9mfy2016 results, investor presentation...investor presentation 26 february 2016 your bank....

9MFY2016 Results,

Investor Presentation 26 February 2016

AmBank . 9MFY2016 Results Investor Presentation

Retail Banking

Enhance customer service

rhythm, build sustainable

growth

Wholesale Banking

Recognition by our customers as

their preferred top tier Malaysian

Bank

General Insurance

To be the most trusted insurer in

Malaysia

Islamic Banking

To be known as the Islamic Bank which prospers

with society

Life & Family Takaful

To be a leading customer centric

and modern insurer in Malaysia


Strategic Agenda Highlights update

3

Deliver on focused organic growth

Retail Targeted segment play - Continue to focus on growing CASA through payroll

acquisitions, SBB, Priority Banking and leveraging on partners (merchants & dealers)

- Support mortgage growth by strengthening strategic partnerships and emphasis on secondary market

- Focus on new business partnerships

Wholesale Grow customer share of wallet - Focus on SME segments with new strategy &

business structure - On-going collaboration with CGC and Islamic CGC

facility to be launched - Cross -selling of high flow FX, trade finance and cash

management business with additional value propositions for customers

General insurance Grow share in non -motor - Launched AmDrive Plus in Q3 which covers 24 hour

emergency towing and minor roadside repairs

Leverage strategic partnerships & deliver on acquisition

General insurance (acquisition of Kurnia ) - Leveraging on dynamic agency force - Focus on growing non -motor insurance through

product bundling, cross -selling to existing motor customer base and via Banca channels

Life assurance and family takaful (MetLife) - Rebuilding agency force, infrastructure and enhance

banca channel capabilities

Merchant and cards issuance business (MBf Cards) - Developing and expanding small business solutions

(e .g. current account, lending facilities, merchant facilities) to increase our product penetration

Continue to optimize efficiency

Upgrading of collection & recovery system to increase productivity and sustain asset quality

Process simplification initiatives across all line of business to deliver better customer experience

General Insurance is strengthening retention capabilities via review of renewal process, KPIs and behaviour /needs

Build sustainability

Phase 2 of core banking project completed, which will progressively improve experience and productivity

Infrastructure modernisation programmes to improve security, reliability and efficiency of Group data centre

Developing pricing and service differentiation capabilities in preparation for de- tariffication of general insurance business


Headline results

Lower inflow of NPLs, asset

quality remains good

Subdued economy, with

some headwinds

Income impacted by

NIM compression

Loan growth predominantly

mortgages

Balancing expenses between

efficiency & growth

expenditure

9MFY16 Reported

9MFY16 Underlying 1

YoY growth (Underlying)

Total income

2,791.3 2,791.3 -13 .1%

Expenses 1,553.7 1,500.0 2.3%

Profit before allowances

1,237.6 1,291.3 -23 .0%

Allowances -151.6 -151.6 >100%

PATMI 1,022.2 1,075.9 -9.0%

Sustaining focus on low cost deposits

Lower performance in

Q3

1. 9MFY16 adjusted for regulatory penalty of RM53.7 mil

4


Performance indicators

Q3FY16 Reported

9MFY16 Reported

FY16 Guidance

PATMI - - Growth (%)

300.2

-21.5% 1

1,022.2 -27.0% 2

1,300

ROE 8.0% 9.2% Circa ~ 9.0%

CTI 63.5% / 57.5% 3 55.7% / 53.7% 3

Gross impaired loans ratio 1.80%

Dividend 5.0 sen per share 40 45% payout

Other details:

Gross loan growth - Excluding Auto Finance

-0.7% 4

2.1% 4 -1% 1%

CASA composition 20.4%

Capital ratios, Proforma 5

- CET 1 - Tier 1 - Total

11.1% 6 12.3% 6

16.4% 6

Note: 1. QoQ growth 2. YoY growth 3. CTI excluding regulatory penalty incurred in Q3FY16 4. YoY growth 5. Based on Aggregated Banking Entities 6. Proforma , based on Retained Earnings @ 31 Dec 2015

5


New Group CEO

AmBank Group

AmBank (M) Berhad

AmInvestment Bank Berhad

AmBank Islamic Berhad

AmGeneral Insurance Berhad

AmMetLife Insurance Berhad

AmMetLife Takaful Berhad

Background :

Dato Sulaiman who was appointed on 23 November 2015 has a wealth of knowledge backed by a total of 28 years of experience being in the forefront of growth in commercial/corporate and consumer banking and transformational programmes .

An accounting graduate from the Royal Melbourne Institute of Technology in Australia, Sulaiman served PriceWaterhouse before repositioning his career in banking with the Bank of Commerce (M) Berhad in 1987 .

Prior to joining AmBank Group , he was previously Chief Executive Officer/Executive Director of CIMB Bank Berhad, where he spearheaded the overall development, management and performance of the sales and distribution channels of the bank . In addition, he was responsible for the management of the Retail Banking in Singapore and Cambodia, and chaired several Management Committees .

6


Group CEO, Initial Action Plans

Getting to know customers and its people via business review sessions with senior management and their respective teams

Focus on building the performance of AmBank Group by pursuing immediate opportunities to drive revenue uplift , be more customer focused and enhance collaborative work across the Group

Create a leaner and simpler organization through process reorganization and structural reform whilst reinforcing compliance

Focus on quick wins including (1) SME & Corporate ; (2) Deposits and (3) Retail value propositions and some bright spots in the economy

Initiated comprehensive review of our current business operating models to develop our FY17 -19 strategic priorities and new growth plans

