Fitch Ratings has revised the ratings outlook for five Thai banks to negative from stable, following the downgrade last week of its outlook for Thailand’s sovereign credit rating.
The revision affects the following banks, while their long-term issuer default ratings (IDRs) have been affirmed:
Export-Import Bank of Thailand (EXIM)
Krungthai Bank Plc (KTB)
TMBThanachart Bank Plc (ttb)
Standard Chartered Bank (Thai) Plc (SCBT), and
United Overseas Bank (Thai) Plc (UOBT).
The long-term ratings with a stable outlook remain unchanged for the following banks:
Bangkok Bank Plc (BBL)
Bank of Ayudhya Plc (BAY)
Kasikornbank Plc (KBank)
Siam Commercial Bank Plc (SCB), and
SCB X Plc (SCBX).
The adjustments follow Fitch’s revision of the outlook on the Thai sovereign rating of BBB+ to negative from stable on Sept 24.
KEY RATINGS DRIVERS
Potential change in government support ability: The long-term IDRs of Exim, KTB and ttb are driven by their government support ratings, and the negative outlook for their ratings reflects the reduced ability of the government to provide extraordinary support.
The government support ratings for Exim, KTB, ttb, BBL, KBank, SCB and SCBX have been affirmed. However, they will likely be downgraded in the event of a sovereign downgrade.
Possible constraint on shareholder support: The shareholder support ratings of SCBT, UOBT and BAY have been affirmed. The negative outlook for SCBT and UOBT reflects their long-term IDRs being capped by Thailand’s country ceiling. Any downward revision of the country ceiling would lead to negative rating action on their shareholder support ratings, and hence on their long-term IDRs.
The long-term local currency IDR of SCBT is not constrained by the country ceiling and the outlook for that rating remains stable. The shareholder support rating for BAY is not constrained by country risk factors, and its long-term IDR would not be affected by a one-notch change in Thailand’s country ceiling.
No impact on viability ratings: The viability ratings of KTB, ttb, UOBT, BBL, BAY, KBank, SCB and SCBX have all been affirmed. Fitch’s operating environment score for Thai banks is at bbb/stable, which is lower than the Thai sovereign rating, and we assess it as not affected by the sovereign rating action.
The outlook on BBL’s bbb+ funding and liquidity score was revised to negative from stable to reflect potential constraints from the sovereign rating, but there is no impact on the bank’s viability rating.
The long-term IDRs at BBL, KBank, SCB and SCBX are driven by their viability ratings, and hence are unaffected by the sovereign rating action.