AMMB Holdings Bhd. · MYX:AMBANK
AMMB Holdings Bhd — FY2010 Earnings Presentation
62 slides from AMMB Holdings Bhd's earnings presentation, May 14, 2010
Slide 1: AmBank Group FY2010 Results Investors Presentation
AMMB Holdings Berhad AmBank Group p Results Investors Presentation FY2010 Results 14 May 2010 Cheah Tek Kuang Group Managing Director
Slide 2: Contents
Contents • Key Messages • Financial Fundamentals 1. Executive Summary • What is Ahead • Summary 2. Financials Update • FY2010 Group Performance 3. Business Strategy • Retail Banking • Business Banking • Investment Banking • Corporate & Institutional Banking 4 4. Business Segment Performance • Life A
Slide 3: AmBank Group snapshot
AmBank Group snapshot • Proud banking heritage & franchise spanning AMMB, Malaysia… over 30+ years • A top t 20 lilisted t d company on th the BBursa Saham S h Malaysia & rank globally 183 (by market cap amongst banks ), with diversified business 1 fundamentals • Record performance for three consecu
Slide 4: Record FY2010 profits (3 consecutive annual record results)
Record FY2010 profits (3 consecutive annual record results) Record FY2010 performance 9 Higher revenues underpinned by growing non‐interest incomes 9 Better‐than‐expected loans and CASA growth 9 Improved asset quality : higher LLC and record low NPL’s 9 PATMI performance exceeded consensus Key f
Slide 5: Strong FY2010 results, sets good foundations for 2011
Strong FY2010 results, sets good foundations for 2011 FY09 FY10 Ch Change Q4FY09 Q4FY10 Underlying PATMI growth : 20.1% Profit after Tax & MI 860.8 mil 1,008.6 mil 17.2% 179.8 mil 241.7 mil Performance ROE 11.7% 11.5% 0.2% 9.6% 10.3% ROA 1.04% 1.13% 0.09% 0.86% 1.06% EPSS 31 6 sen 31.6 34 7 sen 34.7
Slide 6: FY2010: Actual vs Consensus
FY2010 : Actual vs Consensus Actual vs Consensus Actual vs Consensus Performance Indicator / Market Ratio Actual Consensus Consensus (April 2009) (March 2010) FY2010 (as at April 2009) (as at March 2010) FY2010 FY2010 1.13% 0.81% + 0.32% 0 32% 9 1.05% + 0.08% 0 08% 9 11.5% 9.1% + 2.4% 9 11.4% + 0.1%
Slide 7: What is ahead
What is ahead … Increasing global optimism but potential for continuing volatility Malaysia : Acceleration in Malaysian economic recovery GDP 2010 : +5.0 to 6.0% (projection ) 1 I Increasing i optimism ti i ⁺ NEM (New Economic Model) ⁺ Monetary policies, better‐than‐expected exports OPR incr
Slide 8: Summary
Summary 1. Top 5 Banking Group (conventional + Islamic) in Malaysia with diversified business fundamentals expanding franchise, fundamentals, franchise and well supported by ANZ, our strategic partner. 2. Delivered 3 consecutive years of record profit performances exceeding market consensus. perform
Slide 9: AmBank Group Results Investors Presentation
AmBank Group Results Investors Presentation AMMB Holdings Berhad FY2010 Results 14 May 2010 Ashok Ramamurthy Deputy Group Managing Director & Group Chief Financial Officer AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 8
Slide 10: Contents
Contents • Key Messages • Financial Fundamentals 1. Executive Summary • What is Ahead • Summary 2. Financials Update • FY2010 Group Performance 3. Business Strategy • Retail Banking • Business Banking • Investment Banking • Corporate & Institutional Banking 4 4. Business Segment Performance • Life A
Slide 11: Sound profit growth, with conservative provisioning
Sound profit growth, with conservative provisioning REPORTED FY10 vs RM'mil FY09 FY10 FY09 Business Performance Net int income 2,289.2 2,518.5 +10.0% Income : Fee and comm 511.2 618.2 % +20.9% All Divisions recorded good growth in incomes Leveraging the recovery in capital and equity markets Inv
Slide 12: Strong contributions from all Divisions
Strong contributions from all Divisions Business Performance PATMI : Growth contributed by all business divisions Income and profit growth in Retail Banking FY10 vs delivered via focus on viable segments RM'mil FY09 FY10 FY09 Well‐balanced Business Banking profits with both income growth and low
Slide 13: Lower NIM but improving non-interest income and cost-to-income
