Ammb Holdings Bhd. · MYX:AMBANK
Ammb Holdings Bhd — FY2016 Earnings Presentation
64 slides from Ammb Holdings Bhd's earnings presentation, May 27, 2016
Slide 1: FY2016 Results, Investor Presentation
FY2016 Results, Investor Presentation 27 May 2016 PART A – FY2016 Results, Investor Presentation (Page 2 – 19) PART B – Additional Information (Page 21 – 43) PART C – AmBank Group Strategic Growth Plan (Page 45 – 62)
Slide 2: Performance indicators FY16
Performance indicators FY16 RM’ mil FY15 FY16 FY16 YoY Growth FY16 Underlying3 Reported Underlying¹ (Underlying)3 Guidance Total income 4,262.8 3,695.8 3,695.8 13.3% Expenses 2,068.1 2,174.3 2,120.6 2.5% Allowances -97.7 -209.5 -209.5 >100% PATMI 1,639.1 1,302.2 1,355.9 17.3% 1,300 ROE 11.8%
Slide 3: FY2016 results
FY2016 results…. • Underlying PATMI lower at RM1,355.9 mil, top line growth impacted by cautious business sentiment, NIM compression and changes in consumer spending patterns • NIM stood at 2.02%. NIM compression (-41bps) reflects portfolio rebalancing and current funding composition • NoII decrease
Slide 4: FY2016 profit drops from lower income despite higher recoveries
FY2016, Profit drops from lower income despite higher recoveries and flat expense growth YoY growth (%) RM’ mil FY16 FY15 87% 13% 1,918.6 Net Interest 2,378.8 2,770.3 14 Income Non-Interest 1,317.0 1,954.4 33 Income Total 3,695.8 4,724.6 22 Income Expenses 2,174.3 2,157.9 1 PBP 1,521.5 2,566.
Slide 5: Diversified PATMI contribution with 10% growth from Retail
Diversified PATMI contribution with 10% growth from Retail • Net profit from retail banking higher underpinned by better asset quality • Wholesale banking’s contribution lower in line with muted top line growth and lower recoveries year-on-year • Insurance profit declined on the back of conservative
Slide 6: Income drivers – NIM compression persists
Income drivers – NIM compression persists and NII impacted by cautious sentiments & lower fees Total Income Composition YoY growth RM’ mil (%) (%) FY15 reported 4,724.6 Non-interest income: FY15* – RM1,493m / 35.0% FY16 – RM1,317m / 35.6% Divestment gain 461.8 * Underlying FY15 underlying 4,262.8 64
Slide 7: Non-interest income declined across the board
Non-interest income declined across the board YoY growth: 11.7% (underlying) YoY growth: 32.5% (reported) 1,954.4 Non-interest income (RM’mil) 84.9 Non-interest income by lines of business 78% 22% 1,604.7 418.0 1,446.8 97.9 Others Other Retail 14.2 9% 9% 1,349.8 1,317.0 23% 117.0 44.2 Card
Slide 8: Gross yield coming off whilst funding cost escalated
Gross yield coming off whilst funding cost escalated, reflecting industry trend NIM YoY trend vs. industry Quarterly net interest income and NIM movement FY15: 2.43% FY16: 2.02% 5.60% 5.34% 5.35% 2.54% 5.13% Gross 2.45% 4.99% 2.38% Yield 2.33% 2.13% Industry 723 4.88% 2.12% Avg. 696 4.75% 4.63% 682
Slide 9: NIM compression more than industry
NIM compression more than industry reflecting portfolio rebalancing and funding composition bps FY15 reported 243 One-off 237 6 • One-offs – adjustments to PER and EIR in FY15 FY15 Underlying 237 Auto • Auto & mortgage – margins lower from rebalanced 228 9 portfolio with better risk profile Mortgage
Slide 10: Allowances lower, retail asset quality continued to strengthen
