AMMB Holdings Bhd (AmBank) has posted lower revenue and net profit in its latest quarterly results amid lower net interest and Islamic banking income triggered by the Covid-19 pandemic.
AmBank posted a net profit of RM365.16 mil, or a 6.7% decline, for the first quarter ended June 30 (1Q20) compared to RM391.45 mil last year. Revenue clocked in at RM2.21 bil as opposed to RM2.39 bil, the banking group said in an Aug 26 bourse filing.
But AmBank said on a quarterly basis, the banking group fared well. Compared to the preceding quarter, net profit rose 47.5% on a quarter-on-quarter basis.
The narrowing margins for AmBank as well as its peers came on the back of “the COVID-19 pandemic and the resulting Movement Control Order (MCO),” AmBank group CEO Sulaiman Mohd Tahir said in a press statement today.
These developments, he added, led to the suspension of “many business operations and with rapid monetary easing, “this resulted in the narrowing of margins for banks.”
AmBank said that with further cuts in overnight policy rates (OPR), net interest margin compressed further. The banking group’s NII stood at 1.74%, down 13bps year-on-year (y-o-y).
Net impairment of RM49.9 mil was recorded for this quarter compared to a net recovery of RM32.5 mil a year ago.
Islamic banking income also dipped 8.5% to RM197 mil mainly due to net modification loss, said AmBank, adding that operating expenses fell by 3%, with net impairment charge of RM32.4 mil, up 3.8% year on year. Profit after zakat and taxation fell 15.7% to RM71.7 mil.
Moving forward, AmBank is projecting modest loan growth with a flat 2% compared to a 3.9% growth last year. But concerns remain when the moratorium ends on Sept 30.
“The easing of global lockdown should also help provide some positive impetus to trade and investment flows in the second half of 2020. At the same time, we are watchful on the emergence of credit risk post moratorium,” Sulaiman said.
AmBank’s shares were trading 3.74% higher at RM3.05 at 4.48pm, giving the banking group a market capitalisation of RM9.19 bil.
