S&P cuts outlook on Malaysia banks

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CIMBRating agency Standard & Poor’s cut its credit outlook for four Malaysian banks on concern that rising home prices and household debt are contributing to economic imbalances in the country, Bloomberg reported.

The credit ratings company revised its outlook to negative from stable for CIMB Group, AmBank, RHB Bank and RHB Investment Bank. It also lowered its long-term ASEAN regional scale rating on CIMB to axBBB+ from axA-, S&P said in a statement on November 28.

“The negative outlook recognises the potential for deterioration in the banks’ asset quality and financial profile, if the consumer debt burden proves excessive in an unfavourable economic scenario,” S&P analysts Ivan Tan and Deepali V. Seth wrote in the report.

Ratings companies have sent mixed signals on Malaysia’s credit worthiness as Prime Minister Najib Razak seeks to rein in the budget deficit. Fitch Ratings lowered its outlook on the nation’s A- sovereign rating to negative in July on public debt concerns. Moody’s Investors Service raised the outlook on the country’s A3 debt to positive this month, citing improved prospects for fiscal consolidation and macroeconomic stability.

Overall, S&P rates Malaysia A-, its fourth-lowest investment grade. Najib cut state subsidies and set a date to introduce a goods and services tax in April 2015 during his October 25 budget address.

Malaysia’s economy is projected to expand by 5 percent next year, up from an estimated 4.5 percent in 2013, according to economists’ forecasts compiled by Bloomberg.

The nation’s central bank shortened the maximum length on mortgages in July, saying household indebtedness had risen by an average 12 per cent per annum in the past five years. Last month, the government said it will stop developers from helping home buyers by absorbing some interest payments on loans. It also raised the capital gains tax to 30 per cent on homes sold within five years to curb speculation.

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Reading Time: 2 minutes

Rating agency Standard & Poor’s cut its credit outlook for four Malaysian banks on concern that rising home prices and household debt are contributing to economic imbalances in the country, Bloomberg reported.

Reading Time: 2 minutes

CIMBRating agency Standard & Poor’s cut its credit outlook for four Malaysian banks on concern that rising home prices and household debt are contributing to economic imbalances in the country, Bloomberg reported.

The credit ratings company revised its outlook to negative from stable for CIMB Group, AmBank, RHB Bank and RHB Investment Bank. It also lowered its long-term ASEAN regional scale rating on CIMB to axBBB+ from axA-, S&P said in a statement on November 28.

“The negative outlook recognises the potential for deterioration in the banks’ asset quality and financial profile, if the consumer debt burden proves excessive in an unfavourable economic scenario,” S&P analysts Ivan Tan and Deepali V. Seth wrote in the report.

Ratings companies have sent mixed signals on Malaysia’s credit worthiness as Prime Minister Najib Razak seeks to rein in the budget deficit. Fitch Ratings lowered its outlook on the nation’s A- sovereign rating to negative in July on public debt concerns. Moody’s Investors Service raised the outlook on the country’s A3 debt to positive this month, citing improved prospects for fiscal consolidation and macroeconomic stability.

Overall, S&P rates Malaysia A-, its fourth-lowest investment grade. Najib cut state subsidies and set a date to introduce a goods and services tax in April 2015 during his October 25 budget address.

Malaysia’s economy is projected to expand by 5 percent next year, up from an estimated 4.5 percent in 2013, according to economists’ forecasts compiled by Bloomberg.

The nation’s central bank shortened the maximum length on mortgages in July, saying household indebtedness had risen by an average 12 per cent per annum in the past five years. Last month, the government said it will stop developers from helping home buyers by absorbing some interest payments on loans. It also raised the capital gains tax to 30 per cent on homes sold within five years to curb speculation.

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