ammb holdings berhad - ambank · 2018-04-18 · fy2014-2015 strategic ... •commence amg-kurnia...

AMBANKGROUP GROUP INVESTOR RELATIONS & PLANNING INVESTORS PRESENTATION H1FY20131

AMMB Holdings Berhad

Investors PresentationH1FY2013 Results

8 November 2012

AmBank Group

Ashok RamamurthyGroup Managing Director


1. Executive summary

2. H1FY2013 Group Financial Performance

3. Outlook

4. Kurnia& MBF Cards Acquisitions Updates

5. Divisional Strategy & Performance

6. Supplementary Information

o Strategies in more detail

o Economic landscape

o Strategic partnerships

o Others

1. Executive Summary

Page 8

Page 21

Page 25

Page 33

Page 45


Scale & Presence

Reposition, Build New Growth Options

Improve Returns

FY2012FY2007- 11Pre ANZ

PATMI +7.1%, ROE 14.7%

Net loans +10.5%, focus on profitable & viable segments

Divisional results within expectations

Strengthened capital & funding (CASA +27.5%, LDR 87.8%, CET-1 8.6%)

Investing to optimize, building up connectivity as key differentiator

Kurnia acquisition completed, MBF Cardsin progress

Negotiations underway to repurchase

AmFamilyTakaful

H1FY2013

Aggressively Invest, Optimise& Leverage Connectivity

FY2014-2015

Strategic Priorities

Grow retail assets

Lead in investment banking business

Leverage fixed income trading

3 Focus areas:

Strategic Business Transformation

High priority growth initiatives

Organisationand governance structures

5th consecutive year of record performance

Consistent & broad based revenue growth

Improved balance sheet & funding mix

Dividend payout: 40.1%

Pursue niche acquisitions such as Kurnia1

AmBank Vision& PerformanceHighlights

your future with us


Transaction* Islamic*

+96.7% +10.5%

H1FY2013resultsin line with full yearexpectations

PATMI#

EPS (basic)

ROA

ROE

1 Not annualised2 Reflect reclassification from Operating Segment

^ Restated with retrospective application of MFRS, where applicable# PATMI: profit after tax and non controlling interests

* Performances integrated to divisional outcomes

YoYChange Q1FY12 Q1FY11 Q4FY11 FY11

845.2 mil 789.1 mil 7.1% 396.6 mil 448.6 mil

14.7% 14.9% 0.2% 13.5% 15.9%

1.51% 1.48% 0.03% 1.39% 1.64%

28.21 sen 26.41 sen 6.9% 13.21 sen 15.01 sen

H1FY13H1FY12^(restated) Q2FY13 Q1FY13

Performance

H1FY2013 on track to achieve full year estimates

Improved net-interest income despite competitive pricing in selected segments

Credit quality improving with lower charge offs/allowances

H1FY13 vsH1FY12^ PATMI growth

Retail BusinessCorporate& Institutional

Investment Markets General Life

+30.0% +92.3%2 +55.4% -54.5% -55.5% +40.5% +43.7%

Divisional Growth

Retail Banking: higher profits from improved asset quality

Business and Corporate & Institutional Banking: strong income and deposits growth

Investment Banking and Markets: subdued performance with stable outlook

General insurance: improved underwriting profits


2.22% 2.76% 0.54% 2.45%

14.7% 14.9% 0.2% 15.7%

10.5% 10.4% 0.1% 11.3%

87.8% 89.2% 1.4% 89.5%

42.4% 40.0% 2.4% 40.6%

Gross impaired loans

LD Ratio3

CTI

RWCAR

Tier 1 CAR

Risk, Capital & Funding Profile

Consistentlystrongdepositsgrowth, improvedfunding andrisk profiles

Net Lending1

Customer Deposits2

CASA

YoYChange Q1FY12 Q1FY11 Q4FY11

80.1 bil 72.5 bil 10.5% 75.6 bil

14.4 bil 11.3 bil 27.5% 13.0 bil

91.3 bil 81.3 bil 12.3% 84.4 bil

H1FY13H1FY12^(restated)

FY12^(restated)

Growth

Stronger loans growth targeting profitable & viable segments

Maintained strong CASA growth via expanded product and service offerings

Implementing customer segmentation to enhance share of wallet and increase cross-selling across divisions

