Bangkok--9 Dec--Fitch Ratings
Fitch Ratings (Thailand) has today assigned a National Long-Term rating of ‘AA-(tha)’(AA minus) to Kasikornbank Public Company Limited’s (KBANK — ‘BBB+’/‘F2’/Outlook Negative) unsecured subordinated debentures of up to THB17bn with a maturity of 10 years. The National rating Outlook on the bank is Stable.
The rating takes into account KBANK’s sustained improvement in underlying profitability, asset quality and capital, as well as its strong domestic banking franchise in SMEs, corporate and retail banking. Although performance for 2009 could weaken due to an expected sharp economic slowdown in 2009, KBANK’s strong asset quality control and robust capital cushion should help mitigate the impact.
KBANK continued to show a healthy performance for 9M08 with a net profit of THB12.5bn, up 10.3% year-on-year, due to a strong increase in fee income and higher interest income from loan growth. For 9M08, KBANK’s loan growth remained strong at 14% year-to-date. The bank continued to have the highest net interest margin (NIM) among Thailand’s major banks at 4% for 9M08. KBANK’s provisioning has increased significantly by 40% year-on-year to THB5.7bn, due to the deteriorating economic environment. The bank’s performance is expected to weaken in 2009, due to slower loan growth and higher provisioning as a result of a projected sharp fall in GDP growth to 0.9%.
KBANK’s impaired loans remain the lowest in the Thai banking system with impaired loans of THB37.5bn at end-September 2008, or 4.3% of total loans. The bank’s loan loss reserves of THB28.7bn at end-September 2008 equated to a coverage ratio of 77%, in line with its peers.
At end-September 2008, KBANK’s Tier 1 capital ratio and total capital ratio stood at 10.8% and 14.4%, respectively. The implementation of Basel II could see capital ratios decline by about 1% by year-end due to higher capital requirement for operational risks, but the bank’s capital ratios should remain strong.
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 focused on fund management, securities and leasing.
Contacts: Patchara Sarayudh, Bangkok, Tel +66 2655 4761, Vincent Milton +66 2655 4759.