UBS has raised its price target for Kasikornbank Public Company Limited (SET: KBANK) to THB 286 per share, up from THB 255, maintaining a ‘Buy’ recommendation. The upgrade reflects increased confidence in the bank’s strategy to enhance cost efficiency, which is seen as aligning KBANK more closely with its Thai banking peers over the medium term.
Management has emphasized a clear path to improving the bank’s cost-to-income ratio through strategies such as focusing on fee growth, particularly in wealth management, strengthening digital capabilities, and boosting relationship manager productivity. Fee income expansion is being driven by increased transaction volumes and digital channel migration, with ongoing efforts to optimize operating expenses across various business segments.
UBS estimates that KBANK will reduce its cost-to-loan ratio from 3.4% in 2025 to 2.9% by 2030, comparable to other large bank peers. This improvement is expected to support a sustainable dividend payout ratio of about 65-70%, equating to THB 14.50-15.00 per share over the next five years, with a projected dividend yield of around 6%. The bank’s T1 capital ratio is forecasted to remain near 16% by 2030, slightly above the minimum target of 15%.
The updated valuation incorporates a higher P/E for KBANK’s core banking business, backed by the increased estimate for the sustainable dividend payout ratio to 67%. Overall, KBANK remains one of UBS’s favored banking stocks in Thailand due to its targeted cost improvements and strong outlook for shareholder returns.
