17 february 2014 9mfy2014 results investors presentation€¦ · retail banking wholesale banking1...
TRANSCRIPT
1 1Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
17 February 2014
9MFY2014 Results –Investors PresentationAshokRamamurthy, Group ManagingDirector
Your Bank. Malaysia‟s Bank. AmBank.
2 2Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
3. 9MFY2014 GROUP FINANCIAL PERFORMANCE Page 13
4. OUTLOOK & STRATEGIC PRIORITIES Page 27
5. DIVISIONAL STRATEGY & PERFORMANCE Page 32
6. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 44
7. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 54
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
2. STRATEGIC PARTNERSHIP WITH METLIFE & INTEGRATION UPDATES Page 9
3 3Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Pre ANZ FY2007 – 10 FY2011 – 12 FY2013 9MFY2014
Scale & Presence
Reposition, BuildNew Growth Options
Improve ReturnsAggressively Invest, Optimise &
Leverage Connectivity
As Malaysia’s preferred diversified, internationally connected financial solutions group, we take pride in growing your future with us.
Record performances & increasing ROE
Consistent revenue growth
Improved balance sheet & funding mix
Increased dividend payout to 40%
Commenced pursuing niche acquisitions
3 Focus areas:
Strategic Business Transformation
High priority growth initiatives
Organisationand governance structures
6th consecutive year of record performance
Consistent growth & returns
Optimal diversification agenda
Clear strategic priorities
Acquisition synergies on track
Grow retail assets
Lead in investment banking business
Leverage fixed income trading
Strong earnings, PATMI up 9.0%, ROE of 14.2%
Integrations on track, delivering on synergies
Initiated cost efficiency initiatives across the group
New strategic partnership with MetLife, pending regulatory approval
Rating Agency Malaysia upgraded AmBank Group‟s credit ratings
New core banking platform successfully launched
Progressively delivering on FY14 -FY16 strategic agenda
9MFY2014 highlights
4 4Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Kurnia – vesting completed. Branch operations centralisation completed, rolling out dual branded branches. On track to complete integration by H1CY2014
MBF – vesting completed. Enlarged merchant force, ~4,000 MBF merchants using AmBank Easy Payment Plans (EPP). Focus on tapping on merchant base for cross-selling and simplifying internal process and structure
Pursuing “Save to Invest” programme to achieve cost synergies
Restructuring non-retail divisions to Wholesale Banking for better client centricity, efficiency and productivity
FX and Rates businesses have grown significantly, contributing over half of Markets PAT
Transaction Banking income has increased over 10.2%
Leveraging segmentation analysis and developing strategies to grow Main Bank relationships in Retail Banking and Small Business
AmLife & AmFamily Takaful – new strategic partnership with MetLife International Holdings Inc., pending regulatory approval. Completion by FY2014
Financial Services Act (FSA) gazetted– Financial Holding Company (FHC) structure being progressed for full compliance with FSA and IFSA
MBF Cards restructuring completed, allowing RM250m capital repatriation to AMMB
Streamlining of subsidiaries and releasing of dormant capital in progress and will be completed by 31 March 2014
Commenced program to deliver on an IRB based approach to managing risk by FY2015, capital benefits accruing after a 2-3 year period
Integrate acquisitions and deliver synergies
Simplify business model and streamline processes
Accelerate organic growth with focus on cross sell, flow business, small business, and emerging affluent customers
Build scale in specialist businesses with partners
Optimise capital and holding company structures
1
2
3
4
5
Progressively delivering on our strategic agenda
5 5Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
-13.3
28.231.6
34.7
44.7
49.6
54.0
40.744.2
FY07 FY08 FY09 FY10 FY11 FY12 FY13 9MFY13 9MFY14
38.8% 40.2%43.3% 42.0%
39.9% 41.6%
47.9% 46.3% 46.4%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 9MFY13 9MFY14
-283
669
8611,009
1,3431,484
1,619
1,2201,330
-5.8%
11.5% 11.7% 11.5%
13.6% 13.8% 13.9% 14.0% 14.2%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 9MFY13 9MFY14
PATMI (RM'mil)
ROE (%)
-0.17%
1.02% 1.04%1.13%
1.39% 1.39% 1.37% 1.38%1.45%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 9MFY13 9MFY14
CTI
Stronger profit performance, CTI reflects investments for growth
CAGR FY07-13: 0.26%YoY growth: 0.07%
CAGR FY07-13: 12.9%YoY growth: 8.8% YoY change: 0.1%
ROECAGR FY07-13: 3.3%YoY growth: 0.2%
PATMICAGR FY07-13: 19.5%YoY growth: 9.0%
1. CAGR for PATMI & ROE based on FY2007 underlying profits of RM556.9 mil2. FY2013 has been restated to conform with current period‟s presentation
RM (sen) (%)
(%)
PATMI & ROE ROA
CTIEPS (basic)
6 6Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
9.4% 9.5%8.6% 8.4%9.7% 9.8% 9.8%
10.4%
11.1%
11.1%
11.2%12.5%14.0%
15.2% 15.3%14.0%
14.7% 14.8%15.9% 15.2%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 9MFY13 9MFY14
CET-1 Tier-1 RWCAR/Total Capital BASEL III
6.2%
3.7%
2.6%
3.81%3.33%
2.45%1.98% 2.03% 1.98%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 9MFY139MFY14
50.354.4
57.9
64.8
71.175.7
82.6 81.384.8
FY07 FY08 FY09 FY10 FY11 FY12 FY13 9MFY13 9MFY14
5.3 6.3 7.0 8.5 10.4 13.2 16.8 15.4 17.3
45.957.9
65.270.7
81.584.6
93.1 90.895.8
13% 11% 11% 12% 14%17%
20% 19% 20%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 9MFY13 9MFY14
Customer deposits (RM'bil)
CASA(RM'bil)
CASA Composition (%)
Net Lending
Focusing growth in targeted segments, sound credit quality & capital ratios
CASACAGR FY07-13: 21.2%YoY growth: 12.4%
CAGR FY07-13: 8.6%Net lending YoY growth: 4.3%Gross lending YoY growth: 4.1%
Customer DepositsCAGR FY07-13 : 12.5%YoY growth: 5.4%
GP3 MFRS 139
YoY change: -0.05%
(RM‟bil)
(%)(%)
Customer Deposits & CASA
Net Lending
GIL ratio Capital ratio
1. FY2013 has been restated to conform with current period‟s presentation
LDR
88.6%
Proforma*
*Proforma capital ratios include Q3FY14 unappropriated profits of AmBank (M) Bhd, AmIslamic & AmInvestment
7 7Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
32 628
40
FY10 FY11 FY12 FY13 9MFY13 9MFY14
49 6094
13789
137
FY10 FY11 FY12 FY13 9MFY13 9MFY14
614673
922951
773703
FY10 FY11 FY12 FY13 9MFY13 9MFY14
537566
509
592
438505
FY10 FY11 FY12 FY13 9MFY13 9MFY14
PAT (RM‟mil)
PAT (RM‟mil) PAT (RM‟mil)
1 Wholesale banking represents Business, Corporate & Institutional Banking, Investment Banking and Markets activities
PAT (RM‟mil)
Retail Banking Wholesale Banking1
General Insurance Life Assurance & Family Takaful
FY2013 has been restated to conform with current period‟s presentation
15.2% 9.2%
54.8% >100.0%
Good growth in retail banking and insurance businesses
-64 -75
8 8Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
3. 9MFY2014 GROUP FINANCIAL PERFORMANCE Page 13
4. OUTLOOK & STRATEGIC PRIORITIES Page 27
5. DIVISIONAL STRATEGY & PERFORMANCE Page 32
6. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 44
7. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 54
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
2. STRATEGIC PARTNERSHIP WITH METLIFE & INTEGRATION UPDATES Page 9
9 9Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Strategic partnership with MetLife International Holdings Inc.
AMMB and MetLife signed strategic partnership for the Life and Family Takaful businesses (pending regulatory approval)
Total consideration payable of RM812 mil, subject to customary adjustment
MetLife to own 50% plus one share in AmLife, remaining shares owned by AMMB
AMMB to own 50% plus one share in AmTakaful, remaining shares owned by MetLife
Exclusive 20-year bancassurance and bancatakaful agreements for the distribution of life insurance and family takaful products through banking channels
Aligned visions, strategic priority focus on sustainable profitable growth in key segments
Immediate roll-out (no conflicts), proven foreign partnerships
Enhanced reputation – customer centric, trusted, modern
Access to MetLife‟s global capabilities:
oDeep multi-channel expertise (direct & digital channel, agents, bancassurance – over 100 partnerships in Asia)
oLeading innovative product development (wealth protection, wealth accumulation, retirement, health)
oUnique investment capabilities as one of the world‟s largest investors (~750 investment professionals, USD460 billion managed internally & USD220 billion externally)
oWorld leading technology to provide enhanced customer experience
Leading global provider of insurance, annuities and employee benefit programs
Global workforce of ~64,000; serving ~90 million customers
Commenced Asian operation in 1952, with offices across eight countries
Leading market positions in US, Japan, Latin America, Asia, Europe and Middle East
Business to be acquired
Strategic fit
About MetLife
10 10Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Integrations of Kurnia and MBF on track
RM1.627 bil cash purchase price (valuation: P/B 1.95x based on net assets @ 30 Jun 2012)
GWP of >RM1.7 bil (~12% market share), >3.6 mil policyholders
Integration on track:
o “AmAssurance” & “Kurnia” dual branding strategy, the first in Malaysian general insurance market
o Branch operations centralisation completed, 28 dual branded branches rolled out
RM641.4 mil cash purchase price (valuation: P/B 2.9x based on net assets @ 30 Nov 2012)
Enlarged merchant force, ~4,000 MBF merchants signed up for AmBank‟s EPP
IT system integration revised to FY2015 – core banking dependency
Integrating people, processes, operations and IT systems, expected to complete by CY2014
1. Includes depreciation, exclude funding cost2. Updated
Leading general and #1 motor insurer in Malaysia
CIC increased to > 500,000 Combined merchant > 50,000
RM milSynergistic benefit
cost1
Run Rate SynergiesAcquisition cost
Cost Total
FY13 (11.0) 25.5 25.5 (20.5)
9MFY14 (8.5) 27.2 52.7 -
FY14(e) (12.4) 33.4 58.9 -
FY15(e) (7.1) 1.1 60.0 -
RM milSynergistic benefit
cost1
Run Rate SynergiesAcquisition cost
Revenue Cost Total
FY13 (10.5) 0.1 2.4 2.5 (3.5)
9MFY14 (4.0) 1.8 13.0 14.8 -
FY14(e)2 (11.2) 4.1 18.6 22.7 -
FY15(e)2 (24.3) 17.1 25.7 42.8 -
11 11Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
17 February 2014
9MFY2014 Results –Investors PresentationMandy Simpson, Chief Financial Officer
Your Bank. Malaysia‟s Bank. AmBank.