Engage external stakeholders

23 Nov 15

Appointment as Group CEO

Jan

Formulate FY17 -19 strategies & business plans

FY16 results and communicate

FY17-19 business plans & targets

7

onwards

Initated Business Reviews

Activated quick wins programme


2.6%

87.1

63.8

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

2010 2011 2012 2013 2014 2015

CPIBusiness Conditions IndexConsumer Sentiment Index

97

62 80

111 112 109 99

52

- 4.8

- 7.0 - 5.6 - 4.8 - 4.5 - 3.9

- 3.4 - 3.2

3.33 3.52 3.22 3.06 3.09 3.15 3.27 4.29

2008 2009 2010 2011 2012 2013 2014 2015*

Avg Crude Oil Price/Barrel (US$)

Fiscal Deficit (%)

Avg USDMYR

Headwinds in the domestic economy

Fiscal Deficit vs Avg Oil Price & Exchange Rate

Performance of Financial Indices 2010 - 2015

Crude oil price dropped to a 12 year low, driving revision to 2016 Budget to maintain national fiscal deficit target at 3.1% of GDP

Budget allocation reduced by 1.7% YoY to RM256 .2B stemming from allocation reduction for development & operating expenditure . USD strength vs MYR is exerting stress on BNM foreign exchange reserves . Low oil prices, GST implementation , ringgit depreciation and rise in cost of living has impacted sentiment (inflationary)

The recent 50 bps SRR cut by BNM provides some breathing space to the household sector . Optional 3% cut in employee EPF contribution aims to spur private consumption expenditure . GDP likely to bottom out in 3Q2016 or 4Q2016 . We project a moderate growth of 4.25 % for 2016

Growth will be supported by domestic demand (rebounded in 4Q15 ), namely private and public expenditure, complemented by exports .

Foreign Exchange Reserves (USD' bil ) 2011 - 2015

Source: Bank Negara Malaysia Source: Bank Negara Malaysia, *Internal resource as at 31 Dec

Source: Bank Negara Malaysia, MIER

8

Pasted as picture


51.4%

48.2%

49.4%

48.5%

2012 2013 2014 2015

2016, anticipating slower pace for the banking sector

Loan Approval Rate in the Malaysian Banking Sector

Source: Bank Negara Malaysia

Net Interest Margin (NIM) Compression Across the Industry

Source: Industry Data Annual Report

Asset Quality of Banks

Source: Bank Negara Malaysia

10.6%

9.1% 9.5%

10.6% 10.2%

9.3% 9.0%

9.3% 9.2% 9.1% 9.7% 7.9%

11.5% 11.8%

12.9% 10.2%

6.7%

3.6%

0.4%

-1.4% -1.1% -2.0%

-5.0%

-6.4%

Mar 13Jun 13Sep 13Dec 13Mar 14Jun 14Sep 14Dec 14Mar 15Jun 15Sep 15Dec 15

Loans Deposits

Industry loans and deposit¹ downward trend

Source: Bank Negara 1. Deposits refers to core deposits only

9

883 1,004

1,108 1,226

1,340 1,445

3.4%

2.7%

2.0% 1.9%

1.7% 1.6%

Dec Dec Dec Dec Dec Dec

2010 2011 2012 2013 2014 2015

Total Loans (RM' bil) GIL

2.07%

1.97%1.89%

1.76%1.72%

2012 2013 2014 2015 2016

2016... selected bright spots & opportunities

10

Despite easing of banking sector growth numbers at the back of a slower but

stable economic growth, with NIM and fee income remaining subdued, key

financial and credit metrics of the banking industry continue to hold up well,

reflecting a stable financial sector .

Malaysian SME sector:

Consistently outpaced the economy as a whole, and still has room for growth (SME GDP growth has consistently outpaced overall GDP growth since 2005)

SMEs continue to receive active government support and benefits from investment inflows from foreign countries

Retail/Domestic consumption, supported by:

Reduction of EPF contribution by 3%

Liberalise control on APs of 8 agricultural produce

Increase in fair price shops, minimum wage, tax reliefs, etc. should sustain private consumption, given the stable wage growth and labor market conditions

Crystalising mega projects with focus in transportation projects, including development of public transportation, highways, public and rural infrastructure

Ongoing government land & strategic property developments and affordable housing


536.9 445.8 416.6 519.2 339.5 382.5 300.2

16.0% 12.7% 11.8%

15.1%

9.3% 10.2%

8.0%

1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16

PATMI Reported ROE

95.1 94.8 99.8 102.8 99.8 99.7 103.2

90.0% 89.3% 85.9% 83.8% 84.3% 85.6% 82.8%


Customer deposits Adjusted LDR ratio

1. Customer deposits include stable funding sources

Q3 performance lower

Cost - to - income ratio and expense growth (%) Customer deposits 1 bil ) and LDR ratio (%)

ROE (%)

61.0 60.6 62.4 63.5 61.9 63.5 63.8


Loans excluding Auto Finance Total

QoQ growth: 0.1% QoQ growth excluding Auto : 0.53% YoY growth: -0.4%

PATMI QoQ growth: -21.5%, -7.5% underlying ROE QoQ growth: -2.2%, -0.7% underlying

85.6 84.7 86.2 85.7 84.1 85.3

Net lending bil )

85.4

Customer deposits QoQ growth : 3.5%

57.5%

11

57.5%

QoQ CTI change : 10.1%, 4.1% underlying Expense growth change: 11.0%, 0.2% underlying

42.8% 44.0% 49.2% 47.9% 50.5%

53.4%

63.5%

30.3%

-21.1%

0.3% 7.3%

-8.5%

2.5%

13.5%


CTI % Expenses growth %

Underlying ROE is 9.5%

Underlying PATMI is

RM353.9m

Underlying growth is

2.7%

Underlying CTI is 57.5%


1,343 1,484 1,621 1,782 1,919

1,399

13.6% 13.8% 13.9% 14.1%

13.8% 13.5%

9.2%

FY11 FY12 FY13 FY14 FY15 9MFY15 9MFY16

PATMI

ROE

44.7

49.6 54.0

59.3 63.8 62.0

45.4


CAGR FY11-15: 9.3% YoY growth: -26.8%

RM ( sen ), annualised

9MFY2016 results reflect subdued operating environment

- interest income (%)

