Ammb Holdings Bhd. · MYX:AMBANK

Ammb Holdings Bhd — Q1 FY2017 Earnings Presentation

48 slides from Ammb Holdings Bhd's earnings presentation, Aug 22, 2016

  1. Slide 1: Q1FY2017 Results, Investor Presentation

    Q1FY2017 - Results, Investor Presentation 22 AUGUST 2016 1 V18

  2. Slide 2: Performance indicators Q1FY2017

    Performance indicators Q1FY2017 RM’ mil Q1FY16 Q1FY17 YoY Growth Total income 963.8 951.2  1.3% Expenses 487.3 535.5  9.9% Allowances -5.9 -63.7  >100% PATMI 339.5 323.0  4.9% ROE 9.3% 8.5%  0.8% CTI 50.6% 56.3%  5.7% Gross impaired loans 1.69% ratio CASA composition 20.9% 24.5% Capital ratios

  3. Slide 3: Moderate growth for 2016

    Moderate growth for 2016 Malaysia Banking • Moderate GDP growth of 4.0% projected for • Following recent BNM OPR cut by 25 bps to 3%, 2016 there is room for monetary easing. Monetary policy expected to remain supportive of the • Growth will be supported by healthy current challenging environment gov

  4. Slide 4: Headwinds, bright spots and opportunities

    Headwinds, bright spots and opportunities Malaysia’s GDP growth Private domestic demand continued to anchor growth 2016 GDP Forecast Net Exports Change in Stocks Public Investment Real GDP Growth Avg USDMYR Public Consumption Private Investment Private Consumption 4.07 India GDP Growth 3.91 7.4 3.09

  5. Slide 5: 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 focus products growth segments (Cards – issuing & acquiring, Transaction (Mass Affluent, Affluent, SME, Mid Corp) Banking – trade, cash management & payroll, Markets, Consumer Wealth Management) Top 4 Aspirations In Key

  6. Slide 6: 4 Years

    10 metrics will measure how well we live up to our purpose & our strategic priorities Our strategic Our Top 4 priorities Aspirations in key 4 Years Considering growth areas, segments by 2020 2 Phase approach whitespaces, and our capabilities 1 Financial metrics "Firing up new growth engines" 1. Mark

  7. Slide 7: Strategic Initiatives Update

    Strategic Initiatives Update Enablers Retail Strategic priorities Q1FY17 Update Wholesale 1. Firing up new growth engines SME Win in fast growing, underserved segment:  Rolled out 70 liability led SME ready branches  SME (top priority)  Developed remote relationship manager (RM) operating framewo

  8. Slide 8: Q1FY2017 results…

    Q1FY2017 results… PATMI QoQ increased 15.4% to RM323m • NIM improved (up 2 bps to 1.94%), higher insurance and fee income. CTI lowered to 56.3% from 68.5% in Q4FY16 PATMI 4.9% lower on YoY basis • Top line growth impacted by lower net interest income & weaker economy (GDP growth reduced to 4.2% earl

  9. Slide 9: Quarterly performance

    Quarterly performance PATMI (RM’ mil) & ROE (%) Net lending (RM’ bil) PATMI QoQ growth: 15.4% Loans excluding Auto Finance QoQ growth: -0.8% ROE QoQ growth: 1.0% QoQ growth (excl.AF): -0.3% PATMI ROE Total 85.6 84.7 85.7 86.2 84.1 85.3 85.4 86.5 85.8 16.0% 15.1% 12.7% 11.8% 10.2% 24.6 24.1 23.3 22.7

  10. Slide 10: 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: -1.3%¹ PATMI Underlying YoY growth: -5% Yo

  11. Slide 11: Q1FY2017 PATMI down YoY from lower net interest income & higher expenses

    Q1FY2017 PATMI down YoY from lower net interest income & higher expenses YoY growth (%) RM’ mil Q1FY17 Q1FY16 Q1FY16 85% 339.5 15% 339.5 Net Interest Income 565.6 616.4 IntInc 288.8 8 Non-Interest Income 385.6 347.4 NII 11 Total Income 951.2 963.6 TInc 1 Expenses 535.5 487.3 Exp 10 PBP 415.7 476

  12. Slide 12: Wholesale Banking and General Insurance on track

    Wholesale Banking and General Insurance on track • Wholesale banking’s profit grew 24.9% on higher fixed income while forex sales increased from active forex hedging • Retail’s performance was impacted by NIM compression. Fee income improved driven by Cards/Merchants. Loan impairment charges were lo

