kbank investor presentation 4q13 jan2014 final · for further information, please contact the...

1

KASIKORNBANK

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

Investor Presentation as of 4Q13

January 2014

2

Consolidated (as of December 2013)Assets Bt2,290bn (USD69.8bn) Ranked #4 with 14.8% market share** Loans* Bt1,439bn (USD43.9bn) Ranked #4 with 14.5% market share** Deposits Bt1,530bn (USD46.6bn) Ranked #4 with 15.0% market share** CAR 15.78% ***ROE 20.45%ROA 1.89%Number of Branches 965Number of ATMs 8,740Number of Employees 19,303

KASIKORNBANK at a Glance

Share InformationSET SymbolShare Capital: Authorized Bt30.5bn (USD0.9bn) Issued and Paid-up Bt23.9bn (USD0.7bn)Number of Shares 2.4bn sharesMarket Capitalization Bt373bn (USD11.4bn) Ranked #2 in Thai banking sector 4Q13 Avg. Share Price: KBANK Bt177.20 (USD5.40) KBANK-F Bt179.52 (USD5.47)EPS Bt17.27 (USD0.53)BVPS Bt91.60 (USD2.79)

KBANK, KBANK-F

Established on June 8, 1945 with registered capital of Bt5mn (USD 0.15mn)Listed on the Stock Exchange of Thailand (SET) since 1976

Notes: * Loans = Loans to customers less Deferred revenue** Assets, loans and deposits market share is based on C.B.1.1 (Monthly statement of assets and liabilities) as of December 2013*** Capital Adequacy Ratio (CAR) has been reported in accordance with Basel III Capital Requirement from 1 January 2013 onwards.

CAR is based on KASIKORNBANK FINANCIAL CONGLOMERATE. KASIKORNBANK FINANCIAL CONGLOMERATE means the company under the Notification of the Bank of Thailand re: Consolidated Supervision, consisted of KBank, K Companies and subsidiaries operating in supporting KBank, Phethai Asset Management Co., Ltd. and other subsidiaries within the permitted scope from the BOT’s to be financial conglomerate

Exchange rate at the end of December 2013 (Mid Rate) was Bt32.81 per USD (Source: Bank of Thailand)

3

Table of ContentsTopic Slide Page

Operating Environment 5 - 6

2014 Financial Targets 7

Composition of Growth 8 - 11

The K-Strategy 12 - 13

Capital and Dividend 14 - 15

Summary 16

Appendix 17 - 125

4

Topic Slide PageKBank

Segment HighlightsStrategyRisk and Credit Management Financial Performance

18-2425-3536-4041-63

• 2013 Highlights• Net Interest Margin• Interest Income - net• Non-interest Income• Net Fee Income• Net Premium Earned - net• Other Operating Expenses• Loan• Asset Quality• Investment in Securities and Funding Structure

42-45464748

49-505152

53-5657-5960-63

The wholly-owned subsidiaries of KBankMuang Thai Life Assurance (MTL)Other Information

64-7172-7980-86

Banking System and Regulation Update 87-94

Government Policy 95-105

Thai Economic Figures 106-123

IR Contact Information and Disclaimer 124-125

Appendix

5

Key Points:

6.52.7 3.0

-5.0-2.01.04.07.0

10.0

2012 2013F 2014F

% Y

oY

Risk Factors:

Source: KResearch (as of January 20, 2014) and **KBank Capital Markets Research (as of January 22, 2014)

Operating Environment: Economic Outlook for 2014 Key GDP Forecasts and Assumptions

Uncertainties in domestic politics

Capital volatility and monetary policy management

Geo-political risks

Due to the current political strife, the 2014 GDP forecast was revised down to 3.0%, with a range of 2.2-3.7%

The ongoing political stalemate will likely shelve a large portion of public investment projects; the private sector is also likely to put its investments on hold

Mounting household debt and eroding confidence may put pressure on private consumption growth in 2014

Nevertheless, recovery in the export sector is expected to be the main economic driving force in 2014, in line with G4 sustained economic improvement

% YoY

Forecast Range

Base Case

GDP 6.5 2.7 2.2-3.7 3.0

Private Consumption 6.7 0.6 0.5-1.8 1.4

Total Investment 13.2 -0.9 1.3-3.3 2.2

Gov't Budget Deficit (% of GDP)* -2.8 -2.4 -1.7 to -2.6 -2.2

Exports 3.1 -0.3 3.0-7.0 5.0

Imports 8.8 -0.9 0.0-4.0 2.0

Current Account (USD bn) -1.5 -4.0 0.4-3.0 1.7

Headline Inflation 3.0 2.2 2.2-2.6 2.4

Policy Interest Rate* 2.75 2.25 2.50-2.75 2.75

2014F2013F2012

6

Government Stimulus Plan (App. pages 95-105)Due to the current political uncertainty, government investment in infrastructure projects, along with other public investment projects, may experience severe delays

Outlook on Europe, the US, China, and ASEAN The global economy is expected to gradually recover and become more stabilized in 2014

Eurozone: already bottomed-out and will modestly recover; structural reforms are yielding positive results, but fragmentation in the Eurozone financial system remains a challengeUS: economic recovery remains resilient. Political settlement regarding the fiscal deal provides optimism toward US economic prospects amid QE taperingChina: substantial economic growth is expected, but may not be as high as during the historic reform period; some uncertainties remainregarding the fragile banking system; however, ongoing reform will likely help sustain the Chinese economy in the longer-term ASEAN economies: recovery will be partly spurred by the regional economic integration. However, QE tapering may pose downside risks to countries with weak external balance, leading to large capital outflows

Outlook on Inflation (App. pages 108 and 110)Headline inflation remains benign in 2014, despite some increased pressure from higher living costs that will be affected by authorities’ plans, such as energy price restructuring

Outlook on Exports and Tourism (App. pages 109 and 111-112)Exports will likely rebound, due to a low base effect and better global economic prospectsRevenue from tourism is likely to cool, in light of a base effect and impacts from domestic political issues

Outlook on CAPEX cycle (App. page 113)A massive investment cycle is not expected until there is a robust recovery in exports; however, there might be new investment in some BOI-promoted industries, i.e. automobile and utility sectors

Impacts from QE tapering (App. page 117-118)Impacts on the Thai economy should be rather modest, given ample domestic liquidity as well as strong external balances e.g. high international reserves and low external debts

Baht (App. page 107)QE tapering began in Jan-14 and will result in a higher premium on the USD and re-pricing of other assets; capital outflows are expected to pick up, pressuring THB sentiment

Operating Environment: Economic Outlook for 2014

Source: KResearch and KBank Capital Markets Research (as of January 22, 2014)

7

Consolidated 2013 Actual 2014 Targets Notes

ROE 20.45% N/A

ROA 1.89% N/A

NIM 3.55% 3.4-3.6% Ranking maintained among large commercial banks (6)

