TMB Bank Plc. To be the most advocated bank in Thailand Investor Presentation Opportunity Day 1H18 and 2Q18 Performance
1H18 & 2Q18 Financial Performance Asset Quality 2018 Target 2
Strong growth in high-quality and stable deposit from retail segment Deposit Volume & Mix Deposit Structure by Segment One Bank / All Free Normal CASA +3.4% YTD No Fixed ME 6% TD 632 bn TD 611 bn ME 8% 600 12% 14% TD No 41% 500 Fixed 49% No Fixed & 45% 400 ME 300 % Trx deposit % Trx deposit 200 31% Normal Transactional 39% 32% 7% Normal CASA Saving 39% (Saving) 12% 100 Retail = 16% 9% 3% All Free 2% Commercial = 23% 2% 3% 2% One Bank Current 9% 8% 0 Large Corporate Medium SME Small SME Retail Dec-17 Jun-18 % to total deposit 5% 71% 16% 8% ➢ TMB continuously builds stable deposit base by growing more diversified retail deposits ➢ As of Jun- 18, deposit expanded +3.4% YTD with strong growth in superior saving product, supported by the Bank’s strategy in acquiring new customers ▪ Non-Transactional deposit growth was driven mainly by No-Fixed +12%, ME by TMB +9% YTD ▪ Transactional deposit growth was driven mainly by All Free +3% YTD ▪ TD dropped by - 6% YTD, in line with Bank’s direction ➢ % of deposit mix in transactional deposit was 39% ▪ All Free, unconditional transactional account, increased to THB56 bn, represented 9% of total deposit ▪ % One Bank* deposit-to-total deposit was 6% 3 *Remark: One bank of all segments
Reiterating deposit-led strategy in acquiring new customers through flagship products Increasing in Number of Accounts both All Free and No-Fixed No. of new accounts – monthly average (‘000) ➢ The Bank never stops to seek for and deliver better 51 All Free 50 customers’ experience. In 2017, TMB went further by giving 40 36 38 31 No-Fixed a bonus interest rate of 0.30% to TMB No-Fixed account if 47 30 43 customers actively use TMB All Free. This reflected the 19 31 Bank’s value proposition of “Get More with TMB” 16 26 4 2,567 2,519 ➢ As a result, TMB continues to grow new customers with Total accounts (‘000) acquisition strategies targeted at improving high value All Free customers No-Fixed ▪ new customers in All Free account grew +6% YTD 868 and No-Fixed account +8% YTD 335 2012 2013 2014 2015 2016 2017 1H18 Cost of Deposit ➢ Cost of deposit rose +7 bps to 1.34% in 1H18, driven mainly 1.35% 1.34% 1.33% 1.31% 1.27% by a material inflow of retail deposits, No-Fixed & ME +7 bps YoY volume, (+THB31 bn YTD, +11% YTD). +2 bps QoQ +4 bps YoY 2Q17 1Q18 2Q18 1H17 1H18 4
Loan growth primarily from mortgage and large corporate loan Performing Loan Structure Loan Portfolio and Loan Yield Performing loan Corporate (THB bn) +1.6% YTD 636 bn Medium Size SME Small Size SME 626 bn Secured Loan 636 29% 31% Retail 520 Small SME 14% 14% 15% Medium SME 17% 258 232 149 105 Large 40% 40% 94 89 Corporate 91 56 Dec-17 Jun-18 Loan Yield ➢ Performing loan grew +1.6% YTD, led by retail and large corporate ▪ Retail loan grew +7% YTD with mortgage as a key driver (+9% YTD 6.00% or +12 bn) 5.20% 5.20% 5.50% ▪ Large corporate loan grew +4% YTD, from working cap and trade 4.93% 4.92% 4.91% finance 5.00% ▪ SME loan dropped YTD, due mainly to Medium SME (-10% YTD), +2 bps QoQ 4.50% while Small SME loan was flat -27 bps YoY -28 bps YoY 4.00% ➢ Loan yield declined from 5.20% in 1H17 to 4.92% in 1H18 due to ▪ 3.50% Lower yield in large corporate lending as long-term loan (high yield) repayment was replaced by new booking (working cap with lower 3.00% yield) 2Q17 1Q18 2Q18 1H17 1H18 ▪ MRR cut 50 bps in 22 May-17 5
Reduction in loan yield largely due to shift in loan mix -5 bps : key factor was a shift in retail loan portfolio toward Mortgage Performing Loan Breakdown Retail loan breakdown as % of performing loan Change in 1%, Other 195 bn Loan Yield YoY 5.20% 164 bn Credit card yield 4.92% 3% 0.6% -28 bps Unsecured 4% 2% 4% 636 bn 599 bn Mortgage 20% 23% 31% -5 bps Retail 27% Loan 1H17 1H18 Commercial -13 bps : mainly from an increase in new booking of large corporate loan Loan -22 bps 73% 69% -6 bps : from rate cut impact in (BB & SE) (new loan booking) -3 bps : from restructured loan (BB & SE) Commercial loan breakdown as % of performing loan 441 bn 435 bn 1.8% SE-restructured 1H17 1H18 1.4% 1.0% BB-restructured 1.0% 12% 14% Small SE Medium SME 14% 17% Large Corporate 40% 40% 1H17 1H18 6