Lower NIM but improving non‐interest income and cost‐to‐income Business Performance FY10 vs FY09 FY10 FY09 NIM impacted by : Reduced interest recoveries Net Interest Margin Change in asset mix towards lower 3.04% 2.98% ‐0.06% (NIM & NFR composite) margin but stable corporate loans Costs incurr
Slide 14: Faster than system loans and CASA growth
Faster than system loans and CASA growth FY10 vs RM'mil FY09 FY10 FY09 Business Performance Balance Sheet ‐ Lending / Financing Gross Loans / Financing 59,674.8 66,628.9 +11.7% Better than anticipated Net Loans / Financing 56,947.8 64,425.9 +13.1% loans growth, targeting viable segments Balance Sh
Slide 15: Asset quality now superior to industry average
Asset quality now superior to industry average Asset Quality Indicators 15 99.5% 100% 75.1% Best in class 67.3% collections systems 56 6% 56.6% 10 60% 39.3% 36.7% Superior credit / 32.2% risk tools yielding 7.60 20% better results 6.06 6.14 5 5.53 Led by experienced 5.8 3.60 20% ‐20% tteam 4.3
Slide 16: Lower new gross NPL / NPF formation, recoveries, write-offs and conversions
Lower new gross NPL / NPF formation, recoveries, write‐offs and conversions % New Gross NPL / NPF to Gross Loans / Financing % Gross NPL / NPF Conversion to Gross Loans / Financing 1.80% 1.20% 1 20% 1.20% 0 80% 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 % Recoverie
Slide 17: Portfolio rebalancing: Focus on viable segments and diversification
Portfolio rebalancing : Focus on viable segments and diversification Gross Loan / Financing movement (before netting Islamic financing sold to Cagamas) Retail Business / Corporate Loans composition trend Loan Composition % 36.6% 19.9% 3.7% 1.4% 1.3% 2.9% 17.9% 13.3% 1.7% FY10 4.2% 18.7% 33.4% 24.2 1
Slide 18: Good growth in Assurance and key Investment Banking portfolios
Good growth in Assurance and key Investment Banking portfolios RM’mil General Insurance Gross Premium Life Assurance Gross Premium Fund Assets Fund Assets 1,500 1000 4,000 800 577.0 585.8 624.4 449.0 476.3 545.6 382.6 352.2 390.4 438.2 312.1 340.9 S 13.0% 500 3,000 1,000 1 000 S 17.0% 17 0% 0 2,000
Slide 19: Accelerating growth in non-interest income and CASA
Accelerating growth in non‐interest income and CASA Non Interest / Financing Income Composition % Adjusted Customer Deposits by Type CASA composition 12.6% 11.2% 10.5% 12.2% Total 42.4b 55.8b 64.1b 70.3b 30% 29.6% CASA CAGR 15 7% 15.7% 21.8% 8.4 CASA 20% 6.8 17.5% 17.3% 6.3 FD + NID 10% 61 9 61.9 +
Slide 20: Diversified funding profiles
Diversified funding profiles Adj t d Customer Adjusted C t D it Deposits Adjusted Customer Deposits : by Sources Interest / Profit Rate Pricing Profile 2.6 Others 1 1.4 + Senior Individual and 1.0% 5.2% Non ‐ sensitive Notes Islamic 3.0 government 11.0% 0.1% 5.1% 4.5% 6.5% > 5 years 6.0% 7.5% 1 – 5
Slide 21: Balance sheet repositioned for rising interest rates
Balance sheet repositioned for rising interest rates RM’bil Interest / Profit Rate Risk : 0 ‐ 12 Interest / Profit Rate Risk : 1 ‐ 5 years months 34.9 42.9 42 9 49.2 10.0 10 0 10.8 13.4 13 4 ‐58.8 ‐64.3 ‐65.8 ‐4.9 ‐5.1 ‐7.4 ‐4.0 ‐2.9 ‐9.3 3.2 2.2 9.3 Mismatch profile Net mismatch ‐20.6 ‐19.2 ‐7.3 Ne
Slide 22: Improved earnings, returns ratios and capital adequacy
Improved earnings, returns ratios and capital adequacy ROE, % FY10 / FY09 change L0.2% ROA, % FY10 / FY09 change K0.09% EPS, basic FY10 / FY09 change K9.8% FY 09 / 08 change K0.2% FY 09 / 08 change K0.02% sen/share FY 09 / 08 change K12.1% Maintaining profitability despite p 11.5% 11.7% 11.5% 28.2
Slide 23: Contents
Contents • Key Messages • Financial Fundamentals 1. Executive Summary • What is Ahead • Summary 2. Financials Update • FY2010 Group Performance 3. Business Strategy • Retail Banking • Business Banking • Investment Banking • Corporate & Institutional Banking 4. 4 Business Segment Performance • Life A
Slide 24: Significant progress made in business transformation
Significant progress made in business transformation 12 months 24 months 36 months ((FY 2008)) ( 2009)) (FY ((FY 2010)) Set the agenda, and build consensus Build foundations and align Deliver profitable and differentiated and teamwork structures to deliver on strategy growth through GFC Agree visi
