Tmbthanachart Bank Public Company Limited · SET:TTB
Tmbthanachart Bank Public — Investor Day (January 2023)
60 slides from Tmbthanachart Bank Public's investor day presentation, Jan 26, 2023
Slide 1: ttb strategy day
ttb strategy day Analyst presentation 26 January 2023
Slide 2: Our transformation journey towards the most recommended bank of choice
Our transformation journey towards the most recommended bank of choice Auto lending Leader Ecosystem play New digital Top performing platform deposit franchise Merger of 2 banks becoming one D-SIB 2019 2020 2021 2022 2023-25 Completed merger Successful entire business transfer Launch of new ttb ‘Dig
Slide 3: Key highlights of our past journey – integration and synergy realization
Key highlights of our past journey – integration and synergy realization Accelerated cost synergy Transfer of assets, customers Rationalization of Ahead-of-plan balance realization from overlapping One brand with coherent and staffs from TBANK IT applications sheet synergy realization footprints & w
Slide 4: Key highlights of our past journey – group restructuring
Key highlights of our past journey – group restructuring Strategic positioning Key Statistics Asset size1/ Recovery performance 5.7bn Serve as sizeable AMC unconsolidated from ttb balance sheet, ~4x 100% own subsidiary with potential to expand to retail and automotive portfolio > 600mn recovery of s
Slide 5: Key highlights of our past journey – 2022 performance
Key highlights of our past journey – 2022 performance Profit (THB bn) Income (THB bn) +0.5% 2022 Key Performance Drivers 68.8 65.5 65.9 +35.6% Loan +0.4% YTD 14.2 OPEX (THB bn) Deposit +4.5% YTD -4.1% 31.6 31.2 NIM 2.95% 30.0 10.1 10.5 Non-NII/asset 0.79% C/I 45% Risk cost (THB bn) Risk cost 1.3% 24
Slide 6: Challenges and opportunities ahead
Challenges and opportunities ahead Economic headwind Intensifying competition Tightening regulatory landscape GDP (%YoY) projected to grow with policy rate expected to maintain at high level Platforms offers financial services New consumer protection 2.2 3.2 3.6 act on debt collection Challenges 1.5
Slide 7: TTB’s strategic direction
TTB’s strategic direction Vision To become the recommended bank of choice by our customers Mission To improve our customers’ life-long financial well-being Core proposition To deliver best-deal personalized solutions by life-stage and life-event through humanized digital platform 7
Slide 8: 3Y strategic priorities
3Y strategic priorities Strategic focus: I II III IV V Revenue Digital-first business Efficiency Organizational synergy realization and operating model Ecosystem play improvement transformation Continue to capture the Enhance digital platform to Extend from existing areas Streamline offline/back- Al
Slide 9: Balance sheet and cost synergies already ahead of plan
I Balance sheet and cost synergies already ahead of plan with increasing momentum on revenue synergy 5-year synergy value Progress-to-date (shared to investors on 24 Jan 2020) (accumulated as of 4Q22) • Balance sheet optimization strategy achieved and continue as Balance sheet synergies shown in dec
Slide 10: Key drivers of revenue synergies with signs of momentum pickup
I Key drivers of revenue synergies with signs of momentum pickup Higher-yield secured loan potentials Protection for from car owner-and home-owner customers Revamped payday loan auto loan customers • Effective acquisition of new/used car customers (>200k customers/yr) • ~1mn payroll customers • Room
Slide 11: Digitalization journey towards top 3 digital banking platform
II III Digitalization journey towards top 3 digital banking platform Top 3 digital III. Digital banking to create new banking platform business and ecosystem 3yr KR4: 10% bank’s revenue from new business in Thailand II: Digital banking to generate sustainable growth in traditional revenue stream 3yr