Loan Growth 8.46% YoY 9-11% Decent and sustainable loan growth; in line with economic growth (Page 8 and 53-56)

Non-Interest Income Growth* 18.24% YoY Up to mid-teens Mainly driven by fee income and insurance business (Page 9 and 48-51)

Cost to Income Ratio** 43.74% Mid-40sCost to income ratio continues to range in the mid-40s; seasonally higher in 2H (Page 11)

Credit Cost per year (bps) 85 bps Mid-80s Prudent and aligned with global market environment (Page 10 and 58)

NPL Ratio (Gross)*** 2.11% Below 2.2% Manageable with lingering global economic environment (Page 10 and 57)

2014 Financial Targets

Note: * Non-Interest Income includes Net Premium Earned - net (Net Premium Earned less Underwriting Expenses) from Muang Thai Life Assurance PCL (MTL); KBank has a 38.25% economic interest in MTL; on the

consolidated basis, Bancassurance fees are not included in net fee income, due to the elimination of inter-company transactions (the accounting treatment from the Muangthai Group Holding consolidation); Non-Interest Income = Total operating income – net less Interest income – net

** Cost to Income Ratio = Total Other Operating Expenses to Total Operating Income – net (Total Operating income less Underwriting Expenses)*** NPL Ratio (Gross) = NPL (gross) to total loans; NPL (gross ) used in calculation are loans to general customers and loans to financial institutions of non-performing loans; total loans used in calculation

are loans to general customers and loans to financial institutions

8

31%31%

36%36%

26%26%

7%7%

0

500

1,000

1,500

2012 2013

Other Loans

Retail Loans

SME Loans

Corporate Loans

1,3271,439

Composition of Growth: Loans by Business

Loan Portfolio Loan Portfolio Structure

Note: Since 1Q13, as per the Bank of Thailand’s requirement, the Bank has complied with TFRS 8 (Operating Segments) to present operating results for each key segment in financial reports

(Bt bn)

2013 2014 Outlook

Corporate Loans

Mainly from short-term domestic and trade finance credit with seasonal working capital loan demands with some loan repayment; loans drawn from the real estate, construction, and utilities industries

Growth target on long-term investment and high capacity utilizationindustries with a focus on international trade customers

Focused industries: construction materials, hardware, and automotive & parts

SME

LoansMainly from long-term and short-term credit, and seasonal working capital loan demands, especially from agriculture industry

Growth target reflects demand from domestic consumption andinternational trade benefits from the FTA and AECFocused industries: commerce, construction materials, and hardware

Retail

Loans

Mainly from mortgage loans and credit cards, growth in line withindustry; continued loan growth in all areas, driven by year-end seasonal growth

Conservative growth target, in line with industry

Focus on high yield products (K-Credit Card and K-Express Cash) with effective risk management

Loan growth continues to be decent, sustainable, and in line with economic growth

Loan Definition (more details on loans can be found in App. page 54-55)Corporate Loans: Loans of KBank and KBank’s Subsidiaries in Corporate Segments (Annual sales turnover > Bt400mn)SME Loans: Loans of KBank and KBank’s Subsidiaries in SME Segments (Annual sales turnover ≤ Bt400mn)Retail Loans: Loans of KBank and KBank’s Subsidiaries in Retail SegmentsOther Loans: Loans in Enterprise Risk Management Division (NPL + Performing Restructured Loans), and other loan types

Consolidated %YoY % Yield Loan Growth Dec12 Dec 13 Growth Range Target (Y2014)

2013 2013

Corporate Loans 416 443 6.7% 4-6% 6-8% SME Loans 469 521 10.9% 7-8% 9-11% Retail Loans 347 382 10.3% 6-7% 10-13% Other Loans 95 93 (2.9%) Total Loans 1,327 1,439 8.5% 6.4% 9-11%

Amount (Bt bn)

9

15%

2%0.04%2%

18%16%

60%61%

0

10

20

30

40

50

2010 2011 2012 2013

Other Operating Income

Fee and Service Income - net

Net Premium Earned - net*

Dividend Income

Share of Profit from Investmentson Equity Method

Gain on Investment

Gain on Trading and FXtransactions

4%

2%

64%

0.02%2%

14%

12%

2%

2%

20%

61%

0.4%

16%

2%

14%

3%

2%

0.05%3%

2%

Note:

Non-interest income growth continues to be main driver to help achieving the long-term sustainable profitability; mainly from net fee income and life insurance premiums as a result of customer-centric strategy

2013 non-interest income accounted for 40% of total net operating income and net fee income accounted for 24%; Net fee income in 2013 rose mainly through card business and fees from mutual fund and brokerage businesses

2014 non-interest income growth will be up to mid-teens, mainly driven by net fee income and life insurance premiums

Composition of Growth: Net Fees and Non-interest Income

29.44

20.6418.23

24.47

0

10

20

30

2010 2011 2012 2013

(Bt bn)

60%61%62%

62%

40%

38%38%

39%

0

40

80

120

2010 2011 2012 2013

Net Interest Income Non-interest Income

(Bt bn)40%39%38%38%

24%23%23%24%

0

10

20

30

40

50

2010 2011 2012 2013

Non-interest Income Ratio Net Fee Income Ratio

December 2013 (Consolidated)

Total Operating Income - net

Non-interest Income

(Bt bn)

28.40

34.02

40.72

Net Fee Income

(+13%)

(+19%)

Non-interest Income Ratio and Net Fee Income Ratio

75.1490.51

104.31

(+20%)(+15%)

(+22%)

(+14%)(+31%)

(+20%)

(+20%)

- Non-interest Income Ratio = Non-interest Income/Total Operating Income - net - Net Fee Income Ratio = Net Fee Income / Total Operating Income – net- Net Premium Earned - net = Net Premium Earned less Underwriting Expense

(%)120.95(+16%)

48.15(+18%)

(+20%)

10


(Bt bn)

Coverage Ratio(%)

Asset Quality and Impairment Loss of Loans and Debt Securities (Provision)

(bps)(%)

Provision

NPL Ratio and Credit Cost

Asset quality remains stable and manageable

2013 NPL was at 2.11% with a coverage ratio of 134.52%

2013 credit cost is 85bps, to reflect a countercyclical provision policy

2014 asset quality is expected to remain stable with credit cost to be in the mid-80s bps

3.75.4 5.9

7.89.4

6.7 7.38.4

11.7

0

4

8

12

2005 2006 2007 2008 2009 2010 2011 2012 2013

131.83 134.52127.12

111.0291.64

88.38

73.9070.9666.60

0

50

100

150

2005 2006 2007 2008 2009 2010 2011 2012 2013

85

6083 82

93 102

66 64 66

6.85

8.88

2.162.453.76

3.09

4.44

2.912.11

0

2

4

6

8

10

2005 2006 2007 2008 2009 2010 2011 2012 2013

0

50

100

150

200

Credit Cost

NPL ratio

11

2.422.472.632.61

0

2

4

6

2010 2011 2012 2013

43.7445.0050.5750.9247.53

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013

Cost to Income Ratio

(%)

