AMMB Holdings Bhd. · MYX:AMBANK

AMMB Holdings Bhd — 9M FY2010 Earnings Presentation

51 slides from AMMB Holdings Bhd's earnings presentation, Feb 8, 2010

  1. Slide 1: AmBank Group Results - Investors Presentation

    AmBank Group Results ‐ Investors Presentation AMMB Holdings Berhad 9M FY2010 Results 8 Feb 2010 Cheah Tek Kuang Group Managing Director Note : Based on FY2009 Investors Presentation Updated for 9MFY2010 financial results and other uptodate information

  2. Slide 2: Contents

    Contents • Key Messages 1. Executive Summary • Financial Fundamentals • What is Ahead • Summary 2. Financials Update • 9M FY2010 Group Performance • Business Outlook • Retail Bankingg 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Institutional Banking • Assura

  3. Slide 3: AmBank Group snapshot

    AmBank Group snapshot ƒ Proud banking heritage spanning over 30+ years ƒ A top 20 listed company on the Bursa Saham Malaysia (market cap ~RM15.07 billion) & rank 188 (global 1,000 banks by market cap) ƒ Top 4 largest listed banking group AmBank Group, Gross Loans : RM’bil 11.1% (market cap) in Malay

  4. Slide 4: Staying Ahead

    On track to deliver revised improved FY2010 earnings guidance ƒ Sound 9MFY2010 performance 9 Higher revenues Staying Ahead 9 Better‐than‐expected loans growth ƒ Higher FY2010 PATMI guidance (≥ RM950 mil) ƒ Key focus : Medium Term Aspirations (MTA) ƒ Sound Divisional profits Business Segment ƒ Invest

  5. Slide 5: Strong 9MFY2010 results, sets good foundations for FY2010

    Strong 9MFY2010 results, sets good foundations for FY2010 9MFY09 9MFY10 Change Q2FY10 Q3FY10 Underlying PATMI growth : 17.2% Profit after Tax & MI Performance 681.0 mil 766.9 mil 12.6% 240.2 mil 268.5 mil ROE 12.4% 11.9% ‐0.5% 11.1% 11.6% EPS 33.2 sen 35.4 sen 6.6% 32.9 sen 35.3 sen (basic, annualis

  6. Slide 6: What is ahead

    What is ahead … ƒ Increasing global optimism but risks linger ƒ Gradual Malaysian economic recovery Malaysia : Cautious but ƒ GDP : 2009 : ‐2.5% , 2010 +3.5% optimistic ⁺ Fiscal spending (RM67 billion) ⁺ Monetary policies, better‐than‐expected exports ƒ Progressive interest rate hike commencing earl

  7. Slide 7: Summary

    Summary 1. Top 5 Banking Group in Malaysia with diversified business fundamentals, supported by ANZ, our strategic partner and 1 of 11 AA rated banks in the world 2. Good 9M result sets the foundation for us to deliver above our earlier FY 2010 market guidance 9M – 3 Sound capital levels and executi

  8. Slide 8: AmBank Group Results - Investors Presentation

    AmBank Group Results ‐ Investors Presentation AMMB Holdings Berhad 9M FY2010 Results February 2010 Ashok Ramamurthy Group Chief Financial Officer & Deputy Group Managing Director AMBANK GROUP – INVESTOR RELATIONS ‐ PRESENTATION 9M FY2010 ‐ 8FEB2010 7

  9. Slide 9: Contents

    Contents • Key Messages 1. Executive Summary • Financial Fundamentals • What is Ahead • Summary 2. Financials Update • 9M FY2010 Group Performance • Business Outlook • Retail Bankingg 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Institutional Banking • Assura

  10. Slide 10: Sound profit growth, with conservative provisioning

    Sound profit growth, with conservative provisioning 9MFY10 vs REPORTED RM'mil 9MFY09 9MFY10 9MFY09 Business Performance Net int income 1,707.5 1,837.5 +7.6% Income : Fee and comm 393.5 474.8 +20.7% ƒ All Divisions recorded good growth in incomes Inv and trading (28.9) 253.6 +>100% ƒ Recovery in capi

