MARC Ratings said the consolidated group benefits from more diversified sectoral exposures.
PETALING JAYA: MARC Ratings has affirmed the financial institution rating of AAA on Bank Pembangunan Malaysia Bhd (BPMB) and the AAAIS rating on the bank’s RM11bil Islamic medium-term notes (IMTN) programme.
The rating agency assigned a “stable” outlook for both, adding that the ratings reflect the very high likelihood of government support for BPMB, given its status as a fully government-owned policy bank, its key role in national infrastructure development, and its history of receiving such support.
“Part of BPMB’s borrowings are government-guaranteed, and the bank also receives grants that can partially cover credit losses,” it said.
BPMB completed the acquisition of Small Medium Enterprise Development Bank Malaysia Bhd and Export-Import Bank of Malaysia Bhd (Exim Bank) via a share swap at their net asset values on May 11 last year.
Post-acquisition, the group’s asset quality indicators have moderated due to higher impairments from the acquired entities, with the its gross impaired financing (GIF) ratio at 14.8% versus BPMB’s standalone 10.1%, and financing loss coverage at 115.9% (bank level: 174.8%).
“The consolidated group benefits from more diversified sectoral exposures, and capital levels across all three entities remain supportive of their developmental mandates.
“Synergies may arise from cross-selling, lower funding costs, and system or function consolidation.
“The developmental financing mandates of BPMB and its subsidiaries remain intact, and strong government support is expected to continue,” it added.
As of the first half of 2025 (1H25), the group’s financing book stood at RM36.9bil (bank level: RM21.9bil) following the consolidation of the two newly acquired banks.
At the bank level, infrastructure financing accounted for approximately 92% of total financing, with about 79% directed to government-related projects, reflecting BPMB’s role as the country’s infrastructure financing bank.
“BPMB faces inherently higher credit risk due to its developmental role. Its bank-level GIF ratio was 10.1% as of 1H25, having remained around this level over the past five years.
“Asset quality may be pressured by the high share of its financing book under restructured and rescheduled programmes, at 36.7% in 1H25 (2024: 37%),” it said.
