RAM Ratings has reaffirmed the AA2/Stable/P1 financial institution ratings of RHB Islamic Bank Berhad (the Bank), and the AA3/Stable rating of the Bank's Subordinated Sukuk Murabahah Programme of up to RM1 billion (2014/2024). The ratings reflect RHB Islamic's strategic importance as the Islamic banking arm of RHB Capital Berhad (the Group). Operating under a universal-banking model, the Bank's operations are highly integrated with those of its parent, RHB Bank Berhad (RHB Bank, rated AA2/Stable/P1); capital and funding support are expected to be forthcoming, if needed.
RHB Islamic is still the fifth-largest Islamic bank in Malaysia, with RM41 billion of assets as at end-September 2015. The Bank's financing base expanded an annualised 16% in 9M FY Dec 2015, mainly driven by its residential property and working-capital financing portfolios. These segments had overtaken automobile financing to become the Bank's 2 largest financing exposures as at end-September 2015. An increase in impaired financing from the Bank's working-capital portfolio had nudged its adjusted gross impaired-financing (GIF) ratio up to 1.7% (end-December 2014: 1.6%). At the same time, RHB Islamic's adjusted credit-cost ratio edged up to an annualised 0.2% in 9M FY Dec 2015 (FY Dec 2014: 0.1%). Both bases of the Bank's GIF and credit-cost ratios had been adjusted to exclude Restricted Profit-Sharing Investment Account (RPSIA) funded financing. Given the Bank's robust expansion in recent years, its asset quality could face some deterioration as its financing portfolio seasons.
While RHB Islamic is still exposed to depositor-concentration risk and its financing-to-deposit ratio (inclusive of RPSIA funds) remained relatively high at 88% as at end-September 2015, the Bank's liquidity profile is expected to be adequately supported by its parent. RHB Islamic's liquidity coverage ratio stood at 90% as at end-June 2015, which was above the minimum required level of 60% by Bank Negara Malaysia, although lower than banking industry average of 119%. The Bank's capitalisation levels remained strong as at end-September 2015; its common-equity tier-1 and total capital ratios came up to 10.9% and 14.5%, respectively.
Media contact
Choong Andrea
(603) 7628 1115
andrea@ram.com.my
© Press Release 2015
