PETALING JAYA: AMMB Holdings Bhd
’s first half financial year ending March 31, 2026 (1H26) results slightly beat some analysts’ expectations but generally came in line with consensus.
In a note to clients, RHB Research said the group’s larger-than-expected interim dividend reinforced management’s commitment towards accelerating capital returns to shareholders.
“However, as the counter has outperformed the sector year-to-date, we think this is largely in the price,” it said.
RHB Research which has is staying “neutral” on AMMB has upped its target price to RM6.20 from RM5.80.
AMMB at last look, was at RM5.98, up 10 sen.
Citing briefing takeways, RHB Research said management’s guidance for FY26 is as follows – a return of equity of circa.10%, flattish to slight year-on-year net interest margin or NIM expansion from the FY25 level of 1.94% and mid-single digit loan growth.
Management expects further NIM compression in 3Q26 from seasonality effects, but this should be cushioned by continued deposit optimisation and liability management, while an improving asset mix should also be supportive of NIM, it said.
Management saw less trading opportunities in 2H26, although it is actively pushing for greater client-based non-interest income especially from its “Next 20%” clients or the Top 21-40 largest non-retail clients.
It was lifting FY26-FY28 earnings by 6%, 2% and 2%, with higher dividend per share estimates assumed.
In its report, Public Investment Bank noted that gross impaired loans (GIL) ratio worsened to 1.75% quarter-on-quarter (1Q26:1.17%), dragged by higher business banking GIL in the property and manufacturing sectors.
“Net credit cost including additional management overlays of RM99mil was higher at 42 basis points due to an increase in provisions for the small medium enterprise portfolio,” it noted.
It pointed out outstanding management overlays stood at RM497mil.
Meanwhile, wholesale banking GIL ratio improved by 31 basis points quarter-on-quarter attributable to a recovery from a corporate borrower, it added.
MBSB Research said while the lender’s management voiced out potential issues with the retail small medium enterprise segment last quarter, GIL formation seems to have plateaued close to the RM500mil mark.
“Management thinks that some improvement will show in subsequent quarters. For the commercial segment, GIL formation is idiosyncratic in nature, not pointing at any wider trends,” it said.
It also said that the group would be looking closer at property developers in the next several quarters.
It noted that in 1H26, stronger wholesale balances offset a weaker retail performance, mainly driven by large recoveries and investment windfall.
While this level of success is unlikely to be repeated in 2H26, fee income contributions and the remaining Vantris Energy Bhd restructuring proceeds could act as smaller-scale drivers, it said.
MBSB Research has maintained its “buy” call on AMMB with a revised target price of RM6.61 from RM6.15 earlier.
AMMB delivered a record 1H26 net profit of RM1.05bil, an increase of 5% over the same period last year, due largely to net interest income growth, led by higher margins.
Non-interest income saw an increase of 13% from gains from trading, and insurance income.
