KUALA LUMPUR (Aug 30): AMMB Holdings Bhd (AmBank) today announced a 5.9% growth year-on-year in its net profit for the first financial quarter ended June 30, 2021 (1QFY22) to RM386.6 million, mainly driven by higher net income and lower other operating expenses, despite recording a slightly lower revenue.

Quarterly revenue stood at RM2.1 billion, down by 5.3% compared with RM2.21 billion it recorded in the same quarter last year. However, earnings per share dipped to 11.86 sen from 12.14 sen a year ago.

In a statement to Bursa Malaysia today, AmBank said net income increased by RM79.9 million mainly from higher net finance income due to higher volume and margin impact, coupled with higher fee income from Wealth and Cards.

On the other hand, AmBank said the lower other operating expenses were mainly due to lower marketing spend, depreciation costs and lower service transfer pricing expenses.

However, its financial results were partly offset by higher net impairment mainly from provision on loans, advances and financing, mitigated by higher recoveries.

AmBank group chief executive officer Datuk Sulaiman Mohd Tahir commented that Malaysia's road to economic recovery continues to be bumpy with the recent resurgence in Covid-19 infections and the reimposition of movement restrictions impacting many businesses.

"Our customers are important to the group's continued growth and we are committed to assisting our customers by addressing their individual financing needs. While we foresee increased impairment risk to our credit portfolios, this will only become more apparent in the latter part of FY22. Our mitigatory efforts continue to be in place.

"We are steadfast in our practice of credit vigilance. Accordingly, our prudent and proactive stance has seen us set aside a pre-emptive overlay totalling RM832.7 million since the very first Movement Control Order (MCO) in March 2020," he said.

On the banking group's prospects, Sulaiman said that an economic rebound is expected to be reliant on the loosening of movement restrictions coupled with the timely completion of the nationwide vaccination drive.

As such, he said AmBank Group will continue to place customer needs at the forefront while spearheading new paradigm shifts in an increasingly dynamic and digital banking environment, and at the same time observe good cost discipline.

"We have been clear about the importance of continually reviewing all aspects of our businesses to ensure alignment with our strategic aspirations. This is imperative in order to strengthen our base and devote our attention to growing our core banking businesses," he said.

Sulaiman pointed to the group's recently announced disposal of AmGeneral Insurance Bhd (AGIB) to Liberty Insurance Bhd (LIB) in a deal valued at RM2.29 billion. As part of its efforts to rebuild capital, the deal will see AmBank receive cash that will contribute directly to CET1 while at the same time retaining a 30% equity stake in the combined businesses of AGIB and LIB.

"While we have commenced FY22 with an encouraging start, we remain cautious of Malaysia's economic outlook for the remainder of the year as we do our best to anticipate the impact of the full MCO and the recently announced six-month loan moratorium.

"With the continued support of our customers, shareholders and stakeholders, we are confident in our ability to remain resilient, while delivering value for all," he added.

At 2.47pm, AMMB fell one sen or 0.33% to RM3.01, giving it a market capitalisation of RM10 billion.