12 12Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
3. 9MFY2014 GROUP FINANCIAL PERFORMANCE Page 13
4. OUTLOOK & STRATEGIC PRIORITIES Page 27
5. DIVISIONAL STRATEGY & PERFORMANCE Page 32
6. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 44
7. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 54
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
2. STRATEGIC PARTNERSHIP WITH METLIFE & INTEGRATION UPDATES Page 9
13 13Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
14.5 14.5 15.4 16.8 18.0 16.5 17.3
88.0 91.4 90.8 93.1 95.4 96.3 95.8
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14
RM‟bil
Customer deposits CASA
18% 17% 19% 20% 21% 19% 20%
78.1
80.2
81.3
82.6
84.283.6
84.8
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14
(RM‟bil)
C. Deposits QoQ growth: -0.5%CASA QoQ growth: 4.6%
443380 396 400
465 441 423
15.7%13.0% 13.4% 13.6%
15.2%13.9% 13.0%
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14
PATMI (RM'mil)ROE (%)
42.5%45.6%
50.6%52.2%
47.6% 47.6%44.0%
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14
PATMI QoQ growth: -4.1%ROE QoQ growth: -0.6
QoQ growth: 1.4%YoY growth: 4.3%
CASA Composition
CTI stabilised, stronger low-cost deposits growth
(%)
PATMI & ROE CTI
Net LendingCustomer Deposits & CASA
1. FY2013 has been restated to conform with current period‟s presentation
14 14Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
33.7% 10.4% 12.1% >100.0%
1,329.6 mil
9.0% 12.0% 11.8% 11.9% 12.9%
1,219.5 mil
2.1%
9MFY13 PATMI 9MFY14 PATMI Positive growth in 9MFY14 Contraction in 9MFY14
* PATMI: profit after tax and non controlling interests
Strong non-interest income growth, expenses reflect acquisitions & investment
Growth 8.9%
PATMI9MFY13
Net Interest Income
Non-Interest Income
Total income
Expenses PBPProvisions/Allowances
PBTTax & Zakat
PAT MIPATMI
9MFY14
9MFY14 (RM‟mil)
2,259.1 1,349.0 3,608.1 1,673.5 1,934.7 68.0 1,866.7 468.1 1,398.6 69.0
9MFY13(RM‟mil)
2,213.5 1,008.7 3,222.1 1,492.3 1,729.9 61.6 1,668.3 429.8 1,238.5 19.0
15 15Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
14.3% 15.6% 54.8% 33.4% 9.0%>100.0%
* Performances reflected within divisional outcomesNote: 9MFY14 includes Kurnia‟s & MBF‟s 6-month performance
15.2% 4.4% 5.4% 16.2%
Conventional PATMIIslamic PATMI Positive growth in 9MFY14 Contraction in 9MFY14
1,219.5 mil
1,329.6 mil
Growth >100.0%
86%84%
16%14%
PATMI9MFY13
Retail BusinessCorporate & Institutional
Investment MarketsGeneral
Insurance
Life Assurance & Family Takaful
Operating Segments
MI Transaction * Islamic *PATMI 9MFY14
% of Composition
38% 21% 21% 3% 8% 10% 3% 1% (5%)
9MFY14 (RM‟mil)
504.6 281.6 277.8 31.4 111.7 137.4 40.3 13.8 (69.0) 137.3 179.6
9MFY13
(RM‟mil)438.0 269.8 324.2 47.1 132.3 88.8 (74.8) 13.1 (19.0) 163.8 196.1
8.4%
Retail, business banking and insurance divisions delivered stronger profit growth
PATMI by Divisions
Wholesale banking Insurance 9.2% >100%Retail 15.2%
16 16Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Total Income 9MFY13 Retail Business RSb Investment Markets AmG AmLife + AmFam OptSeg Total Income 9MFY14
63%69%
37%31%
1 2
63%69%
37%31%
8.2% 17.0% 12.0% 8.3% 1.4%
3,222.1 mil
3,608.1 mil
YoY Growth 10.2% >100.0% >100.0% 6.0%
35.1
79.8
-12.5
19.2
Total non interest income
Total interest income Positive interest income growth in 9MFY14
Contraction interest income in 9MFY14
Positive non interest income growth in 9MFY14
Contraction non interest income in 9MFY14
Wholesale banking Insurance 0.4% >100%
Income9MFY13
Retail BusinessCorporate & Institutional
Investment MarketsGeneral
Insurance
Life Assurance & Family Takaful
Operating Segments
Income 9MFY14
% of Composition
41% 13% 11% 9% 5% 11% 5% 5%
9MFY14 (RM‟mil)
1,495.3 476.4 378.2 305.1 199.6 404.7 158.0 190.7
9MFY13(RM‟mil)
1,380.4 469.6 412.2 260.8 222.4 245.2 28.5 203.0
Key income drivers – Retail, Investment banking and Insurance
Income by Divisions
-30.1
-3.9
35.5
8.8
-13.3
-9.5
188.9
-29.4
133.8
-4.2
-41.8
29.5
Retail 8.3%
17 17Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation* IB business includes brokerage fees, underwriting fees and corporate advisory & guarantees
As % of total income 31% 37%
>100.0% 11.0%Growth 3.8% 11.4% 15.3%
1,349.0 mil
21.1%44.6% 1.2% >100.0% 33.7% 6.8%
9MFY14 non interest income Positive growth in 9MFY14 Contraction in 9MFY14
Retail: +57milBB & CIB: -28milIB & Markets: -7mil
9MFY13 non interest income
1,008.7 mil
9MFY13Fees on
lending & securities
AUMIB
business*Other fee income
Total Fee Income
Sales TradingOther trading& investment
Trading & Investment
GeneralLife &
TakafulInsuranceBusiness
Others 9MFY14
% of Composition
16% 9% 11% 6% 43% 9% 9% 5% 23% 24% 6% 29% 5%
9MFY14
(RM‟mil)224.1 119.0 146.1 83.6 572.9 119.4 120.5 70.4 310.3 323.2 77.6 400.8 65.0
9MFY13(RM‟mil)
201.8 114.6 131.2 89.0 536.7 82.6 142.3 89.2 314.1 190.8 -57.7 133.1 24.8
6.0%
Non-interest income movement
Consistent NII growth, reflecting cross selling and collaboration efforts
69.4% >100.0%
Fees on loans AUM IB business Other fee inc Total Fee income Sales Trading Other trading incTotal Trading & Investment General Life & Takaful Total Insurance Other
18 18Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
252
256
8 2
2
Q2FY14 Asset mix Funding mix Rates Q3FY14
268
258
0.2 3
13
FY13 Asset mix Funding mix Rates 9MFY14
Higher margin compression in retail, while COF continues to improve
Cost of Fund NIM OPR SRR
Note :1 NIM includes Net Financing Income from Islamic Banking business2 FY10-9MFY14 based on internal data computation
COF
NIMF
SRRF
OPRF
3.44%
2.68%
2.92% 2.92% 2.86% 2.91% 2.90% 2.85%
2.92%
3.04%
2.98% 2.94% 2.94%3.05%
2.95% 2.90%3.01%
2.94%
FY09 FY10 FY11 Q1FY12 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12
Cost of funds NIM
3.44%
2.68%
2.92% 2.92% 2.86% 2.91% 2.90% 2.85%
2.92%
3.04%
2.98% 2.94% 2.94%3.05%
2.95% 2.90%3.01%
2.94%
FY09 FY10 FY11 Q1FY12 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12
Cost of funds NIM
3.44%
2.68%
2.92% 2.92% 2.86% 2.91% 2.90% 2.85%
2.92%
3.04%
2.98% 2.94% 2.94%3.05%
2.95% 2.90%3.01%
2.94%
FY09 FY10 FY11 Q1FY12 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12
Cost of funds NIM
2.50%2.75% 2.75% 2.75%
3.00%
3.00%
1.00% 1.00% 1.00% 1.00%
2.00%
3.00%
4.00%
Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12
OPR SRR
SRR
OPR
2.50%2.75% 2.75% 2.75%
3.00%
3.00%
1.00% 1.00% 1.00% 1.00%
2.00%
3.00%
4.00%
Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12
OPR SRR
SRR
OPR
2.25%2.75% 3.00% 3.00% 3.00%
1.00% 1.00%
4.00% 4.00% 4.00%
FY10 FY11 FY12 FY13 Q1FY14
OPR SRR
10bps
FY10 FY11 FY12 FY13 9MFY14
FY13 Assets mixFunding
mixRates 9MFY14
NIM and COF (YOY)
YTD NIM (bps) drivers
2.68%
2.92%3.13% 3.10%
3.09%2.98%
2.94%2.75% 2.68% 2.58%
FY10 FY11 FY12 FY13 9MFY14
Cost of funds NIM
Q2FY14 Assets mixFunding
mixRates Q3FY14
4bps
QoQ NIM (bps) drivers
19 19Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
89.0% 89.0%90.2%
21.0% 20.0%
25.2%
41.8%
40.2% 40.5%
43.3%
45.0%
Expenses reflecting strategic investments and acquisitions
9MFY13 Personnel EstablishmentMarketing &
CommAdmin & others
Synergisticbenefit cost
9MFY14
% of Composition 60% 23% 8% 8% 1%
9MFY14 (RM‟mil) 1,005.2 390.0 128.5 137.5 12.4
9MFY13 (RM‟mil) 883.0 361.4 102.1 100.1 45.6
13.8% 7.9% 25.9% 37.3%
46.3% 46.4%CTI
YoY Growth
RM‟mil
1,492.3
1,673.5
Expense growth drivers
Banking Group CTIAmGeneral Combined
Operating RatioAmLife Management
Expense Ratio
FY12 FY13 9MFY14FY12 FY13 9MFY14FY10 FY11 FY12 FY13 9MFY14
72.9%
20 20Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
3.18%
0.97%0.60% 0.88%
6.2%
3.7%
2.6%1.5%
10.4%
6.3%
4.1%
2.8%3.81%
3.33%
2.45% 1.98% 1.98%0.50%
0.21% 0.01%
2.89% 2.63% 2.41%
129.3%
119.3%
5.1%
2.4%
2.6%
3.18%
0.97%0.60%
0.88%
6.2%
3.7%
2.6%
1.5%
10.4%
6.3%
4.1%
2.8%
3.81%3.33%
2.45% 1.98% 1.97%0.50%
0.21% 0.01%
2.87% 2.64% 2.41%
Net Provisions Charge Net NPL Ratio Gross NPL Ratio Gross Impaired Loans Loan Loss Charge(MFRS139) Loan Loss Reserve
Loan Loss Coverage
Asset quality remains sounds
183bps
MFR
S 1
39
MFR
S 1
39
RM‟mil
GP
3
FY2007 FY2008 FY2009 FY2010 1/4/2010 FY2011 FY2012 FY2013 9MFY2014
FY13 loan losscoverage
Collective allowance
Individual allowance
Impaired loans &
financing
9MFY14 loan losscoverage
9MFY13 Allowance for impairment
Individual allowance
Collective allowance
