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Press Release
19 Dec | Tuesday
RAM Ratings assigns AAA rating to CIMB Islamic's proposed Sukuk Wakalah

RAM Ratings has assigned an AAA/Stable rating to CIMB Islamic Bank Berhad's (the Bank) proposed RM10.0 billion Sukuk Wakalah Programme. Concurrently, we have reaffirmed the Bank's AAA/Stable/P1 financial institution ratings; these ratings are premised on those of CIMB Bank Berhad (rated AAA/Stable/P1). CIMB Islamic's ratings reflect our anticipation of solid support from CIMB Group Holdings Berhad (the Group) given the Bank’s strategic importance as the latter's Islamic banking arm. Operating under a universal-banking platform, CIMB Islamic is operationally integrated with CIMB Bank and CIMB Investment Bank Berhad (rated AAA/Stable/P1). Group support is expected to be readily extended, if required.

The expansion of CIMB Islamic's financing base has been propelled by the adoption of the Group's Islamic First strategy for its Malaysian operations. The Bank's annualised 18.1% financing growth in 9M fiscal 2017 (fiscal 2016: 16.7%) was mainly driven by financing for the purchase of Amanah Saham Bumiputra unit trust funds, working capital, and residential property. The asset quality of CIMB Islamic's various financing segments remained strong during the same period, with an overall gross impaired-financing (GIF) ratio of 0.7% as at end-September 2017 (end-December 2016: 1.0%). Including its regulatory reserves, the Bank's GIF coverage ratio stood at a sturdy 145.7%. While its asset-quality indicators are favourable, we remain mindful of potential seasoning effects given its consistently strong growth over the past few years.

As at end-September 2017, CIMB Islamic's common-equity tier-1 and total capital ratios remained healthy at 13.0% and 15.0%, respectively. These provide the Bank with a sufficient buffer against any material weakening in its credit quality.

Analytical contact
Choong Andrea
(603) 7628 1115
andrea@ram.com.my

Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my

Date of release: 18 December 2017

The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2017 by RAM Rating Services Berhad

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