AmBank fast-tracking growth areas

By YAP LENG KUEN

THE AmBank group, which recently crossed its second year of partnership with the Australia and New Zealand (ANZ) banking group, is poised for further fast-tracking of its strong areas in retail, business and investment banking. ANZ has, to date, provided expert assistance in a number of areas including retail banking, risk management, channel development, product innovation and financial management, says AmBank chairman Tan Sri Azman Hashim. In fact, with the technical expertise of ANZ, a foreign exchange and derivatives unit had been set up and is expected to contribute to the new revenue sources of the group. Looking further, the 34-year-old AmBank group will have ample opportunities to leverage and expand its cross-border businesses, moving forward, with ANZs current regional footprint and the stronger strategic intent for growth in the Asia-Pacific. Azman sees a trend of increasing overseas expansion for local banks. This is especially so with competition heating up and saturation of the domestic market with the entrance of world-class players following the financial sector liberalisation. The groups current overseas presence is through AmInvestment Bank in Singapore, Brunei and Jakarta. In the longer run, we plan to increase contributions from our foreign operations via asset and wealth management businesses, Azman says. The Brunei operations were set up towards late last year and is in the midst of introducing sukuk and business advisory solutions while seeking an Islamic banking licence. The group is the fifth largest banking group by total assets and ranks fourth in retail banking. In investment banking, it is among the top five for funds under management, ringgit bonds, and mergers and acquisitions league tables. Under the groups medium-term aspirations, it aims to, among other things, double the 2007 profit after tax and enhance dividend payout to be at least on par with the industry average. We acknowledge that these aspirations will take longer to achieve given the material changes in the macro-economic conditions, Azman says. Nevertheless, the execution of strategic themes involving profitable growth and portfolio rebalancing since early last year has provided the group with a good headstart, he says.

In view of the current sluggish economic outlook, enhanced credit control, new risk scorecards and methodologies as well as collections and recoveries management will receive heightened focus in the coming year. The groups current focus is on domestic operations and growing its nationwide distribution network at a moderate pace with emphasis on faster growth of deposits and other income; sustained growth in lending as well as better sales and service capabilities. With a network of 187 branches, the group is backed by automated teller machines which are also installed at 7-Eleven outlets. In addition to weekend and extended hours banking, market reach is widened via the Internet and mobile banking as well as its 24-hour contact centre. Retail banking, in which the AmBank group has a strong brand franchise, aims to sustain growth via its focus on businesses with higher returns and superior customer service. Business banking, another strong area for the group, will look into the realigning of lending to more stable economic segments such as agriculture, oil and gas, medical, fast-moving consumer goods, the broad property sector and contract financing. Action plans are in place to conserve existing customer relationships and cautiously acquire new businesses, Azman says. Investment banking is being repositioned towards customerbased acitivities in the local and regional markets. These include cross-selling of institutional products, corporate and institutional lending, Islamic finance and Islamic fund management opportunities. In the debt capital market, focus will be on higher grade credit bond origination, utilities and infrastructure programmes. A new area, called relationship banking and regional business, aims for higher thrust into advisory work, retainer fees, fund-of-funds model (an investment fund that holds a portfolio of other investment funds), Islamic banking for international businesses and project financing for government support. The life insurance segment will focus on improving capital management and asset liability practices as well as sales and operational efficiencies. The general life insurance side will look into enhancements to customer segmentation analytics for the motor business, developing alternative channels for non-motor, rationalising the branch operating model and centralising work processes. The increase in equity from 19% to 49% in the general insurance arm, AmG Insurance Bhd, by Insurance Australia Group and the acquisition of 30% in the life insurance arm, AmLife Insurance Bhd, by Friends Provident plc are expected to bring about greater transfer of knowledge and skills.

In future, the banking industry is expected to grow in sophistication to be on par or better than the best international practices, says Azman. Among other things, these best practices include product and service innovation, income diversification, customer service excellence, information technology and automation.

AmBank banking on new products to boost deposit base

By SHANNEN WONG

AMBANK (M) Bhd hopes to grow its deposit base with the launch of three products Family First, AmStar Extreme and auto pay-win. Head of retail distribution Brad Gravell said the bank was currently putting up an integrated strategy to promote its new deposit products. This is to position itself as one of the top three banks for the current account segment in the next 12 months from sixth now.

Brad Gravell

We want the existing customers to choose us as their core bank for current and savings accounts, he told StarBiz. AmBank will next month launch the first phase transact and save of its Family First plan, which offers interest rate of 3.5% per annum.

We aim to help young families, specifically the low and middle-income group, to consistently save in minimum blocs of RM50, Gravell said, adding that over 6,000 had signed up for the plan even before the launch. Additionally, AmBank had recently re-launched its auto pay-win solutions, which help small and medium enterprises of 50 to 100 employees to manage their payroll processes. By providing this product, AmBank enabled small businesses to distribute payrolls through AmStar Extreme or other savings and current accounts in the bank, he said. In the last six months, AmBank posted 12% growth in its current account deposits. Currently, it has 1.9 million holders for current and savings accounts, out of 3.5 million in the retail segment. In line with its effort to grow deposit base in the retail market, AmBank is offering attractive discount packages for employees whose employer has chosen to use auto pay-win. AmStar Extreme offers account holders free first five cash withdrawals via the 8,000 Malaysian Electronic Payment System-linked automated teller machines and free first five funds transfer via online inter-bank Giro transactions every month. Meanwhile, the bank plans to partner some institutions to open full-fledged Islamic branches in Kuala Lumpur and Kota Baru by June. Currently, it has Islamic banks in Putrajaya and Bangi and a total of 186 branches nationwide. In the long term, it is particularly interested in the east coast states, especially Terengganu and Kelantan.