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KASIKORNBANKGROUP Investor Presentation June 2011

For further information, please contact Investor Relations Unit or visit our website at www.kasikornbankgroup.com or www.kasikornbank.com

1

KASIKORNBANKGROUP at a Glance „ Established on June 8, 1945 with registered capital of Bt5mn (USD0.16mn) „ Listed on the Stock Exchange of Thailand (SET) since 1976

Consolidated (as of March 2011) Assets Loans* Deposits CAR*** ROE (1Q11) ROA (1Q11) Number of Branches Number of ATMs Number of Employees

Bt1,678bn (USD55.4bn) Bt1,083bn (USD35.8bn) Bt1,182bn (USD39.0bn) 14.0% 17.7% 1.5% 806 7,387 15,698

Ranked #3 in Thai banking industry Ranked #4 with 15.36% market share** Ranked #3 with 16.1% market share**

Share Information SET Symbol Share Capital: Authorized Issued and Paid-up Number of Shares Market Capitalization 1Q11 Avg. Share Price: KBANK KBANK-F EPS (1Q11) BVPS

KBANK, KBANK-F Bt30.5bn Bt23.9bn 2.4bn Bt304bn

(USD1.0bn) (USD0.8bn) shares (USD10.0bn)

Bt120.05 Bt123.13 Bt2.55 Bt58.94

(USD3.96) (USD4.06) (USD0.08) (USD1.95)

Ranked #3 in Thai banking sector

Note: * Loans = Loans to customers less Deferred revenue ** Loans and deposits market share is based on C.B.1.1 (Monthly statement of assets and liabilities) *** If include 2H10 and 1Q11 profit, CAR = 15.42% Exchange rate at the end of March 2011 was Bt30.30 per USD (Source: Bank of Thailand)

2


Economic Outlook in 2011 „

GDP growth for 2011 is projected to be 3.0-4.0% YoY Key Points:

Key GDP Forecasts and Assumptions

„ GDP growth for 2011 is expected to range

between 3.0-4.0% YoY, given average oil price forecasts (Dubai) at USD108/barrel „ Base-case GDP growth for 2011 at 3.6% YoY „ Key economic drivers include investment, 2011F

government spending and continued growth in exports

% YoY

2009

2010

GDP

-2.3

7.8

3.0-4.0

3.6

Private Consumption

-1.1

4.8

3.0-4.0

3.5

Total Investment

-9.2

9.4

7.0-8.3

7.8

„ Political uncertainty, e.g., election results

Gov. Budget (% of GDP)

-5.6

-3.2

-5.0 to -3.8

-4.3

Exports

-14.0

28.5

11.0-17.0

14.0

„ Delayed implementation for the FY2012 budget

Imports

-25.2

36.8

17.0-24.0

21.0

„ Heightened inflation and production costs

Current Account (USD bn)

21.9

14.8

3.1 to 6.9

5.2

„ Lingering global economic uncertainty

Headline Inflation

-0.9

3.3

3.6-4.6

4.0

Policy Interest Rate

1.25

2.00

Range Base Case

Risk Factors:

3.25*

Source: KResearch (as of May 23, 2011) and *KBank Capital Markets Research (as of May 20, 2011) with a high possibility of an upward adjustment of such rate in the near future

3

New Rules and Regulations in 2010-2011 Accounting and Financial Statements Presentation

ƒ ƒ ƒ

In 4Q10, KBank early adopted TAS 19 (Employee benefits) and TAS 12 (Income taxes) to align with international practices and standards; adjusted the total amount of employee retirement reserve and deferred income tax to Y2009 R/E with restatement In 1Q11, new and reclassified presentation lines in the financial statement are in effect in accordance with BOT reforms, in order to align with the revised TAS; some financial ratios are impacted such as NIM and cost to income ratio In April 2011, CAR (December 2010) based on consolidated supervision is disclosed in the Basel II Pillar 3 report as required by the BOT

Deposits Guaranteed from Deposit Protection Agency (DPA) „

August 2011 & 2012: The Deposit Protection Agency will reduce its deposit insurance starting in August 2011 from 100% to Bt50mn/customer/bank and again in August 2012 to Bt1mn/customer/bank; no impact to KBank is expected; Thai banks continue to pay 40bps of average daily deposits per year to DPA

4


The K-Strategy Long-Term Risk-Adjusted Sustainable Profitability

Customer Centric Approach Customer Strategy

SEGMENT

Drive Synergistic Business Acquisition in All Segments To serve both the business and personal life of each customer at every life stage BRANDING BRANDING & & MARKETING MARKETING

PRODUCT PRODUCT Innovate Innovate & & be be responsive responsive

Clear Clear & & consistent consistent communication communication

KASIKORNBANKGROUP

8 Customer Segments

The Way We Work

Medium Business

Large Corporate Business Multi-corporate Business

8 Segments

Mass

Strategic Capabilities

Understanding Customer Needs

Innovating & Managing Products

Middle Income

SERVICE SERVICE QUALITY QUALITY

Excellent Excellent customer customer experience experience @ @ all all channels channels 4 Product Domains

Small & Micro Business High Net Worth Individual Affluent

Sales & Service Excellence

Proactive Risk Management 5

Quality Growth „

Strong momentum for profitable and well balanced growth focusing on: growing risk-adjusted high yield assets; diversifying portfolio concentration risks; increasing cross-sell/up-sell capabilities to gain higher fee income growth

„

2011 NIM stable to slight increase, maintaining our high ranking in the industry

„

NPLs in 2011 staying low; provision to be set aside at an average of Bt1.6-1.8bn per quarter; NPL coverage above 100%

„

Cost to income ratio peaked in 2010 and gradually drops

„

2011 ROA and ROE improving

„

Efficient utilization of capital in the current operating environment 6


2011 Financial Targets

(Consolidated)

New Financial Statement Presentation * 2010 Actual

Affected by the New Financial Statement Presentation App. 46-47

Notes

15.73%

17.72%

N/A

ROA

1.37%

1.51%

N/A

NIM

3.48%

3.46%

3.4-3.6%

14.43%

12.63%YoY

7-9%

Non-Interest Income Growth **

N/A

25.88%YoY

Above 20%

Improved through the expansion of the Bancassurance business

Net Fee Income Growth ***

N/A

15.52%YoY

Above 20%

Strong momentum in fee growth via credit card merchant fees, cash management, trade finance, etc.

Bt1.68bn

Bt1.68 bn

Bt1.6-1.8bn

50.67%

48.39%

Improve slightly from 2010

2.91%

2.73%

Below 3.0%

Loan Growth

Cost to Income Ratio NPL ratio (Gross)

Notes:

2011 Targets

ROE

Provision Average per Quarter Affected by the New Financial Statement Presentation App. 46-47

1Q11 Actual

System ranking maintained Quality and profitable growth

Peaked in 2010 and slowly declining Well monitored

* Reflecting the changes in the financial statement presentation as required by the Bank of Thailand (BOT) ** Non-Interest Income includes earned premium-net from Muang Thai Life Assurance (MTL). KBank has economic interest of 38.3% in MTL. *** On the consolidated basis, Bancassurance fees are not included due to the elimination of inter-company transactions (the accounting treatment from MTGH consolidation).

7

2011 Loan Growth Targets by Business Segment Loan Portfolio „ 2011 Loan growth target: 7-9% Consolidated

Y2011 Target

Corporate Loan (CBS) SME Loan (SME)

4-6% 8-10%

Retail Loan (RBS)

12-15%

NPL + PRL (ERM) Others Total Loan

7-9%

(Bt bn) 1200

1000 800

1,077

904

943

6% 7% 16%

6% 8% 17%

38%

38%

34%

2008

7% 7% 20%

36%

36%

30%

30%

30%

2009

2010

1Q11

600 400 200

1,083

7% 7% 20%

0

CBS

SME

RBS

ERM

¾ Corporate Loans: target of 4-6% reflects higher

credit utilization and demand. International trade credit improved. Potential borrowers include government, state enterprises and multinational corporations Focused Industries: energy (power & green energy); auto & parts; petroleum; chemical; industrial agriculture ¾ SME Loans: target of 8-10% reflects higher demand

from domestic-related consumption and benefits from government spending Focused Industries: construction; commerce; hardware; chemical; industrial agriculture; export oriented; tourism ¾ Retail Loans: target of 12-15% reflects continued

mortgage loan growth Focused Industries: mortgage; credit card; consumer

Others

Note: - KBank’s Definitions: CBS: Corporate Business Division; SME: SME Business Division; RBS: Retail Business Division; ERM: Enterprise Risk Management Division (NPL + Performing Restructured Loans); Others: Loans of the Bank’s subsidiaries such as KASIKORN LEASING, and other loan types - As of March 31, 2011, KLeasing’s outstanding loans were Bt57,744mn, rising 24.8% YoY - More details can be found in App. 59

8


K-Transformation Project Strategic Capabilities

Understanding Customer Needs

K-Transformation Foundation Capabilities

Innovating & Managing Products

Sales & Service Excellence

Know Our Customers (KOC)

Information Technology Capital (ITC)

Multichannel Sales And Services (MSS)

Financial Information System (FIS)

Proactive Risk Management

K-Transformation Supporting Solution (KSS) 9

9Phase 1

Phase 2 Set Foundation around sales & services for channels and new payments

Completed foundation and launched basic FIS and KOC

Completed

Phase 3

Consolidate MSS across channels /launch new core banking on loans

Indicated Benefits

Fully support KGroup aspirations

Work Progress : Nearly 65-70% of project time completed as of May 2011

Call center Complete KT campaign across channels integration New core banking New core banking solution on solution on loans deposits

In progress

9Branch

campaign integration

9KOC Marketing Plan platform rollout

9New basic financial management, reporting, and budgeting capabilities

-

2 3 4 5 6 7 8 9 10 11 12 2 3 4 5 6 7 8 9 10 11 12

2008

234567

9New basic payment system

9New sales

9New branch

9New basic customer data analytics and marketing campaign capabilities

2007

Phase 4

Complete KT across channels, with new core banking fully rolled out

& service pilot rollout

As of May 2011, Branch Solution Rollout completed Approx 400 branches and complete 8target 9 10 11to12 2 3 4 800+ 56789 branches by end of 2011

2009

Branch solution rollout

Consolidate sales & services across channels and integrate with advanced campaign capabilities

10 11 12

2010

2 3 4 5 6 7 8 9 10 11 12

2011

2 3 4 5 6 7 8 9 10 11 12 2 3 4 5 6

2012

2013

Financial Cost as of May 2011

Total Expenditure of K-Transformation Project ~Bt19.5bn ƒ Total Fixed Asset Investment (84% of Total Expenditure) ƒ Total Expense (16% of Total Expenditure)

Remaining 40% of the Total Project Expenditure of ~ Bt19.5bn will be spent over the next 3 years (the remaining expenditure: 80% in fixed asset investment and 20% in expense)

10 10


Capital

%

18

March 2011

15.05

15.19

15 5.21

12

13.96

14.04***

4.94 4.59

4.61

Tier2 Tier1

9 6

9.84

10.25

9.37

9.43***

2008

2009*

2010*

1Q11**

3 0 Note: ***If 2H10 and 1Q11 profit included, CAR = 15.42%, Tier 1 = 10.80%

„ Capital adequacy remains solid to support business growth „ The Bank has adopted Basel II regulations and is well-prepared for the BOT’s new consolidated supervision CAR(%)

2008 15.05

2009* 15.19

2010* 13.96

1Q10** 15.03

1Q11** 14.04

4Q10** 13.96

1Q11** 14.04

Tier I (%)

9.84

10.25

9.37

10.09

9.43

9.37

9.43

Tier II (%)

5.21

4.94

4.59

4.94

4.61

4.59

4.61

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

11

Dividend March 2011

Dividend Payout Ratio

Dividend Per Share 3.0

Bt

2.50

2.5

2.00

2.0 1.5

1.75 1.00

2.50

% 50

42.49

40

2.00

30.55

30

1.25

1.0

20

0.5

10

0.0

31.88 32.33 32.14

21.36 15.45

0 2004

2005

2006

2007

2008

2009

2010

2004

2005

2006

2007

2008

2009

2010

Interim Dividend

„ Dividend policy: both operating results and long-term returns to shareholders are taken into consideration in determining dividend payments „ Efficient utilization of capital Dividend Per Share (Bt)