Proactive and consistent risk management

sen

Continued investments to build capacity for growth

H1FY13H1FY12^(restated)

FY12^(restated)

^ Restated with retrospective application of MFRS, where applicable1 Includes Islamic loans sold with recourse

2 Adjusted customer deposits include term funding and loans sold with recourse3 Based on net loans including loans sold with recourse over adjusted customer deposit


domestic sentiment but not immune to global economy jitters

Domestic business and government spending is expected to support economic activities, spurred by Budget 2013 incentives & plans, accommodative policies and continued roll-out of ETP

Domestic demand is expected to moderate with lower household spending

Anticipating stable outlook for 2013

What is ahead

Malaysia:2012f GDP to grow 4.5 %

Rollout of ETP supported lending and capital market activities

New Responsible Lending Guidelines and regulatory reforms moderating consumer loans growth

Moderating economy and price-based competitions for loans and deposits are ongoing challenges to maintain margins

Tougher economic environment may put some pressure on improving asset quality trends

OPR expected to remain at current 3% for the near term

Banking:Some challenges

Source: BNM and PEMANDU websites

4.8%

-1.5%

7.2%

5.1%4.5%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

560,000

580,000

600,000

620,000

640,000

660,000

680,000

700,000

720,000

CY2008 CY2009 CY2010 CY2011 CY2012f

%

GDP (RM'mil) GDP (%)

ETP execution gaining momentum

Initiatives

Investment ( )

GNI Impact ( )

Job creation

To-dateTarget(2020)

% of Target

138 - -

205.3 1, 400 14.7

242.2 1,700 14.2

0.448 mil 3.3mil 13.6


Execute program to strengthen brand positioning in affluent segments

Centralize functions to improve customer experience via reengineering and process automation

Optimize operating and support segments to deliver productivity and efficiency gains, maintaining upper tier CTI

Commence AmG-Kurniaand MBF Cards integration and delivering on synergies & benefits

AmBankGroup: Executeto StrategicPriorities

Accelerate Growth &

Business Mix Changes

Strengthen Customer

Centricity & Connectivity

Increase Productivity &

Efficiency

Acquire & Integrate

Accelerate execution of Retail reshaping programmeand grow main bank relationships

Grow Transaction Banking and Markets businesses for non-interest income

Enhance focus on AmLifetransformation to deliver growth, complemented by AmTakaful

Uplift ANZ International Connectivity via joint account planning / aligned pricing and propositions to customers

Targeting increased investments in growth, productivity and infrastructure to support MTA


AMMB Holdings Berhad

Investors PresentationH1FY2013 Results

8 November 2012

AmBank Group

Mandy SimpsonChief Financial Officer



2. FY2012 Group Financial Performance

3. Outlook







o Others



PATMI H1FY12*Net interest incomeNon Interest Income Total income Expenses PBP Impairments PBT Taxation & zakat PAT Minority interests PATMI H1FY13PATMI H1FY12*Net interest incomeNon Interest Income Total income Expenses PBP Impairments PBT Taxation & zakat PAT Minority interests PATMI H1FY13

14.7% 93.3%2.6% 68.9%

845.2 mil

7.1%14.6%3.3% 7.1% 10.0% 8.6%

789.1 mil

PATMI*H1FY12

Net Interest Income

Non-Interest Income

Total income Expenses PBPProvisions/Allowances

PBT Tax & Zakat PAT MIPATMI*H1FY13

H1FY13 ( )

1,404.7 663.0 2,067.7 876.4 1,191.3 14.3 1,177.0 299.3 877.6 32.5 845.2

H1FY12^( )

1,360.4 776.9 2,137.3 854.5 1,282.8 213.3 1,069.5 261.2 808.3 19.2 789.1

3.3%

H1 FY13 PATMIH1 FY12 PATMI Positive growth in H1 FY13 Contraction in H1 FY13

* PATMI: profit after tax and non controlling interests ^ Restated with retrospective application of MFRS, where applicable

Higher net interest income and lower allowances underpinned H1FY2013 results

Higher non interest income in H1FY12 due to large trading income

Ongoing medium term investments in infrastructure but well within CTI targets

PATMI H1FY12*Net interest incomeNon Interest Income Total income Expenses PBP Impairments PBT Taxation & zakat PAT Minority interests PATMI H1FY13

Growth


PATMI H1FY12 Retail banking Business banking Corporate &Institutional

InvestmentBanking

Markets General Insurance Life Assurance OperatingSegments

PATMI H1FY13

Diversified divisional contributions

55.4% 55.5% 40.5%54.5% 7.1%43.7% 10.5%

* Performances reflected within divisional outcomes ̂Restated with retrospective applications of MFRS, where applicable1.

