CIMB Group Holdings Bhd · MYX:CIMB
CIMB Group Holdings Bhd — Investor Day (October 2023)
68 slides from CIMB Group Holdings Bhd's investor day presentation, Oct 31, 2023
Slide 1: CIMB Group Digital Businesses Investor Day 2023
CIMB Group Digital Businesses Investor Day 2023 CIMB Group Holdings Berhad 31 October 2023 1
Slide 2: Strategy
Strategy The Forward23+ strategic house refined to shape the Group’s 2023 business plan and key focus areas • Selected digital investments 2
Slide 3: We have a clear view on where we will compete and how we will 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 are a local amongst the Focus on key markets and segments, where we play to win ASEAN bank. leading ASEAN Where will we
Slide 4: Our portfolio needed to be reshaped
Our portfolio needed to be reshaped Malaysia Indonesia Singapore Thailand Cambodia Digital SME/ Consumer Wealth Wealth SME/ TnG & 1 Undertake 1) Commercial & SME Management Management Commercial TNGD stringent portfolio review Wealth Consumer T&M Consumer Consumer Philippines Management 2) 2 Impleme
Slide 5: Asset composition and growth
Asset composition and growth Growth momentum continued to improve on areas we would like to invest Asset Composition Gross Loan Composition CDA & Group Year Consumer Commercial Wholesale Year Consumer Commercial Wholesale Funding Dec-19 33% 11% 43% 12% Dec-19 50% 18% 32% Jun-23 32%▼ 10%▼ 42% ▼ 17%▲
Slide 6: Structured Cost Take-out
Structured Cost Take-out Cumulative cost saving of RM1 billion achieved Evolution Analysis RM’mil FY21 Total Cost Cost Base(1) Decrease in cost Increase in cost (611) (195) (382) 9,386 9,386 8,775 8,748 8,938 9,225 FY19 Cost Savings FY20 Cost BAU FY21 Cost Normalised FY22 FY24 Savings Spend Savings
Slide 7: Positive momentum towards meeting our Forward23+ ambitions
Positive momentum towards meeting our Forward23+ ambitions Key Group FY23 Forward23+ Actual Metrics Guidance Ambition 2018 2019 2020 2021 2022 1H23 2023 2024 BAU BAU BAU BAU 9.6% 9.3% 10.6% 10.2-11.0% 8.1% 10.2% Top Quartile ROE 2.1% 11.5-12.5% 52.6% 53.4% 51.7% 48.6% 46.5% 46.0% <46.5% CIR ≤45.0% C
Slide 8: ROE journey and trajectory
ROE journey and trajectory 70-130 bps 0-40 bps 11.5- 10.2- 12.5% 10.6% 11.0% 8.5% 2019 Portfolio Opex ECL Others Capital 1H23 Drivers 2023 Drivers 2024 ROE Reshaping Optimisation Reduction Accumulation ROE Target ROE Target ROE Key Highlights Future Drivers ROE progressed to 10.6% in 1H23 from 8.5%
Slide 9: CDA on a Positive Trajectory
CDA on a Positive Trajectory CDA losses narrowed over the last 4 years. 1H23 losses declined by 86.9% vs 2019, contributing to the Group’s ROE improvement largely from CIMB Philippines and CIMB Vietnam’s partnership-led expansion and TnG Group's profitability improvement since 2019 Uplift to Group R
Slide 10: Final Remarks
Final Remarks CIMB Digital Assets is a key component to the success of the Forward23+ Strategy, with: • TNG Group playing a core role in the Group’s digital banking aspirations; • Philippines to breakeven by 2023 and contribute positively from 2024; • Vietnam moving in the right direction towards br
Slide 11: CIMB Group Digital Businesses Investor Day 2023
CIMB Group Digital Businesses Investor Day 2023 CIMB Group Holdings Berhad 31 October 2023 11
Slide 12: Introduction to CIMB Group Digital Businesses
Section A – Preamble Introduction to CIMB Group Digital Businesses [#] 12
Slide 13: Executive Summary
Executive Summary ▪ As CIMB transitioned from T18 to F23+, a view was taken around strategies required to future-proof the franchise amidst rising disruption in the digital space. This view was driven primarily by a few factors: o An increased shift in customer preferences toward digital-first exper
Slide 14: Executive Summary (Cont'd)
Executive Summary (Cont’d) ▪ Emergence of new digital banks have challenged how banking is done and how customers are served. ▪ Digital banks differ from traditional banks in several areas: o Designed to be fully digital from the ground up, utilising digital-native technology and back-end cores to r
Slide 15: Executive Summary (Cont'd)
Executive Summary (Cont’d) ▪ ASEAN regulators responded – Singapore, Malaysia and Philippines led the way and issued digital bank licenses through 2021-22, whereas Indonesia captured digital banking provisions within their existing regulations. Thailand now plans to issue licenses in 2024. ▪ Large i
Slide 16: Executive Summary (Cont'd)
Executive Summary (Cont’d) ▪ CIMB Group’s four (4) digital businesses : CIMB Philippines – the ‘newest’ addition to CIMB franchise in ASEAN, built as a full digital bank organically from the ground up, now serving 7Mn+ customers and poised for profitability; CIMB Vietnam – Vietnam’s first true digit
