KUALA LUMPUR (Dec 2): RAM Ratings has reaffirmed RHB Islamic Bank Bhd's respective long- and short-term financial institution ratings, at AA2 and P1; the long-term rating has a stable outlook.
It said on Friday the reaffirmed ratings mirror those of its parent and the core entity within the RHB CAPITAL BHD [] universal-banking group that is RHB Bank Bhd, which carries AA2/Stable/P1 ratings.
RHB Islamic recorded a robust gross financing growth of 92.2% for the past 18 months up to end-June 2011.
Due to the expanded but still largely unseasoned financing base, the bank's gross impaired-financing (GIF) ratio had eased to 5.3% as at the same date (end-December 2010: 7.0%), albeit still high relative to its rated peers.
RHB Islamic's weak asset quality mainly stems from its working-capital portfolio, which includes sizeable exposures to two troubled Middle-Eastern companies.
As at end-June 2011, the bank's portfolio of impaired financing for residential property - which had a high GIF ratio of 7.1% - represented its second-largest GIF exposure. The strong financing growth had also elevated its financing-to-deposits ratio to 99.7% as at end-June 2011 (end-December 2010: 87.6%).
Underpinned by stable net financing income, coupled with lower financing-loss provisions on the Middle-Eastern exposures, RHB Islamic's pre-tax profit improved slightly in FYE Dec 31, 2010.
The bank's tier-1 and overall risk-weighted capital-adequacy ratios were shored up to approximately a respective 11.6% and 12.9% (end-June 2011: 10.5% and 11.8%) via RM250 million capital injection by its parent on ''Nov 10, 2011.
It said on Friday the reaffirmed ratings mirror those of its parent and the core entity within the RHB CAPITAL BHD [] universal-banking group that is RHB Bank Bhd, which carries AA2/Stable/P1 ratings.
RHB Islamic recorded a robust gross financing growth of 92.2% for the past 18 months up to end-June 2011.
Due to the expanded but still largely unseasoned financing base, the bank's gross impaired-financing (GIF) ratio had eased to 5.3% as at the same date (end-December 2010: 7.0%), albeit still high relative to its rated peers.
RHB Islamic's weak asset quality mainly stems from its working-capital portfolio, which includes sizeable exposures to two troubled Middle-Eastern companies.
As at end-June 2011, the bank's portfolio of impaired financing for residential property - which had a high GIF ratio of 7.1% - represented its second-largest GIF exposure. The strong financing growth had also elevated its financing-to-deposits ratio to 99.7% as at end-June 2011 (end-December 2010: 87.6%).
Underpinned by stable net financing income, coupled with lower financing-loss provisions on the Middle-Eastern exposures, RHB Islamic's pre-tax profit improved slightly in FYE Dec 31, 2010.
The bank's tier-1 and overall risk-weighted capital-adequacy ratios were shored up to approximately a respective 11.6% and 12.9% (end-June 2011: 10.5% and 11.8%) via RM250 million capital injection by its parent on ''Nov 10, 2011.
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