KDN PP17686/03/2013(032117)
AMMB HOLDINGS BERHAD
Staying On Track with WT29
DESCRIPTION
Malaysia’s sixth largest banking Group by asset size
| 12-Month Target Price (TP) | RM5.50 |
|---|---|
| Current Price | RM5.14 |
| Expected Return | +7% |
| Previous Target Price | RM5.50 |
| Market | Main |
|---|---|
| Sector | Financials |
| Bursa Code | 1015 |
| Bloomberg Ticker | AMM MK |
| Shariah-Compliant | No |
SHARE PRICE CHART
| 52 Week Range (RM) | 4.19 – 5.94 |
|---|---|
| 3-Month Average Vol (‘000) | 7,301.1 |
SHARE PRICE PERFORMANCE
| 1M | 3M | 6M | |
|---|---|---|---|
| Absolute Returns | 2.2 | 6.7 | -5.3 |
| Relative Returns | 1.0 | 0.2 | -6.7 |
KEY STOCK DATA
| Market Capitalisation (RMm) | 17,005.2 |
|---|---|
| No. of Shares (m) | 3,308.4 |
MAJOR SHAREHOLDERS
| % | |
|---|---|
| Employees Provident Fund | 13.0 |
| Clear Goal Sdn Bhd | 11.8 |
AMMB Holdings (AMMB) hosted its Strategy Day on 25th July 2025 to provide updates since it unveiled the Winning Together 29 (WT29) strategy last year. We think the group is on the right track to achieve its financial goals by FY29F, following a solid FY25 performance. Notably, AMMB delivered a strong PATMI growth of 7%, improved ROA to 1.02% (FY24: 0.97%) and raised its dividend payout ratio to 50%. To recap, WT29 outlines 3 main financial goals: i) higher dividend payout, ii) a lower cost-to-income (CTI) ratio of 40% and iii) improve ROA to 1.1%. While concerns with regards to slowing economic prospects may emerge in 2QFY26 onwards, we think that AMMB’s sound asset quality with sufficient overlays of RM439m and solid LLC buffer should help to mitigate the negative impact. We retain our Neutral call and RM5.50 target price.
- Strategic levers for growth. AMMB is targeting a 5-year FY24-29FPATMI CAGR of 8%, underpinned by key initiatives across its core segments. This includes a 6% CAGR for loans and deposits, with SME and mid corps leading its lending growth. Retail banking (RB) to be the net funder of the group. Liability management and change in lending mix are expected to support net interest margin (NIM) expansion.
- Business banking (BB) to be the leading lending engine for AMMB. Having completed the integration of SME into BB segment, AMMB is entering the next phase of growth by ramping up SME lending. This will be achieved via operational improvements, increased automation as well as higher sales capacity. We think that the potential synergies from the integration should enhance capital efficiency, as SME deposits are a good source of funding, which could be deployed to fund enterprise banking loan growth. AMMB targets to achieve a 5-year CAGR of 11% for FY24-FY29F, and to improve its current market share to RM45bn in FY29F (FY25: RM30bn).
- Explore more wealth management opportunities. Despite the intensive competition in the wealth management space, AMMB targets to achieve a 5-year PATMI CAGR of 9% between FY24-29F. Efforts will focus on deeper client engagements to increase market presence and trusts, which could drive cross selling opportunities. AMMB has identified Johor and Sarawak as the high growth regions, given the ongoing economic developments to widen its customer coverage. In addition, AMMB plans to broaden its wealth product offerings by collaborating with global partners to deliver comprehensive and tailored solutions to meet evolving client needs.
- RB to be a net funder. The management has reiterated its aspirations for the RB segment to be a focused lender and a net funder of the group. AMMB intends to roll out differentiated propositions for the affluent, mass affluent and mass segment, whereby the propositions will be deposit-led, followed by rewarding engagements with its partners such as Bask Bear coffee and BonusLink. AMMB also plans to increase its presence in employee banking, by offering loans at a more attractive rate with auto salary deduction. Digitalisation remains a core focus, with initiatives such as paperless processing and fully automated onboarding to drive operational excellence.
- OPR cut impact. While AMMB may see a 3-4bps compression in NIM on an annualised basis following the OPR cut in the near-term, 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.
