AMMB Holdings Berhad
AmBank Group Results Investors Presentation
FY2010 Results
14 May 2010
Cheah Tek KuangGroup Managing Director
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 1
Contents
• Key Messages• Financial Fundamentals• What is Ahead• Summary
• Retail Banking• Business Banking• Investment Banking • Corporate & Institutional Banking• Life Assurance• General Insurance• Operating Segments• Islamic Banking
• Economic Outlook• Competitive Positioning• BASEL III Discussions
1. Executive Summary
2. Financials Update
3. Business Strategy
4. Business Segment Performance
5. Competitive Positioning
• FY2010 Group Performance
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 2
AmBank Group snapshotAmBank Group snapshot
AmBank Group, PATMI : RM’mil
• Proud banking heritage & franchise spanning over 30+ years
• A top 20 listed company on the Bursa SahamMalaysia & rank globally 183 (by market cap amongst banks1), with diversified business fundamentals
• Record performance for three consecutive years; upgraded credit ratings2
• Well capitalized with Tier 1 CAR of 10.3% and total RWCA of 15.8%
• ANZ, our strategic partner in banking (one of the few AA rated banks in the world)
• Assurance business partners :
Insurance Australia Group (IAG) – general
Friends Provident (FP) – life
AMMB, Malaysia…
215 202 400 -282 669 861 1,009
2004 2005 2006 2007 2008 2009 2010
CAGR 29.4%
Source :1 Bloomberg (Global 1,000 banks by Market Capitalization as at 5 May 2010)2 Ratings upgraded in the last 12 months by Fitch Ratings Ltd, Standard & Poor’s Ratings Services, Rating Agency Malaysia Berhad and Moody’s Investors Services
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 3
Record FY2010 profits (3 consecutive annual record results)
Record FY2010 performance Higher revenues underpinned by growing non-interest incomes Better-than-expected loans and CASA growth Improved asset quality : higher LLC and record low NPL’s PATMI performance exceeded consensus
Key focus : Medium Term Aspirations (MTA)
Sound Retail, Business & Corporate & Institutional Banking profits Stronger Investment Banking performance, leveraged by capital market
recovery Diversified portfolios yielding higher profits in Life and General assurance
Improved capital & funding profiles, better positioned for rising interest rate environment
Proactive risk management Implementing FTP, ALM disciplines, Basel II and FRS Prepared for Basel III implications
FY2011 :• Sustain profitable growth, diversify & rebalance• Deliver faster non-interest income growth and CASA
Medium Term Aspirations : Malaysia’s Top 4 Banking Group as measured by:• Customer satisfaction• Sound financial performances• Well diversified and sustainable growth
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 4
Strong FY2010 results, sets good foundations for 2011P
erf
orm
ance
Profit after Tax & MI
ROE
Ris
k, C
ap
ital
&
Fun
din
g P
rofi
le
RWCA
Tier 1
Net NPL / NPF Ratio
Gro
wth
Net Lending / Financing
AdjustedCustomer Deposits 1
CASA
LD Ratio 1
EPS(basic)
88.8%
9.7%
15.2%
2.6%
6,755 mil
64,132 mil
56,948 mil
31.6 sen
11.7%
860.8 mil
FY09
91.7%
10.3%
15.8%
1.5%
8,372 mil
70,294 mil
64,426 mil
34.7 sen
11.5%
1,008.6 mil
FY10
+2.9%
0.6%
0.6%
-1.1%
23.9%
9.6%
13.1%
9.8%
0.2%
17.2%
Change Q4FY09 Q4FY10
179.8 mil 241.7 mil
9.6% 10.3%
26.8 sen 32.6 sen
Underlying PATMI growth : 20.1%
ROA 1.04% 1.13% 0.09% 0.86% 1.06%
Note :1 Includes Senior Notes of RM1.42 bil issued todate
Current ACE : 8.2%If ACE maintained at 7.3% - 7.7%, ROE range : 11.8% - 12.0%
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 5
FY2010 : Actual vs Consensus
Note :Consensus as at 1 April 2009 (source : Bloomberg)Revenue is taken from consensus “Sales” estimate, PATMI taken from consensus “Net Income GAAP” estimate, EPS taken from consensus “EPS GAAP” estimate
1.13%
11.5%
3,577 mil
1,009 mil
34.7
+ 0.32%
+ 2.4%
+ 5.9%
+ 32.1%
+ 28.5%
Performance Indicator / Market Ratio
0.81%
9.1%
3,379 mil
764 mil
27.0
Exceeded market consensus
+ 0.08%
+ 0.1%
+ 1.2%
+ 2.3%
+ 3.0%
1.05%
11.4%
3,619 mil
986 mil
33.7
Actual
FY2010
Consensus
(as at April 2009)
Actual vs Consensus (April 2009)
FY2010
Consensus
(as at March 2010)
Actual vs Consensus (March 2010)
FY2010
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 6
`
What is ahead …
Higher lending & RWA growth Competition : strong but some irrational pricing Upside : Stronger regional recoveries and NEM impact Expecting Basel III pronouncements
Industry :What is Ahead
Malaysia : Increasing optimism
Increasing global optimism but potential for continuing volatility
Acceleration in Malaysian economic recovery GDP 2010 : +5.0 to 6.0% (projection 1)
⁺ NEM (New Economic Model)⁺ Monetary policies, better-than-expected exports
OPR increase of 25 bps in March 2010; further 50 to 75 bps progressive interest hike expected in next 12 months
AMMB : Leverage tailwinds
Strategic themes to support accelerated profit growth Better positioned for rising interest rates Leverage economic upturn in 2010 Enhanced risk, governance and systems Leverage regional ANZ connectivity for new businesses Basel III could slow down achievement of ROE targets
Note :1 external reports (as at 12 May 2010)
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 7
Summary
1. Top 5 Banking Group (conventional + Islamic) inMalaysia with diversified business fundamentals,expanding franchise, and well supported by ANZ, ourstrategic partner.
2. Delivered 3 consecutive years of record profitperformances, exceeding market consensus.
3. Improved funding and capital profiles, and expectingopportunities to optimize capital even under Basel III.
4. Continue to maintain high vigilance on asset quality,risk disciplines, & cost management.
5. Stay focused on delivering greater value toshareholders via profitable growth, dynamicallyrebalancing portfolios, continue investing forsustainable returns, and accelerate regional ANZcollaboration (Medium Term Aspirations – MTA).
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 8
AMMB Holdings Berhad
AmBank Group Results
Investors Presentation
FY2010 Results
14 May 2010
Ashok RamamurthyDeputy Group Managing Director &
Group Chief Financial Officer
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 9
Contents
• Key Messages• Financial Fundamentals• What is Ahead• Summary
• Retail Banking• Business Banking• Investment Banking • Corporate & Institutional Banking• Life Assurance• General Insurance• Operating Segments• Islamic Banking
• Economic Outlook• Competitive Positioning• BASEL III Discussions
1. Executive Summary
2. Financials Update
3. Business Strategy
4. Business Segment Performance
5. Competitive Positioning
• FY2010 Group Performance
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 10
Fee, 58%
Trading,28%
Insurance12%
Others,2%
Non-Interest Income composition
Sound profit growth, with conservative provisioning
REPORTEDBusiness Performance
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Income :
All Divisions recorded good growth in incomes
Leveraging the recovery in capital and equity markets resulted in higher investment and trading incomes
Non interest income composition
Expenses:
Reflects salary and staffing increases, additional bonus, CPI and ongoing medium term investments, but within CTI targets
Provisions :
Higher GP – stronger loans growth
Pro-active provisioning to account for potential lag effects of recent economic downturn
Provisions include PER, impairment losses and provisions for commitments & contingencies
Note :1 FY2009 underlying is reinstated for one-offs as at 31 March 2010
UNDERLYING 1
RM'mil FY09 FY10
Net int income 2,289.2 2,518.5 +10.0%
Fee and comm 511.2 618.2 +20.9%
Inv and trading 6.6 298.5 +>100%
Ins business 121.3 123.7 +2.0%
Others (0.9) 18.2 +>100%
Total Income 2,927.4 3,577.0 +22.2%
Expenses 1,268.8 1,501.4 +18.3%
PBP 1,658.6 2,075.7 +25.1%
Provisions 441.0 699.0 +58.5%
PBT 1,217.6 1,376.7 +13.1%
PAT 878.3 1,042.6 +18.7%
PATMI 860.8 1,008.6 +17.2%
PATMI 840.8 1,009.4 +20.1%
FY10 vs FY09
GG
G
GG
G
GG
G
G
G
G
G
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 11
Retail, 67%
Business,12%
Investment,10%
CIB, 10%
Life, 3%
General, 5%
Ops,-8%
PATMI contribution
Strong contributions from all Divisions
Business Performance
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Income and profit growth in Retail Banking delivered via focus on viable segments
Well-balanced Business Banking profits with both income growth and lower provisions
Better investment banking performance from leveraging improving capital and equity market conditions
CIB recorded higher interest and fee incomes from lending, asset-based and international businesses
Life Assurance and General Insurance recorded higher incomes from larger fund base and better efficiencies
Note :1 Net Assets : net lending & net financing (net of IIS, SP and GP)2 Life Assurance surplus is transferred into life policy shareholders’ fund in overall Group accounts
PATMI : Growth contributed by all business divisions
Net Assets 1 : Growth contributed by CIB and Business Banking
Retail lending focus on preferred / viable segments in a highly competitive environment
Business and SME growth focusing on stable growth sectors
CIB’s growth focusing on project financing with government support, GLC’s & large MNC’s
RM'mil FY09 FY10
Retail Banking Division 628.4 679.0 +8.1%
Business Banking Division 111.9 124.0 +10.8%
Investment Banking Division 41.6 100.8 +142.3%
Corporate & Institutional
Banking (CIB) 85.4 104.1 +21.9%
Assurance 45.1 80.8 +79.2%
Life Assurance 7.1 32.1 +352.1%
General Insurance 38.0 48.6 +27.9%
Operating Segments :
Reported PATMI (51.6) (80.0) -55.0%
Retail Banking Division 41,626.3 42,991.8 +3.3%
Business Banking Division 9,773.4 11,634.6 +19.0%
Corporate & Institutional Banking 4,957.3 8,971.5 +81.0%
FY10 vs FY09
GG
G
GGGGGGG
G
G
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 12
Lower NIM but improving non-interest income and cost-to-income
Business Performance
