AmBank Group Results Investors Presentation

Transcription

1 AmBank Group Results Investors Presentation AMMB Holdings Berhad 9M FY2010 Results 8 Feb 2010 Cheah Tek Kuang Group Managing Director Note : Based on FY2009 Investors Presentation Updated for 9MFY2010 financial results and other uptodate information

2 Contents 1. Executive Summary Key Messages Financial Fundamentals What is Ahead Summary 2. Financials Update 9M FY2010 Group Performance Business Outlook 3. Business Segment Performance 4. Economic Outlook & Banking System Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Operating Segments Islamic Banking 5. Additional Information Share Price Shareholding ANZ Channel & Distribution Customer Service Ratings & Research Coverage 1

3 AmBank Group snapshot AmBank Group, Gross Loans : RM bil 11.1% Proud banking heritage spanning over 30+ years A top 20 listed company on the Bursa Saham Malaysia (market cap ~RM15.07 billion) & rank 188 (global 1,000 banks by market cap) Top 4 largest listed banking group (market cap) in Malaysia with diversified business fundamentals Well capitalized with Tier 1 CAR of 9.8% and total RWCA of 15.3% ANZ, our strategic partner, one of only 11 AA rated banks in the world 2

4 On track to deliver revised improved FY2010 earnings guidance Staying Ahead Sound 9MFY2010 performance Higher revenues Better than expected loans growth Higher FY2010 PATMI guidance ( RM950 mil) Key focus : Medium Term Aspirations (MTA) Business Segment Performance Sound Divisional profits Investment Banking : capital market recoveries Assurance : diversified portfolios in Life and General Better asset quality : higher LLC and lower NPL Capital, Risk & Funding Well capitalized (Tier 1 : 9.8%, RWCA : 15.3%) Proactive risk management Implement FTP, ALM disciplines, Basel II and FRS Priorities for 2010 Profitable growth, diversification & rebalancing focus Dynamic focus : volume vs price trade offs & asset quality Leverage market leading positions & capital markets recovery Medium term : target cost efficiencies, continue investments Longer term plans : to disclose during FY2010 results 3

5 Strong 9MFY2010 results, sets good foundations for FY2010 9MFY09 9MFY10 Change Q2FY10 Q3FY10 Underlying PATMI growth : 17.2% Performance Profit after Tax & MI ROE EPS (basic, annualised) mil 12.4% 33.2 sen mil 11.9% 35.4 sen 12.6% 0.5% 6.6% mil mil 11.1% 11.6% 32.9 sen 35.3 sen Net Lending / Financing 55,997 mil 63,873 mil 14.1% 60,437 mil 63,873 mil Growth Customer Deposits CASA 59,523 mil 6,727 mil 66,787 mil 8,228 mil 12.2% 65,302 mil 66,787 mil 22.3% 7,611 mil 8,228 mil Risk, Capital & Funding Profile Net NPL / NPF Ratio 2.7% RWCA Tier % 7.9% LD Ratio 94.1% 1.8% 15.3% 9.8% 95.6% 0.9% 2.3% 1.9% +1.6% 2.2% 1.8% 15.7% 15.3% 10.1% 9.8% 92.6% 95.6% 4

6 What is ahead Malaysia : Cautious but optimistic Increasing global optimism but risks linger Gradual Malaysian economic recovery GDP : 2009 : 2.5%, % + Fiscal spending (RM67 billion) + Monetary policies, better than expected exports Progressive interest rate hike commencing early 2010 Industry : What is Ahead Higher lending & RWA growth : government spend, private consumption Competition : strong and some irrational pricing Upside : Capital market recoveries BIS/BASEL III discussion to intensify AMMB : Tailwinds emerging but risks linger Strategic themes provided resilience Leverage economic upturn in 2010 Full MTA achievement delayed : BIS/BASEL III requirements Enhanced risk, governance and systems Good support from ANZ, our strategic partner 5

7 Summary 1. Top 5 Banking Group in Malaysia with diversified business fundamentals, supported by ANZ, our strategic partner and 1 of 11 AA rated banks in the world 9M FY Good 9M result sets the foundation for us to deliver above our earlier FY 2010 market guidance 3. Sound capital levels and executing to our strategic themes will position AmBank Group to leverage economic upturn in Maintaining high vigilance on asset quality, risk disciplines, collections / restructuring activities & cost management 5. Staying focused on executing to our strategic agenda around profitable growth and portfolio rebalancing will help us achieve our Medium Term Aspirations (MTA) 6

8 AmBank Group Results Investors Presentation AMMB Holdings Berhad 9M FY2010 Results February 2010 Ashok Ramamurthy Group Chief Financial Officer & Deputy Group Managing Director 7

9 Contents 1. Executive Summary Key Messages Financial Fundamentals What is Ahead Summary 2. Financials Update 9M FY2010 Group Performance Business Outlook 3. Business Segment Performance 4. Economic Outlook & Banking System Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Operating Segments Islamic Banking 5. Additional Information Share Price Shareholding ANZ Channel & Distribution Customer Service Ratings & Research Coverage 8

10 Sound profit growth, with conservative provisioning REPORTED RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Business Performance Net int income 1, , % Fee and comm % Inv and trading (28.9) >100% Ins business % Others (0.7) >100% Total Income 2, , % Expenses , % PBP 1, , % Provisions % PBT , % PAT % PATMI % Income : All Divisions recorded good growth in incomes Recovery in capital and equity markets contributed to higher investment and trading incomes Expenses: Reflects salary and staffing increases, additional bonus accrual, ongoing medium term investments and CPI, but within CTI targets Provisions : Higher GP stronger loans growth Pro active provisioning to account for potential lag effects of economic downturn Provisions include PER, impairment losses and provisions for commitments & contingencies UNDERLYING 1 PATMI % 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 Note : 1 9MFY2009 underlying is reinstated for one off s as at 31 December

