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RAM Ratings affirms UOB Malaysia’s AAA/Stable/P1 ratings
Published on 12 Nov 2025.
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 rating reflects our view of a ‘very high’ likelihood of parental support from United Overseas Bank Limited (UOB Ltd or the Group), given the Bank’s highly strategic role as the Group’s core subsidiary in driving regional growth.
UOB Malaysia remains the leading locally incorporated foreign bank in Malaysia by total assets. Besides being a notable player in SME lending, the Bank is one of the largest credit card players in Malaysia - a position strengthened by the acquisition of Citibank Berhad’s consumer banking business in late 2022.
In 1H FY Dec 2025, UOB Malaysia reported a pre-tax profit of RM1.4 bil and return on risk-weighted assets (RoRWA) of 3.2% (annualised), lifted by net provision writebacks. Net interest margin (NIM) also widened to 2.15% (FY Dec 2024: 2.07%), supported by lower funding costs from an expanded base of low-cost deposits. Despite a higher cost structure post-acquisition, underlying pre-tax profit in FY Dec 2024 was 8.2% higher y-o-y, mainly boosted by stronger NIM and lower provisioning. Fee income from the enlarged credit card portfolio has also enhanced earnings diversity, with non-interest income rising to 35% of gross income in FY Dec 2024 (pre-acquisition: less than 30%).
As at end-June 2025, UOB Malaysia’s gross impaired loan (GIL) ratio was 2.5% (industry: 1.4%; end-December 2023: 2.6%), partly due to the Bank’s more conservative stance on borrower impairment and GIL reclassification, as well as relatively subdued lending growth in the last few years. The Bank’s longer timeframe for writing off mortgages also contributes to its higher GIL ratio. UOB Malaysia’s credit cost ratio ease to 15 bps in FY Dec 2024 (FY Dec 2023: 27 bps), with further improvement likely in 2025 based on the trend observed in 1H FY Dec 2025 (net writeback of 12 bps). We expect credit losses to remain well controlled in fiscal 2026, even as they normalise, supported by the Bank’s shift in its non-retail portfolio toward trade loans which typically carry lower credit risk and shorter tenures.
On the capital front, UOB Malaysia’s common equity-tier 1 (CET-1) capital ratio stood at 15.5% as at end-June 2025 (industry: 14.3%) (end-December 2023: 15.0%). We expect the Bank to sustain these solid capital levels, supported by its consistent profitability and measured approach to loan growth.
Table 1: UOB Malaysia’s issue ratings
Analytical contacts
Amy Lo
(603) 2708 8289
amy@ram.com.my
Jeremy Noel Paul
(603) 2708 8230
jeremynp@ram.com.my
Media contact
Sakinah Arifin
(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
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