This article first appeared in The Edge Malaysia Weekly on June 29, 2026 - July 5, 2026

AMMB Holdings Bhd (KL:AMBANK) could be poised for a valuation rerating as investors look beyond earnings growth and focus on the bank’s potential to return excess capital to shareholders through higher dividends or other capital return initiatives.

The lender’s strong capital position has become a key theme among analysts, with several research houses noting that AMMB’s capital flexibility is not fully reflected in its current valuation despite the stock outperforming most of its banking peers over the last 12 months.

At the recent Invest Malaysia conference, AMMB reaffirmed its ambition — set out under its Winning Together 2029 (WT2029) five-year strategic plan — to double its dividend per share (DPS) by the financial year ending March 31, 2029  (FY2029) from 22.6 sen in FY2024. This would be supported by earnings growth and capital optimisation, with Basel 3.1 reforms providing a meaningful upside catalyst. 

“AMMB expects a positive day-one Common Equity Tier-1 (CET-1) impact within a range of 1.5% to 2% under the Basel 3.1 reform, similar to the experience of other peers in Singapore. Combined with ongoing risk-weighted assets (RWA) optimisation, this provides optionality for enhanced shareholder returns beyond base dividends, including higher payouts and potential share buybacks, with further details to be outlined at the upcoming Investor Day in July 2026,” CIMB Securities says in a recent report.

The Edge understands that AMMB’s Investor Day will be held in late July.

According to CIMB Securities, capital remains one of AMMB’s key strengths, with its CET-1 ratio standing at 14.8% as at end-March 2026, comfortably above management’s preferred baseline of 14%.

In a more recent banking report last week, the research house notes that AMMB’s “capital optionality” could support a rerating of the stock, particularly if management demonstrates a sustainable strategy for converting surplus capital into shareholder returns. AMMB is trading below book value at 0.96 times forecast 2026 calendar year book value and 0.92 times 2027 book value, making it a potential rerating candidate, it says.

In the financial year ended March 31, 2026 (FY2026), AMMB’s DPS stood at 35 sen (FY2025: 30.2 sen), which represented a 16% year-on-year (y-o-y) growth — significantly outpacing earnings per share (EPS) growth of 4.9% — and dividend payout ratio of 55% (FY2025: 50%).

RHB Research notes that despite the step-up in dividend, the group’s CET-1 ratio remained stable at 14.8% (FY2025: 14.8%). At its recent FY2026 results briefing, AMMB guided that a mid-teens DPS growth can be sustained this year.

“AMMB’s DPS has been growing in the mid-teens [percentage], outpacing the group’s earnings growth, and that’s why dividend yields have been pretty attractive. Naturally, its share price and valuations have also been done well because of that,” RHB Research banking analyst David Chong tells The Edge.

“In our forecast, we have assumed that AMMB will achieve its target to double its DPS by FY2028, one year ahead of the WT29 plan, leading to a dividend yield forecast of about 7% in FY2028. And, in the near term, with DPS growth in the mid-teens [percentage], that itself is pretty attractive,” he adds.

“I think investors’ focus next would be on excess capital. We note that AMMB’s RWA density — which is RWA over total assets — is still much higher versus that of peer IRB (internal ratings-based) banks like Maybank and CIMB; so, I think there is scope for AMMB to optimise that. That will free up further capital and help with the capital-return thesis,” Chong says. This would be a reason for a valuation rerating, he adds.

Over the last 12 months, AMMB’s share price has gained 35.2%, to close at RM6.46 on June 25, for a market value of RM21.36 billion. It was the best performer among the banks after RHB Bank Bhd (KL:RHBBANK), which gained 37.3%. Year to date, AMMB’s stock has risen 2.9%.

AMMB is trading at a price-to-book ratio of one time, the lowest among the bigger banks, according to AskEdge data. Its trailing 12-month dividend yield is 5.4%, with only that of CIMB Group Holdings Bhd (KL:CIMB) (6.4%), Malayan Banking Bhd (KL:MAYBANK) (5.9%) and RHB Bank (6.1%) at a higher level.

Bloomberg data shows that of 17 analysts that track the stock, 11 have a “buy” call and six a “hold”, with the 12-month average target price at RM7.19, which suggests further upside. The stock’s foreign shareholding rose to 33.1% as at March 2026, compared with 30.5% three months earlier — not far off its four-year peak of 33.5% in March 2025.

AMMB made a net profit of RM2.1 billion in FY2026, up 5% y-o-y, helped by overall improvements in total income as well as writebacks from financial investments following the completion of a client’s restructuring exercise. Its earnings that year fell within analysts’ expectations.

AMMB is among Kenanga Research’s top banking picks.

“We believe AMMB could return to investors’ radar screens. Although banks with larger SME (small and medium enterprise) exposures are often perceived as more vulnerable during periods of economic uncertainty, AMMB has consistently demonstrated discipline in balancing growth and asset quality. As a result, it is among the few banks expecting better credit costs this year alongside RHB Bank, although we remain slightly more cautious on the latter. AMMB also remains committed to growing its absolute dividend payout annually, which should gradually lift its yield profile closer to 6%,” it says in a June 4 banking report.

SMEs account for about 21% of AMMB’s loan portfolio. “Management has yet to observe meaningful stress within its SME portfolio and believes credit costs could improve further should macro conditions stabilise,” Kenanga notes.

For FY2027, AMMB has guided for loan growth of roughly 4% to 4.5% (FY2026: 6%), stable net interest margin (FY2026: up four basis points y-o-y) and return on equity of around 10% (FY2026: 10%).

“AMMB thinks there could be pockets of stress ahead from escalating operating costs but the group is prepared to face the challenges ahead amid having derisked its retail portfolio in FY2026, as well as setting aside overlays. Thus far, requests for assistance have been small (circa RM55 million),” RHB Research notes in a May 29 report following the results briefing. 

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