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Financial Highlights Message from Chairman of the Board of Directors Message from Chief Executive Officer Message from Our Strategic Partner...Scotiabank Thai Economic Condition in 2009 and the Outlook for 2010 Management Discussion and Analysis of Financial Position and Performance Nature of Business Operations Risk Management and Risk Factors Corporate Governance Report of The Nomination and Remuneration Committee Supervision and Management Structures Board of Directors and Management Team Responsibilities of the Board of Directors for Financial Report Report of the Audit Committee Report of Independent Auditor Financial Statements and Notes to Financial Statements Related Party Transactions General Information Investment of Thanachart Bank in Other Companies Thanachart Bank’s References Structure of Major Shareholders Dividend Policy Companies in Thanachart Group Branches of Thanachart Bank Corporate Social Responsibility


VISION OF THANACHART GROUP Being a business group, with cooperation from every department, that offers fully integrated

financial services with focus given on providing excellent quality of services and product development to be able to respond to every financial need of its target customer groups.

FOUR STRATEGIC INTENTS FOR THE BUSINESS OPERATION IN 2010 1. We intend to grow by doubling the size of Corporate Loan Portfolio while diversifying overall assets. 2. We intend to grow by maintaining hire purchase market leader. 3. We intend to grow by increasing fee-based income proportion. 4. We intend to grow by increasing services and supports productivity.


FINANCIAL HIGHLIGHTS As at and for the year ended 31 December CONSOLIDATED

SEPARATE FINANCIAL STATEMENTS

2009 2008 2007 2009 2008 2007 2006 2005 Operating results (Million Baht) Interest and dividend income Interest expenses Net interest income Non-interest income Total income(1) Non-interest expenses Bad debt and doubtful accounts(2) Net income(3)

21,470 6,736 14,734 18,403 33,137 24,177 3,107 4,056

20,688 17,488 20,934 19,897 17,123 9,398 9,396 6,791 9,429 9,386 11,290 8,092 14,143 10,468 7,737 10,700 6,111 2,815 2,286 2,005 21,990 14,203 16,958 12,754 9,742 15,535 9,905 9,125 7,788 6,105 3,968 2,692 2,830 3,548 2,606 1,870 1,327 3,547 1,304 991

15,520 9,510 6,010 1,318 7,328 5,744 1,254 225

5,309 2,837 2,472 791 3,263 2,295 606 362

Operating performance

Basic earnings per share (Baht) Return on average assets (ROAA) (Percent) Return on average equity (ROAE) (Percent) Interest spread(4) (Percent) Cost to income ratio(5) (Percent) Cost to income ratio net insurance premium income(6) (Percent)

2.19 1.06 17.01 3.73 72.96 56.51

1.08 0.56 8.79 3.17 70.65 60.09

285,515 432,970 341,496 405,098 27,811

276,142 378,347 317,243 357,006 21,278

0.84 1.91 0.75 0.63 0.15 0.42 0.47 0.96 0.41 0.36 0.10 0.27 7.47 15.20 6.22 5.52 1.48 2.99 2.65 3.66 3.14 2.73 2.30 1.93 69.74 53.81 61.06 62.67 78.38 70.33 62.11

Balance sheet information (Million Baht)

150,000

2.73

3.14 2.65

2.50 2.00 1.50 1.00

50,000

0.50 2009 2008 2007 2009 2008 2007 2006 2005 (Year)

Consolidated Financial Statements Loans

3.17

3.00

100,000

0

3.73

3.50

1.93

200,000

(Percent) 4.00

2.30

250,000

282,577 272,925 224,940 200,652 158,697 413,878 368,272 291,098 257,436 195,525 342,664 318,760 248,084 214,506 149,301 387,523 347,002 270,402 242,237 180,225 26,355 21,270 20,695 15,199 15,300

INTEREST SPREAD

272,925 318,760 224,940 248,084 200,652 214,506 158,697 149,301

300,000

276,142 317,243 228,776 248,193 282,577 342,664

350,000

285,515

(Millon Baht) 400,000

341,496

LOANS AND DEPOSITS AND SHORT-TERM BORROWINGS

228,776 300,787 248,193 279,807 20,923

3.66

Loans Total assets Deposits and short-term borrowings Total liabilities Shareholders’ equity(7)

0.00

2009 2008 2007 2009 2008 2007 2006 2005 (Year)

Separate Financial Statements

Consolidated Financial Statements

Separate Financial Statements

Deposits and short-term borrowings

(1) Total income = Net interest income + Non-interest income (2) Including loss on debt restructuring (3) Excluding minority interest (4) Interest spread = Yield-Cost of fund

Yield = Interest and dividend income/Average earning assets Earning assets = Interbank and money market from interest bearing + net investment + loans Cost of fund = Interest expenses/Average paying liabilities Paying liabilities = Total deposits + interbank and money market from interest bearing + total borrowings 

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


As at and for the year ended 31 December CONSOLIDATED

SEPARATE FINANCIAL STATEMENTS

2009 2008 2007 2009 2008 2007 2006 2005 Balance sheet quality Loans to deposits and short-term borrowings ratio (Percent) NPL-gross to total loans (Percent) NPL-net to total loans (Percent) Coverage ratio(8) (Percent) Total allowance to BOT regulation (Percent) Non-performing loans (NPL) (Million Baht)

83.61 87.04 92.18 82.46 2.57 2.37 2.41 2.49 0.58 0.58 0.78 0.59 96.41 94.99 92.07 92.33 111.45 112.75 121.72 102.85 8,675 7,466 5,520 8,359

85.62 2.30 0.60 88.81 101.55 7,167

90.67 2.31 0.81 86.80 108.38 5,213

93.54 1.87 0.83 81.59 104.65 3,753

106.29 2.26 1.95 51.95 101.42 3,582

Capital measures

Tier I capital ratio (Percent) 8.65 8.02 10.15 8.81 15.37 Total capital ratio (Percent) 14.10 11.18 12.00 11.13 17.26 Risk weighted assets (Million Baht) 273,366 252,634 197,128 175,806 100,787

Common share information Common shares outstanding (Million Shares) - Average-basic 1,854 1,735 1,584 1,854 1,735 1,584 1,458 851 - End of period 1,935 1,735 1,735 1,935 1,735 1,735 1,458 1,458 Book value (Baht) 14.38 12.26 12.06 13.62 12.26 11.93 10.42 10.49 Dividends per share (Baht) 0.56 0.43 0.15 0.25 0.25 Other information Employees 9,456 9,630 6,210 7,470 7,534 4,603 3,978 2,645 Branches 256 213 166 133 66 Exchange booth 92 76 64 42 8 RETURN ON AVERAGE ASSETS (ROAA) AND RETURN ON AVERAGE EQUITY (ROAE)

(Million Baht)

1.80

6,000

0.96

Separate Financial Statements

(7) Excluding minority interest (8) Total allowance/NPL

(Non-interest expenses-Insurance and Life insurance expenses)/ (Total income-Insurance and Life insurance expenses)



6.22

5.52 0.36

5.00

0.00 2009 2008 2007 2009 2008 2007 2006 2005 (Year)

0.00

Consolidated Financial Statements Return on average assets (ROAA)

(5) Cost to income ratio = Non-interest expenses/Total income (6) Cost to income ratio net insurance premium income =

0.10 1.48 0.27 2.99

362

225

0.20

10.00

0.41

7.47

8.79

0.40

2009 2008 2007 2009 2008 2007 2006 2005 (Year)

Consolidated Financial Statements

0.56

0.60 991

1,304

1,327

1,870

0.80

0.47

1.00

1,000 0

1.06

1.20

3,000 2,000

15.00

1.40 3,547

4,000

1.60 4,056

5,000

ROAE (Percent) 20.00

17.01

ROAA (Percent) 2.00

15.20

NET INCOME

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Separate Financial Statements Return on average equity (ROAE)


Year


MESSAGE FROM CHAIRMAN OF THE BOARD OF DIRECTORS

It has been a full year that the Thai economy has been weathering through the global financial crisis. Throughout the period, economic forecasts were highly subjected to uncertainties that largely depended on global economic situations. In the first quarter of 2009, the Thai economy contracted to the trough of the economic cycle at a rate of 7.1 percent. Nonetheless, short and long-term stimulus measures were put in place to cushion the downfall which has led the Thai economy to a satisfactory improvement in the second and third quarter. During the first nine months of 2009, the economy’s rate of contraction averaged only 5 percent before reverting to a positive growth of 5.8 percent in the last quarter, the first expansion after the crisis took place. As a result, the Thai economy in 2009 underperformed the previous year’s output only by 2.3 percent. Regardless of the climate of economic crisis and uncertainties, Scotiabank has continued to believe in TBANK and has increased its shareholdings from 24.98 percent to 48.99 percent in the beginning of 2009. Consequently and accordingly to the Shareholder’s Agreement, Scotiabank sent more directors and executives who have become more than ever engaged in management and business operations. The successful cooperation among the management team of TBANK and its subsidiaries, including the management team of Scotiabank, and employees at all levels resulted in

MR. BANTERNG TANTIVIT Chairman of the Board of Directors Thanachart Bank Public Company Limited

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


honors all commitments with good corporate governance along with a constant awareness on the ever-changing economic climate, in order to deliver excellent performances of TBANK and its subsidiaries. With an announcement of the Financial Institutions Development Fund to sell their 47.58 percent share of Siam City Bank, the Board of Directors deemed that this would be a good opportunity for business expansion, and therefore, TBANK participated in the bid. At present, TBANK has won the bid and has already signed the Share Purchase Agreement with the Financial Institutions Development Fund. Upon the shareholders’ approval for the merger with Siam City Bank at the Annual General Meeting of Shareholders this year, the entire business transfer would be complete and TBANK would become the fifth largest bank among the Thai commercial bank industry with greater stability and competitive advantage. As Chairman of the Board of Directors, I would like to thank all Directors, executives and employees for their continuous dedication. I would also like to thank all stakeholders for your trust and support for TBANK to develop and grow together with stability and sustainability.

superior development in products and services, business channel expansion, and infrastructure system development. Maintaining a market leader position in the hire purchase business, loan portfolio diversification, as well as, an outstanding financial performance were the end results of exceptional synergy of all parties. In 2009, TBANK and its subsidiaries’ satisfactory results was a net profit of THB 4,056 million, an increase of THB 2,186 million or 116.95 percent growth from the previous year. Loan spread hiked from 3.72 percent to 4.69 percent while non-interest income rose by 73.36 percent. In 2009, there was a change in the composition of the Board of Directors. Two new Directors were appointed, naming, Assoc. Prof. Dr. Somjai Phagaphasvivathana and Mr. Kobsak Duangdee to replace Mr. Suvit Arunanondchai and Mr. Vichit Yarnamorn who resigned due to other commitments. Two additional Directors were also appointed, Mr. Somjate Moosirilert, a representative of TCAP, and Mr. Martin Weeks, a representative from Scotiabank. As a result, the Board of Directors now consists of four representatives from each of TBANK’s two major shareholders–TCAP and Scotiabank–and four Independent Directors, thus constituting 12 Directors all together. All Directors are knowledgeable and skilled, with experience in finance and management along with other disciplines, enabling both management and operation of TBANK to fulfill its duties and responsibilities to shareholders, customers and other stakeholders. In 2010, the global economy is expected to revive. In any case, TBANK’s Board of Directors continues to firmly press on its duties and responsibilities and wholly commits to the business plan, together with the management team. The Board

Banterng Tantivit Chairman of the Board of Directors Thanachart Bank Public Company Limited

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


GATHERING MOMENTUM

subsidiaries conducted businesses according to the following nine strategic intents: 1. Intention to meet all strategic financial targets, 2. Intention to maintain market leader in hire purchase business, 3. Intention to increase in customer accessibility, 4. Intention to diversify business loan portfolio, 5. Intention to develop drastic improvement in cross-selling, 6. Intention to grow by increasing fee-based income proportion, 7. Intention to enhance our productivity and cost effectiveness, 8. Intention to achieve Best-in-Class in customer servicing, and 9. Intention to build-up our brand strengthening. Scotiabank formed a business alliance with Thanachart Group in 2007 and showed confidence in the Group by increasing its shareholding in TBANK from 24.98 percent to 48.99 percent in the beginning of 2009. As a result of the joint development of Thanachart Group and Scotiabank in accordance to the business policies and under the supervision of the Board of Directors, the determination to achieve the nine strategic intents mentioned, and the commitment from the executives and employees, TBANK and its subsidiaries have achieved satisfactory growth and financial results. At the end of 2009, TBANK and its subsidiaries had total assets amounted to THB 432,970 million, an increase from THB 378,301 million. As a result, TBANK and its subsidiaries became to be ranked number 7 among 17 Thai commercial bank industry. TBANK and its subsidiaries achieved a net profit for 2009 of THB 4,056 million, an increase of THB 2,186 million or 116.95 percent from the previous year. This resulted from the continuing business

MR. SUPHADEJ POONPIPAT

Vice Chairman, Chairman of the Executive Committee and Chief Executive Officer Thanachart Bank Public Company Limited

TBANK and its subsidiaries are still moving forward in developing capabilities to achieve customer centricity through creating new products, developing and setting up infrastructure and increasing service channels in order to expand business and increase service quality. This is done to create financial opportunities for customers to succeed and grow together stably and continuously, which are the basis for operations that can achieve the goals of being a leading medium-size bank in the country with strong and excellent growth. In 2009, TBANK and its 14

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


This is in line with the concept of “Ri Rerm..Term Tem” (Initiate and Fulfill), which is to initiate projects that are appropriate and coherent with the true needs of communities in each region in order to unite and truly create fulfillment for the communities. In 2009, TBANK introduced the project “Donating via ATMs with TBANK” (Make merits through ATMs with Thanachart Bank) that allows those who hold Thanachart Bank’s ATM cards to make monetary donations through the Bank’s ATM and counters at branches nationwide for charitable foundations without service fees. This is another channel that supports doing good for the community. TBANK’s win of the bidding for Siam City Bank’s stocks from Financial Institutions Development Fund (FIDF) and the signing of the contracts for the purchase of the Siam City Bank’s stocks on 11 March 2010 had the objective of purchasing the stocks to acquire the businesses of Siam City Bank, with the approval of the Bank of Thailand. Once the acquisition is completed, TBANK will be a financial institution of greater stability and a commercial bank with the 5th highest ranking assets among Thai commercial banks. This will promote the stability of Thai financial institutions in line with the Financial Sector Master Plan Phase II. The continuous joint development between Thanachart Group and Scotiabank that fulfill all financial services under good corporate governance with utmost regards to customers, shareholders, employees and all stakeholders, and the reasonable social and environmental contributions will make Thanachart Bank grow stably and continuously together with all stakeholders.

expansion, interest spread increasing from 3.72 percent to 4.69 percent, the non-interest income increasing by 73.36 percent from commercial banking business, securities business, fund management business, life and non-life insurance business, and the efficient management of expenses. This resulted in cost to income ratio net insurance premium income decreased to 56.51 percent from the previous year’s figure of 59.88 percent. Moreover, expenses on bad debt and doubtful accounts decreased by 21.69 percent. In order for the executives and employees of Thanachart Group to move forward in the same direction in 2010, Thanachart Bank has set the following four strategic intents: 1. Intention to grow by doubling the size of Corporate Loan Portfolio while diversifying overall assets, 2. Intention to grow by maintaining hire purchase market leader, 3. Intention to grow by increasing fee-based income proportion, and 4. Intention to grow by increasing services and supports productivity. Because of the direction of the Board of Directors that places great importance in making TBANK and its subsidiaries to be the organizations of good governance, the Board of Directors has set policies to continuously develop human resources of Thanachart Group in the areas of good governance. In 2009, Thanachart Group, together with the Continuing Education Center of Chulalongkorn University, continued to organize training and seminars for the executives and the employees, including disseminating knowledge and understanding of the topics through Thanachart Group’s E-learning to provide knowledge and understanding of good corporate governance and promote conscious awareness of good corporate governance. This is done to solidify the foundation of being organizations of good governance that operate with transparency, adhere to the principles of good governance, and create long-term benefits for investors. Furthermore, TBANK and its subsidiaries continued the Corporate Social Responsibility Projects through hubs and the projects are the cooperation of the organization, the employees, the customers and the community to help underprivileged communities that have varying needs for each region.

Suphadej Poonpipat Vice Chairman, Chairman of the Executive Committee and Chief Executive Officer Thanachart Bank Public Company Limited

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


MESSAGE FROM OUR STRATEGIC PARTNER...SCOTIABANK

Despite difficult global economic conditions, Thanachart Bank had an excellent year in 2009, generating record results. The Bank’s fundamental strengths of prudent risk and cost management and strong liquidity and capital positions positioned the Bank well in these challenging times. The management team and with ongoing assistance from Scotiabank, continued to focus on our core projects and we have seen strong progress on many fronts in 2009. Thanachart Bank remains the leader in the auto hire purchase market helping approximately 200,000 customers purchase their vehicle in 2009. With assistance from Scotiabank, the ongoing re-engineering and automation of the collections process reduced risks and increased returns in this business. This process will continue in 2010 with the completion of the automation and centralization of the collections and underwriting processes. Efforts to diversify the Bank and build on the strengths of the HP business also continue with strong cross sell driving increased growth in insurance, mutual funds and low cost desposits through the expanded branch network. As well, product diversification continues with strong growth achieved in commercial and corporate lending and most recently through the introduction of credit card products which focus on meeting the needs of the Bank’s HP and deposit customers through a focused value proposition tied to auto-related services. Thanachart Bank will continue to expand its credit card offerings in 2010 to meet the lifestyle needs of our customers.

MRS. MICHELE KWOK Senior Vice President/Regional Head, Asia/Pacific and Middle East, Scotiabank

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Enhancing our systems capabilities also remains a priority for Thanachart Bank and Scotiabank is utilizing our global information technology expertise to assist the Bank, with new trade finance, treasury and collections systems being successfully implemented in 2009. We will look to further assist the Bank in 2010 in the areas of cash management, internet banking and loans system enhancements. Scotiabank too has performed very well through the global financial crisis. With our fundamental strengths of diversification by business and geography, strong risk and cost controls and focus on building sustainable revenue growth, Scotiabank generated strong financial results in 2009 with net income of C$3.547 billion, a 13 percent increase over 2008. Scotiabank is very well positioned, with strong earnings, liquidity and capital, to prosper in the years ahead. We remain focused on our key priorities, one of which is working closely with partners like Thanachart Bank, to deliver solutions to the needs of our customers throughout the 50 countries in which we do business. With the strong foundation in the HP business and with substantial growth achieved through the cross sell of other products, Thanachart Bank is building deeper relationships with its customers and is well placed to prosper now and into the future. We remain confident about the future of Thailand and Thanachart Bank and Scotiabank will be there to continue to work closely with our colleagues at Thanachart Bank to help build the Bank as it serves it customers and communities throughout Thailand.

MR. BRENDAN KING

Vice President, Corporate Development, Asia, Scotiabank

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


THAI ECONOMIC CONDITION IN 2009 AND THE OUTLOOK FOR 2010*

The Thai economy has undergone a full year of the global economic crisis. As a result, the outlook for the economy during the past year was subject to large uncertainties that primarily depended on the world economic situation. Around the end of 2008, the first set of forecast released under the crisis estimated that the Thai economy would have a zero-growth or contract by 1.0 percent per annum in 2009, under the views from various economic institutions that the world economy would expand at a range from (-0.5) to 0.5 percent per annum. At the beginning of 2009 when the global financial crisis revealed its worse-than-expected symptoms, the world economic outlook was repeatedly revised down. The contraction of 7.1 percent year on year of the Thai economy in the first quarter led to the expectation that the annual economic contraction would range from 3 to 4 percent. In addition, the unemployment rallied from approximately 500,000 workers from the end 2008 to approximately 900,000 workers in January 2009. As a result of the severe economic conditions, authorities has urgently issued the economic stimulus measures to cushion for a deep plunge in private income and consumption which could lead to an overly adverse impact on production, investment and unemployment. The short-term measures, therefore, were the emergency packages to directly inject cash to the people’s hand in the fastest fashion as well as to help reduce the burdens on their cost of living, especially those with low income, the elderly and the parents. This included the economic sectors that have been severely impacted, for instance, tourism industries and the Small and Medium Enterprises (SMEs).

Most of the measures in the stimulus packages were planned to be implemented in the second and third quarter under the additional budget of approximately THB 116 billion in the fiscal year 2009. Furthermore, there were tax measures to help alleviate the impact of the crisis on the private business such as those in the real estate sectors as well as the individuals. These measures were also accompanied by the eased monetary policy with the policy interest rate brought down from 2.50 to 1.25 percent per annum. Moreover, there were measures related to the Special Financial Institutions (SFI) under the supervision of the government to capitalize as well as to speed up their credit expansion to the public as well. After the onset of the short-term measures, the government viewed that the global financial crisis was still highly uncertain and its impact to the world economy could be prolonged. The government therefore deemed that there was as well a need for the long-term measures. The prepared packages focused on the public investment towards 2012 to stimulate the economic growth, investment opportunity to the private sector as well as investment projects to enhance the country’s competitiveness in the periods ahead. The framework of these investment projects could be categorized into seven sectors include irrigation development and agriculture, basic infrastructure especially logistics, tourism, creative economy, education, health care and the small investment projects in different areas. These measures were the plans in preparation under the circumstances that the financial crisis would extend. The budget allocation under these measures was approximately THB 1.4 trillion to stabilize the economic growth and shore up investors’ confidence towards the Thai economic outlook.

* Dr. Porametee Vimolsiri, Deputy Secretary General, NESDB, 2 March 2010 22

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Sources of funds for such investment would come from the revenue of government and state enterprises, loans and joint venture between public and private sectors. Nonetheless, the declining government revenue due to the economic slowdown could require more government loan to cover the discrepancy and the figure could exceed the borrowing ability of the government allowed in the Budget Management Law and Public Lending Practice. The government therefore had to seek approval from the Parliament to issue the Emergency Decree and Act empowering the Ministry of Finance to borrow for economic restructuring in the amount of THB 800 billion. This funding plan was consistent with the country’s fiscal sustainability with the ratio of the public debt to GDP peaking at 56 percent in 2012 and would gradually subsume. The Thai economy has improved and contracted by a slower rate in the second and third quarter of 2009. During the first 9 months, the slowdown was reported at 5.0 percent with manufacturing sector contracted by 9.8 percent; transportation, communication, hotel and restaurant slowed down at 5.2 percent from the previous year but financial sector was able to grow by 4.0 percent. On the expenditure side, the private investment contracted 15.4 percent while quantity of exports of goods and services was also down by 17.8 percent. Furthermore, indicators during the latter half of the year revealed the continued recovery of the Thai economy including: • The capacity utilization rate in manufacturing sector plunged to the bottom at 54.8 percent in February and rebounded to 70.1 percent in December, especially in the export-oriented industries as the global market revealed signs of gradual recovery. • Unemployment rate that reached its peak at 2.4 percent in January, amounting to 878,900 unemployed workers, gradually declined to a 1.1 percent in October or down to 410,500 unemployed workers. • Tourism sector rebounded somewhat in January when the number of tourists expanded by 45.2 percent and the occupancy rate climbed up to 57 percent from its trough at 40.8 percent in June.

• Exports also rebounded in various sectors since the second quarter, leading to the growth of 17.3 percent in December from the highest contraction of 26.5 percent in May. In 2010, the further implementation of the AFTA was also expected to give rise to the Thai exports to the regional market such as exports of trucks and commercial car to Malaysia and Indonesia. • The agricultural prices started to rebound with the world economic recovery as well as the shortage of rice in the major exporting countries such as Vietnam and the Philippines due to bad weather conditions. More importantly, the price of rubber that is a major raw material in the tire industry rebounded from the lowest level of THB 43 per kilogram to the highest at THB 81 per kilogram in December. This sharp increase could suggest that the world auto industry was heading toward the recovering trend.

As are result, the Thai economy expanded 5.8 percent in the fourth quarter, the first expansion since the crisis. Overall, this brought about the moderate annual rate of contraction for 2009 of 2.3 percent and headline inflation of -0.9 percent. During the entire year, deposits of the commercial banks expanded at 0.7 percent which was a slowdown from the growth rate of 8.5 percent in the previous year. In the first half, deposits including bills of exchange accelerated due to the inflows of funds from investment in other risky assets as concerns over the economy grew. However, in the latter half of the year, such worries subsumed, resulting in the reallocation of investments back towards the higher risk assets. On the lending side, private lending grew at only 3.0 percent which was a major decline from 9.3 percent growth in 2008. The expansion was contributed solely by loans to households while corporate lending contracted. Nonetheless, in the last quarter when the signs of economic recovery became more apparent, total credits in the depository institutions rebounded and expanded at 6.8 percent from 4.7 percent in the third quarter.

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


As the economic expansion improves in 2010, the credit extended to private sector is also expected to expand. At the same time, with the need for government financing for the investment projects in the second stimulus package (SP2), excess liquidity in the financial system is expected to decline. Together with the mounting inflationary pressure, the policy rate is likely to be raised in the near future. Nevertheless, the rise in inflation rate is estimated to exceed the percentage hike in policy rates, leaving the real interest rate at a relatively low level which will still be at supporting level for the recovery in the private investment going forward. In 2010, the global economy was expected to expand, though at a slow pace. The Thai economy therefore was forecasted to also pick up moderately at 3.5-4.5 percent. This economic recovery was expected to be driven by public investment and the global recovery which led to an increase in private consumption and investment. Nonetheless, challenges and limitations facing the Thai economy can be listed as follows; • The world recovery remained vulnerable as the pace will be unbalanced and depend on the stronger recovery in Asia. However, the risk remained as China started to become more cautious in their stimulus measures as well as its commercial bank’s lending. At the same time, unemployment problem in the US seemed to persist and could lead the economy towards the “Human Recession” period. Moreover, the tension on the effort for a collaboration between the US and China could rise as the US would be pressured from domestic businesses towards a more protectionism policy and called for China to lower its saving and raise consumption to rebalance the global growth.

The higher rate of growth in credits relative to deposits resulted in a slight decline in excess liquidity in commercial banking system from THB 1.35 trillion in the third quarter to THB 1.32 trillion in the fourth quarter. Interest rate on the 12-month deposit was at 0.70 percent and the MLR staged at 5.86 percent during the last quarter of the year. Due to the close monitoring of commercial banks on credit quality during the crisis, the non-performing loans slightly increased and trended towards the decline in the last quarter with its ratio to the outstanding loans of 2.66 percent. The operating performance of commercial banks in 2009 remained sound as the net profit was reported at THB 82.9 billion which was a slight increase from the previous year. Despite the decline in net interest income, commercial banks were able to raise their income through the non-interest income such as fee based and service income. The stock market condition in 2009 improved from the past year. The stock index at the end of the fourth quarter stood at 734.5 points, reflecting investors’ expectation on the economic recovery ahead of the actual conditions and the attractiveness of the Asian assets over other regions. On the other hand, private financing through the corporate bond market was recorded around THB 1 trillion, a decline from THB 1.3 trillion in 2008, most of which was the financing through debentures which were concentrated in finance and manufacturing sectors. This significant amount of financing implied that some of the businesses were still in demand of funding and could utilize the low-interest to help contain their cost of funds, particularly when other channels where not as accommodative. Nevertheless, yields on bonds adjusted upward for all tenors especially in the medium-term and long-term maturity due to the expectation of policy rate hike in the near future as well as the constant issuance of the Bank of Thailand and government bonds in the primary market.

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


• • •

The Asian currency would experience the appreciation against the USD as well as the Renminbi due to its strong tie to the USD. The Baht therefore was expected to continue its appreciation after it has appreciated from THB 35.36 per USD in the first quarter to THB 33.31 per USD in the last quarter of 2009. The oil price was expected to reach USD 75-85 per barrel which would raise the inflationary pressure and pass on to the cost of production as well as the cost of living in the country. Inflation in 2010 was expected to increase to 2.5-3.5 percent whereas the policy interest rate is likely to be raised in the latter half of the year. The political uncertainty and issues surrounding the investment climate of Thailand such as the resolution of the legal issue on projects in the Map Ta Phut Industrial area may cause a slowdown in the recovery of the private investment going forward.

Although the short-term crisis has not completely passed, long-term challenges seemed to lie ahead. The strategic preparation for both public and private sector would be essential as the economy started its return to normalization. Only at this time, the economic changes taking place both before and as a result of the crisis has produced the “New Normal” to replace the old norms we were returning to. These new conditions surrounding our economy were, for example, the global warming, food and energy crisis, conflicts of resource allocation, changes in financial regulations, different global growth polar and the aging society. As a result, 2010 was the year for us to be cautious on short-term economic challenges despite the fact that the recovery was underway. Concurrently, the long-term institutional strategies would need a close review in order to prepare for the adjustment towards the new environment which will justify our survival as well as success in the world after the crisis.

Christian Children’s Fund

Supported the training of the Welfare Fund for children and their families at Bahn Nong Ma, Amphur Samrong Thab, in the province of Surin. The training was aimed to help the villagers adapt the fund management scheme to set up the fund for children and their family and promote sustainable growth to their community. 25

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND PERFORMANCE

MANAGEMENT DISCUSSION AND ANALYSIS

OF FINANCIAL POSITION AND PERFORMANCE

(CONSOLIDATED BALANCE SHEET)

• Loan growth grew 3.39 percent, including the decrease of the interest rate as well as the appropriate management of deposits structure resulted in the increase in loan spread to 4.69 percent, an increase from 3.72 percent in 2008. • An effective improvement in debt management and collection process led the expenses on bad debt and doubtful accounts to decrease by THB 861 million or 21.69 percent. • The Bank and its subsidiaries rapidly generated non-interest income and adjusted the management of operating expenses. As a result, the cost to income ratio net insurance premium income decreased to 56.51 percent from 59.88 percent in the previous year.

In July 2007, TBANK had restructured shareholding of the companies within Thanachart Group, resulting in the Synergies as well as the effectiveness and efficiency in business operation which reflected in both consolidated and the bank only financial statements for the year 2009. In 2009, total assets in consolidated balance sheets increased by 14.45 percent. Net income of the Bank and its subsidiaries amounted to THB 4,056 million which increased by 116.95 percent from 2008 while the economy declined by 2.3 percent. The net income of 2009 was driven by the following main factors:

OVERVIEW OF OPERATING RESULTS INCOME STATEMENT

(Unit: Million Baht) 2009

2008

Interest and dividend income 21,470 20,688 Interest expenses 6,736 9,398 14,734 11,290 Net interest and dividend income Bad debt and doubtful accounts and loss (gains) from debt restructuring 3,107 3,968 Net interest and dividend income less bad debt 11,627 7,322 Non-interest income 18,403 10,615 Non-interest expenses 24,177 15,450 Income before income tax 5,853 2,487 Corporate income tax (including refunds) 1,769 586 Minority interest 28 31 Net income for the year 4,056 1,870 Earnings per share (Baht) 2.19 1.08 Weighted average number of ordinary shares (shares) 1,853,523,390 1,734,619,292

26

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

CHANGE FROM 2008

INCREASE/ (DECREASE)

PERCENT

782 (2,662) 3,444

3.78 (28.32) 30.51

(861) 4,305 7,788 8,727 3,366 1,183 (3) 2,186

(21.69) 58.80 73.36 56.48 135.34 201.60 (9.87) 116.95


Net income of TBANK and its subsidiaries in 2009 amounted to THB 4,056 million, an increase of THB 2,186 million or 116.95 percent from the previous year. This was due to the continued expansion of businesses of Thanachart Group, an increase in loan spread from 3.72 percent to 4.69 percent, a rise in non-interest income to 73.36 percent which was due to the continuous growth of commercial bank business, securities business, fund management business, as well as life and non-life insurance business, as well as the efficient management in the Bank’s expenditure. As a result, cost to income ratio net insurance premium income declined to 56.51 percent from 59.88 percent in the previous year. At the same time, expenses on bad debt and doubtful accounts also decreased by 21.69 percent. The details on key changes were as follows: INTEREST AND DIVIDEND INCOME In 2009, interest and dividend income of TBANK and its subsidiaries amounted to THB 21,470 million, an increase of THB 782 million or 3.78 percent from the previous year. This was mainly contributed by the increase in interest income from hire purchase loans and financial lease and interest and dividend income from investments. INTEREST EXPENSES Interest expenses were reported at THB 6,736 million, a decrease of THB 2,662 million or 28.32 percent from the previous year due to the continued decline of market interest rate and effective management in cost of fund. In 2009, TBANK and its subsidiaries’ cost of fund dropped from 3.21 percent in 2008 to 2.01 percent.

BAD DEBT AND DOUBTFUL ACCOUNTS In 2009, expenses on bad debt and doubtful accounts of TBANK and its subsidiaries amounted to THB 3,107 million, a decrease of THB 861 million or 21.69 percent from the previous year, due to an effective management and improvement in debt collection and credit risk management. NON-INTEREST INCOME Non-interest income of TBANK and its subsidiaries amounted to THB 18,403 million, an increase of THB 7,788 million or 73.36 percent. This was mainly due to the continuous growth of commercial bank business, securities business, fund management business, and especially the life and non-life insurance business whose the insurance premium income increased by 97.02 percent. NON-INTEREST EXPENSES Non-interest expenses of TBANK and its subsidiaries were reported at THB 24,177 million, an increase of THB 8,727 million or 56.48 percent from the previous year. The increase was mainly attributed by the insurance and life insurance expenses that increased by 115.50 percent as a result of the increase in number transactions during the year. The personnel expenses as well as expenses on premises and equipments also increased by 21.36 and 15.65 percent respectively, most of which was due to an increase in the number of the Bank’s branches to 256 at the end of 2009 from 213 at the end of the previous year as well as the investment in the IT system and infrastructure. FINANCIAL POSITION OF THANACHART BANK AND ITS SUBSIDIARIES

(Unit: Million Baht)

CHANGE FROM 2008

BALANCE SHEET

2009

2008

INCREASE/ (DECREASE)

PERCENT

Asset Cash Interbank and money market items (with interest) Investments-net Loans and accrued interest receivables - net Property foreclosed - net Land, premises and equipment - net Other assets Total assets

3,665 60,706 78,602 277,396 912 2,211 9,477 432,970

4,018 61,332 30,712 269,343 1,600 2,311 8,986 378,301

(353) (626) 47,890 8,053 (688) (100) 491 54,669

(8.78) (1.02) 155.94 2.99 (43.01) (4.29) 5.46 14.45

27

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


As at 31 December 2009, total assets of TBANK and its subsidiaries were reported at the amount of THB 432,970 million, an increase of THB 54,669 million or 14.45 percent from the end of the previous year. Most of the increase was attributed by an increase in net investments

which expanded THB 47,890 million or 155.94 percent and the increase in loans and accrued interest receivables of THB 8,053 million or 2.99 percent as a result of the continued expansion of corporate lending and automobile hire purchase loans. (Unit: Million Baht)

CHANGE FROM 2008

BALANCE SHEET

2009

2008

INCREASE/ (DECREASE)

Liabilities and shareholders’ equity Deposits Interbank and money market items (with interest) Securities business payable Liabilities payable on demand Borrowings Accrued interest payables Life premium reserve Other liabilities Total liabilities Equity attributable to the Bank’s shareholders Minority interest Total liabilities and shareholders’ equity

266,296 20,499 1,036 2,112 90,200 1,020 15,286 8,649 405,098 27,811 61 432,970

270,163 6,677 855 1,317 61,150 1,721 7,822 7,256 356,960 21,278 63 378,301

(3,867) 13,822 181 795 29,050 (701) 7,464 1,393 48,138 6,533 (2) 54,669

Total liabilities of TBANK and its subsidiaries as of 31 December 2009 were reported at THB 405,098 million, an increase of THB 48,138 million or 13.49 percent from the end of 2008. Such rise was due to an increase in borrowings, interbank and money market items and life premium reserve that varied with the number of transactions.

PERCENT

(1.43) 206.99 21.22 60.39 47.51 (40.75) 95.44 19.19 13.49 30.70 (3.52) 14.45

The shareholders’ equity of the Bank and its subsidiaries recorded at THB 27,811 million as of 31 December 2009, an increase of THB 6,533 million or 30.70 percent from the end of 2008. This increase of shareholders’ equity was mainly due to the operating profit of TBANK and its subsidiaries and the paid-up capital of THB 2,000 million in May 2009.

Phra Pradaeng Home for the Disabled People For Khon Kor Diaw Gun’s members, TV Burapha’s fanclub, Thanachart Bank’s staff and the guests appeared in the Khon Khon Khon show to get together for social welfare activities to support the disables by donating personal items for their everyday use. 28

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND PERFORMANCE (FINANCIAL STATEMENTS OF THE BANK ONLY) OVERVIEW OF PERFORMANCE SUMMARY OF INCOME STATEMENTS INCOME STATEMENTS

2009

2008

20,934 19,897 Interest and dividend income Interest expenses 6,791 9,428 Net interest and dividend income 14,143 10,468 Bad debt and doubtful accounts and loss (gain) from debt restructuring 2,830 3,548 Net interest and dividend income after bad debt 11,313 6,921 Non-interest income 2,815 2,202 Non-interest expenses 9,125 7,705 Income before corporate income tax 5,003 1,418 Corporate income tax (including refunds) 1,455 114 Net income for the year 3,547 1,304 Earnings per share (Baht) 1.91 0.75 Weighted average number of ordinary shares (shares) 1,853,523,390 1,734,619,292 In 2009, net income of Thanachart Bank amounted to THB 3,547 million, an increase of THB 2,243 million or 171.97 percent from the previous year. The rise was contributed by efficient management on nonperforming assets due to the adjustment in strategies and policies in debt collection. In addition, the more cautious lending policy also resulted in a decrease in expenses regarding bad debt and doubtful accounts of THB 718 million. Furthermore, the interest rate spread was up from 3.72 percent in the previous period to 4.69 percent. During the year, moreover, the Bank could also continuously raise non-interest income which expanded by 27.81 percent in accordance with the efficient management of the Bank’s expenditure. The result was a decline of cost to income ratio from 60.81 percent in the previous year to 53.81 percent with key changes listed as follows: 1. Regarding loan expansion, TBANK could continuously expand its lending both in hire purchase and corporate lending. Especially in the hire purchase section which was the main business of the Bank, the outstanding figure increased from THB 198,344 million to THB 206,320 million or a 4.02 percent increase from the end of 2008. Moreover, corporate loans increased from THB 35,113 million to THB 50,910 million, representing an increase of

(Unit: Million Baht)

CHANGE FROM 2008

INCREASE/ (DECREASE)

PERCENT

1,037 (2,637) 3,675

5.21 (27.97) 35.10

(718) 4,392 613 1,420 3,585 1,341 2,243

(20.22) 63.47 27.81 18.44 252.73 1,177.31 171.97

44.99 percent. The increase in corporate loans was in line with loan diversification policy of the Bank. 2. The expansion of deposit base under the declining market interest rate environment, effective management on deposit structure, the issuance of new products as alternatives for customers to gain higher market share were the major factors lowering TBANK’s cost of funds to 2.01 percent compared to 3.21 percent of last year. 3. TBANK rapidly generated non-interest income and adjusted the management of operating expenses in 2009, by launching new products, and improving infrastructures and other systems to support the business expansion. As a result, the Bank was able to achieve noninterest income ratio of 16.60 percent and cost to income ratio of 53.81 percent compared to the average value of the peers at 56.38 percent. INTEREST AND DIVIDEND INCOME In 2009, TBANK’s interest and dividend income stood at THB 20,934 million, an increase of 1,037 million or 5.21 percent compared to the past year. Most of the increase could be explained by an increase in interest income for hire purchase followed by the expansion of loans as well as interest and dividend income from investments. 29

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


(Unit: Million Baht)

INTEREST AND DIVIDEND INCOME

CHANGE FROM 2008

2009

2008

INCREASE/ (DECREASE)

PERCENT

1. Loans 2. Interbank and money market items 3. Hire purchase and financial leases 4. Investments

3,950 1,022 14,354 1,607

4,228 1,512 13,063 1,094

(278) (490) 1,291 513

(6.57) (32.37) 9.89 46.91

Total interest and dividend income

20,934

19,897

1,037

5.21

INTEREST EXPENSES Interest expenses stood at THB 6,791 million, a decrease of THB 2,637 million or 27.97 percent relative to the previous year due to the decline in cost of funds that was consistent with the trend of market interest rates. BAD DEBT AND DOUBTFUL ACCOUNTS TBANK’s expenses on bad debt and doubtful accounts for 2009 registered at THB 2,830 million, a decrease of THB 718 million or 20.22 percent from the past year. Such result was due to the adjustment in work process that allows higher efficiency in debt

management and collection regardless of the economic downturn. NON-INTEREST INCOME In 2009, TBANK’s non interest income amounted to THB 2,815 million, an increase of THB 613 million or 27.81 percent relative to the past year. The major portion of the increase was an increase in fees and service income and a decline in losses incurred from investments due to economic conditions. Moreover, the Bank’s income also rose from the sale of property foreclosed and other assets as well as an increase of other income. (Unit: Million Baht)

NON-INTEREST INCOME

2009

1. Gain (loss) on investments 2. Fees and service income • Acceptances, aval, and guarantees • Discounted income on insurance premium • Others 3. Gain on exchanges and finanical derivatives contracts 4. Gain (loss) on property foreclosed 5. Income on supporting service 6. Other income Total non-interest income

CHANGE FROM 2008

2008

INCREASE/ (DECREASE)

PERCENT

(57)

(206)

149

72.45

41 580 1,198

35 709 920

6 (129) 278

17.41 (18.28) 30.23

148 127 232 545

223 (84) 291 314

(75) 211 (59) 231

(33.61) 252.14 (20.25) 73.92

2,815

2,202

613

27.81

NON-INTEREST EXPENSES In 2009, non-interest expenses of TBANK totaled to THB 9,125 million, a rise of THB 1,420 million or 18.44 percent compared to the previous year. The increase was mainly due to a rise in personnel expenses of THB 683 million as well as premises and equipment expenses of

THB 259 million due to expansion in number of the Bank’s branches, investments in the information technology system and infrastructure. Moreover, the expenses on funds contributed to the Financial Institution Development Fund (FIDF) and Deposit Protection Agency (DPA) also increased by THB 250 million. 30

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


FINANCIAL POSITION (Unit: Million Baht)

CHANGE FROM 2008

ASSET ITEMS

2009

2008

INCREASE/ (DECREASE)

PERCENT

Assets Cash Interbank and money market items (with interest) Investments-net Loans and accrued interest receivables-net Property foreclosed-net Land, premises and equipment-net Other assets

3,665 60,120 64,643 275,108 895 1,950 7,497

4,017 59,418 26,586 266,843 1,541 2,015 7,794

(352) 702 38,057 8,265 (646) (65) (297)

(8.78) 1.18 143.14 3.10 (41.92) (3.20) (3.81)

Total assets

413,878

368,215

45,663

12.40

ASSETS Total assets of TBANK as of 31 December 2009 amounted to THB 413,878 million, an increase from end2008 of THB 45,663 million or 12.40 percent, which stemmed from an increase of net investments of THB 38,057 million and an increase in net loans and accrued interest receivable of THB 8,265 million. TBANK’s investments registered at THB 64,643 million, a rise of THB 38,057 million or 143.14 percent from surge in deposits and short-term borrowings which implies higher liquidity for TBANK. With such liquidity in hand, the increased investments provided the Bank with higher rate of returns from both short-term and long-term investments. Net loans and accrued interest receivables of TBANK amounted to THB 275,108 million, an increase of THB 8,265 million or 3.10 percent from last year. The increase was mostly due to an expansion of THB 15,797 million in corporate lending and THB 7,976 million of automobile hire purchase while the intercompany loans

within Thanachart Group declined by THB 9,730 million from the usual loan repayments. ASSET QUALITY 1. Loans, receivables and accrued interest receivables As of 31 December 2009, TBANK’s net loans and accrued interest receivables amounted to THB 275,108 million, an increase of THB 8,265 million or 3.10 percent from the end of last year. During 2009, the Bank entered into various debt restructuring agreements in the form of reconditioning of the debt repayment, transferring assets and/or equity and/or reconditioning the terms and conditions of repayment. The total debt restructuring agreements were made with 10,810 debtors, an increase of 214 debtors. This was due to the debt management process of the Bank, which led to the ability of some debtors to restructure their debts by having their debt burden in line with the ability to repay debts, and also due to the improvement program of the Bank to improve the debt quality.

LOANS AND INTEREST RECEIVABLES CLASSIFIED BY TYPES OF DEBTORS 31 DECEMBER 2009

LOANS AND INTEREST RECEIVABLE ITEMS NUMBER OF DEBTORS (PERSONS)

Total debtors Debtors entering debt restructuring during the year • Outstanding balance before debt restructuring • Outstanding balance after debt restructuring Total debtors entering debt restructuring at year end Percentage of debtors entering debt restructuring at year end to total debtors

31 DECEMBER 2008

AMOUNT NUMBER OF DEBTORS AMOUNT (MILLION BAHT) (PERSONS) (MILLION BAHT)

812,480

335,145

707,434

10,810 10,810 10,600 1.30

3,678 3,677 5,280

214 214 381

621 621 2,645

1.58

0.05

0.85

31

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

311,981


LOAN CONCENTRATION At the end of 2009, TBANK’s lending was concentrated mostly on hire purchase loans, which the Bank started providing the service since May 2005. The loan was accounted for 73.81 percent of total loans, a decrease from 76.17 percent in 2008.

Regarding the expansion and concentration of loans not including loans to parent and related companies, TBANK’s lending was more diversified towards loans in real estates and construction, manufacturing and commerce as well as infrastructure and service as the share of these loans increased to 16.97 percent from 15.54 percent in 2008.

LOANS CLASSIFIED BY BUSINESS TYPE IN 2008

LOANS CLASSIFIED BY BUSINESS TYPE IN 2009

Manufacturing and commerce, 4.92%

Real estate and construction, 5.61%

Manufacturing and commerce, 5.78%

Infrastructure and service, 5.00%

Others, 5.46%

Real estate and construction, 5.58% Infrastructure and service, 5.60%

Others, 6.74%

Housing, 2.84%

Housing, 2.49%

Hire purchase, 76.17%

Hire purchase, 73.81%

Note: Loans classified by business type excluded parent and related companies.

MATURITY OF DEBTORS The categorization of loans and accrued interest receivables in 2009 according to the remaining maturity indicated that most of the loans had more than one year remaining maturity which account for 87.39 of total loans and accrued interest receivables. Loans with remaining

maturity less than one year and loans at call accounted for 9.53 and 3.08 percent of total loans and accrued interest receivables respectively with the share of loans for more than one year maturity increased while the share of loans at call slightly declined in 2009.

8.10

6.33

(Year)

85.57

LOANS CLASSIFIED BY REMAINING MATURITIES

2008 At call

Less than one Yr

More than one Yr

0

10

87.39

3.08 9.53

2009

20

30

40

50 32

60

70

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

80

90

100

(Percent)


2. Loan classification according to the BOT’s notification As of 31 December 2009, TBANK’s loans and accrued interest receivables (including loans to financial institutions shown in the interbank and money market items) classified under the BOT’s notification registered at THB 335,145 million, an increase of THB 23,164 million or 7.42 percent from the past year. The Bank had set aside

allowance for doubtful accounts as of 31 December 2009 of THB 7,504 million and additional allowances for doubtful accounts of THB 214 million. As a result, the total allowance for doubtful accounts amounted to THB 7,718 million, a THB 1,353 million increase from the previous year. This led the ratio of total allowance for doubtful account to loans and accrued interest receivables to stage at 2.30 percent.

LOANS CLASSIFICATION ACCORDING TO THE BOT’S REGULATION LOANS AND INTEREST RECEIVABLES(1)

(Unit: Million Baht)

DEBT BALANCE/BOOK VALUE

ALLOWANCE FOR DOUBTFUL ACCOUNTS

31 DECEMBER 2009 31 DECEMBER 2008 31 DECEMBER 2009 31 DECEMBER 2008

Normal Special mention substandard doubtful doubtful of loss

308,928 17,830 1,336 2,005 5,046

280,590 24,186 1,547 1,629 4,029

909 188 968 1,181 4,258

752 178 1,163 1,156 3,019

Total

335,145

311,981

7,504

6,268

Additional allowance for doubtful accounts

214

97

Total allowance for doubtful accounts

7,718

6,365

Ratio of total allowance for doubtful accounts to total loans and interest receivables (percent) 2.30

2.04

Note: (1) The loan amounts of the normal and special mention accounts did not include the accrued interest receivables.

Bank’s main business, hire purchase. Nonetheless, the NPL ratio stood at only 2.49 percent and the NPL net provision totaled to THB 1,952 million, resulted in the ratio of net NPL to total loans of 0.59 percent. The allowance for doubtful accounts this year recorded at THB 7,718 million which accounted for 92.34 percent of the NPLs.

3. Non-performing Loans (NPLs) As of 31 December 2009, TBANK faced with an NPL in the amount of THB 8,359 million, an increase of THB 1,192 million from the end of the past year due to the economic slowdown that posed an adverse impact on the debt repayment ability of the debtors, especially in the NON-PERFORMING LOANS

(Unit: Million Baht)

Non-Performing Loans (NPLs) NPLs to total loans (percent) Total allowance for doubtful accounts Total allowance for doubtful accounts to NPLs (percent) NPL-net under the new BOT’s regulation NPL-net (percent)

33

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

31 DECEMBER 2009

31 DECEMBER 2008

8,359 2.49 7,718 92.34 1,952 0.59

7,167 2.30 6,365 88.80 1,830 0.60


NPLs CLASSIFIED BY BUSINESS TYPE Service, 1.25%

Others, 14.36%

CLASSIFIED NPLs

Hire purchase loans, 55.17%

Doubtful of loss, 60.16%

Substandard, 15.93%

Manufacturing and commerce, 10.89% Real estate and construction, 12.10%

Doubtful, 23.91%

Housing loans, 6.15%

4. Investment in Securities In 2009, TBANK’s total investments in securities totaled to THB 59,876 million, most of which was allocated to investments in government and state enterprise securities, accounted for 71.89 percent of the total investments in securities. The second largest share was in the available-for-sale foreign debt securities that the Bank had already entered into forward agreements to cover the foreign exchange risks in advance for both

foreign investments and related interests which accounted for 17.02 percent of total investments in securities of TBANK. After taking into consideration revaluation surplus (deficit) and allowance for impairment, net investments would total to THB 60,161 million in 2009, an increase from THB 22,104 million in 2008 or a 172.17 percent increase. The details of the 2009 investment in securities were as follows:

INVESTMENT IN SECURITIES CLASSIFIED BY TYPE OF INSTRUMENTS INVESTMENT CLASSIFIED BY TYPE

Debt securities Government and state enterprise securities • Trading securities • Available-for-sale securities • Held-to-maturity securities Private debt securities • Available-for-sale securities • Held-to-maturity securities Foreign debt securities • Available-for-sale securities • Held-to-maturity securities Equity securities Listed securities • Available-for-sale securities Unit trusts • Available-for-sale securities General investments Other securities Total investment in securities Add (Less) Allowance for revaluation Allowance for impairment Total investments-net

31 DECEMBER 2009

PERCENT

(Unit: Million Baht) 31 DECEMBER 2008

PERCENT

754 31,062 11,228

1.26 51.88 18.75

- 2,570 10,032

11.50 44.89

5,640 -

9.42 -

3,134 -

14.02 -

5,740 4,449

9.59 7.43

- 4,847

- 21.69

415

0.69

575

2.57

- - 468 0.78 120 0.20 59,876 100.00 396 (111) 60,161

416 655 117 22,346 (33) (209) 22,104

1.86 2.93 0.52 100.00

34

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities and shareholders’ equity Deposits Interbank and money market items (with interest) Liabilities payable on demand Loans Accrued interest payable Other liabilities Total liabilities Equity attributable to the Bank’s shareholders Total liabilities and shareholders’ equity

(Unit: Million Baht)

CHANGE FROM 2008

2009

2008

INCREASE/ (DECREASE)

PERCENT

266,727 21,678 2,112 90,936 1,029 5,040 387,523 26,355 413,878

270,832 7,030 1,317 62,288 1,735 3,742 346,944 21,270 368,215

(4,105) 14,648 795 28,648 (706) 1,298 40,579 5,085 45,663

(1.52) 208.35 60.39 45.99 (40.68) 34.70 11.70 23.91 12.40

• Deposits totaled to THB 266,727 million, a decline of 1.52 percent or THB 4,105 million from the end of the previous year. Most of the deposits had remaining maturity of less than one year, which accounted for 83.02 percent of the total deposits, declining from 99.48 percent of last year.

LIABILITIES AND SHAREHOLDERS’ EQUITY As of 31 December 2009, TBANK’s liabilities totaled to THB 387,523 million, an increase of THB 40,579 million or 11.70 percent from the end of 2008, most of which was attributed by a rise in short-term borrowings and interbank and money market items while deposits declined. The key items in liabilities can be listed as follows:

0.52

99.48

DEPOSITS CLASSIFIED BY REMAINING MATURITIES (Year) 2551 Less than one Yr

More than one Yr

0

10

20

30

40

16.98

83.02

2552

50

60

70

80

90

100

Foundation for Balance Growth of Rural Community-Plarnkhoi

(Percent)

Donated books, stationary and sporting equipment to the Foundation’s school in Ubon Ratchathani province that emphasized on teaching and learning in Buddhism, Dhamma and Thai ways based on principle of morals and religion together with education. The support was to mainly provide educational opportunities for the youth in rural area. 35

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


• Total interbank and money market items registered at THB 22,165 million, a rise of THB 14,496 million or 189.03 percent from last year. Out of this increase, THB 9,300 million was from domestic items while THB 5,196 million was from foreign items. • Total borrowings registered at THB 90,936 million, consisted of short-term borrowings amounted to THB 75,936 million and long-term borrowings of THB 15,000 million. Short-term borrowings increased by THB 28,008 million or 58.44 percent from last year while longterm borrowings also rose from last year by THB 640 million or 4.46 percent. During the second and third quarters of 2009, TBANK issued subordinated debentures in the amount of THB 7,000 million to support the continued expansion of credit lending into the future periods as well as to replace some fractions of borrowings that matured during the second quarter. The detailed of issued debentures can be stated as follows: - Unsecured and unconvertible subordinated debentures with a bondholder representative for the issuance in the amount of THB 2,000 million with a maturity of 10 years. The interest rate was at 5.25 percent for year 1-3, 5.75 percent for year 4-7 and 6.50 percent for year 8-10. - Unsecured and unconvertible subordinated debentures with a bondholder representative for the issuance in the amount of THB 5,000 million that can be divided into: 1. The issuance of THB 3,500 million for 10-year maturity with the interest rate of 5.25 percent for year 1-5 and 5.5 percent from year 6-10. 2. The issuance of THB 1,500 million for 15-year maturity with the interest rate of 5.25 percent for year 1-5, 6.0 percent from year 6-10 and 6.5 percent for year 11-15. SHAREHOLDERS’ EQUITY The shareholders’ equity as of 31 December 2009 was reported at THB 26,355 million, an increase of THB 5,085 million or 23.91 percent compared to the end of 2008. The increase was mainly due to the increase in net income and from an increase in the paid-up capital of THB 2,000 million during 2009. In the second quarter of 2009, TBANK paid out dividend from net income of 2008 to shareholders at a rate of THB 0.56 per share, totaled to THB 971 million. DEBT TO EQUITY RATIO Thanachart Bank’s debt to equity ratio decreased from 16.31 in 2008 to 14.70 in 2009.

