Professional Documents
Culture Documents
01
ANNUAL REPORT 2011
KASIKORNBANKGROUP
Customer
Centricity
Multi-Corporate Business Large Corporate Business
Medium Business Small and Micro Business
High Net Worth Individual Affluent Middle Income Mass
KASIKORNBANKGROUP aims to be the strongest,
the most innovative and the most proactive Thai financial group
in serving customers.
Customer Centricity
Group-Wide Teamwork
Professionalism
Innovation
KASIKORNBANKGROUP aims to be a strong Thai financial group
that provides a variety of financial services of world-class quality
responsive to serve customers needs by harmoniously combining
technology and human resources so as to achieve optimal
benefits to customers, shareholders, employees and the country.
Mission
Vision
Core Values
002
Annual Report 2011
Management Report
Note: Financial statements as at 31 December 2010 and 2009 have been reclassified to be presented in order to comply with Thai Financial Reporting Standards and the Bank of Thailand (BOT)
notification number Sor Nor Sor 11/2553, directive dated 3 December 2010, regarding The preparation and announcement of the financial statements of commercial banks and holding
companies which are parent company of group of companies offering financial services.
The 31 December 2009 consolidated financial position statement included all items of assets and liabilities of MTGH Group. The consolidated statement of comprehensive income included
1 month operating result of MTGH Group for the period ended 31 December 2009.
1) Local board / High-low share prices during the year 4) Excluding non-controlling interests
2) Bank only 5) Loans = Loans to customers less Deferred revenue
3) Provision expense = Impairment loss on loans and debt securities 6) Non-performing loans net refer to the non-performing loan value, net of total allowances for doubtful accounts
COMMON SHARE INFORMATION
Per share (Baht) basic earnings 10.12 8.38 6.16
book value 64.68 56.38 50.14
dividends 2.50 2.50 2.50
Share price (Baht)
1)
high 144.00 130.00 91.00
low 99.75 77.25 40.25
closing 122.00 125.50 85.00
Common shares outstanding average basic (million share) 2,393.26 2,393.26 2,393.26
end of year (million share) 2,393.26 2,393.26 2,393.26
Market capitalization (Million Baht) 291,978 300,354 203,427
VALUE MEASURES
Price to earnings ratio (PER) 12.06 14.98 13.80
Price to book value ratio (PBV) 1.89 2.23 1.70
Dividend yield (based on closing share price) 2.05% 1.99% 2.94%
Dividend payout ratio 27.00% 32.14% 42.49%
Number of employees
2)
16,580 15,677 15,464
Number of branches
2)
816 805 782
OPERATING RESULTS (Million Baht)
Interest income - net 56,491 46,744 39,857
Non-interest income 34,017 28,400 21,683
Fees and service income - net 20,637 18,227 15,937
Other income 45,087 35,394 7,686
Underwriting expenses 31,707 25,221 1,940
Total operating income - net 90,508 75,144 61,540
Total other operating expenses 43,019 38,003 31,338
Impairment loss on loans and debt securities 7,345 6,701 9,376
Operating profit before provision expense
and income tax expense
3)
47,489 37,141 30,202
Net profit
4)
24,226 20,047 14,733
FINANCIAL POSITION STATEMENT INFORMATION (Million Baht)
Loans
5)
1,210,834 1,076,981 941,145
Allowance for doubtful accounts and revaluation allowance for debt restructuring 40,343 36,832 34,045
Non-performing loans net (NPL net)
6)
14,698 16,022 18,473
Non-performing loans gross (NPL gross) 31,736 33,175 37,152
Total assets 1,722,940 1,546,664 1,362,838
Deposits 1,242,229 1,100,036 975,492
Total liabilities 1,555,974 1,401,177 1,234,692
Equity
4)
154,799 134,943 119,997
Risk weighted assets 1,269,282 1,131,218 1,004,092
As of or for the years ended December 31, 2011 2010 2009
FINANCIAL HIGHLIGHTS (CONSOLIDATED FINANCIAL STATEMENTS)
003
Annual Report 2011
Management Report
FINANCIAL HIGHLIGHTS (CONSOLIDATED FINANCIAL STATEMENTS)
2009 2010 2011
NPL Gross to Total Loans
Trillion Baht
Loans NPL Gross to Total Loans
20 2009 09 20 2010 10 20 2011 11
0.94
1.08
1.21
2.91%
2.45%
3.76%
Net Profit
Million Baht
Net Profit
2009 2010 2011
14,733
20,047
24,226
Total Assets
Loans Total Assets
Trillion Baht
2009 2010 2011
1.36
1.55
1.72
2.00
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
0.94
1.21
1.08
Total Liabilities
Trillion Baht
Deposits Total Liabilities
2009 2010 2011
1.80
1.60
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
1.23
1.40
1.10
0.98
1.24
1.56
Note: Financial statements as at 31 December 2010 and 2009 have been reclassified to be presented in order to comply with Thai Financial Reporting Standards and the Bank of Thailand (BOT)
notification number Sor Nor Sor 11/2553, directive dated 3 December 2010, regarding The preparation and announcement of the financial statements of commercial banks and holding
companies which are parent company of group of companies offering financial services.
The 31 December 2009 consolidated financial position statement included all items of assets and liabilities of MTGH Group. The consolidated statement of comprehensive income included
1 month operating result of MTGH Group for the period ended 31 December 2009.
7) Loans used in calculation are loans to general customers and loans to financial institutions after allowance for doubtful account of non-performing loan
8) Loans used in calculation are loans to general customers and loans to financial institutions
9) Provision expense = Impairment loss on loans and debt securities
10) Allowance = Allowance for doubtful accounts and revaluation allowance for debt restructuring
As of or for the years ended December 31, 2011 2010 2009
PERFORMANCE INDICATORS
Net interest margin (NIM) 3.75% 3.48% 3.23%
Non-interest income to average assets 2.08% 1.95% 1.62%
Non-interest income ratio 37.58% 37.79% 35.23%
Efficiency ratio 47.53% 50.57% 50.92%
Return on average assets (ROAA) 1.48% 1.38% 1.10%
Return on average equity (ROAE) 16.72% 15.73% 12.79%
ASSET QUALITY RATIOS
Loans to deposits ratio 97.47% 97.90% 96.48%
Loans to deposits and B/E ratio 94.72% 93.51% 92.80%
Tier 1 capital ratio 9.63% 9.37% 10.25%
Total capital ratio 13.81% 13.96% 15.19%
NPL net to total loans
7)
1.15% 1.43% 1.91%
NPL gross to total loans
8)
2.45% 2.91% 3.76%
Provision expense
to average loans (Credit cost)
9)
0.64% 0.66% 1.02%
Total allowance to loans
10)
3.33% 3.42% 3.62%
Total allowance to NPL gross (Coverage ratio)
10)
127.12% 111.02% 91.64%
30,000
25,000
20,000
15,000
10,000
5,000
0
4.00%
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
1.40
1.20
1.00
0.80
0.60
0.40
0.20
0.00
CONTENTS
BOARD OF DIRECTORS REPORT
MANAGEMENT REPORT
Management Report
Management Discussion and Analysis
1. Overview
2. Operating Performance and Financial Position Analysis
3. Operations of Core Businesses
4. Operations of Support Groups
5. KASIKORNBANKs Investments in Subsidiaries and Associated Companies
Risk Management and Risk Factors
1. Overall Risk Management
2. Risk Management
3. Capital Management
FINANCIAL REPORTS
Report of the Board of Directors Responsibilities for Financial Reports
Report of the Audit Committee
Audit Report of Certified Public Accountant
Financial Statements
Notes to the Financial Statements
CORPORATE GOVERNANCE
Report of the Corporate Governance Committee
Report of the Human Resources and Remuneration Committee
Corporate Governance
1. Rights of Shareholders
2. Equitable Treatment of Shareholders
3. Roles of Stakeholders
4. Disclosure and Transparency
5. Responsibilities of the Board of Directors
Dividend Policy
Factors Affecting Investment Decisions
CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES
Business Activities
Environment and Safety
Employees
Social Activities
Plans for CSR Activities in the Future
STRUCTURE
Organization Chart
Board of Directors
Board of Directors and Executives
Directorship of Directors and Executives in Subsidiaries, Associated, and Related Companies
Changes in KASIKORNBANK Shares Held by Directors and Executives in 2011
Management Team
Investment of KASIKORNBANK in Other Companies
OTHER INFORMATION
Reference Information
Major Shareholders
Awards and Commendations
KASIKORNBANKGROUP
KASIKORNBANK
1. Domestic Branch
2. Foreign Exchange Booth
3. K-Safe Deposit Box Center
4. THE WISDOM Exclusive Center
5. THE WISDOM Corner
6. THE WISDOM K-Safe Deposit Box Center
7. K-WePlan Branch
8. Corporate Business Center
9. Corporate & SME Service Center
10. SME Business Center
11. Overseas Office
K Companies
SUMMARY OF SPECIFIED ITEMS PER FORM 56-2
5
7
9
55
71
72
74
76
84
219
220
221
254
255
257
266
269
274
281
284
286
288
300
302
303
308
311
312
313
321
347
349
005
Annual Report 2011
Management Report
KASIKORNBANKGROUP experienced another
successful year in 2011, as one of Thailands leading
financial conglomerates. Net profits were up 20.85 percent,
to Baht 24,226 million, and total financial solutions continued
to be developed and extended to cover all customer
segments, both at home and abroad. In addition to
the 816 KASIKORNBANK branches and 7,366 ATMs
in Thailand, there are now four branches and four
representative offices abroad. As part of our aim to
provide valuable financial services, business alliances
have been forged with financial institutions in China,
Japan, South Korea, and Vietnam.
Within the financial arena, KASIKORNBANKGROUP
held the lead position in many areas. As the leading
provider of business services to SMEs, KGroup maintained
the largest share of that market. We led in digital and mobile
phone banking services with 2.8 million users. Non-interest
income increased by 19.78 percent; home loans increased
by 15.74 percent. Of note was our K-Value Chain Solutions,
the first of its kind in Thailand, providing full-cycle financial
services along the entire value chain, upstream to downstream.
With the products and services offered by KGroup, our
customers in the corporate, SME, and retail segments
are able to achieve lower costs and more efficient
and effective operations.
The K-Transformation Program continued to move
forward in 2011, with the development of the Multi-channel
Sales and Services (MSS) Project. New branch infrastructure
platform rollout was fully completed. Having been deployed
to all Bangkok branches already during 2011, the new sales
& service solution will be gradually applicable to more than
800 branches nationwide by Q1/2012. To date, the new sales
& service system has created faster customer responsiveness
and consistent customer experience across channels.
Moreover, the newly finished MSS integrated with Know
Our Customer (KOC) capabilities has increased effectiveness
of campaign execution through branch platform, thus leading
to creation of cross-selling, up-selling, better campaign
response rate, as well as higher product holding
and sales amount/transaction volume per customer.
For Small SME & Micro Segment, the benefit has been
realized in lead/referral across channels, sales planning
& sales management activities.
Beyond implementing our Customer-Centric
strategy and ensuring the highest quality under our
unique K-Excellence concept, KASIKORNBANKGROUP
has adhered to our Statement of Corporate Governance
and Corporate Social Responsibility (CSR) Principles.
Activities and projects have been carried out for
the benefit of youth, education, and the environment.
During the catastrophic flooding last October, in addition
to well thought out assistance measures, KGroup set up
two flood relief centers. Administered by the Chaipattana
Foundation, one center was located at the First Army Air
Defense Operation, Wang Noi, Phra Nakhon Si Ayutthaya,
and the other at Wat Yansangwararam, Chon Buri.
KGroup believes that these efforts alleviated material
hardship while providing needed hope and encouragement
to flood victims.
On behalf of the Board of Directors and the entire
KGroup staff, I would like to take this opportunity to express
our sincere appreciation to each and every one of you.
BOARD OF DIRECTORS REPORT
(Mr. Banyong Lamsam)
Chairman
MANAGEMENT REPORT
007 Management Report
009 Management Discussion and Analysis
055 Risk Management and Risk Factors
07
Annual Report 2011
Management Report
Amid global economic woes and domestic economic
risks in 2011, KASIKORNBANKGROUP (KGroup) strove to
provide support to all customer segments, based on our
organization-wide teamwork and the Customer-Centricity
strategy, with the aim of offering the total solutions to our
customers. In addition, having recognized business opportunities
abroad - particularly in China - KGroup has been successful
in forming business alliances with several large banks there,
wherein KASIKORNBANK also became the first Thai bank to
open a Chinese-Thai Business Center (CTBC) in our country to
provide comprehensive information and advisory services to
both Thai and Chinese investors.
Aside from our business expansion into China by opening
of a new branch, KGroup has sought to establish a business
network with partner banks in various countries that will
allow us to meet not only the needs of foreign investors wishing
to invest in Thailand, but also Thai companies seeking to
invest in other countries in Asia, including Japan, South Korea
and Vietnam.
In light of the most extensive flooding in recent Thai history,
KGroup has placed emphasis on customer contacts and visits
to assess the damage, so that we could render them the most
timely and appropriate assistance; we have also devised
a number of complete assistance measures to help both
business and retail customers. To achieve marked success
in strategies that differentiate us from rivals, we have placed
an emphasis on our development of support functions to work
more harmoniously via improvements in human resources
and IT management, as well as technological innovations via
the K-Transformation program.
As a result of these efforts, KBanks consolidated net
income for 2011 totaled Baht 24,226 million, increasing by Baht
4,179 million, or 20.85 percent, over 2010, mainly attributable
to increases in net interest income and non-interest income.
Regarding our financial position as of December 31, 2011,
the Banks consolidated assets totaled Baht 1,722,940 million,
increasing by Baht 176,276 million - an 11.40 percent
increase - over the end of 2010. This was primarily due to
over-year loan growth of Baht 133,853 million - equivalent to
12.43 percent - to Baht 1,210,834 million, which drew support
from impressive growth in Corporate, SME and Retail Business
loans. Our non-performing loans continued to diminish over-year,
amid increased loan extension and improved asset quality.
The Banks consolidated deposits equaled Baht 1,242,229 million,
growing by Baht 142,193 million, or 12.93 percent, over the end
of 2010, as we continued to offer attractive deposit products at
various times. As for capital status, the Banks capital adequacy
ratio was 13.81 percent, with Tier-1 and Tier-2 capital ratios
equaling 9.63 percent and 4.18 percent, respectively, which mirrors
our capital strength.
K Companies engaged in financial business all showed
satisfactory quantitative and qualitative performance in 2011,
attributable to close-knit internal cooperation within KGroup.
KSecurities had an excellent performance, wherein their income
and profit continued to grow over 2010. KAsset maintained superior
growth in their assets under management (AUM), comparing to
the market average. Also, the companys AUM represented
the largest market share in the business. KLeasing had impressive
loan growth in 2011, while the company continued to focus on
their asset quality improvement. KF&E reported significant loan
growth over-year. Meanwhile, MTL achieved outstanding earned
premium growth, and was able to maintain the national first-place
rank in bancassurances new business premiums.
We have adhered to recognized best practices in risk
management strategies. Emphasis has been placed on
engagement within our consolidated risk management framework,
as well as complete and accurate disclosures of risk management
and capital adequacy information on a regular basis. Striving
to be the best in all dimensions of our business development,
we nevertheless strictly adhere to good corporate governance
principles. To this end, we achieved our higher business goals
in 2011, and were applauded widely at home and abroad,
thus having been the recipient of many awards of recognition
extended to us in 2011.
Executive Summary Management Discussion and Analysis
For the Year Ending December 31, 2011
MANAGEMENT REPORT
08
Annual Report 2011
Management Report
009
Thailand Economic Growth Forecast
Source: National Economic and Social Development Board, Ministry of Commerce and KASIKORN RESEARCH CENTER CO., LTD.
Note: * Forecasted Figure (As of February 21, 2012)
Year-on-Year Change (Units: Percent)
10
8
6
4
2
0
GDP Headline CPI
2010 2011 2012*
3.8
4.5 - 6.0
0.1
3.3
3.5 - 4.5
7.8
Annual Report 2011
Management Report
1. Overview
1.1 Overview of Economy, Banking Industry and Regulatory
Changes
Thailands Economy in 2011 and Outlook for 2012
The Thai economy in 2011 expanded at only 0.1 percent
over-year, dramatically decreasing from the 7.8-percent
growth of 2010, due to a number of negative factors at
home and abroad, including the devastating earthquake and
tsunami in Japan that caused supply chain disruption of
industrial manufacturing, an economic slowdown in major
economies as a result of the public debt problems of
the U.S. and Europe, as well as massive flooding in Thailand
affecting a wide range of economic activities and sectors.
As risks to the Thai economy became more evident, the Bank
of Thailands Monetary Policy Committee (MPC) resolved to
cut their policy rate during the final meeting of 2011, following
interest rate hikes during the first three quarters, as part
of their efforts to maintain economic stability. Meanwhile,
the prolonged and widespread European debt crisis has raised
investor concern towards heightened economic risks and
affected global financial market movements.
Regarding the economic outlook for 2012, it is
estimated that the Thai economy will grow by 4.5 to 6.0
percent over 2011, boosted by private and government
spending for post-flood rehabilitation activities, and building
of flood-mitigation facilities, as well as investment in
megaprojects. Although the Thai economy is expected to
maintain its growth momentum, international trade,
particularly for exports, may be affected by the deceleration
of major economies globally. Meanwhile, the governments
policy implementation to increase income and stimulate
the economy, including increases in the minimum wage
and civil servant income, and energy-related policies,
as well as potentially rising commodity prices, may pressure
domestic inflation and bring additional challenges to the
Bank of Thailands monetary policy maneuvers throughout
2012, particularly if the sovereign debt crisis in Europe grows
worse than initially expected.
MANAGEMENT DISCUSSION AND ANALYSIS
010
Annual Report 2011
Management Report
Banking Industry and Competition
In 2011, operations of Thai commercial banks were
affected by multiple downsides, with the worst being
the catastrophic flooding in the final quarter of 2011 that made
banking services inaccessible within some areas, resulting in a
temporary decline in banking transaction volume. Looking
over the entire year, however, core banking business maintained
a fair level of operating performance. This was largely driven
by sound growth during the first three quarters. Loans within
the Thai banking sector achieved double-digit growth in
continuation from 2010, amid higher loan demand along with
expanding international trade and other economic activity,
despite upward interest rate trend during the first three quarters.
Supply-side push also contributed to impressive loan growth,
particularly after most commercial banks looked forward to
meeting their loan targets that year. Continued growth in fee
and service income helped banks to sustain higher net profits
and net interest margins (NIM), despite the widespread
flooding in the fourth quarter of 2011. Asset quality remained
healthy with a continued decline in the ratio of non-performing
loans (NPLs) to total loans.
As for 2012, Thai commercial banks are expected to see
more challenges in maintaining their earnings and profitability,
despite the potential for double-digit loan growth achieved
on the back of continued domestic spending and the tamed
interest rate direction. In addition to loans, competition
in deposit and savings products will remain intense, in light of
the stronger need of Thai commercial banks to accumulate
liquidity to brace for intensified competition in the deposit
market, especially with other savings and investment
alternatives and a reduction in the deposit guarantee to not
more than Baht 1 million/customer/financial institution by
the Deposit Protection Agency, effective August 11, 2012.
In addition, changes in relevant laws and regulations - including
the implementation of a financial sector liberalization policy,
accounting standards and effects from the Emergency Decree
regarding the management of the Financial Institutions
Development Fund (FIDF) debt service - may inevitably
affect Thai banking business operations, going forward.
Regulatory Changes
1
Some important regulatory changes in 2011 that may
affect KASIKORNBANK business operations can be
summarized, as below:
Criteria for Establishment and Supervision of Overseas
Branches of Thai Commercial Banks
Pursuant to the Bank of Thailand (BOT) notification
No. SorNorSor. 8/2554, on the criteria of establishment
and supervision of overseas branches of Thai commercial
banks (which was published in the Government Gazette on
October 17, 2011, and came into force on the following date),
BOT approval is required for overseas branch opening of
Thai commercial banks (in the form of overseas offices
holding branch status, for operating the commercial bank
business within the permitted scope of each country).
In addition, a comparative analysis must be conducted
in relation to expected benefits, costs and risks for such
branch opening. Within three years after the BOT approval
in principle, completion of the branch opening request must
be achieved. Bank officers must be assigned for an audit of
branch business operations and assets at least biennially,
while reporting and document submittal must comply
with the established regulations and conditions. In cases
where commercial banks wish to terminate or discontinue
their branches overseas, they have to submit the request
form for the BOTs permission. Upon approval of business
termination, the business operation license must be returned
to the Ministry of Finance or the BOT (as the case may be).
Guidelines for overseas branch establishment
have been better clarified by this regulation, thus encouraging
commercial banks with high potential to attain greater
coverage of business operations and customers. Moving
forward, banks business operations will be enhanced with
improved efficiency and competitiveness, specifically
1
Other details relating to regulatory changes during 2011 can be viewed
in the report of Management Discussion and Analysis (MD&A) for the quarters
ending March 31, 2011, June 30, 2011 and September 30, 2011.
011
Annual Report 2011
Management Report
important to the upcoming financial sector liberalization.
As KBank has been studying and analyzing all relevant issues
circumspectly for our overseas business expansion,
our operations have not been significantly affected by
this regulation.
Permission for Thai Commercial Banks to Operate
Trustee Business
The BOT notification No. SorNorSor. 9/2554, concerning
the permission for Thai commercial banks to operate trustee
business (which was published in the Government Gazette
on November 16, 2011, and came into force on the following
date) stipulates that permission is required from the Office
of the Securities and Exchange Commission (SEC) for
trustee business to be operated by commercial banks,
in compliance with the Trust for Transactions in Capital
Market Act, B.E. 2550, and other relevant BOT regulations.
Commercial banks can apply for any trustee business types,
if their qualifications meet the established standard and
their practices comply with the specified conditions.
(Nevertheless, retail banks are not allowed to be a trustee
functioning as investment manager.) In addition, those
commercial banks have to formulate policies, strategies,
operational procedures, as well as arranging written plans
to support their trustee business operation, with the approval
of their Board of Directors. Moreover, assets of trust
funds - in which commercial banks are entitled as their
trustee - shall not be consolidated with bank assets, in order
to comply with the BOT supervision. Meanwhile, the BOT is
authorized to suspend or revoke the trustee business license
in cases of breach or non-compliance with the regulations
or conditions, or any action that may affect the safety or
well-being of the general public.
With this notification, commercial banks will have more
opportunities to offer a wider range of financial services as
per the objectives of the Financial Sector Master Plan II
(FSMP II), aiming to encourage leading banks to widen
their financial business to meet all needs of customers,
from mutual funds to venture capital funds and private funds.
As for the trustee business which is new in Thailand,
KGroup has already undertaken a study, wherein its initial
results indicate our potential and readiness in incorporating
this business. Although this study also suggests a variety
of service models suitable to different groups of customers,
practical implementation remains pending clarity of relevant
regulations, including tax-related issues.
The Financial Sector Master Plan II (FSMP II)
The BOTs Financial Sector Master Plan II (to be
implemented during 2010 - 2014) consists of three
key policies: reducing system-wide operating costs,
promoting competition and access to financial services,
and strengthening financial infrastructure, which includes
market liberalization, increased access for foreign financial
institutions via grants of licenses for some business areas,
and permission for an increased number of branches and
ATMs. By 2014, a business license for establishment of
new full-service commercial banks is planned. Furthermore,
the authorities plan to encourage large-sized commercial
banks of ASEAN+3 (including China, Japan and South Korea)
to operate their business in Thailand more freely, as well as
expediting the schedule of financial sector liberalization.
In order to brace for such guidelines to liberalize the financial
institution sector, KGroup has conducted extensive analyses
on this issue. So doing - plus our decade-long efforts to
pursue strategies that have strengthened our business
fundamentals - has led us to believe that we will be able to
maintain our competitiveness over both existing and new
players that may enter the market in the future. These notable
efforts included our thorough understanding towards the needs
of our customers under our Customer-Centricity strategy
that has been continually improved, along with developed
products, services, and sales and services channels,
suitable for each customer segment, their life stages
and lifestyles, as well as the nature of business operations
in Thailand and the changing economic environment.
ASEAN Economic Community (AEC)
A single market and production base among member
countries is aimed to be achieved by 2015 as per the ASEAN
Economic Community (AEC) establishment. Major progress
012
Annual Report 2011
Management Report
of liberalization has been evident in terms of international
trade, whereas the service liberalization will be gradually
implemented later on. Regarding the financial service sector,
the securities business - which Thailand has been committed
to liberalize - has reported significant movements.
Under the securities business liberalization, 100 percent
foreign-equity ownership is permitted in existing firms,
while foreign shareholding of over 49 percent in commercial
banks and insurance firms remains unbounded.
Due to the fact that the full-service commercial banks
may be affected by the development of financial sector
liberalization, particularly for securities business, along with
a plan to expedite the liberalization schedule, commercial
banks should brace for any changing circumstances that may
affect their business operation, as well as their customers.
Realizing the significance of the AEC establishment
that will bring greater opportunities, albeit with heightened
competition, KGroup has been closely monitoring the
development of related negotiations, as well as studying
the opportunities and challenges that may affect the Bank
and our customers business operations. In 2011, KGroup
expanded our cooperation with our business allies who are
leading commercial banks in ASEAN countries. Focus has
been placed upon equipping our customers with relevant
knowledge, along with complete products and services to
every customer segment, in order to ensure that their
business expansion within ASEAN will be supported by
our finest financial services. This effort also helps maintain
their competitiveness, amid more intensified competition
in the future.
Basel III
Drafted by the Basel Committee on Banking
Supervision (BCBS), the new regulations of Basel III will
take effect on January 1, 2013, and may result in changes
in commercial banks capital and liquidity risk management.
As the BOT will likely comply with these guidelines,
the KASIKORNBANK Financial Conglomerate has been
studying in preparation for the changes, assessing impacts
of compliance, and continuously monitoring the progress
of Basel III implementation at home and internationally,
in order to ensure that compliance will not have any impact
on the capital level of the KASIKORNBANK Financial
Conglomerate.
Implementation of International Accounting Standards
(IASs and IFRSs)
KASIKORNBANKGROUP has complied with the
International Accounting Standards (IASs) and International
Financial Reporting Standards (IFRSs) under the time frame
specified by the Federation of Accounting Professions.
Also, the Bank has early-adopted some IASs and IFRSs,
before the regulations take effect officially, while we continue
to prepare for the full implementation of these new
regulations, initially scheduled to be effective in Thailand
during 2013 - 2015. So doing has been undergone by
assessing the possible impacts on management decisions,
policy improvements, as well as revision of relevant
operational procedures and systems, on grounds of benefit
maximization for KGroup.
Reduced Corporate Income Tax
According to the Royal Decree issued under
the Revenue Code regarding Reduction and Exemption
from the Revenue Taxes (No. 530) which was published
in the Government Gazette on December 21, 2011,
and came into force on the following date, the corporate
income tax was reduced from 30 percent to 23 percent
for fiscal year 2012, and to 20 percent for fiscal years 2013
and 2014, in order to promote competitiveness and stimulate
the overall economy.
The reduced corporate income tax will benefit KGroup
in 2012 onwards. Due to our adoption of the deferred income
tax policy, this revised regulation thus had impact on only
our Statement of Financial Position for the fourth quarter
of 2011 (related details can be viewed in No. 43 concerning
Income Tax in the Notes to Financial Statements). As this
consequence is regarded as an accounting adjustment
and bears no realized expenses for the Revenue Department,
such adjustment has not affected our business operation,
profitability and capital.
013
Annual Report 2011
Management Report
1.2 Business Directions of KASIKORNBANKGROUP
KASIKORNBANKGROUP in 2011 and Outlook for 2012
Against the backdrop of global economic woes in 2011,
especially the European public debt crisis and slow U.S.
economic recovery, plus the widespread flooding
in Thailand that dealt a severe setback to the Thai
economy - particularly through the industrial sector - late
last year, KASIKORNBANKGROUP has strived to provide
support to all customer segments, based on our
organization-wide teamwork and the Customer-Centricity
strategy, with an aim of offering total solutions - comprising
products and services from all six companies in KGroup -
to our clients. To this end, we introduced K-Value Chain
Solutions to offer fully-integrated value-chain services to our
large business customers, with credit products and financial
services that meet the specific needs of each business,
from upstream to downstream. Industry Solutions have been
launched to respond to the demands of our SME customers
in eight major industries, in addition to enhancement of
products and services to promote international trade
through the K-Trade Premier and SME Super Trade Credit
programs. With the coordinated effort between the Bank
and KLeasing, K-SME Leasing Plus was launched to meet
the needs of our business clients. We also offered financial
and non-financial support - including knowledge and business
network - through the K SME Care program that has been
continually pursued over the past five years.
For retail business customers, KGroup, in cooperation
with six leading property developers, launched a pilot project
of an escrow agent service, acting as a neutral third party
with fiduciary responsibilities on behalf of home buyers and
sellers. Also, based on our understanding of the restrictions
facing self-employed persons and freelancers in accessing
credit facilities, we initiated the Savings for Future Benefit
program that allows this group of customers to use their
savings records as part of their loan application.
Having recognized business opportunities overseas -
particularly in China, where the ample loan demand of local
SME proprietors has yet to be met - KBank, as a leading
Thai financial institution with SME lending expertise, has
embarked on business expansion to increase our market
share in the Chinese banking sector in sync with the economic
development plans of China and Thailand. In 2011, KGroup
declared success in forming a business alliance with
several large banks in China, and KBank was the first
Thai bank to open the Chinese-Thai Business Center (CTBC)
in our country to provide information and comprehensive
advisory services for doing business in both countries.
Additionally, the Bank has continued to offer financial services
to support Thai-Chinese businesses, namely China Direct,
which guarantees USD-denominated funds transfer to China
within the same day, and other RMB-related services.
Aside from our business expansion into China by
opening of a new branch, KGroup has sought to establish
a business network with partner banks in various countries
that will allow us to meet not only the needs of foreign
investors wishing to invest in Thailand, but also Thai
companies seeking to invest in other countries in Asia,
including Japan, South Korea and Vietnam.
In light of the most extensive flooding in recent
Thai history, KGroup has placed our emphasis on customer
contacts and visits for accurate assessment of damages,
so that we could render them the most timely and appropriate
assistance. We have offered a complete range of post-flood
assistance measures, in the periods of damage assessment,
business restoration and recovery to full production capacity
throughout the business cycle, including suppliers, producers
and consumers. For retail business clients, our aid measures
involved reduction of monthly repayments, provision of grace
period, and reduced minimum repayment of all types of
consumer loans.
KGroup has placed an emphasis on harmonious work
relationships among support functions. With regard to
our human resources, we have recruited employees
in a manner consistent with our organizational and business
strategies, developed leadership potential, and enhanced
our organizational culture based on our behavioral guidelines.
On the IT front, the focus has been on system development,
014
Annual Report 2011
Management Report
Awards for KBank Business Divisions and Other Important Awards
Best SME Bank in Thailand award in The Asset Triple A
Transaction Banking Awards 2010 & 2011 from The Asset
magazine
Adman Award in the Silver category for the Cookie Boy
TV commercial, which was the highest prize in the
Finance & Insurance category of the Adman Awards
& Symposium 2011
Best Deal of the Year award from Alpha Southeast Asia
magazine and Solar Best Deal of the Year award
from Project Finance magazine, for our efforts in offering
advisory services and financial support for the construction
of solar power plant projects
Best Project Finance Deal of the Year in Southeast Asia
award as a financial advisor, and Best Project Finance
Deal of the Year in Southeast Asia award as a syndicate
loan provider, for 2010/2011, from Project Finance
magazine
Best Retail Bank in Thailand award for the second
consecutive year, and Best Retail Banking Brand award
from The Asian Banker journal (KBank is the only
Thai bank to receive this award in 2011.)
Best Retail Bank of the Year 2011 award for the fourth
consecutive year, and the Most Attractive Booth award
for the fifth consecutive year, at the Money Expo 2011,
from Money and Banking magazine
VISA Debit Innovation Award 2010 from
Visa International (Asia Pacific) Ltd.
Best Debt House 2011 award for the fourth consecutive
year and Best Domestic Bond House 2011 award
in The Asset Triple A Country Awards 2011,
from The Asset magazine
Best Local Currency Bond and Best Thailand Deal awards
in the FinanceAsia Achievement Awards 2011 project,
for our distribution of inflation-linked bonds, organized by
FinanceAsia magazine
Best Trade Finance Bank award from Global Review
magazine
Best Foreign Exchange Bank 2011 award from FinanceAsia
magazine
Asia Risk Awards 2011, House of the Year of Thailand,
by Asia Risk magazine
Thailands Most Innovative Companies Award 2011
in the Service category, from the Faculty of Commerce
and Accountancy, Chulalongkorn University
Top Company for Leaders Award (TCFL), with KBank
being ranked in the Top 20 of the Asia-Pacific region,
from Fortune magazine in coordination with Aon Hewitt
of Aon Corporation
security and system stability management, as well as
business continuity management (BCM), all of which aims
at enhancing the success and effectiveness of business
strategy implementation, and responding to the needs
of each business unit.
All of these aforementioned efforts not only
supported KGroup in achieving higher business goals
in 2011
2
, but also rewarded us with many marks of
recognition from both domestic and foreign agencies,
including:
2
Complete details of marks of recognitions and rewards can be viewed
in the Awards and Commendations section of the 2011 Annual Report.
015
Annual Report 2011
Management Report
In 2012, KGroup will adhere to our Customer-Centricity
strategy by striving to satisfy the needs of customers with
the unsurpassed quality of financial products and services
from all six companies in KGroup, under K Excellence,
as well as our K Now project that encompasses a broad
array of supports over and beyond financial services.
Under the K Now project, customers quality of life
will be enhanced through our innovative and value-added
products and services that better meet all needs at
each customers life stage. To achieve this end,
we have tailored our main strategies into three main
areas: Product via creation of innovative products to
meet the customers needs in a timely manner; Branding
and Marketing through clarity and consistency of
the brand at all levels; and Service Quality by the delivery
of the finest service experience for all customers through
our various service channels.
In addition, KGroup has outlined our strategy to
support the diverse needs of each customer segment,
as follows:
Corporate Customers: Aiming to become the trusted
partner of our customers, KGroup will continue to emphasize
enhancing value creation of our customers and their trade
partners businesses, from upstream to downstream, for their
sustainable business success. In achieving this objective,
complete financial service solutions and advisory services
will be offered to meet the financial and non-financial needs
of these customers.
SME Customers: Determined to maintain our
leadership in the overall SME market and in all areas with
potential, we will continually focus on effective and ongoing
marketing communications, together with increases in
the number of customers with high potential, and in holding
of products generating high fee income. In addition to our
efforts to improve operational procedures, plus management
of loan portfolio and asset quality, cordial relationships with
customers will be further strengthened, through our customer
relationship management - in both business and personal
perspectives - by fostering more effective collaboration
with our sales and service channel units.
Retail Customers: We continue to place an emphasis
upon being the main bank for customers and customers
generating high income for KGroup. In achieving this goal,
brand communications and marketing capabilities will be
further strengthened, in addition to more effective
management of the sales and service network, plus their
service quality and efficiency.
Aside from those aforementioned plans, KGroup has
also paid attention to other infrastructure enhancements,
including efficient cost management, risk management
that aligns with external circumstances, human resource
development and IT improvement, all of which will help
ensure that our strategic and business goals will be
achieved as planned.
Corporate Governance
KASIKORNBANK believes that good corporate
governance is a key factor to sustain our business
undertakings and enabling the Bank to attain our ultimate
goals for the maximum benefit of shareholders. It will not
only lead to sound and transparent management under a clear
standard, which will enhance the Banks competitiveness,
but also result in greater confidence among local and foreign
shareholders, and all involved stakeholders. The Bank has,
016
Annual Report 2011
Management Report
therefore, continued to place significant emphasis on
corporate governance practices.
Aside from the review of related principles, and
arrangement of transparent and efficient Annual General
Meetings in accordance with the regulatory requirements and
the Statement of Corporate Governance Principles, the Banks
notable actions in 2011 included the implementation of
corporate governance activities based on efforts to maintain
our standards, and to develop corporate governance
on a continuous and sustainable basis. To promote
corporate governance as our organizational culture,
internal communications were regularly made with directors,
executives and employees on the topics of corporate
governance principles and compliance with the Code of
Conduct. A notification system was set up for directors
and executives, in order to minimize risks from omission of
duty or non-compliance. Moreover, the KGroup CG Index
was initiated during the year for monitoring and assessing
the corporate governance performance of KGroup and
companies providing service support for KGroup.
In 2011, with our dedication and effort to continually
promote corporate governance, KASIKORNBANK was
awarded many marks of recognition for outstanding
corporate governance, including the NACC Integrity Award
for two consecutive years, from the National Anti-Corruption
Commission; and the SET Award of Honor for Continuous
Excellence in Corporate Governance Report 2008 - 2011,
from the Stock Exchange of Thailand (SET) and Money
& Banking magazine at the SET Awards 2011 ceremony.
In addition, the Bank has achieved Excellence in rating
scores for corporate governance and quality assessment
results of the Annual General Meetings of Shareholders of
listed companies for many years running.
3
KBank also continued to place importance on corporate
social responsibility (CSR) activities. The Board of Directors
formulated a relevant policy to welcome participation of
employees, customers, society and the community towards
sustainable development. During 2011, many CSR projects
and activities were carried out continuously, including
K SME Care; the Green Building project to enhance energy
savings with fluorescent tubes and energy-efficient air
conditioners; the project of ATM, CDM and PUM slip size
reduction; the project of KASIKORN staff joined to Clean
Chao Phraya River (arranged for the second consecutive
year); the recognition program for employees, as well as
the Sino-Thai Forum project. These activities have
emphasized our commitment to undertake business based
on good corporate governance principles, together with
responsibility towards the environment and society.
2. Operating Performance and Financial Position
Analysis
2.1 Operating Performance
The Banks consolidated net income for 2011 totaled
Baht 24,226 million, increasing by Baht 4,179 million,
equivalent to a 20.85 percent over-year growth. This increase
was mainly attributable to an increase in net interest income,
as a result of loan growth and a consequence of asset
and liability management to align with interest rate trend.
Consequently, our net interest margin equaled 3.75 percent
in 2011. In the meantime, our non-interest income
grew by 19.78 percent over-year, led by continued
growth of net fees and service income, in alignment
with our Customer-Centricity strategy. Meanwhile,
our efficiency ratio stood at 47.53 percent for 2011,
better than the previous year.
3
Details of marks of recognition and awards related to corporate governance can be
viewed in the Awards and Commendations section of the 2011 Annual Report.
017
Annual Report 2011
Management Report
Interest income 83,693 62,271 21,422 34.40
Interest expenses 27,202 15,527 11,675 75.19
Interest income - net 56,491 46,744 9,747 20.85
Fees and service income - net 20,637 18,227 2,410 13.22
Other income 45,087 35,394 9,693 27.39
Total operating income 122,215 100,365 21,850 21.77
Underwriting expenses 31,707 25,221 6,486 25.72
Total operating income - net 90,508 75,144 15,364 20.45
Total other operating expenses 43,019 38,003 5,016 13.20
Operating profit
(Before impairment loss on loans and
debt securities, and income tax expense) 47,489 37,141 10,348 27.86
Impairment loss on loans and debt securities 7,345 6,701 644 9.61
Income tax expense 13,962 9,094 4,868 53.53
Net profit 26,182 21,346 4,836 22.66
Net profit attributable to:
Equity holders of the Bank 24,226 20,047 4,179 20.85
Non-controlling interests 1,956 1,299 657 50.58
Net profit 26,182 21,346 4,836 22.66
Percent Million Baht
Operating Performance for 2011
(Units: Million Baht)
2011
Change
2010
In the report for the quarter ending September 30,
2011, according to the Cabinets resolution, the Bank
and subsidiaries disclosed the impact of a reduction
in corporate income tax rate from 30 percent of taxable profit
to 23 percent in 2012 and 20 percent in 2013 to 2014.
On December 21, 2011, the Royal Decree was published
announcing the adoption of the reduction in corporate
income tax rate. The Bank and subsidiaries recognized
the item of deferred tax in the income statement
in the fourth quarter of 2011, in accordance with
International Accounting Standards. However, this is
a one-time impact. Since this is an accounting item
adjustment, it does not involve the actual tax payment
to the Revenue Department. Apparently, the Bank
and subsidiaries business undertakings, profitability
and capital fund have not been affected. The Bank
and subsidiaries will thus benefit from this corporate
income tax rate reduction from 2012 onwards.
018
Annual Report 2011
Management Report
Interest income
Interbank and money market items 7,178 2,363 4,815 203.77
Deposits 288 80 208 260.00
Loans without repurchase agreements 75 16 59 368.75
Repurchase agreements 6,815 2,267 4,548 200.62
Investments 8,414 6,929 1,485 21.43
Trading investments 285 279 6 2.15
Available-for-sale investments 4,259 3,602 657 18.24
Held-to-maturity investments 3,870 3,048 822 26.97
Loans 64,801 49,895 14,906 29.87
Finance leases 3,327 2,892 435 15.04
Others (27) 192 (219) (114.06)
Total interest income 83,693 62,271 21,422 34.40
Total interest expenses 27,202 15,527 11,675 75.19
Total interest income - net 56,491 46,744 9,747 20.85
Non-interest income
Fees and service income 26,072 22,821 3,251 14.25
Fees and service expenses 5,435 4,594 841 18.31
Fees and service income - net 20,637 18,227 2,410 13.22
Gain on trading and foreign exchange
transactions 5,214 4,465 749 16.77
Gain (loss) on financial liabilities designated at
fair value through profit or loss (54) (94) 40 (42.55)
Gain (loss) on investments 806 610 196 32.13
Share of profit from investments using equity
method 13 6 7 116.67
Dividend income 784 661 123 18.61
Earned premium 37,118 29,090 8,028 27.60
Other operating income 1,206 656 550 83.84
Less Underwriting expenses 31,707 25,221 6,486 25.72
Total non-interest income 34,017 28,400 5,617 19.78
Total operating income - net 90,508 75,144 15,364 20.45
Percent Million Baht
Income Structure
(Units: Million Baht)
2011
Change
2010
019
Annual Report 2011
Management Report
Net Interest Income
The Banks consolidated net interest income for 2011
rose over the previous year, due mainly to increased
interest income - as a result of an increase in interest income
from loans, following larger average loan volume and higher
lending rates during the period. Meanwhile, our interest
expense increased over-year, in light of increased interest
expense on deposits that largely came from higher interest
expenses from our offering of special fixed-term deposit
products, rising benchmark interest rates, as well as
an increase in average deposits. In addition, the Bank
continued to maintain sound asset and liability structure,
ensuring its alignment with interest rate trends. As a result,
our net interest margin equaled 3.75 percent, higher than
the 3.48 percent in 2010.
Non-Interest Income
For 2011, the Banks consolidated non-interest income
increased over the previous year. Of note was an increase
in net fees and service income, a Baht 1,542 million
increase in earned premium net of underwriting expenses
from Muang Thai Life Assurance Company Limited (MTL),
equivalent to a 39.86 percent growth over-year. Additionally,
the increase was attributable to gains on trading and foreign
exchange transactions, as well as other operating income
that partly came from gains on sales of non-performing
assets in 2011.
The over-year increase in our net fees and service
income was due primarily to the increase in fees from sales
of products and financial services, such as card businesses
and transfer payments, fees from securities underwriting
representatives, as well as fees from loan-related business
that drew support from larger loan volume. All of which
was a result of our Customer-Centricity strategy, leading to
continual growth in the number of new customers.
Other Operating Expenses
The Banks consolidated other operating expenses
for 2011 rose over the previous year. This was mainly
the result of an increase in personnel expenses, in tandem
with increased salary and number of staff, as well as special
benefits to employees. Consequently, the efficiency ratio
in 2011 equaled 47.53 percent, better than the 50.57 percent
in the previous year.
Impairment Loss on Loans and Debt Securities
For 2011, the Bank and our subsidiaries set aside
higher allowances for impairment loss of loans and debt
securities than the previous year. This was mainly in
response to the changing economic environment.
020
Annual Report 2011
Management Report
2.2 Financial Position Analysis
Assets
As of December 31, 2011, the Banks consolidated
assets totaled Baht 1,722,940 million, increasing by
Baht 176,276 million, or 11.40 percent, over the end of 2010.
The increase was mainly attributable to increases in loans,
net interbank and money market items (asset), as well as
net investments, as follows:
The Banks consolidated loans, at the end of 2011,
totaled Baht 1,210,834 million, growing by Baht 133,853
million over-year, or 12.43 percent, due primarily to increases
in commercial, housing, and working capital loans that aimed
at providing liquidity support to our business customers.
Our consolidated loans were the fourth-largest among
the group of large commercial banks.
Meanwhile, our net non-performing loans
4
(Net NPLs)
ratio to total loans, at the end of 2011, equaled 1.15 percent,
down from 1.43 percent at the end of 2010. Similarly,
the gross NPL ratio to total loans was at 2.45 percent
at the end of 2011, dropping from 2.91 percent at the end
of 2010. Such NPL ratio decreases were due to growth
in total loans and a decrease in bad debts.
Net interbank and money market items (asset),
at the end of 2011, amounted to Baht 111,969 million,
up by Baht 14,409 million, or 14.77 percent, over the end
of 2010. This was as a result of the Banks liquidity
management.
Net investments, at the end of 2011, equaled
Baht 264,143 million, increasing by Baht 13,063 million,
or 5.20 percent, over the end of 2010, mainly due to
investments from MTL.
4
Details of non-performing loans are shown in the Non-Performing Loans
and Debt Restructuring of the Credit Risk Management section.
Assets and Liabilities Structure
Deposits
Debts issued and borrowings
Interbank and money market items (liability)
Life policy reserve
Other liabilities
Loans to customers and accrued interest receivables
Investments - net
Interbank and money market items - net (asset)
Cash
Other assets
Units: Million Baht
Dec. 31, 2011 Dec. 31, 2010
80%
5%
3%
6%
6%
79%
6%
2%
6%
7%
2,000,000
1,600,000
1,200,000
800,000
400,000
0
5%
7%
70%
3%
15%
6%
6%
70%
2%
16%
021
Annual Report 2011
Management Report
Liabilities and Equity
The consolidated liabilities of the Bank, at the end
of 2011, totaled Baht 1,555,974 million, increasing by
Baht 154,797 million, or 11.05 percent, over the end of 2010.
The increase was mainly the result of deposits, as well as
interbank and money market items (liability). Meanwhile,
debts issued and borrowings dropped. Consolidated
liabilities that had changed significantly relative to
the previous year included:
Deposits, at the end of 2011, amounted to
Baht 1,242,229 million, increasing by Baht 142,193 million,
or 12.93 percent, over the end of 2010. This was due
mainly to increased special fixed-term deposits offering
more alternatives for customers. Our consolidated
deposits were the third-largest among the group of large
commercial banks.
Interbank and money market items (liability),
at the end of 2011, equaled Baht 53,340 million, increasing
by Baht 20,276 million, or 61.32 percent, over the end
of 2010. This was mainly the consequence of our asset
and liabilities management, part of which was from
an increase in private repurchase transactions.
Debts issued and borrowings, at the end of 2011,
totaled Baht 70,303 million, down by Baht 18,629 million,
or 20.95 percent, from the end of 2010, largely as a result
of bills of exchange that came to maturity.
At the end of 2011, total equity attributable to equity
holders of the Bank equaled Baht 154,799 million,
increasing by Baht 19,856 million, or 14.71 percent,
over the end of 2010. This increase was the result of
higher net operating income for 2011.
Relationship Between Sources and Uses of Funds
At the end of 2011, the funding structure as shown
in the consolidated financial statement comprised
Baht 1,555,974 million in liabilities and Baht 166,965
million in total equity, resulting in a debt-to-equity
ratio of 9.32. The major source of funds on the liabilities
side was deposits, which equaled Baht 1,242,229 million,
or 72.10 percent of the total. Other sources of
funds included interbank and money market items
as well as debts issued and borrowings, which accounted
for 3.10 percent and 4.08 percent of the total, respectively.
Investments
300,000
250,000
200,000
150,000
100,000
50,000
0
Units: Million Baht
Dec. 31, 2010
13,770
8,201
19,325
209,600
Dec. 31, 2011
Equity Securities Private Enterprise Debt Instruments Foreign Debt Instruments Government and State Enterprise Securities
14,255
9,496
32,991
207,387
022
Annual Report 2011
Management Report
The Bank and subsidiaries major use of funds
was loans. At the end of 2011, loans amounted to
Baht 1,210,834 million, resulting in a loan-to-deposit
ratio of 97.47 percent. Meanwhile, the loan-to-deposit
plus bills of exchange ratio was 94.72 percent.
As for the remaining liquidity, the Bank invested
it in various selections of liquid assets, such as
interbank and money market items, and investments
in securities.
The major sources and uses of funds, as of
the end of 2011, are categorized by contractual maturity
periods shown in the following table:
The Bank and Subsidiaries Major Sources and Uses of Funds
(Units: Million Baht)
1 Year 1,195,278 96.22 998,405 90.76 587,763 48.54 545,588 50.66
> 1 Year to
5 Years 46,951 3.78 101,631 9.24 292,340 24.14 272,145 25.27
> 5 Years - - - - 330,731 27.32 259,248 24.07
Total 1,242,229 100.00 1,100,036 100.00 1,210,834 100.00 1,076,981 100.00
Period
Percent Dec. 31, 2011 Percent Dec. 31, 2010 Percent Dec. 31, 2011 Percent Dec. 31, 2010
The Bank and subsidiaries deposits with remaining
maturities of less than or equal to 1 year at the end of 2011
totaled Baht 1,195,278 million, increasing by Baht 196,873
million, or 19.72 percent, over the Baht 998,405 million
at the end of 2010. Deposits with remaining maturities of
over 1 year at the end of 2011 were Baht 46,951 million,
dropping by Baht 54,680 million, or 53.80 percent,
from the Baht 101,631 million at the end of 2010.
At the end of 2011, the Bank and subsidiaries had loans
with remaining maturities of less than or equal to 1 year
totaling Baht 587,763 million, increasing by Baht 42,175
million, or 7.73 percent, over the Baht 545,588 million
at the end of 2010. Loans with remaining maturities of over
1 year up to 5 years amounted to Baht 292,340 million,
increasing by Baht 20,195 million, or 7.42 percent,
over the Baht 272,145 million at the end of 2010.
In addition, loans with remaining maturities of over 5 years
equaled Baht 330,731 million, increasing by Baht 71,483
million, or 27.57 percent, over the Baht 259,248 million
at the end of 2010.
From the above table, it can be seen that, as of
December 31, 2011, deposits with remaining maturities of
less than or equal to 1 year were larger than loans with
remaining maturities of less than or equal to 1 year. This is
considered normal for commercial banks in Thailand, as they
normally fund their lending or investments in long-term assets
from short-term liabilities. However, since most deposits are
renewed upon maturity, it is considered likely that they will
remain with the Bank longer than their stated contractual term,
thereby helping to support funding for the Banks lending.
In order to enhance flexibility and variety in the Banks
funding structure, as well as provide more alternatives
in investments for the public and the Banks depositors,
the Bank has offered K-B/E Investment products to both
retail and corporate customers, with their outstanding value
totaling Baht 36,072 million as of December 31, 2011.
Deposits Loans
023
Annual Report 2011
Management Report
2.3 KASIKORNBANKs Loans and Deposits
Loans Classified by Business and Product Groups
Regarding the Banks loans classified by business
and product groups, Corporate Business loans increased by
Baht 30,207 million, or 9.40 percent, over the end of 2010,
as a result of loan growth in all products, mainly from
domestic credit loans, mostly seen in long-term credits
of utility, real estate, hotel and restaurant businesses.
In the same direction, SME Business loans increased
by Baht 45,343 million, or 11.52 percent, over the end of
2010, due to increases in all products led by higher domestic
credit loans, seen in long-term loans of agriculture, trading,
and processed agricultural businesses. Our Retail Business
loans, at the end of 2011, also reported healthy growth
of Baht 40,827 million, or 19.15 percent, over the end of
2010, in light of increases in all products, with housing loans
recording the highest growth rate in terms of loan volume,
boosted by our efforts to maintain good relationships
with leading property developer allies, and our unique
marketing campaigns that meet the needs of all customer
segments. Additionally, the increase in housing loans was
supported by our measures to relief flood-affected customers.
Meanwhile, consumer loans recorded the highest growth rate
over the previous year, due to our continued efforts to
offer sales promotional campaigns that effectively meet
the needs of target customers.
Note: * Excluding non-performing loans and other loans, such as those of subsidiary companies and others.
