AMMB net profit rises on on higher income growth

KUALA LUMPUR: AMMB Holdings Bhd’s net profit rose 19.9% to RM441.5mil for the first quarter ended June 30 from RM368.2mil previously underpinned by higher income growth as well as improved asset quality with lower charge off or allowances.

Revenue for the quarter was also higher at RM1.95bil against RM1.7bil a year ago while earnings per share rose to 14.75 sen from 12.24 sen last year.

“We had a good start to FY12 (financial year ending March 31, 2012) as we continue to focus on improving returns. Profit growth came from higher non-interest income and lower allowances, with good performances across our diversified business streams,” group managing director Cheah Tek Kuang said in a statement yesterday.

He said the group’s deposit growth remained strong, driven by expanded suite of product offerings and distribution channels. Asset growth was targeted at profitable and viable segments while asset quality continued to improve.
Group managing director Cheah Tek Kuang

“We have maintained a proactive approach to risk management and this was evidenced by an improved risk and funding profile,” he said.

It has introduced several new products and services to suit various investment appetites of its customers, implemented customer segmentation and account planning as well as commenced its core banking system replacement.

“We are positive on achieving our medium-term aspiration to become Malaysia’s preferred banking group with international connectivity in delivering sustainable value to our shareholders,” he added.

On its outlook, Cheah said: “Our strategic priorities are clear. We will maintain focus on profitable growth and rebalancing. Plans are in place for diversification and new business developments as we concentrate on growing non-interest income and deposits.”

During the quarter, total income grew 11.9% to RM1.1bil. Non-interest income grew 44.3% to RM438.8mil supported by higher trading and investment income, and fee income. The group remained operationally efficient with a cost-to-income ratio of 38.5% and expected to accelerate investments over the next few years. Net interest margin trended lower at 2.65%, mainly attributed to an earlier than expected increase in the statutory reserve requirement, competitive pressures in the retail segment, mixed effect of expanding non-retail loans portfolio, term funding raised and higher interbank placements.

Its customer deposits grew 16% to RM83.6bil during the quarter as it focused on main-bank customer relationships, cross-selling, cash management and payroll crediting facilities, and marketing campaigns. Gross loans grew 10% to RM75.4bil. Owing to the faster deposits growth compared with loans growth, the loans to deposit ratio further improved to 87.1%.

Its gross impaired loans fell 85 basis points (bps) from the day one (April 1, 2010) post FRS implementation position of 3.81% to 2.96%. Loan loss charge was 27 bps lower at 0.40% while allowance coverage increased 23.6% to 112.7%.