KTB to brief Moody's on SSI exposure

"Moody’s might be worried about the bank’s performance amid the fragile Thai economy besides the SSI case, while we didn’t see any negative signs from SME and retail loans," Kittiya Todhanakasem, first senior executive vice president of KTB, said yesterday.

Moody’s last week said the proposed loan restructuring by Siam Commercial Bank and KTB for SSI was credit negative to the two banks. The additional provisions for SSI exposure will hurt the banks’ profitability and ability to generate capital internally this year, it said. Kittiya said the bank would also explain the situation at its roadshow to the United State early next month to restore the confidence of investors.

KTB this year has no plan to issue financial instrument to mobilise funds, so Moody’s comments will not yet have an impact on its cost of funds, she said.

KTB reported to the Stock Exchange of Thailand that it would make specific provisions of about Bt9 billion this quarter for its SSI exposure. Even though SSI’s case will affect the bank, the impact is not serious, it said.

The bank will inform the credit-rating agency that it has extra reserves for the unexpected incident, which will be held against SSI Group. The additional impact on its profit might be Bt6 billion or lower than that.

The provision for SSI will send the bank’s coverage ratio falling to 92 per cent from 124 per cent as of the end of June. The bank informed the Bank of Thailand that it would increase general reserves to bring its coverage back to 100 per cent by December.

The bank can maintain its profitability and has no plan to take any actions to keep its profits up this year, Kittiya said.

Tisco and SCB last week took steps to help sustain their profits. Tisco, another SSI lender, is reducing operating expenses this year, while SCB decided to dispose of 9.07 million shares of Siam Cement to the Crown Property Bureau for Bt4.46 billion.