TRIS Rating Co., Ltd. has assigned an “A+” rating for the proposed up to Bt3,000 million senior debentures of Siam Commercial Leasing PCL (SCBL). At the same time, TRIS Rating has affirmed the company rating and the rating of SCBL’s bills of exchange (B/E) at “A+”. TRIS Rating has also affirmed the ratings of SCBL’s guaranteed debentures at “AA”. The rating outlook remains “stable”.
SCBL’s guaranteed debenture ratings reflect credit profile of SCB, the 96.83% shareholder of SCBL and the guarantor for SCBL’s debentures. SCB’s credit rating is supported by its strong market position as the third largest commercial banks in Thailand with a strong operating branch network nationwide, its improving financial and business performance, its sound and experienced management team, and its strong cushion of capital fund and allowance for loan loss against bad debts. SCB’s rating, however, is partly constrained by less favorable operating environment, uncertainty in the securities industry, intensifying competition in consumer and retail finance industry, which might limit the bank’s overall growth prospects and profitability.
SCBL’s company, B/E and senior debenture ratings are based on its strong market position in the automobile hire purchase business and the ability of its experienced management team to continuously expand the loan portfolio. More importantly, the ratings are enhanced from the standalone rating of SCBL as SCBL is a strategic subsidiary of SCB in the automobile hire purchase business, fulfilling its parent’s universal banking policy. However, these strengths are partially offset by intense competition, lower yields, higher operating expenses and losses from repossessed assets which affect profitability. Moreover, slowing economic conditions plus lower consumer confidence and spending may adversely impact its aggressive expansion plan and the ability of customers to repay loans.
The “stable” outlook for SCBL’s guaranteed debenture ratings reflect the likelihood that SCB will deliver a medium-term financial performance as expected, and will be able to keep its leading market position in its core businesses and to control its asset quality efficiently as planned. The bank’s good risk management system, its proven track record and its strong capital fund will help mitigate future downside risks from less favourable operating environment. The “stable” outlook for SCBL’s company, B/E and senior debenture ratings reflect the expectation that SCBL will be able to maintain its strong market position, expand its portfolio and control asset quality. Moreover, the rating outlook is based on the status of SCBL as an important strategic entity under SCB Group; continuous business and financial support are expected from SCB.
TRIS Rating reported that SCB is the third largest among all 14 Thai universal banks, and has a strong franchise value. With a century of experience in the banking industry, SCB has developed a proficient management team and universal banking platform that has enabled the bank to compete in this very competitive industry. SCB’s centralization of the management and control system has been settled to benefit the overall group’s business control and cost efficiency, while decentralization of its business unit functions through its branch and subsidiary network nationwide has enhanced the group’s market position in its core businesses.
SCB’s management has a clear policy to focus on consumer and retail lending businesses and to diversify into fee-based businesses. Acquiring SCBL’s shares in 2006, holding 96.83% stake, is an inevitable evidence of SCB’s attempt to expand into consumer banking business. As of December 2006, SCBL’s total receivables accounted for 7% of SCB’s consolidated loan outstanding, while SCBL’s total income contributed more than 5% to SCB’s consolidated income. The bank’s good risk management system, experienced management team and strong cushion of capital fund and allowance for loan loss against bad debts should mitigate future downside risks.
TRIS Rating said, SCBL is one of Thailand’s leading automobile financing operators. After becoming SCB’s subsidiary in the second quarter of 2006, an aggressive loan expansion policy was implemented. The loan portfolio grew by 24.9% last year, from Bt42,710 million at the end of 2005 to Bt53,329 million at the end of 2006. Net interest income for 2006 was reported at Bt1,908 million, lower than the Bt2,048 million reported in 2005, due to higher average funding costs. SCBL’s net profit declined to Bt316 million in 2006, 63.9% lower than the Bt875 million earned in 2005. The significant decrease in net profit was partly due to a one-time Bt264 million provision in the second quarter of 2006. The provision was the result of changes in the policy for the allowance for doubtful accounts needed to meet SCB’s standard and complies with the Bank of Thailand’s consolidated supervision policy.
SCB set a very aggressive target to drive SCBL to be the leading automobile hire purchase
operator. SCB and SCBL jointly improved the internal operating processes. Resources and facilities have
been significantly expanded and improved to serve the aggressive loan portfolio expansion target. Both
business and financial support have been provided by SCB. Use of SCB’s branch network has been
implemented through the new “SCBL Car for You” product. SCB also provides an adequate amount of funds
for SCBL to meet its business expansion target.
Aggressive portfolio expansion while economic growth slows and more competitive, mean a greater possibility that SCBL’s profitability and asset quality will deteriorate. However, TRIS Rating expects that SCB’s efficient risk management system will enable SCBL to control asset quality. — End
Siam Commercial Leasing PCL (SCBL)
Company Rating: Affirmed at A+
Issue Ratings:
SPL07OA: Bt400 million guaranteed debentures due 2007 Affirmed at AA
SPL081A: Bt810 million guaranteed debentures due 2008 Affirmed at AA
SPL081B: Bt500 million guaranteed debentures due 2008 Affirmed at AA
SPL083A: Bt4,000 million guaranteed debentures due 2008 Affirmed at AA
SPL091A: Bt300 million guaranteed debentures due 2009 Affirmed at AA
SPL102A: Bt900 million guaranteed debentures due 2010 Affirmed at AA
SPL109A: Bt300 million guaranteed debentures due 2010 Affirmed at AA
Up to Bt3,000 million senior debentures due 2010 A+
Bt225 million bills of exchange due 2008 Affirmed at A+
Rating Outlook: Stable
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Copyright 2007, 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. 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.
