TMB Bank Plc. Moving toward Digital Banking. Make THE Difference. Investor Presentation. 1H16 and 2Q16 Performance Update

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Janice King
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1 TMB Bank Plc. Moving toward Digital Banking Investor Presentation 1H16 and 2Q16 Performance Update Make THE Difference

2 AGENDA 1H16 & 2Q16 Financial Performance Asset quality Upcoming Digital Banking [2]

Continued to rebalance deposit growth and mix -0.5% +0.6% Deposits slightly rose 0.6% QoQ, driven by retail deposits Retail deposit For 6-month period, deposits slightly decreased by 0.

3 Continued to rebalance deposit growth and mix -0.5% +0.6% Deposits slightly rose 0.6% QoQ, driven by retail deposits Retail deposit For 6-month period, deposits slightly decreased by 0.5% YTD mainly to optimize deposit volume and mix No-Fixed & ME, +13% YTD, in line with strategy to replace high-cost time-deposits Transactional deposit growth was also on track. Retail transactional increased by +2% YTD #1 No-Fixed 10 bps #2 ME 20 bps, No-Fixed 10 bps #3 ME 20 bps #4 ME 20 bps #5 ME 10 bps Cost of deposit declined 17 bps QoQ in 2Q16 mainly from replacement of high-cost deposit TD and interest rate reduction of No-Fixed & ME For 6-month period, 1H16 deposit cost (1.58%) declined 26 bps compared to 1H15 (1.84%) Key deposit rate cuts (base rate) [3]

4 Loan growth remained in 2Q, driven by mortgage loan +2.0% +1.2% Loan grew 1.2% QoQ, driven by growth from retail loan For 6-month period, loan grew by 2.0% YTD, driven mainly by mortgage loan Retail +18% YTD, driven by mortgage (+28% YTD) & credit card (+5% YTD) Corporate -2% YTD SMEs -0.8% YTD Loan yield declined 2 bps QoQ in 2Q16 For 6-month period, 1H16 loan yield (5.49%) declined 23 bps from 1H15 (5.72%) mainly from MLR and MRR reductions [4]

deposit franchise, cost of deposit can be managed down while key deposit volume (No-Fixed & ME) continued to grow.

5 Margin improvement supported by well-managed funding cost NIM increased 15 bps QoQ to 3.13%, thanks to wellmanaged funding costs +15 bps Loan yields declined -2 bps While deposit cost dropped by -17 bps With TMB strong deposit franchise, cost of deposit can be managed down while key deposit volume (No-Fixed & ME) continued to grow. With higher NIM & growth in performing loan, NII increased 4.1% QoQ +4.1% NII 6M2015 6M2016 YoY Growth(%) THB11,422 mn THB12,102 mn 6.0% 1H16 NIM also rose from 3.01% in 1H15 to 3.06% 1H16 NII grew 6.0% YoY [5]

6 Non-interest income slightly declined due to income from capital market and loan-related fee Total Non-NII decreased 6.1% QoQ mainly due to -6.1% +4.0% Commercial banking fees as capital market income declined due to interest rate volatility Retail fees continued to increase, supported by mutual fund fee (+42% QoQ) and credit card fee (+53% QoQ) Non-interest income/ Earning assets (p.a.) Non-interest income 1.3% 1.2% 1.2% 6M2015 6M2016 YoY Growth(%) THB4,868 mn THB4,763 mn -2.2% Therefore, 1H16 Non-NII declined slightly by 2.2% YoY Commercial banking fees as capital market income declined due to interest rate volatility in 2Q16 and credit-related fee dropped by -12% YoY Retail fees increased, mainly from bancassurance fee, +47% YoY *Non-NII excluded gain on sales of assets [6]

7 Retail fee remained an uptrend Fee income breakdown THB million 2,000 1,600 1, , , , Retail fees Q15 1Q16 2Q16 Credit related fee Trade finance Cash mnt. & Payment Mutual fund & Bancassurance Credit card/ Merchant & ATM Others Total Commercial fees Fee income increased 4.0% QoQ mainly from retail fees Mutual fund showed a positive trend with +42% QoQ growth Credit card fee grew +53%QoQ Fee income 6M2015 6M2016 YoY Growth(%) THB3,700 mn THB3,758 mn +1.5% 1H16 fee income increased 1.5% YoY Credit-related fee dropped by -12%YoY LG fee increased by +37% YoY Bancassurance grew +47% YoY Trade finance +21% YoY [7]

Operating costs were well-managed +1.1% +6.3% +3.5% +0.8% Total operating income rose 1.1% QoQ Operating expenses rose 6.3% QoQ. Key factors were; Lower personnel expense by -3.

