[RAM] RAM Ratings affirms AAA ratings of HSBC Malaysia and HSBC Amanah

RAM Ratings has affirmed the AAA/Stable/P1 financial institution ratings of HSBC Bank Malaysia Berhad (HSBC Malaysia or the Bank) and HSBC Amanah Malaysia Berhad (HSBC Amanah). 

The rating affirmations underscore the Bank’s established domestic franchise and healthy credit metrics. Supported by prudent underwriting standards and robust loan provisioning buffers, HSBC Malaysia’s asset quality continued to improve and is expected to remain broadly stable, notwithstanding potential downside risks from US tariff policies and the knock-on effects. The ratings also consider our view that extraordinary parental support from HSBC Holdings plc (the Group) is ‘highly likely’ in times of need, given the Bank’s strategic importance to the former and integral role in supporting the Group’s pivot towards Asia and the wealth business. 

Excluding differences with industry norms, HSBC Malaysia’s adjusted gross impaired loan ratio eased to less than 1.5% as at end-March 2025 (end-December 2023: below 2%) on the back of a slower accretion of new impairments and strong recoveries. Its credit cost ratio stayed low at 9 bps (annualised) in 1Q FY Dec 2025 following a net reversal of impairment charges last year. 

The Bank exhibits a strong profitability profile, with the pre-tax return on assets and return on risk-weighted assets at 2.2% and 3.8%, respectively, in FY Dec 2024. Pre-tax profit climbed to RM2.2 bil in fiscal 2024, thanks to higher investment and fee income as well as a net writeback of loan provisioning charges. Net interest margin (NIM) stayed healthy at 2.8% as the deployment of excess liquidity into financial investments helped alleviate margin pressure from a smaller loan base. Cushioned by the reduction in the statutory reserve requirement, the NIM is expected to see a mild negative impact this year from the recent 25-bps overnight policy rate cut. 

HSBC Malaysia’s common equity tier-1 capital ratio held steady at 16.8% as at end-March 2025. Its funding and liquidity profile was still robust, backed by a high proportion of current and savings account deposits, which accounted for 59% of total deposits – well above the 34% industry average. 

HSBC Amanah’s ratings are equated to those of HSBC Malaysia, considering its strategic importance to the latter and the highly integrated operations of the two entities. We have also affirmed HSBC Amanah’s issue rating (Table 1).



 

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Sean Lim, CFA 
(603) 2708 8253 
sean@ram.com.my

Sophia Lee 
(603) 2708 8211
sophia@ram.com.my

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