Date: September 17, 2024
Broker: Maybank Investment Bank Berhad
Stock Overview
- Current Share Price: MYR 4.30
- Market Capitalization: MYR 6,657 million
- Target Price: MYR 4.60
- Potential Upside: 7%
Valuation Metrics
- Price-to-Earnings Ratio (PER):
- Price-to-Book (P/B):
- Return on Average Equity (ROAE):
- Net Yield:
Net Interest Margin (NIM) Performance
ABMB (Alliance Bank Malaysia Berhad) recorded a NIM of 2.48% in FY23 and is guiding for its NIM to remain within the range of 2.40%-2.45% in FY24. Maybank IBG’s forecast projects NIM at 2.43% for FY24E, with a slight decline to 2.39% in FY25E. ABMB’s stable NIM outlook highlights its resilience in managing competitive pressures in the market.
Earnings and Profitability
ABMB is expected to generate consistent returns with a forecasted ROAE of 9.9% for both CY24E and CY25E. The bank’s steady profitability, combined with its attractive dividend yield, makes it a solid performer in the Malaysian banking sector. If NIMs return to pre-pandemic levels, ABMB could see a slight 1.2% earnings upgrade by FY25E, reinforcing its potential for sustained growth.
Liquidity and Funding
ABMB is benefiting from improving system liquidity in the Malaysian banking sector, which should help manage its funding costs and maintain profitability. The bank’s focus on maintaining a balanced deposit mix will aid in controlling funding pressures and supporting stable margins.
Dividend Yield and Growth Potential
With a net yield of 5.4% in CY24E and 5.7% in CY25E, ABMB offers an attractive dividend payout to investors. The bank’s solid fundamentals, combined with its 7% upside potential, make it an appealing option for those seeking both income and capital growth in the banking sector.
Risks and Challenges
ABMB faces similar challenges as other banks in Malaysia, particularly from intense competition in the deposit and lending markets, which could pressure margins. However, its stable NIM outlook and consistent profitability provide a cushion against these risks.
This information has been extracted from the Maybank Investment Bank Berhad report dated September 17, 2024.
