PETALING JAYA: AMMB Holdings Bhd’s net profit for the second quarter ended Sept 30, 2019 (Q220) dropped 8.2% to RM319.57 million from RM348.15 million a year ago, dragged down by the allowance for impairment on financial investments.
Its revenue rose 1.5% year-on-year (yoy) to RM2.35 billion from RM2.31 billion.
For the half-year period (1H20), AMMB’s net profit increased 2.2% to RM711.03 million from RM695.75 million, while revenue grew 5.7% to RM4.74 billion against RM4.49 billion in the half-year period last year.
It declared a higher interim dividend of 6 sen per share.
AmBank group CEO Datuk Sulaiman Mohd Tahir (pix) said in 1H20, total income for the group rose 5.6% yoy to RM2.13 billion propelled by consistent net interest income growth, stronger trading gains and investment income from group treasury and markets as well as general insurance.
During the first half of FY20, the group’s net interest income increased 4.6% yoy to RM1.35 billion, driven by consistent assets growth. NIM contracted 8bps to 1.89%, reflecting lower assets yield following the Overnight Policy Rate cut earlier this year. Non-interest income of RM784.8 million grew 7.4% yoy, largely contributed by stronger trading income and investment income from group treasury and markets and general insurance, as well as higher fee income from funds management.
The BET300 efficiency programme allows the group to re-invest some of the savings back into the businesses as well as strengthen its digital capabilities. Operating expenses remained well contained, up 4% yoy to RM1,054.8 million. Cost-to-income further improved to 49.4% from 50.4% a year ago, with a positive jaw of 2%. Consequently, profit before provision grew 7.6% yoy to RM1,078.7 million.
The group recorded a net impairment charge of RM76.6 million in 1H20 compared to RM17.9 million in the same period last year. This was mainly due to provisions on several newly impaired wholesale banking and business banking loans offset by recoveries and releases, as well as higher expected credit loss charges in retail banking, and also lower recoveries post retail debt sale.
The group’s gross impaired loans ratio stood at 1.77%, with loan loss cover at 105.8%.
“We are cautious and remain vigilant on asset quality given the challenging economic conditions.”
Gross loans increased 2.0% yoy, and broadly stable year-to-date (YTD) at RM102.0 billion, with growth in mortgages, mid corp, retail SME and business banking loans being offset by corporate loan repayments and the continued decline in auto loans. Excluding auto loans, gross loans expanded 1.6% YTD, more in line with industry growth rates.
On liquidity and capital, all banking subsidiaries of the group have maintained liquidity coverage of above 100%. The group remains well capitalised, with the FHC CET1 ratio improving to 12.6% and total capital ratio at 16.1%.
On its prospect for financial year ending March 31, 2020, Sulaiman said in tandem with a moderate economic outlook, the banking system loans growth is expected to grow around 4.6%.
“We are pleased with the group’s performance in 1H20, as demonstrated by the good progress made particularly in terms of revenue growth and cost efficiency. Through our BET300 programme, the group continues to embed cost discipline across all lines of business as we continue to improve our cost efficiency. Moreover, notable progress has been made across targeted segments and products as part of our top four strategy to place the group on a stronger and more sustainable growth path. Amidst the softer outlook for the banking sector this year, the group is resolute in its strategic focus to deliver on revenue growth, cost efficiency and capital accretion.”
source https://www.thesundaily.my/business/ammb-q2-earnings-lower-by-82-declares-6-sen-dividend-YK1682054
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