Pressure on NIM resulted from shift in loan mix Net Interest Margin (NIM) ➢ For 1H18, Net Interest Margin (NIM) dropped to 3.01%, reflecting the impact of shift in loan mix and repricing -1 bps QoQ -18 bps YoY from MRR rate cut in 2017 -19 bps YoY 3.20% 3.19% 3.02% 3.01% 3.01% ▪ QoQ change in NIM was mainly from stronger loan growth in large corporate & mortgage loan and expansion in deposit volume from No-Fixed ▪ Seeing a positive trend in high-yield loans ➢ Small SME showed an increase in new limit setup +7% QoQ 2Q17 1Q18 2Q18 1H17 1H18 ➢ Unsecured loan showed a +20% QoQ increase Net Interest Income (NII) in new booking THB million -1.8% YoY ➢ 1H18 Net Interest Income (NII), therefore, decreased to 12,357 12,130 THB12,130 mn, down -2% YoY +1.2% QoQ -1.6% YoY 6,198 6,100 6,030 2Q17 1Q18 2Q18 1H17 1H18 TMB’s MRR Cut 50 bps in 22 May 17 7
Growth in Non-NII, boosted by net fees and gain on trading and FX Net fee income FWD Access Fee Non-Interest Income (Non-NII) Other Non-NII Total Non-NII THB million +7% YoY 6,447 6,048 1,246 1,187 -8% YoY -7% QoQ 3,353 3,309 3,094 Net fee 482 +7% YoY 612 634 332 5,201 664 4,861 332 Net fee (Excl. FWD) 2,409 -10% QoQ 2,163 2,128 -2% YoY -13% YoY 2Q17 1Q18 2Q18 1H17 1H18 ➢ For 1H18, Non-NII grew by +7% YoY, boosted by fee income and gain on trading and FX transactions ▪ Net fee income grew +7% YoY as most fee streams were higher in the first half of 2018 ▪ Trading and FX gain increased +38% YoY or THB224 mn, mainly contributed by FX related to trade finance business ➢ 2Q18 Non-NII decreased by -2% YoY (-7% QoQ) from a slowdown of mutual fund fee following a volatility in global financial market ➢ As of Jun-18, transactional fee income represented only 2% of total fee income , down from 17% in 2012 8
Resumed fee in commercial Fee Income from Key Products (THB mn) Mutual Fund Fee Breakdown by Type 2,103 +17% YoY 15% 13% 8% +1% QoQ 1,797 Bancassurance 17% -15% YoY * 20% 1,241 22% 1,163 10% 1,128 1,047 1,056 268 bn 287 bn 9% AUM 332 332 664 AUM 332 332 +26% YoY Excluded FWD 831 796 724 715 577 36% 49% Dec-17 Jun-18 2Q17 3Q17 4Q17 1Q18 2Q18 1H17 1H18 1,595 +16% YoY 1,373 Mutual fund -31% QoQ Tax Saving Others -15% YoY Money Market Fixed Income Fund Equity Fund 946 869 833 768 650 ➢ In 1H18, retail fee was overall in a positive trend, boosted by higher bancassurance and mutual fund fee. +32% QoQ 2Q17 3Q17 4Q17 1Q18 2Q18 1H17 1H18 342 +25% YoY +41% YoY 274 Loan-related 194 189 167 ➢ On the commercial side, fee was supported by an improvement in 147 138 loan-related fee +25% YoY, higher trade finance & FX income +14% YoY, offsetting by a slowdown in LG fee. 227 2Q17 3Q17 4Q17 1Q18 2Q18 -5% QoQ 1H17 1H18 192 -16% YoY -18% YoY 131 125 114 98 ➢ 2Q18 retail fee dropped primarily due to a drop in MF fee, caused 93 by an unfavorable market environment. Meanwhile, BA fee LG 2Q17 3Q17 4Q17 1Q18 2Q18 1H17 1H18 excluded FWD access fee, registered +26% YoY (+1% QoQ). 598 -7% QoQ +14% YoY 526 +15% YoY ➢ 2Q18 commercial fee growth resumed in loan related fee, backed 310 292 287 270 249 by new limit set up from Small SME and trade finance and FX TF & FX business. 2Q17 3Q17 4Q17 1Q18 2Q18 1H17 1H18 * Remark - 2 quarters recognition in access fee 9 - 1Q18 restated fee income
Well-managed operating expenses Operating Income & Expenses Operating income Operating expenses Cost to income ratio THB million 47% 46% 46% 46% 46% 28,000 45% 24,000 40% +2% YoY 35% 18,544 18,239 20,000 30% -2% QoQ 16,000 25% -3% YoY 12,000 20% 9,409 9,376 9,169 8,582 8,501 +1% YoY 15% 8,000 +1% QoQ 4,367 4,271 4,311 10% -1% YoY 4,000 5% 0 0% 2Q17 1Q18 2Q18 1H17 1H18 ➢ For 1H18, operating income grew +2% while operating expenses increased +1% ➢ The increase in operating expenses was due to ▪ Higher other expenses, mostly from higher expense in software amortization expense and outsource expense that related to business volume ▪ Higher premise expenses, mostly from higher repair & maintenance expense ➢ Cost-to-income ratio remained at 46% in 1H18 ➢ Cost-to-income ratio will seasonally accelerate in the second half of the year but remain within guidance 10
Growth in PPOP, reflected positive momentum in earning capability Pre-Provision Operating Profit (PPOP) THB million +1% YoY 9,980 9,899 -5% QoQ -5% YoY 5,135 5,109 4,871 2Q17 1Q18 2Q18 1H17 1H18 ➢ 6-month PPOP recorded at THB9,980 mn or rose by +1% YoY ➢ 2Q18 PPOP slightly dropped by -5% QoQ or -5% YoY 11
1H18 & 2Q18 Financial Performance Asset Quality 2018 Target 12
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