11 Improved PATMI PATMI : Growth contributed by all business divisions except CIB RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Business Performance Retail Banking Division % 1 (61.9%) Business Banking Division (11.9%) % Investment Banking Division % (11.9%) Corporate & Institutional Banking (CIB) (7.5%) % Assurance (6.8%) % Life Insurance % General Insurance % Operating Segments : Reported PATMI Net Assets 2 : Growth contributed by CIB and Business Banking (34.0) (72.5) 113.2% Retail Banking Division 41, , % Business Banking Division 9, , % Corporate & Institutional Banking 4, , % Income growth in Retail Banking attributed to focus on profitable segments Business Banking recorded lower provisions Better investment banking performance from improving capital and equity market conditions CIB impacted by higher general provisions on stronger lending performance Life and General Insurance recorded higher incomes from larger fund base Retail focus on preferred viable segments in a highly competitive environment Business and SME growth focusing on more stable sectors CIB s growth focusing on project financing with government support, GLC s and large MNC s 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 Note : 1 Bracket denotes composition of contribution to PATMI by business segment 2 Net Assets : net lending & net financing (net of IIS, SP and GP) 3 Life Insurance surplus is transferred into life policy shareholders fund in overall Group accounts 10

12 Lower NIM but improved non interest income and CTI ratios REPORTED RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Net Interest Margin 3.06% 2.92% 0.14% (NIM & NFR composite) Cost Income 43.78% 40.82% 2.96% (CTI) Cost Asset 1.51% 1.58% +0.07% (CTA) Business Performance Lower NIM from : Reduced interest recoveries Change in asset mix towards lower margin but stable corporate loans H1FY10 NIM = 2.82% Improvements in cost income ratio from: Higher revenue growth in Investment Banking, Corporate & Institutional Banking and Assurance Fee Income / Total Income Other Operating Income / Total Income 18.3% 17.8% 0.5% 20.8% 31.2% 10.4% Other operating income : Higher composition to total income due to the recovery in trading incomes 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 Note : 1 Net Interest Margin includes Net Financing Income from Islamic Banking business, as follows : Reported and Underlying : 9MFY % 9MFY % 2 CTI and CTA excluding insurance 3 Other operating income includes net income from insurance business 11

13 Balance sheet fundamentals looking good, with strong CASA growth REPORTED RM'mil 9MFY09 9M1FY10 9MFY10 vs 9MFY09 Business Performance Balance Sheet Lending/Financing Gross loans/financing 59, , % Net loans/financing 55, , % Balanace Sheet Deposits Customer Deposits 59, , % CASA Deposits 6, , % CASA Proportion 11.3% 12.3% +1.0% Loans growth to focus on profitable segments and targeted industry sectors More diversified deposit base with initiatives in retail and business segments driving high CASA growth LD ratio impacted by stronger loans growth in the last two quarters LD Ratio 94.1% 95.6% +1.5% 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 Note : 1 CASA : current accounts & savings accounts 2 CASA proportion : as composition of Deposits from Customers 3 LD : customer deposits / net loans (net IIS, SP, GP) 12

14 Better asset quality & decreasing quantum of historical issues Gross NPL NPL / NPF / NPF by Segments by Segments Retail Business Credit & Leasing Investment / Corporate RM'bill Banking Mar 2007 Mar 2008 Mar 2009 Dec 2009 Non Performing Loans / Financing NPL ratio 3,000 Stable NPL level despite economic stresses from the recent global financial downturn Continuing business NPL s better than system levels 2,400 1,800 1, % 3.0% 2.7% 2.5% 2.1% 1.7% 42.5% 22.5% 23.2% 23.1% 12.1% 2.9% 1,859 1,706 1,728 1,314 1,162 1,100 1, Gross NPL Net NPL Gross NPL Net NPL Historical business gross NPL s constitute circa 23% of the total portfolio RM' mil Continuing Business Historical Business Mar 08 Mar 09 Dec 09 Note : 1 Historical NPL s comprise legacy non performing loans from entities acquired by the Group prior to and during 2002, and Arab Malaysian Credit Berhad 13

15 Improving trends on NPL / NPF ratios & loan loss coverage Asset Quality Indicators % 75.1% 67.3% 56.6% % 32.2% 36.7% RM'bil Gross NPL Net NPL Loan Loss Coverage FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY MFY % 9MFY10 / FY09 change : 17.4% Gross NPL / NPF ratio 0.7% Net NPL / NPF ratio 0.8% 14.8% 15% Net Provisions charge 0.3% 13.8% 12.4% 10.9% 10.4% 10% 9.6% 80% 40% 0% 40% 80% Proactive collection activities Tightened risk assessment Led by experienced team 6.2% 6.3% 5% 0% 2.2% 1.9% 1.7% 3.2% 3.7% 4.1% 2.6% 1.0% 0.6% 3.4% Gross NPL ratio 1.8% Net NPL ratio 0.9% Net Provisions Charge 14

16 Lower new gross NPL / NPF formation, recoveries, write offs and conversions % New Gross NPL / NPF to Gross Loans / Financing 1.80% % Gross NPL / NPF Conversion to Gross Loans / Financing 1.20% 1.20% 0.80% 0.60% 0.40% 0.00% 0.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 % Recoveries to Avg Gross Loans / Financing 0.60% 0.40% 0.20% % Write Offs to Avg Gross Loans / Financing 2.00% 1.50% 1.00% 0.50% 0.00% 0.00% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY2004 FY2007 FY2008 FY2009 FY2010 Note : 1 FY2004 and FY2005 financials based on gross before IIS 15

17 Portfolio rebalancing : Focus on viable segments and diversification Gross Loan / Financing movement (before netting Islamic financing sold to Cagamas) Retail (66%) Business / Corporate (33%) Loan Composition % 36.4% 20.1% 3.8% 1.4% 1.4% 3.1% 16.9% 14.0% 1.8% 15.5% 4.3% % % Retail : targeting profitable segments % % 1.5% 10.4% Auto Financing Mortgage Asset Financing Credit Cards Line of Credit Personal Loans to civil servants RM'bil Dec' 09 Mar' 09 Business Banking (ex GLR) 4.9 Corporate & Institutional Banking 13.8% Business & CIB Loan Rehab Business & Corporate : harness synergies via deepening customer relationships 1.4% Others by Customer Type 62.1% Individuals by Interest Rate Type 10.5% 26.0% SME Business RM'bil Mar 08 Mar 09 Dec 09 Fixed rate 62% 60% 57% Variable rate 38% 40% 43% Dec 09 16

