KUALA LUMPUR (March 6): Malaysian banks are expected to deliver stronger dividends in 2026, underpinned by solid capital buffers and steady earnings growth, according to RAM Ratings.
The level of buffers remains healthy even as capital position in the system has fallen as banks returned the excess accumulated during Covid-19 pandemic to shareholders, the domestic credit ratings agency said in a statement on Friday.
“System capital ratios moderated but remain comfortably above regulatory requirements and closer to pre-pandemic norms,” Wong Yin Ching, a senior analyst at RAM Ratings, said in the statement.
Malaysian banks have announced their plans to step up capital distributions at a time of strong capital positions. CIMB Group Holdings Bhd (KL:CIMB), the country’s second-largest bank, plans to return up to RM2 billion to shareholders over the next two years.
Smaller rival Public Bank Bhd (KL:PBBANK) is preparing to raise its dividend payout ratio guidance to 60% for 2025, while AMMB Holdings Bhd (KL:AMBANK) seeks to double payouts within five years.
Banks’ increasing focus on profitability has also supported higher distributions, the agency said, noting that return on equity at eight selected local banks has risen to 14.3% in 2025, from 14.0% in 2024.
In addition, banks operating under the so-called Standardised Approach for credit risk are expected to benefit from capital savings once the Basel III international capital standards come into effect in July 2026, RAM Ratings noted.