Alliance Bank Malaysia Berhad - 3QFY25 results: Some Pressure on NIMs Expected
Fri, 28-Feb-2025 08:05 am
by Samuel Woo • Apex Research

Counter

ABMB (2488)

Target Price (RM)

5.050

Recommendation

Hold

Summary

  • ABMB’s 3QFY25 core net profit jumped +6% yoy and fell -2% qoq to RM187m, bringing 9MFY25 core net profit at RM553m, which was within expectations, accounting for 76% and 75% of our and consensus expectations, respectively.

  • Management’s tone: Neutral.

  • Re-iterate our HOLD recommendation with a higher target price of RM5.05, based on FY26F GGM-PBV of 0.95x.

 

Results within expectations. 9MFY25 core net profit at RM553m (+8% yoy) came within expectations, accounting for 76% of our core net profit forecast at RM732m and was at 75% of consensus forecasted net profit of RM741m.

 

YoY. 3QFY25 core net profit jumped +6% yoy to RM187m, driven largely by improved NII, which offset higher OPEX, provisioning, and tax charges. 9MFY25 core net profit jumped by +8% yoy to RM553m, driven largely by NII and NOII improvements offsetting higher OPEX and provisioning charges.

 

QoQ. 3QFY25 core net profit fell by -2% qoq due to weaker NOII and higher tax charges offsetting improved OPEX and provisioning. 

 

Outlook. There was some CASA outflow in the consumer segment to wealth business and FDs. Management does warn that further NIM compression may occur in 4QFY25, stemming mainly from the COF side. Aside from CASA outflow, COF pressure is stemming from higher deposit tenures (an effort to lock in liquidity, as expectations of global rates are leaning towards cuts). Regardless, management is generally happy, as long as they can maintain their aggressive loan growth stance (keeping in mind that loans being acquired are of high quality). 

 

Earnings Revision. As earnings came within expectations, we make no changes to our earnings forecast.

 

Valuation. Re-iterate our HOLD recommendation on ABMB with a higher target price of RM5.05, based on an FY26F P/BV of 0.95x GGM-PBV valuation and +1% ESG factored premium based on 4-star ESG rating. We increase our target price to factor in our newly-added ESG premium.

 

Risks. (1) Poor NOII performance, (2) GIL ratio creep, (3) Higher-than-expected OPEX.

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