AmBank Group Results - Investors Presentation

Transcription

1 AmBank Group Results - Investors Presentation AMMB Holdings Berhad FY2009 Full Year Results 15 May 2009 Cheah Tek Kuang Group Managing Director

2 Agenda Table of Contents (Domestic) (603) (Overseas) Executive Summary Financials Update FY09 Group Performance Business Outlook Economic Outlook & Banking System Business Segment Performance Additional Information Retail Banking Business Banking Investment Banking ANZ Channels & Distribution AMMB Group Corporate Structure Relationship Banking Assurance Operating Segments Customer service Ratings & Research Coverage 2

3 Key messages Staying Ahead Another record profit performance for FY 2009, exceeding market consensus Sound business fundamentals, with business offerings being diversified further Lower provisions and MI payouts are major profit growth contributors, partly offset by trading losses and lower capital market contributions Executing to medium term aspirations since early 2008 has provided a head-start advantage over competition Business Segment Performance Retail, Business Banking and Assurance are the main contributors to profit growth Investment Banking and Market trading results impacted by difficult market conditions Asset quality improvements in all areas reflected via lower NPL and provisions Capital, risk & funding Well capitalized with Tier 1 CAR of 9.7% and total RWCAR of 15.2% Proactive risk management via enhanced scorecards, sectoral analysis, watch list accounts & new tools Completed raising non-innovative Tier 1 of RM 500m during March quarter 2009 Priorities for 2010 Maintain profitable growth and rebalancing focus via executing on our strategic agenda Dynamic focus on volume versus price trade offs and growth in viable segments Enhanced asset quality focus (restructuring, rescheduling, & collections activities) Target operating cost efficiencies whilst investing for the medium term 3

4 Improving financial fundamentals in all areas FY08 1 FY09 2 Change Performance Profit after Tax & MI RM mil RM mil 28.8 % ROE 11.5 % 11.7 %* 0.2 % EPS (fully diluted) 27.9 sen 31.6 sen 13.3 % Grow wth Net Lending RM 52,574 mil RM 56,948 mil 8.3 % Customer Deposits RM 55,769 mil RM 64,132 mil 15.0 % CASA RM 6,254 mil RM 6,755 mil 8.0 % Risk & Capital Net NPL Ratio 3.7 % 2.6 % % RWCA 14.1% 15.2% 1.1 % Tier 1 8.5% 9.7% 1.2 % Note : 1 FY08 12 months of financial year ended 31 March 2008, ie April 2007 March FY09 12 months of financial year ended 31 March 2009, ie April 2008 March 2009 * Impacted by holding higher capital ratio 4

5 Corporate transformation agenda largely completed Corporate Development ts Privatisation of AIGB : Legal entity restructuring into 4 groupings largely completed : banking, asset management, capital markets and insurance Optimizes Group capital structure Universal banking model enables greater cross-selling Insurance business transformation : Completed segregation of composite license between life and general Streamlined insurance businesses to create specialization Consummated entry of new strategic partner into life insurance Due diligence underway for acquisition of MAA s general insurance business & Takaful stake Established new FX & derivatives unit in collaboration with ANZ Simplified governance committee structures 5

6 What is ahead Industry : What is Ahead Fallout from the global crisis will have a bigger impact on Malaysia over the forthcoming year Valuable lessons have been learnt from the previous financial crisis BNM has commented that the banking system remains strong and there are no immediate pressures for banks to raise additional capital Growth in lending and risk weighted assets are set to slow down Asset quality will deteriorate and non performing loans, whilst at historical lows, are set to increase Banks likely to proactively shore up their capital position, tighten lending criteria and strengthen risk management Malaysia; Headroom to consider additional policy options Economy forecast to shrink by 2.2% for CY 2009 but will bounce back to grow 3.3% in CY 2010 as global economy recovers (MIER forecast, 15 April 2009) In-house forecast is for a GDP contraction of 2% in FY 2009, with downside bias, and unemployment increasing to 5% Fiscal spending of RM 67 billion over 2009 and 2010 expected to shield the economy from the worst impacts of global downturn External sector contraction will be partly offset by moderate growth in domestic demand Potential exists for further loosening of the monetary policies to cope with the downturn AMMB; Facing headwinds but sound Executing to AMMB s strategic themes will provide greater resilience Enhance risk and governance frameworks Tougher economic conditions, despite disciplined execution, will delay achievement of medium term aspirations ANZ, our strategic partner, is 1 of 11 AA rated banks in the world and listed as 1 of the 20 safest banks globally by Globe Finance Magazine, February

7 Summary FY2009 FY Another record profit performance for FY 2009 with results exceeding market consensus due to lower provisions and MI payouts 2. Well capitalized with Tier 1 CAR of 9.7% and total RWCAR of 15.2% 3. Executing AMMB s medium term strategic themes around profitable growth and rebalancing our portfolio, has provided a head-start advantage and will provide greater resilience 4. Enhanced focus on risk disciplines, collections / recovery activities & cost management 5. Tougher economic conditions, despite disciplined execution, will delay achievement of medium term aspirations 7

8 AmBank Group Results - Investors Presentation AMMB Holdings Berhad FY2009 Full Year Results 15 May 2009 Ashok Ramamurthy Chief Financial Officer & Deputy Group Managing Director

