KUALA LUMPUR (Nov 21): AMMB Holdings Bhd (AmBank Group) saw its net profit decline 7.8% to RM352.63 million or 11.73 sen per share in the second financial quarter ended Sept 30, 2016 (2QFY17) from RM382.52 million or 12.73 sen per share a year ago, mainly due to lower net interest income and net income from insurance business by RM19 million and RM58 million respectively.

The group said lower recoveries of other receivables and writeback of provision for commitments and contingencies by RM6.9 million and RM18.5 million respectively also contributed to the reduction in net profit.

Revenue grew by a marginal 0.5% to RM2.1 billion in 2QFY17 from RM2.09 billion in 2QFY16.

For the first half of its financial year (1HFY17), AmBank Group's net profit fell 6.5% to RM675.63 million or 22.47 sen per share from RM722.03 million or 24.03 sen per share a year ago.

In a filing with Bursa Malaysia today, AmBank Group said the reduction was primarily due to higher other operating expenses and decrease in net interest income and Islamic banking business by RM73.2 million, RM89.7 million and RM8.5 million respectively.

This was mitigated by writeback on impairment on loans, advances and financing of RM73.2 million for 1HFY17 compared with RM52.9 million in 1HFY16 and higher other operating income, income from insurance business, share in results of associates and joint ventures and recoveries (other receivables) by RM77.2 million, RM16.1 million, RM11.6 million and RM11.8 million respectively, it added.

Revenue also dropped 0.8% to RM4.16 billion from RM4.2 billion.

Gross loans, advances and financing decreased marginally to RM87.3 billion in 1HFY17 compared with RM87.9 billion a year ago, due to decrease in term loans, hire-purchase financing and revolving credit balance increases in mortgages, overdrafts and trade facilities.

In a statement today, AmBank group chief executive officer Datuk Sulaiman Mohd Tahir pointed out that the key highlight of 1HFY17 results was the further strengthening of the banking group's balance sheet with improved gross impaired loan ratio and higher capital ratios.

"Our balance sheet remains sound and we have sustained our asset quality despite macroeconomic headwinds. More significantly, our indicative Basel III financial holding company common equity tier 1 ratio has increased to 11.2% with room for capital optimisation," he said.

On future prospects, AmBank Group said loans and deposits are expected to grow at a moderate pace as business outlook is improving among various business activities.

"We expect credit costs to normalise from lower recoveries, while some sectors may experience stress in asset quality," it said.

AmBank Group shares ended the morning session down 3 sen or 0.7% at RM4.08, with 347,200 shares changing hands. Its market capitalisation stood at RM12.39 billion.