Tmbthanachart Bank Public Company Limited · SET:TTB
Tmbthanachart Bank Public — 4Q23 and FY2023 Earnings Presentation
48 slides from Tmbthanachart Bank Public's earnings presentation, Jan 19, 2024
Slide 1: Investor Presentation 4Q23 & 2023 Financial Performance
Investor Presentation 4Q23 & 2023 Financial Performance 19 January 2024
Slide 2: 4Q23 and 2023 Performance / 2024 Strategy Update
4Q23 and 2023 Performance 2024 Strategy Update 2
Slide 3: Executive summary
Executive summary With aspiration to enhance financial strengths and increase shareholders’ value, Y2023 could be considered as one of successful years. Amid challenging economic environment, TTB has set a clear direction to avoid unnecessary risks and keep business focus on the Bank’s core strength
Slide 4: 2023 Financial deliverables
2023 Financial deliverables FY2022 2023 2023FY Actual Targets Actual Loan growth (YoY) +0.4% Approx. 3% -3.5% YTD In line with Deposit growth (YoY) +4.5% -0.9% YTD INCOME loan growth Net Interest Margin 2.95% 3.0% - 3.1% 3.24% Low single Non-NII growth - -3.4% digit growth EFFICIENCY C/I Ratio 45% M
Slide 5: Conservative loan growth with targeted retail lending growing on track
Conservative loan growth with targeted retail lending growing on track Total Loan -2.5% QoQ Others 1,376 bn 1,362 bn 1,328 bn -3.5% YTD 1% 0.5% Retail Credit Card 2% 2% 1% Used Car 3% Retail Personal Loan 3% 3% 3% 14% Retail HP 30% 30% New Car 31% Cash Your car (CYC) 68% 18% 24% Cash Your Book (CYB)
Slide 6: Selective deposit growth for funding cost management
Selective deposit growth for funding cost management Total Deposit +4.3% QoQ 1,399 bn 1,387 bn -0.9% YTD Time deposit 1,329 bn 17% 26% 32% Hybrid 43% 36% 30% Saving 34% ~40% ~38% 32% ~38% 32% CASA CASA CASA Current 6% 6% 6% Dec-22 Sep-23 Dec-23 % Retail deposits 72% 72% 70% • TTB started to build ti
Slide 7: Optimizing balance sheet with healthy liquidity position
Optimizing balance sheet with healthy liquidity position Continue Optimized B/S and Funding Management Retail Deposit is a Major Source of Funds THB Bn Net Liquid Asset LDR LDR+Borrowing % of Total Funding Dec-22 Dec-23 102% 98% 97% 98% 98% 100.0% 62% 61% 600 96% 94% 93% 94% 95.0% 92% 400 90.0% 85.0
Slide 8: Prudently managing B/S composition to ensure B/S healthiness
Prudently managing B/S composition to ensure B/S healthiness Optimized B/S Structure Investment Portfolio Breakdown Investment port at Asset Liab. & Equity 10% of total assets Cash & other assets 315 bn FVTPL 1% HtC&S Loan Deposit 1,328 bn 1,387 bn HTC&S FCY Bond 68% 11% THB Thai Corp Bond 6% Govt B
Slide 9: NIM expansion, driven by better loan yield and well-managed deposit cost
NIM expansion, driven by better loan yield and well-managed deposit cost Yield, NIM and Cost of Deposit FIDF fee reduction to 0.23% p.a. (Jan20-Dec22) 5.53% +20 bps QoQ 5.19% 5.33% +84 bps YoY 5.05% 4.69% 4.42% 4.46% Loan Yield +76 bps YoY 4.52% +5 bps QoQ 5.28% 3.34% 3.39% +29 bps YoY 3.10% 3.08% 3
Slide 10: Positive momentum in NIM and NII, driven by strategic B/S initiatives
Positive momentum in NIM and NII, driven by strategic B/S initiatives Net Interest Margin (NIM) and Net Interest Income THB million +5 bps QoQ +29 bps YoY 3.34% 3.39% 3.10% 3.18% 3.24% 3.08% +29 bps YoY NIM 2.95% 57,207 +11% YoY 51,617 15,500 +2% QoQ 15,000 14,948 +8%YoY 14,665 14,500 14,093 14,000
Slide 11: Excluding one-time AT1 gain in 2022, Non-NII demonstrating a stable trend
Excluding one-time AT1 gain in 2022, Non-NII demonstrating a stable trend Total Non-NII THB million 16,0 00 14,236 -3% YoY 13,754 14,0 00 12,0 00 3,845 3,392 -12% YoY 10,0 00 8,00 0 +1% QoQ -16% YoY 6,00 0 4,014 10,391 10,362 Flatted Total Non-NII 3,368 3,668 3,335 3,384 -10% QoQ YoY 4,00 0 1,264 80
Slide 12: Challenging environment for fee recovery
Challenging environment for fee recovery Breakdown Strategic Non-NII Products ▪ In the face of the challenging 2023 environment, the recovery of strategic Non-NII THB million Prelim-Numbers products has been slower than initially anticipated. Loan-related fee ➢ Bancassurance: BA saw a marginal YoY d
