The growth reflects the strength of the bank’s diverse franchise and effective cost management strategy despite a challenging year

by LYDIA NATHAN / Pic by TMR FILE PIX

AMMB Holdings Bhd’s profit before provision (PBP) for its financial year ended March 31, 2021 (FY21), jumped 14.2% year-on-year (YoY) to RM2.42 billion compared to RM2.12 billion, driven by higher core interest from loans, advances and financing.

The lender’s total income rose 7.7% to RM4.55 billion from higher net interest income, which climbed 5.8%, and non-interest income (+11.3%).

Expenses were broadly stable at RM2.13 billion, while its cost-to-income ratio improved further to 46.8% from 49.9% a year ago, delivering a positive Jaws (comparing between gross income and operating expenses growth trends) of 6.6%.

AMMB CEO Datuk Sulaiman Mohd Tahir (picture) said the bank’s PBP growth reflected the strength of its diverse franchise and effective cost management strategy despite a challenging year.

He said the group’s financial results were materially impacted by one-off exceptional items totalling RM4.77 billion in the fourth quarter ended March 31 (4Q21), and higher impairment charges of RM1.14 billion in FY21, due to the lingering effects of the Covid-19 pandemic on the economy.

“It is important to note that the goodwill impairment is a non-cash and nonrecurring item. As such, it has no impact on regulatory capital ratios or our future earnings,” Sulaiman stated in a statement yesterday.

He said the REIT (Real Estate Investment Trust ) impairment in 4Q21, which amounted to RM147.8 million, is similar except that it has an immaterial impact on regulatory capital ratios.

Gross loans and financing increased 7% YoY to RM114.8 billion, driven by growth in retail and business banking, and outpacing industry’s growth of 3%.

Mortgages grew RM3.6 billion to RM40.1 billion, and loans to small and medium enterprise customers increased by RM2 billion to RM22.8 billion.

In 4Q21, AMMB posted a net loss of RM4.69 billion, mainly due to one-off adjustment items related to 1Malaysia Development Bhd (1MDB), compared to a net profit of RM247.5 million in the same period last year.

The bank said the 1MDB-related settlement was worth RM2.83 billion, followed by a goodwill impairment of RM1.79 billion and the REIT impairment of RM147.8 million.

Sulaiman said the bank will strengthen its balance sheet and customer debt rehabilitation, maintain higher liquidity buffers and drive further cost efficiencies in the new fiscal year.

“We have shown resilience and determination and with the past behind us, we can continue our focus on our growth,” he said.

Since April 2020, the bank has been actively providing financial relief measures to its customers.

“We are glad to note that through our continual engagements, we have made significant progress in graduating financially stable customers to normal repayment streams,” Sulaiman said.