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RAM Ratings affirms Cagamas’ ratings
Published on 19 Nov 2025.
RAM Ratings has affirmed Cagamas Berhad’s (Cagamas or the Company) corporate credit and issue ratings as shown below.
The affirmations reflect Cagamas’ robust credit metrics, supported by its prudent and conservative business practices. Despite an uncertain operating environment and the potentially higher risk from its business plans, the Company’s credit fundamentals are expected to remain resilient. As Malaysia’s national mortgage corporation, Cagamas plays a strategic role within the domestic financial system as a liquidity provider. It is one of the largest domestic issuers of corporate bonds and sukuk. Based on RAM’s rating methodology for government-linked entities, the ratings incorporate a high likelihood of government support in the event of financial distress.
Cagamas primarily acquires loans/financing assets from financial institutions, the Government of Malaysia and selected corporations on a purchase with recourse (PWR) or purchase without recourse (PWOR) basis. In 1H FY Dec 2025, PWR purchases rose sharply to RM12.9 bil (1H FY Dec 2024: RM4.5 bil) amid market volatility, translating into a 8.9% growth in gross receivables to RM47.5 bil. Notwithstanding cuts in the Statutory Reserve Requirement and overnight policy rate, liquidity demand remains strong and is expected to pick up in Q4. PWR purchases are on track to exceed 2024’s level of RM13.0 bil (FY Dec 2023: RM20.5 bil). No PWOR purchases were made in 1H FY Dec 2025 and FY Dec 2024.
Cagamas’ overall asset quality stayed robust, considering the significant proportion of highly rated counterparties for its PWR portfolio and minimal impairment losses from PWOR assets. The PWR portfolio continues to be the main income driver, although with lower margins relative to the PWOR portfolio. The Company’s selective acquisition strategy implemented last year has widened Cagamas’ net interest margin (NIM) to 0.69% (FY Dec 2023: 0.63%). Despite that, NIM is expected to remain under pressure without meaningful growth in the PWOR portfolio as contributions from newer products like Capital Management Solution and Reverse Mortgage are modest. Owing to earnings accretion, total capital and common equity tier-1 capital ratios improved to a respective 35.7% and 36.2% as at end-June 2025 (end-December 2023: 31.6% and 32.0%), adequate to support the Company’s business plans.
Moderating the ratings is the challenging business environment in which Cagamas operates, given a limited customer base and the banking system’s healthy capital and liquidity buffers. While Cagamas’ continues to serve as a reliable liquidity provider for financial institutions, the Company is challenged to make its product more cost-competitive given the narrow gap between Cagamas’ funding costs and highly rated banks. As it is solely dependent on the wholesale market for funding, Cagamas’ competitiveness depends on the pricing of its debt securities. That said, the Company enjoys ready access to domestic capital markets because of its quasi-government status. Liquidity and refinancing risks are seen to be minimal in view of the Company’s prudent asset-liability management.
Analytical contacts
Jeremy Noel Paul
(603) 2708 8230
jeremy@ram.com.my
Lim Chern Yit
(603) 2708 8302
chernyit@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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