KEY FORECAST TABLE
| FYE Mar (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F | CAGR |
|---|---|---|---|---|---|---|
| Total Income | 4,595.5 | 4,928.9 | 5,063.5 | 5,327.7 | 5,753.7 | 3.9% |
| Net Income | 2,543.8 | 2,731.1 | 2,759.3 | 2,911.9 | 3,220.9 | 4.2% |
| Pre-tax Profit | 1,694.1 | 2,587.3 | 2,545.6 | 2,672.0 | 2,905.6 | 2.9% |
| Net Profit | 1,868.1 | 2,001.2 | 1,959.9 | 2,057.2 | 2,237.1 | 2.8% |
| EPS (Sen) | 56.4 | 60.4 | 59.1 | 62.1 | 67.5 | 2.8% |
| P/E (x) | 9.1 | 8.5 | 8.7 | 8.3 | 7.6 | |
| DPS (Sen) | 22.6 | 30.2 | 29.6 | 31.0 | 33.7 | |
| Dividend Yield | 4.4% | 5.9% | 5.8% | 6.0% | 6.6% |
Source: Company, PublicInvest Research estimate
KEY FINANCIAL DATA
INCOME STATEMENT DATA
| FYE March (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Total Income | 4,595.5 | 4,928.9 | 5,063.5 | 5,327.7 | 5,753.7 |
| Net Income | 2,543.8 | 2,731.1 | 2,759.3 | 2,911.9 | 3,220.9 |
| Credit Impairment Charge | -852.1 | -143.9 | -213.8 | -240.0 | -315.4 |
| Net Operating Profit | 1,651.7 | 2,479.4 | 2,416.1 | 2,516.6 | 2,719.2 |
| Other Gains / (Losses) | 2.4 | 0.0 | 0.0 | 0.0 | 0.0 |
| Associates & Affiliates | 40.0 | 107.8 | 129.4 | 155.3 | 186.4 |
| Pre-tax Profit | 1,694.1 | 2,587.3 | 2,545.6 | 2,672.0 | 2,905.6 |
| Income Tax | 148.3 | -585.9 | -585.5 | -614.6 | -668.3 |
| Effective Tax Rate (%) | -8.8 | 22.6 | 23.0 | 23.0 | 23.0 |
| Minorities | -25.4 | -0.2 | -0.2 | -0.2 | -0.2 |
| Net Profit (reported) | 1,868.1 | 2,001.2 | 1,959.9 | 2,057.2 | 2,237.1 |
| Growth | |||||
| Total Income (%) | -0.3% | 7.3% | 2.7% | 5.2% | 8.0% |
| Gross Operating Profit (%) | -2.5% | 7.4% | 1.0% | 5.5% | 10.6% |
| Net Profit | 7.7% | 7.1% | -2.1% | 5.0% | 8.7% |
BALANCE SHEET DATA
| FYE March (RM m) | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Customer Loans (net of provisions) | 132,102.1 | 137,130.1 | 141,626.9 | 148,947.2 | 156,197.6 |
| Trading and Investment Assets | 47,717.0 | 45,307.5 | 47,581.6 | 50,017.3 | 55,082.7 |
| Goodwill and Intangible Assets | 431.3 | 458.7 | 458.7 | 458.7 | 458.7 |
| Other Assets | 16,513.4 | 16,147.3 | 14,277.3 | 14,141.5 | 11,701.8 |
| Total Assets | 196,763.8 | 199,043.6 | 203,944.5 | 213,564.7 | 223,440.9 |
| Customer Deposits | 142,381.2 | 141,547.0 | 149,161.3 | 156,996.8 | 164,846.6 |
| Interest-bearing Debt | 6,845.0 | 11,937.8 | 11,937.8 | 11,937.8 | 11,937.8 |
| Other Liabilities | 28,095.7 | 24,937.0 | 21,175.6 | 21,882.9 | 22,700.5 |
| Minority Interests | 1.0 | 0.9 | 1.1 | 1.3 | 1.6 |
| Total Liabilities | 177,322.9 | 178,422.8 | 182,275.8 | 190,818.8 | 199,486.5 |
| Shareholders’ Equity | 19,440.8 | 20,620.8 | 21,668.6 | 22,745.9 | 23,954.4 |
| Total Equity and Liabilities | 196,763.8 | 199,043.6 | 203,944.5 | 213,564.7 | 223,440.9 |
PER SHARE DATA & RATIOS
| FYE March | 2024A | 2025A | 2026F | 2027F | 2028F |
|---|---|---|---|---|---|
| Book Value Per Share | 5.9 | 6.2 | 6.5 | 6.9 | 7.2 |
| NTA Per Share | 5.7 | 6.1 | 6.4 | 6.7 | 7.1 |
| EPS, RPT. (Sen) | 56.4 | 60.4 | 59.1 | 62.1 | 67.5 |
| DPS (Sen) | 22.6 | 30.2 | 29.6 | 31.0 | 33.7 |
| Payout Ratio (%) | 51.6 | 50.0 | 50.0 | 50.0 | 50.0 |
| ROA (%) | 0.9 | 1.0 | 1.0 | 1.0 | 1.0 |
| ROAE (%) | 10.0 | 10.0 | 9.3 | 9.3 | 9.6 |
Source: Company, PublicInvest Research estimates
T 603 2268 3020
F 603 2268 3014
E wong.lingling@publicinvestbank.com.my
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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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