** Revised to reflect regrouped customers.
KASIKORNBANKs Loans Classified by Business and Product Groups*
(Units: Million Baht)
Loans 351,694 439,076 253,991 321,487 393,733 213,164
Domestic credit loans 251,964 399,819 227,282 365,145
Trade finance loans 88,348 39,257 84,518 28,588
BIBF loans 11,382 9,687
Housing loans 184,900 159,751
Credit card loans 42,179 36,719
Consumer loans 26,912 16,694
SME
Business
Retail
Business
Dec. 31, 2011
Corporate
Business
SME
Business
Retail
Business
Corporate
Business
Dec. 31, 2010**
024
Annual Report 2011
Management Report
Deposits Classified by Type of Deposit Accounts
after the continual hike during the first-nine months of 2011.
The Bank continued to pursue our strategy of increasing
transaction volume with other financial institutions to enlarge
our borrowing and lending sources for regular adjustment
of liquidity position with the money market situations.
This has also helped sustain our status of the BOT-appointed
primary dealer.
Meanwhile, the Bank continued to support the BOTs
effort to jointly develop the Bangkok Interbank Offered Rate
(BIBOR) with all primary dealers, by means of tackling the
prevailing problems and obstacles, increasing transaction
volume in the money market, particularly for 3-month tenors,
as well as extending BIBOR-linked loans and derivatives,
all of which has helped promote BIBOR as another reliable
reference rate in the money market.
At the end of 2011, total deposits - comprising deposits
of our Corporate, SME and Retail Business customers - had
increased by Baht 141,631 million, or 12.85 percent,
over the end of 2010. This was mainly attributable to
increases in fixed-term deposits, as the Bank has offered
special deposit products carrying attractive returns in different
periods that meet the varied needs of customers.
2.4 Treasury Operations
In 2011, the Bank maintained our focus on proper
liquidity management, in response to changing economic
circumstances at home and abroad, as well as interest rate
direction in the money market as per the BOTs monetary
policy. As of the end of November 2011, the BOT resolved
to cut the policy rate by 0.25 percent to 3.25 percent
KASIKORNBANKs Deposits*
(Units: Million Baht)
Total Deposits 100.00 1,243,860 1,102,229 141,631 12.85
Current accounts 5.37 66,833 61,698 5,135 8.32
Savings accounts 55.32 688,037 688,650 (613) (0.09)
Fixed-term deposit accounts 39.31 488,990 351,881 137,109 38.96
Percent
of Total
Deposits Percent
Change
Million Baht Dec. 31, 2011 Dec. 31, 2010
Note: * Bank only
Deposits
025
Annual Report 2011
Management Report
In 2011, total interest income, contributed from our
treasury operations (banking book), was Baht 11,297 million,
rising by Baht 4,933 million, or 77.51 percent, from 2010.
This was the consequence of an over-year increase in liquidity
of around Baht 60,000 million, coupled with an upward
interest rate trend during the first three quarters of 2011.
Treasury Operations Income
(Units: Million Baht)
Interest income*
Interbank and money market items** 61.95 6,998 2,289 4,709 205.72
Investments 38.05 4,299 4,075 224 5.50
Total 100.00 11,297 6,364 4,933 77.51
Percent
2011
Change
2010
Million Baht
Income Structure of Treasury Operations
(Banking Book)
Note: * Managerial figures
** Including loans
Note: * KResearch is not included, as the company does not engage in financial business.
Operating Performance of K Companies* and Muang Thai Life Assurance Co., Ltd.
(Units: Million Baht)
KASIKORN FACTORY AND EQUIPMENT Co., Ltd. (KF&E) Outstanding Loans 8,013 3,912
KASIKORN LEASING Co., Ltd. (KLeasing) Outstanding Loans 63,832 53,908
KASIKORN ASSET MANAGEMENT Co., Ltd. (KAsset) Assets under Management (AUM) 741,827 634,834
Market Share (Percent) 24.61 22.02
KASIKORN SECURITIES PCL. (KSecurities) Trading Volume 411,392 429,985
Market Share (Percent) 3.29 3.47
Muang Thai Life Assurance Co., Ltd. (MTL) Earned Premium 37,886 29,649
Market Share (Percent) 11.51 10.01
2010 2011 Performance Measurement
2.5 Operating Performance of K Companies and Muang Thai Life Assurance Co., Ltd.
Percent
of Total
Income
026
Annual Report 2011
Management Report
During 2011, K Companies showed satisfactory
quantitative and qualitative operating performance, attributable
to the earnest cooperation of all departments in KGroup.
Sound performance of KSecurities was witnessed through
continued growth in their revenue and profits by 18.42 percent
and 24.19 percent, respectively, over 2010. For investment
banking business, the company focused on joining hands
with the Bank in regularly introducing financial solutions to
satisfy our customers. Moreover, the company continued
to make progress on opening up new branches, located
in KBank branch areas, for greater service efficiency.
Other securities products have been developed continuously,
in order to meet all customer needs and to prepare us for
the securities business liberalization in 2012, as well as
striving towards our goal in becoming the market leader
within three years.
During 2011, assets under management (AUM) of
KAsset grew by 16.85 percent over-year, significantly above
the market average growth rate of 4.56 percent. The company
also reported their AUM market share of 24.61 percent,
which was the largest market share in mutual, private and
provident funds business, under the synergy with the Bank
for development of products that efficiently meet the needs
of customers, expansion of electronic channels and delivery of
excellent service quality.
KLeasing also reported satisfactory loan growth,
although the automotive manufacturing industry in
Thailand was severely affected by Japans disasters
and massive flooding in Thailand during 2011. Meanwhile,
the company has continued to improve their asset quality,
with a lower-than-expected ratio of NPLs to total loans
of only 1.04 percent. Upon coordination with the Bank,
the company opened up two new branches to serve the wider
group of customers, and offered various sales promotional
campaigns for both retail and SME customers, such as
K-SME Leasing Plus. With such dedication and efforts,
the companys business achievement was applauded
and awarded many marks of recognition, such as the Best
Car Leasing of the Year award for the third consecutive year,
granted by Grand Prix International Co., Ltd., at the Bangkok
International Motor Show.
KF&E reported significant loan growth over-year,
in alignment with the companys loan growth target for
overall 2011. In addition, the company has been working
together with KBank through relationship managers (RM),
with an aspiration to become a market leader in the near
future.
For MTL, their notable development included efficiency
enhancement for bancassurance services, and coordinated
efforts with the Bank to jointly improve insurance policies
to better match customer needs, all of which resulted
in outstanding growth in MTLs earned premium from
bancassurance channel, and their ability to maintain
the first-place rank in bancassurances new business
premium. In response to continued dedication in developing
products and services, the company was also awarded
many commendations, including the First Winner of
the Life Insurance Company with Outstanding Management
award for five consecutive years (2006 - 2010) from the Office
of Insurance Commission; the Superbrands Award for
the fifth consecutive year (2006 - 2010) from Superbrands
Thailand; and the Trusted Brand Awards 2011 (Gold) for
the second consecutive year (2010 - 2011) by Readers
Digest magazine.
2.6 Capital Requirements and Credit Ratings
Capital Funds
As of December 31, 2011, the Bank had capital funds
of Baht 175,246 million, consisting of Baht 122,228 million
in Tier-1 capital, and Baht 53,018 million in Tier-2 capital.
The capital adequacy ratio of the Bank was 13.81 percent,
significantly above the Bank of Thailands minimum
requirement of 8.50 percent. Details of the capital adequacy
ratio of the Bank are shown in the following table:
027
Annual Report 2011
Management Report
Capital Adequacy Ratio*
(Units: Percent)
Maintenance of Ratios
The Bank maintains liquid assets, on average,
of at least 6.00 percent of deposits and some kinds of
borrowing, in compliance with the Bank of Thailands
regulations. As of December 31, 2011, the Bank had cash
in hand, cash at central cash centers, deposits with
the Bank of Thailand and eligible securities, totaling Baht
265,697 million.
Credit Ratings
In 2011, Standard & Poors upgraded the Banks
long-term counterparty credit rating and the Banks
long-term ASEAN regional scale rating to BBB+ and axA+
from BBB and axA, respectively. Meanwhile, the Banks
credit ratings given by Moodys Investors Service and
Fitch Ratings remained unchanged from year-end 2010.
Details are shown in the following table:
Tier-1 Capital Ratio 9.63 9.72 9.18 9.43 9.37
Tier-2 Capital Ratio 4.18 4.18 4.39 4.61 4.59
Capital Adequacy Ratio 13.81 13.90 13.57 14.04 13.96
Dec. 31, 2011 Capital Adequacy Ratio Sep. 30, 2011 Jun. 30, 2011 Mar. 31, 2011 Dec. 31, 2010
Note: * Excluding the net profits of each period, which under Bank of Thailands regulations, net profit in the first period is to be counted as capital after approval by
the Board of Directors as per Banks regulations. Net profit in the second period is also counted as capital after approval of the General Meeting of Shareholders.
However, whenever a net loss occurs, the capital must be immediately reduced accordingly.
Capital Adequacy Ratio
(Including the net profit of each accounting period)
(Units: Percent)
Tier-1 Capital Ratio 10.56 10.27 10.23 10.80 10.24
Tier-2 Capital Ratio 4.17 4.18 4.39 4.62 4.59
Capital Adequacy Ratio 14.73 14.45 14.62 15.42 14.83
Dec. 31, 2011 Capital Adequacy Ratio Sep. 30, 2011 Jun. 30, 2011 Mar. 31, 2011 Dec. 31, 2010
028
Annual Report 2011
Management Report
KASIKORNBANK Credit Ratings
Moodys Investors Service**
Foreign Currency
Outlook Stable Stable
Long-term - Debt n.a.* n.a.*
- Deposit Baa1 Baa1
Short-term - Debt/Deposit P-2 P-2
Subordinated Debt Baa1 Baa1
Bank Financial Strength Rating (BFSR) D+ D+
Outlook for BFSR Stable Stable
Baseline Credit Assessment Baa3 n.a.
Domestic Currency
Outlook Stable Stable
Long-term - Deposit A3 A3
Short-term - Debt/Deposit P-1 P-1
Standard & Poors**
Global Scale Ratings
Outlook Stable Stable
Long-term Counterparty Credit Rating BBB+ BBB
Long-term Certificate of Deposit BBB+ BBB
Short-term Counterparty Credit Rating A-2 A-2
Short-term Certificate of Deposit A-2 A-2
Subordinated Debt (Foreign Currency) BBB BBB-
ASEAN Regional Scale Ratings
Long-term axA+ axA
Short-term axA-1 axA-1
Note: * Moodys Investors Service does not assign ratings to the Banks long-term debt.
** The base levels for investment grade on long-term credit ratings for Moodys Investors Service, Standard & Poors, and Fitch Ratings are Baa3, BBB- and BBB-,
respectively. For short-term credit ratings, the base levels for investment grade as viewed by these three agencies are P-3, A-3, and F3, respectively.
Dec. 31, 2010 Dec. 31, 2011 Credit Ratings Agency
029
Annual Report 2011
Management Report
KASIKORNBANK Credit Ratings
Fitch Ratings**
International Credit Ratings (Foreign Currency)
Outlook Stable Stable
Long-term Issuer Default Rating BBB+ BBB+
Short-term Issuer Default Rating F2 F2
Subordinated Debt BBB BBB
Viability bbb+ n.a.
Individual C C
Support 2 2
Support Rating Floor BBB- BBB-
National Credit Ratings
Outlook Stable Stable
Long-term AA (tha) AA (tha)
Short-term F1+ (tha) F1+ (tha)
Subordinated Debt AA- (tha) AA- (tha)
Note: ** The base levels for investment grade on long-term credit ratings for Moodys Investors Service, Standard & Poors, and Fitch Ratings are Baa3, BBB- and BBB-,
respectively. For short-term credit ratings, the base levels for investment grade as viewed by these three agencies are P-3, A-3, and F3, respectively.
Dec. 31, 2010 Dec. 31, 2011 Credit Ratings Agency
3. Operations of Core Businesses
3.1 Business Overview
KASIKORNBANKGROUP continued to pursue our
Customer-Centricity strategy. This strategic goal
has been achieved through our harmonious efforts
in effective business development among all customer
segments, product domains, as well as major sales
and service channels. In essence:
030
Annual Report 2011
Management Report
3.2 Customer Segments
Multi-Corporate Business
The Bank strived to satisfy the needs of customers
and their trade partners, from upstream to downstream,
with Value Chain Solution and Integrated Cash Management
Solution featuring innovations beyond financial products
under the synergy within KASIKORNBANKGROUP.
During 2011, our service solutions were provided to our target
customers in infrastructure, real estate, transportation,
commerce, automotive and auto parts, petrochemical
and food processing businesses. Aiming at becoming
the main bank for Multi-Corporate Business customers
in many industries and achieving quality growth,
with sustainable customer relationships for future business
opportunities, we have strengthened relationships
with our business allies at the personal and organizational
levels. In addition, the Bank continued to focus on
becoming a knowledge-based organization, while staff
development was further implemented for their greater
capability in offering client-responsive products
and services, specialized advice, as well as appropriate
financial solutions suitable to each customer and the nature
of their business. As alternative or renewable energies were
among our main focus during the year, we were involved
in providing advisory services and financial supports to
more than 20 solar and at least three wind power plant
projects. Moreover, relevant measures were launched
to assist flood-affected customers, including those located
in industrial parks, as well as other involved companies,
staff and industries.
KASIKORNBANKGROUP
Eight Customer
Segments
Four Product
Domains
Sales & Service
Channels
Corporate Business
Domestic Branch
Foreign Exchange Booth
K-Safe Deposit Box Center
SME Business Center
Cheque Point
Overseas Office
THE WISDOM Exclusive Center
THE WISDOM Corner
THE WISDOM K-Safe Deposit Box Center
Large
Corporate
Business
Multi-
Corporate
Business
Operation &
Transaction
Protection &
Information
Saving & Investing Funding & Borrowing
Medium
Business
High Net
Worth
Individual
Affluent
Middle
Income
Small and
Micro
Business
SME Business Retail Business
Mass
K-WePlan Branch
Corporate Business Center
Corporate & SME Service Center
031
Annual Report 2011
Management Report
Large Corporate Business
Amid a number of negative factors, particularly the 2011
flood crisis, affecting our customer businesses directly
and indirectly, KBank offered relief measures including
an unlimited credit line via loans for business recovery,
K-Equipment Leasing and K-Supplier Financing,
by considering the damages and needs of each business.
So doing allowed the Bank to take part in rehabilitating
customers businesses and provided them with complete
assistance, including advisory services for reorganization
and business expansion, acting as a facilitator for acquiring
new markets and alternative material sources, offering
of cash and risk management, as well as expanding
our assistance to cover the staff of our customers.
Also, KBank continuously focused on and provided support
for sustained growth of family businesses by setting up
the KFam Club, a project to provide business management
courses and other beneficial activities to enhance family
business connections in Thailand and establish healthy
business networks in the future.
Medium Business
Realizing that SME businesses have faced a number
of challenges, KBank has implemented the strategy of
Industry Solutions to meet the needs of customers in eight
key industries, including hotel, apartment, auto parts,
processed agricultural products, logistics, international trade,
contractor, as well as electronics and electrical appliance
parts. Our operating procedures and services at branches
and Corporate & SME Service Centers have been upgraded
for faster service delivery, in addition to the launch of our
24/7 Business Assistant teams for entrepreneur customers.
Meanwhile, the Bank introduced two newly developed
products and services, including K-Trade Premier
and SME Super Trade Credit programs that cover
pre- and post-financing support for all international trade
customers in a more timely manner. Under the ME Academy
project, the Bank has equipped our entrepreneur customers
with useful knowledge, while enhancing their business
expansion opportunities through business matching
with important partners, such as TV Direct and 7-Catalog.
Small and Micro Business
Determined to be the Bank for SMEs and to maintain
our largest market share, development has been undertaken
for our more diverse, flexible and integrated financial
products and services to better meet all customer needs,
throughout their business stages. Our notable efforts
included elimination of collateral limits, ensured adequacy
of credit limits and extension of repayment terms, as well as
KFam Club: The club for family business networks in Thailand K-Value Chain Solutions: Comprehensive products for customers along entire value
chains, from upstream to downstream
032
Annual Report 2011
Management Report
delivery of the finest service experience. In 2011, many sales
promotional campaigns were launched for K-SME Credit
customers, such as the SME Win All and SME Get Ready
campaigns. In addition, the Bank has offered assistance
measures to increase liquidity for flood-affected customers.
These measures included extended grace period for
principal payment, P/N renewal without required documents,
as well as loans for business recovery, covering K-SME
Flood Relief, K-Equipment Finance and other credit
facilities that were introduced jointly by the Bank and
specialized financial institutions (SFIs). Our focus was also
on promoting business sustainability for potential Thai SMEs
by equipping them with knowledge via Training Series
for the business owner and successors. Over the past
four years, 15 classes have been organized for SME
customers under these series. In addition, the Bank joined
hands with the Department of Industrial Promotion to
arrange a project to support new entrepreneurs, while
marketing campaigns were arranged with our business allies.
We took part in launching TV shows - SME Tee Tak
and SMEs Flying High with K SME Care - to offer business
know-how and experience to SME entrepreneurs
in all segments.
High Net Worth Individual
Understanding and realizing the diverse and distinct
needs of each customer in this segment, KBank has
adhered to the When Your Wish is More than Wealth
concept in offering our KGroup Private Banking services.
In 2011, KGroup launched the SET 50 Digital Bullish Note,
featuring structured notes to satisfy customers who prefer
to invest in stocks, but need full coverage against potential
losses, with choices of different return rates, maturity terms
and risk appetite levels. KGroup also offered the K SMART
CLN 1 YEAR A fund, investing in credit-linked notes, with
dividend payments depending on credit rating or incidents that
may affect repayment ability of assets. Additionally, as part of
our attempt to facilitate High Net Worth customers, wishing to
diversify their bank deposits amid the reduced deposit
protection limit by the Deposit Protection Agency,
the K Principal Protected Thai Fixed Income fund was
introduced. Apart from these offerings, the Bank has
organized a number of activities in connection with customer
needs in their everyday life, including Dhamma activities with
the aim of soothing natural disaster victims, and seminar
arrangements on the overall economic environment and
investment knowledge, amid volatile market conditions.
SME Tee Tak TV show that has earned high audience rating, especially among
SME proprietors
KGroup held the KGroup Private Banking event for high net worth individual customer
033
Annual Report 2011
Management Report
the Bank for this customer segment included opening of
THE WISDOM corners in Bangkok and other large provinces,
in order to deliver superior financial services to all Affluent
customers.
Middle Income
The Bank has adhered to our strategy of customer-base
expansion for the Middle Income segment, targeting
depositors, investors and credit cardholders, by tailoring
products and services to suit the prevailing market
conditions and the needs of the targeted customers.
Our efforts in accessing those customers included arranging
activities at their population centers and participating
in activities matching their lifestyles. In 2011, the launch
of the Savings for Future Benefit campaign enabled
freelancer and business owner customers - having
limitations in presenting income evidence - to gain better
access to our lending products through the use of
their savings records as an input for loan applications.
Thus, the number of new customers is reported to have
risen continuously. Meanwhile, customers with potential
in the Mass segment were upgraded, through our branch
officers introduction of appropriate products and services
under the database marketing strategy. Sales promotional
campaigns were made via regular mail, email and SMS,
Affluent
Committed to our strategy of increasing the number of
Affluent customers, we have strived to expand our customer
base and upgrade Middle Income customers, business
owners and high-ranking executives of SMEs into the Affluent
segment, through cross-selling and increasing their holdings
of KGroup investment products. In 2011, promotional
campaigns were regularly organized for loan and insurance
products, while the Member Get Members program served
as a tool for KBank branches to attract new customers
through existing customers referrals. With the cooperation
of the Corporate and SME Business Divisions, KGroups
investment advisory managers have been delegated to make
customers acquaintance, as well as participate in initiating
new services and sales promotions. Some of these notable
projects included Money Inflow Boost Up, K-VIP OD
and Exclusive SME Credit, which uniquely catered to
customers business and personal needs, and helped
differentiate us from peers. In addition, THE WISDOM brand
was continually strengthened for this customer segment,
through various advertising media in leading business
newspapers and magazines, as well as THE WISDOM
of Wealth and Lifestyle magazine, which was widely
distributed for increased awareness of customers and their
acknowledgement of our list of privileges. Another effort by
THE WISDOM Wealth and Lifestyle Magazine -
exclusively for Affluent customer segment
C
U
S
T
O
M
E
R
C
E
N
T
R
IC
IT
Y
The St ory of Smart Success ISSUE 020 JULY - SEPTEMBER 2011
K-Personal Loan for Pensioner
034
Annual Report 2011
Management Report
for an increase in product holdings and more frequent
use of our services. For holders of deposits and/or
investments with KBank of more than Baht 2 million,
the Bank has offered them our KBank THE PREMIER
services, with exclusive privileges. Tailor-made marketing
campaigns have been designed specifically to match
this customer segments lifestyles.
Mass
The strategy of acquiring new customers with potential
in the Middle Income segment has remained a priority for
the Bank. Focus has been on university students and those
starting their careers, as well as the development of
responsive products and services for this customer segment.
In 2011, the privileges of K-Debit Card were improved to
better meet the customers lifestyles. In addition, the Bank
launched K-Bank to Post, allowing money transfer from
KBank branches, so their recipients can collect at post offices
across the country. This service helps enhance convenience
for customers, who are fund recipients in remote areas where
there is no bank branch or ATM nearby. The Bank also
developed personal loan products, in terms of a cash card
under the K-Express Cash service, aimed at helping
customers in need of emergency cash. Special features of
this product include a service to credit the initial loan amount
to a KBank deposit account within one business day after
the credit line approval, plus preferential interest rates.
Also, the Bank joined hands with VISA International Co., Ltd.
to provide Mobile Verify by VISA, the worlds first payment
system via mobile phone, allowing customers to shop online
via their mobile phones. Payments for such transactions can
be made by K-Credit Cards, or K-Debit Cards, under the
Verified by VISA service. The aforementioned development
highlighted our leadership in technology and ensured
customers of payment transaction security.
3.3 Product Domains and Sales Channels
3.3.1 Product Domains
To brace for heightened risk of global and domestic
economic uncertainty, the Bank, in 2011, engaged
in introducing and upgrading our responsive products
and services and delivering the finest service experiences to
customers. Along with this effort, sales promotional activities
and knowledge-based support were launched to assist
clients in their decision-making. To this end, our notable
efforts can be classified into four domains, namely Operation
& Transaction, Saving & Investing, Funding & Borrowing,
and Protection & Information. In essence:
K-Express Cash K-Bank to Post - offering money transfers from K-ATMs to any local post office
in Thailand
035
Annual Report 2011
Management Report
Operation & Transaction
Details
New Products Introduction of Smart Package: Aiming to enhance customer convenience in conducting daily
and Services transactions, this service solution was initiated in the form of a transaction package, consisting of
four main features - cash, mobile alert, cheque, and internet services - to respond to the transaction
needs of SME customers, both payers and payees, more completely. Also, this has helped spur
their transactions via the Banks main sales and service channels.
Introduction of Customer Solution Card: This card has been specifically personalized for
medium-sized SME operators, with special privileges provided, thus increasing transaction volume
of this target customer segment.
Introduction of Cash Package 799 service: This package encompasses multiple services to
better facilitate customers financial transactions, allowing cost management effectiveness,
as well as strengthen service loyalty.
Development of K-Bank to Post service: With our effort to expand channels for receiving funds
transfer at all areas across the country, particularly some remote areas out of the reach of
our services, this service enables money transfer from K-ATMs, 24 hours/7 days, and the recipients
can collect money at post offices across the country during office hours. Also, KBank became
the first bank in Thailand to introduce this service, in January 2011.
K-Auto Top Up: Firstly introduced to One-2-Call customers, the service automatically
tops up customers mobile phones, when their airtime value is lower than Baht 50,
or on a monthly basis.
K-Auto Top Up - One-2-Call Automatic refills of prepaid mobile network service Mobile Verified by VISA service, the worlds first
payment system via mobile phones
036
Annual Report 2011
Management Report
Details
Introduction of K-Direct Debit: Without the needs to fill in an application form at KBank branches,
customers can apply for the direct debit service via K-ATM (KBank was the first bank to offer
this service), by entering their member code and pressing the OK button for this service offering
after their bill payment transaction at K-ATM is completed. The supplementary service under
this development includes SMS to notify the customers of insufficient funds, if any, in their account,
allowing customers to make bill payment via other channels in a timely manner.
Product and Service Enhancement of time guarantee service for global funds transfer: The Bank guarantees one-day
Enhancement funds transfer to China, India and Australia. With this service, Thai entrepreneurs will feel more
confident that their recipients abroad will receive funds transfer within same day, thus enhancing
flexibility in their liquidity management, without the need to prepare money for funds transfer
a few days in advance as before.
Enhancement of K-Corporate Mobile Payment service (in the form of push bill service):
Under this service, bill payment statements will be pushed into customers mobile phones,
which not only increases retail customers convenience, but also helps facilitate our entrepreneur
clients by means of increased business potential and flexibility.
Development of K-My Debit Cards: Based on our focus on value proposition in offering unique
designs of debit cards for our target Gen Y and first-job customers, the Bank introduced
a K-Debit Card in the Paul Frank collection, and the Valentines collection (rose-scented debit cards,
with a special design). Also, the Bank launched a new design of GTH is me card, aiming
at satisfying teenagers who love actors/actresses and cartoon characters in the popular movies.
Development of K-Max Family Debit Cards: This card features personal accident coverage for
customers and their loved ones, targeted specifically at our upper Mass to Middle Income customers,
wishing to provide for the health and security of their family members.
K-My Debit Card, with special designs by Paul Frank Limited Edition,
which has been very popular among teen customers
Guaranteed one-day money transfers to China, India and Australia
037
Annual Report 2011
Management Report
Details
Enhancement of card accepting merchant services: The Bank offered a multi-currency card
accepting service to new merchant customers, along with the Certified Dynamic Currency
Conversion (DCC) service that supports the highest number of currencies (up to 31 currencies).
In addition, the Bank has introduced the new EDCs, with GPRS Desktop to meet merchants diverse
needs and conditions, such as merchants having no telephone line or those wishing to save on
their telephone costs. Meanwhile, dual SIM-card EDCs, with a system of comparable stability
with the single SIM-card EDCs, were installed to reduce relevant costs and the Banks expenses.
For flood-affected merchants, the Bank replaced damaged machines with new ones, free of charge.
Adjustment of withdrawal and funds transfer fees across other clearing districts via our electronic
channels, K-MOBILE BANKING and K-Cyber Banking: To comply with the BOTs policy,
fees for these transactions conducted through both electronic channels were reduced to
Baht 15 per transaction, starting June 18, 2011, which is in alignment with the earlier-adjusted
fees charged from similar transactions made via ATMs.
Enhancement of Enhancement of custodial and mutual fund supervisory services: The Bank is the second service
Business Operation provider in the market to expand the custodial service to investment in gold bullion (with the purity
Efficiency of 96.5 percent). Meanwhile, our mutual fund supervisor service was slightly affected by the flooding,
as some mutual fund customers has been invested in property, factories and warehouses
that were damaged by the flood, with estimated accounting losses in these assets value reaching
approximately Baht 2 billion.
Fund Accounting: This complete service solution includes investment fund management,
as well as facilitating back office work, such as preparation of Statements of Financial Position
and updated investment status reports, for customers particularly two insurance companies that
merged with each other with a combined asset value of more than Baht 7 billion.
K-Cyber Banking: Our convenient
online banking servicebanking at
your fingertip
K-Max Family Debit Card cares for you and your beloved ones
038
Annual Report 2011
Management Report
Details
Improvement of registrar services for unit trusts, debentures and bonds: The Bank has placed
emphasis on improvement of the system and operational procedures for increased efficiency
in registrar services. So doing enabled us to better cope with investment volume of KAssets fixed
income funds with specific terms, which was affected only slightly during the flooding, as well as
high investment volume in LTFs and RMFs at year-end.
Participation in project finance and related services: The Bank acts as a facility and security agent for
customers syndicated loan projects in energy, transportation and telecommunication sectors. As a trusted
service provider, it is expected that we will be entrusted by a number of new customers in 2012.
Enhancement of Phone-Based Relationship Managers (RMs): To increase customer satisfaction,
the Bank added a 24-hour/7-day phone-based RM service, enabling customers to contact
our officers at any time, while we also introduced financial service solutions to encourage customers
to use KBank as their main bank.
Sales and Marketing Marketing activities for holders of K-Max Debit Cards, K-My Debit Cards and GTH is me
Promotional Programs Debit Cards: These activities were jointly organized by the Bank and our business allies to provide
these cardholders with numerous benefits, plus online payment channels. This effort helped
encourage customers to apply for our cards and spur their spending through these cards.
Introduction of EDCs together with KBank Smart Pay: This integration offers our customers
privileges of installment payment at a zero-percent interest rate. In order to strengthen brand
awareness for our large-sized merchant customers, their advertisement messages were placed on
the back of sales slips, which consequently helped broaden our large-sized customer base,
particularly petrol stations, automotive dealers, and mobile phone sales agent businesses in 2011.
Coordination with Anti-Money Laundering Office (AMLO): As an e-payment service provider,
the Bank is working together with AMLO to develop the system, allowing us to conduct e-transfer
or e-payment reports in compliance with the established regulations.
K-My Debit - Our popular and trendy
debit card
K Principal Protected Fund for principal protection and high return
039
Annual Report 2011
Management Report
Saving & Investing
Details
New Products Continuous launch of new deposit products: The Bank introduced various types of saving products,
and Services with suitable returns amid the upward interest rate trend and intensified competition, prior to
the gradual decrease in deposit protection limit in August 2011. The new products and campaigns
include the Deposit for Childrens Day, Fixed Deposit Campaigns with Attractive Interest Rates,
Step-up Fixed Deposit, special fixed deposit products, with different deposit periods, Flexible Fixed
Deposit plus Family Protection and Paul Frank K-My Debit Card and Passbook (limited edition)
that effectively attracted a number of Gen Y and Middle Income customers who are of working age.
In addition, the Bank offered 5-month B/E, as an alternative investment product, with high returns
catering for upper Affluent customers. Obviously, the aforementioned products received a warm
welcome from our customers.
New mutual funds: During 2011, the Bank joined hands with KAsset to establish and offer
104 mutual funds, investing in domestic and foreign debt instruments. Our notable mutual fund
offerings included K Principal Protected Thai Fixed Income, an investment alternative for depositors
wanting higher returns under a comparable level of risk appetite; K GOLD ETF, an exchange-traded
fund investing in domestic gold bars and incorporated in Thailand, allowing investors to know
the price in real time, making it different from other gold mutual funds; K-INDIA, a mutual fund
investing in equities and equity-linked securities of foreign countries; and K Gold Linked Complex
Return 1 Year A Fund (KGL1YA), a complex gold fund investing in structured notes.
FX Linked Note: This B/E product, with special conditions linked with foreign exchange rates,
is suitable for corporate customers with some knowledge and understanding of benchmark foreign
exchange currencies and wanting higher returns than deposit rates at a limited risk appetite.
Moreover, the returns that the customers will gain are tied up with their selected foreign currencies.
K Gold ETF (KG659) K India Equity Fund: K-INDIA
040
Annual Report 2011
Management Report
Details
Introduction of K-Smart Note Linked MLR, featuring bills with returns linked with MLR lending rates.
Launch of Dual Currencies Note: This bills product offers returns that are tied up with foreign
exchange rates, which is provided for those who would like to make a short-term investment and
expect foreign currency to depreciate against the Thai Baht, or would like to exchange the Baht
into foreign currencies at reference rates for higher returns than a fixed deposit rate or B/Es.
The investor must have a foreign currency as underlying assets.
Introduction of K-Smart Equity Linked Note: Bills with special conditions linked with the SET50 index
(SET 50 Digital Bullish Note) are suitable for investors with a limited risk appetite, but wishing to
invest in equity instruments.
Enhancement of Enhancement of online investment system: The Bank developed an online system of transactions
Business Operation (purchasing, redemption or switching of unit trusts), investment planning services, related-registration
Efficiency services, setting up investment target and alert service (when the returns on investment meet
the target) and opening new funds, in order to enhance convenience for customers investments.
Other new service systems were also launched, such as an online purchase system of LTFs
and RMFs for tax benefits via K-Credit Cards, and the reporting system showing gains/losses
and mutual fund costs in customers portfolios.
Sales and Marketing Launch of PR media on Deposit Protection Agency (DPA) Act: As the blanket guarantee was
Promotional Programs reduced to not more than Baht 50 million/depositor/financial institution, starting from August 11, 2011,
this program is aimed at providing knowledge on DPA among our customers and the general public,
as well as assuring them of the Banks financial stability and performance.
Long-term equity fund (LTF), Retirement Mutual Fund (RMF) - Attractive
returns
K SME Fixed Rate Loans
041
Annual Report 2011
Management Report
Funding & Borrowing
Details
New Products Introduction of a number of new products for SME entrepreneurs: Our notable products included
and Services K-SME Retail Credit for retailers that have financial limitations and limited access to loan facility;
K-SME Fixed Rate Loan, offering loans with a fixed interest rate for entrepreneurs, thus reducing risks
from higher interest rates during the first half of 2011; and K-SME Combo Credit catering to those
in need of liquidity for their business operations through an O/D line of up to full value of collateral.
Launch of K-SME Tourism Solution: The project is to support small-sized tourism businesses
related to accommodations, restaurants, tour guides/spas, car and boat rental, and souvenirs.
Introduction of K-SME Leasing Plus: Providing for entrepreneurs buying new cars, this loan facility
consists of a credit line from KLeasing and a business credit line from KBank.
K-SME Commercial Real Estate: This loan facility, with the longest installment term of 30 years,
was provided for SME customers in need of a workplace which can be used as their housing as well.
Development of K-Energy Saving Guarantee Program: KBank offers equipment leasing/hire purchase
financing, in response to the governments energy-saving policies.
Development of K-Exclusive SME Credit: Under this developed product, a credit line of up to
150 percent of collaterals (fixed-term deposits) is provided, in order to support short-term working
capital for business proprietors, or directors of juristic entities.
Introduction of K-SME Flood Relief Loan for 2011: KBank offered a relief loan for qualified
SME customers who operated their business in specified flood-hit areas. Credit lines carrying
a four-percent interest rate for the first three years and normal rates on the following years
were provided in accordance with individual customer needs. The loan maturity is seven years
(the total maturity including existing loan after rescheduling must not exceed 10 years).
K-Energy Saving Guarantee Program, offering equipment leasing/financing for
energy efficiency projects
K-SME Leasing Plus - a credit line from KLeasing
and a business credit line from KBank
042
Annual Report 2011
Management Report
Details
Arrangement of many special projects: To meet the needs of all customer segments more effectively,
the Bank introduced the K-Home Loan + Free Auto Loan, and Savings for Future Benefit
campaigns targeting freelancers - having limitations in presenting income evidence - to gain better
access to our personal loans. Meanwhile, KBank is the first bank in Thailand to launch the escrow
agent project, in which the Bank acts as a neutral third party with fiduciary responsibilities on behalf
of home sellers and buyers.
Introduction of new personal loans: During 2011, the Bank launched K-Personal Loan for Pensioners,
featuring a new consumer loan facility provided for government retirees. K-Express Cash for
Payroll was also introduced, featuring working capital facility, with favorable interest rates for
enhanced convenience of loan applicants (as only national ID card is required for the application).
Development of Cash One Hour: This service aims at rapidly responding to the needs of K-Express
Cash customers by allowing them to receive cash within an hour after approval in Money Expos.
Launch of Bangkok Hospital Group-KBank Credit Cards: In addition to the launch of THE WISDOM,
THE PREMIER and Platinum cards which have been well received among customers, KBank
and Bangkok Hospital Group jointly offered multiple privileges of high-quality medical and financial
services that completely meet the needs of health-conscious customers through these co-branded
credit cards. Moreover, other credit cards were launched to match all customer lifestyles, such as
the AirAsia-KBank Credit Cards, suitable for customers who are frequent travelers.
Product and Service Improvement of K-Trade Premier: This product offers unsecured import and export financing,
Enhancement with a three-year credit term, allowing the Bank to promote our position of main credit account,
expand our customer base, as well as maintain the existing customer base, especially for
customers with good credit record, aiming to expand their businesses.
K SME Flood Relief Loan
043
Annual Report 2011
Management Report
Details
Enhancement of Step-Up Program: This equipment leasing program helped lessen our customers
installment payment burden during the first three months. There are also more types of machines
available in this program, to better respond to customer needs and increase our competitiveness.
Funding arrangement: The Bank provided customers with funds in terms of syndicated loans,
bonds, short-term B/Es, as well as financial advisory service. We were also selected to be
the underwriter and guarantor of bonds and the syndicated loan provider for customers engaging
in some major businesses in the sectors of energy and infrastructure, food and beverage, real estate
and construction, construction material and banking businesses to support their operations,
business expansion and loan repayment.
Enhancement of Adjustment of internal process for loan application: The relevant processes were improved for
Business Operation offering faster service, with enhanced efficiency meeting the customer needs, as well as supporting
Efficiency business expansion of customers. In addition, the Bank joined hands with customers to arrange
a financial support plan for one year ahead, allowing both customers and our loan supervisors to
have time for preparation of integrated and excellent service solutions.
Expanded service areas of K-Global Factoring: The relevant processes were improved for faster
service delivery, with expanded service coverage to all target areas.
Expanded service areas for factoring service: This service was expanded to cover all potential
business areas across the country.
Expansion of retail home loan customer base to our business allies: To improve the loan portfolio
quality and increase new loan volume meeting the established goals, KBank, in coordination
with leading property developers, arranged many sales promotional activities, such as
Easy Home Loan, D
3
for D-Condo and Home Loan with Free Shopping Spree and Air Tickets,
K-Home Loan Best for You, as well as Miracle Ground-Breaking Zero-Percent Home Loan
campaign with a zero-percent interest rate for up to 30 years.
SME Super Trade - Export-import credit facilities that meet all needs of proprietors THE WISDOM cards offer a myriad of benefits for KBank customers
044
Annual Report 2011
Management Report
Details
Opening of new K Home Smiles Club: The club is located in the Crystal Design Center on
Praditmanutham Road, (near Ekamai-Ramintra Expressway Road). In addition, KBank is the only
bank in Thailand, to offer comprehensive advisory services related to home building, with innovations
and modern technology.
Customer assistance measures for flood victims: Financial assistance measures included reductions
in lending rates, monthly installment payment, and minimum installment payment, along with
suspension of principal and interest payments. Other assistance measures included a zero-percent
rate for K-Home Loan for Multi Purpose and K-Home Equity for house rehabilitation. The Bank set up
an assistance center and provided discounts and privileges from business allies. A Big Cleaning Day
activity was organized for clean-up of K-Home Loan customers houses.
Sales and Marketing Arrangement of marketing campaigns to spur application for and spending through K-Credit Cards:
Promotional Programs The Bank - in cooperation with our allies in major businesses, engaged in shopping, dining, traveling,
healthcare services and house renovation - offered our K-Credit Cardholders exclusive privileges
and promotional activities to spur application for and spending through cards. Festival-related
marketing activities were provided for the entire year.
Arrangement of marketing campaigns for personal loans: The relevant programs included
K-Express Cash and Apply for Home Loan, Get Free K-Express Cash Card. Other promotional
activities were also staged, via various media to increase awareness and the use of K-Express Cash
among our customers.
K Home Smiles Club: Comprehensive home-related advisory services Post-flood home renovation with K-Credit card
045
Annual Report 2011
Management Report
Protection & Information
Details
New Products Introduction of new products: Focusing on insurance coverage and returns in response to the diverse
and Services needs of customers, the Bank launched various types of insurance products, such as Salary Man
Life Insurance Package (Pro Saving 1525), a savings plan for fixed income earners plus life and
critical illness coverage with a monthly premium payment starting at a low rate; Pro Saving 1/10,
a life insurance scheme with a single premium payment catering to Affluent customers and those
with higher income in need of life insurance with low risk and assured return; and the Private Pet
Care insurance product, which offers medical expense coverage for customers pets in case of
accidents and illnesses including third party coverage, plus check-ups for insured pets, free of charge.
Introduction of Perfect Business Smart Plus: This business loan protection product provides
additional benefits - including maturity benefits of 15 percent of premium, with greater coverage
in case of death from accident. We also launched an insurance product with an endowment policy
feature, including Perfect Business Plus (an insurance scheme with seven-year premium payment
for 15-year coverage) at the end of the year, when customers normally seek tax benefits.
Product and Service Extension of insurable age for Pro Saving 614 and Pro Life 90/5, to one month - 70 years old
Enhancement and for critical illness protection (Multiple CI) to 18 - 65 years old. So doing helped broaden savings
alternatives for senior customers in need of low-risk savings with constant returns, while alleviating
their medical expense burdens, amid the trend of an aging society in Thailand.
Launch of Total Solutions, aiming to provide our customers with funding sources plus risk protection.
In cooperation with KAsset, we also introduced a mutual fund investing in RMB-denominated
deposits which received an overwhelming response from investors.
Enhancement of LI products: We have extended the sum-assured coverage for Letter of Indemnity
(LI) up to 75 percent of LI limit, from 50 previously, to better meet the customer demand for
business risk protection.
Pro Saving 1525: Salary Man Life Insurance Package Enjoy every trip with K-Credit Card
046
Annual Report 2011
Management Report
Details
Enhancement of Raising awareness of hedging transaction benefits, via monthly seminars to keep our customers
Business Operation abreast of beneficial information, especially that related to domestic and international economies,
Efficiency movement in financial markets, as well as customer businesses, to ensure more efficient
decision-making for hedging transactions. Seminars were also staged in provincial areas,
including Chiang Mai and Songkhla, which were well received by participating customers.
Public relations media for insurance products catering to corporate customers: This media
included TV and print media to develop public awareness of benefits of our insurance products as
a tool for business risk protection.
Development of life insurance premium payment system, via VEDC for endowment and pension
policy. Under this system, the Smart Pay service was also offered to customers, which features
installment payment of premium at zero-percent interest rate for three months.
Arrangement of training courses for relationship and team managers: These training courses focused
on understanding of customer attitude towards our products, enhanced efficiency in sales techniques,
as well as effective sales force management. A Products Box - a portable tool containing key details
of insurance products - has been arranged and distributed to these managers for their enhanced
convenience and effectiveness in product offering to customers.
3.3.2 Sales and Service Channels
Realizing that sales and service channels are one of
the crucial elements connecting the products and services
of KGroup with each target customer segment, as well as
delivering a satisfactory experience in the use of services to
all customers, KGroup has strived to enhance our service
potential and efficiency. Moreover, customer accessibility to
our main sales and service channels has been promoted,
in order to respond to the needs of customers more
effectively and conveniently both at present and in the future.
Our notable services offered through each main channel
in 2011 are summarized as follows:
KBank branches - Everywhere nationwide to ensure customer convenience
047
Annual Report 2011
Management Report
Branches and Financial Service Offices/Centers
Major Sales
and Service Channels
2011 2010
Branch Network 816 805 New branch opening at all target areas: This will provide greater convenience
to our customers located at our main potential areas and our business allies
who are located near our customers. We have also expanded space for
branches with high transaction volumes or relocated branches to areas with
impressive business expansion to respond to the diverse needs of target
customers. Focus has also been on branch designs to create unique looks for
different locations, such as airport WISDOM Lounge window display employed
at the Central Lat Phrao branch, or the local-themed design used at
the Cheom Panya Trang branch in Trang province.
Launch of new services: In cooperation with True Corporation Plc., we introduced
the Ultra Wi-Fi Experience@KBank project which allows customers to use
wireless Internet service for communications and information search while
conducting transactions at branches.
Foreign Exchange 99 100 Convenience enhancement for the use of our services, via arrangements of
Booths foreign exchange booths and mobile exchange booths at major tourist spots
in provincial areas.
Corporate & SME 62 61 Service enhancement at Corporate & SME Service Centers: After International
Service Centers Trade Service offices were renamed as Corporate & SME Service Center,
Cheque Points 24 23 the Bank has expanded the scope of services to cover both domestic
Corporate Business 8 6 and international trade transactions. These services include Domestic Business
Centers Services offering K-Cash Management Solutions for the highest efficiency in cash
SME Business Centers* 95 95 management of our customers; International Trade Services for greater
convenience, confidence, and business flexibility of our customers with a more
timely service delivery and for the highest benefits of our clients; and BIZ Clinic
to provide advisory and consulting services with regard to business planning,
plus domestic and international trade transactions, free of charge.
Key Implementations in 2011
Number of Locations
Note: * Excluding Corporate & SME Service Centers
048
Annual Report 2011
Management Report
Electronic Banking
Services
2011 2010
Electronic Banking Services
K-ATM 7,366 7,471 K-ATM service enhancement: To improve our service efficiency and differentiate
ourselves from peers, KBank installed more ATMs with the innovative
Personalize Your Financial Experience with K-My ATM in our potential areas,
putting the total number to 3,500 at the end of 2011, from 2,200 at the end
of 2010. We also replaced conventional ATMs and relocated the machines to
more appropriate areas for enhanced customer convenience. Thus, the number
of our K-ATMs decreased from the previous year.
Public relations to prevent ATM crime/fraud: A warning via pop-up message on
ATM screens and advisory sticker have been provided on ATM terminals to
raise awareness of such fraudulent acts targeting our customers, especially
when conducting money transfer transactions at ATMs.
Facilitating financial transactions during the widespread flood: The Bank arranged
K-Mobile ATMs and installed ATMs on elevated platforms to provide
24-hour/7-day services at 22 submerged spots, as part of our efforts to alleviate
hardship for our flood-affected customers.
K-CDM 1,067 1,014 New K-CDM installation: To differentiate the Bank from peers, new K-CDMs
(Cash Deposit have been installed to offer one-stop services, wherein both deposit
Machines) and withdrawal can be conducted within the same machine, to better cope with
the trend of increased service used by customers.
Development of K-CDM for interbank Online Retail Funds Transfer (ORFT):
This service enhancement enables customers to use our CDM ORFT services
24 hour/7 days, for their greater convenience.
Enhancement of cost management efficiency: Activities to minimize global
warming were arranged under the CDM Short Slip project, including reduction
in the size of CDM receipts.
Key Implementations in 2011
Number of Units
K Electronic Banking for customer convenience K-MOBILE BANKING: Banking
service on mobile phone
049
Annual Report 2011
Management Report
Internet Banking Key Implementations in 2011
K-Cyber Banking Introduction of new service: K-Cyber Service - combining three KGroup online services,
including K-Cyber Banking, K-Cyber Trade and K-Cyber Invest - was introduced to help enhance
customer convenience by means of a single User ID and Password when logging in to the service.
System development: The K-Cyber Banking webpage has been modernized and upgraded to meet
the KBank website standard. For instance, displayed information and service explanations
have been simplified to be more concise and easy to use, whereas new public relations media
have been introduced, so that customers can learn about the use of K-Cyber Banking by themselves.
Also, the Bank delivered E-Newsletters for recommending customers to conduct financial transactions
via K-Cyber Banking during the flood situation.
Arrangement of sales promotions: This activity aimed at stimulating application and payment,
or mobile top-up transactions during the Money Expos, or other E-Commerce events nationwide.
K-MOBILE BANKING Development and public relations program arrangements for new mobile top-up services:
SMS A new service under the Speed Top-Up system was introduced to customers for facilitating
self-service instant airtime refill, through the mobile networks of KBank business allies.
Launch of sales promotional activities: The program K-MOBILE BANKING SMS - Term Mee Hey (Good
News for Mobile Top-up) has been launched to spur application volume and the use of the service,
whereas the K-Salary Benefit 2011 campaign has been introduced to offer a refund credited to the
accounts of customers making transactions via K-MOBILE BANKING as per the established conditions.
K-MOBILE BANKING Continued service enhancement: An alternative channel to apply for our Due Alert service
ATM SIM has been added via K-Contact Center, while the interbank funds transfer system has been updated
after the merger of some commercial banks.
System efficiency enhancement: In addition to a replacement of database server, the Bank has
added a new participating merchant, including the Expressway Authority of Thailand (EXAT),
the operator of the Easy Pass service.
K-MOBILE BANKING Continued service enhancement, for compatibility with Android and Blackberry OS6-based mobile phones
PLUS and iPads, thus enabling customers to make financial transactions 24 hours/7 days. Moreover, menus
have been added for self-operation and setting-up of email addresses for receiving transaction results.
Service improvements: A new application channel via mobile phones has been added.
Also, the database server for this service has been replaced with a new one, while new merchants,
such as the Expressway Authority of Thailand (EXAT), the operator of the Easy Pass service,
were added to the system of K-MOBILE BANKING PLUS. In addition, the K-MOBILE BANKING PLUS
screen for smartphones was developed for friendlier use, with a screen personalization feature.
Arrangement of sales promotion campaigns: KBank joined hands with our business allies to offer
an e-coupon, a privilege for customers using services of participating merchants, as well as organizing
other sales promotional projects to spur customer applications and financial transactions in each area.
Electronic Banking
Services
2011 2010
K-PUM 917 906 Increase and relocation of K-PUM: The Bank added to the number of K-PUMs
(Passbook Update and relocated some of them to a more suitable area, in order to better facilitate
Machines) the use of the service.
Key Implementations in 2011
Number of Units
050
Annual Report 2011
Management Report
K-Payment Gateway Key Implementations in 2011
K-Payment Gateway Development of payment system via mobile phones: KBank and VISA International Co., Ltd.,
jointly launched the Mobile Verified by VISA service for enhanced customer convenience
and security for online shopping via mobile phones. With this service, customers can make payments
with K-Credit Cards, or K-Debit Cards, based on VISA service with One-Time Password (OTP).
This service is also the first of its kind in the world.
Service system improvements: To be in line with additional requirements of VISA and/or MasterCard,
the template of DCC (Dynamic Currency Conversion) has been changed to show fee rates
more clearly.
Arrangement of marketing campaigns: The Bank joined hands with our airline business
allies to offer a zero-percent installment payment for the purchase of air tickets via the website.
Continued provision of K-Payment Gateway Clinic: This is to provide online merchants with monthly
advisory services about the online credit card payment system. In addition, information on
e-commerce and e-banking has also been presented in seminars arranged for executives
and business proprietors, for a broadened customer base.
K-Payment Gateway - Enabling online credit card payments K-Direct Debit - Bill payment via K-ATM
051
Annual Report 2011
Management Report
K-Contact Center Key Implementations in 2011
K-Contact Center Introduction of new services under Personal Banking, 24 hours, daily by K-Contact Center:
Without having to visit the Bank, customers can use our 11 services that can be divided into
two groups, i.e., 1) services that can be completed by K-Contact Center, including K-Econ Analysis
application by our Affluent customers or above, and our direct debit services for making funds
transfer and bill payments; and 2) services that are performed through K-Contact Center,
including opening of mutual funds accounts, the purchase of KAsset LTF and RMF investment units,
opening of deposit account and purchase of foreign currencies and travel insurance.
Introduction of KGroup Private Banking Contact Center, specially catering for High Net Worth
Individual customers. Through this channel, many special services have been made available,
including limousine, Meet & Assist service at airports, as well as medical and personal concierge
assistance services.
Expanded Service Scope for KAsset customers: Our customers can now request tax-related
certificates and process password resetting for the K-Cyber Invest service, as well as receive
information of highly popular funds, such as K-Oil or K-Gold.
K-Contact Center
KAsset Gold Limited Edition - Gold coin symbolizing never-ending wealth
from KGroup
K-Contact Center - Assisting you 24/7
052
Annual Report 2011
Management Report
4. Operations of Support Groups
To efficiently pursue our Customer-Centricity strategy,
the Bank continued to upgrade all necessary support
functions in the dimensions of organizational culture
enhancement and clarification of desirable behaviors
as per KGroup Core Values through human resource
management. IT management and implementation of
the K-Transformation project also helped facilitate this
strategy. In 2011, notable developments included:
Human Resource Management for the Highest Business
Efficiency of KASIKORNBANKGROUP
During 2011, the Bank continued to strengthen
K-Culture, promote desirable behaviors as per KGroup
Core Values, develop human resources and arrange programs
to build positive emotional attachment to the organization.
These efforts aimed to promote advancement for employees
and business sustainability for the Bank. For human resource
management, the number of employees has been increased
in response to our business expansion, particularly in China.
Employee potential has been enhanced as follows:
Recruitment and Allocation of Staff: To support
business expansion in Thailand and China, the Bank
organized K-Career Day activities, the Staff Referral
program, as well as the China Project Career Day program,
in a bid to meet the Banks staff recruitment and allocation
plans. With a large number of candidates, the Bank was
able to recruit qualified staff, as planned.
