[RAM] RAM Ratings affirms Bank Simpanan Nasional's AAA rating

RAM Ratings has affirmed Bank Simpanan Nasional’s (BSN or the Bank) AAA/Stable/P1 financial institution ratings and the AAA/Stable rating on its RM3.5 billion Islamic Medium-Term Notes Sukuk Wakalah Programme (2021/-).

The affirmation reflects the bank’s critical public policy role and ‘very high’ likelihood of extraordinary government support, given its full ownership by the Ministry of Finance. BSN continues to serve the underserved and unserved consumer segments, with deposits fully guaranteed by the government under the Bank Simpanan Nasional Act 1974. Crucially, BSN remains the only designated payee bank for government cash aid to recipients without bank accounts.

BSN’s gross impaired loan (GIL) ratio, adjusted to exclude financing funded by government grants, inched up to 1.7% as at end-June 2025 (end-December 2023: 1.5%; industry: 1.4%). This was primarily due to impairments in the personal financing (PF) portfolio, particularly financing under the EPF Account 2 Support Facility and non-salary deductible PF. The gradual run-off of EPF savings-backed loans, which ended in 2024, should limit credit risks from this portfolio.

The Bank’s sizeable portfolio of salary-deductible PF to civil servants (31% of total financing) is expected to minimise further credit deterioration. As at end-June 2025, the GIL ratio for the portfolio stood at 0.6%, well below the industry average of 2.2%. Adjusted GIL coverage (including regulatory reserves) of 113% affords an adequate buffer against potential losses. The Bank’s GIL ratio is expected to remain around current levels by end-2025.

BSN’s modest profitability reflects a high operating cost structure aligned with its financial inclusion agenda. The cost-to-income ratio averaged 76% over the past three years and is anticipated to stay elevated on the back of planned investments in digital initiatives. Despite a wider annualised net interest margin of 2.6% in 1H FY Dec 2025 (1H FY Dec 2024: 2.3%, annualised), higher operating expenses and impairment allowances pushed pre-tax profit down slightly to RM234 mil. The annualised return on risk-weighted assets was accordingly softer at 1.1% (FY Dec 2024: 1.3%).

BSN’s Basel 1 tier-1 capital and total capital ratios eased to a respective 13.2% and 18.4% as at end-June 2025 (end-December 2023: 13.7% and 19.9%) due to robust financing growth of 14.1% in the preceding 18-month period. The Bank expects capital ratios to edge down by the end of the year, driven by continued financing expansion and annual dividend distributions.


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

Chan Yin Huei
(603) 2708 8296
yinhuei@ram.com.my

Media contact
Sakinah Arifin
(603) 2708 8212
sakinah@ram.com.my