[RAM] RAM Ratings upgrades MUFG Malaysia to AAA

RAM Ratings has upgraded MUFG Bank (Malaysia) Berhad’s (MUFG Malaysia or the Bank) long-term financial institution rating to AAA/Stable from AA₁/Stable. The short-term rating remains at P1.

The upgrade follows RAM’s reassessment of the support from its ultimate parent Mitsubishi UFJ Financial Group (MUFG or the Group) – which we deem to be ‘high’ – under our new Master Criteria for Group Structure Support released in October 2024. MUFG is one of the world’s largest financial groups and Japan’s leading banking group. Besides forming part of the Group’s Southeast Asia presence to support customers’ business expansion in the region, MUFG Malaysia is the Group’s key touchpoint for clients seeking Islamic finance solutions.

The Bank’s standalone ratings consider its robust capitalisation and superior asset quality balanced against its small presence, high borrower and depositor concentration, and relatively volatile profitability. MUFG Malaysia’s pre-tax profit rose to RM553 mil in FY Mar 2024 (FY Mar 2023: RM490 mil), translating to a return on risk-weighted assets of 4.5% (FY Mar 2023: 4.2%) following an improvement in net interest margin and investment income. In 1H FY Mar 2025, profitability stayed solid, with RoRWA at an annualised 4.6%. Contributing an average of 39% of gross income over the last five years, the Bank’s trading income tends to fluctuate in view of its large foreign exchange trading and derivative business.

MUFG Malaysia’s impaired loans are negligible, given its focus on lending to locally incorporated subsidiaries of established Japanese multinational companies and highly rated domestic corporates. While Stage 2 loans spiked to RM3.1 bil (18% of gross loans) as at end-September 2024 (end-March 2023: RM1.8 bil, 7%), this was mainly due to conservative loan staging and assumptions on macroeconomic variables. The Bank’s capital position remains robust (end-September 2024 common equity tier-1 capital ratio: 29.9%), providing comfortable headroom for growth and loss absorption.


Analytical contacts
Lee Yee Von
(603) 3385 2503
yeevon@ram.com.my

Sophia Lee
(603) 3385 2619 
sophia@ram.com.my

Media contact
Sakinah Arifin
(603) 3385 2500
sakinah@ram.com.my