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RAM Ratings reaffirms CIMB Investment Bank’s AAA rating

Published on 28 Aug 2019.

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RAM Ratings has reaffirmed CIMB Investment Bank Berhad’s (the Bank) AAA/Stable/P1 financial institution ratings, given the Bank’s strategic role as CIMB Group Holding Berhad’s (the Group) investment banking arm. Under a universal banking model, the Bank’s operations are closely integrated with CIMB Bank Berhad and CIMB Islamic Bank Berhad (both rated AAA/Stable/P1). As such, solid group support is expected in times of need.

CIMB Investment remains a strong player in the local investment banking space, featuring prominently in debt and equity market league tables. In June 2019, the Bank completed the deconsolidation of its domestic stockbroking operations, arising from CIMB Group’s 50:50 regional joint venture with China Galaxy Securities Co Ltd. This partnership is among the Group’s cost rationalisation initiatives, while still allowing it to retain its equity distribution platform. The impact of the partial loss of CIMB Investment’s stockbroking earnings is minimal in view of the segment’s small profit contribution in the past.

As with other investment banks, CIMB Investment’s earnings profile is inherently volatile, given that its business activities are sensitive to market conditions and investor sentiment. In FY Dec 2018, the Bank’s pre-tax profit nosedived 73% to RM37.4 mil, mainly owing to significantly reduced capital market activities amid the weaker market sentiment. Meanwhile, CIMB Investment’s capitalisation is deemed robust, with its common equity tier-1 capital ratio standing at 35.1% as at end-March 2019. 

 

Analytical contact
Chow Kah Mun
(603) 3385 2501
kahmun@ram.com.my

Media contact
Padthma Subbiah
(603) 3385 2577
padthma@ram.com.my

 

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 also does not reflect the legality and enforceability of financial obligations.

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.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2019 by RAM Rating Services Berhad



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