Singapore, August 01, 2018 -- Moody's Investors Service has today assigned Counterparty Risk Ratings
(CRRs) to eight rated Malaysian banks and their branches, as applicable.
The eight Malaysian banks comprise: 1) CIMB Bank Berhad, 2)
CIMB Islamic Bank Berhad, 3) HSBC Bank Malaysia Berhad (HSBCM),
4) Hong Leong Bank Berhad, 5) Malayan Banking Berhad (Maybank),
6) Public Bank Berhad, 7) RHB Bank Berhad, and 8) Standard
Chartered Bank Malaysia Berhad (SCBM).
Moody's Counterparty Risk Ratings are opinions of the ability of
entities to honor the uncollateralized portion of non-debt counterparty
financial liabilities (CRR liabilities) and also reflect the expected
financial losses in the event such liabilities are not honored.
CRR liabilities typically relate to transactions with unrelated parties.
Examples of CRR liabilities include the uncollateralized portion of payables
arising from derivatives transactions and the uncollateralized portion
of liabilities under sale and repurchase agreements. CRRs are not
applicable to funding commitments or other obligations associated with
covered bonds, letters of credit, guarantees, servicer
and trustee obligations, and other similar obligations that arise
from a bank performing its essential operating functions.
For a full list of assigned CRRs, please refer to the end of this
press release.
RATINGS RATIONALE
The CRRs assigned to the eight banks are in line with the Counterparty
Risk Assessments (CR Assessments) already assigned to the same banks.
Because Moody's considers that Malaysia (A3 stable) does not have
an operational resolution regime, in assigning CRRs to the Malaysian
banks subject to this rating action, Moody's applies its basic
Loss Given Failure (LGF) approach. Moody's basic LGF analysis
positions CRRs in line with the banks' CR Assessments, which
are typically one notch above their adjusted Baseline Credit Assessments
(BCA), prior to government support.
The CRRs also incorporate zero to one notch of uplift, due to Moody's
assessment of government support for the eight banks in times of need,
based on the banks' systemic importance in Malaysia. The
uplifts are in line with those applied to the CR Assessments.
OUTLOOK
CRRs do not carry outlooks.
FACTORS THAT COULD LEAD TO AN UPGRADE/DOWNGRADE
CIMB Bank -- WHAT COULD CHANGE THE RATING UP
Moody's could upgrade CIMB Bank's A3 ratings if Moody's upgrades
Malaysia's A3 sovereign rating, and only if the bank's credit metrics
remain robust.
Moody's could upgrade CIMB Bank's baa2 BCA, if the bank's
robust asset quality and capital improve further or the operating conditions
of its key markets improve and support the growth prospects and credit
fundamentals of the bank.
CIMB Bank -- WHAT COULD CHANGE THE RATING DOWN
Moody's could downgrade CIMB Bank's A3 ratings if Moody's
downgrades Malaysia's A3 sovereign rating.
Moody's could downgrade CIMB Bank's BCA if there is: (1) a
significant decline in its loss-absorption buffers; (2) a
material deterioration in its asset quality and profitability metrics;
(3) a continued increase in CIMB Group Holdings Berhad 's (Baa1 stable)
leverage levels; and (4) an aggressive credit expansion or acquisitions
that lead to significant increases in the bank's risk profile.
CIMB Islamic -- WHAT COULD CHANGE THE RATING UP
Moody's could upgrade CIMB Islamic's A3 ratings if Moody's
upgrades Malaysia's A3 sovereign bond rating, and only if the bank's
credit metrics remain robust.
Moody's could revise upwards CIMB Islamic's baa2 BCA if: (1)
leverage — as represented by a multiple of total assets over equity
— declines significantly to below 15x, or (2) the bank's other
credit metrics remain robust.
CIMB Islamic -- WHAT COULD CHANGE THE RATING DOWN
Moody's could downgrade CIMB Islamic's A3 ratings if Moody's
downgrades Malaysia's sovereign bond rating and the following factors
occur: (1) CIMB Islamic's credit fundamentals deteriorate to such
an extent that Moody's sees CIMB Islamic becoming less strategically
important to CIMB Bank; or (2) the bank's standalone credit strength
deteriorates and Moody's revises its BCA downward.
HSBCM -- WHAT COULD CHANGE THE RATING UP
HSBCM's ratings incorporate an uplift for affiliate support. Any
positive or negative pressure on its parent's a1 adjusted BCA will therefore
likely have a similar impact on the bank's own ratings.
Because HSBCM's A3 foreign currency deposit rating is positioned
at the same level as Malaysia's A3 sovereign rating, Moody's
will not upgrade the rating unless Moody's upgrades the sovereign
rating.
Moody's will also not upgrade the bank's A1 local currency deposit
rating because the rating is at the same A1 rating level as the local
currency deposit ceiling for Malaysia.
