KUALA LUMPUR: Public Investment Bank Bhd (PublicInvest) expressed continued optimism about the long-term prospects of AMMB Holdings Bhd (AmBank Group).
The bank noted that this confidence is reflected in the steady improvements seen on the operational front.
These improvements come as the Group embarks on its new strategic journey under the Winning Together (WT29) initiative.
AMMB Holdings posted a net profit of RM500.2 million for 1QFY25, marking a 32.2 per cent year-over-year (YoY) increase and a 5.0 per cent quarter-over-quarter (QoQ) rise.
"This result slightly exceeded both our expectations and consensus estimates, accounting for 28 per cent of full-year forecasts.
"The discrepancy is primarily due to significantly lower provisions (-93.6 per cent YoY, -39.6 per cent QoQ), partly driven by write-backs, with improvements in net interest margins (NIMs) also contributing," PublicInvest said.
The firm noted concerns about the ongoing high level of newly impaired loans, although this issue is somewhat mitigated by improved recoveries.
"Despite recent worries, we remain optimistic about future developments, including improvements in net credit costs and the potential for margin expansions," it added.
PublicInvest stated that AMMB's earnings estimates remain unchanged, but the dividend-based target price has been raised to RM5.30 due to adjustments in valuation variables, including risk premiums.
The bank maintains its Trading Buy rating, as banking-related stocks have recently garnered strong investor interest.