Ammb Holdings Bhd. · MYX:AMBANK

Ammb Holdings Bhd — H1 FY2017 Earnings Presentation

57 slides from Ammb Holdings Bhd's earnings presentation, Nov 21, 2016

  1. Slide 1: H1FY2017 Results Investor Presentation

    H1FY2017 - Results Investor Presentation 21 November 2016 V23 H1FY2017 Results – Investor Presentation

  2. Slide 2: Content

    Content H1FY2017 Quick take on our results H1FY2017 - GCEO • H1FY2017 progress Results • Strategic priorities • Business heartbeat Investor Presentation GCFO • Financial highlights • 2HFY2017 expectations Supplementary information • Group performance & financial details • Divisional performance • Ec

  3. Slide 3: Quick take on our Q2FY2017

    Quick take on our Q2FY2017 Gaining Momentum on Strategic Initiatives • NIM stable at 1.93% for half year though ended quarter at 1.92%, reflecting timing Financial difference between the downward revision in base lending rates and repricing of fixed Highlights: deposit rates • PATMI up 9.2% QoQ unde

  4. Slide 4: Performance indicators

    Performance indicators RM’ mil QoQ YoY Forecast Progress Q2FY17 H1FY17 Growth Growth FY17 Status Total Income 954.2 1,905.5 0.3% 0.4% Expenses 524.5 1,060.0 2.1% 7.4% Allowances (42.4) (106.1) 33.4% 48.5% PATMI 352.6 675.6 9.2% 6.4% Circa 5% ROE 9.0% 8.7% 0.5% 1.1% Circa 8.5-9% CTI 55.0% 5

  5. Slide 5: H1FY2017 … what's progressing well

    H1FY2017 … what’s progressing well Performance highlights: • Improving profitability with PATMI up 9.2% QoQ underpinned by higher non interest income and lower expenses • Focused on stabilising NIM via proactive management of COF & progressively growing loans and building up CASA in new and preferre

  6. Slide 6: Recap: AmBank Group's Top 4 Aspirations

    Recap: AmBank Group’s Top 4 Aspirations Our aspirations by the year 2020 How we measure ourselves in key segments To be Top 4 in each of our 4 focus To be Top 4 in each products (Cards & of our 4 growth Financial metrics Merchants, segments (Mass Transaction Banking, Affluent, Affluent, SME, Mid Cor

  7. Slide 7: Our Strategic Priorities

    Our Strategic Priorities Considering growth areas, white spaces and our capabilities Attain market leadership Firing up new growth Optimise current in key segments & Setting up for success engines engines Strategic Priorities products  Digital transformation –  Build up Transaction channels, proce

  8. Slide 8: Wholesale Banking Heartbeat

    Wholesale Banking Heartbeat … • 35 dedicated SME branches completed with clustered SME branches rolled out • Focusing on strategic tie-ups and new solutions for strong pipeline growth SME • Launched SME specific products for Trade and Contract Financing (Aug’16) • Developed remote relationship manag

  9. Slide 9: Retail Banking Heartbeat

    Retail Banking Heartbeat … • Stronger net acceptance and increasing MRTA income • Focus on secondary market to drive disbursements Mortgage • Anti-attrition pricing matrix to retain customers • Reducing cost to serve through auto debit arrangements • Capitalise on faster market share growth of new n

  10. Slide 10: H1FY2017 – Financial Highlights

    H1FY2017 – Financial Highlights PATMI 9.2% higher QoQ • Higher trading and investment income • Costs managed tightly, CTI improved to 55.0% (Q1FY17: 56.3%) PATMI 6.4% lower YoY • Top line flat reflecting YoY average margin compression • Expense growth reflecting higher personnel and business operati

  11. Slide 11: H1FY2017 … what remains a short-term task

    H1FY2017 … what remains a short-term task 1 2 3 4 5 Asset quality Improving NIM concern in O&G Low topline in Retail’s Increasing CASA Perception of and non- growth targeted penetration “low capital” residential segments property sectors Balancing loans Accelerate payroll Adequate to growth & NIM Re

  12. Slide 12: Improved NoII and lower provisions, offset by YoY NIM compression

    Improved NoII and lower provisions, partially offset by YoY NIM compression YoY QoQ (%) (%) RM’ mil H1FY17 1HFY16 H1FY16 85% 15% 722.0 Net Interest Income 1,114.6 IntInc 1,232.7 10 3 Non-Interest Income 790.9 666.0 NII E19 5 Total Income 1,905.5 1,898.7 TInc ≈ ≈ Expenses 1,060.0 986.8 Exp 7 2

