AmBank Group remains cautious on FY22 prospects

by S BIRRUNTHA / pic by MUHD AMIN NAHARUL

AMMB Holdings Bhd’s (AmBank Group) remains cautious of the country’s economic outlook for the remainder of the year, as the group has commenced its new financial year (FY22).

Ambank Group CEO Datuk Sulaiman Mohd Tahir (picture) said the group will do its best to anticipate the impact of the full Movement Control Order (MCO) and the recently announced six-month loan moratorium.

With the continued support from customers, shareholders and stakeholders, he said the group is confident in its ability to remain resilient, while delivering value for all.

“AmBank Group will continue to place customers’ needs at the forefront while spearheading new paradigm shifts in an increasingly dynamic and digital banking environment, while at the same time observing good cost discipline.

“We have been clear about the importance of continually reviewing all aspects of our businesses to ensure alignment with our strategic aspirations. This is imperative in order to strengthen our base and devote our attention to growing our core banking businesses,” he said in a statement.

He also noted that an economic rebound is expected to be reliant on the loosening of movement restrictions coupled with the timely completion of the nationwide vaccination drive.

For the first quarter ended June 30, 2021 (1Q22), AmBank Group net profit increased 5.9% to RM386.6 million from RM365.16 million a year earlier, mainly driven by higher net income and lower other operating expenses.

Quarterly revenue, however, fell 5.3% to RM2.09 billion from RM2.21 billion a year ago, according to its exchange filing on Bursa Malaysia on Monday.

Earnings per share for the period dipped to 11.86 sen from 12.14 sen a year ago.

Meanwhile, the group noted that its fund-based income from interest bearing assets decreased mainly from interest on fixed income securities, while non-interest income also decreased compared to last year.

Interest income from securities decreased mainly from trading portfolio and funding costs decreased attributable to lower interest expense on deposits from customers and securities sold under repurchase agreements.

“Total income grew 13.3% to RM1.23 billion, driven by higher loans growth and net interest margin.

“Excluding the net modification loss, adjusted income increased to RM1.2 billion, up 4.8% year-on-year (YoY),” AmBank Group said in a statement accompanying its financial results.

Commenting on the results, Sulaiman said Malaysia’s road to economic recovery continues to be bumpy with the recent resurgence in Covid-19 infections and the reimposition of movement restrictions impacting many businesses.

He added that amid these challenging circumstances, the group was able to register a solid overall performance.

Sulaiman also said the group managed to deliver a 34.2% growth in profit before provision to RM743.3 million and a 5.9% growth in net profit after tax and minority interests YoY to RM386.6 million on the back of RM1,237.9 million in revenue.

“At the same time, we continued to exert cost discipline demonstrated by AmBank’s improved cost-to-income ratio of 40%.

“Indeed, our long-term transformation efforts, from our Top 4 strategy and now continuing into our Focus 8 strategy, has placed the group on a more formidable footing to face the challenging operating landscape,” he noted.

Sulaiman said while the group foresees increased impairment risk to its credit portfolios, this will only become more apparent in the latter part of FY22.

“Our mitigatory efforts continue to be in place. We are steadfast in our practice of credit vigilance.

“Accordingly, our prudent and proactive stance has seen us set aside a pre-emptive overlay totalling RM832.7 million since the very first MCO in March 2020,” he added.