AMMB Holdings Bhd. · MYX:AMBANK
AMMB Holdings Bhd — H1 FY2010 Earnings Presentation
55 slides from AMMB Holdings Bhd's earnings presentation, Nov 6, 2009
Slide 1: AmBank Group Results - Investors Presentation H1 FY2010
AmBank Group Results - Investors I Presentation P i AMMB Holdings Berhad H1 FY2010 Results 6 November 2009 Cheah Tek Kuang Group Managing Director Note : Based on FY2009 Investors Presentation Updated for H1FY2010 financial results and other uptodate information
Slide 2: Contents
Contents : • Key Messages • Financial Fundamentals 1. Executive Summary • Quarterly Trend • What is Ahead • Summary 2. Financials Update • H1 FY2010 Group Performance • Business Outlook • Retail Banking 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Instit Inst
Slide 3: On track to deliver revised improved FY2010 earnings guidance
On track to deliver revised improved FY2010 earnings guidance Sound H1FY2010 performance sets the foundation to deliver PATMI of between RM920 mil to Staying RM950 mil (above our original FY2010 guidance) Ahead Profit result underpinned by higher revenues Maintain execution focus on key strate
Slide 4: Strong H1FY2010 results, sets good foundations for FY2010
Strong H1FY2010 results, sets good foundations for FY2010 H1FY091 H1FY102 Change Q1FY103 Q2FY104 Profit after Tax & MI Performance ( (PATMI) ) 433.0 mil 498.4 mil 15.1% 258.2 mil 240.2 mil ROE 11.9% 12.0% 0.1% 13.1% 11.1% EPS ( (basic, annualised)) 31.7 sen 35.4 sen 11.7% 38.0 sen 32.9 sen Net Lendi
Slide 5: What is ahead
What is ahead … Increasing global optimism for revival of the world economies but risks linger Recovery for Malaysia’s trade dependent economy expected to be gradual Banks shoring up their capital position although BNM commented that the banking Industry : system remains strong What is Ahead
Slide 6: Summary H1 - FY2010
Summary H1 - 1. Top 5 Banking Group in Malaysia with diversified business FY2010 fundamentals, supported by ANZ, our strategic partner and 1 of 11 AA rated banks in the world 2. Good H1 result sets the foundation for us to deliver above our earlier FY 2010 market guidance 3. Sound capital positions
Slide 7: AmBank Group Results - Investors Presentation H1 FY2010
AmBank Group Results - Investors I Presentation P i AMMB Holdings Berhad H1 FY2010 Results 6 November 2009 Ashok Ramamurthy Group Chief Financial Officer & Deputy Group Managing Director
Slide 8: Contents
Contents : • Key Messages • Financial Fundamentals 1. Executive Summary • Quarterly Trend • What is Ahead • Summary • H1 FY2010 Group Performance 2. Financials Update • Business Outlook • Retail Banking 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Instit Inst
Slide 9: Sound profit growth, with conservative provisioning
Sound profit growth, with conservative provisioning H1FY10 vs REPORTED RM RM’mil mil H1FY09 H1FY10 H1FY09 Business Performance Net int income 1,136.3 1,171.9 +3.1% Income : All Divisions recorded good growth in incomes Fee and comm 277.5 310.1 +11.8% except Retail & Business Banking which were imp
Slide 10: Improved PATMI underpinned by Investment Banking, CIB, Assurance and Markets
Improved PATMI underpinned by Investment Banking, CIB, Assurance and Markets PATMI : Growth contributed by y Investment Banking, g, CIB and Assurance H1FY10 vs RM’mil H1FY09 H1FY10 H1FY09 Business Performance Retail Banking Division 1 (61.1%) 330.4 329.3 -0.3% Better investment banking performance
Slide 11: Lower NIM but improved non-interest income and CTI ratios
