Bangkok--18 Dec--Fitch Ratings
Fitch Ratings has today affirmed Export-Import Bank of Thailand’s (EXIM) Long-term foreign currency Issuer Default Rating (IDR) at ‘BBB+’ with a Negative Outlook, Short-term foreign currency IDR at ‘F2’, National Long-term rating at ‘AAA(tha)’ with a Stable Outlook, National Short-term rating at ‘F1+(tha), Support rating at ‘2’, Support Rating Floor at ‘BBB+’ and outstanding senior unsecured bonds at ‘AAA(tha)’.
The Outlook of EXIM’s international ratings were revised to Negative in December 2008, following a similar revision in Thailand’s sovereign ratings, based on the prolonged political crisis and worsening global economic outlook. EXIM’s ratings are directly linked to Thailand’s sovereign ratings as it is the principal policy bank for the Ministry of Finance (MOF) in supporting and promoting Thai exporters and investors for national development. Given the full ownership and control of the bank by the MOF, as well as EXIM’s development policy role, Fitch believes there is a high probability that state support would be forthcoming, if necessary.
EXIM, with assets of THB59.6bn (at end-June 2008) provides export insurance, investment insurance and financing to Thai exporters and Thai investors overseas. While its main business is export finance, the bank plans to increase its lending to domestic national development projects in energy, utilities and infrastructure sectors.
In 2007, EXIM reported improved financial performance with a small net profit of THB0.5bn after reporting a loss of THB1.3bn in 2006, mainly due to lower provisions. However for H108, EXIM’s net profit significantly declined to THB0.06bn (down 75% from THB0.23bn in H107) as net interest income declined sharply from lower market interest rates and negative loan growth, while a large portion of its funding costs was on fixed rate.
Provisioning risks remain a concern as its asset quality could deteriorate further, given the expected sharp global economic slowdown in 2009. At end-June 2008, impaired loans continued to rise sharply to THB4.3bn (or 8.5% of loans) from THB2.9bn (5.5%) at end-2007. However, the bank expects to write-down impaired loans of THB1bn by year-end, and expects impaired loans to drop to below THB4bn. Loan loss reserves of THB3.7bn (85.8% of impaired loans) appear adequate, although new NPLs could require additional provisions. EXIM’s capital is strong, with Tier 1 capital of 16.6% at end-June 2008. EXIM expects to increase capital by THB1.3bn, from the MOF, by year-end, and it plans to request another capital injection of THB10bn to fund its long-term growth strategy.
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.
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Contact: Patchara Sarayudh, Bangkok, +662 655 4759; Vincent Milton, Bangkok, +662 655 4759.