Bangkok--29 Apr--Fitch Ratings Fitch Ratings (Thailand) Limited has today assigned National Long-term rating of ‘AA-(tha)’ (AA minus (tha)) to Siam Commercial Bank’s (SCB) subordinated unsecured debentures of up to THB20 billion, due 2018. 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 remain strong. SCB has one of the strongest universal banking franchises in Thailand. After a strong financial performance in 2007, SCB continued to report solid performance in Q108 with an 84% yoy increase in net profit to THB6.8bn. This was driven by continued strong loan growth in the auto finance, mortgage and SME sectors which boosted the bank’s net interest income, and also partly due to a strong rise in fee income. SCB’s net interest margins stood at 3.7% in Q108 (Q107: 3.3%), which was amongst the highest in the sector, due partly to lower deposit costs. The stronger platforms in auto finance and mortgages lending, as well as SME growth strategy, should continue to provide a boost to SCB’s earnings growth in 2008. However, such aggressive growth could see a rise in the bank’s provisioning costs this year. At end-Q108, SCB’s gross NPLs fell to THB50bn, or 5.2% of total loans, (end-2007: THB54bn or 6.1% of total loans), as a result of the sale of NPLs worth about THB8.0bn to third parties. The bank is expected to reduce its gross NPLs to about 4% by end-2008. Loan loss reserves (LLRs) of over 80% appear high; while the bank’s Tier 1 capital at 10.7% of total risk-weighted assets remains strong, although this is expected to decline to about 9% by next year as a result of Basel II and consolidated supervision. SCB, established under the Royal Charter in 1904, is Thailand’s oldest and third-largest bank with an approximately 14% share of loans and deposits at end-2007. The Crown Property Bureau holds a 23.72% stake in the bank. SCB has leading subsidiaries in the consumer auto finance, brokerage, investment banking, fund management and insurance sectors. Note to Editors: Fitch’s National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated ‘AAA’ and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as ‘AAA(tha)’ for National ratings in Thailand. Specific letter grades are not therefore internationally comparable. Contacts: Vincent Milton, Darunee Peanmanakit, Bangkok, +66 2 655 4759/52.