RAM reaffirms Alliance Bank’s ratings on healthy fundamentals

KUALA LUMPUR: RAM Ratings has reaffirmed Alliance Bank Bhd’s (Alliance Bank) A1/Stable/ P1 financial institution ratings (FIRs) as well as the respective A1/Stable and P1 ratings of the bank’s Senior MTN Programme of up to RM1.5 billion (2015/2045) and CP Programme of up to RM500 million (2015/2022).

At the same time, it said in a press statement, it has assigned a BBB1/Stable rating to the securities to be issued under Alliance Bank’s proposed Additional Tier-1 Capital Securities Programme of up to RM1 billion (Proposed AT-1 Programme).

The A2/Stable rating of the bank’s subordinated MTN Programme of up to RM2.0 billion (2015/2045) has also been reaffirmed.

“Alliance Bank’s FIRs reflect the bank’s healthy asset quality, favourable funding and liquidity position, as well as strong capitalisation.

“Although the bank’s ratings remain constrained by its position as one of the smallest domestic banking groups in Malaysia, Alliance Bank is well positioned in the SME and consumer segments – evidenced by its strong base of low-cost current- and savings-account deposits,” the ratings agency said.

The AT-1 securities to be issued under Alliance Bank’s Proposed AT-1 Programme have a subordinated ranking and coupon payment flexibility.

In addition, it said, the bank possesses a loss-absorption feature (through write-offs) linked to the bank or its parent holding company and its subsidiaries (collectively referred to as ‘the referenced entities’).

“The loss-absorption feature will be triggered when any of the referenced entities faces a nonviability event or if any of their common-equity tier-1 capital ratios fall below 5.125 per cent,” it explained.