Maybank assures ability to weather Covid-19 situation
KUALA LUMPUR (April 13): Malayan Banking Bhd (Maybank) said it will be able to weather any stress due to changes in the operating environment such as the ongoing Covid-19 situation, given its robust liquidity and capital positions built over the years.
In a statement, Maybank group president and chief executive officer Datuk Abdul Farid Alias said the board and management of the bank had always ensured the group remains ahead of the capital and liquidity requirements set by bank regulators, particularly in Malaysia, Indonesia and Singapore.
He added that these levels have been consistently higher than the full requirements for the past five years, despite them being under gradual implementation by the regulators.
“Maybank’s liquidity capital ratio as at December 2019 stood at 141%, while its total capital ratio was 18.23% and its fully loaded CET1 capital ratio 14.58%, all well above the current regulatory requirements of 100%, 10.5% and 7% respectively.
“Given these levels, it is clear that Maybank group’s capital and liquidity ratios have been kept at the higher quartile, compared to the other banks in Southeast Asia,” he said.
Farid noted Fitch Ratings’ downgrade revision of the bank’s long term issuer default rating (IDR) by one notch, although maintaining its outlook as stable.
The move by the ratings agency was made based primarily on the weakened operating environment and not a reflection of Maybank’s strong fundamentals, he said.
“I was disappointed when I first saw this report but was also aware that Fitch had recently downgraded the credit rating of many banks, especially in the Asia Pacific, Middle East and South African regions,” Farid said.
“While this is the prerogative of the rating agencies, our view is that all effort including by the banking sector should be focused primarily on helping the people survive the crisis, and then eventually help reverse this pandemic-induced economic slowdown, given that the cause of this slowdown is peculiar and its impact significant.
“This downgrade will likely increase the bank’s funding costs, but we will do our best to absorb it without passing the majority of it on to our customers,” he added.
Meanwhile, he said Maybank is reassured by the Fitch report which stressed that the bank remains better capitalised than its peers, and is in a firm position to weather potential strains on earnings and asset quality arising from the weaker operating environment.
Fitch also stated that the bank’s liquidity is well supported by its superior domestic deposit franchise and the central bank’s highly accommodative liquidity management actions, Farid noted.
Earlier today, the ratings agency said that it had downgraded Maybank’s long-term IDR to ‘BBB+’ from ‘A-’ and its viability rating to ‘bbb+’ from ‘a-’.
The bank’s senior debt ratings and medium term note programme have were also downgraded to ‘BBB+’ from ‘A-’.