Recovery from loans sold to Danaharta
Impaired loans –
recovered & written-off
9MFY14 Allowance for impairment
Asset quality indicators
Allowance for impairment on loans & financing (P&L) Movement in loan loss coverage
FY2012 FY2013 9MFY2014
114.6%129.3%
119.3%
AmBank Group
Industry
97.5
3.8
42.2
0.9
9.4
127.4
* Loan loss reserve is computed using collective & individual allowance over net loans
95.6% 99.6%
107.6%
21 21Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Slower growth, being selective in customer segments & economic sectors
Retail Biz & Corporate
1.5% 7.8%
83.4bil
7.5% 6.4% 7.1% 6.0% 10.6% 47.1%
86.8bil
4.1% 6.8%
No
n-re
tail
Reta
il
0.5%
Non-RetailRetail Positive growth in 9MFY14 Contraction in 9MFY14
Conventional73%
Islamic27%
Conventional73%
Conventional73%
Conventional74%
Gross Loan9MFY13
Auto Financing
Mortgage Cards Co-opAsset
FinancingBusiness
Corporate & Institutional
OthersGross Loan
9MFY14
% of Composition
30.1% 19.6% 2.5% 1.8% 3.0% 21.3% 19.9% 1.8%
9MFY14 (RM‟bil)
26.1 17.0 2.2 1.6 2.6 18.5 17.3 1.5
9MFY13(RM‟bil)
26.0 15.8 2.3 1.7 2.9 17.3 16.3 1.1
Gross Loan / Financing movement
Conventional 73%
57%
43%
58%
42%
22 22Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
31.7 8.0 96.7 9.7 49.8 91.2
28.9 88.4 71.0
41.5
690.6
18.3
1,225.8
Dec-13
2.6% 0.7% 7.9% 0.8% 4.1% 7.4% 2.4% 7.2% 5.8% 3.4% 56.3% 1.5%
2.6% 0.7% 7.9% 0.8% 4.1% 7.4% 2.4% 7.2% 5.8% 3.4% 56.3% 1.5%
3.72.8 8.3 0.7 3.9 5.2
2.9 2.3 7.7 1.2
47.0
1.2
86.8
Dec-134.3% 3.2% 9.5% 0.8% 4.5% 6.0% 3.3% 2.7% 8.9% 1.3% 54.2% 1.3%
Loans by Sector: AmBank Group vis-à-vis Industry
Source : BNM, financial statementYour Bank. Malaysia‟s Bank. AmBank.
AmBank Group Loans Growth by Sector
Industry Loans Growth by Sector
AgricultureMining &
QuarryingManufacturing
Electricity, Gas & Water
ConstructionWholesale,
Retail, Restaurant
Transport, Storage &
Com
Finance, Insurance,
& Biz. Real Estate
Education & Health
Household OthersTotal Loans
AgricultureMining &
QuarryingManufacturing
Electricity, Gas & Water
ConstructionWholesale,
Retail, Restaurant
Transport, Storage &
Com
Finance, Insurance,
& Biz. Real Estate
Education & Health
Household Others Total Loans
4.1%
3.72.8 8.3 0.7 3.9 5.2
2.9 2.3 7.7 1.2
47.0
1.2
86.8
Dec-13
LoansComposition
YoYGrowth
YoYGrowth
LoansComposition
27.2% 61.7% 8.9% 30.4% 19.4% 6.5% 7.8% 40.6% 12.9% 26.4% 3.6% 20.4%
10.9% 13.7% 1.8% 6.1% 12.0% 11.1% 2.9% 16.4% 13.5% 3.5% 12.0% 26.5%
3.72.8 8.3 0.7 3.9 5.2
2.9 2.3 7.7 1.2
47.0
1.2
86.8
Dec-13
11.5%
23 23Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
8.5 10.4
13.2
16.8 17.3
12% 14%17%
20% 20%
FY2010 FY2011 FY2012 FY2013 9MFY2014
CASA CASA composition
FY07 FY10 FY13 9MFY14
Equity & debt capital 10% 15% 14% 14%
Customer deposits 60% 77% 75% 73%
Term funding & loans with recourse >1year
4% 2% 7% 6%
Term funding & loans with recourse <1year
1% 1% 1% 2%
Deposits from banks & FIs
25% 5% 3% 5%
1. Term funding includes Senior Notes, credit-linked notes, loans sold with recourse and other sources such as pension and retirement funds, non-profit organisations and similar
Diversified funding sources, customer base and maturity profile
RM‟bil
FY2010 FY2011 FY2012 FY2013 9MFY2014
CAGR FY10-13: 25.4%
8.5 10.4
13.2
16.8 18.0
12% 14%17%
20% 19%
FY2010 FY2011 FY2012 FY2013 H1FY2014
CASA CASA composition
Customer deposits driven by focus on CASA
Improving CASA composition
Lengthening debt capital & term funding profile
Improving funding composition
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
<FY10 FY11 FY12 FY13 FY14 YTD
FY14 FY15 FY16 FY17 FY18 FY19+
RM'bil
Debt Capital Term Funding Loans sold to Cagamas
Issuance Maturity
YoY Growth 15.1% 6.6% 12.4% 4.6% -0.9% 5.4%
Cust
Deposits
9MFY13
Current Savings CASA
Term
Deposit
& NID
Term
Funding
Cust
Deposits
9MFY14
9MFY14 12.1 5.2 17.3 70.3 8.2 95.8
9MFY13 10.5 4.9 15.4 67.2 8.3 90.8
90.8
95.8
24 24Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
123.7 241.9
365.6
606.8
972.5
131.8
273.0
404.7
667.0
1,071.8
Dec'12 Dec'13
6.5% 12.8% 10.7% 9.9% 10.2%
4.9 10.5 15.4
67.0
82.4
5.2
12.1
17.3
70.2
87.5
Dec'12 Dec'13
RM’bil
Deposits by Type: AmBank Group vis-à-vis Industry
Source : BNM, internal reports
RM‟bil
Savings Current Account CASA Fixed Deposits Core Deposits
Savings Current Account CASA Fixed Deposits Core Deposits
AmBank Group Deposits Growth by Type
Industry Deposits Growth by Type
6.6% 15.1% 12.4% 4.8% 6.2%
5.9%
13.8%
80.2%
AmBank Group Core Deposits Composition
Savings Current Account Fixed Deposits
12.3%
25.5%
62.2%
Industry Core Deposits Composition
Savings Current Account Fixed Deposits
25 25Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
9.4% 9.5%9.8% 10.4%
11.1% 11.2%
14.0%14.7% 14.8% 15.2%
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 FY2014:
o CET1: 8.5% ± 1.0%
o T1: 10.5% ± 1.0%
o Total Capital: 14.5% ± 1.0%
Double leverage ratio1: 1.18x
Balance Sheet leverage ratio2: 8.0%
Total leverage ratio3: 6.2%
Adopted Basel III, in progress to optimise capital & holding company structure
1. Double leverage ratio computed based on AMMB Holdings company level2. Balance sheet leverage ratio: total equity net of deferred tax & intangible assets over total assets net of deferred tax assets & intangible assets 3. Total leverage ratio: total equity net of deferred tax & intangible assets over total assets net of deferred tax assets & intangible assets & off balance sheet
Capital: Aggregated banking entities
Basel II Basel III
------------------ After proposed dividend -----------------------
Capital: Legal entities
FY13 9MFY14
CET 1 Tier 1Total
capitalCET 1 Tier 1
Total capital
AmBank 8.6% 10.9% 14.2% 8.6% 10.8% 14.7%
AmIslamic 9.5% 9.5% 14.6% 9.6% 9.6% 14.6%
AmInvestment 25.7% 25.7% 25.7% 19.2% 19.2% 19.2%
FY2011 FY2012FY2013
restated9MFY2014
*Proforma
CET 1Tier 1 RWCAR / Total Capital Ratio
Capital adequacy ratio
* Proforma capital ratios include Q3FY14 unappropriated profits of AmBank (M) Bhd, AmIslamic & AmInvestment
26 26Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
3. 9MFY2014 GROUP FINANCIAL PERFORMANCE Page 13
4. OUTLOOK & STRATEGIC PRIORITIES Page 27
5. DIVISIONAL STRATEGY & PERFORMANCE Page 32
6. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 44
7. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 54
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
2. STRATEGIC PARTNERSHIP WITH METLIFE & INTEGRATION UPDATES Page 9
27 27Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Financial services outlook
MALAYSIA: Moderate Growth Expected in 2014
Monetary policy will remain prudent to support the economic growth and contain inflationary pressure
Moderate loans growth in line with the economic outlook and measures to address high household debt concerns
Asset quality may come under pressure more from rising inflation than potential capital flow risk
Margins remain a challenge from the stiff price-based competition for loans and deposits
OPR expected to remain at 3% throughout 1H2014, with a slight probability of 25bps hike in 2H2014
BANKING: Opportunities & challenges
Global growth to improve moderately
• US to expand firmly, while downside risk in euro-area remains, with structural reforms to take time to gain traction
• Challenging year of Developing Asia to maintain financial stability and sustain economic growth
Malaysian economy: continued moderate growth
• Growth in 2014 will depend on private investment and exports, with softening private consumption
• Inflation will be a focal point in 2014 driven by on-going rationalization of subsidy and pre-GST impact. The other one being public debt
• Authorities will continue to adopt prudent and pragmatic macroeconomic policies, reining in fiscal deficit and public debt
2013e 2014f 2015f
RGDP y/y% 4.6 4.8 5.2
Inflation y/y% 2.1 3.0 3.6
Unemployment (%) 2.9 2.9 2.9
FB% GDP (FY) -4.0 -3.5 -3.0
CA% GDP 3.5 4.4 4.0
95.8
20.4%
10.1%
Jan-1
2
Feb-1
2
Mar-
12
Apr-
12
May-1
2
Jun-1
2
Jul-
12
Aug-1
2
Sep-1
2
Oct-
12
Nov-1
2
Dec-1
2
Jan-1
3
Feb-1
3
Mar-
13
Apr-
13
May-1
3
Jun-1
3
Jul-
13
Aug-1
3
Sep-1
3
Oct-
13
Nov-1
3
Dec-1
3
RM'bil
Loans disbursed Loans approved Loans Applied
28 28Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
FY2014 – 2016 Strategic Agenda
Integrate acquisitions and deliver synergies
Simplify business model and streamline processes
