RAM Ratings raises outlook on AmBank Group’s ratings to positive

Published on 10 Jan 2023.

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RAM Ratings has revised the rating outlook of AMMB Holdings Berhad (AMMB or the Group) and its banking subsidiaries to positive from stable. Concurrently, we have reaffirmed AMMB’s AA3/P1 corporate credit ratings as well as the financial institution ratings of 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). 

The positive outlook is driven by the demonstrable improvement in the Group’s capitalisation. As at end-September 2022, AMMB’s common equity tier-1 (CET-1) capital ratio of 12.2% (without transitional arrangement) had largely recovered to near pre-1Malaysia Development Berhad (1MDB) settlement level. Losses following its settlement with the government for its involvement in 1MDB had lowered its CET-1 capital ratio to 10.4% as at end-March 2021 (end-March 2020: 12.4%). 

The Group took decisive measures to restore its capital base, including a RM825 mil private placement in April 2021, concluding the partial divestment of its general insurance outfit and curtailing dividend payments. We expect profit accretion to be healthy over the remaining quarters of FY Mar 2023, enabling the Group to achieve a post-dividend CET-1 capital ratio (without transitional arrangement) of around 12.5% by end-March 2023. A CET-1 capital ratio at this level or higher on a sustained basis would merit a consideration for a rating upgrade, provided all other credit metrics stay intact. 

AMMB’s headline gross impaired loan (GIL) ratio of 1.5% as at end-September 2022 remained better than the industry’s 1.8%, notwithstanding a recent increase in impaired household loans. As with other banks, we expect the GIL ratio to creep up further when most of the Group’s remaining relief measures (about 4% of loans as at end-October 2022) expire by 4Q FY Mar 2023. Macroeconomic risks have risen but asset quality risk should be manageable, given large provisions for COVID-19-related slippages, tight monitoring of vulnerable segments and aggressive collection efforts. GIL coverage (with regulatory reserves) stood at a sound 106% as at end-September 2022.

AMMB staged a strong rebound in FY Mar 2022, achieving a pre-tax profit (adjusted for one-offs) of RM1.8 bil. This translates to a respective return on assets (ROA) and return on risk-weighted assets (RoRWA) of 1.0% and 1.5% (FY Mar 2021: 0.7% and 1.1%). Depressed trading and investment income was compensated by higher net interest income (+12% y-o-y) from healthy net interest margin (NIM) expansion and above-industry loan growth, as well as significantly lower impairment charges (-33% y-o-y). This encouraging performance was sustained in 1H FY Mar 2023, with ROA and RoRWA climbing further to an annualised 1.3% and 1.9%, respectively. The Group’s NIM is expected to hold steady at around 2.0%-2.1%. Although improved, the margin is still thinner relative to domestic banking groups’ (~2.3%-2.4%).

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
Chan Yin Huei
(603) 3385 2498

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 2023 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