2004 1.00

2005 1.25

2006 1.75

2007 2.00

2008 2.00

2009 2.50

2010 2.50

Dividend Payout Ratio (%)

15.45

21.36

30.55

31.88

32.33

42.49

32.14 12


Summary „ Customer-centric strategy; quality growth in line with the economic cycle; sensible loan growth; high positioned NIM; higher customer acquisition capability to enhance fee and non-interest income growth; cost to income ratio peaked in 2010 and will gradually drop from 2011 onward „ Solid credit platforms; a diverse portfolio; consume less capital to generate higher income „ K-Transformation progresses: enables the Bank to generate fees faster and allows financial innovation and timely introduction of new products to the marketplace „ Capital efficiently utilized; ROA and ROE improved

13

Appendix

14


Appendix: Table of Contents Topic

Slide Page

„ Thai Economy

16 - 25

„ Financial Sector

26 - 27

„ KBank ¾ ¾ ¾ ¾

¾ ¾ ¾

Strategy and Business Risk and Credit Management Changes in Financial Statements Financial Performance • 1Q11 Performance Highlights • Net Interest Margin • Non-interest Income • Net Fee Income • Other Operating Expenses and Cost to Income Ratio • Loan • Asset Quality • Investment in Securities and Funding Structure K Companies Muang Thai Life Assurance (MTL) Other Information

28 - 37 38 - 41 42 - 47 48 - 51 52 53 54 - 55 56 - 57 58 - 60 61 - 63 64 - 66 67 - 68 69 - 73 74 - 76 15

Currency and Interest rate Outlook in 2011 USD/THB: End Period

ƒ Despite recent THB weakness against the USD, it is expected that the THB will likely appreciate to THB29.00/USD by the 2011 year-end, drawing fundamental support from our current account surplus and capital inflows into the region

Note: F is estimated by Capital Markets Research, KBank (as of May 20, 2011).

Interest Rate Trend

ƒ Following the 0.25% policy rate increase in the meeting held on June 1, 2011, the MPC will likely tighten their monetary policy further, amid heightened inflationary risks. To this end, we expect the year-end target to reach 3.25%, with a high possibility of an upward adjustment of such rate in the near future 16


Monthly Economic Conditions: April 2011 2011 Feb 3.4

Mar 4.8

Apr „ Key economic indicators for 4.5 Apr-11 suggested a more

1.4 10.6 16.5 58.7 14.9

0.8 10.1 7.5 49.6 24.3

-0.8 11.7 20.4 80.3 13.2

11.9

14.1

12.6

14.1

1.7 11.5 17.5 17.8 15.5 „

12.8

3.1 32.3 15.2 -51.5

3.6 31.9 24.2 10.3

5.8 32.5 18.4 96.6

3.6 31.9 24.2 64.3

3.2 28.5 21.2 118.7

9.8

2.6

-2.1

-3.0

-6.7

-7.8

63.2

64.2

63.3

62.6

59.5

66.1

54.6

-3.5

-5.2

-4.6

12.7

4.9

27.5

33.2

-9.4

24.2

28.7

24.7

25.7

32.1

18.2

22.3

-14.0

28.5

22.2

21.1

27.4

29.1

31.0

24.7

continued to contract YoY, while

0.3 -14.3

9.1 18.0

7.4 13.8

7.3 12.9

6.7 19.4

6.6 21.1

6.8 22.7

6.6 16.9

the capacity utilization plunged

-25.2

36.8

30.7

18.8

25.6

18.6

27.2

26.3

to the lowest level in one and

-2.5 -23.4

8.1 27.1

6.0 23.3

6.5 11.5

8.9 15.3

8.8 9.0

10.2 15.5

11.0 13.7

half years

19,388 21,866 -0.9 0.3

14,031 14,784 3.3 1.0

3,303 2,047 3.3 1.1

4,072 5,509 2.8 1.2

3,334 6,795 3.0 1.5

2,031 3,823 2.9 1.4

1,892 1,881 3.1 1.6

Units: % over-year, otherwise indicated Private Consumption Index (PCI) Sales Volume of Benzene and Gasohol Value-added Tax at 1995 prices Imports of Consumer Goods at 1995 prices Passenger Car Sales Motorcycle Sales

Private Investment Index (PII) Domestic Sales Volume of Cement Sales Volume of Commercial Cars Imports of Capital Goods at 1995 prices Value of BOI Applications

2010 5.9

5.7 -10.2 -6.5 0.3 -12.9

-1.4 15.6 23.0 51.5 23.0

0.8 13.0 16.1 55.6 20.8

2.4 8.3 13.6 36.9 9.8

-11.0

18.5

20.4

2.5 -19.2 -15.9 47.6

8.7 43.2 25.0 -30.2

5.1 42.0 26.8 -18.6

-7.2

14.4

56.0

0.8

Manufacturing Production Index Industrial Capacity Utilization

Agriculture Production Index Agriculture Price Index

Exports (In terms of US Dollars) Unit Value Volume

Imports (In terms of US Dollars) Unit Value Volume

Trade Balance (USD millions) Current Account (USD millions) Headline CPI Core CPI

2010 3Q10 4Q10 4.8 3.5

2009 -2.5

1Q11 4.3

Source: Bank of Thailand (BOT), Ministry of Finance (MOC), University of the Thai Chamber of Commerce (UTCC), Office of Industrial Economics (OIE), Office of Agricultural Economics (OAE)

pronounced impact from the Japanese disasters Exports cooled, particularly those of vehicles and parts, which consequently pressured the trade and current account balance into the red

„ Manufacturing production

-477 „ Private investment, consumption -165 4.0 and sentiment eased, amid many 2.1

uncertainties

Note: May’s economic data will be available at the end of June 2011

17

Economic Condition Highlights: April 2011 The private sector confidence worsened, in light of many negative factors

Foreign tourist arrivals cooled, but remained significantly higher than last year

Source: BOT, MOC, UTCC, OIE

Private spending showed softer momentum

Exports for Apr-11 eased, as expected

18


Economic Condition Highlights: April 2011 The Apr-11 manufacturing production and capacity utilization worsened, following disruption in Japan

Activities in the property sector weakened, due to a high base of comparison, plus lower consumer purchasing power

May-11 inflation edged up further, in tandem with higher prices of fresh food and some non-food items

Property prices continued to rise in 1Q11

19

Source: BOT, MOC, OIE, REIC (Real Estate Information Center)

Exports and Imports: April 2011 Imports by Country

Exports by Country

Top 10 Exports by Product Total Export (BOP Basis)

Top 10 Imports by Product

Apr-11 USD Millions

Weight

%YoY

Total Exports

17242.61

100.00%

24.66%

Vehicles, Parts and Accessories

1197.68

6.95%

-9.27%

Electrical Apparatus for Electrical Circuit

1150.77

6.67%

12.83%

Computer and Parts

1232.17

7.15%

16.49%

Electrical Appliances

1172.61

6.80%

22.62%

Rubber

900.31

5.22%

104.90%

Misc. Machinery and Mechanical Items

894.98

5.19%

32.83%

Plastic Raisin and Products

1019.25

5.91%

42.04%

Base Metal Products

678.97

3.94%

14.83%

Rice

502.56

2.91%

46.38%

Pearl, Precious Stone and Jewelry

1150.77

6.67%

-5.03%

Total Import (BOP Basis)

Apr-11 USD Millions

Weight

%YoY

Total Import

17719.65

100.00%

26.28%

Fuel and Lubricant

4167.26

23.52%

49.12%

Mineral and Metal Products

2435.32

13.74%

34.75%

Chemicals and Plastic Materials

1952.94

11.02%

28.71%

Electronic Parts

1631.28

9.21%

13.12%

Electrical Machinery and Parts

1435.66

8.10%

21.65%

Industrial Machinery, Tools and Parts

1247.10

7.04%

23.01%

Non-Monetary Gold

154.26

0.87%

-49.07%

Vehicles and Parts

585.98

3.31%

10.38%

Computer Parts

327.30

1.85%

-10.22%

Scientific and Medical Equipments

319.00

1.80%

18.75%

Source: Bank of Thailand (BOT)

20


Economic Condition Highlights: CAPEX and Investment Cycle Capacity utilization of many industries hovered close to, or exceeded the 2004-2008 average , suggesting the need to expand production capacity

Foreign direct investment (FDI) showed signs of improvement, providing a boost to domestic investment over the next several years

71.5

600 Investment Value (Bt bn)

Electrical Appliances

74.5

Vehicles

51.3

Basic M etal

491.3

400

2008

Source: BOI

51.6

Tobacco

50.3

Avg 04-08 Jan-Apr 11 2010

56.3

Food and Beverage

2009

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 Source: BOT, MOC, OIE (Data as of April 2011)

Property Market: Closely Monitor Mortgage loans to GDP continued to grow, due to high consumer demand and intensified competition among commercial banks

Investment Value (Bt bn)

Garments

145.8

2009

2010

4M10

4M11

FDI by industries

70.7

Paper and Paper Products

118.3

0

79.5

Chemical & Chemical Products

FDI Investments (for Approved Projects)

281.3

200

63.4

Rubber & Plastic Products

497.8

200 180 160 140 120 100 80 60 40 20 0

183.6

2009

2010

4M10

4M11 109.5

64.0 29.3

36.3 11.0

56.6 33.3 11.6 6.2

15.6

29.8 13.2

37.1

l l er re cs ing tr y ri ca ur a ami Pap str uctu ess du s l ect icut r oc C er t In stic a &E h r P Agr la f & l s ig n P I a c L ls t ni & al Me er a mi c c tro vic e Source: BOI Min El e C he Ser

21

Remaining supply of property continued to grow, following a higher number of new projects launched during 2010 that drew support from developers’ strategy to manage their future income stream

New Projects Launched (BMR)

Property demand was on an upward trend (as seen from transferred properties in BMR), due mainly to government property stimulus efforts Housing Projects

200,000 Unit

150,000

Condominium

Remaining Supply (BMR)

Column1

146,451

161,240

178,128

134,932

2007

2008

2009

2010

100,000 50,000 0

Sources : National Economic and Social Development Board (NESDB), BOT, Real Estate Information Center (REIC), Agency for Real Estate Affairs (AREA), and KResearch BMR = Bangkok and the Metropolitan Area

22


Other Figures Household Debts & Income per Capita

Bond Yields

Net Foreign Direct Investment

Unemployment Rate

0.8

%

1.0

200,000 100,000 0

2005

0.7 2005

2006

2007

2008

2009

2010

1Q11

Source: NESDB, National Statistical Office (NSO), and KResearch

2006

2007

2008

2,100

1.0

1.2

50,369

300,000

141,765

1.4

154,014

1.4

248,330

1.5

400,000

1.5

355,401

1.5

262,597

1.7

399,382

500,000

1.9

Bt mn

2.0

2009

2010

1Q10

1Q11

Notes: 1. Net FDI refers to equity investment, lending to affiliates, and reinvested earnings. Investment in equity is treated as a direct investment when the direct investors own 10% or more of ordinary shares 2. In 2006, Temasek's acquisition of Shin Corp, amounting to Bt140bn, was included in Net FDI

23

Fiscal Budget: April 2011 „ Government’s cumulative budgetary

disbursement rate for 7M-FY2011 reached 58.2%, higher than the same period of FY2010

Source: Public Debt Management Office (PDMO), MOF

„ This resulted in a budget deficit,

reaching Bt383bn, despite the higher-than-expected government revenue collection

24


Stimulus Efforts: Thai Kem Kang (TKK) Disbursement & Other Measures As of May 27, 2011, cumulative disbursements for the TKK program were THB279bn, approximately 80% of the total THB350bn approved per Emergency Decree

Measures Support Spending

Details Accelerated disbursements from the fiscal budget, including for the TKK program

Household Assistance

Extension of three public service subsidy programs (electricity-bus-train charges) until the end of June 2011

