Thai banks starting to stand on own feet, Fitch says
(8 June 2004 – Thailand) International ratings agency Fitch has upgraded the ratings for three of Thailand’s largest commercial banks.
The agency pointed to recovering financial strength in the banking sector built on strong economic growth, improving property and asset prices, and a pick up in corporate and consumer financing.
However, Fitch said Thai banks could still be handicapped by restructured loans, margin pressure from excess liquidity, competition from state banks, rising interest rates and a generally weak credit culture.
Kasikornbank, Siam Commercial Bank, Krung Thai bank and Bangkok Bank, which account for almost 70 percent of the country’s total loans and deposits, all had their ratings revised upwards.
Fitch said Thai banks had been underpinned by actual or expected government support since the 1997 financial crisis, rather than their real financial strength, which was poor.
"Hence, upgrades in the sovereign ratings provided support to higher ratings for the major banks," Fitch said.
The ratings agency said that it now expected banks’ own standalone financial strength to play an increasing role in determining the long term ratings of Thai banks.
However, Fitch said Thai banks could still be handicapped by restructured loans, margin pressure from excess liquidity, competition from state banks, rising interest rates and a generally weak credit culture.
Kasikornbank, Siam Commercial Bank, Krung Thai bank and Bangkok Bank, which account for almost 70 percent of the country’s total loans and deposits, all had their ratings revised upwards.
Fitch said Thai banks had been underpinned by actual or expected government support since the 1997 financial crisis, rather than their real financial strength, which was poor.
"Hence, upgrades in the sovereign ratings provided support to higher ratings for the major banks," Fitch said.
The ratings agency said that it now expected banks’ own standalone financial strength to play an increasing role in determining the long term ratings of Thai banks.
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