RAM Ratings has reaffirmed the AA1/Stable/P1 financial institution ratings of Hong Leong Islamic Bank Berhad. Hong Leong Islamic is wholly owned by Hong Leong Bank Berhad , and shares the group's common infrastructure, risk-management systems, backroom operations and distribution channels. This allows the bank to reap the benefits of economies of scale and reduce resource duplication. Hong Leong Islamic is considered highly strategic to Hong Leong Bank and RAM Ratings expects a high likelihood of parental support should the need arise. Hong Leong Islamic enjoys robust asset quality, a reflection of the Group's prudent credit-underwriting standards. As at end-September 2013 , its gross impaired-financing ratio stood at a low 1.5 per cent, better than the industry average of 2.0 per cent. In FY June 2013 , Hong Leong Islamic recorded MYR 54 million of write-backs on its financing impairment charges (FY June 2012 : MYR 79 million of impairment charges), underscored by better recoveries and a write-back on collective assessment allowance given its healthier financing portfolio. The bank's capitalisation levels were sound as at end-September 2013 , with common-equity tier-1 capital and total capital ratios at 10.5 per cent and 13.4 per cent, respectively. The bank has a strong liquidity profile and derives financial flexibility from its parent. Hong Leong Islamic's financing-to-deposits ratio remained sound at 75.1 per cent while its liquid-asset ratio came up to a healthy 33.7 per cent as at end-September 2013 . In FY June 2013 , Hong Leong Islamic's higher pre-tax profit of MYR 300.6 million (FY June 2012 : MYR 154.3 million ), reflected the fully consolidated profits of Hong Leong Islamic and the acquisition of EONCAP Islamic Bank Berhad's assets and liabilities. The better showing translated into an improved ROA of 1.4 per cent and a higher return on risk-weighted assets of 2.5 per cent for the year (FY June 2012 : 0.9 per cent and 1.8 per cent). Concurrently, the bank's ROE increased to 23.9 per cent (FY June 2012 : 15.1 per cent).
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