  13. Slide 13: Strong NoII partially offset by subdued NII

    Strong NoII partially offset by subdued NII as YoY NIM compression impedes income growth Net Interest Income (RM’mil) YoY growth Composition Non-interest income / Total income: Income (%) (%) breakdown H1FY16 – RM666.0m / 35.1% H1FY17 – RM790.9m / 41.5% H1FY16 1,232.7 NII - Retail • RB’s NII lower f

  14. Slide 14: NIMs stabilised reflecting release of higher-cost deposits

    NIMs stabilised … reflecting release of higher-cost deposits Quarterly net interest income (RM’mil) & NIM NIM QoQ trend vs. industry movement FY16 NIM : 2.02% FY15 NIM: 2.43% 5.14% 5.15% 5.08% 5.07% 5.01% 4.92% 2.54% 2.45% 2.38% 2.33% Gross Yield YTD FY17 NIM : 1.93% 2.12% 2.11% 4.60% Industry Avg.

  15. Slide 15: Asset quality remains well positioned

    Asset quality remains well positioned Gross impaired loans ratios Credit costs tracking better than industry average Retail Wholesale Group Industry since FY14, benefiting from earlier portfolio de-risking, 2.51% consistent credit underwriting standards and 2.43% rebalancing strategy 2.17% 2.01% 2.2

  16. Slide 16: Actively managing deposits to reduce COF

    Actively managing deposits to reduce COF Deposit and CASA balance (RM’ bil) Deposits QoQ growth:  4% • Managing down higher cost deposits CASA QoQ growth:  14% CASA Fixed deposits CASA Composition (%) • Sustaining CASA through higher cash 24.5% 21.9% 20.5% 20.3% 20.9% 20.9% 20.4% 20.7% management

  17. Slide 17: Slower loans growth and higher corporate repayments

    Slower loans growth and higher corporate repayments, Mortgage outperforming Market Gross loans movement (RM’bil) YTD growth Composition FY16 87.9 (%) (%) • Trade Finance – benefiting from E 2 7 higher utilisation Trade Loans 87.9 0.2 0.2 E 2 15 SME 88.0 • Corporate lending decreased due Corporate

  18. Slide 18: Adequate capital levels with optimisation opportunities

    Adequate capital levels with optimisation opportunities RWA/Total assets RM’ bil 1 Total Assets RWA/Total Assets Industry 77.8% 75.8% • Group capital ratios remain adequate, 72.4% 72.7% 71.5% 71.2% whilst we are optimising capital structure and RWA efficiency for Basel III FHC @ 64.1% 62.2% 63.7% 62

  19. Slide 19: Expectations for 2HFY2017

    Expectations for 2HFY2017: 1. Ongoing focus on balancing loans growth, asset quality and margins 2. Active margin management 3. Targeting negative expense growth through tight control, with increasing benefits from efficiency agenda 4. Expecting stronger performance in targeted segments, with moment

  20. Slide 20: Performance guidance for FY2017 - FY2018

    Performance guidance for FY2017 - FY2018 Reported Capital ROE1 PATMI1 CTI Dividend Proforma ±1% Circa CET 1: 8.5 - FY17 5% <57% 9% 10% Growth Circa 40% payout Circa Circa Total: FY18 10% 50% 10% Growth 15% Refers to FHC CAR 1. Based on projected 2016 GDP growth of 4%, revised down from 4.2% 20 H1FY2

  21. Slide 21: Group Performance

    Group Performance H1FY2017 Results – Investor Presentation

  22. Slide 22: Quarterly performance reflects initial progress on strategic initiatives

    Quarterly performance … reflects initial progress on strategic initiatives PATMI (RM’ mil) & ROE (%) Net lending (RM’ bil) Loans excluding Auto Finance QoQ growth:  0.3% QoQ growth (excl.AF):  1.2% PATMI ROE Auto Finance PATMI QoQ growth:  9.2% 84.7 85.7 86.2 84.1 85.3 85.4 86.5 85.8 86.1 ROE QoQ

  23. Slide 23: Yearly performance underpinned by higher NoII & lower provisions

    Yearly performance underpinned by higher NoII & lower provisions PATMI (RM’ mil) & ROE (%) Cost to income ratio and expenses growth (%) PATMI Reported PATMI ROE CTI% Expenses growth% CTI: Expenses: CAGR FY11-16: 0.6%/ 0.2%¹ CAGR FY11-16: 1.0%/ 0.9%¹ PATMI Underlying CAGR FY11-16:3.7%/3.5%1 CAG

