KASIKORNBANK’s stake buy of PT Bank Maspion unlikely to dent strength: Fitch 

Thai banks are on an expansion spree overseas amidst weak chances domestically.

KASIKORNBANK’s (KBank) plan to increase its stake in PT Bank Maspion Indonesia is unlikely to have a negative impact on the bank, and reflects Thai banks’ appetite for expansion, according to a report by Fitch Ratings.

The Thai bank recently announced its plans to buy a majority stake in the Indonesian lender for a price of over $215m (THB7.5b). This will increase KBank’s stake to 67.5% from its previously held 9.99% stake.

The acquisition is unlikely to have an impact on KBank's standalone strength, as Maspion's total assets (of about $998m) equate to only around 0.8% of KBank's assets or about 1.3% of risk-weighted assets, Fitch noted. 

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KBank’s latest purchase reflects Thai banks’ search for earnings opportunities outside of domestic commercial banking, the ratings agency said.

“Thai banks face strategic challenges in achieving growth, amidst a weak domestic economy and a low-interest-rate environment. International expansion is nonetheless growing despite a limited record,” Fitch said in a report.

KBank isn’t the only Thai bank to make expansion moves overseas. Bangkok Bank acquired Indonesia’s PT Bank Permata in May 2020 for $2.3b, whilst Bank of Ayudhya has invested in financial institutions in the Philippines and Vietnam over the past two years.

“Substantial regional investments in markets with weaker operating environment may ultimately reflect a greater appetite by Thai banks as well as weighing down their operating environment scores,” Fitch said.

(US$1 = THB 34.85)

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