Higher net interest income and lower expenses deliver better Q1 results
PETALING JAYA: AMMB Holdings Bhd’s net profit rose 5.9% to RM347.59mil in the first quarter ended June 30, 2018, from RM328.27mil in the corresponding period last year on higher net interest income (NII) and lower expenses.
During the quarter in review, the sixth-largest banking group in Malaysia saw its revenue increase 4.3% to RM2.17bil from RM2.08bil in the previous corresponding period. The group’s earnings per share rose to 11.56 sen from 10.92 sen previously.
Commenting on the group’s results, AmBank Group CEO Datuk Sulaiman Mohd Tahir said in a statement: “After a year of putting in place a series of fundamental changes, we have today a solid platform to grow further, as our first-quarter results point to a reasonable start to the new fiscal year (FY) ending March 31, 2019.”
Sulaiman noted that the group’s income growth was broad-based.
During the quarter in review, AMMB said the group’s income rose 3.2% year-on-year (y-o-y) to RM1.01bil, supported by higher net interest income (NII), which grew 4.7% y-o- y.
Its net interest margin (NIM) was stable at 2.02%.
AMMB said its expenses fell 7% y-o-y to RM513mil in the three months to June, reflecting savings from lower headcount and business efficiency initiatives, while its profit before provision (PBP) rose 16.7% yoy to RM501mil.
“We saw a strong PBP growth of 16.7% compared to 3.2% in the corresponding period last year. At RM501mil, this is the highest PBP recorded since the fourth quarter of FY15, a testament to the strength of our Top 4 strategy.
“Credit costs were still negligible considering our asset base.
“Overall, we recorded higher profitability and improved returns in the first quarter of FY19,” Sulaiman said.
On the group’s expenses, he said: “Our cost base is now leaner following the completion of the mutual separation scheme.
“Other operational expenses were also reduced as we continue to manage costs diligently through BET300, our three-year business efficiency transformation aimed at achieving RM300mil gross cost savings across the group.”
The banking group’s return on equity, or ROE, stood at 8.3%, while return on assets, or ROA, was 0.99%.
Sulaiman said AMMB’s cost-to-income (CTI) ratio improved to 50.6% from 56.3 %
“We are on track to achieve our full-year CTI target of 55%.
“We will continue to maintain our focus on driving income and CASA (current account savings account) growth as well as manage cost diligently through our BET300 programme to attain operational efficiencies while emphasising capital accretive growth,” he said.
Meanwhile, AMMB’s gross loans and financing registered a growth of 2.2% year-to-date to RM98.4bil.
Its gross impaired loans ratio stood at 1.77%, while loan loss cover ratio was higher at 106.3%, compared with 100.5% at the end of March 2018.
Sulaiman said that the group’s consistent loan growth had underpinned the steady growth of the group’s NII.
“Non-interest income was flat on-year at RM372mil.
“Wealth management fee income continued to increase with a 8.7% growth on-year coupled with improved performance from our insurance business, mitigating global markets and investment banking results which were impacted by weaker market sentiments.
“As a result of our concerted efforts over the past year to implement a philosophy of stronger cost discipline, expenses were down 7% on-year to RM513mil,” Sulaiman said.
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