  13. Slide 13: Net Interest Income lower, WB income higher on hedging activities

    Net Interest Income lower, WB income higher on hedging activities Income Composition YoY growth Total Income breakdown (%) (%) RM’ mil Non-interest income: Q1FY16 – RM963.8m / 36.0% Q1FY17 – RM951.2m / 40.5% Q1FY16 963.8 Net interest 565.6 50.7 59 8 • Margin compression YoY, NIM up 2 bps on QoQ bas

  14. Slide 14: NIM stabilised

    NIM stabilised NIM QoQ trend vs. industry Quarterly net interest income (RM’mil) & NIM movement FY15 NIM: 2.43% 5.14% 5.15% 5.08% 5.07% 5.01% Gross Yield FY16 NIM : 2.02% 2.45% 2.54% 2.38% 2.33% Industry Avg. 2.13% 2.12% 4.62% 4.55% 4.60% 4.59% Lending Rate* 1.94% 1.92% 1.94% 4.51% 3.38% 3.41% 3.36%

  15. Slide 15: Higher NoII from lower general insurance claims and higher trading income

    Higher NoII from lower general insurance claims and higher trading income Non-interest income (RM’mil) Non-interest income by lines of business YoY growth:  11.0% QoQ growth:  13.6% Fee Trading & Investment Insurance Others  7%  38% 385.6 13.6 Others 6% Investment Banking 347.5 339.3 10% 24.0 31

  16. Slide 16: Allowances remain low & recoveries stronger

    Allowances remain low & recoveries stronger Allowances (RM’ mil) • Credit costs tracking below industry average since FY14, benefiting from earlier 21.2 34.1 0.3 portfolio de-risking and rebalancing strategy 10.7 34.3 (36.2) • Higher bad debt recoveries from corporate segment on proactive collection

  17. Slide 17: Current outlook require active monitoring

    Current outlook require active monitoring • Loan loss coverage stable with Loan loss coverage vs. industry impairment charges being mitigated 131.5% through collaterals 129.3% 127.4% • More than 50% of impaired loans are 114.6% Adjusted made up of real-estate and residential 104.9% 99.4% AmBank Grou

  18. Slide 18: Reflecting proactive collection

    Reflecting proactive collection Impaired loans (RM’ mil) Provision charges/(Writebacks) (RM’ mil) Performing Loans Non-Performing Loans Gross Impaired Loans GIL Ratio Recoveries Others Total 1.98% -37.5 -209.5 -5.9 -63.7 1.86% 1.94% 1.79% 1.80% 1.69% 30.4 1,680.5 1,662.1 1,700.9 1,572.7 1,541.2 834.

  19. Slide 19: Mortgage & Trade, driving loans growth

    Mortgage & Trade, driving loans growth Composition YoY growth Gross loans movement (RM’bil) (%) (%) Q1FY16 85.7 Corp & IB 85.7 0.0 39 ≈ • Trade loans– Benefitting from Trade loans 0.4 7 7 higher utilisation Breakdown by rate sensitivity: • Mortgage - Robust growth of 16% Fixed rate – 34% Mortgage V

  20. Slide 20: Loans by sector vs. industry

    Loans by sector vs. industry Loans by Sector Jun’16 YoY Loans by purpose Composition RM’ bil growth Purchase of transport 21.5 -7.6% 24.7% vehicles Loans Working capital 25.5 +11.9% 29.3% composition 4.8% 3.3% 9.6% 0.5% 4.6% 5.1% 2.0% 3.8% 9. 7% 2.4% 53.6% 0.4% Purchase of resi property 19.2 +18.0%

  21. Slide 21: Higher CASA from cash management

    Higher CASA from cash management Deposit and CASA balance (RM’ bil) Deposits QoQ growth:  -8.6% CASA QoQ growth:  13.4% CASA Fixed deposits CASA Composition (%) 24.5% • Deposits contracted YoY, broadly in 20.1% 20.5% 20.3% 20.9% 20.9% 20.4% 20.7% line with the system’s liquidity 85.3 90.0 92.1 89.

