April 30, 2023

Malaysia Bank Bonds

AT1: Has the Dust Settled?

Additional Tier 1 (AT1) Saga: Has the Dust Settled? Credit Suisse AT1 Analysts
write-off last month roiled the financial markets. Asia AT1 issuances Winson Phoon, FCA
plunged to USD7b YTD as of 28 April, down from USD57.9b in 2022 and (65) 6340 1079
USD125.6b in 2021. In ASEAN, AT1 issuances totaled USD0.6b YTD winsonphoon@maybank.com
compared to USD0.9b in 2022. Access to AT1 funding appears to have
Se Tho Mun Yi, CFA
reopened. Japan’s SMFG priced JPY140b AT1 earlier this month, and more
FIXED INCOME

banks have lined up for potential supply. But investors are likely to draw (603) 2074 7606
geographical lines due to the different interpretations of capital ranking munyi.st@maybank-ib.com
rules by regulators.
Regional Divergences. While AT1 ranking was relegated to below equity
by Swiss authorities in a rare divergence from the pecking order of bank
capital structure, other financial regulators including Europe, UK, Japan,
Hong Kong, Singapore and Malaysia have reaffirmed their adherence to the
conventional creditor hierarchy. Relative to European/Australia peers,
Asia AT1 bond prices have outperformed, holding up better during the
selloffs in March and have now mostly or fully recovered. Malaysian banks
Malaysia

have no outstanding USD AT1, and the domestic MYR AT1s have seen little
change in prices through the US/Europe banking turmoil.
MYR AT1: Economic Consideration. Malaysia banks have low reliance on
AT1 with common equity capitals accounting for >90% of the Tier-1 ratios.
But from an economic standpoint, AT1s remain a viable alternative and
cheaper source of funds than the cost of equity to local banks, although
most have good Tier-1 buffer and earnings to support risk-weighted assets
(RWA) consumption and no urgency to rush new issuances. In this report,
we provide updates to local bank debt funding curves that include seniors,
T2 subdebts and AT1s, and compare with the cost of equity for select local
banks.
Extension Risk: AT1s are perpetual instruments callable at the discretion
of banks and subject to central bank approval, but failure to call carries
tainting risk to banks and raises question on financial health. Key dates for
upcoming MYR AT1s are: 1) PBKMK 5.08% AT1 callable 26 Jun 2023 which
we think will likely be called given the small MYR100m size relative to
Public Bank’s large Common Equity Tier 1 (CET1) base, and 2) Affin Bank’s
AHBMK 5.8% AT1 callable 31 Jul 2023 (Size: MYR500m) and Affin Islamic
Bank’s AFFBNK 5.65% AT1 callable 18 Oct 2023 (Size: MYR300m). We also
provide a list of outstanding SGD-denominated AT1s, and USD AT1s for
ASEAN banks by call date.
Malaysia Banks: Credit Profile and Capital Buffers. AT1s are created with
loss absorption features on occurrence of non-viability event or CET1
falling below 5.125%. Domestic banks are generally well capitalized with
good buffers to the automatic trigger. In this report we provide a summary
of capital positions, distance to trigger and the availability of outstanding
AT1 capitals, although in practice, other non-operating factors such as
systemic importance, market access for replenishment of equity capitals
and major shareholder support may also affect the write-down risk of AT1.

THIS REPORT HAS BEEN PREPARED BY MAYBANK RESEARCH PTE LTD

SEE PAGE 14 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
Fixed Income Research

AT1 Saga: Has the Dust Settled?

The After-Effects: The full write-down of Credit Suisse’s AT1 capital last month
roiled the financial markets. Confidence in AT1 instruments, which are designed
to absorb losses in the event of bank failures, took a dent as investors reassess the
credit profiles of such bonds which also carry non-call risk and automatic write-off
triggers. Asia AT1 issuances plunged to USD7b YTD as of 28 April, down from
USD57.9b in 2022 and USD125.6b in 2021. On an annualized basis, YTD issuances
are down 63% YoY. The slowdown is evident across the regional countries. In ASEAN,
AT1 issuances totaled USD0.6b YTD compared to USD0.9b in 2022 as UOB Bank
managed to issue SGD850m AT1s back in January prior to the global banking turmoil.
Testing Water: Japan’s Sumitomo Mitsui Financial Group managed to price a
sizeable JPY140b AT1 on 19 April, the first by a major bank since the Credit Suisse
wipeout, without significant concessions vs. secondary pricing in a two-part deal
of perpetual non-call 10y2m and non-call 5y2m; 100 investors reportedly
participated in the bond sale with demand from life insurers, trust banks and asset
management companies. Banks’ access to AT1 funding has reopened, but investors
are likely to draw geographical lines due to the different interpretations of capital
ranking rules by regulators. Meanwhile: 1) Mitsubishi UFJ Financial Group’s has
plans for a dual-tranche AT1 bond deal as early as mid-May, 2) UOB Thai is planning
the first ever THB AT1s in Thailand, and 3) the State Bank of India plans to raise
capital that include AT1 and T2 subdebts in the coming months.

Figure 1: Asia AT1 Issuances by Country/Region Figure 2: ASEAN AT1 Issuances by Country
China Hong Kong Korea India Japan ASEAN Others Malaysia Singapore Thailand Indonesia Philippines

140 5
4.5
120
4
100
3.5
80 3
2.5
60
2
40 1.5

20 1
0.5
0
2019 2020 2021 2022 2023 YTD 0
2019 2020 2021 2022 2023 YTD

Source: Bloomberg, Maybank IBG Research Source: Bloomberg, Maybank IBG Research

AT1 Performance: Calmer But Not Out of the Woods. Globally, AT1 prices have
rebounded from the floor in March. According to the Bloomberg Global AT1 Index:
1) the average yield-to-worst (YTW) jumped to a high of 13.9% on 20 March from
8.6% at the beginning of the month but has tightened back to around 10% recently;
2) measured by index price, it plunged by 16% at the lowest point in March and has
since recovered by about half; 3) meanwhile, the option adjusted spreads (OAS) of
global AT1s have tightened to about 540bp, lower from a high of almost 700bp on
20 March but remain noticeably wider than about 420bp at end-February. The OAS
for Switzerland banks’ AT1s underperformed but not by a huge margin, wider by
157bp since March vs an average of 116bp.

