Thai banks face headwinds as ING cuts TTB stake and KBANK faces SME risks

TMBThanachart Bank, or ttb, and Kasikornbank are facing heightened investor scrutiny after two developments raised questions about shareholder confidence and the financial pressure confronting Thai borrowers.

ING Bank N.V. has sold a 7.9% stake in ttb through a large transaction worth approximately 18 billion baht, reducing its holding from 19.5% to 11.6%.

Analysts view the transaction as a possible sign that ING is gradually reducing its long-standing investment in the Thai bank. However, they do not expect the sale to affect ttb’s management or business direction and say the broader distribution of shares could improve market liquidity.

Separately, Bloomberg Intelligence included Kasikornbank, or KBANK, among 10 Asia-Pacific companies to watch from both positive and negative perspectives during the second half of 2026.

KBANK was the only Thai company placed in the negative-view group, reflecting concern over Thailand’s elevated household debt and the financial difficulties facing small and medium-sized enterprises.

Despite these pressures, the Bank of Thailand has maintained that the commercial banking system remains financially resilient, supported by capital and liquidity levels above regulatory requirements.

ING sale raises questions over long-term ttb holding

Pakawat Pisuthiphan, chief executive of retail business at CGS International Securities (Thailand), said ING’s large share sale should increase ttb’s free float, making the shares more accessible to retail and institutional investors.

The transaction transfers shares previously concentrated with one strategic investor to a wider range of institutional investors. This should increase trading liquidity and reduce the influence of any single shareholder.

Pakawat said the sale should not affect ttb’s management because ING does not participate directly in the bank’s day-to-day operations.

He nevertheless believes ING intends to reduce its investment gradually after holding the shares for an extended period and is now seeking to realise returns.

ING had previously participated in ttb’s share-repurchase programme as part of an earlier reduction in its investment.

According to the source report, ING sold approximately 4% through the earlier programme, reducing its holding from about 23% to 19.5%.

Pakawat said ttb still had share-repurchase capacity equivalent to 8% of its paid-up capital, with approximately 14 billion baht available. In his view, that capacity could potentially be used if ING decided to sell most of its remaining stake.

He stressed, however, that the identity of the investors acquiring the latest placement had not been confirmed.

“I do not think the buyer in the private placement is likely to be a major bank. It may be a financial institution and, if it is seeking yield, my guess — purely speculative — is that it is more likely to be a domestic than a foreign investor,” he said.

“It would not be surprising if it were the Vayupak Fund or the Finance Ministry, although it is also possible that the company itself used funds to buy.”

ttb sets out three growth engines

Thakorn Piyapan, president of TMBThanachart Bank, has identified three principal engines intended to support the bank’s future growth:

1. Increasing fee income

The bank plans to expand products related to investments and insurance, with particular emphasis on fee-generating wealth-management services.

2. Improving efficiency through digital investment

ttb has invested continuously in digital systems for three to four years. The investment is intended to reduce operating expenses, eliminate paper-based processes and improve employee productivity.

The bank expects these systems to accelerate customer service and allow the business to expand without operating costs increasing at the same rate.

3. Managing credit quality

The bank plans to focus on expanding what it calls its “Golden Portfolio”, comprising higher-quality mortgages, vehicle loans and credit-card accounts.

The strategy is intended to control credit risk and reduce the need for additional provisions against non-performing loans in future.

Thakorn said all three areas were central to maintaining growth as banks contend with pressure on revenue, costs and asset quality.

ttb is also seeking to protect its return on equity as tax benefits gradually expire around the middle of 2028.

To compensate for that pressure, the bank needs to generate more growth from its core businesses, particularly wealth-management fees, while capturing further efficiency gains from its digital investment.

KBANK risk viewed as manageable

Bloomberg Intelligence’s decision to place KBANK in its negative watch group reflects concern about the effect of household debt and financially vulnerable SME borrowers on the bank’s future performance.

Koraphat Vorachet, head of investment strategy at Krungsri Capital Securities, said the market and KBANK were already aware of the risks affecting SMEs and customers in middle- and lower-income segments.

He said the bank had tightened its lending criteria, negotiated with borrowers and built provisions in advance. These measures meant the identified risks remained manageable, in his assessment.

The view is consistent with the broader argument that pressure on KBANK’s SME portfolio has already been reflected, at least partly, in market expectations and the bank’s risk-management decisions.

