The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the securi ty’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. FEBRUARY 2014 AMISLAMIC BANK BERHAD Financial Institution Ratings Proposed RM3 billion Subordinated Sukuk Murabahah Programme RM2 billion Subordinated Sukuk Musharakah Programme (2011/2026) RM3 billion Senior Sukuk Musharakah Programme (2010/2040)
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AMISLAMIC BANK BERHAD - Bursa · PDF fileAMISLAMIC BANK BERHAD ... Dato’ James Lim Cheng Poh Kok Tuck Cheong Pushparani Rajadurai Mandy Simpson Nigel Denby Ross Neil Foden Datuk
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The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings.
The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings.
CREDIT RATING RATIONALE
FINANCIAL INSTITUTION RATINGS
FEBRUARY 2014
AMISLAMIC BANK BERHAD
– Initial Rating and Rating Update
Summary
RAM Ratings has assigned a final AA3/Stable rating to AmIslamic Bank Berhad’s
(the Bank) proposed RM3 billion Subordinated Sukuk Murabahah Programme
(the Proposed Sukuk Programme). At the same time, we have reaffirmed
AmIslamic’s financial institution ratings at AA2/Stable/P1. The long-term ratings of
the Bank’s RM2 billion Subordinated Sukuk Musharakah Programme
(2011/2026) and RM3 billion Senior Sukuk Musharakah Programme (2010/2040)
have also been reaffirmed at AA3/Stable and AA2/Stable, respectively.
The financial institution ratings of AmIslamic reflect its strategic importance as
(ii) BNM and PIDM publicly announce that a decision has been made by
BNM, PIDM, or any federal or state government in Malaysia, to provide
capital injections or equivalent support to AmIslamic, without which
AmIslamic would cease to be viable.
Upon the occurrence of a non-viability event, BNM shall have the option to
require the entire outstanding principal (or such portion thereof) and all other
amounts owing under the Proposed Sukuk Programme to be written off. This
write-off will not constitute an event of default or trigger cross-default clauses.
AmIslamic Bank Berhad 4
Corporate Information – AmIslamic Bank Berhad
Date of Incorporation:
14 April 1994
Commencement of Business:
1 May 2006 (as an Islamic banking subsidiary)
Major Shareholders (as at 30 September 2013):
AMMB Holdings Berhad
100%
Directors:
Tan Sri Azman Hashim (Chairman) Tun Mohammed Hanif Omar Tan Sri Datuk Clifford Francis Herbert Dato’ Larry Gan Nyap Liou @ Gan Nyap Liow Loh Chen Peng Chin Yuen Yin Cheah Tek Kuang Ashok Ramamurthy
Auditor:
Ernst & Young
Listing:
Not Listed
Key Management:
Ashok Ramamurthy Datuk Mohamed Azmi Mahmood Paul Lewis Dato’ James Lim Cheng Poh Kok Tuck Cheong Pushparani Rajadurai Mandy Simpson Nigel Denby Ross Neil Foden Datuk Mahdi Murad Tan Chin Aun
Group Managing Director Deputy Group Managing Director Managing Director, Retail Banking Managing Director, Business Banking Managing Director, Investment Banking Managing Director, Corporate & Institutional Banking Chief Financial Officer Chief Risk Officer Chief Operations Officer Chief Executive Officer of AmIslamic Bank Berhad Senior General Manager, Transaction Banking
Capital History:
Year Remarks Amount (RM million)
Cumulative Total (RM million)
2005 Balance brought forward (from the former commercial bank)
- 761.72
2005 Capital-reduction exercise pursuant to the business merger of AmBank (M) Berhad (formerly known as AmFinance Berhad) and AmIslamic Bank Berhad (formerly known as AmBank Berhad)
(608.68) 153.04
2006 Issuance of new ordinary shares 250.00 403.04
2011 Issuance of new ordinary shares 25.00 428.04
2013 Issuance of new ordinary share 34.88 462.92
AmIslamic Bank Berhad 5
