KUALA LUMPUR: AMMB Holdings Bhd has reached a milestone in its four-year Focus 8 strategy, by delivering its targeted 10% return on equity (ROE) in the third year of the plan, said its group chief financial officer Jamie Ling.
Furthermore, AMMB managed to restore its dividend payout to the level before its hefty RM2.83 billion settlement in 2021 with the Ministry of Finance in relation to the bank's role in 1Malaysia Development Bhd (1MDB) scandal, Ling noted.
“Clearly, FY2023 was a strong year,” he said, “In terms of delivering better return, we achieved that, at 10% ROE, and that resumption of more-normal dividend payout of 35% is a milestone for us after all our trials and tribulations to rebuild the balance sheet after the (1MDB) settlement year”.
AMMB declared a dividend of 12.3 sen, bringing the full year dividend to 18.3 sen, translating to a payout ratio of 35%. The industry average of ROE is about 10.9%.
Speaking at the financial results briefing, Ling stressed that AMMB's credit quality remains “very solid”, with a non-performing loan (NPL) ratio of 1.46% versus industry average of 1.75%.
“We are below industry, but we are not letting our guard down given the conditions are also still very challenging for certain segments. We are carrying RM461 million of overlays, these are provisions or buffers for any unknown.
“That represents over one quarter of our profit, I think those are some of the safeguards that we put in place to make sure we emerge from the post-Covid era with enough buffers for the unknown,” he said.
AMMB reported a 9.2% increase in its quarterly net profit for the fourth quarter ended March 31, 2023 (4QFY2023) to RM427.91 million, from RM391.75 million a year ago. However, its net interest income dropped 2.4% to RM521.79 million from RM534.44 million.
This brought full FY2023 net profit to RM1.74 billion, up 15% from RM1.5 billion for FY2022, while net interest income grew 5.0% to RM2.28 billion from RM2.17 billion.
Shares of AMMB gained two sen at RM3.51, giving it a market capitalisation of RM11.63 billion. The banking stock has fallen 15% year-to-date.
Source : The Edge Markets