KUALA LUMPUR: AMMB Holdings Bhd posted 5.4% higher net income of RM2.91bil for the nine months period ended Dec 31, 2017, underpinned by an increase in net interest income (NII) and a broadly stable net interest margin (NIM).
However, an increase in impairments and lower provisions resulted in 11% lower earnings of RM878.72mil for the group in the same period on the back of 3% growth in revenue to RM6.36bil.
For the third quarter ended Dec 31, 2017, the group posted earnings of RM218.98mil versus RM313.17mil a year ealier.
NII for the nine months period rose 8.8% year-on-year while NIM stood at 1.98% from 1.96% a year earlier.
"Interest income from customer lending was boosted by several factors, primarily, robust growth recorded in residential mortgages as well as increased interest income from securities.
"In addition, cost of funds was lower mainly as a result of the repayment of medium term debt and from diversifying our funding sources towards Retail deposits," said AmBank group CEO Datuk Sulaiman Mohd Tahir.
He added that the improvement in NIM was owing to the bank's focus on accelerating the growth of higher margin products, funding mix and portfolio diversification.
"Deposits from customers increased RM6bil or 6.4% YTD to RM99.9bil. This was predominantly driven by the diversification of our customer base to enhance funding resiliency.
"Current accounts and savings accounts (CASA) which collectively make up our lower cost deposits, expanded by 0.8% YTD. CASA composition at 20.0% due to our enlarged deposit base.”
Cost-to-income rose 1% to 58.2% due to investments in new capabilities and compliance with personnel cost increasing 8.5% to RM73.2mil from the expansion of new growth segments and salary increments.
Loan loss coverage was higher at 101.6% while GIL ratio improved to 1.77% as compared to 1.86% as at 31 March 2017.
"On liquidity and capital, our banking subsidiaries maintained liquidity coverage ratios in excess of the regulatory minimum requirements. The Group's aggregated capital adequacy ratio remains adequate at 16.1%,” said Sulaiman.
Moving into FY18, Sulaiman said NII will continue to drive top line growth with mortgage, SME and credit coard loans maintaining their growth momentum.
"Non-interest income (NOII) from investment banking and money market activities may still be lumpy but Wealth Management, Corporate and Commercial Banking will continue to propel NOII growth.
"We expect credit cost to continue to normalise for us with reduced recoveries relative to FY17 as impairment allowances are expected to commensurate with our loans growth.
"We will continue to manage our funding mix, grow CASA and diversify our portfolio for sustainable NIMs. Our capital position is constantly being assessed and we continuously strive to improve its efficiency.”
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