KUALA LUMPUR: RAM Ratings today reaffirms the AAA/Stable/P1 financial institution ratings (FIRs) of Malayan Banking Bhd (Maybank) and its banking subsidiaries.
Concurrently, the ratings of the entities’ sukuk and debt facilities have also been reaffirmed, the rating agency said in a statement today.
RAM Ratings said the rating action reflected Maybank’s dominant market position as Malaysia’s largest bank, strong funding capabilities and proven management track record.
"Maybank’s diverse income sources continue to generate healthy operating income before impairment charges.
"This, combined with sturdy capitalisation, provides the group with sufficient financial headroom to withstand asset quality pressures over the next 12-18 months,” it said.
The rating agency noted that owing to heightened inflationary pressures, it expects some uptick in Maybank’s gross impaired loan (GIL) ratio over the next few quarters, albeit staying manageable.
"The ratio came in at a controlled 1.8 per cent as at end-June 2022, thanks to recoveries, write-offs and low formation of newly impaired loans which we believe is due to ongoing forbearance for some portfolios, including the Indonesian segment.
"Total management overlay amounted to RM1.7 billion as at the same date. This has strengthened the group’s loan loss coverage, which stood at 139 per cent, including regulatory reserves, as at end-June 2022 compared with end-December 2020’s 117 per cent,” it said.
RAM Ratings said investments to support strategic initiatives under its M25+ Strategy would keep Maybank’s cost-to-income ratio above current levels of 45-46 per cent in the near term.
It said this would limit potential upside to the group’s return on risk-weighted assets (RoRWA) despite gradual net interest margin (NIM) expansion in line with rate rises.
"In the first half of the financial year ending December 2022, NIM and RoRWA climbed to an annualised 2.4 per cent and 2.8 per cent respectively.
"Maybank’s capital position remains a key rating strength, its post-dividend common equity tier-1 capital ratio standing at a sturdy 14.3 per cent as at end-June 2022,” said the rating agency.
Meanwhile, RAM Ratings said Maybank Islamic Bhd’s and Maybank Investment Bank Bhd’s FIRs mirror those of the group, given these core subsidiaries are strategically important to it.
It said Maybank Islamic, the group’s flagship Islamic banking entity, is the largest Islamic bank in Malaysia and is well regarded in the global Islamic finance industry.
"The group’s investment banking and stockbroking arm, Maybank Investment, is a prominent name in the local investment banking scene, consistently ranking among the top three in the domestic equity and debt capital market league tables,” it added. - Bernama