TMB Bank Plc. 2Q17 & 1H17 Performance and Strategic Direction Investor Presentation Opportunity Day Aug 2017
AGENDA 2Q17 and 1H17 Performance Asset Quality Enhance Customer Experience 2017 Target 2
Deposit picked up QoQ, driven by retail deposit base Key Deposit Products Deposit Volume and Mix All Free No-Fixed THB bn ME Bank-wide TD +0.4% YTD 250 222 602 bn 599 bn *Mutual fund conversion 588 bn 183 200 TD 20% 150 19% 17% No Fixed 150 & ME 181 41% 43% 44% 100 Transactional (Saving) 45 32 44 32% 32% 50 31% Current 5 7% 7% 8% - Mar-15 Dec-15 Sep-16 Jun-17 % Txn deposit 40% 39% 39% 68% 70% 70% % Retail deposit Deposit volume picked up in 2Q17, with positive growth of The expansion was in line with the strategies to; 2.4% QoQ, and 0.4% YTD Replace TD by offering customers superior products, Key growth driver was retail deposit, +3.6% YTD No Fixed balance +7.5% QoQ, +10.1% YTD ME balance +1.9% QoQ, +8.3% YTD Grow transactional deposit for better customer understanding , All Free +11.2% QoQ, +25.9% YTD 3
Promote transactional deposit as well as primary banking benefit Increasing New Accounts and no. of Transactions To grow retail transactional deposit, TMB offered new benefit, free ORFT , for All Free customers Unit: ‘ 000 accounts 45 +11% No. of new account opening of retail transactional account has 40 +7% 38 been on an improving trend No. of new retail trxn account No. of transactions has shown the same positive trend – monthly average 485 454 To better understanding customers, we boosted transactional 19 16 usage behavior by +5% Offering primary banking benefit with higher bonus rate 232 271 (+30 bps) for No-Fixed customers who transact via All Free 190 256 account 5 times/month Cost of deposit, therefore, slightly rose to 1.31% or +7 bps QoQ FY2013 FY2014 FY2015 FY2016 1H17 Avg no. of transaction/account 1.2 1.6 2.2 1H17 cost of deposit dropped 31 bps from 1H16 to 1.27% Improving transactional usage has reflected in improving cross Cost of Deposit selling and fee income .80% 1.58% -31 bps +7 bps Improving no. of mutual fund customers and MF fees .60% 1.31% 1.27% .40% 1.24% 1.24% 000 No. of MF 1, 000 customers .20% 000 1, 000 1,000 .00% 768 THB mn 000 800 000 .80% 0,000 60 378 .60% 5,000 400 000 .40% 200 000 4Q16 1Q17 2Q17 1H16 1H17 000 - Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 4
Loan grew +3% QoQ with mortgage as a key driver Corporate Medium SME Performing Loan Volume and Mix Loan Portfolio Small SME Mortgage +3.9% YTD THB bn 400 Performing Performing loan 599 599 bn loan: yield 600 581 bn 350 576 bn 520 5.2% 300 500 239 Retail 231 Corporate 27% 26% 26% 250 yield 3.2% 400 16% 16% Small SME 15% 200 Mortgage 300 yield 4.6% 122 19% 19% Medium SME 18% 150 105 Medium SME 105 200 89 100 5.7% 90 39% Corporate 39% 40% Small SME 100 56 50 8.2% - - Dec-16 Mar-17 Jun-17 Mar-15 Dec-15 Sep-16 Jun-17 Loan Yield Performing loan also picked up +3.0% QoQ and +3.9% YTD, led by retail and corporate lending 6.00% Retail loan +6.3% QoQ and 10.7% YTD with Mortgage 5.49% 5.36% 5.30% 5.20% 5.20% as a key driver (+8.1% QoQ, 15.7% YTD) 5.50% 5.00% -10 bps -29 bps Corporate loan + 5.6% QoQ, 6.0% YTD 4.50% Loan yield declined due mainly to; 4.00% Shift in loan portfolio toward mortgage 3.50% MRR rate cut (-50 bps, effective May 22) 3.00% 4Q16 1Q17 2Q17 1H16 1H17 5
NIM hold up at 3.2% in 2Q17 Net Interest Margin (NIM) +13 bps NIM was maintained at 3.20% in 2Q17, (flat QoQ) YoY 4.0% -1 bps QoQ 3.33% For 1H17, NIM was 3.19% (+13 bps YoY), reflected 3.0% 3.21% 3.20% 3.19% 3.06% well managed funding cost 2.0% 1.0% 0.0% 4Q16 1Q17 2Q17 1H16 1H17 Net Interest Income (NII) Net interest income (NII) therefore, rose to THB6,198 mn +2% THB million YoY 14,000 in 2Q17, +0.6% QoQ 12,000 12,357 12,102 10,000 +1% For 1H17, NII improved to THB12,357 mn, +2.1% YoY QoQ 8,000 6,000 6,391 6,160 6,198 4,000 2,000 0 4Q16 1Q17 2Q17 1H16 1H17 6
Non-NII improved, driven by fee income growth Non-Interest Income (Non-NII) Net fees & service income Other Non-NII +25% THB million YoY 6,000 1,187 5,000 1,064 +21% 4,000 QoQ +30% QoQ 482 3,000 739 4,861 +39% 705 662 427 2,000 QoQ 3,758 2,827 2,205 2,034 2,034 1,000 1,915 0 2Q16 3Q16 4Q16 1Q17 2Q17 1H16 1H17 Non-NII improved both QoQ and YoY, boosted by fee income 2Q17 Non-NII +21% QoQ 1H17 Non-NII +25% YoY Positive momentum in fee income was driven mainly by retail fees despite a 49% decline in loan- related fee 2Q17 Net fee income +39% QoQ 1H17 Net fee income +30% YoY 7
