MARC Ratings has affirmed CIMB Islamic Bank Berhad’s (CIMB Islamic) financial institution (FI) ratings of AAA/MARC-1/Stable. Concurrently, the rating agency has affirmed its ratings on CIMB Islamic’s sukuk issuances as follows:

CIMB Islamic’s FI ratings are equalised with those of parent CIMB Bank Berhad (AAA/MARC-1/Stable). MARC Ratings views CIMB Islamic as a core subsidiary of CIMB Bank, being the parent’s Islamic financing arm. CIMB Islamic represented 28.6% of CIMB Group’s total financing as at end-March 2024. The Tier 2 Junior Sukuk Programme is rated one notch below the long-term FI rating to reflect its subordinated status to the bank’s senior unsecured obligations. 

CIMB Islamic’s financing book expanded by 12.9% y-o-y to RM123.2 billion as at end-2023, ahead of the Islamic banking industry average of 7.9%. This growth can be attributed to CIMB Group’s “Islamic First” strategy. Gross impaired financing ratio edged up to 1.40% as at end-1Q2024 from 1.29% in 2022, due to credit normalisation following the unwinding of relief measures and seasoning of the financing book. Financing loss reserve coverage ratio of 100.5% at end-March 2024 provides some cushion against potential adverse situations or credit losses. In terms of profitability, CIMB Islamic’s pre-tax profit declined to RM1.2 billion in 2023 (2022: RM1.5 billion), despite strong financing volumes. This is due to the narrowing of the net interest margin to 1.62% from 2.04% in 2022 brought about by stiff deposit competition.

CIMB Islamic’s capitalisation remained adequate, with Common Equity Tier 1, Tier 1 and total capital ratios standing at 12.9%, 13.4% and 15.3% as of end-1Q2024. The bank maintains a restricted profit-sharing investment account (RPSIA) arrangement with CIMB Bank. Under the arrangement, any risk arising from RPSIA-funded financing will be transferred to CIMB Bank. CIMB Islamic’s liquidity position remained healthy with a liquidity coverage ratio of 148.9% and net stable funding ratio of 102.3% as at end-2023.

Akmal Sadiq, +603-2717 2939/ akmal@marc.com.my 

Fahmi Hawari, +603-2717 2946/ fahmi@marc.com.my 

Mohd Izazee Ismail, +603-2717 2947/ izazee@marc.com.my