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Maybank - Analyst Presentation 27 Feb 09

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  • 1. Analyst Presentation 27 February 2009
  • 2. Disclaimer This presentation has been prepared by Malayan Banking Berhad (the “Company”) solely for use during its presentation to prospective investors held in connection with the proposed renounceable underwritten rights issue of new ordinary shares in the capital of the Company (the “Rights Shares”). By viewing all or part of this presentation, you agree to maintain confidentiality regarding the information disclosed in this presentation as set out in the confidentiality agreement signed by you. Any failure to comply with these restrictions may constitute a violation of applicable securities laws. This presentation is for information purposes only and does not constitute or form part of an offer, solicitation or invitation of any offer, to buy or subscribe for any securities, nor should it or any part of it form the basis of, or be relied in any connection with, any contract, investment decision or commitment whatsoever. It is not the Company’s intention to provide, and you may not rely on this presentation as providing, a complete or comprehensive analysis of the Company’s financial or trading position or prospects. The information in this presentation has not been independently verified and is subject to verification, completion and change without notice. The information and opinions in this presentation are provided as at the date of this presentation and none of the Company, Maybank Investment Bank Berhad (the “Principal Adviser”), Credit Suisse Securities (Malaysia) Sdn Bhd and Goldman Sachs (Singapore) Pte (collectively referred to as the “International Advisers”) or any of their respective affiliates, advisers or representatives, is under any obligation to update or keep current the information contained herein. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company, the Principal Adviser and the International Advisers or any of their respective affiliates, advisers or representatives, as to and no reliance may be placed for any purposes whatsoever on the accuracy, completeness or fairness of the information or opinions contained in this presentation. None of the Company, the Principal Adviser and International Advisers or any of their respective affiliates, advisers or representatives accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or their contents or otherwise arising in connection therewith. This presentation may contain forward-looking statements that involve risks, uncertainties and other factors. Actual results, performance or achievements of the Company may be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which the Company will operate in the future, and must be read together with such assumptions. Predictions, projections or forecasts of the economy or economic trends of the markets are not necessarily indicative of the future or likely performance of the Company. Past performance is not necessarily indicative of future performance. The forecast financial performance of the Company is not guaranteed. You are cautioned not to place undue reliance on these forward-looking statements, which are based on the current views of the Company on future events. Any decision to subscribe for or purchase any shares in the offering should be made solely on the basis of the information contained in the abridged prospectus relating to the Rights Shares after seeking appropriate professional advice, and no reliance should be placed on any information other than that contained in the abridged prospectus. Neither this presentation nor any copy or portion of it may be distributed, reproduced, sent or taken or transmitted, directly or indirectly into the United States, Canada or Japan or anywhere else. The Rights Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state of the U.S. or other jurisdiction and the Rights Shares may not be offered or sold within the U.S. except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state or local securities laws. This presentation is not an offer for sale of securities in the United States. The Company does not intend to offer or sell the Rights Shares in the United States. The issuance and listing of the Rights Shares is subject, amongst others, to the approval of the Securities Commission of Malaysia, Bank Negara Malaysia, Bursa Malaysia Securities Berhad and the shareholders of the Company. This presentation may not be forwarded or distributed to any other person and may not be copied or reproduced in any manner whatsoever. Failure to comply with this directive may result in a violation of applicable laws of other jurisdictions. 2
