1H18/2Q18 Financial Results

Transcription

1 1H18/2Q18 Financial Results Investor Presentation September 2018 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 final result 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 1 / 43

2 Agenda Page 1. Review of 1H18/2Q18 Results Economic Indicators and 2018 Strategy & Outlook Transformation Update Page 2 / 43

3 Moderate performance with higher revenue and strong buffers 1H18 Results PROFITABILITY INCOME/ COST LOANS/ ASSET QUALITY (Consolidated) 2017 Actual 2018 Targets 1H18 Actual ROE 12.4% N.A. 12.3% ROA 1.45% N.A. 1.47% Net interest margin 3.23% % 3.19% Non-NII growth (yoy) -2.2% Up to 5% 3.3% Cost/Income ratio 42.3% 45-47%* 45.9% Total loan growth (yoy) 4.9% 6-8% 6.7% NPLs (gross) 2.83% 3.0% 2.81% Coverage ratio 134.3% 130% 143.5% 1H18 Highlights 1H18 net profit was Baht 22.5 billion, a 5.7% yoy decline largely from higher operating expenses during the Bank s high investment cycle, while total revenue continued to grow. NIM was at 3.19%, in line with the annual target of %. Non-NII rose by 3.3% yoy mainly from higher net trading and FX income, net fee income, and gain on investments. Coverage ratio improved to 143.5% while NPL ratio stood at 2.81%. CAPITAL CAR 17.7% N.A. 17.1% CET1/ Tier % N.A. 15.1% * Revised per Board of Directors resolution on 19 July N.A. = Not Available Page 3 / 43

4 Financial Summary 1H18/2Q18 Financial Results 1H18 Results 1H18 %YoY Q18 Forecast %QoQ %YoY Total income % % 1.1% - NII % - Non-NII % % -12.9% 4.7% -6.2% Operating Expenses % % 10.7% Operating profit % % -5.9% Provisions % % -0.1% Net profit % % -6.7% Page 4 / 43

5 Top-line continued to grow on the back of net interest income growth Total Income Total operating income for the first half of 2018 grew 3.8% yoy, mainly driven by net interest income growth. On a quarterly basis, total operating income rose 1.1% yoy, supported by net interest income growth despite pressure from lower non-interest income. Total Operating Income (Baht billion) +3.8% yoy Non-NII % yoy +1.1% yoy -2.9% qoq NII % yoy % qoq -6.2% yoy % qoq +4.7% yoy 1H17 1H18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 %Non-NII/ total income 32.5% 32.3% 32.0% 32.9% 32.9% 31.0% 34.0% 30.6% Page 5 / 43

6 Net profit declined as OPEX outweighed revenue growth Profitability In 1H18, total income grew by 3.8% yoy from both NII and non-nii. However, an increase in OPEX from investments in new technology platforms as part of the Transformation Program and digital acquisition activities led to a 5.7% yoy decline in net profit. Net Profit and Operating Profit 1/ (Baht billion) Operating Profit % yoy Net Profit % yoy % yoy -3.1% qoq % yoy -2.2% qoq 1H17 1H18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 1/ Net profit before impairment provisions, non-controlling interest, and taxes. Page 6 / 43

7 Loan growth and effective funding cost management bolstered NII NII In the first half of 2018, NII increased by 4.0% yoy due mainly to loan growth of 6.7% yoy and better funding cost management. On a quarterly basis, NII growth of 4.7% yoy and 2.2% qoq was driven by loan growth and widened NIM. Loan Growth (%yoy) 5.8% 6.7% 6.2% 5.8% 4.3% 4.9% 5.7% 6.7% Net Interest Margin (NIM) 3.19% 3.19% 3.21% 3.18% 3.23% 3.28% 3.18% 3.21% Net Interest Income (Baht billion) % yoy +4.7% yoy +2.2% qoq H17 1H18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Yield on Earning Assets Yield on Loans Cost of Funds Costs of Deposits 4.35% 4.28% 4.39% 4.34% 4.38% 4.39% 4.26% 4.31% 5.41% 5.21% 5.44% 5.40% 5.43% 5.36% 5.19% 5.25% 1.46% 1.39% 1.48% 1.46% 1.45% 1.41% 1.39% 1.40% 1.40% 1.30% 1.40% 1.41% 1.39% 1.36% 1.31% 1.31% Page 7 / 43

