PETALING JAYA: AMMB Holdings Bhd’s net profit for the fourth quarter ended March 31 jumped 81.4% to RM459.67 million from RM253.41 million a year ago driven by higher lending volume, lower expenses from non-repeat of severance cost and increase in recoveries.
Its revenue grew 5.5% to RM2.33 billion compared with RM2.11 billion in the previous year’s corresponding quarter.
For the financial year ended March 31 (FY19), AMMB’s net profit increased 33% to RM1.51 billion from RM1.13 billion a year ago mainly thanks to its share in results of associates and joint ventures and net recovery of RM303.8 million while revenue grew 6.3% to RM9.12 billion from RM8.58 billion.
AmBank Group CEO Datuk Sulaiman Mohd Tahir (pix) said it achieved commendable results for the financial year 2019, which demonstrates that its transformation strategy is bearing fruit and generating value for the group, as it continue to execute its priorities despite heightened competition and headwinds.
Net interest income (NII) grew 3.9% year-on-year (y-o-y) underpinned by good balance sheet growth, as both its loans and deposits growth outpaced the industry’s growth. Total underlying income was broadly stable y-o-y due to weaker investment banking and trading income.
Continuous cost discipline and business efficiency measures were a key driver in FY19 in improving overall profitability. It reduced expenses by 12% y-o-y and achieved a positive JAWS of 11%, with its cost-to-income (CTI) ratio improving to 54.3%.
Excluding certain one-off costs in the previous year, underlying expenses were also down by 4% after absorbing salary inflation and investments. Consequently, its profit before provision recorded a double digit growth of 15.0% y-o-y.
“We completed the sale of retail non-performing loans and resolved a few large corporate non-performing loans during the financial year, further supporting our earnings,“ Sulaiman said.
Return on equity (ROE) improved to 8.8% from 7% in FY18. It declared a final dividend of 15 sen per share, bringing total dividend for the year to 20 sen.
“Overall, we improved our operating leverage and strengthened our fundamentals in our strategic execution this year. Today, we are on a much stronger footing than before, and this is reflected by the two credit rating upgrades received by the group during the year,” he added.
Net interest margin contracted 11bps to 1.89% due to higher liquidity surplus and lending rate pressures in retail banking.
Non-interest income (NoII) fell by 10.2% y-o-y to RM1.34 billion, impacted by tougher market conditions, which resulted in lower contributions from investment banking, trading and investment income. This was partially cushioned by higher fee income from business banking coupled with better outcome from the life insurance business.
Sulaiman said the ongoing BET300 efficiency programme has resulted in a 12% y-o-y drop in expenses to RM2.13 billion while CTI improved to 54.3% from 60.8% a year ago, below the CTI target of 55% set for FY19.
The group recorded a net recovery of RM303.8 million in FY19 compared to an impairment charge of RM15.7 million last year, aided by several large corporate recoveries and the sale of retail non-performing loans.
Gross impaired loans ratio improved 11bps to 1.59% and loan loss cover rose to 114%. Gross loans and financing base expanded 5.7% y-o-y to RM101.8 billion.
On the retail front, mortgage loans increased 11.8% y-o-y to RM34.1 billion and card receivables grew 12.3% y-o-y to RM2.2 billion. Loans to small and medium enterprises (SME) grew 21.2% y-o-y to RM20.2 billion and now represents 19.9% of its total loans base.
AMMB’s customer deposits grew 11.6% y-o-y to RM106.9 billion while current accounts and savings accounts (CASA) grew 22.1% y-o-y to RM24.9 billion, with CASA mix at 23.3% from 21.3% a year ago. FHC CET1 ratio stood at 11.9% and total capital ratio at 15.4%.
On FY20 prospects, Sulaiman said that competition will remain fierce while regional and international headwinds will have an impact on local market dynamics.
“We are confident that our growth strategy in terms of improving profitability and strengthening our balance sheet is on track. Furthermore, our drive to reduce costs will carry through into the new financial year,” he said.
