We upgrade our call on Alliance Bank Malaysia (ABMB) from HOLD to BUY with a revised fair value (FV) ofRM4.10/share fro RM3.60/share after rolling forward our valuation to FY25F. Our is pegged to a P/BV of 0.9x, supported by FY25F ROE of 10.5 No changes to our neutral 3-star ESG rating.
9MFY24 earnings of RM513mil were within expectations, maki up 78.4% of our full-year forecast and 76.5% of consensu Hence, our FY24F/25F/26F earnings have been tweaked 0.6%/2.3%/3.6% to reflect a higher loan growth assumption.
Net profit declined by 6.4% YoY in 9MFY24, contributed by high operating expenses (OPEX) and allowances for lo impairments. OPEX increased by 13.1% YoY as a result of fro loading of expenses on IT and additional headcount hirings the start of FY24.
On QoQ basis, core earnings in 3QFY24 fell by 4.6% to RM177m attributed mainly to a lower non-interest income (NOII) from drop in treasury and investment income.
9MFY24 NOII rose by 15.6% YoY, attributed to stronger clie based fee income that was partially offset by a decline brokerage, investment and trading income.
The group reported an annualised net credit cost of 25bps 9MFY24, within management’s guidance of 30-35bps for FY2 BAU provisions of RM246mil were partially offset by the revers in ECL overlays of RM147mil. As of end 3QFY24, to outstanding overlays amounted to RM157mil.
3QFY24 NIM fell by 4bps QoQ to 2.49% due to higher fundi cost. YTD, NIM slipped 16bps to 2.48% for 9MFY24. Manageme alluded that deposit competition is likely to still persist. Th could still put pressure on interest margin in the near term.
9MFY24 CI ratio rose to 48.2% vs. 44.1% in 9MFY23 due to t frontloading of IT expenses and personal cost to support ACCLER8 2027 strategy. Nevertheless, the increase in OPEX likely to taper in the quarters ahead.
Loans grew strongly by 12.9% YoY, outpacing the industry expansion of 5.7% YoY. This was contributed by growth in loa from all segments, SME, commercial, corporate and consum banking.
Group GIL ratio improved to 2.33% in 3QFY24 from 2.53% 2QFY24. This was supported by marginal QoQ decline in G ratios of commercial, corporate and consumer loans.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....