TRIS Rating Assigns “A-” Rating to Senior Unsecured Debt Worth Up to

TRIS Rating affirms the company rating on Ngern Tid Lor Co., Ltd. (NTL) and the ratings on NTL’s outstanding senior unsecured debentures at “A-” with a “stable” outlook. At the same time, TRIS Rating assigns a “A-” rating to NTL’s proposed issues of up to THB1.5 billion in senior unsecured debentures. The company will use the proceeds from the proposed issues to fund its operation and refinance its existing debts.

The ratings on NTL are enhanced from the stand-alone rating based on the company’s status as an important subsidiary of Bank of Ayudhya PLC (BAY, rated “AAA/Stable” by TRIS Rating). The ratings consider the business and financial support NTL receives from BAY.

On a stand-alone basis, the ratings reflect NTL’s solid market position as one of the leading lenders of auto title loans. Other factors taken into account include: healthy asset quality achieved through prudent risk management practices and ample funding and liquidity. However, the intense competition in the consumer finance segment still constrains the ratings to some extent.

NTL’s operating results for the first half of 2020 remained sound despite the impact of economic lockdown induced by the Coronavirus Disease 2019 (COVID-19). For June 2020, the company reported outstanding loans at THB46.7 billion, lower by 2.7% year-to-date. The ratio of non-performing loans to total loans (NPL ratio) increased to 1.66% at the end of June 2020 from 1.28% at the end of 2019. The rise in NPL ratio was attributed to the weakening economy and the company’s optimization of risk appetite given higher yields and ample loan loss reserve levels, which reflect the risk-adjusted pricing doctrine adopted by the company.

Net income for the first half 2020 was at THB982 million, lower 5% year-on-year (y-o-y) compared with the same period of previous year. The drop in net income was mainly contributed by lowering interest income in the second quarter of 2020 due to the debt relief program given to customers.

RATING OUTLOOK

The “stable” outlook is based on TRIS Rating’s expectation that NTL will maintain its market position and deliver satisfactory performance. Loan quality is expected to be controlled at an acceptable level. The support NTL receives from its parent bank is expected to continue, especially the financial support.

RATING SENSITIVITIES

A rating upward revision could arise if NTL significantly improves its market position, continues to deliver strong financial performance, and controls credit cost at an acceptable level. The ratings could be revised downward if NTL’s competitive position or asset quality deteriorates significantly or the risk adjusted capital (RAC) ratio drops below 15%. If there are any changes in the degree of importance of NTL to the BAY Group, the ratings may change.

RELATED CRITERIA

- Nonbank Financial Institutions Rating Methodology, 17 February 2020

- Group Rating Methodology, 10 July 2015

Ngern Tid Lor Co. Ltd. (NTL)

Company Rating: A-

Issue Ratings:

NTL20DA: THB400 million senior unsecured debentures due 2020 A-

NTL20NA: THB1,000 million senior unsecured debentures due 2020 A-

NTL21DA: THB1,500 million senior unsecured debentures due 2021 A-

NTL217A: THB1,900 million senior unsecured debentures due 2021 A-

NTL221A: THB4,000 million senior unsecured debentures due 2022 A-

NTL22DA: THB450 million senior unsecured debentures due 2022 A-

Up to THB1,500 million senior unsecured debentures due within 3 years A-

Rating Outlook: Stable

TRIS Rating Co., Ltd./www.trisrating.com

Contact: santaya@trisrating.com, Tel: 0-2098-3000/Silom Complex Building, 24th Floor, 191 Silom Road, Bangkok 10500, Thailand

? Copyright 2020, 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, without the prior written permission of TRIS Rating Co., Ltd. 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. All methodologies used can be found at

http://www.trisrating.com/en/rating_information/rating_criteria.html.

TRIS Rating Assigns “A-” Rating to Senior Unsecured Debt Worth Up to THB1.5 Billion of “NTL”, with “Stable” Outlook