Investor Presentation March 2017 · known and unknown risks, assumptions, uncertainties and other factors that may cause the actual results, performance and financial condition of

Investor Presentation

March 2017

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Disclaimer

> Mongolia Macroeconomic Developments

Banking Industry

TDB Overview

Investment Summary

Laying the Foundations for Long-Term Growth

GDP growth is highly correlated to FDI

3

Mongolia is expected to receive IMF bailout package

Source: National Statistical Office of Mongolia, IMF, Bank of Mongolia

IMF’s three–year Extended Fund Facility (EFF)

• IMF and Mongolian Government jointly announced that the

Government of Mongolia reached staff-level agreement with

the International Monetary Fund for a three-year program

that includes a $440 million loan package as part of a $5.5

billion plan.

• Floating interest rate will be no more than 2% p.a.

Repayment period is 10 years. IMF will monitor progress on a

quarterly basis before the next loan tranche is given.

• International partners’ programs such as Asian Development

Bank, World Bank, and bilateral partners including Japan and

Korea together expected to provide up to $3 billion in

budget and project support. People’s Bank of China is

expected to extend its ¥15 billion swap line with the Bank of

Mongolia for at least three years.

• Package is expected to be approved by Executive Board in

April.

-5%

0%

5%

10%

15%

20%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

US

D M

illi

on

s

FDI (LHS) GDP growth (RHS)

Forecast under EFF 2017 2018 2019

GDP growth (%) -0.1 1.8 8.1

Inflation (%) 6.1 6.1 6.9

Trade balance (billion USD) 1.26 0.96 0.7

Export (billion USD) 4.89 4.94 5.44

Import (billion USD) 3.62 3.97 4.73

Foreign exchange reserve

(billion USD)1.67 2.77 3.54

External debt as of GDP

(%)86.9 85.7 79.4

IMF: Staff-Level Agreement on EFF (1)

4

• Tobacco excise tax

increase of 10% in 2018,

increased 5% in 2019 and

2020.

• 10% tax on interest income

for savings is effective

April 1, 2017

• Tobacco import tax

increase of 30%

• Improvement on tax

collection management in

order to increase budget

revenues

Petroleum excise tax

increase in July and

October 2017

Personal income tax

increase of 10%, 15% and

20% based on income level

Social insurance tax

increase of 2%, 1%, 2% for

employer and employee in

2017, 2018 and 2019

respectively.

Automobile excise tax

increase to 3%-15% based

on manufactured year.

Automobiles with engine

over 4,501cm3 is subject to

40%-250% increase

Approach on

budget revenue increase

Tender offer need when

purchasing medicine and

medical equipment

Social welfare programs audit

to remove overlapping

programs

Concession agreement without

estimation of burden on budget

will be audited and

reimbursement will be made in

following year

When increasing budget

expenditure, other

expenditures must be reduced

to offset

No salary increase for

government officials until 2018

Child Money Program

targeted to 40% of total

children instead of 60%

Reduced portion will be

used to spend on the food

stamp program for the

most vulnerable

Suspend the program of

providing residence or

residential allowance to

veterans

Pension age increase by

1.5 years in every 2 year.

By 2026, pension age for

male will be 65 years and

for female it will be 65

years by 2036

IMF financing is necessary to restore economic stability and debt sustainability in order to

create strong, sustainable and inclusive growth in Mongolia.

Source: IMF

Approach on budget

expenditure reduction

Approach on

budget revenue increase

Approach on budget

expenditure reduction

IMF: Staff-Level Agreement on EFF (2)

5

• Flexible exchange rate

policy with intervention

limited to smoothing

excessive volatility and

preventing disorderly

market conditions

• Adoption of new BOM law

to clarify its mandate,

strengthen governance,

and improve independence

Tight monetary policy given

the objective of price

stability

Subsidized mortgage loan

program as a revolving fund

Bank of Mongolia (BOM)’s

solely pursuit to monetary

interventions from now,

forbidding no more

engagement in quasi-fiscal

activity

Monetary policy

• Government commitment to

the deposit insurance

• Commitment to strengthen the

regime for Anti-Money

Laundering and Combating

the Financing of Terrorism.

