CreditSights sees room for Malayan Banking Bhd’s (Maybank) proposed new US dollar senior notes to price significantly tighter than their initial price guidance, supported by the Malaysian banking group’s strong credit profile, resilient asset quality and solid capital position.
In a report dated Sept 8, CreditSights said Maybank is marketing a Regulation S three-year floating-rate note (FRN) and five-year fixed-rate senior bond, with initial price thoughts of SOFR plus 90 basis points (bps) and Treasury plus 80 bps, respectively.
CreditSights estimates fair value at SOFR plus 58 bps for the three-year FRN and Treasury plus 55 bps for the five-year fixed-rate note, implying potential tightening of 32 bps and 25 bps, respectively, from initial guidance. The research firm did not make a formal participation recommendation.
Both instruments are expected to carry an A3 rating, rank as senior unsecured obligations and have proceeds used for working capital, general banking and other corporate purposes, according to the new-issue snapshot on the first page of the report.
Recent Maybank Bonds Provide Pricing Benchmark
For the three-year FRN, CreditSights pointed to Maybank’s existing US dollar floating-rate notes issued in November 2025 and April 2026, which were trading at around Z+55 bps and Z+56 bps, respectively.
It also examined comparable three-year floating-rate notes from Korea’s KB Kookmin Bank and Industrial Bank of Korea, which were trading at around Z+60 to Z+72 bps.
Based on these benchmarks, CreditSights arrived at a fair landing point of SOFR plus 58 bps for Maybank’s new three-year FRN.
For the five-year fixed-rate offering, the absence of directly comparable liquid bonds from Maybank and other Malaysian banks makes valuation less straightforward.
CreditSights believes Maybank should trade around 15 to 20 bps tighter than comparable bonds from Public Bank Bhd, reflecting Maybank’s more resilient asset quality, operations in a stronger macroeconomic environment and slightly stronger profitability.
It noted that Maybank is rated one notch above Public Bank at Baa1/BBB+/BBB+.
Recent five-year fixed-rate bonds from major Korean commercial banks were trading considerably tighter, while Public Bank’s most recent five-year senior bond was trading at around Treasury plus 77 bps. Taking these comparisons into account, CreditSights estimates fair value for Maybank’s new five-year bond at Treasury plus 55 bps.
CreditSights Views Maybank As A Strong Credit
CreditSights described Maybank as Malaysia’s flagship bank with strong government links and a “reasonably good performance track record”.
It views the banking group as a strong credit, citing a comfortable Common Equity Tier 1 (CET1) ratio, healthy credit costs and adequate non-performing loan coverage.
The research firm also highlighted Maybank’s diversified operations in Malaysia, Indonesia and Singapore, with approximately 35% of its loan book located internationally.
While Maybank’s Malaysian operations have performed strongly, results from Indonesia and Singapore have been more variable. Nevertheless, CreditSights said the group’s sizeable overseas business has helped support performance when domestic conditions were more challenging.
First-Half Profit At RM5.2 Billion
Maybank recorded RM5.2 billion in net profit for the first half of 2026, down 0.9% year-on-year, mainly due to lower non-interest income.
Return on equity edged up 0.1 percentage point to 11.6%, while return on assets remained unchanged at 1.0%.
Net operating income increased 5.1% to RM14.6 billion, as a 2.5% increase in net interest income to RM10.1 billion was offset by an 18.8% decline in non-interest income to RM4.5 billion.
Net interest income benefited from a 10-basis-point expansion in net interest margin to 2.12% and 2.7% loan growth.
CreditSights said non-interest income was weighed down by weaker foreign exchange and derivatives income and insurance results, although this was partly offset by 12.1% growth in core fees, supported by wealth and investment banking-related fees.
The cost-to-income ratio increased 0.6 percentage point to 49.5%, reflecting the weaker topline and higher technology spending.
Asset Quality Remains Resilient
CreditSights highlighted Maybank’s resilient asset quality as one of the key strengths underpinning its credit assessment.
Net impairment provisions declined 51.6% year-on-year to RM436 million during the first half, while the normalised net credit charge-off rate improved slightly to 20 bps from 24 bps in the first half of 2025.
The gross impaired loans ratio stood at 1.35%, up five bps year-on-year, while loan-loss coverage excluding regulatory reserves declined to 103% from 118%.
Loan growth stood at 2.7% year-on-year, led by 5.5% growth in Malaysia, while the international loan portfolio contracted 2.3% due partly to currency effects.
Singapore loans increased 3.4% in Singapore dollar terms, while Indonesia’s loan book expanded 4.3% in rupiah terms.
Maybank’s capital position also strengthened, with its CET1 ratio improving to 14.92% from 14.68% in the first half of 2025, while its total capital ratio stood at 18.68%.
Liquidity remained comfortable, with a liquidity coverage ratio of 130% and net stable funding ratio of 113.4%.
Looking ahead, management expects loan growth to remain robust across Maybank’s key markets, supported by resilient economic growth and AI-driven activity in Malaysia and Singapore, alongside stronger working-capital and investment-loan demand.
CreditSights cautioned, however, that while credit costs are expected to remain benign, deposit competition in Malaysia and tight liquidity conditions in Indonesia could exert pressure on net interest margins.
