Ammb Holdings Bhd. · MYX:AMBANK

Ammb Holdings Bhd — 9MFY2017 Earnings Presentation

54 slides from Ammb Holdings Bhd's earnings presentation, Feb 24, 2017

  1. Slide 1: 9MFY2017 Results Investor Presentation

    9MFY2017 - Results Investor Presentation 24 February 2017 V0 9MFY2017 Results – Investor Presentation

  2. Slide 2: 9MFY2017 – Results

    9MFY2017 – Results 01 02 03 04 9MFY2017 GCEO GCFO Supplementary information • Quick take • 9MFY2017 • Financial • Group on our progress highlights performance results & financial • Strategic • FY2017 details priorities expectations • Divisional • Business performance heartbeat • Economic data 2 9MFY

  3. Slide 3: Performance indicators

    Performance indicators RM’ mil QoQ YoY Forecast Progress Q3FY17 9MFY17 Growth Growth FY17 Status Total Income 853.4 2,758.9 10.6% 1.2% Expenses 517.9 1,577.9 1.3% 1.6% Allowances (73.3) (179.5) 73.0% 18.4% PATMI 313.2 988.8 11.2% 3.3% Circa 5% ROE 8.0% 8.5% 1.0% 0.7% Circa 8.5-9% CTI 60.7%

  4. Slide 4: 9MFY2017 update

    9MFY2017 update Performance highlights: • PATMI  3.3% YoY reflecting margin pressures offsetting higher recoveries and NoII benefits • QoQ NIM 10 bps as COF eased from optimisation of funding and deposits whilst managing pricing • Lower performing provisions and higher recoveries reflecting improv

  5. Slide 5: 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 Top 4 Aspirations in Key Segments Financial metrics 1. Market capitalisation (relative) To be Top 4 in each of our 4 growth 2. Revenue growth segments (Mass Affluent, Affluent, SME, Mid

  6. Slide 6: 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

  7. Slide 7: Retail Banking Heartbeat

    Retail Banking Heartbeat … Stronger net acceptance, doubled MRTA income Mortgage Focus on secondary market to drive disbursements for more immediate income recognition Improving returns via reducing cost to serve and managing attrition New partnership with national carmakers is increasing share of n

  8. Slide 8: Wholesale Banking Heartbeat

    Wholesale Banking Heartbeat … A major growth catalyst has been new strategic tie-ups (e.g. CGC) SME Collaboration with CGC encouraging with extension of a further RM300m via Portfolio Guarantee scheme New product value proposition driving new business and recent loans growth momentum • Improving cre

  9. Slide 9: 9MFY17 results

    AmBank Group PATMI 3.3% lower YoY with quarterly PATMI of RM313.2m Loans grew 3.2% YoY, asset quality strengthened with GIL at 1.54% 9MFY17 results CASA composition 21.5% Fully loaded indicative CET 1 ratio at 10.9%1 1. Proforma, based on Retained Earnings as at 31 December 2016 9 9MFY2017 Results –

  10. Slide 10: 9MFY2017 … what remains a short-term task

    9MFY2017 … what remains a short-term task Increase Accelerate Improve CASA and Asset Capital topline NIM managing quality efficiency growth deposits Balancing loans growth Progressively increasing Concern in O&G and & NIM while contribution from non-residential Adequate to support maintaining pruden

  11. Slide 11: Profit sustained through improved NII and higher recoveries in Q3FY17

    Profit sustained through improved NII and higher recoveries in Q3FY17 QoQ YoY growth growth (%) (%) RM’ mil 9MFY17 9MFY16 1,022.2 85% 15% Net Interest 1,692.9 1,813.6 5 7 Income Non-Interest 32 E9 1,066.0 977.7 Income Total 11 1 2,758.9 2,791.3 Income Expenses 1,577.9 1,553.7 1 2 PBP 1,181.0

  12. Slide 12: Income impacted by NIM compression and market volatility

    Income impacted by NIM compression and market volatility Net Interest Income (RM’ mil) Non-interest income / Total income: YoY Income growth Composition 9MFY16 – RM977.7m / 35.0% breakdown (%) (%) 9MFY17 – RM1,066.0m / 38.6% 9MFY16 1,813.6 NII - Retail 81.6 9 50 • Higher loans growth from Mortgage