Slide 13: Improving core operating profit and achieving C/I as target
Improving core operating profit and achieving C/I as target Total Operating Income Total Operating Expense & C/I Ratio THB million 75,000 70,961 +8% YoY THB million 70,000 65,852 65,000 13,754 -3% YoY C/I 46% 44% 44% 45% 44% 43% 43% 14,236 Ratio 60,000 55,000 40,000 50,000 35,000 45,000 30,000 29,95
Slide 14: PPOP growth boosted by core operating performance and cost efficiency
PPOP growth boosted by core operating performance and cost efficiency Pre-Provision Operating Profit (PPOP) THB million 45,000 39,918 +10% YoY 36,169 40,000 35,000 30,000 25,000 20,000 Flat QoQ 15,000 +6% YoY 9,636 9,561 9,940 10,232 10,185 10,000 5,000 0 4Q22 1Q23 2Q23 3Q23 4Q23 2022 2023 • YoY gro
Slide 15: Strengthening LLR to 155% on the back of in-control asset quality trend
Strengthening LLR to 155% on the back of in-control asset quality trend ECL & Credit Cost LLR 275 164 155% 30,0 00 138 127 125 127 133 - 131 128 144% 25,0 00 Expected credit loss (ECL) (THB million) Special provision 22,199 Total provision (5 00) 138% Annualized credit cost (bps) 18,353 +21% YoY +31
Slide 16: Net profit +30% YoY, reflected successful strategy and execution
Net profit +30% YoY, reflected successful strategy and execution Net Profit Dividend Interim dividend Final dividend 32,0 00 8.4% 8.5% 8.2% 55% 7.9% 8.2% 9.0 % 50% 27,0 00 7.0% Payout ratio 6.5% 6.6% 43% 43% 7.0 % (Full Consol.) 22,0 00 5.1% 5.1% 35% 18,462 5.0 % 0.073 17,0 00 14,195 3.0 % TTB 12,0
Slide 17: Maintaining healthy and strong capital position since merger
Maintaining healthy and strong capital position since merger Tier I Ratio Capital Adequacy Ratio (CAR) 20.0% 20.7% 18.9% 16.3% 17.0% 14.6% BoT's min. requirement 4Q19 4Q22 4Q23 4Q19 4Q22 4Q23 • Since merger, TTB has continued to optimize capital usage and enhance shareholders’ return. • On the backd
Slide 18: 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 and Covid-19 measures have THB trillion Blue Orange Non-modifi
Slide 19: 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 portfolio quality, our 7-post relief schemes Repayment Schedule Staging Criteria have been used for both Covid-19 debt reliefs and legacy portfolio – collect
Slide 20: Conservative loan staging with strong LLR buffer
Conservative loan staging with strong LLR buffer DPD Profile VS Loan Staging Internal data for managerial view - Breakdown as % of Loan principals (excluded interbank) 4.8% +40% increase in LLR from pre-Covid 19 4.0% 4.1% LLR Total loans* 3.1% DPD Staging DPD Staging DPD Staging DPD Staging DPD Prof
Slide 21: Proactively resolved weak loans to ensure portfolio quality
Proactively resolved weak loans to ensure portfolio quality Loan Classification (%) Stage 3 Ratio (NPL Ratio) Stage 1 Stage2 Stage 3 Pre-Covid-19 14.30% TFRS9 1.60 tn 1.57 tn 1,6 00,000 1.50 tn 1.53 tn 1,4 00,000 1,373 bn 1,407 bn 1,2 00,000 1,427 bn 1,347 bn 1,0 00,000 89.0% Stage 1 89.8% Stage 1 8
Slide 22: Building up LLR, strengthening resilience for future uncertainties
Building up LLR, strengthening resilience for future uncertainties Distribution of Risk Provision 155% 144% 138% LLR Ratio (%) 124% 63.5 57.4 57.9 53.8 15.6 Allowance for ECL 10.1 13.3 13.6 (THB billion) Stage 1 21.9 24.5 28.2 Stage 2 25.9 Stage 3 21.8 19.6 18.3 19.7 Coverage by stage 1Q21 4Q22 3Q23
Slide 23: Accrued interest reflecting our conservative approach
Accrued interest reflecting our conservative approach Accrued interest 1st phase of debt relief 3rd Phase of debt relief Resume loan growth (Full lockdown) (partial lockdown) and M-rate hikes 9,209 No risk on stage 3 accrued interest 8,579 8,673 8,169 8,213 Accrued Int. Stage 1 & 2 7,522 7,777 7,232
Slide 24: 4Q23 and 2023 Performance / 2024 Strategy Update
4Q23 and 2023 Performance 2024 Strategy Update 24
Slide 25: ttb's transformation journey