OBLIGATIONS TBANK’s total obligation increased from THB 87,095 million in 2008 to THB 92,609 million in 2009. All items of obligations except obligations under unmatured import bills increased from that of 2008. Moreover, TBANK was obligated to an estimated share of potential losses from the sales of non-performing loans to the Thai Asset Management Company (TAMC) in the amount of around THB 89 million, of which a part was presented as allowance for impairment of long-term investment in debt securities. Moreover, the Bank was obligated to compensate losses from the sales of mortgage loans to the Secondary Mortgage Corporation (SMC). The compensation was for losses arising from the number of default mortgage loans up to a maximum of 20 percent of the value of the aforementioned loans, which as of 31 December 2009 did not exceed THB 2 million. LIQUIDITY At the end of 2009, TBANK’s cash flows received from financing activities amounted to THB 27,694 million while that of the operating activities was at THB 7,527 million. At the same time, the cash flow used in investment activities staged at THB 35,574 million. The Bank’s cash and cash equivalents therefore declined by THB 353 million. At end-2009, the Bank’s outstanding cash and cash equivalent registered at THB 3,665 million with major items listed as follows: • With regard to cash flows from financing activities, cash received from borrowings registered at THB 225,330 million and cash received from issued additional share of capital was at THB 2,000 million. At the same time, cash paid for loan repayment, interest from borrowings, and dividend was at THB 196,700 million, THB 1,964 million, and THB 971 million respectively. • Cash flows from the operating activities were due to an increase in interbank and money market items on liabilities recording at THB 14,496 million as well as a decline in deposits of 4,104 million Baht. Cash used in lending was at THB 17,109 million, while cash used in investment in trading securities and in interbank and money market items on assets was at THB 754 million and THB 577 million respectively. • Cash flows from investing activities were accounted for by an increase in investment in securities of THB 36,721 million and the purchase of equipment of THB 360 million. At the same time, cash received from interest on investments and dividend stood at THB 989 million and THB 514 million respectively. 36

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


(Unit: Million Baht) MAJOR CHANGES ITEMS

Cash flows from financing activities Cash flows from investing activities Cash flows from the operating activities Net increase (decrease) in cash Cash at beginning of the year Cash at end of the year

AT CALL

2008

27,694 (35,574) 7,527 (353) 4,017 3,665

(12,682) (6,496) 19,921 743 3,274 4,017

percent of deposits at call and 21.23 percent of borrowings with remaining maturity of less than one year. On the other hand, uses of funds was mostly concentrated in loans with remaining maturity of more than one year accounted for 52.18 percent of total uses of funds and loans with remaining maturity of less than one year accounted for 25.50 percent. However, the maturity mismatch between sources and uses of funds was considered normal in commercial bank and financial institution business. This was due to the behavior of most depositors to extend their deposits after the maturity. Furthermore, the Bank had conducted risk management policies that aimed at seeking for sources of funds that were most compatible with their uses through various financial instruments. This therefore enabled the Bank to recognize in advance the signal of any adverse impacts that would occur to the sources and uses of funds. Details of key sources and uses of funds classified by maturity date of each item since the balance sheet date as of 31 December 2009 were as follows:

CAPITAL EXPENDITURE In 2009, TBANK’s number of branches increased by 43 to the total of 256 branches, leading to expenses on rent, decoration, information technology system together with operating equipment. During the year, the Bank’s expenses on capital expenditure were THB 483 million. RELATIONSHIP BETWEEN SOURCES AND USES OF FUNDS In 2009, TBANK’s sources of funds were from deposits and borrowings of THB 266,727 million and THB 90,936 million respectively. For the uses of funds, THB 282,577 million was for loans and THB 64,358 million was for investments. The comparison between sources and uses of funds based on maturity of financial instruments dated in balance sheet as of 31 December 2009 illustrated that the major sources of funds were deposits with remaining maturity of less than one year which accounted for 38.76 percent of total sources of funds; followed by 23.15 TYPE

2009

LESS THAN 1 YR

MILLION PERCENT MILLION PERCENT BAHT BAHT

MORE THAN 1 YR

NOT SPECIFIED

MILLION PERCENT BAHT

MILLION PERCENT MILLION PERCENT BAHT BAHT

TOTAL

Sources of funds Deposits Borrowings

82,798 0

23.15 138,638 38.76 0.00 75,936 21.23

45,291 12.66 15,000 4.19

0 0

0.00 266,727 0.00 90,936

Total sources of funds

82,798

23.15 214,574 59.99

60,291 16.86

0

0.00 357,663 100.00

Uses of funds Loans(1) Investments

13,056 0

3.76 0.00

88,474 25.50 181,047 52.18 18,973 5.47 40,386 11.64

0 4,999

0.00 282,577 1.44 64,358

Total uses of funds

13,056

3.76 107,447 30.97 221,433 63.83

4,999

1.44 346,935 100.00

74.57 25.43

81.45 18.55

Note: (1) The outstanding balance of loans and debtors at call also included loans and debtors whose income recognition was put on hold.

calculated under Basel II standards was at 14.10 percent, an increase of 11.18 percent from the end of the previous year which was still well above the BOT’s minimum requirement at 8.50 percent. Details of ratio of capital to risk weighted assets could be listed as follows:

MAINTENANCE OF CAPITAL ADEQUACY RATIO As of 31 December 2009, TBANK’s total capital registered at THB 38,557 million of which THB 23,645 million was Tier 1 capital and THB 14,925 million was for Tier 2. The ratio of capital to risk weighted assets 37

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


CAPITAL ADEQUACY RATIO 31 DECEMBER 2009

Tier 1 capital Total capital

31 DECEMBER 2008

MILLION BAHT

PERCENT

MILLION BAHT

PERCENT

23,645 38,557

8.65 14.10

20,261 28,247

8.02 11.18

Net income before corporate income tax of TFUND as of 31 December of 2009 registered at THB 161.84 million, an increase of THB 1.10 million or 0.69 percent from the previous year. This was due to an increase in fee based and service income in 2009 that rose by THB 2.07 million or 0.48 percent from last year as well as a decline in total expenses of THB 6.36 million or 2.24 percent.

THANACHART SECURITIES PUBLIC COMPANY LIMITED

As of 31 December 2009, net income of Thanachart Securities Public Company Limited “TNS” was reported at THB 273.56 million, increased from the same period of the previous year by THB 176.64 million or 182.26 percent. Most of the increase resulted from income from brokerage fee on selling securities and derivatives that rose by THB 151 million or 19.18 percent, which was in line with the stock market condition and the higher market share of TNS. Furthermore, TNS’s increase in net income was also due to rising profit in securities trading of THB 84.70 million as well as sales and reversal of losses from the impairment of investment in securities which was realized in the previous period. On the other hand, the fee expenses on security business and personnel expenses also increased with the volume of transactions while other operating expenses declined due to the policy to control expenditure of TNS. TNS’s ratio of net liquid capital was at 148.09 percent which well exceed the 7 percent minimum requirement of the SEC.

THANACHART LIFE ASSURANCE COMPANY LIMITED

Insurance premium income of Thanachart Life Assurance Company Limited “TLIFE” as of 31 December 2009 increased from the previous year. However, TLIFE had to set aside insurance reserve in compliance with the Office of Insurance Commission (OIC) standards which resulted in the net operating income of this year of THB 120.38 million, a 229.92 million reduction from the same period of last year. The capital ratio was at 402.06 percent which was higher than the minimum requirement of the OIC at 150 percent.

THANACHART INSURANCE COMPANY LIMITED

Insurance premium income of Thanachart Insurance Company Limited “TNI” as of 31 December 2009 declined from the previous year due to the adjustment in TNI’s marketing strategies. Nevertheless, the efficient management of insurance compensation resulted in TNI’s net operating income of THB 225.00 million, an increase of THB 162.23 million or 258.45 percent from the previous year. The capital ratio was at 308.00, higher than the minimum requirement of the OIC at 150 percent.

THANACHART FUND MANAGEMENT COMPANY LIMITED

Net income of Thanachart Fund Management Company Limited “TFUND” as of 31 December 2009 totaled at THB 111.16 million, decreased from the same period of last year by THB 12.16 million or 9.86 percent. This was a result of the recording of income from reacquired bad debt in 2008 at the amount of THB 1.44 million of which the tax incentives from such item could be deducted from the TFUND tax payment. However, TFUND’s tax payment in 2009 was in full.

Foundation for Slum Child Care Set up donation boxes at all the Bank’s branches to raise funds in support of the Foundation as well as encourage donations from customers, executives and Thanachart Group’s employees to support the child’s living conditions, education and quality of live. 38

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


NATURE OF BUSINESS OPERATIONS

trust underwriting and repurchasing services as well as securities registrar. 4. Thanachart Fund Management Company Limited “TFUND” which is a joint venture between TBANK (holding 75 percent of the total shares) and The Government Savings Bank (holding 25 percent) operates mutual fund, private fund and provident fund management businesses. In addition, TFUND operates investment advisory business. As a result, it is considered a company with a full range of advisory services. 5. Thanachart Insurance Company Limited “TNI” gives non-life insurance services including fire insurance, automobile insurance, marine and transportation insurance, and miscellaneous insurance. 6. Thanachart Life Assurance Company Limited “TLIFE” gives life insurance and health insurance services. Based on the characteristics of customers, its services can be divided into two main types including ordinary life insurance and group life insurance. 7. Thanachart Group Leasing Company Limited “TGL” gives automobile hire purchase loans. 8. NFS Asset Management Company Limited “NFS AMC” was granted a license to operate asset management business. It buys or takes transfers of non-performing loans from financial institutions of Thanachart Group. 9. MAX Asset Management Company Limited “MAX AMC” was granted a license to operate asset management business. It buys or takes transfers of non-performing loans from financial institutions. 10. T Leasing Company Limited “TLEASING” was granted a license to operate motorcycle hire purchase business. (B) THE MEMBER COMPANIES THAT OPERATE SUPPORTING BUSINESSES: 1. Thanachart Legal and Appraisal Company Limited “TLA” gives legal services related to contracts, legal advice, bringing cases to court of law, legal enforcement, and appraisal of collateral.

OVERVIEW OF THE BUSINESS OPERATIONS Thanachart Bank Public Company Limited “TBANK” is the company of Thanachart Financial Conglomerate with Thanachart Capital Public Company Limited “TCAP” as a parent company. The companies under Thanachart Financial Conglomerate are classified by their types of business into two groups: (1) financial business group and (2) supporting business group. The Conglomerate could be considered a fully integrated financial business group whose businesses and operations are clearly separated. As regards the distribution channels, member companies of the Group make use of the branch network and service outlets of TBANK as channels for offering their respective financial services. The arrangements are in compliance with the promotion guidelines given by the regulators concerned. The details of the business operations of each company are as follows: (A) THE MEMBER COMPANIES THAT OPERATE FINANCIAL BUSINESSES 1. Thanachart Capital Public Company Limited “TCAP” operates as the holding company and thus is a parent company of Thanachart Financial Conglomerate. 2. Thanachart Bank Public Company Limited “TBANK” operates commercial banking business and other businesses permitted by the BOT, such as selling life and non-life insurance products, and underwriting and repurchasing of unit trusts. 3. Thanachart Securities Public Company Limited “TNS” was granted a Full License from the Ministry of Finance to operate full range of securities businesses including securities brokerage, proprietary trading, securities underwriting, investment advisory service, mutual fund management, private fund management, securities borrowing and lending, venture capital management and derivatives business Sor 1. As well, TNS is engaged in other related businesses that support the securities business. These include, among others, financial advisory services, futures businesses, unit 39

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


SHAREHOLDING STRUCTURE OF THANACHART GROUP AS AT 31 DECEMBER 2009 THANACHART CAPITAL PUBLIC COMPANY LIMITED The Bank of Nova Scotia

Financial Business Group

COMMERCIAL BANKING BUSINESS

48.99%

50.92%

Non-Financial Business Group

ASSET MANAGEMENT BUSINESS 100%

100%

NFS Asset Management Company Limited

Thanachart SPV 01 Company Limited

83.44%

Thanachart Bank Public Company Limited

Max Asset Management Company Limited

Financial Business

Supporting Business 100%

100%

Thanachart Securities Public Company Limited SECURITIES BUSINESS

Thanachart Broker Company Limited

75%

Thanachart Management and Services Company Limited

Thanachart Fund Management Company Limited

100%

100%

Thanachart Insurance Company Limited INSURANCE BUSINESS

100%

Thanachart Legal and Appraisal Company Limited 100%

100%

Thanachart Training and Development Company Limited

Thanachart Life Assurance Company Limited 100%

T Leasing Company Limited LEASING BUSINESS

100%

100%

Thanachart Group Leasing Company Limited

National Leasing Company Limited

Note: The above shareholdings include shares held by the related parties.

2. Thanachart Management and Services Company Limited “TMS” gives staffing support services in the form of service staff. 3. Thanachart Training and Development Company Limited “TTD” organizes training activities for employees of member companies of Thanachart Group. 4. Thanachart Broker Company Limited “TBROKE” pursues Thanachart Group hire purchase customers to insure automobiles with all insurance companies. It is also an automobile insurance broker of TNI.

POLICY ON DIVISION OF OPERATIONAL FUNCTIONS AMONG MEMBER COMPANIES OF THANACHART GROUP Being a parent company of Thanachart Financial Conglomerate with a controlling interest (i.e. owning more than 50 percent of issued and paid-up capital), TCAP has adopted the following policies and approaches in managing the member companies of the Group. BUSINESS POLICIES TCAP and TBANK are responsible for establishing key business policies of Thanachart Group annually. Each subsidiary is required to formulate business plans and 40

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


budgets for 3-5 years and submit them to the parent company for consideration, in order to ensure that they are in alignment with the established key business policies. The business plans and budgets are also subject to evaluation and review regularly. The objective is to ensure that they are in line with the changing business conditions.

As regards the internal audit, the internal audit group is responsible for auditing the business operations of all member companies of the Group, ensuring that they comply with the regulations and the established work systems. The internal audit group also assesses errors and defects in operations in order to propose corrective measures for improvement. In addition, Thanachart Group has established a Compliance Unit responsible for closely monitoring and studying laws, notifications, and orders related to the Group’s business affairs and operations and disseminating the information to the staff. The Compliance Unit is also responsible for ensuring that the conduct of business affairs of the member companies of the Group is in compliance with the legal requirements. Moreover, the Audit Committee of each member company of the Group is responsible for governing, controlling, and auditing their respective business operations. The Audit Committee is also allowed to carry out its duties and give its opinions in a manner independent of the management of each company. The purpose is to ensure that internal control and audit systems are effective and that the financial statements are properly reviewed. As regards the corporate governance, the Boards of Directors of the TCAP and the companies in the Group place strong emphasis on the good corporate governance both at the level of the Board of Directors and the level of various Committees. Independent directors are appointed to the Board of Directors and the Committees to provide effective checks and balances on the powers of executive directors. The established scope of responsibilities of the Board of Directors and the Committees is also in line with the principles of good corporate governance promoted by the authorities concerned. In addition, the Boards of Directors of the TCAP and the subsidiaries have established the corporate governance policy and the code of conduct which the directors, executives and staff of the member companies of Thanachart Group are required to adhere to. Focus is given to integrity, transparency and avoidance of any conflict of interest.

SUPERVISION OF SUBSIDIARIES The directors and high-ranking executives of TCAP and TBANK will be assigned to sit on the Board of Directors of the subsidiaries. The arrangement not only enables TCAP and TBANK to assist the subsidiaries in establishing their policies and in determining their future direction, but also ensures the close supervision of the subsidiaries’ business operations. Importantly, the chief executive officers of the subsidiaries are required to present a monthly performance report to the Executive Committees and the Boards of Directors of TBANK and TCAP. CENTRALIZED SUPPORT SERVICES It is the policy of Thanachart Group to put each of the support services together in one company which will be responsible for providing services to all other member companies of the Group. The purpose is to maximize benefits within the existing resources including expertise of operations staff and various information technology systems, and to reduce staffing costs. The centralized support services available now within Thanachart Group include information technology, personnel, systems and regulatory development, internal audit, operations control, operations, business control, electronic services, administration and procurement, legal and appraisal services, as well as retail debt collections and collections brokerage. INTERNAL CONTROL, AUDIT, AND CORPORATE GOVERNANCE OF PARENT COMPANY AND SUBSIDIARIES Thanachart Group places strong emphasis on internal control. The Group adheres to the principle of adequate and appropriate internal control by establishing procedures for the conduct of business, provision of services, and operations. The Group also separates the duties and responsibilities of each unit from those of others, based on a system of checks and balances. In addition, it puts in writing the announcements as well as order mandates, rules and regulations covering key business areas and operations, and these information is also disclosed to all staff in such a way that they can always study them in order to gain a full understanding. A central unit at TBANK is responsible for preparing and proposing for the announcements, order mandates, rules and regulations of all member companies of the Group.

RISK MANAGEMENT TCAP ensures that the member companies of the Group analyze and assess various risks of their business operations and that the risks are properly managed in line with the guidelines given by the authorities concerned. In addition, TCAP conducts analysis of the key risks faced by the member companies of the Group which may need direct financial or management support from TCAP. The established risk management policy of Thanachart Financial Conglomerate is in line with the guidelines given by the BOT. 41

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


INCOME STRUCTURE OF THANACHART BANK AND ITS SUBSIDARIES

The income structure of TBANK and its subsidiaries based on the consolidated financial statements as of 31 December 2009, 2008 and 2007 was as follows: PERCENTAGE SHAREHOLDING OF TBANK (WITH RELATED PARTIES)

INTEREST AND DIVIDEND INCOME Thanachart Bank Plc. Thanachart Securities Plc. 100.00 Thanachart Fund Management Co., Ltd. 75.00 Thanachart Insurance Co., Ltd. 100.00 Thanachart Life Assurance Co., Ltd. 100.00 Thanachart Group Leasing Co., Ltd. 100.00 Thanachart Broker Co., Ltd. 100.00 Thanachart Management and Services Co., Ltd. 100.00 Thanachart Legal and Appraisal Co., Ltd. 100.00 Thanachart Training and Development Co., Ltd. 100.00 T Leasing Co., Ltd. 100.00 National Leasing Co., Ltd. 100.00 TOTAL INTEREST AND DIVIDEND INCOME INTEREST EXPENSE Thanachart Bank Plc. Thanachart Securities Plc. 100.00 Thanachart Fund Management Co., Ltd. 75.00 Thanachart Insurance Co., Ltd. 100.00 Thanachart Life Assurance Co., Ltd. 100.00 Thanachart Group Leasing Co., Ltd. 100.00 Thanachart Broker Co., Ltd. 100.00 Thanachart Management and Services Co., Ltd. 100.00 Thanachart Legal and Appraisal Co., Ltd. 100.00 Thanachart Training and Development Co., Ltd. 100.00 T Leasing Co., Ltd. 100.00 National Leasing Co., Ltd. 100.00 TOTAL INTEREST EXPENSE NET INTEREST AND DIVIDEND INCOME NON-INTEREST INCOME Thanachart Bank Plc. Thanachart Securities Plc. 100.00 Thanachart Fund Management Co., Ltd. 75.00 Thanachart Insurance Co., Ltd. 100.00 Thanachart Life Assurance Co., Ltd. 100.00 Thanachart Group Leasing Co., Ltd. 100.00 Thanachart Broker Co., Ltd. 100.00 Thanachart Management and Services Co., Ltd. 100.00 Thanachart Legal and Appraisal Co., Ltd. 100.00 Thanachart Training and Development Co., Ltd. 100.00 T Leasing Co., Ltd. 100.00 National Leasing Co., Ltd. 100.00 TOTAL NON-INTEREST INCOME TOTAL INTEREST AND DIVIDEND INCOME AND NON-INTEREST INCOME

CONSOLIDATED FINANCIAL STATEMENTS

2009 2008 2007 MILLION PERCENT MILLION PERCENT MILLION PERCENT BAHT BAHT BAHT

20,282 104 2 68 384 356 - - - - 271 3 21,470 6,734 1 - - - - - - - - - 1 6,736 14,734 2,393 1,027 437 2,672 11,637 96 57 1 43 - 37 3 18,403

61.21 0.31 - 0.21 1.16 1.07 - - - - 0.82 0.01 64.79 20.33 - - - - - - - - - - - 20.33 44.46 7.22 3.10 1.32 8.07 35.12 0.29 0.17 - 0.13 - 0.11 0.01 55.54

88.60 17,051 120.05 0.67 42 0.30 0.03 3 0.02 0.40 29 0.20 1.44 84 0.59 2.13 238 1.68 0.01 1 0.01 - - - - - - - - - 1.15 20 0.14 0.01 20 0.14 94.44 17,488 123.13 42.80 9,364 65.93 0.01 1 0.01 - - - - - - - - - 0.04 23 0.16 - - - - - - 0.01 - - - - - - - - 0.04 8 0.06 42.90 9,396 66.16 51.54 8,092 56.97 8.81 1,914 13.48 3.62 479 3.37 1.99 215 1.51 11.43 1,088 7.66 21.37 2,282 16.07 0.30 46 0.32 0.43 45 0.32 0.01 1 0.01 0.24 29 0.20 - - - 0.22 5 0.04 0.04 7 0.05 48.46 6,111 43.03

33,137 100.00 21,905 100.00 14,203 100.00

Note: The Bank discloses the investment policy under the topic of assets used in business operation. 42

19,407 147 7 87 317 466 1 - - - 253 3 20,688 9,376 3 - - - 9 - - 1 - - 9 9,398 11,290 1,929 793 436 2,504 4,682 65 94 1 52 - 49 10 10,615

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Income structure of TBANK based on separated financial statements for the year ended 31 December 2009, 2008 and 2007 was as follows: 2009

FOR THE YEAR ENDED 31 DECEMBER 2008 2007

MILLION PERCENT MILLION PERCENT MILLION PERCENT BAHT BAHT BAHT

Interest and dividend income Interest expenses Net interest and dividend income Non-interest income Total interest and dividend income and non-interest income

20,934 123.45 6,791 40.05 14,143 83.40 2,815 16.60 16,958 100.00

NATURE OF BUSINESS OPERATION OF EACH BUSINESS GROUP

In addition to the goal of becoming a fully integrated financial services group, Thanachart Group has set itself a goal of becoming a leading mid-sized bank in the country’s commercial banking industry through organic growth, i.e. having an asset size suitable for business competition and achieving financial performance at the same level as the average of the commercial banking industry. As a result, Thanachart Group places strong emphasis on expanding both corporate and retail customer base together. Currently, the Group is quite well prepared and has a competitive advantage. It also places strong emphasis on risk management so that the risk assets diversification is the key factor that drives the Group to have a sustainable growth. Therefore, the expansion of corporate and SME loans is being implemented for providing its customers with more alternatives. Moreover, with the cooperation from The Bank of Nova Scotia “Scotiabank” in developing new businesses, Thanachart Group offers new products such as credit card business, trade finance business and treasury, in order to provide its customers with superior range of new products. Also, for the Group strong growth structure, the Group puts in place the importance of the balance of income between interest income and fee-based income by developing fee-based income business and promoting cross-selling. The Group has communicated these goals to the staff throughout the organization in the form of nine strategic intents with the details as follows: 1. To meet all strategic financial targets 2. To maintain market leader in hire purchase business

BUSINESS POLICY AND STRATEGIES OF THANACHART GROUP In 2009, Thanachart Group determined its strategic direction in becoming a fully integrated financial services group that is capable of offering quality products and services that cater to the financial needs of the targeted groups of customers in an efficient manner. To move in the right strategic direction, Thanachart Group has come up with a vision based on the fully integrated financial services group by “Being a business group that offers fully integrated financial services with focus on creation of service excellence and development of various products that cater to all the financial needs of its target groups of customers, with the cooperation and solidarity of all the members of the group.” Such vision is based on three major fundamentals. The first fundamental is the business group which has fully integrated financial services (Universal Banking) with Thanachart Bank being the main channel for offering the services. The second one is the ability to cater to customers’ needs (Customer Centric) while the third one is the cooperation received from all the work units as well as the unity among them (Synergy). Moreover, the efforts based on the three major fundamentals will not only help Thanachart Group to become a successful financial institution with fully integrated financial services, but will also be the key drivers in making the Group become one of Thailand’s leading banks over the next three to five years. 43

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

19,897 157.04 17,123 175.77 9,429 74.42 9,386 96.35 10,468 82.62 7,737 79.42 2,202 17.38 2,005 20.58 12,670 100.00 9,742 100.00


3. To increase in customer accessibility 4. To diversify business loan portfolio 5. To have a drastic improvement in Cross-selling 6. To grow by increasing fee-based income proportion 7. To enhance our productivity and cost effectiveness 8. To achieve “Best-in-Class” in customer servicing 9. To build-up our brand strengthening Being in line with the vision and strategies established by Thanachart Group, the above strategic intents are communicated to all staff at all levels so that they all share the same determination. In order that the strategies are in alignment, efficiently measurable and able to control the organization systematically, Thanachart Group has developed a long term plan entitled “CEO’s Six-point Agenda” which serves as a key tool to effectively and systematically control the key business plans of all the business units of the Group.

PRODUCTS & SERVICES

GROUP 1 DEPOSIT PRODUCTS

BUSINESS OPERATIONS OF EACH BUSINESS GROUP COMMERCIAL BANKING BUSINESS

CHARACTERISTICS OF SERVICES TBANK operates its businesses in compliance with the Financial Institutions Businesses Act and other relevant notifications issued by the BOT. Among others, TBANK also acts as an advisor for investments in unit trusts and securities trading account opening, a life insurance brokerage agent, a financial advisor, an agent for bondholders, and a custodian. As at 31 December 2009, TBANK had in total 256 branches (excluding the headquarters), 401 ATMs (both in-branches and stand-alone), 3 Cash Deposit Machines (CDMs), 91 foreign exchange booths, 76 of which are in-branches, as well as 15 foreign exchange offices. GROUP OF PRODUCTS OF SERVICES TBANK improves and develops products to better serve the customer needs. Its four main products and services include deposits, loans, electronic services, and others.

CHARACTERISTICS

COMPETITIVE STRATEGIES

Deposit products are offered to customer groups, both retail and corporate, through its service outlets. It has four major types of deposit products including savings deposits, fixed deposits, current deposits, and foreign currency deposits.

In 2009, TBANK developed and offered two new deposits products to its customers under the name of “Ultra Savings” and “Premium Current”. This was for catering to all financial needs of its customers and covering new target group of customers. In addition, the product package was promoted to existing and current customers through product bundling, cross-selling, and up-selling. The strategy was supported by the Customer Segmentation. The Bank also promoted the “Prestige Banking Service” which is the program that serves and gives privileges to the Bank’s high net worth customers. The products and services were offered through various channels including branch network, electronic channels, sales and marketing teams as well as its business alliance network.

44

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


PRODUCTS & SERVICES

GROUP 2 LENDING PRODUCTS

CHARACTERISTICS

COMPETITIVE STRATEGIES

1. Personal Loans: (1) Mortgage loans under the brand of “Home 4 You”. (2) Multi-purposed loans named “TBank Home Plus”. (3) Education loans called “Scholar Loan” (4) Wish-list loans are credit lines given to the hire purchase customers with good repayment records. (5) Credit Card offered under the name of Thanachart Drive Visa/Master Card and given to the hire purchase customers with good repayment records and depositors.

TBANK places emphasis on efficient service delivery and on offer of fully integrated products that catered to all customer needs. As well, marketing promotion, which is in line with the situation and competitive condition, is highlighted. The Retail Banking Department is responsible for developing products, terms, as well as interest rates charged. The target customers are divided into four groups, i.e. customers who need home loans, customers who need personal loans with houses as collateral, hire purchase customers with good repayment records, and customers who need to study further in a higher level. The main distribution channel is personal sales and marketing team that looked after the sales target set in the business plan. Moreover, branch network is set to advertise personal loans or new products to the customers.

2. Automobile SMEs TBANK offers this product to entrepreneurs who have short-term financial needs with the proceeds of the loans to be used as their working capital or for enhancing their liquidity position as well as those who have long-term financial needs with the proceeds of the loans to be used for business expansion or reducing funding cost. These include, among others, guarantee/avals and trade finance.

TBANK places emphasis on lending to car related entrepreneurs. The plan is set together between the Product Development team and Marketing team. Focus is given to selection of the target customers, whom the Bank has database and good relationships with. Also, the Bank continues placing emphasis on promoting good relationships with its customers by providing the customers with advice on financial and business planning. This is for maintaining the Bank’s existing customers. TBANK continues developing loan products that incorporate other financial services, ensuring that the customers have the credit line of credit and products that match their financial needs as well as the financial structure that is appropriate to their business operations. Loan approval authority is delegated by making use of the credit scoring techniques as a main tool in screening and approving applications for standard loan products. The main distribution channels are in Bangkok and its vicinity and in the upcountry.

3. Corporate Loans TBANK divides corporate finance customers into three groups as follows; (1) Large scale businesses which are the group of customers with annual sales revenue of over THB 1,000 million, (2) Medium-sized businesses including the group of customers with annual sales revenue of over THB 300 million

TBANK sets the corporate lending policies in line with the economic growth as well as the risks which could arise from giving loans. The Bank attempts to manage the correlation between risks and the rate of return at an acceptable level. Also, the Bank puts an effort to control the quality of loans and develop the corporate banking team to be more professional. The Investment Banking Group was set for providing customers with a full range of financial advice aiming at catering to all customers’ needs. Apart from the Bank’s policy of providing loans, the corporate banking team places emphasis on tying up relationships with customers and being total solution 45

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PRODUCTS & SERVICES

CHARACTERISTICS

COMPETITIVE STRATEGIES

who are located in Bangkok and its vicinity and intend to get a loan worth more than THB 50 million from TBANK, as well as the group of customers with annual sales revenue of over THB 200 million who are located outside Bangkok and its vicinity and intend to get a loan worth more than THB 25 million. (3) Small scale businesses which include the group of customers with annual sales revenue of less than THB 300 million who are located in Bangkok and its vicinity and intend to get a loan worth less than THB 50 million from TBANK as well as the group of customers with annual sales revenue of less than THB 200 million who are located outside Bangkok and its vicinity and intend to get a loan worth less than THB 25 million.

provider, resulting in the sustainable growth of the customers. Moreover, TBANK established the Product Development Division for corporate customers. The department is responsible for designing products and services that meet the needs of the customers in a most efficient manner. As well, the Bank invested in credit systems and streamlined the internal work process, ensuring that they are shorter and more flexible. The objective is to give services to the customers more efficiently. Focus is given to large and medium scale customers with strong performance, particularly those in the target sector in Bangkok and in the upcountry. Focus is also given to expansion of the client base to cover supply chain of the target customer groups. The channels of distribution includes TBANK head office, cross selling of the Group, branch network, business alliance network, as well as electronic banking.

TBANK streamlines the loan process with cautious manners. The loans services are provided at the head office and branches in every provincial area. The Bank sets the policy to offer a competitive price in the market and also makes the terms of its hire purchase loans more flexible within the limits established. In addition, TBANK places emphasis on after-sale services, sales promotion activities with the car dealers in aggressive and passive styles, as well as establishing relationships with the auto manufacturers’ companies which give hire purchase loans. The Bank also adopts a market penetration strategy aims at gaining a larger market share of the automobile hire purchase business. It invites the customers who have used the Bank’s services before, to get a hire purchase loan from the Bank again to buy their second car. In addition, TBANK focuses its marketing efforts on the customers using the hire purchase services of other companies as well as those who have never used the hire purchase services before, such as individual or corporate clients who purchase their cars by cash. The Bank also increases channels through its customer base by focusing on the high potential customers and organizing special campaign with car dealers offered to specific customer groups.

4. Hire Purchase Loans TBANK gives hire purchase loans with focus given to loans for new and used cars. The Bank also offers the sale and leaseback services under the product named ‘Cash Your Car’. This product is in response to hire purchase consumers who need cash. Moreover, TBANK also has other carrelated projects such as the NGV loan project which is jointly supported by TBANK and PTT. Under the project, TBANK gives loans at a low interest rate for installing NGV equipment and tank, in line with the promotion to reduce the use of crude oil and to protect the environment.

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PRODUCTS & SERVICES

GROUP 3 ELECTRONIC PRODUCTS AND SERVICES

CHARACTERISTICS

COMPETITIVE STRATEGIES

5. Trade Finance TBANK provides a full range of trade finance products and services including Import L/C, Trust Receipt, Packing Credit, Export Bill Negotiation, Standby L/C, and Letter of Guarantee.

Accuracy in services, convenience, interest rates, and fees are the main variables in encouraging the customers to use the Bank’s trade finance services. The Bank takes into consideration the income from business transaction of customers and the creation of customer base as the main concerns. The target groups of customers are corporate, SME, and retail clients. For the corporate clients, the Bank has the target to build up future customer base and expand its network around the world. On the other hand, SME and retail clients are considered as the main sources of income. The services are provided through corporate and SME loans marketing officers and the Bank branch network.

TBANK offers electronic products and services that enable financial transactions of its customers to be processed in a more efficient manner. These services include fund transfer service, Automatic Transfer Service (ATS), online settlement for financial transactions through the Bank of Thailand’s Automatic High-Volume Transaction Network (BAHTNET), automatic money transfers between banks (SMART) and bill payment service through various channels of the Bank.

The competitive strategy focuses on appropriate fee pricing and sales promotions including cross-selling and up-selling. Using this strategy, TBANK could propose its services to both small and large scale companies. The Bank increases the promotion campaign to attract the customers aiming at easy accessibility and services. For example, customers can draw down the loan on the date when the transaction is executed. Branches have been opened in shopping centers focusing on customers who want convenient service and safety money transfer. In addition, TBANK has developed e-service system to better serve the needs of customers.

TBANK has expanded its branch network and foreign exchange offices to serve all business sectors and tourists nationwide. The Bank also adjusts exchange rates by benchmarking with the movements of the world’s currency market. As a result, its customers receive the real time rates and fair prices.

GROUP 4 1. Foreign Exchange Services OTHER PRODUCTS TBANK services include foreign exchange services in form of bank notes and traveler checks; money changers; forward foreign exchange for customers’ international trading business transaction; foreign currency transfers in/out of the country for payments of goods or for transfers into personal accounts; and opening of Foreign Currency Deposit (FCD) accounts and etc.

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PRODUCTS & SERVICES

CHARACTERISTICS

COMPETITIVE STRATEGIES

2. Bill of Exchange TBANK has expanded its bill of exchange products and services to every branch nationwide. This results in the more convenience for the customers and the increase in service accessibility to cover all areas. The product is well accepted and accredited by the customers.

In 2009, TBANK developed methods of B/E services to be convenient, safety, and more confident given to its customers. In this connection, the B/E books which were for checking transaction lists and outstanding of investments in each Bank’s B/E were introduced to the customers. TBANK also facilitated its customers by transferring payments of principal and interest when the B/E matures or transferring a payment of interest of each period automatically to the customers’ savings accounts or current accounts as stated in each purchase order. Target customers are depositors both individual and corporate clients who have knowledge, understanding, and experience in investing in debt instruments and accept a certain level of the Bank’s credit risk.

3. Bondholder Representative Services TBANK’s securities business support services are, for example, custodian, trustee, fund supervisor, and bondholder representative according to the approvals from the BOT and the SEC.

Securities Supportive Services Business have been growing in parallel with the capital market. TBANK recognized this as an opportunity, and thus, attained the Bondholders’ Representative service in order to have full financial services and better satisfy the customer’s needs. By the end of 2005, the Bondholders’ Representative service was transferred from TCAP and the service was entrusted by the regular customers of TBANK. In 2008, TBANK further enhanced its service by acquiring permission to operate Custodian and Trustee services. However with high competition in the securities supportive services business which resulted in low profit margin, business operators turned to use cost leadership tactic-emphasis on volume created cost saving together with a strategy to cross-sell other financial services.

Khon Troupes for Culture Preservation Donated fund to support Mr. Somsong Khun-arj (Khru Chu Cheep), the role-modeled teacher who devoted himself in teaching ‘Khon’ traditional dance to the interested children which helped preserve the Thai culture for the future generations. 48

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INFLUENTIAL FACTORS OR CONSTRAINTS ON BUSINESS OPERATION

INDUSTRY OUTLOOK AND COMPETITION At the end of 2009, there were a total of 32 commercial banks in the industry, of which 17 banks were listed and 15 banks were foreign bank’s branch. Considering the deposits amount of the commercial banking industry, the total amount was THB 7,121,319 million, of which THB 6,654,901 million or 93.45 percent of total deposits came from listed commercial banks and THB 466,418 million or 6.55 percent of total deposits came from foreign bank’s branch. At the end of 2009, deposits in Thai commercial banking industry grew 0.08 percent from the same period last year. The slower rate was a result of the downward trend of interest rate which caused the investors to transfer their investments to other types of instruments. Considering the net loans of the commercial banking industry, the total amount was THB 7,807,233 million, of which THB 6,964,834 million or 89.21 percent of total loans came from listed commercial banks and THB 842,395 million or 10.79 percent came from foreign bank’s branch, similar to that of the previous year. Apart the competition in the commercial banking system, there is also competition in the financial system such as non-banks, financial market, capital market, as well as the state’s specialized financial institutions, which play a more active role in the economic system, as a result of the changes in the regulators’ rules and regulations. The changes allow for more flexibility and prepare the industry for the financial liberalization in the future. The keener competition has caused the commercial banks to adopt non-price strategies, such as developing a more diverse range of financial products, increasing more distribution channels, improving quality of service, and establishing business alliances in the finance business. The objective is to provide the customers with greater convenience and to cater to all the financial needs of the customers. Moreover, the commercial banks place strong emphasis on building a positive corporate image for their organization, e.g. by organizing public relations activities and corporate social responsibility (CSR) activities. The non-price strategies are in addition to the price strategy which remains the principal strategy pursued by the commercial banks.

In 2009, credit lending to private sector of the financial institution expanded at a slower rate, mainly due to a low demand both domestic and foreign which resulted in less demand in loans. Moreover, commercial banks became more strict in credit lending policy in order to prevent bad debts. Hire purchase loan was affected from the economic condition. The sale volume for both car and motorcycle in 2009 have decreased, resulting in a decrease in new business loan for hire purchase. Apart from the economic and political factors, changes initiated by the authorities concerned in some areas represented business constraints in the short-term but helped strengthen the financial system and standardize the Thai commercial banking system in the long-term. After the Financial Institution Business Act B.E. 2551 became effective, BOT implemented Basel II Pillar 2 in the commercial banking industry, which affected the calculation of the capital adequacy and risk assessment and consolidated supervision regulation. Consequently, commercial banks shall adhere to the capital adequacy, related business, credit lending, investment, obligation, risk management of the financial business group, and etc. Moreover, the good corporate governance emphasized on the directors and executives to supervise all activities of the financial institutions, and thus, allowed business operation to be transparent an without a conflict of interest. The key positive contributing factors in the commercial banking business during 2009 included permission request, framework expansion, service expansion of the commercial banks, such as: • permission for commercial banks to operate private repo business for lending, borrowing of foreign currency by using foreign currency debt securities as collateral with eight types of institutional investors by the currency exchange control staff. • permission for commercial bank to borrow and lend foreign securities with eight types of institutional investors permitted by the currency exchange control staff • expanding service scope for commercial banks being able to provide supportive services and other insourcing services.

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Loan growth in 2010 will be supported by the first economic stimulus policy from the government in the amount of THB 280,000 million to stimulate income distribution, job creation in upcountry and to increase purchasing power. The second economic stimulus policy was in the amount of THB 1.43 trillion to stimulate regional economy. Also, there were previous economic stimulus measures through special financial institutions in order to support small and medium enterprise loans and consumer lending. The risk factors in 2010 remain to be the unstable political circumstance, which could affect the confidence of invests. Another issue is Map Ta Phut conflict which has not yet arrived to any conclusive resolution. This could affect in the corporate loan slowdown in 2010. As for regulatory risk, the effect will not be apparent in 2010. The effect on commercial banking business is expected to present itself in 2011 and 2012 which means that commercial banking sector still has couple of years to make adjustment.

The most recent Monetary Policy Committee “MPC” meeting on 13 January 2010 has maintained a 1.25 percent policy rate, the same rate since April 2009. At the end of 4th quarter 2009, interest rate on 1-year fixed deposit of the commercial banks was in the range of 0.65-1.60 percent while loan rate of the listed commercial banks was in the range of 6.44-7.13 percent. Consequently, interest spread of the commercial banks was in the range of 5.53-5.79 percent. THE BANK’S SIZE COMPARED TO COMPETITORS At the end of 2009, TBANK had THB 432,970 million in total assets, accounted for 5.02 percent market share. The Bank was ranked number 7 in the commercial bank industry. TBANK captured 5.09 percent market share for deposits and short-term borrowings, equivalent to THB 341,496 million, and was ranked number 7 among the commercial bank industry. The Bank’s total loans were THB 283,571 million, accounted for 4.75 percent market share, and was ranked number 7 among the commercial bank industry. FUTURE TREND OF COMPETITION Many economic indicators, whether domestic or foreign, have shown sign of improvement. The Thai economy in 2010 was expected to experience continuous expansion, as a result of revived global economy, government stimulus measures and improved business confidence. Inflation in 2010 was expected to increase at high accelerated rate until the end of the year. This was a result of oil price that had experienced a sharp decrease in the previous year. The accelerated increase should happen only in the 1st quarter and the inflation should maintain at around 2-4 percent after that. The increased inflation does not fully reflect the price adjustment of products and services. It was mainly a result of oil price adjustment. The trend of the banking industry in Thailand in 2010 is that electronic banking will continue to develop, which will result in the fee base income generating, as well as, other services for customer group, such as internet banking, cash management, mobile banking and etc. Moreover, strategic alliances with other businesses will enhance capability in order to better satisfy the various needs of customers. This includes cross-selling among the financial business group, e.g. Bancassurance of life and non-life insurance businesses, and etc.

PRODUCTS OF SECURITIES BUSINESS AND FUND MANAGEMENT BUSINESS

Securities Business is provided through Thanachart Securities Public Company Limited “TNS”. The company was granted a Full License to operate full range of securities businesses including securities brokerage, proprietary trading, securities underwriting, investment advisory service, mutual fund management, private fund management, securities borrowing and lending, venture capital management, and derivatives business Sor 1. As well, the company is engaged in other related businesses that support the securities business. As for Fund Management Business, the service is provided through Thanachart Fund Management Company Limited “TFUND” who operates mutual fund, private fund, and provident fund management businesses. In addition, the company also operates investment advisory business. SECURITIES BUSINESS PRODUCTS AND SERVICES TNS operates two key areas of business, brokerage business and investment banking and advisory business. As of 31 December 2009, the company had a total of 25 branches and offered the following services: 50

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


average daily trading volume was higher than that of 2008 and peaked as the highest volume in the past 5 years. Retail client transaction captured the highest volume while foreign client transaction returned to be net buy. In 2009, there were a total of 17 listed companies (6 companies in SET and 11 companies in mai) and 5 property funds that raised capital in the primary market. In 2009, SET index closed at 734.54 points, higher than 449.96 points in 2008. Trading volume was a record high since 2005. Average daily trading volume was at THB 18,226 million. Trading volume of TNS was THB 378,274 million, accounted for 4.27 percent market share, ranked number 7, out of 35 companies in the industry. The trading volume and market share of TNS has continued to increase since 2005. 2. Currently, there are a total of 41 members in the Thailand Future Exchange (TFEX), of which 36 are general securities companies. In 2009, 5 gold-trading members were included as a TFEX member, in order to support gold future trading. In 2009, total value was THB 1,334,318 million, equivalent to a daily average of THB 5,589 million. Total trading volume was 3.08 million contracts, accounted for a daily average of 12,771 contracts, an increase of 44 percent from a daily average of 8,837 contracts at year-end 2008. Internet trading accounted for 21 percent and SET50 Index Futures was the product of highest transaction, 84 percent of the total trading volume. As of 30 December 2009, there were 28,281 open contracts and 29,647 derivative trading accounts, an increase of 86.5 percent from year-end 2008. Gold futures product began with trading transaction on February 2009 and single stock futures product had added 11 non-voting depository receipts (NVDR) during June. Both products attracted much attention from investors. For gold futures, an annual average trading volume was 1,397 contracts per day, accounted for 10 percent of the total derivative trading volume. Single stock futures captured an average trading volume of 600 contracts per day, triple the amount of that in the previous year. 3. Currently, investment advisory service is offered only to the top-ranking securities. However, the competition among the banking industry is aggressive, mainly due to the clustering of target group in Thailand.

1. Brokerage Business covers brokerage services which also include a service of providing related analytical information for various types of customer, whether individual, retail, institutional, local, or foreign, to make decision on their investment. 2. Derivative Business covers trading services for future contracts and derivatives. 3. Securities Borrowing and Lending (SBL) cover services of borrowing or lending securities for customer who has a desire to borrow or lend securities. 4. Investment Advisory covers services of seeking or issuing new financial product, whether local or foreign, in order to satisfy the customer’s needs, which also include providing a customer with structured plan on systematic investment and investment diversification by prioritizing customer’s suitability and investment target of each customer. Investment covers various types of instruments. 5. Unit Trust Underwriting and Repurchasing Services cover services of sale support and providing information on mutual funds of various fund management companies that TNS represents. 6. Financial Advisory and Securities Underwriting Services cover financial advisory business, underwriting service, underwriting guarantee of debt and equity securities, a role of underwriting and guarantee management, underwriting and guarantee co-management, and underwriting and guarantee underwriter. 7. Securities Registrar covers three types of services, namely, a securities issuance registrar, securities holder registrar, and a registrar for the employee stock option program (ESOP) COMPETITION AND MARKET OUTLOOK 1. Brokerage business in 2009 improved once compared to 2008, whether in the aspect of SET index, market capitalization or trading volume. The key positive contributing factors were economic recovery and the better performances of the listed companies, which hit the lowest point during the 4 th quarter of 2008. In 2009, 51

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exceeding 1 year, which accounted for THB 440,787.34 million or 74.61 percent of assets of the newly issued funds during 2009. As of 30 December 2009, TFUND had 78 retail mutual funds, accounted for THB 74,713.96 million assets under management, an increase of 2.79 percent from the previous year. With a market share of 4.89 percent, the company was ranked number 5 among 20 management companies in the industry. The increase in assets under management mainly came from Korean bond funds that accounted for THB 16,760.97 million or 79.25 percent of all funds offered. As of 30 December 2009, TFUND had 23 private funds accounted for THB 8,256.46 million, an increase of THB 6,741.64 million or 445.05 percent from the previous year. In addition, there were 22 provident funds which accounted for THB 4,511.76 million, an increase of THB 504.66 million or 12.59 percent from the previous year.

Each bank attempts to attract customers by offering full financial service, convenience and luxury. Moreover, there was competition in private bank service in foreign country, which focuses on investment in various types and instruments in order to create satisfying return to VIP customers in Thailand. 4. In financial advisory and securities underwriting service, competition was high due to the large number of competitors that is still increasing. Some service providers have foreign alliance. And with the current economic situation, pricing competition has intensified. However, the key competitive factor still remains to be service quality, personnel expertise on providing a customer with relevant advise and solution to a problem, as well as product innovation, which can create value added and more benefit to customers. FUND MANAGEMENT BUSINESS PRODUCTS AND SERVICES TFUND puts importance and emphasis on a great range of retail mutual funds marketing strategies, in order to fully covers all needs of investors in every group and level. The company utilized many types of distribution channels for sale, including a direct sale. The employees are qualified by laws and are strictly enforced to adhere to related laws and regulations. For greater convenience, TFUND offers unit trusts sale through the Bank’s branch network and operates unit trusts sale and repurchasing of other financial institutions approved by the SEC. Furthermore, service quality continues to improve for better efficiency through electronic channel. COMPETITION AND MARKET OUTLOOK At the end of 2009, there were a total of 20 fund management companies, accounted for a total assets under management of THB 1,528,058.14 million (excluding Vayupak Fund, foreign investment funds, property fund for resolving financial institution problem and property and loan fund), a 25.40 percent increase from 2008. During 2009, there were 605 new issued funds, accounted for THB 590,754.83 million of assets. Among the newly issued funds, 375 were foreign investment funds, comprised of debt instruments with maturity not

PRODUCTS OF INSURANCE BUSINESS

Insurance business of Thanachart Group can be divided into two key areas of business, namely non-life insurance business operated by Thanachart Insurance Company Limited “TNI”, which offers all types of non-life insurance services, and life insurance business operated by Thanachart Life Assurance Company Limited “TLIFE”, which offers life insurance services to institutional, corporate and individual customers. NON-LIFE INSURANCE BUSINESS PRODUCTS AND SERVICES TNI offers all types of insurance services, e.g. fire, automobile, marine, miscellaneous and investment. COMPETITION AND MARKET OUTLOOK In 2009, non-life insurance business in Thailand experienced a growth in premium income once compared to 2008. Each company tried to adapt constantly in order to gain competitive advantage, for example, pricing strategy, new product design that offers low price but still satisfies the customer’s needs, more claim coverage, promotional campaigns through various medias-television, radio, newspaper, advertisement poster board, branding image in order to create customer’s awareness. Moreover, many companies put more focus on the 52

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


LIFE INSURANCE BUSINESS PRODUCTS AND SERVICES TLIFE offers life and health insurance, which can be divided into two key categories, e.g. individual and group insurance. COMPETITION AND MARKET OUTLOOK TLIFE operates its business with a multidistribution channel strategy, in order to satisfy various needs of the customers by offering products and services coherent and suitable for each customer group. Currently, the company has utilized various channels, such as, corporate network, corporative network, insurance agent, bancassurance and insurance broker. In 2009, life insurance business expanded substantially, especially through bancassurance channel. This was a result of economic downturn which affected many bank’s credit lending business to contract. Each bank had to rely on the premium income of life insurance policy. Overview of the business sector in 2009 showed a growth of 16-18 percent while in 2010 the growth rate is expected to be within the range of 15-20 percent. Market penetration through commercial bank in 2009 was successful and thus resulted in a prediction that various banks that have alliance with life insurance companies will put more importance on product development, sale promotion and staff training for them to gain more knowledge and skills. At the same time, the agent channel will continue to self-cultivate in order to be able to provide consultancy and structure a financial plan for a customer. In the 11-month period 2009, TLIFE captured a total market share of 4.71 percent and was ranked number 8 in the industry. Market share of first year premium received was 13.27 percent and was ranked number 2 in the industry. The industry is expected to grow by 15-20 percent in 2010. This was under the assumptions that the global economy will revive and will positively affect all Thai business sectors, which would then enhance life insurance business from the increase in purchasing power and consumer’s confidence. Furthermore, the Bank interest rates are still low while the return on the life

post-sale service improvement, channel expansion, utilizing new technology in order to improve and streamline working procedures. At the same time, many companies emphasized on business alliance to expand sale channels, i.e. commercial bank’s branches, grocery store’s counters, department stores or telemarketing, in order to enhance competitive capability and to better the accessibility to retail customers. TNI focuses on a standard of good service quality, productivity, efficiency, and honesty, as well as development of products in order to offer new policy which is more coherent with the economic, social condition and the needs of customers, by taking into consideration a fair premium rate to customer. Furthermore, the company constantly adjusted its progressive competitive strategy to be coherent with the ever-changing conditions, by ways of increase sale channel, expand to new customer base, maintain existing customer base. As much as 95 percent of all customers is the customer group with policy claim limit not exceeding THB 5 million. The customers mostly selected automobile and fire insurance and these customers mainly came from the Bank’s lending customers base and from the company’s marketing campaigns. The customer group with policy claim limit of THB 5 million and more comprised of institutional customers, private enterprises that possesses branch network, whether commerce or industrial. Major portion of this customer groups selected miscellaneous and fire insurance. As aforementioned, it can be concluded that TNI has never relied on any customer that accounted for more than 30 percent of TNI’s total revenue. Moreover, the service is only offered to domestic customers in Thailand. According to Thai Reinsurance Public Company Limited, the insurance industry will experience a slight expansion of 5.6 percent in premium received or a total of THB 115,040.11 million in the year 2010. Under the assumption is that the Thai economy will expand by 0.25-1.00 percent due to various measures and policy which each government attempts to implement to counteract the crisis, as well as, the violent conflict that has a tendency to be resolved.

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insurance business maintains to be higher. The cooperation between banks and life insurance companies will focus on sale expansion in bancassurance channel and new business channel in order to acquire better access to the customers, as well as, product development which will satisfy the customer’s needs and is suitable for each sale channel. In addition, the government may adjust its regulation and allow larger limit on tax write-off from health insurance policy, individual insurance policy, pension policy and etc. PRODUCTS AND SERVICES MANAGEMENT SOURCE OF FUND One source of TBANK’s fund is the capital, comprises of issued and paid-up capital which was in the amount of THB 19,346 million in 2009, including legal reserve and retained earnings. There are another two key sources of fund which are: 1. Deposits which by the end of 2009 were in the amount of THB 266,727 million, a decrease from THB 270,832 million at the end of 2008. 2. Borrowings which were in the amount of THB 90,936 million and could be divided to THB 75,936 million short-term borrowings, mainly comprised of short-term B/E since TBANK added B/E as another saving alternative for customers, and THB 15,000 million long-term borrowings. FUNDING AND BORROWING OF PARTIES RELATED TO EXECUTIVES OR MAJOR SHAREHOLDERS At the end of 2009, TBANK gave loans to a parent company, subsidiary companies, and related companies in Thanachart Group as follows:

1. TGL (subsidiary company of TBANK) TBANK lent to the company for hire purchase business for all types of automobile in line with the business direction of Thanachart Group. In 2009, loan outstanding balance was THB 2,168 million, a decrease from THB 3,645 million at the end of 2008. 2. TLEASING (subsidiary company of TBANK) TBANK lent to the company for hire purchase business of automobile for commercial uses and privately owned automobile which can seat no more than seven persons, as well as, motorcycle as approved by the BOT. On 5 July 2008, the company was permitted to operate motorcycle hire purchase business instead of TGL. And in 2009, loan outstanding balance was THB 634 million, a decrease from THB 824 million at the end of 2008. 3. National Leasing (subsidiary company of Thanachart Group Leasing) TBANK lent to the company for property hire purchase business, as well as, property leasing. In 2009, loan outstanding balance was THB 77 million. 4. TLA (subsidiary company of TBANK) TBANK lent to the company for legal advisory, litigation, lawsuit execution and collateral appraisal services. In 2009, loan outstanding balance was THB 10 million. Loan outstanding balance of Thanachart Group, as aforementioned, totaled to THB 2,889 million, accounted for 1.02 percent of total loans at year-end 2009. All lending and borrowing activities were transacted under the permission of the BOT.

Foundation for the Better Life of Children

Supported the training on “Development of Agri-Nature for the sufficient economy system” arranged by the experts from Pongrad Agri-Nature Center in Chanthaburi province to the children. The training was aimed at encouraging the children to apply these principles to their everyday lives as well as raising their awareness on the sufficient living in order to grow up as good-quality adults. 54

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RISK MANAGEMENT AND RISK FACTORS

guidelines. The process would allow TBANK to effectively manage its capital as well as control and manage risks in the periods ahead. To support such framework, TBANK strategically establish a structure of the organization to support the operation under the direction and supervision of the following committees.

Thailand’s economy contracted in 2009, following the severe downturn in global economy especially in the first quarter of the year. The underlying causes of the downturn stemmed from the credit tightening and shortage of liquidity in global financial institutions including the lack of business and consumers’ confidence worldwide. The crisis led to a sharp decline in most major export items to all major markets. Together with the domestic political issues, the contraction of the Thai economy was more severe than expected. Nevertheless, the Thai exports started to revive since the second quarter as the world economy started to show signs of recovery. In accordance with the timely government’s measures during the crisis, the Thai economy revealed the continued signs of recovery with the improvement of consumption spending and increasing number of inbound tourists. In 2010, the Thai economic recovery is expected to continue with the global economy, leading to the upturns in manufacturing sector and tourism going forward. Thanachart Bank Public Company Limited “TBANK” and Thanachart Financial Conglomerate realized the importance of such risk factors and the Board of Directors and executives of TBANK have therefore closely monitored the business operation as well as made an effort to develop the risk management system continually to cushion for any possible risks. Nonetheless, as the credit lending has been TBANK’s major business and source of earnings, TBANK also continued to give priority to developments of credit lending measures and the credit risk measurement tools, e.g. behavior scoring which would help TBANK to manage risk properly and coherently with the risk profile. Furthermore, to reaffirm the strength and stability of the financial position of TBANK, the Bank is currently in the stage of developing the Internal Capital Adequacy Assessment Process (ICAAP) under Pillar 2 of Basel II framework in accordance with the Bank of Thailand (BOT)

THE BOARD AND COMMITTEES AT THE POLICY LEVEL:

TBANK’s Board of Directors and the Executive Committee has a role in policy determination and establishes guidelines for an efficient enterprise-wide risk management by taking into consideration the impact of risks on TBANK’s operational goal and financial position that has to be in line with its normal operation. Risk Management Committee plays a role in establishing strategic plans and developing the risk management procedure, as well as considering appropriate risk management policy and guideline which were proposed to the Executive Committee and the Bank’s Board of Directors for consideration and approval. Audit Committee has a role in determining the supervisory guidelines for the operation to comply with measures of related authorities as well as assessing the effectiveness and competency of the risk management process and internal control system.

THE COMMITTEES AT THE OPERATIONAL LEVEL:

Asset and Liability Management Committee plays a role in supervising the structure of the Bank’s assets and liabilities to be appropriate for characteristics of the business and in line with the Bank’s risk management policy. Investment Committee plays a role in supervising investment in financial instruments of TBANK to be in line with the Bank’s market risk management policy. 55

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Credit Committee plays a role in supervising the credit lending and other credit-related transactions to be in line with the Bank’s credit risk management policy. IT Security Management Committee plays a role in establishing policies regarding the IT Security System,

proposing preventive measures against risks arising from information and technology system, as well as monitoring, supervising and controlling the operation of the IT Security System in accordance with the proposed plan.

