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RAM Ratings upgrades BNP Paribas Malaysia to AA1

Published on 20 Sep 2021.

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RAM Ratings has upgraded BNP Paribas Malaysia Berhad’s (the Bank) long-term financial institution rating from AA2 to AA1, with a stable outlook. Concurrently, we have reaffirmed the Bank’s short-term P1 rating. 

The upgrade reflects our assessment of strong parental support from BNP Paribas SA (the Group). Throughout the Bank’s 10 years of operations in Malaysia, the Group has demonstrated solid funding and capital support. More recently, it agreed to fully subscribe to the Bank’s RM400 mil subordinated debt to promote business growth. 

BNP Paribas Malaysia forms part of the Group’s footprint in Asia Pacific. The region, while contributing less than 10% of the Group’s aggregate revenue, is identified as an area 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 wholesale banking. 

The ratings are also based on the Bank’s continued business traction and the sustained improvement in its earnings profile since inception in 2011. While the Bank’s trading income stream remains volatile on account of derivative transactions and market making activity, the more stable income from transaction banking and corporate lending trended upwards prior to FY Dec 2020 when the Covid-19 pandemic started. BNP Paribas Malaysia’s loan book has stayed solid (with no impairments) on the back of established client relationships with reputable multinational companies. A strong capital position (common equity tier-1 capital ratio of 21.7% as at end-March 2021) and highly liquid balance sheet afford the Bank ample headroom against increased earnings volatility.

 

Analytical contacts
Timothy Goh
(603) 3385 2496
timothy@ram.com.my

Sophia Lee
(603) 3385 2619
sophia@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 2021 by RAM Rating Services Berhad



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