Cost to Income Ratio Cost to Average Assets Ratio

(%)

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13Cost to Income Ratio (%) 50.92 50.57 47.53 45.00 43.74 40.02 42.65 43.63 48.40

Cost to Average Assets Ratio (%) n.a. 2.61 2.63 2.47 2.42 2.19 2.41 2.42 2.63


Cost to income ratio continues to range in the mid-40s; seasonally higher in 2H

2013 cost to income ratio was 43.74% as the Bank carefully monitored spending in response to economic uncertainty

2014 cost to income ratio will be stable in the mid-40s

12

The K-Strategy

Strategic Capabilities

PRODUCT & SOLUTIONInnovate & be responsive

PRODUCT & SOLUTIONInnovate & be responsive

SERVICE QUALITYExcellent customer experience

at all channels

SERVICE QUALITYExcellent customer experience

at all channels

BRANDING & MARKETINGClear & consistent communication

BRANDING & MARKETINGClear & consistent communication

Customer Centricity

Customer Strategy

4 Product Domains8 Customer Segments*

The Way We Work

Long-Term Risk-Adjusted Sustainable Profitability

TO BE CUSTOMER’S MAIN BANK

Innovative & Managing Products

Understanding Customer Needs

Sales & Service Excellence

Proactive Risk Management

KASIKORNBANK, its wholly-owned subsidiaries, and its strategic partner

I N T E G R A T I O N

Note: * The definition of the eight customer segments can be found in App. page 26

+

13

2.82

1.69

2.80

2.15

2.632.78 2.81

2.71

1

2

3

2007 2008 2009 2010 2011 2011(New)

2012(New)

9M13(New)

26%

18%

25%24%

17%23%

24%

27% 27%28% 29%

14%

12%11%10%

5%

10%

15%

20%

25%

30%

2008 2009 2010 2011 2012

Segment Performance Highlights

Average Product Holdings per CustomerMain Bank Status*

** In 2012, the Average Product Holding calculation is adjusted in all eight customer segments to align with our better understanding of customer behavior; 2011 numbers were restated for comparison purposes

Old Definition New Definition**

(Overall)

(By Business Division)

Corporate Business

SME Business

Retail Business

Main Bank Status and Market Penetration increased on track with our customer segment aspirations

Overall Customer Satisfaction

Overall Customer Satisfaction****

*** Customers in Retail Business Division (RBS) account for 97%, SME Business Division (SME) 3%, and Corporate Business Division (CBS) less than 1% of customer portfolio

**** Customer Satisfaction Index are calculated using the weighted average of customer satisfaction index from our eight customer segments; our retail customer satisfaction exceed the World Finance Industry Norm

No. of Customers (mn)***

* Main Bank Status = % of customers in the market who use KBank and its wholly-owned subsidiaries as their main operating bank and/or main saving and investing bank and/or main borrowing bank

Performance improvement driven by the success of our customer-centric strategy and new IT capabilities

Average product holdings per customer increasing as a result of enhanced cross-selling capabilities

Overall average rose to 2.82 in 9M13, from 2.71 in 2011

No. of customers grew 66% since 2007

No. of customers grew 5% YTD in 9M13

Overall Customer Satisfaction was at 85 in 2012

6.9 7.5 8.0 9.0 10.0

10.911.5

83 85 85 86 86 85

0

20

40

60

80

100

0

5

10

15

2007 2008 2009 2010 2011 2012 9M13

No. of Customers (mn) Overall Customer Satisfaction

2.172.66 2.82 2.862.67

3.12 3.11 3.30 3.54

4.55

2.812.722.78

1.71

2.963.05

2.562.142.122.101.831.44

4.41 4.59

0

5

10

2007 2008 2009 2010 2011 2011(New)

2012(New)

9M13(New)

Retail Business SME Business Corporate Business

14

Bank only KASIKORNBANK FINANCIAL CONGLOMERATE*

Capital (Reported Number: Excluding Net Profit of Each Period)

Capital adequacy remains sufficient to support business growth; maintained adequate Tier 1 ratio, as required under the Basel III

December 2013

Under Bank of Thailand regulations, net profit in the first half of the year is to be counted as capital after approval by the Board of Directors as per the Bank’s regulations. Net profit in the second half of the year 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.

Note: * KASIKORNBANK FINANCIAL CONGLOMERATE means the company under the Notification of the Bank of Thailand re: Consolidated Supervision, consisted of KBank, K Companies and subsidiaries operating in supporting KBank, Phethai Asset Management Co., Ltd. and other subsidiaries within the permitted scope from the BOT’s to be financial conglomerate.

** The details on Basel III regulations can be found in App. Page 90-91

12.579.13 9.57 10.44

5.20

3.844.27

0

3

6

9

12

15

18

2010 2011 2012 2013Tier1 Tier2

(%)

13.40 13.41

15.6415.78

3.21

12.029.37 9.63 10.43

5.554.184.59

0

3

6

9

12

15

18

2010 2011 2012 2013Tier1 Tier2

(%)

13.96 13.81

15.98

3.23

15.25

Basel II Basel III Basel II Basel III

Basel III2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13

Bank onlyCAR (%), excluding net profit of each period 13.96 13.81 15.98 15.25 15.44 15.71 16.72 15.25Tier 1 (%), excluding net profit of each period 9.37 9.63 10.43 12.02 11.08 11.44 12.50 12.02

KASIKORNBANK FINANCIAL CONGLOMERATE

CAR (%), excluding net profit of each period 13.40 13.41 15.64 15.78 15.79 16.20 17.31 15.78Tier 1 (%), excluding net profit of each period 9.13 9.57 10.44 12.57 11.47 11.97 13.13 12.57

Basel IIIBasel II

15

Dividend

2004 2005 2006 2007 2008 2009 2010 2011 2012 1H13Dividend Per Share (Bt) 1.00 1.25 1.75 2.00 2.00 2.50 2.50 2.50 3.00 0.50

Dividend Payout Ratio (%) 15.45 21.36 30.55 31.88 32.33 42.49 32.14 27.00 22.12

Dividend policy: both operating results and long-term returns to shareholders are taken into consideration in determining dividend paymentsDividend payout ratio ranges 20-25%, in order to ensure a sustainable and adequate capital level through the changing economic environment and the ongoing adoption of Basel III

22.1227.00

32.14

15.4521.36

30.55 31.88 32.33

42.49

0

10

20

30

40

50

2004 2005 2006 2007 2008 2009 2010 2011 2012

(%)

Dividend Payout RatioDividend Per Share

0.0

0.5

1.0

1.5

2.0

2.5

3.0

2004 2005 2006 2007 2008 2009 2010 2011 2012 1H13

(Bt)

