INVESTOR PRESENTATION

Transcription

1 INVESTOR PRESENTATION CREDIT SUISSE ASIAN INVESTMENT CONFERENCE 2012 Kannikar Chalitaporn, President Deepak Sarup, CFO 19 th -20 th March 2012

2 Agenda Page 1. Review of Result Future Positioning Targets 25 IMPORTANT DISCLAIMER: Information contained in this document has been prepared from several sources and the Bank does not confirm the accuracy and completeness of such data, particularly where the data is sourced from outside the Bank. In addition, any forward looking statements are subject to change as a result of market conditions and the finalresult may be different to that indicated. The Bank makes no representation or warranty of any type whatsoever on the accuracy or completion of the information contained herein. Page 2

3 2011 A RECORD YEAR AND PERFORMANCE WELL AHEAD OF TARGETS 2010 ACTUAL PROFITABILITY LOAN COST AND INCOME ASSET QUALITY CAPITAL REVISED TARGETS ACTUAL ROE 16.4% 17-19% 18.4% 2/ ROA 1.7% % 1.9% 2/ NIMs 3/ 3.11% 3.26% 4/ 3.26% Total loan growth (yoy) 12.6% 15-18% 22.1% Non-NII growth (yoy) 17.7% ND 20.7% 2/ Net fee & insurance premium growth 20.4% 25%+ 26.8% Cost to income 44% 43-44% 42.9% 2/ NPLs(gross) 3.3% 2.5% 2.61% Capital Adequacy Ratio 15.5% ND 14.5% Tier I 11.6% ND 11.2% 2011 RESULT (Highlights) -Another record net profitofbaht 31.2 billion (growth of 49.9% yoy) 2/ -Robust loan growth of 22.1% yoyacross all business segments and the corresponding uplift to NII -Strong Non-NII growth from solid fee and premium income growth of 26.8% yoy -NPL ratio fell to 2.61% of total loans DISTRIBUTION Branches 1,019 1,050+ 1,094 ATMs 8,006 9,250+ 8,459 ND = Not disclosed Targets revised upwards in July / Excluding Bt 5.1bn one-time investment gain on SCB Life. If this gain was included, thenet Profit would stand at Bt 36.3billion, the ROE at 21.3%, ROAat 2.2%, Net Profit growth at 49.9%, Non-NII growth at 37.9%, and Cost-to-income at 40.5%. 3/ In this quarter, the Bank adjusted its calculation of financialratios from using daily average calculations to determine the denominators to using the average beginning and ending balance for the period. All comparative financial ratios have been restated for comparative purpose. The primary reason for this shift is to bring the ratios in line with those published by third parties, none of whom have access to the daily average balance which was used as the denominator. 4/ Depends on the interest rate environment. The basis for computing the ratio was revised in 3Q11 and the target adjusted upwardsto 3.26%. = On track to target or higher Page 3

4 KEY ACHIEVEMENTS IN Record profits Page Robust loan growth across all segments Stable asset quality Robust fee income and insurance premium growth Strong deposit growth Effective cost control Solid capital base 15 Page 4

5 RECORD HIGH NET PROFIT WITH HIGH ROE & ROA Record Profits Net profit increased by 28.9% yoyin 2011 and 11.6% yoyin 4Q11, while operating profit increased by 27.2% yoyin 2011 and 12.0% yoyin 4Q11 Robust profitability with high ROE and ROA Net Profit (Baht billion) % yoy 31.2 ROE (Percentage) 15.5% 16.4% 18.4% Operating profit (Baht billion) % yoy 49.1 ROA (Percentage) 1.6% 1.7% 1.9% Excluding Bt 5.1bn one-time investment gain on acquisition of SCB Life. If this gain was included, the 2011 Net Profit would stand at Bt 36.3bnand Operating Profit at Bt 54.2bn, while 2011 ROE would stand at 21.3%and ROA at 2.2% Page 5

