Management Discussion and Analysis
For the 1st Quarter 2023 ended May 31, 2023
AEON Thana Sinsap (Thailand) Public Company Limited (“the Company”) has already submitted theconsolidated reviewed the 1Q/2023 financial statements as of May 31, 2023 which were reviewed by Deloitte Touche
Tohmatsu Jaiyos Audit Company Limited. The operating performance is summarized as follows.
Overview
According to the Bank of Thailand and Office of the National Economic and Social Development Board data.
Thailand’s economy in the first quarter of 2023 expanded by 2.7% y-y, accelerating from 1.4% y-y growth in the previousquarter attributed to continual expansion of public and private investments and private consumption expenditures inrelating to the growth in tourism. However, the exports of goods and services have declined the second quarter inconsecutive reflecting the economic slowdown in the trading partner countries. Although, Thailand’s economic outlook
in 2023 is expected to expand between 2.7-3.7% mainly due to the tourism recovery and private consumptions. In
additions, the inflation rate decelerated to 3.9% in this quarter from 5.8% last quarter and the unemployment rate in
1Q/2023 continues to reduce to 1.05% from the previous quarter. However, substance economic challenges areremained such as global economic recession as a result of policy interest rate increment, high household debt level
increasing from 86.3% to 90.6% in the first quarter of 2023 and political stability after the election, which might delay thegovernment’s budget approval for 2024.
For the 1Q/2023, the Company has total new sales increased by 5% y-y, mainly due to the continual increase incredit card spending through online channels and marketing with business partners. In the first quarter of 2023, online
credit card spending shared 21% of total credit card spending.
As of May 31, 2023, the Company had business distributions and number of customers as below;
Number of AEONTS Cards, Networks and Merchandise Partners

May 31, 2022

Feb 28, 2023

May 31, 2023

Number of Credit Cards (million cards)

3.15

2.96

3.30

Number of Member Cards (million cards)

6.37

6.51

6.53

103 branches
30%
70%

104 branches
31%
69%

104 branches
30%
70%

ATMs (machine)309

146142Affiliated Dealers

6,192

5,8465,618

Branches
Bangkok
ProvinceSummary of Consolidated Financial Results
1. Operating Results
Consolidated

Separated

Profit and Loss Statement
Unit : Million Baht

1Q/22

4Q/22

1Q/23%QoQ

%YoY

1Q/22

1Q/23%YoY

Credit card income
Loan income
Hire-purchase income
Other income

1,810
2,628
267
780

1,994
2,538
255
766

1,951
2,534
240
734

(2%)
0.1%
(6%)
(4%)

8%
(4%)
(10%)
(6%)

1,773
2,603
65
857

1,910
2,512
61765

8%
(3%)
(6%)
(11%)

Total Revenues
Operating and administrative expenses
Expected credit lossFinance costs
Other expenses

5,485
2,033
1,563
437
2

5,553
2,060
1,965
523
96

5,459
2,029
2,094
527
5(2%)
(2%)
7%
1%
(95%)

(0.5%)(0.2%)
34%
21%
150%

5,297
1,853
1,530
458
2

5,248
1,856
2,044
541
5(1%)
0.2%
34%
18%
150%

Total Expenses
Profit before tax income
Income tax expenses
Net profit for the period
Earnings Per Share (Baht per share)

4,035
1,450
291
1,115
4.46

4,644
909
180
692
2.77

4,654
805
161
617
2.47

0.2%
(12%)
(11%)
(11%)
(11%)

15%
(45%)
(45%)
(45%)
(45%)

3,844
1,454
259
1,194
4.78

4,446
802
132670
2.68

16%
(45%)
(49%)
(44%)
(44%)

Revenues
For the 1Q/2023 financial results, the total consolidated revenues were 5,459 million baht, stable compared tothe same quarter of the previous year. The increase in revenues was attributed to an 8% increase in credit card revenue,
in line with continued growth in card spending in this quarter, whereas revenue from other products decreased y-y andq-q. However, although the overall economic growth rate of the country has a better outlook, there are risks from theslow recovery of some business sectors, including the export sector that continued to decline due to the economic
slowdown in Thailand's major trading partners. This may affect the ability to pay of customers in the industrial sector.
While the household debt rate remained high, the Company, therefore, implemented a more stringent credit lending
policy in this quarter and focus on specific customer groups to reduce the risk of asset quality by being conservative inpersonal loans and hire purchase.

