AMMB Holdings Bhd. · MYX:AMBANK

AMMB Holdings Bhd — H1 FY2011 Earnings Presentation

60 slides from AMMB Holdings Bhd's earnings presentation, Nov 12, 2010

  1. Slide 1: AmBank Group Investors Presentation H1FY2011 Results Update

    AMMB Holdings Berhad AmBank Group Results Investors I t P Presentation t ti H1FY2011 Results Update 12 November 2010 Cheah Tek Kuang Group Managing Director AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION H1FY2011

  2. Slide 2: H1FY2011 Highlights

    H1FY2011 Highlights AmBank Group History: • 30+ years of banking franchise • Top 20 Bursa Saham listing, ranked 176 on global banking index • 3 consecutive years of record performance (FY08‐FY10) • H1FY2011 up 40.7% FY2011 Performance: • PATMI growth expectations 25% ‐ 30% • Staying focused on profi

  3. Slide 3: Contents: Executive Summary

    Contents Executive Summary H1FY2011 Group Financial Performance Strategy & Outlook Divisional Performance → Economic Update Supplementary Information → Corporate Information Based on half‐year limited review 30 September 2010 (H1 FY2011) financial results of banking subsidiaries (Conventional + Isla

  4. Slide 4: Maintaining earnings growth momentum

    Maintaining earnings growth momentum H1FY10 H1FY11 Change FY09 FY10 Profit after Tax & MI (PATMI) 498.4 mil 701.2 mil 40.7% 860.8 mil 1,008.6 mil Performance ROE 12.0% 14.4% 2.4% 11.7% 11.5% ROA 1.13% 1.48% 0.35% 1.04% 1.13% EPS 35.5 sen 46.7 sen 31.4% 31.6 sen 34.7 sen (basic, annualised) Net Lendi

  5. Slide 5: FY2011 Priorities

    Staying focused on profitable growth, diversification and sustainability Well diversified Divisional Improved risk and financial Staying Ahead contributions disciplines  Strong H1 results  Sound and consistent contributions  Proactive risk management  Higher revenues and lower from Retail, Busin

  6. Slide 6: Opportunity

    Opportunity • Malaysian economic recovery (GDP CY 2010e : 8.0%1, CY 2011e : 6%) 1 • 2011 looking positive but not immune to possible global shocks Malaysia : • Supportive monetary policies, continued trade surplus Stable Outlook • Positive regional recoveries, Economic Transformation Programme, New

  7. Slide 7: AmBank Group Results Investors Presentation

    AMMB Holdings Berhad AmBank Group Results Investors I t P Presentation t ti H1FY2011 Results Update 12 November 2010 Ashok Ramamurthy Deputy Group Managing Director & Group Chief Financial Officer AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION H1FY2011

  8. Slide 8: Contents: H1FY2011 Group Financial Performance

    Contents Executive Summary H1FY2011 Group Financial Performance Strategy & Outlook Divisional Performance → Economic Update Supplementary Information → Corporate Information (Conventional + Islamic) AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION H1FY2011 7

  9. Slide 9: Strong and consistent financial performance for H1FY2011

    Strong and consistent financial performance for H1FY2011 Business Performance H1FY11 vs Income : RM'mil H1FY10 H1FY11 H1FY10  Good growth from most Divisions, H1FY11 run‐rate better than FY2010 full year Net interest income 1,178.7 1,365.4 +15.8%  Higher investment & trading income in H1FY2010 due

  10. Slide 10: Well diversified and higher earnings contribution across the Group

    Well diversified and higher earnings contribution across the Group PATMI (by division) Business Performance H1FY11 vs RM'mil H1FY10 H1FY11 H1FY10  Retail Banking ‐ profit growth via focus on viable segments Retail Banking 262.9 309.5 +17.7%  Business Banking ‐ well‐balanced profits with income gro

