KUALA LUMPUR (Jan 21): RHB Investment Bank Bhd has upgraded Alliance Bank Malaysia Bhd (ABMB) to “Buy” at RM2.56 with a target price of RM2.90 and said asset quality is likely to stabilise in the upcoming quarter – though minor stresses can still be seen – and improve sequentially.

In a note today, the research house said ABMB’s management is confident in containing FY20F credit cost within the 55-60 basis points target.

It said more prudent underwriting policies should help to better safeguard asset quality.

“We believe most negatives are reflected in its trough valuation and Alliance Bank is staged for a recovery.

“We maintain our earnings forecasts pending 3QFY20F results, which is slated to be announced on 25 Feb.

“We believe most negatives have already been priced in at the current trough valuation and expect earnings to recover on sequential improvement in asset quality,” it said.