restated unaudited
STATEMENT OF FINANCIAL POSITION (RM million) 31-Mar-10 31-Mar-11 31-Mar-12 31-Mar-13 30-Sep-13
Net Financing Margin 4.18% 3.59% 3.02% 2.66% 2.42% *
Non-Financing Income to Gross Income 7.59% 10.14% 12.02% 9.61% 9.85%
Cost to Income 37.16% 37.96% 39.41% 43.06% 42.38%
Return on Assets 2.28% 1.12% 1.31% 1.14% 1.05% *
Return on Risk-Weighted Assets 3.14% 1.48% 1.72% 1.61% 1.53% *
Return on Equity 27.20% 15.29% 19.24% 17.28% 15.67% *
ASSET QUALITY (%)
Gross Impaired Financing Ratio 1.48% 2.09% 1.25% 1.19% 1.49%
Net Newly Classified Impaired Financing Ratio 0.68% 1.58% 0.86% 1.02% 1.52% *
Financing Credit Cost Ratio 0.78% 1.79% 0.95% 0.66% 0.65% *
Impairment Charge Ratio 0.75% 1.59% 0.84% 0.56% 0.54% *
Gross Impaired Financing Coverage Ratio 136.96% 157.44% 200.54% 188.07% 152.65%
LIQUIDITY & FUNDING (%)
Liquid Asset Ratio 32.58% 35.72% 23.18% 24.54% 26.00%
Interbank Deposits to Total Profit Bearing Funds 9.48% 7.91% 6.28% 8.33% 10.36%
Customer Deposits to Total Profit Bearing Funds 85.45% 82.22% 77.52% 77.21% 77.48%
CASA Deposits to Total Deposits 15.41% 16.66% 24.31% 28.61% 23.98%
Financing to Deposits Ratio 87.76% 86.87% 101.20% 94.73% 94.93%
CAPITALISATION (%)
Internal Rate of Capital Generation 4.68% 8.53% 14.07% 13.44% 6.00%
Common Equity T ier-1 Capital Ratio NA NA NA 9.47% ^ 9.98% ^
Tier-1 Capital Ratio 10.53% 8.02% 8.99% 9.47% ^ 9.98% ^
Total Capital Ratio 15.29% 12.53% 14.99% 14.62% ^ 15.14% ^
Notes:
* annualised
NA = Not Available / Not Applicable
FY Mar 2012 figures have been restated as a result of retrospective application of MFRS 139
^ The capital components of these ratios are computed in accordance with Bank Negara Malaysia's latest Capital Adequacy Framework , based on Basel III standards
FINANCIAL RATIOS AmIslamic Bank Berhad – Bank
AmIslamic Bank Berhad 8
KEY RATIOS FORMULAE
PROFITABILITY (%)
Net Financing Margin Net Finance Income / Average Profit Earning Assets
Non-Financing Income to Gross Income Non-Finance Income / Gross Income
Cost to Income (Personnel Expenses + Other Operating Expenses) / Gross Income
Return on Assets Pre-Tax Profit/(Loss) / Average Total Assets
Return on Risk-Weighted Assets Pre-Tax Profit/(Loss) / Average Total Risk-Weighted Assets
Return on Equity Pre-Tax Profit/(Loss) / Average Total Equity
Non-Finance Income Fee Income + Investment Income + Other Income
+ Securities Sold Under Repurchase Agreements + Total Borrowings
Total Borrowings Senior Islamic Securities + Subordinated Islamic Securities
Hybrid Capital Islamic Securities + Other Borrowings
CAPITALISATION (%)
Internal Rate of Capital Generation (Net Profit/(Loss) - Dividends) / Average Total Equity
Common Equity T ier-1 Capital Ratio Common Equity T ier-1 Capital / Total Risk-Weighted Assets
T ier-1 Capital Ratio T ier-1 Capital / Total Risk-Weighted Assets
Total Capital Ratio Total Capital / Total Risk-Weighted Assets
Common Equity T ier-1 Capital Ordinary Shares + Share Premium + Retained Earnings + Non-Controlling Interests + Applicable Reserves
± Applicable Regulatory Adjustments
T ier-1 Capital Common Equity T ier-1 Capital + Additional T ier-1 Capital Instruments ± Applicable Regulatory Adjustments
T ier-2 Capital T ier-2 Capital Instruments ± Applicable Regulatory Adjustments
Total Capital T ier-1 Capital + T ier-2 Capital
FINANCIAL RATIOS AmIslamic Bank Berhad – Bank
AmIslamic Bank Berhad 9
CREDIT RATING DEFINITIONS
Financial Institution Ratings
Long-Term Ratings
AAA
AA
A
BBB
BB
B
C
D
Short-Term Ratings
P1
P2
P3
NP
D
A financial institution rated AAA has a superior capacity to meet its financial obligations. This is the highest long-term FIRassigned by RAM Ratings.
