H1FY2015 Results Investors Presentation Ashok Ramamurthy, Group Managing Director

Transcription

1 19 November 2014 H1FY2015 Results Investors Presentation Ashok Ramamurthy, Group Managing Director 1

2 AGENDA Page 1. EXECUTIVE SUMMARY 2 2. H1FY2015 GROUP FINANCIAL PERFORMANCE OUTLOOK & STRATEGIC PRIORITIES DIVISIONAL STRATEGY & PERFORMANCE SUPPLEMENTARY INFORMATION 40 - AMBANK GROUP - ECONOMY & INDUSTRY 2

3 H1FY2015 performance highlights PATMI up 8.9% 1, ROE of 14.3% 1 underpinned by divestment gains Performance reflects ongoing transformation Ongoing portfolio rebalancing, net loans up 1.4% with stronger growth in targeted segments, LDR at 89.3% Expense management to support ongoing investments, CTI at 43.3% 1 Managing capital levels in line with our expectations on future Holding Company Basel III requirements. Proposed interim dividend of 12.0 sen representing circa 50% of FY2015 expected payout...and Cautious credit risk appetite in selected segments in Retail impacting loans growth Continued funding pressure with intensifying competition in deposits New consolidated WB model implemented and stabilising, gaining momentum in preferred sectors/segments, focusing on penetrating customers share of wallet 1. Includes one-off divestment gain of AmLife & AmFamily 3

4 Progressively delivering on our strategic agenda Focused growth Leverage investments Optimise enablers 1 2 Deliver on focused organic growth Leverage strategic partnerships & deliver on acquisitions New small business solutions within Retail Banking rolled out nationwide, targeting niche SME segment Wholesale banking consolidation completed, new product specialist and coverage teams set up Commenced core banking system implementation (Phase 2), target to complete within 18 months Tail end of system integration, target to complete by CY2014 MBF: Achieved cost synergies of RM 13.8mil and revenue synergies of RM 2.9mil for ; merchant force stable at >55,000 Kurnia: Achieved cost synergies of RM 70.4mil to-date AmMetLife: new CEO/leadership team and board members appointed 3 Continue to optimise efficiency Issued USD 400mil senior notes jointly arranged by AmInvestment & ANZ, provides ability to raised term funding at competitive rates regionally Rationalising subsidiaries and non-core operations, releasing dormant capital Streamlining internal organisation structure for greater efficiency 4 Build sustainability Investing in significant governance & compliance projects Material enhancements underway in digital (internet & mobile) banking platforms. Corporate website facelift to be launched in Nov 2014, mobile and tablet responsive to improve user s experience Building leadership and increase talent mobility, aligned and enhanced rewards/recognition (Total Target Remuneration Project) 4

5 Retail Banking: Small Business Banking Solutions - providing big support to Small Business Customers nationwide Aspiration To become the bank of choice for Small Business customers in Malaysia Our Segment Customers with business turnover <RM25 million and Business-Group exposure <RM3 million Supporting Small Businesses TODAY! Tailored solutions and products to cater specifically to Small Business customers 70 dedicated Small Business Specialists covering all AmBank branches nationwide Customer centric sales process, supported by SBB BizReview, a comprehensive profiling and needs assessment tool Deliver market leading customer experience o Dedicated SBB Customer Assist, a contact centre team providing servicing support to SBB customers expected to go live in Dec

6 Wholesale Banking s journey towards customer centricity Previously Currently 5 Business divisions 2 Business divisions Value proposition Business Banking Corporate & Institutional Banking Investment Banking Transaction Banking Markets Wholesale Banking Coverage Wholesale Banking Products Increase customer centricity Created new industry, geography and segmentation focused teams Relationship Management teams as single point of contact enhance customer experience across sales, product solutions and servicing Promote product neutrality to increase cross sell Achieve product excellence Build centers of product expertise Provide innovative, differentiated and competitive products and solutions to the wholesale client segment Promote greater product bundling Improve operational efficiency Consolidation and centralisation of operations 6

7 Strategic partnership with Insurance Australia Group (IAG) Key Highlights Completed Kurnia acquisition on 26 Sep 2012, combined entity renamed AmGeneral Insurance Berhad on 1 Mar 2013 Leading motor insurer in Malaysia >3.6 million policy holders, ~10% market share for general insurance by GWP Achieved cost synergies of RM 70.4mil to-date, on track to complete Kurnia Motor integration by end CY2014 AmAssurance & Kurnia dual branding strategy, first in Malaysian general insurance market New CEO appointed from IAG Building pricing capability to lead the de-tariff market Developing and strengthening alliances with key partners Mr Derek Roberts, new CEO appointed from IAG 7

8 Partnership with MetLife, aligned vision with complementary strength AmLife & AmFamily Takaful businesses new strategic partnership with MetLife International Holdings, Inc. Leverage best practices and global standards, creating a modern, innovative, customer centred insurer Launched new brand name, revamped website, LIVE READY campaigns Key focus and planned initiatives: 1. Enhance brand - new corporate website launched together with a series of Live Ready campaigns 2. Strengthen distribution channel o Agency enhancement o o New distribution channel, setting up Insurance/Takaful Specialist teams at AmBank branches Direct marketing telemarketing (DMTM) outsourcing commenced in Sep IT investment to strengthen foundation and support growth 4. Align policies and processes in human resources, risk management & compliance, actuarial & finance 5. Develop core organisational talents and strengthening leadership teams 8

9 results underpinned by stronger non-interest income PATMI & ROE PATMI CAGR FY10-14: 15.3% YoY growth: 8.9% ROE CAGR FY10-14: 0.7% YoY growth: -0.1% ROA CAGR FY10-14: 0.08% YoY growth: 0.18% PATMI (RM'mil) (%) ROE (%) 11.5% 13.6% 13.8% 13.9% 14.1% 14.4% 14.3% 1,782 1,621 1,484 1, % 1.39% 1.39% 1.37% 1.45% 1.47% 1.65% 1, FY10 FY11 FY12 FY13 FY14 H1FY14 FY10 FY11 FY12 FY13 FY14 H1FY14 EPS (basic) CAGR FY10-14: 14.3% YoY growth: 8.8% CTI CTI YoY change: -4.5% RM (sen) (%) % 39.9% 41.6% 48.1% 45.9% 47.8% 43.3% FY10 FY11 FY12 FY13 FY14 H1FY14 FY10 FY11 FY12 FY13 FY14 H1FY14 1. FY2013 has been restated to reflect adoption of new MFRS 9

