PETALING JAYA: AMMB Holdings Bhd
’s (AmBank) net profit for the financial year ended March 31, 2025 (FY25), which charted a growth of 7.1% year-on-year (y-o-y) to RM2bil, came in within analyst expectations.
In the fourth quarter ended March 31, 2025 (4Q25), net profit came up 7.8% y-o-y, driven by a rise in net interest income and non-interest income.
These more than offset the rise in overheads and surge in loan loss provisioning, according to analysts.
The FY25 operating profit rose 5% from a year ago, driven predominantly by a 15-basis-point (bps) recovery in net interest margin, which is the difference between the interest income earned on loans and investments and the interest paid on deposits and borrowings.
In FY25, a return on equity (ROE) target of 10% was achieved while the banking group surprised with a higher dividend payout ratio of 50% versus 40% in FY24.
Maybank Investment Bank Research (Maybank IB) said in FY24, there was a 1Malaysia Development Bhd tax writeback of RM504mil that was offset in part by additional provisions.
Going into FY26, it said the group’s targets were less defined due to external volatility.
Loan growth is expected to be mid-single digits (driven by business banking), while net interest margins are expected to hold around the current levels of 1.94% in FY25.
As for credit cost, it is expected to be below 30 bps versus FY25’s 16 bps.
“Management targets 11% ROE by FY29 although no target was set for FY26,” said Maybank IB,
This is to be driven mainly by a lower cost over income ratio (CIR) of 40% by then.
In FY25, CIR stood at 45.6%.
The research house maintained its earnings forecasts, having previously cut FY26-FY27 earnings by 4% to 5% to factor in slower economic growth and a 25 bps rate cut in the second half of 2025.
It lowered its FY26-FY27 loan growth forecast to 3% to 3.5% from the estimated 3.5% to 4%.
However, it said AmBank was one of its top sector picks, offering over 5% yields. This is based on the assumption that dividend payout ratio is at 50% over FY26-FY27. The research house expected price upside to RM6.05.
Meanwhile, CGS International (CGSI) Research forecast a net profit growth of 4.2% for AmBank in FY26, underpinned by projections of 6.5% increases in net and non-interest income.
Reiterating its “add” call on the stock, it said valuation at 8.1 times 2026 price-to-earnings (PE) is attractive.
This is the second lowest in the sector and below the sector’s PE of 9.5 times.
CGSI Research also raised the stock’s target price from RM6.39 to RM6.60.
AmBank shares traded four sen higher to RM5.48 at the time of writing.
