KUALA LUMPUR: AMMB HOLDINGS BHD [] net profit for 1Q ended June 30, 2010 rose 42.6% to RM368.28 million from RM258.24 million a year ago, underpinned by higher revenues and lower allowances, and good loans and CASA (current account saving account) growth.

Revenue for the quarter rose to RM1.7 billion from RM1.57 billion a year ago, while earnings per share improved to 12.24 sen from 9.48 sen.

In a filing to Bursa Malaysia Securities, AMMB said the improvement in earnings for the reporting quarter was mainly attributed by increase in interest income by RM113.3 million, increase in net income from insurance business by RM28.3 million and a write back of RM10.2 million of impairment loss on financial investment as compared to a provision of RM41.6 million made in preceding year's corresponding quarter.

In addition, there was a write-back of RM300,000 for commitments and contingencies and RM600,000 for sundry receivables as compared to a provisions of RM300,000 and RM1 million respectively for the preceding year's corresponding quarter, it said.

AMMB said the improvement was however offset by a lower net income from Islamic banking business by RM40.2 million, higher other operating expenses by RM28.9 million and higher transfer to profit equalisation reserve of RM11.8 million as compared to lower transfer of RM1.9 million in preceding year's corresponding quarter.

The group's retail banking operations were the largest contributors to the Group pre-tax profit, reporting a pre-tax profit of RM236.2 million for the reporting quarter, followed by business banking operations of RM80.8 million, while treasury and markets contributed RM80.2 million for the quarter ended 30 June 2010.

Gross loans and advances expanded to RM67.4 billion to register an annual growth of 6.7%.

The growth was mainly attributed to financing of education and health, residential PROPERTIES [], manufacturing and CONSTRUCTION [].

Financing for purchase of transport vehicles accounted for 31.7% of total loans, followed by loans for residential properties was accounted for 18.8% of total loans.

As at June 30, 2010, the group's total assets stood at RM97.4 billion.

Meanwhile, the group's banking subsidiaries aggregated risk-weighted capital ratio (RWCR) stood at 16.7% as at 30 June 2010, compared with 15.8% as at March 31, 2010.

On its prospects for the current financial year, AMMB said recent positive indicators around the region point to greater optimism and an emerging recovery on the economic front, but potential volatility continues to linger.

The 10th Malaysia Plan (2011 ? 2015) recently announced by the government should provide opportunity for accelerating domestic economic growth. For 2010, current consensus view projects a gross domestic product expansion of circa 8%, it said.

AMMB said it would keep abreast with the progress of economic developments and continue to position its business for economic recovery domestically and regionally via leveraging on its strategic partner in banking, Australia And New Zealand Banking Group (ANZ).

The Malaysian banking operating environment is likely to benefit from the economic recovery, with higher lending growth and increase capital market activity , it said.

"However, Malaysian banks are expected to face greater competitive pressures as the financial sector progressively liberalises and with new entrants to the industry.

"The group remains focused on executing to its Medium Term Aspirations (MTA) to position itself as Malaysia's Preferred Banking Group with International Connectivity," it said.

AMMB said its strategic aspirations centre on developing a well diversified business portfolio to deliver sustainable growth via its universal banking group platform and best-in-class key enablers, implementing customer centric business models and expanding regional connectivity in collaboration with ANZ.

"The group will continue to accelerate growth in non-interest income and low-cost deposits, maintain high vigilance on asset quality, risk disciplines and cost management, as well as explore potential tactical in-fill acquisitions," it said.