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Moody’s downgrades outlook for 7 Thai financial institutions to ‘Negative’

Moody’s downgrades outlook for 7 Thai financial institutions to ‘Negative’

Provided by Nation.

Moody’s Ratings revises outlook on 7 Thai banks to ‘Negative’ from ‘Stable’ following downgrade of Thai Government’s outlook, citing weak economy and slowing loan growth

On April 30, Moody’s Ratings announced a downgrade of the credit outlook for seven Thai financial institutions from "Stable" to "Negative," following its recent revision of Thailand’s sovereign credit outlook.

The affected institutions are:

Bangkok Bank Public Company Limited (BBL)

Export-Import Bank of Thailand (EXIMT)

Kasikornbank Public Company Limited (KBANK)

Krung Thai Bank Public Company Limited (KTB)

Siam Commercial Bank Public Company Limited (SCB)

SCB X Public Company Limited (SCBX)

TMBThanachart Bank Public Company Limited (TTB)Moody’s explained that the downgrade of Thailand’s sovereign outlook reflects increasing risks to the country's economic and fiscal resilience. In particular, the imposition of up to 36% tariffs by the United States has had a negative impact on Thailand’s fragile economic recovery and may significantly undermine the country's future growth potential.

The agency warned that a weakening economy could further erode the credit quality of Thai banks, which are already facing challenges such as slowing loan growth and deteriorating asset quality due to lingering effects from the Covid-19 pandemic. Moreover, a worsened economic environment could constrain the government’s ability to provide support to these banks if needed.

Moody’s further noted that should Thailand’s sovereign credit rating be downgraded, the credit ratings of the seven financial institutions would likely be lowered as well. This is due to the strong link between the banks’ ratings and the government's creditworthiness, including expectations of potential government support.Despite the outlook revision, Moody’s has maintained Thailand’s issuer and local currency rating at Baa1, citing the country’s robust institutional framework and sound policy management, which support overall macroeconomic stability. The short-term foreign currency rating remains at P-2.

Moody’s concluded that if Thailand’s sovereign outlook is revised back to “Stable” while retaining the Baa1 rating, the outlooks for the seven affected financial institutions would likely be restored to “Stable” as well.

NATION

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AFP-JIJI PRESS NEWS JOURNAL


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