Standard & Poor’s Ratings Services says banks in Thailand are likely to face some losses, both physical damage as well as earnings, as a result of the Asian tsunami disaster but they should be manageable. The financial impacts on banks in Indonesia and India are expected to be limited.

In a briefing released today, S&P said that it is unlikely to revise its ratings on the banks in the three countries, or revise the outlooks on those ratings, as a result of the tsunamis.

S&P says that the losses of Thai banks arising from the catastrophe are not expected to have material impact on banks’ earnings. The losses are also not expected to lead to a material deterioration in banks’ loan quality.

“The exposure is mainly to the more severely hit economic sub-segments that are particular to the six provinces—tourism-related businesses, agrarian and fishery activities,” said S&P credit analyst Nancy Koh. Some of the banks’ borrowers are major hotel operators, whose properties are likely to be insured, and as such, economic losses or damages arising from the catastrophe could be covered by insurance.

The financial impacts of the disaster on the Indonesian and Indian banks are also expected to be limited. In Indonesia, the coastal areas of the Aceh province were worst affected; the province is in the northern part of Sumatra and is of relatively low economic significance to the national economy. As a prudent measure, the banks plan to allocate about US$64 million as reserves against their loan exposures. The operations of these banks’ branches in the affected areas are being resumed gradually as recovery work continues.

In India, the financial positions of the State Bank of India and ICICI Bank Ltd. are not expected to be significantly affected by the tsunamis, which mainly hit the southern states of Tamil Nadu and Andhra Pradesh, as well as the Andaman and Nicobar Islands. SBI reported the loss of three branches in the Andaman and Nicobar Islands, with loan exposures of about US$1.3 million. In Tamil Nadu, while any tangible loss estimates have yet to be determined, the financial impact on SBI and ICICI Bank is not expected to be material, given the relatively low level of financing to the largest affected borrower group, the fishing sector.