Moody’s affirms all Thai banks ratings despite coup


Singapore: Moody’s Investors Service said it has affirmed the ratings of all 12 rated Thai banks, with a stable outlook, despite the military coup in the country.

The global rating agency said in a statement posted on its website on Monday the coup has not impaired the government’s creditworthiness or its capacity to provide support to the banks, if needed.

“The operating conditions of the banks remain under pressure, but have not materially deteriorated over the last few weeks, and most importantly, the banks’ standalone credit profiles remain robust, with strong funding profiles and solid loss-absorbing buffers,” the statement said.

It named the 12 banks whose deposit, issuer and debt ratings are affirmed as 1) Bangkok Bank Public Co. Ltd.; 2) Bank of Ayudhya; 3) CIMB Thai Bank Public Co. Ltd.; 4) Export-Import Bank of Thailand; 5) Government Housing Bank of Thailand; 6) Kasikornbank Public Co. Ltd.; 7)Krung Thai Bank Public Co. Ltd.; 8) Siam Commercial Bank Public Co. Ltd.; 9) Standard Chartered Bank (Thai) Public Co. Ltd.; 10) SME Development Bank of Thailand; 11) TMB Bank Public Co. Ltd.; and 12) United Overseas Bank (Thai) Public Co. Ltd.”

Moody’s has also affirmed the bank financial strength ratings (BFSRs) for 11 banks and the corresponding outlooks are unchanged. The baseline credit assessment (BCA) of these banks remains unchanged.

Excerpts from Moody’s statement:

Ratings rationale
Moody’s decision to affirm the ratings of all 12 Thai banks reflects Moody’s expectation that the banks’ credit fundamentals will remain intact and are strong enough to weather cyclical pressures on the economy, as well as the political instability in the country.

The stable rating outlooks reflect Moody’s expectation that the military coup in Thailand will not undermine the banks’ credit strengths materially.

Political tensions in the country have added pressure on an already weakening economy, resulting in a deterioration in the banks’ asset quality profiles, and in particular, adversely affecting the retail unsecured, auto and small- and medium-size enterprise segments, which, however, together represent a somewhat modest share of the banks’ loan books. The stable outlooks reflect Moody’s view that the banks are well positioned to withstand an increase in non-performing loans over the next 12-18 months, owing to their strong loss absorbing buffers.

What could move the ratings down/up
The outlook on the ratings of all 12 banks affected by today’s ratings actions is stable and in line with the stable outlook on the sovereign rating of the government of Thailand.

Moody’s will downgrade the banks’ ratings if: (1) the Thai sovereign’s creditworthiness deteriorates; or (2) the banks’ operating environment deteriorates materially, resulting in a worsening of the banks’ standalone credit worthiness and leading to a lowering of their BCAs.

While upward pressure on the banks’ ratings is limited given the uncertain political and operating environment for the banks, a material improvement in the banks’ standalone credit worthiness, supported by a stable and predictable operating environment, could prompt Moody’s to upgrade the banks’ ratings.”


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