  • 3. Agenda Financial Results Strategic Transformation Plan Questions & Answer Session 3
  • 4. 1H09 Highlights 1H09 Net Income rose 6.5% contributed by 37.7% growth in Islamic Banking Financial Income and 3.2% growth in Net Interest Income. Performance Net Interest Margin improved by 21 bps to 2.71% in 2Q09. Net Profit attributable to shareholders for 2Q09 of RM734.6 mil was 28% higher QoQ. However, Net Profit for 1H09 fell 11% YoY to RM1.306 billion. BII’s Net Profit for 2008 rose 36% YoY with 4Q08 net profit rising 16% QoQ Group annualised Net ROE stands at 13.2% for 1H09. Core commercial banking franchise remains strong. However, performance of Business International Banking, Investment Banking and Insurance businesses were Performance affected by weakening economic conditions. Transactional income from customer franchise for 1H09 grew 11.2% YoY. Group loans and advances grew by 21.2% on annualised basis. Domestic loans and advances grew by 6.3%. Net NPL improved to 1.80% from 1.84% in preceding quarter and 2.69% a year ago. Customer deposits and domestic deposits grew 20.8% and 9.0% respectively. Completed tender offer for BII in December 2008 and thereby concluded Corporate Update the acquisition with a 97.5% shareholding. Maybank was awarded Malaysia’s Most Valuable Brand for second consecutive year, valued at RM9.347 billion. Rebranding of Aseambankers to Maybank Investment Bank. 4
  • 5. 1H09 Group Income Statement Quarter Half Year RM million QoQ YoY YoY 2Q09 1Q09 change 2Q08 change 1H09 1H08 change % % % Net Interest Income 1,547.4 1,265.0 22.3% 1,414.7 9.4% 2,812.4 2,726.2 3.2% Islamic Banking Income 301.7 282.0 7.0% 214.2 40.9% 583.6 423.7 37.7% Non Interest Income 809.6 478.7 69.1% 636.3 27.2% 1,288.4 1,246.6 3.4% Net Income 2,658.7 2,025.7 31.2% 2,265.2 17.4% 4,684.5 4,396.5 6.5% Overhead Expenses (1,408.5) (1,216.4) 15.8% (1,054.0) 33.6% (2,625.0) (2,063.0) 27.2% Overhead Expenses (1,335.2) (1,121.2) 19.1% (984.0) 35.7% (2,456.4) (1,930.8) 27.2% Claims Incurred (73.3) (95.2) -23.0% (70.0) 4.7% (168.5) (132.2) 27.5% Operating Profit 1,250.2 809.3 54.5% 1,211.2 3.2% 2,059.5 2,333.5 -11.7% ● Loan Loss Provision (312.2) (192.2) 62.4% (177.6) 75.8% (504.4) (285.6) 76.6% Net Specific Provision (406.7) (152.7) 166.3% (125.9) 223.0% (559.4) (252.1) 121.9% General Provision 94.6 (39.5) -339.5% (51.7) -283.0% 55.1 (33.5) -264.5% ● Write-back of allowance for - 483.8 - - - 483.8 - - non-refundable deposit ● Profit/(Loss) from associate 22.3 22.9 -2.5% (0.4) n.m. 45.1 (0.5) n.m. ● Impairment loss in an - (242.0) - - - (242.0) - - associate Profit before tax 960.3 881.8 8.9% 1,033.2 -7.1% 1,842.1 2,047.3 -10.0% Tax (225.6) (311.0) -27.5% (307.0) -26.5% (536.6) (569.2) -5.7% Minority Interest (0.1) 1.4 -107.6% 4.8 -102.3% 1.3 (11.8) -111.1% Profit after Tax and MI 734.6 572.2 28.4% 731.0 0.5% 1,306.7 1,466.4 -10.9% EPS (sen) 15.05 11.72 28.4% 15.01 0.3% 26.77 30.13 -11.2% 5
  • 6. Net Income growth 1H09 Net Income grew by RM million +6.5% YoY 6.5% YoY. +17.4% YoY 5,000 4,684 Net Interest Income grew 3.2% +31.2% QoQ 4,396 YoY due to growth in loans. 584 +37.7% 424 Non-Interest Income recorded 4,000 a growth of 3.4% YoY. 1,288 +3.4% Transactional fee income grew 1,247 by 11.2% but was partially 3,000 2,789 2,659 offset by decline in investment 273 2,265 2,252 and trading income. 2,026 302 214 268 Income from Islamic Banking 2,000 1,165 282 810 operations grew by 37.7%YoY 636 634 479 driven by strong demand for 2,726 2,812 +3.2% Islamic auto financing and 1,000 securities financing as well as 1,415 1,350 1,351 1,265 1,547 higher income from investment and deposits. - 2Q08 3Q08 4Q08 1Q09 2Q09 1H 08 1H 09 Net interest income Non-interest income Islamic Banking income 6
  • 7. Revenue by Segment Core commercial banking franchise remains strong. However, performance of International Banking, Investment Banking and Insurance businesses were affected by weakening economic conditions. Although 1H09 revenue for these three businesses recorded growth, profit before tax for International Banking and Investment Banking both declined 48% while Insurance business fell 74%. Commercial banking contributed to 93% of Total Revenue. By geography, domestic business contributed to 81% of Revenue whilst International Business contributed 19% of Revenue. Revenue YoY Contribution RM million 1H09 1H08 change (%) Consumer Banking 2,003.3 1,986.9 0.8% 40% Business Banking 1,035.7 1,037.4 -0.2% 21% Corporate Banking 350.8 180.0 94.9% 7% Investment Bkg and Treasury 389.4 360.4 8.0% 8% International 943.9 698.1 35.2% 19% Insurance & Takaful 348.0 333.1 4.5% 7% Management/Corp Support (83.2) (21.8) 281.7% -2% 4,987.9 4,574.1 9.0% 100.0% - Unrealised loss on derivatives (109.9) (177.6) -38.1% Reversal of revaluation gain on SGD (193.4) - position Total Revenue (Net Income) 4,684.6 4,396.5 6.5% 7
