AMMB Holdings Bhd was listed on Bursa Malaysia in 1988. Over the past 30 years, it has matured into one of Malaysia’s leading financial institutions that offers a wide range of conventional and Islamic financial services to a diverse group of customers. Today, AMMB Holdings Bhd is worth RM 12.4 billion in market capitalization. Here, I’ll list down 7 key things that you need to know AMMB Holdings Bhd before you invest.
#1: Stock Symbol
Ticker Symbol: KLSE: AMBANK / KLSE: 1015
Market Capitalization: RM 12.4 Billion (16 March 2018)
Share Price: RM 4.12 (16 March 2018)
Syariah Compliant: Nope
#2: The Business
AMMB Holdings Bhd derives income from the following business segments:
- Corporate & Commercial Banking
This division offers corporate clients services such as trade financing, offshore banking, and cash management solutions. This segment has made RM 2.64 billion in operating revenue in 2017, thus, is currently the main sales contributor as it accounted for 32% of the total operating revenue of AMMB Holdings Bhd.
- Retail Banking
This division offers individual and small business customers financial solutions such as mortgages, auto finance, personal loans, credit card, small business loans, and wealth management services. This segment has made RM 2.50 billion in operating revenue in 2017. It is presently the second largest revenue contributor as it accounted for 30% of the total operating revenue of AMMB Holdings Bhd.
This includes the provision of life and medical insurance, Takaful, and as well as a wide range of general insurance products such as household and property, motor and personal accident. In 2017, this segment has made RM 1.64 billion in operating revenue. It is the third largest sales contributor as it accounted for 20% of the total operating revenue of AMMB Holdings Bhd.
The three segments had accounted for 82% of total operating revenue made by AMMB Holdings Bhd. The remaining 18% consists of sales derived from investment banking activities, global markets, and fund management.
#3: Financial Results
I’ve compiled the financial results of AMMB Holdings Bhd over 10 years and discovered:
- Operating Revenue
AMMB Holdings Bhd has grown its operating revenue from RM 6.01 billion in 2008 to RM 9.61 billion in 2014. Since then, sales had fallen to RM 8.29 billion in 2017. This was caused by a continuous decline in net interest income, income from Islamic Banking, insurance income and fee & commission income over the last three years.
- Shareholders’ Earnings
AMMB Holdings Bhd has grown its shareholders’ earnings from RM 668.5 million in 2008 to RM 1.78 billion in 2014. In 2015, the financial institution has reported RM 475.9 million in disposal gains of equity interests in AmMetLife, AmMetLife Takaful and AmFraser Securities Pte Ltd. This has caused it to report RM 1.92 billion in shareholders’ earnings in 2015. However, in tandem with lower operating revenue, AMMB Holdings Bhd has reported lower shareholders’ earnings of RM 1.30 – 1.35 billion in 2016 and 2017.
Source: Annual Reports of AMMB Holdings Bhd
#4: Asset Strength
I’ll look into three things:
As at 31 December 2017, AMMB Holdings Bhd has reported having RM 93.7 billion in loans, advances and financing assets where RM 1.68 billion of these assets are gross impaired. Thus, its gross impaired loan (GIL) ratio works out to be 1.77%, an improvement from 1.86% as at 31 March 2017. A low GIL ratio indicates a superior quality of a bank’s financing assets as the bank has lower customers that default on their borrowings.
Total Capital Ratio
As at 31 December 2017, AMMB Holdings Bhd has capital adequacy ratio of 16.1% which is above the minimum of 8% set by Bank Negara Malaysia. This indicates that AMMB Holdings Bhd is financially adequate to prepare for a financial crisis if it happens in the future.
Loan Loss Coverage
As at 31 December 2017, AMMB Holdings Bhd has reported having 101.6% in loan loss coverage. This means, AMMB Holdings Bhd is financially ready to mitigate losses arising from loan defaults if it happens in the future.
As I write, AMMB Holdings Bhd is trading at RM 4.12 a share.
Over the last 12 months, AMMB Holdings Bhd has reported generating RM 1.21 billion in shareholders’ earnings (Q4 2017 to Q3 2018). It has issued 3.07 billion ordinary shares. Thus, AMMB Holdings Bhd has generated RM 0.404 in earnings per share. At a current stock price of RM 4.12, its current P/E Ratio works out to be 10.20.
As at 31 December 2017, AMMB Holdings Bhd has reported having RM 5.41 in net asset value a unit. Thus, its current P/NAV works out to be 0.76.
In 2017, AMMB Holdings Bhd has paid out 17.6 sen in dividends per share. If AMMB Holdings Bhd is able to maintain dividends at 17.6 sen a share, hence, I would expect a gross dividend yield of 4.27% in 2018 if I invest in this stock at RM 4.12 a share.
#6: Investors Relation
For further enquiries or to request for additional investment information on AMMB Holdings Bhd’s Investors Relation matters, you may contact:
Ganesh Kumar Nadarajah
Executive Vice President, Group Finance
– Business Performance & Investor Relation
Telephone: +603 2036 1435
Chelsea Cheng Chuan Shing
Senior Vice President, Group Finance
– Business Performance & Investor Relation
Telephone: +603 2036 1425
#7: Major Shareholders:
As at 29 December 2017, the main shareholders of AMMB Holdings Bhd are:
– Australia and New Zealand Banking Group Ltd: 23.8%
– AmCorp Group Bhd: 13.0%
– Employee Provident Fund Board: 9.6%
Tan Sri Azman Hashim is a substantial shareholder of AMMB Holdings Bhd via his interest in AmCorp Group Bhd. Currently, Tan Sri Azman Hashim is appointed as Chairman of AMMB Holdings Bhd and has already served as a director of the banking group for 26 years.