18 Good growth momentum for Insurance and Funds Management RM mil General Insurance Gross Fund Assets Premium 1, % 1,000 0 Life Insurance Gross Fund Assets Premium 3, % 2, , , , , , , General Fund Assets* Gross Premium 1600 Life Fund Assets Gross Premium 1600 FY2005 FY2006 FY2007 FY2008 FY2009 9MFY2010 FY2005 FY2006 FY2007 FY2008 FY2009 9MFY ,000 10,000 AUM Institutional Funds Management Fee % ,000 10,000 AUM Unit Trust Funds Management Fee % ,000 3, , , , , , ,000 3, , , , , , Asset Under Management ("AUM") Management Fee 75 Asset Under Management Management Fee 120 * Prior to December 2008, based on general funds per BNM DGI returns December 2008 & post December 2008 based on BNM DGI returns with total asset (general funds + shareholders funds) 17

19 Sound income growth and conservative provisions Total Group Level Reported Total Group Level Reported Total Total Group Level Underlying 1, % 1, % RM'mil FY2007 FY2008 FY2009 9MFY2010 RM'mil FY2007 FY2008 FY2009 9MFY2010 Total Income Provisions Average / quarter Average / quarter FY2007 FY2008 FY2009 9MFY2010 FY2007 FY2008 FY2009 9MFY2010 Gross Loans / Financing & NIM/NFM / NFM Non Non Interest / / Financing Income Composition % Composition % 31.2% % 8.4% 6.4% 10% 25.0% 20.8% % % 4% 18.3% % 2.9% 3.0% 15.0% 2.9% 2% % % 5.0% % 50 14% RM'bil FY07 FY08 FY09 9MFY10 5.0% 9MFY2009 9MFY2010 RM'bil Y o Y growth NIM Non Interest Inc Fee Inc Trading & Investment Inc Income : performance reflecting improved contributions across Divisions Provisions : to institute more proactive collections management NIM : lower recoveries and changes in lending mix towards lower margin but stable corporate loans 18

20 Diversified funding profiles Customer Deposits by Sources Customer Deposits by Type Others 2 Biz enterprises Government Individuals Government funds grew by 5.5% in 9MFY2010 CASA composition 12.6% 11.2% 10.5% Total 42.4b 55.8b 64.1b % 66.8b Others CASA FD + NID CASA grew by 21.8% in 9MFY2010 RM'bil Mar 07 Mar 08 Mar 09 Dec 09 Others Biz enterprises Government Individuals RM'bil Mar 07 Mar 08 Mar 09 Dec 09 Others CASA FD + NID Customer Deposits : Interest / Profit Rate Pricing Profile Deposits of Banks & Other Financial Institutions 1.0% 5.2% 0.1% 5.1% 6.9% 11.0% 6.0% 4.5% 4.7% 9.2% 26.9% 51.9% 27.8% 27.8% 21.9% 60.9% 62.6% 66.5% RM'bil Mar 07 Mar 08 Mar 09 Dec 09 Non interest sensitive Islamic > 5 years 1 5 yrs Non sensitive Islamic > 5 years 1 5 years 3 12 months 0 3 months Longer term funding an ongoing issue Total 17.4b 7.1b 6.1b 6.1b RM'bil Mar 07 Mar 08 Mar 09 Dec 09 Other FI's BNM Merchant banks Banks Other FI s BNM Merchant Banks Reduce dependency on interbanking funding Note : 1 In line with September 2009 disclosures, FY2009 and FY2008 financial statement figures were restated to reflect certain deposits previously classified under Deposits and Placement of Banks and Other Financial Institutions 2 Others by source comprises pension and retirement funds, non profit organisations and similar 3 Others by type comprises short term treasury deposits, cash management system (CMS) placements and structured deposits 19

21 Balance sheet being progressively repositioned for rising interest rates RM bil Interest / Profit Rate Risk : 0 12 months Interest / Profit Rate Risk : 1 5 years Net mismatch Net mismatch FY2008 FY2009 9MFY2010 FY2008 FY2009 9MFY2010 Interest / Profit Rate Risk : > 5 years Interest / Profit Rate Risk : Non Interest Sensitive Net mismatch Net mismatch Assets Liabilities Equity Off balance sheet gap / derivatives Note : Net mismatch comprises on balance sheet and off balance sheet interest rate gap sensitivity 20

22 Improved earnings and returns ratios for 9MFY2010 9MFY10 / FY09 change 0.2% FY 09 / 08 change 0.2% 9MFY10 / FY09 change FY 09 / 08 change 0.11% 0.02% 9MFY10 / FY09 change FY 09 / 08 change 12.0% 12.1% REPORTED ROE, % ROA, % EPS, basic sen/share 5.8% 11.5% 11.7% 11.9% 0.17% 1.02% 1.04% 1.15% (13.3) FY07 FY08 FY09 9MFY10 FY07 FY08 FY09 9MFY10 FY07 FY08 FY09 9MFY10 9MFY10 / FY09 change 0.6% FY 09 / 08 change 1.3% 9MFY10 / FY09 change 0.14% FY 09 / 08 change 0.06% 9MFY10 / FY09 change 16.2% FY 09 / 08 change 3.4% Maintaining profitability despite economic disruptions UNDERLYING ROE, % ROA, % EPS, basic sen/share 10.2% 12.7% 11.4% 12.0% 0.76% 1.08% 1.02% 1.16%

