MARC affirms ratings on Maybank Islamic Bhd

Malaysian Rating Corporation (MARC) has affirmed its AAA/MARC-1 financial institution (FI) ratings on Maybank Islamic and AA+IS rating on Maybank Islamic's 1.0 billion ringgit Islamic Subordinated Sukuk (Subordinated Sukuk). The outlook on the ratings is stable. The Subordinated Sukuk, which qualifies as Tier-2 capital for Maybank Islamic, is rated one notch lower than the bank's FI rating in accordance with MARC's notching policy for subordinated debt issued by a AAA-rated bank. Positive rating drivers include Maybank Islamic's leading position as the largest Islamic bank in Malaysia, healthy capitalisation, sustainable earnings, and sound liquidity and funding profile. The ratings also factor in the high likelihood of full financial support from the parent/group Malayan Banking. Constraining the ratings are continued margin compression and fierce competition as well as Maybank Islamic's increased exposure to risks associated with regional expansion.