1 1 Your Bank. Malaysia‟s Bank. AmBank. H1FY2014 Results – Investors Presentation 14 November 2013 H1FY2014 Results – Investors Presentation Ashok Ramamurthy, Group Managing Director Your Bank. Malaysia‟s Bank. AmBank.
1 1Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
14 November 2013
H1FY2014 Results –Investors PresentationAshokRamamurthy, Group ManagingDirector
Your Bank. Malaysia‟s Bank. AmBank.
2 2Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
2. H1FY2014 GROUP FINANCIAL PERFORMANCE Page 10
3. OUTLOOK & STRATEGIC PRIORITIES Page 24
4. DIVISIONAL STRATEGY & PERFORMANCE Page 29
5. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 41
6. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 53
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
3 3Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Pre ANZ FY2007 – 10 FY2011 – 12 FY2013 H1FY2014
Scale & Presence
Reposition, BuildNew Growth Options
Improve ReturnsAggressively Invest, Optimise &
Leverage Connectivity
As Malaysia’s preferred diversified, internationally connected financial solutions group, we take pride in growing your future with us.
Record performances & increasing ROE
Consistent revenue growth
Improved balance sheet & funding mix
Increased dividend payout to 40%
Commenced pursuing niche acquisitions
3 Focus areas:
Strategic Business Transformation
High priority growth initiatives
Organisationand governance structures
6th consecutive year of record performance
Consistent growth & returns
Optimal diversification agenda
Clear strategic priorities
Acquisition synergies on track
Grow retail assets
Lead in investment banking business
Leverage fixed income trading
Stronger earnings, PATMI up 10.1%, ROE of 14.6%
Most key performance indicators within FY14 guidance
Integrations on track, delivering on synergies
Capital levels within Basel III targeted levels, propose interim dividend of 7.2 sen (24% payout)
Unveiled new brand chapter, new core banking going live in 3QFY14
Progressively delivering on FY14 -FY16 strategic agenda
H1FY2014 highlights
4 4Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Kurnia – vested on 1 March 2013, good progress made on staff benefits alignment and agent retention programme. Branch operations centralisation completed, rolling out dual branded branches. On track to complete integration by H1CY2014
MBF – vested on 1 July 2013. Focusing on internal reorganisation and tapping on merchant base for cross selling. On track to complete integration by H1CY2014
Pursuing “Save to Invest” programme to achieve cost synergies across the Group
Restructuring non-retail business divisions to Wholesale Banking to improve client centricity, efficiency and productivity
FX and Rates businesses have grown significantly, contributing over half of Markets PAT
Transaction Banking income has increased over 19.7%
Undertaking segmentation activities and developing strategies to grow Main Bank relationships as well as cross-sell in Retail Banking and Small Business
AmLife & AmFamily Takaful – seeking new strategic partner. Completed due diligence and phase two of bid process. Expected to finalise by end of CY2013
Financial Services Act (FSA) gazetted and effective from 1 July 2013 – Financial Holding Company (FHC) structure being progressed for full compliance with FSA and IFSA
MBF Cards restructuring completed 1 July 2013, allowing RM 250m capital repatriation to AMMB
Streamlining of subsidiaries and releasing of dormant capital of 12 entities to be completed by 31 March 2014
Commenced program to deliver on an Internal Rating Based (IRB) based approach to managing risk by FY2015, with capital benefits accruing after a 2-3 year period
Integrate acquisitions and deliver synergies
Simplify business model and streamline processes
Accelerate organic growth with focus on cross sell, flow business, small business, and emerging affluent customers
Build scale in specialist businesses with partners
Optimise capital and holding company structures
1
2
3
4
5
Progressively delivering on our strategic agenda
5 5Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
38.8% 40.2%43.3% 42.0%
39.9% 41.6%
47.9%44.0%
47.6%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 H1FY13 H1FY14
-283
669
8611,009
1,3431,484
1,619
823907
-5.8%
11.5% 11.7% 11.5%
13.6% 13.8% 13.9% 14.3% 14.6%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 H1FY13 H1FY14
PATMI (RM'mil)
ROE (%)
-0.17%
1.02% 1.04%1.13%
1.39% 1.39% 1.37%1.44% 1.49%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 H1FY13 H1FY14
CTI
-13.3
28.231.6
34.7
44.7
49.6
54.0
27.530.2
FY07 FY08 FY09 FY10 FY11 FY12 FY13 H1FY13 H1FY14
Stronger profit performance, CTI reflects investments for growth
CAGR FY07-13: 0.26%YoY growth: 0.05%
CAGR FY07-13: 12.9%YoY growth: 9.8% YoY change: 3.6%
ROECAGR FY07-13: 3.3%YoY growth: 0.3%
PATMICAGR FY07-13: 19.5%YoY growth: 10.1%
1. CAGR for PATMI & ROE based on FY2007 underlying profits of RM556.9 mil2. FY2013 has been restated to conform with current period‟s presentation
RM (sen) (%)
(%)
PATMI & ROE ROA
CTIEPS (basic)
6 6Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
9.4% 9.5%8.6% 8.4%9.7% 9.8% 9.8%
10.4%
11.1%
10.5%
11.2%12.5%14.0%
15.2% 15.3%14.0%
14.7% 14.8% 14.3%14.9%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 H1FY13 H1FY14
CET-1 Tier-1 RWCAR/Total Capital BASEL III
6.2%
3.7%
2.6%
3.81%3.33%
2.45%1.98%
2.21%1.95%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 H1FY13 H1FY14
50.354.4
57.9
64.8
71.175.7
82.680.2
83.6
FY07 FY08 FY09 FY10 FY11 FY12 FY13 H1FY13 H1FY14
5.3 6.3 7.0 8.5 10.4 13.2 16.8 14.5 16.5
45.957.9
65.270.7
81.584.6
93.1 91.496.3
13% 11% 11% 12% 14%17%
20%17%
19%
FY07 FY08 FY09 FY10 FY11 FY12 FY13 H1FY13 H1FY14
Customer deposits (RM'bil)
CASA(RM'bil)
CASA Composition (%)
Net Lending
Continued growth in targeted segments, sound credit quality & capital ratios
CASACAGR FY07-13: 21.2%YoY growth: 13.8%
CAGR FY07-13: 8.6%YoY growth: 4.3%
Customer DepositsCAGR FY07-13 : 12.5%YoY growth: 5.3%
GP3 MFRS 139
YoY change: -0.26%
(RM‟bil)
(%)(%)
Customer Deposits & CASA
Net Lending
GIL ratio Capital ratio
1. FY2013 has been restated to conform with current period‟s presentation
LDR
86.8%
7 7Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
283308
449
243
114131
FY10 FY11 FY12 FY13 H1FY13 H1FY14
867931
983
1,300
673747
FY10 FY11 FY12 FY13 H1FY13 H1FY14
32
62
8
-64
-29
25
FY10 FY11 FY12 FY13 H1FY13 H1FY14
Good growth across all divisions
PAT (RM‟mil)
PAT (RM‟mil) PAT (RM‟mil)
1 Commercial banking represents Retail, Business, Corporate & Institutional Banking activities2 Investment Banking represents Investment Banking and Markets activities
PAT (RM‟mil)
4960
94
137
60
88
FY10 FY11 FY12 FY13 H1FY13 H1FY14
Commercial Banking 1 Investment Banking 2
General Insurance Life Assurance & Family Takaful
FY2013 has been restated to conform with current period‟s presentation
11.0%
14.9%
45.3%
>100.0%
8 8Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Integrations on track, seeking new strategic-partnership for Life & Family Takaful
RM1.627 bil cash purchase price (valuation: P/B 1.95x based on net assets @ 30 Jun 2012)
As at Sep 2013: GWP of >RM1.7 bil (~12% market share), >3.6 mil policyholders
Integration on track:
o “AmAssurance” & “Kurnia” dual branding strategy, the first in Malaysian general insurance market
o 28 dual branded branches rolled out, branch operations centralisation completed
RM641.4 mil cash purchase price (valuation: P/B 2.9x based on net assets @ 30 Nov 2012)
Enlarged merchant force
Integrating people, processes, operations and IT systems, expected to complete by H1CY2014
Recently completed Phase 2 bid process
Target to finalise by end CY2013
RM milSynergistic benefit
cost^
Run Rate SynergiesAcquisition cost
Revenue Cost Total
FY13 (10.5) 0.1 2.4 2.5 (3.5)
H1FY14 (3.5) 0.9 5.7 6.6 -
FY14(e) (32.7) 4.9 14.1 19.0 -
FY15(e) (1.5) 17.1 25.7 42.8 -
RM milSynergistic benefit
cost^Run Rate Synergies
Acquisition costCost Total
FY13 (11.0) 25.5 25.5 (20.5)H1FY14 (3.1) 24.0 49.5 -
FY14(e) (11.3) 33.4 58.9 -FY15(e) (7.1) 1.1 60.0 -
Leading general and #1 motor insurer in Malaysia
CIC increased to > 500,000 Combined merchant > 50,000
^ includes depreciation, exclude funding cost
9 9Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
14 November 2013
H1FY2014 Results –Investors PresentationMandy Simpson, Chief Financial Officer
Your Bank. Malaysia‟s Bank. AmBank.
