- AMMB Holdings Bhd (AMMB) recorded net earnings of RM1,511mil, in line with consensus' estimate of RM1,524mil for FY12F. ROE was at 14.1%, in line with the earlier guidance of circa 14% and consensus' 14.0%.
- Loans grew 1.7% QoQ and 5.9% YoY, with a continued emphasis on more profitable business loans and the corporate loans segment.
- Deposits expanded 2.6% QoQ. CASA maintained strong momentum with an 8.6% QoQ rise. This was on the back of deposits from the non-retail business enterprise segment. This took CASA contribution to 16.9% in 4QFY12, an alltime high (3QFY12: 16.0%; 4QFY11: 13.3%). NIM was lower by 12bps QoQ, due to LDR easing to 98.7% in 4QFY12 (3QFY12: 99.6%).
- Non-interest income was strong with a 15.4% QoQ increase. This came from gains from securities portfolio. Fee income was stable. Total fee income ratio was 32.2% in FY12 (FY11: 27.6%).
- Gross impaired loans continued to attrite, by 7.3% QoQ in 4QFY12, the sixth consecutive quarter of QoQ improvement. Gross NPL ratio dropped further to 2.5% in 4QFY12, from 2.7% in 3QFY12.
- Loan loss cover strengthened to 112.6% in 4QFY12, from 107.5% in 3QFY12 (2QFY12: 101.3%). Loan loss cover would be at the highest ever level for the group.
- Loan loss provision posted an uptick, by 35% QoQ to RM134mil. With this, credit costs increased to 71bps in 4QFY12 (3QFY12: 53bps). However, this was related to a specific account and not led by any particular industrywide trend. The specific account had been under a restructuring process since 2008, and is now being conservatively provided for. We estimate credit costs at 58bps in FY12 (FY11: 69bps), in line with expectations of 50bps to 60bps.
- For FY13F, net earnings growth is targeted at 9% to 12%, with continuing emphasis on growth in the more profitable non-retail segments. NIM is expected to contract by 10bps to 15bps, while credit costs are expected to be lower at 40bps to 45bps. Fee income ratio is targeted at 35%. The group is aiming at a CASA contribution of 16% to 18%.
- For the medium term FY13-15F targets, net earnings CAGR growth is targeted at 9% to 12%. ROE is now targeted at 14%-15%. CTI is targeted at less than 43%, taking into account possible IT capex investments for the core banking platform. Gross impaired loans ratio target is at below 2.5%, while dividend payout ratio is at 40% to 50%.