10 Sound risk and capital profiles, focusing growth in targeted segments Customer Deposits 2 & CASA Customer Deposits CAGR FY10-14 : 8.6% YoY growth: -1.5% CASA CAGR FY10-14: 21.9% YoY growth: 3.6% Net Net Lending Lending CAGR FY10-14: 7.7% Net lending YoY growth: 1.4% Gross lending YoY growth: 0.9% Customer deposits (RM'bil) CASA(RM'bil) CASA Composition (%) 12% 14% 17% 20% 21% LDR 89.3% 2 19% 20% (RM bil) FY10 FY11 FY12 FY13 FY14 H1FY14 FY10 FY11 FY12 FY13 FY14 H1FY14 GIL ratio YoY change: -0.16% Capital ratio (%) (%) Basel II Basel III 3.8% 3.3% 2.5% 1.98% 1.86% 1.95% 1.79% 16.1% 15.3% 14.7% 14.8% 15.5% 14.0% 11.7% 11.1% 11.2% 9.8% 9.8% 10.4% 9.4% 9.7% 10.3% FY10 FY11 FY12 FY13 FY14 H1FY FY10 FY11 FY12 FY13 FY14 CET-1 Tier-1 RWCAR/Total Capital 1. FY2013 has been restated to reflect adoption of new MFRS 2. Customer deposits includes stable funding sources 10

11 19 November 2014 H1FY2015 Results Investors Presentation Mandy Simpson, Chief Financial Officer 11

12 AGENDA Page 1. EXECUTIVE SUMMARY 2 2. H1FY2015 GROUP FINANCIAL PERFORMANCE OUTLOOK & STRATEGIC PRIORITIES DIVISIONAL STRATEGY & PERFORMANCE SUPPLEMENTARY INFORMATION 40 - AMBANK GROUP - ECONOMY & INDUSTRY 12

13 Non-interest income underpinned H1FY2015 results Growth 8.3% 41.6% 9.2% 1.1% 18.5% >100.0% 8.8% 2.1% 10.9% 54.9% 8.9% mil mil 12% 15% 85% 88% PATMI H1FY14 Net Interest Non-Interest Income Income Total income Expenses PBP Provisions/ Allowances PBT Tax & Zakat PAT MI PATMI (RM mil) H1FY14 (RM mil) 1, , , , , , , , , , , , Conventional PATMI Islamic PATMI Positive growth in Contraction in PATMI: profit after tax and non controlling interests 13

14 Stronger QoQ performance PATMI & ROE PATMI QoQ growth: -17.0% ROE QoQ growth: -3.3% CTI QoQ change: 1.5% Underlying PATMI PATMI (RM'mil) ROE CTI % CTI Underlying % 15.1% 13.9% 13.1% 14.6% 16.0% 12.7% % % 47.8% 44.5% 42.5% 42.7% 44.2% Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Customer Deposits 1 & CASA 21% 95.4 Customer deposits (RM'bil) CASA Composition (%) 17% 18% 96.3 C. Deposits QoQ growth: -0.3% CASA QoQ growth: -9.0% CASA(RM'bil) 21% 22% 20% Net Lending (RM bil) Auto Fin Loans excluding AF QoQ growth: -1.0% YoY growth: 1.4% Partly reflects portfolio rebalancing & re-alignment of customer segment focus Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 1. Customer deposits include stable funding sources 14

15 Momentum picked up in Q2 Q2 vs. Q1FY2015 (Underlying) qoq growth H1FY2015 (Underlying) yoy growth H1FY2015 (Reported) yoy growth Income 5.2% (4.3%) 9.2% Expenses 7.3% 4.6% 1.1% PBP 17.5% (4.1%) 18.5% PATMI 35.4% (3.5%) 8.9% NIM 0.09% (Q2FY15 vs. Q1FY15) (0.14%) ( vs. FY14) (0.19%) ( vs. FY14) Non-interest income composition (%) 36.2% 35.8% 45.5% Note: Reflects (1) H1FY2015 divestment gain from AmLife and AmFamily Takaful, net of tax (2) H1FY2014 equity accounting of AmLife & AmFamily and one-off large recoveries of RM125 million 15

16 Retail Banking: Targeted growth, continue to build customer franchise Key financials: Performance highlights: CASA (RM bil) Gross Loans (RM bil) Profit (RM mil) H1FY H1FY14 Cus Dep 5.9% CASA 5.0% CASA Cust Deposits % Mortgage Auto Fin Others % % 85% Islamic PAT Conventional PAT 6% 94% Customer deposits and CASA growth driven by initiatives surrounding segment play (small business, emerging affluent and payroll) to build main bank relationships Loans growth reflects more cautious credit appetite and targeted growth Lower profits on margin compression and higher provisions; offset by lower expenses from MBF cost synergies and productivity initiatives Key focus & planned initiatives: Focus on targeted segment play through small business banking solutions and young professionals Greater emphasis on mortgage and continuous end-to-end process review to improve efficiency and customer experience Remain focused on expanding fee based income via bancassurance and wealth management Digital (internet & mobile) banking platforms upgrade in progress 16

17 Wholesale Banking: Re-prioritising coverage by segment & sector Key financials: Performance highlights: Profits (RM mil) Gross Loans & Average AUM 1 (RM bil) Islamic PAT % % 85% H1FY Conventional PAT 20% 80% H1FY14 AUM 9.2% Loans 4.3% Gross loans AUM 46.1 New consolidated WB model implemented and stabilising Performance underpinned by: o Corporate banking which saw modest loans growth and normalised recoveries o Underlying TB performance was steady with Cash being impacted by a few lumpy deposits o Markets performance reflects strong FI trading performance, offset by slower FX sales revenue o Funds Management continues to deliver good growth in AUM resulting in steady profit growth o Improved contributions from Broking, Fixed Income and Private Banking Key focus & planned initiatives: Market share 1. Average AUM represents AmInvest s funds under management, Private Banking, Am Private Equity & AmARA REITs 2. As at 30 Sep Represents AmInvest s funds under management as at 30 March 2014 Market Share (%) Rank IPO % 2 DCM % 3 M sian Ringgit Islamic Bonds % 3 FUM % 3 Pick up in loans performance through drawdown of loans in key sectors Drive deposits and trade utlilisation through progressively rolling out new solutions including integrated propositions with Retail, and leveraging ANZs connectivity Execute on the large deal pipelines for both DCM and CF for 2H2015 Build up markets trading activities and focus on larger FX and Derivatives sales 17

18 General Insurance: stronger investment income Key financials: Performance highlights: Combined ratio (%) 0.2% 90.4% 90.2% H1FY14 Higher profits underpinned by improved claims management and gain on disposal of investments Achieved cumulative synergy of RM 70.4mil todate (Sep 2014) Capital adequacy ratio exceeds benchmark regulatory target Net earned premium (RM mil) 3.6% Key focus & planned initiatives: Develop and strengthen alliances with key partners H1FY14 Drive premium growth via focused action plans including new products & services, campaigns, agent engagements and exploring new markets Profits (RM mil) % 132 Building pricing capability to lead the de-tariff market Improving supply chain management H1FY14 On track to complete Kurnia Motor integration by end CY2014, continue to extract synergies 18

