Ammb Holdings Bhd. · MYX:AMBANK

Ammb Holdings Bhd — Q1 FY2015 Earnings Presentation

55 slides from Ammb Holdings Bhd's earnings presentation, Aug 22, 2014

  1. Slide 1: Q1FY2015 Results – Investors Presentation

    22 August 2014 Q1FY2015 Results – Investors Presentation Ashok Ramamurthy, Group Managing Director Your Bank. Malaysia‟s Bank. AmBank. Your Bank. Malaysia‟s Bank. AmBank. Q1FY2015 Results – Investors Presentation 1

  2. Slide 2: Agenda

    AGENDA Page 1. EXECUTIVE SUMMARY 3 2. Q1FY2015 GROUP FINANCIAL PERFORMANCE 13 3. OUTLOOK & STRATEGIC PRIORITIES 27 4. DIVISIONAL STRATEGY & PERFORMANCE 32 5. SUPPLEMENTARY INFORMATION 38 - AMBANK GROUP - ECONOMY & INDUSTRY Your Bank. Malaysia‟s Bank. AmBank. Q1FY2015 Results – Investors Presentation

  3. Slide 3: Q1FY2015: Net profits up 16.2%

    Net profits up 16.2% As Malaysia’s preferred diversified, internationally connected financial solutions group, we take pride in growing your future with us. Pre ANZ FY2008 – 10 FY2011 – 12 FY2013 – 14 Q1FY2015  Focused Growth Reposition, Build Scale & Aggressively Invest, Presence New Growth Improv

  4. Slide 4: Q1FY15 results underpinned by divestment gain

    Q1FY15 results underpinned by divestment gain PATMI ROE PATMI & ROE CAGR FY10-14: 15.3% CAGR FY10-14: 0.7% ROA CAGR FY10-14: 0.08% YoY growth: 16.2% YoY growth: 0.9% YoY growth: 0.26% (%) PATMI (RM'mil) ROE (%) 16.0% 15.1% 13.6% 13.8% 13.9% 14.1% 1.78% 11.5% 1.52% 1,782 1.45% 1.39% 1.39% 1.37% 1,621

  5. Slide 5: Sound risk and capital profiles, focusing growth in targeted segments

    Sound risk and capital profiles, focusing growth in targeted segments Customer Customer Deposits CASA CAGR FY10-14: 7.7% Deposits2 & CASA CAGR FY10-14 : 8.6% YoY growth: -0.3% CAGR FY10-14: 21.9% YoY growth: 4.5% Net Net Lending Lending Net lending YoY growth: 1.7% Gross lending YoY growth: 1.5% Cus

  6. Slide 6: Successful issuance of USD400 mil senior notes

    Successful issuance of USD400 mil senior notes jointly arranged by AmInvestment Bank and ANZ, oversubscribed by >10x Highlights  AmBank (M) Berhad issued on 3 July 2014  USD400 mil Senior Unsecured Notes issued under the USD2.0 bil Euro Medium Term Note Programme  >10x oversubscribed with orders

  7. Slide 7: Softer quarter, key initiatives underway to drive growth

    Softer quarter, key initiatives underway to drive growth  Delivering new solutions to emerging affluent & small business  Greater emphasis on mortgage, End-to-End process review underway  Enabling and enhancing digital platform, increasing digital presence and social media via collaborations Reta

  8. Slide 8: Ongoing investment over 12–18 months to deliver growth

    Ongoing investment over 12 – 18 months to deliver growth, optimise efficiency & build sustainability CAPEX: ~RM300 mil OPEX: ~RM100 mil Strategic Priorities Ongoing key investments 1  Retail Application Scorecards Enhancement (RAS2)  AmData Intelligence: data mart & centralised dashboard reporti

  9. Slide 9: Leveraging combined strengths

    Leveraging combined strengths Strategic Partnership: Transaction Highlights AMMB Holdings  30 Apr 2014: Share sale of AmLife and AmFamily to MetLife Inc Berhad MetLife completed 100% 100%  Total cash consideration of RM812 million MetLife AMAB Holdings  MetLife1 to own 50% plus one share in AmLif

  10. Slide 10: Foundations being built for sustainable growth

    Foundations being built for sustainable growth Indicative Timeline Transaction Collaborative Integration 1 Apr 14 28 Apr 14 30 Apr 14 6 May 14 12 – 18 months o Obtained o Signed o Completion o Unveiled o Completion regulatory share sale & o New Board new brands of approvals exclusive of Directors Am

