RAM Ratings reaffirms HSBC Bank Malaysia's AAA/P1 financial institution ratings

Published on 12 June 2012

RAM Ratings has reaffirmed HSBC Bank Malaysia Berhad’s (“HSBC Malaysia” or “the Bank”) long- and short-term financial institution ratings at AAA and P1, respectively. Concurrently, we have also reaffirmed the AA1 rating of the Bank’s RM1 billion Tier-2 Subordinated Bonds (“Sub Bonds”). Both the long-term ratings have a stable outlook. The 1-notch rating differential between the Bank’s long-term financial institution rating and that of its Sub Bonds reflects the subordinated nature of the latter to the Bank’s senior unsecured obligations. 

The financial institution ratings are premised on HSBC Malaysia’s strong international franchise and established domestic market position, on top of its robust asset quality, favourable funding and liquidity positions, as well as healthy profitability and adequate capitalisation. It is the largest locally incorporated foreign bank in Malaysia by asset size. The Bank is ultimately wholly owned by HSBC Holdings Plc, a global financial institution. Aside from financial support, the Bank is also able to leverage on its parent’s international network, brand name, expertise and best practices. 

In fiscal 2011, HSBC Malaysia’s gross loans expanded 14.7% year-on-year (“y-o-y”) while its share of the industry’s loans remained at around 4.0%. While we note that the Bank’s absolute gross impaired loans (“GILs”) grew 7.1% y-o-y to RM741.4 million as at end-December 2011, its higher loan base has kept the GIL ratio in check at 1.9%, which still compares well against its AAA-rated peers and the industry average. 

In addition, the Bank’s pre-tax profit advanced 32.8% to RM1.4 billion in fiscal 2011 (fiscal 2010: RM1.0 billion), buoyed by broad-based income growth and less loan-loss provisioning. The Bank also remained adequately capitalised as at end-December 2011, with overall and tier-1 risk-weighted capital-adequacy ratios of 13.0% and 9.3% (after proposed dividends), respectively. The financials presented in this press release refer to the consolidated results of HSBC Malaysia and its Islamic banking subsidiary, HSBC Amanah Malaysia Berhad.   

Media contact
Chew Wei Li
(603) 7628 1025
weili@ram.com.my