MARC Ratings has affirmed Bank Pertanian Malaysia Berhad’s (Agrobank) financial institution rating at AAA and the bank’s Islamic Medium-Term Notes Programme rating at AAAIS. The ratings outlook is stable.
The affirmation reflects MARC Ratings’ view of a very high likelihood of government support for the development financial institution, given the government’s full ownership and Agrobank’s policy role in advancing national agricultural and rural development objectives. As of end-2024, government-related funding accounted for 44.5% of Agrobank’s total funding, underscoring the government’s strong support for the bank’s policy mandate.
In 2024, gross financing and advances grew 8.2% to RM16.1 billion. Mandate-related exposures made up 70% of total financing, while the remaining 30% comprised mainly personal financing under salary deduction schemes with zero impairments. The gross impaired financing ratio inched up to 7.9% as of end-2024 (2023: 7.4%), and financing loss coverage (including regulatory reserves) stood at 60.4%, supported by 52.7% of total financing being collateralised.
Agrobank’s funding base remains stable, with deposits comprising 46.1% of total funding and a stable funding ratio of 75.8%, supported by other stable sources such as government financing scheme funds, grants, and debt issuances. The current and savings account ratio is high at 64.2%. Liquidity remains sound, with a liquidity coverage ratio of 216.6% and a net stable funding ratio of 133.2%. Capitalisation is adequate for Agrobank’s asset risk profile, reflected in a core capital ratio of 21.2% and a risk-weighted capital ratio of 26.6% as of end-2024.
Agrobank’s earnings are anchored by recurring net financing income, accounting for 86% of total income. Profit before tax and zakat declined 12.6% to RM188.0 million (2023: RM215.2 million), mainly due to higher overheads and credit costs from provisioning. The net profit margin eased to 3.7% (2023: 3.9%) as most financing growth in 2024 occurred late in the year, with the full income impact expected in the current year.