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20 Dec | Thursday
RAM Ratings reaffirms CIMB Islamic Bank’s AAA/Stable/P1 ratings
RAM Ratings has reaffirmed CIMB Islamic Bank Berhad’s (the Bank) AAA/Stable/P1 financial institution ratings. Concurrently, we have reaffirmed the AAA/Stable rating of the Bank’s RM10.0 billion Sukuk Wakalah Programme. These ratings are underlined by CIMB Islamic’s strategic role as the Islamic banking arm of CIMB Group Holdings Berhad (the Group). Operating under a universal banking platform, CIMB Islamic leverages significantly on the Group’s back-room operations, risk management systems, treasury operations and distributions channels. We expect the Bank to continue to benefit from ready group support, if the need arises. 
 
The adoption of CIMB Group’s Islamic First strategy had translated into significant financing growth for the Bank in recent years. CIMB Islamic’s financing book expanded by an annualised 30% in 9M FY Dec 2018 (FY Dec 2017: +22%), although we are cognisant of potential seasoning effects going forward, given rapid growth. The Bank’s asset quality remained healthy. Its gross impaired financing (GIF) ratio stood at 0.6% as at end-September 2018 (end-December 2017: 0.7%) while its credit cost ratio clocked in at an annualised 17 bps in 9M FY Dec 2018 (FY Dec 2017: 16 bps). GIF coverage (including regulatory reserves) was also robust at 192.6% as at end-September 2018.
 
In terms of capitalisation, CIMB Islamic’s common equity tier-1 and total capital ratios came in at a respective 13.6% and 16.8% as at end-September 2018. Its strong capital position was aided by healthy earnings accretion – the Bank’s pre-tax profit rose 32% y-o-y to RM759.0 million in 9M FY Dec 2018 (9M FY Dec 2017: RM576.8 million). This translated into a solid return on risk-weighted assets of 3.3% (annualised) in the same period. 
 
Analytical contact
Liang Huey Jean, CFA
(603) 7628 1124
jean@ram.com.my


Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my
 
Date of release: 20 December 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
Ó Copyright 2018 by RAM Rating Services Berhad
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