ttb’s transformation journey + Financial closing of Entire business transfer after New digital platform and Transformation TMB-TBANK merger successful integration, making digital capability building towards digital- transaction 2 banks to become 1 D-SIB thru setup of ttb Spark first business and ope
Slide 26: Synergy realized to-date already surpassed 5-yr original target
Synergy realized to-date already surpassed 5-yr original target Target: 5-year synergy value (shared to investors on 24 Jan 2020) Actual: synergy realized 4 years since merger closing 14-20bn Total 20.7bn ▪ Exiting low-yield loan and increase CASA mix Balance sheet – -53bps COD from 1.06% to 0.53% i
Slide 27: 2024 outlook and recap of the bank's strategic intent
2024 outlook and recap of the bank’s strategic intent 2024external 2024 external outlook outlook ▪ Slow-growth environment Recap: Recap:governing the bank’sthoughts strategicon the bank’s direction intent ▪ High household debt ▪ Tightening regulatory landscape ▪ Optimize for return while maintaining
Slide 28: 3Y transformation roadmap and key deliverables
3Y transformation roadmap and key deliverables Transformation roadmap: 2 Revenue model transformation to rethink existing and 5 1 new revenue engines 4 Organizational Branch and process Digital transformation transformation transformation to build new capability to align organization to drive produc
Slide 29: Solid momentum of digital transactions in 2023
1 Solid momentum of digital txns in 2023, showing >40% growth yoy, +6% growth in channel contribution and +0.5% PromptPay market shares Financial transactions Non-financial transactions Channel mix of all Digital financial Deposit1/ % Digital financial transactions transactions (mn) % Others 1% 1% 1
Slide 30: Higher engagement via digital channel vs. physical channel
1 Higher engagement via digital channel, thanks to >10x reach vs. physical channel as well as deepening of the relationship over time Higher reach of digital channel vs. others Deepening of relationship over time Monthly customers (digital/ branch/ contact center) No. of monthly transactions mn cust
Slide 31: Meaningful engagement via personalized cards
1 Meaningful engagement delivered via ~700 personalized cards generated to 3.5mn customers resulting in 63mn impressions, 6.5mn views and 2.2mn clicks in 2023 Greeting Reminder Insight Inform Offer Impressions (mn) 63.8 7.5x 8.5 Views (mn) 6.5 6x 1.1 Clicks (mn) 2.2 7.5x 0.3 Y2022 Y2023 31
Slide 32: Increased engagement allows more cross-selling opportunities
1 Increased engagement allows more cross-selling opportunities which ultimately result in >50% digital sales growth in key products in 2023 Digital sales via ttb Touch Credit card Flash card Cash chill chill Cash Your Car booking (‘000s) booking (‘000s) drawdown (THB Bn) booking (’000 cars) 1.6x 1.8
Slide 33: Digital has become a major channel for new business generation
1 As a result, digital has become a major channel for new business generation and serve as a platform for future business model shift % Digital % Other channel 2023 YoY growth in digital channel Account Opening Mutual Fund Credit Card & Flash Card +124% +32% +44% 87% 93% 89% 18% 28% 34% 33% 8% 9% Y2
Slide 34: Revenue model transformation enabled by digital capabilities
2 Revenue model transformation enabled by digital capabilities From To ▪ Physical, staff-based acquisition ▪ Data-driven digital acquisition for new-to-bank as well as recuring engagement as one-off transaction for existing-to-bank customers ▪ Product-centric credit engine ▪ Scale at speed with cust
Slide 35: Focused ecosystems for new revenue model & customer engagement
3 3 focused ecosystems for new revenue model & customer engagement 2022 2023 2024 ~2.5mn Q1 Q2 Q3 Q4 Car Owner Customers New ttb touch R2,R3/R4 R5 R6 R7 R8 R9 ~1mn Payroll Customers ~1mn Home Owner Customers Staff-assisted tablet 35
Slide 36: Car owner ecosystem: connected value chains
3 Car owner ecosystem: connected value chains NOT EXHAUSTIVE SmartShop and EDC ttb broker for auto insurance. Partnership with OEM; to support payment Floorplan / pre-financing Partnership for enhanced exp. & customer loyalty from beyond banking offerings Commercial value chain Retail value chain 36
