executive summary - kasikornbank
TRANSCRIPT
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Executive Summary Management Discussion and Analysis
For the Quarter Ended September 30, 2012
Amid a mixed economic picture that featured slowing international trade which has been
adversely affected by lingering uncertainties in major economies, contrary to ongoing growth in
domestic spending that has helped drive the overall economy, it seems that each customer segment
has been affected to varying degrees, through opportunities and risks incurred by such economic
circumstances. Being aware of these conditions, KASIKORNBANKGROUP (KGroup) has continued
to pursue a “Customer-Centric” strategy to achieve the status of becoming our customers’ “Main
Bank”. This endeavor carried us to an increase in net profit of 7.15 percent over-quarter, excluding
non-recurring items, in tandem with higher net interest income. Our net profit also increased over-
year.
Our financial position as of September 30, 2012 included consolidated assets totaling Baht
2,005,460 million, increasing by Baht 118,424 million – 6.28 percent higher over-quarter – due mainly
to rising loans. At the end of September 2012, consolidated loans equaled Baht 1,287,299 million,
rising Baht 31,247 million – 2.49 percent higher over-quarter – mirroring a broad-based increase in
loans across the Corporate, SME and Retail Business segments. Our NPL ratio also dropped.
Consolidated deposits totaled Baht 1,398,295 million, rising Baht 72,665 million – 5.48-percent higher
over-quarter – due to continuous introduction of special savings and investment products with
attractive returns that matched customer risk appetites. Our capital status remained solid, with a
capital adequacy ratio of 16.53 percent as of September 30, 2012, comprising Tier-1 and Tier-2
capital ratios of 10.90 percent and 5.63 percent, respectively.
Aside from these achievements, we received warm recognition with many awards from home
and abroad during the third quarter of 2012, which emphasized not only the success of our core
business growth, but also our dedication and focus on quality. This was all grounded in good
corporate governance, efficient risk management and harmonious corporate synergies provided by
support functions – human resources and IT management – all becoming state-of-the-art via the
K-Transformation program.
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Content Page
1. Overview 1 1.1 Overview of Economy, Banking Industry and Regulatory Changes 1
Thailand’s Economy in the Third Quarter of 2012 1
Banking Industry and Competition 1
Regulatory Changes 2
1.2 Business Directions of KASIKORNBANKGROUP 4
2. Operating Performance and Financial Position Analysis 6 2.1 Operating Performance 6
2.2 Financial Position Analysis 9
2.3 KASIKORNBANK’s Loans and Deposits 12
2.4 Treasury Operations 13
2.5 Capital Requirements and Credit Ratings 14
3. Operations of Core Businesses 16 3.1 Business Overview 16
3.2 Customer Segments 16
3.3 Product Domains and Sales Channels 19
3.3.1 Product Domains 19
3.3.2 Sales and Service Channels 26
4. Risk Management and Risk Factors 30 4.1 Credit Risk Management 30
4.2 Market Risk Management 33
4.3 Liquidity Risk Management 34
5. Operations of Support Groups 35 Human Resource Management for Sustainable Business Growth of
KASIKORNBANKGROUP
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IT Management 36
K-Transformation 37
1. Overview
1.1 Overview of Economy, Banking Industry and Regulatory Changes
Thailand’s Economy in the Third Quarter of 2012 In the third quarter of 2012, the Thai economy is estimated to have grown 3.5 percent YoY,
lower than the 4.2-percent growth in the second quarter of 2012. This deceleration could be attributed
to global economic uncertainty and the fading positive effects of consumption and investments
boosted by post-flood recovery work. Meanwhile, Headline Inflation accelerated on cost-push factors,
e.g., higher wages, a higher electricity Ft tariff surcharge and certain items of excise tax, as well as a
low base from 2011. Given persistently high economic risks that seemed to outweigh inflationary risks
over the near term, the Bank of Thailand (BOT)’s Monetary Policy Committee has maintained an
accommodative monetary policy stance in order to support economic growth momentum.
Looking into the final quarter of 2012,
exports may remain affected by global
economic risks, despite additional monetary
easing by many major central banks.
Nonetheless, domestic spending, largely
supported by continued Thai budgetary
disbursements, will be the main thrust for the
economy. Due to a low 2011 base when
Thailand was hit by catastrophic floods, the
Thai economy in the fourth quarter of 2012
may look brighter, resulting in 2012 full-year growth rate of around 5.0 percent. Amid prevailing global
downsides, however, the Thai authorities are expected to keep their accommodative monetary stance
intact. Meanwhile, fragility in advanced economies, plus more easing measures around the globe,
may induce financial asset prices and foreign exchange rates to become more volatile. Close
attention will thus be needed to ensure effective preparations to avert any adverse impacts from the
global situation.
Source: National Economic Social Development Board and Ministry of CommerceNote: * Forecasted Figure
Banking Industry and Competition In the third quarter of 2012, Thai commercial banks managed to achieve satisfactory
operating performance, mainly supported by ongoing growth in loans as their core business. As of
the end of September 2012, net loans (less deferred revenue, allowance for doubtful accounts and
revaluation allowances for debt restructuring) at 14 Thai commercial banks had grown 2.98 percent
over-quarter and 13.89 percent over-year, led by retail loan demand toward the purchase of durable
goods, as evidenced by higher auto financing, as well as corporate loans for working capital.
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Qualitatively, asset quality at most commercial banks remained sound. To cope with rising interest
expenses in light of higher contributions to the Deposit Protection Agency (DPA) and the Financial
Institutions Development Fund (FIDF), restructuring of funding sources was undertaken by many
banks, as seen in their fund mobilizations via deposits and debentures in replacement for matured
B/Es. As a result, deposits at the 14 Thai commercial banks grew 8.73 percent over-quarter and
28.01 percent over-year.
Looking at the remainder of 2012, global economic uncertainty and competitiveness
constraints in certain industries may affect loan demand, especially to those most affected. However,
yearend domestic spending is expected to boost core business, particularly loans, nearing or
meeting full-year growth targets. Commercial banks are likely to focus on savings products that are
competitive with other savings alternatives in offering tax benefits to maintain customers. This is
despite the fact that deposit rates are generally moving in line with policymaker adjustments to their
key rate as a response to economic risks. Against a backdrop of economic fragility globally,
commercial banks may continue to focus on fine-tuning their strategies and risk management
processes for efficient business operations.
Regulatory Changes Some significant regulatory changes in the third quarter of 2012 that may affect KBank
business operations include:
• Rules, Procedures and Conditions for Electronic Payment Service Business The Electronic Transactions Commission issued a notification on “Rules, Procedures and
Conditions for the Electronic Payment Service Business” (No.2), B.E. 2555, which was published in
the Government Gazette on September 1, 2012, and became effective on the following day. The
notification cited rules governing debit card businesses which are used for spending domestically,
whereby debit card issuers are required to report transaction switching, clearing and settlements to
the acquirers via the domestic switching system only.
This notification is an important initiative aimed at reducing cash settlement costs domestically
per the BOT’s settlement system development plan. Its objective is to encourage the public to make
greater use of electronic payment services, rather than cash that carries higher settlement costs. The
development of the domestic switching system is perceived as a good starting point, offering greater
security and helping to reduce cash management costs for financial institutions. This system should
benefit both debit card service providers and participating merchants in terms of the service charge
that they are required to pay to overseas networks, while the domestic switching system is
considered as an important mechanism toward improving national settlement systems and financial
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activities. However, KBank, as a debit card service provider for acquirers, will have to make
preparations to meet the new rules, procedures and conditions contained in this notification.
• Regulations Governing Bills and Short-term Debentures Notification of the Capital Market Supervisory Board, TorChor. 16/2555, on “Applications for
and Approval of Offers for Sale of Newly Issued Debt Securities” (No.3), dated March 28, 2012.
Notification of the Securities and Exchange Commission, KorChor. 2/2555, on “Determination of
Characteristics of Bills Deemed as Securities” (No.2), dated March 29, 2012, had the following
details:
− Bills issued by companies or financial institutions for the purpose of mobilizing funds from
the general public are deemed as securities and they are under the supervision of the Office
of Securities and Exchange Commission.
− Bills eligible to be approved for sale to the general public must have a face value not less
than Baht 10 million, with the exception of limited offers of bills, e.g., not exceeding ten bills
at any time, including all outstanding bills previously issued and yet to reach maturity.
− The statement, e.g., “This bill is not eligible for Deposit Protection Agency protection” must
appear on the face of the bill.
− To mitigate risk to investors, either of the following statements: “non-transferable” or “transfer
without recourse” must be indicated on face of the bill.
− Bills deemed as securities must not have features of a structured debenture.
− Bills offered for sale must be made through an intermediary having a permit to operate
securities business. They can be a securities company or a financial institution and they
must ensure that the bills offered are suitable for investment.
These notifications were enforced to help prospective investors avoid risks amid the many bills
distributed to retail investors, because most thought that the bills being offered by financial institutions
were eligible for Deposition Protection Agency protection. Meanwhile, bill endorsers also might not
realize that they may incur legal risk, and that bills with features of structured debentures may not
carry a comprehensive legal commitment. As a result, the sale of bills for the purpose of mobilizing
funds by commercial banks was brought under the supervision of the Office of Securities and
Exchange Commission to limit such risks.
• Suitability Test Requirement for Securities Companies Prior to Undertaking Securities Underwriting
Notification of the Capital Market Supervisory Board, TorThor. 28/2555, on “Rules, Conditions
and Procedures for Controlling Operation of Security Underwriting” (No. 3), dated May 18, 2012,
came into force on July 1, 2012, as an amendment to regulations requiring stock and debenture
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underwriters to conduct a suitability test in same manner as with other securities services, whereby
they shall take into account the investment objectives, knowledge and experience of retail investors
as part of the advice or offer for sale of financial products suitable to the risk appetites of retail
investors. This is a principle-based regulation established in the same manner as those governing
brokers on stock exchanges and bond markets to ensure that securities companies establish suitable
formats and details for customer inquiry forms.
