AMMB Holdings (AMMB reported a sequentially stronger quarter, with 2QFY24 net profit coming in at RM469.8m (+10.1% YoY, +24.2% QoQ), with lower loan loss provisions and write-backs providing the lift. Cumulative 1HFY24 net profit of RM848.1m (+1.3% YoY), albeit relatively unchanged vis-à-vis FY23 is within expectations at 48% of our and 49% of consensus full-year estimates. Weakness in net interest income contributions were mitigated by stronger non-interest income growth. The current quarter also saw a further reversal of overlays amounting to RM48m, which helped lower net impairment charges. The coming quarter(s) will see lifts coming from ~RM481m in a tax recoverable amount (due to treatment of exceptional expenses in FY21), though likely to be indirect. We retain our earnings estimates as we consider this one-off in nature. We remain encouraged over AMMB’s long-term prospects, reflected by steady improvements made on the operational front. We maintain our Trading Buy call and dividend-based target price of RM4.20. AMMB’s share price has gained +12.3% since our call upgrade in May 2023.
Source: PublicInvest Research - 23 Nov 2023
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