1.001.25

1.752.00 2.00

2.50

Interim Dividend

2.50 2.50

3.00

Interim Dividend

0.50

16

Summary

Customer-centric strategy effectively executed: the data-mining, analytic campaign management, and multi-channel sales and services platform have enhanced our capability to quickly acquire new customers; the result is a top-notch total customer experience and strong market position

Balanced growth: loans to grow carefully in line with economic condition; appropriate liquidity maintained; asset quality sustained; appropriate loan loss reserves; strong non-interest income growth; stable cost to income ratio; strong ROE maintained

Adequate capital: maintained adequate Tier 1 ratio, as required under the Basel III

17

Appendix

18

KBank: Segment Highlights

19

Performance and Market PositionMain Bank Status: maintained #1 ranking

Trusted Partner Bank: aim to be #1 through comprehensive fund raising solutions, integrated cash management solutions, and value chain solutions

Outright Trading Volume of Corporate Bonds: ranked #1 with 27% market share in 2013

Corporate Bond Underwriting: ranked #4 with 11% market share in 2013

Syndicated Loan Arranging: leading position with acclaimed expertise in power and petrochemical sectors

Transaction Services: a top player in transactional banking services

Security Services (MFS): 39% market share in November 2013

Cash Management Services: 24% market share in 2013

Trade Finance: 31% market share in 2013

Industrial Expertise: leverage capability in utility, real estate, transportation, and commerce, etc; in 2012 our executives were invited to speak at seminars

on green business and urbanization

Knowledge-based Organization: strive to be a knowledge-based organization for family business (KFAM Club, and Family Business Open Up)

23%

19%21%

23% 24%

0%

10%

20%

30%

2009 2010 2011 2012 2013

25%23% 24%26% 26%

0%

10%

20%

30%

2009 2010 2011 2012 2013

14%18%

15%17%

11%

0%

10%

20%

30%

2009 2010 2011 2012 2013

Corporate Business: Performance and Market PositionMulti-Corporate

BusinessLarge Corporate

BusinessMedium Business

Small and Micro Business

High Net WorthIndividual

MiddleIncome

Mass

Corporate Bond Underwriting

Affluent

Source: ThaiBMA

Main Bank Status

Source: KBank Customer Survey

Cash Management Services

Source: KBank Customer Survey

Note: Main Bank Status = % of customers in the market who use KBank and its wholly-owned subsidiaries as their main operating bank and/or main savings and investing bank and/or main borrowing bank

(#1) (#1) (#1) (#1)(#2) (#2) (#3) (#2)

(#2) (#2) (#2) (#2)

(#4)

(#1)(#2)

20

30%27% 29%

30%

0%

10%

20%

30%

2009 2010 2011 2012

28%27% 27%29%

0%

10%

20%

30%

2009 2010 2011 2012

Multi-Corporate Business

Large Corporate Business

Medium Business



MiddleIncome

MassAffluent

SME Business: Performance and Market Position

Performance and Market PositionMain Bank Status: strengthened #1 position by acquiring new trade credit customers and offering effective cross-selling cash management solutions and packages

Market Share: maintained at 30% in 2012; improved from 29% in 2010 to 30% in 2011

Market Position: strengthened #1 position in SME market – “Bank for SMEs”; targeted to be SME market leader in all areas

Improved capital usage efficiency by increasing total income to loan ratio

Only bank to offer a 2-day credit approval process for small and micro SMEs, with receipt of funds within 5 days

Only bank to offer comprehensive solutions to SMEs through K SME Care program (launched in 2006, with a total of 19 classes and about 10,000 participants so far) and K SME Care Knowledge Center (established in 2009)

#1 in Market Share by Value #1 in Main Bank Status

Source: KBank Customer Survey (updated annually)

(#1)

Source: KBank Customer Survey (updated annually)

(#1)(#1)(#1) (#1)

(#1)(#1)(#1)

Note: - SME Business in Thailand accounts for 37.0% of Thailand’s GDP, or Bt4.2trn; 2.73 million SME customers with 0.66 million registered as legal entities (as of December 2012);supported by the government to become a key factor in economic and social growth (Source: The Office of Small and Medium Enterprises Promotion or OSMEP)

- Market Share by Value = share of revenue (derived from both credit and non-credit products) that each bank gains from the market - Main Bank Status = % of customers in the market who use KBank and its wholly-owned subsidiaries as their main operating bank and/or main savings and investment bank and/or

main borrowing bank

21

9.2%9.4%8.8%

7.7%9.6%

0%

5%

10%

15%

2009 2010 2011 2012 9M13

25.7%23.5%

20.5%15.8%

25.0%23.9%

19.2%

16.1%

22.1% 22.3%

0%

5%

10%

15%

20%

25%

30%

2009 2010 2011 2012 9M13

NewBusiness

TotalPremium

23.1%24.3%23.7%

20.8%

25.5%

0%

10%

20%

30%

2009 2010 2011 2012 2013

#1 in Mutual Fund (KAsset)



Medium Business



MiddleIncome

Mass

Mortgage Loan

Affluent

Retail Business: Performance and Market Position

(% Market Share) (% Market Share) (% Market Share)

#1 in Bancassurance*(Total Premium and New Business Premium)

Performance and Market PositionMarket Penetration: strong market penetration to affluent customers, with 81% penetration in Nov13 (continual increase from 40% in 2010)Bancassurance: MTL held #1 position in Bancassurance total premium with 23.9% market share, and Bancassurance new business premium with 25.7% market share in 9M13; MTL also held #1 position for new business premium of life insurance industry with 18.7% market share in 9M13Fund Management Service:

Mutual Funds: KAsset maintains #1 position, with Gold Winner Award from Reader’s Digest Most Trusted Brand for 6th consecutive year and two Best Mutual Fund of the Year 2013 Awards by Money & Banking magazineMutual Funds + Private Funds + Provident Funds: maintains #1 position, with highest total AUM for the 5th consecutive year

Mortgage Loans: ranked in top 3, with 9.2% market share in 9M13; conservative growth (in line with industry) and maintaining a good quality portfolioCredit Cards:

Total spending: ranked #1 , with highest spending volume of Bt234bn or 20.8% market share in 11M13Number of cards: ranked #2, with 3.02mn cards in November 2013 Card-accepting merchant services (such as EDC, payment gateway, etc.): ranked #1, with 34.9% market share by volume in 11M13

Debit Cards: Maintain leader position to match customer lifestyles, with the launch of Character Card (latest offering with LINE Sticker Set) and Provincial Debit CardHighest debit card spending in the industry, at Bt7,000/active card/month

Digital Banking: Market leader, with 33% market share of Thailand Digital Banking users (Bank of Thailand report, Sep 2013) #1 Digital Banking top of mind Brand perception rating (Nielsen, 2012)

(#2)

(#1) (#2)(#1)

(#2)(#2)

(#2)

(#2)(#1)(#1)