• Independent evaluation

on financial sector to

assess institutions’

financial soundness and

resilience

• BOM’s engagement on

banks to ensure

appropriate restructuring

and recapitalization

• Strengthening the

regulatory and

supervisory framework of

BOM

Strengthening the banking system is a crucial part of the program, to ensure that the banks can

support sustainable and inclusive economic growth

Source: IMF

Banking sector

evaluation

Monetary policy

Banking sector

evaluation

Trade Balance Continues to Show Surplus

Positive trade balance trend has been maintained since 2014 Production increases have helped offset price decreases

6

Strong copper production, coupled with import compression

0

500

1,000

1,500

2,000

2,500

3,000

Copper Coal Crude Oil Iron Ore Gold

US

D M

illi

on

s

Export of main commodities

(2010 through 2016)

Source: National Statistical Office

-4,000

-2,000

0

2,000

4,000

6,000

8,000

2009 2010 2011 2012 2013 2014 2015 2016

US

D M

illi

on

s

External trade

Export Import Trade Balance

Main commodity price

Improvement on the price of main export commodities and expected positive outlook in near future supporting export

and trade balance

7

Update on price of main export commodities

Source: National Statistical Office

4,000

4,500

5,000

5,500

6,000

6,500

1/4/2016 4/4/2016 7/4/2016 10/4/2016 1/4/2017

Copper Price

1,1001,1401,1801,2201,2601,3001,3401,380

3/9/2016 6/9/2016 9/9/2016 12/9/2016 3/9/2017

Gold Price

40

50

60

70

80

90

100

110

5/17/2016 7/17/2016 9/17/2016 11/17/2016 1/17/2017

Iron Ore Price

20

30

40

50

60

1/4/2016 4/4/2016 7/4/2016 10/4/2016 1/4/2017

Crude Oil Price

20

30

40

50

60

70

1/31/2016 4/30/2016 7/31/2016 10/31/2016

China Coking Coal Import Price Mongolia

External Accounts Have Stabilized

Trade surplus helped narrow current account deficit … which helps FX reserve levels stay within the band

8

Positive trade balance helped to narrow the current account deficit

-4,000

-3,500

-3,000

-2,500

-2,000

-1,500

-1,000

-500

0

2008 2009 2010 2011 2012 2013 2014 2015 2016

US

D M

illi

on

s

Current Account Balance

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

2008 2009 2010 2011 2012 2013 2014 2015 2016

US

D M

illi

on

s

Gross Foreign Exchange Reserve

(2010 through 2016)

Source: Bank of Mongolia

Mongolia Macroeconomic Developments

> Banking Industry

TDB Overview

Investment Summary

● Commercial banks are the most important and integral

part of Mongolia’s overall financial system, accounting

for approximately 85% of the system by assets

● 14 commercial banks and one policy bank

● Commercial banks are regulated by the Bank of

Mongolia

● Key players:

- TDB was the number one corporate bank as

measured by corporate loans market share with

increasing SME/retail banking share as of Sep 30,

2016

- Khan Bank and State Bank have large branch

networks and focus on retail banking

- Golomt Bank focuses on corporate banking

- XacBank focuses on microfinance and small

business lending

● TDB remains the only commercial bank to have access

to the international bond markets

TDB

27.9%

Khan

25.3%

Golomt

17.6%

Xac

9.7%

State

8.1%

Others

11.4%

Banking Sector Overview

Banks play the largest role in Mongolia’s financial system Five largest banks account for more than 85% of the

sector by total assets (3Q2016)

10

TDB and five others are classified as systemically important banks

Total Assets

MNT 24.7 Trillion

Source: Bank of Mongolia, Trade & Development Bank of Mongolia, website of each commercial bank financial reports as of Sep 30, 2016

Banks are tested by a protracted economic slowdown

Banks play a prominent role in the economy which is

structurally shifting to Tugrik loans (Q4 2016)

Despite the slowdown, the banking sector remains

profitable

11

Rising NPLs amidst a challenging macro sector

42.5% 41.6%

56.0% 57.0%

50.5% 51.7%

68.5% 67.9%

72.7%

76.9%76.1%

80.1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

2011 2012 2013 2014 2015 2016

Whilst proactively managing their loan books

184.3 198.4229.7

325.9

253.7

88.0

0

50

100

150

200

250

300

350

2011 2012 2013 2014 2015 3Q2016

MN

T B

illi

on

s

Aggregate Banking Sector Profit

Source: National Statistical Office of Mongolia, www.1212.mn, Bank of Mongolia and website of each commercial bank financial reports as of Sep 30, 2016

