CIMB Group Holdings Bhd · MYX:CIMB
CIMB Group Holdings Bhd — Investor Presentation (October 2020)
29 slides from CIMB Group Holdings Bhd's investor presentation, Oct 16, 2020
Slide 1: Forward23+ Investor Presentation
Forward23+ Investor Presentation Dato’ Abdul Rahman Ahmad 16 October 2020 FORWARD Together
Slide 2: Analysis of current situation
[#] Analysis of current situation
Slide 3: We have a terrific legacy and successfully pivoted from our core IB origins
We have a terrific legacy and successfully pivoted from our core IB origins into a large diversified regional bank USD 1.1 bil P/B 1.0x USD 146.1 mil USD 1.8 bil USD 0.8 bil USD 0.4 bil USD 0.4 bil USD 246.4 mil JV with CGC + Principal P/B 1.3x P/B 2.2x P/B 2.1x P/B 2.0x P/B 2.0x P/B 1.0x Presence i
Slide 4: Our franchise today is a leader in ASEAN with a number of strengths
Our franchise today is a leader in ASEAN with a number of strengths 2005 2007 2014 2019 CAGR Strengths and Position Today 51 5th Largest ASEAN 47 Universal Bank by assets Market 37 Capitalisation 8.8% (RM ‘bil) 2nd Largest in Malaysia 16 6th Largest in Indonesia ASEAN Markets (#) 2 2 8 10 High quali
Slide 5: Despite our strengths we lag behind our peers in terms of ROE
Despite our strengths we lag behind our peers in terms of ROE… 2009 ROE (%) 2019 ROE (%) 1 BRI 35.2 1 Vietcom Bank 25.9 2 BCA 31.8 2 BRI 19.4 3 Vietcom Bank 25.6 3 BCA 18.0 4 Public Bank 26.1 4 Bank Mandiri 15.1 5 Bank Mandiri 22.1 5 BNI 14.0 6 BNI 16.3 6 Public Bank 13.6 7 Siam Commercial Bank 15.5
Slide 6: This has led to a significant decline in shareholder value
This has led to a significant decline in shareholder value CIMB Adjusted 10-Year Share Price RM7.0 15 October 2020 Share Price: RM3.05 RM6.0 Market Cap: RM30.27 bil RM5.0 RM4.0 5 January 2011 Share Price: RM6.39 Market Cap: RM66.89 bil RM3.0 RM2.0 2010 2012 2014 2016 2018 2020 Movement (%) YTD 1Y 3Y
Slide 7: We have a number of challenges that we need to tackle
We have a number of challenges that we need to tackle 1 2 3 4 Portfolio allocation Cost Credit Management Customer We over-invest in low-return Our C/I ratio remains one of the Asset quality has been a Decline in Malaysia NPS business and under-invest in highest across ASEAN banks consistent challen
Slide 8: To invest better to grow profitable businesses and fix underperforming areas
To invest better to grow profitable businesses and fix underperforming areas 3-Year Average: Countries 3-Year Average: Regional Business Units SME T&M Consumer Malaysia Cambodia Targeted Indonesia Targeted RAROC (%) FY2019 RAROC (%) Singapore FY2019 SMME Business Corporate Thailand GVP Vietnam and P
Slide 9: Our Cost/Income ratio remains significantly higher than average
Our Cost/Income ratio remains significantly higher than average CIR FY2019 benchmarks (%) CIR FY2019 by country (%) CIMB cost structure Total cost of RM9.5 bil with a growth rate of 3% p.a. 34.4 CIMB Malaysia 51 3Y CAGR 40.5 Malaysia Average 45.9 Personnel 4% 41.1 Establishment (2%) 42.5 CIMB Niaga
Slide 10: Asset quality has been a consistent challenge, with recurring elevated provisions
Asset quality has been a consistent challenge, with recurring elevated provisions ex-Malaysia Provisions (RM ‘bil) Credit cost: 3Y ave (2017-19) (bps) Maybank 39 Public Bank 6 Malaysia RHB 21 CIMB 16 BCA 116 BRI 240 Indonesia Mandiri 188 2.4 2.4 2.2 CIMB 187 2.0 DBS 30 1.4 OCBC 21 Singapore UOB 21 C
Slide 11: Addressing Technology Infrastructure
Addressing Technology Infrastructure CIMB Clicks total uptime (scheduled, unscheduled & service degradation) 98.65% 98.24% 97.67% 95.96% 94.67% 2016 2017 2018 ~ 19% of2019 our critical systems and substantial Up to June 2020 percentage of infrastructure has reached / are Key Focus Areas reaching end
Slide 12: On top of this, we are amidst a once in a lifetime crisis with Covid-19
On top of this, we are amidst a once in a lifetime crisis with Covid-19 United States, comparison of post-WWII recessions Significant uncertainty in outcomes % real GDP peak drop during crisis Covid-19 Scenarios Virus ‘81 ‘08 Global contained, Muted Slow, Inflation ‘73 Oil Financial growth world lon
Slide 13: Recalibrated Strategic Plan
[#] Recalibrated Strategic Plan
Slide 14: Our ambition is to be a top-quartile bank in ASEAN in terms of ROE
Our ambition is to be a top-quartile bank in ASEAN in terms of ROE 2019 ROE (%) 2024 ROE (%) 19.4 Bank 1 18.0 Bank 2 Top 15.1 Bank 3 quartile banks 13.6 Bank 4 * 13.2 Aim to: 11.6 Bank 5 Build a Great, High 11.2 Bank 6 Performing 10.9 Bank 7 Sustainable Business and 10.4 Bank 8 Organisation 9.9 Ba
Slide 15: The path ahead builds upon the foundations of Forward23