Allowances lower, retail asset quality continued to strengthen Allowances (RM’ mil) • Allowances lower through reduction in collective impairment made predominantly due to better loss experience for retail portfolio 47.7 59.5 (30.5) 0.2 • Marked improvement in retail GIL ratio offset by 240.5 (164.1
Slide 11: Asset quality, adequate coverage
Asset quality, adequate coverage Loan loss coverage vs. industry • Loan loss coverage declined as impairment 129.3% 127.4% 131.5% charges are mitigated through collaterals 114.6% Adjusted • More than 50% of impaired loans are made up 104.9% AmBank Group of real-estate and residential properties, whi
Slide 12: Asset quality remains sound with proactive collection activities
Asset quality remains sound with proactive collection activities Impaired loans (RM’ mil) Provision charges/(writebacks) (RM’ mil) Gross Impaired Loans GIL Ratio Individual Collective Recoveries Others Total 2.45% 1.98% 381.9 172.9 67.8 -30.5 1.86% 1.79% 1.94% -164.1 1,906.2 1,680.5 1,662.1 1,700.9
Slide 13: Mortgage loans growth outperforming industry
Mortgage loans growth outperforming industry Composition YoY growth Gross loans movement (RM’bil) (%) (%) FY15 87.8 1.6 Corporate & SME 0.3 • WB (Corp & IB) 39 1 - Higher loans extended to SME sector via CGC programmes - Overall growth remained flat due to large Investment corporate repayments i
Slide 14: Loans by sector vs. industry
Loans by sector vs. industry Loans by Sector Mar’15 YoY Loans by purpose Composition RM’ bil growth Purchase of transport 22.0 -7.6% 25.1% vehicles Loans Working capital 26.1 +13.8% 29.7% composition 4.7% 3.4% 10.2% 0.6% 4.7% 4.9% 2.0% 4.1% 10.0% 2.4% 52.4% 0.5% Purchase of resi property 18.3 +15.3%
Slide 15: CASA sustained amidst intense competition
CASA sustained amidst intense competition Deposit and CASA balance (RM’ bil) Deposits QoQ growth: 0.6% CASA QoQ growth: 1.1% CASA Fixed deposits CASA Composition (%) 21.6% • Deposits contracted YoY, in line with the 20.1% 20.5% 20.3% 20.9% 21.1% 20.4% 20.7% industry’s liquidity outflows (particu
Slide 16: Deposits movement better than industry
Deposits movement better than industry AmBank Group (RM’ bil) Core Deposits Composition Mar'16 (AmBank Group) YoY growth Savings 6% 0.3% 0.1% 0.0% 2.3% 1.8% Current Account 15% Fixed Deposits 79% 90.4 71.7 13.4 18.7 5.3 Current Savings CASA Fixed Deposits Core Deposits Account Core Deposit
Slide 17: Remained proactive on cost management
Remained proactive on cost management Expense growth driver (RM’ mil) 0.8% • Slowing income growth weighed down on 2,157.9 19.9 2,174.3 89.8 CTI ratio despite active cost management 119.5 2,068.1 9.2 41.8 17.8 • Further pressure from increased 2,017.1 regulatory and compliance requirements • Task
Slide 18: Diversified funding structure, prudent liquidity management
Diversified funding structure, prudent liquidity management Funding composition vs. industry Industry FY07 FY10 FY13 FY15 FY16 Ave • Conservative stance on liquidity Equity & debt 10% 15% 14% 15% 16% 15% management with LCRs >100% for all capital banking entities Customer 60% 77% 75% 74% 73% 73% dep
Slide 19: Adequate capital levels
Adequate capital levels RWA / Total Assets 1 Total Assets RWA/ Total Assets Industry • Whilst capital ratios remain adequate, the 77.8% 72.4% 72.7% 71.5% 71.0% Group is reviewing the optimal capital structure and efficiency of RWA (Basel III FHC @ FY2020) 64.1% 63.7% • Basel III FHC indicative ratio
