KUALA LUMPUR: Malayan Banking Bhd (Maybank) says it can weather any stress arising from changes in the operating environment amid the ongoing Covid-19 crisis.
The country’s largest financial services group said the assurance was given on the back of its robust liquidity and capital positions built over the years.
Group president and chief executive officer Datuk Abdul Farid Alias said the board and management had always ensured it remain ahead of the capital and liquidity requirements set by bank regulators, particularly in its three key markets of Malaysia, Indonesia and Singapore.
The levels have been consistently higher than the full requirements for the past five years, despite being under gradual implementation by the regulators.
Farid was responding to Fitch Ratings’ downward revision of Maybank’s long-term issuer default rating (IDR) by one notch although maintaining its outlook as stable.
Fitch’s move followed its revision of Malaysia’s sovereign rating outlook from stable to negative.
As at December last year, Maybank’s liquidity capital ratio stood at 141 per cent, while its total capital ratio was 18.23 per cent and its fully loaded CET1 capital ratio 14.58 per cent.
These were all well above the current regulatory requirements of 100 per cent, 10.5 per cent and 7.0 per cent, respectively.
Maybank said its capital and liquidity ratios had been kept at the higher quartile compared to other banks in Southeast Asia.
Farid said the Fitch move was based primarily on the weakened operating environment, and not a reflection of Maybank’s strong fundamentals.
Fitch had also reaffirmed Maybank’s short-term IDR, he added.
“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.
“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 to 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,” said Farid.
He said the downgrade would likely increase the bank's funding costs.
However, he said the banking group would do its best to absorb it without passing the majority of it to customers.
Farid said Maybank remains better capitalised than peers and in a firm position to weather potential strains on earnings and asset quality arising from the weaker operating environment.
Additionally, Fitch stated the bank’s liquidity was well supported by its superior domestic deposit franchise and the central bank’s highly accommodative liquidity management actions.
Maybank is one of only three banks in Malaysia to be publicly rated by Fitch.