Lower NIM but improved non-interest income and CTI ratios H1FY10 vs REPORTED H1FY09 H1FY10 H1FY09 Business Performance Efficiency Ratios & Others Lower NIM from : Net Interest Margin 1 Reduced interest recoveries 3.10% 2.82% -0.28% (NIM & NFR composite) it ) Change in asset mix towards lower mar
Slide 12: Balance sheet fundamentals looking good, with strong deposit growth
Balance sheet fundamentals looking good, with strong deposit growth REPORTED RM’mil H1FY10 vs H1FY09 H1FY10 H1FY09 Business Performance Balance Sheet – Lending / Financing Gross loans G l / 59,347.1 62,834.8 +5.9% financing Loans growth to focus on Net loans / financing 55,327.9 60,437.3 +9.2% pre
Slide 13: Better overall asset quality and decreasing quantum of historical issues
Better overall asset quality and decreasing quantum of historical issues Gross NPL / NPF by Segments 3.3 2.8 2.3 Stable NPL level 1.8 despite economic 1.3 stresses from the 0.8 recent global financial 0.3 3.05 3 05 1.73 3 1.68 68 1.76 6 1.78 8 1.28 8 0 0.64 6 00.57 5 0.34 0 3 00.30 30 0 0.00 00 0
Slide 14: Stable new gross NPL / NPF formation but lower conversions and recoveries
Stable new gross NPL / NPF formation but lower conversions and recoveries in H1FY2010 % New Gross NPL / NPF to Gross Loans / Financing % Gross NPL / NPF Conversion to Gross Loans / Financing 1 80% 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 % Recov
Slide 15: Improving trends on NPL / NPF ratios & loan loss coverage
Improving trends on NPL / NPF ratios & loan loss coverage Asset Quality Indicators 15 75.1% 83.1% 67.3% 80% 56.6% Loan Loss Coverage 39.3% 36.7% 32.2% H1FY10 / FY09 change : 40% 10 Loan loss coverage 8.0% 7.60 6.06 6.14 0% 5.53 5 3.60 -40% 5.78 2.43 2.42 4.28 4.60 3 18 3.18 2.02 1.50 1.36 - -80% RM'
Slide 16: Loans / Financing growth focuses on viable segments and diversification
Loans / Financing growth focuses on viable segments and diversification Gross Loan / Financing movement (before netting Islamic financing sold to Cagamas) Retail (70%) Business / Corporate (29%) By Type Loan Composition % 38.9% 20.8% 3.7% 1.4% 1.5% 3.2% 17.1% 9.8% 2.4% 2.3% 1.2% Others 15.7% 24.4 10
Slide 17: Good growth momentum for Insurance and Funds Management businesses
Good growth momentum for Insurance and Funds Management businesses General Insurance Life Insurance Fund Assets Gross Premium Fund Assets Gross Premium 1,500 4,000 585.8 800 600 545.6 449.0 390.4 438.2 476.3 312.1 340.9 382.6 352.2 313.5 319.9 1,000 3.7% 14.7% 0 0 2,000 500 922.7 956.9 -800 2,333.1
Slide 18: Sound income growth and conservative provisions in H1FY2010
Sound income growth and conservative provisions in H1FY2010 Total Group Level - Reported 1 Total Group Level - Underlying 1 1,000 1,000 800 838 867 800 872 818 814 802 757 765 600 600 400 400 439 200 200 235 155 175 175 110 146 110 0 0 RM'mil FY2007 FY2008 FY2009 H1FY2010 RM'mil FY2007 FY2008 FY2009
Slide 19: Funding profiles continue to improve
Funding profiles continue to improve Government funds grew by 7.4% in H1FY2010 CASA grew by 12.7% in H1FY2010 C t Customer D Deposits it bby Sources S 1.2 CASA 1.4 composition 12.6% 11.2% 10.5% 11.7% Others Total Customer 42.4b Deposits 55.8b by Type 64.1b 65.3b 3.0 12.6 12.5 Others 3 26.3 27.5 Biz
Slide 20: 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 Assets Liabilities Equity Off balance sheet gap / derivatives 34 9 34.9 43 2 43.2 44 7 44.7 10.0 11.2 12.2 -58.8 -64.3 -65.0 -4.9 -5.1
Slide 21: Improved earnings and returns ratios for H1FY2010
