PETALING JAYA: RHB Research believes that AMMB Holdings Bhd
’s overlay reserves of RM484mil should help cushion potential profit-and-loss volatility, while its strong capital base leaves room for further shareholder returns.
“Its robust capital position places AMMB well on track to deliver on its commitment to double absolute dividend per share (DPS) by financial year 2029 (FY29), with optionality for potential excess capital returns,” the research house said.
RHB Research has upgraded the stock to a “buy” from “neutral”, while keeping its target price at RM7.
AMBB added 10 sen, or 1.63%, yesterday to close at RM6.25.
It believes that the bank’s recent share price weakness has created a more attractive entry point, while underlying capital strength continues to support earnings resilience and dividend growth.
The research house said the stock’s year-to-date underperformance likely reflects investor concerns over exposure within its business banking portfolio amid the Middle East conflict, but believes existing buffers should limit downside risk.
Ahead of its fourth-quarter (4Q) results due end-May, RHB Research expects FY26 net profit of RM2.05bil, up 3% year-on-year (y-o-y), broadly in line with consensus.
This implies 4Q earnings may soften by high single digits quarter-on-quarter and y-o-y, mainly due to higher loan impairments after unusually low provisioning in the previous quarter, when recoveries from retail debt sales lifted earnings.
However, the seasonal softness is expected to be partly offset by deposit repricing gains and potential profits from its investment portfolio.
RHB Research said management had earlier indicated confidence that 4Q earnings could match 3Q performance, and if achieved, this may deliver a modest earnings beat of 2% to 3%, largely depending on credit cost outcomes.
The bank is also expected to maintain a progressive dividend trajectory.
RHB Research forecasts a final cash dividend of 21.5 sen, bringing FY26 total dividend to 34 sen, up 12.5% from 30.2 sen a year earlier, implying a 55% payout ratio.
It expects the payout to rise gradually to 60% by FY28, translating into 41 sen per share.
Given its common equity tier-1 ratio of 15%, inclusive of unaudited profits, RHB Research said AMMB may even meet its dividend target earlier.
“We do not discount the possibility that management could achieve the target of doubling absolute DPS earlier than its WT29 strategy,” it added.
For FY27 and FY28, earnings forecasts were raised by about 2%, supported by lower assumed credit costs of 25 basis points and steady loan growth of 4.5%.
In its third quarter ended Dec 31, 2025, AMMB posted a net profit of RM529.58mil compared to RM485.49mil in the year-ago quarter, which translated to an earnings per share of 16.01 sen against 14.71 sen previously.
Quarterly revenue rose to RM1.28bil from RM1.24bil in the previous corresponding quarter.
