(The following statement was released by the rating agency)BANGKOK/SINGAPORE, May 28 (Fitch) Fitch Ratings has affirmed the ratings of Thailand's four largest commercial banks and their three subsidiaries. The Long-Term Issuer Default Ratings (IDRs) on Bangkok Bank Public Company Limited (BBL), Kasikornbank Public Company Limited (KBANK) and Siam Commercial Bank Public Company Limited (SCB) have been affirmed at 'BBB+' and their National Long-Term Ratings at 'AA(tha)'. Krung Thai Bank Public Company Limited's (KTB) Long-Term IDR has been affirmed at 'BBB' and its National Long-Term Rating at 'AA+(tha)'. The Outlooks are Stable.Fitch has also affirmed the National Long-Term Ratings on the banks' three subsidiaries, Kasikorn Securities Public Company Limited (KS), SCB Securities Company Limited (SCBS) and KTB Leasing Company Limited (KTBL) at 'AA-(tha)'. A full list of rating actions is included at the end of this commentary.KEY RATING DRIVERS - IDRs, VRs, National Ratings and Senior DebtThe IDRs and National Ratings of BBL, KBANK and SCB are driven by their Viability Ratings (VRs), while the IDR of KTB is driven by its Support Rating Floor. The National Ratings of KS, SCBS and KTBL are driven by their strategic importance to their groups, and as a result, KS is notched once, SCBS once and KTBL twice from their respective their parent banks' ratings.The senior debt ratings of BBL, KBANK, SCB and KTB are at the same level as the IDRs (for international ratings) or National Ratings, as the debt represent unsecured and unsubordinated obligations of the banks. The banks' VRs are driven by their strong domestic franchises, sound capital levels, and acceptable loan loss reserves. Fitch expects the operating environment to be more challenging in the future, which may impact the banks' performance. The Thai economy faces significant downside risks, with some signs already seen in 1Q14 of deteriorating asset quality in the banking system. However, we believe that the buffers of these four banks remain acceptable and sufficient for the banks to cope with a normal cyclical economic downturn. Fitch expects BBL's credit profile to remain resilient against potential risks through its maintenance of strong capital and reserve buffers, although its concentration in corporate loans is relatively high compared with other major local banks. BBL continues to maintain a high level of high-quality capital, with Core Tier 1 ratio at 14.3% at end-2013. At the same time, BBL also has the strongest level of loan loss reserve coverage among Thai banks at 214% at end-2013.Fitch expects KBANK's well-diversified portfolio and moderate risk appetite, reflected by its slower loan growth (compared with local peers) over the past few years, to provide some buffer against future asset quality risks. SCB's ratings reflect its sound franchise, particularly in retail banking, and good performance. It has grown relatively quickly in recent years, but at the same time it has maintained acceptable levels of capital and improved its asset quality buffers.KTB's VR is two notches lower than the other three banks, reflecting its relatively weaker operating and financial performance and the quasi-policy responsibility it bears (although KTB has become more commercial in nature). While many of KTB's metrics have improved over the past several years, key financial ratios such as asset quality and leverage are still more comparable to 'bbb-' rated international peers. RATING SENSITIVITIES - IDRs, VRs, National Ratings and Senior DebtProtracted economic weakness from a very severe downturn could have a larger-than-expected impact on the banks' asset quality and performance. The recent rise in private-sector leverage (particularly in the household sector) may lead to unanticipated adverse impacts on businesses and consumers in the event of a sharp economic slowdown. If Fitch deems that this would have a material negative impact on the banks' capital buffers, it could take negative rating actions on the VRs of the four banks, and subsequently on the IDRs and National Ratings of BBL, KBANK and SCB. A further deepening and extension of the economic downturn that