  24. Slide 24: Improved growth momentum from Wholesale Banking and General Insurance

    Improved growth momentum from Wholesale Banking and General Insurance Profit before provision (RM’mil) • Wholesale Bank’s higher profits driven by debt Reported Underlying capital markets syndication and stronger fixed YoY growth:  7.3% 1 income trading 2,566.8 • Retail Banking impacted by YoY marg

  25. Slide 25: Higher NoII from trading and insurance

    Higher NoII from trading and insurance Non-interest income (RM’mil) Non-interest income by lines of business (YoY) YoY growth:  18.7% QoQ growth:  5.1%  45% Fee Trading & Investment Insurance Others  94% 405.3 Others 5% Investment 385.6 Banking 15% 37.5 13.6 347.5 339.3 24.0 318.6 311.7 84.2 49.

  26. Slide 26: Current outlook requires active monitoring

    Current outlook requires active monitoring Loan loss coverage vs. industry 129.3% 131.5% 127.4% • Lower loan loss coverage reflecting exposure to several 114.6% Adjusted AmBank non-residential property 104.9% 103.0% Group 1 107.0% 99.4% accounts, which most are well 102.2% 104.5% collateralised 98.8

  27. Slide 27: Asset quality reflects consistent credit underwriting standards

    Asset quality reflects consistent credit underwriting standards Impaired loans (RM’ mil) Provision charges/(Writebacks) (RM’ mil) Gross Impaired Loans GIL Ratio Performing Loans Non-Performing Loans Recoveries Others 1.98% 1.86% 1.94% -37.5 1.79% 30.4 -209.5 1.64% -71.5 -106.1 1,680.5 1,662.1 1,700.

  28. Slide 28: Loans by sector vs. industry

    Loans by sector vs. industry Loans by sector Loans by purpose Sep’16 YTD Composition RM’ bil growth Purchase of transport 20.9 -5.2% 23.9% vehicles Loans Working capital 25.8 -1.2% 29.5% composition 4.5% 3.3% 10.0% 0.5% 4.6% 5.3% 1.8% 3.9% 9.4% 2.2% 53.9% 0.6% Purchase of resi property 20.2 +10.4% 2

  29. Slide 29: Deposits movement

    Deposits movement AmBank Group (RM’ bil) Deposits Composition Sep'16 (AmBank Group) YTD  2.1%  8.3%  29.6%  7.9% FCY growth 3% Current Account & Savings Account 21% 83.2 63.7 Term Deposits 76% 17.1 2.4 CASA CASA Term Term Deposits Deposits FCY FCY& &Others Others Total TotalDeposits Deposits Dep

  30. Slide 30: Managing expenses to create headroom for growth initiatives

    Managing expenses to create headroom for growth initiatives Expense growth driver (RM’ mil) Expenses: CTI ratio: 535.5 YoY:  7.4% Q1FY17: 56.3% 22.3 QoQ:  2.1% Q2FY17: 55.0% 1.4 524.5 1.9 3.0 1.1 7.0 520.1 0.6 Q1FY17 Personnel Opex Sales & Marketing Regulatory Projects Q2FY17 pre- Regulatory & New

  31. Slide 31: Diversified funding structure, prudent liquidity management

    Diversified funding structure, prudent liquidity management Funding composition vs. industry Industry FY10 FY13 FY15 FY16 H1FY17 Ave1 • Conservative stance on liquidity Equity & debt capital 15% 14% 15% 16% 16% 15% management with LCRs >100% for all Customer banking entities deposits 77% 75% 74% 73%

  32. Slide 32: Divisional Performance and Business Insights

    Divisional Performance and Business Insights H1FY2017 Results – Investor Presentation

  33. Slide 33: Retail banking overview

    Retail banking overview Total income and loans by line of business (RM’ mil) Wealth Sales (RM’ mil) QoQ growth:  52.7% YoY growth:  36.8% 736 Total income  54% 538  16% 482 429 436 Others 393 Wealth 4%  19% 2% Auto 22% Auto Others 44% Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17 Q2FY17 2% Deposits  2% S

  34. Slide 34: Retail banking uplift driven by recoveries

    Retail banking uplift driven by recoveries QoQ PAT (RM’ mil) • Top line growth impacted by NIM compression QoQ growth:  26.5% YoY growth:  14.7% FY15: RM419.9 mil FY16: RM463.8 mil H1FY17: • QoQ Mortgage growth partially offset by RM177.8 mil contraction in Auto Finance from weaker vehicle sales •

