Bank of Ayudhya PCL September 2017 A member of MUFG, a global financial group
Who we are Key Financials & Development Highlights Mid Term Business Plan 2017 Business Strategy and Key Focus 2
Krungsri Group Overview Officially established in 1945 Shareholding Structure (as of 8 Sep 2017) BTMU 76.88% Ratanarak Group & Others 23.12% 2007: BAY and GE become strategic partners 2008: Acquisition of GE Capital Auto Lease, subsequently renamed to Krungsri Auto 2009: Acquisition of AIG Retail Bank Pcl. and AIG Card (Thailand) Co., Ltd. 2009: Acquisition of Ngern Tid Lor Co., Ltd., a micro finance business from AIG 2009: Acquisition of GE Money Thailand, a consumer finance company 2012: Acquisition of HSBC Thailand s retail banking businesses Dec 2013: BTMU replaced GE as the strategic shareholder of Krungsri Jan 2015: Integration of BTMU Bangkok Branch into Krungsri Sep 2016: Acquisition of Hattha Kaksekar Limited (HKL) Mar 2017: Set up Krungsri Finnovate Company Limited 3
Who we are: Our History of Growth Acquisitions & Organic Growth Total Asset Size (Dec 2007) THB 652.4 Bn Feb 2008 Apr 2009 Nov 2009 Acquired GE Auto THB USD$2.6Bn 78.01 Bn Acquired AIG Retail Bank and AIG Card (Thailand) USD$0.7Bn THB 32.80 Bn Acquired GE Money(Thailand) USD$1.9Bn THB 53.75 Bn Year 2010 One KRUNGSRI Integration Q1 2012 Acquired HSBC (Retail Portfolio in Thailand) USD$440MM THB 17.45 Bn 2007 2008 2009 2010 2012 2013 2015 2016 Jan 2007 Sep 2009 Krungsri & GE JV Acquired Ngern Tid Lor USD$64.9MM THB 2.00 Bn Dec 2013 BTMU New strategic shareholder Jan 2015 Integration of BTMU Bangkok Branch Sep 2016 Acquired Hattha Kaksekar Limited THB 2.00 Bn Total Asset Size (Sep 2017) THB 2.0 Trillion BTMU 72.0% Ratanarak Group 25.0% Free Float 3.0% BTMU 76.88% Ratanarak Group & Others 23.12% 4
Fact about Krungsri: Thailand s 5th largest universal bank with leadership position in consumer finance & Japanese Corporate market Unique & Strong Krungsri 5 th largest universal bank in Thailand Strong leadership position in consumer finance Global product offering capabilities One of the world s largest comprehensive financial group Most extensive overseas network with over 2,000 offices in more than 50 countries The combination of Krungsri s new found global capabilities and network as part of the MUFG family, giving us unique strength and enhanced competitiveness. 5
Our Position: Fifth largest financial group in Thailand 1 1 1 Japanese Corporate Personal Loan 3.7 million accounts 30% market share Credit Card 3.3 million CIFs 1/ 16% market share Global Ranking 1,259 Forbes The Global 2000 Sales, Profits, Assets and Market Capitalization SET Ranking 13 THB 277.7 bn 2/ Market Capitalization Thai Banks Ranking Commercial 5 Banks by Assets, Deposits and Loans 1 Credit Ratings Highest rating (A ) among top banks in Thailand by Fitch Ratings 2 Auto (HP) # 1 in used car financing * 25% market share 1/ CIFs: Card in Force International Ratings 2/ Stock Exchange of Thailand (29 Sep 2017) Standard & Poor s Issuer Credit Rating Moody s Long Term Bank Deposit Fitch Ratings Issuer Default Rating Krungsri BBB+ Baa1 A Thailand BBB+ Baa1 BBB+ 6
Our Strong and Broad Franchise ATMs Domestic Branches Overseas Branches Exclusive Banking & Business Center 6,454............ 697 101 2 Branches + 1 Rep Office... First Choice Microfinance Krungsri Auto EDC Branches 157 + 20,500 Dealers 37 Auto Business Branches Overseas 163 Branches 660 Banking Branches Domestic 574 Branches 10,200 Dealers 74,037...... 7