8 Operating costs were well-managed +1.1% +6.3% +3.5% +0.8% Total operating income rose 1.1% QoQ Operating expenses rose 6.3% QoQ. Key factors were; Lower personnel expense by -3.4 % QoQ Higher marketing expense by +78.7% QoQ mainly due to relaunch of All Free product and commission fees from higher mortgage sales Higher premises and maintenance expenses mostly due to software expense Higher other expense from positive impact from asset revaluation in 1Q16 However, for 1H16, operating income grew by 3.5% YoY, while operating cost grew only 0.8%, less than half of the 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 [8]

9 Pre-provision operating profit grew 4.8% in 1H16-2.6% PPOP recorded at THB4,451 million in 2Q16, a slight decrease by 2.6% QoQ PPOP 6M2015 6M2016 YoY Growth(%) THB8,605 mn THB9,022 mn +4.8% Nonetheless, 1H16 PPOP grew 4.8% YoY [9]

10 Cost efficient was well-maintained As a result, cost to income ratio was wellmaintained at 47.7% in 2Q16 and 46.6% in 1H16 Cost to income ratio 6M2015 6M % 46.6% [10]

11 AGENDA 1H16 & 2Q16 Financial Performance Asset quality Upcoming Digital Banking [11]

12 NPL formation is closely monitored NPL formation 3.0% 2.6% 2.2% 1.8% 2.64% 2.08% 1.86% 2.25% 1.64% 2.08% NPL formation remained in line with expectation Overall NPL formation during 1H16 was better 1.4% than same period last year mainly driven by 1.0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 improved NPL formation in small SME as a result of underwriting revision Vintage analysis has shown better trend of NPL formation Note: 1) % NPL formation and NPL resolution calculated per total loan + interbank loan 2) Stated as annualized basis [12]

13 Speed up NPL resolution in 2Q16 by write-off 1.23% If stripping out write-off NPL restructuring activities have been slow during fragile economic growth NPL resolution, then, was speeded up in Q2 by additional write off of NPL (with 100% provisioned) amounted to THB2.9 billion and NPL sale amounted to THB167 million If the Bank did not write-off and sell NPLs, NPL resolution would be at 1.23%. Therefore TMB took a cautious step in write-off NPL Consequently, NPL ratio dropped to 2.87% Note: 1) % NPL formation and NPL resolution calculated per total loan+ interbank loan 2) Stated as annualized basis [13]

14 TMB s loan portfolio 2 nd quarter ended June-16 (Not to scale) Pass Loan 668bn (1) TMB keeps stable performing loan P (94.33%) Normal = 92.7% Rescheduled = 0.5% portfolio quality with relatively small restructuring and rescheduling. Restructured = 1.2% The Bank s SM loans remained relative low to TMB overall lending portfolio. SM (2.80%) NPL formation 2.08% p.a. Special Mention Loan 19,408 mn NPL resolution Restructure NPL Sale NPL write-off Pay-off and close account TMB has consistently set up conservative provisions, therefore, NPL resolution was speed up in 2Q16 by NPL write off and sale NPL (2.87%) NPL 19,779 mn NPL Resolution 3.02% p.a. Consequently, NPL ratio dropped to 2.87% * Loan + interbank loan [14]

15 NPL Ratio at 2.87% of which majority was SME NPL as of Jun-16 reduced to THB19,779 mn. or 2.87% of total loans NPLs: 19.7 bn From total NPLs of THB19.7 bn, THB14.6 bn was NPLs in SME, of which THB4.4 bn was claimable from TCG 14.6 bn Jun-16 TCG claimable 4.4 bn From SME [15]

16 Ensure strong coverage Ratio Coverage ratio 160% 120% 142% 140% 143% Coverage ratio improved to 143% 80% 40% 0% 4Q15 1Q16 2Q16 TMB has consistently maintained conservative Provision set aside for PL is equivalent to 2.9% of PL & Provision set aside for NPL is equivalent to 58% of NPL provision to ensure sufficiency and buffer provision for both performing loan and NPLs [16]

17 TMB took more prudent steps in setting up provision Provision expense Provision expense Annualised credit cost THB million 2, ,000 1,500 1,877 1, , bps With the write-off and to continue conservative provision setting, TMB set up provision of THB2.0 bn in 2Q16 (credit cost 135 bps) 0 4Q15 1Q16 2Q16 0 Provision expense Credit cost 6M2015 6M2016 YoY Growth(%) THB3,736 mn THB3,875 mn +3.7% 136 bps 131 bps -5 bps Provision was THB3.9 bn in 1H16 (credit cost 131 bps) [17]

18 2Q16 and 1H16 Net profit growth +2.8% After provision, net profit was at THB2,151 million, +2.8% QoQ Net profit 6M2015 6M2016 YoY Growth(%) THB3,897 mn THB4,243 mn +8.9% For 1H16, net profit grew 8.9% YoY [18]

19 Solid capital base under Basel III TMB maintained capital base at high level under Basel III requirements Tier 1 capital increased to 12.5% (entirely Core Tier 1) and total CAR increased to 18.0%. [19]

20 AGENDA 1H16 & 2Q16 Financial Performance Asset quality Upcoming Digital Banking [20]

TMB s Journey and Digital Banking Evolutions TMB created a strong

#TMBDigitalBanking เป นท กความเป นไปได เพ อให ค ณใช ช ว ตได เต มท ในแบบท

Things Built and expanded retail customer base from 500k to 2.

