AMMB HOLDINGS BERHAD NIM Expansion Before OPR Cut Impact
DESCRIPTION
Malaysia’s sixth largest banking Group by asset size
- 12-Month Target Price (TP)
- RM5.50
- Current Price
- RM5.45
- Expected Return
- +1.0%
- Previous Target Price
- RM5.50
- Market
- Main
- Sector
- Financials
- Bursa Code
- 1015
- Bloomberg Ticker
- AMM MK
- Shariah-Compliant
- No
SHARE PRICE CHART
5.50
5.40
5.30
5.20
5.10
5.00
4.90
Jun-25
Jun-25
Jul-25
Jul-25
Jul-25
Aug-25
- 52 Week Range (RM)
- 4.67 – 5.94
- 3-Month Average Vol (‘000)
- 6,419.5
SHARE PRICE PERFORMANCE
| 1M | 3M | 6M | |
|---|---|---|---|
| Absolute Returns | 7.0 | 4.1 | -1.7 |
| Relative Returns | 2.3 | -2.5 | -6.6 |
KEY STOCK DATA
| Market Capitalisation (RMm) | 18,030.8 |
| No. of Shares (m) | 3,308.4 |
MAJOR SHAREHOLDERS
| % | |
|---|---|
| Employees Provident Fund | 13.1 |
| Clear Goal Sdn Bhd | 11.8 |
Neutral
AMMB Holdings (AMMB) posted a higher 1QFY26 PATMI of RM516.2m (+3.2% YoY), mainly due to higher net interest income (NII) driven by expansion in net interest margin (NIM). AMMB saw its NIM improved to 2.01%, on lower cost of funds. Results were in-line with expectations, accounting for 26% of our and consensus estimates. We tweak our earnings forecast for FY26-28F by an average of 1% due to housekeeping changes. While concerns with regards to slowing economic prospects may emerge in 2QFY26 onwards, we think that AMMB’s outstanding overlays of RM435m coupled with its solid loan loss coverage of 100.1% should help to mitigate the potential negative impact. Our Neutral call and TP of RM5.50 is maintained.
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Total income grew 10% YoY to RM1.29bn, as both NII (+7.4% YoY) and non-interest income (NoII) (+15.2% YoY) recorded strong growth. The improved performance for NII was mainly due a recovery in NIM. Meanwhile, the growth in NOII was largely driven by higher trading gains from securities which helped to offset the lower fee income from Wealth Management and Investment Banking.
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On asset and liability. Gross loans fell marginally by 1% YTD, due to loan repayment in Wholesale Banking. However, this was partly cushioned by higher credit demand from the Business Banking segment. Customer deposits decreased by 3% YTD, dragged by decline in overall CASA and lower retail FD, which is likely a deliberate move from AMMB, to better manage its cost of funds.
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Expecting near-term squeeze in NIM. Net interest margin improved by 12bps YoY to 2.01%, on the back of lower cost of funds. However, management guided that NIM may see a 3-4bps compression on an annualised basis, following the recent OPR cut. Nevertheless, we are not overly concerned as we think that the group’s shift in lending mix to the higher yielding SME segment and its continued focus to grow more retail deposits will lead to NIM expansion in the longer run.
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Operating expense increased by 8% YoY, mainly due to higher staff costs. Higher income growth helped AMMB to record a positive JAWS of 2%, resulting in an improved cost-to-income ratio of 43.7% (1QFY25: 44.2%).
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Turning cautious over asset quality. Gross impaired loans ratio worsened to 1.71% QoQ, (4QFY25: 1.54%) but remained fairly stable on a YoY basis (1QFY25: 1.70%). Pockets of stressed have been observed in AMMB’s business banking segment, largely coming from its RSME loans portfolio. Net credit cost came in higher at 25bps on higher impairment charge due to lower forward looking writeback, while outstanding overlays stood at RM435m.