Energy Price Controls

Diesel: Maintaining domestic retail price not to exceed THB30/litre by deducting excise tax, while gradually gathering contributions to the Oil Fund during declines in global prices LPG and NGV: continuing freeze on prices, ending June 2011 Energy Rate Adjustment Charge (FT): FT rate to increase by 8.93 Satang/unit during May-August 2011, less than a 13.78 Satang/unit increase it should have been

Relieve Debt Burden

First-Time Homebuyers: Zero interest for two-year on mortgage loans offered by the Government Housing Bank (GHB) for greater affordability Refinance Credit Card Debts: Relief on interest burdens for credit cardholders through three stateowned banks 25

Financial Sector Master Plan (FSMP) Implementation Stages FSMP I (Y2004-2009) ƒ Increase efficiency of the financial institutions system - ‘One Presence’ policy - Expand scope of business: ‘Universal Banking’ - New licenses for retail banks and foreign bank subsidiaries ƒ Promote financial inclusion - Strengthen financial institutions (FIs) by promoting voluntary mergers ƒ Protect customers

FSMP II (Y2010-2014) Looking forward to liberalization Reduce system-wide operating costs ƒ Streamlining regulations ƒ Tackling remaining NPLs and NPAs Allow banks to partner with private firms to raise attractiveness of NPAs, promote efficiency in the trading of NPLs and NPAs by establishing an NPA Information Center, and encourage write-offs of fully provisioned ‘doubtful of loss’ loans

FSMP III (Y2014 onwards) ƒ Further development based on FSMP II results ƒ Another feasibility study in light of empirical results

Promote competition and financial access ƒ Promote competition - Encourage voluntary mergers to lower operating costs - Enhance role of existing service providers (Liberalize of branch network, widen business scope, upgrade qualified retail banks to commercial banks, and expand branch network of foreign banks) - Introduce new entry to fill gaps and create added value - Reduce government ownership in the commercial banking sector ƒ Promote financial access - Facilitate bank expansion of business; support Specialized FIs focusing on providing services to populations without access to banks - Introduce new service providers with microfinance expertise into the system Strengthening financial infrastructure ƒ Promote development of financial products that help support risk management ƒ Enhance information system for risk management ƒ Push for draft/review of necessary financial laws to support risk management and expedite NPL resolution ƒ Promote information technology utilization ƒ Develop human resources in the financial sector

Note: There are four types of Commercial banks in Thailand; Full service banks; Foreign bank branches; Retail banks; and Subsidiary

Source: BOT, KBank, KResearch

26


Deposit Protection Agency (DPA) Objectives & Missions - Enhanced understanding of the deposit protection scheme - Close cooperation with related authorities to maintain stability of the financial institution system - Establishment of an appropriate system for premium collection and sound management of the Deposit Protection Fund - Development of an effective information system to ensure fairness of the deposit protection scheme, with accurate and rapid reimbursement - Management according to the Good Governance Principles and in compliance with the international standards established by the International Association of Deposit Insurers

Amount of Insured Deposits - Insured deposits include deposits and accrued interest denominated in THB accounts, excluding non-resident THB accounts - Blanket guarantee will be gradually phased-out to a limited coverage of Bt1mn per depositor per institution * Contribution to the DPA is 0.4% per year (paid in June and December) of the daily average deposit amount, excluding deposits in foreign currencies and deposits from any other financial institutions because those deposits are not insured by the DPA

11 August 2008 – 10 August 2009

Full amount of deposits

11 August 2009 – 10 August 2010

Full amount of deposits

11 August 2010 – 10 August 2011

Full amount of deposits

11 August 2011 – 10 August 2012

Up to THB50mn

11 August 2012, onwards

Up to THB1mn

Deposit Accounts in Thailand (as of March 2011) # of Accounts

Deposits Less than THB1mn More than THB1mn, but less than THB50mn

%

%

77,868,840

98.77

2,236,046

29.51

963,445

1.22

3,543,832

46.77

0.01

1,797,129

23.72

100.00

7,577,007

100.00

More than THB50mn

9,636

Total

Amount (THB mn)

78,841,921

Source: DPA, BOT, KBank, KResearch

27

Key Milestones and Strategic Measurements Universal Banking Direction: KGroup

K Strategy: Customer-centric Organization with K-Transformation and Channel Expansion in progress K Now: a differentiation strategy to serve customers beyond financial services MTGH acquisition completed in November 2009 KGroup business integration & MTL synergy management

Customer Segment Aspiration : To be a Prominent Player in Every Segment Old Financial Statement Presentation Consolidated Fee Income Amount (Bt bn) % Growth (YoY) Fee Income to Avg Assets Fee Income to Avg Employee (Bt mn)** Non-interest Income to Avg Assets Branches ATM Machines

2004

2005

2006

2007

New Financial Statement Presentation 2008

2009

8.1 9.3 10.6 13.3 17.0 19.5 14.7% 15.2% 13.9% 25.4% 27.2% 15.2% 0.98% 1.12% 1.20% 1.38% 1.48% 1.46%* 0.80

0.89

0.95

1.07

1.23

1.27

2010 22.8 16.8% 1.56%* 1.38

Consolidated Net Fee Income Amount (Bt bn) % Growth (YoY) Net Fee to Avg Assets Net Fee to Avg Employee (Bt mn)**

1.48% 1.48% 1.60% 1.96% 1.97% 2.04%*** 3.97%*** Non-interest Income to Avg Assets 495

495

568

604

662

782

805

1,391

1,962

3,130

3,797

5,102

6,955

7,471

Note: * Fee Income to Average Assets (conso without MTGH) was 1.50% in 2009 and 1.80% in 2010 ** Average employee figure is based on total average employee of KGroup *** Non-interest Income includes Net Premium Written from MTL; Non-interest Income to Average Assets (conso without MTGH) was 1.92% in 2009, and 2.25% in 2010

Branches ATM Machines

2010

1Q11

18.2 1.25%

4.9 15.5% 1.22%

1.10

1.17

1.96%

2.06%

805

806

7,471

7,387

Note: Non-interest income = net operating income – net interest income Financial ratios for 1Q11 are calculated on an annualized basis A drop in 1Q11 number of ATMs reflects the relocation 28


Corporate Business

Multi-Corporate Business

SME Business

Eight Customer Segments

Medium Business

Company with annual sales >Bt5,000mn

Large Corporate Business

Company with annual sales >Bt400mn to Bt5,000mn Individual or company with annual sales >Bt50mn to Bt400mn Individual or company with annual sales ≤ Bt50mn, and with commercial credit limit < Bt10mn

Small & Micro Business

Individual wealth with KGroup* ≥ Bt50mn

„

Business

Retail Business Retail

High Net Worth Individual

Individual wealth with KGroup* ≥ Bt10mn to Bt50mn

Affluent

Individual wealth with KGroup* ≥ Bt15,000 to Bt10mn

Middle Income Mass

Individual wealth with KGroup* <Bt15,000

Customer-centric strategy: offering a full array of financial solutions and a satisfying experience for our customers ¾ ¾ ¾

Uniquely manage portfolio by monitoring eight customer segments Offer financial solutions from among KGroup and the Life Insurance Company Make significant progress towards long-term aspirations; performance on track 29

Note: * Wealth with KGroup is defined as savings and investments, such as deposit products with KBank, mutual funds with KAsset, etc.

Segment Performance and Key Aspirations Clear Customer Segment Aspiration To be a Prominent Player in Every Segment Customer Segment

Measurement

2010A

Within 3 Years

Multi-Corporate Business

Main bank status Market share by value

18% 12%

25% 18%

Large Corporate Business

Main bank status Market share by value

24% 21%

35% 25%

Medium Business

Market share by value

28%

31%

Small & Micro Business

Market share by value

30%

34%

High Net Worth Individual

Market penetration

27%

35%

Affluent

Market penetration Main bank status

43% 17%

62% 36%

Middle Income

Market penetration Main bank status

35% 17%

48% 33%

Mass

e-channel usage *

82%

87%

Main bank status = % of customers in the market who select KGroup as their first choice, do most of their transactions with KGroup, or leave most of their wealth with KGroup Market share by value = share of revenue (derived from both credit and non-credit products) that each bank gains from the market Market penetration = % of customers in the market who use at least one of KGroup’s products e-channel usage = % of retail banking transactions through e-channels (ATM, Cash Deposit Machine (CDM), Internet, Mobile) to KGroup’s total retail transactions * 87% is the 2010 forecasted average e-channel usage in 19 developed countries, based on 'Electronic Finance, A New Approach to Financial Sector Development?', The World Bank, March 2002

30


Corporate Business: Differentiation Strategy Multi-Corporate Business

Medium Business

Large Corporate Business

Small and Micro Business

High Net Worth Individual

Middle Income

Affluent

Mass

„ To be a value enhancement & comprehensive financial solutions provider under our customer-centric strategy and “Think” philosophy Main Bank Status 30%

2001-2005 2006-2010 Basic finan cial Integra ted financia provider l solutions p rovider

20%

2011-2015 Value enh ancement & comprehe nsive fina ncial solutions provider

22%

24%

2010

2011(F)

20%

17%

17%

2007

2008

10% 0% 2009

Market Share by Value 30% 20% 11%

12%

13%

2007

2008

2009

14%

16%

2010

2011(F)

10%

• Think Through • Innovate • Keep Commitment

Our Philosophy

0%

Source: KBank’s Customer Survey

31

Corporate Business: Performance and Market Position Multi-Corporate Business

Medium Business

Large Corporate Business

#1 in Syndicated Loans Mandated Arrangers 50%

30%

25% 20%

28%

(#1)

Mass

To be #1 in Trade Finance Business in 2013 50%

35%

(#1)

27%

20%

(#1)

Middle Income

Affluent

#1 in Bond Dealer (Secondary Market) 30%

32%

40%

20%

High Net Worth Individual

Small and Micro Business

(#1)

(#1)

16%

19%

20%

(#1)

(#1)

16%

(#2)

10%

40% 26%

30% 20% 20%

10%

29%

29%

30%

(#2)

(#2)

(#2)

2009

2010

2011(F)

10% 0%

0% 2007 2008 Source: Bloomberg

2009

2010

2011(F)

0% 2007 2008 Source: ThaiBMA

Performance and Market Position ¾ One of the top corporate market leaders with 14% market share in 2010 (KBank’s Customer Survey) and leveraging expertise in Renewable Energy ¾ Among the top leaders in Bond Underwriting in 2010 (ThaiBMA) ¾ #1 in Syndicated Loans Mandated Arrangers with 32% market share in 2010 (Bloomberg) ¾ Among the top market leaders in Trade Finance with 29% market share in 2010 (KBank’s Customer Survey) and aiming to be #1 in the market in 2013, by continuing develop services to facilitate customer’s business ie. L/C Confirmation, Discounted export L/C without recourse ) ¾ Among the top market leaders in Mutual Fund Supervisory service with 28.5% market share in 1Q11 ¾ Reward: Best Cash Management Bank in Thailand 2011 (The Asian Banker), Best Trade Finance Bank in Thailand 2011 (The Asset), Solar Best Deal of the Year 2010 (Project Finance Magazine), Best Project Financing Deal 2009-2010 (Alpha Magazine)

2009

2010

2011(F)

Business Opportunities

2007

2008

Source: KBank’s Customer Survey

The economic recovery and massive growth in Asia due to Asian Economic Committee (AEC) is an opportunity for KGroup to provide both financial & non-financial solutions ¾ Comprehensive Fund Raising Solution to match market movement and customer’s needs: ƒ Financial Advisoring & Project Financing with main focus on the Energy Industry ƒ Value Chain Solution to create added value for customers and their business partners for strategic industries such as Automobile ƒ Utilization of short-term working capital to help businesses replenish inventory and improve demand for Thai exports ¾ Integrated Payment System providing Trade Finance and Cash Management Integration solutions ¾ Hedging Instruments to mitigate the risk of exchange rate and commodity price fluctuation i.e. FX Night Shift, Commodity Hedging (oil, copper, coal)