10 10Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
2. H1FY2014 GROUP FINANCIAL PERFORMANCE Page 10
3. OUTLOOK & STRATEGIC PRIORITIES Page 24
4. DIVISIONAL STRATEGY & PERFORMANCE Page 29
5. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 41
6. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 53
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
11 11Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
78.1
80.2
81.3
82.6
84.283.6
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14
(RM‟bil)
C. Deposits QoQ growth: -0.9%CASA QoQ growth: -8.2%
443380 396 400
465 441
15.7%13.0% 13.4% 13.6%
15.2%13.9%
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14
PATMI (RM'mil)ROE (%)
42.5%45.6%
50.6% 52.2%47.6% 47.6%
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14
PATMI QoQ growth: -5.2%ROE QoQ growth: -1.3%
QoQ growth: -0.7%YoY growth: 4.2%
14.5 14.5 15.4 16.8 18.0 16.5
88.0 91.4 90.8 93.1 95.4 96.3
Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14
RM‟bil
Customer deposits CASA
18% 17% 19% 20% 21% 19%
CASA Composition
Targeted loan growth in preferred segments and seasonal impact
(%)
PATMI & ROE CTI
Net LendingCustomer Deposits & CASA
1. FY2013 has been restated to conform with current period‟s presentation
12 12Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
40.7% 78.4% 22.9% 91.4%
906.5 mil
10.1% 13.7% 6.5% 8.1% 12.3%
823.3 mil
2.3%
H1FY13 PATMI H1FY14 PATMI Positive growth in H1FY14 Contraction in H1FY14
* PATMI: profit after tax and non controlling interests
Strong non-interest income growth, expenses reflect acquisitions & investment
Growth 3.8%
PATMIH1FY13
Net Interest Income
Non-Interest Income
Total income
Expenses PBPProvisions/Allowances
PBTTax & Zakat
PAT MIPATMIH1FY14
H1FY14 (RM‟mil)
1,503.9 877.0 2,380.9 1,133.1 1,247.8 4.6 1,243.2 292.4 950.8 44.3
H1FY13(RM‟mil)
1,469.9 623.5 2,093.4 921.6 1,171.7 21.4 1,150.4 303.9 846.4 23.1
Includes proactive provisioning of RM40 mil in respect of AmFraser
13 13Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1.3% 35.8% 45.3% >100.0% 10.1%>100.0%
* Performances reflected within divisional outcomesNote: H1FY14 includes Kurnia‟s & MBF‟s 6-month performance
13.8% 20.5% >100.0% 23.4%
Conventional PATMIIslamic PATMI Positive growth in H1FY14 Contraction in H1FY14
823.3 mil
906.5 mil
Growth 91.4%
85%84%
16%15%
PATMIH1FY13
Retail BusinessCorporate & Institutional
Investment MarketsGeneral
Insurance
Life Assurance & Family Takaful
Operating Segments
MI Transaction * Islamic *PATMI H1FY14
% of Composition
39% 21% 21% 9% 6% 10% 3% -4% -5%
H1FY14 (RM‟mil)
356.4 195.7 194.8 78.1 52.7 87.7 24.9 -39.5 44.3 100.6 137.1
H1FY13
(RM‟mil)313.1 162.5 197.4 31.8 82.1 60.3 -28.9 28.2 23.1 131.3 129.4
6.0%
Most divisions delivered double digit profit growth, Markets impacted by lower trading income
PATMI by Divisions
14 14Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
63%70%
37%30%
1 2
63% 70%
37% 30%
1 2
Total Income H1FY13 Retail Business RSb Investment Markets AmG AmLife + AmFam OptSeg Total Income H1FY14
1.6% 23.7% 13.7% 9.0% 3.7%
2,093.4 mil
2,380.9 mil
YoY Growth 26.8% >100.0% >100.0% 12.1%
16.8
65.1
-7.3
4.5-0.9
-36.6
-5.4
150.4
-6.5
73.4
18.56.0
35.3
-18.1
1.0
Total non interest income
Total interest income Positive interest income growth in H1FY14
Contraction interest income in H1FY14
Positive non interest income growth in H1FY14
Contraction non interest income in H1FY14
Commercial banking Investment banking Insurance 6.0% 1.2%
-8.7
>100%
IncomeH1FY13
Retail BusinessCorporate & Institutional
Investment MarketsGeneral
Insurance
Life Assurance & Family Takaful
Operating Segments
Income H1FY14
% of Composition
42% 13% 11% 9% 4% 11% 4% 5%
H1FY14 (RM‟mil)
989.3 315.2 262.3 216.0 102.1 266.2 104.3 125.5
H1FY13(RM‟mil)
907.4 304.0 266.6 174.7 139.6 121.1 37.4 142.6
Key income drivers – Retail, Investment banking and Insurance
Income by Divisions
15 15Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation* IB business includes brokerage fees, underwriting fees and corporate advisory & guarantees
As % of total income 30% 37%
>100.0% 17.8% >100.0%Growth 6.8% 21.6% 47.7% >100.0%
877.0 mil
25.9% 2.9% 53.8% 14.0% >100.0% 40.7% 11.2%
H1FY14 non interest income Positive growth in H1FY14 Contraction in H1FY14
Retail: +45milBB & CIB: -14milIB & Markets: -8mil
H1FY13 non interest income
623.5 mil
H1FY13Fees on
lending & securities
AUMIB
business*Banca
Other fee income
Total Fee Income
Sales TradingOther
trading & investment
Trading & Investment
GeneralLife &
TakafulInsuranceBusiness
Others H1FY14
% of Composition
17% 9% 12% 2% 7% 47% 9% 5% 6% 20% 23% 5% 28% 5%
H1FY14
(RM‟mil)152.9 80.0 104.2 18.6 54.5 410.2 79.7 41.8 51.1 172.6 203.9 42.3 246.1 48.0
H1FY13(RM‟mil)
129.8 74.8 85.7 19.2 59.3 368.8 51.8 79.9 69.0 200.7 91.1 -45.7 45.4 8.6
H1FY13 Fees on loans AUM IB business Banca Other fee incTotal Fee income Sales Trading Other trading incTotal Trading & InvestmentGeneral Life & TakafulTotal Insurance Other H1FY14
8.1%
Non-interest income movement
Consistent NII growth, reflecting cross selling and collaboration efforts
16 16Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
268.5
258.8
1.2
3.2
14.1
FY13 Asset mix Funding mix Rates H1FY14
2.68%
2.92%3.13% 3.10%
3.08%2.98%
2.94%2.75% 2.68%
2.59%
FY10 FY11 FY12 FY13 H1FY14
Cost of funds NIM
Higher margin compression in retail, overall NIM within guidance
Cost of Fund NIM OPR SRR
Note :1 NIM includes Net Financing Income from Islamic Banking business2 FY10-H1FY14 based on internal data computation
COF
NIMF
SRRF
OPRF
3.44%
2.68%
2.92% 2.92% 2.86% 2.91% 2.90% 2.85%
2.92%
3.04%
2.98% 2.94% 2.94%3.05%
2.95% 2.90%3.01%
2.94%
FY09 FY10 FY11 Q1FY12 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12
Cost of funds NIM
3.44%
2.68%
2.92% 2.92% 2.86% 2.91% 2.90% 2.85%
2.92%
3.04%
2.98% 2.94% 2.94%3.05%
2.95% 2.90%3.01%
2.94%
FY09 FY10 FY11 Q1FY12 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12
Cost of funds NIM
3.44%
2.68%
2.92% 2.92% 2.86% 2.91% 2.90% 2.85%
2.92%
3.04%
2.98% 2.94% 2.94%3.05%
2.95% 2.90%3.01%
2.94%
FY09 FY10 FY11 Q1FY12 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12
Cost of funds NIM
2.50%2.75% 2.75% 2.75%
3.00%
3.00%
1.00% 1.00% 1.00% 1.00%
2.00%
3.00%
4.00%
Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12
OPR SRR
SRR
OPR
2.50%2.75% 2.75% 2.75%
3.00%
3.00%
1.00% 1.00% 1.00% 1.00%
2.00%
3.00%
4.00%
Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12
OPR SRR
SRR
OPR
2.25%2.75% 3.00% 3.00% 3.00%
1.00% 1.00%
4.00% 4.00% 4.00%
FY10 FY11 FY12 FY13 Q1FY14
OPR SRR
Net interest margin (NIM)
o Largely impacted by margin pressure in retail loans
o Tax exempted bonds has an additional 2bps impact
Improved funding mix with good CASA growth and composition
9.7 bps
FY10 FY11 FY12 FY13 H1FY14
FY13 Assets mixFunding
mixRates H1FY14
NIM and COF (YOY)
NIM (bps) drivers
17 17Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
21%
20%
26%
89% 89%
90%41.8% 40.2% 40.5%
43.3%46.0%
FY10 FY11 FY12 ^ FY13 H1FY14
Higher expenses reflecting strategic investments and acquisitions
H1FY13 Personnel EstablishmentMarketing &
CommAdmin & others
Synergisticbenefit cost
H1FY14
% of Composition 60% 23% 7.5% 8.5% 1%
H1FY14 (RM‟mil) 675.9 265.2 88.0 97.5 6.5
H1FY13 (RM‟mil) 580.5 214.8 60.7 65.6 -
16.4% 23.5% 44.9% 48.5%
44.0% 47.6%CTI
YoY Growth
RM‟mil
921.6
1,133.1
> 100.0%
Expense growth drivers
Banking Group CTIAmGeneral Combined
Operating RatioAmLife Management
Expense Ratio
FY12 FY13 H1FY14FY12 FY13 H1FY14FY10 FY11 FY12 FY13 H1FY14
18 18Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Loan Loss Coverage
121.8%
129.2%5.3%
1.9%
10.8%
28.3
129.2
(31.0)
73.0
3.2
3.18%
0.97%0.60% 0.88%
6.2%
3.7%
2.6%1.5%
10.4%
6.3%
4.1%
2.8%
3.81%3.33%
2.45%1.98% 1.95%
0.50% 0.21% -0.07%
FY2012 FY2013 H1FY2014
Asset quality remains consistently strong
28bps
186bps
MFR
S 1
39
MFR
S 1
39
RM‟mil
GP
3
Industry
3.18%
0.97% 0.60%0.88%
6.2%
3.7%
2.6%
1.5%
10.4%
6.3%
4.1%
2.8%
3.81%3.33%
2.45%
2.38%
0.51%0.08%
FY2007 FY2008 FY2009 FY2010 Day 1 FY2011 FY2012 Q1FY2013
Net Provisions Charge Net NPL Ratio Gross NPL Ratio Gross Impaired Loans Loan Loss Charge (MFRS139)
AmBank Group
FY2007 FY2008 FY2009 FY2010 1/4/2010 FY2011 FY2012 FY2013 H1FY2014
H1FY13 loan losscoverage
Collective allowance
Individual allowance
Impaired loans &
financing
H1FY14 loan losscoverage
H1FY13 Allowance for impairment
Individual allowance
Collective allowance
Impaired loans –recovered & written-off
H1FY14 Allowance for impairment
114.6% 129.3% 129.2%
Asset quality indicators
Allowance for impairment on loans & financing (P&L) Movement in loan loss coverage
95.6%99.6%
97.6%
19 19Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Slower growth, being selective in customer segments & economic sectors
Retail Biz & Corporate
2.9% 5.7%
82.4bil
7.4% 22.6% 6.3% 2.2% 7.7% 54.9%
85.8bil
4.1% 12.4%
No
n-re
tail
Reta
il
1.1%
Non-RetailRetail Positive growth in H1FY14 Contraction in H1FY14
Conventional73%
Islamic27%
Conventional73%
Conventional73%
Conventional74%
Gross LoanH1FY13
Auto Financing
Mortgage Cards Co-opAsset
FinancingBusiness
Corporate & Institutional
OthersGross Loan
H1FY14
% of Composition
30.3% 19.5% 2.5% 1.9% 3.2% 21.5% 19.4% 1.8%
H1FY14 (RM‟bil)
26.0 16.7 2.2 1.6 2.7 18.4 16.7 1.5
H1FY13(RM‟bil)
25.7 15.5 1.8 1.8 2.9 17.3 16.3 1.1
58%
42%
57%
43%
Lower growth rate due to single large repayments
Gross Loan / Financing movement
Fixed
rate
44%
Variable
rate
56%
Conventional 73%
Islamic 27%
20 20Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Manufacturing, 0%
Electricity, Gas & Water, -12%Construction, 5%
Mining & Quarrying, 19%
Wholesale, Retail, Restaurant &
Hotel, 12%
Transport, Storage &
Communication, -6%
Finance, Insurance & Business
Activities, 4%
Agriculture, 18%Education & Health, 8%
Household, 12%
Others, 13%
Real Estate, 15%
0%
10%
20%
30%
40%
50%
60%
70%
-60% -40% -20% 0% 20% 40%
Manufacturing, 5%
Electricity, Gas & Water, -10%
Construction, -5%
Mining & Quarrying, 37%
Wholesale, Retail, Restaurant &
Hotel, 11%
Transport, Storage &
Communication, -10%Finance, Insurance & Business
Activities, -51%
Agriculture, 27%
Education & Health, 9%
Household, 5%
Others, -38%
Real Estate , 25%
0%
10%
20%
30%
40%
50%
60%
70%
-60% -40% -20% 0% 20% 40%
Loans by Sector: AmBank Group vis-à-vis Industry
Source : BNM, financial statement
Gross Loans Growth
Gross Loans Composition
Gross Loans Growth
Gross Loans Composition
Your Bank. Malaysia‟s Bank. AmBank.
