Analysts remain optimistic about the group’s prospects.
PETALING JAYA: AMMB Holdings Bhd
(AmBank) has maintained a positive trajectory, buoyed by its robust financial performance and strategic initiatives aimed at navigating a challenging banking landscape.
Analysts remain optimistic about the group’s prospects, highlighting its focus on improving net interest margins (NIM), asset quality, and dividend payouts.
AmBank’s strategic pivot towards value-driven growth and liability-management initiatives have positioned it to withstand market volatility while capitalising on growth opportunities.
Kenanga Research said that AmBank’s structured approach prioritising high-quality accounts over sheer loan growth was pivotal.
“AmBank’s deposit strategy would skew to more affluent retail customers for funds while cutting back on wholesale business deposits, which tend to be costlier to sustain,” the research house noted, adding that its funding initiatives have enabled the group to suppress costs effectively.
TA Research echoed the sentiment, forecasting stronger earnings for AmBank’s financial year ending March 31, 2025 (FY25), bolstered by a robust investment banking pipeline, stable NIM, moderate loan growth, and provision write-backs.
“AmBank has successfully strengthened its balance sheet, which is evident by improving capital ratios and rising dividend payout,” the research house said.
CIMB Research added, “The company indicated that NIM remained steady at 1.96%, a level similar to October.
“Although short-term competition may impact NIM, the intensity of competition hasn’t worsened compared with a year ago. Thus, the company is hopeful that its NIM is likely to be sustained in the longer run.”
For its first half ended Sept 30, 2024 (1H25), AmBank posted a net profit of RM1bil, or earnings per share (EPS) of 30.27 sen, an 18% jump year-on-year (y-o-y) from RM848.15mil, or EPS of 25.64 sen in 1H24. Revenue increased 3% y-o-y to RM2.41bil.
In the second quarter (2Q25) alone, the group recorded a net profit of RM500.57mil, or EPS of 15.14 sen, up 6.6% y-o-y from RM469.78mil or EPS of 14.2 sen in 2Q24.
Quarterly revenue rose 9.3% y-o-y to RM1.23bil. This growth was supported by higher NIM, sustained asset quality, and the group’s ongoing efforts to optimise funding costs.
Following the robust performance, several research houses raised their target prices for AmBank.
Optimistic about the bank’s prospects, Phillip Capital Research, for one, increased its FY25 to FY27 earnings forecasts for AmBank by 3%, citing higher NIM expansion.
Consequently, the research house’s reiterated its “buy” call with the target price for the counter raised to RM6.30 from RM6.
“We view AmBank as attractive, given its undemanding valuations (0.85 times FY25 price-to-book value) and potential for a higher dividend payout exceeding 50%,” Phillip Capital Research said.
Also maintaining its “buy” call on AmBank, CIMB Research revised its target price higher to RM6.80 from RM5.70 after rolling forward its base year to FY26 from FY25. This was also to reflect anticipation of higher return on equity (ROE) of 9.3% for FY26, compared with the estimated 8.8% for FY25.
The research house also highlighted AmBank’s ability to sustain NIM levels amid competition pressure.
TA Research raised its target price to RM6.10 from RM5.60, reiterating its “buy” recommendation, attributing the higher valuation to stable asset quality and better capital management.
Kenanga Research maintained an “outperform” call, with a higher target price of RM6.40 from RM5.85, citing potential ROE improvement to 10%.
It projected dividend yields of 6% to 7%, positioning AmBank among the top payers in the sector.
