KUALA LUMPUR (Dec 27): RAM Ratings has reaffirmed Bank Pembangunan Malaysia Bhd's (BPMB) long- and short-term financial institution ratings at AAA and P1, respectively.
At the same time, the long-term rating of the bank's up to RM7 billion Conventional Medium-Term Notes (MTN) and/or Islamic Murabahah MTN Programmes has also been reaffirmed at AAA.
Both long-term ratings have a stable outlook.
In a statement Dec 27, RAM Ratings said BPMB is perceived as being integral to the Federal Government, premised on the bank's strategic role and continued involvement in the socio-economic development of Malaysia.
As a development financial institution, BPMB functions as a key conduit for the Federal Government in developing its mandated infrastructure, high-TECHNOLOGY [] and maritime sectors, it said.
The rating agency said that about 60% of the Bank's funding base was government-guaranteed as at end-March 2011.
'Given BPMB's role in financing nationally strategic projects, it has historically derived substantial financial flexibility from the Federal Government; in FYE 31 December 2008, the latter extended an irrevocable and unconditional guarantee on RM6 billion of the Bank's RM7 billion MTN Programmes.
'This underscores our belief that the entirely government-owned BPMB will receive adequate and timely financial assistance, if required,' it said.
On the flip side, BPMB's asset quality is very weak as some of its credits are embedded with a social-development agenda and are also typically large, particularly with reference to the infrastructure sector, resulting in a high level of customer-concentration risk, said RAM Ratings.
Reflective of the stricter recognition criteria for impaired loans following the adoption of Financial Reporting Standards 139, BPMB's gross impaired-loan ratio stood at a high 12.7% as at end-March 2011, it said.
At the same time, about a third of the bank's performing loans had restructured and rescheduled terms, it said.
'Nonetheless, BPMB enjoys a high level of capitalisation, as reflected by its tier-1 and overall risk-weighted capital-adequacy ratios of a respective 30.6% and 32.4% as at end-March 2011, which acts as a buffer against potential credit losses,' it said.
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At the same time, the long-term rating of the bank's up to RM7 billion Conventional Medium-Term Notes (MTN) and/or Islamic Murabahah MTN Programmes has also been reaffirmed at AAA.
Both long-term ratings have a stable outlook.
In a statement Dec 27, RAM Ratings said BPMB is perceived as being integral to the Federal Government, premised on the bank's strategic role and continued involvement in the socio-economic development of Malaysia.
As a development financial institution, BPMB functions as a key conduit for the Federal Government in developing its mandated infrastructure, high-TECHNOLOGY [] and maritime sectors, it said.
The rating agency said that about 60% of the Bank's funding base was government-guaranteed as at end-March 2011.
'Given BPMB's role in financing nationally strategic projects, it has historically derived substantial financial flexibility from the Federal Government; in FYE 31 December 2008, the latter extended an irrevocable and unconditional guarantee on RM6 billion of the Bank's RM7 billion MTN Programmes.
'This underscores our belief that the entirely government-owned BPMB will receive adequate and timely financial assistance, if required,' it said.
On the flip side, BPMB's asset quality is very weak as some of its credits are embedded with a social-development agenda and are also typically large, particularly with reference to the infrastructure sector, resulting in a high level of customer-concentration risk, said RAM Ratings.
Reflective of the stricter recognition criteria for impaired loans following the adoption of Financial Reporting Standards 139, BPMB's gross impaired-loan ratio stood at a high 12.7% as at end-March 2011, it said.
At the same time, about a third of the bank's performing loans had restructured and rescheduled terms, it said.
'Nonetheless, BPMB enjoys a high level of capitalisation, as reflected by its tier-1 and overall risk-weighted capital-adequacy ratios of a respective 30.6% and 32.4% as at end-March 2011, which acts as a buffer against potential credit losses,' it said.
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