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RAM Ratings reaffirms Maybank Islamic’s AAA/Stable/P1 financial institution ratings
RAM Ratings has reaffirmed Maybank Islamic Berhad’s (the Bank) AAA/Stable/P1 financial institution ratings (FIRs) as well as the ratings of its debt programmes. The reaffirmation of Maybank Islamic’s FIRs reflects our view that the Bank will continue to benefit from parental support, if needed, given its strategic role as Malayan Banking Berhad’s (Maybank or the Group, rated AAA/Stable/P1) Islamic banking arm.
 
Table 1: Maybank Islamic’s sukuk ratings

 

Instrument Ratings
RM10.0 billion Subordinated Sukuk Murabahah Programme (2014/2034) AA1/Stable
RM10.0 billion Islamic Commercial Papers/Medium-Term Notes Programme (2017/2024) AAA/Stable/P1
RM10.0 billion Islamic Additional Tier-1 Capital Securities Programme (2017/2117) AA3/Stable
 
Maybank Islamic’s 9% financing growth in fiscal 2017 and 9M fiscal 2018 continued to outpace the broader banking sector. By asset size, Maybank Islamic is the largest shariah financier domestically, standing among the top five Islamic banks globally. As at end-September 2018, the Bank accounted for 33% of the Malaysian Islamic banking system’s gross financing, and close to a third of the industry’s deposits and customer investment accounts (IAs). Given its pioneership in the IA space, Maybank Islamic still held the lion’s share (68%) of the industry’s customer IAs as at end-September 2018 despite the Bank re-prioritising deposit growth as part of its funding cost management.
 
Maybank Islamic’s asset quality indicators saw some slippage in 9M fiscal 2018, with its gross impaired financing ratio climbing to 1.3% as at end-September 2018 (+24 bps from end-December 2017), largely owing to a few working capital exposures that the Bank had proactively rescheduled and restructured. Together with increased provisioning requirements arising from the adoption of MFRS 9, these accounts contributed to a higher credit cost ratio of 32 bps on an annualised basis in 9M fiscal 2018 (fiscal 2017: 13 bps). 
 
 
The Bank’s de-emphasis on IAs and the hike in overnight policy rate boosted its net financing margin, which came in at 1.9% in 9M fiscal 2018. On the flip side, the tapering of capital savings from IAs and the first-day impact of MFRS 9 implementation had lowered Maybank Islamic’s common equity tier-1 capital ratio to 13.2% as at end-September 2018 (end-December 2017: 14.5%). 
 
 
Analytical contact
Loh Kit Yoong
(603) 7628 1031
kityoong@ram.com.my
 
Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my
 
Date of release: 26 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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