Rating Release

 Agusto & Co. hereby downgrades the rating assigned to AB Microfinance Bank Limited to “Bbb+” with a stable outlook

 The rating expires on 30 June 2025.

Agusto & Co. hereby downgrades the rating assigned to AB Microfinance Bank Limited (“AB MFB”, or “the MFB”) to a ‘Bbb+’ due to the heightened threat to profitability and capitalisation posed by ballooning foreign currency (FCY)- denominated expenses and liabilities payable to the parent company. Nonetheless, the rating reflects AB MFB’s strong support from its foreign shareholders, good asset quality, strong liquidity profile, and experienced management team. However, the rating is constrained by the MFB’s dwindling profitability due to escalating foreign currency (FCY)-denominated expenses, borrowings and liabilities and skewness to costly tenured deposits. We have also considered the challenging business environment that is characterised by weak purchasing power and high inflation which has weakened the financial condition of the MFB’s target market – the micro borrowers.