Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
Research House: MIDF
AMMB Holdings Bhd
(Aug 18, RM5.51)
Reaffirm buy at RM5.43 with revised target price of RM6.20 (from RM5.60): AMMB's 1Q2011 net profit of RM368.3 million rose 52.4% quarter-on-quarter (q-o-q) due to higher net interest'' income, fee income, investment and'' trading'' income, and income from the insurance business.
Its 1Q2011 net'' profit is within expectations at 30.5% of our forecast and 30.4% of consensus estimates for FY2011.
Annualised return on equity of 15.3% was higher than that in 4Q2010 of 10.2%.'' ''
A higher net'' interest margin'' for 1Q2011 of'' 3.08% (against 1Q2010 of 2.75%) was due to an increase in OPR due to the repricing of floating rate loans as well as'' lagged effects of deposit repricing. ''
Non-interest income growth was stronger than 4Q2010 with fee income growing 17.8% q-o-q in 1QFY2011, while investment and trading income edged up 69.9% q-o-q in 1QFY2011.
Gross loans grew at a faster rate of 1.68% q-o-q and 12.7% year-on-year (y-o-y). Growth was driven by higher loans to SMEs, government and statutory bodies and to the retail'' segment. The total loan book comprised 65.2% retail loans and the remaining'' portion in business and corporate loans (unchanged'' from'' 4Q2010). Loan growth is'' higher than the banking system's growth rate of 12.5% y-o-y as at June.
Gross impaired loan/NPL rose 32.3% q-o-q to'' RM2.5 billion. The group'' restated'' its gross NPL as at April 1 with an increase in impaired loan/NPL by RM673 million due'' to adoption of FRS139. Higher impaired loan was contributed by recognition of (i)'' impairment for restructured loans which were not expected to be fully repaid (RM300 million), (ii) add back of interest in suspense (RM129 million)'' and'' (iii) additional impairment recognised for corporate loans (RM244 million).
This resulted in the gross impaired loan ratio rising to 3.6% in 1Q2011 against NPL ratio of 2.8% in 4Q2010 under Bank Negara Malaysia GP3. LLC declined to 93.7% (against) 99.5% in 4Q2010.'' ''
Current account savings account (CASA) grew 13.3% y-o-y to RM7.43 million in 1Q2011.
Proportion of CASA to total deposits stood at 12.4% (against 12.2% in'' 4Q2010). We'' believe the group will continue to drive for growth of low-cost deposits to support its loan expansion and to stabilise margins from expected competition pressure moving forward.
We revise our target price (TP) to RM6.20 (from RM5.60). The stock's TP is pegged to 14.8 times FY2011 EPS, implying an ROE of 14.5% and P/BV of 1.8 times for FY2011.
Our forecast implies a 20.5% growth in net profit for FY2011. Our dividend forecast of 14.6 sen implies a payout of 35% of FY2011 net profit. 'Buy'. ' MIDF Research, Aug 18
This article appeared in The Edge Financial Daily, August 19, 2010.
Company Name: AMMB HOLDINGS BHD
Research House: MIDF
AMMB Holdings Bhd
(Aug 18, RM5.51)
Reaffirm buy at RM5.43 with revised target price of RM6.20 (from RM5.60): AMMB's 1Q2011 net profit of RM368.3 million rose 52.4% quarter-on-quarter (q-o-q) due to higher net interest'' income, fee income, investment and'' trading'' income, and income from the insurance business.
Its 1Q2011 net'' profit is within expectations at 30.5% of our forecast and 30.4% of consensus estimates for FY2011.
Annualised return on equity of 15.3% was higher than that in 4Q2010 of 10.2%.'' ''
A higher net'' interest margin'' for 1Q2011 of'' 3.08% (against 1Q2010 of 2.75%) was due to an increase in OPR due to the repricing of floating rate loans as well as'' lagged effects of deposit repricing. ''
Non-interest income growth was stronger than 4Q2010 with fee income growing 17.8% q-o-q in 1QFY2011, while investment and trading income edged up 69.9% q-o-q in 1QFY2011.
Gross loans grew at a faster rate of 1.68% q-o-q and 12.7% year-on-year (y-o-y). Growth was driven by higher loans to SMEs, government and statutory bodies and to the retail'' segment. The total loan book comprised 65.2% retail loans and the remaining'' portion in business and corporate loans (unchanged'' from'' 4Q2010). Loan growth is'' higher than the banking system's growth rate of 12.5% y-o-y as at June.
Gross impaired loan/NPL rose 32.3% q-o-q to'' RM2.5 billion. The group'' restated'' its gross NPL as at April 1 with an increase in impaired loan/NPL by RM673 million due'' to adoption of FRS139. Higher impaired loan was contributed by recognition of (i)'' impairment for restructured loans which were not expected to be fully repaid (RM300 million), (ii) add back of interest in suspense (RM129 million)'' and'' (iii) additional impairment recognised for corporate loans (RM244 million).
This resulted in the gross impaired loan ratio rising to 3.6% in 1Q2011 against NPL ratio of 2.8% in 4Q2010 under Bank Negara Malaysia GP3. LLC declined to 93.7% (against) 99.5% in 4Q2010.'' ''
Current account savings account (CASA) grew 13.3% y-o-y to RM7.43 million in 1Q2011.
Proportion of CASA to total deposits stood at 12.4% (against 12.2% in'' 4Q2010). We'' believe the group will continue to drive for growth of low-cost deposits to support its loan expansion and to stabilise margins from expected competition pressure moving forward.
We revise our target price (TP) to RM6.20 (from RM5.60). The stock's TP is pegged to 14.8 times FY2011 EPS, implying an ROE of 14.5% and P/BV of 1.8 times for FY2011.
Our forecast implies a 20.5% growth in net profit for FY2011. Our dividend forecast of 14.6 sen implies a payout of 35% of FY2011 net profit. 'Buy'. ' MIDF Research, Aug 18
This article appeared in The Edge Financial Daily, August 19, 2010.
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