  11. Slide 11: Q1FY2015 Results – Investors Presentation

    22 August 2014 Q1FY2015 Results – Investors Presentation Mandy Simpson, Chief Financial Officer Your Bank. Malaysia‟s Bank. AmBank. Your Bank. Malaysia‟s Bank. AmBank. Q1FY2015 Results – Investors Presentation 11

  12. Slide 12: Agenda

    AGENDA Page 1. EXECUTIVE SUMMARY 3 2. Q1FY2015 GROUP FINANCIAL PERFORMANCE 13 3. OUTLOOK & STRATEGIC PRIORITIES 27 4. DIVISIONAL STRATEGY & PERFORMANCE 32 5. SUPPLEMENTARY INFORMATION 38 - AMBANK GROUP - ECONOMY & INDUSTRY Your Bank. Malaysia‟s Bank. AmBank. Q1FY2015 Results – Investors Presentation

  13. Slide 13: Divestment gain and one-off non-recurring recoveries

    Divestment gain and one-off non-recurring recoveries Q1FY2015 Q1FY2015 (Underlying) (Reported) Income (yoy growth)  (7.9%)  22.6% Expenses (yoy growth)  2.1%  (9.7%) PBP (yoy growth)  (13.0%)  34.3% PAT (yoy growth)  (7.0%)  17.4% NIM (Q1FY15 vs FY14)  (0.18%)  (0.23%) Non-interest income

  14. Slide 14: Divestment gain from AmLife & AmFamily Takaful

    Divestment gain from AmLife & AmFamily Takaful RM‟mil Cash considerations 812 50% NAV + goodwill + fair value adjustment of AmLife & Less: (335) AmFamily businesses Completion cost, warranties and other direct expenses (87) Restructuring & investment (101) Provision for contingency & risk (81) Dives

  15. Slide 15: QoQ performance

    QoQ performance PATMI QoQ growth: 15.8% PATMI & ROE ROE QoQ growth: 1.4% CTI QoQ change: 0.2% PATMI (RM'mil) (%) ROE (%) 15.1% 16.0% 47.8% 47.8% 13.9% 14.6% 13.1% 44.5% 537 42.5% 42.7% 462 441 464 416 Q1FY14 Q2FY14 Q3FY14 Q4Y14 Q1FY15 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Customer Deposits1 & CASA C. D

  16. Slide 16: Divestment gain underpinned results

    Divestment gain underpinned results Growth  11.2%  87.0%  22.6%  9.7%  34.3%  >100.0%  13.9%  2.8%  17.4%  42.9%  16.2% 536.9 mil 462.0 mil 9% 18% 82% 91% PATMI Net Interest Non-Interest Total Provisions/ Tax & PATMI Expenses PBP PBT PAT MI Q1FY14 Income Income income Allowances Zakat Q1F

  17. Slide 17: Stronger profit growth in general insurance

    Stronger profit growth in general insurance Retail Banking Wholesale Banking1 PAT (RM’mil) PAT (RM’mil) 537 566 509 592 636 179 133 674 746 1,058 1,112 1,065 316 233 13% 16% 14%  26.1%  26.5% 8% 15% 16% 15% 17% 15% 87% 84% 86% 33% 17% 92% 85% 27% 83% 84% 85% 23% 9% 67% 85% 83% 77% 91% 73% FY10 FY1

  18. Slide 18: Stronger contributions from General Insurance, non-interest income

    Stronger contributions from General Insurance whilst trading, fee income impacted by moderate loans growth Non-interest income movement As % of total income 34% 53% Growth  23.5%  4.5%  10.0%  4.7%  7.0%  40.7%  68.6%  >100.0% >100%  12.2%  35.4%  3.7%  7.1%  87.0% 767.3 mil Includes 2

  19. Slide 19: Margins remain a challenge

    Margins remain a challenge NIM and COF (YOY) SRR 4.00% 4.00% 4.00% 4.00% 4.00% MFRS 10 3.13% 3.10% 3.10% 3.09% 3.13% COF 2.98% 2.94% 2.92% 4.00% 4.00% 3.00% 4.00% 3.00% 4.00% 3.00% 3.00% 3.00% OPR 2.68% 3.13% 3.10% 2.72% 3.10% 3.09% 2.45% 2.98% 2.94% 2.75% 2.75% 2.68% 2.68% 2.92% 2.67% 2.63% 3.00% 3

  20. Slide 20: Disciplined cost management to support ongoing investment

    Disciplined cost management to support ongoing investment Expense growth drivers CTI YoY Growth 47.7% 42.7% RM‟mil  2.6%  0.2%  22.8%  1.8%  >100.0%  9.7% 623.5 568.5 Marketing & Acquisition & Biz Q1FY14 Personnel Establishment Admin & others Q1FY15 Comm efficiency expenses % of Composition 53

  21. Slide 21: Loan loss charge at expected level with normalised recoveries

    Loan loss charge at expected level with normalised recoveries Asset quality indicators Loan Loss Coverage  195 bps 10.4% AmBank Group MFRS 139 MFRS 139 129.3% 127.4% 6.3% 120.5% 114.6% GP 3 6.2% 4.1% 104.7% 104.9% 2.8% 95.6% 99.6% 3.81% Industry 3.7% 3.33% 3.18% 1.5% 2.6% 2.45% 1.98% 1.86% 1.87% 0.