Sep 13 vs Sep 12
Sep 13 vs Sep 12
AmBank Group Loans Growth by Sector
Industry Loans Growth by Sector
21 21Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
8.5 10.4
13.2
16.8 16.5
12% 14%17%
20% 19%
FY2010 FY2011 FY2012 FY2013 H1FY2014
CASA CASA composition
FY07 FY10 FY13 H1FY14
Equity & debt capital 10% 15% 14% 14%
Customer deposits 60% 77% 75% 74%
Term funding & loans with recourse >1year
4% 2% 7% 7%
Term funding & loans with recourse <1year
1% 1% 1% 2%
Deposits from banks & FIs
25% 5% 3% 3%
YoY Growth 17.6% 6.3% 13.8% 4.5% -3.0% 5.3%
Cust
Deposits
H1FY13
Current Savings CASA
Term
Deposit
& NID
Term
Funding
Cust
Deposits
H1FY14
H1FY14 11.4 5.1 16.5 71.7 8.0 96.3
H1FY13 9.7 4.8 14.5 68.6 8.3 91.4
91.4
96.3
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
<FY10 FY11 FY12 FY13 FY14 YTD
FY14 FY15 FY16 FY17 FY18 FY19+
RM'bil
Debt Capital Term Funding Loans sold to Cagamas
Issuance Maturity
1. Term funding includes Senior Notes, credit-linked notes, loans sold with recourse and other sources such as pension and retirement funds, non-profit organisations and similar
Diversifying funding sources, customer base and maturity profile
RM’bil
FY2010 FY2011 FY2012 FY2013 H1FY2014
CAGR FY10-13: 25.4%
8.5 10.4
13.2
16.8 18.0
12% 14%17%
20% 19%
FY2010 FY2011 FY2012 FY2013 H1FY2014
CASA CASA composition
Customer deposits driven by focus on CASA
Improving CASA composition
Lengthening debt capital & term funding profile
Improving funding composition
22 22Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
120.1 226.6
346.7
585.3
932.0
132.9
255.2
388.2
664.4
1,052.6
Sep'12 Sep'13
10.7% 12.6% 12.0% 13.5% 12.9%
4.8 9.7 14.5
68.4
82.9
5.1
11.4
16.5
71.7
88.3
Sep'12 Sep'13
RM’bil
Deposits by Type: AmBank Group vis-à-vis Industry
Source : BNM, internal reports
RM’bil
Savings Current Account CASA Fixed Deposits Core Deposits
Savings Current Account CASA Fixed Deposits Core Deposits
AmBank Group Deposits Growth by Type
Industry Deposits Growth by Type
6.3% 17.6% 13.8% 4.8% 6.4%
12.6%
24.2%
63.1%
Industry Core Deposits Composition
Savings Current Account Fixed Deposits
5.8%
12.9%
81.3%
AmBank Group Core Deposits Composition
Savings Current Account Fixed Deposits
23 23Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
9.4% 9.5%9.8% 10.4%
11.1% 11.2%
14.0%14.7% 14.8% 14.9%
Adopted Basel III at banking entity level:
• The aggregated banking entities of the Group remain well capitalised and operated within internal target capital levels for FY2014:
o CET1: 8.5% ± 1.0%
o T1: 10.5% ± 1.0%
o Total Capital: 14.5% ± 1.0%
Double leverage ratio1: 1.14x
Balance Sheet leverage ratio2: 8.0%
Total leverage ratio3: 6.1%
Adopted Basel III, in progress to optimise capital & holding company structure
1. Double leverage ratio computed based on AMMB Holdings company level2. Balance sheet leverage ratio: total equity net of deferred tax & intangible assets over total assets net of deferred tax assets & intangible assets 3. Total leverage ratio: total equity net of deferred tax & intangible assets over total assets net of deferred tax assets & intangible assets & off balance sheet
Capital: Aggregated banking entities
Basel II Basel III
------------------ After proposed dividend -----------------------
Capital: Legal entities
FY13 H1FY14
CET 1 Tier 1Total
capitalCET 1 Tier 1
Total capital
AmBank 8.6% 10.9% 14.2% 8.8% 11.1% 14.4%
AmIslamic 9.5% 9.5% 14.6% 10.0% 10.0% 15.1%
AmInvestment 25.7% 25.7% 25.7% 23.9% 23.9% 23.9%
FY2011 FY2012FY2013
restatedH1FY2014
CET 1Tier 1 RWCAR / Total Capital Ratio
Capital adequacy ratio
24 24Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
2. H1FY2014 GROUP FINANCIAL PERFORMANCE Page 10
3. OUTLOOK & STRATEGIC PRIORITIES Page 24
4. DIVISIONAL STRATEGY & PERFORMANCE Page 29
5. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 41
6. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 53
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
25 25Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Financial services outlook
Economy expected to moderate
Accommodative monetary policy will remain to support the moderate economic growth, although inflation inches upwards
Greater concern for BNM will be to address the high household debt
Moderate loans growth in line with the economic outlook and measures to address household debt
Asset quality trend may come under pressure for potential capital flow risk and inflationary pressure
Margins remains a challenge from the stiff price-based competitions for loans and deposits
OPR expected to remain at current 3% until 1H2014
Opportunities & challengesMalaysia Banking
Global growth remain uneven
• US debt ceiling issues still lingering, still downside risk in euro-area and structural reforms will take time to gain traction
• Developing Asia is challenged to maintain financial stability and sustain economic growth
Malaysian economy expected to moderate
• Subdued growth in 2013 dampened by exports and faltering private consumption, private investment remains positive
• Growth expected to pick-up in 2014 from improved global trade, supported by private expenditure, namely private investment
• Authorities will continue to adopt prudent and pragmatic macroeconomic policies, reining in fiscal deficit and public debt
2012 2013f 2014f
RGDP y/y% 5.6 4.6 4.8
Inflation y/y% 1.7 2.2 2.7
Unemployment (%) 3.0 3.3 3.4
FB% GDP (FY) -4.5 -4.0 -3.5
CA% GDP 6.1 2.5 3.0
80.1
9.2%
22.0%
Jan-12
Feb-12
Mar-12
Apr-12
May-12
Jun-12
Jul-
12
Aug-12
Sep-12
Oct-
12
Nov-12
Dec-12
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-
13
Aug-13
RM'bil
Loans disbursed Loans approved (yoy growth)Loans Applied (yoy growth)
26 26Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
FY2014 – 2016 Strategic Agenda
Integrate acquisitions and deliver synergies
Simplify business model and streamline processes
Accelerate organic growth with focus on cross-sell, flow business, small business, and emerging affluent customers
Build scale in specialist businesses with partners
Optimise capital and holding company structures
1
2
3
4
5
27 27Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1,619.2
(9.1% yoy)
906.5
(10.1% yoy)10 – 12% 12 – 14%
13.9% 14.6% 14.0 – 14.5% 14.5 – 15.5%
47.9%43.3%
(Banking Group)
47.6%
46.0%
(Banking Group)
≤47%;≤45%
(Banking Group)
≤45%;≤43%
(Banking Group)
1.98% 1.95% ≤2.0% ≤2.0%
22.0 sen / share
41%
7.2 sen / share
24%
40 - 50%Payout
40 - 50%Payout
PATMI(RM‟mil)
ROE (%)
CTI (%)
Gross impaired loans
(%)
Dividend:Single-tier (sen)
Payout (%)
Key performance indicators
NIM expected to contract ~10 bps Loan loss charge expected to be <20 bps Loans expected to grow ~7% (GDP @ 4.6%) LD ratio expected to maintain at ~90%, ±2%
CASA composition ≥20%
Non-interest income composition at circa 35% Target CET 1 of 8.5% (±1%), Tier 1 of 10.5% (±1%),
RWCAR of 14.5% (±1%)
1
2
3
4
5
Other FY2014 underlying estimates:
FY2013(Restated)
H1FY2014(Actual)
FY2014 FY2015 – FY2016Underlying Estimates
28 28Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
H1FY14: Progressively delivering on our strategic agenda
o Stronger earnings, integrations progressing well
o Investing to strengthen AmBank‟s franchise
o More work to be done on efficiency agenda
o Global sentiments underpinning domestic economic outlook
o Some headwinds in the banking environment, expect growth to moderate
Strategic agenda remains unchanged
Summary
1
2
3
29 29Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
2. H1FY2014 GROUP FINANCIAL PERFORMANCE Page 10
3. OUTLOOK & STRATEGIC PRIORITIES Page 24
4. DIVISIONAL STRATEGY & PERFORMANCE Page 29
5. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 41
6. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 53
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
30 30Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Our Vision and divisional aspirations
* Conventional & Islamic
TRANSACTION*
To become Top 5 Transaction
Banking Service Provider
in Malaysia by FY2015 with 8% market
share
CIB*
Target high-profile
and high-value clients, increase „share of wallet‟, deliver innovative & quality solutions and leverage ANZ
for x-border businesses
ISLAMIC
To be the Islamic Bank of choice
INVESTMENT*
Deliver comprehensive
solutions, lead in capital markets,
funds management, stock broking and enhance domestic
and overseasdistribution
via ANZ
MARKETS*
Deliver substantive,integrated and
client-led business with
full suite of FX, Rates,
Commodities and FI offerings
with ANZ collaborations
FAMILY TAKAFUL
To be the trusted Family Takaful
Operator of choice within
all of our selected markets
LIFE ASSURANCE
To be leading Life Insurer in customer
services, productivity and products
GENERAL INSURANCE
Leverage scale to lead the market in
the motoring segment,
whilst building a leading
personal lines portfolio and niche
commercial business
RETAIL*
Develop a liability-led business,
grow assets in targeted segments & expand Wealth
Management
BUSINESS*
Growing the business through decisive
