MARC says the ratings affirm Maybank’s very strong market position in loans and deposits, underpinned by its well-established banking franchise as the largest domestic bank. (Logo from Maybank’s website)

KUALA LUMPUR: Malaysia Rating Corp Bhd (MARC) has affirmed its financial institution (FI) ratings of AAA/MARC-1 on Malayan Banking Bhd (Maybank).

In a statement today, MARC said it has also affirmed the AAA rating on the bank’s RM10 billion senior medium-term note (MTN) programme.

Both ratings come with a stable outlook.

The ratings affirm Maybank’s very strong market position in loans and deposits, underpinned by its well-established banking franchise as the largest domestic bank.

“The bank maintains a healthy funding profile and a strong capital position which provides a buffer against weakening asset quality metrics.

“The ratings assessment considers the consolidated group profile given the strong interlinkages between the bank and its subsidiaries.

MARC said at the bank level, Maybank’s loan book of RM299.8 billion is split between domestic (46.9 per cent) and foreign (53.1 per cent) as at end-March 2017.

It said the bank’s overall loan growth improved during this period to 9.2 per cent year-on-year, supported by improving economic conditions in Malaysia and Singapore, although loan growth is expected to remain moderate over the intermediate term.

MARC said at the group level, Maybank’s consolidated net profit rose by 20.3 per cent year-on-year to RM1.75 billion in the first quarter of 2017, underpinned by stronger earnings from its insurance subsidiaries as well as its Islamic and Indonesian banking subsidiaries.

“MARC also notes that Maybank Indonesia’s loan loss reserve ratio remained low at 48.8 per cent (2016: 50.4 per cent), however, its strong capital position, as reflected by its CET1 (Common Equity Tier 1) capital ratio of 13.5 per cent as at end-June 2017 provides some buffer against potential asset quality deterioration,” it said.

MARC said the stable ratings outlook reflects its expectations that Maybank will sustain its credit profile by prudently managing its loan portfolio and maintaining its capital position against moderate economic growth.