Fitch affirms tmb bank's ratings

It has the bank's long-term foreign-currency issuer default rating at "BBB-"/stable outlook, short-term foreign currency rating at "F3", national long-term rating at "A+"/stable outlook, national short-term at "F1", individual at "C/D", support at "3" and support rating floor at "BB".

TMB's foreign-currency subordinated debt rating is at "BB+", its foreign-currency hybrid Tier 1 securities at "BB-" and subordinated debt at "A", said Fitch.

For the first quarter, TMB reported a net profit of Bt1.6 billion, up from Bt220 million in the same period last year, due mainly to much lower charges following two years of large loan losses and other charges.

Integration with ING Bank and the weak economic environment will constrain loan grow and performance, but it is likely the bank will return to profit this year, Fitch said.

This should permit the renewal of coupon payments on its Hybrid Tier 1 debt this month, following non-payment last June and December.

While non-performing loans (NPLs) remained high at Bt74.2 billion, or 15.1 per cent, at the end of the first quarter, the loan-loss reserve of Bt48.9 billion - or 65.8 per cent coverage at end of the first quarter - was a significant improvement from the previous year. The higher reserve coverage should support the acceleration of NPL sales and resolutions of NPLs in the next two years, said Fitch.

Total capital ratio and Tier 1 has been significantly strengthened with a Bt37.7-billion capital-raising last December and now stands at 15 per cent and 11.2 per cent of risk-weighted assets, respectively. Hybrid Tier 1 accounts for 15 per cent of Tier 1 capital.

TMB is currently the sixth-largest commercial bank in Thailand with assets of Bt621.9 billion.

ING is now the largest shareholder at 30 per cent, followed by the Finance Ministry at 26 per cent and Singapore's DBS Bank at 7 per cent.

ING is the second-largest retail bank in the Netherlands, with assets of US$1.5 trillion (Bt49.5 trillion) and regional retail operations in India and China.