TBANK’S RISK MANAGEMENT STRUCTURE AS OF 31 DECEMBER 2009

THE BANK’S BOARD OF DIRECTORS Internal Audit Group Risk Management Division

Risk Management Committee

Audit Committee

EXECUTIVE COMMITTEE

Head of Risk

Compliance Department

Risk Management Department Credit Analysis Department Risk Control Department

Credit Committee

Investment Committee

Asset and Liability Management Committee

IT Security Management Committee

Chief Executive Officer

Chief Operating Officer Head of Operation

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Under its credit risk management policies and guidelines, TBANK have successfully established a credit culture. To start with, the credit risk of the borrowers, counterparties, or issuers of debt instruments will be independently assessed by the model developed specifically to each type of borrowers or counterparties by the Credit Analysis Unit. At this juncture, authorized Credit Committee would then consider and determine the level of credit risk of borrowers or counterparties, appropriate credit lines and investment budget, as well as Terms and Conditions on loans or other obligations. The Committee also controls the overall risk status by appropriately diversifying credit risk into various business sectors and groups of customers within the established risk ceilings. In addition, the Committee closely monitors the quality of loans to ensure proper and vigilant management by emphasizing on business capability and repayment ability under the supervision of an independent risk control unit. Apart from the aforementioned units, there is also an Internal Audit Group to verify that the credit transactions are in compliance with the BOT’s guidelines. To ensure optimal returns under acceptable risk, TBANK has employed measuring tool called RAROC (Risk Adjusted Return on Capital) to reflect the appropriate level of capital. Moreover, the Bank also performed stress tests to estimate any damage that may occur during the crisis. Under this condition, the borrower’s ability to repay could erode or they could fail to make a repayment under Terms and Conditions stated in the hypothesized contract. The risk factors in the tests were assumed to affect the industry that the debtors’ business belonged to. IMPORTANT CREDIT RISK FACTORS 1.1 CREDIT CONCENTRATION RISK TBANK aims to appropriately diversify its loans to various groups of customers, focusing on high potential customers, and attempt to prevent concentration of loans to a particular group of customers. Under such goal, the Bank pursues proper risk management on overall credit portfolios with close monitoring and comprehensive assessment to report to the assigned committees on a regular basis. The purpose is to mitigate exogenous risks that may adversely affect any particular group of business excessively financed by the Bank.

• The conduct of business affairs is under a system of check and balance with the Middle Office, comprising of the Risk Control Department and the Back Office, being separated from the Front Office. • TBANK would put in writing all the established policies and guidelines regarding the risk management that specifies responsibilities of related units as the operational guidelines for the employees. Moreover, the Bank has established a four-step guideline for risk management comprising of: 1) identification of the characteristics of risk as well as risk factors, 2) development of appropriate tools and models for risk measurement, 3) the control of risks within acceptable limits, and 4) the close monitoring of risk status in order to properly manage any possible risks in a timely manner. • The difference in size and risk ratios determined for each exposure allowed TBANK to be able to perceive the degree of severity from the possible risks. These risk variables could also be used as a ceiling or the acceptable risk level as well as to provide warning signals before severe losses occur. The aforementioned risk management systems are developed based on prudent principles and will be reviewed regularly to suit prevailing situations. The systems are designed to be transparent, explicit, examinable, and to take into consideration the interests of shareholders, customers and staff of the Bank.

KEY RISK CATEGORIES OF TBANK

1. CREDIT RISK Credit risk arises from a situation in which the debtors or counterparties fail to repay or fulfill their agreed obligations. This might be contributed by the fact that the debtor’s financial position is under distress due to volatilities of economic conditions that pose adverse impact on businesses, or the debtors’ mismanagement, which as a result, may adversely affect TBANK and the subsidiaries’ earnings and capital. The credit risk may arise from ordinary financial transactions such as credit lending, financial obligations in the form of avals or guarantees, other transactions related to credit lending, as well as investment in market instruments issued by state agencies or state enterprises with neither guarantee from government nor the BOT, and private debt instruments such as debentures. 57

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


THE DATA ON CREDIT STATUS AS OF 31 DECEMBER 2009 COMPARED TO 31 DECEMBER 2008 CLASSIFIED BY BUSINESS TYPES WAS AS FOLLOWS: BUSINESS TYPE

2009

2008

DEBT BALANCE (MILLION BAHT)

PERCENT

DEBT BALANCE (MILLION BAHT)

PERCENT

Parent and related companies Agricultural and mining Manufacturing and commerce Real estate and construction Public utilities and service Housing loans Hire purchase Others

3,337 2,606 16,153 15,590 15,677 6,948 206,320 16,228

1.18 0.92 5.71 5.51 5.54 2.46 72.94 5.74

12,815 1,152 12,819 14,625 13,015 7,393 198,344 13,065

4.69 0.42 4.69 5.35 4.76 2.71 72.59 4.78

Total loans and accrued interest receivables

282,859

100.00

273,228

100.00

The overall credit data revealed that TBANK’s lending on hire purchase business increased from 72.59 percent as of 31 December 2008 to 72.94 percent of total loans and accrued interest receivables as of 31 December 2009. Nonetheless, most of these hire purchase loans were provided to retail customers whose credit line was relatively small, and with a large number of customers, such risk therefore was well diversified.

1.2 RISKS FROM NON-PERFORMING LOANS The non-performing loans are loans classified as substandard, doubtful and doubtful of loss. They have been the major concerns across financial institutions due to their adverse effect on earnings and capital of TBANK and subsidiaries. At this juncture, TBANK has focused major efforts on controlling credit quality through appropriate policies and procedures to regularly monitor the quality of the loans.

THE NPL RATIOS AS OF 31 DECEMBER 2009 COMPARED WITH THOSE OF 31 DECEMBER 2008 WERE AS FOLLOWS: LOAN CLASSIFICATION

2009

DEBT BALANCE (MILLION BAHT)

PERCENT

2008

DEBT BALANCE (MILLION BAHT)

PERCENT

Substandard Doubtful Doubtful of loss

1,336 2,005 5,046

15.93 23.91 60.16

1,547 1,629 4,029

21.47 22.61 55.92

Total

8,387

100.00

7,205

100.00

TBANK’s non-performing loans increased from THB 7,205 million as of 31 December 2008 to THB 8,387 million as of 31 December 2009 due to the economic slowdown. From the credit overview, the non-performing

loans were accountable for 2.97 percent of total loans and interest receivables, increasing from 2.64 percent as of 31 December 2008. The non-performing loans could be classified by types of business as follows:

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


NON-PERFORMING LOANS CLASSIFIED BY BUSINESS TYPE BUSINESS TYPE

2009

DEBT BALANCE (MILLION BAHT)

PERCENT

2008

DEBT BALANCE (MILLION BAHT)

PERCENT

Agricultural and mining Manufacturing and commerce Real estate and construction Public utilities and service Housing loans Hire purchase Others

7 913 1,015 105 516 4,627 1,204

0.08 10.89 12.10 1.25 6.15 55.17 14.36

9 909 856 141 418 3,735 1,137

0.12 12.62 11.88 1.96 5.80 51.84 15.78

Total loans and accrued interest receivables

8,387

100.00

7,205

100.00

As of 31 December 2009, TBANK had no credit risk from non-performing loans that collateral did not fully cover the remaining loan amounts after deducting provision for loan loss. This was due to the fact that 100

percent provision was allocated on such loans by the Bank in compliance with the International Accounting Standards No. 39 (IAS39).

NON-PERFORMING LOANS

(Unit: Million Baht)

2009

Non-performing loans (NPLs) Loans not fully covered by collateral Provision for loan loss

8,387 6,407 6,407 -

Loans not fully covered by collateral after loan loss provision

2008

7,205 1,182 5,338 1,069 5,338 1,069 -

TROUBLED DEBT RESTRUCTURING Number of debtors (accounts) Outstanding principle and accrued interest receivables Loans not fully covered by collateral Revaluation allowance for debt restructuring Total loans and accrued interest receivables Restructured debts to total loans (Percent) The risk on debt restructuring arises from the re-entry of the substandard debtors, i.e. after the debt restructuring, the debtors again default on their repayments and hence re-enter the non-performing status. The problem poses adverse effects on debt-restructuring performance of TBANK. As of 31 December 2009, the

CHANGE

-

(Unit: Million Baht)

2009

2008

10,600 5,280 1,964 33

381 2,645 883 20

282,859

273,228

1.87

0.97

outstanding principal and the accrued interest receivables of the restructured debt amounted to THB 5,280 million or 1.87 percent of total loans and interest receivables, an increase from THB 2,645 million as of 31 December 2008. The net restructured debt (less collateral) amounted to THB 1,964 million. 59

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


2. MARKET RISK The market risk arises from movements in interest rates, exchange rates, capital fund, and prices of instruments in money market or capital market, which may adversely affect earnings of TBANK. The market risk can be segmented into three categories including price risk, interest rate risk and exchange rate risk. At this juncture, TBANK’s policies are to control and manage these risks to remain at an appropriate level and in line with its policy on risk management. 2.1 PRICE RISK Price risk arises when the Bank’s earnings or capital are adversely affected by changes in the price of debt and equity instruments, causing the value of TBANK’s trading and available-for-sales investment portfolio to decline. TBANK has developed risk measurement tools based on the Value-at-Risk (VaR) model to estimate the maximum loss amount at a certain confidence level and over a given asset holding period. The estimated VaR has therefore been used as a guideline to determine the overall risk appetites of the Bank. The control and monitoring of this type of risk is delegated to the Investment Committee. In order to ensure the efficiency and accuracy of its tools for risk measurement, the Bank requires that the tools are subject to back-testing in accordance with the Bank for International Settlement (BIS) standards. Moreover, the Bank has conducted stress testing by formulating stress scenarios which can create extraordinary reduction in stock prices. The result of the test could therefore shed light on the impact on the Bank’s earnings and required capital should such event occurs. As of 31 December 2009, TBANK’s investment in trading and available-for-sale securities classified by type of investment were as follows:

1.3 RISK FROM COLLATERALS For collateralized loans, TBANK carefully assesses and classifies quality of each type of collateral by taking into account the liquidity and overall risk. The assessment result is one of the important factors applied in the risk classification of each credit exposure. In this regard, the collateral, both in the form of immovable and movable whose value could be appraised, is subject to appraisal or valuation complying with the BOT’s regulations. In the past years, automobile hire purchase loans of TBANK have continued to expand. According to the BOT notification regarding the valueless and noncallable assets dated December 2006, the regulations on provisioning based on IAS39 whereby cars whose ownership belongs to the Bank can be used as collateral. In the case of default, the Bank is eligible to immediately repossess the collateral for the purpose of reselling in the used car market. As a result, TBANK might be exposed to risk from the inability to repossess the cars or from recovering the incurred loss by reselling the assets. Such conditions depend on various risk factors, for instance, the conditions of the used car market and the repossessed car itself. 1.4 RISK FROM GUARANTEES AND AVALS Under the current customer service, TBANK are also obligated in forms of avals, letter of credits, and loan guarantees, which the Bank is held responsible for, should the customers are unable to fulfill their obligations. In managing such risk, TBANK carefully scrutinizes supporting information and applies strict approval procedures to these obligations. The close monitoring on these transactions is undertaken based on the same guideline used for its regular lending procedure of the Bank. As of 31 December 2009, TBANK’s obligations in the form of avals and guarantees for loans amounted to THB 5,608 million, or 1.35 percent of the total assets.

Pediatric Cardiac Surgery Foundation Donated fund to provide the timely cardiac surgery to the poor children with congenital heart disease to save their lives and help them to continue with their normal living. 60

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


(Unit: Million Baht)

Fair Value 2009

2008

- 11,572 1,000 336

- 1,977 427 -

12,908

2,404

19,513 4,758 5,667 402 -

693 2,838 - 253 376

Total long-term investment

30,340

4,160

Total investment in trading and available-for-sale securities

43,248

6,564

Current investment Trading investment Available-for-sale investment Government and state enterprise securities Private debt securities Foreign debt securities Total current investment Long-term investment Trading investment Government and state enterprise securities Private debt securities Foreign debt securities Domestic marketable equity Securities Listed securities Unit trusts

Under the expectation that the Thai economic condition as well as the world economy has passed its trough and the recovery is likely underway in 2010, TBANK increased its investments in the long-term domestic and foreign debt instruments with decent ratings with emphasis on bonds issued by government and state enterprises as well as the securities with strong fundamentals. Such strategy, as a result, has raised the price risk of the Bank to be higher than the previous year. 2.2 INTEREST RATE RISK The interest rate risk is the risk that TBANK’s earnings or capital are adversely affected by changes in interest rates that pose impact on its rate-sensitive items including assets, liabilities and off-balance sheet items whose re-pricing periods are mismatched. These changes may have a negative impact on net interest income of the Bank. It is the goal of TBANK to run its business operations under the system of long-term effective interest rate risk management, in other words, to maintain an appropriate structure of assets and liabilities which are rate-sensitive at different time intervals. To ensure maximum benefits, the Bank has developed the Interest

Rate Gap Analysis Model as a tool for measuring interest rate risk by assessing the impact that may arise from the mismatch of the re-pricing periods of assets, liabilities and obligations at different time intervals. In order to ensure that the risk of TBANK’s business operations is within an acceptable limit, the Bank has also established an acceptable risk ceiling and an early warning risk level, taking into account the structure of assets, liabilities and obligations as well as interest rate re-pricing which are expected to take place in each period of TBANK’s business plan. The Asset and Liability Management Committee “ALCO” is responsible for monitoring and controlling such risk very closely. To effectively design appropriate measures to accommodate the risks, the Committee has to monitor economic conditions, developments in the money market and capital market, and the interest rate trend which could become important risk factors to the Bank’s rate-sensitive items. Details of financial assets and liabilities as of 31 December 2009, classified by the period when the interest rates would be re-priced in accordance with contracts related to TBANK’s financial assets and liabilities were as follows: 61

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


(Unit: Million Baht)

ITEMS

PERIOD OF INTEREST RATE REPRICING OR DUE DATE AT CALL

0-3 MONTHS 3-12 MONTHS 1-5 YEARS OVER 5 YEARS NO INTEREST TOTAL

Financial assets Cash Interbank and money market items Investments Loans

- 457 - 46,415

- 58,361 4,755 6,569

- - 1,268 - 19,517 32,068 14,352 180,604

- - 2,983 33,585

3,665 3,665 3,909 63,995 5,035 64,358 1,052 282,577

Total financial assets

46,872

69,685

35,137 212,672

36,568

13,661 414,595

Financial liabilities Deposits Interbank and money market items Liabilities payable on demand Borrowings

86,761 9,400 - -

60,860 10,255 - 58,673

74,047 1,717 - 17,263

44,432 306 - 15,000

- - - -

627 266,727 487 22,165 2,112 2,112 - 90,936

Total financial liabilities

96,161 129,788

93,027

59,738

-

3,226 381,940

As of 31 December 2009, TBANK was faced with relatively low exchange rate risk as most of the assets in foreign currencies have been hedged by forward contracts. 3. LIQUIDITY RISK Liquidity risk arises from TBANK’s inability to repay its debts or honor its obligations upon the delivery date due to the lack of its ability to convert assets into cash or to mobilize adequate funds or to mobilize funds at an acceptable cost. This could adversely affect the Bank’s current and future earnings and capital. The liquidity risk management mechanism starts with the assessment of the Bank’s cash flows and liquidity position over particular time horizons when the different levels of funds may be required to accommodate deposit withdrawal, reduce other types of the Bank’s liabilities, or increase the Bank’s assets. The assessment applies tools such as Liquidity Gap Analysis, various ratios on liquidity, as well as the simulation under “what if” scenarios. Under different scenarios, the impact on its liquidity adequacy will be analyzed given the cash flow level corresponding to customers’ behavior on the extension of contracts. Additionally, the Bank also estimates demand for liquidity under various assumptions based on economic conditions and extreme events that may affect the Bank itself and the overall banking system.

Based on the aforementioned structure of financial assets and liabilities, TBANK’s net interest income in the next year would decrease should the market interest rate increase. This was mainly due to the expansion of the Bank’s hire purchase business with fixed-interest-rate feature. 2.3 EXCHANGE RATE RISK The exchange rate risk is a risk that TBANK’s earnings or capital can be adversely affected by exchange rate fluctuations, exchange rate exposures in their possession of assets or liabilities or transactions in foreign currencies. The exchange rate risk can be divided into Transaction Risk from foreign currency transactions and Translation Risk from converting foreign currencies to local currency. The ALCO is responsible for monitoring and controlling this type of risk through the consideration in the proper matching between the structure and the maturity of assets and liabilities in foreign currencies. TBANK’s policy is to also rely on the VaR model as a risk measurement tool to determining the risk ceiling in order to control the impact of exchange rate movements on earnings and capital. Nevertheless, in order to avoid the exchange rate risk, TBANK has also relied on hedging instruments such as forward contracts.

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At the same time, TBANK has prepared the emergency plan in order to mitigate any liquidity shortage and the plan would be reviewed should important events affecting the planned operation occur. To control and monitor this liquidity risk, the ALCO conducts a weekly FUNDS CLASSIFIED BY SOURCE

meeting to discuss the updates and appropriate risk management policies. The structure of TBANK’s capital funding could be classified by different type and maturity of source of funds as follows:

(Unit: Million Baht)

2009

PERCENT

2008

PERCENT

Deposits Domestic interbank and money market items Foreign interbank and money market items Borrowings

266,727 16,962 5,203 90,936

70.22 4.47 1.37 23.94

270,832 7,662 7 62,288

79.47 2.25 0.00 18.28

379,828

100.00

340,789

100.00

Total

FUNDS CLASSIFIED BY MATURITY

Less than 1 Year More than 1 Year

Total

(Unit: Million Baht)

2009

PERCENT

2008

PERCENT

319,537 60,291

84.13 15.87

325,015 15,774

95.37 4.63

379,828

100.00

340,789

100.00

As of 31 December 2009, TBANK’s deposits and borrowings amounted to THB 379,828 million where sources of funds were mostly from the public deposits with the maturity less than one year. This is considered a common structure of the commercial banks. Nevertheless, TBANK also issued bills of exchange and debentures

in order to increase the saving alternatives for their customers. The financial assets and liabilities as of 31 December 2009 classified by maturity date were as follows:

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


(Unit: Million Baht)

ITEMS

THE MATURITY DATE OF FINANCIAL INSTRUMENTS AT CALL

LESS THAN 1 YEAR

Financial assets Cash Interbank and money market Items Investments Loans

3,665 4,366 - 13,056

- 59,629 18,973 88,474

- - 40,386 181,047

- - 4,999 -

3,665 63,995 64,358 282,577

Total financial assets

21,087

167,076

221,433

4,999

414,595

Financial liabilities Deposits Interbank and money market Items Liabilities payable on demand Borrowings

82,798 9,887 2,112 -

138,638 11,972 - 75,936

45,291 306 - 15,000

- - - -

266,727 22,165 2,112 90,936

Total financial liabilities

94,797

226,546

60,597

-

381,940

Off-balance sheet items Avals to bills Liabilities under unmatured import bills Letter of credits Other commitments

8 - 54 5,013

133 87 887 54,884

155 - 69 29,233

- - - 2,086

296 87 1,010 91,216

Total off-balance sheets

5,075

55,991

29,457

2,086

92,609

As of 31 December 2009, TBANK’s liquidity, consisting of cash and bank deposits, money market lending, and investment in the government and state enterprise bonds, increased from the previous year. This accounted for 30.16 percent of total deposits, which exceeded the BOT’s minimum liquidity requirement of 6.00 percent of total deposits. This increase was mainly due to the Bank’s expansion of customer base from rising number of branches. 4. OPERATIONAL RISK The operational risk is the risk that arises from the lack of appropriate governance of business affairs or lack of good governance within the organization. Risk may also arise from the inadequate efficiency of the internal audit and internal control systems which could be relating to internal operation processes, personnel, information technology systems, or external events. Such risks can

MORE THAN 1 YEAR

NOT SPECIFIED

TOTAL

pose adverse impact on earnings and capital as well as the reputation and credibility of TBANK. The increasingly intensified competition among commercial banks and other financial institutions providing similar financial services with the Bank in the past year, together with the rapid expansion in the number of TBANK’s branches as well as the improved efficiency of the Bank to provide full financial services with international standards has made TBANK acutely aware of the probable operational risk. As a result, TBANK has placed equally emphasis on operational risks. TBANK has thus established a number of measures to ensure adequate and appropriate internal control systems in accordance with the change in transaction features. In order to allow the internal work processes to be more flexible and accommodative to the format of the Bank’s financial service more effectively and control the risk under the Bank’s acceptable limits, the following measures have been brought to implementation.

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


• Regarding the organization of the Bank’s structure, TBANK has specified the roles, the scope of duties and responsibilities for each position, based on a system of check and balance. The Front Office where all the transactions take place is separated from the Middle Office that comprises of the Risk Control Department and the Back Office that are responsible for supervising and monitoring the transactions. • Establish the transaction-supporting units which are independent and have expertise in their respective fields of work such as computer and information system unit, legal unit, and price appraisal unit in order to prevent any possible errors. • Put operational procedures and regulations related to all types of transaction, staff manuals as well as the authority ranks for approval in writings as a guideline to set the same standards for all internal operations within the organization. • Establish the Audit Committee and the Risk Management Committee to control, monitor, and assess the risks faced by TBANK. The Committees are held responsible for examining and correcting the pitfalls in order to create soundness and efficiency in the Bank’s operation. • Improve the management of the information technology system and IT Security System in order to enhance its potential to accommodate business expansion and gain creditability in the aspect of data and technology. A particular focus was given to the prevention of damages from unauthorized access to the Bank’s information. • Specify procedures in selecting the outsourcing service, both in the operation and information technology systems to minimize the operational risk, enhance efficiency and creditability in the Bank’s operation. These procedures have to also be subject to regulations of TBANK and related authorities.

• Formulate the Business Continuity Plan which consists of an emergency plan, a plan for backup systems, and a business recovery plan to prevent disruption in business operation. In addition, the drills are essential to test for the readiness and to consistently improve the plans for its effective implementation. Regarding the risk measurement, the Bank calculates the capital adequacy to accommodate this risk based on the Basic Indicator Approach in accordance with Basel II and the BOT notification. Furthermore, in preparation for the business plan and strict enforcement of Basel II from the supervisory authority in the future periods, TBANK has developed the database collecting the information of loss data incurred from operation to use as the database to develop tools under the Standardized Approach and Advanced Measurement Approach, which are more accurate in reflecting risks associated with each transaction.

5. RISK FROM INVESTMENTS IN SUBSIDIARIES AND ASSOCIATED COMPANIES This type of risk arises from losses and bankruptcy of the subsidiaries and associated companies from TBANK’s shareholding or joint investments adversely affect the Bank’s earnings and capital. As of 31 December 2009, TBANK’s total investments in its subsidiaries and associated companies amounted to THB 4,482 million, accounting for 6.93 percent of the Bank’s net investment. The largest share was allocated in TNS, amounting to THB 1,858 million which accounted for 41.45 percent of the total investments in subsidiaries and associated companies. The second largest was in TLIFE, in which amounted to THB 936 million, representing 20.88 percent of the Bank’s total investment. Details of the Bank’s investment (cost method) in TBANK’s subsidiaries and associated companies as of 31 December 2009 were as follows:

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


INVESTMENT VALUES IN SUBSIDIARIES AND ASSOCIATED COMPANIES (COST METHOD)

(Unit: Million Baht)

COMPANY’S NAME

INVESTMENT VALUE

Thanachart Securities Public Company Limited Thanachart Insurance Company Limited Thanachart Life Assurance Company Limited Thanachart Fund Management Company Limited Thanachart Group Leasing Company Limited Others

1,858 867 936 97 400 324

4,482

Total

6. STRATEGIC RISK This type of risk arises from the inappropriate formulation of strategies, business planning and implementation which are not compatible with internal setups and external environment, resulting in an adverse impact on earnings, capital or the existence of TBANK. In managing the strategic risk, the formulation of strategies for TBANK will be considered over the three years ahead, with the review required annually or in the case of an external event that may impact the achievement of the Bank’s business goals. The Executive Committee is responsible for regular monitoring and evaluating the performance of the work units upon the established targets stated in the annual operation plan. 7. REGULATORY RISK The risk arises from amendments or changes in regulations, laws or requirements of the authorities especially the BOT. Changes in the authority’s policy may affect TBANK’s strategies and business operations.

In 2009, most changes in regulations and requirements from the related authorities have concentrated on the improvement of measures to promote corporate governance of financial institutions, more efficient risk management and improved consumer protection. These measures therefore posed no significant impact on the Bank’s strategies and business operation. And throughout, TBANK has constantly improved and developed the internal operation system as well as customer service standard. This has also been an important mission for the Bank that the business operation has to also comply with authorities’ rules and regulations.

8. RISK FROM CAPITAL ADEQUACY As of 31 December 2009, TBANK’s capital amounted to THB 38,557 million, of which THB 23,645 million was in Tier I and THB 14,912 million was in Tier II. The BIS ratio amounted to 14.10 percent which exceeded the BOT’s minimum requirement at 8.50 percent. This level of capital should be sufficient in accommodating any potential risks as well as the Bank’s future business expansion.

Elderly Care Center: Nakhon Pathom Staff members from the headquarters as well as Nakhon Pathom Hub joined together for the activities to donate funds for bed sheets and lunch to the elderly and also organize physical activities to give them moral support and relaxation. 66

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


CORPORATE GOVERNANCE

REPORT ON CORPORATE GOVERNANCE COMPLIANCE CORPORATE GOVERNANCE POLICY, BUSINESS ETHICS AND CODES OF CONDUCT FOR DIRECTORS, EXECUTIVES, AND STAFF

TBANK’S BUSINESS CONDUCTS ACCORDING TO GOOD CORPORATE GOVERNANCE PRINCIPLES IN 2009 INCLUDES: 1. SHAREHOLDERS’ RIGHTS AND EQUITABLE TREATMENT

Thanachart Bank Public Company Limited’s (TBANK) Board of Directors has put in place written policy guidelines on corporate governance since 2003. The Board also conducts an annual review on corporate governance policies and the reporting process on business compliance with corporate governance principles of TBANK, at least once per annum. The business ethics as well as code of conduct for directors, executives, and staff have been improved in order to establish a framework for all personnel in the Bank. TBANK has established coporate governance policy as well as business ethics and codes of conduct for directors, executives, and staff. The policy can be easily accessed via Thanachart Group’s intranet system which is intended to be a channel for communicating with staff at every level, so that they can acknowledge a firm standpoint and principle in good corporate governance established and practiced by the Board of Directors. Moreover, Thanachart Group has continuously supported good governnace and recognition on corporate social responsibility awareness (CG & CSR Project) of staff in the group. Thanachart Group also designed training courses that focus particularly on encouraging staff to work on the basis of moral, ethics, and business codes of conduct, for example, pure-hearted businessman program, inner power program. In 2009, there was 3,950 staff attending training courses.

1.1 SHAREHOLDERS’ BASIC RIGHTS TBANK has a policy on shareholders’ right protection and encourages them to honor their rights. The policy includes legal basic rights, such as company’s profit sharing, share transactions or transfers, participation in shareholder’s meeting in order to honor their voting rights equitably and independently. 1.2 SHAREHOLDERS’ MEETING In 2009, TBANK held the Annual General Meeting of Shareholders on Tuesday, 28 April 2009. The meeting was conducted according to laws, regulations, and coporate governance guidelines as follows: PRIOR TO THE SHAREHOLDERS’ MEETING • The Bank published the Notice of shareholders’ meeting as well as related documents in both Thai and English, including meeting agendas, and complete details of each agenda which were sufficient for shareholders’ decision making before the meeting. The forthmentioned information was available via various channels as the followings: TBANK’S INTERNET WEBSITE (www.thanachartbank.co.th) The information was published on the website 21 days prior to the meeting and composes of the Notice of shareholders’ meeting and related information, 67

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including date, time, and meeting vanue, meeting rules, vote casting procedures, as well as proxy statement. This information replicated the documents mailed to each shareholder. DELIVERED BY MAIL Meeting Notice, meeting documents, and annual report were delivered to all shareholders at least 14 days prior to the meeting. NEWSPAPER ADVERTISEMENT Meeting Notice was advertised in both Thai and English in daily newspapers for three consecutive days, six days prior to the meeting day. • TBANK also provided opportunity to the Bank’s shareholders to raise issues for consideration as additional item of the meeting agenda. They could nominate the candidate for director as well as any other business-related issues a month prior to the meeting day, from 29 December 2008 until 27 January 2009. The information provided to shareholders has to be in Thai and English in order to accommodate both Thai and foreign shareholders. In addition, rules, procedures, and channels for raising such issues were available on the Bank’s website and the results will be informed at the shareholders’ meeting. • The proxy statement was delivered with the meeting Notice and also published on the Bank’s website in case of the need of shareholders to request a proxy to attend the meeting on their behalf. • TBANK proposed a candidate for Chief Executive Officer and an Independent Director and their curriculum vitae as well as stakes of independent directors in the meeting Notice to provide the shareholders alternatives for appointment of proxy. THE DAY OF ANNUAL GENERAL MEETING OF SHAREHOLDERS 2009 • TBANK arranged various facilities, such as meeting venue, reception staff as well as printed ballot papers for each agenda item, for shareholders’ convenience during the registration. Moreover, the shareholder could also register in advance within two hours prior to the meeting time.

• TBANK established shareholder’s meeting guideline to ensure that shareholders’ right would not be compromised. At any point of the meeting, shareholders could register and enter the meeting to honor their voting rights on the agendas of which vote casting had not been made. TBANK has never adjusted or added the agendas or distributed additional documents which contain material information during the meeting without prior notice. During the course of the meeting, all the shareholders were provided equitable right to express their opinions and ask questions. • There were 16 shareholders and 48 shareholder’s proxies attended the meeting. • All Directors attended the meeting, including the Chairman, the Chief Executive Officer, the Chairman of the Audit Committee, the Chairman of the Nomination and Remuneration Committee. • The Chairman of the meeting explicitly informed the shareholders on meeting rules, vote casting, and vote counting procedures. • In casting votes, the ballot papers were required for every agenda item as well as during the agenda of Individual Director voting. The ballot papers were collected from shareholders for vote counting. • Video presentations were used in the meeting in order to affirm that all information were clearly presented. POST ANNUAL GENERAL MEETING OF SHAREHOLDERS • The Bank took minutes of the meeting whereby all important information was entirely recorded. The drafted minutes of the 2009 Annual General Meeting of Shareholders has been submitted to the Stock Exchange of Thailand (SET) and also made available on TBANK’s website within 14 days after the meeting day. 1.3 CONTROLLING MEASURES ON THE USE OF INTERNAL DATA TBANK has specified the controlling measures of the use of internal data in the Bank’s Codes of Conduct which can be summarized as follows: • An appropriate oversight on the internal data maintainance system is required for all business units within the Bank. 68

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• In compliance with the Securities and Exchange Commission (SEC) regulations, executives in manager position, the next four positions below the manager, and the highest ranking position in the accounting department are required to report their holdings of the Bank’s shares on the quarterly basis. Moreover, any trading transactions of aforementioned shares have to be reported to the SEC within three business days once the transaction has been completed, while the copy of the transactions have to be submitted to the Office of Chief Executive Officer. • Directors, executives, staffs, employees, and advisors who have access to the confidential information are prohibited from seeking any benefit from such information for their own or other’s interest. • The use of internal data for the individual interest is considered as a policy misconduct and will be subject to the penalty according to judgement of the Disciplinary Committee. 1.4 CONTROLLING MEASURES ON CONFLICT OF INTERESTS TBANK has established and documented policies and approval procedures on related transactions to be fully disclosed to all related parties. The Bank has also established policies and measures aiming at preventing executives and related parties from making use of internal information for personal interest. The policies are as follows: • In case of a conflict-of-interest, related, or affiliated transaction between any related parties, the matter will be reported to the Compliance Unit for seeking their opinion on legal issues and practice guidelines before being forwarded to the authorized party for approval. • As stated in the notification of various committees, any transactions from which the director, executive or related parties gain benefit are required to specify the interest of such transaction. In addition, related director or executive is prohibited from attending the meeting during the time when the agenda item are being conducted. • The execution of transactions from which TBANK or director or senior management of the Bank gain benefit has to seek the unanimous approval from the Board of Directors in which neither director nor senior management who is beneficial from the transactions can participate in the approval process.

• The Board of Directors has to be fully informed of transactions that may involve in the conflicts of interest or related party issues and is always subject to a careful consideration and in compliance with rules and regulations of the SET, the SEC, and the Bank of Thailand (BOT) • Information disclosure on transactions which may have conflicts of interest or connected transactions or affiliated transactions is complied with rules and regulations established by the authorities. • All related transactions are subject to a review in accordance with the annual audit plan and will be reported to the Audit Committee. • The information about business connection or business of which the benefit is related to directors and senior management has to be disclosed quarterly for controlling purposes and to be the list of related transactions which will be disclosed in the notes to the financial statements.

2. ROLE OF STAKEHOLDERS

Thanachart Group has established written practice guideline on stakeholders; including customers, trading partners/lenders, competitors, public sector as well as society and environment, in business Codes of Conduct of directors, executives, and staffs. All the information in the guideline is disseminated through the Bank’s internal communication channels, so that the directors, executives, and staffs at all levels can strictly adhere to. The information has also been publicized via TCAP’s website to enhance stakeholders’ confidence on their rights. The details on the treatment of various groups of stakeholder are as follows: SHAREHOLDERS Thanachart Group aims at having a solid performance and achieving a sustainable growth as well as being competitive to ensure an appropriate return to shareholders on a regular basis. In conducting business, the Bank has been aware of risks and ensures that there is the efficient internal control system as well as information disclosure in an accurate, complete, timely and transparent manner. Moreover, the Bank has made arrangements to provide the shareholders with convenience in exercising any of the rights they are entitled to. 69

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Officer as well as high-level executives of TBANK paid visits to all the hubs nationwide to meet with managers and staff of the network branches in order to infrom the Group’s strategic directions as well as policies that are consistent with business operations. This would help enhancing unity and cooperation among staff within the organization as they are the key driving force of Thanachart Group. Moreover, the project is still being organized in 2010 under the “Grow Together” scheme. CUSTOMERS Thanachart Group is determined to develop financial products and services that could accommodate all financial needs of the customers. Fees are fairly charged and the Bank aims to provide the customers with complete and sufficient information of products and services before the customers’ decision is reached. PARTICIPATION MECHANISM OF STAKEHOLDERS Thanachart Group has developed the system for receiving complaints and suggestions from customers, external parties, and stakeholders more effectively for the purpose of organizational development. This has been undertaken through various channels such as the Bank’s website (www.thanachartbank.co.th), marketing staff, and Thanachart Contact Center (1770). TBANK has also explicitly established the business practice for the complaints reception system in which the responsible unit will follow up the customers’ complaints and provide feedback to every customer or party that lodges the complaint as well as report to the Board of Directors on a monthly basis. This aims at improving the Group’s services; fulfilling customer’s needs; and increasing consumer or stakeholder’s satisfaction. TRADING PARTNERS AND LENDERS Thanachart Group has established explicit policies and practices on purchasing and outsourcing for the purpose of fairness, transparency, and verifiability of all related parties as well as the rules on approval authority of package purchasing and rental. The Bank has provided transparent and verifiable information to lenders and has attached to the integrity of fulfilling the obligations made with the lenders under the conditions that are mutually agreed upon as well as legal rules and regulations in order to build confidence for long-term cooperation.

EMPLOYEES Thanachart Group emphasizes on equal and fair treatments to its employees, as well as ensures that they are appropriately compensated. As a guideline in determining emplyees’ salaries, the Bank conducts surveys and takes into consideration inflation rates, the consumer price index, and the Key Performance Indicators (KPIs). In 2009, the Bank introduced the performance evaluation form, which is consistent with Thanachart Group’s key business strategies or the CEO’s Six-point agenda, to assess employee’s performance for the purpose of fair compensation and promotion. Moreover, the Bank also provides many fringe benefits for the employee, including medical expense, annual leave, provident fund, saving cooperatives for Thanachart Group’s staff, fire drills, upkeep of workplace environment, as well as security for life and belongings. TBANK also strengthens working relationships among employees by publishing and circulating the monthly journal entitled “Tor Saiyai” that provides better connections between employees within the group. In addition, via the intranet system, the Bank also circulates news and information about Thanachart Group’s products and services, related external rules and regulations, as well as activities of the Group. Thanachart Group has been constantly active in human resource development. In 2009, Thanachart focuses on enhancing knowledge and competencies as well as necessary working skills for each position at every staff level in order to increase employee’s working efficiency and ability to respond to Thanachart Group’s visions, missions, and objectives. Moreover, the Bank also strengthened employees’ recognition of rules and regulations of the authorities as well as the business Codes of Conduct by establishing the human resource development plan that is consistant with strategic and business plan of Thanachart Group. In order to keep up with the pace of business growth and expansion, the Group organized effective training courses for employees under the advice and knowledge support from Scotiabank that has expertise in international finance, external training and seminar, as well as staff visit at reputable domestic and foreign institutes. In 2009, Thanachart Group organized the third year “Go Together” project under “A Year of CustomerCentric Creating a Culture of Collaboration” scheme, totally, 13 projects. Such project aimed at strengthening the unity of the organization whereby the Chief Executive 70

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the Bank as well as provide services to the shareholders effectively. The Investor Relations unit can be contacted via telephone at 0 2613 6107 and 0 2217 8199 Ext. 3027 or at E-mail address: ir.nf@thanachart.co.th. TBANK has established policies on information disclosure in which the information has to be accurate, complete, equitable, transparent, and timely as well as comply with related laws and regulations. The information is disclosed via the channels as the followings: 1. Stock Exchange of Thailand - Annual Registration Statement Form 56-1 - Financial Statement and Annual Report - Shareholders’ meeting resolutions 2. Securities and Exchange Commission 3. Department of Business Development, Ministry of Commerce 4. TBANK’s website www.thanachartbank.co.th 5. Press, Media, and Other medias 6. Analyst meeting 7. Company visit/One-on-one meeting 8. Roadshow 9. Newsletter In 2009, the Bank’s senior management and Investor Relations paid a visit and provided information to related parties in various occasions, including One-on-one meeting, Conference call, Group analyst meeting, and Roadshow.

COMPETITORS TBANK operates under rules and competitions with other parties or organizations as well as under fairly established policies and practices. The Bank recognizes the importance of good customs and tradition as well as laws and rules for the purpose of maintaining and rehabilitating the society and the environment. SOCIETY AND ENVIRONMENT Thanachart Group has taken a responsible attitude towards society. The senior management of the Group has played an important role in promoting the principles of social responsibility. These principles fall under the umbrella of the Group’s corporate social responsibility (CSR) that places emphasis on “sustainable growth with moral righteousness”. Supported by its staff, business alliances, local communities and society, the Group is prepared to consistently participate in activities that support and help local communities and societies in a long term manner with understanding and sincerity. PUBLIC SECTOR TBANK conducts its business in adherence to laws and rules and regulations of the authorities as well as provides effective cooperation according to government policies. Moreover, the Bank will not involve or do business with any illegal organizations or individuals.

3. INFORMATION DISCLOSURE AND TRANSPARENCY

4. RESPONSIBILITIES OF THE BOARD OF DIRECTORS

TBANK’s Board of Directors is responsible for the financial statements of the Bank. In this regard, it has assigned the Audit Committee to ensure that the financial reports and internal control system of the Bank are accurate and valid in accordance with the accounting standards in Thailand. TBANK has also included the Report of the Audit Committee in the Annual Report. TBANK ensures sufficient disclosure of important information in the notes to the Bank’s financial statements. The Bank also discloses the financial statements and the notes to the financial statements on the quarterly and annually basis on the Bank’s website. Moreover, Investor Relations unit is responsible for providing an accurate information and news on a timely manner to Thai and foreign shareholders, investors, analysts, and credit rating agencies in order to strengthen image and credibility of

CONSTITUENT OF THE BOARD OF DIRECTORS TBANK’s Board of Directors is composed of well qualified persons who have expertise, skill, and experience in finance, accounting, management and other professional areas which provides TBANK with great benefits. The Bank’s Board of Directors structure is complied with the notification of the Securities and Exchange Commission no. ThorChor 28/2008 Re: Application for Offer and Permission for Sale of Newly Issued Securities, dated 15 December 2008 and the Bank of Thailand’s notification Re: Governance of Financial Institutions, dated 9 July 2009. 71

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INDEPENDENT DIRECTOR TBANK speficies a more stringent definition and qualification of the independent director as follows: (1) Holding shares not more than 0.5 percent of paid-up capital of the Bank, affiliated company, associated company or related company, including shares held by persons related to the independent director. (2) Not taking part in the management or being an employee, staff, or advisor who receives salary, or a controlling person of the Bank, a regular salary from the Bank, member company of the Group, affiliated company, associated company, related company or a person who has authority controlling a juristic person that may have a conflict of interest (at present and during the past two years). (3) Not having a business relationship with the Bank, Member Company of the Group, affiliated company, subsidiary company or juristic person that may have a conflict of interest that obstructs the independent opinion. (4) Not being a person related by blood or registration under laws such as father, mother, sibling and child, including spouse of children, executives, major shareholders, controlling persons, or persons to be nominated as executive or controlling person of the Bank, member company of the Group, affiliated company, subsidiary company or related company. (5) Neither having a relationship with the Bank in the form of its professional service provider such as auditor and financial advisor nor having a business association with the Bank under significant cash amount or value as stipulated (at present or during the past two years before the appointment). (6) Not being a representative of any member of the Bank’s Board of Directors or any major shareholder. Nor being a shareholder related to the major shareholders.

(7) Not being simultaneously an audit committee member of any listed company of the Group, associated company or subsidiary company. (8) Not having any prohibited characteristic that undermines independence in carrying out his or her duties as director. Every Independent Directors are independent to express opinion without interest in benefit in terms of assets or working position; from the pressure of any person or any group of people as well as from any circumstances that could affect their opinion expression. EXECUTIVE DIRECTOR is defined as 1) Directors who involve in the management of the Bank in accordance with the Notification of the Securities and Exchange Commission no. ThorChor 28/2008 Re: Application for Offer and Permission for Sale of Newly Issued Securities, dated 15 December 2008, including any additional amendments or announced substitution which means Director who assume the directorship in the Executive position, Director who act as the Executive; and as Director with full signatory authority except the case when it can be demonstrated that it is the authorized signatories according to the list that the Board of Director has already approved and it is the joint authorized signatories with other committees. 2) In accordance with the BOT’s Notification no. SorNorSor 13/2009 Re: Governance of Financial Institutions, Executive Director is defined as: (1) Director with a responsibility in the position of manager, deputy manager, assistant manager or equivalence. (2) Director with a responsibility in the operation or involve in business management as executive, including a party in executive committee. (3) Director with full signatory authority, except for the case when can be demonstrated that it is the authorized signatories according to the list that the Board of Director has already approved and it is the joint authorized signatories with other committees.

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At present, the number of Independent Directors and Non-Executive Directors of TBANK is accounted for 50 percent of the total number of Board of Directors. The constituent of the Bank’s Board of Directors as of 31 December 2009 was as the following: NAME

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12.

Notes:

POSITION

Mr. Banterng Tantivit Mr. Suphadej Poonpipat Mrs. Michele Kwok Mr. Kiettisak Meecharoen Mr. Narong Chivangkur Mr. Sathaporn Jinachitra Assoc. Prof. Dr. Somjai Phagaphasvivathana Ms. Suvarnapha Suvarnaprathip Mr. Brendan King Mr. Somjate Moosirilert Mr. Kobsak Duangdee Mr. Martin Weeks

Chairman Vice Chairman Vice Chairperson Director Director Director Director Director Director Director Director Director

NONEXECUTIVE EXECUTIVE INDEPENDENT DIRECTOR DIRECTOR DIRECTOR

- - - - - -

-

- - - - - - - - -

- - -

- - - - -

TBANK’s authorized signatories include Mr. Banterng Tantivit, Mr. Suphadej Poonpipat, Ms. Suvarnapha Suvarnaprathip, Mr. Brendan King, and Mr. Kobsak Duangdee. Any two out of the five authorized signatories can jointly sign with TBANK’s seal affixed. Mr. Panupan Tuangthong was Acting Secretary of the Board. 1. Mr. Suvit Arunanondchai and Mr. Vichit Yarnamorn resigned their directorship of TBANK on 23 Febuary 2009 2. Assoc. Prof. Dr. Somjai Phagaphasvivathana has assumed his directorship since 26 March 2009 3. Mr. Kobsak Duangdee has assumed his directorship since 1 April 2009 4. Mr. Somjate Moosirilert has assumed his directorship since 29 October 2009 5. Mr. Martin Weeks has assumed his directorship since 24 December 2009

of the Bank’s business affairs in an independent and neutral manner, taking into consideration the interests of the shareholders and other stakeholders. The roles and responsibilities of the Board of Directors are as follows: 1. The Board is responsible the overall business conducts of TBANK to ensure the compliance with legal requirements, the Bank’s objectives and Articles of Association, as well as the resolutions adopted at the shareholders’ meetings. 2. The Board appoints the Executive Committee or Sub-Committees to perform duties as assigned by the Board. 3. The Board may assign or authorize one or more directors or other persons to take any action on behalf of the Board. 4. The Board makes approval on visions, missions, and values of the Bank as well as the business ethics. 5. The Board considers the strategies proposed by the management and makes approval on important issues related to the Bank’s direction and policies. The Board also makes approval on business plans, budgets, and operational goals proposed by the management.

TENURE OF DIRECTORSHIP The tenure of directorship of the Board of Directors has been stated clearly by TBANK’s Articles of Association. At each Annual General Meeting of Shareholders of TBANK, one third (or nearest number but do not exceed one third) of the members of the Board of Directors must retire. After the date when TBANK’s Articles of Association has been effective, the retirement of Directors in year one and year two is decided by a draw. In the subsequent years, the Director who holds the longest time in office will be retired. Should there be the case when the number of Directors who holds the longest time in office is greater than the number of Directors that have to be retired, the draw will be applied. Director who retires due to this reason can be reelected to re-assume the directorship. ROLES AND RESPONSIBILITIES OF TBANK’S BOARD OF DIRECTORS TBANK’s Board of Directors is accountable to all the Bank’s shareholders and participates in the governance 73

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6. The Board monitors the Bank’s performance and progress achieved in relation to the established objectives as well as the compliance with the related laws, regulations and policies. 7. The Board authorizes the Chief Executive Officer to conduct business management of TBANK within the framework of the capital expenditure budgets and operating expenditure budgets approved for various projects. Moreover, the Bank’s Board of Directors shall approve any loan applications which are beyond the authority on credit approval. 8. The Board ensures that the Bank has the effective internal control system and appropriate risk management system. 9. The Board ensures that both internal and external auditor conduct their duties effectively. 10. The Board approves the quarter and annual financial statements and ensures that the financial statements have been prepared in accordance with the accounting principles. 11. The Board ensures that the information is disseminated to the Bank’s stakeholders and general public.

1. Mr. Suphadej Poonpipat Chairman of the Executive Committee 2. Ms. Suvarnapha Suvarnaprathip

Vice Chairperson of the Executive Committee

3. Mr. Brendan King Vice Chairman of the Executive Committee 4. Mr. Somjate Moosirilert Member of the Executive Committee 5. Mr. Martin Weeks

Member of the Executive Committee 6. Mr. Kobsak Duangdee Member of the Executive Committee Mr. Panupan Tuangthong Acting as Secretary of the Executive Committee ROLES AND RESPONSIBILITIES OF THE EXECUTIVE COMMITTEE 1. Authorized to approve lines of credit for the benefit of TBANK as well as approving debt restructuring in compliance with the Commercial Banking Act as well as the rules and regulations of the BOT. 2. Authorized to approve investments aimed at generating earnings for TBANK in compliance with the Commercial Banking Act as well as the rules and regulations of the BOT. 3. To manage business operations in line with TBANK’s business objectives as well as managing liquidity, risks and the interest rate structure. 4. Authorized to make purchases, take transfers, and dispose of TBANK’s assets in an amount up to 5 percent of TBANK’s share capital. 5. To consider and screen matters which are beyond the authority of the Executive Committee, and to present them to those having higher authority for consideration. 6. Authorized to restructure and manage the organization, to establish rules and regulations related to work process, to appoint and remove employees, to appoint advisers, as well as directing and governing the conduct of TBANK’s business affairs. 7. Authorized to approve salaries or other compensation benefits for employees and advisers to support TBANK’s normal business operations. 8. To consider and approve appointments of independent appraisers.

SEGREGATION OF DUTIES The Chairman of the Board of Directors shall not be the same person as the Chief Executive Officer so as to segregate the duties of developing policies from day-today business management. ASSUMPTION OF DIRECTORSHIP IN OTHER COMPANIES BY DIRECTORS AND SENIOR EXECUTIVES In compliance with the BOT’s Notification on Governance of Financial Institutions, Directors and senior executives of the Bank can assume the position of Chairman, Executive Director or Director with full signatory authority in no more than three business groups. SUB-COMMITTEES The Board of Directors of TBANK has appointed the sub-committees to be responsible for performing necessary duties. The roles and responsibilities of each sub-committee are as follows: EXECUTIVE COMMITTEES TBANK’s Board of Directors has appointed the Executive Committee which consists of six members. As of 31 December 2009, the names of the member of the Executive Committee were as follows: 74

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3. To review TBANK’s risk management, ensuring that it is adequate and comply with the Bank’s policy as well as the BOT’s guidelines. 4. To review evidences from internal investigations when there is an observation or inference that there might be a fraud, irregularities or substantial loopholes in the Bank’s internal control system. The Committee will then make a report to TBANK’s Board of Directors for further consideration. 5. To review related party transactions as well as transactions which may lead to conflicts of interest, ensuring that they are executed correctly and accurately. 6. To review the Bank’s business conducts, ensuring that they are in compliance with the rules and regulations of the respective authorities. 7. To consider the audit reports and recommendations presented by the external auditor and internal auditor and to monitor the actions taken according to the recommendations. 8. To recruit and nominate candidates for the external auditor of TBANK and also to consider the auditing fees, taking into account the auditor’s credibility, the adequacy of its resources, workload of the auditor as well as experience of the staff assigned to audit the Bank’s accounts. 9. To approve for the appointment, evaluation, removal, transfer or dismissal of the Head of the Internal Audit Group. 10. To ensure that the business conducts of the subsidiaries are in compliance with Thanachart Group’s policies. The Internal Audit Group has been given the following assignments: 10.1 To acknowledge TBANK’s Audit Committee on the summary of the overall performance of the Internal Audit Group which is responsible for auditing the Bank’s subsidiaries. 10.2 To acknowledge TCAP’s Board of Directors on the summary of the overall performance of the Internal Audit Group which is responsible for auditing TBANK and its subsidiaries. 10.3 In undertaking the auditing duties specified in 10.1 and 10.2, in case that there are key issues such as violation of law, fraud, or matters that have a serious impact on the financial statements, status or image of TBANK and its subsidiaries, the Internal Audit Group is required to report in details.

9. To establish expense budgets for collateral appraisal items as well as controlling the related expenses. 10. Authorized to delegate its authority to other staff of TBANK for the purpose of efficiency. The Executive Committee is authorized to approve lines of credit, investments, and obligations in compliance with the requirements imposed by the BOT. AUDIT COMMITTEE TBANK’s Board of Directors approved the establishment of the Audit Committee to ensure that TBANK’s business management is efficient and adhere to the principles of good corporate governance, which would help fostering the Bank’s credibility in the eyes of general public and compliance to the authorities’ policy. The Audit Committee consists of three directors, all of whom are Independent Director. All of them has knowledge, understanding, and experience in accounting and/or finance. As of 31 December 2009, the names of the members of the Audit Committee were as follows: 1. Mr. Kiettisak Meecharoen Chairman of the Audit Committee 2. Mr. Sathaporn Jinachitra Member of the Audit Committee 3. Assoc. Prof. Dr. Somjai Phagaphasvivathana Member of the Audit Committee Mr. Chatchawal Jantararuangtong Secretary of the Audit Committee Mr. Chusak Patcharapongsak Assistant Secretary of the Audit Committee ROLES AND RESPONSIBILITIES OF THE AUDIT COMMITTEE 1. To review the process related to the preparation and information disclosure of TBANK’s financial reports, ensuring that the information is accurate, complete, and reliable. During the reviewing process, the Audit Committee will cooperate with the external auditor and the executives responsible for preparing both quarterly and yearly financial reports. 2. To review the efficiency and appropriateness of the internal control system, internal audits, and oversight. In this regard, the Audit Committee will cooperate with the external auditors, internal auditors, and the respective authorities. 75

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11. To hold meetings with Audit Committees of each company in Thanachart Group occasionally as deemed necessary. 12. To perform any other duties assigned by TBANK’s Board of Directors or in compliance with the SET or other respective legal requirements. NOMINATION AND REMUNERATION COMMITTEE TBANK’s Board of Directors approved the establishment of the Nomination and Remuneration Committee. As of 31 December 2009, the Nomination and Remuneration Committee consisted of the followings: 1. Mr. Narong Chivangkur

Chairman of the Nomination and Remuneration Committee (Independent Director) 2. Mr. Sathaporn Jinachitra Member of the Nomination and Remuneration Committee (Independent Director) Mr. Panupan Tuangthong Acting as Secretary of the Nomination and Remuneration Committee Note:

4. To establish a structure of remuneration packages and fringe benefits for Directors and Executive President. And to propose the remunerate packages and fringe benefits to TBANK’s Board of Directors for consideration and approval. 5. To ensure that the remuneration packages and fringe benefits for directors and Chief Executive Officer are appropriate and consistent to their respective duties and level of responsibility and propose to the TBANK’s Board of Directors or the shareholders’ meetings for approval, depending on the case. RISK MANAGEMENT COMMITTEE The Board of Directors of TBANK has established the Risk Management Committee to ensure that risks are effectively and appropriately managed and consistently with the Bank’s organizational structure. As of 25 January 2010, the members of the Risk Management Committee were as follows: 1. Mr. Suphadej Poonpipat Chairman 2. Mr. Somjate Moosirilert Vice Chairman 3. Mr. Terry Watkins Member 4. Mrs. Noossara Roonsamrarn Member 5. Mr. Piyaphong Artmangkorn Member 6. Mr. Ajay Mundkur Member 7. Mr. Nophadon Ruengchinda Member 8. Mr. Anuwat Luengtaweekul Member 9. Mr. Kobsak Duangdee Member 10. Mr. Rick Yakabowich Member 11. Mrs. Sasima Taweeskulchai Member 12. Mrs. Kjitphan Chunharit Member 13. Mr. Sakda Chantrasuriyarat Member

In meeting no. 1/2010 on 15 January 2010, TBANK’s Board of Directors agreed to appoint Mrs. Michele Kwok to be the new member of the Nomination and Remuneration Committee in stead of Mr. Brendan King.

ROLES AND RESPONSIBILITIES OF THE NOMINATION AND REMUNERATION COMMITTEE 1. To establish guidelines and procedures for nominating candidates for the positions of Director and Chief Executive Officer in case the positions become vacant. 2. To select and examine the candidates with appropriate qualifications for appointment as Director or Chief Executive Officer. To propose the qualified candidates to the Bank’s Board of Directors for consideration. 3. To ensure that the size and constituent of TBANK’s Board of Directors are appropriate to the organization and to the changing environment. The Board of Directors consists of members with appropriate knowledge, competency, and experience in different fields. 76

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SEC, and the BOT’s guidelines. The committee has assigned duties for two Sub-committees as follows: 1. The Executive Committee undertakes the oversight and control of the Bank’s business conducts to ensure the policy guideline on corporate governance, approved by Board of Directors, is complied. 2. The Audit Committee is responsible for monitoring, reviewing, and examining the policy compliance to ensure that the Bank has good corporate governance system. ASSET AND LIABILITY MANAGEMENT COMMITTEE (ALCO) The Executive Committee has established the ALCO to manage the Bank’s assets and liabilities effectively and to be consistent with the organizational structure. As of 31 December 2009, the committee consisted of: 1. Mr. Suphadej Poonpipat Chairman 2. Ms. Suvarnapha Suvarnaprathip Vice Chairperson 3. Mr. Piyaphong Artmangkorn Vice Chairman 4. Mr. Somjate Moosirilert Member 5. Mrs. Noossara Roonsamrarn Member 6. Mr. Nophadon Ruengchinda Member 7. Mr. Anuwat Luengtaweekul Member 8. Mr. Ajay Mundkur Member 9. Mr. Kobsak Duangdee Member 10. Mr. Lalit Dharmaseri Member Representative of the Risk Control Department Secretary ROLES AND RESPONSIBILITIES OF THE ASSET AND LIABILITY MANAGEMENT COMMITTEE 1. To formulate the Bank’s liquidity, interest rate, and exchange rate risk management plans under the policy established by the Executive Committee.

