Asean Financials A profit booking quarter in the making; 2Q26 preview

Research evidence excerpt

Asean Financials A profit booking quarter in the making; 2Q26 preview

Harsh Wardhan Modi AC Asia Pacific Equity Research

(65) 6882-2450 16 July 2026 J P M O R G A N

harsh.w.modi@jpmorgan.com

• Thailand: This sector is going through a meaningful positive shift after more than a

decade of lagging on growth and AQ (link). We forecast 2.8% real GDPg in Thailand in

2026/27, which, along with good capital, liquidity and underwriting position of banks

sets stocks up for continued outperformance. Yet, all of these will not be apparent in 2Q.

If anything, NIM and AQ are likely to disappoint, with growth visible only in select

segments. Accordingly, we recommend trimming into results, while scaling up positions

as and when the stocks correct. Corporate lending (amidst high government and

consumer debt levels) should be the main series driver. Accordingly, BBL is our top pick.

Bank Permata (~12% of BBL assets) is a key risk. We are wary of KTB as the stock has

moved to 1.21x 2026 PB, while we do not expect immediate EPS revisions. KBank has

guided for risks from Middle East related exposures, while SCB is at risk of disappointing

on non-II. Consumer finance companies underperformed (KTC, MTC, Sawad, TidLor)

as EPSg slowed down over the last few years. We now expect an inflection, which should

lead to re-rating.

• Indonesia: The sector is undergoing challenges on liquidity, as higher SRBI yields and

policy rate hikes have led to sustained deposit competition. In addition to NIM, this

should also lead to slower loan growth. Further, tighter financial conditions may lead to

cashflow stresses, leading to NPL formation. Our forecasts for the Big4 banks are 4-23%

below Street for 2026-28. Negative revisions should limit stock price movements. For