The AmBank Group was fined RM53.7m by Bank Negara for the breach of certain regulations under Sect 234 of the Financial Services Act 2013 and Sect 245 of the Islamic Financial Services Act 2013 by AmBank (M) Bhd and AmBank Islamic Bhd. The Group had agreed to pay the penalty to BNM. While no specific reasons were mentioned, the Group had commenced its own review and had been cooperating with BNM with regards to non-compliance of its banking units under certain regulations. (Source: Bursa Malaysia)

Comments: In our view, the penalty is unlikely to have a material impact on the Group’s FY16. We maintain our HOLD rating, with our 12-month Price Target at RM5.10 (based on a 0.94x P/BV multiple on a CY16E ROE of 9.6%). We foresee that catalysts appear to be lacking in the near term, though management’s initiatives such as expanding into the preferred consumer segments (higher income professionals – in mortgages, autofinancing), growing the share of corporate’s wallet and leveraging on strategic partnerships in cross-selling remain in place.

Source: Affin Hwang Capital Research - 24 Nov 2015