Krung Thai Bank Public Co. Ltd.'s ('BBpi') recent announcement that it will set aside an additional Thai baht 2 billion (US$46.5 million) for loan-loss provisions in the fourth quarter 2002, will have an impact on its bottom line, but does not affect Standard&Poor's ratings on the bank. Nevertheles, the announcement is encouraging as a further sign that Thai banks are more willing to increase loan-loss provisions to a level more in line with the riskiness of the operating environment. On average, the Thai banking industry has a 23% loan-loss reserve coverage against nonperforming assets (defined as loans on three months past due basis, plus restructured loans and foreclosed properties), which Standard&Poor's regards as a low.
