AMMB Holdings Berhad 1QFY26 Results Review and Outlook






AMMB Holdings Berhad 1QFY26 Results Review and Outlook


Tuesday 19th. August 2025

AMMB Holdings Berhad
(1015 | AMM Mk) Main | Financial Services

AMMB Holdings Berhad 1QFY26 Results Review and Outlook

Maintain NEUTRAL Unchanged Target Price RM5.30

1QFY26 Results Review Asset Quality Concerns

To Conclude

Our Verdict: Decent set of earnings, as guided. Management’s tone: Neutral. Expect asset quality and loan growth issues to be the primary projects or concern.

Asset quality and loan growth concerns plague AMMB’s outlook. Despite multiple levers to ensure its FY26 ROE target is being met, valuations are rather expensive.

Current P/BV of 0.88x is expensive, trading near +1SD of the 10-year P/BV mean of 0.74x.

Valuations: The company is currently trading at a forward FY26 P/BV of 0.88x with a 4.0% dividend yield.

Yays:

  1. Dividend yield is expected to grow stronger over time.
  2. Expect large recoveries and writebacks in the future.
  3. NOII is expected to perform well in subsequent quarters.

Nays:

  1. Asset quality concerns, particularly in AMMB’s RSME and unsecured loan portfolio.
  2. NIM to remain fairly stable or show slight improvement from FY25’s figure.

Okays:

  1. Mild loan growth to persist.

Results in a nutshell:

  • 3MFY26’s Core NP of RM516m was Within/Within our/street forecasts: 26%/26% of full-year forecasts.
  • No dividend announcement.
  • 3MFY26’s Core net profit (NP) of RM516m up by 3%yoy. The growth was driven by increased NII and NOII, which offset higher OPEX and provisions.
  • 1QFY26’s Core NP of RM516m remained flattish, growing 0%qoq. Stronger NII and lower OPEX offset weakness in NOII and higher provisions.

RETURN STATISTICS

Price @ 18 August 2025 (RM) 5.45
Expected share price return (%) -2.8
Expected dividend yield (%) +4.0
Expected total return (%) +1.1

INVESTMENT STATISTICS

FY26 Mar FY26E FY27E FY28F
Core NP (RM m) 2,061 2,051 2,091 2,122
CNP growth (%) (2) -0 2 1
Div yield (%) 4.0 5.1 5.2 5.3
EPS (Sen) 26.7 28.0 28.5 28.9
P/BV (x) 0.8 0.8 0.8 0.8
ROE (%) 6.9 7.0 7.1 7.2
RONA (%) 9.3 9.3 9.0 9.2
% Street CNP (%) 97 97 97 97

KEY STATISTICS

FBM KLCI 1,584.96
Bursa Shares (m) 3,295.4
Unquoted free float (%) 74.6
Market Capitalisation (RM’m) 18,165.2
52-wk high/low RM4.58 – RM5.94
3-mth average daily volume (m) 6.4
3-mth average daily value (RM’m) 32.1
Top Shareholders (%)
ASB Malaysia Pty Bhd 12.9
EPF Holding Bhd 11.8
Amanah Saham Nasional Bhd 8.4

Analyst

Samuel Woo
samuelwoo.cy@midf.com.my
03-2173 8461

Tuesday 19th. August 2025

Have a look at:

  • High certainty that AMMB achieves its >RM1.0b target by 1HFY26. This certainty is provided by bond-related NOII upside and a recovery from a large O&G corporate exposure.
  • NOII in subsequent quarters may not be a strong as current figures, but different business groups may step up. Fee income this time around was buoyed by higher securities-related gains from treasury, which offset weaker wealth management and investment banking deal flow. Management is expecting to see weaker performing segments to show strong recovery by 2QFY26, with a back-up of utilising further realised gains to secure its 1HFY26 earnings target.
  • NIM has peaked this quarter and will decline. This quarter’s NIM performed better than expected, rising +5bps qoq to 2.01%, largely driven by COF improvements. The OPR cut will fall in 2QFY26 (management thinks by -5bps in the next quarter), before clawing its way back up by 2-3bps in 2HFY26 (from FD repricing and loan mix changes), which would allow FY26’s full-year NIM to fall roughly 2-3bps above FY25’s 1.94% figure.
  • Seasonal effects bolster a concerning trend in asset quality deterioration. GIL ratio increased by a steep +18bps on a sequential quarter basis. This was driven largely by retail and business banking segments, while the corporate segment saw little change. Management isn’t overly concerned about the uptick of impairments in the residential mortgage and hire purchase loan segments – these are seasonal effects that showed normalisation in Jul-26 and Aug-26. More concerning is the asset quality deterioration in the unsecured and RSME segments, which the Group will be watching and likely setting aside larger overlays for.
    • Large recoveries expected by next quarter – and also larger overlay/forward-looking provisions. Management guides for larger recoveries in its corporate segment, particularly out of a large O&G exposure, as early as Sep-26 or Oct-26. Given the likelihood of a windfall recovery, management will instead be setting aside larger provisions for its problematic unsecured and RSME loan segments. The Group guides that FY26’s actual NCC will come close to the 20bps level (factoring in recoveries).
  • Mild loan growth to persist – more concerns on the retail loan portfolio. So far, loan growth has continued to underperform, with the Group experiencing negative loan growth due to large repayments in the corporate segment. Currently, the wholesale and business banking segment loan pipeline remains solid – the Group seems confident it can weed out the undesirable SME loans by FY26, and thus regrow its RSME segment.

