RAM Ratings has affirmed the AAA/Stable/P1 financial institution ratings for Malayan Banking Berhad and its banking subsidiaries. Concurrently, the ratings of the entities' sukuk/debt facilities have also been affirmed.

The rating action RAM said reflects Maybank's dominant market position as the largest bank in Malaysia, its healthy asset quality, strong funding capabilities and proven management track record. Maybank's diverse income sources continue to generate healthy operating income before impairment charges. This, combined with its robust capitalisation, provides the Group with sufficient financial headroom to withstand asset quality pressures. Considering Maybank's systemic importance to Malaysia, we believe extraordinary support will come through if needed.

As at end-June 2024, Maybank's gross impaired loan ratio eased to 1.3%, thanks to steady write-offs, strong recoveries and slower inflow of newly impaired loans. While there are pockets of vulnerabilities, particularly among certain self-employed and borrowers from the B40 income group, as well as retail SMEs, we expect the Group to effectively manage these risks through heightened monitoring, early intervention through loan restructurings and strengthened collection efforts. Loan loss coverage (including regulatory reserves) stayed robust at 156%. The Group expects the credit cost ratio to stay below 30 bps for fiscal 2024 (1H FY Dec 2024: 27 bps).

Maybank delivered solid financial results in 1H FY Dec 2024, registering an improved profit before tax of RM6.9 bil (+7.2% y-o-y). This performance was primarily driven by a notable 28.4% growth in non-interest income, fueled by stronger core fees, improved insurance contributions and gains from treasury and market activities. Continued investments in IT and digital spend kept cost-to-income ratio higher than average levels in the past (48.6% in 1H FY Dec 2024). Net interest margin (NIM) compressed 11 bps to 2.0% in 1H FY Dec 2024 compared to FY Dec 2023 on higher funding costs. Management plans to temper mortgage growth in 2H FY Dec 2024, prioritising higher-yielding commercial lending to bolster NIM, in addition to shedding off costlier deposits.

Maybank Islamic Berhad's and Maybank Investment Bank Berhad's FIRs mirror those of the Group, RAM added that given its view that these core subsidiaries are strategically important to the latter. Maybank Islamic, the Group's flagship Islamic banking entity, is the largest Islamic bank in Malaysia and is well regarded in the global Islamic finance industry. The Group's investment banking and stockbroking arm, Maybank Investment, is a prominent name in the local investment banking scene, consistently ranking among the top three in the domestic equity and debt capital market league tables.