Impairments and write-offs dent AmBank’s 2Q net profit


AMMB Holdings Bhd (AmBank) recorded a net profit of RM319.57 million for the second quarter ended Sept 30, 2019 (2Q20), from RM348.15 million recorded a year ago due to allowance impairments and other net write-offs.

The banking group registered an allowance for impairment on financial investments of RM42.99 million in the quarter compared to RM2.82 million write-back of allowance.

AmBank also recorded RM2.59 million of other net write-offs in 2Q20, against RM5.68 million of other recoveries in the same quarter last year.

Its earnings per share for the three months were lower at 10.62 sen from 11.57 sen in 2Q19.

The group’s quarterly revenue increased to RM2.35 billion from RM2.31 billion in 2Q19.

AmBank group CEO Datuk Sulaiman Mohd Tahir (picture) said the group continues to demonstrate good progress with improving trends in its income momentum, operating leverage and profitability.

“Total income for the group rose 5.6% YoY, propelled by consistent net interest income growth, stronger trading gains and investment income from group treasury and markets, as well as general insurance.

“Our unwavering focus on cost efficiency has enabled us to deliver improved cost-to-income (CI) ratio. As a result, we were able to achieve a good profit before provision growth of 7.6%,” he said in a statement.

Sulaiman said despite the progressively challenging operating environment compounded by the normalisation of credit costs, the group recorded a 2.2% YoY increment in net profit.

For the first half of financial year 2020 (1HFY20), AmBank’s net profit increased 2.2% YoY to RM711.03 million from RM695.75 million in the same period last year.

Its revenue in 1HFY20 also climbed 5.57% YoY to RM4.74 billion, compared to RM4.49 billion in the six months.

In 1HFY20, the group’s net interest income increased 4.6% YoY to RM1.35 billion, driven by consistent assets growth. Net interest margin contracted eight basis points to 1.89%, reflecting lower assets yield following the Overnight Policy Rate cut earlier this year.

Non-interest income of RM784.8 million grew 7.4% YoY, largely contributed by stronger trading income and investment income from group treasury and markets, and general insurance, as well as higher fee income from funds management.

As a result, total income was higher at RM2.13 billion, up 5.6% YoY.

AmBank’s are gross loans increased 2% YoY, and are broadly stable year-to-date (YTD) at RM102 billion, with growth in mortgages, mid corporation, retail small and medium enterprise, and business banking loans being offset by corporate loan repayments and the continued decline in auto loans.

Excluding auto loans, gross loans expanded 1.6% YTD, more in line with industry growth rates.

Total customer deposits stood at RM102.7 billion, an increase of 1.9% YoY, but down 3.9% YTD. The group’s current accounts and savings accounts (CASA) stood at RM23.4 billion, with a higher CASA mix of 22.8%.

“While we can expect challenging external headwinds, the outlook for Malaysia remains stable with GDP projected to grow circa 4.5% in 2019 supported by domestic demand with private consumption taking the lead.

“Inflation is anticipated to hover around 0.8% for 2019 while the policy interest rate is expected to remain unchanged at 3% for the rest of the year. In tandem with a moderate economic outlook, the banking system’s loans growth is expected to grow around 4.6%,” Sulaiman said.

He added that the group is resolute in its strategic focus to deliver on revenue growth, cost efficiency and capital accretion.

AmBank has declared a single-tier interim dividend of six sen, to be paid on Dec 27, 2019.