RHB Research maintains ‘buy’ call on AMMB Holdings

KUALA LUMPUR: RHB Research Institute has maintained its “buy” call on AMMB Holdings Bhd with target price of RM4.73 as its viewed the company’s proposed disposal of non-performing loans (NPLs) positively.

RHB Research said the move would potentially boost AMMB Holdings’ earnings in financial year ending March 31, 2019, although with a consequential downgrade of financial year 2020 net profit, and lift capital ratios.

“Furthermore, we believe the sale of these delinquent retail accounts will also allow management to re- allocate resources to more productive uses,” it said in a note yesterday.

Recently, AMMB Holdings’ wholly- owned AmBank ( M) Bhd and AmBank Islamic Bhd entered into sale and purchase agreements with Aiqon Amanah Sdn Bhd and Aiqon Islamic Sdn Bhd for the disposal of an aggregate of RM553.9 million of NPLs.

The proposed disposal of RM428.1 million from AmBank and RM125.8 million from AmBank Islamic, involved an outright sale on a non-recourse basis.

The portfolios comprised 537,068 accounts for industrial hire purchases, small and medium industry loans, auto financing, mortgages, personal loans and credit cards.

The NPLs were fully written off and appraised by KPMG Corporate Advisory Sdn Bhd to have a value of between RM450 million and RM570 million. — Bernama