execution
DIVISIONAL ASPIRATIONS
Vision“As Malaysia‟s preferred diversified, internationally connected financial
solutions group, we take pride in growing your future with us”
31 31Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Retail Banking
Develop a liability-led business, grow assets in targeted segments and expand Wealth ManagementAspirations
9.0%Growth 4.2% 15.3% 36.1% 13.4% 12.1% 13.8%
• Higher profit contribution via growing core business while improving asset quality and managing expensesOutlook
PAT
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
• Higher profits benefiting from progressive integration of MBF Cards and improved asset quality, offset by higher synergistic benefit cost
• CASA and customer deposits grew stronger underpinned by leveraging existing and new channels, campaigns and alliances
• Lending growth partly reflects regulatory changes, various initiatives being rolled out to support sales growth
• Integrated campaigns focused to effectively manage marketing spend and maximise revenue
• Small Business Banking model targeting non-individual customers, on track for pilot launch to 45 branches in Nov
Higher profits from improved asset quality and Cards
H1FY14 PAT
(composition to Group)
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13
37.5%
Gross Loans /
Financing 47,764.6 49,154.7 ▲ +2.9%
Gross Impaired Loans 2.62% 1,288.3 1,287.5 -▼ -0.1%
Customer Deposits 34,512.2 38,430.1 ▲ +11.4%
CASA Deposits 9,322.0 10,535.5 ▲ +13.0%
ROA 1.33% 1.45% ▲ +0.12%
CTI 43.5% 46.0% ▲ +2.5%
Allowance Coverage 78.7% 79.1% ▲ +0.4%
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
989.3 455.1 534.2 60.8 473.5 117.0 356.4
H1FY13(RM‟mil)
907.4 394.8 512.6 95.1 417.5 104.4 313.1
32 32Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Aspirations
H1FY14 Income mix
Business Banking
Growing the business through decisive execution
3.7%Growth 4.2% 1.3% 93.9% 20.3% 19.8% 20.5%
H1FY14 PAT(composition to Group)
Outlook • Expecting higher profit growth for FY2014
PAT
• Strong profit growth underpinned by higher income and lower provisions as well as higher recovery due to better customer credit rating
• Expanding customer base and value of business in preferred sectors (construction, manufacturing, oil & gas), seized growth opportunities from beneficiaries of ETP
• Regional coverage teams provided diversified geographic loans and deposits growth
Higher income and strong deposits growth
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13
20.6%
Lending
& deposits
, 70%
Trade
Services, 30%
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
315.2 52.9 262.3 2.2 260.1 64.4 195.7
H1FY13(RM‟mil)
304.0 52.2 251.7 35.5 216.2 53.7 162.5
Gross Loans / Financing 17,313.4 18,405.8 ▲ +6.3%
Gross Impaired Loans 0.64% 270.3 118.3 -▼ -56.2%
Customer Deposits 7,700.6 9,951.3 ▲ +29.2%
CASA Deposits 2,576.8 3,263.1 ▲ +26.6%
ROA 1.98% 2.19% ▲ +0.21%
CTI 17.2% 16.8% -▼ -0.4%
Allowance Coverage 145.0% 173.5% ▲ +28.5%
G
G
33 33Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
20.5%
Lending &
deposits, 58%
Offshore Banking,
12%Asset
Mgmt, 4%
Trade Services & Cash
Mgmt, 31%
Corporate & Institutional Banking
Target high-profile and high-value clients, increase ‘share of wallet’, deliver innovative and quality solutions and leverage ANZ for x-border businesses
Aspirations
1.6%Growth 3.7% 10.4% 7.0% 2.6% 6.9% 1.3%
PAT
H1FY14 Income mix H1FY14 PAT(composition to Group)
Services include : large corporate lending & deposits, financial institutions group, offshore banking, transaction banking, private equity, REITs and trustee services
Outlook • Anticipating higher profit growth for FY2014
• Higher net interest income offset by lower non-interest income in the absence of divestment gains in Assets business in H1FY14
• Gross loans / financing affected by large repayments in H1FY14, expecting improve growth in H2FY14
• Lower deposits reflects management of depositors concentration
• Continued cross sell in key products / solutions under wholesale banking platform
Sustained loans and deposits growth
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
262.3 43.5 218.9 (28.7) 247.6 52.8 194.8
H1FY13(RM‟mil)
266.6 39.4 227.2 (26.8) 254.1 56.7 197.4
34 34Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
CTI 68.5% 58.2% -▼ -10.3%
Ave Assets Management 36,086.9 39,771.7 ▲ +10.2%
Ave Volume / Contract Traded (RM'mil/month)
IB Broking 4,553.0 5,568.7 ▲ +22.3%
AmFuture - FKLI 30.4 31.1 ▲ +2.3%
Market Share as at:
IB Broking 6.8% 5.9% -▼ -0.8%
AmFuture -FKLI 8.3% 6.1% -▼ -2.2%
1
Investment Banking
Deliver comprehensive solutions, lead in capital markets, funds management, stock broking and enhance domestic & overseas distribution via ANZ
Aspirations
Growth 5.0% 23.7% 64.2% >100.0% >100.0% 20.4% >100.0%
H1FY14 Income mix H1FY14 PAT(composition to Group)
Outlook
• Near term market uncertainty as a result of continue guessing on timing and quantum of US QE tapering
• FY2014 profit to be supported by improved market sentiment post elections coupled with roll out of Economic Transformation Programme (ETP) projects driving capital markets activities
PAT
1. Includes AmInvestment Management, AmInvestement Services, AmIslamic Funds Management & Private Banking
• PAT doubled underpinned by strong contributions from corporate finance, debt capital market activities, broking and funds management, as well as write back of allowances
• Continued good growth of assets under management from funds management and private banking, supporting recurring non-interest income growth
Improved performance
H1FY14 PATH1FY13 PAT Positive growth in H1FY14H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
Debt
Cap Mkt, 8
%Corp
Fin, 12%
Equity,
3%
Broking
& Futures
, 23%
Fund
Mgmt, 33%
Private
Bkg, 7%
Int
Biz, 14%
8.2%
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
216.0 125.6 90.4 (9.1) 99.5 21.4 78.1
H1FY13(RM‟mil)
174.7 119.6 55.0 5.5 49.5 17.7 31.8
35 35Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Markets
Deliver substantive, integrated and client-led business with full-suite of FX, Rates, Commodities and FI offerings with ANZ collaborations
Aspirations
Growth 10.4% 69.7% 37.9% 26.8% 33.3% 36.3% 35.8%
Outlook
• FY2014 profit outlook supported by:
a) Intensifying cross-sell initiatives by tapping into the Group’s regional presence in FX and Derivatives business
b) Expansion of regional distribution and trading capabilities
PAT
H1FY14 Income mix H1FY14 PAT(composition to Group)
• Healthy volume flows from foreign exchange and derivatives Sales made up for the paucity of trading revenue, especially from Fixed Income
• Excessive market volatility causing temporary deferment to deal flows
Performance impacted by continued volatility in market
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13
5.5%Fixed
Income, 15%
Foreign
exchange, 64%
Derivativ
es, 20%
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
102.1 35.3 66.9 (2.7) 69.6 16.9 52.7
H1FY13(RM‟mil)
139.6 39.4 100.3 (9.0) 109.3 27.2 82.1
CTI 28.2% 34.5% ▲ +6.3%
PAT : FX and Derivatives 45.8 48.6 ▲ +6.0%
Financial assets HFT 11,092.6 2,460.9 -▼ -77.8%
Financial investments
AFS 2,193.8 3,458.7 ▲ +57.7%
Total Group:
Financial assets HFT 13,248.4 5,335.9 -▼ -59.7%
Financial investments
AFS 7,610.0 9,616.8 ▲ +26.4%
Financial investments
HTM 2,209.6 5,068.4 ▲ +>100.0%
36 36Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
General Insurance
Leverage scale to lead the market in the motoring segment, whilst building a leading personal lines portfolio and niche commercial business
Aspirations
>100.0%Growth >100.0%>100.0% >100.0% 58.4% >100.0% 45.3%
Outlook
PAT H1FY14 PAT(composition to Group)
• Higher premium growth, stronger net earned premium and improved underwriting profit benefiting from enlarge entity
• Higher expenses reflects enlarge entity and amortisation of intangible assets (RM15.4 mil for H1FY14). In accordance with MFRS 3 (Business Combination) and MFRS 138 (Intangible Assets), AmGeneral Holdings has completed the purchase price allocation (PPA) in relation to the Kurnia acquisition. The total intangible assets, which comprised of brand, agency relationship and policies in force is valued at RM208 mil. The agency relationship and policies in force will be amortised on a straight line basis over their useful economic lives
Improved performance, benefiting from positive contributions from acquisition
• Expecting higher retention levels in FY2014
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
266.2 145.2 121.0 2.1 118.9 31.2 87.7
H1FY13(RM‟mil)
121.1 45.8 75.4 0.4 75.0 14.7 60.3
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
9.2%
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13
Claim ratio 57.4% 63.1% ▲ +5.7%
Expenses ratio 15.7% 16.5% ▲ +0.8%
Combined ratio 83.5% 90.4% ▲ +6.9%
• H1FY2013 reflects AmG standalone results only.• Ratios as above reflects insurance operating business only (exclude PPA amortization).
