Kasikornbank's 2013E return on equity predicted to hit 20.8%

It's one of the strongest in the sector.

According to Macquarie Research, among Thai banks, KBANK's loan mix is the most balanced with 35% in corporate, 35% in SME and 30% in retail & others. 

Contribution from non-interest income is one of the highest in the sector, 43% in 2013E. The strong non-interest income has been supported by the leading market positions in key products, i.e. credit card, mutual funds and bancassurance.

Here's more from Macquarie Research:

With continued focus on the transactional deposits, KBANK currently runs the highest CASA ratio of 67%, the key factor behind KBANK's cheap and stable funding.

We expect KBANK's profitability outlook to remain strong with 2013E ROE of 20.8%, one of the highest in the sector. Our target price of Bt260.00 implies a 2013E PER of 14.9x and P/BV of 2.9x vs the sector‟s weighted average 2013E PER of 13.8x and P/BV of 2.2x.

We believe that a premium valuation to the sector is warranted by KBANK‟s strong profitability, conservative credit risk management, the well-balanced business mix and an excellent funding franchise.