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
NIM impacted by :
Reduced interest recoveries
Change in asset mix towards lower
margin but stable corporate loans
Costs incurred to reposition balance
sheet mismatches
9MFY10 NIM = 2.92%
Lower cost to income ratio mainly due to
higher income
Higher other operating income
composition due to recovery in trading
incomes
Note :1 Net Interest Margin includes Net Financing Income from Islamic Banking business, as follows :
Reported and Underlying : FY09 – 0.68% FY10 – 0.82%2 CTI and CTA excluding insurance3 Other operating income includes net income from insurance business
FY09 FY10
Net Interest Margin
(NIM & NFR composite) 3.04% 2.98% -0.06%
Cost-Income
(CTI) 43.34% 41.97% -1.37%
Cost-Asset
(CTA) 1.50% 1.62% +0.12%
Non Interest Income
/ Total Income 21.8% 29.6% 7.8%
FY10 vs
FY09
GG
G
GGGGGGGGG
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 13
Faster than system loans and CASA growth
Business Performance
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Better than anticipated
loans growth, targeting
viable segments
Strong CASA growth,
improving funding profiles
Note :1 Adjusted Customer Deposits : includes RM1.42 bil Senior Notes2 CASA : current accounts & savings accounts3 CASA proportion : as composition of Deposits from Customers4 LD : net loans (net IIS, SP, GP) / adjusted customer deposits
RM'mil FY09 FY10
Balance Sheet - Lending / Financing
Gross Loans / Financing 59,674.8 66,628.9 +11.7%
Net Loans / Financing 56,947.8 64,425.9 +13.1%
Balance Sheet - Deposits
Adjusted Customer Deposits 64,131.5 70,294.1 +9.6%
CASA Deposits 6,755.1 8,371.9 +23.9%
CASA Proportion 10.5% 12.2% +1.7%
LD Ratio 88.8% 91.7% +2.9%
FY10 vs
FY09
GG
G
GGGGGGGG
G
1
2
3
4
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 14
Retail, 69%
Biz,26%
CIB,4%
Best in class collections systems
Superior credit / risk tools yielding better results
Led by experienced team
Composition of NPL by segment :
10.9%
13.8%
9.6%
6.2%
3.7%
2.6%1.5%
14.8%
17.4%
12.4%
10.4%
6.3%
4.1%
2.8%2.24% 1.92% 1.73%3.19%
0.97% 0.60% 0.88%0%
5%
10%
15%
20%
4.3 5.8
4.6 3.2
2.0 1.5 1.0
39.3%32.2% 36.7%
56.6%67.3%
75.1%
99.5%
-60%
-20%
20%
60%
100%
-
5
10
15
RM'bil Gross NPL Net NPL Loan Loss Coverage
Asset quality now superior to industry average
Asset Quality Indicators
FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY2010
6.06
7.60
6.145.53
3.60
2.431.87
FY10 / FY09 change :Gross NPL / NPF ratio i1.3%Net NPL / NPF ratio i1.1%Net Provisions charge h0.28%
Gross NPL ratio
Net NPL ratio
Net provisions charge
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 15
0.00%
0.50%
1.00%
1.50%
2.00%
Q1 Q2 Q3 Q4
% Write-Offs to Avg Gross Loans / Financing
0.00%
0.40%
0.80%
1.20%
Q1 Q2 Q3 Q4
% Gross NPL / NPF Conversion to Gross Loans / Financing
0.00%
0.60%
1.20%
1.80%
Q1 Q2 Q3 Q4
% New Gross NPL / NPF to Gross Loans / Financing
Lower new gross NPL / NPF formation, recoveries, write-offs and conversions
Note :
1 FY2004 and FY2005 financials based on gross before IIS
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
FY2004 -FY2007 FY2008 FY2009 FY2010
0.00%
0.20%
0.40%
0.60%
Q1 Q2 Q3 Q4
% Recoveries to Avg Gross Loans / Financing
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 16
23.3
12.4
2.2 0.9 1.0 2.1
24.2
13.2
2.5
0.9
Auto Financing Mortgage Asset Financing Credit Cards Line of Credit Co-Op
RM'bil Mar '10 Mar '09
6.6%
11.6%3.9%
7.5%
12.4%
4.2%
10.0
4.9
1.3
11.9
8.8
1.1
Business Banking (ex GLR)
Corporate & Institutional
Banking
Loan Rehabilitation
79.2%
13.6%
18.7%
0.91.9
10.0
4.9
1.3
11.9
8.8
1.1
Business Banking (ex GLR)
Corporate & Institutional
Banking
Loan Rehabilitation
79.2%
13.6%
18.7%
Biz 26.5%
SME10.9%
Individual
61.0%
Others1.7%
Retail : targeting profitable segments
Business & Corporate : harness synergies via deepening customer relationships
Portfolio rebalancing : Focus on viable segments and diversification
Gross Loan / Financing movement (before netting Islamic financing sold to Cagamas)
by Interest Rate Typeby Customer Type
Loan Composition %36.6% 19.9% 3.7% 1.4% 2.9%1.3% 17.9% 13.3% 1.7%
Retail Business / Corporate Loans composition trend
RM'bil Mar-08 Mar-09 Mar-10Fixed rate :
Conventional 46.5% 42.9% 39.3%Islamic 15.1% 16.9% 17.8%
Variable rate :Conventional 38.3% 40.0% 42.6%Islamic 0.1% 0.3% 0.3%
66.6%
33.4%
FY10
Retail Biz / Corp
72.4%
27.6%
FY09
73.7%
26.3%
FY08
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 17
6,925.9 10,218.9
14,458.2 18,291.3
15,952.1 19,272.6
12.0%13.8%
16.6% 15.5%14.1%
12.8%^
-10.0%
0.0%
10.0%
20.0%
-
10,000
20,000
30,000
Market ShareAUM
Asset Under Management Market Share
19,923.4
39,940.8
92,845.4
50,044.2 46,490.8
5.0%
7.2%8.0% 8.0%
7.7%
-5.0%
0.0%
5.0%
10.0%
-
40,000
80,000
120,000
Market ShareTrading Value
Trading Value Market Share
539.9 601.8 696.3
811.3 901.8 1,018.6
390.4 438.2 476.3 545.6 585.8 624.4
-1000
-500
0
500
1000
-
500
1,000
1,500
Gross PremiumFund Assets
General Fund Assets* Gross Premium
Good growth in Assurance and key Investment Banking portfolios
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010
General Insurance
* Prior to December 2008, based on general funds per BNM DGI returnsDecember 2008 & post December 2008 based on BNM DGI returns with total asset (general funds + shareholders’ funds)
^ Based on Dec 09 data
p 13.0%
RM’mil
Institutional funds : Unit trust funds ratio at 42 : 58
941.4 1,164.8 1,430.1
1,700.9 2,034.8
2,379.9
312.1 340.9 382.6 352.2 449.0
577.0
-800
0
800
-
1,000
2,000
3,000
4,000
Gross PremiumFund Assets
Life Fund Assets Gross Premium
Life Assurance
p 17.0%
2005 2006 2007 2008 2009
Institutional & Unit Trust Funds
p 20.8%
Stock Broking
q 7.1%
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 18
37.1
49.5
57.461.9
5.3
6.3
6.8
8.4
Mar 07 Mar 08 Mar 09 Mar 10RM'bil
CASA All Other Deposits 1
Accelerating growth in non-interest income and CASA
Non Interest / Financing Income Composition %
CASA grew by 23.9% in FY2010
Adjusted Customer Deposits by Type
CASA
FD + NID + Senior Notes + Treasury Deposits
12.6% 11.2% 10.5%
Total 42.4b 55.8b 64.1b
CASAcomposition
70.3b
12.2%
CASA CAGR15.7%
Note :1 “Others” by type comprises short-term treasury deposits, cash management system (CMS) placements and structured deposits2 CASA composition : as composition of Deposits from Customers
21.8%
29.6%
17.5% 17.3%
0.2%
8.3%4.1%
3.5%
0%
10%
20%
30%
FY09 FY10
Non-Interest Inc Fee Inc
Trading & Investment Inc Insurance Business
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 19
51.9%60.9% 62.6% 65.1%
26.9%
27.8% 27.8% 20.9%
9.2%
6.0% 4.5% 7.5%
0.1%11.0%
1.0% 5.2%5.1% 6.5%
Mar 07 Mar 08 Mar 09 Mar 10RM'bil
Non-interest sensitive Islamic > 5 years 1-5 yrs 3-12 mths 0-3 mths
23.0 23.6 25.5 26.8
4.99.0
10.9 11.212.5
20.2
26.329.6
1.9
3.0
1.4
2.6
Mar 07 Mar 08 Mar 09 Mar 10RM'bil
Others + Senior Notes Biz enterprises Government Individuals
4.8 2.1 1.60.4
0.51.4
0.70.5
1.3
1.4 0.90.9
10.9
2.12.9
2.5
Mar 07 Mar 08 Mar 09 Mar 10RM'bil
Other FI's BNM Merchant banks Banks
Funding profile reflecting current interest regime
Individual and government funds grew 4.5% in FY2010
Diversified funding profiles
Reduce dependency on inter-banking funding
Note :1 “Others” by source comprises pension and retirement funds, non-profit organisations and similar
Includes Senior Notes RM1.42 bil
Adjusted Customer Deposits by Sources
Deposits of Banks & Other Financial Institutions
Adjusted Customer Deposits : Interest / Profit Rate Pricing Profile
Individuals
Government
Biz enterprises
Others 1
+ Senior Notes
0 – 3 months
3 – 12 months
1 – 5 years
Non - sensitive
> 5 yearsIslamic
BanksMerchant
BNMOther FI’s
17.4b 7.1b 6.1b 4.3b
Centralised Capital & Balance Sheet Management
Manage regulatory capital, economic capital, liquidity funding, FTP and balance sheet risks to optimise long term economic value
Formulate capital management frameworks, including dividend policy
Formulate capital management plan aligned to strategic plans, and stress tests
Manage efficient internal capital allocation
Execute capital and funding transactions in order to deliver a competitive advantage
Q4FY10 : issued RM1.42 bilSenior Notes under a RM7 bilterm funding program
Total
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 20
10.1 9.5 8.5
-8.5 -8.4 -10.5
-7.3 -7.9-9.8
-0.4 -0.6
-0.4
Interest / Profit Rate Risk : Non -Interest Sensitive
21.5 25.3 23.6
-3.4 -3.5 -2.5
0.8 0.80.1
Interest / Profit Rate Risk : > 5 years
10.0 10.8 13.4
-4.9 -5.1 -7.4
-4.0 -2.9
-9.3
Interest / Profit Rate Risk : 1 - 5 years
34.9 42.9 49.2
-58.8 -64.3 -65.8
3.2 2.29.3
Interest / Profit Rate Risk : 0 - 12 months
Balance sheet repositioned for rising interest rates
Note : Net mismatch comprises on-balance sheet and off-balance sheet interest rate gap sensitivity
Assets Liabilities Equity Off balance sheet gap / derivatives
FY2008 FY2009 FY2010 FY2008 FY2009 FY2010
RM’bil
Net mismatch -20.6 -19.2 -7.3
Net mismatch 18.9 22.5 21.2 Net mismatch -6.1 -7.4 -12.2
Net mismatch 1.1 2.9 -3.3Mismatch profileNet mismatch > 12 months
FY2008 13.9 bil
FY2009 18.0 bil
FY2010 5.7 bil
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 21
-0.17%
1.02% 1.04% 1.13%
ROA, %
-5.8%
11.5% 11.7% 11.5%
ROE, %
(13.3)
28.2 31.6 34.7
EPS, basicsen/share
Improved earnings, returns ratios and capital adequacy
Note :1 FY2007 capital adequacy ratios as per the published financial statements of AHB for FY2008
Innovative Tier 1 Capital Securities issued (AmBank (M) Berhad) :
Approved program = RM500 mil
Q1FY10 issuance = RM300 mil
Q2FY10 issuance = RM185 mil
Tier 2 :
Q3FY10 : issued 7th tranche of MTN RM98 mil, total todate RM1.56 bil
Capital management plan :
Optimise capital profile & buffer
Increase scenario modelling
Streamline corporate structures
Develop dynamic dividend policy
Proactive management of BIS / Basel III requirements
FY2007 FY2008 FY2009 FY2010
Core equity 5.8% 7.7% 7.8% 8.2%
Tier 1 6.8% 8.5% 9.7% 10.3%
RWCA 10.1% 14.1% 15.2% 15.8%
Capital adequacy : AMMB Holdings Berhad
Tier 1 RWCA
AmBank (M) Berhad 11.0% 15.3%
