21 CM 1.7 CM 21 CM SYNERGY FOR 29.7 CM FOR GROWTH GROWTH TMB Bank Public Company Limited ANNUAL REPORT 2019 TMB Bank Public Company Limited Annual Report 2019 3000 Phahon Yothin Road, Chom Phon, Chatuchak, Bangkok 10900 TMB Bank Public Company Limited Reg No./TAX ID No. 0107537000017 Tel. 0-2299-1111, TMBbank.com Table of Contents Section Page Section Page Vision and Mission 4 Internal Control 128 Message from the Chairman of the Board of Directors 7 Statement of the Audit Committee 129 Message from the Chief Executive Officer 9 Report of NRCC 130 Synergy for Growth 11 Report of the Board of Directors’ Responsibility 132 Historical Financial Performance 28 for Financial Reports Board of Directors 30 Management Discussion and Analysis 133 Chief Officers 46 Credit Rating 145 Management Team 50 Independent Auditor’s Report 149 Organization Chart 52 Financial Statements and 153 Notes to Financial Statements Thai Economy and Banking Industry 55 Company Information 273 Strategy and Business 60 Investment of TMB in Other Companies 274 Risk Management and Key Risk Factors 66 Domestic Network 276 Management Structure 76 International Branches 277 Corporate Governance 90 Main Correspondent Banks 278 Corporate Social Responsibility (CSR) 120 Attachment 1-4 279 Bank’s Securities and Shareholders 124 Other Related Information and Affecting Factors 126 For Annual Registration Statement (Form 56-1) please visit the SEC website at www.sec.or.th or TMB Bank website at www.tmbbank.com Table of Contents Section Page Section Page Vision and Mission 4 Internal Control 128 Message from the Chairman of the Board of Directors 7 Statement of the Audit Committee 129 Message from the Chief Executive Officer 9 Report of NRCC 130 Synergy for Growth 11 Report of the Board of Directors’ Responsibility 132 Historical Financial Performance 28 for Financial Reports Board of Directors 30 Management Discussion and Analysis 133 Chief Officers 46 Credit Rating 145 Management Team 50 Independent Auditor’s Report 149 Organization Chart 52 Financial Statements and 153 Notes to Financial Statements Thai Economy and Banking Industry 55 Company Information 273 Strategy and Business 60 Investment of TMB in Other Companies 274 Risk Management and Key Risk Factors 66 Domestic Network 276 Management Structure 76 International Branches 277 Corporate Governance 90 Main Correspondent Banks 278 Corporate Social Responsibility (CSR) 120 Attachment 1-4 279 Bank’s Securities and Shareholders 124 Other Related Information and Affecting Factors 126 For Annual Registration Statement (Form 56-1) please visit the SEC website at www.sec.or.th or TMB Bank website at www.tmbbank.com Vision TMB inspires people to Make THE Difference Mission > Empower customers to make the most of their lives > Deliver consistent performance to create sustainable values for shareholders > Transform organization into the best place to work for employees and provide opportunities and development that allow them to unlock their full potentials to challenge status quo > Engage to create more value to the society while ensuring sustainability 4 Vision TMB inspires people to Make THE Difference Mission > Empower customers to make the most of their lives > Deliver consistent performance to create sustainable values for shareholders > Transform organization into the best place to work for employees and provide opportunities and development that allow them to unlock their full potentials to challenge status quo > Engage to create more value to the society while ensuring sustainability 5 6 Message from the Chairman of the Board of Directors In 2019, businesses were faced with several global economic and social uncertainties; the Board of Directors is therefore committed to conducting business with prudence as well as exploring new business opportunities in order to build strong and sustainable growth. In 2019, TMB achieved another milestone which is the merger with Thanachart Bank. The Board of Directors agreed that this merger plan is a perfect match for both banks since they have different strengths that complement each other. TMB is a market leader in deposit and digital banking while Thanachart Bank is a market leader in retail lending, particularly the auto hire purchase, which ranked No.1 in the market. Thus, this integration will enhance the bank’s financial services and improve financial products to serve our larger customer base. In addition, this merger plan aligns with the government’s national agenda to encourage the integration of commercial banks in order to enlarge bank scale and increase competitiveness on a regional level. Post-merger, TMB is double in size and well-positioned to play a critical role to the development of Thai economy and financial sector. As a result, credit rating agencies underpinned positive implications of the merged bank and elevated TMB’s credit rating and score. Moody’s Investor Service lifted the long-term foreign-currency deposit rating from Baa2 to Baa1 and the Baseline Credit Assessment, which reflects TMB’s strength, from ba1 to baa3. Likewise, S&P Global changed TMB’s