6 ROBUST LOAN GROWTH, BALANCED ACROSS ALL SEGMENTS Robust Loans Growth Loan growth of 22.1% yoywas broad-based while the qoqexpansion was mainly from the wholesale, SME, and auto hire purchase segments, which were the direct result of SCB s market share growth strategies Loans (Baht billion) +22.1% yoy 1,293 Wholesale Loans (Baht billion) SME Loans (Baht billion) Market Share Top 3 Market Share # % yoy +34.7% yoy , Loans breakdown (as at Dec 30, 2011) Wholesale 41.9% SME 18.4% Retail 39.7% Retail Loans (Baht billion) % yoy Others 2/ +23.5% yoy Auto +41.6% yoy (market share 15.4% 3/, #4) Housing +16.5% yoy (market share 30% 4/, #1) Includes loans classified as NPLs 2/ Others includes mainly credit cards and unsecured consumer loans 3/ Market share among the top 5 auto loan lenders, excluding captive finance companies), as of December / Market share for mortgage portfolio amongst commercial banks, comprising of housing loans and consumer loans secured with a mortgage, as of September 2011 Page 6

7 RESULTING IN STRONG GROWTH IN NII The growth in NII yoywas the result of strong loan growth, the rising interest rate environment, and the higher interest income from investments. Higher NII Over the year, NIM were subject to both volatile interest rates and the rapid rise in cost of funds due to the intense competition for deposits. Net Interest Income (Baht billion) +27.1% yoy 50.5 Yield of Earning Assets, NIM and Cost * (Percentage) Yield on Earning Assets Net interest margin Cost of funds 4.37% 4.40% 4.77% 5.27% 5.27% 3.28% 3.33% 3.17% 3.09% 3.14% % 1.51% 1.76% 2.28% 2.49% 4Q10 1Q11 2Q11 3Q11 4Q11 * In this quarter, the Bank adjusted its calculation of financial ratios from using daily average calculations for the denominators to using the average beginning and ending balance for the period. All comparative financial ratios have been restated for comparative purpose. The primary reason for this shift is to bring the ratios in line with those published by third parties, none of whom have access to the daily average balance used as the denominator. Yield on loans by BU Wholesale SME Retail 4.1% 4.2% 4.5% 5.0% 5.1% 5.6% 6.0% 6.4% 6.7% 6.9% 5.7% 6.0% 6.2% 6.4% 6.5% Page 7

8 EVEN AS ASSET QUALITY IMPROVED, ON A PRUDENTIAL BASIS THE BANK SET ASIDE ADDITIONAL PROVISIONS Stable Asset Quality NPLsfell to 2.61%, the lowest level in over a decade, due to debt restructuring, NPL sales, and the Bank s preemptive strategies to prevent new NPL formation. The improvement was broad based. As a result of regulatory forbearance the full impact of the flood related NPLsis not yet reflected in the reported data at 312/2011. The Bank expects the NPLsto rise in the bps range as and when the normal rules are applied again. The Bank set aside additional provision of Bt 3.3bn as a cushion against the impact of the continued dislocation in the global capital markets which may impact the Thai economy, and the consequence of the severe floods in the 4Q11 which will be manifest later in % 5% Gross NPL ratio & NPL Coverage ratio (Percentage) 6.10% Gross NPL% 107.5% 127.1% Provisions (Baht billion) % yoy +64.3% qoq 3.1 3% 0% 86.3% 3.25% 2.61% NPL Coverage ratio Q10 1Q11 2Q11 3Q11 4Q11 NPL by Segment Wholesale SME Retail 3.3% 2.9% 2.4% 11.7% 8.5% 5.7% 3.7% 2.5% 1.9% Page 8

