Bangkok--30 Nov--Fitch Ratings Fitch Ratings has today affirmed the ratings of Krung Thai Bank Public Company Limited (KTB), notwithstanding weaker results in 2007 due to higher provisioning, as its performance is expected to improve in 2008. KTB’s ratings are as follows: Long-term foreign currency Issuer Default Rating (IDR) at ‘BBB+’ with a Stable Outlook, Short-term foreign currency rating at ‘F2’, Individual rating at ‘C/D’, Support rating at ‘2’, Support rating floor at ‘BBB’, foreign currency subordinated debt rating at ‘BBB’, foreign currency rating on offshore hybrid Tier 1 securities at ‘BBB-’ (BBB minus), National Long-term at ‘AA+(tha)’ with a Stable Outlook, National Short-term at ‘F1+(tha)’, National subordinated debt rating at ‘AA(tha)’ and National rating on domestic hybrid Tier 1 securities at ‘A+(tha)’. Fitch notes that KTB’s ratings are underpinned by strong government ownership and support. KTB is the second-largest Thai bank with an 18% market share with the Bank of Thailand’s Financial Institutions Development Fund (FIDF) holding a 55.3% stake. KTB’s 9M07 results show a net profit of THB5.8 billion, a sharp decline from the previous year due to large provisioning as a result of stricter provisioning and weaker asset quality trends. Negligible loan growth and rising funding costs saw some margin contraction - to 3.4% from 3.9%. The bank still faces provisioning risks given that its loss coverage ratio remains low at about 40%. Also, large provisioning against its CDO exposure of THB5.5bn is expected in Q407. KTB's impaired loans increased to THB101.4bn, or 11.6%, at end-September 2007 from THB90bn (10%) at end-2006, reflecting the effect of a weaker operating environment that has resulted in new NPLs and the relapse of restructured debt. Nonetheless, pre-provision earnings and capital remains strong with Tier 1 of 10.5%, offsetting the provisioning risks. An expected rebound in domestic demand and government infrastructure spending should see improved performance for the bank in 2008. Any change in Thailand’s sovereign ratings may impact KTB’s Long-term and Short-term ratings as government ownership and control underpin these ratings. The hybrid Tier 1 ratings partly reflect support from majority government ownership but are influenced more by KTB’s financial strength based on the bank’s positive retained earnings, strong capital and underlying profitability, notwithstanding the provisioning risks. State support is less likely to be extended to the bank’s hybrid securities should there be any major deterioration in the bank’s stand-alone financial strength. This implies some risk of a ratings downgrade of the bank’s hybrid securities while the senior ratings of the bank would likely remain unchanged on the back of government support. The notching difference between the bank’s Long-term senior ratings and its hybrid securities may, as a result, widen should that scenario take place. Contacts: Vincent Milton, Bangkok +662 655 4759; David Marshall, Hong Kong +852 2263 9963. 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 Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.