Bangkok--21 Sep--Fitch Ratings
Fitch Ratings says recent USD fund raising by Thailand’s three largest private banks, Bangkok Bank Public Company Limited (‘BBB+’/Stable), Siam Commercial Bank Public Company Limited (‘BBB+’/Stable), and Kasikornbank Public Company Limited (‘BBB+’/Stable), will have limited rating impact. This is because such wholesale borrowings form a small portion of their funding base. However, any increased reliance on capital market funding could put pressure on the banks’ already tight funding profile and their moderately high loans to deposits ratios.
Fitch views the USD issuance of USD2.2bn by the three banks in September 2012 as opportunistic, supported by attractive interest rates and investor demand. Proceeds would largely be used to meet credit demand from corporates and for overseas acquisitions and expansion. These recent USD issuance also diversify the banks’ funding and improve their assets/liabilities maturity mismatch profile.
USD credit growth in Thailand has been increasing since 2010, and major Thai banks have thus far relied on short-term funding through the swaps and interbank markets. Other large Thai banks, such as Krung Thai Bank Public Company Limited (‘BBB’/Stable), may consider such funding in the low interest rate environment. In comparison, Fitch believes that many medium-sized and smaller banks, especially those with high loans/deposits ratios, are likely to pay more attention to building their deposit franchise in the domestic market, despite intense competition for deposits.