Tmbthanachart Bank Public Company Limited · SET:TTB
Tmbthanachart Bank Public — TMBThanachart Bank — Jefferies 5th Asia Forum 2024
52 slides from Tmbthanachart Bank Public's conference presentation, Mar 20, 2024
Slide 1: TMBThanachart Bank Investor Presentation
TMBThanachart Bank Investor Presentation Jefferies 5th Asia Forum, Hong Kong March 20, 2024
Slide 2: Thailand's economic outlook
Thailand’s economic outlook 2
Slide 3: ttb analytics expected Thai economy to grow 2.6% in 2024
ttb analytics expected Thai economy to grow 2.6% in 2024 Economic forecast 2024 %YoY 2022 2023 2024F Positive GDP 2.5 1.9 2.6 ▪ Foreign tourism expenditure bouncing back ▪ Fiscal measures to boost consumption amid low cost-of- Private consumption 6.2 7.1 2.3 living pressure Private investment 4.7 3.
Slide 4: Key drivers on recovering path amid headwinds
Key drivers on recovering path amid headwinds 1. Private Consumption 2. Foreign Tourist 3. Merchandise Export (59% of GDP)* (12% of GDP)* (58% of GDP)* Index 2019=100 Index 2019=100 Index 2019=100 117.1 83.0 113.5 70.4 109.8 108.7 108.4 106.8 106.0 99.2 99.8 28.1 16.8 94.2 1.0 2020 2021 2022 2023 20
Slide 5: Thailand on track to meet tourism target
Thailand on track to meet tourism target Thailand’s foreign arrival and revenue, 2015-2023 Sectors’ revenue recovery of listed companies (SET) Million persons Trillion THB Unit: Index 2019=100 50 Foreign arrivals Foreign tourism revenue (RHS) 2.5 Millions Electricity & Water Supply 184 Consumer Good
Slide 6: The stock of FDI remains resilient; huge investment in EV production
The stock of FDI remains resilient; huge investment in EV production BOI foreign investment value BOI requested application on BEV production Billion THB USD million THB 848 billion on BOI 1,000 Requested Approved application requested, 2,000 1,746 Electronic vehicles or +43%YoY 1,500 EV Battery par
Slide 7: Overall resilient macro-financial stability remained robust
Overall resilient macro-financial stability remained robust Public Debt External Debt Current Account Foreign Reserve ** Real interest rate*** (%GDP) (%GDP) (%GDP) (Months of Import) (%) -2.9 39.0 27.5 19.8 17.9 Japan -3.4 Indonesia Philippines Singapore Japan 39.5 27.0 19.3 14.5 0.3 Malaysia 0.5 30
Slide 8: Why ttb?
Why ttb? 1 Track record of delivering results through our transformation journey 2 Shareholder value creation and commitment to all stakeholders 3 2024 Guidance 8
Slide 9: Transformation journey towards the most recommended bank of choice
Transformation journey towards the most recommended bank of choice TBANK Auto lending Leader Ready to take off for TMB better performance and shareholder value creation Top performing Launch of new ttb deposit franchise Touch / Biz One and setup of ttb Spark Integration of 2 banks Financial closing
Slide 10: Improvement pathway of key business drivers: 2018-23
Improvement pathway of key business drivers: 2018-23 Before 2019 2019-2021 2022-2023 Pre-merger Merger & Integration Integration Covid-19 Pandemic Completion 63% 31% Moving towards Before % Retail retail banking After Optimized 29% loan structure % SMEs 8% ▪ Sub-scale medium- ▪ D-SIB bank with sized
Slide 11: House-keeping early in our journey to handle legacy issue in SME portfolio
A House-keeping early in our journey to stay focus and to handle legacy issue in SME portfolio High-risk & non-profitable customer exit (loan balance) New SME acquisition (limit setup) with collateral focus Re-segment of LTV 100-120% SME-S portfolio with SmartBiz+ 10% 20% 85% 60% 81% 80% 49% LTV<100
Slide 12: Strong presence in car, home and payroll market
B Strong presence in car, home and payroll market, setting stage for growth opportunities to optimized return Loan structure optimization Breakdown retail portfolio Other loan 1% of total loan Pre-merger Post-merger Credit card 3% Personal loan 3% Mortgage 25% 63% 1,600 THB billion 1,392 Hire Purcha
Slide 13: Key financial deliverables post-merger
B Key financial deliverables post-merger Profit (THB bn) Income (THB bn) Consensus 2023 Key Performance Drivers 70.9 bn Consensus Consensus +7.8% 17.8 bn +0.5% 71.0 YoY Loan -3.5% YTD 69.3 +30.1% 65.5 65.9 YoY 18.5 Deposit -0.9% YTD +35.5% OPEX (THB bn) Consensus 14.2 31.3 bn +4.4% NIM 3.24% 32.2 -4
Slide 14: Synergy realized after 4 years already surpassed original 5-year target
B Synergy realized after 4 years already surpassed original 5-year 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 – -53 bps COD from 1.06%
