Presentation to the Shareholders of Maybank
Extraordinary General Meeting
23 March 2009
Maybank – In A Position of Strength
The Dominant Malaysian bank…
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No. 1 Bank in Malaysia in assets
and reach
No. 1 Islamic Bank in Malaysia in
assets
Leading bank in most business
segments
Superior multi-channel
distribution network
Comprehensive portfolio of
products and services
Proactive and conservative
approach to capital management
One of the most recognized
brand names
Strong shareholder support and
ratings
Strong dividend track record
… and A Talent and Execution
Focused Company
… An Emerging Regional Leader…
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Diversified Pan-Asia platform
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A leadership pool and talent
pipeline to realise our aspirations
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Presence in the highest growth
markets
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Highly effective performance and
talent management processes
Leadership in fast-growing
Islamic banking
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A Group-wide performance culture
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Continued momentum and robust
performance amidst current
environment
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Solid financial strength
Aspire to be The Undisputed Malaysian Leader
and A Top 5 Bank in South and South East Asia
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Implementation of LEAP 30
Wave 1 (Sep 2008 – Dec 2009)
Initial 20 initiatives
Initiatives
Consumer
Enterprise
• Launch tactical sales stimulation
Objective
• Enhance consumer sales with tangible sales
uplift captured in the first year of launch
• Deepen share of Corporate
• Enhance customer penetration with improved
customers’ wallet
• Create a domestic Insurance
• Reduce procurement costs
• New tiered system for agency and full product
range
• Detailed spend analysis and quick win
•
•
Cost
Optimisation
Recent Progress
• Launched pilot at 8 branches
• Target RM11 mil PBT uplift by this FY
• Launched 4 of 8 rounds of tactical account
wallet share
champion
Insurance
Operation
Wave 2 (Jan 2010 – Dec 2011)
Remaining 10 initiatives
identification
Category mapping of group spend
Defining governance model and structuring
central procurement unit
planning. Target RM26.9 mil PBT uplift by this
FY
•
•
•
•
Increase in premiums to Etiqa
Target RM 989 mil by this FY
Increase commission/fees to Maybank
Target RM58 mil by this FY
• Capex cost reduction/avoidance of RM60 million
in this FY
• Cost reduction/avoidance of RM85 million in
• IT Projects Reprioritisation
• Ensure IT projects resources are focused on
• MIS enhancement
• Upgrade management information system
• Reprioritise to enhance performance
• Credit Collections
• Tighten prevention mechanisms in deteriorating
• Pilot specific performance improvement
delivering benefits
this FY
management dashboards
economic conditions
Credit
measures targeted at prevention
• Pilot Collections centre operationalise by end
June 09
People
•
•
•
•
•
•
Upgrade performance management
Launch talent management
Enhance leadership development
Ramp-up external recruitment engine
Embed core values in the way we work
Launch PMO (completed)
• Build a pipeline of talent and leaders to achieve
•
Maybank’s aspiration to be a talent and execution
–based company
And be among the top quartile employer of talent
in each of Maybank’s markets
• Group Talent Review Committee and Sectoral
Review Committees formed
• Achieved ratio of 1:2 succession plan coverage
for Level 1 positions
• Intensive improvement programme for
Performance Management launched
• Centralised Recruitment set up
• Annual Talent Management calendar introduced
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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
„ Strengthening core business
and franchise
⎯
Achieve globally-benchmarked
operating metrics
⎯
Achieve leadership across all
key segments of business
⎯
Capture value from
new investments
⎯
Improve synergies across the
Maybank Group
Implementation of LEAP 30
initiatives underway
2
„ Further strengthen capital
base via rights issue
⎯
Pre-emptive capital to
strengthen Maybank’s
capital base
⎯
Widen Maybank’s
competitive positioning
3
„ Putting in place an
organisational and corporate
structure that provides greater
strategic, financial, and
operational flexibility across
the group
⎯
Adopt a financial holding
company structure, subject to
regulatory and tax
considerations and a final
implementation plan
Rights Issue
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Summary of Rights Issue
„ Offer Type: Renounceable, fully underwritten rights issue
„ Size: Approximately RM6.0 billion (US$1.6 billion)
Offer
„ No. of rights shares: Up to 2,212 million rights shares
Structure
„ Issue Price: RM2.74 representing a discount of 34.4% to the theoretical ex-rights price of the Share
„ Rights Ratio: 9 rights share for 20 existing shares
„ Substantial Shareholder Commitment
Shareholder
Support
⎯
Written irrevocable undertaking to fully subscribe for its pro-rata entitlements by Permodalan
Nasional Berhad and its managed funds of a combined stake of 55.7%, plus 20% excess shares
commitment, and written undertaking by Employees’ Provident Fund of its entitlement stake of
13.7%1, which represents a significant combined shareholder support of approximately 89.4%.
