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RAM Ratings Reaffirms Public Islamic's AAA Rating on Firm Parental Support

IB Insights
By IB Insights
6 years ago
RAM Ratings Reaffirms Public Islamic's AAA Rating on Firm Parental Support

Islam, Sukuk

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  1. IB Press Release Service Published on :​ ​IslamicBanker.com Publications: ​https://www.islamicmarkets.com/publications RAM Ratings Reaffirms Public Islamic's AAA Rating on Firm Parental Support 23 May 2017 RAM Ratings has reaffirmed the AAA/Stable/P1 financial institution ratings of Public Islamic Bank Berhad (the Bank). Concurrently, we have reaffirmed the respective AAA/Stable and AA1/Stable ratings of the senior and subordinated sukuk under the Bank's Sukuk Murabahah Programme of up to RM5 billion (2014/2044). The ratings reflect Public Islamic's strategic importance as the Islamic banking arm of Public Bank Berhad (the Group, rated AAA/Stable/P1), from which capital and funding support are expected to be forthcoming, if needed. Public Islamic remains exposed to financing-concentration risk, given that property and vehicle financing represented a substantial 83% of its total portfolio as at end-March 2017. While vehicle financing has traditionally constituted the bulk of financing extended by the Bank, this portfolio as a percentage of total financing has been moderating. As part of its strategy to rebalance its portfolio in favour of floating-rate financing, vehicle financing now counts as the Bank's second-largest financing exposure after property financing. Despite the concentration, Public Islamic's asset quality remained sturdy, a testament of the Group's prudent credit culture. As at end-March 2017, Public Islamic's gross impaired-financing ratio stood at a low 0.5% while its annualised credit-cost ratio stayed benign at 0.2% in 1Q fiscal 2017. The Bank's depositor base is also concentrated, with its top 3 depositors making up about a third of total deposits as at end-December 2016. Nonetheless, funding support from the Group is expected to be readily available should the need arise. We further derive comfort from Public Islamic's satisfactory liquidity profile. Meanwhile, the Bank's capitalisation levels remained sound, with its common equity tier-1 capital ratio standing at 10.6% as at end-March 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 analyses and commentaries, where relevant