RAM Ratings has reaffirmed RHB Investment Bank Berhad’s (the Bank) AA2/Stable/P1 financial institution ratings (FIRs),

Published on 23 November 2016

RAM Ratings has reaffirmed RHB Investment Bank Berhad’s (the Bank) AA2/Stable/P1 financial institution ratings (FIRs), along with the issue ratings of the Bank’s outstanding debt instruments. The ratings reflect RHB Investment’s strategic role as the investment-banking and stockbroking arm of RHB Bank Berhad (the Group, rated AA2/Stable/P1 by RAM) and the expected support from its parent, if required. Operating under a universal-banking model, RHB Investment is also able to leverage on the Group’s larger balance sheet to underwrite sizeable deals.

RHB Investment has a prominent presence within the domestic investment-banking arena, with an established franchise in both the domestic debt and equity capital markets. The Bank also ranks among the top 5 stockbrokers in Malaysia in terms of trading value and volume.

The Bank only managed to ring up RM115.7 million of pre-tax profit in fiscal 2015 (fiscal 2014: RM345.9 million), constrained by weaker investment-banking and securities-market-related fee income, lower trading income and the absence of a one-off gain arising from the disposal of investments. This is reflective of the Bank’s inherently volatile earnings, which are susceptible to market conditions and investor sentiment. The Bank posted a pre-tax profit of RM70.9 million in 1H FY Dec 2016, translating into an annualised ROA of 1.2% and ROE of 4.5%. As at end-June 2016, the Bank’s capitalisation remained healthy, with respective common-equity tier-1 and total capital ratios of 24.9% and 32.1%.

Table 1: Issue ratings of RHB Investment

Instrument	Rating action	Rating
RM1.0 billion Multi-Currency MTN Programme (2015/2045)	Reaffirmed	Senior notes: AA2/Stable Subordinated notes: AA3/Stable
RM245 million Subordinated Notes (2012/2022)	Reaffirmed	AA3/Stable
Note: The 1-notch differential between RHB Investment’s long-term FIR and the rating of its Subordinated Notes Programme reflects the subordination of the debt facilities to the Bank’s unsecured obligations.

Analytical contact                                        Media contact
Chan Yin Huei                                                Padthma Subbiah
(603) 7628 1180                                            (603) 7628 1162
yinhuei@ram.com.my                                    padthma@ram.com.my