A financial institution rated AA has a strong capacity to meet its financial obligations. The financial institution is resilientagainst adverse changes in circumstances, economic conditions and/or operating environments.
A financial institution rated A has an adequate capacity to meet its financial obligations. The financial institution is moresusceptible to adverse changes in circumstances, economic conditions and/or operating environments than those in
higher-rated categories.
A financial institution rated BBB has a moderate capacity to meet its financial obligations. The financial institution is morelikely to be weakened by adverse changes in circumstances, economic conditions and/or operating environments than
those in higher-rated categories. This is the lowest investment-grade category.
A financial institution rated BB has a weak capacity to meet its financial obligations. The financial institution is highlyvulnerable to adverse changes in circumstances, economic conditions and/or operating environments.
A financial institution rated B has a very weak capacity to meet its financial obligations. The financial institution has alimited ability to withstand adverse changes in circumstances, economic conditions and/oroperating environments.
A financial institution rated C has a high likelihood of defaulting on its financial obligations. The financial institution ishighly dependent on favourable changes in circumstances, economic conditions and/or operating environments, the lack
of which would likely result in it defaultingon its financial obligations.
A financial institution rated D is currently in default on either all or a substantial portion of its financial obligations, whetheror not formally declared. The D rating may also reflect the filing of bankruptcy and/or other actions pertaining to the
financial institution that could jeopardise the payment of financial obligations.
A financial institution rated P1 has a strong capacity to meet its short-term financial obligations. This is the highest short-term FIR assigned by RAM Ratings.
A financial institution rated P2 has an adequate capacity to meet its short-term financial obligations. The financialinstitution is more susceptible to the effectsof deteriorating circumstances than thosein the highest-rated category.
A financial institution rated P3 has a moderate capacity to meet its short-term financial obligations. The financialinstitution is more likely to be weakened by the effects of deteriorating circumstances than those in higher-rated
categories. This is the lowest investment-grade category.
A financial institution rated NP has a doubtful capacity to meet its short-term financial obligations. The financial institutionfaces major uncertainties that could compromise its capacity for payment of financial obligations.
A financial institution rated D is currently in default on either all or a substantial portion of its financial obligations, whetheror not formally declared. The D rating may also reflect the filing of bankruptcy and/or other actions pertaining to the
financial institution that could jeopardise the payment of financial obligations.
For long-term ratings, RAM Ratings applies subscripts 1, 2 or 3 in each rating category from AA to C. The subscript 1 indicates that thefinancial institution ranks at the higher end of its generic rating category; the subscript 2 indicates a mid-ranking; and the subscript 3
indicates that the financial institution ranks at the lower end of its generic rating category.
A Financial Institution Rating ("FIR") is RAM Ratings' current opinion on the overall capacity of a financial institution to meetits financial obligations. The opinion is not specific to any particular financial obligation, as it does not take into account theexpressed terms and conditions of any specific financial obligation.