  • 8. Net Interest Margin Net Interest Margin, Loans Interest Yield % and Customer Deposit COF NIM on interest earning 7.0 assets improved to 2.71% in 6.50 2Q09 due to larger reduction 6.5 6.24 in cost of funds of customer 5.81 6.0 5.66 deposits relative to lending 5.62 yield. 5.5 In addition, spreads on Loans Interest Yield 5.0 government securities have Customer Deposit COF widened considerably. 4.5 Gross Lending Spread Lending spread have Net Interest Margin of Int. Bearing Assets 4.0 stabilised in last 3 quarters. 3.75 3.65 3.5 3.07 2.98 3.04 3.0 2.75 2.81 2.72 2.68 2.71 * 2.5 2.73 2.74 2.60 2.50 2.58 2.0 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 * NIM excluding BII = 2.55% 8
  • 9. Group Non-Interest Income Transactional income from customer franchise for 1H09 grew 11.2% YoY. Quarter Half Year RM million 2Q09 1Q09 QoQ % 2Q08 YoY % 1H09 1H08 Dec 08 Sep 08 Change Dec 07 Change Dec 08 Dec 07 Transactional Income (Customer franchise) Commission, service charges and fees 390.9 397.6 -1.7% 375.7 4.0% 788.5 707.6 Other fee income 69.1 62.7 10.1% 72.5 -4.8% 131.8 140.8 Foreign exchange profit/(loss) 214.3 68.2 214.3% 91.8 133.6% 282.5 215.0 Net premiums written 128.8 122.8 4.9% 125.4 2.7% 251.5 244.7 Total Transactional Income 803.1 651.3 23.3% 665.4 20.7% 1,454.4 1,308.1 Investment & Trading Gain/loss from disposal of securities 26.2 (0.2) n.m. 9.3 183.3% 26.0 30.4 Gross Dividend from Securities portfolio 6.6 11.7 -44.0% 9.4 -30.3% 18.3 17.5 Write back of /(Provision for) impairment losses in securities, net (22.6) (16.2) 38.9% 7.0 -423.3% (38.8) (10.5) Total Investment & Trading 10.3 (4.7) -316.1% 25.7 -60.0% 5.5 37.3 Other income 107.3 24.5 338.1% 35.9 199.4% 131.8 78.7 Unrealised gain/(loss) on revaluation of securities (111.1) 1.1 n.m. (90.6) 22.6% (109.9) (177.6) held-for-trading and derivatives Reversal of forex of gain relating to BII - (193.4) - - - (193.4) - Total non-interest income 809.6 478.7 69.1% 636.3 27.2% 1,288.4 1,246.6 9
  • 10. Group Overhead Expenses Overhead Expenses for 1H09 rose 27.2% YoY but 27.2% YoY excluding BII overheads grew 15.6% 2,624.9 33.6% YoY 168.5 YoY Change 2500 Inc. BII Excl. BII 231.3 15.8% QoQ Claims incurred 27.5% 27.5% 2,063.0 368.2 Fees & Brokerage 5.6% 5.6% 2000 132.2 219.0 Admin & General 60.2% 16.8% 226.7 229.9 70.2 Marketing 6.9% 1.4% 1500 1,408.5 RM million 222.0 73.3 212.1 Depre. & Amort. 6.0% -18.9% 1,216.6 115.3 147.1 66.2 IT 20.8% 19.7% 1,054.0 95.2 231.9 183.7 116.0 1000 70.0 Establishment 38.5% 17.6% 136.5 113.8 106.2 114.5 44.6 115.2 112.9 Personnel * 30.3% 20.8% 25.6 115.8 110.4 106.2 82.7 34.4 Total 27.2% 15.6% 89.4 64.4 1190.9 500 50.4 913.7 631.1 * Growth in personnel cost excluding BII as 559.8 469.7 well as salary revision and collective agreement would be 12.1% 0 2Q08 1Q09 2Q09 1H08 1H09 10
  • 11. Balance Sheet Annualised RM billion Dec 08 Jun 08 Total Assets rose 24% on % Change annualised basis due to Cash and short-term funds 22.73 27.64 -35.5% consolidation of BII. Deposits and placement with FI 4.15 8.96 -107.4% Securities Portfolio 52.06 36.55 84.9% Growth in assets driven by 22% Loans, advances and financing 182.58 164.80 21.6% rise in net loans and 85% Insurance & Takaful Business 16.10 15.69 5.2% increase in securities portfolio. Other Assets 24.09 15.46 111.6% Total Assets 301.71 269.10 24.2% During 1H09, customer deposits, excluding BII, rose RM5.8bn, or Deposits from customers 206.59 187.11 20.8% nearly funded all the net loans Deposits and placements of banks and FI 29.15 24.55 37.5% Obligations on securities sold under Repo - 0.32 n.m. growth (+RM5.9bn), denoting Bills and acceptances payable 3.71 4.79 -45.0% ample liquidity. Subordinated debts & Capital Securities 14.65 8.47 145.8% Insurance & Takaful liabilities & policy holders' funds 16.10 15.69 5.2% Other Liabilities 10.43 8.07 58.6% Total Liabilities 280.63 249.01 25.4% Shareholders Funds 21.08 20.09 9.8% Loan-to-Deposit Ratio 88.4% 88.1% 11
