TRIS Rating has upgraded the rating of TMB Bank PLC (TMB) to "A-" from "BBB+" and has upgraded the ratings of TMB's Bt8,000 million subordinated debentures to "BBB+" from "BBB". The outlook remains "positive". The ratings reflect TMB's capable executive management, steady development in the merger integration and stronger competitive position from extended franchise value after the three-way merger of TMB with DBS Thai Danu Bank PLC (DTDB) and the Industrial Finance Corporation of Thailand (IFCT) since September 2004. The ratings also reflect TMB's improvement in profitability and capital status. However, these strengths are partially constrained by TMB's liquidity risk after the merger, and by intense competitive environment and unfavorable business factors associated in the banking industry which might deteriorate TMB's asset quality and limit its business expansion and profitability.
While the "positive" outlook reflects the expectation of improvement in TMB's asset quality, profitability and liquidity. The strengths of each individual partner have created synergy that enhances franchise value for TMB, and provided. TMB with universal banking platform that is expected to further enhance its competitive edge in providing full banking services. Continuity in development of international standard risk management system, IT system, and all-level organizational harmonization are to be monitored
TRIS Rating reported that the three-way merger in September 2004 has developed synergy and enhanced TMB's franchise value through contribution of three parties; IFCT's strengths in project finance and its established corporate and small and medium enterprise (SME) customer base, DTDB's high-quality SME customer base, retail network and access to regional markets, and TMB's local market expertise and strong distribution platform. After the merger, TMB's market share in terms of asset size increased from the seventh rank as of June 2004 (Bt407,068 million) to the fifth rank (Bt672,222 million) among all Thai commercial banks.
TRIS Rating said that one year after the merger, TMB has proved to pass its transitional period, achieving reorganization and integration of its operation, human resource management and IT system, while being able to recover its financial performance in the first half of 2005. As of June 2005, TMB reported Bt704,892 million in consolidated assets, up from Bt672,222 million at the end of September 2004. For the first half of 2005, TMB reported a net profit of Bt4,138 million, on track with TRIS Rating's rating expectation. However, the combined funding structure weakened TMB's liquidity position, which has been improved continuously after the merger. As of June 2005, TMB's liquidity position was still lower than the industry average, but is expected to be developed further through its funding restructuring plan during the next two years. Its non-performing loan (NPL) coverage ratio, which was far lower than the industry average, is a concern for TRIS Rating. - End
TMB Bank PLC (TMB) Company Rating: Upgraded to "A-" from "BBB+" Issue Rating: TMB153A: Bt8,000 million subordinated debentures due 2015 Upgraded to "BBB+" from "BBB" Rating Outlook: Positive