RAM reaffirms Bank Islam's ratings

RAM Rating Services Bhd has reaffirmed the A1/Stable/P1 financial institution ratings of Bank Islam Malaysia Bhd,
Malaysia's first Islamic bank.

In a statement today, it said the ratings reflected its strong
Islamic-banking franchise in the country and also considered the ongoing support from its major shareholder, Lembaga Tabung Haji, that continued to provide a large and steady pool of deposits to the bank.

Nevertheless, its market position, vis-a-vis, larger universal-banking groups was comparatively limited and the share of the overall banking system's financing and deposits was still small, it said.

Bank Islam's credit fundamentals have been improving, however the risk of non-payment was largely mitigated as the bulk of its personal financing facilities comprise those having arrangements with employers for salary deductions and transfers and the bank.

RAM said Bank Islam's financing-to-deposits ratio of about 61 per cent, at end-June 2013, was deemed conservative; and its current-and savings-account deposits, which formed 37 per cent of its deposit pool, were favourable.

It added that the bank still had a high level of depositor-concentration risk, partly counterbalanced by liquid balance sheet and relationships with depositors.-