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RAM Ratings affirms BNP Paribas Malaysia’s AA1 rating
Published on 13 Sep 2024.
RAM Ratings has affirmed BNP Paribas Malaysia Berhad’s (the Bank) AA1/Stable/P1 financial institution ratings. The ratings incorporate an uplift, reflecting our belief that ready parental support from BNP Paribas SA (the Group) will be forthcoming in times of need. One of the world’s largest financial institutions and among the global systemically important banks, BNP Paribas SA has on multiple occasions demonstrated solid funding and capital support.
BNP Paribas Malaysia forms part of the Group’s footprint in Asia Pacific. The region, while contributing only 8% of the Group’s aggregate revenue, is identified as an area for further growth and investment. As part of the larger BNP Paribas SA, the Bank can leverage on the former’s global franchise, international network and technical expertise in wholesale banking.
In FY Dec 2023, the Bank’s pre-tax profit jumped 42% y-o-y to RM95.1 mil, translating into a return on risk-weighted assets of 2.1% from 1.7% a year ago. The improvement was mainly driven by the Transaction Banking and Global Markets (GM) businesses owing to continued business traction and favourable market conditions. Pre-tax profit for 1Q fiscal 2024, meanwhile, climbed 33% y-o-y, attributable to the derivatives segment of the GM business.
BNP Paribas Malaysia’s income stream is volatile, given its focus on wholesale banking, which entails derivative transactions and market-making activities. This is partly mitigated by the transaction banking business, a more stable income source. Earnings from this segment have trended up in recent years due to the Bank’s emphasis on growing new-to-bank multinational companies and cross-selling efforts. Transaction banking contributed a notable 44% of gross income in FY Dec 2023 (FY Dec 2022: 29%), outperforming the GM division (29% of gross income). A robust common equity tier-1 capital ratio of 21.2% as at end-March 2024 provides the Bank with an ample loss absorption buffer to support volatile trading activities. A highly liquid balance sheet also backs the ratings.
Analytical contacts
Jeremy Noel Paul
(603) 3385 2556
jeremynp@ram.com.my
Sophia Lee
(603) 3385 2619
sophia@ram.com.my
Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@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 2024 by RAM Rating Services Berhad