  11. Slide 11: Short-term NIM benefit and improving efficiency

    Short‐term NIM* benefit and improving efficiency H1FY11 vs Business Performance H1FY10 H1FY11 H1FY10 * Higher NIM (FY10 NIM = 2.98% ) : Net Interest Margin  Benefit from interest in suspense being disclosed 2.82% 3.00% +0.18% (NIM & NFR composite) under impairments as per FRS139 requirements Cost‐I

  12. Slide 12: Balancing loans and customer deposits growth

    Balancing loans and customer deposits growth H1FY11 vs RM'mil H1FY10 H1FY11 H1FY10 Business Performance Balance Sheet ‐ Lending / Financing Gross Loans / Financing 62,834.8 70,136.3 +11.6%  Loans growth targeting viable segments Net Loans / Financing 60,437.3 66,589.8 +10.2%  Improving funding Bal

  13. Slide 13: Asset quality: benefitting from differentiated product growth strategies

    Asset quality : Benefitting from differentiated product growth strategies Asset Quality Indicators 15.0 FRS 139 99.5% 93.7% 95.5% 89.1% 100% 75.1% Allowance coverage 67.3% H1FY11 / Day1 change 6.4%  FRS139 adopted 10.0 56.6% 60% under BNM 39.3% 32.2% 36.7% transitional arrangements since 7.60 20%

  14. Slide 14: New gross impaired loans formation, conversions, recoveries and write-offs

    New gross impaired loans formation, conversions, recoveries and write‐offs; Within expectations % New Gross NPL / Gross Impaired Loans to Gross Loans % Gross NPL / Impaired Loans Conversion to Gross Loans 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

  15. Slide 15: Implementation impact of FRS139

    Implementation impact of FRS139 Gross Impaired Loans (RM'mil) 2,539 2,559 2,469 1,866 129 244 300 0.8%  in gross impaired loans as at H1FY2011 vs Day 1 Gross NPL Restructured performing Interest on impaired loans Impairment recognition at Gross Impaired Loans Gross Impaired Loans Gross Impaired Loa

  16. Slide 16: Implementation of FRS139: impairment coverage strengthened

    Implementation of FRS139 : Balance sheet impairment coverage strengthened SP & IIS vs IP GP vs CP Total SP, GP & IIS vs IP & CP As % of Gross Loans 1.3% 0.4% 0.7% 0.7% 1.5% 2.7% 2.8% 3.2% 3.4% 3.5% 2,443 RM’mil 2,262 2,117 1,961 1,804 1,004 854 458 482 259 SP IIS IP IP GP CP CP Total Total Total Pre

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

    Portfolio rebalancing : Focus on viable segments and diversification Gross Loan / Financing movement (gross before netting loans sold to Cagamas) Retail (64%) Business / Corporate (36%) Loan Composition %  Retail : target viable 35.0% 19.6% 1.3% 1.2% 2.8% 3.8% 18.3% 15.9% 2.2% segments in highly Re

  18. Slide 18: Good momentum in Assurance and key Investment Banking portfolios

    Good momentum in Assurance and key Investment Banking portfolios RM’mil Fund Assets General Insurance Gross Premium Fund Assets Life Assurance Gross Premium 1,500 624 4,000 546 586 583 438 476 335 449 341 383 352  7% 264 400 1,000 0  6% 2,000 1,093 1,019 -400 902 -1,000 2,538 500 811 2,388 696 602

  19. Slide 19: Balancing trading vs investment income

    Balancing trading vs investment income Financing Assets / Investments as % of Total Assets MGS MMS PDS DECS, shares, UT & Others 7.0% 5.1% 5.0% 4.3% 4.2% 2.3% 1.7%  Increase in HFT 1.1% 1.7% for H1FY2011 0.3% 1.2% from highly liquid 0.6% FY2009 FY2010 H1FY2011 MGS and MMS holding Composition of Fin

  20. Slide 20: Balance sheet repositioned for rising interest rates, more stable funding

    Balance sheet repositioned for rising interest rates, more stable funding Interest / Profit Rate Risk : 1 ‐ 5 years Interest / Profit Rate Risk : > 5 years RM’bil Mismatch profile Net mismatch > 12 months 10.0 10.8 13.4 13.2 FY2008 13.9 bil ‐4.9 ‐5.1 ‐7.4 ‐8.4 FY2009 18.0 bil FY2010 5.7 bil ‐4.0 ‐2.