14. Mr. Kamtorn Tantisiriwat Member and Secretary ROLES AND RESPONSIBILITIES OF THE RISK MANAGEMENT COMMITTEE 1. To propose the policy on overall risk management of TBANK to the Board of Directors for their approval. In this regard, the monitoring and auditing standards must be established to ensure that the risk management policy is strictly adhered to. 2. To formulate risk management strategies in accordance with the risk management policies and to ensure that the Bank’s risks are appropriately measured, monitored, and maintained at an appropriate level. 3. To review the adequacy of risk management policy, including the effectiveness of risk management system and the adherence to the established policy. 4. To establish risk management measures which aims at preventing possible losses from occuring and finding resolutions. 5. To assess both internal and external factors that might have material impact on the Bank’s financial positions. The assessment results will be taken into account in the adjustment of TBANK’s overall risk management policy. 6. To determine and order business units under the Risk Management Committee for the development of more efficient risk managing, controlling, and monitoring mechanism. 7. To monitor and control the risk management conducts of committees and/or business units to ensure that they are adhere to the established policy. 8. To report the committee’s performance to the Audit Committee regularly on areas which need improvements, ensuring that the improvements are in line with the established risk management policy and strategies. CORPORATE GOVERNANCE COMMITTEE TBANK has realized the importance of having good corporate governance system in accordance with the Codes of Conduct for listed companies and the SET’s guidelines on the disclosure of information on good corporate governance in the annual report. The Bank’s Board of Directors, therefore, plays the role of the Corporate Governance Committee by determining policy on corporate governance in compliance with the SET, the 77

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


2. To manage TBANK’s liquidity and exchange rate risks in accordance with the trends of money market and capital market condition. 3. To manage the Bank’s interest rate structure and determine the rate of interest both floating and fixed rates for which to prevent the adverse impact from interest rates volatility. 4. To approve investments in bonds and private debt instruments within budget limits. 5. To report the performance of the liquidity, interest rate and exchange rate management to the Executive Committee. INVESTMENT PORTFOLIO COMMITTEE The Executive Committee has established the Investment Portfolio Committee in order to ensure that the investment portfolio of the Bank is efficient and consistent to the organizational structure. The Committee, as of 31 December 2009, comprised of the followings: 1. Mr. Suphadej Poonpipat Chairman 2. Ms. Suvarnapha Suvarnaprathip Vice Chairperson 3. Mr. Somjate Moosirilert Vice Chairman 4. Mr. Piyaphong Artmangkorn Member 5. Dr. Chartchai Parasuk Member 6. Mr. Lalit Dharmaseri Member Representative of the Risk Control Department Secretary ROLES AND RESPONSIBILITIES OF THE INVESTMENT PORTFOLIO COMMITTEE 1. To determine the investment policy as well as consider and approve investment plans. 2. To approve the investments within the scope of authority specified by TBANK, which has to be complied with established position limit and VaR limit. To examine investment proposals that exceed its authority before propose them to the Executive Committee which has higher authority for seeking approval.

3. To review the investment performance and determine guidelines aimed at improving investment performance. 4. To manage the market risk arising from changes in prices of investment portfolios. 5. To establish and review the ratio of provisioning or determine the impairment value of the securities invested. CREDIT COMMITTEE The Executive Committee has established the Credit Committee to enhance the efficiency of TBANK’s credit underwriting process and comply with the organizational structure of the Bank. As of 31 December 2009, the members of the Credit Committee were including: 1. Mr. Suphadej Poonpipat Chairman 2. Ms. Suvarnapha Suvarnaprathip Vice Chairperson 3. Mr. Somjate Moosirilert Vice Chairman 4. Mrs. Noossara Roonsamrarn Member 5. Mr. Nophadon Ruengchinda Member 6. Mr. Terry Watkins Member 7. Mr. Noel Singh Member 8. Mrs. Sasima Taweeskulchai Member 9. Mr. Kamtorn Tantisiriwat Member Representative of the Risk Control Department Secretary ROLES AND RESPONSIBILITIES OF THE CREDIT COMMITTEE 1. To establish a work plan and oversight credit approval procedures under the policy approved by TBANK’s Executive Committee or Board of Directors. 2. To establish covenants and conditions of credit lines and approve new credit lines as well as the adjusted conditions on credit lines within the delegated 78

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authority, taking into account the credit risk assessments within the scope specified by TBANK’s Executive Committee or Board of Directors. 3. To establish the authority on credit approval to a person or a group of persons within delegated authority of the Credit Committee. 4. To approve transactions which exceed scope of authorization of the Debt Restructuring Committee or other subsequently appointed committee of which scope of responsibilities is similar to the forthmentioned committee. 5. To screen credit applications which exceed the scope of authorization of the Credit Committee in order to propose them to TBANK’s Executive Committee or Board of Directors for seeking approval. In case of urgency, the Credit Committee can propose the credit applications to the forthmentioned Committee without screening. 6. To report credit approval results to TBANK’s Executive Committee or Board of Directors. The Executive Committee has also established a number of Sub-committees to ensure that TBANK’s business conducts have been managed in a proper, efficient, and effective manner. EXECUTIVES As of 31 December 2009, TBANK had the executive in the manager position and the first four executives subsequent to the manager according to the SEC guidelines as follows: 1. Mr. Suphadej Poonpipat Chief Executive Officer 2. Ms. Suvarnapha Suvarnaprathip Vice Chairperson of the Executive Committee 3. Mr. Somjate Moosirilert Senior Executive Vice President 4. Mr. Piyaphong Artmangkorn Executive Vice President 5. Mrs. Noossara Roonsamrarn Executive Vice President 6. Mr. Nophadon Ruengchinda Executive Vice President 7. Mr. Anuwat Luengtaweekul Executive Vice President

8. Mr. Ajay Mundkur Executive Vice President 9. Mr. Kobsak Duangdee Executive Vice President 10. Mr. Amorn Kitinartintranee Executive Vice President 11. Mrs. Rambha Bhoocha-oom Executive Vice President

Note: Mr. Bundit Cheevadhanarak, Senior Executive Vice President, resigned from his position in TBANK on 1 April 2009

CHIEF EXECUTIVE OFFICER With reference to the BOT Notification No. TorPorTor. ForKorTor. (21) 434/2006 dated 28 March 2006 approving the appointment of Mr. Suphadej Poonpipat as Chief Executive Officer. TBANK’s Board of Directors has determined the duties and authority of the Chief Executive Officer as follows: 1. To formulate the guideline and plan for business conducts which aim at achieving goals and consistent with TBANK’s visions and missions. 2. To conduct business plan and budgeting for proposing to TBANK’s Executive Committee and Board of Directors for consideration. 3. To manage and approve business transactions, as well as conduct the oversight on TBANK’s executives and staff, ensuring that they follow the business plan and budget approved by the Bank’s Executive Committee and Board of Directors. 4. To manage and approve matters related to TBANK’s organization structure and human resource management. 5. To report TBANK’s business performance to the Executive Committee or the Board of Directors. Aside from delegating for other to act on the behalf of TBANK as aforementioned, TBANK has prepared regulation and organizational chart demonstrating authority and responsibility to manage internal operation of the Bank, in order to fairly diversify duties, responsibilities and authorities to various units properly and productively. This creates efficiency in decision-making and dexterity in execution, all under adequate supervision and control. As regards the level of approval authorization, the Chief Executive Officer is authorized to approve a credit line, investment or obligation worth no more than

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THB 300 million, provided that they are supported by collateral in the form of bonds, deposits or debt instruments. COMPANY SECRETARY In accordance with the principles of good corporate governance, TBANK has assigned the Office of Chief Executive Officer to be a unit that performs the corporate secretariat functions to ensure the Bank’s business management is more effective. ROLES AND RESPONSIBILITIES OF THE COMPANY SECRETARY 1. To provide the Board of Directors with preliminary advice on laws, rules and regulations as well as the Articles of Association of TBANK and ensure that they have been complied properly and regularly. Moreover, the secretary is entitled to report the Board of Directors on any material changes. 2. To organize Annual General Meeting of Shareholders and the Board of Directors meetings in compliance with legal requirements as well as the Articles of Association of TBANK. 3. To take minutes of Annual General Meeting of Shareholders and the Board of Directors meetings, as well as monitoring the implementation of the resolutions agreed at the shareholders’ meeting and the meetings of the Board of Directors. 4. To document and organize director’s administrative documents, invitations for the Board of Directors’ meeting, the minutes of the Board of Directors’ meeting, TBANK’s Annual Report, invitations for the shareholders’ meeting and the minutes of the shareholders’ meeting.

5. To ensure the disclosure of information and reports within respective authority to the supervisory agency in accordance with authority’s rules and regulations. 6. To contact and communicate with shareholders in general, ensuring that they are well informed about their rights and information of TBANK. 7. To support activities of TBANK’s Board of Directors. BOARD OF DIRECTORS MEETINGS TBANK’s Board of Directors holds the meeting regularly on the last week of each month. It may also hold additional meetings as deemed appropriate. The meeting agenda will be clearly determined in advance including the regular agenda such as business performance monitoring, approval of business transactions, and risk management. The Secretary of the Board of Directors is responsible for sending meeting invitations to all members of the Board along with the agenda as well as supporting documents in advance so that the Board will have sufficient time to review before attend the meetings. In 2009, the Board of Directors held 12 general meetings. At the Board of Directors meeting, every director is encouraged to express their opinions and adopts resolutions independently. The Chairman of the Board of Directors shall provide opportunities to all directors to express their opinions before requesting for the adoption of the resolution. The recommendation and opinions of the directors at the meetings are documented. The minutes of the meetings are approved by the Board of Directors and available to be examined by the Board and related parties.

Chaiyapruk Children’s Home Donated funds for expenses on meals, books and other items to the underprivileged children to provide them with the opportunities in the education and future careers 80

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DIRECTORS’ ATTENDANCE AT MEETING HELD IN 2009

(Unit: Times)

BOARD OF DIRECTORS

LIST OF TBANK’S DIRECTORS

(12 MEETINGS)

1. Mr. Banterng Tantivit 2. Mr. Suphadej Poonpipat 3. Mrs. Michele Kwok 4. Mr. Kiettisak Meecharoen 5. Mr. Narong Chivangkur 6. Mr. Sathaporn Jinachitra 7. Assoc. Prof. Dr. Somjai Phagaphasvivathana 8. Ms. Suvarnapha Suvarnaprathip 9. Mr. Brendan King 10. Mr. Somjate Moosirilert 11. Mr. Kobsak Duangdee 12. Mr. Martin Weeks Directors Resigning during 2009 1. Mr. Suvit Arunanondchai 2. Mr. Vichit Yarnamorn

NOMINATION RISK AND AUDIT MANAGEMENT EXECUTIVE REMUNERATION COMMITTEE COMMITTEE COMMITTEE COMMITTEE (8 MEETINGS) (2 MEETINGS) (8 MEETINGS) (14 MEETINGS)

12 12 7 11 12 12 9 11 10 2 8 0 1 1

- - - 8 - 2 6 - - - - - 2 -

- - - - 2 2 - - - - - - - -

- 7 - - - - - - - 0 0 - - -

- 14 - - - - - 14 11 3 10 0 - -

Notes: 1. Mr. Suvit Arunanondchai and Mr. Vichit Yarnamorn resigned from their directorship of TBANK on 23 Febuary 2009 2. Assoc. Prof. Dr. Somjai Phagaphasvivathana has assumed his directorship since 26 March 2009 3. Mr. Kobsak Duangdee has assumed his directorship since 1 April 2009 4. Mr. Somjate Moosirilert has assumed his directorship since 29 October 2009 5. Mr. Martin Weeks has assumed his directorship since 24 December 2009

appointment of the independent director has to be conducted in compliance with the regulations imposed by the BOT. In electing the Bank’s Director at the shareholders’ meeting, every shareholder has equitable voting rights. The rules and procedures of Director’s election at the shareholders’ meeting are as follows: (1) Each voter has the number of vote equals to the number of shares, one share represents one vote. (2) Vote casting can be conducted individually or in terms of a group of individuals or by any other procedure as deemed appropriate by the shareholders. However, in each resolution, all shareholders must cast all of their votes as stated in (1) (3) The resolutions are adopted by a majority vote. In the case when the votes are equal, the ultimate decision is upon the Chairman of the meeting.

NOMINATION AND APPOINTMENT OF DIRECTORS AND OTHER COMMITTEES 1. Appointment Procedures of TBANK’s Board of Directors TBANK does not specify the maximum number of directors. However, in accordance with the Bank’s Articles of Association, the Bank must have at least five directors. The appointment procedure can be categorized into two cases, including the case of appointing new director to replace the other that is retired by rotation; and the case is when the appointment is made during the tenure of directorship due to position vacancy. In this regard, TBANK’s Board of Directors has established the Nomination Committee in order to select and nominate qualified candidates for holding the directorship. Under the first circumstance, the resolution of the shareholders’ meeting is required, while, in the latter case, the Board of Directors is able to approve the director’s appointment given that the qualifications are fulfilled. In addition, the

Note: 81

In compliance with the Bank’s Articles of Association amended by the Extraordinary Meeting of Shareholders No. 3/2009 on 6 October 2009.

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


2. Appointment Procedures of the Executive Committee TBANK’s Board of Directors may appoint a number of directors to hold the position in the Executive Committee as it deems appropriate. Among these, one of them shall serve as the Chairman of the Executive Committee. The Executive Committee will be authorized to manage and conduct TBANK’s business affairs as assigned by TBANK’s Board of Directors. The Chief Executive Officer will be ex-officio Executive Committee. 3. Appointment Procedures of the Audit Committee The Board of Directors will appoint at least three Independent Directors who have met the Bank’s qualifications to assume the directorship in the Audit Committee. The Committee is responsible for undertaking responsibilities as speficied in the charter of the Audit Committee which is in compliance with the SET’s guideline. The Committee is fully independent to perform their duties and has a direct reporting line to the Board of Directors. 4. Appointment Procedures of the Nomination and Remuneration Committee The Board of Directors will appoint at least three Non-executive Directors to assume the directorship in the Nomination and Remuneration Committee. The Committee is responsible for undertaking responsibilities as specified in the Charter of the Nomination and Remuneration Committee in accordance with the SET’s guidelines and the BOT’s regulations. DEVELOPMENT OF DIRECTORS AND EXECUTIVES Each Director of TBANK has attended at least one training course organized by the Thai Institute of Directors Association (IOD). Director and executive who attended the training course in 2009 were: 1. Mr. Narong Chivangkur Independent Director/Chairman of the Nomination and Remuneration Committee Certificate: Financial Statement for Directors (FSD), Class 4/2009 2. Mr. Anuwat Luengtaweekul Executive Vice President Certificate: Successful Formulation & Execution the Strategy (SFE), Class 3/2552

EVALUATION OF BOARD OF DIRECTORS AND MANAGEMENT TEAM’S PERFORMANCE TBANK has conducted the evaluation of the Board of Directors’ performance every year. The evaluation can be categorized into: 1) The evaluation of Board of Directors’ performance and 2) The evaluation of Chief Executive Officer’s performance SUCCESSION PLAN The Nomination and Remuneration Committee is responsible for ensuring that there is the succession plan for the Chief Executive Officer position for the continuity in the Bank’s management. THE ORIENTATION FOR NEWLY APPOINTED DIRECTORS AND EXECUTIVES When the composition of the directors has been changed or there is newly appointed executive, Office of Chief Executive Officer is responsible for preparing necessary documents for new director. Such documents compose of the Bank’s annual report, which contains visions, strategies, and goals of the Bank; the Director and executive’s manual which includes qualifications and profile prohibited by laws related to financial institutions; and the relevant Acts and notifications. REMUNERATION POLICY The remuneration of TBANK’s Directors has been determined by being compared with the industry’s director remuneration. Such comparison has been applied along with the consideration on roles, duties, and scope of responsibilities of each director. The remuneration of TBANK’s Directors has to be under the consideration and screening of the Nomination and Remuneration Committee and suggested to the Bank’s Board of Directors for their consideration before being proposed to the shareholders’ meeting for seeking their approval. The remuneration will be paid in terms of meeting stipends, monthly compensation, and performance allowance. Members of Sub-Committee will receive the remuneration as speficied by TBANK’s Board of the Directors based on the recommendation of Nomination and Remuneration Committee. The recommendation is derived by considering their duties and responsibilities compared to a peer of the industry. The Sub-Committee’s 82

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DIRECTOR’S REMUNERATION a) Financial Remuneration As of 31 December 2009, TBANK has remunerated three Committees, including the Board of Directors, the Audit Committee, and the Nomination and Remuneration Committee totally THB 14,355,294.47. The remuneration has been paid in terms of meeting stipends, position allowance, and performance allowance (from the Bank’s performance in 2008) which can be summarized as follows:

remuneration will be in terms of meeting stipends and/or position allowance. The remuneration of the executives is complied with policies and standards which are associated with the Bank’s as well as the individual performance. The performance assessment is conducted via the use of Key Performance Indicators (KPI). The executives will be remunerated in terms of salaries and allowances of which the average meets the industry’s peer.

1) Details on the remuneration of TBANK’s Directors are as follows: TYPE OF REMUNERATION (Baht per Year) LIST OF DIRECTORS

MONTHLY MEETING PERFORMANCE COMPENSATION STIPENDS ALLOWANCE

1. Mr. Banterng Tantivit 2. Mr. Suphadej Poonpipat 3. Mrs. Michele Kwok 4. Mr. Kiettisak Meecharoen 5. Mr. Narong Chivangkur 6. Mr. Sathaporn Jinachitra 7. Assoc. Prof. Dr. Somjai Phagaphasvivathana 8. Ms. Suvarnapha Suvarnaprathip 9. Mr. Brendan King 10. Mr. Somjate Moosirilert 11. Mr. Kobsak Duangdee 12. Mr. Martin Weeks Directors Resigned in 2009 1. Mr. Suvit Arunanondchai 2. Mr. Vichit Yarnamorn TOTAL Notes:

630,000.00 315,600.00 315,600.00 315,600.00 315,600.00 315,600.00 236,700.00 315,600.00 315,600.00 78,900.00 236,700.04 26,300.00 52,600.00 52,600.00 3,523,000.04

466,800.00 226,800.00 132,300.00 207,900.00 226,800.00 226,800.00 170,100.00 207,900.00 189,000.00 37,800.00 151,200.00 0.00 18,900.00 18,900.00 2,281,200.00

1,412,926.26 2,509,726.26 706,463.13 1,248,863.13 706,463.13 1,154,363.13 706,463.13 1,229,963.13 706,463.13 1,248,863.13 706,463.13 1,248,863.13 0.00 406,800.00 706,463.13 1,229,963.13 706,463.13 1,211,063.13 0.00 116,700.00 0.00 387,900.04 0.00 26,300.00 706,463.13 777,963.13 706,463.13 777,963.13 7,771,094.43 13,575,294.47

1. Mr. Suvit Arunanondchai and Mr. Vichit Yarnamorn resigned from their directorship of TBANK on 23 Febuary 2009. 2. Associate Professor Dr. Somjai Phagaphasvivathana has assumed his directorship since 26 March 2009. 3. Mr. Kobsak Duangdee has assumed his directorship since 1 April 2009. 4. Mr. Somjate Moosirilert has assumed his directorship since 29 October 2009. 5. Mr. Martin Weeks has assumed his directorship since 24 December 2009.

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TOTAL


2) The remuneration made to the Audit Committee in terms of meeting stipends amounted to THB 740,000.00. NAMELIST

AMOUNT (Baht per Year)

1. Mr. Kiettisak Meecharoen 2. Mr. Suvit Arunanondchai 3. Mr. Sathaporn Jinachitra 4. Assoc. Prof. Dr. Somjai Phagaphasvivathana TOTAL

370,000.00 35,000.00 185,000.00 150,000.00 740,000.00

3) The remuneration made to the Nomination and Remuneration Committee in terms of meeting stipends amounted to THB 40,000.00. NAMELIST

AMOUNT (Baht per Year)

1. Mr. Narong Chivangkur 2. Mr. Sathaporn Jinachitra TOTAL

25,000.00 15,000.00 40,000.00

4) No remuneration made to the Executive Committee as it has not yet been determined by TBANK’s Board of Directors. 5) The remuneration of 12 executives of TBANK who assume manager position and the next four positions below, in accordance with the SEC’s guideline, is in terms of salaries, cost-of-living allowances, and contribution payments amounted to THB 55,477,506.00.

6) With regard to the remuneration of the Independent Director of the subsidiaries, there is one Independent Director who assume the directorship in Thanachart Life Assurance Company Limited and received the compensation amounted to THB 150,000.00 in 2009. b) Remuneration other than cash payments - None -

Heroes in Black Provided fund to sponsor the purchase of bulletproof helmet for scout volunteers stationed along the border of Thailand-Cambodia as well as presented stories of their lives to communicate with the public of their mission to protect the country. 84

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REPORT OF THE NOMINATION AND REMUNERATION COMMITTEE The Board of Directors of Thanachart Bank Public Company Limited approved the establishment of the Nomination Committee and the Remuneration Committee on 26 March 2002. On 25 March 2009, the Bank Board of Directors’ meeting adopted a resolution to combine the Nomination Committee and the Remuneration Committee together and rename the Committee to “the Nomination and Remuneration Committee”. The Committees consisted of three independent directors whose names as at 15 January 2010 were as follows: 1. Mr. Narong Chivangkur Chairman (Independent Director) 2. Mrs. Michele Kwok Member (Non-Executive Director) 3. Mr. Sathaporn Jinachitra Member (Independent Director) Mr. Panupan Tuangthong Acting Secretary In 2009, the Nomination Committee held two meetings to process the following important matters: 1. To select and nominate the name of person appropriate for the assessment to be appointed as a director by the Bank’s Board of Directors meeting. 2. To review and nominate the names of person appropriate for assessment to be appointed as directors replacing the directors retiring by rotation in the Annual General Meeting of Shareholders for the year 2010. The names of person appropriate have been proposed to be approved at the Bank’s Board of Directors meeting and the Annual General Meeting of Shareholders. 3. To select and nominate the name of person appropriate for the assessment to be appointed as the Senior Executive Vice President by the Bank’s Board of Directors meeting. 4. To review rules, procedures, and channels of providing opportunities for shareholders to propose the name of person appropriate to be appointed as Bank’s directors. 5. To acknowledge the Bank’s Board of Directors’ performance for the year 2008 and propose at the Bank’s Board of Directors’ meeting for seeking the solution to be implemented for supporting the Board of Directors’ operations. 6. To review and consider the remuneration packages for directors and executives, taking into account that the assigned duties and responsibilities and performance are in line with the Bank’s policy and operating result. The remuneration packages were proposed for approving at the Bank’s Board of Directors meeting and the Annual General Meeting of Shareholders for the year 2010. Mr. Narong Chivangkur Chairman of the Nomination and Remuneration Committee

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SUPERVISION AND MANAGEMENT STRUCTURES

BOARD OF DIRECTORS Internal Audit Nomination and Remuneration Committee

Audit Committee

Risk Management Committee

Risk Management Department

Compliance Unit

EXECUTIVE COMMITTEE

Office of CEO

Asset & Liability Management Committee

Investment Portfolio Committee

Credit Committee

IT Security Management Committee

CHIEF EXECUTIVE OFFICER Compensation Management Department

Business Group

Consulting

Supporting Group

Retail Customer and Branch Network

Corporate Strategy and Finance Account Control

Product Development

Human Resource

Corporate and SMEs Customer

Operation and Support

Financial Institution Customer

Communication & Brand Management

Trouble Debt Restructuring

Information and Technology

Treasury

Channel Development

Information as of 31 December 2009

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


BOARD OF DIRECTORS AND MANAGEMENT TEAM

Mr. Banterng Tantivit

Chairman (Non-Executive Director)

Age Education(s)

65 years - Master of Science (Finance), Sloan School of Management, Massachusetts Institute of Technology, USA - Bachelor of Science in Electrical Engineering, Massachusetts Institute of Technology, USA - Director Accreditation Program (DPA), Class 25/2004, Thai Institute of Directors Association

Directorship and Executive training program(s) Experience(s) in the past 5 years 2006-Present

2005-Present 2003-Present

2001-Present 1994-Present

1989-Present

1987-Present Family relationship with management No. of TBANK share(s) held

-

Vice Chairman, Thanachart Insurance Company Limited Director, Arsom Silp Institution of the Arts Council Director, Siam Piwat Holding Company Limited Chairman, Thanachart Life Assurance Company Limited Chairman, MBK Resort Public Company Limited Director, B.V. Holding Company Limited Chairman, Plan Estate Company Limited Director, Siam Piwat Company Limited Advisor, Dusit Thani Public Company Limited Advisor, Pathum Ricemill & Granary Public Company Limited Chairman, Thanachart Capital Public Company Limited (Original name was National Finance Public Company Limited and was registered to change name in 2006) - Chairman and Chairman of Executive Committee, MBK Public Company Limited (Holding Chairman position in 2006) - Director, Deebuk Company Limited - Director, Thai Farming Company Limited None None

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Mr. Suphadej Poonpipat

Vice Chairman, Chairman of Executive Committee and Chief Executive Officer (Executive Director)

Age Education(s)

59 years - Master of Science, University of Wisconsin, USA - Bachelor of Business Administration and Accounting, Chulalongkorn University - Director Accreditation Program (DAP), Class 8/2004, Thai Institute of Directors Association

Directorship and Executive training program(s) Experience(s) in the past 5 years 2007-Present 2006-Present 2005-Present

2003-Present

2000-Present 1992-Present 1990-Present

Family relationship with management No. of TBANK share(s) held

-

Director, Royal Orchid Hotel (Thailand) Public Company Limited Director, Thai Royal Orchid Real Estate Company Limited Director, Siam Piwat Holding Company Limited Director and Chairman of Executive Committee, Thanachart Insurance Company Limited - Director, MBK Resort Public Company Limited - Director and Chairman of Executive Committee, Thanachart Life Assurance Company Limited - Director, Plan Estate Company Limited - Director, Siam Piwat Company Limited - Vice Chairman and Vice Chairman of Executive Committee, MBK Public Company Limited (Holding Vice Chairman in 2006) - Advisor, Pathum Ricemill & Granary Public Company Limited - Director, Advance Info Service Public Company Limited - Vice Chairman and Chairman of Executive Committee, Thanachart Capital Public Company Limited (Holding Vice Chairman position in the Board of Directors and Chairman position in of Executive Committee in 2007) None None

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Mrs. Michele Kwok

Vice Chairperson (Non-Executive Director)

Age Education(s)

50 years - Master of Business Administration (Finance & Marketing), University of British Columbia, Canada - Bachelor of Science in Mathematics, University of British Columbia, Canada

Experience(s) in the past 5 years 2008-Present 2006-Present

2004-2006 2000-2004 Family relationship with management No. of TBANK share(s) held

- Director, Canada China Business Council, Canada - Governor, The Canadian Chamber of Commerce, Hong Kong - Senior Vice President/Regional Head, Asia/Pacific and Middle East, The Bank of Nova Scotia, Hong Kong - Director, Scotiabank (Hong Kong) Limited, Hong Kong - Director, Boracay Limited, Hong Kong - Director, The Bank of Nova Scotia Asia Limited, Singapore - Director, The Bank of Nova Scotia Berhad, Malaysia - Director, Scotiatrust (Asia) Limited, Hong Kong - Vice President, Human Resources, Scotiabank, Canada - Vice President, Commercial Banking, Scotiabank, Canada None None

Mr. Kiettisak Meecharoen

Chairman of the Audit Committee (Independent Director)

Age Education(s)

63 years - Master of Theoretical Economics, Keio University, Japan - Bachelor of Science in Finance, Hitotsubashi University, Japan - Director Accreditation Program (DAP), Class 40/2005, Thai Institute of Directors Association - Audit Committees Program Class 10/2005, Thai Institute of Directors Association - Banking and Monetary Policy in Developing Countries Program, Harvard University

Directorship and Executive training program(s)

Experience(s) in the past 5 years 2005-Present 2000-Present

1997-1999 Family relationship with management No. of TBANK share(s) held

- Independent Director, Tararom Enterprise Public Company Limited - Independent Director, Thanachart Life Assurance Company Limited - Independent Director and Chairman of the Audit Committee, Safety Insurance Public Company Limited (Holding the Chairman position of the Audit Committee in 2004) - Assistant Governor, Bank of Thailand None None

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Mr. Narong Chivangkur

Chairman of the Nomination and Remuneration Committee (Independent Director)

Age Education(s)

65 years - Management Development Program, Asian Institute of Management, Philippines - Financial Management Program, Rochester Institute of Technology, USA - Financial Statement for Directors (FSD), Class 4/2009, Thai Institute of Directors Association - Successful Formulation & Execution the Strategy (SFE), Class 2/2008, Thai Institute of Directors Association - Role of the Compensation Committee (RCC), Class 4/2007, Thai Institute of Directors Association - Corporate Social Responsibility (CSR), Class 1/2007, Thai Institute of Directors Association - Director Certification Program (DCP) Class 34/2003, Thai Institute of Directors Association

Directorship and Executive training program(s)

Experience(s) in the past 5 years 2005-Present 2004-Present 2003-Present 2002-Present 2000-Present Family relationship with management No. of TBANK share(s) held

- Director, Mom Chailai Development Company Limited - Director, Momentum Sale and Distribution Company Limited - Director, Momentum IM Company Limited - Director, Momentum Consulting Company Limited - Director, Momentum BBS Company Limited None None

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Mr. Sathaporn Jinachitra

Member of the Audit Committee and the Nomination and Remuneration Committee (Independent Director)

Age Education(s)

61 years - Master of Science (Econometrics), The London School of Economics and Political Science (University of London), England - Bachelor of Science (Economics), University College London (University of London), England - Bachelor of Art (Law), Sukhothai Thammathiraj University - Corporate Social Responsibility Program (CSR), Class 1/2007, Thai Institute of Directors Association - DCP Refresher Course, Class 2/2006, Thai Institute of Directors Association - Director Certification Program (DCP), Class 0/2000, Thai Institute of Directors Association

Directorship and Executive training program(s)

Experience(s) in the past 5 years 2009-Present 2006-Present

1999-Present 2002-2006 Family relationship with management No. of TBANK share(s) held

- Director, B.M.S. Company Limited - Dispute Resolution Committee under The National Telecommunications Commission - Director, I Mutchima Company Limited - Director, Thai Institute of Directors Association (IOD) - President, Export-Import Bank of Thailand None None

91

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Assoc. Prof. Dr. Somjai Phagaphasvivathana

Member of the Audit Committee (Independent Director)

Age Education(s)

64 years - Doctorate in Political Economic, Madrid University, Spain - Diploma de Sciences Politiques, Centre European University de Nancy, France - Licenciado en Ciencias Politicas, Madrid University, Spain - Bachelor of Arts, Chulalongkorn University - Director Certification Program (DCP), Class 34/2005, Thai Institute of Directors Association

Directorship and Executive training program(s) Experience(s) in the past 5 years 2006-Present 1997-Present

1996-Present 1982-2006 Family relationship with management No. of TBANK share(s) held

- Director and Chairman of the Audit Committee, SEAFCO Public Company Limited - Director and Chairman of the Audit Committee, Lee Feed Mill Public Company Limited - Director, Krungthep Thanakom Company Limited - Director, Thai Hua Rubber Public Company Limited - Director and Member of the Audit Committee, Amarin Printing & Publishing Public Company Limited - Associate Professor, Faculty of Political Science, Thammasat University None None

Note: Assoc. Prof. Dr. Somjai Phagaphasvivathana was appointed as a director of the Bank on 26 March 2009.

Ms. Suvarnapha Suvarnaprathip

Vice Chairperson of the Executive Committee (Executive Director)

Age Education(s)

64 years - Bachelor of Economics, Monash University, Australia - Commercial Lending Training Program, Banker Trust, New York, USA - Director Accreditation Program (DAP), Class 20/2004, Thai Institute of Directors Association

Directorship and Executive training program(s) Experience(s) in the past 5 years 2005-Present

1991-Present Family relationship with management No. of TBANK share(s) held

- Director and Vice Chairperson of Executive Committee, Thanachart Capital Public Company Limited - Director, Thanachart Life Assurance Company Limited - Director, Seacon Development Public Company Limited None None

92

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Mr. Brendan King

Vice Chairman of the Executive Committee (Executive Director)

Age Education(s)

46 years - Master of Business Administration (Finance & International Business), York University, Canada - Bachelor of Art (Business & Economics), York University, Canada

Experience(s) in the past 5 years 2005-Present 2004-Present

2002-2004 Family relationship with management No. of TBANK share(s) held

-

Director, Xi’an City Commercial Bank, China Director, Scotiabank (Hong Kong) Limited, Hong Kong Director, Scotia Nominees (Hong Kong) Limited, Hong Kong Director/Treasury, The Canadian Chamber of Commerce, Hong Kong Vice President, Greater China, The Bank of Nova Scotia, Hong Kong General Manager, International Corporate Finance, Scotiabank (Bahamas) Limited, USA None None

Mr. Somjate Moosirilert

Director of the Executive Committee and Senior Executive Vice President (Executive Director)

Age Education(s)

53 years - Master of Management, Sasin Graduate Institute of Business Administration of Chulalongkorn University - Bachelor of Business Administration and Accounting, Thammasat University - Role of the Chairman Program (RCP), Class 5/2001, Thai Institute of Directors Association

Directorship and Executive training program(s) Experience(s) in the past 5 years 2009-Present

2002-2008 Family relationship with management No. of TBANK share(s) held

-

Executive Director, Association of Securities Companies Director, Thailand Securities Finance Corporation Vice Chairman, The Stock Exchange of Thailand Chairman, Thanachart Securities Public Company Limited Director, Executive Director and Chief Executive Officer, Thanachart Capital Public Company Limited - President, Thai Asset Management Corporation None None

Note: Mr. Somjate Moosirilert was appointed as a director of the Bank on 29 October 2009.

93

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Mr. Kobsak Duangdee

Director of the Executive Committee and Executive Vice President (Executive Director)

Age Education(s)

52 years - Master of Business Administration (Finance), University of Tennessee, Knoxville, USA - Bachelor of Commerce and Accountancy, Chulalongkorn University - Director Accreditation Program (DAP), Class 73/2008, Thai Institute of Directors Association

Directorship and Executive training program(s) Experience(s) in the past 5 years 2008-Present

2001-Present 1997-2008 Family relationship with management No. of TBANK share(s) held

- Director and Executive Director, Thanachart Securities Public Company Limited - Vice President/Country Head, The Bank of Nova Scotia, Bangkok Representative Office - Director, Thai-Canadian Chamber of Commerce - Vice President/Country Head, The Bank of Nova Scotia, Bangkok Branch None None

Note: Mr. Kobsak Duangdee was appointed as a director of the Bank on 1 April 2009.

Mr. Martin Weeks

Director of the Executive Committee (Executive Director)

Age Education(s)

44 years - Master of Science in Finance, University of London, England - Diploma in Corporate Treasury Management, The Association of Corporate Treasurers - Diploma in Retail Banking, The Chartered Institute of Bankers

Experience(s) in the past 5 years 2007-Present

2004-2007 2002-2004 Family relationship with management No. of TBANK share(s) held

- Senior Vice President & Regional Treasurer, The Bank of Nova Scotia, Hong Kong - Director, The Bank of Nova Scotia Asia Limited, Singapore - Director, Scotiabank (Hong Kong) Limited, Hong Kong - Trustee UK Pension Scheme, The Bank of Nova Scotia - Co-Head Capital Markets and Money Markets, The Bank of Nova Scotia None None

Note: Mr. Martin Weeks was appointed as a director of the Bank on 24 December 2009.

94

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Mr. Piyaphong Artmangkorn

Executive Vice President

Age Education(s)

52 years - Master of Public Administration (Taxation), University of Southern California, USA - Bachelor of Economics, Thammasat University - Director Accreditation Program (DAP), Class 21/2004, Thai Institute of Directors Association

Directorship and Executive training program(s) Experience(s) in the past 5 years 1998-Present 2005-2009

2001-2008 2000-2008 1998-2005 Family relationship with management No. of TBANK share(s) held

- Director and Executive Director, MBK Public Company Limited - Chairman and Chairman of Executive Committee, Thanachart Securities Public Company Limited (Resigned from the positions of Chairman and Chairman of Executive Committee on 19 February 2009) - Director and Executive Vice President, Thanachart Bank Public Company Limited - Director, Thai Royal Orchid Real Estate Company Limited - Director, Royal Orchid Hotel (Thailand) Public Company Limited - Senior Vice President, National Finance Public Company Limited None None

Mrs. Noossara Roonsamrarn

Executive Vice President

Age Education(s)

51 years - Master of Business Administration, National Institute of Development Administration (NIDA) - Bachelor of Political Science, Chulalongkorn University - DCP Refresher Course, Class 4/2004, Thai Institute of Directors Association - Director Certification Program (DCP), Class 19/2002, Thai Institute of Directors Association

2003-2005

Directorship and Executive training program(s)

Experience(s) in the past 5 years 1997-Present

2005-2008 1997-2005 Family relationship with management No. of TBANK share(s) held

- Director and Member of the Audit Committee, Thanachart Insurance Company Limited (Holding position as a member of the Audit Committee in 2006) - Director and Member of the Audit Committee, Thanachart Fund Management Company Limited - Director and Executive Vice President, Thanachart Bank Public Company Limited None None

95

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Mr. Nophadon Ruengchinda

Executive Vice President

Age Education(s)

52 years - Master of Management, Chulalongkorn University - Master of Business Administration, National Institute of Development Administration (NIDA) - Bachelor of Political Science, Chulalongkorn University

Experience(s) in the past 5 years 2009-Present 2005-Present 1998-Present 2004-2009

Family relationship with management No. of TBANK share(s) held

Director, T Leasing Company Limited Director, Thanachart Insurance Company Limited Director, Thanachart Life Assurance Company Limited Director and Chairman of the Audit Committee, Thanachart Fund Management Company Limited (Resigned from the positions of Director and Chairman of the Audit Committee on 31 July 2009) - Director, Thai International Rent A Car Company Limited (Resigned from the directorship on 23 July 2009) None None

Mr. Anuwat Luengtaweekul

Executive Vice President

Age Education(s)

46 years - Master of Business Administration, Rangsit University - Bachelor of Science (Accounting), Kasetsart University - Director Certification Program (DCP), Class 24/2002, Thai Institute of Directors Association - Board and Performance Evaluation Program, Thai Institute of Directors Association - Financers’ Executive Development Program, Class 9/1994, Association of Finance Companies

2000-2009

Directorship and Executive training program(s)

Experience(s) in the past 5 years 2007-2009

2007-2007 2002-2007 Family relationship with management No. of TBANK share(s) held

-

- Executive Director and Executive Vice President, Thanachart Capital Public Company Limited (Resigned from the position of Executive Director on 30 April 2009 and resigned from the position of Executive Vice President on 31 May 2009) - Senior Vice President, Corporate Strategy and Planning Division, Thanachart Capital Public Company Limited - Senior Vice President, Office of Managing Director, Thanachart Bank Public Company Limited None None

96

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Mr. Ajay Mundkur

Executive Vice President

Age Education(s)

45 years - Master of Business Administration, Washington University, St. Louis, USA - Diploma in Financial Management, Symbiosis Institute of Business Management, India - Bachelor of Commerce (Accounting and Auditing), University of Poona, India

Experience(s) in the past 5 years 2005-Present 2004-2005 Family relationship with management No. of TBANK share(s) held

- Vice President, Retail Banking, The Bank of Nova Scotia, Canada - Managing Director, Term Deposits & Day-to-Day Banking, The Bank of Nova Scotia None None

Satabun Saeng Sawang Foundation Helped find speakers who were experts on Art Therapy for special children and arranged the training for the teachers who help and train these children to continue their normal living. 97

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


REPORT ON THE CHANGE IN DIRECTOR AND EXECUTIVE’S SHAREHOLDING DURING THE PERIOD BETWEEN 2009 AND 2008 (Information as at 31 December 2009) No.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

Name

Position

Number of Shares Held as at 31 December 2009

Mr. Banterng Tantivit Chairman Mr. Suphadej Poonpipat Vice Chairman Mrs. Michele Kwok Vice Chairperson Mr. Kiettisak Meecharoen Independent Director Mr. Narong Chivangkur Independent Director Mr. Sathaporn Jinachitra Independent Director Assoc. Prof. Dr. Somjai Phagaphasvivathana Independent Director Ms. Suvarnapha Suvarnaprathip Executive Director Mr. Brendan King Executive Director Mr. Somjate Moosirilert Executive Director Mr. Kobsak Duangdee Executive Director Mr. Martin Weeks Executive Director Mr. Piyaphong Artmangkorn Executive Vice President Mrs. Noossara Roonsamrarn Executive Vice President Mr. Nophadon Ruengchinda Executive Vice President Mr. Anuwat Luengtaweekul Executive Vice President Mr. Ajay Mundkur Executive Vice President

-

Number of Shares Held as at 31 December 2008

Increase (Decrease) in Number of shares

-

-

Percentage Shareholding in the Company (Percent)

-

CSR Club The club voluntarily joined by the staff of Thanachart Group to participate in social responsibility activities in various areas such as receiving the donation of stationary equipments and passed to schools in the rural area, the canal cleaning to support the community in preserving the environment, etc. 98

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

99

Note:

X //

D

D

* Thanachart Bank does not have affiliated company.

XX Vice Chairman B Managing Director

X X

D

X

X

X/

X

X

D

D

X/

X/

X / C X / A XXX

X //

X //

X

X

X

X

XX

X

X

X X X

X F X

F X X

X X F X F X X X

X Director /// Chairman of Executive Committee C Senior Executive Vice President D Executive Vice President

X/

X X XX //

Related Company

X X X X X X X X X X X X X X X X /

F

F X

// Vice Chairman of Executive Committee / Executive Director E Chief Executive Officer F Authorized Person with Management Power

X X

14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51

X X XXX /// XXX X XXX X X

6 7 8 9 10 11 12 13

X /// X ///

5

XX /// E XX ///

3 4 XXX XX

2

Subsidiary Company

XXX

XXX

1

Company

XXX Chairman A President & Chief Executive Officer

Mr. Banterng Tantivit Mr. Suphadej Poonpipat Mrs. Michele Kwok Mr. Kiettisak Meecharoen Mr. Narong Chivangkur Mr. Sathaporn Jinachitra Assoc. Prof. Dr. Somjai Phagaphasvivathana Ms. Suvarnapha Suvarnaprathip Mr. Brendan King Mr. Somjate Moosirilert Mr. Kobsak Duangdee Mr. Martin Weeks Mr. Piyaphong Artmangkorn Mrs. Noossara Roonsamrarn Mr. Nophadon Ruengchinda Mr. Anuwat Luengtaweekul Mr. Ajay Mundkur

Name List

as at 31 December 2009

THE INFORMATION OF THE EXECUTIVES AND AUTHORIZED PERSONS’ POSITION IN SUBSIDIARY, ASSOCIATED AND RELATED COMPANIES

TBANK


List of Subsidiary and Related Companies (Information as at 31 December 2009)

Parent Company 1. Thanachart Capital Public Company Limited Subsidiary Companies 2. Thanachart Securities Public Company Limited 3. Thanachart Fund Management Company Limited 4. Thanachart Training and Development Company Limited 5. Thanachart Life Assurance Company Limited 6. Thanachart Insurance Company Limited Related Companies 11. Siam Piwat Company Limited 12. Siam Piwat Holding Company Limited 13. MBK Public Company Limited 14. MBK Resort Public Company Limited 15. B.V. Holding Company Limited 16. Plan Estate Company Limited 17. Deebuk Company Limited 18. Thai Farming Company Limited 19. Advance Info Service Public Company Limited 20. Royal Orchid Hotel (Thailand) Public Company Limited 21. Thai Royal Orchid Real Estate Company Limited 22. Boracay Limited, Hong Kong 23. The Bank of Nova Scotia Asia Limited, Singapore 24. The Bank of Nova Scotia Asia Limited, Hong Kong 25. Scotiabank (Hong Kong) Limited, Hong Kong 26. The Canadian Chamber of Commerce in Hong Kong 27. The Bank of Nova Scotia Berhad, Malaysia 28. Scotiatrust (Asia) Limited, Hong Kong 29. Canada China Business Council, Canada 30. Tararom Enterprise Public Company Limited 31. Safety Insurance Public Company Limited

100

7. 8. 9. 10.

T Leasing Company Limited Thanachart Legal and Appraisal Company Limited Thanachart Group Leasing Company Limited Thanachart Management and Service Company Limited

32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51.

Momentum Sale and Distribution Company Limited Mom Chailai Development Company Limited Momentum Consulting Company Limited Momentum BBS Company Limited Momentum IM Company Limited I Mutchima Company Limited B.M.S. Company Limited Lee Feed Mill Public Company Limited Amarin Printing & Publishing Public Company Limited SEAFCO Public Company Limited Krungthep Thanakom Company Limited Thai Hua Rubber Public Company Limited Seacon Development Public Company Limited Scotia Nominees (Hong Kong) Limited, Hong Kong Xian City Commercial Bank, China Thailand Securities Finance Corporation Association of Securities Companies The Bank of Nova Scotia, Canada The Bank of Nova Scotia, Bangkok Representative Office Thai-Canadian Chamber of Commerce

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


RESPONSIBILITIES OF THE BOARD OF DIRECTORS FOR FINANCIAL REPORT Thanachart Bank’s Board of Directors is responsible for the separated and consolidated financial statements and for financial information presented in this annual report. The aforementioned financial statements were prepared in accordance with the generally accepted accounting principles, applying appropriate and consistent accounting policies and with careful judgments and best estimates. Important information is adequately and transparently disclosed to Thanachart Bank’s shareholders and other investors in the notes to financial statements. Thanachart Bank’s Board of Directors has established and maintained appropriate and effective risk management and internal control system in order to rationally assure that the accounting information is correctly and completely recorded and adequate to sustain Thanachart Bank’s assets, as well as to prevent any material irregular operations or fraud. Thanachart Bank’s Board of Directors has appointed an the Audit Committee comprising Independent Directors responsible for revision of accounting policies and the quality of financial statements, internal control, internal audit and risk management system, as well as the disclosure of related party transaction. The Committee’s comments on these issues are included in the Audit Committee Report in this annual report. Thanachart Bank’s separated and consolidated financial statements were audited by the Certified Public Auditor of Ernst & Young Office Limited. Thanachart Bank’s Board of Directors had provided the auditing team all information and document supports in order that the auditor would be able to audit and address his/her opinion to the auditing standards. The auditor’s opinion was included in the Report of Independent Auditor in this annual report. Thanachart Bank’s Board of Directors is of the opinion that Thanachart Bank’s overall internal control is at a satisfying level and provides reliability on Thanachart Bank’s separated and consolidated financial statements for the year ended 31 December 2009 which is in compliance with the generally accepted accounting principles and relevant rules and regulations. Mr. Banterng Tantivit Mr. Suphadej Poonpipat Chairman Chief Executive Officer

101

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


REPORT OF THE AUDIT COMMITTEE The Audit Committee of Thanachart Bank Public Company Limited consists of three independent directors who are highly qualified and have extensive experiences in the banking industry. The Committee is also supported by the Senior Vice President of the Audit Division who serves as secretary. The names of the Committee’s members are as follows: 1. Mr. Kiettisak Meecharoen Chairman of the Audit Committee 2. Mr. Suvit Arunanondchai Member of the Audit Committee 3. Mr. Sathaporn Jinachitra Member of the Audit Committee Mr. Chatchawal Jantararuangtong Secretary In 2009, Mr. Suvit Arunanondchai resigned from the Bank’s Board of Directors and the Audit Committee. As a result, the Bank’s Board of Directors appointed Assoc. Prof. Dr. Somjai Phagaphasvivathana as the member of the Audit Committee, effective since 26 March 2009. The Audit Committee is responsible for carrying out the duties as assigned by Thanachart Bank’s Board of Directors in line with the requirements imposed by the regulating authorities concerned. The duties, as stated in the Charter stipulated by the Board of Directors, include, reviewing of financial statements, good corporate governance, internal control systems, risk management systems, compliance with the requirements of the authorities and etc. The Audit Committee’s tools in performing its duties consist of the Audit Division and the Compliance Department, both of which report directly to the Audit Committee. As a result, the Committee is able to perform its duties independently in line with the legal requirements and the principles of good corporate governance in a transparent manner, in order to properly protect the interests of the organization without any limitation imposed on the information to be received. Throughout 2009, the Audit Committee received full cooperation from the management as well as the staff concerned. Also in 2009, the Committee held seven meetings in total with the auditor, the internal auditor and Thanachart Bank’s management. The Audit Committee reviews the quarterly and year-end financial statements by discussing them with the auditors and Thanachart Bank’s management. The objective is to ensure the full and proper disclosure of financial information, with special attention being paid to Thanachart Bank’s transactions with related parties. The Audit Committee also performs other reviews, ensuring that the internal control systems and the internal audits are efficient. The Committee discusses the matters with the internal auditor and helps formulate and approve the annual audit plan that covers overall audits, loan reviews and information systems audits. The Committee monitors and evaluates the implementation of the audit plan quarterly. As regards the compliance with legal requirements, the Committee closely monitors the performance of the Compliance Department, ensuring that the conduct of business affairs is in compliance with the requirements imposed by the authorities concerned, which include, among others, those imposed by the Bank of Thailand, the Office of Securities and Exchange Commission, the Securities and Exchange of Thailand, the Office of Insurance Commission (OIC) and Anti-Money Laundering Office (AMLO). In relation to risk management, the Committee pays special attention to management of credit risk, market risk, liquidity risk, and operational risk. The Committee fully realizes that economic, political and social changes could cause significant impacts on Thanachart Bank’s risk management. As a result, the Committee performs reviews to ensure that Thanachart Bank puts in place adequate and concrete measures to properly deal with these risk factors. The Audit Committee participated in the meetings of the Board of Directors, in order to become informed of the performance of various work units including the subsidiaries, and to monitor results of the implementation of various corrective measures. In conclusion, after having evaluated all the areas audited, the Audit Committee is of the opinion that Thanachart Bank has disclosed financial information in its financial statements fully and accurately. The Bank also has adequate and efficient audit systems, internal control systems, corporate governance and risk management as well as appropriate measures to deal with the risks. Moreover, the Bank has strictly complied with the regulations and requirements imposed by the authorities concerned. As well, the Audit Committee is of the opinion that Ernst & Young Office Limited should be retained as Thanachart Bank’s auditor for another year, taking into account the fact that the auditor is well recognized as one of the country’s leading auditors. Importantly, the auditor also has a good understanding of the business and is supported by well qualified and experienced staff. As a result, it is deemed appropriate that Thanachart Bank proposes to shareholders the appointment of Ernst & Young Office Limited as Thanachart Bank’s auditor for the year 2010. Kiettisak Meecharoen Chairman of the Audit Committee 102

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


REPORT OF INDEPENDENT AUDITOR To the Shareholders of Thanachart Bank Public Company Limited I have audited the accompanying consolidated balance sheets of Thanachart Bank Public Company Limited and its subsidiaries as at 31 December 2009 and 2008, the related consolidated statements of income, changes in shareholders’ equity and cash flows for the years then ended, and the separate financial statements of Thanachart Bank Public Company Limited for the same periods. These financial statements are the responsibility of the management of the Bank and its subsidiaries as to their correctness and the completeness of the presentation. 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 audits 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 financial statements referred to above present fairly, in all material respects, the financial position of Thanachart Bank Public Company Limited and its subsidiaries and of Thanachart Bank Public Company Limited as at 31 December 2009 and 2008, and the results of their operations and cash flows for the years then ended in accordance with generally accepted accounting principles. Ratana Jala Certified Public Accountant (Thailand) No. 3734 Ernst & Young Office Limited Bangkok: 24 February 2010

103

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Thanachart Bank Public Company Limited and its subsidiaries As at 31 December 2009 and 2008

BALANCE SHEETS

Thanachart Bank Public Company Limited and its subsidiaries Balance sheets As at 31 December 2009 and 2008

Consolidated financial statements 2009 2008

Note Assets Cash Interbank and money market items Domestic Interest bearing Non-interest bearing Foreign Interest bearing Non-interest bearing Total interbank and money market items - net Investments Current investments - net Long-term investments - net Investments in subsidiary companies Investments in an associated company Net investments Receivables from clearing house Loans and accrued interest receivables Loans Securities business receivables Total loans and receivables Accrued interest receivables Total loans and accrued interest receivables Less: Allowance for doubtful accounts Revaluation allowance for debt restructuring Net loans and accrued interest receivables Property foreclosed - net Land, premises and equipment - net Intangible assets - software - net Financial derivatives assets Other assets - net Total assets

6

7 7 8 9

10

11 12 14 15 16 17

(Unit: Baht)

Separate financial statements 2009 2008

3,665,369,936

4,017,954,398

3,664,865,336

4,017,430,303

53,134,784,209 3,707,561,088

40,959,771,517 3,875,410,865

52,548,012,959 3,577,499,306

39,046,395,525 3,776,554,928

7,571,684,915 331,088,960 64,745,119,172

20,372,080,617 495,714,325 65,702,977,324

7,571,684,915 331,088,960 64,028,286,140

20,372,080,617 495,714,325 63,690,745,395

23,021,885,958 54,319,529,700 1,260,634,745 78,602,050,403 429,219,703

6,927,882,970 22,700,626,160 1,083,135,083 30,711,644,213 50,185,586

18,988,981,897 41,172,231,247 4,481,643,114 64,642,856,258 -

4,276,135,274 17,828,463,614 4,481,643,114 26,586,242,002 -

283,570,514,879 1,944,658,101 285,515,172,980 277,032,572 285,792,205,552 (8,363,387,501)

274,034,052,128 2,107,940,234 276,141,992,362 287,850,610 276,429,842,972 (7,066,943,508)

282,576,806,903 282,576,806,903 282,231,389 282,859,038,292 (7,717,512,778)

272,925,468,442 272,925,468,442 302,482,037 273,227,950,479 (6,365,168,503)

(33,149,854) 277,395,668,197 912,078,382 2,211,400,055 473,998,661 956,688,110 3,578,137,541 432,969,730,160

(19,963,190) 269,342,936,274 1,600,485,678 2,310,543,615 416,748,531 1,369,064,034 2,778,933,245 378,301,472,898

(33,149,854) 275,108,375,660 895,221,052 1,950,185,750 431,337,359 956,688,110 2,200,372,905 413,878,188,570

(19,963,190) 266,842,818,786 1,541,311,290 2,014,653,535 377,231,891 1,369,064,034 1,775,114,647 368,214,611,883

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements. 104

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


BALANCE SHEETS (CONTINUED)

Thanachart Bank Public Company Limited and its subsidiaries Balance sheets (continued) As at 31 December 2009 and 2008

Consolidated financial statements 2009 2008

Note Liabilities and shareholders' equity Deposits Deposits in Baht Deposits in foreign currencies Total deposits Interbank and money market items Domestic Interest bearing Non-interest bearing Foreign Interest bearing Non-interest bearing Total interbank and money market items Payable to clearing house Securities business payable Liability payable on demand Borrowings Short-term borrowings Long-term borrowings Total borrowings Accrued interest payable Unearned premium reserve Life premium reserve Corporate income tax payable Accrued expenses Financial derivatives liabilities Other liabilities Total liabilities

18

19

20

21

Thanachart Bank Public Company Limited and its subsidiaries As at 31 December 2009 and 2008 (Unit: Baht)

Separate financial statements 2009 2008

266,206,035,990 89,953,995 266,295,989,985

270,092,868,130 70,367,617 270,163,235,747

266,637,368,740 89,953,995 266,727,322,735

270,761,410,331 70,367,617 270,831,777,948

15,305,183,188 430,964,353

6,677,346,941 607,106,923

16,484,109,167 478,023,697

7,030,389,032 631,885,020

5,193,820,752 8,822,437 20,938,790,730 95,690,201 1,035,955,112 2,111,811,444

6,450,786 7,290,904,650 294,804,300 854,589,048 1,316,693,276

5,193,820,752 8,822,437 22,164,776,053 2,111,811,444

6,450,786 7,668,724,838 1,316,693,276

75,200,199,414 15,000,000,000 90,200,199,414 1,019,602,377 1,354,934,243 15,286,244,129 1,257,219,624 1,651,005,632 24,227,749 3,825,976,723 405,097,647,363

47,079,799,561 14,070,000,000 61,149,799,561 1,720,880,715 1,465,630,973 7,821,623,453 125,290,774 1,057,044,647 296,261,316 3,403,617,685 356,960,376,145

75,936,199,414 15,000,000,000 90,936,199,414 1,029,409,498 1,138,356,145 799,519,349 24,227,749 2,591,327,676 387,522,950,063

47,928,299,561 14,360,000,000 62,288,299,561 1,735,303,962 594,392,205 296,261,316 2,212,788,960 346,944,242,066

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements. 105

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


BALANCE SHEETS (CONTINUED)

Thanachart Bank Public Company Limited and its subsidiaries Balance sheets (continued) As at 31 December 2009 and 2008

Consolidated financial statements 2009 2008

Note Shareholders’ equity Share capital Registered 5,934,619,272 ordinary shares of Baht 10 each (2008 : 2,134,619,292 ordinary shares of Baht 10 each) Issued and paid-up share capital 1,934,619,272 ordinary shares of Baht 10 each (2008 : 1,734,619,292 ordinary shares of Baht 10 each) Share premium Revaluation surplus on investments Revaluation deficit on investments Surplus from business combination under common control Retained earnings Appropriated - statutory reserve Unappropriated Equity attributable to the Bank’s shareholders Minority interest - equity attributable to minority shareholders of subsidiaries Total shareholders’ equity Total liabilities and shareholders’ equity Off-balance sheet items - commitments Aval to bills Liability under unmatured import bills Letter of credits Other commitments

Thanachart Bank Public Company Limited and its subsidiaries As at 31 December 2009 and 2008 (Unit: Baht)

Separate financial statements 2009 2008

22

23 23

24

36.1

59,346,192,720

21,346,192,920

59,346,192,720

21,346,192,920

19,346,192,720 2,100,694,232 764,523,022 (381,254,880)

17,346,192,920 2,100,694,232 321,677,996 (1,387,121,442)

19,346,192,720 2,100,694,232 405,976,013 (192,282,442)

17,346,192,920 2,100,694,232 242,692,625 (537,861,364)

(123,378,934)

(123,378,934)

-

-

370,018,647 5,734,597,426 27,811,392,233

192,648,978 2,827,480,089 21,278,193,839

370,018,647 4,324,639,337 26,355,238,507

192,648,978 1,926,002,426 21,270,369,817

60,690,564 27,872,082,797 432,969,730,160

62,902,914 21,341,096,753 378,301,472,898

26,355,238,507 413,878,188,570

21,270,369,817 368,214,611,883

296,250,634 87,557,302 1,009,878,320 91,880,759,854

118,025,575 442,517,702 664,174,238 86,515,586,525

296,250,634 87,557,302 1,009,878,320 91,215,659,854

118,025,575 442,517,702 664,174,238 85,870,136,525

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements. 106

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Thanachart Bank Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

INCOME STATEMENTS

Thanachart Bank Public Company Limited and its subsidiaries Income statements For the years ended 31 December 2009 and 2008

Consolidated financial statements 2009 2008

Note Interest and dividend income Loans Interbank and money market items Hire purchase and financial lease Investments Total interest and dividend income Interest expenses Deposits Interbank and money market items Short-term borrowings Long-term borrowings Total interest expenses Net interest and dividend income Bad debts and doubtful accounts Loss on debt restructuring Net interest and dividend income after bad debts and doubtful accounts and loss on debt restructuring Non-interest income Brokerage fees Loss on investments Share of income from investment in an associated company Fees and service income Acceptances, aval and guarantees Others Gain on exchanges and financial derivatives contracts Gain (loss) on disposal of property foreclosed and other assets Insurance premium/Life insurance premium income Income on supporting service Other income Total non-interest income

27

28

29

(Unit: Baht) Separate financial statements 2009 2008

3,894,437,990 1,046,377,411 14,984,438,959 1,545,169,356 21,470,423,716

4,098,944,380 1,560,373,020 13,785,249,666 1,242,938,651 20,687,505,717

3,950,430,013 1,022,271,782 14,354,491,178 1,606,666,660 20,933,859,633

4,228,235,051 1,511,618,302 13,063,100,782 1,093,672,064 19,896,626,199

4,872,643,138 119,955,195 964,449,992 779,106,375 6,736,154,700 14,734,269,016 (3,054,400,164) (52,979,637)

7,031,405,854 184,099,419 1,501,767,160 680,371,227 9,397,643,660 11,289,862,057 (3,954,737,499) (13,351,891)

4,880,086,193 140,682,929 982,774,585 787,377,649 6,790,921,356 14,142,938,277 (2,785,940,992) (44,197,921)

7,046,294,803 191,132,692 1,496,998,818 694,033,556 9,428,459,869 10,468,166,330 (3,538,740,996) (8,887,990)

11,626,889,215

7,321,772,667

11,312,799,364

6,920,537,344

885,292,839 (222,068,721)

756,390,129 (419,893,430)

(56,677,509)

(205,721,519)

129,486,348

153,064,461

-

-

40,507,881 2,066,334,937

34,500,005 2,056,308,540

40,507,881 1,777,721,827

34,500,005 1,629,226,182

147,882,056

222,700,412

147,882,056

222,732,024

130,968,930 14,466,531,929 76,881,055 680,743,069 18,402,560,323

(85,154,344) 7,342,635,671 143,101,123 411,577,164 10,615,229,731

127,278,138 232,469,716 545,470,849 2,814,652,958

(83,656,567) 291,491,983 313,633,302 2,202,205,410

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements. 107

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Thanachart Bank Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

INCOME STATEMENTS (CONTINUED)

Thanachart Bank Public Company Limited and its subsidiaries Income statements (continued) For the years ended 31 December 2009 and 2008

Note Non-interest expenses Personnel expenses Premises and equipment expenses Taxes and duties Fees and charges Directors’ remuneration Contribution fee to the Financial Institutions Development Fund/Deposit Protection Agency Insurance/Life insurance expenses Other expenses Total non-interest expenses Income before corporate income tax Corporate income tax Corporate income tax refundable Net income for the year

30

31 31

Net income attributable to The Bank Minority interests of the subsidiaries

Earnings per share Basic earnings per share

4,339,984,300 1,810,850,140 197,512,647 784,423,126 23,015,094

3,576,094,519 1,565,770,680 200,288,283 259,541,542 21,217,662

3,328,333,401 1,514,456,361 182,747,200 50,327,266 14,602,094

2,645,032,328 1,255,641,509 189,075,951 55,029,352 14,642,663

1,072,378,634 12,533,227,744 3,415,794,841 24,177,186,526 5,852,263,012 (1,768,591,642) 4,083,671,370

822,569,724 5,815,964,410 3,188,814,001 15,450,260,821 2,486,741,577 (688,290,185) 101,889,524 1,900,340,916

1,072,378,634 2,962,094,800 9,124,939,756 5,002,512,566 (1,455,119,182) 3,547,393,384

822,569,724 2,722,510,549 7,704,502,076 1,418,240,678 (215,810,210) 101,889,524 1,304,319,992

4,055,873,810 27,797,560 4,083,671,370

1,869,500,168 30,840,748 1,900,340,916

3,547,393,384 3,547,393,384

1,304,319,992 1,304,319,992

2.19

1.08

1.91

0.75

1,853,523,390

1,734,619,292

1,853,523,390

1,734,619,292

32

Weighted average number of ordinary shares (shares)

(Unit: Baht) Separate financial statements 2009 2008

Consolidated financial statements 2009 2008

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements. 108

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

109

Share premium 2,100,694,232 2,100,694,232 2,100,694,232 2,100,694,232

Issued and paid-up share capital 17,346,192,920 17,346,192,920 17,346,192,920 1,999,999,800 19,346,192,720

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements.

