This article first appeared in The Edge Financial Daily on June 1, 2018

KUALA LUMPUR: AMMB Holdings Bhd (AmBank) said its books are open to regulators and investigators of the 1Malaysia Development Bhd (1MDB) case as they have been for the past two years, said group chief executive officer Datuk Sulaiman Mohd Tahir.

“As far as Bank Negara Malaysia (BNM) is concerned, we have been an open book,” he told a press conference yesterday.

“We have not been called in by the [1MDB] task force. But because we have been working very closely with the regulators for the last two years, if there were anything to find, it would have already been found,” Sulaiman said. “Of course if they want to look [at our books], we are more than happy to [comply].”

The group was fined RM53.7 million by BNM in 2015 for “non-compliance with certain regulations” and “weaknesses in its reporting system”. Although the group did not specify in its announcement to Bursa Malaysia, the fine is believed to be linked to the 1MDB case.

The fine was imposed after a report showed that up to RM2.6 billion had been transferred into the personal bank account of former prime minister Datuk Seri Najib Razak.

“We were one of the first to be fined and I think we paid the biggest fine that has ever been paid by a Malaysian bank,” Sulaiman said.

He added that AmBank has since spent RM100 million to improve its systems and processes in order to ensure better compliance.

Sulaiman also noted that of the “names that have been seen in the papers”, none of them are still employees of AmBank. He himself had joined the bank in November 2015.

“It is not easy to have spent that RM100 million, but we now have better and more robust systems going forward,” he said, adding that his focus has been on “building the new bank” since he joined.

AmBank is targeting to achieve a loan growth of between 5% and 6% in its 2019 financial year (FY19), in line with its 5.5% gross domestic product growth forecast.

This will be supported largely by loan growth to small and medium enterprises (SMEs) as well as mid-sized corporate firms, which should still see double-digit growth.

“We have seen a change in direction for government-linked companies (GLCs) recently but that will not deter us. There may even be better opportunities for SMEs and mid-caps now,” Sulaiman said.

AmBank group chief financial officer Jamie Ling added that the group “does not see stress in its books currently” from its exposure to GLCs, although the bank remains vigilant of second order effects on its loans as a result of the cancellation of mega infrastructure projects.

Sulaiman said the group remains committed to growing efficiency and cutting costs by RM300 million over the next two years. Its cost management initiatives in FY18 had seen the group saving up to RM140 million on the back of lowered funding costs, completing a mandatory separation scheme and reducing regulatory costs.

“Going forward, it will be more difficult to lower costs, but we are looking at areas such as reducing office space, negotiating contracts with vendors, and business growth by individual departments to cover a natural 3% cost inflation,” Ling said.

AmBank posted a 25% drop in net profit for its fourth financial quarter ended March 31, 2018, (4QFY18) to RM253.41 million from  RM335.81 million a year ago, on the back of rising operating expenses, although quarterly revenue increased to RM2.21 billion from RM2.15 billion.

For the full FY18, revenue grew 3.5% year-on-year to RM8.58 billion from RM8.29 billion previously, while net profit fell 14.5% to RM1.13 billion.