Network Coverage: 61 Corporate & SME Service Centers, 8 Corporate Business Centers, and 23 Cheque Direct Service Offices (As of March 2011) 32


SME Business: Differentiation Strategy Multi-Corporate Business

Medium Business

Large Corporate Business

Small and Micro Business

High Net Worth Individual

Middle Income

Affluent

Mass

„ To strengthen #1 position in SME market in all areas – “Bank for SME” - Reinforcing K SME Brand Awareness as SMEs’ 1st Top of Mind Brand - Optimizing SME Lending Portfolio for Highest Risk-Adjusted Return on Capital - Expanding Customer Base, Especially Micro Business, to Increase the Long Run Opportunity to Generate Higher Economic Value - Generating Sustainable Revenue Stream by Increasing Fee Income Portion - Cooperating with Branch Network for Integrated Customer Relationship (Business and Personal)

The Way We Lend and Assess Credit Risk

ƒ ƒ ƒ

The Way We Organize and Work Together

The Way We Support Our Customers

ƒ ƒ ƒ

Portfolio By Design Cost-Efficient Underwriting Model Proactive Monitoring & Recovery

Personal & Business Needs Innovative Solution Offerings

“Breaking the Silo” & Business Unit Synergy 33

SME Business: Performance and Market Position Multi-Corporate Business

Medium Business

Large Corporate Business

Small and Micro Business

High Net Worth Individual

#1 in Market Share by Value 30%

29% 25%

20%

26%

27%

(#1)

(#1)

30%

Middle Income

Affluent

Mass

#1 in Main Bank Status 30%

26%

27%

27%

29%

25%

2007

2008

2009

2010

2011(F)

(#1)

(#1)

20% 10%

10%

0%

0% 2007

2008

2009

2010

2011(F)

Source: KBank’s Customer Survey

Performance and Market Position ¾ Strengthened #1 position in SME market – “Bank for SME” ¾ Improved market share from 27% in 2009 to 29% in 2010 ¾ Only bank to offer a 2-day credit approval process for small and micro SMEs and clients with receipt of funds within 5 days ¾ Only bank to offer comprehensive solutions to SMEs through K SME Care program and K SME Care Knowledge Center

Network coverage Network coverage includes 806 branches, 99 SME business centers, 61 Corporate & SME Service Centers, 8 Corporate business centers, and 23 Cheque Direct Service Offices (As of March 2011)

Source: KBank’s Customer Survey

Business Opportunities ¾ Increase utilization of short-term working capital to help businesses meet their financial needs ¾ Provide comprehensive solutions; offer a variety of products and services to address every SME business life stage ¾ Continue to support SMEs with education, by opening a K SME Care Knowledge Center in addition to the K SME Care program (C=Capital, A=Advisory, R=Research, E=Education) Note: SME Business in Thailand: accounts for 37.9% of Thailand’s GDP, or Bt3.4trn; 2.8 million SME customers with 0.57 million registered as legal entities (as of June2010); supported by the government to become a key mechanism in economic and social growth

34


Retail Business: Differentiation Strategy Multi-Corporate Business

Medium Business

Large Corporate Business

High Net Worth Individual

Small and Micro Business

Middle Income

Affluent

Mass

Leverage & Synergy „Leverage among KGroup i.e. Dual Segment Customers; KAsset ; KLeasing; KSecurities and KResearch

„Synergy with Strategic Partners i.e. Telecom, Household Products, Hypermart, Express way, Entertainment, Post

Advisory

Effective Marketing

„ Financial Advisory : Deliver advisory experience at

„ Innovative Products Solutions: Develop innovative

branch via branch staff and IAM (Investment Advisory Manager); also provide variety of advisory tools to suit customer needs: website, e-mail consulting, K-Savings Memo (program for personal savings plan)

products and offerings that match with customer needs i.e. Deposit for Seniors

„ Effective Cross/UpCross/Up-sell : Understand customer needs and offer suitable products via all channels (Database Marketing & Sale Tools)

C la ss St an da rd

„ Simplified Advisory : Provide excellent service, speed of problem solving and simple advisory service

Channel Efficiency Ho lis tic

„ Branch Network : Build sustainable & effective branch network „ Digital Experience: Provide total digital experience via mobile banking, internet banking, KBank Live on Facebook and Twitter, alert series and all social media

„ E- Channel : Consistently educate customers, and enhance features to serve customer’s convenience (i.e. K-My ATM).

Cu sto me r

Communication

„ Strengthen Brand Communication and Marketing Capabilities : Approachable & Trustworthy

o * t Expe x rienc e d In e @ all Tou t. Sat ch-points by elevating Cust.

ld or W

* Source: Nielsen

35

Retail Business: Performance and Market Position Multi-Corporate Business

Medium Business

Large Corporate Business

#1 in Savings & Investment (KGroup)* Rank Market Share 1,800

2007 #4 13.6%

2008 #3 15.3%

2009 #3 16.6%

2010 #1 18.2%

1Q11 #1 18.8%

2007 2008 2009 2010 1Q11 Rank #2 #2 #1 #1 #1 Market Share 14.3% 16.2% 19.7% 22.0% 23.3%

1,600

1,661

800

(Bt bn)

600 1,229

400

1,200

2007 #4 6.5%

Rank Market Share

800 2009

2010

1Q11

2010 #3 8.9%

22% 20% KBank

14%

351

0 2008

2009 #3 7.7% 26%

9%

8%

200

1,000

2008 #3 7.2%

24%

10%

1,023

2007

Mortgage Loans: Strong Growth

680

509 319

Mass

30% 635

1,356

1,400

Middle Income

Affluent

#1 in Asset Management (KAsset)

(Bt bn) 1,581

High Net Worth Individual

Small and Micro Business

9%

Industry

6%

0%

2007

2008

2009

2010

1Q11

2007

2008

2009

2010

Performance and Market Position (March 2011)

Business Opportunities

¾ Strong market penetration to affluent customers ¾ Savings & Investment (Deposit + Mutual Fund): KGroup ranked #1 (from #3 in 2009) with the highest growth (5.1% YTD) among leading commercial banks ¾ Mortgage Loan: ranked #3, with highest growth among leading commercial banks (26.1%) and highest incremental market share to 8.9% in 2010 ¾ Credit Card: spending ranked #2, outperformed market with 33.1% growth, increased to 12.6% market share (from 12.4% in 2010) ¾ Bancassurance: MTL ranked #1 in new business premium in 1Q11 with 23.1% market share and ranked #2 in total premium with 21.7% market share ¾ Mutual Fund + Private Fund + Provident Fund: KAsset maintained ranked #1 ranking ¾ Market leader in Digital Banking with highest number of K-Mobile Banking users, and the highest referral score for both K-Cyber Banking and K-Mobile Banking**

¾ Leverage and synergy among KGroup companies and strategic partners ¾ Provide innovative product solutions that match customer needs ¾ Continue to emphasize creating the highest levels of service satisfaction via advisory service ¾ Increase efficiency of cross-selling, product bundling, and new customer acquisition via database marketing ¾ Provide a holistic customer experience at all touch-points

Network Coverage 806 branches, 7,387 ATMs, and 9 THE WISDOM Exclusive Center (As of March 2011) * Savings & Investment (KGroup) means deposits with KBank and mutual funds with KAsset ** Based on research conducted by Synovate in Mar 2010 and Market Support in Sep 2009

36


Channels March 2011

ATMs

Branches 782

800

805

806

662

604

822

7,500

(+17 branches)

6,000

7,387

7,471

2010

1Q11

2011F

5,102

600 4,500

7,471 6,955

3,797

400 3,000

200

1,500

0

0

2007

„ „ „

2008

2009

2010

1Q11

2011F

2007

2008

2009

Shift focus to branch efficiency enhancement, after reaching existing channel coverage in high traffic areas Further facilitate our customers in strategic areas by expanding the number of Cash Deposit Machines (CDM –deposit and withdrawal function within one machine) Continuously invest in E-Channel capability, particularly in K-Cyber Banking and K-Mobile banking, providing more convenient service to customers Branches - Bangkok - Upcountry

2007 604 42% 58%

2008 662 44% 56%

2009 782 46% 54%

2010 805 46% 54%

1Q10 784

2Q10 790

3Q10 797

4Q10 805 46% 54%

1Q11 806 46% 54%

ATMs - Bangkok - Upcountry CDMs - Bangkok - Upcountry

3,797 57% 43% 501 51% 49%

5,102 57% 43% 707 51% 49%

6,955 52% 48% 973 52% 48%

7,471 51% 49% 1,014 53% 47%

7,162

7,289

7,398

981

992

1,005

7,471 51% 49% 1,014 53% 47%

7,387 50% 50% 1,013 51% 49% 37

Note: A drop in 1Q11 number of ATMs and CDMs reflects the relocation.

KBank Risk Management Structure The Bank’s organization has been structured to facilitate all aspects of risk management; each business unit’s responsibilities and segregation of duties have been clearly identified in accordance with good internal-control practices Board of Directors Audit Committee

Risk Management Committee Sub-committee Asset and Liabilities Management Sub-committee Credit Policy and Risk Management Sub-committee Pricing Sub-committee

Business Functions CBS/ RBS/ SME/ CMB/ CSP

Risk Functions ERM

CBS = Corporate Business Division, RBS = Retail Business Division, SME = SME Business Division, CMB = Capital Market Business Division, CSP = Corporate and SME Products Division, ERM = Enterprise Risk Management Division

• Approving all risk management policies and guidelines; setting risk limits and risk appetites • Ensuring the adequacy and effectiveness of risk management system and internal controls • Overseeing and monitoring risk management policies and overall risk profile under the policies and guidelines approved by the Bank’s Board of Directors

• Business functions are accountable for managing all risks inherent in their day-to-day activities • Risk functions are responsible for risk management policies, methodologies, and processes in order to effectively measure, monitor, and control all related risks 38


KBank Credit Risk Management Process Portfolio Management

Underwriting & Approval

Designing and setting portfolio targets and diversification in various dimensions to meet the Bank’s desired risk appetite and concentration

Collection & Recovery

Monitoring

Developing credit underwriting processes and supporting tools, appropriate to the risks associated with each specific customer group

Continually monitoring and overseeing the credit quality of customers on a case-by-case basis and at the portfolio level

Collecting and recovering debts in a swift and efficient manner to minimize potential losses

39

Annual Sales

KBank Credit Approval Process Corporate

SME

MB

CB

ME

SM

> Bt5,000mn

> Bt400 - 5,000mn

> Bt50 – 400mn

≤ Bt50mn

Credit Underwriting Dept.

Approval Process

Retails

Policy Lending • • • •

Sufficiency of cash flow Growth trends and ability to compete Management experience and depth Leverage, Liquidity, and asset quality

Housing Loan/ Secured Consumer

SME Credit and Housing Loan Approval Processing Dept. Credit Scoring • Bureau information/Credit history • Debt service capacity • LTV • Profitability • FICO Score

Unsecured Credit Product Operation Dept.

Credit Scoring • Credit history • Debt to income (for home loans) • LTV (for home loans)

Credit Processing Dept.

Post Approval

Credit Card/ Unsecured Consumer

• Legal document • Limit set up

Unsecured Credit Product Operation Dept.

• Legal document • Limit set up Bankwide Risk Asset Review

• Customer Review by Relationship Manager (RM) • Credit Portfolio Monitoring Unit to facilitate RM in customer monitoring

Retail and SME Business Collection and Recovery Dept. • Automated collection system • Efficiently utilize available behavior scoring and collection tools i.e. SMS, automated letter generation, phone

Note: MB = Multi-Corporate Business, CB = Large Corporate Business, ME = Medium Business, SM = Small & Micro Business FICO = Fair Isaac Corporation

40


Credit Bureau Summary National Credit Bureau (NCB)*

KBank Practice

„ Two Types of Credit Reports Offered by NCB:

KBank’s customers applying for loans

¾ Consumer credit report for individuals ¾ Commercial credit report for businesses

Sign agreement to allow the Bank to get credit report from NCB

„ Credit Report Optional to

¾ Shows 3 years of credit history

(Large companies normally have reliable financial statements)

(Name, address, identification number, history of application, approval history, loan payment history, etc.)