The amended regulations may result in KGroup having to conduct suitability tests on securities
underwritten for retail clients, together with a need to adjust certain operational and communication
processes. An understanding of those processes should be given to relevant staff, and controls
should be reviewed to ensure compliance with the SEC regulations.
• Rules and Methods for the Calculation of Average Deposit and Types of Deposit Eligible for the Protection of Deposit Protection Agency
Notification of the Deposit Protection Agency on “Rules and Methods for the Calculation of
Average Deposit and Types of Deposit Eligible for Deposit Protection Agency Protection”, B.E. 2555,
was published in the Government Gazette on July 16, 2012. Aside from rules and methods
overseeing contributions to the Deposit Protection Fund, consistent with the Royal Decree
“Specifying Contributions to Financial Deposit Protection Agency (DPA)”, B.E. 2555, published in the
Government Gazette on June 22, 2012, this notification sets out the types of deposit that are eligible
for protection, including Thai Baht deposits in domestic current accounts, deposits in savings
accounts, call deposits, time deposits, certificates of deposit, deposit receipts and deposits in
accounts that financial institutions offer the general public, and for which they are obliged to give
returns to depositors. These deposits exclude deposits in Thai Baht deposit accounts of non-
residents, deposits having features of structured notes and inter-bank deposits.
This notification is consistent the guidelines announced earlier by the Thai authorities on
deposits eligible for protection, remaining consistent with existing rules. It does not have any
significant impact on KBank.
1.2 Business Directions of KASIKORNBANKGROUP During the third quarter of 2012, the Thai economy was affected by exports that were below
expectations, as did several other Asian nations, due to the unfavorable economic situations within
major trade partner countries. Nonetheless, ongoing expansion in private sector spending, coupled
with the Thai government’s stimulus efforts, are helping to sustain economic growth momentum over
the remainder of 2012.
Realizing current economic uncertainties, KASIKORNBANKGROUP (KGroup) remains vigilant
in business undertakings as we proceed with “Customer-Centric” operating practices, plus ongoing
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efforts to achieve the status of being our customers’ “Main Bank”. We are firmly committed to
satisfying customer needs, via exceptionally sound and useful financial solutions, along with the
finest services, plus efficient risk management. Our accomplishments have gained us many marks of
recognition, domestically and abroad:
Awards to KGroup Business Divisions Other Important Awards
• Best Retail Bank 2012, by Money and Banking
magazine, for the fifth successive year
• Thailand Best Bond House of 2012, by FinanceAsia
magazine
• Best Domestic Providers of FX Services in Thailand for
2012 by Asiamoney magazine for the sixth consecutive
year
• Three awards, including Best Bank, Best Cash Management and Best FX Bank for Corporations & Financial Institutions, given by Alpha Southeast Asia
magazine
• Best Cash Management House in Thailand, given as part
of the ‘Corporate Treasurer Alliance Awards 2012’
• Thailand Domestic Trade Finance Bank of the Year, by
Asian Banking & Finance magazine
• Best Trade Finance Bank in Thailand, by Global Trade
Review magazine
• Asian Corporate Director Recognition Award 2012, granted to Khun Banthoon Lamsam, KBank CEO and
President, for the third year running
• Corporate Governance Asia Recognition Awards 2012, by
Corporate Governance Asia magazine for the eighth
consecutive year
• Most Attractive Booth in Money Expo 2012, by Money and
Banking magazine for sixth successive year
• Outstanding Labor, Welfare and Relations Award 2012, by
the Ministry of Labour for the seventh year in a row
KBank maintains a focus on corporate governance practices via policies to promote them
consistent with international standards, as well as regulations of the Bank of Thailand (BOT),
Securities and Exchange Commission (SEC) and Capital Market Supervisory Board (CMSB). In 2012,
KGroup Code of Conduct compliance assessments, per the KGroup CG Index program, were
undertaken on P Companies and KGroup employees.
Having placed considerable importance on corporate governance, we have attained many
marks of recognition toward these efforts. As evidence of this during the third quarter of 2012, KBank
was rated “Excellent” for the seventh successive year in the Annual General Meeting (AGM)
assessment of 2012 conducted by the Securities and Exchange Commission, Thai Investors
Association and Thai Listed Companies Association. KBank was also honored with the Corporate
Governance Asia Recognition Award 2012 by Corporate Governance Asia Journal for the eighth
consecutive year, wherein Mr. Banthoon Lamsam, KBank Chief Executive Officer and President, was
awarded the Asian Corporate Director Recognition Award 2012, making it his third year running in
getting that award.
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2. Operating Performance and Financial Position Analysis
2.1 Operating Performance
The Bank’s consolidated net profit for the third quarter of 2012 totaled Baht 9,212 million,
decreasing Baht 155 million or 1.66 percent over-quarter due partly to non-recurring item from stock
dividend obtained in the previous quarter. Excluding the non-recurring item, the net profit increased
7.15 percent, over-quarter. Over-year, the net profit rose as a result of reduction in corporate income
tax rate from 30 to 23 percent in 2012. Meanwhile, our operating profit before income tax expense for
the third quarter of 2012 equaled Baht 12,953 million, also higher than the same period of 2011.
Operating Performance for the Third Quarter of 2012 (Units: Million Baht)
Q3-2012 Q2-2012 Change Q3-2011 Change Million Baht Percent Million Baht Percent
Interest income 24,393 23,589 804 3.41 22,119 2,274 10.28
Interest expenses 8,189 8,124 65 0.80 7,440 749 10.07
Interest income - net 16,204 15,465 739 4.78 14,680 1,525 10.39
Fees and service income - net 6,233 5,964 269 4.50 5,498 735 13.37
Other income 15,191 14,758 433 2.93 12,568 2,623 20.87
Total operating income 37,628 36,188 1,441 3.98 32,746 4,883 14.91
Underwriting expenses 11,114 10,311 803 7.79 9,187 1,927 20.98
Total operating income - net 26,514 25,876 638 2.47 23,559 2,955 12.54
Total other operating expenses 11,544 11,426 118 1.03 10,265 1,279 12.46
Operating profit
(Before impairment loss on loans and debt
securities, and income tax expense) 14,970 14,450 520 3.60 13,294 1,676 12.61
Impairment loss on loans and debt securities 2,018 1,894 124 6.53 1,719 299 17.39
Operating profit before income tax expense 12,953 12,556 397 3.16 11,575 1,378 11.90
Income tax expense 3,010 2,561 449 17.50 3,424 (414) (12.09)
Net profit 9,943 9,995 (52) (0.52) 8,151 1,792 21.99
Net profit attributable to:
Equity holders of the Bank 9,212 9,367 (155) (1.66) 7,761 1,451 18.70
Non-controlling interests 731 628 103 16.48 390 341 87.44
Net profit 9,943 9,995 (52) (0.52) 8,151 1,792 21.99
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Income Structure (Units: Million Baht)
Q3-2012 Q2-2012 Change Q3-2011 Change
Million Baht Percent Million Baht Percent
Interest income Interbank and money market items 1,117 948 169 17.83 1,847 (730) (39.51) Deposits 93 104 (11) (9.53) 68 25 37.43
Loans without repurchase agreements 139 74 65 88.20 33 106 327.43
Repurchase agreements 885 770 115 14.86 1,746 (861) (49.34)
Investments 3,192 3,190 2 0.06 2,222 970 43.69 Trading investments 191 103 88 85.41 98 93 95.29
Available-for-sale investments 1,704 1,884 (180) (9.57) 1,123 581 51.83
Held-to-maturity investments 1,297 1,203 94 7.82 1,001 296 29.52 Loans 19,087 18,499 588 3.18 17,209 1,878 10.91 Finance leases 1,032 963 69 7.17 859 173 20.10 Others (35) (11) (24) (218.18) (18) (17) (103.93) Total interest income 24,393 23,589 804 3.41 22,119 2,274 10.28 Total interest expenses 8,189 8,124 65 0.80 7,439 750 10.07 Total interest income - net 16,204 15,465 739 4.78 14,680 1,524 10.38
Non-interest income
Fees and service income 7,932 7,667 265 3.46 6,897 1,035 15.02
Fees and service expenses 1,699 1,703 (4) (0.20) 1,399 300 21.51
Fees and service income - net 6,233 5,964 269 4.50 5,498 735 13.37 Gain on trading and foreign exchange
transactions 1,344 1,207 137 11.37 1,584 (240) (15.12)
Loss on financial liabilities designated at
fair value through profit or loss (7) (20) 13 64.54 (39) 32 81.15
Gain on investments 226 118 108 90.99 58 168 293.51
Share of profit from investments using
equity method 3 7 (4) (50.58) 3 - 3.38
Dividend income 247 939 (692) (73.73) 219 28 12.87
Net premiums earned 13,137 12,243 894 7.30 10,602 2,535 23.91
Other operating income 241 264 (23) (8.74) 141 100 70.59
Less Underwriting expenses 11,114 10,311 803 7.79 9,187 1,927 20.98
Total non-interest income 10,310 10,411 (101) (0.97) 8,879 1,431 16.12 Total operating income - net 26,514 25,876 638 2.47 23,559 2,955 12.55
The over-quarter rise in net profit, excluding non-recurring item from stock dividend obtained
in the previous quarter, was mainly attributable to increased net interest income with a slight
decrease in non-interest income. Nonetheless, net fees and service income maintained its growth.
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The efficiency ratio equaled 43.54 percent, down from the previous quarter, due to higher growth of
operating income than that of other operating expenses.
When compared to the same period of 2011, the increase in operating profit before income
tax expense was due largely to increased net interest income and non-interest income. Of note were
increases in net fees and service income as well as earned premium net of underwriting expenses.
The efficiency ratio was thus close to the level seen in the third quarter of 2011.
