AMMB (AMM MK)

Tricky Year Off To a Decent Start

Neutral (Maintained)

Share Performance (%)

• Stay NEUTRAL, with new MYR5.80 TP from MYR5.50, 6% upside and c.6% FY26F (Mar) yield. AMMB’s 1QFY26 results were within expectations, with NIM expansion and opex discipline helping to offset the sequential contraction in the loan book. As NIM is expected to compress in the coming quarters, we prefer larger cap banks with overseas exposure to weather through a more challenging 2HCY25 for the sector.
• Results review. 1QFY26 PATMI of MYR516m (+3% YoY, flat QoQ) was in line, and came in at 27% and 26% of our and consensus FY26F. A 10% growth in operating income (NII and non-II led) alongside positive JAWs were the key YoY drivers, while sequentially, non-II dipped 4% QoQ off a high base mainly due to lower fee income. Credit costs jumped slightly to 25bps (1QFY25: 11bps, 4QFY25: 14bps), partly due to seasonality and timing effects, which have reversed to a certain extent in July and August. All in, 1QFY26 reported ROAE stood at 10.0%, a slight decline from the 10.2% achieved in 1QFY25.
• Balance sheet highlights. Gross loans saw a slight 1% QoQ drop in 1QFY26 (YoY: +4%), largely due to lumpy wholesale banking repayments. The business banking segment, ie AMMB’s key driver under its Winning Together FY29 strategy, was up 1% QoQ (YoY: +12%) while the retail banking segment was flat (YoY: -2%). Deposits, on the other hand, were down 3% QoQ (YoY: +2%) mostly from CASA departures – the CASA ratio shed 2ppts QoQ to 34% (1QFY25: 34%). Despite the LDR surpassing the 100%-mark, management believes liquidity is ample, as the LCR across all entities are north of 160%. On asset quality, the GIL ratio saw a 17bps QoQ spike to 1.71% largely from the retail and retail SME backbook, ie segments that management has de-emphasised growth in since FY24. LLC of 82% (1QFY25: 96%, 4QFY25: 87%) remains sufficient, as c.82% of GILs are fully collateralised by high quality assets, eg property and land.
• Briefing takeaways. On the recent policy rate cut, management expects NIM for FY26 to bottom at 1.96% (c.5bps QoQ) in 2QFY26, before the uplift from the repricing of term deposits kicks in. As such, FY26 NIM should still land ahead of the previous year’s 1.94%. Elsewhere, management guided for c.20bps credit costs for FY26, an improvement from the 1Q level, as it has some visibility on lumpy reversals and recoveries ahead. The 20bps guidance also takes into consideration some top-ups required for the retail SME portfolio. Lastly, the group is sitting on healthy unrealised trading profit that could be realised in the coming quarters to mitigate any NII weakness.
• No changes to forecasts as results were in line. Our TP – which includes an unchanged 4% ESG premium – is raised to MYR5.80 after rolling forward our base year to CY26F.

Forecasts and Valuation

Overall ESG Score: 3.2 (out of 4)
E Score: 2.8 (GOOD)
S Score: 3.8 (EXCELLENT)
G Score: 3.5 (EXCELLENT)
Please refer to the ESG analysis on the next page

Source: Company data, RHB

Emissions And ESG

Trend analysis

Source: Company data, RHB

Latest ESG-Related Developments

Offers flood relief assistance: AMMB announced several relief initiatives for customers affected by recent floods in East Malaysia – these include a moratorium period of up to six months, as well as certain waivers.

Ramping up financing of green property: AMMB recently announced partnerships with several developers of green-certified development projects – including a MYR450m facility to Eastern & Oriental (EAST MK, BUY, TP: MYR1.17) as well as a MYR130m facility to Avaland (AVALAND MK, NR).

GVC Programme: AMMB is the official banker for Kossan Rubber’s (KRI MK, SELL, TP: MYR1.23) Greening Value Chain (GVC) programme, which assists SMEs in implementing ESG-related changes to operations, including helping out in climate reporting.

ESG Unbundled

Overall ESG Score: 3.2 (out of 4)
Last Updated: 28 July 2025

E Score: 2.8 (GOOD)
AMMB’s FY25 GHG emissions now includes an expanded scope, covering waste directed to disposal and employee commute. During the financial year, the group mobilised c.MYR15bn in sustainable financing, largely through green fixed income investments. AMMB’s business banking customers were some of the largest recipients of the group’s green financing facilities, deployed towards sectors such as logistics, technology and sustainable property development.

S Score: 3.8 (EXCELLENT)
AMMB is engaged in numerous programmes to assist MSMEs with capacity building and digitalisation, including being the initial anchor bank supporting the central bank’s Greening Value Chain programme. The bank’s employees are decently diverse (62% are women) and well-trained (average of >70 training hours pa).

G Score: 3.5 (EXCELLENT)
AMMB has 89% independence at the Board level, with its sustainability direction overseen by a dedicated Group Sustainability and Climate Risk Council. The Group CEO and his direct reportees are also assessed on sustainability-linked performance indicators, among others. Selected indicators in the FY25 Sustainability Report had obtained external assurance.

ESG Rating History

Financial Exhibits

Financial Summary (MYR)

Valuation basis

Source: Company data, RHB

Figure 1: AMMB – summary of 1QFY26 results

Other key data and ratios

Source: Company data, RHB

Management guidance

Figure 2: AMMB – management guidance and financial targets for FY26F

Source: Company data, RHB

Valuation and TP

Our TP is raised to MYR5.80 (from MYR5.50), and is based on an unchanged GGM-derived P/BV of 0.83x, around -0.5SD from the long-term mean. The sole change to our GGM model was to the BVPS, which was rolled forward to CY26F. While we have no major concerns on AMMB, its largest catalyst in our view, ie successful execution of its WT29 strategy, will only play out over the long term. In the near term, we prefer larger cap banks with overseas exposure to mitigate the OPR cut impact in 2HCY25.

Figure 3: AMMB – GGM valuation with ESG overlay

Source: Company data, RHB

Figure 4: AMMB’s 12-month forward consensus P/E

Figure 5: AMMB’s 12-month forward consensus P/BV

Recommendation Chart

Source: RHB, Bloomberg

RHB Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months

Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain

Neutral: Share price may fall within the range of +/- 10% over the next 12 months

Take Profit: Target price has been attained. Look to accumulate at lower levels

Sell: Share price may fall by more than 10% over the next 12 months

Not Rated: Stock is not within regular research coverage

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