Accelerate organic growth with focus on cross-sell, flow business, small business, and emerging affluent customers
Build scale in specialist businesses with partners
Optimise capital and holding company structures
1
2
3
4
5
29 29Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
PATMI(RM‟mil)
ROE (%)
CTI (%)
Gross impaired loans
(%)
Dividend:Single-tier (sen)
Payout (%)
Key performance indicators
NIM expected to contract ~10 bps Loan loss charge expected to be <20 bps Loans expected to grow ~7% (GDP @ 4.6%) LD ratio expected to maintain at ~90%, ±2%
CASA composition ≥20%
Non-interest income composition at circa 35% Target CET 1 of 8.5% (±1%), Tier 1 of 10.5% (±1%),
total capital of 14.5% (±1%)
1
2
3
4
5
Other FY2014 underlying estimates:
(Underlying Estimates)
FY2013
(Restated)
9MFY2014
(Actual)
FY2014 FY2015 – FY2016 FY2014 (Market
Consensus)
1,619.2
(9.1% yoy)
1,329.6
(9.0% yoy)10 – 12% 12 – 14% 10.1%
13.9% 14.2% 14.0 – 14.5% 14.5 – 15.5% 14.2%
47.9%43.3%
(Banking Group)
46.4%
45.0%
(Banking Group)
≤47%;≤45%
(Banking Group)
≤45%;≤43%
(Banking Group)≤47%
1.98% 1.98% ≤2.0% ≤2.0% ≤2.0%
22.0 sen / share
41%
7.2 sen / share
24%
(6-months interim
dividend)
40 - 50%Payout
40 - 50%Payout
40 - 50%Payout
30 30Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
9MFY14: Progressively delivering on our strategic agenda
o Stronger earnings, integrations progressing well
o Investing to strengthen AmBank‟s franchise
o Efficiency agenda underway
o Global and Malaysia economy expecting continued moderate growth
o Some headwinds in the banking environment, we will remain agile and responsive
Strategic priorities unchanged, continued discipline execution and exploring strategic growth opportunities
Summary
1
2
3
31 31Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
3. 9MFY2014 GROUP FINANCIAL PERFORMANCE Page 13
4. OUTLOOK & STRATEGIC PRIORITIES Page 27
5. DIVISIONAL STRATEGY & PERFORMANCE Page 32
6. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 44
7. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 54
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
2. STRATEGIC PARTNERSHIP WITH METLIFE & INTEGRATION UPDATES Page 9
32 32Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Our Vision and divisional aspirations
* Conventional & Islamic
TRANSACTION*
To become Top 5 Transaction
Banking Service Provider
in Malaysia by FY2015 with 8% market
share
CIB*
Target high-profile
and high-value clients, increase „share of wallet‟, deliver innovative & quality solutions and leverage ANZ
for x-border businesses
ISLAMIC
To be the Islamic Bank of choice
INVESTMENT*
Deliver comprehensive
solutions, lead in capital markets,
funds management, stock broking and enhance domestic
and overseasdistribution
via ANZ
MARKETS*
Deliver substantive,integrated and
client-led business with
full suite of FX, Rates,
Commodities and FI offerings
with ANZ collaborations
FAMILY TAKAFUL
To be the trusted Family Takaful
Operator of choice within
all of our selected markets
LIFE ASSURANCE
To be leading Life Insurer in customer
services, productivity and products
GENERAL INSURANCE
Leverage scale to lead the market in
the motoring segment,
whilst building a leading
personal lines portfolio and niche
commercial business
RETAIL*
Develop a liability-led business,
grow assets in targeted segments & expand Wealth
Management
BUSINESS*
Growing the business through decisive
execution
DIVISIONAL ASPIRATIONS
Vision“As Malaysia‟s preferred diversified, internationally connected financial
solutions group, we take pride in growing your future with us”
33 33Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Retail Banking
Develop a liability-led business, grow assets in targeted segments and expand Wealth ManagementAspirations
8.3%Growth 3.2% 15.0% 30.7% 14.8% 13.5% 15.2%
• Higher profit contribution via growing core business while improving asset quality and managing expensesOutlook
PAT
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
• Higher profits benefiting from progressive integration of MBF Cards and improved asset quality,
• CASA and customer deposits grew stronger underpinned by new integrated campaigns, new segment based strategies, and leveraging existing and new channels as well as alliances
• Lending growth partly reflects regulatory changes, various initiatives being rolled out to drive sales growth
• Small Business Banking model targeting non-individual customers, pilot launch at 40 branches in Nov
Higher profits from improved asset quality and Cards
9MFY14 PAT
(composition to Group)
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
1,495.3 686.8 808.5 138.1 670.5 165.9 504.6
9MFY13(RM‟mil)
1,380.4 597.2 783.2 199.1 584.1 146.1 438.0
36.1%
Gross Loans /
Financing 48,735.6 49,481.3 ▲ +1.5%
Gross Impaired Loans 2.82% 1,296.2 1,395.7 ▲ +7.7%
Customer Deposits 35,149.1 39,834.8 ▲ +13.3%
CASA Deposits 9,682.9 10,999.5 ▲ +13.6%
ROA 1.23% 1.36% ▲ +0.13%
CTI 43.3% 45.9% ▲ +2.7%
Allowance Coverage 84.8% 73.2% -▼ -11.6%
G
G
G
34 34Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Aspirations
9MFY14 Income mix
Business Banking
Growing the business through decisive execution
1.4%Growth 1.7% 0.3% 27.8% 4.3% 4.2% 4.4%
9MFY14 PAT(composition to Group)
Outlook • Expecting higher profit growth for FY2014
PAT
• Good profit growth underpinned by higher income and lower provisions from better customer credit rating
• Expanding customer base and value of business in preferred sectors (construction, manufacturing, oil & gas), seized growth opportunities from beneficiaries of ETP
• Regional coverage teams provided diversified geographic loans and deposits growth
Improved asset quality, stronger deposits growth
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
476.4 79.1 397.3 23.4 374.0 92.4 281.6
9MFY13(RM‟mil)
469.6 78.9 390.8 32.3 358.5 88.7 269.8
Lending
& deposits
, 70%
Trade
Services, 30%
20.1%
Gross Loans / Financing 17,276.5 18,504.4 ▲ +7.1%
Gross Impaired Loans 0.76% 158.7 140.1 -▼ -11.7%
Customer Deposits 8,406.7 10,126.9 ▲ +20.5%
CASA Deposits 2,830.8 3,762.2 ▲ +32.9%
ROA 2.15% 2.08% -▼ -0.07%
CTI 16.8% 16.6% -▼ -0.2%
Allowance Coverage 153.6% 132.7% -▼ -20.9%
G
G
35 35Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Lending &
deposits, 53%
Offshore Banking,
13%Asset Mgmt, 4
%
Trade Services & Cash
Mgmt, 30%
19.9%
Corporate & Institutional Banking
Target high-profile and high-value clients, increase „share of wallet‟, deliver innovative and quality solutions and leverage ANZ for x-border businesses
Aspirations
8.2%Growth 8.2% 8.2% 56.7% 15.8% 21.0% 14.3%
PAT
9MFY14 Income mix 9MFY14 PAT(composition to Group)
Services include : large corporate lending & deposits, financial institutions group, offshore banking, transaction banking, private equity, REITs and trustee services
Outlook • Anticipating stable growth for FY2014
• Lower income partly impacted by large repayments during the year and absence of divestment gains in Assets business in 9MFY14
• Gross loans / financing reflects large repayments in 9MFY14
• Lower deposits reflects management of depositors concentration
• Continued cross sell in key products / solutions under wholesale banking platform
Sustained loans and deposits growth
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
378.2 55.8 322.4 (28.1) 350.5 72.8 277.8
9MFY13(RM‟mil)
412.2 60.8 351.4 (64.9) 416.3 92.1 324.2
36 36Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Investment Banking
Deliver comprehensive solutions, lead in capital markets, funds management, stock broking and enhance domestic & overseas distribution via ANZ
Aspirations
Growth 2.5% 17.0% 52.6% >100.0% 14.9% 20.0% 33.4%
9MFY14 Income mix 9MFY14 PAT(composition to Group)
Outlook
• Near term market uncertainty as a result of continue guessing on timing and quantum of US QE tapering
• FY2014 profit to be supported by improved market sentiment post elections coupled with roll out of Economic Transformation Programme (ETP) projects driving capital markets activities
PAT
1. Includes AmInvestment Management, AmInvestement Services, AmIslamic Funds Management & Private Banking
• Good diversified contributions across corporate finance, debt capital market, equities, broking and funds management, as well as private banking.
