Thursday, Nov 11, 2021
MARC has affirmed Bank Pembangunan Malaysia Berhad’s (Bank Pembangunan) financial institution (FI) rating of AAA and accordingly the issue rating on the development financial institution’s (DFI) RM5.0 billion Islamic Medium-Term Notes (IMTN) Programme at AAAIS. The outlook on all ratings is stable.
The ratings affirmation factors in Bank Pembangunan’s status as a wholly government-owned DFI with a mandate to provide financing to priority sectors in support of the government’s development goals. The DFI has been supported by the government by way of guarantees extended on certain borrowings as well as by compensation for losses on directed loans/financing. For 1H2021, Bank Pembangunan’s loans/financing portfolio rose to RM19.6 billion, partly due to a special scheme financing, a government initiative that was channelled through the DFI. Over the same period, the DFI’s pre-tax profit grew to RM326.8 million, aided by higher net interest/profit income.
The ratings affirmation factors in Bank Pembangunan’s status as a wholly government-owned DFI with a mandate to provide financing to priority sectors in support of the government’s development goals. The DFI has been supported by the government by way of guarantees extended on certain borrowings as well as by compensation for losses on directed loans/financing. For 1H2021, Bank Pembangunan’s loans/financing portfolio rose to RM19.6 billion, partly due to a special scheme financing, a government initiative that was channelled through the DFI. Over the same period, the DFI’s pre-tax profit grew to RM326.8 million, aided by higher net interest/profit income.
Bank Pembangunan has strong capitalisation as reflected by its core capital ratio and risk-weighted capital ratio of 33.4% and 42.6% as at end-June 2021. Its funding profile also comprises funding from the government and related institutions which constituted 18.9% of its total funding base as at end-2020. We note that this proportion has continued to decline from 25.0% as at end-2019, indicating that the DFI is diversifying its funding base and increasingly rely on its strength to tap into the capital market for funding. In this regard, Bank Pembangunan has established a RM5.0 billion IMTN programme.
Bank Pembangunan has acquired a 100%-interest in Danajamin Nasional Berhad (Danajamin) in September 2021 in line with the government’s plan to consolidate the country’s DFIs. We are of the view that the acquisition does not have immediate rating implications on Bank Pembangunan.
Over the near term, we expect Bank Pembangunan to further strengthen its position in the sustainability financing space through collaboration with various government ministries and the World Bank. It is also leading the way in the DFI space in incorporating responsible lending practices in line with the government’s sustainable development agenda. The move into the sustainability space is also in line with the DFI’s strategic transformation plan, in addition to becoming a full-fledged Islamic DFI and diversifying its business portfolio in the near term.
Contacts:
Bank Pembangunan has acquired a 100%-interest in Danajamin Nasional Berhad (Danajamin) in September 2021 in line with the government’s plan to consolidate the country’s DFIs. We are of the view that the acquisition does not have immediate rating implications on Bank Pembangunan.
Over the near term, we expect Bank Pembangunan to further strengthen its position in the sustainability financing space through collaboration with various government ministries and the World Bank. It is also leading the way in the DFI space in incorporating responsible lending practices in line with the government’s sustainable development agenda. The move into the sustainability space is also in line with the DFI’s strategic transformation plan, in addition to becoming a full-fledged Islamic DFI and diversifying its business portfolio in the near term.
Contacts:
Haziq Najmuddin, +603-2717 2965/ haziq@marc.com.my;
Farhan Darham, +603-2717 2945/ farhan@marc.com.my;
Fahmi Hawari, +603-2717 2946 / fahmi@marc.com.my;
Mohd Izazee Ismail, +603-2717 2947/ izazee@marc.com.my.