Slide 37: Car owner ecosystem – deepen engagement with car owners
3 Car owner ecosystem – deepen engagement with car owners and new acquisition model via digital channel My Car Roddonjai > 680,000 Cars onboarded > 59,000 Easy pass registered ~65% Car tax renewal vs other channels Motor insurance CYC drop lead conversion +50% 19% > 2,200 > 3.8mn > 8,000 Dealer Onbo
Slide 38: Streamlined CYC application journey for higher conversion
3 Streamlined CYC application journey for higher conversion From: existing offline journey Application Car appraisal Underwriting Approval Disbursement Processing /verification 6-7 days To: to-be digital journey (tentative Q2’24) Select loan objective, Fill Receives credit Choose car/ add car Select
Slide 39: Motor insurance renewal experience to be completed in 3 clicks
3 Motor insurance renewal experience to be completed in 3 clicks From: existing offline journey Customers confirm and Broker confirm Tele sale call 1st attempt Tele sale call 2nd attempt … … make a payment transaction to insurer 1-3 months 15-20 mins To: to-be digital journey (tentative Q2’24) Perso
Slide 40: Salaryman ecosystem – financial well-being solution for employees
3 Salaryman ecosystem – financial well-being solution for employees and supporting companies to better engage their people Welfare loan and debt consolidation My Work by ttb (soft launched Nov’23) Best-in-class employee well-being solution with financial literacy program for payroll customers Payrol
Slide 41: Home owner ecosystem – My Home widget to be launched in 1Q24
3 Home owner ecosystem – My Home widget to be launched in 1Q24 to capture needs of financial and non-financial of home owners My Home (to be launched in 1Q24) Experience the new level of household management Bill management with Refinance calculation & CYH top-up Reminder to renew Maintenance servic
Slide 42: Leaner cost base going forward via branch and back-office transformation
4 Leaner cost base going forward could be achieved by transforming branch/front-end and streamlining back office towards digital-first principle Lower cost achieved in the past was Strategic priorities going forward driven mainly by removing duplication between the two banks A B C Digital-first bran
Slide 43: Digital-first branch in action
4 A Digital-first branch in action: improved experiences and potentially release of staff capacity to focus on higher-value transactions Approach: 1) Migratable transaction (50% of txn at branch) → educate customers to do transactions via Touch or machine 2) Non-migratable transaction (50%) → develo
Slide 44: Digital's cost-to-operate has been funded from optimizing operations
4 Digital’s cost-to-operate has been funded from optimizing front/back-office operations, which would improve medium-to-long term cost structure Digital Branch + ATM No. of financial transactions Total cost to operate digital and Average cost per transaction (txn) branch/ATM (THB billions) (THB/txn)
Slide 45: Digital-first & digital-only operating model calls for significant shifts
5 Digital-first & digital-only operating model calls for significant shifts in ttb as an organization Initial success in talent attraction and employer branding during Aspired workforce mix roadmap 2022 to 2023 through the setup of ttb Spark and ttb Spark Academy 100% = 17,350 15,320 ∼600 530 368 13
Slide 46: 2023 Sustainability Performance
2023 Sustainability Performance Anchored by the B+ESG principle, we strive to integrate sustainability into our business, ensuring that our strategic objectives not only meet short-term goals but also contribute to long-term sustainable growth. Corporate Governance Business Sustainability Environmen
Slide 47: 2023 awards and recognitions
2023 awards and recognitions
Slide 48: 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 — 4Q23 and FY2023 Earnings Presentation on 6ix