KUALA LUMPUR: RAM Rating Services Bhd had on Monday, Sept 20 reaffirmed the respective long- and short-term ratings of A2 and P1 for MBF Cards (M'sia) Sdn Bhd's RM600 million commercial papers/medium-term notes (CP/MTN) programme (2007/2014); the long-term rating has a stable outlook.
MBF Cards is a mono-line, non-bank credit-card issuer and merchant acquirer.
It is the largest among the three non-bank-backed credit-card issuers in Malaysia, with an estimated 5% share of the industry's outstanding receivables as at end-March 2010; the company holds a niche position among the low-to-medium-income group.
MBF Cards is also the second-largest merchant acquirer in the country, with an estimated 18%-share of this market.
Despite the economic downturn in 2008/09, MBF Cards' financial profile remained resilient. The company achieved a pre-tax profit of RM87.3 million in FY Dec 2009 (FY Dec 2008: RM84.5 million), supported by lower operating costs following its strategy of reining in growth and reduced credit costs. For 1Q FY Dec 2010, its pre-tax profit came in at RM20.1 million.
MBF Cards' gross non-performing-loan ratio stood at 1.9% as at end-December 2009, slightly better than the banking industry's default rate of 2.2% for credit cards. With the adoption of Financial Reporting Standard 139 effective Jan 1, 2010, the company's gross impaired-loan ratio stood at 2.9% as at end-March 2010 (end-December 2009: 3.3%, retrospectively adjusted).
Moving forward, RAM Ratings expects this ratio to remain stable at about 3%. Meanwhile, MBF Cards' credit costs as a percentage of average gross receivables remained high at 5.2% in FY Dec 2009 (FY Dec 2008: 7.2%). Given its healthy net interest margin, however, it was able to maintain a satisfactory level of profitability.
We note that MBF Cards' lending activities are mainly funded by the CP/MTN, which is subject to rollover and interest-rate risks.
As at end-March 2010, the company had RM144.2 million of unutilised banking lines. MBF Cards is also in the midst of securing a RM120 million 7-year term loan. This, together with the unutilised banking lines are aimed to mitigate the aforesaid risks. At the same time, the company's capitalisation level remained healthy with a capital adequacy ratio of 28.5% (end-December 2009: 27.1%).
MBF Cards is a mono-line, non-bank credit-card issuer and merchant acquirer.
It is the largest among the three non-bank-backed credit-card issuers in Malaysia, with an estimated 5% share of the industry's outstanding receivables as at end-March 2010; the company holds a niche position among the low-to-medium-income group.
MBF Cards is also the second-largest merchant acquirer in the country, with an estimated 18%-share of this market.
Despite the economic downturn in 2008/09, MBF Cards' financial profile remained resilient. The company achieved a pre-tax profit of RM87.3 million in FY Dec 2009 (FY Dec 2008: RM84.5 million), supported by lower operating costs following its strategy of reining in growth and reduced credit costs. For 1Q FY Dec 2010, its pre-tax profit came in at RM20.1 million.
MBF Cards' gross non-performing-loan ratio stood at 1.9% as at end-December 2009, slightly better than the banking industry's default rate of 2.2% for credit cards. With the adoption of Financial Reporting Standard 139 effective Jan 1, 2010, the company's gross impaired-loan ratio stood at 2.9% as at end-March 2010 (end-December 2009: 3.3%, retrospectively adjusted).
Moving forward, RAM Ratings expects this ratio to remain stable at about 3%. Meanwhile, MBF Cards' credit costs as a percentage of average gross receivables remained high at 5.2% in FY Dec 2009 (FY Dec 2008: 7.2%). Given its healthy net interest margin, however, it was able to maintain a satisfactory level of profitability.
We note that MBF Cards' lending activities are mainly funded by the CP/MTN, which is subject to rollover and interest-rate risks.
As at end-March 2010, the company had RM144.2 million of unutilised banking lines. MBF Cards is also in the midst of securing a RM120 million 7-year term loan. This, together with the unutilised banking lines are aimed to mitigate the aforesaid risks. At the same time, the company's capitalisation level remained healthy with a capital adequacy ratio of 28.5% (end-December 2009: 27.1%).
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