PETALING JAYA: AMMB Holdings Bhd
(AmBank) could declare an interim dividend of about 15 sen per share with its upcoming second quarter (2Q27) results, given its earnings stay on course, Hong Leong Investment Bank (HLIB) Research projects.
The research house said it increasingly sees scope for a higher dividend payout ahead, as management had previously guided for over 15% year-on-year growth in its first half (1H27) dividends per share while staying on track to reach its 60% payout target by the end of financial year 2027 (FY27).
Based on its estimates, this would imply an attractive FY27 dividend yield of approximately 6.5%.
HLIB Research said it expects AmBank to deliver a net profit of RM514mil to RM557mil in 2Q27, bringing cumulative earnings in 1H27 to RM1.03bil to RM1.08bil.
“This would account for about 48% to 50% of our FY27 earnings forecast, suggesting that earnings remain broadly on track despite a more challenging operating backdrop,” it said.
“While market-related income could introduce some quarterly volatility, we expect the underlying earnings engine to remain resilient, supported primarily by a healthy net interest income (NII) trajectory.”
However, the bank’s total income is likely to be weighed by weaker non-interest income (NOII), which mainly reflects mark-to-market (MTM) pressure from higher Malaysian Government Securities (MGS) yields, it noted.
Based on its sensitivity analysis, the research house estimated MGS-driven MTM trading losses could reach approximately RM91.5mil, or 4.2% of its FY27 profit after tax and minority interest forecast.
“Nevertheless, the bank’s US dollar-denominated interest-rate swap hedges are expected to partly offset this pressure,” HLIB Research noted.
It also said AmBank’s NII to NOII income mix of about 70:30 in 1Q27 should help cushion the weaker NOII, keeping overall revenue growth relatively healthy.
Meanwhile, funding cost pressure is expected to remain elevated into 2Q27 amid persistent deposit competition, with net interest margin potentially easing marginally from 1.93% in 1Q27.
Despite this, the research house’s channel checks indicate that asset quality remains benign, suggesting that credit costs should stay manageable for now, which should support underlying earnings resilience.
HLIB Research upgraded its call on the stock to a “buy”, raising its Gordon Growth Model-derived target price to RM7 from RM6.80.
The target price is based on an implied multiple of one times 2027 price-to-book, a premium to its five-year historical mean of 0.73 times.
“We believe the premium is warranted by AmBank’s improving shareholder-return proposition, anchored by over 6% dividend yields for 2026 to 2028, alongside an improving return on equity profile of circa 10% versus its about 9% five-year average,” it said.
It added that it sees a more favourable risk-reward profile following the recent share price pullback, providing a buy-on-weakness opportunity ahead of a potential re-rating from the RM2bil capital return programme from FY28.
