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

2

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

  1. Lead the market on customer experience and service for focused customer segments
  2. Stay competitive in providing value to customers by becoming more efficient
  1. Leveraging our ASEAN footprint as a differentiator where relevant
  2. Investing in technology, digital and analytics to lead on service, experience and value
  3. 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

3

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

7

  • 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

  1. Savings from IA write-off based on FY2021 exercise, while savings from accelerated depreciation only to commence when the asset is fully depreciated
  2. 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%

7

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

8

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

9

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.