AmBank Group’s net profit for the financial year ended 31 March 2019 rose by 32.9% to RM1.505bil from RM1.132bil in FY18, driven by its strong transformation strategy, net recovery and lower expenses. The banking group announced on Tuesday its revenue increased by 6.3% to RM9.12bil from RM8.57bil a year ago.
“Net interest income (NII) grew by 3.9% to RM2.580bil. Total income stood at RM3,922.4 million"
“Expenses down by 12.0% to RM2.131bil, driven by business efficiency initiatives. Cost-to-income (CTI) ratio improved to 54.3% from 60.8% a year ago,” it said.
AmBank said profit before provision increased by 15% to RM1.791bil from the improved operating leverage.
AmBank CEO Datuk Sulaiman Mohd Tahir said the group recorded a net recovery of RM303.8mil in FY19 compared to an impairment charge of RM15.7mil last year, aided by several large corporate recoveries and the sale of retail non-performing loans.
“This is part of our initiatives to improve our capital position and also focus our collection resources on newer vintage delinquent loans."
“Gross impaired loans ratio improved 11bps to 1.59% and loan loss cover rose to 114.0%. The group’s asset quality remains resilient while credit vigilance is exercised in a less benign credit environment,” he said.
Sulaiman said the FY19 commendable results “demonstrate that our transformation strategy is bearing fruit and generating value for the group, as we continue to execute our priorities despite heightened competition and headwinds”.
He said the banking group’s net interest income grew 3.9% on-year underpinned by good balance sheet growth, as both our loans and deposits growth outpaced the industry’s growth. Total underlying income was broadly stable on-year 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. We reduced expenses by 12% on-year and achieved a positive JAWS of 11%, with our cost-to-income 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, our profit before provision recorded double-digit growth of 15.0% on-year. We completed the sale of retail non-performing loans and resolved a few large corporate NPLs during the financial year, further supporting our earnings,” he said.
For the fourth quarter, its net profit jumped by 81.3% to RM459.66mil from RM253.41mil a year ago.
The higher profit was driven by higher lending volume, lower expenses from non-repeat of severance cost and increase in recoveries.
“Compared with the preceding quarter (Q3FY19), profit was up 31% quarter-on-quarter (QoQ) to RM459.7mil mainly underpinned by the gain from the sale of retail non-performing loans and provisions write-back,” he said.
Its revenue increased by 5.5% to RM2.33bil from RM2.21bil. Earnings per share were 15.28 sen compared with 8.43 sen. It announced a dividend of 15 sen a share compared with 10 sen a year ago, dividend payout of 40% for FY19.
Sulaiman said the group’s net interest income (NII) was 3.9% higher at RM2.580bil reflecting the consistent expansion of its loan base.
However, 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% on-year to RM1.342bil, 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 a better outcome from the life insurance business,” he said.