Net Interest Income The Bank’s consolidated net interest income rose over-quarter, mainly the result of increased
interest income – comprising an increase in interest income from growth in loans following larger
average loan volume and from interbank and money market items, derived mainly from higher volume
of repurchase agreement transactions. Meanwhile, interest expenses rose slightly, due mainly to
increased interest expenses from deposits following higher average deposit volume whereas interest
expenses from interbank and money market items decreased in line with decreased volume of private
repurchase transactions. As a result, our net interest margin (NIM) for the third quarter of 2012
equaled 3.55 percent, slightly higher than the previous quarter.
Over-year, the Bank’s consolidated net interest income increased, due primarily to increased
interest income. Of note was an increase in interest income from loans following larger average loan
volume. Our interest expenses also increased, mostly the consequence of increased interest expense
from deposits following larger average deposit volume and special fixed-term deposit campaign
offerings as well as higher contributions to Deposit Protection Agency (DPA) and Financial Institutions
Development Fund (FIDF). This caused our net interest margin (NIM) to be lower than the 3.65
percent seen in the third quarter of 2011.
Non-Interest Income For the third quarter of 2012, the Bank’s consolidated non-interest income decreased Baht
101 million, or 0.97 percent over-quarter, due in part to non-recurring item from stock dividend
obtained in the previous quarter. Meanwhile, net fees and service income still maintained its growth.
Over-year, increase in non-interest income was derived largely from net fees and service income and
earned premium net of underwriting expenses from Muang Thai Life Assurance Company (MTL).
The over-quarter increase in net fees and service income was supported by increased fees
from sales of products and financial services such as card businesses. When compared to the same
quarter of 2011, our net fees and service income increased, largely the result of increased fees from
sales of products and financial services, such as card businesses, mutual fund management, card
accepting merchant services, and loan-related business. All of which was the result of our “Customer-
Centricity” concept, leading to continual growth in the number of new customers.
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Other Operating Expenses For the third quarter of 2012, our other operating expenses rose over-quarter, in light of an
increase in personnel expenses despite decreased expenses for promotion, advertisement and
marketing activities. Over-year, other operating expenses increased, due mainly to increased
personnel expenses following increases in salary and the number of employees, other expenditures,
as well as premises and equipment expenditures. As a consequence, the efficiency ratio in the third
quarter of 2012 equaled 43.54 percent, lower than the 44.16 percent in the previous quarter and
close to the 43.57 percent in the same period of last year.
Impairment Loss on Loans and Debt Securities For the third quarter of 2012, the Bank and our subsidiaries set aside allowances for
impairment loss on loans and debt securities at levels higher than those of the previous quarter and
the same period of last year. This was mainly in alignment with domestic and internationally
economic conditions.
2.2 Financial Position Analysis
Assets and Liabilities Structure
0
400,000
800,000
1,200,000
1,600,000
2,000,000
2,400,000
Jun. 30, 2012 Sep. 30, 2012
64% 77%
19%5%
11% 5%2% 4%
7%
67%
20%
2% 4%7%
78%
4%
7%6%
Loans to customers and accrued interest receivables Investments - netInterbank and money market items - net (asset)CashOther assets
DepositsDebts issued and borrowingsInterbank and money market items (liability)Life policy reserve
Units: Million Baht
Jun. 30, 2012 Sep. 30, 2012
Other liabilities
5%6%
Assets As of September 30, 2012, the Bank’s consolidated assets totaled Baht 2,005,460 million,
increasing by Baht 118,424 million, or 6.28 percent, over the end of June 2012. The increase was
mainly due to increases in net interbank and money market items (asset) as well as loans to
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customers. Meanwhile, net investments dropped over-quarter. Consolidated assets that had changed
significantly relative to the previous quarter included:
• Net interbank and money market items (asset), at the end of September 2012, equaled
Baht 223,197 million, rising by Baht 98,247 million, or 78.63 percent, from the end of
June 2012. This was the result of the Bank’s liquidity management.
• The Bank’s consolidated loans to customers, at the end of September 2012, totaled Baht
1,287,299 million, growing by Baht 31,247 million, or 2.49 percent, over the end of June
2012, mainly attributable to increases in commercial and housing loans. Our
consolidated loans were the fourth-largest among the group of large commercial banks.
In the meantime, our net non-performing loans1 (Net NPLs) ratio to total loans,
at the end of September 2012, equaled 0.93 percent, down from 1.01 percent at the end
of June 2012. Similarly, the gross NPL ratio to total loans was at 2.07 percent at the end
of September 2012, dropping from 2.20 percent at the end of June 2012. Such NPL
ratio decreases were due largely to an increase in total loans.
• Net investments, at the end of September 2012, amounted to Baht 374,554 million,
falling by Baht 5,752 million, or 1.51 percent, over the end of June 2012, as a result of
sales of investments in government and state enterprise securities.
Investments
317,452 302,476
34,543 40,92011,478 12,523
16,820 18,623
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Jun. 30, 2012 Sep. 30, 2012
Units: Million Baht
Equity Securities Foreign Debt Instruments
Private Enterprise Debt Instruments Government and State Enterprise Securities
Liabilities and Equity The consolidated liabilities of the Bank, as of September 30, 2012, totaled Baht 1,812,026
million, increasing by Baht 108,650 million, or 6.38 percent, over the end of June 2012. Of note were
1 Details of non-performing loans are shown in the “Non-Performing Loans and Debt Restructuring” portion of the “Credit Risk
Management” section.
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increases in deposits, interbank and money market items, debts issued and borrowings, as well as
life policy reserves. Consolidated liabilities that had changed significantly relative to the previous
quarter included:
• Deposits, at the end of September 2012, equaled Baht 1,398,295 million, increasing by
Baht 72,665 million, or 5.48 percent, over the end of June 2012. This was mainly the
result of increased savings deposits as well as special fixed-term deposits. Our
consolidated deposits were the fourth-largest among the group of large commercial
banks.
• Interbank and money market items, at the end of September 2012, amounted to Baht
108,374 million, up by Baht 11,102 million, or 11.41 percent, over the end of June 2012.
This was in response to the “Soft Loans per the Flood Relief Program 2011” project,
which in collaboration with the Bank of Thailand.
• Debts issued and borrowings, at the end of September 2012, totaled Baht 86,952 million,
rising by Baht 10,403 million, or 13.59 percent, over the end of June 2012, due largely to
U.S. Dollar 500 million in foreign debenture issuance.
• Life policy reserves, at the end of September 2012, equaled Baht 119,074 million, up by
Baht 7,693 million, or 6.91 percent, over the end of June 2012. This was the result of
growth in the life-insurance business.
At the end of September 2012, total equity attributable to equity holders of the Bank equaled
Baht 178,599 million, increasing by Baht 8,569 million, or 5.04 percent, over the end of June 2012.
This increase was mainly the result of Baht 9,212 million in our net operating income for the third
quarter of 2012, although the dividends generated from Baht 1,197 million in the first six months of
2012 net operating income were paid in September 2012.
Relationship Between Sources and Uses of Funds At the end of September 2012, the funding structure as shown in the consolidated financial
statement comprised Baht 1,812,026 million in liabilities and Baht 193,434 million in total equity,
resulting in a debt-to-equity ratio of 9.37. The major source of funds on the liabilities side was
deposits, which equaled Baht 1,398,295 million, or 69.72 percent of the total. Other sources of funds
included interbank and money market items as well as debts issued and borrowings, which
accounted for 5.40 percent and 4.34 percent of the total, respectively.
The Bank and subsidiaries’ major use of funds was loans. At the end of September 2012,
loans (less deferred revenue) amounted to Baht 1,287,299 million, resulting in a loan-to-deposit ratio
of 92.06 percent. Meanwhile, the loan-to-deposit plus bills of exchange ratio was 90.86 percent. As
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for the remaining liquidity, the Bank invested it in various selections of liquid assets, such as interbank
and money market items, and investments in securities.
2.3 KASIKORNBANK’s Loans and Deposits Loans Classified by Business and Product Groups
KASIKORNBANK’s Loans Classified by Business and Product Groups* (Units: Million Baht)
Sep. 30, 2012 Jun. 30, 2012 Corporate
Business SME
Business Retail
Business Corporate Business
SME Business
Retail Business
Loans 372,698 452,533 280,967 368,744 443,957 267,901 Domestic credit loans 266,891 412,667 258,028 404,673
Trade finance loans 92,105 39,866 95,887 39,284
Foreign currency credits (formerly BIBF) 13,702 14,829
Housing loans 201,072 194,173
Credit card loans 44,698 41,970
Consumer loans 35,197 31,758
Note: * Excluding non-performing loans and other loans, such as those of subsidiary companies and others.
Regarding KBank’s loans, when classified by business and product groups, at the end of the
third quarter of 2012, Corporate Business loans increased by Baht 3,954 million, or 1.07 percent, over
the end of June 2012. This was mainly attributable to growth in domestic credit loans – both in long-
term credit for power plants and the property sector, as well as short-term credit for machinery and
metal, agriculture, electrical appliance and electronics industries. In the meantime, SME Business
loans increased over-quarter by Baht 8,576 million, or 1.93 percent, largely the result of an increase in
domestic credit loans, particularly in agribusiness, trading, service, chemicals and chemical products,
as well as automotive industries. Retail Business loans also reported growth of Baht 13,066 million, or
4.88 percent, over-quarter. Of note were housing loans, which recorded the largest increase in
volume, driven by our efforts to maintain good relationships with our leading property developer allies,
continuously arrange promotional activities and special campaigns, as well as coordinate with the
authorities to provide a soft-loan program for flood-affected customers. Meanwhile, consumer loans
registered the highest growth, in tandem with aggressively driving our K-Express Cash forward,
through various promotional campaigns that effectively meet the needs of target customers.
