TRIS Rating Co., Ltd. has upgraded the company rating of TMB Bank PLC (TMB) to “A+” from “A” and the rating of TMB’s subordinated debentures (TMB153A) to “A” from “A-” with “stable” outlook. The ratings reflect the potential benefits arising from the bank’s strategic partnership with ING Bank N.V (ING Bank). ING Bank is the active partner in managing TMB, and is expected to strengthen the bank’s financial and business capabilities. TMB will leverage ING Bank’s know-how in risk management and strengths in retail banking, insurance and asset management service, which are keys to future growth of the bank. TMB’s high legacy NPLs, the major constraint of credit rating, is also expected to resolve in the near term by NPL sales. In the first quarter of 2008, the bank sold NPLs worth approximately Bt4.4 billion, which represents 5.7% of the bank’s total NPLs. The capital injection of Bt37.62 billion in December 2007 provides strong cushion of capital fund against future risks associated with adverse changes in operating environment. However, these strengths are partially offset by the remaining high legacy non-performing assets and a less favorable economic and business environment, which might limit business growth and profitability.
The “stable” outlook reflects the expectation of improvement in TMB’s asset quality, profitability and liquidity in the medium term. Support from ING Bank is expected to enhance TMB’s franchise value and competitive edge, and to generate steady earnings in the future. However, achieving the bank’s group synergies and all-level organizational harmonization has yet to be proved.
TRIS Rating reported that as of December 2007, TMB was the sixth largest commercial bank in Thailand in terms of assets, with 8.8% market share in loans and 7.9% in deposits. TMB’s major shareholders are ING Bank (includes ING Support Holding) and Ministry of Finance (MOF), which held 30.1% and 26.1% of the shares as of December 2007, respectively. TMB’s net loss for 2007 was Bt.43.67 billion due to Bt30.1 billion additional loan loss provisioning expenses in 2007 in complying with the new international accounting standard (IAS39) and Bt12.61 billion impairment losses and goodwill amortization arising from transfer of businesses under the three-party merger in 2004. TMB’s ratio of non-performing to total loans deteriorated from 15.1% in 2006 to 16.1% as of December 2007, which is far above the industry average of 8.8% for the 12 universal banks. TMB’s non-performing assets (classified loans that are more than three months past due, outstanding amount of troubled debt restructuring and foreclosed property) were 0.98 times its capital fund and allowance for loan loss, an improvement from 1.2 times in 2006, which was in line with the industry average of 1.0 time.
TRIS Rating said, TMB’s key managements as Chief of Risk Management (CRO) and Head of Retail Banking are nominated by ING Bank while Chief Executive Officer (CEO) has been jointly agreed by ING Bank and MOF. TMB’s strong branch network and brand recognition, as well as its strategy to leverage ING Bank’s expertise in retail banking, insurance and asset management will drive the bank to grow its market share in consumer banking as well as non-interest income. To improve risk management and restructure loan portfolio will be the priorities which will result in slower loan growth in 2008. In 2007, TMB had a solid capital base following new capital injection of Bt37.62 billion, of which Bt20.9 billion was funded by ING Bank and the remaining portion was funded by other shareholders and investors. The bank’s capital adequacy ratio improved from 10.43% at the end of 2006 to 14.35% at the end of 2007. The success in recapitalization strengthened the bank’s cushion of capital fund against bad debts, as well as supported TMB’s plan to expedite NPL problem resolution. However, the success in addressing asset quality improvement and growing profitable loan portfolio will also depend on economic conditions and political stability. -- End
TMB Bank PLC (TMB)
Company Rating: Upgraded to A+ from A
Issue Rating:
TMB153A: Bt8,000 million subordinated debentures due 2015 Upgraded to A from A-
Rating Outlook: Stable
Note: TMB owns 15.30% of TRIS Rating’s parent company, Thai Rating and Information Services Co., Ltd. (TRIS)
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Copyright 2008, 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
The “stable” outlook reflects the expectation of improvement in TMB’s asset quality, profitability and liquidity in the medium term. Support from ING Bank is expected to enhance TMB’s franchise value and competitive edge, and to generate steady earnings in the future. However, achieving the bank’s group synergies and all-level organizational harmonization has yet to be proved.
TRIS Rating reported that as of December 2007, TMB was the sixth largest commercial bank in Thailand in terms of assets, with 8.8% market share in loans and 7.9% in deposits. TMB’s major shareholders are ING Bank (includes ING Support Holding) and Ministry of Finance (MOF), which held 30.1% and 26.1% of the shares as of December 2007, respectively. TMB’s net loss for 2007 was Bt.43.67 billion due to Bt30.1 billion additional loan loss provisioning expenses in 2007 in complying with the new international accounting standard (IAS39) and Bt12.61 billion impairment losses and goodwill amortization arising from transfer of businesses under the three-party merger in 2004. TMB’s ratio of non-performing to total loans deteriorated from 15.1% in 2006 to 16.1% as of December 2007, which is far above the industry average of 8.8% for the 12 universal banks. TMB’s non-performing assets (classified loans that are more than three months past due, outstanding amount of troubled debt restructuring and foreclosed property) were 0.98 times its capital fund and allowance for loan loss, an improvement from 1.2 times in 2006, which was in line with the industry average of 1.0 time.
TRIS Rating said, TMB’s key managements as Chief of Risk Management (CRO) and Head of Retail Banking are nominated by ING Bank while Chief Executive Officer (CEO) has been jointly agreed by ING Bank and MOF. TMB’s strong branch network and brand recognition, as well as its strategy to leverage ING Bank’s expertise in retail banking, insurance and asset management will drive the bank to grow its market share in consumer banking as well as non-interest income. To improve risk management and restructure loan portfolio will be the priorities which will result in slower loan growth in 2008. In 2007, TMB had a solid capital base following new capital injection of Bt37.62 billion, of which Bt20.9 billion was funded by ING Bank and the remaining portion was funded by other shareholders and investors. The bank’s capital adequacy ratio improved from 10.43% at the end of 2006 to 14.35% at the end of 2007. The success in recapitalization strengthened the bank’s cushion of capital fund against bad debts, as well as supported TMB’s plan to expedite NPL problem resolution. However, the success in addressing asset quality improvement and growing profitable loan portfolio will also depend on economic conditions and political stability. -- End
TMB Bank PLC (TMB)
Company Rating: Upgraded to A+ from A
Issue Rating:
TMB153A: Bt8,000 million subordinated debentures due 2015 Upgraded to A from A-
Rating Outlook: Stable
Note: TMB owns 15.30% of TRIS Rating’s parent company, Thai Rating and Information Services Co., Ltd. (TRIS)
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Copyright 2008, 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