Thailand Financial News

Fitch Ratings has today upgraded selected ratings of Chugoku Bank, Ltd. (Chugoku) and Hokkaido Bank, Ltd. (Hokkaido), and at the same time affirmed the ratings of Fukui Bank, Ltd. (Fukui) and Kita-Nippon Bank, Ltd. (Kita-Nippon) as follows:

Chugoku: Long-term foreign and local currency Issuer Default Ratings (IDRs) were upgraded to ‘A+’ from ‘A’ with a Stable Outlook.

Individual rating was upgraded to ‘B’ from ‘B/C’. Short-term foreign and local currency IDRs and Support rating were affirmed at ‘F1′ and ‘2′, respectively. Support rating floor ‘BBB-’ (BBB minus). Hokkaido: Individual rating was upgraded to ‘D’ from ‘D/E’ and Positive Rating Watch was removed accordingly. Long-term foreign and local currency IDRs, Short-term foreign and local currency IDRs and Support rating were affirmed at ‘BBB-’ (BBB minus), ‘F3′ and ‘2′, respectively. The rating Outlook was changed to ‘Positive’. Support rating floor ‘BBB-’ (BBB minus). Fukui: Long-term foreign and local currency IDRs, Short-term foreign and local currency IDRs, Individual rating and Support rating were affirmed at ‘BBB-’ (BBB minus), ‘F3′, ‘C/D’ and ‘2′, respectively. The rating Outlook was changed to ‘Positive’. Dated subordinated debt also affirmed at ‘BB+’. Support rating floor ‘BBB-’ (BBB minus). Kita-Nippon: Long-term foreign and local currency IDRs, Short-term foreign and local currency IDRs, Individual rating and Support rating were affirmed at ‘BBB-’ (BBB minus), ‘F3′, ‘C/D’ and ‘3′, respectively. The rating Outlook was changed to ‘Positive’. Dated subordinated debt also affirmed at ‘BB+’. Support rating floor ‘BB-’ (BB minus). Chugoku’s upgrades reflect a steady improvement in the bank’s asset quality and capital position. Net risk-monitored loan (”RML”) accounted for 20% of pure Tier1 capital (net of gross deferred tax) at end-September 2006, which was well below its peers’ average. Although the recent voluntary loss-cut on bond holdings has negatively affected the bank’s operating profit, continued growth in interest revenues as well as fee and commission income have underpinned its top-line profitability. Hokkaido’s upgrade reflects a consistent improvement in the bank’s capital position. Net losses reported at end-March 2003 due to a surge in credit costs hit its capital position hard, but retained earnings through continuing profitability growth has helped to strengthen the bank’s capital base since then. In addition, constant improvement in its loan quality has led to a decrease in credit costs. Furthermore, Hokkaido forecasts a decent growth of bottom-line profitability at end-March 2007, which is mainly attributable to a reduction of credit costs. The changes in the rating Outlooks of Fukui and Kita-Nippon reflect their improved capital positions, which resulted from an issuance of preferred securities in the case of Fukui, and retention of earnings and exercise of warrants issued by the bank in the case of Kita-Nippon. On the other hand, Fitch notes that the credit quality of the banks’ loans has room for further improvement, which will help improve the banks’ resilience against a possible economic downturn. –www.theasianbanker.com (March 30 2007)–