12
Deposits Classified by Type of Deposit Account
KASIKORNBANK’s Deposits*
(Units: Million Baht)
Percent Deposits Change of Total
Deposits Sep. 30, 2012 Jun. 30, 2012 Million
Baht Percent
Total Deposits 100.00 1,400,627 1,328,208 72,419 5.45 Current accounts 5.79 81,094 74,819 6,275 8.39
Savings accounts 58.40 817,919 773,824 44,095 5.70
Fixed-term deposit accounts 35.81 501,614 479,565 22,049 4.60
Note: * Bank-only
At the end of September 2012, total deposits – comprising the deposits of all our Corporate,
SME and Retail Business customers – had increased by Baht 72,419 million, or 5.45 percent, over the
end of June 2012. This was due mainly to an increase in savings deposits, as customers tended to
park their money after their fixed-term deposits came due. Meanwhile, we continued to offer special
fixed-term deposit campaigns, as well as other investment alternatives with attractive returns and
acceptable risk.
2.4 Treasury Operations
KBank continues to pursue a strategy of properly managing liquidity to suit the demands of
each unit, as well as changing economic circumstances and the money market rate direction. In the
third quarter of 2012, the money market situation did not record any significant over-quarter change;
meanwhile, the BOT continued to encourage KBank to increase the volume of our term interbank
borrowing and BIBOR-based transactions, e.g., lending to corporate customers, and borrowing or the
issuance of bills of exchange (B/E), etc. Cooperation was also sought from commercial banks to use
the BIBOR as a reference rate for transactions in the derivatives market. Treasury Operations Income
(Unit: Million Baht)
Income Structure of Treasury Operations (Banking Book)
Percent of Total Income
Q3-2012 Q2-2012 Change Million Baht Percent
Interest income* Interbank and money market items** 37.72 1,024 866 158 18.24
Investments 62.28 1,691 1,887 (196) (10.39)
Total 100.00 2,715 2,753 (38) (1.38) Notes: * Managerial figures
** Including loans
13
During the third quarter of 2012, total interest income from our treasury operations (banking
book), totaled Baht 2,715 million, falling by Baht 38 million, being 1.38 percent less than in the second
quarter of 2012; this was the result of a Baht-15,550-million decrease over-quarter in liquidity.
2.5 Capital Requirements and Credit Ratings
Capital Funds As of September 30, 2012, the Bank had capital funds of Baht 220,447 million, consisting of
Baht 145,405 million in Tier-1 capital, and Baht 75,042 million in Tier-2 capital. The capital adequacy
ratio of the Bank was 16.53 percent, significantly above the Bank of Thailand’s minimum requirement
of 8.50 percent. Details of the capital adequacy ratio of the Bank are shown in the following table:
Capital Adequacy Ratio* (Units: Percent)
Capital Adequacy Ratio Sep. 30,
2012 Jun. 30,
2012 Mar. 31,
2012 Dec. 31,
2011 Sep. 30,
2011
Tier-1 Capital Ratio 10.90 9.76 9.59 9.63 9.72
Tier-2 Capital Ratio 5.63 5.80 5.89 4.18 4.18
Capital Adequacy Ratio 16.53 15.56 15.48 13.81 13.90 Note: * Excluding the net profit of each period; under the Bank of Thailand’s regulations, net profit in the first period is to be
counted as capital after approval by the Board of Directors as per Bank’s regulations. Net profit in the second period
is also counted as capital after approval of the General Meeting of Shareholders. However, whenever a net loss
occurs, the capital must be immediately reduced accordingly.
Credit Ratings At the end of September 2012, the Bank’s credit ratings given by Moody’s Investors Service,
Standard & Poor’s and Fitch Ratings remained unchanged from the end of June 2012. Details are
shown in the following table:
KASIKORNBANK Credit Ratings Credit Ratings Agency Sep. 30, 2012
Moody’s Investors Service * Foreign Currency Outlook Stable
Long-term - Senior Unsecured Notes A3
- Deposit Baa1
Short-term - Debt/Deposit P-2
Subordinated Debt Baa1
Bank Financial Strength Rating (BFSR) D+
Outlook for BFSR Stable
Baseline Credit Assessment Baa3
14
Credit Ratings Agency Sep. 30, 2012 Domestic Currency
Outlook Stable
Long-term - Deposit A3
Short-term - Debt/Deposit P-1
Standard & Poor’s *
Global Scale Ratings
Outlook Stable
Long-term Counterparty Credit Rating BBB+
Long-term Certificate of Deposit BBB+
Short-term Counterparty Credit Rating A-2
Short-term Certificate of Deposit A-2
Senior Unsecured Notes (Foreign Currency) BBB+
Subordinated Debt (Foreign Currency) BBB ASEAN Regional Scale Ratings Long-term axA+
Short-term axA-1
Fitch Ratings *
International Credit Ratings (Foreign Currency)
Outlook Stable
Long-term Issuer Default Rating BBB+
Short-term Issuer Default Rating F2
Subordinated Debt BBB
Viability bbb+
Support 2
Support Rating Floor BBB-
National Credit Ratings
Outlook Stable
Long-term AA(tha)
Short-term F1+(tha)
Subordinated Debt AA-(tha)
Note: * The base levels for investment grade on long-term credit ratings for Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings
are Baa3, BBB- and BBB-, respectively. For short-term credit ratings, the base levels for investment grade as viewed by these three
agencies are P-3, A-3, and F3, respectively.
15
3. Operations of Core Businesses
3.1 Business Overview While the Thai economy maintained its growth momentum, driven by private sector spending,
exports continued to be plagued by the global slowdown, with each customer segment having been
affected to varying degrees. Given the opportunities and risks seen in this economic situation,
KGroup continued to pursue “Customer-Centricity” and “Customer’s Main Bank” strategies to achieve
our sustainable growth and business goals. During the third quarter of 2012, the Bank remained
determined to develop our business in all dimensions – across all customer segments, product
domains, plus major sales and service channels – to ensure the best service experience to our clients.
In essence:
3.2 Customer Segments
Multi-Corporate Business As this customer segment – comprising quite large businesses – has long played an important
role in driving the Thai economy, KBank has not only realized their importance, but has also revised
our strategies to meet with changing business circumstances affecting them. We continue to upgrade
our staff competencies for better performance in presenting these customers with services and
financial tools that help sustain their business growth and fit specific needs. In the third quarter of
2012, we conducted an in-depth study to gain a better understanding of ASEAN business operations
overall, gearing up for AEC integration and thus be ready to support customers wishing to invest in
other ASEAN members states, or vice versa. Via collaboration within KGroup units, KBank continues
to assist the business operations of customers in other countries.
Large Corporate Business Focusing on ‘excellent sales and service’ to our Large Corporate Business customers, we
make great efforts toward providing financial advisory service solutions that cater to their needs,
transmitted to them via our Capital Market Development Team. A recent ‘RM Champion’ project was
organized as a hub-based promotion to further the industry-specific knowledge of our Relationship
Managers (RMs). To ensure faster and more efficient service, new ‘Customer Relationship
Management (CRM)’ tools were devised to assist our RMs in analyzing and formulating strategic
plans that include products and services that would efficiently meet their needs. These tools also
permit close after-sales monitoring to further develop our services. These efforts ensure a continued
satisfactory experience for these large customers.
16
Medium Business Amid economic volatility, in particular on the global front, KBank strategies were revised and
services further improved in the third quarter of 2012 to assist this business segment. ‘Industry
Solutions’ were introduced with post-financing to auto spare-part producers and recruitment
agencies; also offered were factoring and supplier financing products to boost liquidity for their
business operations. We also developed the ‘K-Insured Export Factoring’ product to enhance the
confidence of export-oriented customers. Processes related to international transactions and trade
finance were improved for greater speed and more thorough processing.
Small and Micro Business Adhering to our goal of becoming the bank of choice for SME customers, by mean of having
the largest number of SME clients and being chosen as their ‘main bank’ for financial services, the
Bank, in the third quarter of 2012, rolled out many products. Notable items included the ‘K-SME PG
Start-up’, featuring a credit facility guaranteed by the Small Business Credit Guarantee Corporation
(SBCG) and earmarked for entrepreneurs having been in operation for only two years or less. This
program provides training courses jointly organized with Mahidol University to improve their
knowledge of topics useful to successful business start-ups. Additionally, ‘K-SME Automotive Credit’
was offered with financial support of up to Baht 15 million for auto dealer investments and branch
expansion, as well as working capital for pre-owned vehicle business.
Furthermore, ‘K-SME Franchise Credit’ was further developed, in order to provide better
support to franchise operators for use as investment capital, branch expansion or for other business
enhancements. A number of quality franchise participants were added, reaching 60 franchisees, as
targeted, and thus increasing our business opportunity in increasing market share for this type of loan
to SMEs. Meanwhile, we also emphasized brand positioning and marketing activities in four provinces
with rising potential, where we offered our ‘K-SME Credit: Choose as Your Wish’ program. Social
media and branch networking were widely used to communicate this program to entrepreneurs.
High Net Worth Individual We are avidly cross-selling products to this segment to achieve higher product holdings and
greater use of KGroup services by them with KBank as their main operating bank. A focus has been
placed on expanding our customer base in Bangkok and other provinces via activities tailor-made to
meet the financial needs and lifestyles of the High Net Worth Individual segment. This is aimed at
quickening their decisions toward accepting multiple KGroup products to meet their investment
objectives and risk appetites. Notable activities in the financial dimension included our ‘KPB Exclusive
Dinner Talks’ organized in Bangkok and other provinces to offer updates on equity trading, led by
guest experts. For the non-financial dimension, hobby-themed lifestyle workshops were organized for
17
our customers with higher investment through KBank, in addition to other activities as gestures of
appreciation for their continued trust in us.
