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RAM Ratings affirms Sabah Credit Corporation’s AA1/Stable/P1 issue ratings
Published on 30 Jul 2026.
RAM Ratings has affirmed the AA1/Stable/P1 ratings of Sabah Credit Corporation’s (SCC) sukuk programmes (Table 1).
The ratings reflect SCC’s healthy profitability, robust asset quality and comfortable gearing, partly offset by its concentrated financing portfolio, small market presence and wholesale funding reliance. The ratings also incorporate an uplift for a high likelihood of extraordinary support from the Sabah State Government (the State) – which wholly owns SCC – given its close relationship with the State and track record of government support. The state government’s implied strength is assessed as superior, underpinned by a healthy fiscal position.
SCC’s pre-tax profit rose 12.4% y-o-y to RM132.7 mil in FY Dec 2025 (FY Dec 2024: RM118.0 mil), mainly attributable to sustained portfolio expansion (+10.0% y-o-y) and higher fee income. Financing growth was fuelled by civil servant salary revisions and promotional campaigns. Personal financing accounts for about 95% of SCC’s RM3.6 bil in total financing, largely extended to civil servants. Repayments are predominantly made through non-discretionary salary deductions by Angkatan Koperasi Kebangsaan Malaysia Berhad, the Sabah state treasury and other state agencies, helping to keep credit risk low.
Asset quality stayed healthy, with the gross impaired financing (GIF) ratio unchanged y-o-y at 2.0% as at end-December 2025. The adjusted GIF ratio edged up to 1.6% (end-December 2024: 1.4%), mainly due to higher impairments in contractor financing and revolving credit facilities. Management has responded with tighter underwriting standards and more selective credit approval. Loss absorption was strong, with GIF and adjusted GIF coverage at 130.8% and 160.1%, respectively.
Reflective of sizeable lower-yielding cash balances, SCC’s net financing margin narrowed to 5.5% in FY Dec 2025 from 6.1% a year earlier. Gearing was a higher 3 times as at end-December 2025 (end-December 2024: 2.5 times) as SCC raised funding to support portfolio growth but remained comfortable for the rating. Refinancing risk is moderated by the expectation of state support if required.
Table 1: SCC’s issue ratings
Analytical contacts
Sean Lim, CFA
(603) 2708 8253
sean@ram.com.my
Lee Yee Von
(603) 2708 8217
yeevon@ram.com.my
Media contact
Sakinah Arifin
(603) 2708 8210
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 2026 by RAM Rating Services Berhad
