Bangkok--26 Nov--Fitch Ratings
Fitch Ratings has affirmed Export-Import Bank of Thailand’s (EXIM) Long-Term Issuer Default Rating (LT IDR) at ‘BBB’ and its National Long-Term Rating at ‘AAA(tha)’. The Outlook is Stable. A full rating breakdown is provided below.
EXIM’s ratings are equalised with those of Thailand’s ratings, reflecting Fitch's view of a high probability of support from the state, if needed. This is based on the Ministry of Finance’s (MoF) full ownership and supervision, the bank’s entitlement to loss compensation and certain debt guarantee provision from the state, its legal status as a specialised financial institution (SFI) and its important policy role as Thailand’s principal export credit agency. EXIM has recently been mandated by the government to support the development of small and medium enterprises’ (SMEs) export potential.
EXIM’s Support Rating Floor of ‘BBB’ is at Thailand’s Long-Term Foreign Currency IDR. A change in the sovereign LTFC IDR would thus result in the same movement of the bank’s Support Rating Floor and LT IDR and, potentially, also a change in the Support Rating. Changes to the Thailand’s Long-Term Local Currency IDR will have no impact on the bank’s National Long-Term Rating, which is likely to remain at the highest level of ‘AAA(tha)’. Adverse changes to Fitch's view of the willingness or ability of the Thai government to support EXIM, including a material reduction in ownership, could lead to a negative change in the bank's ratings. However, Fitch believes this is unlikely in the medium term given the Stable Outlook on Thailand's IDRs and that EXIM's policy role remains important to the state.
EXIM is supervised by the MoF, which appoints the bank's Board of Directors. The bank's operations are inspected by the Bank of Thailand (BoT) while its financial statements are audited by the Office of Auditor General. Capital injections have been forthcoming from the sovereign since EXIM’s inception, the latest being capital support for EXIM’s export credit insurance business. The bank has also received loss compensation from the MoF on certain high-risk policy-related transactions.
Fitch expects another strong performance in 2012, driven mainly by loan expansion to merchant marine and project finance lending, while new loans extended to exporters are likely to slow. EXIM showed continued improvement in asset quality with a declining non-performing loan (NPL) ratio, mainly due to more active restructuring and write-offs. Its NPL ratio of 4.7% at end-H112 was lower than that of SFIs’ average. Nonetheless, its asset quality may weaken in 2013 due to its strategy to extend lending to the high-risk SME sector.
EXIM’s liquidity is sensitive to capital markets’ conditions as it is a non-retail deposit taking institution. The bank depends largely on wholesale funding, of which 45% were USD floating-rate notes at end-H112. Nonetheless, the bank’s funding ability is underpinned by potential state support would support EXIM, if needed. Its Tier 1 ratio of 13.2% and total capital ratio of 14.4% at end-H112 are strong domestically, albeit down since 2009 due to loan growth and continued expansion of its credit insurance business.
EXIM’s ratings have been affirmed as follows:
- Long-Term IDR affirmed at 'BBB'; Outlook Stable
- Short-Term IDR affirmed at ‘F3’
- Support Rating affirmed at ‘2’
- Support Rating Floor affirmed at ‘BBB’
- Long-Term National Rating affirmed at ‘AAA(tha)’; Outlook Stable
- Short-Term National Rating affirmed at ‘F1+(tha)’