Loans in Tugrik

Loan-to-GDP ratio

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0.0

3.0

6.0

9.0

12.0

15.0

2008 2009 2010 2011 2012 2013 2014 2015 2016Q3

MN

T T

rill

ion

s

Loans Outstanding (LHS) NPL Ratio (RHS)

31.6

16.2

-4.4

2.8

-10

-5

0

5

10

15

20

25

30

35

TDB Khan Golomt Xac

MN

T M

illi

on

s

26.1%

Khan Bank

24.2%Golomt

Bank

15.6%

Xac Bank

9.7%

State Bank

9.2%

Others

14.7%

21.0%

Khan Bank

29.4%Golomt

Bank

20.3%

Xac Bank

7.4%

State Bank

10.3%

Others

12.5%

29.1%

Khan Bank

23.6%Golomt

Bank

12.6%

Xac Bank

7.5%

State Bank

6.4%

Others

20.2%

Key Players and PerformanceTDB is a leader by key measures

Source: Bank of Mongolia, Trade & Development Bank of Mongolia, website of each commercial bank financial reports as of Sep 30, 2016

Note: (1) Leverage = total assets / total equity

Shareholders’ equity market share (3Q2016)

Deposits market share(3Q2016)

Loans outstanding market share(3Q2016)

TDB remains a leader in net profit per employee (3Q2016) Lowest leverage(1) (3Q2016)

MNT2.8 trn MNT12.6 trn MNT12.4 trn

12

8.4

9.5

12.411.5

0%

200%

400%

600%

800%

1000%

1200%

1400%

TDB Khan Golomt Xac


Banking Industry

> TDB Overview

Investment Summary

● Largest and longest-serving commercial bank in

Mongolia by total assets as of Sep 2016

● Most experienced and largest bank in corporate

banking by corporate lending market share

● Primary lender to many leading domestic and foreign-

own corporations in Mongolia across every major

sector

● Well-established network of 51 branches and

settlement centers, 206 ATMs and 2,242 POS terminals

as of 3Q2016

● Direct correspondent relationships with more than 150

foreign banks and financial institutions

● Leading virtual banking services, e.g. Internet Banking

service, Mobile Banking Service, E-Billing

● The only commercial bank that has successfully issued

bonds internationally, to date five USD and one CNY

international bond issuances

● Senior Unsecured EMTN ratings: Moody’s Caa1, S&P B-

as of Mar 2017.

Leading Bank in Mongolia

14

A premier financial institution in the country, celebrating 27 years

Source: Bank of Mongolia, Trade & Development Bank of Mongolia

TDB,

69.7%Other,

30.3%

Trade Finance Transactions

TDB

48.0%

Other

52.0%

Corporate Lending

27.7%

30.7%

27.9%

20%

30%

40%

Gold market Money market FX market

Treasury Products

TDB selected market shares (3Q2016)

Corporate

banking

48.2%

SME banking

2.7%

Retail banking

15.2%

Treasury

activities

33.9%

Others

0.9%

Strong Fundamentals

Diversified loan portfolio (3Q2016)Segment revenue (3Q2016)

Although rising, NPLs remain below sector average High collateral values provide comfort over

provisioning levels

15

Diversified and reliable throughout business cycles


Note*: Consumer loan includes card loan and saving collateralized loan.

Mining

14.4%

Construction

15.1%

Trade

15.8%

Mortgage

9.7%

Petrol Import &

Trade

3.1%

Manufacturing

9.1%

Consumer*

3.8%

Other

29.4%

2.5%

1.4%1.1%

4.0%

6.3%

7.4%

5.8%

4.2%

5.3%5.0%

7.5%

9.0%

0%

2%

4%

6%

8%

10%

2011 2012 2013 2014 2015 3Q2016

TDB Banking Sector

Total MNT 3.3 trnTotal MNT 445.6 billion

63.6% 61.1% 66.0%51.7% 56.4% 56.2% 58.5%

144.0%132.7%

168.4%

107.2%

196.2%

228.5%

0%

50%

100%

150%

200%

250%

0.0

100.0

200.0

300.0

400.0

500.0

2011 2012 2013 2014 2015 2Q2016 3Q2016

MN

T i

n B

illi

on

s

NPL Provision

Collateral Coverage ratio (RHS)

