28/05/2024 12:10 PM

KUALA LUMPUR, May 28 (Bernama) -- AMMB Holdings Bhd (AmBank) is targeting a five to six per cent loan growth for the financial year ending March 31, 2025 (FY2025).

Group chief executive officer Jamie Ling said the bank is projecting a slightly higher loan growth compared to the three per cent achieved in FY2024, supported by resilient domestic demand and the improving labour market.

“We always said we want to grow above the GDP growth and when we look at the gross domestic product (GDP) for 2024 at 4.5 per cent, I expect we should grow around 1.25 times of GDP for FY2025 in terms of target loan growth,” he told reporters during its FY2024 results briefing here Monday.

He also noted that the FY2025 loan growth would be driven by middle market companies and small and medium enterprises, he said.

“On the catalyst of the industrialisation of Malaysia’s economy, Ambank would grow in line with that policy direction as that is where the leading engine for lending is going to be.

“As for retail, it would be more selective particularly in terms of mortgages, while for the large infrastructure and construction projects that the government has launched, that will be for the wholesale and business banking segment,” he said.

Meanwhile, for FY2024, he pointed out that AmBank posted a lower loan growth of three per cent compared with what it had earlier targeted, which was about six per cent.

The loan growth was largely dragged by a large loan repayment in corporate banking in FY2024 of about RM1.4 billion plus some risk tightening policy in the mortgage segment which resulted in slower loan approvals.

“On corporate lending, we did participate in refinancing but in the bond format. For the mortgage segment, we need to step back and look at mortgage pricing for profitability and also looking at mortgage quality in terms of our risk factors,” he said.

Looking at the net interest margin (NIM) compression for FY2024, he said, it was not unique to AmBank as it had been experienced by all banks in Malaysia.

AmBank's NIM, he said, was compressed to 1.79 per cent in FY2024, which is about the banking industry average last year versus 2.07 per cent the previous year, causing its net interest income (NII) to decline by 6.7 per cent year-on-year.

However, Ling said he expected its NIM to expand in the first quarter (1Q) of FY2025 following the improvement the bank had seen in April, the first month of its financial year.

Group chief financial officer Shafiq Abdul Jabbar said the bank is also internally relooking at deposit composition and considering different funding sources to remain fluid.

“Overall, the initiatives that we have taken in the new financial year has already seen some reduction in the cost of funds.

“So at least for 1Q, we expect to see an expansion of NIM,” he  added.


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