Thai Large Banks Have Ratings Headroom Despite Weak Recovery
Fitch Ratings-Bangkok-08 April 2021: The Viability Ratings (VR) of Thailand’s five largest banks are driven by their domestic franchises, which support through-the-cycle earnings generation and the build-up of sound capital buffers, Fitch Ratings says in a peer review report.
The five banks have strong and sustainable market shares, and a diverse presence across products and client segments. The VRs also take into account their relatively weak asset quality and profitability ratios compared to Fitch's financial benchmarks, which are exacerbated by the coronavirus pandemic. That said, we do not think such weakness is likely to trigger a downgrade in the near future given the banks’ other loss-absorption buffers, including capital levels and loan-loss allowances.
The 'BBB' Support Rating Floors (SRF) of Bangkok Bank Public Company Limited (BBL, BBB/Stable/bbb), KASIKORNBANK Public Company Limited (KBank, BBB/Stable/bbb), The Siam Commercial Bank Public Company Limited (SCB, BBB/Stable/bbb), and Krung Thai Bank Public Company Limited (KTB, BBB/Stable/bbb-) reflect the banks’ high systemic importance. The SRFs of BBL, KBank and SCB are at the same level as their VRs, which limits the risk of a downgrade of the banks’ Long-Term Issuer Default Ratings (IDR) in the event of a VR downgrade. The Long-Term IDR of KTB is driven by its SRF.
The Long-Term IDR of Bank of Ayudhya Public Company Limited (BAY, BBB+/Stable/bbb) is driven by institutional support from its parent MUFG Bank, Ltd. (A-/Stable).
