Investor Presentation. December 2013

Transcription

1 Investor Presentation December

2 Table of Contents 1. Thai economy 2. Strengthening bank and client base 3. BBL s financial results

3 Thai economy in Thailand is facing short-term challenges, but fundamentals in the long-term are still intact. Short-term challenges: 1) Domestic political situation 2) Global financial markets volatilities Long-term opportunities: 1) ASEAN Economic Community integration 2) Urbanization in provincial areas 3) Diversification of cross-border investment

4 Thai economy in Recoveries in advanced economies Political issue Headwind Tailwind AEC Integration Capital outflows Infrastructure projects will help support the economy later Urbanization Cross-border investment 4

5 Looking back, 2013 GDP growth was lower than expected Expected GDP growth in 2013 YoY (%) 8.0% 4.0% % % % 3.0% (or lower) 0.0% 18 Feb 20 May 19 Aug 18 Nov Date of revised forecast Source: National Economic and Social Development Board of Thailand 5

6 For 2014, volatility will continue in short-term Business sentiment index in Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Bank of Thailand Private investment index in 2013 Index (2000=100) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Bank of Thailand Private consumption index in 2013 Index (2000=100) Tourism industry decline 2013 No. of tourists ( 000) 2,500 2,250 2,000 1,750 30% 20% 10% 145 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1,500 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 0% Source: Bank of Thailand Source: Bank of Thailand 6

7 Political uncertainty will slow down the economy 11 Nov 13 The Senate voted to reject the amnesty bill 13 Jan 14 1 st Day of Bangkok Shutdown at 7 key inter sections 2 Feb 14 General election 31 Oct 13 The government passed the amnesty bill, Start of Bangkok protest 9 Dec 13 Government dissolved parliament 21 Jan 14 Emergency Decree invoked 7

8 Global volatility may lead to capital outflow and asset prices correction Stock market: net foreign buy/sell For Year 2013 Bond markets: net non-resident holding For Year 2013 THB bn 20 THB bn Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source: Stock exchange of Thailand, Company filing (non-resident trading weekly report) 8

9 Thus, 2014 GDP growth is at % Recent GDP growth YoY (%) 8.0% 7.8% 6.4% 4.0% 4.1% 2.9% % 0.0% 0.1% f Source: National Economic and Social Development Board of Thailand 9

10 Supported partly by exports that will increase given economic recovery in advanced countries Export growth YoY (%) 30.0% 28.4% 20.0% 16.4% 10.0% 3.1% % 0.0% -10.0% -0.2% F Source: NESDB 10

11 We continue to strengthen ourselves according to long-term fundamental drivers that are still intact 11

12 1. With our strategic location, Thailand will benefit from AEC integration Foreign Direct Investment Baht bn BOI application value Baht bn , Japan ,110 China 43 12

13 2. Benefits of connectivity still valid Economic corridors New bridges and economic zones Source: Ministry of Transport 13

14 3. Increasing connectivity and border trade remain in trend Myanmar US 3.8 billion +21% Ex: Refine fuel, Beverages, Machinery Im: Natural gas, Wood Malaysia US 13.0 billion +5% Ex: Refine fuel, Motor cars, Machines Im: Computers, Crude oil Laos US 3.8 billion +5% Ex: Refine fuel, Cars, Iron and steel Im: Fuel, Metal ores, Wood Vietnam US 7.2 billion +11% Ex: Refine fuel, Polymers, Chemical products Cambodia Im: Electrical household appliances, Iron, Steel US 4.3 billion +13% Ex: Refine fuels, Sugar, Precious stone, Beverage Im: Electrical machinery, Fruit, Vegetables Note: For the year ended December 31, 2013, CLMV refers to Cambodia, Laos, Myanmar and Vietnam. Source: The customs Department, Bangkok Bank analysis 14