• Higher provisions reflects proactive provisions of RM63 million to-date in relation to AmFraser
Strong income growth
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY149MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
Debt
Cap Mkt, 7
%
Corp
Fin, 12%
Equity,
4%
Broking
& Futures
, 23%
Fund
Mgmt, 34%
Private
Bkg, 8%
Int
Biz, 12%
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
305.1 190.0 115.1 53.8 61.3 29.9 31.4
9MFY13(RM‟mil)
260.8 185.4 75.4 3.4 72.1 24.9 47.1
CTI 71.1% 62.3% -▼ -8.8%
Ave Assets Management 36,510.0 40,027.0 ▲ +9.6%
Ave Volume / Contract Traded (RM'mil/month)
IB Broking 4,405.4 5,193.5 ▲ +17.9%
AmFuture - FKLI 27.0 27.4 ▲ +1.5%
Market Share as at:
IB Broking 6.7% 5.4% -▼ -1.3%
AmFuture -FKLI 7.7% 5.8% -▼ -1.9%
1
2.2%
37 37Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Markets
Deliver substantive, integrated and client-led business with full-suite of FX, Rates, Commodities and FI offerings with ANZ collaborations
Aspirations
Growth 8.3% >100.0% 16.6% 10.2% 10.9% 15.8% 15.6%
Outlook
• FY2014 profit outlook supported by:
a) Intensifying cross-sell initiatives by tapping into the Group‟s regional presence in FX and Derivatives business
b) Expansion of regional distribution and trading capabilities
PAT
9MFY14 Income mix 9MFY14 PAT(composition to Group)
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
199.6 50.9 148.7 0.5 148.3 36.6 111.7
9MFY13(RM‟mil)
222.4 55.5 166.9 (9.2) 176.1 43.9 132.3
Fixed
Income, 40%
Foreign
exchange, 46%
Derivativ
es, 14%
• Healthy volume flows from foreign exchange and derivatives sales made up for the paucity of trading revenue, especially from Fixed Income
• High market volatility causing temporary deferment to deal flows
Performance impacted by continued volatility in market
CTI 24.9% 25.5% ▲ +0.5%
PAT: FX and Derivatives 56.2 66.3 ▲ +17.9%
Financial assets HFT 8,400.8 2,781.3 -▼ -66.9%
Financial investments
AFS 2,252.8 4,061.2 ▲ +80.3%
Total Group:
Financial assets HFT 10,579.8 5,829.0 -▼ -44.9%
Financial investments
AFS 6,697.3 10,681.5 ▲ +59.5%
Financial investments
HTM 2,623.3 3,866.6 ▲ +47.4%
8.0%
38 38Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
General Insurance
Leverage scale to lead the market in the motoring segment, whilst building a leading personal lines portfolio and niche commercial business
Aspirations
65.1%Growth 77.1% 55.4% 63.4% 77.6% >100.0% 54.8%
Outlook
PAT 9MFY14 PAT(composition to Group)
• Higher premium growth, stronger net earned premium and improved underwriting profit benefiting from enlarge entity
• Higher expenses reflects enlarge entity and amortisation of intangible assets (RM16.4 mil for 9MFY14). In accordance with MFRS 3 (Business Combination) and MFRS 138 (Intangible Assets), AmGeneral Holdings has completed the purchase price allocation (PPA) in relation to the Kurnia acquisition. The total intangible assets, which comprised of brand, agency relationship and policies in force is valued at RM208 mil. The agency relationship and policies in force will be amortised on a straight line basis over their useful economic lives
Improved performance, benefiting from positive contributions from acquisition
• Expecting higher retention levels in FY2014
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
404.7 212.2 192.6 5.7 186.9 49.4 137.4
9MFY13(RM‟mil)
245.2 136.5 108.7 3.5 105.2 16.5 88.8
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
9.8%
Claim ratio 62.2% 63.0% ▲ +0.8%
Expenses ratio 16.6% 16.6% ▲ +0.0%
Combined ratio 90.0% 90.2% ▲ +0.2%
G
GGG
GGG
GGGGGG
G
GGG
GGG
GGG
GGG
GGG
GGGG
GGG
39 39Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Life Assurance & Family Takaful
Life Assurance: To be leading Life Insurer in customer service, productivity and products
Family Takaful: To be the trusted Family Takaful Operator of choice within all of our selected marketsAspirations
Growth 6.3% 98.9%>100.0% >100.0% >100.0% 100.0% >100.0%
Outlook Life Assurance: FY2014 profit contribution to normalise
Family Takaful: Expecting sales growth in FY2014 post full year operational readiness
PAT 9MFY14 PAT(composition to Group)
• AmLife: stronger premiums from agents and corporate channels, in progress to rationalise products and enhance customer segmentation focus (via campaigns and trainings)
• AmFamily Takaful: stronger contribution from credit related & employee benefits products, inward Retakaful and higher investment income
Stronger premiums & investment income
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
158.0 90.4 67.6 0.1 67.5 27.2 40.3
9MFY13(RM‟mil)
28.5 85.1 (56.6) 9.2 (65.8) 9.0 (74.8)
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
2.9%
Life Assurance
Total assets 3,147.8 3,122.0 -▼ -0.8%
CAR ratio 182.5% 246.9% ▲ +64.4%
Net earned premium 267.9 329.6 ▲ +23.0%
Family Takaful
Total assets 115.6 160.8 ▲ +39.1%
Net contributions 17.7 39.0 ▲ +100.0%
GG
40 40Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Transaction Banking
To become top 5 Transaction Banking Service Provider in Malaysia by FY2015 with 8% market shareAspirations
10.2%Growth 9.5% 15.0% >100.0% 16.2% 16.2% 16.2%
9MFY14 Income mix 9MFY14 PAT
(composition to Group)
Outlook • Anticipate good profit growth for FY2014
PAT
• Higher income from cross sell initiatives and increase business flows between ANZ and AmBank whilst working with Relationship Managers to offer customized solutions to improve customer experience
• Core business competencies of full suite Cash management and Trade & Supply Chain Services yielding impressive growth in CASA and higher customer utilization in Trade
• Expanded customer touch-points via internet platforms and streamlined documentation for seamless customer experience. With over 180 AmTrade deals implemented for 9MFY14; totaling over 440 implemented customers since its launch in late 2012
• 9MFY13 allowances reflect write-backs for contingent liabilities
Higher profits and CASA growth from growing share of wallet
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
263.0 34.8 228.3 45.1 183.1 45.8 137.3
9MFY13(RM‟mil)
238.7 30.3 208.5 (10.0) 218.5 54.6 163.8
Trade Services, 44%
Cash Mgmt,
56%
9.8%
Gross Loans / Financing 5,089.8 5,310.2 ▲ +4.3%
Cash Management 28,496.9 30,265.2 ▲ +6.2%
CASA Deposits 6,164.3 7,188.0 ▲ +16.6%
ROA 4.42% 3.50% -▼ -0.92%
CTI 12.7% 13.2% ▲ +0.6%
41 41Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Gross Financing 21,853.4 23,707.8 ▲ +8.5%
Gross Impaired Loans 1.54% 272.1 364.6 ▲ +34.0%
Customer Deposits 21,652.3 22,609.8 ▲ +4.4%
CASA Deposits 5,325.9 5,283.8 -▼ -0.8%
ROA 0.82% 0.73% -▼ -0.09%
CTI 42.3% 41.2% -▼ -1.1%
Allowance Coverage 185.8% 143.7% -▼ -42.1%
G
9MFY14 PAT(composition to Group)
• Higher income backed by financing growth as a result of increased focus to feature Islamic banking products & services, and greater emphasis was placed to grow GLC and GLIC business while capitalising on ETP related projects
• Strong deposits & CASA growth, resulting from a continued focus on „sticky‟ funds and improving funding mix
Islamic Banking
To be the Islamic Bank of choiceAspirations
Strong deposits & CASA growth
4.5%Growth 6.5% 1.8% 39.7% 7.7% 5.3% 8.4%
Outlook • Increase penetration of solutions and cross-selling to support AmBank Group as “main bank” initiatives
PAT
PAT9MFY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
9MFY14
9MFY14 (RM‟mil)
655.7 270.0 385.7 152.0 223.7 54.1 179.6
9MFY13(RM‟mil)
627.2 265.1 362.1 108.8 253.3 57.1 196.1
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
9MFY14
vs
RM'mil 9MFY13 9MFY14 9MFY13
1
12.8%
42 42Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
• Includes funding cost to support recent acquisitions
• MI represents non-controlling interests within the Group
Group Operating Segments
9MFY14 PAT(composition to Group)
3.0% 6.0%Growth 30.7% 5.3% 12.2% 64.4% >100.0% 5.4%
PAT
>100%
9MFY14 PAT9MFY13 PAT Positive growth in 9MFY14 Contraction in 9MFY14
PAT9MFY13
Total Income Expenses PBP Allowances PBT Tax PAT MIPATMI
9MFY14
9MFY14 (RM‟mil)
190.7 308.4 (117.7) (125.4) 7.7 (6.1) 13.8 69.0 (55.2)
9MFY13(RM‟mil)
203.0 293.0 (90.0) (111.8) 21.7 8.6 13.1 19.0 (5.9)
1.0%
>100%
43 43Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
3. 9MFY2014 GROUP FINANCIAL PERFORMANCE Page 13
4. OUTLOOK & STRATEGIC PRIORITIES Page 27
5. DIVISIONAL STRATEGY & PERFORMANCE Page 32
6. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 44
7. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 54
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
2. STRATEGIC PARTNERSHIP WITH METLIFE & INTEGRATION UPDATES Page 9
44 44Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
• Statutory reserve and liquidity requirement savings
• Reduced exposure to interest rate risks
Diversifying funding sources and maturity profile
Benefits to funding strength
• Improve funding stability, maturity gap & liquidity ratios
• Reduce dependence on short-dated deposits to fund long-dated fixed rate loan assets which incur liquidity risk and interest rate risk