More concerning is the retail loan portfolio. So far, retail loan growth has been weak, ending up flattish this year so far. Management is trying to jumpstart it again by 2HFY26. For mortgages, the goal is end-financing in higher-quality projects. The Group is regrowing its hire purchase loans portfolio after having undergone rehoming, and more positive signs should come around by 2HFY26. On the other hand, the Group remains concerned about its unsecured loans portfolio and has stopped onboarding new-to-bank customers a few quarters back.

Forecasts unchanged. We make no changes to our earnings forecasts.

Key downside risks: (1) Persistent asset quality issues, (2) Steeper-than-expected NIM compression, (3) Weak loan growth.

Maintain NEUTRAL call: Unchanged GGM-TP of RM 5.30. The TP is based on an unchanged FY26F P/BV of 0.81x.

(GGM assumptions: FY26F ROE of 9.3%, LTG of 4.0% & COE of 10.5%)

Tuesday 19th. August 2025

FIG 1: Quarterly results

FINANCIAL SUMMARY
FYE Mar (RM m) 1Q FY26 4Q FY25 1Q FY25 Yoy (%) Qoq (%) 3M FY26 3M FY25 Yoy (%)
Net interest income 610 584 573 7 4 610 573 7
Islamic banking inc. 294 360 204 18 -18 294 204 18
Non-interest inc. 293 298 271 8 -2 293 271 8
Net income 1,260 1,242 1,146 10 1 1,260 1,146 10
OPEX (564) (576) (521) 8 -2 (564) (521) 8
PPOP 696 666 626 11 5 696 626 11
Loan provisions (87) (56) (36) 139 55 (87) (36) 139
Other provisions 15 7 24 -40 102 15 24 -40
JV & Associates 31 39 32 -5 -21 31 32 -5
PBT 654 656 646 1 -0 654 646 1
Tax (138) (142) (146) -5 -3 (138) (146) -5
Discontinued ops n.m. n.m. n.m.
NCI 0 (0) 0 n.m. n.m. 0 0 n.m.
Reported NP 516 514 500 3 0 516 500 3
Core NP 516 514 500 3 0 516 500 3
Total NII* 925 895 861 7 3 925 861 7
Total NOII* 366 387 318 15 -5 366 318 15
Gross DPS (sen) 19.9 n.m. n.m. n.m.
Gross loans 15.8 15.3 15.1 4 3 15.8 15.1 3
Gross impaired loans 138,181 136,882 132,672 4.2 -0.5
Gross impaired loans 2,367 2,132 2,253 5.1 11.0
Customer deposits 137,987 141,547 135,479 1.9 -2.5
CASA 46,892 51,006 45,767 2.5 -8.1
Source: Company, MBSBR
Ratios (%) 1Q FY26 4Q FY25 1Q FY25 Yoy (ppts) Qoq (ppts) 3M FY26 3M FY25 Yoy (ppts)
ROE (Ann.) 10.0 10.0 10.0 0.0 0.0 10.0 10.0 0.0
NIM (Reported) 2.01 1.96 1.89 0.12 0.05 2.01 1.89 0.12
NOII/Net income 28.4 30.2 27.0 1.4 -1.8 28.4 27.0 1.4
Cost/income 44.8 46.4 45.4 -0.7 -1.6 44.8 45.4 -0.7
NCC (ann.) (bps) 26 16 11 15 9 26 11 15
GIL ratio 1.71 1.54 1.70 0.01 0.18
Loan loss coverage 78 82 89 -12 -5
CASA ratio 34.0 36.0 33.8 0.2 -2.1
L/D Ratio 98.8 96.9 96.4 2.4 1.9
CET 1 14.9 14.8 13.2 1.7 0.1

