Ammb Holdings Bhd. · MYX:AMBANK
Ammb Holdings Bhd — H1 2016 Earnings Presentation
42 slides from Ammb Holdings Bhd's earnings presentation, Nov 19, 2015
Slide 1: H1FY2016 Results, Investor Presentation
H1FY2016 Results, Investor Presentation 19 November 2015
Slide 2: Our vision and FY15-17 growth agenda
Our vision: As Malaysia’s preferred diversified, internationally connected financial solutions group, we take pride in growing your future with us Our FY15-17 growth agenda: 2. Leverage strategic partnerships & 1. Deliver on focused organic growth deliver on acquisitions 3. Continue to optimize effi
Slide 3: Retail Banking, Wholesale, General Insurance, Islamic Banking, Life & Family Takaful
Retail Wholesale General Islamic Life & Banking Banking Insurance Banking Family Enhance Recognition by To be the most To be known as Takaful customer service our customers as trusted insurer in the Islamic Bank To be a leading rhythm, build their preferred Malaysia which prospers customer centric s
Slide 4: Delivering on FY15-17 strategic agenda highlights
Delivering on FY15-17 strategic agenda highlights Leverage strategic partnerships & deliver on Deliver on focused organic growth acquisition • Retail – Targeted segment play • General insurance (acquisition of Kurnia) Business specialists at branches nationwide Maintain top 3 general insurer I
Slide 5: Headline results
Headline results Income lower by Better Q2 results NIM compression over Q1 and cautious IB market YoY growth RM’ mil H1FY16 (Underlying) Loan growth Sound asset Total income 1,898.7 (14.0%) predominantly quality, mortgage & intensified corporate collection effort Expenses 986.8 (4.7%) Profit bef
Slide 6: Performance indicators
Performance indicators Q2FY16 H1FY16 FY16 Guidance PATMI - RM’ million 382.5 722.0 Flat 2 - Growth (%) 12.7%1 (6.9%)2 ROE 10.2% 9.8% Circa ~ 10.5% CTI 53.4% 52.0% ≤ 52% Gross impaired loans ratio 1.95% ≤ 2% Proposed dividend 5.0 sen per share 40 – 45% payout Other details: Gross loan growth 0.3%3 2%
Slide 7: Better Q2 performance
Better Q2 performance PATMI (RM’ mil) & ROE Net lending (RM’ bil) QoQ growth: 1.4% PATMI QoQ growth: 12.7% Loans excluding AF Total YoY growth: 0.6% PATMI ROE ROE QoQ growth: 0.9% 16.0% 15.1% 85.7 84.1 85.3 85.6 84.7 86.2 12.7% 11.8% 9.3% 10.2% 536.9 519.2 445.8 416.6 61.0 60.6 62.4 63.5 61.9 63.5 3
Slide 8: First half results reflect subdued operating environment
First half results reflect subdued operating environment PATMI (RM’ mil) & ROE Total income (RM’ mil) and non-interest income (%) PATMI ROE PATMI Reported Total income (underlying) CAGR FY11-15: 4.7% CAGR FY11-15: 9.3% CAGR FY11-15: 0.1% PATMI Underlying YoY growth: -26.5% YoY growth: -4.5% Total in
Slide 9: Modest top line growth, margin compression persists
Modest top line growth, margin compression persists Total income (RM’mil) • Top line growth influenced by: YoY Growth 13.2% 32.2% 12.5% 33.2% 6.4% - NIM compression, as competition remains 26.9% intense given lower demand and focus on better 390.0 14.0% quality assets 187.6 20.6 - Flat
Slide 10: Targeted loans growth, driven by mortgage and wholesale
Targeted loans growth, driven by mortgage and wholesale Gross loans outstanding (RM’ bil) QoQ Growth: • Loans growth responding to greater Retail Non-retail 1.3% sales focus and relationship 86.6 87.5 87.8 85.7 86.8 management • Focus in preferred customer segments 39.0 40.7 41.5 39.8 41.0 lifted
