Date: September 17, 2024
Broker: Maybank Investment Bank Berhad

Stock Overview

• Current Share Price: MYR 5.17
• Market Capitalization: MYR 17,134 million
• Target Price: MYR 5.95
• Potential Upside: 15%

Valuation Metrics

• Price-to-Earnings Ratio (PER):
  • CY24E: 9.4x
  • CY25E: 8.8x
• Price-to-Book (P/B):
  • CY24E: 0.9x
  • CY25E: 0.8x
• Return on Average Equity (ROAE):
  • CY24E: 9.5%
  • CY25E: 9.5%
• Net Yield:
  • CY24E: 5.2%
  • CY25E: 5.7%

Net Interest Margin (NIM) Outlook

AMMB’s NIM for FY23 was recorded at 1.79%, with expectations for it to rise to 1.89% in FY24. Maybank IBG has forecasted the bank’s NIM to stabilize at 1.85% for FY24E and 1.88% for FY25E. This improvement is supported by favorable liquidity conditions, indicating AMMB’s focus on enhancing its margins while managing competitive pressures.

Earnings Growth and Profitability

AMMB is positioned for steady earnings growth with a projected net profit increase of 4.4% if NIMs return to pre-pandemic levels. This potential uplift in earnings could take net profit from MYR 1,985 million to MYR 2,073 million in FY25E. The bank’s profitability is expected to remain strong, with ROAE holding steady at 9.5% for both CY24E and CY25E.

Liquidity and Funding

AMMB benefits from an improving liquidity environment within Malaysia’s banking sector, which should help sustain its funding costs and stabilize margins. The bank’s ability to manage liquidity effectively is key to maintaining its competitive advantage in a challenging market.

Growth Potential

AMMB offers an attractive investment proposition with a 15% potential upside. Its ability to manage NIM improvements and maintain profitability makes it a solid performer in the banking sector. The combination of stable earnings growth and an attractive dividend yield further enhances its long-term appeal.

Risks and Challenges

AMMB, like other banks in Malaysia, faces intense competition in both the deposit and lending markets. However, the bank’s solid NIM recovery and stable profitability mitigate these risks, positioning it for continued success in the near future.

This information has been extracted from the Maybank Investment Bank Berhad report dated September 17, 2024.