AMMB Holdings Berhad AmBank roup Results Investors Presentation Q1FY2011 Results Update 17 August 2010 Cheah Tek Kuang roup Managing Director
Contents Executive Summary Q1FY2011 roup Financial Performance Strategy & Outlook Segment Performance Appendix Based on unaudited 30 June 2010 (Q1 FY2011) financial results AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 1
Risk, Capital & Funding Profile rowth Performance ood start to FY2011 Q1FY10 Q1FY11 Change FY09 FY10 Underlying PATMI growth : 44.4% Profit after Tax & MI 258.2 mil 368.3 mil 42.6% 860.8 mil 1,008.6 mil ROE 13.1% 15.3% 2.2% 11.7% 11.5% ROA 1.18% 1.58% 0.40% 1.04% 1.13% EPS (basic, annualised) 37.9 sen 49.0 sen 29.1% 31.6 sen 34.7 sen Net Lending / Financing 57,982 mil 65,083 mil 12.2% 56,948 mil 64,426 mil Customer Deposits 1 65,414 mil 71,056 mil 8.6% 64,132 mil 70,294 mil CASA 7,437 mil 8,424 mil 13.3% 6,755 mil 8,372 mil ross Impaired Loans N/A 3.6% N/A N/A 3.8% RWCA 14.7% 16.7% 2.0% 15.2% 15.8% Tier 1 9.4% 10.0% 0.6% 9.7% 10.3% LD Ratio 1 88.6% 91.6% 3.0% 88.8% 91.7% Note 1 : Includes Senior Notes RM2.74 bil & credit-linked notes RM0.13bil issued AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 2
Staying focused on profitable growth, diversification and sustainability Staying Ahead Well diversified Divisional contributions Strong Q1 results Higher revenues and lower allowances ood loans & CASA growth FRS139 adopted under BNM transition arrangements (Q1FY2011) Sound contributions from Retail, Business and Corporate & Institutional Banking Divisions Diversified portfolios yielding higher profits in Life Assurance, eneral Insurance and Markets & Treasury ood Investment Banking pipeline Improved risk and financial disciplines FY 2011 Priorities Proactive risk management Balance sheet positioned for rising interest rates Implemented new FTP and FRS disciplines Enhancing ALM disciplines and preparing for Basel III FY2011 : Profitable growth, diversification & rebalancing Faster non-interest income & CASA growth MTA : Malaysia s Top 4 Banking roup measured by Customer satisfaction Sound financial performances Well diversified and sustainable growth AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 3
What is ahead Malaysia : Stable Outlook Industry : What is Ahead Progressive medium term global economic recovery but with significant volatility Malaysian economic recovery (DP 2010 : 8.0% projected 1 ) Supportive monetary policies, continuous trade surplus Positive regional recoveries, New Economic Model and 10 th Malaysia Plan to mitigate global risk Higher lending & RWA growth New licences will put pressures on pricing and resources OPR increased 25 bps each in Mar, May & Jul 2010; currently at 2.75%, further 25-50 bps expected in next 12 months Latest Basel III pronouncements indicate higher core capital and stable funding requirements, but with longer transition period AHB : Leveraging Tailwinds Leverage strategic themes and improving domestic economy Better positioned for rising interest rates but Basel III could slow down achievement of ROE targets Leverage ANZ s international connectivity in key business segments Note 1 : In-house economic research AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 4
AmBank roup Results Investors Presentation AMMB Holdings Berhad Q1FY2011 Results Update 17 August 2010 Ashok Ramamurthy Deputy roup Managing Director & roup Chief Financial Officer AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 5
Contents Executive Summary Q1FY2011 roup Financial Performance Strategy & Outlook Segment Performance Appendix AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 6
Implementation impact of FRS139 : Day 1 Adjustments ross Impaired Loans (RM'mil) 1,866 300 129 244 2,539 2,469 Day 1 adjustment 36% h in gross impaired loans vs gross NPL ross NPL 31 Mar 10 (P3) Restructured performing Interest on impaired loans loans unlikely to be repaid no longer suspended in full Impairment recognition at customer level vs account level for Corporates ross Impaired Loans 1 Apr 10 (FRS139) ross Impaired Loans 30 Jun 10 ross Impaired Loans % 3.8% 3.6% 2.8% 0.4% 0.2% 0.4% 1.0% h in gross impaired loans % vs gross NPL ratio ross NPL % 31 Mar 10 (P3) Restructured performing loans unlikely to be repaid in full Interest on impaired loans Impairment recognition at no longer suspended customer level vs account level for Corporates ross Impaired Loans % 1 Apr 10 (FRS139) ross Impaired Loans % 30 Jun 10 Retained earnings (RM'mil) 2,557 14 18 3 63 2,389-2,757 1,804 458 114 6 2,117 6.6% i in retained earnings from FRS139 adoption 31 Mar 10 Collective impairment Individual impairment Provision for contingencies FRS 4 Insurance contracts Existing P / SP / Effective interest IIS rates Valuation Reclassification Tax 1 Apr 10 (Day 1) 30 Jun 10 Based on unaudited 30 June 2010 (Q1 FY2011) financial results, subject to review AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 7
Strong financial result for Q1FY2011 REPORTED RM'mil Q1FY10 Q1FY11 Q1FY11 vs Q1FY10 Business Performance Net interest income 567.3 692.4 +22.1% Fee and commission 154.2 161.7 +4.9% Investment and trading 138.4 80.0-42.2% Insurance business 23.8 52.0 +>100.0% Others 4.4 3.7-15.9% Total Income 888.1 989.8 +11.5% Expenses 352.3 381.2 +8.2% Income : ood growth from most Divisions, Q1FY11 run-rate better than FY2010 full year Higher investment & trading income in Q1FY2010 due to a one-time gain on disposal of a bond holding Non interest income composition Insurance. 17% Others, 1% PBP 535.7 608.6 +13.6% Impairments / Allowances 182.2 92.4-49.3% PBT 353.5 516.2 +46.0% PAT 265.5 381.7 +43.8% PATMI 258.2 368.3 +42.6% UNDERLYIN 1 PATMI 260.9 376.8 +44.4% Expenses : Trading, 27% Salary & staffing increases, CPI & ongoing medium term investments; within CTI targets Provisions / Allowances : Fee, 54% Lower individual & collective impairments (combined) Includes PER, impairment losses & provisions for commitments & contingencies Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 Note : 1 Q1FY2010 underlying is reinstated for one-offs as at 30 June 2010 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 8
