Fitch Affirms AEON Thana Sinsap at #A-(tha)#; Outlook Stable

Stocks and Financial Services Press Releases Monday September 5, 2016 10:19
Bangkok--5 Sep--Fitch Ratings

Fitch Ratings has affirmed AEON Thana Sinsap (Thailand) Public Company Limited's (AEONTS) National Long-Term Rating at 'A-(tha)', with a Stable Outlook. The company's National Short-Term Rating has been affirmed at 'F2(tha)'.

KEY RATING DRIVERS

The company's ratings are driven by its standalone profile and reflect its market position as one of Thailand's largest consumer finance companies. AEONTS is focussed on the credit card and personal loan segments and has a nationwide branch presence. Its capitalisation has improved over the past three years due to profit retention, boosting the company's buffers and ability to cope with unexpected downturns.

The ratings also reflect the company' lack of diversification compared with larger financial institutions and continued competitive pressures from non-bank financial institutions and commercial banks. The operating environment remains weak due to Thailand's muted economic growth; increasingly weighing on the company's asset quality. However, these trends are in line with Fitch's expectations.

AEONTS is part of Japan's AEON group and benefits from the group's operational expertise in the consumer-loan sector. Unlike commercial banks, the company does not have a deposit base. However, its funding structure is reasonably diverse compared with other non-banks and includes bank loans, bonds and securitisation transactions.

RATING SENSITIVITIES

AEONTS's National Ratings would be affected by substantial changes to its financial profile. Further sustained improvements in capitalisation, revenue diversification and scale could lead to a rating upgrade, though Fitch views this as remote in the short term.

Conversely, a sharp deterioration in the company's capital buffers or an increase in risk appetite that leads to sharply weaker asset-quality could lead to a rating downgrade, as could a large and sustained deterioration in the company's performance.


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