Improved earnings and returns ratios for H1FY2010 H1FY10 / FY09 change 0.09% EPS, basic EPS b i ROE, % H1FY10 / FY09 change 0.3% ROA, % FY 09 / 08 change 0.02% H1FY10 / FY09 change 12.0% FY 09 / 08 change 0.2% sen/share FY 09 / 08 change 12.1% EPORTED RE 11.5% 11.7% 12.0% 1.02% 1.04% 1.13% 28.2 31.6
Slide 22: Strong capital base to meet ensuing challenges and support growth
Strong capital base to meet ensuing challenges and support growth Capital C it l adequacy d : AMMB Holdings H ldi Berhad B h d • Innovative Tier 1 Capital Securities FY2007 FY2008 FY2009 H1FY2010 issued (AmBank (M) Berhad) : • Approved program = RM500 mil Core equity 7 6% 7.6% 7 7% 7.7% 7 8% 7.8% 8
Slide 23: Contents
Contents : • Key Messages • Financial Fundamentals 1. Executive Summary • Quarterly Trend • What is Ahead • Summary • H1 FY2010 Group Performance 2. Financials Update • Business Outlook • Retail Banking 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Instit Inst
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 owth ed Gro Moderrate Differrentiate Low (ISLAMIC AND CONVENTIONAL BANKING) 24
Slide 25: Strategy & outlook for FY2010 refined to incorporate improving market conditions
Strategy & outlook for FY2010 refined to incorporate improving market conditions Maintain profitable growth and rebalancing focus via executing on our strategic agenda Overall Income diversification, cost management, deposit growth and enhanced risk disciplines are key priorities for FY 2010 P
Slide 26: Strategy & outlook for FY2010 refined (Corporate, Assurance, Markets)
Strategy & outlook for FY2010 refined to incorporate improving market conditions Focus on project financing with government support, GLC’s and large MNC’s Corporate & Deepen customer relationships to generate fee incomes and advisory mandates Institutional Enhance focus on capital efficient bu
Slide 27: 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 H1FY 10 FY 2010 Aspirations Previously (MTA) RM800 – 900mil Reported : Reported : Reported : Reported : -RM282.5 mil RM668.5 mil RM860.8 mil RM498.4 mil ~ 12% - 15% PATMI RM920 950 mil RM920-950 CAGR Underlyi
Slide 28: Concluding remarks
Concluding remarks 1. Top 5 Banking Group in Malaysia with diversified business fundamentals, supported pp by y ANZ,, our strategic g partner p and 1 of 11 AA rated banks in the world 2. Good H1 result sets the foundation for us to deliver above our earlier FY 2010 market guidance 3. Sound capital p
Slide 29: Contents
Contents : • Key Messages • Financial Fundamentals 1. Executive Summary • Quarterly Trend • What is Ahead • Summary 2. Financials Update • H1 FY2010 Group Performance • Business Outlook • Retail Banking 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Instit Inst
Slide 30: Summary of divisional performance
Summary of divisional performance Income Expenses H1FY09 H1FY10 60% 50% 50% 40% 40% 30% 30% 20% 20% 10% 10% 64.7 54.3 12.0 8.8 9.1 10.2 7.0 6.8 4.9 4.3 2.3 15.6 50.6 49.3 6.2 6.2 12.3 10.9 6.4 5.3 5.9 5.6 18.6 22.8 0% 0% Retail Business Investment Corporate & Assurance Group Retail Business Investme
Slide 31: Retail Banking Division
Retail Banking Division H1FY10 vs RM’mil RM’ il H1FY09 1 09 H1FY10 H1FY09 Income I growth th underpinned d i d by b focus f on profitable segments and risk pricing Income 875.0 941.1 +7.6% Expenses reflecting growing footprints and Expenses 319.2 342.2 +7.2% upgrade in risk tools, people cost an
Slide 32: Business Banking Division
