AMMB Holdings - Within expectations Non-Rated

- AMMB Holdings Bhd’s (AMMB) 3QFY13 annualised net earnings are in line with FY13F consensus’ RM1,664mil. 

- The 3QFY13’s net earnings of RM393mil (-0.9% QoQ, +13.5% YoY) included one-off acquisition-related expenses of RM26.0mil. 

- 3QFY13 net earnings also included a 1-month contribution from MBF of RM5.2mil, and a 3-month contribution of RM31.2mil from Kurnia Insurance. 

- Annualised loans growth came in at 10.1% in 3QFY13, in line with the company’s target of 8% to 10%. 

- Net interest margin was stable at 2.56% in 3QFY13 vs. 2.60% in 2QFY13. 

- Non-interest income benefitted from a gain on revaluation of securities held-for-trading of RM26mil in 3QFY13, in contrast to a loss of RM29mil in 2QFY13. This largely contributed to the 39.6% QoQ increase in non-interest income to RM306.6mil in 3QFY13, from RM221.8mil in 2QFY13.

- CASA growth remained robust at 7.1% QoQ, bringing CASA contribution to 18.6% in 3QFY13, from 17.3% 2QFY13. 

- Gross impaired loans were lowered by 7% QoQ in absolute terms. Thus, gross impaired loans ratio was at only 2% in 3QFY13, vs. 2.2% in 2QFY13. 

- Loan loss cover strengthened to 123.5% in 3QFY13 from 121.8% in 2QFY13. 

- Credit cost was more normalised at 34bps in 3QFY13 (2QFY13: 7bps). 

- The banking entity’s group common equity ratio (CET 1) was at 9.2% in 3QFY13, vs. 8.6% in 2QFY13.

- FY13F’s targets are unchanged:- (a) Loans growth target of 8% to 10%; (b) NIM expected to contract by 10bps to 15bps; (c) Fee income ratio of 35%; (d) CASA contribution of 16% to 18%; (e) Gross impaired loans ratio of 2.4%; (f) Credit cost of 25bps; (g) Net earnings growth of 9% to 11%; (h) ROE target of 14% to 14.5%.     

Source: AmeSecurities