• Maintain BUY, with new MYR4.90 TP from MYR5, 15% upside and c.5% FY25F (Mar) yield. AMMB’s FY24 results met our, but beat consensus estimates. While the group expects non-II to soften in FY25F off a high base, it sees room for NIM to expand given its ongoing initiatives to lower cost of funds (CoF). AMMB remains a sector Top Pick for its dividend upside potential following the completion of its capital rebuild exercises.

• Results review. 4QFY24 headline net profit of MYR477m (+11% YoY, -12% QoQ) brought the full-year sum to MYR1.87bn (+9% YoY) – this came in line with our, but exceeded Street full-year forecast. FY24 NII was down 7% YoY mainly from a 28bps NIM compression, but was offset by a higher non-II (+15%), mostly from trading income. Opex declined 2% YoY on prudent cost controls, while net impairment allowances (excluding one-off top ups) were also down 29% YoY. On a quarterly basis, 4Q NIM was maintained sequentially at 1.79% (-5bps YoY), while non-II was up 7% QoQ (+3% YoY) on strong core fees. All in, FY24 ROE of 10.0% (FY23: 9.8%) met management’s target for the year. A final DPS of 16.6 sen was declared, bringing the full year total to 22.6 sen (FY23: 18.3 sen), implying a 40% payout (FY23: 35%).

• Loans growth to accelerate in FY25F. Loans growth in FY24 was relatively soft at 3% YoY (QoQ: +2%) due to lumpy corporate repayments. In FY25F, management aims for loans growth of 1-1.5x Malaysia GDP, ie at the mid- single digit level. The group has a robust pipeline to support such growth levels, with loans related to infrastructure projects to be drawn down gradually in tandem with the execution of said projects. It remains watchful of household loans given pressure on the cost of living and is slowing down growth in that segment.

• On a NIM rebuilding path. After a 28bps YoY NIM compression in FY24, the group has identified several initiatives to lower its CoF in FY25F. These include stepping up CASA gathering efforts (especially corporate CASA), running on tighter LDR (up to 96% from 94% at end-Mar 2024), and diversifying its funding sources. We learnt that these efforts have had an immediate impact on NIM as management reported that CoF in Apr CY24 saw an improvement from the 4QFY24 level.

• No issues on asset quality. The group’s GIL ratio inched up 7bps QoQ to 1.67%, largely due to one corporate account entering impaired status – this had been regularised after the closing period. While household GILs were also on the rise, the group remains secure with its position as it had built up provision buffers for the retail book in the previous quarter.

• Forecasts lowered by 2-3% to reflect the flow-through of softer-than- expected loans growth in FY24. Our TP is lowered to MYR4.90 (from MYR5) as a result, and includes a 4% ESG premium.

Source: RHB Research - 28 May 2024