Krungsri Group Companies Credit Card, Personal Loan & Sale Finance Krungsriayudhya Card Co., Ltd (KCC) 99.99% Ayudhya Capital Services Co., Ltd. (AYCAP) 99.99% Tesco Card Services Ltd. (TCS) 50.00% General Card Services Ltd. (GCS) 99.99% Auto Hire Purchase and Leasing Ayudhya Capital Auto Lease Plc. (AYCAL) 99.99% Krungsri Leasing Services Co., Ltd (KLS) 90.00% Investment Management Krungsri Asset Management Co., Ltd. (KSAM) 76.59% Factoring Krungsri Factoring Co., Ltd. (KSF) 99.99% Securities Krungsri Securities Plc. (KSS) 99.74% Collection Services Total Services Solutions Plc. (TSS) 99.99% Support Business Siam Realty and Services Co., Ltd. (SRS) 99.99% Microfinance Ngern Tid Lor Co., Ltd. (NTL) 99.99% Hattha Kaksekar Limited (HKL) 100.00% Life Insurance Krungsri Life Assurance Broker Ltd. (KLAB) 100.00% Tesco Life Assurance Broker Ltd. (TLAB) 50.00% Leasing Ayudhya Development Leasing Co., Ltd. (ADLC) 99.99% Non life Insurance Krungsri General Insurance Broker Ltd. (KGIB) 100.00% Tesco General Insurance Broker Ltd. (TGIB) 50.00% Asset Management Krungsri Ayudhya AMC Ltd. (KAMC) 99.99% Venture Capital Krungsri Finnovate Co., Ltd. (KFin) 99.99% Krungsri full fledged Universal Bank 8
Krungsri: Credit Ratings International Ratings Fitch Ratings Moody s Standard & Poor s Krungsri Foreign currency Foreign Long Term Issuer Credit Rating Outlook Outlook Outlook Long Term Deposit Long Term A Stable Baa1 Stable BBB+ Stable National Ratings Fitch Ratings (Thailand) Tris Rating Long Term Outlook Company Rating Outlook Krungsri AAA (tha) Stable AAA Stable Krungsri Auto /1 na na AA Stable Krungsri Card /2 na na AAA Stable Ngern Tid Lor na na A Stable /1 Ayudhya Capital Auto Lease Plc. (AYCAL) /2 Krungsriayudhya Card Co., Ltd. (KCC) 9
What guides us: Mission, Vision and Values Krungsri MISSION To be a leading regional financial institution with global reach, committed responsibly to meeting the needs of our customers and serving society through sustainable growth. Krungsri VISION Highly qualified team of professionals providing innovative products and services, dedicated to becoming our customers number one preferred financial group. Krungsri VALUES Customer Centricity Integrity Team Spirit Passion for Excellence Embracing Changes Global Awareness 10
Our Philosophy Our Corporate Governance: Adherence to best corporate governance practices Employees Supervisory Authority Shareholders Customers Board of Directors Management Staff Shareholders Investors Commercial banks or Other financial institutions Business partners/creditors Society and country Our People: The key driving force of Krungsri Our Products: Developing & delivering financial solutions that best match with the need of customers. 11
Who we are Key Financials & Development Highlights Mid Term Business Plan 2017 Business Strategy and Key Focus 12
3Q 2017 Key Financial Highlights Loan Growth +1.4% QoQ / +6.6% YoY Deposit Growth +2.9% QoQ / +10.3% YoY CASA Consolidated (Baht Billion) 1,475.5 1,496.2 1,163.3 1,197.3 NIM 2Q/17 3Q/17 2Q/17 3Q/17 Non interest Income Growth +10.6% QoQ / +2.9% YoY Cost to Income Ratio NPL 7.42 8.21 47.2% 46.1% Coverage 2Q/17 3Q/17 2Q/17 3Q/17 13
Loans by Segments A broad based expansion in Corporate, SME and Retail segment Consolidated (Baht Billion) Corporate Loan SME Loan Retail Loan -0.6% +1.5% +3.1% 590.3 587.0 215.1 218.4 670.1 690.8 June 17 Sep 17 June 2017 Sep 2017 THB 1,475.5 bn. THB 1,496.2 bn. June 17 Sep 17 June 17 Sep 17 Thai Corporate 29% 11% 15% Retail 45% JPC/MNC SME JPC/MNC Thai Corporate 28% 11% 15% Retail 46% SME Retail Auto HP 21% Mortgage 14% Credit Card & 11% Personal Loans 14
5 years Financial Highlights 15
Who we are Key Financials & Development Highlights Mid Term Business Plan 2017 Business Strategy and Key Focus 16
Mid Term Business Plan (MTBP) A strategic framework formulated as a guide for Krungsri s business operations over the next three years (2015 2017), formulated in a forward looking approach. Domestic Regulatory External Operating Environment Rise of middle income Growth outside Bangkok Aging population AEC Political uncertainty Change in tax structure (Corporate/VAT) Credit Card Act Krungsri Strength & Weakness Auto loan, credit card and personal loan Business and financial support from MUFG Global product capabilities & network Strong franchise and customer base Retail deposit & mortgage Lower share in Thai corp & SME Our ASPIRATION: To be a Top Tier Financial Group in Thailand Key Strategic Themes Grow Asset Increase Noninterest Income Reduce Cost of Funds 17