9 FY09 Group Performance

10 Sound profit growth despite income pressures REPORTED Income Expenses PBP Provisions PBT PAT RM mil FY08 3, , , , FY09 3, , , , FY09 vs FY08-2.4% +4.9% -8.6% -28.9% +1.9% +8.3% PATMI % UNDERLYING 1 Income Expenses PBP Provisions PBT PAT 3, , , , , , , , % +5.7% -7.8% -25.0% +0.9% +0.9% PATMI % FY08 results Favourable growth in FY09 Unfavourable growth in FY09 Business Performance Income : Investment and Regional Banking income adversely impacted by capital market conditions Retail and Business Banking and Assurance performances meet expectations Expenses: Reflects salary adjustments, insurance claims, ongoing medium term investments and CPI Provisions : Improved credit risk, asset quality, NPL collections and recoveries management Provisions include PER build-upup and impairment losses One-off impacts : RM mil FY08 FY09 Income : Hedge accounting, disposal AmG shares Expenses : MSS Provisions : SP for indirect tax Tax : tax impact on one-offs, thin capitalisation MI : impact on disposal of AmG Insurance Note : 1 FY2008 underlying is reinstated for one-off s as at 31 March PATMI : Total impact

11 Improved PATMI underpinned by Retail, Business Banking & Assurance PATMI : Growth contributed by Retail, Business, Assurance RM mil FY08 FY09 FY09 vs FY08 Business Performance Retail Banking Division Business Banking Division Investment Banking Division 1 (71.1%) (12.2%) (5.5%) % +35.6% -69.8% Retail & Business are main drivers of profit growth Lower investment banking contribution reflects stressed equity and capital market conditions Relationship & Regional Banking Assurance Operating Segments : Reported PATMI (5.9%) (5.2%) % +17.8% +97.7% Operating segments : FY08 FY09 09 vs 08 Underlying PAT % One-Off s % including MI payout MI % Net Lending 2 : Growth contributed by Business Business Performance Retail Banking Division Business Banking Division Relationship Banking & Regional Business 40, , , , , , % +19.2% +36.2% Retail focus on higher profit segments in a highly competitive environment Targeted growth in Business and SME loans, focusing on more stable sectors FY08 results Favourable growth in FY09 Unfavourable growth in FY09 Note : 1 Bracket denotes composition of contribution to PATMI by business segment 2 Net Lending : net of IIS, SP and GP 11

12 Improving NIM but higher CTI due to deteriorating trading and fee income REPORTED FY08 FY09 FY09 vs FY08 Business Performance Efficiency Ratios & Others Cost-Income : Net Interest Margin % 2.89% +0.06% Income growth impacted by tough trading conditions Cost-Income % 43.0% +3.4% Enhanced focus being placed on expense management and driving efficiency improvements Fee Income / Total Income 15.9% 14.0% -1.9% UNDERLYING Efficiency Ratios & Others Net Interest Margin 1 (RM534.3mil) (RM457.0mil) 2.78% 2.89% +0.11% Net Interest Margin : Higher NIM due to pricing, interest recoveries on NPL s and loan step-up rates NIM, subject to future OPR reductions and regulatory pricing constraints, is expected to be stable (+/- 10 bps) Cost-Income % 43.7% +3.5% FY08 results Favourable growth in FY09 Unfavourable growth in FY09 Note : 1 Net Interest Margin includes Net Income from Islamic Banking business, as follows : Reported and Underlying : FY % FY % 2 Cost-income excluding insurance 12

13 Balance sheet fundamentals looking good REPORTED RM mil FY08 FY09 FY09 vs FY08 Business Performance Balance Sheet - Lending Gross loans 56, , % Net loans 52, , % Balance Sheet - Deposits Lower loans growth due to focus on profitable and targeted industry segments Customer Deposits 55, , % CASA 1 Deposits 6, , % More diversified deposit base with initiatives in retail and CASA Proportion 11.2% 10.5% LD Ratio % 88.8% -0.7% -5.5% business segments showing improved results FY08 results Favourable growth in FY09 Unfavourable growth in FY09 Note : 1 CASA : current accounts & savings accounts 2 LD based on net loans (net IIS, SP, GP) 3 Financial statements restated for reclassification of deposits from select non-bank FI s from Deposits and Placements of Banks and Other Financial Institutions to Deposits from Customers 13

14 Better overall asset quality and decreasing quantum of historical issues 2.0 Gross NPL by Segments RM'mil Retail Business Credit & Leasing Relationship Banking Mar 2008 Mar 2009 Industry average NPL ratios for Continuing business Non-Performing Loans 1 3,000 2,400 1,800 1, NPL ratio 3.0% 2.1% 22.5% 12.1% 1,706 1, Gross NPL Net NPL Gross NPL Net NPL Historical business NPL constitute less than 30% of the total portfolio RM' mil Continuing Business Historical Business 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 14

15 New NPL formations decreased YoY but flattening trends in recent quarters % New NPL to Gross Loans 8.00% % PL Conversion to Gross Loans 5.00% 6.00% 4.00% 2.00% 4.00% 3.00% 2.00% 1.00% 0.00% 0.00% FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 % Recoveries to Gross Loans 3.00% % Write-off's to Gross Loans 5.00% 4.00% 2.00% 3.00% 1.00% 2.00% 1.00% 0.00% FY2004 FY2005 FY2006 FY2007 FY2008 FY % FY2004 FY2005 FY2006 FY2007 FY2008 FY2009 New NPL formations to date show a decreasing trend due to a combination of improved asset writing strategies, and risk and collections activities. However tougher economic conditions are expected to reverse this trend going forward. Note : 1 FY2004 and FY2005 NPL movement based on gross before IIS 15

16 Loans growth focused on higher profit segments and diversification GROSS LOAN MOVEMENT (before netting Islamic financing sold to Cagamas) Retail Business / Corporate By Type Loan Composition % 40.5% 20.8% 3.7% 1.5% 1.7% 3.4% 16.7% 8.5% 3.0% 1.2% % 2.3% Others % Individuals % % % % % % % % 21.2% SME Business Auto Financing Mortgage Asset Financing Credit Cards LOC Co-Op RM'bil Mar'09 Mar' 08 Business Banking (ex GLR) Relationship & Regional Banking GLR + ILR Mar 09 Retail: targeting profitable segments Institutional & Business: harness synergies via deepening customer relationships by Interest Rate FY08 FY09 Fixed rate 62% 60% Variable rate 38% 40% 16

