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Alliance Research maintains Neutral on AMMB, unchanged target price of RM7.89

KUALA LUMPUR: Alliance Research is maintaining its earnings estimates for the AMMB group, pending review post announcement of its Q2, FY14 results.

It said on Tuesday it maintained a Neutral recommendation with an unchanged target price of RM7.89.

The research house said it was reported AMMB is believed to have financial exposure close to S$150mil (RM384.6mil) relating to the recent share price fallouts of three counters listed in Singapore Exchange Ltd (SGX).

“Although the substantial financial exposure speculated to be RM384.6mil is a negative surprise to us, we have not adjusted our earnings estimates in view of the uncertainties and complexity of the issues,” it said.

Alliance Research said this was because the RM384.6mil financial exposure quoted by the newsdaily may include (1) the group’s trading exposure to the three counters, (2) margin financing exposure provided directly by AmFraser Securities Pte, and, (3) exposure of remisiers who are working in AmFraser Securities. Besides that, it remains to be seen on how much of such financial exposure is being collateralised.

“On a positive note, our recent correspondence with management of AMMB indicated that the incident does not have a significant impact to the group’s FY14 earnings.

“Besides that, potential disposal gains from selling of significant stakes in its insurance units could offset the provisions arising from such exposure.

“AMMB is expected to release its 2QFY14 results on Nov 15. We understand that management will provide more clarity on issues mentioned above during the results briefing.

“We are maintaining our earnings estimates for the group, pending review post announcement of its 2QFY14 results. Maintain Neutral with an unchanged TP of RM7.89.

“Nonetheless, we believe that such sizeable exposure highlighted by the media could cause market jittery and trigger near term selling pressure on the stock,” it said.
12 Nov 2013, 09:19 AM
why is the price dropping last few days?
02 Sep 2014, 09:26 AM
Time to bargain hunt? PE 7.99 and DY 5.99% look very attractive for a index-linked counter.
28 Aug 2015, 07:33 AM

KLSE market: movement is slow

14 Sep 2018, 12:31 AM
Casper Koo

In line with expectations. The Group posted 9MFY19 earnings which was in line with our and consensus’ expectations. It came in at 76.6% and 74.9% of respective full year estimates.

Earnings growth contributed by lower OPEX. The 3QFY19 and 9MFY19 OPEX fell -11.1%yoy and -9.5%yoy respectively as the benefit from the Group cost rationalisation initiatives continue to bear fruit. Personnel cost for 9MFY19 contracted -4.3%yoy to RM895.4m. The management expects that CI will be kept at below 55% level for FY19.

Weak NOII moderated by NII growth. NOII continue to be affected by the volatile market conditions, falling -2.7%yoy in 9MFY19. Main contributors for the drop were lower fee income and trading income. These contracted -5.1%yoy to RM390.9m and -35.4%yoy to RM111.6m respectively. However, the NOII weakness was moderated by NII increase of +5.0%yoy. This was despite NIM compression.

Recoveries also boosted earnings. The Group registered a lumpy recovery from several of its large corporate accounts in 3QFY19 which resulted in write backs. There were recoveries amounting to RM215.4m vs. RM97.4m in 3QFY18. We understand these were from legacy accounts.

Robust loans growth driven by targeted segments. Gross loans as at 3QFY19 grew +6.0%yoy to RM100.4b. The gross loans growth were led by mortgage which expanded +17.0%yoy to RM29.8b and SMEs

which grew +20.1%yoy to RM18.8b.

Building up buffer. Meanwhile, deposits grew at faster pace at +6.9%yoy to RM106.8b. We understand that this is to build up a liquidity buffer. CASA rose +10.5%yoy to RM22.1b coming from nonretail segment which grew +17.0%yoy to RM10.3%. Fixed deposits (FD) grew +6.0%yoy supported by the +14.8%yoy rise to RM41.0b in retail FD.

22 Feb 2019, 10:25 AM

AMMB Holdings (AMMB) reported a stable net profit of RM350mil (+0.5%QoQ) in 3QFY19. Total income was lower by 6.0%QoQ in 3QFY19 despite recording an increase in net interest income (NII) by 2.0%QoQ. This was due to lower noninterest income (NOII) as a result of a volatile market and weaker market sentiment. Nevertheless, this was offset by a net write-back in impairments of RM51mil driven by large corporate recoveries. In 3QFY19, there were recoveries for 3 large corporate accounts amounting to RM150mil. These included RM100mil realised against the borrowers’ collaterals.

22 Feb 2019, 10:40 AM

9MFY19 net profit of RM1.05bil (+19.0%YoY) was within expectations, making up 73.8% of consensus estimates. Preprovisioning operating profit rose by 18.2%YoY, supported by rise in NII, lower opex and net write-back in impairments of RM33.4mil. NOII for 9MFY19 declined due to weaker contributions from funds management, IB and markets businesses. With initiatives to manage cost under the BET300 programme, opex fell by 9.5%YoY in 9MFY19. This led to a positive JAW of 12.0%. 9MFY19 CI ratio improved to 51.6%. Meanwhile, credit cost continued to be benign at -0.04% for 9MFY19. ROE for 9MFY19 rose to 8.2% vs. 7.2% in 9MFY18.

22 Feb 2019, 10:42 AM

Gross loans grew 4.0% on a year-to-date (YTD) basis or 5.6% annualised. It was supported by loans in the targeted segments, midcorp, retail SMEs, business banking as well as mortgages but partially offset by the continued contraction in auto loans. The group’s exposure to the real estate, construction and oil & gas sectors remained at 8.0%, 4.0% and 2.0% of its total loans respectively.

22 Feb 2019, 10:43 AM

Customer deposits grew 11.0% YTD, at a faster pace than loans. CASA was up 9.0% YTD vs. the industry’s 2.0%. CASA ratio declined slightly to 20.7% but its retail CASA mix continued to hold up at 53.5%. Group LDR and loan-toavailable funds ratios were 94.8% and 80.5% respectively. LCR for financial holding company and net stable funding ratios for banking entities were all above 100.0%.

22 Feb 2019, 10:44 AM

9MFY19 NIM was compressed by 5bps YoY to 1.93%. This was impacted by the rebalancing of loan portfolio and deposit mix. Gross impaired loan (GIL) ratio improved to 1.62% in 3QFY19 vs 1.72% in 2QFY19 and 1.77% in 1QFY19 (industry: 1.5%). Retail banking and investment banking’s GIL ratios remained steady at 1.32% and 0.10% respectively. Meanwhile, GIL ratios for wholesale and business banking improved QoQ to 2.18% and 1.68%. Loan loss cover including regulatory reserves rose to 116.8% as at end of 3QFY19.

22 Feb 2019, 10:45 AM

As at the end of 3QFY19, capital position remained healthy with an FHC CET1 ratio of 12.0%. The group issued RM1.5bil of Tier 2 capital in 3QFY19 to strengthen its capital position. Disposal of legacy retail NPLs announced earlier has been targeted to be completed by 4QFY19, and this will be earnings and capital accretive to the group.

22 Feb 2019, 10:45 AM

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22 Mar 2020, 12:30 AM

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