This article first appeared in The Edge Malaysia Weekly on November 13, 2023 - November 19, 2023
THOUGH passionate about banking, AMMB Holdings Bhd’s (AmBank Group) Datuk Sulaiman Mohd Tahir likes to quip that he will be moving to greener pastures once he retires as group CEO. His last day is Nov 22.
“I want to try to do other things. I say I’m moving to greener pastures because I have got a small plantation in Nilai. It’s an orchard with rambutan, pulasan and durian trees. Previously, I’d get a gardener to see to it, but now maybe I can be more hands on,” he tells The Edge.
“But this is more of a part-time thing to do, a hobby. I feel I still have room to contribute to the country, to the corporate world. I do have a few queries [about job interest] coming my way. This is something I will explore.”
For now, though, after having spent a roller-coaster eight years with the group, navigating the highs and lows — the latter including a RM2.83 billion cash payment to the Malaysian government in 2021 as a global settlement over its historical dealings with 1MDB and related entities — Sulaiman wants to take a break before deciding on his next step. He offers no clues to the sectors he is interested in.
“I do want to take a bit of a break and take charge of my life after having taken charge of the bank all these years. Decide what I want to do and when I want to do it,” he says.
Sulaiman, who turned 60 in January, was appointed to the role on Nov 23, 2015, taking over from Ashok Ramamurthy. Prior to joining the group, he was the CEO of CIMB Bank Bhd.
He has over 38 years of banking experience, having risen up through the ranks. “I have been a branch manager, a regional manager, a corporate banking officer and been through five or six integrations of banks. I love banking. It’s a complicated thing to do but it’s what I enjoy doing.”
His happiest moment was achieving the targets set under his Focus 8 strategy, including a return on equity of 10%, in the financial year ended March 31, 2023 (FY2023) — one year earlier than the plan’s conclusion.
“We hit all the goals earlier than we expected, despite the challenges, and we got our ratings back. Whatever was needed to shape the bank has now been completed,” Sulaiman says.
Below are excerpts from The Edge’s exclusive interview with him.
The Edge: Datuk, tell us the reasons behind your leaving.
Datuk Sulaiman Mohd Tahir: My contract was renewed every three years. At my last contract renewal in 2021, I asked the board for two years instead of the usual three, given that I would be turning 60 in January 2023. In the normal course of business, people usually retire at 60, so I wanted to give the bank the chance to make that call.
Furthermore, my Focus 8 strategy comes to an end on March 31, 2024 (FY2024), and I thought if I retired sometime at the end of November 2023, it would give the new CEO the chance to work out a new strategy, which is going to start on April 1, 2024. Had I retired in 2024, it would have been like I’m sitting in on one new year of strategy, which I am crafting but not staying for.
So, you’re saying the decision to leave was yours?
Yes. I’m happy [to leave], by virtue of the fact that I’ve done what I needed to do, and what was tasked of me over the last eight years. And, because of that, I believe the bank is now on a good, clean platform.
Is there anything in your Focus 8 strategy that will not be achieved by the time March 31, 2024 comes around? We have seen global growth and markets slowing, so would anything need more time?
I honestly wish I could have done better in SME (small-to-medium enterprises) and even in retail lending, in selective products. But Covid-19 was a bit of a setback for us. Two years of not much activity because shops were closed, lending was not really there, so that set back the entire industry. But there’s a lot more focus on asset quality, which we are managing very well. If only we hadn’t had that distraction, from a market share perspective, we would have done much better, I think.
So, as at FY2023, you’ve met all your Focus 8 targets one year ahead of time?
Yes. In fact, not just met, but gone beyond that.
Apart from AmMetLife Insurance Bhd and AmMetLife Takaful Bhd, was there any other non-core business lined up for potential divestment?
No, nothing else.
There has always been speculation about the sale of your asset management business.
Asset management (AM) is a high ROE (return on equity) business, it’s very accretive, we make good fees, so the question is, how do we scale it up? It’s not about disposal, it’s about partnerships — either from a shareholding perspective or from a partnership that we have with AM companies that are big and wanting to have a presence in Malaysia.
So the idea is to keep the business but grow it with a partner?
Yes. External partners who can then improve our product range. But things like insurance companies are a drag on our ROEs. High investments, the returns are lower and it’s getting very competitive, with challenges like detariffication and so on. So, it’s timely that we say, how do we then get back our capital and reinvest. With AmMetLife, we are one of the smaller insurance companies out there
I can’t see any more divestment that we need to make that’s a drag on our ROE, hence, with this, our capital is going to be strong and the investments that we make in new businesses will hopefully give us the sustainable ROEs that we want, going forward.