Business Banking Division H1FY10 vs RM mil RM’mil H1FY09 H1FY10 H1FY09 Income growth impacted by lower interest Income 162.9 151.9 -6.7% recoveries Expenses Cost increase largely reflecting expansion in 39.1 42.8 +9.4% relationship team PBP 123.8 109.1 -11.8% More vigilant measures in asset qu
Slide 33: Investment Banking Division
Investment Banking Division H1FY10 vs RM RM’mil mil H1FY09 H1FY10 H1FY09 Income 123.5 177.2 +43.4% Improvement in performance from pick-ups in Expenses 77.8 75.3 -3.2% capital market and stock market Continue to strengthen business relationships PBP 45.8 101.9 +122.6% and core expertise p Provis
Slide 34: Corporate & Institutional Banking Division
Corporate & Institutional Banking Division * H1FY10 vs RM’mil H1FY09 H1FY10 H1FY09 Income 94.8 117.8 +24.2% Diversified loans portfolio provided good Expenses 40.4 36.6 -9.3% support for income growth PBP 54.4 81.2 +49.1% International Business has contributed higher i income Provisions 7.9 21.3
Slide 35: Assurance
Assurance H1FY10 vs RM’mil H1FY09 H1FY10 H1FY09 Income 65.8 75.4 +14.7% Higher income from enhanced agency network Expenses 37.3 38.8 +4.1% and focus on product bundling and cross selling 28.5 36.6 Better B tt claims l i experience i compared d tto PBP +28.5% H1FY2009 Provisions 1.2 (0.4) -133.7
Slide 36: Group Operating Segments
Group Operating Segments H1FY10 vs RM’mil H1FY09 H1FY10 H1FY09 Business Performance Income 31.0 270.6 +774.0% Higher income from : Treasury and Markets Expenses 117 3 117.3 158 1 158.1 +34 8% +34.8% (improved trading conditions) (86.4) 112.4 Loan Rehab units PBP +230.2% (recovery rate as schedul
Slide 37: Islamic Banking
Islamic Banking H1FY10 vs RM’mil RM mil H1FY09 H1FY10 H1FY09 Strong results improvement attributed to Income 267.3 326.1 +22.0% business expansion in line with Malaysia’s drive on Islamic banking growth Expenses 107.1 119.8 +11.9% Underlying branding position remains PBP 160.3 206.3 +28.7% 28.7%
Slide 38: Overview of one-offs
Overview of one-offs Impacts from changes in accounting and provisioning policies, policies prior period catch-ups, catch ups divestments, strategic investments and tax rate changes H1FY H1FY 2009 2010 Hedge accounting impacts Non core and prior period operating incomes, eg deposit insurance premium
Slide 39: Contents
Contents : • Key Messages • Financial Fundamentals 1. Executive Summary • Quarterly Trend • What is Ahead • Summary 2. Financials Update • H1 FY2010 Group Performance • Business Outlook • Retail Banking 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Instit Inst
Slide 40: Slowdown in 2009 with slow recovery thereafter
Slowdown in 2009 with slow recovery thereafter 2 Private Consumption (%YoY) Real GDP : Consumption Government Consumption (%YoY) Real GDP (%YoY) % YoY 12.0 9.0 Extraordinary global challenges in 2008 / 2009 6.0 Despite some resilience, consensus amongst economists 3.0 is that domestic economy wo
Slide 41: Lower interest rates forecast for 2009 but rising thereafter
Lower interest rates forecast for 2009 but rising thereafter OPR, BLR OPR (%) BLR (%) Deposit Rates Retail Deposit Rate (%) Corporate Deposit Rate (%) % % 8.00 6.00 3.0 4.00 2.0 2.00 0.00 1.0 2008 2009F 2010E 2011E 2012E 2008 2009F 2010E 2011E 2012E Low policy rates regime to support economy Fin
Slide 42: Stronger banking system asset quality to withstand rising delinquencies
Stronger banking system asset quality to withstand rising delinquencies in 2009 / 2010 NPL on a declining d li i trend t d NPL Ratios in Banking System & Loan Loss Coverage Ratio Loan loss coverage rising RM’bil / % % steadily with exception of March 2009 due to some 87.1 86.3 87.8 87.9 90.0 84.
