Standard & Poor's (S&P) Ratings Services has revised its rating outlook on three Malaysian financial institutions to stable from negative.

In a statement released in Singapore today, S&P said it affirmed the global scale and Asean regional scale ratings on the three financial institutions, namely AmBank (M) Bhd, RHB Bank Bhd, and RHB Investment Bank Bhd.

"At the same time, we also affirmed the ratings on four other Malaysian banks namely Public Bank Bhd, Malayan Banking Bhd, CIMB Bank Bhd, and CIMB Investment Bank Bhd," it said, adding that it also affirmed the ratings based on the outstanding issuances by these banks.

S&P said it revised the outlook on the three banks because of its view of moderating economic risks for banks operating in Malaysia, following a prolonged run-up in housing prices and household debt in the country.

It said the stable outlook on Malaysian banks was based on its expectation that these banks would maintain their satisfactory financial profiles even amid slowing domestic economy.

"The Malaysian economy has lost some momentum due to a weak energy sector, tighter domestic spending due to the Goods and Services Tax implementation and uncertainties in global demand," it said, adding that it expects an incremental increase in credit losses from historically low levels.

But, overall, S&P said it expects the credit risk of Malaysian banks to remain manageable as they had built up capital and provisioning buffers in the good years, which would mitigate some downside risks.

"We revised our economic risk trend for Malaysia because of successive government measures since 2010 to counteract the stimulatory effect of low interest rates on consumer borrowing and home prices have been effective," it said.

- Bernama