MARC Ratings has affirmed CIMB Islamic Bank Berhad’s (CIMB Islamic) financial institution (FI) ratings of AAA/MARC-1/Stable. Concurrently, the rating agency has also affirmed its ratings on CIMB Islamic’s sukuk issuances 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 and Senior Sukuk Wakalah ratings are equalised to that of parent CIMB Bank Berhad (AAA/Stable). CIMB Islamic is the Islamic financing arm and core subsidiary of the parent. With total assets of RM152.5 billion, CIMB Islamic is one of the largest Islamic banks in the country, with a 14.2% market share by asset size as at end-June 2023.
In 1H2023, CIMB Islamic’s financing book expanded by 14.1% y-o-y to RM112.9 billion, higher than the industry’s pace of growth. Financing was focused on the consumer segment, which accelerated strongly through 2022, growing 10.7% y-o-y as at end-June 2023. During the period, pre-tax profit fell by 17.2% y-o-y to RM551.0 million due to lower net financing income and higher impairment charges. Gross impaired financing ratio increased to 1.69% as at end-June 2023 from 1.29% as at end-2022, due in part to the expiry of relief measures. During the period, financing loss coverage stood at 82.0%.
CIMB Islamic’s capitalisation levels remained adequate, with Common Equity Tier 1, Tier 1 capital and total capital ratios of 13.3%, 13.8% and 16.1% as at end-1H2023. The Restricted Profit-Sharing Investment Account mechanism with CIMB Bank continued to support CIMB Islamic’s capital buffers. CIMB Islamic’s liquidity coverage ratio and net stable funding ratio were also healthy at 133.2% and 107.7% as at end-2022. Readily available parental funding and liquidity backing, if required, further support CIMB Islamic’s sound funding and liquidity profile.