EPS (basic ) ROA (%)

& ROE (%)

ROE CAGR FY11-15: 0.1 % YoY growth: 4.3%, -3.8% underlying

PATMI CAGR FY11-15: 5.1% YoY growth: -27.0%, -9% underlying

1.39% 1.39% 1.37%

1.45%

1.60% 1.56%

1.08%


CAGR FY11-15: 0.05% YoY growth: -0.48%

3,926 4,306 4,379 4,743

4,263 3,612

2,791

30% 34% 31% 34% 41% 42%

35%


Total income (reported)

Non-interest income %

CAGR FY11-15: 2.1% YoY growth: -23%

1,022

12

Underlying PATMI is

RM1,076m

Underlying ROE is 9.7%


3,612.4 3,213.2

2,855.6 2,791.3 2,791.3

399.2 288.8

23.2 22.8 22.8 28.0 36.3

9MFY15reported

Divestmentgain

9MFY15underlying

Net interest Credit cardfees

Asset,wealth

mgmt &brokerage

WB fee Markets Insurancepremium

9MFY16reported

Better retail contribution , margin compression persists

Retail

Banking

34%

Wholesale

Banking

59%

Insurance

12%

Operating

-5%

PATMI ( ) and divisional contribution (%) NIM Movement

Top line performance influenced by:

- NIM compression: driven by softer market and focus on better asset quality segments

- Investment banking: impacted by weaker brokerage volumes

- Insurance income: lower on higher general claims experience and slower national car sales

-16%

14%

1,399.4

1,022.2

9MFY15 9MFY16

Reported Reported

27%

-42%

-17.2 % YoY growth

-25.9 % -11.3 % -27.6% -11.1 %

-13.1%

-22.7 %

Total income ( )

Total fee income: 9MFY15 RM533m 9MFY16 RM454m Non - interest income: 9MFY15* RM1,109m / 34.5% 9MFY16 RM975m / 34.9% * Underlying

QoQ FY15 vs 9MFY16

NIM Driver

Portfolio rebalancing -7 -9

Asset re -pricing -7 -13

Deposits/Funding -4 -9

Underlying movement -18 -31

One-offs - -6

NIM movement - 18 - 37

-13.6%

>100%

13

Underlying PATMI is

RM1,076m


87.5

86.9

0.1 0.0

1.9 1.9

0.2

0.5

9MFY15 Corporatebanking

Investmentbanking

Mortgage Autofinance

Cards Others 9MFY16

Targeted loans growth in preferred segments

14

Auto Finance

25%

Mortgage 23%

Cards 2%

Corp & Comm

Banking 45%

Investment Banking

2%

Others 3%

bil ) Loan composition by type

Greater sales focus and relationship management to drive loans growth

Focus in preferred segments lifted mortgage (+10.7%) and wholesale banking loans (+0.3%)

A balanced portfolio composition with retail 53% and non - retail loans 47%

48.1 47.6 46.8 46.3 45.9 45.8 46.0

39.5 39.0 40.7 41.5 39.8 41.0 40.9

Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Q3FY16

Retail Non-retail

86.8 85.7 87.8 87.5 86.6

2.7% -8.0% 10.7% YoY growth -10.5% -0.7% -17.0%

Breakdown by rate sensitivity: Fixed rate 35% Variable rate 65%

Breakdown by concept: Islamic 32% Conventional 68 %

QoQ Total growth: 0.1% Retail growth : 0.4% Non -retail growth : -0.2 %

Total retail/non - retail 53% - 47%

bil )

2.1% Excluding Auto Finance

Retail loans: YoY growth: -1.7% YoY growth excluding Auto Finance: 4.9%

86.9 87.6

Non -retail

Retail

0.2%


4.8%

4.3% 4.3% 4.6% 4.6%

4.2% 4.4% 4.3% 4.3% 4.4% 4.3%

Jun 13 Sep 13 Dec 13 Mar 14 Jun 14 Sep 14 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15

Industry - CASA AmBank Grp Mkt Share

Sustaining focus on low cost deposits (CASA)

15

CASA market share and industry CASA balance 1

bil ) bil )

CASA composition sustained through active relationship management and payroll acquisition programmes

CASA balance and market share relatively flat QoQ; industrytrending down in 2015

18.8 17.1 18.5 18.7 18.8 18.8 18.5

86.9 85.3 90.0

92.1 89.8 89.3 90.9

21.6% 20.1% 20.5% 20.3% 21.0% 21.1% 20.4%


Customer deposits CASA CASA Composition (%)

39.7 37.2 40.6 42.0 39.9 39.6 41.6

34.7 35.6 35.8 35.6 35.5 35.2 35.2

13.1 13.4 13.8 14.4 14.4 14.2 14.1


Biz Ent Individuals Govt & Others

89.3 90.9 89.8 92.1 90.0 85.3

1. Source: BNM Monthly Statistics

QoQ growth : 1.8%

bil )

86.9


28.9

(124.5)

8.8

158.4

0.2

(14.0)

-0.50%

0.50%

1.50%

Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15

AmBank

Asset quality remains good, allowances lower

16

Credit costs ( annualised ) vs. industry 1

Credit costs improved further in the 3Q

GIL ratio improved to 1.80% from 1.95% rising loan

defaults

Adequate coverage based on current servicing assessment discounted with internal buffers on seasonal impacts

