Published on 21 Dec 2018.
RAM Ratings has reaffirmed Malayan Banking Berhad's (Maybank or the Group) respective ASEAN and Malaysian national-scale financial institution ratings at seaAAA/Stable/seaP1 and AAA/Stable/P1. Concurrently, the ratings of all the Group's debt issues have been reaffirmed.
Maybank is the fourth-largest bank by assets in ASEAN. The reaffirmation of Maybank's ratings reflects the Group's strong ASEAN franchise, solid capitalisation, diversified earnings base and deposit funding strength in Malaysia. As the largest bank in Malaysia, Maybank is systemically important to the country.
While pressure on the Group's asset quality lingers, the credit quality of its loan portfolio is expected to hold up. Its gross impaired loan (GIL) ratio had weakened to 2.7% as at end-September 2018, mainly due to a large collateralised loan in Singapore in 2Q FY Dec 2018. On a positive note, the inflow of impaired oil and gas (O&G) accounts, which had contributed to a rise in the Group's GIL ratio in 2016, has slowed. Maybank recorded a respective 31% and 15% y-o-y reduction in impairment losses in fiscal 2017 and 9M fiscal 2018, translating into an annualised credit cost ratio of 0.4%. This is a notable improvement from the 0.6% seen in fiscal 2016 when Maybank had actively managed the rescheduling and restructuring of borrowers in the O&G and related sectors, and borne the necessary provisions. That said, increasing interest rates and uncertainties arising from the upcoming presidential election in Indonesia, the challenging outlook for the power sector in Singapore and the ongoing trade war between the US and China could introduce some stress to asset quality.
Maybank recorded a pre-tax profit of RM10.0 billion in fiscal 2017 (9M fiscal 2018: RM7.8 billion). Its profit performance is improving on account of easing credit costs and should support internal capital generation. Taking into consideration RM2.8 billion of regulatory reserves as at end-September 2018, the Group's adjusted GIL coverage ratio stood healthy at 99%. Meanwhile, Maybank's common equity tier-1 capital ratio was a solid 13.6% as at the same date.
Table 1: Maybank's issue ratings
| | Rating/Outlook |
| Maybank | |
| RM3.0 billion Subordinated Note Programme (2011/2031) | AA1/Stable |
| RM20.0 billion Subordinated Note Programme (2012/2112) | AA1/Stable |
| RM10.0 billion Additional Tier-1 Capital Securities Programme (2014/2114) | AA3/Stable |
| RM10.0 billion Senior and Subordinated Sukuk Murabahah Programme (2015/2117) - Senior - Subordinated | AAA/Stable AA1/Stable |
| RM10.0 billion Commercial Paper/Medium Term Note Programme (2016/2023) | AAA/Stable/P1 |
Note: Maybank has redeemed and subsequently terminated the RM4.0 billion Innovative Tier-1 Capital
Securities Programme (2008/2073) in September 2018
Analytical contact
Chan Yin Huei
(603) 7628 1180
yinhuei@ram.com.my
Media contact
Padthma Subbiah
(603) 7628 1162
padthma@ram.com.my
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