Maybank’s asset quality could withstand Covid-19 market rattle


MALAYAN Banking Bhd (Maybank) expects to endure the challenging market environment caused by the Covid-19 pandemic through its robust liquidity and capital position designed to weather tougher operating environments.

In a response to Fitch Ratings Inc’s downward revision of the largest bank in Malaysia, Maybank’s group president and CEO Datuk Abdul Farid Alias said the bank’s board and management have always ensured it remains ahead of the capital and liquidity requirements set by bank regulators, particularly in its three key markets of Malaysia, Indonesia and Singapore.

Abdul Farid said Maybank has taken note of Fitch’s downward revision of the bank’s long-term issuer default rating (IDR) by one notch although maintaining its outlook as stable, and that the move by the rating agency is based primarily on the weakened operating environment and not a reflection of Maybank’s strong fundamentals.

“While this is the prerogative of the rating agencies, our view is that all efforts including by the banking sector should be focused

primarily on helping the people to survive the crisis, and then eventually help reverse this pandemic- induced economic slow- down given 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 said in a statement on Monday.

Maybank’s liquidity capital ratio as at December 2019 stood at 141%, while its total capital ratio was 18.23% and its fully loaded common equity Tier 1 ratio 14.58%,

all well above the current regulatory requirements of 100%, 10.5% and 7% respectively.

The numbers show Maybank’s capital and liquidity ratios have been kept at the higher quartile compared to other banks in South East Asia.

On Monday, Fitch downgraded Maybank’s long-term IDR to ‘BBB+’ from ‘A-‘ and its viability rating (VR) to ‘bbb+’ from ‘a-’.

The rating agency said the long-term IDR, VR and senior debt ratings of Maybank have been downgraded to reflect the adverse operating environment brought about by the coronavirus pandemic and efforts to contain it.