  21. Slide 21: Strong capital position and improving returns

    Strong capital position and improving returns H1FY11 / FY10 change 2.9% H1FY11 / FY10 change 0.35% EPS, basic H1FY11 / FY10 change 34.5% ROE, % FY10 / FY09 change 0.2% ROA, % FY10 / FY09 change 0.09% FY10 / FY09 change 9.8% sen/share  Improved ROE, ROA and EPS in H1FY11 11.5% 11.7% 11.5% 14.4

  22. Slide 22: Contents: Strategy & Outlook

    Contents Executive Summary H1FY2011 Group Financial Performance Strategy & Outlook Divisional Performance → Economic Update Supplementary Information → Corporate Information (Conventional + Islamic) AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION H1FY2011 21

  23. Slide 23: To become Malaysia's Preferred Banking Group with International Connectivity

    Medium Term Aspirations FY2011‐2015 To become Malaysia’s Preferred Banking Group with International Connectivity • customer satisfaction As measured by • sound financial performances • well diversified and sustainable growth Divisional Aspirations Retail * Develop a liability‐led business, grow asse

  24. Slide 24: Increasing profit momentum for FY2011

    Increasing profit momentum for FY 2011  Good CASA & deposit growth, profitable asset growth & lower credit costs Retail  Invest for medium term outcomes Banking *  Strong profit growth benefiting from lower impairments for FY 2011  Income growth from larger asset base & growth in non‐interest in

  25. Slide 25: Key Strategic Thrusts for FY2011

    Key Strategic Thrusts for FY2011 • Complete structural realignment to improve target segment focus • Develop customer centric retail business model ‐ part of AmHorizon Strategic • Implement account plans for business customers and increase SOW business • Expand product offerings and build new capabi

  26. Slide 26: Medium Term Aspirations and estimates

    Medium Term Aspirations and estimates Medium Term FY07 FY 08 FY 09 FY 10 H1FY 11 FY 2011 Estimate Aspirations (MTA) 2012 ‐ 2016 ‐ RM282.5 RM668.5 RM860.8 RM1,008.6 RM701.2 25 ‐ 30% 14 – 18% PATMI ~ mil mil mil mil mil # CAGR ^ FY13 onwards : ROE ‐ 5.8% 11.5% 11.7% 11.5% 14.4% 12.5 ‐ 13% * 15 – 18% *

  27. Slide 27: Summary

    Summary 1. Good HY2011 performance, portfolio diversification on track for FY2011 2. Growth momentum expected to moderate in FY2012 due to uncertain global outlook 3. Strong foundations and clear medium term strategies 4. International connectivity with ANZ and access to world class “IP” and resourc

  28. Slide 28: Contents: Divisional Performance

    Executive Summary H1FY2011 Group Financial Performance Strategy & Outlook Divisional Performance → Economic Update Supplementary Information → Corporate Information (Conventional + Islamic) AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION H1FY2011 27

  29. Slide 29: Retail Banking Division: improved asset quality main contributor to higher profits

    Retail Banking Division : Improved asset quality main contributor to higher profits Income Expenses PBP PAT Develop a liability‐led business, grow assets in targeted segments 46.9% 47.1% 46.7% 42.6% Composition to Group and expand wealth management H1FY11 vs RM'mil H1FY10 H1FY11 H1FY10 Income 912.2