Slide 17: Section B – Deep Dive into each Digital Business
Section B – Deep Dive into each Digital Business 1. CIMB Philippines 2. CIMB Vietnam 3. Touch ‘n Go Group [#] (A) Touch ‘n Go Sdn Bhd (“Touch ‘n Go” or “TNG”); (B) TNG Digital Sdn Bhd (“TNG Digital” or “TNG eWallet”) 17
Slide 18: Section B – Deep Dive into each Digital Business
Section B – Deep Dive into each Digital Business 1. CIMB Philippines 2. CIMB Vietnam 3. Touch ‘n Go Group [#] (A) Touch ‘n Go / TNG; (B) TNG Digital / TNG eWallet 18
Slide 19: Philippines had always been an important market to CIMB
Philippines had always been an important market to CIMB given its strong market potential Philippines is a USD390bn economy, projected to Combined with a young and growing ~110 Mn grow at ~10% CAGR population Gross domestic product (GDP),USD Bn 0-19 20-29 30-39 40-49 50-59 60+ +10% p.a. Population b
Slide 20: CIMB's attempt to enter Philippines finally made headway
CIMB’s attempt to enter Philippines was no secret ; finally made headway as regulators signaled liberalisation on foreign ownership in banks 2012 2013 2014 2015-16 2018 As part of ASEAN Acquisition of Banko Sentral ng Focused on Obtained approval expansion plans, BankCom was Pilipinas (BSP) search f
Slide 21: Opportunity to disrupt banking in Philippines using digital delivery
Upon BSP approval, recognised an opportunity to disrupt banking in Philippines using digital delivery models and specialised segment plays… CIMB Philippines Play Mobile application based ; digital product delivery models Branch- Based Banking Limited Access Credit Take advantage of increasing Banks
Slide 22: CIMB entered as the nation's first all-digital, mobile-first bank
… and CIMB entered the Philippines market as the nation’s first all-digital and mobile first banking proposition, leveraging strategic ecosystem partnerships CIMB PHILIPPINES PRODUCTS & DIGITAL & CUSTOMER INNOVATION EXPERIENCE • HIGHER VALUE • BEST FINANCIAL SOLUTION & Best interest rates and no hid
Slide 23: Strategic ecosystem partnerships key to digital delivery model
The strategic ecosystems partnerships is key to CIMB Philippine’s digital delivery model, acquiring customers through partners’ expansive reach… Closely integrated, often embedded Digital Bank Ecosystem Partner Bank provides products (e.g., cards and Partner focuses on customer-facing services savin
Slide 24: Digital app and partner footprint substitute physical branches
… and when executed, allowed it to substitute costly physical branch network with CIMB Philippine’s own digital app and partner footprint SIMPLER PRODUCTS FOR A * LEVERAGE ON PARTNER * CASH IN, CASH OUT & WIDER AUDIENCE PLATFORM REACH TRANSFER OPTIONS Virtual Current Savings Savings Revolving Debit
Slide 25: Fastest growing digital bank in ASEAN by customer base
Successful execution of the business model made CIMB Philippines the fastest growing digital bank in ASEAN by customer base Dec 2018 Dec 2020 Sep 2021 May 2022 Apr 2023 Establishment of 3M customer Launch of Operational Best bank in the CIMB Philippines milestone Revi Credit enhancements Philippines
Slide 26: CIMB Philippines is an award-winning leading digital bank
Today, CIMB Philippines is an award-winning leading digital bank in the Philippines, pioneering digital financial solutions in the market FIRST DIGITAL & MOBILE ONLY-BANK IN PHILIPPINES Pioneer and Industry Leader in Digital Banking Solutions <10 minutes Account Opening THE ONLY BANK IN ASEAN EMBEDD
Slide 27: Competitors launched digital banks; head-start maintains market leadership
Competitors took notice, launching their digital banks and reiterated CIMB Philippine’s key success factors; its head-start allowed it to maintain market leadership for now Customers(1) Loans Deposits Mn PHP Bn, 1Q23 PHP Bn 1Q23 7.0 12 20 BSP issued guidelines on establishment of digital banks in
Slide 28: Arriving at profitable scale ahead of competition
Major advantage in arriving at profitable-scale ahead of competition ; continued push on acquisition, deposit and loan growth at manageable credit risk cost Financial Quarter Breakeven Today • Reducing CIR as Improve Underwriting business meets • Improve credit portfolio economies of profitability,
Slide 29: CIMB Philippines among global digital banks demonstrating scale
CIMB Philippines is amongst digital banking players globally which have demonstrated scale and success in their respective markets ▪ CIMB Philippines is now part of a cohort of disruptive digital banking players which have demonstrated scale, success and have / will be achieving full financial year