23 Strong capital base to meet ensuing challenges and support growth Capital adequacy : AMMB Holdings Berhad FY2007 FY2008 FY2009 9MFY2010 * Core equity 7.6% 7.7% 7.8% 7.8% Tier 1 8.7% 8.5% 9.7% 9.8% RWCA 12.6% 14.1% 15.2% 15.3% Capital adequacy : by legal entity, 9MFY2010 Tier 1 * RWCA * AmBank (M) Berhad 10.3% 14.7% AmBank (M) Berhad, Group 9.4% 14.9% AmInvestment Bank Berhad, Group 22.7% 27.8% AmIslamic Bank Berhad 11.0% 15.8% * Excludes Q3 FY2010 profits (except for AmIslamic) * Innovative Tier 1 Capital Securities issued (AmBank (M) Berhad) : Approved program = RM500 mil Q1FY10 issuance = RM300 mil Q2FY10 issuance = RM185 mil CAR excludes Q3FY2010 profits; if included : Core equity : 0.3% (proforma 8.1%) Tier 1 : 0.4% 04%(proforma 10.2%) RWCA : 0.4% (proforma 15.7%) Capital management plan : Strengthen capital profile & buffer Increased modelling of economic scenarios Risk / rewards focus within Basel II Improvements in capital diversification Development of dynamic dividend policy Review of BIS / Basel III framework Note : 1 FY2007 capital adequacy ratios as per the published financial statements of AHB for FY

24 Strategic focus : Maintain viable growth and rebalancing focus De risk Diversify De risk + Diversify Differentiated G rowth Low Moderate High (ISLAMIC AND CONVENTIONAL BANKING) 23

25 Strategy & outlook for FY2010 refined for improving market conditions Overall Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Maintain profitable growth & rebalancing focus via executing to our strategic agenda Income diversification, cost management, deposit growth & enhanced risk disciplines key priorities for FY2010 Position business for potential economic recovery towards beginning 1Q2010 Currently evaluating medium to long term strategic plans and options Maintain asset growth focus on profitable segments whilst growing deposits Expect higher income growth from historical fixed income assets (under FTP) Expect increased delinquencies & credit costs, though lower than previously anticipated Enhanced focus on risk management and collections Expect minimal profit growth for FY2010 Focus on building a sustainable asset base targeted towards stronger industry segments & with greater diversification Proactively manage existing accounts to mitigate higher risk of default Enhance focus on deposits & transaction based fees Expect rapid FY2009 profit growth to moderate in FY2010 More stable economic environment with equity & debt market activities improving Focus on core expertise in advisory & capital market activities Expect rising profit performance over FY2009 Assurance General Stable profits, and MAA business acquisition if proceeded with, will bring in synergies later Life Expect good growth via revenue increase & efficiency improvements over FY2009 Markets Biz Risk & Financial Governance Focus on project financing with government support, GLC s & large MNC s Deepen customer relationships to generate fee incomes & advisory mandates Enhance focus on capital efficient business growth & loan pricing to reflect economic risks Expect an improved profit performance over FY2009 Focus on reducing volatile exposures & diversifying revenues Market disruption not expected to recur leading to improved fixed income profit performance Expect Markets FX and Derivative businesses to contribute to income growth Implement new retail tools including 3G scorecards, PD & LGD models Implement new non retail PD, EAD & LGD models, financial spreading tool & security indicators (collateral management) Implement new FTP and ALM disciplines, Basel II, FRS requirements and review adoption of the proposed BIS/Basel III capital & liquidity framework (2012) Note : Modifications made to previous strategy and outlook are in italics 24

26 On track to deliver revised improved FY2010 earnings guidance FY 07 FY 08 FY 09 9M FY10 FY 2010 Medium Term Aspirations (MTA) PATMI Reported : RM282.5 mil Underlying : RM556.9 mil Reported : RM668.5 mil Underlying : RM837.4 mil Reported : RM860.8 mil Underlying : RM840.7 mil Reported : RM766.9 mil Underlying : RM777.9 mil RM950 mil Previously RM mil ~ 12% 15% CAGR ROE Reported : 5.8% Underlying : 10.2% Reported : 11.5% Underlying : 12.7% Reported : 11.7% Underlying : 11.4% Reported : 11.9% Underlying : 12.0% circa 11.5% Previously 11% FY2012 : circa 15% MTA : 17 20% CTI Reported : 37.1% Reported : 39.6% Reported : 43.0% Reported : 40.8% 42% 43% circa 40% Net NPL Ratio Dividend gross / payout Reported : 6.2% Reported : 3.7% Reported : 2.6% Reported : 1.8% 2.0% 2.5% 5.0 sen / share (loss year) 6.0 sen / share 18.3% 8.0 sen / share 19.0% N/A Previously 45% Previously 4% 10.0 sen / share FY2012 : 2 3% MTA : below system Payout % system average Note : Underlying performance of PATMI and ROE for FY07 and FY08 adjusted for one off impacts including restatement as if AmInvestment Group Berhad was a 100% owned entity of AMMB MTA : excludes adoption of new proposed capital framework (BIS /Basel III Dec 2009) in

27 Concluding remarks 1. Top 5 Banking Group in Malaysia with diversified business fundamentals, supported by ANZ, our strategic partner and 1 of 11 AA rated banks in the world 2. Good 9M result sets the foundation for us to deliver above our earlier FY 2010 market guidance 3. Sound capital levels and executing to our strategic themes will position AmBank Group to leverage economic upturn in Maintaining high vigilance on asset quality, risk disciplines, collections / restructuring activities & cost management 5. Staying focused on executing to our strategic agenda around profitable growth and portfolio rebalancing will help us achieve our medium term aspirations (MTA) 26

28 Contents 1. Executive Summary Key Messages Financial Fundamentals What is Ahead Summary 2. Financials Update 9M FY2010 Group Performance Business Outlook 3. Business Segment Performance 4. Economic Outlook & Banking System Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Operating Segments Islamic Banking 5. Additional Information Share Price Shareholding ANZ Channel & Distribution Customer Service Ratings & Research Coverage 27

