Trading halt reignites talk of potential RHB-AMMB merger

PETALING JAYA: The suspension of trading in RHB Bank Bhd and AMMB Holdings Bhd shares pending a material announcement today has reignited talk of a potential merger.

All structured warrants relating to RHB and AMMB are also be suspended from trading at the same time.

Talk of a merger between RHB and AMMB, which operates AmBank, dates back to as early as 2007. Both banks have in recent years and in the last three months denied reopening merger talks.

RHB closed 1 sen higher at RM5.39 yesterday while AMMB closed up 11 sen to RM5.21.

A merger between RHB and AMMB would create the fourth largest bank in Malaysia by market capitalisation. RHB is currently the fifth largest bank in Malaysia based on market capitalisation, while AmBank is the sixth largest. AMMB has said it aims be one of the top four banking groups in the country by 2020.

The Employees Provident Fund is a common shareholder in both banks.

In 2015, RHB was involved in a proposed three-way mega merger with CIMB Group Holdings Bhd and Malaysia Building Society Bhd (MBSB), but the deal was called off due to unfavourable conditions. MBSB is now in merger talks with Asian Finance Bank Bhd and they have until June 22 to conclude negotiations.

Yesterday, AMMB announced that its net profit for the fourth quarter ended March 31, 2017, rose 19.9% to RM335.81 million from RM280.02 million a year ago. Revenue went up 2% to RM2.15 billion from RM2.10 billion in the previous year’s corresponding quarter.

For FY17, AMMB’s net profit increased 1.7% to RM1.32 billion from RM1.30 billion in FY16 attributed mainly to other operating income, share of results of associates and joint ventures, lower other operating expenses, other recoveries, higher writeback for impairment on loans, advances and financing and net income from insurance business. Revenue fell 1.6% to RM8.29 billion from RM8.42 billion in FY16.

RHB’s net profit declined 11.4% to RM500.3 million in the first quarter ended March 31, 2017, from RM564.9 million in the previous corresponding quarter, mainly due to lower total income and higher impairment losses for loans. Revenue was down slightly by 3.4% to RM2.62 billion, compared with RM2.71 billion in the same period last year.