Maybank Investment Bank Berhad
August 18, 2025
AMMB Holdings 1QFY26: Strong Performance Amid Asset Quality Monitoring – Is AMMB a Buy for 2025?
Executive Summary: AMMB Holdings Delivers Solid 1QFY26 Results
AMMB Holdings (AMM MK) has posted its 1QFY26 financial results, meeting expectations and maintaining its guidance for FY26. The Malaysian banking group continues to show resilience, with positive net interest margin (NIM) expansion, healthy non-interest income (NOII) growth, and effective cost management. Despite some uptick in impaired loans, strategic adjustments in lending portfolios and ongoing deleveraging in the retail SME segment highlight management’s proactive approach. Maybank Investment Bank Berhad reiterates its BUY rating, targeting a price of MYR6.05, which implies an attractive 11% upside.
Key Financial Highlights: 1QFY26 Performance Overview
| Metric |
1QFY26 |
4QFY25 |
1QFY25 |
YoY Change |
QoQ Change |
| Net Profit (MYR m) |
516.2 |
513.9 |
500.2 |
+3.2% |
+0.4% |
| Operating Income (MYR m) |
1,260.1 |
1,242.5 |
1,146.2 |
+9.9% |
+1.4% |
| Net Interest Margin (NIM) |
2.01% |
1.96% |
– |
– |
+0.05% |
| Cost-to-Income Ratio |
44.8% |
46.4% |
45.4% |
-0.6% |
-1.6% |
| Gross Impaired Loans (MYR m) |
2,366.5 |
2,132 |
2,253 |
+5.1% |
+11.0% |
| Gross Impaired Loan Ratio |
1.71% |
1.54% |
1.7% |
0.0% |
+0.17% |
Stock Overview & Valuation Metrics
- Share Price (Aug 18, 2025): MYR 5.45
- 12-Month Target Price: MYR 6.05 (+11% Upside)
- Market Capitalisation: MYR 18.1 Billion (USD 4.3 Billion)
- Major Shareholders: Employees Provident Fund (12.8%), Hashim Azman (11.8%), Permodalan Nasional Bhd. (8.4%)
- 52-Week High/Low: MYR 5.94 / MYR 4.89
- Dividend Yield (FY26E): 5.5%
- Forward P/E (FY26E): 9.0x
- Forward P/BV (FY26E): 0.8x
Business Segments and Strategic Shifts
AMMB Holdings delivers integrated financial services including:
- Retail Banking
- Wholesale Banking
- Investment Banking
- Islamic Banking
The bank is repositioning its mortgage business, shifting from affordable housing to mass affluent end-financing. Auto financing is showing signs of recovery, and new-to-bank unsecured lending was ceased at the end of December 2024.
Asset Quality: Monitoring and Adjustments
- Absolute gross impaired loans (GILs) increased 11% quarter-on-quarter.
- GIL ratio rose to 1.71% by June 2025 from 1.54% in March 2025; most increases occur in retail SME and consumer portfolios, while corporate remains stable.
- Retail SME (RSME) book deleveraged from MYR5.2b (June 2024) to MYR4.5b (now), with further reductions expected.
- Management overlays stand at MYR435m, with credit guarantee coverage (CGC) for a substantial portion of RSME loans.
- Loan loss coverage ratio dropped to 73.8% (June 2025) from 82.2% (March 2025).
Loan and Deposit Growth Trends
- Group loans contracted 1% year-to-date (YTD), mainly due to a 6% drop in wholesale banking loans.
- Business banking loans grew 1% YTD, consumer loans flat.
- On a year-on-year (YoY) basis, gross loans up 4%.
- Customer deposits declined 3% YTD, up 2% YoY. Fixed deposits and CASA both rose 2% YoY.
- CASA ratio dipped to 34% (June 2025) from 36% (March 2025).
Net Interest Margin (NIM) and Non-Interest Income (NOII)
- Group NIM improved to 2.01% in 1QFY26 (+5bps QoQ). NIM may average 1.97-1.98% for FY26E after the recent OPR cut.
- NOII rose 8% YoY, led by trading gains, though offset by lower fee income from investment banking and wealth management.
Operational Efficiency and Cost Management
- Operating expenses increased 8.3% YoY, driven by higher personnel costs (+11% YoY from staff rewards).
- Positive JAWS achieved, as operating income grew faster than costs.
- Cost/income ratio improved to 44.8% (1QFY26) from 45.4% (1QFY25).
