HLIB Research said the bank's 10% year-on-year loan growth is seen continuing into the third quarter of financial year 2024.
PETALING JAYA: Alliance Bank Malaysia Bhd
(ABMB), the smallest banking group by asset size in Malaysia, is poised to see healthy loan growth this year, backed by the small and medium enterprise (SME) and commercial segments.
Hong Leong Investment Bank Research (HLIB Research) said the bank's 10% year-on-year loan growth is seen persisting into the third quarter of financial year 2024 (3Q24), supported by the SME and commercial segments, with rising focus towards healthcare, education and green technologies.
The research house said this topped its conservative 6% growth estimate, suggesting scope for an upside surprise.
“Also, the robust new-to-business customer acquisition observed in 2Q24 continued its momentum into the last quarter of 2023.
“Separately, the bank appears confident of chalking up non-interest income amounting to RM300mil in financial year 2024 (FY24), coincidentally matching our projection, premised on strong sustained foreign exchange sales and trade fees, coupled with healthy corporate banking fees. However, treasury income is expected to stay soft,” the research house added.
The bank’s net interest margin (NIM) broadened 10 basis points (bps) sequentially in 2Q24 due to better lending yields and volume along with the release of some pricey fixed deposits.
HLIB Research said the bank’s 3Q24 NIM is expected to ease slightly quarter-on-quarter, in line with the more competitive deposit-taking season.
However, the rivalry this time around is not irrational like the same period last year.
“ABMB is still actively optimising its loan-to-deposit ratio to blunt the impact and remains committed to keep this less than 100% (2Q24: 99%),” HLIB Research said, retaining its “buy” call on the bank with a target price of RM3.95.