What’s the update on the AmMetlife sale? When do you expect to have it completed?
It’s going through the process. We hope to have it completed before the financial year end (March 31, 2024).
The group’s 1QFY2024 earnings were lower because of higher provisions and lower net interest margin (NIM). Can you guide if 2Q is likely to be worse than 1Q?
I think 2Q is on track. Not because of anything, but because in 1Q we were a bit conservative. It’s still post-Covid and we need to be super careful. Bear in mind that we did a lot of [provision] overlays and we’ve not even written these back. Remember when people and businesses come out of Covid, we need to have an observation period. So, it’s about holding on to the overlays until such time we have got more clarity.
So, writebacks are coming but not necessarily as early as 2Q?
Yes, it will come in phases
Looking at asset quality, where do your concerns lie today?
I think the concern is more retail, small business, than anything else. But as I said, these [loans] are heavily collateralised.
What about the big companies?
The big companies, apart from what you see in the news, the larger ones, those are being worked out. We’ve taken the provisions already. There are no more provisions to be taken [on these].
And in terms of NIMs? All the banks seem to be suffering from NIM compression.
I would say it has stabilised a bit. Because the [deposit] rates are more stable than before, so the NIM has stabilised. I mean, it has not dropped.
Is there anything you would have done differently in your eight years at AmBank Group?
No, I don’t think so. When I came in, it was one episode after another. Like meteorites hitting the earth, let’s put it that way. So, I had no choice but to navigate through these the best way that I could. Despite everything, I was still able to get the team to work together, focus on the things that we needed to do, and we managed to reach this stage. As it turns out, whatever I’ve done, it was the right thing. I’m quite happy with the whole transition to get to where we are today.
It must have been very frustrating to be hit by the RM2.83 billion global settlement in 2021, after the Bank Negara Malaysia penalty in 2015.
This was always something hanging over our head, because it was never resolved, right? People were always speculating, but up to that point, there was nothing on the table — as I have always told you.
Yes, [it was frustrating]. But then again, I would have been more frustrated if it had been a bigger amount, an amount that we couldn’t afford. We had the option of going to court, but banking is such a fragile business — what you don’t want is to have a situation [that stretches out] and the amount is so big that it could undermine you as a bank.
But one thing I want to say is that the chairman [at the time], Tan Sri Azman Hashim, he was very supportive of me, right up to his last day. And when the new chairman [Tan Sri Md Nor Yusof] came on board, he was also very supportive towards making sure that we would do well post-Covid and strengthen our position, and because of his vast experience, it helped. So, I must say, the two chairmen have been quite instrumental to me.
Has there been any development on the shareholding front? We have been hearing a lot of things in the market.
It’s all speculation. Those stories that you hear are all historical. We notice they keep surfacing.
So, nothing has gone up to the board about shareholding changes?
We had before, but that was some time ago.
You almost had a merger during your time.
Twice. It would have been nice. It would have been nice. My view is — banking is a business of scale. Having M&A with the right party, and which gives stability to the bank, would be a good thing. The last thing you want is a reluctant shareholder who invests. But if you have a shareholder who is going to be with you, and is there for good, then that would be good.
Do you reckon that the industry needs consolidation?
I don’t think so. I think the business is growing, the market is growing. I think consolidation has to be by a mutual, agreeable basis for it to make sense. I don’t think it will be by force. Consolidation, if it happens, would mean that fewer people are required. Is now then the right time? I don’t think so.
Many of the banks have been moving into new headquarters, green buildings, because of the ESG push as well. You have been in this building (Bangunan AmBank in Jalan Raja Chulan) for a very long time, and you also have another building nearby. Is there a plan to move or anything?
I’m not into real estate [or] fancy buildings, to be honest with you. I mean, if we can get this building green-certified, if it meets the environmental standard, I think there should be no issue.
Is that the plan, to get this building certified?
AmBank Group is the first financial institution to be awarded the Energy Management Gold Standard certification, for which the bank received the 1-star certification for Menara AmBank [in Jalan Yap Kwan Seng]. Now, if we can just get certification for this building (Bangunan AmBank), it should be fine.
Save by subscribing to us for your print and/or digital copy.
P/S: The Edge is also available on Apple's App Store and Android's Google Play.