  30. Slide 30: Business Banking Division: good income and targeted loans growth

    Business Banking Division : Good income and targeted loans growth Income Expenses PBP PAT Grow diversified & profitable assets, increase liabilities, fee base business 11.8% 6.0% 15.4% 16.2% & international trade finance Composition to Group leveraging on ANZ H1FY11 RM'mil H1FY10 H1FY11 H1FY10 Incom

  31. Slide 31: Corporate & Institutional Banking Division

    Corporate & Institutional Banking Division : Good income growth and lower impairments Deliver innovative and quality Income Expenses PBP PAT solutions, increase ‘share of wallet’, 9.3% 6.2% 11.3% 14.0% target high‐impact and high‐value Composition to Group clients and leverage ANZ for x‐border busin

  32. Slide 32: Investment Banking Division: subdued debt market, but good pipeline

    Investment Banking Division : Subdued debt market, but good pipeline Deliver comprehensive solutions, Income Expenses PBP PAT lead in capital markets, funds 8.7% 11.9% 6.7% 8.3% management, stock broking and Composition to Group enhance domestic & overseas distribution via ANZ H1FY11 vs RM'mil H1FY1

  33. Slide 33: Life Assurance: stronger contribution to shareholders

    Life Assurance : Stronger contribution to Shareholders, sound capital adequacy Income PAT Leverage Friends Provident to deliver premium product & customer 2.3% 5.5% Composition to Group propositions & improve efficiencies H1FY11 vs RM'mil H1FY10 H1FY11 H1FY10 Net Income 12.7 46.1 +>100.0%  Higher i

  34. Slide 34: General Insurance: higher income and improved efficiencies

    General Insurance : Higher income and improved efficiencies Income Expenses PBP PAT Leverage Insurance Australia Group to become a scale specialist in motor 4.2% 5.4% 3.4% 3.7% and niche specialist in commercial Composition to Group and non‐motor lines H1FY11 vs RM'mil H1FY10 H1FY11 H1FY10 Income 62

  35. Slide 35: Markets: income diversification and increasing momentum

    Markets : Income diversification and increasing momentum Income Expenses PBP PAT Deliver substantive, integrated and client‐led business with full‐suite of 9.8% 4.2% 13.4% 16.3% Composition to Group FX, Rates, Commodities and FI offerings with ANZ collaborations H1FY11 vs RM'mil H1FY10 H1FY11 H1FY10

  36. Slide 36: Group Operating Segments

    Group Operating Segments Income Expenses PBP PAT Defining the journey to a Customer 6.9% 19.0% ‐0.7% ‐6.6% Composition to Group Service Delivery Channel H1FY11 vs RM'mil H1FY10 H1FY11 H1FY10 Income 107.7 137.6 +27.8%  Higher income from : Shareholders fund, Corporate & Shared Services  Expenses 13

  37. Slide 37: Islamic Banking: lower underwriting profits and higher impairments

    Islamic Banking : Lower underwriting profits and higher impairments Income Expenses PBP PAT To become the Islamic Bank of choice and ensure a high degree of Composition to Group 19.1% 19.1% 19.1% 18.6% value for our customers, employees & stakeholders H1FY11 vs RM'mil H1FY10 H1FY11 H1FY10 Income 403

  38. Slide 38: Contents: Economic Update

    Contents Executive Summary H1FY2011 Group Financial Performance Strategy & Outlook Divisional Performance → Economic Update Supplementary Information → Corporate Information (Conventional + Islamic) AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION H1FY2011 37

  39. Slide 39: Malaysian economy

    Malaysian economy  Malaysia’s GDP growth supported by domestic new growth drivers and initiatives coupled with robust Asia‐Pacific growth % ASEAN economies real GDP growth Malaysia average lending rate vs OPR & BLR 13 12.20 Singapore 11 9 8.00 Malaysia 8.40 Vietnam 6.58 7.00 Thailand 7 5.70 5.30 5.