17 Improving trends on NPL & coverage Asset Quality Indicators % 32.2% % 56.6% 67.3% 75.1% FY09 / 08 change : Loan loss coverage Loan Loss Coverage 7.8% 60% 20% RM'bil Net NPL Gross NPL FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY % 17.4% FY09 / 08 change : Gross NPL ratio 15% 14.8% Net NPL ratio 13.8% Net Provisions charge 12.4% 10.9% 10.4% 10% 9.6% 2.2% 1.1% 0.4% -20% -60% % 6.2% 6.3% 5% 0% 2.2% 1.9% 1.7% 3.2% 3.7% 1.0% 4.1% 2.6% Gross NPL ratio Net NPL ratio 0.6% Net Provisions Charge Proactive collections activities Tightened risk assessment Led by experienced team Better positioned for 2009 / 2010 credit and economic challenges 17

18 Positive trends since 2007 for provisions and NIM Total Group Level - Reported 4,000 Total Group Level - Underlying 4, ,000 3,028 3,352 3,271 3,000 3,137 3,255 3,206 2,000 2,000 1,756 1,000 0 RM'mil FY2007 FY2008 FY2009 Total Income 1,000 0 RM'mil Provisions FY2007 FY2008 FY2009 FY2007 FY2008 FY2009 FY2007 FY2008 FY2009 Gross Loans & NIM % to Total Income RM'bil 8.4% 6.4% 4.9% 2.5% 2.8% 2.9% FY07 FY08 FY09 8% 4% 0% -4% -8% 40.0% 20.0% 0.0% -20.0% 38.0% 36.4% 28.2% 13.7% 15.9% 14.0% 8.0% 10.8% -0.2% FY07 FY08 FY09 RM'bil Y-o-Y growth NIM Non-Interest Inc Fee Inc Trading & Investment Inc Income and Fee : performance reflecting lower contributions from investment banking Provisions : proactive collections management NIM : driven by profitable segments, IIS recoveries and favorable interest regime Note : 1 FY2007 as per the previous FY2008 market pack 2 Trading & Investment Income includes forex gain / loss, Non-Interest Income comprises Fee Income, Trading & Investment Income, Income from Insurance Business and Other Income; Total Income includes Net Interest Income, Income from Islamic Banking and Non-Interest Income 18

19 Funding profiles improved and will continue to be a major focus Growing sticky deposits ( 12%) (comprises deposits from individuals & government) Others Biz enterprises Government Individuals CASA composition Customer deposits grew 15.0%, primarily from deposits from business enterprises ( 31%); CASA grew by 8% 12.6% 11.2% 10.5% Total 42.4b 55.8b 64.1b Others Current Savings FD + NID RM'bil Mar 07 Mar 08 Mar 09 Individuals Government Biz enterprises Others Customer Deposits by Sources Extended the duration of interest pricing profile 12.0% 16.7% 20.0% 9.2% 0.2% 5.4% 3.8% Non - sensitive > 5 years 1 5 years RM'bil Mar 07 Mar 08 Mar 09 FD + NID Savings Current Others Customer Deposits by Type Reduce dependency on inter-banking funding Total 17.4b 7.1b 6.1b % 25.3% 25.1% 51.9% 52.5% 51.2% RM'bil Mar 07 Mar 08 Mar mths 3-12 mths 1-5 yrs > 5 years Non-interest sensitive Customer Deposits : Interest Pricing Profile 3 12 months 0 3 months RM'bil Mar 07 Mar 08 Mar 09 Banks Merchant banks BNM Other FI's Deposits of Banks & Other Financial Institutions Note : 1 FY2007 as per the previous financial statements 2 FY2009 and FY2008 based on FY2009 financial statements with reinstatement for FY2008 (whereby certain deposits previously classified under Deposits and Placement s of Banks and Other Financial Institutions have been reclassified to Deposits from Customers) Other FI s BNM Merchant Banks 19

20 Mixed trends in earnings ratios, improvement required to meet expectations REPORTED ROE, % FY 09 / 08 change FY 08 / 07 charge 0.2% 17.3% ROA, % FY 09 / 08 change FY 08 / 07 charge 0.02% 1.19% EPS, basic sen/share FY 09 / 08 change FY 08 / 07 charge 12.1% 312.0% -5.8% 11.5% 11.7% -0.17% 1.02% 1.04% (13.3) FY2007 FY2008 FY2009 FY2007 FY2008 FY2009 FY2007 FY2008 FY2009 UNDERLYING ROE, % FY 09 / 08 change FY 08 / 07 charge 1.3% 3.8% ROA, % FY 09 / 08 change FY 08 / 07 charge 0.06% 0.25% EPS, basic sen/share FY 09 / 08 change FY 08 / 07 charge 3.4% 45.5% 8.9% 12.7% 11.4% 0.83% 1.08% 1.02% Maintaining profitability despite economic disruptions Underlying ROE lower, due to higher proportion core capital by value Better utilization of asset resources Note : 1 FY2007 as per the previous FY2008 market pack 20