Source: Company, MBSBR

Tuesday 19th. August 2025

FIG 2: QoQ P/L walk (Quarterly results)

Source: Company, MBSBR

FIG 3: YoY P/L walk (Quarterly results)

Source: Company, MBSBR

FIG 4: YoY P/L walk (Cumulative results)

Source: Company, MBSBR

Tuesday 19th. August 2025

INCOME STATEMENT (QUARTERLY & CUMULATIVE)
1QFY26 / 3MFY26 results

Earnings: Within/Within our/street forecasts
26%/26% of full-year estimates

Dividend: NO

ROE (%)

Core Net Profit (RM b)
Growth – qoq (Qtr) & yoy (Cum) (%)

Pre-Provisioning Operating Profit (RM b)
Growth – qoq (Qtr) & yoy (Cum) (%)

OPEX – (RM b)
Growth – yoy only! (Qtr & Cum) (%)

Topline – (RM b)
Growth – qoq (Qtr) & yoy (Cum) (%)

Cost/Income ratio (%)

% NOII as topline (%)

Net interest income (RM b)

Non-interest income (RM b)

Tuesday 19th. August 2025

NIM (%)

Non-fee NOII (RM b)

Fee income growth – qoq (Qtr) & yoy (Cum) (%)

% Non-fee income as NOII (%)

BALANCE SHEET

Loan growth – qoq, yoy, FYTD (%)

CET 1 ratio (%)

Deposit growth – qoq, yoy, FYTD (%)

Loan/Deposit ratio (%)

CASA growth – qoq, yoy, FYTD (%)

CASA ratio (%)

GIL ratio (%)

Loan loss coverage (%)

Ann. net credit cost (bps)

Tuesday 19th. August 2025

FIG 5: Retrospective performance (Income Statement)

Notes (Cum = Cumulative, Qtr = Quarterly)

Metric Surprise?
Qoq/Yoy
RM mil Metric Surprise?
Qoq/Yoy
Qtr value
Qtrly
Core
NP
516 Qtrly
ROE
10.0% t-1
10.0%
t-4
Qoq 0% 10.0%
Yoy 3% 10.0%
Cum
Core
NP
516 Cum
ROE
10.0% t-1
10.0%
t-4
Within our forecast
Within consensus
26% of FY CNP
Yoy 3%
As expected +ve surprise
NII -5% NIM Qtr value 2.01
Qtr (Qoq) 3% Qtr (Qoq) +5bps
Qtr (Yoy) 7% Qtr (Yoy) +12bps
Cum (Yoy) 7% Cum (Yoy) +12bps
As expected As expected
NOII 15% % NII Qtr value 72%
Qtr (Qoq) -5% Qtr (Qoq) % NOII 28%
Qtr (Yoy) 15% % NII 72%
Cum (Yoy) 15% Cum % NOII 28%
As expected As expected
OPEX 8% Cost/
Inc.
Qtr value 44.8%
Qtr (Qoq) -2% Qtr (Qoq) -1.6%
Qtr (Yoy) 8% Qtr (Yoy) -0.7%
Cum (Yoy) 8% Cum (Yoy) -0.7%

Source: Company, MBSBR

Tuesday 19th. August 2025

FIG 6: Retrospective performance (Balance Sheet, Dividends, and anything extra)

Notes (Cum = Cumulative, Qtr = Quarterly)

Metric Surprise?
Qoq/Yoy
Metric Surprise?
Qoq/Yoy
-ve surprise -ve surprise
Loans
Qoq -0.5%
Yoy -4.2%
YTD (FY) -0.5%
As expected As expected
Depo.
growth
Qoq -2.5% CASA
grwth
Qoq -8.1%
Yoy 1.9% Yoy 2.5%
YTD (FY) -2.5% YTD (FY) -8.1%
As expected As expected
CASA
ratio
Value now 34.0% L/D ratio Value now 98.8%
Qoq -2.1% Qoq +1.9%
Yoy +0.2% Yoy +2.4%
-ve surprise -ve surprise
GIL ratio Value now 1.71% LLC ratio Value now 78%
Qoq +18bps Qoq -5%
Yoy +1bps Yoy -12%
As expected As expected
Qtrly
Net
CC
Value now 26bps Cum
Net
CC
Value now 26bps
t-1 16bps t-4 11bps
t-4 11bps
Healthy level No divvy
CET 1 Value now 14.9% Div
payout
Payout
Qoq 0.1%

