Krung Thai Bank: The best sector L-T shareholder return story; we expect re-rating to continue

研报英文原文证据摘录

Krung Thai Bank: The best sector L-T shareholder return story; we expect re-rating to continue

Krung Thai Bank UBS Research

UBS Research THESIS MAP Thesisa guideMapto our thinking and what´s where in this report

Pivotal Questions Q: Can KTB sustain superior shareholder returns beyond the current earnings cycle ?

Yes. We believe releasing the excess LLR buffer to management's 170% LLR/NPL target, together

with an industry-leading Tier-1 capital of 18-19%, will drive ROE from 10% to 12% by 2029E and

sustain a 75-80% dividend payout ratio and a 7-8% dividend yield for at least the next five years.

Q: Can hidden asset value extend shareholder return growth and justify a premium

valuation?

Yes. KTB's 49.3% stake in KTC provides a unique source of capital flexibility that could potentially

generate substantial gains if partially monetised. We estimate this could extend the high payout cycle

from five years to 10-12 years, supporting longer term ROE and dividend sustainability, and

potentially justify a premium valuation versus local and regional banking peers.

UBS VIEW We think investors continue to underestimate KTB’s capacity to sustain superior shareholder returns

beyond the current earnings cycle. Although the stock has re-rated and trades broadly in line with

peers, potential upside remains from excess LLR reserves, sector-leading capitalisation and hidden

asset value. As reserves are optimised to the 170% LLR/NPL target, we estimate ROE to rise from 10%

in 2025 to 12% by 2029, supporting a 75-80% payout and a 7-8% dividend yield. KTB’s 49.3% KTC

stake adds flexibility to unlock value, supporting our Bt52.00 price target and Buy rating.

EVIDENCE KTB has one of the highest reserve buffers among Thai banks with an LLR/NPL ratio of c200%,