Fee income has shown good momentum, driven by retail fee Fee Income from Key Products (THB mn) Net Fee and Service Income (THB mn) Bancassurance 1,797 4,861 +55% Other Trade finance Net fee YoY +30% YoY 1,241 +124% LG Fee Loan related fee 1,069 TF QoQ Net fee LG 3,758 Loan related Mutual fund Bancassurance +39% QoQ 556 2,827 MF 2,205 2,034 2,034 1,915 2Q16 3Q16 4Q16 2Q17 1H16 1H17 1Q17 1,373 Mutual fund +98% +27% YoY BA QoQ 768 694 605 2Q16 3Q16 4Q16 1Q17 2Q17 1H16 1H17 Note: Consolidated Fee income growth was driven by retail fees, especially from strategic +6% Loan-related 548 products: BA and MF QoQ -49% 279 YoY 135 144 Commercial banking fees in 2Q17 dropped 19% QoQ and 1H17 fell 19% YoY LG +5% Key reason was a slowdown in loan-related fee, -49% from 1H16 QoQ 236 232 -2% 119 113 YoY However, seeing QoQ improvement in loan-related, TF and LG fees Trade finance Retail fees grew 55% QoQ in 2Q17 and 50% YoY in 1H17 +3% 182 152 QoQ -17% 77 75 Mutual fund continued to grow, mainly from Global Income Fund YoY Growth in Bancassurance was from (1) bancassurance sale and (2) access fee 2Q16 4Q16 1H17 3Q16 1Q17 2Q17 1H16 from the renewal of life bancassurance collaboration of TMB and FWD Note: Bank-only 8
Operating expenses increased from business vol. & investment Operating Income and Expenses Operating income Operating expenses +8.1 %YoY THB million 18,239 16,865 18,000 +6.6% QoQ 12,000 9,409 9,315 8,830 +8.0% YoY 8,501 7,872 6,000 +5.6% QoQ 4,460 4,366 4,134 0 4Q16 1Q17 2Q17 1H16 1H17 Operating income was THB9,409 mn (+6.6% QoQ) while expenses was THB4,366 mn (+5.6% QoQ) For 1H17, operating income was THB18,239 mn (+8.1% YoY) with expenses of THB8,501 mn (+8.0% YoY) The increase in operating expenses due to expense related business volume and investments HR cost, revenue sharing from growing business vol. Marketing expenses increased both in retail and commercial banks Depreciation of investment projects kicked in and software rental expenses increased 9
PPOP improved YoY, reflected earnings capability Pre-Provision Operating Profit (PPOP) +10% YoY THB million 9,899 10,000 9,022 8,000 +8% QoQ 6,000 5,135 4,834 4,764 4,000 2,000 0 4Q16 1Q17 2Q17 1H16 1H17 Positive momentum in PPOP reflected the Bank’s earnings capability PPOP was THB5,135 mn in 2Q17, +7.8% QoQ For 1H17, PPOP was THB9,899 mn, +9.7% YoY 10
Cost to income ratio remained in target Cost to income ratio 60% 48% 47% 47% 46% 46% 50% 40% 30% 20% 10% 0% 4Q16 1Q17 2Q17 1H16 1H17 Cost to income ratio dropped slightly to 46% in 2Q17 and 1H17, in line with target 11
AGENDA 2Q17 and 1H17 Performance Asset Quality Enhance Customer Experience 2017 Target 12
NPL ratio stayed relatively stable at 2.56% NPLs & NPL ratio NPLs NPL ratio 4% THB million 18,208 17,605 17,588 20,000 3% 10,000 2.56% 2.53% 2.53% 3.9 bn TCG claimable 3.8 bn 3.6 bn 2% 0 Dec-16 Mar-17 Jun-17 NPLs stayed relatively stable in 2Q17 with NPL ratio at 2.56% as of Jun-17 TCG claimable was 20% of total NPLs 13
Maintained Prudent Provision and Coverage ratio Provision expenses Annualized credit cost Provision & Credit cost Provision and credit cost stayed relatively stable THB million To accommodate write-offs together with slow 6,000 151 150 bps 148 147 economic recovery, TMB set aside THB2,282 131 150 5,000 million of provision or credit cost of 148 bps in 120 4,523 2Q17 4,000 3,875 90 3,000 For 1H17, provision was THB4,523 mn or credit 60 2,000 cost of 147 bps which remained in the Bank’s 2,282 2,234 2,241 target 30 1,000 0 0 (Note: written-off loan was required to set up 100% provision, 4Q16 1Q17 2Q17 1H16 1H17 disregarded of collateral value) Coverage ratio 160% Coverage ratio stayed at 140% as of Jun-17, 144% 143% 143% 140% 140% remained in target range and above industry 120% average 80% 40% 0% Dec-16 Mar-17 Jun-17 Jun-16 Jun-17 14
Net profit continued on positive trend Net Profit (to equity holder of the Bank) +4% YoY THB million 4,426 4,243 4,500 +11% QoQ 3,000 2,330 2,138 2,096 1,500 0 4Q16 1Q17 2Q17 1H16 1H17 Net profit was THB2,330 mn in 2Q17, +11.1% QoQ For 1H17, net profit was THB4,426 mn (+4.3% YoY), represented an ROE of 10.4% 15
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