TMB Bank Plc. To be the most advocated bank in Thailand Investor - - PowerPoint PPT Presentation

Investor Presentation Opportunity Day 1H18 and 2Q18 Performance

TMB Bank Plc.

To be the most advocated bank in Thailand

Asset Quality 2018 Target

1H18 & 2Q18 Financial Performance

2

100 200 300 400 500 600

Dec-17 Jun-18

Strong growth in high-quality and stable deposit from retail segment

611 bn 632 bn

14% 45% 32% 9% 12% 49% 31% 8%

Deposit Volume & Mix

% Trx deposit

39%

Deposit Structure by Segment

Large Corporate Medium SME Small SME Retail

One Bank / All Free Normal CASA No Fixed ME TD

Normal CASA

12%

One Bank

2% 2% 2% 3% 3%

7%

9%

Normal Saving All Free

% Trx deposit 39%

Retail = 16% Commercial = 23% No Fixed

41%

ME

TD

8% 6%

16% % to total deposit

➢ 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% +3.4% YTD

TD

No Fixed & ME Transactional (Saving) Current

5% 8% 71% *Remark: One bank of all segments

3

335 2,519 868 2,567 2012 2013 2014 2015 2016 2017 1H18

• No. of new accounts – monthly average (‘000)

Reiterating deposit-led strategy in acquiring new customers through flagship products

Increasing in Number of Accounts both All Free and No-Fixed

All Free No-Fixed All Free No-Fixed

Total accounts (‘000)

➢ The Bank never stops to seek for and deliver better customers’ experience. In 2017, TMB went further by giving a bonus interest rate of 0.30% to TMB No-Fixed account if customers actively use TMB All Free. This reflected the Bank’s value proposition of “Get More with TMB” ➢ As a result, TMB continues to grow new customers with acquisition strategies targeted at improving high value customers ▪ new customers in All Free account grew +6% YTD and No-Fixed account +8% YTD

4 16 19 38 40 50 51 36 31 30 26 31 43 47 1.31% 1.33% 1.35% 1.27% 1.34%

2Q17 1Q18 2Q18 1H17 1H18

Cost of Deposit

+2 bps QoQ +4 bps YoY +7 bps YoY

➢ Cost of deposit rose +7 bps to 1.34% in 1H18, driven mainly by a material inflow of retail deposits, No-Fixed & ME volume, (+THB31 bn YTD, +11% YTD).

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5.20% 4.91% 4.93% 5.20% 4.92%

3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00%

2Q17 1Q18 2Q18 1H17 1H18

Loan Yield

Dec-17 Jun-18

Loan growth primarily from mortgage and large corporate loan

29% 14% 17% 40%

+1.6% YTD

Loan Portfolio and Loan Yield

(THB bn)

➢

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

• r +12 bn)

▪

Large corporate loan grew +4% YTD, from working cap and trade finance

▪

SME loan dropped YTD, due mainly to Medium SME (-10% YTD), while Small SME loan was flat ➢

Loan yield declined from 5.20% in 1H17 to 4.92% in 1H18 due to

▪

Lower yield in large corporate lending as long-term loan (high yield) repayment was replaced by new booking (working cap with lower yield)

▪

MRR cut 50 bps in 22 May-17

Retail Small SME Large Corporate Medium SME

31% 14% 15% 40%

Performing Loan Structure

+2 bps QoQ

• 27 bps YoY

626 bn 636 bn

520 636 232 258 105 94 89 91 56 149

Performing loan Corporate Medium Size SME Small Size SME Secured Loan

• 28 bps YoY

5

1H17 1H18

Reduction in loan yield largely due to shift in loan mix

Retail Loan

69% 31% 636 bn 5.20% 4.92%

• 5 bps
• 22 bps

Change in Yield YoY

• 28 bps

Performing Loan Breakdown

Loan yield

Commercial Loan

73% 27% 599 bn

1H17 1H18 164 bn 195 bn Retail loan breakdown as % of performing loan

• 5 bps : key factor was a shift in retail loan portfolio toward Mortgage

20% 23%

Mortgage Credit card Unsecured 1%, Other

4%

2% 0.6%

4%

3%

1H17 1H18 435 bn 441 bn 40% 40%

Large Corporate Medium SME

17% 14%

Small SE

14% 12%

1.0% BB-restructured 1.8% SE-restructured 1.0% 1.4%

Commercial loan breakdown as % of performing loan

• 13 bps : mainly from an increase in new booking of large corporate loan
• 6 bps : from rate cut impact in (BB & SE) (new loan booking)
• 3 bps : from restructured loan (BB & SE)