Slide 11: Sustaining focus on low cost deposits (CASA)
Sustaining focus on low cost deposits (CASA) Deposit and CASA balance (RM’ bil) • CASA composition sustained through active relationship management and payroll Customer deposits CASA CASA Composition (%) acquisition programmes, despite outflow of 20.1% 20.5% 20.3% 21.0% 21.1% term deposits as expect
Slide 12: Asset quality remains strong, allowances lower with higher recoveries
Asset quality remains strong, allowances lower with higher recoveries Allowances (RM’ mil) • Allowances lower with higher recoveries from intensifying collection efforts 21.5 • Credit costs trending below industry average 37.8 since Q2FY15 125.0 • GIL ratio at 1.95% as retail assets quality 57.9 con
Slide 13: Continued emphasis on cost discipline
Continued emphasis on cost discipline Expense growth driver (RM’ mil) 12.3% • Expense well controlled, balancing 89.8 4.7% between BAU expenses and 1,125.4 50.5 9.2 18.4 17.6 11.7 investments to deliver on our 1,035.6 957.5 986.8 growth agenda CTI ratio: • Despite consistent cost discipline, H1F
Slide 14: Funding and capital, sound & conservative positioning
Funding and capital, sound & conservative positioning Funding composition vs. industry • Prudent liquidity management with LCRs >100% for Industry FY07 FY10 FY13 FY15 H1FY16 all banking entities Ave • Higher composition of stable medium term funding Equity & debt 10% 15% 14% 15% 16% 14% capital vis-
Slide 15: Wholesale Banking, subdued outlook but stronger loans momentum
Wholesale Banking, subdued outlook but stronger loans momentum and grew CASA QoQ PAT (RM’ mil) • QoQ profit increased whilst loan growth picking up in Q2 as lumpy repayments stabilising and introduction of new financing/business solutions 22% • YoY PAT down reflecting NIM compression, cautious bus
Slide 16: Retail Banking, focus on main bank relationships
Retail Banking, focus on main bank relationships QoQ PAT (RM’ mil) • Performance impacted by margin compression, run-offs in cards and auto finance, though partially mitigated by lower allowances from improved asset quality 28% • Stronger momentum in Q2 from mortgage growth, higher average auto fi
Slide 17: General insurance, reflecting lower car sales
General insurance, reflecting lower car sales QoQ PAT (RM’ mil) • Gross written premium lower QoQ primarily due to motor insurance, corresponding to challenging car sales data • PAT was lower YoY impacted by lower premium and investment income. 13% • Key initiatives for Q3: Motor Renewal New cus
Slide 18: Outlook
Outlook Malaysia Banking • GDP growth anticipated to slow from 6.0% in • Monetary policy expected to remain prudent to 2014 to 4.7% in 2015, reflecting support slower economic growth • Weak commodity prices, dampened exports, • Loans growth to moderate in tandem with lower government spending and sl
Slide 19: AmBank Group Second Half FY16 Considerations and Expectations
AmBank Group Second Half FY16 Considerations and Expectations Divisions to show Sound asset quality, moderate growth Disciplined lending in recoveries likely to momentum, given all targeted sectors to level off leading to current economic continue normalised credit cost outlook BAU Expense Pricing c
Slide 20: Appendix
Appendix Your Bank. Malaysia’s Bank. AmBank. H1FY2016 Results – Investor Presentation
