Broker Name: Maybank Investment Bank Berhad
Date of Report: March 27, 2026
Excerpt from Maybank Investment Bank Berhad report.
Report Summary
- Alliance Bank (ABMB) is downgraded to HOLD due to concerns over potential stress in its SME loan portfolio amid rising inflation and ongoing net interest margin (NIM) pressure.
- Earnings momentum remains strong, with core net profit up 12% YoY for 9MFY26, but further NIM compression is expected due to higher funding costs and increased allocation to lower-yielding treasury assets.
- ABMB’s SME loans account for 26% of total loans (67-70% secured), but are being closely monitored as oil prices and inflation rise; credit cost assumptions are raised, and earnings forecasts for FY26-28 are trimmed by 1-4%.
- Loan growth has outpaced the industry, with a focus on mortgages, SMEs, and commercial lending; deposit growth is strong but mainly in fixed deposits, affecting NIMs.
- Operating expenses are rising due to increased IT and digitalization spending, resulting in a higher cost/income ratio (~47%).
- Asset quality remains stable overall, but some uptick in overdue accounts for both SME and consumer loans is noted; gross impaired loan ratios remain manageable.
- Capital ratios have improved, aided by a recent rights issue, and the bank maintains a healthy dividend payout policy, prioritizing capital conservation for further growth.
- Key risks include further NIM compression, deterioration in SME asset quality, and the impact of prolonged inflation or geopolitical tensions on economic growth.
- Target price is lowered to MYR5.20 (from MYR5.80) as a result of revised forecasts and a more cautious outlook.
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 Berhad website: https://www.maybank.com/investment-banking