8 F Above sector average loan growth in 2017 with an upward trajectory Credit Cycle Loan Growth (%yoy) SCB s acquisition of SCB Leasing 1/ and market share gains in SME segment Global financial crisis; SCB tightened credit underwriting standards SCB s market share growth strategies in mortgage, auto and SME segment Thailand s economic slowdown 30.0% SCB Loan Growth 20.0% 2018 SCB Loan Growth Target 10.0% 0.0% Banking Sector Loan Growth 4.9% 4.4% 6-8% 5-6% 2/ Estimated Sector Loan Growth by EIC -10.0% 1/ In 2006, the Bank increased its holding in SCB Leasing (then Thai Panich Leasing PCL) from 37.6% to 95.5%. 2/ SCB EIC s estimation as of July 2018 Source: Bank of Thailand s website (for sector loans growth) Page 8 / 43

9 Total loan growth at 6.7% yoy in line with the 2018 target Loan Growth The yoy loan growth was experienced across all segments, particularly in the corporate and retail segments. Loans 1/ (Baht billion) 1,970 1, % yoy +1.9% qoq 2,035 2,063 2,103 Corporate Loans1/ 3/ (Baht billion) % yoy +3.0% qoq SME Loans1/ 3/ (Baht billion) % yoy +0.8% qoq 344 2Q17 3Q17 4Q17 1Q18 2Q18 Loans Breakdown 1/ as at 30-Jun-18 2Q17 3Q17 4Q17 1Q18 2Q18 Retail Loans 1/ (Baht billion) 2Q17 3Q17 4Q17 1Q18 2Q18 Corporate 39.4% (38.5%) SME 16.4% (17.2%) Retail 44.2% (44.3%) Mortgage 30.3% ( 31.0%) Auto 9.1% (8.8%) Others 4.8% (4.5%) Retail +6.5% yoy +1.4% qoq Others 2/ +15.5% yoy +3.6% qoq Auto +10.8% yoy +2.7% qoq Mortgage +4.1% yoy +0.7% qoq ( ) : Loan breakdown as at 30-Jun-17 1/ Including loans classified as NPLs 2/ Mainly credit cards and unsecured consumer loans 2Q17 3Q17 4Q17 1Q18 2Q18 3/ Some SME customers have experienced sales turnover growth and have been reclassified as Corporate loans. Data for Jun 30, 2017, Dec 31, 2017, and Mar 31, 2018 are restated figures. Page 9 / 43

10 Coverage ratio continued to rise while NPL slightly increased Asset Quality NPL ratio stood at 2.81% in 2Q18, down from 2.83% in 4Q17, but rose from 2.77% in 1Q18 mainly driven by higher NPLs in SME segment and housing loans. Coverage ratio continued to rise and stood at 143.5%. In 2Q18, loan loss provision was set at Baht 5.0 billion, unchanged qoq and yoy, which was adequate based on prudential provisions for future uncertainty. Coverage Ratio 133.5% 136.4% 137.3% 141.9% 143.5% Provisions (Baht billion) % yoy -0.1% qoq Gross NPL % 2.65% 2.75% 2.83% 2.77% 2.81% Credit cost (bps) 2Q17 3Q17 4Q17 1Q18 2Q Non-Performing Loans (Baht billion) % yoy +2.4% qoq Troubled Debt Restructuring (Baht billion) % yoy -3.7% qoq NPL PL 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 Page 10 / 43