Slide 21: Appendix – Income Statement
Appendix – Income Statement 9% Growth 13.2% 43.5% 26.9% 12.3% 38.1% >100% 27.0% 30.7% 25.9% 17.0% 26.5% 982.8 mil 722.0 mil 12% 17% 88% 83% 85% (RM’ mil) Net Non- Total Provisions/ Tax & PATMI PATMI Interest Interest Expenses PBP PBT PAT MI income Allowances Zakat H1FY16 H1FY15
Slide 22: Appendix – Net interest margin
Appendix – Net interest margin NIM and COF (YoY) SRR 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% 3.28% 4.00% 3.13% 3.10% 4.00% 3.10% 4.00% 3.09% 3.17%4.00% COF 2.98% 2.94% 3.13% 3.25% 3.25% 3.00% 3.00% 3.10% 3.00% 3.10% 3.00% 3.09% OPR 2.98% 2.94% 2.92% 2.92% 3.00% 3.00% MFRS 10 2.75% 2.75% 2.68% 3.00%2.68%
Slide 23: Appendix – Loans by sector vs. Industry
Appendix – Loans by sector vs. Industry Sep-15 YoY Loans by purpose Sep’15 Composition AmBank Group growth Purchase of transport 22.8 -11.1% 26.2% Loans by Sector Sep-15 vehicles Loans Working capital 24.2 +23.7% 27.8% Composition 5.0% 4.2% 10.0% 0.6% 4.0% 5.2% 3.2% 3.5% 9.8% 1.9% 52.2% 0.5% Purchas
Slide 24: Appendix – Deposits by sector vs. Industry
Appendix – Deposits by sector vs. Industry AmBank Group Sep'15 Core Deposits Composition (AmBank YoY 0.1% 14.3% 10.0% 3.3% 4.6% Group) Growth Savings RM’ bil 6% Current Account 15% 89.3 70.5 Fixed Deposits 79% 13.6 18.8 5.2 Savings Current Account CASA Fixed Deposits Core Deposits Industry
Slide 25: Appendix - Auto Finance
Appendix - Auto Finance Auto Finance loans vs industry vehicle sales Auto Finance monthly balance vs. net outflows Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Balance O/S Net o
Slide 26: Appendix – Retail Banking
Appendix – Retail Banking Income Statement (RM’mil) Growth 13.0% 2.5% 24.1% 56.4% 9.9% 13.9% 8.6% H1FY16 PAT (composition to Group) 27% PAT PAT Total Income Expenses PBP Allowances PBT Tax H1FY15 H1FY16 H1FY16 772.4 444.2 328.2 57.4 270.8 64.3 206.5 H1FY15 888.3 455.7 432.6 131.9 300.7
Slide 27: Appendix – Wholesale Banking
Appendix – Wholesale Banking Income Statement (RM’mil) H1FY16 PAT Growth 16.9% 19.3% 15.5% 17.7% 11.7% 13.9% 11.0% (composition to Group) 54.7% 55% PAT PAT Total Income Expenses PBP Allowances PBT Tax H1FY15 H1FY16 H1FY16 714.0 248.0 466.0 (83.2) 549.2 124.7 424.5 H1FY15 858.8 307.3 55
Slide 28: Appendix – Insurance and Group Funding & Others
Appendix – Insurance and Group Funding & Others Income Statement - Insurance (RM’mil) Growth 21.4% 0.6% 37.8% >100% 40.6% 83.6% 27.3% H1FY16 PAT (composition to Group) 14% PAT PAT Total Income Expenses PBP Allowances PBT Tax H1FY15 H1FY16 H1FY16 260.6 142.8 117.8 2.5 115.3 7.5 107.8 H1
Slide 29: Appendix – Islamic Banking
Appendix – Islamic Banking Income Statement (RM’mil) Growth 5.2% 10.0% 18.4% 51.9% 1.2% 4.3% 2.8% H1FY16 PAT (composition to Group) 16% PATZ PATZ Total Income Expenses PBP Allowances PBT Tax & zakat H1FY15 H1FY16 H1FY16 439.4 237.8 201.6 44.0 157.6 33.7 123.9 H1FY15 463.3 216.1 247.1 9
Slide 30: Appendix – Funding sources and maturity profile
Appendix – Funding sources and maturity profile Funding diversity underpinned by Fixed deposits: RM70.5billion LDR1 of 85.6% CASA: RM18.8 billion (strong retention) Supplemented by term funding & debt capital AMMB Holdings Berhad AmBank (M) Berhad AmBank Islamic Berhad AmBank (M) Berhad AmBank Islam
Slide 31: ANZ & AmBank Group Partnership
