MARC Ratings has affirmed Bank Muamalat Malaysia Berhad’s (BMMB) financial institution (FI) ratings of A+/MARC-1/Stable and the ratings on instruments under the bank’s existing Sukuk Wakalah Programme of up to RM5.0 billion, as follows:
- Senior Sukuk Wakalah at A+IS/Stable
- Tier-2 Subordinated Sukuk Wakalah at AIS/Stable
- Additional Tier-1 (AT-1) Sukuk Wakalah at BBB+IS/Stable
The ratings reflect the relative seniority of the instruments, consistent with MARC Ratings’ notching framework.
The affirmed FI ratings reflect BMMB’s improving earnings profile, adequate capitalisation and resilient financing margins. The ratings are moderated by the bank’s reliance on wholesale funding and relatively modest market position within Malaysia’s competitive Islamic banking sector.
As at end-2025, BMMB remained the third-largest standalone Islamic bank in Malaysia, with total assets of RM45.7 billion. Financing growth moderated to 4.6% in 2025 (2024: 14.1%), below the domestic Islamic banking sector average of 7.9% and the overall banking system’s 4.8%. Asset quality weakened as anticipated amid slower financing growth, with the gross impaired financing ratio rising to 1.43% in 2025 (2024: 1.05%) and further to 1.52% as at 1Q2026, exceeding the industry average for the first time in recent years. The deterioration was driven mainly by retail financing exposures, including around RM100 million of accounts placed under Agensi Kaunseling & Pengurusan Kredit following a fraud-related incident in early 2025 that affected multiple banks.
As at 1Q2026, BMMB’s funding profile remained predominantly deposit-funded, with customer deposits accounting for 90.2% of total funding. The bank also maintained a current account savings account (CASA) ratio of 31.3%, above the industry average. These strengths are partly moderated by its relatively small retail funding base, which represented 12% of total deposits combined with investment accounts, and a top-20 depositor concentration of 47%, indicating continued reliance on wholesale funding. Nevertheless, liquidity remained strong, with liquidity coverage and net stable funding ratios of 160.3% and 108.3%, well above regulatory requirements.
BMMB’s pre-tax profit rebounded to RM307.1 million in 2025 from RM129.3 million in the previous year, driven mainly by a RM75.7 million reduction in financing loss provisions following elevated charges related to a sizeable legacy account in 2024. Net financing income remained the primary earnings driver, contributing more than 80% of total operating income.
As at 1Q2026, capitalisation remained sound, with capital ratios well above regulatory requirements. While the total capital ratio benefited from Tier 2 issuances, the Common Equity Tier 1 ratio remained adequate despite being below the industry average.