HSBCM -- WHAT COULD CHANGE THE RATING DOWN
HSBCM's ratings could be negatively affected by a material weakening in
its standalone credit profile, resulting in a multinotch downgrade
of its BCA.
Hong Leong Bank -- WHAT COULD CHANGE THE RATING UP
Because Hong Leong Bank's A3 long-term deposit ratings are
at the same rating level as Malaysia's A3 sovereign rating, Moody's
will not upgrade the bank's ratings unless Moody's upgrades
the sovereign rating.
Moody's could upgrade the bank's baa1 BCA if the bank materially
improves its asset quality and profitability metrics.
Hong Leong Bank -- WHAT COULD CHANGE THE RATING DOWN
Moody's could downgrade Hong Leong Bank's A3 ratings if:
(1) Moody's downgrades Malaysia's A3 government rating;
or (2) Moody's downgrades the bank's baa1 BCA by multiple
notches, due to a significant increase in its problem loans ratio,
a material weakening of its capital buffer, and/or a deterioration
in its liquidity and funding profiles.
Maybank -- WHAT COULD CHANGE THE RATING UP
Moody's could upgrade Maybank's A3 deposit ratings if Moody's
upgrades Malaysia's A3 sovereign rating.
Because Maybank's a3 BCA is at the same rating level as the sovereign
rating, Moody's will unlikely raise the bank's BCA in
the absence of a sovereign upgrade.
Maybank -- WHAT COULD CHANGE THE RATING DOWN
Moody's could downgrade Maybank's BCA of a3 if the bank's
asset quality, capital adequacy, profitability, liquidity
or funding structure deteriorate materially.
Moody's could also downgrade the BCA if the bank materially increases
its exposure to borrowers in countries that Moody's considers riskier
than Malaysia. Such countries would typically have a Macro Profile
lower than Malaysia's Strong- Macro Profile.
Public Bank -- WHAT COULD CHANGE THE RATING UP
Moody's will upgrade Public Bank's A3 deposit ratings if Moody's
upgrades the Malaysian government bond rating, and only if the bank's
standalone credit metrics remain robust.
Because the bank's a3 BCA is positioned at the same level as that of the
Malaysian government bond rating, Moody's will not raise its
BCA in the absence of a sovereign upgrade.
Public Bank -- WHAT COULD CHANGE THE RATING DOWN
Moody's could downgrade Public Bank's deposit ratings if:
(1) Moody's downgrades Malaysia's sovereign bond rating;
or (2) the bank's standalone credit profile deteriorates significantly,
resulting in a multinotch downgrade of its BCA.
RHB Bank -- WHAT COULD CHANGE THE RATING UP
Moody's could upgrade RHB Bank's A3 deposit ratings if both
the following conditions are met: (1) Moody's upgrades Malaysia's
A3 sovereign rating; and (2) the bank demonstrates sustained improvements
in its standalone creditworthiness, such as an improved funding
profile, a materially lower risk appetite and an improved capital
buffer.
RHB Bank -- WHAT COULD CHANGE THE RATING DOWN
Moody's could downgrade RHB Bank's ratings and baa2 BCA if
Moody's downgrades Malaysia's sovereign rating, and/or the
bank's credit quality falls sharply, pushing up materially its impaired
loan ratio and decreasing its impaired loan coverage. Additionally,
a substantial decrease in the core capital buffer will be negative for
the ratings.
SCBM -- WHAT COULD CHANGE THE RATING UP
Moody's could upgrade SCBM's baa2 BCA if the bank's asset
quality improves significantly, while other credit fundamentals
remain stable.
And, Moody's could upgrade the bank's Baa1 deposit ratings,
if Moody's upgrades the baa1 BCA of its parent bank, Standard
Chartered Bank (SCB, A1 stable, baa1), leading Moody's
to incorporate a higher notching uplift due to affiliate support.
SCBM -- WHAT COULD CHANGE THE RATING DOWN
Moody's could downgrade SCBM's BCA and deposit ratings if the bank's
asset quality deteriorates materially, leading to a substantial
weakening of its loss-absorption buffers.
An erosion of the bank's liquidity position would also be negative for
the BCA.
And, Moody's could downgrade the deposit ratings if Moody's
downgrades the baa1 Adjusted BCA of SCB.
