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TMB Bank Plc.
Empowering Customers
with Digital Banking
Investor Presentation
4Q16 and 2016 Performance
Make THE Difference
[2]
AGENDA
4Q16 and FY2016 Performance
Asset Quality
2016 Wrap-Up and Looking Forward
1.79%
1.35%1.24%
0.0%
0.4%
0.8%
1.2%
1.6%
2.0%
4Q15 3Q16 4Q16
Cost of deposit
[3]
Optimized deposit structure towards more Transactional Deposits
Optimization of deposits resulted in deposit decrease of 7.1% YoY
Time deposit declined by 32% YoY, in line with the
strategy to convert high cost deposits to mutual fund
Key retail deposit increased:
Retail transactional accounts increased 4%. Key driver
was “All Free” which relaunched in 4Q16
No-Fixed & ME rose 4.2% YoY
% Transactional deposit/total deposit rose to 40%
from 37% in 2015
In 2016, 52% of deposit outflow was actively converted to mutual fund, in line with the strategy to optimize deposit volume toward transactional deposits to be in line with loan growth
2016 cost of deposit reduced 38 bps to 1.45%
% Txn deposit/total deposit
37% 38% 40%
FY2015 FY2016 Change (bps)
1.83% 1.45% -38 bpsDeposit cost
5.70%
5.38% 5.39%
4.0%
4.5%
5.0%
5.5%
6.0%
4Q15 3Q16 4Q16
Loan yield
[4]
Moderate performing loan growth driven by retail loan
Total loan growth was moderate at 2.2%. Performing loan grew 2.8%
Retail loan increased +32% YoY, led by mortgage loan
+53% YoY and credit card +26% YoY
Corporate declined -6.6%
SMEs declined -3.1%
TMB has grown mortgage loan market share from 3.4% to 4.8%* on the back of
Improving end-to-end process to improve turnaround
time resulted in an increase in efficiency
Developed mortgage mobile sale channels along with
building relationship with top developers
2016 loan yield (5.44%) dropped 30 bps from 2015 (5.74%)
mainly from the shift in loan mix toward mortgage loan and
MLR and MRR reduction
Note: MLR and MRR cut 25 bps in April-16
+0.3%+2.8%
FY2015 FY2016 Change (bps)
5.74% 5.44% -30 bps
* Market share as of Sep 2016
Loan yield
[5]
NIM improved from optimization of deposit structure and achieved
better funding cost
In 4Q16, NIM rose 9 bps QoQ to 3.33%, or driven
mainly by optimizing deposit mix and well-managed
funding cost, while yield came down less
2016 NIM increased by 15 bps to 3.17%
FY2015 FY2016 Change
3.02% 3.17% +15 bpsNIM
FY2015 FY2016 YoY growth (%)
THB23,220 mn THB24,761 mn 6.6%NII
As a result of further NIM improvement, NII grew
by 2.0% QoQ
2016 NII showed a steady growth of 6.6% YoY
+9 bps
+2.0%
[6]
Non-NII growth turned around from 3Q16
2016 Non-NII increased slightly by 2.7% YoY
Commercial banking fee declined due to
Loan-related fee dropped 32% YoY
Capital market income reduced 37% YoY
LG rose 9% YoY and Trade finance rose 14% YoY
Retail fees increased 12% mainly from bancassurance fee +32 YoY and credit card fee +65% YoY
Note: *Non-NII excluded gain on sales of assets
2,064 2,057 1,842 1,915 2,034 2,205
2,592 2,619 2,456
2,307
2,660
2,924
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
Other non-interest incomeNet fee and service incomeTotal non-interest income
Non-interest income
7,821 7,997
10,078 10,347
FY2015 FY2016
Non-NII improved 9.9% QoQ from 3Q16, supported mainly by net fee and service income
