Moody's affirms A3 issuer ratings of CIMB and entities


  • Banking
  • Friday, 05 Feb 2021

The rating agency expects successful execution of CIMB's restructuring to improve its profitability and improve its resilience to operating environment changes.

KUALA LUMPUR: Moody's Investors Service has affirmed the A3 issuer ratings of CIMB Bank Bhd (CIMB), CIMB Islamic Bank Bhd (CIMB Islamic) and CIMB Investment Bank (CIMB IB).

In a statement on Friday, Moody's also affirmed CIMB Group Holdings Bhd's (CIMB Group) Baa1 issuer ratings. The outlook on all ratings on the issuers remain stable.

Meanwhile, the outlooks of CIMB's Hong Kong, Singapore, and Labuan branches were changed to “no outlook” from stable as there was no senior debt outstanding from those branches.

Moody's said it had affirmed CIMB's A3 issuer rating with a stable outlook due to the banking group's well-established franchise, improved capitalisation and stable core profitability.

“These strengths largely mitigate risks to CIMB's asset quality and profitability driven by the pandemic-induced economic contraction in key operating markets, ” it said.

The rating agency expects successful execution of CIMB's restructuring to improve its profitability and improve its resilience to operating environment changes.

The group's ongoing restructuring aims to de-risk the business, simplify the operating structure and improve profitability to deliver sustainable financial results.

“However, the benefits will take time to materialise because the group faces tough operation conditions in most markets, ” it said.

Moody's added CIMB's A3 issuer rating was two notches above its baa2 baseline credit assessment (BCA), reflecting Moody's expectation of a very high level of support to the bank from the government (A3 stable), in times of need.

It explained the support expectation was based on CIMB's significant deposit market share of 12% in Malaysia as of the end September 2020 and the 49.8% indirect government stake in CIMB Group through Khazanah Nasional Bhd (A3) (27.2%), the Employees Provident Fund (16%) and Kumpulan Wang Persaraan (6.6%) as of December 2020.

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