is related to the current political uncertainties could lead to a bigger impact on bank asset quality and absorption buffers.A downgrade of Thailand's sovereign rating could lead to a similar impact on the VRs of BBL, KBANK and SCB, as these are currently at the same level as the sovereign. KEY RATING DRIVERS - Support Rating and Support Rating FloorThe Support Ratings and Support Rating Floors of the four banks reflect their clear systemic importance to the Thai banking system. The four banks together account for more than 60% of total commercial bank deposits and loans. KTB's Support Rating Floor at 'BBB' is one notch higher than the other three banks. This reflects KTB's strategic importance to the government - it is the only state-owned commercial bank, with close operational and branding links with the Finance Ministry.RATING SENSITIVITIES - Support Rating and Support Rating FloorA reduced propensity of the government to support systemically important banks could result in a downgrade in the Support Ratings and Support Rating Floors of the banks, but we view this to be unlikely in the medium term. A change in the sovereign ratings could also lead to a change in the Support Ratings and Support Rating Floors.KEY RATING DRIVERS - Subordinated debt BBL's US dollar subordinated debt is rated one notch below its IDR. The four banks' Thai baht subordinated debts are rated one notch below their National Long-Term Ratings. This is to reflect their subordination in the capital structure and is in line with Fitch's approach to rating such subordinated debt instruments of financial institutions. These subordinated debts are legacy instruments, which are not Basel III-compliant.RATING SENSITIVITIES - Subordinated debtThe banks' subordinated debt ratings would be affected by changes to the banks' IDR/ National Long-Term Ratings.KEY RATING DRIVERS - Hybrid Tier 1KTB's international hybrid Tier 1 rating of 'B' is rated five notches below the VR, reflecting their going-concern risks that include a non-cumulative coupon deferral feature that could be triggered upon the bank posting a loss. The national hybrid Tier 1 rating also reflects this implied notching approach from the VR. RATING SENSITIVITIES - Hybrid Tier 1Any changes in KTB's VR could impact the ratings on KTB's hybrid Tier 1 securities.The list of rating actions is as follows:BBLLong-Term Foreign Currency IDR affirmed at 'BBB+'; Outlook StableShort-Term Foreign Currency IDR affirmed at 'F2'Viability Rating affirmed at 'bbb+'Support Rating affirmed at '2' Support Rating Floor affirmed at 'BBB-'National Long-Term Rating affirmed at 'AA(tha)'; Outlook Stable National Short-Term Rating affirmed at 'F1+(tha)' Senior unsecured USD3bn GMTN programme affirmed at 'BBB+'Long-term foreign currency senior unsecured notes affirmed at 'BBB+' Long-term foreign currency subordinated debt affirmed at 'BBB'National long-term subordinated debt affirmed at 'AA-(tha)' KBANKLong-Term Foreign Currency IDR affirmed at 'BBB+'; Outlook StableShort-Term Foreign Currency IDR affirmed at 'F2'Viability Rating affirmed at 'bbb+'Support Rating affirmed at '2'Support Rating Floor affirmed at 'BBB-'National Long-Term Rating affirmed at 'AA(tha)'; Outlook StableNational Short-Term Rating affirmed at 'F1+(tha)' Senior unsecured USD2.5bn EMTN programme affirmed at 'BBB+'Long-term foreign currency senior unsecured debt affirmed at 'BBB+'National short-term senior unsecured debt rating affirmed at 'F1+(tha)'National long-term subordinated debt rating affirmed at 'AA-(tha)' SCB Long-Term Foreign Currency IDR affirmed at 'BBB+'; Outlook Stable Short-Term Foreign Currency IDR affirmed at 'F2' Viability Rating affirmed at 'bbb+'Support Rating affirmed at '2' Support Rating Floor affirmed at 'BBB-'National long-term rating affirmed at 'AA(tha)'; Outlook Stable National short-Term rating affirmed at 'F1+(tha)'Senior unsecured USD3.5bn MTN programme affirmed at 'BBB+' Long-term foreign currency senior unsecured debt affirmed at 'BBB+'National rating on short-term senior unsecured debt programme affirmed at 'F1+(tha)'National rating on long-term subordinated debt affirmed at 'AA-(tha)' KTB Long-Term