AMMB loses RM25m for every 25bp cut in OPR


  • Banking
  • Thursday, 27 Aug 2020

AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir: "Simply put, 25 bps is RM25 million a year, which is RM1 million for one bps, and that directly affects the profit."

KUALA LUMPUR: AMMB Holdings Bhd is expecting a loss of RM25mil in revenue for every 25 basis points (bps) cuts in the overnight policy rate (OPR), which has projected to be around 1.25-1.50 per cent for 2020.

The OPR is currently at a record low of 1.75 per cent, after being reduced four times year-to-date.

"Simply put, 25 bps is RM25 million a year, which is RM1 million for one bps, and that directly affects the profit," said AmBank Group chief executive officer Datuk Sulaiman Mohd Tahid.

The next Monetary Policy Committee (MPC) meeting is scheduled for Sept 10 and the last meeting for the year is set to be held on Nov 3.

Additionally, the group estimated its loan growths to be flat at about two per cent, similar to the industry’s average growth projection.

In financial year 2020 (FY2020), the bank's loan growth stood at five per cent or RM107.2 billion, better than the industry average of four per cent.

The bank also projected the gross domestic product (GDP) for 2020 to be in the range of between -3.6 per cent and - 5.6 per cent, while exports growth may contract by 6.5 per cent.

Yesterday, the group announced a lower net profit of RM365.17 million for the first quarter of FY2021 (Q1 2021) from RM391.46 million in Q1 2020.

Revenue eased to RM2.21 billion in the period ended June 30,2020 from RM2.39 billion previously due to the impact from the COVID-19 pandemic and the Movement Control Order (MCO), coupled with the rapid monetary easing which resulted in the narrowing of margins for banks.

Asked to comment on the news of a potential divestment of AmMetLife Insurance Bhd, Sulaiman said the bank is reviewing its insurance segment to see whether it is a core or non-core business for the group.

It was reported yesterday that MetLife Inc and AMMB are working with an adviser on the potential divestment of the jointly-owned business. - Bernama

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AMMB , OPR , Revenue , COVID-19 , MCO , AmMetLife Insurance Bhd

   

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