15 CLMV countries are growing Cambodia GDP growth % YoY Lao P.D.R GDP growth % YoY 9.0% 6.0% 6.1% 7.1% 7.3% 7.0% 9.0% 6.0% 7.5% 8.1% 8.0% 7.9% 8.3% 3.0% 0.0% f 2013f 3.0% f 2013f Myanmar GDP growth % YoY Vietnam GDP growth % YoY 9.0% 9.0% 6.0% 5.1% 5.3% 5.9% 6.4% 6.8% 6.0% 5.4% 6.4% 6.2% 5.2% 5.3% 3.0% f 2013f 3.0% f 2013f Note : Since 2011 estimated by International Monetary Fund Source: Bloomberg 15

16 Thai companies have taken advantage of strong balance sheets to invest abroad 16

17 Bangkok Bank Conservative balance sheet and superior liquidity management no concerns from short-term challenges

18 1. Asset quality remains high BBL s loan portfolio Over 60% in large corporate, mid-sized SMEs NPL ratio declines Baht bn % 5% 10% 2% International 16% Consumer 12% Small-sized SMEs 11% Mid-sized SMEs 17% Note: As at December 2013 Consolidated Large Corporate 44% % 2.7% 2.3% 2.2% NPL NPL Ratio 3% 1% -1% 18

19 2. Large reserves for NPLs Excess reserves to required reserves at 157% or Baht 57 Billion December % 71% High LLR/NPL December % 148% High LLR/Loan December % 4.0% BBL System /1 BBL System /2 BBL System /2 Excess LLR Required LLR by BOT Note : /1 System refers to average of top 5 banks consolidated figure and includes BBL, KBANK, SCB, KTB and BAY /2 System refers to average of top 7 banks consolidated figure and includes BBL, KBANK, SCB, KTB, BAY, TMB, TISCO Top 7 banks accounted for 81% of commercial banks registered in Thailand's assets as at December

20 3. Balance sheet is liquid High liquid assets of Baht 839 billion Baht bn 1, Liquid assets at 1/3 of total assets As at December 2013 Other assets 68% Liquid assets 32% Source: Bangkok Bank filings Note: Liquid assets refer to cash, interbank assets and investments. 20

21 4. Business loan demand continues 88% in business loans 16% in international loans Customer loans 12% Business loans 88% Others 84% International 16% Demand for business loans remains strong, largely due to export sector recovery, more than offsetting slowdown in consumer loan growth International Lending provide diversification Note: As at December 2013 Consolidated 21

22 Bangkok Bank Strong fundamentals well placed to benefit from opportunities

23 1. Sizable international banking operations, best placed to service clients expanding in the region Long-standing international presence UK Branches: 1 Number of Years: 57 USA Branches: 1 Number of Years: 30 Laos Branches: 1 Number of Years: 22 Myanmar /2 Rep. Office: 1 Number of Years: 19 Malaysia /1 Branches: 5 Number of Years: 55 Singapore Branches: 1 Number of Years: 57 Indonesia Branches: 3 Number of Years: 46 Note: As at December 2013 /1 Wholly-owned subsidiaries /2 Representative office Source: Bangkok Bank filings Vietnam Branches: 2 Number of Years: 22 China /1 Branches: 4 Number of Years: 28 Japan Branches: 2 Number of Years: 59 Philippines Branches: 1 Number of Years: 19 Taiwan Branches: 3 Number of Years: 49 Hong Kong Branches: 2 Number of Years 60 Number of international branches / International lending as a % of total lending 20% 16% 12% 8% 4% 15.9% BBL KTB Kbank SCB BAY TMB Note: As at December 2013 /1 Including the representative office in Myanmar Source: Bangkok Bank filings 1.8% 1.5% 1.4% 1.3% 0.2% 0% BBL SCB TMB KTB Kbank BAY Note: As at December 2013 for BBL and December 2012 for others Source: Bangkok Bank filings 23 2

