KUALA LUMPUR: AMMB Holdings Bhd’s (AmBank) net profit increased 12.62 per cent to RM391.46 million in the first-quarter (Q1) ended June 30, 2019, from RM347.60 million a year ago.
In an exchange filing today, the bank said higher earnings were contributed mainly from interest on customer lending and interest income on securities.
Its Q1 revenue rose 10.14 per cent to RM2.39 billion from RM2.17 billion a year ago. This was fuelled by higher interest on fixed income securities and customer lending; non-interest income and interest income of customer deposits and customer lending.
AmBank group chief executive officer Datuk Sulaiman Mohd Tahir said the banking group kicked off its fiscal year ending March 31, 2020 (FY20) with a higher return on equity of 8.8 per cent.
“Total income rose 5.0 per cent year-on-year (YoY) from improved trading performance and better insurance income despite a subdued lending environment,” Sulaiman said in a separate statement today.
He said AmBank continued to exert cost discipline with its cost-to-income (CTI) ratio further improving to 49.7 per cent.
“This is a testament to our transformation strategy which has placed the group on a stronger footing to weather the more challenging operating landscape,” he added.
The group’s net interest income continued to increase steadily at 4.2 per cent YoY due to expanded loans and deposits base.
Its non-interest income grew 6.4 per cent to RM395.4 million, largely contributed by higher trading income and investment income from group treasury and markets and general insurance.
Sulaiman said the group was currently in the third year of its BET300 efficiency programme and continued to record cost savings. This allowed it to re-invest some of the savings into its strategic business streams as well as digital capabilities and infrastructure.
Its operating expenses were up 3.1 per cent YoY to RM528.6 million, while its CTI continued to improve from 50.6 per cent to 49.7 per cent a year ago.
Its gross impaired loan ratio stood at 1.66 per cent from 1.59 per cent in the same period a year ago, with loan loss cover at 111.5 per cent.
Gross loans increased 2.5 per cent YoY, although contracted 1.0 per cent year-to-date (YTD) to RM100.8 billion. This was mainly due to corporate loan repayments and decline in auto loans.
The group’s gross loans continue to grow in the targeted segments including mortgage loans, which increased 1.7 per cent YTD to RM34.7 billion.
Loans in the retail and small medium enterprises (SMEs) and business banking segments grew 6.0 per cent and 1.1 per cent YTD, respectively.
Meanwhile, its total customer deposits stood at RM102.8 billion, an increase of 4.2 per cent YoY and the current accounts and savings accounts (CASA) stood at RM23.1 billion, with CASA mix at 22.5 per cent.
Sulaiman said Malaysia would remain stable with the economy expanded 4.9 per cent YoY in Q2 of 2019, supported by sustained domestic demand.
He said there would still a room for Bank Negara Malaysia to reduce the overnight policy rate by 25 basis points in the second-half of 2019 to support domestic demand and in tandem with global monetary policy where rates were expected to drop further.
He said the banking system loans growth was envisaged to grow around 4.6 per cent in tandem with a moderate economic outlook.