Total collateral value (RHS)

Strong Fundamentals (Cont’d)

16

Profitable and reliable

Source: Trade & Development Bank of Mongolia

120.7148.2

174.3142.6

90.258.2 14.2

11.0

0

50

100

150

200

250

2013 2014 2015 3Q2016

MN

T B

illi

on

s

Net Interest Income Non-Interest Income

Total loans: Corporate growth amidst economic backdrop

Net interest margin is steady over the years Remains a leader in net profit and ROAE

139.3

93.5

61.554.5

49.5%

22.4% 9.5% 10.5%

0%

10%

20%

30%

40%

50%

60%

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

2013 2014 2015 3Q2016

MN

T B

illi

on

s

Net Profit (LHS) ROAE (RHS)

4.4%

3.9%

4.1%4.2%

3.0%

4.0%

5.0%

2013 2014 2015 3Q2016

Operating income remains strong, underpinned by

consistent net interest income growth

1,910 2,128 2,1682,676

517569 456

514

122139 119

114

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2013 2014 2015 3Q2016

MN

T B

illi

on

s

Corporate Retail SME

Low Cost and Diversified Funding Base

17

Strong and prudent balance sheet management

Source: Bank of Mongolia, Trade & Development Bank of Mongolia internal filings

High contribution of low cost deposits (3Q2016)

Deposits from

customers

42.0%

Deposits and

placements by

banks and

other financial

institutions

2.6%

Borrowings

23.8%

Debt securities

issued

22.8%

Subordinated

debt securities

issued

0.4%

Bills sold under

repurchase

agreements

4.0%

Others

2.9%

The only commercial bank to complement local funding

base with international debt issuance (3Q2016)

Current

39.7%

Savings

10.8%

Time Deposits

44.4%

Others

5.1%

Total MNT 2.5 trnTotal MNT 6.1 trn

Strong capital base above regulatory thresholds

15.1% 19.2% 16.7% 15.5%11.6% 13.0% 12.3% 10.5%

14.0% 14.0% 14.0% 14.0%

9.0% 9.0% 9.0% 9.0%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2013 2014 2015 3Q2016

CAR Tier-1 Minimum CAR Minimum Tier-1

PSP and

mortgage loan

funding, 13.9%

Trade finance

loans, 56.7%

Syndicated

loans, 3.7%

SME Fund

loans, 1.5%

DBM Financed

loans, 20.6%

Two step loan

funded by

multinational

Fis, 2.5%

Other, 1.1%

Established Track Record of Debt Transactions

18

Market recognition of TDB’s commitment to the performance of its bonds

USD

75,000,0008.625% Senior Notes,

due in 2010

USD 150,000,000

EMTN Programme

January 2007

USD

150,000,0008.500% Senior Notes,

due in 2013

USD 300,000,000

EMTN Programme

October 2010

CNH

700,000,00010.000% Senior Notes,

due in 2017

USD 700,000,000

EMTN Programme

January 2014

USD

82,000,000Syndicated A/B

Term Loan Facility

September 2013

USD

300,000,0008.500% Senior Notes,

due in 2015

USD 700,000,000

EMTN Programme

September 2012

Source: Trade & Development Bank of Mongolia, Bloomberg

USD

500,000,0009.375% Senior Notes,

due in 2020

Guaranteed by the

Government of

Mongolia

USD 500,000,000

GMTN Programme

May 2015

USD

25,000,00012.500% Subordinated

Notes,

due in 2015

USD 300,000,000

EMTN Programme

October 2010

TDB is the only Mongolian commercial bank that has successfully issued bonds internationally.

US$1.25 billion have been raised through five US$ and one Dim Sum bond as well as a syndicate loan from the international markets.

This consistent approach to maintaining a diversified funding portfolio is beneficial and allows TDB to weather changing market

conditions better than its peers.

