Regional Banks Enhance Capital Management Amid Economic Slowdown

With business growth decelerating, regional banks are intensifying their focus on capital management to boost returns for shareholders.

These institutions continue to utilize share repurchase programs and interim dividend distributions as vital strategies for enhancing earnings per share (EPS) and return on equity (ROE).

“The emphasis on capital management stems primarily from an excess of liquidity in the banking sector and a strong Tier 1 capital position, which is juxtaposed with waning loan growth given the current economic landscape,” explained Pathakorn Wanvivachaloen, an investment analyst at Asia Plus Securities.

Take Kasikorn Bank (KBank) as an example: it recently unveiled a share buyback initiative valued at 8.8 billion baht, amounting to 2% of its total paid-up capital. This program is set to operate from November 14, 2025, to May 13, 2026, as stated in an announcement to the Stock Exchange of Thailand.

KBank, which ranks as the third-largest lender in the nation by total assets, had previously executed a buyback worth 3.2 billion baht, or 1% of its paid-up capital, back in 2020.

In addition, the bank is actively distributing interim dividends while also raising the dividend payout ratio. Last year, the payout ratio stood at 47%, and they aim for 50% this year, with a target of keeping it between 50% and 60% in the medium term.

KBank’s ROE climbed to 8.98% in the third quarter of this year, up from 8.87% in the previous quarter.

KBank Co-President Chongrak Rattanapian mentioned that the bank is committed to upholding careful capital management practices that align with both its business activities and the broader economic climate, seeking to strike a balance between shareholder returns and financial stability.

Similarly, Krungthai Bank (KTB), the second-largest bank in the country, declared its inaugural interim dividend of 0.43 baht per share based on the operating performance for the first half of 2025.

KTB President Payon Srivanic shared that the bank has adjusted its dividend policy from an annual payout to a biannual one, reflecting the expectations of stakeholders and market peers.

“This interim dividend reflects the strong performance of the bank. We are also exploring a share buyback initiative as another tool for capital management,” he added.

Despite the slow rate of loan growth, KTB plans to sustain a double-digit ROE, currently at 11%, by the end of this year. However, they anticipate a decline in the overall loan portfolio following a contraction over the first nine months of the year.

Meanwhile, TMBThanachart Bank, the sixth-largest bank in Thailand, recently announced a three-year share buyback program totaling 21 billion baht, with the first phase commencing in February 2025.

According to Asia Plus Securities, the ROE of the Thai banking sector is expected to be 8.4% in 2025, lagging behind the regional average of 13.5%. Projections for major Indonesian banks’ ROE range between 17.4% and 21.1%, while Singaporean banks are estimated at 11.5% to 16.2%, and Malaysian banks at 9.6% to 11.1%.