2. Includes expenses for recently set-up AmFamilyTakaful business3. Reflect reclassification from Operating Segment

85%

30.0% 92.3% >100.0% 96.7%

PATMI (by division)

PATMI*H1 FY12

Retail BusinessCorporate & Institutional

Investment MarketsGeneral

InsuranceLife

Assurance1Operating Segments

Transaction* Islamic*

PATMI*H1 FY13

% of Composition

37% 19% 23% 4% 10% 7% 1% -1%

H1 FY13 ( )

313.9 162.53 197.0 32.1 82.1 60.3 4.7 -7.32 120.8 129.4

H1 FY12^ ( )

241.4 84.5 126.8 70.5 184.6 42.9 3.3 35.1 61.4 117.1

Conventional PATMI Islamic PATMI Positive growth in H1 FY13 Contraction in H1 FY13

789.1 mil

85%

15%

845.2 mil

15%

Growth


610.3 674.3 701.6

378.2 373.2

288.1

302.4

562.2

19.6

191.5

123.7

172.0

146.5

5.0

89.6

18.2

21.6

21.7

10.1

127.1 8.7

FY10 FY11 FY12 H1FY12* Fee Income Trading & InvestmentInsurance Business Others H1FY13

Fee Income Trading & Investment Insurance Business Others

1.4

318.6

Non-interest income movement

Lower non-interest income growth but stronger contributions from insurance

As % of total income 29% 30% 34% 36% 32%

14.7%

1,432.0

1,040.3

1,170.2

663.0

1.3% 39.9% 28.0% 13.1%

776.9

^ Restated with retrospective application of MFRS, where applicable

610.3 674.3701.60

378.2 373.2

288.1 302.4

562.20

19.6

191.5

123.7

172.0

146.50

5.0

89.6

18.2

21.6

21.70

10.1 127.1 8.7

FY10 FY11 FY12 H1FY12* Fee Income Trading & InvestmentInsurance Business Others H1FY13

Fee Income Trading & Investment Insurance Business Others

FY10 FY11 FY12^ H1FY12^ Fee IncomeTrading &

InvestmentInsuranceBusiness

Others H1FY13

56%

29%

1%

14%

Sales: 27%

Trading: 37%

Others: 36%

70.0


Note :1 Net Interest Margin includes Net Financing Income from Islamic Banking business 2 FY10-H1FY13 based on internal data computation

NIM and COF (YoY)

Reducing NIM, within expectations


Q1FY12^ Q2FY12^ Q3FY12^ Q4FY12^ Q1FY13 Q2FY13

3.00% 3.00% 3.00% 3.00% 3.00% 3.00%

2.00%

3.00%

3.50%4.00% 4.00% 4.00% 4.00% 4.00%

Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13

OPR SRR

NIM and COF (QoQ)

2.25%2.75% 3.00% 3.00%

1.00% 1.00%

4.00% 4.00%

FY10 FY11 FY12 H1FY13

OPR SRR


COF

NIMF

SRRF

OPRF

COF

NIMF

SRRF

OPRF

Net interest margin declined QoQbut within expectations, partly due to:

Ongoing competition

Loans portfolio rebalancing

Loans replacement cycle

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 NIMCost of Fund NIM OPR SRR