Balance - as at 1 January 2009 Increase from share capital issuance (Note 22) Increase in revaluation surplus on investments Decrease in revaluation deficit on investments Income recognised directly in equity Net income for the year Total income for the year Dividend paid (Note 26) Transfer to statutory reserve (Note 24) Decrease in minority interest - equity attributable to minority shareholders of subsidiaries Balance - as at 31 December 2009

Balance - as at 1 January 2008 Increase in revaluation surplus on investments Increase in revaluation deficit on investments Income (expenses) recognised directly in equity Net income for the year Total income (expenses) for the year Dividend paid (Note 26) Transfer to statutory reserve (Note 24) Decrease in minority interest - equity attributable to minority shareholders of subsidiaries Balance - as at 31 December 2008

Statements of changes in shareholders' equity For the years ended 31 December 2009 and 2008

764,523,022

321,677,996 442,845,026 442,845,026 442,845,026 -

321,677,996

Revaluation surplus on investments 100,168,306 221,509,690 221,509,690 221,509,690 -

(381,254,880)

(1,387,121,442) 1,005,866,562 1,005,866,562 1,005,866,562 -

(1,387,121,442)

(123,378,934)

(123,378,934) -

(123,378,934)

370,018,647

192,648,978 177,369,669

192,648,978

5,734,597,426

2,827,480,089 4,055,873,810 4,055,873,810 (971,386,804) (177,369,669)

2,827,480,089

Total 20,980,224,382 221,509,690 (990,099,108) (768,589,418) 1,900,340,916 1,131,751,498 (745,886,296) -

21,341,096,753 1,999,999,800 442,845,026 1,005,866,562 1,448,711,588 4,083,671,370 5,532,382,958 (971,386,804) (30,009,910) (30,009,910) 60,690,564 27,872,082,797 -

62,902,914 27,797,560 27,797,560 -

(24,992,831) (24,992,831) 62,902,914 21,341,096,753

Minority interest 57,054,997 30,840,748 30,840,748 -

(Unit: Baht)

Thanachart Bank Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

Consolidated financial statements Surplus from Retained earnings Revaluation business deficit on combination under Appropriated investments common control statutory reserve Unappropriated (397,022,334) (123,378,934) 127,432,979 1,769,082,216 (990,099,108) (990,099,108) - 1,869,500,168 (990,099,108) - 1,869,500,168 (745,886,296) 65,215,999 (65,215,999)

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Thanachart Bank Public Company Limited and its subsidiaries


ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

110

2,100,694,232 2,100,694,232

17,346,192,920 1,999,999,800 19,346,192,720

Balance - as at 1 January 2008 Increase in revaluation surplus on investments Increase in revaluation deficit on investments Income (expenses) recognised directly in equity Net income for the year Total income (expenses) for the year Dividend paid (Note 26) Transfer to statutory reserve (Note 24) Balance - as at 31 December 2008

Balance - as at 1 January 2009 Increase from share capital issuance (Note 22) Increase in revaluation surplus on investments Decrease in revaluation deficit on investments Income recognised directly in equity Net income for the year Total income for the year Dividend paid (Note 26) Transfer to statutory reserve (Note 24) Balance - as at 31 December 2009

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements.

Share premium 2,100,694,232 2,100,694,232

Issued and paid-up share capital 17,346,192,920 17,346,192,920

Statements of changes in shareholders' equity (continued) For the years ended 31 December 2009 and 2008

242,692,625 163,283,388 163,283,388 163,283,388 405,976,013

(537,861,364) 345,578,922 345,578,922 345,578,922 (192,282,442)

192,648,978 177,369,669 370,018,647

1,926,002,426 3,547,393,384 3,547,393,384 (971,386,804) (177,369,669) 4,324,639,337

21,270,369,817 1,999,999,800 163,283,388 345,578,922 508,862,310 3,547,393,384 4,056,255,694 (971,386,804) 26,355,238,507 -

Total 20,695,148,061 171,916,871 (155,128,811) 16,788,060 1,304,319,992 1,321,108,052 (745,886,296) 21,270,369,817

(Unit: Baht)

Thanachart Bank Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

Separate financial statements Retained earnings Revaluation Revaluation surplus on deficit on Appropriated investments investments statutory reserve Unappropriated 70,775,754 (382,732,553) 127,432,979 1,432,784,729 171,916,871 (155,128,811) 171,916,871 (155,128,811) 1,304,319,992 171,916,871 (155,128,811) 1,304,319,992 (745,886,296) 65,215,999 (65,215,999) 242,692,625 (537,861,364) 192,648,978 1,926,002,426

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED) Thanachart Bank Public Company Limited and its subsidiaries


Thanachart Bank Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

STATEMENTS OF CASH FLOWS Thanachart Bank Public Company Limited and its subsidiaries Statements of cash flows For the years ended 31 December 2009 and 2008

(Unit: Baht)

Consolidated financial statements 2009 2008 Cash flows from operating activities Net income before corporate income tax Adjustments to reconcile net income before corporate income tax to net cash provided by (paid from) operating activities Share of income from investment in an associated company Depreciation and amortisation Bad debt and doubtful accounts and loss from debt restructuring Amortisation of premiums on investment in debt securities Increase (decrease) in allowance for impairment/ change in value of investments Increase (decrease) in allowance for impairment of property foreclosed Increase in allowance for impairment of land, premises and equipment Interest income and other income from the assets transferred for debt repayment Loss from disposal of equipment Unrealised loss (gain) on exchange Gain from sales of investment in an associated company Increase in unearned premium reserve/ life insurance premium reserve Increase (decrease) in allowance for impairment of other assets Decrease (increase) in other income receivable Decrease in fees and rental received in advance Decrease in amortisation of deferred income Increase in accrued expenses Amortisation of discounts on borrowings

Separate financial statements 2009 2008

5,852,263,012

2,486,741,577

5,002,512,566

1,418,240,678

(129,486,348) 653,786,803

(153,064,461) 537,616,314

548,574,414

436,415,336

3,107,379,801

3,968,089,390

2,830,138,913

3,547,628,986

14,549,519

22,733,675

12,620,274

31,921,594

(223,661,179)

242,355,999

(102,529,380)

97,928,341

(116,774,655)

68,770,822

(112,336,667)

64,229,815

1,189,945

-

1,189,945

-

(7,016,161) 20,938,211 333,271,072

(901,161) 13,745,764 (643,505,800)

(7,016,160) 17,237,124 333,271,072

(901,161) 15,501,581 (643,505,800)

(2,707,057)

-

-

-

7,353,923,946

2,486,435,257

-

-

(4,765,620)

49,346,414

(9,023,005)

54,566,116

270,448,251

106,942,222

(6,985,712)

882,904

(38,525,672) (7,755,656) 593,960,985 17,951,490 17,688,970,687

(33,582,819) (5,143,846) 16,522,812 8,970,781 9,172,072,940

(38,525,672) (7,755,656) 205,127,143 17,951,490 8,684,450,689

(33,582,819) (5,143,846) 42,755,467 8,970,781 5,035,907,973

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements. 111

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Thanachart Bank Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

STATEMENTS OF CASH FLOWS Thanachart Bank Public Company Limited and its subsidiaries (CONTINUED) Statements of cash flows (continued) For the years ended 31 December 2009 and 2008

Consolidated financial statements 2009 2008 (14,766,770,025) (11,321,566,513) 20,049,896,538 19,391,027,793 (5,496,149,867) (6,833,501,916)

Net interest income Cash received from interest income Cash paid for interest expenses Income from operating activities before changes in operating assets and liabilities Decrease (increase) in operating assets Interbank and money market items Securities purchased under resale agreements Investments in trading securities Receivables from clearing house Loans and receivables Property foreclosed Other assets Increase (decrease) in operating liabilities Deposits Interbank and money market items Payable to clearing house Securities business payable Liability payable on demand Other liabilities Cash flows from operating activities Cash paid for corporate income tax Cash received from corporate income tax refundable Net cash flows from operating activities Cash flows from investing activities Increase in investments in securities held for investments Payment to acquire investments in subsidiaries Cash received from sales of investments in an associated company Capital returned from subsidiaries Cash received from interest on investments Cash received from dividend Cash received from dividend from an associated company Cash paid for purchase of equipment Cash received from disposal of equipment Net cash flows used in investing activities

17,475,947,333

10,408,032,304

8,445,059,388

6,401,373,101

741,246,507

(25,562,406,808)

(577,222,786)

(24,908,365,594)

(1,026,138,305) (379,034,117) (17,533,673,677) 7,204,060,108 (829,542,383)

2,500,000,000 193,384,774 (55,422,256,866) 5,922,657,239 261,816,033

(754,000,000) (17,109,234,579) 6,794,205,425 (226,944,465)

2,500,000,000 (55,467,585,938) 5,604,349,821 182,573,703

(3,867,245,762) 13,647,886,080 (199,114,099) 181,366,064 795,118,168 160,863,761 16,371,739,678 (691,991,905)

81,503,061,760 3,582,088,750 294,804,300 (389,330,350) (12,334,058) 424,344,503 23,703,861,581 (845,423,002)

(4,104,455,214) 14,496,051,216 795,118,168 84,542,349 7,843,119,502 (316,445,244)

81,745,502,029 3,863,283,572 (12,334,058) 173,466,456 20,082,263,092 (263,007,207)

15,679,747,773

101,889,524 22,960,328,103

7,526,674,258

101,889,524 19,921,145,409

(45,258,494,757) -

(8,877,808,522) -

(36,721,147,741) -

(6,919,843,145) (431,140,884)

84,304,975 1,269,867,800 105,575,377

989,976,838 237,371,734

988,573,467 514,314,466

244,355,148 755,736,635 342,173,727

82,633,650 (420,595,469) 6,737,628 (44,129,970,796)

81,202,800 (572,898,274) 9,656,408 (8,132,499,016)

(359,921,050) 4,598,829 (35,573,582,029)

(489,576,461) 1,846,835 (6,496,448,145)

The accompanying notes are an integral part of the financial statements. The accompanying notes are an integral part of the financial statements.

(Unit: Baht) Separate financial statements 2009 2008 (14,173,510,041) (10,509,058,705) 19,458,845,721 18,728,689,725 (5,524,726,981) (6,854,165,892)

112

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Thanachart Bank Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

STATEMENTS OF CASH FLOWS (CONTINUED) Thanachart Bank Public Company Limited and its subsidiaries Statements of cash flows (continued) For the years ended 31 December 2009 and 2008

Consolidated financial statements 2009 2008 Cash flows from financing activities Cash received from issued additional share capital Cash received from borrowings Cash paid for borrowings Cash paid for interest from borrowings Dividend paid Dividend paid from a subsidiary company to minority interest Net cash flows from (used in) financing activities Net increase (decrease) in cash Cash at beginning of the year Cash at end of the year Supplemental cash flows information Non-cash transactions Transfer of properties foreclosed from receivables for debt settlement Accounts payable for purchase of fixed assets Bad debt written-off

(Unit: Baht)

Separate financial statements 2009 2008

1,999,999,800 225,125,643,598 (196,093,195,235) (1,933,412,888) (971,386,804)

150,844,877,018 (161,907,015,392) (2,251,463,862) (745,886,296)

1,999,999,800 225,329,643,598 (196,699,695,235) (1,964,218,555) (971,386,804)

152,054,877,018 (161,733,515,392) (2,257,086,374) (745,886,296)

(30,009,910)

(24,992,831)

-

-

28,097,638,561 (352,584,462) 4,017,954,398 3,665,369,936

(14,084,481,363) 743,347,724 3,274,606,674 4,017,954,398

27,694,342,804 (352,564,967) 4,017,430,303 3,664,865,336

(12,681,611,044) 743,086,220 3,274,344,083 4,017,430,303

6,383,809,740 70,769,444 1,866,310,926

6,154,566,145 151,706,930 1,772,468,873

6,020,710,103 66,759,930 1,503,618,608

5,790,320,145 143,841,708 1,525,490,095

The accompanying notes are an integral part of the financial statements.

The accompanying notes are an integral part of the financial statements. 113

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


Notes Thanachartto BankConsolidated Public Company Limited and its subsidiaries Financial Statements Notes to consolidated financial statements

Thanachart Bank Public Company Limited and its subsidiaries For the years ended 31 December 2009 and 2008

For the years ended 31 December 2009 and 2008 1. General General information 1. information Thanachart Bank Public Company Limited (“the Bank”) was incorporated as a public limited company under Thai laws and its parent company is Thanachart Capital Public Company Limited (herein after referred to as “the Parent company”), a public limited company also existing under Thai laws. As at 31 December 2009, the Parent Company holds 50.92 percent of the Bank issued shares (as at 31 December 2008, the Parent company held 74.93 percent of the Bank issued shares, and on 3 February 2009, the Parent company sold additional ordinary shares of the Bank to the Bank of Nova Scotia (“BNS”). As a result, BNS holds 48.998 percent and the Parent company holds 50.92 percent of the Bank issued shares). The Bank’s registered address is 900, Tonson Tower, Ploenchit Road, Lumpini, Pathumwan, Bangkok and the Bank has 256 operational branches. All subsidiaries are registered limited or public limited companies under Thai laws and operate their businesses in Thailand. The subsidiaries businesses include securities business, leasing and hire purchase business, non-life insurance business, life insurance business, fund management business, and others. 2. Basis Basis ofofpreparation of financial statements 2. preparation of financial statements 2.1

The financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Professions Act B.E. 2547, with reference to the principles stipulated by the Bank of Thailand (“BOT”). The presentation of the financial statements has been made in compliance with the Notification of the BOT relating to the preparation and format of the financial statements of commercial banks and holding parent company of financial business groups, dated 3 August 2008. The financial statements in Thai language are the official statutory financial statements of the Bank. The financial statements in English language have been translated from the Thai language financial statements. The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

2.2

Basis of preparation of the consolidated financial statements a)

The consolidated financial statements include the financial statements of the Bank and the following subsidiary companies (“the subsidiaries”): Percentage of shareholding 2009 2008 Subsidiaries directly held by the Bank Thanachart Securities Plc. Thanachart Insurance Co., Ltd. Thanachart Life Assurance Co., Ltd. Thanachart Fund Management Co., Ltd. Thanachart Broker Co., Ltd. Thanachart Group Leasing Co., Ltd. Thanachart Management and Services Co., Ltd. Thanachart Legal and Appraisal Co., Ltd. Thanachart Training and Development Co., Ltd. T Leasing Co., Ltd. Subsidiaries indirectly held by the Bank National Leasing Co., Ltd.

114

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

100.00 100.00 100.00 75.00 100.00 100.00 100.00 100.00 100.00 100.00

100.00 100.00 100.00 75.00 100.00 100.00 100.00 100.00 100.00 100.00

100.00

100.00

1


Total assets and total income of the subsidiaries that have significant impact to and are included in the consolidated financial statements as at 31 December 2009 and 2008 and for the years then ended, after eliminating significant inter company transactions, are as follows: (Unit: Million Baht) Total assets Thanachart Life Assurance Co., Ltd. Thanachart Group Leasing Co., Ltd. Thanachart Securities Plc. Thanachart Insurance Co., Ltd.

2009 16,195 2,713 3,082 3,217

2008 7,488 4,187 3,087 2,676

Total income for the years 2008 2009 12,021 4,999 452 547 1,131 939 2,740 2,590

b)

Subsidiaries are fully consolidated as from the date of acquisition, being the date on which the Bank obtains control.

c)

The financial statements of the subsidiaries are prepared for the same reporting period as the Bank, using consistent significant accounting policies. In case where there are different accounting policies the Bank has adjusted the effect of these in the consolidated financial statements.

d)

The outstanding balances and significant intercompany transactions between the Bank and its subsidiaries have been eliminated in the consolidated financial statements. The investments in subsidiaries as recorded in the Bank’s and subsidiaries’ books of accounts have been eliminated against shareholders’ equity of the subsidiaries.

e)

Minority interests represent the portion of net income or loss and net assets of the subsidiaries that are not held by the Bank and are presented separately in the consolidated income statements and within equity in the consolidated balance sheet.

2.3

The separate financial statements, which present investments in subsidiaries under the cost method, have been prepared solely for the benefit of the public.

3.3.

Adoption accounting standards Adoptionofofnewnew accounting standards In June 2009, the Federation of Accounting Professions issued Notification No. 12/2552, assigning new numbers to Thai Accounting Standards that match the corresponding International Accounting Standards. The numbers of Thai Accounting Standards as referred to in these financial statements reflect such change. The Federation of Accounting Professions has issued Notification No. 86/2551 and 16/2552, mandating the use of new accounting standards, financial reporting standard and accounting treatment guidance as follows.

3.1

Accounting standards, financial reporting standard and accounting treatment guidance which are effective for the current year Framework for Preparation and Presentation of Financial Statements TAS 36 Impairment of Assets TFRS 5 Non-current Assets Held for Sale and Discontinued Operations Accounting Treatment Guidance for Leasehold Right Accounting Treatment Guidance for Business Combination under Common Control These accounting standards, financial reporting standard and accounting treatment guidance became effective for the financial statements for fiscal year beginning on or after 1 January 2009. The management of the Bank and its subsidiaries have assessed the effect of these standards and noted that Accounting Treatment Guidance for Business Combination under Common Control and TFRS 5 are not relevant to the business of the Bank and its subsidiaries, while the remaining accounting standards do not have any significant impact on the financial statements for the current year.

115

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

2


3.2

Accounting standards which are not effective for the current year TAS 20 TAS 24 TAS 40

Accounting for Government Grants and Disclosure of Government Assistance Related Party Disclosures Investment Property

Effective date 1 January 2012 1 January 2011 1 January 2011

However, TAS 24 and TAS 40 allow early adoption by the entity before the effective date. The management of the Bank and its subsidiaries has assessed the effect of these standards and believe that TAS 20 is not relevant to the business of the Bank and its subsidiaries, while TAS 24 and TAS 40 will not have any significant impact on the financial statements for the year in which they are initially applied.

4. accounting policies 4. Significant Significant accounting policies 4.1

Revenue recognition a)

Interest and discounts on loans Interest on loan is recognised as income on an accrual basis, based on the amount of principal outstanding. Interest on hire purchase and financial lease is recognised on the effective interest rate. For loans on which principal or interest payments have been defaulted for more than three months past the due date, the Bank and its subsidiaries cease accrual of interest income, and accrued interest already recorded is reversed from the Bank and its subsidiaries’ accounts. Interest is then recognised as income on a cash basis until settlement of such overdue balance has been received from the debtors. Interest income on restructured loans is recognised as income on an accrual basis, with reference to the interest rate stipulated in the agreements, with the exception of interest on loans that are subject to monitoring for compliance with restructuring conditions, which the Bank and its subsidiaries recognise as income on a cash basis until the receivable is able to comply with the restructuring conditions for a period of no less than three months or three installments, whichever is longer. Interest or discounts already included in the face value of notes receivable or loans are recorded as deferred interest and taken up as income evenly throughout the term of the notes or loans or in proportion of debt repayment. Deferred interest income on hire purchase represents discounted on interest given to debtors by dealers, is recognised based on the effective interest method, in the same manner as interest income recognition on hire purchase receivables.

b)

Interest and dividends on investments Interest on investments is recognised as income on an accrual basis based on the effective interest rate. Dividends are recognised as income when the right to receive the dividend is established.

c)

Brokerage fee income Brokerage fee charged on securities trading are recognised as income on the transaction date.

d)

Interest on loans for purchase of securities Interest on loans for purchases of securities is recognised as income over the term of the loans based on the amount of principal outstanding. The subsidiary company ceases accruing interest for certain loans that fall under the conditions set by the Securities and Exchange Commission (“SEC�).

e)

Gains (losses) on investments and derivatives Gains (losses) on investments and derivatives are recognised as income/expenses on the transaction dates. 116

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f)

Fees and service income Fees and service income are recognised as income on an accrual basis.

g)

Insurance/life insurance premium income Non-life insurance business Insurance premium income on insurance policies is recognised on the date the insurance policy comes into effect, after deducting premium ceded and refunded for insurance policies with coverage periods of up to 1 year. For long-term insurance policies with coverage periods of longer than 1 year, related revenues and expenses are recorded as unearned and prepaid items, and amortised to income and expenses over the coverage period. Insurance premium income is recognised after deducting unearned premium reserve. Reinsurance premium income is recognised when the reinsurer places the reinsurance application or statement of accounts. Life insurance business Premium income is recognised as income when underwriting of the insurance is approved, after deducting premium ceded and refunded. Premium due and uncollected at the end of year is recognised as revenue only if the policy is still in force, and is calculated based on the average persistency rate.

4.2

Expenses recognition a)

Interest expenses Interest expenses are charged to expenses on an accrual basis. Interest on notes payable included in the face value is recorded as deferred interest and amortised to expenses evenly throughout the term of the notes.

b)

Commission and expenses charged on hire purchase/financial leases For hire purchase/financial lease contracts originating on or after 1 January 2007, initial direct expenses at the inception of a hire purchase/financial lease contract (i.e. commission expenses and stamp duty expenses) are to be deferred and amortised using the effective interest method, with amortisation deducted from interest income throughout the contract period, in order to reflect the effective rate of return on the contracts. Unearned income on hire purchase/financial leases is presented net of commission expenses and initial direct cost on the inception of the contracts.

4.3

Unearned premium/life insurance premium reserve Non-life insurance business Unearned premium reserve of a subsidiary company is set aside in compliance with the Notification of the Ministry of Commerce regarding the appropriation of unearned premium reserve as follows: Fire, marine (hull), motors and miscellaneous - Monthly average basis (except for traveling accident with coverage of not more (the one-twenty fourth basis) than 6 months) Marine and transportation (cargo) - Net premium written for the last ninety days Traveling accident with coverage of not more than 6 months - Net premium written for the last thirty days

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Life insurance business Life assurance policy reserve represents the accumulated total liability for policies in force on the balance sheet date. Life assurance 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. The liability is based on assumptions established at inception of the contract. A subsidiary company base mortality and morbidity tables announced by the Office of Insurance Commission which reflect historical experiences.

4.4

a)

Reserve for insurance policies of over 1 year is determined using the fractional reserve method.

b)

For accident and group insurance of 1 year or less, unearned premium reserve is set aside at the full amount of unearned premium, and the period of coverage.

Investments Investments in trading securities are determined at fair value. The Bank and its subsidiaries recognise changes in the value of the securities as income (loss) in the income statements. Investments in available-for-sale securities, both held for short-term and long-term investment, are determined at fair value. The Bank and its subsidiaries recognise changes in the value of the securities as separate items in shareholders’ equity until the securities are sold, when they are then included in determining income. Investments in debt securities, both due within one year and expected to be held to maturity, are recorded at amortised cost. Premiums/discounts on debt securities are amortised by the effective rate method with the amortised amount presented as an adjustment to the interest income. Investments in non-marketable equity securities which are classified as other investments are stated at cost net of allowance for impairment (if any). The Bank and its subsidiaries do not treat investments in mutual fund as being in associated or subsidiary companies because the Bank and its subsidiaries do not have control or influence over the financial and operating policy of these funds, which are independently managed by the fund manager in accordance with the details of each fund project and the funds are under the supervision of the Securities and Exchange Commission. The fair value of marketable securities is based on the latest bid price of the last working day of the year as quoted on the Stock Exchange of Thailand. The fair value of government bonds, state enterprise securities and private sector debt securities is determined using the formula quoted by the BOT, which is based on the yield rate quoted by the Thai Bond Market Association adjusted by an appropriate risk factor. The fair value of unit trusts is determined based on their net asset value. The Bank and its subsidiaries recognised loss on impairment (if any) of available-for-sale securities, held-tomaturity debt securities and other investments in the statements of income. The weighted average method is used for computation of the cost of investments. In the event of the Bank and its subsidiaries’ transfer investments to another category, the investments are valued at their fair value prevailing on the transfer date. Differences between the carrying amount of the investments and their fair value on that date are recorded as gains (losses) in determining income or surplus (deficit) from revaluation of investments, which is presented as a separate item in shareholders’ equity and amortised over the remaining period to maturity of the debt securities, depending on the type of investment which is reclassified.

4.5

Investments in subsidiary and associated companies Investments in subsidiaries in the separate financial statements are accounted for under the cost method net of allowance for impairment (if any). Loss on impairment is recognised as expenses in the income statements. Investment in an associated company in the consolidated financial statements is accounted for under the equity method. Under this method, investment is initially recorded at acquisition cost and is adjusted to reflect the attributable share of the income from the operations of the associated company, in proportion to the investment. 118

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4.6

Securities purchased under resale agreements The Bank enters into agreements with a private company to purchase securities, whereby there is an agreement to resell the securities at certain dates and at a fixed price. Amounts paid for securities purchased are presented as assets under the caption of interbank and money market items or loan, depending on the counter party, and the underlying securities are treated as collateral to such receivables.

4.7

Receivables from/payable to Clearing House Receivables from/payable to Clearing House comprises the net balance receivable from/payable to the Thailand Securities Depository in respect of securities trades settled through the Clearing House of Thailand Securities Depository and the net receivable from/payable to the Derivatives Clearing House. These also include amounts pledged with the Derivatives Clearing House as security for derivatives trading.

4.8

Loans Loans are stated at the principal balances, excluding accrued interest receivable, except for overdrafts which are presented at the principal balances plus accrued interest receivable. Unrecognised deferred income and discounts on loans are deducted from the loan balances. Hire purchase receivables and financial lease receivables are stated at the contract value of the hire purchase receivables and financial lease receivables net of unearned income, which is presented after netting commission expenses and initial direct cost on the inception of the contracts. Securities and derivatives business receivables comprise the net securities receivable and derivatives business receivables. Securities business receivable comprise the net receivable balances of cash accounts and credit balance accounts (for which the securities purchased are used as collateral) as well as other receivables, such as overdue amounts in cash accounts and securities receivables which are under legal proceedings, are undergoing restructuring, or are being settled in installments.

4.9

Allowances for doubtful accounts a)

The Bank provides allowances for doubtful accounts in accordance with the Notifications of the BOT and adjusts these by the additional amount which is expected not to be collectible based on an evaluation of the current status of the debtors, taking into consideration the recovery risk and the value of collateral. Increase (decrease) in an allowance for doubtful debts is recognised as an expense during the year. The Bank sets provision for normal loans (including restructured receivables) and special mention loans at minimum rates of 1% and 2%, respectively, of the loan balances (excluding accrued interest receivable) net of collateral value, as required by the BOT’s guidelines. Collateral value included values of vehicles under hire purchase and finance lease contracts. For non-performing loans, provision is set at a rate of 100% of the debt balance remaining after deducting the present value of expected future cash flows from debt collection or from collateral disposal, based on the use of a discount rate and assumptions as to the time needed to dispose of the collateral, in accordance with the BOT’s guideline. However, non-performing hire purchase receivables and financial lease receivables are treated as having no collateral.

b)

A securities subsidiary has provided an allowance for doubtful accounts based on a review of debtors’ repayment capability, taking into consideration the risk of recovery and the value of collateral. An allowance is set aside for doubtful debts not fully covered by collateral and/or those which may not be fully recovered. Such debt classifications and provisions are made in accordance with the Notifications of the SEC.

c)

Subsidiaries engaged in hire purchase and leasing businesses have provided allowance for doubtful accounts at percentages of the amount of principal outstanding net of unearned income, based on the number of months overdue (with reference to the classification of loans under BOT’s guidelines). Allowance for doubtful accounts is provided based on the loan balances after net of collateral value for receivables overdue no more than 3 months, while provided based on the loans balance without deducting collateral value for receivables overdue more than 3 months. 119

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d)

Allowance for doubtful accounts of other receivables is based on the amount of debt that may not be collectible, determined from a review of the current status of the receivables as at the balance sheet date.

e)

The Bank writes off hire purchase receivables when full allowance for doubtful accounts has been made for such receivables. For other loans, the Bank and its subsidiaries will be written off when the relevant criteria under tax law are met.

f)

Amounts written off as bad debts or bad debt recovery are deducted from or added to the allowance for doubtful accounts.

4.10 Troubled debt restructuring In cases where the debt restructuring involves modifications of the terms, the fair value of the receivables after restructuring is based on the net present value of expected future cash flows, discounted by the market’s minimum interest rate for credit to large customers as at the date of the debt restructuring. The differences between the fair values of receivables as of the restructuring date and their previous book values is recorded in “Revaluation allowance for debt restructuring”, and recognised as an expense in the income statements in the restructuring period. The Bank and its subsidiaries review such revaluation allowance based on the net present value of future cash flows over the remaining period to maturity, recognising adjustments against bad debt and doubtful accounts. In cases where the troubled debt restructuring involves the transfer of assets or equity, the Bank and its subsidiaries record the assets or equity interest received as a result of debt restructuring at their fair value (based on the value appraised by internal appraisers or external independent appraisers) providing this does not exceed the amount of principal legally claimable from the debtor (including interest of which recognition has ceased until the restructuring date). Any excess of the fair value of the assets over the book value is recognised as interest income in the income statements. Losses arising from debt restructuring through waivers of part of principal or recorded accrued interest receivable are recognised in the income statement when incurred. 4.11 Recognition and amortisation of customers’ assets Assets which customers have placed with the subsidiary company for securities trading, in term of cash accounts and credit balance accounts, including amounts which customers have placed as security for derivative trading, are recorded as assets and liabilities of the subsidiary company for internal control purpose. As at the balance sheet date, the subsidiary company writes off those amounts which there are no guarantee obligations from both assets and liabilities and presents only those assets which belong to the subsidiary company. 4.12 Property foreclosed Property foreclosed is stated at the lower of cost (fair value with reference to appraisal value less estimated selling expenses, providing this does not exceed the legally claimable amount of debt) or net realisable value, which is determined with reference to the latest appraisal value less estimated selling expenses, adjusts these in accordance with the BOT’s guideline and taking into consideration the type and the nature of the assets. Gains on disposal of property foreclosed are recognised in the income statements on disposal date, unless the purchase is made with a loan from the Bank. In such cases, gains are recognised in accordance with the BOT’s guideline. Losses on disposal and impairment are recognised as expenses in the income statement. 4.13 Land, premises and equipment and depreciation a)

Land and assets in progress are stated at cost and depreciation is not provided.

b)

Premises and equipment are stated at cost less accumulated depreciation and allowance for impairment (if any). Depreciation is calculated with reference to cost on a straight-line basis over the following estimated useful lives:

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Buildings Buildings improvement Furniture, fixtures and equipment Motor vehicles

-

20 5 - 10 5 - 10 5

years years years years

Depreciation is included in determining income. 4.14 Intangible assets and amortisation Intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses (if any). The Bank and its subsidiaries amortised intangible assets with finite lives on a systematic basis over the economic useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method of such intangible assets are reviewed at least at each financial year end. The amortisation expense and loss on impairment are recognized as expenses in the income statement. The intangible assets with finite useful lives have useful lives of approximately 5 - 10 years. 4.15 Goodwill Goodwill has been initially measured at cost, which is the excess of the cost of the business combination over the Bank’s share in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. Goodwill is carried at cost less any accumulated impairment losses, and is tested for impairment annually or when circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash generating units (or group of cash-generating units) that is expected to benefit from the synergies of the combination. The Bank estimates the recoverable amount of each cash-generating unit (or group of cashgenerating units) to which the goodwill relates. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the statement of income. Impairment losses relating to goodwill cannot be reversed in future periods. 4.16 Long-term leases Leases that transfer substantially all the risks and rewards of ownership to the Bank and its subsidiaries are classified as financial leases. Financial leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other payables, while the interest element is charged to the income statement over the lease period. Assets acquired under finance leases are depreciated over their estimated useful lives. Lease not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. The Bank and its subsidiaries record advance payments made under operating leases as leasehold rights, and amortise them as expenses in the income statement over the term of the leases on the straight - line basis. Moreover, payments made under operating leases are recognised as expenses in the income statement over the term of the leases on the straight-line basis. 4.17 Premium due and uncollected and allowance for doubtful accounts Premium due and uncollected is carried at its net realisable value. Subsidiary companies provide an allowance for doubtful accounts based on the estimated loss that may be incurred in the collection of the premium due, on the basis of collection experience and a review of current status of the premium due as at the balance sheet date. 4.18 Sales of commercial paper The Bank recorded commercial paper with an aval by the Bank, or without an aval or acceptance which is sold with recourse, as a liability under the caption of “Liabilities under commercial paper sold”. Commercial paper sold at a discount with recourse, which is avaled by or has acceptance from a commercial bank or other finance company, is recorded by crediting the notes receivable account, and the obligations disclosed as part of “Contingent liabilities”. 121

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4.19 Securities and derivatives business payables Securities and derivatives business payables are the obligations of the subsidiary in respect of its securities and derivatives business with the outside parties. 4.20 Loss reserve and outstanding claims/Benefits payment to life policy Non-life insurance business Outstanding claims are recorded at the amount to be actually paid. Loss reserve is provided upon the receipt of the claims advice from the insured based on the claims notified by the insured and estimates made by a subsidiary company’s management. The estimated value of losses is limited to not more than the sum insured of the related insurance policies. In addition, a subsidiary company set up additional provision for losses incurred but not yet reported (IBNR) based on historical experience but at no less than 2.5 percent of the total net written premiums in the twelve months prior to the allocation date, in compliance with the Notification of the Ministry of Commerce governing the appropriation of unearned premium reserves and loss reserve by non-life insurance companies. However, from 1 January 2009, a subsidiary company set up provision for IBNR at the higher of the reserve calculated using standard actuarial claims techniques and 2.5 percent of total net written premiums in the previous twelve months. Life insurance business Benefits paid under life policies are provided for upon receipt of the claims advices from the insured or in accordance with the conditions of the policy. 4.21 Related party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Bank and its subsidiaries, whether directly or indirectly, or which are under common control with the Bank and its subsidiaries. They also include associated company and individuals which directly or indirectly own a voting interest in the Bank and its subsidiaries that give them significant influence over the Bank and its subsidiaries, key management personnel, directors and officers with authority in the planning and direction of the Bank’s and its subsidiaries’ operations. 4.22 Impairment of assets The Bank and its subsidiaries assess at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Bank and its subsidiaries realise loss on impairment when the asset’s recoverable amount is less than the book value. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. Fair value less costs to sell reflects the amount that the Bank and its subsidiaries could obtain at the balance sheet date from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. 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. The Bank and its subsidiaries recognise impairment losses in the income statement. The Bank and its subsidiaries assess at each reporting date whether there is an indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Bank and its subsidiaries estimate the asset’s recoverable amount and the impairment loss recognised in prior periods for assets other than goodwill is reversed.

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4.23 Employee benefits Salary, wages, bonuses and contributions to the social security fund and provident fund are recognised as expenses when incurred. 4.24 Foreign currencies Foreign currency transactions are translated into Baht at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies and off-balance sheets transactions, which were outstanding on the balance sheet date, have been translated into Baht at the rates ruling at the balance sheet date. Exchange gains and losses arising from trading or translation of foreign currencies are included in determining income. 4.25 Provisions Provisions are recognised when the Bank and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. 4.26 Income tax Income tax is provided in the accounts based on taxable income determined in accordance with tax legislation. 4.27 Financial derivatives The Bank and its subsidiaries have entered into off-balance sheet transactions involving derivative financial instruments in order to manage risk of the Bank and its subsidiaries and in response to customer needs. Forward foreign currency contracts which originated for trading purposes are recorded as off-balance sheet items. Gains or losses arising from changes in the fair value of the contracts are recognised in the income statement. Forward foreign currency contracts, interest rate swap contracts and cross currency and interest rate swap contracts which were not originated for trading purposes are recorded as off-balance sheet items, and presented on an accrual basis. Foreign currency components are translated at the year-end exchange rate, in the same manner as the hedged items, with unrealised gains or losses on translation recognised in the income statement. Interest rate components are presented on an accrual basis, in the same manner as the hedged assets or liabilities, with gains or losses recorded to interest income and interest expense over the terms of the contracts. Receivables and payables under forward exchange contracts and interest rate swap contracts are presented at the net amount in balance sheet. 5. Significant Significant accounting judgments and estimates 5. accounting judgments and estimates The preparation of financial statements in conformity with generally accepted accounting principles at times requires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures and actual results could differ. Significant accounting judgments and estimates are as follows: 5.1

Recognition and derecognition of assets and liabilities In considering whether to recognise and derecognise assets or liabilities, the management is required to make judgment on whether significant risk and rewards of those assets or liabilities have been transferred, based on their best knowledge of the current events and arrangements.

5.2

Allowance for doubtful accounts for loans Allowance for doubtful accounts for loans is intended to adjust the value of loans for probable credit losses. The management uses the BOT’s regulation regarding the provision of allowance for doubtful accounts and judgments to estimate losses on outstanding loans when there is any doubt about the borrower’s capability to repay the principal and/or the interest. The allowances for loan losses are determined through a combination of specific reviews, probability of default, value of collateral and current economic conditions. 123

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5.3

Fair value of financial instruments In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are not readily available, the management exercised judgment, using a variety of valuation techniques and models. The input to these models is taken from observable markets, and includes consideration of liquidity, correlation and longer-term volatility of financial instruments.

5.4

Allowance for impairment of investments The Bank and its subsidiaries review an impairment of investments when there has been a significant or prolonged decline in the fair value. The determination of what is “significant” or “prolonged” requires the management’s judgment.

5.5

Allowance for impairment of property foreclosed The Bank and its subsidiaries assess allowance for impairment of property foreclosed when net realizable value falls below the book value. The management uses the BOT’s regulation and judgment to estimate impairment losses, taking into consideration the latest appraisal value, the type and the nature of the assets.

5.6

Property, premise and equipment/Depreciation In determining depreciation of premise and equipment, the management is required to make estimates of the useful lives and salvage values of the premise and equipment and to review estimate useful lives and salvage values when there are any changes.

5.7

Goodwill and intangible assets The initial recognition and measurement of goodwill and intangible assets requires the management to make judgment of the recoverable amount to be generated by the asset using the discounted cash flows method. The estimated cash flows may differ as a result of competitive forces, or changes in revenue trends, cost structures, and the discount rate, industry circumstances or related market conditions.

5.8

Finance lease/Operating lease In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgment regarding whether significant risk and rewards of ownership of the leased assets have been transferred to the leasee. Leases that transfer substantially all the risks and rewards of ownership to the leasee are classified as financial leases. In the other hand, leases not transferring a significant portion of the risks and rewards of ownership to the leasee are classified as operating lease.

5.9

Loss sharing from transfer of non-performing loans to TAMC In estimating losses arising from the transfer of non-performing loans to the Thai Asset Management Corporation (“TAMC”), the Bank uses the latest information received from TAMC and projections of the amounts expected to be received from the debtors or from collateral value. The management uses judgment in determining the assumptions as to the percentage on the amount expected to be recovered from the debt restructuring agreement, or as to collateral value. The management considers these assumptions to be appropriate given the currently available information and current situation

5.10 Life insurance premium reserve Life insurance premium reserve is calculated under the actuarial method, based on the assumptions established at inception of the contract which reflect the best estimate at the time, increased with a margin for risk and adverse deviation. The main assumptions used relate to mortality, morbidity, longevity, expenses, and discount rates. 5.11 Loss reserve and outstanding claims Part of the loss reserve for claims of the subsidiary company is estimated by the subsidiary’s management on the basis of claims advices received from insured parties. Another part is for losses incurred but not yet reported (IBNR), which is estimated using a range of standard actuarial claims techniques. The main assumption underlying these techniques relate to historical claims experience, including development of estimates of paid and incurred losses, average costs per claim, claim numbers and insurance type. 124

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5.12 Litigation The Bank and its subsidiaries have contingent liabilities as a result of litigation. The management has used judgment to assess of the results of the litigation case, and in case where they believe that there will be no losses, they will provide no contingent liabilities at the balance sheet date. 6. 6.

Interbank and market itemsitems (assets) Interbank andmoney money market (assets) (Unit: Million Baht) Consolidated financial statements 2009 At call

Domestic Bank of Thailand and Financial Institutions Development Fund Commercial banks Other banks Other financial institutions Total Add: Accrued interest receivables Less: Allowance for doubtful accounts Total domestic items Foreign US Dollar Euro Others Total Add: Accrued interest receivables Total foreign items Total

At call

2008 Term

Total

Term

Total

3,442 396 46 350 4,234 4,234

6,600 45,300 50 647 52,597 11 52,608

10,042 45,696 96 997 56,831 11 56,842

3,422 628 112 18 4,180 1 4,181

35,800 4,490 50 300 40,640 40 (26) 40,654

39,222 5,118 162 318 44,820 41 (26) 44,835

200 55 76 331 331 4,565

7,546 7,546 26 7,572 60,180

7,746 55 76 7,877 26 7,903 64,745

286 98 112 496 496 4,677

20,236 20,236 136 20,372 61,026

20,522 98 112 20,732 136 20,868 65,703 (Unit: Million Baht)

Separate financial statements 2009 Domestic Bank of Thailand and Financial Institutions Development Fund Commercial banks Other banks Other financial institutions Total Add: Accrued interest receivables Total domestic items Foreign US Dollar Euro Others Total Add: Accrued interest receivables Total foreign items Total

Total

At call

Term

Total

3,442 101 35 350 3,928 3,928

6,600 45,000 590 52,190 7 52,197

10,042 45,101 35 940 56,118 7 56,125

3,422 251 103 18 3,794 3,794

35,800 3,200 39,000 29 39,029

39,222 3,451 103 18 42,794 29 42,823

200 55 76 331 331 4,259

7,546 7,546 26 7,572 59,769

7,746 55 76 7,877 26 7,903 64,028

286 98 112 496 496 4,290

20,236 20,236 136 20,372 59,401

20,522 98 112 20,732 136 20,868 63,691

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At call

2008 Term

12


During the year 2009, a financial institution receivable of a subsidiary company which has outstanding debt of Baht 306 million entered into debt restructuring agreement, whereby terms of payment were amended and some debt was converted to equity. The subsidiary company had loss on debt restructuring amounting to Baht 9 million and reversed the existing allowance for doubtful accounts, amounting to Baht 25 million. As at 31 December 2009, the outstanding debt had amounted to Baht 57 million (2008: the outstanding debt was Baht 300 million and related allowance was Baht 25 million). As at 31 December 2009, deposits of the Bank included deposits with BNS (the other major shareholder) of Baht 189 million (2008: Baht 7,754 million). 7. 7.

Investments Investments

7.1

Classified by type of investment (Unit: Million Baht) Separate financial statements 2008 2009 Cost/ Cost/ Fair Fair Amortised Amortised cost value cost value

Consolidated financial statements 2008 2009 Cost/ Cost/ Fair Fair Amortised Amortised cost value cost value Current investment Trading securities Government and state enterprises securities Private debt securities Total Add: Allowance for change in value Net Available-for-sale securities Government and state enterprises securities Private debt securities Foreign debt securities Domestic marketable equity securities Total Add: Allowance for change in value Net Held-to-maturity debt securities - dued within one year Government and state enterprises securities Private debt securities Foreign debt securities Total Other investment Investment in property fund Total Total current investment - net

263 754 1,017 5 1,022

263 759 1,022

-

-

754 754 5 759

759 759

-

-

14,468 1,551 334 128 16,481 17 16,498

14,471 1,559 336 132 16,498

4,264 463 49 4,776 32 4,808

4,290 469 49 4,808

11,569 994 334 12,897 11 12,908

11,572 1,000 336 12,908

1,956 420 2,376 28 2,404

1,977 427 2,404

953 4,449 5,402

1,495 101 524 2,120

773 4,449 5,222

1,348 524 1,872

100 100 23,022

6,928

100 100 18,989

4,276

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(Unit: Million Baht) Separate financial statements 2008 2009

Consolidated financial statements 2008 2009 Cost/ Amortised cost Long-term investment Available-for-sale securities Government and state enterprises securities Private debt securities Foreign debt securities Domestic marketable equity securities Listed securities Unit trusts Total Add (less): Allowance for change in value Less: Allowance for impairment Net Held-to-maturity debt securities Government and state enterprises securities Private debt securities Foreign debt securities Total Less: Allowance for impairment Net Other investment Investment in property fund Domestic non-marketable equity securities Investment in equity securities Unit trusts Foreign non-marketable equity securities Investment in equity securities Total Less: Allowance for impairment Net Total long-term investment - net

Fair value

Cost/ Amortised cost

Fair value

Cost/ Amortised cost

Fair value

Cost/ Amortised cost

13

Fair value

20,844 6,606 5,406

20,864 6,766 5,667

618 4,618 -

697 4,800 -

19,493 4,646 5,406

19,513 4,758 5,667

614 2,714 -

693 2,838 -

1,637 554 35,047

1,598 581 35,476

2,380 605 8,221

1,194 574 7,265

415 29,960

402 30,340

575 416 4,319

253 376 4,160

435 (6) 35,476

(722) (234) 7,265

380 30,340

(61) (98) 4,160

17,087 1,362 18,449 (89) 18,360

9,656 791 4,323 14,770 (89) 14,681

10,455 10,455 (89) 10,366

8,684 4,323 13,007 (89) 12,918

368

658

368

655

117 18

109 18

99 18

99 18

3 506 (22) 484 54,320

785 (30) 755 22,701

3 488 (22) 466 41,172

772 (22) 750 17,828

127

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

14


7.2

Classified by due date of debt securities (Unit: Million Baht) Consolidated financial statements

Available-for-sale securities Government and state enterprises securities Private debt securities Foreign debt securities Total Add: Allowance for change in value Net Held-to-maturity debt securities Government and state enterprises securities Private debt securities Foreign debt securities Total Less: Allowance for impairment Net Total debt securities

Less than 1 year

2009 Due within Over 1 - 5 years 5 years

Total

Less than 1 year

2008 Due within Over 1 - 5 years 5 years

Total

14,448 1,551 334 16,333 13 16,346

20,186 6,518 5,406 32,110 430 32,540

678 88 766 11 777

35,312 8,157 5,740 49,209 454 49,663

4,264 463 4,727 32 4,759

42 4,318 4,360 162 4,522

576 300 876 99 975

4,882 5,081 9,963 293 10,256

953 4,449 5,402

9,036 889 9,925

8,051 473 8,524

18,040 1,362 4,449 23,851

1,495 101 524 2,120

9,452 272 4,323 14,047

204 519 723

11,151 892 4,847 16,890

5,402 21,748

(89) 9,836 42,376

8,524 9,301

(89) 23,762 73,425

2,120 6,879

(89) 13,958 18,480

723 1,698

(89) 16,801 27,057

(Unit: Million Baht) Separate financial statements 2009

Available-for-sale securities Government and state enterprises securities Private debt securities Foreign debt securities Total Add: Allowance for change in value Net Held-to-maturity debt securities Government and state enterprises securities Foreign debt securities Total Less: Allowance for impairment Net Total debt securities

Less than 1 year

Due within Over 1 - 5 years 5 years

Total

Less than 1 year

2008 Due within Over 1 - 5 years 5 years

Total

11,569 994 334 12,897 11 12,908

19,081 4,558 5,406 29,045 383 29,428

412 88 500 10 510

31,062 5,640 5,740 42,442 404 42,846

1,956 420 2,376 28 2,404

39 2,714 2,753 126 2,879

575 575 77 652

2,570 3,134 5,704 231 5,935

773 4,449 5,222

7,972 7,972

2,483 2,483

11,228 4,449 15,677

1,348 524 1,872

8,684 4,323 13,007

-

10,032 4,847 14,879

5,222 18,130

(89) 7,883 37,311

2,483 2,993

(89) 15,588 58,434

1,872 4,276

(89) 12,918 15,797

652

(89) 14,790 20,725

128

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

15


7.3

As at 31 December 2009, the Bank and its subsidiaries have a revaluation deficit arising from transfers of investments in debt securities, of which the current balances of Baht 164 million in the consolidated financial statements and Baht 177 million in the separate financial statements. These are presented in shareholders’ equity caption. (2008: Revaluation surplus of Baht 1 million and revaluation deficit of Baht 259 million in the consolidated financial statements, and revaluation surplus of Baht 1 million and revaluation deficit of Baht 263 million in the separate financial statements).

7.4

As at 31 December 2009, long-term investments in held-to-maturity debt securities include non-transferable promissory notes, with terms of 10 years counting from 16 September 2002 and 14 March 2003, amounting to Baht 292 million and Baht 4 million, respectively, which were received as a result of the transfer of non-performing loans of totaled Baht 296 million to Thai Asset Management Corporation (“TAMC”) (2008: Baht 296 million). However, the agreed transfer price received in the form of promissory notes could still be revised up or down after TAMC reviews the price or has the collateral assessed or the price adjusted. As at 31 December 2009, the Bank is still unable to estimate the exact amount of such losses. However, the Bank has estimated the contingent of losses arising from the management of non-performing assets at approximately Baht 89 million (2008: Baht 89 million). Such amount has been presented as allowance for impairment under the caption of investments in held-to-maturity debt securities, classified based on the type of promissory note. In addition, the Bank also shares joint responsibility with TAMC for future profits or losses arising from TAMC’s management of the non-performing assets as mentioned in Note 36.2 to the financial statements.

7.5

As at 31 December 2009, investments of the Bank and its subsidiary in government and state enterprise securities amounting to Baht 1,738 million, at amortised cost, have been placed as collateral for loans from commercial banks and as security with a Government agencies (separate financial statements: Baht 20 million) (2008: Baht 1,257 million in the consolidated financial statements).