  35. Slide 35: Retail banking

    Retail banking Income Statement (RM’mil)        YoY growth  11.3%  15.0%  11.9%  4.7%  34.2%  >100%  14.8%  15.2%  14.7% Net Interest Non-Interest Total Provisions/ RM’ mil Expenses PBP PBT Tax & Zakat PAT Income Income Income Allowances H1FY17 561.8 119.7 681.5 463.8 217.7 (15.2) 23

  36. Slide 36: Retail banking – Distribution channels

    Retail banking – Distribution channels Nationwide Branch Network Branches ATM RO1 Perlis 1 4 Perlis Kedah 6 29 1 Kedah Pulau Pinang 14 49 1 Kelantan Pulau Pinang Perak 18 47 1 Terengganu Sabah Labuan Selangor 38 236 2 Perak Brunei Darussalam Kuala Lumpur 23 123 3 Pahang Selangor Putrajaya 1 3 Kuala

  37. Slide 37: Wholesale banking overview

    Wholesale banking overview Total income and total assets by line of business (RM’ mil) Unit Trust – FUM (RM’ bil)  33% 21.0 21.5 21.8  12% Others 19.0 19.4 18.7 3% Funds Management 13.4 8% 11.3  13%  89% Wholesale Banking Wholesale Capital & Coverage Equity Banking Coverage Others 65% Markets 3%

  38. Slide 38: Wholesale banking reflecting higher fixed income

    Wholesale banking reflecting higher fixed income QoQ PAT (RM’ mil) • Total income and NoII increased 9.5% and 40.9% QoQ growth:  0.7% YoY growth:  12.3% YoY respectively from primary sale of sukuk and H1FY17: stronger fixed income trading (lower yield curve FY15: RM987.4 mil FY16: RM816.7 mil RM47

  39. Slide 39: Wholesale banking

    Wholesale banking Income Statement (RM’mil) YoY growth  8.7%  40.9%  9.6%  9.0%  9.8%  >32.1%  13.2%  16.1%  12.3% Net Interest Non-Interest Total Provisions/ RM’ mil Expenses PBP PBT Tax & Zakat PAT Income Income Income Allowances H1FY17 414.6 371.8 786.4 270.4 516.0 -109.9 625.9 146.4 479

  40. Slide 40: General insurance higher from improved historical claims experience

    General insurance higher from improved historical claims experience YoY PAT (RM’ mil) YoY growth:  8.0% 256.4 • General Insurance posted a higher profit underpinned by the release of claims reserve 194.0 from better claims experience. 175.0 • Gross premium recorded a marginal increase 116.2 110.3 1

  41. Slide 41: AmGeneral Insurance 3-Year Strategy Overview

    AmGeneral Insurance 3 - Year Strategy Overview Where we want to To be the Most Trusted Insurer be by FY18/19?: in Malaysia How will we grow our businesses in FY16/17 to achieve our FY18/19 goals? Priorities: 1. Be the No.1 Motor Insurer 3. Grow in Select Commercial Lines 2. Lead in Select Personal L

  42. Slide 42: Insurance and Group Funding & Others

    Insurance and Group Funding & Others Income Statement – Insurance (General & Life/Takaful) (RM’mil) YoY growth  27.4%  21.5%  34.5%  81.5%  37.0%  >100.0%  20.5% H1FY17 PAT (composition of Group) 18% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances H1FY17 328.8 170

  43. Slide 43: Roadmap & Strategy Focus

    Roadmap & Strategy Focus: 2015 - 2016 2017 2018 and beyond Focusing on customer- centricity, AmMetLife Revitalise Distribution Accelerate Customer-centric wants to be the Strengthen Business` Organization preferred life insurer of Foundation choice for all Malaysians Multi-channel distribution Stren

  44. Slide 44: Islamic Banking

    Islamic Banking Income Statement (RM’mil) YoY growth  0.9%  19.4%  21.0%  75.7%  5.7%  3.0%  6.5% H1FY17 PAT (composition of Group) 17% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PATZ Allowances H1FY17 443.1 283.9 159.2 10.7 148.5 32.7 115.9 H1FY16 439.4 237.8 201.5 44.0 15