2Sales and Revenues Structure for the 1Q/2023
Total Turnovers

Total Revenues

3%
6%

14%
4%

22%

5,459 MB

69%

Credit Card

Personal Loan

36%

Total Revenues

Hire Purchase

46%Others

Credit Card

Personal Loan

Hire Purchase

Others- Credit Card
For 1Q/2023 financial results, credit card turnover accounted 69% of total turnovers with revenue of 1,951
million baht, an increase of 141 million baht or 8% from the same quarter of the previous year and accounting of 36% of
total revenues, as a result of an increase shopping spending such as payment for online shopping on partner online
shopping platforms, online food delivery platforms and hotel bookings platforms in regards to the relaxation of various
measures and recovery of the tourism sector. For overseas business, AEON Specialized Bank (Cambodia) Plc had credit
card revenue in the first quarter of 2023 of 41 million baht, grew by 11% from the same period last year.
- Loans
For 1Q/2023 financial results, loans turnovers shared 22% of total turnovers, while the income from loans in
the consolidated financial statements amount 2,534 million baht, reduced by 94 million baht, or 4% from the same quarterof previous year. The income from loans has 46% proportion of total revenues.
However, the Company has been expanding more online service channels to customers and reduced theCompany’s operation cost. As a result, the cardless withdrawal transactions currently accounting 97% of total personalloan sales.
- Hire Purchase
For the 1Q/2023 financial results, motorcycle and used car hire purchase in Thailand and electricalappliances, mobile phones and others in overseas business resulted in the Company’s incomes from hire purchaseamount 240 million baht, decreased by 27 million baht or 10% from the same quarter last year.

3

- Others
For the 1Q/2023 financial results, other incomes were 734 million baht or 14% of total revenues, decreasing of
46 million baht or 6% from the same quarter in previous year. Other revenues consist of bad debt recovery, which was
441 million baht or 8% of total revenues, collection service income was 55 million baht, insurance broker business income
was 170 million baht, and others of 68 million baht respectively. The reduction of other incomes in comparison to thesame period last year was a result of no write-off transaction in this quarter.
Expenses
The Company’s expenses mainly consist of operating and administrative expenses, expected credit loss andfinance cost. For the 1Q/2023 financial results, the Company had total consolidated expenses of 4,654 million baht, anincrease of 619 million baht or 15% from the same quarter last year. Details of expenses are shown as follows:- Operating and Administrative Expenses and other expenses
For the 1Q/2023 financial results, the consolidated operating and administrative expense whichincluding director and management remuneration expense were 2,029 million baht, stable from the same quarter lastyear because the Company can control effective operating and administrative expenses well in accordance to theDigitalization plan, which reducing some operating and administrative expenses. The operating and administrative
expenses to total revenue was 37%.
- Expected Credit Loss
The consolidated expected credit loss in 1Q/2023 amounted 2,094 million baht, increased by 530
million baht or 34% from the same period last year and 7% from the previous quarter due to the ending of moratorium
program for customers impacted by Covid-19 since December 2021. The default receivables in credit risk (Stage 3) ratio
stood at 5.9% of consolidated financial statements and 5.7% of separated financial statements.
- Finance Cost
The Company recorded consolidated finance cost in the 1Q/2023 of 527 million baht, increased by
21% from the same period last year, in which the portion of finance cost in the first quarter of 2023 was 10% of total
revenues. The average funding cost in the first quarter of 2023 was at 2.92% due to the gradual increasing of the policy
interest rate from 0.50% in 2022 to 1.75 as of May 2023.
Net Profit
In 1Q/2023 financial results, the consolidated profit for the period was reported at 805 million baht, a decreaseof 645 million baht or 45% y-y. The Company recorded net profit attributable to the owners of the parent of 617 million
baht, a decrease of 498 million baht or 45 % y-y and decreased by 11% q-q, earning per share was 2.47 baht.