7.6

As at 31 December 2009 and 2008, investments in which the Bank and its subsidiaries hold not less than 10 percent of the equity of the investee are as follows:

Securities Public utilities and services Puen Pob Paet Co., Ltd. Others The Thai Business Fund 3 (1)

Nature of business

Consolidated financial statements Separate financial statements 2008 2008 2009 2009 Percentage Percentage Percentage Percentage Cost of holding Cost of holding Cost of holding Cost of holding Million Baht Percent Million Baht Percent Million Baht Percent Million Baht Percent

Medical Clinic

-

10.00

-

10.00

-

10.00

-

10.00

Mutual Fund property (1) Sub Thawee Property Fund Mutual Fund property Thanasarn Open-End Fund (1) Mutual Fund debt securities The Krung Thai Dividend Fixed- Mutual Fund Income Fund debt securities

252

26.67

340

26.67

252

26.67

340

26.67

116

56.00

156

56.00

116

56.00

156

56.00

-

-

267

28.99

-

-

267

28.99

50

15.08

-

-

-

-

-

-

(1) The Bank and its subsidiaries do not treat these investments as associated or subsidiary companies because the Bank and its subsidiaries do not have control or influence over the financial and operating policy of these funds, which are independently managed by the fund manager in accordance with the details of each fund project and the funds are under the regulations of the Securities and Exchange Commission. Therefore, the Bank and its subsidiaries account for its long-term investments in these funds as available-for-sale securities or other investments depending on the objective of investment.

7.7

As at 31 December 2009 and 2008, investments in securities of the Bank and its subsidiaries included investments in the companies with weak financial position and poor operating results, are summarised below.

129

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

16


Consolidated financial statements

Number of investment 2008 2009 Equity securities - common shares 1. Companies whose auditors’ reports cited going concern issues 2. Financial institutions that are in the process of debt restructuring

Allowance for change in value/impairment Cost Fair value provided in the accounts 2008 2008 2008 2009 2009 2009 Million Baht Million Baht Million Baht Million Baht Million Baht Million Baht

2

2

21

21

1

1

20

20

-

1

-

8

-

-

-

8

Separate financial statements

Number of investment 2008 2009 Equity securities - common shares 1. Companies whose auditors’ reports cited going concern issues

2

Allowance for change in value/impairment Cost Fair value provided in the accounts 2008 2008 2008 2009 2009 2009 Million Baht Million Baht Million Baht Million Baht Million Baht Million Baht

2

21

21

1

1

20

20

Investments in subsidiary companies 8.8. Investments in subsidiary companies 8.1

As at 31 December 2009 and 2008, investments in subsidiary companies in the separate financial statements stated under the cost method, consist of investment in ordinary shares of the following subsidiary companies: (Unit: Million Baht) Separate financial statements

Company’s name Thanachart Securities Plc. Thanachart Insurance Co., Ltd.

Nature of business Securities business Non-life insurance Thanachart Life Assurance Co., Ltd. Life - insurance Thanachart Fund Management Fund management Co., Ltd. Thanachart Broker Co., Ltd. Non-life insurance broker Thanachart Group Leasing Co., Ltd. Hire purchase Thanachart Management and Services Services Co., Ltd. Thanachart Legal and Appraisal Legal services Co., Ltd. Thanachart Training and Training services Development Co., Ltd. T Leasing Co., Ltd. Hire purchase Total investments in subsidiary companies

Paid-up share capital 2008 2009 1,500 1,500 740 740

Percentage of holding 2008 2009 100 100 100 100

Value of investment under the cost method 2008 2009 1,858 1,858 867 867

Dividend income for the years ended 31 December 2008 2009 83 240 -

500 100

500 100

100 75

100 75

936 97

936 97

70 90

50 75

100

100

100

100

104

104

93

69

360 6

360 6

100 100

100 100

400 11

400 11

101 -

15 -

10

10

100

100

13

13

-

-

5

5

100

100

5

5

30

14

180

180

100

100

191

191

-

-

4,482

4,482

467

463

130

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

17


8.2

The consolidated balance sheet as at 31 December 2008 and the consolidated income statement for the year then ended included assets, income and net income of Thanachart Life Assurance Co., Ltd. of which the auditor of the subsidiary issued a qualified audit report on the financial statements for the year ended 31 December 2008 with respect to the effect of any adjustments which might be required as a result of a scope limitation imposed on the audit of insurance income and related expenses. Such issue has been already corrected and adjusted in the financial statements for the year ended 31 December 2009. However, the results of such adjustments have no material effect on the current year consolidated financial statements.

8.3

During the year 2008, the Bank purchased ordinary shares of T Leasing Co., Ltd. from Thanachart Group Leasing Co., Ltd., and included this company as a subsidiary company in the solo consolidation group. The gain on disposal of investment in such subsidiary in Thanachart Group Leasing’s financial statements, amounting Baht 11 million has been eliminated from the consolidated financial statement.

9. 9.

Investments associated company Investments in inanan associated company

9.1

As at 31 December 2009 and 2008, investments in an associated company in the consolidated financial statements included investment in MBK Plc., which was incorporated under Thai laws and engaged in property rental, hotel and services businesses can be summarised as follows: (Unit: Million Baht)

Company’s name

Paid-up share capital 2008 2009

Consolidated financial statements MBK Plc. 1,886 1,886

Percentage of holding (%) 2008 2009

Investment value Cost method Equity method 2008 2008 2009 2009

9.90

984

10.76

1,066

1,261

1,083

Dividend income for the years ended 31 December 2008 2009 83

81

Share of income for the years ended 31 December 2008 2009 129

153

The Bank and its subsidiaries classified such investments as investments in an associated company, like its Parent company, since the Parent company had significant influence in that company. During the year 2009, a subsidiary company sold investments in this associated company of Baht 81 million with gain on disposal of Baht 3 million, and presented in the consolidated financial statements. 9.2

Summarised financial information of an associated company as at 30 September 2009 and 2008 and for the years then ended as follows: (Unit: Million Baht)

Company’s name MBK Plc.

Paid-up share capital 30 September 2008 2009 1,886 1,886

Total assets 30 September 2008 2009 23,514 19,164

Total liabilities 30 September 2008 2009 13,021 10,889

Total income for the years ended 30 September 2008 2009 6,494 6,410

Net income for the years ended 30 September 2008 2009 1,258 1,456

The share of income of that associated company recognised in the current year is determined based on financial statements of that associated company prepared for a different period, as a result of limitations on the availability of information. The financial information used was based on the balance sheets as of 30 September 2009 and 2008 and the income statement for the years then ended, prepared by the Bank’s management, with reference to the financial statements as reviewed by its auditor and adjusted to reflect differences in accounting policies. The Bank’s management believes that the net income for the year ended 30 September 2009 is not material different from that income for the year ended 31 December 2009. 9.3

As at 31 December 2009, the fair value of investment in an associated company which is listed in the Stock Exchange of Thailand was Baht 1,214 million (2008: Baht 1,005 million).

131

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

18


10. Loans Loans and interest receivables 10. andaccrued accrued interest receivables 10.1 Classified by loan type (Unit: Million Baht) Consolidated financial statements Loans Overdrafts Loans Notes receivable Hire purchases receivables Financial leases receivables Total loans Add: Accrued interest receivables Less: Allowance for doubtful accounts Revaluation allowance for debt restructuring Loans and accrued interest receivables - net Securities business receivables Customers’ accounts Credit balances receivables Other receivables Total securities business receivables Less: Allowance for doubtful accounts Securities business receivables and accrued interest receivables - net Loans and accrued interest receivables - net

Separate financial statements

2009

2008

2009

2008

2,812 48,335 19,938 210,141 2,345 283,571 277 (8,048)

2,511 39,992 25,805 203,829 1,897 274,034 288 (6,769)

2,812 49,330 21,827 206,320 2,288 282,577 282 (7,718)

2,511 39,990 30,273 198,344 1,807 272,925 303 (6,365)

(33) 275,767

(20) 267,533

(33) 275,108

(20) 266,843

692 870 382 1,944 (315)

1,095 598 415 2,108 (298)

-

-

1,629 277,396

1,810 269,343

275,108

266,843

10.2 Classified by remaining period of contract

At call* Not over 1 year Over 1 year Total loans and accrued interest receivables

Consolidated financial statements 2008 2009 7,118 13,867 29,268 23,640 249,406 238,923 285,792 276,430

(Unit: Million Baht) Separate financial statements 2008 2009 8,723 17,302 26,942 22,116 247,194 233,810 282,859 273,228

* Included expired contracts

10.3 Classified by currency and country (Unit: Million Baht) Consolidated financial statements

Baht US Dollar Other currencies Total

Domestic 283,148 1,313 4 284,465

2009 Foreign 323 1,004 1,327

132

Total 283,471 2,317 4 285,792

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Domestic 275,151 955 68 276,174

2008 Foreign 256 256

Total 275,407 955 68 276,430

19


(Unit: Million Baht) Separate financial statements

Baht US Dollar Other currencies Total

Domestic 280,215 1,313 4 281,532

2009 Foreign 323 1,004 1,327

Total 280,538 2,317 4 282,859

Domestic 271,949 955 68 272,972

2008 Foreign 256 256

Total 272,205 955 68 273,228

10.4 Classified by type of business and loan classification (Unit: Million Baht) Consolidated financial statements 2009

Parent and related companies Agricultural and mining Manufacturing and commerce Real estate and construction Public utilities and services Personal consuming Housing loans Securities Hire purchase Others Others Total loans and accrued interest receivables

Normal 473 2,597 15,170 14,122 15,120

Special mention 2 71 473 456

Substandard 158 67 34

Doubtful

Doubtful of loss

7 157 457 7

598 491 64

Total 473 2,606 16,154 15,610 15,681

6,033 1,628 188,466 6,302 8,223

399 16,756 506 -

103 3 893 166 -

260 313 807 366 -

153 3,219 671 1

6,948 1,944 210,141 8,011 8,224

258,134

18,663

1,424

2,374

5,197

285,792 (Unit: Million Baht)

Consolidated financial statements 2008

Parent and related companies Agricultural and mining Manufacturing and commerce Real estate and construction Public utilities and services Personal consuming Housing loans Securities Hire purchase Others Others Total loans and accrued interest receivables

Normal 8,563 1,143 11,273 13,369 11,663

Special mention 647 430 1,240

Substandard 14 219 71

Doubtful

Doubtful of loss

10 372 25 14

523 612 56

Total 8,563 1,153 12,829 14,655 13,044

6,430 1,595 177,765 6,508 4,707

545 21,941 709 9

67 4 1,057 249 -

110 295 894 282 -

241 2,172 605 1

7,393 1,894 203,829 8,353 4,717

243,016

25,521

1,681

2,002

4,210

276,430

133

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

20


(Unit: Million Baht) Separate financial statements 2009 Normal Parent, subsidiaries and related companies Agricultural and mining Manufacturing and commerce Real estate and construction Public utilities and services Personal consuming Housing loans Hire purchase Others Others Total loans and accrued interest receivables

Special mention

Substandard

Doubtful of loss

Doubtful

Total

3,337 2,597 15,169 14,102 15,116

2 71 473 456

158 67 34

7 157 457 7

598 491 64

3,337 2,606 16,153 15,590 15,677

6,033 185,753 6,297 8,221

399 15,940 506 -

103 808 166 -

260 751 366 -

153 3,068 671 1

6,948 206,320 8,006 8,222

256,625

17,847

1,336

2,005

5,046

282,859 (Unit: Million Baht)

Separate financial statements 2008 Normal Parent, subsidiaries and related companies Agricultural and mining Manufacturing and commerce Real estate and construction Public utilities and services Personal consuming Housing loans Hire purchase Others Others Total loans and accrued interest receivables

Special mention

Substandard

Doubtful of loss

Doubtful

Total

12,815 1,143 11,263 13,339 11,633

647 430 1,241

14 219 71

9 372 25 14

523 612 56

12,815 1,152 12,819 14,625 13,015

6,430 173,967 6,505 4,706

545 20,642 709 8

67 927 249 -

110 817 282 -

241 1,991 605 1

7,393 198,344 8,350 4,715

241,801

24,222

1,547

1,629

4,029

273,228

10.5 Non-performing loans As at 31 December 2009 and 2008, the Bank and the securities company, a subsidiary, had non-performing loans (debtors classified as substandard, doubtful and doubtful of loss) classified in accordance with the Notification of the BOT and SEC as follows: Consolidated financial statements 2008 2009 Non-performing loans (excluding accrued interest receivables) The Bank Securities business

8,359 316

134

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

7,167 299

(Unit: Million Baht) Separate financial statements 2008 2009

8,359 -

7,167 -

21


The above definition of non-performing loans does not include overdue loans which have been restructured and meet the conditions for classification as Normal or Special mention debt. Additionally, the Bank and the subsidiary company, securities company, had loans for which income recognition under an accrual basis has been discontinued, as follows: Consolidated financial statements 2008 2009 8,777 7,251 316 299

The Bank Securities business

(Unit: Million Baht) Separate financial statements 2008 2009 8,777 7,251 -

10.6 Unearned income/interest income received in advance As at 31 December 2009 and 2008, the Bank and its subsidiaries had unearned interest income and interest income received in advance as follows: Consolidated financial statements 2008 2009 175 175

Unearned interest income Unearned income from hire purchase/ financial lease Interest income received in advance

30,385 7

31,095 5

(Unit: Million Baht) Separate financial statements 2008 2009 175 175 29,572 7

29,872 5

10.7 Hire purchases/Financial leases receivables As at 31 December 2009, the Bank and its subsidiaries had net hire purchase/financial lease receivables amounting to Baht 206,824 million in the consolidated financial statements and Baht 203,290 million in the separate financial statements. These mostly comprise hire purchase agreements or financial lease agreements for cars and motorcycles. The terms of the agreements are generally between 3 and 6 years and most carry interest at fixed rates. (Unit: Million Baht)

Gross investment in the lease Unearned finance income Present value of minimum lease payments receivable Allowance for doubtful accounts

Consolidated financial statement as at 31 December 2009 Amounts due under lease agreements Less than 1 year* 1 - 5 years Over 5 years 82,809 155,752 4,310 (13,488) (16,760) (137) 69,321 138,992 4,173

Total 242,871 (30,385) 212,486 5,662

* Included non-performing receivables (Unit: Million Baht) Consolidated financial statement as at 31 December 2008 Amounts due under lease agreements Less than 1 year* 1 - 5 years Over 5 years Total 76,238 155,435 5,148 236,821 (13,436) (17,480) (179) (31,095)

Gross investment in the lease Unearned finance income Present value of minimum lease payments receivable Allowance for doubtful accounts

62,802

137,955

4,969

205,726 4,761

* Included non-performing receivables

135

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

22


(Unit: Million Baht) Separate financial statement as at 31 December 2009 Less than 1 year* 80,534 (13,026)

Gross investment in the lease Unearned finance income Present value of minimum lease payments receivable Allowance for doubtful accounts

67,508

Amounts due under lease agreements 1 - 5 years Over 5 years 153,494 4,152 (16,416) (130) 137,078

4,022

Total 238,180 (29,572) 208,608 5,318

* Included non-performing receivables (Unit: Million Baht) Separate financial statement as at 31 December 2008 Amounts due under lease agreements Less than 1 year* 1 – 5 years Over 5 years Total 73,318 151,912 4,793 230,023 (12,794) (16,922) (156) (29,872)

Gross investment in the lease Unearned finance income Present value of minimum lease payments receivable Allowance for doubtful accounts

60,524

134,990

4,637

200,151 4,328

* Included non-performing receivables

10.8 Troubled debt restructuring During the years 2009 and 2008, the Bank and its subsidiaries have entered into debt restructuring agreements as follows: 2009

Type of restructuring Consolidated and separate financial statements Modification of repayment conditions Transfer of assets and/or ordinary shares and/or modification of repayment conditions Total

Number of debtors

Outstanding loans balance before restructuring (1) Million Baht

Outstanding loans balance after restructuring (1) Million Baht

10,796 14

3,408 270

3,407 270

10,810

3,678

3,677

Type of assets to be transferred

Land

Fair value of assets to be transferred per agreements Million Baht

89

(1) Presents the outstanding balance per the books of account (principal plus accrued interest).

136

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

23


2008

Type of restructuring Consolidated financial statement Modification of repayment conditions Transfer of assets and/or ordinary shares and/or modification of repayment conditions Total Separate financial statement Modification of repayment conditions Transfer of assets and/or ordinary shares and/or modification of repayment conditions Total

Number of debtors

Outstanding loans balance before restructuring (1) Million Baht

Outstanding loans balance after restructuring (1) Million Baht

221 3

814 6

810 6

224

820

816

211 3

615 6

615 6

214

621

621

Type of assets to be transferred

Fair value of assets to be transferred per agreements Million Baht

Land

7

Land

7

(1) Presents the outstanding balance per the books of account (principal plus accrued interest).

Counting from the balance sheet date, the remaining periods to maturity of receivables which entered into debt restructuring agreements during the years 2009 and 2008, are summarised below. 2009

Periods Past due after restructuring Due within the year Less than 5 years 5 - 10 years 10 - 15 years Over 15 years Total

2008

Consolidated and separate financial statements Outstanding Number of balances after debtors restructuring Million Baht 4,760 1,541 782 253 2,166 702 3,078 1,115 11 31 13 35 10,810 3,677

Consolidated financial statements Outstanding Number of balances after debtors restructuring Million Baht 102 493 68 102 34 155 6 25 3 3 11 38 224 816

Separate financial statements Outstanding Number of balances after debtors restructuring Million Baht 102 493 65 55 27 7 6 25 3 3 11 38 214 621

Supplemental information for the years 2009 and 2008 relating to restructured loan is as follows:

Interest income recognised in income statement Cash repayment from receivables Properties foreclosed received for debts settlement Loss on debt restructuring

Consolidated financial statements 2008 2009 254 144 678 751 138 7 32 13

137

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

(Unit: Million Baht) Separate financial statements 2008 2009 249 142 640 688 138 7 32 9

24


As at 31 December 2009 and 2008, the Bank and its subsidiaries have the following restructured receivables balance (principal and accrued interest receivable) as follows:

Thanachart Bank Plc. Thanachart Securities Plc.

Restructured receivables

Total number of outstanding receivables 2008 2009

Number of receivables 2008 2009

812,480 1,906

10,600 6

707,434 1,580

381 8

Outstanding balances 2008 2009 Million Baht Million Baht 5,280 2,645 101 134

Outstanding balances, net of collateral 2008 2009 Million Baht Million Baht 1,964 883 101 134

10.9 As at 31 December 2009 and 2008, the Bank had loans to parent company, subsidiary and related companies within Thanachart Group as follows: Company’s name Parent company Thanachart Capital Plc. Subsidiary companies Thanachart Group Leasing Co., Ltd.

Type of credit

Contract period as at 31 December 2009

Promissory note Promissory note

At call

T Leasing Co., Ltd.

Promissory note

At call

National Leasing Co., Ltd.

Promissory note

At call

Thanachart Legal and Appraisal Co., Ltd.

Promissory note

At call

Related company NFS Asset Management Co., Ltd. Total

Interest rate as at 31 December 2009

Promissory note

138

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

The Bank’s cost of fund plus a fixed interest rate per annum The Bank’s cost of fund plus a fixed interest rate per annum The Bank’s cost of fund plus a fixed interest rate per annum The Bank’s cost of fund plus a fixed interest rate per annum

Outstanding balances 2008 2009 Million Baht Million Baht -

4,500

2,168

3,645

634

824

77

-

10

-

-

3,650

2,889

12,619

25


10.10 Classification of loans under the Bank of Thailand’s guidelines As at 31 December 2009 and 2008, the Bank classified and made allowances against its loans (including loans to financial institutions which presented as part of interbank and money market items) in accordance with the BOT’s guidelines as summarised below. (Unit: Million Baht) Separate financial statements Debt balance net of Minimum collateral (2) percentage 2008 (Percent) 2009

Debt balance/ book value (1) 2008 2009 Loans and accrued interest receivables (including interbank and money market items) Normal 308,928 280,590 Special mention 17,830 24,186 Substandard 1,336 1,547 Doubtful 2,005 1,629 Doubtful of loss 5,046 4,029 Total 335,145 311,981 Additional allowance for possible uncollectability debts Total

84,895 7,396 968 1,181 4,258 98,698

75,170 8,905 1,163 1,156 3,019 89,413

1 2 100 100 100

Allowance for doubtful accounts 2008 2009

909 188 968 1,181 4,258 7,504 214 7,718

752 178 1,163 1,156 3,019 6,268 97 6,365

(1) Debt balance/book value for normal and special mention loans are excluded accrued interest receivables. (2) Debt balance net of collateral for substandard, doubtful and doubtful of loss loans are debt balance remaining after deducting the present value of expected future cash flows from debt collection or from disposal of collaterals.

10.11 Loan in companies which have settlement problems As at 31 December 2009 and 2008, part of the Bank and its subsidiaries’ loans in the consolidated financial statements and the separate financial statements included debts due from companies with weak financial position and poor operating results: Consolidated financial statements

Number of debtors 2008 2009 1. Listed companies vulnerable to delisting from the SET 2. Non - listed companies with similar operating results and financial positions to listed companies vulnerable to delisting from the SET 3. Companies which have loan settlement problems or have defaulted on the repayment

Allowance for doubtful accounts provided Debt balance Collateral value in the accounts 2008 2008 2008 2009 2009 2009 Million Baht Million Baht Million Baht Million Baht Million Baht Million Baht 311 263 44 57 267 206

3

2

14

13

835

858

815

809

281

284

651

541

1,129

1,051

896

865

399

404

139

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

26


Separate financial statements

Number of debtors 2008 2009 1. Listed companies vulnerable to delisting from the SET 2. Non - listed companies with similar operating results and financial positions to listed companies vulnerable to delisting from the SET 3. Companies which have loan settlement problems or have defaulted on the repayment

10.12

Allowance for doubtful accounts provided Debt balance Collateral value in the accounts 2008 2008 2008 2009 2009 2009 Million Baht Million Baht Million Baht Million Baht Million Baht Million Baht 311 263 44 57 267 206

3

2

14

13

835

858

815

809

281

284

522

415

1,105

959

896

746

375

387

Classification of securities business receivables in accordance with the Notification of the Securities and Exchange Commission As at 31 December 2009 and 2008, a subsidiary company operating in the securities business classified its securities business receivables and accrued interest receivables and provided related allowance for doubtful accounts in accordance with the Notification of the Securities and Exchange Commission (SEC) as follows:

Doubtful Substandard Total

Receivable and accrued interest receivables 2009 2008 313 296 3 4 316 300

Allowance for doubtful accounts as required by SEC 2009 2008 313 313

296 296

(Unit: Million Baht) Allowance for doubtful accounts provided in the accounts 2009 2008 313 296 2 2 315 298

The above substandard receivables were the outstanding debt balance which equal to the pledged securities. 10.13

Hire purchase receivables/financial lease receivables of subsidiaries separate by aging As at 31 December 2009 and 2008, loans in consolidated financial statements which included hire purchase and financial lease receivables of three subsidiary companies engaged in hire purchase and financial lease businesses are classified by the due date of the contracts (after elimination) as follows: (Unit: Million Baht) Current or overdue less than 90 days Overdue 91 - 365 days Overdue more than 1 year Debtors under legal actions

2009 3,586 141 58 93

2008 5,187 207 45 136

Total

3,878

5,575

344

433

Allowance for doubtful accounts provided in the accounts

27 140

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


11. Allowance Allowance forfordoubtful accounts 11. doubtful accounts (Unit: Million Baht)

Normal Balance - beginning of the year Increase (decrease) during the year Bad debts recovery Bad debts written-off Balance - end of the year

Special mention

For the year ended 31 December 2009 Separate financial statements SubDoubtful General standard Doubtful of loss provision Total

Subsidiary companies

Eliminations Consolidated

752

178

1,163

1,156

3,019

97

6,365

731

(29)

7,067

157 909

10 188

(195) 968

25 1,181

2,690 52 (1,503) 4,258

117 214

2,804 52 (1,503) 7,718

279 12 (363) 659

15 (14)

3,098 64 (1,866) 8,363

(Unit: Million Baht)

Balance - beginning of the year Increase (decrease) during the year Bad debts recovery Bad debts written-off Reversal from disposal of loans Balance - end of the year

Normal

Special mention

For the year ended 31 December 2008 Separate financial statements SubDoubtful General standard Doubtful of loss provision Total

Subsidiary companies

Eliminations Consolidated

626

123

964

901

1,558

350

4,522

543

(28)

5,037

126 -

55 -

199 -

255 -

3,158 43 (1,526)

(253) -

3,540 43 (1,526)

393 1 (206)

(1) -

3,932 44 (1,732)

752

178

1,163

1,156

(214) 3,019

97

(214) 6,365

731

(29)

(214) 7,067

12. allowance restructuring 12. Revaluation Revaluation allowance for for debtdebt restructuring (Unit: Million Baht)

Balance - beginning of the year Increase during the year Add (less): Amortised during the year

Consolidated financial statements 2009 2008 20 10 31 8 (18) 2

Balance - end of the year

33

20

Separate financial statements 2009 2008 20 10 31 8 (18) 2 33

20

13. assets 13. Classification Classification ofofassets

As at 31 December 2009 and 2008, the quality of assets classified in accordance with the announcements of the Bank of Thailand are as follows: (Unit: Million Baht)

Normal Special mention Substandard Doubtful Doubtful of loss Total

Loans and accrued interest receivables 2008 2009 308,928 280,590 17,830 24,186 1,336 1,547 2,005 1,629 5,046 4,029 335,145 311,981

Investments 2008 2009 126 484 126 484

Separate financial statements Property foreclosed Other assets 2008 2008 2009 2009 129 57 52 68 3 4 2 6 43 155 69 84 43 155 255 219

141

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Total 2009 309,057 17,882 1,339 2,007 5,284 335,569

2008 280,647 24,254 1,551 1,635 4,752 312,839

28


14. Property Property foreclosed 14. foreclosed (Unit: Million Baht) Consolidated financial statements For the year ended 31 December 2009 Balance Balance beginning of end of the year Additions Disposals the year Assets transferred in settlement of debts Immovable assets Movable assets Assets foreclosed from purchase by bid on the open market Immovable assets Total property foreclosed Less: Allowance for impairment Property foreclosed - net

Separate financial statements For the year ended 31 December 2009 Balance Balance beginning of end of the year Additions Disposals the year

420 1,282

92 6,295

(49) (7,149)

463 428

420 1,217

92 5,932

(49) (6,739)

463 410

59 1,761 (161) 1,600

14 6,401 (420) 5,981

(8) (7,206) 537 (6,669)

65 956 (44) 912

59 1,696 (155) 1,541

14 6,038 (400) 5,638

(8) (6,796) 512 (6,284)

65 938 (43) 895

15. Land, Land, premises 15. premisesandandequipment equipment (Unit: Million Baht)

Land

Buildings and buildings improvement

Consolidated financial statements Furniture, fixtures and equipments Vehicles

Cost 31 December 2008 398 241 2,740 Additions 28 85 238 Transfers/Disposals 64 79 31 December 2009 426 390 3,057 Accumulated depreciation 31 December 2008 23 1,222 Transfer/Disposals (37) Depreciation for the year 19 525 31 December 2009 42 1,710 Allowance for impairment 31 December 2008 Increase during the year 1 31 December 2009 1 Net book value 31 December 2008 398 218 1,518 31 December 2009 425 348 1,347 Depreciation charge included in the income statements for the years ended 31 December 2008 2009

142

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Assets under installation

Total

162 22 (16) 168

95 119 (196) 18

3,636 492 (69) 4,059

80 (13) 28 95

-

1,325 (50) 572 1,847

-

-

1 1

82 73

95 18

2,311 2,211 476 572

29


(Unit: Million Baht) Buildings and building improvement

Separate financial statements Furniture, fixtures and equipments Vehicles

Land Cost 31 December 2008 398 181 2,173 Additions 28 86 212 Transfers/Disposals 64 71 31 December 2009 426 331 2,456 Accumulated depreciation 31 December 2008 16 867 Transfers/Disposals (17) Depreciation for the year 15 445 31 December 2009 31 1,295 Allowance for impairment 31 December 2008 Increase during the year 1 31 December 2009 1 Net book value 31 December 2008 398 165 1,306 31 December 2009 425 300 1,161 Depreciation charge included in the income statements for the years ended 31 December 2008 2009

Assets under installation

Total

99 14 (12) 101

92 86 (161) 17

2,943 426 (38) 3,331

45 (9) 18 54

-

928 (26) 478 1,380

-

-

1 1

54 47

92 17

2,015 1,950 387 478

As at 31 December 2009, the Bank and its subsidiaries have vehicles acquired under financial leases with net book values amounting to approximately Baht 71 million. In addition, the Bank and its subsidiaries have office equipment and vehicles which have been fully depreciated but are still in use with original costs, before deducting accumulated depreciation, amounting to approximately Baht 376 million (separate financial statements: Baht 45 million and Baht 164 million, respectively).

16. assets- software – software 16. Intangible Intangible assets (Unit: Million Baht) Consolidated financial statements For the year ended 31 December 2009

Computer software Less: Amortisation Intangible assets - net Amortisation included in the income statement for the year

Remaining useful life 0 - 10 years

Balance beginning of the year 505 (88) 417

Additions 116 (46) 70

Disposals (13) (13)

Balance end of the year 608 (134) 474 46

143

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

30


(Unit: Million Baht) Separate financial statements For the year ended 31 December 2009 Remaining useful life 0 - 9 years

Computer software Less: Amortisation Intangible assets - net Amortisation included in the income statement for the year

Balance beginning of the year 413 (36) 377

Additions 102 (36) 66

Disposals (12) (12)

Balance end of the year 503 (72) 431 36

As at 31 December 2009, the Bank and its subsidiaries have computer software which have been fully amortised but are still in use with original costs, before deducting accumulated amortisation, amounting to approximately Baht 31 million (separate financial statement: Baht 7 million).

17. assets 17. Other Other assets

Accrued premium insurance income Other receivables Accrued interest and dividend income receivables VAT refundable Prepaid leasehold rights Other receivables - VAT paid in advance for customers Withholding tax refundable Others Total Less: Allowance for impairment Total other assets - Net

Consolidated financial statements 2008 2009 757 518 721 578 533 232 401 353 264 305 164 176 77 106 765 619 3,682 2,887 (104) (108) 3,578 2,779

(Unit: Million Baht) Separate financial statements 2008 2009 718 447 394 176 390 330 258 299 164 176 80 352 364 2,276 1,872 (76) (97) 2,200 1,775

Consolidated financial statements 2008 2009 657 616 81,614 72,870 66 68

(Unit: Million Baht) Separate financial statements 2008 2009 672 657 81,990 73,153 66 68

18. Deposits 18. Deposits 18.1 Classified by type of deposits

Current Saving Promissory notes Fixed deposits - Less than 6 months - 6 months and up to 1 year - Over 1 year Total deposits

66,764 17,759 99,436 266,296

144

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

64,914 82,947 48,748 270,163

66,794 17,759 99,446 266,727

65,209 82,967 48,778 270,832

31


18.2 Classified by the remaining period of contracts (Unit: Million Baht) Separate financial statements 2008 2009 221,436 269,418 45,291 1,414 266,727 270,832

Consolidated financial statements 2008 2009 221,005 268,749 45,291 1,414 266,296 270,163

Not over 1 year * Over 1 year Total deposits * Included expired contracts

18.3 Classified by currency and countries (Unit: Million Baht) Consolidated financial statements

Baht US Dollar Other currencies Total

Domestic 266,206 44 39 266,289

2009 Foreign 6 1 7

Total 266,206 50 40 266,296

Domestic 270,093 64 5 270,162

2008 Foreign 1 1

Total 270,093 65 5 270,163 (Unit: Million Baht)

Separate financial statements

Baht US Dollar Other currencies Total

Domestic 266,637 44 39 266,720

2009 Foreign 6 1 7

Total 266,637 50 40 266,727

Domestic 270,762 64 5 270,831

2008 Foreign 1 1

Total 270,762 65 5 270,832

.

19. Interbank andmoney money market (liabilities) 19. Interbank and market itemsitems (liabilities) (Unit: Million Baht) Consolidated financial statements 2009 Term

At call Domestic Commercial banks Other banks Finance companies and securities companies Other financial institutions Total domestic items Foreign US Dollar Baht currency Total foreign items Total

Total

At call

2008 Term

Total

6 -

1,150 534

1,156 534

61 -

-

61 -

4,773 4,298 9,077

3,545 1,430 6,659

8,318 5,728 15,736

3,921 2,005 5,987

493 804 1,297

4,414 2,809 7,284

35 35 9,112

5,038 130 5,168 11,827

5,038 165 5,203 20,939

7 7 5,994

1,297

7 7 7,291

145

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

32


(Unit: Million Baht) Separate financial statements 2009 Term

At call Domestic Commercial banks Other banks Finance companies and securities companies Other financial institutions Total domestic items Foreign US Dollar Baht currency Total foreign items Total

Total

At call

2008 Term

Total

6 -

1,150 534

1,156 534

11 -

-

11 -

5,046 4,800 9,852

3,745 1,681 7,110

8,791 6,481 16,962

3,946 2,106 6,063

493 1,106 1,599

4,439 3,212 7,662

35 35 9,887

5,038 130 5,168 12,278

5,038 165 5,203 22,165

7 7 6,070

1,599

7 7 7,669

As at 31 December 2009, interbank and money market items (liabilities) included deposits and borrowing from BNS (the other major shareholder) of Baht 5,014 million. (2008: Deposits of Baht 8 million).

20. 20. Borrowings Borrowings As at 31 December 2009 and 2008, domestic borrowings are as follows: (Unit: Million Baht) Type of borrowings Short-term borrowings Promissory notes Bills of exchange Bills of exchange

Long-term borrowings Subordinated debentures issued under Tier II Subordinated debentures issued under Tier II Subordinated debentures issued under Tier II Bills of exchange

Interest rate per annum (as at 31 December 2009)

Fixed rate of 0.91 - 4.80 percent

Maturity date Call Call 2009 -2010

Consolidated financial statements 2009 2008

Separate financial statements 2009 2008

75,200

122 2 46,956

75,936

2 47,926

75,200

47,080

75,936

47,928

6.18 percent

2013

3,000

3,000

3,000

3,000

5.10 percent

2015

5,000

5,000

5,000

5,000

5.25 percent

2019 and 2024

7,000

-

7,000

-

2010

15,000 90,200

6,070 14,070 61,150

15,000 90,936

6,360 14,360 62,288

Total borrowings

On 8 December 2006, the Bank issued 3,000,000 units of subordinated, unsecured and unconvertible debentures, with a face value of Baht 1,000 each. The debenture mature in 2013 and bear interest at a fixed interest rate of 6.18 percent per annum, payable semi-annually. On 9 May 2008, the Bank issued 5,000,000 units of subordinated, unsecured, unconvertible debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debenture mature in 2015 and bear interest at a fixed interest rate of 5.1 percent per annum for the first three years and 6 percent per annum for the fourth to seventh years, payable quarterly. 146

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

33


On 3 April 2009, the Bank issued 2,000,000 units of subordinated, in name certificate, unsecured, unconvertible debenture with debenture holders’ representative, with a face value of Baht 1,000 each. The debenture mature in 2019 and bear interest at a fixed interest rate of 5.25 percent per annum for the first three years, 5.75 percent per annum for the fourth to seventh years and 6.5 percent per annum for the eighth to tenth years, payable quarterly. After 5 years, the Bank has call option to early redemption these debentures if the conditions as specified are met. On 24 July 2009, the Bank issued 5,000,000 units of name registered subordinated, unsecured, unconvertible debenture with debenture holders’ representative, with a face value of Baht 1,000 each. Of these, 3.5 million units mature in 2019 and bear interest at a fixed interest rate of 5.25 percent per annum for the first five years and 5.5 percent per annum for the sixth to tenth years, while 1.5 million units mature in 2024 and bear interest at a fixed interest rate of 5.25 percent per annum for the first five years, 6.0 percent per annum for the sixth to tenth years and 6.5 percent per annum for the eleventh to fifteenth years, payable quarterly. After 5 years, the Bank has call option to early redemption these debentures if the conditions as specified are met. As at 31 December 2009, borrowings amounting to Baht 9,628 million are borrowed from Thanachart Capital Plc., the parent company (2008: Baht 6,372 million). 21. Other Other liabilities 21. liabilities

Other payables Loss reserves and outstanding claims from insurance/life assurance Suspense cash received from account receivables Insurance premium payable Unearned income from hire purchase Provision for corporate income tax Others Total other liabilities

Consolidated financial statements 2008 2009 383 284

(Unit: Million Baht) Separate financial statements 2008 2009 282 216

872

786

-

-

736 86 193 586 970 3,826

750 264 212 421 687 3,404

736 147 193 586 647 2,591

750 172 212 421 442 2,213

22. Share capital 22. Share capital On 8 January 2009, the Extraordinary Meeting of Shareholders of the Bank approved a decrease and an increase in the Bank’s registered share capital as follows: -

Approved a decrease in the share capital from Baht 21,346,192,920 (2,134,619,292 shares with a par value of Baht 10) to Baht 17,346,192,920 (1,734,619,292 shares with a par value of Baht 10) by reduction 400,000,000 unissued ordinary shares with a par value of Baht 10. The Bank registered such decrease with the Ministry of Commerce on 15 January 2009.

-

Approved an increase in the share capital from Baht 17,346,192,920 (1,734,619,292 shares with a par value of Baht 10) to Baht 19,346,192,920 (1,934,619,292 shares with a par value of Baht 10) by issuance of additional 200,000,000 shares with a par value of Baht 10. The Bank registered such increase with the Ministry of Commerce on 20 January 2009. The Bank called up and registered paidup share capital of Baht 1,999,999,800 on 29 May 2009.

147

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

34


On 6 October 2009, the Extraordinary Meeting of Shareholders of the Bank approved a decrease and an increase in the Bank’s registered share capital as follows: -

Approved a decrease in the share capital from Baht 19,346,192,920 (1,934,619,292 shares with a par value of Baht 10) to Baht 19,346,192,720 (1,934,619,272 shares with a par value of Baht 10) by reduction 20 unissued ordinary shares with a par value of Baht 10. The Bank registered such decrease with the Ministry of Commerce on 16 October 2009.

-

Approved an increase in the share capital from Baht 19,346,192,720 (1,934,619,272 shares with a par value of Baht 10) to Baht 59,346,192,720 (5,934,619,272 shares with a par value of Baht 10) by issuance of additional 4,000,000,000 shares with a par value of Baht 10. The Bank registered such increase with the Ministry of Commerce on 20 October 2009.

23. surplus(deficit) (deficit) on investments 23. Revaluation Revaluation surplus on investments Consolidated financial statements 2008 2009 Revaluation surplus on investments Available-for-sale investments Debt instruments Equity instruments Held-to-maturity investments (transfer from available-for-sale investments) Surplus recognised for an associated company - under equity method - net Total Revaluation deficit on investments Available-for-sale investments Debt instruments Equity instruments Held-to-maturity investments (transfer from available-for-sale investments) Deficit recognised for an associated company - under equity method - net Total Revaluation surplus (deficit) on investments

(Unit: Million Baht) Separate financial statements 2008 2009

450 196

284 37

405 1

231 11

-

1

-

1

119 765

322

406

243

(5) (213)

1 (1,036)

(1) (14)

(275)

(164)

(259)

(177)

(263)

(382) 383

(93) (1,387) (1,065)

(192) 214

(538) (295)

24. Statutory Statutory reserve 24. reserve Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Bank is required to set aside a statutory reserve at least 5 percent of its net income after deducting accumulated deficit brought forward (if any) until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution. As at 31 December 2009, the Bank allocated Baht 177,369,669 of net income for the year 2009 to the statutory reserve.

25. funds 25. Capital Capital funds The primary objectives of the Bank’s capital management are to maintain the Bank’s ability to continue as a going concern and to maintain a capital adequacy ratio in accordance with the Act on Undertaking of Banking business B.E. 2551.

148

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

35


(Unit: Million Baht) 2008

2009 Tier I Issued and fully paid up share capital Share premium Statutory reserve Retained earnings - unappropriated Total Tier II Subordinated debentures Reserve for loans classified as normal Total Total Tier I and Tier II Less: Net revaluation deficit on equity instruments Total capital funds

19,346 2,101 245 1,953 23,645

17,346 2,101 127 687 20,261

13,800 1,125

7,400 850

14,925 38,570 (13) 38,557

8,250 28,511 (264) 28,247

As at 31 December 2009 and 2008, the Bank’s capital ratios, calculated based on the BOT’s regulation relating to the calculation of capital funds announced by the BOT, are as follows: 2008

2009 Capital ratio of the Bank 14.10 8.65

Total capital to risk assets (percent) Total Tier I to risk assets (percent)

Minimum requirement by BOT 8.50 4.25

Capital ratio of the Bank 11.18 8.02

Minimum requirement by BOT 8.50 4.25

The Bank will disclose capital maintenance information as at 31 December 2009 in accordance with the Notification of the Bank of Thailand Re: Public Disclosure of Capital Maintenance Information for Commercial Banks on its web site at www.thanachartbank.co.th, within April 2010. In addition, the Bank had disclosed the latest capital maintenance information as at 30 June 2009 on its web site since 28 September 2009. 26.

Dividends 26. Dividends Dividends Dividends on earning for the year 2008 Dividends on earning for the year 2007

Approved by Annual General Meeting of the Shareholders on 28 April 2009 Annual General Meeting of the Shareholders on 23 April 2008

Total dividends Million Baht

Dividend per share Baht

971

0.56

746

0.43

27. Bad debtsandanddoubtful doubtful accounts 27. Bad debts accounts Bad debts and doubtful accounts in the statements of income for the years ended 31 December 2009 and 2008 consisted of the following:

149

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

36


Bad debts and doubtful accounts of loans Increase (reversal) bad debts and doubtful accounts of interbank and money market items Amortisation of revaluation allowance for debts restructured during the year (additional setup) Total bad debts and doubtful accounts

Consolidated financial statements 2008 2009 3,098 3,932

(Unit: Million Baht) Separate financial statements 2008 2009 2,804 3,540

(26)

21

-

(3)

(18) 3,054

2 3,955

(18) 2,786

2 3,539

28. oninvestments investments 28. Loss Loss on

Loss on investments for the years ended 31 December 2009 and 2008 consisted of the following:

Reversal (increase) of impairment of investments Realised gain (loss) on disposals Trading securities Available-for-sale securities Investments in an associated company Gain on return of ordinary share capital Unrealised gain on change in value Total loss on investments

Consolidated financial statements 2008 2009 228 (242) 14 (473) 3 1 5 (222)

(9) (169) (420)

(Unit: Million Baht) Separate financial statements 2008 2009 98 (98) 4 (164) 5 (57)

(108) (206)

29. (loss)ononproperty property foreclosed and assets other assets 29. Gain Gain (loss) foreclosed and other

Gain (loss) on property foreclosed and other assets for the years ended 31 December 2009 and 2008 consisted of the following: Consolidated financial statements 2008 2009 Realised gain (loss) on disposal of property foreclosed and other assets Reversal of allowance for impairment (increase in allowance for impairment) Total gain (loss) on property foreclosed and other assets

150

(Unit: Million Baht) Separate financial statements 2008 2009

14

(16)

15

(20)

117 131

(69) (85)

112 127

(64) (84)

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

37


30. Directors’ remuneration 30. Directors’ remuneration Directors’ remuneration represents the benefits paid to the directors of the Bank and a public subsidiary company in accordance with Section 90 of the Public Limited Companies Act, including the payment of remuneration amounting to approximately Baht 8 million to the Bank’s directors, which was approved by the Annual General Meeting of Shareholders held on 28 April 2009, exclusive of salaries and related benefits payable to directors who hold executive positions.

31. Corporate income 31. Corporate income tax tax Corporate income tax was calculated on net income for the year, after adding back expenses and provisions which are disallowable for tax computation purposes and deducting income which is exempted for tax computation purposes. From 1 January 2007, the Bank changed the method of recording property foreclosed – movable assets from recording the cost of such assets at the book value of the receivables on the transfer date, to recording them at the fair value (with reference to appraisal value less estimated selling expenses), providing this does not exceed the legal claim over such receivables. In this regard, the Bank restated the 2006 financial statements to reflect the change, of which the effect was to decrease corporate income tax of the year 2006 by Baht 102 million. In May 2008, the Bank received such tax refund from the Revenue Department and presented such amount under “Corporate income tax refundable” in the income statement.

32. Earnings pershare share 32. Earnings per Basic earnings per share is calculated by dividing net income of the Bank’s portion for the year by the weighted average number of ordinary shares in issue during the year.

33. Provident fund 33. Provident fund The Bank, its subsidiaries and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Employees, the Bank and the subsidiaries contributed to the fund monthly at the rate of 5 percent of their basic salary. The fund will be paid to the employees upon termination of employment in accordance with the fund rules. During the year 2009, approximately Baht 108 million has been contributed to the fund by the Bank and its subsidiaries (separate financial statement: Baht 82 million).

34. Related partytransactions transactions 34. Related party During the years, the Bank and its subsidiaries had significant business transactions with its related parties. These transactions have been concluded on commercial terms and based agreed upon in the ordinary course of businesses between the Bank and those companies. Below is a summary of those transactions.

151

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

38


(Unit: Million Baht) Consolidated financial statements Separate financial statements 2009 2009 2008 2008 Transactions occurred during the years Parent company Purchase of debt securities 50 50 Sales of debt securities 22,266 28,443 10,789 (Related gain) 2 1 Sales of subordinated debentures 81 81 Interest income 28 294 15 287 Income on supporting service

70

134

70

134

Other income Interest expenses

47 254

46 275

5 253

256

Rental expenses Other expenses Dividend payment Subsidiary companies Purchase of debt securities Sales of debt securities (Related gain) Sales of subordinated debentures Purchase of investment in subsidiary company Interest and dividend income

163 24 495

151 20 559

141 24 495

128 20 559

-

-

4,433 8,791 17 4 -

2,878 512 5 431

-

-

569

408

Income on supporting services

-

-

156

146

Other income Interest expenses

-

-

389 57

285 53

Rental expenses Other expenses Purchase of fixed assets Associated company Sales of subordinated debentures Interest income

-

-

6 192 -

2 221 4

1,200 1

3

1,200 1

3

Other income Interest expenses

1 30

3 2

30

2

Rental expenses Other expenses

22 2

21 1

22 -

21 -

Transfer pricing policy (For the year 2009)

At market price At market price At par value At interest rate of 2.74 – 5.25 percent per annum At the rate agreed under the contract, determined with reference to cost At interest rate 0.75 – 6.18 percent per annum At the rate agreed under the rental contracts As declared At market price At market price At par value

At interest rate of 2.16 – 3.55 percent per annum and dividend as declared At the rate agreed under the contract, determined with reference to cost At interest rate of 0.5 – 4.70 percent per annum At the rate agreed under the rental contracts

At par value At interest rate of 1.75 – 6.88 percent per annum At interest rate of 0.65 – 5.25 percent per annum At the rate agreed under the rental contracts

(Unit: Million Baht) 152

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

39


Other expenses

2

1

-

-

(Unit: Million Baht) Consolidated financial statements 2009 2008 Transactions occurred during the years (continued) Related companies Purchase of debt securities 648 21,047 Sales of debt securities 7,579 21,580 (Related gain) 13 Sales of subordinated debentures 300 158,016 131,553 Purchase/sales of forward exchange contracts (Related gain (loss)) 2 (36) Sale of loans 8 (Related gain) 2 Purchase of fixed assets 68 -

Interest and dividend income Income on supporting services Other income Interest expenses Rental expenses Insurance/Life insurance expenses Fees and services expenses Other expenses Dividend payment

Separate financial statements 2009 2008

598 2,588 300 158,016

1,226 607 12 131,553

2 68

(36) 8 2 -

136

361

102

333

7

9

7

9

27 34

37 71

34

69

52 185 385 36 476

38 7 3 37 186

27 30 476

15 30 186

153

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Transfer pricing (Unit: policy Million Baht) (For the year 2009)

39

At market price At market price At par value At market price

At the rate agreed under the contract, determined with reference to appraisal value and market price At interest rate of 0.05 - 8.50 percent per annum and dividend as declared At the rate agreed under the contract, determined with reference to cost At interest rate of 0.15 - 5.25 percent per annum At the rate agreed under the rental contracts At the rate agreed under the contracts At the rate agreed under the contracts As declared

40


The outstanding balances of the above transactions during the years ended 31 December 2009 and 2008 have been shown at the average balance at the end of each month as follows: (Unit: Million Baht) Separate financial statements 2008 2009

Consolidated financial statements 2008 2009 Parent company Loans Deposits Borrowings Subsidiary companies Loans Deposits Interbank and money market items (liabilities) Borrowings Associated company Loans Deposits Borrowings Related companies Interbank and money market items (assets) Loans Deposits Interbank and money market items (liabilities) Borrowings

708 462 7,387

7,589 700 4,651

4,000 462 7,360

7,385 700 4,277

-

-

3,877 620 784 906

4,525 565 185 714

383 207 1,200

87 56 -

277 207 1,200

48 56 -

3,477 1,435 1,567 2,379 447

4,398 4,962 1,403 447 410

3,452 1,385 1,567 2,379 447

4,287 4,695 1,403 402 400

The significant outstanding balances of the above transactions are as follows: (Unit: Million Baht)

Assets Interbank and money Investments Loans and market - debt interest items securities receivables Parent company Thanachart Capital Plc. Associated company MBK Plc. Related companies Advanced Info Service Plc. The Stock Exchange of Thailand Dhipaya Insurance Plc. The Bank of Nova Scotia Other related companies

Consolidated financial statements 31 December 2009 Liabilities Interbank and money market Other Interest assets Deposits items Borrowings payable

Commitments

Other liabilities

-

217

22

29

129

-

9,628

26

17

-

-

-

-

8

19

-

1,200

5

-

67

-

319

44

7

2,123

-

300

2

2

17

189 190 379

536

407 473

500 15 17 576

568 748 3,587

5,013 55 5,068

450 11,578

1 1 4 39

1 15 1 296 332

1,407 77 1,568

154

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

41


Consolidated financial statements 31 December 2008 Assets Liabilities Interbank Interbank and money Investments Loans and and money market - debt market interest Other Interest items securities receivables assets Deposits items Borrowings payable Parent company Thanachart Capital Plc. Associated company MBK Plc. Related companies NFS Asset Management Co., Ltd. Advanced Info Service Plc. The Bank of Nova Scotia Other related companies

(Unit: Million Baht)

Commitments

Other liabilities

-

257

4,512

31

166

-

6,372

13

14

30

-

-

-

7

65

-

-

-

-

64

7,754 7,754

714 971

3,859 43 149 8,563

2 22 3 19 84

23 32 814 1,100

8 94 102

212 6,584

11 24

6 4 1 25

1,228 58 1,380

155

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

42


(Unit: Million Baht) Separate financial statements 31 December 2009 Assets

Liabilities

Interbank and money Investments Loans and - debt interest market securities receivables items Parent company Thanachart Capital Plc. Subsidiary companies Thanachart Group Leasing Co., Ltd. T Leasing Co., Ltd. Thanachart Securities Plc. Thanachart Insurance Co., Ltd. Thanachart Life Assurance Co., Ltd. National Leasing Co., Ltd. Thanachart Broker Co., Ltd. Thanachart Legal and Appraisal Co., Ltd. Thanachart Training and Development Co., Ltd. Thanachart Management and Services Co., Ltd. Thanachart Fund Management Co., Ltd. Associated company MBK Plc. Related companies Advanced Info Service Plc. The Stock Exchange of Thailand The Bank of Nova Scotia Other related companies

Commitments

Interbank and money Other market assets Deposits items Borrowings

Interest Other payable liabilities

-

-

-

24

129

-

9,628

26

11

-

-

-

2,173 634 -

1

27 16 -

458

-

1

1

30

-

-

-

25

144

-

246

1

70

10

-

-

77 -

15 -

2 228

769 -

490 -

8 -

40 59 -

-

-

-

10

-

17

-

-

-

-

-

-

-

-

-

23

-

-

-

-

-

-

-

-

-

16

-

-

-

-

-

-

-

-

2

-

15

-

-

-

-

-

-

-

7

19

-

1,200

5

-

67

-

99

43

2

2,123

-

300

2

2

17

189 133 322

99

400 3,337

15 8 99

568 748 4,060

5,013 55 6,310

450 12,314

1 1 4 49

1 1 185

1,407 77 1,608

156

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

43


(Unit: Million Baht)

Assets Interbank and money Investments Loans and market - debt interest items securities receivables Parent company Thanachart Capital Plc. Subsidiary companies Thanachart Group Leasing Co., Ltd. T Leasing Co., Ltd. Thanachart Securities Plc. Thanachart Insurance Co., Ltd. Thanachart Life Assurance Co., Ltd. National Leasing Co., Ltd. Thanachart Broker Co., Ltd. Thanachart Legal and Appraisal Co., Ltd. Thanachart Training and Development Co., Ltd. Thanachart Management and Services Co., Ltd. Thanachart Fund Management Co., Ltd. Associated company MBK Plc. Related companies NFS Asset Management Co., Ltd. Advanced Info Service Plc. The Bank of Nova Scotia Other related companies

Separate financial statements 31 December 2008 Liabilities Commitments Interbank and money market Interest Other Other Borrowings payable liabilities assets Deposits items

-

-

4,500

22

166

-

6,250

13

11

30

-

-

3,657 827 -

1 1 2

19 24 -

19

-

-

-

30

-

-

-

12

285

-

170

3

2

10

-

-

-

11 -

5 327

403 -

1,090 -

11 -

31 61 -

-

-

-

-

-

10

-

-

-

-

-

-

-

-

-

41

-

-

-

1

-

-

-

-

-

10

-

-

-

-

-

-

-

-

2

-

8

-

-

-

-

-

-

-

7

65

-

-

-

-

64

7,754 7,754

451 451

3,650 40 141 12,815

8 3 11 80

23 32 814 1,821

8 93 531

212 7,722

11 38

4 4 114

1,228 58 1,420

157

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

44


As at 31 December 2009 and 2008, the Bank has loans to parent, subsidiary and related companies within Thanachart Group as mentioned in Note 10.9 to the financial statements. As at 31 December 2009, the Bank and its subsidiaries have investments amounting to approximately Baht 365 million (Baht 62 million in the separate financial statement) in related companies to which they are related by means of members of their management being shareholders and/or directors of those companies (2008: Baht 220 million in the consolidated financial statement and Baht 62 million in the separate financial statement). As at 31 December 2009 and 2008, the Bank and its subsidiaries have the following related parties transactions with executive employees of the Bank and companies within Thanachart Group from department manager level up, including related persons who together with these employees: (Unit: Million Baht) Consolidated and separate financial statements 2008 2009 48 67 554 496

Loans Deposits

Directors and management’s remuneration During the year 2009, the Bank and its subsidiaries paid Baht 242 million for salary, bonus, meeting allowance and gratuities to their key management personnel, including directors, totalled 78 persons (separate financial statement: 24 persons totaling Baht 70 million). 35. Financial Financial information by segment 35. information by segment The Bank and its subsidiaries’ business operations involve 4 principal segments: (1) Banking business; (2) Securities business; (3) Life insurance business; and (4) Non-life insurance business. These operations are carried on in Thailand. Below is the consolidated financial information of the Bank and its subsidiaries by segment. (Unit: Million Baht)

Net interest and dividend income after bad debts and doubtful accounts and loss on debt restructuring Share of income from investments accounted for under equity method Non-interest income Non-interest expenses Corporate income tax Net income

For the year ended 31 December 2009 Non-life Life insurance insurance Other business business business

Banking business

Securities business

11,313

114

419

76

286

(581)

11,627

2,814 (9,125) (1,455) 3,547

1,479 (1,074) (134) 385

11,646 (11,935) (10) 120

2,695 (2,453) (90) 228

494 (415) (79) 286

129 (855) 825 (482)

129 18,273 (24,177) (1,768) 4,084

158

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Eliminations

Total

45


(Unit: Million Baht)

Net interest and dividend income after bad debts and doubtful accounts and loss on debt restructuring Share of income from investments accounted for under equity method Non-interest income Non-interest expenses Corporate income tax Corporate income tax refundable Net income

For the year ended 31 December 2008 Non-life Life insurance insurance Other business business business

Banking business

Securities business

6,920

112

348

96

170

(324)

7,322

2,202 (7,704) (216) 102 1,304

1,239 (1,036) (95) 220

4,684 (4,514) (168) 350

2,544 (2,551) (72) 17

592 (440) (137) 185

153 (799) 794 (176)

153 10,462 (15,451) (688) 102 1,900

Eliminations

Total

(Unit: Million Baht)

Interbank and money market items Investments - Net Loans and accrued interest receivable - Net Land, premises and equipment - Net Other assets Total assets

Banking business 64,028 64,643

Securities business 768 835

275,108 1,950 8,149 413,878

1,629 68 563 3,863

At as 31 December 2009 Life Non-life insurance insurance Other business business business 1,602 410 340 14,827 2,730 64 5 150 957 17,541

28 492 3,660

3,624 15 76 4,119

Eliminations (2,403) (4,497)

Total 64,745 78,602

(2,970) (221) (10,091)

277,396 2,211 10,016 432,970

(Unit: Million Baht)

Interbank and money market items Investments - Net Loans and accrued interest receivable - Net Land, premises and equipment - Net Other assets Total assets

Banking business 63,691 26,586

Securities business 626 701

266,843 2,014 9,080 368,214

1,810 107 175 3,419

At as 31 December 2008 Life Non-life insurance insurance Other business business business 2,838 477 442 5,788 2,037 65 2 139 284 9,051

159

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

34 663 3,211

5,233 16 254 6,010

Eliminations (2,371) (4,465)

Total 65,703 30,712

(4,545) (223) (11,604)

269,343 2,310 10,233 378,301

46


36. Commitments Commitments andand contingent liabilities 36. contingent liabilities

As at 31 December 2009 and 2008, significant commitments and contingent liabilities consisted of:

36.1

(Unit: Million Baht) Consolidated financial statements

Aval to bills Liability under unmatured import bills Letter of credits Other obligations Foreign exchange contracts - Bought - Sold Cross currency and interest rate swap contracts - Bought - Sold Interest rate swap contracts - Bought - Sold Committed (but not draw) overdraft Others Total

Baht 118 69 1

2008 Foreign currency 374 663

Total 118 443 664

9,086 20,524

-

8,519 36,161

8,519 36,161

4,937 7,785

4,937 7,785

-

5,169 4,846

5,169 4,846

334 334 57 44,147

20,204 20,204 4,861 4,280 93,274

12,270 12,270 4,164 3,083 31,975

34 55,766

12,270 12,270 4,164 3,117 87,741

Baht 294 9

2009 Foreign currency 2 87 1,001

Total 296 87 1,010

-

9,086 20,524

19,870 19,870 4,861 4,223 49,127

(Unit: Million Baht) Separate financial statements

Aval to bills Liability under unmatured import bills Letter of credits Other obligations Foreign exchange contracts - Bought - Sold Cross currency and interest rate swap contracts - Bought - Sold Interest rate swap contracts - Bought - Sold Committed (but not draw) overdraft Others Total

Baht 118 69 1

2008 Foreign currency 374 663

Total 118 443 664

9,086 20,524

-

8,519 36,161

8,519 36,161

4,937 7,785

4,937 7,785

-

5,169 4,846

5,169 4,846

334 334 57 44,147

19,904 19,904 4,861 4,215 92,609

11,970 11,970 4,164 3,037 31,329

34 55,766

11,970 11,970 4,164 3,071 87,095

Baht 294 9

2009 Foreign currency 2 87 1,001

Total 296 87 1,010

-

9,086 20,524

19,570 19,570 4,861 4,158 48,462

160

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

47


36.2 During the years 2001 and 2002, the Bank entered into agreements to transfer non-performing loans and receivables of approximately Baht 296 million to TAMC. The Bank is still jointly liable for a share of the gains and losses arising from TAMC’s management of these non-performing assets to be calculated at the end of the fifth year and tenth year, counting from 1 July 2001. If there are losses, the Bank is liable for all initial losses up to 20 percent of the transfer price, while further losses of up to another 20 percent of the transfer price are to be shared equally between the Bank and TAMC, and TAMC is liable for all remaining losses. Such gains and losses will be determined based on the accumulated value of collections made on the assets at the date of determination, minus transfer costs and all operating expenses of TAMC, including interest on the debt instruments issued to purchase the loans and receivables. The gain or loss cannot be estimated at this stage, but as at 31 December 2009, the Bank has estimated its share of losses which may arise from the management of the non-performing assets at approximately Baht 89 million. This amount has been presented as a part of allowance for impairment of long-term investments in debt securities (2008: estimated share of losses at Baht 89 million). 36.3 The Bank has entered into agreements to sell housing loans/transfer rights to the Secondary Mortgage Corporation, under which it is committed to compensate the Corporation for losses from uncollected housing loans up to a maximum of 20 percent of the valuation of the said receivables. As at 31 December 2009, its maximum obligation is Baht 2 million. 36.4 As at 31 December 2009, the Bank and its subsidiaries have commitments to pay the service fees in relation to property foreclosed, computer system services and other services, including commitments in respect of office rental and related service fees under long-term rental contracts, as follow:

Year 2010 2011 2012 onward

Consolidated financial statements Other Parent parties company 535 147 266 106 380 46

(Unit: Million Baht) Separate financial statements Other Parent Subsidiary parties company companies 480 127 12 235 88 321 35 -

In addition, the Bank has obligations to pay an administrative fee to a subsidiary company, determined at actual cost plus a margin, for the period stipulated in the agreement. 36.5 As at 31 December 2009, a subsidiary company has commitment under a research support and distribution services agreement made with an overseas company, whereby it must pay service charges on a quarterly basis at the rate specified in the agreement. The agreement will expire on 30 September 2010. 36.6 Under the agreements among the Parent company, the Bank and the Bank of Nova Scotia Asia Limited (“BNSAL”) (BNSAL had transferred all rights and obligations under these agreements to the Bank of Nova Scotia (“BNS”) on 11 January 2008), the Parent company and the Bank have to disclose information relating to the business, business performance, operations, and legal compliance of the Bank and the Bank’s subsidiaries, and certify the correctness of the disclosed information, to assist BNS in deciding whether to purchase shares in the Bank. In the event that the Bank or its subsidiaries have to pay any damages, compensation or penalties to any other parties as a result of events or information that the Parent company and the Bank did not disclose to BNS before BNS purchased the shares of the Bank, the Parent company and the Bank will jointly compensate BNS for its losses in accordance with the principles stipulated in the agreements, but not beyond the prescription period stipulated by Thai laws for each claim for damage.