11 New NPL formation rose slightly but within expected range Asset Quality Special mention loans increased by 16.7% yoy and 9.9% qoq. The qoq increase was due mainly to qualitative classification to special mention loan of one corporate client in the commercial industry. In 2Q18, new NPL ratio stood at 0.44%, up qoq from mortgages for self-employed borrowers and auto loans. Special Mention (Baht billion) +16.7% yoy +9.9% qoq Total Loans 2Q17 3Q17 4Q17 1Q18 2Q18 NPL% 2.65% 2.75% 2.83% 2.77% 2.81% New NPL% 0.45% 0.38% 0.49% 0.41% 0.44% Corporate * NPL% 2.23% 1.85% 1.80% 1.77% 1.70% New NPL% 0.03% 0.01% 0.09% 0.06% 0.02% SME * Mortgage NPL% 7.65% 8.01% 8.08% 8.24% 8.25% New NPL% 1.08% 0.58% 0.67% 0.79% 0.68% NPL% 2.33% 2.76% 3.08% 3.01% 3.21% New NPL% 0.70% 0.70% 0.96% 0.70% 0.93% 2Q17 3Q17 4Q17 1Q18 2Q18 Auto Loans NPL% 1.72% 1.75% 1.82% 1.69% 1.67% New NPL% 0.50% 0.50% 0.54% 0.43% 0.51% * In 2Q18, some SME customers have experienced sales turnover growth and have been reclassified as Corporate customers. Data as of 2Q17, 3Q17, 4Q17, and 1Q18 are restated figures. Green / Red fonts indicate decrease / increase in new NPL formation as a % to total loans from the previous period. Page 11 / 43

12 Non-NII rose in 1H18 from stronger net trading & FX income, higher net fee income and gain on investments Non-NII Non-NII increased by 3.3% yoy in 1H18 mainly due to higher net trading & FX income, net fee income and gain on investments. On a quarterly basis, non-nii in 2Q18 declined by 6.2% yoy and 12.9% qoq largely due to lower net fee income from the fee waiver, lower net trading and FX income, and lower net insurance premium. Non-Interest Income (Baht billion) % yoy Gain on Investments Other Income 1/ Net Trading and FX Income % yoy -16.6% yoy +24.1% yoy Net Fee Income % yoy % qoq -6.2% yoy -34.2% qoq -4.3% yoy Net Insurance Premium %Non-NII to Total Income %Net Fee and Net Insurance Premium to Total Income % yoy H17 1H18 2Q17 1Q18 2Q % 32.3% 32.9% 34.0% 30.6% 24.7% 23.3% 23.8% 24.7% 21.7% -13.0% qoq -0.8% yoy -37.3% qoq -60.0% yoy 1/ Other income includes income from equity interest in affiliated companies, dividend income, and other operating income. Page 12 / 43

13 Despite digital transaction fee waiver, 1H18 net fee income increased yoy from rising corporate finance and bancassurance fees Fee Income In 1H18, net fee income grew by 5.5% yoy from higher fee income from corporate finance and bancassurance. On a quarterly basis, net fee income in 2Q18 declined by 13.0% qoq largely from the digital transaction fee waiver, lower mutual fund, and loan related fees. Net fee income Breakdown by Product (Baht billion) % yoy % qoq -0.8% yoy Others 1/ Loan related fee Mutual fund Bancassurance fee GMTS 2/ 15% 13% -7.1% yoy 16% 16% 24% 8% +0.0% yoy 10% 10% 10% 10% 22% -1.8% yoy 23% 23% 10% +22.4% yoy 9% 9% +33.1% yoy 15% 19% 16% 18% 10% 9% 22% 11% 20% -47.8% qoq -36.9% yoy -16.2% qoq -5.9% yoy -17.5% qoq -6.5% yoy -0.5% qoq +17.1% yoy +0.6% qoq +29.8% yoy Bank cards 27% 26% 27% 24% 28% +0.5% yoy +1.6% qoq +3.0% yoy 1H17 1H18 2Q17 1Q18 2Q18 Net Fee Income Breakdown by Segment Corporate 21% 26% 21% 26% 26% SME 8% 7% 8% 7% 8% Retail 71% 67% 71% 68% 67% 1/ Others include brokerage fee, fund transfer, remittance, etc. 2/ GMTS stands for Global Markets and Transaction Services, which includes cash management, trade finance, corporate finance and corporate trust. Page 13 / 43