Affluent In order to increase the number of customers using KBank as their main bank, we continue to
pursue a strategy of acquiring new customers, upgrading Middle Income customers to the Affluent
segment – particularly business owners and high-ranking executives – as well as expanding our
customer base in provincial communities. During the third quarter of 2012, aside from in Bangkok
Metropolitan Region (BMR), we expanded further into strategic provinces that are key economic
centers with ongoing growth. Many special services, plus financial and non-financial activities were
launched to meet diverse needs and lifestyles of customers in each area under the ‘Customer Centric’
strategy. Notable efforts included activities increasing customer knowledge of investments via
advisory services for wealth management, plus lifestyle trips/activities, to please these customers. We
took the opportunity to promote ‘THE WISDOM’ as a ‘top-of-mind’ brand for customers, using local
media marketing communications such as leading magazines, Chamber of Commerce journals and
provincial cable TVs services to reach targeted customer groups.
Middle Income In the third quarter of 2012, our Middle Income customer base was enlarged using strategies
to win customers’ hearts and become their main bank, leading to larger product holdings and
frequencies in service usage. Tapping into those strategic provinces across the country, KBank
organized Pull-Marketing activities via local media to gain access to customers. Appropriate products
and services that well respond to their financial needs and lifestyles were launched, including ‘Wow!
Step-up Fixed Deposit’, ‘K-Auto Finance: Auto Refinance (Used Car)’ and ‘Doraemon – Come Pay
Your Bill Quickly’ promotions. To emphasize our leadership in advisory services, we also promoted
‘K-Expert’ teams at KBank branches nationwide, along with the distribution of handbooks on ‘Tips for
Managing Your Financial Dream’, organized group seminars, set up new websites and posted
interesting news on social media networks. Emphasis was placed on bundled deposit products for
customers opening new KBank accounts to ensure greater convenience, while also increasing our
sales performance. In addition, KBank has implemented a database marketing strategy using
customer transaction behaviors to imply their needs and wants, and thus enhance efficiency in
product presentations. Our ‘KBank THE PREMIER’ service, aside from inviting distinguished
customers to participate in the trial service, also offered special privileges for those with at least Baht
2 million commitment in KGroup products for over six months. Upon application for THE PREMIER
service, they are entitled to gift air tickets plus three other privileges in the lifestyle, wealth and
financial service categories, plus use of THE PREMIER card points to upgrade domestic air tickets
under the established conditions.
18
Mass To gain the forefront in customers’ minds and become their main bank, KBank launched a
variety of marketing activities to ensure greater familiarity with our products and services to meet the
financial needs of the Mass segment. We mainly targeted university students and those earning less
than Baht 15,000/month in these activities. Services via electronic channels were continually
upgraded for greater convenience and more effective response to their lifestyles. In the third quarter
of 2012, we introduced a ‘fast-lane’ service at branches, which is aimed at more convenient use of
our services via active queue management, while also spurring more bill payment transactions. A
‘Apply with Your Gang and Pay 0% Interest Up to 6 Months’ campaign was launched to offer
customers instant cash for everyday expenditures. Through collaboration between three of our
business divisions, KBank also staged a promotional campaign entitled ‘Decorate Your Dream Home
– Special Prize Offer with K-Payroll Benefits’, wherein customers with a KBank payroll account are
entitled to many privileges, including participation in a sweepstakes to win home decoration vouchers
and many other prizes when applying for and using our products.
3.3 Product Domains and Sales Channels
3.3.1 Product Domains During the third quarter of 2012, amid the lingering global and domestic economic
uncertainty that remains a challenge to our customers and their businesses, KBank introduced
and/or upgraded many products and services, while continuing to deliver the finest service to
customers. Sales promotional activities and knowledge-based support were launched to assist
customers in their decision-making. Our more notable efforts are classified into four product
domains, i.e., Operation & Transaction, Saving & Investing, Funding & Borrowing, and
Protection & Information. In essence:
Operation & Transaction Details
New Products and Services
• Introduction of K-My Debit Card with the motif of ‘Yak’, the first Thai animation movie
for children and family groups. This was an effort continuing from the successful
launch of Hello Kitty and Angry Birds Space K-My Debit Cards and K-Max Debit Cards
earlier this year. Newly designed ‘GTH is me’ debit cards were also introduced on the
occasion of the 7th anniversary of GTH operation.
• Occasion Gift Cheque Set: A product which combines gift cheques with attractive
blessing cards for customers’ selections in special occasions, while creating brand
awareness and emphasizing KBank leadership in product innovations.
19
Details
Product and Service Enhancements
• Introduction of ‘Fast Lane’ at KBank Branches for greater convenience to customers
in need of fast and complete bill payment services. The ‘Doraemon – Come Pay Your
Bill Quickly’ promotional campaign, running from August 8 to November 30, 2012, has
been launched to persuade customers to make their bill payments at KBank branches
or K-ATMs and collect stamps to redeem them for special Doraemon gift collections.
• K-Merchant on Mobile: In cooperation with our business allies, KBank introduced a
card-accepting merchant service innovation via applications on smartphones – the
first of its kind in Thailand – which welcomes the VISA and MasterCard cards of all
banks.
Enhancement of Business Operation Efficiency
• Upgraded custodial and mutual fund supervisory services: KBank has been entrusted
by a new asset management company to provide mutual fund supervisory services.
Despite our having the largest single market share in this market, that move gave us
an even larger market share over peers. We also offered private fund custodial
services to two large corporate customers – with a combined asset value of over Baht
3 billion – and educational institutions, while providing provident fund custodial
services to new state enterprise customers. KBank is now preparing to offer new types
of funds per regulatory requirements to meet customers’ business needs and benefits
of unit holders.
• Fund Accounting: We extended our fund accounting services to new securities firms
and the private funds of educational institutions. These services, combined with our
custodial and mutual fund supervisory services, highlight our capability toward
providing complete service solutions ranging from investment fund management to
facilitating back office work, such as the preparation of statements of financial position
and updating investment status reports to customers, not only for mutual funds, but
also securities and insurance firms.
• Improvement in registrar services for unit trusts, debentures and bonds: We have
improved our registrar services to cope with a growing volume of investments into
fixed-income funds and other types of mutual funds that have enjoyed continued
growth, enabling us to gain the largest market share in registrar services for asset
management business. In addition, KBank is preparing to provide registrar services on
new types of debentures, wherein KSecurities will be the underwriter.
• A facility and security agent for project finance and debenture holder
representatives: KBank has acted as a facility and security agent on syndicated loans
for several large projects in the energy industry. We expect the number of customers
20
Details
entrusting KBank with these services will increase over the remainder of 2012. We
have also acted as a holder representative of debentures issued by large
entertainment business companies and subsidiaries of financial institutions.
Sales and Marketing Promotional Programs
• Sales promotional programs on all types of K-Debit Cards: KBank joined hands with
business allies to offer privileges that match lifestyles of our target customers,
including watching movies, enjoying ice-cream, getting cash back when shopping
online and getting reward points when spending via cards. Hello Kitty K-My Debit
Cardholders were also entitled to get a discount when shopping at any Central
Department store during June 15-September 17, 2012.
• Programs to promote sales of ‘K-mAlert: Transaction Alert’ have been provided, with
greater options to customers making annual bill payments.
• Sales promotional programs for Global Outward, wherein customers with
accumulated outward fund transfers in excess of every Baht 500,000 during the
promotion period were entitled to a Baht 250 discount coupon to be used in lieu of
cash, for fee payments up to Baht 10,000.
Saving & Investing Details
New Products and Services
• New deposit products for medium- to high-end customers, e.g., a ‘Special 7-Month
Fixed Deposit’ product, offering an attractive interest rate for High Net Worth
Individual and Affluent segments, as well as KBank THE WISDOM cardholders.
Meanwhile, a promotional campaign on the ‘Special 5-Month Fixed Deposit’ and
‘Special 5-Month Fixed Deposit’ for THE WISDOM cardholders were extended to meet
customer demand, also maintaining our competitiveness. Earmarked for the Middle
Income segment, we launched ‘Wow! Step-up Fixed Deposit’, a 18-month period that
offers a higher interest rate than savings deposits even when withdrawal is made
before maturity. The promotional campaign for this deposit product was made, via TV
commercials (TVC) to attract new customers.
• Initial Public Offering on 50 funds: During the third quarter of this year, KBank joined
hands with KAsset to offer 50 funds, investing in bonds domestically and
internationally, most of which were 3-6 month fixed-income funds offering higher
returns than fixed deposits.
Sales and Marketing
• Marketing activities for mutual fund investments: To encourage customers to invest
21
Details
Promotional Programs
more in LTFs/RMFs during the year, customers buying investment units via their
K-Credit Card during May-July received up to 3x reward points, and during August-
September, 2x reward points.
Funding & Borrowing Details
New Products and Services
• Letter of Indemnity (L/I) for SME customers, which can be used as collateral in lieu of
other securities for their enhanced liquidity.
• Industry Solutions for post-shipment financing – the first of its kind in Thailand, to
ensure enhanced working capital of our SME customers in recruitment agency
business and auto spare parts production.
• K-Insured Export Factoring for increased security in exports for our customers dealing
with international trade business
• K-SME PG Start-up, which features a credit facility guaranteed by Small Business
Credit Guarantee Corporation (SBCG) in the combined amount of Baht 10 billion,
earmarked for entrepreneurs having operated business in Thailand for up to two
years. Borrowers are required to pass the SBCG-approved training courses organized
by public or private agencies.
• K-SME Automotive Credit, as a financial support for new investments and working
capital to pre-owned car dealers with high market capitalization that are in need of a
large funding resources for inventories to boost their competitiveness.
Product and Service Enhancements
• Rebranding of K-Credit Card, into a classic and modern look with multiple benefits to
fulfill the lifestyles of all K-Credit Cardholders per the concept of ‘K-Credit Card…Your
Daily Happiness’. Our notable effort included a new campaign ‘Always Special and
Superior! Dining, Flying, Traveling Anywhere: Get 15% Cash Back when Redeeming
Your Points Equal to Your Spending’.
