KUALA LUMPUR (May 29): AMMB Holdings Bhd is expecting a 6% loan growth for the current financial year ending March 31, 2024 (FY2024) versus 9% in the prior financial year, amid a high base effect and decelerating economic growth.

Group chief executive officer Datuk Sulaiman Mohd Tahir noted that the tapering loan growth in FY2024 was in line with the country’s slower gross domestic products (GDP) expansion. The projected economic growth is 4%-5% this year, compared with 8.7% last year.

“The slowdown [in FY2024 loan growth] is because we had this pent-up demand, and hence GDP was growing, and loan growth has [a] close relation with GDP growth. It is just that it is from a high base in 2023,” he told reporters at a briefing on Monday (May 29).

The group’s gross loan grew to RM130.2 billion in FY2023 from RM120.0 billion in FY2022.

Sulaiman also stressed that the banking group needs to expand its deposit base.

“The other thing we want to strengthen in FY2024, is to also focus on deposits, the focus is really on retail and SME deposits. Those are the deposits that we see a low rate of runoff, a little bit of stability there as corporations can be a little bit lumpy,” said Sulaiman.

Sulaiman noted that AMMB recorded a 6% growth in customer deposits for FY2023, with current account saving account (CASA) ratio reaching 37.4%, which he deemed the highest in the industry.

CASA accounts pay little to no interest, hence it is usually beneficial for a bank’s profitability as a result of lower cost of funds.

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 RM1.50 billion for FY2022, while net interest income grew 5.0% to RM2.28 billion from RM2.17 billion.

AMMB declared a dividend of 12.3 sen, bringing the full year dividend to 18.3 sen, translating to a payout ratio of 35%.