Published on 28 Aug 2019.
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.
Chow Kah Mun
(603) 3385 2501
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Ratings on CIMB Investment Bank Berhad