Considering the Bank’s increasing susceptibility to lumpy corporate impairments, we remain wary of further defaults, particularly those from vulnerable segments amid the pandemic. The proportion of Stage 2 loans was sizeable at 20.3% as at end-March 2021, partly owing to the pre-emptive downgrade of most retail loans under repayment assistance. We also observed weakness in the Bank’s retail book despite ongoing relief measures. Deterioration mainly stemmed from a handful of lumpy corporate impairments. The Bank’s loss absorption buffers however should provide enough headroom to withstand potentially greater impairments.Īsset quality was weaker than expected, with the Bank’s gross impaired loan (GIL) ratio surging to 3.3% as at end-March 2021 from 2.0% as at end-December 2019. OCBC Malaysia’s asset quality remains weaker than similarly rated peers’, with the recent rise in Covid-19 infections and an extended lockdown compounding downside risk.
The reaffirmation is premised on our expectation of ready parental support from Oversea-Chinese Banking Corporation Limited (OCBC Ltd), if required, in view of the Bank’s strategic importance to the latter. RAM Ratings has reaffirmed OCBC Bank (Malaysia) Berhad’s (OCBC Malaysia or the Bank) AAA/Stable/P1 financial institution ratings.
RAM Ratings reaffirms OCBC Malaysia’s AAA rating