• Diversifies investor base
• No obligation for buy back since we are not exposed to withdrawal risks and the notes are traded in the open market
• Enable depositors to invest in long and medium dated papers
LDR of 88.6%
AmBank (M) Bhd
USD2b Euro Medium Term
Note
BBB+ (S&P)Baa1 (Moody‟s)
Joint Lead Arrangers
AmIslamic Bank Bhd
RM2b Subordinated Musyarakah
Sukuk
AA3 (RAM)
RM0.9b
Sep 2011
Lead Arranger
AMMB Holdings Bhd
RM2b Medium Term Notes
Senior MTN: AA3 (RAM)
Subordinated MTN: A1 (RAM)
RM1.7b
Aug 2012
Lead Arranger
AmBank (M) BhdAmIslamic Bank
Bhd
Loans with Recourse
Recourse obligations on loans sold to Cagamas -maturing in 2017
Islamic financing sold to Cagamas –maturing in 2016
Funding diversity underpinned by
CASA: RM17.3 billion (yoy growth = 12.4%)
Fixed deposits: RM70.2 billion (strong retention)
Supplemented by term funding & debt capital
AmBank (M) BhdAmIslamic Bank
Bhd
RM7b Senior Notes* & RM3b Senior Sukuk
AA2 (RAM)
RM2.6b & RM0.6b
Mar‟10 & Sep‟10
Lead Arranger
AmBank (M) Bhd
RM2b Medium Term Notes
AA3 (RAM)
RM1.6b
Feb 2008
Lead Arranger
* 1st senior notes issuance by a financial institution in Malaysia
Outstanding amount @ 31.12.13
Issued date
Major programs
45 45Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
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 regional network & connectivity
Board & Management representation
• Shayne Elliot – Director (CFO, ANZ)
• Gilles Planté– Director (CEO Asia Pacific, ANZ)
• Mark Whelan – Director (MD, Corporate & Commercial, ANZ)
• Mandy Simpson – Chief Financial Officer
• Nigel Denby – Chief Risk Officer
• Ross Foden – Chief Operations Officer
• Paul Lewis – Managing Director, Retail Banking
• Tan Chin Aun - Transaction Banking
• Oscar Demirtas - Senior Program Manager, Small Business Banking
Partnership with ANZ
Source: Trade Finance Magazine 2013
CHINA
HONG KONG
PHILIPPINES
VIETNAM
NEW ZEALAND
SOUTH KOREA
JAPAN
TAIWAN
INDONESIA
AUSTRALIAPACIFIC ISLANDS
SINGAPORE
LAOS
THAILAND
CAMBODIAMALAYSIA
PAPUA NEW GUINEA
FIJI
INDIA
ANZ & AmBank Partnership
16 Asian markets, 98 branches and 5 Partnerships
46 46Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
General Insurance Credentials
• AmG completed the Kurnia acquisition on 26 Sept 2012 – combined entity renamed AmGeneralInsurance Berhad on 1 Mar 2013
• One of Malaysia‟s leading general insurers and the No. 1 motor insurer
• Insures around one in five cars in Malaysia (~21% market share) and ~12% market share for general insurance by GWP
• GWP over MYR 1.7 billion
• Over 3.6 million policy holders and a diversified distribution base – 7,000 plus agents, supported by a national network of branches and over 180 AmBank branches across the country
• Cost synergies and operational efficiencies to achieve value accretion over the next 2 years
• IAG provided substantial leadership and input into the acquisition process and integration planning
• Resources from IAG Group have been mobilised to Malaysia to assist with integration
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 via product development, underwriting and pricing
Board & Management representation
• Justin Breheny– Director (Group Chief Risk Officer, IAG)
• Duncan Brain – Director (CEO, IAG Asia)
• Travis Atkinson – CEO AmGeneral Insurance Berhad
• Arron Mann– General Manager, Claims
• Chris Tandy – General Manager, Personal and Commercial Pricing
• Jackie Chung – Head of Transformation Management Office
Partnership with IAG
GENERAL INSURANCE
AmGeneral: Leveraging strategic partnership with global insurance partner
47 47Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Branches ATMRegional Business Centres
Perlis 1 4
Kedah 5 29
Pulau Pinang 16 51 1
Perak 19 49
Selangor 40 261
Kuala Lumpur 27 148
Putrajaya 1 4
Negeri Sembilan 7 44
Melaka 6 37
Johor 23 95 1
Pahang 8 36
Terengganu 4 20
Kelantan 2 22
Sabah 10 35 1
Labuan 1 2
Sarawak 16 48 1
186 885 4
1.Peer banks as at Dec 2012, AmBank as at latest practical date2. AmLife & AmG branches and agency office
Multiple distribution channels aligned to demographics
Population Density: <100 persons per km2 101-500 persons per km
501-1,000 persons per km2 1,001--1,500 persons per km2
> 1,501 persons per km2
Perlis
Kedah
PulauPinang
Perak
SarawakKuala Lumpur
Putrajaya
NegeriSembilan
Melaka Johor
Pahang
Singapore
Indonesia
Selangor
Labuan
SabahTerengganu
Kelantan
AmIslamicbranches
Weekend Banking Branches
ATMs @ 7-Eleven
ElectronicBanking Centres
Internet & Mobile
BankingAmGeneral AmLife AmInvestment MBF
3 96 404 167AmOnlineAmGenie
32(include 28
dual branded branches)
18 offices14 agencies
14 26
Note(s):
Brunei: AmCapital (B) Sdn Bhd
Indonesia: PT.AmCapital Indonesia, PT.AMCI Manajemen Investasi Indonedia
Singapore: AmFraser Securities Pte Ltd
Brunei Darussalam
Nationwide Branch Network
Other Customer Touch Points
48 48Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
AmInvestmentGroup Berhad
AmCorp Group
Bhd, 15.1%
ANZ Funds
Pty Ltd 1, 23.8%
EPF, 14.8%
Other
shareholders, 46.4%
FY2010 FY2011 FY2012 FY2013 Q1FY2014 H1FY2014 9MFY2014
27% 27% 26% 29% 32% 34% 32%
Solid shareholding structure & franchise value
As at 31 Dec 2013
AmLifeInsurance
Berhad
AMMB Holdings Berhad
Capital Markets
100%
100%
100%Asset Management
100%
100%
100%
51%
Banking
Insurance
AmGeneralHoldingsBerhad2
AmFamilyTakaful Berhad
AmBank (M) Berhad
AmIslamic Bank Berhad
AmInvestmentBank Berhad
AMAB Holdings Sdn Bhd
100% MBF Cards (M’sia) Sdn Bhd
BonuskadLoyalty Sdn
Bhd
33.33%
100%
AmGeneralInsurance Berhad3
100%
1. ANZ: ANZ Funds Pty Ltd,a wholly owned subsidiary of Australia and New Zealand Banking Group Limited2. Formerly known as AmG Insurance Berhad3. Formerly know as Kurnia Insurans (Malaysia) Berhad
49%
Foreign shareholding excluding ANZ
49 49Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
9.158.83
8.60 8.60 8.50 8.50 8.40 8.40 8.40 8.358.11 8.10 8.10 7.90 7.84 7.83 7.70 7.60 7.58 7.50 7.50 7.30 7.28 7.20
6.776.35
20
Ja
n 1
4
14
No
v 1
3
15
No
v 1
3
15
No
v 1
3
14
No
v 1
3
16
Au
g 1
3
15
No
v 1
3
15
No
v 1
3
14
Ja
n 1
4
15
No
v 1
3
14
No
v 1
3
15
No
v 1
3
20
De
c 1
3
29
Ja
n 1
4
15
No
v 1
3
2 J
an
14
10
De
c 1
3
15
No
v 1
3
15
No
v 1
3
14
No
v 1
3
4 O
ct
13
15
No
v 1
3
15
No
v 1
3
19
Se
p 1
2
Buy/Outperform/Overweight/AddP/EPS : EPS annualized Apr 12 – Sep 13 P/BV : BV as at 30 Sep13
Banking sector share price movement / target price and recommendations
10.7%
32.5%
37.6%
67.4%
85.0%
104.5%
127.6%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0%
MBB
CIMB
KLCI
RHB Cap
AMMB
PBB
HLFG
(Note: 18 May 2007 vs. 31 Dec 2013)
Ratings FY2007 9MFY2014
AmBank (M) RAM A2/P1/Stable AA2/P1/Stable
Fitch BBB-/F3/Stable BBB/F3/Stable
S&P BBB-/A-3/Stable BBB+/A-2/Negative
Moody‟s Baa2/P-3/Stable/D- Baa1/P-2/Stable/D+1
AmInvestment RAM AA3/P1/Stable AA2/P1/Stable
Fitch BB+/B/Stable BBB/F3/Stable
S&P BB+/B/Stable BBB+/A-2/Stable
AmIslamic
RAM A2/P1/Stable AA2/P1/Stable
AMMB RAM NA AA3/P1/Stable
TP: target price
Sell/Underperform/Fully valued/Reduce/Underweight
Hold/Neutral/Market perform Source : Bloomberg as at 7 Feb 2014
1 BFSR - Banking Financial Strength Rating
+3
+1
+2
+2
+3
+3
+1 Notches of ratings upgrades
+1
AMMB HOLDINGS BERHAD Average TP : RM7.94Buy : 8 (31%)Sell : 3 (12%)Hold : 15 (58%)Average TP / Average CP : 1.08x
P/EPS : 12.25P/BV : 1.79
Market Price : RM7.40
Banking Sector Share Price Movement Upgraded ratings
Target Price and Recommendations
+3
14 N
ov
13
14 N
ov
13
50 50Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Strategic Business Transformation: Continued Progress
Set Group‟s MTA, transformation strategy, agenda and targets Enhanced focus on asset quality and risk reward trade offs Realigned business model towards profitable segments in HP, mortgage & fixed income Consolidated Group balance sheet activities within commercial bank Split composite insurance license to General and Life
High Priority Growth
Initiatives
Governance & Enablement Functions
Created deposit businesses as profit centres across Group Commenced realigning non-retail customer segmentation and divisional focus Proactively strengthened capital and liquidity management Repositioned balance sheet for rising interest rates Completed realignments in non-retail customer centric business models Continued expanding product offerings and new capabilities in Markets division Balance sheet funding strengthened via long term fund raisings
Developed retail focus customer centric business models Implemented basic account plans for business customers to increase SOW Initiated Group Rebranding program Initiated revamping of branches to refresh customer experience Realigned account management teams for more effective account planning
Launched a new brand re-positioning, “Your Bank. Malaysia‟s Bank. AmBank.”, a new chapter for our brand to deliver a unique AmBank Group experience to our customers
Restructure non-retail business divisions to Wholesale Banking to improve client centricity, efficiency and productivity
