Maybank’s AAA ratings reaffirmed
KUCHING: RAM Ratings has reaffirmed Malayan Banking Berhad’s ( Maybank) respective Asean and Malaysian nationalscale financial institution ratings at seaAAA/Stable/ seaP1 and AAA/Stable/ P1.
Concurrently, the ratings of all the Group’s debt issues have been reaffirmed.
Maybank is the fourth-largest bank by assets in Asean. The reaffirmation of Maybank’s ratings ref lects the Group’s strong regional franchise, solid capitalisation, diversified earnings base and deposit funding strength in Malaysia.
“As the largest bank in Malaysia, Maybank is systemically important to the country. While pressure on the Group’s asset quality lingers, the credit quality of its loan portfolio is expected to hold up,” RAM detailled in a report.
“Its gross impaired loan (GIL) ratio had weakened to 2.7 per cent as at end- September 2018, mainly due to a large collateralised loan in Singapore in 2QFY018. On a positive note, the inf low of impaired oil and gas ( O& G) accounts, which had contributed to a rise in the Group’s GIL ratio in 2016, has slowed.
“Maybank recorded a respective 31 and 15 per cent year- on-year (y- o-y) reduction in impairment losses in fiscal 2017 and 9M fiscal 2018, translating into an annualised credit cost ratio of 0.4 per cent.
This is a notable improvement from the 0.6 per cent seen in fiscal 2016 when Maybank had actively managed the rescheduling and restructuring of borrowers in the O& G and related sectors, and borne provisions.
“That said, increasing interest rates and uncertainties arising from the upcoming presidential election in Indonesia, the challenging outlook for the power sector in Singapore and the ongoing trade war between the US and China could introduce some stress to asset quality.
Maybank recorded a pre- tax profit of RM10.0 billion in fiscal the necessary 2017. Its profit performance is improving on account of easing credit costs and should support internal capital generation.
“Taking into consideration RM2.8 billion of regulatory reserves as at end- September 2018, the Group’s adjusted GIL coverage ratio stood healthy at 99 per cent. Meanwhile, Maybank’s common equity tier-1 capital ratio was a solid 13.6 per cent as at the same date.”