TMB Bank : Management Discussion and Analysis for the quarter and year ended 31 Dec 2020 (Unaudited)

Management Discussion and Analysis

For the 4th quarter and 12-month period ended 31 December 2020

(Unaudited financial statements)

TMB Bank Public Company Limited

3000 Phahon Yothin Road

Chom Pon, Chatuchak, Bangkok 10900

Website:www.tmbbank.com

Investor Relations

Email:[e-mail]

Management Discussion and Analysis

Executive summary: Economic review & outlook

Thai economy in 4Q20: Thailand's domestic economy gradually rebounded, particularly private consumption which steadily improved according to the supports from government's stimulus programs such as 1) Half-half copayment scheme which government subsidized 50% of spending amounts but not exceeded 3,000 baht 2) Tax rebate scheme which allowed consumers to deduct spending costs up to 30,000 baht and 3) The increasing amount of financial aid for welfare card holders by 500 baht. Approximately, the stimulus programs could inject liquidity into the economy around 200 billion baht. Regarding external sectors, merchandise exports also improved, reflected by the less contracted figure of export values excluded gold of 3.1% YoY compared to the contraction of 11% YoY in the first half of the year. However, tourism sector still continuously contracted. Even though with the launch of special tourist visa scheme, there were only around 1,000 inbound tourists per month. With respect to the concerns over the pandemic outbreak and reimposing lockdown measures by many countries, the rebound in international tourism therefore became more fragile. According to domestic tourism sector, after gaining supports from the campaign 'we travel together' and special holidays, it recovered with softer momentum in December 2020 as a result of the new round of outbreak in several provinces. With ongoing improvement in economic components, TMB Analytics thus estimated Thai economy in the fourth quarter to contract at 6.2% YoY, slightly better than the contraction of 6.4% YoY in thethird quarter.

Financial market & banking industry: The Monetary Policy Committee (MPC) decided to maintain the policy rate at 0.50% to support the recovery of Thai economy. In addition, Bank of Thailand amended regulation to provide financial assistance specifically for those targeted individuals and businesses who got adverse impacts. Overall, financial condition would remain accommodative to support economic recovery through 2021. The decision to keep policy rate unchanged in the fourth quarter led to the deposit and lending rate remaining at the same rate as in the third quarter. Regarding Thai baht, it was on average at 30.62 baht per US dollar in the fourth quarter, appreciating by 2.3% compared to the average of 31.33 baht per US dollar in the previous quarter. To be more precise, Thai Baht had significantly appreciated since November 2020 and reached the level of below 30 baht per US dollar in December 2020. This was due to the U.S. presidential election result and successful vaccine developments,causing US Dollar to depreciate significantly. In the meantime, Thai bath's volatility remained moderate. Regarding commercial banking, total loans at the end of November 2020 grew by 5.6% compared to the same period last year (YoY) and increased by 4.4% from the end of year 2019 (YTD). On the other hand, deposits expanded by 10.3% YoY or9.7% (YTD) in both types of saving and time deposits and increased slightly from the third quarter.

Economic outlook for 2021: Thai economy is projected to continuously recover by 2.4% YoY annually with the main supports from government stimulus programs, either by extending the periods of existing scheme or launching a new program. This is for example the second phase of half-half copayment scheme, the period extension of 'we travel together' campaign as well as the newly launched cash subsidy programs in order to provide cushion for those impacted by a new round of domestic pandemic outbreak. Altogether, these relief packages are expected to sustain private consumption's growth but could barely help accelerating the recovery momentum due to persisting drags from weaker purchasing powers and fragile labor market. With regards to public investment, it is estimated to further proceed, especially the infrastructure projects in EEC which mostly are under ongoing constructions and hence expected to support the recovery of private investment. Merchandise exports are forecasted to turn into positive figures but would be totally at around 3.4% due to uncertainty in global recovery and Thai baht's appreciation. In the meantime, the recovery of tourism sector would still face challenges from slowly opening the border to foreign travelers and slow progress of acquiring vaccine, resulted in a forecast of 3.5 million inbound foreigner tourists for 2021, below the former projection. For financial market, the policy rate is expected to remain at 0.25-0.5% in accordance with ongoing economic recovery and worsening debt quality. Thai baht is forecasted to continue its appreciation trend from the fourth quarter due to US dollar's depreciation and foreign capital inflows and accordingly estimated to move within the rangeof 29.5-31.0baht per US dollar.