MTBP Key Principles To achieve aspiration, Krungsri will implement 3 business strategies which is key strategic themes, and four management platform themes to strengthen governance in support of business endeavors. I. Key Strategic Themes II. Key Drivers Customer Centric Approach Products & Services Delivery Channels Marketing / Branding Increase Noninterest Income Grow Assets Reduce Cost of Funds Operate Productively & Efficiently Strengthen Internal Control Align Robust Process Talent Management & Working Environment III. Key Attitude Make Life Simple Products & Services Delivery Channels Marketing / Branding OneKrungsri 18
MTBP Key Principles (Cont d) Key Strategic Themes Grow Asset Keep Leading Position in Consumer and Auto Become a Tier 1 Mortgage Player Become a Core Bank to Commercial Customers Enhance Trade Finance & Transaction Banking Increase Noninterest Income Reduce Cost of Funds Increase CASA * Expand Customer Base Enhance Delivery Channels, Including Branches MUFG BTMU Synergy Retail & Commercial Collaboration * CASA: Current and Saving Accounts 19
Regional Expansion Key Strategies Alignment of coverage segment between Krungsri and BTMU Except for Laos, Krungsri focusses on expansion opportunities in auto, consumer and microfinance spaces and leverage BTMU network in corporate segments for Mekong strategies. Conduct feasibility study and seeking investment opportunities. Myanmar: BTMU: Yangon Branch Krungsri : Representative Office Laos Krungsri to lead the coverage of both bank and non bank segments Focus: Auto, consumer and microfinance Myanmar & Cambodia Use BTMU platform for corporate segment Retail and SME are open space for further assessment Focus: Auto/Consumer Finance and MFI Vietnam Collaborating with VietinBank Explore opportunity Focus: Auto, consumer and microfinance fields Cambodia: Acquired Hattha Kaksekar Co., Ltd. (HKL), a leading microfinance provider in Cambodia. 20
Krungsri s Future Maintain No.1 in Consumer Finance Stronger Commercial Banking Platform Larger Customer Base Strong corporate Governance & Internal Control Top Tier Financial Group in Thailand 21
Who we are Key Financials & Development Highlights Mid Term Business Plan 2017 Business Strategy and Key Focus 22
Thailand Economic Outlook 2017 2018 Outlook: The Thai economy is likely to see a more balanced recovery with projected growth of 3.8% this year and 3.7% next year. 2017 2018 Key Economic Forecasts % YoY growth unless otherwise stated 2016A 2017F* 2018F* GDP Private Consumption Private Investment Exports ( In USD term) Headline Inflation Policy Interest Rate (%, end of period) Note: * 2017 18 forecast by Krungsri Research Key drivers are growing consumption, rebounding exports, recovering tourism sector, increasing public spending and economic stimulus measures After facing drought in the past several years, favorable weather this year boosts farm output and income. Government is speeding up infrastructure investment. However, new foreign labor law may create risks to domestic construction and investment. Policy interest rate is likely to be unchanged at least until mid 2018 given low inflation and still weak private investment. 3.2 3.1 0.4 0.1 0.2 1.50 3.8 3.2 2.1 6.5 0.6 1.50 3.7 3.3 3.5 4.5 1.7 1.75 Tailwinds Global economic recovery Infrastructure and EEC projects Stronger confidence with clearer timeframe of general election Lower first car debt burden, favorable farm income, measures to help low income earners Resilient tourism sector Sound economic fundamentals Headwinds Domestic political uncertainty US policy uncertainties and China s economic slowdown High global risks and volatile financial markets Labor shortage and potential impact of new foreign labor law High household debt Structural problems e.g. competitiveness problem Source: Krungsri Research 23