  22. Slide 22: Deposits movement is broadly in line with the system

    Deposits movement is broadly in line with the system AmBank Group (RM’ bil) Industry (RM’ bil) YoY growth YoY growth AmBank Industry  12.4%  7.9%  7.2%  3.5%  0.4%  3.1%  4.7%  0.8% 1,655.3 86.7 64.1 856.1 433.1 366.1 20.0 2.6 CASA Term Deposits FCY & Others FCY Total Deposits CASA Term Depo

  23. Slide 23: Managing expenses to create head-room for growth initiatives

    Managing expenses to create head-room for growth initiatives Expense growth driver (RM’ mil) 620.6 CTI ratio: 20.4 Q4FY16: 68.6% Q1FY17: 56.3% 25.0 12.0 7.0 12.0 4.0 4.7 535.5 Q4FY16 Personnel Computer & Marketing Communications Professional Admin & General Rental & Others Q1FY17 Software Services P

  24. Slide 24: Diversified funding structure, prudent liquidity management

    Diversified funding structure, prudent liquidity management Funding composition vs. industry Industry FY10 FY13 FY15 FY16 Q1FY17 Ave • Conservative stance on liquidity Equity & debt 15% 14% 15% 16% 16% 15% management with LCRs >100% for all capital banking entities Customer 77% 75% 74% 73% 72% 73% d

  25. Slide 25: Adequate capital levels

    Adequate capital levels RWA / Total Assets Total Assets RWA/ Total Assets Industry 1 • Whilst capital ratios remain adequate, the 77.8% 72.4% 72.7% 71.5% 71.0% 73.1% Group is reviewing the optimal capital structure and efficiency of RWA (Basel III FHC @ FY2020) 64.1% 63.7% • Basel III FHC indicative

  26. Slide 26: Performance Guidance for FY2017 - FY2018

    Performance Guidance for FY2017 - FY2018 Capital ROE PATMI CTI Dividend Proforma ±1% CET 1*: 10% 9.5% ~ 10% 50% ~ 40% - Growth - payout 10.5% p.a. 55% Total: 15% * Refers to FHC CAR *Based on projected 2016 GDP growth of 4.2% Q1FY17 IR Results (Business Performance & Investor Relations) 26

  27. Slide 27: Divisional Performance and Business Insights

    Divisional Performance and Business Insights Q1FY17 IR Results (Business Performance & Investor Relations)

  28. Slide 28: Retail banking overview

    Retail banking overview Total income and loans by line of business (RM’ mil) Total income  58% Others 6%  23% Auto 22% Auto  3% 45% Others 3% Deposits SBB 31% 2% Cards 3% Total loans Mortgage Mortgage 47% 18%  8% Personal financing 3% Cards  5% 20%  11% Q1FY17 IR Results (Business Performance

  29. Slide 29: Retail Banking impacted by lower net interest income

    Retail Banking impacted by lower net interest income QoQ growth:  35.0% QoQ PAT (RM’ mil) YoY growth:  34.3% • PAT decline of 34.3% YoY mainly due to lower net interest income FY15: RM423.1 mil FY16: RM467.2 mil • Total income declined 16.7% due to NIM compression as competition on retail deposits

  30. Slide 30: Retail Banking

    Retail Banking Income Statement (RM’mil) YoY growth  16.7%  8.2%  43.3%  74.0%  34.7%  34.8%  34.3% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances Q1FY17 348.2 233.2 115.0 11.5 103.5 24.2 79.3 Q1FY16 418.3 215.6 202.7 44.2 158.6 37.7 120.9 Q1FY17 Balance Sheet (R

  31. Slide 31: Retail Banking – Distribution channels

    Retail Banking – Distribution channels Nationwide Branch Network Branches ATM RO Perlis 1 4 Perlis Kedah 6 29 1 Kedah Pulau Pinang 14 49 1 Kelantan Pulau Pinang Perak 18 47 1 Terengganu Sabah Labuan Selangor 38 235 2 Perak Brunei Darussalam Kuala Lumpur 23 126 3 Pahang Selangor Putrajaya 1 3 Kuala L

  32. Slide 32: Wholesale banking overview

    Wholesale banking overview Total income and total assets by line of business (RM’ mil) Total Income  1%  11% Others 4% Funds Management 8%  35% Wholesale Capital & Banking Equity Coverage Others 63% Markets Wholesale 2% 11% Capital & Banking Coverage  6% Equity 41% Markets 3% Total Transaction A