The path ahead builds upon the foundations of Forward23, incorporating a set of key guiding principles When defining the path ahead we applied these guiding principles Forward23 as starting point; Refine not throw out Incorporate new normal Accept trade-offs Detailed and measureable performa
Slide 16: Recalibrating our Forward23 Strategy
Recalibrating our Forward23 Strategy Vision To be the leading focused ASEAN bank Strategic Themes 1 Delivering a) Reshape portfolio b) Drive cost efficiency c) Digitise for value d) Focused investments Accelerate profitable Reset cost base Strengthen technology Facilitate intra-ASEAN wholesa
Slide 17: We have a clear view on where we will compete and how will we win
We have a clear view on where we will compete and how will we win To be the leading focused ASEAN bank Leading Focused ASEAN We seek to be We will not be everything to everyone. We shall focus on key We are a local amongst the markets and segments, where we play to win ASEAN bank. leading ASEAN Wher
Slide 18: Our portfolio needs to be reshaped
Our portfolio needs to be reshaped Malaysia Indonesia Singapore Thailand Cambodia Digital SME/ Consumer Wealth Wealth SME/ TnG & Commercial & SME Management Management Commercial TNGD 1) 1 Undertake stringent portfolio review Wealth Consumer T&M Consumer Consumer Philippines Management 2) 2 Implemen
Slide 19: Reshaping our portfolio will involve the following
Reshaping our portfolio will involve the following: 1 Accelerating growth 2 Improving segments 3 Focused investments in in focus areas that require fixing growth areas CASA Growth COBA and Intra-ASEAN Strengthen funding COMBA Wholesale base NOII Growth Become a focused Preferred Improve cross-sell p
Slide 20: Tackling cost efficiency is non-negotiable
Tackling cost efficiency is non-negotiable Levers Cost Trajectory (RM ‘mil) Reset the cost base Cost BAU Take-out Escalation Digitise and automate 9,500 500 Cost Eliminate duplication, streamline structure Take-out and operating model Increase productivity Tight expense management 2019 2020 2021 202
Slide 21: Our fundamentals need to be transformed to support the franchise
Our fundamentals need to be transformed to support the franchise Elements of digitise for value Technology Stability/ Availability • Baselining completed with execution underway • Complete Bolster activities to improve resiliency • Develop Boost technology blueprint for advanced capabilities Digitis
Slide 22: Customer centricity can be a differentiator moving forward
Customer centricity can be a differentiator moving forward What will we do? What should customers expect? >99.95% uptime of digital Strengthen reliability channels Transform customer journeys Market-leading turnaround time Relevant, value adding and Understand customer needs deeply competitive produ
Slide 23: Our fundamentals need to be transformed to support the franchise
Our fundamentals need to be transformed to support the franchise Elements of Fundamentals Transformation Risk Management Holistic approach across client selection, underwriting, market risk, collections Capital Optimisation Data driven and fact-based; rigorous and dynamic asset allocation Finance Si
Slide 24: We need to step up on disciplined execution
We need to step up on disciplined execution Elements of disciplined execution Deliver what we promise consistently Clear transparent accountability Simpler performance management, KPIs (rigorous metrics and tracking) Linking performance to rewards 24
Slide 25: Strengthening and creating a purpose driven organisation
Our journey will involve strengthening and creating a purpose driven organisation Culture & Values Performance Integrity & Accountability Overall purpose Passion To build a high performing Human capital Best talent sustainable Better place to work organisation to help advance Sustainability customer
Slide 26: Targets remain as previously committed in Forward23
Targets remain as previously committed in Forward23 but we will be more granular and clearly define both near term and longer term outcomes 2022 Objectives 2024 Targets Aspiration 1 Cost reduction 1 ROE Top Quartile* 1 Building a great sustainable Cost take out of RM800mil - RM1bil organisation Winn
Slide 27: ROE Trajectory
ROE Trajectory Top Quartile** 9.3% 2%-4% 2019 ROE 2020 ROE* Grow Assets Grow NOII Provisions Cost Capital 2024 ROE Judiciously Aggressively Improvement Reduction Management *2020 ROE is based on FY20 guidance 27 ** Weighted average top quartile
Slide 28: Final Remarks
Final Remarks Forward23+ is a recalibration of our existing strategy and is extended to 2024 due to Covid-19 disruption Transiting from an asset growth to earnings growth model/plan Forward23+ will be focused on getting CIMB’s ROE into the top quartile* in ASEAN Committed to cost management to lower
Slide 29: Thank You
THANK YOU 29
CIMB Group Holdings Berhad — Investor Presentation (October 2020) on 6ix