Slide 20: Divisional Performance and Business Insights
Divisional Performance and Business Insights Your Bank. Malaysia’s Bank. AmBank. FY2016 IR Results (Business Performance & Investor Relations)
Slide 21: Retail banking overview
Retail banking overview Total income and loans by line of business (RM’ mil) Total income 30% Personal Mortgage Deposits Others Cards Auto SBB financing 0% 9% Personal financing Others 3% 2% 8% Deposits SBB 30% 2% 17% Mortgage Mortgage Others 17% 45% 3% Total loans Cards Auto , 3% 47% Cards
Slide 22: Retail Banking performance lifted by better asset quality
Retail Banking performance lifted by better asset quality QoQ PAT (RM’ mil) QoQ growth: 10.4% YoY growth: 10.4% • PAT growth of 10.4% YoY due to write back of allowances and better recoveries FY15: RM423.1 mil FY16: RM467.2 mil • Total income declined 14.2% from NIM compression as well as lower
Slide 23: Retail Banking
Retail Banking Income Statement (RM’mil) YoY growth 14.2% 0.5% 31.5% 132.2% 9.0% 4.6% 10.4% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances FY16 1,481.6 940.3 541.2 -73.0 614.2 147.0 467.2 FY15 1,725.8 935.4 790.4 226.7 563.7 140.6 423.1 Balance Sheet (RM’m
Slide 24: Retail Banking – Distribution channels
Retail Banking – Distribution channels Nationwide Branch Network Branches ATM RO Perlis 1 4 Perlis Kedah 6 29 Kedah Pulau Pinang 14 49 1 Kelantan Pulau Pinang Perak 18 47 Terengganu Sabah Labuan Selangor 38 240 Perak Brunei Darussalam Kuala Lumpur 23 129 2 Pahang Selangor Putrajaya 1 3 Kuala Lumpur
Slide 25: Wholesale banking overview
Wholesale banking overview Total income and total assets by line of business (RM’ mil) Total Income 35% 5% Others 5% Funds Management 9% Wholesale 23% Banking Capital & Coverage Equity Markets 58% 9% Others Wholesale Banking 11% Coverage 13% Total 44% Capital & Equity Assets Markets Global M
Slide 26: Wholesale Banking earnings down from subdued market
Wholesale Banking earnings down from subdued market, disbursement picking up QoQ PAT (RM’ mil) QoQ growth: 20.2% • YoY PAT decreased 16.8% impacted by subdued capital market YoY growth: 16.8% activities and higher allowances FY15: RM987.4 mil FY16: RM821.3 mil • Total income fell 13.1%: WB Cov
Slide 27: Wholesale Banking
Wholesale Banking Income Statement (RM’mil) YoY growth 13.1% 13.4% 12.9% 42.7% 17.8% 20.9% 16.8% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances FY16 1,457.9 517.1 940.9 -122.2 1,063.0 241.7 821.3 FY15 1,676.8 596.8 1,080.0 -213.1 1,293.1 305.7 987.4 FY16 B
Slide 28: General insurance, higher claims and lower investment income
General insurance, reflecting higher claims experience and lower investment income QoQ PAT (RM’ mil) QoQ growth: >100% YoY growth: 24.3% • Notwithstanding lower industry vehicle sales, YoY gross premium sustained at RM1,567.4 mil (FY15: RM1,565.5 mil) FY15: RM256.4 mil FY16: RM194.1 mil • PAT im
Slide 29: Insurance and Group Funding & Others
Insurance and Group Funding & Others Income Statement – Insurance (General & Life/Takaful) (RM’mil) YoY growth 14.2% 5.6% 37.1% >100% 49.9% >100% 33.0% FY16 PAT (composition to Group) 12% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances FY16 484.3 320.1 164.