  • 12. Loans Growth Group loans grew 21.2% in 1H09 Industry on annualised basis due to RM billion Dec 08 Dec 07 YoY Jun 08 1H09 growth growth Growth (annualised) consolidation of BII. Excluding BII, (YoY) loans grew 7.0%. Domestic 125.9 112.4 12.1% 122.1 6.3% 12.8% Domestic Loans grew 6.3%. Consumer 59.8 55.7 7.3% 58.0 6.1% 11.1% Consumer loans grew 6.1% as Securities 10.4 9.9 5.3% 10.3 0.9% 29.6% growth in mortgages improved Vehicles 18.6 14.8 25.9% 17.8 9.1% 8.4% while hire purchase began to Residential 24.6 24.8 -1.0% 24.3 2.7% 10.2% subside. Credit card continues to Credit Card 3.6 3.0 21.0% 3.2 23.4% 9.6% show strong growth. Business 66.2 56.7 16.8% 64.1 6.5% Business loans grew 6.5%, driven Corporate 39.4 32.2 22.4% 35.7 20.8% by strong Corporate loans growth SME 26.8 24.5 9.4% 28.4 -11.4% of 20.8% which offset a 11.4% Overseas 63.4 42.9 47.7% 49.1 58.3% contraction in SME loans. Excl. BII 51.3 42.9 19.3% 49.1 8.6% Overseas loans grew 58% on S'pore (SGD b) 16.0 14.0 13.9% 15.3 8.3% annualised basis but excluding BII, BII (Rp trillion) 38.3 32.2 18.9% 35.0 18.6% growth slowed to 8.6% due to the Others 12.7 10.8 17.6% 12.2 9.7% global economic slowdown with Gross Loans 189.4 155.3 21.9% 171.2 21.2% growth for Singapore recording a Exc. BII 177.2 155.3 14.1% 171.2 7.0% 8.3% growth. 12
  • 13. Asset Quality • Net NPL ratio as at end-2Q09 further improved by 4 bps to 1.80% although Gross NPLs for international operations have started to rise. Domestic NPLs have stabilised in 2Q09 compared to 1Q09 although there is likelihood of NPLs rising in 2H09. Gross & Net NPL Ratio (%), Loan Loss Coverage Gross NPL Half Year YoY RM million Dec 07 Jun 08 Sep 08 Dec 08 Annualised Growth 99.2 100.2 99.8 Growth 83.6 87.2 Loan Loss Coverage 100.8 7 Excl. BII Domestic 7,506.0 6,066.0 6,128.2 5,900.8 -21.4% -5.4% 6.40 6 6.00 Securities 329.4 235.6 239.4 240.8 -26.9% 4.4% 5.30 Vehicles 148.4 113.9 138.0 137.1 -7.6% 40.6% 5.10 5 4.90 Residential 2,448.2 2,054.3 2,027.8 2,032.2 -17.0% -2.2% 5.12 4.80 Credit Card 52.0 39.5 40.7 43.1 -17.0% 18.4% 4 Construction 690.9 413.7 363.3 410.8 -40.5% -1.4% 3.20 3.00 3.76 Working 3 3.60 3.59 capital 2,673.4 2,583.6 2,729.0 2,442.8 -8.6% -10.9% 2.40 2.80 2.40 2.69 Overseas 503.5 406.5 781.0 926.6 84.0% 255.9% 2 2.43 1.92 1.84 1.80* Singapore 366.2 237.8 238.8 302.1 -17.5% 54.1% 1 Indonesia - - 396.7 384.9 n.m. n.m. 2Q08 3Q08 4Q08 1Q09 2Q09 Others 137.3 168.7 145.5 239.6 74.5% 84.0% Net NPL Ratio Gross NPL Ratio Group 8,009.5 6,472.4 6,909.2 6,827.4 -14.8% 11.0% Industry NPL Net NPL Ratio Industry NPL Gross NPL Ratio Group ex. BII 8,009.5 6,472.4 6,512.5 6,442.4 -19.6% -0.9% * Net NPL excluding BII for 2Q09 is 1.78% 13
  • 14. Customer Deposits • For 1H09, customer deposits for the Group grew 20.8% on annualised basis due to consolidation of BII (RM13.7b) and growth in Money Market and Structured Deposits. Customer deposits Composition of customer deposits 100% 100% 13.0% YoY 20.8% annualised 0.8% QoQ 80% 80% 204.6 206.6 200 185.2 187.1 182.8 60% 60% 41.9 41.8 47.8% 47.4% 48.2% 48.4% 48.0% 36.1 38.1 38.6 150 34.0 33.2 40% 40% 29.4 RM billion 29.4 28.4 13.9 15.4 15.3 13.3 35.8% 35.9% 36.4% 37.0% 36.3% 15.6 100 20% 20% 115.1 116.2 50 101.8 103.4 105.7 0% 0% Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 0 Savings Deposits Demand Deposits Dec 07 Mar 08 Jun 08 Sep 08 Dec 08 Money Market & Structured Deposits Fixed Deposits Fixed Deposits Money Mkt & Struc. Deposits CASA (Savings and Demand) Deposit from Individuals Savings Deposits Demand Deposits 14
  • 15. Capital Adequacy BANK 14% Core Capital Ratio RWCR Capital Adequacy 12% The Core Capital Ratio (CCR) and 12.32% 10% 11-12% 12.27% Risk Weighted Capital Ratio (RWCR) 10.19% 8% 11.09% of the Bank, based on credit and 8.99% 10.19% 6% 7-8% market risks now stands at 10.19% 4% The target CCR and RWCR remains at 2% 7-8% and 11-12% respectively. 0% Dec 08 Dec 07 Dec 08 Dec 07 Jun 08 Jun 08 Target Target GROUP 16% RWCR Core Capital Ratio 12% 14.49% 13.54% 13.32% 8% 10.60% 9.17% 8.13% 4% 0% Dec 08 Dec 07 Dec 08 Dec 07 Jun 08 Jun 08 15