29 Summary of divisional performance Income Expenses 60% 50% 50% 40% 30% 20% 40% 30% 20% 10% 0% PBP 65% Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Group Operating Segments 10% 0% PAT 70% Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Group Operating Segments Investment Banking and Assurance Businesses have contributed higher profit in the current 9 month vis à vis last corresponding period 45% 50% 25% 30% 5% % % Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Group Operating Segments 10% Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Group Operating Segments 9MFY09 9MFY10 28

30 Retail Banking Division RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Income 1, , % Expenses % PBP % Provisions % PBT % PAT % Gross Loans / Financing 42, , % Net Loans / Financing 41, , % Gross NPL / NPF Ratio : 3.75% 1, , % Net NPL / NPF Ratio : 2.58% 1, , % Customer Deposits 35, , % Low Cost Deposits 5, , % ROA (annualised) 1.57% 1.62% +0.05% CTI 36.7% 36.9% +0.2% Loan Loss Coverage 60.1% 72.3% +12.2% Income growth underpinned by focus on profitable segments and risk pricing Expenses reflecting growing footprints and upgrade in risk tools, people cost and IT systems Strong CASA growth More vigilant measures to improve asset quality via enhancement to credit risk management, collections and recoveries management Retail Banking s Aspirations : Establish retail business models in key areas of profitability for coming year and readiness to engage scalable growth ahead Strategic Agenda : Focus target market and portfolio base by product Streamline distribution channels for productivity and efficiency Strengthen risk and sustain portfolio health Enhance service levels TAT, SSM and customer services Continue to build operational infrastructure for efficiency and capacity 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 29

31 Business Banking Division RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Income % Expenses % PBP % Provisions % PBT % PAT % Gross Loans / Financing 9, , % Net Loans / Financing 9, , % Gross NPL / NPF Ratio : 1.02% % Ratio : 0.61% Net NPL / NPF % Customer Deposits 1, , % Low Cost Deposits 1, , % ROA (annualised) 1.49% 1.28% 0.21% CTI 24.8% 27.4% +2.6% Loan Loss Coverage 205.9% 189.4% 16.5% Income growth impacted by lower interest recoveries Cost increase largely reflecting expansion in relationship team More vigilant measures in asset quality via enhancement to credit risk management Business Banking s Aspirations : Entrench business in stable industries i in accordance to government stimulus packages, grow fee income / non interest income and deposit base Strategic agenda : Overall 3C approach : Conserve, Control, Caution Conserve Maintain good relationship with existing customers through excellent service and managing expectations Control Greater emphasis on monitoring customers conduct of account Caution In respect of new application for facilities, to target customers with good track record, feasible business plans and operating in chosen sectors 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 30

32 Investment Banking Division RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Income % Expenses % PBP % Provisions (1.4) 4.1 +>100% PBT % PAT % CTI 73.7% 45.8% 27.9% 1 Assets Management 18, , % Ave Volume / Contract Traded (RM'mil/month) Bursa M'sia 45, , % Future KL index % IB Broking 3, , % AmFuture % Market Share as at: IB Broking 8.2% 7.7% 0.5% AmFuture 16.0% 20.1% +4.0% Improvement in performance from pick ups in capital market and stock market Continue to strengthen business relationships and core expertise Investment Banking s Aspirations : Staying relevant & protect market share in current operating environment Preserving quality of balance sheet assets by managingcredit credit, interest rate and operationalrisksrisks whist remaining profitable Balance between nurturing human resource capital to prepare for eventual upturn in global economy whilst managing operating costs Strategic agenda: Concentrate on core businesses and priority customers Weather financial crisis storm by managing costs Build scale through aggressive relationship building and capabilities Position (resources and prime morale) for eventual upturn in operating environment 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 Note : 1 Including AmInvestment Management, AmInvestment Services, private banking & AmARA 31

33 Corporate & Institutional Banking Division RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Income % Expenses % PBP % Provisions (0.6) >100% PBT % PAT % CTI 41.2% 30.7% 10.5% Net Loans / Financing 4, , % Assets Management % Ave Volume / Contract Traded (RM'mil/month) S'pore SE 142, , % Jakarta SE 58, , % AmFIPL 1, , % PTAMCI % Market Share as at: AmFIPL 0.7% 1.3% +0.5% PTAMCI 0.9% 0.9% +0.0% Diversified loans portfolio provided good support for income growth Higher general provisions from larger loans base impacted profits Corporate & Institutional Banking s Aspirations: Deepen and expand Corporate & Institutional Banking relationships and harness Group synergies Derisk, Diversify, Differentiate, Consolidate, Grow, Build Strategic agenda : Business diversification of income sources : advisory, retainer fees, fund of funds model, Islamic banking license (international biz) Implement cost savings measures for higher efficiency and productivity Close monitor of watchlist Focus on project financing with government support, GLC s, large MNC s 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 * Services include : large corporate lending, large corporate deposits, financial institution group, offshore banking, international business, private equity, REITs and loan syndication Note : 1 Singapore Stock Exchange 2 Jakarta Stock Exchange 3 AmFraser International Pte Ltd 4 PT AmCapital Indonesia 32

34 Assurance Businesses RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Income % Expenses % PBP % Provisions 2.3 (0.2) >100% PBT % PAT % CTI 51.9% 45.9% 6.0% Life Insurance Fund Assets General Insurance Fund Assets 1, , % % Post tax ROE 14.0% 17.7% +3.8% General Business Claim 70.5% 71.2% +0.7% Higher income from larger fund assets, attributed to enhanced agency network and focus on product bundling and cross selling Assurance s Aspirations : To be the top 3 insurer in terms of premiums Strategic Agenda: Life : Improve capital efficiency via better ALM practices Improve sales & operating efficiency via enhanced core system and distribution channel management General : Enhance customer segmentation analytics for motor business Develop alternative channels for non motor business Rationalise branch operating model & centralise work processes 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 33