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3.20% 3.02% 3.01% 3.19% 3.01%

2Q17 1Q18 2Q18 1H17 1H18

Net Interest Margin (NIM)

6,198 6,030 6,100 12,357 12,130

2Q17 1Q18 2Q18 1H17 1H18

Net Interest Income (NII)

THB million

Pressure on NIM resulted from shift in loan mix

➢ For 1H18, Net Interest Margin (NIM) dropped to 3.01%, reflecting the impact of shift in loan mix and repricing from MRR rate cut in 2017

▪ 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 ➢ Unsecured loan showed a +20% QoQ increase in new booking

➢ 1H18 Net Interest Income (NII), therefore, decreased to THB12,130 mn, down -2% YoY

• 1 bps QoQ
• 19 bps YoY
• 1.8% YoY
• 18 bps YoY

+1.2% QoQ

• 1.6% YoY

TMB’s MRR Cut 50 bps in 22 May 17 7

2,163 2,409 2,128 4,861 5,201 664 332 332 482 612 634 1,187 1,246 3,309 3,353 3,094 6,048 6,447

2Q17 1Q18 2Q18 1H17 1H18

Non-Interest Income (Non-NII)

Net fee income FWD Access Fee Other Non-NII Total Non-NII

THB million

Growth in Non-NII, boosted by net fees and gain on trading and FX

+7% YoY (Excl. FWD)

• 2% YoY
• 8% YoY
• 7% QoQ

➢

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

Net fee +7% YoY Net fee

• 10% QoQ
• 13% YoY

8

Resumed fee in commercial

Fee Income from Key Products (THB mn)

768 833 869 946 650 1,373 1,595

2Q17 3Q17 4Q17 1Q18 2Q18 1H17 1H18 TF & FX Bancassurance Mutual fund Loan-related LG

+17% YoY +16% YoY +25% YoY

• 16% YoY

+14% YoY

* Remark

• 2 quarters recognition in access fee
• 1Q18 restated fee income

*

• 31% QoQ
• 15% YoY

+32% QoQ +41% YoY

• 7% QoQ

+15% YoY

➢

In 1H18, retail fee was overall in a positive trend, boosted by higher bancassurance and mutual fund fee.

➢

On the commercial side, fee was supported by an improvement in loan-related fee +25% YoY, higher trade finance & FX income +14% YoY, offsetting by a slowdown in LG fee.

➢

2Q18 retail fee dropped primarily due to a drop in MF fee, caused by an unfavorable market environment. Meanwhile, BA fee excluded FWD access fee, registered +26% YoY (+1% QoQ).

➢

2Q18 commercial fee growth resumed in loan related fee, backed by new limit set up from Small SME and trade finance and FX business.

20% 49% 10% 13% 8% 22% 36% 9% 17% 15% 287 bn AUM 268 bn AUM

Mutual Fund Fee Breakdown by Type

Fixed Income Fund Money Market Tax Saving Equity Fund Others

Dec-17 Jun-18 577 796 831 715 724

664 332 332 332 332

1,241 1,128 1,163 1,047 1,056 1,797 2,103

+26% YoY Excluded FWD

+1% QoQ

• 15% YoY

138 167 189 147 194 274 342

2Q17 3Q17 4Q17 1Q18 2Q18 1H17 1H18

• 5% QoQ
• 18% YoY

114 125 131 98 93 227 192

249 270 292 310 287 526 598 2Q17 3Q17 4Q17 1Q18 2Q18 1H17 1H18

9

Well-managed operating expenses

➢

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

9,409 9,376 9,169 18,239 18,544 4,367 4,271 4,311 8,501 8,582 46% 46% 47% 46% 46%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 4,000 8,000 12,000 16,000 20,000 24,000 28,000

