KUALA LUMPUR: Fitch Ratings expects Malaysia's six largest banks to maintain resilient credit profiles, supported by a stable operating environment, sound asset quality, steady profitability and adequate capitalisation, even as the country's economic growth moderates in 2026.
In a peer credit analysis released on Thursday, the rating agency said Malaysia's economic growth is expected to moderate to 4.5% in 2026, reflecting normalisation following a period of strong expansion.
Fitch said asset quality is likely to remain broadly stable, supported by low non-performing loan (NPL) ratios, improving Stage 2 loan metrics and credit costs that remain below historical averages. While external uncertainties and potential increases in borrowing costs could pose modest risks to borrowers' repayment capacity, it expects any deterioration in credit quality to be limited.
"Profitability remains stable despite some margin pressure from a lower interest-rate environment and continued deposit competition, which should be mitigated by banks' established deposit franchises and active balance-sheet management," it said.
Capital positions across the sector remain robust, with the common equity Tier 1 (CET1) ratio at 14% in May 2026, comfortably above regulatory minimums. Fitch said strong capital buffers should continue to support shareholder distributions while allowing banks to absorb potential risks.
Most rated Malaysian banks have Stable rating outlooks. Fitch said the Positive Outlook on AmBank (M) Bhd's 'BBB-' Long-Term Issuer Default Rating reflects the potential for positive rating action if its business profile continues to improve.
"Malaysian banks' ratings remain supported by adequate capital buffers, although significant weakening in risk profiles, asset quality or capitalisation could lead to negative rating pressure," it said.
The agency added that Malaysia's banking operating environment remains aligned with the country's sovereign rating, meaning any downgrade of the sovereign could weigh on banks' standalone credit profiles and issuer ratings.