37 37Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
2.6%
Life Assurance & Family Takaful
Life Assurance: To be leading Life Insurer in customer service, productivity and products
Family Takaful: To be the trusted Family Takaful Operator of choice within all of our selected marketsAspirations
Growth 19.4% 99.8%>100.0% >100.0% >100.0% 100.0% >100.0%
Outlook Life Assurance: FY2014 profit contribution to normalise
Family Takaful: Expecting sales growth in FY2014 post full year operational readiness
PAT H1FY14 PAT(composition to Group)
• Higher income reflects stronger premiums growth in single premiums from Banca & Corporate channels
• Exploring new strategic partnership to become a leading insurance player
• Increased productivity of Bancassurance leveraging on Group‟s platforms
• Accelerated recruitment and training of quality agency force
• Rationalized product portfolio and distribution cost structure to deliver margin expansion
Stronger premiums & investment income
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
104.3 62.3 42.0 0.0 42.0 17.2 24.9
H1FY13(RM‟mil)
37.4 52.1 (14.8) 7.1 (21.9) 6.9 (28.9)
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13 Life Assurance
Total assets 2,993.4 3,074.0 ▲ +2.7%
CAR ratio 197.8% 236.1% ▲ +38.3%
Net earned premium 187.7 232.1 ▲ +23.7%
Family Takaful
Total assets 105.8 149.1 ▲ +41.0%
Net contributions 14.1 38.4 ▲ +100.0%
GG
38 38Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Transaction Banking
To become top 5 Transaction Banking Service Provider in Malaysia by FY2015 with 8% market shareAspirations
19.7%Growth 19.7% 19.9% >100.0% 23.4% 23.4% 23.4%
H1FY14 Income mix H1FY14 PAT
(composition to Group)
Outlook • Anticipate good profit growth for FY2014
PAT
• Higher income from cross sell initiatives and increase business flows between ANZ and AmBank whilst working with Relationship Managers to offer customized solutions to improve customer experience.
• Core business competencies of full suite Cash management and Trade & Supply Chain Services yielding impressive growth in CASA and higher customer utilization in Trade.
• Expanded customer touch-points via internet platforms and streamlined documentation for seamless customer experience. With over 130 AmTrade deals implemented for H1FY14; totaling over 390 implemented customers since its launch in late 2012.
• H1FY13 allowances reflect write-backs for contingent liabilities.
Higher profits and CASA growth from growing share of wallet
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
10.6%
Trade Services, 42%
Cash Mgmt,
58%
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
184.0 23.3 160.7 26.6 134.1 33.5 100.6
H1FY13(RM‟mil)
153.7 19.5 134.3 (40.8) 175.1 43.8 131.3
Gross Loans / Financing 5,145.6 5,431.8 ▲ +5.6%
Trade Finance 5,076.4 5,352.4 ▲ +5.4%
Cash Management 28,213.1 31,983.4 ▲ +13.4%
CASA Deposits 5,558.8 7,350.1 ▲ +32.2%
ROA 5.38% 3.86% -▼ -1.52%
CTI 12.7% 12.7% ▲ +0.0%
39 39Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
14.4%
H1FY14 PAT(composition to Group)
• Higher income backed by financing growth as a result of increased focus to feature Islamic banking products & services, and greater emphasis was placed to grow GLC and GLIC business while capitalising on ETP related projects
• Strong deposits & CASA growth, resulting from a continued focus on „sticky‟ funds and improving funding mix
Islamic Banking
To be the Islamic Bank of choiceAspirations
Strong deposits & CASA growth
5.0%Growth 6.2% 3.2% 4.0% 7.2% 11.4% 6.0%
Outlook • Increase penetration of solutions and cross-selling to support AmBank Group as “main bank” initiatives
PAT
PATH1FY13
TotalIncome
Expenses PBP Allowances PBT TaxPAT
H1FY14
H1FY14 (RM‟mil)
441.8 180.8 261.0 82.1 178.9 41.8 137.1
H1FY13(RM‟mil)
421.0 175.2 245.8 78.9 166.8 37.5 129.4
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
H1FY14
vs
RM'mil H1FY13 H1FY14 H1FY13
Gross Financing 21,647.3 22,843.1 ▲ +5.5%
Gross Impaired Loans 1.49% 263.0 341.5 ▲ +29.9%
Customer Deposits 20,669.9 23,476.1 ▲ +13.6%
CASA Deposits 4,985.3 5,638.5 ▲ +13.1%
ROA 0.96% 0.84% -▼ -0.13%
CTI 41.6% 40.9% -▼ -0.7%
Allowance Coverage 188.3% 152.7% -▼ -35.7%
G
40 40Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
• Includes funding cost to support recent acquisitions
• MI represents non-controlling interests within the Group
Group Operating Segments
H1FY14 PAT(composition to Group)
3.0%
12.1%Growth >100.0% 19.6% 76.9% 100.0% >100.0% >100.0%
PAT
91.4% >100%
H1FY14 PATH1FY13 PAT Positive growth in H1FY14 Contraction in H1FY14
-4.2%
PATH1FY13
Total Income Expenses PBP Allowances PBT Tax PAT MIPATMI
H1FY14
H1FY14 (RM‟mil)
125.5 213.2 (87.8) (19.9) (67.9) (28.4) (39.5) 44.3 (83.7)
H1FY13(RM‟mil)
142.6 178.3 (35.7) (86.4) 50.7 22.5 28.2 23.1 5.1
41 41Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
2. H1FY2014 GROUP FINANCIAL PERFORMANCE Page 10
3. OUTLOOK & STRATEGIC PRIORITIES Page 24
4. DIVISIONAL STRATEGY & PERFORMANCE Page 29
5. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 41
6. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 53
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
42 42Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
25.79 34.59
50.00 4.40
2.50 1.90
13.38
2.02
HIFY13 Computer software
Merchant relationship
Credit cards relationship
In force biz Agent relationship
HIFY14
43.87 57.75
99.92 10.96 1.67 1.27 -
40.15
2.01
FY12 Computer software
Merchant relationship
Credit cards
relationship
FY13 (previously reported)
In force biz Agent relationship
FY13 (restated)
17.1% >100.0% >100.0% 93.9%
25.0% >100.0% 31.7% >100.0%
H1FY13Computer software
Merchantrelationship
(MBF)
Credit cards relationship
(MBF)
In force biz(Kurnia)
Agent relationship
(Kurnia)H1FY14
In accordance with MFRS 3 (Business Combination) and MFRS 138 (Intangible Assets):
RM‟mil
RM‟mil
RM‟mil
MBF
Merchantrelationship
25.0Straight line basis, amortised over 5 years
Credit card relationship
38.0Straight line basis, amortised over 10 years
Total 63.0
Kurnia
In Force Business
53.5Straight line basis, amortised over 1 year
Agent relationship
60.5Straight line basis, amortised over 15 year
Brand 94.4Not impaired, reviewedfor impairment annually
Total 208.4
FY12Computer software
Merchantrelationship
(MBF)
Credit cards relationship
(MBF)
FY13
(Previously reported)
In force biz(Kurnia)
Agent relationship
(Kurnia)
FY13(Restated)
>100.0% >100.0%
>100.0% >100.0% >100.0%
Amortisation of intangible assets
43 43Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
• Statutory reserve and liquidity requirement savings
• Reduced exposure to interest rate risks
Diversifying funding sources and maturity profile
Benefits to funding strength
• Improve funding stability, maturity gap & liquidity ratios
• Reduce dependence on short-dated deposits to fund long-dated fixed rate loan assets which incur liquidity risk and interest rate risk
• Diversifies investor base
• No obligation for buy back since we are not exposed to withdrawal risks and the notes are traded in the open market
• Enable depositors to invest in long and medium dated papers
LDR of 86.8%
AmBank (M) Bhd
USD2b Euro Medium Term
Note
BBB+ (S&P)Baa1 (Moody‟s)
Joint Lead Arrangers
AmIslamic Bank Bhd
RM2b Subordinated Musyarakah
Sukuk
A1 (RAM)
RM1.0b
Sep 2011
Lead Arranger
AMMB Holdings Bhd
RM2b Medium Term Notes
A1 (RAM)
RM2.0b
Aug 2012
Lead Arranger
AmBank (M) BhdAmIslamic Bank
Bhd
Loans with Recourse
Recourse obligations on loans sold to Cagamas -maturing in 2017
Islamic financing sold to Cagamas –maturing in 2016
Funding diversity underpinned by
CASA: RM16.5 billion (yoy growth = 13.8%)
Fixed deposits: RM71.7 billion (strong retention)
Supplemented by
AmBank (M) BhdAmIslamic Bank
Bhd
RM7b Senior Notes* & RM3b Senior Sukuk
AA3 (RAM)
RM2.7b & RM0.6b
Mar‟10 & Sep‟10
Lead Arranger
AmBank (M) Bhd
RM2b Medium Term Notes
AA3 (RAM)
RM1.6b
Feb 2008
Lead Arranger
* 1st senior notes issuance by a financial institution in Malaysia
Outstanding amount @
30.9.13
Issued date
44 44Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
• Is an investment to implement the new core banking system (“AmBanCS”) in two phases, covering several strategicinitiatives within the AmHorizon Eco-System i.e. Project Enterprise, Service Oriented Architecture, Business ProcessReengineering , Data Centre Core Modernization, AmBanCS Capability and Performance Teams (ACT & APT)
• Phase 1 of AmBanCS implementation is on schedule to go-live on 18 November 2013
Customer centricity
• Faster turnaround time for seamless view across line of business and different entities, bridging systems and departments boundaries
• Minimum effort for IT to allow integration of other lines of business to utilize the customer centric views within core banking system
Faster Time to Market
• Reduced / Quick turnaround time for product launches
• Reduced IT effort for code enhancements to launch products
• Reduced code enhancement due to more parameterization capabilities
Product Support
