AMMB Holdings Bhd has seen its share price tumbled sharply to RM4.22 after hitting a high of RM4.58 in August 1. Since then there has been strong buying momentum for the counter & touch a year high of RM4.68 on Aug 14.

Fundamentally, investors are probably positive over AMMB’s plans to achieve a CAGR of over 8% in income and net profit under its new 5-year strategy, “Winning Together – WT29”.

The banking group also targets to achieve an income of RM7 billion (up from RM4.6 billion in FY24) and RM2.9 billion in PATMI (up from RM1.9 billion in FY24). This growth is expected to be driven by an increase in net interest margin (NIM from 1.79% in FY24 to over 2% in FY29).

Better NIM can achieved through a gradual reduction in the cost of funds by steadily accumulating current account savings account (CASA) and more robust loan growth in higher-yielding SME, midcorporate, and business banking sectors.

Despite these ambitious growth targets, management is confident in maintaining a common equity Tier 1 (CET1) ratio of around 13% (FY24: 12.8%). It will gradually increase the dividend payout ratio from 40% to about 50%-55% by FY29. This would translate to a dividend per share of around 45 sen per share, up from 22.6 sen in FY24.

AMMB aims to differentiate itself by strategically deploying digital technologies to improve operational efficiency. Its digitalisation efforts are expected to lead to the acquisition of stickier CASA, lowering the cost of funds, and driving cross-selling synergies to generate higher revenue per customer.

Certainly, the transition towards digitalisation, underscored by the use of AI (Artificial intelligence), ML (Machine Learning) and data analytics, signifies a step in the right direction to build a niche over its peers.

The vision is to become an intelligence-driven bank, with the first phase of the data management platform launched in July 2024, followed by a second phase focused on data monetisation.

This initiative is expected to improve anti-money laundering transaction monitoring by 33%, predict loan defaults with 85% accuracy, and enhance deposit retention.

Operationally, AMMB plans to strengthen the SME segment by merging enterprise banking (EB) and retail SME (RSME) to align underwriting standards for improved risk management.

This will also enable the banking group to tap into the deposit base to enhance the loan-to-deposit ratio (LDR) and reduce the segment's gross impaired loans (GIL) ratio.

Management sees significant opportunities in the SME segment and intends to leverage technology to penetrate this large customer base. This segment is expected to drive AMMB's lending, where yields are typically higher and growth rapid, given the abundance of SMEs in the country.

AMMB aims to increase its SME market share from the current 7.2% to 9.1%. Surely, investors can put their faith in the stable growth prospects of AMMB given its ambitious drive and focus on technology to move ahead of the curve.