Tmbthanachart Bank Public Company Limited · SET:TTB
Tmbthanachart Bank Public — H1 2021 Earnings Presentation
34 slides from Tmbthanachart Bank Public's earnings presentation, Jul 21, 2021
Slide 1: Investor Presentation 2Q21/1H21 Financial Performance
Investor Presentation 2Q21/1H21 Financial Performance Analyst Meeting July 21, 2021
Slide 2: Integration Update, Relief Program Update, 2Q21/1H21 Performance & Asset Quality
Integration Update Relief Program Update 2Q21/1H21 Performance & Asset Quality 2
Slide 3: Executive summary - Successful EBT
Executive summary - Successful EBT Thailand kicked start 2Q21 with the resurgence of Covid-19 epidemic that put even more pressure on business environment throughout the quarter. Nonetheless, with a well-executed integration roadmap, a clear strategic direction to preserve balance sheet quality for
Slide 4: Successful entire business transfer (EBT) at a glance
Successful entire business transfer (EBT) at a glance 18-month integration journey 2 separate legal entities 1 legal entity under one governance Customers Channel System and Operation 100% loans 664 branches ~8k FTEs transferred or THB operated under one transferred ~620bn from TBANK bank, one syste
Slide 5: Balance sheet synergy realization already in place
Balance sheet synergy realization already in place Deposits mix Cost of deposits (excl. FIDF) 1,398 bn 1,324 bn 144 bn (11%) 1.06% TD+NCD 419 bn (30%) 50 bps COD drop at ttb vs. 702 bn industry’s drop of 38 bps 538 bn (53%) Hybrid (38%) 0.56% 0.53% CASA 478 bn 441 bn (36%) (32%) 2019 2Q21 1Q20 2Q20
Slide 6: Better-than-plan cost synergy realization
Better-than-plan cost synergy realization Cost synergy drivers Cost synergy realization to-date # branch THB bn Branch -230 Accelerated branch New cost saving rationalization thru the 1.8 from action done in launch of co-location 2021 894 664 format before EBT THB 5.6 bn accumulated Recurring cost 2
Slide 7: Post-EBT focus on delivering revenue synergy via flagship products
Post-EBT focus on delivering revenue synergy via flagship products ’s flagship ttb All Free & No Fixed ttb credit card ttb Drive – Cash your car Debt consolidation program via CYC New “Reserved” card customers can Transactions via ALL Free/Touch will earn for unsecured loan customers to enjoy “earn
Slide 8: Leveraging Strength from Group Structure
Leveraging Strength from Group Structure Group Structure Post-EBT • The current TTB’s group structure is well-balanced and reflects our strategic direction of gearing toward retail banking space. • While TBROKE, TMBAM Eastspring and TFUND are support businesses to the good bank side, PAMCO has an im
Slide 9: Integration Update, Relief Program Update, 2Q21/1H21 Performance & Asset Quality
Integration Update Relief Program Update 2Q21/1H21 Performance & Asset Quality 9
Slide 10: Executive summary - Preserve B/S quality for future growth
Executive summary - Preserve B/S quality for future growth ➢ 2Q21 Performance : Focusing on funding optimization and cost discipline against revenue pressure. Asset quality in line with target. ▪ NII and NIM was fairly stabilized QoQ as funding optimization helped reduce pressure from a slowdown in
Slide 11: Debt relief profile as % of total loan portfolio
Debt relief profile as % of total loan portfolio Loans under Relief Program to Total Loans • Under prolonged Covid-19 situation, TTB continues to support our THB billion customers in need as it is one of our priorities. 1,382 1,380 1,359 • As expected, after the 3rd wave of Covid-19 resurgence at th
Slide 12: Principle-based relief schemes and deterioration of asset quality captured by the ECL model
Principle-based relief schemes and deterioration of asset quality captured by the ECL model Guiding Principle of Post Relief Risk Schemes • The Bank has provided relief measures to affected customers, ranging from scheme 1-7 (SC1-SC7), based on customer’s debt service ability Repayment Schedule Mini
