Highlights

• Management stressed that the group will comply with all rules and regulations and will give full cooperation to authority in a transparent manner if the need arise.

• It is not aware of any investigations or broader implications to the group (the latter in response to question about licensing) and assured that announcement will be made immediately if there are any developments or investigations.

• These news reports have not resulted in any impact to its operations and deposits base. Or in short, it is Business As Usual (BAU).

• Given that the company is already in the close period for its 1QFY03/16 results (scheduled to be released during the third week of Aug), it decline to comment on the results but highlighted that overall operations are tracking in line with its FY16 KPIs.

• As for deposits competition, post implementation of LCR in Jun, it has seen return of stability The search for a new Group MD is now progressing to the stage of shortlisting selected candidates. 

• On question about ANZ’s 23.8% stake in the company, management highlighted that ANZ’s senior management are in AMMB’s Board at both the holding and subsidiary levels. They are very much involved in the group with monthly meetings.

Comments

• While management tried to address concerns arising from recent news reports, it is bounded by regulation and is not able to reveal much information.

• However, these negative reports are likely to continue impact share price performance in the short term, until clarity emerged.

Risks

• Unexpected jump in impaired loans, lower than expected loan growth and impact from lower capital markets activities.

Forecasts

• Unchanged.

Rating

HOLD

• Positives - Value propositions from ANZ have improved asset quality and risk management. Recent mergers and life insurance partnership to enhance long-term recurring noninterest income.
• Negatives - Still searching for new leader, high LD ratio, relatively high earnings sensitivity to capital markets and slow asset growth arising from portfolio rebalancing towards lower risk segments.

Valuation

• Maintain Hold and target price of RM6.21 based on Gordon Growth (ROE of 11.9% andWACC of 10.7%).