Bangkok--27 Jun--Fitch's rating Fitch Ratings has today affirmed Kasikornbank Public Company Limited’s (KBANK) ratings as follows: - Long-term foreign currency Issuer Default Rating (IDR): at ‘BBB+’; - Short-term foreign currency IDR: at ‘F2’; - Individual: at ‘C’; - Support: at ‘2’; - Support Rating Floor: at ‘BBB-’ (BBB minus). - Long-term foreign currency subordinated debt: at ‘BBB’. - National Long-term rating: at ‘AA(tha)’; - National Short-term rating: at ‘F1+(tha)’; - National Long-term senior unsecured debt: at ‘AA(tha)’; - National Short-term senior unsecured debt: at ‘F1+(tha)’; and - National Long-term subordinated debt: at ‘AA-(tha)’ (AA minus(tha)). The Outlook remains Stable. The ratings reflect the sustained improvement in KBANK’s underlying profitability and its asset quality and capital, as well as its strong domestic banking franchise in SMEs (which accounts for 40% of loans), corporate and retail banking. The ratings also factor in the high probability of government support due to the bank’s systemic importance. KBANK’s foreign currency IDRs are currently capped by the sovereign rating. A further significant decline in impaired and restructured loans would be positive for its credit profile. In 2007, pre-provisioning profit before tax was up 17.6% and net profit up 9.5% from 2006, due to stronger loan growth and financial services fees. Net interest margins remained stable at 3.9% in 2007, reflecting its strong SME franchise and low cost deposit base. The bank’s strong Q1 result was helped by higher loan growth, although provisioning costs could rise. Overall, results should remain solid for 2008, however the bank faces a challenging economic environment which could see rising funding costs, moderating loan growth and renewed asset quality pressures. Impaired loans declined to 4.6% of total loans at end-2007 from 7% at end-2006, mainly due to the sale of impaired loans to external parties and restructuring. Impaired loans rose slightly to 5% at end-March 2008. KBANK aims to reduce its impaired loans to below 5% of total loans by end-2008, mainly through the further sale of NPLs. Loan loss reserve coverage of about 70% and Tier 1 ratio of about 10% remain strong. Basel II implementation could see capital ratios decline modestly by year-end. KBANK, established in 1945 by the Lamsam family, is Thailand’s fourth-largest commercial bank, with a 13% market share. KBANK’s major subsidiaries are fund management and investment banking. Contacts: Darunee Peanmanait, Vincent Milton, Bangkok, +662 655 4752/4759. Disclosure: Kasikorn Asset Management Company Limited (of which KBANK holds a 100% stake) owns 10% of the shares in Fitch Ratings (Thailand) Limited. No shareholder, other than Fitch Ratings Limited of the UK, is involved in the day-to-day operations of, or credit rating reviews undertaken by Fitch Ratings (Thailand) Limited. 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.