Fitch Upgrades Thai EXIM#s ST Rating to #F1#; Revises Outlooks on EXIM, IBANK and KTB to Positive

Stocks and Financial Services Press Releases Thursday July 25, 2019 17:13
Bangkok--25 Jul--Fitch Ratings

Fitch Ratings has revised the Outlook on the Long-Term Foreign-Currency Issuer Default Ratings (IDR) of Export-Import Bank of Thailand (EXIM), Islamic Bank of Thailand (IBANK) and Krung Thai Bank Public Company Limited (KTB) to Positive from Stable. At the same time, Fitch has affirmed the Long-Term Foreign-Currency IDRs, Support Ratings, and Support Rating Floors of EXIM, IBANK and KTB. Fitch has also upgraded the Short-Term IDR of EXIM to 'F1' from 'F2' and removed the rating from Under Criteria Observation (UCO).

Other ratings for EXIM, IBANK and KTB are not affected. A full list of rating actions is included in this commentary.
The Support Ratings and Support Rating Floors of the three banks are driven by expectations of support from the Thai sovereign (BBB+/Positive). Their Long-Term IDRs are driven by their Support Rating Floors.

The Outlook revision on the Long-Term IDRs follows Fitch's revision of the Outlook on Thailand's Long-Term Foreign-Currency IDR to Positive from Stable on 18 July 2019. See the most recent rating action commentary, "Fitch Revises Outlook on Thailand to Positive; Affirms at 'BBB+'", dated 18 July 2019.

The Long-Term Foreign-Currency IDR and Support Rating Floor of EXIM is at the same level as that of the sovereign, reflecting its status as a state policy bank controlled by the Thai Ministry of Finance and set up under specific legislation to fulfil key government objectives. The upgrade of EXIM's Short-Term IDR follows a similar rating action at the sovereign level (see "Fitch Upgrades Short-Term Ratings of Six Sovereigns, Removes from UCO", dated 24 May 2019), and is in line with Fitch's revised Short-Term Ratings Criteria for bank ratings driven by sovereign support.

Fitch rates IBANK's Long-Term IDR and Support Rating Floor two notches below Thailand's Long-Term Foreign-Currency IDR, due to IBANK's more limited and potentially less permanent policy role relative to other Thai state policy banks.

KTB's Long-Term Foreign-Currency IDR is driven by its Support Rating Floor, and is underpinned by Fitch's belief that the government will be highly likely to extend extraordinary support to KTB in times of need. KTB is the only commercial bank majority-owned by the state and is also one of Thailand's largest banks. Fitch believes that KTB is systemically important, and continues to be strategically important to the government. See also KTB's most recent rating action commentary "Fitch Affirms Krung Thai Bank; Outlook Stable", dated 12 April 2019.


Fitch believes that EXIM, IBANK, and KTB's Long-Term IDRs and Support Rating Floors are sensitive to changes in Thailand's sovereign rating. Any change in Thailand's sovereign rating may affect the IDRs of EXIM, IBANK and KTB in a similar direction, if there were no significant changes in Fitch's assumptions about the state's propensity to support the banks. A revision of the banks' Outlooks would also be likely if the Outlook on Thailand is revised to Stable.

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