  • 16. Maybank Group: Key Ratios 2Q09 1Q09 4Q08 2Q08 1H 09 1H 08 Dec 08 Sep 08 Jun 08 Dec 07 Dec 08 Dec 07 ● Net Interest Margin 2.71% 2.50% 2.81% 2.73% 2.71% 2.66% ● Net Return on Equity 14.6% 11.6% 18.7% 15.1% 13.2% 15.2% ● Fee to Income Ratio 32.0% 25.2% 41.0% 29.2% 29.1% 29.4% ● Adj. Fee to Income Ratio * 34.7% 29.5% 37.5% 31.9% 33.4% 32.4% ● Cost to Income 53.0% 60.0% 40.4% 46.5% 56.0% 46.9% ● Adj. cost to Income ** 48.2% 52.1% 40.6% 41.8% 49.2% 42.2% ● Loan-to-Deposit Ratio 88.4% 90.0% 88.1% 81.4% 88.4% 81.4% ● Asset Quality ● Gross NPL Ratio 3.59% 3.60% 3.76% 5.12% 3.59% 5.12% ● Net NPL Ratio 1.80% 1.84% 1.92% 2.69% 1.80% 2.69% ● Gross Reserve Coverage 99.8% 100.2% 99.2% 83.6% 99.8% 83.6% ● SP charge off rate (bps) 75 35 -6 # 33 56 ^ 34 ● Capital Adequacy (Bank) ● Core Capital Ratio 10.19% 10.76% 11.09% 8.99% 10.19% 8.99% ● Risk Weighted Capital Ratio 10.19% 10.76% 12.32% 12.27% 10.19% 12.27% * excluding unrealised loss on derivatives and one-off items related to BII. ** excluding insurance claims (cost) and unrealised loss on derivatives and and one-off items related to BII. # Before NPL sale = 29b ps ^ Excluding BII = 44bps 16
  • 17. Strategic Transformation Plan 17
  • 18. Maybank Aspirations By 2015… 1 Top 5 in South/Southeast Asia by size AND performance − Size defined by asset and market cap − Performance defined by CIR, ROE, TSR To be a leading 2 Undisputed leadership in Malaysia, across regional financial all high margin/profitable products/segments services group 3 Truly regional organisation, with ~40% of gross loans derived from international operations 4 Recognised for delivering innovative and superior value proposition to customers 5 Being among the top-quartile employer of talent in each of our markets 18
  • 19. Three Strategic Thrusts Strategic thrusts Key components 1 Undisputed leadership • Establish differentiated multi-specialist model and well-executed business in Malaysia across strategies: all attractive − #1 in Consumer, SME and Corporate Banking businesses products/ segments − Top 2, full-fledged Investment Bank (incl. Treasury) − Top 2 position in Insurance, Takaful and Asset Management − #1 in Islamic Banking 2 Strengthen regional • Capture full value from our current footprint, managing for above-market growth presence through market-specific approaches to capture value • Complement coverage in selected high-growth countries, in particular in China (selected provinces), India and GCC • Develop and capture emerging regional Islamic banking opportunities: – Near-term: Corporate/IB and Takaful – Mid-term: High-end Consumer/SME Banking 3 Become a talent • Assemble/build a leadership pool and pipeline to realise our aspirations and execution- • Establish highly effective performance and talent management processes focused company • Create a Group-wide performance culture 19
  • 20. Leap 30: Two Waves Wave 1 (Sep 2008 – Dec 2009) Wave 2 (Jan 2010 – Dec 2011) • 9 business initiatives • 8 business initiatives • 5 enabling initiatives • 1 enabling initiative • 6 talent initiatives • 1 talent initiative A total of 20 initiatives will be The remaining 10 initiatives launched in Wave 1 will be launched in Wave 2 ~ 150 people dedicated to these initiatives over the next 3 years 20
  • 21. Update on Strategic Transformation Plan In November 2008, Maybank refocused resources and management attention to realign Strategic Transformation Programme with immediate organisational needs to realise near term revenue impact & cost reduction in challenging economic conditions. Initiatives Objective Recent Progress • Launch tactical sales • Enhance consumer sales with • Launched pilot at 8 branches. Consumer stimulation tangible sales uplift captured in the first year of launch • Deepen share of Corporate • Enhance customer penetration with • Intensify Tactical Account Planning customers’ wallet improved wallet share for Corporate clients. Enterprise • Create a domestic • New tiered system for agency and • Increase in premiums to Etiqa Insurance champion full product range,. • Increase commission/fees to Insurance Maybank • Reduce procurement costs • Detailed spend analysis and quick win • Capex cost reduction/avoidance of identification RM60 million in this FY Cost • Category mapping of group spend Optimisation • Defining governance model and structuring central procurement unit • IT Projects Reprioritization • Ensure IT projects resources are • Cost reduction/avoidance of RM85 focused on delivering benefits million in this FY 21