Slide 30: Islamic Banking
Islamic Banking Income Statement (RM’mil) YoY growth 4.8% 22.6% 30.6% >100% 5.5% 18.8% 1.7% FY16 PAT (composition to Group) 18% Provisions/ PATZ RM’ mil Total Income Expenses PBP PBT Tax & Zakat Allowances FY16 FY16 743.7 413.0 330.7 -6.6 337.3 84.6 252.7 FY15 845.8 369.1 476.7 156.9 3
Slide 31: Quarterly performance
Quarterly performance PATMI (RM’ mil) & ROE (%) Net lending (RM’ bil) QoQ growth: 1.3% PATMI QoQ growth: -6.7% QoQ growth (excl.AF) : 2.1% Loans excluding Auto Finance ROE QoQ growth: -0.5% Total 85.6 84.7 85.7 86.2 84.1 85.3 85.4 86.5 PATMI Reported ROE 16.0% 15.1% 12.7% 11.8% 10.2% 24.6 24.1 23.3
Slide 32: Yearly performance
Yearly performance PATMI (RM’ mil) & ROE (%) Total income (RM’ mil) and non-interest income (%) PATMI Reported PATMI ROE Total income (underlying) CAGR FY11-16: -1.2% CAGR FY11-16: -0.6%/ 0.2%¹ CAGR FY11-16: -1.0%/ -0.9%¹ Total income (reported) YoY growth: -22%/ -13%¹ PATMI Underlying YoY growth: -
Slide 33: Funding sources and maturity profile
Funding sources and maturity profile Funding diversity underpinned by Fixed deposits: RM71.7 billion LDR1 of 84.7% CASA: RM18.7 billion (strong retention) Supplemented by term funding & debt capital AMMB Holdings Berhad AmBank (M) Berhad AmBank Islamic Berhad AmBank (M) Berhad & AmBank Islamic 1. RM
Slide 34: ANZ & IAG
ANZ & IAG Value proposition • Seconding ANZ staff into key roles Value proposition • Providing technical expertise • Involved in the management of AmGeneral Insurance, • Support new product development offering skills transfer, partnership and relationship models • Two-way customer referrals of IAG
Slide 35: Shareholding structure & franchise value
Shareholding structure & franchise value 23.8%1 AmCorp 13.0% EPF 15.1% Others 48.1% As at 31 March 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 Cards
Slide 36: Banking sector share price movement / target price and recommendations
Banking sector share price movement / target price and recommendations Banking Sector Share Price Movement Upgraded ratings HLBK Ratings FY2007 FY2015 98.5% +3 AmBank (M) RAM LT: A2, ST: P1 LT: AA2, ST: P1 PBB 98.0% Outlook: Stable Outlook: Stable S&P LT: BBB-, ST: A-3 LT: BBB+, ST: A-2 RHB Cap 25.0
Slide 37: Key economy indicators
Key economy indicators GDP, consumption and investment growth CPI and unemployment rate 3.4% Consumption 4.5% Investment 2.8% GDP 4.2% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Dec Dec Dec Dec Dec Dec Mar Mar Mar Mar Mar Mar Mar June Sept June Sept June Sept June Sep
Slide 38: Banking system data
Banking system data Household debt, national savings and retail Household debt movement impaired loan ratio Annual Change 100.0% 86.1% 86.8% 89.1% (%) 80.5% To be updated for the his 9.4 74.5% 76.1% 10.0 80.0% 9.0 7.3 8.0 2.4 60.0% 7.0 0.4 0.6 0.4 6.0 0.6 33.5% 34.1% 30.9% 40.0% 29.4% 29.3% 28% 5.0
Slide 39: Banking system data
Banking system data Capital ratios Capital activities RM’bil Basel II Basel III 16.5% 13.9% 13.0% 18.4 1.1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Jun Jun Jun Jun Jun Jun Dec Dec Dec Dec Dec Dec Mar Mar Mar Mar Mar Mar Mar Sep Sep Sep Sep Sept Sept 2010 2011 2012 2
Slide 40: Business Opportunities in Malaysia driven by Budget 2016
Business Opportunities in Malaysia driven by Budget 2016 Spur Domestic Investment to contribute to 26.7% of Affordable housing allocation GDP • Malaysian Vision Valley Development covering 108,000 • RM1.6bil allocated to build 175,000 units of PR1MA hectares in Negeri Sembilan – RM5bil houses • Cybe
Slide 41: Budget 2016 contribution to 11th Malaysia Plan
