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RAM Ratings reaffirms AmInvestment Bank’s AA2 rating

Published on 18 Nov 2019.

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RAM Ratings has reaffirmed AmInvestment Bank Berhad’s (the Bank) AA2/Stable/P1 financial institution ratings (FIRs). The reaffirmed FIRs reflect those of AmBank (M) Berhad (rated AA2/Stable/P1), the core subsidiary of AMMB Holdings Berhad (AMMB or the Group, rated AA2/Stable/P1). As AMMB’s investment banking and stockbroking arm, the Bank is viewed as highly strategic to the Group. We, therefore, expect AmInvestment to receive solid group support if required.  

Under a universal banking model, AmInvestment’s operations are strongly linked to that of AmBank and AmBank Islamic Berhad (rated AA2/Stable/P1). This allows the Bank to significantly leverage on its sister banks’ larger balance sheets to underwrite sizeable deals. AmInvestment plays a prominent role in the Malaysian investment banking arena, having upheld its position as the third-largest player in the debt capital market space. 

As with other investment banks, AmInvestment’s earnings profile is inherently susceptible to capital market volatility and investor sentiment. The Bank’s underlying pre-tax profit in FY Mar 2019 was 37% lower at RM43.0 mil compared to the previous year’s RM67.8 mil (excluding RM177.3 mil disposal gain). The weaker performance was attributable to subdued fee income amid a slower market environment, although partly offset by lower operating expenses. The Bank has, however, maintained a robust capital position. Its common equity tier-1 and total capital ratios came in at 47.9% and 48.3%, respectively, as at end-June 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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