1. An average of eight peer domestic banks

AmBank Group

FY12 FY13 FY14 FY15 9MFY15 9MFY16

Credit cost 0.50% 0.21% 0.08% -0.04% 0.04% -0.19%

9MFY15 Individual Allowance

Collective Allowance

Recoveries Others 9MFY16

Gross impaired loans ratios

2.51% 2.43% 2.17%

2.01%

1.95%

1.91% 1.74%

1.08% 0.98%

1.53% 1.55% 1.63%

2.00%

1.86%

1.87% 1.79%

1.88% 1.79%

1.80% 1.95%

1.80%


Retail Wholesale Group

Credit costs tracking

below industry

Consists of loan loss allowances only. Sharp

spike due to lower recoveries from WB


1,625.2 1,535.4 1,446.1 1,500.0

1,553.7

41.2 12.7 53.7

89.8 49.3

9.2 30.8

35.0%

40.0%

45.0%

50.0%

55.0%

Ma

r-08

Ma

r-09

Ma

r-10

Ma

r-11

Ma

r-12

Ma

r-13

Ma

r-14

Ma

r-15

Continued emphasis on cost discipline

17

Business growth:

Bank -wide data centre upgrade

Enhancement of Cash Management System for Transaction Banking

Replacement of Collection & Recovery System

Enhancement of infrastructure to support digital banking

Consolidate and enhance multi -channel payment switch

Enhancement of Murex Commodities module

Regulatory and compliance (systems & process enhancement)

credit card chip

prevent ATM malware attack

adopt MFRS 9

adopt Basel AIRB

prevent fraud for internet and mobile banking

Compliance systems

Cost - to - income ratio vs. industry 1

Key capital expenditure planned for FY16/FY17

Balancing between BAU expenses and

strategic agenda

Slowing income growth has seen an increase in CTI ratio in spite of the

Task force set up to focus on creating leaner organization through process reorganization and structural reform

1. An average of eight peer domestic banks

AmBank Group

Industry

4.4%

CTI ratio: 9MFY15 45.0% 9MFY16 55.7%


FY07 FY10 FY13 FY15 9MFY16 Industry

Ave

Equity & debt capital

10% 15% 14% 15% 23% 15%

Customer deposits

60% 77% 75% 74% 72% 73%

Term funding & loans with recourse >1year

4% 2% 7% 8% 9%

5% Term funding & loans with recourse 100 % for all banking entities

Higher composition of stable medium term funding vis -à-vis industry, creates stability though weighs on cost of funds

Whilst capital ratios remain adequate, the Group is reviewing long term capital plans and structure (Basel III FHC @ FY2020 )

Basel III FHC indicative ratios as at 31 December 2015 (no requirements until FY2020 ) CET 1: 9.3%

81%

13%

5%

1%

< 6 mth

6-12 mth

1-3 yr

3-5 yr

6%

94%

< 1 yr > 1 yr

Deposits from customers and Banks & FIs Term funding & Debt capital

9.3% 9.7% 10.5% 11.1%

9.8% 10.4%

11.0% 11.2% 11.8% 12.3%

14.0% 14.7% 14.8% 15.5%

15.8% 16.4%

FY11 FY12 FY13 FY14 FY15 9MFY16Proforma

RWCAR/Total Capital RatioTier 1 CAR CET 1 Ratio


Market Share As At 31 Dec 15 (%)

Rank

DCM 17.9% 3

M&A League 6.1% 5

MYR Islamic Bonds 13.8% 4

FUM1 10.9% 3

Wholesale Banking, subdued activities in loans & capital markets

QoQ

Net loan disbursement (RM) movement League table

QoQ, income higher as fixed income trading picked up, offset by lower recoveries and weaker loans momentum

Capital markets fund raising better in 3Q

Decline in corporate loans driven by lower refinancing needs in oil and gas and lower growth in other sectors

Key Priorities:

SME enhance value proposition, structure and turnaround time

Cross -Sell & Efficiency optimize cross functional and value chain synergy, covering structure, people , processes, risk and digital strategy

Funding reposition funding composition to optimize returns

216.4 260.9 241.3 268.8 191.5 233.1 180.9


1. FUM data consists of unit trust funds only

1. Net movement equals to disbursement less repayment


Disbursement

Net movement

19

QoQ growth: -22.42 %


Retail Banking, focus is on main bank relationships & CASA

QoQ

Mortgage and auto finance disbursement QoQ bil )

QoQ deposit balance ( )

PAT growth of 13.8% YoY reflecting improvement in asset quality

Retail continues to focus on expanding mortgage business. Excluding the auto finance segment, gross loan growth was 4.9%

increased focus in lending, QoQ sales increased by 42%

increased by 45% and 32% respectively QoQ.

Priorities: Driving CASA growth through AmBank@Work payroll solutions Driving foreign exchange in collaboration with Markets via retail distribution channels

123 103 77.8 119.3 120.4 86.1 139.1



Mortgage Auto Finance

36.5% 34.2% 33.1% 33.6% 33.9% 34.2% 33.4%


Total deposits CASA %

41.8 41.4 42.1 42.7 42.1 40.9

20

40.0

QoQ growth: 61.6%


Small Business Banking (SBB) update

21

A total banking solution, driven by dedicated Small Business Specialists for enhanced personalised banking experience

Non - Individuals who appreciate a one -stop personalised banking experience Target segment

Market leading customer experience

Develop consistent total customer needs approach

Dedicated Small Business sales force

Superior financial returns

Customer centric strategy in lending and deposit taking activities

Enablers

Increase customer responsiveness

Process simplification & automation

Best practice sales productivity via introduction of BizReview for customers

FY

17

S

trate

gic

fo

cu

s

BizReview Dedicated Specialists and Managers for that Single Point of Contact experience Enhanced scorecards and simplified processes for speedy turnaround time

How to win?

banking transactions whilst assisting to grow their businesses via BizReview

What is SBB?


