MARC Ratings has affirmed its financial institution rating of AAA on Credit Guarantee Corporation Malaysia Berhad (CGC) with a stable outlook.
The rating reflects MARC Ratings’ assessment of very high government support for CGC, underpinned by its longstanding policy mandate to support micro, small and medium enterprises (MSME) financing, Bank Negara Malaysia’s (BNM) majority ownership of the company, and CGC’s key role in the government’s industrial and SME development agenda, including the provision of government-backed guarantee schemes.
CGC’s guarantee activity has moderated as a result of tighter bank credit policies, business competition, and restructuring among partner banks. New guarantees fell to RM1.9 billion in 2024 (2023: RM2.6 billion), reducing gross loans guaranteed to RM15.8 billion as of end-2024 (2023: RM16.1 billion), before declining further to RM15.1 billion in 1H2025. Moving forward, CGC’s business volumes are expected to benefit from BNM’s transition towards guarantee-based support for SMEs, announced under Budget 2026, through the introduction of a credit guarantee scheme targeting guaranteed financing amounting to RM10 billion.
Asset quality came under pressure in 2024 through 1H2025 amid portfolio contraction and macroeconomic pressures on MSMEs. Gross impaired guaranteed loans stood at RM1.3 billion in 1H2025, with the gross impairment ratio at 8.5% (2024: 6.8%; 2023: 4.5%). However, risk remains mitigated given the dominance of shared-risk guarantees (75.4% of guaranteed loan portfolio), negligible full-risk exposure, and a sizeable share of zero-risk government-backed schemes (24.4%).
CGC’s conservative investment portfolio supports stable investment income, which together with lower expected credit losses, drove improved profitability in 2024 and a turnaround to a RM46.8 million pre-tax profit in 1H2025 from a RM3.7 million loss in 1H2024.
CGC’s capitalisation is sound, with a higher Basel II-equivalent capital adequacy ratio of 54.1% as of end-2024 (2023: 48.4%). Leverage from the core guarantee business — measured by CGC’s net guarantee exposure over shareholders’ funds — declined to 1.39x from 1.55x, while liquidity remains adequate, supported mainly by equity and supplemented by low-cost government and BNM developmental funds.