MARC Ratings has affirmed MBSB Berhad’s (MBSB) corporate credit ratings at A+/MARC-1, with a stable outlook. The ratings reflect MBSB’s status as a non-operating financial holding company and the close alignment of its credit profile with that of its core wholly-owned subsidiary, MBSB Bank Berhad (A+/Stable).

MBSB has no borrowings at the holding-company level, with earnings derived primarily through dividends received from MBSB Bank and, since 2024, Malaysian Industrial Development Finance Berhad (MIDF). As at end-June 2026, MBSB Bank accounted for approximately 92.3% of the group’s total assets and 96.4% of consolidated gross financing. Annual dividends from the bank have ranged from RM162.8 million to RM458.9 million in recent years.

The rating also factors in MARC Ratings’ expectation of a high likelihood of support from MBSB’s major shareholder, the Employees Provident Fund, which holds a 56.5% stake, providing support to the group’s overall credit profile.

The group’s total financing expanded by 6.8% in 1H2026, driven mainly by corporate and commercial financing as MBSB continued to diversify away from personal financing under its FLIGHT26 strategy. Retail financing remained the dominant segment, although its share declined as corporate as well as small and medium enterprises financing grew. While this has broadened the financing portfolio, the greater exposure to larger corporate borrowers could increase concentration risk and capital requirements. Asset quality remained a key constraint, with the gross impaired financing ratio rising to 6.2% as at end-June 2026 from 5.3% at end-2024, remaining well above the Islamic banking industry average. Financing loss coverage was relatively low at 39.4%, although collateral provided some mitigation against potential losses.

Earnings remained subdued amid weaker net financing income and higher impairment charges, with pre-tax profit declining to RM390.0 million in 2025. Earnings diversification has improved following the addition of MIDF Group, primarily through the growing contribution from MBSB Investment Bank Berhad. Non-financing income increased to 22.3% of total income in 1H2026, although financing income remained the group’s main earnings source. The funding profile continued to improve, with the current and savings account ratio rising to 18.6%, approaching the FLIGHT26 target of 20% and supporting lower funding costs. Nevertheless, reliance on wholesale funding remained relatively high, with deposits concentrated among business enterprises, government entities and statutory bodies.

Capitalisation remained strong despite some moderation, with Common Equity Tier 1 and total capital ratios standing at 17.4% and 19.8%, respectively, as at end-June 2026. The decline largely reflected higher risk-weighted assets from financing growth and a greater proportion of corporate and commercial financing. Nevertheless, both ratios remained comfortably above regulatory minimum requirements.