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Wednesday November 21, 2012

Bank Rakyat’s RM1bil Islamic medium term notes well received

By LIZ LEE
lizlee@thestar.com.my


At the signing ceremony are (from left) CIMB Investment Bank CEO Datuk Charon Wardini Mokhzani, Domestic Trade, Cooperatives and Consumerism Minister Datuk Ismail Sabri Yaacob, Yusof, Maybank Investment Bank CEO Tengku Datuk Zafrul Tengku Abdul Aziz, Sabbaruddin Chik and Bank Rakyat branch operation assistant GM Baharom Embi. At the signing ceremony are (from left) CIMB Investment Bank CEO Datuk Charon Wardini Mokhzani, Domestic Trade, Cooperatives and Consumerism Minister Datuk Ismail Sabri Yaacob, Yusof, Maybank Investment Bank CEO Tengku Datuk Zafrul Tengku Abdul Aziz, Sabbaruddin Chik and Bank Rakyat branch operation assistant GM Baharom Embi.

KUALA LUMPUR: In preparation for Basel III, Bank Rakyat has launched its first sukuk issuance to raise RM1bil under an Islamic medium term notes programme.

The issuance would raise RM300mil under its three-year term notes and RM700mil under its five-year term notes.

Bank Rakyat managing director Datuk Yusof Abdul Rahman said the sukuk issuance was part of the bank's effort to restructure the bank's fund and to raise funds for the long and medium term.

“It is also to meet the higher capital requirements and in preparation for the eventuality of Basel III implementation,” he said at the launch of the sukuk issuance.

He said most of the local banks had responded to take up the sukuk bonds, including RHB Bank, Maybank and CIMB Bank.

The notes under three-year tenure have an annualised return of 3.88% while the five-year term notes have an 4.08% rate of return.

Bank Rakyat chairman Tan Sri Sabbaruddin Chik noted in his speech that the sukuk had been given an AA2 rating by RAM Rating Bhd.

“This is evidence of the bank's strength and an important indicator to the public on the bank's ability to give better returns,” he said.

The issuance has been oversubscribed by 2.05 times.

As obligor, Bank Rakyat has appointed its funding conduit, Imtiaz Sukuk Bhd to issue the sukuk on Nov 23. CIMB Investment Bank and Maybank Investment Bank were the lead arrangers for the sukuk issuance and were involved in identifying potential investors.

On Bank Rakyat's performance, Yusof said the loan growth was expected to be about 12% at year-end.

“As at end-September, our loan growth was 12% higher year-on-year, amounting to RM49.7bil and we anticipate to end the year with a 12% loan growth,” he said.

The bank's loan portfolio is now 78% retail, 11% commercial and the remainder for other services. Under the retail loans, 75% were personal loans.

Non-performing loans stood at 2.9% in September and improved to 2.79% the following month. Bank Rakyat's risk-weighted capital ratio was 15% while its core capital ratio was 14.8%.

He also said the demand for its Ar Rahnu Islamic pawnbroking service was still high among the mid and lower income groups, adding that the bank now had a loan balance of RM1.8bil under its Ar Rahnu service.

As for business expansion, he said Bank Rakyat planned to open five more Ar Rahnu outlets in addition to its 42 outlets and three more bank branches by year-end.

Yusof noted that the cost for each Ar Rahnu outlet was about RM400,000 while bank branches cost RM1.5mil each.

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