Bangkok--29 Jun--Fitch Ratings Fitch Ratings-Bangkok/Hong Kong/Singapore-29 June 2007: Fitch Ratings has today affirmed Siam Commercial Bank's (SCB) Long-term Foreign Currency Issuer Default Rating (IDR) at 'BBB+', Short-term Foreign Currency IDR at 'F2', Individual at 'C', Support at '2', as well as its foreign currency senior unsecured debt and subordinated notes at 'BBB+' and 'BBB', respectively. The Bank's Support Rating Floor remains unchanged at 'BBB-' (BBB minus). At the same time, the agency has affirmed SCB's National Long-term Rating at 'AA(tha)', National Short-term Rating at 'F1+(tha)', senior unsecured debt at National Short-term 'F1+(tha)', and subordinated debt at National Long-term 'AA-(tha)' (AA minus (tha)). The Outlook for the bank remains Stable. SCB's ratings reflect the bank's sustained recovery in underlying earnings and profitability on the back of an improvement in asset quality and loan growth. The bank's reserve and capital positions have also strengthened. SCB has one of the strongest corporate and retail banking franchises in Thailand. Fitch believes there is a high probability that the bank would receive state support should the need arise, given the support of the Crown Property Bureau (CPB, the Thai Crown's investment agency) which is SCB's single largest private shareholder, the past support of the Ministry of Finance (MOF), SCB's large share of deposits and its importance to the Thai economy. SCB's debt ratings are currently capped by the country's sovereign rating ('BBB+'/Stable). Further improvement in its ratings would require a further significant decline in impaired and restructured loans, as well as structural improvements in the Thai economy and banking system, including the regulatory and legal framework. While SCB's financial performance could be affected by the weakening operating environment in 2007, its strong corporate and retail franchise should help support the bank's earnings. SCB's aggressive expansion into retail, especially auto hire purchase lending through its subsidiary, Siam Commercial Leasing (SCBL), and SME segments may impact profitability and see a rise in credit costs. In 2006, SCB's net profit decreased to THB13.6bn from THB19bn in 2005 due to tax expenses and higher provisions in compliance with the Bank of Thailand's provisioning guidelines under IAS39. Nonetheless, its pre-provision profit before tax improved by 17% to THB24.7bn in 2006, from THB21.1bn in 2005. In Q107, SCB's net profit fell to THB3.7bn from THB4.2bn in Q106, due mainly to higher provisions, whereas its underlying performance continued to improve, with pre-provision profit before tax rising by 3.4%. SCB's impaired loans amounted to THB61.2bn, or 8% of total loans, at end-March 2007. The bank aims to reduce its impaired loans to less than 6% by end-2007. Loan loss reserves (LLRs) fell to THB52.9bn after write-offs, and covered 86.4% of impaired loans, which remains one of the highest loss coverage ratios among Thai banks. At end-March 2007, the bank's Tier 1 capital stood at THB78.9bn, or 11.1% of total risk-weighted assets, while total capital amounted to THB99.2bn, or 13.9%, which appears strong. SCB, established under the Royal Charter in 1904, is Thailand's oldest and third-largest bank with approximately a 13% share of loans and deposits at end-March 2007. The CPB holds a 23.72% stake in the bank. SCB has leading affiliates in consumer auto finance, investment banking, fund management and insurance. Contacts: Chaiyapat Paitoon, Vincent Milton, Bangkok, +662 655 4762/4759; David Marshall, Hong Kong, +852 2263 9963.