Investment banking suits AMMB

ANZ's Malaysian associate, AMMB, is counting on growth in its investment banking and funds management activities to drive profit and to offset a squeeze on margins.

AMMB Holdings yesterday reported a net profit of RM1.51 billion for the financial year to March 2012. The profit was within guidance of a rise of between 10 per cent and 12 per cent for the year.

Leong Hon Sze, an analyst with Malaysian stockbroker ECM Libra, wrote in a note, following a briefing, that "AMMB… expects interest margins to remain under downward pressure.

"Its strategy is thus to grow loans at below industry-average, but compensate this from non-interest income on the back of ETP (Malaysian government economic transformation projects) funding requirements."

These requirements are related to the presumed advisory and funding opportunity that will accompany the somewhat grandiose projects proposed by the administration of Prime Minister Najib Razak under the government's latest 10-year plan.

Over the last year, AMMB did manage to grow its earnings from investment banking. These increased 30 per cent, to RM165 million, due to "higher income in debt capital markets, equity derivatives, funds management and private banking."