RAM Ratings reaffirms Citibank’s AAA rating

Published on 07 Jan 2021.

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RAM Ratings has reaffirmed Citibank Berhad’s (the Bank) AAA/Stable/P1 financial institution ratings, premised on our expectation that the Bank will maintain its sturdy credit fundamentals despite the economic fallout from the coronavirus crisis. We also expect Citibank to receive extraordinary support from Citigroup Inc, if necessary, given the Bank’s strategic importance to the latter. 

As part of Citigroup, the Bank is able to tap its parent’s global franchise, connectivity and technical expertise, enabling it to carve a strong foothold in cash management and treasury solutions. Citibank ranks among the dominant credit card issuers domestically, with a notable 15% market share.

Having recorded low levels of impairment in recent years (end-September 2020: 0.6%), the Bank’s loan quality remains benign. While Bank Negara Malaysia’s loan relief measures may momentarily help alleviate asset quality pressures, delinquencies are anticipated to rise albeit at a moderate level. Citibank has pre-emptively ramped up credit charges amid the uncertain operating landscape, which resulted in an annualised credit cost ratio of 118 bps in 9M FY Dec 2020 (FY Dec 2019: 24 bps). Gross impaired loan coverage stood at a robust 417% as at end-September 2020. 

On account of heftier impairment costs, Citibank reported a lower pre-tax profit of RM519.3 mil in 9M FY Dec 2020 (-41% y-o-y). Its annualised return on risk-weighted assets declined to 2.6% (three-year average: 3.9%), although still deemed sound relative to other banks. While the Bank’s annualised net interest margin had narrowed to 3.1% (FY Dec 2019: 3.4%) amid reduced rates, it still enjoys among the widest margins in the banking industry. This is upheld by the Bank’s large portions of high-yielding unsecured loans and lower-cost current and savings account (CASA) deposits. 

Citibank’s funding and liquidity profile stayed solid. The Bank has extensive shares of CASA and individual deposits, a reflection of its strong cash management franchise. These deposits represented a respective 74% and 38% of total deposits as at end-September 2020. Citibank’s liquidity coverage and net stable funding ratios are comfortably above the respective regulatory minimums. The Bank is well capitalised, with a robust common equity tier-1 capital ratio of 18.4% as at the same date. 


Analytical contact
Chow Kah Mun
(603) 3385 2501

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
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