RAM Ratings reaffirms Maybank Islamic’s financial institution ratings
KUALA LUMPUR: RAM Ratings has reaffirmed the AAA/Stable/ P1 financial institution ratings (FIRs) of Maybank Islamic Bhd (Maybank Islamic).
Concurrently, it noted that the ratings of the bank’s sukuk have also been reaffirmed.
“The FIRs reflect that of Malayan Banking Bhd (Maybank rated AAA/Stable/P1), and are premised on the bank’s strategic role as the Islamic banking arm of the group. As such, ready parental support from the group is expected, if required,” it said in a statement.
Maybank Islamic stands among the world’s five largest Islamic banks.
“On its own, it is the biggest domestic syariah lender. The bank accounted for 34 per cent of the Malaysian Islamic banking sector’s financing and a third of its deposits and investments accounts (IAs) as at end-September 2017.
“Although showing a declining trend, Maybank Islamic still commands the lion’s share (83 per cent) of the industry’s IAs.
“Notably, the bank’s Islamic financing made up about 56 per cent of the group’s domestic financing as at the same date, underlining its strategic importance to Maybank,” the rating agency highlighted.
As at end-September 2017, it pointed out that Maybank Islamic’s gross impaired-financing (GIF) ratio came up to a still-healthy 1.1 per cent (end-December 2016 at one per cent).
“However, the bank’s asset quality remained pressured by its corporate books, particularly from the oil and gas as well as commodities sectors. The bank’s credit-cost ratio could also increase from the potential additional provisioning requirements of the aforementioned sectors.
“As at end-September 2017, its GIF coverage ratio (inclusive of regulatory reserves and allowances for impairment losses on financing related to restricted profit-sharing IAs ) stood at a sound 123.6 per cent,” it added.
Meanwhile, it noted that the bank’s funding profile is still relatively weak, with its financing-to-deposits ratio coming in at a lofty 105.5 per cent as at end-September 2017.
Adjusting for funding placements by its parents, the ratio would improve to 91.9 per cent.
“We derive comfort from the ready funding support Maybank Islamic enjoys from the group. On the other hand, the bank’s liquidity profile has stayed healthy; its liquidity coverage ratio averaging above 100 per cent in 3Q fiscal 2017,” it said.
“RPSIAs and IAs have been providing substantial capital savings to the bank in the last few years, given that the credit risks of assets funded by such accounts are borne by its investors.
“Nonetheless, these savings are expected to taper off as the bank attempts to strike a balance between the capital savings and the higher cost of funds.