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This article first appeared in The Edge Financial Daily, on November 20, 2015.

 

KUALA LUMPUR: AMMB Holdings Bhd (AmBank Group) is set to announce the appointment of a new group chief executive officer (CEO) soon, having already obtained Bank Negara Malaysia’s (BNM) approval for its candidate.

“Yes, BNM has approved [the appointment]. So the announcement of the new CEO is imminent,” AmBank Group chief financial officer Mandy Simpson told a press conference on the group’s second-quarter results yesterday.

The Edge Financial Daily reported in August that Datuk Sulaiman Tahir, the former CEO of CIMB Group Holdings Bhd’s consumer bank, CIMB Bank Bhd, was expected to take up the spot at AmBank Group once the central bank gave its nod.

Sulaiman, 52, who had been with CIMB Group for 25 years, resigned from CIMB Bank in August and has been on garden leave since. He officially parts ways with the group on Nov 22.

AmBank Group has been without a captain ever since its previous group managing director Ashok Ramamurthy stepped down on April 1 to return to Australia to take on a senior executive role at Australia and New Zealand Banking Group Ltd (ANZ). ANZ is the single largest shareholder in AmBank Group with a 23.78% stake.

AmBank Group then appointed his deputy, Datuk Mohamed Azmi Mahmood, as the acting group managing director.

Meanwhile, AmBank Group reported a 14.2% drop in second-quarter net profit, dragged down largely by lower non-interest income, net interest, Islamic banking and insurance business income.

Net profit for the three months ended Sept 30, 2015 (2QFY16) fell to RM382.52 million or 12.73 sen a share from RM445.82 million or 14.81 sen a share in 2QFY15.

Revenue for 2QFY16 also declined 5.5% to RM2.09 billion compared with RM2.21 billion a year ago.

Despite weaker second-quarter results, AmBank Group declared an interim dividend of five sen for the finacial year ending March 31, 2016 (FY16), payable on Dec 18.

In a filing with Bursa Malaysia yesterday, AmBank Group said gross loans, advances and financing reduced to RM86.8 billion in 2QFY16 from RM87.8 billion a year ago, mostly due to reduction reported from hire-purchase receivables, term loans, credit-card receivables, trust receipts and overdrafts.

For the first-half period (1HFY16), the group saw its net profit fall 26.5% to RM722.03 million or 24.03 sen a share from RM982.76 million or 32.67 sen a share in 1HFY15.

Revenue also fell 12.4% to RM4.2 billion from RM4.79 billion a year ago.

Its retail banking’s net profit fell 8.6% year-on-year (y-o-y) to RM206.5 million, mainly due to margin compression arising from portfolio-rebalancing initiatives. The wholesale banking division’s net profit was also down 11% y-o-y at RM424.5 million, reflecting pressures on margin, cautious business sentiment and weaker fixed-income trading.

During yesterday’s event, Mohamed Azmi said in the near term, business conditions are expected to be challenging against the backdrop of a slowing economy and increasing compliance requirements.

“The US dollar rise, interest gap, and yuan outlook will continue to weigh on the ringgit,” he said. “The banking sector is expected to experience slower demand and narrowing net interest margins, while asset quality may come under pressure. Private consumption is expected to grow moderately this year.”

On its part, Mohamed Azmi said AmBank Group will remain focused on its FY16 to FY17 strategic agenda to deliver on organic growth, leverage strategic partnerships and acquisitions, and will continue to optimise efficiency and build sustainability.

AmBank Group’s (valuation: 2.55; fundamental: 1.5) share price closed unchanged at RM4.66 yesterday, for a market capitalisation of RM14.05 billion.


The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

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