9 STRONG AND INDEPENDENT RISK MANAGEMENT Effective Risk Management An effective Risk Management function The Bank has a robust Risk Management Framework with a corresponding governance structure, to ensure that risks are managed efficiently and effectively. The Risk Management Group reports directly to the President and is independent of the origination units. Over the past 8 years, the risk management group has not only grown in size but has, in addition, acquired the analytical capability necessary to monitor risk effectively. The Bank s effective credit risk management process has contributed to a steady improvement in asset quality, with the gross NPL ratio improving from 5.14% in 2008 to 2.61% as of December 30, has resulted in the highest ratings among Thai financial institutions Long-Term Foreign Currency Senior Unsecured Note Outlook BFSR 2/ Baa1 A3 Stable C- BBB+ BBB+ Stable - 3/ BBB+ BBB+ Stable C Rating assigned to the Bank s USD2.5bn Euro Medium Term Note (EMTN) program issued in / Bank Financial/Fundamental Strength Ratings 3/ S&P no longer assigns BFSR ratings to banks worldwide, startingdecember 6, 2011 Page 9

10 A YEAR-ON-YEAR SURGE IN NON-NII Strong Surge in Non-NII Non-NII has increased +37.9% yoyowing to higher net fee and insurance premium income and net trading income. Non-Interest Income (Baht billion) % yoy 40.5 (+23.9%yoy excluding Gain on Investment) (Baht 35.4bn excluding Gain on Investment) Gain (Loss) on Investment Other income Gain on trading and FX Net fee and Net insurance premium 2/ 39% 42% 41% 3/ 28% 30% 30% 3/ Non-NII % to total operating income Net fee and net insurance premium % to total income Other income includes income from equity interest in affiliatedcompanies, dividend income, and other operating income. 2/ From March 2011, bancassurancefee from SCB Life is eliminated on consolidation and reflected under net insurance premium hence it has been restated for other quarters to facilitate comparison. 3/ Excluding Bt 5.1bn one-time investment gain on SCB Life. If this gain was included, thenon-nii % to total operating income would stand at 44% and Net fee and insurance premium income % to total income at 29%. Page 10

11 ANCHORED ON ROBUST GROWTH IN FEE INCOME Higher Fee and Insurance Premium Income Net fee and insurance premium income grew 26.8% yoyfrom a stronger focus on fee based activities in all business segments Wholesale, SME, and Retail The yoygrowth was mainly driven by higher fee income from insurance products,card business and GMTS Net Fee and Insurance Premium by BU (Baht billion) Net Fee and Insurance Premium Breakdown (Percentage) % yoy Others % 12.0% 72% 7% 21% % 9% 22% Wholesale +34.8% yoy SME +65.0% yoy Retail +20.9% yoy Loan related fee Mutual fund Bancassurance and net insurance premium GMTS 1 Bank cards 9.9% 10.7% 12.8% 9.9% 22.6% 25.6% 15.2% 18.1% 27.6% 23.7% % Share % Share GMTS stands for Global Markets and Transaction Services, which includes cash management, trade finance, corporate finance and corporate trust 2/ Others include brokerage fee, fund transfer, remittance, etc. Page 11

12 STRONG DEPOSIT FRANCHISE FUNDING LOAN GROWTH Strong Deposit/BE Growth The Bank has slowed down on growing the volume of Bills of Exchange (BE) and shifted the focus back to growing deposits in 4Q11. At the same time, CASA remains high at56%. Total Deposits + BE (Baht billion) 975 1, %yoy 1,401 Deposits (Baht billion) , , % yoy Current Savings Fixed Bills of Exchange (Baht billion) %yoy CASA Current & Savings Accounts (%) % 61% 56% Bill of Exchange is a borrowing instrument and is akin to an uninsured deposit in the Thai market. Page 12

