KUALA LUMPUR: AMMB Holdings Bhd (AmBank) (fundamental: 1.7; valuation: 3) saw a largely flat net profit for its third quarter ended Dec 31, 2014 (3QFY15) of RM416.65 million compared with RM415.83 million recorded a year earlier.

Revenue for the quarter dipped 11.4% to RM2.13 billion from RM2.41 billion a year ago.

Despite the somewhat lacklustre earnings, AmBank group managing director Ashok Ramamuthy said the company’s balance sheet growth momentum is stronger in 3QFY15.

“On a quarter-on-quarter basis, our balance sheet growth momentum has picked up. Customer deposits expanded 5.2% while net loans grew 1.2% driven by growth in wholesale and mortgages,” said Ashok in a statement yesterday.

For its cumulative nine-month period (9MFY15), AmBank’s revenue had also fallen 3.4% to RM6.93 billion, compared with RM7.17 billion in the same period last year. At the same time, 9MFY15’s net profit stood at RM1.4 billion, 6.1% higher than the RM1.32 billion registered in 9MFY14.

AmBank said the higher net profit was due to “non-interest income, expense management and lower allowances, which translates into a return on equity of 13.5%”.

Notably, AmBank’s retail banking segment saw its profit after tax (PAT) decrease by 35.4% in 9MFY15 to RM310.2 million due to loan contraction from the group’s policy of de-risking its auto finance portfolio and margin compression from portfolio rebalancing. The segment had higher provisions in the first half of FY15.

Also in the cumulative nine months, for the wholesale banking business, PAT declined by 5.7% to RM712.5 million as a result of weaker first-half corporate loans growth and capital market activities.

The general insurance division during the period was more upbeat as PAT rose 47.6% to RM193.9 million from improved claims management, higher investment gains and lower management costs. Its Islamic banking segment, which registered a PAT growth of 2.6% to RM184.3 million, supported by lower allowances from stronger corporate recoveries and continuous collection efforts.

Meanwhile, basic earnings per share (EPS) for the 3QFY15 was flat at 13.86 sen, just 0.03 sen higher than last year. For the cumulative period, EPS was 46.53 sen, 6% higher than the nine-month period in the last financial year.

On the company’s prospects, Ashok said, “At AmBank group, we will remain dynamic and responsive with key measures in place to drive growth, supported by ongoing investments to improve our capabilities and customer experience.”  “We are focused on managing cost, credit quality and liquidity to deliver on our FY15 to FY17 aspirations,” he added. AmBank’s counter closed 3 sen down at RM6.47, with a market capitalisation of RM19.5 billion.

This article first appeared in The Edge Financial Daily, on February 13, 2015.