RAM reaffirms UOB Malaysia’s AAA/P1 ratings

KUCHING: RAM Ratings has reaffirmed United Overseas Bank (Malaysia) Bhd’s (UOB Malaysia or the Bank) AAA/Stable/P1 financial institution ratings (FIRs) as well as the ratings of its debt instruments.

“Apart from its sturdy credit metrics, healthy funding and liquidity profile, and robust capitalisation, the ratings incorporate the bank’s strategic importance to United Overseas Bank Ltd,” RAM said in a statement.

It added that UOB Malaysia’s risk management practices were underpinned by the Group’s prudent and conservative stance.

“The bank’s asset quality is still deemed sound, although its gross impaired-loan (GIL) ratio crept up to 1.8 per cent as at end-March 2018 on the back of some weakening that was largely confined to a handful of borrowers which had already been monitored closely.

“The credit quality of UOB Malaysia’s household financing segments remained steady. We continue to derive comfort from UOB Malaysia’s highly collaterised portfolio and comfortable GIL coverage ratio, which stood at 100 per cent as at end-March 2018.”

Despite larger impairment charges in fiscal 2017, RAM saw that UOB Malaysia recorded a higher pre-tax profit of RM1.52 billion on the back of its strong financing growth in the previous year.

In tandem, its return on riskweighted assets edged up to 2.8 per cent while its net interest margin remained stable at 2.1 per cent. The Bank’s funding and liquidity profile stayed healthy, with liquidity coverage and net stable funding ratios of above 100 per cent. THE Malaysian rubber market closed mixed yesterday, in line with the performance on the regional rubber futures markets coupled with a stronger ringgit against the US dollar.

Nevertheless, the losses were capped by a slight recovery in crude oil prices.

“Oil prices edged up, supported by expectations of supply cuts once the US sanctions against Iran bite in November, but capped by worries that a Sino-US trade dispute will drag on fuel demand growth,” he said.

At 12pm, the Malaysian Rubber Board’s official physical price for tyre-grade SMR 20 and latex-in-bulk eased one sen each to 545.5 sen per kg and 404.0 sen per kg, respectively.