  11. Slide 11: Improved PATMI

    Improved PATMI PATMI : Growth contributed by all business divisions except CIB 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 Business Performance Retail Banking Division 1 (61.9%) 489.5 520.1 +6.3% ƒ Income growth in Retail Banking attributed to focus on profitable Business Banking Division (11.9%) 93.2 100

  12. Slide 12: Lower NIM but improved non-interest income and CTI ratios

    Lower NIM but improved non‐interest income and CTI ratios REPORTED Business Performance 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 Lower NIM from : ƒ Reduced interest recoveries ƒ Change in asset mix towards lower Net Interest Margin 3.06% 2.92% ‐0.14% margin but stable corporate loans (NIM & NFR composi

  13. Slide 13: Balance sheet fundamentals looking good, with strong CASA growth

    Balance sheet fundamentals looking good, with strong CASA growth REPORTED 9MFY10 vs RM'mil 9MFY09 9M1FY10 9MFY09 Business Performance Balance Sheet ‐ Lending/Financing Gross loans/financing 59,676.1 66,311.7 +11.1% ƒ Loans growth to focus on profitable segments and targeted industry sectors Net loan

  14. Slide 14: Better asset quality & decreasing quantum of historical issues

    Better asset quality & decreasing quantum of historical issues Gross Gross NPLNPL / NPF / NPF by Segments by Segments 3.3 2.8 2.3 1.8 1.3 ƒ Stable NPL level despite 0.8 economic stresses from 0.3 3.05 1.73 1.68 1.65 1.78 1.28 0.64 0.50 0.34 0.30 0.00 0.00 0.36 0.29 0.09 0.09 the recent global ‐0.2 f

  15. Slide 15: Improving trends on NPL / NPF ratios & loan loss coverage

    Improving trends on NPL / NPF ratios & loan loss coverage Asset Quality Indicators 15 92.8% 75.1% 80% 67.3% 56.6% 10 39.3% 32.2% 36.7% 40% 7.60 6.06 6.14 0% 5.53 5 3.60 2.43 ‐40% 5.8 4.6 2.23 ƒ Proactive collection 4.3 3.2 activities 2.0 1.5 1.1 ‐ ‐80% RM'bil Gross NPL Net NPL Loan Loss Coverage ƒ T

  16. Slide 16: Lower new gross NPL / NPF formation, recoveries, write-offs

    Lower new gross NPL / NPF formation, recoveries, write‐offs and conversions % New Gross NPL / NPF to Gross Loans / Financing % Gross NPL / NPF Conversion to Gross Loans / Financing 1.80% 1.20% 1.20% 0.80% 0.60% 0.40% 0.00% 0.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % Recoveries to Avg Gro

  17. Slide 17: Portfolio rebalancing: Focus on viable segments and diversification

    Portfolio rebalancing : Focus on viable segments and diversification Gross Loan / Financing movement (before netting Islamic financing sold to Cagamas) Retail (66%) Business / Corporate (33%) Loan Composition % 36.4% 20.1% 3.8% 1.4% 1.4% 3.1% 16.9% 14.0% 1.8% 15.5% 4.3% 24.0 11.2 115.7% ƒ Retail : t

  18. Slide 18: Good growth momentum for Insurance and Funds Management

    Good growth momentum for Insurance and Funds Management RM’mil General Insurance Gross Life Insurance Gross Fund Assets Fund Assets Premium Premium 1,500 800 3,000 800 476.3 545.6 585.8 461.8 441.5 390.4 438.2 340.9 382.6 352.2 449.0 312.1 S 13.0% S 6.4% 1,000 0 2,000 0 2,300.3 982.2 2,034.8 500 922

  19. Slide 19: Sound income growth and conservative provisions

    Sound income growth and conservative provisions Total Group Level ‐ Reported TotalGroup Total GroupLevel Level ‐‐ Underlying Underlying Total Group Level ‐ Reported 1,000 1,000 S8.8% S 11.2% 800 890 800 891 838 818 814 765 802 757 600 600 ƒ Income : 400 400 439 performance 200 200 reflecting improve