14 Strong growth in low cost deposits (CASA) Deposit Growth Deposit growth of 4.3% yoy mainly from higher savings accounts, raised the Bank s CASA ratio to 68.1% in 2Q18 from 63.9% in 2Q17. Deposits (Baht billion) +4.3% yoy +2.5% qoq 2,057 2,027 2,092 2,093 2, Current +1.9% yoy -3.6% qoq 1,246 1,241 1,282 1,352 1,391 Savings +11.6% yoy +2.9% qoq Fixed -7.7% yoy +2.5% qoq 2Q17 3Q17 4Q17 1Q18 2Q18 Current & Savings Accounts (CASA) 63.9% 64.6% 65.0% 68.1% 68.1% Page 14 / 43

15 The Bank s liquidity position remained strong Liquidity As loan growth of 6.7% yoy outpaced deposit growth of 4.3% yoy, loan-to-deposit ratio rose to 98.0% in 2Q18 from 95.8% in 2Q17. On a qoq basis, L/D ratio declined from 98.6% to 98.0%. The Bank currently maintains a daily liquidity ratio of 20% or higher as measured by total liquid assets (at a bank-only level) to total deposits. If the ratio falls below 20%, corrective action will be immediately considered. Loan-to-Deposit Ratio (Consolidated, %) Liquidity Ratio (Bank-only, %) 98.4% 98.6% 30.0% 97.2% 98.0% 23.9% 26.9% 25.8% 24.9% 95.8% 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 Liquid assets primarily comprise cash, net interbank, bilateral repo with the Bank of Thailand and investment in government securities. Page 15 / 43

16 Transformation-related investments temporarily raised the Bank s cost base OPEX 1H18 OPEX increased by 15.5% yoy primarily due to investments in major transformation projects, new technology platform and digital acquisition. Given modest top-line growth in the high investment cycle, cost-to-income ratio went up to 45.9% in 1H18. Cost-to-Income Ratio (%) 41.3% 45.9% 40.6% 42.0% 41.9% 44.9% 45.9% 45.9% Operating Expenses (Baht billion) % yoy +10.7% yoy -2.8% qoq H17 1H18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Page 16 / 43

17 Capital position remained strong to prepare for future growth opportunities and regulatory changes Capital Strong capital position, currently well above the minimum regulatory requirement, together with adequate loan loss provisions will enable the Bank to withstand any adverse shocks and to pursue any future growth opportunities. Capital Adequacy Ratio (Basel III) Consolidated CAR 17.4% 18.2% 17.7% 17.1% 17.1% Tier 2 2.1% 2.1% 2.1% 2.0% 2.0% CET1/ Tier % 16.1% 15.6% 15.1% 15.1% 2018 Regulatory Minimum CAR % Tier % Bank-only 2Q17 3Q17 4Q17 1Q18 2Q18 CAR 16.8% 17.6% 17.2% 16.8% 16.6% CET1/ Tier % 15.5% 15.1% 14.7% 14.5% Page 17 / 43

18 Agenda Page 1. Review of 1H18/2Q18 Results Economic Indicators and 2018 Strategy & Outlook Transformation Update Page 18 / 43

19 Economic recovery continues in the first half of 2018 in a more broad-based manner. GDP growth is expected to accelerate while policy rate remains constant. Key risk to watch is trade tension between the US and China. Key driver estimates (%) A 2018F GDP growth Export USD growth Policy rate (end period) THB/USD (end period) Loan growth (sector-wide) Deposit+BE (sector-wide) Non-deposit wealth %YOY except for policy rate (% per annum) and exchange rate (THB/USD) 2. Includes bonds, insurance, mutual funds, private funds, pension funds, and retirement funds Source: SCB Economic Intelligence Center Page 19 / 43

20 Paradigm shifts in banking industry continue to evolve Evolving customer behavior Expectation shift towards faster, simpler, safer services at lower cost Digital disruption & the rise of non-banks Hyper competition among banks and non-banks (fintech, telco, Chinese platforms) Looming regulatory change (e.g., SME single account, IFRS9, National e-payment, e-marketplace Platform) Product commoditization Commoditization of retail transaction banking leading to structural change in pricing/ competition Rapidly changing environment requires bold strategic moves if banks want to remain relevant in the future Page 20 / 43

