KUALA LUMPUR: AMMB Holdings Bhd will set aside RM2.83bil for the global settlement over the 1MDB matter in its last quarter ended March 31, but assured investors that the bank has enough capital to absorb the hit.
"While this will have a material impact on the current year’s profitability, there are adequate capital buffers to absorb this settlement without an immediate need to raise additional equity capital," AMMB said in a late filing with Bursa Malaysia today.
Earlier on Friday, the finance ministry said that AMMB has agreed to a RM2.83bil global settlement on all outstanding claims and actions in relation to the AmBank Group’s involvement in the 1MDB.
"A provision for RM2.83bil will be established for the Global Settlement in the final quarter of the Group’s financial year ending March 31, which will translate to a proforma loss of 93.89 sen per share," AMMB said.
As a result of the Global Settlement, the company will not be proposing any final dividends for the financial year ending March 31. Based on the latest consolidated financial statements of AMMB Group as at March 31, the proforma effects of the Global Settlement will reduce the net asset per share from RM6.18 to RM5.22.
The estimated proforma impact to Core Equity Tier 1 (CET1) and Total Capital Ratio (TCR) ratio was estimated to be reduced from 13.52% to 11.01%; and 16.39% to 13.88%, respectively after the proposed provision.
The group remains highly liquid, with Liquidity Coverage Ratio (LCR) of 155.8% and Net Stable Funding Ratio (NSFR) for all operating entities above 100%.
"However, the Group plans to raise Tier 2 debt capital to increase total capital available for on-going working capital purposes," it said.
The group said it has rebuilding the banking group through new management team under the leadership of its board of directors, strengthening its governance structures as well as enhancing the robustness of its processes.
"As part of the global settlement, we will continue as we have for the past five years, to strengthen our fundamentals, particularly in terms of corporate governance by continuing to improve our systems and processes to strengthen due diligence," it said.
"We are therefore committed to putting these historical matters behind us and move forward to deliver value to all shareholders, stakeholders and customers," it added.