Staff Potential Development: Employees with
consistently high performance and potential, plus satisfactory
behaviors in line with K-Culture and KGroup Core Values,
have been selected to participate in the Leadership
Development program. Under this process, the Bank
has provided individual development plans and monitored
the performances of such employees. As a result,
a number of these employees have been appointed as
KBank leaders and executives. In addition, a succession plan
was formulated to develop personnel with potential to fill
vacancies, for which required knowledge and skills for
each job position were specified. Meanwhile, assessment
and learning programs in the form of class training
and E-Learning courses were organized for employees,
in addition to training programs on some specific knowledge
and skills needed for the examination for a salesperson
license issued by government agencies.
Staff Retention: Realizing the significance of employee
feedback, the Bank arranged for an employee survey.
The survey results will be used to improve employee
satisfaction and to create engagement with the organization.
The needs and potential of staff in each generation have been
managed to promote higher efficiency, happiness and a sense
of pride in being a part of the KGroup team. KBank also
provided welfare benefits as per the Labor Protection Law
and the current situation. Our notable efforts included
the provision of temporary accommodations, home renovation
loans, as well as high-pressure water washers and cleaning
tools, for flood-affected employees. Meanwhile, the Bank
joined hands with other organizations to support many
CSR activities, allowing employees to help and strengthen
relationships among those within the Bank and in society
053
Annual Report 2011
Management Report
at large. Such activities included those organized by
the KASIKORN Foundation, the eyeglasses donation project,
environmental projects in coordination with Kuiburi National
Park, and projects to provide natural food sources for
elephants and artificial coral reefs for fish, with overwhelming
participation by our employees.
Efforts to Support Business Expansion in China:
The China Business Division and China Strategy Development
Unit - Special Project were established to map out business
expansion strategies that suit each customer segment,
current competition, as well as an operational system
and procedures that are in strict compliance with related
laws and regulations issued by Thai and Chinese officials.
Meanwhile, the organizational structure and positions/
functional titles of the China Business and Overseas
Office Management Department and Shenzhen Branch
were reorganized, in order to enhance the efficiency of
strategic formulation and human resource management
for business operations in China. The structure of relevant
departments has been improved to better facilitate customer
base expansion in China and promote income for the Bank,
part of which was achieved through closer relationships
with Chinese firms investing in Thailand.
IT Management
IT Security Policy and Infrastructure
Aside from the development of data security and service
systems of relevant units during 2011, the Bank implemented
various measures to cope with the impacts of the massive
flooding, ensuring uninterrupted business operations
and IT system continuity to support customers service use.
Our efforts included data center protection and enhancement
of the remote working system as per the Banks standards
on security control, thus enabling employees responsible
for some key transactions to continue their operations
during adverse circumstances.
IT Outsourcing
In 2011, revisions were made to the IT outsourcing
contracts, concerning the areas of application maintenance,
plus application development and enhancement, to ensure
clearer working scopes for better service quality and flexibility,
at a more reasonable price. During the flooding situation,
the Bank closely coordinated with IT outsourcing vendors
to brace for any disruptive event as per our established
plans. These plans involved preparation of Critical Skeleton
staff to ensure uninterrupted operations of our critical services,
as well as businesscontinuity management, in order to meet
all customer needs with smooth operations, thus allowing
us to effectively deliver high-quality products and excellent
service to our customers.
K-Transformation
The K-Transformation program has been progressing
as per KGroups long-term strategy of Customer Centricity,
particularly in the areas of business management
and other important process development. Meanwhile,
the new sales and service system has created faster
customer responsiveness and a consistent customer
experience across channels.
054
Annual Report 2011
Management Report
Throughout 2011, major progress was seen
in the Multi-Channels Sales & Service (MSS) project.
The new branch infrastructure platform rollout
was completed. Having been deployed to all Bangkok
branches during 2011, the new sales and service solution
will be gradually put in place at all branches nationwide
by early 2012. Moreover, the newly finished MSS
integrated with Know Our Customer (KOC) capabilities
has increased the effectiveness of campaign execution
through the branch platform, thus leading to creation
and development of new products, cross-selling
and up-selling, better campaign response rates,
as well as higher product holding and sales
amount/transaction volume per customer.
Regarding the IT Capital (ITC) program, the new
core banking system development has reported
ongoing progress. The Bank is now in the process
of system testing to ensure quality and higher security
of business operations. As per the Banks plan,
the new core banking system will be launched
in 2013, with full functionalities to be completed
by 2014. With all of these efforts, the Banks
business goals will be reached more efficiently
and effectively, through our expanded ability to respond
to the needs of customers and differentiate our products
and services, thus resulting in higher income than
that of our rivals.
5. KASIKORNBANKs Investments in
Subsidiary and Associated Companies
Subsidiary and Associated Companies
Definitions of subsidiary and associated companies are
in alignment with those specified in accounting standards,
wherein the Bank discloses such details in the Notes to
the Financial Statements.
Investment Policy
The Banks investment policy can be summarized
as follows:
Strategic Investments
The Bank invests in companies for strategic benefit.
The Bank and these companies collaborate on the review
of business strategies and synergies, through the sharing
of various resources, equipment, tools and channels,
in order to efficiently meet the needs of customers,
with minimal operational redundancies.
Outsourcing Investments
The Bank invests in companies that support
the Banks operations. These are companies providing
services that are not the core business of the Bank,
and that would face inflexibility if they were to remain
a part of the Bank. Bank executives are appointed as
directors of these companies to oversee their management
and operating policies, with one director having control
over the firms operations. This helps ensure standardized
service quality, as well as maximum efficiency and benefits
for the Bank.
055
Annual Report 2011
Management Report
1. Overall Risk Management
KASIKORNBANKs risk management has been
carried out with an aim of supporting our business growth
and sustainable profitability, as well as maximizing
shareholders and investors returns. To ensure risk
management effectiveness, the Bank adheres to risk
management strategies that are in line with best practices.
The Bank has engaged in a consolidated risk
management framework which emphasizes not only
the management of major risk types, including credit, market,
liquidity, operational, strategic and other risk management,
but also the accuracy and completeness of risk management
and capital adequacy disclosure.
Key Developments to Strengthen Risk Management
Having realized the importance of effective and timely
risk management in response to a changing business
environment, KASIKORNBANK has continuously enhanced
policies, tools and processes to manage various types of risk.
Notable developments in 2011 can be summarized as follows:
Assessment of possible loss and capital adequacy
under stressed situations: This assessment was carried out
by integrating various types of risks. The assessment
results are used for effective and timely portfolio management
and business decisions, while contingency plans have been
developed to ensure viable capability in the event of stress.
For instance, a liquidity contingency plan was developed
for sudden deposit outflow.
Efficiency enhancement for credit processes: Our notable
improvements were seen in the credit underwriting process,
of which criteria was designated and improved to better suit
customers risks and returns through statistical testing.
An improved credit risk management tool that prioritizes
debt-collection to achieve greater efficiency in the debt
* Details of various risk management and other related information, in accordance
with Pillar 3 requirements of the Bank of Thailand and disclosure principles,
are shown in the Information Disclosure under the Basel II Pillar 3 Principle
report posted on the Banks website.
collection and recovery process is another example
of the Banks enhanced credit process.
Emphasis on management of liquidity risk at
an acceptable level: So doing helped ensure sufficient liquidity
under normal and stressed situations. Along with this,
the Bank has enhanced the balance of our liquidity
management cost, by fostering close communication between
liquidity managers and business units, conducting an in-depth
analysis of cash flow transactions through the use of models
and statistical tools, as well as developing a system for risk
monitoring and an effective early warning system. In addition,
the Bank has arranged a managerial plan to ensure that
our liquidity management suits each problem at different
degrees of severity.
Enhancement of market risk management efficiency:
In order to achieve a higher level of efficiency, we have
undertaken the development of advanced tools and
measurements, which consider market behavior during
extreme event, to be used as an early warning system.
In addition, close attention has been paid to foreign exchange
rate movements, due to concerns over the European
sovereign debt crisis, which may increase volatility in
movements of the U.S. Dollar and other major currencies.
Enhancement of operational risk management structure:
To achieve higher efficiency and effectiveness in our operational
risk management, the Bank established the Operational
Risk Sub-Committee comprising high-ranking executives
from various divisions to be responsible for supervising
relevant parties. So doing helped ensure that they perform
their duties, in accordance with the established operational
risk management guidelines under close monitoring.
Enhancement of risk model governance: This endeavor
is to ensure risk models completeness, transparency,
and credibility, while helping to ascertain that the existing risk
models or those to be adopted in the future will be accurate
and function in accordance with the set objectives. Risk model
governance policy and process have been comprehensively
established to include risk model development, validation,
approval, application and maintenance.
RISK MANAGEMENT AND RISK FACTORS*
056
Annual Report 2011
Management Report
KASIKORNBANK Risk Management amid Great Flooding
during 2011
The massive flooding in 2011 affected the Banks
and our customers business operations. In order to
prepare for and mitigate any adverse impacts, the Bank
has continued to implement Business Continuity Management
(BCM) to ensure uninterrupted business operation
and services provided to customers during the flooding.
Moreover, the Business Continuity Plans (BCP) was also
continually developed through a working team that was
responsible for outlining necessary strategies and operational
directions, as well as setting aside appropriate resources
and budgets for related units.
For customers directly and indirectly affected by
flooding situation, the Bank has managed our credit risks,
through stress tests and the survey of flooding impacts
on each customers, as well as launches of post-flooding
assistance measures, particularly in terms of grace period,
repayment period extension and interest rate reduction.
In addition, the Bank has offered financial support - both
commercial and retail loans - to affected customers for
their business and asset rehabilitation, while we have
continued to monitor and assess risk levels of these
participated customers closely, so as to ensure the sound
credit quality of our overall portfolio.
2. Risk Management
Although credit risk is deemed as the key risk,
the Banks risk management aims to develop all types of
risk management, including credit, market, liquidity,
operational, strategic, and other risks, as follows:
Credit Risk Management
Credit risk refers to the risk that a counterparty or
borrower may default on contractual obligations or agreements.
Such a default may be caused by the counterpartys inability
to pay because of financial difficulties, or intention not to
abide by the agreements, resulting in a loss to the Bank.
The Bank places emphasis on organizing a proper
credit risk management structure, covering policies
that are in line with our strategies and acceptable
risk appetites, check-and-balance organizational structure,
and effective and efficient credit procedures and system,
under the supervision of the Risk Management Committee,
and the Credit Policy and Risk Management Subcommittee.
Credit Risk Management Process
The Bank has established the whole credit risk
management process and procedure, from beginning to end.
The process and procedure has been developed to
appropriately reflect the prevailing risk for enhanced
efficiency in customer responsiveness in a prudent manner.
Steps under credit risk management process and procedure
are as follows:
Portfolio
Management
Underwriting &
Approval
Monitoring
Collection &
Recovery
To continually monitor
and oversee credit quality
of customers on
a case-by-case basis
and at the portfolio level
To collect and recover
debts in a swift and efficient
manner to minimize
potential losses
To design portfolio target
setting and diversification
in various dimensions
to meet the Banks
desired risk appetite
and concentration
To develop credit
underwriting process
and supporting tools,
appropriate for associated
risks of each specific
customer group
057
Annual Report 2011
Management Report
Portfolio Management Process
Focusing on active portfolio management, the Bank
has defined loan targets consistent with the Banks business
goals. To this end, audit and monitoring have been
conducted regularly to meet the Banks desired risk appetite
and concentration. Portfolio quality and return have also
been monitored on a regular basis.
In addition, the Bank has conducted stress tests
for setting appropriate risk management guidelines to cope
with expected impacts on the Banks portfolio, to ensure
sustainable growth of the portfolio.
Credit Underwriting and Approval Process
The Banks credit management is based on up-to-date
transparent and standardized information. The credit
underwriting process and system has been designed to fit
customers unique needs in different segments. For example,
for large-scale corporate customers with complex financial
needs and medium business clients, relationship managers
with a solid understanding of corporate financial needs
and risks are assigned to conduct analyses and to propose
loan facility structure, credit products and services appropriate
for customers, as well as setting prices according to their risk
ratings determined by our quantitative and qualitative tools.
Relationship managers are also responsible for preparing
credit risk reports submitted for approval to underwriters
under relevant delegated authorization based on their total
credit exposure. These relationship managers are required
to monitor the status of their supervised customers on
a regular basis.
A similar approval process and structure has been employed
for institutional clients with transactions in financial markets.
In the underwriting and approval processes of retail lending,
which includes housing loans, credit card services, plus other
personal loans, the Bank utilizes a credit scoring system
based on the Banks customer credit history. Emphasis has
been placed on verification of personal data and assessment
of income-liability consistency for each case. A customer
credit history-based model has also been utilized for effective
customer risk assessment which results in concise and swift
underwriting and approval processes, thus meeting customer
needs and achieving their satisfaction.
The Bank continuously places emphasis on efficiency
enhancement of credit underwriting process with our strict
adherence to risk control within the specified risk appetite.
Post-Credit Approval Operations
In achieving standardized and efficient credit operations,
the Bank has centralized all necessary functions for post-credit
approval operations, including contract documents, legal
contract-related operations, collateral agreement preparation,
credit-line establishment, credit-related document storage,
and credit data support. Meanwhile, the credit quality monitoring
process has been upgraded, focusing on customer credit use
behavior, their business performance, compliance with credit
contracts, as well as monitoring of debt servicing ability.
Debt Quality Monitoring Process
The debt collection process for large business
customers will begin immediately after the detection of
any negative signals in their respective businesses,
which may affect their debt servicing ability or lead to
defaults on debt payments. The Banks Corporate Portfolio
Monitoring Unit (CPMU) has been assigned to assess debt
quality to ensure close and regular portfolio monitoring.
For medium business and retail customers, collection scoring
has been adopted to achieve the fastest and most efficient
debt monitoring process. Debt quality monitoring of all
customer segments has been regularly conducted before
being reported to the Management on a monthly basis.
Debt Recovery Process
The debt recovery process will start as soon as defaults
on debt payments, both of corporate and individual accounts,
have occurred. Relevant guidelines, methods or tools
adopted - aimed at helping customers to resume their debt
servicing ability in order to minimize the impact on the Banks
lending portfolio, while also maximizing benefits for both the
borrowers and the Bank - must be in compliance with the Bank
of Thailands regulations. Upon the completion of debt
restructuring, debt quality monitoring will be regularly conducted
for further reporting to the Management every month.
058
Annual Report 2011
Management Report
Asset Quality Review
The Bank considers the review and evaluation of asset
quality a necessary process for improvement in credit
management standards to achieve the business goals of
the KASIKORNBANK FINANCIAL CONGLOMERATE. This is
the responsibility of the Risk Asset Review Department,
having been assigned to review the quality of the Banks credit
policy and processes, from credit write-up, to underwriting,
contract preparation, and monitoring of credit quality, which will
then be contributed as information for credit risk management.
Credit Risk Position
Outstanding loans
As of December 31, 2011, the Banks consolidated
outstanding loans stood at Baht 1,210,834 million,
increasing by Baht 133,853 million, or 12.43 percent,
compared to Baht 1,076,981 million at the end of 2010.
As of December 31, 2011, 56.91 percent of the Banks
outstanding loans to customers were loans exceeding Baht
20 million. Credit extended to the 20 largest borrowers,
excluding Phethai Asset Management Company Limited
and the K Companies, accounted for Baht 57,901 million,
or 4.82 percent of the Banks total loan portfolio, which is
a small ratio. Classified by customers and terms, juristic
persons accounted for Baht 706,098 million, or 58.78 percent,
of outstanding loans; while sole proprietorship and individual
customer credit accounted for the remaining 41.22 percent.
In terms of maturity, credit with maturities of less than
or equal to 1 year accounted for 48.35 percent of the Banks
total loans.
The Banks Consolidated Lending Portfolio - Profile
43.09%
43.03%
58.78%
48.35%
59.11%
50.54%
Business entities
Less than Baht 20 million
Less than or equal to 1 year
56.91%
56.97%
41.22%
51.65%
40.89%
49.46%
Individual
Over Baht 20 million
Over 1 year
As of Dec. 31, 2011
As of Dec. 31, 2010
As of Dec. 31, 2011
As of Dec. 31, 2010
As of Dec. 31, 2011
As of Dec. 31, 2010
Credit Amount
Type of Customer
Credit Maturity
0% 20% 40% 60% 80% 100%
059
Annual Report 2011
Management Report
As of Dec. 31, 2011
Agricultural & Mining
Utilities & Services
Manufacturing & Commerce
Housing Loans
Real Estate & Construction
Others
The Banks Consolidated Lending Portfolio
As of Dec. 31, 2011
As of Dec. 31, 2010
54.26%
2.51%
11.42%
15.48%
10.69%
5.65%
2.46%
11.63%
16.03%
6.21%
51.23%
12.44%
Consolidated Loans
Classified by Type of Business
and Loan Classification
Percent of Consolidated Loans
Classified by Type of Business
and Loan Classification
Manufacturing
& Commerce
Agricultural
& Mining
Utilities
& Services
Others Housing
Loans
Real Estate
& Construction
Real Estate
& Construction
Manufacturing
& Commerce
Housing Loans Others Agricultural
& Mining
Utilities
& Services
Unit: Million Baht
11.63%
6 21%%
4%
11.42%
9%
5 65%%
Oth Others ers Hou Housin singg Man anufa ufactu cturin ringg
Sub-Standard Special Mention
Doubtful and Loss
Normal
Doubtful
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
100%
80%
60%
40%
20%
0
Rea Real E l Esta state te Man Manufa ufactu cturin ringg Hou Housin sing L g Loan oans Oth Others ers Ag Agric ricult ultura urall Uti Utilit lities ies
060
Annual Report 2011
Management Report
Of the Banks consolidated lending portfolio, 95.80
percent was classified as Normal loans. Classified by type
of business, Manufacturing & Commerce accounted for
51.23 percent of total consolidated lending, which was
the highest ratio. Of this figure, 92.25 percent was classified
as Normal loans.
Non-Performing Loans and Debt Restructuring
Non-Performing Loans
As of December 31, 2011, the Banks consolidated NPLs
stood at Baht 31,736 million, equal to 2.45 percent of total
outstanding credit, including that of financial institutions.
For Bank-only NPLs, the amount totaled Baht 29,868 million,
accounting for 2.31 percent of total outstanding credit, including
that of financial institutions, which decreased from the end
of 2010. These NPL figures are shown in the table below:
The Banks consolidated NPLs 31,736 33,175
Percent of total outstanding credit, including that of financial institutions 2.45 2.91
The Bank-only NPLs 29,868 31,053
Percent of total outstanding credit, including that of financial institutions 2.31 2.73
Dec. 31, 2010 Dec. 31, 2011 Year Ending
Non-Performing Loans
(Units: Million Baht)
Net Non-Performing Loans
As of December 31, 2011, the Banks consolidated net
NPLs stood at Baht 14,698 million, equal to 1.15 percent of
total outstanding credit, including that of financial institutions.
For the Bank-only net NPLs, the amount totaled Baht 13,675
million, accounting for 1.07 percent of total outstanding credit,
including that of financial institutions, which decreased from the
end of 2010. The net NPL figures are shown in the table below:
The Banks consolidated net NPLs 14,698 16,022
Percent of total outstanding credit, including that of financial institutions 1.15 1.43
The Bank-only net NPLs 13,675 14,806
Percent of total outstanding credit, including that of financial institutions 1.07 1.32
Dec. 31, 2010 Dec. 31, 2011 Year Ending
Net Non-Performing Loans
(Units: Million Baht)
Debt Restructuring
In 2011, the Banks consolidated pre-written off,
restructured debts totaled Baht 49,151 million, increasing by
Baht 2,162 million when compared to 2010. Losses from debt
restructuring stood at Baht 3,574 million, or 7.27 percent
of total restructured debts, which was equivalent to
an increase of Baht 984 million compared to Baht 2,590
million in 2010, or 2.09 percent of total restructured debts.
061
Annual Report 2011
Management Report
Non-Performing Loans of Asset Management Company,
and Foreclosed Properties
Non-Performing Loans of Phethai Asset Management
Company Limited
Phethai Asset Management Company Limited
As of December 31, 2011, Phethai AMC had
resolved and/or restructured NPLs amounting to
Baht 72,968 million, or 98.59 percent of the total initial
unpaid principal balance, with an expected recovery rate
of 48.00 percent.
The details of NPL resolution and/or restructuring over
the past four quarters are shown in the table below:
Loans Resolved/Restructured at Phethai Asset Management Company Limited
(Units: Million Baht)
Thai Asset Management Corporation
The Bank has transferred the sub-quality debts of
borrowers, who all had characteristics matching those
in the Emergency Decree on the Thai Asset Management
Corporation (B.E. 2544) and the Asset Transfer Agreement,
to Thai Asset Management Corporation (TAMC).
In exchange for the transferred assets, TAMC issued
the Bank a ten-year, non-transferable, callable note,
guaranteed by the Financial Institutions Development Fund
(FIDF). The notes yields include an annual coupon, reset
quarterly, at the weighted average of deposit rates of
five major Thai commercial banks, paid for by a one-year,
extendable, non-transferable, FIDF-guaranteed note.
Despite the asset transfer to TAMC, the Bank remains
exposed to a proportion of risk in our share of TAMCs
potential losses. According to the Emergency Decree
on the Thai Asset Management Corporation (B.E. 2544)
and the Asset Transfer Agreement, at the end of the fifth
and tenth years dating from July 1, 2001, TAMC and the Bank
would share gains and losses arising from the resolution
of the Banks transferred assets.
Apparently, June 30, 2011, was marked as the tenth-year
completion. A gross book value of the total transferred
assets, calculated until the end of December 2011, equaled
Baht 14,882 million. These transferred assets were priced
at Baht 9,747 million, and the Bank has already received
the same amount of notes paid by FIDF. At present,
liquidation processes has been undertaken by the Liquidation
Committee, which must be completed within the twelfth year
since the effective date of the Emergency Decree on
the Thai Asset Management Corporation (B.E. 2544).
As of December 31, 2011, according to primary
information as suggested by TAMC, the Bank had
approximately Baht 107 million in gains arising from
these sub-quality debt account management at the end of
the tenth year. However, final revision of this figure
shall be made by TAMC, after the remaining assets are
completely managed.
Foreclosed Properties
As of December 31, 2011, the Banks consolidated
foreclosed properties had a book value of Baht 15,103 million,
accounting for 0.88 percent of total assets.
Phethai Asset Management Company Limited
Cumulative loans resolved/restructured 72,968 72,931 72,807 72,790 72,750
Percent of the total initial unpaid principal balance 98.59 98.54 98.37 98.35 98.29
Dec. 31, 2011 Year Ending Sep. 30, 2011 Jun. 30, 2011 Mar. 31, 2011 Dec. 31, 2010
062
Annual Report 2011
Management Report
As of December 31, 2011, consolidated allowances for
impairment of foreclosed properties stood at Baht 1,679
million, equivalent to 11.12 percent of the cost value of
those foreclosed properties, which is believed to be sufficient
to cover holding, maintenance and disposal expenses,
as well as losses on the liquidation of foreclosed properties.
Allowance for Doubtful Accounts and Allowance for
Impairment of Assets
As of December 31, 2011, the Banks consolidated
allowance for doubtful accounts and revaluation allowance for
debt restructuring totaled Baht 40,343 million. This amount
was equivalent to 149.92 percent of the level required by
the Bank of Thailand.
Market Risk Management
Market risk is risk incurred from changes in interest
rates, exchange rates, securities prices, commodity prices,
and credit derivatives. These changes affect the Banks present
and future income or financial assets and liabilities values.
KASIKORNBANK has consistently developed
fundamental and necessary processes with an aim of proper
and timely management of market risks from transactions
related to derivative products and new financial instruments.
The Bank has set product management processes for both
existing and new financial products, covering the objectives
and procedures in transaction executions, as well as related
market risk factors. Analyses and impact assessment of
potential risks have been conducted, while risk evaluation
and controls have also been put in place.
In 2011, the financial market encountered high volatility
amid numerous risk factors both domestically and abroad,
resulting in the Bahts movements being dictated by
the sovereign debt crisis in Europe and economic and political
problems in the U.S., leading to its credit rating downgrade.
In addition, Thailands worst-ever flooding in the second half
of 2011 was responsible for a slowdown in the domestic
economy, prompting the BOT to cut their policy rates.
These factors significantly affected movements
and directions of money and capital markets.
The Bank has continued to develop market risk
management tools for enhanced efficiency of our risk
assessments and analyses in a more complete array
of perspectives, in order to cope with market volatility.
In 2011, the Bank utilized the Value-at-Risk tool to measure
and monitor market risk for loan syndication. Amid high
volatility in the money and capital markets that may
significantly affect business operations of counterparties,
especially financial institutions in Europe, the Bank decided
to place greater importance on monitoring the risk position of
those financial institutions closely. The Bank also established
a new decision-making and management process to cope
with any negative signals about the financial position of
those counterparties to ensure the effectiveness and timely
implementation of our risk management.
The Bank has realized the importance of performance
measurement and compensation schemes of business units.
We have, thus, set a policy for fair-value appraisal of financial
instruments and derivative contracts for trading-book
activities. The policy has been implemented as a key
mechanism to maintain the balance of risk management,
performance measurement, and compensation schemes
for business units involved with trading book activities.
With the new policy, the fair-value assessment of financial
instruments and derivative products has been conducted
completely, precisely, and trustworthily. This includes gradual
revenue recognition for illiquid products, and valuation
adjustment of financial instruments and derivative products
based on various types of risk (such as counterparty risk
and risk from large position holding). The Bank adopted
the fair value option in structured notes valuation. So doing
has not only allowed booking of structured notes to better
reflect their current prices, but has also fortified the Banks
statement of income against volatility, with improved
appropriateness of the Banks value.
063
Annual Report 2011
Management Report
Developmentsofnoteformarketriskmanagement
during2011,aswellasrelatedinformationcategorized
bytradingandbankingbookactivities,areshown
asfollows:
MarketRiskinTradingBookActivities
KASIKORNBANKiscurrentlyexposedtothreemain
typesofriskintradingbookactivities,includinginterestrate
risk,foreignexchangerisk,andequityrisk.AstheBankhas
chosennottoretainanypositiondealingwithcommodity
pricesandcreditderivatives,theyhavebeenmanaged
underaback-to-backpolicy.Inaddition,theBankexposes
ourselvestoequityrisksonlyinordertoservetheequity
underwritingbusiness.TheBankmeasures,controls,
andmaintainsrelatedmarketrisksatacceptablelevels,
underthesupervisionandcontroloftheEnterpriseRisk
ManagementDivision,aswellastheRiskManagement
Committee.
In2011,theVaRforone-dayholdingperiod,99-percent
confidenceleveloftradingbook,wasBaht50.84million
onaverage,meaningthatthedailypotentiallossoftrading
businessislessthanBaht50.84millionon99daysoutof
100businessdays.
MarketRiskinBankingBookActivities
KASIKORNBANKisexposedtorisksfrominterestrates
andcapitalmarketsecuritiesoftransactionsinbanking
bookactivities,asfollows:
Interest Rate Risk in Banking Book Activities
In2011,domesticandinternationalfactors,particularly
theEuropeanpublicdebtcrisisandeconomicimpactsof
thefloodingsituationathome,hadasignificantimpacton
domesticinterestratemovements.However,theeffecton
theBanksinterestrateriskprofilewasminimal,astheBank
hasadjustedourStatementofFinancialPositionstructureto
beconsistentwithinterestraterisk,andalsowithinaspecified
riskappetite,asapreemptivemeasureagainstpotentialloss
fromsignificantchangesininterestrates.Amidapossible
downwardinterestratetrendtoassisteconomicgrowth
andpost-floodrecoveryin2012,theBankwillre-adjust
ourStatementofFinancialPositionstructuretobetter
accommodatefutureinterestratetrends,withconsideration
placedonapossiblechangeinnetincomeandunderlying
economicvalue,underaspecifiedriskappetite.
Inaddition,theBankhascloselymonitoredinterest
ratemovementsandbehaviorofourcustomers,ensuring
P&LDistribution-TradingPortfolio BacktestingResult-TradingPortfolio
F
r
e
q
u
e
n
c
y
Loss Profit
064
Annual Report 2011
Management Report
maximum accuracy of information used as input for modeling
of our interest rate risk management.
The Bank has monitored interest rate risk in banking
book activities regularly (on a monthly basis), including
raising the frequency of risk position monitoring if
there is any significant change in the structure of assets
and liabilities.
In addition, the Bank has prepared a report on interest rate
risk gap to monitor interest rate risk and assess net
interest income sensitivity over the next 12 months,
based on an assumption of a 1.00-percent change
in interest rate of all types of assets and liabilities at their
different re-pricing periods. The results of interest rate
risk assessment are as follows:
THB (372)
Foreign Currencies 277
Total Effect of Interest Rate Change (95)
+100 bps
The Effect of Changing Interest Rate on Net Interest Income
(Units: Million Baht)
For the Period Ending
Dec. 31, 2011
Equity Risk in the Banking Book
The Bank currently has no policy of extending
our equity investments, and continues to reduce the size
of these investments that are not directly related to our core
businesses. In this endeavor, data analysis and assessment
of the prevailing situation have been conducted to ensure
maximum benefit to the Bank.
Liquidity Risk Management
Liquidity risk is defined as the risk caused by the Banks
inability to meet obligations when they come due - because
of an inability to convert assets into cash, or to obtain
sufficient funds to meet cash needs at appropriate costs
within a limited time period - which may then result
in a loss to the Bank.
The main objective of liquidity risk management is
to ensure that our liquidity level sufficiently facilitates
business undertakings under appropriate operating costs.
The Bank has established a liquidity risk management
system that is efficient, flexible and adaptable to the current
market conditions, with a proactive and proper asset
and liability structure, as well as liquidity risk control
consistent with the Banks risk appetite and appropriate
operating costs.
In the first half of 2011, manufacturing activities at home
showed a gradual recovery, following subsiding impacts of
the devastating earthquake and tsunami in Japan,
whereas the Thai export sector and domestic spending
continued to maintain growth momentum, thus supporting
the BOTs policy rate hikes to keep price stability in check
and curb inflationary pressure. Nevertheless, global economic
uncertainty - caused by the European public debt crisis
and the U.S. - has resulted in increased volatility in
the money and capital markets.
In the latter half of 2011, volatile money and capital
markets remained prevalent globally, following the lingering
global economic risks, as well as cooling economic
momentum at home that was dampened significantly
065
Annual Report 2011
Management Report
by the massive flooding in Thailand during the final
quarter of 2011. This flooding not only largely impacted
the manufacturing sector, but also impeded the countrys
exports, which consequently led the BOT to cut their policy
rate. As downside risks to growth seem to outweigh
inflationary risks, it is believed that a policy rate hike is
unlikely to occur, at least in the near term.
The aforementioned situation indirectly heightened
consequential risk in line with growing operational risk.
However, the Bank adopted a Business Continuity Plan
(BCP) to alleviate the corresponding effects, or other factors
that could disrupt the Banks key operations and systems,
thus allowing the Bank to fulfill its obligations. The BCP
contains key operational procedures, including a contingency
plan to cope with a liquidity crisis caused by substantial
deposit outflows (bank run) and other factors. Under the BCP,
the Bank arranged facilities, necessary documents,
technologies, personnel, communication channels/processes
and services needed for operations to ensure the continuity of
our liquidity management system should any unexpected and
severe incident occurs. The Bank has strictly followed
the BCP procedures during the period of heightened risk.
The Bank has assessed and analyzed liquidity
risk continuously to ensure adequate liquidity for
business operations during normal and crisis situations.
In 2011, the Bank conducted additional stress tests for
the events of both market-wide liquidity crisis and combination
liquidity crisis, aside from our regular stress tests for
a Bank-specific liquidity crisis. In addition, in light of
the phasing out of deposit protection during 2011 - 2012
that may have a wider impact on liquidity in the commercial
banking system, the Bank has made analyses and
assessments of possible impacts in various scenarios,
ranging from base to worst cases, wherein the obtained
results have been used for mapping out necessary
operational plans and strategies.
In addition, the Bank has continued to focus on
reviewing and further refining our liquidity risk management
procedures, so as to be in alignment with world-class
standard practices, as well as our business growth
directions. In 2011, the Bank developed a new tool
to measure and monitor foreign-currency liquidity risk,
aside from our existing tool to measure and monitor
overall liquidity risk. In terms of liquidity risk management,
the Bank has regularly reviewed and improved our
management process in line with changing economic
conditions and our business performance. We have also
reviewed the structure of our funding sources to suit
the changing market conditions and liquidity directions
in the commercial banking system, so as to brace for
global economic conditions and rapid change in asset
prices. In addition, the Bank has continued to monitor,
analyze and manage foreign-currency liquidity risk, along
with procuring short- and medium-term funds regularly,
to ensure that our liquidity is adequate for both current
and future requirements. We have considered strategies to
maintain a proper minimum level of foreign-currency liquid
assets. One of those strategies is to bolster the volume of
foreign-currency liquidity via deposits, which are considered
a high quality liquidity source, to brace for heightened liquidity
risk stemming from volatility in the global economy.
The Bank has closely monitored major factors that
may impact liquidity and interest rate risks in the future,
as follows:
The global and Thai economies in the short-
and long-term periods.
Timeframe and directions of the BOTs policy rate
adjustments.
Direct and indirect foreign capital inflows, influenced by
the overall confidence towards domestic consumption
and investment.
066
Annual Report 2011
Management Report
Intensified competition in savings and investment
products of financial institutions, which could impact
the liquidity of the Thai commercial banking system.
Potentially rising trend of credit demand, in accordance
with the Thai economic recovery, which may put additional
pressure on the liquidity of the Thai commercial banking
system.
Operational Risk Management
Operational risk refers to the risk of direct or indirect
losses in bank earnings and capital funds, resulting from
failure or inadequate processes, personnel, operating
and IT systems, or external events. Having realized
the importance of operational risk management, the Bank
has always placed a great emphasis on effective operational
risk management, and has continually improved our risk
management framework. The objective of this framework is to
implement systematic operational risk management practices
with a single standard across the entire KASIKORNBANK
FINANCIAL CONGLOMERATE, with proper risk assessment
and prevention.
The Banks operational risk management has been
implemented, through systematic and effective risk identification,
assessment, management, and monitoring processes.
All units of the Bank are required to continuously report their
operational risk exposures, designed controls, and risk
prevention initiatives. Meanwhile, many modern risk
management tools - such as key risk indicators, risk event
database and other IT systems - have been employed,
in order to enhance the effectiveness for risk monitoring
and prevention, as well as managing risks in a timely
manner before damage occurs to the Bank and customers.
Meanwhile, the Bank has strengthened cooperation
between the operational risk management team and Internal
Audit Department, in order to increase the efficiency
and effectiveness of risk management and internal control
process for relevant units through sharing important
information and arranging workshops between those relevant
parties. This project has contributed to enhanced efficiency of
risk management and internal audit procedures, while being
accountable as a key component in risk management
evaluation procedures - which not only leads to continuous
improvements in operational risk management, but also
enables the Bank to cope with rapid changes more effectively,
under the foundation of our desired corporate culture.
The Bank has continued to put an emphasis on enhanced
efficiency and operating cost reduction. To this end, guidelines
for operational risk management have been applied with
the Lean and Six Sigma concepts to create balance between
the control of risks within the acceptable risk appetite,
rising costs and effectiveness of operational procedures.
These efforts help ensure that work procedures have been
continually developed in alignment with enhanced business
competitiveness and effective operational risk management.
Business and support units within various business divisions
of the Bank have jointly implemented this project.
In 2011, the Bank focused on enhancement of directions
and organizational structure for operational risk management.
An Operational Risk Sub-Committee was set up to supervise
the operational risk management of the KASIKORNBANK
FINANCIAL CONGLOMERATE to ensure that it is
in alignment with the established framework, and to monitor
closely the progress of key risk management. Additionally,
the Sub-Committee manages and controls key operational
risks of the Bank through the Corporate Level Initiative project,
emphasizing on major operational risk factors, such as
business continuity management (BCM). This BCM includes
management of risk from IT system interruption, preparation
for external events, e.g., natural disasters, and management
of risk from fraud that is a key risk within key products of
financial institutions, such as credit cards, ATM cards,
cheques and internet services. Factors to be considered
consist of appropriate management structure, adequate
resources and processes, and suitable management tools,
for the purpose of attaining customer satisfaction towards
the Banks products and services.
067
Annual Report 2011
Management Report
The Bank also enhanced operational risk tracking process
via the use of the Operational Risk Management Dashboard,
which indicates an effectiveness of operational risk
management of each product, as concerns effectiveness of
risk identification and self-assessment, implementation of
the established risk prevention initiatives, and risk level
monitoring via risk indicators and operational loss events.
Such a report has been aimed at presenting to senior executives
the overview and directions of risk management as crucial
information for efficient decision-making and maintaining
compliance with the Bank of Thailands regulations,
as well as other relevant laws and international standards.
Strategic Risk Management
Strategic risk is incurred from formulation of strategies
and business plans, as well as inappropriate implementation of
such strategies and work plans, or actions inconsistent with
internal factors and external environments, which will affect
earnings, capital funds, or sustainable business undertakings
of the KASIKORNBANK FINANCIAL CONGLOMERATE.
Strategic risk management of KGroup is under
the supervision of the Board of Directors and Management
Committee. Meanwhile, the Corporate Strategy Department
is responsible for strategic plan formulation and revision,
as well as monitoring of KGroups performance.
Also, the department has to present KGroup strategic
directions to the Management Committee, consisting of
executives of related divisions who will oversee and determine
appropriateness and feasibility of each strategic issue.
Finally, the approved strategic plan and budget arranged by
the Financial Planning Department will be presented to
the Board of Directors for approval.
Throughout 2011, KGroup has tracked and evaluated
actual performance as compared with business and budget
plans by means of monthly segment monitoring meetings,
Balanced Scorecard and multi-level performance assessments.
Evaluation results were analyzed vis-a-vis the business goals,
in order to identify relevant causes and, thus, seek possible
resolutions, prior to close monitoring of corrective actions.
3. Capital Management
As equity capital is of significant value to business
operation of financial institutions, effective capital
management must therefore be ascribed the highest
priority to achieve financial strength and sustainable
credibility.
Placing great emphasis on capital management,
the Banks capital management framework is consistent
with international practices, as well as being in accordance
with Basel II requirements which have been implemented
since December 31, 2008. Three applicable pillars under
Basel II comprise minimum capital requirements (Pillar 1),
supervisory review (Pillar 2) and market discipline (Pillar 3).
The Risk Management Committee supervises overall
risk management to ensure that the Banks risk level is
maintained within the acceptable risk appetite. Additionally,
in 2011, the Bank established the Capital Management
Sub-Committee to oversee capital adequacy, as well as
the Banks capital planning.
Following the announcement made by the Basel
Committee on Banking Supervision (BCBS) on the Basel III
framework, which will be implemented in Thailand in
the near future, the Banks taskforce for Basel preparation
has prepared for our compliance through discussion
with the BOT. Additionally, future capital adequacy
under the Basel III framework has been assessed to
ensure that there is no impact on the Banks capital
and business undertakings once the BOT revises
the capital requirement criteria. The taskforce for
Basel preparation has regularly monitored and reported
progress on Basel III implementation, both domestically
and internationally, to senior executives for timely planning
and management.
Capital Management
As of December 31, 2011, total capital amounted
to Baht 175,246 million, consisting of Tier-1 capital
of Baht 122,228 million, and Tier-2 capital of Baht
53,018 million.
068
Annual Report 2011
Management Report
The difference between the Banks minimum capital
requirement under the Basel II Accord, totaling Baht 107,889
million, and the current available capital of Baht 175,246
million, indicates Baht 67,357 million of capital above
the minimum requirement. This level of capital beyond
regulatory requirements is adequate for future business growth,
under both normal and stressed conditions, and reflects
our capability to maximize returns to shareholders.
Tier-1 Capital
Baht 122,228 million
Capital Structure
As of Dec. 31, 2011
Baht
175,246
million
Basel II Minimum Capital Requirement
As of Dec. 31, 2011
Baht
107,889
million
Market Risk
Baht 2,060 million (1.91%)
Operational Risk
Baht 8,938 million (8.28%)
The minimum capital required for all risk types
under Basel II amounted to Baht 107,889 million,
equivalent to the risk-weighted assets value of
Baht 1,269,282 million. Credit risk constitutes the principal
risk of the Bank, or 89.81 percent of total minimum capital
requirement.
Tier-2 Capital
Baht 53,018 million
Credit Risk
Baht 96,891 million (89.81%)
069
Annual Report 2011
Management Report
At 13.81 percent Capital Adequacy Ratio (CAR)
and 9.63 percent Tier-1 Capital Ratio, exceeding the Bank of
Thailands minimum requirement of 8.50 percent, the Banks
capital is considered to be within the Banks effective
capital management framework. Should the net profits for
the second period of the year be counted as capital, wherein
the Bank of Thailand allows such inclusion after the approval
of the Banks General Meeting of Shareholders, the Banks
capital adequacy ratio would be 14.73 percent, with the Tier-1
capital ratio reaching 10.56 percent.
Performance Measurement using Risk-Adjusted Return
on Capital (RAROC) and Economic Profit (EP)
In 2011, KASIKORNBANK FINANCIAL CONGLOMERATE
has continued to implement the Value-Based Management
(VBM) framework, which is a management practice
aiming for the highest value creation for our shareholders,
in accordance with our business strategies and goals.
In achieving this endeavor, the Risk-Adjusted Return on
Capital (RAROC) and Economic Profit (EP) - showing net
profit after adjusting for both the risk charge and the cost
of capital - have been adopted as key measurements.
Moreover, we have developed guidelines of
performance measurements, consistent with various
management aspects, including business targeting,
and strategic and business planning that takes into
consideration complete risk-adjusted returns, risk-based
pricing and efficient resource management. In addition,
the Bank has measured our business performance
and analyzed value-based profits, based on the
Customer-Centricity concept, in order to strengthen our
competitive advantage in the dimensions of customer
segments, product domains, as well as linkage between
customer segments and product domains. Meanwhile, related
business units have adopted the value-based analyses for
their business viability assessment of investment projects,
allowing them to effectively adjust their business strategies
in alignment with the fast-changing market environment.
Capital Adequacy
As of Dec. 31, 2011
Units: Billion Baht
Minimum Capital
Requirement
Total Capital Base
Credit Risk Operational Risk Market Risk
Minimum BOT
Capital above
108
175
0 20 40 60 80 100 120 140 160 180 200
11
FINANCIAL REPORTS
071 Report of the Board of Directors Responsibilities for Financial Reports
072 Report of the Audit Committee
074 Audit Report of Certied Public Accountant
076 Financial Statements
084 Notes to Financial Statements
The Board of Directors of KASIKORNBANK PCL places
significance on roles and responsibilities in supervising
corporate governance activities in compliance with
the Statement of Corporate Governance Principles. The Board
is held accountable for the Consolidated and Bank-only
Financial Statements, including financial data as shown in the
Annual Report. The financial statements for the accounting year
ended December 31, 2011 has been prepared in accordance
with the accounting standards and the generally accepted
accounting principles in Thailand. The Bank has chosen
proper accounting policies and strictly adhered to them
on the consistency basis. The financial statements have
also been prepared with careful consideration to detail,
using best estimations only where necessary. All material
information has been sufficiently disclosed in the Notes to
Financial Statements, and thus reflecting the actual financial
position, operating results of the Bank and subsidiaries
over the past year, which is transparent and useful to
all shareholders and investors. The financial statements
have been audited by qualified, independent authorized
auditors whose unqualified opinions are stated therein.
The Board has also adopted and maintained an appropriate
and effective risk management, internal control and compliance,
so that the Bank can be reasonably assured that the financial
records are accurate, complete and adequate to protect
the Banks assets. These controls also serve as preventive
measures against any significant operational risk of the Bank.
The Board of Directors has appointed an Audit Committee
entirely comprising independent directors responsible for
the quality of Banks financial reporting, the internal control
systems as well as complete and appropriate disclosure of
connected transactions and other processes. The opinion of
the Audit Committee with regard to these matters appears
in the Report of the Audit Committee in this Annual Report.
The Board is of the view that the Bank has maintained
an effective internal control system at an adequate and
appropriate level of protection, which can assure the credibility
of Consolidated and Bank-only Financial Statements as of
December 31, 2011.
REPORT OF THE BOARD OF DIRECTORS RESPONSIBILITIES FOR FINANCIAL REPORTS
(Mr. Banthoon Lamsam)
Chief Executive Officer
& President
(Mr. Banyong Lamsam)
Chairman
071
Annual Report 2011
Financial Report
072
Annual Report 2011
Financial Report
On September 29, 2011, the Board of Directors
resolved to appoint Audit Committee Chairperson and
a new member of the Audit Committee due to the passing of
M.R. Sarisdiguna Kitiyakara, an independent director and
the Chairman of the Audit Committee. As a result, the Audit
Committee of KASIKORNBANK comprises of Professor
Khunying Suchada Kiranandana as Chairperson, Mr. Somchai
Bulsook, Professor Dr. Yongyuth Yuthavong and Ms. Elizabeth
Sam as members. All four are independent directors.
During 2011, twelve meetings were held and proceedings
from all meetings were reported to the Board of Directors.
The Audit Committee performed activities according to its duties
and responsibilities, which can be summarized as follows:
On a quarterly basis, reviewed the accuracy and reliability
of the Banks and the Banks consolidated financial statements
in relation to the accounting information given and in terms
of the compliance with accounting standards, regulatory
requirements and internal controls in the preparation of the said
statements. In addition, the Audit Committee held regular
meetings with the external auditors, without the presence of
KBanks responsible management, to discuss any points of
concern arising from their reviews or audits. No notification of
fraud or violation of law was reported to the Audit Committee
during the reviews or audits by the external auditors.
Reviews of the risk management practice were
performed with the Enterprise Risk Management Division
executives on a quarterly basis, covering all aspects of
known risks, in particular credit, market and liquidity risks.
Due attention was paid to risk factors arising from changes
in the operating environment, globally and domestically;
and how the Bank manages these risk to prevent significant
impact on the operations of KASIKORNBANKGROUP.
Reviews of the effectiveness and adequacy of
the internal controls were conducted by considering audit
results and significant audit findings presented by internal
auditors and regularly followed up on results of corrective
actions taken. The Audit Committee also acknowledged
material operational loss events, their causes and preventive
guidelines against future recurrence.
For internal audit activities, the Audit Committee approved
annual audit plan which are performed on risk based approach.
The Audit Committee places significance on independence
and staff sufficiency of internal auditors. Key deliverables from
internal auditors were tracked and monitored against the audit
plan with additional recommendations from the Audit Committee
made when necessary to ensure compliance with the required
standards and to enhance greater efficiency.
Considerations of the results of compliance supervision
and reviews undertaken by the Compliance Department,
according to the annual compliance program approved by
the Audit Committee, to ascertain that KASIKORNBANKGROUPs
operations were in compliance with relevant laws and regulations
such as Financial Institutions Business Law, Securities
and Exchange Law, Anti-Money Laundering Law, as well as
regulations of the Bank of Thailand and Stock Exchange of
Thailand, etc. In addition, the Audit Committee acknowledged
reports on regulatory changes and emphasized actions be
promptly and appropriately taken, where required.
REPORT OF THE AUDIT COMMITTEE
073
Annual Report 2011
Financial Report
Overseeing loan reviews performed by the Risk
Asset Review Department to ensure efficiency and compliance
with Bank of Thailand requirements. The Audit Committee
considered the annual review plan prior to the Board of
Directors approval. Loan quality from the review results
and findings accompanied with corresponding actions to
ensure effectiveness of the bank credit processes were
discussed during meeting with executives of Risk Asset
Review Department.
Acknowledged complaints toward staffs, operating
procedures and/or practices that were deemed to involve
impropriety or unfairness and reviewed the handling of
complaints to ensure fairness and transparency.
For the matter of potential conflict of interest transactions,
the Audit Committee placed importance on following the Banks
approval procedures that are in compliance with regulatory
requirements and Good Corporate Governance principles.
However, the Bank had no such transactions during the past
year that would have been subject to the Audit Committees
consideration.
Evaluated the performance of KPMG Phoomchai
Audit Ltd. over the past year and considered their service
and independence to be of value suited to the Banks current
operations. For the appointment of the Bank external
auditors for the year 2012, the Audit Committee took into
account the knowledge, capabilities, experience, resources
and independence of the auditors in accordance with Securities
and Exchange Commission criteria, thereby recommending
the reappointment of KPMG Phoomchai Audit Ltd. as the external
auditors, along with their proposed annual audit fees for 2012,
to the Board of Directors for consideration and concurrence
for submission to the Annual General Meeting of Shareholders
for approval.
In performing duties according to roles and responsibilities
specified in the Charter, the Audit Committee performed
their duties carefully, independently and transparently for
the benefit of KASIKORNBANKGROUP. The Audit Committee
is of confidence that the financial statements of the Bank
and the consolidated financial statements of the Bank and
its subsidiaries are accurate, reliable and in compliance with
the generally accepted accounting standards and financial
reporting standards and that KASIKORNBANKGROUP has
operated under an environment of appropriate risk management,
effective and adequate internal controls, and compliance
with relevant laws and regulatory requirements.
(Professor Khunying Suchada Kiranandana)
Chairperson, Audit Committee
074
Annual Report 2011
Financial Report
To the Shareholders of KASIKORNBANK PUBLIC COMPANY
LIMITED
I have audited the accompanying consolidated
and the Bank-only statements of financial position
as at 31 December 2011 and 2010, and the related
statements of comprehensive income, changes in equity
and cash flows for the years then ended of KASIKORNBANK
PUBLIC COMPANY LIMITED and its subsidiaries,
and of KASIKORNBANK PUBLIC COMPANY LIMITED,
respectively. The Banks management is responsible
for the correctness and completeness of information
presented in these financial statements. My responsibility
is to express an opinion on these financial statements
based on my audits.
I conducted my audits in accordance with generally
accepted auditing standards. Those standards require that
I plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management,
as well as evaluating the overall financial statement
presentation. I believe that my audits provide a reasonable
basis for my opinion.
In my opinion, the consolidated and the Bank-only
financial statements referred to above present fairly,
in all material respects, the financial position as at
31 December 2011 and 2010 and the results of operations
and cash flows for the years then ended of KASIKORNBANK
PUBLIC COMPANY LIMITED and its subsidiaries,
and of KASIKORNBANK PUBLIC COMPANY LIMITED,
respectively, in accordance with Financial Reporting Standards.
As explained in Notes 2, 4 and 46 to the financial
statements, with effect from 1 January 2011, the Bank
and its subsidiaries have adopted certain new and revised
financial reporting standards and relevant Bank of Thailand
notifications with regard to the presentation of the financial
statements. The consolidated and the Bank-only financial
statements for the year ended 31 December 2010,
which are included in the accompanying financial statements
for comparative purposes, have been restated accordingly.
(Ms. Somboon Supasiripinyo)
Certified Public Accountant
Registration No. 3731
KPMG Phoomchai Audit Ltd.
Bangkok
16 February 2012
AUDIT REPORT OF CERTIFIED PUBLIC ACCOUNTANT
075
Annual Report 2011
Financial Report
076
Annual Report 2011
Financial Report
ASSETS
Cash 53,210,590 32,457,482 53,209,128 32,456,187
Interbank and money market items - net 8 111,968,713 97,560,143 110,205,130 96,768,486
Derivative assets 9 26,726,209 29,060,408 26,730,310 29,060,408
Investments - net 10 264,143,123 251,079,721 159,907,169 168,114,988
Investments in subsidiaries and associates - net 11 151,643 137,595 14,126,630 15,582,889
Loans to customers and accrued interest receivables - net 12, 13
Loans to customers 1,217,397,103 1,082,580,962 1,201,714,013 1,067,998,583
Accrued interest receivables 2,104,977 1,416,482 1,896,336 1,224,484
Total Loans to customers and accrued interest receivables 1,219,502,080 1,083,997,444 1,203,610,349 1,069,223,067
Less Deferred revenue (6,562,721) (5,599,718) (394,553) (290,630)
Less Allowance for doubtful accounts 14 (35,202,069) (32,444,855) (34,159,891) (31,199,086)
Less Revaluation allowance for debt restructuring 15 (5,140,975) (4,386,765) (5,140,472) (4,386,660)
Total Loans to customers and accrued interest receivables - net 1,172,596,315 1,041,566,106 1,163,915,433 1,033,346,691
Customers liability under acceptances 580,231 521,190 580,231 521,190
Properties foreclosed - net 16 13,423,855 14,380,983 12,220,549 12,393,288
Premises and equipment - net 18 38,660,218 39,008,556 32,927,196 33,371,270
Goodwill and other intangible assets - net 19 18,804,645 16,614,260 14,851,374 12,805,098
Deferred tax assets 20 2,464,150 3,581,654 2,310,378 3,524,427
Other assets - net 20,210,187 20,696,211 13,583,443 12,786,792
Total Assets 1,722,939,879 1,546,664,309 1,604,566,971 1,450,731,714
KASIKORNBANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
As of 31 December 2011 and 2010
Note Consolidated
31 December 2011 31 December 2010
The Bank
Thousand Baht
31 December 2011 31 December 2010
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF FINANCIAL POSITION
077
Annual Report 2011
Financial Report
KASIKORNBANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
As of 31 December 2011 and 2010
Note Consolidated
31 December 2011 31 December 2010
The Bank
Thousand Baht
31 December 2011 31 December 2010
The accompanying notes are an integral part of these financial statements.