24 Well-established operations to support Chinese and Japanese who want to expand in the region Chinese Branches Japanese Branches 4 Branches in Shanghai, Beijing, Xiamen and Shenzhen Only Thai bank to get local bank license 28 years operating in China Chinese Corporate Unit 2 Branches in Tokyo and Osaka 59 years operating in Japan Cooperation agreements with 27 Japanese banks Japanese Corporate Unit 24

25 Well-established in provincial areas to capture growth opportunities from this growing market 310 business centers 242 are located in provinces 62 trade finance centers across 77 provinces in Thailand 1,157 domestic branches including 757 branches located in provincial areas Note: Business centers opened in 2013 As at December Branches exclude 85 self-service. Business Centers,including Business Desks, are offices to service SME customers 25

26 2. When investment returns, business loans and BBL will benefit Business lending market share System* (exc. BBL) 71% 29% BBL 29% Over 4,400 corporate customers Over 250,000 SME customers Including all major construction companies Note: As at December 2013 *System refers to 16 commercial banks registered in Thailand Source: Bank of Thailand (FI_CB_016_S2), Bangkok Bank analysis 26

27 Liquidity and capital to fund lending growth in near-term LDR always lower than system Tier 1 capital ratio /1 As at December % 100% 90% 108.2% 92.6% System LDR /1 96.4% BBL 90.6% 20% 15% 14.8% /2 14.4% 11.8% 80% 10% 70% 5% 60% 0% BBL System /3 Note: /1 System refers to 16 commercial banks registered in Thailand LDR refers to Loan-to-Deposit ratio Source: Bank of Thailand, Bangkok Bank analysis Note : /1 Tier 1 ratio is as Bank of Thailand s definition /2 Tier 1 ratio included net profit for the second-half of 2013 and net of final dividend 2013 /3 System refers to average of 6 bank s consolidated figure, including BBL, KBANK, SCB, KTB, BAY, TMB 27

28 Financial results Sustainable growth across business cycles Year 2013

29 1,143 1,256 1,470 1,604 1,753 Loan growth slightly above target Baht bn 2,000 1,500 1, % +9.9% +17.0% +9.1% +9.2%

30 Significant improvement in asset quality NPL ratio declines Baht bn % 5% BBL s loan portfolio % 2.7% 2.3% 2.2% % 1% International 16% Consumer 12% Small-sized SMEs 11% Mid-sized SMEs 17% Large Corporate 44% % Note: As at December 2013 Consolidated NPL NPL Ratio 30

31 Steady provisioning policy Stable provision expenses Excess loan loss reserves increase Baht bn Bps Baht bn Provisioning expenses (Baht bn) One-time provisioning expenses (Baht bn) Provisioning expenses / loans - Credit cost (Bps) Excess reserves over BOT requirement (Baht bn) Allowance required by BOT (Baht bn) 31

32 Deposits steadily increase Deposits Baht bn 2, % 1,500 1, ,361 1,394 1,588 1,835 1,

33 86% 81% 85% 85% 84% 10% 14% 11% 14% 16% Stable deposit funding and among the lowest cost of funds Reliance on deposits Lower cost of funds than system 100% 2.5% System /2 2.3% 80% 60% 2.0% 1.5% BBL 2.1% 40% 1.0% 20% 0.5% 0% % Deposits B/Es Other liabilities /1 Note: /1 Includes interbank and money market items, debt issued and borrowings, derivatives liabilities, liabilities payable on demand. /2 System refers to BBL, KBANK, SCB, KTB, BAY and TMB. Source: Bangkok Bank filings 33

34 Net Interest Margin lower to 2.36% Lending yield -13bps Deposit cost +7bps Policy rate cut by 25 bps to 2.50% 2.8% 2.6% 2.64% 2.76% 2.55% Policy rate cut by 25 bps to 2.25% 2.4% 2.36% 2.41% 2.44% 2.39% 2.38% 2.28% 2.2% 2.0% Q12 1Q13 2Q13 3Q13 4Q13 Yearly Quarterly Net Interest Margin (%) Source: Bank of Thailand, Bangkok Bank analysis 34

