Banks well capitalised to withstand stresses
KUALA LUMPUR: RAM Rating Services Bhd’s (RAM Ratings) Banking Scoreboard and Islamic Banking Scoreboard showed that banks are well capitalised to withstand stresses on asset quality.
Scoreboards served as peer comparisons of key Malaysian banks whereby the banks are ranked and assessed based on more than 25 metrics, covering asset quality, profitability, funding and liquidity as well as capitalisation.
In a statement today, RAM Ratings said the Banking Scoreboard showed the asset quality of banks remains resilient amidst the weaker macroeconomic backdrop with Public Bank, Hong Leong Bank and Citibank stayed in the top three spots in terms of gross impaired loan (GIL) ratio.
All three banks reported a commendable GIL ratio of less than one per cent as at endSeptember 2019.
“Based on our analysis, banks are well-positioned to weather looming asset quality challenges arising from the COVID-19 pandemic and plunging oil prices.
“The common equity tier-1 (CET1) capital ratios of all the banks in our sample were above 12 per cent as at end-September 2019,” it said.
This is significantly higher than the minimum regulatory requirement of seven per cent and the more stringent capital requirements imposed on those designated as domestic systemically important banks (Maybank and CIMB: 8 per cent, Public Bank: 7.5 per cent).
On another note, the rating agency said the Islamic Banking Scoreboard indicates that HSBC Amanah, Public Islamic and Hong Leong Islamic reported much higher shares of retail deposits relative to peers, reflective of the banks’ strong consumer focus.
Islamic banks belonging to larger banking groups have a greater proportion of retail deposits to total customer deposits when juxtaposed with standalone Islamic banks, it said.
“Aiding this is the ability of these entities to leverage on the extensive branch networks and other distribution channels of their conventional parents.
“As part of larger banking groups, the banks are also able to draw on strong parental funding support in the form of restricted profit sharing investment accounts and interbank funding,” it added. — Bernama