  20. Slide 20: Diversified funding profiles

    Diversified funding profiles Customer Deposits Customer Deposits by Sources by Type CASA 1.7 1.4 Others 2 composition 12.6% 11.2% 10.5% 12.3% Total 42.4b 55.8b 64.1b 66.8b 3.0 3 28.1 Biz enterprises Government 13.1 Others 26.3 12.6 CASA grew 1.9 funds grew by 20.2 5.5% in 5.3 by 21.8% in 8.2 CASA 9M

  21. Slide 21: Balance sheet being progressively repositioned for rising interest rates

    Balance sheet being progressively repositioned for rising interest rates RM’bil Interest / Profit Rate Risk : 0 ‐ 12 months Interest / Profit Rate Risk : 1 ‐ 5 years 34.9 43.2 45.5 13.2 10.0 11.2 ‐58.8 ‐64.3 ‐65.9 ‐4.9 ‐5.1 ‐5.3 ‐4.0 ‐2.9 3.2 2.2 ‐8.6 8.5 Net mismatch ‐20.6 ‐19.0 ‐11.9 Net mismatch

  22. Slide 22: Improved earnings and returns ratios for 9MFY2010

    Improved earnings and returns ratios for 9MFY2010 9MFY10 / FY09 change K0.2% 9MFY10 / FY09 change K0.11% 9MFY10 / FY09 change K12.0% FY 09 / 08 change K0.2% FY 09 / 08 change K0.02% FY 09 / 08 change K12.1% ROE, % ROA, % EPS, basic sen/share REPORTED 11.5% 11.7% 11.9% 1.02% 1.04% 1.15% 28.2 31.6 35.

  23. Slide 23: Strong capital base to meet ensuing challenges and support growth

    Strong capital base to meet ensuing challenges and support growth Capital adequacy : AMMB Holdings Berhad Innovative Tier 1 Capital Securities issued (AmBank (M) Berhad) : FY2007 FY2008 FY2009 9MFY2010 * ƒ Approved program = RM500 mil Core equity 7.6% 7.7% 7.8% 7.8% ƒ Q1FY10 issuance = RM300 mil ƒ Q

  24. Slide 24: Strategic focus: Maintain viable growth and rebalancing focus

    Strategic focus : Maintain viable growth and rebalancing focus De‐risk Diversify De‐risk + Diversify High Differentiated Growth Moderate Low (ISLAMIC AND CONVENTIONAL BANKING) AMBANK GROUP – INVESTOR RELATIONS ‐ PRESENTATION 9M FY2010 ‐ 8FEB2010 23

  25. Slide 25: Strategy & outlook for FY2010 refined for improving market conditions

    Strategy & outlook for FY2010 refined for improving market conditions ƒ Maintain profitable growth & rebalancing focus via executing to our strategic agenda Overall ƒ Income diversification, cost management, deposit growth & enhanced risk disciplines key priorities for FY2010 ƒ Position business for

  26. Slide 26: On track to deliver revised improved FY2010 earnings guidance

    On track to deliver revised improved FY2010 earnings guidance Medium Term FY 07 FY 08 FY 09 9M FY10 FY 2010 Aspirations (MTA) Reported : Reported : Reported : Reported : PATMI ‐RM282.5 mil RM668.5 mil RM860.8 mil RM766.9 mil ~ 12% ‐ 15% ≥ RM950 mil Underlying : Underlying : Underlying : Underlying :

  27. Slide 27: Concluding remarks

    Concluding remarks 1. Top 5 Banking Group in Malaysia with diversified business fundamentals, supported by ANZ, our strategic partner and 1 of 11 AA rated banks in the world 2. Good 9M result sets the foundation for us to deliver above our earlier FY 2010 market guidance 3 Sound capital levels and e

  28. Slide 28: Contents

    Contents • Key Messages 1. Executive Summary • Financial Fundamentals • What is Ahead • Summary 2. Financials Update • 9M FY2010 Group Performance • Business Outlook • Retail Bankingg 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Institutional Banking • Assura

  29. Slide 29: Summary of divisional performance

    Summary of divisional performance Income Expenses 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 60.754.0 11.2 9.1 7.2 9.5 6.5 7.1 4.9 4.8 9.5 15.5 50.948.9 6.3 6.1 12.110.7 6.2 5.3 5.8 5.4 18.823.6 0% 0% ƒ Investment Banking Retail Business Investment Corporate & Assurance Group Retail Business Invest

  30. Slide 30: Retail Banking Division

    Retail Banking Division 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 ƒ Income growth underpinned by focus on profitable Income 1,309.4 1,442.9 +10.2% segments and risk pricing Expenses 480.5 533.0 +10.9% ƒ Expenses reflecting growing footprints and upgrade in risk tools, people cost and IT systems PBP 829.

