• AMMB outlined its growth strategy, emphasizing the expansion of business banking operations and the development of technological initiatives

• Key takeaways include leveraging its existing RSME clientele, focusing on cross- selling deposits to enterprise banking borrowing customers, and driving financing for its merchant base

• Maintain BUY with an unchanged TP of RM6.30

Deep dive into its integrated SME strategy

We left AMMB’s analyst briefing feeling optimistic about its strategic direction under the Winning Together 2029 (WT29) framework, with a strong focus on business banking as a key growth driver. The session was attended by key executives, including Jamie Ling (Group CEO), Shafiq Abdul Jabbar (Group CFO), Christopher Yap (Managing Director, Business Banking), and Wong Eng Teng (Group Chief Financial & Transformation Officer).

WT29 – SME beyond RM1bn

Under WT29, AMMB aims to grow its SME business exceeding RM1bn revenue (1HFY25: RM542m) and achieve a 10% market share. Business banking is likely to remain the most profitable segment, with asset yield of 5.5–6.5% and NIM above 2.5%. Early initiatives include merging retail SME segment (RSME) into business banking by 4QFY25, supported by streamlined onboarding (3 days vs 3+ weeks) and robust technology. Key takeaways included AMMB’s data-driven strategy to unlock growth across three key areas, including 1) identifying high-potential clients for financing within its >100k non-borrowing RSME base, with early results pointing to 3k accounts worth RM2m each, 2) cross-selling deposits to RSME and enterprise banking borrowers, offering margin gains of >500bps, and 3) expanding supply chain financing within its 35k merchant network, which recorded RM17bn in transaction volume in FY24.

Maintain BUY, unchanged GGM-derived RM6.30 TP

We retain our earnings forecasts and maintain our BUY rating, with an unchanged GGM- derived target price of RM6.30. We find AMMB attractive, given its undemanding valuations (trading at 0.83x 2025E P/BV against 3-year forward ROE of 9.7%) and the potential for higher dividend payouts. Key risks include higher-than-expected NPLs, prolonged NIM pressure, and elevated cost related to technological investments supressing cost-to-income ratio.

Source: Philip Capital Research - 5 Dec 2024