MAYBANK KIM ENG SECURITIES (THAILAND)
Fitch Ratings (
The Outlook is Stable.
Key Rating Drivers
Shareholder Support Underpins Ratings: MST's ratings stem from Fitch's expectation of a high probability of extraordinary shareholder support from its ultimate parent,
Strategically Important Subsidiary: We believe MST supports the Maybank group's objective to be a leading financial services provider in the
Ongoing Oversight and Synergies: Maybank owns 83.5% of MST, and controls the subsidiary via the board of directors. The group also maintains oversight and influence over MST's operations, including its strategy alignment and risk-management policy. There are marketing and product development synergies between MST and its parent group, as well as funding support from the parent, which Fitch expects to be sustained.
Reputational Links: The assessment also takes into account the significant reputational linkages between MST and its parent group, such as the shared brand and ownership structure. We believe these factors would entail a high reputational risk to Maybank in the event of any default by the Thai subsidiary.
Markets-Reliant Business: MST's business is mainly dependent on volatile equity markets. This constrains its standalone credit profile relative to its support-driven ratings. Nonetheless, the company has maintained adequate profitability over the past 10 years, and Fitch expects MST's well-established franchise to continue to support business prospects over the medium term.
Adequate Profitability Above Peers: MST's operating profit/average equity of 9.3% and return on equity (ROE) of 7.6% in 2023 compared well relative to peers (sector average ROE: 3.1%). This was despite a challenging operating environment affected by unfavourable domestic investment sentiment and subdued market turnover (down 29% in 2023).
Parent Supports Funding Profile: MST's funding profile is backed by adequate access to local capital markets and bank credit facilities, supported by group relationships. The parent also provides funding in the form of intra-group liquidity lines and subordinated loans, which provide an additional buffer against earnings volatility or market liquidity shocks.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Negative rating action may arise if the parent's credit profile deteriorates and its ability to provide support weakens. Any action would also take into account MST's support-driven credit profile relative to other entities within
A weakening in Maybank's propensity to support MST could also affect the National Long-Term Rating. This may occur if the parent reduces its stake in the Thai subsidiary to below 75%, combined with diminished management control, operational links or business synergies. However, Fitch does not expect such developments in the near to medium term.
MST's National Short-Term Rating is unlikely to be downgraded unless its National Long-Term Rating is downgraded to 'A+(tha)' or below.
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
MST's National Long-Term Rating could be upgraded if the parent's credit profile strengthens, indicating increased ability to support the subsidiary.
The National Long-Term Rating may also be upgraded if Fitch believes that the parent's willingness to support its Thai subsidiary has increased. This may occur if MST becomes more integral to its parent's franchise, such as through substantially increased scale and group contribution.
There is no upside to the National Short-Term Rating as it is already at the top end of the National Rating scale.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
Public Ratings with Credit Linkage to other ratings
The ratings on MST are linked to the credit profile of Maybank.
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