Limited rating risk from US$ funding for 3 Thai banks: Fitch
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Recent US-dollar fund-raising by Thailand's three largest private banks will have limited impact on their ratings, Fitch Ratings says.
This is because such wholesale borrowings form a small portion of their funding base. However, any increased reliance on capital-market funding could put pressure on the banks’ already tight funding profile and their moderately high loans-to-deposits ratios, it said.
The three institutions are Bangkok Bank, Siam Commercial Bank and Kasikornbank.
Fitch takes the view that the US-dollar issuance of $2.2 billion (nearly Bt68 billion) by the three banks this month was opportunistic, supported by attractive interest rates and investor demand. Proceeds will largely be used to meet credit demand from corporates and for overseas acquisitions and expansion.
These recent issuances also diversify the banks’ funding and improve their assets/liabilities maturity mismatch profile, Fitch said.
Dollar-denominated credit growth in Thailand has been increasing since 2010, and major Thai banks have thus far relied on short-term funding through the swaps and interbank markets. Other large Thai banks, such as Krung Thai Bank, may consider such funding in the low-interest-rate environment.
In comparison, Fitch believes that many medium-sized and smaller banks, especially those with high loans/deposits ratios, are likely to pay more attention to building their deposit franchise in the domestic market, despite intense competition for deposits.