21 Stronger capital base to meet ensuing challenges and support growth Capital Adequacy : AMMB Holdings Berhad RWCA 12.6% 14.1% 15.2% 5.4% 3.9% 5.6% 8.7% 8.5% 9.7% 7.6% 7.3% 7.5% FY2007 FY2008 FY2009 Core Equity Ratio Tier 1 Ratio Tier 2 Ratio Wef , adoption of BNM s RWCAF-Basel II, Standardised Approach for Credit Risk & Market Risk, and Basic Indicator Approach for Operational Risk RWA of Group derived by aggregating RWA of banking subsidiaries FY2008 FY2009 Capital ratio by legal entity Capital Base RWA Tier 1 Ratio RWCA Ratio Capital Base RWA Tier 1 Ratio RWCA Ratio RM'bil RM'bil % % RM'bil RM'bil % % AmBank (M) Berhad, Group % 13.1% % 14.6% AmBank (M) Berhad % 13.0% % 14.2% AmInvestment Bank Berhad, Group % 17.9% % 34.2% AmIslamic Bank Berhad % 16.3% % 16.7% AMMB Holdings Berhad, Group % 14.1% % 15.2% Total RWA has reduced, partly due to changes in BNM s weightage for undrawn commitments. Relatively higher capital ratio as compared with peers Strongly positioned to continue building lending franchises Raised RM500mil NIT1 in 4QFY09 Note : 1 FY2007 capital adequacy ratios as per the published financial statements of AHB for FY

22 FY2010 : Actual vs Consensus Performance Indicator / Market Ratio Actual FY2009 Consensus Estimates March 2009 Actual 2009 vs Consensus ROA (%) 1.04% 0.98% % ROE (%) 11.7% 11.0% + 0.7% Revenue 3,271 mil 3,224 mil + 1.5% Profit before Tax 1,218 mil 1,145 mil + 6.4% Profit after Tax & MI 861 mil 825 mil + 4.4% EPS (sen / share) % Based on consensus as at 15 Apr 09. Earlier consensus for FY2009 indicated a larger positive variance to actual results. Note : Consensus as at 15 April 2009 (source : Bloomberg) Revenue is taken from consensus Sales estimate, PATMI taken from consensus Net Income GAAP estimate, EPS taken from consensus EPS GAAP estimate 22

23 Business Outlook

24 Strategic focus FY2010: Maintain profitability growth and rebalancing focus De--risk + Diversify De Moderate High Diversify Low Differentiated G Growth De--risk De 24

25 Looking ahead for FY2010 Overall Maintain profitable growth and rebalancing focus via executing on our strategic agenda Income diversification, cost management and enhanced risk disciplines are key priorities for FY 2010 Position business for potential economic recovery towards mid FY2011 Retail 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 Enhanced focus on risk management and collections Expect minimal profit growth for FY2010 Business Proactively manage existing accounts to mitigate higher risk of default Focus on building a sustainable asset base targeted towards stronger industry segments and with greater diversification Enhance focus on deposits & transaction based fees Expect rapid FY2009 profit growth to moderate in FY2010 Relationship & Regional Biz Deepen customer relationships to generate fee incomes and advisory mandates Enhance focus on capital efficient business growth and loan pricing to reflect economic risks Expect an improved profit performance over FY

26 Looking ahead for FY2010 Investment Banking Uncertain economic environment means equity and debt markets remain subdued Focus on core expertise in advisory and capital market activities Expect stable to rising profit performance over FY2009 Assurance Expect modest growth via revenue increase and efficiency improvements over FY2009 MAA business acquisition may bring in synergies later Markets Biz 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 Risk & Financial Governance Implement new retail tools including 3G scorecards, PD & LGD models Implement new non-retail PD, EAD and LGD models, financial spreading tool and security indicators (collateral management) Implement new FTP and ALM disciplines, Basel II and FRS requirements 26

27 Holding position for FY2010, achieving medium-term aspirations will take longer FY 07 FY 08 FY 09 FY 2010 Medium Term Aspirations (MTA) PATMI Reported : -RM282.5 mil Underlying : RM468.3 mil Reported : RM668.5 mil Underlying : RM837.4 mil Reported : RM860.8 mil Underlying : RM840.7 mil RM mil FY2012: circa >RM1.2bil ROE Reported : -5.8% Underlying : 8.9% Reported : 11.5% Underlying : 12.7% Reported : 11.7% Underlying : 11.4% circa 11% FY2012 : circa 15% MTA : 17 20% CTI 1 Reported : 37.1% Reported : 39.6% Reported : 43.0% circa 45% circa 40% Net NPL Ratio Reported : 6.2% Reported : 3.7% Reported : 2.6% circa 4 % FY2012 : 2-3% MTA : below system Dividend gross / payout 5.0 sen / share 6.0 sen / share 8.0 sen / share 10.0 sen / share Payout % system average Note: The achievement of medium-term aspirations is barring negative economic impacts lasting longer and deeper Underlying performance of PATMI and ROE for FY08 adjusted for one-off impacts including restatement as if AmInvestment Group Berhad was a 100%-owned entity of AMMB Underlying performance of PATMI and ROE for FY07 as per previous FY08 market pack 1 CTI excludes all insurance activities (different measurement) 27

28 Concluding remarks FY2009 FY Another record profit performance for FY 2009 with results exceeding market consensus due to lower provisions and MI payouts 2. Well capitalized with Tier 1 CAR of 9.7% and total RWCAR of 15.2% 3. Executing AMMB s medium term strategic themes around profitable growth and rebalancing our portfolio, has provided a head-start advantage and will provide greater resilience 4. Enhanced focus on risk disciplines, collections / recovery activities & cost management 5. Tougher economic conditions, despite disciplined execution, will delay achievement of medium term aspirations 28

29 Additional Group Details Economy Outlook and Banking System Business Segment Performance Corporate Structure ANZ Channels & Distribution Network Customer Service Ratings Research Coverage