• Reduced IT effort in order to package products
• Lesser IT effort to support segmentation capabilities
• Reduced staff for support of product
High Availability / Response
• Multi entity structure capability
• Multi country, region & currency capability
• Lesser response time for similar/current staff experience
Future-Proof Technology & Agile Architecture
• Lesser IT effort for integrating various channels into new core banking system
• Reduced cost for IT maintenance and enhancement
Continued investments to strengthen the AmBank franchise
AmHorizon: Replacing AmBank‟s Core Engine
Benefits:
45 45Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
ANZ diversified footprints in Asia
Value proposition
• Seconding ANZ staff into key roles
• Providing technical expertise
• Support new product development
• Two-way customer referrals
• Joint account planning
• Access to regional network & connectivity
Board & Management representation
• Shayne Elliot – Director (CFO, ANZ)
• Gilles Planté– Director (CEO Asia Pacific, ANZ)
• Mark Whelan – Director (MD, Corporate & Commercial, ANZ)
• Mandy Simpson – Chief Financial Officer
• Nigel Denby – Chief Risk Officer
• Ross Foden – Chief Operations Officer
• Paul Lewis – Managing Director, Retail Banking
• Tan Chin Aun - Transaction Banking
• Oscar Demirtas - Senior Program Manager, Small Business Banking
Partnership with ANZ
Source: Trade Finance Magazine 2013
CHINA
HONG KONG
PHILIPPINES
VIETNAM
NEW ZEALAND
SOUTH KOREA
JAPAN
TAIWAN
INDONESIA
AUSTRALIAPACIFIC ISLANDS
SINGAPORE
LAOS
THAILAND
CAMBODIAMALAYSIA
PAPUA NEW GUINEA
FIJI
INDIA
ANZ & AmBank Partnership
16 Asian markets, 98 branches and 5 Partnerships
46 46Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
General Insurance Credentials
• AmG completed the Kurnia acquisition on 26 Sept 2012 – combined entity renamed AmGeneralInsurance Berhad on 1 Mar 2013
• One of Malaysia‟s leading general insurers and the No. 1 motor insurer
• Insures around one in five cars in Malaysia (~21% market share) and ~12% market share for general insurance by GWP
• GWP over MYR 1.7 billion
• Over 3.6 million policy holders and a diversified distribution base – 7,000 plus agents, supported by a national network of branches and over 180 AmBank branches across the country
• Cost synergies and operational efficiencies to achieve value accretion over the next 2 years
• IAG provided substantial leadership and input into the acquisition process and integration planning
• Resources from IAG Group have been mobilised to Malaysia to assist with integration
Value proposition
• Involved in the management of AmGeneral Insurance, offering skills transfer, partnership and relationship models of IAG
• Adding value through claims re-engineering savings, increased revenue via product development, underwriting and pricing
Board & Management representation
• Justin Breheny– Director (Group Chief Risk Officer, IAG)
• Duncan Brain – Director (CEO, IAG Asia)
• Travis Atkinson – CEO AmGeneral Insurance Berhad
• Arron Mann– General Manager, Claims
• Chris Tandy – General Manager, Personal and Commercial Pricing
• Jackie Chung – Head of Transformation Management Office
Partnership with IAG
GENERAL INSURANCE
AmGeneral: Leveraging strategic partnership with global insurance partner
47 47Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Branches ATMRegional Business Centres
Perlis 1 4
Kedah 5 29
Pulau Pinang 16 51 1
Perak 19 49
Selangor 40 261
Kuala Lumpur 28 148
Putrajaya 1 4
Negeri Sembilan 7 44
Melaka 6 37
Johor 23 95 1
Pahang 8 36
Terengganu 4 20
Kelantan 2 22
Sabah 10 35 1
Labuan 1 2
Sarawak 16 48 1
187 885 4
1.Peer banks as at Dec 2012, AmBank as at latest practical date2. AmLife & AmG branches and agency office
Multiple distribution channels aligned to demographics
Population Density: <100 persons per km2 101-500 persons per km
501-1,000 persons per km2 1,001--1,500 persons per km2
> 1,501 persons per km2
Perlis
Kedah
PulauPinang
Perak
SarawakKuala Lumpur
Putrajaya
NegeriSembilan
Melaka Johor
Pahang
Singapore
Indonesia
Selangor
Labuan
SabahTerengganu
Kelantan
AmIslamicbranches
Weekend & Extended Hours
Banking Branches
ATMs @ 7-Eleven
ElectronicBanking Centres
Internet & Mobile
BankingAmGeneral AmLife AmInvestment MBF
3 96 404 167AmOnlineAmGenie
32(include 28
dual branded branches)
18 offices14 agencies
14 26
Note(s):
Brunei: AmCapital (B) Sdn Bhd
Indonesia: PT.AmCapital Indonesia, PT.AMCI Manajemen Investasi Indonedia
Singapore: AmFraser Securities Pte Ltd
Brunei Darussalam
Nationwide Branch Network
Other Customer Touch Points
48 48Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
AmInvestmentGroup Berhad
AmCorp Group
Bhd, 15.5%
ANZ Funds
Pty Ltd 1, 23.8%
EPF, 12.4%
Other
shareholders, 47.3%
FY2010 FY2011 FY2012 FY2013 Q1FY2014 H1FY2014
27% 27% 26% 29% 32% 34%
Solid shareholding structure & franchise value
As at 30 Sep 2013
AmLifeInsurance
Berhad
AMMB Holdings Berhad
Capital Markets
100%
100%
100%Asset Management
100%
100%
100%
51%
Banking
Insurance
AmGeneralHoldingsBerhad2
AmFamilyTakaful Berhad
AmBank (M) Berhad
AmIslamic Bank Berhad
AmInvestmentBank Berhad
AMAB Holdings Sdn Bhd
100% MBF Cards (M’sia) Sdn Bhd
BonuskadLoyalty Sdn
Bhd
33.33%
100%
AmGeneralInsurance Berhad3
100%
1. ANZ: ANZ Funds Pty Ltd,a wholly owned subsidiary of Australia and New Zealand Banking Group Limited2. Formerly known as AmG Insurance Berhad3. Formerly know as Kurnia Insurans (Malaysia) Berhad
49%
Foreign shareholding excluding ANZ
49 49Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
9.10 8.95 8.83 8.70 8.60 8.50 8.46 8.45 8.40 8.40 8.358.11
7.897.60 7.58 7.50 7.50 7.40 7.40 7.40 7.40 7.35 7.32 7.30
6.776.35
19
Au
g 1
3
16
Au
g 1
3
23
Au
g 1
3
18
Oct
13
16
Au
g 1
3
16
Au
g 1
3
16
Au
g 1
3
19
Au
g 1
3
10
Oct
13
19
Au
g 1
3
19
Au
g 1
3
16
Au
g 1
3
16
Au
g 1
3
16
Au
g 1
3
1 N
ov 1
3
19
Au
g 1
3
21
Oct
13
11
Ap
r 1
3
19
Au
g 1
3
1 O
ct
13
16
Au
g 1
3
19
Au
g 1
3
4 O
ct
13
19
Se
p 1
2
Buy/Outperform/Overweight/AddP/EPS : EPS annualized Apr 12 – Sep 13 P/BV : BV as at 30 Sep13
Banking sector share price movement / target price and recommendations
105.7%
105.3%
84.1%
75.8%
36.5%
15.8%
31.6%
0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0%
AMMB
HLFG
PBB
RHB Cap
CIMB
MBB
KLCI(Note: 18 May 2007 vs. 30 Sep 2013) Ratings FY2007 H1FY2014
AmBank (M) RAM A2/P1/Stable AA3/P1/Positive
Fitch BBB-/F3/Stable BBB/F3/Stable
S&P BBB-/A-3/Stable BBB+/A-2/Stable
Moody‟s Baa2/P-3/Stable/D- Baa1/P-2/Stable/D+1
AmInvestment RAM AA3/P1/Stable AA3/P1/Positive
Fitch BB+/B/Stable BBB/F3/Stable
S&P BB+/B/Stable BBB+/A-2/Stable
AmIslamic
RAM A2/P1/Stable AA3/P1/Positive
AMMB RAM NA A1/P1/Positive
TP: target price
Sell/Underperform/Fully valued/Reduce/Underweight
Hold/Neutral/Market perform Source : Bloomberg as at 6 Nov 2013
1 BFSR - Banking Financial Strength Rating
+2
+1
+2
+2
+3
+2
+1 Notches of ratings upgrades
+1
AMMB HOLDINGS BERHAD Average TP : RM7.91Buy : 7 (27%)Sell : 4 (15%)Hold : 15 (58%)Average TP / Average CP : 1.07x
P/EPS : 12.25P/BV : 1.79
Market Price : RM7.41
19
Au
g 1
3
13
Ju
n 1
3
Banking Sector Share Price Movement Upgraded ratings
Target Price and Recommendations
50 50Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Strategic Business Transformation: Continued Progress
Set Group‟s MTA, transformation strategy, agenda and targets Enhanced focus on asset quality and risk reward trade offs Realigned business model towards profitable segments in HP, mortgage & fixed income Consolidated Group balance sheet activities within commercial bank Split composite insurance license to General and Life
High Priority Growth
Initiatives
Governance & Enablement Functions
Created deposit businesses as profit centres across Group Commenced realigning non-retail customer segmentation and divisional focus Proactively strengthened capital and liquidity management Repositioned balance sheet for rising interest rates Completed realignments in non-retail customer centric business models Continued expanding product offerings and new capabilities in Markets division Balance sheet funding strengthened via long term fund raisings
Developed retail focus customer centric business models Implemented basic account plans for business customers to increase SOW Initiated Group Rebranding program Initiated revamping of branches to refresh customer experience Realigned account management teams for more effective account planning
Launched a new brand re-positioning, “Your Bank. Malaysia‟s Bank. AmBank.”, a new chapter for our brand to deliver a unique AmBank Group experience to our customers
Restructure non-retail business divisions to Wholesale Banking to improve client centricity, efficiency and productivity
Developing Small Business Banking model targeting non-individual customers in Retail banking
FY2014
FY2012 & FY2013
FY2010 & FY2011
FY2008 & FY2009
Strategic Business
Transformation
51 51Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
High Priority Growth Initiatives: Implemented To-Date
