TRIS Rating Assigns New Issue Rating of “TCAP” at “A/Stable”

TRIS Rating Co., Ltd. has assigned a rating to the proposed issue of up to Bt4,000 million in senior debentures of Thanachart Capital PLC (TCAP) at “A”. At the same time, TRIS Rating has affirmed the company rating and the ratings of TCAP’s current debentures at “A”. The outlook remains “stable”. The ratings reflect TCAP’s position as an investment holding company of Thanachart Group, which will have reliable dividends from its 74.92%-owned core operating subsidiary, Thanachart Bank PLC (TBANK). The ratings also reflect TCAP’s capable management team, the improvement in its standard risk management system, and continued improvement in the company’s diversification into non-interest based income. The ratings also take into consideration the enlarged scope of its banking businesses under the universal banking platform, which is expected to provide the group with long-term growth and earnings. Fully achieved synergies within Thanachart Group has yet to be achieved, and is expected to generate steady earnings to the group in the long term. The ratings are constrained by Thanachart Group’s limited franchise value compared with large-sized commercial banks, the less favorable economy and banking business environment which might limit the group’s business expansion and profitability.

The “stable” outlook reflects the expectation that TCAP’s remaining hire purchase portfolio continues to generate cash flow for the company, and the company will receive reliable dividend income from TBANK. Its proficient management team, good risk management system and adequate capital base are expected to help mitigate future downside risks.

TRIS Rating reported that TCAP’s 74.92%-owned subsidiary, TBANK, currently operates under a universal banking license. To comply with the group’s reorganization plan, in 2007 TBANK bought eight subsidiaries from TCAP. In July 2007, TCAP signed a joint venture agreement with Bank of Nova Scotia (BNS) for the investment in TBANK, making changes in TBANK’s shareholding structure. TCAP’s shareholding in TBANK reduced from 99.36% to 74.92% as of 15 January 2008, while 24.98% was held by BNS. Based on consolidated asset size as of June 2008, TCAP is ranked eighth among all 14 Thai universal banks. TCAP has developed a proficient management team, which has enabled the company to support its subsidiary to compete and remain flexible in response to changes in the economy and business environment.

TCAP’s financial performance for the first half of 2008 had been in line with TRIS Rating’s expectation. As of June 2008, TCAP reported consolidated asset of Bt346,672 million and net income of Bt1,777 million. TCAP’s non-annualized return on assets and equity were 0.53% and 5.43%, respectively, while its non-performing loan ratio was 4.78% of average loans. The company has gradually developed into a pure holding company, from its initial reorganization. TCAP’s consolidated risk management framework has improved continuously to comply with international standards, and its experienced management team has a proven track record. Slower economic growth, high inflation rate and high competitive environment in the banking business are all expected to partly limit business growth and profitability of core subsidiary, TBANK, and its distressed asset management companies, over the next few years, said TRIS Rating. -- End

Company Rating: Affirmed at A Issue Ratings: TCAP103A: Bt4,000 million senior debentures due 2010 Affirmed at A Up to Bt4,000 million senior debentures due 2011 A Rating Outlook: Stable Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.

---