30 Economy Outlook and Banking System

31 Pre-emptive monetary and fiscal policies to ameliorate economic impacts BNM : GDP growth : -1% to 1%; GDP contraction 4.5% Exports 25.3% Imports 21.2% Inflation 1.5% to 2% Factors sustaining economy Factors depressing economy Stimulus packages : First : RM7bil Nov 08 Second : RM60bil Mar 09 Possible Third : RM15bil Sept 09 (depending on coming economic condition) Fiscal measures : OPR cut by 150bps since Nov 08 to 2% SRR cut by 300bps to 1% Conducive borrowing costs to induce access to financing Domestic demand (growth f2.9%) Sustainable consumption (growth f3.5%) Services sector (growth f4.5%) Construction sector (growth f3%) Reduced EPF contribution from 11% to 8%, spur consumption & assist repayments Spared from toxic assets BNM s policy to maintain orderly MYR and FX Lower inflationary risks, from lower commodities prices Change in government leadership has led to a renewed sense of optimism Global financial and economic downturn World Bank s forecast global average contraction 2% for 2009 Weakened external demand Manufacturing sector contraction -8% Export industries dampened, esp E&E Deterioration in labour market, unemployment rate f4.5% Low overall investment sentiments Current account surplus moderated to RM80bil (circa USD20bil) Gross inflows of FDI moderating Private investment f-17.7% Government s fiscal deficit f7.6% of GDP in 2009 from 4.8% in 2008 Source : Based on BNM s press statement on release of annual report 2008 and other media publications 31

32 Anticipated slowdown in 2009 with slow recovery thereafter Nominal GDP, CA RM'bil Nominal GDP (RM'bil) Current Account, BOP (RM'bil) Real GDP : Consumption % YoY Private Consumption (%YoY) Government Consumption (%YoY) F 2010E 2011E 2012E F 2010E 2011E 2012E CPI, Real GDP, Unemployment, US GDP US GDP Growth (%YoY) % CPI (% change) Unemployment Rate (%) Real GDP (% YoY) F 2010E 2011E 2012E Extraordinary global challenges Despite some resilience, consensus amongst economists is that domestic economy would contract in 2009 with a slow recovery expected in Source : In-house internal research 32

33 Growth in construction and service centers expected to stay positive GDP Growth (%YoY) - Construction 2000 prices (% YoY) 4.0 GDP Growth (%YoY) - Services 2000 prices (% YoY) F 2009E 2010E 2011E 2012E F 2009E 2010E 2011E 2012E GDP Growth (%YoY) - Manufacturing 2000 prices (% YoY) GDP Growth (%YoY) - Mining 2000 prices (% YoY) F 2009E 2010E 2011E 2012E F 2009E 2010E 2011E 2012E GDP Growth (%YoY) - Agriculture 2000 prices (% YoY) F 2009E 2010E 2011E 2012E Concentration risk exists judging from sharp deterioration in some sectors Pronounced deceleration may require additional use of fiscal policy to support economic activity Export market most impacted, Private and Public Consumption to partly buffer slowdown in other areas Source : In-house internal research 33

34 Lower loans growth and interest rates forecast for 2009 but rising thereafter OPR, BLR OPR (%) BLR (%) 8 % Deposit Rates 4.0 % Retail Deposit Rate (%) Corporate Deposit Rate (%) F 2010E 2011E 2012E F 2010E 2011E 2012E Loans Growth of Banking System % F 2010E 2011E 2012E Policy rates slashed to support economy 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 Source : In-house internal research 34

35 Stronger banking system asset quality to withstand rising delinquencies in 09/10 Non-Performing Loan Ratios In Banking System NPL (RM bil) Gross NPL (%) Net NPL (%) Banking System - Loan Loss Provisions & Credit Charge-Off % Despite poor macro picture and SME & consumer segments remaining vulnerable, credit charge-off ratios and NPLs not expected to reach previous highs ( ) Interest rate environment more conducive and BNM is more vigilant and preemptive % Banks have tightened lending policy and strengthened risk assessment, starting fundamentals are strong Still, banking system preparing proactively for risky delinquencies Loan loss provisons (RM bil) Credit Charge-Off (%) 35

36 Malaysian banks are well capitalized and have less leverage than global peers % of Risk Weighted Assets Malaysia banks well capitalised Bank debt as % of GDP Banking sector in Asia not highly leveraged compared to other countries RWCA Tier Tier Latin America Africa Middle East United States Finland Portugal Asia Sweden World Greece Austria Italy Japan Canada New Zealand Germany Australia Spain Euro area Netherlands France Denmark United Belgium Ireland Iceland Source: BNM, Banking System: Constituents of Capital Source: RBNZ; IMF October 2008 Global Financial Stability Report; RBA; Central Bank of Iceland; ANZ 36

37 Proactive actions in place to face economic slowdown Impacts on Financial Sector Bracing for the Tough Times The downsides Declining corporate earnings Credit cycle downturn from higher delinquency Low trading liquidity from risk aversion Widening of credit spreads in bond market Weakening credit outlook and demand for financing Lower contribution from foreign / regional operations Insurance industry : Declining premiums, lower sum insured and higher claims Actions by Central Bank : Revival of Corporate Debt Restructuring Committee Increased macro-economic surveillance and supervisory Strengthen risk assessment from external development Enhance scenario analysis at system and bank levels Strengthen stakeholder engagement Intensify regional and international regulatory coordination Review of legislations governing FI s Completed holistic review of BNM Banking Act 1958 Some positives Better starting basis with stronger fundamentals Banks with foreign strategic partner to benefit from increased sophistication Local banks in strong capital position : RWCA and core of 12.7% and 10.6% NPL still at record lows Malaysian banks focusing on core functions : Capacity building Improved productivity and cost efficiency Earnings diversification Business re-strategising Risk and asset quality management Instrumental in supporting economic building Source : Based on BNM s press statement on release of annual report 2008 and media publications 37

38 Expansionary fiscal policies 2 nd stimulus package under implementation National economic fundamentals started positively, learning from previous experiences Proactive monetary and fiscal policies to partially mitigate global economic disruption Prolong global slowdown may need additional policy support 38

