HLIB Research revised up its bottom-line estimates for the financial year 2025 (FY25) to FY27 by 2% to 3%, expecting higher NIM.
PETALING JAYA: Hong Leong Investment Bank (HLIB) Research has raised its earnings forecasts for Alliance Bank Malaysia Bhd
, after pencilling in higher net interest margin (NIM) assumption.
Following a recent meeting with Alliance’s management, HLIB Research said the “tone was cautiously optimistic”.
“In the upcoming quarterly results, we are likely to see stable NIM, steady loans growth, resilient non-interest income, along with potentially higher net credit cost.”
Overall, HLIB Research revised up its bottom-line estimates for the financial year 2025 (FY25) to FY27 by 2% to 3%, expecting higher NIM.
Recall, NIM managed to stay flat sequentially in the the first quarter of FY25 (1Q25) as Alliance hoisted its loan-to-deposit ratio by two percentage points to 99%, which in turn helped to relieve some funding cost pressure.
“In the upcoming quarter, we expect NIM to hold up well, thanks to disciplined pricing, benign deposit rivalry, and good current account savings account traction from new to bank clients (still acquiring on average 10,000 per month retail customers and 900 per month for small medium enterprises, similar to 1Q25’s level.
“Overall, Alliance retains its full-year FY25 NIM contraction guidance of three to eight basis points versus our forecast of negative seven basis points.”
There are no major operating expense quarter-on-quarter and thus, we expect neutral to positive Jaws in 2Q25, to recap, the cost-to-income ratio was stable sequentially at 48% in the previous quarter, HLIB Research said.
The research house has downgraded the bank to “hold” but with a higher target price of RM5.25 from RM5.10, following an upward revision in earnings.