„ Maybank Investment Bank: Financial Advisor, Joint Global Coordinator and Joint Lead Manager
Issue
Managers „ MIDF Amanah Investment Bank and RHB Investment Bank: Joint Lead Underwriters
„ Goldman Sachs & Credit Suisse: Joint Global Coordinators and Joint International Lead Managers
Financial
Impact
„ Pro forma consolidated Core Equity2 ratio of up to 8.1% and Tier I ratio of up to 11.0% after the
rights issue (vs. consolidated Core Equity1 ratio of 5.2% and Tier I ratio of 8.1%), as at Dec
20083
„ Support Strategic Transformation Plan
Rationale „ Enhance balance sheet and capital ratios
„ Strengthen franchise and accelerate organic growth
(1) Subject to share price not falling below RM2.74 per share
(2) Core Equity capital refers to Tier 1 capital less qualifying preferred and hybrid instruments
(3) Based on unaudited December 2008 financials
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Strengthening Balance Sheet and Capital Ratios
Capital Ratio Benchmarking1
Recent Fund Raising Exercise
Rights Issue
RM 6.0 bn
16.4%
15.3%
15.1%
14.9%
Total Capital
Raised
RM 15.1 bn
Subdebt
RM 3.1 bn
11.0%
10.9%
10.1%
13.9%
12.4%
8.1%
11.0%
9.0%
8.1%
8.0%
8.1%
8.5%
7.1%
5.2%
Aug 2008
Nov 2008
Mar 2009
MBB
Total
2
UOB
OCBC
Core Tier 1 Capital
„
13.5%
10.8%
Non-Innovative
Tier I
RM 3.5 bn
Jun 2008
13.7%
8.3%
RM 9.1 bn
already
raised
Hybrid Tier I
RM 2.5 bn
14.0%
Pre-emptive capital raising exercise
„
DBS
CIMB
Public
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Tier 1 Capital
MBB
RHB
Total Capital
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, Public Bank, CIMB, RHB, and the Singapore Banks, 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
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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
Financial Centres
Country Presence
Shanghai
Malaysia
Hong Kong
Singapore
Bahrain
Indonesia
London
Philippines
New York
Vietnam
Cambodia
Brunei Darussalam
Papua New Guinea
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
„
„
„
„
Pakistan
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
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Effects Of The Rights Issue (Based on Minimum Scenario)
Share Capital
4,881.12 million shares
Up to 7,077.63 million shares
Net Assets
RM3.90 per share
RM3.54 per share
Gearing
0.77 times
0.58 times
ƒ
No material effect on earnings for FYE 30 June 2009. However, the EPS will be reduced as
a result of the increase in the number of shares post completion of the Proposed Rights
Issue.
ƒ
No effect on the shareholdings of the Company's substantial shareholders except for the
proportionate increase in the number of shares held following the Proposed Rights Issue.
ƒ
ƒ
Depends, amongst others, on the profitability and cash flow position of the Maybank Group.
Earnings
Substantial
Shareholdings
Dividends
Capital Adequacy
Ratio
Going forward, commitment to the long term dividend payout ratio of 40% to 60% of profit
attributable to shareholders, subject to approval by Bank Negara Malaysia.