Foreign-Currency IDR affirmed at 'BBB'; Stable OutlookShort-Term Foreign-Currency IDR affirmed at 'F3'Viability Rating affirmed at 'bbb-'Support Rating affirmed at '2'Support Rating Floor affirmed at 'BBB'National Long-Term Rating affirmed at 'AA+(tha)'; Stable OutlookNational Short-Term Rating affirmed at 'F1+(tha)'Senior unsecured USD 2.5bn EMTN programme affirmed at 'BBB'Senior unsecured notes affirmed at 'BBB'International rating for hybrid Tier 1 securities affirmed at 'B'National rating on THB30bn short-term debenture programme affirmed at 'F1+(tha)'National subordinated debt rating affirmed at 'AA(tha)'National rating hybrid Tier 1 securities affirmed at 'BBB(tha)'KSNational Long-Term Rating affirmed at 'AA-(tha)'; Stable OutlookNational Short-Term Rating affirmed at 'F1+(tha)'SCBSNational Long-Term Rating affirmed at 'AA-(tha)'; Stable OutlookNational Short-Term Rating affirmed at 'F1+(tha)'KTBLNational Long-Term Rating affirmed at 'AA-(tha)'; Stable OutlookNational Short-Term Rating affirmed at 'F1+(tha)'Contact: Primary Analysts Ambreesh Srivastava (BBL's, KBANK's, SCB's and KTB's International Ratings)Senior Director+65 6796 7218Fitch Ratings Singapore PTE Ltd6 Temasek Boulevard#35-05 Suntec Tower FourSingapore 038986Patchara Sarayudh (KBANK's and KS' National Ratings)Director +662 108 0152 Fitch Ratings (Thailand) LimitedPark Ventures, Level 1757 Wireless Road, LumpiniPatumwan, Bangkok 10330Parson Singha, CFA (BBL, SCB's and SCBS' National Ratings)Senior Director +662 108 0151 Trin Siriwutiset (KTB's and KTBL's National Ratings)Associate Director+66 2108 0154Secondary Analysts Parson Singha, CFA (BBL and SCB's International Ratings, KTB's and KTBL's National Ratings)Senior Director +662 108 0151 Patchara Sarayudh (KBANK's International Ratings, BBL's, SCB's and SCBS's National Ratings)Director+662 108 0152Trin Siriwutiset (KTB's International Ratings, Kbank's and KS' National Ratings)Associate Director+66 2108 0154Committee ChairpersonJonathan CornishManaging Director+852 2263 9901Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com.Disclosure: Kasikorn Asset Management Company Limited (of which KBANK holds a 100% stake) owns 10% of the shares in Fitch Ratings (Thailand) Limited. Muang Thai Life Assurance Company Limited (of which KBANK holds a 38.3% economic interest) 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.Additional information is available atwww.fitchratings.com. Applicable criteria, "Global Financial Institution Rating Criteria", dated 31 January 2014, "National Scale Ratings Criteria", dated 30 October 2013, "Rating FI Subsidiaries and Holding Companies" dated 10 August 2012, "Assessing and Rating Bank Subordinated and Hybrid Securities Criteria", dated 31 January 2014; "Finance and Leasing Companies Criteria dated 11 December 2012, and "Securities Firms Criteria" dated 31 January 2014 are available atwww.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732397 National Scale Ratings Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=720082 Rating FI Subsidiaries and Holding Companieshttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=679209 Assessing and Rating Bank Subordinated and Hybrid Securities Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732137 Finance and Leasing Companies Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696720 Securities Firms Criteriahttp://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=732556 Additional Disclosure Solicitation Statushttp://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=831877 ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE '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. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.
Fitch Affirms Thailand's 4 Largest Commercial Banks, Subsidiaries
(The following statement was released by the rating agency)BANGKOK/SINGAPORE, May 28 (Fitch) Fitch Ratings has affirmed the ratings of Thailand&aposs four largest commercial banks and their three subsidiaries. The Long-Term Issuer Default Ratings (IDRs) on Bangkok Bank Public Company Limited (BBL), Kasikornbank Public Company Limited (KBANK) and Siam Commercial Bank Public Company Limited (S
May 28, 2014
