Singapore, March 09, 2012 -- The following release represents Moody's Investors Service's summary
credit opinion on CIMB Bank Berhad and includes certain regulatory disclosures
regarding its ratings. This release does not constitute any change
in Moody's ratings or rating rationale for CIMB Bank Berhad and its affiliates.
Moody's current ratings on CIMB Bank Berhad and its affiliates are:
Long Term Issuer (foreign currency) rating of A3
Senior Unsecured MTN Program (foreign currency) ratings of (P)A3
Long Term Bank Deposits (foreign currency) ratings of A3
Bank Financial Strength ratings of C-
Short Term Bank Deposits (foreign currency) ratings of P-1
Shor Term Issuer Rating (foreign currency) ratings of P-1
SBB Capital Corporation
BACKED Preferred Stock Non-cumulative (foreign currency) ratings
of Ba2(hyb)
RATINGS RATIONALE
Moody's assigns a bank financial strength rating ("BFSR")
of C- to CIMB Bank Berhad, which translates into a baseline
credit assessment ("BCA") of Baa2.
The C- BFSR reflects the bank's continued ability to maintain sound
financials, deliver on its strategic objectives and reduce its risk
profile. It takes into account the progress that CIMB Bank has
made since 2007 to integrate its legacy operations, improve its
domestic franchise and expand regionally. At the same time,
it also factors in the challenges CIMB Bank faces in further improving
its funding costs and asset quality in light of intense competition among
banks domestically and renewed volatility in the global economy.
The outlook on the BFSR is stable.
Moody's believes that the probability of systemic support for CIMB Bank
is very high, which results in a two-notch uplift in its
deposit ratings to A3/Prime-1 from its BCA of Baa2.
Rating Outlook
On August 25, 2011, Moody's upgraded CIMB Bank's
BFSR to C- with a stable outlook, from D+. The
upgrade was due to the bank's continued ability to maintain sound
financials, deliver on its strategic objectives and reduce its risk
profile.
In addition, Moody's also upgraded SBB Capital Corporation's
foreign currency preference stock rating to Ba2(hyb), with a stable
outlook, from Ba3(hyb).
The outlook on CIMB Bank's long-term foreign currency deposit
and issuer rating is stable.
What Could Change the Rating - Up
The following factors could result in upward pressure on CIMB Bank's BFSR:
(i) Continued growth of the bank's consumer banking business, while
it also maintains its strength in corporate banking
(ii) Significant reduction in borrower and industry concentrations
(iii) Further reduction in the level of impaired loans to below 3%
of gross loans and below 20% of shareholder's equity and loan loss
reserves
(iv) Risk-adjusted profitability -- measured by net
income as a percentage of average risk-weighted assets --
of above 2%
(v) Continued maintenance of adequate capital buffer against credit losses
with core Tier 1 capital ratio above 10%.
As the bank's foreign currency deposit and debt ratings are currently
capped at the sovereign ceilings of A3, an upgrade of the sovereign
ceiling could result in the upgrade of these ratings.
What Could Change the Rating - Down
The following factors could result in downward pressure on CIMB Bank's
BFSR:
(i) Aggressive organic expansion or acquisitions, resulting in significant
increases in its risk profile
(ii) Keen price competition, resulting in net income falling below
1.5% of average risk-weighted assets
(iii) Significant weakening in the operating environment or looser underwriting
practices, resulting in the impaired loans ratio rising above current
levels
(iv) Material decline in capital buffer from current levels.
The bank's foreign currency deposit and debt ratings may be pressured
downwards if:
(i) The sovereign ceilings are downgraded to below A3; and/or
(ii) Systemic support for the bank is assessed to have fallen.
The movement in SBB's hybrid securities rating is dependent on changes
to CIMB Bank's BFSR and BCA.
The methodologies used in these ratings were Bank Financial Strength Ratings:
Global Methodology published in February 2007, Incorporation of
Joint-Default Analysis into Moody's Bank Ratings: A
Refined Methodology published in March 2007, and Moody's Guidelines
for Rating Bank Hybrid Securities and Subordinated Debt published in November
2009. Please see the Credit Policy page on www.moodys.com
for a copy of these methodologies.
REGULATORY DISCLOSURES
Although these credit ratings have been issued in a non-EU country
which has not been recognized as endorsable at this date, the credit
ratings are deemed "EU qualified by extension" and may still
be used by financial institutions for regulatory purposes until 30 April
2012. Further information on the EU endorsement status and on the
Moody's office that has issued a particular Credit Rating is available
on www.moodys.com.
For ratings issued on a program, series or category/class of debt,
this announcement provides relevant regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides relevant regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides relevant regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
Information sources used to prepare each of the ratings are the following:
parties involved in the ratings, parties not involved in the ratings,
public information, and confidential and proprietary Moody's
Investors Service information.
Moody's considers the quality of information available on the rated
entities, obligations or credits satisfactory for the purposes of
issuing these ratings.
Moody's adopts all necessary measures so that the information it
uses in assigning the ratings is of sufficient quality and from sources
Moody's considers to be reliable including, when appropriate,
independent third-party sources. However, Moody's
is not an auditor and cannot in every instance independently verify or
validate information received in the rating process.
Please see the ratings disclosure page on www.moodys.com
for general disclosure on potential conflicts of interests.
Please see the ratings disclosure page on www.moodys.com
for information on (A) MCO's major shareholders (above 5%)
and for (B) further information regarding certain affiliations that may
exist between directors of MCO and rated entities as well as (C) the names
of entities that hold ratings from MIS that have also publicly reported
to the SEC an ownership interest in MCO of more than 5%.
A member of the board of directors of this rated entity may also be a
member of the board of directors of a shareholder of Moody's Corporation;
however, Moody's has not independently verified this matter.
Please see Moody's Rating Symbols and Definitions on the Rating
Process page on www.moodys.com for further information on
the meaning of each rating category and the definition of default and
recovery.
Please see ratings tab on the issuer/entity page on www.moodys.com
for the last rating action and the rating history. The date on
which some ratings were first released goes back to a time before Moody's
ratings were fully digitized and accurate data may not be available.
Consequently, Moody's provides a date that it believes is
the most reliable and accurate based on the information that is available
to it. Please see the ratings disclosure page on our website www.moodys.com
for further information.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has
issued the rating.
Simon Chen
Analyst
Financial Institutions Group
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Stephen Long
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (65) 6398-8308
Moody's Disclosures on Credit Ratings of CIMB Bank Berhad