Others:

Source: Company, MBSBR

Tuesday 19th. August 2025

FIG 7: Targets, Achievements, and Outlook

Targets FY26 3M FY26 Notes (Red: New guidance, Strikethrough: Guidance is no longer pertinent)
ROE 10
(Unofficial)
10.0 Management is intent on achieving >RM1.0b in 1HFY25.
CIR 44.8
NIM 2-3bps
above 1.94
Flat
2.01 Management believes FY26 NIM will have peaked at 2.01%. It expects OPR impact to reduce NIM by -5bps in 2QFY26. Management expects NIM to lift by 2-3bps in 2HFY26, as FDs reprice.
NOII 15% (yoy)
Loans Mid-single-digit -0.5 (YTD)
Deposits -2.5 (YTD)
% CASA 34.0
Loan/Depo 98.8
GIL ratio 1.71
NCC (bps) 16 – 30 26 Management expects figures to come closer to the 20bps level, skewed towards the upper bound of guidance. Expect to see recoveries of a large O&G exposure as early as next quarter.
LLC 78
CET 1 14.9
Div payout 50 50

Source: Company, MBSBR

Tuesday 19th. August 2025

FINANCIAL SUMMARY

INCOME STATEMENT FINANCIAL RATIOS
FYE Mar (RM m) FY24 FY25 FY26F FY27F FY28F FYE Mar (%) FY24 FY25 FY26F FY27F FY28F
Net interest income 2,137 2,354 2,456 2,477 2,538 Interest (%)
Islamic banking inc. 1,012 1,121 1,378 1,420 1,451 NIM 1.76 1.90 1.91 1.93 1.93
Other operating inc. 1,103 1,112 1,166 1,233 1,258 Return on IKEAs 3.24 3.28 3.25 3.23 3.18
Net income 4,555 4,821 4,950 5,129 5,242 Cost of funds 2.39 2.29 2.22 2.12 2.03
OPEX (2051) (2,198) (2,240) (2,257) (2,308) Net interest spread 0.85 0.99 1.03 1.10 1.15
PPOP 2,504 2,623 2,747 2,872 2,935
Loan provisions (696) (224) (327) (344) (361) Profitability (%)
Other allowances (15) 80 5 5 5 ROE 9.1 10.0 9.3 9.3 10.0
JV & Associates 40 108 110 115 117 ROA 0.9 1.0 1.0 1.0 1.0
PBT 1,694 2,587 2,533 2,650 2,702 NOII/Net income 27.5 26.0 26.4 26.9 26.8
Tax & Jakat 148 (586) (573) (599) (611) Effective tax rate -8.8 22.6 22.6 22.6 22.6
NCI (120) (0) Cost/Income 45.0 45.6 44.8 44.0 44.0
Discontinued ops 51
Reported NP 1,868 2,001 1,961 2,051 2,091 Liquidity (%)
Core NP 1,707 2,001 1,961 2,051 2,091 Loan/Deposit 97.8 96.9 96.7 96.7 96.7
CASA ratio 37.1 36.0 32.0 32.0 32.0
Total NII 3,304 3,570 3,643 3,750 3,835
Total NOII 1,291 1,359 1,307 1,379 1,407 Asset Quality (%)
GIL ratio 1.67 1.54 1.60 1.60 1.60
BALANCE SHEET LLC ratio 91 82 90 90 90
FYE Mar (RM m) FY24 FY25 FY26F FY27F FY28F LLC (w. reserves) 102 99 98 98 97
Cash & SI funds 4,929 6,700 6,793 6,759 6,750 Net CC (bps) 53 16 23 23 23
Investments securities 47,713 45,348 47,793 38,901 35,873
Net loans 132,102 137,130 143,728 150,914 158,460 Capital (%)
Other IKEAs CET 1 13.0 14.8 14.9 14.4 14.2
Net assets 10,452 9,847 11,229 16,360 21,268 Tier 1 capital 13.0 14.8 14.9 14.4 14.2
Total assets 196,764 199,044 203,509 212,694 222,660 Total capital 16.3 17.5 17.6 17.1 16.9
Customer deposits 142,381 141,547 148,624 156,056 163,858 Growth (%)
Other IBLs 22,089 25,481 25,926 26,433 27,009 Total NII -5.5 8.1 2.0 2.9 2.3
Non-IBLs 12,851 11,394 7,336 7,515 7,701 Total NOII 19.2 5.3 -3.8 5.5 2.0
Total liabilities 177,322 178,422 181,886 190,003 198,568 OPEX 0.6 5.8 2.7 3.6 2.2
PPOP -0.1 4.7 6.2 4.4 2.2
Share capital 6,376 6,376 6,376 6,376 6,376 Core NP -0.1 17.2 -2.0 4.6 2.0
Reserves 13,065 14,245 15,247 16,314 17,416 92
Shareholders’ funds 19,441 20,621 21,623 22,691 23,792 Gross loans 3.0 3.5 5.0 5.0 5.0
NCI 1 1 Customer deposits 9.3 -0.6 5.0 5.0 5.0
Total equity 19,442 20,622 21,623 22,691 23,792 CASA 8.1 -3.3 -6.8 5.0 5.0
Total L&E 196,764 199,044 203,509 212,694 222,660
Valuation metrics
Total IKEAs 186,312 189,197 192,280 196,334 201,092 Core EPS (sen) 51.7 60.6 59.4 62.1 63.3
Total IBLs 164,471 167,028 174,550 182,489 190,867 Gross DPS (sen) 22.6 30.2 26.7 28.0 28.5
Gross loans 134,130 138,883 145,828 153,119 160,775 Div payout (%) 44 50 50 45 45
CASA 52,707 51,006 47,560 49,938 52,435 P/E (x) 6.9 8.5 6.5 8.0 7.2
Core P/E (x) 10.5 9.0 9.2 8.8 8.6
P/BV (x) 0.9 0.8 0.8 0.8 0.8
P/BV (x) 0.9 0.8 0.8 0.8 0.8

