RAM Ratings has reaffirmed the AAA(bg)/Stable rating of the securities issued under Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad’s (BTMU Malaysia or the Bank) USD500 million Multi-Currency Sukuk Wakalah Bi Al-Istithmar Programme (the Programme). Concurr

Published on 31 October 2016

RAM Ratings has reaffirmed the AAA(bg)/Stable rating of the securities issued under Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad’s (BTMU Malaysia or the Bank) USD500 million Multi-Currency Sukuk Wakalah Bi Al-Istithmar Programme (the Programme). Concurrently, we have also reaffirmed the AA1/Stable/P1 financial institution ratings of the Bank.

BTMU Malaysia is wholly owned by The Bank of Tokyo-Mitsubishi UFJ, Ltd (BTMU, rated AAA/Stable/P1 by RAM). The enhanced issue rating reflects the irrevocable and unconditional guarantee extended by BTMU on the Sukuk Wakalah issued under the Programme, which enhances the risk profile of the securities.

The Bank and its parent constitute part of the larger Mitsubishi UFJ Financial Group (MUFG), one of the world’s largest banking groups and also Japan’s leading banking group. BTMU Malaysia’s ratings reflect its robust capitalisation, superior loan quality despite a more challenging domestic landscape, and stable income-generating capacity. In addition, the ratings consider the Bank’s relatively small stature and narrow business scope vis-à-vis the larger universal banking groups in Malaysia. BTMU Malaysia’s ratings also benefit from a strong likelihood of support from its parent.

As at end-December 2015, the Bank’s loan book had more than doubled y-o-y (+9.3 billion) to RM17.4 billion. The expansion was supported by placements from its parent under a cash-collateral scheme. Besides providing stable funding for loan expansion, such collateral had also helped the Bank to manage the credit risks on its large exposures. The majority of the Bank’s customers are Malaysian-domiciled entities under established Japanese conglomerates, multi-national companies, top-tier domestic companies and government-linked entities. Despite the tougher operating environment, the Bank’s loan-quality indicators have stayed superior, with a gross impaired-loan ratio of just 0.03% as at end-December 2015. At the same time, the Bank recorded a robust common-equity tier-1 capital ratio of 14.9%.

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