LIABILITIES AND EQUITY
Deposits 21 1,242,229,335 1,100,036,472 1,243,860,346 1,102,229,159
Interbank and money market items 22 53,340,485 33,063,634 56,775,838 34,996,959
Liabilities payable on demand 11,598,165 21,621,928 11,598,165 21,615,512
Financial liabilities designated at fair value through profit or loss 23 2,112,573 6,156,385 2,112,573 6,156,385
Derivative liabilities 9 27,436,187 28,398,944 27,436,423 28,397,687
Debts issued and borrowings 24 70,303,494 88,932,321 70,927,494 89,542,321
Banks liability under acceptances 580,231 521,190 580,231 521,190
Provisions 12,789,069 11,804,616 12,452,927 11,534,844
Deferred tax liabilities 20 1,062,656 1,776,958 - -
Life policy reserve 97,596,505 76,404,247 - -
Other liabilities 36,925,742 32,460,145 29,522,922 24,305,603
Total Liabilities 1,555,974,442 1,401,176,840 1,455,266,919 1,319,299,660
Equity
Share capital 26
Authorized share capital
3,048,614,697 common shares, Baht 10 par value 30,486,147 30,486,147 30,486,147 30,486,147
Issued and paid-up share capital
2,393,260,193 common shares, Baht 10 par value 23,932,602 23,932,602 23,932,602 23,932,602
Premium on common shares 18,103,110 18,103,110 18,103,110 18,103,110
Other reserves 10,934,372 9,198,714 10,209,040 8,414,470
Retained earnings
Appropriated
Legal reserve 27 3,050,000 3,050,000 3,050,000 3,050,000
Unappropriated 98,778,668 80,658,270 94,005,300 77,931,872
Total Equity attributable to equity holders of the Bank 154,798,752 134,942,696 149,300,052 131,432,054
Non-controlling interests 12,166,685 10,544,773 - -
Total Equity 166,965,437 145,487,469 149,300,052 131,432,054
Total Liabilities and Equity 1,722,939,879 1,546,664,309 1,604,566,971 1,450,731,714
STATEMENTS OF FINANCIAL POSITION
(Banthoon Lamsam)
Chief Executive Officer and President
(Pow Sarasin)
Vice Chairman
Pol.Gen.
078
Annual Report 2011
Financial Report
Interest income 36 83,692,656 62,271,245 78,027,918 57,440,019
Interest expenses 37 27,201,600 15,526,800 27,341,939 15,591,929
Interest income - net 56,491,056 46,744,445 50,685,979 41,848,090
Fees and service income 26,071,888 22,820,865 25,104,803 21,867,242
Fees and service expenses 5,435,065 4,594,355 5,469,613 4,543,680
Fees and service income - net 38 20,636,823 18,226,510 19,635,190 17,323,562
Gain on trading and foreign exchange transactions 39 5,213,669 4,465,366 5,213,788 4,456,160
Loss on financial liabilities designated at fair value through
profit or loss 40 (53,936) (94,545) (53,936) (94,545)
Gain on investments 41 805,855 610,034 319,658 243,387
Share of profit from investments using equity method 13,337 5,944 - -
Dividend income 784,394 660,739 1,731,831 1,459,757
Earned premium 37,118,340 29,090,104 - -
Other operating income 1,206,087 656,056 1,925,912 1,203,749
Total operating income 122,215,625 100,364,653 79,458,422 66,440,160
Underwriting expenses 31,707,255 25,220,602 - -
Total operating income - net 90,508,370 75,144,051 79,458,422 66,440,160
Other operating expenses
Employees expenses 19,544,222 16,402,361 15,044,749 12,621,103
Directors remuneration 100,531 114,561 76,717 96,339
Premises and equipment expenses 9,383,379 8,799,524 9,331,544 8,659,087
Taxes and duties 3,129,620 2,437,291 2,929,278 2,271,801
Others 10,861,219 10,249,139 10,460,626 10,196,609
Total other operating expenses 43,018,971 38,002,876 37,842,914 33,844,939
Impairment loss on loans and debt securities 42 7,345,533 6,700,908 7,380,372 6,491,425
Operating profit before income tax expense 40,143,866 30,440,267 34,235,136 26,103,796
Income tax expense 43 13,961,623 9,094,141 12,075,879 7,489,004
Net profit 26,182,243 21,346,126 22,159,257 18,614,792
Other comprehensive income
Gain on remeasurement of available-for-sale investments 436,223 2,774,755 1,036,627 83,269
Actuarial losses on defined benefit plans (303,219) - (300,397) -
Income taxes relating to components of other comprehensive
income 1,390,762 (823,574) 955,661 (24,981)
Total other comprehensive income 1,523,766 1,951,181 1,691,891 58,288
Total comprehensive income 27,706,009 23,297,307 23,851,148 18,673,080
Net profit attributable to:
Equity holders of the Bank 24,225,567 20,046,690 22,159,257 18,614,792
Non-controlling interests 1,956,676 1,299,436 - -
Total comprehensive income attributable to:
Equity holders of the Bank 25,856,019 20,903,050 23,851,148 18,673,080
Non-controlling interests 1,849,990 2,394,257 - -
Earnings per share of equity holders of the Bank
Basic earnings per share (Baht) 10.12 8.38 9.26 7.78
Weighted average number of common shares (Thousand shares) 2,393,260 2,393,260 2,393,260 2,393,260
KASIKORNBANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
For the years ended 31 December 2011 and 2010
Note Consolidated
2011 2010
The Bank
Thousand Baht
2011 2010
The accompanying notes are an integral part of these financial statements.
(Banthoon Lamsam)
Chief Executive Officer and President
(Pow Sarasin)
Vice Chairman
Pol.Gen.
STATEMENTS OF COMPREHENSIVE INCOME
079
Annual Report 2011
Financial Report
T
h
e
a
c
c
o
m
p
a
n
y
i
n
g
n
o
t
e
s
a
r
e
a
n
i
n
t
e
g
r
a
l
p
a
r
t
o
f
t
h
e
s
e
f
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
.
I
s
s
u
e
d
a
n
d
P
a
i
d
-
u
p
S
h
a
r
e
C
a
p
i
t
a
l
A
p
p
r
a
i
s
a
l
S
u
r
p
l
u
s
o
n
A
s
s
e
t
R
e
v
a
l
u
a
t
i
o
n
R
e
v
a
l
u
a
t
i
o
n
S
u
r
p
l
u
s
o
n
A
v
a
i
l
a
b
l
e
-
f
o
r
-
s
a
l
e
I
n
v
e
s
t
m
e
n
t
s
A
p
p
r
o
p
r
i
a
t
e
d
L
e
g
a
l
R
e
s
e
r
v
e
U
n
a
p
p
r
o
p
r
i
a
t
e
d
T
o
t
a
l
e
q
u
i
t
y
a
t
t
r
i
b
u
t
a
b
l
e
t
o
e
q
u
i
t
y
h
o
l
d
e
r
s
o
f
t
h
e
B
a
n
k
N
o
n
-
c
o
n
t
r
o
l
l
i
n
g
I
n
t
e
r
e
s
t
s
T
o
t
a
l
P
r
e
m
i
u
m
o
n
S
h
a
r
e
C
a
p
i
t
a
l
K
A
S
I
K
O
R
N
B
A
N
K
P
U
B
L
I
C
C
O
M
P
A
N
Y
L
I
M
I
T
E
D
A
N
D
S
U
B
S
I
D
I
A
R
I
E
S
F
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
S
T
A
T
E
M
E
N
T
S
O
F
C
H
A
N
G
E
S
I
N
E
Q
U
I
T
Y
B
a
l
a
n
c
e
a
t
1
J
a
n
u
a
r
y
2
0
1
0
2
3
,
9
3
2
,
6
0
2
1
8
,
1
0
3
,
1
1
0
7
,
5
1
5
,
9
0
9
9
4
3
,
6
5
1
3
,
0
5
0
,
0
0
0
6
6
,
4
5
2
,
0
1
1
1
1
9
,
9
9
7
,
2
8
3
8
,
1
4
8
,
7
8
1
1
2
8
,
1
4
6
,
0
6
4
D
i
v
i
d
e
n
d
p
a
i
d
2
8
-
-
-
-
-
(
5
,
9
8
3
,
1
5
0
)
(
5
,
9
8
3
,
1
5
0
)
(
5
0
0
,
0
1
2
)
(
6
,
4
8
3
,
1
6
2
)
S
h
a
r
e
c
a
p
i
t
a
l
-
-
-
-
-
-
-
5
0
1
,
7
4
8
5
0
1
,
7
4
8
T
o
t
a
l
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
f
o
r
t
h
e
y
e
a
r
-
-
-
8
5
6
,
3
6
0
-
2
0
,
0
4
6
,
6
9
0
2
0
,
9
0
3
,
0
5
0
2
,
3
9
4
,
2
5
7
2
3
,
2
9
7
,
3
0
7
T
r
a
n
s
f
e
r
r
e
d
t
o
r
e
t
a
i
n
e
d
e
a
r
n
i
n
g
s
-
-
(
1
1
7
,
2
0
6
)
-
-
1
1
7
,
2
0
6
-
-
-
O
t
h
e
r
s
-
-
-
-
-
2
5
,
5
1
3
2
5
,
5
1
3
(
1
)
2
5
,
5
1
2
E
n
d
i
n
g
b
a
l
a
n
c
e
a
s
o
f
3
1
D
e
c
e
m
b
e
r
2
0
1
0
2
3
,
9
3
2
,
6
0
2
1
8
,
1
0
3
,
1
1
0
7
,
3
9
8
,
7
0
3
1
,
8
0
0
,
0
1
1
3
,
0
5
0
,
0
0
0
8
0
,
6
5
8
,
2
7
0
1
3
4
,
9
4
2
,
6
9
6
1
0
,
5
4
4
,
7
7
3
1
4
5
,
4
8
7
,
4
6
9
B
a
l
a
n
c
e
a
t
1
J
a
n
u
a
r
y
2
0
1
1
2
3
,
9
3
2
,
6
0
2
1
8
,
1
0
3
,
1
1
0
7
,
3
9
8
,
7
0
3
1
,
8
0
0
,
0
1
1
3
,
0
5
0
,
0
0
0
8
0
,
6
5
8
,
2
7
0
1
3
4
,
9
4
2
,
6
9
6
1
0
,
5
4
4
,
7
7
3
1
4
5
,
4
8
7
,
4
6
9
D
i
v
i
d
e
n
d
p
a
i
d
2
8
-
-
-
-
-
(
5
,
9
8
3
,
1
5
0
)
(
5
,
9
8
3
,
1
5
0
)
(
2
2
8
,
0
7
8
)
(
6
,
2
1
1
,
2
2
8
)
T
o
t
a
l
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
f
o
r
t
h
e
y
e
a
r
-
-
1
,
0
3
2
,
4
2
8
8
4
0
,
8
6
8
-
2
3
,
9
8
2
,
7
2
3
2
5
,
8
5
6
,
0
1
9
1
,
8
4
9
,
9
9
0
2
7
,
7
0
6
,
0
0
9
T
r
a
n
s
f
e
r
r
e
d
t
o
r
e
t
a
i
n
e
d
e
a
r
n
i
n
g
s
-
-
(
1
3
7
,
6
3
8
)
-
-
1
3
7
,
6
3
8
-
-
-
O
t
h
e
r
s
-
-
-
-
-
(
1
6
,
8
1
3
)
(
1
6
,
8
1
3
)
-
(
1
6
,
8
1
3
)
E
n
d
i
n
g
b
a
l
a
n
c
e
a
s
o
f
3
1
D
e
c
e
m
b
e
r
2
0
1
1
2
3
,
9
3
2
,
6
0
2
1
8
,
1
0
3
,
1
1
0
8
,
2
9
3
,
4
9
3
2
,
6
4
0
,
8
7
9
3
,
0
5
0
,
0
0
0
9
8
,
7
7
8
,
6
6
8
1
5
4
,
7
9
8
,
7
5
2
1
2
,
1
6
6
,
6
8
5
1
6
6
,
9
6
5
,
4
3
7
O
t
h
e
r
r
e
s
e
r
v
e
s
R
e
t
a
i
n
e
d
E
a
r
n
i
n
g
s
C
o
n
s
o
l
i
d
a
t
e
d
T
h
o
u
s
a
n
d
B
a
h
t
N
o
t
e
E
q
u
i
t
y
h
o
l
d
e
r
s
o
f
t
h
e
B
a
n
k
N
o
n
-
c
o
n
t
r
o
l
l
i
n
g
I
n
t
e
r
e
s
t
s
080
Annual Report 2011
Financial Report
T
h
e
a
c
c
o
m
p
a
n
y
i
n
g
n
o
t
e
s
a
r
e
a
n
i
n
t
e
g
r
a
l
p
a
r
t
o
f
t
h
e
s
e
f
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
.
I
s
s
u
e
d
a
n
d
P
a
i
d
-
u
p
S
h
a
r
e
C
a
p
i
t
a
l
A
p
p
r
a
i
s
a
l
S
u
r
p
l
u
s
o
n
A
s
s
e
t
R
e
v
a
l
u
a
t
i
o
n
R
e
v
a
l
u
a
t
i
o
n
S
u
r
p
l
u
s
o
n
A
v
a
i
l
a
b
l
e
-
f
o
r
-
s
a
l
e
I
n
v
e
s
t
m
e
n
t
s
A
p
p
r
o
p
r
i
a
t
e
d
L
e
g
a
l
R
e
s
e
r
v
e
U
n
a
p
p
r
o
p
r
i
a
t
e
d
T
o
t
a
l
P
r
e
m
i
u
m
o
n
S
h
a
r
e
C
a
p
i
t
a
l
K
A
S
I
K
O
R
N
B
A
N
K
P
U
B
L
I
C
C
O
M
P
A
N
Y
L
I
M
I
T
E
D
A
N
D
S
U
B
S
I
D
I
A
R
I
E
S
F
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
S
T
A
T
E
M
E
N
T
S
O
F
C
H
A
N
G
E
S
I
N
E
Q
U
I
T
Y
O
t
h
e
r
r
e
s
e
r
v
e
s
R
e
t
a
i
n
e
d
E
a
r
n
i
n
g
s
T
h
e
B
a
n
k
N
o
t
e
T
h
o
u
s
a
n
d
B
a
h
t
E
q
u
i
t
y
h
o
l
d
e
r
s
o
f
t
h
e
B
a
n
k
B
a
l
a
n
c
e
a
t
1
J
a
n
u
a
r
y
2
0
1
0
2
3
,
9
3
2
,
6
0
2
1
8
,
1
0
3
,
1
1
0
7
,
5
1
5
,
9
0
9
9
5
7
,
4
7
9
3
,
0
5
0
,
0
0
0
6
5
,
1
3
7
,
7
4
0
1
1
8
,
6
9
6
,
8
4
0
D
i
v
i
d
e
n
d
p
a
i
d
2
8
-
-
-
-
-
(
5
,
9
8
3
,
1
5
0
)
(
5
,
9
8
3
,
1
5
0
)
T
o
t
a
l
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
f
o
r
t
h
e
y
e
a
r
-
-
-
5
8
,
2
8
8
-
1
8
,
6
1
4
,
7
9
2
1
8
,
6
7
3
,
0
8
0
T
r
a
n
s
f
e
r
r
e
d
t
o
r
e
t
a
i
n
e
d
e
a
r
n
i
n
g
s
-
-
(
1
1
7
,
2
0
6
)
-
-
1
1
7
,
2
0
6
-
O
t
h
e
r
s
-
-
-
-
-
4
5
,
2
8
4
4
5
,
2
8
4
E
n
d
i
n
g
b
a
l
a
n
c
e
a
s
o
f
3
1
D
e
c
e
m
b
e
r
2
0
1
0
2
3
,
9
3
2
,
6
0
2
1
8
,
1
0
3
,
1
1
0
7
,
3
9
8
,
7
0
3
1
,
0
1
5
,
7
6
7
3
,
0
5
0
,
0
0
0
7
7
,
9
3
1
,
8
7
2
1
3
1
,
4
3
2
,
0
5
4
B
a
l
a
n
c
e
a
t
1
J
a
n
u
a
r
y
2
0
1
1
2
3
,
9
3
2
,
6
0
2
1
8
,
1
0
3
,
1
1
0
7
,
3
9
8
,
7
0
3
1
,
0
1
5
,
7
6
7
3
,
0
5
0
,
0
0
0
7
7
,
9
3
1
,
8
7
2
1
3
1
,
4
3
2
,
0
5
4
D
i
v
i
d
e
n
d
p
a
i
d
2
8
-
-
-
-
-
(
5
,
9
8
3
,
1
5
0
)
(
5
,
9
8
3
,
1
5
0
)
T
o
t
a
l
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
f
o
r
t
h
e
y
e
a
r
-
-
1
,
0
3
2
,
4
2
8
8
9
9
,
7
8
0
-
2
1
,
9
1
8
,
9
4
0
2
3
,
8
5
1
,
1
4
8
T
r
a
n
s
f
e
r
r
e
d
t
o
r
e
t
a
i
n
e
d
e
a
r
n
i
n
g
s
-
-
(
1
3
7
,
6
3
8
)
-
-
1
3
7
,
6
3
8
-
E
n
d
i
n
g
b
a
l
a
n
c
e
a
s
o
f
3
1
D
e
c
e
m
b
e
r
2
0
1
1
2
3
,
9
3
2
,
6
0
2
1
8
,
1
0
3
,
1
1
0
8
,
2
9
3
,
4
9
3
1
,
9
1
5
,
5
4
7
3
,
0
5
0
,
0
0
0
9
4
,
0
0
5
,
3
0
0
1
4
9
,
3
0
0
,
0
5
2
(
B
a
n
t
h
o
o
n
L
a
m
s
a
m
)
C
h
i
e
f
E
x
e
c
u
t
i
v
e
O
f
f
i
c
e
r
a
n
d
P
r
e
s
i
d
e
n
t
(
P
o
w
S
a
r
a
s
i
n
)
V
i
c
e
C
h
a
i
r
m
a
n
P
o
l
.
G
e
n
.
081
Annual Report 2011
Financial Report
CASH FLOWS FROM OPERATING ACTIVITIES
Operating profit before income tax expense 40,143,866 30,440,267 34,235,136 26,103,796
Add (Less) Adjustments to reconcile profit from operating before
income tax expense to net cash from operating activities
Depreciation and amortization 4,648,809 4,238,050 4,050,181 3,617,448
Bad debt and doubtful accounts 4,629,599 4,726,012 4,589,823 4,438,872
Loss on debt restructuring 3,571,520 2,596,529 3,570,768 2,596,048
Interest income from amortization of revaluation allowance
for debt restructuring (239,423) (326,010) (239,098) (325,566)
Loss (gain) on foreign exchange translation of long-term
borrowings 281,561 (622,757) 281,561 (622,757)
(Gain) loss on revaluation of investments (68,473) 59,729 (68,473) 62,224
(Reversal of loss) loss on impairment of investments (504,375) 6,210 (504,375) 9,451
Reversal of loss on impairment of investments in associated (1,077) - (1,077) -
Gain on disposal of securities for investments (548,154) (617,940) (69,592) (253,387)
(Gain) loss on disposal of investments in associated (7,056) - 1,841 -
Loss on investments write off and capital decrease of subsidiary - - - 10,000
Amortization of discount on debt instruments (1,096,060) (602,735) (1,055,783) (827,706)
Loss on impairment of properties foreclosed 596,639 474,546 482,433 453,779
(Reversal of loss) loss on impairment of other assets (52,770) 128,426 (52,770) 128,426
(Gain) loss on disposal of premises and equipment (7,236) (11,448) 3,694 (628)
Loss on write off of premises and equipment 236,395 37,495 235,940 27,033
Reversal of loss on impairment of premises and equipment - (2,604) - (2,604)
Loss on write off of intangible assets 104,028 - 104,672 -
Loss on impairment of intangible assets 255,438 - 255,438 -
Share of profit from investments using equity method (13,337) (5,944) - -
Dividend income from associated companies 4,650 4,200 - -
Amortization of discount on debentures 2,981 3,083 2,981 3,083
Increase (decrease) in other reserves 984,453 (1,161,258) 918,083 177,541
52,921,978 39,363,851 46,741,383 35,595,053
KASIKORNBANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
For the years ended 31 December 2011 and 2010
Note Consolidated
2011 2010
The Bank
Thousand Baht
2011 2010
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
082
Annual Report 2011
Financial Report
KASIKORNBANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
For the years ended 31 December 2011 and 2010
Note Consolidated
2011 2010
The Bank
Thousand Baht
2011 2010
Net income from interest (56,491,056) (46,744,445) (50,685,979) (41,848,089)
Dividend income (784,394) (660,739) (1,731,831) (1,459,757)
Proceeds from interest 83,136,173 62,767,596 76,863,242 57,553,280
Interest paid (24,527,249) (13,823,805) (24,666,186) (13,887,666)
Proceeds from dividends 744,608 689,272 1,731,624 1,469,499
Income tax paid (11,039,023) (8,003,348) (8,968,231) (6,288,806)
Income from operations before changes in operating assets
and liabilities 43,961,037 33,588,382 39,284,022 31,133,514
(Increase) decrease in operating assets
Interbank and money market items (assets) (14,201,995) (34,171,635) (13,233,668) (34,108,715)
Investments held for trading 10,184,755 (7,301,588) 10,179,431 (7,293,471)
Loans to customers (140,522,593) (145,137,970) (138,972,123) (142,119,972)
Properties foreclosed 4,384,810 4,755,759 3,511,708 3,288,356
Other assets 3,264,864 (11,216,098) 1,396,029 (9,010,064)
Increase (decrease) in operating liabilities
Deposits 142,192,863 124,544,549 141,631,187 124,164,823
Interbank and money market items (liabilities) 20,276,851 (13,781,927) 21,778,879 (13,009,658)
Liabilities payable on demand (10,023,763) 8,866,303 (10,017,347) 8,867,611
Financial liabilities designated at fair value through profit or loss (4,043,812) 6,156,386 (4,043,812) 6,156,386
Short-term debts issued and borrowings (18,635,546) 21,368,886 (18,621,546) 19,763,597
Other accrued expenses 2,128,719 1,466,780 1,973,326 1,249,475
Other liabilities 17,976,344 25,598,233 (2,155,084) 7,469,271
Net cash provided by (used in) operating activities 56,942,534 14,736,060 32,711,002 (3,448,847)
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
083
Annual Report 2011
Financial Report
KASIKORNBANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
For the years ended 31 December 2011 and 2010
Note Consolidated
2011 2010
The Bank
Thousand Baht
2011 2010
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of available-for-sale investments 153,486,644 259,202,592 131,327,933 235,064,433
Proceeds from redemption of held to maturity debt instruments 8,352,772 17,678,612 415,533 544,964
Proceeds from disposal of general investments 209,317 213,217 209,292 212,217
Proceeds from capital decrease/disposal of investments
in subsidiary company - - 1,976,145 1,467,420
Proceeds from disposal of investments in associated company 48,188 - 495 -
Purchase of available-for-sale investments (157,928,458) (230,420,841) (133,085,002) (205,107,513)
Purchase of held to maturity debt instruments (26,671,366) (32,028,929) (63,375) (373,876)
Purchase of general investments (260,455) (191) (252,155) (191)
Cash paid for capital increases of subsidiary company - - (202,000) (5,000)
Purchase of investments in associated company (28,700) - - -
Proceeds from disposal of premises and equipment 13,751 16,129 1,975 6,447
Purchase of premises and equipment (3,141,366) (5,405,849) (2,342,671) (4,296,724)
Purchase of leasehold (195,511) (111,318) (195,178) (110,988)
Purchase of intangible assets (3,585,191) (3,618,876) (3,488,080) (3,690,137)
Net cash (used in) provided by investing activities (29,700,375) 5,524,546 (5,697,088) 23,711,052
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in long-term debts issued and borrowings (277,823) (8,496,061) (277,823) (8,496,061)
Increase in non-controlling interests share capital - 501,748 - -
Dividend payments to shareholder 28 (5,983,150) (5,983,150) (5,983,150) (5,983,150)
Dividend paid to non-controlling interests (228,078) (500,012) - -
Net cash used in financing activities (6,489,051) (14,477,475) (6,260,973) (14,479,211)
Net increase in cash 20,753,108 5,783,131 20,752,941 5,782,994
Cash at the beginning of the period 7 32,457,482 26,674,351 32,456,187 26,673,193
Cash at the end of the period 7 53,210,590 32,457,482 53,209,128 32,456,187
The accompanying notes are an integral part of these financial statements.
STATEMENTS OF CASH FLOWS
(Banthoon Lamsam)
Chief Executive Officer and President
(Pow Sarasin)
Vice Chairman
Pol.Gen.
084
Annual Report 2011
Financial Report
Note Contents Page
1 General information 85
2 Basis of preparation of the nancial statements 90
3 Impact of severe ooding in Thailand 92
4 New and revised Thai Financial Reporting Standards 92
5 Signicant accounting policies 93
6 Capital requirements 112
7 Supplementary information of cash ows 113
8 Interbank and money market items - net (assets) 114
9 Derivatives 116
10 Investments - net 118
11 Investments in subsidiaries and associated companies - net 124
12 Loans to customers and accrued interest receivables - net 130
13 Troubled debt restructuring 141
14 Allowance for doubtful accounts 146
15 Revaluation allowance for debt restructuring 147
16 Properties foreclosed - net 148
17 Classied assets 150
18 Premises and equipment - net 152
19 Goodwill and other intangible assets - net 156
20 Deferred tax assets and deferred tax liabilities 159
21 Deposits 163
22 Interbank and money market items (liabilities) 164
23 Financial liabilities designated at fair value through prot or loss 166
24 Debts issued and borrowings 166
25 Employee retirement benets 171
26 Share capital and earnings per share 172
27 Reserves 172
28 Dividend payments 172
29 Assets pledged as collateral 173
30 Contingent liabilities and commitments 173
31 Related party transactions and balances 175
32 Benets of directors and executives 185
33 Capital commitments and long-term agreements 186
34 Thai Financial Reporting Standards (TFRS) not yet adopted 187
35 The nancial positions and results of operations differentiated by domestic and foreign business 187
36 Interest income 192
37 Interest expenses 192
38 Fees and service income - net 193
39 Gain on trading and foreign exchange transactions 193
40 Loss on nancial liabilities designated at fair value through prot or loss 194
41 Gain on investments 194
42 Impairment loss on loans and debt securities 195
43 Income tax expense 195
44 Financial risk management 198
45 Fair value of nancial instruments 215
46 Reclassication of accounts 217
NOTES TO THE FINANCIAL STATEMENTS
KASIKORNBANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
For the years ended 31 December 2011 and 2010
085
Annual Report 2011
Financial Report
NOTES TO THE FINANCIAL STATEMENTS
The financial statements issued for Thai statutory and regulary reporting purposes are prepared in the Thai language.
These English language financial statements have been prepared from the Thai language statutory financial
statements, and were approved and authorized for issue by the Audit Committee on 16 February 2012.
1 GENERAL INFORMATION
KASIKORNBANK PUBLIC COMPANY LIMITED, (the Bank), is a registered public company located in the
Kingdom of Thailand and listed on the Stock Exchange of Thailand on 9 February 1976. The registered office of
the Bank is at 1 Soi Rat Burana 27/1, Rat Burana Road, Rat Burana Sub-District, Rat Burana District, Bangkok.
The principal activity of the Bank is commercial banking and the Bank conducts its businesses through a network
of branches covering all parts of Thailand and certain majors cities overseas.
The consolidated financial statements of the Bank consist of the Bank and its subsidiaries. Details of the Banks
subsidiaries are as follows:
% Shareholding of the Bank
Direct and Indirect
31 December 2011 31 December 2010
KASIKORN ASSET MANAGEMENT CO., LTD. (KAsset) 100.00 100.00
KASIKORN RESEARCH CENTER CO., LTD. (KResearch) 100.00 100.00
KASIKORN SECURITIES PCL (KSecurities) 99.99 99.99
KASIKORN LEASING CO., LTD. (KLeasing) 100.00 100.00
KASIKORN FACTORY & EQUIPMENT CO., LTD. (KF&E) 100.00 100.00
Phethai Asset Management Co., Ltd. 100.00 100.00
KHAO KLA Venture Capital Management Co., Ltd. 100.00 100.00
K-SME Venture Capital Co., Ltd. 100.00 100.00
Progress Software Co., Ltd. 100.00 100.00
Progress Plus Co., Ltd. 100.00 100.00
Progress Appraisal Co., Ltd. 100.00 100.00
Progress Gunpai Co., Ltd. 100.00 100.00
KASIKORNBANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
For the years ended 31 December 2011 and 2010
These notes form an integral part of the financial statements.
086
Annual Report 2011
Financial Report
Progress Management Co., Ltd. 100.00 100.00
Progress Facilities Management Co., Ltd. 100.00 100.00
Progress Service Co., Ltd. 100.00 100.00
Progress Land and Buildings Co., Ltd. 100.00 100.00
Progress Storage Co., Ltd. 100.00 100.00
Progress HR Co., Ltd. 100.00 100.00
Progress Service Support Co., Ltd. 100.00 100.00
Progress Collection Co., Ltd. 100.00 100.00
Progress Training Co., Ltd. 100.00 100.00
Progress Multi Insurance Broker Co., Ltd. 100.00 100.00
Thanyathanathavee Co., Ltd. 100.00 100.00
Thanyathamrongkij Co., Ltd. 100.00 100.00
Thanyanithiwattana Co., Ltd. 100.00 100.00
Ruang Khao Phuean Thai Joint Investment Agreement 100.00 100.00
Muangthai Group Holding Co., Ltd. (MTGH) 51.00 51.00
Muang Thai Life Assurance Co., Ltd. (MTL) 38.25 38.25
Muangthai Broker Co., Ltd. (MTB) 49.98 49.98
% Shareholding of the Bank
Direct and Indirect
31 December 2011 31 December 2010
KASIKORN ASSET MANAGEMENT COMPANY LIMITED is a company which is registered in the Kingdom of
Thailand and is located at 400/22 Kasikornbank Building, Floor 6, Phaholyothin Road, Samsennai, Phayathai,
Bangkok. The company's main business is assets and funds management.
KASIKORN RESEARCH CENTER COMPANY LIMITED is a company which is registered in the Kingdom of
Thailand and is located at 400/22 Kasikornbank Building, Floor 2 and 7, Phaholyothin Road, Samsennai,
Phayathai, Bangkok. The companys main business is to support the Bank with research work and public
relations.
KASIKORN SECURITIES PUBLIC COMPANY LIMITED is a company which is registered in the Kingdom of
Thailand and is located at 400/22 Kasikornbank Building, Floor 19, Phaholyothin Road, Samsennai, Phayathai,
Bangkok. The companys main businesses are securities and investment banking.
087
Annual Report 2011
Financial Report
KASIKORN LEASING COMPANY LIMITED is a company which is registered in the Kingdom of Thailand and is
located at 400/22 Kasikornbank Building, Floor 17, Phaholyothin Road, Samsennai, Phayathai, Bangkok. The
companys main businesses are leasing and hire purchase.
KASIKORN FACTORY AND EQUIPMENT COMPANY LIMITED (changed its name from KASIKORN FACTORING
COMPANY LIMITED on 25 December 2009) is a company which is registered in the Kingdom of Thailand and is
located at 400/22 Kasikornbank Building, Floor 3, Phaholyothin Road, Samsennai, Phayathai, Bangkok. The
company was established to furnish commercial financial services to businesses, including factoring, finance
leases, operating leases and hire purchase.
Phethai Asset Management Company Limited is a company registered in the Kingdom of Thailand and was
approved by the Bank of Thailand (BoT) on 13 October 1999 to register as an asset management company under
the Ministerial Regulation (B.E. 2541) issued with regard to the provisions of the Asset Management Company Act
(B.E. 2541). The company is located at 400/22 Kasikornbank Building, Floor 4, Phaholyothin Road, Samsennai,
Phayathai, Bangkok and was established with the objective of managing substandard assets transferred from the
Bank.
KHAO KLA Venture Capital Management Company Limited, 100% held by KASIKORN ASSET MANAGEMENT
COMPANY LIMITED, is a company which is registered in the Kingdom of Thailand and is located at 400/22
Kasikornbank Building, Floor 14, Phaholyothin Road, Samsennai, Phayathai, Bangkok. The companys main
business is securities investment management.
K-SME Venture Capital Company Limited is a company which is registered in the Kingdom of Thailand and is
located at 400/22 Kasikornbank Building, Floor 14, Phaholyothin Road, Samsennai, Phayathai, Bangkok. The
companys main business is venture capital.
Progress Software Company Limited is a company which is registered in the Kingdom of Thailand and is located
at 306 Suapa Road, Pomprab, Pomprab-satrupai, Bangkok. The companys main business is to render the
service of designing computer program, and training in the use of hardware and software.
Progress Plus Company Limited is a company which is registered in the Kingdom of Thailand and is located at
306 Suapa Road, Pomprab, Pomprab-satrupai, Bangkok. The companys main businesses are to deal in the
business of agency/brokerage sales of inventories and/or service, contractor, particularly office stationery,
printing matters and other goods.
088
Annual Report 2011
Financial Report
Progress Appraisal Company Limited is a company which is registered in the Kingdom of Thailand and is located
at 252, Phaholyothin Road, Samsennai, Phayathai, Bangkok. The companys main business is to appraise
assets.
Progress Gunpai Company Limited is a company which is registered in the Kingdom of Thailand and is located at
47/7, Kasikornbank Building, Floor 3, Mu 3, Tambon Ban Mai, Pak Kret District, Nontaburi. The companys main
businesses are to provide transportation service of cash and valuable assets to the Bank, including cash count
service, packing and change of cash to Automatic Teller Machines.
Progress Management Company Limited is a company which is registered in the Kingdom of Thailand and is
located at 252/9 Muang Thai-Phatra Tower 1, Floor 5, Ratchadapisek Road, Huaykwang, Huaykwang, Bangkok.
The companys main business is engaged as the custodian and management of assets, received from debt
settlement of the Bank including related parties assets which have been transferred in, in order to keep these
assets in good condition for sale or rent.
Progress Facilities Management Company Limited is a company which is registered in the Kingdom of Thailand
and is located at 400/22 Kasikornbank Building, Floor 9, Phaholyothin Road, Samsennai, Phayathai, Bangkok.
The companys main business is to provide building management services to the Bank and related parties.
Progress Service Company Limited is a company which is registered in the Kingdom of Thailand and is located at
400/22 Kasikornbank Building, Floor 9, Phaholyothin Road, Samsennai, Phayathai, Bangkok. The companys main
business is to provide drivers, security guards, cleaners and other related services for the Bank and related parties.
Progress Land and Buildings Company Limited is a company which is registered in the Kingdom of Thailand and
is located at 252/9 Muang Thai-Phatra Tower 1, Floor 5, Ratchadapisek Road, Huaykwang, Huaykwang,
Bangkok. The company was established to receive, manage and sell properties that have been foreclosed as
well as the premises of Phatra Thanakit Public Company Limited.
Progress Storage Company Limited is a company which is registered in the Kingdom of Thailand and is located
at 400/22 Kasikornbank Building, Floor 9, Phaholyothin Road, Samsennai, Phayathai, Bangkok. The companys
main business is to provide inventory management services, used as collateral for bank loans.
Progress HR Company Limited is a company which is registered in the Kingdom of Thailand and is located at
1019/15 Kasikornbank Building, Sanampao Branch, Floor 2-3, Phaholyothin Road, Samsennai, Phayathai,
Bangkok. The company main business is to provide outsourced employee services to the Bank and related
parties.
089
Annual Report 2011
Financial Report
Progress Service Support Company Limited is a company which is registered in the Kingdom of Thailand and is
located at 47/7, Kasikornbank Building, Floor 9, Mu 3, Tambon Ban Mai, Pak Kret District, Nontaburi. The
companys main business is to provide information relating the Banks products and services through customer
relationship channels, including selling and marketing via telephone banking.
Progress Collection Company Limited is a company which is registered in the Kingdom of Thailand and is
located at 1 Kasikornbank Building, Rat Burana Main Branch, Floor 2-3, Soi Rat Burana 27/1, Rat Burana Road,
Rat Burana Sub-District, Rat Burana District, Bangkok. The companys main businesses are collection and debt
restructuring for consumer and corporate loans of the Bank and its subsidiaries.
Progress Training Company Limited is a company which is registered in the Kingdom of Thailand on 9 April 2009,
and is located at 1 Kasikornbank Building, Floor 12, Soi Rat Burana 27/1, Rat Burana Road, Rat Burana Sub-
District, Rat Burana District, Bangkok. The companys main business is offering of training services to develop
the skills of its employees of the Bank and its subsidiaries.
Progress Multi Insurance Broker Company Limited is a company which is registered in the Kingdom of Thailand
on 16 September 2010, and is located at 400/22 Kasikornbank Building, Floor 17, Phaholyothin Road,
Samsennai, Phayathai, Bangkok. The companys main business is commission from casualty insurance.
Thanyathanathavee Company Limited is a company which was registered in the Kingdom of Thailand on
11 November 2009, and is located at 1 Parking Building Floor 5, Soi Rat Burana 27/1, Rat Burana Road,
Rat Burana Sub-District, Rat Burana District, Bangkok. The companys main business is investment in other
companies.
Thanyathamrongkij Company Limited is a company which was registered in the Kingdom of Thailand on
11 November 2009, and is located 1 Parking Building Floor 5, Soi Rat Burana 27/1, Rat Burana Road, Rat Burana
Sub-District, Rat Burana District, Bangkok. The company's main business is investment in other companies.
Thanyanithiwattana Company Limited is a company which was registered in the Kingdom of Thailand on
12 November 2009, and is located at 1 Parking Building Floor 5, Soi Rat Burana 27/1, Rat Burana Road,
Rat Burana Sub-District, Rat Burana District, Bangkok. The company's main business is investment in other
companies.
Ruang Khao Phuean Thai Joint Investment Agreement was agreed between Thanyathanathavee Company
Limited and Thanyathamrongkij Company Limited on 12 November 2009, pursuant to the regulations under the
Life Insurance Act B.E. 2535 as amended. The objective of this agreement is investment in other companies.
090
Annual Report 2011
Financial Report
Muangthai Group Holding Company Limited (changed its name from Muangthai Fortis Holding Company Limited
on 31 July 2009) is a company which was registered in the Kingdom of Thailand on 11 August 1999 and is
located at Muang Thai-Phatra Complex, Tower A, Floor 5, 252/9, Ratchadapisek Road, Huaykwang, Huaykwang,
Bangkok. The companys main business is investment in other companies.
Muang Thai Life Assurance Company Limited is a company which was registered in the Kingdom of Thailand on
1 February 1951 and is located at 250 Ratchadapisek Road, Huaykwang, Huaykwang, Bangkok. The companys
main business is providing life insurance.
Muangthai Broker Company Limited is a company which was registered in the Kingdom of Thailand on 12 March
2008, and is located at Muang Thai-Phatra Complex, Tower A, Floor 5, 252/9, Ratchadapisek Road, Huaykwang,
Huaykwang, Bangkok. The companys main business is commission from life insurance.
2 BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
a) Statement of compliance
The financial statements are prepared in accordance with Thai Financial Reporting Standards (TFRS);
guidelines promulgated by the Federation of Accounting Professions (FAP), applicable rules and regulations
of the Thai Securities and Exchange Commission (SEC) and prescribed by the Bank of Thailand (BoT)
notification number SOR NOR SOR 11/2553, directive dated 3 December 2010, regarding the Preparation
and announcement of the financial statements of commercial banks and holding companies which are parent
company of group of companies offering financial services. See Note 46 for reclassification of accounts for
financial statements for the year ended 31 December 2010, for comparative purpose.
b) Basis of measurement
The financial statements have been prepared on the historical cost basis except the following material items
in the statements of financial position:
- derivative financial instruments are measured at fair value;
- financial instruments at fair value through profit or loss are measured at fair value;
- available-for-sale financial assets are measured at fair value;
- premises and equipment are measured at revalued amounts;
- investment properties are measured at fair value.
091
Annual Report 2011
Financial Report
c) Presentation currencies
The financial statements are prepared and presented in Thai-Baht. All financial information presented in
thousand Baht has been rounded in the notes to the financial statements to the nearest million unless
otherwise stated.
d) Use of estimates and judgements
The preparation of financial statements in conformity with TFRS requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognised in the period in which estimates are revised and in any future period affected.
Information about significant of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amount recognised in the financial statements are described in
note 4 significant accounting policies and in the following notes:
Note 3 Impact of severe flooding in Thailand
9 Derivatives
10 Investments - net
13 Troubled debt restructuring
14 Allowance for doubtful accounts
15 Revaluation allowance for debt restructuring
16 Properties foreclosed - net
18 Premises and equipment - net
19 Goodwill and other intangible assets - net
20 Deferred tax assets and deferred tax liabilities
23 Financial liabilities designated at fair value
25 Employee retirement benefits
30 Contingent liabilities and commitments
43 Income tax expense
44 Financial risk management
45 Fair value of financial instruments
092
Annual Report 2011
Financial Report
3 IMPACT OF SEVERE FLOODING IN THAILAND
Due to the recent flooding the Bank of Thailand has implemented measures requesting banks to provide support
to their impacted customers, where the customers account status is Pass or Special Mention. Such measures
are set out in Notification For Nor Sor. (23) Wor. 1564/2554 issued on 19 October 2011.
Customers have been granted relief under the measures referred to above has loans outstanding balances as of
31 December 2011 amounting to Baht 86,542 million. The Bank has performed an assessment and already
provided allowance for doubtful accounts to serve for any impact incurred which is not material to the financial
statements.
4 NEW AND REVISED THAI FINANCIAL REPORTING STANDARDS
During 2010 and 2011, the FAP issued the following new and revised Thai Financial Reporting Standards (TFRS)
relevant to the Bank and its subsidiaries operations and effective for accounting periods beginning on or after
1 January 2011. The Bank and its subsidiaries have early adopted some TFRS for the preparation of financial
statements in 2010 and have applied the following TFRS from 1 January 2011 :
TFRS Topic
TAS 1 (Revised 2009) Presentation of Financial Statements
TAS 24 (Revised 2009) Related Party Disclosures
TAS 34 (Revised 2009) Interim Financial Reporting
FAPs announcement 17/2554 Transitional Procedures for other Long-term Employee Benefits
FAPs announcement 18/2554 Accounting Guidance on Revaluation of Assets
From 1 January 2011, the Bank and its subsidiaries have adopted TAS 1 (Revised 2009) Presentation of Financial
Statements. Under the revised standard, a set of financial statements comprises:
x Statement of financial position;
x Statement of comprehensive income;
x Statement of changes in equity;
x Statement of cash flows; and
x Notes to the financial statements.
093
Annual Report 2011
Financial Report
As a result, the Bank and its subsidiaries present all owner changes in equity in the statement of changes in
equity and all non-owner changes in equity in the statement of comprehensive income. Previously, all such
changes were included in the statement of changes in equity.
Comparative information has been re-presented so that it also is in conformity with the revised standard, see Note
46. Since the change in accounting policy only impacts presentation aspects, there is no impact on reported
profit or earnings per share.
In addition to the above new and revised TFRS, during 2010 the FAP has issued a number of other TFRS which
are expected to be effective for financial period beginning on or after 1 January 2013 and have not been adopted
in the preparation of these financial statements. These new and revised TFRS are disclosed in Note 34.
5 SIGNIFICANT ACCOUNTING POLICIES
5.1 Basis of consolidation
The consolidated financial statements relate to the Bank and its subsidiaries and the Banks interests in
associates.
Business combinations
The Bank and subsidiaries apply the acquisition method for all business combinations other than those with
entities under common control.
Business combinations are accounted for under the purchase method. The cost of an acquisition is
measured at the fair value of the assets transferred, equity securities issued and identifiable liabilities
assumed at the date of exchange.
Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from
its activities. In assessing control, the Bank and subsidiaries takes into consideration potential voting rights
that currently are exercisable.
094
Annual Report 2011
Financial Report
Goodwill in a business combination
Goodwill in a business combination represents the excess of the cost of acquisition over the fair value of the
Banks share of the identifiable net assets acquired. Negative goodwill in a business combination
represents the excess of the fair value of the Banks share of the identifiable net assets acquired over the
cost of acquisition.
- goodwill and negative goodwill, carried in the financial statements that arose from a business
combination for which the agreement date was before 1 January 2008, are stated at cost less
accumulated amortisation as of 31 December 2007 and accumulated allowance for impairment.
- goodwill arising from a business combination for which the agreement date begins on or after
1 January 2008 to 31 December 2009, are stated at cost less accumulated allowance for impairment.
Negative goodwill is recognised as income in the statement of comprehensive income in the year of
the business combination.
Subsidiaries
Subsidiaries are entities controlled by the Bank and its subsidiaries. Control exists when the Bank and
subsidiaries has the power, directly or indirectly, to govern the financial and operating policies of an entity so
as to obtain benefits from its activities. The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control commences until the date that control ceases.
The accounting policies of subsidiaries have been changed where necessary to align them with the policies
adopted by the Bank.
Losses applicable to non-controlling interests in a subsidiary are allocated to non-controlling interests even
if doing so causes the non-controlling interests to have a deficit balance.
Associates
Associates are those entities in which the Bank and subsidiaries has significant influence, but not control,
over the financial and operating policies. Significant influence is presumed to exist when the Bank and
subsidiaries holds between 20% and 50% of the voting power of another entity.
Investments in associates are accounted for in the consolidated financial statements using the equity
method and are recognised initially at cost. The cost of the investment includes transaction costs.
095
Annual Report 2011
Financial Report
The consolidated financial statements include the Bank and subsidiaries share of profit or loss and other
comprehensive income from the date that significant influence commences until the date that significant
influence ceases. When the Bank and subsidiaries share of losses exceeds its interest in an associate, the
Bank and subsidiaries carrying amount is reduced to nil and recognition of further losses is discontinued
except to the extent that the Bank and subsidiaries has incurred legal or constructive obligations or made
payments on behalf of the associate.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income or expenses arising from intra-group
transactions, are eliminated in preparing the consolidated financial statements. Unrealised gains arising from
transactions with associates are eliminated against the investment to the extent of the Bank and subsidiaries
interest in the investee. Unrealised losses are eliminated in the same way as unrealised gains, but only to
the extent that there is no evidence of impairment.
The consolidated and the Bank only financial statements include the accounts of all branches; domestic and
outside Thailand. Interbranch transactions have been eliminated.
5.2 Cash
Cash represent cash in hand and cash items in the process of collection.
The Bank recognised such items on this financial statements by Settlement Date method.
5.3 Investments
Investments in debt and equity securities
Debt securities and marketable equity securities held for trading are classified as trading investments and
are stated at fair value, with any resultant gain or loss being recognised in the statements of comprehensive
income.
Debt securities for which the Bank and its subsidiaries have the positive intent and ability to hold to maturity
are classified as held-to-maturity investments. Held-to-maturity investments are stated at amortised cost,
less any impairment losses. The difference between the acquisition cost and redemption value of such debt
securities is amortised using the effective interest rate method over the period to maturity.
096
Annual Report 2011
Financial Report
Debt securities and marketable equity securities, other than those securities held for trading or intended to
be held to maturity, are classified as available-for-sale investments. Available-for-sale investments are,
subsequent to initial recognition, stated at fair value, and changes on available-for-sale monetary items, are
recognised directly in equity and other comprehensive income. Where these investments are interest-
bearing, interest calculated using the effective interest method is recognised in profit or loss.
Equity securities which are not marketable classified as general investment are stated at cost less any
impairment losses.
Investments in marketable equity securities classified as trading investments and available-for-sale
investments are stated at fair value based on the last Stock Exchange of Thailand (SET) bid prices as of the
reporting date.
Investments in marketable unit trusts classified as trading investments and available-for-sale investments are
stated at fair value based on the net asset value as of the reporting date.
Investments in government securities and state enterprises securities guaranteed by the government,
classified as trading investments and available-for-sale investments, are stated at fair value based on the
Thai Bond Market Association Government Bond Yield Curve as of the reporting date. State enterprises
securities not guaranteed by the government and private debt instruments are stated at fair value based on
bid prices from the Thai Bond Market Association as of reporting date. If not available, the Government
Bond Yield for the same period, adjusted by an appropriate risk premium, is used.
Investments in receivables
Investments in receivables are stated at acquisition cost after deducting the allowance for impairment.
When debt restructuring is required, the balance is recorded as a loan at fair value, in accordance with the
transfer of financial asset accounting procedure. The difference between the book value and the fair value
is recognised as a gain or loss on transfer of financial assets in the statements of comprehensive income.
Investments recognition
The Bank recognised and eliminated such items on this financial statements by Settlement Date method.
097
Annual Report 2011
Financial Report
Revenue recognition
Interest income is recognised on an accrual basis. Dividend income from investment is recognised on
an accrual basis at the date which the Bank earns the rights to receive the dividend. Gains or losses on
sales of securities are recognised in profit or loss upon disposal. Interest income from investments in
receivables is recognised by using the effective yield method.
Disposal of investments
On disposal of an investment, the difference between net disposal proceeds and the carrying amount together
with the associated gain or loss that was reported in equity is recognised in the statements of comprehensive
income.
On disposal of part of its holding of a particular investment, the deemed cost of the part sold is determined
using the weighted average method applied to the carrying value of the total holding of the investment.
5.4 Investments in subsidiaries and associates
Investments in subsidiaries and associates in the separate financial statements of the Bank are accounted
for using the cost method less allowance for impairment. Investments in associates in the consolidated
financial statements are accounted for using the equity method.
5.5 Loans
Except in the case of loans effected through overdraft agreements, loans represent only principal amounts.
Unearned discounts received in advance are presented as a reduction in loans.
The Bank recognised and eliminated such items on this financial statements by Settlement Date method.
Impairment
An impairment review of investments is carried out when there is a factor indicating that an investment might
be impaired. Losses on impairment for all classifications of investments are charged to the statements of
comprehensive income.
098
Annual Report 2011
Financial Report
5.6 Allowance for doubtful accounts
The Bank and certain subsidiaries which are credit institutions or asset management company make
allowances for doubtful accounts that are determined through methods based on the Bank of Thailands
regulations and the Banks estimated loan loss. The allowance for non-performing loans has been
specifically determined by the nature of loans and the relevant factors such as payment ability, collateral,
historical loss and estimated loss, etc. The allowance for performing loans has been assessed based upon
general relevant factors such as historical loss, credit risk, economic conditions and management
experience, etc. For corporate loans, the allowance is determined on a case by case basis while the
allowance for retail loans is determined on a portfolio basis for portfolios with similar risk characteristics.
Based on BoTs regulations, the Bank and certain subsidiaries which are credit institutions or asset
management company have classified their loan portfolios into six categories, primarily based on the non-
accrual period. For loans classified as pass and special-mention, the calculation of allowances for doubtful
accounts is based on the regulatory minimum percentage requirement, taking into consideration the
collateral value, where the collateral type and date of the latest appraisal are qualifying factors. For loans
classified as sub-standard, doubtful and doubtful of loss, the allowances on these accounts will be set at
100 percent for the difference between the outstanding book value of the debt and the present value of
future cashflows expected to be received or the expected proceeds from the disposal of collateral in
accordance with the BoTs regulations.
Allowance for doubtful accounts of the factoring subsidiary which has credit risk guarantee with other
insurance companies is established in accordance with the Bank of Thailands notification.
Allowance for doubtful accounts established during the year are recognised as bad debt and doubtful
accounts expense in the statements of comprehensive income. Bad debt recovery is recognised as income
and is presented net of bad debt and doubtful accounts expense in the statements of comprehensive
income.
The life insurance subsidiary has allowance for doubtful accounts based on the estimated loss that may
incurred in collection of the premium due, determined by collection experience, review of premium due
aging and value of collateral held against each receivable.
099
Annual Report 2011
Financial Report
5.7 Troubled debt restructuring
The Bank and the asset management subsidiary record foreclosed assets acquired from troubled debt
restructuring at fair value up to the legal claim for the debt, including interest receivable. Where
restructuring a loan involves modification of its terms, the present value of the expected future cash
collections is calculated by using discount rates equivalent to the market rates of interest at the time of
restructuring. The difference between the present value of the future cash flows expected to be received
and the outstanding balances of investment in loans is recorded in the revaluation allowance for debt
restructuring. This revaluation allowance for debt restructuring is amortised to the statement of
comprehensive income according to the amounts received over the remaining period of the
debt-restructuring contracts except for restructured loans with a high probability of default on their
contractual obligations and agreement. In this latter case, the Bank will stop recognising to the statements
of comprehensive income. The recognition in the statements of comprehensive income occurs when such
risk is eliminated.