Required to

Required to

SME

Retail Business

Corporate Business

„ Data Record ¾ Individuals: Credit information remains on file for 3 years from the original date of delinquency ¾ Bankrupt individuals: Credit information remains on file for 5 years from the date of the bankruptcy order ¾ Businesses: Credit information remains on file for 5 years from the original date of delinquency

„ Members: Approximately 70 financial institutions including commercial banks, finance companies, securities companies, insurance companies, etc.

MultiCorporate Business

Large Corporate Business

Medium Business

Good credit

Poor credit

KBank’s Policy Lending

Reject application

Small & Micro Business

4 Customer Segment in Retail (HN, AF, MI and MA)

Good credit KBank’s Credit Scoring

Poor credit Reject application

Note: * The concept of a credit bureau started in 1961 and central credit registration started in 1964. The Central Information Service was established in 1999 and its name was changed to Central Credit Information Service in 2000 and to the National Credit Bureau in 2005

41

Changes in Financial Statements 4Q2010 31 Dec 2010 : TAS Implementation TAS 19: Employee Benefits ¾ Use actuarial techniques to determine retirement reserve for eligible staff

2013 Phase 2 : TAS Implementation TAS 21: Effects of Changes in Foreign Exchange Rates ¾ Use ‘Functional currency’ concept

TAS 12: Income Taxes ¾ Use deferred income tax concept to record tax asset/ liability

Other TASs

IFRS Conversion IFRS 8: Operating Segments ¾ Present operating details for each key segment

IFRIC 13: Customer Loyalty Program

1 Jan 2011: New financial statement presentation BOT’s New Financial Statement Presentation/Convention

¾ Defer portion of income for reward credit granted

2015 (Tentative) Full IFRS Conversion IFRS 9 (IAS 39), IFRS 7 and IAS 32: Financial Instruments ¾Thai banks have implemented a new provisioning rule under IAS 39, since December 2006 ¾Thai banks have complied with IAS 39 when reporting embedded derivatives, since 2008 ¾KBank has applied IAS 39 to issues for which TAS does not yet have a standard IFRS 4: Insurance Contracts ¾Requires liability adequacy test and prohibits some provisions ¾Unbundling of deposit components

¾ New and reclassified reporting line in financial statements to serve both revised and new accounting standards from 2011 onward

42


Key Implications to KGroup’s Financial Statements in 4Q10 Impacts

Highlights TAS 19: Employee Benefits „ KBank one-time adjustment to R/E with restatement

„ „

TAS 12: Income Taxes

„ „

Adjust whole amount to R/E at the beginning of Y2009 with restatement Retirement reserve on balance sheet increased

Adjust whole amount to R/E at the beginning of Y2009 with restatement Deferred tax asset and deferred tax liability appears on balance sheet

Implementing early adoption, KGroup aligns with international practices and standards

43

TAS 19 : Employee Benefits Concept

To recognize liabilities for employee benefits paid in the future in exchange for services rendered by employees Short-term Benefits

Present value measured by – Projected Unit Credit Method – Actuarial assumptions Financial Demographic • Salary increase • Turnover rate • Discount rate • Mortality rate • Retirement rate

Post employment Benefits

Long term Benefits

Past service cost Date of Employed

Current service cost

Reporting Date (31 Dec 2010)

Liability

Liability

(1) (2) (3)

Expense

One time in R/E One time in PL 5 yrs in PL

Termination Benefits

Retirement Date

44


TAS 12: Income Taxes Concept

To recognize tax consequences, which will be recovered/ settled in the future, of assets/ liabilities recognized in the financial statement

Asset and Liability

Current Accounting Report Period

Accounting Report Period in the Future

Recognition

Deductible

Deferred Tax Asset (DTA)

Taxable

Deferred Tax Liability (DTL)

Accounting Book

Temporary Difference

Tax Book No Deferred Tax Transaction

Permanent Difference

45

Changes in Financial Statement Presentation in 2011 New and reclassified presentation lines in the financial statement are to align with the revised TAS, effective in 2011 As Is

• Balance Sheet

To Be

• Statement of

Key Changes

No disclosure of some detailed items and off-balance sheet items

Financial Position

New presentation lines such as financial liabilities designated at fair value through profit or loss

• Statement of Income

• Statement of

Additions of other comprehensive income such as

Comprehensive

changes in revaluation surplus and gain/loss on

Income

re-measuring AFS

Reclassified presentation lines such as dividend income, contributions to DPA, fee and service expenses and impairment loss of debt securities

New presentation lines such as gain/loss on financial liabilities designated at FVTPL

*Note: AFS = Available-for-sale; DPA = Deposit Protection Agency; FVTPL = Fair Value Through Profit and Loss

46


Impact on Financial Ratios from New Financial Statements Form and New Insurance Business Presentation „

Same formula used, although results change from new accounting classifications Change in Accounting Classifications

Key Financial Ratios

Interest income: Interest expense:

ROA, ROE Net interest margin = NII / Avg Earnings Assets

Out - Dividend income In - Contributions to DPA

Fee income: In - Fee paid related to income Gain on investment: Out - Impairment loss of debt securities Other income: In - Dividend income Earned Premium In - Underwriting expenses

Non-interest income / Avg assets Net fee income / Avg assets

Fee income:

Efficiency ratio = Total other operating expenses /

In

- Fee paid related to income

Total other operating Out - Fee paid related to income Expenses: Out - Contributions to DPA Out - Underwriting expenses Total operating In - Fee paid related to income Income – net: In - Contributions to DPA Out - Impairment loss of debt securities In - Underwriting expenses

Total operating income - net

Loan growth, Deposit growth, L to D NPL ratio, Coverage ratio Impairment loss of loans and debt securities / Avg. Loan

Provision:

CAR

In

- Impairment loss of debt securities 47

1Q11 Performance Highlights Consolidated Net Profit (Bt bn)

1Q11* 6.114

4Q10* 5.282

1Q10* 4.106

Profitability - NIM

3.46%

3.60%

3.37%

- ROE

17.72%

15.94%

13.43%

- ROA

1.51%

1.40%

1.17%

- YTD Loan growth

0.57%

14.43%

2.18%

- YoY Loan growth

12.63%

14.43%

- YoY net fee income growth

15.52%

„

1Q11 net profit increased 48.9% YoY and 15.7% QoQ

„

Loans grew 0.6% YTD; on the yearly basis, loans grew 12.6%

„

High NIM maintained, focus on high yield lending markets

„

Net fee income grew at 15.5% YoY as a result of customer-centricity; growth entails strengthening acquisition, retention, and crossselling capabilities

„

Cost to income ratio peaked in 2010 and slowly declining

„

Asset quality improved with high coverage ratio

„

Strong capital base maintained

Cost control - Cost to income

48.39%

52.68%

2.73%

2.91%

51.30%

Asset quality - NPL ratio - Coverage ratio Loan to Deposit CAR (Bank Only)

108.45% 111.02%

3.51% 96.55%

91.60%

97.90%

95.41%

14.04%**

13.96%

15.03%

Note: * KBank consolidated financial statements in 1Q11 was presented in new financial statement presentation ** If include 2H10 & 1Q11 profit, CAR = 15.42%, Tier I = 10.80%

48


Consolidated Financial Statements Statements of Income (Bt bn)

Statements of Comprehensive Income (Bt bn)

Interest and dividend income Interest expenses Net interest and dividend income Provisioning expenses NII after provisioning expense Non-interest income Non-interest Expenses Income before income tax Income tax expenses

2008 60,130 17,694 42,436 7,789 34,647 22,590 35,060 22,178 6,844

2009* 56,396 13,021 43,375 9,403 33,972 27,299 40,445 20,826 6,032

2010* 62,740 11,502 51,238 6,696 44,542 57,946 72,047 30,441 9,094

Net income attributable to: Equity holders of the Bank Non-controlling interest

15,333 0.003

14,732 61

20,046 1,299

Balance Sheets (Bt bn)

Interest income Interest expenses Interest income - net Fee and service income Fee and service expenses Fee and service income - net Total operating income Underwriting expenses Total operating income - net Total other operating expenses Impairment loss of loans and debt securities Profit from operating before income tax expenses Income tax expenses Net profit attributable: Owners of the Bank Non-controlling interest

Statements of Financial Position (Bt bn)

1Q10** 14,587 3,695 10,892 5,281 1,028 4,253 23,280 5,794 17,486 8,970 1,696 6,821 2,383

4Q10** 16,772 4,297 12,475 6,425 1,340 5,085 26,540 6,558 19,982 10,526 1,682 7,773 2,327

1Q11** 18,222 5,277 12,945 6,205 1,292 4,913 28,461 7,216 21,245 10,280 1,681 9,284 2,666

4,106 332

5,282 164

6,114 504

1Q10** 961,639

4Q10** 1,076,981

1Q11** 1,083,094

2008 904,008

2009* 943,378

2010* 1,079,513

Loans to customers (less deferred revenue)

Total Assets Deposits

1,304,045 967,950

1,366,993 975,492

1,551,528 1,100,036

Total Assets Deposits

1,430,436 1,007,936

1,551,528 1,100,036

1,677,862 1,182,390

Total Liabilities Total Equity

1,190,383 113,663

1,238,847 119,997

1,406,040 134,943

Total Liabilities

1,297,164

1,406,040

1,525,739

124,637

134,943

141,051

Loans

Total Equity

Note: * KBank acquired additional ordinary shares in MTGH to hold a 51% stake, valued at Bt7,529mn and completed the MTGH Acquisition on November 30, 2009. Since the MTGH acquisition was completed on November 30, 2009, the Bankâ&#x20AC;&#x2122;s consolidated financial statements from 2010 include the performance of companies in the MTGH Group for the whole year, with the inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation 49

Earnings Before Provision and Tax (EBPT) and Net Profit March 2011 (Consolidated)

Net Profit

EBPT (Bt bn)

(Bt bn) 40 35 30 25 20 15 10 5 0

37.14 29.97

20.05

20

30.23

16

15.33

14.73

12 10.97

8

6.11

4 0 2008

2009*

2010*

2008

1Q11**

2009*

2010*

1Q11**

EBPT (Bt bn)

2008 29.97

2009* 30.23

2010* 37.14

1Q10** 8.52

1Q11** 10.97

4Q10** 9.46

1Q11** 10.97

Net Profit (Bt bn)

15.33

14.73

20.05

4.11

6.11

5.28

6.11

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

50


ROA and ROE March 2011 (Consolidated)

ROA

ROE (%)

(%)

24

2.5

20

2 1.33

1.5

1.51

1.37

1.10

16

17.72

15.73

14.35

12.79

12

1

8

0.5

4

0

0

2008

2009*

2010*

1Q11**

2008

2009*

2010*

1Q11**

ROA (%)

2008 1.33

2009* 1.10

2010* 1.37

1Q10** 1.17

1Q11** 1.51

4Q10** 1.40

1Q11** 1.51

ROE (%)

14.35

12.79

15.73

13.43

17.72

15.94

17.72

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

51

Net Interest Margin March 2011 (Consolidated) Yield on Loans and Finance Leases

NIM

(%)

8

(%)

5

3.98

4

3.51

3.81

6

3.46

3

6.46

5.21

5.52

2010*

1Q11**

5.47

4

2

2

1 0

0 2008

2009*

2010*

1Q11**

2008

2009*

Â&#x201E; NIM reported under the changes in the financial statement presentation required by the BOT was 3.46%; maintained at the highest level among larger banks Â&#x201E; Strong NIM will continue to be maintained, focusing on the high-yield lending market; helped by the rising interest rate trend NIM (%)

2008 3.98

2009* 3.51

2010* 3.81

1Q10** 3.37

1Q11** 3.46

4Q10** 3.60

1Q11** 3.46

Yield on Earning Assets (%)

5.64

4.57

4.66

4.51

4.88

4.84

4.88

Cost of Fund (%)

1.77

1.16

0.97

1.30

1.62

1.43

1.62

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation ; Cost of fund included DPA

52


Non-interest Income and Structure March 2011 (Consolidated)