Outstanding amount:

USD 17,000,000

49.7%

52.4%

49.5%48.0%

40.0%

45.0%

50.0%

55.0%

60.0%

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2013 2014 2015 3Q2016

Gross Loans Total Assets Loan/Asset Ratio

Tight Control on Asset Composition

19

Focus on quality loans, prudent asset management and liquidity


Liquid assets significantly above regulatory thresholds

42.3% 41.3%

30.0%

31.5%

14.4% 11.99%

0%

10%

20%

30%

40%

50%

60%

2013 2014 2015 3Q2016

Liquidity Ratio Locked liquidity due to TDB 20’s

Minimum

Liquidity

Ratio at

25.0%

(MNT bn)

Loan-to-deposit ratio

119%

112%

124%

130%

100%

120%

140%

2013 2014 2015 3Q2016

Balanced asset composition (3Q2016) Loans /assets ratio managed below 60%

Currency match on loans

and deposits (3Q2016)

Cash and due

from banks,

16.3%

Investment

securities,

21.8%

Investment in

associates and

joint ventures,

0.7%

Loans and

advances, net,

45.9%

Subordinated

loans , 0.1%

Others,

15.2%

1,776

983

1,528

1,564

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Loan Deposit

MNT Foreign currency

MNT bn

180.8%

LDR

97.7%

LDR

● FinanceAsia 2016 “Best High Yield”

● FinanceAsia 2015 “Best Bank of Mongolia”


● FinanceAsia 2013 “Best Frontier Markets Bank”


● Euromoney 2015 and 2013 “Best Bank in

Mongolia”

● Global Banking & Finance Review

2015, 2014 and 2013 “Best Commercial Bank in

Mongolia”

● GTR 2012, 2013, 2014 and 2015 “Best Trade

Finance Bank in Mongolia”

● Global Finance Magazine

2015 “Best Trade Finance Provider Mongolia”

● Asian Development Bank

2015 “Leading Partner Bank in Mongolia”

● The World Economic Forum honoured Trade and

Development Bank of Mongolia as a Global

Growth Company

● Maintains 48 nostro accounts in 15 currencies at 31 top

rated foreign banks in 15 different countries

● Direct correspondent banking relationship with more than

150 foreign financial institutions

● Combined USD 675.1 million clean trade finance lines from

48 large foreign financial institutions (as of 3Q2016)

● Only Mongolian commercial bank which has arranged

syndicated club deals with foreign banks for MNT 58 billion

and over USD 171.2 million since 2005

● Cooperation with MasterCard, Visa, JCB/Discover and Diners

International Recognition

20 international awards won since 2000 Cooperation with international FIs

20

Strong cross-border franchise, established network and recognized brand name


Strong Execution Capability and Industry Expertise

Experienced Management Team

21

With extensive industry experience in Mongolia and overseas, the management

team has successfully steered the Bank through growth and downturns

Mr. Orkhon Onon

CEOOver 19 years of experience

Mr. Medree Balbar

PresidentOver 24 years of experience

Mr. Randolph S. Koppa

Executive

Vice ChairmanOver 50 years of experience

Top three executive officers have over 25 years TDB management experience in total, and have been managing TDB together for 9 years

Proven success in maintaining TDB’s strong leadership in corporate and international banking

Good mix of foreign and domestic banking experience

Successfully established strong relationships with a wide range of international financial institutions

Mr. Khurelbaatar

Dambiijav

Mr. Soronzonbold

Lkhavgasuren

Mr. Orgodol Sanjaasuren

Mrs. Otgonbileg

Demchigjav

Deputy CEO and

Chief Risk Officer Over 19 years of experience

Deputy CEO

Over 14 years of experience

Deputy CEO


Deputy CEO


Vision and Strategy

An experienced and dedicated management team:


