Fitch Ratings has affirmed Kasikorn Securities Public Company Limited's (KS) National Long-Term Rating at 'AA(tha)' and National Short-Term Rating at 'F1+(tha)'. The Outlook is Stable.
KEY RATING DRIVERS
The ratings are underpinned by support from KS's parent, KASIKORNBANK Public Company Limited (KBank; BBB/AA+(tha)/Stable). KS is an important part of KBank's universal banking platform, as the group's only securities business arm. There are strong synergies with the parent, with KS providing equity-related services to KBank's clients.
KBank also has full ownership and control over KS, and there is a high level of management and operational integration. We believe a default by KS would damage KBank's reputation, due to the clear linkages and shared branding. The one-notch rating differential between KS and KBank's National Long-Term Rating reflects Fitch's view that the securities business is a complementary, but small, business line for KBank.
RATING SENSITIVITIES
Factors that could, individually or collectively, lead to negative rating action/downgrade:
KS's National Ratings are linked to the local-currency credit profile of KBank, as indicated by the parent's National Ratings. Any weakening in KBank's rating profile could lead to negative rating action on KS.
A decline in KBank's propensity to support its subsidiary could also affect the ratings. This may be indicated by the parent reducing its shareholding in KS to below 75%, combined with a lower level of management control or diminished financial and operational linkages. However, we see this a low probability in the medium term.
Factors that could, individually or collectively, lead to positive rating action/upgrade:
We may upgrade KS's ratings in the event of an upgrade of KBank's National Long-Term Rating, which would indicate a stronger parent credit profile and increased ability to support its subsidiary. Any perceived strengthening in KBank's propensity to support KS could also lead to positive rating action; for instance, if KS starts to play a significantly larger role in KBank's consolidated franchise. However, we believe this as unlikely in the near-term in light of KS's limited profit contribution to KBank and moderate role in supporting the bank's customer offering.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
PUBLIC RATINGS WITH CREDIT LINKAGE TO OTHER RATINGS
KS's ratings are linked to the local-currency credit profile of KBank, as indicated by its National Long-Term Rating.
Additional information is available on www.fitchratings.com