• K-Home Loan, via the ‘@ Home Banking Solution Version 1.0’ program was launched
jointly with our allied telecom service provider to offer a complete communication
package to new homebuyers. In cooperation with four leading property developers,
we introduced a promotional campaign to grant scores of privileges to our customers
via ‘iButterfly’ application on smartphone, aiming at emphasizing our innovation
leadership. KBank also joined hands with other property developers in the Bangkok
Metropolitan Region to launch various promotional activities, in addition to our
22
Details
participation in home and building fairs, as well as money expos in Bangkok and
Nakhon Ratchasima. All of these efforts helped our new loans to reach the set target.
• Soft Loans per the Flood Relief Program, 2011: In response to a government policy,
KBank not only arranged PR activities to promote this soft loan program actively, but
also extended the loan to flood-affected K-Home Loan customers at the full quota set
aside by the Bank of Thailand in the third quarter.
• More franchise companies under the K-SME Franchise Credit program were
selected to join, putting the total number of quality franchise participants at 60, as
targeted. This would increase our market share on this type of loan for SMEs for
investment, expansion and improvement of franchise business.
• Development of O/D-linked payment system, via mobile phones and an O/D network
for the over 200 dealers of Thai Beverage Plc. nationwide. This systems helps ensure
faster and more efficient payment management, as well as enhanced liquidity for the
company, which records over Baht 50 billion in sales via the system and represents
credit lines totaling Baht 4,500 million. Given the inherently better systemic credit risk
management using this system, KBank has been able to acquire a large number of
new quality customers in a short time.
• Revised criteria for K-Trade Premier has been instituted, e.g., guarantor
qualifications, plus the addition of trade finance products for pre- or post-shipment
financing on domestic and international transactions to serve the needs of our
customers.
• K-SME Credit Solutions was revised and renamed as K-Credit Solutions. As part of
our efforts to conduct our business with a ‘Customer-Centric’ strategy, we have
focused on acquisitions in every customer segment, including foreign investors, to
widen our client base and add products to cover long-term and revolving credits, as
well as certain derivative products, such as Interest Rate Swap and Cross Currency
Swap.
• Enhancement of K-Taiwan EXIM Bank Trade Credit; it was also renamed K-Taiwan
Equipment Finance to better serve customer demand. In cooperation with KF&E, we
incorporated K-Equipment Leasing services into the program, as well as streamlined
processing and documentation to reduce paperwork, as well as increased credit
limits to Baht 600 million (equivalent to USD 20 million), while also extending the
promotion period to January 21, 2014. Enhancement of • Adjustments in operational procedures, to ensure faster transactions with reduced
23
Details
Business Operation Efficiency
application processing and fewer requisite documents for timely customer
responsiveness. Emphasis was also placed on the offering of financial solutions to
customers using KBank as their main bank, to add customers and increase their use
of credit lines.
Sales and Marketing Promotional Programs
• Sales promotional programs for L/C: New programs were staged for customers with
accumulated L/C issuances exceeding the minimum value of every Baht 1,000,000
during the promotion period, wherein they were entitled to a discount coupon to be
used in place of cash for fee payments up to Baht 10,000.
• Sales promotions to expand credit card base were launched. Notable efforts
included promotional activities of co-branded cards, such as Bangkok Hospital Group
- KBank Credit Card, Robinson-KBank Credit Card, Mercedes-KBank Credit Card, to
offer cardholders privileges under the established conditions. As part of our effort to
reach high-end customers, KBank granted THE WISDOM, THE PREMIER and
Platinum cards to both new and existing customers via cross-selling for complete
service delivery.
• Marketing campaigns to gain more card applications and greater spending via
cards: With the ‘K-Credit Card…Your Daily Happiness, with privileges provided
throughout the year’ concept, ‘Spend 1,000 Baht, Get 1,000 Baht’ program was
extended to customers in other provinces at different locations each month, e.g.,
Udon Thani, Nakhon Ratchasima and Pattaya during the third quarter of 2012.
Another notable promotional campaign was ‘Make Merit for Mom and Get Lucky with
Luxury Dining-Traveling-Beauty Treatment, Good Deeds with Double Privileges’ to
celebrate Mother’s Day.
• Marketing activities for consumer loans: KBank offered a special interest rate to
group applicants for K-Express Cash, per the promotional campaign ‘Apply with your
gang and pay 0% interest for up to six months’, when they utilize 70 percent of their
approved loans that will be credited to their account instantly.
• PR program and brand image creation, through the debut of Life Innovation Solution
Center by ‘K Home Smiles Club’ at Mega Bangna. The center is equipped with
‘K-Home Feng Shui’, our innovative service with user-friendly and advanced
technology platform to provide information on feng shui and DIY feng shui
consultations; ‘K-eBook Gallery’ that provides multi-touch screen-based home design
and decoration assistance with customer choice of style; and e-Magazine featuring
home-related matters via multi-touch screens. Placing emphasis on relationship
24
Details
management with our existing customers, we arranged special activities for K-Home
Loan customers via a family day-themed ‘K Home Smiles Talk & Musical’ show.
Protection & Information Details
New Products and Services
• Discount without recourse under export L/C Sight was introduced, which was aimed
at enhancing competitiveness for our target customers, while also increasing our
opportunities and potential for international trade service.
• Life insurance products with loan protection for a period of one year: Some insurance
products, earmarked for SME clients who applied for loans of less than one-year term,
are available with 3-month, 6-month or annual premium payment period options.
Another notable effort was the introduction of a critical illness (CI) rider with major
insurance policies, i.e., Perfect Business Smart, Perfect Business Smart Plus and
Perfect Business Future, with a single premium payment. In addition, we have
expanded our life insurance products with loan protection to large corporate
customers.
• Launch of ‘Pro Saving 1/10, plus Pro Life 90/5’, which offer returns of up to 4.20
percent on the Pro Saving 1/10 policy and longer coverage on the Pro Life 90/5 to
meet the demand of High Net Worth Individual and Affluent customers seeking fixed
returns with low risk over long terms.
Product and Service Enhancements
• MRTA products with single coverage of death from accident have been introduced to
a specific group of customers as an alternative for a regular MRTA policy.
• Development of insurance products with loan protection that offer cash benefits upon
maturity to better meet customer demand. We plan to expand this product line in the
final quarter of 2012.
• Offering of non-life insurance products, e.g., Industrial All Risks insurance, trade
credit insurance, transportation insurance, cash flow insurance and employee integrity
insurance to customers within a supply chain of large companies. KBank also plans to
extend this program to clients in other supply chains for complete services and
benefits, i.e., hedging against risk in business operations, in addition to providing
working capital.
Enhancement of Business Operation
• Enhancement of operational efficiency on insurance products: In cooperation with
Muang Thai Life Assurance, KBank developed a customer information transfer system
25
Details
Efficiency for different units, resulting in faster underwriting and more efficient monitoring and
assessment. We also joined hands with Muang Thai Insurance to enhance their online
working program to ensure faster and more convenient application processing with
immediate coverage for non-life insurance customers. Efforts have been made to
develop a ‘Top-Up’ setting system to accommodate insurance products with loan
protection that offer cash benefits upon maturity, expected to be finished by the fourth
quarter of 2012
Sales and Marketing Promotional Programs
• PR campaigns for life and non-life insurance products have been planned to be
arranged, in order to promote greater brand awareness among general public during
the final quarter of 2012.
• Information support to customers for their effective decision-making toward the use
of risk protection products: KBank added an information channel for our customers via
two TV programs – ‘Get Set’ and ‘Money Forum’ – broadcast on the Money Channel.
Audiences are informed of daily money market movements on ‘Currency Watch with
KBank’ in the ‘Get Set’ program aired Mondays to Fridays, while monthly seminars
feature news on the interest rate trend and commodity prices, as well as useful advice
on risk protection during the ‘Money Forum’ program. Each seminar is rerun six times
to ensure that customers gain access to useful information and risk management
methods provided by KGroup.
• Arrangement of special seminars, entitled ‘Looking through the Money Market -
Connecting to the Business World with Professional KBank’ was staged, in addition to
monthly seminars for our customers. The forum provided in-depth information on the
global crisis, how to manage forex and commodity risks, as well as preparation for the
ASEAN Economic Community (AEC) in 2015 to assist our customers in their decision-
making.
3.3.2 Sales and Service Channels KASIKORNBANKGROUP works diligently to enhance our service capabilities and
efficiency as provided via numerous channels which are one of the crucial elements connecting
the products and services of KGroup with each target customer segment, as well as delivering
a satisfactory service experience. Lists of these channels as in the third quarter of 2012 are
summarized below:
26
Branches and Financial Service Offices/Centers Number of
Locations Key Implementations in the Third Quarter of 2012
Sep. 30 2012
Jun. 30 2012
Branch Network
824 824 • Differentiation with K-Expert’s Advisory Services: Through the
introduction of K-Expert professional advisers at all KBank branches,
KBank is ready to deliver an impressive and caring financial experience
to customers with need-based solutions, rather than product-based
offerings. Our advisors are equipped with need-based KBank
guidebooks that depict product solutions which have been designed to
meet the needs of each customer segment throughout customers’ life
stages.
Foreign Exchange
Booths
97 99 • A slight decrease in the number of foreign exchange booths was due
to an expiry of space lease contracts, while the Bank is in the relocation
process.
• Sales Promotional Programs: KBank introduced a free roaming SIM for
callbacks at cheaper prices to customers using KBank forex service via
any channel in an amount of Baht 25,000 or more during July-October
2012.