19 Stronger contributions from trading & general insurance whilst fee income impacted by moderate loans growth Non-interest income movement As % of total income 35% 45% Growth 19.4% 4.1% 10.7% 11.6% 8.0% 39.3% >100.0% >100.0% >100.0% 10.8% 54.3% 0.8% 25.2% 41.6% 1,178.1 mil mil Includes 5-mths equity accounting of AmLife & AmFamily Retail: -7mil Wholesale: -23mil Includes gross divestment gain Fees on AUM IB business Other fee inc Total Fee Sales Trading Other Total General Life & Total Other loans Fees on income Other trading inc Trading & Takaful Insurance H1FY14 Fees on loans AUM IB IB businessother fee fee Total Total inc Fee Fee income Sales TradingOther trading Total Trading Investment inc && Investment Life Life & Takaful & Total Insurance H1FY14 Fees lending on loans& AUM IB businessother fee Total inc Fee incomesales Trading TradingOther trading business* trading Total & income Income Trading inc & Investment General General Investment Life & Total Insurance Other Others Takaful Business securities investment H1FY14 % of Composition (RM mil) H1FY14 (RM mil) 10% 7% 8% 5% 31% 4% 7% 29% 41% 22% 2% 24% 5% H1FY14 non interest income non interest income Positive growth in Contraction in * IB business includes brokerage fees, underwriting fees and corporate advisory & guarantees 19

20 MFRS 10 Margins remain a challenge, improved yields & recent rate hike lifted QoQ NIM NIM (without AmLife & AmFamily) NIM and COF (YOY) 4.00% 4.00% 4.00% 4.00% 4.00% SRR 2.98% 2.94% 2.92% 2.98% 2.68% 2.94% 2.75% 2.92% 3.13% 3.10% 3.10% 3.09% 4.00% 4.00% 3.00% 3.00% 3.00% 4.00% 4.00% 3.00% 2.68% 3.13% 2.72% 2.75% 3.10% 3.10% 3.09% 2.68% 2.67% 2.63% 3.00% 3.00% 3.00% 3.00% 3.25% 3.14% 2.49% 2.49% OPR COF NIM.68% 2.25% 2.75% 2.75% 2.68% 2.72% 2.69% 2.25% 1.00% 1.00% 1.00% 1.00% FY13 FY10 FY10 FY11 FY11 FY12 FY12 FY13 FY13 [Restated] 3 FY14 FY14 FY10 Cost FY11 of funds NIM OPR FY12 SRR FY13 1 Apr 2013 FY14 Cost of funds NIM OPR SRR NIM (without AmLife & AmFamily) YTD NIM (bps) drivers Q1FY2015 Q2FY2015 NIM 2.45% 2.54% 11.7ps 7.6ps % 2.63% % AmLife & Normalised Yields Markets FY14 FY14 one-offs Rates & mix AF asset quality Funding AmFamily 1-Apr-13 FY14 FY14 Q1FY15 & Gen Ins FY14 AmLife & AmFamily FY14 one-offs Normalised FY14 Rates & mix HP asset quality Yields - Markets & Gen Deposits Note : 1 NIM includes Net Financing Income from Islamic Banking business 2 FY10-FY14 based on internal data computation 3 FY2013 has been restated to reflect adoption of new MFRS 20

21 Disciplined cost management to support ongoing investment Expense growth drivers Banking CTI AmGeneral COR* 43.2% 90.2% H1FY % 90.4% CTI 47.6% 43.3% YoY Growth 8.8% 0.4% 21.4% 3.0% >100.0% 1.1% RM mil 1,130.2 Save to invest 1,118.3 programme Productivity initiatives H1FY14 Personnel Establishment Marketing & Comm Admin & others Acquisition & Biz efficiency expenses % of Composition 55% 23% 6% 9% 7% (RM mil) H1FY14 (RM mil) * Combined Operating Ratio Strategic Priorities Key investment over months to deliver growth, optimise efficiency & build sustainability Deliver on focused organic growth Retail Application Scorecards Enhancement (RAS2) 1 to support AIRB accreditation programme AmData Intelligence: data mart & centralised dashboard reporting system (Phase 2) Core banking system implementation (phase 2) Digital (internet & mobile) banking platform upgrade Murex implementation & upgrade Continue to optimise efficiency Retail collection & recovery system replacement Save to Invest Programme Enterprise Process Platform (EPP) Programme Build sustainability New multi-channel switch which consolidates multiple switches operating on various platforms Infrastructure Facilities Modernisation 1 Basel Advanced Internal Rating Based (AIRB) and related risk projects 1 Disaster recovery capabilities 1 GST (Goods & Services Tax) readiness 1 Regulatory Reporting System & BNM ISS (Phase 3) 1 De-tariff risk selection and pricing engine 1 Anti Money Laundering Act compliance (Phase 3) 1 Others (e.g. MEPS/MyClear compliance, IBG enhancement, MyMobile, eibft, TAC Registration Process enhancement, single counterparty exposure limit) 1 1. Regulatory and compliance related 21

22 GP 3 MFRS 139 MFRS 139 Asset quality within expected level Asset quality indicators 202 bps Loan Loss Coverage 10.4% AmBank Group 6.3% 114.6% 129.3% 127.4% 117.6% 6.2% 4.1% 95.6% 99.6% 104.5% 102.2% 3.18% 3.7% 0.97% 2.6% 0.60% 2.8% 3.81% 1.5% 3.33% 0.88% 2.45% 1.98% 1.86% 1.79% 0.50% 0.21% 0.08% 0.20% Industry Industry AmBank Group FY2007 FY2008 FY2009 FY2010 1/4/10 FY2011 FY2012 FY2013 FY2014 FY2012 FY2013 FY2014 H1FY2015 Net Provisions Charge Net NPL Ratio Gross NPL Ratio Gross Impaired Loans Loan Loss Charge(MFRS139) Loan Loss Reserve 10.4% Allowance for impairment on loans & financing (P&L) Movement in loan loss coverage RM mil 6.3% 6.2% (31.0) 3.18% 3.7% 0.97% 4.1% 2.6% % 2.8% 1.5% 0.88% % % % 2.87% 2.64% 2.41% 129.2% Normalised recoveries 2.45% 1.98% 1.97% 0.50% 0.21% 0.01% 1.9% 8.7% 117.6% H1FY14 Allowance for impairment Individual allowance Collective allowance Impaired loans recovered Allowance for impairment H1FY14 loan loss coverage Collective Individual allowance allowance Impaired loans & financing loan loss coverage 22

23 Modest loans growth reflects realignment of portfolios and segments Gross Loan / Financing movement 5.4% 7.2% 9.5% 4.6% 11.3% 4.3% >100.0% Re-prioritizing coverage by segment & sector 0.9% 86.6bil 85.8bil 44% 56% Re-aligning customer segment focus Islamic, 28% Variable rate, 57% Fixed rate, 43% 45% 55% Non-retail Retail Conventional, 72% Gross Loan H1FY14 % of Composition (RM bil) H1FY14 (RM bil) Auto Financing Mortgage Cards Co-op Small Biz Wholesale Others 28.4% 20.7% 2.3% 1.8% 2.0% 45.0% -0.2% (0.1) (0.0) Gross Loan Retail Non-Retail Positive growth in Contraction in 23

