Thailand Financial News

Moody’s Investors Service has placed Krung Thai Bank’s (KTB) bank financial strength rating (BFSR) of “E+” on review
for possible upgrade. KTB’s debt and deposit ratings are unaffected and their outlook remains stable. The bank’s Baa1 foreign currency deposit rating is at Thailand’s foreign currency country ceiling.

Furthermore, its deposit and debt ratings already incorporate government support, lifting them above the rating level typically associated with KTB’s intrinsic financial strength. “The review for possible upgrade reflects the progress KTB has achieved in restoring its balance sheet solvency in terms of economic capital (adjusted for possible additional loan losses),” says lead analyst Leo Wah, adding, “Moody’s is also aware that KTB has made substantial efforts to bring its risk management standard to a level more comparable
to other large commercial Thai banks.” “Given KTB’s high level of NPLs and, in Moody’s opinion, probably inadequate level of loan loss reserves, the review will focus primarily on asset quality and how quickly KTB could bring its loan loss reserves to an adequate level,” says Wah, adding, “The possible rating upgrade will also depend on KTB’s ability to make its lending practices, historically susceptible to political influence, more commercial.” Headquartered in Bangkok, KTB is Thailand’s second largest bank, with total assets of Bt 1,160 billion (US$29 billion) as of December 31, 2005. The following rating was placed on review for possible upgrade: Krung Thai Bank — Bank financial strength rating of E+. The other ratings of the bank are: Krung Thai Bank — Foreign currency deposit ratings of Baa1 and Prime-2.
The rating outlook is stable. Krung Thai Bank, Singapore branch — Foreign currency deposit note and subordinated debt of Baa1 and Baa2. The rating outlook is stable. Hong Kong
Leo Wah, CFA Singapore
Beatrice Woo