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%


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%


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%


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%


OPR SRR

SRR

OPR

2.68%

2.92%

3.18% 3.14%2.98% 2.94%

2.73% 2.65%


Cost of funds NIM

NIM

COF

3.15% 3.19% 3.20% 3.21% 3.15% 3.13%

2.66% 2.71%2.85%

2.73% 2.70% 2.59%


Cost of funds NIM

NIM

COF

2.68%


43.3%42.0%

39.9% 40.6%42.4%

46.9% 47.3%

43.2%

44.3%44.5%

FY09 FY10 FY11 FY12 H1FY13

897.6 946.3 1,049.8

548.7 557.3

323.7 346.8

362.6

179.3 204.0

149.5 134.7

127.7

59.9 54.2

130.5 134.1

154.5

60.9

FY10 FY11 FY12 H1FY12 Personnel Establishment Mkt & Comm Admin H1FY13

RM' Mil1,694.6

1,561.9 1,501.4

-5.88.6 24.7 -5.7

66.7

Cost-Income Ratio

FY09 FY10 FY11FY12

(restated)H1FY13

CTI in upper quartile amongst peers despite on-going investments to support growth

Peer banks average

FY10 FY11 FY12 H1FY12 Personnel EstablishmentMarketing &

CommunicationAdministration

& OthersH1FY13

1.6% 13.8% 9.3% 8.7%

Composition of Operating Expenses

Personnel & Staff Establishment Marketing & Communication Administration & Others

2.6%

854.5


876.4

Personal64%

Establishment23%

Marketing & Communication

6%

Admin & others7%

Operating Expenses % Composition (H1FY13)

43.3%42.0%

39.9% 40.6%42.4%

46.9% 47.3%

43.2%

44.3%44.5%


AMMB CTI Peer banks

Computerisationcost: 12%


3.182.02 1.50 1.01

5.53

3.602.43

1.87 2.54 2.45 1.91 1.82

56.6%67.3%

75.1%

99.5%114.5% 121.8%

Net NPL Gross NPL Gross Impaired Loans Loan Loss Coverage Allowance Coverage (MFRS 139)

3.182.02 1.50 1.01

5.53

3.602.43

1.87 2.54 2.45 1.91 1.82

56.6%67.3%

75.1%

99.5%114.5% 121.8%


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%

2.22%

0.51%0.07%

Net Provisions Charge Net NPL Ratio Gross NPL Ratio Gross Impaired Loans Loan Loss Charge(MFRS139)

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)

Continued improving asset quality with stable outlookAsset Quality Indicators

MF

RS

139

159bps

44bps

Allowance Coverage:Retail Bkg: 78.7%Business Bkg: 145.0%

Gross Impaired LoansRetail Bkg: 2.70%Business Bkg: 1.56%

LoanLoss Charge FY12

Transitional provisions 0.56%

MFRS 139 0.51%

AllowanceCoverage FY12

Transitional provisions 112.6%

MFRS 139 114.5%

FY2007 FY2008 FY2009 FY2010

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%


Net Provisions Charge Net NPL Ratio Gross NPL Ratio Gross Impaired Loans Loan Loss Charge (MFRS139)

FY2011 FY2012 H1FY13Day 1

[1 April 10]

MF

RS

139

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%


Net Provisions Charge Net NPL Ratio Gross NPL Ratio Gross Impaired Loans Loan Loss Charge (MFRS139)

Gross Impaired loans

GP

3G

P3

3.182.02 1.50 1.01

5.53

3.602.43

1.87 2.54 2.45 1.91 1.91

56.6%67.3%

75.1%

99.5%114.5%

116.3%


Net NPL Gross NPL Gross Impaired Loans Loan Loss Coverage Allowance Coverage (MFRS 139)Net NPL Gross NPL

3.182.02 1.50 1.01

5.53

3.602.43

1.87 2.54 2.45 1.91 1.82

56.6%67.3%

75.1%

99.5%114.5% 121.8%



0.00%

0.50%

1.00%

1.50%

2.00%

Q1 Q2 Q3 Q4

% Write-Offs to Avg Gross Loans

0.00%

0.60%

1.20%

1.80%

Q1 Q2 Q3 Q4

% New Gross NPL / Gross Impaired Loans to Gross Loans

Note :

