RAM Ratings affirms Bank Muamalat's A2/P1 financial institution ratings

RAM Ratings has affirmed Bank Muamalat Malaysia Berhad's A2/Stable/P1 financial institution ratings and the A3/Stable rating of its RM1 billion Subordinated Sukuk Murabahah Programme (2016/2036). The one-notch differential reflects the sukuk's subordination to the Bank's senior unsecured obligations.

The ratings underscore Bank Muamalat's sound asset quality, supported by a meaningful level of credit mitigants. As at end-March 2026, the Bank's gross impaired financing ratio remained manageable at 1.5% (2024: 1.0%), with about 30% of gross financing backed by salary transfer and deduction arrangements and government guarantees. 

We remain cautious of risks from Bank Muamalat's relatively unseasoned financing book following several years of strong growth, and from its increasing exposure to private sector personal financing without salary transfer/deduction arrangements. These factors could pressure asset quality, particularly amid persistently elevated living costs. Although credit cost eased in 2025, we expect them to trend higher as exposure to riskier segments expands. The Bank does not foresee any material asset quality impact from the Middle East conflict. 

Profit before tax surged to RM307 mil in FY Dec 2025 (+137% y-o-y), largely due to lower impairment charges and sustained business growth. Momentum continued in 1Q FY Dec 2026, with profit before tax rising 12% y-o-y to RM63 mil. While overall
profitability remains constrained by scale and, consequently, a high cost-to-income ratio, earnings prospects are supported by targeted expansion into higher-yielding segments, fee-based income growth and ongoing cost optimisation. 
The three-year average return on risk-weighted assets and return on assets were modest at 1.0% and 0.6%, respectively.

Capitalisation strengthened following a deliberate moderation in financing growth to 4.6% in 2025 (previous five-year compound annual g