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RAM Ratings affirms AMMB Group
Published on 22 May 2025.
RAM Ratings has affirmed AMMB Holdings Berhad’s (AMMB or the Group) corporate credit ratings and the financial institution ratings of its banking subsidiaries at AA2/P1. All long-term ratings carry a stable outlook.
The affirmations reflect our expectation that AMMB’s credit metrics will stay commensurate with its current ratings. AMMB’s asset quality indicators are projected to remain broadly sound, supported by strengthened oversight measures introduced since the COVID-19 pandemic. These measures have enabled the Group to identify and address emerging risks early. Under its Winning Together strategy (FY2025-FY2029), which emphasises a strategic pivot towards higher-yielding segments, business banking loans rose 10% for the first nine months of FY Mar 2025. In contrast, retail lending contracted by 1% over the same period, driven by an 11% decline in auto financing and more selective growth in mortgages (+2%). This shift is expected to enhance profitability in the medium term.
AMMB continues to maintain a healthy overlay reserve, which stood at RM514 mil as at end-December 2024. Its gross impaired loan ratio held steady at 1.7% on the same date as the credit cost ratio eased to 17 bps in the absence of one-off items as well as provision reversals. The Group’s strong capitalisation and healthy profit-generating capacity should enable it to navigate heightened economic risks from the US administration’s tariff policy. The direct exposure of AMMB’s loan book to tariffs (estimated at a little under 5%) is deemed manageable given the short-term nature of the loans, although the knock-on effects on the broader economy remain uncertain at this stage.
AMMB’s net loan-to-funds ratio, which includes funding from Cagamas, senior notes and capital securities, is still at a comfortable level of 87%. The proportion of current and savings account (CASA) deposits made up a reduced 32% of total deposits as at end-December 2024 (end-March 2024: 37%) as the Group trims off costlier non-retail CASA deposits. Notably, individual deposits still constituted a respectable 40% of total deposits, providing granularity.
Profitability is deemed moderate, with the three-year average pre-tax return on assets and return on risk-weighted assets at 1.0% and 1.5%, respectively, in fiscal 2024. The Group expects to close FY Mar 2025 with a stronger net interest margin (NIM) of 1.9% following active asset-liability management. Focused growth in the business banking segment should gradually push up the Group’s overall NIM owing to the more attractive yields. Efforts to contain the cost-to-income ratio at 40% in the medium term should further support profitability.
Analytical contacts
Chan Yin Huei
(603) 2708 8296
yinhuei@ram.com.my
Wong Yin Ching, CFA
(603) 2708 8280
yinching@ram.com.my
Media contact
Sakinah Ariffin
(603) 2708 8212
sakinah@ram.com.my
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 2025 by RAM Rating Services Berhad
Rating Rationale: AMMB Holdings Berhad & AmBank (M) Berhad
Rating Rationale: AmBank Islamic Berhad
