Non-performing loans (NPLs) continue to create risks to financial institutions, especially those in Malaysia. Unexpected crises like the Global Financial Crisis and the COVID-19 pandemic may aggregate macroeconomic variables, impacting NPL levels. The study investigates how macroeconomic conditions and unexpected crises influence Malaysian bank NPLs. Panel data analysis using Stata Software 18 is utilized to study data from eight domestic Malaysian conventional banks from 2001 to 2023. The selection of domestic banks is based on their significant role in the Malaysian economy, their direct sensitivity to local economic situations, and the data availability for study. This study meticulously examines macroeconomic indicators such as unemployment, GDP, inflation, lending interest rate, and exchange rate, as well as unexpected crises like the Global Financial Crisis and the COVID-19 pandemic. The study draws on 2001–2023 secondary data from bank annual reports, the World Bank, and the International Monetary Fund database. The findings reveal that NPLs are significantly influenced by macroeconomic variables, highlighting the banking sector's vulnerability to economic cycles and external disturbances. Also, this study's findings provide a solid foundation for future research in the field, inspiring Malaysian conventional banks, policymakers, and researchers to delve deeper into strategies to strengthen developing country banks as well to motivate other developing countries facing similar economic difficulties to explore ways to minimize economic volatility and unanticipated banking crises.