April 30, 2023 2

Fixed Income Research

Figure 3: Global AT1 Index - Total Return Figure 4: Global AT1 Index - YTW and OAS Spread
150 OAS Spread (bp) Yield to Worst (%)
145 800 15
14
140
700 13
135
12
130 600
11
125 10
500
9
120
400 8
115 7
110 300 6

04-Apr-23

11-Apr-23

18-Apr-23

25-Apr-23

04-Apr-23
11-Apr-23
18-Apr-23
25-Apr-23
07-Feb-23

14-Feb-23

21-Feb-23

28-Feb-23

07-Feb-23
14-Feb-23
21-Feb-23
28-Feb-23
03-Jan-23

10-Jan-23

17-Jan-23

24-Jan-23

31-Jan-23

07-Mar-23

14-Mar-23

21-Mar-23

28-Mar-23

03-Jan-23
10-Jan-23
17-Jan-23
24-Jan-23
31-Jan-23

07-Mar-23
14-Mar-23
21-Mar-23
28-Mar-23
Source: Bloomberg, Maybank IBG Research Source: Bloomberg, Maybank IBG Research

Regional/Country Divergences: In Figure 5, we make cross-country comparison of

USD-denominated AT1 performance. But it is worth highlighting that some
countries have very few outstanding USD AT1s and we use Ringgit AT1s for
Malaysian banks due to the absence of USD-denominated AT1s. At the height of
AT1 fears, the European and Australia AT1 prices lost about 10-20pts. Market
conditions have since stabilized, and prices have recovered by half on average. For
Switzerland, we exclude Credit Suisse AT1s which have been written down in full
by the regulator. Overall, Asian banks AT1 outperformed and continue to hold up
better; they lost 3-7pts in prices at the low in March, but have since mostly or fully
recovered. Major North Asia and ASEAN banks are generally seen to have good
capital buffers and lower extension risk than the European peers. For Malaysia,
MYR AT1s have seen little change in prices through the US/Europe banking turmoil.

Figure 5: USD-denominated AT1s: Price Change Since March

20-Mar 25-Apr
5

-5

-10

-15

-20

-25

Source: Bloomberg, Maybank IBG Research

*Exclude Credit Suisse
**Malaysian banks have no outstanding AT1 bonds in USD. Price change in the chart is
estimated from Ringgit-denominated AT1.
***Sample size for each country varies with some like Indonesia, India, Philippines and
Singapore having only 1-2 outstanding AT1 bonds in USD.

April 30, 2023 3

Fixed Income Research

Bank Capitals: The Question of Seniority

In a rescue plan for Credit Suisse, the Swiss Financial Market Supervisory Authority
(FINMA) wrote down the bank’s AT1 bonds in full, which amounted to about CHF16b.
The deal included a takeover by UBS Group AG for CHF3b, preserving some value
for shareholders in a rare divergence from the pecking order in a bank capital
structure. The wipeout sparked concerns about the order of capital instruments
absorbing losses, especially AT1s that share similar non-viability terms. Revisiting
the history of credit loss in the AT1 sector:
 Not the First: The Credit Suisse wipeout is not the first time where the
AT1 ranking is relegated to below that of equity holders. In 2020, India’s
Yes Bank wrote down AT1s before common equity in a bank restructuring.
But the Bombay High Court quashed the write-down on the basis that the
administrator exceeded his powers and authority; the case remains
ongoing and is now at the Supreme Court of India.
 In other examples:
o Banco Popular’s junior capitals that include AT1s were written
off together with equity.
o SVB UK’s AT1 and T2 instruments were written off and the bank
was sold to HSBC for £1 following the failure of its US parent.
 Bank of Jinzhou: AT1 holders incurred some losses on a year worth of
coupon skips, but the principals were subsequently redeemed in full.
 Korea: Regulators had in 2009 pressured a local bank to reverse its
decision to not call its subddebt and again in Nov 2022, a local life insurer
overturned its initial decision to not call a USD perp to “clear a confusion
in markets”.
No Universal Approach. Overall, these examples show regulators decision making
will prioritize a practical approach towards protecting systemic stability and use
flexibility within regulatory frameworks and proactive oversight to do so.

Figure 6: Precedent Cases of AT1 Loss Absorption

Year Country Bank Regulator What happened

2017 Spain Banco Popular ECB  Bought over by Santander for EUR1.
 Equity was wiped out as well as the AT1 and T2 bonds, as ECB deemed the bank was
at a point of non-viability.
 Bondholders still complained of foul play and pursued legal action against the
regulator.
 In a news dated 1 Jun 2022, the EU court rejected claims by shareholders and
creditors over losses suffered.

2019 China Bank of Jinzhou CBIRC  Bank of Jinzhou announced that it will cancel coupon payments on offshore AT1 USD
bonds for one year.
 Financial results showed significant losses in 2018 and 1H19 due to increased
provisions, which pushed the CET1 ratio down to 5.14% at the end of June 2019,
marginally above the 5.125% trigger for mandatory conversion of AT1 instruments.
 Investments from various state-backed firms kept the bank afloat.
 The impact on China’s AT1 market was short-lived as a wave of AT1 issuance emerged
in 2020. In Oct 2022, Bank of Jinzhou repaid the principal of the AT1 bonds.

2020 India Yes Bank RBI  Deteriorating financial position led Yes Bank, one of India’s largest private banks, to
write-down its AT1 bonds in March 2020.
 But the write-down of AT1s was done without first writing down the bank’s
common equity.
 In Jan 2023, the Bombay High Court quashed Yes Bank's write-off AT1s as it came after
the bank had been reconstituted and as such, the administrator did not have the
power to make such a decision.
 On 4 Mar 2023, the Supreme Court of India extended the stay granted on the high
court's order.

2023 UK Silicon Valley Bank BOE  On 13 Mar 2023, problems with the US parent led to a loss of confidence in SVB UK,
UK (SVB UK) and the BOE used its resolution powers for stabilising failing banks to write-down SVB
UK’s AT1 and T2 capital instruments in full, and transfer shares for SVB UK to HSBC UK
April 30, 2023 4
Fixed Income Research

Bank plc for a nominal £1.

2023 Switzerland Credit Suisse FINMA  In a rescue deal, UBS will acquire Credit Suisse shares for CHF3b, but Credit Suisse
AT1s will be written off to zero as instructed by FINMA.
 FINMA says that a “viability event” took place on Sunday, 19 Mar 2023, the day of the
UBS deal. On the same day, the Swiss Federal Council enacted the Emergency
Ordinance on Additional Liquidity Assistance Loans and the Granting of Federal Default
Guarantees for Liquidity Assistance Loans by the Swiss National Bank to systemically
important banks. The ordinance also authorizes FINMA to order the borrower and the
financial group to write-down AT1 capital.

Source: News Reports

Regulator’s Stance: Swiss the Outlier. To reassure markets, regulators in the

major and regional financial markets that include the Eurozone, UK, Japan, Hong
Kong, Singapore and Malaysia have taken a stance that respect the hierarchy of
claims in a bank resolution in a clear deviation from the Swiss regulator (Figure 7):
Singapore’s MAS issued a statement saying “…it intends to abide by the hierarchy
of claims in liquidation. This means that equity holders will absorb losses before
holders of Additional Tier 1 (AT1) and Tier 2 capital instruments”. For Malaysia,
BNM Governor Shamsiah a press briefing stated that “In terms of our policy, the
ranking of creditors follows what we call the Financial Stability Board’s (FSB) Key
Attributes of Effective Resolution Regimes for Financial Institutions. So AT1
holders are more senior than equity holders”. See Figure 8 for excerpts on AT1
ranking from BNM’s Capital Adequacy Framework. While in Japan, the Finance
Minister clarified to parliament that AT1s by Japanese banks do not share the same
terms that would lead to principal reduction in a government bailout.