1 FY2004 and FY2005 financials based on gross before IIS

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

New gross impaired loans formation within expectations

Impairments caused by a previously restructured Business Banking loan

Prudently accelerated write-offs of partial provisions post system enhancements

0.00%

0.60%

1.20%

1.80%

Q1 Q2 Q3 Q4


FY2004-FY2007 FY2008-FY2010 FY2011

FY2012 FY2013

GP 3

FY2004 -FY2007 FY2008-FY2010 FY2011

MFRS 139

0.00%

0.60%

1.20%

1.80%

Q1 Q2 Q3 Q4


FY2004-FY2007 FY2008-FY2010

FY2011 Q1FY2012FY2012

0.00%

0.40%

0.80%

1.20%

Q1 Q2 Q3 Q4

% Gross NPL / Impaired Loans Conversion to Gross Loans

0.00%

0.20%

0.40%

0.60%

Q1 Q2 Q3 Q4

% Recoveries to Avg Gross Loans


Conventional27%

Islamic16%

Conventional48%

Islamic9%

Gross LoansH1FY12*

Auto Financing Mortgage Credit Cards Line of Credit Co-Op Asset Financing Business Banking(ex GLR)

Corporate &Institutional

Banking

Others Gross LoansH1FY13

Loans: non-retail growing faster than industry, retail targeting viable segments

Gross Loan1 / Financing1 movement

Retail Non-Retail

4.7% 19.0%

74.6bil

5.5% 6.0% 14.9% 26.6%12.1% 5.5% -14.2% 82.3bil

42%

58%

10.3%

39%

61%

Gross LoanH1 FY12

Auto Financing

Mortgage Credit Cards Line of Credit Co-OpAsset

FinancingBusiness

Corporate & Institutional

OthersGrossLoan

H1 FY13% of

Composition31.2% 18.9% 1.4% 0.8% 2.2% 3.6% 21.1% 19.8% 1.0%

H1 FY13 ( )

25.7 15.5 1.1 0.8 1.8 2.9 17.3 16.3 0.9

H1FY12 ( )

24.3 14.7 1.0 0.8 2.0 2.8 15.1 12.9 1.0

6.6%

No

n-reta

ilR

eta

il

5.5%

Non-RetailRetail1 Including Islamic financing sold to Cagamas Positive growth in H1 FY13 Contraction in H1 FY13

Loan portfolio H1FY13


2.5 3.08.0 9.0 10.1 [11%]

25.5 26.829.7 30.5

31.3[34.3%]

26.329.6

27.435.4

40.8[44.7%]10.9

11.2

16.3

9.4

9.1[10%]


Diversify funding

Term funding Individuals Biz enterprises Government

RM'bil

Lengthening debt capital & term funding profile

1. Term funding includes Senior Notes, credit-linked notes, loans sold with recourse and other sources such as pension and retirement funds, non-profit organisationsand similar

81.384.4

91.3

70.765.2

Diversified funding with well distributed debt maturities

Funded assets financed by equity, customer deposits and longer-term debt:

H1FY13 = 94.5%

FY12 = 95.3%

FY11 = 95.2%

FY10 = 93.9%

FY09 = 91.6%

Increased funding diversification (Senior Notes, Sukuk, MTN)-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

FY06 FY08 FY09 FY10 FY11 FY12 FY13 YTD FY13 FY14 FY15 FY16 FY17 FY18 FY19+

RM'bil

Debt Capital Term Funding Loans sold to Cagamas

Issuance Maturity

13.9% 15.0% 14.0% 14.6% 13.8%

77.0% 77.4% 74.3% 73.8% 73.4%

0.7% 1.5% 6.9% 6.9% 7.3%1.0% 1.2% 0.6% 0.8% 0.6%7.4% 4.9% 4.3% 3.9% 4.9%


Improving funding composition

Equity & Debt Capital Deposits from Customers

Term Funding & loans sold with recourse > 1 yr Term Funding & loans sold with recourse < 1 yr

Deposits from Banks & FIs

94.5%


7.7%* 8.1%* 8.0%*9.2% 8.6%

9.7%10.3% 10.2%

11.3%10.5%

15.2%15.8%

14.4%15.7%

14.7%

FY2009 FY2010 FY2011 FY2012 H1FY2013

CET 1 Ratio Tier 1 CAR RWCAR* include preference shares

Capital adequacy: Pro-forma AmBank Group Banking Entities1 Capital adequacy by legal entities2

1. Banking entities include AmBank (M) BerhadGroup, AmInvestmentBank Group and AmIslamicBank

2. H1FY13 after deducting proposed dividend

3. Double leverage ratio computed based on AMMB Holdings BhdCompany level

Double leverageratio3 1.04x

Balance Sheet leverage ratio (total equity net of deferred tax & intangible assets over total assets net of deferred tax & intangible

assets)

