Thursday, August 22nd, 2019

 

Wall Street falls after disappointing data, Fed policymakers dampen rate cut hopes

NEW YORK, Aug 22 — US stocks turned lower today as the first contraction in the manufacturing sector in nearly a decade and uncertainty about future interest rate cuts overshadowed an initial boost from upbeat retail earnings. IHS Markit said its…


Sterling jumps as traders cling to Merkel’s Brexit backstop comments

LONDON, Aug 22 — The pound was on course for its best day in months today after traders interpreted comments from German Chancellor Angela Merkel to mean that a solution to the Irish border problem could be found before Britain leaves the European…


China buys US soybeans after declaring ban on American farm goods

CHICAGO, Aug 22 — China snapped up a small volume of US soybeans last week after pledging to halt purchases of American farm products due to the escalating trade war between Washington and Beijing, US Department of Agriculture data showed today….


Minister: Asean makes progress in implementing AEC Blueprint 2025

MELBOURNE, Aug 22 — Asean has made considerable progress in the implementation of the Asean Economic Community (AEC) Blueprint 2025, said Minister of International Trade and Industry, Datuk Darell Leiking. He said economic integration is a dynamic…


Eurozone bankers warn of 'more protracted' slowdown

BERLIN, Aug 22 — Eurozone central bankers had worried that an economic slowdown hitting the bloc would drag on, as they prepared the ground for a new package of stimulus measures, according to minutes of their July meeting published today. In a…


Trump attacks, economic fears focus spotlight on Fed’s Powell speech

WASHINGTON, Aug 22 — When the leader of the Federal Reserve speaks, the world listens. But the relentless attacks by US President Donald Trump ensure Fed Chair Jerome Powell’s speech tomorrow will be subjected to an even more intense spotlight….


Volkswagen not interested in buying Tesla stake

BERLIN, Aug 22 — Volkswagen said today it was not interested in taking a stake in Tesla, denying a media report that CEO Herbert Diess wanted to buy shares in the US company to access its software and batteries technology. “The speculation about…


AMMB’s Q1 net profit up 12.6% on higher income

PETALING JAYA: AMMB Holdings Bhd’s net profit for the first quarter ended June 30, 2019 (Q1FY20) jumped 12.6% to RM391.46 million from RM347.59 million a year ago, underpinned by consistent net interest income (NII) growth, coupled with higher trading and insurance income.

Its revenue rose 10.1% to RM2.39 billion compared with RM2.17 billion in the previous year.

AmBank Group CEO Datuk Sulaiman Mohd Tahir (pix) said it recorded a higher return on equity at 8.8%.

“Total income rose 5.0% year-on-year from improved trading performance and better insurance income despite a subdued lending environment. At the same time, we continued to exert cost discipline with our cost-to-income (CTI) ratio further improving to 49.7%. This is a testament to our transformation strategy which has placed the group on a stronger footing to weather the more challenging operating landscape,” he said in a statement.

The bank’s NII increased 4.2% year on year (yoy), on the back of the expanded loans and deposits base. Non-interest income grew 6.4% to RM395.4 million, largely contributed by higher trading income and invest-ment income from group treasury and markets and general insurance.

The group is now in the third year of its BET300 efficiency programme and continues to record cost savings. which has allowed the group to reinvest some of these savings back into its strategic business streams as well as its digital capabilities and infrastructure.

It recorded a net recovery of RM32.5 million in Q1FY20 compared with an impairment charge of RM7.0 million in the previous year, mainly driven by a net write-back of provision for corporate loans. The group’s gross impaired loan ratio stood at 1.66% (FY19: 1.59%), with loan loss cover at 111.5%.

Gross loans increased 2.5% yoy, though contracted 1.0% year to date to RM100.8 billion, mainly due to corporate loan repayments and decline in auto loans.

Total customer deposits stood at RM102.8 billion, an increase of 4.2% yoy but down 3.9% year to date. The group’s current accounts and savings accounts (CASA) stood at RM23.1 billion, with CASA mix at 22.5%.

AMMB said the group’s capital position is adequate with common equity tier-1 ratio at 11.9% and total capital ratio at 15.4%.

Sulaiman said while Bank Negara Malaysia’s benchmark rate is expected to remain unchanged at 3% for the rest of the year, there is still room for the central bank to reduce the Overnight Policy Rate by 25 basis points in 2H2019 in a move to support domestic demand and in tandem with global monetary policy. In tandem with a moderate economic outlook, the banking system’s loan growth is envisaged to be around 4.6%.

Sulaiman said as part of its digital roadmap, AMMB will be rolling out more such initiatives.


RAM: Central banks’ dovish stance to weigh on Malaysian bond yields

PETALING JAYA: Domestic bond yields continue to face downward pressure from the prospect of a low global interest rate environment and consequent search for yield, according to RAM Ratings.

The rating agency highlighted that over the past few months, a number of central banks have lowered their policy rates, which have tilted investors’ interest rate expectations downwards.

“As widely anticipated, the Fed had cut its policy rate band by 25 bps on 31 July 2019, albeit assuring investors that the cut does not mark the beginning of an easing cycle.

“Nevertheless, the market has so far priced in another rate cut in September amid global growth concerns,” it said in a statement today.

RAM said government bond issuance activity stayed robust in July with total Malaysian Government Securities and Government Investment Issue of RM10.5 billion against RM8 billion recorded in June.

Bid-to-cover ratios at government auctions are consistent with the robust demand seen in July, with all issues that were up for tendering achieving a ratio of above two times.

RAM said the shift in the interest rate landscape had sparked a renewed hunt for yields among foreign investors.

“Increased demand for higher-yielding bonds had led to a net inflow of RM5.7 billion into the Malaysian bond market in July versus RM6.6 billion in June.”

As a result, it led to a broad-based retreat in yields across the maturity spectrum and rating bands in July.

“We do not envisage this downward pressure to subside in August as investors remain on the lookout for more rate cuts by the Fed next month,” said the rating agency.

However, the prospect of a global growth slowdown and the fear of a looming recession signalled by an inverted US treasury yield curve, has the potential to dampen investor appetite for emerging market assets.

But, RAM said, the impact on Malaysia so far has been largely confined to the domestic equity market.

It noted that the FTSE Bursa Malaysia Composite Index has been on a downward trend since the start of July, while demand for fixed-income instruments led to a bond price rally during the month.

“Prevailing uncertainties and growing concerns over global growth momentum pave a path for further loosening of global liquidity conditions going forward. The hunt for yield in the emerging market assets will continue so long as an attractive yield differential is maintained, thus providing a counter to potential

rationalisation of passive investor flows in the market,” said RAM head of research Kristina Fong.


US jobless claims fall in sign of labour market strength

WASHINGTON, Aug 22 — The number of Americans filing applications for unemployment benefits fell sharply last week, suggesting the labour market was holding firm despite a manufacturing slowdown and concerns the economy is on a path toward…