RAM Ratings has reaffirmed the AAA(bg)/Stable rating of securities issued under MUFG Bank (Malaysia) Berhad's (MUFG Malaysia or the Bank, formerly known as Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad) USD500 million Multi-Currency Sukuk Wakalah Bi Al-Istithmar Programme (the Programme). The enhanced issue rating reflects an irrevocable and unconditional guarantee extended by MUFG Malaysia's parent, MUFG Bank Ltd (MUFG Bank, rated AAA/Stable/P1 by RAM), on the sukuk. Concurrently, we have reaffirmed the AA1/Stable/P1 financial institution ratings of the Bank.
MUFG Malaysia is a subsidiary of Mitsubishi UFJ Financial Group's (MUFG or the Group) commercial banking arm one of the world's largest banking groups and Japan's leading banking group. MUFG Malaysia's ratings benefit from a strong likelihood of support from its parent. The ratings also reflect its robust capitalisation and superior loan quality.
MUFG Malaysia's total loan base expanded to RM24 billion as at end-June 2018 (end-March 2017: RM19 billion), supported by placements from MUFG Bank under a cash collateral scheme. MUFG Malaysia's exceptional loan quality is attributable to its focus on the Malaysian-domiciled entities owned by established Japanese conglomerates, MNCs and highly rated domestic names.
As at end-June 2018, the Bank recorded a robust common equity tier-1 capital ratio of 17.7%. However, loan and deposit concentration remain a factor in MUFG Malaysia's business given its small stature. As at end-June 2018, its 10 largest loans accounted for 56% of lending while the Bank's top 10 depositors constituted about 40% of total customer deposits. In FY March 2018, the Bank registered a pre-tax profit of RM390 million (annualised growth of 33%) owing to a spike in trading income brought about by an increased client flow. Trading income, on average, contributes about 41% of MUFG Malaysia's gross income, which subjects the Bank to some earnings volatility.
Goh Kwan Khhy
(603) 7628 1099
(603) 7628 1162
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