Bangkok--20 Jun--Fitch Ratings
Fitch Ratings (Thailand) Limited has assigned The Siam Commercial Bank Public Company Limited's (SCB; AA+(tha)/Stable/F1+(tha)) senior unsecured medium-term note (MTN) programme a National Long-Term Rating of 'AA+(tha)' and a National Short-Term Rating of 'F1+(tha)'. The programme has a maximum issuance size of THB50 billion, and allows revolving issuances within the next two years. Proceeds will be used for the bank's general corporate purposes.
This programme will replace SCB's existing THB50 billion short-term debenture programme, which expires on 29 June 2018. The ratings of the programme apply only to senior unsecured issues under the programme. There is no assurance that notes issued in the future under the programme will be assigned a rating.
KEY RATING DRIVERS
SCB's MTN programme is rated at the same level as the bank's National Long-Term Rating of 'AA+(tha)' and National Short-Term Rating of 'F1+(tha)'. This is in line with Fitch's criteria, as the senior notes represent unsecured and unsubordinated obligations of the bank.
SCB's ratings reflect its extensive universal-banking franchise, with strength in retail banking. The bank's profitability and asset quality had come under heightened pressure amid a weak operating environment in the period up to 2017. In particular, the core asset-quality metric was relatively weak compared with that of its global peers. However, Fitch expects pressure to recede over 2018 amid a more benign economic environment, particularly as Thai banks have already been tightening credit standards over the past few years. We also expect SCB to maintain adequate earnings, reserve coverage and capital, which together provide adequate buffers for the bank.
RATING SENSITIVITIES
The ratings of the programme are sensitive to changes in SCB's National Long-Term Rating and National Short-Term Rating.
A significant and sustained deterioration beyond Fitch's expectations in either asset quality or profitability (including much higher risk appetite, which could raise the prospects for future deterioration) without adequate buffers in terms of loan-loss reserves and capitalisation could lead to a negative rating action on the bank.
For more details on the rating drivers and sensitivities for SCB, please see the rating action commentary Fitch Upgrades KTB's Short-Term IDR to 'F2'; Affirms 4 Other Thai D-SIBs, dated 2 May 2018.