Bangkok--9 Oct--Fitch Ratings
Fitch Ratings (Thailand) has today assigned an 'A(tha)' National Long-term rating to TMB Bank Public Company Limited's (TMB; 'A+(tha)'/'F1(tha)'/'Stable') subordinated unsecured debentures of up to THB10bn, with a maturity of 10 years.
TMB's ratings reflect significant improvement in the bank's capital after the recapitalisation by ING Bank NV (ING; 'A+'/'F1+'/'Stable Outlook') in December 2007. Although its performance in 2009 has been affected by ongoing operational restructuring and the weak economic environment, the outlook should improve in 2010 due to a recovery in economic growth and the bank's refocus on business growth.
Nonetheless, downside risks persist due to the still weak economy and asset quality overhang.
TMB reported a small net profit of THB0.8bn for H109 due to falling revenues as its loan book continued to contract sharply, down 13.7% year-to-date, and given still high provisioning and charges against foreclosed properties. The net interest margin (NIM) remained weak at 2.4%, although this should improve in 2010 with a further fall in impaired loans and a pick-up in loan growth.
TMB's NPLs continued to decline, to THB60.2bn at end-June 2009 (2008: THB70.6bn) due to THB15bn NPL sales in H109, although the NPL ratio remained flat at about 16% due to its shrinking loan book. TMB's loan loss reserves (LLR) and LLR coverage ratio stood at THB35.9bn and 59.6% at end-June 2009, respectively. The LLR coverage is still moderately lower compared to peers, implying further provisioning risks, although earnings should now mostly offset this risk.
Liquidity and capital measures remain generally stable, despite market volatility. Tier 1 and total capital ratios have strengthened significantly since the capital raising in December 2007 and were 11% and 15% of risk-weighted assets, respectively, at end-June 2009. This should provide a reasonable buffer against the weak operating environment and enable TMB to absorb any additional provisioning.
TMB is currently the sixth-largest commercial bank in Thailand with assets of THB568.7bn. ING is the largest shareholder at 30%, followed by the Ministry of Finance at 26% and Singapore's DBS Bank at 7%. Fitch considers the probability of external support from the Thai government, if needed, to be moderate.
Contacts: Patchara Sarayudh, Bangkok, Tel: +662 655 4761; Vincent Milton, Bangkok, +662 655 4759.
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.
Media Relations: Shivani Sundralingam, Singapore, Tel: + 65 6796 7215, Email: [email protected].