customer base in supply chains and SMEs (>300k SME customers) Bolstered

digital bank MEbyTMB Launched TMB TOUCH and redesigned TMB Internet

disruptions as TMB possesses limited physical networks (ATMs 2,279 :

reduction because TMB had disrupted itself and forgone fee income from

Peer of THB 884) (3) Active digital channel uptake shows 156% (4) growth

further utilize digital capabilities to provide the right products to

21 TMB s Journey and Digital Banking Evolutions TMB created a strong foundation and faces limited headwind to succeed in digital era #TMBDigitalBanking เป นท กความเป นไปได เพ อให ค ณใช ช ว ตได เต มท ในแบบท ค ณต องการ E-Banking Multi- Channel Integration Omni Channel Internet of Things Built and expanded retail customer base from 500k to 2.3Mn active customers (AF 10% : MI 63% : Mass 27%) (1) Built strong customer base in supply chains and SMEs (>300k SME customers) Bolstered infrastructure and core banking systems Introduced Thailand s first digital bank MEbyTMB Launched TMB TOUCH and redesigned TMB Internet Banking to create Omni-channel experiences Limited headwind from digital disruptions as TMB possesses limited physical networks (ATMs 2,279 : ADMs 514 : Branch 453) (2) Limited downside of Non-Interest Income reduction because TMB had disrupted itself and forgone fee income from transactions (TMB transaction fee per retail customers of THB 215 vs Peer of THB 884) (3) Active digital channel uptake shows 156% (4) growth of new TMB Internet Banking and TMB TOUCH users since JAN15 TMB to further utilize digital capabilities to provide the right products to the right customers in the right channels *Active digital customers : Active internet banking customers + active mobile banking customers [21]

22 Looking Ahead in Digital Banking Era for TMB Limited negative impacts from digitalization but greater opportunities foreseen PromptPay, in full adoption, would result in only 1-2% reduction in total fee income Financial Impacts from Digitalization Bank-wide Digital self-service and payments (PromptPay/Debit Cards) will replace assisted service at branch, thus, TMB expects to convert servicing activities into more sales activities (60% sales activities at branch within Y2020) while redeploying the remaining staff to other areas Estimate sizable operational expense savings from lower cash handling Lower risk cost from effective data driven predictive analysis #TMB Digital Banking Retail Banking Commercial Banking Using effective data analytics to transform from one-size-fits-all to targeted offers and sales (Growth in digital leads by 53% in Y2016) Build and use capability to cross-sell on inbound traffic in each of our channels has already commenced in Y2016 Build and use digital marketing and digital sales to reach new customers (1Mn user sessions per month in 2016) Automation to convert sales, lower acquisition costs and replace error-sensitive manual processing MEbyTMB will become a fully digital bank honoring Do-It-Yourself philosophy to pass on the benefits to the customers Leverage on PromptPay to introduce new innovative cash management products in order to capture transaction data between corporate clients and their SME suppliers/retail customers Convert transaction data into credit applications, develop single working capital platform and integrate into supply chain community for potential P2P lending Enable operational excellence platform by enhancing current TMB TOUCH for multi-currency payment as well as integrating with customer journey to reduce clients daily operating workload Explore Blockchain technology and its applications in banking products such as trade finance [22]

Digital banking plays more important role No. of transaction by channels +105.4% YoY -6.1% YoY +0.9% YoY Evidence shows digital customers have higher product holding than average No.

23 Digital banking plays more important role No. of transaction by channels % YoY -6.1% YoY +0.9% YoY Evidence shows digital customers have higher product holding than average No. of financial transactions via digital channel has outpaced transactions via traditional channels and the trend continues Financial transactions : Transfer + Bill Payment + ORFT Product holding and average revenue from digital customer are higher than total bank average (Product holding 1.85 vs 1.21) +156% (Jan -May 16) In May-16, active digital customers growth rate was 156% (since launched TMB mobile banking) Take up rate, therefore, rise further with digital % Digital customer*/ Active customers 6% 9% 10% 11% 13% 15% customers representing 15% of active digital customers in May 16 *Active digital customers : Active internet banking customers + active mobile banking customers [23]

24 2016 Key financial targets Key ratios 2015 Actual 1H Target Performing loan growth 9.5% 2.0% YTD 6-8% (Revised) Deposit growth 12.8% -0.5% YTD 0-2% (Revised) Net interest margin 3.0% 3.06% % Net fee income growth 36.4% 1.6% 5-10% (Revised) Cost to income ratio 49.2% 46.7% 46-49% ROE 12.9% 10.7% 10-12% (Revised) NPL ratio 2.99% 2.87% Approx. 3.0% Coverage ratio 142% 143% Approx % [24] [24]

TMB Bank Public Company Limited 3000 Phahonyothin Road Chatuchak, Bangkok 10900 Website: www.tmbbank.

25 TMB Bank Public Company Limited 3000 Phahonyothin Road Chatuchak, Bangkok Website: 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. [25]

TMB Bank Plc. Building the Best Transactional Bank. Make THE Difference. Day with Executive Management

TMB Bank Plc. Building the Best Transactional Bank Day with Executive Management November 1, 215 Make THE Difference AGENDA 3Q15 Financial Performance 9M15 Financial Performance Looking Forward [2] Executive