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THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
AMMB Holdings Berhad
Resilient 1QFY26 Earnings
Review
- AMMB’s 1QFY26 net profit grew 3% YoY to RM506mn, underpinned by higher income growth. Results came within our expectations, with net profit at 24% of our full-year forecast. ROE was stable at 10% (1QFY25: 10.2%).
- Including Islamic Banking Operations, the 1QFY26 net interest income (NII) expanded by 7% YoY, underpinned by NIM, which strengthened by 12 bps YoY to 2.01% vs 1.89% a year ago, thanks to easing funding costs (-12 bps YoY). Asset yields also declined at a lesser pace of 5 bps YoY.
- Loans and advances grew 4% YoY. QoQ loan growth was, however, largely unchanged at RM138.2bn (FY25: RM138.9bn) as more robust loan demand from Business Banking (+1% QoQ) was muted by management’s efforts to derisk Retail Banking (unchanged QoQ) and a 6% decline in Wholesale Banking due to repayments. Within the Retail portfolio, Mortgage loans rose marginally, while Cards grew by 1%. Meanwhile, Auto Financing declined by 3% QoQ.
- Customer deposits rose by 2% YoY but slipped by 3% QoQ to RM138.0bn (FY25: RM141.5bn). Time/fixed deposits rose 2% YoY to RM91.1bn. CASA deposits also advanced by 2% YoY but fell by 8% QoQ to around RM46.9bn, translating to a CASA ratio of 34.0% vs 36.0% in 4QFY25.
- Total non-NII accelerated by 15% YoY as higher trading gains in Group Treasury & Markets (GTM) offset lower fee income from Investment Banking (IB) and Retail Banking (RB) caused by declines in Cards and Wealth Management. Overall Wholesale Banking strengthened on higher trading gains and from Corporate & Transaction Banking. Income from Business Banking also advanced by 4% YoY.
- Overhead expenses rose 8% YoY but fell 2% QoQ. Yearly, the overhead expenses rose across all business segments due to higher staff costs. Despite the increase in overhead expenses, AMMB’s 1QFY26 cost-to-income (CTI) ratio eased to 43.7% from 44.2% a year ago due to positive JAWs.
- AMMB reported higher impairment charges amounting to RM72mn in 1QFY26 (vs RM12mn in 1QFY25). Management noted that the higher impairment charges are due to significantly lower forward-looking writeback, offset in part by lower overlay provisions. With that, the 1QFY26 gross credit cost (excl. recoveries) rose to 50 bps vs 30 bps a year ago. Including recoveries, AMMB’s net credit cost grew to 25 bps from 11 bps in 1QFY25. AMMB’s total overlay reserves currently stand at around RM435mn compared to RM439mn in the previous quarter.
- Elsewhere, the total gross impaired loans increased slightly to RM2,367mn in 1QFY26 vs RM2,253mn a year ago. AMMB’s gross impaired loans ratio (GIL) rose marginally to 1.71% (1QFY25: 1.70%). Meanwhile, the loan loss coverage ratio softened to 100.1% (1QFY25: 107.6%).
- Lastly, the CET1 Ratio stood at 14.9% from 16.5% in FY25. The liquidity position remains sound, with the Net Stable Funding Ratio (NSFR) at 109.7%.