35 Group Operating Segments RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Income % Expenses % PBP % Provisions % PBT (6.4) (43.4) 574.1% PAT (22.5) (47.9) 113.1% PATMI (34.0) (72.5) 113.2% Total Group: Securities HFT 1, , % Securities AFS 7, , % Securities HTM % Higher income from : Treasury and Markets (improved trading conditions) Loan Rehab units (recovery rate as scheduled) Shareholders fund, Corporate & Shared Services (consolidation adjustments) t 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 34

36 Islamic Banking RM'mil 9MFY09 9MFY10 9MFY10 vs 9MFY09 Income % Expenses % PBP % Provisions % PBT % PAT % Net Financing 9, , % Gross NPF Ratio : 1.79% % Net NPF Ratio : 1.00% % Customer Deposits 9, , % Low Cost Deposits 1, , % ROA (annualised) 1.40% 1.68% +0.3% CTI 39.7% 36.5% 3.2% Financing Loss Coverage 108.6% 124.8% +16.2% Strong results improvement attributed to business expansion in line with Malaysia s drive on Islamic banking growth Underlying branding position remains strong and expected to provide growth support Islamic Banking s Aspirations : To become Islamic bank of choice and ensure high degree of value for customers and stakeholders Strategic Agenda : Strengthen International Currency Business (ICBU); focus on capital market and funds management via AmInvestment banking arm Implement debt equity program (musyarakah) Strengthen retail segment, focusing on personal financing, cards and housing loan Execute deposit business programs and expand deposit business with government and government linked companies Expand product tie ups and alliances with third parties 9MFY09 results Favourable growth in 9MFY10 Unfavourable growth in 9MFY10 * Results incorporated under respective business divisions 35

37 Overview of one offs Impacts from changes in accounting & provisioning policies, prior period catch ups, divestments, strategic investments & tax rate changes 9MFY MFY 2010 Hedge accounting impacts Non core and prior period operating incomes, eg deposit insurance premium, divestment of general insurance business Strategic investments & prior period expenses eg ANZ partnership, funding cost, MSS, LTI Provisioning policy changes and catch ups, eg 5 and 7 year rules Net Impact on Profit before Tax (RM mil) 27.0 (13.4) Write down of deferred tax assets & prior period tax catch ups, eg corporate tax rate reductions Tax impact on one off items above Net Impact on Profit after Tax (RM mil) 13.8 (8.6) Impact of one offs on minority interest Net Impact on Profit after Tax and MI (RM mil) 17.2 (11.0) 36

38 Contents 1. Executive Summary Key Messages Financial Fundamentals What is Ahead Summary 2. Financials Update 9M FY2010 Group Performance Business Outlook 3. Business Segment Performance 4. Economic Outlook & Banking System Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Operating Segments Islamic Banking 5. Additional Information Share Price Shareholding ANZ Channel & Distribution Customer Service Ratings & Research Coverage 37

39 +3.5% GDP forecast for 2010 / Lower interest rates forecast from 2009 to mid 2010 but rising thereafter Real GDP : Consumption % YoY 12.0 Private Consumption (%YoY) Government Consumption (%YoY) Real GDP (% YoY) F 2010E 2011E 2012E OPR, BLR OPR (%) BLR (%) % F 2010E 2011E 2012E Deposit Rates Retail Deposit Rate (%) % Corporate Deposit Rate (%) Extraordinary global challenges in 2008 / 2009 Despite some resilience, consensus amongst economists is that domestic economy would contract in 2009 with a gradual recovery expected in GDP forecast : +3.5% Progressive interest rate hike in 2010 Financial sector stable and financially healthier, hence can afford to pass on official interest rate cuts Convergence of price competition and narrower viable sectors Vigilant and responsive BNM F 2010E 2011E 2012E Source : In house internal research 38

40 Stronger banking system asset quality to withstand rising delinquencies in 2009 / NPL Ratios in Banking System & Loan Loss Coverage Ratio RM bil % Mar 05 Jun 05 Sep 05Dec 05Mar 06 Jun 06 Sep 06Dec 06Mar 07 Jun 07 Sep 07Dec 07Mar 08 Jun 08 Sep 08Dec 08Mar 09 Jun 09 Sep 09Dec 09 Gross NPL (RM'bil) LHS Gross NPL (%) RHS Loan Loss Coverage (%) LHS Net NPL (%) RHS NPL on a declining trend Loan loss coverage rising steadily with exception of March 2009 due to some asset quality pressure from financial crisis Overall, banking system asset quality remains intact during the recent economic downturn Banks have tightened lending policy and strengthened risk assessment, starting fundamentals are strong Source : BNM monthly statistical bulletin 39

41 Contents 1. Executive Summary Key Messages Financial Fundamentals What is Ahead Summary 2. Financials Update 9M FY2010 Group Performance Business Outlook 3. Business Segment Performance 4. Economic Outlook & Banking System Retail Banking Business Banking Investment Banking Corporate & Institutional Banking Assurance Operating Segments Islamic Banking 5. Additional Information Share Price Shareholding ANZ Channel & Distribution Customer Service Ratings & Research Coverage 40

