It has also raised the bank's baseline credit assessment (BCA) to baa1, from baa2.
Moody's Assistant Vice-President and Lead Analyst, Simon Chen said CIMB bank's base credit assessment was raised to reflect the improvements in the bank's asset quality over the past three years, as well as, its stable capitalisation levels, which in turn has enhanced its loss-absorption capacity.
He said the bank's consistently robust liquidity profile and steady profitability also contributed to its stronger credit profile placing it in a comparable position to baa1 banks in the region.
"In addition, the consistent decline in the impaired loans ratio since 2010 is largely the result of the bank's low and slowing rate of new impaired loans formation.
"We view this as evidence of its good underwriting and risk management capabilities and disciplined approach towards growing its business," he said.
At baa1, CIMB Bank's standalone intrinsic strength reflected the bank's defensible franchise in its home market that has supported its recurring profits and stable liquidity profile. At end-March 2013, the consolidated gross impaired loans ratio stood at 2.8 per cent, which was lower than 2.9 per cent recorded at end-2012 and 3.9 per cent at end-2010. He said CIMB Bank had one of the best liquidity profiles in Malaysia, marked by stable loan-to-deposit ratios at comfortable levels of around 80 per cent over the past three years, and supported by an extensive branch network. Moody's said CIMB Bank's A3 foreign currency deposit rating was driven by its BCA of baa1, plus one notch of uplift to reflect Moody's systemic support assumptions.
The deposit rating is constrained by the A3 sovereign ceiling. Moody's considered CIMB Bank as systemically important because of the bank's position as the third-largest in Malaysia by system deposits, with a 14 per cent market share at end-March.
Consequently, Moody's believed there was a very high probability that the Malaysian government would support CIMB Bank in times of financial distress.
TNS TNS VMD