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Press Release
15 Apr | Wednesday
RAM Ratings assigns AA1 rating to UOB Malaysia’s proposed up to RM1 billion subordinated bonds

RAM Ratings has assigned an AA1/Stable rating to United Overseas Bank (Malaysia) Bhd’s (UOBM or the Bank) Proposed up to RM1.0 billion Subordinated Bonds. Concurrently, we have also reaffirmed UOBM’s AAA/Stable/P1 financial institution ratings. The 1-notch difference between UOBM’s long-term financial institution rating and issue rating reflects the subordination of the debt facility to the Bank’s senior unsecured obligations.

UOBM is viewed to be a highly strategic subsidiary of United Overseas Bank Limited (UOBL) – ASEAN’s third-largest bank. The Bank represents UOBL’s largest presence ex-Singapore in terms of assets and pre-tax profit contribution. As part of the larger group, UOBM is able to leverage on its parent’s solid franchise, network and expertise. Emulating UOBL’s strategies, the Bank has carved a niche among SMEs and established its presence in the Malaysian retail mortgage market.

UOBM’s gross impaired-loan ratio had continued to ease, coming in at 1.6% as at end-September 2014, comparing well among its peers. Its credit-cost ratio came in at a benign 0.3% (annualised) for 9M FY Dec 2014. Meanwhile, the Bank’s concentration on property lending has stayed significant, forming around 60% of its loans. Its expansion in this space has, nonetheless, become more conservative in the last couple of years. While there may still be some seasoning of loans following the earlier periods of high growth, the asset quality of UOBM’s residential and non-residential mortgages is envisaged to hold up. The Bank’s buffer against asset-quality slippage has remained strong; its common-equity tier-1 capital ratio came in at 13.8% as at end-September 2014. Meanwhile, for 9M FY Dec 2014, the Bank delivered a pre-tax profit of RM1.1 billion, translating into a ROA of 1.6% (annualised).

Media contact:
Peter Kong
(603) 7628 1029
peterkong@ram.com.my

source: RAM Rating Services Berhad
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