outlook to “Positive” and affirmed its BBB- on TMB’s Issuer Credit Rating. In addition, Fitch Ratings revised TMB’s Support Rating Floor from BB+ to BBB- and upgraded its Support Rating to 2 from 3. Therefore, I believe that the merger will provide a solid foundation and create a better return to TMB’s shareholders and Thai economy in the long-run. Apart from building strong fundamentals for sustainable business growth, TMB is committed to maintaining good corporate governance and pursuing sustainable operations by complying with industry’s best practices. As a result of this endeavor, TMB earned various awards throughout 2019 including ranking first place in the Fair Finance Thailand 2019, climbing up from the 9th place in 2018. Fair Finance Thailand is an index for assessing fair finance among Thai banks to create sustainable banking in Thailand. Furthermore, TMB has been included in the FTSE4Good index since 2015 and also on the list of Thailand Sustainability Investment (THSI) 2019 for two consecutive years. In terms of social contribution, TMB aims to thrive alongside the development of Thai society. One of our social activities that we take pride in is the “FAI-FAH for Communities” project which essentially reflects TMB’s philosophy: “Make THE Difference” by creating opportunities for youth to develop their life skills through creative learning and sharing of knowledge to bring about a better society. For over a decade, TMB’s volunteers together with the participation of more than 50,000 children, completed more than 133 projects across the country. With such efforts and continued contribution to society, TMB proudly received the Best Bank for CSR Thailand Award 2019 from Asiamoney, Singapore. Lastly, I would like to express my gratitude to all of our stakeholders for your continued support. To begin TMB’s next chapter, I believe that together with the bank’s competency, the endless effort and dedication of the management team and staff from both TMB and Thanachart Bank, we will Make REAL Change, creating better innovative products and services to improve the financial well-being of customers. Besides, TMB’s sustainable growth and good corporate governance will yield the utmost benefits to our shareholders, staffs and the Thai society. Mr. Prasong Poontaneat Chairman of the Board 7 8 Message from the Chief Executive Officer At TMB, the management team and all employees have always adhered to the philosophy of “Make THE Difference”, where it is embedded in the way we think and work. Thus, with this philosophy in mind, we are constantly searching for ways for continuous improvement. We do not attach to past accomplishments, nor do we ignore any changes in the market. We always challenge ourselves with new initiatives and are eager to change and disrupt traditional banking norms. We are genuinely committed to make our customers “Get MORE”. 2019, A year of Continued Commitment to Make Our Customers “Get MORE” Through 2019, TMB dedicated our efforts to bring the key concept of “Get MORE with TMB” into fruition. As a leading market pioneer, we continued to launch new-to-market products and services such as the TMB ABSOLUTE credit card and TMB Wealthy 3 Gens, to name a couple. The TMB ABSOLUTE credit card, for instance, is the first credit card in Thailand that waives 2.5% charge on foreign currency purchases. The TMB Wealthy 3 Gens is an insurance product that is designed to provide a solution for taxes and inheritance management since it could be inherited from generation to generation, which also serves as a long-term financial plan for customers’ children or even grandchildren. Concurrently, TMB has been consistently improving the features of its existing products and services to ensure that customers’ fast changing needs and lifestyles are met in a timely manner. We continue to uplift customer experience through simple and easy digital banking. This year, TMB WOW, a loyalty program that gives WOW points to customers when transacting via TMB TOUCH, successfully launched Pay with WOW, the newest feature that allows customers to easily redeem WOW points for real money through TMB ALL FREE Debit Card. Moreover, 2019 marked a significant milestone for TMB with the successful execution of the merger transaction with Thanachart Bank, making it one of the largest banks in Thailand. Synergy for Growth The merger between TMB Bank and Thanachart Bank marked one of the most important collaboration in Thai banking history. The merger united two banks that have different but complementary strengths to each other. While TMB has a strong proposition of transactional banking excellence, Thanachart Bank has expertise in retail lending, particularly in the hire purchase business. The combined core strengths of both banks will truly create synergy for growth opportunities. 2019, therefore, was a challenging year for TMB given its internal mission of the merger transaction with Thanachart Bank and external factors ranging from unfavorable macro-economic environment, digital banking competition, to a changing landscape in the banking industry.