Higher contributions across most Divisions PATMI Net Loans / Financing RM'mil Q1FY10 Q1FY11 Retail Banking Division 134.2 177.2 +32.0% Business Banking Division 34.8 60.6 +74.1% Corporate & Institutional Banking (CIB) Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 Note 1 : Life Assurance surplus is transferred into life policy shareholders fund in overall roup accounts Q1FY11 vs Q1FY10 30.1 54.9 +82.4% Investment Banking Division 64.2 26.3-59.0% Assurance 16.2 36.5 +>100% Life Assurance 4.5 23.7 +>100% eneral Insurance 11.7 12.8 +9.4% Markets and Treasury 45.9 60.4 +31.6% Operating Segments (67.2) (47.6) +29.2% Retail Banking Division 42,194.2 43,230.1 +2.5% Business Banking Division 9,276.7 11,822.4 +27.4% Corporate & Institutional Banking 6,057.3 10,200.2 +68.4% Business Performance Retail Banking - income and profit growth via focusing on viable segments Business Banking - well-balanced profits with income growth and lower provisions Investment banking good pipeline but slower start CIB higher incomes from lending, assetbased and international businesses Life Assurance and eneral Insurance - higher incomes from larger fund base and better efficiencies PATMI contribution eneral, 3% Life, 6% Investment, 7% Markets, 16% Operating -13% CIB, 15% Retail, 48% Business, 16% Retail lending - target / viable segments in highly competitive environment Business and SME growth - stable & preferred growth sectors CIB - project financing with government support, LC s & large MNC s AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 9
Higher NIM* and improving efficiency Net Interest Margin (NIM & NFR composite) Cost-Income (CTI) Cost-Asset (CTA) Q1FY10 Q1FY11 Q1FY11 vs Q1FY10 2.75% 3.08% +0.33% 39.7% 38.5% -1.2% 1.57% 1.57% +0.00% Business Performance * Higher NIM : Benefit from interest in suspense being disclosed under provisions as per FRS139 requirements Immediate benefit from BLR increase Lagged impact of term deposit increase on cost of funds Expect NIM to be lower over remaining FY2011 FY10 NIM = 2.98% Non-interest income / Total Income 36.1% 30.0% -6.1% Lower CTI mainly due to higher income Non-interest income / total income decreased compared to prior corresponding period due to lower trading fixed income but higher than FY10 of 29.6% Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 Note : 1 Net Interest Margin includes Net Financing Income from Islamic Banking business : Q1FY10 0.72% Q1FY11 0.75% 2 CTI and CTA excluding assurance 3 Other operating income includes net income from insurance business AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 10
Faster than system CASA growth, loans and customer deposit growth at system Balance Sheet - Lending / Financing RM'mil Q1FY10 Q1FY11 Q1FY11 vs Q1FY10 Business Performance ross Loans / Financing 60,793.9 68,523.3 +12.7% Net Loans / Financing 57,982.0 65,083.3 +12.2% Loans growth targeting viable segments Balance Sheet - Deposits Customer Deposits 1 65,414.1 71,055.7 +8.6% 2 CASA Deposits 7,436.7 8,423.6 +13.3% 3 CASA Proportion 11.4% 12.4% +1.0% CASA proportion continues to increase LD ratio within acceptable levels LD Ratio 4 88.6% 91.6% +3.0% Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 Note : 1 Customer Deposits : includes RM2.74 bil Senior Notes & RM0.13bil credit-linked notes 2 CASA : current accounts & savings accounts 3 CASA proportion : as composition of Deposits from Customers 4 LD : net loans / customer deposits AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 11
Asset quality as per FRS139 / BNM transitional arrangements 15.0 10.0 5.0 - RM'bil 20% 15% 10% Asset Quality Indicators FRS 139 99.5% 67.3% 75.1% 56.6% 39.3% 32.2% 36.7% 7.60 6.06 6.14 5.53 ross impaired loans 5.8 3.60 4.3 4.6 2.43 3.2 1.87 2.0 2.5 2.5 1.5 1.0 FY2004Net NPLFY2005ross NPL FY2006 FY2007 Loan loss coverage FY2008 ross FY2009 impaired loans FY2010Allowance Day coverage 1 Q1FY2011 * FY2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY2010 Day 1 Q1FY2011 17.4% 14.8% 13.8% 12.4% 10.9% 10.4% 9.6% 89.1% 93.7% * *Allowance coverage FRS 139 100% 60% 20% -20% -60% FRS139 adopted under BNM transitional arrangements Historical figures are under P3 basis and not comparable Continue to enhance : Collections systems Credit / risk tools Risk management / NPL management team 5% 0% 2.24% 6.2% 1.92% 1.73% 3.18% 6.3% 3.7% 4.1% 2.6% 0.97% 0.60% 2.8% 1.5% 0.88% ross impaired loans 3.8% 3.6% + + Loan loss charge 0.56% x FY2004ross NPL FY2005 ratio FY2006 Net NPL ratiofy2007 Net provisions FY2008charge FY2009 +ross impaired FY2010 loans X Loan loss chargeq1fy2011 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 12
Portfolio rebalancing : Focus on viable segments and diversification ross Loan / Financing movement (before netting loans sold to Cagamas) Loan Composition % 36.2% 19.9% 3.7% 1.3% 1.3% 2.8% 17.5% 15.1% 2.2% 17.7% 1.8% 25.6% 24.7 12.0 86.4% 12.0 68.4% 24.2 2.6% 13.6 13.2 Retail (65.2%) Business / Corporate (34.8%) 10.2% 2.5 2.3 0.9 0.9 0.9 1.0 Auto Financing Mortgage Asset Financing Credit Cards Line of Credit Co-Op 2.0% 12.1% RM'bil June '10 Jun '09 8.2% 1.9 2.1 10.2 9.5 Business Banking (ex LR) 10.3 10.2 5.56.1 Corporate & & Institutional Banking 15.8% 15.8% 1.5 1.5 1.8 1.8 Loan Loan Rehabilitation Retail : targeting profitable segments Business & Corporate : harness synergies via deepening customer relationships Increasing composition of variable rate loans Increasing composition of Business / Corporate loans by Interest Rate Type RM'bil Mar-08 Mar-09 Mar-10 Jun-10 Fixed rate : Conventional 46.5% 42.9% 39.3% 38.5% Islamic 15.1% 16.9% 17.8% 19.1% Variable rate : Conventional 38.3% 40.0% 42.6% 42.1% Islamic 0.1% 0.3% 0.3% 0.3% by Retail & Business / Corporate RM'bil Mar-08 Mar-09 Mar-10 Jun-10 Retail 73.7% 72.4% 65.2% 65.2% Biz / Corp 26.3% 27.6% 34.8% 34.8% AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 13