39 2 nd Stimulus package is more beneficial to the finance sector 1) Up to RM 10,000 tax relief on interest paid on housing loans pa for 3 years Mid-low end properties, targeted homeowners of loans RM 150,000, tenure 20 years, interest rate 3.5%-3.75% 2) Banks to allow retrenched workers to defer repayment of housing loans for 1 year Interest income on deferred housing loans repayments of retrenched workers to be taxed when interest is received 3) RM 5bil Working Capital Guaranteed Scheme for companies with shareholders equity <RM 20 mil Government will guarantee 80% of loan (maximum RM10mil, repayment structure 5 years) 1) Minimal uplift to residential demand, but may reduce concern on rising NPLs in low to mid end property owners 2) Deferment of housing loans repayments indicate banks do not need to classify loans as NPL thus moderating increase in NPL and loan loss provisions 3) Working Capital Guarantee scheme will benefit banks with niche in SME lending, with government guarantee mitigating risk Overall Views : Stimulus helps to reduce stress on loan default by vulnerable segments : lower income consumer segment / retrenched workers SMEs (growing concerns on languishing exports) Source: Internal Research 39

40 Business Segment Performance

41 Retail Banking Division Income Expenses RM mil +9.2% PBP 1, , % Provisions PBT PAT PATMI FY08 FY09 1, , FY09 vs FY % -27.7% +11.6% +13.1% +13.1% Good profit growth, benefiting from lower provisions and our focus on profitable segments, risk pricing and stable margins Expenses reflecting growing footprints and upgrade in risk tools, people cost and IT systems Asset quality improved via strong credit risk management, collections and recoveries management Gross loans 41, , % Retail Banking s Aspirations : Net loans 1 40, , % Gross NPL (net IIS) Ratio : 3.95% 1, , % Establish retail business models in key areas of profitability for coming year and readiness to engage scalable growth ahead Net NPL Ratio : 3.05% 1, , % Strategic Agenda : Retail Deposit 32, , % Focus target market and portfolio base by product Low Cost Deposit ROA (annualised PAT / average net loans) 5, % 5, % +9.4% -0.3% Streamline distribution channels for productivity and efficiency Strengthen risk and sustain portfolio health CTI Loan Loss Coverage FY08 results Favourable growth in FY % 37.7% 60.7% 61.8% +2.4% +1.1% Note : 1 Net loans : net of IIS, SP and GP Enhance service levels - TAT, SSM and customer services Continue to build operational infrastructure for efficiency and capacity Unfavourable growth in FY09 41

42 Business Banking Division * RM mil FY08 FY09 FY09 vs FY08 Income Expenses PBP Provisions PBT % +33.6% +45.6% +73.0% +33.8% Income growth fuelled by SME loans drive and higher utilisation of cash management Reflecting expansion and strength in relationship franchise Cost increase largely reflecting expansion in relationship team PAT PATMI % +35.6% Gross loans 8, % Net loans 1 Gross NPL (net IIS) Net NPL Biz Banking Deposits ROA (annualised PAT / average net loans) CTI Loan Loss Coverage Ratio : 1.07% Ratio : 0.49% , % 29.9% 9, , % 28.1% +23.5% -19.4% +42.7% Low-Cost Deposits % FY08 results Favourable growth in FY09 Unfavourable growth in FY09 8, , % +0.1% -1.8% 176.8% 196.1% +19.3% * Excludes Group Loan Rehabilitation Note : 1 Net loans : net of IIS, SP and GP Business Banking s Aspirations : Entrench business in stable industries 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 42

43 Investment Banking Division * RM mil FY08 FY09 FY09 vs FY08 Income Expenses PBP Provisions % -2.3% -70.2% % Resilient performance despite weak capital market and lower stock market turnovers Underlying business relationships and core expertise provided support, despite difficult environment which has reduced demand for complex products PBT PAT PATMI % -69.8% -69.8% CTI 40.7% 69.3% +28.6% Assets Management (FUM) 19, , % * Includes Debt Capital, Equity Capital, Structured Finance, Derivatives, Broking & Futures, Funds Management, Private Banking Excludes Trading & Treasury, Shareholders Funds, Corporate & Shared Services which are disclosed under Operating Segments FY08 results Favourable growth in FY09 Unfavourable growth in FY09 Investment Banking s Aspirations : Staying relevant & protect market share in current operating environment Preserving quality of balance sheet assets by managing credit, interest rate and operational risks 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 43

44 Relationship Banking and Regional Business Division * RM mil FY08 FY09 FY09 vs FY08 Income % Lower income in International Business Expenses PBP % -9.8% Diversified portfolio provided support for income despite difficult banking landscape Provisions % Relationship Banking & Regional Business s Aspirations: PBT PAT PATMI % +2.9% +2.9% CTI 47.2% 52.1% +4.9% * Includes Corporate & Institutional, International Business, Regional Branch Centre, Asset Management 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 FY08 results Favourable growth in FY09 Unfavourable growth in FY09 44

45 Assurance Income RM mil FY FY FY09 vs FY % Higher income mainly from general insurance premium Higher claims impacted profitability Expenses PBP % +21.5% Assurance s Aspirations : To be the top 3 insurer in terms of premiums Provisions PBT PAT PATMI CTI 86.5% 85.0% Life business assets General business assets 1, , , % +30.2% +17.8% +17.8% -1.6% +17.9% +34.9% 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 FY08 results Favourable growth in FY09 Unfavourable growth in FY09 45

46 Group Operating Segments* RM mil FY08 FY09 FY09 vs FY08 Business Performance Income Expenses PBP Provisions % -11.4% -29.4% -50.4% Lower income mainly due : Treasury and Proprietary Trading (tough trading conditions) Loan Rehab units (recovery rate as scheduled) Shareholders fund, Corporate & Shared Services (consolidation adjustments) PBT PAT % % One-off impacts are included in Operating Segments Includes : one-off revenue and expenses, additional provisions, reduction in deferred tax assets, taxation impacts PATMI % Refer overview of one-offs for more details * Includes Treasury & Proprietary Trading, Group Loan Rehabilitation, Corporate & Shared Services FY08 results Favourable growth in FY09 Unfavourable growth in FY09 46