24 AF loans (RM'bil) Auto Finance: increase proportion of business in preferred risk grades and reduce exposure to vulnerable group Risk Grade % of New Business Household Income Group % of New Business 9% 3% 0% 32% 27% 37% 30% 18% 17% 54% 66% 73% 70% 82% 83% FY13 FY14 Most Preferred Preferred Least Preferred FY13 FY14 Others Vulnerable Note: Vulnerable income group is defined as household income RM3,000 Auto Finance Industry purchase of transport vehicles (RM'bil) Loans growth (%) 10.0% 5.0% 0.0% -5.0% Acquisition targeted at preferred loan tenures and margin of financing Prudent guidelines on lending to vulnerable income groups This quarter simplified steps to identify targeted segment, enhanced approval process % Continue to apply Risk-based pricing Industry - purchase of transport vehicles AMMB - Auto Financing YoY growth Industry purchase of transport vehicles loans YoY growth 24

25 Loans 4.7% 3.5% 9.3% 1.3% 4.7% 6.5% 2.6% 2.8% 9.3% 1.4% 53.6% 0.4% Composition YoY Growth Loans AmBank Group vis-à-vis Industry AmBank Group Loans Growth by Sector 12.1% 16.5% 0.6% 38.8% 24.4% 1.7% 18.3% 12.5% 0.4% 36.6% 0.3% 31.6% Sep-14 Sep % Loans by purpose Purchase of transport vehicles Working capital Purchase of resi property Purchase of non resi property Sept 14 YoY growth Loans composition % 29.6% % 22.6% % 17.5% % 10.0% Other purposes % 6.1% Construction % 4.7% Agriculture Mining & Quarrying Manufacturing Electricity, Gas & Water Construction Wholesale, Retail, Restaurant Transport, Finance, Storage & Insurance, Real Estate Education & Health Com & Biz Household 0.4 Others Total Loans Purchase of securities % 4.2% Personal Use % 2.2% Credit card % 2.1% Purchase of fixed assets Consumer durables % 1.1% % 0.0% % 100.0% Industry Loans 2.5% 0.6% 1.0% 4.2% 7.4% 6.5% 6.0% Composition 2.5% 0.6% 7.7% 1.0% 4.2% 7.4% 2.5% 6.5% 6.0% 2.8% 57.3% 1.5% YoY Growth Loans Growth by Sector 0.3% 6.8% 4.1% 32.9% 12.8% 7.3% 14.1% 6.5% 15.5% 18.9% 10.7% 19.3% Sep-14 Sep % Loans by purpose Purchase of resi property Sep 14 YoY growth Loans composition % 29.1% Working capital % 23.1% Purchase of non resi property Purchase of transport vehicles % 13.2% % 12.8% Purchase of securities % 5.8% Other purposes % 5.0% 1,298.1 Personal use % 4.6% Construction % 2.9% 46.4 Credit card % 2.7% Purchase of fixed assets % 0.8% Mining & Agriculture Manufacturing Electricity, Wholesale, 3.0 Quarrying Gas & Water Construction Retail, Restaurant Transport, Finance, 2.2 Storage & 2.4 Insurance, 8.0 Real Estate Education 1.2 & Health Com & Biz. Household 0.4 Others Total Loans Consumer durables 0.5 >100.0% 0.0% Source : BNM, financial statement 1, % 100.0% 25

26 Stable CASA composition, continue to reduce reliance on term deposits Customer deposits driven by focus on CASA Improving CASA composition CAGR FY10-14: 21.7% YoY Growth 4.5% 1.7% 3.6% -4.8% 18.4% -1.5% 12% 14% 12% 14% 17% 17% 20% 21% 20% 20% 19% 96.3 Cust Deposits H1FY14 Stronger growth in Retail +8.4% Current Savings CASA Term Deposit & NID Term Funding 94.8 Cust Deposits H1FY FY2010 FY2011 FY2012 FY2013 FY2014 H1FY2015 FY2010 FY2011 FY2012 FY2013 FY2014 H1FY2015 FY2010 FY2011 FY2012 FY2013 H1FY2014 CASA CASA composition CASA CASA composition Improving funding composition FY07 FY10 FY13 FY14 Equity & debt capital 10% 15% 14% 15% 16% Customer deposits 60% 77% 75% 74% 73% Term funding & loans with recourse >1year Term funding & loans with recourse <1year 4% 2% 7% 6% 6% 1% 1% 1% 2% 2% Set up a USD2 billion EMTN programme, issued USD400 million post Q1FY15, >10x oversubscribed o o Diversified our funding base Provides ability to raise term funding at competitive rates regionally Deposits from banks & FIs 25% 5% 3% 3% 3% 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 26

27 Capital within internal targeted range Capital adequacy ratio: Aggregated Banking Entities After proposed dividend Basel II Basel III Adopted Basel III at banking entity level Internal target capital levels for FY2015: 14.0% 14.7% 14.8% 15.5% 11.1% 11.2% 16.1% 11.7% o CET 1: 9.0% ± 1.0% o Tier 1: 10.5% ± 1.0% o Total Capital: 15.0% ± 1.0% 9.8% 10.4% 9.4% 9.7% 10.3% Double leverage ratio 1 : 1.13x Balance Sheet leverage ratio 2 : 9.4% FY2011 FY2012 FY2013 FY2014 Tier 1 CET 1 Capital adequacy ratio: Legal Entities FY14 RWCAR / Total Capital Ratio CET 1 Tier 1 Total capital CET 1 Tier 1 Total capital AmBank 9.1% 11.1% 14.6% 9.9% 12.0% 15.9% AmIslamic 9.2% 9.2% 15.2% 9.2% 9.2% 14.9% AmInvestment 21.2% 21.2% 21.2% 24.5% 24.5% 24.5% Total leverage ratio 3 : 7.3% Financial Holding Company (FHC) - no requirements until FY Key measures to optimise capital structure & efficiency: o Rationalising subsidiaries and noncore operations, releasing dormant capital o Streamlining internal organisation structure for greater efficiency o Building advanced internal rating based (AIRB) capabilities 1. Double leverage ratio computed based on AMMB Holdings company level 2. 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 4. Based on recent BNM guidelines 27

28 AGENDA Page 1. EXECUTIVE SUMMARY 2 2. H1FY2015 GROUP FINANCIAL PERFORMANCE OUTLOOK & STRATEGIC PRIORITIES DIVISIONAL STRATEGY & PERFORMANCE SUPPLEMENTARY INFORMATION 40 - AMBANK GROUP - ECONOMY & INDUSTRY 28

29 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 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Financial services outlook MALAYSIA: No change to our growth projection BANKING: Opportunities & challenges Malaysian economy: supported by domestic activities & exports Growth in 2014 will depend on private investment and exports, with softening private consumption Inflation will be a focal point in 2014 driven by on-going rationalisation of subsidy and pre-gst impact. The other one being public debt Authorities will continue to adopt prudent and pragmatic macroeconomic policies, reining in fiscal deficit and public debt f 2015f RGDP y/y% Inflation y/y% OPR RM'bil Monetary policy will remain prudent to support the economic growth and address financial imbalances Moderate loans growth in line with the economic outlook and monetary policy Asset quality may come under pressure more from rising inflation and borrowing cost as well as potential capital flow risk Margins remain a challenge from the stiff pricebased competition for loans and deposits % 6.7% Unemployment (%) FB% GDP (FY) CA% GDP Loans disbursed Loans approved Loans Applied 29

