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Ratings

MARC Ratings affirms CIMB Islamic’s financial institution and related issue ratings

8 July 2022

Access the full report here.

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Contacts

Farhan Darham, +603-2717 2945/ farhan@marc.com.my
Haziq Najmuddin, +603-2717 2965/ haziq@marc.com.my
Mohd Izazee Ismail, +603-2717 2947/ izazee@marc.com.my

MARC Ratings has affirmed CIMB Islamic Bank Berhad’s (CIMB Islamic) financial institution (FI) ratings of AAA/MARC-1/Stable and concurrently the sukuk issuance ratings as follows:

  • RM10.0 billion senior Sukuk Wakalah programme (Sukuk Wakalah) at AAAIS/Stable
  • RM5.0 billion Tier 2 Junior Sukuk programme at AA+IS/Stable

CIMB Islamic’s FI ratings are equalised to that of its parent CIMB Bank Berhad based on the former’s strategic importance to its parent in the Islamic banking industry, underpinned by the close operational integration between them. With an asset size of RM125.4 billion as at end-1Q2022, CIMB Islamic is one of the largest domestic Islamic banks. The rating on the Tier 2 Junior Sukuk programme reflects its subordination to the senior Sukuk Wakalah programme, of which its rating has been equalised to the bank’s long-term FI rating.

In tandem with CIMB Group’s strategy in managing asset quality, CIMB Islamic has maintained a prudent stance in regard to growth. As at end-2021, gross financing grew 6.9% y-o-y (end-2020: +8.1% y-o-y) to stand at RM91.8 billion. Gross impaired financing ratio improved to 0.70% as at end-1Q2022 from 1.74% as at end-2020, supported by repayment assistance programmes as well as recoveries and write-offs. While the various measures provide some relief on asset quality, clarity on customers’ repayment capabilities would only become more apparent as the bank winds down the repayment assistance.

Pre-tax profit grew 85.2% y-o-y to RM1.2 billion as at end-2021, underpinned by a larger financing book, broader net financing margin (NFM), as well as lower provisioning expenses and modification charges. The bank’s positive performance continued into 1Q2022 as pre-tax profit was up by 28.6% y-o-y to RM410.3 million and is expected to continue its upside supported by further pick-up in financing demand, moderating provisions and relatively stable NFM.

CIMB Islamic’s capitalisation levels continued to provide ample headroom in cushioning further asset quality weakening. As at end-1Q2022, Common Equity Tier 1 and total capital ratios stood at 14.0% and 17.3%. The bank’s capital position benefits from a Restricted Profit-Sharing Investment Account mechanism with its parent, which provides a substantial lift to the bank’s capital ratios. The bank’s liquidity position is also deemed sound with liquid coverage ratio and net stable funding ratio at 135.4% and 110.2% as at end-1Q2022. We also draw comfort from the readily available parental funding and liquidity support, if required.

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Ratings

MARC Ratings withdraws ratings on Danajamin

17 March 2023

Ratings

MARC Ratings affirms AAIS rating on BEWG’s RM400.0 million Sukuk Wakalah

17 March 2023

Ratings

MARC Ratings upgrades PTP’s Sukuk Murabahah rating to AAIS

14 March 2023

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