  22. Slide 22: Moderating loans growth from large repayments

    Moderating loans growth from large repayments and focusing on target segments Gross Loan / Financing movement Retail Non retail  0.5%  4.0%  4.1%  7.9%  9.2%  3.8%  9.7%  3.7%  36.1% 1.5% 87.6bil Non-retail 86.3bil 45% 44% Islamic, 28% Fixed Retail rate, 55% Variable 43% rate, 57% 56% Conv

  23. Slide 23: Loans AmBank Group vis-à-vis Industry

    Loans AmBank Group vis-à-vis Industry Loans by YoY Loans June‟14 AmBank Group purpose growth composition Jun-14 Purchase of 3.5 +42.6% 4.0% securities Loans Growth by Sector Loans Purchase of 4.4% 3.4% 9.5% 1.5% 4.9% 6.7% 2.6% 2.7% 9.0% 1.3% 53.5% 0.5% 26.3 -6.8% 30.0% Composition transport vehicles

  24. Slide 24: Diversify funding sources, stable CASA composition growth momentum

    Diversify funding sources, stable CASA composition growth momentum Customer deposits driven by focus Improving CASA composition on CASA CAGR FY10-14: 21.7% YoY Growth 5.6% 1.9% 4.5% -1.6% 0.9% -0.3% 20% 21% 22% 17% 20% 14% 17% 19% 12% 12% 14% 18.7 18.8 95.4 16.8 95.1 16.8 18.0 13.2 10.4 13.2 8.5 10.

  25. Slide 25: Capital at preferred level

    Capital at preferred level  Adopted Basel III at banking entity level: • The aggregated banking entities of the Group remain well capitalised and operated within internal target capital levels for FY2015: o CET1: 9.0% ± 1.0% o T1: 10.5% ± 1.0% o Total Capital: 15.0% ± 1.0%  Double leverage ratio1:

  26. Slide 26: Agenda

    AGENDA Page 1. EXECUTIVE SUMMARY 3 2. Q1FY2015 GROUP FINANCIAL PERFORMANCE 13 3. OUTLOOK & STRATEGIC PRIORITIES 27 4. DIVISIONAL STRATEGY & PERFORMANCE 32 5. SUPPLEMENTARY INFORMATION 38 - AMBANK GROUP - ECONOMY & INDUSTRY Your Bank. Malaysia‟s Bank. AmBank. Q1FY2015 Results – Investors Presentation

  27. Slide 27: Financial services outlook

    Financial services outlook MALAYSIA: 2014(f) GDP of 5.9% BANKING: Opportunities & challenges  Global growth to improve moderately  Monetary policy will remain prudent to support the economic growth and address financial imbalances • US and Japan are to expand at a moderate pace, while growth in th

  28. Slide 28: Strategic Priorities FY2015–17

    Strategic Priorities FY2015 – 17 Focused growth Leverage investments Optimise enablers  Retail: build new value segments in emerging affluent & small business, leverage 1 existing value strength to grow in mass market Deliver on focused  Wholesale: grow franchise value by targeting value segmen

  29. Slide 29: Key performance indicators

    Key performance indicators FY2014 Q1FY2015 FY2015 FY2016 – 17 PATMI 1,782.4 536.9 Circa 10% 9 – 11% (RM‟mil) (10.0% yoy) (16.2% yoy) ROE (%) 14.1% 16.0% 14.2% - 14.5% 14.5% - 15.5% 45.7% 42.7% ≤45%; ≤44%; CTI (%) 43.1% 42.5% ≤43% ≤42% (Banking Group) (Banking Group) (Banking Group) (Banking Group)

  30. Slide 30: Summary

    Summary 1 Q1FY2015 underpinned by divestment gains and lower recoveries, whilst operating performance was softer Increasingly challenging business environment with 2 consolidations, intensifying competition and rising compliance 3 requirements 3 Discipline execution to our four strategic priorities

