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RAM Ratings reaffirms Maybank Investment Bank’s AAA rating

Published on 23 Jan 2020.

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RAM Ratings has reaffirmed Maybank Investment Bank Berhad’s (Maybank IB or the Bank) AAA/Stable/P1 financial institution ratings. The reaffirmation reflects our expectation of ready parental support when required, given the Bank’s highly strategic role as the investment banking arm of Malayan Banking Berhad (Maybank or the Group, rated AAA/Stable/P1). 

Maybank IB is a prominent name in the Malaysian investment banking scene, consistently ranking among the top three players in the league tables for domestic debt and equity capital market deals. It also stands among the largest stockbrokers locally, ranking fourth by trading value in 9M 2019. Beyond Malaysia’s borders, the Group operates chiefly in the stockbroking arena, notably in Thailand (where it is one of the leading stockbrokers by trading value), Singapore, Indonesia, Vietnam, Hong Kong and the Philippines through Maybank Kim Eng, a sister company of Maybank IB. 

As with all investment banks, the Bank’s earnings are inherently volatile as the performance of investment banking and stockbroking operations is dependent on market conditions and investor sentiment. Revenue from these divisions had reduced as a result of a slower deal flow and lacklustre trading activities in the lead-up to and following the general election in May 2018. Consequently, Maybank IB’s pre-tax profit more than halved to RM46.0 mil in fiscal 2018 (fiscal 2017: RM140.2 mil). Some pick-up in capital market activity had helped the Bank turn in a pre-tax profit of RM41.1 mil in 9M fiscal 2019, although still lower y-o-y (9M fiscal 2018: RM61.1 mil). Maybank IB’s common equity tier-1 capital ratio strengthened to 29.1% as at end-September 2019 from 24.6% as at end-December 2018, mainly due to a smaller asset base. This capital level is deemed sturdy as the Bank’s core operations are not capital-intensive and are primarily fee income-based.

 

Analytical contact
Loh Kit Yoong
(603) 3385 2493
kityoong@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 2020 by RAM Rating Services Berhad



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