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LH Financial Group PCL
Investor Presentation
May 31, 2011
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LH Financial Group PCL
Investor Presentation
May 31, 2011
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SECTION 1
LHFG Profile and Business Overview
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Company Profile
( )
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Key Milestones
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Strong Capital Position
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LHFG Shareholding Structure & Group Structure
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Board of Directors & Management Team
Ms.Sasitorn Phongsathorn Mr.Pairoj Paisonsrisomsuk Mr.Naporn Sunthornchitcharoen Ms.Suwanna BuddhaprasartMember of the Board Member of the Board Member of the Board Member of the Board
Member of the Executive Committee Member of the Executive Committee Member of the Executive Committee
Managing Director Senior Executive Vice President
Mr.Anant Asavabhokhin Mr.Rutt Phanijphand Mr.Phairoj Hengsakul Mr.Adul Vinaiphat Mr.Suwit Udomsab
Chairman of the Board Member of the Board Chairman of the Audit Committee Member of the Audit Committee Member of the Audit Committee
Chairman of the Executive Committee Independent Director Independent Director Independent Director
The two committees will be nominated for the BoD appointment at
the Annual Shareholder General Meeting on April 18, 2011
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Limitations of Retail Bank Hindrance
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SECTION 2
Financial Performance
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Organic Asset Growth
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Superior Asset Quality
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Strong Liquidity
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Branch Networks
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Productivity per branch above Peers
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Productivity per head above Peers
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Strengthening Capital Position
.
.
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Improving Earnings Capability
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SECTION 3
Investment Highlights
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Key Investment Highlights
Poised to be one of
the leading players in
the mortgage
financing in Thailand
Continuing business
expansion under the
existing retail
banking model with
synergy initiation
Potential growth arising
from universal banking
platform
Proven Track Record & Financial Achievements
Competent management
team and sponsoring
shareholders
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687 771 867 9571,087
13.7
10.3
12.512.3
0
300
600
900
1,200
1,500
2006 2007 2008 2009 2010
0.0
4.0
8.0
12.0
16.0
20.0
Retail Mortgage Loans Growth Rate
Baht billion YoY Growth (%)
Leading Mortgage Financing Player
Industry-wide Retail Mortgage Loans (Post-financing)
LH Bank has the vision to be one of the leading players in the mortgage financing with the proven track record in the past.
Standing at the
Forefront of
Mortgage Financing
Continuing
Expansions under Retail Banking
Universal Banking-
Driven Potential Growth
StrongShareholders
Proven
Trace Record & Milestones
25.2
26.4
28.7
2008 2009 2010
Baht billion
Favorable uptrend in the property market condition could be the positive
factor for LH Bank mortgage loan expansion.
LH Bank Mortgage Loan Portfolio
2010 LH Bank’s Loan Breakdown
Mortgage67.5%
Non-Mortgage32.5%
LH Bank mortgage loan portfolio has continuously grown in the past with
relatively high growth rate.
Source: Bank of Thailand
Source: LH Bank Financial Statement
Baht 42.5 Billion
* LH Bank mortgage loans were inclusive of accrued interest
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Cross-Selling Products to Premium Customers
The premium housing loan customer base
and growing number of branches serve as
the good infrastructure to secure additional
deposit .
Procurement of CompetitiveSource of Funds
Expand Lending to SMEs BusinessCross-selling Financial
Products & Services
Penetrate into existing customer bases to
provide them with the lending for their
business.
The historical payment track record of
customers could be utilized to manage
credit and business risk.
Capitalize the supply chain financing for
those who have business relationships
with the sponsoring shareholders, implying
lower credit risk
511
15 1724
2
4
66
7
2006 2007 2008 2009 2010
Number of Branches
Bangkok & Surrounding Areas Provincial
Offer all-in wealth management services to
clients to generate fee base income.
Standing at the
Forefront of Mortgage
Financing
Continuing
Expansions under Retail Banking
Universal Banking-
Driven Potential Growth
StrongShareholders
Proven
Trace Record & Milestones
Quality Housing Loan Customers
Wealth Management Services
Bancassurance
Mutual FundProducts Fixed Income
LH Bank could leverage its premium homebuyers as quality customer bases to build up related businesses
Source: Company
7
15
2123
31
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Deposits / Payment / Transfer
Loan / Loan Syndication /
Loan Related• < THB 200 mm
(assets, excluding land cost)
• < 200 employees
Banc Assurance
• life / non-life insurance
E-Banking
Selling Agent Insurance
Government bond
Strong liquidity and lending capability on the back of enormous capital increase, coupled with potential to raise fee-based income
Strike a balance of loan portfolio (Mortgage loans VS other specialized loans i.e. Hire-purchase, SME, and Corporate loans) Diversified loan portfolio tends to reduce concentration risk, which in turn will stabilize the spread earned and tone down NPL issues
Full-fledged financial license will bring LHB about a particular economic context, where growth opportunity & competency met
Retail Banking Full Universal Banking
Lending to large corporate> THB 200 mm (assets, exc. land cost)
> 200 employee
Trading securitiesBond
Trading portfolio
FOREX and derivatives
UnderwritingInvestment unit
Bond
Investment unit: Best effort Bond: SME
Single lending limitCorporate loan / account
Retail loan / account
<= 25% of equity• Corporate <= 10% of equity• Retail <= 1% of equity
Potential GrowthExisting Scope of Services
SBL & Short Sales
Standing at the
Forefront of Mortgage
Financing
Continuing
Expansions under Retail Banking
Universal Banking-
Driven Potential Growth
StrongShareholders
Proven
Trace Record & Milestones
Investment unit: Firm commitment Bond: unlimited
Hire purchase & Leasing
Selling Agent (Corporate Bond)
• Limited (Retail & SMEs)
• Limited (Retail & SMEs)
Potential from Universal Banking Platform
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Standing at the
Forefront of Mortgage
Financing
Continuing
Expansions under Retail Banking
Universal Banking-
Driven Potential Growth
StrongShareholders
Proven
Trace Record & Milestones
LH Fund
Mutual fund management
Private fund management
Investment unit selling agent
Investment unit trading
Investment underwriting
Investment advisory
Investment management
LH Fund is currently in the process of consideration the Securities Business Application Type Kor
by SEC, which will allow the company to operate the business as follows;
Potential Growth from LH Fund
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• Business combination
gave rise to a new retail banking platform.
