KUALA LUMPUR: AMMB Holdings Bhd revised downward its earnings growth forecast for the fiscal year ending March 30, 2012, to between 10% and 12% from 14% on expectation of lower economic growth than previously estimated.
In a media briefing on the group’s results for its first half year ended Sept 30 (1HFY12) yesterday, the group revealed its target profit after tax and minority interest (PATMI) growth of 10% to 12% for FY12.
For 1HFY12, PATMI rose 15.7% to RM811 million from RM701 million in the previous corresponding period.
Group managing director Cheah Tek Kuang said even if the GDP growth rate comes in at 4.5%, which is lower than the government’s estimation of 5% to 6% for this year, the group’s business could still thrive.
“For the first half of the year, results were very good but in second half we think it may weaken a bit, but on average, we think 10% growth in profit is achievable,” he said.
Ganesh Kumar Nadarajah, group general manager of investor relations and planning, said the downward revision in its profit growth is due to the lower-than- expected GDP growth in the first half year and other external headwinds.
“Although the government has announced a slew of projects under the Economic Transformation Programme (ETP), some of these projects have not yet been implemented. The uncertainty in the global economy has also impacted demand for Malaysian exports as well. I think we have to be a little bit more cautious,” he said when contacted by The Edge Financial Daily.
The growth in PATMI was supported by broad-based earnings contributions as the group embarked on a diversification exercise to increase contributions from fee-based and non-interest income, and growing its current account savings account (CASA) deposits and loans by targeting profitable and viable segments.
AMMB said total income grew by 9.6% to RM2.17 billion for 1HFY12 against RM1.98 billion a year ago. This increase was driven by higher non-interest income growth of 31.7% year-on-year (y-o-y) to RM810 million from RM615.2 million, while its net interest income slipped to RM1.36 billion from RM1.37 billion a year ago.
Gross loans, including Islamic financing sold to Cagamas Bhd, rose 6.4% to RM74.6 billion during the period under review.
According to group CFO Ashok Ramamurthy, generally the growth rate of gross loans is around twice the growth rate of the country’s GDP.
“Even though the consensus is that Malaysia’s GDP growth this year would come closer to 5%, which would mean that gross loan growth would come around 10%, the group has a more conservative target of maintaining it at around 7%,” he said.
Retail lending continued to be concentrated on viable and profitable segments, rising 2.8% y-o-y to RM46.9 billion.
Non-retail lending grew at a higher rate of 13.2% with business loans up by 20.4% to RM15.2 billion during the period under review compared with RM12.6 billion in the previous corresponding period. Corporate loans grew by 13.5% to RM12.9 billion from RM11.3 billion recorded during 1HFY11.
“Non-retail portfolio has been growing faster compared with retail loans, resulting in an increased non-retail loans composition of 37% compared with 35% a year ago. Overall, variable rate loans continued expanding and now make up 53% of AMMB’s total portfolio,” said Cheah.
On the group’s short-term outlook, Cheah said AMMB will be cautious while staying aligned to its medium-term aspiration to become Malaysia’s preferred banking group with international connectivity, as measured by customer satisfaction, sound financial performance, and well diversified and sustainable growth.
He said the group will leverage on its international connectivity especially with its 25% shareholder Australia and New Zealand Banking Group (ANZ) via the roll-out of the AmBank-ANZ Get Set solutions and ANZ’s signature priority banking in Malaysia.
Net profit for the second quarter (2Q) ended Sept 30 was RM381.6 million, up 10.7% from RM344.6 million a year ago, the group said in its announcement to Bursa Malaysia yesterday.
It attributed the improved 2Q earnings to net impairment writeback on financial investment of RM17.7 million as opposed to net impairment loss of RM45 million, higher other operating income and net income from Islamic banking business by RM33.6 million and RM27.5 million respectively.
Higher earnings from net income from insurance business of RM49.7 million and net interest income of RM524.8 million also contributed to the improvement in earnings for the 2Q, it added.
AMMB declared a dividend per share of 6.6 sen.