Non-interest Income Structure

Non-interest Income to Average Assets

2008-2010

1Q11

(%)

5

3.97

4 3 2

60

57.95

Bt bn

Fee and Services Income-net

12 1.97

2.06

2.04

50 Dividend income

1

51%

40

0 2008

2009*

2010*

1Q11**

22.59

Non-interest Income to Total Income 60

20

3% 15%

35%

39%

39%

10

75% 7%

0

30

3% 8% 14%

72% 0.2%

2008

20 0 2009*

2010*

0.03%

7%

6

39%

3

Gain on trading and FX transactions Fee and Services Income

59%

Share of Profit from Investments 6% on Equity Method 15% Gains on Investments 3% 0.2%

2% 0.01%

1.5%

Net premium written

0

2010*

1Q11**

„ Non-interest income continued to grow mainly from life insurance earned premium, and fee income

10 2008

3%

2009*

Other Income

14%

53%

50

8.30

9

27.30

30

(%)

40

Earned premium-net***

Bt bn

1.5%

1Q11**

2007 18.90

Non-interest Income (Bt bn) Non-interest Income-net (Bt bn)

2008 22.59

2009* 27.30

2010* 57.95

Non- interest Income Growth (%YoY)

33.50

19.54

20.85

112.27

Non- interest Income to Total Income (%) Net Non- interest Income to Net Total Operating Income (%)

33.55

34.74

38.63

53.07

1Q10**

1Q11**

4Q10**

1Q11**

6.59

8.30

7.51

8.30

25.88 37.71

25.88

39.07

37.57

39.07

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

53

*** Earned premium-net = Earned premium – Underwriting expense

Net Fee Income March 2011 (Consolidated) Fee Income to Total Operating Income

Net Fee Income

Fee income

(%)

(Bt bn)

30

22.82

25 20

Net Fee Income to Net Total Operating Income

16.97

19.54

(Bt bn)

26%

(%)

23%

21%

15

15

30

28%

20

20

10

10 5

5 0

4.9

0

2008

2009*

2010*

10

10 0

1Q11**

0 2008

2009*

2010*

1Q11**

„ Net fee income grew 15.5% YoY, as a result of our customer-centric strategy „ Net fee income to total operating income was 23% in 1Q11, due to the accounting treatment following the MTGH consolidation; Bancassurance fees were not included in the fee income item 2008 16.97

2009* 19.54

2010* 22.82

1Q10** 5.28 4.25

1Q11** 6.21 4.91

4Q10** 6.43 5.09

1Q11** 6.21 4.91

27.19

15.16

16.77

24.38

17.50 15.52

19.24

17.50 15.52

Fee Income to Total Income (%) 26.10 Net Fee Income to Net Total Operating Income (%)

27.66

20.90 24.32

23.13

25.45

23.13

Fee Income (Bt bn) Fee Income-net (Bt bn) Fee Income Growth (%YoY) Net Fee Income Growth (%YoY)

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

54


Net Fee Income Structure (Bank only) March 2011 Loan Related and Non-loan Related Fees - net Net Fee Income by Business Division

Loan related 19%

Corporate Business 26%

SME Business 22%

Non-loan related 81%

Retail Business 52%

Net Fee Income by Product Others Credit Card 10% Business Bancassurance 13% 13%

„ Loan related fee income made up around 19% of total fee income

Cash Management 8%

Transaction Services Commercial Credit

Transaction Services 28%

Trade Finance 7%

„ The Bank will continue to focus on non-loan related fees

Credit Card Business

Cash Management Trade Finance

Commercial Credit 21%

Bancassurance Others 55

Other Operating Expenses and Structure March 2011 (Consolidated)

Other Operating Expenses Structure

Other Operating Expenses (Bt bn) 75

2008-2010 Bt bn 80

72.0

1Q11

72.0

70

Bt bn

11%

Underwriting expenses

60

50 35.1

40.4

50 40

25 10.3

30 20

0

10

2008

2009*

2010*

1Q11**

Others

15

40.4 35.1

15% 18% 9%5% 9% 11% 0.2% 12% 0.2% 5% 6% 21% 20%

35%

10

6% 0.2% 8% 3% 5 14%

10.3

Contributions to FIDF and DPA

22% 7%

Directors' remuneration

0.2%

21%

Taxes & Duties

50%

35%

34%

23%

2008

2009*

2010*

0

0

Fee & Service

Premises & Equipment Employee's exp.

1Q11**

„ In 1Q11, other operating expenses were due mainly to employee’s expenses and expenditures rerated to the Bank’s strategic projects Other Operating Expenses (Bt bn)

2008 35.06

2009* 40.45

2010* 72.05

% Growth (YoY)

20.77

15.36

78.14

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

1Q10** 8.97

1Q11** 10.28 14.61

4Q10** 10.53

1011** 10.28 14.61

56


Cost to Income Ratio March 2011 (Consolidated)

Cost to Income Ratio (%) 70 53.92 60 50 40 30 20 10 0 2008

Cost to Average Assets Ratio (%) 6

65.99 57.23

4.94

48.39 4

3.05

3.03

2008

2009*

2.55

2 0

2009*

2010*

1Q11**

2010*

1Q11**

„ Cost to income ratio at 48.39% in 1Q11 reflects changes in the financial statement presentation required by the BOT „ Cost to income ratio peaked in 2010 and gradually declines „ KGroup’s cost management is in place in key areas Cost to Income Ratio (%) Cost to Income Ratio, excl MTGH (%)

2008 53.92 53.92

2009* 57.23 55.93

2010* 65.99 56.34

1Q10** 51.30

1Q11** 48.39

4Q10** 52.68

1Q11** 48.39

Cost to Average Assets Ratio (%)

3.05

3.03

4.94

2.57

2.55

2.79

2.55

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

57

Loan Growth March 2011 (Consolidated) Loan Growth (% YoY)

Loan Growth (% YTD) (%)

(%)

20

18.56

20

14.43

15

18.56 14.43

15

12.63

10

10

4.35

5

4.35

5

0.57 0

0 2008

2009*

2010*

2008

1Q11**

2009*

2010*

1Q11**

„ Loans grew 0.57% YTD; on the yearly basis, loans grew 12.63% 2008 904

2009* 943

2010* 1,077**

Loan Growth (% YoY)

18.56

4.35

14.43

12.63

12.63

Loan Growth (% YTD)

18.56

4.35

14.43

0.57

0.57

Loans (Bt bn)

1Q10** 962

1Q11** 1,083

4Q10** 1,077

1Q11** 1,083

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

58


Loan Structure and Loan Growth Targets March 2011 (Consolidated) (Amount in Bt bn)

Dec 10** 2010

1Q11**

growth

YTD

(% )

Loan Portfolio Structure (Bt bn) 1200 1000 800

1,077

904

943

6% 7% 16%

6% 8% 17%

600 400 200

1,083

7% 7% 20%

7% 7% 20%

36%

36%

38%

38%

34%

30%

30%

30%

2008

2009*

2010**

1Q11**

0 CBS

SME

RBS

ERM

Others

1) Corporate Business Division (CBS) Multi-Corporate Large Corporate 2) SME Business Division (SME) Medium Business Small and Micro Business 3) Retail Business Division (RBS) Mortgaged Loans Credit Cards Consumer Loans 4) Enterprise Risk Management Division (ERM) 5) Others Total Loans

321 169 153 394 245 149 213 160 37 17 73 76 1,077

10.5 13.5 7.2 10.3 5.3 19.6 29.8 26.1 35.9 58.7 2.7 29.6 14.4

YoY

1Q11

growth growth (% ) 323 174 149 394 242 152 212 165 29 19 74 79 1,083

(% )

0.5 3.2 (2.5) 0.1 (0.9) 1.8 (0.4) 3.0 (20.3) 10.9 1.8 4.5 0.6

Y2011

Yield

loan

(% ) 3-4

target (% ) 4-6

6-7

8-10

5-6

12-15

5.5

7-9

12.4 16.7 7.8 7.7 2.8 16.6 23.3 19.9 25.9 58.1 6.5 17.6 12.5

Note: December 2010 loan base is not comparable with previous reports, due to customer migration to larger segments

KBank’s Definitions CBS: Corporate Business Division (Annual sales turnover ≥ Bt400mn) SME: SME Business Division (Annual sales turnover < Bt400mn) RBS: Retail Business Division ERM: Enterprise Risk Management Division (NPL + Performing Restructured Loans) Others: Loans of the Bank’s subsidiaries such as KASIKORN LEASING, and other loan types As of March 31, 2011, KLeasing’s outstanding loans were Bt57,744mn, rising 24.8% YoY Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

59

Loan Portfolio Breakdown by Industry, Currencies, and Interest Rate Consolidated

Loan Portfolio by Industry (March 2011)

By Top 20 Borrowers (March 2011) Top 20 Borrowers 5.4%

(Bt bn) 1,200

1,077

1,000 800 600

904 763

10.7%

1,083

944

11.4%

10.4%

10.9%

15.5%

15.9%

10.7% 5.7%

11.3% 6.0%

9.3% 12.5% 8.7% 6.0%

12.8% 9.3% 6.7%

14.0%

57.6%

55.4%

54.3%

53.9%

60.3% 3.1%

2.8%

2.7%

2.5%

2.5%

2007

2008

10.8% 6.3%

400 200 0

2009

2010

Others Housing Loans Utilities & Services Real Estate & Construction Manufacturing & commerce Agricultural and mining

By Currencies (December 2010)* US Dollar Other Currencies 0.4% 5.9%

Thai Baht 93.7%

By Interest Rate (December 2010)*

1Q11

Notes: Definition of Loans 1) by industry in 2007- 2009 = Gross loans + AIR 2) by industry in 2010-1Q11 = Gross loans 3) by interest rate = Loans including financial institutions 4) by top 20 borrowers = Loans excluding K Companies and Phethai Asset Management Company * The information on loans breakdown by currencies and interest rate are disclosed on half year basis ** Loans in 2010 and Based on new financial statement presentation

Fixed Rate 26.6% Floating Rate 73.4% 60


Asset Quality March 2011 (Consolidated)

Coverage Ratio

NPL Ratio (%)

(%)

120

111.02

108.45

2010*

1Q11**

8 6 4

80 3.09

3.76

2.91

2.73

2010*

1Q11**

88.38

91.64

2008

2009*

40

2 0

0

2008

2009*

„ NPL ratio remain low, below 3% „ Coverage ratio has been maintained at above 100% level since 2Q10 NPL Ratio (%)

2008 3.09

2009* 3.76

2010* 2.91

1Q10** 3.51

1Q11** 2.73

4Q10** 2.91

1Q11** 2.73

Coverage Ratio (%)

88.38

91.64

111.02

96.55

108.45

111.02

108.45

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

61

Impairment Loss of Loans and Debt Securities and Credit Cost March 2011 (Consolidated)

Credit Cost

Impairment loss of loans and debt securities (Bt bn) 9.40

10 8

(bps) 150

7.79 6.70

6

100 93

4

66

62

50

1.68

2

102

0

0 2008

2009*

2010*

2008

1Q11**

2009*

2010*

1Q11**

„ In 1Q11, Provision expense was Bt1.68bn; inline with the provision expense target to be set aside at an average of Bt1.6-1.8bn per quarter in 2011 „ Credit cost was at 62bps in 1Q11, from 66bps in 2010 Impairment loss of loans and debt securities (Bt bn) Credit Cost (bps) Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

2008 7.79

2009* 9.40

2010* 6.70

1Q10** 1.70

1Q11** 1.68

4Q10** 1.68

1Q11** 1.68

93

102

66

71

62

65

62 62


Bad Assets Resolution March 2011 (Consolidated)

Outstanding Foreclosed Properties

Restructured Loans % of Restructured loans to Total loans

12%

Restructured loans

(Bt bn)

