[RAM] RAM Ratings raises outlook on RHB Group's AA1 rating to Positive

RAM Ratings has revised the rating outlook on RHB Bank Berhad (RHB Bank or the Group) and its core subsidiaries, RHB Islamic Bank Berhad and RHB Investment Bank Berhad, to Positive from Stable (Table 1). The outlook change reflects the Group’s consistently strong operating performance and a continued strengthening of key credit metrics, particularly its funding mix.

Since our last assessment, the Group further increased the share of retail deposits to a higher 45% of total deposits, underlining growth momentum (end-2024: 43%), supported by strategic customer acquisition strategies (including its MySiswa programme targeting deposit capture within the higher education ecosystem) and higher take-up of its Multi-Currency Account. Asset quality indicators also remained sound, demonstrating sustained low credit impairment formation. Gross impaired loan ratio improved for a second consecutive year to an all-time low of 1.41% and is expected to remain contained, while credit costs were lower than management’s guidance and is projected to stay stable in 2026. Common equity tier-1 capital ratio remained stronger than peers’ despite an above-industry domestic loan growth and a higher dividend payout, indicating continued capacity to absorb stress while supporting growth.

Collectively, these developments provide stronger evidence that the improvements observed in our November 2025 review were not temporary and supportive of a more resilient operating profile, underpinning the outlook revision to Positive.

The Group’s pre-tax profit increased 9% to RM4.4 bil in FY Dec 2025, driven by lower impairment charges and higher net interest/finance income from balance sheet growth and more favourable funding costs. Higher fee income also supported profit growth but overall non-interest income declined, weighed down by lower treasury income. Over the past three years, RHB Bank generated an average pre-tax return on assets of 1.2%, supportive of internal capital generation. Solid pre-provision profit, together with a comfortable 129% loan loss coverage (including regulatory reserves), a largely collateralised loan book and robust capitalisation, provide buffers against potential downside risks, including those arising from ongoing geopolitical developments and possibly higher market volatility.

The Group’s ratings could be upgraded if it demonstrates sustained strengthening in its core credit profile. Key considerations will include: (i) continued improvement and stabilisation in the funding mix (with higher retail deposits and current- and savings-accounts), supporting lower funding volatility; (ii) consistently strong asset quality and contained credit costs; and (iii) the maintenance of robust capital buffers while supporting growth and higher shareholder distributions.

The ratings of RHB Islamic Bank and RHB Investment Bank remain aligned with the Group’s, reflecting their core status and our expectation of timely and strong parental support, if required.

As Malaysia’s fourth-largest banking group by total assets, RHB Bank benefits from a strong domestic franchise, with 8%-9% market share of loans and deposits. The Group also maintains meaningful positions in investment banking and Islamic banking, ranking as the third-largest Islamic bank domestically by assets.




Analytical contacts
Lee Yee Von
(603) 2708 8217
yeevon@ram.com.my

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

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