314.6 334.2 318.3 316.1 315.0 310.9 307.6

72.2 69.7 69.9 70.5 70.7 67.3 70.7


Motor Non-Motor

General insurance, reflecting higher claims experience and lower investment income

22

QoQ

QoQ Loss ratio and combined ratio

Gross written premium was flat QoQ with growth in fire and personal accident offset by lower motor business

Lower PBT QoQ from higher claims experience and expenses

Priorities for Q4:

Motor Renewal

New customer friendly renewal notices

Gamification renewal monitoring tool

Call -centre outbound and SMS renewal reminder

initiatives

Non -Motor

New product launches

Enhancing sales kits for Banca and branch agents

62.6 69.9 61.4 62.5 58.9 51.5

22.8


81.3% 57.5% 65.4% 63.8% 63.0% 62.3% 66.6%


Loss Ratio Combined Ratio

93.9% 92.5% 89.3% 99.5%

93.2%

QoQ growth: -56%

85.3%

403.9 388.2 386.6 385.7 378.3 378.2

93.4%

386.8


AmBank Group FY16 Considerations and Expectations

23

Lower Q3 performance amidst a challenging economy

Disciplined lending in targeted sectors to

continue

Pricing competition to continue stressing

NIM

Sound asset quality , focusing on recoveries

and collection efficiency

Active management of BAU expense required

Governance and compliance remain a

key focus

Conservative funding profiles and efficient

capital positioning

Focusing on immediate quick wins whilst developing new Strategic Agenda for

FY17 - 19


Appendix


Islamic PATMI

H1FY16 H1FY15

Conventional PATMI Positive growth in 9MFY16 Contraction in 9MFY16

-22.7% -28.2% -37.7 % -4.4 % >100 % -31.8 %

2,104.4

-35.3 %

86%

9%

Appendix Income Statement

Net

Interest Income

Non -Interest Income

Total Income

Expenses PBP Provisions/ Allowances

PBT Tax & Zakat

PAT MI PATMI

9MFY16 1,815.7 975.6 2,791.3 1,553.7 1,237.6 -151.6 1,389.1 300.9 1,088.3 66.1 1,022.2

9MFY15 2,104.4 1,508.0 3,612.4 1,625.2 1,987.2 51.3 1,935.9 441.4 1,494.5 95.1 1,399.4

-13.7 %

85%

YoY growth

25

-27.2 % -30.5 % -27.0%

1,815.7

14%

96%

4 %

4%

9 6%


2.68%

2.92%

3.13% 3.10% 3.10% 3.09% 3.17% 3.38%

2.98% 2.94%

2.75% 2.68% 2.72% 2.68% 2.43%

2.05%

2.25%

2.75%

3.00% 3.00% 3.00% 3.00% 3.25% 3.25%

1.00% 1.00%

4.00% 4.00% 4.00% 4.00% 4.00% 4.00%

Note: 1 NIM includes Net Financing Income from Islamic Banking

business 2 FY10-FY14 based on internal data computation

3 FY2013 has been restated to reflect adoption of new MFRS

MF

RS

10

2.68%

2.92%

3.13% 3.10% 3.10% 3.09%2.98% 2.94%

2.75%2.68% 2.72% 2.69%

2.25%

2.75%

3.00% 3.00% 3.00% 3.00%

1.00% 1.00%

4.00% 4.00% 4.00% 4.00%

FY10 FY11 FY12 FY13 1 Apr 2013 FY14Cost of funds NIM OPR SRR

COF

NIM

SRR

OPR

Appendix Net interest margin

FY10 FY11 FY12 FY13 FY13

[Restated] 3 FY14 FY15 9MFY16

NIM Driver

Q3FY16 vs. Q2FY16

Portfolio rebalancing -7

Asset re -pricing -7

Deposits/Funding -4

Underlying movement -18

One-offs -

QoQ NIM movement - 18

Breakdown of NIM Driver (bps):

26

NIM and COF ( YoY )