16%

100 89.44 71.47 80

15.1% 11.4%

8%

60 9.1%

4%

6.9% 7.4%

8.2%

61.51

57% 57%

20 0%

73% 43% 43%

38%

0

2004 2005 2006 2007 2008 2009 2010 1Q11

67.01

2004

2006

Bt bn 30

74.50

75.16

77%

76%

25

52.33

62%

40

6.9% 6.9%

77.19

27%

76%

78%

20.5

18.7

20

24%

22%

2008

23%

24%

17.3 16.1

16.7

15.9

15.5

2008

2009

2010

1Q11

15

2010

% of Perform ing Restructured loans to Restructured loans

10

% of Non-Perform ing Restructured loans to Restructured loans

„ Outstanding Restructured Loans, as of 1Q11, was Bt74.16bn; 76% were performing restructured loans „ Definition: Outstanding Restructured Loans are the accumulated outstanding amount of restructured loans, comprised of performing restructured loans and non-performing restructured loans. Non-performing restructured loans are already counted as a part of Non-Performing Loans (NPLs)

Write-off

0 2005

NPL Portfolio Sales

30.0 Bt bn

10.0

0.0 2004

2005

2006

2007

2008

2009

2010

1Q11

26.4

10.7

11.6

8.7

4.3

5.5

4.3

0.7

Note: * Accrued interest receivable included

2006

2007

Sale of Foreclosed Properties 10

„ 1999-2000: KBank and Phatra Thanakit sold NPLs to Phethai AMC and Ploy AMC totaling Bt64.5bn* and Bt41.2bn*, respectively

20.0

Write-off

5

Bt bn

8

„ 2001-2004: KBank sold NPLs totaling Bt14.6bn* to TAMC

6

„ 2007: KBank and Phethai AMC sold NPLs totaling Bt11.4bn to Standard Bank Asia Limited and Morgan Stanley Emerging Markets Inc., at Bt7.6bn and Bt3.8bn, respectively „ 2008-2010: NPLs continue to decline without bulk of NPL sales

4

7.5 5.9

5.6

4.5

4.9

4.6

3.0

2

0.9

0 2004

2005

2006 2007

2008 2009

2010 1Q11

63

Investment in Securities Portfolio and Structure March 2011 (Consolidated)

Instrument Type 300

255 4%

250

6%

5%

200 150 100 50

Holding Type

(Bt bn)

251 6% 8%

3%

(Bt bn)

252 6% 3% 9%

300

255

251

252

250

0.1%1% 23%

0.1%1%

0.1% 1%

28%

30%

65%

66%

200

96 4% 3% 19% 73%

103 4% 3% 4%

150

85%

83%

82%

100

89%

50

0

0 2007 2008 2009 2010 1Q11 Govt & State Ent. Bonds Corp Bonds Foreign Bonds Equity Investment Investments in receivables

96 0.6% 11%3% 82%

103 0.2% 8% 2%

73%

81%

4%

8%

3%

6%

3%

2007

2008

2009

2010

1Q11

Trading General

Available-for-sales Subsidiaries & assoc.

Held-to-maturity

Note: Accounting for investments 1) Trading: Stated at fair value (FV). Unrealized gains or losses arising from changes in FV are recognized in the income statement 2) AFS: Stated at FV. Unrealized gains or losses arising from revaluation are reflected in the shareholder’s equity 3) HTM: Stated at amortized cost, after deduction of any allowance for impairment

„ In 2009, a significant increase in government, state enterprises, and corporate securities was due to investments held by Muang Thai Life Assurance (MTL) „ During 1Q11, KBank has reduced THB bonds investment to conform to increasing of Thai policy rate 2007

2008

2009

2010

1Q10

2Q10

3Q10

4Q10

1Q11

Investment Portfolio (Bt bn)

95.53

102.95

254.99

251.22

272.10

234.02

257.04

251.22

252.44

% Growth (YoY)

(6.34)

7.77

147.69

(1.48)

44.10

42.91

42.89

(1.48)

(7.22) 64


Deposits Growth and Loan to Deposit Ratio March 2011 (Consolidated)

Loan to Deposit Ratio

Deposits & B/E (Bt bn)

100%

1,182

1,100

1,200

95%

97.9%

96.7%

975

968 784

900

97.3% 93.4%

95.6%

91.6% 93.5%

600

93.5%

90%

300

70

14

33

52

65

86.8%

87.1%

85%

0 2007

2008

2009* Deposit

2010**

2007

1Q11**

B/E

2008

2009*

Loan to Deposit

2010**

1Q11**

Loan to Deposit + B/E

Deposits (Bt bn)

2007 784

2008 968

2009* 975

2010** 1,100

1Q10** 1,008

2Q10** 1,029

3Q10** 1,042

4Q10** 1,100

1Q11** 1,182

Deposit (% YoY)

5.0%

23.5%

0.8%

12.8%

10.3%

13.1%

11.1%

12.8%

17.3%

Deposit (% YTD)

5.0%

23.5%

0.8%

12.8%

3.3%

5.4%

6.9%

12.8%

7.5%

Loan to Deposit (%)

97.3%

93.4%

96.7%

97.9%

95.4%

95.0%

96.0%

97.9%

91.6%

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

65

Funding Structure and Interest Rate Movement March 2011 (Consolidated)

KBank Funding Structure (Bt bn) 1,400 1,200 1,000 800

1,122 856

12%

7%

4%

8%

3%

7%

1,200

(Bt bn) 968

4% 1,000

89%

90%

62%

400 50%

200 0

0 2007 Deposits

2008

2009

ST and LT Borrowings

2010

1Q11

46%

59%

55%

5%

5%

6%

6%

5%

2007

2008

2009

2010

1Q11

Current

Interbank and Money Market

KBank Interest Rate Movement (Retail customers) 8

36%

39%

88%

200

1,182

45%

600

86%

32% 49%

1%

92%

1,100

975

784

800

7%

600 400

2%

1,350

1,231

1,101

KBank Deposit Structure

Savings

Term

KBank ST and LT Borrowings

Deposit and Bill of Exchange Rates (April 22, 2011)

(%)

(Bt bn)

Savings 6

4

0.75%

Fixed 3M-12M

1.35%-2.25%

Fixed 24M-36M

2.50%-3.10%

B/E 3M, 6M, 12M

1.70%-2.25%

2

Lending rates (April 22, 2011)

0 2007

MLR

2008

Savings

2009

Fixed 3M

MLR

6.75%

MOR

7.00%

MRR

7.50%

Apr_11

138

160

80

40

0

105

29%

120

58

79 51%

33% 43% 24%

2007

31%

36% 53%

20%

47%

2008

2009

ST Debentures

90

B/E & Others

61%

57% 7%

8%

2010

1Q10

LT Borrowing

66


K Companies: Business Profile and Aspiration March 2011 KResearch EST. 1995

KAsset EST. 1992

KLeasing EST. Aug 2005

KSecurities EST. Jul 2005

KASIKORN ASSET MANAGEMENT CO., LTD

KASIKORN RESEARCH CENTER CO., LTD

KASIKORN SECURITIES PCL

Company Profile

- A leader in fund management business i.e. mutual funds, provident funds and private funds

- Professional in providing knowledge in economics, business, money, and banking - The only research house which is an affiliate of the bank

Professional in providing a complete range of professional and excellent financial solutions and services, including investment banking, securities underwriting, and securities brokerage

Asset Size

Bt1.27bn

Bt0.05bn

Bt6.26bn

Bt 58.58bn

Bt4.56bn

23.06% (#1)

N/A

3.42% (#13)

#6 by outstanding loans (excluding captive leasing)

N/A

2011 Targets

#1 in overall market

- Top of mind research house for media and KGroup clients - Market equivalent value of research to PR expense at 12-14

4.7% average market share with leading position in investment banking business

20% YoY growth on outstanding loans with a total loan size of Bt64.6bn

115% YoY growth on outstanding loans with a total loan size of Bt8.4bn

3-year Aspiration

Maintain #1 position

Top of mind research house

Become one of the leading securities firms

Aim to be top 3 in new business in 2013

Aim to be no.1 market leader in 2013

Company Name

Market Share

KASIKORN LEASING CO., LTD

KF&E EST.1990 KASIKORN FACTORY AND EQUIPMENT CO., LTD

Professional in providing three core products: hire purchase, finance lease, and floor plan

Professional in providing a complete range of machinery and equipment leasing service

67

K Companies: 1Q11 Key Operating Performance March 2011 KAsset EST. 1992 1Q11 Key Operating Performance

Assets Under Management (AUM): Bt666bn (5% YTD, 32.5% YoY)

KResearch EST. 1995 Market equivalent value of research to PR expense = 12.38

KSecurities EST. Jul 2005 Trading volume : Bt109.9bn (72% growth YoY)

KLeasing EST. Aug 2005 Outstanding loans: Bt 57.74bn (7% YTD, 24.8% YoY)

KF&E EST.1990 Outstanding loans: Bt 4.44 bn (13% YTD, -3.9% YoY)

* % YoY loan growth of KF&E was negative because factoring port was transferred to KBank

K Companies: Net Income (Bt bn)

2.0 1.43

1.5

1.19

1.0 0.55

0.63

2007

2008

0.46

0.5

Â&#x201E; Net Income of K Companies continues to rise, along with the synergy among KGroup

0.0 2009 *

2010 *

1Q11 **

Notes: * Inclusive of the impact of TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) ** Based on new financial statement presentation

68


Life Insurance Industry in Thailand „ Low penetration rate of 2.4% in Thailand, with a high opportunity to grow insurance business in Thailand

Premium per %GDP by Country (%)

16

Y2007

Y2009

4.3 3.8 3.4

4.6 4.2 2.9 4.0 3.1 2.8

2.3 2.1 2.4 0.9 1.0 2.2 0.7 0.7 1.8 1.1 0.9 0.9 0.9 1.8 0.8

China

Malaysia

Australia

Singapore

India

0

South Korea

„ Muang Thai Life Assurance (MTL) is ranked # 3 in life insurance industry in Thailand, with 10.0% market share in 2010 and 11.3% in 1Q11 „ In Bancassurance market, MTL is ranked #1 in new business premium, with 23.1% market share, and #2 in total premium, with 21.7% market share in 1Q11

Vietnam

5.1

Philippines

5.6

Indonesia

6.2

4

Taiwan

Y2008

Source: Swiss Reinsurance

Thailand

13.5 13.8 12 12.9 8.2 7.2 8 6.5

Size of Market by Premium(%)

Market Share by Total Premium in Life Insurance (%)

Total Premium

First Year Premium

(Bt bn)

(Bt bn)

400

C A GR

: 11.2% ’02-’10

100

300 200 100

113.9

166.8

173.3

133.1

151.1

30.6

29.1

30.9

33.2

2003

2004

2005

2006

24.8

202.5

222.0

44.0

44.7

259.2 57.0

296.3 63.8

80 60 77.5

0 2002

Total Premium

2007

2008

2009

2010

40 30

10

20

0

2010 1Q11

12.4

AIA

1Q11

2009

31.0 28.7

20

40

12.1

TLI

11.3 10.0

MTL

8.910.3 8.3 9.8

6.0 6.3 6.2 5.7

3.9 3.8 3.1 2.7 2.0 2.0

BLA SCNYL KTAL AACP OLIC

ING

8.2 7.2

TLA Others

First Year Premium * Source: First Year Premium (1Q11) = Bt15.1bn

Source: The Thai Life Assurance Association

(%)

69

Source: The Thai Life Assurance Association,

KBank’s Strategic Acquisition in Muangthai Group Holding (MTGH) Before: 10% Stake in MTGH

Currently: 51% Stake in MTGH after Acquisition

6.0%

Group A Persons

65.05%

10.0%

Swiss Re

KBank 10.0%

Fortis

4.95%

20.0%

25.0%

Group A Persons

KBank 51.0 %

75.0%

MTI

MTL

53.7%

MTR

2.0%

PL PL

98.0%

25.0%

MTB MTB

100.0%

MTGS

KBank’s Economic Interest MTI MTL 8.5% 7.5%

MTB 9.8%

MTGH 51.0%

98.0%

75.0%

19.9% MTI

MTFH 10.0%

Fortis 7.8%

MTGH

MTFH MTFH* 25.2%

41.2%

MTL

MTB

KBank’s Economic Interest MTI MTL 10.1% 38.3%

MTB 50.0%

Note: 1) Information from the General Meeting of Shareholders No. 97, April 3, 2009 2) MTFH = Muangthai Fortis Holding Company Limited, MTL = Muang Thai Life Assurance Company Limited, MTI = Muang Thai Insurance PCL, MTR = Muangthai Real Estate PCL, MTB = Muangthai Broker Company Limited, MTGS = Muangthai Group Service Company Limited, PL = Phatra Leasing PCL, Group A Persons = Group of retail shareholders 3) The details of Group A Persons can be found in Appendix A of Opinion Report of the Independent Financial Advisor Regarding to Connected Transaction 4) Muangthai Fortis Holding (MTFH) changed its name to Muang Thai Group Holding (MTGH) in July 2009 5) Fortis Insurance International NV changed its name to Ageas in 2010

