Krung Thai Bank Public Co. Ltd.

The positive outlook on KTB reflects a one-in-three chance that the bank can sustain improvements in its risk management and profitability over the next 12-24 months. However, Thailand's economic recovery remains uneven, and restructured loans could still lapse into nonperforming loans (NPLs) after the recent expiry of the pandemic-related restructuring scheme. KTB's improved risk management should help the bank contain asset quality risks. We expect the bank to continue to rebalance its portfolio to sustain improvements in its profitability. We could revise the outlook back to stable if KTB is unable to sustain the recent improvements in its performance. Lower profitability or higher weak loans and credit losses than other rated Thai banks could indicate this. We could raise the

...Improvements in profitability could sustain amid better risk management. Krung Thai Bank Public Co. Ltd.'s (KTB) stronger underwriting standards in recent years have supported the quality of its new retail loans. We forecast the Thailand-based bank's return on assets will be about 1% over the next two years, on the back of stable provisioning costs, portfolio rebalancing, and above-average margins. The bank improved its net interest margin (NIM) in 2023 by more than 60 basis points (bps), beating gains for its peers. Asset quality downside would be less severe for KTB than for its peers. This is because KTB has a lower proportion of loans under relief than its peers in Thailand. The bank also has a higher proportion of loans to customers on government payroll in its retail portfolio. Still, if the economic recovery in Thailand is slower than we expect, it could jeopardize the asset quality of banks in the country, including KTB....

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