RAM Ratings has assigned a A1/Stable rating to the securities to be issued under CIMB Group Holdings Berhad’s (the Group) proposed Additional Tier-1 Capital Securities Programme of RM10 billion (Proposed AT-1 Programme).

Published on 20 April 2016

RAM Ratings has assigned a A1/Stable rating to the securities to be issued under CIMB Group Holdings Berhad’s (the Group) proposed Additional Tier-1 Capital Securities Programme of RM10 billion (Proposed AT-1 Programme). At the same time, we have reaffirmed CIMB Group’s AA1/Stable/P1 corporate credit ratings (CCRs) as well as all its issue ratings (refer to Table 1). The 1-notch difference between CIMB Group’s long-term CCR and the AAA long-term financial institution ratings of its key subsidiaries reflects its structural subordination as a non-operating holding company and moderate unconsolidated debt levels.

CIMB Group is the fifth-largest banking group in ASEAN (by assets), with an extensive regional footprint and a commendable universal-banking franchise. Nonetheless, the Group’s asset quality and profitability have stayed under pressure, mainly due to the challenges facing its Indonesian operations. On the other hand, CIMB Group’s capitalisation, cost management and provision coverage have improved, thus providing a stronger buffer against further headwinds.

The AT-1 securities issued under CIMB Group’s Proposed AT-1 Programme have a subordinated ranking and coupon payment flexibility. In addition, they possess a loss-absorption feature (through write-offs or conversion into shares), which will be triggered when a non-viability event occurs or if the Group’s common-equity tier-1 (CET-1) capital ratios falls below 5.125%.

Table 1: Issue ratings of CIMB Group

	Rating action	Rating(s)
RM6.0 billion Conventional and Islamic CP/MTN Programme  (2008/2038)	Reaffirmed	AA1/Stable/P1
RM3.0 billion Subordinated Notes Programme (2009/2074)	Reaffirmed	AA3/Stable/-
RM6.0 billion Conventional CP Programme (2015/2022)*	Reaffirmed	-/-/P1
Proposed RM6.0 billion Islamic CP Programme*  (*combined limit of RM6.0 billion)	Reaffirmed	-/-/P1
Proposed Additional Tier-1 Capital Securities Programme of  RM10.0 billion	Reaffirmed	A1/Stable/-
Note: The 2-notch differential between CIMB Group’s long-term corporate credit rating and that of its  Subordinated Notes Programme reflects the subordinated position of the Subordinated Notes and their optional  interest-deferral feature.

Media contact
Lim Yu Cheng, CFA
(603) 7628 1188
yucheng@ram.com.my