AmIslamic Bank Berhad 10
CREDIT RATING DEFINITIONS
Issue Ratings - Debt-Based Sukuk
Long-Term Ratings
AAA
AA
A
BBB
BB
B
C
D
Short-Term Ratings
P1
P2
P3
NP
D
A sukuk rated AAA has superior safety for payment of financial obligations. This is the highest long-term Issue Ratingassigned by RAM Ratings to a debt-based sukuk.
A sukuk rated AA has high safety for payment of financial obligations. The issuer is resilient against adverse changes incircumstances, economic conditions and/or operating environments.
A sukuk rated A has adequate safety for payment of financial obligations. The issuer is more susceptible to adversechanges in circumstances, economic conditions and/or operating environments than those in higher-rated categories.
A sukuk rated BBB has moderate safety for payment of financial obligations. The issuer is more likely to be weakened byadverse changes in circumstances, economic conditions and/or operating environments than those in higher-rated
categories. This is the lowest investment-grade category.
A sukuk rated BB has low safety for payment of financial obligations. The issuer is highly vulnerable to adverse changesin circumstances, economic conditions and/oroperating environments.
A sukuk rated B has very low safety for payment of financial obligations. The issuer has a limited ability to withstandadverse changes in circumstances, economic conditions and/oroperating environments.
A sukuk rated C has a high likelihood of default. The issuer is highly dependent on favourable changes in circumstances,economic conditions and/or operating environments, the lack of which would likely result in it defaulting on a particular
sukuk.
A sukuk rated D is either currently in default or faces imminent default on its financial obligations, whether or not formallydeclared. The D rating may also reflect a distressed exchange, the filing of bankruptcy and/or other actions pertaining to
the issuer that could jeopardise thepayment of a particular sukuk.
A sukuk rated P1 has high safety for payment of financial obligations in the short term. This is the highest short-termIssue Rating assigned by RAM Ratings to a debt-based sukuk.
A sukuk rated P2 has adequate safety for payment of financial obligations in the short term. The issuer is moresusceptible to the effects of deteriorating circumstances than those in the highest-rated category.
A sukuk rated P3 has moderate safety for payment of financial obligations in the short term. The issuer is more likely tobe weakened by the effects of deteriorating circumstances than those in higher-rated categories. This is the lowest
investment-grade category.
A sukuk rated NP has doubtful safety for payment of financial obligations in the short term. The issuer faces majoruncertainties that could compromise its capacity for payment of a particularsukuk.
A sukuk rated D is either currently in default or faces imminent default on its financial obligations, whether or not formallydeclared. The D rating may also reflect a distressed exchange, the filing of bankruptcy and/or other actions pertaining to
the issuer that could jeopardise thepayment of a particular sukuk.
For long-term ratings, RAM Ratings applies subscripts 1, 2 or 3 in each rating category from AA to C. The subscript 1 indicates that theissue ranks at the higher end of its generic rating category; the subscript 2 indicates a mid-ranking; and the subscript 3 indicates that the
issue ranks at the lower end of its generic rating category. In addition, RAM Ratings applies the suffixes (bg) or (s) to ratings which havebeen enhanced by a bank guarantee or other supports, respectively.
An Issue Rating for a debt-based sukuk is RAM Ratings' current opinion on the creditworthiness of a particular debt-basedsukuk. It reflects the overall capacity and willingness of an issuer to meet the financial obligations on a particular debt-based sukuk on a full and timely basis, taking into account its expressed terms and conditions. RAM Ratings’ sukuk ratingsare, however, not a measure of compliance with Shariah principles or the role, formation, practices, legitimacy andsoundness of the Shariah advisors’ recommendations and decisions.