Maintain strong loan

portfolio quality

Focus on SME

services expansion

Target niche segments

of retail market

Expand deposit base while

retaining price leadership

Strengthen internal

controls, active risk

mitigation

Maintain corporate

banking market leader

position

Offer broader range of loan

and deposit products

Extend core corporate

competencies to SME sector

Continue monitoring and improving the quality of loan portfolio

Keep enhancing internal processes such as credit due

diligence and loan approval process

Prepare for an environment in which MNT

loan growth is higher

Adapt to market conditions by shifting

loan-book exposure to sectors

deemed more resilient

Clear and Focused Strategy

22

Remain focused on corporate banking with targeted expansion into retail & SMEs

Enhance independent risk

management, risk-based

internal audit and compliance

procedures

Strive to meet ethical

standards in all internal and

external dealings

Proactive measures such as

early re-classification of

potential problem loans

Remain the preferred financial institution for Mongolian

corporate customers

Actively increase the range and quality of products and

services

Target the employees of the

corporate and SME clients

Increase niche electronic product

offerings

Focus on retail service for high net-worth individuals

Enlarge the deposit base to obtain

attractively priced MNT and USD

deposits

Leverage expertise in foreign exchange and

remittance to attract foreign customers

Further broaden partnerships with

international banks

Cross-sell other bank products


● First Mongolian Bank to introduce an independent Risk

Management Committee

● Appointed Chief Risk Officer to oversee risk governance

framework reporting to the RGB and Risk Management

Committee on quarterly basis

● Strive to apply Basel II / III principles for corporate loan

portfolio and to be the most advanced bank in Mongolia to

move towards international banking standards

● Formally appointed Shagdarsuren Zuunai as independent

non-executive director on the RGB on 27 April 2012

● Established Audit Committee and Risk Committee in 2011

● Established General Audit Unit and Special Audit Unit to

provide independent and objective assurance and consulting

services

● Based on PwC recommendations implemented

comprehensive compliance programmes

Robust Risk Management Framework

Market leader in risk management Strong corporate governance structure

23

Leading risk management framework & robust corporate governance structure

Monitors risk limits and

provides day to day

support to the two

committees

Regulatory Governing Board

(“RGB”)

Risk Management Committee

(“RMC”)

Chief Risk Officer

(“CRO”)

Risk Management

Department

Credit Committee

(“CC”)

Asset Liability Committee

(“ALCO”)

Operational Risk Management

Unit

Member of CC and

ALCOReports to

Risk governance framework

7.3% 65.8% 4.8% 20.0% 2.1%

Stable Ownership Structure

24

Stable ownership over time

TDB strives to internationalize and diversify its shareholder base as demonstrated by

Goldman Sachs Group’s 2012 equity investment

GS Mongolia

Investment Limited

Globull Investment & Development SCA

US Global Investment LLC

United Banking

Corporation LLC

Erdenebileg Doljin

(Chairman)

Minority

Shareholders

Goldman Sachs

Group, Inc.

Trade and Development Bank of Mongolia

100%

100%

100%

Note: There has been some changes to the shareholding structure of the bank in June and July.


100%


Banking Industry

TDB Overview

> Investment Summary

Investment Highlights


Proven Reliability in

Profitability and

Efficiency throughout

Business Cycles and

Economic Slowdowns

2

Efficient Asset and

Liability Management to

Ensure High Quality and

Liquidity

3

The “International Face

of Mongolia”4

Experienced

Management Team with

Proven Track Record5

Mongolia’s Largest

Corporate Bank, uniquely

positioned to benefit

from Mongolia’s long-

term growth

1

Market Leader in Risk

Management and Strong

Corporate Governance6

Contacts

27

Trade and Development Bank

14210 Peace Avenue 19

Sukhbaatar District 1st Khoroo

Ulaanbaatar, Mongolia

Swift: TDBMMNUB

www.tdbm.mn

Randolph Koppa

Executive Vice Chairman

T +976 11 318970 ext. 1610

F +976 11 312418

E [email protected]

Orkhon Onon

CEO

T +976 11 329087 ext. 1601

F +976 11 312418

E [email protected]

Erkhembayar Baltsukh

Director

International & Corporate

Relations Department

T +976 11 319943 ext. 1495

F +976 11 312418

E [email protected]


Banking Industry

TDB Overview

Investment Summary

> Appendix

MNT’000 2013 2014 2015 3Q 20163Q 2016

(USD Millions)1

Interest income 321,438,593 444,673,852 532,856,753 434,605,536 190.3

Interest expense -200,692,181 -296,489,329 -358,520,676 -292,018,294 -127.8

Net interest income 120,746,412 148,184,523 174,336,077 142,587,242 62.4

Net fee and commission

income21,525,806 27,364,138 29,419,494 21,316,275 9.3

Other operating income

(net)68,684,766 30,882,990 -15,192,458 -10,323,905 -4.5

Net non-interest income 90,210,572 58,247,128 14,227,036 10,992,370 4.8

Operating income 210,956,984 206,431,651 188,563,113 153,579,612 67.2

Operating expenses -44,477,351 -68,785,944 -91,417,672 -59,189,154 -25.9

Share of profit (loss) of an

associate204,056 1,085,417 12,569,455 7,167,715 3.1

Write back/(allowance) for

impairment losses-8,255,683 -44,749,513 -46,976,039 -46,892,659 -20.5

Profit before tax 158,428,006 93,981,611 62,738,857 54,665,514 23.9

Income tax expense -19,164,321 -474,447 -1,263,569 -205,837 -0.1

Net profit 139,263,685 93,507,164 61,475,288 54,459,677 23.8

TDB Income Statement

29


Note: 1. MNT/USD rate of 2,284.39 as of Sep 29 2016 is used for 3Q 2016 USD conversion

