Published on 20 Sep 2021.
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.
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Ratings on BNP Paribas Malaysia Berhad