Bangkok--31 Oct--Fitch Ratings
Fitch Ratings has today affirmed Industrial and Commercial Bank of China (Thai) Public Company Limited's (ICBCT) National Long-Term Rating at 'AA+(tha)' and National Short-Term Rating at 'F1+(tha)'. The Outlook is Stable.
ICBCT's ratings reflect near full ownership and high probability of support from its parent, Industrial and Commercial Bank of China (ICBC; 'A'/Stable). ICBC is China's largest banking group with USD2.0trn in assets at end-2010. ICBC is one of China's most profitable banks with a leading domestic franchise, solid liquidity and greater geographic expansion. ICBC is systematically important to China's banking sector (15% of deposit share in 2010) and is 75% owned by the Chinese government.
ICBCT has leveraged off the parent's strong franchise name, with increasing operational integrations with ICBC. Also, ICBCT has now aligned its strategy with the parent bank's, which is mainly focused on facilitating bilateral trade between Thailand and China. ICBCT also has strong liquidity support and capital commitment from its parent, which Fitch considers as key support drivers for the ratings.
On standalone financial strength, ICBCT's profitability continued to improve in H111 (up 56.5%), thanks to strong loan growth (12% ytd) mainly in auto hire purchases. Its capital and liquidity positions remain adequate in light of high growth. Loan loss coverage, despite improving, appears weak at 55% at end-June 2011 (end-June 2010: 50%).The impact from major flooding in Thailand since mid-September 2011 could result in a weakening of asset quality, increasing provisioning risk which could affect profitability in 2012.
The Stable Outlook is based on the parent's Outlook. Any changes in ICBC's shareholding or its commitment and support to ICBCT could affect the latter's national ratings. Also, any changes in ICBC's or Thailand's international ratings could have an impact on ICBCT's national ratings.
Founded in 1969 as a finance company, ICBCT (formally ACL Bank Public Company Limited) is amongst the country's smallest full-licensed banks, with a less than 1% market share of assets and loans. ICBCT is 97.7%-owned by ICBC, which is intended to be a long-term holding. 10 years after acquiring ICBCT, ICBC could be restricted from a capital increase with its holding above 49%, although in Fitch's view, it is unlikely to prevent its re-capitalisation of ICBCT if needed in the event of financial problems.