KUALA LUMPUR (May 31): AMMB Holdings Bhd (AmBank) emerged largely unscathed from the one-off prosperity tax in the financial year ended March 31, 2022 (FY22), thanks mainly to a tax credit totalling RM266 million.

Its group chief executive officer Datuk Sulaiman Mohd Tahir said the tax credit — arising from a settlement of RM235 million and RM31 million in tax claims from prior years — offset the prosperity tax charge of RM106 million.

“For FY22, we delivered a net profit of RM1.5 billion, an increase of 56% year-on-year when compared to FY21 core net profit of RM962 million,” Sulaiman said in a media briefing following the release of the group’s results for FY22.

“The improved performance was driven by good operating leverage, lower impairments, and the tax credit of RM266 million which offset the cukai makmur (prosperity tax) tax charge of RM106 million,” he said.

Including one-off exceptional items totalling RM4.77 billion — which includes the RM2.83 billion 1Malaysia Development Bhd (1MDB) settlement — AmBank’s FY21 earnings swung to a net loss of RM3.83 billion.  

For the year of assessment 2022, companies with chargeable income above RM100 million are taxed a one-off prosperity tax rate of 33%, instead of the blanket 24% previously.

While AmBank managed to have its tax claims offset the impact of the one-off tax, not all banking players were that lucky.

RHB Bank Bhd saw its tax and zakat expenses rise 36%  to RM289.3 million for the first quarter ended March 31, 2022 (1QFY22), from RM213.3 million a year earlier. The lender’s net profit slipped 7.69% to RM600.27 million from RM650.63 million, compounded further by its lower net income.

CIMB Group Holdings Bhd saw its taxation and zakat rise 37.23% to RM580.26 million in 1QFY22, from RM422.85 million in 1QFY21. Coupled with the revaluation gain of RM1.16 billion on the deconsolidated of TNB Digital in 1QFY21, the group’s net profit plummeted 41.93% to RM1.43 billion, from RM2.46 billion.

Elsewhere, Tenaga Nasional Bhd saw a contraction in its bottomline partly due to the tax, while rubber glove manufacturer Hartalega Holdings Bhd reported its first-ever net loss due to the prosperity tax.

Telekom Malaysia Bhd, on the other hand, was able to post a net profit growth for 1QFY22 despite the tax, helped by lower finance costs subsequent to its early redemption of its RM2 billion sukuk in March 2021.

Commenting on the bank’s outlook, Sulaiman said that in view of an expected improvement in the US dollar to ringgit exchange rate, AmBank foresees Bank Negara Malaysia (BNM) raising the overnight policy rate (OPR) two more times, each time by 25 basis points (bps). 

“In addition to the recent 25bps hike you have seen announced in May 2022, we expect BNM to continue with the normalisation of the OPR in the second half of 2022, with [the] expectation of two hikes [of] 25 bps each time.

“The first hike, we think will happen in July 2022, while the second one will possibly be in September, and this is resulting from the improved US dollar to ringgit exchange rate, as we projected for the second half of 2022,” he added.

AmBank’s projection of two additional hikes would mean that BNM would raise the OPR to 2.5% by the end of this year, from the current 2%.

Sulaiman said AmBank expects the US dollar to ringgit exchange rate to hover around RM4.20 to RM4.25. At the time of writing, the local note retreated to 4.3767 versus the greenback.