Quarterly NIM (bps) drivers

2.45% 2.54%

2.38% 2.33%

2.13% 2.12%

1.94%


FY15 2.43% 9MFY16 2.05%


37.6 14.0 102.3 11.5 62.8

106.7 34.3 99.9 97.9

39.3

820.9

18.0

1,445.1

Dec-15

4.3 3.0 8.6 0.6 3.7 4.3 2.7 3.5 8.5 1.5

45.7

0.4

86.9

Dec-15

Source : BNM, financial statement

Agriculture Mining &

Quarrying Manufacturing

Electricity , Gas & Water

Construction Wholesale,

Retail, Restaurant

Transport, Storage &

Com

Finance, Insurance, & Biz Act

Real Estate Education & Health

Household Others Total Loans

YoY growth

Agriculture Mining &

Quarrying Manufacturing

Electricity , Gas & Water

Construction Wholesale,

Retail, Restaurant

Transport, Storage &

Com

Finance, Insurance, & Biz Act

Real Estate Education & Health

Household Others Total Loans

Appendix Loans by sector vs. Industry

YoY growth

Loans by purpose

bil YoY

growth Composition

Purchase of transport vehicles

22.4 -9.5% 25.8%

Working capital 25.1 +12.9% 28.9%

Purchase of resi property

17.6 +13.4% 20.2%

Purchase of non - resi property

7.6 -10.6% 8.8%

Other purpose 4.1 -23.0% 4.8%

Purchase of securities 2.8 -21.4% 3.2%

Construction 3.1 -6.0% 3.5%

Personal use 1.6 -0.8% 1.9%

Credit card 1.4 -16.0% 1.6%

Purchase of fixed assets 1.2 +21.9% 1.4%

Consumer durables - - -

86.9 - 0.7% 100.0%

Loans by purpose

bil YoY

growth Composition

Purchase of transport vehicles

169.8 +2.3% 11.8%

Working capital 349.2 +10.4% 24.2%

Purchase of resi property

437.0 + 11.9% 30.2%

Purchase of non - resi property

197.0 + 10.6% 13.6%

Other purpose 64.3 -2.4% 4.5%

Purchase of securities 75.2 -1.9% 5.2%

Construction 42.7 +7.6% 3.0%

Personal use 63.7 +5.9% 4.4%

Credit card 36.0 +1.2% 2.5%

Purchase of fixed assets 10.1 -4.3% 0.7%

Consumer durables 0.1 -77.3% 0.0%

1,445.1 +7.9% 100.0%

Loans by Sector

Loans by Sector

bil

bil

27

AmBank Group

Industry

9.9% 64. 1% 3.9 % 56.2 % 15. 4% 0.2 % 26.9% 6.3 % 0.2 % 3.8 % 0.3 % 75.2 % 0.7 %

4.9% 3.5% 9.9% 0.6% 4.3% 5.0% 3.1% 4.0% 9.7% 1.8% 52.6% 0.5%

Loans composition

19.4% 47.8 % 1.4 % 11.2 % 8.6 8.2 % 4.5% 6.3 % 14.6 % 6.3 % 7.7 % 3.9% 7.9 %

2.6% 1.0% 7.1% 0.8% 4.3% 7.4% 2.4% 6.9 % 6.8% 2.7% 56.8 % 1.2%

Loans composition


5.2 13.4 18.5

72.3

90.9

Dec'15

Appendix Deposits by sector vs. Industry

bil

28

Savings Current Account CASA Fixed Deposits Core Deposits

Savings Current Account CASA Fixed Deposits Core Deposits

YoY growth

bil

Savings

14%

Current

Account

29%

Fixed

Deposits

57%

Core Deposits Composition (AmBank Group)

Core Deposits Composition (Industry)

AmBank Group

Industry

Source : BNM, financial statement

0.7% 0.4 % 0.5 % 1.2% 1.0 %

135.6 291.8

427.4 562.1

989.5

Dec'15

0.5% 2.1 % 1.6 % 11.6 % 6.4 %

Savings

6%

Current

Account

15%

Fixed

Deposits

79%

YoY growth


66% 70% 73%

34% 30% 27%

FY14 FY15 Dec-15

Other Income brackets

( >RM3K )

Vulnerable Income bracket

(


32%

9MFY16 PAT 9MFY15 PAT Positive growth in 9MFY16 Contraction in 9MFY16

9MFY16 PAT (composition to Group)

Total Income Expenses PBP Provisions/ Allowanc es

PBT Tax & Zakat PAT

9MFY16 1,138.9 691.6 447.3 -6.2 453.5 108.0 345.6

9MFY15 1,301.2 686.4 614.9 210.9 404.0 100.2 303.8

Income Statement ( )

Balance Sheet ( /%)

YoY growth - 12.5 % - 27.3 % 0.8 % -103.0 % 12 .3 % 7.8 % 13.8 %

Appendix Retail Banking

30


Corp &

Comm

Bkg

67%

Markets

10%

IB

14%

Funds

Mgmt

9%



Balance Sheet ( /%)

- 13.5 % - 11.4 % -17.2 % - 53.1 % - 17.9 % -24.5 % - 15.7 %

Appendix Wholesale Banking

YoY growth

54.7%


PBT Tax & Zakat PAT

9MFY16 1,087.1 376.3 710.8 -69.8 780.6 175.1 605.5

9MFY15 1,256.3 454.3 801.9 -148.7 950.6 232.0 718.6


9MFY16 Income (composition by sub -segments)

56%

31



Income Statement - Insurance ( )

Income Statement Group Funding & Others ( )

Appendix Insurance and Group Funding & Others


PBT Tax & Zakat PAT

9MFY16 366.4 216.2 150.2 4.6 145.6 22.6 123.0

9MFY15 455.8 209.0 246.8 -30.7 277.5 65.8 211.8

- 19.6 % - 39.1 % 3.4 % >100 % - 47.5 % -65 .7 % - 41.9 % YoY growth 9MFY16 PAT (composition to Group)

11%

32

Total

Income Expenses PBP

Provisions/ Allowanc es

PBT Tax & Zakat PAT MI PAT

9MFY16 198.9 269.7 - 70.7 -80.2 9.5 -4.7 14.2 65.2 - 51.0

9MFY15 599.2 275.6 323.6 19.8 303.8 43.4 260.4 95.0 165.4


1 %

YoY growth - 66.8 % >100.0 % -2.1 % > 100.0 % - 96.9 % >100.0 % - 94.5 % -31.4 % >100.0 %


PATZ: profit after tax and zakat

Appendix Islamic Banking

9MFY16 Gross Financing (composition to Group)


mil Total Income Expenses PBP Provisions/ Allowanc es

PBT Tax & Zakat PATZ FY16

9MFY16 671.1 420.9 250.2 19.5 230.7 59.2 171.4

9MFY15 690.6 331.3 359.3 121.6 237.7 53.4 184.3

YoY growth -2.8 % - 30.4 % 27.0 % -84.0 % - 2.9 % 10.9 % 7.0 %

Balance Sheet ( /%)



16%

32%

33


LDR 1 of 82.8%


1. RM2b Subordinated Sukuk Musharakah Programme

2. RM3b Senior Sukuk Musharakah Programme

3. RM3b Basel III - compliant Subordinated Sukuk Murabahah Programme via Tawarruq arrangement

AMMB Holdings Berhad

1. RM2b Medium Term Notes Programme (Senior and/or Subordinated)

Funding diversity underpinned by

CASA: RM18.5 billion Fixed deposits: RM72.3 billion

(strong retention)

Supplemented by term funding & debt capital

AmBank (M) Berhad

1. RM500m Innovative Tier -1 Capital Securities Programme

2. RM500m Non - innovative Tier 1 Capital Securities Programme

3. USD200m USD Subordinated Term Loan 3

4. RM2b Medium Term Notes

5. RM4b Tier -2 Subordinated Notes

6. RM7b Senior Notes 2

7. USD2b Euro Medium Term Notes

1. Includes stable funding sources 2. 1st senior notes issuance by a financial institution in Malaysia 3. Redeemed on 27 January 2016

AmBank (M) Berhad &


Loans with Recourse

Recourse obligations on loans sold to Cagamas - maturing in 2018

Islamic financing sold to Cagamas maturing in 2018

Statutory reserve and liquidity requirement savings

Reduced exposure to interest rate risks

Funding characteristics

Improve funding stability, maturity gap and 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

