RAM Ratings reaffirms CIMB Islamic Bank's AAA/Stable/P1 ratings
RAM Ratings has reaffirmed CIMB Islamic Bank Berhad’s AAA/Stable/P1 financial institution ratings. The bank’s ratings are underscored by its strategic importance as the Islamic banking arm of CIMB Group Holdings Berhad. Through a universal-banking platform, CIMB Islamic is operationally integrated with CIMB Bank Berhad and CIMB Investment Bank Berhad (both rated AAA/Stable/P1). As such, RAM Ratings expects the bank to continue enjoying ready group support, if needed.
CIMB Islamic’s gross financing expanded an annualised 11 per cent in 9M FY Dec 2016 (FY Dec 2015: 11 per cent), driven mainly by financing for the purchase of securities, property financing and financing for working capital. Going forward, the group intends to scale up the bank’s asset growth by prioritising Shari’ah-based financing through its Islamic First strategy. Notably, the bank’s asset quality has held up, with its restricted profit-sharing investment account’s (RPSIA) adjusted gross impaired-financing (GIF) ratio standing at 1.2 per cent as at end-September 2016 (end-December 2015: 1.1 per cent). In addition, its GIF coverage ratio came up to a satisfactory 92.2 per cent. That said, the bank’s asset quality may be pressured given the tougher operating environment.
On balance, CIMB Islamic’s capitalisation has remained strong, with a common-equity tier-1 capital ratio of 13.2 per cent as at end-September 2016. This provides the bank with a sufficient buffer against potential credit losses amid the more challenging operating landscape.