PETALING JAYA: AMMB Holdings Bhd (AmBank Group) has recorded a 12.6% year-on-year (y-o-y) jump in net profit for the first quarter ended June 30, despite a lower net income from its insurance business and higher total operating expenses.
The sixth-largest banking group by assets told Bursa Malaysia yesterday that its bottom line in the April-June 2019 period had risen to RM391.46mil from RM347.59mil a year earlier.
The stronger net profit in the three-month period was mainly due to a higher revenue and AmBank Group’s net write-back of provisions of corporate loans.
The net write-back resulted in a net recovery of RM32.5mil as compared to an impairment charge of RM7mil in the previous year.
The bank’s total operating expenses increased by 3% y-o-y, mainly attributable to higher personnel expenses due to share based payment expenses.
Funding costs, namely, interest for customer deposits and financial institutions also increased due to the increase in average deposit balances.
As a result, AmBank Group’s net interest margin declined to 1.87% compared to 2.02% for the corresponding period last year.
However, the banking group pointed out that its cost-to-income ratio had improved to 49.7% from 50.6% a year ago.
On the insurance business, the net income dropped 22% to RM121.16mil, mainly due to higher commission and insurance claims, despite an increase in the net earned premium.
As for the overall revenue, it saw a 10% y-o-y increase to RM2.39bil, up from RM2.17bil a year earlier.
“Fund-based income from interest bearing assets increased mainly from interest on fixed-income securities and customer lending. Non-interest income increased by RM60.5mil compared to the same period last year.
“Interest income from securities grew mainly from trading and hold to collect and sell securities. Interest income from customer lending increased from term loans, trade financing and mortgages, ” the banking group said in a filing with the stock exchange.
Going forward, group chief executive officer Datuk Sulaiman Mohd Tahir said the group would be rolling out more digital initiatives while remaining focused on its cost efficiencies through its BET300 programme.
For the quarter under review, the group’s gross impaired loan ratio stood at 1.66% with loan loss cover at 111.5%.
Gross loans grew 2.5% y-o-y despite contracting 1% year-to-date (y-t-d) to RM100.8bil on declining corporate loan repayments and auto loans.
However, mortgage loans increased 1.7% y-t-d to RM34.7bil, while loans in the retail SME and business banking segments grew 6% and 1.1% y-t-d, respectively.
Total customer deposits rose 4.2% y-o-y but fell 3.9% y-t-d at RM102.8bil.
Current accounts and savings accounts (CASA) stood at RM23.1bil, with the CASA mix at 22.5%.
AmBank Group’s earnings per share rose to 13 sen in the first quarter as compared to 11.56 sen a year earlier. The banking group did not announce a dividend for the quarter in review.
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