Corporate & SME
Service Centers
61 61 • New Cheque Point: The 26th Cheque Point was opened at the Sut
Banthat Branch, Saraburi. Cheque Points 26 25
Corporate Business
Centers
6 6
SME Business
Centers*
115 115
Note: *Excluding Corporate & SME Service Centers
Electronic Banking Service
Number of Units Key Implementations in the Third Quarter of 2012 Sep. 30 2012
Jun. 30 2012
K-ATM 7,525 7,441 • K-ATM service enhancements: For better service and differentiation
from peers, KBank has improved our K-My ATM concept with the
27
Number of Units Key Implementations in the Third Quarter of 2012 Sep. 30 Jun. 30 2012 2012
display of ATM screens featuring motifs from festivals and the launch of
promotional campaigns.
K-CDM
(Cash Deposit
Machines)
1,177 1,141 • K-ATM service enhancements: For better service and differentiation
from peers, KBank has improved our K-My ATM concept with the
display of ATM screens featuring motifs from festivals and the launch of
promotional campaigns.
K-PUM
(Passbook Update
Machines)
943 937 • Increases in number and relocation of K-PUMs: We added a number
of K-PUMs and relocated some to more suitable locations for enhanced
convenience and expanded service coverage.
Key Implementations in the Third Quarter of 2012
K-Cyber Banking • Efficiency enhancement of our Internet banking system: Our notable efforts included
development of a more user-friendly web interface to brace for an increased number of
customers, and providing real-time payment for participating merchants, including mobile
phone shops. 2012
• Sales promotional campaigns: KBank, with business allies in airline, cinema and
telecommunications services, organized sweepstakes wherein customers making bill
payments, funds transfers or mobile top-ups via K-Cyber Banking were entitled to win air
tickets, prizes or complimentary gifts. In addition, promotional activities at various
expositions, including ‘Happy Money Festivals’ were held in strategic provinces to increase
brand awareness, use of our services, new applications and financial transactions.
K-Speed Top Up
(formerly K-MOBILE
BANKING SMS)
• Sales promotional campaigns: In addition to ‘Happy Money Festivals’ in strategic provinces,
KBank continued to hold promotional activities at several expositions to promote K-Speed
Top Up, together with K-MOBILE BANKING PLUS and other KBank electronic services to
increase new users of these services.
K-MOBILE BANKING
PLUS • Service enhancement has been made for higher system efficiency to accommodate the new
network utilization, including provision of terms and conditions to customers via e-mails upon
their first login.
• Sales promotional campaigns: KBank, with business allies in airline, cinema and
telecommunications services, organized sweepstakes wherein customers making bill
payments, funds transfers or mobile top-ups via K-MOBILE BANKING PLUS were entitled to
win air tickets, prizes or complimentary gifts. In addition, promotional activities at various
expositions, including ‘Happy Money Festivals’ were held in strategic provinces to increase
28
Key Implementations in the Third Quarter of 2012
brand awareness, use of our services, new applications and financial transactions.
K-MOBILE BANKING PLUS campaigns were also launched as part of our ATM SIM
customer retention program, given that the use of ATM SIM is not compatible with some
mobile systems.
K-Payment Gateway • Payments to CUP (China Union Pay) credit and debit cards via K-Payment Gateway can
be made via the UPOP (UnionPay Online Payment) platform, which is CUP’s secure system.
• K-Payment Gateway Clinic offered advisory services on online payments via credit cards for
e-commerce businesses. Lectures were also arranged on e-commerce and e-banking
businesses, plus seminars on topics beneficial to executives and business owners who are
prospective customers.
K-Contact Center and K-BIZ Contact Center
Key Implementations in the Third Quarter of 2012
K-Contact Center
(0-2888-8888)
• K-Contact Center service is now available in the Myanmar language: Since July 2, 2012, K-
Contact Center services have been available in the Myanmar language at Tel. 0-2888-8888,
and press *5, from 12.00-21.00 hrs. Service hours will likely be extended to meet customer
demand.
• Introduction of askKBank.com website: This new service channel enables customers to
search information related to financial knowledge and lifestyle matters to match their needs
through inquiry services classified by KGroup product categories, including Finance and
Banking, What’s Hot, Investment (domestic and foreign), Smart Planning and Casual
Lifestyle, covering such topics as tourism, restaurants, health and financial benefits. All
customer questions are answered by our K-Contact Center staff.
• PR activities for Web Chat service extended to 24/7 have been organized and announced
via banners on KBank websites, as well as the K-Cyber Service homepage, so that
customers are able to engage in a live chat with our K-Contact Center staff.
• Exchange of knowledge with public agencies: Officials from the BOT’s Financial Consumer
Protection Center (FCPC) paid a visit to the K-Contact Center to exchange knowledge and
experiences, which was beneficial to efficient contact center services.
K-BIZ Contact Center
(0-2888-8822) • Web Chat service extended to 24/7 has been promoted via banners on the KBank website,
so that our corporate customers are able to engage in a live chat with our K-BIZ Contact
Center staff.
29
4. Risk Management and Risk Factors2
4.1 Credit Risk Management
Credit Risk Position
− Outstanding loans As of September 30, 2012 the Bank’s consolidated outstanding loans stood at Baht
1,287,229 million, increasing by Baht 31,247 million, or 2.49 percent, compared to Baht 1,256,052
million as of June 30, 2012.
As of September 30, 2012, 56.17 percent of the Bank’s outstanding loans to customers were
loans exceeding Baht 20 million. Credit extended to the 20 largest borrowers, excluding Phethai
Asset Management Company Limited and the K Companies, accounted for Baht 61,421 million, or
4.81 percent of the Bank’s total loan portfolio, which is a small ratio. Classified by customers and
terms, juristic persons accounted for Baht 741,177 million, or 58.04 percent, of outstanding loans;
while sole proprietorship and individual customer credit accounted for the remaining 41.96 percent.
In terms of maturity, credit with maturities of less than or equal to 1 year accounted for 46.69 percent
of the Bank’s total loans.
The Bank’s Consolidated Lending Portfolio – Profile
.0%
.20%
.40%
.60%
.80%
.100%
Type of Customer
Credit Maturity
Credit Amount
Less than 20 MB Over 20 MB
Business entities Individual
Less than or equal to 1 year Over 1 year
As of Sep. 30, 2012
As of Jun. 30, 2012
As of Sep. 30, 2012
As of Jun. 30, 2012
As of Sep. 30, 2012
As of Jun. 30, 2012
43.43% 56.57%
43.83% 56.17%
58.64% 41.36%
58.04% 41.96%
47.74% 52.26%
46.69% 53.31%
2 The details of Overall Risk Management, as well as management of each type of risks and Capital Management, can be viewed
in the MD&A report for the year ended December 31, 2011.
30
The Bank’s Consolidated Lending Portfolio
49.09%
6.68%
12.99%
16.31%
12.40%2.53%
49.94%
6.79%
12.54%
16.17%
12.03%2.53%
Sep. 30, 2012 Jun. 30, 2012• Agricultural & Mining• Manufacturing & Commerce• Real Estate & Construction• • Uti Utilities & Services• Housing Loans• Others
• Agricultural & Mining• Manufacturing & Commerce• Real Estate & Construction
lities & Services• Housing Loans• Others
As of Sep. 30, 2012
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
0%
20%
40%
60%
80%
100%
เกษตร อุต อสังหา สาธารณู ท่ีอยูอาศัย อื่นๆ
Doubtful Sub-Standard Special Mention Normal
Agric
ultur
al &
Mini
ng
Real
Esta
te &
Cons
truct
ion
Man
ufac
turin
g &
Com
mer
ce
Agr
icultu
ral &
Mini
ng
Othe
rs
Real
Esta
te &
Cons
truct
ion
Utilit
ies &
Ser
vices
Hous
ing L
oans
Man
ufac
turin
g &
Com
mer
ce
Unit: Million Baht
Percent of Consolidated Loans Classified by Type of Business and Loan
Classification
Consolidated Loans Classified by Type of Business and Loan
Classification
Utilit
ies &
Ser
vices
Othe
rs
Hous
ing L
oans
Doubtful and Loss
Of the Bank’s consolidated lending portfolio, 96.09 percent was classified as ‘Normal’ loans.
Classified by type of business, Manufacturing & Commerce accounted for 49.09 percent of total
31
consolidated lending, which was the highest ratio. Of this figure, 95.36 percent was classified as
‘Normal’ loans.
− Non-Performing Loans and Debt Restructuring Non-Performing Loans As of September 30, 2012, the Bank’s consolidated NPLs stood at Baht 30,162 million, equal
to 2.07 percent of total outstanding credit, including that of financial institutions. For Bank-only NPLs,
the amount totaled Baht 28,582 million, accounting for 1.96 percent of total outstanding credit,
including that of financial institutions, which the ratios decreased from the end of the second quarter
of 2012. These NPL figures are shown in the table below: Non-Performing Loans
(Units: Million Baht)
Quarter Ending Sep. 30, 2012 Jun. 30, 2012
The Bank’s consolidated NPLs 30,162 29,575
Percent of total outstanding credit, including that of financial institutions 2.07 2.20
The Bank-only NPLs 28,582 27,967
Percent of total outstanding credit, including that of financial institutions 1.96 2.09
Net Non-Performing Loans As of September 30, 2012, the Bank’s consolidated net NPLs stood at Baht 13,370 million,
equal to 0.93 percent of total outstanding credit, including that of financial institutions. For the Bank-
only net NPLs, the amount totaled Baht 12,671 million, accounting for 0.88 percent of total
outstanding credit, including that of financial institutions, which the ratios decreased from the end of
the second quarter of 2012. The net NPL figures are shown in the table below: Net Non-Performing Loans
(Units: Million Baht)
Quarter Ending Sep. 30, 2012 Jun. 30, 2012
The Bank’s consolidated net NPLs 13,370 13,340
Percent of total outstanding credit, including that of financial institutions 0.93 1.01
The Bank-only net NPLs 12,671 12,636
Percent of total outstanding credit, including that of financial institutions 0.88 0.95
Debt Restructuring In the third quarter of 2012, the Bank’s consolidated pre-written off, restructured debts
totaled Baht 48,189 million, increasing by Baht 4,068 million when compared to the same period of
2011. Losses from debt restructuring stood at Baht 1,831 million, or 3.80 percent of total restructured
32
debts, which was equivalent to a decrease of Baht 1,243 million compared to Baht 3,074 million in the
third quarter of 2011, or 2.82 percent of total restructured debts.