8.1%

Total leverage ratio (total equity net of deferred tax & intangible assets over total assets net of deferred tax & intangible

assets& Off Balance Sheet )

6.2%

Remained well positioned for Basel III & targeted payouts

Comfortable with Risk Appetite Framework Targets for regulated entities:

CET 1: 8.3% ± 1%

Tier 1 CAR: 10.3% ± 1%

RWCAR: 14.3% ± 1%

7.7%* 8.1%* 8.0%*9.2%

9.7%10.3% 10.2%

11.3%

15.2%15.8%

14.4%15.7%

FY2009 FY2010 FY2011 FY2012

CET 1 Ratio Tier 1 CAR RWCAR* include preference shares

9.5%

14.4%

8.0%

12.5%

21.7% 21.7%

10.3%

14.4%

8.1%

13.4%

25.2% 25.2%

Tier 1 RWCAR Tier 1 RWCAR Tier 1 RWCAR

AmBank AmIslamic AmInvestment

FY11 FY12 H1FY13


6.6 sen

6.6sen

7.0sen

8.0sen

10.5sen

12.0sen

13.5sen

13.5sen

13.5sen

20%

28%

40% 40% 41%

25%

Interim Dividend Final Dividend Dividend Payout Ratio

31.6sen

34.7sen

44.7sen

50.5sen

49.4sen

28.2sen*

ROE ROA

EPS, BasicSen/Share

Dividend, GrossSen/Share


* Not annualised

FY09 FY10 FY11 FY12FY12^ H1FY13 FY09 FY10 FY11 FY12FY12^ H1FY13 (restated) (restated)(Previously reported)

(Previously reported)

FY09 FY10 FY11 FY12FY12̂ H1FY13 FY09 FY10 FY11FY12 FY12^ H1FY13(restated) (restated)(Previously reported)

(Previously reported)

6.0sen

1.04% 1.13%1.39% 1.43% 1.39% 1.51%

11.7% 11.5%13.6% 14.1% 13.8% 14.7%




3. Outlook







o Others

3. Outlook


Grow deposits and improve CASA compositionIncrease share of wallet and main bank relationships, grow assets in profitable & viable segmentsForecasting higher profit contribution for FY2013

Capitaliseon ETP targeting preferred sectors (oil & gas, palm oil, construction/infrastructure)Increase penetration of corporate clients with international presenceExpectinggood profit growth for FY2013

Raise CASA ratio,diversify cash management servicesand increase utilization of trade products Enhance customer service and improve turnaround time to clientsExpectinggood profit growth for FY2013

Continue cross selling growth leading to increase in non interest incomeCapitalize on public & private sectors growth initiatives and focus on selected key sectorsAnticipating increased profit for FY2013

Focus on high value ETP deals for oil & gas, infrastructure & construction New products & services for DCM, equities corporate solutions & structural products, funds managementExpecting subdued performancefor FY2013

Expand product range utilisingMurex capabilitiesEnable trading for regional bonds, increase contribution of cross border transactionsExpecting subdued performancefor FY2013

Increase contribution of non-motor retail lines, develop business insurance and direct marketing capabilitiesIncrease penetration of AmBank customers & renewal rate, and motor customer baseCommence AmG-Kurniaintegration and delivering on synergiesExpecting higher growth in premiumand profit for FY2013

Optimisingand maximisingboth the volumes & profitability of bancassurancedistributionExpectingstable profit contribution for FY2013

Grow the Islamic contract/project financing via focus on customers awarded with ETP-related contractsIncrease penetration of products and increase cross-

RETAIL*

BUSINESS*

CORPORATE &INSTITUTIONAL*

INVESTMENT*

MARKET*

GENERAL

LIFE

ISLAMIC

TRANSACTION*

* Conventional & Islamic

Outlook: profit growth for FY2013 expected circa 9 11%


FY08 FY09 FY10 FY11FY12

(restated)^ H1FY13FY13

EstimateFY14 - FY15Estimates

668.5 860.8 1,008.6 1,342.8 1,476.6 845.2 mil

11.5% 11.7% 11.5% 13.6% 13.8% 14.7%

40.2% 43.3% 42.0% 39.9% 40.6% 42.4%

3.7% 2.6% 1.5%

3.81% 3.33% 2.45% 2.22%

6.0 sen/

share

18%

8.0 sen/ share

20%

10.5 sen/ share

28%

18.0 sen/ share

40%

20.1 sen/ share

41%

7.0 sen/ share

25%

PATMI*( )