Continuing growth in non-interest income and CASA Non Interest & Non Financing Income Composition % Customer Deposits by Type Non-Interest Income, RM'mil % non-interest income / total income FY09 : 21.8% FY10 : 29.6% Q1FY11 : 30.0% CASA composition 12.6% 11.2% 10.5% Total 42.4b 55.8b 64.1b 12.2% 70.3b 12.4% 71.1b 1,058.5 CASA CAR 15.7% 8.4 8.4 CASA 511.2 618.2 161.7 Fee income 6.6 298.5 80.0 Trading & Investment income 121.3 123.7 52.0 Insurance business 638.2 FY09 FY10 Q1FY11 FY2010 trading & investment income recorded a one-time gain on disposal of a bond holding (~1.5%) 297.4 Total non-interest income 5.3 37.1 6.3 49.5 6.8 57.4 61.9 62.6 RM'bil FY07 FY08 FY09 FY10 Q1FY11 CASA All Other Deposits 1 Slower CASA growth in Q1FY11 in line with industry trend FD + NID + Senior Notes + Credit- Linked Notes + Treasury Deposits Note : 1 CASA composition : as composition of Deposits from Customers AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 14
Improved returns; strong capital adequacy ROE, % Q1FY11 / FY10 change FY10 / FY09 change h3.7% i0.2% ROA, % Q1FY11 / FY10 change FY10 / FY09 change h0.45% h0.09% EPS, basic sen/share Q1FY11 / FY10 change FY10 / FY09 change h41.1% h9.8% -5.8% 11.5% 11.7% 11.5% 15.3% 1.02% 1.04% 1.13% 1.58% -0.17% 1 2 3 4 5 28.2 31.6 34.7 48.96 (13.3) 1 2 3 4 5 Improved ROE, ROA and EPS in Q1FY11 FY07 FY08 FY09 FY10 Q1FY11 FY07 FY08 FY09 FY10 Q1FY11 FY07 FY08 FY09 FY10 Q1FY11 Capital adequacy : AHB FY2007 FY2008 FY2009 FY2010 Q1FY2011* ACE 5.8% 7.7% 7.8% 8.2% 7.9% Tier 1 6.8% 8.5% 9.7% 10.3% 10.0% RWCA 10.1% 14.1% 15.2% 15.8% 16.7% Capital adequacy : by legal entity, Q1FY2011* Tier 1 RWCA AmBank (M) Berhad 10.7% 16.4% AmBank (M) Berhad (roup) 9.6% 16.3% AmInvestment Bank Berhad 29.4% 31.2% AmInvestment roup Berhad 25.4% 31.1% AmIslamic Bank Berhad 9.6% 15.1% * Unappropriated profits for Q1FY2011 not included Innovative T1 (AmBank (M) Berhad) : Approved = RM500 mil Q1FY10 issuance = RM300 mil Q2FY10 issuance = RM185 mil Tier 2 : Q3FY10 : 7 th tranche MTN RM98 mil, total todate RM1.56 bil Including Q1FY10 profits, AHB s ACE, Tier 1 and RWCA will improve 0.4% - 0.5% : proforma ACE : 8.4%, proforma T1 : 10.5% & proforma RWCA : 17.1% Capital management plan : 1. Optimise capital profile & buffer 2. Increase scenario modeling 3. Streamline corporate structures 4. Develop dynamic dividend policy 5. Proactively manage Basel III requirements Note : 1 FY2007 capital adequacy ratios as per the published financial statements of AHB for FY2008 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 15
Contents Executive Summary Q1FY2011 roup Financial Performance Strategy & Outlook Segment Performance Appendix AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 16
MTA 1 : Malaysia s Preferred Banking roup with International Connectivity Retail Banking* Develop a liability-led business, grow assets in targeted segments and expand wealth management Business Banking* row diversified & profitable assets, increase liabilities, fee base business & international trade finance leveraging on ANZ Corporate & Institutional Banking* Deliver innovative and quality solutions, increase share of wallet, target high-impact and highvalue clients and leverage ANZ for x-border businesses Investment Banking* Deliver comprehensive solutions, lead in capital markets, funds management, stock broking and enhance domestic & overseas distribution via ANZ Life Assurance Leverage Friends Provident to deliver premium product & customer propositions & improve efficiencies eneral Insurance Leverage Insurance Australia roup to become a scale specialist in motor and niche specialist in commercial and non-motor lines Markets & Treasury* Deliver substantive, integrated and client-led business with full suite of FX, Rates, Commodities and FI offerings with ANZ collaborations *Conventional + Islamic 1 - Medium Term Aspirations FY 2010 FY 2015 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 17
Increasing profit momentum Retail Banking * Business Banking * CIB * Investment Banking * Life Assurance Accelerate CASA & deposit growth, profitable asset growth & lower credit costs Invest for medium term outcomes Strong profit growth benefiting from new FTP rules and lower provisions for FY 2011 Income growth from larger asset base & growth in non-interest incomes Proactively manage existing accounts for cross-sell & transactional deposits Strong profit growth benefiting from new FTP rules and lower provisions for FY 2011 Income growth from larger asset base & fees Increase focus on cross-selling & growing deposits Strong profit growth benefiting from new FTP rules and lower provisions for FY 2011 Leverage upturn in capital markets Increase regional biz via closer collaboration with ANZ Reasonable profit growth for FY 2011 New products, improve new biz IRR & leverage strategic partnership with Friends Provident Strong growth in profits transferred to Shareholders for FY 2011 eneral Insurance Markets & Treasury * Higher contribution from new products, increase share of wallet from retail & biz customers Possible synergistic benefits from MAA acquisition Reasonable profit growth for FY 2011 Momentum from FX & Derivatives set to increase Strong profit growth for FY 2011 *Conventional + Islamic AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 18
Medium Term Aspirations FY07 FY 08 FY 09 FY 10 Q1FY 11 FY 2011 Medium Term Aspirations (MTA) PATMI - RM282.5 mil RM668.5 mil RM860.8 mil RM1,008.6 mil RM368.3 mil >20% 14 18% CAR ^ Previous guidance: 16-20% ROE - 5.8% 11.5% 11.7% 11.5% 15.3% 12-13% * FY13 onwards : 15 18% * CTI 37.1% 39.6% 43.3% 42.0% 38.5% 40-42% 40-42% Net NPL ratio ross impaired loans 6.2% 3.7% 2.6% 1.5% 3.8% 3.6% circa 3.6% circa 2.5% Dividend ross Payout 5.0 sen / share (loss year) 6.0 sen / share 18.3% 8.0 sen / share 19.0% 10.5 sen / share 28.1% * - * 35 40% * 40% payout payout * Adjusted for possible Basel III impacts on ACE ^ Previously 12-15% sustainable profit growth AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 19
Summary 1. ood FY2011 start 2. Favourable Malaysian / regional economy but cautious global outlook 3. Strong growth foundations and clear strategies (MTA) 4. International connectivity with ANZ 5. Disciplined execution and governance AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 20
Contents Executive Summary Q1FY2011 roup Financial Performance Strategy & Outlook Segment Performance Appendix AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 21