Budget 2016 contribution to 11th Malaysia Plan (11MP) Budget 2016 Allocation – RM258.2 Billion* People Growth Business • ▲ Personal tax reliefs • Accelerating regional • Unlocking the capital market (child, spouse and parents) economic development (incentives for Sustainable & (RM23bil for Malaysian
Slide 42: Economic Transformation Programme
Economic Transformation Programme ETP Overview Achievement of 12 NKEAs in 2013-2015 GROSS NATIONAL 2020 Target KPI Scoring* JOBS INCOME NKEAs GNI New 2015 2014 2013 (RM’bil) Jobs • RM48k (USD15k) GNI per • 31.6m population Greater KL/ Klang Valley 190 320,000 111% 103% 98% capita • 3.3m additional j
Slide 43: 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-15 Aug-14 Mar-15 Mar-16 Jul-14 Oct-14 Jul-15 Oct-15 Jun-14 Jun-15 Apr-14 Dec-14 Jan-15 Apr-15 Dec-15 Jan-16 Sep-14
Slide 44: Top 4 – AmBank Group Strategic Growth Plans
Top 4 STRATEGIC GROWTH PLANS AMBANK GROUP Your Bank. Malaysia’s Bank. AmBank. FY2016 IR Results (Business Performance & Investor Relations)
Slide 45: Moderate growth for 2016
Moderate growth for 2016 Malaysia Banking • Moderate GDP growth of 4.2% projected for • Monetary policy expected to remain supportive 2016 due to: from the current challenging environment • Soft exports led by weak commodity prices, • Loans growth to moderate in tandem with slower low government spe
Slide 46: Headwinds, bright spots and opportunities
Headwinds, bright spots and opportunities Malaysia’s GDP Growth may be slowing, though still among Private domestic demand continued to anchor growth the faster growing-economies within the region Net Exports Change in Stocks Public Investment Real GDP Growth Avg USDMYR Public Consumption Private In
Slide 47: Residential properties, still room for growth
Residential properties, still room for growth in selected segments and risk profiles Residential properties dominated property Housing supply gap in Malaysia transactions in 2015 Net increase in number of households Completion of new houses Land Industrial 5.7% 1.9% (86,511) +49,626 203,000 203,000
Slide 48: Wholesale banking - higher loans to SME
Wholesale banking - higher loans to SME, reducing exposure to commercial properties System SME loans growth outpaced GDP growth AmBank Group SME loans growth ‘currently’ trailing banking system Business Loans (RM' bil) SME Loans Growth Rate Non-SME SME SME YoY growth: 2.5% Business Loans Growth Ra
Slide 49: We have faced challenging times with lower performance
We have faced challenging times with lower performance recent years We have focused on de-risking the portfolio Asset quality improved significantly albeit sharp decline in loan market share Time is now right for us to embark on a new growth trajectory and rebuild franchise value New strategic growt
Slide 50: Our New Purpose
Our New Purpose We are not transactional. We focus on relationship and are advisors and long term partners to our customers. We help by being professional, reliable and We are not just a retail bank. We are not just fast, and giving them the best service. By helping, we earn their trust a corporate
Slide 51: Our "Top 4" Aspiration
Our "Top 4" Aspiration To be Top 4 in each of our 4 To be Top 4 in each of our 4 growth segments (Mass Affluent, focus products (Cards, TB, Affluent, SME, Mid Corp) Markets, Wealth Management) Top 4 Aspirations In Key Segments ~ 4 Years (2020) To sustain Top 4 in each of To be Top 4 Best Employer in
Slide 52: 10 metrics will measure how well we live up to our purpose
10 metrics will measure how well we live up to our purpose & our strategic priorities Our Top 4 Aspirations Our strategic priorities in Key Segments by Considering growth areas, whitespaces, and 2020 our capabilities 1 Financial metrics "Firing up new growth engines" 1. Market capitalization (relati
