FITCH Ratings has affirmed Malayan Banking Bhd’s (Maybank) long-term foreign- and local-currency issuer default ratings (IDRs) at BBB+ and the viability rating (VR) at bbb+ following Malaysia’s sovereign rating downgrade to BBB+/Stable from A-Negative on Dec 4.
The outlook on Maybank’s IDRs is “stable”, according to the credit rating agency.
Additionally, Fitch has also affirmed Maybank’s senior debt ratings and medium-term note programme at BBB+.
“Maybank’s IDRs are driven by the VR which is underpinned by the moderate risk appetite, the strength of the banking franchise and the leading market position in Malaysia,” Fitch pointed out in a rating commentary.
The credit rating agency nevertheless said it does not expect the sovereign rating downgrade to materially affect these strengths or the bank’s intrinsic credit profile.
“Its core profitability, asset quality and loss absorption and capital buffers have remained consistent with our base case since our last assessment in July 2020,” noted Fitch.
“The negative outlook on the bank’s asset quality and earnings and profitability factor midpoints reflects the potential risk of rising credit costs heading into 2021.”
According to Fitch, it has downgraded Maybank’s funding and liquidity factor midpoint to bbb+ from a- with a stable outlook as the sovereign rating downgrade to bbb+ constrains its assessment of the factor.
“The deposit base was 62% drawn from the home market as of end-September,” justified Fitch. “We are unlikely to view Maybank’s foreign-currency liabilities more favourably than those of the sovereign, thereby constraining the funding and liquidity score at bbb+.”
In the absence of the sovereign rating downgrade, there were no material developments about the bank’s funding or liquidity, and Maybank’s deposit franchise remains the strongest among domestic peers, added the credit rating agency. – Dec 16, 2020
