PETALING JAYA: AMMB Holdings Bhd’s net profit for the first quarter ended June 30, 2019 (Q1FY20) jumped 12.6% to RM391.46 million from RM347.59 million a year ago, underpinned by consistent net interest income (NII) growth, coupled with higher trading and insurance income.
Its revenue rose 10.1% to RM2.39 billion compared with RM2.17 billion in the previous year.
AmBank Group CEO Datuk Sulaiman Mohd Tahir (pix) said it recorded a higher return on equity at 8.8%.
“Total income rose 5.0% year-on-year from improved trading performance and better insurance income despite a subdued lending environment. At the same time, we continued to exert cost discipline with our cost-to-income (CTI) ratio further improving to 49.7%. This is a testament to our transformation strategy which has placed the group on a stronger footing to weather the more challenging operating landscape,” he said in a statement.
The bank’s NII increased 4.2% year on year (yoy), on the back of the expanded loans and deposits base. Non-interest income grew 6.4% to RM395.4 million, largely contributed by higher trading income and invest-ment income from group treasury and markets and general insurance.
The group is now in the third year of its BET300 efficiency programme and continues to record cost savings. which has allowed the group to reinvest some of these savings back into its strategic business streams as well as its digital capabilities and infrastructure.
It recorded a net recovery of RM32.5 million in Q1FY20 compared with an impairment charge of RM7.0 million in the previous year, mainly driven by a net write-back of provision for corporate loans. The group’s gross impaired loan ratio stood at 1.66% (FY19: 1.59%), with loan loss cover at 111.5%.
Gross loans increased 2.5% yoy, though contracted 1.0% year to date to RM100.8 billion, mainly due to corporate loan repayments and decline in auto loans.
Total customer deposits stood at RM102.8 billion, an increase of 4.2% yoy but down 3.9% year to date. The group’s current accounts and savings accounts (CASA) stood at RM23.1 billion, with CASA mix at 22.5%.
AMMB said the group’s capital position is adequate with common equity tier-1 ratio at 11.9% and total capital ratio at 15.4%.
Sulaiman said while Bank Negara Malaysia’s benchmark rate is expected to remain unchanged at 3% for the rest of the year, there is still room for the central bank to reduce the Overnight Policy Rate by 25 basis points in 2H2019 in a move to support domestic demand and in tandem with global monetary policy. In tandem with a moderate economic outlook, the banking system’s loan growth is envisaged to be around 4.6%.
Sulaiman said as part of its digital roadmap, AMMB will be rolling out more such initiatives.