MNT’000 2013 2014 2015 3Q20163Q2016(USD

Millions)1

ASSETS

Cash and due from banks2 1,090,245,012 1,054,739,557 694,959,701 1,126,456,800 460.2

Investment securities3 885,112,661 908,732,944 1,412,539,922 1,498,229,455 780.5

Investment in associates and joint ventures 10,416,001 14,530,077 46,763,866 50,886,072 28.2

Loans and advances, net 2,530,557,178 2,777,188,433 2,644,979,616 3,161,010,546 1,524.2

Bills purchased under resale agreements - - 99,799,000 124,188,909 50.0

Subordinated loans 7,000,000 4,000,000 4,000,000 4,000,000 2.0

Property and equipment, net 153,297,326 298,042,268 204,884,777 339,973,831 174.4

Intangible assets, net 4,270,615 4,542,466 1,449,739 3,851,844 1.1

Investment properties 33,388,245 33,689,000 99,789,000 99,789,000 50.8

Foreclosed real properties, net 6,057,155 1,020,454 1,370,810 1,292,675 0.7

Current tax assets - 5,676,348 - 257,296 -

Other assets 403,730,785 311,018,769 333,547,874 473,513,435 241.0

Assets held for sale - - - - -

Total assets 5,124,074,978 5,413,180,316 5,544,084,305 6,883,449,863 3,313.2

Deposits from customers 2,139,692,149 2,533,607,001 2,209,953,463 2,546,155,262 1,114.6

Deposits and placements by banks and other financial institutions 172,109,699 120,007,336 112,754,972 157,758,337 69.1

Bills sold under repurchase agreements 372,650,503 - 99,799,000 244,179,888 106.9

Borrowings 1,157,090,928 1,107,328,964 1,012,394,089 1,441,427,873 631.0

Current tax liabilities 7,646,234 361,331 4,385,983 765,754 0.3

Debt securities issued 460,563,148 741,354,845 1,175,921,345 1,471,594,634 644.2

Subordinated debt securities issued 66,036,156 75,351,569 29,939,700 22,843,900 10.0

Other liabilities 379,224,697 279,151,158 231,003,212 175,763,855 76.9

Total liabilities 4,755,013,514 4,857,162,204 4,876,151,764 6,060,489,503 2,653.0

Share capital 16,525,280 16,525,280 50,000,011 50,000,011 21.9

Share premium 19,272,456 19,272,456 19,272,456 19,272,456 8.4

Treasury shares -2,620,626 -2,620,626 - - -

Revaluation reserves 18,555,196 153,645,983 135,298,874 135,102,703 59.1

Accumulated unrealised gain (loss) on available-for-sale financial assets 14,153,606 27,487,697 -23,831,129 49,568,190 21.7

Accumulated unrealised gain on valuation of cash flow hedges - - 39,938,362 63,706,483 27.9

Retained earnings 301,599,783 395,019,832 445,209,993 502,639,062 220.0

Total equity attributable to equity holders of the Bank 367,485,695 554,355,228 665,888,567 820,288,905 359.1

Non-controlling interests 1,575,769 1,662,884 2,043,974 2,671,455 1.2

Total equity 369,061,464 556,018,112 667,932,541 822,960,360 360.3

Total liabilities and equity 5,124,074,978 5,413,180,316 5,544,084,305 6,883,449,863 3,013.3

TDB Balance Sheet

30


Note: 1. MNT/USD rate of 2,284.39 as of Sep 29 2016 is used for 3Q 2016 USDm conversion

2. Cash and due from banks include Cash on hand, Deposits and placements with banks and other financial institutions, and Balances with the Bank of Mongolia

