PETALING JAYA: AMMB Holdings Bhd
(AmBank) could see a recovery in net interest margin (NIM) in the bank’s final financial quarter (4Q26) on the back of continuous downward repricing of fixed deposits.
The NIM compression narrowed following the cut in the overnight policy rate since July last year, CGS International (CGSI) Research noted.
The bank’s NIM contracted four basis points (bps) quarter-on-quarter (q-o-q) in 2Q26, but the decline narrowed q-o-q to one bps in 3Q26.
For 3Q26 AmBank posted an 8.8% year-on-year (y-o-y) rise in net profit to RM529.6mil, or an earnings per share (EPS) of 16 sen on revenue of RM1.28bil, which was 3% y-o-y. Earnings for the nine months (9M26) totalled RM1.58bil or an EPS of 47.8 sen, up 6.3% y-o-y as revenue grew by 5.9% y-o-y to RM3.86bil. AmBank’s annualised return on equity for 9M26 was stable at 10.1% (9M25: 9.9%), while non-interest income grew a decent 16% y-o-y.
CGSI Research kept its “add” call on the stock with a target price (TP) of RM8 a share.
It said the bank trades at an attractive valuation of 9.6 times 2026 price earnings versus the sector’s 11.6 times valuation, with a potential writeback in its management overlay, as well as increase in capital market-related income in 4Q26 and financial year 2027 and potential rise in dividend payout ratio.
TA Research said the bank continues to strategically reposition its portfolio toward higher yielding corporate and small and medium enterprises segments to enhance margins.
The bank’s management expects the retail business to focus on higher-ticket, better-quality mortgages while re-engaging the mass affluent segment.
“On funding, priority is placed on reshaping the deposit base toward lower-cost retail and operational current account saving account while gradually reducing reliance on higher-cost non-retail fixed deposits,” TA research stated.
With the bank’s results meeting its expectations, TA Research kept its “buy” call on the stock and raised its TP on AmBank to RM7.40 a share from RM6.60 with the valuation based on an implied price to book value of 1.05 times based on the Gordon Growth Model.
