Bank Islam’s ratings unaffected by proposed reorganisation

BIMB Holdings Berhad’s (BIMB or the Group) plan to collapse its financial holding company structure and elevate Bank Islam Malaysia Berhad (the Bank) to the apex of the banking group will not affect the Bank’s financial institution ratings or sukuk ratings. Bank Islam, rated AA3/Stable/P1, is a wholly owned subsidiary of BIMB. Although the effective stake of the Bank’s ultimate majority shareholder – Lembaga Tabung Haji – will reduce to about 48% from 53.1% (8 February 2021) post-restructuring, we expect support from the latter to remain forthcoming, if required.

As part of its regulatory requirements, Bank Negara Malaysia requires financial holding companies such as BIMB to maintain minimum capital and liquidity requirements. Hence, the plan to move away from the financial holding company structure will lower regulatory compliance costs and improve operational efficiencies.  Under the proposed restructuring, Bank Islam will also assume BIMB’s listing status.

While Bank Islam will acquire BIMB’s stockbroking and property investment entities, we expect the Bank’s business profile to remain largely unchanged given the small contribution of these operations. Syarikat Takaful Malaysia Keluarga Berhad, currently 58.9% owned by BIMB, will not be placed under the umbrella of Bank Islam. The impact of the exercise on Bank Islam’s capitalisation will be negligible – the Bank’s common equity tier-1 capital ratio stood at 14.7% as at end-December 2020.

Pending approval from the relevant authorities, the restructuring is targeted to be completed by 3Q 2021.

Ratings of Bank Islam’s sukuk 

Analytical contact

Wong Yin Ching, CFA

(603) 3385 2555

yinching@ram.com.my

Media contact

Padthma Subbiah

(603) 3385 2577

padthma@ram.com.my

Date of release: 19 April 2021

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