Banking system remains resilient

Suchot Piamchol, senior director of the Bank of Thailand’s Model Validation and Financial Institution Risk Analysis Department, said the commercial banking system continued to manage its risks despite higher production costs and changes in consumer behaviour.

Commercial banks recorded a combined net profit of 83 billion baht in the second quarter of 2026, an increase of 6.8% from the corresponding period a year earlier.

The increase was driven principally by non-interest income, including higher mark-to-market gains on financial instruments during a period of falling interest rates.

Brokerage fees and income from wealth-management services also supported earnings.

Provisioning expenses declined because banks had already set aside substantial reserves in previous quarters to cover potential risks. This allowed them to reduce additional provisioning during the latest quarter.

Return on assets and return on equity improved slightly, although banks continued to face difficulty increasing lending income under prevailing economic conditions.

Commercial banking system loans expanded by 2%, supported mainly by demand for working capital from businesses.

Although energy and raw-material prices had eased from their peaks, they remained above levels recorded before the recent wars. This continued to increase operating costs and financing requirements.

Working-capital demand was not confined to large companies. Some types of SME also needed additional financing to meet higher costs.

The Bank of Thailand indicated that the recent expansion in credit was being driven largely by supply-side factors.

Meanwhile, fee income was generally trending down. The central bank said the decline was not yet attributable to its recently announced regulatory measures covering 19 categories of bank fees, as the effects of those measures were expected to become more evident during the third and fourth quarters.

Instead, the decline reflected changes in technology, the business environment and consumer behaviour. More customers were using online transaction channels, reducing revenue from transfer fees.

Foreign investors remain cautious

Sittichai Duangrattanachaya, head of investment strategy at InnovestX Securities, said international investors did not regard the Thai economy as being in a disastrous position.

However, they also did not see sufficiently distinctive or strong growth to support the return of banking shares as market leaders.

Banks are usually among the first sectors to benefit when an economy expands strongly. Thailand’s recovery, however, remains dependent mainly on tourism and government expenditure.

Interest in developing data centres in Thailand has increased, but Sittichai said the country had yet to see enough actual investment or domestic borrowing from such projects to provide meaningful support for bank earnings.

The strengthening baht had attracted some foreign capital because international investors could also benefit from currency gains. Nevertheless, those flows remained intermittent rather than sustained.

Uncertainty surrounding Thailand’s political situation was another reason foreign investors had not returned fully to the Thai stock market.

International investors generally preferred stability in Thai interest rates, Sittichai said. The possibility of further reductions was becoming more limited, while any future increase would represent an additional benefit for banks.

Higher interest rates could widen banks’ net interest margins — the difference between interest earned on loans and interest paid on deposits and other funding — thereby supporting profits.

Although Thai banking shares offered relatively inexpensive valuations and high dividend yields, these features were not unique to Thailand. International investors could find similarly valued, high-yielding shares in other markets.

Foreign investors were consequently maintaining a wait-and-see position. Sittichai said a sustained banking-share rally would probably require three conditions to emerge together: clearer economic growth, greater political stability and consistent foreign capital inflows.

Until those conditions become visible, international investors may give greater weight to other sectors.

Analysts retain positive view of banking sector

Koraphat described ING’s ttb transaction as a company-specific portfolio adjustment by a long-term investor rather than a development affecting the bank’s fundamentals.

He said ttb continued to stand out for its use of technology and did not expect the share transaction to weaken its core operations.

Koraphat also maintained a positive view of the wider Thai banking sector, pointing to strong Tier 1 capital compared with many other countries and regions.

Loan growth had also been better than the market expected. Positive credit growth during the first six months of 2026 suggested that large companies were beginning to resume investment and expand their operations.

Investment was becoming a clearer driver of gross domestic product, he said. Applications for incentives from the Board of Investment were beginning to develop into foreign direct investment and actual relocations of production.

Koraphat expects the resulting economic activity eventually to spread from large companies to smaller businesses and lower-income sections of the economy.

Thailand was not currently in a cycle of rising interest rates, and he expected rates to remain unchanged into next year. Such stability should support a gradual economic recovery.

He added that if Thailand developed into a regional data-centre hub, banks could be among the first businesses to benefit. More stable data-processing infrastructure could help them develop financial products tailored more accurately to individual customer groups.

Source: Bangkokbiznews