30 AmBanking on a new journey As Malaysia s preferred diversified, internationally connected financial solutions group, we take pride in growing your future with us. Pre ANZ FY FY FY FY Scale & Presence Reposition, Build New Growth Options Improve Returns Aggressively Invest, Optimise & Leverage Connectivity Focused Growth Leverage Investment Optimise Enablers Grow retail assets Lead in investment banking business Leverage fixed income trading 3 Focus areas: Strategic Business Transformat ion High priority growth initiatives Organisation and governance structures Record performances & increasing ROE Consistent revenue growth Improved balance sheet & funding mix Increased dividend payout to 40% Commenced pursuing niche acquisitions Delivered consistent growth & returns Strengthening customer centricity & connectivity Expand international connectivity initiatives In-fill acquisitions & new strategic tie-up 1. Deliver on focused organic growth 2. Leverage strategic partnerships & deliver on acquisitions 3. Continue to optimise efficiency 4. Build sustainability 30

31 Strategic Priorities FY Focused growth Leverage investments Optimise enablers 1 2 Deliver on focused organic growth Leverage strategic partnerships & deliver on acquisitions Retail: build new value segments in emerging affluent & small business, leverage existing value strength to grow in mass market Wholesale: grow franchise value by targeting value segments, customer centricity, and deeper relationships to increase SOW, focus on CASA, cross selling & lead in innovation to accelerate non-interest income growth General Insurance: maintain leading position in motor, diversify into non-motor Islamic: grow CASA, rebalance portfolio mix, increase fee based income Complete Kurnia & MBF Cards integrations and deliver synergies. Shift focus to top line growth Life: grow Banca and synergise with Metlife Family Takaful: grow sales of credit related term Takaful products & extract synergies from Metlife 3 Continue to optimise efficiency Build scalable customer service delivery center Simplify business and operating models Optimise holding company Build AIRB capabilities 4 Build sustainability Strengthen governance Enhance employee engagement & talent management Superior customer experience technology & branding 31

32 Key performance indicators FY2014 H1FY2015 FY2015 FY PATMI (RM mil) 1,782.4 ( 10.0% yoy) ( 8.9% yoy) Circa 8% 6 10% ROE (%) 14.1% 14.3% Circa 14% Circa 14% CTI (%) 45.7% 43.1% (Banking Group) 43.3% 43.2% (Banking Group) 45%; 43% (Banking Group) 44%; 42% (Banking Group) Gross impaired loans (%) 1.86% 1.79% 1.9% 1.9% Dividend: Single-tier (sen) Payout (%) Interim: 7.2 sen / share Final: 16.9 sen / share 41% Interim: 12.0 sen / share 40-50% Payout 40-50% Payout FY2015 underlying estimates: NIM expected to contract ~15 bps (underlying) Loan loss charge expected to be circa 15 bps Loans expected to grow ~3% LD ratio expected to maintain at ~90%, ±2% CASA composition 21% Non-interest income composition at circa 38% Target CET 1 of 9.0% (±1%), Tier 1 of 10.5% (±1%), total capital of 15.0% (±1%) 32

33 Summary 1 H1FY2015 underpinned by divestment gains, operating performance moderated 2 3 Loans growth likely to remain modest, stronger growth in targeted segments 3 Cost discipline to continue, further productivity benefits to flow though partially offset by ongoing planned investments 4 Increasingly challenging business and economic environment, while compliance requirements continue to rise 5 Key priorities: - Committed to our FY strategic agenda - Focus is on achieving FY2015 key performance indicators - Ongoing investment to improve capabilities & customer experience - Remain dynamic & responsive to drive growth 33

34 AGENDA Page 1. EXECUTIVE SUMMARY 2 2. H1FY2015 GROUP FINANCIAL PERFORMANCE OUTLOOK & STRATEGIC PRIORITIES DIVISIONAL STRATEGY & PERFORMANCE SUPPLEMENTARY INFORMATION 40 - AMBANK GROUP - ECONOMY & INDUSTRY 34

35 Retail Banking Aspirations Re-orient to higher value segments, extract value from core mass Targeted growth Deposit grew stronger underpinned by continuous marketing campaigns and leverage distribution channel Targeted loans growth reflects conservative risk appetite and improved quality assets. Lower profits on continued margin compression and targeted loans growth; offset by lower expenses from MBF cost synergies and productivity initiatives Outlook Retail Banking s growth agenda will focus on simplification, digital enablement including modernisation of its digital platforms, building a service-oriented culture and people capability. Key segments include small business and young professionals whilst continue to expand and innovate wealth management offerings PAT PAT (composition to Group) Growth 8.8% 2.8% 14.4% 127.7% 31.7% 31.3% 31.8% 22.2% vs RM'mil H1FY14 H1FY14 Gross Loans / Financing 48, , % Gross Impaired Loans 2.44% 1, , % Customer Deposits 38, , % PAT H1FY14 (RM mil) H1FY14 (RM mil) Total Income Expenses PBP Allowances PBT Tax PAT H1FY14 PAT PAT Positive growth in Contraction in CASA Deposits 9, , % ROA 1.40% 0.96% % CTI 48.1% 51.3% +3.2% Allowance Coverage 78.5% 70.8% % 35

36 Wholesale Banking Aspirations Diversified contribution across business Outlook Coverage: Maximising franchise value through holistic coverage & cross sell full understanding of customer needs, distinguishing service by complexity, allocating specialists intelligently to grow sustainable profitability Products: To offer innovative, quality products and services and deliver comprehensive differentiated solutions Performance reflects stabilisation of new Wholesale Banking operating model and normalised recoveries Improved contributions from Broking, Fixed Income, Funds Management and Private Banking were partially offset by margin compression, as well as lower foreign exchange and derivative performance Reduced expenses through cost management initiatives Good growth in assets under management. Customer deposits reflects management of depositors concentration Higher profit growth with strong deals pipeline particularly from debt and loans markets and recovery of fixed income business. Expecting margin pressure and volatility in the market. PAT Growth 8.6% 2.2% 11.9% 44.7% 17.0% 16.8% 17.1% PAT (composition to Group) 44.9% Income Breakdown Loan Rehab, 2% IB, 21% Others, 4.9% Markets, 11% Corporate Bkg, 45% Transaction Bkg, 20% vs RM'mil H1FY14 H1FY14 Gross Loans / Financing 37, , % Gross Impaired Loans 1.00% % Customer Deposits 52, , % PAT H1FY14 (RM mil) H1FY14 (RM mil) Total Income Expenses PBP Allowances PBT Tax PAT (64.3) (116.2) H1FY14 PAT PAT Positive growth in Contraction in CASA Deposits 7, , % ROA 2.38% 1.95% % CTI 33.5% 35.9% +2.4% Allowance Coverage 137.0% 120.2% % Ave Assets Management 42, , % Assets managements include FMD, private banking, AmAra Reits and AmPrivate Equity 36

