AmBank 2Q net profit up 5%, declares 5 sen dividend

Group CEO says AmBank continues to build on the progress made in 2017, boosted with the improving trends in income


AMMB Holdings Bhd’s (AmBank) net profit for the second quarter ended Sept 30, 2018 (2Q18), rose 5% to RM348.15 million, helped by higher net interest income, revenues from the Islamic banking segment and lower cost.

Malaysia’s sixth-largest banking group by assets posted a revenue of RM2.31 billion compared to RM2.13 billion recorded in the corresponding quarter a year ago.

The bank also declared an interim dividend of five sen a share.

Group CEO Datuk Sulaiman Mohd Tahir (picture) said AmBank continued to build on the progress made last year, boosted with the improving trends in income, operating leverage and profitability.

For the first half of financial year 2019 (1H19), AmBank’s net profit rose by 5.5% to RM695.74 million from RM659.74 million in the previous corresponding period. Revenue for the sixmonth period rose by 6.6% to RM4.48 billion.

“For the third quarter in a row, the group achieved incomes of more than RM1 billion,” Sulaiman said at the bank’s half-year results briefing in Kuala Lumpur.

He said, excluding the gain on disposal of foreclosed property in the 1Q, underlying income grew 1.5% quarteron- quarter amid a more cautious market sentiment.

Expenses during 1H19 reduced by 8.7% to RM1.02 billion, driven by business efficiency initiatives. Cost-toincome ratio improved to 50.4% from 57.2% a year ago.

Meanwhile, return on equity improved to 8.2% from 7% with return on assets of 0.97% from 0.83% and basic earnings per share of 23.13 sen, from a previous 21.94 sen Sulaiman said gross loans and financing grew by 3.8% year-to-date (YTD) to RM99.9 billion and customer deposits of RM100.8 billion, up by 5.2%.

Gross impaired loans ratio was at 1.72% from 1.7% in the same period last year, while loan loss cover ratio higher at 111.3%.

It recorded a net impairment charge of RM17.9 million in 1H19 compared to net recovery of RM48 million a year ago.

Non-interest income of RM730.8 million grew by 4% YoY, after adjusting for one-off investment gains in the previous year and foreclosed property gains.

“Good growth was achieved in wealth management, corporate and business banking fee incomes, offsetting a lower financial markets and investment banking revenue out turn,” he said.

Sulaiman said the bank sees improved performance of the general insurance business, due to lower claims, and the actuarial revaluation gains experienced by the life insurance business.

On the retail front, he said mortgages grew by 8.1% YTD to RM28.5 billion, while card receivables rose by 8.7% to RM2.2 billion.

“Reflecting our focus on our top four strategy, the group’s overall loans to small and medium enterprises grew by 8.3% to RM18.1 billion.

“Customer deposits grew by 5.2% YTD to RM100.8 billion, while current accounts and savings accounts (CASA) increased by 8% YTD to RM22 billion,” he added.

Noting that retail deposit mix increased to 54.6% of total customer deposits compared to 51.5% as at March 31, 2018, Sulaiman also added that CASA composition stood at 21.8%.

“The group remains focused on driving CASA to improve its funding costs,” he said.

On liquidity and capital, Sulaiman said all banking subsidiaries of the group have maintained liquidity coverage and net stable funding ratio above 100%.

On the economy outlook, Sulaiman said the forecast for Malaysia remains positive despite growth would be slower in the near term, with a projected GDP growth of 4.6 % for 2018.

“Inflation and unemployment levels are also expected to remain moderate and this should underpin a loans growth of about 5.5% for the banking industry in 2018,” he said.

Sulaiman said the bank is on track to achieve its loan growth target of 6% for 2H19 despite the external headwinds surrounding the trade war between the two powerful rivals, the US and China.