Moody’s Investors Service has affirmed Maybank Singapore Ltd’s( MSL) A1 long- term( LT) foreign currency( FC) and original currency( LC) deposit conditions.
The standing agency has also affirmed the bank’s a3 birth credit assessment( BCA) and acclimated BCA with the standing outlook remaining stable.
” The protestation of MSL’s A1 deposit conditions and a3 BCA reflects the bank’s strong asset quality, track record of prudent capital and liquidity operation, as well as its modest profitability, ” it said in a statement moment.
In addition, the agency has affirmed MSL’s Aa3 LT FC and LC counterparty threat conditions( CRRs), Aa3( cr) LT counterparty threat( CR) assessment, P- 1 FC marketable paper standing, P- 1 short- term( ST) FC and LC deposit conditions, P- 1 ST FC, and LC CRRs and P- 1( cr) ST CR assessment.
Moody’s said that MSL’s problem loan rate would probably remain low at around0.5 per cent because of its focus on low- threat casing and bus loans in Singapore.
” These loans constituted further than 60 per cent of MSL’s total gross loans as of March 31, 2023, and are capitalized under the country’s strict consumer debt regulations.
” Likewise, MSL has erected up strong loan- loss reserves, which amounted to further than 250 per cent of the bank’s problem loans as of Dec 31, 2022, ” it said.
Moody’s said MSL’s capital and liquidity criteria were anticipated to remain well above nonsupervisory conditions.
” The bank’s common equity league 1 capital rate was high at14.2 per cent as of March 31, 2023.
” Its average Singapore bone and each- currency liquidity content rates, which also include Maybank’s Singapore branch, were also high at 165 per cent and 146 per cent independently in the first quarter of 2023, ” it said.
Meanwhile, the standing agency noted that MSL’s return on average means would remain modest at around0.5 per cent given the bank’s lack of husbandry of scale.
It also said that although the bank’s net interest periphery expanded in 2022 following advanced domestic interest rates, it would probably stabilise at current situations as backing costs catch up.
” MSL’s credit costs will be elevated because ofpre-emptive provisioning amid the profitable retardation in Singapore, ” it said.
The standing agency said that MSL’s A1 deposit conditions were two notches advanced than the bank’s a3 BCA, incorporating Moody’s supposition that the probability of support from the Singaporean government( Aaa stable) would be high in times of need.
” The support supposition reflects the bank’s designation as a domestic systemically important bank by the original controller.
” Although Moody’s also expects MSL to admit extraordinary support from its parent, Malayan Banking Bhd( Maybank, A3 stable, a3), the bank doesn’t profit from any standing uplift because its BCA is formerly at the same position as Maybank’s BCA, ” it said.
In terms of an upgrade or downgrade of conditions, Moody’s said MSL’s A1 deposit conditions upgrade would be doubtful as they were formerly among the loftiest encyclopedically.
MSL’s BCA could be upgraded if the bank’s return on palpable means increases to above0.8 per cent without a significant deterioration in its other criteria , it said.
” Still, Moody’s is doubtful to upgrade the BCA similar that it becomes further than two notches advanced than Maybank’s BCA given the strong brand association and solid operation, functional and fiscal liaison between the two realities, ” it said.
On another note, Moody’s said it could downgrade MSL’s conditions if Maybank’s capability or amenability to give support weakened and MSL’s BCA was downgraded.
” MSL’s BCA could be downgraded if the bank’s problem loan rate rises above two per cent and its palpable common equity/ threat- weighted means fall below 12 per cent, ” it added. – Bernam