AmBank (M) Berhad, Group 9.9% 15.3%
AmInvestment Bank Berhad, Group 24.0% 29.4%
AmIslamic Bank Berhad 10.5% 15.3%
Capital adequacy : by legal entity, FY2010
FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10 FY07 FY08 FY09 FY10
FY10 / FY09 change i0.2%FY 09 / 08 change h0.2%
FY10 / FY09 change h0.09%FY 09 / 08 change h0.02%
FY10 / FY09 change h9.8%FY 09 / 08 change h12.1%
Maintaining profitability despite economic disruptions
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 22
Contents
• Key Messages• Financial Fundamentals• What is Ahead• Summary
• Retail Banking• Business Banking• Investment Banking • Corporate & Institutional Banking• Life Assurance• General Insurance• Operating Segments• Islamic Banking
• Economic Outlook• Competitive Positioning• BASEL III Discussions
1. Executive Summary
2. Financials Update
3. Business Strategy
4. Business Segment Performance
5. Competitive Positioning
• FY2010 Group Performance
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 23
Significant progress made in business transformation
12 months (FY 2008)
24 months (FY 2009)
36 months (FY 2010)
Strategic initiatives
Organisation & governance
Growth opportunities
Agree vision and aspirations
Set transformation strategy and agenda
Agree top down targets
Fix HP business strategy and action plans
Improve on asset quality
Realign growth towards profitable and viable segments only
Realign Markets Fixed Income business strategy and deliverables
Reset Mortgage business strategy and action plans
Leverage AmBank (M) entity for all Group balance sheet activities and vest AmInvestment Bank assets to AmBank (M)
Create deposits as a profit centre across all divisions and grow CASA
Realign customer ownerships and focus across all business divisions
Proactively strengthen capital and liquidity management to handle GFC issues
Repositioned balance sheet for rising interest rates
Buy out minority shareholders and privatiseAmInvestment Bank
Create specialist Finance and Risk management functions
Consolidate / simplify governance committee structures across entities
Deliver line of business budgets and performance reporting
Create a Group PMO to prioritise and manage key strategic initiatives and projects
Established Advance Risk Recognition Program (ARRP)
Strengthen risk disciplines via Group Risk Appetite Framework (e.g. tighter asset writing strategies and scorecard exceptions)
Set up a separate ALCO and capital and balance sheet management unit
Deliver Peer Bank comparisons and relative performance benchmarks
Implement short and long term incentives aligned to performance via MTA
Deliver 3rd generation retail scorecards and new market risk models
Commence PD, LGD & EAD for retail and non-retail, and security indicators for non-retail
Implement a new funds transfer pricing system aligned to balance sheet and non-traded risk strategy
Develop leadership bench-strength and succession planning
Implement new profit centre based retail branch distribution model
Create retail deposits as a separate line of business and grow CASA
Create a separate Corporate and Institutional Banking Division (CIB)
Develop a new FX business in collaboration with ANZ
Enhance cash management offering via Net Payroll system
Split insurance license to General and Life, and bring in a new life business partner, FriendsProvident Fund plc
Accelerate growth from GLC, GLIC and MNC via CIB Division
Acquire a general insurance business (MAA) and build scale
Develop a new Rates business in collaboration with ANZ
Set the agenda, and build consensus and teamwork
Build foundations and align structures to deliver on strategy
Deliver profitable and differentiated growth through GFC
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010
Malaysia’s Preferred Banking Group with International Connectivity
MTA: Strategic Themes
Aspirations:
MTA: Medium Term Aspirations
Customer focused
Product focused
Malaysia’s
Top 4 Banking Group
as measured by :
• Develop a liability-led business, complemented with asset growth in certain segments and products, and grow scale in wealth management in both Mass and Mass Affluent segments
• Develop a well diversified, profitable and sustainable client base and grow deposit and cash management, quality loans, international trade finance via leveraging ANZ connectivity, non-interest incomes and “Share of wallet”
• Provide innovative and quality solutions (including syndication and cross-selling) both domestic and cross border via ANZ, targeting high-impact and high-value clients, MNCs and GLCs
• Develop complete, end-to-end, comprehensive solutions and lead in capital markets, funds management, and stock broking underpinned by strong domestic and overseas distribution capability via ANZ
• Provide substantive, integrated and client-led business underpinned by a full suite of FX, Rates, Commodities and FI offerings, with ANZ collaborations
• Deliver premium product & customer propositions to target segments, streamline process to improve efficiencies and leverage Friends Provident
• Deliver competitive customer propositions via becoming a scale specialist in motor and niche specialist in commercial and non-motor personal lines, and leverage IAG
• Customer satisfaction
• Sound financial performances
• Well diversified and sustainable growth
24
Retail Banking(Conventional + Islamic)
Business Banking (Conventional + Islamic)
CIB(Conventional + Islamic)
Investment Banking(Conventional + Islamic)
Markets & Treasury(Conventional + Islamic)
Life Assurance
General Insurance
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 25
Increasing profit momentum forecast for FY 2011
Conventional + Islamic
Overall
Income growth from larger asset base and fees Increase focus on cross-selling and growing deposits Expect rising profit performance in FY 2011
Accelerate CASA & deposit growth, profitable asset growth and lower credit costs Continue to invest for medium term outcomes Expect stable profit for FY 2011
Leverage on upturn in capital markets Increase regional business through closer collaboration with ANZ Expect higher profits for FY 2011
Momentum from FX & Derivatives set to increase Expect higher profits in FY 2011
Maintain profitable growth & rebalancing focus via executing to our strategic agenda Income diversification, cost management, deposit growth & enhanced risk disciplines Position business for economic recovery domestically and regionally via leveraging ANZ Explore potential tactical in-fill acquisitions
Income growth arising from larger asset base and growth in non-interest incomes Proactively manage existing accounts for cross-sell and transactional deposits Expect better profit growth for FY 2011
Higher contribution from new products and increase in share of wallet from retail and business customers
Possible synergistic benefits from MAA acquisition Expect rising profits for FY 2011
Launch new products, improve new business IRR and leverage strategic partnership with Friends Provident
Expect growth in premium and profits for FY 2011
Retail Banking
Corporate & Institutional
Banking
Investment Banking
Life Assurance
General Insurance
Markets & Treasury
Business Banking
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 26
Specialisation
Effectiveness, efficiency, cost optimisation
Speed-to-market, fast turnaround
Customer and service excellence
Process improvements and reengineering
Better alignment to enable the key business /market strategies including revenue growth
Support enhanced risk management capabilities
Deliver infrastructure optimisation & rationalisation
Governance, enhance security and data integrity
Progressively building best in class “key enablers” in Malaysia
Best in class scorecards, risk and pricing models, and governance infrastructure
Asset writing business strategies, frameworks and policies
Effective identification, assessment / measurement, control / mitigation and monitoring / review of risks
Explicit risk-reward trade-offs
Results driven performance framework
Rewards & recognition
Talent management and succession planning
Performance improvement program
Best in class“key
enablers”
Customer
Lead in customer satisfaction
Expanded distribution footprints
Branding
Product & service differentiation
Customer proposition
Drive brand preference & affinity
Top of mind recall & brand power grid (brand value)
Customer centric & Branding
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 27
-RM282.5 mil RM668.5 mil RM860.8 mil RM1,008.6 mil 16 – 20%14 – 18%
CAGR ^
-5.8% 11.5% 11.7% 11.5% 12 - 13% *FY13 onwards :
15 – 18% *
37.1% 39.6% 43.3% 42.0% 42 - 43% 40 - 42%
6.2% 3.7% 2.6% 1.5% circa 1.5% 1 - 1.5%
5.0 sen / share
(loss year)
6.0 sen / share
18.3%
8.0 sen / share
19.0%
10.5 sen / share
28.1%
35 – 40%
payout
≥ 40%
payout
Improving outlook but expecting higher capital requirements
PATMI
ROE
CTI
Net NPL Ratio
Dividend
gross / payout
* *
* Adjusted for possible Basel III impacts on ACE^ Previously 12-15% sustainable profit growth
FY 07 FY 08 FY 09FY 10
ActualFY 2011
Medium Term Aspirations (MTA)
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 28
Regional connectivity via ANZ and access to world class “IP” and
skill resources :
AmBank Group well set to deliver on aspirations
Implement customer centric business
models :
Universal banking group :
1
2
3• ANZ, our strategic partner in Banking
• IAG in General Insurance • Friends Provident in Life Assurance
• Focus on customer segmentation and satisfaction measures
• Develop differentiated product and service propositions
• Well diversified and significant market positions in key business segments
• Wide distribution footprint and market reach
• Sound financial fundamentals
• Building “best in class” key enablers in Malaysia
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 29
Summary
1. Top 5 Banking Group (conventional + Islamic) inMalaysia with diversified business fundamentals,expanding franchise, and well supported by ANZ, ourstrategic partner.