Figure 7: Extracts of Statements on AT1 Treatment from Central Banks and Monetary Authorities

Country Regulator Statement (extract)

Eurozone ECB 20 Mar (Media release)
 “The resolution framework implementing in the European Union the reforms recommended by the Financial
Stability Board after the Great Financial Crisis has established, among others, the order according to which
shareholders and creditors of a troubled bank should bear losses.”
 “In particular, common equity instruments are the first ones to absorb losses, and only after their full use
would Additional Tier 1 be required to be written down. This approach has been consistently applied in past
cases and will continue to guide the actions of the SRB and ECB banking supervision in crisis interventions.”

UK BOE 20 Mar (Press statement)

 The UK’s bank resolution framework has a clear statutory order in which shareholders and creditors would
bear losses in a resolution or insolvency scenario. This was the approach used for the recent resolution of SVB
UK, in which all of SVB UK’s Additional Tier 1 (AT1) and T2 instruments were written down in full and the
whole of the firm’s equity was transferred for a nominal sum of £1.
 AT1 instruments rank ahead of CET1 and behind T2 in the hierarchy. Holders of such instruments should
expect to be exposed to losses in resolution or insolvency in the order of their positions in this hierarchy.

Hong Kong HKMA 22 Mar (Press release)

 “The Financial Institutions (Resolution) Ordinance establishes the legal basis for the resolution regime in Hong
Kong. Under the Ordinance, there is a clear order in which shareholders and creditors would bear losses in a
resolution scenario.”
 “Holders of capital instruments (including core equity capital, Additional Tier 1 (AT1) capital and Tier 2
capital) issued by a financial institution should expect to be treated in resolution in accordance with the
priority they would enjoy on a winding up of the institution. Accordingly, shareholders are the first ones to
absorb losses, followed by holders of AT1 and Tier 2 capital instruments.”

Singapore MAS 22 Mar (Media release)

 “…in exercising its powers to resolve a financial institution (FI), it intends to abide by the hierarchy of claims
in liquidation. This means that equity holders will absorb losses before holders of Additional Tier 1 (AT1) and
Tier 2 capital instruments.”
 “The creditor compensation framework will also apply in the exceptional situation where MAS departs from
the creditor hierarchy in order to contain the potential systemic impact of the FI’s failure or to maximise the
value of the FI for the benefit of all creditors as a whole.”

Japan BOJ 28 Mar (News)

 Japan’s Finance Minister Shunichi Suzuki said in parliament “Such special contracts are not applied to AT1
bonds of Japanese financial institutions, so there won't be reduction in principal in case of government-
backed bailouts.”

April 30, 2023 5

Fixed Income Research

Malaysia BNM 29 March (Press briefing)

 In a press briefing, governor Tan Sri Nor Shamsiah Mohd Yunus stated that “Additional Tier 1 (AT1) bonds
issued by Malaysian banks are ranked higher than equity holdings in the case of resolution.”
 “In terms of our policy, the ranking of creditors follows what we call the Financial Stability Board’s (FSB) Key
Attributes of Effective Resolution Regimes for Financial Institutions. So AT1 holders are more senior than
equity holders.”
 Clause 5.1 of FSB’s Key Attributes of Effective Resolution Regimes for Financial Institutions:
Resolution powers should be exercised in a way that respects the hierarchy of claims while providing
flexibility to depart from the general principle of equal (pari passu) treatment of creditors of the same
class, with transparency about the reasons for such departures, if necessary to contain the potential
systemic impact of a firm’s failure or to maximise the value for the benefit of all creditors as a whole. In
particular, equity should absorb losses first, and no loss should be imposed on senior debt holders until
subordinated debt (including all regulatory capital instruments) has been written off entirely (whether or
not that loss-absorption through write-down is accompanied by conversion to equity).

Source: Central Banks/Monetary Authorities, Banking Regulators and News Reports

Figure 8: Excerpts That Indicate the Ranking of AT1 Bonds

Document Clause Excerpt

1. BNM Capital Adequacy Framework 16.1(b) “the instrument is subordinated to depositors, general creditors and other holders of
subordinated debt of the financial institution.”
2. BNM Capital Adequacy Framework 15.1(c) “ordinary shares absorb the first and proportionately greatest share of any losses as
they occur, and each ordinary share absorbs losses on a going concern basis
proportionately and pari passu with all ordinary shares.”
“For the avoidance of doubt, the requirement for a permanent write-off feature in
capital instruments as set out in paragraph 34.1(b) does not negate this criterion being
met by ordinary shares.”
Source: BNM
*Notwithstanding BNM’s framework, investors should refer to the principal terms and conditions of each individual AT1 bond for the defined ranking
and status.

ASEAN Banks: AT1s Callable in 2023

Extension Risk: Non-ASEAN Examples: 1) In late-March, Deutsche Pfandbriefbank,
a small German real estate lender, decided to not call its AT1 bonds citing “market
conditions and economic costs”, indicating that small or weak banks were facing
more challenges to access markets or too expensive. 2) UniCredit announced it
would redeem its AT1 callable in Jun 2023 and has no plans to issue new AT1s in
the foreseeable future. Extension risk will be closely watched in the near term
given the market volatility caused by banking failures in the US and Europe and
having adequate capital levels is key for banks in current market conditions.
ASEAN Banks: Our regional bank analyst team opined that ASEAN banks are
generally well capitalized with sticky liquidity and conservative balance sheets,
and together with partial decoupling of domestic economies from the US downturn,
they are better placed to withstand negative spillovers from banking turmoil in the
US and Europe. (Report: ASEAN Banks: When the dust settles). We provide in Figure
9 the SGD-denominated AT1s and in Figure 10 the USD-denominated AT1s for ASEAN
banks by next call dates.

Figure 9: SGD AT1s by Call Date: All Banks

Outstanding
Next Call Median
Bonds Currency Country Amount
Date Rating
(Million)
24-Aug-23 OCBCSP 4 PERP SGD Singapore BBB 1,000
24-Sep-23 HSBC 5 PERP SGD UK BBB- 750
28-Nov-23 UBS 5 7/8 PERP SGD Switzerland N/A 700
16-Apr-24 SOCGEN 6 1/8 PERP SGD France BB 750
4-Sep-24 UBS 4.85 PERP SGD Switzerland N/A 750
3-Oct-24 STANLN 5 3/8 PERP SGD UK BB 750
12-Sep-25 DBSSP 3.98 PERP SGD Singapore BBB+ 1,000
15-Jan-26 UOBSP 2 1/4 PERP SGD Singapore N/A 150
17-Jul-26 UOBSP 3.58 PERP SGD Singapore BBB 750
April 30, 2023 6
Fixed Income Research

8-Jun-27 OCBCSP 3.9 PERP SGD Singapore BBB 500

15-Jul-27 SOCGEN 8 1/4 PERP SGD France BB 200
15-Sep-27 BACR 8.3 PERP SGD UK BB+ 450
4-Oct-27 UOBSP 4 1/4 PERP SGD Singapore BBB 400
19-Jan-28 UOBSP 5 1/4 PERP SGD Singapore BBB+ 850
28-Feb-28 BNP 5.9 PERP SGD France BBB- 600
15-Jun-28 BACR 7.3 PERP SGD UK BB+ 400
22-Jun-28 UOBSP 2.55 PERP SGD Singapore BBB 600
30-Sep-30 OCBCSP 3 PERP SGD Singapore BBB 200
Sources: Bloomberg, Maybank IBG Research