42 Banking Sector Share Price Movement / Target Price and Recommendations 140.0% 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% May/07 Jul/07 Sep/07 Nov/07 Jan/08 Mar/08 May/08 Jul/08 Sep/08 Nov/08 Jan/09 Mar/09 May/09 Jul/09 Sep/09 Nov/09 18 May 07 (strategic partnership with ANZ) Source : Bloomberg Date Banking Sector Share Price Movement MBB PBB CIMB RHBC AMMB HLFG KLCI Index 15January 10 AMMB HOLDINGS BERHAD P/ EPS = P/ BV = 1.62 Average TP : RM 5.49 Buy : 20 (83.3%) Hold : 2 (8.3%) Sell : 2 (8.3%) Market Price: RM % Index Movement (May 07 = 100) / index change at close of 15 Jan 10 vs 18 May 07 AMMB % (RM5.25) PBB % (RM11.64) RHBC % (RM5.35) CIMB % (RM13.44) HLFG % (RM7.55) 100% base index KLCI Index 4.3%(1,298.58) MBB 23.1% (RM6.91) Target Price and Recommendations RM mil 9MFY2010 Share Capital 3,014.2 Reserves 6,324.3 Shareholders Equity 9,338.5 Less: Intangible Assets (1,814.6) NTA 7,524.0 NTA Per Ordinary Share (RM) 2.50 Net Asset Per Ordinary Share (RM) 3.10 Stats Market Price (RM) Jan Jan Nov 09 7 Jan Jan Jan Jan Dec 09 4 Jan Jan 10 6 Nov 09 9 Nov Dec Dec Jan 10 9 Nov Nov Jan 10 9 Nov Nov Dec 09 Median Average Range 24 Nov 09 9 Nov 09 9 Nov 09 Price to Book [NTA / Net 2.00 / 1.61 Asset] EPS (sen) basic, annualised Dividend (gross sen / share) * As at 29 January 2010 Index change market price close of 29 Jan 10 vs. 22 Jan 10 Buy/Outperform/Overweight/Add Hold / Neutral P/EPS : EPS annualized Apr Sept 09 P/BV : BV annualized Apr Sept 09 Sell/Underperform/Fully valued/reduce/underweight 41

43 Shareholding structure As at 31 December 2009 AmcorpGroup Bhd 16.7% 23.8% 12.9% 46.6% 100% AMFB Holdings Bhd 100% AmBank (M) Berhad 100% AmIslamic Bank Bhd ANZ Funds Pty Ltd # AMMB Holdings Bhd Employees Provident Fund Board 100% 70%* AmInvestment AmLife Insurance Group Berhad Berhad * Friends Provident Fund PLC 30% 100% AMAB Holdings Sdn Bhd Public 51%^ AmG GInsurance Berhad ^ Insurance Australia Group Ltd 49% Ranked No. 18 (Malaysia market capitalisation) & 188 (global 1,000 banks by market capitalisation) : with market capitalization of RM15.07 billion on Bursa Saham Malaysia (N1) and market capitalization of US$4.41 billion on Bloomberg (N2) Foreign shareholding excluding ANZ : Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Mar 09 Jun 09 Sep 09 Dec % 36.95% 37.15% 34.39% 30.08% 28.38% 29.58% 28.53% 29.58% # ANZ Funds Pty Ltd : a wholly owned subsidiary of Australia and New Zealand Banking Group Limited ( ANZ ) AHB in progress of due diligence to acquire : general insurance business of a local insurance company Source : N1 Starbiz (Top 100 Companies By Market Capitalization as at 31 December 2009) N2 Bloomberg (Global 1,000 banks By Market Capitalization as at 4 January 2010) 42

44 ANZ AmBank strategic partnership + ANZ has provided key resources and support Board Senior Management Management Director Alex Thursby Group CFO & Deputy Group MD Ashok Ramamurthy Head of Retail Distrib & Deposits Brad Gravell Credit Risk/ Portfolio Mgt Glenn Saunders Malaysia Director Dr. Robert John Edgar Chief Risk Officer Andrew Kerr Head of FX & Derivatives Steve Kelly Head of Systems Accounting Ignatius Lim Director Mark Whelan Chief Operating Officer Ross Neil Foden Head of Market Risk Jonathan Manifold Head of Sales, FX & Derivatives Peter Trumper ANZ is the only Australian bank to have been in the Asian region of over 40 years Strategic banking partnerships and presence across 14 countries In August 2009, ANZ acquired selected RBS businesses in Asia for US$550 million, thus reinforcing its strategic intent of a super regional objective ANZ is committed to AmBank s long term success and aspirations 43

45 Significant positions in major business Retail Banking Business Banking Investment Banking Corporate & Institutional Banking* Assurance Islamic Banking # 4 # 5 # 2 # 5 # 7 # 6 # 5 Focus on profitability and build foundations for growth Leverage on existing customers, build sustainable assets & deposit bases Stay relevant & protect market share, and preserve balance sheet quality Derisk, Diversify, Differentiate, Consolidate, Grow, Build [General] [Life] To be the top 3 insurer in terms of premiums To become Islamic bank of choice #2 auto financier : 20.9% mkt share; Best Auto Financier Award in 2007 # 6 (incl. foreign banks) in housing loans (5.6%) # 7 (incl. foreign banks) in credit cards (7.0%) # 3 in personal financing (7.1%) >1.4 products per customer # 4 in no. of branches & # 3 in no. of ATM s Pioneer in weekend and extended banking hours Leverage on nationwide network : 4 regional business centres & 11 commercial centres; and strong relationship managers force Leader in cash management (full suite) and SME financing Expanding trade and remittance leveraging on ANZ s regional network Awards : Best Bond, Best Bond Group, Best Portfolio Manager, Best Deal, Best League Manager Ranked Top 3 in : M&A league Malaysian Ringgit Bond league Funds Under Management Participating organisations Bursa trading summary Build niche in corporate lending, focusing on GLC s and MNC s Cross sell commercial banking products International businesses : Singapore, Indonesia & Brunei Diversify businesses in REITs and private equity # 3 in motor insurance premiums (8.6%) and # 7 in general insurance premiums (5.2%) # 6 in life insurance premiums (6.3%) Leverage IAG s market and operational leadership in general insurance New strategic partner, Friends Provident, in life insurance Full range of banking products and services according to Syariah principles Latest venture : set up of Islamic funds management division # 2 in Islamic credit cards Diversify Islamic banking business in Brunei 44

