MARC affirms CIMB Islamic's financial institution and related issue ratings with stable outlook

RM10.0 billion senior Sukuk Wakalah programme (Sukuk Wakalah) at AAAIS/Stable

  

MARC has affirmed CIMB Islamic Bank Berhad’s (CIMB Islamic) financial institution (FI) ratings of AAA/MARC-1/stable and concurrently the sukuk issuance ratings as follows:

  • RM10.0 billion senior Sukuk Wakalah programme (Sukuk Wakalah) at AAAIS/Stable
  • RM5.0 billion Tier 2 Junior Sukuk programme at AA+IS/Stable

CIMB Islamic’s FI ratings are equalised to its parent CIMB Bank Berhad’s FI ratings of AAA/MARC-1 based on the former’s strategic importance to its parent in the domestic Islamic banking industry, underpinned by the close operational integration between them. With an asset size of RM121.7 billion as at end-1Q2021, CIMB Islamic is one of the largest domestic Islamic banks. The rating on the Tier 2 Junior Sukuk proramme reflects its subordination to the senior Sukuk Wakalah programme which has been equalised to the bank’s long-term FI rating.

CIMB Islamic bank has been impacted by the pandemic-induced economic conditions, resulting in the bank providing higher impairment charges as a pre-emptive measure and undertaking one-off modification losses. These factors had contributed to a sharp decline in pre-tax profit to RM632.7 million in 2020. Financing growth, which decreased to 8.1% y-o-y to RM85.9 billion of total gross financing last year, will remain muted in 2021 given prevailing weak economic conditions. Its gross impaired loans ratio stood at 1.42% as at end-1Q2021, slightly higher than the industry average of 1.34%. Against this backdrop, the bank is expected to adhere to its cost optimisation stance; it undertook a cost reduction exercise which yielded a decline in operating expenses by 5.1% y-o-y to RM911.1 million in 2020.

CIMB Islamic’s capitalisation as reflected by its Common Equity Tier 1 (CET1) and total capital ratios of 13.3% and 16.8% as at end-2020 provides some buffer to absorb potential asset quality weakening. The bank’s capital position is also supported by the Restricted Profit-Sharing Investment Account of its parent bank. The bank’s liquidity position is deemed to be sound as liquidity coverage ratio of 137.2% and net stable funding ratio of 109.6% stood well above the regulatory requirement.

-Ends-

Contacts:
Haziq Najmuddin, +603-2717 2965/ haziq@marc.com.my;
Farhan Darham, +603-2717 2945/ farhan@marc.com.my;
Mohd Izazee Ismail, +603-2717 2947/ izazee@marc.com.my .   

[This announcement is available on MARC’s corporate website at www.marc.com.my] 

----   DISCLAIMER    ----

This communication is provided by Malaysian Rating Corporation Berhad (MARC) based on information believed by MARC to be accurate and reliable as derived from publicly available sources or provided by the rated entity or its agents. MARC, however, has not independently verified such information and makes no representation as to the accuracy or completeness of such information. Any assignment of a credit rating by MARC is solely to be construed as a statement of its opinion and not a statement of fact. A credit rating is not a recommendation to buy, sell, or hold any security.

© 2021 Malaysian Rating Corporation Berhad

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