  13. Slide 13: Margin management beginning to yield results

    Margin management beginning to yield results Quarterly net interest income (RM’mil) & NIM NIM QoQ trend vs. industry movement FY15 NIM: 2.43% FY16 NIM : 2.02% YTD FY17 NIM : 1.96% 5.14% 5.15% 5.08% 5.07% 5.01% 4.92% 4.95% 2.54% 2.45% 2.38% 2.33% Gross Yield 2.12% 2.11% Industry Avg. 2.02% 4.62% 4.55

  14. Slide 14: Credit costs underpinned by sound asset quality and recoveries

    Credit costs underpinned by sound asset quality and recoveries Allowances (RM’ mil) Gross impaired loans ratios Retail Wholesale Group Industry 9MFY16 Individual Collective Recoveries Others 9MFY17 Allowance Allowance 2.51% 2.43% 2.22% 2.17% 2.00% (151.6) 2.01% 1.95% 1.96% 1.86% 1.94% 1.90% (179.5)

  15. Slide 15: Loans growth reflecting target segments

    Loans growth reflecting target segments Gross loans movement (RM’bil) YTD growth Composition FY16 87.9 (%) (%) Trade Loans 0.8 E 13 8 • Higher utilisation SME 1.3 E 11 15 • SME ready infrastructure and strategic tie-ups driving segment penetration Corporate Banking 1.2 E5 23 IB 0.1 E 5 2 Mortgag

  16. Slide 16: Total deposits reflect balancing of LDR and funding costs

    Total deposits reflect balancing of LDR and funding costs Deposits and CASA balance (RM’ bil) Deposits QoQ growth:  4% CASA QoQ growth:  2% CASA Fixed deposits CASA Composition (%) 24.5% 21.9% • CASA growth driven by Retail 20.5% 20.3% 20.9% 21.1% 20.7% 21.5% 20.4% 90.0 92.1 89.8 89.3 90.9 90.4 86

  17. Slide 17: Adequate capital levels

    Adequate capital levels RWA/Total assets RM’ bil Industry2 • Group capital ratios remain adequate, Total Assets RWA/Total Assets 77.8% 75.9% 72.4% 72.7% 71.5% 71.2% whilst we are optimising capital structure and RWA efficiency for Basel III FHC @ 64.1% 63.7% 62.4% 61.1% FY2020 62.2% 62.0% • Position

  18. Slide 18: 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: Circa FY182 10% 10% 50% 15% Growth Refers to FHC CAR 1. Based on projected 2016 GDP growth of 4%, revised down from 4.2%

  19. Slide 19: Expectations for FY2017

    Expectations for FY2017: Targeting negative Expecting stronger Ongoing focus on expense growth performance in balancing loans through cost targeted segments, growth, asset quality management, with with stronger and margins increasing benefits momentum in SME from efficiency agenda Overall asset qual

  20. Slide 20: Group Performance

    Group Performance 9MFY2017 Results – Investor Presentation

  21. Slide 21: Quarterly performance

    Quarterly performance PATMI (RM’ mil) & ROE (%) Net lending (RM’ bil) Loans excluding Auto Finance QoQ growth:  4.0% Auto Finance QoQ growth (excl.AF):  6.0% PATMI ROE PATMI QoQ growth:  11.2% ROE QoQ growth:  1.0% 89.5 85.7 86.2 84.1 85.3 85.4 86.5 85.8 86.1 15.1% 11.8% 24.6 24.1 23.3 22.7 22.2

  22. Slide 22: Yearly performance

    Yearly performance 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:3.8%/3.5%1 CAGR FY11-16:6.8%/6.3%1 YoY Growth: 3.3%

  23. Slide 23: 9MFY17 results reflect subdued operating environment

    9MFY17 results reflect subdued operating environment • Top line growth influenced by: Profit before provision (RM’mil) • NIM compression Reported Underlying YoY growth:  4.6% • Volatile equity and debt markets 1 2,566.8 • Wholesale Bank’s improved bottom line supported by stronger trading gain 2 2,

  24. Slide 24: Resilient NoII amid softer market underpinned by trading and investment income

    Resilient NoII amid softer market underpinned by trading and investment income Non-interest income (RM’mil) Non-interest income by lines of business (YoY) QoQ growth:  32.1% YoY growth:  9.0% Fee Trading & Investment Insurance Others  27% 405.3 Others 5% 385.6 Investment Bank  48% 37.5 14% 13.8