Slide 12: Positive momentum in adoption and utilization of new ttb Touch
II Positive momentum in adoption and utilization of new ttb Touch 4.0 3.5 2.8 +46% Number of new ttb Touch user (mn users) 2Q22 3Q22 4Q22 168 154 146 4Q21 Touch +25% old version Number of financial (134mn) transactions on digital 2Q22 3Q22 4Q22 520 356 +89% 275 Avg daily QR code scan transaction (‘0
Slide 13: Ongoing migration of low-value transaction to digital channels
II Ongoing migration of low-value transaction to digital channels for better customer experience while achieving lower cost-to-serve Digital’s share of financial transactions >80% Cost-to-serve comparison Digital’s share of ~10x non-financial transactions <20% Passbook / fund book request 0.9mn (+35
Slide 14: Converting ‘segment-of-one’ concept into reality
II Converting ‘segment-of-one’ concept into reality Greeting Reminder Insight Inform Offer ~300k Personalized cards clicked since launched 2.2-2.5x avg daily click thru rate vs. social media Reward redemption by channel Non-Digital Flat Digital +260% 1/ 1Q22 2Q22 3Q22 4Q22 14 1/ prorated figures bas
Slide 15: Strong momentum of digital sales carried to new ttb Touch
II Strong momentum of digital sales carried to new ttb Touch Digital lending Digital saving & investment Credit card new booking (#card) Deposit account opening (#account) +12% 2.5x 2021 2022 2021 2022 Cash2Go new drawdown (THB) Mutual fund purchase via Touch % amount via Touch % transactions via To
Slide 16: ttb’s ecosystem play: guiding principles
III ttb’s ecosystem play: guiding principles A. Start with customers’ unmet needs / pain points Not technologies-driven B. Focus on our core competencies, our strengths, Not unfamiliar domain what we know well thru development of new away from home turf businesses or new way of doing existing busine
Slide 17: ttb’s ecosystem play in actions
III ttb’s ecosystem play in actions 17
Slide 18: Ecosystem capabilities along customer journey and life-cycle events
III Ecosystem capabilities along customer journey and life-cycle events Bank’s view Acquire Engage Monetize Existing acquisition engine via • Buy a new car traditional banking products • Find / repay car financing • Buy / renew car insurance Car loans • Pay annual car tax Car insurance • Top up toll
Slide 19: Ecosystem play: My Car Widget
III Ecosystem play: My Car Widget Objectives: To develop long-term relationship with car-owners throughout cars’ life cycle via seamless digital journey for financial needs and beyond banking needs MVP concept: My Car widget Results thru organic growth with no marketing budget spent Pay AL Sell Car
Slide 20: Ecosystem play: Simplified insurance purchase journey
III Ecosystem play: Simplified insurance purchase journey from traditional approach to seamless digital experience Launched in Jan 2023 From: outbound calls To: end-to-end in-app journey Renew existing policy Buy new policy Call-center staffs cold calling customers; Time and convenience Limited visi
Slide 21: Ecosystem play: Preliminary release timeline
III Ecosystem play: Preliminary release timeline 2022 Q1’23 Q2’23 Q3’23 Q4’23 New ttb Touch Car Insurance My Car My Tax My Work My Home 21
Slide 22: Ongoing end-to-end productivity improvement
IV Ongoing end-to-end productivity improvement to capitalize on enhanced digital capabilities and accelerated e-migration Progress to-date Plan going forward Annual branch footfall: -13% Offline transaction shares ▪ Financial service txn: ~1% Digital-first Digital-only ▪ Non-financial service txn: >
Slide 23: Ongoing organization transformation to sustain digital-first operating model
V Ongoing organization transformation to sustain digital-first & digital-only operating model 3Y aspired workforce mix 100% = 17,350 15,556 Shift of staff to more IT/Digital ▪ Increase in number of IT/Digital staff to support on digital transformation roadmap ▪ Lower proportion of frontline and oper
