MARC has affirmed its long- and short-term financial institution ratings of AAA and MARC-1 respectively on the Islamic Development Bank. Concurrently, the rating agency affirmed its AAAIS rating on the Sukuk Wakalah programme of up to RM400m issued by Tadamun Services, a trust established by the Islamic Development Bank for the purpose of issuing the Sukuk. The outlook on the ratings is stable. The ratings are based on the Malaysian national scale.
The affirmed FI ratings continue to be premised on the Islamic Development Bank’s strong capital and liquidity position, its strong shareholding structure, and preferred creditor status that mitigates sovereign risk. The Islamic Development Bank remains well supported by its shareholders since its establishment as a multilateral development bank in 1975 by the Organisation of Islamic Cooperation to facilitate economic development of OIC member countries. Of its shareholders, Saudi Arabia, Kuwait, Qatar and the United Arab Emirates have a combined stake of 45 per cent in the Islamic Development Bank.
The Islamic Development Bank’s capital, as reflected by an equity-to-asset ratio of 45.9 per cent as at end-2016, remains strong and compares favourably with many MDBs. The bank’s members’ equity stood at Islamic Dinar (ID) 8.3bn as at end-December 2016, up from ID7.8 billion as at October 13, 2015. The growth in members’ equity was due mainly to an increase in retained earnings of ID185.1m and paid-up capital of ID203.4m during the financial period ended December 31, 2016. MARC notes that the bank maintains a prudent policy of restricting earnings distribution until general reserves attain 25 per cent of subscribed capital; as at end-2016, this stood at 4.9 per cent.