Retail Banking Division : improved asset quality main contributor to higher profits Achieving profitable growth, balancing between margins and credit costs Composition to roup Income Expenses PBP PAT 47.6% 47.2% 47.8% 46.4% RM'mil Q1FY10 Q1FY11 Q1FY11 vs Q1FY10 Income 453.1 470.9 +3.9% Expenses 159.7 180.0 +12.7% PBP 293.4 291.0-0.8% Impairments / Allowances 112.7 54.7-51.5% PBT 180.7 236.2 +30.7% PAT 134.2 177.2 +32.0% Income growth - profitable segments and pricing for risk Expenses - growing footprints and upgrade in risk tools, people cost and IT systems Lower loan loss allowances driving higher profits Q1FY2010 loans and deposits adjusted for segment realignment ross Loans / Financing 43,694.3 44,450.6 +1.7% Net Loans / Financing 42,194.2 43,230.1 +2.5% ross Impaired Loans 3.06 % - 1,358.6 - Customer Deposits 30,097.5 32,441.1 +7.8% CASA Deposits 5,924.1 6,851.3 +15.7% ROA 1.26% 1.61% +0.35% CTI 35.3% 38.2% +2.9% Allowance Coverage - 89.8% - Aspirations Develop a liability-led business, complemented with asset growth in certain segments and products, and grow scale in wealth management in both Mass and Mass Affluent segments Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 22
Business Banking Division : ood income and targeted loans growth Income Expenses PBP PAT Achieving profit growth post financial consolidation Composition to roup 11.6% 6.5% 14.8% 15.9% Q1FY11 RM'mil Q1FY10 Q1FY11 Q1FY10 Income 84.2 114.5 +36.0% Expenses 19.4 24.8 +27.8% PBP 64.9 89.8 +38.4% Impairments / Allowances 18.4 9.0-51.1% PBT 46.4 80.8 +74.1% PAT 34.8 60.6 +74.1% ross Loans / Financing 9,520.6 11,957.8 +25.6% Net Loans / Financing 9,276.7 11,822.4 +27.4% ross Impaired Loans 0.89% - 105.9 - Customer Deposits 2,930.5 4,134.6 +41.1% CASA Deposits 932.2 1,419.1 +52.2% ROA 1.49% 2.11% +0.62% Income growth - lending to stable sectors, trade and transactional Cost increase - expansion in relationship team Q1FY2010 loans and deposits adjusted for segment realignment Aspirations Develop a well diversified, profitable and sustainable client base and grow deposit and cash management, quality loans, international trade finance via leveraging ANZ connectivity, non-interest incomes and Share of wallet CTI 23.0% 21.6% -1.4% Allowance Coverage - 127.9% - Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 23
Corporate & Institutional Banking Division : ood income growth and lower provisions Accelerate growth, underpinned by higher CASA, non-interest income and regional presence Composition to roup Income Expenses PBP 8.7% 6.5% 10.1% 14.4% PAT RM'mil Q1FY10 Q1FY11 Income 60.6 85.9 +41.7% Expenses 18.3 24.6 +34.4% PBP 42.3 61.3 +44.9% Impairments / Allowances 3.1 (10.8) +>100% PBT 39.2 72.1 +83.9% PAT 30.1 54.9 +82.4% CTI 30.1% 28.6% -1.5% Net Loans / Financing 6,057.3 10,200.2 +68.4% Ave Assets Management 990.0 1,008.5 +1.9% Ave Volume / Contract Traded (RM'mil/month) S'pore SE 1 158,404.3 151,360.6-4.4% Jakarta SE2 63,087.3 69,238.0 +9.7% AmFIPL 3 1,721.5 1,638.9-4.8% PTAMCI 4 511.6 530.5 +3.7% Market Share as at: Q1FY11 vs Q1FY10 AmFIPL 1.1% 1.1% +0.0% PTAMCI 0.8% 0.8% +0.0% Diversified loans portfolio - good support for income growth Provisions benefitted from bad debts recovered Q1FY2010 loans adjusted for segment realignment Aspirations Provide innovative and quality solutions (including syndication and cross-selling) both domestic and cross border via ANZ, targeting high-impact and high-value clients, MNCs and LCs Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 Note : 1 Singapore Stock Exchange 2 Jakarta Stock Exchange 3 AmFraser International Pte Ltd 4 PT AmCapital Indonesia * Services include : large corporate lending, large corporate deposits, financial institution group, offshore banking, international business, private equity, REITs and loan syndication AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 24
Investment Banking Division : ood pipeline but slower start to Q1FY2011 Reposition as consistent top 3 player whilst delivering sustainable profit growth with lower volatility Composition to roup Income Expenses PBP PAT 7.6% 10.4% 5.9% 6.9% RM'mil Q1FY10 Q1FY11 Q1FY11 vs Q1FY10 Income 120.5 75.4-37.4% Expenses 36.1 39.7 +10.0% PBP 84.3 35.7-57.7% Impairments / Allowances 0.8 0.4-50.0% PBT 83.6 35.3-57.8% PAT 64.2 26.3-59.0% CTI 30.0% 52.6% +22.5% 1 Ave Assets Management 18,459.2 23,529.3 +27.5% Ave Volume / Contract Traded (RM'mil/month) Bursa M'sia 57,410.1 59,429.3 +3.5% Future KL index 436.2 367.3-15.9% IB Broking 4,480.2 4,707.1 +5.1% AmFuture 85.0 75.5-11.2% Market Share as at: IB Broking 7.8% 7.8% +0.0% AmFuture 20.2% 20.3% +0.1% Higher income in Q1FY10 partly due to a one-time gain on disposal of a bond holding Aspirations Develop complete, end-to-end, comprehensive solutions and lead in capital markets, funds management, and stock broking underpinned by strong domestic and overseas distribution capability via ANZ Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 Note : 1 Including AmInvestment Management, AmInvestment Services, private banking & AmARA AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 25
Life Assurance : Stronger contribution to Shareholders, sound capital adequacy Income PAT Becoming a top 5 life assurance company Composition to roup 2.4% 6.2% Q1FY11 vs RM'mil Q1FY10 Q1FY11 Q1FY10 Net Income 6.2 23.7 +>100.0% Higher income - larger fund assets, from enhanced agency network, product bundling and cross selling PAT 4.5 23.7 +>100.0% Life Assurance fund assets 2,149.7 2,389.9 +11.2% CAR ratio 187.2% 232.7% +45.5% Aspirations Deliver premium product & customer propositions to target segments, streamline process to improve efficiencies and leverage Friends Provident * Life assurance shareholder s fund accounts Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 26
eneral Insurance : Higher income and improved efficiencies Becoming a well-diversified and profitable top 3 general insurance provider Composition to roup Income Expenses PBP PAT 4.3% 5.4% 3.6% 3.4% RM'mil Q1FY10 Q1FY11 Income 27.4 42.6 +55.5% Expenses 18.2 20.7 +13.7% PBP 9.2 21.9 +>100% Impairments / Allowances - - N/A PBT 11.7 21.9 +87.2% PAT 11.7 12.8 +9.4% CTI 66.4% 48.6% -17.8% eneral Insurance fund assets Q1FY11 vs Q1FY10 922.7 1,042.0 +12.9% Higher income - larger gross written premium, from enhanced up- and cross-selling, and established distribution network Aspirations Deliver competitive customer propositions via becoming a scale specialist in motor and niche specialist in commercial and non-motor personal lines, and leverage IA Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 27
