KUALA LUMPUR: AMMB Holdings Bhd (AmBank) is expected to post improved earnings on a consistent basis, benefiting from loan book repricing in the coming months.

       The group is set to capitalise on loan book repricing, given the high percentage of floating rate loans, said MIDF Research.

       “We believe that AMMB is an extremely attractive prospect for its valuation, given that it has resumed regular dividend payouts, offers the possibility of a lucrative special dividend announcement, has displayed steady improvements in cost-income ratio management and offers a solid return-on-equity (ROE) even while affected by cukai makmur,” it added.

       For its fourth quarter ended March 31 (4Q22), the group returned to the black with a net profit of RM391.75mil from a net loss of RM4.69bil a year ago when it was dragged mainly by one-off exceptional items totalling RM4.77bil that included the RM2.83bil 1Malaysia Development Bhd settlement.

       As the group has resumed its dividend payouts from 4Q22, MIDF Research anticipates a special dividend payout for financial year ending March 31, 2023 (FY23) upon the finalisation of AmBank’s divestiture of AmGeneral Holdings.

       It is worth noting that the AmBank announced a lower-than-expected final dividend of five sen for the quarter, bringing the gross dividend per share for FY22 to five sen.

       This translates to a payout ratio of 11% for the year.

       MIDF Research has upgraded its call on AmBank to “buy” from “neutral” with a higher target price of RM4.07.

       “Our target price is based by pegging its FY23 book per share to an upgraded price-to-book value of 0.7 times,” it said.

       The group reported gross loan growth of 4.6% year-on-year, driven by retail mortgages, mid-corp wholesale and business banking (small and medium enterprise or SME) segments.

       As of May 2022, outstanding repayment assistance loans are worth RM6.6bil.

       The outstanding volume as of February 2022 stood at RM17.8bil.

       “This reduction was largely driven by SME loan graduation,” noted MIDF Research.

       Meanwhile, Kenanga Research said AMMB’s dividend-ROE stands at an “attractive level” between the smaller-cap banks.

       “This is aided by the group returning to pre-pandemic payouts which we believe could whet up better appetite among investors,” it added.