KUALA LUMPUR (Feb 22): RAM Rating Services Bhd has reaffirmed Malayan Banking Berhad’s (“Maybank” or “the Group”) long- and short-term financial institution ratings at AAA and P1, respectively.
It said on Wednesday that at the same time, the respective issue ratings of Maybank and Cekap Mentari Berhad’s (a subsidiary set up to issue subordinated notes) outstanding debt instruments have been reaffirmed.
Concurrently, RAM Ratings has assigned an AA1 rating to Maybank’s proposed up to RM7 billion Subordinated Note Programme.
Below is the statement from RAM Ratings:
The proceeds from the issuance of the subordinated notes under the Programme will be used to fund Maybank’s working capital as well as for general banking and other corporate purposes. The subordinated notes will qualify as tier-2 capital of Maybank subject to compliance with the requirements under Bank Negara Malaysia’s guidelines.
The ratings reflect Maybank’s significant systemic importance, excellent franchise and sound credit fundamentals. With an asset base of RM431 billion as at end-September 2011, the Group is the largest domestic banking group in Malaysia, and commands the largest share of loans and deposits in the local banking system. Maybank’s asset-quality indicators remained healthy as at end-September 2011 – its gross impaired-loan ratio (“GIL”) had improved to 3.2% (post-FRS 139 restated GIL ratio as at end-June 2010: 4.7%). The Bank’s credit-cost ratio remained low at an annualised 0.2% in the 3-month period ended 30 September 2011 (“3M FY Dec 2011”).
During the 3M FY Dec 2011, Maybank recorded a pre-tax profit of RM1.8 billion, which translated into an annualised return on assets of 1.7% and return on equity of 21.1%. In the same span, international operations contributed 26% of Maybank’s pre-tax profit. We expect this segment to account for about 30% of the Group’s pre-tax profits in the next 1–2 years, boosted by earnings from its recent acquisition of Kim Eng Holdings Limited (a Singapore-based regional securities and investment-banking group). The management aspires towards a 40% contribution from Maybank’s international operations by 2015.
As Malaysia’s flagship bank, Maybank’s funding capabilities are unrivalled – the Group has a large base of low-cost current- and savings-account deposits. With faster loan expansion than deposit growth over the last 2 years, Maybank’s loans-to-deposits ratio had risen to about 90% by end-September 2011 (end-June 2010: 87%). Going forward, the management seeks to bring this ratio down to about 85%-90%. Maybank’s loans-to-deposits ratio falls within the norms of its larger domestic banking peers, but higher than the industry average of about 78%.
Maybank’s overall capitalisation levels are viewed to be sound relative to its asset quality and profit performance. As at end-September 2011, the Group’s overall risk-weighted capital-adequacy ratio (“RWCAR”) stood at 14.3% assuming that the full electable portion under the Dividend Reinvestment Plan (“DRP”) was paid in cash; on the other hand, if the full electable portion was reinvested in Maybank’s shares, the overall RWCAR would come up to 14.9%. The take-up rate on Maybank’s finalised DRP for FYE 30 June 2011 came up to 86.1%.
It said on Wednesday that at the same time, the respective issue ratings of Maybank and Cekap Mentari Berhad’s (a subsidiary set up to issue subordinated notes) outstanding debt instruments have been reaffirmed.
Concurrently, RAM Ratings has assigned an AA1 rating to Maybank’s proposed up to RM7 billion Subordinated Note Programme.
Below is the statement from RAM Ratings:
The proceeds from the issuance of the subordinated notes under the Programme will be used to fund Maybank’s working capital as well as for general banking and other corporate purposes. The subordinated notes will qualify as tier-2 capital of Maybank subject to compliance with the requirements under Bank Negara Malaysia’s guidelines.
The ratings reflect Maybank’s significant systemic importance, excellent franchise and sound credit fundamentals. With an asset base of RM431 billion as at end-September 2011, the Group is the largest domestic banking group in Malaysia, and commands the largest share of loans and deposits in the local banking system. Maybank’s asset-quality indicators remained healthy as at end-September 2011 – its gross impaired-loan ratio (“GIL”) had improved to 3.2% (post-FRS 139 restated GIL ratio as at end-June 2010: 4.7%). The Bank’s credit-cost ratio remained low at an annualised 0.2% in the 3-month period ended 30 September 2011 (“3M FY Dec 2011”).
During the 3M FY Dec 2011, Maybank recorded a pre-tax profit of RM1.8 billion, which translated into an annualised return on assets of 1.7% and return on equity of 21.1%. In the same span, international operations contributed 26% of Maybank’s pre-tax profit. We expect this segment to account for about 30% of the Group’s pre-tax profits in the next 1–2 years, boosted by earnings from its recent acquisition of Kim Eng Holdings Limited (a Singapore-based regional securities and investment-banking group). The management aspires towards a 40% contribution from Maybank’s international operations by 2015.
As Malaysia’s flagship bank, Maybank’s funding capabilities are unrivalled – the Group has a large base of low-cost current- and savings-account deposits. With faster loan expansion than deposit growth over the last 2 years, Maybank’s loans-to-deposits ratio had risen to about 90% by end-September 2011 (end-June 2010: 87%). Going forward, the management seeks to bring this ratio down to about 85%-90%. Maybank’s loans-to-deposits ratio falls within the norms of its larger domestic banking peers, but higher than the industry average of about 78%.
Maybank’s overall capitalisation levels are viewed to be sound relative to its asset quality and profit performance. As at end-September 2011, the Group’s overall risk-weighted capital-adequacy ratio (“RWCAR”) stood at 14.3% assuming that the full electable portion under the Dividend Reinvestment Plan (“DRP”) was paid in cash; on the other hand, if the full electable portion was reinvested in Maybank’s shares, the overall RWCAR would come up to 14.9%. The take-up rate on Maybank’s finalised DRP for FYE 30 June 2011 came up to 86.1%.
