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Press Release
26 Apr | Thursday
RAM Ratings reaffirms Public Islamic’s AAA rating

RAM Ratings has reaffirmed the AAA/Stable/P1 financial institution ratings of Public Islamic Bank Berhad (the Bank). Concurrently, we have reaffirmed the respective AAA/Stable and AA 1 /Stable ratings of the senior and subordinated sukuk under the Bank’s RM5 billion Sukuk Murabahah Programme (2014/2044). The ratings reflect Public Islamic’s strategic importance as the Islamic banking arm of Public Bank Berhad (the Group, rated AAA/Stable/P1), from which capital and funding support is expected to be forthcoming, if needed.

Public Islamic’s track record of robust asset quality continues to be underpinned by the Group’s prudent lending practices and risk management. While the Bank’s financing book remains concentrated given that residential and non-residential property financing forms a significant 57% of its total portfolio, its asset quality has stayed sturdy. As at end-December 2017, Public Islamic’s gross impaired financing ratio stood at a low 0.6% (banking system average: 1.5%), while its credit-cost ratio remained benign at 0.2%.

The Bank’s depositor base is also concentrated, with its top three depositors making up about a third of total deposits as at end-December 2017. Nonetheless, funding support from the Group is expected to be readily available if required. Additionally, Public Islamic’s liquidity position is healthy, with its liquidity coverage ratio averaging 150% in FY Dec 2017. The Bank’s capitalisation levels remained sound, with common equity tier-1 (CET-1) and total capital ratios standing at 11.9% and 16.0%, respectively, as at end-December 2017. Taking into account Public Islamic’s regulatory reserves of RM201 million (which could absorb up to a 67% increase in its existing provisions before its CET-1 capital ratio is affected), the impact of Malaysian Financial Reporting Standards 9 on the first day of its adoption by the Bank is likely to be muted.

Analytical contact
Chew Wei Li
(603) 7628 1025
weili@ram.com.my

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

Date of release: 26 April 2018

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 2018 by RAM Rating Services Berhad’s

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