2. Delivered 3 consecutive years of record profitperformances, exceeding market consensus.
3. Improved funding and capital profiles, and expectingopportunities to optimize capital even under Basel III.
4. Continue to maintain high vigilance on asset quality,risk disciplines, & cost management.
5. Stay focused on delivering greater value toshareholders via profitable growth, dynamicallyrebalancing portfolios, continue investing forsustainable returns, and accelerate regional ANZcollaboration (Medium Term Aspirations – MTA).
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 30
Contents
• Key Messages• Financial Fundamentals• What is Ahead• Summary
• Retail Banking• Business Banking• Investment Banking • Corporate & Institutional Banking• Life Assurance• General Insurance• Operating Segments• Islamic Banking
• Economic Outlook• Competitive Positioning• BASEL III Discussions
1. Executive Summary
2. Financials Update
3. Business Strategy
4. Business Segment Performance
5. Competitive Positioning
• FY2010 Group Performance
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 31
RM'mil FY09 FY10
Income 1,754.8 1,952.8 +11.3%
Expenses 654.7 739.9 +13.0%
PBP 1,100.1 1,212.9 +10.3%
Provisions 262.2 307.6 +17.3%
PBT 837.9 905.3 +8.0%
PAT 628.4 679.0 +8.1%
Gross Loans / Financing 42,667.5 43,974.3 +3.1%
Net Loans / Financing 41,626.3 42,991.8 +3.3%
Gross NPL / NPF 1,683.7 1,289.2 -23.4%
Net NPL / NPF 1,289.3 974.7 -24.4%
Customer Deposits 37,543.4 38,204.5 +1.8%
Low Cost Deposits 5,861.7 6,880.6 +17.4%
ROA 1.53% 1.60% +0.07%
CTI 37.3% 37.9% +0.6%
Loan Loss Coverage 61.8% 76.2% +14.4%
FY10 vs FY09
G
Ratio : 0.65%
Ratio : 0.33%
Ratio : 2.93%
Ratio : 2.23%
Retail Banking Division
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Income growth underpinned by focus on profitable segments and risk pricing
Expenses reflecting growing footprints and upgrade in risk tools, people cost and IT systems
Strong CASA growth
More vigilant measures to improve asset quality via enhancement to credit risk management, collections and recoveries management
Retail Banking’s Aspirations :
Develop a liability-led business, complemented with asset growth in certain segments and products, and grow scale in wealth management in both Mass and Mass Affluent segments
Strategic priorities :
Grow quality assets with better returns, post aligned segment (leverage lower funding cost, lower risk weightage and better risk) and profit modelling
Grow deposits, focusing on CASA
Diversify retail income via new line of business and widening of service offerings
Enhance customer value propositions via improved service level, differentiation (customer centricity and product innovation) and customer segmentation
Achieving profitable growth, balancing between margins and credit costs
PATExpensesIncome
Composition to Group 54.6% 49.3%
PBP
58.4% 65.1%
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 32
Business Banking Division
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Income growth from lending to stable sectors, trade and transactional
Cost increase reflecting expansion in relationship team
More vigilant measures in asset quality via enhancement to credit risk management
Business Banking’s Aspirations :
Develop a well divesified, profitable and sustainable client base and grow deposit and cash management, quality loans, international trade finance via leveraging ANZ connectivity, non-interest incomes and “Share of wallet”
Strategic priorities :
Overall 3C approach : Conserve, Control, Compete
Conserve – Deepen relationship with existing clients
Control – Monitor closely customers’ conduct of accounts and contain NPL’s through early warning detection and analytical tools
Compete – Target customers with good track record, feasible business plans and operating in chosen sectors, to grow Business’ asset base
Achieving profit growth post financial consolidation
PATPBPIncome Expenses
Composition to Group9.2% 5.9% 11.6% 11.9%
RM'mil FY09 FY10
Income 313.4 329.6 +5.2%
Expenses 85.7 88.2 +2.9%
PBP 227.7 241.3 +6.0%
Provisions 78.6 75.9 -3.4%
PBT 149.2 165.4 +10.9%
PAT 111.9 124.0 +10.8%
Gross Loans / Financing 9,983.1 11,854.1 +18.7%
Net Loans / Financing 9,773.4 11,634.6 +19.0%
Gross NPL / NPF 106.9 77.6 -27.4%
Net NPL / NPF 49.0 38.9 -20.6%
Customer Deposits 1,942.6 3,598.3 +85.2%
Low Cost Deposits 896.7 1,479.8 +65.0%
ROA 1.25% 1.16% -0.09%
CTI 27.3% 26.8% -0.6%
Loan Loss Coverage 196.3% 283.0% +86.7%
FY10 vs FY09
Ratio : 0.65%
G
Ratio : 0.33%
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 33
Corporate & Institutional Banking Division
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Diversified loans portfolio provided good support for income growth
Higher general provisions from larger loans base
Corporate & Institutional Banking’s Aspirations:
Provide innovative and quality solutions (including syndication and cross-selling) both domestic and cross-border via ANZ, targeting high-impact and high-value clients, MNCs and GLCs
Strategic priorities :
Corporate & Institutional :
Top 3 comprehensive bank
Significant player in untapped financial institutions group sector in Malaysia
International : Top 7 broker for Singapore, top 10 broker for
Jakarta markets Top 5 bank in Labuan offshore market Leader in asset management in Brunei
Assets business : Top 3 private PE managers in Malaysia Top 2 / 3 position in REITs AUM ranking Top 4 trustee provider in Malaysia
Note : 1 Singapore Stock Exchange2 Jakarta Stock Exchange3 AmFraser International Pte Ltd4 PT AmCapital Indonesia
* Services include : large corporate lending, large corporate deposits, financial institution group, offshore banking, international business, private equity, REITs and loan syndication
Accelerate growth, underpinned by higher CASA, non-interest income and regional presence
PATPBPExpensesIncome
Composition to Group7.5% 5.8% 8.7% 10.0%
RM'mil FY09 FY10
Income 185.8 267.9 +44.2%
Expenses 76.6 87.8 +14.6%
PBP 109.2 180.1 +64.9%
Provisions 2.7 47.5 +>100%
PBT 106.4 132.6 +24.6%
PAT 85.4 104.1 +21.9%
CTI 41.2% 32.8% -8.5%
Net Loans / Financing 4,957.3 8,971.5 +81.0%
Assets Management 980.0 1,008.0 +2.9%
Ave Volume / Contract Traded (RM'mil/month)
S'pore SE 130,973.3 159,633.5 +21.9%
Jakarta SE 49,428.7 63,235.2 +27.9%
AmFIPL 984.3 1,945.5 +97.7%
PTAMCI 463.6 542.5 +17.0%
Market Share as at:
AmFIPL 0.8% 1.2% +0.3%
PTAMCI 0.9% 0.9% +0.0%
FY10 vs
FY09
G
G
G
G
G
1
2
3
4
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 34
Investment Banking Division
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Improvement in performance from pick-ups in capital market and stock market
Continue to strengthen business relationships and core expertise
Investment Banking’s Aspirations :
Develop complete, end-to-end, comprehensive solutions and lead in capital markets, funds management, and stock broking underpinned by strong domestic and overseas distribution capability via ANZ
Strategic priorities :
Build sustainable income base with efficiency management
Maintain market leadership positioning: top 3 in chosen businesses
Develop new products and innovative solutions
Grow regional businesses and cross-border deals
Enhance infrastructure and systems, expand distribution channels, and improve operational efficiency (front to back-end)
Note :1 Including AmInvestment Management, AmInvestment Services, private banking & AmARA
Reposition as consistent top 3 player whilst delivering sustainable profit growth with lower volatility
PATPBPExpensesIncome
Composition to Group8.6% 11.0% 6.8% 9.7%
RM'mil FY09 FY10
Income 201.2 306.4 +52.3%
Expenses 145.6 164.7 +13.1%
PBP 55.6 141.8 +155.0%
Provisions (0.4) 6.2 +>100%
PBT 56.0 135.5 +142.0%
PAT 41.6 100.8 +142.3%
CTI 72.4% 53.7% -18.7%
Assets Management 19,031.4 23,612.9 +24.1%
Ave Volume / Contract Traded (RM'mil/month)
Bursa M'sia 41,368.7 56,657.4 +37.0%
Future KL index 441.7 324.7 -26.6%
IB Broking 3,356.2 4,313.2 +28.5%
AmFuture 75.0 63.1 -15.9%
Market Share as at:
IB Broking 8.1% 7.6% -0.5%
AmFuture 16.1% 19.7% +3.5%
FY10 vs FY09
G
G
G
G
1
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 35
Net Income PAT
Life Assurance
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Higher income from larger fund assets, attributed to enhanced agency network and focus on product bundling and cross selling
Life Assurance’s Aspirations :
Deliver premium product & customer propositions to target segments, streamline process to improve efficiencies and leverage Friends Provident
Strategic priorities :
Growth in top line and bottom line, driven by premium and revenue growth
Cost efficiency to ensure expenses grow at a rate less than premium growth
Increase product / service range offered, leveraging on Friends’ Provident’s expertise
Product re-pricing for compliance, competitiveness and profitability
Becoming a top 5 life assurance company
Composition to Group1.9% 3.1%
* Life assurance shareholder’s fund accounts
RM'mil FY09 FY10
Net Income 19.2 39.3 +>100.0%
PAT 7.1 32.1 +>100.0%
Life Assurance
fund assets 2,034.8 2,379.9 +17.0%
