Moody’s recently upgraded Thailand’s sovereign credit outlook from “Negative” to “Stable” while maintaining the sovereign credit rating at Baa1. Following that, the rating agency also affirmed the credit ratings of six Thai financial institutions, upgrading their outlooks from “Negative” to “Stable.”
These institutions comprise Bangkok Bank Public Company Limited (SET: BBL), Krung Thai Bank Public Company Limited (SET: KTB), Kasikornbank Public Company Limited (SET: KBANK), SCB X Public Company Limited (SET: SCB), TMBThanachart Bank Public Company Limited (SET: TTB), and Export-Import Bank of Thailand (EXIM Bank).
The upgrade was primarily due to Moody’s revising its outlook on the Thai government’s credit from “Negative” to “Stable,” citing reduced geopolitical risks and lower pressure from U.S. tariffs, as well as improved political stability and investment momentum.
Meanwhile, five commercial banks—BBL, KTB, KBANK, SCB, and TTB—continue to be designated as Domestic Systemically Important Banks (D-SIBs), with Tier 1 capital ratios exceeding the Bank of Thailand’s minimum requirement of 9.5%, ranging from 16.4% to 18.6%.
According to Daol Securities (Thailand), this is a positive sentiment for the share prices of the aforementioned banks. The analyst firm noted that following Moody’s previous downgrading of five Thai banks’ outlook on May 2, 2025, the share prices of those banks fell by around 1-2% on the same day, before rebounding within 1-2 trading days. Thus, in this current instance of an outlook upgrade, the broker expected that the banks’ share prices may also rise.
The investment strategy remains “Overweight” on the banking sector, with top picks including KTB (recommend “Buy,” target price THB 38), KBANK (recommend “Buy,” target price THB 225), and BBL (recommend “Buy,” target price THB 195).
Bualuang Securities (BLS) reported that the combined net profit of the seven banks under its coverage—BBL, KBANK, SCB, KTB, TTB, TISCO, KKP—stood at THB 57.2 billion in 1Q26, representing a 2% decrease from the same period last year due to a decline in net interest margin (NIM), but increasing 20% from the previous quarter, driven by higher non-interest income and lower operating expenses.
Aggregate net profit exceeded Bualuang’s forecast by 15% and the market consensus by 12%, mainly due to stronger-than-expected non-interest income and lower-than-expected operating costs.
Net profits of BBL, KBANK, KKP, and KTB outperformed expectations, while SCB, TISCO, and TTB reported profits in line with forecasts.
Two key positive highlights of 1Q26 performance are a rise in net fee income, especially from wealth management and capital markets-related fees, and slightly improved asset quality compared to the previous quarter. The average coverage ratio for the recommended banks rose from 201.2% at the end of 2025 to 204.7% at the end of March 2026.
The brokerage house anticipated that asset quality among the banks would remain manageable throughout 2026, as most banks have tightened screening of new loans since 2023, resulting in improved quality for new borrowers overall.