2Q17 1Q18 2Q18 1H17 1H18

Operating Income & Expenses

Operating income Operating expenses Cost to income ratio

THB million +2% YoY +1% YoY

• 2% QoQ
• 3% YoY

+1% QoQ

• 1% YoY

10

Growth in PPOP, reflected positive momentum in earning capability

➢

6-month PPOP recorded at THB9,980 mn or rose by +1% YoY

➢

2Q18 PPOP slightly dropped by -5% QoQ or -5% YoY

5,135 5,109 4,871 9,899 9,980

2Q17 1Q18 2Q18 1H17 1H18

Pre-Provision Operating Profit (PPOP)

THB million +1% YoY

• 5% QoQ
• 5% YoY

11

1H18 & 2Q18 Financial Performance 2018 Target

Asset Quality

12

4.4% 2.2% 2.3% 2.6% 2.0% 2.3% 1.6% 0.9% 1.0% 1.3% 1.1%0.8%

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

Resolution with write off Natural resolution 1.6% 1.0% 0.9% 0.9%1.0%1.0% 2.1% 3.1% 2.6% 2.2% 2.3% 2.2% 2.2%

0% 1% 2% 3% 4% 5% 6% 7%

2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18

More stabilized trend of NPL formation and resolution

NPL Formation

Formation from restructured loan Formation from new NPL % Total formation % New NPL formation

NPL Resolution

➢

Natural resolution is on improving trend, but still slow

➢

TMB therefore continues to proactively write off to limit downside risks and to keep the balance sheet clean

➢

As of Jun-18, total resolution rose to 2.3% as the Bank wrote off further by THB2.9 bn

➢

Total formation has been stable with improving trend from small SME

➢

Formation from New NPLs continued its stabilized trend at approximately 1.0%

➢

Formation from restructured loans was at 1.2% in 2Q18, compared with 1.4% in 4Q17

13

Prudence in portfolio management

➢

As of Jun-18 (bank-only basis), loan in Pass class was 94% of total loan (including interbank), relatively stable.

➢

SM loan was 3.6% of total loan. Although it was still at elevated level but saw a stabilized trend.

➢

NPLs remained at relatively low level at 2.36%.

➢

15% of NPLs was covered by TCG. Net of TCG claimable, NPLs to total loan was 1.89%.

➢

TMB wrote off further by THB2.9 bn in 2Q18.

➢

Written-off loan outstanding was THB31 bn as of Jun-18.

Total Loan Portfolio (including interbank)

Note: Bank-only financial statement Pass-Normal Pass-Rescheduled Pass-Restructured SM-Normal SM-Rescheduled SM-Restructured TCG claimable NPL

94.2% 3.4% 2.34%

0.6% 1.6% 0.7% 0.1% 2.6%

0.4%

91.9%

2.02% Dec-17

Written-off loan

29 bn Mar-18 2.39% 701 bn 25.5 bn 17.8 bn 3.5% 94.2%

92.0% 0.6% 1.6% 0.8% 2.6% 0.1%

0.5% 1.84%

Pass Loan 702 bn SM loan 26.1 bn NPL 17.5 bn

31 bn 703 bn 17.6 bn 0.5% 1.89% 2.36% Jun-18

91.9% 0.5% 1.7%

94.1% 3.6% 26.8 bn

0.1% 2.8% 0.7%

TMB has been prudent in portfolio management. As natural resolution has still been slow, TMB continues to proactively write-off NPLs to limit downside risk and keep balance sheet clean.

