RAM Ratings reaffirms Citibank’s AAA/Stable/P1 ratings

Published on 02 Jan 2020.

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RAM Ratings has reaffirmed Citibank Berhad’s (the Bank) AAA/Stable/P1 financial institution ratings. The ratings incorporate the Bank’s strategic importance to Citigroup Inc, its solid capitalisation and sturdy funding and liquidity profile. As part of the larger Citigroup, the Bank leverages on its parent’s global franchise, connectivity and technical expertise, allowing it to establish a strong foothold in cash management and treasury solutions. 

With a 16% share of the domestic banking system’s credit card receivables as at end-June 2019, Citibank stands among the industry’s largest credit card providers. As the credit card business accounted for one-fourth of its total loans and about a third of gross income, the material exposure renders the Bank more susceptible to regulatory reforms in this segment.  However, the Bank has been able to defend its profitability in the face of measures such as the progressive reduction of interchange fees. Return on risk-weighted assets (RORWA) was a healthy 3.9% and 4.3% (annualised) in fiscal 2018 and 1H fiscal 2019, respectively. 

In fiscal 2018, Citibank revised its loan reclassification policy to be in line with BNM guidelines, whereby loans restructured via Agensi Kaunseling & Pengurusan Kredit are classified as non-impaired as long as they are performing. Previously, these loans were classified as impaired regardless of repayment status. Given the reclassification of these fairly sizeable performing restructured loans, the Bank’s gross impaired loan (GIL) ratio had eased to 0.9% as at end-June 2019 (end-December 2017: 2.3%) and is expected to hover at this level in the immediate future. 

Citibank has maintained a sturdy funding and liquidity profile. Low-cost current and savings account deposits made up a commendable 72% of the Bank’s deposit base as at end-June 2019 – among the highest proportions of such deposits in the industry, underscoring the Bank’s strong cash management franchise. Capitalisation remained solid, as the Bank’s common equity tier-1 capital ratio, including unaudited profit for 1H fiscal 2019, stood at 16.2% as at end-June 2019 (end-December 2017: 16.3%). 


Analytical contact                
Goh Kwan Kheen, Timothy 
(603) 3385 2496
Media contact
Padthma Subbiah
(603) 3385 2577


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 2020 by RAM Rating Services Berhad


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