Fitch may upgrade Malaysian, Thai, RI bank ratings

Fitch may upgrade Malaysian, Thai, RI bank ratings

Stephanie Phang and Kate Mayberry, Bloomberg, Singapore

Banks in Malaysia, Thailand and Indonesia may have their
ratings raised by Fitch Ratings Ltd. as the region's financial
systems recover from the Asian financial crisis and stronger
economies lift country ratings.

"Most Asian banking systems are still in an upswing from the
crisis of the late 1990s, with sovereign rating upgrades lifting
the ceiling and allowing bank ratings to rise," Fitch said in a
statement today, citing David Marshall, its head of Asian
financial institutions.

Fitch and larger rivals Standard & Poor's and Moody's
Investors Service have become more optimistic about the Asian
banking industry's prospects as expanding economies fuel demand
for loans, boosting profit. Mergers, asset clean-ups and more
prudent loan management have also strengthened banking systems in
the region since the crisis.

"The improvement in the Asian economies has helped boost
growth in loans as well as lowering provisions in Malaysia and
Indonesia," said Stephanie Lee, who helps manage assets worth
about US$10 billion in Asia at Aberdeen Asset Management in
Singapore. "The entire banking industry in Asia should re-rate."
The banks that Lee owns include Public Bank Bhd., Malaysia's No.4
lender, and Indonesia's PT Bank NISP.

A devaluation of the Thai baht in 1997 caused currencies
across Southeast Asia to tumble, leaving many borrowers unable to
repay their debts and banks laden with bad loans. The resulting
financial crisis crimped economic growth across the region.

This year, economic growth in Asia, excluding Japan and the
Indian subcontinent, is expected to accelerate to 7.1 percent,
the fastest since the 1997 crisis, the World Bank said earlier
this month. In April, the Washington-based organization predicted
growth of 6.3 percent.

On Nov. 9, Fitch raised the credit rating of Malayan Banking
Bhd., Malaysia's largest lender by assets, one level to A-, a day
after it lifted the country's sovereign rating.

In October, the ratings company raised to positive the outlook
for eight Indonesian banks, including PT Bank Mandiri, PT Bank
Rakyat Indonesia and PT Bank Negara Indonesia.

Standard & Poor's raised its ratings on Bangkok Bank Pcl,
Thailand's biggest lender, and three of its rivals on June 24,
citing faster economic growth, increased lending and a decline in
bad assets.

It was the first time S&P had done so since the 1997 crisis.
Moody's lifted its ratings on Thai Military Bank Pcl on Sept. 1
after a merger with the local unit of Singapore's biggest bank
and Industrial Finance Corp. made it Thailand's No. 5 lender.

"The banks' recovery cycle is completed, they should go back
to their pre-crisis ratings," said Kelvin Miranda, who helps
manage about $180 million at Asian Asset Management Sdn. in Kuala
Lumpur.

A high level of bad debts is hurting the outlook for
Philippine banks, Fitch said.

"The Philippines stands in contrast to the positive trend with
concerns at the sovereign level over the fiscal policy outlook
and banks facing some negative rating pressures as they grapple
with heavy non-performing loans," Fitch cited Marshall as saying.