Ranked # 1 in both total and new business premium

Ranked #1 in Mutual Fund AUM (KAsset)

(#2)

(#1)(#1)(#1) ( #1)

(#3) (#3)(#2) (#3)

(#3)

Maintaining good quality portfolio with lowest %NPL ratio among leading commercial banks

Note: * Total Premium = New Business Premium (NBP) + Renewal Premium; New Business Premium = First Year Premium (FYP) + Single Premium (SP)

22

34

262321 24

0

20

40

2009 2010 2011 2012 2013

145117

9587114

0

50

100

150

200

2009 2010 2011 2012 2013

866

12

8

0

5

10

15

20

2009 2010 2011 2012 2013

63636160 62

0

15

30

45

60

75

90

2009 2010 2011 2012 2013

Corporate & SME Service Centers

Channels: Corporate and SME Business

Corporate Business Centers* SME Business Center**

Cheque Direct Service Office

Customer facilitation in areas with good potential, via the opening of financial service centers and cheque points

* Reduction in the number of centers was a result of consolidation of some centers** Excluding Corporate & SME Service Centers; in one branch, there could be more than one SME Business Centers

Note:

23

8,7407,6037,4716,955 7,366

9,394

0

1,500

3,000

4,500

6,000

7,500

9,000

10,500

2009 2010 2011 2012 2013 2014F

835869 883

3096

262

400

600

800

1,000

1,200

2009 2010 2011 2012 2013 2014F

Branch ATM

(+11)

Channels: Retail Business

(+120) (+23)

(+1,853)(+516)

185

126

9977

103

252

0

40

80

120

160

200

240

280

2009 2010 2011 2012 2013 2014F

K-Lobby ***

(+33)(+22)

(-105**)

* “New Branch Model” is a new modern-lifestyle branch model aiming to provide more convenience to targeted customers. This type of branch is designed to be smaller in size and equipped with an electronic banking machine and a small staff; hence, it is cost efficient to operate

(+4)

(+237)

(+23)

782 805 816865

(+34)

965(+1,137)

(+59)

(+66)

New Branch Model*

*** K-Lobby is an electronic banking service with multiple functions such as K-ATM, K-CDM (Cash Deposit Machines), and K-PUM (Passbook Update Machine). K-Lobby is available to serve customers both outside of branch offices and as stand-alone machines in areas without branches

(+100)

Note:

(+19)

(+30)

2009 2010 2011 2012 2013Branch 782 805 816 865 965 - Bangkok and Metro 46% 46% 46% 45% 42% - Upcountry 54% 54% 54% 55% 58%ATM 6,955 7,471 7,366 7,603 8,740 - Bangkok and Metro 52% 51% 52% 51% 48% - Upcountry 48% 49% 48% 49% 52%xxCDM 973 1,014 1,067 1,398 2,195 - CDM (Deposit) 973 1,014 1,016 1,066 1,138 - CDM (Deposit & Withdraw) 51 332 1,057K-Lobby 77 99 103 126 185

The WISDOM Centers and Corners 31 36 75

** A drop in the number of ATMs reflected a relocation plan

1,145(+180)

(+654)(+67)

(+14)

(+166)(+49)

Key Strategies in Channel ExpansionBranch: provide customer service

Increase number of branches to 1,145 by year-end 2014 (including “new branch model”)

Expand branch and “new branch model” to potential areas for high competitiveness

Expand branch size in high traffic/strategic areas to better serve customers

Relocate low use branches to more convenient areas

E-Channel: provide customer convenience

#1 in number of Cash Deposit Machines (CDMs) in Thailand; utilize duo-function CDMs(deposits & withdrawals) to increase efficiency, enhance service coverage and improve customer convenience

#1 in number of K-Lobby in Thailand; increase number of K-Lobby to 252 in 2014

Relocate ATMs to provide more convenient service to customers

24

Branch

Sample of Channels

K-Lobby

A new modern-lifestyle branch model aiming to provide more convenience to targeted customers. This type of branch is designed to be smaller in size and equipped with an electronic banking machine and a small staff; hence, it is cost efficient to operate

An electronic banking service with multiple functions such as K-ATM, K-CDM (Cash Deposit Machines), and K-PUM (Passbook Update Machine). K-Lobby is available to serve customers both outside of branch offices and as stand-alone machines in areas without branches

New Branch Model

THE WISDOM Center and Corner

An exclusive center providing a full range of services and facilities to the High Net Worth Individual and Affluent segments

Digital Banking

Sample of Digital Banking

• K-Mobile Banking

• K-Cyber Service (K-Cyber Banking, K-Cyber Trade and K-Cyber Invest)

• K-Payment Gateway

• K-PowerP@y (mPOS)

THE WISDOM Lounge @ Sofitel So Bangkok

Branch @ Department Stores Mini Branch @ BTS

25

KBank: Strategy

26

Eight Customer Segments Multi-Corporate Business


Medium Business

Small & Micro Business

High Net Worth Individual

Co

rpo

rate

B

usi

nes

sS

ME

B

usi

nes

sR

etai

l Bu

sin

ess

Ret

ail

Bu

sin

ess

Company with annual sales >Bt5,000mn

Company with annual sales >Bt400mn to Bt5,000mn

Individual or company with annual sales >Bt50mn to Bt400mn

Individual or company with annual sales ≤ Bt50mn, and with commercial credit limit ≤ Bt15mn

Individual wealth with KBank and its wholly-owned subsidiaries* ≥ Bt50mn

Individual wealth with KBank and its wholly-owned subsidiaries* ≥ Bt15,000 to < Bt10mn

Individual wealth with KBank and its wholly-owned subsidiaries* < Bt15,000

Note: * Wealth with KBank and its wholly-owned subsidiaries is defined as savings and investments, such as deposit products with KBank, mutual funds with KAsset; or the monthly income of an individual customer

Affluent

Middle Income

Mass

Individual wealth with KBank and its wholly-owned subsidiaries* ≥ Bt10mn to < Bt50mn

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

Synergistic portfolio management by monitoring eight customer segments Offer financial solutions from among KBank, its wholly-owned subsidiaries, and the insurance companyMake significant progress towards long-term aspirations; performance on track

27

Revenue by Eight Customer Segments

Note: Loan portion and loan yield of each customer segment includes loans from the Enterprise Risk Management Division (NPL + Performing Restructured Loans); figures are not comparable with loan data in other pages

Non-interest income *

0.5%

22.7%

3.5%0.3%

18.2%

21.8%

16.9%

16.1%

Loan

Portion

Average

Loan Yield (%)

High Network

4%


13%

Small & Micro

Business 15%

Medium Business

12%


9%

Mass10%

Middle Income

28%

Affluent9%

* Non-interest income excludes capital market business, treasury business and others

4.4%

6.5%

7.1%

9.4%

4.5%

9.6%

4.5% 5.5%


Medium Business

Small & Micro Business

High Net Worth Individual

Affluent

Middle Income

Mass


December 2013

28

K-Transformation Foundation Capabilities

Information Technology

Capital (ITC)

