PETALING JAYA: AMMB Holdings Bhd
(AmBank) continues to caution that the overnight policy rate (OPR) reduction last month will have some impact on net interest margin (NIM) in the near term.
In the recent July 2025 Monetary Policy Committee meeting, Bank Negara Malaysia announced a 25-basis-point (bps) OPR cut to 2.75%.
AmBank noted the OPR cut in July should not be construed as the start of an aggressive easing cycle. Given that the risk of an imminent recession is minimal, the group said in a filing with Bursa Malaysia that it does not see another cut over the remainder of 2025, specifically in the September and November meetings.
Even so, for the first quarter ended June 30, 2025 of financial year 2026 (1Q26), the bank recorded a 9.5% year-on-year (y-o-y) growth in net income of RM1.29bil contributed by improvements in both net interest income (NII) and non-interest income (NoII).
AmBank’s NII grew 7.4% y-o-y to RM924.7mil, on the back of a 12-bps NIM expansion to 2.01% from 1.89% in 1Q25.
Loans and financing grew 4.2% y-o-y in 1Q26, with business banking and wholesale banking loan growth of 12.2% and 10% y-o-y, respectively.
Meanwhile, NoII was 15.2% higher y-o-y to RM366mil in 1Q26, largely driven by higher trading gains in securities from group treasury and markets as well as higher fee income from corporate banking and business banking, partially offsetting a decline in fee income from investment banking and wealth management.
AmBank said overall expenses increased 8.3% y-o-y in 1Q26 to RM563.9mil mainly due to higher personnel costs. However, good income growth resulted in cost-to-income improving to 43.7% in 1Q26 from 44.2% in 1Q25. Accordingly, profit before provisions grew 10.5% y-o-y to RM726.8mil in 1Q26.
The bank’s net impairment charges were higher at RM72.4mil in 1Q26 from RM12.3mil in 1Q25, due to higher Stage 3 provision from business banking and lower forward-looking writeback y-o-y.
On the other hand, AmBank’s profit after tax and minority interests improved 3.2% y-o-y in the quarter to RM516.2mil, achieving an annualised return on equity of 10% from 10.2% in 1Q25, while return on assets improved to 1.05% in 1Q26 from 1.02% in 1Q25.
Nevertheless, the gross impaired loan ratio was higher at 1.71% from 1.54% in the financial year 2025 (FY25), with a loan loss coverage (including regulatory reserves) of 100.1% (FY25: 103.6%).
AmBank also recorded a marginal 0.5% drop year-to-date for its total gross loans, advances and financing to RM138.2bil, mainly due to repayment of wholesale banking loans, partly cushioned by loan growth in business banking.
The group said loans in retail banking remained flat year-to-date.
Year-to-date total customer deposits also fell 2.5% to RM138bil (FY25: RM141.5bil). Time deposits grew 0.6% year-to-date to RM91.1bil (FY25: RM90.5bil) while current account savings account (Casa) decreased 8.1% year-to-date to RM46.9bil (FY25: RM51bil), with Casa mix of 34% (FY25: 36%).
For its retail banking arm, AmBank posted a lower profit after tax of RM11.6mil in 1Q26 from RM46.6mil in 1Q25, mainly due to lower income coupled with higher operating expenses and a higher net impairment charge.
Income in the retail banking division also fell by 7.1% y-o-y to RM339mil in 1Q26 due to a 3.3% y-o-y decline in NII from margin compression in mortgage and auto financing, along with a 26.9% y-o-y decline in NoII mainly from retail wealth management.
As for the group’s business banking, the financial institution reported a 16.8% y-o-y decline in profit after tax to RM196.6mil in 1Q26, mainly due to higher operating expenses and higher net impairment charges.
Income for business banking grew 3.4% y-o-y to RM442.6mil in 1Q26 driven by a 3.1% increase in NII from strong loan growth, as well as a 4.2% growth in NoII from higher fee income and foreign exchange income.
Further, profit after tax for wholesale banking increased by 66.2% y-o-y to RM270.6mil in 1Q26, mainly driven by higher income and net impairment writeback. Income for this division grew 53.7% y-o-y to RM413.3mil in 1Q26 driven by effective liability management efforts, higher y-o-y loan growth and higher NoII of RM111.8mil from trading gain of securities.
AmBank said while being mindful of prevailing uncertainties surrounding the US tariffs and geopolitical tensions in the Middle East, the group remains optimistic on the continued growth of the Malaysian economy, buoyed by resilient domestic demand and the group’s prospects for FY26.
AmBank group chief executive officer Jamie Ling said as the local economy adjusts to the 19% tariff imposed on most Malaysian exports to the United States, the group is confident that economic growth will remain resilient.
“We delivered a good set of results in 1Q26. There was good income growth supported by strong NIM improvement.
“Capital position strengthened further and liquidity remains ample. Overall, a satisfactory first-quarter performance, delivered in more volatile market conditions,” he said in a statement yesterday.
