RAM assigns AAA rating to CIMB Islamic’s proposed Sukuk Wakalah

KUALA LUMPUR: RAM Ratings has assigned an AAA/Stable rating to CIMB Islamic Bank Bhd’s (CIMB Islamic) proposed RM10 billion Sukuk Wakalah Programme.

Concurrently, RAM Ratings has reaffirmed the bank’s AAA/ Stable/P1 financial institution ratings; these ratings are premised on those of CIMB Bank (rated AAA/Stable/P1).

CIMB Islamic’s ratings reflect RAM Ratings’ anticipation of solid support from CIMB Group Holdings Bhd (CIMB Group) given the bank’s strategic importance as the latter’s Islamic banking arm.

“Operating under a universalbanking platform, CIMB Islamic is operationally integrated with CIMB Bank and CIMB Investment Bank Bhd (rated AAA/Stable/ P1).

“CIMBGroupsupportisexpected to be readily extended, if required,” the ratings firm said.

RAM Ratings highlighted that the expansion of CIMB Islamic’s financing base has been propelled by the adoption of the group’s Islamic First strategy for its Malaysian operations.

“The bank’s annualised 18.1 per cent financing growth in the first nine months (9M) fiscal 2017 (fiscal 2016: 16.7 per cent) was mainly driven by financing for the purchase of Amanah Saham Bumiputra unit trust funds, working capital, and residential property.

“The asset quality of CIMB Islamic’s various financing segments remained strong during the same period, with an overall gross impaired-financing (GIF) ratio of 0.7 per cent as at endSeptember 2017 (end-December 2016: one per cent),” the ratings firm said.

It added that including the bank’s regulatory reserves, CIMB Islamic’s GIF coverage ratio stood at a sturdy 145.7 per cent.

While its asset-quality indicators are favourable, RAM Ratings remained mindful of potential seasoning effects given its consistently strong growth over the past few years.