Broker: Maybank Investment Bank Berhad
Date of Report: March 27, 2026
Excerpt from Maybank Investment Bank Berhad report.
- Alliance Bank (ABMB) downgraded to HOLD: Earnings momentum remains strong, but there are concerns about possible stress in the SME loan portfolio due to rising inflation and oil prices. Net interest margins (NIMs) are expected to stay under pressure, and credit cost assumptions have been raised, leading to trimmed earnings forecasts for FY26–28.
- SME asset quality under scrutiny: SME loans account for 26% of ABMB’s book, with 67-70% secured. Asset quality remains stable for now, but inflationary pressures and higher operating costs could lead to deterioration.
- Loan growth outpacing industry: ABMB’s loans grew faster than the industry (7.9% YoY vs. 4.8%), targeting 8-10% growth for FY26, focused on mortgages, SMEs, and commercial lending.
- NIM compression and cost growth: NIMs continue to compress due to higher funding costs and increased allocation to lower-yielding treasury assets. Operating expenses are rising due to ongoing IT investments.
- Capital and dividend: ABMB’s CET1 capital ratio improved to 13.1% after a recent rights issue. Dividend payout is expected at 41%, prioritizing capital conservation amid growth.
- Risks and outlook: Upside could come from margin expansion and proactive capital management. Downside risks include weaker loan demand, slower economic growth, and further NIM compression.
Report Summary:
- Maybank downgrades Alliance Bank to HOLD, citing concerns over SME loan quality and persistent NIM pressure.
- ABMB is growing loans faster than the industry, but ongoing inflation and higher operating expenses pose risks to future earnings.
Above is an excerpt from a report by Maybank Investment Bank Berhad. Clients of Maybank Investment Bank Berhad can be the first to access the full report from the Maybank Investment Bank website: https://www.maybank.com/investment-banking
