KUALA LUMPUR: AMMB Holdings Bhd (Ambank Group) expects its net interest margin (NIM) to expand in the first quarter (Q1) of financial year 2025.
Ambank group chief executive officer Jamie Ling said this follows the improvement the bank has seen in April, which is the first month of its financial year.
The bank's NIM were compressed in the financial year 2024 (FY4) to 1.79 per cent versus 2.07 per cent a year earlier, causing its net interest income (NII) declining to 6.7 per cent year-on-year (YoY).
In terms of the NIM compression, Ling explained that it is about the average to the banking industry last year.
"Everybody saw that coming due to the interest rate adjustments around cost of funds. So I think it's probably going to be better in this Q1," he said at a press conference on AmBank's FY24 results here today.
Ambank group chief financial officer Shafiq Abdul Jabbar said the bank is internally relooking at deposit composition and considering different funding sources.
"Overall, the initiatives that we have taken in the new financial year has already seen some reduction in the cost of funds.
"So our expectations is, at least for the Q1, we should see an expansion of NIM. However, the market is still quite fluid," he said.
In terms of banking sector's outlook for 2024, Ling said the loans growth is expected to be between 4.0 per cent and 5.0 per cent this year, driven by the small and medium enterprises (SMEs) and mid-sized companies.
He noted that the bank posted a lower loan growth of 3.0 per cent in FY24 versus initial target at 6.0 per cent last year, dragged by a large loan repayment in corporate bank amounting to about RM1.4 billion, as well as some risk tightening policy in mortgages.
According to Ling, Ambank is projecting a slightly higher loan growth in FY25, supported by a resilient domestic demand and improving labour markets.
"We look at gross domestic products (GDP) of 2024 at 4.5 per cent. We always said we want to expand above the GDP growth and this year is around 1.25 times of GDP in terms of target loan growth," he said.
He said the bank would grow in line with the catalyst of Malaysia's economy policy, where the leading engine for lending would be.
As for retail, Ling said Ambank would be more selective particularly in terms of mortgages, while expanding the large infrastructure in wholesale banking segment.
"However, we did participate corporate financing but in bonds format. As for mortgage segment we need to step back to look at pricing policy and risks need for tightening exercise," added.