Figure 10: USD AT1s by Call Date: ASEAN Banks

Outstanding
Next Call Median
Bonds Currency Country Amount
Date Rating
(Million)
19-Oct-23 UOBSP 3 7/8 PERP USD Singapore BBB+ 650
2-Dec-24 TMBTB 4.9 PERP USD Thailand N/A 246
27-Feb-25 DBSSP 3.3 PERP USD Singapore BBB+ 1,000
27-Aug-25 RCBPM 6 1/2 PERP USD Philiippines N/A 300
23-Sep-25 BBLTB 5 PERP USD Thailand N/A 750
14-Oct-25 KBANK 5.275 PERP USD Thailand N/A 500
25-Mar-26 KTBTB 4.4 PERP USD Thailand N/A 600
10-Feb-27 KBANK 4 PERP USD Thailand N/A 350
24-Mar-27 BBNIIJ 4.3 PERP USD Indonesia N/A 600
Sources: Bloomberg, Maybank IBG Research

Malaysia Banks: Economic Consideration of AT1

AT1: Still Viable Funding Source: The cost of capital for AT1s remains lower than
the cost of equity (COE) for Malaysian banks (generally c.10%), although the gap
varies by bank: see Figures 11-14 for CIMB, Hong Leong Bank, Affin Bank and
Alliance Bank. The debt curves below are derived from the mark-to-market (MTM)
levels of existing bonds, and new issuances may require some concessions
depending on market conditions. To roughly gauge new AT1 pricing, by
conservatively assuming a 2.25x AT1-Senior spread multiple (typically 1.5-2.2x)
and applying on average 5-year AAA-AA3 senior FI composite spreads of 50-80bp,
this translates to 110-180bp AT1 spreads depending on issuers/rating, which we
think are not economically punitive to banks and still cheaper than the COE,
although local banks with good Tier-1 buffer and earnings to support RWA
consumption have no urgency to rush new issuances.
Wait-and See Approach: While theoretically MYR AT1 funding remains feasible
from a cost of capital point of view, there are practical considerations. To investors,
credit assessment may become more prudent, more selective on names and
demanding on yields to account for not just credit risk premiums, but also
structural subordination risk. To issuers/banks, issuing AT1 is probably not the
priority currently given ample Tier-1 capital buffers, and reputations are at stake
if the demand for their AT1 issuance falls short. We reckon banks will take a wait-
and-see approach while monitoring developments in the global and regional
banking sectors.

April 30, 2023 7

Fixed Income Research

Figure 11: CIMB Bank: Estimated Cost of Capital Figure 12: Hong Leong Bank: Estimated Cost of Capital

% Senior Tier-2 Subdebt AT1 COE* % Senior Tier-2 Subdebt AT1 COE* ROE*

12.00 14.00

10.00 12.00

10.00
8.00
8.00
6.00
6.00
4.00
4.00

2.00 2.00

- -
0 1 2 3 4 5 6 7 8 0 1 2 3 4 5
Debt Tenor Debt Tenor

Source: BPAM, Bloomberg, Maybank IBG Research

*Return on equity (ROE) and COE are estimated figures.
**Cost of debt for senior, T2 subdebt and AT1 are based on MTM levels of existing bonds, therefore no complete curves

Figure 13: Affin Bank: Estimated Cost of Capital Figure 14: Alliance Bank: Estimated Cost of Capital

% Senior Tier-2 Subdebt AT1 COE* ROE* % Senior Tier-2 Subdebt AT1 COE* ROE*

12.00 12.00

10.00 10.00

8.00 8.00

6.00 6.00

4.00 4.00

2.00 2.00

- -
0 1 2 3 4 5 0 1 2 3 4 5 6 7 8
Debt Tenor Debt Tenor

Source: BPAM, Bloomberg, Maybank IBG Research

*Return on equity (ROE) and COE are estimated figures.
**Cost of debt for senior, T2 subdebt and AT1 are based on MTM levels of existing bonds, therefore no complete curves

Malaysia Banks: AT1s Callable in 2023 and Supply Profile

Extension Risk: AT1s are perpetual debt instruments with a call option of at least
5 years. While the right to exercise the call is at the discretion of the issuer and
subject to BNM’s approval, banks are expected to redeem on call dates failing
which might cause tainting effect and raise questions on a bank’s financial strength.
Malaysian banks have a total of MYR2.9b callable AT1s in 2023 (Figure 15). The
upcoming callable AT1s to watch for are:
 Public Bank’s PBKMK 5.08% AT1 callable 26 Jun 2023 (Size: MYR100m).
We think it will likely be called. Public Bank’s MYR100m AT1s is small
relative to its total CET1 capital of MYR46.6b or a CET1 ratio of 14.6%.
The bank generates c.MYR5-6b net profit per annum and is expected to
grow to nearly MYR7b this year. Healthy earnings support RWA
consumption while loan growth is expected to moderate to 4.8% (2022:
5.3%), based on our equity research’s forecast. The bank’s last dividend
payout ratio was 53.9%. BNM’s approval is not expected to be a major
hurdle for AT1 redemption, in our view.
 Affin Bank’s AHBMK 5.8% AT1 callable 31 Jul 2023 (Size: MYR500m)
and Affin Islamic Bank’s AFFBNK 5.65% AT1 callable 18 Oct 2023 (Size:
MYR300m). AT1 maturities total MYR800m in 2H23. Upon redemption, it
reduces Affin Bank’s Tier-1 ratio from 17% to 15.6%, all else equal, which
April 30, 2023 8
Fixed Income Research

remains healthy. Affin Bank’s core net profit range was around MYR400-
500m, though more than doubled to MYR1.2b in 2022 helped by gains from
divesting its asset management arm. The bank paid out c.53% of net profit
in dividends for 2022. Absent the one-off gain, net profit should normalize
this year while continued loan growth and cost management should lift
net profit attributed to shareholders above the MYR527m in 2021, but may
not be sufficient to support RWA consumption considering the bank’s
target loan growth of 12%, and may reduce its CET1 ratio depending on
the RWA mix. Given the reputation risk and tainting effect of non-
redemption, we think it is more likely than not that Affin Bank will call
its AT1 bonds, unless banking sector outlook deteriorates unexpectedly,
but unclear if market conditions will permit to reissue AT1 replacements.

