Alliance Bank Malaysia Bhd (ABMB) has received mixed analyst assessment following its 2QFY2024/251 results.
MIDF Amanah Investment Bank Bhd (MIDF Research) has maintained a NEUTRAL call on the bank, with a target price of RM4.64, citing that the bank's positive performance has already been priced in.
Meanwhile, RHB Investment Bank Bhd (RHB Research) and Maybank Investment Bank Bhd (Maybank IB) have both maintained BUY calls, with target prices of RM5.50 and RM5.30, respectively, reflecting optimism about ABMB's continued growth prospects.
As at 10:09am, ABMB's stock traded at RM4.90. (Stock updates from Bursa Malaysia)
MIDF Research highlighted ABMB's strong momentum, with core net profit rising by 9% year-on-year in the first half of FY2024/25 (From April to September 2024). The growth was primarily driven by higher net income and reduced provisions. The bank's gross loans also saw significant growth across all segments, up 14.8% year-on-year. However, despite these positive factors, the research house has kept its target price below market valuation unchanged, noting that the stock has already factored in these improvements. MIDF Research is also cautious about the minor net interest margin (NIM) compression, which they will continue to monitor.
Meanwhile, RHB Research sees ABMB continuing to perform well, maintaining its BUY recommendation and raising its target price to RM5.50, reflecting a 13% potential upside. The firm believes that ABMB is on track to meet, if not exceed, its full-year targets, driven by robust loan growth, particularly in the SME and consumer sectors. The house expect credit costs to moderate in the second half of FY2024/25, a key factor in the bank's ongoing strong performance.
Maybank IB, while also maintaining its BUY recommendation, has scaled back its dividend payout ratio forecast to 40%, down from 50% previously, to allow for capital preservation while accelerating asset growth. Despite this adjustment, Maybank IB is confident that ABMB is performing in line with expectations, with loan growth exceeding industry averages and NIM improving. The analyst have kept their target price at RM5.30, noting that the bank's overall performance remains solid.
Overall, ABMB's strong first-half performance and growth trajectory are being recognised by analysts, although concerns over NIM compression and credit costs have led to some caution. The varying analyst views reflect differing perspectives on the sustainability of the bank's growth, but all agree on the positive outlook for the coming months. With an average target price of around RM5.00, the bank's future appears promising, despite the potential risks posed by macroeconomic factors.
FY2024/25: Financial year ending 31 March 2025 ︎