Source: Company, MBSBR

Tuesday 19th. August 2025

MBSB RESEARCH (formerly known as MIDF RESEARCH) is part of MBSB Investment Bank Berhad (formerly known as MIDF Amanah Investment Bank Berhad) 197501002077 (24878-X).

(Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad)

DISCLOSURES AND DISCLAIMER

This report has been prepared by MBSB Investment Bank Berhad (formerly known as MIDF Amanah Investment Bank Berhad) 197501002077 (24878-X).

It is for distribution only under such circumstances as may be permitted by applicable law. Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MBSB INVESTMENT BANK BERHAD (formerly known as MIDF Amanah Investment Bank Berhad) makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such. This report is not, and should not be construed as, an offer to buy or sell any securities or other instruments. The information contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts will initiate, update and cease coverage solely at the discretion of MBSB INVESTMENT BANK BERHAD (formerly known as MIDF Amanah Investment Bank Berhad). The directors, employees and representatives of MBSB INVESTMENT BANK BERHAD (formerly known as MIDF Amanah Investment Bank Berhad) may have an interest in any of the securities mentioned and may benefit from the information herein. Members of the MBSB Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein This document may not be reproduced, distributed or published in any form or for any purpose.

MBSB Investment Bank (formerly known MIDF Investment Bank): GUIDE TO RECOMMENDATIONS

STOCK RECOMMENDATIONS

BUY Total return is expected to be >10% over the next 12 months.
TRADING BUY The stock price is expected to rise by >10% within 3 months after a Trading Buy rating has been assigned due to positive news flow.
NEUTRAL Total return is expected to be Between -10% and +10% over the next 12 months.
SELL Total return is expected to be < -10% over the next 12 months.
TRADING SELL The stock price is expected to fall by >10% within 3 months after a Trading Sell rating has been assigned due to negative news flow.

SECTOR RECOMMENDATIONS

POSITIVE The sector is expected to outperform the overall market over the next 12 months.
NEUTRAL The sector is expected to perform in line with the overall market over the next 12 months.
NEGATIVE The sector is expected to underperform the overall market over the next 12 months.

ESG RECOMMENDATIONS* source Bursa Malaysia and FTSE Russell

★★★★★ Top 25% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
★★★★☆ Top 26-50% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
★★★☆☆ Top 51%-75% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell
★★☆☆☆ Bottom 25% by ESG Ratings amongst PLCs in FBM EMAS that have been assessed by FTSE Russell

* ESG Ratings of PLCs in FBM EMAS that have been assessed by FTSE Russell in accordance with FTSE Russell ESG Ratings Methodology


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