AmIslamic Bank Berhad 11
CREDIT RATING DEFINITIONS
Issue Ratings - Partnership-Based Sukuk
Long-Term Ratings
AAA
AA
A
BBB
BB
B
C
D
Short-Term Ratings
P1
P2
P3
NP
D
A sukuk rated AAA has superior safety for payment of capital and expected returns. This is the highest long-term IssueRating assigned by RAM Ratings to a partnership-based sukuk.
A sukuk rated AA has high safety for payment of capital and expected returns. The issuer is resilient against adversechanges in circumstances, economic conditions and/or operating environments.
A sukuk rated A has adequate safety for payment of capital and expected returns. The issuer is more susceptible toadverse changes in circumstances, economic conditions and/or operating environments than those in higher-rated
categories.
A sukuk rated BBB has moderate safety for payment of capital and expected returns. The issuer is more likely to beweakened by adverse changes in circumstances, economic conditions and/or operating environments than those in
higher-rated categories. This is the lowest investment-grade category.
A sukuk rated BB has low safety for payment of capital and expected returns. The issuer is highly vulnerable to adversechanges in circumstances, economic conditions and/or operating environments.
A sukuk rated B has very low safety for payment of capital and expected returns. The issuer has a limited ability towithstand adverse changes in circumstances, economic conditions and/oroperating environments.
A sukuk rated C has a high likelihood of not meeting the payment of capital and expected returns. The issuer is highlydependent on favourable changes in circumstances, economic conditions and/or operating environments, the lack of
which would likely result in it not fulfilling the terms of the investment contract.
A sukuk rated D is either currently not meeting or will not meet the payment of capital and expected returns. The D ratingmay also reflect a distressed exchange, the filing of bankruptcy and/or other actions pertaining to the issuer that could
jeopardise the fulfilment of the investment contract's terms.
A sukuk rated P1 has high safety for payment of capital and expected returns in the short term. This is the highest short-term Issue Rating assigned by RAM Ratings a partnership-based sukuk.
A sukuk rated P2 has adequate safety for payment of capital and expected returns in the short term. The issuer is moresusceptible to the effects of deteriorating circumstances than those in the highest-rated category.
A sukuk rated P3 has moderate safety for payment of capital and expected returns in the short term. The issuer is morelikely to be weakened by the effects of deteriorating circumstances than those in higher-rated categories. This is the
lowest investment-grade category.
A sukuk rated NP has doubtful safety for payment of capital and expected returns in the short term. The issuer facesmajor uncertainties that could compromise its capacity for fulfiling the terms of the investment contract.
A sukuk rated D is either currently not meeting or will not meet the payment of capital and expected returns. The D ratingmay also reflect a distressed exchange, the filing of bankruptcy and/or other actions pertaining to the issuer that could
jeopardise the fulfilment of the investment contract's terms.
For long-term ratings, RAM Ratings applies subscripts 1, 2 or 3 in each rating category from AA to C. The subscript 1 indicates that theissue ranks at the higher end of its generic rating category; the subscript 2 indicates a mid-ranking; and the subscript 3 indicates that the
issue ranks at the lower end of its generic rating category. In addition, RAM Ratings applies the suffixes (bg) or (s) to ratings which havebeen enhanced by a bank guarantee or other supports, respectively.
An Issue Rating for a partnership-based sukuk is RAM Ratings' current opinion on the creditworthiness of a particularpartnership-based sukuk. It reflects the overall capacity and willingness of an issuer to meet the payment of capital andexpected returns on a full and timely basis, taking into account the expressed terms and conditions of the investmentcontract. RAM Ratings’ sukuk ratings are, however, not a measure of compliance with Shariah principles or the role,formation,practices, legitimacy and soundness of the Shariah advisors’ recommendations and decisions.
AmIslamic Bank Berhad 12
RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes
third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has
no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the
objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM
Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.
RAM Ratings, its rating committee members and the analysts involved in the rating exercise have not encountered and/or are not aware of any
conflict of interest relating to the rating exercise. RAM Ratings will adequately disclose all related information in the report if there are such
instances.
Published by RAM Rating Services Berhad
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