Asia Plus recommends accumulating KTB, followed by KBANK and BBL, to capture volatile bank share prices

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Asia Plus Securities recommends that investors use the volatility in share prices driven by fund flows to accumulate commercial banks with strong balance sheets, giving top weighting to KTB, followed by KBANK and BBL, which is a catch-up play at a PBV of only 0.6 times versus the sector average of 1.2 times. Global bank stocks declined, with the MSCI ACWI Banks index falling 1.2% day-on-day compared with the MSCI ACWI, which rose 0.1% day-on-day, after US commercial banks declined, led by WFC, JPM and BAC, on concerns over a bear-flattening yield curve after 2-year US Treasuries rose faster than 10-year notes, following the Fed's higher-for-longer signal. The research team notes that the structure of Thai commercial banks differs from that of the US, with Thai bond yields of 2 to 10 years rising by an average of only 14 basis points quarter-to-date from the end of the second quarter of 2026, while US yields rose by an average of 53 basis points, because Thai banks' funding comes about 87% from deposits and about 9% from the interbank market, which is mainly tied to the policy rate, while bonds linked to bond yields account for only 4%, unlike JPM, where non-deposit interest-bearing liabilities account for about 36% and deposits about 64%. On valuation, Thai bank stocks have an average PBV of 1.2 times, or 1 time excluding TISCO, compared with an average of 1.6 times for major overseas banks, while the sector's average dividend yield is 5.4% versus 4.4% for major overseas banks. The research team maintains its view that net interest income for large banks is likely to gradually recover quarter-on-quarter from the third quarter of 2026, in line with Thailand's stabilizing interest rate cycle, and recommends a barbell strategy, with the other side being tourism-related stocks expected to offer upside, namely CENTEL, AOT and ERW, on sentiment ahead of the tourism season.

Impact on assets 13

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Bangkok Bank PCL
BBL
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Asia Plus recommends accumulating BBL as a catch-up play at only 0.6x PBV versus the sector average of 1.2x.

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