(The following statement was released by the rating agency)
BANGKOK/SINGAPORE, February 12 (Fitch) Fitch Ratings has
affirmed Bank of
Ayudhya Public Company Limited's (BAY) Long-Term Issuer Default
Rating (IDR) at
'A-' and its National Long-Term Rating at 'AAA(tha)'. The
Outlook is Stable. At
the same time, Fitch has also affirmed the bank's Viability
Rating (VR) at
'bbb'. A full list of rating actions is provided at the end of
KEY RATING DRIVERS
BAY's IDRs and National Ratings reflect Fitch's belief there
would be an
extremely high probability of extraordinary support from its
shareholder, Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU,
A/Stable), if needed.
This is based on BAY's strategic importance to its parent,
ownership and effective control, and an expectation of increased
after BAY combines with BTMU's Bangkok Branch by end-2014.
The Stable Outlook on BAY's Long-Term IDR is consistent with
that of its parent.
BAY's VR reflects its satisfactory performance, moderate
improved asset quality. The rating also takes into account a
significant increase in asset size, strengthening local
franchise and a more
diversified business model after the integration of BTMU's
Bangkok branch. While
BAY will likely remain the fifth-largest bank by asset size in
market share could increase to about 10% from 7% at
end-September 2013. Its loan
portfolio would also be more diversified, with corporates, SMEs
customers accounting for about 40%, 20%, and 40% of total loans,
(end-2013: 26%, 24% and 50%).
Fitch believes there is downside risk from a weakening operating
higher private sector leverage. As a result BAY's profitability
quality could weaken. However, Fitch still expects BAY's solid
coverage ratio of 141% at end-2013 and consolidated Tier 1
capital of 11% at
end-1H13 to provide acceptable buffers.
The bank's funding and liquidity profile could remain relatively
major local peers, with its greater reliance on wholesale
loan-to-deposit ratio and lower liquidity buffer. However, Fitch
BAY could rely on funding support from BTMU to mitigate the
Upgrades of the Long-Term IDR and National Long-Term Rating are
BAY's IDR is currently at the Country Ceiling of 'A-', while its
Long-Term Rating is the highest on the national scale. A
negative rating action
on BTMU's IDRs would lead to similar rating action on BAY's
IDRs, Support Rating
and National Long-Term Rating. A negative rating action could
occur if there is
a material reduction in BTMU's shareholding in or in its
propensity to provide
support to BAY.
Given downward pressure in the current operating environment, it
that BAY's VR will be upgraded in the near- to medium term. In
the integration with BTMU may lead to improvement in the
Together with the maintenance of the bank's strong profitability
quality measures, and the sustained improvement in
capitalization and funding,
this could potentially result in an upgrade of VR.
A downgrade in the VR could result from a significant erosion of
increasing risk of significant deterioration in asset quality or
and liquidity profile.
BAY is Thailand's fifth-largest commercial bank by assets. Its
Mitsubishi UFJ Financial Group, BTMU's single parent, is the
group in Japan by assets with the most extensive overseas
The rating actions are as follows:
- Long-Term IDR affirmed at 'A-'; Outlook Stable
- Short-Term IDR affirmed at 'F2'
- Viability Rating affirmed at 'bbb'
- Support Rating affirmed at '1'
- National Long-Term Rating affirmed at 'AAA(tha)'; Outlook
- National Short-Term Rating affirmed at 'F1+(tha)'
- National long-term senior unsecured debt affirmed at
- National short-term senior unsecured debt affirmed at
- Legacy Basel II subordinated debt affirmed at 'AA+(tha)'
Ambreesh Srivastava (International Ratings)
+65 6796 7218
Fitch Ratings Singapore PTE Ltd
6 Temasek Boulevard
#35-05 Suntec Tower Four
Piyamas Chaihetphon, CFA, CPA (National Ratings)
+66 2108 0153
Piyamas Chaihetphon, CFA, CPA (International Ratings)
+66 2108 0153
Patchara Sarayudh (National Ratings)
+66 26108 0152
+65 6796 7229
Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234,
Note to Editors: Fitchâ€™s National ratings provide a relative
creditworthiness for rated entities in countries with relatively
international sovereign ratings and where there is demand for
such ratings. The
best risk within a country is rated â€˜AAAâ€™ and other credits
are rated only
relative to this risk. National ratings are designed for use
mainly by local
investors in local markets and are signified by the addition of
for the country concerned, such as â€˜AAA(tha)â€™ for National
ratings in Thailand.
Specific letter grades are not therefore internationally
Additional information is available at www.fitchratings.com.
Applicable criteria, "Global Financial Institutions Rating
Criteria ", dated 31
January 2014; "Assessing and Rating Bank Subordinated and Hybrid
Criteria ", dated 31 January 2014; â€œRating FI Subsidiaries and
Companiesâ€�, dated 10 August 2012 and "National Scale Ratings
Criteria", dated 30
October 2013; are available at www.fitchratings.com.
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
Assessing and Rating Bank Subordinated and Hybrid Securities
Rating FI Subsidiaries and Holding Companies
National Scale Ratings Criteria
ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND
PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS
here. IN ADDITION,
ON THE AGENCY'S
PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS,
METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S
CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE
AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE
FROM THE 'CODE OF
CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER
SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES.
DETAILS OF THIS
SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN
ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER
ON THE FITCH