3. Investment securities include Held-to-maturity investment securities, Available-for-sale investment securities

Oyu Tolgoi copper and gold mine project

• USD 4.4 billion Oyu Tolgoi Underground Mine Development

and Financing Plan (OT Phase II) project financing facility was

fully drawn down in May 2016 when the development of the

underground mine in Phase II commenced

• IMF estimates OT will generate up to 1/3 of Mongolia’s GDP

once it reaches full production

Tavan Tolgoi coking coal mine project

A consortium of Energy Resources LLC (Mongolia), China

Shenhua Energy (China) and Sumitomo Corporation (Japan)

has been selected to develop the Tavan Tolgoi deposit

Negotiations continue with respect to the proposed US$ 4.0

billion investment (and broader investment proposal) by the

consortium and both parties are waiting for relevant

approvals

Update on Key Development-Projects

31

Progress continues

Source: Oyu Tolgoi, Turquoise Hill Resources, Oyu Tolgoi Undergound Mine Development and Financing Plan, Erdenes Tavan Tolgoi, Erdenes Mongol, Government of Mongolia

Gatsuurt Strategic Gold Deposit

• On February 4, 2016, the Parliament approved a resolution

for the Government’s acquisition of a 34.0% interest in the

Gatsuurt gold deposit, which is classified as a strategic

deposit under the Minerals Law

• The development plan of this deposit is currently under

negotiation

Tsagaan Suvarga and Khokh Tsav

• US$ 1.3 billion will be invested for the development of the

Tsagaan Suvarga copper-molybdenum concentrator project

and the Khokh Tsav cement-lime plant project

National railway network

Construction of TT— Gashuun Sukhait line commenced in

May 2013 and the total construction for this line is

approximately 50% complete

On New Railway Project, US$196.2 million from proceeds of

the Chinggis Bonds and US$23.5 million has been disbursed

by DBM. additional funding will be provided for this railway

construction when the negotiations regarding the US$4.0

billion investment for Tavan Tolgoi are finalized

Trans-Mongolian Highway

The Government plans to build a 990-kilometer north/south

trans-Mongolian highway with an aim to sustain and

promote the development of cross-border trades with China

and Russia. The total investment planned is estimated to be

US$5.0 billion

• Oyu Tolgoi is one of the largest high-grade copper deposit in

the world, located 80 km north of Chinese border

• Third largest copper mine after expansion

• Estimated 2.7 million tons of recoverable copper and 1.7

million ounces of recoverable gold in reserves

• Comprehensive Investment Agreement was signed in 2009

• Government of Mongolia owns 34% and Rio Tinto owns

66% through Turquoise Hill Resources

• Approximately US$ 6.2 billion invested in the first phase

development (OT Phase I) as of March 31, 2014

• Oyu Tolgoi started exporting copper concentrate from its

open-pit operation in July 2013

• In May 2015, Government of Mongolia and Rio Tinto signed

Oyu Tolgoi Underground Mine Development and Financing

Plan (OT Phase II)

• USD 4.4 billion OT Phase II project financing facility

agreement is signed on December 15, 2015. The project

financing was closed on May 25, 2016 with full disbursement

and the underground work has commenced.

• Estimated US$ 6.8 billion capex, US$ 9.0 billion onshore

spending over 7 years during the OT Phase II development

• IMF estimates OT will generate up to 1/3 of Mongolia’s GDP

once it reaches full production

Update on mega-projects

Oyu Tolgoi copper and gold mine project Oyu Tolgoi’s key development in 2016

32

Source: Oyu Tolgoi, Turquoise Hill Resources, Oyu Tolgoi Undergound Mine Development and Financing Plan

• Shafts 2 and 5 related activities and construction of critical on-

site facilities continued, and the bulk excavation component

for the conveyor-to-surface work stream has been completed.

• Oyu Tolgoi’s total in-country spend since 2010 crossed US$6.1

billion at the end of Q4 – demonstrating a strong, continuing

commitment to local content in both operations and

underground development, including US$760 million total

spend in country in 2016

• Oyu Tolgoi spent 62 per cent of its total procurement

expenditures with Mongolian companies in 2016, equaling to

US$279 million. With a focus on continuously increasing the

Mongolian supplier participation in its supply chain

• Oyu Tolgoi is expected to produce 130,000 to 160,000 tonnes

of copper in concentrates and 100,000 to 140,000 ounces of

gold in concentrates for 2017.

Documents

Investor Presentation March 2017 · known and unknown risks, assumptions, uncertainties and other factors that may cause the actual results, performance and financial condition of