Group’s results led by higher revenues and solid loans growth

KUCHING: Financial group AMMB Holdings Bhd (AmBank) continues on its strong profitable growth momentum, despite facing challenging operating environment.

Cheah Tek Kuang

In its note to Bursa Malaysia yesterday, the group recorded a profit after tax and minority interests (PATMI) of RM 766.9 million for the first nine months of financial year ending March this year, a 12.6 per cent growth over previous corresponding period.

This represented annualised earnings per share of 35.4 sen and post-tax return on equity of 11.9 per cent. Adjusting for one-off impacts, AmBank’s underlying PATMI was RM 777.9 million, or 17.2 growth on a period-on-period basis.

Total assets delivered a 9.7 per cent y-o-y (year-on-year) growth to RM 94.9 billion.

“The group’s profit results were driven by higher revenues of 23.8 per cent and better-than-expected net loans growth of 14.1 per cent y-o-y, the latter in part due to strong growth in syndication and bridging finance loans.

“The strong nine-months’ performance reflects its sound and diversified business fundamentals, a disciplined approach to managing risks, as well as a strong focus on meeting banking customer expectations,” said its chief executive officer and managing director Cheah Tek Kuang.

Within the group, AmBank’s retail banking segment remained the largest contributor to profits, driven by its focus on viable target segments via enhanced service commitment and product innovation. Tactical initiatives in the segment had driven higher CASA (customer accounts and savings accounts) growth of 22.3 per cent, which grew CASA’s transactional customer deposits by 21.8 per cent to RM 8.2 billion.

However, it was the group’s investment banking division that showed the most encouraging performance, posting a strong 220.6 per cent growth in profits due to positive recovery in capital market conditions and market reforms.

Meanwhile, its life and general insurance busi­nesses exhibited income growth of 67.8 per cent, on a combined basis.

“With this nine-month performance, the group is well-placed to deliver a record full-year PATMI and continue to build on the profitable growth momen­tum towards achieve­ment of its MTA (Medium-Term Aspirations).

“As we look at 2010, we are encouraged by the increasing global optimism for revival of world economies. However, by virtue of its trade and export dependency, we expect the recovery process in Malaysia to be gradual. With that said, the financial sector has remained stable, benefiting from prudent monetary policies, fiscal stimulus and tightened surveillance by Bank Negara,” explained Cheah.

He also reiterated the group’s commitment to MTA, in which it would continue to work together with its strategic partner ANZ (Australia and New Zealand Banking Group) in strategic management, risk management, financial management, distribution channel management, deposits business as well as foreign exchange and derivatives.

“ANZ is one of the eleven AA-rated banks worldwide. In the insurance sphere, our partnerships with Insurance Australia Group Ltd and Friends Provident Fund PLC bring about knowledge exchange in general and life insurances, respectively.”

Looking ahead, Cheah remarked that AmBank would continue to invest significantly in new and enhanced risk models and infrastructure, with progressive roll-out expected by next year aimed at elevating evaluation and predictive risk capabilities.

“Our strategy to enlarge our distribution footprint and branch network, which is currently the fourth largest domestic network, plays a pivotal role in deposits gathering. The group’s distribution footprint includes 189 commercial bank branches with two dedicated Islamic bank branches, 745 ATMs (automated teller machines) and 129 electronic banking centres nationwide.

“Of these, a targeted 400 ATMs are placed at 7-Eleven stores to accord customers with 24-hour and more secured banking convenience.”

“As part of our capital and balance sheet management program, emphasis is also accorded to repositioning balance sheet for rising interest rates. A potential of up to 75 basis-points hike in overnight policy rate is anticipated between now and the financial year ending 31 March next year,” he added.