37 General Insurance Aspirations Dominate in auto insurance and diversify into non-motor segment Stronger investment income Higher profits underpinned by gain on disposal of investments and improved claims management Achieved cumulative synergy of RM 70.4mil to-date (Sep 2014), target to complete integration by end CY2014 Positive capital adequacy ratio exceeds benchmark regulatory target Outlook Expecting higher profit level in FY2015, initiatives underway to strengthen strategic alliances with key partners and brand enhancement PAT PAT (composition to Group) Growth 3.6% 5.1% 0.4% 9.2% 25.3% 62.9% >100.0% 39.6% 57.8% 12.6% vs RM'mil H1FY14 H1FY14 PAT H1FY14 (RM mil) H1FY14 (RM mil) Net Earned Premium Claims & Comm UW Profit Mgmt Expenses Net UW Profit Investment Provision Tax Income PAT (6.3) Claim ratio 63.1% 62.0% % Expenses ratio 18.9% 17.8% % Combined ratio 90.4% 90.2% % Expenses ratio reflects insurance business only (exclude PPA amortisation) H1FY14 PAT PAT Positive growth in Contraction in 37

38 Islamic Banking Aspirations To be the Islamic Bank of choice Strong financing & CASA growth Profits impacted by lower income and higher provision, partially offset by lower expenses from continued cost management initiatives Income reflects realignment of loans portfolio and continued margin compression Wholesale banking delivered double-digit strong financing growth; Retail Banking remain focus on targeted loans growth Outlook Increase penetration of solutions and cross-selling to support AmBank Group as main bank initiatives PAT Growth 4.4% 3.0% 5.3% 11.3% 12.9% 15.7% 12.1% PAT (composition to Group) 11.5% Gross Financing Auto Financing, 44% vs RM'mil H1FY14 H1FY14 Gross Financing 22, , % Gross Impaired Loans 1.50% % PAT H1FY14 (RM mil) H1FY14 (RM mil) Total Income Expenses PBP Allowances PBT Tax PAT H1FY14 PAT PAT Positive growth in Contraction in Customer Deposits 23, , % CASA Deposits 5, , % ROA 0.81% 0.70% % CTI 40.9% 41.5% +0.6% Allowance Coverage 152.7% 148.8% % 38

39 Group Operating Segments Income includes one-off divestment gain of AmLife and AmFamily businesses Higher expenses reflect continued investment (centrally accrued) MI represents non-controlling interests within the Group PAT Growth >100.0% 54.1% >100.0% 7.6% >100.0% >100.0% >100.0% 54.9% >100.0% PAT (composition to Group) 18.8% PAT H1FY14 (RM mil) H1FY14 (RM mil) Total Income Expenses PBP Allowances PBT Tax PAT MI PATMI (46.0) 63.6 (109.6) (38.8) (70.7) 42.5 (113.2) H1FY14 PAT PAT Positive growth in Contraction in 39

40 AGENDA Page 1. EXECUTIVE SUMMARY 2 2. H1FY2015 GROUP FINANCIAL PERFORMANCE OUTLOOK & STRATEGIC PRIORITIES DIVISIONAL STRATEGY & PERFORMANCE SUPPLEMENTARY INFORMATION 40 - AMBANK GROUP - ECONOMY & INDUSTRY 40

41 Deposits profile AmBank Group Deposits Growth by Type RM bil 1.7% 4.5% 3.6% 4.8% 3.3% Sep'14 AmBank Group Core Deposits Composition 6.1% 13.9% % Savings Current Account Fixed Deposits Savings Current Account CASA Fixed Deposits Core Deposits Industry Deposits Growth by Type RM bil 1.0% 7.0% 5.0% 0.7% 1.2% Sep'14 Industry Core Deposits Composition 12.6% 1, % 25.6% Savings Current Account Fixed Deposits Savings Current Account CASA Fixed Deposits Core Deposits Source : BNM, internal reports 41

42 Diversifying funding sources and maturity profile Funding diversity underpinned by LDR 1 of 89.3% CASA: RM17.1 billion (yoy growth = 3.6%) Fixed deposits: RM68.2 billion (strong retention) Supplemented by term funding & debt capital AMMB Holdings Bhd 1. RM2b Medium Term Notes (Senior & Subordinated) AmBank (M) Bhd 1. RM500m Innovative Tier 1 Capital Securities Programme 2. RM500m Non-innovative Tier 1 Capital Securities Programme AmIslamic Bank Bhd 1. RM2b Subordinated Musyarakah Sukuk 2. RM3b senior sukuk musyarakah programme AmBank (M) Bhd AmIslamic Bank Bhd Loans with Recourse 3. USD200m USD Subordinated Term Loan 4. RM2b Medium Term Notes 5. RM4b Tier 2 Subordinated Notes 3. RM3b Basel III-compliant Subordinated Sukuk Murabahah Programme via Tawarruq arrangement Recourse obligations on loans sold to Cagamas - maturing in RM7b Senior Notes 2 7. USD300m Term Loan Facility 8. USD2b Euro Medium Term Notes Islamic financing sold to Cagamas maturing in 2016 Funding characteristics 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 1. Includes stable funding sources 2. 1 st senior notes issuance by a financial institution in Malaysia Statutory reserve and liquidity requirement savings Reduced exposure to interest rate risks 42

43 ANZ & AmBank Partnership Partnership with ANZ ANZ diversified footprints in Asia Value proposition Seconding ANZ staff into key roles Providing technical expertise Support new product development Two-way customer referrals Joint account planning Access to regional network & connectivity Board representation Shayne Elliot Director (Chief Financial Officer, ANZ) Mark Whelan Director (Managing Director, Corporate & Commercial, ANZ) Management representation Mandy Simpson Chief Financial Officer Nigel Denby Chief Risk Officer Paul Lewis Managing Director, Retail Banking Tan Chin Aun - Transaction Banking Oscar Demirtas - Senior Programme Manager, Small Business Banking LAOS THAILAND CAMBODIA INDONESIA INDIA CHINA AUSTRALIA JAPAN SOUTH KOREA TAIWAN HONG KONG VIETNAM PHILIPPINES MALAYSIA SINGAPORE PAPUA NEW GUINEA FIJI PACIFIC ISLANDS NEW ZEALAND 15 Asian markets, 98 branches and 5 Partnerships Source: Trade Finance Magazine

