Thursday, February 14, 2013

RAM reaffirms AmIslamic’s ratings, revises outlook to positive from stable

RAM reaffirms AmIslamic’s ratings, revises outlook to positive from stable

Published on 25 January 2013
RAM Ratings has reaffirmed AmIslamic Bank Berhad’s (“AmIslamic” or “the Bank”) long- and short-term financial institution ratings at AA3 and P1, respectively. Under the universal-banking model, the Bank’s financial institution ratings mirror those of AmBank (M) Berhad (“AmBank”) – AmIslamic’s sister bank and the core entity under AMMB Holdings Berhad (“AMMB” “or the Group”). Concurrently, the Bank’s issue ratings have also been reaffirmed (please refer to Table 1). Meanwhile, the outlook on all the long-term ratings has been revised to positive from stable, following a similar action on AmBank.
Table 1: AmIslamic’s issue ratings
Instrument
Rating action
Rating
Outlook
RM2 billion Subordinated Sukuk Musyarakah Programme
Reaffirmed
A1
Positive
RM3 billion Senior Sukuk Musyarakah Programme
Reaffirmed
AA3
Positive
Note: The 1-notch rating differential between AmIslamic’s AA3 long-term financial institution rating and the A1 rating of its Subordinated Sukuk reflects the subordination of the debt facility to its senior unsecured obligations.

AmIslamic is strategically important as AMMB’s Islamic banking arm. The Bank has an operating model that is highly integrated with that of AmBank, leveraging on the latter’s risk-management systems, infrastructure and extensive branch network. The Group operates in an integrated fashion, with a common senior management team, risk and governance management philosophies and tools. We believe that the Group will readily extend its support to the Bank should the need arise.
In 1H FY Mar 2013, AmIslamic’s financing portfolio expanded 16%, mainly underpinned by the expansion of its automobile and working-capital portfolios. The larger financing base, coupled with a lower level of gross impaired financing (“GIF”), had eased the Bank’s GIF ratio to 1.2% as at end-September 2012 (end-March 2011: 2.1%). Reflecting the Group’s prudent risk and provisioning policy, AmIslamic’s GIF coverage ratio has been strengthening over the years, which stood at a robust 188% as at end-September 2012. For the same period, strong financing growth and better asset quality lifted the Bank’s pre-tax profit to RM158.9 million (1H FY Mar 2012: RM132.4 million).
AmIslamic’s deposit base augmented 13.4% in 1H FY Mar 2013, driven by the strong increase in its current- and savings-account deposits, which constituted 24% of the Bank’s total deposits as at end-September 2012. Although AmIslamic’s financing-to-deposits ratio of 94.8% as at the same date is relatively high, it has issued RM550 million of senior sukuk for more stable and longer-term funding. Following its rapid expansion, the Bank’s tier-1 and overall risk-weighted capital-adequacy ratios had descended to a respective 8.1% and 13.4% as at the same date (end-March 2012: 9.0% and 15.2%), albeit still adequate.
Media contact
Umar Marzuki
(603) 7628 1055
umar@ram.com.my

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.

Related Posts with Thumbnails