CIMB Group Digital Businesses Investor Day 2023
CIMB Group Holdings Berhad
31 October 2023
Strategy
The Forward23+ strategic house refined to shape the Group's 2023 business plan and key focus areas
• Selected digital investments
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We have a clear view on where we will compete and how will we win
To be the leading focused ASEAN bank
Leading
We seek to be amongst the
Focused
We will not be everything to everyone.
Focus on key markets and segments, where we play to win
ASEAN
We are a local
ASEAN bank.
leading ASEAN banks (top quartile) when measured by financial metrics such as ROE* and CIR as well as non-
financial metrics such as NPS, Organisational Health and Sustainability
* Weighted average top quartile
Where will we compete
Universal Bank: Across all segments
Focused Universal Bank: Consumer and SME; high quality wholesale
ASEAN focus: ASEAN wholesale and Preferred; niche in commercial
Focused player: ASEAN wholesale
and Preferred; niche in consumer finance
Universal community focused bank
Selective investments: Digital
attacker leveraging on partnerships to create a hedge on future
How will we win
- Lead the market on customer experience and service for focused customer segments
- Stay competitive in providing value to customers by becoming more efficient
- Leveraging our ASEAN footprint as a differentiator where relevant
- Investing in technology, digital and analytics to lead on service, experience and value
- Being brilliant at the basics: end to end risk management, controls, performance orientation
This identity resonates with our staff and external stakeholders. It provides an element of
differentiation
and aspirationn
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Our portfolio needed to be reshaped
Malaysia
Indonesia Singapore Thailand
Cambodia
Digital
SME/ Commercial
Consumer
Wealth Management
Transaction banking
T&M
Corporate
Consumer
& SME
Wealth Management
T&M
Transaction banking
COBA
COMBA
Wealth | Wealth |
Management | Management |
T&M | Consumer |
Corporate | T&M |
Commercial | Corporate1 |
Transaction | Transaction |
banking | banking |
Consumer | Commercial |
SME/
Commercial
Consumer
Wealth Management
Transaction banking
T&M
Corporate
TnG &
TNGD 1)1 Undertake stringent
portfolio review
Philippines
2)2 Implementation of dynamic
Vietnam allocation` framework
• Stronger growth vs market for performing businesses
• Slower growth vs market for businesses that need to be fixed
1. Focused on ASEAN | Double down | Grow | Fix and turnaround | Exit | Growth through partnership |
4
Asset composition and growth
Growth momentum continued to improve on areas we would like to invest
Asset Composition
Year | Consumer | Commercial | Wholesale | CDA & Group | |
Funding | |||||
Dec-19 | 33% | 11% | 43% | 12% | |
Jun-23 | 32%▼ | 10%▼ | 42% ▼ | 17%▲ | |
Loan Growth (YoY) | |||||
1H23 | 2019 - 1H23 |
Invest
Gross Loan Composition
Year | Consumer | Commercial | Wholesale |
Dec-19 | 50% | 18% | 32% |
Jun-23 | 52%▲ | 16%▼ | 32% ▼ |
Initiatives / Comments
Consumer | +7% | +19% | Consumer loans growth driven by Thailand and Indonesia | |
Malaysia | +5% | +17% | Malaysia loans growth driven by Commercial segment | |
Malaysia Commercial | +8% | +26% | Malaysia Commercial growth driven by Business Banking | |
Indonesia Consumer | +8% | +28% | Indonesia Consumer holding strong | |
Fix | ||||
Indonesia Commercial (ex-SME) | +1% | +7% | Indonesia Commercial portfolio optimisation completed. Growing cautiously | |
Singapore Commercial (ex-SME) | -3% | -50% | Singapore Commercial showing improved LLC | |
Exit | ||||
Thailand Commercial | -29% | -71% | Thailand Commercial - Continued portfolio run down | |
5 | ||||
Note: Malaysia includes London, Hong Kong and Shanghai |
Structured Cost Take-out
Cumulative cost saving of RM1 billion achieved
Evolution Analysis
RM'mil | FY21 | Total Cost |
Decrease in cost | ||
Cost Base(1) | ||
Increase in cost |
(611) | 8,775 | (195) | 8,938 | (382) | ||||||
9,386 | 9,225 | |||||||||
8,748 | ||||||||||
FY19 | Cost Savings | FY20 | Cost | BAU | FY21 | Cost | Normalised | FY22 | FY24 | |
Cost-to- | Savings | Spend | Savings | BAU Spend & | Target | |||||
Other | ||||||||||
income | 53.4% | 51.7% | 48.6% | Investments | 46.5% | ≤45% | ||||
ratio |
~RM1 billion cost savings taken out between 2020-2022:
A&G optimisation | 185 |
