RAM Ratings reaffirms Maybank’s AAA ratings

Published on 23 Jan 2020.

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RAM Ratings has reaffirmed Malayan Banking Berhad’s (Maybank or the Group) AAA/Stable/P1 financial institution ratings on the national and ASEAN scales, as well as the ratings of its debt programmes (Table 1 below). The reaffirmation of the ratings reflects Maybank’s dominant market position as the largest bank in Malaysia and its strong funding capabilities by virtue of an extensive branch network. The ratings also consider the Group’s sound earnings generation capacity and robust capital position. While we noted some weakening in Maybank’s asset quality, its sturdy loss absorption buffer is expected to comfortably cushion potential impairments in the prevailing macroeconomic landscape. Commanding about 18% each of the domestic market’s deposits and loans as at end-September 2019, Maybank is systemically important to Malaysia. It also ranks among the top five in the ASEAN region by asset size.

Slowing growth environments in Maybank’s home markets of Malaysia, Singapore and Indonesia have given rise to weaker repayment trends in non-retail borrower segments, seen in the deterioration of the Group’s key asset quality indicators in 9M fiscal 2019. The Group’s headline gross impaired loan ratio had climbed to 2.7% as at end-September 2019 (end-December 2018: 2.4%) while its credit cost ratio came in at an annualised 50 bps in 9M fiscal 2019 (fiscal 2018: 31 bps). Maybank had cited recent impairments as borrower-specific risks, with additional provisions made on Hyflux-related projects a contributory factor to higher impairment charges. While the prolonged US-China trade war and softer growth outlook could weigh on Maybank’s asset quality in the next 12-18 months, potential impairments are expected to be manageable in view of the Group’s sturdy loss absorption buffer in the form of sound pre-provision earnings and robust capitalisation.

Pre-provision profit was up 5% y-o-y at RM9.7 bil in 9M fiscal 2019 (9M fiscal 2018: RM9.2 bil), primarily on the back of stronger trading and investment income, while loan growth and interest income from an enlarged securities portfolio were minor contributors to earnings growth. Although higher impairments had negated these improvements – resulting in a marginally lower pre-tax profit of RM7.8 bil in 9M fiscal 2019 (-0.7%) – the Group’s bottom line still translated into a sound pre-tax return on risk-weighted assets of 2.7% on an annualised basis. Disciplined risk-based pricing and a current and savings account (CASA)-focused deposit-gathering strategy have held Maybank’s net interest margin steady at around 2.3% in the last five years, while its capital position remains one of the strongest among Malaysian domestic banking groups. The Group’s post-dividend common equity tier-1 capital ratio stood at a robust 14.4% as at end-September 2019 (end-December 2018: 14.5%).

Table 1: Ratings of Maybank’s debt instruments



RM20.0 bil Subordinated Note Programme (2012/-)


RM10.0 bil Additional Tier-1 Capital Securities Programme (2014/-)


RM10.0 bil Senior Medium-Term Note Programme (2015/-)


RM10.0 bil Commercial Paper/Medium-Term Note Programme (2016/2023)


RM10.0 bil Sukuk Programme (2017/-)

- Senior Sukuk Murabahah

- Subordinated Sukuk Murabahah

- Additional Tier-1 Sukuk Mudharabah






Analytical contact
Loh Kit Yoong
(603) 3385 2493

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
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