42. Financial Status
Statement of Financial Position
Unit : Million BahtAccounts Receivable
Total Assets
Total Borrowing
Total Liabilities
Equity Attributable to Owners of the Parent
ROE (attributable to owners of the parent)
ROA
D/E RatioFebruary 28, 2023

May 31, 2023

Change%YTD

93,937
95,207
66,05571,85922,821
17.9%
4.1%
3.1

93,79894,31764,08270,42523,348
10.7%
2.6%
2.9

(0.1%)
(1%)
(3%)
(2%)
2%
(40%)
(37%)
(6%)

Total Assets
As of May 31, 2023, consolidated total assets were 94,317 million baht, decreasing 1% from 95,207 million baht
as of February 28, 2023 due to the reduction in personal loan receivable by 517 million baht or 1% from end of last fiscal
year. The main assets were attributed to the portfolio of net account receivables which shared 99% of total assets.
- Account Receivables
The Company has account receivables of 93,798 million baht as of May 31, 2023, slightly decreased
from February 28, 2023 due to the conservative approach in lending policy although the credit card receivable continued
to grow. The account receivables are consisting credit card receivable of 43,649 million baht, increasing by 0.4% fromend of last year; loan receivable of 44,361 million baht, decreased by 1% from end of last year; hire purchase receivableof 5,712 million baht, increasing by 4% from end of last year and others receivable of 76 million baht increased by 4%
from end of last year.
- Allowance for expected credit loss
As of May 31, 2023, the Company provided allowance for doubtful accounts of 10,199 million baht,
where the default receivables in credit risk (NPL Stage 3) in accordance to TFRS9 was 5.9% increasing from 5.7% at theend of last year and 5.3% in the same quarter last year. The consolidated coverage ratio of allowance for expected credit
loss to NPL (NPL Coverage ratio) was at 184%, decreased from 190% from fiscal year of 2022 and 219% from the samequarter previous year due to positive outlook of macroeconomic factors.
Liabilities
The consolidated liabilities of the Company as of May 31, 2023 totaling 70,425 million baht, a decrease of 1,434
million baht or 2% from 71,859 million baht as of February 28, 2023. There were both short-term and long-term borrowings
totally 64,082 million baht, decreasing by 3% from the end of last year. The portion of long-term borrowings was 46,654
million baht or represented 73% of total borrowings. To manage risk that might occur from the fluctuation in foreign
currencies. The Company has entered cross currency interest rate swap contracts to hedge its debt. In addition, theCompany has unused unsecured revolving credit facilities 12,530 million baht and 3,000 million baht unused committed5

facilities with various financial institutions which is enough to drive the Company’s operation. The Company does not havedebentures that will mature within 12 months.
Shareholders’ Equity
As of May 31, 2023, total equity attributable to owners of the parent amounted to 23,348 million baht, an increaseof 527 million baht or 2% from the end of fiscal year 2022, Book value (attributable to the owners of the parent) as of May31, 2023 was 93.4 baht per share, increased from that of 91.3 baht per share as of February 28, 2023.
Debt to Equity ratio as of May 31, 2023 was at 2.9 times decreased from 3.1 times as of February 28, 2023.
Return on Equity (attributable to the owners of the parent) (ROE) and Return on Asset (ROA) for the first quarter of 2023
are 2.6% and 10.7%, respectively.
Key Financial Ratio

1Q22

4Q22

1Q23

Net Profit Margin (%)

20.3%

12.5%

11.3%

Debt-to-Equity ratio (Times)

3.3

3.1

2.9

Cost to Income (%)

37.1%

37.1%

37.2%

EPS (Baht)

4.46

2.77

2.47

31 May, 22

28 February, 23

31 May, 23

Allowance for Expected Credit Loss/ Total Receivables (%)

11.6%

10.8%10.9%

NPL Coverage Ratio (%)
Book Value per Share(attributable to owners of the parent) (Baht)

219%

190%

184%

85.2

91.3

93.4

Key Financial Ratio

6