FY10 vs FY09
GG
G
G
G
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 36
General Insurance
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Higher income from larger gross written premium, attributed to enhanced up- and cross-selling, and established distribution network
General Insurance’s Aspirations :
Deliver competitive customer propositions via becoming a scale specialist in motor and niche specialist in commercial and non-motor personal lines, and leverage IAG
Strategic priorities :
Be a scale specialist in motor insurance through acquisition, improved penetration and renewal retention to take scale position
Deliver superior shareholder return
Lead in chosen niche commercial segments by targeting specific industries with specialist products and innovative distribution channels
Grow gross written premium and net profit after tax
Be a leader in non-motor personal lines by leveraging motor scale and customer base and optimising the AmBank Group network
Create stability, longevity and sustainability of performance, people and business systems
Becoming a well-diversified and profitable top 3 general insurance provider
PATPBPExpensesIncome
Composition to Group3.8% 5.2% 2.8% 4.7%
RM'mil FY09 FY10
Income 125.2 136.7 +9.2%
Expenses 71.2 78.2 +9.8%
PBP 54.1 58.5 +8.1%
Provisions (0.4) 1.0 +>100%
PBT 54.4 57.4 +5.5%
PAT 38.0 48.6 +27.9%
CTI 56.9% 57.2% +0.3%
General Insurance
fund assets901.8 1,018.6 +13.0%
General business
claim69.6% 72.6% +3.0%
FY10 vs FY09
GG
G
G
G
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 37
Expenses
Group Operating Segments
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Higher income from :
Markets and Treasury(improved trading conditions)
Loan Rehab units (recovery rate as scheduled)
Shareholders fund, Corporate & Shared Services (consolidation adjustments)
Markets and Treasury’s Aspirations :
Provide substantive, integrated and client-led business underpinned by a full suite of FX, Rates, Commodities and FI offerings, with ANZ collaborations
Strategic priorities :
Strong top line and profit growth in FX, interest rate derivatives and commodities
Enhance market penetration via effective customer segmentation and leveraging on ANZ to enhance product offerings
Deliver more consistent profits in fixed income via hedging of sticky portfolio, size growth and quality enhancement of liquid AFS, and execution of IRS hedges
Enhance new products and business offerings including tailored business facility, enhanced selection of currency pairs and distributed FX platform
PATPBPIncome
Composition to Group15.2% 22.7% 9.7% -4.4%
Markets & Treasury : Achieving top 3 rank in customer penetration, sales and profitability by 2013, with lower volatility
RM'mil FY09 FY10
Income 327.9 542.5 +65.4%
Expenses 235.1 340.7 +44.9%
PBP 92.8 201.8 +117.5%
Provisions 98.3 260.7 +165.2%
PBT (5.5) (58.9) -970.9%
PAT (34.2) (46.0) -34.5%
PATMI (51.6) (80.0) -55.0%
Total Group:
Securities HFT 1,400.0 1,713.4 +22.4%
Securities AFS 6,626.1 9,093.9 +37.2%
Securities HTM 780.2 562.7 -27.9%
FY10 vs FY09
GG
G
G
G
G
G
GGG
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 38
RM'mil FY09 FY10
Income 562.2 685.0 +21.9%
Expenses 218.5 259.3 +18.6%
PBP 343.7 425.7 +23.9%
Allowances 130.3 69.2 -46.9%
PBT 213.3 356.6 +67.2%
PAT 156.7 261.3 +66.8%
Net Financing 9,810.5 11,758.7 +19.9%
Gross NPF 239.6 182.2 -24.0%
Net NPF 140.6 117.4 -16.5%
Customer Deposits 10,155.1 13,398.0 +31.9%
Low Cost Deposits 1,591.8 2,065.2 +29.7%
ROA 1.75% 2.42% +0.67%
CTI 38.9% 37.8% -1.0%
Financing Loss Coverage 110.8% 137.0% +26.1%
FY10 vs FY09
G
Islamic Banking
FY09 results
Favourable growth in FY10
Unfavourable growth in FY10
Results improvement attributed to business expansion in line with Islamic banking growth in Malaysia
Underlying branding position remains strong and expected to provide growth support
Islamic Banking’s Aspirations :
To become Islamic bank of choice and ensure high degree of value for customers, employees and stakeholders
Strategic priorities :
Grow retail financing products via development of more program lending, globally accepted new products, variations to existing products to suit customers’ needs and equity based financing
Grow business banking and corporate & institutional banking products so as to increase the contribution of Islamic business to total merged bank
Strengthen Islamic’s treasury and international currency business
Develop Islamic fee-based products
* Results incorporated under respective business divisions
Increase contribution to overall merged bank portfolio
PATPBPExpensesIncome
Composition to Group19.2% 17.3% 20.5% 25.1%
Ratio : 1.48%
Ratio : 0.96%
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 39
Contents
• Key Messages• Financial Fundamentals• What is Ahead• Summary
• Retail Banking• Business Banking• Investment Banking • Corporate & Institutional Banking• Life Assurance• General Insurance• Operating Segments• Islamic Banking
• Economic Outlook• Competitive Positioning• BASEL III Discussions
1. Executive Summary
2. Financials Update
3. Business Strategy
4. Business Segment Performance
5. Competitive Positioning
• FY2010 Group Performance
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 40
0.00
2.00
4.00
6.00
8.00
2008 2009 2010F 2011E 2012E
%
OPR, BLR OPR (%) BLR (%)
1.0
2.0
3.0
2008 2009 2010F 2011E 2012E
%
Deposit Rates Retail Deposit Rate (%)
Corporate Deposit Rate (%)
Faster than expected Malaysian economic recovery
• Business activities picking up indicated by IPI growth, driven by
manufacturing growth (6.8% yoy)
electricity growth (11.4% yoy)
• Unemployment rate decrease & government spending to moderate
• OPR rose by 25 bps in March 2010 and expected to further increase by 50 bps this year
Banking sector growth supported by strong capitalisation
• Loans expected to grow over 10% yoy
driven by consumer credit – HP & mortgage
commercial credit growth expected to improve
• Deposits grew 7.4% yoy in Feb 2010
• Strong RWCR & CCR, 15.1% & 13.5% (Feb 2010)
Key statistics 2009 2010
CPI (2005=100) 0.6% 2.0 – 2.5%
Unemployment
(% of labour force)3.7% 3.6 %
Fiscal deficit to GDP 7% 5.6%
Note :1 external reports (as at 12 May 2010)
Malaysia, a fast rebounding emerging economy with strong banking sector fundamentals
-3.0
0.0
3.0
6.0
9.0
12.0
2005 2006 2007 2008 2009 2010F 2011E 2012E
% YoY
Real GDP : ConsumptionPrivate Consumption (%YoY)
Government Consumption (%YoY)
Real GDP (% YoY)
1 2010 GDP : +5% to 6%
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 41
4.8%
1.8%
3.3%
1.8%
5.3%
1.4%
3.2%
2.2%
Thailand
Singapore
Indonesia
Malaysia
Non-Performing Loan Ratio
New Economic Model : 31 March 2010
High Income
Targets US$15,000 – 20,000 per capita by 2020
Enables all communities to fully benefit from the
wealth of the country
RakyatQuality of Life
New Economic Model : Goals Strategic Reform Initiatives (SRIs)
Meets present needs without compromising
future generations
Sustainability
Developing a quality workforce and reducing dependency on foreign labour
1
5
6
8
2
Inclusiveness
Creating a competitive domestic economy
Strengthening the public sector
Transparent and market-friendly affirmative action
Building the knowledge base and infrastructure
Enhancing the sources of growth
Ensuring sustainability of growth
Re-energising the private sector
3
4
7
86.6%
109.2%
25.8%
116.2%
83.6%
102.2%
26.5%
98.4%
Thailand
Singapore
Indonesia
Malaysia
Loans to GDP
-2.3%
-2.0%
4.6%
-1.7%
2.5%
1.3%
6.1%
4.6%
Thailand
Singapore
Indonesia
Malaysia
GDP Growth
2008 2009Note :1 sources – Bloomberg, respective central banks’ website, in-house research2 GDP based on 2000p except for Thailand based on 1988p
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 42
Strategic partnership with global partner, ANZ
Competitive positioning : continues to strengthen
Sound size and market position in key business
segments
1
2
3
4
5
6
Well diversified universal bank & # 4 largest banking group (market capitalization) # 4 in retail bank, # 5 in business and corporate & institutional banking lending Top 2 investment bank , #5 in Islamic banking, #6 in general, #7 in life assurance
Strong customer-focused financial institution, lead in customer satisfaction
Focus on Segmentation & positioning strategies and differentiating ourselves through product & service
Large retail and corporate client base provides high cross-selling potential
Award-winning products and services
Improving “Top of Mind” brand recall
Expanding distribution footprint (branch network – 189, #3 largest ATM network (736), 355 ATMs @ 7/11 and 134 EBC’s)
eChannels : internet banking, mobile banking and 24 hours call centre
Pioneer in weekend banking concept
~8,000 sales agents, direct sales teams, marketing & personal bankers, financial services and insurance agents
Strategic partnership with ANZ (since May 07), 1 of 11 AA rated global banks Leveraging ANZ : strengthen strategy formulation, financial management, risk management, distribution
channel management, deposits strategy and product development