Markets and Treasury : Income diversification and increasing momentum To serve our clients with superior & competitive financial solutions Composition to roup Income Expenses PBP 8.7% 3.4% 12.0% 15.8% PAT RM'mil Q1FY10 Q1FY11 Q1FY11 vs Q1FY10 Income 79.5 86.1 +8.3% Expenses 9.3 13.1 +40.9% PBP 70.3 73.0 +3.8% Impairments / Allowances 8.2 (7.3) ->100% PBT 62.1 80.2 +29.1% PAT 45.9 60.4 +31.6% CTI 11.6% 15.2% +3.6% Total roup: Financial assets HFT 2,255.6 2,737.9 +21.4% Financial investments AFS Financial investments HTM 7,122.3 7,593.6 +6.6% 766.9 199.5-74.0% Higher interest income from HFT, FX and derivatives Expenses reflect continuous investment in FX, rates, derivatives & commodities establishment Provisions reflect reversal in AFS impairment Aspirations Provide substantive, integrated and client-led business underpinned by a full suite of FX, Rates, Commodities and FI offerings, with ANZ collaborations Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 28
roup Operating Segments Defining the journey to a Customer Service Delivery Channel Composition to roup Income Expenses PBP PAT 9.2% 20.5% 2.1% -9.0% RM'mil Q1FY10 Q1FY11 Q1FY11 vs Q1FY10 Income 56.5 90.6 +60.4% Expenses 91.3 78.1-14.5% PBP (34.8) 12.5 +>100.0% Impairments / Allowances 39.1 46.5 +18.9% PBT (73.9) (34.0) +54.0% PAT (59.9) (34.2) +42.9% PATMI (67.2) (47.6) +29.2% Higher income from : Loan Rehab units (recovery rate as scheduled) Shareholders fund, Corporate & Shared Services (consolidation adjustments) Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 29
Islamic Banking Increase contribution to overall merged bank portfolio Composition to roup Income Expenses PBP PAT 19.6% 20.1% 19.3% 15.5% RM'mil Q1FY10 Q1FY11 Income 234.3 194.2-17.1% Expenses 64.2 76.5 +19.1% PBP 170.1 117.7-30.8% Impairments / Allowances 23.1 37.3 +61.7% PBT 147.0 80.4-45.3% PAT 109.1 59.3-45.6% Net Financing 9,885.6 12,785.7 +29.3% ross Impaired Financing 1.35% - 191.6 - Q1FY11 vs Q1FY10 Customer Deposits 13,678.3 13,287.3-2.9% CASA Deposits 2,156.8 2,047.1-5.1% ROA 2.77% 1.34% -1.43% Q1FY11 income run-rate higher than FY2010 full-year Higher income in Q1FY10 due to a one-time gain in disposal of a bond holding recorded in income derived from Islamic Banking Funds Underlying branding position remains strong and expected to provide growth support Aspirations To become the Islamic Bank of choice and ensure a high degree of value for our customers, employees & stakeholders CTI 27.4% 39.4% 12.0% Allowance Coverage - 159.4% - Q1FY10 results Favourable growth in Q1FY11 Unfavourable growth in Q1FY11 * Results incorporated under respective business divisions AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 30
Contents Executive Summary Q1FY2011 roup Financial Performance Strategy & Outlook Segment Performance Appendix AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 31
AMMB Holdings Berhad Listing Stock code Bursa Malaysia Securities Berhad, Main Market AMMB / 1015 Tickers AMM MK (Bloomberg) AMMB.KL (Reuters) Issued share capital Market capitalisation RM3,014.2 mil RM15.04 bil, USD4.62 bil Price Price performance RM4.99, 30/6/10 RM5.26, 52-wk high RM3.40, 52-wk low 1 month 3 months 12 months 24 months 36 months AMMB +2.0% -0.2% +47.6% +56.9% +17.5% KLCI +2.3% -0.5% +22.2% +10.7% -3.0% Volume (daily average) 4mil, 1 month 4.5mil, 3 months 6.2mil, 12 months Market ratios EPS, 49.0sen PE, 10.19 PBV, 1.54 AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 32
AmBank roup snapshot AmBank roup, Malaysia 30+ years of banking heritage & franchise Top 20 listed company on Bursa Saham Malaysia & rank 176 th globally (by market cap amongst banks 1 ) CAR 22.8% [2008-2010] 26.0% [2006-2010] 669 861 1.2 bil estimate 1,009 Diversified business fundamentals with 3 consecutive years of record performance Upgraded credit ratings 2 and well capitalized - Tier 1 CAR 10.0% & RWCA 16.7% 215 202 400-282 2004 2005 2006 2007 2008 2009 2010 2011e AmBank roup, PATMI : RM mil PATMI = profit after tax and minority interests Source : 1 Bloomberg (lobal 1,000 banks by Market Capitalization as at 1 July 2010) 2 Ratings upgraded in the last 12 months by Fitch Ratings Ltd, Standard & Poor s Ratings Services, Rating Agency Malaysia Berhad and Moody s Investors Services Strategic partnership with ANZ (one of 11 AA rated banks in the world) and Assurance business partners : Insurance Australia roup (IA) general Friends Provident (FP) life AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 33
Malaysia, moving from recovery to growth Malaysia s DP growth to be positively impacted by growth in major Asia-Pacific trading partners 11 9 7 5 3 % ASEAN economies real DP growth 8.40 6.58 Vietnam 5.70 5.30 5.00 4.93 4.60 4.55 1.00 10.85 8.00 5.80 5.31 4.46 Singapore Malaysia Indonesia Thailand Philippines 15% Malaysia average lending rate vs OPR & BLR 13.14% 9.66% 10% 8.71% 8.23% 7.81% 7.46% 7.14% 7.01% 7.73% 6.63% 6.65% 6.06% 6.07% 5% 0% Average lending rate Average OPR Average BLR 1 YoY 15% Malaysia lending growth vs DP growth 11.7% -1-3 2005 2006 2007 2008 2009 2010f -1.25-1.70-2.20 10% 5% 0% 5.7% 3.8% 4.6% 4.8% 8.5% 8.6% 6.3% 10.1% 11.2% 7.8% -5% -10% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 May -1.6% 2010-5.1% DP growth Lending growth Relative debt / loans to DP, 2009 Malaysia Singapore Indonesia Thailand Philippines Malaysia : Key statistics 1 2010e 2011e National debt / DP 69.5% 117.9% 0.07% 60.7% 349.9% Total external debt / DP 44.7% 481.3% 74.6% 1.3% 172.4% Housing loans / DP 40.3% 37.0% n.a. 21.7% n.a. Auto financing loans / DP 22.0% 4.9% n.a. 9.0% 6.6% DP 8.0% 6.0% Inflation 2.5% 3.0% OPR 2.75-3% 3.3% Fiscal deficit 5.3% 4.4% Exchange rate (RM vs USD) 3.1 3 Note: 1 AmResearch forecast Sources : Bloomberg, BNM, in-house economic research AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 34