  25. Slide 25: Sound asset quality and healthy coverage ratios

    Sound asset quality and healthy coverage ratios Loan loss coverage vs. industry 131.5% 129.3% 127.4% • LLC higher with improvement Adjusted in asset quality from AmBank Group¹ consistent credit underwriting 102.2% 104.5% 104.9% 103.0% 107.0% 108.5% standards 99.4% 89.6% 89.4% Industry 98.8% 90.2% 94

  26. Slide 26: Improved asset quality attributed to portfolio rebalancing initiatives

    Improved asset quality attributed to portfolio rebalancing initiatives Impaired loans (RM’ mil) Provision charges/(Writebacks) (RM’ mil) Gross Impaired Loans GIL Ratio Performing Loans Non-Performing Loans Recoveries Others 1.98% 1.94% -37.5 1.86% 1.79% 30.4 -209.5 1.54% -151.6 -179.5 1,680.5 1,662.

  27. Slide 27: Loans by sector & by purpose vs. industry

    Loans by sector & by purpose vs. industry Loans by sector Loans by purpose Dec-16 YTD Composition RM’ bil growth Purchase of transport 20.4 -7.6% 22.4% vehicles Loans Working capital 28.5 +9.4% 31.5% composition 4.2% 3.3% 9.9% 0.5% 4.5% 5.3% 2.4% 5.3% 9.0% 2.4% 52.8% 0.4% Purchase of resi property 2

  28. Slide 28: Deposits movement

    Deposits movement AmBank Group (RM’ bil) Deposits Composition (AmBank Group) Dec'16 YTD  3.2%  5.6%  19.6%  4.1% growth FCY 5% Current Account & Savings Account 20% 86.7 65.2 Term Deposits 75% 17.0 4.5 CASA CASA Term Term Deposits Deposits FCY FCY& &Others Others Total TotalDeposits Deposits Dep

  29. Slide 29: Diversified funding sources, prudent liquidity management

    Diversified funding sources, prudent liquidity management Funding composition vs. industry • Conservative approach to liquidity FY10 FY13 FY15 FY16 9MFY17 Industry Ave1 management, LCRs for all banking Equity & debt entities above regulatory requirement capital 15% 14% 15% 16% 16% 15% Customer • Hig

  30. Slide 30: Divisional Performance and Business Insights

    Divisional Performance and Business Insights 9MFY2017 Results – Investor Presentation

  31. Slide 31: Wholesale banking overview

    Wholesale banking overview Total income (YoY movement) and total assets by line of business (RM’ mil) Unit Trust – FUM (RM’ bil)  34% 21.0 21.5 20.8  8% Others 19.0 18.7 19.4 3% Funds 13.4 Management 11.3 8%  8%  48% Wholesale Banking Capital & Coverage Equity Wholesale Others 63% Banking Market

  32. Slide 32: Wholesale banking uplift driven by NoII and recoveries

    Wholesale banking uplift driven by NoII and recoveries QoQ PAT (RM’ mil) QoQ growth:  23.4% YoY growth:  8.8% • NII decreased 3.5% YoY from margin FY15: RM987.4 mil FY16: RM830.1 mil 9MFY17: compression and large repayments from RM671.7 mil corporate loans • Trading and investment income grew 69%

  33. Slide 33: Wholesale banking

    Wholesale banking Income Statement (RM’mil) YoY growth  3.5%  14.9%  3.7%  4.4%  3.3%  75.6%  9.6%  12.6%  8.8% Net Interest Non-Interest Total Provisions/ RM’ mil Expenses PBP PBT Tax & Zakat PAT Income Income Income Allowances 9MFY17 648.0 495.3 1,143.3 392.8 750.5 (122.5) 873.0 201.3 671

  34. Slide 34: Retail banking overview

    Retail banking overview Total income (YoY movement) and loans by line of business Wealth Sales (RM’ mil) QoQ growth:  27% YoY growth:  29% Total income  52%  8% Others  18% Wealth 4% 3% Auto 21% 283 268 336 439 429 538 393 436 482 736 537 Auto 42% Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY1

  35. Slide 35: Retail banking results reflect margin compression

    Retail banking results reflect margin compression QoQ PAT (RM’ mil) QoQ growth:  22.1% YoY growth:  26.3% • Retails loans base up 4% YoY supported by FY15: RM419.9 mil FY16: RM455.0 mil 9MFY17: RM249.0 mil robust growth in Mortgages partially offset by contraction in Auto Finance • Fee income grow