47 Islamic Banking RM mil FY08 FY09 FY09 vs FY08 Income Expenses PBP Provisions % +6.8% +10.9% +7.1% Performance reflective of commercial banking with strong growth in deposits Underlying branding position remains strong and expected to provide growth support PBT PAT PATMI Net loans Gross NPL (net IIS) Net NPL Customer Deposit Low Cost Deposit ROA (PAT / average net loans) CTI Loan Loss Coverage Ratio : 2.18% Ratio : 1.29% FY08 results Favourable growth in FY09 Unfavourable growth in FY % +39.3% +39.3% 8, , % , , % 39.8% * Results incorporated under respective business divisions , , % 38.9% 101.0% 110.8% -21.5% -7.4% +46.8% +20.4% +0.2% -0.9% +9.8% Islamic Banking s Aspirations : To become Islamic bank of choice and ensure high degree of value for customers and stakeholders Strategic t Agenda : Strengthen International Currency Business (ICBU); focus in 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 47

48 Overview of one-offs Impacts from changes in accounting and provisioning policies, prior period catch-ups, divestments, strategic investments and tax rate changes FY 2008 FY 2009 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 Provisioning policy changes and catch ups, eg 5 and 7 year rules Net Impact on Profit before Tax (RM mil) Write down of deferred tax assets & prior period tax catch ups, eg corporate tax rate reductions Tax impact on one off items above Impact of one offs on minority interest Net Impact on Profit after Tax (RM mil) (42.9) 16.6 Net Impact on Profit after Tax and MI (RM mil) (168.9)

49 Corporate Structure

50 Key financial statistics on shareholders ratios RM 000 FY2008 FY2009 Share Capital 2,722,970 2,722,970 Reserves 4,446,623 5,013,123 Shareholders Equity 7,169,593 7,736,093 Less: Intangible Assets (1,801,985) (1,808,101) NTA 5,367,608 5,927,992 NTA Per Ordinary Share (RM) Net Asset Per Ordinary Share (RM) Market Price (RM) Price to Book [NTA / Net Asset] 1.75 / / 0.92 EPS (sen) basic Dividend (gross sen / share) Convertible Instruments Outstanding 31 Mar 2009 Exercise Price Expiry Date Held By Interest Rate Exchangeable Bonds 194,915,254 RM May 2017 ANZ Funds Pty Ltd 5% pa Year 1 to Year 5 5.5% pa Year 6 to Year 10 50

51 Banking sector share price movement 140.0% 120.0% 100.0% 80.0% 60.0% Index Movement / index change at close of 16 Apr 09 vs 18 May % base index Bank B 11.7% Bank D 16.7% Bank E 22.3% AMMB 25.7% (RM2.92) KLCI Index 29.2% Bank C 34.0% 40.0% Bank A 62.5% 20.0% May- 07 Jun- 07 Jul- 07 Aug- 07 Sep- 07 Oct- 07 Nov- 07 Dec- 07 Jan- 08 Feb- 08 Mar- 08 Apr- 08 Date May- 08 Jun- 08 Jul- 08 Aug- 08 Sep- 08 Oct- 08 Nov- 08 Dec- 08 Jan- 09 Feb- 09 Mar- 09 Bank A Bank B Bank C Bank D AMMB Bank E KLCI Index 18 May Apr 09 (strategic partnership with ANZ) 51

52 Shareholding structure As at 31 March 2009 AmcorpGroup Bhd ANZ Funds Pty Ltd Employees Provident Fund Board 17.70% 19.17% 15.15% 47.98% 100% AMFB Holdings Bhd 100% AmBank (M) Berhad 100% AmIslamic Bank Bhd AMMB Holdings Bhd AmInvestment Group Berhad Foreign Shareholding excluding ANZ 100% 70%* AmLife Insurance Berhad * Friends Provident Fund PLC 30% Public 100% AMAB Holdings Sdn Bhd 51%^ AmG Insurance Berhad ^ Insurance Australia Group Ltd 49% Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar % 41.10% 38.14% 36.95% 37.15% 34.39% 30.08% 28.38% Ranked No. 23 : with market capitalization of RM7.16 billion on Bursa Saham Malaysia as of March ANZ strategic partnership : ANZ s current shareholding is at 19.17%. ANZ has the right to exercise a further 5% via exchangeable bonds subject to BNM s approval. Dec08 : completed restructuring of insurance business : Split composite business of AmLife Insurance Bhd (AmLife, formerly AmAssurance Bhd) via transfer of general insurance business to AmG Insurance Bhd (AmG) Shareholding of AmG and AmLife restructured via : Increase of equity interest by 19% of Insurance Australia Group (IAG) in AmG Insurance, total 49% Sale of previous 30% equity interest of IAG in AmLife to AMMB Sale of 30% equity interest in AmLife held by AMMB to Friends Provident Fund plc AMMB in progress of acquiring : General insurance business of Malaysian Assurance Alliance Bhd 4.9% stake in MAA Takaful Bhd (Islamic insurance business) 52