Slide 25: Malaysia's Preferred Banking Group with International Connectivity
Malaysia’s Preferred Banking Group with International Connectivity Malaysia’s • Customer satisfaction Aspirations: Top 4 Banking Group • Sound financial performances as measured by : • Well diversified and sustainable growth Customer focused • Develop a liability‐led business, complemented with asse
Slide 26: Increasing profit momentum forecast for FY 2011
Increasing profit momentum forecast for FY 2011 Maintain profitable growth & rebalancing focus via executing to our strategic agenda Overall Income diversification, cost management, deposit growth & enhanced risk disciplines Position business for economic recovery domestically and regionally v
Slide 27: Progressively building best in class key enablers in Malaysia
Progressively building best in class “key enablers” in Malaysia Better alignment to enable the key business Specialisation /market strategies including revenue growth Effectiveness, efficiency, cost optimisation Support enhanced risk management capabilities Speed‐to‐market, fast turnaround
Slide 28: Improving outlook but expecting higher capital requirements
Improving outlook but expecting higher capital requirements FY 10 Medium Term FY 07 FY 08 FY 09 FY 2011 Actual Aspirations (MTA) PATMI 14 – 18% ‐RM282.5 mil RM668.5 mil RM860.8 mil RM1,008.6 mil 16 – 20% CAGR ^ FY13 onwards : ROE ‐5.8% 11.5% 11.7% 11.5% 12 ‐ 13% * 15 – 18% * CTI 37.1% 39.6% 43.3% 42
Slide 29: AmBank Group well set to deliver on aspirations
AmBank Group well set to deliver on aspirations • Well diversified and significant market positions in key business segments 1 Universal banking • Wide distribution footprint and market reach group : • Sound financial fundamentals • Building “best in class” key enablers in Malaysia • Focus on custom
Slide 30: Summary
Summary 1. Top 5 Banking Group (conventional + Islamic) in Malaysia with diversified business fundamentals, expanding franchise, and well supported by ANZ, our strategic partner. 2. Delivered 3 consecutive years of record profit performances, exceeding market consensus. 3. Improved funding and capit
Slide 31: Contents
Contents • Key Messages • Financial Fundamentals 1. Executive Summary • What is Ahead • Summary 2. Financials Update • FY2010 Group Performance 3. Business Strategy • Retail Banking • Business Banking • Investment Banking • Corporate & Institutional Banking 4 4. Business Segment Performance • Life A
Slide 32: Retail Banking Division
Retail Banking Division Income Expenses PBP PAT Achieving profitable growth, balancing between Composition to Group 54.6% 49.3% 58.4% 65.1% margins and credit costs FY10 vs Income growth underpinned by focus on profitable RM'mil FY09 FY10 FY09 segments and risk pricing Income 1,754.8 1,952.8 +11.3
Slide 33: Business Banking Division
Business Banking Division Income Expenses PBP PAT Achieving profit growth post 9.2% 5.9% 11.6% 11.9% Composition to Group financial consolidation FY10 vs Income growth from lending to stable sectors, sectors trade RM'mil FY09 FY10 FY09 and transactional Income 313.4 329.6 +5.2% Cost increase ref
Slide 34: Corporate & Institutional Banking Division
Corporate & Institutional Banking Division Accelerate Income Expenses PBP PAT growth, underpinned by higher 7.5% 5.8% 8.7% 10.0% Composition to Group CASA, non‐interest income and regional presence FY10 vs Diversified loans portfolio provided good support for RM'mil FY09 FY10 FY09 income growth In
Slide 35: Investment Banking Division
Investment Banking Division Reposition as consistent top 3 Income Expenses PBP PAT player whilst delivering 8.6% 11.0% 6.8% 9.7% Composition to Group sustainable profit growth with lower volatility FY10 vs RM'mil FY09 FY10 FY09 Improvement in performance from pick‐ups in capital Income 201.2 306.4
Slide 36: Life Assurance
Life Assurance Net Income PAT Becoming a top 5 life 1.9% 3.1% Composition to Group assurance company FY10 vs RM'mil FY09 FY10 FY09 Higher income from larger fund assets, attributed to enhanced agency network and focus on product bundling and cross selling Net Income 19.2 39.3 +>100.0% Life Assuran
Slide 37: General Insurance
