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RAM Ratings affirms alrajhi bank Malaysia’s AA1 rating
Published on 13 Nov 2026.
RAM Ratings has affirmed Al Rajhi Banking & Investment Corporation (Malaysia) Berhad’s (alrajhi bank Malaysia or the Bank) financial institution ratings at AA1/Stable/P1.
The ratings benefit from an uplift from parental support, reflecting our assessment of a ‘high’ likelihood of parental support from Al Rajhi Banking & Investment Corporation (the Group), the world’s largest Islamic bank by total assets. As a wholly owned subsidiary and key overseas operation, alrajhi bank Malaysia is integral to the Group’s growth strategy, notwithstanding its small contribution to Group revenue and earnings. The Group has demonstrated its commitment to alrajhi bank Malaysia through a previous RM542 mil equity injection, a USD550 mil liquidity facility and its subscription of SAR1.2 bil (about RM1.3 bil) of the Bank’s subordinated sukuk.
The Bank’s standalone credit profile is anchored by healthy asset quality and sound funding and liquidity, partly offset by its small market presence, modest capitalisation and weak profitability. alrajhi bank Malaysia accounts for less than 1% of the industry’s financing and deposits.
The gross impaired financing (GIF) ratio edged up to 0.7% as at end-June 2026 (end-December 2024: 0.6%), mainly attributable to higher delinquencies in the personal financing portfolio but remained well below the industry’s 1.4%. The annualised credit cost ratio correspondingly rose to 25 bps in 1H FY Dec 2026 (FY Dec 2025: 17 bps; FY Dec 2024: 24 bps). Asset quality in the corporate portfolio remained strong, with a GIF ratio of 0.4% as at end-June 2026, supported by the Bank’s focus on higher-quality mid-sized companies. Overall GIF coverage, including regulatory reserves, stayed ample at 238%.
Customer deposits grew 15% over the review period, while financing was broadly unchanged. Growth was driven mainly by wholesale deposits as the Bank recalibrated its funding mix to benefit from lower funding costs through foreign exchange swaps. Individual deposits consequently eased to 11% of total deposits as at end-June 2026 (end-December 2024: 13%). Nonetheless, current and savings account deposits remained stable at 37% of total deposits, supporting alrajhi bank Malaysia’s sound funding profile.
Pre-tax profit climbed 21% y-o-y to RM210 mil in FY Dec 2025 from RM173 mil the previous year, underpinned by wider margins and lower impairments. Earnings, however, moderated in 1H FY Dec 2026 amid higher impairment charges and operating expenses, lowering the annualised return on risk-weighted assets to 1.5%. Capitalisation is modest at the core-equity level, with the Bank’s common equity tier-1 capital ratio at 11.5% as at end-June 2026, at the lower end of the industry range. Its total capital ratio was much stronger at 21.6%, bolstered by subordinated sukuk subscribed by the Group.
Analytical contacts
Amira Shamsul, CFA
(603) 2708 8212
syahira@ram.com.my
Sophia Lee
(603) 2708 8211
sophia@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
© Copyright 2026 by RAM Rating Services Berhad
Ratings on Al Rajhi Banking & Investment Corporation (Malaysia) Berhad
