This article first appeared in The Edge Financial Daily on August 23, 2019

KUALA LUMPUR: AMMB Holdings Bhd’s (AmBank Group) net profit rose 12.6% to RM391.46 million for the first financial quarter ended June 30, 2019 (1QFY20) from RM347.59 million a year ago, supported by a better net interest income (NII) and higher income contributions from the trading and insurance businesses.

This resulted in higher earnings per share of 13.01 sen for 1QFY20 compared with 11.56 sen for 1QFY19. Total operating revenue for the quarter grew 10.1% to RM2.39 billion from RM2.17 billion for 1QFY19.

In a statement yesterday, AmBank Group said NII rose to 4.2% year-on-year (y-o-y) in 1QFY20, on expanded loans and deposits base.

“We kicked off the 2020 fiscal year with a healthy net profit of RM391.5 million for the quarter under review. We are pleased to record a higher return on equity at 8.8% (from 8.3% in 1QFY19),” AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir said.

“Total income rose 5% y-o-y [to RM1.06 billion] from an improved trading performance and a better insurance income despite a subdued lending environment. At the same time, we continued to exert cost discipline with our cost-to-income further improving to 49.7% (from 50.6% a year ago).

“This is a testament to our transformation strategy [through the BET 300 programme], placing the group on a stronger footing to weather a more challenging operating landscape,” he added.

The group recorded a net recovery of RM32.5 million in 1QFY20 compared with an impairment charge of RM7 million a year ago, mainly driven by a net write-back of provision for corporate loans. Its gross impaired loan ratio stood at 1.66%, from 1.59% in FY19, with a loan loss cover at 111.5%.

“We are keeping a watchful eye on the credit portfolios as economic conditions are less benign,” said AmBank Group.

For FY20, the group said its financial priorities will be centred on revenue growth, the BET 300 programme aiming to maintain a tight rein on costs and pacing its investments, capital-accretive growth and digital banking.