Non-Performing Loans of Asset Management Company, and Foreclosed Properties Non-Performing Loans of Phethai Asset Management Company Limited
As of September 30, 2012, Phethai AMC had resolved and/or restructured NPLs amounting
to Baht 73,229 million, or 98.94 percent of the total initial unpaid principal balance, with an expected
recovery rate of 48.00 percent.
The details of NPL resolution and/or restructuring over the past four quarters are shown in
the table below:
Loans Resolved/Restructured at Phethai Asset Management Company Limited (Units: Million Baht)
Quarter Ending Sep. 30, 2012
Jun. 30, 2012
Mar. 31, 2012
Dec. 31, 2011
Sep. 30, 2011
Phethai Asset Management Company Limited
Cumulative loans resolved/restructured 73,229 73,185 72,994 72,968 72,931
Percent of the total initial unpaid principal balance 98.94 98.88 98.62 98.59 98.54
Foreclosed Properties
As of September 30, 2012, the Bank’s consolidated foreclosed properties had a book value
of Baht 12,345 million, accounting for 0.62 percent of total assets.
As of September 30, 2012, consolidated allowances for impairment of foreclosed properties
stood at Baht 1,660 million, equivalent to 13.45 percent of the cost value of those foreclosed
properties, which is believed to be sufficient to cover holding, maintenance and disposal expenses,
as well as losses on the liquidation of foreclosed properties.
Allowance for Doubtful Accounts and Allowance for Impairment of Assets
As of September 30, 2012, the Bank’s consolidated allowance for doubtful accounts and
revaluation allowance for debt restructuring totaled Baht 43,114 million. This amount was equivalent
to 155.77 percent of the level required by the Bank of Thailand.
4.2 Market Risk Management In the third quarter of 2012, global economic risks eased somewhat after the central banks and
governments of many countries implemented accommodative monetary and fiscal policies to
stimulate their economies. Notable efforts were seen in the Fed’s open-ended QE3 via the purchase
of agency mortgage-backed securities (MBS) to spur their recovery and labor market, as well as to
stabilize the economy. Meanwhile, the European Central Bank’s announcement of measures to assist
33
debt-laden nations and a plan to directly inject liquidity into the European banking sector enhanced
clarity toward their direction in solving the Euro crisis.
As for China, their government resorted to fiscal policy assistance measures via investments in
infrastructural projects, plus a monetary policy initiative via reductions in their key policy rate. Such
developments had some repercussions on domestic and international financial markets, leading to a
Thai Baht appreciation versus the U.S. Dollar.
In spite of more positive signals being seen globally, the Thai economy has been affected by
lackluster demand from major trade partners. The BOT, as a result, has resolved to maintain their key
policy rate steady in the third quarter, while preparing appropriate future policies to limit downside
risks to the overall economy. In order to brace for greater risks that could be caused by many factors
– including the prolonged Euro crisis, as well as elected leadership transitions in the U.S. and China –
KBank, with the supervision of the Enterprise Risk Management Division and Risk Management
Committee, have taken steps to ensure that there are effective procedures of risk assessment and
management in place within specified limits.
4.3 Liquidity Risk Management The Euro crisis remained a pressure on financial markets in the third quarter of 2012. Although
it had eased somewhat toward the end of the quarter, during which tight liquidity in major foreign
currencies improved following accommodative measures taken by many central banks – especially
the Fed and ECB – the Euro crisis, plus slowing U.S. and China economies, may resume a pressure
on financial markets later on. Therefore, KBank is keeping a close watch on these situations, as well
as carefully monitoring and managing our liquidity risk accordingly.
Accommodative measures globally have helped enhance liquidity, especially in foreign
currencies, thus allowing KBank to conduct a variety of liquidity management prerogatives. These
included the opportunity to resort to foreign currency liquidity management to support long-term
business growth.
Also, we have streamlined the liquidity risk management of all KGroup units to ensure that it
meets international standards amid rising banking business competition and our own business
expansion. This enhancement will prepare us against any possible liquidity risk that could affect
KGroup performance in the future, and help assure our customers’ confidence in our risk monitoring
and management.
34
5. Operations of Support Groups
Human Resource Management for Sustainable Business Growth of KASIKORNBANKGROUP
To pursue KGroup strategies and brace for ASEAN Economic Community (AEC) integration,
KBank has placed emphasis on developing staff leadership, strengthening our corporate K-Culture,
and upgrading staff skills in terms of languages, cultures and business-related knowledge vis-à-vis
ASEAN nations. In addition, the Bank has focused on increasing the number of employees and
enhancing their potential to support business expansion abroad. Notable developments include:
• Staff Recruitment and Allocation: In the third quarter of 2012, KBank hired 2,350 employees,
in response to our business plan. An event titled “A Day@KBank Career Opportunities for
Chinese and Japanese Speakers” was organized in July 2012 to receive applications and to
interview 160 applicants, concentrating on those with skills in Chinese or Japanese language.
Examinations were held to screen qualified candidates to fill positions in business units of the
Bank and KGroup.
• Staff Potential Development and Leadership Enhancement: The Bank recognizes the
importance of creating knowledge and understanding for adaptation of employee behaviors
that conform with the organization’s expectations. As it is our firm belief that sustainable
business will be maintained through adherence to the K-Culture by employees from
generation to generation, various activities have been held to seek the employees with the
best knowledge and practices of the K-Culture, while “K-Culture on Tour” campaigns have
been launched for provincial units to communicate with and encourage staff in complying
with the four Core Values of KGroup. Moreover, the Bank has continually promoted
leadership qualities of employees under the project of “Leaders Create Leaders”, wherein
KBank Senior Executive Vice Presidents share their concepts and experience of being good
leaders, and their views on how to create the next generation of leaders. So doing is
believed to enhance smooth succession and efficient drive of the organization.
• Staff Retention: The annual Employee Engagement Survey has been conducted to elicit
employee opinions towards the Bank, in terms of their engagement and satisfaction. Data
and survey results have been used to determine guidelines for necessary improvements,
with an aim to better respond to staff requirements and to attain higher efficiency of Bank
operations. For the Service and Sales Network staff, the survey will be conducted in the
fourth quarter of 2012.
35
• Performance Management: A performance assessment was undertaken at mid-2012 to
monitor and evaluate half-year performance of employees, and for supervisors to discuss
and advise their staff, aiming at ensuring the achievement of full-year targets.
• Efforts to Support Business Expansion in China: KBank has mapped out the targets of staff
performance to be consistent with all changes, criteria of staff engagement via agents, joint
operations with business units in a more proactive manner, determination of appropriate
skills, as well as staff recruitment planning. Also, we have put a focus on human resource
development planning for the China Project, leadership enhancement and succession
planning, preparation of an IT development plan and human resource tasks, along with the
creation of networks with agencies in Thailand and China. All of these efforts are to ensure
the compliance of human resource management with regulatory requirements in China, while
facilitating the Bank to efficiently meet our business goals there.
• Human Resource Development in Overseas Branches and Offices: The Bank has prioritized
preparations for the establishment of branches and offices in ASEAN nations. An
International Human Resource Management unit has been set up to support the human
resource tasks of overseas business unit establishment, and to assure non-Thai KBank staff
and expatriates of appropriate treatment and benefits.
• Labor Relations Management and Welfare: The Bank has been granted the Best Labor
Relations and Welfare Award 2012 from the Ministry of Labour for the seventh straight year,
and remains the only commercial bank to have been awarded this commendation.
• Corporate Activities and Relations: Diverse activities have been organized for employee
participation, in both social and corporate aspects, for example the “Green at Heart” activity
of reforestation in selected communities, and “Cutting Electric Bills” for energy-saving
purposes. In addition, the Bank has prepared a handbook on business continuity
management as it concerns human resource management, in the event of any unrest or
natural disaster, in order to prepare ourselves for effective business continuity management.
IT Management • IT Security Policy
To meet the requirements of the Payment Card Industry’s Data Security Standards (PCI-DSS),
during the third quarter of 2012, we improved our IT policy accordingly, as well as implementing the
system for surveillance and analysis of security incidents to ensure prompt and timely protection, as well
as remedial actions.
36
• IT System Development to Support Operations of KASIKORNBANK FINANCIAL CONGLOMERATE
In the third quarter of 2012, apart from improvements in KBank’s IT to cope with rising
business needs and volume, we developed the Global CASHplus (GCP) system for the cash
management transactions of the Corporate Business Division via e-channels, which resulted in
greater efficiency and service capability.
K-Transformation As of the end of the third quarter of 2012, the K-Transformation strategic project has been
progressing continuously, supporting the achievement of our business goals and differentiating us
from peers. Major advancement was seen in the development of the new core banking system under
the IT Capital (ITC) program. The Multi-Channels Sales & Service (MSS) project was also progressing
with the preparation to maintain KBank branch systems nationwide, keeping them continuously up-to-
date.
37
Disclaimer
Certain statements shown in this document are forward-looking statements in respect of financial position or
performance of KASIKORNBANK Public Company Limited (“KBank”). KBank has prepared such statements based on
several assumptions, and has relied on the financial and other information made available from public sources as of
the date these statements were made. Statements with words such as “expect”, “believe”, “estimate”, etc., are types of
forward-looking statements involving uncertainties and subject to change at any time due to future events, including
but not limited to, changes in the global/national economic, political and regulatory environment. KBank is under no
obligation to update these forward-looking statements to correspond to the current situation. Thus, recipients shall
carefully review these statements and make an independent decision prior to investing or entering into any transaction.
38
39