Fitch Ratings has today affirmed Export-Import Bank of Thailand's (EXIM) Long-term foreign currency Issuer Default Rating (IDR) at 'BBB' with a Stable Outlook, Short-term foreign currency IDR at 'F3', National Long-term rating at 'AAA(tha)' with a Stable Outlook, National Short-term rating at 'F1+(tha), Support rating at '2', Support Rating Floor at 'BBB' and outstanding senior unsecured bonds at 'AAA(tha)'.
EXIM's ratings are correlated with the Sovereign's ratings given the full ownership and control of the bank by the Ministry of Finance (MOF). Also, EXIM's policy role as Thailand's export credit agency, which entitles the bank to partial debt guarantee provisions and loss compensation for business undertaken in accordance with its mandated policy role, links its ratings to that of Thailand's ('BBB'/Stable). Fitch believes that there is a high probability that state support would be forthcoming, if necessary. The International rating and Outlook of EXIM was revised to 'BBB'/Stable from 'BBB+'/Negative in April 2009 following a similar action on Thailand, due to the prolonged political crisis.
Following a strong improvement in financial performance in 2007, EXIM reported a weaker net profit of THB201m in 2008, 60% lower yoy due to increased loan loss provisions (LLP) as a result of higher NPLs amid the weak global economy. Revenue also declined due mainly to loan contraction. EXIM's 9M09 performance has shown improvement with net profit of THB160m, although provisioning risks remains.
The severe global economic downturn in Q408 and Q109 caused a sharp jump in impaired loans. At end-2008, NPLs stood at THB4.7bn (or 9.24% of total loans), a 62% increase from THB2.9bn (5.46%) at end-2007. At end-March 2009, NPLs rose to THB5.3bn (10.84%) but improved to THB4.3bn (9.06%) at end-September 2009 due to restructuring of NPLs. Fitch expects the weak global economic recovery to pose further risks to EXIM's asset quality in 2010.
EXIM's capital position is stronger, with total capital ratio of 23.82% at end-September 2009 compared with 16.63% at end-2008 and 13.05% at end-2007. This is due to the capital injections made by the MOF at end-2008 (THB1.3bn) and in September 2009 (THB5bn). Equity to assets improved to 23.6% at end-September 2009, significantly higher than regional peers.
EXIM began operations in 1994. The bank is under the supervision of the MOF and is subject to examination by the Bank of Thailand (BOT). The bank's main objective is to promote exports, Thai investments abroad and investments for national development. EXIM is not allowed to accept public deposits.
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