Latest news with #ABMB
The Star
6 days ago
- Business
- The Star
Alliance poised to ramp up customer acquisition
Kenanga Research noted that the group presented a FY26 loans growth guidance of 8% to 10%. PETALING JAYA: Analysts have maintained their outperform call with a lower target price of RM4.85 for Alliance Bank Malaysia Bhd (ABMB), following its recently completed rights issue exercise. Kenanga Research told clients in a report it believes that the proceeds from the exercise would enable the group to ramp up its customer acquisition efforts. It has cut its financial year ending March 31, 2026 (FY26) earnings by 8%, reflecting lower net interest margins from the recent 25 basis points (bps) overnight policy rate cut and aligned its credit cost assumptions to 35 bps from 31, being the upper range of guidance. Citing a recent meeting with the lender, Kenanga Research noted that the group presented a FY26 loans growth guidance of 8% to 10% which is below the 12% achieved in FY25. The research firm said its model assumptions are conservatively kept at around 8% in line with the lower band of guidance. The group's recently completed rights issue generated cash proceeds of RM600mil in capital to fuel its growth strategies. 'We gather that ABMB is likely deploying across all markets as opposed to accelerating its position in a specific market. 'Amid macro-economic challenges, we opine the bank may benefit from a larger collateralised portfolio (mortgage) as delinquency risks may emerge from its commercial segment, namely from small medium enterprises which are 34% of its loan book.'
The Star
7 days ago
- Business
- The Star
Alliance Bank rights issue to bolster customer acquisition efforts
PETALING JAYA: Analysts have maintained their outperform call with a lower target price of RM4.85 for Alliance Bank Malaysia Bhd (ABMB), following its recently completed rights issue exercise. Kenanga told clients in a report it believes that the proceeds from the exercise would enable the group to ramp up its customer acquisition efforts. It has cut its financial year financial year ending March 31, 2026 (FY26) earnings by 8%, reflecting lower net interest margins (NIMs) from the recent 25 basis overnight policy rate cut and aligned its credit cost assumptions to 35 basis points from 31, being the upper range of guidance. Citing a recent meeting with the lender, Kenanga noted that the group presented a FY26 loans growth guidance of 8%-10% which is below the 12% achieved in FY25. The research firm said its model assumptions are conservatively kept at around 8% in line with the lower band of guidance. The group's recently completed rights issue generated cash proceeds of RM600mil in capital to fuel its growth strategies. "We gather that ABMB is likely deploying across all markets as opposed to accelerating its position in a specific market. "Amid macro-economic challenges, we opine the bank may benefit from a larger collateralised portfolio (mortgage) as delinquency risks may emerge from its commercial segment, namely from small medium enterprises (SME) which are 34% of its loan book." Kenanga noted that ABMB's FY25's reported NIMs of 2.45% could see further deterioration where asset yields could come off should the group's business loans be outpaced by its household loans. Meanwhile, the recent 25 basis points cut would reflect a 2 basis points impact to ABMB's NIMs, per its sensitivity analysis. However, thanks to some relief by the reduction in Statutory Reserve Requirement or SRR in addition to the abovementioned rights issue's capital injection, the group may likely ease on its deposits growth strategies, thereby lowering its funding cost, the research firm said. Aside from the adjustments in overnight policy rate, which led to a 2% trimming to earnings, Kenanga has raised credit cost expectations to 35 basis points out of prudency amid higher asset quality concerns from the group's heavier SME comprised loans book. It has also introduced its FY27 earnings which reflects a 13% earnings growth from credit cost normalisation and better cost management per the group's long-term strategies. At last look, shares of ABMB were at RM4.50 a piece.
Borneo Post
10-07-2025
- Business
- Borneo Post
Banking sector negatively impacted by OPR cut
Generally, every 25bp cut in our OPR would result in a 2 to 3 bps NIM compression on average, which would lead to a 1 to 2 ppt reduction in banking player's earnings. KUCHING (July 10): Bank Negara Malaysia's (BNM) 25bps cut to our Overnight Policy Rate (OPR) is expected to negatively impact our banking sector through net interest margin (NIM) compression says industry analysts. On July 9, BNM announced that they have decided to reduce our OPR rate from 3.00 per cent to 2.75 per cent, the first cut since July 2020. Majority of industry analysts viewed the cut as a pre-emptive measure by BNM to preserve Malaysia's steady growth path amid current macroeconomic uncertainties. In a sector report on July 10, the research arm of Maybank Investment Bank Bhd (Maybank Research) guided that generally, every 25bp cut in our OPR would result in a 2 to 3 bps NIM compression on average, which would lead to a 1 to 2 percentage point (ppt) reduction in banking player's earnings. 'Based on our estimates, there is a slightly larger 3 to 4bps impact to the NIMs of Alliance Bank Malaysia Bhd (ABMB), Public Bank Bhd (PBK) and RHB Bank Bhd (RHB),' they added. Public Investment Bank Bhd (PublicInvest Research) explains that this is because banks with lower levels of fixed-rate loans and current account and or savings account (CASA) deposits will be more susceptible to rate cuts. 'ABMB should see the highest compression in NIM due to its relatively higher proportion of variable rate loans of circa 84 per cent. However, ABMB's CASA ratio of 41 per cent could help to cushion some negative impact,' they shared. Meanwhile, banks like Malayan Banking Bhd (Maybank) are expected to be largely insulated from the OPR cut due to their lower proportion of variable rate loans which currently sits at circa 70 per cent. Despite this NIM compression, analyst Maybank Research and Midf Amanah Investment Bank Bhd (Midf Research) make no changes to their pre-existing forecasts as they have already factored in the 25bps cut in their estimates. On the other hand, PublicInvest Research has opted to adjust their bank earnings forecasts under their coverage downward by an average of 3 to 4 per cent. And while in theory credit demand would benefit from this rate cut, PublicInvest Research cautions that loans growth will instead likely taper due to slower economic growth dragged by rising global trade uncertainty. Looking ahead, Maybank Research and Midf Research opine that there will be no more further rate cuts in 2025. However, Midf Research guides that should another 25bps OPR cut happen, from an earnings standpoint they reckon that smaller banks will be more impacted by it due to their nearly 100 per cent exposure to local loans. Moreover, Maybank Research believes that there are also several factors that serve to buffer the compression in NIM such as the recent 1ppt Statutory Reserve Requirement (SRR) cut which released about RM19 billion of liquidity into the banking system, a declining Kuala Lumpur Interbank Offered Rate (KLIBOR) which is indicative of reduced funding pressure, and lower bond yields, which could contribute to potential marked-to-market gains on Fair Value To P&L (FVTPL) investments. banking economy overnight policy rate