5.8 Properties foreclosed
Properties foreclosed are recorded at the lower of market value or the amount of the legal claim on the
related debt, including interest receivable. The market value is estimated by using the latest appraisal value
after deduction of estimated disposal expenses and holding cost.
Losses on impairment are charged to the statements of comprehensive income. Gains or losses on disposal
of properties foreclosed are recorded as other operating income or other expenses upon disposal.
5.9 Premises and equipment and depreciation
Recognition and measurement
Owned assets
Land and buildings are stated at their revalued amounts. The revalued amount is the fair value determined
on the basis of the propertys existing use at the date of revaluation less any subsequent accumulated
depreciation and impairment losses. Equipment are stated at cost less accumulated depreciation and
impairment losses.
100
Annual Report 2011
Financial Report
Cost includes expenditure that is directly attributable to the acquisition of the asset, any other costs directly
attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and
removing the items and restoring the site on which they are located, and capitalised borrowing costs.
Purchased software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.
When parts of an item of premises and equipment have different useful lives, they are accounted for as
separate items of premises and equipment.
Gains and losses on disposal of an item of premises and equipment are determined by comparing the
proceeds from disposal with the carrying amount of premises and equipment, and are recognised net within
other income and other expense in the statements of comprehensive income. When revalued assets are
sold, the amounts included in the revaluation reserve are transferred to retained earnings.
Revalued assets
Revaluation of land and buildings is performed by independent professional valuers according to the Bank
of Thailands criteria with sufficient regularity to ensure that the carrying amount of these assets does not
differ materially from that which would be determined using fair values at the reporting date.
Any increase in value, on revaluation, is recognised in other comprehensive income and presented in the
appraisal surplus on asset revaluation in equity unless it offsets a previous decrease in value recognised
loss in the statements of comprehensive income in respect of the same asset.
A decrease in value is recognised in the statements of comprehensive income to the extent it exceeds an
increase previously recognised in other comprehensive income in respect of the same asset.
The appraisal surplus on asset revaluation is utilised by reference to the difference between depreciation
based on the revalued carrying amount of the asset and depreciation based on the assets original cost and
transferred directly to retained earnings.
Upon disposal of a revalued asset, any remaining related appraisal surplus on asset revaluation is
transferred directly to retained earnings and is not taken into account in calculating the gain or loss on
disposal.
101
Annual Report 2011
Financial Report
Leased assets
Leases in terms of which the Bank and its subsidiaries substantially assumes all the risk and rewards of
ownership are classified as finance leases. Equipment acquired by way of finance leases is capitalised at
the lower of its fair value and the present value of the minimum lease payments at the inception of the lease,
less accumulated depreciation and impairment losses. Lease payments are apportioned between the
finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges are charged directly to the statements of comprehensive
income.
Subsequent expenditure
Subsequent expenditure relating to an item of premises and equipment is added to the carrying amount of
the asset when it is probable that the future economic benefits embodied within the part will flow to the Bank
and its subsidiaries. The other subsequent expenditure is recognised in expenses as incurred.
Depreciation
Depreciation is calculated based on the depreciable amount, whish is the cost of and asset, or other amount
substituted for cost, less its residual value.
Depreciation is charged to the statements of comprehensive income on a straight-line basis over the
estimated useful lives of each item of premises and equipment.
Depreciation on buildings acquired before July 1996 is computed using the declining balance method.
Depreciation on buildings acquired after July 1996 and on equipment is computed using the straight-line
method. The estimated useful lives are as follows:
Buildings 20-50 years
Buildings on rented land over rental contract
Equipment 5-15 years
Depreciation methods, useful lives and residual values are reviewed at each financial year-end and adjusted
if appropriate. No depreciation is provided on freehold land or assets under construction
102
Annual Report 2011
Financial Report
5.10 Goodwill and intangible assets
Goodwill
Goodwill that arises upon the acquisition of subsidiaries is included in goodwill and intangible assets. The
measurement of goodwill at initial recognition is described in note 5.1. Subsequent to initial recognition,
goodwill is measured at cost less accumulated impairment losses.
Other intangible assets
Other intangible assets and have finite useful lives are measured at cost less accumulated amortisation and
accumulated impairment losses.
Subsequent expenditure
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the
specific asset to which it relates. The other subsequent expenditure is recognised in expenses as incurred.
Amortisation
Amortisation is charged to the statements of comprehensive income on a straight-line basis over the
estimated useful lives of intangible assets, other than goodwill, from the date that they are available for use,
since this most closely reflects the expected pattern of consumption of the future economic benefits
embodied in the asset, unless such lives are indefinite. Intangible assets with an indefinite useful life are
systematically tested for impairment at each reporting date. Other intangible assets are amortised from the
date they are available for use. The estimated useful lives are as follows
Software licenses 5-15 years
Deferred underwriting license fee and deferred stock exchange membership fee 5 years
Amortisation methods, useful lives and residual values are reviewed at each financial year-end and adjusted
if appropriate.
5.11 Leasehold
Leasehold is presented at cost net accumulated amortisation. The amortisation is calculated using the
straight-line method over the lease periods.
5.12 Investment Property
Investment property consists of buildings and areas for rent of the Bank and subsidiaries. Investment
property is measured at cost on initial recognition and subsequently at fair value and is presented as part of
other assets. Changes in fair value are recognised in the statements of comprehensive income.
103
Annual Report 2011
Financial Report
5.13 Impairment
The carrying amounts of the Bank and subsidiaries assets are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists, the assets recoverable amounts
are estimated. For goodwill and intangible assets that have indefinite useful lives or are not yet available for
use, the recoverable amount is estimated each year at the same time.
An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its
recoverable amount. The impairment loss is recognised in the statements of comprehensive income unless it
reverses a previous revaluation credited to equity, in which case it is charged to equity and other
comprehensive income.
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity
and other comprehensive income and there is objective evidence that the value of the asset is impaired, the
cumulative loss that had been recognised directly in equity and other comprehensive income is recognised
in the statements of comprehensive income even though the financial asset has not been derecognised.
The amount of the cumulative loss that is recognised in the statements of comprehensive income is the
difference between the carrying amount and current fair value, less any impairment loss on that financial
asset previously recognised in the statements of comprehensive income.
Calculation of recoverable amount
The recoverable amount of held-to-maturity securities and receivables carried at amortised cost is
calculated as the present value of the estimated future cash flows discounted at the original effective interest
rate. Receivables with a short duration are not discounted.
The recoverable amount of available-for-sale financial assets is calculated by reference to the fair value.
The recoverable amount of a non-financial asset is the greater of the assets value in use and fair value less
costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value
using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset. For an asset that does not generate cash inflows largely independent of those
from other assets, the recoverable amount is determined for the cash-generating unit to which the asset
belongs.
104
Annual Report 2011
Financial Report
An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in
respect of other non-financial assets are assessed at each reporting date for any indications that the loss
has decreased or no longer exists. An impairment loss is reversed if there has been a change in the
estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that
the assets carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
5.14 Interest-bearing liabilities
Interest-bearing liabilities are recognised initially at fair value less attributable transaction charges.
Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost with any difference
between cost and redemption value being recognised in the statements of comprehensive income over the
period of the borrowings on an effective interest basis.
The Bank recognised and eliminated such items on this financial statements by Settlement Date method.
5.15 Provisions
A provision is recognised in the statement of financial position when the Bank has a present legal or
constructive obligation as a result of a past event that can be estimated reliably, and it is probable that an
outflow of economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate the reflects current market assessments of the
time value of money and the risks specific to the liability. The unwinding of the discount is recognised as
finance cost.
Provisions for commitments not recognised in the statements of financial position relate to credit risk
transactions ie., Avals on bills, Acceptances, Letters of Indemnity - Borrowing, Other Guarantees and Letters
of Credit, etc. A provision is recognised when the transactions relate to loans that are classified as sub-
standard, doubtful, doubtful of loss and loss assets. The provisions have been specifically determined by
using the same rate as the allowance for doubtful accounts on each of those loans.
Reversals of impairment
An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment loss was recognised in the
statements of comprehensive income. For financial assets carried at amortised cost, the reversal is
recognised in the statements of comprehensive income. For available-for-sale financial assets, the reversal
is recognised in other comprehensive income.
105
Annual Report 2011
Financial Report
5.16 Life policy reserve
a) The life policy reserve represents the accumulated total liability for policies in force on the reporting date.
The life policy reserve is calculated according to the procedures prescribed by the Regulation on Life
Assurance Policy Reserve as promulgated by the Ministry of Commerce on 23 November 2001, and is
based on current assumptions.
The main assumptions used relate to mortality and interest rate. The life insurance subsidiary uses mortality
tables and interest rates as announced by the Office of Insurance Commission, increased with a margin for
risk.
b) For accident and group insurance, unearned premium reserve is set aside at the full amount of unearned
premium.
5.17 Benefit payments to life policies
Benefit payments to life policies are recorded when notices of the claims are received or when policies reach
maturity.
5.18 Derivatives
Trading Derivatives: Trading derivatives are carried at fair value which is determined based upon liquid
(observable) market prices, reference to exchange traded prices, broker/dealer quotations, prices of other
similar transactions or prices derived by using a valuation technique incorporating observable market data
which is adjusted with counterparty credit risk and other risks to reflect liquidity and future operational cost.
The changes in fair value of both realized and unrealized gains or losses are recognised in the statements of
comprehensive income as part of gain on trading and foreign exchange transactions against assets or
liabilities in the statements of financial position so that the derivative assets/liabilities represent their fair
value at the reporting date.
Hedging Derivatives: The Bank manages its banking exposures to market rate movements through the use
of derivatives, including interest rate swaps, interest rate future and forward exchange contracts. Gains or
losses resulting from the changes in fair values of contracts are recognised in accordance with the standard
accounting treatment for income or expenses on hedged items as follows:
106
Annual Report 2011
Financial Report
1. Where hedged items are carried at fair value, hedging instruments are carried at fair value
consistently.
2. Where hedged items are carried on an accrual basis, then hedging instruments carry the accrual
consistently.
The Bank recognised and eliminated such items on this financial statements by Trade Date method.
5.19 Hybrid Instrument
Hybrid Instruments: include a non-derivative host contract and an embedded derivative. The host contract
shall be accounted for under the classification of the host contract. An embedded derivative shall be
separated from the host contract and accounted for as a derivative which is carried at fair value, if and only
if:
1. The economic characteristics and risks of the host contract and the embedded derivative are not
closely related;
2. A separate instrument with the same terms as the embedded derivative would meet the definition
of a stand-alone derivative; and
3. The hybrid instrument is not recognised at fair value through the statements of comprehensive
income.
If an embedded derivative is not separated, the hybrid instrument shall be accounted for under the
classification of the host contract.
Changes in the fair value of separated embedded derivatives are recognised in the statements of
comprehensive income.
Structured Note: is a hybrid instrument, which includes deposit or borrowing transaction and embedded
derivative. The Banks management approach with regard to the accounting and assessment of fair value of
deposit and borrowing transactions with embedded derivatives (structured note) are consistent with those of
International Accounting Standard No. 39 (IAS 39) and the BoT notification number SOR NOR SOR 2/2554,
dated 24 June 2011, titled Permission for Commercial Banks to Undertake Deposit or Borrowing
Transactions with Embedded Derivatives, which requires commercial banks to apply IAS 39 to structured
note products. The Bank has an option to classify the structured note as financial liabilities designated at
fair value through profit or loss when
107
Annual Report 2011
Financial Report
1. It eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise from measuring assets or liabilities or recognising the gains and losses on them
on a different basis; or
2. It is a management tool for risk management and investment, in accordance with
- Documented risk management or investment strategy
- Group of financial assets or financial liabilities managed and their performance evaluated on
a fair value basis; and
3. It relates to financial instruments containing one or more embedded derivatives that significantly
modify the cash flows resulting from those financial instruments and meets the above criteria for
separation of the embedded derivative from the host contract.
Changes in the fair value of financial liabilities designated at fair value through profit or loss are recognised
in the statements of comprehensive income as gain or loss on financial liabilities designated at fair value
through profit or loss with the corresponding entry to liabilities in the statements of financial position. The fair
value designation, once made, is irrevocable.
The Bank will comply with requirements of hybrid instrument if the Bank does not choose on criteria for fair
value through profit or loss upon designation are not met.
Day One Profit or Loss: Gains or losses from trading derivatives are recognised at inception in the
statements of comprehensive income when the fair value of those derivatives are determined based upon
observable market data or supported by comparison to other observable market transactions, or based
upon a valuation technique incorporating observable market data. The Bank amortizes initial gains or losses
on trading transactions on a straight-line basis or on an effective interest rate basis over the life of the
contract when the fair value of those trading derivatives are based upon unobservable market data or when
they gains or losses on hybrid instruments. The unamortised gains or losses are recognised in the
statements comprehensive of income when the market data becomes observable.
The Bank recognised and eliminated such items on this financial statements by Settlement Date method.
108
Annual Report 2011
Financial Report
5.20 Employee benefits
Provident fund
The Bank established a provident fund under the Provident Fund Act (B.E. 2530), and registered this Fund
with the Ministry of Finance on 16 August 1994. According to the Funds Articles, every employee is entitled
to apply for membership, and each member must contribute to the Fund at the rate of 3% of their basic
salary, while the Bank contributes an additional 3.0% - 4.5%. Upon termination of employment, employees
are entitled to receive this benefit except when terminated without compensation.
Provision for retirement benefits
Under the labor laws and the Bank and its subsidiaries employment policy, all employees are entitled to
severance pay upon retirement.
The Bank and its subsidiaries determines the net obligation in respect of defined retirement by using
historical data in estimating the amount of future benefits that employees have earned in return for their
service in the current and prior periods. The discount rate is determined by reference to market yields on
high quality government bonds. The provision for retirement benefit is calculated by professional actuary
using The Projected Unit Credit Method and presented as part of provision.
The Bank and its subsidiaries recognise all acturial gains and losses in other comprehensive income and all
expenses related to provision for retirement benefits are recognized as personnel expenses in the statement
of comprehensive income.
Short-term employee benefits
Short-term employee benefits are expensed as the related service is provided.
A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing
plans if the Bank and subsidiaries have a present legal or constructive obligation to pay this amount as a
result of past service provided by the employee, and the obligation can be estimated reliably.
109
Annual Report 2011
Financial Report
5.21 Recognition of income
Interest and discount income on loans are recognised on an accrual basis, except when interest payments
are in arrears for more than three months when, regardless of collateral, the cash basis is adopted.
In compliance with the BoTs regulation, the Bank reverses accrued interest receivable on loans for which
repayments are more than three months in arrears.
The asset management subsidiary recognises interest income on investments in receivables and loans on a
cash basis.
Income from factoring business is recognised on an accrual basis.
The lease income of subsidiaries is recognised as follows:
- Income under finance lease agreements is recognised on the basis of installment payments due by
using the effective interest rate method, calculated from the balance of the net investment in each
installment. When installment payments are in arrears for more than three months, the cash basis is
adopted.
- Income under operating lease agreements is recognised on the basis of installment payments due.
When installment payments are in arrears for more than three months, the cash basis is adopted.
Premium income is recognised as income when underwriting of the insurance is approved. Premium due
and uncollected at the reporting date is recognised as income only if the policy is still in force, and is
calculated based on the persistency rate.
5.22 Recognition of interest expense
Interest expense is recognised on an accrual basis.
110
Annual Report 2011
Financial Report
5.23 Income tax
Income tax expenses for the year comprises current and deferred tax. Current and deferred tax are
recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity or in other comprehensive income.
Current tax
Current tax is the expected tax payable on the taxable income or loss for the year, using tax rates enacted
or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous
years.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is
measured at the tax rates that are expected to be applied to the temporary differences when they reverse,
using tax rates enacted or substantively enacted at the reporting date.
The Bank and its subsidiaries takes into account the impact of uncertain tax positions in determining the
amount of income tax. The Bank and its subsidiaries believes that its accruals for tax liabilities are adequate
for all open tax years based on its assessment of many factors, including interpretations of tax law, prior
experience and a series of judgements about future events; such changes to tax liabilities will impact tax
expense in the period that such a determination is made.
Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities
and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available
against which the temporary differences can be utilised. Deferred tax assets are reviewed at each reporting
date and reduced to the extent that it is no longer probable that the related tax benefit will be realized.
111
Annual Report 2011
Financial Report
5.24 Earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to equity holders of the Bank
on ordinary shareholders of the Bank by the weighted average number of ordinary shares in issue during the
period.
5.25 Translation of foreign currencies
Assets and liabilities denominated in foreign currencies are translated into Thai Baht at the rates of
exchange prevailing on the dates of the transactions. Assets and liabilities including the statement of
financial position of the Banks foreign branches that are denominated in foreign currencies at the reporting
date are translated into Thai Baht at the reference rates announced by the BoT on that date. The statements
of comprehensive income of the Banks foreign branches are translated into Thai Baht at the reference rates
announced by the BoT at the transaction date rate.
Exchange gains or losses on translation is recognised in the statements of comprehensive income or
directly in equity and other comprehensive income, according to the gains or losses on change in fair value
of the related assets and liabilities.
Exchange gains or losses on transactions in foreign currencies and foreign exchange differences arising on
the translation of financial statements of the Banks foreign branches are recognised in the statements of
comprehensive income.
5.26 Trade Date Settlement Date policy
Trade Date policy means the Bank recognises and presents such items on Financial Statements on the date
both counterparties decide to mutually commit on sale agreement, eliminates those items on Financial
Statements when the sale agreement is matured or cancelled as well as recognises Gain or Loss from such
agreement.
Settlement Date policy means the Bank recognises and presents such items on Financial Statements on the
date cash settlement or asset delivery and recognises gain or loss from such agreement.
112
Annual Report 2011
Financial Report
6 CAPITAL REQUIREMENTS
The ratios of capital to assets (Capital Adequacy Ratio) as of 31 December 2011 and 2010 were calculated from
the financial statements of the Bank. The Bank has chosen to adopt the Standardized Approach in compliance
with the Basel II Accord, which is consistent with BoT requirements.
(Million Baht)
2011 2010
Tier 1 Capital
Issued and fully paid up share capital, premiums on share capital 42,036 42,036
Legal reserves 3,050 3,050
Net profit after appropriation 83,833 67,397
Less Deferred tax assets (6,690) (6,547)
Investments in subordinated debt of other financial
institutions (Already included in their capital requirements)
(1)
-
Total Tier 1 Capital Base 122,228 105,936
Tier 2 Capital
Surplus on land revaluation 4,544 4,585
Surplus on premises revaluation 1,938 2,023
Surplus on marketable equity securities-available-for-sale
investments revaluation
973
616
Provision for normal assets 15,866 14,140
Subordinated debentures 29,698 30,569
Less Investments in subordinated debt of other financial
institutions (Already included in their capital requirements)
(1)
-
Total Tier 2 Capital Base 53,018 51,933
Total Capital Base 175,246 157,869
Total Risk-Weighted Assets 1,269,282 1,131,218
113
Annual Report 2011
Financial Report
Capital adequacy ratio
Tier-1 Capital ratio
The BoTs regulations require that banks registered in Thailand maintain a capital adequacy ratio of not less than 8.5%
and that tier-1 capital ratio must not be less than 4.25% of such assets and contingencies. Capital adequacy ratios
maintained by the Bank were as follows:
In accordance with the BoTs directive number SOR NOR SOR 25/2552, dated 14 December 2009, titled The disclosure
of capital requirements of commercial banks requires the Bank to disclose the capital requirements as of 31 December
2011 through the website http://www.kasikornbank.com/EN/Investors/FinanInfoReports/Pages/FinancialReports.aspx
under the investor relations section within 4 months after 31 December 2011.
In accordance with the BoTs directive number SOR NOR SOR 6/2553, dated 18 June 2010, titled Prudential regulation on
consolidated supervision, requires KASIKORNBANK FINANCIAL CONGLOMERATE to disclose the capital requirements as
of 31 December 2011 through the website http://www.kasikornbank.com/EN/Investors/FinanInfoReports/Pages/Financial
Reports.aspx under the investor relations section within 4 months after 31 December 2011.
7 SUPPLEMENTARY INFORMATION OF CASH FLOWS
7.1 Significant non-cash items
Significant non-cash items for the years ended 31 December 2011 and 2010 are as follows:
Percentage
2011 2010
13.81 13.96
9.63 9.37
(Million Baht)
Revaluation surplus on available-for-sale investments 841 856 900 58
The realized portion of the appraised surplus on asset revaluation (138) (117) (138) (117)
Foreclosed properties arising from auction and debt settlement 3,996 4,653 3,793 4,253
Consolidated The Bank
2011 2010 2011 2010
114
Annual Report 2011
Financial Report
Consolidated
2011 2010
At call Term Total At call Term Total
1. Domestic
The BoT and FIDF 827 78,200 79,027 7,034 74,480 81,514
Commercial banks 500 14,627 15,127 308 2,120 2,428
Specialized financial institutions 53 60 113 2 200 202
Other financial institutions 309 465 774 250 1,360 1,610
Total 1,689 93,352 95,041 7,594 78,160 85,754
Add Accrued interest receivable 5 100 105 3 20 23
Less Allowance for doubtful accounts (3) (41) (44) (5) (51) (56)
Total Domestic 1,691 93,411 95,102 7,592 78,129 85,721
2. Foreign
US Dollars 5,975 1,598 7,573 6,213 1,509 7,722
Japanese Yen 113 - 113 92 - 92
Euro 752 - 752 433 - 433
Other currencies 838 7,559 8,397 694 2,888 3,582
Total 7,678 9,157 16,835 7,432 4,397 11,829
Add Accrued interest receivable - 48 48 - 13 13
Less Allowance for doubtful accounts - (16) (16) (3) - (3)
Total Foreign 7,678 9,189 16,867 7,429 4,410 11,839
Total Domestic and Foreign 9,369 102,600 111,969 15,021 82,539 97,560
8 INTERBANK AND MONEY MARKET ITEMS - NET (ASSETS)
Interbank and money market items - net (assets) as of 31 December 2011 and 2010 consisted of:
(Million Baht)
115
Annual Report 2011
Financial Report
The Bank
2011 2010
At call Term Total At call Term Total
1. Domestic
The BoT and FIDF 827 78,000 78,827 7,034 74,480 81,514
Commercial banks 50 14,051 14,101 95 1,450 1,545
Other financial institutions 309 20 329 516 1,360 1,876
Total 1,186 92,071 93,257 7,645 77,290 84,935
Add Accrued interest receivable - 95 95 - 19 19
Less Allowance for doubtful accounts (3) (11) (14) (5) (20) (25)
Total Domestic 1,183 92,155 93,338 7,640 77,289 84,929
2. Foreign
US Dollars 5,975 1,598 7,573 6,213 1,509 7,722
Japanese Yen 113 - 113 92 - 92
Euro 752 - 752 433 - 433
Other currencies 838 7,559 8,397 694 2,888 3,582
Total 7,678 9,157 16,835 7,432 4,397 11,829
Add Accrued interest receivable - 48 48 - 13 13
Less Allowance for doubtful accounts - (16) (16) (3) - (3)
Total Foreign 7,678 9,189 16,867 7,429 4,410 11,839
Total Domestic and Foreign 8,861 101,344 110,205 15,069 81,699 96,768
(Million Baht)
116
Annual Report 2011
Financial Report
Consolidated
2011
Fair Value Notional amount classified by maturity
Type of risk Assets Liabilities Up to 1 year Over 1 year Total
Exchange rate 17,317 16,880 940,181 104,610 1,044,791
Interest rate 9,586 10,444 232,153 700,119 932,272
Others
- Commodities 119 112 4,832 53 4,885
- Equities 15 - - 46 46
- Others (311) - - - -
Total 26,726 27,436 1,177,166 804,828 1,981,994
Consolidated
2010
Fair Value Notional amount classified by maturity
Type of risk Assets Liabilities Up to 1 year Over 1 year Total
Exchange rate 17,394 16,398 730,030 72,283 802,313
Interest rate 11,075 11,193 197,032 575,265 772,297
Others
- Commodities 811 808 4,532 - 4,532
- Credit - - 100 - 100
- Equities 12 - - 53 53
- Others (232) - - - -
Total 29,060 28,399 931,694 647,601 1,579,295
(Million Baht)
9 DERIVATIVES
9.1 Derivatives held for trading
Fair value and notional amount classified by type of risks as of 31 December 2011 and 2010 consisted of:
(Million Baht)
117
Annual Report 2011
Financial Report
The Bank
2011
Fair Value Notional amount classified by maturity
Type of risk Assets Liabilities Up to 1 year Over 1 year Total
Exchange rate 17,321 16,880 940,391 104,610 1,045,001
Interest rate 9,586 10,444 232,153 700,119 932,272
Others
- Commodities 119 112 4,832 53 4,885
- Equities 15 - - 46 46
- Others (311) - - - -
Total 26,730 27,436 1,177,376 804,828 1,982,204
(Million Baht)
(Million Baht)
The Bank
2010
Fair Value Notional amount classified by maturity
Type of risk Assets Liabilities Up to 1 year Over 1 year Total
Exchange rate 17,394 16,397 729,911 72,283 802,194
Interest rate 11,075 11,193 197,032 575,265 772,297
Others
- Commodities 811 808 4,532 - 4,532
- Credit - - 100 - 100
- Equities 12 - - 53 53
- Others (232) - - - -
Total 29,060 28,398 931,575 647,601 1,579,176
118
Annual Report 2011
Financial Report
Proportion of the notional of derivative transactions classified by counter parties as of 31 December 2011 and 2010
consisted of:
Consolidated The Bank
2011 2010 2011 2010
COUNTERPARTY Proportion (%) Proportion (%)
Financial institution 81 79 81 79
Company - other 19 21 19 21
Total 100 100 100 100
10 INVESTMENTS - NET
10.1 Type of investments
Investments as of 31 December 2011 and 2010 consisted of:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Fair Value Fair Value Fair Value Fair Value
1. Trading investments
1.1 Government and state enterprise securities 3,846 14,540 3,846 14,540
1.2 Private enterprise debt instruments 1,433 784 1,433 784
1.3 Marketable equity securities - domestic 313 316 276 274
Total 5,592 15,640 5,555 15,598
2.1 Government and state enterprise securities 148,446 143,586 143,046 139,662
2.2 Private enterprise debt instruments 81 1,234 - 839
2.3 Foreign debt instruments 8,464 6,141 6,058 5,509
2.4 Marketable equity securities - domestic 10,809 11,601 1,359 1,316
2.5 Marketable equity securities - overseas 1,358 345 1,048 345
2.6 Other 200 - - -
Total 169,358 162,907 151,511 147,671
2. Available-for-sale investments
119
Annual Report 2011
Financial Report
Consolidated The Bank
(Million Baht)
2011 2010 2011 2010
Cost Value/
Amortised Cost
Value
Cost Value/
Amortised Cost
Value
Cost Value/
Amortised Cost
Value
Cost Value/
Amortised Cost
Value
3. Held-to-maturity debt instruments
3.1 Government and state enterprise securities 54,895
51,477 1,237 3,261
3.2 Private enterprise debt instruments
31,107 17,905 583 583
3.3 Foreign debt instruments
2,001 2,059 - 93
3.4 Investments in receivables
63 485 50 466
Total
88,066 71,926 1,870 4,403
Less Allowance for impairment
(647) (902) (627) (881)
Total
87,419 71,024 1,243 3,522
4. General investments
4.1 Non-marketable equity securities - domestic
1,554 1,917 1,261 1,616
4.2 Non-marketable equity securities - overseas
437 307 437 307
Total
1,991 2,224 1,698 1,923
Less Allowance for impairment
(217) (715) (100) (599)
Total
1,774 1,509 1,598 1,324
Total Investments - net
264,143 251,080 159,907 168,115
As of 31 December 2011 and 2010, investments in held-to-maturity debt instruments, which are government and state
enterprise securities, included promissory notes from Thai Asset Management Corporation of Baht 173 million and
Baht 2,261 million, respectively.
10.2 Revaluation surplus on available-for-sale investments
Revaluation surplus on available-for-sale investments as of 31 December 2011 and 2010 consisted of:
2011 2010 2011 2010
Revaluation surplus on
available-for-sale investments
Debt instruments 263 40 251 57
Equity securities 2,378 1,760 1,664 959
Total 2,641 1,800 1,915 1,016
(Million Baht)
Consolidated The Bank
120
Annual Report 2011
Financial Report
Consolidated
(Million Baht)
2011 2010
Maturity Maturity
10.3 Maturity for debt instruments
As of 31 December 2011 and 2010 a maturity analysis for debt instruments resulted in the following:
1. Available-for-sale investments
1.1 Government and state
enterprise securities
53,155
92,317
2,469
147,941
44,596
94,237
4,585
143,418
1.2 Private enterprise debt
instruments
4
18
102
124
561
625
96
1,282
1.3 Foreign debt instruments 638 6,774 1,007 8,419 452 4,985 654 6,091
Total 53,797 99,109 3,578 156,484 45,609 99,847 5,335 150,791
(Less) Add Allowance for
revaluation
(93)
491
155
553
(63)
(24)
303
216
Less Allowance for impairment - - (46) (46) - - (46) (46)
Total 53,704 99,600 3,687 156,991 45,546 99,823 5,592 150,961
2. Held-to-maturity debt
instruments
2.1 Government and state
enterprise securities
617
2,471
51,807
54,895
410
5,171
45,896
51,477
2.2 Private enterprise debt
instruments
1,941
7,722
21,444
31,107
755
3,678
13,472
17,905
2.3 Foreign debt instruments - 793 1,208 2,001 93 476 1,490 2,059
2.4 Investments in receivables 58 5 - 63 472 13 - 485
Total 2,616 10,991 74,459 88,066 1,730 9,338 60,858 71,926
Less Allowance for impairment (48) - (599) (647) (303) - (599) (902)
Total 2,568 10,991 73,860 87,419 1,427 9,338 60,259 71,024
Total Debt Instruments 56,272 110,591 77,547 244,410 46,973 109,161 65,851 221,985
1 year
Over
1 year to
5 years
Over
5 years
Total
1 year
Over
1 year to
5 years
Over
5 years
Total
121
Annual Report 2011
Financial Report
(Million Baht)
1. Available-for-sale investments
1.1 Government and state
enterprise securities
50,215
91,499
1,029
142,743
42,952
93,512
3,184
139,648
1.2 Private enterprise debt
instruments
-
-
46
46
240
603
46
889
1.3 Foreign debt instruments 638 5,233 159 6,030 452 4,985 - 5,437
Total 50,853 96,732 1,234 148,819 43,644 99,100 3,230 145,974
(Less) Add Allowance for
revaluation
(93)
385
39
331
(66)
(120)
268
82
Less Allowance for impairment - - (46) (46) - - (46) (46)
Total 50,760 97,117 1,227 149,104 43,578 98,980 3,452 146,010
2. Held-to-maturity debt
instruments
2.1 Government and state
enterprise securities
63
1,081
93
1,237
-
3,261
-
3,261
2.2 Private enterprise debt
instruments
-
-
583
583
-
-
583
583
2.3 Foreign debt instruments - - - - 93 - - 93
2.4 Investments in receivables 45 5 - 50 459 7 - 466
Total 108 1,086 676 1,870 552 3,268 583 4,403
Less Allowance for impairment (44) - (583) (627) (298) - (583) (881)
Total 64 1,086 93 1,243 254 3,268 - 3,522
Total Debt Instruments 50,824 98,203 1,320 150,347 43,832 102,248 3,452 149,532
The Bank
2011 2010
Maturity Maturity
1 year
Over
1 year to
5 years
Over
5 years
Total
1 year
Over
1 year to
5 years
Over
5 years
Total
122
Annual Report 2011
Financial Report
10.4 Investments in other companies having a going concern
As of 31 December 2011 and 2010, investments held by the Bank and its subsidiaries in financial institutions
that were closed on 8 December 1997, or investments in listed companies which meet SETs criteria for
delisting, and are in default on debt instruments, or companies whose ability to continue as a going concern is
uncertain, or unlisted companies whose financial position and operating results are the same as companies
which meet SETs criteria for delisting or investments in receivables with uncertainty in settlement or in default,
were as follows:
(Million Baht)
2011
Consolidated The Bank
Cost Value/
Book Value
Fair Value
Allowance for
Impairment
Cost Value/
Book Value
Fair Value
Allowance for
Impairment
1. Closed financial institutions
- Debt Instrument 130 - (130) 130 - (130)
2. Listed companies which meet SETs
criteria for delisting, and are in
default on debt instruments
- Debt Instrument 46 - (46) 46 - (46)
3. Companies whose ability to continue
as a going concern is uncertain, or
unlisted companies whose financial
position and operating results are
the same as companies which meet
SETs criteria for delisting
- Equity Securities 423 381 (42) 423 381 (42)
- Debt Instrument 453 - (453) 453 - (453)
4. Investments in receivables with
uncertainty in settlement or in default
63
15
(48)
50
6
(44)
Total 1,115 396 (719) 1,102 387 (715)
123
Annual Report 2011
Financial Report
(Million Baht)
2010
Consolidated The Bank
Cost Value/
Book Value
Fair Value
Allowance for
Impairment
Cost Value/
Book Value
Fair Value
Allowance for
Impairment
1. Closed financial institutions
- Debt Instrument 130 - (130) 130 - (130)
2. Listed companies which meet SETs
criteria for delisting, and are in
default on debt instruments
- Debt Instrument 46 - (46) 46 - (46)
3. Companies whose ability to continue
as a going concern is uncertain, or
unlisted companies whose financial
position and operating results are
the same as companies which meet
SETs criteria for delisting
- Equity Securities 293 - (293) 293 - (293)
- Debt Instrument 453 - (453) 453 - (453)
4. Investments in receivables with
uncertainty in settlement or in default
485
183
(302)
466
168
(298)
Total 1,407 183 (1,224) 1,388 168 (1,220)
Consolidated The Bank
2011 2010 2011 2010
Manufacturing and commerce 60 80 - -
Property development and construction 592 496 592 496
Infrastructure and services 1 1 1 1
Others 895 1,155 138 285
Total 1,548 1,732 731 782
(Million Baht)
10.5 Investments over 10% held by the Bank and its subsidiaries
As of 31 December 2011 and 2010, investments held by the Bank and its subsidiaries, that were more than
10% of those companies shares and were not investments in subsidiaries and associated companies,
classified by industry were as follows:
124
Annual Report 2011
Financial Report
Consolidated
% Shareholding
Direct and indirect Cost method Equity method
Type of
Business
Type of
Share
2011
2010
2011
2010
2011
2010
Associated companies
Goco Co., Ltd.
1)
Information and
communication
System
Development
Ordinary
22.65%
30.74%
4
5
4
5
Processing Center Co., Ltd. Service Ordinary 30.00% 30.00% 15 15 117 109
Rural Capital Partners Co., Ltd.
2)
Venture Capital Ordinary - 27.50% - 2 - 2
Lawson-Marsh Events Co., Ltd.
1)
Professional
Conference
Organizer
Ordinary
35.71%
35.71%
5
5
5
5
Humanica Co., Ltd.
1)
Software design
and development
Ordinary
47.60%
21.60%
26
13
26
13
2Spot Communications Co., Ltd.
1)
Character
design and
Development
Ordinary
6.63%
20.17%
-
5
-
5
Total 50 45 152 139
Less Allowance for impairment - (1) - (1)
Investments in Associated Companies - Net 50 44 152 138
1)
The Bank holds shares indirectly through K-SME Venture Capital Co., Ltd.
2)
The Bank sold all investments in Rural Capital Partnurs Co., Ltd. On 22 September 2011.
On 23 March 2011, 2Spot Communications Co., Ltd. repurchased their stocks from K-SME Venture Capital
Co., Ltd., thus the percent of indirect shareholding via K-SME decreased from 20.17% to 6.63%. As the result,
K-SME transferred such investment from investments in associates to general investments.
11 INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIES - NET
11.1 Type of investments in subsidiaries and associated companies
As of 31 December 2011 and 2010, investments in ordinary shares of subsidiaries and associated
companies were as follows:
(Million Baht)
125
Annual Report 2011
Financial Report
Subsidiaries
KASIKORN ASSET MANAGEMENT CO., LTD. Mutual Fund
Management
Ordinary
100.00%
100.00%
2,003
2,003
882
826
KASIKORN RESEARCH CENTER CO., LTD. Service Ordinary 100.00% 100.00% 6 6 - -
KASIKORN SECURITIES PCL Securities
Business
Ordinary
99.99%
99.99%
1,512
1,312
201
-
KASIKORN LEASING CO., LTD. Lending Ordinary 100.00% 100.00% 900 900 - -
KASIKORN FACTORY & EQUIPMENT CO., LTD. Lending Ordinary 100.00% 100.00% 237 237 - -
Phethai Asset Management Co., Ltd. Asset
Management
Ordinary
100.00%
100.00%
3,350
5,000
-
-
KHAO KLA Venture Capital Management
Co., Ltd.
Venture Capital
Management
Ordinary
100.00%
100.00%
-
-
-
-
K-SME Venture Capital Co., Ltd. Venture Capital Ordinary 100.00% 100.00% 200 200 - -
Progress Software Co., Ltd. Service Ordinary 100.00% 100.00% 19 19 7 25
Progress Plus Co., Ltd. Service Ordinary 100.00% 100.00% 4 4 - 3
Progress Appraisal Co., Ltd. Service Ordinary 100.00% 100.00% 5 5 33 20
Progress Gunpai Co., Ltd. Service Ordinary 100.00% 100.00% 21 21 50 50
Progress Management Co., Ltd. Service Ordinary 100.00% 100.00% 6 6 1 1
Progress Facilities Management Co., Ltd. Service Ordinary 100.00% 100.00% 5 5 11 7
Progress Service Co., Ltd. Service Ordinary 100.00% 100.00% 2 2 21 16
Progress Land and Buildings Co., Ltd. Property
Development
Ordinary
100.00%
100.00%
160
160
-
-
Progress Storage Co., Ltd. Service Ordinary 100.00% 100.00% 3 3 9 8
Progress HR Co., Ltd. Service Ordinary 100.00% 100.00% 1 1 20 19
Progress Service Support Co., Ltd. Service Ordinary 100.00% 100.00% 4 4 7 3
Progress Collection Co., Ltd. Service Ordinary 100.00% 100.00% 5 5 2 -
Progress Training Co., Ltd. Service Ordinary 100.00% 100.00% 2 2 1 1
Progress Multi Insurance Broker Co., Ltd. Insurance
Broker
Ordinary
100.00%
100.00%
-
5
-
-
Thanyathanathavee Co., Ltd.
Investment in
other
companies
Ordinary
100.00%
100.00%
1,149
1,149
-
-
Thanyathamrongkij Co., Ltd.
Investment in
other
companies
Ordinary
100.00%
100.00%
1,149
1,149
-
-
Thanyanithiwattana Co., Ltd.
Investment in
other
companies
Ordinary
100.00%
100.00%
2,204
2,204
67
-
Ruang Khao Phuean Thai Joint Investment
Agreement
Investment in
other
companies
Ordinary
100.00%
100.00%
-
-
-
-
Muangthai Group Holding Co., Ltd.
Holding Ordinary 51.00% 51.00% 3,077 3,077 75 141
Muang Thai Life Assurance Co., Ltd.
Life Insurance Ordinary 38.25% 38.25% - - - -
Muangthai Broker Co., Ltd.
Insurance
Broker
Ordinary
49.98%
49.98%
-
-
-
-
(Million Baht)
The Bank
% Shareholding
Direct and indirect Cost method Dividend income
Type of
Business
Type of
Share
2011
2010
2011
2010
2011
2010
Mutual Fund
Management
Service
Securities
Business
Lending
Lending
Asset
Management
Venture Capital
Management
Venture Capital
Service
Service
Service
Service
Service
Service
Service
Property
Development
Service
Service
Service
Service
Service
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100.00%
100.00%
99.99%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
99.99%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
2,003
6
1,512
900
237
3,350
-
200
19
4
5
21
6
5
2
160
3
1
4
5
2
2,003
6
1,312
900
237
5,000
-
200
19
4
5
21
6
5
2
160
3
1
4
5
2
882
-
201
-
-
-
-
-
7
-
33
50
1
11
21
-
9
20
7
2
1
826
-
-
-
-
-
-
-
25
3
20
50
1
7
16
-
8
19
3
-
1
Insurance
Broker
Ordinary
100.00%
100.00%
- - 5 -
Investment in
other
companies
Investment in
other
companies
Investment in
other
companies
Investment in
other
companies
Holding
Life Insurance
Insurance
Broker
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100.00%
100.00%
100.00%
100.00%
51.00%
38.25%
49.98%
100.00%
100.00%
100.00%
100.00%
51.00%
38.25%
49.98%
1,149
1,149
2,204
-
3,077
-
-
1,149
1,149
2,204
-
3,077
-
-
-
-
67
-
75
-
-
-
-
-
-
141
-
-
126
Annual Report 2011
Financial Report
The recording of investments in associated companies using the equity method in the consolidated financial
statements is based on financial information obtained from audited or reviewed financial statements and from
management information that has not been audited or reviewed by the auditors.
11.2 Financial positions and results of operations of the Banks subsidiaries and associated companies
The summary of financial positions and results of operations of the Banks subsidiaries and associated
companies are set out below:
(Million Baht)
Statements of Financial Position
31 December 2011 31 December 2010
Total
Assets
Total
Liabilities
Total
Equity
Total
Assets
Total
Liabilities
Total
Equity
Subsidiaries
K Companies 79,212 74,146 5,066 65,790 61,678 4,112
Companies in MTGH Group 119,397 101,644 17,753 96,883 81,366 15,517
Phethai AMC 1,871 44 1,827 3,502 52 3,450
Support Service Providers to
KASIKORNBANKGROUP
(P Companies) and others
10,958
772
10,186
11,053
1,078
9,975
Total 211,438 176,606 34,832 177,228 144,174 33,054
Associated Companies 502 108 394 413 42 371
(Million Baht)
The Bank
% Shareholding
Direct and indirect Cost method Dividend income
Type of
Business
Type of
Share
2011
2010
2011
2010
2011
2010
Associated companies
Processing Center Co., Ltd. Service Ordinary 30.00% 30.00% 15 15 4 4
Rural Capital Partners Co., Ltd. Venture Capital Ordinary - 27.50% - 2 - -
Total 16,039 17,496 1,391 1,124
Less Allowance for impairment (1,913) (1,913)
Investments in Subsidiaries and Associated Companies - Net 14,126 15,583 1,391 1,124
127
Annual Report 2011
Financial Report
(Million Baht)
Statements of Comprehensive Income
For the Years Ended 31 December
2011 2010
Operating
Income
Operating
Expenses Net Profit
Operating
Income
Operating
Expenses Net Profit
Subsidiaries
K Companies 4,940 3,102 1,838 4,303 2,871 1,432
Companies in MTGH Group 6,967* 4,086 2,881 5,426* 3,079 2,347
Phethai AMC 62 35 27 72 40 32
Support Service Providers to
KASIKORNBANKGROUP
(P Companies) and others
4,226
3,873
353
3,603
3,368
235
Total 16,195 11,096 5,099 13,404 9,358 4,046
Associated Companies 252 206 46 202 180 22
* Excluding inter-group transactions being dividend from subsidiaries for the years ended 31 December 2011 and 2010 in the amount of Baht 267 million and Baht
1,500 million, respectively.
128
Annual Report 2011
Financial Report
11.3 Disclosure of Statements of Cash Flows of Asset Management Company (AMC)
Phethai Asset Management Company Limited
Statements of Cash Flows
For the Years Ended 31 December 2011 and 2010
Million Baht
2011 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Income before income tax
27 32
Add (Less) Adjustments to reconcile income before income tax to net
from operating activities
Interest income from amortisation of revaluation allowance
for debt restructuring
-
(1)
Loss on impairment of properties foreclosed
90 40
Reversal of loss on impairment of other assets
- (2)
Reversal of bad debt and doubtful accounts
(45) (1)
Loss on debt restructuring
1 1
Gain on transfer of changing account
(15) (6)
Amortisation of discount on promissory note receivbles
(4) (16)
Decrease in accrued expenses
(1) (1)
53 46
Net income from interest
(45) (53)
Proceeds from interest
45 53
Income tax received
4 10
Income from operations before changes in operating assets
and liabilities
57
56
129
Annual Report 2011
Financial Report
Phethai Asset Management Company Limited
Statements of Cash Flows (Continued)
For the Years Ended 31 December 2011 and 2010
Million Baht
2011 2010
Decrease in operating assets
Investments in receivables
4 51
Loans
122 160
Properties foreclosed
359 962
Other assets
366 6
(Decrease) increase in operating liabilities
Other liabilities
(8) 6
Net cash provided by operating activities
900 1,241
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of investments in securities
1 1
Net cash provided by investing activities
1 1
CASH FLOWS FROM FINANCING ACTIVITIES
Cash paid for share capital decrease
(1,650) (998)
Net cash used in financing activities
(1,650) (998)
Net (decrease) increase in cash
(749) 244
Cash at the beginning of the year
804 560
Cash at the end of the year
55 804
130
Annual Report 2011
Financial Report
Consolidated The Bank
2011 2010 2011 2010
Overdrafts 197,077 183,904 196,678 183,367
Loans 562,656 478,921 625,626 528,760
Bills 328,613 311,741 330,533 313,324
Hire purchase receivables 63,663 53,776 - -
Finance lease receivables 10,956 7,006 - -
Others 54,432 47,233 48,877 42,548
Less Deferred revenue (6,563) (5,600) (395) (291)
Total loans to customers net from
deferred revenue
1,210,834
1,076,981
1,201,319
1,067,708
Add Accrued interest receivables 2,105 1,417 1,896 1,225
Total loans to customers net from
deferred revenue plus accrued
interest receivables
1,212,939
1,078,398
1,203,215
1,068,933
Less Allowance for doubtful accounts
1. Minimum reserve of BoTs
Regulations - Individual approach
(21,769)
(20,982)
(21,607)
(20,599)
2. Excess allowance (13,385) (11,346) (12,553) (10,600)
3. Credit balance transaction (5) - - -
4. Loan from life insurance business (43) (117) - -
Less Revaluation allowance for
debt restructuring
(5,141)
(4,387)
(5,140)
(4,387)
Total Loans to customers and accrued
interest receivables - net
1,172,596
1,041,566
1,163,915
1,033,347
(Million Baht)
12 LOANS TO CUSTOMERS AND ACCRUED INTEREST RECEIVABLES - NET
Loans to customers and accrued interest receivables - net as of 31 December 2011 and 2010 consisted of:
12.1 Classified by Type of Loans
131
Annual Report 2011
Financial Report
12.2 Classified by Currencies and Residency of Borrowers
Consolidated
2011 2010
Domestic Foreign Total Domestic Foreign Total
Baht 1,115,815 10,199 1,126,014 1,005,079 6,530 1,011,609
US Dollars 74,713 555 75,268 60,965 528 61,493
Other currencies 6,251 3,301 9,552 3,005 874 3,879
Total 1,196,779 14,055 1,210,834 1,069,049 7,932 1,076,981
(Million Baht)
The Bank
2011 2010
Domestic Foreign Total Domestic Foreign Total
Baht 1,106,300 10,199 1,116,499 995,806 6,530 1,002,336
US Dollars 74,713 555 75,268 60,965 528 61,493
Other currencies 6,251 3,301 9,552 3,005 874 3,879
Total 1,187,264 14,055 1,201,319 1,059,776 7,932 1,067,708
(Million Baht)
132
Annual Report 2011
Financial Report
12.3 Classified by Type of Business and Account Status
Consolidated
2011
Pass
Special
Mention
Sub-
Standard
Doubtful
Doubtful
of Loss
Total
Agriculture and mining 28,035 1,107 71 112 491 29,816
Manufacturing and commerce 590,864 10,988 2,991 3,059 12,440 620,342
Property development and
Construction
71,215
1,411
256
357
1,967
75,206
Infrastructure and services 144,055 2,402 608 1,057 2,471 150,593
Housing loans 190,076 1,105 435 504 1,917 194,037
Others 129,079 1,798 600 591 1,808 133,876
Total 1,153,324 18,811 4,961 5,680 21,094 1,203,870
Credit balance transaction 958
Loan from life insurance business 6,006
Total 1,210,834
(Million Baht)
(Million Baht)
Consolidated
2010
Pass
Special
Mention
Sub-
Standard
Doubtful
Doubtful
of Loss
Total
Agriculture and mining 24,892 1,353 43 109 635 27,032
Manufacturing and commerce 551,823 14,912 1,977 4,278 11,334 584,324
Property development and
Construction
56,482
1,119
204
319
2,681
60,805
Infrastructure and services 106,694 2,485 340 1,234 4,391 115,144
Housing loans 162,266 1,512 621 628 1,694 166,721
Others 111,468 1,853 607 531 1,549 116,008
Total 1,013,625 23,234 3,792 7,099 22,284 1,070,034
Credit balance transaction 1,517
Loan from life insurance business 5,430
Total 1,076,981
133
Annual Report 2011
Financial Report
(Million Baht)
The Bank
2011
Pass
Special
Mention
Sub-
Standard
Doubtful
Doubtful
of Loss
Total
Agriculture and mining 22,671 743 58 96 480 24,048
Manufacturing and commerce 565,125 9,737 2,900 2,902 12,058 592,722
Property development and
Construction
67,233
1,101
245
343
1,735
70,657
Infrastructure and services 133,229 1,062 567 1,027 2,055 137,940
Housing loans 190,064 1,102 436 503 1,852 193,957
Others 178,467 917 556 566 1,489 181,995
Total 1,156,789 14,662 4,762 5,437 19,669 1,201,319
(Million Baht)
The Bank
2010
Pass
Special
Mention
Sub-
Standard
Doubtful
Doubtful
of Loss
Total
Agriculture and mining 20,392 1,030 22 92 626 22,162
Manufacturing and commerce 530,099 14,006 1,912 4,218 10,765 561,000
Property development and
Construction
53,579
977
193
307
2,274
57,330
Infrastructure and services 98,444 2,245 319 1,100 4,051 106,159
Housing loans 162,245 1,508 621 628 1,597 166,599
Others 151,012 1,119 561 476 1,290 154,458
Total 1,015,771 20,885 3,628 6,821 20,603 1,067,708
134
Annual Report 2011
Financial Report
12.4 Classified by Account Status
(Million Baht)
Consolidated
2011
Loans and
Accrued Interest
Receivables
Net amount used for
set the Allowance for
Doubtful Accounts
% Used for setting
the Allowance for
Doubtful Accounts
Allowance for
Doubtful Accounts
1. Minimum reserve of BoTs Regulations
Pass 1,154,958 433,653 1 4,337
Special Mention 18,902 2,848 2 324
Sub-Standard 5,004 3,093 100 3,093
Doubtful 5,684 3,007 100 3,007
Doubtful of Loss 21,234 11,008 100 11,008
Total 1,205,782 453,609 21,769
2. Excess allowance 13,385
3. Credit balance transaction 960 5
4. Loan from life insurance business 6,197 43
Total 1,212,939 35,202
(Million Baht)
Consolidated
2010
Loans and
Accrued Interest
Receivables
Net amount used for
set the Allowance for
Doubtful Accounts
% Used for setting
the Allowance for
Doubtful Accounts
Allowance for
Doubtful Accounts
1. Minimum reserve of BoTs Regulations
Pass 1,014,571 373,298 1 3,733
Special Mention 23,366 5,395 2 108
Sub-Standard 3,821 1,448 100 1,447
Doubtful 7,104 3,089 100 3,089
Doubtful of Loss 22,420 12,605 100 12,605
Total 1,071,282 395,835 20,982
2. Excess allowance 11,346
3. Credit balance transaction 1,517 -
4. Loan from life insurance business 5,599 117
Total 1,078,398 32,445
135
Annual Report 2011
Financial Report
The Bank
2011
Loans and
Accrued Interest
Receivables
Net amount used for
set the Allowance for
Doubtful Accounts
% Used for setting
the Allowance for
Doubtful Accounts
Allowance for
Doubtful Accounts
1. Minimum reserve of BoTs Regulations
Pass 1,158,427 502,195 1 5,022
Special Mention 14,754 2,735 2 322
Sub-Standard 4,805 3,077 100 3,077
Doubtful 5,440 2,958 100 2,958
Doubtful of Loss 19,789 10,228 100 10,228
Total 1,203,215 521,193 21,607
2. Excess allowance 12,553
Total 34,160
(Million Baht)
The Bank
2010
Loans and
Accrued Interest
Receivables
Net amount used for
set the Allowance for
Doubtful Accounts
% Used for setting
the Allowance for
Doubtful Accounts
Allowance for
Doubtful Accounts
1. Minimum reserve of BoTs Regulations
Pass 1,016,720 425,942 1 4,259
Special Mention 21,017 5,271 2 106
Sub-Standard 3,656 1,441 100 1,441
Doubtful 6,826 2,957 100 2,957
Doubtful of Loss 20,714 11,836 100 11,836
Total 1,068,933 447,447 20,599
2. Excess allowance 10,600
Total 31,199
(Million Baht)
136
Annual Report 2011
Financial Report
12.5 Non-performing loans (NPL)
According to the BoTs directive number SOR NOR SOR 13/2553, dated 3 December 2010, titled Preparation
and announcement of condensed report of assets and liabilities of commercial banks.
