Four Thai banks get a ratings downgrade due to 'systematic risks'


Four Thai commercial banks were downgraded by S&P Global Ratings over concerns that the commercial banks operating in Thailand would be affected by increasing systematic risks.

The S&P announced its new ratings for Thai banks on Tuesday, which showed Siam Commercial Bank and Kasikornbank downgraded from “BBB+” to “BBB”.

The S&P also downgraded Krungthai Bank and TMBThanachart Bank to “BBB-” from “BBB”.

The S&P, however, reaffirmed “BBB+” for Bangkok Bank and Bank of Ayudhya. The ratings agency reasoned that Bangkok Bank has high systematic importance in Thailand and this quality offsets the risk. It said Bank of Ayudhya benefits from being a strategic subsidiary of Mitsubishi UFJ Financial Group.

S&P also announced that its research team has revised down the standalone credit profiles of all the six banks by one notch because the team expects the banks to continue to face structural issues due to the economic situation in the country.

The S&P added that the country’s economic recovery would remain fragile and uneven across sectors in Thailand. It predicts that the tourism sector would be further hindered by the Russia-Ukraine war.

The ratings agency also expects that non-performing loans in the Thai banking sector would continue to rise over the next 24 months to five per cent, which will be the highest since the 2008 global financial crisis.