46 Key group information highlights : customer service and delivery channels ASPIRATIONS Increased customer satisfaction via integrated & seamless channels model Expand branch network and SSM footprint Further build and improve sales & service capabilities Number of Branches #4 Business Units Key Strategic Initiatives Branch Banking 10 new branches (200+ by early 2011) Increase in customer facing / sales staff Maybank CIMB Public AmBank RHB HLB EON Alliance Affin E Channels & Contact Centre (incl. Internet & Mobile Banking) Reaching out to our customers by expanding our self service machine network at branches, shopping centers and 7 Eleven stores Drive profitability by expanding revenue streams through additional services like Interbank Loan & Bill Payment and a full suite of Prepaid Top Up services Maximizing our outbound sales productivity through our Award Winning Contact Centre Enhance customer experience via innovative mobile and internet banking services Number of ATMs 2,828 2, Maybank CIMB AmBank RHB PBB HLB EON Alliance Affin #3 Deposit & Customer Solutions Wealth Mgmt Increase deposit size through innovative products, campaign, marketing activities, banking solutions and competitive rates on CASA & FD Maintain or improve market position (at 5th or 6th assuming unchanged number of anchor banks) Establishing new line of business i.e. premier banking to cater to Affluent segment Increase cross selling via AmUtopia WM system BITPC approval stage Total no ATM s at 7 Eleven 334 Electronic Banking Centers (EBC) 125 FUM no. of accounts 46 K Life insurance policy holders ~400 K General insurance policies in force ~1,160 K Source : Note : Company websites of peer banks / MEPS information Peer groups as at 31 December 2009; AmBank as at latest practicable date 45

47 The AmBank brand : top of mind brand awareness & service performance % (BankC) 311 The AmBank brand : Top of Mind Brand Awareness & Service Performance ADEX (SOV) 07* 08* H (Bank D) (Bank E) (Bank B) (Bank A) (AmB) 2004* 2007* 2008* H1 09 AmBank Bank A Bank B Bank C Bank D Bank E 5% 3% 5% 7% 11% 12% 6% 6% 6% Figures are in % 9% 11% 15% 15% 14% 12% % 3% 8% AmBank at top 5 TOM brand recall Continuous improvement initiatives on brand awareness campaigns Efforts will continue to strengthen brand positioning Brand Imagery Overall Competitor A Competitor F Competitor B Overall this is the bank that I prefer to do my banking STAFF PRODUCT BANK Extensive electronic channels Innovative bank Easy and simple to bank with Has many branches A friendly bank A financially strong bank One stop financial svs provider A progressing & fwd moving bank Long term r/ship brings value With conveniently located ATMs outside bank branches Extended banking hours Uses the techn. to the best advantage Helps to achieve my goals / aspirations Provides a good quality of products & services Offers competitive int. rates Provides the best value for all its products Has reasonable charges Professional and knowledgeable staff Responsive to customers needs Excellent customer service Quick to resolve my problems Provides superior financial advice and guidance Figures are in % Base All respondents (N=525) H109 strength 2008 strength Positively positioned against 2 nd tier competitors Strengths : extended banking hours, convenient ATMs & many branches Ongoing efforts to improve performance matrixes Note: ADEX (SOV) for H109 = (Apr 09 Aug 09) Assets as at June 09 (RM 000) 46

48 Ratings upgrade AmBank (M) Berhad Rating Agency Long Term Short Term Outlook Date RAM Instrument : AA 3 P1 Stable Nov 09 RM500mil non cumulative perpetual capital securities A 2 Nov 09 RM1.0bil negotiable instruments of deposits AA 3 Nov 09 RM2.0bil medium term notes programme A 1 Nov 09 RM500mil innovative tier 1 capital securities programme A 2 Nov 09 Moody s Baa2 P 3 Under review Dec 09 Instrument : USD200mil non cumulative non convertible guaranteed preference share Ba2 Dec 09 Fitch BBB F3 Stable Feb 09 Instrument : USD200mil non cumulative non convertible guaranteed preference share BB Feb 09 S&P BBB A 3 Positive Dec 09 Instrument : USD200mil non cumulative non convertible guaranteed preference share BB Dec 09 Capital Intelligence BBB A3 Positive Dec 09 AmInvestment Bank Berhad Rating Agency Long Term Short Term Outlook Date RAM Instrument : AA 3 P1 Stable Nov 09 RM200mil subordinated tier 2 bonds A 1 Nov 09 MARC AA MARC 1 Stable Mar 09 S&P BBB A 3 Positive Dec 09 Fitch BBB F3 Stable Feb 09 AmIslamic Bank Berhad Rating Agency Long Term Short Term Outlook Date RAM AA 3 P1 Stable Nov 09 Instrument : RM400mil subordinated sukuk musyarakah A 1 Nov 09 47

49 Research Coverage No Research House Analyst 1 Affin Investment Bank Tan Ei Leen 2 Alliance Research Sdn Bhd Soh Meng Hui 3 Bank of America Merrill Lynch Research Kar Weng Loo / Melvyn Boey 4 BNP Paribas Securities (Singapore) Pte Ltd Ng Wee Siang 5 CIMB Investment Bank Berhad Winson Ng 6 Citi Investment Research Fiona Leong 7 CLSA Securities Malaysia Sdn Bhd Loong Chee Wei 8 Deutsche Bank Malaysia Andrew Hill 9 ECM Libra Investment Research ChingWengJin 10 HwangDBS Vickers Research Sdn Bhd Lim Sue Lin 11 Inter Pacific Research Sdn Bhd Anthony Das 12 J.P. Morgan Chris Oh 13 KAF Seagroatt & Campbell Securities Sdn Bhd Chehan Perera 14 Kenanga Investment Bank Berhad Chan Chee Kin 15 Kim Eng Research Sdn Bhd Yew Chee Yoon 16 Macquarie Capital Securities (Singapore) Pte Ltd Tay Chin Seng 17 Maybank Investment Bank Berhad Wong Chew Hann 18 Nomura Malaysia Sdn Bhd Julian Chua 19 OSK Research Sdn Bhd Keith Wee 20 RHB Research Institute Sdn Bhd Low Yee Huap 21 Standard Chartered Bank Tan See Ping 22 TA Securities Holdings Berhad Wong Li Shia 23 UBS Securities Malaysia Sdn Bhd Khairul Rifaie 24 UOB Kay Hian Research Pte Ltd Vincent Khoo / Leow Huey Chuen 48