  45. Slide 45: Funding sources and maturity profile

    Funding sources and maturity profile Funding diversity underpinned by LDR1 of 89.6% CASA: RM18.3 billion Fixed deposits: RM65.0 billion Supplemented by term funding & debt capital AMMB Holdings Berhad AmBank (M) Berhad AmBank Islamic Berhad AmBank (M) Berhad & AmBank Islamic 1. RM2b Medium Term Note

  46. Slide 46: Strengthening fundamentals: Governance, Risk & Compliance

    Strengthening fundamentals: Governance, Risk & Compliance Credit Board Operations Market & Technology Senior Management Key Capital & Risk Insurance Liquidity Underwriting Group Compliance & Risk Legal & Reputation Regulatory 46 H1FY2017 Results – Investor Presentation

  47. Slide 47: ANZ & IAG

    ANZ & IAG Value proposition Value proposition • Seconding ANZ staff into key roles • Involved in the management of AmGeneral Insurance, • Providing technical expertise offering skills transfer, partnership and relationship models • Support new product development of IAG • Two-way customer referrals

  48. Slide 48: Shareholding structure & franchise value

    Shareholding structure & franchise value 23.8%1 AmCorp 13.0% EPF 15.1% Others 48.1% As at 30 September 2016 AMMB Holdings Berhad Life Assurance & Retail Banking Wholesale Banking Islamic Banking General Insurance Takaful 100% AMAB Holdings Sdn Bhd 100% AmBank (M) Berhad 51% AmGeneral 49% 100% MBF Ca

  49. Slide 49: Ratings, share price movement, target price and recommendations

    Banking sector share price movement/target price and recommendations Upgraded ratings Ratings FY2007 Sept-16 AmBank (M) RAM LT: A2, ST: P1 LT: AA2, ST: P1 Outlook: Stable Outlook: Stable +3 S&P LT: BBB-, ST: A-3 Outlook: LT: BBB+, ST: A-2 Stable Outlook: Stable +2 LT: Baa1, ST: P-2 LT: Baa2, ST: P-3

  50. Slide 50: Opportunities and outlook

    Opportunities and outlook Real GDP Growth Avg USDMYR 2016 GDP Forecast Malaysia’s GDP growth 4.19 4.05 3.09 3.15 3.27 3.91 4.01 India 7.4 • GDP growth has moderated sharply in past 2 3.06 Philippines 7.0 years due to deteriorating commodity prices PR China 6.7 • Domestic economy expected to remain o

  51. Slide 51: Opportunities and outlook

    Opportunities and outlook CPI Business Conditions Index Business and consumer confidence Consumer Sentiment Index recovering • Business outlook for the next three to six months is improving among various business BCI 83.9 CSI 73.6 activities. CPI 1.3% • Resilient growth in services, manufacturing an

  52. Slide 52: Key economy indicators

    Key economy indicators GDP, consumption and investment growth CPI and unemployment rate GDP Consumption Investment CPI Unemployment Unemployment 3.5% Consumption 6.4% Investment 6.1% CPI 1.3% GDP 4.3% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q

  53. Slide 53: Banking system data

    Banking system data Household debt, national savings and retail Household debt movement impaired loan ratio Annual Change (%) 86.1% 86.8% 89.1% 76.1% 80.5% To be updated for the his 9.4 74.5% 7.3 2.4 0.4 0.6 0.4 33.5% 34.1% 0.6 30.9% 29.4% 29.3% 28.0% 5.8 6.5 2.5% 2.0% 1.6% 1.5% 1.3% 1.2% 2010 2011

  54. Slide 54: Banking system data

    Banking system data Capital ratios Capital activities RWCAR Tier 1 CET 1 New issues of equity New issues of debt Basel II Basel III RM’bil RWCAR 16.7% Tier 1 14.2% CET 1 13.3% 27.6 3.2 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q Jun Jun Jun Jun Jun Jun Dec Dec Dec Dec Dec Ma

  55. Slide 55: Auto Finance

    Auto Finance Auto Finance loans vs industry vehicle sales Auto Finance monthly balance vs. net outflows AMMB disbursement (RM) Industry vehicle sales (No.) Balance O/S Net outflows Aug-14 Mar-15 Aug-15 Mar-16 Aug-16 Jul-14 Oct-14 Jul-15 Oct-15 Jul-16 Jun-15 Jun-16 Apr-15 Apr-16 Dec-14 Jan-15 Dec-15

  56. Slide 56: 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 cha

  57. Slide 57: Glossary/Disclaimer of warranty and limitation of liability

    Glossary/Disclaimer of warranty and limitation of liability 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

AMMB Holdings Berhad — H1 FY2017 Earnings Presentation on 6ix