Moody’s lowers CIMB Bank baseline rating

Moody’s Investors Service said it affirmed CIMB Bank Bhd.’s A3 local-currency and P-2 foreign-currency deposit ratings and A3 foreign-currency senior unsecured debt ratings.

The agency also said it affirmed the bank’s A3 and P-2 foreign-currency issuer ratings, and provisional A3 foreign-currency senior unsecured medium-term note rating.

The outlook remains positive.

Moody’s said it downgraded CIMB Bank’s baseline credit assessment and adjusted baseline credit assessment to Baa2 from Baa1.

As a result of the baseline downgrade, CIMB Bank’s foreign-currency subordinated medium-term notes rating was downgraded to provisional Ba1 from provisional Baa3, along with the foreign-currency preferred stock rating (issued by SBB Capital Corp.) to Ba2 (hyb) from Ba1 (hyb).

The agency said it affirmed CIMB Islamic Bank Bhd.’s A3 local-currency and P-2 foreign-currency deposit and issuer ratings, but also downgraded CIMB Islamic’s adjusted baseline credit assessment to Baa2 from Baa1.

Lastly, Moody’s said it affirmed CIMB Group Holdings Bhd.’s Baa1 local-currency and P-2 foreign-currency issuer ratings with a positive outlook.

The downgrade of CIMB Bank’s baseline rating reflects the bank’s weaker capitalization compared to its domestic and regional peers, as well as an expectation that further pressure on asset quality from slowing operating conditions will weaken the bank’s profitability and ability to improve its capital levels, Moody’s said.

Although operating revenue growth was strong at 10.6% year-on-year in the first half of 2015, the bank’s restructuring expenses and higher credit costs from its Thai operations have dragged the bank’s overall profitability, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.