  31. Slide 31: Business Banking Division

    Business Banking Division 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 ƒ Income growth impacted by lower interest recoveries Income 240.9 241.7 +0.3% ƒ Cost increase largely reflecting expansion in Expenses 59.7 66.2 +10.9% relationship team ƒ More vigilant measures in asset quality via PBP 181.2 175.5 ‐3.

  32. Slide 32: Investment Banking Division

    Investment Banking Division 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 ƒ Improvement in performance from pick‐ups in capital Income 154.6 253.9 +64.2% market and stock market Expenses 113.9 116.4 +2.2% ƒ Continue to strengthen business relationships and core expertise PBP 40.7 137.5 +238.1% Provisions (1

  33. Slide 33: Corporate & Institutional Banking Division

    Corporate & Institutional Banking Division 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 Income 140.9 189.1 +34.2% ƒ Diversified loans portfolio provided good support for Expenses 58.1 58.1 +0.0% income growth PBP 82.9 131.0 +58.1% ƒ Higher general provisions from larger loans base impacted profits Provisio

  34. Slide 34: Assurance Businesses

    Assurance Businesses 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 ƒ Higher income from larger fund assets, attributed to Income 105.3 128.9 +22.5% enhanced agency network and focus on product Expenses 54.6 59.1 +8.3% bundling and cross selling PBP 50.6 69.8 +37.8% Provisions 2.3 (0.2) ‐>100% Assurance’s As

  35. Slide 35: Group Operating Segments

    Group Operating Segments 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 Income 205.1 413.5 +101.7% Higher income from : Expenses 177.2 257.2 +45.1% ƒ Treasury and Markets (improved trading conditions) Å PBP 27.9 156.3 +461.2% ƒ Loan Rehab units (recovery rate as scheduled) Æ Provisions 34.3 199.7 +482.4% ƒ S

  36. Slide 36: Islamic Banking

    Islamic Banking 9MFY10 vs RM'mil 9MFY09 9MFY10 9MFY09 ƒ Strong results improvement attributed to business Income 409.7 502.1 +22.6% expansion in line with Malaysia’s drive on Islamic banking growth Expenses 162.5 183.5 +12.9% ƒ Underlying branding position remains strong and PBP 247.2 318.6 +28.9% e

  37. Slide 37: Overview of one-offs

    Overview of one‐offs Impacts from changes in accounting & provisioning policies, prior period catch‐ups, divestments, strategic investments & tax rate changes 9MFY 9MFY 2009 2010 Hedge accounting impacts Non core and prior period operating incomes, eg deposit insurance premium, divestment of general

  38. Slide 38: Contents

    Contents • Key Messages 1. Executive Summary • Financial Fundamentals • What is Ahead • Summary 2. Financials Update • 9M FY2010 Group Performance • Business Outlook • Retail Bankingg 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Institutional Banking • Assura

  39. Slide 39: +3.5% GDP forecast for 2010 / Lower interest rates forecast

    +3.5% GDP forecast for 2010 / Lower interest rates forecast from 2009 to mid‐2010 but rising thereafter Real GDP : Consumption Private Consumption (%YoY) % YoY Government Consumption (%YoY) 12.0 Real GDP (% YoY) 9.0 6.0 ƒ Extraordinary global challenges 3.0 in 2008 / 2009 0.0 ƒ Despite some resilien

  40. Slide 40: Stronger banking system asset quality to withstand rising delinquencies

    Stronger banking system asset quality to withstand rising delinquencies in 2009 / 2010 NPL Ratios in Banking System & Loan Loss Coverage Ratio ƒ NPL on a declining trend RM’bil % 94.4 ƒ Loan loss coverage 88.0 84.7 87.1 86.3 87.4 20.0 rising steadily with 80.2 exception of March 80.0 76.5 70.7 73.5

