KUALA LUMPUR: AMMB Holdings Bhd’s (AmBank) total income for the financial year ended March 31,2021 (FY21) grew by 7.7% to RM4.55bil on higher net interest income (NII) as well as noninterest income (NoII).
NII came in 5.8% higher year-on-year (y-o-y) at RM2.94bil on the back of 7.0% loans growth, the banking group said in a statement yesterday.
However, it noted that net interest margin (NIM) contracted 3 basis points (bps) to 1.91% y-o-y due to margin compression resulting from the cumulative 125 bps reduction in the Overnight Policy Rate (OPR) in 2020. Nonetheless, this was offset by margin recovery in the second half of FY21 from effective asset and liability management.
Meanwhile, NoII grew 11.3% y-o-y, largely attributable to strong trading, investment and insurance income from group treasury and markets, general and life Insurance, as well as higher fee income from fund management and stockbroking.
The group said its diligent management of costs, along with operating expenses remaining relatively flat at RM2.13bil, helped drive cost-to-income ratio lower to 46.8% from 49.9% a year ago.
Meanwhile, gross impaired loans ratio decreased to 1.54% from 1.73% in FY20. But AmBank expects this to trend upwards upon the expiry of financial relief programmes in the coming months.
“Nonetheless, the group has been building up provisions for potential loans at risk with macro provisions of RM578.2mil in FY21. The total preemptive macro provisions to-date amounted to RM745.5mil carried forward into the next financial year and were made in relation to the group’s exposure to retail and SME customers affected by the Covid-19 pandemic as well as the aviation, construction and oil and gas sectors, ” it said.
This has resulted in an increased net impairment charge of RM1.14bil in FY21 compared to RM336.1mil in FY20.
For the fourth quarter ended March 31,2021, AmBank posted a net loss of RM4.69bil compared to a net profit of RM247.54mil in the previous corresponding quarter. Revenue for the quarter dipped 11% to RM1.97bil from RM2.21bil previously.
For the full year, the group registered a net loss of RM3.83bil compared to net profit of RM1.34bil in FY20. Revenue for FY21 came in lower at RM8.41bil from RM9.32bil in the previous year.
“Against a challenging economic backdrop, our financial results were materially impacted by one-off exceptional items totalling RM4.77bil and higher impairment charges of RM1.14bil due to the lingering effects of the Covid-19 pandemic on the economy.
“Core profit after tax and minority interests, excluding the exceptional items and related legal and professional expenses, of RM961.6mil was 28.3% lower y-o-y as a result of increased overlay provisions.
“Financial Holding Company Common Equity Tier 1 (FHC CET1) of 11.33% includes 0.91% benefit of the regulatory transitional arrangements. In order to accelerate our capital build following the settlement, we undertook a private placement exercise which raised approximately RM825mil in a private placement on April 14,2021. This will improve our FHC CET1 capital ratio by 0.71% to 12.04%, ” said AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir.
AmBank had earlier reached an agreement with the Ministry of Finance to pay RM2.83bil as settlement for transactions the bank was involved in with regards to the 1MDB issue.
Sulaiman said the bank will focus on strengthening its balance sheet, customer debt rehabilitation, maintaining higher liquidity buffers and driving further cost efficiencies in the new year.