TMBThanachart Bank Public Company Limited 4. Management Discussion & Analysis Executive Summary 2021 was another challenging year from prolonged COVID-19 situation. TMBThanachart Bank (TTB) has maintained conservative direction to preserve financial stability for future growth with a key focus on integration mission as well as providing COVID-19 support to customers throughout the crisis. The Bank has been focused on quality growth strategy and optimized deposit structure to ensure balance sheet healthiness during the pandemic as well as prudently managed asset quality. Despite topline growth was under pressure but balance sheet optimization strategy and proactive funding management helped lessen impact of yield compression under low rate environment. Cost saving synergies and cost discipline delivered as planned, reflected by lower OPEX. As result of muted top-line growth and prudent business direction under fragile economic recovery, PPOP decreased from the previous year. The Bank remained a prudent risk management approach and set aside sufficient level of provision for the uncertainties circumstance. Optimized deposit structure aligning with funding strategy: The continuous effort of balance sheet optimization resulted in well-managed deposit mix by running down high-cost deposits and replacing with quality-hybrid deposits. As of December 2021, total deposits contracted by 2.5% YTD to THB1,339 billion, in line with the Bank’s direction to optimize balance sheet and funding strategy. However, the Bank started to acquire long-term deposit, led by retail-TD up and up in 4Q21, as part of funding management and product offering for wealth customer. As a result, Time Deposit rose by 16.9% from the previous quarter. Retail hybrid deposits grew on track, led by All Free which continued its growth pace by 39.1% YTD while No-fixed deposit also favorably grew by 49.5% YTD. However, the Bank will continue to optimize and balance deposit structure thru CASA & hybrid products and Time Deposit to ensure efficiently-managed deposit cost going forward. Resumed loan growth with quality growth strategy: TTB has been more selective in growing loans and focus on quality growth strategy during the pandemic. Total loan, therefore, declined by 1.5% YTD to THB1,372 billion as of December 2021. Corporate loans contracted by 5.5% YTD mainly from loan repayment while trade finance and term loan maintained its moderate growth, despite the slow economic recovery from prolonged COVID-19 pandemic. Small SME loans was still slow down, in line with the Bank’s direction to de-risk weak loans and ensure quality of loan portfolio. Retail loan was relatively flat YTD as we started to resume growth in key products, led by mortgage and HP loans. Mortgage loans continued its positive momentum by 2.6% YTD while hire purchase showed a recovery sign in new auto loan booking especially in new car segment from the previous quarter. Unsecured loans and credit card also pick-up. As the Bank pursues its balance sheet optimization and maintain quality loan growth strategy, loan portfolio shifted towards retail lending since merger. Currently, retail loans represented 57% of total portfolio. 126
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