Tightened marketing cost | 110 |
Singapore restructuring | 45 |
Thailand restructuring | 30 |
Indonesia cost optimisation | 55 |
TnGD deconsolidation | 200 |
Personnel costs optimisation
Tactical reduction on non-IT spend
Savings from IA Write-off & Accelerated Deprecation (2)
Consumer Malaysia initiatives (3)
Real Estate optimisation
250
56
80
24
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- Sustained productivity gains with enhanced CAPEX prioritisation framework and stringent opex management especially in the tech capex and opex space
Notes: (1) FY21 Cost Base without cost savings is RM9,133 mil | 6 |
- Savings from IA write-off based on FY2021 exercise, while savings from accelerated depreciation only to commence when the asset is fully depreciated
- Optimisation of the Consumer business including, paper statement and courier/printing reduction, real estate optimisation and rental negotiation
Positive momentum towards meeting our Forward23+ ambitions
Key Group | Actual | FY23 | Forward23+ | |||||
Metrics | Guidance | Ambition | ||||||
2018 | 2019 | 2020 | 2021 | 2022 | 1H23 | 2023 | 2024 | |
BAU | BAU | BAU | BAU | 10.6% | 10.2-11.0% | |||
9.6% | 9.3% | 8.1% | 10.2% | Top Quartile | ||||
ROE | 2.1% | 11.5-12.5% |
52.6% | 53.4% | 51.7% | 48.6% | 46.5% | 46.0% | <46.5% | |
CIR | ≤45.0% | ||||||
Cost of | 43 | 58 | 151 | 73 | 51 | 40-50 | ||
Credit | 38 | 50-60 bps | ||||||
(bps) |
CET1 | 12.2% | 12.9% | 13.3% | 14.5% | 14.5% | 14.2% | >13.5% | >13.5% |
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ROE journey and trajectory
70-130 bps
0-40 bps
10.2- | 11.5- | |
10.6% | 12.5% | |
11.0% |
8.5%
2019 | Portfolio | Opex | ECL | Others | Capital | 1H23 | Drivers | 2023 | Drivers | 2024 |
ROE | Reshaping | Optimisation | Reduction | Accumulation | ROE | Target ROE | Target ROE |
Key Highlights
ROE progressed to 10.6% in 1H23 from 8.5% in 2019 as we delivered on key Forward23+ initiative
Our business recalibration efforts via reshaping of our portfolio delivered positively across segments and geographies
Achieved structured cost take out of RM1bil over 3 years ECL uplift from proactive asset quality management
Partial offset from higher CET1 of 14.2% at end Jun-23 vs 12.9% in 2019
Future Drivers
BAU profitability from asset growth, NOII expansion and preferred segments growth
Higher contribution from CIMB Niaga Further credit cost optimisation
CIMB Digital Assets (CDA) turnaround
Capital optimisation
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CDA on a Positive Trajectory
CDA losses narrowed over the last 4 years. 1H23 losses declined by 86.9% vs 2019, contributing to the Group's ROE improvement largely from CIMB Philippines and CIMB Vietnam's partnership-led expansion and TnG Group's profitability improvement since 2019
Uplift to Group ROE as CDA losses narrow
Narrowing | |||||||||||||
CDA losses | |||||||||||||
have | |||||||||||||
+19 bps | cumulatively | ||||||||||||
contributed | |||||||||||||
+17bps | |||||||||||||
+16 bps | +16bps | ||||||||||||
to 55bps of | |||||||||||||
Group's | |||||||||||||
ROE | |||||||||||||
expansion | |||||||||||||
since 2019 | |||||||||||||
+4 bps | |||||||||||||
2020 | 2021 | 2022 | 1H23 * | 2023 E |
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Note: *1H23 vs 1H22
Final Remarks
CIMB Digital Assets is a key component to the success of the Forward23+ Strategy, with:
- TNG Group playing a core role in the Group's digital banking aspirations;
- Philippines to breakeven by 2023 and contribute positively from 2024;
- Vietnam moving in the right direction towards breakeven
Approaching the final year of the Forward23+ programme, the Group will continue executing the strategies as core focus remains on:
- Driving profitability through targeted loan growth and CASA growth;
- Contain operating costs while ensuring sustained technology investment;
- Sustainable loan loss charges;
- Our ASEAN diversification efforts via reshaping of our portfolio and focused investments
The Group remains optimistic in achieving its key financial targets for 2023 & 2024 with CIMB Digital Assets playing an important role in the Group's ROE expansion
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Disclaimer
CIMB Group Holdings Bhd published this content on 31 October 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 November 2023 14:51:57 UTC.