Non-performing loans (NPL gross) are defined as sub-standard quality loans, being outstanding loans of sub-
standard, doubtful, doubtful of loss and loss loan accounts in accordance with the BoTs directive number SOR
NOR SOR 31/2551, dated 3 August 2008, titled Classification and provision criteria of financial institution.
Non-performing loans, net (NPL net) refers to the non-performing loan value, net of total allowances for doubtful
accounts.
In accordance with the BoTs regulations, commercial banks are required to report the following information:
- Non-performing loans (NPL gross).
- The ratio of NPL to total loans.
- Non-performing loans, net (NPL net).
- The ratio of total loans, net of allowances for doubtful accounts, which is referred to the ratio of NPL
net, to total loans after deduction of allowances for doubtful accounts.
137
Annual Report 2011
Financial Report
As of 31 December 2011 and 2010, the Bank and subsidiaries showed non-performing loans (including
financial institutions) to comply with BoTs regulations, summarized as follows:
(Million Baht)
2011
KASIKORNBANK
Phethai Asset
Management
Other
Consolidated
Non-performing loans, gross
Non-performing loans
29,868 879 989 31,736
Total loans used for NPL gross ratio
calculation
(1)
1,295,337
913
71,844
1,297,887
(2)
Ratio of total loans
2.31 96.28 1.38 2.45
Non-performing loans, net
Non-performing loans
13,675 646 377 14,698
Total loans used for NPL net ratio
calculation
(1)
1,279,144
680
71,233
1,280,850
(2)
Ratio of total loans
1.07 95.00 0.53 1.15
(Million Baht)
2010
KASIKORNBANK
Phethai Asset
Management
Other
Consolidated
Non-performing loans, gross
Non-performing loans 31,053 1,208 914 33,175
Total loans used for NPL gross ratio
calculation
(1)
1,138,880
1,245
57,874
1,141,206
(2)
Ratio of total loans 2.73 97.04 1.58 2.91
Non-performing loans, net
Non-performing loans 14,806 911 305 16,022
Total loans used for NPL net ratio
calculation
(1)
1,122,633
948
57,265
1,124,053
(2)
Ratio of total loans 1.32 96.11 0.53 1.43
(1)
Excluding loans from KSecurities and MTL.
(2)
Excluding loans to and from subsidiary companies.
138
Annual Report 2011
Financial Report
12.6 Non-accrual loans based on the accrual basis
As of 31 December 2011 and 2010, the Bank and subsidiaries showed non-accrual loans, gross, (including
financial institutions) based on the accrual basis to comply with BoTs regulations can be summarized as
follows:
Consolidated The Bank
2011 2010 2011 2010
Non-accrual loans 66,394 65,593 64,643 63,467
Total loans used for ratio Calculation
(1)
1,297,887
(2)
1,141,206
(2)
1,295,337 1,138,880
Percentage of total loans 5.12 5.75 4.99 5.57
(1)
Excluding loans from KSecurities and MTL.
(2)
Excluding loans to and from subsidiary companies.
12.7 Listed companies that meet SETs criteria for delisting
As of 31 December 2011 and 2010, loans to listed companies that meet SETs criteria for delisting were as
follows:
(Million Baht)
(Million Baht)
Consolidated and The Bank
2011 2010
Loans and
Accrued
Interest
Receivables
Collateral
Value
Allowance for
Doubtful
Accounts
Loans and
Accrued
Interest
Receivables
Collateral
Value
Allowance for
Doubtful
Accounts
Listed companies which meet SETs
criteria for delisting
2,841
576
124
477
24
449
139
Annual Report 2011
Financial Report
12.8 Transferring of Sub-Standard Quality Assets to Thai Asset Management Corporation (TAMC)
In accordance with the Emergency Decree on the Thai Asset Management Corporation B.E. 2544, on 12
October 2001, the Bank signed an Asset Transfer Agreement with TAMC to transfer eligible sub-standard
quality assets outstanding as of 31 December 2000 to TAMC. All rights and duties associated with each
transferred sub-standard quality asset were transferred to TAMC at a price determined by the appraised value
of the underlying collateral assets, provided that the price did not exceed the book value of credits extended,
less existing provisions outstanding, as required by law on the transfer date. TAMC has 180 days from the date
of each transfer to examine any transferred assets. TAMC will then quote the transfer price within 7 days after
the end of the examination period. After confirming the price, TAMC will issue non-transferable 10-year callable
promissory notes guaranteed by FIDF. The notes bear interest equal to the weighted average of the deposit
rates of five major banks, and are paid at the end of each year by cheque. The rights to these notes and the
received notes are included in investments in held-to-maturity debt instruments.
In accordance with the Emergency Decree B.E. 2544 and the Asset Transfer Agreement, TAMC and the Bank
will share jointly the profits and responsibility for any losses on transferred assets, which are payable on the fifth
and the tenth anniversaries of the transfers, starting from 1 July 2001. In the case of losses, the Bank will first
be responsible for any loss, not exceeding 20% of the transfer price. The second portion of losses, again not
exceeding 20% of the transfer price, will be equally shared by TAMC and the Bank. Any remaining loss would
then be absorbed by TAMC. In addition, expenses of TAMC are included in the calculation of the gain or loss
sharing. In the case of profit, the first portion of profits up to 20% of the transfer price is to be shared equally by
TAMC and the Bank. Should there be any profit over and above this, the Bank is entitled to the remainder up to
the gross book value of the assets, less the transfer price and the Banks share in the first portion of the profits.
As of 31 December 2011 and 2010, the Bank has set up an estimate for loss sharing amounting to
Baht 1,400 million and Baht 1,300 million, respectively.
As of 30 June 2011 which is the tenth anniversary of the transfer, the gross book value of the assets transferred
before deducting allowance for doubtful accounts was Baht 14,557 million and the estimated total transfer price
was Baht 10,072 million, for which the Bank received promissory notes from TAMC. The liquidation process has
been in process to complete within the twelfth year since the Emergency Decree on Thai Asset Management
Corporation B.E. 2544 was put into effect by the Liquidation Committee.
The Bank was informed that profit sharing at the end of the tenth year amounting to Baht 107 million was
allocated to the Bank from TAMC. TAMC also informed that they will adjust the result of tenth anniversary upon
completion of the remaining asset management process.
140
Annual Report 2011
Financial Report
Consolidated
2011
Portion due
Up to 1 year
Over 1 Year
to 5 Years
Over 5 Years
Total
Gross receivables from finance leases 26,745 47,211 663 74,619
Less Unearned interest income (6,159)
Present value of minimum lease payments 68,460
Allowance for doubtful accounts (516)
Total Finance Lease Receivables - net 67,944
12.9 Finance Lease Receivables
(Million Baht)
Consolidated
2010
Portion due
Up to 1 year
Over 1 Year
to 5 Years
Over 5 Years
Total
Gross receivables from finance leases 21,311 39,060 411 60,782
Less Unearned interest income (5,555)
Present value of minimum lease payments 55,227
Allowance for doubtful accounts (456)
Total Finance Lease Receivables - net 54,771
(Million Baht)
141
Annual Report 2011
Financial Report
13 TROUBLED DEBT RESTRUCTURING
During the years ended 31 December 2011 and 2010, the Bank and its subsidiaries engaged in debt
restructuring contracts as follows:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Total Total Total Total
Outstanding
Debt Before
Outstanding
Debt Before
Outstanding
Debt Before
Outstanding
Debt Before
Cases Restructuring Cases Restructuring Cases Restructuring Cases Restructuring
Debt restructuring
contracts that incurred
losses 391 14,887
401
14,443 385 14,868
397
14,424
Debt restructuring
contracts that incurred
no losses 40,700
34,264
35,849
32,546 40,667 34,189
35,817
32,053
Total 41,091 49,151 36,250 46,989 41,052 49,057 36,214 46,477
Losses on debt restructuring for the years ended 31 December 2011 and 2010 were as follows:
(Million Baht)
Consolidated
2011
Outstanding Debt Transferred Assets Loss on
Before After Debt
Types of Restructuring Cases Restructuring Restructuring Types Fair Value Restructuring
Transfers of assets 12 556 - Cash, land, 216 340
premises
and investments
Changes of repayment conditions 350 11,725 11,458 - - 2,160
Debt restructuring in various forms 29 2,606 1,813 Cash, land, 792 1,074
Premises
and investments
Total 391 14,887 13,271 1,008 3,574
142
Annual Report 2011
Financial Report
Consolidated
2010
Outstanding Debt Transferred Assets Loss on
Before After Debt
Types of Restructuring Cases Restructuring Restructuring Types Fair Value Restructuring
Transfers of assets 6 116 - Cash, land, 102 14
premises
and investments
Changes of repayment conditions 357 10,032 9,981 - - 1,874
Debt restructuring in various forms 38 4,295 3,545 Cash, land, 750 702
premises
and investments
Total 401 14,443 13,526 852 2,590
The Bank
2011
Outstanding Debt Transferred Assets Loss on
Before After Debt
Types of Restructuring Cases Restructuring Restructuring Types Fair Value Restructuring
Transfers of assets 7 553 - Cash, land, 213 340
premises
and investments
Changes of repayment conditions 349 11,709 11,441 - - 2,159
Debt restructuring in various forms 29 2,606 1,813 Cash, land, 792 1,074
premises
and investments
Total 385 14,868 13,254 1,005 3,573
(Million Baht)
(Million Baht)
143
Annual Report 2011
Financial Report
The Bank
2010
Outstanding Debt Transferred Assets Loss on
Before After Debt
Types of Restructuring Cases Restructuring Restructuring Types Fair Value Restructuring
Transfers of assets 6 116 - Cash, land, 102 14
premises
and investments
Changes of repayment conditions 353 10,013 9,962 - - 1,873
Debt restructuring in various forms 38 4,295 3,545 Cash, land, 750 702
premises
and investments
Total 397 14,424 13,507 852 2,589
(Million Baht)
144
Annual Report 2011
Financial Report
The Bank and its subsidiaries measure the expected recoverable amounts of loans restructured by changing
repayment conditions by using the present value of future cash flows discounted by the market rate.
The terms of debt restructuring agreements with debts which were restructured by changing the repayment
conditions and restructured in various other ways and which resulted in losses on debt restructuring during the
years ended 31 December 2011 and 2010 are as follows:
(Million Baht)
Consolidated
2011 2010
Outstanding Debt Outstanding Debt
Terms of debt
restructuring
agreements
Cases
Before
Restructuring
After
Restructuring
End of
Year
Cases
Before
Restructuring
After
Restructuring
End of
Year
Less than 5 years 268 3,955 3,597 3,268 336 8,688 8,016 7,462
5 to 10 years 57 6,966 6,489 6,277 23 2,060 1,974 1,967
Over 10 years 54 3,410 3,185 3,091 36 3,579 3,536 3,455
Total 379 14,331 13,271 12,636 395 14,327 13,526 12,884
The Bank
2011 2010
Outstanding Debt Outstanding Debt
Terms of debt
restructuring
agreements
Cases
Before
Restructuring
After
Restructuring
End of
Year
Cases
Before
Restructuring
After
Restructuring
End of
Year
Less than 5 years 267 3,939 3,580 3,252 332 8,669 7,997 7,455
5 to 10 years 57 6,966 6,489 6,277 23 2,060 1,974 1,967
Over 10 years 54 3,410 3,185 3,091 36 3,579 3,536 3,455
Total 378 14,315 13,254 12,620 391 14,308 13,507 12,877
(Million Baht)
145
Annual Report 2011
Financial Report
(Million Baht)
The Bank and its subsidiaries recognised interest income from debt restructuring for the years ended
31 December 2011 and 2010 as follows:
Consolidated The Bank
2011 2010 2011 2010
Debt restructuring contracts that incurred losses 708 824 708 824
As of 31 December 2011 and 2010, the Bank had commitments to extend additional loans to these borrowers as
follows:
(Million Baht)
Consolidated and The Bank
2011 2010
Debt restructuring contracts that incurred losses 407 479
The Bank and its subsidiaries had outstanding balances on debtors which were restructured during 2011 and
2010 as follows:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Debt restructuring contracts that incurred losses 12,636 12,884 12,620 12,877
Debt restructuring contracts that incurred no losses 26,137 24,956 26,125 24,955
Total 38,773 37,840 38,745 37,832
As of 31 December 2011 and 2010, the Bank and its subsidiaries had outstanding balances relating to all
restructured debtors which had been performing in accordance with debt restructuring agreements as follows:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Debt restructuring contracts that incurred losses 22,861 22,597 22,839 22,585
Debt restructuring contracts that incurred no losses 40,147 36,738 40,041 36,676
Total 63,008 59,335 62,880 59,261
146
Annual Report 2011
Financial Report
(Million Baht)
14 ALLOWANCE FOR DOUBTFUL ACCOUNTS
The movements in the allowance for doubtful accounts during the years were as follows:
Consolidated
2011
Pass
Special
Mention
Sub-
Standard
Doubtful
Doubtful
of Loss
Excess
Allowance
Allowances
from
Securities
Business
Allowances
from
Insurance
Business
Total
Balance at the beginning
of the year
3,733
108
1,447
3,089
12,605
11,346
-
117
32,445
Transferred from investments
in receivables
-
-
-
-
1
-
-
-
1
Doubtful accounts (reversal)
605 216 1,646 (82) 251 2,039 5 (52) 4,628
Bad debt written off
(1) - - - (3,911) - - - (3,912)
Others
- - - - 2,062 - - (22) 2,040
Balance at the end of the year
4,337 324 3,093 3,007 11,008 13,385 5 43 35,202
Consolidated
2010
Pass
Special
Mention
Sub-
Standard
Doubtful
Doubtful
of Loss
Excess
Allowance
Allowances
from Insurance
Business
Total
Balance at the beginning of the year 2,829 79 3,061 3,020 11,261 9,141 135 29,526
Transferred from investments in
receivables
-
-
-
-
7
-
-
7
Doubtful accounts (reversal) 905 58 (1,614) 69 3,083 2,237 (26) 4,712
Bad debt written off (1) (29) - - (4,303) - - (4,333)
Others - - - - 2,557 (32) 8 2,533
Balance at the end of the year 3,733 108 1,447 3,089 12,605 11,346 117 32,445
(Million Baht)
147
Annual Report 2011
Financial Report
The Bank
2011
Pass
Special
Mention
Sub-
Standard
Doubtful
Doubtful
of Loss
Excess
Allowance
Total
Balance at the beginning of the year 4,259 106 1,441 2,957 11,836 10,600 31,199
Doubtful accounts (reversal) 763 216 1,636 1 20 1,953 4,589
Bad debt written off - - - - (3,788) - (3,788)
Others - - - - 2,160 - 2,160
Balance at the end of the year 5,022 322 3,077 2,958 10,228 12,553 34,160
(Million Baht)
The Bank
2010
Pass
Special
Mention
Sub-
Standard
Doubtful
Doubtful
of Loss
Excess
Allowance
Total
Balance at the beginning of the year 3,260 74 3,057 3,001 10,531 8,424 28,347
Doubtful accounts (reversal) 999 32 (1,616) (44) 2,877 2,176 4,424
Bad debt written off - - - - (4,137) - (4,137)
Others - - - - 2,565 - 2,565
Balance at the end of the year 4,259 106 1,441 2,957 11,836 10,600 31,199
15 REVALUATION ALLOWANCE FOR DEBT RESTRUCTURING
The movements in the revaluation allowance for debt restructuring during the years were as follows:
(Million Baht)
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Balance at the beginning of the year 4,387 4,519 4,386 4,493
Increase 3,232 2,583 3,231 2,582
Amortisation to interest income (239) (326) (239) (326)
Others (2,239) (2,389) (2,238) (2,363)
Balance at the end of the year 5,141 4,387 5,140 4,386
148
Annual Report 2011
Financial Report
16 PROPERTIES FORECLOSED - NET
Properties foreclosed as of 31 December 2011 and 2010 consisted of:
Consolidated
2011
Type of Properties Foreclosed
Beginning
Balance
Addition
Disposal
Ending
Balance
1. Assets acquired from debt repayment
1.1 Immovable assets
15,488 4,041 (4,487) 15,042*
1.2 Movable assets
38 84 (91) 31
Total
15,526 4,125 (4,578) 15,073
2. Others
405 28 (403) 30
Total Properties Foreclosed
15,931 4,153 (4,981) 15,103
Less Allowances for impairment
(1,550) (596) 467 (1,679)
Total Properties Foreclosed - net
14,381 3,557 (4,514) 13,424
* As of 31 December 2011, the value of immovable assets acquired from debt repayment was appraised by external
appraisers and internal appraisers in the amount of Baht 10,471 million and Baht 4,571 million, respectively.
(Million Baht)
Consolidated
2010
Type of Properties Foreclosed
Beginning
Balance
Addition
Disposal
Ending
Balance
1. Assets acquired from debt repayment
1.1 Immovable assets 16,106 4,538 (5,156) 15,488**
1.2 Movable assets 48 287 (297) 38
Total 16,154 4,825 (5,453) 15,526
2. Others 500 4 (99) 405
Total Properties Foreclosed 16,654 4,829 (5,552) 15,931
Less Allowances for impairment (1,695) (541) 686 (1,550)
Total Properties Foreclosed - net 14,959 4,288 (4,866) 14,381
** As of 31 December 2010, the value of immovable assets acquired from debt repayment was appraised by external
appraisers and internal appraisers in the amount of Baht 11,254 million and Baht 4,234 million, respectively.
(Million Baht)
149
Annual Report 2011
Financial Report
(Million Baht)
The Bank
2011
Beginning Ending
Type of Properties Foreclosed Balance Addition Disposal Balance
1. Assets acquired from debt repayment
1.1 Immovable assets
13,644 3,925 (3,988) 13,581*
1.2 Movable assets
27 - - 27
Total
13,671 3,925 (3,988) 13,608
2. Others
7 28 (7) 28
Total Properties Foreclosed
13,678 3,953 (3,995) 13,636
Less Allowances for impairment
(1,285) (482) 352 (1,415)
Total Properties Foreclosed - net
12,393 3,471 (3,643) 12,221
* As of 31 December 2011, the value of immovable assets acquired from debt repayment was appraised by external
appraisers and internal appraisers in the amount of Baht 9,010 million and Baht 4,571 million, respectively.
(Million Baht)
The Bank
2010
Beginning Ending
Type of Properties Foreclosed Balance Addition Disposal Balance
1. Assets acquired from debt repayment
1.1 Immovable assets 13,074 4,409 (3,839) 13,644**
1.2 Movable assets 28 - (1) 27
Total 13,102 4,409 (3,840) 13,671
2. Others 3 4 - 7
Total Properties Foreclosed 13,105 4,413 (3,840) 13,678
Less Allowances for impairment (1,227) (455) 397 (1,285)
Total Properties Foreclosed - net 11,878 3,958 (3,443) 12,393
** As of 31 December 2010, the value of immovable assets acquired from debt repayment was appraised by
external appraisers and internal appraisers in the amount of Baht 9,410 million and Baht 4,234 million,
respectively.
150
Annual Report 2011
Financial Report
17 CLASSIFIED ASSETS
As of 31 December 2011 and 2010, assets of the Bank and its subsidiaries, classified as investments, loans and
accrued interest receivables (including financial institutions), properties foreclosed and other assets, were
categorized by quality in compliance with the BoTs regulations, taking into account analyses of each loan and
appraisal of the financial standing of each borrower, as follows:
(Million Baht)
Consolidated
2011
Investments
Loans and Accrued
Interest Receivables
Properties
Foreclosed
Other Assets
Total
Pass - 1,247,334 - - 1,247,334
Special Mention - 18,810 - - 18,810
Sub-Standard - 5,004 - - 5,004
Doubtful - 5,684 - - 5,684
Doubtful of Loss 3,204 21,234 625 1,328 26,391
Total 3,204 1,298,066 625 1,328 1,303,223
Consolidated
2010
Investments
Loans and Accrued
Interest Receivables
Properties
Foreclosed
Other Assets
Total
Pass - 1,084,795 - - 1,084,795
Special Mention - 23,233 - - 23,233
Sub-Standard - 3,821 - - 3,821
Doubtful - 7,104 - - 7,104
Doubtful of Loss 4,207 22,420 559 1,314 28,500
Total 4,207 1,141,373 559 1,314 1,147,453
(Million Baht)
151
Annual Report 2011
Financial Report
(Million Baht)
The Bank
2011
Investments
Loans and Accrued
Interest Receivables
Properties
Foreclosed
Other Assets
Total
Pass - 1,250,807 - - 1,250,807
Special Mention - 14,662 - - 14,662
Sub-Standard - 4,805 - - 4,805
Doubtful - 5,440 - - 5,440
Doubtful of Loss 3,198 19,789 403 1,324 24,714
Total 3,198 1,295,503 403 1,324 1,300,428
(Million Baht)
The Bank
2010
Investments
Loans and Accrued
Interest Receivables
Properties
Foreclosed
Other Assets
Total
Pass - 1,086,943 - - 1,086,943
Special Mention - 20,885 - - 20,885
Sub-Standard - 3,656 - - 3,656
Doubtful - 6,826 - - 6,826
Doubtful of Loss 4,201 20,714 356 1,314 26,585
Total 4,201 1,139,024 356 1,314 1,144,895
152
Annual Report 2011
Financial Report
1
8
P
R
E
M
I
S
E
S
A
N
D
E
Q
U
I
P
M
E
N
T
-
N
E
T
C
h
a
n
g
e
s
i
n
p
r
e
m
i
s
e
s
a
n
d
e
q
u
i
p
m
e
n
t
f
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
a
r
e
s
u
m
m
a
r
i
z
e
d
a
s
f
o
l
l
o
w
s
:
C
o
n
s
o
l
i
d
a
t
e
d
2
0
1
1
C
h
a
n
g
e
o
f
C
o
s
t
C
h
a
n
g
e
o
f
A
c
c
u
m
u
l
a
t
e
d
D
e
p
r
e
c
i
a
t
i
o
n
I
m
p
a
i
r
m
e
n
t
A
l
l
o
w
a
n
c
e
B
o
o
k
V
a
l
u
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
I
n
c
r
e
a
s
e
D
i
s
p
o
s
a
l
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
D
e
p
r
e
c
i
a
t
i
o
n
D
i
s
p
o
s
a
l
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
L
a
n
d
C
o
s
t
3
,
5
4
2
1
-
(
1
7
)
3
,
5
2
6
-
-
-
-
-
-
-
3
,
5
4
2
3
,
5
2
6
A
p
p
r
a
i
s
a
l
i
n
c
r
e
a
s
e
8
,
5
2
1
-
-
(
5
8
)
8
,
4
6
3
-
-
-
-
-
-
-
8
,
5
2
1
8
,
4
6
3
A
p
p
r
a
i
s
a
l
d
e
c
r
e
a
s
e
(
3
8
5
)
-
-
-
(
3
8
5
)
-
-
-
-
-
-
-
(
3
8
5
)
(
3
8
5
)
B
u
i
l
d
i
n
g
C
o
s
t
1
5
,
5
7
1
3
6
6
-
(
1
0
4
)
1
5
,
8
3
3
5
,
7
8
6
3
7
7
-
(
5
9
)
6
,
1
0
4
-
-
9
,
7
8
5
9
,
7
2
9
A
p
p
r
a
i
s
a
l
i
n
c
r
e
a
s
e
9
,
8
4
5
-
-
(
3
7
)
9
,
8
0
8
4
,
5
6
5
2
9
5
-
(
2
4
)
4
,
8
3
6
-
-
5
,
2
8
0
4
,
9
7
2
A
p
p
r
a
i
s
a
l
d
e
c
r
e
a
s
e
(
1
2
2
)
-
-
-
(
1
2
2
)
(
7
3
)
(
4
)
-
-
(
7
7
)
-
-
(
4
9
)
(
4
5
)
E
q
u
i
p
m
e
n
t
2
6
,
5
3
4
2
,
7
1
1
(
1
3
3
)
(
3
,
5
0
1
)
2
5
,
6
1
1
1
4
,
9
2
7
2
,
6
7
7
(
1
2
7
)
(
3
,
4
3
5
)
1
4
,
0
4
2
6
6
1
1
,
6
0
1
1
1
,
5
6
3
O
t
h
e
r
s
9
1
8
3
7
9
(
1
)
(
1
9
3
)
1
,
1
0
3
2
0
4
6
2
-
-
2
6
6
-
-
7
1
4
8
3
7
T
o
t
a
l
6
4
,
4
2
4
3
,
4
5
7
(
1
3
4
)
(
3
,
9
1
0
)
6
3
,
8
3
7
2
5
,
4
0
9
3
,
4
0
7
(
1
2
7
)
(
3
,
5
1
8
)
2
5
,
1
7
1
6
6
3
9
,
0
0
9
3
8
,
6
6
0
(
M
i
l
l
i
o
n
B
a
h
t
)
153
Annual Report 2011
Financial Report
C
o
n
s
o
l
i
d
a
t
e
d
2
0
1
0
C
h
a
n
g
e
o
f
C
o
s
t
C
h
a
n
g
e
o
f
A
c
c
u
m
u
l
a
t
e
d
D
e
p
r
e
c
i
a
t
i
o
n
I
m
p
a
i
r
m
e
n
t
A
l
l
o
w
a
n
c
e
B
o
o
k
V
a
l
u
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
I
n
c
r
e
a
s
e
D
i
s
p
o
s
a
l
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
D
e
p
r
e
c
i
a
t
i
o
n
D
i
s
p
o
s
a
l
T
r
a
n
s
f
e
r
i
n
(
o
u
t
)
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
D
e
c
r
e
a
s
e
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
L
a
n
d
C
o
s
t
3
,
5
3
6
1
1
-
(
5
)
3
,
5
4
2
-
-
-
-
-
-
-
-
3
,
5
3
6
3
,
5
4
2
A
p
p
r
a
i
s
a
l
i
n
c
r
e
a
s
e
8
,
5
2
1
-
-
-
8
,
5
2
1
-
-
-
-
-
-
-
-
8
,
5
2
1
8
,
5
2
1
A
p
p
r
a
i
s
a
l
d
e
c
r
e
a
s
e
(
3
8
5
)
-
-
-
(
3
8
5
)
-
-
-
-
-
-
-
-
(
3
8
5
)
(
3
8
5
)
B
u
i
l
d
i
n
g
C
o
s
t
1
3
,
5
9
0
2
,
0
3
2
(
1
1
)
(
4
0
)
1
5
,
5
7
1
5
,
0
7
3
3
7
8
(
4
)
3
3
9
5
,
7
8
6
-
-
-
8
,
5
1
7
9
,
7
8
5
A
p
p
r
a
i
s
a
l
i
n
c
r
e
a
s
e
9
,
8
5
2
-
-
(
7
)
9
,
8
4
5
4
,
2
6
8
3
0
1
-
(
4
)
4
,
5
6
5
-
-
-
5
,
5
8
4
5
,
2
8
0
A
p
p
r
a
i
s
a
l
d
e
c
r
e
a
s
e
(
1
2
2
)
-
-
-
(
1
2
2
)
(
7
0
)
(
3
)
-
-
(
7
3
)
-
-
-
(
5
2
)
(
4
9
)
E
q
u
i
p
m
e
n
t
2
3
,
0
9
0
4
,
9
9
1
(
8
0
2
)
(
7
4
5
)
2
6
,
5
3
4
1
3
,
4
8
2
2
,
3
5
8
(
7
9
9
)
(
1
1
4
)
1
4
,
9
2
7
8
(
2
)
6
9
,
6
0
0
1
1
,
6
0
1
O
t
h
e
r
s
2
,
7
3
4
2
,
1
9
2
(
4
)
(
4
,
0
0
4
)
9
1
8
2
3
5
6
2
(
2
)
(
9
1
)
2
0
4
-
-
-
2
,
4
9
9
7
1
4
T
o
t
a
l
6
0
,
8
1
6
9
,
2
2
6
(
8
1
7
)
(
4
,
8
0
1
)
6
4
,
4
2
4
2
2
,
9
8
8
3
,
0
9
6
(
8
0
5
)
1
3
0
2
5
,
4
0
9
8
(
2
)
6
3
7
,
8
2
0
3
9
,
0
0
9
(
M
i
l
l
i
o
n
B
a
h
t
)
D
e
p
r
e
c
i
a
t
i
o
n
p
r
e
s
e
n
t
e
d
i
n
p
r
e
m
i
s
e
s
a
n
d
e
q
u
i
p
m
e
n
t
e
x
p
e
n
s
e
s
i
n
t
h
e
s
t
a
t
e
m
e
n
t
s
o
f
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
o
f
t
h
e
B
a
n
k
a
n
d
i
t
s
s
u
b
s
i
d
i
a
r
i
e
s
f
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
a
m
o
u
n
t
e
d
t
o
B
a
h
t
3
,
4
0
7
m
i
l
l
i
o
n
a
n
d
B
a
h
t
3
,
0
9
6
m
i
l
l
i
o
n
,
r
e
s
p
e
c
t
i
v
e
l
y
.
A
s
o
f
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
,
p
r
e
m
i
s
e
s
a
n
d
e
q
u
i
p
m
e
n
t
w
i
t
h
o
r
i
g
i
n
a
l
c
o
s
t
s
o
f
B
a
h
t
6
,
9
9
3
m
i
l
l
i
o
n
a
n
d
B
a
h
t
8
,
9
6
4
m
i
l
l
i
o
n
,
r
e
s
p
e
c
t
i
v
e
l
y
,
w
e
r
e
f
u
l
l
y
d
e
p
r
e
c
i
a
t
e
d
b
u
t
s
t
i
l
l
i
n
u
s
e
.
154
Annual Report 2011
Financial Report
T
h
e
B
a
n
k
2
0
1
1
C
h
a
n
g
e
o
f
C
o
s
t
C
h
a
n
g
e
o
f
A
c
c
u
m
u
l
a
t
e
d
D
e
p
r
e
c
i
a
t
i
o
n
I
m
p
a
i
r
m
e
n
t
A
l
l
o
w
a
n
c
e
B
o
o
k
V
a
l
u
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
I
n
c
r
e
a
s
e
D
i
s
p
o
s
a
l
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
D
e
p
r
e
c
i
a
t
i
o
n
D
i
s
p
o
s
a
l
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
L
a
n
d
C
o
s
t
3
,
0
5
0
-
-
(
1
7
)
3
,
0
3
3
-
-
-
-
-
-
-
3
,
0
5
0
3
,
0
3
3
A
p
p
r
a
i
s
a
l
i
n
c
r
e
a
s
e
6
,
5
5
0
-
-
(
5
8
)
6
,
4
9
2
-
-
-
-
-
-
-
6
,
5
5
0
6
,
4
9
2
A
p
p
r
a
i
s
a
l
d
e
c
r
e
a
s
e
(
3
8
5
)
-
-
-
(
3
8
5
)
-
-
-
-
-
-
-
(
3
8
5
)
(
3
8
5
)
B
u
i
l
d
i
n
g
C
o
s
t
1
3
,
5
7
3
3
2
5
-
(
8
3
)
1
3
,
8
1
5
4
,
7
6
4
3
1
9
-
(
5
3
)
5
,
0
3
0
-
-
8
,
8
0
9
8
,
7
8
5
A
p
p
r
a
i
s
a
l
i
n
c
r
e
a
s
e
8
,
4
6
7
-
-
(
3
7
)
8
,
4
3
0
4
,
4
1
5
1
5
7
-
(
2
4
)
4
,
5
4
8
-
-
4
,
0
5
2
3
,
8
8
2
A
p
p
r
a
i
s
a
l
d
e
c
r
e
a
s
e
(
1
2
2
)
-
-
-
(
1
2
2
)
(
7
3
)
(
4
)
-
-
(
7
7
)
-
-
(
4
9
)
(
4
5
)
E
q
u
i
p
m
e
n
t
2
3
,
8
0
2
2
,
4
4
1
(
1
2
0
)
(
2
,
7
3
3
)
2
3
,
3
9
0
1
2
,
9
0
1
2
,
3
7
2
(
1
1
5
)
(
2
,
5
8
9
)
1
2
,
5
6
9
6
6
1
0
,
8
9
5
1
0
,
8
1
5
O
t
h
e
r
s
4
4
9
6
5
-
(
1
6
4
)
3
5
0
-
-
-
-
-
-
-
4
4
9
3
5
0
T
o
t
a
l
5
5
,
3
8
4
2
,
8
3
1
(
1
2
0
)
(
3
,
0
9
2
)
5
5
,
0
0
3
2
2
,
0
0
7
2
,
8
4
4
(
1
1
5
)
(
2
,
6
6
6
)
2
2
,
0
7
0
6
6
3
3
,
3
7
1
3
2
,
9
2
7
(
M
i
l
l
i
o
n
B
a
h
t
)
155
Annual Report 2011
Financial Report
T
h
e
B
a
n
k
2
0
1
0
C
h
a
n
g
e
o
f
C
o
s
t
C
h
a
n
g
e
o
f
A
c
c
u
m
u
l
a
t
e
d
D
e
p
r
e
c
i
a
t
i
o
n
I
m
p
a
i
r
m
e
n
t
A
l
l
o
w
a
n
c
e
B
o
o
k
V
a
l
u
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
I
n
c
r
e
a
s
e
D
i
s
p
o
s
a
l
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
D
e
p
r
e
c
i
a
t
i
o
n
D
i
s
p
o
s
a
l
T
r
a
n
s
f
e
r
i
n
(
o
u
t
)
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
D
e
c
r
e
a
s
e
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
L
a
n
d
C
o
s
t
3
,
0
5
0
-
-
-
3
,
0
5
0
-
-
-
-
-
-
-
-
3
,
0
5
0
3
,
0
5
0
A
p
p
r
a
i
s
a
l
i
n
c
r
e
a
s
e
6
,
5
5
0
-
-
-
6
,
5
5
0
-
-
-
-
-
-
-
-
6
,
5
5
0
6
,
5
5
0
A
p
p
r
a
i
s
a
l
d
e
c
r
e
a
s
e
(
3
8
5
)
-
-
-
(
3
8
5
)
-
-
-
-
-
-
-
-
(
3
8
5
)
(
3
8
5
)
B
u
i
l
d
i
n
g
C
o
s
t
1
2
,
1
7
2
1
,
4
2
8
-
(
2
7
)
1
3
,
5
7
3
4
,
1
2
2
2
9
7
-
3
4
5
4
,
7
6
4
-
-
-
8
,
0
5
0
8
,
8
0
9
A
p
p
r
a
i
s
a
l
i
n
c
r
e
a
s
e
8
,
4
7
4
-
-
(
7
)
8
,
4
6
7
4
,
2
5
7
1
6
2
-
(
4
)
4
,
4
1
5
-
-
-
4
,
2
1
7
4
,
0
5
2
A
p
p
r
a
i
s
a
l
d
e
c
r
e
a
s
e
(
1
2
2
)
-
-
-
(
1
2
2
)
(
7
0
)
(
3
)
-
-
(
7
3
)
-
-
-
(
5
2
)
(
4
9
)
E
q
u
i
p
m
e
n
t
2
0
,
4
7
1
4
,
7
7
4
(
7
3
8
)
(
7
0
5
)
2
3
,
8
0
2
1
1
,
6
2
5
2
,
0
8
9
(
7
3
2
)
(
8
1
)
1
2
,
9
0
1
8
(
2
)
6
8
,
8
3
8
1
0
,
8
9
5
O
t
h
e
r
s
2
,
1
7
4
2
,
1
5
6
-
(
3
,
8
8
1
)
4
4
9
-
-
-
-
-
-
-
-
2
,
1
7
4
4
4
9
T
o
t
a
l
5
2
,
3
8
4
8
,
3
5
8
(
7
3
8
)
(
4
,
6
2
0
)
5
5
,
3
8
4
1
9
,
9
3
4
2
,
5
4
5
(
7
3
2
)
2
6
0
2
2
,
0
0
7
8
(
2
)
6
3
2
,
4
4
2
3
3
,
3
7
1
(
M
i
l
l
i
o
n
B
a
h
t
)
D
e
p
r
e
c
i
a
t
i
o
n
p
r
e
s
e
n
t
e
d
i
n
p
r
e
m
i
s
e
s
a
n
d
e
q
u
i
p
m
e
n
t
e
x
p
e
n
s
e
s
i
n
t
h
e
s
t
a
t
e
m
e
n
t
s
o
f
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
o
f
t
h
e
B
a
n
k
f
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
a
m
o
u
n
t
e
d
t
o
B
a
h
t
2
,
8
4
4
m
i
l
l
i
o
n
a
n
d
B
a
h
t
2
,
5
4
5
m
i
l
l
i
o
n
,
r
e
s
p
e
c
t
i
v
e
l
y
.
A
s
o
f
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
p
r
e
m
i
s
e
s
a
n
d
e
q
u
i
p
m
e
n
t
w
i
t
h
o
r
i
g
i
n
a
l
c
o
s
t
s
o
f
B
a
h
t
6
,
1
8
2
m
i
l
l
i
o
n
a
n
d
B
a
h
t
7
,
5
3
6
m
i
l
l
i
o
n
,
r
e
s
p
e
c
t
i
v
e
l
y
,
w
e
r
e
f
u
l
l
y
d
e
p
r
e
c
i
a
t
e
d
b
u
t
s
t
i
l
l
i
n
u
s
e
.
156
Annual Report 2011
Financial Report
C
o
n
s
o
l
i
d
a
t
e
d
2
0
1
1
C
h
a
n
g
e
o
f
C
o
s
t
C
h
a
n
g
e
o
f
A
c
c
u
m
u
l
a
t
e
d
D
e
p
r
e
c
i
a
t
i
o
n
I
m
p
a
i
r
m
e
n
t
A
l
l
o
w
a
n
c
e
B
o
o
k
V
a
l
u
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
I
n
c
r
e
a
s
e
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
A
m
o
r
t
i
s
a
t
i
o
n
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
A
p
p
l
i
c
a
t
i
o
n
s
o
f
t
w
a
r
e
1
8
,
3
8
9
3
,
5
9
3
(
1
,
8
5
2
)
2
0
,
1
3
0
5
,
5
8
3
1
,
1
1
6
(
1
,
8
1
5
)
4
,
8
8
4
-
2
5
6
1
2
,
8
0
6
1
4
,
9
9
0
B
u
s
i
n
e
s
s
p
u
r
c
h
a
s
e
d
2
7
0
-
-
2
7
0
2
7
0
-
-
2
7
0
-
-
-
-
G
o
o
d
w
i
l
l
3
,
7
8
9
-
-
3
,
7
8
9
-
-
-
-
-
-
3
,
7
8
9
3
,
7
8
9
O
t
h
e
r
s
1
9
8
-
2
7
-
1
-
1
-
-
1
9
2
6
T
o
t
a
l
2
2
,
4
6
7
3
,
6
0
1
(
1
,
8
5
2
)
2
4
,
2
1
6
5
,
8
5
3
1
,
1
1
7
(
1
,
8
1
5
)
5
,
1
5
5
-
2
5
6
1
6
,
6
1
4
1
8
,
8
0
5
1
9
G
O
O
D
W
I
L
L
A
N
D
O
T
H
E
R
I
N
T
A
N
G
I
B
L
E
A
S
S
E
T
S
-
N
E
T
C
h
a
n
g
e
s
i
n
g
o
o
d
w
i
l
l
a
n
d
o
t
h
e
r
i
n
t
a
n
g
i
b
l
e
a
s
s
e
t
s
f
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
a
r
e
s
u
m
m
a
r
i
z
e
d
a
s
f
o
l
l
o
w
s
:
(
M
i
l
l
i
o
n
B
a
h
t
)
157
Annual Report 2011
Financial Report
A
m
o
r
t
i
s
a
t
i
o
n
p
r
e
s
e
n
t
e
d
i
n
o
t
h
e
r
s
-
o
t
h
e
r
o
p
e
r
a
t
i
n
g
e
x
p
e
n
s
e
s
i
n
t
h
e
s
t
a
t
e
m
e
n
t
s
o
f
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
o
f
t
h
e
B
a
n
k
a
n
d
i
t
s
s
u
b
s
i
d
i
a
r
i
e
s
f
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
a
m
o
u
n
t
e
d
t
o
B
a
h
t
1
,
1
1
7
m
i
l
l
i
o
n
a
n
d
B
a
h
t
1
,
0
0
1
m
i
l
l
i
o
n
,
r
e
s
p
e
c
t
i
v
e
l
y
.
A
s
o
f
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
,
i
n
t
a
n
g
i
b
l
e
a
s
s
e
t
s
w
i
t
h
o
r
i
g
i
n
a
l
c
o
s
t
s
o
f
B
a
h
t
9
7
3
m
i
l
l
i
o
n
a
n
d
B
a
h
t
2
,
3
8
2
m
i
l
l
i
o
n
,
r
e
s
p
e
c
t
i
v
e
l
y
,
w
e
r
e
f
u
l
l
y
a
m
o
r
t
i
s
e
d
b
u
t
s
t
i
l
l
i
n
u
s
e
.
(
M
i
l
l
i
o
n
B
a
h
t
)
C
o
n
s
o
l
i
d
a
t
e
d
2
0
1
0
C
h
a
n
g
e
o
f
C
o
s
t
C
h
a
n
g
e
o
f
A
c
c
u
m
u
l
a
t
e
d
A
m
o
r
t
i
s
a
t
i
o
n
B
o
o
k
V
a
l
u
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
I
n
c
r
e
a
s
e
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
A
m
o
r
t
i
s
a
t
i
o
n
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
A
p
p
l
i
c
a
t
i
o
n
s
o
f
t
w
a
r
e
1
4
,
9
4
5
3
,
7
6
2
(
3
1
8
)
1
8
,
3
8
9
4
,
7
3
4
9
7
4
(
1
2
5
)
5
,
5
8
3
1
0
,
2
1
1
1
2
,
8
0
6
B
u
s
i
n
e
s
s
p
u
r
c
h
a
s
e
d
2
7
0
-
-
2
7
0
2
4
3
2
7
-
2
7
0
2
7
-
G
o
o
d
w
i
l
l
3
,
7
8
9
-
-
3
,
7
8
9
-
-
-
-
3
,
7
8
9
3
,
7
8
9
O
t
h
e
r
s
1
6
3
-
1
9
-
-
-
-
1
6
1
9
T
o
t
a
l
1
9
,
0
2
0
3
,
7
6
5
(
3
1
8
)
2
2
,
4
6
7
4
,
9
7
7
1
,
0
0
1
(
1
2
5
)
5
,
8
5
3
1
4
,
0
4
3
1
6
,
6
1
4
158
Annual Report 2011
Financial Report
A
m
o
r
t
i
s
a
t
i
o
n
p
r
e
s
e
n
t
e
d
i
n
o
t
h
e
r
s
-
o
t
h
e
r
o
p
e
r
a
t
i
n
g
e
x
p
e
n
s
e
s
i
n
t
h
e
s
t
a
t
e
m
e
n
t
s
o
f
c
o
m
p
r
e
h
e
n
s
i
v
e
i
n
c
o
m
e
o
f
t
h
e
B
a
n
k
f
o
r
t
h
e
y
e
a
r
s
e
n
d
e
d
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
a
m
o
u
n
t
e
d
t
o
B
a
h
t
1
,
0
8
2
m
i
l
l
i
o
n
a
n
d
B
a
h
t
9
3
1
m
i
l
l
i
o
n
,
r
e
s
p
e
c
t
i
v
e
l
y
.
A
s
o
f
3
1
D
e
c
e
m
b
e
r
2
0
1
1
a
n
d
2
0
1
0
,
i
n
t
a
n
g
i
b
l
e
a
s
s
e
t
s
w
i
t
h
o
r
i
g
i
n
a
l
c
o
s
t
s
o
f
B
a
h
t
7
9
1
m
i
l
l
i
o
n
a
n
d
B
a
h
t
2
,
2
0
8
m
i
l
l
i
o
n
,
r
e
s
p
e
c
t
i
v
e
l
y
,
w
e
r
e
f
u
l
l
y
a
m
o
r
t
i
s
e
d
b
u
t
s
t
i
l
l
i
n
u
s
e
.
T
h
e
B
a
n
k
2
0
1
1
C
h
a
n
g
e
o
f
C
o
s
t
C
h
a
n
g
e
o
f
A
c
c
u
m
u
l
a
t
e
d
D
e
p
r
e
c
i
a
t
i
o
n
I
m
p
a
i
r
m
e
n
t
A
l
l
o
w
a
n
c
e
B
o
o
k
V
a
l
u
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
I
n
c
r
e
a
s
e
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
A
m
o
r
t
i
s
a
t
i
o
n
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
A
p
p
l
i
c
a
t
i
o
n
s
o
f
t
w
a
r
e
1
8
,
1
3
0
3
,
4
8
3
(
1
,
9
2
4
)
1
9
,
6
8
9
5
,
3
2
5
1
,
0
8
1
(
1
,
8
2
0
)
4
,
5
8
6
-
2
5
6
1
2
,
8
0
5
1
4
,
8
4
7
O
t
h
e
r
s
-
5
-
5
-
1
-
1
-
-
-
4
T
o
t
a
l
1
8
,
1
3
0
3
,
4
8
8
(
1
,
9
2
4
)
1
9
,
6
9
4
5
,
3
2
5
1
,
0
8
2
(
1
,
8
2
0
)
4
,
5
8
7
-
2
5
6
1
2
,
8
0
5
1
4
,
8
5
1
(
M
i
l
l
i
o
n
B
a
h
t
)
T
h
e
B
a
n
k
2
0
1
0
C
h
a
n
g
e
o
f
C
o
s
t
C
h
a
n
g
e
o
f
A
c
c
u
m
u
l
a
t
e
d
A
m
o
r
t
i
s
a
t
i
o
n
B
o
o
k
V
a
l
u
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
I
n
c
r
e
a
s
e
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
A
m
o
r
t
i
s
a
t
i
o
n
T
r
a
n
s
f
e
r
o
u
t
E
n
d
i
n
g
B
a
l
a
n
c
e
B
e
g
i
n
n
i
n
g
B
a
l
a
n
c
e
E
n
d
i
n
g
B
a
l
a
n
c
e
A
p
p
l
i
c
a
t
i
o
n
s
o
f
t
w
a
r
e
1
4
,
7
4
1
3
,
7
0
7
(
3
1
8
)
1
8
,
1
3
0
4
,
6
1
8
9
3
1
(
2
2
4
)
5
,
3
2
5
1
0
,
1
2
3
1
2
,
8
0
5
T
o
t
a
l
1
4
,
7
4
1
3
,
7
0
7
(
3
1
8
)
1
8
,
1
3
0
4
,
6
1
8
9
3
1
(
2
2
4
)
5
,
3
2
5
1
0
,
1
2
3
1
2
,
8
0
5
(
M
i
l
l
i
o
n
B
a
h
t
)
159
Annual Report 2011
Financial Report
20 DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES
Deferred tax assets and liabilities as of 31 December 2011 and 2010 as follows:
Consolidated The Bank
2011 2010 2011 2010
Deferred tax assets 2,464 3,582 2,310 3,524
Deferred tax liabilities (1,063) (1,777) - -
Net 1,401 1,805 2,310 3,524
Movements in total deferred tax assets and liabilities during the year were as follows:
(Million Baht)
(Million Baht)
Consolidated
Charged / credited to:
As of
1 January
2011
Profit or loss
Other
comprehensive
income
Others
As of
31 December
2011
Deferred tax assets
Investments 544 (337) - - 207
Investments in subsidiaries and
associated companies
577
(193)
-
-
384
Loans and accrued interest
receivables
994
(445)
-
(2)
547
Properties foreclosed 402 (88) - 1 315
Premises and equipment 6 3 - (1) 8
Provisions 4,202 (1,123) 60 (1) 3,138
Life policy reserve 660 (74) - (11) 575
Others 541 (80) - 8 469
Total 7,926 (2,337) 60 (6) 5,643
Deferred tax liabilities
Investments 1,882 (117) (298) - 1,467
Premises and equipment 4,050 (460) (1,032) - 2,558
Others 189 28 - - 217
Total 6,121 (549) (1,330) - 4,242
Net 1,805 (1,788) 1,390 (6) 1,401
160
Annual Report 2011
Financial Report
(Million Baht)
Consolidated
Charged / credited to:
As of
1 January
2010
Profit or loss
Other
comprehensive
income
Charged
directly to
equity
As of
31 December
2010
Deferred tax assets
Investments 524 20 - - 544
Investments in subsidiaries and
associated companies
577
-
-
-
577
Loans and accrued interest
receivables
1,074
(80)
-
-
994
Properties foreclosed 386 16 - - 402
Premises and equipment 5 1 - - 6
Provisions 3,991 211 - - 4,202
Life policy reserve 468 192 - - 660
Others 454 87 - - 541
Total 7,479 447 - - 7,926
Deferred tax liabilities
Investments 1,106 (48) 824 - 1,882
Premises and equipment 4,098 1 - (49) 4,050
Others 94 95 - - 189
Total 5,298 48 824 (49) 6,121
Net 2,181 399 (824) 49 1,805
161
Annual Report 2011
Financial Report
(Million Baht)
The Bank
Charged / credited to:
As of
1 January
2011
Profit or loss
Other
comprehensive
income
As of
31 December
2011
Deferred tax assets
Investments 506 (324) - 182
Investments in subsidiaries and
associated companies
574
(192)
-
382
Loans and accrued interest
receivables
915
(408)
-
507
Properties foreclosed 385 (89) - 296
Provisions 4,130 (1,121) 60 3,069
Others 304 (41) - 263
Total 6,814 (2,175) 60 4,699
Deferred tax liabilities
Investments 242 69 137 448
Premises and equipment 3,048 (75) (1,032) 1,941
Total 3,290 (6) (895) 2,389
Net 3,524 (2,169) 955 2,310
162
Annual Report 2011
Financial Report
The Bank
Charged / credited to:
As of
1 January
2010
Profit or loss
Other
comprehensive
income
Charged
directly to
equity
As of
31 December
2010
Deferred tax assets
Investments 486 20 - - 506
Investments in subsidiaries and
associated companies
574
-
-
-
574
Loans and accrued interest
receivables
987
(72)
-
-
915
Properties foreclosed 368 17 - - 385
Provisions 3,928 202 - - 4,130
Others 262 42 - - 304
Total 6,605 209 - - 6,814
Deferred tax liabilities
Investments 222 (5) 25 - 242
Premises and equipment 3,096 1 - (49) 3,048
Total 3,318 (4) 25 (49) 3,290
Net 3,287 213 (25) 49 3,524
See Note 43 for the amounts recognised in the statements of comprehensive income.
