KUALA LUMPUR: AMMB Holdings Bhd is expected to record notable quarter-on-quarter (QoQ) growth in its upcoming fourth quarter ending March 31, 2024 (Q4FY24) results, potentially returning to its quarterly run rate of RM400 million.
Hong Leong Investment Bank (HLIB) Research said despite Austalia's lender ANZ Group's share disposal overhang, the firm still views AmBank's risk-reward profile favourably.
It added that the anticipated growth in Q4 is anchored by the anticipation of downward normalization in the group's net credit costs.
"It is worth noting that AmBank's net credit cost recorded a surge of 134 basis points (bp) in 3QFY24 from 17.3bp in 2QFY24. The increase was mainly due to the higher loan loss provisions as overlays for retail.
franchise; this resulted in the loan loss coverage for the retail franchise being raised to 100 per cent.
"With the allowances made for bad loans being deemed adequate thus far, we
anticipate a normalization of net credit costs to 30-35 bp in 4QFY24.
"This reduction in net credit costs is poised to bolster the group's earnings QoQ, despite potential softness in loans and non-interest income during the period," it said in a note.
HLIB has a "buy" call on the stock with a target price of RM4.60.