KUALA LUMPUR (May 31): AMMB Holdings Bhd (AmBank Group) saw its fourth-quarter net profit rise 19.9% year-on-year (y-o-y), mainly contributed by other operating income, net income from Islamic banking business, writeback for impairment on doubtful sundry receivables and net interest income (NII).
Net profit for the three months ended March 31, 2017 (4QFY17) rose to RM335.81 million from RM280.02 million a year ago. Earnings per share grew to 11.17 sen from 9.32 sen in 4QFY16.
Quarterly revenue increased by a marginal 2% to RM2.15 billion in 4QFY17 from RM2.1 billion in 4QFY16.
"We recorded a NII of RM599.3 million in 4QFY17, the highest level we have seen since 2QFY16. This reflects our ongoing initiatives to improve our cost of funds and stronger loans growth momentum, particularly mortgages and loans to small and medium enterprises," AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir said in a statement today.
The group also proposed a final dividend of 12.6 sen per share for FY17, bringing total dividends to 17.6 sen per share or a payout ratio of 40%.
For the full year FY17, the group's net profit rose by a marginal 1.7% to RM1.32 billion from RM1.3 billion in the previous year, mainly due to higher other operating income, share in results of associates and joint ventures and lower other operating expenses.
In a filing with Bursa Malaysia today, AmBank Group also attributed the improved quarterly earnings to higher other recoveries, writeback for impairment on loans, advances and financing, and net income from insurance business.
However, revenue slipped 1.5% to RM8.29 billion from RM8.42 billion in FY16.
Sulaiman said the group spent a good part of FY17 setting the foundation to its Top 4 strategy and building the areas that support its growth agenda, focusing on improving margins and strengthening its balance sheet for optimal returns to its shareholders.
He noted that the group's return on equity stood at 8.5% and return on assets improved to 1.1%.
However, the group's FY17 NII was weaker y-o-y due to margin compression in the second half of FY16 due to the roll-off of higher yield legacy retail loans.
AmBank Group noted that its gross loans, advances and financing increased to RM91 billion as at March 31, 2017 compared with RM87.9 billion a year ago due to growth in mortgages and trade facilities, offset by decrease in hire-purchase receivables and term loans.
As at March 31, 2017, the group's total assets stood at RM134.8 billion.
On the outlook for the banking industry, Sulaiman pointed out that the banking system's loans growth is expected to be between 5% and 6% in 2017, supported by modest growth in retail loans, especially in mortgage loans for affordable homes and improvement in business loans from infrastructure, higher exports and firmer commodity prices.
"We are pleased with the initial progress in executing our Top 4 strategy and we are confident that the group is well positioned to achieve our growth targets and progressively deliver optimal returns for our shareholders," he said.
"As we enter into our second year (of the Top 4 aspirations), we will see more traction building from initiatives rolled out in FY17, contributing to higher income growth and strengthening of our funding and capital positions.
"Meanwhile, our digital banking transformation is set to gain momentum in FY18 as we progressively materialise initiatives that will help improve customer experience and overall efficiency," Sulaiman added.
At 4.01pm, AmBank Group shares were up 10 sen or 1.96% at RM5.20 today, with 12.66 million shares traded, bringing a market capitalisation of RM15.6 billion.