35 Improvement in fee income revenues Net fee income Baht bn % +9.2% +4.9% +5.5% +11.1%

36 Better-diversified fee income For the year 2007 Baht 4.4 billion For the year 2013 Baht 28.4 billion 7% 16% 4% 15% 9% 13% 12% 16% 35% 23% 25% 25% Bancassurance & Mutual funds Credit cards Global market services /2 Loan-related fees Transaction services Others Note: /1 CARG of of net fee income /2 CARG +29.9% of bancassurance & mutual funds during

37 Operating expenses increased mainly from personnel expense Operating expenses breakdown For Year 2013 /2 Operating expenses Baht bn 13% 9% 23% 55% Personnel expenses Premises and equipment Tax and duties Others Note: /1 including directors remuneration / % Note: /2 For 2013 operating expenses growth excluding the one-time item of the reversal of estimated loss on the impaired assets transferred to Thai Asset Management Corporation (TAMC), amounting to Baht 2.58 billion, would be 9.1% YoY 37 /3 CAGR was 5.9%

38 Increased cost are mainly for business improvement Branches /1 1, , ,174 ATMs 6, , ,472 Employees 21,503 +1,431 22,934 +1,176 24,110 Note: /1 Branches comprise domestic and international branches, but not including branches of BBC and BBB 38

39 Efficient cost management BBL s cost-to-income ratio Low cost to asset and cost to income ratio For the year % 40% 30% 20% 10% 42.2% 43.8% 43.5% 41.5% /1 4% 3% 2% 1% 41.5% 1.5% 44.9% 2.1% 60% 40% 20% 0% Note: /1 For 2013 operating expenses include the one-time item of the reversal of estimated loss on the impaired assets transferred to Thai Asset Management Corporation (TAMC), amounting to Baht 2.58 billion. If this is not included, such item, the cost to income ratio would be 44.3%. 0% BBL System /1 Cost to average assets (L) Cost to income (R) Note : /1 System refers to average of top 6 bank s consolidated figure and includes BBL, KBANK, SCB, KTB, BAY and TMB Source: Bangkok Bank filings 0% 39

40 Consistently delivering profits across business cycles Baht bn % Note: Corporate tax rate reduced from 30% to 23% in 2012 and to 20% in 2013 onwards 40

41 Summary With our prudent and conservative approach, BBL will be able to withstand short-term volatility and continues to deliver steady growth across business cycles 41

42 For further information Contact: Investor Relations Team Tel (66) Fax (66) IR@bbl.co.th Bangkok Bank Website This presentation is made by Bangkok Bank and may not be copied, altered, offered, sold or otherwise distributed to any other person by any recipient without the consent of Bangkok Bank. Although all reasonable effort has been made to ensure the facts stated herein are accurate and that the opinions contained herein are fair and reasonable, this document is selective in nature and is intended to provide an introduction to, and overview of, the business of Bangkok Bank. Where any information and statistics are quoted from any external source, such information or statistics should not be interpreted as having been adopted or endorsed by Bangkok bank as being accurate. Neither Bangkok Bank nor any of its directors, officers, employees, and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this information. The facts and information contained herein are as up to date as is reasonably possible and may be subject to revision in the future. Neither Bangkok Bank nor any of its directors, officers, employees or advisors nor any other person makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this presentation. Neither Bangkok Bank nor any of its directors, officers, employees and advisors nor any other person shall have any liability whatsoever for loss howsoever arising, directly or indirectly, from any use of this presentation. This presentation may contain projections or other forward-looking statements related to Bangkok Bank that involve risks and uncertainties. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. All forward-looking statements are based on information available to Bangkok Bank on the date of its posting and Bangkok Bank assumes no obligation to update such statements unless otherwise required by applicable law. This presentation does not constitute an offer or invitation to subscribe for, or purchase, any shares of Bangkok Bank. 42