Recent Economic Development A recovery of economic activity continues and becomes broader based Consumer spending recovers moderately and private investment begins to show a positive growth rate Pro cyclical government spending continues to buoy economic recovery Exports surprisingly expand across the board in both key markets and products amid strengthening external demand Foreign tourist arrivals rebounded as negative impact of crackdown on illegal tours dissipated. % YoY 5.0 4.0 3.0 2.0 1.0 0.0 1.0 2.0 GDP: continues to expand in 3Q17 3Q17F = 3.9% 1Q14 2Q 3Q 4Q 1Q15 2Q 3Q 4Q 1Q16 2Q 3Q 4Q 1Q17 2Q 3Q Domestic demand: consumption grows and investment picks up Exports: surprised growth amid rising global demand and higher prices Tourism: Chinese arrivals turn around Consumption (% YoY) 6 4 2 0-2 -4-6 Private consumption index Private investment index Investment (% YoY) 1Q14 2Q 3Q 4Q 1Q15 2Q 3Q 3Q 1Q16 2Q 3Q 4Q 1Q17 2Q Jul Aug 6 4 2 0-2 -4-6 % YoY 15 10 5 0 5 10 1Q14 2Q 3Q 4Q 1Q15 2Q 3Q 4Q 1Q16 2Q 3Q 4Q 1Q17 2Q Jul Aug Million Persons Foreign tourist arrivals % 10 % YoY 8 6 4 2 1Q14 2Q 3Q 4Q 1Q15 2Q 3Q 4Q 1Q16 2Q 3Q 4Q 1Q17 2Q Jul Aug 60 40 20 0 20 Source: BOT, Department of Tourism, Krungsri Research 24
Emerging Changes to Banking Landscape Challenges to respond to change in need & expectation Customers needs FinTech Customer Centricity & Digital Banking Challenges for Topline New normal growth Competition from new rivals Regulatory changes Productivity and efficiency 25
Business Strategy and Key Focus: 2017 Continuation of MTBP and leveraging MUFG s global capabilities and networks to deliver superior financial solutions. MTBP Synergy Strategies Increase Noninterest Income Grow Assets Reduce Cost of Funds Europe & MEA 36 locations Thailand 697 locations Asia and Oceania 68 locations Japan 1,086 locations Americas 399 locations MUFG global network: over 2,000 offices in more than 50 countries Strengthen Internal Control CIB CLMV Align Robust Process Operate Productively & Efficiently Thai JP Collaboration Leveraging MUFG s global capabilities and networks Retail Talent Management Working Environment Transaction Banking Dealer / Vendor Finance 26
Continuation of MTBP Area of special focus in 2017 1 Keep Leading Position in Consumer and Auto Grow Assets 2 3 Become a Tier 1 Mortgage Player Become a Core Bank to Commercial Customers Increase Non Interest Income Reduce Cost of Funds Operate Productively & Efficiently 4 5 6 7 8 9 Enhance Transaction Banking Strengthen FX Business Increase Low Cost CASA Expand Customer Base Enhance Delivery Channels, Including Branches MUFG/BTMU Synergy Retail & Commercial Collaboration 27
Segment focus to support growth in 2017 To be a Tier 1 Bank in Thai corporations Thai Corporate Explore and deepen relationship with existing customers, expand customer base (new customers/new industry) To enhance No. 1 position JPC/MNC Expand customer base Provide local services to JPC/MNC To become a main operating bank for SMEs SMEs Expand Krungsri s value chain solutions New product & new chain Continue growing trade finance assets Maintain & Assure Leadership Position Retail & Consumer Improving customer experience across retail and consumer banking Differentiated position in the market 28
Moving toward Digital Banking 29
3 elements of Fintech to be a leader in digital banking Venture Capital / Accelerator & Academic Collaboration/ Fintech Collaboration Venture Capital Krungsri Finnovate (Investment Fund: USD 30 million) Accelerator & Academic Collaboration Fintech Collaboration Investment Focus Payment system AI Continue the success of Krungsri RISE and Krungsri Uni Startup Working together with MUFG to further develop innovative financial technology to capture new business opportunities. 30
