Monday, Sep 06, 2021
MARC has affirmed its financial institution (FI) ratings of AAA/MARC-1 on Islamic Development Bank (IsDB). The rating agency has concurrently affirmed its AAAIS rating on the Sukuk Wakalah programme of up to RM400 million issued by Tadamun Services Berhad, a trust established by IsDB.
The FI ratings are driven by the preferred creditor status of IsDB as a multilateral development bank established by the Organisation of Islamic Cooperation (OIC), its sound liquidity and low leverage position. During the year, IsDB issued US$1.5 billion sukuk, the proceeds of which were mainly utilised to support its members to help mitigate the impact from the COVID-19 pandemic. The provision of financial support to OIC member countries and Islamic communities in non-member countries remains integral to its mandate.
IsDB registered a growth of 5.3% y-o-y in total gross financing to ID16.2 billion in 2020, primarily driven by Istisna’a financing for infrastructure projects for utilities, transportation and telecommunication. In terms of geography, financing to Asia and Africa accounted for 56.8% and 40.3% of the total net financing exposure as at end-2020 (2019: 58.9%, 38.8%), reflecting its focus on developing countries.
Overdue instalments rose slightly to 0.9% of total financing in 2020 (2019: 0.8%) and could further increase in the near term due to the impact from the pandemic. IsDB’s healthy capitalisation level offers a strong buffer to absorb increases in overdue instalments; its provisions stood at ID381.9 million against ID149.0 million of overdue instalments, translating to provisioning coverage of over 250%. Liquidity remains sound with liquid assets-to-total borrowings ratio standing at 49.3%. Liquid assets of ID7.2 billion as at end-2020 comprised deposits with banks, cash balances and sukuk investment.
The FI ratings are driven by the preferred creditor status of IsDB as a multilateral development bank established by the Organisation of Islamic Cooperation (OIC), its sound liquidity and low leverage position. During the year, IsDB issued US$1.5 billion sukuk, the proceeds of which were mainly utilised to support its members to help mitigate the impact from the COVID-19 pandemic. The provision of financial support to OIC member countries and Islamic communities in non-member countries remains integral to its mandate.
IsDB registered a growth of 5.3% y-o-y in total gross financing to ID16.2 billion in 2020, primarily driven by Istisna’a financing for infrastructure projects for utilities, transportation and telecommunication. In terms of geography, financing to Asia and Africa accounted for 56.8% and 40.3% of the total net financing exposure as at end-2020 (2019: 58.9%, 38.8%), reflecting its focus on developing countries.
Overdue instalments rose slightly to 0.9% of total financing in 2020 (2019: 0.8%) and could further increase in the near term due to the impact from the pandemic. IsDB’s healthy capitalisation level offers a strong buffer to absorb increases in overdue instalments; its provisions stood at ID381.9 million against ID149.0 million of overdue instalments, translating to provisioning coverage of over 250%. Liquidity remains sound with liquid assets-to-total borrowings ratio standing at 49.3%. Liquid assets of ID7.2 billion as at end-2020 comprised deposits with banks, cash balances and sukuk investment.
Contacts:
Farhan Darham, +603-2717 2945/ farhan@marc.com.my;
Haziq Najmuddin, +603-2717 2965/ haziq@marc.com.my;
Mohd Izazee Ismail, +603-2717 2947/ izazee@marc.com.my.