AMMB Holdings Berhad - 3QFY25 results: A Solid Quarter
Fri, 21-Feb-2025 07:15 am
by Samuel Woo • Apex Research

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AMBANK (1015)

Target Price (RM)

5.650

Recommendation

Hold

Summary

  • AMMB’s 3QFY25 core net profit jumped +19% yoy and fell -3% qoq to RM486m, bringing 9MFY25 core net profit at RM1.49bn, which was deemed above our expectations but within consensus, accounting for 81% and 78% of our and consensus expectations, respectively.

  • Management’s tone: Optimistic.

  • Re-iterate our HOLD recommendation with a revised target price of RM5.65, based on FY26F GGM-PBV of 0.86x.

 

Results within expectations. 9MFY25 core net profit at RM1.49bn (+21% yoy) came above our expectations, accounting for 81% of our full-year core net profit forecast at RM1.8bn and was at 78% of consensus forecasted net profit of RM1.90bn.

 

YoY. 3QFY25 core net profit jumped +19% yoy to RM486m, driven by improved NII and lower provisioning making up for the surplus brought about by the large tax relief taken last year. 9MFY25 rose by +21% yoy, driven by lower provisioning offsetting higher tax and OPEX charges. 

 

QoQ. 3QFY25 fell by -3% qoq, largely dragged by higher OPEX charges, as managements has already made some early bonus accruals due to excellent performance. NIM was flattish and maintained very well, despite year-end deposit competition.

 

Outlook. Management is optimistic about the asset quality outlook and expects NCC to stay below 20bps in FY25F. Management is also optimistic on NIM outlook, with multiple debt-market avenues left to tap as the group continues its liability management programme. The Group’s excellent investment banking franchise should prop up fee income in the next few quarters. Business banking loans have been growing exceptionally well, which is in line with AMMB’s intention to increase loan book exposure to higher-yielding business banking loans. However, we have our concerns, primarily on (1) Treasury income, when conditions are so volatile, and (2) The pivot toward the affluent/mass-affluent segment in the retail loan book segment. 

 

Earnings Revision. We increase our FY25F earnings forecasts by +5% to account for lower-than-expected provisioning costs.

 

Valuation. Re-iterate our HOLD recommendation on AMMB with a revised target price of RM5.65 (from RM5.57), based on an FY26F P/BV of 0.86x GGM-PBV valuation and 1% ESG factored premium based on 4-star ESG rating. We increase our target price to incorporate the 1% ESG premium and increased earnings expectations.

 

Risks. (1) Volatile treasury incomes, (2) Weak loan growth persists, (3) NIM contraction.

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