ABMB: A Solid Bank on a Strong Uptrend
Overall Technical Verdict:
This chart setup looks solid with a clear uptrend in place, confirmed by moving averages, positive MACD signals, and strong price action along the upper Bollinger Band. The only minor caution is that volume has slightly decreased in recent sessions, and the RSI is approaching the overbought zone.
Themes on the stock:
Digital Transformation: The bank is focusing on enhancing its digital banking platform to attract tech-savvy customers and streamline operations.
SME Banking: Alliance Bank is known for its focus on small and medium enterprises (SMEs), offering tailored products and services for business growth.
Sustainability: Alliance Bank emphasizes sustainable financing, with efforts towards environmental, social, and governance (ESG) initiatives.
Consumer Banking: Growth in personal loans, mortgages, credit cards, and wealth management services continues to be a core theme.
Risk Management: Strong credit risk management and asset quality improvement strategies are central to maintaining financial stability.
Stock Background:
Alliance Bank operates as a financial institution offering a range of banking services, including personal and business banking, loans, mortgages, investment products, and wealth management. It focuses on digital banking solutions, fostering customer relationships, and providing tailored financial advice to meet individual and corporate needs.
Latest Quarter Earnings:
Alliance Bank Malaysia Berhad reported strong earnings for the first quarter of FY2025, with a net profit increase of 17.3% year-on-year to RM176.7 million. Revenue grew 15.8% to RM539.8 million, driven by a similar rise in net interest income, which reached RM464.7 million due to higher loan volumes. The net interest margin remained stable at 2.45%. Non-interest income also grew 15.7%, reaching RM75.1 million, supported by wealth management and foreign exchange sales.
Loans saw impressive growth of 14.8% year-on-year, led by SME, commercial, and consumer banking. Customer deposits grew 11.6%, maintaining a healthy CASA ratio of 41.5%. The cost-to-income ratio improved to 48.0%, while net credit cost was managed at 8.1 bps. (Source: Company)
Details of Technical Analysis:
Price Movement:
The stock has been trending upwards consistently since March, with higher highs and higher lows. This is a positive trend.
The recent price action shows a bounce off the 20-day moving average, which indicates that buyers are stepping in at that support level.
Moving Averages:
The price is trading well above the 200-day moving average (around RM3.48), signaling a strong long-term uptrend.
The 50-day moving average (around RM3.65) is also below the current price, confirming a bullish intermediate-term trend.
The stock price is also above the 20-day moving average (around RM3.74), which shows short-term strength.
Bollinger Bands:
The price is near the upper band, which suggests strong upward momentum. However, it is not yet in an overextended position, so there could be further upside potential before a pullback.
The Bollinger Bands are widening, indicating increased volatility and potential for continuation of the trend.
MACD:
The MACD line is slightly above the signal line, with the histogram starting to turn positive, suggesting a potential bullish crossover or continuation of upward momentum.
There is no clear divergence between price and MACD, which is a good sign for the strength of the current trend.
Volume:
Volume is healthy and shows increased participation in the upward movement since July, although it has tapered off slightly in recent weeks. A spike in volume with continued price action would further confirm the bullish scenario.
RSI:
The RSI is at 63, which is still in a bullish range but not yet in overbought territory, leaving room for additional gains. A slight caution if it moves too close to the 70 mark, but for now, it's showing strength.