General Insurance Income Expenses PBP PAT Becoming a well‐diversified and 3.8% 5.2% 2.8% 4.7% profitable top 3 general Composition to Group insurance provider Higher income from larger gross written premium, attributed to enhanced up‐ and cross‐ FY10 vs selling, and established distribution networ
Slide 38: Group Operating Segments
Group Operating Segments k & Treasury : Achieving Markets hi i Income Expenses PBP PAT top 3 rank in customer 15.2% 22.7% 9.7% ‐4.4% penetration, sales and Composition to Group profitability by 2013, with lower volatility Higher Hi h income i from f : Markets and Treasury FY10 vs (improved trading
Slide 39: Islamic Banking
Islamic Banking Income Expenses PBP PAT Increase contribution to 19.2% 17.3% 20.5% 25.1% overall merged bank Composition to Group portfolio FY10 vs RM'mil FY09 FY10 FY09 Results improvement attributed to business expansion in line with Islamic banking growth in Income 562.2 685.0 +21.9% Malaysia E
Slide 40: Contents
Contents • Key Messages • Financial Fundamentals 1. Executive Summary • What is Ahead • Summary 2. Financials Update • FY2010 Group Performance 3. Business Strategy • Retail Banking • Business Banking • Investment Banking • Corporate & Institutional Banking 4 4. Business Segment Performance • Life A
Slide 41: Malaysia, a fast rebounding emerging economy with strong banking sector fundamentals
Malaysia, a fast rebounding emerging economy with strong banking sector fundamentals Key statistics 2009 2010 OPR, BLR OPR (%) BLR (%) % CPI (2005=100) 0.6% 2.0 – 2.5% 8.00 Unemployment 3.6 % 3.7% 6.00 (% of labour force) Fiscal deficit to GDP 7% 5.6% 4.00 1 2010 GDP : +5% to 6% 2.00 Real GDP : Cons
Slide 42: New Economic Model: March 2010
New Economic Model : 31 March 2010 New Economic Model : Goals Strategic Reform Initiatives (SRIs) 1 Re‐energising the private sector High Income 2 Developing a quality workforce and reducing dependency on foreign labour Targets US$15,000 – 20,000 per capita by 2020 3 Creating a competitive domestic
Slide 43: Competitive positioning: continues to strengthen
Competitive positioning : continues to strengthen f Well diversified universal bank & # 4 largest banking group (market capitalization) f # 4 in retail bank, # 5 in business and corporate & institutional banking lending f Top 2 investment bank , #5 in Islamic banking, #6 in general, #7 in life assur
Slide 44: Strategic focus: Maintain viable growth and rebalancing focus
Strategic focus : Maintain viable growth and rebalancing focus 1 De‐risk Diversify De‐risk + Diversify High Diffferentiatted Growtth Moderrate Low Conventional + Islamic AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 43
Slide 45: Competitive positioning: Sound size and market position in key business segments
Competitive positioning : 1 Sound size and market position in key business segments Business Investment Corporate & Retail Banking Institutional Assurance Islamic Banking Banking Banking Banking #4 #5 #2 #5 #6 #7 #5 [General] [Life] Profitable growth, with Profit growth post Reposition as consistent
Slide 46: Competitive positioning: Momentum in non interest income & low-cost deposits
Competitive positioning : 1 Momentum in non interest income & low‐cost deposits Growing Non Interest Income CASA growth strategy Wealth management Increase cross‐ Deposits as New products / Islamic fee‐based products Customer selling “profit centre” Performance‐ businesses : Increase I f f
Slide 47: Peer group comparison
Peer group comparison 1 Total Assets (RM'bil) Loans & Advances (RM’bil) Dec 08 Dec 09 Growth Dec 08 Dec 09 Growth 9.7% 16.3% 10.7% 10.0% 9.7% 2.9% 6.9% 21.2% 14.3% 10.4% 14.1% 2.7% 330.8 301.7 195.1 182.6 240.4 217.1 142.2 135.3 206.7 196.2 117.4 118.4 115.0 66.9 104.5 63.9 86.5 94.9 85.6 88.1 60.6
Slide 48: Peer group comparison
Peer group comparison 1 Malaysian Malaysian Ringgit Ringgit Bond Bond League (RM'mil) Amount Market Share Funds under Management Funds Under Management (RM‘bil) Dec 08 Dec 09 Brokerage Turnover (RM‘bil) Trading Value Market Share Growth 52.6% 1.7% 5.1% 21.7% ‐1.0% 9.5% 8.7% 7.5% 6.7% 6.6% 31.7% 26.6
Slide 49: Competitive positioning: Recognised brand name / strong customer franchise
