KUALA LUMPUR (Jan 30): The leadership change in AMMB Holdings Bhd is not expected to have a major impact on the financial services provider, according to analysts.

This is because the new chief is seen as someone already familiar with AMMB's (fundamental: 1.7; valuation: 3) existing operations. According to Kenanga Investment Bank Bhd, AMMB may appoint a candidate from AMMB's largest shareholder Australia and New Zealand Banking Group Ltd (ANZ).

ANZ owns 23.78% in AMMB.

“We do not foresee any major leadership transition risk as the new group MD will likely come from ANZ, which in turn, helps to preserve the vision of the company. Furthermore, ANZ has affirmed to be a committed strategic partner of AmBank,” Kenanga analyst Chan Jit Hoong wrote in a report today.

Yesterday, AMMB said its group managing director Ashok Ramamurthy would step down to rejoin his family in Melbourne, Australia. The move also constitutes a part of a proposed transition that will allow him to resume his career in a senior executive postion at ANZ.

Ashok joined AMMB from ANZ in 2007, first as chief financial officer before he became group managing director since 2012.

Today, Kenanga's Chan also said the research firm was mindful of AMMB's prospects.

Chan said structural and cyclical headwinds such as muted loan growth and narrowing net interest margins continued to weigh on the bank.

“We opine that its return on equity (ROE) target for FY15-FY17 of 14% is a tall order to achieve. AmBank's annualised core ROE was only 10% as at 1HFY15,” said Chan.

He maintained Kenanga's “market perform” rating on AMMB shares with a target price of RM6.75.

At 10:51am, AMMB shares fell one sen or 0.2% to RM6.29 for a market capitalisation of RM18.93 billion.

The stock had fallen 5% this year, underperforming the FBM KLCI's 1% rise.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)