Fitch affirms TMB Bank

Fitch Ratings said it affirmed Thailand-based TMB Bank PCL's ratings following the bank's announcement that its rights issue has been fully subscribed. Ratings affirmed include the BB+ foreign-currency issuer default rating, B short-term foreign-currency rating, D individual rating, 3 support rating, BB foreign-currency subordinated debt rating, B+ foreign-currency hybrid tier 1 securities, A(tha) national rating, F1(that) short-term rating and A-(tha) subordinated debt rating.

The outlook is positive.

The bank raised 9.7 billion Thai baht of new capital via the sale of 3.22 billion new shares at 3 Thai baht apiece through the rights issue.

While the capital raising addresses some of Fitch's concerns on TMB Bank's financial strength, the bank still has low reserves and weak profitability and franchise relative to its peers, the agency said. For the first half of 2006, the bank reported a net profit of 3.1 billion Thai baht, down from 4.1 billion Thai baht for the same period of 2005, as a result of higher provisions and operating expenses. Net interest margin fell slightly to 2.1% on an annualized basis from 2.12% for the prior year, which Fitch said is significantly lower than the bank's peers.

The positive outlook reflects the agency's view that capital raising, together with the strengthening of the bank's franchise, should result in higher revenues and improved profitability in the medium term.

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