| Share Information | |
|---|---|
| Bloomberg Code | AMM MK |
| Stock Code | 1015 |
| Listing | Main Market |
| Share Cap (mn) | 3308.4 |
| Market Cap (RMmn) | 18030.8 |
| 52-wk Hi/Lo (RM) | 5.94/4.67 |
| 12-mth Avg Daily Vol (‘000 shrs) | 7623.2 |
| Estimated Free Float (%) | 74.6 |
| Beta | 1.2 |
| Major Shareholders (%) | |
|---|---|
| EPF | – 13.0 |
| Clear Goal | – 11.8 |
| PNB | – 8.4 |
| Forecast Revision | FY26 | FY27 |
|---|---|---|
| Forecast Revision (%) | ||
| Core net profit (RMmn) | 2162.7 | 2341.6 |
| Consensus | 2013.0 | 2112.0 |
| TA’s / Consensus (%) | 107.4 | 110.9 |
| Previous Rating | BUY (maintained) | |
| Consensus Target Price (RM) | 6.00 | |
| Financial Indicators | FY26 | FY27 |
|---|---|---|
| ROE (%) | 10.1 | 10.3 |
| ROA (%) | 1.1 | 1.1 |
| CTI Ratio (%) | 43.4 | 42.1 |
| Gross Impaired Loans Ratio ( | 1.5 | 1.5 |
| BV/ Share (RM) | 6.7 | 7.1 |
| Price/ BV (x) | 0.8 | 0.8 |
| Scorecard | % of FY | |
|---|---|---|
| vs. TA | 24.0 | Within |
| vs. Consensus | 26.0 | Within |
| Share Performance (%) | ||
|---|---|---|
| Price Change | AMMB | FBM KLCI |
| 1 mth | 6.2 | 3.9 |
| 3 mth | (0.7) | 0.8 |
| 6 mth | (6.4) | 0.0 |
| 12 mth | 16.7 | (2.4) |
(12-Mth) Share Price relative to the FBMKLCI
Source: Bloomberg
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Impact
- No change to our earnings estimates.
Outlook
- AMMB delivered a resilient 1QFY26 despite the volatile macro environment. Previously guiding 5-6%, management now expects loan growth to broadly track GDP as retail lending flattens. On the SME side, ongoing recalibration of the portfolio could moderate near-term growth, although management sees it as a necessary step toward building a healthier, more sustainable portfolio. While business banking’s growth momentum is expected to remain healthy, investment banking could see a rebound in the 2H as market conditions normalise.
- Asset quality trends were mixed. Impaired loans edged higher due to seasonal retail effects and persistent stress in SME and unsecured lending. Retail impairments also rose across mortgages, hire purchases and unsecured loans, though the wholesale portfolio remains resilient. While Loan Loss Coverage fell to 82%, management noted that the high collateral backing provides comfort, and expected recoveries from large corporate exposures in 2Q-3Q may offer additional buffer. Management is guiding full-year credit costs toward the upper end of its 15-20bps range.
- On the margin front, NIM held firm at 2.01% in 1Q but is expected to soften below 2% in 2Q following the OPR cut. A partial uplift is anticipated toward year-end as fixed deposits are repriced. With robust capital strength, dividend visibility remains intact.
Valuation and recommendation
We maintain AMMB’s TP at RM6.10. Our valuation is based on an implied PBV of c. 0.92x based on the Gordon Growth Model. BUY reiterated on AMMB.
Table 1: Earnings Summary (RMmn)
| FYE Mar | 2024 | 2025 | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Net interest income | 2136.8 | 2358.0 | 2404.9 | 2577.8 | 2728.0 |
| Non-interest income | 1102.9 | 1112.4 | 1293.1 | 1516.0 | 1793.0 |
| Islamic Banking | 1315.7 | 1350.6 | 1431.7 | 1517.6 | 1608.6 |
| Total operating income | 4555.5 | 4821.1 | 5129.7 | 5611.4 | 6129.6 |
| Pre-provisioning profit | 2543.8 | 2731.1 | 2884.0 | 3199.8 | 3541.2 |
| Pretax profit | 1694.1 | 2587.3 | 2808.5 | 3040.8 | 3313.2 |
| Reported net profit | 1842.4 | 2001.5 | 2162.7 | 2341.6 | 2551.3 |
| EPS (sen) | 55.7 | 60.5 | 65.4 | 70.8 | 77.1 |
| EPS growth (%) | 12.7 | 7.2 | 8.1 | 8.3 | 9.0 |
| Net profit | 1842.4 | 2001.5 | 2162.7 | 2341.6 | 2551.3 |
| Gross div (sen) | 22.6 | 30.2 | 30.0 | 32.0 | 35.5 |
| Div yield (%) | 4.1 | 5.5 | 5.5 | 5.9 | 6.5 |
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Table 2: 1QFY26 Results Analysis (RMmn)
| FYE 31 Mar | 1Q FY25 | 4Q FY25 | 1Q FY26 | QoQ | YoY | YTD FY25 | YTD FY26 | YoY |
|---|---|---|---|---|---|---|---|---|
| Net interest income | 571.4 | 584.2 | 609.5 | 4.3 | 6.7 | 571.4 | 609.5 | 6.7 |
| Non interest income | 271.0 | 297.9 | 292.7 | (1.7) | 8.0 | 271.0 | 292.7 | 8.0 |
| Islamic banking | 303.8 | 360.4 | 357.8 | (0.7) | 17.8 | 303.8 | 357.8 | 17.8 |
