Maybank IB says it will keep its forecasts on AMMB following a meeting with management, the broking house forecast a net profit growth of 5.7% in FY25/26E respectively, with prospective ROEs of 8.7%. It also noted the valuations were undemanding and maintained a buy call on the stock with an unchanged TP of MYR5.05
The house forecast a FY24 dividend yield of 4.9% (40% payout assumption). AMMB’s loan growth has lagged the industry’s thus far and it is likely to end its financial year (March) around the 3% mark. Maybank IB said it has pencilled in loan growth of 2.8% for FY24 and 3.2% for FY25. Nevertheless, what is positive is that with increased focus on better yielding loans in the commercial and mid-corporate space, the house does expect NIMs to improve in FY25, and has factored in a 3-bps increase in the group’s FY25 NIM.
The group’s gross impaired loans ratio is still ticking up at this stage (particularly in the consumer portfolio), in line with the industry’s, but with the restoration of its loan loss coverage to a comfortable 112% end Dec 2023, provision levels are adequate. The house has nevertheless kept credit cost assumptions elevated at 30bps in FY24E and FY25E respectively, on prudent grounds.
The group’s CET1 ratios have been restored to a comfortable 13.4% and could potentially be enhanced by another 2%-pts when it carts over to an Internal Risk-based (IRB) framework. The dividend payout forecast assumes a normalisation to pre-COVID levels of 40% from FY24E onwards, but does not rule out higher payout ratios once it shifts to IRB.
