[RAM] RAM Ratings upgrades Deutsche Malaysia to AAA

RAM Ratings has upgraded Deutsche Bank (Malaysia) Berhad’s (Deutsche Malaysia or the Bank) long-term financial institution rating (FIR) to AAA from AA1, revising the rating outlook from positive to stable. 

The upgrade is based on the improved credit profile of the Bank’s parent, Deutsche Bank AG (the Group), following the effective execution of its business transformation plan which we believe has stabilised and strengthened earnings. The Group continued to narrow the profitability gap with peers through commendable revenue growth and improving cost efficiency, while preserving solid capital and liquidity profiles. Deutsche Malaysia’s AAA/P1 FIR incorporates an uplift benefit from the credit strength of its parent and accordingly the Group’s ability to provide financial support to the Bank when required. 

The ratings are further backed by the Bank’s entrenched position in Malaysia’s wholesale banking space – particularly fixed income and currencies – its solid liquidity profile, sound risk management and robust capitalisation which provides ample headroom against earnings volatility. 

In FY Dec 2023, Deutsche Malaysia’s pre-tax profit improved slightly to RM279.3 mil (FY Dec 2022: RM270.0 mil). While the better performance of its cash management and securities services business drove earnings higher, the improvement was partly offset by lower foreign exchange earnings, given a slower inflow of foreign funds and higher operating expenses. The Bank’s return on risk-weighted assets slid marginally to 3.5% (FY Dec 2022: 3.6%) on account of a larger risk-weighted asset base as derivative contracts increased. 

In view of its heavy involvement in trading and market-making activities, Deutsche Malaysia’s profitability is highly sensitive to market sentiment. The Bank’s common equity tier-1 capital ratio of 19.9% as at end-December 2023 serves as a sturdy loss absorption buffer against potential fluctuations in earnings. 


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Jeremy Noel Paul 
(603) 3385 2556
jeremynp@ram.com.my

Sophia Lee
(603) 3385 2619
sophia@ram.com.my

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