| Share in results of associates and JVs | 32.3 | 38.9 | 30.7 | (21.2) | (5.2) | 32.3 | 30.7 | (5.2) |
| Net income | 1,178.5 | 1,281.4 | 1,290.7 | 0.7 | 9.5 | 1,178.5 | 1,290.7 | 9.5 |
| Overhead expenses | (520.6) | (576.4) | (563.9) | (2.2) | 8.3 | (520.6) | (563.9) | 8.3 |
| Profit before allowances | 657.9 | 705.0 | 726.8 | 3.1 | 10.5 | 657.9 | 726.8 | 10.5 |
| Profit before Tax | 645.7 | 656.2 | 654.4 | (0.3) | >100 | 645.7 | 654.4 | 1.4 |
| Reported net profit | 500.2 | 513.9 | 516.2 | 0.4 | 3.2 | 500.2 | 516.2 | 3.2 |
| EPS (sen) | 15.1 | 15.5 | 15.6 | 0.4 | 3.2 | 15.1 | 15.6 | 3.2 |
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Sector Recommendation Guideline
OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.
Stock Recommendation Guideline
BUY : Total return of the stock exceeds 12%.
HOLD : Total return of the stock is within the range of 7% to 12%.
SELL : Total return of the stock is lower than 7%.
Not Rated: The company is not under coverage. The report is for information only.
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total total return of the stocks in the sector.
ESG Scoring & Guideline
Remark
While expanding its exclusion list for new loans and financing, AMMB announced it would no longer provide new or additional loans and funding to businesses where coal or coal-related activities account for at least 20% of total revenue or cost of production, except the national energy company. RM3.7bn of loans/financing disbursed were categorised as green loans/financing, representing around 3% of its total loans. Subscribed to GET offered by TNB in February 2022 and offset its carbon emissions.
In FY22, a large percentage of AMMB’s community empowerment initiatives centred on providing critical aid to the hardest-hit communities. The organisation provided financial and non-financial assistance, including medical supplies, food, and devices facilitating remote learning and work. AMMB invested around RM1.4mn in social impact projects in FY22. RM17.7mn was invested in training and development initiatives for the staff to equip them with the necessary skills for the future. Achieved an approximately 96% High Performer Retention Rate. 89% of active suppliers are local, and 88% of suppliers pass AmBank’s prequalification ESG surveys. 47% of Management/Senior Management posts were held by women, while the ratio of women on the Board of Directors climbed from 22% to 33%.
Conforming to GRI criteria and validated by an independent assessment organisation, AMMB has an appropriate governance structure in place, with clearly defined duties and assigned roles and responsibilities for addressing sustainability risks and opportunities. In addition, AMMB has a Risk Management committee that oversees the governance and infrastructure for managing group-wide ESG risks, all the way down to senior management’s delegation of responsibility for managing repercussions. 63% of RHB Bank’s board of directors is comprised of independent directors. In FY22, AMMB saw a 42% rise in the amount of compliance-related training completed by its employees.
★★★★★ (≥80%): Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions.
★★★★ (60-79%): Above adequate integration of ESG factors into most aspects of operations, management and future directions.
★★★ (40-59%): Adequate integration of ESG factors into operations, management and future directions.
★★ (20-39%): Have some integration of ESG factors in operations and management but are insufficient.
★ (<20%): Minimal or no integration of ESG factors in operations and management.
+5% premium to target price
+3% premium to target price
No changes to target price
-3% discount to target price
-5% discount to target price
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
As of Tuesday, August 19, 2025, the analyst, Wong Li Hsia, who prepared this report, has interest in the following securities covered in this report:
(a) nil
Kaladher Govindan – Head of Research
TA SECURITIES HOLDINGS BERHAD 197301001467 (14948-M)
A Participating Organisation of Bursa Malaysia Securities Berhad
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