44 AmGeneral: Leveraging strategic partnership with global insurance partner GENERAL INSURANCE Partnership with IAG IAG diversified footprints in Asia Value proposition Involved in the management of AmGeneral Insurance, offering skills transfer, partnership and relationship models of IAG Adding value through claims re-engineering savings, increased revenue via product development, underwriting and pricing Board representation Duncan Brain Director (CEO, IAG Asia) Aidan Pallister Director (Deputy CEO / COO of IAG Asia) Management representation Derek Roberts CEO, AmGeneral Insurance Berhad Arron Mann General Manager, Claims Chris Tandy General Manager, Personal and Commercial Pricing 2 subsidiaries in Thailand & Vietnam Investment in associates in Malaysia, China & India Source: IAG annual report

45 Multiple distribution channels aligned to demographics Nationwide Branch Network Perlis Branches ATM Perlis 1 4 Regional Business Centres Kedah Pulau Pinang Perak Selangor Kuala Lumpur Putrajaya Kelantan Pahang Terengganu Negeri Sembilan Sarawak Labuan Brunei Darussalam Sabah Kedah 5 29 Pulau Pinang Perak Selangor Kuala Lumpur Putrajaya 1 4 Negeri Sembilan 6 43 Melaka Johor Melaka 5 38 Population Density: <100 persons per km persons per km 501-1,000 persons per km 2 1,001--1,500 persons per km 2 > 1,501 persons per km 2 Singapore Note(s): Brunei: AmCapital (B) Sdn Bhd Indonesia: PT.AmCapital Indonesia, PT.AMCI Manajemen Investasi Indonedia Singapore: AmFraser Securities Pte Ltd Other Customer Touch Points Indonesia Johor Pahang Terengganu 5 20 Kelantan 2 22 Sabah Labuan 1 2 Sarawak AmIslamic branches Weekend Banking Branches 7- Eleven Electronic Banking Centres Internet & Mobile Banking AmGeneral AmMetlife AmInvestment MBF AmOnline AmGenie 32 (include 28 dual branded branches) 18 branches 52 agencies

46 Solid shareholding structure & franchise value As at 30 Sept % 1 AmCorp 13.3% EPF 14.2% Others 48.7% AMMB Holdings Berhad Retail Banking Wholesale Banking Islamic Banking General Insurance Life Assurance & Takaful 100% AmBank (M) Berhad 100% MBF Cards (M sia) Sdn Bhd 33.33% Bonuskad Loyalty Sdn Bhd 100% AmIslamic Bank Berhad 100% AmInvestment Bank Berhad 100% AMAB Holdings Sdn Bhd 51% AmGeneral Holdings Berhad 2 ~50% AmMetLife Insurance Berhad 4 49% 100% AmGeneral Insurance Berhad 3 ~50% 100% AmInvestment Group Berhad Foreign shareholding excluding ANZ ~50% AmMetLife Takaful Berhad 4 ~50% FY2010 FY2011 FY2012 FY2013 FY2014 H1FY % 27% 26% 29% 31% 32% 1.ANZ: ANZ Funds Pty Ltd,a wholly owned subsidiary of Australia and New Zealand Banking Group Limited 2.Formerly known as AmG Insurance Berhad 3.Formerly know as Kurnia Insurans (Malaysia) Berhad 4.MetLife owns 50% plus one share in AmMetLife Insurance Berhad, with the remaining shares held by AmBank Group, and AmBank Group owns 50% plus one share in AmMetLife Takaful Berhad, with the remaining shares owned by MetLife 46

47 25 Aug Aug 14 Banking sector share price movement / target price and recommendations Banking Sector Share Price Movement Upgraded ratings Ratings FY2007 H1FY % AmBank (M) RAM A2/P1/Stable AA2/P1/Stable % Fitch BBB-/F3/Stable BBB/F3/Stable % S&P BBB-/A-3/Stable BBB+/A-2/Negative % Moody s Baa2/P-3/Stable/D- Baa1/P-2/Stable/D % AmInvestment RAM AA3/P1/Stable AA2/P1/Stable % Fitch BB+/B/Stable BBB/F3/Stable % (Note: 18 May 2007 vs. 30 Sept 2014) 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% 120.0% 140.0% 160.0% 180.0% AmIslamic AMMB RAM A2/P1/Stable AA2/P1/Stable RAM NA AA3/P1/Stable +3 Target Price and Recommendations 1 BFSR - Banking Financial Strength Rating +1 Notches of ratings upgrades AMMB HOLDINGS BERHAD P/EPS : 9.13 P/BV : 1.42 Market Price : RM6.52 Average TP : RM7.37 Buy : 5 (20%) Sell : 6 (24%) Hold : 14 (56%) Average TP / Average CP : 1.14x Buy/Outperform/Overweight/Add P/EPS : EPS for FY2014, P/BV : BV as at 30 June 2014 Hold/Neutral/Market perform Source : Bloomberg as at 14 Nov 2014 Sell/Underperform/Fully valued/reduce/underweight TP: target price 47

48 Strategic Business Transformation: Continued Progress Strategic Business Transformation High Priority Growth Initiatives Governance & Enablement Functions FY2015 & FY2014 Launched a new brand re-positioning,, a new chapter for our brand to deliver a unique AmBank Group experience to our customers Launched new corporate website ( enhancing mobile and tablet responsiveness New consolidated Wholesale Banking model implemented to improve client centricity, efficiency and productivity Rolled out new Small Business Banking model targeting non-individual customers in Retail banking FY2012 & FY2013 Developed retail focus customer centric business models Implemented basic account plans for business customers to increase SOW Initiated Group Rebranding programme Initiated revamping of branches to refresh customer experience Realigned account management teams for more effective account planning FY2010 & FY2011 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 FY2008 & FY2009 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 48

49 High Priority Growth Initiatives: Implemented To-Date Strategic Business Transformation High Priority Growth Initiatives Governance & Enablement Functions FY2015 & FY2014 Sealed strategic partnership with MetLife in Life Assurance and Family Takaful Channels re-organisation to improve customer connectivity and experience (e.g. branch redesign 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 FY2012 & FY2013 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 FY2010 & FY2011 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 FY2008 & FY2009 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 49

50 Governance and Enablement Functions Streamlined: Supports Better Decision Making Strategic Business Transformation High Priority Growth Initiatives Governance & Enablement Functions FY2015 & FY2014 FY2012 & FY2013 FY2010 & FY2011 FY2008 & FY2009 Rebuilding AmBank s Core Banking System via AmHorizon, creating a scalable and robust platform for growth with enhanced customer experience, Phase 1 went live in end Commenced Phase 2 of Core Banking System and its supporting applications Implementing Multichannel payment switch solutions to consolidate multiple switches on different platforms for efficiency and faster time to market Financial Holding Company structure being progressed for full compliance with FSA & IFSA Streamlining of subsidiaries and releasing of dormant entities capital Reviewing Internal Rating Based approach to optimise capital management Building AIRB capabilities to improve risk management and increase capital efficiency Enterprise Process Platform (EPP) going live to support lending operations Completed risk management recalibration (simplified AF & WB risk processes, non-retail pricing tool) 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 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 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 50