  40. Slide 40: 10th Malaysia Plan (2011-2015) and New Economic Model

    10th Malaysia Plan (2011 – 2015) and New Economic Model : Moving Malaysia to the rank of high income economies  10th Malaysia Plan (10MP) snapshots  Government Transformation Programme & New 9MP 10MP 10MP : Key macroeconomic targets 2006 – 2010 2011 ‐ 2015 Economic Model  GDP growth target 6% pa

  41. Slide 41: Economic Transformation Programme

    Economic Transformation Programme –Contents Propelling Malaysia towards becoming a High‐Income, Developed Nation 4 strategic thrusts to transform Economic Transformation Programme (ETP) roadmap Malaysia towards Vision 2020 >RM48K GNI (USD15K) per capita 1 Malaysia 3.3 mil new jobs RM23.77K GNI (USD6

  42. Slide 42: Economic Transformation Programme: Financial Services as 1 of 12 NKEAs

    Economic Transformation Programme : Financial Services as 1 of 12 NKEAs Vision • Evolve to serve needs of biz & consumers in high‐income economy Greater KL Oil, Gas & Energy • Increase depth, regional & global market shares in selected niches Palm Oil Aspirations • Strengthen core Agriculture • Serv

  43. Slide 43: Industry Growth: Loans by Sector, Deposits by Type

    Industry Growth : Loans by Sector, Deposits by Type Industry Industry Loans Loans Growth Growth byby Purpose Purpose Sept '09 Sept '10 RM’bil 9.6% 12.4% 12.9% 14.8% 12.0% Retail loans growth : 11.8% AmBank Group’s growth : +5% +4% ‐6% +7% +27% Retail loans growth : 3% Banking System RM’bil 423.7 Loa

  44. Slide 44: Loans by Economic Purpose: AMMB vis-à-vis Industry

    Loans by Economic Purpose : AMMB vis‐à‐vis Industry AmBank AmBankGroup GroupLoans LoansGrowth Growthby byEconomic EconomicPurpose Purpose Sep‐09 Sep‐10 RM’bil 4.6% 4.2% ‐6.4% ‐7.4% 24.4% ‐0.1% ‐42.4% 419.7% 5.0% 44.0% 49.8% 25.7 11.9 24.6 13.9 11.4 4.3 9.7 1.7 2.3 2.4 1.2 0.0 1.6 5.3 1.8 2.5 3.5 2.4

  45. Slide 45: Competitive Positioning: sound size and market position in key businesses

    Competitive Positioning : Sound size and market position in key businesses (as at mid 2010)  # 2 auto financier [21.2%]  # 8 in housing loans (incl foreign banks) [ 5.0%] #4  # 7 in credit cards (incl foreign banks) [ 6.0%] Retail Banking [9.9%]  # 3 in personal financing [ 6.4%]  # 5 in no. of

  46. Slide 46: Competitive positioning: Shareholding structure

    Competitive positioning : Shareholding structure As at 30 September 2010 No. 17 (Malaysia – market capitalisation) & Amcorp Group ANZ Funds Pty Ltd Employees Provident Other Bhd # Fund Board shareholders 176 (global – 1,000 banks by market 16.8% 23.8% 12.5% 46.9% capitalisation) : AMMB  RM17.63 bil

  47. Slide 47: Competitive positioning: strategic partnership with global partner, ANZ

    Competitive positioning : Strategic partnership with global partner, ANZ ANZ’s Regional Aspiration : ANZ is committed to AmBank Group’s long‐term success Create a leading Super Regional bank and aspirations Global quality, regional focus ANZ has provided key resources and support Director Director D

  48. Slide 48: Strategic Business Transformation: Good Progress

    Strategic Governance & Strategic Business Transformation : Good Progress Business High Priority Growth Initiatives Enablement Transformation Functions • Set Group’s vision & aspirations 12 months • Agreed Group’s transformation strategy, agenda and targets (FY 2008) • Realigned auto financing busine