Financial Information

System (FIS)

Know Our Customers

(KOC)

Multi-channel

Sales And Services

(MSS)

K-Transformation Supporting Solution (KSS)

Innovative & Managing Products

Understanding Customer Needs

Sales & Service Excellence

Strategic Capabilities

Proactive Risk Management

K-Transformation Project

Implementing: completion expected by

2015

Implemented

29

2007 2008 2009 2010 2011 2012

- In 2012, Average Product Holding calculation was adjusted in all eight customer segments to align with customer behavior; 2011 numbers were revised for comparison purposes

- Since January 1, 2011, financial statements have been reclassified per the Bank of Thailand’s requirements; the 2009 and 2010 financial statements were restated and adjusted for comparison purposes

1.692.15

2.71

51.54

2.782.63

47.5350.5750.9253.95

39.0435.23

39.8134.7433.55

Average Product Holdings

Non-interest Income Ratio (%)

Cost to Income Ratio (%)

14.3512.79

15.7315.94 16.72ROE (%)

2.80

37.58

45.00

20.76

Y2007-2008: Old Financial Presentation Y2009 onwards: New Financial Presentation

Note:

37.79

43.74

20.45

2013

Key Highlights

Y2008: Know Our Customer (KOC) and Financial Information System (FIS) completedKOC key business capabilities: customer analytics; data mining; campaign managementFIS key business capabilities: new chart of accounts (CoA); enhanced financial controls; enhanced budgeting capabilities; enhanced procurement capabilities

Y2011: New branch infrastructure platform rollout under Multi-Channel Sales and Services (MSS) completedKey business capabilities: increased the effectiveness of campaign execution from MSS and KOC integration through new branch platform

Y2012: Multi-Channel Sales and Services (MSS); branch roll-out completed nationwide since 1Q12Key business capabilities: enhanced sales & service capabilities; single view of customer; multi-channel integration; legacy risk mitigation

New IT Business Capabilities Highlights

2.82*

* Data for 9M13

Y2013: IT Capital (ITC): plan to deploy new loan core banking system; start roll out by end of 2013 and complete deployment by early 2014Y2015: IT Capital (ITC): plan to deploy new deposit core banking system; K-Transformation completedY2013-2015: Total remaining expenditure for K-Transformation project ~ Bt11bn (Total Fixed Asset Investment ~75-80%; Total Expense ~ 20-25%)

30

KOC and MSS Benefits Highlights

Faster customer responsiveness and more consistent customer experience across channels

Integrated MSS with KOC capabilities; the benefits have become part of business as usual; the new MSS system:

Increase effectiveness in campaign execution through the new branch and call center platform

Increase lead referrals creation, cross-selling, and up-selling

Increase marketing campaign response rates

Increase product holdings and sales per customer; the overall average product holding per customer rose from 1.69 in 2007 to 2.82 in 9M13

Increase number of customers from 6.9mn in 2007 to 11.5mn in 9M13

Improve overall customer satisfaction

Sample of Key Benefits from KOC and MSSSample of Key Benefits from KOC and MSS

965915897824824822768600427

2532952

865 877

0

500

1,000

2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13

(No. of Branch)

New Branch Sales & Service Rollout

Branch roll-out completed since 1Q12; new platform is continuously implemented for new branch opening

Note:

- KOC = Know Our Customer- MSS = Multi-channel Sales and Services

31

New IT Business Capabilities

New Core Banking System on Loans- Open possibilities to capture new business

opportunities- Help shorten product development time - Enhance product innovation capability

New Branch Sales & Service and Call Center System Enhancement- Create unique and consistent customer

experience across channels including new infrastructure

- Enhance cross selling capability via diverse sales and service channels

New Core Banking System on Deposits - Start to deploy legacy system in multiple

groups to mitigate risk of big bang deployment

Key Deliverables and Benefits in 2013Key Deliverables and Benefits in 2013--20142014

Develop a constructive and harmonious corporate culture; new IT platform to provide unique tools to support our customer-centric strategy; overcoming IT obstacles makes KBank a leader among peers

LongLong--term Strategic Positioningterm Strategic PositioningThe K-Transformation project is expected to be completed by 2015

A new core banking system, the last capability enhancement under the K-Transformation project, consists of new loan and deposit core banking systems

New capabilities will help enhance new product development capability, shorten product development time, and significantly reduce maintenance costs in the long-term; as well as open possibilities to capture new business opportunities

Gradual deployment of the K-Transformation project will make the project KBank’s new standard business system platform; the project budget will be included as a part of KBank’s regular annual IT budget

KBank’s cost to income ratio will range in the mid-40s

June 2013: changes to some parts of deposit core banking system development

New deposit core banking vendor provides more benefits in the long-term, including faster data processing, mitigated risk concerning for staff competence in maintaining system stability, and reduction in maintenance costs

New capabilities will help enhance new product development capability, shorten product development time, and significantly reduce maintenance cost in the long term

End 2013 to early 2014: Plan to deploy on new loan accounts, with gradual deployment to mitigate new technology system risk; deployment for all loan accounts will be completed by early 2014

End 2015: Plan to deploy new deposit core banking system to complete the K-Transformation project

32

KASIKORNBANK to Capture AEC Opportunities

Note: 1. Size of economy for 2013 from IMF and compiled by KResearch (as of October 15, 2013)2. 2014 GDP forecast is projected by KResearch (as of January 20, 2014) 3. ASEAN economic growth are averaged growth among ASEAN member countries in national currencies4. Greater Bangkok includes Nonthaburi, Samut Prakarn, Nakorn Pathom, Samut Sakhon, and Patumthani

GDP Thailand ASEAN

Size of Economy (GDP) in USD Trillion for 2013 0.38 3.30

2014 GDP Forecast 3.0% 5.5%

Contribution to GDP (by NESDB) 2012 Y2015F

Greater Bangkok : Provinces 44 : 56 42 : 58

KBank has 5 international branches (Los Angeles, Cayman Islands, Hong Kong, Shenzhen, and Chengdu), and 5 representative offices (Beijing, Shanghai, Kunming, Tokyo, and Yangon)

ASEAN Economic Community (AEC): ASEAN member countries to become a single market by 2015; free flow of goods & services and non tariff barrier among 10 member nationsGreater opportunities available through ASEAN + 3 (China, Japan, and South Korea)To capture AEC opportunities, KBank continues to enhance business in

International TradeBorder TradeCross Border Investment Retail Customer (Tourist / Expatriate / Transit)Host Country Business

Higher revenue generation and expansion of customer base“AEC Plus” framework is established to cover ASEAN, China, Japan, and Korea through our presence and collaborative business networks with partner banksChina model developed to ensure KBank’s presence in China