Created new profit centre based retail branch distribution model Created a separate Corporate and Institutional Banking (CIB) Division Developed new FX business in collaboration with ANZ Enhanced cash management offering via Gross Payroll system Friends Life brought in as new life strategic business partner
Accelerated building of scale in non-retail customer businesses Increased focus on GLC, GLIC and MNC businesses Developed new Rates business in collaboration with ANZ Expanded distribution footprint (particular focus on 7-11 ATM‟s) & alternative channels Commenced activities to leverage ANZ International connectivity Developed new wealth management business strategies Created a new Transaction Banking business focusing on trade and cash management
Inked business principle agreements with ANZ to leverage international connectivity Commenced a new family Takaful business with Friends Life Commenced Priority Banking expansion initiatives Completed Kurnia & MBF Cards acquisitions and commence integration Repurchased remaining shareholding in AmLife and AmTakaful Secured approval as Private Retirement Scheme (PRS) provider Established partnership with Travelex for money changing services
Channels re-organisation to improve customer connectivity and experience (e.g. branch re-design and rationalisation; reposition digital banking)
Pursuing “Save to Invest” programme to achieve cost synergies across the Group Undertaking segmentation activities to enhance cross-selling to grow Main Bank relationships Initiated account joint-planning within non-retail divisions to increase trade utilisation &
business deals
Strategic Business
Transformation
Governance & Enablement Functions
FY2014
FY2012 & FY2013
FY2010 & FY2011
FY2008 & FY2009
High Priority Growth
Initiatives
52 52Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Rebuilding AmBank‟s “Core Banking System” via AmHorizon, creating a scalable and robust platform for growth with enhanced customer experience, target to go live by end 2013
Financial Holding Company structure being progressed for full compliance with FSA & IFSA Streamlining of subsidiaries and releasing of dormant capital of 12 entities to be completed
by 31 March 2014 Reviewing Internal Rating Based approach to optimise capital management Enterprise Process Platform (EPP) going live to support lending operations
Governance and Enablement Functions Streamlined:Supports Better Decision Making
Privatised AmInvestment Bank as part of migration to universal banking platform Consolidated / simplified governance committee structures and strengthen risk disciplines Created a Group PMO to prioritise and manage key strategic initiatives Established Advance Risk Recognition Program (ARRP) Separated ALCO, capital and balance sheet management from Markets Delivered Peer Bank relative performance benchmarks Implemented short and long term performance incentives
Delivered 8 new generation retail scorecards & new market risk models Commenced PD, LGD & EAD models for retail and non-retail, non-retail security indicators Developed leadership bench-strength and succession planning Implemented Operational Risk Incident Reporting system and Basel II capital calculator Implemented FTP system aligned to balance sheet strategies Consolidated some Group Support into Centres of Excellence Initiated new retail and non retail PD / LGD models, Security Indicators, Collateral
management, and Market risk system (VIPER) Initiated core banking system replacement programme
Strategic Business
Transformation
High Priority Growth
Initiatives
Implemented a new ALM system and divisional capital allocations under Basel II Integrate new Basel III frameworks into planning processes Finalised vendor selection and commenced core banking system replacement Developed AmFamily Takaful system to support commencement of Takaful business Implemented Model Execution Platform (MEP) provisioning methodology for better risk
assessment and pricing capabilities Transitioned to full MFRS 139 compliance on collective provisioning for credit risk Developing new behavioral scoring models for Retail and SME portfolio
FY2014
FY2012 & FY2013
FY2010 & FY2011
FY2008 & FY2009
Governance & Enablement Functions
53 53Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1. EXECUTIVE SUMMARY Page 3
2. H1FY2014 GROUP FINANCIAL PERFORMANCE Page 10
3. OUTLOOK & STRATEGIC PRIORITIES Page 24
4. DIVISIONAL STRATEGY & PERFORMANCE Page 29
5. SUPPLEMENTARY INFORMATION – AMBANK GROUP Page 41
6. SUPPLEMENTARY INFORMATION – ECONOMY & INDUSTRY Page 53
AGENDA
Your Bank. Malaysia‟s Bank. AmBank.
54 54Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
98.6
0
20
40
60
80
100
120
140
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2008 2009 2010 2011 2012 2013
BCI
4.3%
8.0%
6.0%
0%
5%
10%
15%
20%
25%
30%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
GDP Consumption Investment
FDIs remain robust
Sources : Bloomberg & BNM
Domestic consumption and investment continues to drive Malaysian economy
Business Conditions Index
2010 2011 2012 2013
27.5
41.643.3
30.829.627.028.2
33.1
39.0
23.422.125.5
32.529.0
30.632.2
29.8
21.3
17.2
26.6
16.3
8.27.2
16.0
2.0-0.8 0.4 1.1 2.6
-3.5
14.5
2.4
6.3
12.013.814.013.4
4.8
12.011.38.7
-1.9
9.4
7.4
-10
0
10
20
30
40
50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2008 2009 2010 2011 2012 2013
TD FDI
RM' bil
Moderating growth
Slight deterioration in near term expectations
CPI & unemployment rates remain low
FDIs remain robust
2.8%
2.6%
0%
5%
10%
Mar
Jun
Sept
Dec
Mar
Jun
Sept
Dec
Mar
Jun
Sept
Dec
Mar
Jun
Sept
2010 2011 2012 2013
Unemployment Rate CPI
55 55Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
10.2%
8.8%
9.5%
5%
10%
15%
Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept Dec Mar Jun Sept
2010 2011 2012 2013
Retail growth YoY Non-retail growth YoY Total loans growth YoY
4.53%
3.00%
6.53%
0%
5%
10%
15%
2006 2007 2008 2009 2010 2011 2012 2013
Average lending rate (commercial banks) Average OPR Average BLR
257.7 307.6 342.1 350.4
263.7 333.7
400.1 415.8
33.4% 34.2% 34.6% 31.9%
75.1% 75.8% 76.6%80.5%
-100
100
300
500
700
900
1,100
1,300
1,500
Retail loans application Non-retail loans application
Gross national savings Household debt/GDP
2009 2010 2011 2012
Domestic economy expected to be resilient
RM’mil
Source: BNM
To be updated for the his
Interest rates expected to remain in the short term
Moderating loans growth
Stable household debt / GDP with sustainable loan application
Loans application and loans approval remained weak
257.7 307.6 342.1 350.4
263.7 333.7
400.1 415.8
33.4% 34.2% 34.6% 31.9%
75.1% 75.8% 76.6%80.5%
-100
100
300
500
700
900
1,100
1,300
1,500
Retail loans application Non-retail loans application
Gross national savings Household debt/GDP
13.1%
10.9%
-30.0%
-10.0%
10.0%
30.0%
50.0%
Mar Jun SeptDec Mar Jun SeptDec Mar Jun SeptDec Mar Jun Sept
2010 2011 2012 2013
Loan application growth yoy Loan approved growth yoy
56 56Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
0
5
10
15
20
25
30
35
40
45
50
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2010 2011 2012 2013
New issues of equity New issues of debtSource: BNM
Strong fundamentals in the banking sector
RM’bil RM’mil
Loan loss coverage Gross impaired loans
Capital levels above BNM‟s Basel 3 guidelines
Capital activities supported by debt issuance
Asset quality improved
Sustained deposits growth provides liquidity
97.6%
2.0%
-2.0%
2.0%
6.0%
10.0%
14.0%
18.0%
80%
85%
90%
95%
100%
105%
Mar Jun SeptDec Mar Jun SeptDec Mar Jun SeptDec Mar Jun Sept
2010 2011 2012 2013
Loan Loss Coverage Gross Impaired Loans
14.4%
13.0%
0%
5%
10%
15%
20%
Mar Jun SeptDec Mar Jun SeptDec Mar Jun SeptDec Mar Jun Sept
2010 2011 2012 2013
RWCA/Total capital Core capital/ Tier-1
Beginning January 2013, capital components are reported based on Basel III Capital Adequacy Framework
79.8%
0
200
400
600
800
1,000
1,200
1,400
1,600
Mar
Jun
Sept
Dec
Mar
Jun
Sept
Dec
Mar
Jun
Sept
Dec
Mar
Jun
Sept
2010 2011 2012 2013
Total Deposits LD Ratio
57 57Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
ETP: Propelling Malaysia towards becoming a high-income, developed nation by 2020
• RM48k (USD15k) GNI per capita
• RM1.7 trillion GNI
• 6% annual GDP growth
GROSS NATIONAL INCOME
JOBS
• 31.6m population
• 3.3m additional jobs
TRANSFORMATIONAL ACTIONS
INVESTMENT
Focus Drivers:
• 12 NKEAs, 131 EPPs
• 60 Biz Opportunities
• Private-sector led
Competitiveness ‘Enablers’
• 6 SRIs & 51 Policy Measures
• RM1.4 trillion investment
• 92% private investment
• 8% public investment
• 73% DDI, 27% FDI
ECONOMIC TRANSFORMATION
PROGRAMME
Note: Data was correct as on ETP announcement date, the ETP is an evolving programme, in the past 2 years, some EPPs have been dropped, some new ones were added* Based on ETP update up 26 Aug 2013, the discrepancies with the sums of NKEAs was due to some undisclosed investment values and rounding errors
Round 11(16 Nov 2012)
Round 12(26 Aug 2013)
Round 9(28 May 2012)
Round 10(13 Sep 2012)
ROUND 1(25 Oct 2010)