161

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

48


In addition, under the Shareholders’ Agreement between the Parent company and BNS, there are mutual agreements whereby the Parent company, the Bank and the Bank’s subsidiaries, and BNS have certain stipulated rights and obligations per the conditions therein with no expiry date. However, the management of the Bank and the Parent company believe that the Bank and the Bank’s subsidiaries, and the Parent company operate their businesses under adequate supervision and therefore no material losses will result that would significantly affect the Parent company, the Bank and its subsidiaries’ financial positions.

37. 37. Litigation Litigation As at 31 December 2009, the Bank and its subsidiaries have contingent liabilities amounting to approximately Baht 546 million (separate financial statements: Baht 492 million) as a result of litigation. However, the Bank and its subsidiaries’ management expect that no losses will result and therefore no liabilities are currently recorded.

38. instruments 38. Financial Financial instruments Financial instruments are any contracts which give rise to both a financial assets of one enterprise and a financial liability or equity instruments of another enterprise. 38.1 Credit risk Credit risk is the risk that the party to a financial instrument will fail to fulfill the obligation, causing the Bank and its subsidiaries to incur a financial loss. The amount of maximum credit risk exposure is the carrying amount of the financial assets less provision for losses as stated in the balance sheet and the off-balance sheet transactions of avals, guarantees of loans, other guarantees and derivative contracts. In addition, the Bank and its subsidiaries manage credit risk by the following means, in through careful consideration of credit approval process, analysis of risk factors, the ability to service debt of customers and credit review process, which examines and reviews the quality of the loan portfolio so as to prevent and provide a remedy for problem loans in the future. 38.2 Market risk Market risk is the risk that changes in interest rates, foreign exchange rates and securities prices may have an effect on the Bank and its subsidiaries’ foreign currency position and investment status. As such, market risk consists of interest rate risk, foreign exchange risk and equity position risk. a)

Interest rate risk

Interest rate risk is the risk that the value of financial instrument will fluctuate as a result of changes in market interest rates. The Bank and its subsidiaries manage the changes in interest rate risk by means of an appropriate structuring of holdings in assets and liabilities with different repricing dates, taking into account the direction of market interest rates, in order to generate a suitable yield while maintaining risk at acceptable levels. Such management is under the supervision of the Asset and Liability Management Committee.

162

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

49


As at 31 December 2009 and 2008, financial assets and liabilities classified by types of interest rate are as follows: (Unit: Million Baht) Consolidated financial statements 2008

2009

Transactions Financial assets Cash Interbank and money market items Investments Receivable from clearing house Loans(1) Financial liabilities Deposits Interbank and money market items Payment to clearing house Securities business payable Liabilities payable on demand Borrowings (1)

Floating interest rate

Fixed interest rate

Noninterest bearing

Total

Floating interest rate

Fixed interest rate

Noninterest bearing

Total

526 43,278

60,143 74,526 240,401

3,665 4,039 3,736 429 1,836

3,665 64,708 78,262 429 285,515

305 38,353

60,876 27,547 235,650

4,018 4,371 4,208 50 2,139

4,018 65,552 31,755 50 276,142

86,386 8,672 -

179,298 11,827 90,200

612 440 96 1,036 2,112 -

266,296 20,939 96 1,036 2,112 90,200

76,259 5,330 -

193,288 1,347 61,150

616 614 295 855 1,317 -

270,163 7,291 295 855 1,317 61,150

The outstanding balances of loans which have floating interest rates or fixed interest rates include loans on which interest recognition is discontinued. (Unit: Million Baht) Separate financial statements 2008

2009

Transactions Financial assets Cash Interbank and money market items Investments Loans(1) Financial liabilities Deposits Interbank and money market items Liabilities payable on demand Borrowings (1)

Floating interest rate

Fixed interest rate

Noninterest bearing

Total

Floating interest rate

Fixed interest rate

Noninterest bearing

Total

350 42,025

59,736 59,323 239,500

3,665 3,909 5,035 1,052

3,665 63,995 64,358 282,577

18 37,340

59,236 21,216 234,675

4,017 4,272 5,612 910

4,017 63,526 26,828 272,925

86,761 9,400 -

179,339 12,278 90,936

627 487 2,112 -

266,727 22,165 2,112 90,936

76,543 5,432 -

193,632 1,599 62,288

657 638 1,317 -

270,832 7,669 1,317 62,288

The outstanding balances of loans which have floating interest rates or fixed interest rates include loans on which interest recognition is discontinued.

163

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

50


With respect to financial instruments that carry fixed interest rates, the periods from the balance sheet date to the repricing or maturity date (whichever is the earlier) are presented below: (Unit: Million Baht)

Transactions Financial assets Interbank and money market items Investments Loans Financial liabilities Deposits Interbank and money market items Borrowings

Consolidated financial statement as at 31 December 2009 Repricing or maturity date 0-3 3 - 12 1-5 Over 5 months months years years Total

At call

Weighted average interest rates Percent

107 1,521

58,561 7,504 6,608

1,475 20,555 14,764

37,177 182,996

9,290 34,512

60,143 74,526 240,401

1.19 - 1.70 2.81 - 4.08 7.98 - 9.44

-

60,860 10,654 58,327

74,006 867 16,873

44,432 306 15,000

-

179,298 11,827 90,200

1.76 0.92 2.35

(Unit: Million Baht)

Transactions Financial assets Interbank and money market items Investments Loans Financial liabilities Deposits Interbank and money market items Borrowings

Consolidated financial statement as at 31 December 2008 Repricing or maturity date 0-3 3 - 12 1-5 Over 5 Months months years Years Total

At call

Weighted average interest rates Percent

129 9,012

60,547 3,525 6,330

200 8,438 12,239

13,986 166,172

1,598 41,897

60,876 27,547 235,650

2.59 - 3.89 4.18 - 4.59 7.97 - 9.99

4 50 124

107,810 1,060 38,280

85,432 237 8,676

42 14,070

-

193,288 1,347 61,150

3.49 3.56 3.71

(Unit: Million Baht)

Transactions Financial assets Interbank and money market items Investments Loans Financial liabilities Deposits Interbank and money market items Borrowings

Separate financial statement as at 31 December 2009 Repricing or maturity date 0-3 3 - 12 1-5 Over 5 months months years Years Total

At call

Weighted average interest rates Percent

107 4,390

58,361 4,755 6,569

1,268 19,517 14,352

32,068 180,604

2,983 33,585

59,736 59,323 239,500

1.19 2.81 7.98

-

60,860 10,255 58,673

74,047 1,717 17,263

44,432 306 15,000

-

179,339 12,278 90,936

1.76 0.92 2.35

164

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

51


(Unit: Million Baht)

Transactions

Separate financial statement as at 31 December 2008 Repricing or maturity date 0-3 3 - 12 1-5 Over 5 months months years years Total

At call

Financial assets Interbank and money market items Investments Loans Financial liabilities Deposits Interbank and money market items Borrowings

Weighted average interest rates Percent

129 13,463

59,107 1,877 6,276

7,448 11,880

11,316 162,548

575 40,508

59,236 21,216 234,675

2.59 4.59 7.97

4 2

108,104 1,211 38,750

85,482 388 9,176

42 14,360

-

193,632 1,599 62,288

3.49 3.56 3.71

In addition, the average balances of the financial assets and liabilities of the Bank and its subsidiaries generating revenues and expenses, calculated based on the average balances outstanding during the year, and the average interest and dividend rate for the year ended 31 December 2009 and 2008 can be summarised as follows: (Unit: Million Baht) Consolidated financial statements For the years ended 31 December 2009

Interest bearings financial assets Interbank and money market items Securities purchased under resale agreements Investments Loans/hire purchase and finance leases Interest bearings financial liabilities Deposits Interbank and money market items Borrowings

2008

Average balances

Interest and dividend

Average rate (%)

Average balances

Interest and dividend

Average rate (%)

58,662 40,432 264,639

1,046 1,545 18,879

1.78 3.82 7.13

40,042 962 23,659 266,284

1,529 31 1,243 17,884

3.82 3.24 5.25 6.72

263,191 14,601 58,042

4,873 120 1,743

1.85 0.82 3.00

229,311 6,843 55,855

7,031 184 2,182

3.07 2.69 3.91 (Unit: Million Baht)

Separate financial statements For the years ended 31 December 2009

Interest bearings financial assets Interbank and money market items Securities purchased under resale agreements Investments Loans/hire purchase and finance leases Interest bearings financial liabilities Deposits Interbank and money market items Borrowings

Average rate (%)

Average balances

2008 Interest and dividend

1,022 1,607 18,305

1.80 4.81 6.96

39,608 962 23,845 264,135

1,480 31 1,094 17,291

3.74 3.24 4.59 6.55

4,880 141 1,770

1.85 0.93 3.01

229,837 6,835 56,194

7,046 191 2,191

3.07 2.79 3.90

Average balances

Interest and dividend

56,683 33,417 263,003 263,769 15,112 58,868

Average rate (%)

52 165

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


b)

Foreign exchange risk

Foreign exchange risk is the risk that changes in foreign exchange rates may result in changes in the value of financial instruments, and fluctuations in revenues or the values of financial assets and liabilities. Since the Bank has foreign exchange transactions, it may be exposed to foreign exchange risk. However, the Bank has a policy to hedge this foreign exchange exposure through management of its net exchange position and operating in accordance with a risk management policy which has been approved by its Board of Directors and is in strict accordance with BOT guidelines. The status of the Bank foreign currency balances as at 31 December 2009 and 2008 can be summarised as follows: (Unit: Million Baht) Consolidated and separate financial statements 2008 2009 Outstanding balance of financial instruments Outstanding balance of financial instruments US Dollar Euro Yen Others US Dollar Euro Yen Others In balance foreign currency Cash Interbank and money market items Investments Loans Other assets

109 7,772 5,740 2,317 53

41 55 4 -

4 15 170 -

48 61 4,282 14

50 20,658 699 955 8

98 98 68 -

88 65 -

36 47 4,148 12

Total assets Deposits Interbank and money market items Total liabilities Net

15,991 50 6,071 6,121 9,870

100 2 2 98

189 189

4,405 38 38 4,367

22,370 65 65 22,305

264 264

153 153

4,243 5 5 4,238

-

2

-

-

-

-

-

-

9 807

188

78 -

6

291 472

165

83 -

26

8,356 19,185

604 732

252

126 355

8,393 35,239

10 398

27 281

89 243

4,937 3,503

-

-

4,282

5,169 699

-

-

4,147

334 334 57

-

-

-

34

-

-

-

Off balance foreign currency Aval to bills Liability under unmatured import bills Letter of credits Foreign exchange contracts - Bought - Sold Cross currency and interest rate swap contracts - Bought - Sold Interest rate swap contracts - Bought - Sold Others

c)

Equity position risk

Equity position risk is the risk that changes in the market prices of equity securities which will result in fluctuations in revenue and the value of financial assets.

166

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

53


38.3 Liquidity risk Liquidity risk is the risk that the Bank and its subsidiaries will be unable to liquidate their financial assets and/or procure sufficient funds to discharge their obligations in a timely manner, resulting in the Bank and its subsidiaries incurring a financial loss. The Bank and its subsidiaries manage liquidity risk by means of appropriate structuring of short-term and longterm sources of capital. In addition, the Bank has a policy to maintain liquidity to ensure that it has sufficient liquidity to meet both present and future requirements. Counting from the balance sheet date, the periods to maturity of financial instruments held as at 31 December 2009 and 2008 are as follows: (Unit: Million Baht) Consolidated financial statements

Transactions Financial assets Cash Interbank and money market items (1) Investments Receivable from clearing house Loans (2) Financial liabilities Deposits Interbank and money market items Payable to clearing house Securities business payable Liability payable on demand Borrowings Off-balance sheet items Aval to bill Liability under unmatured import bills Letter of credits Other commitments (1) (2)

Less than 1 year

At call

2009 Over 1 year

Unspecified

Total

Less than 1 year

At call

2008 Over 1 year

Unspecified

Total

3,665

-

-

-

3,665

4,018

-

-

-

4,018

4,672 -

60,036 22,990

51,691

3,581

64,708 78,262

5,105 -

60,447 6,886

20,701

4,168

65,552 31,755

11,748

429 90,677

183,090

-

429 285,515

19,640

50 77,571

178,931

-

50 276,142

82,407

138,598

45,291

-

266,296

73,686

195,063

1,414

-

270,163

9,112 2,112 -

11,521 96 1,036 75,200

306 15,000

-

20,939 96 1,036 2,112 90,200

5,994 1,317 124

1,297 295 855 46,956

14,070

-

7,291 295 855 1,317 61,150

8

133

155

-

296

-

106

12

-

118

54 5,013

87 887 54,884

69 29,898

2,086

87 1,010 91,881

48 4,310

360 616 51,611

83 29,534

1,061

443 664 86,516

The outstanding balances of interbank and money market items at call included the item for which revenue recognition has been discontinued. The outstanding balances of loans at call included loans for which revenue recognition has been discontinued.

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54


(Unit: Million Baht) Separate financial statements

Transactions Financial assets Cash Interbank and money market items Investments Loans (1) Financial liabilities Deposits Interbank and money market items Liability payable on demand Borrowings Off-balance sheet items Aval to bill Liability under unmatured import bills Letter of credits Other commitments (1)

Less than 1 year

At call

2009 Over 1 year

Unspecified

Total

Less than 1 year

At call

2008 Over 1 year

Unspecified

Total

3,665

-

-

-

3,665

4,017

-

-

-

4,017

4,366 13,056

59,629 18,973 88,474

40,386 181,047

4,999 -

63,995 64,358 282,577

4,419 22,573

59,107 4,248 74,668

17,008 175,684

5,572 -

63,526 26,828 272,925

82,798

138,638

45,291

-

266,727

74,010

195,408

1,414

-

270,832

9,887 2,112 -

11,972 75,936

306 15,000

-

22,165 2,112 90,936

6,070 1,317 2

1,599 47,926

14,360

-

7,669 1,317 62,288

8

133

155

-

296

-

106

12

-

118

54 5,013

87 887 54,884

69 29,233

2,086

87 1,010 91,216

48 4,310

360 616 51,611

83 28,888

1,061

443 664 85,870

The outstanding balances of loans at call included loans for which revenue recognition has been discontinued.

38.4 Fair value Fair value represents the amount for which an asset could be exchanged or a liability settled between knowledgeable, willing parties in an arm’s length transaction. The Bank and its subsidiaries have estimated the fair value of financial instruments as follows: a)

Financial assets

The method used for determining the fair value depends upon the characteristics of the financial instruments. The fair values of most financial assets are presented at the amount stated in the balance sheet, including cash, interbank and money market items, receivables from clearing house and loans. These financial assets have their fair value approximate to their respective carrying value since the values of these financial instruments are predominantly subject to market interest rates. Financial instruments with standard terms and conditions which are traded on an active and liquid market, such as investments, have their fair values determined by the quoted market price. b)

Financial liabilities

The fair values of financial liabilities, including deposits, interbank and money market items, payable to clearing house, securities business payable, liabilities payable on demand, and borrowings, are considered to approximate their respective carrying values for the same reasons as described above. As at 31 December 2009 and 2008, there are no material differences between the book value of financial instruments of the Bank and its subsidiaries and their fair value.

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55


38.5 Financial derivatives The Bank and its subsidiaries engage in financial derivatives activities as required in the normal course of their business to manage risk and to meet their clients’ needs. These financial derivatives include forward foreign currency contracts, cross currency and interest rate swap contracts, and interest rate swap contracts. The Bank and its subsidiaries have a policy to hedge the risk limits by which it requires risk reporting for the various types of risk, as a control over financial derivative activities. The Bank and its subsidiaries manage the credit risk associated with financial derivatives on the basis of the credit limits granted to customers in general. The same credit approval process that is used when granting loans to a customer is adopted for financial derivative customers, so that the Bank and its subsidiaries are able to maintain risk at acceptable levels. As at 31 December 2009 and 2008, the Bank and its subsidiaries have financial derivatives as classified by their maturities as follows: (Unit: Million Baht) Consolidated financial statements 2009 Over 1 year

Less than 1 year Foreign exchange contracts - Bought - Sold Cross currency and interest rate swap contracts - Bought - Sold Interest rate swap contracts - Paid fixed interest rate - Paid floating interest rate - Received fixed interest rate - Received floating interest rate

Total

Less than 1 year

2008 Over 1 year

Total

9,086 20,524

-

9,086 20,524

8,519 36,161

-

8,519 36,161

4,937 4,449

3,336

4,937 7,785

524

5,169 4,322

5,169 4,846

7,070 7,070

12,334 800 800 12,334

19,404 800 800 19,404

950 1,450 1,450 950

9,070 800 800 9,070

10,020 2,250 2,250 10,020 (Unit: Million Baht)

Separate financial statements 2009 Over 1 year

Less than 1 year Foreign exchange contracts - Bought - Sold Cross currency and interest rate swap contracts - Bought - Sold Interest rate swap contracts - Paid fixed interest rate - Paid floating interest rate - Received fixed interest rate - Received floating interest rate

Total

Less than 1 year

2008 Over 1 year

Total

9,086 20,524

-

9,086 20,524

8,519 36,161

-

8,519 36,161

4,937 4,449

3,336

4,937 7,785

524

5,169 4,322

5,169 4,846

7,070 7,070

12,334 500 500 12,334

19,404 500 500 19,404

950 1,450 1,450 950

9,070 500 500 9,070

10,020 1,950 1,950 10,020

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39. 39. Reclassification Reclassification The Bank has reclassified certain amounts in the financial statements for the year ended 31 December 2008 to conform to the current year’s classifications in order to comply with the same classification of the group, with no effect on previously reported net income and shareholders’ equity. Reclassifications are as follows: Consolidated financial statement As previously As reclassified reported 2,779 2,426 3,404 3,450

Other assets Other liabilities Non-interest expenses - Premises and equipment expenses - Fees and charges - Other expenses

1,566 260 3,189

1,362 258 3,395

(Unit: Million Baht) Separate financial statement As previously As reclassified reported 1,775 1,445 2,213 2,271 1,256 55 2,722

1,052 53 2,928

40. Subsequent events 40. Subsequent events On 24 February 2010, the Board of Directors of the Bank passed a resolution to propose the payment of a dividend of Baht 0.56 per share to the ordinary shareholders in respect of the operating results for the year 2009, a total of Baht 1,083 million, to the Annual General Meeting of Shareholders. Such dividend will be paid and recorded after it is approved by the Annual General Meeting of the Bank’s shareholders. 41. Approval ofoffinancial statements 41. Approval financial statements These financial statements were authorised for issue by the Bank’s Board of Directors on 24 February 2010.

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57


Office Limited to be an auditor of Thanachart Group. In 2009, TBANK paid Ernst & Young Office Limited for the audit services and other services. The details of the auditors’ fee are as follows: 1. AUDIT FEE 1.1 Audit fee worth THB 7,250,000 was paid for auditing the financial statements of the previous year, signed by Ms. Ratana Jala, Certified Public Accountant. 1.2 Other payment worth THB 102,549 which related to the auditing of the financial statements for the past year, was made to the audit firm the Certified Public Accountant auditor affiliated with. 2. NON-AUDIT FEE TBANK made payments for other services including special audits, for the requirements of the BOT, in the amount of THB 350,000 and there was no fee to be paid in the future for the contracted services not yet rendered in the past fiscal year. Apart from the fees mentioned in 1 and 2 above, there was no other fee for the past year that TBANK had to pay to the auditors of the Bank, the audit firm the Certified Public Accountant auditors affiliated with, persons or businesses related to Certified Public Accountant or related to the audit firm the Certified Public Accountant auditors affiliated with.

REMUNERATION FOR THE AUDITOR

Every year the Audit Committee evaluates the qualification and performance of the auditor and proposes to TBANK’s Board of Directors for an approval of the appointment and fee of the auditor, in order to further obtain an approval in the shareholders meeting. The proposed candidates shall be the auditors approved by the Bank of Thailand “BOT”. In accordance, the BOT has officially issued a letter No. ForKorKor. (02) 181/2009 dated 24 March 2009 on the subject matter of the consent granting for the auditor of the accounting year 2009. The consent was granted for three auditors as follows: 1. Ms. Ratana Jala

Certified Public Accountant No. 3734; and/or 2. Ms. Rungnapha Lertsuwankul Certified Public Accountant No. 3516; and/or 3. Mr. Narong Pantawongs Certified Public Accountant No. 3315 of Ernst & Young Office Limited, the current auditor team of TBANK. • THE RELATIONSHIP OF THE AUDITORS AND THE BANK The proposed auditors have no relationship in any form with the Bank. • THE AUDITORS OF SUBSIDIARIES AND ASSOCIATED COMPANIES IN THANACHART GROUP Thanachart Bank, as a company in the group of Thanachart Capital, thus proposed Ernst & Young

THANACHART HUB CSR Saving Festival Thanachart Bank acted as an intermediary to communicate and encourage the public to participate in social contribution and share their social responsibility through activities that were well-targeted to serve the needs of the society and underprivileged communities. 171

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RELATED PARTY TRANSACTIONS

All related party transactions of Thanachart Bank Public Company Limited “TBANK” are normal business transactions in accordance with the Bank’s business plan and subject to the same price and terms as applied to general customers. The transactions have been approved under transparent procedure and in line with relevant regulations imposed by the authority. The related party of TBANK refers to a person or business entity with a control over the Bank or being controlled directly or indirectly by the Bank or under the same control as the Bank. Moreover, a related person or business entity includes the person who has significant influence on TBANK, Executives, Directors or staff who

RELATED COMPANIES/RELATIONSHIP WITH TBANK

TYPE OF TRANSACTION/ CONTRACT TERMS

Subsidiaries Promissory notes Thanachart Group Leasing at call Company Limited Shareholding - TBANK held 100 percent shares Related Directors Mr. Seth Cechetto Mr. Anuchart Deeprasert Mr. Pompetch Rasanon Mr. Songwuth Chaowalit Mr. Somkuan Chaicharoen Relationship - Executives of TBANK - Control or influence over Thanachart Group Leasing Co., Ltd. - No shares holding in Thanachart Group Leasing Co., Ltd.

has authority in planning and controlling the Bank’s business operations. In 2009, TBANK had the related party transactions with its parent company, subsidiaries and related companies whereby these transactions can be summarized as follows:

TRANSACTIONS BETWEEN TBANK AND SUBSIDIARIES IN THANACHART GROUP

TBANK lends to Thanachart Group Leasing Co., Ltd., T Leasing Co., Ltd., National Leasing Co., Ltd., and Thanachart Legal and Appraisal Co., Ltd.

INTEREST RATE

TRANSACTION VALUE (OUTSTANDING BALANCE) (MILLION BAHT)

In line with TBANK’s cost of fund plus a fixed percentage per annum

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

2008 THB 3,645 million 2009 THB 2,168 million

RELATIONALE OF THE TRANSACTION AND PRICING POLICY

This was loans provided to member companies of Thanachart Group for their normal day-to-day business operations. TBANK’s Board of Directors was responsible for approving the transactions with the consent of the Credit Committee and the Executive Committee. Those having a conflict of interest in the transactions were not allowed to involve in any part


RELATED COMPANIES/RELATIONSHIP WITH TBANK

TYPE OF TRANSACTION/ CONTRACT TERMS

T Leasing Company Limited Promissory notes Shareholding at call - TBANK held 99.99 percent shares Related Directors Mr. Nophadon Ruengchinda Mr. Anuchart Deeprasert Mr. Thanes Ratanakorn Mr. Wichak Praditavanij Mr. Chatchai Kaivalkul Mr. Kriangkrai Phurivitvattana Mr. Sanong Khumnuch Mr. Seth Cechetto Relationship - Executives of TBANK - Control or influence over T Leasing Co., Ltd. - No shares holding in T Leasing Co., Ltd. National Leasing Company Limited Promissory notes at call Shareholding - TBANK held 100 percent shares Related Directors Mr. Thanes Ratanakorn Mr. Naris Saifuk Mr. Anuchart Deeprasert Relationship - Executives of TBANK - Control or influence over National Leasing Co., Ltd. - No shares holding in National Leasing Co., Ltd. Thanachart Legal and Appraisal Company Limited Promissory notes Shareholding at call - TBANK held 100 percent shares Related Directors Mr. Sanong Khumnuch Relationship - Executives of TBANK - Control or influence over Thanachart Legal and Appraisal Co., Ltd. - No shares holding in Thanachart Legal and Appraisal Co., Ltd.

INTEREST RATE

TRANSACTION VALUE (OUTSTANDING BALANCE) (MILLION BAHT)

In line with TBANK’s cost of fund plus a fixed percentage per annum

2008 THB 824 million 2009 THB 634 million

In line with TBANK’s cost of fund plus a fixed percentage per annum

2008 - None - 2009 THB 77 million

In line with TBANK’s cost of fund plus a fixed percentage per annum

2008 - None - 2009 THB 10 million

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

RELATIONALE OF THE TRANSACTION AND PRICING POLICY

of the consideration and approval process of the transactions. Applicable interest rate and terms were the same as those applied to general customers with prices comparable to general customers with the same level of risk. The approval of credit was within the limit imposed by the Bank of Thailand (BOT).


TRANSACTION BETWEEN TBANK AND ITS SUBSIDIARIES AND PARENT COMPANY, SUBSIDIARIES, ASSOCIATE COMPANIES, AND RELATED PARTIES

THANACHART CAPITAL PUBLIC COMPANY LIMITED “TCAP” 1. Office space rental agreement between Thanachart Bank Plc. (TBANK) (tenant) and parent company, that is, Thanachart Capital Plc. (TCAP) (landlord) 1.1 Details of contracting party COMPANY

TYPE OF RELATIONSHIP

1. Thanachart Capital Plc. (TCAP) Parent company holds 50.92 percent shares in TBANK*

DIRECTORS WITH STAKEHOLDING

1. Mr. Banterng Tantivit 2. Mr. Suphadej Poonpipat 3. Ms. Suvarnapha Suvarnaprathip 4. Mr. Somjate Moosirilert

Note: * On 3 February 2009, TCAP sold TBANK’s shares to Scotiabank. As a result, at present, TCAP holds 50.92 percent shares in TBANK.

1.2 Details of office space rental agreement and key terms in the contract Office space rental agreement between TBANK (tenant) and TCAP (landlord) to be used as headquarters, branches, currency exchange booths, parking space, and space for advertisement board. 1.3 As of 2009, the transaction is valued at THB 49.58 million. 1.4 Necessity and rationale of the transaction The rental fee has been calculated by COMPANY

1. MBK Plc. (MBK) 2. Glas Haus Building Co., Ltd. (GHB) 3. Siam Piwat Co., Ltd. (SPW)

using market price that is comparable to the fee of properties located in the area nearby. Therefore, the transaction was considered appropriate. MBK PUBLIC COMPANY LIMITED 1. Office space rental agreement between TBANK (tenant) and companies in the MBK Group (Property-Owner), including MBK Plc. (MBK), Glas Haus Building Co., Ltd. (GHB), and Siam Piwat Co., Ltd. (SPW). 1.1 Details of contracting parties

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

Member companies in Thanachart 1. Mr. Banterng Tantivit Group all together hold 19.90 percent 2. Mr. Suphadej Poonpipat shares in MBK An indirect subsidiary of MBK in which MBK holds 99.99 percent shares in GHB via a subsidiary A subsidiary of MBK in which MBK holds 30.72 percent shares in SPW

1.2 Details of office space rental agreement and key terms in the contract Office space rental agreement between TBANK (tenant) and MBK and member companies (landlord) to be used as headquarters, branches, currency exchange booths, and ATM location.

1.3 The transactions in 2008 and 2009 were THB 35.77 million and THB14.47 million respectively. 1.4 Necessity and rationale of transaction The rental fee has been calculated by using market price which is comparable to the fee of the properties located in the area nearby. Therefore, the transaction was considered appropriate. 174

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(GHB), Patum Rice Mill and Granary Plc. (PRG), Seree Center Management Co., Ltd. (SCM), Royal Orchid Hotel (Thailand) Plc. (ROH), Lan Bangna Co., Ltd. (LBN), and Apple Auto Action (Thailand) Co., Ltd. (AAA) (Borrower). 2.1 Details of contracting parties

2. Credit Line between TBANK (Lender) and member companies in MBK Group, including MBK Plc.(MBK), MBK Resort Plc. (MBK-R), Sapsin Thani Co., Ltd. (SSTN), MBK Hotel and Resort Co., Ltd. (MBK-HR), Plan Estate Co., Ltd. (PST), Glas Haus Building Co., Ltd.

COMPANY

1. MBK Plc. (MBK) 2. MBK Resort Plc. (MBK-R) 3. Sapsin Thani Co., Ltd. (SSTN) 4. MBK Hotel and Resort Co., Ltd. (MBK-HR) 5. Plan Estate Co., Ltd. (PST) 6. Glas Haus Building Co., Ltd. (GHB) 7. Patum Rice Mill and Granary Plc. (PRG) 8. Seree Center Management Co., Ltd. (SCM)* 9. Royal Orchid Hotel (Thailand) Plc. (ROH) 10. Lan Bangna Co., Ltd. (LBN) 11. Apple Auto Action (Thailand) Co., Ltd. (AAA)

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

Member companies in Thanachart Group 1. Mr. Banterng Tantivit all together hold 19.90 percent shares in 2. Mr. Suphadej Poonpipat MBK An indirect subsidiary of MBK in which MBK holds 69.88 percent shares in MBK-R via a subsidiary A subsidiary of MBK in which MBK holds 100 percent shares in SSTN A subsidiary of MBK in which MBK holds 100 percent shares in MBK-HR An indirect subsidiary of MBK with MBK holding 69.88 percent shares in PST via a subsidiary An indirect subsidiary of MBK in which MBK holds 99.99 percent shares in GHB via a subsidiary An indirect subsidiary of MBK in which MBK holds 74.52 percent shares in PRG via a subsidiary A subsidiary of MBK in which MBK directly and indirectly holds 65.36 percent shares in SCM. A subsidiary of MBK in which MBK holds 29.77 percent shares in ROH An indirect subsidiary of MBK in which MBK holds 69.88 percent shares in LBN via a subsidiary A joint venture between MBK and Apple Auto Auction Group with MBK holding 49.99 percent shares in AAA.

Note: * SCM has registered to change name to Paradise Park Co., Ltd. on 1 October 2009.

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2.3 Necessity and rationale of transaction Loans and guarantees from TBANK to MBK and its member companies were transactions relating to normal business operations of TBANK. Terms and conditions as well as fees and interest rates were in line with those applicable to general customers. Such transactions were therefore, justified. 3. Insurance contract between Thanachart Insurance Co., Ltd. (TNI) (insurer) to MBK Plc. (MBK) and its member companies, including MBK Entertainment Co., Ltd. (MBK-E), MBK Resort Plc. (MBK-R), Sapsin Thani Co., Ltd. (SSTN), MBK Hotel and Resort Co., Ltd. (MBK-HR), Prommin Co., Ltd. (PPM), Apple Auto Action (Thailand) Co., Ltd. (AAA), Glas Haus Building Co., Ltd. (GHB), Plan Estate Co., Ltd. (PST), Lan Bangna Co., Ltd. (LBN), Plan Properties Co., Ltd. (PPC), MBK Leisure Co., Ltd. (MBK-LS), Absolute Travel Co., Ltd. (ALT), Crystal Lake Properties Co., Ltd. (CLP), Plan Appraisal Co., Ltd. (PAS), and Seree Center Management Co., Ltd. (SCM) (insured). 3.1 Details of contracting parties

2.2 Type and value of transaction In 2008, TBANK provided credit and guarantee to MBK Group and its member companies, including MBK Plc. (MBK), MBK Resort Plc. (MBK-R), Sapsin Thani Co., Ltd. (SSTN), MBK Hotel and Resort Co., Ltd. (MBK-HR), Plan Estate Co., Ltd. (PST), Glas Haus Building Co., Ltd. (GHB), Patum Rice Mill and Granary Plc. (PRG), Royal Orchid Hotel (Thailand) Plc. (ROH), Lan Bangna Co., Ltd. (LBN). The loan outstanding was THB 136.38 million and the guarantee liability was valued at THB 53.94 million. In 2009, TBANK provided credit and guarantee to MBK Group and its member companies, including, MBK Plc. (MBK), Glas Haus Building Co., Ltd. (GHB), Sapsin Thani Co., Ltd. (SSTN), Patum Rice Mill and Granary Plc. (PRG), Plan Estate Co., Ltd. (PST), Royal Orchid Hotel (Thailand) Plc. (ROH), MBK Resort Plc. (MBK-R), MBK Hotel and Resort Co., Ltd. (MBK-HR), Lan Bangna Co., Ltd. (LBN), Apple Auto Action (Thailand) Co., Ltd. (AAA), and Seree Center Management Co., Ltd. (SCM), The loan outstanding was THB 111.49 million, the guarantee liability was THB 51.50 million, and FX line was valued at THB 0.18 million. COMPANY

1. Thanachart Insurance Co., Ltd. (TNI) 2. MBK Plc. (MBK) 3. MBK Entertainment Co., Ltd. (MBK-E) 4. MBK Resort Plc. (MBK-R) 5. Sapsin Thani Co., Ltd. (SSTN) 6. MBK Hotel and Resort Co., Ltd. (MBK-HR) 7. Prommin Co., Ltd. (PPM) 8. Apple Auto Auction (Thailand) Co., Ltd. (AAA)

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

A subsidiary of TBANK with the Bank holding 1. Mr. Banterng Tantivit 100 percent shares in TNI 2. Mr. Suphadej Poonpipat Member companies in Thanachart Group all together hold 19.90 percent shares in MBK An indirect subsidiary of MBK with MBK holding 81.23 percent shares in MBK-E via a subsidiary An indirect subsidiary of MBK with MBK holding 69.88 percent shares in MBK-R via a subsidiary A subsidiary of MBK with MBK holding 100 percent shares in SSTN A subsidiary of MBK with MBK holding 100 percent shares in MBK-HR An indirect subsidiary of MBK with MBK holding 99.98 percent shares in PPM via a subsidiary A joint venture between MBK and Apple Auto Auction Group with MBK holding 49.99 percent shares in AAA

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


COMPANY

9. Glas Haus Building Co., Ltd. (GHB) 10. Plan Estate Co., Ltd. (PST) 11. Lan Bangna Co., Ltd. (LBN) 12. Plan Properties Co., Ltd. (PPC) 13. MBK Leisure Co., Ltd. (MBK-LS) 14. Absolute Travel Co., Ltd. (ALT) 15. Crystal Lake Properties Co., Ltd. (CLP) 16. Plan Appraisal Co., Ltd. (PAS) 17. Seree Center Management Co., Ltd. (SCM)*

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

An indirect subsidiary of MBK with MBK holding 99.99 percent shares in GHB via a subsidiary An indirect subsidiary of MBK with MBK holding 69.88 percent shares in PST via a subsidiary An indirect subsidiary of MBK with MBK holding 69.88 percent shares in LBN via a subsidiary A subsidiary of MBK with MBK holding 99.99 percent shares in PPC via a subsidiary An indirect associate company of MBK with MBK holding 49 percent shares in MBK-LS via a subsidiary An indirect subsidiary of MBK with MBK holding 99.99 percent shares in ALT via a subsidiary An indirect subsidiary of MBK with MBK holding 69.88 percent shares in CLP via a subsidiary An indirect subsidiary of MBK with MBK holding 69.88 percent shares in PAS via a subsidiary A subsidiary of MBK with MBK directly and indirectly holding 65.36 percent shares in SCM

Note: * SCM has registered to change name to Paradise Park Co., Ltd. on 1 October 2009.

3.2 Type and value of transaction These transactions related to insurance policies business issued by Thanachart Insurance Co., Ltd. for MBK Plc. and its member companies for physical assets, vehicles, terrorism and liabilities of directors and executives. The contracting parties included MBK Plc. and its aforementioned member companies. Total insurance premium for 2008 and 2009 were THB 15.30 million and THB 22.24 million, respectively. 3.3 Necessity and rationale of transaction These transactions related to normal business operations of TNI. Terms and conditions as well as premium were in line with those applicable to general customers. Such transactions were, therefore, justified.

4. Group health insurance, life insurance, accident insurance, handicap insurance, heath insurance by Thanachart Life Assurance Company Limited (TLIFE) (insurer) to employees of MBK Plc. and its member companies including Thep Thai Business Co., Ltd. (TTB), MBK Entertainment Co., Ltd. (MBK-E), MBK Leisure Co., Ltd. (MBK-LS), Absolute Travel Co., Ltd. (ALT), MBK Center Co., Ltd. (MBK-C), and Apple Auto Auction (Thailand) Co., Ltd. (AAA) (insured). 4.1 Details of contracting parties

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COMPANY

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

1. Thanachart Life Assurance Co., Ltd. A subsidiary of TBANK and TBANK holding (TLIFE) 100 percent shares in TLIFE 2. MBK Plc. (MBK) Member companies in Thanachart Group all together held 19.90 percent shares in MBK 3. MBK Entertainment Co., Ltd. (MBK-E) An indirect subsidiary of MBK with MBK holding 81.23 percent shares in MBK-E via a subsidiary 4. Thep Thai Business Co., Ltd. (TTB) A subsidiary of MBK with MBK holding 99.93 percent shares in TTB 5. Absolute Travel Co., Ltd. (ALT) An indirect subsidiary of MBK with MBK holding 99.99 percent shares in ALT via a subsidiary 6. MBK Leisure Co., Ltd. (MBK-LS) An indirect associate company of MBK with MBK holding 49 percent shares in MBK-LS via a subsidiary 7. MBK Center Co., Ltd. (MBK-C) A subsidiary of MBK with MBK holding 99.93 percent shares in MBK-C 8. Apple Auto Auction (Thailand) Co., Ltd. A joint venture between MBK and Apple (AAA) Auto Auction Group with MBK holding 49.99 percent shares in AAA 4.2 Value of transaction The value of transactions for 2008 and 2009 were THB 2.54 million and THB 2.55 million, respectively. 4.3 Necessity and rationale of transaction Insurance policies issued by TLIFE for life, health, and accident to employees of the MBK group were justified based on the fact that the premiums COMPANY

1. MBK Plc. (MBK) 2. Plan Estate Co., Ltd. (PST)

1. Mr. Banterng Tantivit 2. Mr. Suphadej Poonpipat

charged for policies on physical assets, health, accident and life for these employees were in line with those applicable to general customers of TLIFE. 5. Management fee paid by TBANK to Plan Estate Co., Ltd. (PST) for management and sale of non-performing assets. 5.1 Details of contracting parties

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

Member companies in Thanachart Group all together held 19.90 percent shares in MBK An indirect subsidiary of MBK with MBK holding 69.88 percent shares in PST via a subsidiary

5.2 Value of transaction In 2008 and 2009, total value of transactions amounted to THB 4.14 million and THB 2.09 million.

1. Mr. Banterng Tantivit 2. Mr. Suphadej Poonpipat

5.3 Necessity and rationale of transaction These transactions were justified given that TBANK contracted PST to manage and sell their non-performing assets whereby fees were calculated

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based on cost of fund plus profit, which were considered normal rates applicable to general customers in management of similar projects. COMPANY

1. MBK Plc. (MBK) 2. Plan Estate Co., Ltd. (PST)

6. Other expenses that TBANK paid to PST to award sale of non-performing assets 6.1 Details of contracting parties

TYPE OF RELATIONSHIP

Member companies in Thanachart Group all together held 19.90 percent shares in MBK An indirect subsidiary of MBK with MBK holding 69.88 percent shares in PST via a subsidiary

6.2 Value of transaction There were no transactions in 2008, while the value of transactions was THB 10.50 million in 2009. 6.3 Necessity and rationale of transaction These transactions related to awards for sale of non-performing assets, calculated based on publicly announced rates and conditions in finding buyers for the Bank’s non-performing assets. Such rates were computed as percentage of sale prices. COMPANY

1. Thanachart Insurance Co., Ltd. (TNI) 2. Thanachart Bank Plc. (TBANK) 3. Thanachart Legal and Appraisal Co., Ltd. (TLA) 4. Thanachart Securities Plc. (TNS) 5. Thanachart Life Assurance Co., Ltd. (TLIFE) 6. NFS Asset Management Co., Ltd. (NFS AMC) 7. Max Asset Management Co., Ltd. (MAX AMC)

DIRECTORS WITH STAKEHOLDING

1. Mr. Banterng Tantivit 2. Mr. Suphadej Poonpipat

THANACHART INSURANCE COMPANY LIMITED (TNI) 1. Vehicle insurance of Thanachart Capital Plc. (TCAP), Thanachart Bank Plc. (TBANK), Thanachart Legal and Appraisal Co., Ltd. (TLA), Thanachart Securities Plc. (TNS), Thanachart Life Assurance Co., Ltd. (TLIFE), Thanachart Insurance Co., Ltd. (TNI), NFS Asset Management Co., Ltd. (NFS AMC) and Max Asset Management Co., Ltd. (MAX AMC) with Thanachart Insurance Co., Ltd. (TNI). 1.1 Details of contracting parties

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

An indirect subsidiary of TCAP with TCAP 1. Mr. Banterng Tantivit holding 50.92 percent shares in TBANK and 2. Mr. Suphadej Poonpipat TBANK holding 100 percent shares in TNI A subsidiary of TCAP (TCAP held 50.92 percent shares in TBANK)* An indirect subsidiary of TCAP with TCAP holding 50.92 percent shares in TBANK and TBANK holding 100 percent shares in TLA An indirect subsidiary of TCAP with TCAP holding 50.92 percent shares in TBANK and TBANK holding 100 percent shares in TNS An indirect subsidiary of TCAP with TCAP holding 50.92 percent shares in TBANK and TBANK holding 100 percent shares in TLIFE A subsidiary of TCAP with TCAP holding 100 percent shares in NFS AMC A subsidiary of TCAP with TCAP holding 83.44 percent shares in MAX AMC

Note: * On 3 February 2009, TCAP sold TBANK’s shares to Scotiabank. As a result, at present, TCAP holds 50.92 percent shares in TBANK.

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1.2 Type and value of transaction These transactions related to vehicle insurance policies whereby in 2008 and 2009 their premiums amounted to THB 0.29 million and THB 3.18 million, respectively. 1.3 Necessity and rationale of transaction Member companies of Thanachart Group insured their vehicles with TNI to alleviate impact COMPANY

1. Thanachart Insurance Co., Ltd. (TNI) 2. Thanachart Bank Plc. (TBANK)

arising from risk of accidents to Thanachart Group’s vehicles. Insurance premiums paid by member companies of Thanachart Group to TNI were normal rates applicable to general customers. 2. Directors and Officers Liability Insurance of member companies in Thanachart Group with (TNI). 2.1 Details of contracting parties

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

A subsidiary of TBANK with TBANK holding 100 percent shares in TNI A subsidiary of TCAP (TCAP held 50.92 percent shares in TBANK)*

1. Mr. Banterng Tantivit 2. Mr. Suphadej Poonpipat

Note: * On 3 February 2009, TCAP sold TBANK’s shares to Scotiabank. As a result, at present, TCAP holds 50.92 percent shares in TBANK.

2.2 Type and value of transaction These transactions related to directors and officers liability insurance policies issued by TNI for all directors and officers of member companies in Thanachart Group. In 2008 and 2009, the premiums charged for these policies were THB 5.21 million and THB 4.70 million respectively. 2.3 Necessity and rationale of transaction Member companies of Thanachart Group insured their directors and officers with TNI to protect those directors and officers who performed their duties to the level of capacity and responsibility required COMPANY

1. Thanachart Life Assurance Co., Ltd. (TLIFE) 2. Thanachart Insurance Co., Ltd. (TNI) 3. Thanachart Capital Plc. (TCAP)

for their respective roles, from possible liabilities. Such practice was common in the industry. Premiums paid to TNI were normal rates applicable to general customers. THANACHART LIFE ASSURANCE COMPANY LIMITED (TLIFE) Group health insurance, life insurance, and group accident insurance by Thanachart Life Assurance Co., Ltd. (TLIFE) (insurer) to employees of Thanachart Capital Plc. (TCAP), NFS Asset Management Co., Ltd. (NFS AMC) and Max Asset Management Co., Ltd. (MAX AMC) (insured). 1. Details of contracting parties

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

An indirect subsidiary of TCAP with TCAP holding 50.92 percent shares in TBANK and TBANK holds 100 percent shares in TLIFE An indirect subsidiary of TCAP with TCAP holding 50.92 percent shares in TBANK and TBANK holds 100 percent shares in TNI Parent company holds 50.92 percent shares in TBANK*

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

1. Mr. Banterng Tantivit 2. Mr. Suphadej Poonpipat 3. Ms. Suvarnapha Suvarnaprathip


COMPANY

4. Thanachart Legal and Appraisal Co., Ltd. (TLA) 5. Thanachart Securities Plc. (TNS) 6. NFS Asset Management Co., Ltd. (NFS AMC) 7. Max Asset Management Co., Ltd. (MAX AMC)

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

An indirect subsidiary of TCAP with TCAP holding 50.92 percent shares in TBANK and TBANK holds 100 percent shares in TLA An indirect subsidiary of TCAP with TCAP holding 50.92 percent shares in TBANK and TBANK holds 100 percent shares in TNS A subsidiary of TCAP with TCAP holding 100 percent shares in NFS AMC A subsidiary of TCAP with TCAP holding 83.44 percent shares in MAX AMC

Note: * On 3 February 2009, TCAP sold TBANK’s shares to Scotiabank. As a result, at present, TCAP holds 50.92 percent shares in TBANK.

2. Type and value of transaction These transactions are related to group health insurance, life insurance and group accident insurance for employees. In 2008 and 2009, their premiums amounted to THB 0.17 million and THB 8.58 million, respectively. 3. Necessity and rationale of transaction TCAP and its subsidiaries purchased group

health insurance and life insurance from TLIFE and group accident insurance from TNI under similar terms and conditions as other insurers. Thus, these transactions were considered appropriate market transactions. The rationale for such transactions was to offer health, life and accident insurance coverage for employees of TCAP and its subsidiaries. This type of benefit for the employees was considered beneficial for all employees.

EXECUTIVES OF MEMBER COMPANIES IN THANACHART GROUP

1. Related transactions between TBANK and the executives in Thanachart Group

(Unit: Million Baht)

31 DECEMBER 2009

31 DECEMBER 2008

Loans Deposits

48 554

67 496

2. Necessity and rationale of transaction These transactions are related to financial services offered by TBANK under its normal business

operations and were conducted under the same terms and conditions as well as interest rates applicable to general customers.

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TRANSACTION OF THE RELATED COMPANIES AND MEMBER COMPANIES OF THANACHART GROUP

ADVANCE INFO SERVICE PLC. (AIS) 1. Details of contracting parties COMPANY

1. Advance Info Service Plc. (AIS) 2. Thanachart Bank Plc. (TBANK)

TYPE OF RELATIONSHIP

DIRECTORS WITH STAKEHOLDING

Vice Chairman of the Board of Directors and Chairman of the Executive Committee of TBANK was also a Non-signatory Director of AIS A subsidiary of TCAP (TCAP holding 50.92 percent shares in TBANK)*

Mr. Suphadej Poonpipat

Note: * On 3 February 2009, TCAP sold TBANK’s shares to Scotiabank. As a result, at present, TCAP holds 50.92 percent shares in TBANK.

obtaining such service will be calculated mainly from cost of business operations (Cost Plus). Services provided are as follows: THANACHART BANK PLC. The Bank provides supportive service in operation, business control, debt collection and payment agent, accounting, e-commerce business, system and regulation development, internal audit, compliance, human resource, IT system, hire purchase credit review, building and premises management, procurement and asset management. THANACHART MANAGEMENT AND SERVICE CO., LTD. This company provides services for servicesupport employees THANACHART LEGAL AND APPRAISAL CO., LTD. This company provides supportive services in legal counseling, legal contracts, lawsuit prosecution and execution, and collateral appraisal. THANACHART TRAINING AND DEVELOPMENT CO., LTD. This company provides training services to personnel of member companies in Thanachart Group.

2. Type and value of transaction Loans and guarantees between TBANK and Advance Info Service Plc. (AIS) were considered normal business operations of TBANK. • In 2008, TBANK extended loans and guarantees to AIS with a total outstanding balance of THB 43 million for loans and none for guarantees. • In 2009, TBANK extended loans and guarantees to AIS with total outstanding balances of THB 59.24 million and THB 36.29 million for loans and guarantees, respectively. 3. Necessity and rationale of transaction Loans and guarantees extended by TBANK to AIS were considered normal business operations of the Bank under the same terms and conditions, fees and interest rates applicable to general customers. Such transactions were, therefore, justified.

SUPPORTIVE SERVICES AMONG MEMBER COMPANIES IN THANACHART GROUP

Thanachart Group has put in place a policy on integrating supportive units into a single company for the purpose of Economies of Scale and Economies of Scope in providing supportive services to member companies in the group. Under such policy, the use of available resources will be at maximum benefit. The charging fee for

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The transactions are also subjected to unanimous approval by the Bank’s Board of Directors. The Bank’s directors or senior executives having any conflict of interest are prohibited from participating in the approval process. The approval of the transaction has to be within the authority and the limit determined by the Bank and also in compliance with the requirements of the related authorities. In conducting their duties relating to the approval of loans or investment, payments, renting or renting out of movable or immovable property, securities trading, related party transactions, transactions relating to acquisition or disposal of assets, the Bank is required to act prudently, aiming to prevent conflicts of interest and to strictly adhere to rules and regulations imposed by the related authorities. Disclosure of information relating to such transactions shall be in line with the requirements imposed by the authorities, accounting standards as well as the Bank’s regulations.

CREDIT LENDING AND CONTINGENT LIABILITIES AT MANAGER LEVEL OR ABOVE OF TBANK

AND MEMBER COMPANIES IN THANACHART GROUP INCLUDING OTHER TRANSACTIONS AS AFOREMENTIONED The transactions are resulted from normal business operations.

MEASURES OR PROCEDURES FOR APPROVING RELATED PARTY TRANSACTION

TBANK has put in place a policy and regulations aimed at protecting conflicts of interest as well as related party transactions and related transactions in line with the requirements imposed by the Stock Exchange of Thailand (SET). It has also announced regulations, to which both its staff and executives are required to adhere to in relation to the Bank’s transactions with individuals who may have a conflict of interest in line with the criteria of the Securities and Exchange Commission (SEC). In considering the execution of related party transactions, the Bank uses the same procedure as applied to general customers or trading partners and appropriately follows the normal process that has been established. The service of the related party will be used only as necessary for the purpose of supporting the Bank’s business operations. In determining the price of the related party transactions, to prevent a conflict of interest, the Bank uses a fair value that is appropriate and in line with the authority’s requirements, taking into consideration mainly the maximum benefit to be received by the Bank and its shareholders. In approving related party transactions, directors or employees having a conflict of interest in the transaction are prohibited from participating in decision making.