This article appeared in The Edge Financial Daily, November 17, 2011.
In a media briefing on the group’s results for its first half year ended Sept 30 (1HFY12) yesterday, the group revealed its target profit after tax and minority interest (PATMI) growth of 10% to 12% for FY12.
For 1HFY12, PATMI rose 15.7% to RM811 million from RM701 million in the previous corresponding period.
Group managing director Cheah Tek Kuang said even if the GDP growth rate comes in at 4.5%, which is lower than the government’s estimation of 5% to 6% for this year, the group’s business could still thrive.
“For the first half of the year, results were very good but in second half we think it may weaken a bit, but on average, we think 10% growth in profit is achievable,” he said.
Ganesh Kumar Nadarajah, group general manager of investor relations and planning, said the downward revision in its profit growth is due to the lower-than- expected GDP growth in the first half year and other external headwinds.
“Although the government has announced a slew of projects under the Economic Transformation Programme (ETP), some of these projects have not yet been implemented. The uncertainty in the global economy has also impacted demand for Malaysian exports as well. I think we have to be a little bit more cautious,” he said when contacted by The Edge Financial Daily.
Cheah: On average, we think 10% growth in profit is achievable.
The growth in PATMI was supported by broad-based earnings contributions as the group embarked on a diversification exercise to increase contributions from fee-based and non-interest income, and growing its current account savings account (CASA) deposits and loans by targeting profitable and viable segments.
AMMB said total income grew by 9.6% to RM2.17 billion for 1HFY12 against RM1.98 billion a year ago. This increase was driven by higher non-interest income growth of 31.7% year-on-year (y-o-y) to RM810 million from RM615.2 million, while its net interest income slipped to RM1.36 billion from RM1.37 billion a year ago.
Gross loans, including Islamic financing sold to Cagamas Bhd, rose 6.4% to RM74.6 billion during the period under review.
According to group CFO Ashok Ramamurthy, generally the growth rate of gross loans is around twice the growth rate of the country’s GDP.
“Even though the consensus is that Malaysia’s GDP growth this year would come closer to 5%, which would mean that gross loan growth would come around 10%, the group has a more conservative target of maintaining it at around 7%,” he said.
Retail lending continued to be concentrated on viable and profitable segments, rising 2.8% y-o-y to RM46.9 billion.
Non-retail lending grew at a higher rate of 13.2% with business loans up by 20.4% to RM15.2 billion during the period under review compared with RM12.6 billion in the previous corresponding period. Corporate loans grew by 13.5% to RM12.9 billion from RM11.3 billion recorded during 1HFY11.
“Non-retail portfolio has been growing faster compared with retail loans, resulting in an increased non-retail loans composition of 37% compared with 35% a year ago. Overall, variable rate loans continued expanding and now make up 53% of AMMB’s total portfolio,” said Cheah.
On the group’s short-term outlook, Cheah said AMMB will be cautious while staying aligned to its medium-term aspiration to become Malaysia’s preferred banking group with international connectivity, as measured by customer satisfaction, sound financial performance, and well diversified and sustainable growth.
He said the group will leverage on its international connectivity especially with its 25% shareholder Australia and New Zealand Banking Group (ANZ) via the roll-out of the AmBank-ANZ Get Set solutions and ANZ’s signature priority banking in Malaysia.
Net profit for the second quarter (2Q) ended Sept 30 was RM381.6 million, up 10.7% from RM344.6 million a year ago, the group said in its announcement to Bursa Malaysia yesterday.
It attributed the improved 2Q earnings to net impairment writeback on financial investment of RM17.7 million as opposed to net impairment loss of RM45 million, higher other operating income and net income from Islamic banking business by RM33.6 million and RM27.5 million respectively.
Higher earnings from net income from insurance business of RM49.7 million and net interest income of RM524.8 million also contributed to the improvement in earnings for the 2Q, it added.
AMMB declared a dividend per share of 6.6 sen.
This article appeared in The Edge Financial Daily, November 17, 2011.
