Moody’s reaffirms ratings of CIMB

PETALING JAYA: Moody’s Investors Service has affirmed all ratings and assessments of CIMB Bank Bhd, CIMB Islamic Bank Bhd and CIMB Group Holdings Bhd.

The outlook on the ratings remained stable.

The ratings of PT Bank CIMB Niaga Tbk ( Baa2 stable, ba2), CIMB Thai Bank Public Company Ltd ( Baa2 stable, ba2) and CIMB Investment Bank Bhd ( A3 stable) remained unchanged.

The affirmation of CIMB Bank’s A3 rating takes into account the bank’s baa2 baseline credit assessment (BCA) and Moody’s expectation of a very high probability of government support for the bank in times of need.

The stable outlook reflected Moody’s view that the credit fundamentals of the bank would remain robust over the next 12 to 18 months.

The bank’s baa2 BCA reflected its improved capitalisation, stabilising asset quality and robust liquidity over the past three years (2015 to 2017).

At the same time, it also considered the uncertainties in the domestic economy, driven by the ongoing policy changes introduced by Malaysia’s new government, which may negatively affect the growth prospects of the economy and banking sector.

CIMB Bank’s overall asset quality has largely stabilised with its gross impaired loan ratio at 2.3% as of the end of March 2018, similar to 2.3% as of end 2017, after a marginal pick-up from 2.1% as of end 2016.

The asset quality of its Malaysian portfolio (about 72% of gross loans) remains robust, and the asset quality of its overseas portfolios, Singapore and Thailand, has stabilised on the back of improving operating conditions.

Moody’s added that the bank’s common equity Tier-1 ratio has consistently improved since 2016, driven by the group’s efforts to improve risk-adjusted returns, as well as optimise risk-weighted assets.