Competitive positioning : 2 Recognised brand name / strong customer franchise The AmBank Brand : Top‐of‐Mind Brand Awareness & Service Performance (Bank C) AmBank at top 4 TOM brand recall (Bank D) (Bank E) Continuous improvement (Bank B) initiatives on brand awareness (Bank A) campaigns Effor
Slide 50: Reaping awards and accolades
Reaping awards and accolades 2 The Edge‐Lipper Malaysia Fund Awards 2010 : ‐ Best Bond Group ‐ AmDynamic Bond (Best Bond MYR Fund – 3 years) ‐ AmDynamic Bond (Best Bond MYR Fund – 5 years) Euromoney Private Banking Survey, 2010 : Best Local Private Bank in Malaysia 10th CCAM Annual Contact Center Aw
Slide 51: Major investment banking deals clinched
Major investment banking deals clinched 2 PDS Deals Rights Issue IPO Mulpha SPV Limited 1Malaysia Development Berhad Cagamas MBS Berhad Kencana Dijaya Corporation Berhad Multi Sports Holdings Ltd XiDeLang Holdings Islamic Medium Term Notes Petroleum USD200 Million Medium Term Listing of RM4.0 Billio
Slide 52: Competitive positioning: Wide market reach and multiple distribution channels
Competitive positioning : 3 Wide market reach and multiple distribution channels ASPIRATIONS Increased customer satisfaction via integrated & seamless channels model Expand branch network and SSM footprint Further build and improve sales & service capabilities Number of Branches #5 364 323 248
Slide 53: Competitive positioning: Strategic partnership with global partner, ANZ
Competitive positioning : 4 Strategic partnership with global partner, ANZ ANZ is the onlyy + Australian bank to have been in the Asian region of over 40 years Malaysia SStrategic i bbanking ki partnerships and presence across 14 ANZ has provided key resources and support countries Director Dire
Slide 54: Leveraging on ANZ
Leveraging on ANZ 4 AMMB Holdings Berhad Improve mortgage and credit cards business models for receivables growth and operational enhancements Progressively grow new business in FX, derivatives and commodities : Seconded ANZ staff and recruit new staff Complete end‐to‐end business platform &
Slide 55: Competitive positioning: Experienced management team
Competitive positioning : 5 Experienced management team Name Designation Profile Joined the Group in 1978 with over 30 years of experience and has held Cheah Tek Kuang Group Managing Director various senior positions in AmBank Group Joined the Group in 2007 and has over 20 years of experience, most
Slide 56: Shareholding structure
Shareholding structure 6 As at 31 March 2010 Amcorp Group ANZ Funds Pty Ltd Employees Provident Bhd # Fund Board Public Ranked No. 18 (Malaysia – market 16.7% 23.8% 13.4% 46.1% capitalisation) & 183 AMMB ( l b l – 1,000 (global 1 000 banks b k Holdings Bhd by market capitalisation) : 100% 100% wit
Slide 57: Banking sector share price movement / Target price and recommendations
Banking sector share price movement / 6 Target price and recommendations Banking g Sector Share Price Movement Index Movement 140.0% (May 07 = 100) 120.0% S/T index change at close of 31 Mar 10 vs 18 May 07 (strategic partnership with ANZ) 100.0% AMMB S + 27.7% (RM5.00) 80.0% HLFG S + 24.3% (RM8.45)
Slide 58: Ratings upgraded
Ratings upgraded AmBank (M) Berhad AmInvestment Bank Berhad RAM AA3/P1/ RAM AA28 AA3/P1/ AA3/P1/ AA3/P1/ AA3/P1/ 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
Slide 59: BIS / Basel III
BIS / Basel III • Addressing failures that brought about the global financial crisis in 2007‐2009 • Raising quality, consistency and transparency • Strengthening risk coverage of capital framework Objectives of new • Introduction of : BIS proposalsl • leverage ratio as supplementary measure to Basel
Slide 60: Research Coverage
Research Coverage No Research House Analyst y 1 Affin Investment Bank Tan Ei Leen 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 CIMB Investment Bank Berhad Winson Ng 6 Citi In
Slide 61: Glossary / Disclaimer of warranty and limitation of liability
Glossary / Disclaimer of warranty and limitation of liability Reported p 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
Slide 62: 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