Newsroom
21 May 2012
The Edge: AMMB's FY12 numbers in line
 
AMMB’s FY12 numbers in line 
In The Edge Financial Daily Today 2012 
Written by Financial Daily    
Monday, 21 May 2012

AMMB Holdings Bhd 
(May 18, RM6.17)
Maintain hold at RM6.23 with target price of RM5.70: Results for FY12 were within market expectations. Earnings per share grew 13% y-o-y to 50.5 sen, which was on the dot with consensus and our forecast of 50.5 sen.

Profit before tax before provisions grew 7% y-o-y in FY12, while lower provisions boosted PBT growth to 12% y-o-y.

Net interest income (including Islamic banking) was flat y-o-y in FY12. Loan growth was 7% and deposit growth was 3%, resulting in its loan-deposit ratio increasing from 93% to 96%. This subdued growth was offset by lower net interest margin, which fell from 2.94% in FY11 to 2.73% in FY12.

Non-interest income was up 26% y-o-y in FY12, accounting for 32% of total income. This was boosted by an 86% jump in non-recurrent trading and investment income.

AMMB’s gross impaired loan ratio continued to improve from 3.3% at the end of FY11 to 2.5% at the end of FY12.

The group’s core equity capital ratio was 9.2%, above Basel III’s ultimate minimum requirement of 7% by 2019. AMMB’s target for core equity capital ratio is 7% to 9%. The group’s Tier-1 capital ratio was 11.3% and its risk-weighted capital ratio was 15.7%.

AMMB Holdings Bhd        
FYE March 31  2011A 2012A  2013F  2014F 
Adj EPS (sen)   44.7
  50.5  55.6  60.9
Adj P/E (x)   13.9  12.3   11.2  10.2
Net DPS (sen)   18.0  20.1  25.0  27.4 
Div yield (%)   2.9  3.2  4.0  4.4 
NTA (RM)   2.81  3.09  3.39  3.72 
P/NTA(x)   2.2  2.0  1.8   1.7
Source: ecmlibra Investment Research          
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