  31. Slide 31: Agenda

    AGENDA Page 1. EXECUTIVE SUMMARY 3 2. Q1FY2015 GROUP FINANCIAL PERFORMANCE 10 3. OUTLOOK & STRATEGIC PRIORITIES 27 4. DIVISIONAL STRATEGY & PERFORMANCE 32 5. SUPPLEMENTARY INFORMATION 38 - AMBANK GROUP - ECONOMY & INDUSTRY Your Bank. Malaysia‟s Bank. AmBank. Q1FY2015 Results – Investors Presentation

  32. Slide 32: Retail Banking

    Retail Banking Aspirations Re-orient to higher value segments, extract value from core mass • Income impacted by margins compression and loans growth remained under pressured in the short term reflecting Targeted tightening of credit policies growth • Loans growth was targeted in profitable segments

  33. Slide 33: Wholesale Banking

    Wholesale Banking Coverage: Maximising franchise value through holistic coverage & cross sell – full understanding of customer needs, Aspirations distinguishing service by complexity, allocating specialists intelligently to grow sustainable profitability Products: To offer innovative, quality produc

  34. Slide 34: General Insurance

    General Insurance Aspirations Dominate in auto insurance and diversify into non-motor segment Stronger • Higher profits underpinned by gain on disposal of investments investment • Achieved cumulative synergy of RM66.7mil to-date (June 2014), target to complete integration by end CY2014 income • Posi

  35. Slide 35: Islamic Banking

    Islamic Banking Aspirations To be the Islamic Bank of choice • Profits impacted by lower income from margin compression higher allowances Strong • Strong financing growth partly impacted by margin compression mainly from the auto financing business and lower financing & trading and Investment income

  36. Slide 36: Group Operating Segments

    Group Operating Segments • Income includes one-off divestment gain of AmLife and AmFamily businesses • Higher expenses reflect continued investment • MI represents non-controlling interests within the Group PAT Growth  >100.0%  93.1%  >100% 90.1%  >100.0% >100.0%  >100.0%  >100%  >100.0% Q1

  37. Slide 37: Agenda

    AGENDA Page 1. EXECUTIVE SUMMARY 3 2. Q1FY2015 GROUP FINANCIAL PERFORMANCE 13 3. OUTLOOK & STRATEGIC PRIORITIES 27 4. DIVISIONAL STRATEGY & PERFORMANCE 32 5. SUPPLEMENTARY INFORMATION 38 - AMBANK GROUP - ECONOMY & INDUSTRY Your Bank. Malaysia‟s Bank. AmBank. Q1FY2015 Results – Investors Presentation

  38. Slide 38: Deposits profile

    Deposits profile AmBank Group Deposits Growth by Type June'14 AmBank Group Core Deposits RM’bil  1.9% 5.6%  4.5%  1.6%  0.3% Composition 6.2% 15.5% 86.9 78.3% 68.1 18.8 Savings Current Account Fixed Deposits 13.5 5.4 Savings Current Account CASA Fixed Deposits Core Deposits Industry Deposits Gr

  39. Slide 39: Diversifying funding sources and maturity profile

    Diversifying funding sources and maturity profile Funding diversity underpinned by CASA: RM18.8 billion Fixed deposits: RM68.1 billion LDR1 of 90.0% (yoy growth = 4.5%) (strong retention) Supplemented by term funding & debt capital AMMB Holdings Bhd AmBank (M) Bhd AmIslamic Bank Bhd AmBank (M) Bhd A

  40. Slide 40: ANZ & AmBank Partnership

    ANZ & AmBank Partnership Partnership with ANZ 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 JAPAN • Access to regional network & connect

  41. Slide 41: AmGeneral: Leveraging strategic partnership with global insurance partner

    AmGeneral: Leveraging strategic partnership with global insurance partner GENERAL INSURANCE Partnership with IAG General Insurance Credentials Value proposition • Involved in the management of AmGeneral Insurance, offering skills transfer, partnership and relationship • AmG completed the Kurnia acqu

  42. Slide 42: Multiple distribution channels aligned to demographics

    Multiple distribution channels aligned to demographics Nationwide Branch Network Regional Branches ATM Business Centres Perlis Perlis 1 4 Kedah Kedah 6 29 Kelantan Pulau Pinang Pulau Pinang 14 50 1 Terengganu Sabah Perak Labuan Perak 19 51 Brunei Darussalam Selangor 39 258 Pahang Kuala Lumpur 25 143