Appendix Funding sources and maturity profile

34


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 representation AMMB Holdings Berhad

Shayne Elliott, CFO (resigned on 15 October 2015 and he assumed the role as CEO starting 1 January 2016 )

Mark Whelan Director (CEO Australia)

Suzette Corr Director (General Manager HR Australia and Group General Manager Talent & Culture, ANZ)

Board representation AmBank (M) Berhad, AmBank Islamic Berhad & AmInvestment Bank Berhad

Graham Hodges Director (Deputy Chief Executive Officer, ANZ)

Management representation

Mandy Simpson Chief Financial Officer

Nigel Denby Chief Risk Officer

Tan Chin Aun - Transaction Banking

Partnership with ANZ since 2007

Source: ANZ website

Appendix ANZ & AmBank Group Partnership

29 Asian markets, 5 Partnerships

35


IAG diversified footprints in Asia

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 representation

Duncan Brain Director ( CEO, IAG Asia)

Aidan Pallister Director (Deputy CEO / COO of IAG Asia)

Management representation

Derek Roberts CEO, AmGeneral Insurance Berhad

Arron Mann General Manager, Claims

Chris Tandy General Manager, Personal and Commercial Pricing

Partnership with IAG

Appendix AmGeneral Partnership

2 subsidiaries in Thailand & Vietnam Investment in associates in Malaysia, China & India

Source: IAG annual report 2014

36

https://www.kurnia.com/malaysia


Perlis

Kedah

PulauPinang

Perak

SarawakKuala Lumpur

Putrajaya

NegeriSembilan

Melaka Johor

Pahang

Selangor

Labuan

SabahTerengganu

Kelantan

Brunei Darussalam

Branches ATM RO

Perlis 1 4

Kedah 6 29

Pulau Pinang 14 49 1

Perak 18 47

Selangor 38 242

Kuala Lumpur 23 132 2

Putrajaya 1 3

Negeri Sembilan 7 38

Melaka 6 37

Johor 21 91 1

Pahang 9 32 1

Terengganu 4 20

Kelantan 2 22

Sabah 9 36 1

Labuan 1 2

Sarawak 15 50 1

175 834 7

Population Density: 1,501 persons per km 2

AmBank Islamic

branches

Weekend Banking

Branches

ATMs @ 7 - Eleven

Electronic Banking Centres

Internet & Mobile

Banking AmGeneral AmMetlife AmInvestment

AmCard Services

3 75 365 182 AmOnline AmGenie

32 (include 28

dual branded branches)

18 branches 52 agencies

14 26

Note(s):

Brunei: AmCapital (B) Sdn Bhd

Appendix Distribution channels

RO: Regional Offices

37

Nationwide Branch Network

Other Customer Touch Points


AMMB Holdings Berhad

23.8% 1 AmCorp 13.0% EPF 16.5% Others 46.7%

100% AmBank (M) Berhad

100% AmInvestment Group Berhad

100% AmInvestment Bank Berhad

FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 9MFY2016

27% 27% 26% 29% 31% 29% 26%

1. ANZ: ANZ Funds Pty Ltd,a wholly owned subsidiary of Australia and New Zealand Banking Group Limited 2. Formerly known as AmG Insurance Berhad 3. Formerly know as Kurnia Insurans (Malaysia) Berhad 4. MetLife owns 50% plus one share in AmMetLife Insurance Berhad , with the remaining shares held by AmBank Group, and AmBank

Group owns 50% plus one share in AmMetLife Takaful Berhad , with the remaining shares owned by MetLife

Foreign shareholding excluding ANZ

100% AmBank Islamic Berhad

100% MBF Cards ( ) Sdn Bhd

33.33% Bonuskad Loyalty Sdn Bhd

100% AMAB Holdings Sdn Bhd

51% AmGeneral Holdings Berhad 2

~50 % AmMetLife Takaful Berhad 4

~50 % AmMetLife Insurance Berhad 4

100% AmGeneral Insurance Berhad 3

49%

~50%

~50%

As at 31 December 2015

Retail Banking Wholesale Banking Islamic Banking General Insurance Life Assurance &

Takaful

Appendix Shareholding structure & franchise value

38


6.00 5.60 5.60 5.42 5.40 5.25 5.20 5.20 5.10 5.10 5.00 5.00 4.90 4.90 4.80 4.80 4.80 4.75 4.45 4.20 4.00 4.00 3.50

- 23.7%

- 6.5%

15.7%

24.7%

20.1%

95.2%

97.6%

-35.0% -15.0% 5.0% 25.0% 45.0% 65.0% 85.0% 105.0%

CIMB

MBB

AMMB

KLCI

RHB Cap

PBB

HLBK

(Note: 18 May 2007 vs . 31 Dec 2015)

Ratings FY2007 FY2015

AmBank (M) RAM LT: A2 , ST: P1 Outlook: Stable

LT: AA2 , ST: P1 Outlook: Stable

S&P

LT: BBB - , ST: A-3 Outlook: Stable

LT: BBB+, ST: A-2 Outlook: Stable

LT: Baa2 , ST: P-3 Outlook: Stable BFSR: D -

LT: Baa1 , ST: P-2 Outlook: Stable *BCA: baa3 * Adj BCA: baa3

AmInvestment RAM LT: AA3 , ST: P1 Outlook: Stable


AmBank Islamic

RAM LT: A2 , ST: P1 Outlook: Stable


AMMB RAM NA LT: AA3 , ST: P1 Outlook: Stable

Source : Bloomberg as at 12 January 2016

+3

+3

+1 Notches of ratings upgrades since 2007

+1

AMMB HOLDINGS BERHAD P/EPS : 17.75 P/BV : 0.92

Market Price : RM4.53

+3

Average TP : RM4.91 Buy : 4 (17%) Sell : 6 (26%) Hold : 14 (57%) Average TP / Average CP : 1.11x

