KUALA LUMPUR: AMMB Holdings Bhd (AmBank Group), the sixth-largest local banking group by asset that is putting the credit card business back on its radar, expects loan growth rate for the current financial year ending March 31, 2017 (FY17) to come in slightly below the industry’s average of 6% to 8%.
“It really depends on what the actual [banking] system growth is. For the current year (FY17), the latest GDP (gross domestic product) growth is about 4%, [so] the system’s credit growth may be tracking at around 6% to 8%. We look to grow a little bit lower than that,” AmBank Group chief financial officer Mandy Simpson told reporters after the group’s annual general meeting (AGM) yesterday.
Growth this year will be driven by the mortgage and small and medium enterprise (SME) segments, said Simpson, while the automotive financing and non-residential property segments are likely to grow at a rate below the industry’s average.
In FY16, AmBank Group’s loans, advances and financing grew 0.39% to RM86.51 billion from RM86.17 billion in FY15.
Its chief executive officer Datuk Sulaiman Mohd Tahir said the market trend is less favourable to the group now.
“The segments we have looked at here are clearly SMEs and midsize corporates, affluent and mass affluent. Targeting the affluent is because household income has increased for Malaysians as a whole. For SMEs and midsize corporates, loan growth for this segment in the last five years was in the double digits, compared to large corporates’ single digit,” he said.
Hence, Sulaiman said AmBank will revive its credit card and merchant businesses. “We have the legacy of being the number one card provider once, which is MBF, which we bought over about three years ago. We want to revive these businesses,” he said. The group bought over MBF Cards (M) Sdn Bhd in December 2012 for RM623.4 million.
Furthermore, Sulaiman wants to grow the group’s current account saving account ratio to total deposits from 20:80 to 32:68 by 2020, while Simpson shared that the group is targeting a return on equity (ROE) growth of up to 10.5% for FY17, with profit after tax and minority interest (Patmi) growth of about 10% per annum for the next two years, and to keep its cost-to-income (CTI) ratio below 55%.
The group’s FY16 ROE was 8.8%. Patmi declined 32.13%, while the CTI ratio was at 58.8%.
Meanwhile, Simpson put off concerns over the group’s exposure to the oil & gas (O&G) sector after the collapse of Singapore offshore service provider Swiber Holdings Ltd three weeks ago, saying O&G’s portion of credit in Malaysia’s banking market is “quite small” compared to Singapore.
“O&G as a proportion of our total loans was around 5% as at March 31, 2016. That said, we will continue to closely monitor the O&G portion. If anything needs to be impaired, we will impair,” she added.