Core capital
Risk weighted capital
8.1%
13.5%
Core capital
11.0%
Risk weighted capital
16.4%
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Recent Rights Issues Of Financial Institutions
Financial
Institutions
Date
launched
Date of
listing
Issue size
Ratio
USD’billion
Issue
price
Price
before
announce
ment
Discount
to last
price
TERP
Discount
to TERP
USD
USD
%
USD
%
Maybank
27-Feb-09
Ongoing
1.65
9 for 20
0.75(1)
1.32(2)
43.2%
1.14(3)
34.4%
HSBC Holdings
02-Mar-09
Ongoing
17.70
5 for 12
3.66
6.98
47.5%
6.00
39.0%
Bank Danamon
Indonesia
18-Feb-09
Ongoing
0.34
68 for 100
0.10
0.19
46.7%
0.15
34.2%
Shinhan Financial
Group
02-Feb-09
Ongoing
1.13
0.145 for 1
11.90
20.18
41.1%
15.86
25.0%
DBS Group
Holdings
22-Dec-08
02-Feb-09
2.64
1 for 2
3.58
6.50
45.0%
5.53
35.2%
Standard
Chartered
10-Nov-08
23-Dec-08
2.70
30 for 91
5.62
10.94
48.7%
9.62
41.6%
Banco Santander
10-Nov-08
04-Dec-08
9.76
1 for 4
6.10
11.31
46.0%
10.26
40.6%
For comparison, all local currencies are translated into USD based on the following rates as at 20 March 2009:
Ringgit Malaysia
USD1:RM3.645
Indonesian Rupiah
USD1:IDR11,815.00
Korean Won
USD1:KRW1,412.25
Singapore Dollar
USD1:SGD1.5147
Euro
USD1:EUR0.7377 (8.15pm)
British Pound Sterling USD1:GBP0.694 (8.15pm)
Notes:
(1) RM2.74
(2) RM4.82
(3) RM4.17
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Rights Issue Discount
12,000
7.0
6.0
Last
High
Low
Average
4.36
5.70
3.98
5.11
Date of Announcement
27-Feb-2009
10,000
5.0
8,000
4.0
37.2%
Discount
6,000
3.0
Issue Price = RM2.74
Volume ('000)
Closing Price (MYR)
Last Close (20-Mar-09) = RM4.36
4,000
2.0
2,000
1.0
0.0
02-Jan-09
0
20-Jan-09
11-Feb-09
27-Feb-09
18-Mar-09
Daily from 02-Jan-2009 to 20-Mar-2009
Volume
ƒ
Maybank
The Rights Issue price of RM2.74 still represents a sizeable discount of 37.2% to the last closing price of
RM4.36 as at 20 March 2008.
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Update on the regulatory approvals required
ƒ
ƒ
Securities
Commission
To implement the Rights Issue
For a waiver from providing the underwriting arrangement in
respect of the Employee Provident Fund Board’s entitlement of
the Rights Issue
ƒ
For a waiver from the requirement for Maybank IB to act as an
underwriter
ƒ
To allow Maybank to announce the book closure date for the
Rights Issue prior to the EGM
Obtained on
6 March 2009
Obtained on
6 March 2009
Bursa Malaysia
Securities Berhad
ƒ
The listing of and quotation for the Rights Shares
Bank Negara
Malaysia
ƒ
To increase Maybank’s issued and paid-up capital of Maybank
pursuant to the Rights Issue
Shareholders of
Maybank
ƒ
To implement the Rights Issue
Obtained on
12 March 2009
Obtained on
18 March 2009
Pending approval from
shareholders
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Targeted Timeline of Rights Issue
27 February 09
ƒ Announcement of rights issue
6 March 09
ƒ Despatch of circular
19 March 09
ƒ Announcement of books closure date
23 March 09
ƒ EGM
2 April 09
7 April 09
14 April 09
21 April 09
30 April 09
ƒ Books closure date
ƒ Despatch of abridged prospectus
ƒ Commencement of Rights Trading period
ƒ Cessation of Rights Trading
ƒ Closing date of applications
ƒ Receipt of application monies
ƒ Listing of rights shares
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Conclusion
„
Strategic Transformation Plan to strengthen our Malaysian leadership and become a top 5
bank in South and South East Asia
„
Successful Implementation of LEAP 30 is the first step of the Strategic Plan
„
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
„
The Rights Issue will place us in an even stronger position for long-term growth
The Board is of the opinion that the Rights Issue is in the best interest of Maybank
and the shareholders.