POLICY AND TRENDS ON RELATED PARTY TRANSACTOIN

Related party transactions between TBANK and member companies in Thanachart Group or related persons will be normal business transactions, including those resulting from implementation of the Bank’s financial business restructuring plan in compliance with the Financial Sector Master Plan Phase I’s One Presence policy and Consolidated Supervision regulation. Related party transactions also cover supporting services given between member companies of Thanachart Group in line with the Group’s policy. TBANK has no policy encouraging parties who have a conflict of interest to execute related party transactions.

The Kidney Foundation of Thailand Donated funds to alleviate burdens and difficulties of the patients with kidney disease countrywide, together with regular visits to support the patients as well as the Foundation. 183

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GENERAL INFORMATION

INVESTMENT OF THANACHART BANK PUBLIC COMPANY LIMITED IN OTHER COMPANIES The following is a list of companies in which Thanachart Bank made investments during 2009, in the form of shareholding of 10 percent or more of the total paid-up capital. COMPANY/LOCATION

Subsidiaries Thanachart Securities Public Company Limited 444 MBK Tower, 14th, 18th, and 19th Floor, Phayathai Road, Wangmai, Pathumwan, Bangkok 10330 Tel. +66 (0) 2217 8888, 2217 9595 Fax +66 (0) 2217 9642

TYPE OF BUSINESS

TYPE OF REGISTERED CAPITAL SHARES (BAHT)

PAID-UP CAPITAL (BAHT)

TOTAL NUMBER TOTAL NUMBER PROPORTION OF TBANK’S OF PAID-UP OF SHAREHOLDING SHARES SHARES HELD (%)1

Securities Ordinary 1,700,000,000 1,500,000,000 1,500,000,000 1,499,999,930 Share

100.00

Thanachart Insurance Company Limited Non-Life Ordinary 740,000,000 1 Glas Haus Building, 10th Floor, Insurance Share Soi Sukhumvit 25, North Klongtoey, Wattana, Bangkok 10110 Tel. +66 (0) 2661 7999 Fax +66 (0) 2665 7304

740,000,000

74,000,000

73,999,434

100.00

Thanachart Life Assurance Company Limited 231 Thanachart Life Assurance Building, Rachadamri Road, Lumpini, Pathumwan, Bangkok 10330 Tel. +66 (0) 2207 4200 Fax +66 (0) 2253 8484

Life Ordinary 500,000,000 Assurance Share

500,000,000

50,000,000

49,999,400

100.00

Thanachart Fund Management Company Limited 898 Ploenchit Tower, 15th and 18th Floor Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel. +66 (0) 2126 8200, 2126 8300 Fax +66 (0) 2126 8398

Mutual Fund Ordinary 100,000,000 Management Share

100,000,000

10,000,000

7,499,993

75.00

Thanachart Broker Company Limited 1 Glas Haus Building, 4th Floor, Soi Sukhumvit 25, North Klongtoey, Wattana, Bangkok 10110 Tel. +66 (0) 2685 0200, 2685 0300 Fax +66 (0) 2685 0322, 2685 0333

Insurance Ordinary 100,000,000 Broker Share

100,000,000

10,000,000

9,999,000

99.99

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ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


COMPANY/LOCATION

TYPE OF BUSINESS

TYPE OF REGISTERED CAPITAL SHARES (BAHT)

Thanachart Group Leasing Leasing Company Limited 444 MBK Tower, 11th Floor, Phayathai Road, Wangmai, Pathumwan, Bangkok 10330 Tel. +66 (0) 2217 8000, 2217 8333 Fax +66 (0) 2611 9488

Ordinary 360,000,000 Share

Thanachart Management and Service Services Company Limited 128/23 , 3rd Floor, Phayathai Plaza Office, Phayathai Road, Thung Phayathai, Ratchathewi, Bangkok 10400 Tel. +66 (0) 2612 1500 Fax +66 (0) 2612 1400

Ordinary Share

Legal Advisory Ordinary Services and Share Appraisal

Thanachart Legal and appraisal Company Limited 128/20-21 3rd Floor, Phayathai Plaza Office, Phayathai Road, Thung Phayathai, Ratchathewi, Bangkok 10400 Tel. +66 (0) 2216 6677 Fax +66 (0) 2216 9022

PAID-UP CAPITAL (BAHT)

PROPORTION OF TOTAL NUMBER TOTAL NUMBER TBANK’S OF PAID-UP OF SHAREHOLDING SHARES SHARES HELD (%)1

360,000,000

36,000,000

35,999,994

100.00

6,000,000

6,000,000

600,000

599,993

100.00

10,000,000

10,000,000

1,000,000

999,993

100.00

Thanachart Training and Development Training Company Limited 207/6 Thanachart Building, 5th Floor, Ratchadaphisek Road, Dindaeng, Bangkok10400 Tel. +66 (0) 2290 3410 Fax +66 (0) 2290 3419

Ordinary Share

5,000,000

5,000,000

500,000

499,993

100.00

T Leasing Company Limited Leasing 2 Thanachart Buidling, Rama 7, 5th Floor, Soi Charansanitwong 98, Bangorr, Bang phlat, Bangkok 10700 Tel. +66 (0) 2832 2555 Fax +66 (0) 2832 2556

Ordinary 180,000,000 Share

180,000,000

18,000,000

17,998,200

99.99

National Leasing Company Limited2 Leasing 444 MBK Tower, 12th Floor, Phayathai Road, Wangmai, Phayathai, Pathumwan, Bangkok 10330 Tel. +66 (0) 2217 8000

Ordinary Share

60,000,000

600,000

599,994

100.00

60,000,000

Associated Company Siam Media and Communication Communication Ordinary 700,000,000 700,000,000 7,000,000 1,633,800 Company Limited3 Share 18 SCB Park Plaza Tower 2 West, 17th-22nd Floor, Ratchadaphisek Road, Ladyao, Chatuchak, Bangkok 10900

23.34

Notes: 12 Shareholding percentage shown above included the shareholding held by related companies Thanachart Bank indirectly held 100 percent through Thanachart Group Leasing Company Limited which was in line with the definition of subsidiaries announced by the Stock Exchange of Thailand 3 Bankrup 185

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


THANACHART BANK’S REFERENCES Location of Head office Registration No. Registered Capital Paid-up Capital Website E-mail Telephone Fax

: : : : : : : :

900 Tonson Tower, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330, Thailand 0107536001401 (Former No. BOR.MOR.JOR. 214) THB 59,346,192,720 THB 19,346,192,720 www.thanachartbank.co.th ir.nf@thanachart.co.th +66 (0) 2655 9000 +66 (0) 2655 9001

NAME, LOCATION, TELEPHONE AND FAX OF OTHER REFERENCES Securities : Securities Representative/Registrar : Securities : Debenture Representative/Registrar : Securities : Debenture Representative/Registrar : Auditor : Name of Auditor : Legal Advisor : Financial Advisor : Advisor or Management under : Management Contract

Ordinary shares Thailand Securities Depository Company Limited 62 The Stock Exchange of Thailand Building, Ratchadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel. +66 (0) 2229 2800 Fax +66 (0) 2359 1259 Call Center +66 (0) 2229 2888 Website: www.tsd.co.th Unsecured subordinated debentures of Thanachart Bank Public Company Limited No. 1/2006 Thanachart Bank Public Company Limited “TBANK” 900 Tonson Tower, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330, Thailand Tel. +66 (0) 2655 9000 Fax +66 (0) 2655 9001 Website: www.thanachartbank.co.th Debentures TBANK155A, TBANK194A, TBANK197A, and TBANK247A TMB Public Company Limited 393 Silom Branch, Soi. 7, Silom Road, Bangrak, Bangkok 10500, Thailand Tel. +66 (0) 2230 6301, +66 (0) 2230 5883 Fax +66 (0) 2230 6200 Website: www.tmbbank.com Ernst & Young Office Limited 193/136-137 Lake Rajada Office Complex, 33rd Floor, Rachadaphisek Road, Klongtoey, Bangkok 10110, Thailand Tel. +66 (0) 2264 0777 Fax +66 (0) 2264 0789-90 Miss Ratana Jala, Certified Public Accountant No. 3734 Thanachart Legal and Appraisal Company Limited 128/20-21 Payathai Plaza Office, 3rd Floor, Phayathai Road, Thung Phayathai, Ratchathewi, Bangkok 10400, Thailand Tel. +66 (0) 2216 6677 Fax +66 (0) 2216 6558 None None 186

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STRUCTURE OF MAJOR SHAREHOLDERS

NO.

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

LIST OF SHAREHOLDERS

NO. OF SHARES

Thanachart Capital Public Company Limited The Bank of Nova Scotia Ms. Kittima Tolieng Ms. Piengjai Hanphanit Thai Finance and Securities Public Company Limited* Mr. Wanchai Chirathivat Mr. Thanawat Chareonthassanont Mr. Thung-ngern Pum-ngern Mrs. Soranee Deephanphong Mr. Wayne Huang Other Shareholders

985,170,229 947,916,657 157,525 96,665 90,000 84,809 70,000 45,376 43,285 40,000 904,726

PERCENTAGE OF SHAREHOLDING

50.923 48.998 0.008 0.005 0.005 0.004 0.004 0.002 0.002 0.002 0.047

Total Paid-up Capital

1,934,619,272

100.00

Thai Shareholders

986,659,315

51.00

Foreign Shareholders

947,959,957

49.00

Note: * Thai Finance and Securities Public Company Limited’s assets were put on restraint by receivership of Legal Execution Department. Source: Report of the Bank’s Major shareholders as at 30 December 2009 prepared by Thailand Securities Depository Company Limited.

Earth Hour 2009 “Let the world rest; reduce unnecessary electricity usage” Thanachart Bank in corporation with World Wildlife Fund (WWF), authorities and various businesses in Bangkok joined the campaign in turning off light switch for one hour in order to promote energy saving and alleviate the global warming condition. 187

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reserve into consideration. Their Boards of Directors may pay interim dividend to shareholders occasionally when they consider that they have adequate profits to make the payment. The Boards of Directors are required to report the interim dividend payment to the shareholders at their next meeting. GROUP OF MAJOR SHAREHOLDERS WHICH HAS A SIGNIFICANT IMPACT ON THE FORMULATION OF MANAGEMENT POLICIES TBANK has 2 major shareholders that, by behavior, have significant influence on the establishment of its management policies. The 2 major shareholders are Thanachart Capital Public Company Limited “TCAP”, which holds 50.92 percent of the total paid-up shares, and the Bank of Nova Scotia “Scotiabank”, which holds 48.99 percent of the total paid-up shares. Thanachart Capital Public Company Limited does not have any major shareholder that has significant influence on the establishment of its management policies or its operation.

DIVIDEND POLICY

DIVIDEND POLICY OF THANACHART BANK Thanachart Bank has dividend payment policy by paying dividend when the Bank has profit. In order to make a dividend payment, the Bank has to take the capital adequacy for supporting the Bank’s businesses and legal reserve into account. The Bank’s Board of Directors may pay an interim dividend to shareholders occasionally when it considers that the Bank has adequate profit to do so. The Board of Directors is required to report the interim dividend payment to the shareholders at their next meeting. At the Annual General Meeting of Shareholders for the year 2009 held on 28 April 2009, the shareholders adopted a resolution approving the dividend payment

for the year 2008 performance to the Bank shareholders

at a rate of THB 0.56 per share. The dividend was made on 12 May 2009, and paid to 1,734,619,292 shares in the total amount of THB 971,386,803.52. DIVIDEND POLICY OF THE SUBSIDIARY COMPANIES The subsidiary companies of TBANK have dividend payment policy by paying dividend when they have profits. In order to make payments, they have to take the excessive cash from business operation and legal

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COMPANIES IN THANACHART GROUP THANACHART CAPITAL PUBLIC COMPANY LIMITED

THANACHART FUND MANAGEMENT COMPANY LIMITED

444 MBK Tower, 10th-11th and 15th-20th Floor, Phayathai Road, Wangmai, Pathumwan, Bangkok 10330, THAILAND Tel. +66 (0) 2217 8444, 2217 8000, 2611 9111 Fax. +66 (0) 2613 6099 Registration No. 0107536000510 www.thanachart.co.th

898 Ploenchit Tower, 15th and 18th Floor, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330, THAILAND Tel: +66 (0) 2126 8300 Fax: +66 (0) 2263 0811 Registration No. 0105535049696 www.thanachartfund.com

THANACHART BANK PUBLIC COMPANY LIMITED

THANACHART INSURANCE COMPANY LIMITED

THANACHART SECURITIES PUBLIC COMPANY LIMITED

THANACHART LIFE ASSURANCE COMPANY LIMITED

900 Tonson Tower, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330, THAILAND Tel: +66 (0) 2655 9000 Fax: +66 (0) 2655 9001 Registration No. 0107536001401 www.thanachartbank.co.th

1 Glas Haus Building, 10th Floor, Sukhumvit 25 Road, North Klongtoey, Wattana, Bangkok 10110, THAILAND Tel: +66 (0) 2661 7999 Fax: +66 (0) 2204 6904 Registration No. 0105540060091 www.thanachartinsurance.co.th

444 MBK Tower, 14th 18th and 19th Floor, Phayathai Road, Wangmai, Pathumwan, Bangkok 10330, THAILAND Tel: +66 (0) 2217 8888, 2611 9222, 2217 9595 Fax: +66 (0) 2217 9642 Registration No. 0107547000591 www.tnsitrade.com

231 Thanachart Life Assurance Building, Ratchadamri Road, Lumpini, Pathumwan, Bangkok 10330, THAILAND Tel: +66 (0) 2207 4200 Fax: +66 (0) 2253 8484 Registration No. 0105540057090 www.thanachartlife.co.th

Thanachart Contact Center 1770

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BRANCHES OF THANACHART BANK PUBLIC COMPANY LIMITED Information as of 31 December 2009 HEAD OFFICE

Tonson Branch Tel. +66 (0) 2655 9000 Fax. +66 (0) 2655 9585

BANGKOK AND VICINITIES

BANGKOK Department of Land Transport Branch Tel. +66 (0) 2272 6073-5 Fax. +66 (0) 2272 6077 Khlong Tan Branch Tel. +66 (0) 2314 2642-4 Fax. +66 (0) 2719 8031 Seacon Square 2 Branch Tel. +66 (0) 2322 9724-6 Fax. +66 (0) 2721 9252 Seacon Square Srinakarin Branch Tel. +66 (0) 2721 9955 Fax. +66 (0) 2721 8321 Central Pin Klao Branch Tel. +66 (0) 2884 9680-3 Fax. +66 (0) 2884 9684 Central Rama 2 Branch Tel. +66 (0) 2872 4770 Fax. +66 (0) 2872 4769 Central Rama 3 Branch Tel. +66 (0) 2211 8260 Fax. +66 (0) 2211 8190 The Avenue Chaengwattana Branch Tel. +66 (0) 2573 0673-5 Fax. +66 (0) 2573 0677 The Mall Bang Kapi Branch Tel. +66 (0) 2375 1575 Fax. +66 (0) 2375 1686 The Mall Bang Khae Branch Tel. +66 (0) 2803 8310 Fax. +66 (0) 2803 8305 Talat Phatthanakan Branch Tel. +66 (0) 2320 2922-4 Fax. +66 (0) 2722 1045 TOYOTA BUZZ Kaset-Nawamin Branch Tel. +66 (0) 2561 0069-71 Fax. +66 (0) 2561 0073 Thanon Charoen Nakhon Branch Tel. +66 (0) 2438 6953-5 Fax. +66 (0) 2860 4355 Thanon Nang Linchi Branch Tel. +66 (0) 2286 1971, +66 (0) 2286 1898 Fax. +66 (0) 2286 1939 Thanon Phatthanakan Branch Tel. +66 (0) 2369 2814-7 Fax. +66 (0) 2369 2818 Thanon Ramkhamhaeng 2 Branch Tel. +66 (0) 2397 6173-5 Fax. +66 (0) 2728 4061 Thanon Sathon Nuea Branch Tel. +66 (0) 2267 7512-4 Fax. +66 (0) 2637 8975 Thong Lo Branch Tel. +66 (0) 2381 8421-2, +66 (0) 2381 8364-5 Fax. +66 (0) 2381 8423 Thong Lo Soi 3 Branch Tel. +66 (0) 2392 5802-4 Fax. +66 (0) 2712 8168 Tops RCA Branch Tel. +66 (0) 2203 0267-9 Fax. +66 (0) 2641 5121

Tesco Lotus Bang Kapi Branch Tel. +66 (0) 2377 8029, +66 (0) 2377 8092, +66 (0) 2377 8147 Fax. +66 (0) 2377 8508 Tesco Lotus Rama 4 Branch Tel. +66 (0) 2249 7533-5 Fax. +66 (0) 2249 7537 Tesco Lotus Phet Kasem 81 Branch Tel. +66 (0) 2489 2087-9 Fax. +66 (0) 2812 4073 Tesco Lotus Lat Phrao Branch Tel. +66 (0) 2512 1955, +66 (0) 2512 1963, +66 (0) 2512 1977 Fax. +66 (0) 2939 3043 Bang Khun Non Branch Tel. +66 (0) 2434 6067-8, +66 (0) 2434 6078, +66 (0) 2882 4595 Fax. +66 (0) 2882 4581 Bang Na Branch Tel. +66 (0) 2397 3757 Fax. +66 (0) 2398 0185 Bang Na-Trat km. 4 Branch Tel. +66 (0) 2399 2841-3 Fax. +66 (0) 2399 2845 Bo Bae Branch Tel. +66 (0) 2356 0755-8 Fax. +66 (0) 2356 0759 PTT Thanon Seri Thai Branch Tel. +66 (0) 2187 2009-11 Fax. +66 (0) 2187 2013 Pratu Num Branch Tel. +66 (0) 2208 0072-5 Fax. +66 (0) 2208 0076 Rama 4 Branch Tel. +66 (0) 2661 5534-7 Fax. +66 (0) 2661 5539 Phlapphlachai Branch Tel. +66 (0) 2224 6922-3, +66 (0) 2224 6930 Fax. +66 (0) 2224 6947 Phahon Yothin Soi 9 Branch Tel. +66 (0) 2270 1371-3, +66 (0) 2619 6399 Fax. +66 (0) 2619 6339 Phet Kasem Branch Tel. +66 (0) 2456 0337-42 Fax. +66 (0) 2454 4116 Platinum Pratu Nam Branch Tel. +66 (0) 2121 9683-5 Fax. +66 (0) 2121 9687 Mah Boon Krong Branch Tel. +66 (0) 2611 5710-4 Fax. +66 (0) 2611 5717 Major Ratchayothin Branch Tel. +66 (0) 2512 1082, +66 (0) 2512 1102, +66 (0) 2512 1248 Fax. +66 (0) 2939 5372 Union Mall Lat Phrao Branch Tel. +66 (0) 2511 0236, +66 (0) 2511 0246, +66 (0) 2511 0256 Fax. +66 (0) 2511 0268 Yaowarat Branch Tel. +66 (0) 2221 1868, +66 (0) 2221 1845-7 Fax. +66 (0) 2221 1869 Ratchada Phisek (Glas Haus Building) Branch Tel. +66 (0) 2693 9811 Fax. +66 (0) 2693 9820 Ramkhamhaeng Soi 122 Branch Tel. +66 (0) 2372 2377-9, +66 (0) 2728 2947 Fax. +66 (0) 2728 2950 Ramkhamhaeng Soi 129 Branch Tel. +66 (0) 2372 3318-20 Fax. +66 (0) 2729-5832 190

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Ramkhamhaeng Soi 24 Branch Tel. +66 (0) 2300 4956-8 Fax. +66 (0) 2719 1258 Navaminthra 9 Hospital Branch Tel. +66 (0) 2518 1100, +66 (0) 2518 2360-1 Fax. +66 (0) 2518 2363 Lat Phrao Hospital Branch Tel. +66 (0) 2932 2473-5 Fax. +66 (0) 2932 2530 Samitivej Hospital Sukhumvit 49 Branch Tel. +66 (0) 2712 7013-5 Fax. +66 (0) 2712 7016 Wong Sawang Branch Tel. +66 (0) 2834 9999 Fax. +66 (0) 2834 9905 The Government Complex Commemorating Chaengwattana (Building B) Branch Tel. +66 (0) 2143 9393-5 Fax. +66 (0) 2143 9397 Sanam Pao Branch Tel. +66 (0) 2271 0026-8 Fax. +66 (0) 2271 0030 Rama 7 Bridge (Bang Phlat) Branch Tel. +66 (0) 2423 9011-3 Fax. +66 (0) 2423 9015 Silom Branch Tel. +66 (0) 2266 7414-7 Fax. +66 (0) 2266 7416 Sukhumvit Soi 47 Branch Tel. +66 (0) 2204 0307-9 Fax. +66 (0) 2662 5632 Surawong Branch Tel. +66 (0) 2234 5964-6 Fax. +66 (0) 2631 7031 All Seasons Place Branch Tel. +66 (0) 2250 7611-3 Fax. +66 (0) 2250 7615 Udom Suk Branch Tel. +66 (0) 2398 4024-7 Fax. +66 (0) 2398 4028 Esplanade Ratchada Branch Tel. +66 (0) 2354 2052-4 Fax. +66 (0) 2660 9250

SUB BRANCH Green Place (Soi Wat Phai Ngoen) Sub Branch Tel. +66 (0) 2211 3515, +66 (0) 2211 3519-20 Fax. +66 (0) 2674 9704 Khlong Thom Sub Branch Tel. +66 (0) 2221 1677, +66 (0) 2221 1671 Fax. +66 (0) 2221 1679 Carrefour Bang Bon Sub Branch Tel. +66 (0) 2416 9969-71 Fax. +66 (0) 2416 9974 Century The Movie Plaza Sub Branch Tel. +66 (0) 2245 8500-2 Fax. +66 (0) 2245 8504 Central World Sub Branch Tel. +66 (0) 2646 1346-9 Fax. +66 (0) 2646 1350 The Park Place Sub Branch Tel. +66 (0) 2252 2677-8, +66 (0) 2651 9037, +66 (0) 2651 9038 Fax. +66 (0) 2252 2679 The Mall 2 Ram Khamhaeng Sub Branch Tel. +66 (0) 2369 2480, +66 (0) 2369 2486, +66 (0) 2369 2482 Fax. +66 (0) 2369 2484 The Mall Tha Phra Sub Branch Tel. +66 (0) 2477 7321-3 Fax. +66 (0) 2477 7324


Tao Pun Sub Branch Tel. +66 (0) 2587 7292, +66 (0) 2587 7284-5 Fax. +66 (0) 2587 7379 Talat Ying Charoen Sub Branch Tel. +66 (0) 2552 8043, +66 (0) 2552 8045, +66 (0) 2552 8047, +66 (0) 2972 3159 Fax. +66 (0) 2972 3161 Thanon Chan Sub Branch Tel. +66 (0) 2285 5360 Fax. +66 (0) 2285 5361 Thanon Petchaburi Tat Mai Sub Branch Tel. +66 (0) 2254 0252-4 Fax. +66 (0) 2254 0255 Thanon Mangkon Sub Branch Tel. +66 (0) 2225 3331, +66 (0) 2225 3863, +66 (0) 2225 4727 Fax. +66 (0) 2225 8364 Thanon Sirindhorn Sub Branch Tel. +66 (0) 2434 5028-9, +66 (0) 2434 5947-8 Fax. +66 (0) 2434 5661 Tesco Lotus Wang Hin Sub Branch Tel. +66 (0) 2578 6194-6 Fax. +66 (0) 2578 6197 Bang Rak Sub Branch Tel. +66 (0) 2234 4227-9 Fax. +66 (0) 2630 9027 Bang Lamphu Sub Branch Tel. +66 (0) 2356 0782-6 Fax. +66 (0) 2356 0787 Big C Don Mueang Sub Branch Tel. +66 (0) 2551 0639-40 Fax. +66 (0) 2551 0642 Big C Bang Na Sub Branch Tel. +66 (0) 2396 0482, +66 (0) 2396 0484-5 Fax. +66 (0) 2396 0500 Big C Phet Kasem Sub Branch Tel. +66 (0) 2444 2927, +66 (0) 2444 2904, +66 (0) 2444 2906 Fax. +66 (0) 2444 2909 Big C Ekkamai Sub Branch Tel. +66 (0) 2714 8274-7 Fax. +66 (0) 2714 8268 Phahon Yothin Soi 6 Sub Branch Tel. +66 (0) 2279 9874-6 Fax. +66 (0) 2279 9895 Fashion Island Sub Branch Tel. +66 (0) 2519 5784, +66 (0) 2519 5753, +66 (0) 2519 5742 Fax. +66 (0) 2519 5718 Money Park Sub Branch Tel. +66 (0) 2686 3959-62 Fax. +66 (0) 2686 3963 Ratchadamnoen Klang Sub Branch Tel. +66 (0) 2226 3083-5, +66 (0) 2621 2185 Fax. +66 (0) 2621 2186 Ratchawong Sub Branch Tel. +66 (0) 2622 9050 Fax. +66 (0) 2622 9029 Vichaiyut Hospital Sub Branch Tel. +66 (0) 2278 2194-6 Fax. +66 (0) 2278 2606 Lat Krabang Sub Branch Tel. +66 (0) 2327 2754-7 Fax. +66 (0) 2327 2706 Wongwian Yai Sub Branch Tel. +66 (0) 2438 2486, +66 (0) 2438 2562, +66 (0) 2438 2567, +66 (0) 2861 6027 Fax. +66 (0) 2438 2568 Watcharaphon Sub Branch Tel. +66 (0) 2508 2185-7 Fax. +66 (0) 2508 2207

Si Worachak Sub Branch Tel. +66 (0) 2222 1912, +66 (0) 2222 1917, +66 (0) 2222 1965 Fax. +66 (0) 2622 9338 Siwara Sub Branch Tel. +66 (0) 2538 8466, +66 (0) 2538 8986, +66 (0) 2538 8670, +66 (0) 2538 7039 Fax. +66 (0) 2538 9378 Siam Discovery Sub Branch Tel. +66 (0) 2658 0491-3 Fax. +66 (0) 2658 0494 Siam Paragon Sub Branch Tel. +66 (0) 2129 4374-7 Fax. +66 (0) 2129 4372 Siam Square Sub Branch Tel. +66 (0) 2252 7363-5 Fax. +66 (0) 2252 7367 Silom Soi 15 Sub Branch Tel. +66 (0) 2237 4192-4, +66 (0) 2635 0272 Fax. +66 (0) 2635 0270 Silom Complex Sub Branch Tel. +66 (0) 2235 8832 Fax. +66 (0) 2235 8833 Sukhumvit Soi 101/1 (Piyarom Place) Sub Branch Tel. +66 (0) 2393 2033-5, +66 (0) 2741 8016 Fax. +66 (0) 2741 8017 Sukhumvit Soi 25 Sub Branch Tel. +66 (0) 2259 4727-9 Fax. +66 (0) 2259 4730 Seri Center Sub Branch Tel. +66 (0) 2325 9072-4 Fax. +66 (0) 2325 9075 MBK Center Sub Branch Tel. +66 (0) 2611 4752-4 Fax. +66 (0) 2611 4751 MBK Tower Sub Branch Tel. +66 (0) 2611 9480 Fax. +66 (0) 2611 9557 Carrefour Rama 2 Sub Branch Tel. +66 (0) 2451 4402, +66 (0) 2451 4409, +66 (0) 2451 4460 Fax. +66 (0) 2451 4882 Chamchuri Square Sub Branch Tel. +66 (0) 2160 5254-6 Fax. +66 (0) 2160 5258 Central Ram Inthra Sub Branch Tel. +66 (0) 2552 7462, +66 (0) 2552 7467-8 Fax. +66 (0) 2970 5518 The Paseo (Lat Krabang) Sub Branch Tel. +66 (0) 2346 4103-4, +66 (0) 2346 4109 Fax. +66 (0) 2346 4111 Thanon Pracha Uthit (Thung Khru) Sub Branch Tel. +66 (0) 2426 7017-9 Fax. +66 (0) 2873 4030 Thanon Suea Pa Sub Branch Tel. +66 (0) 2221 4327-9 Fax. +66 (0) 2623 0579 Nawamin Town Center Sub Branch Tel. +66 (0) 2519 1142, +66 (0) 2519 1154, +66 (0) 2519 1194 Fax. +66 (0) 2946 7432 Big C Sukhaphiban 3 (Ramkhamhaeng) Sub Branch Tel. +66 (0) 2916 3584-5, +66 (0) 2916 3603 Fax. +66 (0) 2916 3607 Pak Khlong Talat Sub Branch Tel. +66 (0) 2225 1555, +66 (0) 2225 1628, +66 (0) 2225 1629 Fax. +66 (0) 2623 6527 Phahurat Sub Branch Tel. +66 (0) 2221 4409, +66 (0) 2221 4419-20 Fax. +66 (0) 2623 8098 191

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Paolo Memorial Hospital Chok Chai 4 Sub Branch Tel. +66 (0) 2514 3277, +66 (0) 2514 3293-4 Fax. +66 (0) 2933 2292 Paolo Memorial Hospital Phahon Yothin Sub Branch Tel. +66 (0) 2357 1774-6 Fax. +66 (0) 2616 6028 Lat Phrao Soi 101 Sub Branch Tel. +66 (0) 2187 0162-4 Fax. +66 (0) 2187 0161 Sirirat Sub Branch Tel. +66 (0) 2412 4515, +66 (0) 2412 4583-4 Fax. +66 (0) 2866 3218 Vichaiyut Medical Center Sub Branch Tel. +66 (0) 2357 1916-8 Fax. +66 (0) 2619 7043 Suan Phlu Sub Branch Tel. +66 (0) 2287 3084-5, +66 (0) 2287 3074 Fax. +66 (0) 2679 3028 Asok Sub Branch Tel. +66 (0) 2204 1695-7 Fax. +66 (0) 2204 1699 India Emporium Sub Branch Tel. +66 (0) 2224 0133, +66 (0) 2224 0135-6 Fax. +66 (0) 2623 9434

VICINITIES Carrefour Samrong Branch Tel. +66 (0) 2380 1100-2 Fax. +66 (0) 2755 0240 Chaeng Wattana Branch (Software Park) Tel. +66 (0) 2962 0066, +66 (0) 2962 0415-6 Fax. +66 (0) 2962 0376 Central Chaengwattana Branch Tel. +66 (0) 2193 8114-6 Fax. +66 (0) 2101 0710 Central Rattanathibet Branch Tel. +66 (0) 2525 4736-8 Fax. +66 (0) 2969 7537 The Mall Ngamwongwan Branch Tel. +66 (0) 2550 1231-4 Fax. +66 (0) 2550 1235 Tesco Lotus Navanakhon Branch Tel. +66 (0) 2529 6187-9 Fax. +66 (0) 2909 7097 Tesco Lotus Lam Luk Ka Khlong 6 Branch Tel. +66 (0) 2569 1694-5, +66 (0) 2569 1655 Fax. +66 (0) 2998 8164 Tesco Lotus Srinagarindra Branch Tel. +66 (0) 2175 7844-6 Fax. +66 (0) 2759 9054 Nonthaburi Branch Tel. +66 (0) 2526 3453-6 Fax. +66 (0) 2526 3457 Bang Yai Branch Tel. +66 (0) 2594 1143, +66 (0) 2594 1152, +66 (0) 2594 1154 Fax. +66 (0) 2594 1161 Big C Samut Prakan Branch Tel. +66 (0) 2702 1792-3, +66 (0) 2702 1859-60 Fax. +66 (0) 2702 1982 Big C Suk Sawat Branch Tel. +66 (0) 2463 7700, +66 (0) 2463 1894-6 Fax. +66 (0) 2463 7144 Rangsit Branch Tel. +66 (0) 2567 1117, +66 (0) 2567 5586 Fax. +66 (0) 2567 6694 Imperial World Samrong Branch Tel. +66 (0) 2380 2943-5, +66 (0) 2756 9023 Fax. +66 (0) 2756 9024


SUB BRANCH Talad Thai Sub Branch Tel. +66 (0) 2529 6171-3 Fax. +66 (0) 2529 6175 Thanon Samakkhi Sub Branch Tel. +66 (0) 2582 8146-8 Fax. +66 (0) 2997 6042 Suvarnabhumi Airport Sub Branch Tel. +66 (0) 2134 4085-6 Fax. +66 (0) 2134 4089 Tesco Lotus Rattana Thibet Sub Branch Tel. +66 (0) 2950 1160, +66 (0) 2950 1297 Fax. +66 (0) 2950 1157 Bang Bua Thong Sub Branch Tel. +66 (0) 2571 7124, +66 (0) 2571 7142-3 Fax. +66 (0) 2920 9603 Big C Bang Phli Sub Branch Tel. +66 (0) 2312 2284, +66 (0) 2312 2380 Fax. +66 (0) 2312 2321 Pak Nam Sub Branch Tel. +66 (0) 2173 7882-4 Fax. +66 (0) 2702 8037 Future Park Rangsit Sub Branch Tel. +66 (0) 2958 5116-9 Fax. +66 (0) 2958 5121 Paolo Memorial Hospital Samut Prakan Sub Branch Tel. +66 (0) 2182 7239-41 Fax. +66 (0) 2182 7243

CENTRAL REGION Kanchanaburi Branch Tel. +66 (0) 3451 8763, +66 (0) 3462 1565-6, +66 (0) 3462 1567 Fax. +66 (0) 3451 4961 Kamphaeng Phet Branch Tel. +66 (0) 5572 0575, +66 (0) 5571 3325 -6 Fax. +66 (0) 5571 3368 Tesco Lotus Pran Buri Branch Tel. +66 (0) 3254 2436-7, +66 (0) 3254 2445 Fax. +66 (0) 3282 5777 Tesco Lotus Mahachai Branch Tel. +66 (0) 3482 6231, +66 (0) 3482 6060, +66 (0) 3482 6107 Fax. +66 (0) 3442 1356 Nakhon Pathom Branch Tel. +66 (0) 3421 9131 Fax. +66 (0) 3421 9160 Phra Nakhon Si Ayutthaya Branch Tel. +66 (0) 3523 5611 Fax. +66 (0) 3523 5630 Phutthamonthon Sai 4 Branch Tel. +66 (0) 2420 0444, +66 (0) 2420 5964, +66 (0) 2420 5976 Fax. +66 (0) 2813 1116 Phetchaburi Branch Tel. +66 (0) 3241 0505, +66 (0) 3241 0506, +66 (0) 3241 0514 Fax. +66 (0) 3240 0618 Ratchaburi Branch Tel. +66 (0) 3231 1203-5 Fax. +66 (0) 3231 1207 Lop Buri Branch Tel. +66 (0) 3661 8023, +66 (0) 3661 8083-4 Fax. +66 (0) 3642 4846 Samut Songkhram Branch Tel. +66 (0) 3472 0744, +66 (0) 3472 0148-9 Fax. +66 (0) 3471 6267 Samut Sakhon Branch Tel. +66 (0) 3482 0359-60, +66 (0) 3482 0365-6 Fax. +66 (0) 3482 0445

Saraburi Branch Tel. +66 (0) 3631 7722 Fax. +66 (0) 3631 6601 Sing Buri Branch Tel. +66 (0) 3653 0410, +66 (0) 3653 0413, +66 (0) 3653 0432 Fax. +66 (0) 3651 2021 Suphan Buri Branch Tel. +66 (0) 3552 5742, +66 (0) 3550 1237, +66 (0) 3550 1302, +66 (0) 3550 1361 Fax. +66 (0) 3552 5743 Hua Hin Branch Tel. +66 (0) 3251 6663-6 Fax. +66 (0) 3253 2919 Om Yai Branch Tel. +66 (0) 2420 4920, +66 (0) 2420 4930, +66 (0) 2420 4955 Fax. +66 (0) 2811 6538

SUB BRANCH Thanon Sut Banthat (Saraburi) Sub Branch Tel. +66 (0) 3631 4256-7, +66 (0) 3631 4512 Fax. +66 (0) 3631 5404 Phra Pathom Chedi Sub Branch Tel. +66 (0) 3425 4203-5, +66 (0) 3421 3541 Fax. +66 (0) 3425 9131 Rojana Industrial Park Ayutthaya Sub Branch Tel. +66 (0) 3571 9710-2 Fax. +66 (0) 3533 1651 Ayutthaya Park Sub Branch Tel. +66 (0) 3522 9560-2 Fax. +66 (0) 3522 9554 NORTHERN REGION Chiang Rai Branch Tel. +66 (0) 5374 5244-6 Fax. +66 (0) 5374 5247 Thanon Chang Chlan (Chiang Mai) Branch Tel. +66 (0) 5382 0538-41 Fax. +66 (0) 5382 0543 Nakhon Sawan Branch Tel. +66 (0) 5631 3848, +66 (0) 5622 5444 Fax. +66 (0) 5631 3850 Phitsanulok Branch Tel. +66 (0) 5530 4313 Fax. +66 (0) 5530 4279 Lampang Branch Tel. +66 (0) 5431 8927-30 Fax. +66 (0) 5431 6960 Sukhothai Branch Tel. +66 (0) 5561 6022, +66 (0) 5562 2465-6 Fax. +66 (0) 5562 2469 Talat Varorot Branch Tel. +66 (0) 5387 4018-9, +66 (0) 5387 4002 Fax. +66 (0) 5387 4006 Tak Branch Tel. +66 (0) 5554 0219, +66 (0) 5554 0889, +66 (0) 5554 0988 Fax. +66 (0) 5551 3988 Tha Phae Branch Tel. +66 (0) 5323 5755 Fax. +66 (0) 5323 5757 Tesco Lotus Chiang Mai Hang Dong Branch Tel. +66 (0) 5380 6266-8 Fax. +66 (0) 5328 1460 Tesco Lotus Phitsanulok Branch Tel. +66 (0) 5537 7254, +66 (0) 5537 7256, +66 (0) 5537 7287 Fax. +66 (0) 5537 7356 Phichit Branch Tel. +66 (0) 5665 1214-6 Fax. +66 (0) 5661 5858 192

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED

Phetchabun Branch Tel. +66 (0) 5674 4076-8 Fax. +66 (0) 5672 2415 Phrae Branch Tel. +66 (0) 5462 6811, +66 (0) 5462 6931, +66 (0) 5462 6962 Fax. +66 (0) 5453 2837 Uttaradit Branch Tel. +66 (0) 5544 1777, +66 (0) 5544 2240, +66 (0) 5544 2294 Fax. +66 (0) 5541 4096

SUB BRANCH Central Airport Chiang Mai Sub Branch Tel. +66 (0) 5320 1234 Fax. +66 (0) 5320 1900 Thanon Kosi (Nakhon Sawan) Sub Branch Tel. +66 (0) 5631 3929-31 Fax. +66 (0) 5631 3932 Thanon Chang Phueak (Chiang Mai) Sub Branch Tel. +66 (0) 5323 1060, +66 (0) 5341 2116-7, +66 (0) 5341 2033 Fax. +66 (0) 5323 1061 Thanon Nimmanhemin Sub Branch Tel. +66 (0) 5322 5463, +66 (0) 5340 0672-4 Fax. +66 (0) 5340 0675 Thanon Barom Trai Lokanart 2 (Phitsanulok) Sub Branch Tel. +66 (0) 5521 7864-7 Fax. +66 (0) 5521 8648 Thanon Phahon Yothin (Chiang Rai) Sub Branch Tel. +66 (0) 5371 6433, +66 (0) 5371 6979, +66 (0) 5371 8394 Fax. +66 (0) 5371 9088 McCormick Hospital (Chiang Mai) Sub Branch Tel. +66 (0) 5326 1218-9, +66 (0) 5330 0421 Fax. +66 (0) 5326 1123 NORTH EASTERN REGION Kalasin Branch Tel. +66 (0) 4382 1080-1, +66 (0) 4382 1420 Fax. +66 (0) 4381 6584 Khon Kaen Branch Tel. +66 (0) 4332 4321, +66 (0) 4322 6888 Fax. +66 (0) 4332 5919 Tesco Lotus Chaiyaphum Branch Tel. +66 (0) 4483 8324-6 Fax. +66 (0) 4481 3352 Nakhon Phanom Branch Tel. +66 (0) 4251 4500 Fax. +66 (0) 4251 4501 Nakhon Ratchasima Branch Tel. +66 (0) 4426 9797 Fax. +66 (0) 4426 9790 Big C Yasothon Branch Tel. +66 (0) 4572 4361, +66 (0) 4572 4376, +66 (0) 4572 4423 Fax. +66 (0) 4572 5067 Buri Ram Branch Tel. +66 (0) 4460 2573, +66 (0) 4462 5471, +66 (0) 4462 5476 Fax. +66 (0) 4460 2575 Maha Sarakham Branch Tel. +66 (0) 4374 0681-3 Fax. +66 (0) 4372 2958 Roi Et Branch Tel. +66 (0) 4352 3335-8 Fax. +66 (0) 4352 3339 Loei Branch Tel. +66 (0) 4283 0851-3 Fax. +66 (0) 4281 4472


Si Sa Ket Branch Tel. +66 (0) 4562 0500-2 Fax. +66 (0) 4564 4197 Sakon Nakhon Branch Tel. +66 (0) 4271 5767, +66 (0) 4273 6146-8 Fax. +66 (0) 4271 5686 Surin Branch Tel. +66 (0) 4453 8517-20 Fax. +66 (0) 4453 8521 Nong Khai Branch Tel. +66 (0) 42460 119-22 Fax. +66 (0) 4246 0199 Udon Thani Branch Tel. +66 (0) 4234 2550 Fax. +66 (0) 4234 2398 Ubon Ratchathani Branch Tel. +66 (0) 4528 4272 Fax. +66 (0) 4528 4273

SUB BRANCH Thanon Klang Mueang (Khon Kaen) Sub Branch Tel. +66 (0) 4322 8266, +66 (0) 4332 2630, +66 (0) 4332 2632 Fax. +66 (0) 4332 2386 Thanon Pho Si (Udon Thani) Sub Branch Tel. +66 (0) 4234 3817-8 Fax. +66 (0) 4234 3727 Tesco Lotus Khorat Sub Branch Tel. +66 (0) 4426 3564-7 Fax. +66 (0) 4426 3565 Pak Chong Sub Branch Tel. +66 (0) 4431 6866-9 Fax. +66 (0) 4431 6859 Warin Chamrap Sub Branch Tel. +66 (0) 4532 5075, +66 (0) 4528 6171-3 Fax. +66 (0) 4532 5076 Surin Plaza Sub Branch Tel. +66 (0) 4453 8517-20 Fax. +66 (0) 4453 8521 Thao Suranari Monument Sub Branch Tel. +66 (0) 4424 1774, +66 (0) 4424 1775 Fax. +66 (0) 4424 1776

EASTERN REGION Carrefour Chon Buri Branch Tel. +66 (0) 3878 3032-4 Fax. +66 (0) 3838 7923 Chanthaburi Branch Tel. +66 (0) 3934 4323-6 Fax. +66 (0) 3934 4327 Chachoengsao Branch Tel. +66 (0) 3881 2856-7, +66 (0) 3853 5336, +66 (0) 3581 2869 Fax. +66 (0) 3881 2874 Central Chon Buri Branch Tel. +66 (0) 3805 3531-3 Fax. +66 (0) 3805 3535 Central Festival Pattaya Beach Branch Tel. +66 (0) 3300 3571-3 Fax. +66 (0) 3804 3194 The Avenue Pattaya Branch Tel. +66 (0) 3872 3933-5 Fax. +66 (0) 3805 2002 Trat Branch Tel. +66 (0) 3953 1641-3 Fax. +66 (0) 3952 2662 Thanon Chetchamnong (Chon Buri) Branch Tel. +66 (0) 3879 2203-5 Fax. +66 (0) 3879 2178

Thanon Sukhumvit (Chon Buri) Branch Tel. +66 (0) 3879 6066, +66 (0) 3879 5639 Fax. +66 (0) 3827 7841 Na Kluea (Pattaya) Branch Tel. +66 (0) 3822 6060-61 Fax. +66 (0) 3822 6117 BigC Pattaya Tai Branch Tel. +66 (0) 3837 4270, +66 (0) 3837 4273 Fax. +66 (0) 3837 4463 BigC Rayong Branch Tel. +66 (0) 3887 3094, +66 (0) 3887 3301, +66 (0) 3887 3302 Fax. +66 (0) 3862 2659 BigC Sa Kaeo Branch Tel. +66 (0) 3742 1761-3 Fax. +66 (0) 3742 1765 Pattaya Nuea Branch Tel. +66 (0) 3842 8901-2, +66 (0) 3842 8905 Fax. +66 (0) 3842 8963 Rayong Branch Tel. +66 (0) 3886 4123 , +66 (0) 3886 4114 Fax. +66 (0) 3886 4115 Sri Racha Branch Tel. +66 (0) 3877 1686, +66 (0) 3877 1711 Ext. 103-115 Fax. +66 (0) 3877 1690 Nong Mon (Chon Buri) Branch Tel. +66 (0) 3874 5233, +66 (0) 3874 5239, +66 (0) 3874 6329-30 Fax. +66 (0) 3874 6349

SUB BRANCH Klaeng Sub Branch Tel. +66 (0) 3888 4503-5 Fax. +66 (0) 3888 4506 Thanon Phraya Satcha (Chon Buri) Sub Branch Tel. +66 (0) 3879 2214-5, +66 (0) 3879 2217 Fax. +66 (0) 3879 2216 Tesco Lotus Pattaya Nuea Sub Branch Tel. +66 (0) 3841 1410, +66 (0) 3841 1316 Fax. +66 (0) 3841 1423 Laem Chabang Sub Branch Tel. +66 (0) 3849 0230, +66 (0) 3849 1921-2 Fax. +66 (0) 3849 1924 SOUTHERN REGION Krabi Branch Tel. +66 (0) 7563 2838-41 Fax. +66 (0) 7563 2835 Carrefour Hat Yai Branch Tel. +66 (0) 7446 9235-7 Fax. +66 (0) 7455 5609 Chumphon Branch Tel. +66 (0) 7750 5051-2 Fax. +66 (0) 7750 5054 Trang Branch Tel. +66 (0) 7522 3240-3 Fax. +66 (0) 7522 3244 Thanon Ratsada (Phuket) Branch Tel. +66 (0) 7621 9664, +66 (0) 7625 6873-5 Fax. +66 (0) 7621 9731 Tesco Lotus Chao Fa (Phuket) Branch Tel. +66 (0) 7626 8059-61 Fax. +66 (0) 7621 9248 Tesco Lotus Phuket Branch Tel. +66 (0) 7625 5472-4 Fax. +66 (0) 7652 3400 Tesco Lotus Ranong Branch Tel. +66 (0) 7782 6636-8 Fax. +66 (0) 7782 6640

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Tesco Lotus Lamai (Ko Samui) Branch Tel. +66 (0) 7741 8464, +66 (0) 7741 8565-6 Fax. +66 (0) 7741 8720 Nakhon Si Thammarat Branch Tel. +66 (0) 7532 2689-90 Fax. +66 (0) 7532 2144 BigC Pattani Branch Tel. +66 (0) 7333 8004, +66 (0) 7331 3982-3 Fax. +66 (0) 7333 8005 Phatthalung Branch Tel. +66 (0) 7462 6952-4 Fax. +66 (0) 7461 5451 Phuket Branch Tel. +66 (0) 7626 1570-5 Fax. +66 (0) 7626 1576 Si Yaek Tha Ruea (Phuket) Branch Tel. +66 (0) 7661 7097-8, +66 (0) 7627 2274 Fax. +66 (0) 7661 7095 Surat Thani Branch Tel. +66 (0) 7721 3551-7 Fax. +66 (0) 7721 3560 Hat Yai Branch Tel. +66 (0) 7435 4690 Fax. +66 (0) 7435 4696 Hat Yai Nai Branch Tel. +66 (0) 7436 1313-5 Fax. +66 (0) 7425 9704

SUB BRANCH

Khok Kloi (Phang Nga) Sub Branch Tel. +66 (0) 7643 4821-4 Fax. +66 (0) 7643 4827 Central Festival Phuket Sub Branch Tel. +66 (0) 7620 9290 Fax. +66 (0) 7620 9291 Diana Si Phuwanart Sub Branch Tel. +66 (0) 7446 5316-8 Fax. +66 (0) 7446 5319 Thanon Chuti Uthit (Hat Yai) Sub Branch Tel. +66 (0) 7434 6396-8 Fax. +66 (0) 7434 6393 Thanon Ratthakan (Hat Yai) Sub Branch Tel. +66 (0) 7434 9070-2, +66 (0) 7426 1751 Fax. +66 (0) 7426 1752 Thanon Si Wichai (Surat Thani) Sub Branch Tel. +66 (0) 7720 6488, +66 (0) 7726 4170-1 Fax. +66 (0) 7720 6671 Tha Wang (Nakhon Si Thammarat) Sub Branch Tel. +66 (0) 7531 3144-6 Fax. +66 (0) 7535 7067 Thung Song Sub Branch Tel. +66 (0) 7541 3003-6 Fax. +66 (0) 7541 3007 Tesco Lotus Krabi Sub Branch Tel. +66 (0) 7565 0833, +66 (0) 7565 0836-7 Fax. +66 (0) 7565 0834 Patong Sub Branch Tel. +66 (0) 7629 0585-7 Fax. +66 (0) 7629 0587 Songkhla Sub Branch Tel. +66 (0) 7444 1198-9, +66 (0) 7444 1232 Fax. +66 (0) 7444 1233 Na Thon (Ko Samui) Sub Branch Tel. +66 (0) 7723 6613, +66 (0) 7723 6616 Fax. +66 (0) 7723 6611 Ha Yaek Chalong (Phuket) Sub Branch Tel. +66 (0) 7638 3222, +66 (0) 7638 3431 Fax. +66 (0) 7638 3348


CORPORATE SOCIAL RESPONSIBILITY

Throughout its 30 years of business operations, Thanachart Group has taken a responsible attitude towards society. The Group believes that conducting its business affairs which are underpinned by a sense of social responsibility, will lead to the long-term sustainability of the business. Although there is no compulsory requirement for such activities, the Group has taken on the responsibility voluntarily. The top management of the Group has played an important role in promoting the principles of social responsibility. These principles fall under the umbrella of the Group’s Corporate Social Responsibility (CSR) that places emphasis on “sustainable growth with moral righteousness”. Supported by its staff, business alliances, local communities and society, the Group is prepared to consistently participate in activities that support or help local communities and society in a long term manner with understanding and sincerity. In this regard, Thanachart Group’s socially responsible activities can be divided into two main categories as follows: 1. Socially Responsible Business The conduct of its business affairs with social responsibility is based on the principles of CSR that focus on “sustainable growth with moral righteousness”. Throughout its 30 years of business operations, the Group has strictly adhered to the principle of rejecting any business that is ethically questionable or socially harmful. Its mainstream business practices that reflect a sense of social responsibility include the following: 1.1 The conduct of business affairs of all member companies of Thanachart Group does not support any business or organization that is illegal or immoral. Nor do the companies involve themselves in such businesses or organizations. Staff at all levels of the Group shall also strictly adhere to ethical and moral principles. 1.2 In selling or offering any product or service, full information about its limitations or terms and conditions has to be clearly and completely disclosed to customers from the outset. 1.3 Private information of customers has to be protected and remains confidential. As well, all the member companies strictly comply with the legal requirements relating to the private information of customers. 1.4 Offices and work environment has be safe and supportive of the well being of the staff members. 1.5 The Group promotes energy conservation, environmental protection and a reduction of the excessive use of paper and the use of toxic materials that cause air pollution or are harmful to health.

2. CSR Activities The Group may initiate socially beneficial activities on its own or invite experts to help organize such activities. To achieve the objectives efficiently, it may have to establish relationships with stakeholders that can help implement the activities. In addition, it may also invite other groups of stakeholders to participate in the socially beneficial activities in order to achieve a broader impact. Furthermore, for the benefits to be gained by the beneficiaries, the Group has designed activities to primarily focusing around the beneficiaries. The CSR activities can be divided into two sub-categories as follows: 2.1 Activities that encourages well-doings for society TBANK has taken the representative role to promote organization or business units for their charitable activities to the society without any returning deeds through the “Ri Rerm .. Term Tem” (Initiate and Fulfill) program. The program reports to general public the updates on missions for social activities, position of the organization or charities that are socially responsible, for instance, Foundation for Slum Child Care, Foundation for the Better Life of Children, Foundation for Balance Growth of Rural Community - Plarnkhoi, Chaiyapruk Foundation, the Thai Scout Unit, and Satabun Saeng Sawang Foundation. These are charitable organizations to support the underprivileged in various areas including educationally disadvantaged persons, disable persons, as well as the elderly. This program was broadcasted as a 1.30-minute scoop of “Khon Khon Khon” (variety/talk show) Program on Channel 9 (Modern Nine TV). Apart from taking a role of an intermediary between beneficiaries and donors, TBANK also organized the event called “Thanachart Ri Rerm..Term Tem: Saving Merit Festival” whereby 12 charities and social units were provided the opportunity to promote their socially charitable activities as well as to raise funds to support their organizations. The event has proven successful from good responses from the public to support funding on the operating capital of participating organizations. Moreover, TBANK has also initiated the project “Donating via ATM with TBANK” by which the TBANK’s ATM card holders can donate to the participated charities at every TBANK’s ATM and branches countrywide without any fee as another channel to encourage the social responsible activities. 2.2 TBANK’s in-house social activities The program has been initiated from the cooperation of all entities in Thanachart Group around the 194

ANNUAL REPORT 2009 THANACHART BANK PUBLIC COMPANY LIMITED


1

2

3

4

1. TBANK gave bicycles to students in A. Fang, Chiang Mai province in “Thanachart Ri Rerm..Term Tem” program under the Bicycle for young children project. 2. TBANK gave safety helmets to children in “Thanachart Ri Rerm..Term Tem” program under the TBANK cares children wear safety helmet project. 3. Mr. Suphadej Poonpipat, Chief Executive Officer donated supporting fund to Foundation for Slum Child care. 4. Executives of Thanachart Group invited customers of MBK Center to jointly save merit in “Thanachart Ri Rerm..Term Tem” fair under the Saving Merit Festival.

country. The scope of TBANK’s social responsibility activities has been determined by the relevance of such activities to the business and the real need of the community. The activities can be categorized according to the operating guideline into the four major groups: (1) Education or child development; (2) Opportunity for the underprivileged in the society; (3) Road and traffic safety; and (4) Environmental preservation. The objective of the program is to provide the opportunity for TBANK to be an integral part of the local community where TBANK has business liability. Therefore, the activities undertaken by each hub are different according to the observed demand or local cultures in each community, which will be proposed to the program’s committee for approval. The activities will be undertaken by each hub with the support from headquarters, for example: • “TBANK cares children wear safety helmet” Peoject The project launched a campaign encouraging the wear safety helmets to reduce traffic accidents of the kindergarten to elementary school students who commute to school on the back of their parent’s motorcycles. 3,000 helmets were provided to students of the school located in Songkhla, Pattani, Phitsanulok, and Nakhon Pathom Provinces. Moreover, the project provided the lecture to the parents on how to drive safely by traffic police as well. • “Bicycle for young children” Project A total of 200 bicycles were given to rural

schools located in Amphur Fang, Chiang Mai Province, so that students who live in the distant area can spend less commuting time as they can borrow the bicycle to travel between their home and school. The project also helped schools to maintain good condition of the bicycles for the good use. Furthermore, the donation of coats, blankets, and learning equipments to these schools were also made by Thanachart Group as well as its customers, executives, and staff members. • “Ride bicycles to reduce pollutions and global warming” Project This continual project built parking spaces for bicycles in various locations around Bang Bua Thong Municipality in Nonthaburi Province in order to allow greater conveniences to the members of community who use bicycle to commute and at the same time encourage people to switch to bicycle commuting to fight the global warming condition. • “Blood donation for Mother of the Nation and Blood donation for Father of the Nation” Project on the auspicious occasion of Her Majesty the Queen’s and His Majesty the King’s Birthday with the support from the Thai Red Cross. The project has been regularly organized and is currently in its 7th year. In addition, TBank provided blood donors with free physical medical checkups, blood checks, as well as personal finance checkups. The blood donors were also given seedlings, from which they could grow to conserve the global environment.

TBANK cares children wear safety helmet With Hat Yai, Phitsanulok and Nakhon Pathom Hubs, Thanachart Bank and the municipal as well as provincial schools initiated social responsibility activities to raise awareness of the guardians and the riders on the safety precautions in riding bicycles and the importance of the safety helmets especially for the children. 195

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TBANK: Annual Report 2009 ENG