Strong key shareholders with common aspirations
AIGB privatisation & internal business restructuring completed
Insurance business partnership (2009)
Improvement in stock valuation &upgrades in credit ratings
Experienced management team with key ANZ appointments
Industry experts with international and domestic best practices
Performance based culture for all levels
Strengtheningcompetitive positioning
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 43
Strategic focus : Maintain viable growth and rebalancing focus
De-riskD
iffe
ren
tiat
ed
Gro
wth
Low
Mo
der
ate
Hig
hDe-risk + DiversifyDiversify
Conventional + Islamic
1
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 44
Competitive positioning :Sound size and market position in key business segments
#2 auto financier : 20.5% market share; Best Auto Financier Award in 2007
# 6 (incl. foreign banks) in housing loans (5.5%)
# 7 (incl. foreign banks) in credit cards (6.5%)
# 3 in personal financing (5.4%)
>1.4 products per customer
# 5 in no. of branches &
# 3 in no. of ATM’s
Pioneer in weekend and extended banking hours
Leverage on nationwide network : 4 regional business centres & 12 commercial centres; and strong relationship managers force
Leader in cash management (full suite) and SME financing
Expanding trade and remittance leveraging on ANZ’s regional network
# 3 in motor insurance premiums (8.5%) and # 6 in general insurance premiums (5.2%)
# 7 in life assurance premiums (5.6%)
Leverage IAG’s market and operational leadership in general insurance
New strategic partner, Friends Provident, in life assurance
Investment Banking
Retail Banking Business Banking Assurance
► Awards : Best Bond, Best Bond Group, Best Portfolio Manager, Best Deal, Best League Manager
► Ranked Top 3 in : Malaysian Ringgit
Bond league Participating
organisations’ Bursa trading summary
Islamic Banking
Full range of banking products and services according to Syariah principles
Latest venture : set-up of Islamic funds management division
# 2 in Islamic credit cards
Diversify Islamic banking business in Brunei
Reposition as consistent top 3, premier
investment banking group
Profit growth post financial consolidation
Profitable growth, with top-class customer service
& innovative products
Becoming top 3 general insurer & top
5 life insurer
To become Islamic bank of choice
# 2# 4 # 5 # 6 # 7 # 5[General] [Life]
Corporate & Institutional
Banking
► Build niche in corporate lending, focusing on GLC’s and MNC’s
► Cross-sell commercial banking products
► International businesses : Singapore, Indonesia & Brunei
► Diversify businesses in REITs and private equity
Accelerate growth & innovation to deliver
value enhancing propositions
# 5
1
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 45
Competitive positioning :Momentum in non interest income & low-cost deposits
Enlarge nationwide branch network
Larger ATM base
ATM placement at 7-Eleven
Build main-bank relationships
Anchor products :
Product bundling 3A approach : activation,
acquisition, anti-attrition
Deposits as “profit centre”
Higher KPI’s for Retail, Business, CIB & Islamic Banking
Customer segmentation
Performance-linked
Footprints expansion
Service & convenience proposition
Higher targets for branch teams Manage deposits as “profit”
product under new FTP mechanism
Increase cross-selling
Leverage trade programs, cash management & auto payroll
Family First : full suite financial planning
AmStarExtreme : competitive rates and fees, ease of transactions
Wealth management Islamic fee-based products Increase focus on banacassurance &
international trade Fx and derivatives : Expand offerings, new
solutions & extend distribution platform
New products / businesses :
Core recurring income base:
Investment Banking : End-to-end solutions, multi-asset class, front-to-back trading platform & baseline staple products
Markets : consistent fixed income profits, execute hedges, grow size for liquid, quality securities & reduce VaR
Regional business: Singapore & Jakarta broking business, Labuan offshore & Brunei asset management
Assurance : Higher gross written premiums, MAA acquisition synergies
Asset business
Contribution increase :
Increase customer penetration from current levels (high KPI focus)
Increase share of wallet (of customers), account planning approach
Increase utilisation of Group channels
Cross – selling :
Growing Non Interest Income CASA growth strategy
1
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 46
Peer group comparison 1
31.3
23.5
18.7 16.5
13.4 14.4
37.9
26.7 22.9 22.7
16.7 15.9
21.1% 13.6% 22.8% 38.2% 24.6% 10.4%
Maybank Islamic Berhad
Bank Islam Malaysia Bhd
CIMB Islamic Bank
Public Islamic Bank
AmIslamic Bank Berhad
Bank Muamalat
Dec08 Dec 09 Growth
69.8
48.5 50.2
39.8
25.7 23.4
79.2
58.654.7
41.6
28.624.1
13.5% 20.7% 8.9% 4.3% 11.1% 3.0%
PBB CIMB MBB AMMB RHBC HLFG
Dec 08 Dec 09 Growth
182.6
117.4 118.4
60.6 56.0
35.2
195.1
142.2 135.3
66.9 63.9
36.1
6.9% 21.2% 14.3% 10.4% 14.1% 2.7%
MBB CIMB PBB RHBC AMMB HLFG
Dec 08 Dec 09 Growth
301.7
206.7 196.2
104.5 86.5 85.6
330.8
240.4 217.1
115.0 94.9 88.1
9.7% 16.3% 10.7% 10.0% 9.7% 2.9%
MBB CIMB PBB RHBC AMMB HLFG
Dec 08 Dec 09 Growth
5th largest banking group in Malaysia by asset size
(RM'bil)Total Assets
5th largest by lending Growth comparable to system
(RM’bil)Loans & Advances
Retail Assets (RM'bil)
4th largest by retail assets
Islamic Banking Assets (RM'bil)
5th largest by Islamic banking assets
*
* Based on Sept 09
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 47
7th in life assurance
Peer group comparison 1
No.1 by transaction value Source :Lipper Hindsight, Malaysian Association of Asset Managers Bloomberg / Bursa Malaysia (transactions Jan – Mar 2010)
1,524
1,277
625 502
250
31.7% 26.6% 13.0% 10.4% 5.2%
AmInvestment Bank
CIMB Standard Chartered PLC
Maybank Investment Bank
HSBC
Malaysian Ringgit Bond League Amount Market ShareMalaysian Ringgit Bond (RM'mil)
23.3 22.0 20.9
16.3
6.5
35.6
22.421.9
19.8
6.4
52.6% 1.7% 5.1% 21.7%
Public Mutual Mayban / AMB CIMB-Principal AMMB AR JMF
Funds Under Management Dec 08 Dec 09
Growth
Funds under Management (RM‘bil)
-1.0%
4th largest FUM
17.2 15.7
13.5 12.1 11.9
9.5% 8.7% 7.5% 6.7% 6.6%
CIMB HwangDBS AmInvestment Bank
RHB Investment Bank
OSK Investment Bank
Trading Value Market ShareBrokerage Turnover (RM‘bil)
3rd by trading value
791
515
447 409
330
15.1% 9.8% 8.5% 7.8% 6.3%
Kurnia Allianz AmG Tokio Marine Pacific & Orient
Amount Market ShareMotor Insurance (RM’mil)
1,152
932
779 766 690
604
10.0% 8.1% 6.8% 6.6% 6.0% 5.2%
Allianz Kurnia MSIG Etiqa Tokio Marine
AmG
(RM'mil) Amount Market ShareGeneral Insurance
1,350
1,134
977
693
505 423
17.9% 15.1% 13.0% 9.2% 6.7% 5.6%
ING G E Life Prudential Mayban Life MAA AmLife
Amount Market Share
Life Assurance (RM'mil)
3rd in motor insurance 6th in general insuranceSource :
ISM Insurance Services Malaysia Bhd for Motor & General Insurance (Jan – Dec 2009 data)Life Insurance Association of Malaysia for Life Insurance (Jan – Dec 2009 data)
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 48
Competitive positioning :Recognised brand name / strong customer franchise
AmBank at top 4 TOM brand recall
Continuous improvement initiatives on brand awareness campaigns
Efforts will continue to strengthen brand positioning
Positively positioned against 2nd-tier competitors
Strengths : “extended banking hours”, “responsive”, “friendly bank”, “good quality products and services” & “value to long term relationship”
Ongoing efforts to improve performance matrixes
The AmBank Brand : Top-of-Mind Brand Awareness & Service Performance
2
Competitor ACompetitor B Competitor C
Bank A
(Bank A)
Bank B
(Bank B)
Bank C
(Bank C)
Bank D
(Bank D)
(Bank E)
Bank E
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 49
Reaping awards and accolades
10th CCAM Annual Contact Center Awards 2009 :
- Silver Award for Best Telemarketing Contact Center, Best Contact Center Manager, Best Contact Center Telemarketer, Best Contact Center Support Professional
- Bronze Award for Mystery shopper results
Association of Accredited Advertising Agents Malaysia (4As), The Edge Malaysia and Interbrand Awards 2009 :
- One of the Top 30 companies of “Malaysia’s most valuable brands” stature
Malaysian Takaful Association Awards 2009 :
- Best Bancatakaful Award
Top Corporate Performers Award 2009 held in conjunction with 4th edition Malaysian 1000 – Top Corporate Directory :
- Most prominent company award for effort in creating value for society and contribution to nation building
“Malaysian Independence Award 1957” in 2009 :
- Industry Excellence Awards (Financial Services Category)
Euromoney Private Banking Survey, 2010 : Best Local Private Bank in Malaysia
The Edge-Lipper Malaysia Fund Awards 2010 :
- Best Bond Group
- AmDynamic Bond (Best Bond MYR Fund – 3 years)
- AmDynamic Bond (Best Bond MYR Fund – 5 years)
Third Alpha South East Asia’s Annual deal and solution awards 2009 :⁻ Most Innovative Deal of the Year in South East Asia - 1Malaysia Development Berhad’s RM5.0bil Islamic MTN issue⁻ Best Islamic Financing deal for the Year in South East Asia – Penerbangan Malaysia Berhad’s RM2.2bil Islamic MTN issue
