Bangkok--May 12--Fitch Ratings
Fitch Ratings, the international rating agency, has today upgraded the ratings on Kasikornbank (“KBANK”), Siam Commercial Bank (“SCB”), Krung Thai Bank (“KTB”), Bank of Asia (“BOA”), Standard Chartered Nakornthon Bank (“SCNB”) and Export Import Bank of Thailand (“EXIM”). Fitch has also revised the Outlook on Bangkok Bank (“BBL”) to Positive. These rating actions come on the heels of Fitch’s upgrade today of the Thai sovereign’s international Long-term foreign currency rating to ‘BBB+’ from ‘BBB’ and Long-term local currency rating to ‘A’ from ‘A-’ (A minus), both with Stable Outlooks.
The banking sector recovery is on track, with asset quality problems becoming less of an issue and underlying earnings showing stronger signs of recovery in light of lower funding and provisioning costs as well as a pick-up in loan growth. The anticipated rise in private investment over the next two to three years’ supports a continued recovery in bank earnings and profitability. While Thai banks’ gross spreads have been abnormally high and may weaken as liquidity starts to tighten, the negative impact of higher funding costs on profitability should be mitigated by lower impaired loans and stronger loan growth. Hence, net interest margins and underlying profitability should generally continue to strengthen in 2005, although increased tax expense may hurt net profit.
The Long and Short-term foreign currency senior debt ratings of SCB and KBANK, which were previously capped by the Thai sovereign rating, have been upgraded alongside the sovereign to reflect their strong financial positions. SCB and KBANK continue to report the most solid financial performance, in terms of earnings, asset quality and profitability.
KTB’s rating upgrades, meanwhile, primarily reflect the bank’s linkage to the sovereign. Also, following more stringent supervision by the Bank of Thailand in 2004, KTB’s loan growth has moderated significantly. An upward revision of the rating Outlook on BBL to Positive is based on both the sovereign upgrade and the bank’s improved financial strength.
The Long-term foreign currency rating of EXIM generally should move in tandem with the sovereign rating, due to the bank’s full government ownership and support. The foreign currency ratings of BOA and SCNB (which are capped by the sovereign ceiling) are closely linked to the ratings of their parent banks. United Overseas Bank (“UOB) of Singapore currently has a 96.8% stake in BOA while Standard Chartered Bank (“SC”) of the UK, now holds a 99.97% stake in SCNB.
The rating actions are as follows:
Bangkok Bank (“BBL”): Long-term foreign currency ‘BBB’ Outlook revised to Positive from Stable; all other ratings are affirmed as follows: Short-term foreign currency ‘F3’; Subordinated foreign currency ‘BBB-’ (BBB minus); Individual ‘C/D’; Support ‘2’;
Krung Thai Bank’s (“KTB”): Long-term foreign currency upgraded to ‘BBB+’ Stable Outlook from ‘BBB-’ (BBB minus); Short-term foreign currency upgraded to ‘F2’ from ‘F3’; Subordinated foreign currency upgraded to ‘BBB’ from ‘BB+’; National Long-term upgraded to ‘AA+(tha) Stable Outlook from ‘AA(tha)’; National Subordinated upgraded to ‘AA(tha)’ from ‘AA-(tha)’ (AA minus (tha)); all other ratings are affirmed as follows: Individual ‘D’; Support ‘2’; National Short-term ‘F1+(tha)’;
Kasikornbank (“KBANK”): Long-term foreign currency upgraded to ‘BBB+’ Stable Outlook from ‘BBB’; Short-term foreign currency upgraded to ‘F2’ from ‘F3’; all other ratings are affirmed as follows: Subordinated foreign currency ‘BBB’; Individual ‘C’; Support ‘2’; National Long-term ‘AA(tha)’ Stable Outlook; National Short-term ‘F1+(tha)’; National Subordinated ‘AA-(tha)’ (AA minus (tha));
Siam Commercial Bank (“SCB”): Long-term foreign currency upgraded to ‘BBB+’ Stable Outlook from ‘BBB’; Short-term foreign currency upgraded to ‘F2’ from ‘F3’; all other ratings are affirmed as follows: Subordinated foreign currency ‘BBB’; Individual ‘C’; Support ‘2’;
Bank of Asia (“BOA”): Long-term foreign currency upgraded to ‘BBB+’ Stable Outlook from ‘BBB’; Short-term foreign currency upgraded to ‘F2’ from ‘F3’; all other ratings are affirmed as follows: Individual ‘C/D’; Support ‘2’; National Long-term ‘AA+(tha)’ Stable Outlook; National Short-term ‘F1+(tha)’; National Subordinated ‘AA(tha)’;
Standard Chartered Nakornthon Bank (“SCNB”): Long-term foreign currency upgraded to ‘BBB+’ Stable Outlook from ‘BBB’; Short-term foreign currency upgraded to ‘F2’ from ‘F3’; all other ratings are affirmed as follows: Individual ‘C/D’; Support ‘2’;
Export Import Bank of Thailand (“EXIM”): Long-term foreign currency upgraded to ‘BBB+’ Stable Outlook from ‘BBB’; Short-term foreign currency upgraded to ‘F2’ from ‘F3’; all other ratings are affirmed as follows: Support ‘2’; National Long-term ‘AA+(tha)’ Stable Outlook; National Short-term ‘F1+(tha)’.
Contact: Chaiyapat Paitoon, Vincent Milton, Bangkok +662 655 4762/4759; David Marshall, Hong Kong +852 2263 9963
Note to Editors: Fitch’s Support and Individual Ratings for Banks: Fitch’s Individual ratings assess how a bank would be viewed if it were entirely independent and could not rely on external support. Its Support ratings deal with the question of whether a bank would receive support from its owners or from the state if it were to get into difficulty. These ratings are not debt ratings but rather, respectively, an assessment of the intrinsic strength of a bank and of any level of outside support that may, or may not, be available to it.
Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable.
Disclosure: Kasikorn Asset Management Company Limited (of which KBANK holds 71.4%) owns 10% of the shares in Fitch Ratings (Thailand) Limited. No shareholder, other than Fitch Ratings Limited of the United Kingdom, is involved in the day-to-day operation of, or credit rating reviews undertaken by, Fitch Ratings (Thailand) Limited End.