  41. Slide 41: Contents

    Contents • Key Messages 1. Executive Summary • Financial Fundamentals • What is Ahead • Summary 2. Financials Update • 9M FY2010 Group Performance • Business Outlook • Retail Bankingg 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Institutional Banking • Assura

  42. Slide 42: Banking Sector Share Price Movement / Target Price and Recommendations

    Banking Sector Share Price Movement / Target Price and Recommendations Banking Sector 140.0% Share Price Movement Index Movement (May 07 = 100) 120.0% S/T index change at close of 15 Jan 10 vs 18 May 07 100.0% AMMB S + 34.1% (RM5.25) PBB S + 20.9% (RM11.64) S + 13.3% (RM5.35) 80.0% RHBC CIMB S + 12.

  43. Slide 43: Shareholding structure

    Shareholding structure As at 31 December 2009 AmcorpGroup ANZ Funds Pty Employees Provident Bhd Ltd # Fund Board Public Ranked No. 18 (Malaysia – market 16.7% 23.8% 12.9% 46.6% capitalisation) & 188 AMMB (global – 1,000 banks Holdings Bhd by market capitalisation) : 100% 100% ƒ with market AMFB Hold

  44. Slide 44: ANZ - AmBank strategic partnership

    ANZ – AmBank strategic partnership ƒ ANZ is the only + Australian bank to have been in the Asian region of over 40 years Malaysia ƒ Strategic banking partnerships and presence across 14 ANZ has provided key resources and support countries Director Director Director Board Alex Thursby Dr. Robert John

  45. Slide 45: Significant positions in major business

    Significant positions in major business Business Investment Corporate & Retail Banking Institutional Assurance Islamic Banking Banking Banking Banking* #4 #5 #2 #5 #7 #6 #5 [General] [Life] Focus on profitability and Leverage on existing Stay relevant & protect Derisk, Diversify, To be the top 3 To

  46. Slide 46: Key group information highlights: customer service and delivery channels

    Key group information highlights : customer service and delivery channels ASPIRATIONS ƒ Increased customer satisfaction via integrated & seamless channels model ƒ Expand branch network and SSM footprint ƒ Further build and improve sales & service capabilities Number of Branches #4 387 367 249 Busine

  47. Slide 47: The AmBank brand: top-of-mind brand awareness & service performance

    The AmBank brand : top‐of‐mind brand awareness & service performance % 44 45 41 38 (BankC) 311 The AmBank brand : Top‐of‐Mind Brand Awareness & Service Performance 17 16 (Bank D) 225 11 12 (Bank E) 204 11 10 8 7 6 (Bank B) 86 7 (Bank A) 5 5 5 105 34 1 3 3 (AmB) 91 ƒ AmBank at top 5 TOM brand recall

  48. Slide 48: Ratings upgrade

    Ratings upgrade AmBank (M) Berhad Rating Agency Long‐Term Short‐Term Outlook Date RAM AA3 P1 Stable Nov 09 Instrument : ‐ RM500mil non‐cumulative perpetual capital securities A2 Nov 09 ‐ RM1.0bil negotiable instruments of deposits AA3 Nov 09 ‐ RM2.0bil medium term notes programme A1 Nov 09 ‐ RM500mi

  49. Slide 49: Research Coverage

    Research Coverage No Research House Analyst 1 Affin Investment Bank Tan Ei Leen 2 Alliance Research Sdn Bhd Soh Meng Hui 3 Bank of America – Merrill Lynch Research Kar Weng Loo / Melvyn Boey 4 BNP Paribas Securities (Singapore) Pte Ltd Ng Wee Siang 5 CIMB Investment Bank Berhad Winson Ng 6 Citi Inve

  50. Slide 50: Glossary / Disclaimer of Warranty and Limitation of Liability

    Glossary / Disclaimer of Warranty and Limitation of Liability Reported Performance Reported performance refers to the financial performance as reported in the audited financial statements and disclosed to the market One Offs One offs comprise those impacts on financial performance that arise from ch

  51. Slide 51: www.ambankgroup.com

    The material in this presentation is general background information about AmBank Group’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors

AMMB Holdings Berhad — 9M FY2010 Earnings Presentation on 6ix