PETALING JAYA: Following an encouraging finish to the financial year ending March 31, 2026 (FY26), Alliance Bank Malaysia Bhd
is guiding for FY27 loan growth, including unrated bonds, of 7.5% to 10%, positioning the bank to outperform overall industry growth.
The banking group will also continue focusing on driving fee and treasury income growth, TA Research said in a post FY26 results review report.
In FY26, Alliance Bank’s net profit rose 10.1% year-on-year (y-o-y) to RM826.5mil.
TA Research said the stronger full-year performance was anchored by higher operating income, which largely met analysts’ expectations.
Return on equity (ROE) stood at 10.2% versus FY25’s 10.3%.
Loan growth moderated slightly to 7.5% y-o-y, easing from 7.9% in the third quarter, with total loans reaching RM67.2bil, which it pointed out was slightly below management’s FY26 target range of 8% to 10%.
Incorporating FY26 results, TA Research said it has adjusted the FY27 and FY28 net profit forecast to RM862.2mil and RM912.1mil from RM887.1mil and RM923.8mil.
As for FY29, it projects net profit to grow by 6.7% y-o-y to RM972.9mil.
“On the downside, we expect margin pressure to persist as fixed deposits continue to grow faster than current account and savings account or Casa.
“Nevertheless, management is still guiding for a relatively stable net interest margin of around 2.28% to 2.35%,” TA Research said in a report.
According to the research house, while management noted Casa growth has moderated, partly due to temporary disruptions from digital system upgrades, the overall Casa balances remain on a positive growth trajectory and expect stronger momentum once the upgrades are fully completed.
From a strategy perspective, TA Research said the banking group is prioritising quality loan growth over chasing absolute market share.
Meanwhile, management expects operating expenditure growth to moderate going forward, although investments in capabilities and digital infrastructure will continue.
Despite the higher cost base, the cost-to-income ratio would remain relatively stable at around 47.5% to 48.5%, supported by stronger revenue growth and a more measured pace of cost expansion.
While TA Research had a “buy” on the stock, some research firms kept their “neutral” and “hold” calls.
UOB Kay Hian Research has maintained a “hold” call. It noted that the banking stock was currently trading at plus one standard deviation above its historical mean price-to-book.
While this premium likely reflects its high beta and strong loan growth, it said with single-digit earnings growth projections, the stock is largely fairly valued at current levels.
Nevertheless it has upped the stock’s target price to RM5.20, from RM5.10.
Meanwhile, RHB Research lowered the target price to RM5.20 from RM5.40 before with a “neutral” rating.
It said Alliance Bank’s FY26 results were broadly in line with estimates and management’s FY27 ROE guidance of 10% to 10.5%.
It was also based on expectations that the elevated energy prices would not persist, meaning that crude oil prices are not expected to average at US$120 per barrel for over six months.
“Early signs suggest that the first quarter of FY27 metrics should be tracking guidance.
“That said, Alliance Bank remains watchful over sectors such as logistics, construction and agriculture, but the overall impact thus far seems manageable,” RHB Research added.
