RAM Ratings has reaffirmed HSBC Amanah Malaysia’s (the bank) AAA/Stable/P1 financial institution ratings and the AAA/Stable rating of its RM 3 billion Multi-Currency Sukuk Programme (2012/2032).
The reaffirmation is premised on HSBC Amanah’s strategic role as the Islamic banking arm of HSBC Bank Malaysia (rated AAA/Stable/P1) and one of HSBC Holdings’s two global “amanah” or Islamic banking hubs. The bank is operationally integrated with HSBC Malaysia and leverages on the HSBC Group’s global franchise, international network and expertise. Parental support is envisaged to be readily available when needed.
As such, the Bank’s ratings are equated with its parent, HSBC Malaysia.
RAM Ratings noted that HSBC Amanah posted a pretax profit of RM229.4 million in FY December 2019 (FY December 2018: RM211.6 million), 8% higher year-on-year due to higher financing income from financial assets and deposit placements with financial institutions. The increase in the Bank’s current and saving account deposits (+54%) also contributed to an overall lower cost of funds relative to the Islamic banking industry.
Pretax profit fell to RM20.3 million in Q1 FY December 2020 (Q1 FY December 2019: RM58.6 million) as a result of heftier forward-looking impairment charges on financing.
RAM Ratings expects the bank’s profitability to remain under pressure in view of the low profit rate environment, muted financing growth and higher impairment charges given the weaker macroeconomic environment.
"Like other banks, HSBC Amanah may incur a modification charge arising from hire-purchase and other fixed-rate financing subject to the moratorium," the company said in an online statement.