Developing Small Business Banking model targeting non-individual customers in Retail banking
FY2014
FY2012 & FY2013
FY2010 & FY2011
FY2008 & FY2009
Strategic Business
Transformation
51 51Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
High Priority Growth Initiatives: Implemented To-Date
Created new profit centre based retail branch distribution model Created a separate Corporate and Institutional Banking (CIB) Division Developed new FX business in collaboration with ANZ Enhanced cash management offering via Gross Payroll system Friends Life brought in as new life strategic business partner
Accelerated building of scale in non-retail customer businesses Increased focus on GLC, GLIC and MNC businesses Developed new Rates business in collaboration with ANZ Expanded distribution footprint (particular focus on 7-11 ATM‟s) & alternative channels Commenced activities to leverage ANZ International connectivity Developed new wealth management business strategies Created a new Transaction Banking business focusing on trade and cash management
Inked business principle agreements with ANZ to leverage international connectivity Commenced a new family Takaful business with Friends Life Commenced Priority Banking expansion initiatives Completed Kurnia & MBF Cards acquisitions and commence integration Repurchased remaining shareholding in AmLife and AmTakaful Secured approval as Private Retirement Scheme (PRS) provider Established partnership with Travelex for money changing services
Channels re-organisation to improve customer connectivity and experience (e.g. branch re-design and rationalisation; reposition digital banking)
Pursuing “Save to Invest” programme to achieve cost synergies across the Group Undertaking segmentation activities to enhance cross-selling to grow Main Bank relationships Initiated account joint-planning within non-retail divisions to increase trade utilisation &
business deals
Strategic Business
Transformation
Governance & Enablement Functions
FY2014
FY2012 & FY2013
FY2010 & FY2011
FY2008 & FY2009
High Priority Growth
Initiatives
52 52Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Rebuilding AmBank‟s “Core Banking System” via AmHorizon, creating a scalable and robust platform for growth with enhanced customer experience, Phase 1 went live in end 2013
Financial Holding Company structure being progressed for full compliance with FSA & IFSA Streamlining of subsidiaries and releasing of dormant capital of 12 entities to be completed
by 31 March 2014 Reviewing Internal Rating Based approach to optimise capital management Enterprise Process Platform (EPP) going live to support lending operations
Governance and Enablement Functions Streamlined:Supports Better Decision Making
Privatised AmInvestment Bank as part of migration to universal banking platform Consolidated / simplified governance committee structures and strengthen risk disciplines Created a Group PMO to prioritise and manage key strategic initiatives Established Advance Risk Recognition Program (ARRP) Separated ALCO, capital and balance sheet management from Markets Delivered Peer Bank relative performance benchmarks Implemented short and long term performance incentives
Delivered 8 new generation retail scorecards & new market risk models Commenced PD, LGD & EAD models for retail and non-retail, non-retail security indicators Developed leadership bench-strength and succession planning Implemented Operational Risk Incident Reporting system and Basel II capital calculator Implemented FTP system aligned to balance sheet strategies Consolidated some Group Support into Centres of Excellence Initiated new retail and non retail PD / LGD models, Security Indicators, Collateral
management, and Market risk system (VIPER) Initiated core banking system replacement programme
Strategic Business
Transformation
High Priority Growth
Initiatives
Implemented a new ALM system and divisional capital allocations under Basel II Integrate new Basel III frameworks into planning processes Finalised vendor selection and commenced core banking system replacement Developed AmFamily Takaful system to support commencement of Takaful business Implemented Model Execution Platform (MEP) provisioning methodology for better risk
assessment and pricing capabilities Transitioned to full MFRS 139 compliance on collective provisioning for credit risk Developing new behavioral scoring models for Retail and SME portfolio
FY2014
FY2012 & FY2013
FY2010 & FY2011
FY2008 & FY2009
Governance & Enablement Functions
53 53Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
3. 9MFY2014 GROUP FINANCIAL PERFORMANCE Page 13
4. OUTLOOK & STRATEGIC PRIORITIES Page 27
5. DIVISIONAL STRATEGY & PERFORMANCE Page 32
6. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 44
7. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 54
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
2. STRATEGIC PARTNERSHIP WITH METLIFE & INTEGRATION UPDATES Page 9
54 54Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
98.6
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2008 2009 2010 2011 2012 2013
BCI
5.0%
8.6%8.1%
0%
5%
10%
15%
20%
25%
30%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
GDP Consumption Investment
Domestic consumption and investment continues to drive Malaysian economy
Business Conditions Index
2010 2011 2012 2013
Moderating growth
Slight deterioration in near term expectations
CPI & unemployment rates remain low
FDIs remain robust
0%
5%
10%
Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec
2010 2011 2012 2013
CPI Unemployment
18.6
9.3
-10
0
10
20
30
40
50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2008 2009 2010 2011 2012 2013
TD FDI
RM' bilpoints
Source: BNM & Bloomberg
55 55Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
-30.0%
-10.0%
10.0%
30.0%
50.0%
Mar
June
Sept
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
Mar
Jun
Sep
Dec
2010 2011 2012 2013
Loan application yoy growth Loan approved yoy growth
310.8 352.3 355.8 407.8
333.7 399.7 415.8
412.3
34.2% 34.6% 31.9%
75.8% 76.6% 80.5%
-100
100
300
500
700
900
1,100
1,300
1,500
2010 2011 2012 2013
Retail Non Retail Gross national savings Household debt/GDP
10.0%
11.2%10.6%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec
2010 2011 2012 2013
Retail yoy growth Non Retail yoy growth Total loans yoy growth
4.53%
3.00%
6.53%
0%
5%
10%
15%
2006 2007 2008 2009 2010 2011 2012 2013
Average lending rate (commercial banks) Average OPR Average BLR
Domestic economy expected to be resilient
To be updated for the his
Interest rates expected to remain in the short term
Moderating loans growth
Stable household debt / GDP with sustainable loan application
Loans application and loans approval remained weak
20.4%
10.1%
Source: BNM
RM‟mil
* 2013 ratios for gross national savings & household debt/GDP not available to date
310.8 352.3 355.8 407.8
333.7 399.7 415.8
412.3
34.2% 34.6% 31.9%
75.8% 76.6% 80.5%
-100
100
300
500
700
900
1,100
1,300
1,500
2010 2011 2012 2013
Retail Non Retail Gross national savings Household debt/GDP
56 56Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
80.3%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010 2011 2012 2013
Total deposits LD ratio
1.9%
107.6%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
0%
1%
1%
2%
2%
3%
3%
4%
4%
Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec
2010 2011 2012 2013
Gross impaired loans Loan loss coverage
Source: BNM
Strong fundamentals in the banking sector
RM‟mil
Loan loss coverageGross impaired loans
Capital levels above BNM‟s Basel 3 guidelines
Capital activities supported by debt issuance
Asset quality improved
Sustained deposits growth provides liquidity
Beginning January 2013, capital components are reported based on Basel III Capital Adequacy Framework
7.4
36.0
0
5
10
15
20
25
30
35
40
45
50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2010 2011 2012 2013
New issues of equity New issues of debt
RM‟bil
Basel II Basel III
57 57Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
ETP: Propelling Malaysia towards becoming a high-income, developed nation by 2020
• RM48k (USD15k) GNI per capita
• RM1.7 trillion GNI
• 6% annual GDP growth
GROSS NATIONAL INCOME
JOBS
• 31.6m population
• 3.3m additional jobs
TRANSFORMATIONAL ACTIONS
INVESTMENT
Focus Drivers:
• 12 NKEAs, 131 EPPs
• 60 Biz Opportunities
• Private-sector led
Competitiveness ‘Enablers’
• 6 SRIs & 51 Policy Measures
• RM1.4 trillion investment
• 92% private investment
• 8% public investment
• 73% DDI, 27% FDI
ECONOMIC TRANSFORMATION
PROGRAMME
Note: Data was correct as on ETP announcement date, the ETP is an evolving programme, in the past 2 years, some EPPs have been dropped, some new ones were added* Based on ETP update up 26 Aug 2013, the discrepancies with the sums of NKEAs was due to some undisclosed investment values and rounding errors
Round 11(16 Nov 2012)
Round 12(26 Aug 2013)
Round 9(28 May 2012)
Round 10(13 Sep 2012)
ROUND 1(25 Oct 2010)
ROUND 2(30 Nov 2010)
ROUND 3(11 Jan 2011)