ROE (%)

CTI (%)

Net NPL ratio /Gross

impaired loans (%)

Dividend:Gross/single-

tier (sen)Payout (%)

Key performance indicators

Actual Underlying estimates

NIM expected to contract 10 15bps

Loan loss charge expected to be circa 25 bps

Loans growth expected to grow @ 8 10%

LD ratio expected to maintain at ~90%

CASA composition at 16 18%

Non-interest income as a percentage of total income at circa 35%

Retail : non-retail loan portfolio at approximately 60 : 40

Target CET 1 of 8.3% (1%), Tier 1 of 10.3% (1%), RWCAR of 14.3% ( 1%)

One-off acquisition costs excluded from estimates *PATMI: profit after tax and non-controlling interests


Other FY2013 estimates

9 11% 9 12% CAGR

14 14.5% 14 15%

40-50%Payout

40-50%Payout


Summary

Good H1FY2013 performance, on track to achieve full year estimates

Recent acquisitions to drive synergistic benefits progressively

Fully committed to FY2013 2015 strategic priorities:

Accelerate growth & business mix changesStrengthen customer centricity & connectivityIncrease productivity and efficiencyAcquire & integrate in-fill acquisitions and strategic tie-ups




3. Outlook

4. Kurniaacquisition updates






o Others

4. Kurnia& MBF Cards acquisitions updates


Deal Summary & Valuation

On 26 Sep 2012, AmG1, 51% owned subsidiary of AMMB, acquired 100% equity interest in Kurnia Insurans(Malaysia) Berhad Kurnia

Cash purchase price of RM1.627 billion

Valuation: Implied Price to Book of 1.95x based on 30 Jun 2012 net assets

51% capital injection by AMMB to AmG, funded by existing internal cash resources, supplemented by approximately RM500 million of senior debt issued in August 2012

Merged Entity

KurniaAcquisition Overview: Summary

o Base price of RM1.55 billion, and

o Increased in net assets of Kurniaof RM77 million RM836 million as at the completion accounts (30 Jun 2012) vs. RM759 million as of 30 Jun 2011

Approx4 million policyholderslargest agency networkLeading market shares in motor (21%) & general insurance (12%)

Transitional governance and oversight mechanisms establishedAgents and business partners of both AmGand Kurniaremain in current working Both AmAssurance Kurnia to be used

Communication plans in progress (AmG& Kurniaemployees, customers, agents & business partners)Headquarter to be relocated to MenaraKurnia

General insurers & Number 1 Motor insurer

Transition period Clear plans and communications program established

AmGand KurniaIntegration Programme Office set up

1. AmGInsurance Bhd

https://www.kurnia.com/malaysia


Significantly Addresses PartiallyAddresses PartiallyAddresses

ability to Address Strategy

Our approved strategic aspirations have not changed...AmG remains committed to building an industry leadership position, under-pinned by Motor scale and supported by growth in Commercial and Personal Lines.

The Kurniaacquisition significantly contributes to the achievement of these strategies

KurniaAcquisition Overview: Strategic Alignment Between AmG& Kurnia

Building a performance culture led by a top quartile performing

management team

Delivering industry-leading systems, operational excellence and superior customer service

Building best-practice customer database management and

marketing techniques

Be the Number 1 in Motor Insurance

Lead in Chosen Niche Commercial Segments

Lead in Non-Motor Personal Lines

KurniaResponds to Numerous Strategic Imperatives

Achieves GWP Aspirations

Creates Dominant Scale Player

Reduces Margin Pressures

Diversification

Meeting future industry challenges



Source: ACORN research conducted for AmG

Kurn

ia

Am

G

Com

pe

titor

1

Com

pe

titor

2

Com

pe

titor

3

Com

pe

titor

4

Com

pe

titor

5

Com

pe

titor

6

Com

pe

titor

7

Com

pe

titor

8

Com

pe

titor

9

Com

pe

titor

10

Com

pe

titor

11

Com

pe

titor

12

Com

pe

titor

13

Com

pe

titor

14

Com

pe

titor

15

Com

pe

titor

16

Com

pe

titor

17

Com

pe

titor

18

Com

pe

titor

19

Com

pe

titor

20

Total unaided TOM

Acquisition Overview: Kurniaand AmAssuranceIndustry-Leading Brands

Kurniaand AmAssurance are the market-leading brands. Both brands will be retained and used, in what would be a pioneering brand strategy for a Malaysian general insurer.



