Friday 21 Jun 2024
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This article first appeared in The Edge Malaysia Weekly on September 11, 2023 - September 17, 2023

AMMB Holdings Bhd group CEO Datuk Sulaiman Mohd Tahir (pictured) will be leaving the country’s sixth-largest banking group by assets after eight years at the helm, sources say. His contract is understood to be expiring in November.

“The bank is starting to look at options for his replacement, which could be an internal or external candidate,” one of the sources tells The Edge.

When contacted for comment, an AMMB spokesman says: “Should there be any significant announcement, rest assured it will be communicated through the appropriate channels, in accordance with disclosure requirements.”

Sulaiman, 60, was appointed to the role on Nov 23, 2015, taking over from Ashok Ramamurthy. Prior to joining AMMB, he was CEO of CIMB Bank Bhd.

He joined AMMB the day the banking group was hit with a hefty RM53.7 million penalty from Bank Negara Malaysia for compliance breaches in relation to its dealings with the now-defunct 1Malaysia Development Bhd (1MDB) and its subsidiaries.

Sulaiman immediately got down to work, launching a four-year transformation plan aimed at putting the group on a more solid foundation to move forward. Under that plan, the group successfully eased its decades-long focus on large corporates, turning instead to mid-sized corporates and SMEs (small and medium enterprises) for growth.

He then set out on a new four-year growth plan, known internally as “Focus 8” because of its eight areas of focus, ultimately aimed at achieving a return on equity (ROE) of at least 10% by its conclusion in the financial year ending March 31, 2024 (FY2024).

In February 2021, AMMB was dealt a major setback, shocking the market with news that it would be paying a massive RM2.83 billion to the Malaysian government as a global settlement over the 1MDB scandal. This led to it posting a net loss of RM3.83 billion in FY2021.

The group has since manoeuvred itself back on a strong foundational footing, making a net profit of RM1.74 billion in FY2023, from RM1.5 billion in FY2022, and reaching the targeted ROE of 10% one year earlier than expected.

It also managed to restore its common equity tier 1 capital ratio — a key measure of a bank’s financial strength — to 12.1% as at FY2023, after it had sunk to 10.4% in FY2021, owing to the losses incurred from the settlement. In 1QFY2024, CET-1 stood at 12.59%.

“He [Sulaiman] has been firefighting since the day he joined,” remarks a senior banking analyst with a local brokerage who describes the CEO as “very hardworking”.

“His rebuilding of AMMB’s profitability and ROE after the 1MDB [settlement] is admirable. He is also very focused on cost saving.”

Challenges are growing, though. Last month, the group reported a 1QFY2024 net profit that declined 7.8% year on year to RM378.37 million as net impairment charges rose, owing to higher provisions. Its annualised ROE stood at 8.3%. Analysts nevertheless deemed the performance to be within their expectations because they expect earnings to improve in the following quarters, as provisions are likely to ease.

AMMB’s share price has shed 4.8% over the last 12 months to close at RM3.67 on Friday, giving the lender a market capitalisation of RM12.15 billion. Bloomberg data shows that of 16 analysts, 10 have a “buy” call while five have a “hold” and one, a “sell”.  The average 12-month target price was RM4.13.

“We believe its current fundamentals are highly supportive of healthier discussions for mergers and acquisitions, which have been frequently considered in the past. The group is also one of the leaders in terms of SME profile, which is touted as a high-growth segment that could accelerate market share growth for it,” says Kenanga Research in a research note last week.

Australia and New Zealand Banking Group Ltd is the single-largest shareholder of AMMB, with a 21.66% stake, followed by founder and former chairman Tan Sri Azman Hashim (10.89%) and the Employees Provident Fund (10.02%). 

 

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