AMMB Holdings Bhd has retained BUY calls from RHB Investment Bank Bhd (RHB Research), MBSB Investment Bank Bhd (MBSB Research) and Hong Leong Investment Bank Bhd (HLIB), with all three raising their target prices as the bank eyes stronger dividends and a potential RM2 billion capital release under upcoming Basel III reforms.
RHB Research raised its target price to RM7.62 from RM7.30, implying around 13% upside from AMMB’s RM6.76 price on July 31, while MBSB Research lifted its target to RM7.67 from RM7.63. HLIB increased its target to RM7.40 from RM6.90.
RHB Research said the Basel III reforms, due to take effect from January 1, 2028 for internal ratings-based banks, could release around RM2 billion or 60 sen per share in capital. AMMB has yet to decide whether to distribute the excess capital through dividends or share buybacks.
MBSB Research said the potential capital release strengthens the case for higher payouts, noting AMMB plans to raise its ordinary dividend payout ratio to 60% by financial year 2027. It expects dividend per share to exceed earnings per share growth, with AMMB targeting more than 40 sen in dividend per share this year.
HLIB said the potential RM2 billion release could support significant shareholder returns. Assuming progressive distribution over three years after Basel III takes effect, it estimates the capital could translate into around 20 sen in special dividends annually and more than 9% total dividend yield potential for financial years 2028 to 2030.
The analysts also highlighted AMMB’s shift towards higher-return growth, with the bank focusing on entrepreneurs, mid-sized companies and larger SMEs while improving capital efficiency. RHB Research noted its current 9.6 times equity leverage multiplier remains below the preferred 11 times, leaving room for asset growth or capital returns.
However, elevated technology spending remains a near-term concern. MBSB Research said higher technology costs could weigh on earnings growth, while HLIB noted AMMB’s RM700 million technology investment programme is expected to accelerate over the next three years.
Despite this, the analysts remain positive on AMMB’s longer-term return profile, supported by stronger capital generation, improving dividend payouts and more disciplined asset allocation.
As of 10.14 am, the stock price rose 3.11% to RM6.97.
