AmBank commended on continued feat in managing cost
KUALA LUMPUR: AMMB Holdings Bhd (AmBank) has been commended by analysts for the group’s continued feat in managing cost, following the release of its latest financial results.
In AmBank’s media release for the first half of financial year 2019 (1HFY19), the group reported that net profit after tax and minority interests (PATAMI) grew 5.5 per cent to RM695.7 million.
Thegroup’sexpenseshadreduced by 8.7 per cent to RM1.018 billion, driven by business efficiency initiatives while cost-to-income (CTI) ratio improved to 50.4 per cent from 57.2 per cent a year ago.
“We commend the management continued feat in managing cost, which was a pleasant surprise,” the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) said.
“We believe that this will allow the group to pace its needed investments in order to grow its value proposition in its focused areas.
MIDF Research has however noted that net interest margin (NIM) continues to be under pressure. It further noted that retail current and savings accounts (CASA) growth remains sluggish, up 3.6 per cent year on year (y-oy). compared to total deposits and non-retail CASA growth.
To recap, AmBank’s net interest margin (NIM) at 1.97 per cent in 1HFY19.
“Customer deposits grew 5.2 per cent year to date (YTD) to RM100.8 billion while CASA increased by eight per cent YTD to RM22 billion,” the group also reported.
“Retail deposit mix increased to 54.6 per cent of total customer deposits as compared to 51.5 per cent at March 31, 2018.
“CASA composition stood at 21.8 per cent and the group remains focused on driving CASA to improve its funding costs.”
Moving forward, the research arm would also like to see this CASA segment to grow at a faster rate in order to stabilise the NIM compression.
On another note, while loan traction moderated in the second quarter (2Q), the research arm of Kenanga Investment Bank Bhd (Kenanga Research) maintained its view of loans growing approximately six per cent for FY19E, underpinned by small and medium enterprises (SMEs), Mid-Corp and supported by the credit card space.
“While concerns over the protracted trade war prevail, risks for the domestic SMEs might not be so prevalent, as Malaysia might be an intermediary to bypass the tariffs imposed,” Kenagna Research said.
“Management guided for flattish NIM ahead mitigated by lower funding costs (from higher intake of SMEs and Mid-Corp ahead) and higher yielding assets, especially from wholesale banking.”