Integration

12 Apr2012

Execution of SPA with Kurnia

Integration Update: Indicative timeline business & operations integration

11 Jul2012

Shareholder Approval obtained

26 Sep 2012

Acquisition of Kurnia

completed

1Qtr2013

Integrated sales & claims system for new motor

and PA

2Qtr2013

Motor and PA policy data migrated to

integrated core

3Qtr2013

Integrated sales & claims system for all products

4Qtr2013

All products policy data migrated to integrated

system

Nov2012

Relocate to MenaraKurnia

1Qtr 2013

Vesting Order takes effect and announcement of vesting order

in major newspaper

3 Apr2012

Approval of MOF via BNM letter dated 3

April 12 obtained

8 Aug 2012

Successful issuance of

RM500 million Senior Medium

Term Notes

Today

1Qtr2014

Integration completed

Acquisition



TotalHeadcount reduction

A ProcurementB Corporate recharge

C Rationalisation

50

15.5

14.5

10.5

9.5

D

31% 29% 21% 19%

4 major source of synergies contribute to estimated annual savings of RM50 million from year 2 onwards

Portion of total synergiesPercent

Description No material redundancies throughout integration period

Headcount reduction largely achieved through natural attrition

Leverage scale of the enlarged business

Cessation of annual service fee paid to parent company

Rationalisationof shared assets and services (e.g. branch footprint, network charges, etc.)

Gradual ramp up in attainment of synergies

RM

mill

ion

per

yea

r

Synergies & Benefits



Summary

Integrating Kurnia

Expected outcome

Strategic Fit for AmBankGroup

o Detailed integration plans developed

o Low transition risk a business AmGknows well, leveraging on international expertise and regional support

o Committed to a seamless integration and supporting all existing and future customers and business partners

o Integration cost of RM38 million is predominantly relating to providing a combined IT infrastructure and systems platform

o Full integration by 2014

o Sustainable #1 position in motor

o Maintain two of the strongest general insurance brands in the industry

o Deliver synergy targets and improved profitability

o Stronger income growth from profitable segments

o Accelerating recurring non-interest income growth rate

o Provide opportunities for cross-selling



MBF Cards: proposed acquisition of a merchant leader in card business

Proposed Acquisition & Considerations

100% equity of MBF Cards ( ) SdnBhd, including:

o 33.33% equity of BonuskadLoyalty SdnBhd

o

o Customer & merchant base

Cash consideration of RM623.4 mil (goodwill of RM411.1 mil), subject to final adjustment

BNM and vendors1

completion expected before end 2012

1. 51% directly owned by MBf Holdings Berhadand 49% through MBf Holdings wholly owned subsidiaries AtoxCards SdnBhd(11.55%) and JasturaSdnBhd(37.45%)

Attractive ROE business

Full control over LOC interest

Improved profitability, scale & growth opportunities

Customer base

CASA

Technology / unique bill payment capabilities

Leveraging the current product / insurance solutions over the AmBank Group customer base

Economies of scale

Issuance & merchant

Profitability

Growth

Scale

Strategic Fit for AmBank Group

Targeted growth from profitable segmentsAccelerate growth from recurring non-interest incomeProvides for CASA growth & cross-selling opportunities

Increased and diversified customer base and reachEnlarged and complimentary merchant forceAccess to scale and synergistic benefits

Creates Top 3 merchant acquiring business and strengthens issuing business

Leverage on combined network and additional products & services

Funded by internal funds & borrowings; EPS accretive within 12 18 months from acquisition

ammb holdings berhad - ambank · 2018-04-18 · fy2014-2015 strategic ... •commence amg-kurnia...

Documents