PETALING JAYA: AMMB Holdings Bhd (AMMB) posted a net profit of RM357.18 million for 3QFY12 ended Dec 31, 2011, up 9.8% over the previous corresponding quarter. The group’s revenue was higher at RM1.96 billion during the quarter, compared with RM1.82 billion previously.
This is the group’s 19th consecutive quarter of profit growth. However, analysts who track the banking group said the latest quarterly earnings numbers are pretty much in line with market consensus.
“There is no surprise to the market,” said Alliance Research analyst Cheah King Yoong, adding that AMMB’s results continued to be supported by strong growth in non-interest income, stabilised net interest margin (NIM) and improving loan quality that resulted in lower loan loss charged.
For the nine-month period ended Dec 31, AMMB recorded an increase of 13.8% on net profit to RM1.17 billion above the same period last year.
AMMB said the double-digit growth of the group’s 9MFY12 earnings was driven by growth across most divisions, with the retail banking division leading the contributions.
The division recorded RM433.6 million in profit after tax (PAT), an increase of 3.6% from the same period last year, driven by lower impairments of non-performing loans.
Most other divisions also recorded double-digit growth rates in net profit. The markets division’s — which involves Treasury business and trading of bonds — net profit jumped by 51.3% year-on-year (y-o-y) to RM235.1 million, while the corporate and institutional banking division recorded 35.5% growth in net profit to RM186.7 million.
Net profit for business banking increased by 17.8% to RM158.9 million, with higher income growth of 20.5% from diversified growth in asset base and strong fee income, according to the group’s statement. The investment banking division recorded a net profit of RM116.2 million, an increase of 29% over the year.
The general insurance division recorded RM64 million in PAT, a 38.7% increase over the year, driven by better underwriting profits and lower claims, the group stated. General insurance fund assets increased by 10.2% while the claim ratio continues to improve, it said.
However, PAT for the life insurance division dropped by 18.2% y-o-y to RM42.2 million, pending stabilisation of business model refinements focusing on bancassurance business growth initiatives, better performing agencies and infrastructure improvements, the group said.
“Net interest margin improved quarter on quarter while the non-retail segment drove loans growth. We continue to strategically grow our Casa (current account savings account), alongside diversifying our overall funding profile which includes stable funds such as senior notes, medium-term notes and sukuk funding programmes,” said Cheah Tek Kuang, group managing director of AMMB in the statement.
According to Keith Wee of OSK Investment Research, although the group’s annualised loan growth at 5.6% y-o-y is slightly below the research firm’s target of 8% growth y-o-y, AMMB’s focus is on profitability rather than volume growth.
This strategy has paid off, reflected by improvement in the quarterly NIM to 2.85% in 3QFY12 compared with 2.71% in 2QFY12, he added.
For FY12, the group will remain cautious in the short term. “We will continue with our disciplined execution of strategic priorities but remain cautious of short-term downside risks,” said AMMB’s Cheah.
AMMB’s share price traded one sen higher to RM6.12 yesterday with just over three million shares traded. Year-to-date, the stock has increased by 5.5% from RM5.80 on Jan 3. For the 52-week period since Feb 14, 2011, it has dropped by 2.4% from RM6.27.
This article appeared in The Edge Financial Daily, February 15, 2012.
This is the group’s 19th consecutive quarter of profit growth. However, analysts who track the banking group said the latest quarterly earnings numbers are pretty much in line with market consensus.
“There is no surprise to the market,” said Alliance Research analyst Cheah King Yoong, adding that AMMB’s results continued to be supported by strong growth in non-interest income, stabilised net interest margin (NIM) and improving loan quality that resulted in lower loan loss charged.
For the nine-month period ended Dec 31, AMMB recorded an increase of 13.8% on net profit to RM1.17 billion above the same period last year.
AMMB said the double-digit growth of the group’s 9MFY12 earnings was driven by growth across most divisions, with the retail banking division leading the contributions.
The division recorded RM433.6 million in profit after tax (PAT), an increase of 3.6% from the same period last year, driven by lower impairments of non-performing loans.
Cheah Tek Kuang: We will continue with our disciplined execution of strategic priorities.
Most other divisions also recorded double-digit growth rates in net profit. The markets division’s — which involves Treasury business and trading of bonds — net profit jumped by 51.3% year-on-year (y-o-y) to RM235.1 million, while the corporate and institutional banking division recorded 35.5% growth in net profit to RM186.7 million.
Net profit for business banking increased by 17.8% to RM158.9 million, with higher income growth of 20.5% from diversified growth in asset base and strong fee income, according to the group’s statement. The investment banking division recorded a net profit of RM116.2 million, an increase of 29% over the year.
The general insurance division recorded RM64 million in PAT, a 38.7% increase over the year, driven by better underwriting profits and lower claims, the group stated. General insurance fund assets increased by 10.2% while the claim ratio continues to improve, it said.
However, PAT for the life insurance division dropped by 18.2% y-o-y to RM42.2 million, pending stabilisation of business model refinements focusing on bancassurance business growth initiatives, better performing agencies and infrastructure improvements, the group said.
“Net interest margin improved quarter on quarter while the non-retail segment drove loans growth. We continue to strategically grow our Casa (current account savings account), alongside diversifying our overall funding profile which includes stable funds such as senior notes, medium-term notes and sukuk funding programmes,” said Cheah Tek Kuang, group managing director of AMMB in the statement.
According to Keith Wee of OSK Investment Research, although the group’s annualised loan growth at 5.6% y-o-y is slightly below the research firm’s target of 8% growth y-o-y, AMMB’s focus is on profitability rather than volume growth.
This strategy has paid off, reflected by improvement in the quarterly NIM to 2.85% in 3QFY12 compared with 2.71% in 2QFY12, he added.
For FY12, the group will remain cautious in the short term. “We will continue with our disciplined execution of strategic priorities but remain cautious of short-term downside risks,” said AMMB’s Cheah.
AMMB’s share price traded one sen higher to RM6.12 yesterday with just over three million shares traded. Year-to-date, the stock has increased by 5.5% from RM5.80 on Jan 3. For the 52-week period since Feb 14, 2011, it has dropped by 2.4% from RM6.27.
This article appeared in The Edge Financial Daily, February 15, 2012.