Appendix Banking sector share price movement / target price and recommendations

* Maintained since 16 Jun 15

+2

39

Buy/Outperform/Overweight/Add P/EPS & P/BV as at 31 December 2015

TP: target price Sell/Underperform/Fully valued/Reduce/Underweight

Hold/Neutral/Market perform

Banking Sector Share Price Movement Upgraded ratings

Target Price and Recommendations


Business Conditions Index

points

Source: BNM, MIER, Department of Statistics & Bloomberg

Appendix Key economy indicators: As per 9MFY2016

40

Business confidence index FDI flow

CPI and unemployment rate GDP, consumption and investment growth

3.9%


To be updated for the his

* Retail comprise purchase of transport vehicle, purchase of residential property, personal use and credit card

Source: BNM & Bloomberg

* Effective 2 January 2015, the Base Rate would replace the Base Lending Rate as the main reference rate for new retail floating rate loans

41

Appendix Banking system data: As per 9MFY2016

Key interest rates Asset quality

Household debt movement Household debt, national savings and retail impaired loan ratio

34.2% 34.6% 33.0% 31.2% 30.9%

74.5% 76.2% 81.3%

86.7% 87.9%

24.9% 19.7% 16.3% 14.7% 13.3% 0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

2010 2011 2012 2013 2014

Gross national savings Household debt/GDP

Retail impaired loans ratio*

6.8 6.1 6.8

2.4 1.4 0.6

3.2

1.7 0.8

1.4

2.3 1.7

13.8

11.5

9.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

2012 2013 2014

Annual Change

(%)

Residential property Hire purchase Personal use

Others* Annual Change (%)

4.57%

3.25%

6.79%

3.86%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Avg lending rate (commercial banks) Average OPR

Average BLR Base rate

1.2%

96.2%

Mar

Ju

n

Sep

t

De

c

Mar

Ju

n

Sep

t

De

c

Mar

Ju

n

Sep

t

De

c

Mar

Ju

n

Sep

t

De

c

Mar

Ju

n

Sep

t

De

c

Mar

Ju

n

Sep

t

De

c

2010 2011 2012 2013 2014 2015

GIL LLC

Loan loss coverage

Gross impaired loans


Source: BNM & Bloomberg

Beginning January 2013, capital components are reported based on Basel III Capital Adequacy Framework

Basel II Basel III

42

Appendix Banking system data : As per 9MFY2016

Capital ratios Capital activities

Loan growth Deposit growth

8.3%

7.4%

7.9%

Mar JunSeptDecMar JunSeptDecMar JunSeptDecMar JunSeptDecMar JunSeptDecMar JunSeptDec

2010 2011 2012 2013 2014 2015

Retail yoy growth Non Retail yoy growthTotal loans yoy growth


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

6 SRIs & 51 Policy Measures

RM1.4 trillion investment

92% private investment

8% public investment

73% DDI, 27% FDI

ECONOMIC TRANSFORMATION

PROGRAMME

ETP Overview Achievement of 12 NKEAs in 2013 and 2014

2020 Target

2011 2012 2013 2014 To - date % of

Target

Investment ( ) 444.0 94.8 21.7 15.2 14.4 146.1 32.9%

GNI per capita (USD per capita) 15,000 9,710 228 168 320 10,426 69.5%

Job Creation (mil) 3.3 0.2 0.4 0.4 0.5 1.5 45.5% Note:

Scoring is calculated by a simple comparison against set 2013 and 2012 targets respectively. (*) The overall NKEA composite scoring is the average of all scores. 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

ETP : Economic Transformation Programme Source ETP Annual Report 2013 & 2014, Resaerch House Report

Tracking of EPPs

NKEAs

2020 Target KPI Scoring*

GNI ( )

New Jobs 2014 2013

Greater KL/ Klang Valley 190 320,000 103% 98%

Oil, Gas & Energy 131.4 52,300 108% 97%

Financial Services 180.2 275,400 121% 117%

Wholesale & Retail 55.4 454,190 104% 124%

Palm Oil & Rubber 230.9 41,600 106% 78%

Tourism 66.7 497,000 126% 115%

Electrical & Electronics 53.4 157,000 104% 105%

Business Services 78.7 245,000 96% 102%

Communications Content & Infrastructure

57.7 43,162 110% 101%

Education 31.8 535,000 116% 102%

Agriculture 28.9 109,335 120% 98%

Healthcare 35.3 181,000 105% 103%

43

Appendix Economic Transformation Programme : As per H1FY2016


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 ma rket One Offs One 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 Performance Underlying performance refers to the financial performance adjusted for one off impacts as above Business Divisions Business divisions

comprise AmBank 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 Segments Operating 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 AMMBmake any representation or warranty, express or implied, as to the adequacy, accuracy, completeness or fairness of any such i nfo rmation and opinion contained and shall not be liable for any consequences of any reliance thereon. Neither AMMB Holdings nor its affiliates are act ing as your financial advisor or agent. The individual is responsible to make your own independent assessment of the information herein and should not trea t s uch 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 securitie s. Neither does this presentation purport to contain all the information that a prospective investor may require. Because it is not possible for A MMB Holdings or its affiliates to have regard to the investment objectives, financial situation and particular needs of each individual who reads the informati on 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, t o a ny other person or published electronically or via print, in whole or in part, for any purpose.

Warranty and Limitation of Liability policy applies to the financial institutions under AMMB Holdings.

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 activities current at the date of the presentation . It is information given in

summary form and does not purport to be complete . It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor . These should be considered, with or without professional advice when deciding if an investment is appropriate .

For further information, visit www.ambankgroup.com ;

or contact

Ganesh Kumar Nadarajah

Executive Vice President, Group Finance Business Performance & Investor Relations

Tel: +603 2036 1435

Fax: +603 2031 7384

Email: ganesh [email protected] /

[email protected]
http://www.ambankgroup.com/mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]

9mfy2016 results, investor presentation...investor presentation 26 february 2016 your bank....

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