13 LIQUIDITY IS AT A COMFORTABLE LEVEL The Bank s loan to deposit + BE ratio fell in 3Q11. Given the high level of competition for deposits in the market, the Bank is comfortable with maintaining a loan to deposit ratio (including BE) in the mid 90s%. Ample Liquidity The Bank monitors its liquidity daily and has set its minimum liquidity ratio (liquid assets divided by total deposits and BE) at 20%. This is well in excess of the regulatory threshold. Loan to Deposit Ratio Liquidity Ratio 115% 109.1% 28% 25.8% 105% Loan to Deposit 25% 94%-96% 95% 85% Loan to Deposit + Bills of Exchange (BE) % The Bank expects deposits (including BE) to grow in tandem with loan growth in order to keep LDR within a comfortable range. 22% 20% 19% 4Q10 1Q11 2Q11 3Q11 4Q11 Liquid assets primarily comprise cash, deposits and bilateral repo with the Bank of Thailand as well as investment in government securities BE or Bills of Exchange are included in deposits as they are essentially akin to uninsured deposits Page 13

14 IMPROVING COST TO INCOME RATIO Effective Cost Control Operating expenses rose 20.8% yoydue to the consolidation of SCB Life from March 2011, the continued network and IT expansion, and the impact of flooding in the last quarter. Nevertheless, given strong total income, cost to income ratio fell to 42.9% from 44.2% in 2010 Operating Expense (Baht billion) +20.8% yoy Cost-to-Income Ratio (Percentage) % % 42.9% 2/ If the impact of the consolidation of SCB Life was excluded, the growth in Operating Expense is about 13.8%. 2/ Excluding the one-time investment gain in 1Q11. If this gain is included, the costto income ratio would stand at 40.5%. Page 14

15 STRONG CAPITAL BASE TO SUPPORT GROWTH AND EMERGING REGULATORY REQUIREMENTS The Bank believes its solid capital position will provide the flexibility to grow its business in a timely manner as growth opportunities arise in the quarters to come, in addition to providing a cushion against unexpected shocks Capital Base Capital Adequacy Ratio (Bank only) Basel II Standardized Approach Tier II Tier I 16.5% 15.5% 14.5% 4.2% 3.9% 3.4% 12.3% 11.6% 11.2% Should the 2H11 net profit be taken into consideration, CAR would stand at 15.7%, while Tier I would stand at 12.3%. Page 15

16 SCB RETAINS A STRONG COMPETITIVE POSITION AMONGST THE BIG THAI BANKS Highest Net Profit (Consolidated, Baht billion) Highest ROA (Percentage) Competitive Positioning 2011 Net profit ROA 0.9% 1.3% 1.5% 1.9% KTB KBANK BBL SCB Source: Commercial banks 2011 financial results Highest Market Cap (Baht billion) Highest ROE (Percentage) KTB BBL KBANK SCB Source: Commercial banks 2011 financial results Market Cap. as at Dec 30, ROE % 13.3% 16.7% 18.4% KTB KBANK BBL SCB Source: Stock Exchange of Thailand s website BBL KTB KBANK SCB Source: Commercial banks 2011 financial results Excluding one-time investment gain on SCB Life recorded in 1Q11. If such gain was included, the Net Profit would stand at Bt 36.3bn, ROA at 2.2%, and ROE at 21.3%. Page 16

17 SCB RETAINS A STRONG COMPETITIVE POSITION AMONGST THE BIG THAI BANKS (cont d) Highest Loan Growth(2011 vs. 2010) (Percentage) Highest Proportion of Non-NII(2011) (Percentage) Competitive Positioning 12.4% 14.1% 17.1% 22.1% Non Interest Income to Total Income 35.9% 37.6% 27.5% 41.2% 2/ KBANK KTB BBL SCB Source: Commercial banks 2011 financial results Lowest Cost to Income Ratio 3/ (2011) (Percentage) KTB BBL KBANK SCB Source: Commercial banks 2011 financial results Largest Branch & ATM Networks (as at Dec 30, 2011) 47.7% 47.5% 43.8% 42.9% # of Branches # of ATMs 975 1,022 1,094 6, ,207 7,417 8,459 KTB KBANK BBL SCB KBANK BBL KTB SCB BBL KTB KBANK SCB Source: Commercial banks 2011 financial results Source: Bank of Thailand s website, National ITMX Company Including net insurance premiums less net insurance claims 2/ Excluding one-time investment gain on SCB Life recorded in 1Q11. If such gain was included, the Non interest income to total income would stand at 44.5%. 3/ Excluding non-recurring items for SCB particularly the one time investment gain relating to SCB Life in 1Q11. If this gain is included, the cost to income ratio would stand at 40.5%. Page 17