Net fee income rose by 8.4% QoQ driven mainly by key strategic fee products i.e. Bancassurance fee, LG and TF
+9.9%
+2.7%
+15.3%-6.0%-6.2%
THB million
[7]
431 297 287
407 527 527
529 679 555
514 537
788 140 138
122 114
125
130
82 65 84
98 86
87 340 306
263 285
216
170
2,064 2,057
1,842 1,915
2,034
2,205
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16
Other Loan related fee Trade finance
LG Fee Bancassurance Mutual fund
Fee income increased 8.4% QoQ for 3 consecutive
quarters after a drop in 1Q16 mainly from strategic
products, led by;
Bancassurance fee, +47% QoQ
LG fee +4% QoQ
Mutual fund fee was flat QoQ
However, loan-related fee dropped 24% QoQ
2016 fee income grew 2.2% led by growth in key strategic
fee products, despite heavily weighed down by 32%
reduction of loan-related fee
Bancassurance fee +23% YoY
LG fee +9%
TF +14%
Loan-related fee dropped 32% YoY
*MF: Mutual fund
1,751 1,748
1,939 2,393
450 492
312 355
1,368 934
7,821 7,997
2015 2016
Fee and service income (THB million)
Loan related -24% QoQ
BA+47% QoQ
LG+4% QoQ
TF +1% QoQ
MF flatted QoQ
Loan related -32%
+8.4% +2.2%
+6.2%+4.0%-10.4%
MF flatted
TF +14%
BA+23%
*BA: Bancassurance
Net fee income from strategic products continued its upward recovery
[8]
Operating costs were managed to be in line with business volume to
ensure growing operating profitability
In 4Q16, operating expenses rose 7% QoQ
due to an increase in marketing expense
For 2016, operating income grew 5%, with
focus in efficiency, operating expenses were
flat, in line with our principle that operating
expenses increase half of revenue growth
**Operating costs exclude loss on impairment of properties foreclosed, provisions of obligation on transfers of non-performing assets and provisions for other liabilities
***Non-interest income excluded gain on sale of asset
+0%expenses
+5%
[9]
Therefore PPOP continued to grow by 10% in 2016
PPOP recorded at THB4,834 million in 4Q16,
+0.5% QoQ
PPOP of 2016 continued to grow 10.2% YoY to
THB18,667 millionFY2015 FY2016 YoY growth (%)
THB16,937 mn THB18,667 mn 10.2%PPOP
Cost efficiency continued to improve
Cost to income ratio in 4Q16 increased QoQ due to
an increase in marketing expense
For the year 2016, cost to income ratio improved to
47% from 49% in 2015
[10]
FY2015 FY2016
49% 47%Cost to income ratio
4Q16 and FY2016 Performance
Asset Quality
2016 Wrap-Up and Looking Forward
AGENDA
[11]
NPL formation remains elevated, but less coming from new NPL
Note: 1) % NPL formation and NPL resolution calculated per total loan+ interbank loan
2) Stated as annualized basis
Average NPL formation in 2016 was 2.4%, higher
than 2.2% in 2015
However, new NPL formation slowed down in
2016. NPL formation in 2016 was more driven by
restructuring loan portfolio
New NPL formation in 4Q16 was lower to 0.8%
mainly due to SME portfolio
[12]
Average (%) FY2015 FY2016
Total NPL formation 2.2% 2.4%
New NPL formation 1.5% 1.1%
Speed up NPL resolution by writing off to limit further downside risk
Note: 1) % NPL formation and NPL resolution calculated per total loan+interbank loan
2) Stated as annualized basis
To be conservative and to reduce downside risk in the future, TMB is more proactive in writing off NPL in 2016
In 4Q16, TMB continued to write off NPL. However, amount of NPL written off was lower to THB2 billion compared with