Slide 53: Key strategic initiatives for Institutional Business
Key strategic initiatives for Institutional Business 3 1 Further leverage on Strategically select strength in Capital Mkts target segment / clients in high-end Large Corps S t r a t e g i c to grow 2 4 Initiatives Capture full opportunity Improve execution in lower-end Large and TAT Corps 1. Grow
Slide 54: Key strategic initiatives for Mid-Corporates
Key strategic initiatives for Mid-Corporates 1 Enhance coverage model by building better focus and improving 2 productivity S t r a t e g i c Achieve higher wallet Initiatives share through relationship focus 3 Increase speed of execution by optimizing processes and policies 1. Coverage model to e
Slide 55: Key strategic initiatives for SMEs
Key strategic initiatives for SMEs 1 3 Focus on SME as a segment Enhance offerings to S t r a t e g i c – capture entire SME 2 service needs of SMEs spectrum from Initiatives micro to larger SMEs 4 Roll out differentiated cost-effective relationship- based sales & service Refine credit to match SM
Slide 56: Why AmBank Can Win in SME
Why AmBank Can Win in SME 54k merchant base (low CASA penetration) 2k+ HP dealers (medium CASA penetration) Existing large and Large Corporate customers base with SME untapped SME base subsidiaries 175 branches across the regions 25 Cards merchant centers 25 Business centers Why can Chan
Slide 57: Key strategic initiatives for Retail
Key strategic initiatives for Retail 2 Offer a cost-effective wealth 1 Enhance product advisory proposition offerings to become the 3 Deliver superior channel proposition (both digital and "main bank" and drive transactions physical) S t r a t e g i c Initiatives 5 Differentiate via advisory-led wea
Slide 58: Key strategic initiatives for AmBank Islamic
Key strategic initiatives for AmBank Islamic 2 Unique Islamic products for S t r a t e g i c ‘blue ocean' and at least Initiatives product equivalence with conventional 1 3 Penetrate into untapped Ensure efficiency and Islamic ‘blue ocean’ and effectiveness via a leveraged enhance initiatives in m
Slide 59: How we will do it: Run the bank better, Change the bank
How we will do it: "Run the bank better" and "Change the bank" R Run the bank better C Change the bank Unlock value across our footprint, capabilities, Create new sources of competitive advantage customer bases and talent pool through harnessing digital & analytics to take to next level Drive effici
Slide 60: It's tough...but we have a base to build on
It's tough...but we have a base to build on Our Our brand customers Our assets Our staff Digital revolution Well known brand – RB – need to grow 175 branches, strong Capable staff – scope Technology and data professionalism, more “main bank” WB regional presence to unlock with new analytics enables
Slide 61: Performance Guidance for FY2017 - FY2018
Performance Guidance for FY2017 - FY2018 Capital ROE PATMI CTI Dividend Proforma ±1% CET 1*: 10% 9.5% 50% ~ 10% ~ 40% to Growth p.a. To payout 10.5% 55% Total: 15% * Refers to FHC CAR Your Bank. Malaysia’s Bank. AmBank. FY2016 IR Results (Business Performance & Investor Relations) 61
Slide 62: AmBank Group FY17, foundation for 4 year Strategic Plan
AmBank Group FY17, foundation for 4 year Strategic Plan "Top 4" strategy Challenging goal developed considering though achievable by Aspiration to become growth areas, white Running the Bank a Top 4 bank by 2020 spaces, and our Better and Changing capabilities the Bank “Change the Bank” Phased devel
Slide 63: 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
Slide 64: 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