KUALA LUMPUR (May 15): AMMB Holdings Bhd (KL:AMBANK), Malaysia’s sixth-largest banking group by assets, is expected to report a 9.8% growth in net profit when it releases its fourth-quarter results this month, RHB Investment Bank said.

That would bring the full-year net profit to RM1.86 billion, up 7% from the previous year, according to RHB IB’s forecast. Net interest income will likely be subdued by net interest margin compression, though decent trading income and strong fees will support non-interest income, it noted.

“We continue to like AMMB for its solid growth and asset quality metrics, paired with potential dividend upside from its upcoming mid-term strategy refresh slated for later this year,” the research house said and kept its ‘buy’ call.

Shares of AMMB have risen 5% so far this year, tracking performance of banking stocks but lagged the 10% gain of the country’s benchmark index FBM KLCI amid concerns over heightened deposit competitions that will pressure its cost of funds.

RHB IB, whose full-year profit forecast is also above consensus that calls for RM1.68 billion, is among 11 of 15 houses still optimistic about AMMB with ‘buy’ calls while the rest have ‘hold’ rating, according to Bloomberg. The consensus 12-month target price is RM4.66, about 10% away from its last price.

Operating and credit costs meanwhile could be more “benign” during the final quarter following kitchen-sinking in the previous quarter, RHB IB said.

Gross impaired loans were stable and “We do not expect large reversals of overlays — especially those flagged for the retail book — as these provisions had just been reinforced in the previous quarter,” it said.

AMMB is expected to pay a final dividend of 14 sen for the second half of the financial year ended March 31, 2024 (2HFY2024), bringing the full-year dividend to 20 sen, according to RHB IB. For comparison, AMMB declared a total dividend of 18.3 sen per share in FY2023.

Looking ahead, the research house anticipates “exciting times ahead” for AMMB, citing upcoming mid-term strategy slated for release in the middle of the year.

“These include focused initiatives for the retail segment, targeting mass-market wealth, integrated wealth for affluent customers, and potentially, retail brokerage,” it said. The bank is targeting mid-sized corporates and small-and-medium enterprises for growth, it noted.

Shares of AMMB remained unchanged at RM4.24, valuing the group at RM14.05 billion. Year to date, the counter has risen by over 5%.