TRIS Rating maintains CreditAlert with a “negative” implication for the “A-” company rating and issue ratings on Ratchthani Leasing PLC (THANI). At the same time, TRIS Rating also assigns the rating on THANI’s proposed issues of up to Bt2 billion in senior unsecured debentures due within three years at “A-” with CreditAlert “negative”. We expect to resolve the CreditAlert upon completion of a merger between TMB Bank PLC (TMB) and Thanachart Bank PLC (TBANK), or when available data is sufficient to enable us to make an in-depth analysis and conclusion on the ratings of THANI.
The ratings reflect sustained improvements in THANI’s market position and financial performance. The ratings also reflect the steady recovery in THANI’s asset quality as a result of continuous developments in the company’s operating processes and risk management systems.
The ratings take into consideration the business and financial supports THANI receives from its major shareholder, Thanachart Bank PLC (TBANK). THANI’s ratings are enhanced from its stand-alone rating.
THANI’s financial performance has been moving in a positive direction. According to unaudited financial statements, THANI’s loan portfolio was Bt51.1 billion as of June 2019, up 5% from December 2018. Profitability continues to improve. The return on average assets (ROAA) improved to 4.94% in the first half of 2019 (annualized), from 3.83% in 2018. We also believe the prudent risk management will enable THANI to maintain decent asset quality. This is despite a recent rise in non-performing loans (NPL). The NPL ratio increased slightly to 3.84% as of June 2019, from 3.69% in December 2018.
CREDITALERT
TRIS Rating has placed CreditAlert with a “negative” implication on the company rating and the senior unsecured debenture ratings of THANI since 14 March 2019. The CreditAlert follows the signing of a non-binding memorandum of understanding (MOU) by five parties, including: TMB Bank PLC (TMB), TBANK, Thanachart Capital PLC (TCAP), ING Groep N.V. (ING), and The Bank of Nova Scotia (BNS) on 26 February 2019 to proceed with a merger between TMB and TBANK.
The “negative” CreditAlert on THANI is due to TRIS Rating’s concern that THANI’s ratings could be downgraded or remain unchanged from the current level. This is because THANI’s ratings may no longer benefit from its linkage to TBANK as a majority-owned parent of THANI, once TBANK is amalgamated with TMB to form a new bank and/or THANI becomes a controlled subsidiary of TCAP. THANI’s ratings will depend largely on its stand-alone financial performance and profile and/or its relationship with TCAP.
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