RAM Ratings Reaffirms RHB Islamic's AA2/Stable/P1 Ratings

Transcription

1. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications RAM​ ​Ratings​ ​Reaffirms​ ​RHB​ ​Islamic's AA2/Stable/P1​ ​ratings 22​ ​December​ ​2017 RAM​ ​Ratings​ ​has​ ​reaffirmed​ ​the​ ​AA2/Stable/P1​ ​financial​ ​institution​ ​ratings​ ​of​ ​RHB​ ​Islamic​ ​Bank Berhad​ ​(the​ ​Bank),​ ​and​ ​the​ ​AA3/Stable​ ​rating​ ​of​ ​the​ ​Bank's​ ​RM1.0​ ​billion​ ​Subordinated​ ​Sukuk Murabahah​ ​Programme​ ​(2014/2034).​ ​The​ ​ratings​ ​are​ ​premised​ ​on​ ​our​ ​expectation​ ​that​ ​the Bank​ ​will​ ​continue​ ​benefiting​ ​from​ ​ready​ ​parental​ ​support,​ ​given​ ​its​ ​strategic​ ​importance​ ​as​ ​the Islamic​ ​banking​ ​arm​ ​of​ ​RHB​ ​Bank​ ​Berhad​ ​(the​ ​Group,​ ​rated​ ​AA2/Stable/P1). RHB​ ​Islamic's​ ​asset​ ​base​ ​had​ ​expanded​ ​further​ ​to​ ​RM59​ ​billion​ ​as​ ​at​ ​end-September​ ​2017, driven​ ​by​ ​its​ ​rapid​ ​financing​ ​growth​ ​(+26%,​ ​annualised)​ ​in​ ​9M​ ​FY​ ​Dec​ ​2017.​ ​Given​ ​the​ ​Bank's aggressive​ ​expansion​ ​in​ ​recent​ ​years,​ ​its​ ​asset​ ​quality​ ​could​ ​face​ ​some​ ​pressure​ ​as​ ​its​ ​financing portfolio​ ​seasons,​ ​especially​ ​those​ ​from​ ​SMEs.​ ​Its​ ​enlarged​ ​financing​ ​base​ ​contributed​ ​to​ ​an easing​ ​in​ ​its​ ​gross​ ​impaired-financing​ ​(GIF)​ ​ratio​ ​to​ ​0.9%​ ​as​ ​at​ ​end-September​ ​2017.​ ​Its credit-cost​ ​ratio​ ​remained​ ​steady​ ​at​ ​an​ ​annualised​ ​0.2%. Meanwhile,​ ​the​ ​Bank​ ​continues​ ​to​ ​rely​ ​on​ ​wholesale​ ​funding;​ ​about​ ​half​ ​of​ ​its​ ​wholesale​ ​funding comprises​ ​inter-bank​ ​funding​ ​from​ ​its​ ​parent,​ ​via​ ​the​ ​Restricted​ ​Profit-Sharing​ ​Investment Account​ ​(RPSIA).​ ​This,​ ​along​ ​with​ ​the​ ​anticipated​ ​liquidity​ ​support​ ​from​ ​RHB​ ​Bank,​ ​partially mitigates​ ​RHB​ ​Islamic's​ ​high​ ​level​ ​of​ ​depositor-concentration​ ​risk. The​ ​Bank's​ ​strong​ ​capitalisation​ ​and​ ​higher​ ​adjusted​ ​GIF​ ​coverage​ ​ratio​ ​of​ ​141%​ ​as​ ​at end-September​ ​2017​ ​(adjusted​ ​to​ ​include​ ​RM215​ ​million​ ​of​ ​regulatory​ ​reserves​ ​and​ ​allowances for​ ​impairment​ ​losses​ ​on​ ​financing​ ​related​ ​to​ ​the​ ​RPSIA)​ ​provide​ ​a​ ​comfortable​ ​buffer.​ ​Based​ ​on RAM's​ ​assumption​ ​that​ ​Bank​ ​Negara​ ​Malaysia​ ​will​ ​allow​ ​the​ ​Bank​ ​to​ ​release​ ​its​ ​regulatory reserve​ ​to​ ​offset​ ​additional​ ​provisions​ ​following​ ​the​ ​adoption​ ​of​ ​MFRS​ ​9,​ ​the​ ​Bank's​ ​regulatory reserve​ ​is​ ​deemed​ ​to​ ​provide​ ​sufficient​ ​coverage,​ ​with​ ​minimal​ ​impact​ ​on​ ​the​ ​first​ ​day​ ​of implementation. Meanwhile​ ​RHB​ ​Islamic's​ ​net​ ​financing​ ​margin​ ​of​ ​1.4%​ ​was​ ​still​ ​lower​ ​than​ ​its​ ​peers',​ ​largely attributable​ ​to​ ​the​ ​Bank's​ ​smaller​ ​proportion​ ​of​ ​low-cost​ ​current-​ ​and​ ​savings-account​ ​deposits and​ ​a​ ​large​ ​percentage​ ​of​ ​financing​ ​facilities​ ​for​ ​government-related​ ​clients,​ ​which​ ​yield​ ​finer margins.
2. IB ​ ​Press​ ​Release​ ​Service Published​ ​on:​​ ​IslamicBanker.com​ ​Publications:​ ​https://www.islamicmarkets.com/publications Organisation​ ​Name: News​ ​Type: RAM​ ​Rating​ ​Services​ ​Berhad RATING​ ​ANNOUNCEMENT Source: BNM​ ​Announcements 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.