  33. Slide 33: Wholesale Banking reflecting higher fixed income

    Wholesale Banking reflecting higher fixed income • YoY PAT increased 24.9% on higher fixed income trading QoQ PAT (RM’ mil) • Total income up 5.0%: QoQ growth:  10.7%  Global Markets – benefitted from active trading of local YoY growth:  24.9% bond market, tactical USD trading and active forex he

  34. Slide 34: Wholesale Banking

    Wholesale Banking Income Statement (RM’mil) YoY growth  5.0%  7.5%  3.6%  >100%  23.0%  16.8%  24.9% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances Q1FY17 361.7 132.2 229.5 -83.2 312.7 72.0 240.6 Q1FY16 344.6 123.0 221.6 -32.7 254.3 61.7 192.6 Q1FY17 Balance Shee

  35. Slide 35: General Insurance higher, reflecting lower claims experience

    General Insurance higher, reflecting lower claims experience QoQ PAT (RM’ mil) QoQ growth:  22.5% YoY growth:  26.7% FY15: RM256.4 mil FY16: RM194.1 mil • YoY gross premium declined slightly by 0.4% to RM384 mil (Q1FY16: RM385.7 mil) notwithstanding lower industry vehicle sales • PAT increased by

  36. Slide 36: Insurance and Group Funding & Others

    Insurance and Group Funding & Others Income Statement – Insurance (General & Life/Takaful) (RM’mil) YoY growth  26.2%  23.2%  28.9%  >100%  30.1%  11.4%  36.3% Q1FY17 PAT (composition to Group) 21% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PAT Allowances Q1FY17 179.9 83.1

  37. Slide 37: Islamic Banking

    Islamic Banking Income Statement (RM’mil) YoY growth  1.5%  16.8%  23.8%  84.5%  8.3%  19.6%  5.3% Q1FY17 PAT (composition to Group) 15% Provisions/ RM’ mil Total Income Expenses PBP PBT Tax & Zakat PATZ Allowances Q1FY17 219.8 143.1 76.7 5.4 71.3 16.4 54.9 Q1FY16 223.2 122.5 100.6 34.8 65.8

  38. Slide 38: Funding sources and maturity profile

    Funding sources and maturity profile Funding diversity underpinned by LDR1 of 84.8% CASA: RM21.2 billion Fixed deposits: RM65.5 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

  39. Slide 39: 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 Q1FY17 IR Results (Business Performance & Investor Relations) 39

  40. Slide 40: 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

  41. Slide 41: Shareholding structure & franchise value

    Shareholding structure & franchise value 23.8%1 AmCorp 13% EPF 15.2% Others 48% As at 30 June 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 (M’si

  42. Slide 42: 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 PBB Ratings FY2007 June-16 105.6% AmBank (M) RAM LT: A2, ST: P1 LT: AA2, ST: P1 +3 HLBK 92.9% Outlook: Stable Outlook: Stable S&P LT: BBB-, ST: A-3 LT: BBB+, ST: A-2 KLCI 21.8%

  43. Slide 43: Key economy indicators

    Key economy indicators GDP, consumption and investment growth CPI and unemployment rate 3.4% Consumption 5.1% Investment 0.1% 1.9% GDP 4.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 2014 2015 201

  44. Slide 44: 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% (%) 76.1% 80.5% To be updated for the his 9.4 74.5% 10.0 80.0% 9.0 7.3 8.0 2.4 60.0% 7.0 0.4 0.6 0.4 33.5% 34.1% 6.0 0.6 40.0% 30.9% 29.4% 29.3% 28.0% 5.

  45. Slide 45: Banking system data

    Banking system data Capital ratios Capital activities RM’bil Basel II Basel III 16.4% 13.9% 12.9% 20.1 2.1 Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec Jun Mar Mar Mar Mar Mar Mar Sep Sep Sep Sep Sept Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2012 2013 2014 2015 2016 2011 201

  46. Slide 46: Auto Finance

    Auto Finance Auto Finance loans vs industry vehicle sales Auto Finance monthly balance vs. net outflows AMMB AMMB disbursement disbursement (RM) (RM) Industry vehicle Industry salessales vehicle (No.) (No.) Balance O/S Net outflows Oct-14 Oct-15 Aug-14 Mar-15 Aug-15 Mar-16 Jul-14 Jul-15 Jun-14 Jun-1

  47. Slide 47: 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

  48. Slide 48: 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 — Q1 FY2017 Earnings Presentation on 6ix