  36. Slide 36: Retail banking

    Retail banking Income Statement (RM’mil) YoY growth  8.8%  12.0%  9.4%  0.4%  24.8%  >100.0%  26.4%  26.8%  26.3% Net Interest Non-Interest Total Provisions/ RM’ mil Expenses PBP PBT Tax & Zakat PAT Income Income Income Allowances 9MFY17 843.1 177.6 1,020.7 691.8 328.9 2.7 326.2 77.2 249.0

  37. Slide 37: 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 52 1 Kelantan Pulau Pinang Perak 18 50 1 Terengganu Sabah Labuan Selangor 38 242 2 Perak Brunei Darussalam Kuala Lumpur 23 127 3 Pahang Selangor Putrajaya 1 3 Kuala

  38. Slide 38: General insurance sustained Gross Premium and improved historical claims experience

    General insurance sustained Gross Premium and improved historical claims experience YoY PAT (RM’ mil) • PBT increased 3.6% YoY from improved YoY growth:  4.0% historical claims experience 256.4 • Gross premium sustained on higher non- 194.0 motor insurance 175.0 133.1 • Key operating ratios remaine

  39. Slide 39: Insurance and Group Funding & Others

    Insurance and Group Funding & Others Income Statement – Insurance (General & Life/Takaful) (RM’mil) YoY growth  19.5%  15.7%  25.0%  >100.0%  29.8%  48.8%  26.3% 9MFY17 PAT (composition of Group) 14% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances 9MFY17 437.9 250

  40. Slide 40: 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

  41. Slide 41: Roadmap & Strategy Focus

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

  42. Slide 42: Islamic Banking

    Islamic Banking Income Statement (RM’mil) YoY growth  3.0%  1.5%  5.4%  44.3%  9.6%  24.2%  4.6% 9MFY17 PAT (composition of Group) 16% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PATZ Allowances 9MFY17 651.1 414.5 236.6 28.2 208.4 44.9 163.6 9MFY16 671.1 420.9 250.2 19.5 230

  43. Slide 43: Funding sources and maturity profile

    Funding sources and maturity profile Funding diversity underpinned by LDR1 of 90.3% 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

  44. Slide 44: 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 44 9MFY2017 Results – Investor Presentation

  45. Slide 45: 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

  46. Slide 46: Shareholding structure & franchise value

    Shareholding structure & franchise value 23.8%1 AmCorp 13.0% EPF 14.9% Others 48.3% As at 31 December 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 Car

  47. Slide 47: Banking sector 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

  48. Slide 48: Opportunities and outlook

    Opportunities and outlook 2016 GDP 2017 GDP Forecast Real GDP Growth Avg USDMYR Malaysia’s GDP growth 4.48 India 7.4 4.13 7.6 3.27 3.91 6.8 • GDP grew 4.2% for CY16 supported by private 3.06 3.09 3.15 Philippines 7.0 consumption. Private investment moderated to PR China 6.7 6.2 4.7% led by capital s

  49. Slide 49: Opportunities and outlook

    Opportunities and outlook CPI Business Conditions Index Business and consumer confidence Consumer Sentiment Index recovering • Underlying inflationary pressure expected to remain with bulk of it contributed by weaker BCI 81.2 CSI 69.8 ringgit, firmer commodity and crude oil prices CPI 1.7% • Consume

  50. Slide 50: Key economy indicators

    Key economy indicators GDP, consumption and investment growth Consumer Indices Auto Industry Index (AII) Residential Property Index (RPI) GDP Consumption Investment Retail Trade Index (RTI) Consumption 5.8% AII 120.8 Investment 2.0% RTI 91.4 RPI 87.5 GDP 4.5% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2

  51. Slide 51: Banking system data

    Banking system data Deposits growth Loans growth Total deposits LD ratio Retail yoy growth Non Retail yoy growth Total loans yoy growth 1,695.4 89.7% 5.3% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Jun Jun Jun Jun Jun Jun Dec Dec Dec Dec Dec Dec Mar Mar Mar Mar Mar Mar S

  52. Slide 52: 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-16 Mar-16 Jul-16 Jul-15 Oct-15 Oct-16 Jun-15 Jun-16 Apr-15 Dec-15 Jan-16 Feb-16 Apr-16 Dec-16 Sep-15 Sep-16

  53. Slide 53: 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

  54. Slide 54: 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 — 9MFY2017 Earnings Presentation on 6ix