70


Muang Thai Life Assurance (MTL) Information Summary „ Established on 6 April, 1951. The first life insurance company to be granted Royal Patronage (since 1959) „ Joined hands with Fortis Insurance International NV (changed name to Ageas in 2010) since 2004 and joined hands with KBank since 2005 „ Credit Rating: BBB+/Stable and Axa+ (ASEAN) from S&P’s, AA(tha)/Positive / BBB+/Stable from Fitch Ratings

Income Statement (Bt bn) Net Premium Written Net Investments Income Gains on Investments and Other Income Total Revenue Life Policy Reserve Increase from Previous Year Benefits Payment during the Year Dividends to Policyholders Commissions and Brokerages Other Underwriting Expenses Total Underwriting Expense Operating Expense and Other Expense Total Expense Income Before Income Tax Corporate Income Tax Net Income

Balance Sheet (Bt bn) - Admitted Total Assets Total Liabilities

Strategy in 2011 2008 17.1 2.6 0.1 19.7 9.2 3.9 0.1 2.9 0.2 16.1 1.6 17.7 2.0 0.7 1.3 2008 57.9 51.4

2009 21.3 3.0 0.5 24.8 11.3 5.1 0.1 3.5 0.2 20.2 2.0 22.2 2.7 0.9 1.7 2009 72.1 62.7

2010 29.3 3.7 0.4 33.4 16.4 6.2 0.1 5.1 0.2 28.0 2.2 30.1 3.3 1.1 2.1 2010 94.2 80.2

1Q11 8.6 1.0 0.2 9.9 4.9 1.8 0.02 1.3 0.1 8.2 0.6 8.8 1.1 0.4 0.7 1Q11 99.8 85.2

Focus on capabilities improvement to fulfill customers’ needs, including product development, process efficiency, and service quality in all channels

2011 Key Financial Targets 2010 94.2 31% 29.6 38%

Total Asset % Growth Total Premium % Growth

2011 (F) 121.1 29% 40.7 37%

Key Financial Ratio Bt bn ROE (% )

2008 20.0%

2009 20.1%

2010 16.7%

1Q11 20.2%

ROA (% ) Capital Capital to Capital Requirement Ratio (% )

2.4% 6.5 669%

2.4% 9.4 788%

2.3% 14.1 920%

2.8% 14.6 899%

Investment to Life Policy Reserve (% )

110%

112%

116%

115%

Source: Muang Thai Life Assurance, and the Thai Life Assurance Association

71

MTL Investment Portfolio and Insurance Premium MTL Investment Portfolio: Fixed Income accounted for around 80%

MTL Total Premium: Growth continues to outpace the industry Total Premium Growth MT L Industry (% YoY) Y2008 Y2009 Y2010 1Q11

Total Investment (1Q11): 93.1 bn

Total Premium by Products: Ordinary product accounted for over 80%

26% 25% 38% 25%

10% 17% 14% 12%

Source: The Thai Life Assurance Association

Total Premium by Channels: Bancassurance accounted for around 60% in 1Q11 with an increasing proportion

72


MTL’s Life Insurance Product Profile Four Major Types of Life Insurance Product „ Ordinary Life Insurance Products: Provide life protection for a fixed amount to an insured person

Can be further classified into 4 sub-categories; ¾ Endowment Life Insurance: Savings type product; insured person receives an amount at the certain period of time or a designated beneficiary receive death benefits upon the death of the insured person within the insured period e.g. Pro Saving 614, Pro Saving 1525 ¾ Term Life Insurance: provides temporary protection with no savings component. Insured person can claim upon death within the stated term period e.g. MRTA Home ¾ Whole Life Insurance : provides life time protection (to the age of 90 or 99) with the death benefit paid to the beneficiary upon the death of the insured e.g. Pro Life 90/5 ¾ Rider : additional coverage desired by the insured e.g. medical expenses, accident „ Group Life Insurance Products : term insurance covering a group of people, usually employees of a company or

members of a union or association „ Industrial Insurance Products : life insurance with a modest amount of coverage, low premium, and no health

check requirement „ Personal Accident : a limited life insurance designed to cover the insured in case of personal accident 73

Shareholder Structure March 11, 2011 (Closing Registration Date)

Shareholder Structure

Top 10 Shareholders

%

Thai Shareholders

51%

1. THAI NVDR CO., LTD

25.03

Foreign Shareholders

49%

2. STATE STREET BANK AND TRUST COMPANY

10.17

NVDR*

25.03

Thai Shareholding Limit

51%

Foreign Shareholding Limit

49%

* NVDR stands for Non-Voting Depository Receipt

3. CHASE NOMINEES LIMITED 42

5.00

4. STATE STREET BANK AND TRUST COMPANY FOR LONDON 5. NORTRUST NOMINEES LTD.

3.48

6. HSBC (SINGAPORE) NOMINEES PTE LTD

2.16

7. STATE STREET BANK AND TRUST COMPANY FOR AUSTRALIA 8. CHASE NOMINEES LIMITED 1

2.08

9. THE BANK OF NEW YORK MELLON

1.38

10. THAILAND SECURITIES DEPOSITORY COMPANY LIMITED FOR DEPOSITORS (THAI SECURITIESHOLDER ACCOUNT)

1.37

Other Shareholders

Total

2.83

1.66

44.84 100.00 74


Credit ratings As of May 31, 2011

Thailand S&P's

Moody's

Fitch

Long-term - Foreign

Long-term - Foreign

Long-term - Foreign

Rating

Outlook

Rating

Outlook

Rating

Outlook

BBB+

Stable

Baa1

Stable

BBB

Stable

KBank S&P's

Moody's

Fitch

Long-term - Foreign

Long-term - Deposit

Long-term - Foreign

Rating

Outlook

Rating

Outlook

Rating

Outlook

BBB

Stable

Baa1

Stable

BBB+

Stable

Note: The lowest level of investment grades for Long-term Debt/Deposit Credit Ratings of S&P’s, Moody’s and Fitch are BBB-, Baa3, and BBB-, respectively

75

Public Recognition Highlight: 2010 - 1Q11 1Q11 - Asia’s Best CEO (Investor Relations) - Best Investor Relations by a Thai Company Asian

2010 - The QFC-Asian Banker Leadership Achievement Award for Thailand - The Strongest Bank in Thailand Award 2010 - Achievement award for Cash Management in Thailand - Best Retail Bank in Thailand 2010 - Best Retail Banking Brand 2010 Best Trade Finance Providers 2010

- Best SME Bank, Thailand - Best Trade Finance Bank, Thailand

Deal of the Year 2011

Best Cash Management Bank in Thailand 2011

- Best SME Bank in Thailand 2010 - Government Bonds Market Share 1st Bank in Thailand - The Asset Corporate Governance Platinum Award 2010 - Best Debt House 2010 - Best Bank in Thailand 2010 - Best Local Private Bank in Thailand Top Winner of IDC Enterprise Innovation Awards 2010 - Best Project Financing Deal of the Year 2010 - Best Investment Bank in Thailand 2010 - Best Bond House 2010 Deal of the Year 2010 - Best Domestic Bank in Thailand 2010 - Best Managed Company-Large Cap in Thailand 2010

Best Trade Finance Providers 2011

Structured Products Polls 2010 1.Best Domestic Provider in Thailand for Local Currency Products - Structured Currency Products 2.Best Domestic Provider in Thailand for Local Currency Products - Structured Interest-Rate Products Cash Management Poll 2010 - Best Local Cash Management Bank in Thailand FX Poll 2010 (voted by corporations) 1. Best Domestic Provider of FX Services in Thailand 2. Best Domestic FX Provider for Innovative FX Products and Structured Ideas in Thailand 3. Best Domestic FX Provider of Prime Broking Services in Thailand 4. Best Domestic FX Provider of Single-Bank Electronic Trading Platform in Thailand

- Best Bank in Thailand 2010 - Best Trade Finance Bank in Thailand 2010 - Best Cash Management Bank in Thailand 2010 - Best Private Bank Award for Thailand 2010

- Asian Corporate Director Recognition Awards 2010 - Corporate Governance Asia Recognition Awards 2010 Reader’s Digest Trusted Brand 2010: - Category: KBank (Gold) - Category: Credit Card Issuing Bank (Gold) ThaiBMA Best Bond Awards 2010 - Best Bond House - Deal of the Year - Most Creative Deal - Sales of the Year SET Awards 2010: - SET Award of Honor for continuous excellence in corporate governance report 2008-2010 - IR Excellence Award

Awards for Listed Companies 2010: - Best Chief Executive Officer - Best Investor Relations Money & Banking Awards 2010: - Financier of the Year 2009: CEO - Best Retail Bank of the Year 2010 Thailand’s Most Innovative Companies 2010

Thailand ICT Excellence Awards 2010 - Business Enabler - Innovation Project

76


For Further Enquiries, Contact KASIKORNBANK Investor Relations: Chief Investor Relations Officer

Tel (66) 2470 2673-4 Fax (66) 2470 2680

Investor Relations Team

Tel (66) 2470 6900-1 Tel (66) 2470 2659-62 Fax (66) 2470 2690 Email: IR@kasikornbank.com

IR Website

www.kasikornbank.com Æ Investor Relations

Disclosure Practice: „ Unreviewed/unaudited quarterly financial reports are released within 21 days from the end of each period „ Reviewed financial reports are released within 45 days from the end of the period for 1Q and 3Q; Audited financial reports are released within 60 days from the end of the period for 2Q and 4Q „ Following good governance practice, KASIKORNBANK maintains a "silent period" for approximately 7 days prior to the unreviewed/unaudited earnings announcement. During this period, the Bank refrains from replying to questions or commenting on the earnings announcement 77

DISCLAIMER: This document is intended to provide material information relating to investment or product in discussion and for reference during discussion, presentation or seminar only. It does not represent or constitute an advice, offer, contract, recommendation or solicitation and should not be relied on as such. In preparation of this document, KASIKORNBANK PUBLIC COMPANY LIMITED (“KBank”) has made several crucial assumptions and relied on the financial and other information made available from public sources, and thus KBank assumes no responsibility and makes no representations with respect to accuracy and/or completeness of the information described herein. Before making your own independent decision to invest or enter into transaction, the recipient of the information (“Recipient”) shall review information relating to service or products of KBank including economic and market situation and other factors pertaining to the transaction as posted in KBank’s website at URL www.kasikornbankgroup.com and in other websites including to review all other information, documents prepared by other institutions and consult financial, legal or tax advisors each time. The Recipient understands and acknowledges that the investment or execution of the transaction may be the transaction with low liquidity and that KBank shall assume no liability for any loss or damage incurred by the Recipient arising out of such investment or execution of the transaction. The Recipient also acknowledges and understands that the information so provided by KBank does not represent the expected yield or consideration to be received by the Recipient arising out of the execution of the transaction. Further the Recipient should be aware that the transaction can be highly risky as the markets are unpredictable and there may be inadequate regulations and safeguards available to the Recipient. KBank reserves the rights to amend either in whole or in part of information so provided herein at any time as it deems fit and the Recipient acknowledges and agrees with such amendment. Where there is any inquiry, the Recipient may seek further information from KBank or in case of making complaint, the Recipient can contact KBank at IR@kasikornbank.com or +(662) 470 6900 to 01, +(662) 470 2673 to 74

78


79


KasikornBank PCL BAK:KBANK Undervalued