The Summary of Key Financial Performance Consolidated 2016 1H/17 3Q/17 9M/17 2017 Targets Loan Growth (Net) +145.4 bn +11.2% +26.6 bn +1.8% +20.7 bn +1.4% +47.3 bn +3.3% 6 8% NPLs Ratio 2.21% 2.24% 2.16% 2.16% < 2.5% Deposit Mix: Savings and Current 53% 50% 48% 48% > 50% ~ Loan Mix : Retail 44% 45% 46% 46% ~ 40% L/Deposit+Debenture+B/E 117% 114% 115% 115% n.d. n.d. NIM 3.74% 3.82% 3.89% 3.82% ~ 3.7% Non interest income growth* (YoY) 11.7% 6.5% 2.9% 5.2% 5.0%+ Cost to Income Ratio 47.1% 48.0% 46.1% 47.4% < 50% Provisions 147 bps 146 bps 165 bps 151 bps ~ 140 bps ~ Loan Loss Coverage 143% 144% 149% 149% 140%+ CAR (Bank Only) 14.16% 15.96% 16.28% 16.28% n.d. n.d. * Net Fees Income + Non Interest and Non Fees Income 31
Krungsri Group Profile International Ratings Fitch Ratings Standard & Poor s Moody s A BBB+ Baa1 Leadership Position Consumer As of August 2017 In consumer finance Market % Share Position Personal Loan 1 30% National Ratings Fitch Ratings AAA (tha) TRIS Rating AAA Credit Card 1 16% Auto (HP) 2 25% SME 5 5% Corporate 4 12% As of September 2017 Extensive Franchise: 33,492 Service Outlets Number As of September 2017 Number Domestic Branches 697 * Krungsri Business Centres 63 Overseas Branches 2 First Choice Branches 157 Branches + Dealers + 20,500 Dealers Representative Office 1 Krungsri Auto Dealers > + 10,200 Dealers ATMs 6,454 Microfinance Branches 574 Exchange Booths 97 Microfinance Overseas Branches (HKL) 163 Krungsri Exclusive 38 Thai Post Offices > + 1,000 * Krungsri Domestic Branches = 697 Branch, of which 660 are Banking Branches and 37 are Auto Business Branches 32
What guides us: Sustainability is a founding concept of our mission In our pursuit of being a responsible financial service provider, we established a guideline of action for achieving sustainability development in the following 3 dimensions: Economic Aligning business strategies with the economic outlook Maintaining a well balanced portfolio while serving as our customers trusted business partner and financial advisor. A true financial solution provider for customers. Social Improving financial access and enhancing financial literacy among Thai people Engaging Krungsri Staff in valued community development initiatives and CSR practices. A responsible corporate citizen. Environment Taking care to minimize the negative impact on our environment through implementation of green initiatives within our business and through our prudent support of customers growth initiatives. We place great emphasis on various green initiatives 33
This presentation has been prepared by Bank of Ayudhya Public Company Limited (the Bank ) solely for informational purposes. It does not constitute an offer or sale or a solicitation of an offer to purchase securities, nor does it constitute a prospectus within the meaning of the Securities and Exchange Act B.E. 2535 of Thailand. Neither this presentation nor any part of it shall form the basis of, or be relied on in connection with, or act as an inducement to enter into, any contract or commitment whatsoever. No person should rely on the information contained in this presentation in making an investment decision in respect of any of the Bank s securities. Any decision to purchase or subscribe for any securities of the Bank must be made on the basis of a thorough review of publicly available information of the Bank, including information made publicly available by the Bank pursuant to the requirements of the Securities Exchange of Thailand and the Thai Securities Exchange Commission. The information contained herein is only accurate as of its date. Contact Public and Investor Relations Department : Telephone : (662) 296 2977 Fax : (662) 683 1341 E mail : irgroup@krungsri.com Krungsri Website : www.krungsri.com Join us! www.facebook.com/krungsrisimple 34 www.twitter.com/krungsrisimple