21 The race is on to disrupt traditional banking with new comers from digital startups and tech giants across countries Every aspect of the traditional banking business is under attack by Fintech/startups Digital giants enter the battle field through new business model Platform Focusing on addressing specific customer pain point with structurally lower cost base and better customer experience Platform model focusing on acquiring customers and gaining customer data / insight Page 21 / 43

22 We have embarked on the transformation journey since mid-2016 to strengthen ourselves and position to win in the new business paradigm Macroeconomic headwinds Digital disruption To be the Most Admired Bank Consumer behaviors Regulatory shifts Mid A Fixing the Fundamentals B Today Going Upside Down 2020 Page 22 / 43

23 A Fixing the Fundamentals : Over the past years, we have started to build strong foundation and capabilities for the future Jun Today Sales service separation Wealth strategic partnership New EASY Mae Manee Digital Ventures SCB Connect New call center Rattanakosin application SCB Express Business center Investment center Freenomenon campaign Tech Data People Process Coverage Stable/scalable/ reconfigurable infrastructure Cloud migration and open API Technical data lake Center of excellence with data engineers/ data scientists setup Systematic way to manage resource/ talents Mindset of speed Standardized approach for digitization Customer experience capabilities Leading edge digital platform New format pilots Beyond banking platform Page 23 / 43

24 B Going upside down : Organization and business model transformation 1 Lean: Lean the bank by leveraging digital technologies to lower cost base and create agility/immunity under the new paradigm Digital acquisition: Revolutionize digital acquisition model to upscale digital/ 2 customer base Data capabilities: Build data analytics capabilities across organization 3 New growth: Capture blue ocean growth in high margin/alternative lending 4 Bank as a platform: Explore new business model to become Bank as a platform + New Culture 5 Page 24 / 43

25 Agenda Page 1. Review of 1H18/2Q18 Results Economic Indicators and 2018 Strategy & Outlook Transformation Update Page 25 / 43

26 SCB s digital transformation aims to deliver a distinctive customer value proposition Available across all channels 24/7 Continuous & consistent experiences Anytime, Anywhere Simple & seamless Streamlined and automated processes Intuitive digital interfaces User-friendly Personalized & contextualized Engaging Personalized offerings Dynamic bundles/ pricing Profile and situation-specific CUSTOMER Facilitate frequent interactions between bank and customer Cross-sell opportunities Beyond financial needs Delightful Goal-oriented savings and banking Digitally-enabled advisory Instant gratification Proactive customer support Enjoyable experiences through gamification Page 26 / 43

27 Significant progress on the transformation journey I. Fixing the fundamentals II. Going upside down Digital Platforms Retail digital platform Corporate digital platform New Easy platform Continuous releases of new features / upgrades New cash management platform Onboarding journeys Juristic v1.0 Juristic v2.0 / 3.0 Individual v1.0 Individual v2.0 Advisory journeys Insurance v1.0 Insurance v2.0 Digitization Lending journeys Wealth v1.0 Unsecured v1.0 Wealth v2.0 Unsecured v2.0 Payments PromptPay v1.0 RTP, Bill pay QR Ecosystem plays BusinessLinX University ecosystem Coverage Analytics Technology Network restructuring and migration SCB Express Investment / Business Center Data lake Data analytics Cloud migration Technology uplift System upgrades Network analysis Migration Closure 1.0 Closure 2.0 Design Wave 1 Wave 2 Design Launch Data Lake set up Move to cloud Next best action, churn, cash, fraud, Cloud infrastructure and migration Microservices, scalability, testing, agile, HR Finance Payment Hub On-going People SCB Academy Academy set up Training (foundations, digital, design thinking, ) Today! Page 27 / 43

28 We aim to acquire/engage digital customers and transform our cost base ultimate goal is to open up new growth on a more scalable platform Creating value from our digital transformation A B Key value drivers: Acquire & Migrate Transact & Engage Top-line growth (with new revenue stream) C Transform cost structure New capabilities (Tech/ Data/ People & culture) Lower cost base/ Higher productivity (without impact to customer services) Page 28 / 43

