KUALA LUMPUR: AMMB HOLDINGS BHD posted net profit of RM1.34bil for FY ended March 31,2020, down by 10.9% from RM1.50bil a year ago due to a net impairment charge after taking pre-emptive macro provision in the final quarter due to the Covid-19 pandemic.
However, its underlying net profit rose by 15.4%, adjusted for the gain on retail debt sales of RM285mil in FY19 and the macro provision of RM167.30mil in FY20.
AmBank said on Monday its revenue increased by 2.2% to RM9.32bil from RM9.12bil.
“Total income rose 7.8% to RM4.23bil, as a result of net interest income (NII) growth of 7.5% to RM2.77bil and non-interest income (NoII) growth of 8.3% to RM1.45bil, ” it said.
In the financial year, it managed to reduce its expenses by 1.1% to RM2.11bil, driven by operational efficiency initiatives.
AmBank explained that profit before provisions (PBP) increased by 18.3% to RM2.12bil.
There was a net impairment charge of RM336.1mil (FY19: net recovery of RM303.8mil), after taking pre-emptive macro provision of RM167.3mil in the fourth quarter of FY20, it said.
For the fourth quarter, its net profit fell by 46.1% to RM247.54mil from RM459.66mil a year ago due to the provision.
Its revenue declined by 5.1% to RM2.21bil from RM2.33bil a year ago. Its earnings per share was 8.23 sen compared with 15.28 sen. It announced a dividend of 7.3 sen versus 15 sen a year ago.
AmBank group CEO Datuk Sulaiman Mohd Tahir said with the end of the 2020 fiscal year, it marked the conclusion of AmBank Group’s Top 4 Strategy.
“Over these four years, we have made significant strides in transforming our business. The strong growth we have been able to record in our targeted segments and products is testament to the success of our strategy.”
“We also placed targeted emphasis on strengthening our digital capabilities and strategic partnerships. Equally, we have improved our operating leverage, rationalised our cost base and established a much firmer foundation for the group
“Clearly, we have a stronger balance sheet now and we are well-capitalised and more diverse in our liquidity profile compared to just four years ago, ” he added.
Sulaiman said AmBank group started FY20 strongly, achieving over RM1bil of core revenue in the first three quarters of the year, with higher net interest income and stronger trading and fee income.
However, the final quarter’s performance was impacted by the Covid-19 pandemic.
He pointed out operational efficiency continued to improve the group’s operating leverage, with cost-to-income ratio at 49.9%, from 54.3% a year ago. AmBank Group’s profit before provisions grew by 18.3%.
Sulaiman said due to the economic disruption resulting from the Covid-19 pandemic and amidst the decrease in global oil price, the group has set aside an additional macro provision of RM167.3mil in the fourth quarter to reflect a more challenging outlook.
“As a result, our net credit cost for the year increased to 30bps from a net recovery position last year.
“Higher net provisions impacted our profit after tax and minority interests (PATMI) which stood at RM1.34bil. However, included in the previous year’s result was a one-off gain from the retail NPL sale of RM285mil.
“In fact, our underlying PATMI of RM1.46bil was up 15.4% year on year, after normalising the one-off gain and the additional macro provision that was set aside as additional prudence.”
Sulaiman also said about RM65bil, or 61% of the group’s total loans in the retail and SME segments are under the Bank Negara’s repayment moratorium until Oct 1,2020.