Friday 29 Mar 2024
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KUALA LUMPUR (Jan 17): The Employees Provident Fund's (EPF) 65.4%-owned subsidiary Malaysia Building Society Bhd's (MBSB) wholly-owned subsidiary MBSB Bank Bhd has proposed to issue RM5 billion worth of Islamic bonds or sukuk under the wakalah principle to raise money to finance the financial services provider’s operations.

According to Malaysian Rating Corp Bhd (MARC) analysts, MARC Ratings has assigned a financial institution (FI) rating of A+ to MBSB Bank and a preliminary rating of A+IS to the bank's proposed RM5 billion sukuk programme. 

MARC Ratings said MBSB Bank's strength, particularly in personal financing besides its strong capitalisation that had been well supported by its controlling shareholder EPF, are key rating factors for MBSB Bank.

"We expect the EPF, as the major shareholder of MBSB with a 65.4% stake, to provide liquidity support to the bank if the need arises. 

"The bank's liquidity coverage ratio remained well above Bank Negara Malaysia's requirement, standing at 284.6% as at end-9M21 (the cumulative first nine months of 2021; 2020: 193.2%),” MARC Ratings said.

According to MARC Ratings, MBSB Bank was established in February 2018, arising from MBSB's acquisition of Asian Finance Bank, a fully-fledged Islamic bank. 

Concurrently, RM41.2 billion worth of syariah-compliant assets of MBSB were transferred to MBSB Bank, MARC Ratings added.

"The acquisition [of Asian Finance Bank] was mainly prompted by the need for an Islamic banking licence in line with the MBSB group's plans to become a fully-fledged Islamic FI,”  MARC Ratings said.

At the time of writing on Monday (Jan 17), MBSB’s share price had fallen half a sen or 0.84% to 59 sen, giving it a market value of about RM4.14 billion.

MBSB has 7.02 billion issued shares, according to its latest quarterly financial report.

Edited ByChong Jin Hun
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