SCBL’s guaranteed debenture ratings reflect credit profile of SCB, the 96.83% shareholder of SCBL and the guarantor for SCBL’s debentures. SCB’s credit rating is supported by its strong market position as the third largest commercial banks in Thailand with a strong operating branch network nationwide, its improving financial and business performance, its sound and experienced management team, and its strong cushion of capital fund and allowance for loan loss against bad debts. SCB’s rating, however, is partly constrained by less favorable operating environment, uncertainty in the securities industry, intensifying competition in consumer and retail finance industry, which might limit the bank’s overall growth prospects and profitability.
SCBL’s company, B/E and senior debenture ratings are based on its strong market position in the automobile hire purchase business and the ability of its experienced management team to continuously expand the loan portfolio. More importantly, the ratings are enhanced from the standalone rating of SCBL as SCBL is a strategic subsidiary of SCB in the automobile hire purchase business, fulfilling its parent’s universal banking policy. However, these strengths are partially offset by intense competition, lower yields, higher operating expenses and losses from repossessed assets which affect profitability. Moreover, slowing economic conditions plus lower consumer confidence and spending may adversely impact its aggressive expansion plan and the ability of customers to repay loans.
The “stable” outlook for SCBL’s guaranteed debenture ratings reflect the likelihood that SCB will deliver a medium-term financial performance as expected, and will be able to keep its leading market position in its core businesses and to control its asset quality efficiently as planned. The bank’s good risk management system, its proven track record and its strong capital fund will help mitigate future downside risks from less favourable operating environment. The “stable” outlook for SCBL’s company, B/E and senior debenture ratings reflect the expectation that SCBL will be able to maintain its strong market position, expand its portfolio and control asset quality. Moreover, the rating outlook is based on the status of SCBL as an important strategic entity under SCB Group; continuous business and financial support are expected from SCB.
TRIS Rating reported that SCB is the third largest among all 14 Thai universal banks, and has a strong franchise value. With a century of experience in the banking industry, SCB has developed a proficient management team and universal banking platform that has enabled the bank to compete in this very competitive industry. SCB’s centralization of the management and control system has been settled to benefit the overall group’s business control and cost efficiency, while decentralization of its business unit functions through its branch and subsidiary network nationwide has enhanced the group’s market position in its core businesses.
SCB’s management has a clear policy to focus on consumer and retail lending businesses and to diversify into fee-based businesses. Acquiring SCBL’s shares in 2006, holding 96.83% stake, is an inevitable evidence of SCB’s attempt to expand into consumer banking business. As of December 2006, SCBL’s total receivables accounted for 7% of SCB’s consolidated loan outstanding, while SCBL’s total income contributed more than 5% to SCB’s consolidated income. The bank’s good risk management system, experienced management team and strong cushion of capital fund and allowance for loan loss against bad debts should mitigate future downside risks.
TRIS Rating said, SCBL is one of Thailand’s leading automobile financing operators. After becoming SCB’s subsidiary in the second quarter of 2006, an aggressive loan expansion policy was implemented. The loan portfolio grew by 24.9% last year, from Bt42,710 million at the end of 2005 to Bt53,329 million at the end of 2006. Net interest income for 2006 was reported at Bt1,908 million, lower than the Bt2,048 million reported in 2005, due to higher average funding costs. SCBL’s net profit declined to Bt316 million in 2006, 63.9% lower than the Bt875 million earned in 2005. The significant decrease in net profit was partly due to a one-time Bt264 million provision in the second quarter of 2006. The provision was the result of changes in the policy for the allowance for doubtful accounts needed to meet SCB’s standard and complies with the Bank of Thailand’s consolidated supervision policy.
SCB set a very aggressive target to drive SCBL to be the leading automobile hire purchase
operator. SCB and SCBL jointly improved the internal operating processes. Resources and facilities have
been significantly expanded and improved to serve the aggressive loan portfolio expansion target. Both
business and financial support have been provided by SCB. Use of SCB’s branch network has been
implemented through the new “SCBL Car for You” product. SCB also provides an adequate amount of funds
for SCBL to meet its business expansion target.
Aggressive portfolio expansion while economic growth slows and more competitive, mean a greater possibility that SCBL’s profitability and asset quality will deteriorate. However, TRIS Rating expects that SCB’s efficient risk management system will enable SCBL to control asset quality. — End
Siam Commercial Leasing PCL (SCBL)
Company Rating: Affirmed at A+
Issue Ratings:
SPL07OA: Bt400 million guaranteed debentures due 2007 Affirmed at AA
SPL081A: Bt810 million guaranteed debentures due 2008 Affirmed at AA
SPL081B: Bt500 million guaranteed debentures due 2008 Affirmed at AA
SPL083A: Bt4,000 million guaranteed debentures due 2008 Affirmed at AA
SPL091A: Bt300 million guaranteed debentures due 2009 Affirmed at AA
SPL102A: Bt900 million guaranteed debentures due 2010 Affirmed at AA
SPL109A: Bt300 million guaranteed debentures due 2010 Affirmed at AA
Up to Bt3,000 million senior debentures due 2010 A+
Bt225 million bills of exchange due 2008 Affirmed at A+
Rating Outlook: Stable
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Copyright 2007, 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. 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.