Fitch affirms EON Bank

Fitch Ratings said it affirmed Malaysia-based EON Bank's BBB- long-term issuer default rating, C/D individual rating and 3 support rating following a review of the bank.

The outlook is stable.

Fitch said the ratings reflect the bank's adequate balance sheet strength and profitability, albeit with some limitations emanating from its relatively small size and concentrated loan book. The bank has historically focused on relatively less risky consumer lending - mainly car loans, which constitute the largest component of the loan book at 36%, followed by mortgage financing at 18%. Consequently, EON's asset quality is comparatively better than its peers, with a non-performing loan ratio of 7.9% at the end of 2005 versus the industry average of 8.4%.

The outlook for EON's underlying profitability is stable thanks to an established auto franchise, albeit with some downside potential arising from tighter margins amid a rising interest rate environment, the agency said.

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