MARC Ratings has affirmed MBSB Bank Berhad’s A+ financial institution (FI) rating and the A+IS rating on the bank’s RM5.0 billion Sustainability Sukuk Wakalah Programme. In line with the rating agency’s revised methodology for rating Basel III–compliant capital instruments, MARC Ratings has also revised the ratings of instruments under the bank’s Sukuk Wakalah Programme of up to RM10.0 billion as follows:
- Senior Sukuk Wakalah at A+IS (Affirmed)
- Tier-2 Sukuk Wakalah at AIS (Upgraded from A-IS)
- Additional Tier-1 Capital Sukuk Wakalah (AT-1 Sukuk Wakalah) at BBB+IS (Upgraded from BBBIS)
The outlook on all ratings is stable. The Senior Sukuk Wakalah’s rating is aligned with MBSB Bank’s FI rating, while the one-notch and three-notch differentials on the Tier-2 Sukuk Wakalah and AT-1 Sukuk Wakalah reflect structural subordination per MARC Ratings’ methodology.
The FI rating affirmation reflects MBSB Bank’s longstanding presence in the banking sector, especially in personal financing, its healthy capitalisation, and the expected support from ultimate majority shareholder Employees Provident Fund. These strengths are partially offset by asset quality metrics that are weaker than the industry average.
MBSB Bank’s three-year FLIGHT26 strategic plan aims to improve asset quality and deposit composition by 2026, targeting a gross impaired financing (GIF) ratio of 3% and Current Account and Savings Account (CASA) contribution of 20%. In 2024, total financing grew 3.0% y-o-y to RM40.8 billion, below the domestic Islamic banking industry growth of 8.2%, and remained flat in 1H2025. Slower growth reflected a shift from personal financing to housing, small medium enterprise, and higher-quality corporate loans. Financing growth is expected to strengthen in 2H2025 following this transition.
MBSB Bank’s GIF ratio remains above the industry average (1.3%) but improved to 4.7% as of 1H2025 (2023: 5.7%). Asset quality has been supported by credit recoveries and write-offs despite pressure from newly classified impairments, as well as structural safeguards — most notably direct salary deductions from government employees, which cover around 36% of total financing. The relatively low financing loss coverage ratio (50.5%) indicates potential vulnerability to unexpected losses, though about 43% of impaired exposures are fully collateralised, limiting severability.
MBSB Bank’s profitability recovered in 2024, with pre-tax profit rising to RM604 million (2023: RM249 million), driven by an improved net profit margin of 2.4% (2023: 1.8%) as funding costs normalised. The cost-to-income ratio also improved to 50.2% (2023: 66.2%). In 1H2025, pre-tax profit increased to RM191.3 million from RM180.3 million in 1H2024. Capital ratios remained well above regulatory requirements and industry averages.
As of 1H2025, customer deposits — accounting for 82.3% of total funding — underpin MBSB Bank’s funding, though reliance on wholesale sources remains high, with its top 20 depositor groups representing 67.4% of total deposits. The CASA ratio improved to 12.4% but remained below the Islamic banking sector’s average of 28.4%. Liquidity metrics were strong, with liquidity coverage ratio and net stable funding ratio at 150.4% and 105.4%, both well above regulatory minimums.