[RAM] RAM Ratings affirms AMMB Group's ratings at AA2/P1, outlook stable
RAM Ratings has affirmed AMMB Holdings Berhad’s (AMMB or the Group) corporate credit ratings and the financial institution ratings of its banking subsidiaries at AA2/P1. All long-term ratings carry a stable outlook.
AMMB continues to maintain a healthy overlay reserve, which stood at RM514 mil as at end-December 2024. Its gross impaired loan ratio held steady at 1.7% on the same date as the credit cost ratio eased to 17 bps in the absence of one-off items as well as provision reversals. The Group’s strong capitalisation and healthy profit-generating capacity should enable it to navigate heightened economic risks from the US administration’s tariff policy. The direct exposure of AMMB’s loan book to tariffs (estimated at a little under 5%) is deemed manageable given the short-term nature of the loans, although the knock-on effects on the broader economy remain uncertain at this stage.
AMMB’s net loan-to-funds ratio, which includes funding from Cagamas, senior notes and capital securities, is still at a comfortable level of 87%. The proportion of current and savings account (CASA) deposits made up a reduced 32% of total deposits as at end-December 2024 (end-March 2024: 37%) as the Group trims off costlier non-retail CASA deposits. Notably, individual deposits still constituted a respectable 40% of total deposits, providing granularity.
Profitability is deemed moderate, with the three-year average pre-tax return on assets and return on risk-weighted assets at 1.0% and 1.5%, respectively, in fiscal 2024. The Group expects to close FY Mar 2025 with a stronger net interest margin (NIM) of 1.9% following active asset-liability management. Focused growth in the business banking segment should gradually push up the Group’s overall NIM owing to the more attractive yields. Efforts to contain the cost-to-income ratio at 40% in the medium term should further support profitability.
Analytical contacts
Chan Yin Huei
(603) 2708 8296
yinhuei@ram.com.my
Wong Yin Ching, CFA
(603) 2708 8280
yinching@ram.com.my
Media contact
Sakinah Ariffin
(603) 2708 8212
sakinah@ram.com.my