RAM Ratings reaffirms Bank Islam's AA3/Stable/P1 ratings

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1. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications RAM​ ​Ratings​ ​reaffirms​ ​Bank​ ​Islam's AA3/Stable/P1​ ​ratings 12​ ​December​ ​2017 RAM​ ​Ratings​ ​has​ ​reaffirmed​ ​Bank​ ​Islam​ ​Malaysia​ ​Berhad's​ ​(the​ ​Bank)​ ​AA3/Stable/P1​ ​financial institution​ ​ratings.​ ​Concurrently,​ ​we​ ​have​ ​also​ ​reaffirmed​ ​the​ ​A1/Stable​ ​rating​ ​of​ ​the​ ​Bank's RM1.0​ ​billion​ ​Subordinated​ ​Sukuk​ ​Murabahah​ ​Programme​ ​(2015/2045). The​ ​reaffirmation​ ​reflects​ ​our​ ​expectation​ ​that​ ​the​ ​Bank​ ​will​ ​be​ ​able​ ​to​ ​count​ ​on​ ​ready​ ​financial support​ ​from​ ​its​ ​major​ ​shareholder,​ ​Lembaga​ ​Tabung​ ​Haji​ ​(the​ ​Fund),​ ​in​ ​times​ ​of​ ​need. Nonetheless,​ ​any​ ​significant​ ​change​ ​in​ ​the​ ​Fund's​ ​effective​ ​shareholding​ ​in​ ​Bank​ ​Islam​ ​would necessitate​ ​a​ ​reassessment​ ​of​ ​the​ ​Bank's​ ​ratings. While​ ​Bank​ ​Islam​ ​has​ ​a​ ​well-established​ ​franchise​ ​in​ ​the​ ​Malaysian​ ​Islamic​ ​banking​ ​sphere,​ ​its market​ ​position​ ​is​ ​still​ ​limited​ ​relative​ ​to​ ​the​ ​larger​ ​domestic​ ​universal-banking​ ​groups.​ ​This remains​ ​a​ ​challenge​ ​against​ ​the​ ​expansion​ ​of​ ​its​ ​retail​ ​deposits,​ ​which​ ​only​ ​made​ ​up​ ​a​ ​relatively small​ ​14%​ ​of​ ​its​ ​total​ ​deposits​ ​as​ ​at​ ​end-June​ ​2017.​ ​Its​ ​liquidity​ ​coverage​ ​ratio​ ​is​ ​also​ ​below​ ​the industry​ ​average,​ ​although​ ​it​ ​exceeds​ ​the​ ​minimum​ ​requirement. That​ ​said,​ ​the​ ​Bank​ ​continues​ ​to​ ​display​ ​commendable​ ​asset​ ​quality,​ ​with​ ​a​ ​low​ ​gross impaired-financing​ ​ratio​ ​of​ ​1.0%​ ​as​ ​at​ ​end-June​ ​2017​ ​(industry​ ​average:​ ​1.6%).​ ​Its​ ​credit-cost ratio​ ​also​ ​remains​ ​benign,​ ​hovering​ ​around​ ​20-25​ ​bps.​ ​While​ ​the​ ​spiralling​ ​cost​ ​of​ ​living​ ​may weaken​ ​the​ ​asset​ ​quality​ ​of​ ​the​ ​Bank's​ ​household​ ​financing,​ ​a​ ​significant​ ​portion​ ​(55%)​ ​of​ ​such financing​ ​is​ ​repaid​ ​via​ ​non-discretionary​ ​salary​ ​transfers​ ​or​ ​salary​ ​deductions.​ ​These​ ​repayment features​ ​are​ ​expected​ ​to​ ​sustain​ ​the​ ​Bank's​ ​overall​ ​asset​ ​quality.​ ​Meanwhile,​ ​the​ ​Bank's​ ​capital position​ ​has​ ​remained​ ​strong,​ ​with​ ​respective​ ​common-equity​ ​tier-1​ ​and​ ​total​ ​capital​ ​ratios​ ​of 13.0%​ ​and​ ​16.0%​ ​as​ ​at​ ​end-June​ ​2017. Organisation​ ​Name: News​ ​Type: Source: RAM​ ​Rating​ ​Services​ ​Berhad RATING​ ​ANNOUNCEMENT BNM​ ​Announcements
2. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications Media​ ​Contact Padthma​ ​Subbiah (603)​ ​7628​ ​1162 padthma@ram.com.my Disclaimer: The​ ​credit​ ​rating​ ​is​ ​not​ ​a​ ​recommendation​ ​to​ ​purchase,​ ​sell​ ​or​ ​hold​ ​a security,​ ​inasmuch​ ​as​ ​it​ ​does​ ​not​ ​comment​ ​on​ ​the​ ​security's​ ​market price​ ​or​ ​its​ ​suitability​ ​for​ ​a​ ​particular​ ​investor,​ ​nor​ ​does​ ​it​ ​involve​ ​any audit​ ​by​ ​RAM​ ​Ratings.​ ​The​ ​credit​ ​rating​ ​also​ ​does​ ​not​ ​reflect​ ​the legality​ ​and​ ​enforceability​ ​of​ ​financial​ ​obligations. RAM​ ​Ratings​ ​receives​ ​compensation​ ​for​ ​its​ ​rating​ ​services,​ ​normally paid​ ​by​ ​the​ ​issuers​ ​of​ ​such​ ​securities​ ​or​ ​the​ ​rated​ ​entity,​ ​and sometimes​ ​third​ ​parties​ ​participating​ ​in​ ​marketing​ ​the​ ​securities, insurers,​ ​guarantors,​ ​other​ ​obligors,​ ​underwriters,​ ​etc.​ ​The​ ​receipt​ ​of this​ ​compensation​ ​has​ ​no​ ​influence​ ​on​ ​RAM​ ​Ratings'​ ​credit​ ​opinions or​ ​other​ ​analytical​ ​processes.​ ​In​ ​all​ ​instances,​ ​RAM​ ​Ratings​ ​is committed​ ​to​ ​preserving​ ​the​ ​objectivity,​ ​integrity​ ​and​ ​independence​ ​of its​ ​ratings.​ ​Rating​ ​fees​ ​are​ ​communicated​ ​to​ ​clients​ ​prior​ ​to​ ​the issuance​ ​of​ ​rating​ ​opinions.​ ​While​ ​RAM​ ​Ratings​ ​reserves​ ​the​ ​right​ ​to disseminate​ ​the​ ​ratings,​ ​it​ ​receives​ ​no​ ​payment​ ​for​ ​doing​ ​so,​ ​except for​ ​subscriptions​ ​to​ ​its​ ​publications. Similarly,​ ​the​ ​disclaimers​ ​above​ ​also​ ​apply​ ​to​ ​RAM​ ​Ratings' credit-related​ ​analysis​ ​and​ ​commentaries,​ ​where​ ​relevant.