Any perceived weakening in the parental support from KFH and/or dilution in its ownership in KFHMB
would trigger a rating action that could result in a potential lowering of KFHMB
Credit growth has now been directed to business financing, particularly to construction, real estate and trading and manufacturing segments; KFHMB has also added two branches in 1H2014 to a total of 15 (2013: 13) to support its expansion.
MARC observes that KFHMB has a significantly high gross financing-to-deposit ratio of 139.
Although KFHMB returned to profitability in 2012, the bank continues to be challenged to improve its underlying profitability more into line with domestic peers.
KFHMB saw a decrease in customer deposits during 1H2013.
The Chairmana[euro](tm)s contentment at the progress of KFHMB
since its inception and latest set-up in Singapore is echoed by Datoa[euro](tm) K.
At the same time, MARC notes positively that KFHMB has taken decisive steps to address legacy problem exposures in its financing book and counter the drag on its profitability posed by the continuing recognition of credit impairment from these exposures.
In the more immediate term, KFH's ability to address key negative credit drivers such as its continued high level of non-performing finance facilities (NPF), provisioning for NPFs and pressure on its profitability would be a particularly important determinant of rating stability for both the parent and KFHMB.
Puan Jamelah Jamaluddin, Chief Executive Officer, KFHMB said, "With the increasingly competitive environment, customers are looking for enhanced services from their banks.
KFHMB is currently gearing its effort to grow its retail banking business.
Puan Jamelah said, "Our cooperation with one of Japan's leading financial services groups demonstrates Nomura's trust in KFHMB
, and in the strength of Islamic finance products.