51 AGENDA Page 1. EXECUTIVE SUMMARY 2 2. H1FY2015 GROUP FINANCIAL PERFORMANCE OUTLOOK & STRATEGIC PRIORITIES DIVISIONAL STRATEGY & PERFORMANCE SUPPLEMENTARY INFORMATION 40 - AMBANK GROUP - ECONOMY & INDUSTRY 51

52 Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept Malaysian economy is on a steady growth trajectory Moderating growth Upward pressure on inflation remains, unemployment rates stable 5% 30% 4% 25% 20% 15% 3% 2% 3.0% 2.7% 10% 5% 7.2% 5.0% 6.4% 1% 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 0% GDP Consumption Investment CPI Unemployment (May) Business confidence is improving FDIs remain robust points RM' bil Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q Q1Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2Q3 Q4 Q1 Q Business Conditions Index BCI TD FDI (Q1) Source: BNM & Bloomberg 52

53 Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept Well-contained risks despite increase in household 44% indebtedness Household - debt by compositions % of composition RM bil 100.0% 86.8% 4% 4% Others 90.0% 81.3% HH debt Residential property Hire purchase Personal financing Securities Credit Non-residential card Credit card Others 74.5% 76.2% 8% Non-residential 80.0% % Securities 70.0% To be updated for the his % Personal financing 60.0% % 18% Hire purchase 40.0% 34.2% 34.6% 31.9% 30.1% 44% HH debt Residential property Hire purchase Personal financing Securities Non-residential Credit card Others Residential property 30.0% 20.0% 10.0% 0.0% Higher household debt, but retail impaired loans ratio trending down 25.0% 19.7% 16.3% 14.6% Gross national savings Retail impaired loans ratio* Household debt/gdp * Retail comprise purchase of transport vehicle, purchase of residential property, personal use and credit card Interest rates expected to remain in the short term Improving asset quality 15% Gross impaired loans 4% Loan loss coverage 110.0% 4% 105.0% 10% 6.53% 3% 3% 2% 1.7% 100.0% 95.0% 5% 4.53% 2% 90.0% 1% 3.00% 1% 85.0% 0% % 80.0% Average lending rate (commercial banks) Average OPR Average BLR Gross impaired loans Loan loss coverage Source: BNM 53

54 Mar June Sept Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar June Sept Capital remains sound in the banking sector, loans growth moderating Capital levels above BNM s Basel 3 guidelines Capital activities supported by debt issuance 20% Basel II Basel III RM bil % 10% 15.5% 13.5% 12.8% % % 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q RWCAR Tier 1 CET 1 Beginning January 2013, capital components are reported based on Basel III Capital Adequacy Framework New issues of equity New issues of debt Moderating loans growth Sustained deposits growth provides liquidity 18% 16% 14% RM mil 1,800 1, % 12% 1,400 10% 8% 6% 9.1% 9.0% 8.8% 1,200 1, % 400 2% 200 0% Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept Dec Mar June Sept 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q Retail yoy growth Non Retail yoy growth Total loans yoy growth Total deposits LD ratio Source: BNM 54

55 ETP: Propelling Malaysia towards becoming a high-income, developed nation by 2020 ETP Overview Achievement of 12 NKEAs in 2012 and 2013 RM48k (USD15k) GNI per capita RM1.7 trillion GNI 6% annual GDP growth Focus Drivers: GROSS NATIONAL INCOME 12 NKEAs, 131 EPPs 60 Biz Opportunities Private-sector led Competitiveness Enablers 6 SRIs & 51 Policy Measures TRANSFORMATIONA L ACTIONS ECONOMIC TRANSFORMATION PROGRAMME JOBS 31.6m population 3.3m additional jobs RM1.4 trillion investment 92% private investment 8% public investment 73% DDI, 27% FDI INVESTMENT NKEAs 2020 Target KPI Scoring* GNI (RM bil) New Jobs Greater KL/ Klang Valley ,000 98% 108% Oil, Gas & Energy ,300 97% 119% Financial Services , % 111% Wholesale & Retail , % 153% Palm Oil & Rubber ,600 78% 101% Tourism , % 117% Electrical & Electronics , % 95% Business Services , % 114% Communications Content & Infrastructure , % 153% Education , % 121% Agriculture ,335 98% 130% Healthcare , % 105% Tracking of EPPs 2020 Target To-date % of Target EPPs Investment (RM bil) % GNI (RM bil) % Job Creation 3.3 mil 313,741 94,702 29, , % Note: Scoring is calculated by a simple comparison against set 2013 and 2012 targets respectively. (*) The overall NKEA composite scoring is the average of all scores. Data was correct as on ETP announcement date, the ETP is an evolving programme, in the past 2 years, some EPPs have been dropped, some new ones were added ETP : Economic Transformation Programme Source ETP Annual Report 2012 & 2013, Maybank Resaerch Report 55

56 Malaysia remains an attractive investment destination GDP per capita, 2014 (USD) Singapore 55,568 Real GDP growth F Unemployment (%) Inflation (%) Philippines 6.9% Indonesia 5.5% Malaysia 11, Indonesia 6.1% Vietnam 6.3% Thailand 5, Vietnam 4.4% Philippines 4.0% Indonesia 3, Malaysia 3.0% Malaysia 3.3% Phillippines 2, Singapore 2.0% Thailand 2.3% Vietnam 2, Thailand 0.7% Singapore 2.3% Population (mil) Savings rate (% of GDP) Current Account Balance (% of GDP) Government structural Balance (% of GDP) Indonesia Singapore 44.8 Singapore 18.5 Malaysia -3.5 Philippines 99.4 Indonesia 30.4 Vietnam 4.3 Indonesia -2.6 Vietnam 90.6 Malaysia 31.2 Malaysia 4.1 Philippines -2.3 Thailand 68.6 Thailand 28.1 Philippines 3.2 Thailand -0.6 Malaysia 30.1 Vietnam 29.6 Thailand 0.2 Singapore 5.7 Singapore 5.5 Philippines 23.0 Indonesia -3.0 Vietnam 0.0 Source: World Economic Outlook Database April

57 Glossary / Disclaimer of warranty and limitation of liability Reported Performance Reported performance refers to the financial performance as reported in the audited financial statements and disclosed to the market One Offs One offs comprise those impacts on financial performance that arise from changes to : accounting and provisioning policies (eg 5 and 7 year rules) differences between economic and accounting hedges prior period catch ups (eg backdated salary costs) strategic investments and divestments (eg ANZ partnership), and tax and regulatory regimes (eg deferred tax asset write off due to reduction in corporate tax rates) Underlying Performance Underlying performance refers to the financial performance adjusted for one off impacts as above Business Divisions Business divisions comprise AmBank 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 Segments Operating segments have more volatile and lumpy income streams, with the former a direct function of risk appetite include income and expenses associated with shareholder funds, loan rehabilitation and legacy businesses, plus costs associated with corporate, shared services and governance functions currently not charged back to the business units 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 significant 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. 57

58 Glossary / Disclaimer of warranty and limitation of liability The material in this presentation is general background information about AmBank Group s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. For further information, visit or contact ir@ambankgroup.com 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 significant 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. 58