Slide 13: Debt relief profile by customer segments and key products
Debt relief profile by customer segments and key products Commercial Loans Non-Debt Relief Loans under Relief Program (Included Debt Relief Exit) THB billion Corporate Small Enterprise 601 603 585 • As of Jun-21, 16% of commercial loans remained in debt relief program, lower QoQ due to an exit of 50
Slide 14: Covid-19 readiness: Call center and non-voice capacity expansion
Covid-19 readiness: Call center and non-voice capacity expansion to support incoming relief requests Incoming requests from impacted customers ~56k call a month during peak period ~80k call a month after partial lockdown, and closely during peak period monitor after full lockdown in July ~300k call
Slide 15: Covid-19 readiness: Debt relief measure phase 3
Covid-19 readiness: Debt relief measure phase 3 Extended period of existing program (7 schemes) until 31 Dec 2021 BOT’s 2-month skip payment program Qualification Non NPL (as of registration date) Credit card and revolving loan Relief program to support employers and employee customers that Purpose
Slide 16: Integration Update, Relief Program Update, 2Q21/1H21 Performance & Asset Quality
Integration Update Relief Program Update 2Q21/1H21 Performance & Asset Quality 16
Slide 17: Summary of 1H21 operating performance
Summary of 1H21 operating performance 2021 Targets Actual 1H21 Loan ≤Flat -2.5% YTD • As part of B/S optimization initiatives, TTB strategically shrink low yielding loans and high risk segment Growth with a plan to redeploy them in higher yielding assets. However, due to Covid-19, we have been more
Slide 18: Maintaining loan quality portfolio against a resurgence of Covid-19
Maintaining loan quality portfolio against a resurgence of Covid-19 Total Loan -1.6% QoQ -2.5% YTD Others 1,393 bn 1,380 bn 1,359 bn Retail Credit Card 1% 1% 1% Retail Personal Loan 2% 2% 2% Used Car 2% 2% 2% 18% 29% New Car Retail HP 29% 30% 68% CYC 14% Retail Mortgage 22% 22% 22% CYB 0.1% Small En
Slide 19: Deposit strategy and structure improving cost of deposit
Deposit strategy and structure improving cost of deposit Total Deposit -4.3% QoQ -3.6% YTD 1,373 bn 1,384 bn 1,324 bn TD+NCD 14% 11% 11% Hybrid 51% 53% 51% Saving 29% ~35% 32% ~38% 29% ~36% CASA CASA CASA Current 6% 6% 7% Dec-20 Mar-21 Jun-21 % Retail deposits 76% 76% 75% • Deposit decreased -4.3% Q
Slide 20: Optimizing balance sheet with healthy liquidity position
Optimizing balance sheet with healthy liquidity position Continue Optimized B/S through Liquid Asset Management Retail Deposit is a Major Source of Funds Net Liquid Asset LDR LDR+Borrowing % of Total Funding Mar-21 Jun-21 Unit: THB Bn 103% 101% 100% 100.00% 63% 64% 400 97% 95.00% 95% 95% 90.00% 85.0
Slide 21: Consistent improvement in cost of deposit with a strong liquidity position
Consistent improvement in cost of deposit with a strong liquidity position Strong Liquidity Position 1,398 1,404 1,443 1,392 1,398 1,406 1,393 1,384 1,359 Loans -2.5% YTD 1,382 1,373 1,363 1,380 1,324 Deposit -3.6% YTD 1.51% 1.29% 1.16% 0.96% 0.84% 0.80% 0.76% Cost of Deposit ~210 bn -75 bps from De
Slide 22: Stabilized NIM from ability to manage deposit cost despite declining asset yields
Stabilized NIM from ability to manage deposit cost despite declining in asset yields Cost of Deposit Loan Yield Net Interest Margin (NIM) Loan yield (excluded PPA impact) 6.00% 5.03% 5.23% 4.72% 4.64% 4.68% 5.00% 5.50% -8 bps QoQ 5.08% -2 bps QoQ 4.88% -52 bps YoY 3.00% 1.80% 5.00% -36 bps YoY +10 b
Slide 23: Under Covid-19 and the focus on loan quality, NII on pressure
Under Covid-19 and the focus on loan quality, NII on pressure Net Interest Income THB million 33,000 -5.2% YoY 27,059 28,000 25,654 23,000 -0.7% QoQ -2.0% YoY 18,000 13,045 12,872 12,782 13,000 8,000 3,000 2Q20 1Q21 2Q21 1H20 1H21 • With the support from funding strategy, 2Q21 NII slightly dropped Q