Slide 24: Deliverables to our stakeholders
Deliverables to our stakeholders Financial well-being enabler ▪ Improvement in main bank customers’ Customer financial well-being Employer of choice ▪ Employee retention Employee ▪ Critical positions filled by internal candidates1 Investment with competitive and ▪ ROE at top peer level sustainable r
Slide 25: 2023 Guidance
2023 Guidance 2022 2022 2023 Targets Actual Targets Loan growth (YoY) Approx. 2% +0.4% Approx. 3% In line with Deposit growth (YoY) Approx. 3% +4.5% loan growth INCOME Stable Net Interest Margin 2.95% 3.0% - 3.1% (2.97% in 2021) - - Low single Non-NII growth digit growth EFFICIENCY C/I Ratio 45% - 4
Slide 26: FY2022 Financial Performance
FY2022 Financial Performance
Slide 27: Executive summary
Executive summary Looking back on the time since merger— starting in 2019 from the idea of combining 2 banks’ complementary strengths — it is a clear pathway for the Merged Bank to scale up and to deliver stakeholders’ value in a sustainable way. To this end, we have carried on pursuing our strategi
Slide 28: 2022 Outcomes
2022 Outcomes 2022 Targets 2022 Actual Loan • TTB’s loan growth slightly increased by 0.4% YTD as growth in retail loans almost offset by commercial loan repayment (-5.7% YTD). Zooming in retail loans which our targeted area, it grew as plan, led by HP (4.3% YTD) and Growth Approx. +2% +0.4% YTD mor
Slide 29: Well-Prepared Position for a Rising Rate Environment
Well-Prepared Position for a Rising Rate Environment 29
Slide 30: Well-managed B/S composition in preparation of interest rate trend
Well-managed B/S composition in preparation of interest rate trend Funding Strategy Flexible Asset-Liability Portfolio Cost of deposit (Included DPA) The Bank will benefit from interest rate hike 1.27% due to well-positioned asset-liability portfolio Earning asset Pre-funded -50 bps 1,600 strategy A
Slide 31: Well-managed B/S composition in preparation of interest rate trend
Well-managed B/S composition in preparation of interest rate trend Priority is to minimize the negative Mark-to-Market impact during a rising rate cycle under proper market risk guidelines THB Government in Investment Portfolio Investment Portfolio Breakdown Data as of Dec-22 160% 4.0 2.3 Duration 1
Slide 32: Sound Capital and Liquidity Position
Sound Capital and Liquidity Position Robust liquidity position with high LCR and top tier capital ratios among D-SIBs LCR Ratio LDR + Borrowings Capital Ratios BoT's Minimum Requirement LCR Net Liquid Asset LDR LDR+Borrowing 20.0% 102.5% 101.5% 16.3% 188% 187% 100.4% 99.8% 15.7% 200 % 174% 184%* 98.
Slide 33: Y2022 Performance, Asset Quality, Target 2023
Y2022 Performance Asset Quality Target 2023 33
Slide 34: Loan mix optimization towards retail lending for better loan yield
Loan mix optimization towards retail lending for better loan yield Total Loan -1.3% QoQ Others 1,371 bn 1,394 bn 1,376 bn +0.4% YTD Retail Credit Card 1% 2% 2% 2% 2% 2% Used Car Retail Personal Loan 2% 2% 3% 16% Retail HP Cash Your Car (CYC) 29% 29% 30% New Car 14% 70% Cash Your Book (CYB) 0.1% Reta
Slide 35: Strategically building strong deposit franchise amid rate hike cycle
Strategically building strong deposit franchise amid rate hike cycle Total Deposit +1.9% QoQ 1,374 bn 1,399 bn +4.5% YTD 1,360 bn TD+NCD 12% 15% 17% Hybrid 47% 45% 43% Saving 34% ~41% 34% ~40% 34% ~40% CASA CASA CASA Current 7% 6% 6% Dec-21 Sep-22 Dec-22 % Retail deposits 74% 73% 73% • Key deposit s
Slide 36: Starting to see a payoff from pre-fund strategy
Starting to see a payoff from pre-fund strategy after a short-term impact on NII +23 bps QoQ 4.69% +21 bps YoY 4.70% 4.52% +1 bps YoY 4.60% 4.48% 4.47% 4.46% 4.50% 4.42% Loan Yield 4.51% 4.40% 4.30% 4.20% 4.10% Pre-funded strategy 4.00% +3 bps QoQ 0.75% 0.78% 0.81% 0.79% 0.82% +7 bps YoY 0.80% +3 bp
