Standard Chartered Bank (Thai)

Singapore, March 07, 2016 -- Moody's Investors Service has downgraded to
Baa1 from A3 Standard Chartered Bank (Thai) Public Co Ltd's (SCBT) local
currency deposit rating, as well as the bank's local and foreign currency
issuer ratings.

At the same time, Moody's has affirmed the bank's foreign currency
deposit rating at Baa1.

The ratings outlook is negative.

Moody's has also lowered SCBT's Adjusted baseline credit assessment (BCA)
and BCA to baa1 and ba1 respectively.

The long-term and short-term Counterparty Risk Assessment (CRA) are
downgraded to A3(cr)/P-2(cr) from A2(cr)/P-1(cr). All other short-term
ratings are affirmed at P-2.

This rating action concludes a review for downgrade which began on 9
November 2015, following the ratings review of its parent, Standard
Chartered Bank (SCB).

A full list of the ratings affected can be found at the end of this press
release.

RATINGS RATIONALE

Downgrade of SCBT's BCA to ba1 from baa3

The downgrade of SCBT's BCA reflects the bank's weak asset quality when
compared to its domestic and regional peers, as well as Moody's
expectation that a challenging operating environment in Thailand will
result in the further pressure on the banks' asset quality. At end-2015,
SCBT's non-performing loan (NPL) ratio  which was at 8.8%  reached its
highest level since 2010, with nominal NPLs rising by about 6%
year-on-year.

Profitability has also been under pressure, with SCBT reporting a loss in
2015. Moody's expects that the bank's core profitability will remain
under pressure, given its negative loan growth since 2013. In addition,
the bank's net interest margins have also declined, largely due to a
slowdown in loan growth and a shift in the bank's portfolio, particularly
retail loans, from unsecured to secured segments such as mortgage loans.

Despite pressure on asset quality and SCBT's weaker profitability, the
bank's loss absorbing buffers are still intact, with loan loss reserves
at 123% of NPLs and a reported common equity tier 1 (CET1) ratio of
24.6%. The improvement in its capitalization ratio is largely due to the
reduction of risk weighted assets by 9.6% in 2015.

Lowering of SCBT's Adjusted BCA to baa1

We have lowered SCBT's adjusted BCA to baa1 following the downgrade of
SCB's BCA to a3 from a2.

SCBT's Adjusted BCA incorporates Moody's expectation of a very high level
of support from SCB, whose capacity to provide support is reflected by
its BCA of a3.

Downgrade of Long-Term Local Currency Bank Deposit and Local and Foreign
Currency Issuer Ratings to Baa1

SCBT's long-term ratings of Baa1 also take into account Moody's
expectation of a moderate level of support from the Government of
Thailand (Baa1 stable) for SCBT in times of need. Moody's assessment of
support is driven by the bank's insignificant domestic market share of
banking system deposits (of 0.6% at 31 December 2015), loans (0.5%) and
assets (0.9%).

The negative outlook on SCBT's Baa1 ratings mirrors the negative outlook
on its parent's ratings.

WHAT COULD CHANGE THE RATING - DOWN

A lowering of SCB's BCA would exert downward pressure on SCBT's adjusted
BCA and long-term ratings. A lowering of Moody's assumption of support
from SCB Group would also lead to a downgrade of SCBT's ratings.

SCBT's ratings could also be downgraded if the bank's operating
environment deteriorates materially, resulting in a worsening of the
banks' standalone credit worthiness and leading to a lowering of its BCA.

Specific triggers for a downgrade are detailed as follows:

(1) A further weakening of the operating environment, exerting undue
stress on SCBT's credit fundamentals;

(2) A deterioration in credit quality, such that the bank's gross
impaired loans ratio  as a percentage of loan loss reserves and
shareholders' equity  shows a steady increase;

(3) A decline in its loss-absorption capacity as a result of aggressive
credit growth or rising credit costs, or due to the repatriation of
capital to the SCB group, resulting in SCBT's Tier 1 ratio falling below
the historical average.

WHAT COULD CHANGE THE RATING  UP

Given the negative outlook, SCBT's ratings are unlikely to face upward
pressure over the next 12-18 months.

Nevertheless, a material improvement in the bank's standalone credit
worthiness, supported by a stable and predictable operating environment,
could prompt an upward revision of the bank's BCA.

Specific triggers that would lead to a raising of its BCA comprise: (1) a
reduction in its credit risk concentration in single borrowers and
industry sectors; (2) a significant increase in market share and
expansion of its franchise through a sustained niche; (3) an improvement
in risk-adjusted profitability, as measured by net income as a
percentage of tangible banking assets.

Moody's rating actions on SCBT result in the following ratings for the
bank:

Downgraded:

- Long-term local currency deposit ratings downgraded to Baa1, with a
negative outlook;

- Long-term local and foreign currency issuer rating downgraded to Baa1,
with a negative outlook;

- Long-term Counterparty Risk Assessment downgraded to A3(cr);

- Short-term Counterparty Risk Assessment downgraded to P-2(cr).

 

Lowered:

- Baseline credit assessment lowered to ba1;

 

- Adjusted baseline credit assessment lowered to baa1;

Affirmed:

- Long-term foreign currency deposit ratings affirmed at Baa1, with a
negative outlook;

- Short-term local and foreign deposit ratings are affirmed at P-2;

- Short-term local and foreign issuer ratings are affirmed at P-2.

The principal methodology used in these ratings was Banks published in
January 2016. Please see the Ratings Methodologies page on www.moodys.com
for a copy of this methodology.

Standard Chartered Bank (Thai) Public Company Limited is headquartered in
Bangkok, with total assets of THB208 billion (USD5.8 billion) at December
2015.