Bangkok--Dec 17--MOODY
Moody's Investors Service has upgraded
Siam City Bank Public Company Limited's (SCIB) long-term foreign currency deposit and senior debt ratings to Baa3 from Ba2, its long-term foreign
currency subordinated debt rating to Ba1 from Ba3, and its short-term foreign currency deposit rating to Prime-3 from Not Prime. Furthermore, SCIB's bank financial strength rating was raised to D- from E+. The outlook is stable. This action concludes the review begun in December 2003.
Moody's said the upgrades reflect SCIB's improved financial fundamentals
and the progress it has made in establishing itself among Thailand's mid-size banks.
Specifically, the upgrades for its debt and deposit ratings recognize its progress in strengthening its position (gained as the result of a government-engineered merger) among Thailand's second-tier banks. Moody's believes that the bank would benefit from a degree of regulatory support as a result of its enhanced systemic importance. While slated for privatization, it is currently 47.5% government owned.
The upgrade of SCIB's BFSR to D- reflects its improved earnings and the
resultant strengthening of its capital cushion, the rating agency said, adding that the bank's recovering franchise was another factor in its decision.
SCIB, the product of the 2002 merger of two government-rescued banks, has since upgraded its credit risk management and IT systems. Despite the 4-year hiatus between the rescue of its two predecessors and their subsequent merger and rehabilitation, SCIB has managed to maintain many of its middle-market customers.
The bank's loan portfolio, which was drastically reduced by a massive
sale of bad loans to the government, is being rebuilt, thereby restoring earnings capacity. Moody's expects earnings will continue to improve, maintaining capital at levels sufficient to support its growing loan portfolio, even as dividend payments resume.
However, Moody's notes that the rapid growth of SCIB's loan portfolio
raises some asset quality concerns. Furthermore, reported non-performing loans will fluctuate as Thailand concludes its clean-up of problem loans which emerged during the Asian financial crisis. Nevertheless, SCIB's strong loan loss reserves and relatively high capital levels provide adequate protection to creditors.
SCI B, headquartered in Bangkok, is Thailand's seventh largest bank, and
as of September 30, 2004 had total assets of Baht 467 billion (US$ 11 billion).
The following ratings were upgraded:
Siam City Bank Public Company Limited -- bank financial strength rating
to D- from E+, long- and short-term foreign currency deposit ratings to Baa3/P-3 from Ba2/NP
Singapore
Deborah Schuler
VP - Senior Credit Officer
Financial Institutions Group
Moody's Singapore Pte Ltd.
Telephone: 65-6398-8300
Facsimile: 65-6398-8301
Singapore
Beatrice Woo
Vice President - Senior Analyst
Financial Institutions Group
Moody's Singapore Pte Ltd.
Telephone: 65-6398-8300
Facsimile: 65-6398-8301
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