Slide 30: Outlook positive for CIMB Philippines
Outlook continues to look positive for CIMB Philippines – profitability around the corner as it doubles down on growth opportunities and operational improvements Commercial Focus Areas Deposits growth & funding Explore new segment Grow loan book, but cautiously strategy propositions • Diversify loan
Slide 31: Section B – Deep Dive into each Digital Business
Section B – Deep Dive into each Digital Business 1. CIMB Philippines 2. CIMB Vietnam 3. Touch ‘n Go Group [#] (A) Touch ‘n Go / TNG; (B) TNG Digital / TNG eWallet 31
Slide 32: Vietnam has one of the fastest growing economies in the region
Vietnam has one of the fastest growing economy and income levels in the region, with favourable demographics Vietnam is a USD406bn economy, projected to Combined with a young and growing ~105 Mn grow at ~7.2% CAGR for the next few years population, driving key economic consumer growth Gross domestic
Slide 33: CIMB secured banking license in Vietnam and launched in 2016
As part of efforts to deepen its ASEAN presence, CIMB Group secured its banking license in Vietnam and launched in 2016, with the intention of unveiling a full universal banking presence 2010 – 2014 2015 2016 CIMB’s presence in Vietnam CIMB Group obtained an In December 2016, the Hanoi was only limi
Slide 34: Bringing the business to scale conventionally would present challenges
By early 2017, it was evident that bringing the business to scale ‘conventionally’ would present its challenges – efforts on putting in place a digital platform began Key challenges observed: Favourable macro landscape: The Vietnam banking sector Vietnam as a relatively new is largely dominated by
Slide 35: CIMB Vietnam's pivot journey
CIMB Vietnam’s pivot journey saw it laying the necessary building blocks required of a digital bank as it refocused its business Thinking Digital Pivot to Digital Crystalizing 2017 - 2018 2019 -2020 2021-2022 Explored and deployed digital Pivot towards “Platform- Strengthen foundations as a an
Slide 36: Business model recalibrated to deliver financial services via partner platforms
The business model has now been recalibrated, with focus on availing financial services digitally through partner platforms, alongside minimal branch presence Product Design Continuous / Identify Key E2E Digital Preferred product with & for Iterative Strategic Partners Experience offering Partners E
Slide 37: CIMB Vietnam now has capabilities to scale digitally
Post recalibration – CIMB Vietnam now has the required capabilities to scale digitally and capture future growth CIMB Vietnam’s 4-pronged strategy underpinning digital customer acquisition and monetisation has tremendous scalability potential for future growth Ability to Co-design Financial Use Case
Slide 38: Platform-Centric product creation approach
New digital banking capabilities allowed the business to undertake a “Platform-Centric” product creation approach… High Quality Digital Platforms Innovative products Co-branded product meeting needs of partners Secured / Unsecured Cash Loans Credit Card Debit card Buy Now Pay Later Current a
Slide 39: Rapid customer acquisition via partnerships
… which enabled rapid customer acquisition, with more than 70% of CIMB Vietnam’s digital customers acquired via partnerships Key partnerships and product launches Secured (‘000 Customers) lending CASA bundle BNPL 847 Launch of Secured Launch of lending BNPL debit card credit card Launch of 70%+ CAGR
Slide 40: No clear winners among digital banks in Vietnam yet
There are still no clear winners among digital banks in Vietnam yet – significant upside in terms of “first mover advantage” No. of digital Bank Banking license Launch date Digital Proposition No. of branches customers VietcomBank 2020 VCB Digibank – mobile banking app - 630 BIDV N/A BIDV SmartB
Slide 41: CIMB Vietnam initial success following pivot to digital
CIMB Vietnam demonstrated initial success following its pivot to digital, on the back of its “Platform-Centric” partnership strategy… CIMB Vietnam 846k+ USD 134m USD 166m Agile First-to-market digital customers gross loan book consumer deposits new product or functionality eKYC and Video KYC release
Slide 42: Well positioned for next phase of scaling
…and is geared and well positioned for the next phase of scaling and become a leading digital bank in Vietnam Partnerships Product Data and analytics Technology Continue pursuing other Continue to develop new Doubling down on data Sustain progress on high-value partnership and innovative use