Slide 15: Prudent risk management
C Prudent risk management Prudent risk management is always one of our priorities. We have closely monitor asset quality with stringent ECL model and considered forward-looking risks through Management Overlay to ensure sufficient provision level. During Covid-19 pandemic, ttb continued to be conser
Slide 16: Not prolonging the situation to mitigate risk from policy cliff
C1 Not prolonging the situation to mitigate risk from policy cliff Remaining prudent approach for risk management Stronger LLR buffer Covid-19 outbreak Loan outstanding 1,393 1,371 1,376 (THB million) 1,400 1,328 1,350 1,300 180% 160% 155% Credit cost35.0 179 164 Total credit200 cost 138% 157 140% 1
Slide 17: Stringent loan staging to ensure sufficient ECL level
C2 Stringent loan staging to ensure sufficient ECL level Ensuring provision adequacy and tightening risk management Conservative loan staging DPD Profile VS Loan Staging DPD Staging DPD Profile Loan Staging No DPD Bucket 1 DPD 1-30 Stage 1 93.2% 87.9% Bucket 2 DPD 31-60 Stage 2 DPD 61-90 Stage 3 Buc
Slide 18: Also ensuring quality of revenue recognition
C3 Also ensuring quality of revenue recognition Ensuring quality of revenue recognition Apply 100% provision on stage 3 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
Slide 19: Initial result from enhancing credit card revenue engine
D Initial result from enhancing credit card revenue engine Key spending by categories (2023 %YoY growth) Credit card spending Insurance Gas 23% 3% % Industry credit card %ttb credit card spending growth spending growth 5% 31% Industry* ttb Industry* ttb -1% 22% 22% Hospital Supermarket 19% 19% 10% 7
Slide 20: Boosting cross-selling of day-2 lending to existing customers
D Boosting cross-selling of day-2 lending to existing customers who have demonstrated good repayment discipline CYC new booking (THB) CYH new booking (THB) P-Loan booking (THB) +138% +210% +214% Y2021 Y2022 Y2023 Y2021 Y2022 Y2023 Y2021 Y2022 Y2023 20
Slide 21: Solid momentum of digital transactions in 2023
D 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 22: Higher engagement via digital channel
D 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 23: Meaningful engagement via personalized cards
D 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 23
Slide 24: Increased engagement allows more cross-selling and digital sales growth
D 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 25: Digital's cost-to-operate funded from optimizing operations
D 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 26: 2024 outlook and recap of the bank's strategic intent
E 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 maintaini
Slide 27: 3Y transformation roadmap and key deliverables
E 3Y transformation roadmap and key deliverables Transformation roadmap: 2 Revenue model transformation to rethink existing and 5 1 new revenue engines 4 Organizational Channel and process Digital transformation transformation transformation to build new capability to align organization to drive pro
Slide 28: Revenue model transformation enabled by digital capabilities
E 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 LENDING ▪ Product-centric credit engine ▪ Scale at speed
Slide 29: Focused ecosystems for new revenue model & customer engagement
E 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 29
Slide 30: Car owner ecosystem: connected value chains
E 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
Slide 31: Car owner ecosystem – deepen engagement with car owners
E 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 On
Slide 32: Streamlined CYC application journey for higher conversion
E 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 Sele
Slide 33: Salaryman ecosystem – financial well-being solution
E 3 Salaryman ecosystem – financial well-being solution for staffs 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 Payroll
Slide 34: Home owner ecosystem – My Home widget
E 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 serv
Slide 35: Leaner cost base through transforming branch and back office
E 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 br
Slide 36: Digital-first branch in action
E 4 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 37: Digital-first operating model calls for significant shifts in ttb
E 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
Slide 38: Why ttb?
