RAM Ratings has reaffirmed the AAA/Stable/P1 financial institution ratings of HSBC Amanah Malaysia Berhad (the Bank).

Published on 30 June 2014

RAM Ratings has reaffirmed the AAA/Stable/P1 financial institution ratings of HSBC Amanah Malaysia Berhad (the Bank). Concurrently, the AAA/Stable rating of the Bank’s RM3 billion Multi-Currency Sukuk Programme (2012/2032) has been reaffirmed. The ratings are anchored by the Bank’s strategic importance as HSBC Bank Malaysia Berhad’s (rated AAA/Stable/P1 by RAM) Islamic banking arm, and also its operating model that is integrated with its parent’s.
HSBC Amanah is the largest locally incorporated foreign Islamic bank in Malaysia, with an established domestic franchise under the Amanah brand. Malaysia is also among the 2 global hubs for HSBC Holdings plc’s Amanah network. Given HSBC Amanah’s strategic importance to HSBC Bank and HSBC Holdings, we believe shareholder support will be forthcoming should the need arise.
After a period of rapid growth during its start-up phase, HSBC Amanah has been expanding more moderately since 2012. Its gross financing expanded 8% y-o-y to RM9.3 billion in fiscal 2013. While the Bank’s gross impaired-financing ratio is in line with the industry’s, its credit-cost ratio remained high due to its still-considerable exposure to unsecured financing (24% of total financing).
Meanwhile, the Bank’s funding profile has improved significantly, underpinned by its rapid branch expansion in recent years that has led to a strong growth in retail deposits. Coupled with slower financing expansion, HSBC Amanah’s financing-to-deposits ratio was more comfortable at 84% as at end-December 2013 (end-December 2012: 101%). At the same time, the Bank’s capitalisation levels were healthy, with respective common-equity tier-1 capital and total capital ratios of 12.3% and 13.1%.

Media contact
Poh Wen Jun
(603) 7628 1038
wenjun@ram.com.my