MARC affirms Maybank Islamic's financial institution ratings at AAA/MARC-1

PETALING JAYA: Malaysian Rating Corp Bhd (MARC) has affirmed Maybank Islamic Bhd’s long-term and short-term financial institution (FI) ratings of AAA and MARC-1 respectively with a stable outlook.
“The long-term FI rating of Maybank Islamic has been equalised to that of its parent Malayan Banking Bhd (Maybank) based on the former’s significance as the Islamic banking arm of Maybank group, underpinned by shared infrastructure and resources,” it said in a statement today.
The rating agency noted Maybank Islamic’s leading market position with gross financing and total customer deposits accounting for 33.6% and 25.6% respectively of the total domestic Islamic banking sector as at end-June 2017.
It said that the bank’s market strength stems from the ability to leverage on Maybank’s well-established brand name, infrastructure and distribution network, enabling Maybank Islamic to register strong financing growth, which continues to be supported by the group’s “Islamic first” strategy.
As at end-2016, Maybank Islamic’s gross financing portfolio grew 14.3% year-on-year, higher than the domestic Islamic banking sector’s 11.4% average growth rate in the same period. However, Maybank Islamic’s financing growth slowed down to 3.1% for 1H’2017, in line with the trend in the domestic Islamic banking sector.
Meanwhile, Maybank Islamic’s gross impaired financing (GIF) ratio increased marginally to 1.09%. The bank’s financing loss allowance coverage declined to 89.8% from 92% in 2016, but remains higher than the Islamic banking sector’s average of 83.6%.
MARC said the GIF could come under pressure over the intermediate term, from the seasonal effect following the sharp growth in financing in recent years.
“The bank has a sound capital position as reflected by its CET1 and total capital ratios of 13.4% and 17.8% respectively as at end-June 2017. MARC opines that the bank’s capital position will continue to be supported by internal capital generation and capital savings from investment accounts as well as restricted profit sharing investment accounts,” it said.