33

AEC Plus Framework and China ModelGermany

Italy

Indonesia

Japan South Korea

VietnamLao PDR

Cambodia

Beijing Rep. Office

Kunming Rep. Office

Shenzhen Branch

Chengdu Branch Shanghai Rep. Office

Hong Kong Branch

Los Angeles International Branch

Yangon Rep. Office

Tokyo Rep. OfficeCayman Islands Branch

Note: * There is some overlap among Japanese partner banks and Japanese Regional Banks through JBIC Scheme

AEC Plus Framework:

Collaborative business networks established with partner banks overseas

Global partners with 60 banks* in 8 countries: 27 Japanese partner banks; 2 Korean partner banks; 3 European regional banks; 5 ASEAN partner banks; and 28 Japanese Regional Banks through Japan Bank for International Cooperation (JBIC) Scheme (As of Dec 2013)

China Model:

Three branches in China include Shenzhen, Chengdu, and Hong Kong with one sub-branch in Shenzhen (in process) and three representative offices in China

SME lending and international trade business are key strategic business directions for expansion in China

Aim to establish KASIKORNBANK China (Local Incorporated Institution, LII)

34

KASIKORNBANK to Capture Urban Growth Opportunities

Bangkok

Note: Market Penetration = % of customers in the market who use at least one of the products of KBank and its wholly-owned subsidiaries Market Share by Value = share of revenue (derived from both credit and non-credit products) that each bank gains from the market Main Bank Status = % of customers in the market who use KBank and its wholly-owned subsidiaries as their main operating bank and/or main savings and investing bank and/or main borrowing bank

* In 2012, 14 provinces were selected as strategic provinces

Strategic Provinces Project* started to capture urban growth opportunities and to prepare for the upcoming AEC

Different industries, customer segments, and behaviors in each strategic province in Thailand identified to capture various business opportunities with different approaches

Key areas include: Tourist Hub, Logistic Hub, Education Centre, Industrial Estate, and AEC Linkage

Aspiration to become No.1 in customers’ mind in each strategic province

Higher revenue generation from both net interest income and non-interest income expected, with a gradually increasing proportion of loans and revenue generation from the upcountry

Wider customer base in all customer segments expected, along with higher Market Penetration (especially retail customers), higher Market Share by Value, and higher Main Bank Status

As of 2013, the proportion of KBank’s outstanding loans in Bangkok and its metropolitan area is around 65% vs. around 35% in the upcountry

35

Strategic Provinces Project: Highlights in 2013*

Corporate Business Total income earned from corporate customers in strategic provinces increased 12% YoY in 10M13Successfully launched events to keep a strong relationship with Big Family (Phuket) Created Marketing Activities for corporate customers such as Professional Family Business Management and Business Matching Activities

SM

E

Bu

sin

ess

SME BusinessTotal income earned from SME customers in strategic provinces increased 9% YoY in 10M13Opened six SME hubs in strategic provincesBuilt K-SME brand awarenessLaunched localized marketing campaigns, including brand selling and retention programs, to serve customer needs in each strategic province

Co

rpo

rate

B

usi

nes

s

KBank, its wholly-owned subsidiaries, and Muang Thai Life Assurance (MTL) aim to offer a full range of financial solutions based on customer-centric strategy to capture business in strategic provinces

Ret

ail

Bu

sin

ess

Note: * In 2013, 15 provinces were selected as strategic provinces for corporate and SME customers; 19 provinces were selected as strategic provinces for retail business

Retail BusinessSince launching the strategic province project, the number of retail customers has grown continuously by a total of 23% in 2013, with significant growth particularly in High Net Worth Individual and Affluent segmentsStrengthen KBank infrastructure through new branches and THE WISDOM lounge opening in strategic provinces Massive acquisition and customer engagement with effective marketing communication by launching localized offerings, events, campaigns, and privileges to match customer lifestyles and needs such as Joyful Festival, Provincial Debit Card, Localized Privileges, and Exclusive Experience Activities for high value customers

36

KBank: Risk and Credit Management

37

KBank Risk Management StructureThe Bank’s organization is structured to facilitate all aspects of risk management; each business unit’s responsibilities and segregation of duties are clearly identified in accordance with good internal-control practices

Board of DirectorsBoard of Directors

Audit CommitteeAudit Committee

Risk Management Committee

Sub-committeeCredit Policy and Risk Management Sub-committee

Credit Process Management Sub-committeeMarket Risk Management Sub-committee

Asset and Liabilities Management Sub-committeeOperational Risk Management Sub-committee

Capital Management Sub-committee

Business FunctionsCBS/ RBS/

SME/ CMB/ CSP

Risk FunctionsERM

Approve risk appetite and all risk management policies and guidelinesEnsure the adequacy and effectiveness of risk management system and internal controls

Approve risk limits according to the risk appetite approved by the Bank’s Board of DirectorsOversee and monitor risk management policies and overall risk profile under the policies and guidelines approved by the Bank’s Board of Directors

Risk functions are responsible for risk management policies, methodologies, and processes in order to effectively measure, monitor, and control all related risks

Business functions are accountable for managing all risks inherent in their day-to-day activities

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

38

KBank Credit Risk Management Process

Monitor customer behavior and detect early warning signsEnsure credit condition compliance (e.g. insurance, capital injection, project progress) Take prompt action to prevent credit deterioration

Efficient collection and follow-up of customers with late paymentsRestructure viable customers to prevent NPLsForeclose pledged assets to recover loan loss

Enhance decision making/supporting tools for more efficient return and risk evaluationSetup specific prescreening criteria for potential industriesEnhance customer income validation process

MonitoringMonitoringMonitoring Collection & RecoveryCollection & RecoveryCollection & RecoveryOriginationOriginationOrigination

Portfolio ManagementPortfolio ManagementPortfolio Management

Determine portfolio-by-design i.e., portfolio target setting by key credit concentration dimensions (Country, Industry, Large Customer Group) and other sub portfolio dimensions based on value-based analysis

Manage portfolio according to the Bank’s risk appetite and concentration

Perform stress testing to identify portfolio weaknesses and proactively prepare appropriate management actions

The Bank continues to enhance credit risk management processes to promote risk strategies with justified risk-return tradeoff within the rapidly changing economic environment

39

• Automated collection system• Efficiently utilize available behavior scoring and collection tools i.e. SMS, automated letter

generation, phone

Unsecured Credit Product Operation Dept.

Credit Card/Unsecured Consumer

Housing Loan/ Secured Consumer

SM≤ Bt50mn

MB> Bt5,000mn

ME> Bt50 – 400mn

CB> Bt400 - 5,000mn

Policy Lending

• Sufficiency of cash flow• Growth trends and ability to compete• Management experience and depth• Leverage, Liquidity, and asset quality• Credit Risk Mitigation• Facilities Structure

Formula Lending

Corporate SME Retail

Po

st A

pp

rova

l

• Legal document• Limit set up

Credit Processing Dept.

