Fitch Ratings has released its ratings and outlooks on five major Thai banks -- Krungthai Bank (KTB), Siam Commercial Bank (SCB), Bangkok Bank (BBL), Kasikornbank (KBank) and Bank of Ayudhya (BAY) -- to mixed results.
Fitch affirmed KTB's long-term issuer default rating (IDR) at BBB and its national long-term rating at AA+ with a stable outlook.
Highly probable sovereign support from the government is driving KTB's ratings on international and national scales, including its senior debt ratings. Fitch said the state is highly likely to extend extraordinary support to KTB in the event of financial stress. Such support is captured in the bank's support rating and support rating floor.
Fitch also affirmed the long-term IDR on SCB at BBB+ and its national long-term rating at AA+, as well as affirmed the national long-term rating on the bank's wholly owned subsidiary, SCB Securities Co (SCBS), at AA with a stable outlook.
The ratings on the senior debt of SCB are driven by its stand-alone credit profile, as denoted by the viability rating (VR). The senior debt represents unsecured and unsubordinated obligations of the bank.
Its VR reflects its solid domestic franchise as the largest bank in Thailand by consolidated assets (as of the end of 2018) and a particularly strong presence in retail banking. The rating also takes into account SCB's weakening profitability the past few years and Fitch's expectation that profitability could remain lower than that of global rating peers over the medium term.
Fitch affirmed the long-term IDR on BBL at BBB+ and its national long-term rating at AA+ with a stable outlook.
BBL's ratings are driven primarily by its stand-alone strength, which is denoted by its VR, while the senior debt represents unsecured and unsubordinated obligations of the bank.
The VR of BBL is based on the bank's strong domestic franchise, stable funding and liquidity, as well as sound capitalisation. BBL has consistently maintained its strong market positions in the large corporate client segment and in international banking.
The rating also reflects BBL's conservative management style relative to domestic peers, which is evident from its consistently stronger buffers versus peers, such as a reserve coverage ratio of 191% at the end of 2018.
Fitch affirmed KBank's long-term foreign currency IDR at BBB+ and its national long-term rating at AA+ with a stable outlook.
The bank's ratings are driven by its stand-alone profile and peer relativity among other Thai companies. The senior debt represents unsecured and unsubordinated obligations of the bank.
KBank's VR takes into consideration its strong domestic franchise as one of the largest banks in Thailand, as well as its leadership in small-business lending. The rating also reflects KBank's weakening profitability during the past few years, which may remain lower than that of its globally rated peers over the medium term.
Fitch upgraded BAY's short-term IDR to F1 from F2 and affirmed its long-term IDR at A- with a stable outlook.
The bank's ratings are based on Fitch's view that BAY is a strategically important subsidiary of MUFG. The Japanese parent owns 76.9% of BAY and has management control. There are important marketing linkages in terms of MUFG's Japanese corporate-client base and the group's expertise in cross-border banking products.