  • 22. Update on Strategic Transformation Plan Critical enabling initiatives are in motion to support mid-long transformation efforts:- Initiatives Objective Recent Progress • MIS enhancement • Upgrade management information • Reprioritise to enhance performance Operation system management dashboards • Credit Collections • Tighten prevention mechanisms in • Pilot specific performance deteriorating economic conditions improvement measures targeted at Credit prevention • Upgrade performance • Build a pipeline of talent and • Group Talent Review Committee management leaders to achieve Maybank’s and Sectoral Review Committees • Launch talent management aspiration to be a talent and formed • Enhance leadership execution –based company; • Achieved ratio of 1:2 succession People development • And be among the top quartile plan coverage for Level 1 positions • Ramp-up external employer of talent in each of • Intensive improvement programme recruitment engine Maybank’s markets. for Performance Management • Embed core values in the launched way we work • Centralised Recruitment set up • Annual Talent Management calendar introduced 22
  • 23. Maybank – In A Position of Strength The Dominant Malaysian bank… … And An Emerging Regional Leader No. 1 Bank in Malaysia in assets and reach Diversified Pan-Asia platform No. 1 Islamic Bank in Malaysia in assets Presence in the highest growth markets Leading bank in most business segments Superior multi-channel distribution network Leadership in fast-growing Islamic banking Comprehensive portfolio of products and Continued momentum and robust services performance amidst current environment Proactive and conservative approach to capital management Solid financial strength One of the most recognized brand names Strong shareholder support and ratings Strong dividend track record Aspire to be The Undisputed Malaysian Leader and A Top 5 Bank in South and South East Asia 23
  • 24. Strategic Transformation Plan RM6.0 billion rights issue is an integral part of Maybank’s strategy to become one of the top 5 banks in South and South East Asia by size and performance by 2015 Strategic Transformation Plan 1 2 3 Strengthening core business Further strengthen capital base Putting in place an organisational and franchise via rights issue and corporate structure that ⎯ Achieve globally-benchmarked ⎯ Pre-emptive capital to provides greater strategic, operating metrics strengthen Maybank’s financial, and operational ⎯ Achieve leadership across all key capital base flexibility across the group segments of business ⎯ Widen Maybank’s competitive ⎯ Adopt a financial holding company ⎯ Capture value from positioning structure, subject to regulatory and new investments tax considerations and a final implementation plan ⎯ Improve synergies across the Maybank Group Implementation of LEAP 30 Rights Issue initiatives underway 24
  • 25. Rights Issue to Strengthen Franchise and Accelerate Growth Comprehensive one-time capital raise to provide sufficient capital to implement the Bank’s key strategic initiatives for the next 2-3 years 1 Domestic Franchise Focus on organic growth to establish undisputed leadership in Malaysia across all high margin products and segments: ⎯ #1 in consumer, SME and corporate banking business ⎯ #1 in Islamic banking ⎯ Top 2 in investment banking ⎯ Top 2 in insurance, Takaful and asset management Continually strengthen the Bank’s “anytime, anywhere” distribution capability Achieve superior operating metrics through productivity improvements and cost management 2 Regional Franchise Completed major strategic acquisitions Strong presence in Singapore, Philippines and Vietnam Strengthening leadership position in Islamic Banking Strengthening regional presence by capturing value from BII and MCB through participating in the Bank’s management and operations. Recent progress includes: ⎯ Strengthening key management positions at BII (CEO, COO, CFO) ⎯ Leveraging BII and MCB franchise to develop fee-based business such as investment banking 25
  • 26. Summary of Rights Issue Offer Type: Renounceable, fully underwritten rights issue Size: Approximately RM6.0 billion Offer No. of rights shares: Up to 2,197 million rights shares Structure Discount: 30% to 40% to the theoretical ex-rights price of the Shares Rights Ratio: 9 rights share for 20 existing shares Substantial Shareholder Commitment Issue ⎯ Irrevocable written undertakings to fully subscribe for its pro-rata entitlements by Permodalan Managers Nasional Berhad and its managed funds (55.7%, plus 20% excess shares commitment) Principal Advisor: Maybank Investment Bank; International Advisors : Goldman Sachs, Credit Suisse Financial Pro forma consolidated Core Equity1 ratio of up to 8.1% and Tier I ratio of up to 11.0% after the Impact rights issue (vs. consolidated Core Equity1 ratio of 5.2% and Tier I ratio of 8.1%), as at Dec 20082 Support Strategic Transformation Plan Rationale Enhance balance sheet and capital ratios Strengthen franchise and accelerate organic growth (1) Core Equity capital refers to Tier 1 capital less qualifying preferred and hybrid instruments (2) Based on unaudited December 2008 financials 26