Slide 37: NIM and NII showing positive momentum
NIM and NII showing positive momentum, driven by strategic B/S initiatives Net Interest Margin (NIM) and Net Interest Income THB million +18 bps QoQ +12 bps YoY 3.10% 2.98% 2.92% NIM 2.97% 2.91% 2.95% -2 bps YoY 2.83% 51,000 51,617 +1% YoY +7% QoQ 13,826 +8%YoY 14,500 14,000 12,968 13,500 12,769 12,
Slide 38: Win-win solution in repurchasing AT1 with gain and capital utilization
Win-win solution in repurchasing AT1 with gain and capital utilization Total Non-NII THB million 16,0 00 14,537 14,236 -2% YoY 14,0 00 3,288 12,0 00 3,845 +17% YoY 10,0 00 8,00 0 +19% QoQ +7% YoY 6,00 0 Total Non-NII 11,248 10,391 -8% YoY 3,739 4,014 3,365 3,475 3,381 4,00 0 +49% QoQ Other Non-NII 7
Slide 39: Better performing YoY for most strategic fee products, except MF fee
Better performing YoY for most strategic fee products, except MF fee Breakdown Strategic Non-NII Products Bancassurance fee * (Included ttb broker) THB million ▪ 2022 strategic fee engines improved YoY, boosted by BA fee and other strategic commercial fees. 6,368 +9% YoY 5,847 ▪ However, MF fees rem
Slide 40: Benefiting from cost synergy, especially a reduction in recurring expenses
Benefiting from cost synergy, especially a reduction in recurring expenses Total Operating Income Total Operating Expense & C/I Ratio THB million 70,000 65,537 65,852 Flat YoY THB million 65,000 49% 48% 60,000 C/I 44% 45% 45% 46% 45% 14,537 14,236 -2% YoY Ratio 55,000 50,000 31,219 29,952 -4% YoY 35
Slide 41: PPOP growth, boosted by both profitability and cost efficiency
PPOP growth, boosted by both profitability and cost efficiency Pre-Provision Operating Profit (PPOP) THB million 36,169 +5% YoY 35,000 34,300 30,000 25,000 20,000 15,000 +8% QoQ +14% YoY 10,000 8,461 8,818 8,752 8,963 9,636 5,000 0 4Q21 1Q22 2Q22 3Q22 4Q22 2021 2022 • Recurring cost was under contro
Slide 42: Net Profit +36% YoY with lower provision
With core operating improvement and lower provision underpinning by controllable asset quality, Net Profit +36% YoY ECL & Credit Cost Net Profit Expected credit loss (ECL) (THB million) Annualized credit cost (bps) THB million 157 146 142 138 127 124 133 30,000 130 14,195 +36% YoY 25,000 21,514 10,4
Slide 43: Y2022 Performance, Asset Quality, Target 2023
Y2022 Performance Asset Quality Target 2023 43
Slide 44: Limited portion of deep restructuring in our modified portfolio
Limited portion of deep restructuring in our modified portfolio Total modified portfolio (Pre-COVID and during COVID) • Customers’ financial support has been migrated to a comprehensive debt restructuring as the BoT’s debt relief program expired. THB trillion Blue Orange Non-modified • To be prudent
Slide 45: Ensuring provision adequacy in response to Covid-19 crisis
Ensuring provision adequacy in response to Covid-19 crisis Guiding Principle of Post Relief Risk Schemes • To have effective management of the portfolios quality, our 7 post relief schemes Repayment Schedule Minimum PD have been used for both Covid-19 debt reliefs and legacy portfolio – collectively
Slide 46: Prudent loan staging with higher LLR buffer
Prudent loan staging with higher LLR buffer DPD Profile VS Loan Staging Internal data for managerial view - Breakdown as % of Loan principals (excluded interbank) >20% increase in LLR 4.0% 4.0% 4.1% from pre-Covid LLR Total loans* 3.1% DPD Staging DPD Staging DPD Staging DPD Staging DPD Profile No D
Slide 47: Strengthening portfolio quality
Strengthening portfolio quality Loan Classification (%) NPL Ratio/ Stage 3 Stage 1 Stage2 Stage 3 Pre-Covid-19 14.30% TFRS9 1.60 tn 1,6 00,000 1.50 tn 1.54 tn 1.53 tn 1,4 00,000 1,427 bn 1,2 00,000 1,380 bn 1,373 bn 1,347 bn 1,0 00,000 89.0% Stage 1 89.8% Stage 1 89.6% Stage 1 89.8% Stage 1 800 ,000
Slide 48: Building up reserve for future uncertainties