53 ANZ Channels & Distribution Network Customer Service Ratings Research Coverage

54 Corporate developments January 2009 : announcement of proposal for Bumiputra issue of 96,300,000 new ordinary shares of RM1.00 Proforma share capital information upon Special Issue Shares tabulated as follows : No. of Shares Issued and fully paid-up ordinary shares : 31 Mar 09 2,722,969,590 Add : Special issue shares (N1) 96,300,000 Enlarged share capital of AMMB Holdings Berhad 2,819,269,590 N1 : The Special Issue Shares proposal has received approval from Bank Negara Malaysia and the Securities Commission Proforma substantial shareholders information upon Special Issue Shares, and upon conversion of exchangeable bonds by ANZ : Existing Proforma 1 Proforma 2 As at After special shares issue After conversion of exchangeable bonds (N2) Substantial Direct ( 000) % Direct ( 000) % Direct ( 000) % shareholders Total 2,722, ,819, ,014, ANZ Funds 521, , ,841 (N4) AmcorpGroup 482, ,854 (N3) , EPF 432, , , N2 : Exchangeable bonds expiring on 18 May 2017 with exercise price of RM2.95, currently held by ANZ N3 : Assuming Amcorp subscribes for 81.9 million Special Issue Shares such that its shareholding in AHB does not exceed 20% N4 : Assuming exchangeable bonds exchanged for 194,915,254 new shares in AHB subject to BNM s approval (updated per circular to shareholders dated 8 May 2009) 54

55 ANZ strategic partnership ANZ is the only Australian bank to have been in the Asian region for 40 years, with strategic banking partnerships across 7 countries AmBank is ANZ s single largest investment in Asia, with a total investment of US$696 million This is equivalent to 51% of total investments to date China Laos + Vietnam Cambodia Philippines Malaysia ANZ has provided key resources and support to AmBank Indonesia Board Director Dr. Robert John Edgar Director Alex Thursby Director Mark Whelan Senior Management Management Group CFO & Deputy Group MD Ashok Ramamurthy Head of Capital & Balance Sheet Management Neville Mallard Chief Risk Officer Andrew Kerr Head of Retail Distribution & Deposits Brad Gravell Chief Operating Officer TBC Head of FX & Derivatives Steve Kelly Head of Market Risk Jonathan Manifold Credit Risk/ Portfolio Mgt Glenn Saunders Head of Systems Accounting Ignatius Lim Project Director Mark Lockhart Head of Risk Infrastructure Chung Fui Ken Program Director Retail CoF Christopher Shields ANZ is committed to AmBank s long-term success and aspirations 55

56 Key group information highlight : customer service - delivery channels Business Units ASPIRATION Expand footprint Further build and improve sales & service capabilities Key Strategic Initiatives R2 Perak R1 Perlis, Kedah & Penang 24 branches 20 branches R5 Kelantan, Terengganu & Pahang 16 branches R7 Sabah 12 branches Branch Banking 10 New branches (200+ by early 2011) Increase sales by +30% R8 KL Central 23 branches R6 Sarawak 18 branches Distribution Operations Continue from 2008/09 footprint expansion plan via 7-11 strategic partnership (+ 150 ATMs) Additional SSM functionality and trxn migration from ~40% to 60% Network expansion incl. segmentation of ATM placement branches (30%, hypermart / shopping centre (25%), convenience shops / petrol kiosk (40%), hubs (5%) airport, transit business support R9 KL Outer City 24 branches R3 Selangor, N.Sembilan & Melaka R4 Johor 28 branches 22 branches Number of Branches #4 E-Channel & Contact Centre Wealth Mgmt Distribution Intelligence Expand outbound competency in sales 22 hours capability for all channels Establish new line of business ie premier banking and advisory services Increase sales productivity by >80% Profitability & incentive models Branch performance tracking New suite of sales tools & sales aids Enhanced MIS Maybank CIMB Public AmBank RHB HLB EON Alliance Affin 2,795 1, Number of ATMs 449` Maybank CIMB AmBank RHB PBB HLB EON Alliance Affin #3 Source: Note: Company websites of peer banks / MEPS information Peer group as at 31 March 2009; AmBank as at latest practicable date 56

57 Continuing to grow underlying customer base and distribution footprints Total no 31 March March March 2009 Branches ATM * ATM at 7 Eleven # # 180 Electronic Banking Center (EBC) Retail banking customer base 4,850 K 5,120 K 5,555 K ^ FUM no. of accounts 39 K 49 K 46 K Life insurance policyholders 317 K 341 K 372 K General insurance policyholders 1,078 K 914 K 696 K Remarks: * Inclusive of ATM s at 7 Eleven # Installation only started in April 2008 ^ Based on Feb 09 (latest) Customer base denotes customer(s) who has at least one or more facilities with AHB 57

58 The AmBank brand : top-of-mind brand awareness (vs assets) AmBank is the 6th largest local bank in terms of assets; with the 4th best TOM brand recall Continuous improvement initiatives iti on brand awareness campaigns Efforts will continue to strengthen brand positioning Top-of-Min nd Ad Awareness Top-of-Mind Brand Awareness (2004vs 2007vs 2008 vs Assets) 44% 45% 4th best TOM brand recall AmB Bank C Bank D 41% 17% Bank A Bank B Bank E Assets (in RM bil) Bank A 233 Bank C 11% 10% BankB % 8% AmB 65 7% 5% 7% 4% 5% Bank D 85 5% 3% 3% Bank E 69 3% 1% Notes : Based on survey by external consultants engaged by AmBank, conducted in 2008/2009 on commercial banks Assets as at Sept 08 ( for local banks only ) 58

59 The AmBank brand service performance AmBank Competitor A Competitor B Competitor C Foreign A Foreign B Trustworthy bank Bank with extensive electronic channels Bank with extensive branch network Easy/simple to bank with Good range/quality of products/services Financially strong bank Professional/knowledgeable staff Efficient/effective customer service Responsive towards customers needs Long term relationship brings value Friendly bank Conveniently located ATMs outside banks Competitive interest rates One-stop financial provider Progressing/moving forward bank Extended banking hours Prestigious/proud to be a customer Innovative bank Positively positioned against the larger banks AmBank strengths are ease of use & good range of products Efforts ongoing to improve increase performance matrixes Notes : Based on survey by external consultants engaged by AmBank, conducted in 2008/2009 on commercial banks Base: All respondents (N=502) Data have been normalized based on comparison among peer banks 59