18 Agenda Page 1. Review of Result Future Positioning Targets 25 Page 18

19 MACRO TRENDS FORECAST FOR 2012 Macro Estimates (%) 2011 Key drivers 2012 Comment and outlook Thai GDP growth will be driven more from domestic demand recovery from flood, and less from exports due to weaker global economy Government policies on wage and energy as well as increases in spending will keep pressure on inflation A rate cut early in the year to facilitate economic recovery. Downside risk due to possible fallout from the Eurozone Long term trend of USD weakening against Asian currencies should continue, but with short term volatility from risk aversion / 8.5 2/ Loan growth will moderate from exceptional growth last year, but remain robust from the need to repair and rebuild after flood. Headwinds include: more competition from SFI, lower current account surplus, and new FIDF fee imposed on B/E. %YOY except for policy rate (% per annum) and exchange rate (THB/USD) 2/ Estimate under review Source: SCB EIC analysis as of January 2011 based on data from the Ministry of Commerce, Bank of Thailand, and Office of the National Economic and Social Development Board Page 19

20 KEY DELTA GROWTH DRIVERS OVER THE NEAR TERM (CONTINUING THE MOMENTUM FROM 2011) Delta Growth Major current initiatives to obtain market share growth, over and above business as usual: Wholesale Continued expansion of market share, particularly in terms of fee income from the larger enterprises in this segment SME Gain further momentum from new SME business model, centered around gaining market share in the smaller end of this segment Auto Loans Expansion of market share in the auto hire-purchase segment with the aim to be the #1 originator within 2-3 years, with a strong focus in 2012 on used car loans Page 20

21 SUSTAIN MOMENTUM IN CAPTURING HIGHER MARKET SHARE IN THE WHOLESALE SEGMENT Delta Growth Wholesale EXISTING POSITION Among the top 3 in wholesale lending STRATEGIC THRUST: WHOLESALE FUTURE POSITION Market leading position in most fee-based products Remain as a top 3 lender Continued push to capture more wallet-share of fee income in the large enterprise segment Greater focus on capturing a clients value chain product clusters or supply chain network In-depth expertise in specific segments to develop compelling customer propositions and solutions Upgrade service delivery platforms to enhance user experience Wholesale Loans (Baht billion) Market Share Top Q10 1Q11 2Q11 3Q11 4Q11 Includes loans classified as NPLs Wholesale Fee Income (Baht billion) Deal momentum in 4Q11 impacted by the severe flooding +17.2% yoy +4.4% qoq 2011 growth over 2010: +34.8% -24.0% yoy -39.7% qoq 1.1 4Q10 1Q11 2Q11 3Q11 4Q11 Page 21

22 CONTINUED EXPANSION OF MARKET SHARE IN THE SME SEGMENT Delta Growth SME EXISTING POSITION Ranked #4 in the market STRATEGIC THRUST: SME FUTURE POSITION Ranked top 3 in the market Increase the SME loan volume with substantial uplift in fee income Develop deepercustomer insights, particularly in terms of customer behavior and financial needs at each life stage of a business Adopt a solution based approach to address the current and future financial needs of each customer segment, with a strong focus on fee income Enhance SME risk management capabilities by balancing risk and returns and monitoring to ensure growth has sustained profitability SME Loans (Baht billion) Market Share # % yoy +5.8% qoq 238 4Q10 1Q11 2Q11 3Q11 4Q11 Includes loans classified as NPLs SME Fee Income (Baht billion) 4Q11 fee impacted by the severe flooding growth over 2010: +65.0% % yoy -19.7% qoq 0.5 4Q10 1Q11 2Q11 3Q11 4Q11 Page 22

