RAM reaffirms Bank Islam’s AA3/Stable/P1 ratings

KUCHING: RAM Ratings has reaffirmed Bank Islam Malaysia Bhd’s AA3/Stable/P1 financial institution ratings.

“Concurrent ly, we have reaffirmed the respective AA3/ Stable and A1/Stable ratings of the Senior and Subordinated Sukuk Murabahah under the Bank’s RM10 billion Sukuk Murabahah Programme,” RAM said in a statement yesterday.

RAM said the A1/Stable rating of its RM1 billion Subordinated Sukuk Murabahah Programme ( 2015/ 2045) has also been reaffirmed.

“The ratings continue to incorporate our expectation that the Bank will be able to count on ready financial support from its major shareholder, Lembaga Tabung Haji, in times of need,” it said.

“From our recent engagement with the Fund, we believe that the ongoing rehabilitation and restructuring plan will improve the financial health of Lembaga Tabung Haji while the impending oversight by the central bank will further strength its risk and governance structure.

“Crucially, the fund continues to view Bank Islam as a core strategic investment and remains committed to ensuring the financial standing of Bank Islam.”

Meanwhile, RAM acknowledged Bank Islam’s well- established franchise in the Malaysian Islamic banking sphere, although its market position is small relative to larger domest ic universal banking groups.

This remains a challenge in respect of the growth of its retail deposits, which made up a small 12 per cent of total deposits as at end- September 2018.

“That said, Bank Islam has consistently kept its asset quality better than that of the broader banking industry over the years. As at end- September 2018, the Bank’s gross impaired financing ratio of one per cent stayed superior to the industry’s 1.5 per cent.”