The following ratings were assigned:
CIMB Bank Berhad
Local currency long-term Counterparty Risk Rating of A3
Local currency short-term Counterparty Risk Rating of P-2
Foreign currency long-term Counterparty Risk Rating of A3
Foreign currency short-term Counterparty Risk Rating of P-2
CIMB Bank Berhad, Labuan Branch
Local currency long-term Counterparty Risk Rating of A3
Local currency short-term Counterparty Risk Rating of P-2
Foreign currency long-term Counterparty Risk Rating of A3
Foreign currency short-term Counterparty Risk Rating of P-2
CIMB Bank Berhad, Singapore Branch
Local currency long-term Counterparty Risk Rating of A3
Local currency short-term Counterparty Risk Rating of P-2
Foreign currency long-term Counterparty Risk Rating of A3
Foreign currency short-term Counterparty Risk Rating of P-2
CIMB Islamic Bank Berhad
Local currency long-term Counterparty Risk Rating of A3
Local currency short-term Counterparty Risk Rating of P-2
Foreign currency long-term Counterparty Risk Rating of A3
Foreign currency short-term Counterparty Risk Rating of P-2
HSBC Bank Malaysia Berhad
Local currency long-term Counterparty Risk Rating of A1
Local currency short-term Counterparty Risk Rating of P-1
Foreign currency long-term Counterparty Risk Rating of A1
Foreign currency short-term Counterparty Risk Rating of P-1
Hong Leong Bank Berhad
Local currency long-term Counterparty Risk Rating of A3
Local currency short-term Counterparty Risk Rating of P-2
Foreign currency long-term Counterparty Risk Rating of A3
Foreign currency short-term Counterparty Risk Rating of P-2
Malayan Banking Berhad
Local currency long-term Counterparty Risk Rating of A2
Local currency short-term Counterparty Risk Rating of P-1
Foreign currency long-term Counterparty Risk Rating of A2
Foreign currency short-term Counterparty Risk Rating of P-1
Malayan Banking Berhad, Hong Kong Branch
Local currency long-term Counterparty Risk Rating of A2
Local currency short-term Counterparty Risk Rating of P-1
Foreign currency long-term Counterparty Risk Rating of A2
Foreign currency short-term Counterparty Risk Rating of P-1
Malayan Banking Berhad, Singapore Branch
Local currency long-term Counterparty Risk Rating of A2
Local currency short-term Counterparty Risk Rating of P-1
Foreign currency long-term Counterparty Risk Rating of A2
Foreign currency short-term Counterparty Risk Rating of P-1
Public Bank Berhad
Local currency long-term Counterparty Risk Rating of A2
Local currency short-term Counterparty Risk Rating of P-1
Foreign currency long-term Counterparty Risk Rating of A2
Foreign currency short-term Counterparty Risk Rating of P-1
RHB Bank Berhad
Local currency long-term Counterparty Risk Rating of A3
Local currency short-term Counterparty Risk Rating of P-2
Foreign currency long-term Counterparty Risk Rating of A3
Foreign currency short-term Counterparty Risk Rating of P-2
Standard Chartered Bank Malaysia Berhad
Local currency long-term Counterparty Risk Rating of A3
Local currency short-term Counterparty Risk Rating of P-2
Foreign currency long-term Counterparty Risk Rating of A3
Foreign currency short-term Counterparty Risk Rating of P-2
The principal methodology used in these ratings was Banks published in
August 2018. Please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
CIMB Bank Berhad, headquartered in Kuala Lumpur, reported
total assets of MYR432.7 billion (USD111.9 billion) at 31
March 2018.
CIMB Islamic Bank Berhad, headquartered in Kuala Lumpur, reported
total assets of MYR92.4 billion (USD23.9 billion) at 31
March 2018.
HSBC Bank Malaysia Berhad, headquartered in Kuala Lumpur,
reported total assets of MYR79.5 billion (USD20.6 billion)
at 31 March 2018.
Hong Leong Bank Berhad, headquartered in Kuala Lumpur, reported
total assets of MYR197.3 billion (USD51.0 billion) at 31
March 2018.
Malayan Banking Berhad, headquartered in Kuala Lumpur, reported
total assets of MYR769.6 billion (USD198.9 billion) at 31
March 2018.
Public Bank Berhad, headquartered in Kuala Lumpur, reported
total assets of MYR398.2 billion (USD102.9 billion) at 31
March 2018.
RHB Bank Berhad, headquartered in Kuala Lumpur, reported total
assets of MYR234.6 billion (USD60.7 billion) at 31 March
2018.
Standard Chartered Bank Malaysia Berhad, headquartered in Kuala
Lumpur, reported total assets of MYR47.7 billion (USD12.3
billion) at 31 March 2018.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain 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 certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain 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.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead rating analyst and the Moody's legal entity that has issued
the ratings.
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.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Simon Chen
Vice President - Senior 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
Client Service: 852 3551 3077
Graeme Knowd
MD - Banking
Financial Institutions Group
JOURNALISTS: 81 3 5408 4110
Client Service: 81 3 5408 4100
Releasing Office:
Moody's Investors Service Singapore Pte. Ltd.
50 Raffles Place #23-06
Singapore Land Tower
Singapore 48623
Singapore
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