23 MAINTAIN LEADING POSITION IN KEY RETAIL PRODUCTS AND CONTINUE TO BUILD MARKET SHARE IN AUTO LOANS, PARTICULARLY USED CARS RETAIL Housing Loans (Baht billion) Delta Growth Retail EXISTING POSITION Leading positions in Mortgage, Credit Cards, Bancassurance STRATEGIC THRUST: FUTURE POSITION Maintain leading position in key products #1 in terms of loan origination for Auto loans Continue to build market share in auto loans with an emphasis on the used car segment Stronger focus on key customer segments through offering a differentiated proposition for each segment Further enhance product businessesthrough innovation in the product and delivery platform Increase productivity (end-to-end) of operations Hire Purchase (Auto loans and others) 2/ (Baht billion) Q10 Market Share 30%, #1 289 Market Share 15.4% 2/3/, #4 +31% yoy 4Q11 4Q % yoy Q11 4Q % yoy 4Q Q10 +23% yoy 156 4Q % yoy 336 4Q10 1Q11 2Q11 3Q11 4Q Q10 +14% yoy KK SCB TISCO BAY TCAP 4Q11 Market share for mortgage portfolio amongst commercial banks, comprising of housing loans and consumer loans secured with a mortgage, as of September / SCB sfigure is for auto loans only while other banks' figures include other hirepurchase loans:plant, machinery, equipment, motorcycle, and loan facilities to dealers. TCAP s growth in 2011 was mainly attributable to the acquisitions of Siam City Bank and Ratchthani Leasing PCL. 3/ Market share among the top 5 auto loan lenders, excluding captive finance companies, as of December 2011 Page 23

24 Agenda Page 1. Review of Result Future Positioning Targets 25 Page 24

25 2012 ASPIRATIONS 2010 ACTUAL PROFITABILITY LOAN REVISED TARGETS ACTUAL ROE 16.4% 17-19% 18.4% 2/ ROA 1.7% % 1.9% 2/ NIMs 3/ 3.11% 3.26% 4/ 3.26% Total loan growth (yoy) 12.6% 15-18% 22.1% 2012 TARGETS 17-19% % 3%+ 4/ 12-14% COST AND INCOME ASSET QUALITY CAPITAL DISTRIBUTION Non-NII growth (yoy) 17.7% ND 20.7% 2/ Net fee & insurance premium growth 20.4% 25%+ 26.8% Cost to income 44% 43-44% 42.9% 2/ NPLs(gross) 3.3% 2.5% 2.61% Capital Adequacy Ratio 15.5% ND 14.5% Tier I 11.6% ND 11.2% Branches 1,019 1,050+ 1,094 ATMs 8,006 9,250+ 8,459 ND 15% % 2.5% ND ND 1,150+ 8,500+ = On track to target or higher ND = Not disclosed Targets revised upwards in July / Excluding Bt 5.1bn one-time investment gain on SCB Life. If this gain was included, thenet Profit would stand at Bt 36.3billion, the ROE at 21.3%, ROAat 2.2%, Net Profit growth at 49.9%, Non-NII growth at 37.9%, and Cost-to-income at 40.5%. 3/ In this quarter, the Bank adjusted its calculation of financialratios from using daily average calculations of the denominators to using the average beginning and ending balance for the period. All comparative financial ratios have been restated for comparative purpose. The primary reason for thisshift is to bring the ratios in line with those published by third parties, none of whom have access to the daily average balance used as the denominator. 4/ Depends on the interest rate environment. The basis for computing the ratio was revised in 3Q11 and the target adjusted upwardsto 3.26%, the same level as 2010 Page 25

26 IMPORTANT DISCLAIMER: Information contained in this document has been prepared from several sources and the Bank does not confirm the accuracy and completeness of such data, particularly where the data is sourced from outside the Bank. In addition, any forward looking statements are subject to change as a result of market conditions and the finalresult may be different to that indicated. The Bank makes no representation or warranty of any type whatsoever on the accuracy or completion of the information contained herein. Page 26