By IM Press Release
6 months ago
RAM Ratings reaffirms Bank Islam’s AA3/Stable/P1 ratings
Islam, Murabahah, Sukuk
Islam, Murabahah, Sukuk
- IM Press Release Service Published on : IslamicMarkets.com Publications: https://islamicmarkets.com/publications RAM Ratings reaffirms Bank Islam’s AA3/Stable/P1 ratings 31 December 2018 RAM Ratings has reaffirmed Bank Islam Malaysia Berhad’s (the Bank) AA3/Stable/P1 financial institution ratings. Concurrently, we have reaffirmed the respective AA3/Stable and A1/Stable ratings of the Senior and Subordinated Sukuk Murabahah under the Bank’s RM10 billion Sukuk Murabahah Programme. The A1/Stable rating of its RM1.0 billion Subordinated Sukuk Murabahah Programme (2015/2045) has also been reaffirmed. The ratings continue to incorporate 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. From our recent engagement with the Fund, we believe that the ongoing rehabilitation and restructuring plan will improve the financial health of Lembaga Tabung Haji while the impending oversight by the central bank will further strength its risk and governance structure. Crucially, the Fund continues to view Bank Islam as a core strategic investment and remains committed to ensuring the financial standing of Bank Islam. Meanwhile, we acknowledge Bank Islam’s well-established franchise in the Malaysian Islamic banking sphere, although its market position is small relative to larger domestic universal banking groups. This remains a challenge in respect of the growth of its retail deposits, which made up a small 12% of total deposits as at end-September 2018. That said, the Bank has consistently kept its asset quality better than that of the broader banking industry over the years. As at end-September 2018, the Bank’s gross impaired financing ratio of 1.0% stayed superior to the industry’s 1.5%. Its credit cost ratio, which has not exceeded 25 bps over the past five years, remained benign at 19 bps (annualised) in 9M FY Dec 2018. We envisage the Bank’s asset quality to stay solid, given that a significant portion of its consumer financing entails salary deduction or salary transfer repayment mechanisms. Meanwhile, the Bank’s common equity tier-1 and total capital ratios also stood sturdy at a respective 12.7% and 16.4% as at end-September 2018.
- IM Press Release Service Published on : IslamicMarkets.com Publications: https://islamicmarkets.com/publications Organisation Name: RAM Rating Services Berhad News Type: RATING ANNOUNCEMENT Source: https://www.ram.com.my/pressrelease/?prviewid=4844 Media Contact Padthma Subbiah (603) 7628 1162 email@example.com 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.