Slide 43: CIMB Vietnam established as a pioneer in digital banking
CIMB Vietnam has established itself a pioneer and will continue to be a prominent player in Vietnam’s digital banking landscape First-to-market eKYC and Video KYC Issuance of the first-ever virtual debit card in Vietnam Recognized for its innovation and ability to develop cutting-edge products with
Slide 44: Section B – Deep Dive into each Digital Business
Section B – Deep Dive into each Digital Business 1. CIMB Philippines 2. CIMB Vietnam 3. Touch ‘n Go Group [#] (A) Touch ‘n Go / TNG ; (B) TNG Digital / TNG eWallet 44
Slide 45: Touch 'n Go is Malaysia's first fintech and cashless payments platform
Touch ‘n Go is Malaysia’s first fintech company and the nation’s pioneering cashless payments platform centered on mobility and transportation… 100% TOLL COVERAGE 34 highways 2.2k+ Toll Lanes Incorporated in 1996, Touch n’ Go is Malaysia’s sole Electronic Toll Collection operator for highways. 100
Slide 46: Award-winning mobility use cases with nationwide customer base
…and it has built a wide array of award-winning mobility focused use cases, trusted and actively used by a nationwide customer base A strong suite of varied use cases Proven as a trusted offering to Malaysian stakeholders Expressways Parking Transit Fueling Accolades 1,400+ 34+ highways 1,400+ TNG-e
Slide 47: CIMB's strong hand in Touch 'n Go's growth
Through this all, CIMB has had a strong hand in Touch ‘n Go’s growth, recognising it as a large customer interfacing business with high value potential – eventually venturing into retail payments through eWallet JV 1996 2000 2008 2011 * 2017 2019 2022 Incorporation of SmartTAG hits the TNG Cards Acc
Slide 48: Touch 'n Go strategic review: 5 pillars
As part of CIMB’s Forward23 plans, Touch ‘n Go conducted a strategic review of its business – 5 pillars to structurally pivot & drive financial returns… 1 2 3 4 5 Drive mid-term Enhance tech Strengthen brand, Explore and Drive strategic financial returns, capabilities & data people and pursue new pa
Slide 49: Defending and growing the core while future-proofing
… with a view of defending & growing the core business, and also focus efforts on future-proofing the company Enhance and innovate digital products to stay GROWTH & FUTURE PROOF relevant, unlock new revenue streams 2023 - 2025 Adjacent opportunities into digital platform Focus on technology and
Slide 50: Longer term strategy: Defend, Build, Innovate and Accelerate
Longer term strategy: Defend, Build, Innovate and Accelerate In the face of an evolving landscape: • The vision for MLFF in Malaysia is still in development • Adoption of open-payments • Wider macroeconomic changes which may change how mobility payments is perceived B ASPIRATION A C Where we were Ou
Slide 51: Key initiatives across expressways, transit, parking and new horizons
Touch ‘n Go’s overarching strategy can be broken down into key initiatives which are in various stages of play – from implemented ideas to bold new plays Expressways Transit Parking New Horizons P Being the main Site capture, Increasing RFID B2B collaboration, transit payments PayDirect site adoptio
Slide 52: Purpose driven company with 4 key sustainability themes
Focusing on being a purpose driven company with 4 key sustainability themes • #GoNetPositive – a new mantra in ensuring that a net positive impact in everything we do • Refining sustainability efforts targeting 6 of the United Nation’s SDGs. • 4 important pillars to TNG Group in achieving sustainabl
Slide 53: Section B – Deep Dive into each Digital Business
Section B – Deep Dive into each Digital Business 1. CIMB Philippines 2. CIMB Vietnam 3. Touch ‘n Go Group [#] (A) Touch ‘n Go / TNG ; (B) TNG Digital / TNG eWallet 53
Slide 54: Early propositions in retail to cross-sell to captive user base
In the early days, CIMB via TNG explored and had built certain propositions in retail with the intention of cross / up-selling their large captive user base ▪ As penetration into toll payments near its peaked, TNG experienced tapered growth in its financial performance. With a large captive customer
Slide 55: Global and Asian trends spurred differentiated strategy
Meanwhile, there were notable trends emerging globally and in Asia, which spurred the formulation of a differentiated establishment strategy Global Payments Revenue USD Tn ; As at 2015 ▪ In China, industry giants in e-commerce (Alibaba Group) and 1.0 social media (Tencent Group) built their mobile-b