Credit Cost and Capital Ratios
- Net credit cost increased to 25bps in 1QFY26 (vs 11bps in 1QFY25, 16bps in 4QFY25).
- Guidance for FY26E credit cost is 20bps.
- Common Equity Tier 1 (CET1) ratio stood at 14.9% (end-June 2025).
- Annualised ROE was 10.0% for 1QFY26, slightly down from 10.2% in 1QFY25.
Dividend Outlook and Shareholder Returns
- Assumed dividend payout ratio for FY26E is 50%, with potential for positive surprises.
- Net dividend yield for FY26E is projected at 5.5%.
Financial Performance – Five-Year Summary
| Metric |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Operating Income (MYR m) |
4,472 |
4,607 |
4,821 |
5,084 |
5,367 |
| Pre-Provision Profit (MYR m) |
2,473 |
2,555 |
2,623 |
2,806 |
3,005 |
| Core Net Profit (MYR m) |
1,709 |
1,732 |
2,001 |
2,000 |
2,093 |
| Core EPS (MYR) |
0.52 |
0.52 |
0.61 |
0.60 |
0.63 |
| Net DPS (MYR) |
0.18 |
0.23 |
0.30 |
0.30 |
0.32 |
| ROAE (%) |
9.8 |
9.2 |
10.0 |
9.5 |
9.5 |
Balance Sheet Review: Assets, Deposits and Shareholder Equity
| Balance Sheet Item (MYR m) |
FY23A |
FY24A |
FY25E |
FY26E |
FY27E |
| Loans & Advances |
128,243 |
132,102 |
137,130 |
142,038 |
146,300 |
| Customer Deposits |
130,332 |
142,395 |
141,560 |
145,794 |
150,167 |
| Total Assets |
197,430 |
196,764 |
199,044 |
204,326 |
210,510 |
| Shareholders’ Funds |
18,024 |
19,441 |
20,621 |
21,621 |
22,667 |
Key Ratios and Performance Trends
- Net interest income growth for FY26E is projected at 0.7% (after a 7.8% gain in FY25E).
- Non-interest income growth expected at 12.5% FY26E.
- Gross loans growth forecasted at 3.5% for FY26E.
- Loan loss coverage expected to remain around 79% for FY26E and FY27E.
- ROAA steady at 1.0% for FY26E and FY27E.
Risk Factors to Watch
- Economic slowdown could negatively impact earnings.
- Heightened deposit rate competition may pressure NIM.
- Deterioration in asset quality, particularly in commercial property exposure, may increase provision levels.
AMMB Holdings: Investment Ratings and Historical Recommendations
- BUY: Return expected above 10% in next 12 months (including dividends).
- HOLD: Return expected between 0% and 10% in next 12 months.
- SELL: Return expected below 0% in next 12 months.
| Date |
Rating |
Target Price (MYR) |
| 18 Aug |
Buy |
4.9 |
| 23 Feb |
Buy |
5.2 |
| 29 May |
Buy |
4.2 |
| 22 Aug |
Hold |
4.2 |
| 22 Nov |
Buy |
4.8 |
| 26 Feb |
Buy |
5.1 |
| 20 Aug |
Buy |
5.9 |
| 28 Nov |
Buy |
6.3 |
| 20 Feb |
Buy |
6.4 |
| 7 May |
Buy |
6.1 |
Conclusion: AMMB Holdings Maintains Stability and Growth Potential
AMMB Holdings stands out with its balanced growth, prudent asset quality management, and steady returns for investors. Strategic adjustments in lending and focus on commercial banking should support profitability, even as credit cost and impaired loans are closely monitored. With a solid dividend yield, healthy ROE, and a manageable risk outlook, AMMB remains an appealing pick for investors seeking exposure to Malaysia’s banking sector in 2025.
Contact Information
- Maybank Investment Bank Berhad – Kuala Lumpur: (603) 2059 1888
- Maybank Securities Pte Ltd – Singapore: (65) 6336 9090
- Maybank Securities (London) Ltd – London: (44) 20 7332 0221
- MIB Securities (Hong Kong) Limited – Hong Kong: (852) 2268 0800
- PT Maybank Sekuritas Indonesia – Jakarta: (62) 21 2557 1188
- MIB Securities India Pte Ltd – Mumbai: (91) 22 6623 2600
- Maybank Securities Inc – Philippines: (63) 2 8849 8888
- Maybank Securities (Thailand) PCL – Bangkok: (66) 2 658 6817
- Maybank Securities Limited – Vietnam: (84) 28 44 555 888