KEY FORECAST TABLE
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F | CAGR |
|---|---|---|---|---|---|---|
| Total income | 4,555.5 | 4,821.1 | 4,986.7 | 5,233.6 | 5,593.0 | 4.7% |
| Operating income | 1,846.0 | 2,461.6 | 2,484.5 | 2,600.7 | 2,841.2 | 12.1% |
| Pre-tax Profit | 1,694.1 | 2,587.2 | 2,592.4 | 2,708.6 | 2,949.0 | 16.9% |
| PATMI | 1,893.2 | 2,001.2 | 1,970.0 | 2,058.3 | 2,241.1 | 2.8% |
| EPS (Sen) | 45.4 | 60.4 | 59.4 | 62.1 | 67.6 | |
| P/E (x) | 12.0 | 9.0 | 9.2 | 8.8 | 8.1 | |
| DPS (Sen) | 22.6 | 30.2 | 31.0 | 32.5 | 35.5 | |
| Dividend Yield | 4.1% | 5.5% | 5.7% | 6.0% | 6.5% |
Source: Company, PublicInvest Research estimate
Table 1: Results Summary
| FY Mar (RM’m) | 1Q26 | 1Q25 | 4Q25 | YoY chg (%) | QoQ chg (%) | YTD 26 | YTD 25 | YoY chg (%) | Comments |
|---|---|---|---|---|---|---|---|---|---|
| Interest income | 1,529.6 | 1,529.3 | 1,522.4 | 0.0 | 0.5 | 1,529.6 | 1,529.3 | 0.0 | |
| Interest expense | -920.1 | -957.9 | -938.2 | -4.0 | -1.9 | -920.1 | -957.9 | -4.0 | |
| Net Int. Income | 609.5 | 571.4 | 584.2 | 6.7 | 4.3 | 609.5 | 571.4 | 6.7 | NIM expanded on lower cost of funds |
| Other income | 650.5 | 574.8 | 658.3 | 13.2 | -1.2 | 650.5 | 574.8 | 13.2 | NoII driven by higher trading gains, which helped to offset lower fee income from IB and Wealth Management |
| Operating expense | -563.9 | -520.6 | -576.4 | 8.3 | -2.2 | -563.9 | -520.6 | 8.3 | CTI improved to 43.7% |
| Operating profit | 696.2 | 625.6 | 666.1 | 11.3 | 4.5 | 696.2 | 625.6 | 11.3 | |
| Allowances for impairment | -87.1 | -36.4 | -56.0 | 139.0 | 55.4 | -87.1 | -36.4 | 139.0 | Gross credit cost (excluding recoveries) at 0.5%, while net credit cost is at 0.25% for 1QFY26 |
| Associates | 30.7 | 32.3 | 38.9 | -5.2 | -21.2 | 30.7 | 32.3 | -5.2 | |
| Pre-tax profit | 654.4 | 645.7 | 656.2 | 1.4 | -0.3 | 654.4 | 645.7 | 1.4 | |
| Income tax | -138.3 | -145.5 | -142.0 | -5.0 | -2.6 | -138.3 | -145.5 | -5.0 | |
| Discontinued ops | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Minorities | 0.1 | 0.1 | -0.2 | 77.6 | -165.7 | 0.1 | 0.1 | 77.6 | |
| PATMI | 516.2 | 500.2 | 513.9 | 3.2 | 0.4 | 516.2 | 500.2 | 3.2 |
Source: Company, PublicInvest Research
Note: n.a. = not applicable core * = continuing operations, excluding one-off items
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE March (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Net interest income | 2,136.8 | 2,358.0 | 2,426.7 | 2,515.9 | 2,683.6 |
| Islamic operations | 1,315.7 | 1,350.6 | 1,397.8 | 1,532.4 | 1,650.2 |
| Non-interest income | 1,102.9 | 1,112.4 | 1,162.2 | 1,185.4 | 1,259.2 |
