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Issuer Credit Research

Issuer Flash: AmBank Group

Issuer Flash: AmBank Group

Report date: 2026-06-02
Event date: 2026-05-28
Event title: FY26 results

1. Flash Conclusion

AmBank Group's FY26 results are positive for senior credit, but they are also results that require continued monitoring of asset quality in Business Banking and Retail. PATMI reached a record high of RM2.1bn, ROE was 10.0%, NIM was 1.98%, CET1 was 14.82%, and TCR was 17.23%, with earnings, capital, and liquidity supporting near-term credit stability. At the same time, Business Banking net impairment charge increased, the Retail GIL ratio also rose, and the LLC ratio declined to 100.9%. The appropriate credit reading of these results is therefore that “strong earnings are absorbing credit costs,” not that “asset quality no longer needs to be monitored.”

2. What Was Announced

AmBank Group announced its FY26 results on 28 May 2026. The company stated that FY26 PATMI increased 5.0% year on year to RM2,100.8m, marking a record high. Net income rose 4.7% to RM5,158.4m, NIM was 1.98%, PBP increased 4.5% to RM2,854.8m, and ROE was 10.0%. Gross loans increased 5.6% to RM146.7bn, while customer deposits rose 3.9% to RM147.0bn, indicating that loan and deposit growth were broadly aligned.

On capital, the CET1 ratio was 14.82% and the total capital ratio was 17.23%. The company stated that LCR was above 135% across all entities. Dividends comprised a final dividend of 22.5 sen and a full-year dividend of 35.0 sen, with a payout ratio of 55%, demonstrating earnings strength and capacity for shareholder returns. At the same time, Business Banking recorded SME overlay provision and Commercial Banking individual provisions, and net impairment charge increased from RM109.2m in FY25 to RM231.8m in FY26. In Retail Banking, PAT recovered, but the GIL ratio rose from 1.64% in FY25 to 1.83% in FY26.

3. Credit Read-Through

The first credit implication of these results is that AmBank had sufficient earnings absorption capacity as of FY26. PBP was RM2.85bn, substantially exceeding the group’s net impairment charge of RM133.6m. CET1 of 14.82% and TCR of 17.23% are also levels that support senior credit. Looking only at the FY26 results, the increase in Business Banking impairment has not reached a stage where it damages the bank’s overall earnings or capital.

The second implication is that asset-quality issues have not disappeared. Business Banking loans increased, but net impairment charge also increased. The company referred to SME overlay provision and Commercial Banking individual provisions, but the relevant industries, borrower concentration, migration from Stage 2 to Stage 3, collateral, and whether any rescheduling was involved are not sufficiently clear. In Retail Banking as well, the GIL ratio rose, and it remains unconfirmed whether this reflects a mortgage-centred, low-loss profile or a higher-loss profile involving auto, cards, and personal financing.

The third implication is that confirmation of LLC and Pillar 3 has become important. The LLC ratio remained above 100%, but declined from FY25. As of the time of writing, FY26-end Pillar 3, RWA, entity-level LCR, and NSFR have not been sufficiently confirmed, and therefore remain items to be checked in the next update or before investment in individual bonds.

4. Bondholder Implications

For senior bondholders, the FY26 results are a broadly stable event. Earnings are strong, capital is solid, and the scale of deposits and loans is not materially mismatched. When assessing the senior credit of AmBank (M) Berhad or AmBank Islamic Berhad, these results do not weaken near-term repayment or refinancing capacity.

For AT1 / Tier 2, however, the same results need to be read somewhat more cautiously. Subordinated capital instruments are affected not only by issuer stability, but also by capital ratios, loss-absorption ranking, coupon cancellation, non-viability, write-off / conversion, call decisions, and rating notching. AmBank’s Credit Ratings page shows a clear difference between the ratings of senior programmes and those of Tier 2 and AT1. FY26’s strong earnings also support subordinated capital instruments, but if Business Banking impairment, Retail GIL, and the decline in LLC continue, the impact is likely to appear in AT1 / Tier 2 market valuation earlier than in senior instruments.

5. Key Numbers

Item FY26 result Credit read-through
PATMI RM2,100.8m Record high. An earnings level capable of absorbing higher credit costs.
ROE 10.0% Good for a mid-sized bank. However, the balance between shareholder returns and capital retention should be monitored.
NIM 1.98% Margin provides support. Dependence on Time Deposits and funding cost should be monitored.
Gross loans RM146.7bn Up 5.6%. Driven by Wholesale and Business Banking.
Customer deposits RM147.0bn Up 3.9%. Broadly commensurate with loan growth.
Group GIL ratio 1.59% Low level, but up slightly from FY25.
LLC ratio 100.9% Remains above 100%, but declined from FY25. The reasons need to be confirmed.
CET1 ratio 14.82% Solid capital. Maintained even post-dividend.
Total capital ratio 17.23% Sufficient level, but RWA and capital composition should be checked in Pillar 3.
LCR all entities above 135% Sufficient based on company disclosure. NSFR has not been confirmed.

6. What To Watch Next

The first point to watch is whether Business Banking SME overlay and individual provisions decline in FY27. If these were temporary conservative provisions, FY26’s strong earnings would more clearly support AmBank’s credit profile. Conversely, if Business Banking impairment continues while loan growth also continues, the balance between growth and credit risk will need to be reassessed.

The next point is the composition of Retail GIL. The headline GIL ratio alone does not make it possible to judge whether the increase reflects a low-loss, mortgage-centred profile or a higher-loss profile extending to auto / unsecured / cards. Product-level GIL, recoveries, charge-offs, and debt sales will be important items to confirm.

The third point is the detail in Pillar 3 and capital and liquidity. CET1, TCR, RWA, entity-level LCR, and NSFR need to be checked to substantiate the capital and liquidity assessment based on the FY26 results. If NSFR is not disclosed, it should be treated as an unconfirmed item.

Finally, the individual terms of AT1 / Tier 2 / senior instruments and the latest rating commentary should be checked. Even if issuer credit is stable, for subordinated capital instruments, discretionary suspension, perpetual structure, calls, loss absorption, non-viability, write-off / conversion, guarantee relationships, and rating notching are directly relevant to investment decisions.

7. Sources

Unconfirmed items: