RAM Ratings affirms UOB Malaysia’s AAA rating

Published on 01 Nov 2023.

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RAM Ratings has affirmed United Overseas Bank (Malaysia) Bhd’s (UOB Malaysia or the Bank) AAA/Stable/P1 financial institution ratings as well as the ratings of its debt instruments (Table 1).

The affirmation reflects our view that parental support from United Overseas Bank Limited (UOB Ltd or the Group) will be forthcoming if needed, given the Bank’s high strategic importance to the Group. Among UOB Ltd’s largest asset and profit contributors outside Singapore, the Bank has built an entrenched local presence over three decades. 

The acquisition of Citibank Berhad’s (Citi Malaysia) consumer banking business has further strengthened the Bank’s retail footprint, making it one of the largest credit card players in Malaysia. In 1H 2023, the acquired higher-yielding Citi Malaysia retail business contributed to better pre-provision earnings, with the Bank’s fee income improving owing to higher card-related fees and net interest margin holding steady in contrast to the declining trend seen in the industry.

UOB Malaysia reported a gross impaired loan (GIL) ratio of 2.6% as at end-June 2023, which is improved from 2.9% a year earlier but still above pre-pandemic and industry levels. The relatively higher ratio is attributed to the Bank’s proactive impairment of borrowings and stringent policy of reclassifying impaired loans as performing only after all arrears have been cleared. UOB Malaysia’s GIL coverage of 89% as at the same date, while lower than the industry’s 92%, is reasonable considering its highly secured portfolio. We expect conservative underwriting practices and risk controls to continue to uphold the Bank’s sound asset quality.

UOB Malaysia’s post-acquisition common equity tier-1 capital ratio moderated to a still-healthy 15.4% as at end-June 2023 (end-June 2022: 18.0%; industry end-June 2023: 14.8%). A wide base of current and savings account deposits (38%) and individual deposits (54%) as at the same date underpin its favourable funding profile.

Table 1: UOB Malaysia’s issue ratings


Analytical contacts
Lee Yee Von
(603) 3385 2503

Sophia Lee
(603) 3385 2619

Media contact
Sakinah Arifin
(603) 3385 2500


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

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Ratings on United Overseas Bank (Malaysia) Bhd