(Million Baht)
163
Annual Report 2011
Financial Report
21 DEPOSITS
Deposits were classified as of 31 December 2011 and 2010 as follows:
21.1 Classified by Type of Deposits
Consolidated The Bank
2011 2010 2011 2010
Current 66,618 60,776 66,833 61,698
Savings 686,716 687,502 688,037 688,650
Term
- Less than 6 months 146,434 156,870 146,529 156,993
- 6 months and less than 1 year 116,571 38,235 116,571 38,235
- 1 year and over 1 year 225,890 156,653 225,890 156,653
Total 1,242,229 1,100,036 1,243,860 1,102,229
(Million Baht)
21.2 Classified by Currencies and Residency of Depositors
(Million Baht)
Consolidated
2011 2010
Domestic Foreign Total Domestic Foreign Total
Baht 1,180,730 42,922 1,223,652 1,052,512 32,437 1,084,949
US Dollars 13,891 617 14,508 10,704 1,159 11,863
Other currencies 2,720 1,349 4,069 2,584 640 3,224
Total 1,197,341 44,888 1,242,229 1,065,800 34,236 1,100,036
(Million Baht)
The Bank
2011 2010
Domestic Foreign Total Domestic Foreign Total
Baht 1,182,361 42,922 1,225,283 1,054,705 32,437 1,087,142
US Dollars 13,891 617 14,508 10,704 1,159 11,863
Other currencies 2,720 1,349 4,069 2,584 640 3,224
Total 1,198,972 44,888 1,243,860 1,067,993 34,236 1,102,229
164
Annual Report 2011
Financial Report
22 INTERBANK AND MONEY MARKET ITEMS (LIABILITIES)
Interbank and money market items (liabilities) as of 31 December 2011 and 2010 consisted of:
(Million Baht)
Consolidated
2011 2010
At call Term Total At call Term Total
1. Domestic
The BoT and FIDF - 1,900 1,900 - 839 839
Commercial banks 4,834 34,847 39,681 1,619 21,150 22,769
Specialized financial
institutions 192 100 292 178 - 178
Other financial institutions 2,162 147 2,309 2,685 1,195 3,880
Total Domestic 7,188 36,994 44,182 4,482 23,184 27,666
2. Foreign
US Dollars 16 30 46 19 3 22
Japanese Yen 206 7,477 7,683 18 5,065 5,083
Other currencies 542 887 1,429 293 - 293
Total Foreign 764 8,394 9,158 330 5,068 5,398
Total Domestic and Foreign 7,952 45,388 53,340 4,812 28,252 33,064
165
Annual Report 2011
Financial Report
(Million Baht)
The Bank
2011 2010
At call Term Total At call Term Total
1. Domestic
The BoT and FIDF - 1,900 1,900 - 839 839
Commercial banks 4,834 34,847 39,681 1,619 21,150 22,769
Specialized financial
institutions 206 100 306 192 - 192
Other financial institutions 5,584 147 5,731 4,604 1,195 5,799
Total Domestic 10,624 36,994 47,618 6,415 23,184 29,599
2. Foreign
US Dollars 16 30 46 19 3 22
Japanese Yen 206 7,477 7,683 18 5,065 5,083
Other currencies 542 887 1,429 293 - 293
Total Foreign 764 8,394 9,158 330 5,068 5,398
Total Domestic and Foreign 11,388 45,388 56,776 6,745 28,252 34,997
166
Annual Report 2011
Financial Report
Contract parties
Financial institutions
Outsiders
Total
2011 2010
Borrowing 2,113 6,156
Consolidated and The Bank
2011 2010
23 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial liabilities designated at fair value through profit or loss as of 31 December 2011 and 2010
consisted of:
(Million Baht)
Consolidated and The Bank
2011 2010
2,113 6,156
Proportion of transactions classified by the contract parties based on the amount of the contract: as of
31 December 2011 and 2010 consisted of:
Consolidated and The Bank
2011 2010
Proportion (%)
- 11
100 89
100 100
Consolidated
2011 2010
Domestic Foreign Total Domestic Foreign Total
Debentures 3,000 - 3,000 6,135 - 6,135
Subordinated Debentures - 5,796 5,796 - 5,511 5,511
Subordinated Debentures
KASIKORNBANK PCL No.1/2008 17,000 - 17,000 17,000
- 17,000
Subordinated Debentures
KASIKORNBANK PCL No.1/2009
600 -
600
600
-
600
Subordinated Debentures
KASIKORNBANK PCL No.1/2010 7,500 - 7,500 7,500
-
7,500
Bills of Exchange 36,072 - 36,072 51,648 - 51,648
Others 335 - 335 538 - 538
Total 64,507 5,796 70,303 83,421 5,511 88,932
24 DEBTS ISSUED AND BORROWINGS
Debts issued and borrowings as of 31 December 2011 and 2010 consisted of:
(Million Baht)
167
Annual Report 2011
Financial Report
(Million Baht)
Consolidated
2011
Currency Maturity Date Interest rate Amount
Debentures Baht 2012 3.20% - 3.40% 3,000
Subordinated Debentures US Dollar 2016 8.25% 5,796
Subordinated Debentures
KASIKORNBANK PCL No.1/2008
Baht
2018
5.25% - 6.50%
17,000
Subordinated Debentures
KASIKORNBANK PCL No.1/2009
Baht
2019
4.85% - 5.75%
600
Subordinated Debentures
KASIKORNBANK PCL No.1/2010
Baht
2020
4.50%
7,500
Bills of Exchange Baht 2024 1.75% - 6.00% 36,072
Others Baht 2018 0.00% - 0.50% 335
Total 70,303
Consolidated
2010
Currency Maturity Date Interest rate Amount
Debentures Baht 2011 1.77% - 1.91% 6,135
Subordinated Debentures US Dollar 2016 8.25% 5,511
Subordinated Debentures
KASIKORNBANK PCL No.1/2008
Baht
2018
5.25% - 6.50%
17,000
Subordinated Debentures
KASIKORNBANK PCL No.1/2009
Baht
2019
4.85% - 5.75%
600
Subordinated Debentures
KASIKORNBANK PCL No.1/2010
Baht
2020
4.50%
7,500
Bills of Exchange Baht 2013 0.90% - 3.20% 51,648
Others Baht 2017 0.00% - 0.50% 538
Total 88,932
(Million Baht)
168
Annual Report 2011
Financial Report
(Million Baht)
The Bank
2011 2010
Domestic Foreign Total Domestic Foreign Total
Debentures 3,000 - 3,000 6,135 - 6,135
Subordinated Debentures - 5,796 5,796 - 5,511 5,511
Subordinated Debentures
KASIKORNBANK PCL No.1/2008 17,000 - 17,000 17,000
- 17,000
Subordinated Debentures
KASIKORNBANK PCL No.1/2009
600 -
600
600
-
600
Subordinated Debentures
KASIKORNBANK PCL No.1/2010 7,500 - 7,500
7,500
-
7,500
Bills of Exchange 36,072 - 36,072 51,648 - 51,648
Others 959 - 959 1,148 - 1,148
Total 65,131 5,796 70,927 84,031 5,511 89,542
(Million Baht)
The Bank
2011
Currency Maturity Date Interest rate Amount
Debentures Baht 2012 3.20% - 3.40% 3,000
Subordinated Debentures US Dollar 2016 8.25% 5,796
Subordinated Debentures
KASIKORNBANK PCL No.1/2008
Baht
2018
5.25% - 6.50%
17,000
Subordinated Debentures
KASIKORNBANK PCL No.1/2009
Baht
2019
4.85% - 5.75%
600
Subordinated Debentures
KASIKORNBANK PCL No.1/2010
Baht
2020
4.50%
7,500
Bills of Exchange Baht 2024 1.75% - 6.00% 36,072
Others Baht 2018 0.00% - 3.25% 959
Total 70,927
169
Annual Report 2011
Financial Report
(Million Baht)
The Bank
2010
Currency Maturity Date Interest rate Amount
Debentures Baht 2011 1.77% - 1.91% 6,135
Subordinated Debentures US Dollar 2016 8.25% 5,511
Subordinated Debentures
KASIKORNBANK PCL No.1/2008
Baht
2018
5.25% - 6.50%
17,000
Subordinated Debentures
KASIKORNBANK PCL No.1/2009
Baht
2019
4.85% - 5.75%
600
Subordinated Debentures
KASIKORNBANK PCL No.1/2010
Baht
2020
4.50%
7,500
Bills of Exchange Baht 2013 0.90% - 3.20% 51,648
Others Baht 2017 0.00% - 2.00% 1,148
Total 89,542
As of 31 December 2011 and 2010, the Bank has debts issued and borrowings with embedded derivative that
are not designated at fair value through profit or loss amounted to Baht 1,418 million and Baht 5,764 million,
respectively.
SUBORDINATED DEBENTURES
The Board of Directors in its meeting on 25 July 1996 approved the issuance of USD 200 million of unsecured
Subordinated Debentures, having a face value of USD 100,000 each, with a twenty-year maturity offered at a
price of USD 98,997 each on 21 August 1996 and carrying an 8.25 percent coupon rate payable semi-annually.
The Bank repurchased USD 16.69 million of such Subordinated Debentures in accordance with the Board of
Directors resolution, which was approved on 28 May 2009. The settlement was completed on 2 July 2009.
KBank Subordinated Debentures No.1/2008, KBank Subordinated Debentures No.1/2009 and Kbank Subordinated
Debentures No.1/2010
On 25 September 2008, the Board of Directors in its meeting approved the issuance of these Unsubordinated
and/or Subordinated Debentures in name certificate, unconvertible and without security in order to raise long-
term funding at a reasonable cost, to efficiently manage the interest rate and liquidity risks, as well as to
strengthen the status of the Banks tier two capital funds. The Bank issued and offered the Subordinated
Debentures as follows:
170
Annual Report 2011
Financial Report
On 29 April 2010, the Board of Directors in its meeting approved the issuance of these Unsubordinated and/or
Subordinated Debentures in name certificate, unconvertible and without security in order to raise long-term
funding at a reasonable cost. The Bank issued and offered the Subordinated Debentures as follows:
On 22 June 2010, the Bank issued the Subordinated Debentures of KASIKORNBANK PUBLIC COMPANY
LIMITED No.1/2010 Due A.D. 2020, which the Bank may redeem the debenture before maturity, in the amount of
Baht 7,500 million, with a ten-year maturity. The debentures bear interest at the fixed interest of 4.50 % per
annum. Interest is payable quarterly.
The Bank may redeem KBank Subordinated Debentures No.1/2008, KBank Subordinated Debentures No.1/2009
and KBank Subordinated Debentures No.1/2010 before maturity under the following criteria:
(A) Before the fifth anniversary of the issue date, under a notice by the Bank of Thailand that
(1) The debenture will no longer be classified as a financial instrument, which can be counted as Tier two
capital fund of the Bank; or
(2) The debenture can be counted as Tier two capital fund, at the proportion less than 50 percent of Tier
one capital fund of the Bank; or
(B) On the fifth anniversary of the issue date or any subsequent interest payment date after the fifth anniversary
of the issue date; or
(C) The Bank is under court order for complete receivership, or for business rehabilitation or for bankruptcy
under the Bankruptcy Act or other applicable laws or under the Banks liquidation process; or
(D) If the Bank can demonstrate that interest payments under the Debentures are no longer, or will no longer
be, deductible as an expense for income tax purposes; or
(E) In any other cases as may be later stipulated by the Bank of Thailand.
On 19 December 2008, the Bank issued the Subordinated Debentures of KASIKORNBANK PUBLIC COMPANY
LIMITED No.1/2008 Due A.D. 2018, which the Bank may redeem the debenture before maturity, in the amount of
Baht 17,000 million, with a ten-year maturity. The debentures bear interest at the fixed interest rate for the first
three years of 5.25 % per annum, the fixed interest rate for the next four years of 5.75 % per annum and the fixed
interest rate for the final three years of 6.50 % per annum. Interest is payable quarterly.
On 17 July 2009, the Bank issued the Subordinated Debentures of KASIKORNBANK PUBLIC COMPANY
LIMITED No.1/2009 Due A.D.2019, which the Bank may redeem the debenture before maturity, in the amount of
Baht 600 million, with a ten-year maturity. The debentures bear interest at the fixed interest rate for the first three
years of 4.85 % per annum, the fixed interest rate for the next four years of 5.25 % per annum and the fixed
interest rate for the final three years of 5.75 % per annum. Interest is payable quarterly.
171
Annual Report 2011
Financial Report
25 EMPLOYEE RETIREMENT BENEFITS
The Bank and its subsidiaries have been assessing liability to pay for long-term employee benefits by using
Projected Unit Credit method as follows:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Balance at the beginning of the year 9,046 8,766 8,776 8,513
Current service costs* 1,033 443 980 418
Interest cost* 464 392 450 380
Acturial losses in other
comprehensive income
303
-
300
-
Benefits paid (968) (555) (965) (535)
Balance at the end of the year 9,878 9,046 9,541 8,776
* Presented by employees expenses in statements of comprehensive income
Acturial gains and losses recognised in other comprehensive income for the years ended 31 December 2011
and 2010 consisted of:
Consolidated The Bank
2011 2010 2011 2010
Included in retained earnings:
At 1 January - - - -
Recognised during the year 303 - 300 -
At 31 December 303 - 300 -
Principle actuarial assumptions are as follows:
(Million Baht)
2011 / 2010
Discount rate 1.06% - 4.85%
Average salary increase 4% - 6%
Average turnover 3% - 12%
Normal retirement age 55 - 60 years
2011 / 2010
1.06% - 4.85%
4% - 6%
3% - 12%
55 - 60 years
172
Annual Report 2011
Financial Report
26 SHARE CAPITAL AND EARNINGS PER SHARE
The calculation of the consolidated and the Bank-only basic earnings per share for the years ended
31 December 2011 was based on profit attributable to ordinary shareholders of Baht 24,226 million and Baht
22,159 million, respectively (2010: Baht 20,047 million and Baht 18,615 million, respectively) and the weighted
average number of ordinary shares outstanding during the year ended 31 December 2011 of 2,393,260,193
shares (2010: 2,393,260,193 shares).
27 RESERVES
Section 116 of the Public Companies Act B.E. 2535 requires that the Bank shall allocate not less than 5 percent
of its annual net profit, less any accumulated losses brought forward, to a reserve account (legal reserve), until
this account reaches an amount not less than 10% of the registered authorized capital. In addition, The
provisions of the Civil and Commercial Code of Thailand require that subsidiaries shall allocate not less than
5 percent of their annual net profit each time a dividend is declared, to a reserve account (legal reserve) until
the reserve reaches 10 percent of authorized share capital. The legal reserve is not available for dividend
distribution.
28 DIVIDEND PAYMENTS
On 25 August 2011, the Board of Directors Meeting of the Bank approved to pay interim dividends from the
six-month operating results of 2011 at the rate of Baht 0.50 per share, totaling Baht 1,197 million, which was paid
on 22 September 2011.
On 7 April 2011, the Annual General Meeting of Shareholders of the Bank approved to pay dividend from the
operating results of 2010 at the rate of Baht 2.50 per share, totaling Baht 5,983 million. The interim dividend was
paid at the rate of Baht 0.50 per share, totaling Baht 1,197 million on 23 September 2010 and the remaining
dividend was paid at the rate of Baht 2.00 per share, totaling Baht 4,786 million, on 29 April 2011.
On 26 August 2010, the Board of Directors Meeting of the Bank approved to pay interim dividends from the
six-month operating results of 2010 at the rate of Baht 0.50 per share, totaling Baht 1,197 million, which was paid
on 23 September 2010.
On 7 April 2010, the Annual General Meeting of Shareholders of the Bank approved to pay dividend from the
operating results of 2009 at the rate of Baht 2.50 per share, totaling Baht 5,983 million. The interim dividend was
paid at the rate of Baht 0.50 per share, totaling Baht 1,197 million on 24 September 2009 and the remaining
dividend was paid at the rate of Baht 2.00 per share, totaling Baht 4,786 million, on 30 April 2010.
173
Annual Report 2011
Financial Report
29 ASSETS PLEDGED AS COLLATERAL
Assets pledged as collateral as of 31 December 2011 and 2010 consisted of:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Deposits 3,154 916 3,135 827
Government bonds 45,946 34,277 27,825 20,210
State enterprises bonds 295 297 185 187
Total 49,395 35,490 31,145 21,224
The Bank has pledged these assets as collateral for derivatives, for electricity consumption, for court collateral
and for repurchase agreements.
30 CONTINGENT LIABILITIES AND COMMITMENTS
Contingent liabilities and commitments as of 31 December 2011 and 2010 consisted of:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Avals to bills 7,944 3,802 7,944 3,802
Guarantees of loans 186 159 186 159
Liability under unmatured import bills 8,697 8,418 8,697 8,418
Letter of credit 26,962 24,496 26,962 24,496
Other contingencies
- Guarantees of selling instruments or securities - 1,500 - 1,500
- Unused credit line of overdraft 176,461 161,168 176,461 161,168
- Other guarantees 143,865 126,839 143,820 126,813
- Others 556,925 477,847 556,904 477,813
Total 921,040 804,229 920,974 804,169
174
Annual Report 2011
Financial Report
Under normal business operations, the Bank is a defendant in various litigation against the Bank. These include
cases of wrongful acts brought against the Bank, with total claims amounting to Baht 7,728 million and Baht
7,663 million as of 31 December 2011 and 2010, respectively. The Management believes that any liability
resulting from this litigation will not be material to the Banks financial position or on the results of its operations.
One of the civil cases against the Bank is a case which was further appealed to the Court of Final Appeal of Hong
Kong under Common Law. In this case, the Liquidators of Akai Holdings Limited (Akai) under a bankruptcy
case filed a civil lawsuit against the Bank, with total claim for damages of USD 52.81 Million plus interest, alleging
that a Loan Agreement and a Share Pledge Agreement entered into during 1998 between the Bank and Akai
were void and that the Bank is required to compensate Akai for damages resulting from enforcing the sale of
shares under the Share Pledge Agreement.
The Court of First Instance of Hong Kong dismissed the Liquidators entire claim. The Liquidators appealed to the
Court of Appeal which overturned the Court of First Instance decision ordering the Bank to pay damages. The
Bank appealed to the Court of Final Appeal. On 8 November 2010, the Court of Final Appeal awarded in favour
of Akai by ordering the Bank to pay damages of USD 22.54 million together with interest, at the rate of 1% over
USD LIBOR, total amount of USD 34.25 million. The Bank already paid such damages in 2010.
As of 31 December 2011 and 2010, Muang Thai Life Assurance Company Limited has been sued as insurer, with
claims amounting to approximately Baht 161 million and Baht 133 million, respectively. The Management
believes that any liability resulting from this litigation will not be material to the consolidated financial statements.
175
Annual Report 2011
Financial Report
31 RELATED PARTY TRANSACTIONS AND BALANCES
31.1 Loans and contingencies made to officers
(1)
and to business entities where the Bank and its subsidiaries,
their directors or officers, hold 20%
(2)
or more of their paid-up capital, in which market price as charged as
with other normal business, are summarized as follows:
(Million Baht)
Consolidated
31 December 2011 31 December 2010
Loans
1. Officers 30 21
2. Business entities where the Bank and subsidiaries, their
directors or officers, hold 20% or more of the paid - up capital
(2)
126
982
Total 156 1,003
Contingencies
1. Officers - -
2. Business entities where the Bank and subsidiaries, their
directors or officers,
hold 20% or more of the paid - up capital
(2)
13
13
Total 13 13
(Million Baht)
The Bank
31 December 2011 31 December 2010
Loans
1. Officers 18 21
2. Business entities where the Bank, its directors or officers,
hold 20% or more of the paid - up capital
(2)
69,446
57,012
Total 69,464 57,033
Contingencies
1. Officers - -
2. Business entities where the Bank, its directors or officers,
hold 20% or more of the paid - up capital
(2)
194
89
Total 194 89
(1)
Officers mean management who holds the title of at least First Senior Vice President including Department Head-Financial Accounting
Management Department and Department Head-Financial Planning Department.
(2)
Related business entities: 2010 mean business entities where the Bank, subsidiaries and any related parties hold 10% or more of the
paid-up capital.
2011 mean business entities where the Bank, subsidiaries and any related parties hold 20% or more of the
paid-up capital.
176
Annual Report 2011
Financial Report
31.2 Related Parties
Relationships between the Bank and other business entities
(1)
where control exists for the years ended
31 December 2011 and 2010 are explained in Note 11.1
31.3 Significant transactions occurring between the Bank and Phethai Asset Management Company Limited are
summarized as follows:
The Bank
31 December 2011 31 December 2010
Deposits 55 804
Other income 7 10
Income and expenses shared between the Bank and Phethai Asset Management Company Limited are charged
at cost, except for fee income, which is charged at market price.
The Bank has provided an allowance for doubtful accounts for Phethai Asset Management Company Limited
using the same method as for general customers and in accordance with the BoTs regulations.
(1)
Related parties 2010 mean spouses and children under age of 20 years old.
2011 mean spouses, children, father, mother, siblings and childrens spouses.
(Million Baht)
31.4 Additional transactions occurring between the Bank and related business entities, which are charged at market
price as with other normal business or the price as stipulated in the agreement, are as follows:
31.4.1 Assets, liabilities and contingencies between the Bank, its subsidiaries and associated companies
excluding Phethai Asset Management Company Limited as of 31 December 2011 and 2010 are
summarized as follows:
177
Annual Report 2011
Financial Report
(Million Baht)
Deposits
Subsidiaries
- KASIKORN ASSET MANAGEMENT CO., LTD. - - 1,338 1,236
- KASIKORN LEASING CO., LTD. - - 360 524
- Progress Gunpai Co., Ltd. - - 182 196
- Progress Land and Buildings Co., Ltd. - - 176 2
- Muangthai Group Holding Co., Ltd. - - 145 112
- KASIKORN FACTORY & EQUIPMENT CO., LTD. - - 100 122
- K-SME Venture Capital Co., Ltd. - - 88 68
- Progress Plus Co., Ltd. - - 84 86
- Progress Appraisal Co., Ltd. - - 71 78
- Progress Service Co., Ltd. - - 69 63
- Progress Service Support Co., Ltd. - - 56 49
- Progress Software Co., Ltd. - - 52 63
- KASIKORN RESEARCH CENTER CO., LTD. - - 43 42
- Progress Facilities Management Co., Ltd. - - 40 40
- Progress HR Co., Ltd. - - 33 40
Interbank and Money Market Items (Assets)
Subsidiary
- KASIKORN SECURITIES PCL - - - 265
Loans
Subsidiaries
- KASIKORN LEASING CO., LTD. - - 61,853 52,782
- KASIKORN FACTORY & EQUIPMENT CO., LTD. - - 7,462 3,242
Other Assets
Subsidiaries
- Muang Thai Life Assurance Co., Ltd. - - 235 190
- KASIKORN ASSET MANAGEMENT CO., LTD. - - 107 82
- KASIKORN SECURITIES PCL - - 19 32
- KASIKORN LEASING CO., LTD. - - 15 11
- Processing Center Co., Ltd. 10 - 10 -
- Progress Land and Buildings Co., Ltd. - - - 319
Consolidated The Bank
2011 2010 2011 2010
178
Annual Report 2011
Financial Report
- Progress Storage Co., Ltd. - - 26 32
- Progress Management Co., Ltd. - - 23 31
- Progress Multi Insurance Broker Co., Ltd. - - 17 -
- Progress Training Co., Ltd. - - 11 14
Associated Company
- Processing Center Co., Ltd. 18 23 18 23
Interbank and Money Market Items (Liabilities)
Subsidiaries
- KASIKORN SECURITIES PCL - - 2,898 1,471
- Muang Thai Life Assurance Co., Ltd. - - 959 721
Borrowings
Subsidiary
- KASIKORN ASSET MANAGEMENT CO., LTD. - - 624 510
Other Liabilities
Subsidiaries
- KASIKORN LEASING CO., LTD. - - 859 730
- Progress Software Co., Ltd. - - 208 215
- Progress HR Co., Ltd. - - 62 36
- Progress Plus Co., Ltd. - - 45 25
- Progress Appraisal Co., Ltd. - - 19 16
- Progress Service Co., Ltd. - - 16 -
- KASIKORN SECURITIES PCL - - 13 9
- Progress Storage Co., Ltd. - - 12 -
- Progress Training Co., Ltd. - - 11 -
Contingencies
Subsidiaries
- Muang Thai Life Assurance Co., Ltd. - - 2,038 1,787
- KASIKORN FACTORY & EQUIPMENT CO., LTD. - - 212 128
Associated Company
- Processing Center Co., Ltd. 13 13 13 13
- - 26 32
- - 23 31
- - 17 -
- - 11 14
18 23 18 23
- - 2,898 1,471
- - 959 721
- - 624 510
- - 859 730
- - 208 215
- - 62 36
- - 45 25
- - 19 16
- - 16 -
- - 13 9
- - 12 -
- - 11 -
- - 2,038 1,787
- - 212 128
13 13 13 13
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
179
Annual Report 2011
Financial Report
Certain subsidiaries and associated companies have entered into 1-2 year building lease and service
agreements with the Bank. Rentals are charged at cost plus an increment for additional administration and
maintenance expenditures incurred. As of 31 December 2011 and 2010, the Bank and its related parties have
rental agreements with remaining tenures amounting to Baht 39 million and Baht 35 million, respectively.
The Bank has entered into 5-year car leasing agreements with KASIKORN LEASING CO., LTD. Such
agreements are classified as finance lease agreements, charged at market rates. As of 31 December 2011 and
2010, the book value of finance lease liabilities, before elimination, amounts to Baht 857 million and 728 million,
respectively.
The Bank entered into an Information Technology Service Agreement with Progress Software Co., Ltd. under
which the service will be provided until 30 November 2015. As of 31 December 2011, the Bank is committed to
pay total service fees of Baht 91 Million and as of 31 December 2010, the Bank has no further commitment to
pay total service fees as the service fees have not been determined.
31.4.2 Revenue and expenses occurring between the Bank, its subsidiaries and associated companies for the
years ended 31 December 2011 and 2010 are summarized as follows:
Subsidiaries
Revenue:
Interest income - - 2,228 1,798
Dividend income - - 956 859
Fee income - - 3,719 2,762
Other income - - 1,607 955
Expenses:
Interest expenses - - 197 110
Fee expenses - - 191 277
Personnel expenses - - 383 274
Other expenses - - 3,308 3,199
Associated Companies
Revenue:
Other income 12 8 12 8
Expenses:
Fee expenses - 3 - 3
Other expenses 20 15 20 15
(Million Baht)
- - 2,228 1,798
- - 956 859
- - 3,719 2,762
- - 1,607 955
- - 197 110
- - 191 277
- - 383 274
- - 3,308 3,199
12 8 12 8
- 3 - 3
20 15 20 15
Consolidated The Bank
2011 2010 2011 2010
180
Annual Report 2011
Financial Report
The Bank has entered into a staff secondment agreement with KASIKORN SECURITIES PCL, commencing from
January 2006. The agreement shall be terminated at any time by the Bank giving notice 60 days prior to the
termination date. The Bank is responsible for salaries, welfare and other benefits and any liabilities that arise or
may arise from the actions of the employees.
For the years ended 31 December 2011 and 2010, the Bank incurred expenses amounting to Baht 383 million
and Baht 274 million, respectively, presented as personnel expenses in the statements of comprehensive
income.
31.4.3 Assets, liabilities and contingencies between the Bank and other business entities in which the directors,
key executive officers and close members of their families have significant influence as of 31 December
2011 and 2010 were summarized as follows:
Consolidated and The Bank
2011 2010
Loans
- TT&T Public Co., Ltd.* 2,156 -
- Sansiri Public Co., Ltd. 2,032 2,136
- BANGKOK PRODUCE MERCHANDISING PUBLIC CO., LTD.* 1,541 -
- PAPANAN LIMITED* 830 -
- Jutha Maritime Public Co., Ltd. 687 714
- Charoen Pokphand Foods Public Co., Ltd. 600 800
- C.P. Merchandising Co., Ltd.* 585 -
- SAIM QUALITY STARCH CO., LTD.* 382 -
- Loxley Public Co., Ltd.* 250 -
- KOMATSU BANGKOK LEASING CO., LTD.* 212 -
- Bangkok Komatsu Forklift Co., Ltd.,* 205 -
- Global Utilities Services Co., Ltd. 185 217
- RED LOTUS PROPERTIES LIMITED* 164 -
- B.P. Food Products Co., Ltd.* 150 -
- CPF Food Products Co., Ltd.* 150 -
- BANGKOK FOOD PRODUCTS CO., LTD.* 146 -
- TISCO TOKYO LEASING CO., LTD.* 115 -
- Rajburi Foods Co., Ltd.* 100 -
(Million Baht)
181
Annual Report 2011
Financial Report
Consolidated and The Bank
2011 2010
Loans (Continued)
- Thanakorn Vegetable Oil Products Co., Ltd.* 92 -
- Charoen Pokphand Northeastern Plc.* 50 -
- Eastern Printing Public Company Limited* 42 -
- Construction and Engineering Services Co., Ltd.* 22 -
- M&A Guard Service Co., Ltd.* 11 -
- Bangkok Glass Industry Co., Ltd.** - 693
Deposits
- Counter Service Co., Ltd.* 777 -
- Serm Suk Public Co., Ltd. 663 300
- TT&T Public Co., Ltd.* 554 -
- CP ALL PUBLIC CO., LTD.* 472 -
- Muang Thai Insurance Public Co., Ltd. 255 352
- Thai Smart Card Co., Ltd.* 228 -
- C.P. Retailing and Marketing Co., Ltd.* 200 -
- TOSHIBA LIGHTING COMPONENTS (THAILAND) LTD.* 170 -
- BP - CASTROL (THAILAND) LIMITED* 145 -
- Phatra Leasing Public Co., Ltd. 113 72
- Sansiri Public Co., Ltd. 107 194
- Sermsuk Beverage Co., Ltd. 97 45
- Global Utilities Services Co., Ltd.* 95 -
- National ITMX Co., Ltd. 85 22
- SIAM MOTORS SALES CO., LTD.* 82 -
- B.GRIMM BIP POWER LIMITED* 74 -
- Retailink (Thailand) Co., Ltd.* 70 -
- Guardfire Limited* 61 -
- SIAM MOTORS TRADING CO., LTD.* 58 -
- Charoen Pokphand Foods Public Co., Ltd. 52 24
- CHANACHAI LIMITED* 41 -
- LOXLEY JOINT AND HOLD CO., LTD.* 41 -
- TRIPLE T GLOBAL NET CO., LTD.* 39 -
- Suludee Co., Ltd.* 38 -
- SIAM MODIFIED STARCH CO., LTD.* 37 -
(Million Baht)
182
Annual Report 2011
Financial Report
Consolidated and The Bank
2011 2010
Deposits (Continued)
- Loxley Trading Co., Ltd.* 36 -
- General Engineering Public Co., Ltd.* 32 -
- Sombat Lamsam Co., Ltd. 32 27
- Crown Seal Public Co., Ltd.* 31 -
- Muangthai Holding Co., Ltd.* 30 -
- JEM ENVIRONIMENTAL MANAGEMENT CO., LTD.* 29 -
- PHIWANTHANA CO., LTD.* 29 -
- PTT Global Chemical Public Company Limited* 29 -
- Loxbit Public Co., Ltd.* 26 -
- Oriental Post Co., Ltd.* 25 -
- Professional Computer Co., Ltd.* 25 -
- Benjangkawat Co., Ltd.* 24 -
- Thai - Amadeus Southeast Asia Co., Ltd.* 23 -
- The Barbecue Plaza Co., Ltd.* 21 -
- Smithithada Co., Ltd. 20 15
- Sarasin Co., Ltd.* 20 -
- SIAM MUSIC YAMAHA CO., LTD.* 19 -
- P I A INTERIOR COMPANY LIMITED* 18 -
- Ruam Samphant Co., Ltd.* 18 -
- Architects 49 Ltd.* 17 -
- PLUS PROPERTY CO., LTD.* 17 -
- M&E ENGINEERING 49 LIMITED* 17 -
- Songkhla Shipping Agency Co., Ltd.* 17 -
- PAPANAN LIMITED* 16 -
- The Viriyah Insurance Co., Ltd.* 15 -
- SIAM QUALITY STARCH CO., LTD.* 15 -
- SIAM HITACHI AUTOMOTIVE PRODUCTS LTD.* 13 -
- GS YUASA SIAM SALES LTD.* 13 -
- P 49 INTERIOR AND ASSOCIATES CO., LTD.* 13 -
- CONSULTING & MANAGEMENT 49 LTD.* 13 -
(Million Baht)
183
Annual Report 2011
Financial Report
Consolidated and The Bank
2011 2010
Deposits (Continued)
- Toshiba Thailand Co., Ltd.* 13 -
- SIAM GS SALES CO., LTD.* 12 -
- Pruetthada Co., Ltd. 12 5
- BLUESCOPE LYSAGHT (THAILAND) CO., LTD.* 12 -
- Floor Industry Co., Ltd.* 11 -
- GRAPHIC 49 LIMITED* 11 -
- S.U.N. MANAGEMENT CO., LTD.* 10 -
- Mobile Innovation Co., Ltd.* 10 -
- The Phatra Samphant Co., Ltd.* 10 -
- Mitsubishi Elevator Asia Co., Ltd. 9 37
- Nithi Thamrong Co., Ltd. 6 37
- Zin Suapa Co., Ltd. 6 12
- TOT Public Co., Ltd.** - 34
- Sup Wattana Co., Ltd.** - 19
- Khao Angkaew Co., Ltd.** - 13
Contingencies
- Charoen Pokphand Foods Public Co., Ltd. 3,863 1,619
- PTT Global Chemical Public Company Limited* 2,003 -
- Sansiri Public Co., Ltd. 1,191 1,296
- CPF Food Products Co., Ltd.* 255 -
- Loxley Public Co., Ltd.* 245 -
- B.GRIMM BIP POWER LIMITED* 229 -
- Quality Houses Public Co., Ltd. 224 583
- CP ALL PUBLIC CO., LTD.* 184 -
- Home Product Center Public Co., Ltd.* 127 -
- Global Utilities Services Co., Ltd. 121 174
- CASA VILLE CO., LTD.* 70 -
- Construction and Engineering Services Co., Ltd.* 64 -
- BANGKOK PRODUCE MERCHANDISING PUBLIC CO., LTD.* 53 -
- General Engineering Public Co., Ltd.* 52 -
- C.P. Merchandising Co., Ltd.* 49 -
- JEM ENVIRONIMENTAL MANAGEMENT CO., LTD.* 47 -
(Million Baht)
184
Annual Report 2011
Financial Report
Consolidated and The Bank
2011 2010
Contingencies (Continued)
- Retailink (Thailand) Co., Ltd.* 45 -
- Loxley Trading Co., Ltd.* 45 -
- SCG Network Management Co., Ltd.* 44 -
- Dole Thailand Co., Ltd. 42 75
- C.P. Retailing and Marketing Co., Ltd.* 40 -
- Eastern Printing Public Company Limited* 40 -
- Professional Computer Co., Ltd.* 34 -
- Petpak Co., Ltd.* 29 -
- SCG Trading Co., Ltd.* 24 -
- PHIWANTHANA CO., LTD.* 24 -
- SCG Logistics Management Co., Ltd.* 23 -
- Crown Seal Public Co., Ltd.* 21 -
- Loxbit Public Co., Ltd.* 21 -
- Siam Motor Parts Co., Ltd.* 20 -
- SIAM RIKEN INDUSTRIAL CO., LTD.* 19 -
- SAIM QUALITY STARCH CO., LTD.* 18 -
- Charoen Pokphand Northeastern Plc.* 13 -
- Bangkok Glass Industry Co., Ltd.** - 67
- Yip In Tsoi & Jacks Co., Ltd.** - 15
- Jutha Maritime Public Co., Ltd. - 12
* 2010 the entity was not related to the Bank.
** 2011 the entity is no longer related to the Bank.
31.4.4 During 2011, a subsidiary of the Bank sold a property foreclosed to another related business in the amount
of Baht 540 million which has gain on sale of property foreclosed in amount of Baht 238 million.
(Million Baht)
185
Annual Report 2011
Financial Report
Short-term employee benefits 928 904 535 539
Post-employment benefits 24 23 19 18
Total 952 927 554 557
31.4.5 Assets, liabilities and contingencies between the Bank and its directors and key executive officers or the
Banks employees who have authority and responsibility for planning, directing and controlling the
activities of the Bank including their close family members as of 31 December 2011 and 2010 are
summarized as follows:
(Million Baht)
Consolidated and The Bank
2011 2010
Loans 67 30
Deposits 2,920 1,150
31.5 Key management personnel compensation for the years ended 31 December 2011 and 2010 are consisted of:
(Million Baht)
Consolidated The Bank
32 BENEFITS OF DIRECTORS AND EXECUTIVES
The Bank and its subsidiaries have not paid other benefits to directors and executives except for the benefits that
are normally paid such as directors fee, directors bonus (if any) and income tax, executives salary and bonus
(if any).
2011 2010 2011 2010
928 904 535 539
24 23 19 18
952 927 554 557
186
Annual Report 2011
Financial Report
33 CAPITAL COMMITMENTS AND LONG-TERM AGREEMENTS
33.1 Capital Commitments
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Contracted but not provided for 5,607 7,436 5,610 7,435
33.2 Long-Term Agreements
33.2.1 Operating Lease
The Bank and its subsidiaries have entered into land/building lease agreements for branch offices
and vehicle lease agreements. The Bank and its subsidiaries were committed to pay future rentals,
which are summarized as follows:
(Million Baht)
Consolidated The Bank
Types of Lease Agreement Remaining Period 2011 2011
Land/building lease agreements 1 January 2012 6 March 2036 1,800 1,785
Vehicle lease agreements 1 January 2012 21 December 2016 104 101
Others 1 January 2012 31 January 2016 45 -
Total 1,949 1,886
187
Annual Report 2011
Financial Report
(Million Baht)
Consolidated The Bank
Types of Lease Agreement Remaining Period 2010 2010
Land/building lease agreements 1 January 2011 6 March 2036 1,830 1,806
Vehicle lease agreements 1 January 2011 15 July 2015 109 253
Others 1 January 2011 25 October 2014 33 -
Total 1,972 2,059
33.2.2 Service Agreement
The Bank entered into an Information Technology Service, under which the service will be provided
until 31 December 2015. As of 31 December 2011 and 2010, the Bank is committed to pay total
service fees of Baht 5,975 million and Baht 6,156 million, respectively.
34 THAI FINANCIAL REPORTING STANDARDS (TFRS) NOT YET ADOPTED
The Bank and its subsidiaries have not adopted the following revised TFRS that have been issued as of the
reporting date but are not yet effective.
The below revised TFRS (revised 2009) is expected to become effective for annual financial periods beginning on or
after 1 January 2013.
TFRS Topic
TAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates
The management is presently considering the potential impact from the adoption of the above revised TFRS.
35 THE FINANCIAL POSITIONS AND RESULTS OF OPERATIONS DIFFERENTIATED BY DOMESTIC AND
FOREIGN BUSINESS
The financial positions and results of operations differentiated by domestic and foreign business can be
summarized as follows:
188
Annual Report 2011
Financial Report
(Million Baht)
Consolidated
2011
Domestic
Business
Foreign
Business
Total
Eliminated
Transactions
Total
Total assets 1,709,069 13,871 1,722,940 - 1,722,940
Interbank and money market items - net
(assets)
108,805
3,164
111,969
-
111,969
Investments - net 259,206 5,089 264,295 - 264,295
Loans to customers and accrued interest
receivables - net
1,168,784
3,812
1,172,596
-
1,172,596
Deposits 1,237,897 4,332 1,242,229 - 1,242,229
Interbank and money market items
(liabilities)
52,454 886 53,340 - 53,340
Debts issued and borrowings 64,507 5,796 70,303 - 70,303
(Million Baht)
Consolidated
2010
Domestic
Business
Foreign
Business
Total
Eliminated
Transactions
Total
Total assets 1,537,291 11,182 1,548,473 (1,809) 1,546,664
Interbank and money market items - net
(assets) 93,468 4,092 97,560 - 97,560
Investments - net 245,615 5,602 251,217 - 251,217
Loans to customers and accrued interest
receivables - net
1,040,172
1,394
1,041,566
-
1,041,566
Deposits 1,098,393 1,643 1,100,036 - 1,100,036
Interbank and money market items
(liabilities)
33,064
-
33,064
-
33,064
Debts issued and borrowings 83,421 5,511 88,932 - 88,932
35.1 Financial Positions Classified by Types of Business
189
Annual Report 2011
Financial Report
The Bank
2011
Domestic
Business
Foreign
Business
Total
Eliminated
Transactions
Total
Total assets 1,590,696 13,871 1,604,567 - 1,604,567
Interbank and money market items - net
(assets)
107,041
3,164
110,205
- 110,205
Investments - net 168,945 5,089 174,034 - 174,034
Loans to customers and accrued interest
receivables - net
1,160,103
3,812
1,163,915
- 1,163,915
Deposits 1,239,528 4,332 1,243,860 - 1,243,860
Interbank and money market items
(liabilities)
55,889 887 56,776 - 56,776
Debts issued and borrowings 65,131 5,796 70,927 - 70,927
(Million Baht)
The Bank
2010
Domestic
Business
Foreign
Business
Total
Eliminated
Transactions
Total
Total assets 1,441,359 11,182 1,452,541 (1,809) 1,450,732
Interbank and money market items - net
(assets) 92,676 4,092 96,768
- 96,768
Investments - net 178,096 5,602 183,698 - 183,698
Loans to customers and accrued interest
receivables - net
1,031,953
1,394
1,033,347
-
1,033,347
Deposits 1,100,586 1,643 1,102,229 - 1,102,229
Interbank and money market items
(liabilities)
34,997
-
34,997
-
34,997
Debts issued and borrowings 84,031 5,511 89,542 - 89,542
(Million Baht)
190
Annual Report 2011
Financial Report
35.2 Results of Operations Classified by Types of Business
(Million Baht)
Consolidated
2011
Domestic
Business
Foreign
Business
Total
Eliminated
Transactions
Total
Interest income 83,412 483 83,895 (202) 83,693
Interest expenses 27,276 128 27,404 (202) 27,202
Interest income - net 56,136 355 56,491 - 56,491
Fees and service income - net 20,595 42 20,637 - 20,637
Other operating income 12,841 539 13,380 - 13,380
Other operating expenses 50,087 277 50,364 - 50,364
Operating profit before income tax expense 39,485 659 40,144 - 40,144
(Million Baht)
Consolidated
2010
Domestic
Business
Foreign
Business
Total
Eliminated
Transactions
Total
Interest income 62,169 220 62,389 (118) 62,271
Interest expenses 15,578 67 15,645 (118) 15,527
Interest income - net 46,591 153 46,744 - 46,744
Fees and service income - net 18,186 41 18,227 - 18,227
Other operating income 10,553 (380) 10,173 - 10,173
Other operating expenses 44,555 149 44,704 - 44,704
Operating profit (loss) before income tax
expense
30,775
(335)
30,440
-
30,440
191
Annual Report 2011
Financial Report
(Million Baht)
The Bank
2011
Domestic
Business
Foreign
Business
Total
Eliminated
Transactions
Total
Interest income 77,747 483 78,230 (202) 78,028
Interest expenses 27,416 128 27,544 (202) 27,342
Interest income - net 50,331 355 50,686 - 50,686
Fees and service income - net 19,593 42 19,635 - 19,635
Other operating income 8,598 539 9,137 - 9,137
Other operating expenses 44,946 277 45,223 - 45,223
Operating profit before income tax expense 33,576 659 34,235 - 34,235
(Million Baht)
The Bank
2010
Domestic
Business
Foreign
Business
Total
Eliminated
Transactions
Total
Interest income 57,338 220 57,558 (118) 57,440
Interest expenses 15,643 67 15,710 (118) 15,592
Interest income - net 41,695 153 41,848 - 41,848
Fees and service income - net 17,283 41 17,324 - 17,324
Other operating income 7,648 (380) 7,268 - 7,268
Other operating expenses 40,187 149 40,336 - 40,336
Operating profit (loss) before income tax
expense
26,439
(335)
26,104
-
26,104
192
Annual Report 2011
Financial Report
36 INTEREST INCOME
Interest income for the years ended 31 December 2011 and 2010 consisted of:
Consolidated The Bank
2011 2010 2011 2010
Interbank and money market items 7,178 2,363 7,143 2,347
Investments and trading transactions 285 279 285 279
Investments in debt securities 8,129 6,650 4,325 3,638
Loans 64,801 49,895 66,302 50,984
Hire purchase and financial lease 3,327 2,892 - -
Others (27) 192 (27) 192
Total 83,693 62,271 78,028 57,440
(Million Baht)
37 INTEREST EXPENSES
Interest expenses for the years ended 31 December 2011 and 2010 consisted of:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Deposits 15,067 6,863 15,078 6,870
Interbank and money market items 3,758 1,845 3,820 1,857
Contributions to Deposit Protection Agency 4,776 4,026 4,776 4,026
Debts issued
- Subordinated debentures 1,728 1,859 1,728 1,859
- Others 1,776 885 1,799 891
Borrowings 36 - 36 9
Others 61 49 105 80
Total 27,202 15,527 27,342 15,592
193
Annual Report 2011
Financial Report
38 FEES AND SERVICE INCOME - NET
Fees and service income - net for the years ended 31 December 2011 and 2010 consisted of:
(Million Baht)
39 GAIN ON TRADING AND FOREIGN EXCHANGE TRANSACTIONS
Gain on trading and foreign exchange transactions for the years ended 31 December 2011 and 2010 consisted
of:
Consolidated The Bank
2011 2010 2011 2010
Fees and service income
Acceptances, aval and guarantees 1,803 1,657 1,803 1,657
Other 24,269 21,164 23,302 20,210
Total Fees and service income 26,072 22,821 25,105 21,867
Fees and service expenses 5,435 4,594 5,470 4,544
Fees and service income - net 20,637 18,227 19,635 17,323
Consolidated The Bank
2011 2010 2011 2010
1. Gain (loss) on trading and foreign
exchange transactions
- Foreign currencies and foreign
currency related derivatives
6,059
4,097
6,058
4,099
- Interest rate related derivatives (794) 91 (794) 91
- Debt securities 4 - 4 -
- Equity securities 4 268 5 257
- Others (59) 9 (59) 9
Total 5,214 4,465 5,214 4,456
(Million Baht)
194
Annual Report 2011
Financial Report
Gain (loss) on disposal
Available-for-sale investments
Held-to-maturity debt instruments
General investments
Investments in subsidiaries and associates
Total
(Loss) Reversal on impairment and write-off of investment
Equity securities - available-for-sale
General investments
Investments in subsidiaries and associates
Total
Total gain on investments
Consolidated and The Bank
2011 2010
1. Changes in the fair value - net
- Borrowing 16 (24)
2. Loss on redemption or transferable and interest expense
which is not excluded NO. 1.
(70)
(71)
Total (54) (95)
40 LOSS ON FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS
Loss on financial liabilities designated at fair value through profit or loss for the years ended 31 December 2011
and 2010 consisted of:
(Million Baht)
Consolidated and The Bank
2011 2010
16 (24)
(70)
(71)
(54) (95)
41 GAIN ON INVESTMENTS
Gain on investments presented in the statements of comprehensive income for the years ended 31 December
2011 and 2010 consisted of:
(Million Baht)
Consolidated
2011 2010
512 618
55 -
(19) (4)
7 -
555 614
(1) (4)
251 -
1 -
251 (4)
806 610
The Bank
2011 2010
89 257
- -
(19) (4)
(2) -
68 253
- (10)
251 -
1 -
252 (10)
320 243
195
Annual Report 2011
Financial Report
42 IMPAIRMENT LOSS ON LOANS AND DEBT SECURITIES
Impairment loss on loans and debt securities for the years ended 31 December 2011 and 2010 consisted of:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Interbank and money market items 1 14 1 14
Held-to-maturity debt instruments (258) 5 (254) 9
Loans to customers 4,031 4,085 4,062 3,872
Loss on debt restructuring 3,572 2,597 3,571 2,596
Total 7,346 6,701 7,380 6,491
43 INCOME TAX EXPENSE
On 21 December 2011, the Government has issued a Royal Decree under the Revenue Code that give effect to
the Cabinet resolution on 11 October 2011 regarding the Reduction and Exemption in Income Taxes (No. 530)
B.E. 2554 to reduce the corporate income tax rate for the three accounting periods; from 30% to 23% for the
accounting period 2012 and to 20% for the following two accounting periods 2013 and 2014.
The Bank and subsidiaries shall be measured deferred tax assets and deferred tax liabilities at the tax rates that
are expected to apply to the period when the asset is realized or the liability is settled in line with Thai Accounting
Standard. The substantively enacted tax rates which should be applied in measuring deferred tax assets and
liabilities shall be 23% for the accounting period 2012 and 20% for accounting periods 2013 onwards that give
effect to implication of The Federation of Accounting Professions.
196
Annual Report 2011
Financial Report
43.1 Income tax recognised in profit or loss for the years ended 31 December 2011 and 2010 consisted of:
Consolidated The Bank
2011 2010 2011 2010
Current tax expense
Current year 12,174 9,493 9,907 7,702
Deferred tax expense
Movements in temporary differences (194) (399) 53 (213)
Income tax reduction
For items recognised before the Cabinet
resoluation 1,868 - 1,995 -
For items recognised after the Cabinet
resoluation 114 - 121 -
1,788 (399) 2,169 (213)
Total income tax expense 13,962 9,094 12,076 7,489
(Million Baht)
See Note 20 for movement in deferred tax assets and deferred tax liabilities during the year
43.2 Income tax recognised in other comprehensive income for the years ended 31 December 2011 and 2010
consisted of:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Income taxes relating to components of other
comprehensive income
Movements in temporary differences 45 (824) (191) (25)
Deferred tax - income tax reduction 1,345 - 1,146 -
Total 1,390 (824) 955 (25)
197
Annual Report 2011
Financial Report
43.3 Reconciliation of effective tax rates as consisted of
(Million Baht)
Consolidated
2011 2010
Rate (%) Amount Rate (%) Amount
Operating profit before income tax 40,144 30,440
Income tax using the Thai corporation tax rate 30.00 12,043 30.00 9,132
Deferred tax - income tax reduction
For items recognised before the Cabinet
resoluation
1,868
-
For items recognised after the Cabinet
resoluation
114
-
Tax effect of income and expenses
that are not taxable income or not deductible
in determining taxable profit, net
(63)
(38)
Total 34.78 13,962 29.88 9,094
(Million Baht)
The Bank
2011 2010
Rate (%) Amount Rate (%) Amount
Operating profit before income tax 34,235 26,104
Income tax using the Thai corporation tax rate 30.00 10,270 30.00 7,831
Deferred tax - income tax reduction
For items recognised before the Cabinet
resoluation
1,995
-
For items recognised after the Cabinet
resoluation
121
-
Tax effect of income and expenses
that are not taxable income or not deductible
in determining taxable profit, net
(310)
(342)
Total 35.27 12,076 28.69 7,489
198
Annual Report 2011
Financial Report
44 FINANCIAL RISK MANAGEMENT
Credit risk
Credit risk refers to the risk that a counterparty or a borrower may default on its contractual obligations and
agreements. Such default may be caused by the counterpartys inability to pay due to financial
encumbrances or their intention not to abide by the contractual agreements, resulting in a loss to the Bank.
The bank has employed credit portfolio optimization techniques to determine the target of loan growth and
its desirable credit portfolio composition that strive for the highest possible risk-adjusted return within
acceptable risk levels under stress conditions, by taking into account of economic outlook, potential market
opportunities, and the banks strategic direction. The Bank has employed credit risk management
processes in credit processes. In assessing medium and large corporate customers credit risk level, the
Bank utilizes credit risk rating tools to enhance the quality of loans granted. Furthermore, the credit scoring
has been employed to determine the credit risk level of retail customers to ensure uniformity of assessment
results. To manage medium business and large corporate business portfolios following the approval
process, the Bank annually reviews customers credits rating a on qualitative and quantitative basis.
Regarding the management of retail portfolio, behavior scoring has been adopted for assessing customers
risk level resulting in the Banks capability in determining risk-adjusted returns or interest rates. This also
enhances the determination of asset allocation across businesses and industries to diversify risks at an
aggregate level. Moreover, the bank has employed collection scoring to define risk-based collection
strategies and optimize collection efficiency. In addition, the Bank has conducted the stress tests to assess
potential impacts from political, financial shock on customers credit risk profiles, flooding, and other
situation in order to determine the implication to credit policy and credit risk management.
199
Annual Report 2011
Financial Report
For loans item shown in the statements of financial position, the Banks maximum credit loss is the carrying
amount of net loans after deduction of applicable allowance for losses without considering the value of
collateral. In addition, credit risk may arise from off-financial reporting items or contingencies.
Market risk
Market risk is any risk due to changes in interest rates, foreign exchange rates, equity prices, commodity
prices and risk arising from credit derivatives which may cause volatility in the Banks earnings or
fluctuations in the value of the Banks financial assets and liabilities both in the current reporting period and
in the future.
The Bank currently faces 3 major types of market risk namely interest rate risk, foreign exchange rate risk
and equity position risk. As the Bank has chosen not to retain any position dealing with commodity prices
and credit derivatives, they have been managed under back-to-back policy.
In the credit approval process, the Bank considers the customers ability to repay and the loan objectives as
key factors in the approval of credit and may obtain sufficient collateral or other securities, where
appropriate, as a means of mitigating the risk of financial losses from default. To maximize the effectiveness
of the credit approval process, credit analysis and approval functions are separated from the units
responsible for maintaining customer relationships. The Bank also has processes for regularly reviewing
customers credit rating and performance on all approved transactions. For non-performing loans (NPL), the
Bank has closely and continuously monitored, resolved and/or restructured them to retain maximum benefits
for the Bank.
200
Annual Report 2011
Financial Report
1. Interest rate risk
Interest rate risk refers to any risk arising from changes in interest rates which may affect the value of
the Banks financial instruments or may cause volatility in the Banks earnings or cost of funds, both in
the current reporting period and in the future. The Bank has employed various tools to manage interest
rate risk such as Value-at-Risk (VaR) and Interest Rate Risk Gap under the supervision of Risk
Management Committee and Assets and Liabilities Management Sub-committee.