Research by TMB Analytics [e-mail]

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Summary of TMB relief scheme for customers who are affected by COVID-19

At the onset of the COVID-19 pandemic, the Bank has provided its relief measure for all customer segments in the form of payment holiday for principal and interest, a reduction of interest payment, extension of installment period, and soft loan facilities. At the end of December 2020, approximate 15% of total loan portfolio was under the relief program which decreased from 20% as of Sep 20 and 40% as of Jun 20. For those customers remaining in the relief program, most of them were in the 2nd phrase of relief measures. As of Dec 2020, commercial customer under forbearance accounted for 25% of total commercial loans and retail customers accounted for 9% of total retail loans respectively. According to the new round of pandemic outbreak, TMB continues to be vigilant and keeps monitoring customers to ensure the Bank's asset quality as well as supportcustomers through pre-emptivedebt restructuring to ensure that customers can recover in the long run.

			Relief program "Tang Lak round 2"
	Retail: TMB extends the relief program for customer until 30 Jun 2021, in response to BOT announcement
	Auto loan	•	Reduce installment by extending tenure or 3-month debt suspension for the
			principal and interest payment (for new car, used car and cash your car)
		•	Reduce 30% of installment for 6 months and cut interest rate not over 22%
			(for cash your book)
	Mortgage loan	•	6-month grace period of principle payment (Pay only interest) or
		•	Reduce installment to 70% for 6 months or
		•	3-month debt suspension for the principal and interest payment
	Unsecured loan	•	Reduce installment to 70% for 6 months and cut interest rate not over 22%
		•	Lower interest rate for unsecured loan to 25% from 28% per year, effective
			from 1 Aug 2020 (for new application)
	Credit card	•	Convert current outstanding balance to term loan or convert to Installment pay
			plan (IPP) with interest rate not over 12% and maximum 48 tenors
		•	Minimum payment for credit card will be reduced to 5% in 2020-2021, 8% in
			2022 and back to 10% in 2023, effective from 20 Apr 2020 billing cycle
			onwards
		•	Lower interest rate for credit card to 16% from 18% per year, effective from
			1 Aug 2020
	Cash card	•	Convert current outstanding balance to term loan or convert to Installment
			pay plan (IPP) with interest rate not over 22% and maximum 60 tenors
		•	Minimum payment for cash card will be reduced to 3%, effective from 20 Apr
			2020 billing cycle onwards
		•	Lower interest rate for cash card to 25% from 28% per year, effective from
			1 Aug 2020

Commercial: TMB provides the below relief program for customers until 30 June 2021

SME (Juristic and Non-Juristic)	•	Long-term lending: Reduce the amount of installment payment up to 6 months;
		plus extend installment period up to 15 months from the approve date
	• Overdraft/Working Capital Lending: Convert Overdraft or Working Capital
		lending to 10 years Long Term Lending
Large corporate
	•	Long-term lending: Suspension for the principal for 3 months from the
		approval date
	•	Overdraft/Working Capital Lending: Convert up to 50% of working capital
		outstanding to 5 years long-term lending

Please findhttps://www.tmbbank.com/page/view/loan-covid19.htmlfor further details

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Summary of TMB's operating performance

Thai economy for the year 2020 contracted drastically amid the spread of COVID-19. The pace of recovery remained sluggish. TMB continued to grow loan and deposit very selectively to ensure on portfolio quality during the new round of domestic outbreak and fragile macroeconomic recovery. Quality-hybrid deposit grew well amidst lower interest rate environment. NII and NIM improvement was in line with Bank's direction to optimize its balance sheet synergy from post-merger. The operating efficiency and cost synergy realization was reflected by higher PPOP. De-risking loan portfolio remains one of the Merged Bank's priorities. TMB remained prudence with elevated ECL for the uncertainties ahead while NPL ratio was low at2.50%

