Published on 14 April 2015
The ratings reflect Public Islamic’s strategic importance as the Islamic banking arm of Public Bank Berhad (the Group, rated AAA/Stable/P1); capital and funding support is expected to be forthcoming, if needed. The Group operates under a universal-banking model, under which Public Islamic’s activities are closely integrated with those of its parent.
Public Islamic’s asset quality remains robust, a reflection of the Group’s prudent credit culture. The Bank’s gross impaired-financing (GIF) ratio stood at a low 0.9% as at end-December 2014, with a GIF coverage ratio of 138.5%. The Bank’s financing portfolio is concentrated on residential and non-residential property as well as vehicle financing, which collectively accounted for 83% of its total financing as at the same date. Despite this, the Bank’s vehicle financing portfolio contracted slightly in 2014, as the Bank has been rebalancing its financing mix towards a higher proportion of floating-rate facilities. The Bank reported a fixed-to-floating-rate financing ratio of 55:45 as at end-December 2014 - a significant shift from the 80:20 mix as at end-December 2011.
Public Islamic’s financing-to-deposit ratio stood at 83% as at end-December 2014. The Bank faces a relatively high degree of depositor-concentration risk. Nonetheless, funding and liquidity are managed at group level and we expect liquidity support from Public Bank to be readily available should the need arise. Public Islamic issued its first capital securities – a RM500 million subordinated sukuk – in June 2014. The Bank’s common-equity tier-1 and total capital ratios are deemed sound, at a respective 11.0% and 13.9% as at end-December 2014.
Lim Yu Cheng
(603) 7628 1188
yucheng@ram.com.my
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