An analysis of loans (including financial institutions) at fixed and floating interest rates (MLR, MOR and MRR) as
of 31 December 2011 and 2010 is as follows:
(Million Baht)
Consolidated The Bank
2011 2010 2011 2010
Fixed interest rates 463,588 376,137 455,797 369,061
Floating interest rates 841,264 772,016 839,540 769,819
Total Loans (including financial
institutions)
1,304,852
1,148,153
1,295,337
1,138,880
The average balances of the interest-bearing financial assets and liabilities of the Bank and its subsidiaries,
calculated by using the average of the beginning of the year and the ending of the year, and the average
interest rates for the years ended 31 December 2011 and 2010 are as follows:
201
Annual Report 2011
Financial Report
Consolidated
2011 2010
Average
Balance
Interest
Income/
Expense
Average
Rate (%)
Average
Balance
Interest
Income/
Expense
Average
Rate (%)
Interest-bearing Financial Assets
Interbank and money market items 104,669 7,178 6.86 80,445 2,363 2.94
Investments 257,611 8,414 3.27 252,958 6,930 2.74
Loans to customers 1,105,320 68,128 6.16 973,625 52,787 5.42
Total 1,467,600 83,720 5.70 1,307,028 62,080 4.75
Interest-bearing Financial Liabilities
Deposits 1,171,133 15,067 1.29 1,037,764 6,863 0.66
Interbank and money market items 43,202 3,758 8.70 40,025 1,845 4.61
Debts issued and borrowings 79,618 3,540 4.45 82,866 2,744 3.31
Total 1,293,953 22,365 1.73 1,160,655 11,452 0.99
(Million Baht)
The Bank
2011 2010
Average
Balance
Interest
Income/
Expense
Average
Rate (%)
Average
Balance
Interest
Income/
Expense
Average
Rate (%)
Interest-bearing Financial Assets
Interbank and money market items 103,398 7,143 6.91 79,688 2,347 2.95
Investments 164,011 4,610 2.81 179,253 3,917 2.19
Loans to customers 1,097,071 66,303 6.04 966,586 50,984 5.27
Total 1,364,480 78,056 5.72 1,225,527 57,248 4.67
Interest-bearing Financial Liabilities
Deposits 1,173,045 15,078 1.29 1,040,147 6,870 0.66
Interbank and money market items 45,886 3,820 8.32 41,502 1,857 4.47
Debts issued and borrowings 80,235 3,563 4.44 84,218 2,759 3.28
Total 1,299,166 22,461 1.73 1,165,867 11,486 0.99
(Million Baht)
202
Annual Report 2011
Financial Report
Financial assets and liabilities, classified by maturity of interest repricing, as of 31 December 2011 and 2010 shown
below:
(Million Baht)
Consolidated
2011
Immediate
Repricing
Less than
6 months
6 months
to 1 Year
Over 1 Year
to 5 Years
Over
5 Years
Non-interest
Bearing
Stop
Accrued Total
Financial Assets
Cash - - - - - 53,211 - 53,211
Interbank and money market
items 6,814 97,172 5,585
80
- 2,378 - 112,029
Investments 176 9,505 68,192 95,066 76,197 26,497 820 276,453
Loans to customers 752,913 128,639 12,284 85,589 89,512 75,503 66,394 1,210,834
Accrued interest receivables - - - - - 2,105 - 2,105
Other assets 3,140 - - - - 9,087 - 12,227
Total Financial Assets 763,043 235,316 86,061 180,735 165,709 168,781 67,214 1,666,859
Financial Liabilities
Deposits 686,716 250,054 172,511 66,330 - 66,618 - 1,242,229
Interbank and money market
items 4,302 36,929 8,423 36
- 3,650 - 53,340
Liabilities payable on demand - - - - - 11,598 - 11,598
Financial liabilities designated
at fair value through profit
or loss -
993
701
419
-
- -
2,113
Debts issued and borrowings - 37,588 1,139 23,267 8,309 - - 70,303
Other liabilities 5,390 - - - - 7,340 - 12,730
Total Financial Liabilities 696,408 325,564 182,774 90,052 8,309 89,206 - 1,392,313
Items recognised on the
statements of financial
position 66,635 (90,248) (96,713) 90,683 157,400 79,575 67,214 274,546
203
Annual Report 2011
Financial Report
(Million Baht)
Consolidated
2010
Immediate
Repricing
Less than
6 months
6 months
to 1 Year
Over 1 Year
to 5 Years
Over
5 Years
Non-interest
Bearing
Stop
Accrued Total
Financial Assets
Cash - - - - - 32,457 - 32,457
Interbank and money market
items 6,961 81,883 695
-
- 8,080 - 97,619
Investments 2,265 10,062 55,283 104,667 64,814 11,382 1,088 249,561
Loans to customers 693,306 110,485 10,423 75,952 82,467 38,755 65,593 1,076,981
Accrued interest receivables - - - - - 1,417 - 1,417
Other assets 836 - - - - 8,530 - 9,366
Total Financial Assets 703,368 202,430 66,401 180,619 147,281 100,621 66,681 1,467,401
Financial Liabilities
Deposits 687,502 158,301 91,826 101,631 - 60,776 - 1,100,036
Interbank and money market
items 1,815 27,090 131 1,031
- 2,997 - 33,064
Liabilities payable on demand - - - - - 21,622 - 21,622
Financial liabilities designated
at fair value through profit or
loss -
5,118
360 678
- - -
6,156
Debts issued and borrowings - 56,397 18,643 795 13,022 75 - 88,932
Other liabilities 6,571 - - - - 5,282 - 11,853
Total Financial Liabilities 695,888 246,906 110,960 104,135 13,022 90,752 - 1,261,663
Items recognised on the
statements of financial
position 7,480 (44,476) (44,559) 76,484 134,259 9,869 66,681 205,738
204
Annual Report 2011
Financial Report
The Bank
2011
Immediate
Repricing
Less than
6 months
6 months
to 1 Year
Over 1 year
to 5 Years
Over
5 Years
Non-interest
Bearing
Stop
Accrued Total
Financial Assets
Cash - - - - - 53,209 - 53,209
Interbank and money market
items
6,552
96,339
5,213 -
-
2,131
-
110,235
Investments 176 5,154 66,905 81,656 1,396 19,240 675 175,202
Loans to customers 750,057 130,770 7,312 84,170 88,864 75,503 64,643 1,201,319
Accrued interest receivables - - - - - 1,896 - 1,896
Other assets 3,140 - - - - 5,559 - 8,699
Total Financial Assets 759,925 232,263 79,430 165,826 90,260 157,538 65,318 1,550,560
Financial Liabilities
Deposits 688,037 250,149 172,511 66,330 - 66,833 - 1,243,860
Interbank and money market
items
7,510
36,929
8,423
36
-
3,878
-
56,776
Liabilities payable on demand - - - - - 11,598 - 11,598
Financial liabilities designated
at fair value through profit or
loss
-
993
701 419
-
-
-
2,113
Debts issued and borrowings - 38,212 1,139 23,267 8,309 - - 70,927
Other liabilities 2,662 - - - - 7,345 - 10,007
Total Financial Liabilities 698,209 326,283 182,774 90,052 8,309 89,654 - 1,395,281
Items recognised on the
statements of financial
position
61,716
(94,020) (103,344)
75,774
81,951
67,884
65,318
155,279
(Million Baht)
205
Annual Report 2011
Financial Report
(Million Baht)
The Bank
2010
Immediate
Repricing
Less than
6 months
6 months
to 1 Year
Over 1 year
to 5 Years
Over
5 Years
Non-interest
Bearing
Stop
Accrued Total
Financial Assets
Cash - - - - - 32,456 - 32,456
Interbank and money market
items
7,111
81,720
- -
-
7,965
-
96,796
Investments 2,265 7,189 54,157 97,421 3,638 2,625 1,088 168,383
Loans to customers 689,078 113,879 6,167 74,545 81,817 38,755 63,467 1,067,708
Accrued interest receivables - - - - - 1,225 - 1,225
Other assets 836 - - - - 5,782 - 6,618
Total Financial Assets 699,290 202,788 60,324 171,966 85,455 88,808 64,555 1,373,186
Financial Liabilities
Deposits 688,650 158,424 91,826 101,631 - 61,698 - 1,102,229
Interbank and money market
items
3,748
27,090
131
1,031
-
2,997
-
34,997
Liabilities payable on demand - - - - - 21,616 - 21,616
Financial liabilities designated
at fair value through profit
or loss
-
5,118
360 678
- -
-
6,156
Debts issued and borrowings - 57,007 18,643 795 13,022 75 - 89,542
Other liabilities 5,015 - - - - 5,285 - 10,300
Total Financial Liabilities 697,413 247,639 110,960 104,135 13,022 91,671 - 1,264,840
Items recognised on the
statements of financial
position 1,877 (44,851) (50,636) 67,831 72,433 (2,863) 64,555 108,346
206
Annual Report 2011
Financial Report
2. Foreign exchange rate risk
Foreign exchange rate risk is the risk that occurs from changes in exchange rates which may affect the
value of the Banks financial instruments or may cause volatility in the Banks earnings or cost of funds.
Tools adopted for managing foreign exchange rate risk are for instance, open positions and VaR.
Foreign exchange rate risk is under the supervision of Risk Management Committee and Assets and
Liabilities Management Sub-committees.
Foreign currency positions in Baht equivalent, as of 31 December 2011 and 2010 were as follows:
(Million Baht)
Consolidated
2011
Currency
US Dollar Yen Pound Euro Others Total
Assets
Cash 1,468 46 59 350 272 2,195
Interbank and money market items - net 9,148 113 164 752 7,037 17,214
Investments - net 10,845 118 - 204 53 11,220
Loans to customer and accrued interest
receivables - net
75,324
2,163
208
1,820
5,314 84,829
Derivatives - net 32,895 48 - - 6,100 39,043
Other assets 3,312 2 1 30 11 3,356
Total 132,992 2,490 432 3,156 18,787 157,857
Liabilities
Deposits 14,508 449 528 2,308 784 18,577
Interbank and money market items 3,408 7,684 - - 886 11,978
Liability on demand 4,513 106 60 562 145 5,386
Debts issued and borrowings 5,796 - - - - 5,796
Derivatives - net - - - 157 - 157
Other liabilities 2,494 51 5 448 164 3,162
Total 30,719 8,290 593 3,475 1,979 45,056
Foreign currency position of
items recognised on the statements of
financial position - net
102,273
(5,800)
(161)
(319)
16,808 112,801
items not recognised on the statements of
financial position - net
(112,028)
5,689
159
454
(12,514) (118,240)
(Forward exchange contracts, cross currency
swaps and FX options)
207
Annual Report 2011
Financial Report
Consolidated
2010
Currency
US Dollar Yen Pound Euro Others Total
Assets
Cash 1,011 65 71 383 236 1,766
Interbank and money market items - net 8,061 91 117 65 3,255 11,589
Investments - net 7,798 107 - 198 39 8,142
Loans to customer and accrued interest
receivables - net
63,900
1,645
47
1,068
1,289 67,949
Derivatives - net 68,893 43 - - 386 69,322
Other assets 777 8 2 16 3 806
Total 150,440 1,959 237 1,730 5,208 159,574
Liabilities
Deposits 11,863 212 635 1,818 559 15,087
Interbank and money market items 199 5,084 - - 4 5,287
Liability on demand 8,206 88 124 936 484 9,838
Debts issued and borrowings 5,512 - - - - 5,512
Derivatives - net - - - 269 - 269
Other liabilities 4,850 40 10 415 43 5,358
Total 30,630 5,424 769 3,438 1,090 41,351
Foreign currency position of
items recognised on the statements of
financial position - net
119,810
(3,465)
(532)
(1,708)
4,118 118,223
items not recognised on the statements of
financial position - net
(130,974)
3,572
536
1,590
(501)
(125,777)
(Forward exchange contracts, cross currency
swaps and FX options)
(Million Baht)
208
Annual Report 2011
Financial Report
The Bank
2011
Currency
US Dollar Yen Pound Euro Others Total
Assets
Cash 1,468 46 59 350 272 2,195
Interbank and money market items - net 9,093 113 164 752 7,037 17,159
Investments - net 7,493 - - 3 23 7,519
Loans to customer and accrued interest
receivables - net
75,324
2,163
208
1,820
5,314 84,829
Derivatives - net 32,895 48 - - 6,100 39,043
Other assets 3,280 2 1 22 11 3,316
Total assets 129,553 2,372 432 2,947 18,757 154,061
Liabilities
Deposits 14,508 449 528 2,308 784 18,577
Interbank and money market items 3,408 7,684 - - 886 11,978
Liability on demand 4,513 106 60 562 145 5,386
Debts issued and borrowings 5,796 - - - - 5,796
Derivatives - net - - - 157 - 157
Other liabilities 2,494 51 5 448 164 3,162
Total liabilities 30,719 8,290 593 3,475 1,979 45,056
Foreign currency position of
items recognised on the statements of
financial position - net
98,834
(5,918)
(161)
(528)
16,778 109,005
items not recognised on the statements of
financial position - net
(112,028)
5,689
159
454
(12,514) (118,240)
(Forward exchange contracts, cross currency
swaps and FX options)
(Million Baht)
209
Annual Report 2011
Financial Report
The Bank
2010
Currency
US Dollar Yen Pound Euro Others Total
Assets
Cash 1,011 65 71 383 236 1,766
Interbank and money market items - net 8,061 91 117 65 3,255 11,589
Investments - net 6,490 - - 3 23 6,516
Loans to customer and accrued interest
receivables - net
63,900
1,645
47
1,068
1,289 67,949
Derivatives - net 68,893 43 - - 386 69,322
Other assets 757 8 2 8 3 778
Total 149,112 1,852 237 1,527 5,192 157,920
Liabilities
Deposits 11,863 212 635 1,818 559 15,087
Interbank and money market items 199 5,084 - - 4 5,287
Liability on demand 8,206 88 124 936 484 9,838
Debts issued and borrowings 5,512 - - - - 5,512
Derivatives - net - - - 269 - 269
Other liabilities 4,850 40 10 415 43 5,358
Total 30,630 5,424 769 3,438 1,090 41,351
Foreign currency position of
items recognised on the statements of
financial position - net
118,482
(3,572)
(532)
(1,911)
4,102 116,569
items not recognised on the statements of
financial position - net
(130,974)
3,572
536
1,590
(501)
(125,777)
(Forward exchange contracts, cross currency
swaps and FX options)
(Million Baht)
210
Annual Report 2011
Financial Report
3. Equity price risk
Equity price risk is any risk arising from changes in the price of equities or common stock that may
cause volatility in the Banks earnings or fluctuations in the value of the Banks financial assets.
The Bank manages risk arising from equity underwriting and investment in equity security under
relevant applicable regulations. The Bank has closely managed and monitored market situations to
provide information for management in order to retain maximum benefits for the Bank.
4. Commodity price risk
Commodity price risk is any risk arising from changes in the price of commodities which may affect the
value of the Banks financial instruments or may cause volatility in the Banks earnings or cost of funds.
The Bank has no policy to hold commodity position and then manages risk arising from commodity
position under back-to-back policy, and relevant applicable regulations. The Bank has closely
managed and monitored market situations to provide information for management in order to retain
maximum benefits for the Bank.
5. Credit derivatives price risk
Credit derivatives price risk is any risk arising from changes in the price of credit derivatives which may
affect the value of the Banks financial instruments or may cause volatility in the Banks earnings or cost
of funds. The Bank manages risk arising from credit derivatives under relevant applicable regulations.
Credit derivatives price risk is under the supervision of Risk Management Committee.
Liquidity risk
Liquidity risk is the risk of the prospect that the Bank will be unable to meet its obligations as they fall due
because of an inability to liquidate assets or obtain funding sufficiently in a timely manner with appropriate
cost which could result in losses.
211
Annual Report 2011
Financial Report
The Bank manages its liquidity position under the Bank of Thailands liquidity reserve regulations and other
applicable regulations. The Treasury Department is accountable for managing the Banks liquidity position
by providing short-term and long-term funding sources as well as investing in highly liquid assets in both
domestic and foreign currencies. The Bank also ensures that its liquidity position is suitable and sufficient
for the current and foreseeable market conditions. The Assets and Liabilities Management Sub-committee
and the Risk Management Committee supervises management of liquidity risk.
Financial assets and liabilities, classfied by contractual matuarity analysis, as of 31 December 2011 and 2010
shown follows:
Consolidated
2011
At call
Less than
6 months
6 months
to 1 Year
Over 1 Year
to 5 Years
Over
5 Years
No
Maturity Total
Financial Assets
Cash - - - - - 53,211 53,211
Interbank and money market items 9,056 97,308 5,585 80 - - 112,029
Investments 58 9,382 49,538 113,031 77,816 26,628 276,453
Loans to customers 195,330 366,975 25,458 292,340 330,731 - 1,210,834
Accrued interest receivables 17 1,879 179 21 9 - 2,105
Other assets 3,140 4,723 - - - 4,364 12,227
Total Financial Assets 207,601 480,267 80,760 405,472 408,556 84,203 1,666,859
Financial Liabilities
Deposits 753,334 316,412 125,532 46,951 - - 1,242,229
Interbank and money market items 7,947 36,930 920 66 7,477 - 53,340
Liability payable on demand 11,598 - - - - - 11,598
Financial liabilities designated at fair
value through profit or loss
-
359
616
1,138
-
-
2,113
Debts issued and borrowings - 37,323 633 6,438 25,909 - 70,303
Other liabilities 5,536 3,033 614 207 10 3,330 12,730
Total Financial Liabilities 778,415 394,057 128,315 54,800 33,396 3,330 1,392,313
Liquidity - net (570,814) 86,210 (47,555) 350,672 375,160 80,873 274,546
(Million Baht)
212
Annual Report 2011
Financial Report
Consolidated
2010
At call
Less than
6 months
6 months
to 1 Year
Over 1 Year
to 5 Years
Over
5 Years
No
Maturity Total
Financial Assets
Cash - - - - - 32,457 32,457
Interbank and money market items 15,041 81,883 695 - - - 97,619
Investments 885 9,350 39,263 122,481 66,223 11,359 249,561
Loans to customers 184,673 335,940 24,975 272,145 259,248 - 1,076,981
Accrued interest receivables 16 1,215 164 18 4 - 1,417
Other assets 836 3,390 - - - 5,140 9,366
Total Financial Assets 201,451 431,778 65,097 394,644 325,475 48,956 1,467,401
Financial Liabilities
Deposits 748,278 158,301 91,826 101,631 - - 1,100,036
Interbank and money market items 4,812 22,122 231 31 5,868 - 33,064
Liability payable on demand 21,622 - - - - - 21,622
Financial liabilities designated at fair
value through profit or loss
-
2,918
169
3,069
-
-
6,156
Debts issued and borrowings - 55,480 1,051 1,779 30,622 - 88,932
Other liabilities 6,715 665 309 465 9 3,690 11,853
Total Financial Liabilities 781,427 239,486 93,586 106,975 36,499 3,690 1,261,663
Liquidity - net (579,976) 192,292 (28,489) 287,669 288,976 45,266 205,738
(Million Baht)
213
Annual Report 2011
Financial Report
The Bank
2011
At call
Less than
6 months
6 months
to 1 Year
Over 1 Year
to 5 Years
Over
5 Years
No
Maturity Total
Financial Assets
Cash - - - - - 53,209 53,209
Interbank and money market items 8,548 96,474 5,213 - - - 110,235
Investments 45 5,194 48,252 100,418 2,055 19,238 175,202
Loans to customers 191,408 369,000 20,419 290,486 330,006 - 1,201,319
Accrued interest receivables - 1,896 - - - - 1,896
Other assets 3,140 1,853 - - - 3,706 8,699
Total Financial Assets 203,141 474,417 73,884 390,904 332,061 76,153 1,550,560
Financial Liabilities
Deposits 754,870 316,507 125,532 46,951 - - 1,243,860
Interbank and money market items 11,383 36,930 920 66 7,477 - 56,776
Liability payable on demand 11,598 - - - - - 11,598
Financial liabilities designated at fair
value through profit or loss
- 359 616 1,138 - - 2,113
Debts issued and borrowings - 37,947 633 6,438 25,909 - 70,927
Other liabilities 2,809 3,037 614 207 10 3,330 10,007
Total Financial Liabilities 780,660 394,780 128,315 54,800 33,396 3,330 1,395,281
Liquidity - net (577,519) 79,637 (54,431) 336,104 298,665 72,823 155,279
(Million Baht)
214
Annual Report 2011
Financial Report
The Bank
2010
At call
Less than
6 months
6 months
to 1 Year
Over 1 Year
to 5 Years
Over
5 Years
No
Maturity Total
Financial Assets
Cash - - - - - 32,456 32,456
Interbank and money market items 15,076 81,720 - - - - 96,796
Investments 459 7,189 38,474 115,372 4,267 2,622 168,383
Loans to customers 181,331 337,122 20,518 270,102 258,635 - 1,067,708
Accrued interest receivables - 1,225 - - - - 1,225
Other assets 836 1,267 - - - 4,515 6,618
Total Financial Assets 197,702 428,523 58,992 385,474 262,902 39,593 1,373,186
Financial Liabilities
Deposits 750,348 158,424 91,826 101,631 - - 1,102,229
Interbank and money market items 6,745 22,122 231 31 5,868 - 34,997
Liability payable on demand 21,616 - - - - - 21,616
Financial liabilities designated at fair
value through profit or loss
- 2,918 169 3,069 - - 6,156
Debts issued and borrowings - 56,090 1,051 1,779 30,622 - 89,542
Other liabilities 5,160 667 309 465 9 3,690 10,300
Total Financial Liabilities 783,869 240,221 93,586 106,975 36,499 3,690 1,264,840
Liquidity - net (586,167) 188,302 (34,594) 278,499 226,403 35,903 108,346
(Million Baht)
215
Annual Report 2011
Financial Report
45 FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value is the estimated value that the Bank and its subsidiaries could receive from the sale of financial assets,
or the estimated cost of redeeming their financial liabilities. Fair values are based on market value, or estimated
values derived from using general market principles of calculation.
The following is a summary of carrying amounts and estimated fair values of financial assets and liabilities and
off-balance sheet items as of 31 December 2011 and 2010.
(Million Baht)
Consolidated
2011 2010
Carrying
Amount
Fair value
Carrying
Amount
Fair value
Financial Assets
Cash 53,211 53,211 32,457 32,457
Interbank and money market items - net 111,969 111,969 97,560 97,560
Investments - net 264,143 272,192 251,080 255,708
Investments in subsidiaries and associates - net 152 152 138 138
Loans to customers and accrued interest
receivables - net 1,172,596 1,172,596 1,041,566 1,041,566
Other assets 12,227 12,227 9,366 9,366
Total Financial Assets 1,614,298 1,622,347 1,432,167 1,436,795
Financial Liabilities
Deposits 1,242,229 1,242,229 1,100,036 1,100,036
Interbank and money market items 53,340 53,340 33,064 33,064
Liabilities payable on demand 11,598 11,598 21,622 21,622
Financial liabilities designated at fair value
through profit or loss 2,113 2,113 6,156 6,156
Debts issued and borrowings 70,303 70,690 88,932 89,716
Other liabilities 12,730 12,730 11,853 11,853
Total Financial Liabilities 1,392,313 1,392,700 1,261,663 1,262,447
216
Annual Report 2011
Financial Report
The Bank
2011 2010
Carrying
Amount
Fair value
Carrying
Amount
Fair value
Financial Assets
Cash 53,209 53,209 32,456 32,456
Interbank and money market items - net 110,205 110,205 96,768 96,768
Investments - net 159,907 159,959 168,115 168,184
Investments in subsidiaries and associates - net 14,127 14,127 15,583 15,583
Loans to customers and accrued interest
receivables - net 1,163,915 1,163,915 1,033,347 1,033,347
Other assets 8,699 8,699 6,618 6,618
Total Financial Assets 1,510,062 1,510,114 1,352,887 1,352,956
Financial Liabilities
Deposits 1,243,860 1,243,860 1,102,229 1,102,229
Interbank and money market items 56,776 56,776 34,997 34,997
Liabilities payable on demand 11,598 11,598 21,616 21,616
Financial liabilities designated at fair value
through profit or loss 2,113 2,113 6,156 6,156
Debts issued and borrowings 70,927 71,314 89,542 90,326
Other liabilities 10,007 10,007 10,300 10,300
Total Financial Liabilities 1,395,281 1,395,668 1,264,840 1,265,624
The following methods and assumptions were used by the Bank in estimating fair values of financial assets and
liabilities as disclosed herein:
The values of cash, interbank and money market items (assets and liabilities), other assets, deposits, liabilities
payable on demand, financial liabilities designated at fair value through profit or loss and other liabilities are
stated at their carrying values on the statements of financial position.
(Million Baht)
217
Annual Report 2011
Financial Report
The fair values of held-for-trading investments and available-for-sale investments are stated according to the
Banks accounting policies mentioned in Note 10.
The fair values of held-to-maturity investments is estimated by using market values.
The fair value of general investments and investments in subsidiaries and associates are stated at cost, net of
allowance for their impairment.
The fair values of loans to customers and accrued interest receivables are based on the carrying values of loans
to customers and accrued interest receivables, net of deferred revenue, allowance for doubtful accounts and
revaluation allowance for debt restructuring.
The fair values of debts issued and borrowings are estimated by using market values.
46 RECLASSIFICATION OF ACCOUNTS
Financial statements as at 31 December 2010 have been reclassified to be presented in order to comply with
Thai Financial Reporting Standards and the Bank of Thailand (BoT) notification number Sor Nor Sor 11/2553,
directive dated 3 December 2010, regarding The preparation and announcement of the financial statements of
commercial banks and holding companies which are parent company of group of companies offering financial
services.
CORPORATE GOVERNANCE
219 Report of the Corporate Governance Committee
220 Report of the Human Resources and Remuneration Committee
221 Corporate Governance
254 Dividend Policy
255 Factors Affecting Investment Decisions
219
Annual Report 2011
Corporate Governance
The Corporate Governance Committee of KASIKORNBANK
PCL comprises four directors of the Bank: Pol. Gen. Pow Sarasin,
Non-Executive Director, Chairman of the Corporate Governance
Committee; Mr. Sukri Kaocharern, Non-Executive Director;
Professor Dr. Yongyuth Yuthavong, Independent Director; and
Mr. Hiroshi Ota, Independent Director. The main responsibilities
of the Committee are to oversee the Banks business practices
in compliance with the Statement of Corporate Governance
Principles, laws and regulations, to ensure effective practice of
corporate governance principles by the Bank, and to supervise
Corporate Social Responsibility (CSR). Five meetings were
held in 2011, which covered a large area of the Banks activities
in accordance with the Committees duties and responsibilities,
and can be summarized as follows:
Endorsing a strategic plan and activities to enhance
good corporate governance. Emphasis has been placed
on the maintenance of corporate governance standards
of the Bank, and the establishment of corporate
governance as an organizational culture, by regularly
communicating the Statement of Corporate Governance
Principles and Code of Conduct to all directors,
executives and employees via various channels.
In addition, a CG alert system was developed for
the directors and executives, in order to minimize
compliance risk. This year, the KGroup CG Index
project was initiated for use as the index to monitor
and assess the corporate governance practices of
the Bank, K Companies and P Companies.
Commenting on and recommending the action plan
and related activities of KASIKORNBANKGROUP.
Reviewing the Statement of Corporate Governance
Principles, Charters of the Board of Directors
and Board Committees, as well as the Statement
of Business Conduct and Code of Conduct,
and KASIKORNBANKGROUP Disclosure Policy,
keeping them up-to-date, in accordance with the ongoing
business undertakings of the Bank and in line with
the laws, international practices and best practices,
as prescribed by the Stock Exchange of Thailand,
the Office of the Securities and Exchange Commission,
the Capital Market Supervisory Board and the Bank
of Thailand.
Reviewing practices of the Bank under the criteria of
Corporate Governance Report of Thai Listed Companies,
by the Thai Institute of Directors Association.
Endorsing guidelines of the Corporate Governance
Report and Corporate Social Responsibility Activities
Report in the Annual Report.
In 2011, the Bank was presented with the SET Award
of Honor for continuous excellence in Corporate Governance
Report 2008 - 2011 and Best Investor Relations Award,
presented by the Stock Exchange of Thailand and Money
& Banking magazine at the SET Awards 2011 ceremony.
The Bank also achieved the recognition level of Excellent
from Corporate Governance Report of Thai Listed Companies
in 2011, organized by the Thai Institute of Directors Association,
in addition to special commendation for exemplary performance
with an Excellent score from quality assessment of Annual
General Meeting arrangement among listed companies
in 2011 for the sixth consecutive year, organized by the
Thai Investors Association in cooperation with the Office of
the Securities and Exchange Commission and the Thai Listed
Companies Association. The Bank was also honored with
the 2011 NACC Integrity Award, which was awarded for
the second time, from the National Anti-Corruption Commission.
The Bank strongly believes that its continued transparent
and fair business undertakings will contribute to long-term
business sustainability and create confidence among
all shareholders and stakeholders.
REPORT OF THE CORPORATE GOVERNANCE COMMITTEE
(Pow Sarasin)
Chairman, Corporate Governance Committee
Pol. Gen.
220
Annual Report 2011
Corporate Governance
The Human Resources and Remuneration Committee
of KASIKORNBANK PCL comprises four directors,
namely Mr. Somchai Bulsook, independent director,
as Chairman, Dr. Abhijai Chandrasen, non-executive director,
Professor Dr. Pairash Thajchayapong, independent director,
and Ms. Kobkarn Wattanavrangkul, independent director,
as members. The Committee held 6 meetings in 2011.
According to its Charter, the Human Resources
and Remuneration Committee has the duties and responsibilities
for formulation of human resource policy, director and senior
executives nomination, review of the Board of Directors
remuneration and recommendation on compensation for
the senior executives specified by the policy in line with
the business direction of the Bank, as well as recommendation
of the executive succession plan.
As for the nomination of directors, members of Board
committees and senior executives, the Human Resources
and Remuneration Committee is responsible for nominating
qualified persons with primary qualifications specified by
the Bank and not having characteristics prohibiting them
from holding a directorship. In addition, factors to be taken
into consideration include the appropriate proportion,
size and composition of the Board as well as compliance with
regulatory requirements, the Banks Articles of Association
and the Statement of Corporate Governance Principles.
Concerning the nomination of the Chief Executive Officer
or President when necessary, the Committee considers suitable
persons from the list in the succession plan. The qualifications
of candidates for director and senior executive positions
have been regularly reviewed.
Upon reviewing the remuneration for directors
and senior executives, as disclosed in the Annual Report,
the Human Resources and Remuneration Committee
deemed it commensurate with the scope of their duties
and responsibilities, taking into consideration such factors
as the Banks performance results, performance assessment
as well as the overall business and economic environment.
(Mr. Somchai Bulsook)
Chairman, Human Resources and Remuneration Committee
REPORT OF THE HUMAN RESOURCES AND REMUNERATION COMMITTEE
221
Annual Report 2011
Corporate Governance
1. Rights of Shareholders
In recognizing the importance and rights of shareholders,
the Board of Directors makes every effort to treat shareholders
equally and fairly, as specified under the Articles of Association
of the Bank and related laws. The basic legitimate rights of
shareholders include the right to participate in shareholders
meeting, the right to appoint a proxy to participate in and vote
at shareholders meeting, the right to vote for the appointment
or removal of individual directors, the right to vote on the annual
appointment of independent auditors and the setting of annual
audit fees, and the right to vote on various other businesses of
the Bank. Shareholders rights also include eligibility to receive
dividend payments, the right to give opinions and enquire into
business matters of the Bank during shareholders meeting,
and the right to receive sufficient information in a timely manner.
Apart from the basic rights above, the Board of Directors
emphasizes the disclosure of accurate, complete, timely,
and transparent information to shareholders. Information updates
are regularly provided on the Banks website in four languages:
Thai, English, Chinese, and Japanese, as well as to the public
media. In 2011, the Bank took the following measures to
facilitate and promote the rights of shareholders:
1. The Board of Directors Meeting No. 2/2011,
on February 24, 2011, resolved to schedule the 2011
Annual General Meeting of Shareholders on April 7,
2011. The resolution was published on the information
dissemination system of the Stock Exchange of Thailand
starting the day the resolution was passed.
2. Before the General Meeting of Shareholders, the Bank
arranged delivery of the meeting notice to sharehoders,
with information on the date, time, and venue
of the meeting, a map of the meeting site, and the meeting
agenda, in accordance with the law, the Stock Exchange
of Thailands requirements, and the Banks Articles of
Association. In addition, proxy forms and a complete
set of supporting documents for the meeting agenda,
together with the Banks Articles of Association related
to the meeting, were sent to shareholders for their
consideration more than 14 days prior to the meeting date.
Along with the meeting notice, shareholders were sent
sufficient information to allow them to vote on every
agenda item, each of which was identified clearly as
either for acknowledgment, or for approval, or for
consideration, together with sufficient and clear comments
by the Board of Directors to help shareholders in their
voting decisions. All of the information sent in document
form was also posted on the Banks website
(www.kasikornbankgroup.com) more than 30 days prior
to the meeting date, to ensure that shareholders received
the information in a convenient and timely manner.
Moreover, the meeting notice was published in the
Thai daily newspaper for at least 3 consecutive days,
at least 3 days before the meeting date. The Notice of
the General Meeting of Shareholders and the meeting
documentation in English were sent to foreign
shareholders and posted on the Banks website.
CORPORATE GOVERNANCE
Dissemination of information via KBank website prior to the Meeting Scene from the 99
th
General Meeting of Shareholders
222
Annual Report 2011
Corporate Governance
For those attending the General Meeting of
Shareholders or their proxies, the Bank gave detailed
information as to which documents were necessary for
shareholders to present on the meeting date in order to
have the right to attend the meeting, including a proxy
form per the Ministry of Commerce designation.
Also included was a list of independent directors,
the Chairman of the Board, the Chief Executive Officer
and President, and any other persons whom the
shareholders might wish to appoint as proxy, to cast
votes at the meeting on his/her behalf.
3. On the meeting date, the Bank arranged for
shareholder registration to begin more than one hour
prior to the meeting schedule. Preparation of the venue
and an appropriate number of greeters were also
arranged to assist shareholders. In 2011, the Bank
used the AGM Voting Service, organized by
Thailand Securities Depository Co., Ltd. A barcode
system was used for shareholder registration
and proxy registration as in the previous year,
allowing for a quick and efficient registration process.
Printed ballots were handed out to each shareholder
for voting on each agenda item. In addition, the Bank
showed video presentations of the voting procedure,
to clarify and enhance shareholder understanding of
the process.
4. Before the meeting commenced, the Chairman of
the meeting announced that all shareholders had been
informed of the voting and vote-counting procedure.
The counting of votes was carried out in a transparent
manner. The Bank adopted the Thailand Securities
Depository Co., Ltd. system to facilitate vote counting.
One share equaled one vote; approval of a resolution
was based on the majority of votes, except for
certain resolutions which required the approval of
no less than two-thirds of all votes of those
attending the meeting, or three-fourths of all votes
of those attending the meeting and casting their votes.
This practice was in line with the Banks Articles of
Association and the law.
In the 99
th
General Meeting of Shareholders,
the Chairman of the Board acted as Chairman of
the meeting, which was also attended by the Chief
Executive Officer and President and the Chairmen
of all Board Committees. Altogether, there were
13 directors in attendance:
1. Mr. Banyong Lamsam
Chairman
2. Pol. Gen. Pow Sarasin
Vice Chairman and Chairman of the Corporate
Governance Committee
3. Mr. Banthoon Lamsam
Director and Chief Executive Officer and President
4. Mr. Sukri Kaocharern
Director and Chairman of the Risk Management
Committee
KBank Board of Directors at the Meeting Scene from the registration desk prior to the Meeting
223
Annual Report 2011
Corporate Governance
5. M.R. Sarisdiguna Kitiyakara
Independent Director and Chairman of
the Audit Committee
6. Mr. Somchai Bulsook
Independent Director and Chairman of the Human
Resources and Remuneration Committee
7. Professor Khunying Suchada Kiranandana
Independent Director
8. Professor Dr. Yongyuth Yuthavong
Independent Director
9. Dr. Abhijai Chandrasen
Director and Legal Adviser
10. Ms. Elizabeth Sam
Independent Director
11. Professor Dr. Pairash Thajchayapong
Independent Director
12. Mr. Hiroshi Ota
Independent Director
13. Ms. Kobkarn Wattanavrangkul
Independent Director
5. During the meeting, the Chairman of the meeting
offered all shareholders an equal opportunity to give
suggestions and ask questions within an appropriate
time frame, and allowed directors in charge of topics
that were raised to clarify and provide complete
information to shareholders. Moreover, shareholders
were given the opportunity to submit questions
concerning meeting agenda items in advance,
beginning the day they were notified of the meeting
and the meeting agenda until one week before
the shareholders meeting date. These criteria were
disclosed via the information dissemination system of
the Stock Exchange of Thailand and the Banks website.
Shareholders who entered the meeting after it had
commenced were allowed to vote for agenda items
that were still under consideration.
6. So as to provide the highest satisfaction to
shareholders, the Bank continues to publish
the quarterly newsletter Sarn Samphan,
providing information and news on the overall
economy, stock market, investments,
and other information that may be beneficial
to shareholders. The newsletter can be found
on the Banks website.
2. Equitable Treatment of Shareholders
Recognizing the importance of the equitable treatment
of shareholders, the Board of Directors established
a Corporate Governance Policy based on shareholders
rights and the equal and fair treatment of all shareholders,
and undertook the following tasks:
1. To promote good governance, the Bank provided
shareholders with the opportunity, before the
shareholders meeting, to propose matters for inclusion
as agenda items, and also the opportunity to propose
qualified candidates having no prohibited characteristics
Sarn Samphan newsletter for KBank shareholders Scene from the meeting room
224
Annual Report 2011
Corporate Governance
for election as director at the General Meeting of
Shareholders. Both options are under the specified
criteria and process of the Board and relevant regulatory
agencies. Guidelines on the proposing procedure
and shareholders rights were provided to shareholders
through the information dissemination system of
the Stock Exchange of Thailand and disclosed on
the Banks website, including the Banks decisions
and reasons related to proposed agenda items
or candidates proposed for the meeting. In 2011,
the Bank posted this notification 5 months prior to
the meeting; shareholders proposed no items
to be included in the agenda, nor did they propose
any candidates for election as directors.
2. The Bank arranged for the shareholders meeting to
be conducted in a transparent and efficient manner,
in line with the Banks Articles of Association and
related laws. The consideration of items and voting
were conducted in accordance with the announced
agenda. This included consideration of the election of
directors individually and director remuneration,
together with consideration of the annual appointment
of independent auditors, setting of the audit fee,
and other agenda items as specified in the meeting
notice. During the meeting, in addition to related
meeting documents, the Bank prepared video
presentations and provided English translations
for foreign shareholders.
3. Shareholders unable to participate in the meeting
in person had the option to appoint proxies to
the meeting. Proxies could be any independent
director, or the Chairman of the Board, or the Chief
Executive Officer and President, or any other person
appointed to participate in voting on behalf of
the shareholder. Proxy forms were designed in such
a way that shareholders were able to designate their
preferred direction of voting.
4. Ballots were used to vote on every agenda item.
To enable efficient and rapid vote counting, the Bank
collected only the ballots of shareholders opposing
or abstaining from each vote. To comply with
the best practices for shareholders meeting, the Bank
collected the ballots from all shareholders and proxies
present at the meeting after the meeting was adjourned,
arranged to have officers from a legal advisory firm
verify the vote counting, and asked shareholder
volunteers to witness ballot counts. Also, the Bank
kept the ballots for future reference.
5. Comprehensive meeting minutes were recorded.
They included significant details, e.g., meeting
resolutions, voting results (divided into approval,
opposition, abstention, or invalid ballots for each
agenda item), questions, explanations, and opinions
of the meeting. The minutes of the shareholders
meeting were sent to regulatory agencies within
14 days of the meeting, and to shareholders for their
acknowledgment, also available on the Banks
website. Moreover, the Bank arranged for the meeting
to be recorded on video for future use.
6. The Bank has established internal regulations to
supervise the use of inside information and securities
and stock futures trading by directors and employees,
in compliance with the securities laws and Corporate
Governance Principles. The essence of the internal
regulations is presented as follows:
All operational units must set up a system
and manage their workplace, including maintaining
inside information, to prevent disclosure to others.
Inside information can be used and sent only by
persons who need to know or use that information
for their operations.
Directors and employees are prohibited from
buying, selling, transferring, or obtaining the transfer
of securities and stock futures in any manner
that may take advantage of outsiders by using inside
information that may have a significant impact on
the price of securities and has not been disclosed
to the public or the Stock Exchange of Thailand.
Though they may have become aware of such
information in their capacity, either as directors
or employees of the Bank, such actions are
prohibited, whether to favor themselves or others,
or to reveal such information to others to act upon it
or receive benefit thereof.
The Bank has regulated that directors, officers in
the position of Senior Executive Vice President or
225
Annual Report 2011
Corporate Governance
equivalent and higher, and staff in the position of
Department Head or equivalent and higher in the
Financial Accounting Management Department or
Financial Planning Department under the Financial
and Control Division, must report their ownership of
securities issued by the Bank and stock futures
with underlying Bank stock, including those under
ownership of their spouses and minor children.
Moreover, they must report every change in their
holding of securities issued by the Bank and stock
futures with underlying Bank stock, i.e. by any
purchase, sale, transfer, or obtaining the transfer
of securities and stock futures, as regulated by
the Office of the Securities and Exchange
Commission, and also must have a copy of their
ownership report of securities submitted to the
Corporate Secretary who shall collectively provide
such reports to the Board of Directors Meeting.
Furthermore, the Bank requires that all personnel
who have access to significant inside information,
under the above criteria, report their ownership
of securities issued by the Bank and stock futures
with underlying Bank stock, including those under
the possession of their spouses and minor children,
to the Banks Compliance Department.
Concerning the supervision of securities and stock
futures trading and prevention of the use of inside
information, the Bank has stipulated a silent period
for securities and stock futures trading by directors
and related staff, including their spouses and minor
children, prohibiting trading of securities issued
by the Bank and stock futures with underlying
Bank stock starting one month prior to the Banks
disclosure of financial statements or quarterly
performance, and lasting until the second day
after the information has been disclosed. Internal
regulations on the prevention of the use of inside
information are disseminated at the beginning
of each year and quarterly to directors and related
staff through various operating channels of
the Bank, including regular monitoring of actions.
In the past year, directors and related staff strictly
adhered to internal regulations.
7. The Bank has established directors and executives to
report on their interests and related persons interests to
the Corporate Secretary, for further submission to
the Chairman and the Chairman of the Audit Committee
as specified by the Securities and Exchange Act,
and report on every change in such reports.
The reports for 2011 were presented to the Chairman
and the Chairman of the Audit Committee.
3. Roles of Stakeholders
The Bank places particular emphasis on the equal rights of
all stakeholders, both internal stakeholders, i.e., shareholders,
the Board of Directors, employees of the Bank and subsidiary
companies; and external stakeholders, i.e., customers,
counterparties, competitors, creditors, public sector and other
related agencies, as well as the community, the environment
and the society at large, including human rights.
In order to ensure the rights of stakeholders, the Bank
established a Statement of Business Conduct and a Code of
Conduct for all employees, which have been disseminated
through the Banks website and internal communication media
such as the KASIKORNBANKGROUP newsletter, intranet and
KASIKORNTV - the Banks closed-circuit TV network, for strict
adherence by directors, executives, and employees at all levels.
In addition, the Bank assigned the Compliance Department of
the Compliance and Audit Division to monitor the performance
of all employees in compliance with the Code of Conduct,
and assigned the Corporate Governance Unit under the Office
of Corporate Secretary, Corporate Secretariat Division,
to oversee all governance issues of the Bank and to report to
the Corporate Governance Committee for acknowledgement.
Realizing the importance of stakeholders involvement,
the Bank provides communication channels to receive suggestions,
useful information, or complaints of improper actions from
stakeholders, which are then conveyed to the Banks Board
of Directors in accordance with the guidelines disclosed on
the Banks website. For transparency purposes, as well as for
the protection of the rights of information providers, the Bank has
established a policy for the receipt of information or complaints,
with specific channels for complaints, management procedures,
and measures for the protection of information providers rights
and the protection of confidential information. Only authorized
persons have access to this confidential information and are
226
Annual Report 2011
Corporate Governance
able to investigate complaints. Independent directors supervise
the consideration and reporting to the Board of Directors.
In cases where stakeholders are affected by a disregard to
their legitimate rights, the Bank has enforcement measures to
ensure them fair treatment.
Shareholders: The Bank is determined to achieve good
operating performance, sustainable growth, and competitiveness,
with due consideration given to both current and future risk
factors, in order to maximize shareholders value over the long
term. The Bank discloses all information in a fair and transparent
manner, and makes every effort to protect the Banks assets
and uphold its reputation.
The Board of Directors: The Board of Directors is fully
aware of the authority, duties, and responsibilities of directors,
as well as the rights of stakeholders, and undertakes measures
to ensure that these legitimate rights are provided, and that
all stakeholders are treated equally and fairly.
Employees: Employees are valuable assets of the Bank.
The Bank continues to seek capable and experienced
personnel in line with its growth and the demands of
the organization. Necessary training programs are
continuously provided to enhance employees capabilities,
and appropriate remuneration - comparable to that of other
leading companies - is offered. Favorable business culture and
atmosphere are promoted in the workplace, together with fair,
equal treatment, and respect for the honor, dignity, and individual
rights of all employees. The Bank recognizes the need for
proper welfare and security for employees, and provides
benefits such as provident funds, scholarships for employees
and their children, annual medical check-ups, as well as
safety procedures such as fire drills and the installation of fire
prevention systems, etc.
Customers: The Bank aims to promote customer
satisfaction by offering diverse, complete, and high-quality
financial products and services, in response to the needs
of customers. The Bank gives due attention to and holds
itself accountable to customers, and, more importantly,
gives high priority to the protection of their confidential
information. Customers are provided with explanations of
the risks related to the use of various financial services,
and are given the opportunity to express opinions through
responsible parties that the Bank has assigned to handle
customer complaints.
Counterparties: The Bank respects compliance with
contracted terms and conditions in trade, in fair and acceptable
competition, and refrains from all mala fide practices.
Competitors: The Bank observes fairness in competition
and does not practice any mala fide methods that are
deleterious to competitors.
Creditors: The Bank abides by lending terms and conditions
and all legitimate duties to creditors, debenture holders, and
depositors. The Bank also gives clear explanations to customers on
all of the possible risks involved with non-deposit financial services.
Responsibility to the Community, the Environment,
and the Society: The Bank operates as a good financial
institution and conducts business according to the Statement
of Corporate Governance Principles. The Bank believes that
environmental and social responsibilities are part of sustainable
development. The Board of Directors has established
a Corporate Social Responsibility (CSR) Policy as follows:
To strictly adhere to the Statement of Business Conduct,
and to participate in social development and environmental
protection
To encourage employees at all levels to strictly abide by
the Code of Conduct and CSR Principles
To launch CSR activities for the benefit of all stakeholders
To arrange workplaces with an emphasis on safety,
occupational health, environmental concerns,
and facilitation for employees and customers
To promote environmental preservation and contribution
to society
The Bank acts as a good citizen, is non-partisan,
and is non-aligned with any political party. The Bank bears in
mind its role as part of the society at large and its responsibility to
assist society and promote activities that benefit the community,
the society, and the environment, in order to enhance the living
standards of the people. The Bank recognizes the importance of
and demonstrates concern for sound environmental protection
through continuing efforts and activities for enhanced energy
efficiency and environmental conservation; it also organizes
training courses and encourages employee involvement through
the expression of opinions and participation in activities related to
the development of the community and environment on a regular
basis. In 2011, for instance, the Bank launched the Helping Each
Other in the Thai Spirit project wherein employees voluntarily
joined hands to give assistance to flood victims. The Green at
227
Annual Report 2011
Corporate Governance
Heart: 1 Person, 1 Idea Worth Baht 8 for a Green Society was
implemented to raise the environment awareness of the Bank
staff and the community. Details are included under the heading
Corporate Social Responsibility (CSR) Activities in this annual report.
The Bank also specified other procedural guidelines,
as follows:
Fairness: The Bank demonstrates fairness to all parties
having business relationships with the Bank, and does its best to
avoid any bias or events that would lead to conflicts of interest.
Ethics: The Bank adheres to its Statement of Business
Conduct and pursues every business endeavor with integrity.
Professionalism: The Bank maintains professional
standards, aiming high for superb quality integrated with modern
and sophisticated technology.
Responsiveness: The Bank has the readiness to respond
to the needs of its customers and society, as well as to
changes in the economy and technology, both at present
and in the future.
Discipline and Compliance: The Bank pursues business
with discipline and ethical principles, and certifies that its
business operations comply with the law, the Statement
of Business Conduct, and the Code of Conduct for
employees, such as protection of intellectual property rights
and copyright. A software compliance policy was implemented
to ensure that only copyrighted software is used in the Banks
information system. A prohibition against offering or receiving
bribes for business benefit, etc. has been incorporated
into the Code of Conduct.
4. Disclosure and Transparency
Realizing the importance of transparent information
disclosure, the Bank has supervised and set up
the KASIKORNBANKGROUP Disclosure Policy, approved
by the Board of Directors. The objective of this policy
is to ensure that disclosures of KGroups financial
and non-financial information to shareholders, investors,
analysts, regulatory agencies, and the general public are
accurate, complete, timely, equal, transparent, consistent,
and in accordance with all applicable laws, regulatory
requirements, and criteria.
On May 18, 1998, the Bank established the Investor
Relations and Shareholders Services Unit under the Executive
Services Department, Corporate Secretariat Division. In 2007,
under a change in organizational structure, the unit was
renamed the Investor Relations Unit, under the Office of
Corporate Secretary, with the objective and responsibility
of handling investor relations activities. Responsibilities
of the Investor Relations Unit also include setting up annual
investor relations plans and providing timely and accurate
information to shareholders, investors, analysts, and credit
rating agencies, both local and international, so as to
enhance the Banks image and reputation for reliability
among investors and deliver efficient service to the Banks
shareholders. The Shareholder Relationship Management Unit,
under the Office of Corporate Secretary, is responsible for
the management and supervision of shareholder rights,
as well as strengthening relationships with the Banks minor
Dissemination of information on investor relations via KBank website 2010 Annual Report
228
Annual Report 2011
Corporate Governance
shareholders. The unit has developed a strategic plan to create,
maintain, and promote cordial relationships with minor
shareholders. This has enhanced the image and credibility of
the Bank as an exemplary organization with respect to the care
and services provided to minor shareholders. Marketing
activities were organized to build connections with shareholders
and provide them useful information, such as panel discussions
on the economy, stock market and investment, publication of
quarterly shareholder newsletters on the Banks website containing
economic and investment news, distribution of documents
notifying shareholders of services such as returned cheques,
changing share certificates, and the e-Dividend service.
These activities received positive feedback from shareholders.
In addition, the Bank formulated and imposed the
KASIKORNBANKGROUP Disclosure Policy for dissemination
of significant information, authorizing the Chairman,
Chief Executive Officer, President, Domain Coordinators,
Chief Financial Officer, or Corporate Secretary to consider
and make decisions on the content of significant information
for public disclosure. Any one of them may disclose information
by him/herself, or to assign relevant parties to handle this task.
The executive entrusted as Chief Investor Relations Officer
has the authority to hold press conferences or to disseminate
significant information related to KGroup, and to reply to
questions raised by shareholders, investors, and securities
analysts. The Public Relations Unit coordinates with
information owners in disseminating significant information
related to KGroup.
In 2011, the Bank adequately disclosed important financial
information in its financial statements. The disclosures were in
line with regulations of the Bank of Thailand, Stock Exchange of
Thailand, Office of the Securities and Exchange Commission,
and Financial Reporting Standards. Such information was also
disseminated via the SET Community Portal and the Banks
website. The financial statements were audited by certified
public accountants and were endorsed by the Audit Committee
before disclosure to shareholders; the Board of Directors
of the Bank also disclosed its report of the responsibilities
for financial reports in the annual report. Moreover, the Bank
has published unreviewed/undudited quarterly financial
statements, reviewed/audited financial statements and Basel II
Pillar 3 Disclosures, as well as other non-financial information
such as the Management Discussion and Analysis (MD&A)
and information on the Banks corporate governance for
the benefit of shareholders, investors, and analysts. In addition,
the Bank has periodically evaluated the effectiveness of its
disclosure procedures.
The Bank enforces a 7-day silent period before the
quarterly operating results are reported to the Stock Exchange
of Thailand. During this period, no information related to
the Banks performance is revealed to shareholders, investors,
and analysts. Company visits/participation in one-on-one
meetings/group analyst meetings/replies to questions related to
the Banks operating results do not occur during this period.
This practice is regarded as a key policy of the Bank, to ensure
that operations of units are consistent with the Banks
e-Dividend service and KBank new share certificate