KUALA LUMPUR (Aug 24): Higher net interest income (NII) of RM23.9 million pulled up AMMB Holdings Bhd (AmBank Group)’s net profit by 1.6% in the first quarter ended June 30, 2017 (1QFY18) to RM328.3 million, from RM323 million a year ago.
The group’s net profit, with earnings per share of 10.92 sen versus 10.74 sen last year, was also attributed to higher net income from Islamic Banking, other operating income, as well as lower taxation and zakat.
“This was partially offset by lower writeback for impairment on loans, advances and financing, lower net income from insurance business, higher other operating expenses, lower writeback for provision for commitments and contingencies, other recoveries and share in results of associates and joint ventures,” AmBank Group said in a Bursa Malaysia filing today.
Revenue grew marginally to RM2.08 billion in the quarter, from RM2.06 billion in the corresponding period last year (1QFY17), the filing said.
Gross loans, advances and financing increased to RM92.8 billion, compared with RM91 billion as at March 31, 2017, on growth in mortgages and trade facilities, offset by decrease in hire-purchase receivables, the group added.
As at 30 June 2017, total assets stood at RM136.1 billion, while total capital ratio from the aggregation of the capital positions and risk weighted assets of the regulated banking subsidiaries stood at 16.1%.
In a separate statement, AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir said encouraging topline growth in business banking, transaction banking, global markets and mortgages, drove the results.
“Higher NII for the quarter was driven by lending growth in targeted segments, while net interest margin stood at 2.02%. Fee income was boosted by stronger fixed income trading, foreign exchange and derivatives sales.
“The group saw an uplift in commission income, following the appointment of AmBank Group as an agent of Amanah Saham Nasional Berhad (ASNB) in January,” Sulaiman said.
Year-to-date (YTD), loans and financing base recorded a modest growth of 2%, underpinned by business banking loans base that grew 4.6% and mortgages (+4.3%), he added.
Sulaiman said AmBank Group will continue to grow the small and medium enterprise (SME) segment via its newly set up enterprise business centres, and to drive growth in SME loans.
He added that the corporate fixed deposits contracted 1.95% YTD, which was cushioned by higher retail and cash management current accounts, fuelling the 2.2% expansion in current accounts and savings accounts (CASA).
On a quarter-on-quarter basis, expenses fell 5.1%, while cost-to-income (CTI) improved 1.6%, as the group kept a tight rein on operating cost.
In terms of asset quality, the group's credit cost is normalising, with lower recoveries and writebacks on performing loans.
Gross impaired loans (GIL) ratio was stable at 1.88%, as the group maintained adequate capital with Common Equity Tier 1 ratio at 11.7%.
Moving forward, Sulaiman said the group will continue to focus on its strategic priorities, such as penetrating into targeted segments and expanding in areas that it is strong in.
It also plans to focus on the growth of quality assets, deposit mix, maximising fees, as well as optimising and improving its risk-adjusted returns.
The group aims to improve its operational efficiency via faster loan approval turnaround time and automating its collections processes.
“Our financial year ending March 31, 2018 (FY18)’s strategic priorities are in place now. We remain focused on running the bank better and changing the bank in our efforts to deliver on our Top 4 aspirations, and bringing optimal returns to our shareholders,” Sulaiman said.
At 12.30pm, AmBank Group dipped 11 sen or 2.4% to RM4.48, with 3.7 million shares transacted, for a market capitalisation of RM13.7 billion.