  49. Slide 49: High Priority Growth Initiatives: Implemented To-Date

    High Priority Governance & High Priority Growth Initiatives : Implemented To‐Date Strategic Business Transformation Growth Enablement Initiatives Functions • Implemented new profit centre based retail branch distribution 12 months (FY 2008) model • Accelerated CASA growth via aligning profitability

  50. Slide 50: Governance and Enablement Functions Streamlined

    Governance and Enablement Functions Streamlined : Governance Strategic Business High Priority and Supports Better Decision Making Transformation Growth Initiatives Enablement Functions • Privatised AmInvestment Bank • Consolidated some Group support into Centres of Excellence 12 months • Consolidate

  51. Slide 51: Competitive positioning: continues to strengthen

    Competitive positioning : continues to strengthen  Well diversified universal bank & # 4 largest banking group (market capitalization)  # 4 retail bank, # 5 business and CIB lending  Strong customer‐focus, lead in  Top 2 investment bank, #5 Islamic banking, #7 general insurance customer satisfac

  52. Slide 52: Wide market reach and multiple distribution channels

    Wide market reach and multiple distribution channels Aspirations  Increased customer satisfaction via integrated & seamless channels model  Expand branch network & SSM footprint  Further build & improve sales & service capabilities Strategic initiatives , expanding distribution footprints Branch

  53. Slide 53: Competitive Positioning: Products and Services

    Competitive Positioning : Products and Services eBanking Personal Internet banking Deposits Cards Loans Family First Wealth Floating Rate AmBank@work Management NIDs Mobile Banking Business Deposits Loans and Cash Trade Services Factoring Treasury AmBank@work AmOnline Bill Payment Financing Manageme

  54. Slide 54: Reaping awards and accolades

    Reaping awards and accolades The Asset Triple A Awards 2010 : ⁻ Malaysia’s Asset Management Company of the Year ⁻ Islamic Asset Management House of the Year ACI Excellence Awards 2010 : AmBank received “Highly Commended” honour for easy‐to‐use Inter Bank Loan Repayments Service via ATMs The Asset Tr

  55. Slide 55: Major investment banking deals clinched

    Major investment banking deals clinched M&A Secondary Offerings IPO Delegateam Sdn Bhd RM1.65 billion Techfast Holdings Berhad Lion Diversified Holdings Berhad Voluntary Take‐Over Offer RM8.33 million Ivory Properties SIG Gases Berhad Sinotop Holdings Group Berhad on Sarawak Energy Berhad Multi Spor

  56. Slide 56: Ratings upgraded

    Ratings upgraded AmBank (M) Berhad AmInvestment Bank Berhad RAM AA3/P1/ RAM AA3/P1/ AA3/P1/ AA3/P1/ AA3/P1/ AA28 AA28 Stable Stable Stable Stable Stable A1/P1/ A1/P1/ AA36 AA36 Stable Stable A2/P1/ A14 A14 negative outlook issued in July 2009 but Stable A22 moved up to stable in December 2009 A22 0

  57. Slide 57: Banking sector share price movement / Target price and recommendations

    Banking sector share price movement / Target price and recommendations Banking Sector Share Price Movement Index Movement (May 07 = 100) 160.0% / index change at close of 30 September 10 vs 18 May 07 140.0% (strategic partnership with ANZ) 120.0% RHBC  + 53.2% (RM7.23) 100.0% 100% base AMMB  + 5

  58. Slide 58: Research Coverage

    Research Coverage Research House Analyst AMMB Holdings Berhad 1 Affin Investment Bank Tan Ei Leen 2 Alliance Research Sdn Bhd Soh Meng Hui RM5.93 30.9.10 3 Bank of America – Merrill Lynch Research Alistair Scarff / Tay Chin Seng Price RM5.98 52‐week HIGH 4 BNP Paribas Securities (Singapore) Pte Ltd

  59. Slide 59: 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

  60. Slide 60: 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 FY2011 Earnings Presentation on 6ix