29 A Acquire & Migrate: Acquisition gaining positive momentum with significantly larger digital customer and merchant base ~7.6m digital users 1/ ~1.0m QR merchants No. of digital users (SCB EASY) 7.6 No. of merchants 1.0 million 2.5 3x with >60% active users 4,000 ~250x SCB EASY Pay (Mae Manee) 2Q 16 Aug target: 9-10 mn digital users 3Q 17 Aug target: mn merchants ~7.7m PromptPay users (Retail) % Share of digital onboarding (As of Aug-18) Individual Juristic 2/ 3/ #1 Mobile users (>28% market share) #2 95% Digital Total users (ID and Mobile) 1/ Mobile and internet banking; 2/ All commercial banks and SFIs banks ; 3/ Among all commercial banks onboarding With 50%+ time saving for account opening 85% Digital onboarding With 90%+ time saving for account opening Page 29 / 43

30 B Transact & Engage: Digital customers are more engaged and contribute higher revenue with digital sales through SCB EASY gaining importance Digital users have higher revenue, hold more products and spend more on credit cards (Per customer as of Jul-18) Non-MOA MOA: Traditional 1/ MOA: Digital 2/ Avg. revenue per month Avg. product holding Avg. credit card spending 2.6x 1.5x x ~1.0x MOA = Main Operating Account 1/ MOA customers who are non-digital users / inactive digital users 2/ MOA customers who are active digital users Mutual Funds Sales through SCB EASY becoming more important Purchased fund thru EASY ~44bn THB Purchased funds thru EASY Jan 18 Aug 18 Mutual fund customers % Digital share of mutual fund active customers 1/ Mutual fund transaction volume % Digital share of total transaction volume 29% 31% Jan-Aug 17 1/ Customers who purchase, redeem or switch funds through EASY channel 44% 15pp 45% 14pp Jan-Aug 18 Page 30 / 43

31 B Transact & Engage: Strong growth of our transactional banking/ payment platform leading to higher market share Financial transactions through digital channel growing faster than the market No. of financial transactions thru SCB EASY 1/ (million transactions) 53 No. of financial transactions thru SCB EASY per customer per month 1/ (transactions) 2.7x x 8 1.7x Jan-17 Aug-17 Jun-18 Aug-17 Jun-18 %Market share 2/ 13% 15% 23% SCB Easy launched 1/ Financial transactions including transfer, bill payment, top-up transactions 2/ Source: Market data from BOT Page 31 / 43

32 C Transform cost structure: Customers' behavior shifting towards digital with transaction volume migrates to SCB EASY Customers becoming less reliant on branches Share of branch transactions declining Relative no. of SCB s customers by behavioral type (Index, no. of individual customers as of Jan 2018 = 100) Jan-18 Jul SCB s transaction volume 1/ mix (Monthly) 14% 33% 42% 47% Digital (Internet/ Mobile) Cost per txn 2/ (indexed to branch txn cost) % 54% 49% 46% Machine (ATM/CDM) 10 Branch Heavy Traditional branch user Multi Multi-channel Channel user user Tech Digital Focus user user 17% 13% 9% 7% Jan-17 Jan-18 Jun-18 Aug-18 Branch 100 Heavy branch user: Visit branch every 1-2 weeks, low digital usage Multi-Channel user: Visit branch 2-3 times / quarter, otherwise use digital channel Digital user: Use digital channel for most transactions, visit branch 1-2 times / year 1/ Payment, transfer and top-up 2/ txn = transaction No. of branch closed: 3Q18F ~125 branches Page 32 / 43

33 We are also transforming our digital customer experience as the key enabler for driving customer engagement and satisfaction Individual onboarding Juristic onboarding Personal loans Credit card 20 mins days 3-5 days 7 days 10 mins 30 mins < 5 < 5 mins * mins * Prequalified customers for loan approval and booking through SCB EASY * * Prequalified customers for virtual card approval through SCB EASY Page 33 / 43

