TRIS Rating Co., Ltd. has affirmed the ratings of TISCO Finance PLC (TISCO) and its senior debentures at "A" with "positive" outlook. The ratings reflect TISCO's capable management team, its good risk management system, continued improvement in its financial performance and asset quality, its strong market position in the hire purchase business, and its diversification into fee-based income businesses. The ratings take into account TISCO's transition risks during its upgrading to be a universal bank. The ratings also take into consideration retail market prospects that indicate low penetration rate, and stock market prospects that will be strengthened by new listed stocks. However, these strengths are partially constrained by lower purchasing power due to higher inflation rate, uncertainty in the securities industry, and intensifying competition in the corporate and retail finance industry.
TRIS Rating reported that in terms of asset size, TISCO is ranked second among the seven finance companies listed on the Stock Exchange of Thailand (SET), and twelfth among all Thai commercial banks and listed finance companies. With more than 30 years experience in the industry, TISCO has developed a proficient management team that has enabled the company to compete in this very competitive industry. TISCO's good risk management system and experienced management team should mitigate future downside risk. Management has a clear policy to focus on consumer finance businesses and to diversify into fee-based businesses. Since 2002, TISCO has centralized its group's business operation and management system to gain the overall group's business control and cost efficiency. Upgrading to a commercial bank is expected to have some effects on TISCO's financial returns during the transition period, but it will provide the company with long term opportunities in commercial banking businesses.
TRIS Rating said that the value of TISCO's new hire purchase loans has increased by an average of about 50% per annum during 2000 and the first half of 2004, and the proportion of hire purchase loans in the company's loan portfolio has steadily increased. At year-end 2003, TISCO ranked as the fourth largest automobile hire purchase financing operator in Thailand, with the market share of about 11%. Its outstanding hire purchase loans totaled Bt31,403 million as of December 2003, and increased to Bt35,914 million as of June 2004. The hire purchase loans accounted for 64% of TISCO's total consolidated outstanding loans. Fee-based financial services and asset management help the company diversify its income base. Its joint research project with Deutsche Bank's financial arm, Global Equities Asia (GEA), has enhanced TISCO's competitive position as a local premium brokerage firm. The company's market share rose from 2.87% of total stock trading value in 2001 to about 3.53% for the first six months of 2004. In the asset management business as of June 2004, TISCO was the second largest manager of provident funds in terms of fund size, with sustainable market share of about 14%. The company also ranked as the third largest manager of private funds with a 12% market share. However, its market share in management of mutual funds was about 2%, which ranked twelfth among all the 15 active mutual fund managers.
With its good credit risk management system and conservative underwriting process, TISCO's asset quality has been better than the average for the industry. TISCO's asset quality has improved rapidly and significantly over the past few years. TISCO's ratio of non-performing loans to average loans decreased substantially from 35.16% in 1999 to 6.69% as of June 2004. For the hire purchase business, TISCO's non-performing loans represented about 1.5% of total hire purchase loans as of December 2003, which was higher than the average of about 1% for its peers in TRIS Rating's accounts. TISCO's financial profile has continuously improved since 1999. Its return on average equity (ROE) and return on average assets (ROA) improved continuously to 20.40% and 3.45% respectively in 2003. For the first half of 2004, ROE and ROA were 9.21% and 1.61%, respectively. The improvement in financial performance has strengthened TISCO's capital fund. Its shareholders' equity increased continuously by 39% from Bt7,379 million in 2002 to Bt10,375 million as of June 2004. Its capital adequacy ratio increased from 16.82% in 2001 to 21.42% in 2003. As of June 2004, the ratio dipped to 19.26%, because the company paid a Bt649 million dividend on 28 April 2004. However, this level still provides sufficient cushion to absorb deterioration in TISCO's loan quality and also should be sufficient to facilitate TISCO's future growth as a commercial bank, TRIS Rating said.-- End
TISCO Finance PLC (TISCO) Company Rating: Affirmed at A Issue Ratings: TSCO077A: Bt2,000 million senior debentures due 2007 Affirmed at A TSCO077B: Bt1,000 million senior debentures due 2007 Affirmed at A TSCO07OA: Bt1,800 million senior debentures due 2007 Affirmed at A Rating Outlook: Positive
TRIS Rating reported that in terms of asset size, TISCO is ranked second among the seven finance companies listed on the Stock Exchange of Thailand (SET), and twelfth among all Thai commercial banks and listed finance companies. With more than 30 years experience in the industry, TISCO has developed a proficient management team that has enabled the company to compete in this very competitive industry. TISCO's good risk management system and experienced management team should mitigate future downside risk. Management has a clear policy to focus on consumer finance businesses and to diversify into fee-based businesses. Since 2002, TISCO has centralized its group's business operation and management system to gain the overall group's business control and cost efficiency. Upgrading to a commercial bank is expected to have some effects on TISCO's financial returns during the transition period, but it will provide the company with long term opportunities in commercial banking businesses.
