[RAM] RAM Ratings affirms AA1 ratings of RHB Bank Group entities

RAM Ratings has affirmed the respective AA₁/Stable/P1 financial institution ratings of RHB Bank Berhad (RHB Bank or the Group) and its core subsidiaries, RHB Islamic Bank Berhad and RHB Investment Bank Berhad. Both entities’ ratings are aligned with the Group’s, underpinned by an expectation of ‘very high’ likelihood of extraordinary parental support if needed. The ratings of the entities’ debt facilities have also been affirmed (Table 1).

The affirmations reflect RHB Bank’s strong domestic banking franchise and sound credit metrics. Contributing a respective 8% and 9% of the banking system’s deposits and loans as at end-June 2025, RHB Bank is the fourth-largest banking group in the country by total assets. It maintains commendable market shares in residential property financing (11%), small and medium enterprise (SME) financing (9%) and auto financing (5%).

RHB Bank’s capitalisation remained a key credit strength, with a post-dividend common equity tier-1 capital ratio consistently above 15% in the last few years (end-June 2025: 15.9%). Asset quality is healthy, with an overall gross impaired loan (GIL) ratio and GIL coverage ratio (including regulatory reserves) of 1.51% and 128%, respectively, as at end-June 2025 (end-December 2023: 1.74% and 118%). The domestic GIL ratio stood at 1.27%, continuing to outperform the industry’s 1.42%. For FY Dec 2025, the Group expects credit costs to remain contained between 15 and 20 bps (1H FY Dec 2025: 18 bps), with further improvement in its GIL ratio.

Despite normalised credit costs and a larger cost base, pre-tax profit (excluding one-off gains) rose 5% y-o-y to RM3.9 bil in FY Dec 2024, driven by strong fee income, forex gains and treasury activities. Lower impairment charges in 1H FY Dec 2025 further lifted pre-tax profit by 6% y-o-y to RM2.0 bil. This translated to a sound average pre-tax return on assets of 1.2% across both periods. Alongside robust capitalisation, RHB Bank’s healthy loan loss reserves and solid pre-provision profit generation offer ample loss absorption buffers against potential credit slippage.

RHB Bank’s funding and liquidity profile remains satisfactory, with current and savings account and retail deposits constituting a respective 28% and 45% of total deposits as at end-June 2025 (end-December 2023: 28% and 41%). 

Further strengthening of the Group’s GIL ratio and continued traction of the retail deposit base to AAA-median levels could provide upside to the current rating in the intermediate term.

Table 1: Ratings of entities under RHB Banking Group


 

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