  • 27. Resilient Franchise with Strong Fundamentals Well Capitalised Quality Loan Book Sound Investment Portfolio Tier I Capital Total Capital 99.2% 100.2% 99.8% 16.42% 13.54% 11.01% Other 3.78% 23% Govt. & govt- 8.13% 3.61% 3.60% linked Min Reg. Level = 8% Securities Local corporate 1.92% 1.84% 1.80% debt 55% Min Reg. Level = 4% 22% 2Q FY09 2Q FY09 2Q FY09 2Q FY09 4Q FY08 1Q FY09 2Q FY09 Total Portfolio = RM52,063 million 1 1 Pro Form a Pro Form a Gross NPL Net NPL Coverage Capital levels well above minimum Asset quality continues to show Government and government-linked regulatory requirements improvement securities comprise 55% of Loan coverage of 100% in line with Maybank’s investment portfolio conservative provisioning levels Significant portion of remaining portfolio consists of debt from the largest and most stable corporates in Malaysia Note: 2Q FY09 figures based on unaudited December 2008 financials (1) Pro forma capital ratios based on net proceeds under the minimum scenario and do not take into account impact on RWA from new proceeds 27
  • 28. Strengthening Balance Sheet and Capital Ratios Recent Fund Raising Exercise Capital Ratio Benchmarking1 Rights Issue 16.4% Up to RM 6.0 bn 15.5% 15.5% 14.8% 14.2% 13.7% 13.5% 14.4% 11.7% Total Capital Subdebt Raised 11.8% RM 15.1 bn 11.0% 11.2% RM 3.1 bn 9.5% 7.8% 8.3% 8.1% Hybrid Tier I RM 9.1 bn RM 2.5 bn 9.9% 10.6% already raised 9.3% 8.1% 7.4% 6.5% 6.8% 5.2% Non-Innovative Tier I RM 3.5 bn Maybank DBS UOB OCBC CIMB Public Maybank RHB 2 (PF) Jun 2008 Aug 2008 Nov 2008 Mar 2009 Total 3 Core Tier 1 Capital Tier 1 Capital Total Capital Preemptive capital raising exercise Maybank’s capital ratios will be best-in-class post rights issue, which strongly positions Maybank to capture market share and business opportunities (1) Based on latest available public data of 3Q08, except for Maybank and Public Bank, which are based on Dec 2008 data. Maybank Dec 2008 financials are unaudited (2) Pro forma capital ratios based on net proceeds under the minimum scenario and do not take into account impact on RWA from new proceeds (3) Core Tier 1 capital refers to Tier 1 capital less qualifying preferred and hybrid instruments 28
  • 29. Update on Bank Internasional Indonesia (“BII”), MCB Bank Ltd (“MCB”) and An Binh Bank (“An Binh”) …what has happened since 30 Sep 2008? Impairment treatment 30 Sep 2008 Maybank remains proactive in conducting an impairment review with regard to its Maybank held a 55.6% stake in BII, reporting RM2.9bn goodwill from recent acquisitions its acquisition The significant deterioration in the share price of BII and MCB and the current The Company also held a 20.0% stake in MCB which was impaired difficult economic environment globally, including in the countries where these by RM242m in Q1 2009 investments are, have given an indication of impairment in these investments. Subsequent to 30 Sep 2008 Accordingly we have undertaken the process of determining the recoverable amount based on FRS136 requirements. Maybank is committed to completing this Maybank entered into agreement with certain shareholders of BII to acquire additional 16.3% equity interest in BII at a price of Rp433 per process by our fiscal-year end (June 2009) and subsequently determining any share or c.RM1.26bn potential impairment charge relating to the acquisition in accordance with FRS 136: Impairment of Assets standards. 10 Oct 2008 The process for determining impairment for BII involves the computation of future Maybank held a total equity interest of 71.86% in BII for a total earnings cash flows on a long term basis, discounted at long term rates to arrive purchase consideration of RM5.52bn at a value-in-use determination. Such a computation is necessarily protracted as it involves the stabilisation of earnings potential which requires a detailed review Represents a reduction in price of c.RM987m from the previous and assessment by the management team which is still being assembled at BII, agreed price of Rp510 per share and the stabilisation of the interest rate term structure (for discounting purposes). 