Kasikornbank headed for year of portfolio clean-up

UOB Kay Hian “surprised” regarding the Thai bank’s flat loan growth target.

The next 11 months will be a period of “portfolio cleaning” for Thailand’s Kasikornbank (KBANK) as it targets normalised credit cost and flat loan growth, according to UOB Kay Hian (UOBKH).

In its annual analyst and fund manager meeting, the Thai bank set a flat loan growth target for 2025, which “surprised” UOBKH.

“Although KBANK will maintain a prudent approach to achieve the normalisation of credit cost this year, we are a little surprised by the bank's conservative outlook, with loan growth expected to remain flat in 2025,” said UOBKH analyst Thanawat Thangchadakorn in its latest company report of the bank.

Thangchadakorn expects KBANK to continuously reduce its loan exposure to small and medium enterprises (SMEs), as well as sell more debt.

“Overall, we believe this year will be another period of portfolio cleaning for KBANK as it works toward achieving its targets,” Thangchadakorn said.

There is room for a higher dividend payout ratio in 2024, although KBANK’s CEO said not to expect an 80% to 100% dividend payout ratio over the next 2-3 years.

KBANK also has no plans for share repurchases in 2025.

KBANK aims to achieve double-digit return on equity (ROE) in 2026.