KUALA LUMPUR (Nov 27): AMMB Holdings Bhd (KL:AMBANK), the country’s sixth-largest bank by assets, sharply raised its dividend payout after reporting a 7% rise in second-quarter net profit from a year earlier on interest income growth.
The bank declared a higher interim dividend of 10.3 sen per share, compared with six sen per share for the same period last year, the group said in a Wednesday exchange filing. A stronger capital position allowed the higher payout to shareholders, it noted.
“Our capital position has strengthened further” with RM1 billion in profit accretion, as well as from the adoption of the foundation internal ratings-based approach, said AMMB group chief executive officer Jamie Ling in a separate statement.
The common equity Tier 1 capital ratio — a measure of a bank’s capital strength based on the highest quality of regulatory capital — came in at 15.29% based on the new approach.
Net profit for the three months ended Sept 30, 2024 (2QFY2025) was RM500.57 million or 15.14 per share. Year-on-year, net interest income edged up 6.8% and Islamic banking income gained 41%, while non-interest income, such as fees and commissions, fell 24%.
Moving into the second half ending March 31, 2025 (2HFY2025), AMMB said it will focus on growing its loan book, particularly the small and medium enterprise (SME) as well as middle-sized corporate segments, while “repositioning its retail banking segment".
The group will also build and expand its “wealth management propositions, as well as developing efficient supply chain solutions for customers”.
For 1HFY2025, net profit was RM1 billion, up 18% when compared to the same period last year. Net interest income rose 8.3%, which offset a 7.2% decline in other operating income, while allowances for impairment on loans, advances and financing were down sharply.
“In line with Malaysia’s improving economic prospects, we remain optimistic about our FY2025 prospects,” said Ling.
AMMB's net interest margin, a measure of profitability from interest charged on loans after paying returns on deposits, improved 14 basis points to 1.93% at the end of September. Gross loans, advances and financing grew 2.8%, mainly led by business banking.
Total customer deposits fell 4.3%, as AMMB controlled its cost of funds. Time deposits were flat, while current-account-saving-accounts decreased nearly 13%.
In terms of asset quality, gross impaired loans — debts deemed unrecoverable as a percentage of total loans — were stable at 1.67%, while loan loss coverage stood at 102.1%, including regulatory reserves.
Shares of AMMB rose on Wednesday after the results were announced, up about 2% to RM5.45 as at 3.30pm. At that price, the group had a market capitalisation of RM18 billion.