ROUND 2(30 Nov 2010)
ROUND 3(11 Jan 2011)
ROUND 4(8 Mar 2011)
ROUND 5(19 Apr 2011)
ROUND 6(13 Jun 2011)
ROUND 7(8 Sep 2011)
Initiatives
Investment (RM‟bil)
GNI Impact
(RM‟bil)
Job creation(„000)
TO-DATE*
TARGET (2020)
% OF TARGET
ROUND 8(10 Nov 2011)
9 9 19 23 12 15 10 13 21 7 11 33 182 - -
5.3 9.6 66.8 14.8 11.4 63.4 1.4 5.9 20.5 5.6 6.7 7.0 218.3 1,419 15.4
0.1 84.5 32.5 20.1 16.6 66.3 8.4 6.7 4.6 2.4 1.1 6.8 250.1 1,700 14.7
13 71 52 88 74 64 10 17 40 18 40 26 513 3.3 mil 15.5
ETP Overview
ETP execution gaining momentum ETP : Economic Transformation ProgrammeSource : Pemandu
* Inclusive of 1.9 bil investment of not accounted for any sector
RM218.3 bil worth of investment unveiled since Oct 2010
National Key Economic Area
Target Investment(RM‟bil)
To-date(RM‟bil)
% of Target
Oil, Gas & Energy 218 95 44%
Palm Oil 124 2 2%
Business Services 41 5 13%
Tourism 204 17 8%
Financial services 211 - -%
Electronics & Electrical 78 10 12%
Wholesale & Retail 255 13 5%
Education 20 5 24%
Healthcare 23 6 26%
Communications content & Infrastructure
51 2 3%
Agriculture 22 1 7%
Greater KL 172 58 34%
Total 1,419 214* 15%
58 58Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
1,896
2,792
3,499
5,879
10,429
52,918
Vietnam
Phillippines
Indonesia
Thailand
Malaysia
Singapore
0.0
5.2
-2.1
-2.2
-2.6
-4.3
Vietnam
Singapore
Philippines
Indonesia
Thailand
Malaysia
Malaysia remains an attractive investment destination
GDP per capita, 2013 (USD)
1.3 3.5
5.6 4.7
6.5 3.1
6.2 53
6.8 6.8
5.2 5.3 0.7%
2.1%
3.1%
4.5%
5.9%
7.0%
Thailand
Singapore
Malaysia
Vietnam
Indonesia
Philippines
1.9%
2.0%
2.0%
3.4%
8.2%
9.5%
Singapore
Thailand
Malaysia
Philippines
Vietnam
Indonesia
Unemployment (%) Inflation (%)
5.4
30.0
68.2
89.7
97.5
248.0
Singapore
Malaysia
Thailand
Vietnam
Philippines
Indonesia
21.1
29.5
30.1
30.6
31.2
44.9
Philippines
Vietnam
Thailand
Malaysia
Indonesia
Singapore
Population (mil) Savings rate (% of GDP)
-3.4
0.1
2.5
3.5
5.6
18.5
Indonesia
Thailand
Philippines
Malaysia
Vietnam
Singapore
Current Account Balance(% of GDP)
Government structuralBalance (% of GDP)
Real GDP growth 2012 2013F
Source: World Economic Outlook Database October 2013
59 59Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Glossary / Disclaimer of warranty and limitation of liability
Reported PerformanceReported performance refers to the financial performance as reported in the audited financial statements and disclosed to the market
One OffsOne offs comprise those impacts on financial performance that arise from changes to :
• accounting and provisioning policies (eg 5 and 7 year rules)• differences between economic and accounting hedges• prior period catch ups (eg backdated salary costs)• strategic investments and divestments (eg ANZ partnership), and • tax and regulatory regimes (eg deferred tax asset write off due to reduction in corporate tax rates)
Underlying PerformanceUnderlying performance refers to the financial performance adjusted for one off impacts as above
Business Divisions
Business divisions • comprise AmBank Group‟s core operating businesses that generate profits from direct customer transactions and interactions• have relatively more stable income streams, incur the bulk of the costs and typically have a lower risk profile• in most instances have market shares and growth metrics that can be measured and benchmarked externally
Operating SegmentsOperating segments
• have more volatile and lumpy income streams, with the former a direct function of risk appetite • include
• income and expenses associated with shareholder funds, loan rehabilitation and legacy businesses, plus• costs associated with corporate, shared services and governance functions currently not charged back to the business units
The information provided is believed to be correct at the time of presentation. AMMB Holdings Berhad or AMMB Holdings or “AMMB” or its affiliates do not make any representation or warranty, express or implied, as to the adequacy, accuracy, completeness or fairness of any such information and opinion contained and shall not be liable for any consequences of any reliance thereon. Neither AMMB Holdings nor its affiliates are acting as your financial advisor or agent. The individual is responsible to make your own independent assessment of the information herein and should not treat such content as advice relating to legal, accounting, and taxation or investment matters and should consult your own advisers.
Forward looking statements are based upon the current beliefs and expectations of the AMMB Holdings and are subject to signif icant risks and uncertainties. Actual results may differ from those set forth in the forward looking statements. AMMB Holdings does not undertake to update the forward looking statements to reflect impact of circumstances or events that may arise after the date of this presentation.
The information in the presentation is not and should not be construed as an offer or recommendation to buy or sell securities. Neither does this presentation purport to contain all the information that a prospective investor may require. Because it is not possible for AMMB Holdings or its affiliates to have regard to the investment objectives, financial situation and particular needs of each individual who reads the information contained thus the
information presented may not be appropriate for all persons.
The information contained is not allowed to be reproduced, redistributed, transmitted or passed on, directly or indirectly, to any other person or published electronically or via print, in whole or in part, for any purpose.
The term "AMMB Holdings" and “AmBank Group” denotes all Group companies within the AMMB Holdings Group and this Disclaimer of Warranty and
Limitation of Liability policy applies to the financial institutions under AMMB Holdings.
Disclaimer of Warranty and Limitation of Liability
60 60Your Bank. Malaysia‟s Bank. AmBank.
H1FY2014 Results – Investors Presentation
Glossary / Disclaimer of warranty and limitation of liability
The information provided is believed to be correct at the time of presentation. AMMB Holdings Berhad or AMMB Holdings or “AMMB” or its affiliates do not make any representation or warranty, express or implied, as to the adequacy, accuracy, completeness or fairness of any such information and opinion contained and shall not be liable for any consequences of any reliance thereon. Neither AMMB Holdings nor its affiliates are acting as your financial advisor or agent. The individual is responsible to make your own independent assessment of the information herein and should not treat such content as advice relating to legal, accounting, and taxation or investment matters and should consult your own advisers.
Forward looking statements are based upon the current beliefs and expectations of the AMMB Holdings and are subject to signif icant risks and uncertainties. Actual results may differ from those set forth in the forward looking statements. AMMB Holdings does not undertake to update the forward looking statements to reflect impact of circumstances or events that may arise after the date of this presentation.
The information in the presentation is not and should not be construed as an offer or recommendation to buy or sell securities. Neither does this presentation purport to contain all the information that a prospective investor may require. Because it is not possible for AMMB Holdings or its affiliates to have regard to the investment objectives, financial situation and particular needs of each individual who reads the information contained thus the information presented may not be appropriate for all persons.
The information contained is not allowed to be reproduced, redistributed, transmitted or passed on, directly or indirectly, to any other person or published electronically or via print, in whole or in part, for any purpose.
The term "AMMB Holdings" and “AmBank Group” denotes all Group companies within the AMMB Holdings Group and this Disclaimer of Warranty and Limitation of Liability policy applies to the financial institutions under AMMB Holdings.
Disclaimer of Warranty and Limitation of Liability
The material in this presentation is general background information about AmBank Group‟sactivities current at the date of the presentation. It is information given in summary form anddoes not purport to be complete. It is not intended to be relied upon as advice to investors orpotential investors and does not take into account the investment objectives, financialsituation or needs of any particular investor. These should be considered, with or withoutprofessional advice when deciding if an investment is appropriate.
For further information, visit www.ambankgroup.com;
or contact
Ganesh Kumar Nadarajah
Group General Manager, Investor Relations and Planning
Karen Chuah
Senior Manager, Investor Relations and Planning
Tel: +603 2036 1435 or +6019 2093 955
Fax: +603 2031 7384
e-mail: [email protected];
Your Bank. Malaysia‟s Bank. AmBank.