  43. Slide 43: Solid shareholding structure & franchise value

    Solid shareholding structure & franchise value As at 30 June 2014 23.8%1 AmCorp 14.0% EPF 14.1% Others 48.1% AMMB Holdings Berhad Wholesale General Life Assurance & Retail Banking Islamic Banking Banking Insurance Family Takaful 100% AmBank (M) Berhad 100% AMAB Holdings Sdn Bhd 100% MBF Cards (M‟sia

  44. Slide 44: 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 Ratings FY2007 Q1FY2015 HLFG 137.4% AmBank (M) RAM A2/P1/Stable AA2/P1/Stable +3 PBB 106.4% Fitch BBB-/F3/Stable BBB/F3/Stable +1 AMMB 81.9% S&P BBB-/A-3/Stable BBB+/A-2/Negati

  45. Slide 45: Strategic Business Transformation: Continued Progress

    Strategic Business Transformation: Continued Progress Strategic High Priority Governance & Business Growth Enablement Initiatives Functions Transformation  Launched a new brand re-positioning, “Your Bank. Malaysia’s Bank. AmBank.”, a new chapter for our brand to deliver a unique AmBank Group experi

  46. Slide 46: High Priority Growth Initiatives: Implemented To-Date

    High Priority Growth Initiatives: Implemented To-Date Strategic High Priority Governance & Business Growth Enablement Transformation Functions Initiatives  Channels re-organisation to improve customer connectivity and experience (e.g. branch re- design and rationalisation; reposition digital bankin

  47. Slide 47: Governance and Enablement Functions Streamlined

    Governance and Enablement Functions Streamlined: Supports Better Decision Making Strategic High Priority Governance & Business Growth Enablement Transformation Initiatives Functions  Rebuilding AmBank’s “Core Banking System” via AmHorizon, creating a scalable and robust platform for growth with enh

  48. Slide 48: Agenda

    AGENDA Page 1. EXECUTIVE SUMMARY 3 2. Q1FY2015 GROUP FINANCIAL PERFORMANCE 10 3. OUTLOOK & STRATEGIC PRIORITIES 27 4. DIVISIONAL STRATEGY & PERFORMANCE 32 5. SUPPLEMENTARY INFORMATION 38 - AMBANK GROUP - ECONOMY & INDUSTRY Your Bank. Malaysia‟s Bank. AmBank. Q1FY2015 Results – Investors Presentation

  49. Slide 49: Malaysian economy is on a steady growth trajectory

    Malaysian economy is on a steady growth trajectory Upward pressure on inflation remains, Moderating growth unemployment rates stable 5% 30% 4% 3.3% 25% 3% 20% 2.9% 15% 2% 7.8% 10% 6.3% 1% 5% 6.2% 4.2% 4.5% 5.0% 5.1% 0% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Sept Sept Sept Sept Dec Dec

  50. Slide 50: Well-contained risks despite increase in household indebtedness

    300.0 Well-contained 200.0 risks despite increase in household 44% indebtedness 100.0 Higher household debt, but retail Household - debt by compositions impaired loans ratio trending down 2010 2011 2012 2013 % of composition RM’bil 100.0% 900.0 86.8% 4% Others 90.0% 81.3% 800.0 HH debt Residential p

  51. Slide 51: Capital remains sound in the banking sector, loans growth moderating

    Capital remains sound in the banking sector, loans growth moderating Capital levels above BNM‟s Basel 3 Capital activities supported by debt guidelines issuance RM’bil 20% Basel II Basel III 50 45 14.8% 40 15% 13.0% 35 30 12.2% 10% 25 20 18.5 15 5% 10 5.2 5 0% 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q

  52. Slide 52: ETP: Propelling Malaysia towards becoming a high-income nation by 2020

    ETP: Propelling Malaysia towards becoming a high-income, developed nation by 2020 ETP Overview Achievement of 12 NKEAs in 2012 and 2013 GROSS NATIONAL 2020 Target KPI Scoring* JOBS INCOME NKEAs GNI New Jobs 2013 2012 (RM‟bil) • RM48k (USD15k) • 31.6m population Greater KL/ Klang Valley 190 320,000 9

  53. Slide 53: Malaysia remains an attractive investment destination

    Malaysia remains an attractive investment destination GDP per capita, 2014 (USD) Real GDP growth Unemployment (%) Inflation (%) 2013 2014F Singapore 55,568 Philippines Indonesia 4.1 3.6 6.9% 5.5% Malaysia 11,387 4.7 5.2 Indonesia 6.1% Vietnam 6.3% Thailand 5,450 2.9 2.5 Vietnam 4.4% Philippines 4.0%

  54. Slide 54: 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

  55. Slide 55: 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

AMMB Holdings Berhad — Q1 FY2015 Earnings Presentation on 6ix