PETALING JAYA: The outlook of Alliance Bank Malaysia Bhd
’s (ABMB) fiscal year ended March 31, 2026 (FY26) remains broadly on track, with net interest margin (NIM) expected to stay within management guidance despite potential marginal pressure in the fourth quarter of the year (4Q26).
BIMB Research said in a report that in 4Q26, pressure would likely come from sustained deposit competition, likely pushing any NIM recovery into FY27.
Loan growth is projected to be close to the 8% to 10% target, outpacing industry growth, while the cost income ratio should end FY26 near 48%. Dividend payout is also expected to remain within the 40% to 50% range.
A banking analyst told StarBiz that the bank is a good proxy for investors who want to tap into the growth of small and medium enterprises (SMEs) in the country.
“Most of the bigger banks are not fully focused on this segment, and that is where ABMB can offer more exposure,” he said.
BIMB Research said the lender’s credit costs may edge up on a quarterly basis in 4Q26, but are still expected to stay within the full-year guidance of 30 to 33 basis points, supported by RM145.7mil of management overlays.
It said the group continues to hold RM145.7mil in management overlays as a buffer against potential credit risks.
While the full amount has been allocated, recoveries from corporate loans in 4Q26 could enable partial redeployment of these overlays. This would address the risk of potential rating downgrades on selected loan accounts under watchlist amid ongoing geopolitical tensions, as well as setting aside some additional pre-emptive provisioning in 4Q26, the research house said.
Loan exposures in the oil and gas, construction, and transportation sectors that are supported by collateral will be placed under watchlist, it said.
The research house added that the group is continuing to evaluate the potential impact of the Middle East conflict, including the implications of higher oil prices, noting that developments remain fluid amid evolving news flows.
BIMB Research said 4Q26 could see some upticks in delinquency (30 days past due) for the consumer, SME and commercial loan segments.
It also noted that the group’s NIM rose by two basis points to 2.34% in 3Q26.
ABMB’s proactive pre-funding strategy saw deposits increased two to three months ahead of the usual year-end seasonal competition, said the research house.
Nonetheless, it said sustained deposit competition from peer banks beyond 3Q26 and efforts to defend the deposit market share could lead to marginal NIM pressure in 4Q26.
Consequently, the expected NIM recovery may be pushed into the later quarters of FY27, instead of occurring in 4Q26 as initially anticipated.
That said, earnings momentum into 4Q26 remains supported by resilient non-interest income and strong capital markets activity, with no material credit cost shocks anticipated ahead of its results on May 26, said BIMB Research.
It said ABMB’s capital markets revenue strength from the preceding quarter has carried through into 4Q26, and non-interest income should be supported by resilient client fees, although treasury income may moderate during the quarter.
The research house said net profit forecasts for FY26 to FY28 are revised down by 1%, 3.5%, and 4.3%, respectively, following a lower NIM assumption. This leads to a 2%, 5.1%, and 6% respective reduction in net interest income estimates.
ABMB gained 1.55% yesterday to close at RM4.59.