34 High investments for the transformation program temporarily raised C/I, peak C/I expected near the end of 2018 to the beginning of 2019 followed by a gradual decrease to a new lower C/I operating range post transformation Cost-to-income ratio (C/I) Percentage 50% 45% C/I Change the Bank C/I Run the Bank C/I is expected to peak in the mid-to-high 40 s range Change-the-bank cost is estimated to increase C/I by around 5-6% in % Pre-transformation Avg. ~38% CAPEX depreciation and expense from THB 40 Bn Transformation program 35% Post-transformation Avg. low 30-s 30% 25% 20% E 2019E 2020E 2021E 2022E 2023E Estimate (E) Page 34 / 43

35 APPENDIX I: SCB s key recent awards and recognitions APPENDIX II: Transformation update examples of customer value propositions and recent initiatives launched Page 35 / 43

36 SCB s key recent awards and recognitions The Asset Triple A Digital Awards 2017 Digital Bank of the Year Best Retail Mobile Banking Experience Most Innovative Mobile Banking Application SCB EASY Most Innovative ATM Project Cardless ATM Finance Asia s Country Awards 2018 Best Bank in Thailand Best Investment Bank in Thailand Best Private Bank in Thailand Best Belt and Road Bank Money & Banking Awards Best Financier of the year Best Public Company Financial Industry Best Service Provider Personal Loan Best Service Provider Credit Card Best Mutual Fund of the Year (LTF) Financial Insights Innovation Awards 2018 Asia s Most Transformative Bank Service Innovation of the year Branch Innovation of the year Asian Banking & Finance Retail Banking Award 2018 Asia Money Banking Award 2018 Bangkok International Digital Content Festival 2018 Best Character for Commercial Use Award (Mae Manee) Best Digital Bank Best Corporate and Investment Bank Alpha SEA Annual Best Financial Institution Awards 2018 Best Bank 2018 Corporate Governance Asia's 8th Asian Excellence Award 2018 Asia s Best CEO Mr. Arthid Nanthawithaya Asia s Best CFO Mrs. Kittiya Todhanakasem Best Investor Relations Company (Thailand) Global Finance Magazine Best Private Bank in Thailand Innovator Awards 2018 Best Consumer Digital Bank (Thailand) Best in Social Media Marketing & Services Prime Minister s Digital Award 2018 Digital Organization of the year Page 36 / 43

37 SCB has been selected as a member of DJSI World and DJSI Emerging Markets Indices in 2018 scoring top-six among global banks The Dow Jones Sustainability Indices (DJSI), created jointly by S&P Dow Jones Indices and RobecoSAM, evaluate the sustainability performance of global corporations across sectors Assessment criteria focus on long-term economic, social and environmental asset management plan. Evaluations are performed in parallel with analysis of financial performance. Company: 9 Thai companies listed on DJSI World Index RobecoSAM Industry: In 2018, SCB has been selected as a member of DJSI World Index (Among all 27 banks from 201 invited banks) DJSI Emerging Markets Index (Among all 15 banks from 106 invited banks) Siam Commercial Bank Kasikornbank PTT PTT Exploration & Production Banks Banks Oil & Gas Upstream & Integrated Oil & Gas Upstream & Integrated #6 SCB s score of global banks industry ranking Thai Oil Oil & Gas Refining & Marketing Rank: Bank name: Country: CP ALL Food & Staples Retailing 1 Bancolumbia SA Columbia Thai Beverage Food, Beverage & Tobacco 2 KB Financial Group Inc Korea PTT Global Chemical Siam Cement Chemicals Construction Materials Banco Santander SA ABN AMBRO Group NV First Financial Holding Co Ltd Spain Netherlands Taiwan Central Pattana Real estate 6 Siam Commercial Bank PCL Thailand Page 37 / 43

