Published on 16 Dec 2019.
RAM Ratings has reaffirmed the AA2/Stable/P1 financial institution ratings of BNP Paribas Malaysia Berhad (the Bank). The ratings factor in our expectation of continued ready parental support from BNP Paribas SA (the Group), one of the world’s largest financial institutions and among the globally systemically important banks identified by the Financial Stability Board. Past parental support is evident from the Group’s conversion of RM160 mil of the Bank’s subordinated debts into equity in 2013 and a RM48 mil capital injection in 1Q 2016. The ratings also consider the Bank’s still-small capital base that restricts its ability to participate in large deals.
BNP Paribas Malaysia Berhad forms part of the Group’s footprint in Asia Pacific, which while contributing less than 10% of the latter’s total revenue, has been identified as a region for further growth and investment. In this regard, the Bank is able to leverage on the Group’s global franchise, international network and technical expertise in the domain of wholesale banking.
Given its focus on wholesale banking that involves among others, Global Markets’ activities, BNP Paribas Malaysia Berhad’s earnings are intrinsically volatile and subject to market fluctuations. However, off the back of heightened market-making activity and an increased client flow, the Bank recorded healthy pre-tax profits of RM83 mil in fiscal 2018 (fiscal 2017: RM60 mil) and RM51 mil in 1H fiscal 2019 (1H fiscal 2018: RM50 mil). The Bank’s common equity tier-1 capital ratio while having edged lower to 16.0% as at end-June 2019 (end-December 2017: 21.3%) due to business expansion, was still at a level deemed robust.
Goh Kwan Kheen, Timothy
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Ratings on BNP Paribas Malaysia Berhad