Friday, November 25, 2011

RAM Ratings reaffirms RHB Bank's AA2/P1 ratings

KUALA LUMPUR (Nov 25): RAM Ratings has reaffirmed RHB Bank Bhd's respective long- and short-term financial institution ratings at AA2 and P1.

The rating agency has also reaffirmed the AA2 and AA3 ratings of the senior and subordinated notes under the bank's respective RM3 billion Medium-Term Note (MTN) Programme and RM3 billion Multi-Currency MTN Programme; the A1 rating of the securities issued under its RM600 million Hybrid Tier-1 Securities Programme has also been reaffirmed.

RAM Ratings said on Friday that all the long-term ratings had a stable outlook.

The reaffirmed ratings reflect RHB Bank's established market position as Malaysia's fifth-largest domestic bank (by assets) under the universal-banking platform, it said.

The rating agency said that RHB Bank accounts for a respective 9.7% and 8.3% of the Malaysian banking system's loans and deposits.

'Given the group's sharper business focus after its transformation, RHB Bank has been enjoying considerable growth while improving its financial performance.

'Although strategies have been mapped out, RAM Ratings is closely observing the changes in the Bank's senior management line-up,' it said.

RAM Ratings said that with the appointment of Johari Abdul Muid as its RHB Banks'new managing director, it would be monitoring the situation for potential changes to the bank's existing strategies under the new leadership.

It said the bank's gross impaired-loan ratio had gradually eased to 3.9% as at end-June 2011 (end-December 2010: 4.4%), albeit still higher than the industry average of 2.9%.

Meanwhile, its annualised credit-cost ratio was kept stable at 0.5%. In 1H FY Dec 2011, the bank delivered a sound profit performance, it said.

'However, its full-year profitability may be affected by further impairment charges on its holdings of collateralised loan obligations, which amounted to RM298.4 million as at end-June 2011.

'At the same time, its liquid-asset ratio remained at the lower end of the scale at 18.3% while its capitalisation levels were healthy, with respective tier-1 and overall risk-weighted capital-adequacy ratios of 10.3% and 14.0%,' it said.



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