Growth reflects the strength of the bank’s diverse franchise and effective cost management strategy despite a difficult year
by LYDIA NATHAN / Photo by TMR FILE PIX
AMMB Holdings Bhd’s profit before provision (PBP) for its fiscal year ended March 31, 2021 (FY21) jumped 14.2% year-on-year (year-on-year) to RM2.42 billion against RM 2.12 billion, due to higher base interest on loans, advances and financing.
The lender’s total income rose 7.7% to RM 4.55 billion due to higher net interest income, which climbed 5.8%, and non-interest income (+ 11.3%).
Spending was broadly flat at RM 2.13 billion, while its cost-to-income ratio improved further to 46.8% from 49.9% a year ago, showing a positive Jaws (comparing growth trends in gross profit and operating expenses) of 6.6%.
CEO of AMMB Datuk Sulaiman Mohd Tahir (Photo) said the growth of the bank’s PBP reflects the strength of its diverse franchise and effective cost management strategy despite a difficult year.
He said the group’s financial results were significantly affected by one-off items totaling RM 4.77 billion in the fourth quarter ended March 31 (4Q21), and higher impairment charges of RM 1.14 billion in FY21, due to the lingering effects of the Covid-19 pandemic on the economy.
“It is important to note that goodwill impairment is a non-cash and non-recurring item. As such, it has no impact on regulatory capital ratios or our future earnings, ”Sulaiman said in a statement yesterday.
He said the REIT (Real Estate Investment Trust) depreciation in 4Q21, which amounted to RM 147.8 million, is similar except that it has a negligible impact on regulatory capital ratios.
Gross loans and financing increased by 7% YoY to 114.8 billion RM, driven by growth in retail and business banking, and exceeding industry growth by 3%.
Mortgage loans increased from RM 3.6 billion to RM 40.1 billion, and loans to small and medium-sized enterprises increased from RM 2 billion to RM 22.8 billion.
In 4Q21, AMMB recorded a net loss of RM 4.69 billion, mainly due to one-off adjustment items related to 1Malaysia Development Bhd (1MDB), compared to net profit of RM 247.5 million at the same period last year.
The bank said the 1MDB-related settlement was worth RM2.83 billion, followed by goodwill impairment of RM1.79 billion and REIT impairment of RM147.8 million.
Sulaiman said the bank would strengthen its balance sheet and rehabilitate its customers’ debt, maintain higher liquidity cushions and drive further savings in the new fiscal year.
“We have shown resilience and determination and with the past behind us we can continue to focus on our growth,” he said.
Since April 2020, the bank has been actively providing financial relief measures to its customers.
“We are pleased to see that through our continued commitments we have made significant progress in transitioning from financially stable clients to normal reimbursement flows,” Sulaiman said.