RAM Ratings reaffirms AmBank Group’s AA3/Stable/P1 ratings

Published on 11 Jan 2022.

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RAM Ratings has reaffirmed the AA3/Stable/P1 corporate credit ratings of AMMB Holdings Berhad (AMMB or the Group) and the financial institution ratings of its subsidiaries, AmBank (M) Berhad, AmBank Islamic Berhad and AmInvestment Bank Berhad. The ratings of debt securities issued by AmBank and AmBank Islamic have also been reaffirmed (Table 1). Despite AMMB’s structural subordination as a non-operating holding company, its ratings are equated to those of its banking entities to reflect its debt-free status at holding company level. 

The reaffirmations are based on our view that AMMB will be able to preserve sound credit metrics over the intermediate term. As pandemic-related relief measures are obscuring underlying credit risks, impairments may start to crystallise when these are lifted. We believe AMMB’s healthy pre-provision earnings and sturdy loan loss coverage will serve as strong buffers for loss absorption. 

Pre-pandemic, the Group’s loan quality was healthy, faring favourably against some larger banking groups. Its gross impaired loan (GIL) ratio eased to 1.4% as at end-September 2021 (end-March 2020: 1.7%; industry: 1.6%), helped by ongoing assistance schemes and proactive collection efforts. AMMB has prudently built up a large pool of provisioning reserves through management overlay as reflected in its robust GIL coverage of 151% (industry: 121%). Total lending under relief was around 29% as at mid-November 2021, roughly similar to most banks (average of eight banking groups: 28%). 

A sizeable global settlement provision in March 2021 noticeably impacted AMMB’s capital levels but we note that measures to rebuild capital are firmly underway. The Group’s common equity tier-1 capital ratio improved to a reported 12.7% as at end-September 2021 (end-March 2021: 11.3%), driven by a RM825 mil private placement completed in April 2021 and profit accretion. Without transitional arrangement – an optional forbearance measure – the metric stood at a lower 11.6% (end-March 2021: 10.4%). Although still subject to regulatory approval, an ongoing corporate divestiture exercise for its general insurance arm is envisaged to provide a 25-bp capital uplift. Overall, the Group’s capitalisation is deemed moderate, ranking below its peers (industry average: 14.4%). 

Primarily due to the RM2.8 bil settlement, and the impairment of goodwill on legacy corporate exercises and acquisitions amounting to RM1.9 bil, the Group reported a pre-tax loss of RM3.5 bil in FY Mar 2021 (FY Mar 2020: RM1.8 bil pre-tax profit). As with all banks, AMMB’s performance was also weighed down by heftier provisions. Pre-provision profit accretion however is considered healthy, thanks to disciplined cost management and a steady net interest margin (~1.8%-1.9%). Earnings for 1H FY Mar 2022 rebounded by 21% y-o-y to RM973.4 mil because of broader margins, lower cost outlays and a smaller modification loss. Elevated credit costs, albeit lower, and the one-off prosperity tax will pressure its bottom line in FY Mar 2022 but the impact is expected to be manageable.

Table 1: Issuer and issue ratings of AMMB and its banking entities



AMMB Holdings Berhad

  1. Corporate Credit Ratings


AmBank (M) Berhad

  1. Financial Institution Ratings
  1. RM7 billion Senior Notes Issuance Programme (2010/2040)
  1. RM4 billion Tier-2 Subordinated Notes Programme (2013/2043)




AmBank Islamic Berhad

  1. Financial Institution Ratings
  1. RM3 billion Senior Sukuk Musyarakah Programme (2010/2040)
  1. RM3 billion Subordinated Sukuk Murabahah Programme (2014/2044)




AmInvestment Bank Berhad

  1. Financial Institution Ratings



Analytical contacts
Chow Kah Mun
(603) 3385 2501

Wong Yin Ching, CFA
(603) 3385 2555


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 2022 by RAM Rating Services Berhad

Rating Rationale: AMMB Holdings Berhad & AmBank (M) Berhad

Rating Rationale: AmBank Islamic Berhad

Rating Rationale: AmInvestment Bank Berhad

Ratings on AMMB Holdings Berhad