IFR Asia Awards 2009 :⁻ Malaysia Capital Markets Deal Award – Maxis Berhad RM11.2bil IPO
2009
Asset Triple A Awards 2009 :⁻ Best Domestic Bond House in Malaysia⁻ Best Deal in Malaysia – 1Malaysia Development Berhad RM5bil Islamic MTN programme
2
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 50
Major investment banking deals clinched 2
1Malaysia Development
Berhad
Islamic Medium Term Notes
Programme of up to RM5.0
Billion
May 2009
Principal Adviser, Lead Arranger
and Lead Manager
RM10.0 Billion Islamic Medium Term
Notes pursuant to a Ringgit
Issuance Programme and a Multi-
Currency Issuance Programme
April 2009
Joint Principal Adviser and
Joint Lead Arranger
Danga Capital Berhad
Cagamas MBS Berhad
Listing of RM4.0 Billion Sukuk
and RM6.0 Billion Conventional
Bonds on Bursa Malaysia on an
Exempt Regime basis
August 2009
Principal Adviser
Perbadanan Tabung Pendidikan
Tinggi Nasional
RM1,500 Million
Syndicated Term Loan under
the Islamic principle
November 2009
Mandated Lead Arranger
Cagamas Berhad
RM2,070.0 Million
Conventional and Islamic
Medium Term Notes Issuance
March 2009
Joint Lead Manager and
Joint Bookrunner
Mulpha SPV Limited
USD200 Million Medium Term
Note Programme
December 2009
Joint Lead Arranger
RM1,450.0 Million
Syndicated Term Loan
July 2009
Mandated Lead Arranger
Sarawak Energy Berhad
Putrajaya Holdings Sdn Bhd
Sukuk Musyarakah Medium Term
Notes Programme of up to
RM1,500.0 Million
April 2009
Joint Principal Adviser, Joint Lead
Arranger and Joint Lead Manager
PDS Deals
Loan Syndication Deals
IOI Corporation Berhad
Rights Issue RM1,220,166,471November 2009
Adviser
Dijaya Corporation Berhad
Rights Issue RM194,719,187November 2009
Adviser
KencanaPetroleum
Berhad
Rights Issue RM18,245,910January 2010
Adviser
HLG Capital Berhad
Rights IssueRM123,448,334September 2009
Adviser
Rights Issue
Multi Sports Holdings LtdMarket
Capitalisation:RM306,000,000
Adviser, Sole Underwriter and Sole
Placement Agent
XiDeLang Holdings Ltd
Market Capitalisation:
RM232,000,000Adviser, Co-Underwriter and Co-Placement Agent
Maxis Berhad
Market Capitalisation:
RM39,000,000,000Joint Managing
Underwriter
TA Global Holdings Ltd
Market Capitalisation:
RM2,407,681,816Adviser
IPO
IOI Corporation Berhad
RM534 million
Conditional Voluntary Take-Over Offer On IOI
Properties Berhad31 March 2009
Delegateam Sdn BhdRM1.65 billion
Voluntary Take-Over Offer on Sarawak Energy Berhad
November 2009
IJM Corporation Berhad
RM1.32 billionProposed Disposals,
Proposed Dividend In-Specie & Proposed Capital
RepaymentRM23.4 million
Proposed Offer To Eligible Employees
27 May 2009
Ranhill Berhad
Above RM1 billion
Proposed disposal of all its water assets and
corresponding liabilities1 September 2009
M & A
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 51
Competitive positioning :Wide market reach and multiple distribution channels
Branch Banking
E- Channels & Contact
Centre (incl. Internet &
Mobile Banking)
Wealth Mgmt
ASPIRATIONS Increased customer satisfaction via integrated & seamless channels model Expand branch network and SSM footprint Further build and improve sales & service capabilities
Business Units Key Strategic Initiatives
Deposit & Customer Solutions
Number of ATMs
2,8312,052
771 684 473 319 241 174 145
MaybankCIMB AmBank RHB PBB HLB EON Alliance Affin
Number of Branches
Source : Company websites of peer banks / MEPS informationNote : Peer groups as at 31 March 2010; AmBank as at latest practicable date
#5
#3
Total no
ATM’s at 7 Eleven 363
Electronic Banking Centers (EBC) 136
FUM no. of accounts 50 K
Assurance offices 74
AmInvestment offices 15
Life assurance policy holders ~402 K
General insurance policies in force ~1,196 K
3
364 323248 234 189 186 139 89 86
MaybankCIMB Public RHB AmBank HLB EON Alliance Affin Has 189 branches nationwide, pending 2 branches to be opened in UIA and Seri Hartamas
10 new branches to be opened (200+ by early 2011)
Reaching out to our customers by expanding our self service machine (SSM) network at branches, shopping centers and 7-Eleven stores
Drive profitability by expanding revenue streams through additional services like
Interbank Loan & Bill Payment and a full suite of Prepaid Top Up services
Maximizing our outbound sales productivity through our Award Winning Contact Centre
Enhance customer experience via innovative mobile and internet banking services
Increase deposits by being the main bank for our customers’ transactional and savings needs by; (1) increasing deposits promotions and branch marketing events and activities (2) focusing on payroll customers acquisition (3) excelling in
service delivery Enhancing the products suite and services to be
more convenient, simple and friendly to the customers
Establishing new line of business i.e. Priority Banking to cater to Affluent segment
Increase cross selling via AmUtopia system Multi campaign/product launches to cater to
different customer segment. WM system – endorsed by Board. Finalizing
contract with vendor. Group Wealth Steering Committee to be set-up.
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 52
Competitive positioning :Strategic partnership with global partner, ANZ
+ ANZ is the only
Australian bank to have been in the Asian region of over 40 years
Strategic banking partnerships and presence across 14 countries
In August 2009, ANZ acquired selected RBS businesses in Asia for US$550 million, thus reinforcing its strategic intent of a super regional objective
ANZ is committed to AmBank Group’s long-term success and aspirations
Malaysia
Director
Dr. Robert John EdgarBoard
Director
Alex Thursby
Senior
Management
Deputy Group MD & Group CFO
Ashok Ramamurthy
Chief Risk Officer
Andrew Kerr
Head of Retail Distrib & Deposits
Brad GravellManagement
Head of FX & Derivatives
Steve Kelly
Credit Risk / Portfolio Management
Glenn Saunders
Head of Market Risk
Jonathan Manifold
Head of Systems Accounting
Ignatius Lim
Chief Operating Officer
Ross Neil Foden
Director
Mark Whelan
Head of Sales, FX & Derivatives
Peter Trumper
ANZ has provided key resources and support
4
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 53
Leveraging on ANZ
Business growth
Risk / governance
Structural transformation
Improve mortgage and credit cards business models for receivables growth and operational enhancements
Progressively grow new business in FX, derivatives and commodities : Seconded ANZ staff and recruit new staff Complete end-to-end business platform & core integrated business streams Sales, trading, IT, risk, product development and process skills
Developing integrated wealth management business Leverage ANZ connectivity to : access migrant population business grow international trade financing & increase cross border deals / transactions develop regional structuring / advisory capabilities & expand offshore fund management / broking
services. Export niche AmBank products to ANZ’s regional offices
Reorganised finance structure focusing on specialisation and business partnering
Refined trading strategies by proactively trading and realigning VaR
Implemented second and third generation scorecards
Implementing new FTP mechanism wef 1 April 2010
Rolling out probability-of-default, loss-given-default, earnings-at-default models
Rolled out new branch distribution model based on profitability & new staff incentives
Deposits as distinct business segment
Strategic repositioning of auto financing for profitable growth via improvements to customer segmentation & pricing for risk
Restructured distribution function for greater fee income generating avenues, managed as profit centres
AMMB Holdings Berhad
4
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 54
Competitive positioning :Experienced management team
• Majority of the senior management have more than 20 years of experience in the banking industry
• AmBank Group : ~10,000 employees
• Key emphasis on human resource and capital development recognisingstaff value towards growth targets
5
Name Designation Profile
Cheah Tek Kuang Group Managing DirectorJoined the Group in 1978 with over 30 years of experience and has held various senior positions in AmBank Group
Ashok RamamurthyDeputy Group Managing Director & Group Chief Financial Officer
Joined the Group in 2007 and has over 20 years of experience, most of which has been with ANZ across multiple geographies including Australia, New Zealand and India
Datuk Mohamed Azmi Mahmood
Managing Director, Retail BankingJoined the Group in 1981 and has almost 30 years of experience in the banking industry
Dato’ James Lim Cheng Poh
Managing Director, Business BankingJoined the Group in 2004 with almost 30 years of experience in the banking industry, most of which has been with Hong Leong Group
Kok Tuck Cheong Managing Director, Investment BankingJoined the Group in 1981 , with close to 30 years’ experience encompassing treasury, corporate finance, investment banking and funds management
