Stronger earnings growth for AmBank in 3Q and 9 months

  • Banking
  • Thursday, 27 Feb 2020

AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir said the banking group managed to once again outpace the macroeconomic and geopolitical headwinds plaguing the sector with a RM1.09 bill profit in the nine months ended Dec 31,2019.

KUALA LUMPUR: AmBank Bhd posted stronger earnings of RM382.15mil in the third quarter and RM1.09bil in the nine months ended Dec 31,2019, underpinned by stronger net interest income (NII) and non-interest income.

It said on Thursday its 3Q income increased by 16.6% compared to a year ago, boosted by better lending growth and stronger trading and investment income. Its revenue rose by 2.9% to RM2.37bil from RM2.30bil.

“Net profit rose 9.2% from RM349.87mil to RM382.15mil. Compared with the preceding quarter (2QFY20), income was up 3.3% quarter-on-quarter (QoQ), ” it said.

AmBank said the increase in net profit was underpinned by stronger NII and higher investment banking fee income, partially offset by softer general insurance income. Earnings per share were 12.71 sen compared with 11.63 sen.

In addition, net interest margin (NIM) expanded by 11bps in the third quarter to 2.02% (Q2FY20: 1.91%). Moreover, its quarterly net profit rose 19.6% QoQ.

For the 9M, total income grew 9.1% to RM3.24bil, driven by consistent NII growth of 6.1% with a stable net interest margin of 1.93%.

Non-interest income increased by 14.9% on the back of strong fixed income trading gains and higher investment banking fee income.

AmBank said expenses increased by 5% at RM1.60bil while cost-to-income (CTI) ratio improved further to 49.6% from 51.6% a year ago, delivering a positive JAWS of 4.1% It recorded strong profit before provision (PBP) growth of 13.5% to RM1.63bil.

“Net impairment charge of RM133.5mil (9MFY19: net recovery of RM33.4mil) was largely due to increased gross provisions charged for wholesale banking and business banking, coupled with lower recoveries from wholesale banking and retail banking, ” it said.

“Net profit after tax and minority interests (PATMI) up 4.5% to RM1.09bil, ” it said.

AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir said the banking group managed to once again outpace the macroeconomic and geopolitical headwinds plaguing the sector with a RM1.09 bill profit in the nine months ended Dec 31,2019.

“Indeed, we stepped up our revenue growth momentum to record a robust 9.1% growth year-on-year in total income as a result of net interest income growth, strong trading gains and investment income as well as higher investment banking fee income.

“Testament to our strict cost discipline, we were able to make notable progress in cost efficiency, achieving a CTI of 49.6% compared with 54.3% in FY19. As a result, we delivered strong profit before provision growth of 13.5%.”

Speaking on the group’s recent initiatives, Sulaiman said, “We are pleased with our recent appointment as the primary banker for LUNO, the first regulator approved cryptocurrency exchange in Malaysia.

He said AmBank has invested in developing an infrastructure in accordance with regulatory requirements that allows for transaction monitoring and customised reconciliation that facilitates the seamless operations of the LUNO exchange.

This arrangement is a significant breakthrough for AmBank as we are now the first conventional bank to offer banking services to a regulated cryptocurrency exchange. This highlights our leadership in the digital and financial technology revolution. We are committed to showcasing our customised services and solutions as we continue to work with customers like LUNO.”

“As part of our focus to drive growth in the Small and Medium Enterprise (SME) segment and expand our financial solutions for SME customers, we recently launched a new comprehensive policy, Flexi SME365 under AmGeneral Insurance. Flexi SME365 was developed with three value-added propositions.

“SMEs now have the flexibility on the sum insured, the options to select the types of risk insured and the benefits of having one policy for all coverage. This simplified product provides insurance protection with comprehensive coverage. We envisage that the introduction of Flexi SME365 will create a great opportunity to close the coverage gap in terms of underinsured and non-insured SMEs in Malaysia.”

Sulaiman said due to the Covid-19 coronavirus outbreak, AmBank Group will offer temporary deferment or restructuring of instalment repayments for its individual and SME customers.

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