26 August 2004

Capital Intelligence, the international emerging markets rating agency, today announced that the rating outlook for Bank of Ayudhya (BAY) had been raised to positive. Other ratings remain unchanged.

The new ratings are as follows:

BAY management continues to make solid progress in rebuilding the bank. Asset quality is steadily improving while provision coverage is rising. While CI would still wish to see the ratio of non-performing loans lower and provision coverage higher, trends in both measures are moving in the right direction. With operating profitability expected to be rather stronger this year following the repayment of the SLIPs, this in turn will allow management to build up provisioning coverage more rapidly. Liquidity remains satisfactory in ratio terms, while the underlying structure of the funding base has improved. As regards capital, ratios are satisfactory. However the replacement of the SLIPs by equity has significantly improved the quality of the capital base by removing the dependence on hybrid structures. While BAY may need to raise more equity in the medium term, current capital is more than adequate to support planned asset growth. The change of the ratings outlook to positive is based on the better capital structure and an earnings improvement that will allow BAY to address remaining asset quality questions more quickly than previously expected.