| Total income | 4,555.5 | 4,821.1 | 4,986.7 | 5,233.6 | 5,593.0 |
| Expenses | -2,051.7 | -2,197.8 | -2,307.7 | -2,423.1 | -2,544.2 |
| Loan loss provision | -696.3 | -224.0 | -354.5 | -319.8 | -317.6 |
| Pre-tax Profit | 1,694.1 | 2,587.2 | 2,592.4 | 2,708.6 | 2,949.0 |
| Income Tax | 148.3 | -585.9 | -622.2 | -650.1 | -707.8 |
| Effective Tax Rate (%) | -8.8% | 22.6% | 24.0% | 24.0% | 24.0% |
| Minorities | -0.3 | -0.2 | -0.2 | -0.2 | -0.2 |
| PATMI | 1,893.2 | 2,001.2 | 1,970.0 | 2,058.3 | 2,241.1 |
Growth
| 2024A | 2025A | 2026F | 2027F | 2028F | |
|---|---|---|---|---|---|
| Total income | 0.4% | 5.8% | 3.4% | 5.0% | 6.9% |
| Pre-tax profit | -24.9% | 52.7% | 0.2% | 4.5% | 8.9% |
| PATMI | 8.7% | 5.7% | -1.6% | 4.5% | 8.9% |
Source: Company, PublicInvest Research estimates
BALANCE SHEET DATA
| FYE March (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Customer Loans (net of provisions) | 132,102.1 | 137,130.1 | 142,589.8 | 148,293.4 | 152,742.2 |
| Trading and Investment Assets | 47,717.0 | 45,307.5 | 45,760.6 | 46,218.2 | 46,680.4 |
| Goodwill and Intangible Assets | 431.3 | 458.7 | 468.9 | 478.0 | 486.0 |
| Other Assets | 16,513.4 | 16,147.3 | 16,111.0 | 16,051.6 | 17,507.2 |
| Total Assets | 196,763.8 | 199,043.6 | 204,930.3 | 211,041.2 | 217,415.9 |
| Customer Deposits | 142,395.3 | 141,559.5 | 146,501.2 | 151,628.7 | 156,935.7 |
| Interest-bearing Debt | 6,913.0 | 12,116.6 | 12,116.6 | 12,116.6 | 12,116.6 |
| Other Liabilities | 28,013.7 | 24,745.7 | 25,501.6 | 25,470.5 | 25,457.1 |
| Total Liabilities | 177,321.9 | 178,421.9 | 184,119.4 | 189,215.9 | 194,509.5 |
| Minority Interests | 1.0 | 0.9 | 0.9 | 0.9 | 0.9 |
| Shareholders’ Equity | 19,440.8 | 20,620.8 | 20,810.0 | 21,824.4 | 22,905.5 |
| Total Equity and Liabilities | 196,762.7 | 199,042.7 | 204,929.4 | 211,040.3 | 217,415.0 |
Source: Company, PublicInvest Research estimates
PER SHARE DATA & RATIOS
| FYE March | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Book Value Per Share | 5.9 | 6.2 | 6.3 | 6.6 | 6.9 |
| NTA Per Share | 5.7 | 6.1 | 6.1 | 6.4 | 6.8 |
| EPS (Sen) | 43.8 | 60.4 | 59.5 | 62.3 | 67.6 |
| DPS (Sen) | 22.6 | 30.2 | 31.0 | 32.5 | 35.5 |
| Payout Ratio (%) | 51.6 | 50.0 | 52.1 | 52.2 | 52.5 |
| ROA (%) | 0.7 | 1.0 | 1.0 | 1.0 | 1.0 |
| ROAE (%) | 8.0 | 10.0 | 9.5 | 9.7 | 10.0 |
Source: Company, PublicInvest Research estimates
RATING CLASSIFICATION
STOCKS
SECTOR
DISCLAIMER
This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents.
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PUBLIC INVESTMENT BANK BERHAD (20027-W)
26th Floor, Menara Public Bank 2
78, Jalan Raja Chulan
50200 Kuala Lumpur
T 603 2268 3000
F 603 2268 3014