• Operations commenced
in late 2005 with initial
paid-up capital of Bt 1.1 billion
2004-2005
• Business combination
gave rise to a new retail banking platform.
• Operations commenced
in late 2005 with initial
paid-up capital of Bt 1.1 billion
2004-2005 • A series of equity fund
raising to catch up the
pace of tremendous
growth in lending volume
– 30% CAGR loan growth during 2006-2010
2006-2010
• A series of equity fund
raising to catch up the
pace of tremendous
growth in lending volume
– 30% CAGR loan growth during 2006-2010
2006-2010• Set up and AMC and
reorganize under the
regulatory Solo Consolidation framework
• Equity reached the Bt 10,000 milestone
2011 & Beyond
Well Supported Shareholders
The One-presence LHFG Corporate Umbrella
Strong shareholders play the crucial part in growing LH Bank business
Post - IPO Shareholding Structure
35.8% LHFG 1/
Non-operating Holding Company
LH Fund
Asset Management Co
LH Bank 1/ 2/
Retail Banking –As is
Universal Banking –As planned
The Asavabhokhin
Group
Khun Piangjai
HarnpanijIPO Investors
• Institution
• Retail
Top-tier Developer HNW SponsorPublic Interest
22.5%
12.7%
17.3%1.5%
1/ LHFG and LH Bank are altogether viewed under one solo consolidation2/ LH Bank will submit the official application to BoT within Mar 2011, seeking permission to upgrade status from retail to universal bank
Fund Raising above Bt 10,000 million -the most important
milestone
Application to the BOT within Mar 2011 re: Upgrade to
full-fledged commercial bank under the FSMP II
Standing at the
Forefront of Mortgage
Financing
Continuing
Expansions under Retail Banking
Universal Banking-
Driven Potential Growth
StrongShareholders
Proven
Trace Record & Milestones
2011 & Beyond
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Heading in the Right Direction
Standing at the
Forefront of Mortgage
Financing
Continuing
Expansions under Retail Banking
Universal Banking-
Driven Potential Growth
StrongShareholders
Proven
Trace Record & Milestones
* Adjusted ROE (w/o Right Offering)
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SECTION 4
LHFG Business Strategies and Targets
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Vision & Mission
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Strategic Roadmap
1. Loan Growth42,513
MB
+19%
+20
%
+20
%
+20
%
35,604
MB
+11%
32,014 MB
+25%> 73,000 MB
2. Deposit &
Borrowing
Growth
45,476
MB
+8%
+20
%
+20
%
+20
%
41,938
MB
+18%
35,673 MB
+61%> 77,500 MB
3. Market share -
funding0.57
%
0.84
%
4. Net Profit
Growth408 MB
+50%
+15
%
+15
%
+15
%273 MB
+14%
240 MB
+138%> 620 MB
5. Asset Growth62,311
MB
+25%
+20
%
+20
%
+20
%
49,707
MB
+12%
44,216 MB
+35%> 107,000 MB
2008 2009 2010 2011 2012 2013
Target
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Target
Strategic Roadmap (Cont’d)
6. High Technology
Channel
Expansion
ATM Pool/
Internet
Banking
7. Human Resource
Development
Professional
knowledge supported
by LH Group
8. Universal Bank in
Domestic
Full
Banki
ng
Servi
ce
10. Listing on SET
(IPO)
Listed
Co.
(LHBA
NK)
9. Distribution
Network (incl.
Head Office)
31
branch
es
+20
branc
hes
+10
branc
hes
+14
branc
hes
23
branch
es
21
branches
75
branches
2008 2009 2010 2011 2012 2013
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Strategic Roadmap (Cont’d)
Full Banking Service
Source of Fund Growth
+ 20% CAGR
(2011 – 2013)
Loan Growth
+ 20% CAGR
(2011 – 2013)
Diversified Loan Portfolio
Improve Retail Channels
HR Development
Target Strategy
Total Assets Growth
> 20% CAGR
(2011 – 2013)
Net Profit Growth
> 15% CAGR
(2011 -2013)
0.84% Market Shares – Funding
in 2013
Prudent Risk Discipline &
Portfolio Management
• Capital increase to 10,000 MB tier-1 capital
• Expand wider & more competitive business scope
• Expand banking networks
• New initiative product offerings
• Strong capital
• Expand from SME to Corporate loan
• Diversified loan to lower risk & fulfill new opportunities
• Expand banking networks
• ATM Pool & Internet Banking
• Professional knowledge support
Result
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Q&A