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Press Release
14 May | Tuesday
RAM Ratings reaffirms Public Islamic’s AAA rating to the media

RAM Ratings has reaffirmed Public Islamic Bank Berhad’s (the Bank) AAA/Stable/P1 financial institution ratings as well as the respective AAA/Stable and AA1/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). As such, the Bank is expected to receive ready support from its parent in times of need.

Public Islamic’s financing base expanded by a healthy 9% in fiscal 2018 and sustained this momentum through 1Q fiscal 2019, mainly attributable to its property financing portfolio. The Bank’s exposure to the property sector is sizeable, with residential property and non-residential property financing accounting for 40% and 22% of the portfolio, respectively, as at end-March 2019. While there is some portfolio concentration, Public Islamic’s overall asset quality metrics remain robust, anchored by the Group’s prudent credit culture. The Bank’s gross impaired financing (GIF) ratio clocked in at a sturdy 0.5% as at end-March 2019 (end-December 2017: 0.6%), significantly lower than the banking industry’s 1.5%. Its annualised credit cost ratio stayed benign at 5 bps in 1Q FY Dec 2019 and 7 bps in FY Dec 2018. Including regulatory reserves, the Bank’s adjusted GIF coverage ratio was robust at 228% as at end-March 2019.

While Public Islamic is exposed to depositor concentration risk, its average liquidity coverage ratio and net stable funding ratio were comfortably above the regulatory minimum of 100% in FY Dec 2018. Public Islamic’s capital position is sound relative to its low risk profile, with its common equity tier-1 and total capital ratios holding steady at a respective 11.8% and 15.8% as at end-March 2019 (after proposed dividends). We also take comfort in the Bank’s ability to derive funding and capital support from the Group, if needed.

Analytical contact
Loh Kit Yoong
(603) 3385 2493
kityoong@ram.com.my

Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my

 Date of release: 14 May 2019

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 2019 by RAM Rating Services Berhad

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