Building up reserve for future uncertainties Distribution of Risk Provision LLR Ratio (%) 131% 124% 125% 121% 129% 132% 133% 135% 138% 55.5 55.0 56.6 57.4 Allowance for ECL 60.00 52.0 53.8 54.4 53.9 54.5 (THB billion) Stage 1 50.00 10.1 12.6 12.4 12.6 12.8 12.5 13.3 11.1 12.4 Stage 2 40.00 Stage 3 2
Slide 49: Accrued interest reflecting our conservative approach
Accrued interest reflecting our conservative approach Accrued interest 1st phase of debt relief 3rd phase of debt relief (Full lockdown) (partial lockdown) 9,209 7,522 7,499 7,777 Approx. -16% from peak in 3Q20 7,145 7,130 7,232 7,369 7,148 7,351 6,442 7,720 6,440 5,143 6,444 6,497 6,793 6,998 7,351
Slide 50: Y2022 Performance, Asset Quality, Target 2023
Y2022 Performance Asset Quality Target 2023 50
Slide 51: TTB’s 2023 financial targets
TTB’s 2023 financial targets Loan Growth Approx. +3% • Loan growth target reflects our direction to maintain a selective growth strategy and prudent portfolio management under rate hike cycle and recession risk in major economies in 2023. Given our current portfolio structure, there is still room to
Slide 52: Appendix: ttb’s Sustainability
Appendix: ttb’s Sustainability 52
Slide 53: 2022 Sustainability Highlights
2022 Sustainability Update Business Sustainability Corporate Governance Environmental Social Sustainability and Business Ethics Sustainability > THB 1,672 mn #1 USD 150 million THB 318 mn Debt consolidation in Fair Finance Thailand for 4 Green and blue bond positive environmental and program consecu
Slide 54: Sustainability ratings & certification
Sustainability ratings & certification Sustainability Excellence 1st place in Fair Finance Inclusion in Thailand Inclusion in FTSE4Good for 1st time included in S&P Thailand ranking for 4 Sustainability Investment 7 consecutive years since Global’s Sustainability consecutive years (2019- (THSI) sinc
Slide 55: TTB’s Sustainability
TTB’s Sustainability We strive to integrate sustainability into our business and to ensure that our strategic objectives do not only fulfil short-term goals, but also contribute to long-term sustainable growth. Sustainability Sustainability Framework Sustainability KPIs Governance Board of Directors
Slide 56: Business Sustainability
Business Sustainability As we go forward on the path of sustainable banking and become the recommended bank of choice, digital banking is imperative for us to strive and deliver best-deal personalized solutions by life-stage and life-event through humanized digital platforms. Ecosystems for financia
Slide 57: Corporate Governance & Business Ethics
Corporate Governance & Business Ethics Our governance is based on policies and practices that ensure accountability, fairness and transparency. With good corporate governance, risk management and internal control, the Bank is more resilient and prepared for new challenges. It allows the Bank to oper
Slide 58: Environmental Sustainability
Environmental Sustainability We promote responsible and sustainable financing by assessing clients’ long-term environmental, social and governance impacts. At the same time, we manage our direct environmental footprints to improve operational and resource efficiency. Responsible Lending Sustainable
Slide 59: Social Sustainability
Social Sustainability We embrace the diversity of workforce and build the skills and capability of our workforce. Also, we contribute to the sustainable development of youth and community and promote financial inclusion and literacy for those financially vulnerable to have a life-long financial well
Slide 60: Disclaimer
Disclaimer: The information in this material is in summary form and does not purport to be complete. No representation or warranty, express or implied, is or should be made concerning, and no reliance should be place on, the accuracy, fairness, or completeness of this information and liability there
TMBThanachart Bank Public Company Limited (ttb) — Investor Day (January 2023) on 6ix