Siam Commercial Bank Public upgraded to BBB+/A-2

JAKARTA: Standard & Poor's Ratings Services said today that it had raised its counterparty credit ratings on Siam Commercial Bank Public Co Ltd (SCB) to BBB+/A-2 from BBB/A-2. The outlook on the long-term rating is stable. At the same time, the rating agency raised the bank fundamental strength rating on SCB to C+ from C. It also affirmed the ASEAN regional scale rating at axA+/axA-1. "We upgraded SCB to reflect the sustained improvement in the bank's financial profile in the past few years, which is attributable to the remarkable increase in the bank's profitability and its consistently improving asset quality," said Standard & Poor's credit analyst Geeta Chugh, in a press statement obtained by Bisnis today. The upgrade incorporates S&P's assessment of SCB's stand-alone credit profile, which we raised to bbb from bbb-. SCB's strong business franchise as the fourth-largest commercial bank in Thailand has translated into superior profitability metrics for the bank. As on Sept. 30, 2010, the bank had a 14% market share of deposit and loans each. Its profitability metrics, measured by return on average assets (ROAA), of 1.8% for the nine months ended Sept. 30, 2010, are the highest among domestic peers and good when compared with international peers'. SCB's asset quality has consistently, although slowly, improved in recent years and is better than the industry. The bank's ratio of gross nonperforming assets (NPAs; including nonperforming loans, restructured loans, and foreclosed assets) to total loans was below the industry average, even though it was higher than that of global as well as regional peers, due to its conservative approach and prudent risk management practices. As on Sept. 30, 2010, SCB's gross NPA ratio was 8.2%, a slight improvement from 9% as on Dec. 31, 2009. "We expect the bank's asset quality to improve further albeit at a slow pace. SCB's capitalization is sound, and comparable with that of other similarly rated domestic peers." The bank' ratio of adjusted total equity to adjusted assets was 9.4% as at Sept. 30, 2010. The stable outlook reflects our opinion that SCB will maintain its financial profile at the current levels. (wiw)

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