Figure 15: List of MYR AT1s by Call Date

Next Call Amount Tenor to AT1-Senior

Date Bonds ISIN Rating (MYR m) Call (y) Multiple (x)
26/6/2023 PBKMK 5.08% AT1 6/2023 MYBPZ1800054 AA3 100 0.2 1.5
31/7/2023 AHBMK 5.8% AT1 7/2023 MYBUZ1800955 A3 500 0.3 1.8
18/10/2023 AFFBNK 5.65% AT1 10/2023 MYBVZ1802819 A3 300 0.5 2.0
23/10/2023 CIMBMK 5.4% AT1 10/2023 MYBPZ1800088 A1 1,000 0.5 1.5
23/10/2023 CIMBMK 5.4% AT1 10/2023 MYBPZ1800096 A1 1,000 0.5 1.5
8/3/2024 AFGMK 5.95% AT1 3/2024 MYBDZ1900017 BBB1 100 0.9 1.8
29/3/2024 ABISMK 5.95% AT1 3/2024 MYBVZ1900753 BBB1 100 0.9 1.8
29/3/2024 HLBKMK 4.72% AT1 3/2024 MYBUZ1900524 A1 400 0.9 1.7
29/3/2024 HLFGMK 4.82% AT1 3/2024 MYBUZ1900516 A1 400 0.9 1.7
28/6/2024 CIMBMK 4.88% AT1 6/2024 MYBPZ1900078 A1 1,000 1.2 1.5
25/9/2024 MAYMK 4.08% AT1 9/2024 MYBVZ1901868 AA3 1,240 1.4 1.5
3/12/2025 CIMBMK 3.6% AT1 12/2025 MYBPZ2000134 A1 550 2.6 1.7
3/12/2025 CIMBMK 3.6% AT1 12/2025 MYBPZ2000118 A1 550 2.6 1.7
25/9/2026 MAYMK 4.13% AT1 9/2026 MYBVZ1901876 AA3 1,560 3.4 1.5
29/4/2027 HLBKMK 4.45% AT1 4/2027 MYBUZ2201443 A1 900 4.0 1.6
30/6/2027 AFGMK 5.5% AT1 6/2027 MYBPZ2200080 BBB1 150 4.2 1.5
24/8/2027 BIMBMK 5.16% AT1 8/2027 MYBVZ2203082 A3 500 4.3 1.7
14/10/2027 HL Islamic 4.7% AT1 10/2027 MYBVZ2203694 A1 400 4.5 1.5
14/10/2027 HLBKMK 4.7% AT1 10/2027 MYBUZ2202797 A1 400 4.5 1.5
14/12/2027 MBB Islamic 4.76% AT1 12/2027 MYBVZ2204775 AA3 1000 4.6 1.6
3/12/2030 CIMBMK 4% AT1 12/2030 MYBPZ2000142 A1 200 7.6 2.2
3/12/2030 CIMBMK 4% AT1 12/2030 MYBPZ2000126 A1 200 7.6 2.2
Source: BPAM, Maybank IBG Research
*As of 25 Apr

MYR Bank Debt: Supply Profile. The amount of callable AT1s this year is
manageable at around MYR2.9b and will increase slightly to MYR3.2b in 2024.
Besides AT1s, banks also have MYR5.2b of subdebts callable in 2023 and another
MYR14.1b next year. YTD bank capital issuances amounted to MYR2.3b as of 28 Apr,
comprising MYR1.8b subdebt and MYR0.5b senior bonds. Bank bond issuances tend
to pick up in the second half of the year and we maintain our forecast of c.MYR22b
gross issuance from banks & FIs for 2023 (2022: MYR25.4b). AmBank and AmBank
Islamic managed to privately placed MYR500m of subdebts in mid-March at the
onset of the global banking turmoil, probably helped by the positive rating action,
raised to AA3/positive from AA3/stable by RAM after the bank beefed up its capital
ratios to near pre-1MDB settlement levels.

April 30, 2023 9

Fixed Income Research

Figure 16: Bank Subdebts and AT1s Callable – by Year Figure 17: Bank Bond Issuances (exclude non-banks) – by
Capital
MYR b Subdebt AT1 MYR b Senior Subdebt AT1 Bank & FI maturities
20.0 30.0
18.0
16.0 25.0

14.0
20.0
12.0
10.0 15.0
8.0
10.0
6.0
4.0
5.0
2.0
0.0 0.0
2023 2024 2025 2026 2027 2028 2029 2030 2017 2018 2019 2020 2021 2022 YTD 2023

Source: BPAM, Maybank IBG Research Source: BPAM, Maybank IBG Research
*YTD2023 as at 28 Apr *YTD2023 as at 28 Apr

MYR Bank Debt: Outstanding Amount. The size of Ringgit AT1 space in Malaysia
PDS market is around MYR12.6b, which makes up 13% of all bank capital bonds,
though compared to the overall PDS market, AT1s’ share is small at just 1.6%. The
bulk of local bank bonds is mainly subdebts (56%), followed by senior debts (31%).
Figure 20 is a list of issuers with AT1 bonds and their respective loss absorption
mechanism.
Figure 18: Bank and DFI Bonds Outstanding – by Capital Figure 19: Banking Groups’ Outstanding Bonds – by Capital
AT1
MYR b Senior Subdebt AT1
13%
18.0
Senior
31% 16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Subdebt Affin Alliance AmBank CIMB Hong Maybank Public RHB
56% Bank Bank Leong Bank

Source: BPAM, Maybank IBG Research Source: BPAM, Maybank IBG Research
*As at 28 Apr *As at 28 Apr

Figure 20: List of Issuers with AT1s

FI AT1 Outstanding Nearest first
Issuer Rating Rating Notches (MYR m) call date Capital event Non-viable event
Affin Bank Berhad AA3 A3 3 500 2023 Write-off Write-off
Affin Islamic Bank Berhad AA3 A3 3 300 2023 Write-off Write-off
Alliance Bank Malaysia Berhad A1 BBB1 3 250 2024 Write-off Write-off
Alliance Islamic Bank Berhad A1 BBB1 3 100 2024 Write-off Write-off
Bank Islam Malaysia Berhad AA3 A3 3 500 2027 Write-off Write-off
CIMB Bank Berhad AAA A1 4 1,750 2023 Write-off/Equity Write-off
conversion
CIMB Group Holdings Berhad AA1 A1 3 2,750 2023 Write off/Equity Write-off
conversion
Hong Leong Bank Berhad AAA A1 4 1,700 2024 Write-off Write-off
Hong Leong Financial Group Berhad AA1 A1 3 400 2024 Write-off Write-off
Hong Leong Islamic Bank Berhad AAA A1 4 400 2027 Equity conversion Equity conversion
Malayan Banking Berhad AAA AA3 3 2,800 2024 Write-off Write-off
Maybank Islamic Berhad AAA AA3 3 1,000 2027 Write-off/Equity Write-off/Equity
conversion conversion
Public Bank Berhad AAA AA3 3 100 2023 Write-off Write-off
Source: BPAM, Maybank IBG Research
*As of 28 Apr

April 30, 2023 10

Fixed Income Research

Malaysia Banks: Credit Profile and Relative Value

Capital Buffers. In addition to loan loss provisioning, capital buffers help to absorb
credit losses. AT1 capitals are created with loss absorption feature standing second
in line after equity to absorb losses. Malaysian bank AT1 capitals can be 1) written
off upon the occurrence of a non-viability event which shall be determined by BNM
jointly with the Malaysia Deposit Insurance Corporation (PIDM) or capital
injection/equivalent support by the regulator/government, or 2) automatically
written down in part or in full if the CET1 ratio falls below 5.125%.
In Figure 22, we provide a summary of Malaysian bank capital positions, the
distance to trigger and the availability of outstanding AT1 capitals, although in
practice, other non-operating factors such as a bank’s market position, systemic
importance, access to market to replenish equity capitals and major shareholder
support could also affect the write-down risk of AT1. Malaysian banks have low
reliance on AT1s, and usually CET1 capital makes up over 90% of their Tier 1 capital
ratios.
Figure 21: Malaysian Banks Have Strong CET1 Capital