THB6 billion in 3Q16
For 2016, TMB made an extra write-off amounted to THB12 billion and NPL sale amounted to THB1.2 billion
Consequently, NPL ratio dropped to 2.53%, with the written-off portfolio of THB22.2 billion
[13]
NPL resolution included extra write off
Natural NPL resolution
648
17 20
649
19 20
659
19 18
0
100
200
300
400
500
600
700
PASS SM NPL
450
500
550
600
650
Dec-15 Jun-16 Sep-16
Chart Title
94.6% 94.3% 94.8%
Dec-15 Jun-16 Dec-16
648
17 20
649
19 20
659
19 18
0
100
200
300
400
500
600
700
PASS SM NPL
Dec-15 Jun-16 Dec-16
[14]
TMB maintained stable performing loan portfolio quality with relatively
small restructuring and rescheduling loans
% of
total loan
2.98% 2.87%
2.52%
Dec-15 Jun-16 Dec-16
2.9%2.8%
2.7%
Dec-15 Jun-16 Dec-16
Pass, SM and NPL loan
0
10
20
30
40
50
60
70
Dec-15 Jun-16 Sep-16
SM-Normal SM-Reschedule SM-Restructure
THB bn
Loan quality
0
20
40
60
80
100
120
140
160
180
200
Dec-15 Jun-16 Sep-16
NPL
P-Normal 92.5%
SM-Restructured 1.9%*
Included restructured loan under concession rate of THB6.8 bn (1.0% of total loan)
Perform-Rescheduled 1.0%Perform-Restructured 1.2%
SM-Normal 0.7%SM-Rescheduled 0.2%
NPL 2.52%
94.8%
2.7%
Dec-16
THB bn
Special mention loan portfolio remained stable,
while NPL portfolio decreased as a result of write
offs that have reduced downside risks
With higher proportion of NPL formation coming from
TDR, our relatively small restructuring also mitigate
future downside risk
Note: Bank-only financial statementNote: Bank-only financial statement
0
4,000
8,000
12,000
16,000
20,000
Dec-16
NPL Breakdown SME NPL Total NPL
NPL Ratio reduced to 2.53% with TCG claimable of THB3.8 bn
NPLs as of Dec-16 was at TH17,605 million
QoQ slightly increased by 0.8%
YoY dropped by THB2.8 billion or 14% due
mainly to write-off NPLs in 2016
From total NPLs of THB17.6 billion, THB14.0 billion
was NPL in SME of which THB3.8 billion was
claimable from TCG
[15]
TCG
claimable 3.8 bn
From SME
17.6 bn
14.0 bn
THB million
The proactive provision was set high in 2016
The write-off loan was required to set up 100%
provision, disregarded of collateral value.
Additional write-offs together with uncertain
economic outlook, the Bank set relatively high
provision of THB2.2 billion in 4Q16
Provision was THB8.6 billion in 2016
Credit cost in 2016 is 146 bps
[16]
923
1,8771,998
2,541
2,234
64
128 135
172
151
-
20
40
60
80
100
120
140
160
180
0
500
1,000
1,500
2,000
2,500
3,000
4Q15 1Q16 2Q16 3Q16 4Q16
Provision expense Provision expense
Annualised credit cost
THB million bps
FY2015 FY2016 YoY growth (%)
THB5,479 mn THB8,649 mn 57.9%
94 bps 146 bps 52 bps
Provision expense
Credit cost
Coverage ratio remained high in line with the Bank’s target
[17]
As a result of higher provision, coverage ratio remained strong at 143% in 4Q16
Net profit declined due to higher provision
After provision, net profit was at THB2,138 million,
+15.9% QoQ
For 2016, net profit declined 11.9% YoY.
ROE was at 10.2%
[18]
FY2015 FY2016 YoY growth (%)
THB9,333 mn THB8,226 mn -11.9%
12.9% 10.2%
Net profit
ROE
Tier 1 improved to 12.8% in 2016
TMB maintained capital base at high level under Basel III requirements
Tier I capital improved from 2015 to 12.8% (entirely Core Tier I) and total CAR improved to 18.1%.