31 bn

14

17,521 17,870 17,691 2.35% 2.40% 2.37%

• 1000%
• 800%
• 600%
• 400%
• 200%

0% 200% 10,000 20,000 30,000

Dec-17 Mar-18 Jun-18

NPLs & NPL ratio

NPLs TCG coverage NPL ratio THB million

Stable NPL situation

➢

NPL situation is stable and in line with the Bank’s expectation

➢

As of Jun-18, NPLs on consolidated basis was THB17,691 million, down by -1.1% QoQ

➢

Of total NPLs, 2.7 billion or 15% was covered by TCG

➢

NPL ratio was relatively stable from the previous quarter at 2.37%

TCG claimable

3.1 bn 2.7 bn 2.8 bn

15%

15

Prudence in provisioning with high coverage ratio

➢

In 1H18, TMB set aside THB4.7 bn of provision, represented a credit cost of 146 bps.

➢

While an increase QoQ in credit cost was mainly due to NPL formation of customers in Medium- Sized SMEs and to accommodate proactive NPL write-off.

➢

As of Jun-18, coverage ratio was at 140%, in line with target.

2,282 2,305 2,380 4,523 4,685 151 145 147 151 146

50 100 150 200

• 1,000

2,000 5,000 8,000 11,000

2Q17 1Q18 2Q18 1H17 1H18

Provision & Credit Cost

Provision expenses Annualized credit cost (bps) THB million 172 bps (peaked in 3Q16)

143% 142% 140% Dec-17 Mar-18 Jun-18

Coverage Ratio

16

Net Profit

4,426 4,306

1H17 Net Profit NII Non-NII Operating Expenses Provision Tax & Others 1H18 Net Profit

• 228 mn
• 1.8% YoY

+90 mn +1.1% YoY +399 mn +6.6% YoY +162 mn +3.6% YoY 39 mn

Net Profit

THB million

In the first half of 2018, net profit declined by 2.7% YoY primarily due to;

➢ NII dropped 1.8% YoY due mainly to higher interest expense (+4.6% YoY) as non-transactional deposit expanded well ➢ Non-NII rose 6.6%, driven by a 7.0% growth of net fee and service income, coupled with income from Trade Finance & FX ➢ Operating expenses slightly increased 1.1% YoY, in line with business volume ➢ Provision rose 3.6% YoY to maintain coverage ratio at 140%

Positive Impact Negative Impact 17

➢

Capital ratios are well above BoT’s requirements ▪ As of Dec-17, CAR was at 17.3% ▪ Tier I and Core Tier I were at 13.3%

Strong level of CAR and Tier I

Note: Bank-only financial statement Note: Bank-only financial statement

13.2% 13.3% 13.3% 7.250% 7.875% 7.875%

0% 5% 10% 15%

Dec-17 Mar-18 Jun-18

Tier I Ratio

Tier I BoT's min. requirement

17.3% 17.5% 17.3% 9.750% 10.375% 10.375%

0% 5% 10% 15% 20%

Dec-17 Mar-18 Jun-18

Capital Adequacy Ratio (CAR)

CAR 18

1H18 & 2Q18 Financial Performance Asset Quality

2018 Target

19

2018 Financial Targets

Key ratios 2018 Target Actual 1H18 Performing loan growth 8-10% 1.6% YTD Deposit growth 10-12% 3.4% YTD Net interest margin (NIM) 3.05% - 3.15% 3.01% Net fee income growth 15%-20% 7% YoY Cost to income ratio 45%-47% 46% NPL ratio 2.3%-2.5% 2.37% Coverage ratio 140%-150% 140% Credit cost (annualized) 135-145 bps 146 bps

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TMB Bank Public Company Limited 3000 Phahonyothin Road Chatuchak Bangkok 10900 TMB Website : www.tmbbank.com IR Webpage : www.tmbbank.com/ir Important Disclaimer

This presentation contains some information from other sources, that TMB Bank Public Company Limited does not make any representations regarding the use, validity, accuracy, or reliability of, or the results of the use of information, data but not limited to, all text, and images (“the Content”) on this

• presentation. Some content may contain forward looking statements, that based on management’s view upon the information currently available to us.

These statement are subject to certain risks and uncertainties that could cause the actual results materially differed from what had been previously stated. The materials in this presentation shall not, and are not intended to, constitute or contain an offer to sell or the solicitation of an offer to buy, any securities

• f TMB Bank Public Company Limited.