[RAM] RAM Ratings affirms Citibank Berhad's AAA ratings

RAM Ratings has affirmed Citibank Berhad’s (Citibank or the Bank) AAA/Stable/P1 financial institution ratings. 

The affirmation reflects Citibank’s established franchise in the domestic wholesale banking arena, superior funding and liquidity profile, strong profitability and healthy asset quality. The ratings also incorporate an uplift reflecting our expectation of a “high likelihood” of parental support from Citigroup Inc (the Group) in times of need under RAM’s support assessment for Group Support (criteria published on 29 October 2024). The Bank forms part of Citigroup’s footprint in Asia, remaining a strategically important entity of the Group.  

In 9M FY Dec 2024, Citibank’s pre-tax profit rose 7% y-o-y to RM878.2, mainly due to lower operating expenses. This was accompanied by higher earnings from the Bank’s markets and treasury and trade solutions segments owing to stronger client flows, the higher interest rate environment and export recovery. Consequently, the return on risk-weighted assets was an annualised 7.4% for the period (FY Dec 2023: 6.1%). We expect Citibank’s profitability to remain strong, backed by its focus on delivering bespoke solutions to top-tier institutional clients, a leaner cost structure and our expectation of lower impairment expenses. That said, its income stream is subject to volatile trading income.  

The Bank has a low-risk profile as a significant portion (30%) of its asset base comprises low-risk government securities. Gross loans represented 13% of total assets, mainly constituting revolving credits and short-term trade finance facilities. The Bank’s lending book is healthy, with a gross impaired loan ratio of 0.2% as at end-September 2024. While Citibank is susceptible to lumpy impairments, we envisage its asset quality staying sound as its main corporate clients are top-tier domestic names and multinational companies. 

Current and savings account deposits made up a commendable 88% of customer deposits as at end-September 2024. These were largely sourced from the Bank’s cash management and transactional banking businesses, which increases the stickiness of the deposits. Citibank’s common equity tier-1 and total capital ratios stayed robust at a respective 22.4% and 22.8% as at the same date (end-December 2023: 22.4% and 22.9%) and should provide ample headroom against earnings volatility.


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Jeremy Noel Paul 
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