Why ttb? 1 Track record of delivering results through our transformation journey 2 Shareholder value creation and commitment to all stakeholders 3 2024 Guidance 38
Slide 39: Steady recovery from Covid-19
Steady recovery from Covid-19 Net profit momentum and Analyst Consensus THB bn 6.00 Net profit Consensus Covid-19 4.73 4.87 5.00 Covid-19 4.57 Wave #1 Wave #2 4.29 4.00 3.71 3.85 3.44 3.19 3.00 2.78 2.80 ~4x 2.53 2.36 2.00 1.62 1.23 1.00 - 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23
Slide 40: Maintain commitment to create shareholders' value
Maintain commitment to create shareholders’ value Shareholders’ value creation is one of our aspiration. We seek to optimize capital deployment to increase shareholder value, aiming for consistent dividend stream in the long run. In 2022, the Bank lifted DPS to 50% and 55% in 2023, the 2nd highest D
Slide 41: Valuation reflecting votes of confidence from investors' community
Valuation reflecting votes of confidence from investors’ community Current valuation ROE 2019-2023 and 2023 Dividend Payout Ratio (Conso) Avg. DPR P/BVx P/Ex ~48% +ROE, below avg. DPR +ROE, above avg. DPR Current Current 500 Small bank 1.91 11.1 +ROE D-SIB 0.80 8.8 (bps) 250 0.79 9.8 Small Bank 0.75
Slide 42: Alignment of long-term interests between bank and shareholders
The alignment of long-term interests between bank and shareholders Retention programs 2024 Employee Joint Investment Program (EJIP) Budget 2.5 times higher than the previous year (eligible for 11,755 employees) ➢ The program will grant share contribution from employees and ttb the right to ~11,755 h
Slide 43: Commitment to all stakeholders
Commitment to all stakeholders Customers Financial well-being enabler • Improvement in main bank customers’ financial well-being • Employee retention Employees Employer of choice ➢ Long term employee incentive program (e.g. EJIP) • Critical positions filled by internal candidates1 • ROE at top peer
Slide 44: Why ttb?
Why ttb? 1 Track record of delivering results through our transformation journey 2 Shareholder value creation and commitment to all stakeholders 3 2024 Guidance 44
Slide 45: 2024 Financial Guidance
2024 Financial Guidance 2023 2023FY 2024 Targets Actual Target Loan growth (YoY) Approx. 3% -3.5% YTD Flat In line with In line with Deposit growth (YoY) loan growth -0.9% YTD loan growth INCOME Net Interest Margin 3.0% - 3.1% 3.24% 3.1%-3.25% Low single Low single Non-NII growth digit growth -3.4%
Slide 46: Appendix
Appendix • TTB share profile • 2023 sustainability update • Sustainability ratings & certification 46
Slide 47: Vision Mission
Vision To become the recommended bank of choice by our customers Mission To improve our customers’ life-long financial well-being 47
Slide 48: TTB's financial group
TTB’s financial group Focus on our core competencies, our strengths and what we know well thru development of new businesses or new way of doing existing business. Shareholder Structure Group Restructuring as of March 2024 Subsidiary Company Phahonyothin Asset Management serves as a 100% sizeable AM
Slide 49: 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. Data as of 2023 49
Slide 50: 2023 awards and recognitions
2023 awards and recognitions
Slide 51: TTB's sustainability ratings & certification
TTB’s sustainability ratings & certification Sustainability Excellence 1st place in Fair Finance Inclusion in Thailand Inclusion in FTSE4Good for 8 1st time included in S&P Thailand ranking for 5 Sustainability Investment consecutive years since 2016 Global’s Sustainability consecutive years (2019-2
Slide 52: 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