10 th Malaysia Plan (2011 2015) and New Economic Model : Moving Malaysia to the rank of high income economies 10 th Malaysia Plan (10MP) snapshots overnment Transformation Programme & New Economic Model DP growth target 6% pa (2006/2010 : 4.2%) Primary policy thrust to re-energize private sector amid leaner public sector RM230bil for development expenditure Private Finance Initiative Fund RM20bil to attract private investments worth at least RM200bil in National Key Economic Areas (NKEAs) 12 NKEAs, comprising 11 sectors and 1 geographical area reater KL Key growth engines NKEAs O& (11.1% 1 ) Palm oil & related products Financial services (12.7% 1 ) Wholesale & retail (15.1% 1 ) Tourism ICT (10.2% 1 ) Education (2.0% 1 ) Electrical & electronics Business services (3.3% 1 ) Private healthcare Agriculture services (2% 1 ) reater Kuala Lumpur Cluster corridors Iskandar Malaysia Northern Corridor Economic Region East Coast Economic Region Sarawak Corridor Renewable Energy Sabah Development Corridor 10MP : Key macroeconomic targets 9MP 2006 2010 10MP 2011-2015 DP 4.1% pa 6.0% pa DP per capita US$8,256 US$12,139 Private expenditure 5.7% pa 8.6% pa Public expenditure 5.4% pa 4.9% pa Exports 1.3% pa 10.6% pa Fiscal deficit -5.3% of DP -2.8% of DP Inflation 2.8% pa NA Unemployment rate 3.6% 3.1% New Economic Model : oals 10MP allocation for development expenditure eneral admin, 5% Security sector, 10% Social sector, 30% Economic sector, 55% Note: 1 target % contribution to DP by 2015 Sources: AmResearch, media AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 35
Industry rowth : Loans by Sector, Deposits by Type RM bil Industry Loans rowth by Sector June '09 June '10 8.5% 127.7 117.7 Purchase of Transport Vehicles 11.3% 11.4% 19.6% 13.8% Retail loans growth : 11.2% 222.5 199.9 Purchase of Residential Properties 27.7 40.5 24.9 33.8 417.1 366.5 Credit Cards Personal Use Business & Corporate Loans composition : 15.3% 26.6% 3.3% 4.8% 49.9% Retail loans composition : 50.1% Banking System Loans RM bil June 2010 835.5 June 2009 742.8 12.5% Industry Deposits by Type June '09 June '10 1.3% 11.6% 3.4% CASA growth : 7.6% 172.9 99.2 155.0 97.9 481.9 465.8 Banking System Core Deposits RM bil June 2010 753.9 June 2009 718.7 4.9% Savings Current Account Fixed Deposits composition : 13.2% 22.9% 63.9% AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 36
ood momentum in Assurance and key Investment Banking portfolios RM mil eneral Insurance Life Assurance Fund Assets ross Premium Fund Assets ross Premium 1,500 1,000 438.2 476.3 545.6 585.8 624.4 161.2 p 2.3% 0 4,000 340.9 382.6 352.2 449.0 583.4 125.1 p 0.1% 400 500 601.8 696.3 811.3 901.8 1,018.6 1,042.0-1000 2,000 2,387.7 2,389.9-400 1,164.8 1,430.1 1,700.9 2,034.8 - eneral Fund Assets* ross Premium -2000 - Life Fund Assets ross Premium -1200 FY06 FY07 FY08 FY09 FY10 Q1FY10 FY06 FY07 FY08 FY09 FY10 Q1FY10 30,000 AUM Institutional & Unit Trust Funds Market Share 20.0% 16.6% 15.5% 13.8% 14.1% 12.8% 12.2% Trading Value 120,000 7.2% Stock Broking Market Share 10.0% 8.0% 8.0% 7.7% 7.6% 20,000 p 4.7% 10.0% 80,000 5.0% 10,000 14,975.6 18,291.3 15,954.4 19,272.6 20,176.9 0.0% 40,000 0.0% 10,218.9 39,940.8 92,845.4 50,044.2 46,490.8 26,417.8 - Asset Under Management Market Share Institutional funds : Unit trust funds ratio at 44 : 56-10.0% - Trading Value Market Share 2006 2007 2008 2009 H1CY2010-5.0% *Prior to December 2008, based on general funds per BNM DI returns. December 2008 & post December 2008 based on BNM DI returns with total asset (general funds + shareholders funds) AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 37
Diversified funding profiles 1.9 12.5 4.9 3.0 20.2 9.0 1.4 26.3 29.6 10.9 11.2 23.0 23.6 25.5 26.8 2.6 4.1 [6%] 27.7 [39%] 12.0 [17%] 27.3 [38%] RM'bil FY07 FY08 FY09 FY10 Q1FY11 10.9 Adjusted Customer Deposits by Sources Others Biz enterprises overnment Individuals Deposits of Banks & Other Financial Institutions Total 17.4b 7.1b 6.1b 4.3b 3.9b 1.3 2.1 2.9 0.5 1.4 0.9 2.5 1.4 1.2 4.8 0.7 0.9 0.9 2.1 1.6 0.5 0.5 0.4 1.3 RM'bil FY07 FY08 FY09 FY10 Q1FY11 Other FI's BNM Merchant banks Banks Others 1 + Senior Notes + Credit- Linked Notes Biz enterprises overnment Individuals Other FI s BNM Merchant Banks Individual and government funds grew 3.2% in Q1FY11 RM7 bil Senior Notes term funding program : RM1.42bil via book building & RM1.32bil via private placements issued to-date Reduce dependency on interbanking funding Adjusted Customer Deposits : Interest / Profit Rate Pricing Profile RM'bil 1.0% 5.2% 11.0% 0.1% 5.1% 6.5% 6.0% 4.5% 7.5% 9.2% 27.8% 27.8% 20.9% 26.9% 51.9% 60.9% 62.6% 65.1% FY07 FY08 FY09 FY10 Non-interest sensitive Islamic > 5 years 1-5 yrs 3-12 mths 0-3 mths Non - sensitive Islamic > 5 years 1 5 years 3 12 months 0 3 months Centralised Capital & Balance Sheet Management Manage regulatory and economic capital, liquidity funding, and FTP and balance sheet risks Formulate capital management frameworks, including dividend policy Funding profile reflecting current interest regime Formulate capital management plan aligned to strategic plans, and stress tests Manage efficient internal capital allocation Execute capital and funding transactions for competitive advantage Note 1: Others by source comprises pension and retirement funds, non-profit organisations and similar - includes Senior Notes RM2.74 bil & credit-linked notes RM0.13bil AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 38
Balance sheet repositioned for rising interest rates RM bil Interest / Profit Rate Risk : 0-12 months Interest / Profit Rate Risk : 1-5 years 34.9 42.9 49.2-58.8-64.3-65.8 10.0 10.8 13.4-4.9-5.1-7.4-4.0-2.9 3.2 2.2 9.3 Net mismatch : -20.6-19.2-7.3-9.3 Net mismatch : 1.1 2.9-3.3 Mismatch profile Net mismatch > 12 months FY2008 FY2009 FY2010 FY2008 FY2009 FY2010 FY2008 13.9 bil Interest / Profit Rate Risk : > 5 years Interest / Profit Rate Risk : Non- Interest Sensitive FY2009 FY2010 18.0 bil 5.7 bil 10.1 9.5 8.5-8.5-8.4-10.5-7.3-7.9 21.5 25.3 23.6-9.8-3.4-3.5-2.5-0.4 0.1-0.6 0.8 0.8-0.4 Net mismatch : 18.9 22.5 21.2 Net mismatch : -6.1-7.4-12.2 Assets Liabilities Equity Off balance sheet gap / derivatives Note : Net mismatch comprises on-balance sheet and off-balance sheet interest rate gap sensitivity AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 39