Slide 43: Contents
Contents : • Key Messages • Financial Fundamentals 1. Executive Summary • Quarterly Trend • What is Ahead • Summary 2. Financials Update • H1 FY2010 Group Performance • Business Outlook • Retail Banking 3. Business Segment Performance • Business Banking • Investment Banking • Corporate & Instit Inst
Slide 44: Banking Sector Share Price Movement
Banking Sector Share Price Movement Index Movement (M (May 07 = 100) Index / index change at close of 15 Oct 140.0% 09 vs 18 May 07 AMMB 16.2% (RM4.55) RHBC 15.3% (RM5.44) 120.0% PBB 10 3% (RM10.62) 10.3% (RM10 62) CIMB 2.4% (RM12.18) 100% base index 100.0% KLCI Index -8.1% (1246.86) HLFG -11.8% (RM
Slide 45: Target Price and Recommendations – AMMB Holdings Berhad
Target Price and Recommendations – AMMB Holdings Berhad 26 October 2009 AMMB HO L DING S B E R HAD P/ EPS = 14.99 Average TP : RM 4.84 P/ BV = 1.66 Buy : 22 (92%) Hold : 1 (4%) 5.60 5.56 5.55 Sell : 1 (4%) 5.25 5.20 5.20 5.20 Market Price: RM 4.74 3.78% 5.10 5.10 5.00 5.00 4.93 4.90 4.89 4 80 4.80 4
Slide 46: Shareholding structure
Shareholding structure As at 30 September 2009 AmcorpGroup ANZ Funds Employees Provident Prudential Public Bhd Pty Ltd # Fund Board Plc 16.72% 23.78% 13.74% 5.69% 40.07% Ranked No. 17 (Malaysia – market AMMB capitalisation) & 204 (global – 1000 Holdings Bhd banks by market capitalisation) : with m
Slide 47: ANZ strategic partnership
ANZ strategic partnership • ANZ is the only Australian bank to have been in the Asian region of over 40 years, with strategic banking partnerships hi and d presence across 14 countries i • ANZ’s investment in AmBank totalled US$696 million • In August 2009, ANZ acquired selected RBS businesses in As
Slide 48: Significant positions in major business
Significant positions in major business Retail Business Investment p Corporate & Islamic Banking Banking Institutional Assurance Banking Banking Banking #4 #5 #3 #5 #7 # 10 #5 [General] [Life] Focus on Leverage on Stay relevant & Derisk, Diversify, profitability and existing protect market Different
Slide 49: Key group information highlight: customer service - delivery channels
Key group information highlight : customer service - delivery channels ASPIRATION Increased customer satisfaction via integrated & Number N b off Branches B h seamless channels model #4 Expand branch network and SSM footprint 386 Further build and improve sales & service 355 capabilities 242 1
Slide 50: The AmBank brand: top-of-mind brand awareness & service performance
The AmBank brand : top-of-mind brand awareness & service performance 50 Top-of-Mind Brand Awareness AmB Bank A (2004vs2007vs 2008 vs Assets) Bank C Bank B Bank D Bank E AmBank Competitor A Competitor B Competitor C ForeignA ForeignB 45 Assets Trustworthybank 1 -2 3 1 0 0 45% (in RM ’bil) -1 -6 -7 44
Slide 51: Ratings
Ratings AmBank (M) Berhad Rating Agency Agenc Long-Term Long Term Short Term Short-Term Date RAM AA3 P1 Nov 09 Instrument : - RM500mil non-cumulative perpetual capital securities A2 Nov 09 - RM1.0bil negotiable instruments of deposits AA3 Nov 09 - RM2.0bil MTN programme A1 Nov 09 - RM500mil Tier-1 c
Slide 52: Research Coverage
Research Coverage No Research House Analyst 1 Affin Investment Bank Rachel Huang 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 Cazenove Asia Ltd Tan See Ping 6 CIMB Investment
Slide 53: Glossary
Glossary 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 changes to : • accounting and provisioning policies (eg
Slide 54: Disclaimer of Warranty and Limitation of Liability
Disclaimer of Warranty and Limitation of Liability The information provided is believed to be correct at the time of presentation. AMMB Holdings Berhad or “AHB” or its affiliates do not make any representation or warranty, express or implied, as to the adequacy, accuracy, completeness or fairness of
Slide 55: 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 — H1 FY2010 Earnings Presentation on 6ix