Slide 56: A game changer strategy: joint venture with Ant Group
For CIMB / TNG to succeed in retail game over the long run, it needed a game changer strategy ▪ To remain relevant and compete in retail payments, CIMB / TNG believed strongly in these three (3) success factors: (1) robust technology solution/platform ; (2) product speed to market ; and (3) ability
Slide 57: Thesis validated – TNG eWallet is #1 Finance App in Malaysia
The thesis was validated – TNG eWallet is the largest and #1 Finance App in Malaysia, robust growth journey and strong foundation setting ; eventually validated by strong industry backers as strategic investors 2017 2018 2020 2021 2022 2023 Launch of TNG eWallet Sole eWallet linked to Fast expanding
Slide 58: TNG eWallet evolution to full suite of digital financial services
TNG eWallet has completed its evolution from a mobility focused eWallet, to being a complete cash alternative in payments and now offering a full suite of digital financial services EXPANSION INTO FINANCIAL SERVICES COMPLETE CASH ALTERNATIVE WealthTech LEADING MOBILITY Wealth management PAYMENT EWAL
Slide 59: TNG Digital's award-winning propositions
TNG Digital’s industry leading, award winning and best-in class propositions are well recognised, receiving strong support from customers and partners As of 30 June 2023 20.0MM+ | 15.0mm+ Malaysia’s #1 and largest eWallet by Users and Merchant Acceptance Registered e-KYC Only eWallet Connected to Fi
Slide 60: TNG eWallet partner of choice for Government initiatives
TNG eWallet is the partner of choice for Government initiatives to increase awareness, public confidence and reduce barriers to e-payment adoption (Jan – Mar 2020) (Jul – Sep 2020) (Jun – Jul 2021) (Apr – Jun 2022) (Jun – Aug 2023) RM30 wallet credit to eligible RM50 wallet credit to eligible RM150
Slide 61: TNG eWallet beginning to look like an alternative to banks
TNG eWallet is beginning to look like an alternative to banks – offering a whole suite of financial services with innovative and digitally embedded offerings relevant for the masses Payment + Remittance WealthTech InsureTech CreditTech Since 2021 Since 2021 Since 2022 7Mn+ Average 3Mn+ 2Mn+ 1Mn+ Dai
Slide 62: Operational indicators of the business are healthy
Operational indicators of the business are healthy, indicating it is on the right track of monetisation and towards profitability Registered & Monthly Total Payments Value Revenue Active Users 3.0x 20+ (RM’bil) (RM’mil) (’mil) Growth 25+ 100+ >50x >100x Annual Run-Rate Growth Annual Run-Rate Growth
Slide 63: Growth opportunities across five key pillars
There is still ample growth opportunities for TNG Digital across its five key pillars, once executed will enhance the business in its current state and allow it to pursue new business opportunities 1 2 3 4 5 Universal Offline Online True Alternative to National Digital Merchants’ Most Payments Power
Slide 64: The Path to Profitability roadmap
The Path to Profitability roadmap requires acceleration and expansion of high margin products combined with optimisation of the cost structure While TNG Digital There’s room to further improve take-up of high margin products and services, launch new revenue dominates payments… lines opportunities; i
Slide 65: New horizons and adjacent business avenues
New horizons, adjacent business avenues and right to play – tapping on its 1Mn+ merchant touchpoints Transaction Business Value-added Services optimization Services Current Current New initiatives Offline acceptance Merchant dashboard Lending Geo-location Online acceptance Mini-program Wealth Loyalt
Slide 66: TNG Digital's prospects encouraging versus regional peers
Overall, TNG Digital’s prospects are encouraging, as evidenced by the respective trajectories of its closest peers in the region ▪ TNG Digital is part of a new wave of valuable, domestic-focused payment businesses affiliated with Ant Group, with the same playbook of generating additional revenue str
Slide 67: Opportunity for CIMB Malaysia to leverage TNG eWallet's reach
There is latent opportunity for CIMB Malaysia to leverage on TNG eWallet’s expansive reach to acquire customers and grow retail assets ▪ CIMB Malaysia’s customer growth has plateaued at ~8Mn customers, as it largely relies on offline channels for 20Mn+ acquisition and service. TNG eWallet Registered
Slide 68: CIMB Group Digital Businesses Investor Day 2023
CIMB Group Digital Businesses Investor Day 2023 CIMB Group Holdings Berhad 31 October 2023
CIMB Group Holdings Berhad — Investor Day (October 2023) on 6ix