CET1 ratio Tier 1 ratio Total Capital ratio GIL ratio

20.0% 3.50%
18.0%
3.00%
16.0%
14.0% 2.50%
12.0% 2.00%
10.0%
8.0% 1.50%
6.0% 1.00%
4.0%
0.50%
2.0%
0.0% 0.00%
CIMB

Hong Leong
Public Bank
RHB Bank

AMMB
Maybank
Alliance

Affin Bank
Bank Islam
Bank

Bank

Source: Banks, Maybank IBG Research

Figure 22: Ample CET1 Buffer Available Before Capital Trigger Event
How Much
CET1 Automatic to Restore
Total (Every Trigger of from
Capital CET1 CET1 100bp CET1 Distance 5.125% to AT1 Subdebt
Bank ratio ratio Amount Drop) Ratio to Trigger 5.75%1 Outstanding Outstanding
% % MYR'b MYR'b % % MYR'b MYR'b MYR'b
Alliance
Bank 20.1 15.1 6.0 (0.4) 5.125 10.0 0.2 0.4 1.3
Bank Islam 19.4 13.6 6.4 (0.5) 5.125 8.5 0.3 0.5 1.7
Affin Bank 19.4 15.6 9.1 (0.6) 5.125 10.5 0.4 0.8 1.3
RHB Bank 19.3 16.9 23.8 (1.4) 5.125 11.8 0.8 0.0 3.4
Maybank 19.1 15.7 64.0 (4.1) 5.125 10.5 2.6 3.8 11.7
CIMB 18.5 14.5 48.3 (3.3) 5.125 9.4 2.1 4.5 16.1
Public Bank 17.6 14.6 46.6 (3.2) 5.125 9.4 2.0 0.1 6.0
Hong Leong
Bank 16.1 13.0 20.7 (1.6) 5.125 7.8 1.0 2.5 3.6
AMMB 16.0 12.7 15.4 (1.2) 5.125 7.6 0.8 0.0 4.4
Source: Banks, Maybank IBG Research
*On proforma basis
1
If CET1 ratio drops below 5.125%, it will trigger the automatic capital event write-off and the amount of AT1s to be written off or
converted into equity must immediately restore CET1 ratio to 5.75%. There may be situations where CET1 ratio falls well below
5.125% and may require more capital to move up to 5.75%.

April 30, 2023 11

Fixed Income Research

Bank Funding Profile and Liquidity Coverage. Unlike the liquidity crunch that led
to bank failures in the US and Europe, especially for banks with sector
concentration risk, Malaysia banks generally have stickier funding profiles. The
share of fixed deposits to total deposits range from 54%-73% and retail deposits
account for 14%-53% for the nine banks in Figure 23. Liquidity coverage ratios (LCR)
– a measure of banks’ liquid assets that can be easily sold at little or no loss of
value to meet 30 days of financial stress – mostly stand well above the minimum
100% (Figure 24).
History of Support. Malaysia regulators have a history of taking prudent and pre-
emptive measures to shore up market confidence. To preserve confidence in the
domestic financial system in the lead-up to the Global Financial Crisis in Oct 2008,
BNM announced jointly with PIDM that 1) all Ringgit and foreign currency deposits
with commercial, Islamic and investment banks, and deposit taking DFIs regulated
by BNM, are fully guaranteed by the government through PIDM until Dec 2010, and
2) access to BNM’s liquidity facility will be also extended to insurance companies
regulated by BNM.

Figure 23: High Proportion of Sticky Funding Figure 24: Liquidity Coverage Ratio
% of FD deposits % of Retail deposits Minimum
180%
Affin Bank 160%
RHB Bank 140%
120%
Public Bank
100%
Hong Leong
Bank 80%
AMMB 60%
Bank Islam 40%
20%
Maybank
0%

Affin Bank
AMMB
Maybank

RHB Bank
Bank Islam
CIMB

Public Bank
Hong Leong
Alliance

CIMB
Bank

Bank
Alliance
Bank
0% 10% 20% 30% 40% 50% 60% 70% 80%

Source: Banks, Maybank IBG Research Source: Banks, Maybank IBG Equity Research

Relative Value: Based on MTM levels, AT1s are marked on AT1-Senior spread
multiples of 1.5-2.2x and a median of 1.6x to account for the risk of structural
subordination, coupon skips, and extension and bail-in risks.
 CIMB: CIMBMK 4% AT1s (A1) callable 3 Dec 2030 gives a 2.2x AT1-Senior
multiple, the highest among MYR AT1s, probably in part due to its longer
non-call tenor. In comparison, HLBKMK AT1s (A1) callable 2024 and 2027
give tighter multiples of 1.5-1.7x. CIMB is a domestically important bank
(D-SIB) with healthy CET1 and total capital ratios of 14.5% and 18.5%
respectively, though its GIL ratio remains higher than peers at 3.3% due
to legacy loans that have been fully provided for.
 Alliance Bank: AFGMK 5.5% AT1 (BBB1) callable 30 Jun 2027 gives a AT1-
Senior multiple of 1.5x, tighter than the 1.7-2.0x spread multiples for the
higher-rated AT1s of Affin Bank (A3) and Bank Islam (A3). Alliance Bank
has a FI rating of A1 and its AT1s are rated 3 notches lower at BBB1.

