Fitch Ratings-Bangkok/Hong Kong/Singapore-24 May 2012: Fitch Ratings (Thailand) has assigned Government Housing Bank (GHB) National Long-and Short-Term Ratings of 'AAA(tha)' with Stable Outlook and 'F1+(tha)', respectively. At the same time, Fitch has affirmed the bank's Support Rating at '2'.
The ratings are based on GHB's strong linkage to the government given its full state ownership, legal status as a state enterprise set up under specific law, and tight state control. The ratings also reflect GHB's policy role, as well as a high probability of timely support from the government, if necessary.
The Stable Outlook reflects Fitch's expectations that the government will continue to support the bank in case of need. Any perceived dilution/weakening in the sovereign's propensity or capacity to support could negatively impact the bank's Support Rating and National Long-Term Rating.
The bank was set up under the Government Housing Bank Act B.E. 2496 (1953), with the role to provide housing finance to low-and middle-income groups and civil servants which is vital for the country's long-term economic and social development. The bank is under supervision of the Ministry of Finance and is audited by the Bank of Thailand on prudential regulation. Financial statement is audited by the Office of Auditor General. The Board of Directors and the President are appointed by the Cabinet.
GHB has previously received capital injection and debt guarantees upon request from the government. Financial support from the state generally requires the Cabinet's approval, and the approval process can be accelerated to ensure timely support, if required. The government also closely monitors the bank's financial position to ensure timely support.
GHB reported a net profit of THB6.9bn in 2011, up 9% yoy, mainly due to lower provisioning costs. Asset quality improved as non-performing loans (NPLs) fell to THB61.3bn (8.9% of total loans) at end-2011 from THB68.1bn (10.3%) at end-2010. GHB plans to sell NPLs of THB13.4bn in 2012, which would help further improve asset quality. Capital remains adequate with a total capital ratio (based on Basel I) of 16.5% at end-2011 (end-2010: 15.3%), most of which is Tier 1 capital.
GHB was set up in 1953 as one of the government's specialised financial institutions. GHB is the largest provider of residential mortgage finance in Thailand, with a market share of 33% in 2011.
Primary Analyst Narumol Charnchanavivat Director +662 655 4763 Fitch Ratings (Thailand) Limited 55 Wireless Road Lumpini, Patumwan Bangkok 10330
Secondary Analyst Patchara Sarayudh Associate Director +662 655 4761
Committee Chairperson Jonathan Cornish Managing Director +852 2263 9901
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