38 SCB wins international recognition with 6 innovation awards, highlighting the success of tech innovation in providing services for corporate clients StartBiz The new innovative juristic onboarding StartBiz is a digital platform featuring the most modern electronic know-your-customer (KYC) and authentication innovation (e-kyc & e-signature) tools. It streamlines back-office processes and operations to provide corporate clients with a better customer experiences NO DOCUMENTS ANYTIME ANYWHERE ONCE AND DONE Awards & recognitions Asian Banking & Finance Branch innovation of the Year Silver Service innovation of the year - Thailand 15 Physical Documents The Asian Banker The Best branch digitization initiative Thailand The Best API initiative Reduced to ID Card กร ณาวางเอกสารภายในกรอบท กาหนด Integration to link business customer s data from Ministry of Commerce directly Fully digital and audit trail process with one digital signatory on ipad No Branch Visit Required Setup profile Business alert Local collect Own account transfer 3 rd party transfer icheque book ORFT Payroll direct credit Smart payroll Direct credit BahtNet PromptPay QR and IR EDC The International Banker The Best customer service provider, Asia Global Finance Magazine Global financial innovators - Digital Business Account Opening Page 38 / 43

39 APPENDIX I: Recent awards and recognitions APPENDIX II: Transformation update examples of customer value propositions and recent initiatives launched Page 39 / 43

40 Examples of our core value proposition in the focused areas which will emphasize on improving customer experience Focused areas for growth High-yield lending Personal lending Personalized & contextualized Individual credit line based on risk score and customer income Anytime, anywhere Digital loan application 24/7 with immediate funds usage via EASY platform Simple & seamless Information pre-filled based on data pre-qualified customers can complete process in less than 5 mins Engaging Send offers to prequalified customers based on behavioral triggers (e.g., low balance) Beyond financial needs Delightful SSME business lending Select offers from relevant product programs Digital loan application 24/7 Application on Easy platform with pre-filled forms Wealth management HNW,PB, affluent, uppermass Suggest investments based on individual risk/return preferences Execute transactions on Easy (for funds) Onboard bank, mutual funds and securities accounts in one go Robo-advisory with alerts (as of November) Triggers with advice on how to reach goals Transaction banking Individual Business Predictive tiles for expected upcoming transactions Open account with biometrics 24/7 Barcode scan, 1-click to pay SCB bills / cards Cash flow history, favorite transactions Transaction approval via separate app / Apple watch Simple onboarding to transacting Simple and convenient and convenient cash cash management management Free digital transactions, bonus offers Lifestyle offers: cinema, donations, gifts Easy bonus offers and rewards Page 40 / 43

41 Leveraging digital capabilities to deliver exceptional customer experience Onboarding Digital advice Individual customers Juristic customers 50%+ time saving for account opening (from 20 mins to 10 mins) 95% of new accounts opened with the digital onboarding 90%+ time saving for account opening (from days to 30 mins) 85% of new accounts opened with the digital tool Life insurance Wealth management Business solutions iplan Needs-based advisory tool for life insurance with a straightthrough processing wplan Investment proposal based on customer s risk profile; Mutual fund sales SCB Rubik Relationship Manager Advisory tools for corporate customers Page 41 / 43

42 SCB Easy as the transaction, lifestyle and sales platform to enhance customer s digital experience Transaction platform Daily transaction and money management services Cardless ATM: >26 mn transactions (after a launch in September 2017) Freenomenon: Free fee for transfer/ bill payment/ top-up/ cardless cash withdraw via ATM Lifestyle/ Engagement platform Movie, Gift, Donation, Dining, EASY Bonus, My Deals >12mn lifestyle tile clicks per quarter Insights on customer s lifestyle and behavior Sales platform Mutual funds, Loan & credit card >THB 1.2 bn new loan booking (8M 18) >THB 44 bn purchased funds (8M 18) New way of working utilizing new tech foundations: Monthly releases of new features Payment hub to scale capacity AI for predictive transactions APIs/ Micro services for integration with partners Page 42 / 43

43 SCB Business Anywhere is a new cash management platform for corporate and SME customers SCB Business Anywhere (Official launch in Sep-18) 8:3 0 AM 10 0 % 8:3 0 AM 10 0 % 8:3 0 AM 10 0 % Quick Day-to- Day Operation Financial Activity Anywhere Approval Workflow Keeping Track of Business Dashboard helps users monitor their financial trends. Live search helps users to search for required information Tablet and mobile phone are able to create payment easily via application or site Approval workflow can be assigned by different users and approvers can also approve with any devices on hand Easily monitor liquidity of business and FX rate via smartwatch Page 43 / 43