April 30, 2023 12

Fixed Income Research

Research Offices
ECONOMICS REGIONAL EQUITIES SINGAPORE INDONESIA
Suhaimi ILIAS Anand PATHMAKANTHAN Thilan WICKRAMASINGHE Head of Research Jeffrosenberg CHENLIM Head of Research
Chief Economist Head of Regional Equity Research (65) 6231 5840 thilanw@maybank.com (62) 21 8066 8680
Malaysia | Philippines | Global (603) 2297 8783 • Banking & Finance - Regional Jeffrosenberg.lim@maybank.com
(603) 2297 8682 anand.pathmakanthan@maybank-ib.com • Consumer • Strategy • Banking & Finance • Property
suhaimi_ilias@maybank-ib.com
WONG Chew Hann, CA Eric ONG Willy GOUTAMA
CHUA Hak Bin Head of ASEAN Equity Research (65) 6231 5849 ericong@maybank.com (62) 21 8066 8500
Regional Thematic Macroeconomist (603) 2297 8686 • Healthcare • Transport • SMIDs willy.goutama@maybank.com
(65) 6231 5830 wchewh@maybank-ib.com • Consumer
chuahb@maybank.com Kelvin TAN
MALAYSIA (65) 6231 5837 kelvin.tan1@maybank.com Richard SUHERMAN
LEE Ju Ye • Telcos • Industrials (62) 21 8066 8691
Singapore | Thailand | Indonesia Anand PATHMAKANTHAN Head of Research richard.suherman@maybank.com
(65) 6231 5844 (603) 2297 8783 LI Jialin • Metals & Mining
leejuye@maybank.com anand.pathmakanthan@maybank-ib.com (65) 6231 5845 jialin.li@maybank.com
• Strategy • REITs Etta Rusdiana PUTRA
Dr Zamros DZULKAFLI (62) 21 8066 8683
(603) 2082 6818 WONG Chew Hann, CA Jarick SEET etta.putra@maybank.com
zamros.d@maybank-ib.com (603) 2297 8686 (65) 6231 5848 jarick.seet@maybank.com • Telcos
wchewh@maybank-ib.com • Technology
Fatin Nabila MOHD ZAINI • Non-Bank Financials (stock exchange) William Jefferson W
(603) 2297 8685 • Construction & Infrastructure Krishna GUHA (62) 21 8066 8563
fatinnabila.mohdzaini@maybank-ib.com (65) 6231 5842 krishna.guha@maybank.com william.jefferson@maybank.com
Desmond CH’NG, BFP, FCA • REITs • Property
Brian LEE Shun Rong (603) 2297 8680
(65) 6231 5846 desmond.chng@maybank-ib.com PHILIPPINES Satriawan Haryono, CEWA, CTA
brian.lee1@maybank.com • Banking & Finance (62) 21 8066 8682
Jacqui de JESUS Head of Research satriawan@maybank.com
Luong Thu Huong LIAW Thong Jung (63) 2 8849 8840 • Chartist
(65) 6231 8467 (603) 2297 8688 tjliaw@maybank-ib.com jacqui.dejesus@maybank.com
hana.thuhuong @maybank.com • Oil & Gas Services- Regional • Strategy • Conglomerates VIETNAM
• Automotive
FX Rachelleen RODRIGUEZ, CFA Quan Trong Thanh Head of Research
ONG Chee Ting, CA (63) 2 8849 8843 (84 28) 44 555 888 ext 8184
Saktiandi SUPAAT (603) 2297 8678 ct.ong@maybank-ib.com rachelleen.rodriguez@maybank.com thanh.quan@maybank.com
Head of FX Research • Plantations - Regional • Banking & Finance • Transport • Telcos • Strategy • Banks
(65) 6320 1379
saktiandi@maybank.com YIN Shao Yang, CPA Daphne SZE Hoang Huy, CFA
(603) 2297 8916 samuel.y@maybank-ib.com (63) 2 8849 8847 (84 28) 44 555 888 ext 8181
Fiona LIM • Gaming – Regional daphne.sze@maybank.com hoanghuy@maybank.com
(65) 6320 1374 • Media • Aviation • Non-Bank Financials • Consumer • Strategy • Technology
fionalim@maybank.com
TAN Chi Wei, CFA Miguel SEVIDAL Le Nguyen Nhat Chuyen
Alan Lau (603) 2297 8690 chiwei.t@maybank-ib.com (63) 2 8849 8844 (84 28) 44 555 888 ext 8082
(65) 6320 1378 • Power • Telcos miguel.sevidal@maybank.com chuyen.le@maybank.com
alanlau@maybank.com • REITs • Property • Gaming • Oil & Gas • Logistics
WONG Wei Sum, CFA
Shaun Lim (603) 2297 8679 weisum@maybank-ib.com Fiorenzo de JESUS Nguyen Thi Sony Tra Mi
(65) 6320 1371 • Property • Glove (63) 2 8849 8846 (84 28) 44 555 888 ext 8084
shaunlim@maybank.com fiorenzo.dejesus@maybank.com trami.nguyen@maybank.com
Jade TAM • Utilities • Consumer Discretionary
STRATEGY (603) 2297 8687 jade.tam@maybank-ib.com
• Consumer Staples & Discretionary Alexa Mae CARVAJAL Tran Thi Thanh Nhan
Anand PATHMAKANTHAN (63) 2 8849 8838 (84 28) 44 555 888 ext 8088
ASEAN Nur Farah SYIFAA alexamae.carvajal@maybank.com nhan.tran@maybank.com
(603) 2297 8783 (603) 2297 8675 • Consumer • Consumer Staples
anand.pathmakanthan@maybank-ib.com nurfarahsyifaa.mohamadfuad@maybank-ib.com
• Renewable Energy • REITs THAILAND Nguyen Le Tuan Loi
FIXED INCOME (84 28) 44 555 888 ext 8088
Arvind JAYARATNAM Chak REUNGSINPINYA Head of Research loi.nguyen@maybank.com
Winson PHOON, FCA (603) 2297 8692 (66) 2658 5000 ext 1399 • Industrials
Head of Fixed Income arvind.jayaratnam@maybank.com chak.reungsinpinya @maybank.com
(65) 6340 1079 • Petrochemicals • Technology • Strategy • Energy Nguyen Thi Ngan Tuyen
winsonphoon@maybank.com Head of Retail Research
Shafiq KADIR, CFA Jesada TECHAHUSDIN, CFA (84 28) 44 555 888 ext 8081
SE THO Mun Yi, CFA (603) 2297 8691 (66) 2658 5000 ext 1395 tuyen.nguyen@maybank.com
(603) 2074 7606 msshafiqk.abkadir@maybank-ib.com jesada.t@maybank.com • Retail Research
munyi.st@maybank-ib.com • Healthcare • Software • Banking & Finance
Nguyen Thanh Lam
PORTFOLIO STRATEGY LOH Yan Jin Wasu MATTANAPOTCHANART (84 28) 44 555 888 ext 8086
(603) 2297 8687 (66) 2658 5000 ext 1392 thanhlam.nguyen@maybank.com
ONG Seng Yeow lohyanjin.loh@maybank-ib.com wasu.m@maybank.com • Chartist
(65) 6231 5839 • Ports • Shipping • Telcos
ongsengyeow@maybank.com
Eugene HOO Yee Hui Surachai PRAMUALCHAROENKIT
MIBG SUSTAINABILITY RESEARCH (603) 2082 6819 (66) 2658 5000 ext 1470
eugene.hoo@maybank.com Surachai.p@maybank.com
Jigar SHAH • Media • Auto • Conmat • Contractor • Steel
Head of Sustainability Research
(91) 22 4223 2632 TEE Sze Chiah Head of Retail Research Suttatip PEERASUB
jigars@maybank.com (603) 2082 6858 szechiah.t@maybank-ib.com (66) 2658 5000 ext 1430
• Retail Research suttatip.p@maybank.com
Neerav DALAL • Food & Beverage • Commerce
(91) 22 4223 2606 Nik Ihsan RAJA ABDULLAH, MSTA, CFTe
neerav@maybank.com (603) 2297 8694
nikmohdihsan.ra@maybank-ib.com
• Chartist