Appendix – ANZ & AmBank Group Partnership Partnership with ANZ since 2007 ANZ diversified footprints in Asia Value proposition • Seconding ANZ staff into key roles • Providing technical expertise • Support new product development • Two-way customer referrals • Joint account planning • Access to regi
Slide 32: AmGeneral Partnership
Appendix – AmGeneral Partnership Partnership with IAG IAG diversified footprints in Asia Value proposition • Involved in the management of AmGeneral Insurance, offering skills transfer, partnership and relationship models of IAG • Adding value through claims re-engineering savings, increased revenue
Slide 33: Appendix – Distribution channels
Appendix – Distribution channels Nationwide Branch Network Branches ATM RBC Perlis 1 4 Perlis Kedah 6 28 Kedah Pulau Pinang 14 49 1 Kelantan Pulau Pinang Perak 18 47 Terengganu Sabah Labuan Selangor 38 244 Perak Brunei Darussalam Kuala Lumpur 23 131 1 Pahang Selangor Putrajaya 1 3 Kuala Lumpur Neger
Slide 34: Shareholding structure & franchise value
Appendix – Shareholding structure & franchise value 23.8%1 AmCorp 13.0% EPF 16.7% Others 46.5% As at 30 September 2015 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%
Slide 35: Banking sector share price movement / target price and recommendations
Appendix – Banking sector share price movement / target price and recommendations Banking Sector Share Price Movement Upgraded ratings HLBK Ratings FY2007 FY2015 92.9% +3 AmBank (M) RAM LT: A2, ST: P1 LT: AA2, ST: P1 PBB 84.7% Outlook: Stable Outlook: Stable LT: BBB-, ST: A- RHB Cap 26.1% S&P LT: BB
Slide 36: Appendix – Key economy indicators
Appendix – Key economy indicators GDP, consumption and investment growth CPI and unemployment rate 3.2% 3.0% 6.5% 4.9% 0.5% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Sept Sept Sept Sept Sept Sept Dec Dec Dec Dec Dec June June June June June June Mar Mar Mar Mar Mar Mar 2010 2
Slide 37: Appendix – Banking system data
Appendix – Banking system data Household debt, national savings and retail Household debt movement impaired loan ratio Annual Change 100.0% To be updated for the his 87.9% 86.7% (%) 76.2% 81.3% 16.0 13.8 74.5% 80.0% 14.0 1.4 11.5 12.0 9.9 60.0% 3.2 2.3 10.0 34.6% 1.7 34.2% 33.0% 31.2% 30.9% 8.0 2.4
Slide 38: Appendix – Banking system data
Appendix – Banking system data Capital ratios Capital activities RM’bil Basel II Basel III 14.8% 12.8% 12.1% 13.1 Mar Mar Mar Mar Mar Mar Sept Sept Dec Dec Dec Dec Dec Sept Sep Sep Sep Jun Jun Jun Jun Jun Jun 2.5 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2010 2011 2012 201
Slide 39: Appendix – National statistics (ASEAN)
Appendix – National statistics (ASEAN) Real GDP Growth GDP per capita, 2015 (USD) 2014 2015F Unemployment (%) Inflation (%) Philippines 6.3% Indonesia 6.8% Singapore 53,224 0.6 -4.8 Indonesia 5.8% Malaysia 2.4% Malaysia 10,073 3.3 -1.4 Malaysia 3.0% Vietnam 2.2% Thailand 5,426 -4.0 3.1 Vietnam 2.5%
Slide 40: Appendix – Economic Transformation Programme
Appendix – Economic Transformation Programme ETP Overview Achievement of 12 NKEAs in 2013 and 2014 2020 Target KPI Scoring* GROSS NATIONAL JOBS NKEAs INCOME GNI New Jobs 2014 2013 (RM’bil) • RM48k (USD15k) GNI Greater KL/ Klang Valley 190 320,000 103% 98% • 31.6m population per capita • 3.3m additio
Slide 41: 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
Slide 42: 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 t