RAM Ratings assigns P1 rating to Alliance Bank’s proposed RM500 million CP Programme

Published on 14 Jun 2022.

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RAM Ratings has assigned a short-term rating of P1 to Alliance Bank Malaysia Berhad’s (the Group) proposed RM500 mil Commercial Papers Programme. Concurrently, we have reaffirmed the Group’s financial institution ratings of A1/Stable/P1 and the ratings of its existing debt facilities (Table 1). 

Alliance Bank’s key credit metrics have stayed largely intact since our last review in January 2022. As with other industry players, the Group’s underlying asset quality remains obscured by ongoing repayment assistance. Loans benefiting from relief measures more than halved to 13.6% of its loan portfolio as at mid-May 2022 from mid-November 2021, albeit still above the industry average of 8.4%. This, coupled with intensified collection efforts, lowered the Group’s gross impaired loan (GIL) ratio to 1.8% as at end-March 2022 (end-March 2021: 2.3%), bringing it closer to the industry’s 1.5%. 

While some bad debts may crystalise in the coming months, Alliance Bank has strong loss absorption buffers to tide over asset quality headwinds. Its capital position remained robust, with a post-dividend common equity tier-1 capital ratio of 16.0% as at end-March 2022 (without transitional arrangement: 14.6%). With sizeable management overlays in FY Mar 2021 and FY Mar 2022, the Group has fortified its GIL coverage, which stood at 142% (including regulatory reserves) as at the same date. 

Owing to its rich pool of high-yielding loans and a favourable funding mix, Alliance Bank’s net interest margin (three-year average: 2.4%) is among the broadest in the industry, underpinning its earnings profile. Pre-tax profit jumped 71% y-o-y in FY Mar 2022, largely owing to significantly lower net impairment charges (FY Mar 2022: RM239 mil; FY Mar 2021: RM506 mil). This translated into a stronger return on risk-weighted assets of 2.2% (FY Mar 2021: 1.3%).

Table 1: Ratings of entities under Alliance Bank



Alliance Bank Malaysia Berhad








Financial Institution Ratings

RM500 million Commercial Papers Programme (2015/2022)

RM1.5 billion Senior Medium-Term Notes Programme (2015/2045)

RM2.0 billion Subordinated Medium-Term Notes Programme (2015/2045)

RM1.0 billion Additional Tier-1 Capital Securities Programme (2017/-)

Proposed RM500 million Commercial Papers Programme








Analytical contacts
Tan Shu Xuan
(603) 3385 2497

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.

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Ratings on Alliance Bank Malaysia Berhad