A final single-tier dividend of 13.5 sen per share (prior year: 12 sen) has been recommended. Total dividend for FY12 is 20.1 sen or a dividend payout ratio of 40%, which is lower than our expected 45% DPR and the low end of AMMB’s guidance of 40% to 50% DPR.
For FY13, AMMB expects net interest margin to contract 10 to 15 basis points and loans growth of 8% to 9%. For FY13 to FY15, AMMB has lowered its net profit growth target range from 10% to 14% per year to 9% to 12% per year, and targets an return on equity (ROE) of 14% to 15%.
There is no change to our FY13 earnings per share forecast, which translates into EPS growth of 10% in FY13 and implies an ROE of 14.3%. AMMB’s proposed acquisition of Kurnia Insurans (M) Bhd for RM790.5 million (AMMB’s 51% share) is only expected to be completed in 2QFY13 and will have an immaterial impact on AMMB’s net profit.
We introduce our FY14 EPS forecast, which translates into EPS growth of 9% in FY14 and implies an ROE of 14.5%.
We are maintaining our dividend payout ratio (DPR) assumption of 45% for FY13/FY14.
We are maintaining our target price of RM5.70, applying a 2012 price-earnings ratio (PER) of 10.5 times on AMMB’s annualised (adjusted for March year-end) EPS of 54.3 sen. The low PER is in line with its relatively smaller market cap and average EPS growth of 10% per year over the next two years.
We maintain our “hold” recommendation. AMMB’s share price has softened 2% since our last company update on April 13 this year. Its foreign shareholding (excluding ANZ’s 23.8%) is 26.2%. — ECM Libra Research, May 18