TRIS Rating said that the value of TISCO's new hire purchase loans has increased by an average of about 50% per annum during 2000 and the first half of 2004, and the proportion of hire purchase loans in the company's loan portfolio has steadily increased. At year-end 2003, TISCO ranked as the fourth largest automobile hire purchase financing operator in Thailand, with the market share of about 11%. Its outstanding hire purchase loans totaled Bt31,403 million as of December 2003, and increased to Bt35,914 million as of June 2004. The hire purchase loans accounted for 64% of TISCO's total consolidated outstanding loans. Fee-based financial services and asset management help the company diversify its income base. Its joint research project with Deutsche Bank's financial arm, Global Equities Asia (GEA), has enhanced TISCO's competitive position as a local premium brokerage firm. The company's market share rose from 2.87% of total stock trading value in 2001 to about 3.53% for the first six months of 2004. In the asset management business as of June 2004, TISCO was the second largest manager of provident funds in terms of fund size, with sustainable market share of about 14%. The company also ranked as the third largest manager of private funds with a 12% market share. However, its market share in management of mutual funds was about 2%, which ranked twelfth among all the 15 active mutual fund managers.
With its good credit risk management system and conservative underwriting process, TISCO's asset quality has been better than the average for the industry. TISCO's asset quality has improved rapidly and significantly over the past few years. TISCO's ratio of non-performing loans to average loans decreased substantially from 35.16% in 1999 to 6.69% as of June 2004. For the hire purchase business, TISCO's non-performing loans represented about 1.5% of total hire purchase loans as of December 2003, which was higher than the average of about 1% for its peers in TRIS Rating's accounts. TISCO's financial profile has continuously improved since 1999. Its return on average equity (ROE) and return on average assets (ROA) improved continuously to 20.40% and 3.45% respectively in 2003. For the first half of 2004, ROE and ROA were 9.21% and 1.61%, respectively. The improvement in financial performance has strengthened TISCO's capital fund. Its shareholders' equity increased continuously by 39% from Bt7,379 million in 2002 to Bt10,375 million as of June 2004. Its capital adequacy ratio increased from 16.82% in 2001 to 21.42% in 2003. As of June 2004, the ratio dipped to 19.26%, because the company paid a Bt649 million dividend on 28 April 2004. However, this level still provides sufficient cushion to absorb deterioration in TISCO's loan quality and also should be sufficient to facilitate TISCO's future growth as a commercial bank, TRIS Rating said.-- End
TISCO Finance PLC (TISCO) Company Rating: Affirmed at A Issue Ratings: TSCO077A: Bt2,000 million senior debentures due 2007 Affirmed at A TSCO077B: Bt1,000 million senior debentures due 2007 Affirmed at A TSCO07OA: Bt1,800 million senior debentures due 2007 Affirmed at A Rating Outlook: Positive