Amirah AZMI
(603) 2082 8769 amirah.azmi@maybank-ib.com
• Retail Research

April 30, 2023 13

Fixed Income Research

APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES

DISCLAIMERS
This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation
of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions
or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different
methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns
may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does
not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek
financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its
subsidiary and affiliates (collectively, “Maybank IBG”) and consequently no representation is made as to the accuracy or completeness of this report by Maybank IBG and it should not be
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Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations
apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.
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Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank Securities (Thailand) Public
Company Limited. Maybank Securities (Thailand) Public Company Limited (“MST”) accepts no liability whatsoever for the actions of third parties in this respect.
Due to different characteristics, objectives and strategies of institutional and retail investors, the research products of MST Institutional and Retail Research departments may differ in either
recommendation or target price, or both. MST reserves the rights to disseminate MST Retail Research reports to institutional investors who have requested to receive it. If you are an
authorised recipient, you hereby tacitly acknowledge that the research reports from MST Retail Research are first produced in Thai and there is a time lag in the release of the translated
English version.
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and
Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the
public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside
information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. MST does
not confirm nor certify the accuracy of such survey result.
The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the
policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission. Thaipat Institute made this assessment based on the information
received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2),
or other relevant documents or reports of such listed company. The assessment result is therefore made from the perspective of Thaipat Institute that is a third party. It is not an assessment
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date or when there is any change to the relevant information. Nevertheless, MST does not confirm, verify, or certify the accuracy and completeness of the assessment result.
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Inc. 1000 Wilshire Blvd, Los Angeles, California 90017, +1 (646) 604-4232 and not with the issuer of this report.

April 30, 2023 14

Fixed Income Research

UK
This document is being distributed by Maybank Securities (London) Ltd (“MSUK”) which is authorized and regulated, by the Financial Conduct Authority and is for Informational Purposes only.
This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for
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report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.

DISCLOSURES
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Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938- H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of
Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This report is distributed in Singapore by MRPL (Co. Reg No 198700034E) which is regulated
by the Monetary Authority of Singapore. Indonesia: PT Maybank Sekuritas Indonesia (“PTMSI”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by
the Financial Services Authority (Indonesia). Thailand: MST (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the
Securities and Exchange Commission. Philippines: Maybank Securities Inc (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and
Exchange Commission. Vietnam: Maybank Securities Limited (License Number: 117/GP-UBCK) is licensed under the State Securities Commission of Vietnam. Hong Kong: MIB Securities (Hong
Kong) Limited (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: MIB Securities India Private Limited (“MIBSI”) is a participant of the National Stock
Exchange of India Limited and the Bombay Stock Exchange and is regulated by Securities and Exchange Board of India (“SEBI”) (Reg. No. INZ000010538). MIBSI is also registered with SEBI as
Category 1 Merchant Banker (Reg. No. INM 000011708) and as Research Analyst (Reg No: INH000000057). UK: Maybank Securities (London) Ltd (Reg No 2377538) is authorized and regulated
by the Financial Conduct Authority.

Disclosure of Interest
Malaysia: Maybank IBG and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or
may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating
to those companies.

Singapore: As of 30 April 2023, Maybank Research Pte. Ltd. and the covering analyst do not have any interest in any companies recommended in this research report.

Thailand: MST may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors
should exercise their own judgment before making any investment decisions. MST, its associates, directors, connected parties and/or employees may from time to time have interests and/or
underwriting commitments in the securities mentioned in this report.

Hong Kong: As of 30 April 2023, MIB Securities (Hong Kong) Limited and the authoring analyst do not have any interest in any companies recommended in this research report.

India: As of 30 April 2023, and at the end of the month immediately preceding the date of publication of the research report, MIBSI, authoring analyst or their associate / relative does not
hold any financial interest or any actual or beneficial ownership in any shares or having any conflict of interest in the subject companies except as otherwise disclosed in the research report.
In the past twelve months MIBSI and authoring analyst or their associate did not receive any compensation or other benefits from the subject companies or third party in connection with the
research report on any account what so ever except as otherwise disclosed in the research report.
Maybank IBG may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of
the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned
or a related investment and may receive compensation for the services provided from the companies covered in this report.

OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s
compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming
the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward
interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured
product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of Maybank IBG.

Definition of Ratings
Maybank IBG Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (including dividends)
HOLD Return is expected to be between 0% to 10% in the next 12 months (including dividends)
SELL Return is expected to be below 0% in the next 12 months (including dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable
to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do
not actively follow developments in these companies.

April 30, 2023 15

Fixed Income Research

 Malaysia  Singapore  London  Hong Kong

Maybank Investment Bank Berhad Maybank Securities Pte Ltd Maybank Securities (London) Ltd MIB Securities (Hong Kong)
(A Participating Organisation of Maybank Research Pte Ltd PNB House Limited
Bursa Malaysia Securities Berhad) 50 North Canal Road 77 Queen Victoria Street 28/F, Lee Garden Three,
33rd Floor, Menara Maybank, Singapore 059304 London EC4V 4AY, UK 1 Sunning Road, Causeway Bay,
100 Jalan Tun Perak, Hong Kong
50050 Kuala Lumpur Tel: (65) 6336 9090 Tel: (44) 20 7332 0221
Tel: (603) 2059 1888; Fax: (44) 20 7332 0302 Tel: (852) 2268 0800
Fax: (603) 2078 4194 Fax: (852) 2877 0104

Stockbroking Business:  Indonesia  India  Philippines

Level 8, Tower C, Dataran Maybank, PT Maybank Sekuritas Indonesia MIB Securities India Pte Ltd Maybank Securities Inc
No.1, Jalan Maarof
Sentral Senayan III, 22nd Floor 1101, 11th floor, A Wing, Kanakia 17/F, Tower One & Exchange
59000 Kuala Lumpur
Jl. Asia Afrika No. 8 Wall Street, Chakala, Andheri - Plaza
Tel: (603) 2297 8888 Gelora Bung Karno, Senayan Kurla Road, Andheri East, Ayala Triangle, Ayala Avenue
Fax: (603) 2282 5136
Jakarta 10270, Indonesia Mumbai City - 400 093, India Makati City, Philippines 1200

Tel: (62) 21 2557 1188 Tel: (91) 22 6623 2600 Tel: (63) 2 8849 8888
Fax: (62) 21 2557 1189 Fax: (91) 22 6623 2604 Fax: (63) 2 8848 5738

 Thailand  Vietnam
Maybank Securities (Thailand) PCL Maybank Securities Limited
999/9 The Offices at Central World, Floor 10, Pearl 5 Tower,
20th - 21st Floor, 5 Le Quy Don Street,
Rama 1 Road Pathumwan, Vo Thi Sau Ward, District 3
Bangkok 10330, Thailand Ho Chi Minh City, Vietnam

Tel: (66) 2 658 6817 (sales) Tel : (84) 28 44 555 888

Tel: (66) 2 658 6801 (research) Fax : (84) 28 38 271 030

 Sales Trading

Indonesia London
Helen Widjaja Greg Smith
helen.widjaja@maybank.com gsmith@maybank.com
(62) 21 2557 1188 Tel: (44) 207-332-0221

Philippines India
Keith Roy Sanjay Makhija
keith_roy@maybank.com sanjaymakhija@maybank.com
Tel: (63) 2 848-5288 Tel: (91)-22-6623-2629

www.maybank.com/investment-banking
www.maybank-keresearch.com

April 30, 2023 16