AmBank to focus on cost-control measures, digital transformation

The lender’s revenue rose 2.4% YoY to RM2.4b, supported by higher trading and insurance income


AMMB Holdings Bhd (AmBank) expects the Overnight Policy Rate (OPR) to remain unchanged at 3% despite the more moderate economic outlook, while the bank keeps improving its cost control measures via its business transformation plan measures.

Group CEO Datuk Sulaiman Mohd Tahir (picture) said Bank Negara Malaysia (BNM) has the room to cut the OPR if the need arises.

“There is still room for BNM to reduce the OPR by 25 basis points in the second half of 2019 in a move to support domestic demand, and in tandem with global monetary policy where rates are expected to drop further,” he said in an exchange filing yesterday.

The next central bank’s Monetary Policy Committee meeting is scheduled for Sept 12, 2019.

AmBank expects the banking system loans growth to be around 4.6% in the present environment.

AmBank’s net profit for the first quarter ended June 30, 2019, rose 12.62% year-on-year (YoY) to RM391 million from RM347 million in the same quarter a year ago, on the back of interest on fixed-income securities and customer lending.

In a filing to the exchange yesterday, the lender’s revenue rose 2.4% YoY to RM2.39 billion supported by higher trading and insurance income.

The group highlighted that its deposits from customers was lower compared to the previous quarter ended March 31, 2019, at RM102.8 billion.

“The lower deposits reflect the group’s liquidity management strategy of reducing higher costs corporate and retail term deposits, while continuing to drive current account and savings account growth,” it said.

AmBank’s gross loans increased 2.5% YoY to RM100.8 million, mainly due to corporate loan repayments and the decline in auto loans.

Notwithstanding the lower loans outstanding, gross loans continue to grow in the targeted segments, it added.

“Mortgage loans increased 1.7% year-to-date (YTD) to RM34.7 billion, while loans in the retail small and medium enterprise and business banking segments grew 6% and 1.1% YTD respectively,” it said.

On its outlook, AmBank will focus on capital accretive growth and digital banking transformation initiatives in its financial year 2020.

Under its Business Efficiencies Transformation (BET 300) plan — which is moving into the third year of implementation — the group will continue to maintain a tight rein on cost and pace its investments, while driving operational efficiencies through digitalisation and streamlining of processes.

BET300 is a three-year business efficiency transformation aimed at achieving RM300 million gross cost savings across the AmBank group.

AmBank’s share price closed 24 sen higher yesterday to RM4.14, valuing the company at RM12.17 billion.

AmBank is a provider of banking and financial services via its subsidiaries AmBank (M) Bhd and AmBank Islamic Bhd.

The bank’s largest segments — which contribute the vast majority of its revenue — are retail banking, wholesale banking, insurance and group funding.