Shake-up at the top in AMMB

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KUALA LUMPUR: A major shake-up at the top level of AmBank Group is on the cards as the banking industry braces itself for a tough 2015.

Sources said the banking arm of AMMB Holdings Bhd (fundamental: 1.7 ; valuation: 3.0) will soon see the departure of its group managing director (MD) Ashok Ramamurthy, MD for wholesale banking coverage Pushpa Rajadurai, and AmInvestment Bank MD/chief executive officer for wholesale banking products Kok Tuck Cheong.

“Some of the changes will likely be announced as early as end of this week,” a source said.

At press time, AMMB had yet to respond to questions posed.

Banking analysts when contacted said they were unaware of anything brewing. “This is quite surprising. The market’s perception is that the team, with Ashok leading it, has done a good job so far based on the numbers,” said a banking analyst. “NPL (non-performing loan) ratios have come down, they have improved cost efficiency; deposit base has improved and ROE (return on equity) has increased.”

Sources said a myriad of issues surrounding the business were behind the upcoming changes.

Most recently, AmInvestment was supposed to arrange a RM8.4 billion sukuk bond for 1Malaysia Development Bhd (1MDB) to finance its 3B power project but this has been called off. AmInvestment, together with Goldman Sachs, arranged the first bond issue amounting to RM5 billion for 1MDB in 2009.

Ashok joined the local banking group in 2007 as a representative of Australia and New Zealand Banking Group Ltd (ANZ) and was chief financial officer (CFO) in the same year the Australians emerged as a strategic partner and major investor of AMMB.

In October 2008, Ashok was appointed to hold dual roles as deputy group MD and CFO and succeeded veteran banker Cheah Tek Kuang as group MD of AMMB when the latter retired on April 1, 2012.

Meanwhile, Pushpa and Kok have had long careers in AmBank Group. The two have been working in the local banking group for over two decades and have spent most of their careers in the investment banking arena.

Today, ANZ is the single largest shareholder of AMMB with its 23.75% stake. The entry of ANZ has also boosted AmBank Group’s product base, strengthened its business policies and improved its asset quality.

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Aside from ANZ’s stake, the Employees Provident Fund has a 14.5% stake in the group, while AmBank Group chairman — Tan Sri Azman Hashim — has a 12.97% stake.

For the six months ended Sept 30, 2014 (1HFY14), AMMB’s net profit rose 11% year-on-year (y-o-y) to RM1.048 billion. In notes accompanying the results, AMMB said the improvement in earnings was also due to other higher operating income of RM392.8 million and other lower operating expenses of RM81.8 million.

As for the full financial year ended March 31, 2014 (FY14), AMMB saw its net profit rising 10% (y-o-y) to RM1.78 billion.

The stock ended three sen down yesterday at RM6.57, giving it a market capitalisation of RM19.8 billion.

 

The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company’s financial dashboard.

 

This article first appeared in The Edge Financial Daily, on January 29, 2015.