RAM Ratings’ Banking Scoreboard shows better profitability by locally incorporated foreign banks

Published on 28 Mar 2019.

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RAM Ratings today released its Banking Scoreboard and Islamic Banking Scoreboard to facilitate peer comparison of Malaysian banks. The former is a publication that compares the 16 largest commercial banks in Malaysia across 23 metrics while the latter juxtaposes all 16 domestic Islamic banks with 24 metrics. Both reports serve as a reference for the ranking and assessment of banks.

Key findings of RAM’s Banking Scoreboard include locally incorporated foreign banks’ (LIFBs) better profitability relative to their domestic peers. Three LIFBs (out of five in our sample) stand among the top five banks by pre-tax return on risk-weighted assets (RoRWA) and pre-tax return on equity (ROE) for the financial period ended 30 September 2018. The key factors for their outperformance vary and include a larger portion of higher-yielding unsecured retail loans (Citibank Malaysia), good cost efficiency (UOB Malaysia) and lumpy impairment write-backs (Standard Chartered Malaysia).

A large base of low-cost funding also bolstered the profitability of Citibank Malaysia and Standard Chartered Malaysia. The Banking Scoreboard shows that these two LIFBs, together with HSBC Malaysia, boast much higher proportions of current and savings account (CASA) deposits (56%-65% as at end-September 2018) relative to their peers and the corresponding industry average (26%). This reflects their group-wide cash-management franchises and international networks – all three banks are part of global banking groups. The funding cost advantage has propelled these three LIFBs to the top five spots in terms of net interest margins.

Our analysis also reveals that smaller banks are better-capitalised. As at end-September 2018, banks with less than RM100 bil of assets reported an average common equity tier-1 (CET-1) capital ratio of 13.5%, i.e. 0.5 percentage points higher than the average for banks with more than RM100 bil of assets.

Meanwhile, RAM’s Islamic Banking Scoreboard illustrates that Islamic banks are more cost efficient than their conventional counterparts. Most of the domestic Islamic banks hail from universal banking groups and are able to leverage their parents’ branch networks and backroom operations, thereby pruning their costs. For the financial period ended 30 September 2018, Islamic banks recorded an average cost-to-income ratio of 40.6%, in contrast to 45.6% for the universal banks in our sample.

The full versions of the Banking Scoreboard and Islamic Banking Scoreboard are available for download at www.ram.com.my.


Analytical contact
Lim Yu Cheng, CFA, FRM
(603) 3385 2492

Media contact
Padthma Subbiah
(603) 3385 2577


The credit rating is not a recommendation to purchase, sell or hold a security, inasmuch as it does not comment on the security’s market price or its suitability for a particular investor, nor does it involve any audit by RAM Ratings. The credit rating also does not reflect the legality and enforceability of financial obligations.

RAM Ratings receives compensation for its rating services, normally paid by the issuers of such securities or the rated entity, and sometimes third parties participating in marketing the securities, insurers, guarantors, other obligors, underwriters, etc. The receipt of this compensation has no influence on RAM Ratings’ credit opinions or other analytical processes. In all instances, RAM Ratings is committed to preserving the objectivity, integrity and independence of its ratings. Rating fees are communicated to clients prior to the issuance of rating opinions. While RAM Ratings reserves the right to disseminate the ratings, it receives no payment for doing so, except for subscriptions to its publications.

Similarly, the disclaimers above also apply to RAM Ratings’ credit-related analyses and commentaries, where relevant.

Published by RAM Rating Services Berhad
© Copyright 2019 by RAM Rating Services Berhad

Publication Date Published Category
Banking Scoreboard 2019 28-Mar-2019 Bank Scoreboard View PDF

Islamic Banking Scoreboard 2019 28-Mar-2019 Bank Scoreboard View PDF