Hence, the Board recommends that you vote in favour of the Rights Issue.
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Questions raised by Minority Shareholder Watchdog Group
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Q1:
Why the potential BII impairment losses have not been accounted
for to date?
Reply
ƒ
ƒ
ƒ
ƒ
Maybank is committed to completing this process by FYE June 2009.
Impairment based on FRS 136: Impairment of Assets.
Value-In-Use will be based on future long term cash flows, discounted at
long term rates and not referenced to the stock market price of BII.
Computation will involve:
- stabilisation of earnings potential
- cashflow projections
- stabilisation of the interest rate term structure
ƒ
ƒ
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New management team for BII has been appointed at its EGM on 20 March
2009.
Impairment charge is non-cash and does not affect the capital position of
Maybank.
Our cash and liquid reserves remain robust.
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Q2:
How much capital commitment is expected to be involved in the
outstanding proposals pending completion?
Reply
Proposal
Current status
Capital commitment
Acquisition of additional charter capital of An
Binh Bank
Pending approval from the
Vietnam’s authorities
VND400 million or
RM84 million
MOU between Maybank and ICD
Pending implementation
Maybank has not
committed any
capital
Family Takaful business in Pakistan
Pending completion
PKR150 million or
RM7 million
Subordinated bonds issuance of up to
USD1.0 billion and/or its equivalent
Deferred. Approval from the
SC has lapsed
Maybank has not
committed any
capital
The total capital commitment highlighted is approximately RM91 million.
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Q3:
With the undertakings from substantial shareholders, what would
be the likely free float in the public spread post Rights Issue?
Reply
Assuming 89.4% of the rights shares will be taken up by:
i)
Permodalan Nasional Berhad (“PNB”);
ii) units trust schemes managed by Amanah Saham Nasional Berhad (“Schemes”); and
iii) Employees Provident Fund Board (“EPF”).
As at 25.02.2009
After the Proposed Rights Issue
(%)
No of
shares
(million)
Market Value
(RM million)(b)
(%)
No of
shares
(million)
Market Value
(RM million)(c)
Public spread(a)
44.3
2,162
8,821
38.1
2,696
9,873
Free float
30.6
1,494
6,096
24.4
1,727
6,323
Domestic retail free float
10.7
522
2,130
8.5
602
2,203
The free float in number of shares will be higher post Rights Issue
(a)
(b)
(c)
Includes EPF as permitted under the Listing Requirements of Bursa Securities but excludes PNB and the Scheme
Based on the closing price of Maybank shares as at 18.3.2009 of RM4.08 per share
Assuming market capitalisation of approximately 25,914 million (after taking into account the RM6.0 bil to be raised)
17
Q4:
Please clarify the Group’s gearing position as it would increase
from 0.44 times to 0.58 times.
Reply
ƒ
ƒ
ƒ
As at 30 June 2008
After raising funds
totalling RM9.1 billion
After completion of
Rights Issue
0.44 times
0.77 times
0.58 times
The CAR reflects strength of financial institutions; not the conventional
gearing computation.
Post Rights, Maybank’s core capital and risk weighted capital ratios
increase to 11.0% and 16.4% respectively.
Maybank’s capital position will be the best-in-class post rights, allowing it
to capture growth opportunities.
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Q&A
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THANK YOU
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