RAM Ratings reaffirms Bank Rakyat’s AA2/P1 ratings

Published on 13 Oct 2022.

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RAM Ratings has reaffirmed Bank Kerjasama Rakyat Malaysia Berhad’s (Bank Rakyat or the Bank) AA2/Stable/P1 financial institution ratings (FIRs). We have also reaffirmed the ratings of the Bank’s sukuk, issued through its funding conduits (see Table 1).

The reaffirmations are premised on Bank Rakyat’s strong foothold in personal financing (PF) and the Bank’s robust loss absorption capacity. The ratings also consider our view that government support will be readily extended if needed, given Bank Rakyat’s status as a cooperative-cum-developmental financial institution (DFI).

Bank Rakyat boasts the largest share of the domestic PF market, which is mostly extended to civil servants. Its gross impaired financing (GIF) ratio climbed to 2.0% as at end-June 2022 (end-December 2021: 1.7%) following the expiry of pandemic-related relief measures. Rising inflationary pressures and interest rates may cause further asset quality slippages for the remainder of the year. The risk of material deterioration however is low in view of the Bank’s access to non-discretionary salary deductions – mainly administered by Biro Perkhidmatan Angkasa – through which the PF facilities are repaid. Bank Rakyat remains well positioned to absorb further potential impairments with its robust GIF coverage and capitalisation.

Financing receivables under relief programmes fell to less than 2% as at end-June 2022 from around 50% as at end-August 2021. Delinquencies post assistance have been contained so far. Financing which were impaired following missed payments constituted a small portion of receivables (~0.6% of total expired relief financing).

Sustained margins – which are consistently above industry averages – and the reversal of some of the Bank’s management overlays should lend support to earnings in the near term. Overall, we expect Bank Rakyat’s credit cost to ease to around 60 bps for full-year 2022 (FY Dec 2021: 71 bps; 1H FY Dec 2022: 69 bps). Under regulatory forbearance measures granted to DFIs, the Bank is temporarily shielded from the full impact of a modification loss. Most of the loss (estimated at around RM500 mil) will be taken to the Bank’s retained earnings on 1 January 2023. While this will shave circa 60 bps off the Bank’s capital ratios, the impact will be manageable owing to a strong Basel I tier-1 capital ratio of 23.4% as at end-June 2022.

Table 1: Bank Rakyat’s issue ratings



Imtiaz Sukuk II Berhad

RM10 billion Sukuk Wakalah Programme (2020/2050)


RM9 billion Islamic Medium-Term Notes Programme (2013/2023)


Mumtaz Rakyat Sukuk Berhad

RM5 billion Subordinated Sukuk Murabahah Programme (2016/2036)


  1. The ratings of Imtiaz Sukuk II Berhad and Mumtaz Rakyat Sukuk Berhad – both funding conduits of Bank Rakyat – are linked to the credit profile of the Bank as their Islamic structures provide recourse to Bank Rakyat by virtue of its obligations under purchase undertakings.
  2. The one-notch difference between Bank Rakyat’s long-term FIR and the rating of Mumtaz Rakyat's Subordinated Sukuk Murabahah reflects the subordination of the instrument to the Bank's senior obligations.


Analytical contacts
Amy Lo 
(603) 3385 2509

Lee Jo Yee
(603) 3385 2583


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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Ratings on Bank Kerjasama Rakyat Malaysia Berhad