Kasikornbank Public Company Limited (SET: KBANK), one of Thailand’s leading financial institutions, has set a cautious tone for its 2026 business outlook, reflecting continued concerns over the nation’s still-fragile economic recovery.
According to FSS International Investment Advisory Securities (FSSIA), the bank is prioritizing asset quality over aggressive expansion, targeting modest loan growth of just 0–2% year-on-year. This moderate increase will be primarily driven by corporate loans as well as secured retail lending, particularly high-end residential mortgages.
While these segments typically deliver lower yields compared to riskier loan categories, KBANK anticipates that a strategy focused on high-quality assets will generate benefits through reduced credit costs, improved new customer acquisition, and more opportunities for cross-selling financial products. Notably, the bank will continue to limit growth in small and medium-sized enterprise (SME) loans as part of its risk management strategy.
KBANK’s guidance for net interest margin (NIM) in 2026 indicates a decline of 28–48 basis points from 3.23% in 2025. This move is broadly in line with peers and does not come as a surprise to analysts. To address concerns about a potential decline in non-interest income (Non-NII) following exceptionally strong fair value through profit or loss (FVTPL) and investment gains in 2025, KBANK is intensifying its focus on fee income. The bank aims for mid-to-high single-digit growth in this area, with wealth management and bancassurance identified as key drivers.
Cost discipline also remains a core theme, with management targeting a cost-to-income ratio in the mid-40% range. Credit costs are expected to remain stable at 140–160 basis points, while non-performing loans (NPLs) will be strictly controlled, with a capped ratio of 3.25%.
On the shareholder returns front, KBANK is maintaining a normal payout ratio of 50–60% for 2025, in addition to its previously announced share buyback plan. While management has yet to confirm whether special dividends will continue in 2025, FSSIA projects that total dividends should remain sustainable at THB 12 per share—equivalent to a 57% payout ratio—after factoring in the estimated 0.57% share buyback in 2025. These projections are consistent with KBANK’s guidance for a 55–65% payout ratio, including buybacks.
FSSIA has revised down its net profit forecasts for KBANK for 2026 and 2027 to reflect the bank’s conservative targets, notably lower NIM assumptions reflecting a sharper-than-expected decline in loan yields, together with a credit cost outlook at the upper end of guidance. As a result, net profit across 2026–2028 is expected to deliver a compound annual growth rate (CAGR) of -1.6%, falling short of the industry average of -0.2%.
Given the muted profit outlook and limited capital gains potential, FSSIA has downgraded its recommendation on KBANK shares to “Hold.” With the bank still offering an average dividend yield of approximately 6% per annum, there remains value for income-focused investors, but upside from the unchanged 2026 target price of THB 190 (based on long-term return on equity of 7.50% and cost of equity of 9.84%) is viewed as limited.
Meta disc: FSSIA downgrades KBANK’s recommendation to “Hold” as the company projects conservative loan and NIM growth outlook for 2026.