1 Dec 2008 A similar review of the carrying value of our 20% equity stake in MCB and 15% equity stake in An Binh is being undertaken the same methodology as described Post completion of tender offer, Maybank held a 97.5% equity interest in BII above. Estimated cost of tender offer of RM1.95bn Based on current available information, Maybank is confident that any impairment charge on the investments would not lead to a loss in net earnings ( profit after tax 27 Feb 2009 and MI) of the Group for the financial year ending 30 June 2009. This view is based on management’s current outlook on Maybank and its affiliates, based on Release of Dec 2008 financial results their current earnings trajectory and a set of assumptions in the discount rates BII fully consolidated in Maybank’s accounts and earnings growth potential specific to the respective countries these Increase of goodwill from BII acquisition from RM2.92bn to investments are in. However, should the economic environment deteriorate RM6.00bn beyond our current expectations or that there are unforeseen changes in circumstances, the abovementioned statement on full year profitability may be different. An impairment charge is a non-cash charge and does not affect the capital position of Maybank 29
  • 30. Effect Of Rights Issue Approvals Effects on NA & Gearing The Proposed Rights Issue is subject to the approvals of the following: (I) (II) (i) the Securities Commission (“SC”) for: Minimum Audited As at 30 After adjusted for After (I) and June 2008 certain material Proposed Rights (a) the Proposed Rights Issue; and transactions (1) Issue RM’000 RM’000 RM’000 (b) the listing of and quotation for the Rights Shares; (ii) Bursa Malaysia Securities Berhad for the listing of and quotation for the Rights Shares; Share capital 4,881,123 4,881,123 7,077,628 (iii) Bank Negara Malaysia for the increase in the issued and paid-up capital of Maybank; Non-distributable 6,290,874 6,290,874 10,089,758 the shareholders of Maybank at an Extraordinary General Meeting (“EGM”) to be convened; Distributable 8,130,496 7,888,496 7,888,496 and Total reserves 14,421,370 14,179,370 17,978,254 (iv) any other relevant authorities, if required. NA 19,302,493 19,060,493 25,055,882 Number of Shares 4,881,123 4,881,123 7,077,628 Effects on Issued and Paid-up Capital NA per Share (RM) 3.95 3.90 3.54 Borrowings 8,473,039 14,632,637 14,632,637 Shareholders’ funds 19,302,493 19,060,493 25,055,882 Minimum This scenario assumes that none of the outstanding ESOS options Scenario relating to approximately 33,784,000 new Shares which have been Gearing 0.44 0.77 0.58 granted to the directors and employees pursuant to the ESOS will be exercised (“Unexercised ESOS Options”) prior to the (I) (II) (III) Entitlement Date Maximum Audited As at After adjusted After (I) and After (II) and 30 June 2008 for certain exercise of Proposed Maximum This scenario assumes that the entire Unexercised ESOS Options material Unexercised Rights Issue (1) (2) Scenario are fully exercised prior to the Entitlement Date. transactions ESOS Options RM’000 RM’000 RM’000 RM’000 Minimum Scenario Maximum Scenario Share capital 4,881,123 4,881,123 4,914,907 7,126,615 No. of Shares No. of Shares ’000 ’000 Non-distributable 6,290,874 6,290,874 6,525,725 10,351,214 As at 30 June 2008 4,881,123 4,881,123 Distributable 8,130,496 7,888,496 7,888,496 7,888,496 Total reserves 14,421,370 14,179,370 14,414,221 18,239,710 (1) Upon exercise of Unexercised ESOS Options - 33,784 NA 19,302,493 19,060,493 19,329,128 25,366,325 4,881, 123 4,914,907 Number of Shares 4,881,123 4,881,123 4,914,907 7,126,615 To be issued pursuant to Proposed Rights Issue 2,196,505 2,211,708 NA per Share (RM) 3.95 3.90 3.93 3.56 After Proposed Rights Issue 7,077,628 7,126,615 Borrowings 8,473,039 14,632,637 14,632,637 14,632,637 Shareholders’ funds 19,302,493 19,060,493 19,329,128 25,366,325 Gearing 0.44 0.77 0.76 0.58 30
  • 31. Timeline 27 February 09 Announcement of rights issue Early March 09 Despatch of circular Mid March 09 Announcement of books closure date End March 09 EGM End March 09 Books closure date Despatch of abridged prospectus Early April 09 Commencement of Rights Trading period Early April 09 Cessation of Rights Trading Closing date of applications Mid April 09 Receipt of application monies End April 09 Listing of rights shares 31
  • 32. Conclusion Strategic Transformation Plan to strengthen our Malaysian leadership and become a top 5 bank in South and South East Asia Pre-emptive rights issue is the next step towards achieving the Strategic Plan ⎯ Further strengthen our franchise and core business ⎯ Allow focus on capturing market share and business opportunities ⎯ Enhance our balance sheet and capital ratios Our franchise is resilient despite the economic turmoil and the proposed rights issue will place us in an even stronger position for long-term growth 32
  • 33. Q&A 33