Competitive positioning : continues to strengthen Strong key shareholders, common aspirations AIB privatisation & internal business restructuring completed Insurance biz partnership (2009) Improvement in stock valuation & upgrades in credit ratings Well diversified universal bank & # 4 largest banking group (market capitalization) # 4 retail bank, # 5 business and CIB lending Top 2 investment bank, #5 Islamic banking, #7 general insurance Sound size and market position in key business segments 6 1 2 Strong customer-focus, lead in customer satisfaction Segmentation focus and positioning strategies & differentiating through products & services Large retail and corporate client base provides high cross-selling potential Award-winning products and services Improving Top of Mind brand recall Experienced management team with key ANZ appointments Industry experts, international and domestic best practices Performance based culture, all levels 5 Strengthening competitive positioning 4 Strategic partnership with global partner, ANZ Strategic partnership with ANZ (since May 07), 1 of 11 AA rated global banks Leveraging ANZ : strengthen strategy formulation, financial management, risk management, distribution channel management, deposits strategy and product development 3 Expanding distribution footprint (branch network 190), #3 largest ATM network (787), 377 ATMs @ 7/11 and 137 EBC s) echannels : internet banking, mobile banking and 24 hours call centre Pioneer in weekend banking concept ~7,200 sales agents, direct sales teams, marketing & personal bankers, financial services and insurance agents AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 40
AmBank roup well set to deliver on aspirations Universal banking group 1. Well diversified and significant market positions in key business segments 2. Wide distribution footprint and market reach 3. Sound financial fundamentals 4. Building best in class key enablers in Malaysia Implement customer centric business models 1. Focus on customer segmentation and satisfaction measures 2. Develop differentiated product and service propositions Regional connectivity via ANZ and access to world class IP and skill resources 1. ANZ, our strategic partner in Banking 2. IA in eneral Insurance 3. Friends Provident in Life Assurance AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 41
Progressively building best in class key enablers in Malaysia Specialisation Effectiveness, efficiency, cost optimisation Speed-to-market, fast turnaround Customer and service excellence Process improvements and reengineering Better alignment to key business / market strategies including revenue growth Support enhanced risk management capabilities Infrastructure optimisation & rationalisation overnance, enhance security and data integrity Results driven performance framework Rewards & recognition Talent management and succession planning Performance improvement program Customer Best in class key enablers Lead in customer satisfaction Expanded distribution footprints Branding Product & service differentiation Customer proposition Customer centric & Branding Drive brand preference & affinity Top of mind recall & brand power grid (brand value) Best in class scorecards, risk and pricing models, and governance infrastructure Asset writing business strategies, frameworks and policies Effective identification, assessment / measurement, control / mitigation and monitoring / review of risks Explicit risk-reward trade-offs AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 42
Competitive positioning : Sound size and market position in key business segments Retail Banking # 4 [10.1%] # 2 auto financier [20.5%] # 8 in housing loans (inc foreign banks) [ 5.2%] # 7 in credit cards (inc foreign banks) [ 6.5%] # 3 in personal financing # 5 in no. of branches & # 3 in ATM network coverage Business Banking # 5 [6.4%] Nationwide network - 4 regional business & 12 commercial centres Lead in cash management, trade and SME financing Investment Banking # 2 Top 3 in Malaysian Debt league and stock broking Award-winning Corporate & Institutional Banking Assurance Islamic Banking # 5 [6.4%] # 7 eneral # 12 Life # 5 [7.7%] Focus - LC s and MNC s Niche international businesses - Singapore, Indonesia & Brunei Other businesses - REITs and private equity # 7 in general insurance premiums [ 4.9%] # 3 in motor insurance premiums [ 8.4%] # 12 in life assurance premiums [ 3.1%] Strategic partners - IA in general and Friends Provident in life insurance Syariah based banking products and services # 2 in Islamic credit cards [31.3%] ` Islamic funds management and banking business in Brunei Note : [ ] denotes market share AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 43
Competitive positioning : Wide market reach and multiple distribution channels Aspirations Increased customer satisfaction via integrated & seamless channels model Expand branch network & SSM footprint Further build & improve sales & service capabilities Strategic initiatives, expanding distribution footprints Branch Banking 190 branches, 2 in progress E- Channels & Contact Centre (incl. Internet & Mobile Banking) Expand self-service machines (SSM) network at branches, shopping centres, 7-Eleven Expand revenue streams via add-ons (interbank loan, bill payment, full-suite prepaid top-up) Maximise outbound sales productivity via contact centre Enhance experience via innovative mobile & internet banking Deposit & Customer Solutions Main-bank for transactional and savings needs : Promotions, marketing events Payroll acquisition Service delivery Convenience, simplicity, friendliness Wealth Management Priority banking for affluent segment Multi-campaigns / product launches for different segments Increase sales efficiency through the introduction of WM System roup Wealth Steering Committee Maximise WS sales productivity sales management Number of Branches #5 364 323 248 241 190 188 139 89 86 MaybankCIMB Public RHB AmBank HLB EON Alliance Affin Number of ATMs 2,845 2,065 787 751 478 322 242 173 146 MaybankCIMB AmBank RHB PBB HLB EON Alliance Affin #3 Total no ATM s at 7 Eleven 377 Electronic Banking Centers (EBC) 137 Assurance offices 74 AmInvestment offices 15 Source : Company websites of peer banks / MEPS information Note : Peer groups as at 30 June 2010; AmBank as at latest practicable date AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 44
