Monday, Dec 01, 2003
Bumiputra-Commerce Bank Berhad’s (BCB) Financial Institution rating has been affirmed at A+/MARC-1 and its detachable coupons of the RM667 million nominal value Irredeemable Convertible Unsecured Loan Stocks (ICULS) rating at A. The Financial Institution rating reflects the bank’s strong market position in Malaysia, moderated by its somewhat weaker market position in the higher yielding consumer banking, while the rating of the detachable coupons reflect their subordinated status.
Currently the second largest commercial bank in Malaysia, BCB’s gross loans reached RM40.6 billion in fiscal year 2002, an increase of 4.3% from the preceding year largely driven by lending to the corporate and business segments. In a move to enhance its market position in consumer lending, the bank is taking steps to introduce new products and restructure its existing distribution and marketing infrastructure.
Despite an 11.6% rise in total outstanding non performing loans (NPLs) to RM4.3 billion, BCB’s net NPL ratio however remained at 7.2% in fiscal year 2002 and continued to remain at that level as at June 2003. Almost half of the gross NPLs comprised of residential property financing and loans to the manufacturing and construction sectors with further increases expected to be moderated by the restructuring of certain large corporate NPLs and substantial write-offs.
The bank’s risk weighted capital and core capital ratios increased to 11.5% and 9.0% respectively. Its risk weighted capital ratio, however, remains below the industry’s 12.8%. The conversion of RM355.7 million of ICULS into ordinary shares in December 2002 helped to strengthen the bank’s core capital in fiscal year 2002.
BCB’s asset base remains relatively liquid compared to its peers with its liquid asset ratio increasing from 26.6% to 28.0% in fiscal year 2002. Contributing to the liquidity are the bank’s holdings of Danaharta Urus bonds which can be liquefied at Bank Negara’s discount window at any time. BCB’s customer deposits base rose by 1.3% to RM43.1 billion with deposits from government bodies providing some stability to the bank’s funding base.
BCB’s profitability improved for the fiscal year 2002 due to lower loan loss provisioning and lower interest expense. For the first half of 2003, the bank’s results appear equally encouraging. The bank’s cost to income ratio, a measure of operating efficiency, decreased to 49.2% from 51.1% partly due to staff cost savings and cost reduction from the IT integration of the banking systems onto a common platform.
Currently the second largest commercial bank in Malaysia, BCB’s gross loans reached RM40.6 billion in fiscal year 2002, an increase of 4.3% from the preceding year largely driven by lending to the corporate and business segments. In a move to enhance its market position in consumer lending, the bank is taking steps to introduce new products and restructure its existing distribution and marketing infrastructure.
Despite an 11.6% rise in total outstanding non performing loans (NPLs) to RM4.3 billion, BCB’s net NPL ratio however remained at 7.2% in fiscal year 2002 and continued to remain at that level as at June 2003. Almost half of the gross NPLs comprised of residential property financing and loans to the manufacturing and construction sectors with further increases expected to be moderated by the restructuring of certain large corporate NPLs and substantial write-offs.
The bank’s risk weighted capital and core capital ratios increased to 11.5% and 9.0% respectively. Its risk weighted capital ratio, however, remains below the industry’s 12.8%. The conversion of RM355.7 million of ICULS into ordinary shares in December 2002 helped to strengthen the bank’s core capital in fiscal year 2002.
BCB’s asset base remains relatively liquid compared to its peers with its liquid asset ratio increasing from 26.6% to 28.0% in fiscal year 2002. Contributing to the liquidity are the bank’s holdings of Danaharta Urus bonds which can be liquefied at Bank Negara’s discount window at any time. BCB’s customer deposits base rose by 1.3% to RM43.1 billion with deposits from government bodies providing some stability to the bank’s funding base.
BCB’s profitability improved for the fiscal year 2002 due to lower loan loss provisioning and lower interest expense. For the first half of 2003, the bank’s results appear equally encouraging. The bank’s cost to income ratio, a measure of operating efficiency, decreased to 49.2% from 51.1% partly due to staff cost savings and cost reduction from the IT integration of the banking systems onto a common platform.