Alliance Bank Malaysia Bhd

[winston]

vested

FY26 results within expectations

HOLD maintained ABMB’s FY26 earnings were within expectations (net profit +10% YoY).

We have trimmed our FY27/28E earnings by 3-5% largely on lower NIM estimates, but we have raised our dividend payout ratio assumption to 45% from 41% before.

Our GGM-derived TP is lowered to MYR5.00 from MYR5.20 on an unchanged CY26 PBV target of 0.98x (COE: 9.9%, LT growth: 4%, ROE: 9.8% (10.0% before)).

HOLD maintained.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/535916.pdf

[winston]

vested

Can Alliance Bank keep up its stellar run?

By Cheryl Poo

While there could be questions on sustainability given higher inflation expectations, the group is delving into unrated bond issuance as an alternative, which it has guided to be an important component of its FY2027.

The stock still trades at about 0.82 times book value, below the multiples commanded by, for example, Public Bank (1.5f times), CIMB Group Holdings Bhd (KL:CIMB) (1.18 times), Maybank (1.42 times) and Hong ­Leong Bank (1.05 times).

Source: The Edge Malaysia

https://theedgemalaysia.com/node/805844

[winston]

vested

Why is the share price of Alliance Bank weak?

Alliance Bank’s share price weakness is primarily driven by recent capital-raising exercises that diluted earnings per share, broader banking sector headwinds (like decelerating corporate loan growth) and the stock historically trading at a valuation discount to larger peers due to its smaller scale.

Key factors weighing on the stock:

Earnings Dilution from Rights Issues: Alliance Bank’s renounceable rights issue to raise RM600 million increased the share base. While it successfully strengthened the bank's Common Equity Tier 1 (CET1) capital ratio, the increase in total shares outstanding negatively impacted the
Return on Equity (ROE) and earnings per share in the short term, dampening investor sentiment.

Sector-Wide Headwinds: Analysts at MIDF Research have highlighted broader challenges facing the banking sector, including tightening corporate loan approvals, slowing deposit growth and compression in Net Interest Margins (NIM).

Reliance on Fee Income: Alliance Bank has an over-reliance on non-interest fee income. With a sluggish capital market, this leaves its earnings profile more vulnerable compared to peers who rely primarily on stable net interest margins.

Historical Valuation Discount: Because Alliance Bank is smaller than major competitors like Malayan Banking Bhd (Maybank) and Public Bank, the market traditionally prices it at a discount (trading below one-time Price-to-Book).

Despite these pressures, consensus estimates compiled by Investing.com generally view the stock's fundamentals as solid, citing steady asset quality and targeted SME growth strategies.

Source: Google AI