[19]
4Q16 and FY2016 Performance
Asset Quality
2016 Wrap-Up and Looking forward
AGENDA
[20]
-
500
1,000
1,500
2,000
2,500
3,000
3,500
Jan
-15
Feb
-15
Mar-
15
Ap
r-15
May-1
5
Jun
-15
Jul-
15
Au
g-1
5
Sep
-15
Oct
-15
No
v-1
5
Dec-
15
Jan
-16
Feb
-16
Mar-
16
Ap
r-16
May-1
6
Jun
-16
Jul-
16
Au
g-1
6
Sep
-16
Oct
-16
No
v-1
6
Dec-
16
Branch ATM/ADM Digital
TMB successfully migrate customers to digital channel
TMB’s proof points of Digital transformation in 2016
Digital Vision
2016
Active digital customers
500K in Dec 2016
% digital cust/active cust = 20%
*Active digital customers : Active internet banking customers + active mobile banking customers
Active digital customers as of Jan 2015 = 140K
Digital Financial transactions surpass traditional channels
Financial transactions : Transfer + Bill Payment + ORFT
+344.7%
+6.7%
+4.7%
Digital is a mean for “Empowering customers to make the most of their lives with simple and personalized banking”
“เป็นทุกความเป็นไปได้ เพื่อให้คุณใช้ชีวิตได้เต็มที่ในแบบที่คุณต้องการ”
% digital customers/active customers = 6%393 baht & 1.82 PH
142 baht & 1.26 PH
Sh
are
of
wallet
pro
du
ct h
old
ing
(P
H)
Digital cust
Non-digital cust
from Jan’15
Digital customers apply for so good – Grew 19 folds
รายการแบ่งจ่าย0% 3 เดือน
0
10
20
30
40
50
60
70
80
90
Jan-16 Dec-16
#Transactions, applying for So GoooD
via digital channel
via call center
52,869transactions
2,629transactions
61,612transactions
83,253transactions
(thousand)
(thousand)
4%%Digital/total channels 39%
The usage of digital channel in applying “So Goood”
feature grew 19 folds
% digital channel/ non-digital channel rose to 39% from 4% in Jan-16
Embracing the holistic shift to digital, cross-product
[21]
Areas of focus in 2017 to continue our growth
Transactional DepositGrowing transactional deposit
continues to be a challenge for both commercial and retail banking
Fee IncomeWhile Fee Income has improved
substantially from 2008 level of 0.6%
per EA, fee income capability remains
subpar comparing to Top Peers
EfficiencyWhile TMB has been more efficient
comparing to C/I of 71% in 2008,
efficiency still present a gap comparing
to Top Peers.
Note: Fee*/EA = Fee per Earning Asset; C/I = Cost to Income Ratio
* Fee = Net fee + Capital market fee
In 2016,
%Txn to Non-Txn Deposit in 2016 was at (40%) comparing to
ratio in the beginning of the year at (37%)
+107% increased in #no. of customer account in flagship product, namely “All-Free”
In 2016,
Fee/EA of 1.3% vs 2.0% Top Peers
In 2016,
TMB C/I = 47%; Peers’ C/I = 40%
[22]
Key financial targets
Key ratios 2016 Actual 2017 Target
Performing loan growth 2.8% 8-10%
Deposit growth -7.1% 8-10%
Net interest margin 3.2% 3.2%-3.3%
Net fee income growth 2.2% 10-20%
Cost to income ratio 47% 45-47%
ROE 10.2% 10%-12%
NPL ratio 2.53% 2.3-2.5%
Coverage ratio 143% 140-150%
Credit cost (annualized) 146 bps 140-150 bps
[23]
TMB Bank Public Company Limited
3000 Phahonyothin Road
Chatuchak, Bangkok 10900
Website: www.tmbbank.com
Disclaimer
This presentation contains some information from other sources, that TMB Bank Public Company Limited does not make any representations
regarding the use, validity, accuracy, or reliability of, or the results of the use of information, data but not limited to, all text, and images (“the Content”)
on this presentation. Some content may contain forward looking statements, that based on management’s view upon the information currently
available to us. These statement are subject to certain risks and uncertainties that could cause the actual results materially differed from what had been
previously stated. The materials in this presentation shall not, and are not intended to, constitute or contain an offer to sell or the solicitation of an offer to buy, any securities of TMB Bank Public Company Limited.
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