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Ratings

MARC Ratings affirms Bank Muamalat’s ratings

5 August 2025

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Contacts

Amirah Aisyah
+603-2717 2969/ amirah@marc.com.my

Darren Leong
+603-2717 2937/ darren@marc.com.my

Elmer Lim
+603-2717 2947/ elmer@marc.com.my

MARC Ratings has affirmed its financial institution ratings of A+/MARC-1/Stable on Bank Muamalat Malaysia Berhad (BMMB). The rating agency has concurrently affirmed its ratings on the bank’s 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 different seniority rankings of the instruments, in line with MARC Ratings’ methodology on notching principles of subordinated and hybrid instruments.

The affirmation reflects BMMB’s healthy asset quality, expectation of normalised profitability, and adequate capital buffers against regulatory minimums, tempered by its high reliance on wholesale funding and relatively small size in a competitive Islamic banking sector.

BMMB’s financing book grew by 14.1% in 2024, outpacing both the domestic Islamic banking industry (8.2%) and the overall banking industry (5.5%). Retail lending remains the core focus, with house and personal financing accounting for 37% and 26% of total financing. As at end-March 2025, the bank’s gross impaired financing ratio rose to 1.19% (2023: 0.93%) but stayed below the Islamic banking sector average of 1.35%. Rapid growth may give rise to lagging asset quality risks, as evidenced by early signs of pressure reflected in higher newly classified impairments. Despite a y-o-y decline due to increased impairments, financing loss coverage — including regulatory reserves (107.2%) — continues to provide a buffer against credit losses.

As at end-March 2025, BMMB’s funding was primarily supported by stable customer deposits (91.3% of total funding), though tempered by a low retail deposit share (10.0%) and high concentration among the top 10 depositors (33%). Liquidity and funding metrics remained strong, with the liquidity coverage ratio and net stable funding ratio at 151.9% and 107.6% — well above regulatory minimums.

BMMB’s pre-tax profit in 2024 fell 56% to RM129.3 million, driven by a RM125.1 million increase in financing loss provisions and full provisioning (RM44.8 million) for securities in its amortised cost portfolio. Despite higher operating income, net profit margin declined by 5 basis points due to rising funding costs.

The bank’s capital ratios remained above Bank Negara Malaysia’s regulatory minimums but below industry averages. As of end-March 2025, BMMB’s Basel III ratios were 11.0% for Common Equity Tier 1, 12.4% for Tier 1, and 16.8% for total capital.

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