MARC Affirms Maybank Islamic Berhad's Financial Institution Ratings at AAA/MARC-1

MARC Affirms Maybank Islamic Berhad's Financial Institution Ratings at AAA/MARC-1
Islam, Mal, Provision
Islam, Mal, Provision
Transcription
- 10 /10/2016 Latest Announcement - (News ID : 2016101000024) Latest Announcement News ID : 2016101000024 Subject : MAYBANK ISLAMIC BERHAD MAYBANK ISLAMIC BERHAD Organisation Name: MALAYSIAN RATING CORPORATION News Type: RATING ANNOUNCEMENT Reference Site: None Embargo Date: 10/10/2016 Embargo Time: 04:30 PM Expiry Date: 24/10/2016 Priority: Medium Summary: MARC AFFIRMS MAYBANK ISLAMIC BERHAD'S FINANCIAL INSTITUTION RATINGS AT AAA/MARC1 Attachments: No attachment available. Disclaimer: The user, including a user who is also a FAST Participant, expressly agrees that the use of this website which is accessible at https://fast.bnm.gov.my/ is at the user's sole risk. The information contained in this FAST website is compiled by MyClear Sdn. Bhd. (MyClear) and is provided on an "as is" basis without any representations or warranties of any kind, either expressed or implied. While MyClear makes every effort to ensure that information contained in the FAST website are accurate and disseminated in a timely and efficient manner, the user acknowledges that delays, errors, omissions or inaccuracies may occur. MyClear disclaims any liability pertaining to the consequences of any delays, errors, omissions or inaccuracies arising out of or relating to the FAST website or information, including but not limited to, any decision made or action taken by a user in reliance upon such information, or for damages suffered, whether direct, consequential, special, punitive, indirect or otherwise, notwithstanding having been advised of the possibility of such damages. In the event of any dispute, the official records of MyClear shall prevail. MyClear, Bank Negara Malaysia or any of its affiliates, officers, directors, agents or any other party involved in creating, producing or delivering the FAST website, shall not be liable for any direct, consequential, special, punitive, indirect, incidental or other damages arising out of or in any way connected with the use or inability to use the FAST website or information, whether based on contract, tort, liability or otherwise, even if advised on the possibility of any such damages. Content MARC has affirmed Maybank Islamic Berhad's (Maybank Islamic) longterm and shortterm financial institution (FI) ratings of AAA and MARC1 respectively with a stable outlook. The longterm rating of Maybank Islamic is equalised with the rating of its parent Malayan Banking Berhad (Maybank) on the basis of the former's significance as Maybank's Islamic banking arm and its contribution to group profitability. Both banking entities are also operationally integrated with shared branding between them, underpinning MARC's assessment of a high likelihood of full and timely financial support from the parent. Maybank Islamic maintains a lead position in the domestic Islamic banking industry with a 30.9% market share of assets as at end June 2016. Financing growth, averaging at 22.9% per annum (p.a.) over the last five years, has outpaced the industry average of 19.3% p.a. over the same period. The rapid pace of financing growth has contributed to a weakening in Maybank Islamic's asset quality metrics, partly due to the seasoning effect. The gross impaired financing ratio increased to 1.17% as at endJune 2016 from 0.67% as at end2015 with the higher impairment arising mainly from the corporate segment. However, Maybank Islamic's financing loss coverage ratio has declined to an adequate 74.6% as at endJune 2016 from 109.5% as at end2015. MARC views that in light of the prevailing challenging economic conditions, the likelihood for the Islamic bank's asset quality to weaken further has increased, which could result in higher provisioning over the near term. Maybank Islamic maintains a sound capital position as reflected by CET1 and total capital ratios of 13.9% and 18.4% respectively as at endJune 2016 (2015: 12.4%; 16.5%), supported by internal capital generation and the Restricted Profit Sharing Investment Account (RPSIA) maintained by its parent. In addition, its capital position benefited from the reclassification of Mudharabah deposits to investment accounts in June 2015, enabling the Islamic bank to transfer the credit risk on assets funded by investment accounts to investment account holders. Largely due to the reclassification, the riskweighted assets (RWA) for credit risk absorbed by the parent and investment account holders rose to RM15.4 billion (2015: RM9.1 billion for RPSIA). As a result, total RWA declined by 8.7% yoy as compared to the 14.6% yoy increase in capital base in 1H2016, providing an improved buffer for growth and for absorbing credit loss. . MARC observes Maybank Islamic's customer deposits has remained fairly unchanged at RM106.3 billion as at endJune 2016 following the reclassification of Mudharabah deposits; however, on including its investment account balance of RM31.0 billion, customer deposit growth was strong at 28.9% yoy as at endJune 2016. The gross financingtodeposit ratio remained high at 100.8% (2015: 107.3%) but would stand lower at 88.7% on excluding financing support from Maybank via the RPSIA of RM12.9 billion (end2015: RM11.0 billion). For 1H2016, the net financing margin was marginally higher at 1.90% due to an uptick in financing rate for certain segments (1H2015: 1.88%). Maybank Islamic's pretax preprovision profit grew by 14.7% yoy to RM1,086.0 million, largely attributed to the increase in financing growth in the period. MARC notes that Maybank Islamic is on track to comply with the Basel III framework; it issued RM2.0 billion Tier2 Basel IIIcompliant subordinated sukuk in February 2016 and redeemed its RM1.0 billion nonBasel III compliant sukuk in March 2016. The stable outlook on Maybank Islamic reflects MARC's expectation that Maybank Islamic will sustain its strong market position in the domestic Islamic banking industry and remain a core entity of the Maybank group. Contacts: Afeeq Amiri, +6032082 2256/ afeeqamiri@marc.com.my; Sharidan Salleh, +6032082 2254/ sharidan@marc.com.my. October 10, 2016 [This announcement is available in the MARC corporate homepage at http://www.marc.com.my] DISCLAIMER This communication is provided by Malaysian Rating Corporation Berhad (MARC) on the basis of information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of its opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security. © 2016 Malaysian Rating Corporation Berhad https://fast.bnm.gov.my/fastweb/public/PublicInfoServlet.do?chkBox=2016101000024&mode=DISPLAY&info=NEWS&screenId=PB010400 1/1
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