Strategic partnership with global partner, ANZ ANZ s Regional Aspiration : Create a leading Super Regional bank lobal quality, regional focus ANZ is committed to AmBank roup s long-term success and aspirations ANZ has provided key resources and support Board Director Alex Thursby Director Dr. Robert John Edgar Director Mark Whelan Senior Management Deputy roup MD & roup CFO Ashok Ramamurthy Chief Risk Officer Andrew Kerr Chief Operations Officer Ross Neil Foden Management Head, Retail Sales & Distribution Brad ravell Head, Market Risk Jonathan Manifold Head, roup Risk Models lenn Saunders ( ) number of branches & representative offices in each country Head, Systems Accounting Ignatius Lim Head, FX & Derivatives Peter Trumper Super regional strategic intent Launched Dec 2007 1 2 years Restore Drive Asia profit 2 5 years Outperform In-fill M&A in Asia (core geography) 5+ years TRANSFORM Asia Pacific growth focus : Retail, Wealth, Commercial, Institutional AmBank roup 1 of 5 key partnerships that is expanding ANZ s organic agenda AHB s market cap increased 56.4% in 2008/2010 Partnerships model, ANZ adds value : leadership & management product development technical expertise 2-way customer flows AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 45
Significant progress made in business transformation 12 months 12 months (FY(FY2008) Set agenda, build consensus and teamwork 24 months 24 months (FY(FY2009) Build foundations, align structures to deliver on strategy 36 months 36 months (FY 2010) (FY2010) Deliver profitable and differentiated growth through FC Strategic initiatives Vision & aspirations Transformation strategy & agenda Top down targets HP biz strategy and action plans Asset quality Realign growth profitable & viable segments Realign Markets Fixed Income biz strategy & deliverables Mortgage biz strategy & action plans AmBank (M) for all roup balance sheet activities, vest AmInvestment Bank assets to AmBank (M) Deposits as profit centre & grow CASA Customer ownerships & focus across all biz divisions Strengthen capital & liquidity management to handle FC issues Repositioned balance sheet for rising interest rates Organisation & governance Privatise AmInvestment Bank Specialist Finance & Risk management Consolidate governance committee Line of business budgets & performance reporting roup PMO to prioritise key strategic initiatives & projects Advance Risk Recognition Program (ARRP) Strengthen risk disciplines via roup Risk Appetite Framework ALCO & capital and balance sheet management Peer Bank comparisons & relative performance benchmarks Short & long term incentives aligned to performance via MTA 3 rd generation retail scorecards & new market risk models Commence PD, LD & EAD for retail & non-retail, and security indicators for non-retail New FTP system aligned to balance sheet & non-traded risk strategy Leadership bench-strength & succession planning rowth opportunities New profit centre based retail branch distribution model Retail deposits as separate line of business & grow CASA Corporate and Institutional Banking (CIB) New FX business in collaboration with ANZ Cash management via Net Payroll system Split insurance to eneral & Life, new life biz partner, Friends Provident Fund plc Accelerate growth from LC, LIC & MNC via CIB Acquire general insurance biz (MAA) & build scale New Rates business in collaboration with ANZ AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 46
Shareholding structure As at 30 June 2010 Amcorp roup Bhd 16.7% 23.8% 12.4% 47.1% AMFB Holdings Bhd 100% AmBank (M) Berhad 100% AmIslamic Bank Bhd Banking group 100% ANZ Funds Pty Ltd # AmInvestment Bank Berhad Capital Market group Foreign shareholding excluding ANZ : AMMB Holdings Bhd Employees Provident Fund Board 100% 100% 70%* AmInvestment roup Berhad Asset Management group AmLife Insurance Berhad * Friends Provident Fund PLC 30% Mar 09 : 28.4% Mar 10 : 27.1% Jun 10 : 27.5% # ANZ Funds Pty Ltd : a wholly owned subsidiary of Australia and New Zealand Banking roup Limited ( ANZ ) Public 100% AMAB Holdings Sdn Bhd Insurance group 51%^ Am Insurance Berhad ^ Insurance Australia roup Ltd 49% No. 18 (Malaysia market capitalisation) & 176 (global 1,000 banks by market capitalisation) : RM15.04 billion, Bursa Saham Malaysia (1) US$4.62 billion, Bloomberg (2) 1 Apr 2010 : 100% equity in AmInvestment Bank Bhd transferred to AHB from AmInvestment roup Bhd AHB in progress of due diligence to acquire : general insurance business of a local insurance company Source : 1StarBiz (Top 100 Companies by Market Capitalization as at 2 July 2010) 2Bloomberg (lobal 1,000 banks by Market Capitalization as at 1 July 2010) AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 47
Banking sector share price movement / Target price and recommendations 140.0% 120.0% 100.0% 80.0% 60.0% Banking Sector Share Price Movement Index Movement (May 07 = 100) p/q index change at close of 30 June 10 vs 18 May 07 (strategic partnership with ANZ) AMMB PBB RHBC HLF CIMB p + 27.5% (RM4.99) p + 25.4% (RM11.90) p + 24.6% (RM5.88) p + 23.7% (RM8.41) p + 17.6% (RM7.00) KLCI Index q 3.2% (1,314.02) MBB q 15.8% (RM7.56) 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 Jan-10 Mar-10 May-10 18 May 07 (strategic partnership with ANZ) Source : Bloomberg Date MBB PBB CIMB RHBC AMMB HLF KLCI Index 30 June 10 Target Price and Recommendations RM mil Q1FY2011 Share Capital 3,014.2 Reserves 6,764.3 Shareholders Equity 9,778.5 Less: Intangible Assets (1,826.5) NTA 7,952.0 NTA Per Ordinary Share (RM) 2.64 Net Asset Per Ordinary Share (RM) 3.24 Market Price (RM) 4.99 Price to Book [NTA / Net Asset] 1.54 / 1.89 EPS (sen) basic, annualised 48.96 Dividend (gross sen / share) - As at 2 July 2010 Index change market price close of 2 July 10 vs. 25 June 10 P/EPS : EPS annualized Apr09-Mar 10 P/BV : BV as at 31 Mar 2010 Buy/Outperform/Overweight/Add Hold / Neutral / Market perform Sell/Underperform/Fully valued/reduce/underweight AMBANK ROUP INVESTOR RELATIONS PRESENTATION Q1FY2011 48