KIEV, April 19 — Ukrainian tycoon Ihor Kolomoisky won a major victory yesterday in his battle with the government over the nationalisation of the country's largest bank after a court ruled the change of ownership was illegal. The ruling is a major…
PETALING JAYA: The RM6.2 billion financial assistance to ailing Federal Land Development Authority (Felda) will add to the government’s debt burden, which is already significantly above the median of A-rated sovereigns, a credit negative, said Moody’s Investors Service.
“We estimate that the assistance will raise the government’s debt burden by 0.3% of GDP to 56.0% in 2019, substantially higher than median debt ratio for A-rated sovereigns of 37.8%, and up from 50.7% in 2017,“ it said in a report today.
In its estimates, Moody’s included the debt of state-owned investment fund 1Malaysia Development Bhd and the RM20 billion of funding provided to state-owned pilgrimage fund Tabung Haji at the end of last year through an asset-backed sukuk.
“A higher debt burden will weigh on Malaysia’s debt affordability, particularly because the share of revenue to GDP, at 16.3% in 2018, is likely remain at or near record lows. Interest payments account for 13.3% of revenue, significantly higher than the A-rated median of 4.0%.”
Felda was established in 1956 to manage the resettlement of the rural poor and employ them in Malaysia’s palm oil industry, but it has evolved into a financially independent statutory body supporting broader socio-economic development.
Its financial performance has been deteriorating since 2013. In 2017, its losses reached RM4.9 billion, compared to an average profit of RM700 million in the five years leading up to the listing of its commercial arm, FGV Holdings Bhd, in 2012, because of declining operating income from plantations due to lower palm oil prices, financially unviable investment decisions, alleged corruption and weak governance practices. Since then, its total liabilities have more than doubled to RM14.4 billion from RM6.5 billion.
Former Felda chairman Tan Sri Isa Samad has been charged with bribery linked to a hotel purchase and FGV Holdings has sued Isa and former CEO Datuk Mohd Emir Mavani Abdullah over the purchase of two luxury condominium units allegedly for above market price.
With its cash balance shrinking, Felda is unlikely to be able to meet its debt obligations without the government’s assistance. It recorded a loss of RM4.6 billion in earnings before interest and tax in 2017.
The financial aid announcement followed the release of a white paper that detailed the company’s deteriorating financial performance, and outlined plans to restore its viability and strengthen its governance practices.
The government plans to spread its aid over seven years. Felda will raise about half of this, which will be backed by government guarantees, while the remainder will come from loans and grants.
PETALING JAYA: CIMB Thai Bank PCL recorded a consolidated net profit of 325 million baht (RM42.2 million) for the first quarter (Q1) ended March 31, an increase of 92.4% compared with the same period a year ago.
This was mainly attributed to a 3.4% growth in operating income and a 17.4% drop in provisions, partially offset by a 8.2% increase in operating expenses.
CIMB Thai acting president and CEO Omar Siddiq said operating income rose 3.4% to 3.5 billion baht from an increase of 4.3% in net interest income, mainly from loan expansion and higher interest income on investments.
Other operating income rose 3.4% from an increase in gains on sale of non-performing loans (NPLs) and higher gains on trading and foreign exchange transactions.
Its net interest margin over earning assets stood at 3.31% in Q1 2019 against 3.98% in Q1 2018, resulting from higher cost of funds.
As at March 31, total gross loans stood at 230.9 billion baht, an increase of 1.4% from Dec 31, 2018.
Deposits stood at 235 billion baht, a slight increase of 0.3% from 234.3 billion baht as at end of December 2018. The modified loan-to-deposit ratio rose to 98.3% compared to 97.2% as at Dec 31, 2018.
“The gross NPL stood at 10 billion baht, with a stable gross NPL ratio of 4.3%, unchanged from Dec 31, 2018. CIMB Thai continues to exercise high credit risk underwriting standards and risk management policies. The bank also focuses on improving productivity and monitoring collection,” it said in a statement.
CIMB Thai’s loan loss coverage ratio increased to 109.5% as at March 31 from 107% at the end of December 2018. As at March 31, total provisions stood at 11 billion baht, translating to a 5.4 billion baht excess over the Bank of Thailand’s reserve requirements.
Total consolidated capital funds as at March 31 stood at 48.1 billion baht. The BIS ratio stood at 18.9%, of which 13.8% comprised Tier-1-capital.
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