[RAM] RAM Ratings affirms UOB Malaysia's AAA/Stable/P1 ratings

RAM Ratings has affirmed United Overseas Bank (Malaysia) Bhd’s (UOB Malaysia or the Bank) AAA/Stable/P1 financial institution ratings as well as the ratings of its debt instruments (Table 1). The rating reflects our view of a ‘very high’ likelihood of parental support from United Overseas Bank Limited (UOB Ltd or the Group), given the Bank’s highly strategic role as the Group’s core subsidiary in driving regional growth. 

UOB Malaysia remains the leading locally incorporated foreign bank in Malaysia by total assets. Besides being a notable player in SME lending, the Bank is one of the largest credit card players in Malaysia - a position strengthened by the acquisition of Citibank Berhad’s consumer banking business in late 2022.  

In 1H FY Dec 2025, UOB Malaysia reported a pre-tax profit of RM1.4 bil and return on risk-weighted assets (RoRWA) of 3.2% (annualised), lifted by net provision writebacks. Net interest margin (NIM) also widened to 2.15% (FY Dec 2024: 2.07%), supported by lower funding costs from an expanded base of low-cost deposits. Despite a higher cost structure post-acquisition, underlying pre-tax profit in FY Dec 2024 was 8.2% higher y-o-y, mainly boosted by stronger NIM and lower provisioning. Fee income from the enlarged credit card portfolio has also enhanced earnings diversity, with non-interest income rising to 35% of gross income in FY Dec 2024 (pre-acquisition: less than 30%). 

As at end-June 2025, UOB Malaysia’s gross impaired loan (GIL) ratio was 2.5% (industry: 1.4%; end-December 2023: 2.6%), partly due to the Bank’s more conservative stance on borrower impairment and GIL reclassification, as well as relatively subdued lending growth in the last few years. The Bank’s longer timeframe for writing off mortgages also contributes to its higher GIL ratio. UOB Malaysia’s credit cost ratio ease to 15 bps in FY Dec 2024 (FY Dec 2023: 27 bps), with further improvement likely in 2025 based on the trend observed in 1H FY Dec 2025 (net writeback of 12 bps). We expect credit losses to remain well controlled in fiscal 2026, even as they normalise, supported by the Bank’s shift in its non-retail portfolio toward trade loans which typically carry lower credit risk and shorter tenures.

On the capital front, UOB Malaysia’s common equity-tier 1 (CET-1) capital ratio stood at 15.5% as at end-June 2025 (industry: 14.3%) (end-December 2023: 15.0%). We expect the Bank to sustain these solid capital levels, supported by its consistent profitability and measured approach to loan growth.

Table 1: UOB Malaysia’s issue ratings


 

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Amy Lo 
(603) 2708 8289
amy@ram.com.my

Jeremy Noel Paul 
(603) 2708 8230
jeremynp@ram.com.my 

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