ROUND 4(8 Mar 2011)
ROUND 5(19 Apr 2011)
ROUND 6(13 Jun 2011)
ROUND 7(8 Sep 2011)
Initiatives
Investment (RM‟bil)
GNI Impact
(RM‟bil)
Job creation(„000)
TO-DATE*
TARGET (2020)
% OF TARGET
ROUND 8(10 Nov 2011)
9 9 19 23 12 15 10 13 21 7 11 33 182 - -
5.3 9.6 66.8 14.8 11.4 63.4 1.4 5.9 20.5 5.6 6.7 7.0 218.3 1,419 15.4
0.1 84.5 32.5 20.1 16.6 66.3 8.4 6.7 4.6 2.4 1.1 6.8 250.1 1,700 14.7
13 71 52 88 74 64 10 17 40 18 40 26 513 3.3 mil 15.5
ETP Overview
ETP execution gaining momentum ETP : Economic Transformation ProgrammeSourcePemandu , www.pemandu.gov.my
RM218.3 bil worth of investment unveiled since Oct 2010
National Key Economic Area
Target Investment(RM‟bil)
To-date(RM‟bil)
% of Target
Oil, Gas & Energy 218 95 44%
Palm Oil 124 2 2%
Business Services 41 5 13%
Tourism 204 17 8%
Financial services 211 - -%
Electronics & Electrical 78 10 12%
Wholesale & Retail 255 13 5%
Education 20 5 24%
Healthcare 23 6 26%
Communications content & Infrastructure
51 2 3%
Agriculture 22 1 7%
Greater KL 172 58 34%
Total 1,419 214* 15%
* Inclusive of 1.9 bil investment of not accounted for any sector
58 58Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
1,896
2,792
3,499
5,879
10,429
52,918
Vietnam
Phillippines
Indonesia
Thailand
Malaysia
Singapore
0.0
5.2
-2.1
-2.2
-2.6
-4.3
Vietnam
Singapore
Philippines
Indonesia
Thailand
Malaysia
Malaysia remains an attractive investment destination
GDP per capita, 2013 (USD)
1.3 3.5
5.6 4.7
6.5 3.1
6.2 53
6.8 6.8
5.2 5.3 0.7%
2.1%
3.1%
4.5%
5.9%
7.0%
Thailand
Singapore
Malaysia
Vietnam
Indonesia
Philippines
1.9%
2.0%
2.0%
3.4%
8.2%
9.5%
Singapore
Thailand
Malaysia
Philippines
Vietnam
Indonesia
Unemployment (%) Inflation (%)
5.4
30.0
68.2
89.7
97.5
248.0
Singapore
Malaysia
Thailand
Vietnam
Philippines
Indonesia
21.1
29.5
30.1
30.6
31.2
44.9
Philippines
Vietnam
Thailand
Malaysia
Indonesia
Singapore
Population (mil) Savings rate (% of GDP)
-3.4
0.1
2.5
3.5
5.6
18.5
Indonesia
Thailand
Philippines
Malaysia
Vietnam
Singapore
Current Account Balance(% of GDP)
Government structuralBalance (% of GDP)
Real GDP growth 2012 2013F
Source: World Economic Outlook Database October 2013
59 59Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Glossary / Disclaimer of warranty and limitation of liability
Reported PerformanceReported performance refers to the financial performance as reported in the audited financial statements and disclosed to the market
One OffsOne offs comprise those impacts on financial performance that arise from changes to :
• accounting and provisioning policies (eg 5 and 7 year rules)• differences between economic and accounting hedges• prior period catch ups (eg backdated salary costs)• strategic investments and divestments (eg ANZ partnership), and • tax and regulatory regimes (eg deferred tax asset write off due to reduction in corporate tax rates)
Underlying PerformanceUnderlying performance refers to the financial performance adjusted for one off impacts as above
Business Divisions
Business divisions • comprise AmBank Group‟s core operating businesses that generate profits from direct customer transactions and interactions• have relatively more stable income streams, incur the bulk of the costs and typically have a lower risk profile• in most instances have market shares and growth metrics that can be measured and benchmarked externally
Operating SegmentsOperating segments
• have more volatile and lumpy income streams, with the former a direct function of risk appetite • include
• income and expenses associated with shareholder funds, loan rehabilitation and legacy businesses, plus• costs associated with corporate, shared services and governance functions currently not charged back to the business units
The information provided is believed to be correct at the time of presentation. AMMB Holdings Berhad or AMMB Holdings or “AMMB” or its affiliates do not make any representation or warranty, express or implied, as to the adequacy, accuracy, completeness or fairness of any such information and opinion contained and shall not be liable for any consequences of any reliance thereon. Neither AMMB Holdings nor its affiliates are acting as your financial advisor or agent. The individual is responsible to make your own independent assessment of the information herein and should not treat such content as advice relating to legal, accounting, and taxation or investment matters and should consult your own advisers.
Forward looking statements are based upon the current beliefs and expectations of the AMMB Holdings and are subject to signif icant risks and uncertainties. Actual results may differ from those set forth in the forward looking statements. AMMB Holdings does not undertake to update the forward looking statements to reflect impact of circumstances or events that may arise after the date of this presentation.
The information in the presentation is not and should not be construed as an offer or recommendation to buy or sell securities. Neither does this presentation purport to contain all the information that a prospective investor may require. Because it is not possible for AMMB Holdings or its affiliates to have regard to the investment objectives, financial situation and particular needs of each individual who reads the information contained thus the
information presented may not be appropriate for all persons.
The information contained is not allowed to be reproduced, redistributed, transmitted or passed on, directly or indirectly, to any other person or published electronically or via print, in whole or in part, for any purpose.
The term "AMMB Holdings" and “AmBank Group” denotes all Group companies within the AMMB Holdings Group and this Disclaimer of Warranty and
Limitation of Liability policy applies to the financial institutions under AMMB Holdings.
Disclaimer of Warranty and Limitation of Liability
60 60Your Bank. Malaysia‟s Bank. AmBank.
9MFY2014 Results – Investors Presentation
Glossary / Disclaimer of warranty and limitation of liability
The information provided is believed to be correct at the time of presentation. AMMB Holdings Berhad or AMMB Holdings or “AMMB” or its affiliates do not make any representation or warranty, express or implied, as to the adequacy, accuracy, completeness or fairness of any such information and opinion contained and shall not be liable for any consequences of any reliance thereon. Neither AMMB Holdings nor its affiliates are acting as your financial advisor or agent. The individual is responsible to make your own independent assessment of the information herein and should not treat such content as advice relating to legal, accounting, and taxation or investment matters and should consult your own advisers.
Forward looking statements are based upon the current beliefs and expectations of the AMMB Holdings and are subject to signif icant risks and uncertainties. Actual results may differ from those set forth in the forward looking statements. AMMB Holdings does not undertake to update the forward looking statements to reflect impact of circumstances or events that may arise after the date of this presentation.
The information in the presentation is not and should not be construed as an offer or recommendation to buy or sell securities. Neither does this presentation purport to contain all the information that a prospective investor may require. Because it is not possible for AMMB Holdings or its affiliates to have regard to the investment objectives, financial situation and particular needs of each individual who reads the information contained thus the information presented may not be appropriate for all persons.
The information contained is not allowed to be reproduced, redistributed, transmitted or passed on, directly or indirectly, to any other person or published electronically or via print, in whole or in part, for any purpose.
The term "AMMB Holdings" and “AmBank Group” denotes all Group companies within the AMMB Holdings Group and this Disclaimer of Warranty and Limitation of Liability policy applies to the financial institutions under AMMB Holdings.
Disclaimer of Warranty and Limitation of Liability
The material in this presentation is general background information about AmBank Group‟sactivities current at the date of the presentation. It is information given in summary form anddoes not purport to be complete. It is not intended to be relied upon as advice to investors orpotential investors and does not take into account the investment objectives, financialsituation or needs of any particular investor. These should be considered, with or withoutprofessional advice when deciding if an investment is appropriate.
For further information, visit www.ambankgroup.com;
or contact
Ganesh Kumar Nadarajah
Group General Manager, Strategic Planning & Investor Relations
Karen Chuah
Senior Manager, Strategic Planning & Investor Relations
Tel: +603 2036 1435 or +6019 2093 955
Fax: +603 2031 7384
e-mail: [email protected];
Your Bank. Malaysia‟s Bank. AmBank.