RAM assigns AA3/Stable/P1 ratings to Affin Islamic Bank

THE tin price on the Kuala Lumpur Tin Market (KLTM) has inched up to US$19,000 per tonne compared to US$ 18,850 yesterday on higher demand.

A dealer said this was due to the strengthening of the US dollar with the US Treasury yield at its highest level since July 2011.

“This has pushed up the prices of copper, and the effect ripples to other types of metals as well,” he said.

The benchmark London Metal Exchange ( LME) closed US$ 85 lower at US$ 19,045 per tonne. KUCHING: RAM Ratings has assigned ratings of AA3/Stable/P1 to Affin Islamic Bank Bhd (Affin Islamic Bank), the Islamic banking subsidiary of Affin Bank Bhd (Affin Bank). The ratings are premised on Affin Islamic’s strategic role as the Islamic banking arm of the group.

Concurrently, RAM has assiged the Tier 2 Sukuk Murabahah and Additional Tier 1 Capital Sukuk Wakalah to be issued under the proposed Sukuk Programme are Basel III-compliant and will qualify as tier- 2 and additional tier- 1 regulatory capital, respectively.

Both instruments have a lossabsorption feature linked to the occurrence of a non- viability event.

“Given Affin Islamic’s crucial role in the group, we expect capital and funding support from the Group to be forthcoming, if the need arises,” it said yesterday.

“Notably, the bank received three capital injections from the Group, amounting to RM100 million each in 2015 and 2016 and RM500 million in 2017 – a reflection of its importance to the group.”

To note, Affin Islamic leverages significantly on Affin Bank’s common infrastructure, risk management systems and branch network, allowing it to gain from economies of scale.

The group’s implementation of its Priority Islamic Policy in June 2016 had translated into significant growth for AFFIN Islamic in recent years. The bank’s financing base expanded by a rapid 29 per cent in financial year ending December 2017 (FY17) and a subsequent 26 per cent in the first half of FY18.

However, RAM said Affin Islamic’s asset quality may come under pressure owing to strong growth as its financing book seasons, albeit remaining at a manageable level.

“The bank’s gross impaired financing (GIF) stood at 0.9 per cent as at end- June 2018. We further derive comfort from the bank’s healthy GIF coverage ratio – including regulatory reserves – of 143.5 per cent as at the same date.

“While the bank registered a higher pre-tax profit of RM85.6 million in 1H FY18), its return on risk-weighted assets of 1.4 per cent for the period is comparatively lower than its industry peers.