[Note: 1. NFS (National Finance PLC) was renamed to TCAP (Thanachart Capital PLC) on 3 Apr 2006
2. Short name of Thanachart Bank PLC was changed to TBANK from NBANK on 22 Mar 2006
]
TRIS Rating Co., Ltd. has assigned the ratings of National Finance PLC (NFS) and its two tranches of Bt5,000 million senior debentures at "A". At the same time, TRIS Rating has also assigned the ratings of Thanachart Bank PLC (NBANK), a 98.89%-owned subsidiary of NFS, and the bank's Bt1,200 million bills of exchange at "A". The "stable" rating outlooks have been assigned to the ratings of NFS and NBANK.
The ratings of NFS reflect its capable management team, its strong market position in the hire purchase business, its sufficient risk management system, continued improvement in its financial performance, and its diversification into fee-based income. The ratings also take into consideration retail market prospects that have room for market expansion, and stock market prospects in the medium term that will be correlated with overall economy. These strengths are partially constrained by slower economic growth, uncertainty in the securities industry and intensifying competition in the consumer finance industry, which might limit the group's business expansion and profitability. While NFS's outlook reflects the likelihood that the company will deliver medium-term financial performance as expected. The company's reorganization to a financial holding structure is expected to be smoothly executed. Its acceptable risk management system and adequate capital base will help mitigate future downside risks.
The ratings of NBANK reflect its strong financial profile and management's capability and experience in its future core business, hire purchase. The ratings also consider NBANK's prospects for growth in assets and deposits after the National Finance Group's (NFS Group) reorganization and NBANK's network expansion in the next few years are complete. However, these strengths are partially offset by intense competition in the banking industry, NBANK's limited service channels and branch network, and the credit risk derived from its current high concentration of housing loans and future concentration of hire purchase loans. Moreover, over the next few years the bank's earnings will be adversely impacted by higher expenses involved in building its own franchise. While the outlook recognizes NBANK's designated role as the group's core financial and banking operator. The outlook also takes into account the strong market position and the expectation of a smooth transition of the group's major business, hire purchase lending, from the parent to NBANK. The higher yield and driving force for fee income growth of the hire purchase business (HP) is expected to help offset the rising cost of funds for the bank during the expansion phase. The outlook also rests on the expectation of continuing vigorous growth of the HP market during the next few years.
TRIS Rating reported that the Financial Sector Master Plan, issued in January 2004, compelled the NFS Group to reorganize the group's business in accordance with the One Presence policy, which permits only one deposit-taking institution to exist within a financial conglomerate. Subsequently, the NFS Group, led by NFS and NBANK, submitted a business plan to the Bank of Thailand in 2004 and received approval in April 2005. For the balance of 2005 and for the next few years, NFS Group will be preoccupied with the structural change in which the parent will eventually hand over all financial service businesses, including the group's major business -- HP -- to NBANK, which will become the group's key financial operator. Under its new structure, NFS will be an operating holding company until the existing hire-purchase receivables gradually run down approximately over the next three years. NFS has also centralized its group's business operations and management systems to gain overall control of the group's business to improve cost efficiency.
TRIS Rating said that with the strong team of HP staff and an efficient operating system that has enabled NFS to become the largest player in the HP market, NBANK will be well equipped to succeed in the auto hire purchase business. The tasks remaining for NBANK over the next few years: expansion of service channels and its physical branch network; integration of systems for core banking and hire purchase businesses; and extension of product breadth. -- End
National Finance PLC (NFS) Company Rating: A Issue Ratings: NF083A: Bt1,000 million senior debentures due 2008 A NF103A: Bt4,000 million senior debentures due 2010 A Rating Outlook: Stable
Thanachart Bank PLC (NBANK) Company Rating: A Issue Rating: Bt1,200 million bills of exchange due 2009 A Rating Outlook: Stable
2. Short name of Thanachart Bank PLC was changed to TBANK from NBANK on 22 Mar 2006
]
TRIS Rating Co., Ltd. has assigned the ratings of National Finance PLC (NFS) and its two tranches of Bt5,000 million senior debentures at "A". At the same time, TRIS Rating has also assigned the ratings of Thanachart Bank PLC (NBANK), a 98.89%-owned subsidiary of NFS, and the bank's Bt1,200 million bills of exchange at "A". The "stable" rating outlooks have been assigned to the ratings of NFS and NBANK.
The ratings of NFS reflect its capable management team, its strong market position in the hire purchase business, its sufficient risk management system, continued improvement in its financial performance, and its diversification into fee-based income. The ratings also take into consideration retail market prospects that have room for market expansion, and stock market prospects in the medium term that will be correlated with overall economy. These strengths are partially constrained by slower economic growth, uncertainty in the securities industry and intensifying competition in the consumer finance industry, which might limit the group's business expansion and profitability. While NFS's outlook reflects the likelihood that the company will deliver medium-term financial performance as expected. The company's reorganization to a financial holding structure is expected to be smoothly executed. Its acceptable risk management system and adequate capital base will help mitigate future downside risks.
The ratings of NBANK reflect its strong financial profile and management's capability and experience in its future core business, hire purchase. The ratings also consider NBANK's prospects for growth in assets and deposits after the National Finance Group's (NFS Group) reorganization and NBANK's network expansion in the next few years are complete. However, these strengths are partially offset by intense competition in the banking industry, NBANK's limited service channels and branch network, and the credit risk derived from its current high concentration of housing loans and future concentration of hire purchase loans. Moreover, over the next few years the bank's earnings will be adversely impacted by higher expenses involved in building its own franchise. While the outlook recognizes NBANK's designated role as the group's core financial and banking operator. The outlook also takes into account the strong market position and the expectation of a smooth transition of the group's major business, hire purchase lending, from the parent to NBANK. The higher yield and driving force for fee income growth of the hire purchase business (HP) is expected to help offset the rising cost of funds for the bank during the expansion phase. The outlook also rests on the expectation of continuing vigorous growth of the HP market during the next few years.
TRIS Rating reported that the Financial Sector Master Plan, issued in January 2004, compelled the NFS Group to reorganize the group's business in accordance with the One Presence policy, which permits only one deposit-taking institution to exist within a financial conglomerate. Subsequently, the NFS Group, led by NFS and NBANK, submitted a business plan to the Bank of Thailand in 2004 and received approval in April 2005. For the balance of 2005 and for the next few years, NFS Group will be preoccupied with the structural change in which the parent will eventually hand over all financial service businesses, including the group's major business -- HP -- to NBANK, which will become the group's key financial operator. Under its new structure, NFS will be an operating holding company until the existing hire-purchase receivables gradually run down approximately over the next three years. NFS has also centralized its group's business operations and management systems to gain overall control of the group's business to improve cost efficiency.
TRIS Rating said that with the strong team of HP staff and an efficient operating system that has enabled NFS to become the largest player in the HP market, NBANK will be well equipped to succeed in the auto hire purchase business. The tasks remaining for NBANK over the next few years: expansion of service channels and its physical branch network; integration of systems for core banking and hire purchase businesses; and extension of product breadth. -- End
National Finance PLC (NFS) Company Rating: A Issue Ratings: NF083A: Bt1,000 million senior debentures due 2008 A NF103A: Bt4,000 million senior debentures due 2010 A Rating Outlook: Stable
Thanachart Bank PLC (NBANK) Company Rating: A Issue Rating: Bt1,200 million bills of exchange due 2009 A Rating Outlook: Stable