RAM Ratings affirms AA2/Stable/P1 ratings of AmBank Group entities

RAM Ratings has affirmed the corporate credit ratings of AMMB Holdings Berhad (AMMB or the Group) and the financial institution ratings of its key subsidiaries at AA2/Stable/P1 (Table 1). We view AmBank (M) Berhad, AmBank Islamic Berhad and AmInvestment Bank Berhad as core operating entities, given their integral role in the execution of the Group's banking strategy.

The ratings reflect our expectation that the Group's strong pre-provision profit and capitalisation will remain sufficient to absorb higher credit losses should external uncertainties and macroeconomic conditions weaken. While AMMB's direct exposure to Middle East is limited, its comparatively larger proportion of business banking loans in its portfolio may render its asset quality and earnings more vulnerable than peers' in a domestic economic downturn.

Asset quality remains healthy despite a higher gross impaired loan ratio of 1.8% as at end-December 2025 (end-March 2025: 1.5%) and credit cost ratio of 29 bps in 9M FY Mar 2026 (9M FY Mar 2025: 17 bps). The deterioration was mainly driven by a small number of commercial accounts, the retail SME segment, and to a smaller extent, residential mortgages. The Group views the non-retail impairments as largely idiosyncratic rather than indicative of a broader systemic portfolio weakness. AMMB's loan loss coverage (with regulatory reserve) stayed below peers' at 98% as at end-December 2025 (peer average: 139%); nonetheless, this is partly mitigated by the relatively high collateral coverage of its portfolio. We remain watchful of sustained slippage in vulnerable segments or weaker-than-expected recoveries that may necessitate further provisioning.

Backed by stronger margins, loan growth and trading gains, the Group's pre-tax profit rose 6% y-o-y to RM2.0 bil in 9M fiscal 2026 (9M fiscal 2025: RM1.9 bil). Its profitability metrics also improved, with pre-tax return on assets of 1.4%e