Quality-hybrid deposit continued to grow, boosted by No-Fixed and Ultra Saving: TMB continued to focus on deposit-ledstrategy and build strong deposit franchise as well as proactively optimize deposit mix by running high-costdeposit with CASA and quality-hybriddeposits. As of December 2020, total deposit contracted by 1.8% YTD to THB1,373 billion. Retail flagship product continued its positive momentum, led by No-Fixed(+42.6% YTD), Ultra-saving(+24.0% YTD) and TMB All Free (+23.1% YTD) respectively while TD and Certificate Deposit significantly dropped by 55.4% YTD, in line with balance sheet optimization. As a result, retail deposit represented 76% from 66% of total deposit as of Dec 2019. With strong retail franchise and the substantial growth inhybrid deposits reflected capability to retain and attract affluent segment thru our flagship products.

Continued to focus on quality loan portfolio against economic headwinds:Amidst the slow economic activities recovering from the COVID-19pandemic and the new round of virus outbreak, TMB continued to grow loan very selectively. Total loan as of December 2020, therefore, was stable YTD at THB1,393 billion, in line with Merged Bank's B/S optimization strategy to run down low yield portfolio and improve loan quality against fragile economic recovery from COVID-19outbreak. Retail loans marginally declined by 0.6% YTD, backed by unsecured loan and credit card while hire purchase was relatively stable YTD. However, the Bank saw a recovery sign in new auto loan booking especially in new car segment in this quarter. Mortgage continued its moderate growth pace with 0.4% YTD growth. Corporate loans grew 2.2% YTD primarily from government loan granted in 4Q20. Post-mergerloan portfolio was well-diversifiedand shifted to retail lending, given retail loans represented 56% of total portfolio and around 90% of retail loans aresecured lending.

Solid core operating profit, driven by top-linegrowth: Given the challenging economic environment from COVID-19, TMB reported 12M20 net interest income of THB53,805 million, significantly rose by 100. 3% YoY, thanks to balance sheet optimization from running down high cost deposit which resulted in lower interest expense for the Merged Bank while NIM improved to 3.00% in 2020 despite the multiple rate cuts during the year and customer relief programs recalculated EIR, resulting from higher yield on earning assets from consolidation with TBANK and optimize its balance sheet. Non-NII increased by 15.7% YoY to THB14,986 million mainly from the broad-based fee recovery in 4Q20, covering all key products. Mutual fund fee continued its growth pace from the previous quarter from an increase in sale volume of high-fee investment product and IPO launches in this quarter while Bancassurancefee also improved mainly from hire purchase business. Commercial fees also showed recovery sign from the precedingquarter. Total operating income, therefore, rose by 72.8% YoY to THB68,791 million in 2020.

With operating efficiency and cost synergy realization, PPOP improved: With the significant progress in balance sheet optimization and cost synergy realization, core operating profit remains a positive momentum amid the pressures on income generation from COVID-19pandemic. Operating expenses were well-managedwith the major cost saving in HR cost and branch rationalization after consolidation with TBANK. Given the optimization plan and well-managedoperating expense, cost-to-incomeratio excluded purchase price allocation (PPA) impact improved to 45% which achieved financial target in 2020. As a result, Pre-Provision Operating Profit (PPOP), improved by 89.6% YoY to THB37,266 million in 12M20.

Higher expected credit loss was for prudent management and uncertainty ahead: With higher PPOP, TMB continued its prudent management and decided to add more ECL in preparation for the uncertainties arising from COVID-19outbreak and pressure on asset quality from the post financial relief program. In total, TMB set aside expected credit loss of THB24,831 million in 2020 compared to THB10,337 million in 2019. The Bank's provisioning is kept at an elevated level with sufficient capital cushion and is continuously adjusted to reflect changing environments. Stage 3 loans, as a result, totaled THB 39,594 million, representing NPL ratio of 2.50%. TMB continued to de-riskloan portfolio to clear up headroom ahead for economic uncertainties. After provision, TMB reportedTHB10,112 million of net profit in 2020. The figure increased by 40.0% YoY and represented a return on equity (ROE) of 5.1%.

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