Slide 24: Lower consumer activities during Covid-19 pressuring Non-NII engines
Lower consumer activities during Covid-19 pressuring Non-NII engines Total Non-Interest Income (Non-NII) THB million 9,00 0 7,705 8,00 0 7,089 -8% YoY 7,00 0 6,00 0 2,732 1,859 -32% YoY Total Non-NII 5,00 0 3,971 3,523 4,00 0 3,118 -21% QoQ, -12% YoY 939 Other Non-NII 3,00 0 1,365 919 -2% QoQ, -33%
Slide 25: The 3rd wave disrupting retail fees recovery path
The 3rd wave disrupting retail fees recovery path Breakdown Strategic Fee Products THB million (Prelim data) +8% YoY 270 +8% YoY 250 803 -7% YoY 746 110 119 +55% YoY LG fee 1,536 132 990 TF and FX fee 135 383 313 55 +4% QoQ, +4% YoY Loan-related fee 43 137 131 +10% QoQ, +46% YoY 280 704 1,088 420 Mu
Slide 26: Initial success at relaunching new TSP, building recurring fee for long run
Initial success at relaunching new TSP, building recurring fee for long run Why New TSP is Better for Customer 13.7 bn Everybody can invest With minimum only 1 baht to invest Reduce liquidity issue Able to buy/sell/switching daily even during portfolio adjustment and Settlement is T+5 Market differe
Slide 27: With cost discipline, cost synergy realization going as plan
With cost discipline, cost synergy realization going as plan Total Operating Income Total Operating Expense THB million 40,000 THB million 34,764 20,000 35,000 32,743 -6% YoY -5% YoY 18,000 16,107 30,000 7,705 16,000 15,330 7,089 -8% YoY 14,000 -7% QoQ 25,000 -6% QoQ 12,000 -4% YoY -5% YoY 20,000 16
Slide 28: C/I ratio in line with target, with long-term aspiration to achieve low-40s
C/I ratio in line with target, with long-term aspiration to achieve low-40s Cost-to-Income Ratio C/I ratio (excluded PPA impact) 45% 46% 45% 45% 45% 70% 46% 60% -1 bps 36% 50% 47% 47% 46% -1 bps 46% 47% +1 bps 26% 40% 30% 16% 20% 6% 10% 0% -4% 2Q20 1Q21 2Q21 1H20 1H21 • With the pressure on income a
Slide 29: Pre-provision profit reflecting our prudent business direction
Pre-provision profit reflecting our prudent business direction Pre-Provision Operating Profit (PPOP) THB million 20,000 18,653 18,000 17,401 -7% YoY 16,000 14,000 12,000 10,000 8,791 8,898 8,502 -4% QoQ 8,000 -3% YoY 6,000 4,000 2,000 0 2Q20 1Q21 2Q21 1H20 1H21 • As a result of our prudent business
Slide 30: Prudent risk management and prudent level of allowances set aside
Prudent risk management and prudent level of allowances set aside ECL & Credit Cost Net Profit Expected credit loss (ECL) (THB million) THB million Annualized credit cost (bps) 30,000 300 25,000 238 250 199 7,258 20,000 200 160 161 161 -27% YoY 144 141 15,000 150 -9% QoQ 5,316 Flat QoQ 10,971 +13% Y
Slide 31: Building provision coverage by stage
Building provision coverage by stage Distribution of Risk Provision *Remark 132% 131% 124% 125% 114% 140% LLR Ratio (%) 130% 120% 110% 100% 90% 80% 54.4 70% 60% 52.0 53.8 Allowance for ECL 50% 48.4 44.4 10.12 Stage 1 (THB billion) 11.13 12.59 11.31 Stage 2 9.85 21.92 21.00 19.63 21.62 Stage 3 17.14
Slide 32: Prudent actions to strengthen portfolio quality
Prudent actions to strengthen portfolio quality Loan Classification (%) NPL Ratio/ Stage 3 Stage 1 Stage2 Stage 3 Pre-Covid-19 19 TFRS9 1.60 tn 14.3% 1.58 tn 1.50 tn 1,427 bn 1,417 bn 1,346 bn 89.0% Stage 1 89.9% Stage 1 89.5% Stage 1 8.3% Stage 2 7.4% Stage 2 7.6% Stage 2 2.76% Stage 3 2.75% Stage
Slide 33: Reinforce capital position with wider buffer over requirements
Reinforce capital position with wider buffer over requirements Solid Capital with ample buffer over requirement 19.6% +4.1% • We remain strongly capitalized, enabling the Bank to withstand the uncertainty ahead. + 1% 15.5% 14.4% 14.5% • Due to Economic headwind impacted from Covid-19 Tier 2 AT1 pand
Slide 34: 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 — H1 2021 Earnings Presentation on 6ix