Pushpa Rajadurai Managing Director, Corporate & Institutional Banking
Joined the Group in 1989 and has over 25 years of experience in the investment banking and financial consultancy field
Ng Lian Lu Chief Executive Officer, AmLife InsuranceAppointed as CEO of AmAssurance in 2002 (prior to the segregation into AmLife and AmG), with over 25 years experience in the insurance industry
Datuk Mahdi bin Morad Chief Executive Officer, AmIslamic BankJoined the Group in 1989 and was appointed CEO of AmIslamic in September 2009; prior experience in finance company and Malaysian conglomerate
Teng Chean Choy Managing Director, Treasury & MarketsJoined the Group in 1995; over 20 years experience in treasury, having held management positions in Malaysian financial institutions
Andrew Strain Kerr Chief Risk OfficerJoined the Group in 2007 and with almost 30 years of banking experience with major financial institutions which include Bank of America and ANZ
Ross Neil Foden Chief Operations OfficerJoined the Group in 2009 with over 30 years of experience in operations. Prior to that, he was the General Manager for Operations and Transformation for ANZ Asia Pacific
Duncan Victor Brain Chief Executive Officer, AmG InsuranceJoined the Group on 8 March 2010; over 20 years experience in general insurance across Asia, Australia and New Zealand. Previously Head of South East Asia for Insurance Australia Group
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 55
Shareholding structure
Ranked No. 18 (Malaysia – market capitalisation) & 183 (global – 1,000 banks by market capitalisation) :
with market capitalization of RM15.16 billion on Bursa SahamMalaysia (1)
and market capitalization of US$4.63 billion on Bloomberg (2)
AHB in progress of due diligence to acquire :
general insurance business of a local insurance company
As at 31 March 2010
Foreign shareholding excluding ANZ :
100% 70%*100%
100%
AmInvestmentGroup Berhad
16.7% 13.4% 46.1%
Employees Provident Fund Board
AMMB Holdings Bhd
Amcorp Group Bhd
Public
AmBank (M) Berhad
AmIslamicBank Bhd
^ Insurance Australia Group Ltd –49%
ANZ Funds Pty Ltd #
23.8%
Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10
36.95% 37.15% 34.39% 30.08% 28.38% 29.58% 28.53% 29.58% 27.06%
AMFB Holdings Bhd
100%
51%^
AMAB Holdings Sdn Bhd
100%
AmG Insurance Berhad
AmLife Insurance Berhad
* Friends Provident Fund PLC –30%
Source :1 StarBiz (Top 100 Companies by Market Capitalization as at 2 April 2010)2 Bloomberg (Global 1,000 banks by Market Capitalization as at 5 May 2010)
# ANZ Funds Pty Ltd : a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (“ANZ”)
6
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 56
Stats
Median
Average
Range
6.15 6.15 6.13 6.10 6.10 6.10 6.00 6.00 5.90 5.80 5.70 5.70 5.60 5.55 5.50 5.40 5.35 5.26 5.25 5.24
5.10 4.90 4.80 4.78
4.20
AMMB HOLDINGS BERHAD Average TP : RM 5.55Buy : 22 (88%) Hold : 1 (4%) Sell : 2 (8%)
9Fe
b 10
1 M
ac10
1 A
pr 1
0
8 A
pr10
9Fe
b 1
0
9 Fe
b 1
0
4 M
ac 1
0
9 A
pr 1
0
9 Fe
b10
9Fe
b 10
6A
pr 1
0
4 M
ac 1
0
8 Fe
b 1
0
4 M
ac10
P/ EPS =13.93 P/BV = 1.57
8 Fe
b 10
16 M
ac 1
0
8 A
pr 1
0
8 Fe
b 10
17 M
ac 1
0
9Fe
b 10
5M
ac 1
0
9 Fe
b 10
5 M
ac 1
0
Market Price: RM 4.96 0.20%
2 A
pr 1
0
1 A
pr 1
0
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10
Date
MBB PBB CIMB RHBC AMMB HLFG KLCI Index
Banking sector share price movement /Target price and recommendations
Target Price and Recommendations
p/q index change at close of 31 Mar 10 vs 18 May 07
(strategic partnership with ANZ)
AMMB p + 27.7% (RM5.00)
HLFG p + 24.3% (RM8.45)
PBB p + 22.7% (RM11.64)
RHBC p + 19.5% (RM5.64)
CIMB p + 18.2% (RM14.06)
KLCI Index q – 2.7% (1,320.57)
MBB q – 16.8% (RM7.47)
RM’mil FY2010
Share Capital 3,014.2
Reserves 6,829.8
Shareholders’ Equity 9,844.0
Less: Intangible Assets (1,825.5)
NTA 8,018.5
NTA Per Ordinary Share (RM) 2.66
Net Asset Per Ordinary Share (RM)
3.27
Market Price (RM) 5.00
Price to Book [NTA / Net Asset]
1.88 / 1.53
EPS (sen) – basic, annualised 34.71
Dividend (gross sen / share) 10.5
31 March 1018 May 07
Source : Bloomberg
(strategic partnership with ANZ)
Banking Sector Share Price Movement
6
Index change market price close of 16 Apr 10 vs. 9 Apr 10 Buy/Outperform/Overweight/AddP/EPS : EPS annualized Apr-Dec 09 P/BV : BV as at 31 Dec 09
Sell/Underperform/Fully valued/Reduce/Underweight
Hold / NeutralAs at 16 April 2010
Index Movement
(May 07 = 100)
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 57
0
2
4
6
8
2007 2008 2009 2010
A1
AA3
AA2
A2
AA3/P1/Stable
AA3/P1/Stable
AA3/P1/Stable
AA3/P1/Stable
0
2
4
6
8
2007 2008 2009 2010
BBB-
BBB
BBB+
BB+
BB+/B/Stable
BBB-/F3/Stable
BBB/F3/Stable
BB+/B/Positive
0
2
4
6
8
2007 2008 2009 2010
BBB
BBB+
BB+
BBB-BB+/B/Stable
BBB-/A-3/Positive
BB+/B/Stable
BBB-/A-3/Positive
0
2
4
6
8
2007 2008 2009 2010
AA-
AA
AA+
A+
AA-/MARC-1/Stable
AA-/MARC-1/Stable
AA-/MARC-1/Stable
AA-/MARC-1/Positive
0
2
4
6
8
2007 2008 2009 2010
A1
AA3
AA2
A2
A2/P1/Stable
A1/P1/Stable
AA3/P1/Stable
0
2
4
6
8
2007 2008 2009 2010
BBB-
BBB
BBB+
BB+
BBB-/F3/Stable
BBB-/F3/Positive
BBB-/F3/Stable
BBB/F3/Stable
0
2
4
6
8
2007 2008 2009 2010
BBB-
BBB
BBB+
BB+
BBB-/A-3/Stable
BBB-/A-3/Stable
BBB-/A-3/Stable
BBB-/A-3/Positive
0
2
4
6
8
2007 2008 2009 2010
Baa2
Baa1
A3
Baa3
Baa2/P-3/D-Stable
Baa2/P-3/D-Stable
Baa2/P-3/D-Stable
Baa2/P-3/DStable
0
2
4
6
8
2007 2008 2009 2010
BBB-
BBB
BBB+
BB+
BBB-/A3/Stable
BBB-/A3/Stable
BBB-/A3/Positive
BBB-/A3/Positive
A1/P1/Stable
Ratings upgraded
AmBank (M) Berhad AmInvestment Bank Berhad
AmIslamic Bank Berhad
0
2
4
6
8
2007 2008 2009 2010
A1
AA3
AA2
A2
AA3/P1/Stable
AA3/P1/StableA1/P1/
StableA2/P1/Stable
RAM
Fitch
S&P
Moody’s
CapitalIntelligence
RAM
MARC
S&P
Fitch
RAM
#
# : Based on Dec 09
reflected system outlook
#
#
#
negative outlook issued in July 2009 but moved up to stable in December 2009
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 58
BIS / Basel III
Objectives of new BIS proposals
Key changes to definition of
capital
• Addressing failures that brought about the global financial crisis in 2007-2009
• Raising quality, consistency and transparency
• Strengthening risk coverage of capital framework
• Introduction of :
• leverage ratio as supplementary measure to Basel II
• measures to build up capital buffers in good times to cushion bad times
• global minimum liquidity standard for internationally active banks
• Improvement to quality and consistency of common equity element of tier 1
• Common equity to form greater proportion of tier 1
• Strengthen feature requirement for instruments in tier 1 outside common equity element
• One set of criteria for tier 2
• Tier 3 to be abolished
• Dividend restrictions where capital buffers are insufficient
• No major impact to AmInvestment Bank Berhad and AmIslamic Bank Berhad
• Assessment in progress to restructure AmBank (M) Berhad vis-à-vis the Group holding company
AmBank Group
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 59
Research Coverage
No Research House Analyst
1 Affin Investment Bank Tan Ei Leen
2 Alliance Research Sdn Bhd Soh Meng Hui
3 Bank of America – Merrill Lynch Research Kar Weng Loo / Melvyn Boey
4 BNP Paribas Securities (Singapore) Pte Ltd Ng Wee Siang
5 CIMB Investment Bank Berhad Winson Ng
6 Citi Investment Research Fiona Leong
7 CLSA Securities Malaysia Sdn Bhd Loong Chee Wei
8 Deutsche Bank Malaysia Andrew Hill
9 ECM Libra Investment Research Bernard Ching
10 HwangDBS Vickers Research Sdn Bhd Lim Sue Lin
11 Inter-Pacific Research Sdn Bhd Anthony Das
12 J.P. Morgan Chris Oh
13 KAF - Seagroatt & Campbell Securities Sdn Bhd Chehan Perera
14 Kenanga Investment Bank Berhad Chan Chee Kin
15 Kim Eng Research Sdn Bhd Yew Chee Yoon
16 Macquarie Capital Securities (Singapore) Pte Ltd Tay Chin Seng
17 Maybank Investment Bank Berhad Wong Chew Hann
18 MIDF Research Kelvin Ong
19 Nomura Malaysia Sdn Bhd Julian Chua
20 OSK Research Sdn Bhd Keith Wee
21 RHB Research Institute Sdn Bhd David Chong
22 Standard Chartered Bank Tan See Ping
23 TA Securities Holdings Berhad Wong Li Shia
24 UBS Securities Malaysia Sdn Bhd Khairul Rifaie
25 UOB Kay Hian Research Pte Ltd Vincent Khoo / Leow Huey Chuen
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010 60
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 SegmentsBusiness segments
• 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 proprietary and treasury trading, shareholder funds, loan rehabilitation and legacy busin esses, 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 “AHB” 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 r egard 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 pe rsons.
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
AMBANK GROUP – INVESTOR RELATIONS – PRESENTATION FY2010
The material in this presentation is general background information about AmBank Group’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors 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
Head, Group Investor Relations
Tel : +603 2036 1435 Fax : +603 2031 7384 e-mail : [email protected] or+6019 2093955 [email protected]