payout ratio have led to a projected dividend per share of THB 12.2 for 2025 and THB 11.5 for 2026. KBANK’s comfortable Tier 1 capital position, in excess of 15%, paves the way for potential special dividends or share buybacks, especially given subdued loan growth.
KKPS now estimates a robust 8.2% annual increase in earnings from 2025 to 2027, supporting its upgraded view of Kasikornbank as a top pick among Thai banking stocks.
