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Results Note – AMMB Holdings (ADD, upgrade) - Robust non-fund based income boost earnings




Affin Hwang Investment Bank Bhd


17 Feb 2014





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9MFY03/14 net profit in-line with AFFIN and consensus estimate AMMB reported a 9MFY03/14 net profit of RM1,329.6m (+9% yoy). Annualized, this was within consensus estimate and our forecast. There were no major earnings surprises during the 9-month period. AMMB’s net profit was bolstered by non-fund based income, i.e. on the back of a significant 3-fold jump in contribution from the insurance division (arising from the merger with Kurnia Insurans) and a 7.8% growth in non-interest income. Credit recoveries continued to underpin group earnings, notwithstanding the provision of RM40m set aside by AmFraser Securities’ in 2QFY03/14. Overall, the retail banking division (+15.2% yoy) contributed to the bulk of group earnings or 38% of net profit, followed by business banking (21%). No dividend was proposed in the quarter (3QFY03/13: - nil-). Ytd, dividends amounted to 7.2 sen against our FY03/14 forecast of 24 sen. We maintain our earnings forecasts for FY03/14-16.

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