Bank-wide Risk Asset Review

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

customer monitoring• Credit Clinic

Retail and SME Business Collection and Recovery Dept.

Ap

pro

val P

roce

ssA

nn

ual

Sal

e s

• Legal document• Limit set up

• Application Score• FICO Score• Bureau information/Credit

history• Debt service capacity• LTV

Unsecured Credit Product Operation Dept.

KBank Credit Approval Process

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

Formula Lending

• Application Score• FICO Score• Bureau information/Credit history• Debt service capacity (except Credit Card)• LTV (only housing loan/secured consumer)

SME Credit and Housing Loan Approval Processing Dept.Credit Underwriting Dept.

40

Credit Bureau Summary

Two Types of Credit Reports Offered by NCB:

Consumer credit report for individuals

Commercial credit report for businesses

Credit report (monthly reported by members)

Customer information (Name, address, identification number, birth date, occupation, etc.)

Credit information (History of application, approval history, loan payment history, etc.)

Data Record of Credit Report

Individuals: Credit report remains on file for 3 years

Businesses: Credit report remains on file for 5 years

Members: Financial institutions including commercial banks, specialized financial institutions (SFIs), non-bank financial institutions, finance companies, securities companies, insurance companies, etc.

KBank PracticeNational Credit Bureau (NCB)*

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

KBank’s customers applying for loans

Corporate Business



Required to

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

Retail Business

Reject application

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

Good credit

Small & Micro

Business

Medium Business

SME

Reject application

Required to (Large companies normally have reliable financial statements)

Optional to

Poor credit Good credit Poor credit

KBank’s Policy

Lending

KBank’s Credit

Scoring

41

KBank: Financial Performance

42

Consolidated 2012 1Q13 2Q13 3Q13 4Q13 2013

Net Profit (Bt bn) 35.26 10.11 10.98 10.71 9.53 41.33Profitability

- NIM 3.58% 3.49% 3.52% 3.52% 3.60% 3.55%

- ROE 20.76% 21.23% 22.17% 20.94% 17.80% 20.45%

- ROA 1.86% 1.93% 2.03% 1.92% 1.68% 1.89%

- YTD Loan growth 9.57% 2.19% 4.78% 6.51% 8.46% 8.46%

- YoY Loan growth 9.57% 11.12% 10.67% 9.77% 8.46% 8.46%

- YoY net fee income growth 18.56% 29.52% 23.63% 20.64% 9.67% 20.34%

- YoY non-interest income growth 19.72% 16.72% 21.39% 20.09% 14.61% 18.24%

Cost control

- Cost to income 45.00% 40.02% 42.65% 43.63% 48.40% 43.74%

Asset quality

- NPL ratio 2.16% 2.09% 2.13% 2.13% 2.11% 2.11%

- Coverage ratio 131.83% 138.62% 133.93% 132.85% 134.52% 134.52%

Loans to Deposits 95.35% 94.92% 94.76% 91.03% 94.06% 94.06%

Tier 1 Ratio (Bank Only)** 10.43% 11.08%** 11.44%** 12.51%** 12.02%** 12.02%**

CAR (Bank Only)** 15.98% 15.44%** 15.71%** 16.72%** 15.25%** 15.25%**

2013 Performance Highlights2013 net profit rose 17.20% YoY, driven by both net interest income and non-interest income

Loans grew 8.46% YoY from all business segments: Corporate, SME, and Retail

High NIM maintained; focus on high yield lending markets

Net fee income continued to grow due to customer-centric strategy; growth entails strengthening acquisition, retention, and cross-selling capabilities

2013 cost to income ratio was at 43.74%; cost to income ratio in 2014 will range in the mid-40s

Manageable NPLs, with high coverage ratio maintained

Strong capital base maintained

Note: * Under Bank of Thailand regulations, net profit in the first half of the year is counted as capital after approval by the Board of Directors as per Bank regulations. Net profit in the second half of the year is counted as capital after approval of the GeneralMeeting of Shareholders. However, when a net loss occurs, the capital must be reduced immediately.

** Capital Adequacy Ratio (CAR) has been reported in accordance with Basel III Capital Requirement from 1 January 2013 onwards.For KASIKORNBANK FINANCIAL CONGLOMERATE, as of 2013, Tier 1 = 12.57%, Tier 2 = 3.21%, and CAR = 15.78%.

KASIKORNBANK FINANCIAL CONGLOMERATE means the company under the Notification of the Bank of Thailand re: Consolidated Supervision, consisting of KBank, K Companies and subsidiaries operating in supporting KBank, Phethai Asset Management Co., Ltd. and other subsidiaries within the permitted scope of the BOT’s to be a financial conglomerate

43

Consolidated Financial Statements

KBank acquired additional ordinary shares in MTGH, to hold a 51% stake valued at Bt7,529mn; the MTGH Acquisition was completed on November 30, 2009. As the MTGH acquisition was completed on November 30, 2009, the Bank’s consolidated financial statements from 2010 include the performance of companies in the MTGH Group for the whole year.

Statements of Comprehensiv e Income (Bt mn)

2011* 2012 1Q13 2Q13 3Q13 4Q13 2013

Interest income 83,693 96,174 25,088 26,053 27,158 27,927 106,226

Interest expenses 27,202 32,593 7,883 8,121 8,641 8,783 33,428

Interest income - net 56,491 63,581 17,205 17,931 18,517 19,144 72,797Fee and service income 26,072 31,429 9,037 9,241 9,419 9,549 37,246

Fee and service expenses 5,435 6,961 1,901 1,867 1,899 2,136 7,803

Fee and serv ice income - net 20,637 24,467 7,136 7,374 7,519 7,413 29,443

Total operating income 122,216 144,495 40,575 42,541 43,295 43,224 169,635Underwriting expenses 31,707 40,190 11,872 11,971 12,396 12,446 48,685

Total operating income - net 90,508 104,305 28,703 30,569 30,899 30,779 120,950

Total other operating expenses 43,019 46,934 11,488 13,037 13,482 14,896 52,903Impairment loss of loans and debt securities 7,346 8,390 3,525 2,200 2,983 3,035 11,743

Operating profit before income tax expenses 40,144 48,981 13,690 15,332 14,433 12,848 56,303Income tax expenses 13,962 11,136 2,743 3,335 2,778 2,601 11,457

Net profit attributable:

Equity holders of the Bank 24,226 35,260 10,106 10,979 10,713 9,527 41,325 Non-controlling interest 1,957 2,585 842 1,018 942 720 3,522

Statements of Financial Position (Bt mn)2011 2012 1Q13 2Q13 3Q13 4Q13 2013

Loans to customers (less deferred revenue) 1,210,834 1,326,732 1,355,747 1,390,135 1,413,050 1,438,978 1,438,978Total Assets 1,722,940 2,077,442 2,109,967 2,225,152 2,240,034 2,290,045 2,290,045Deposits 1,242,229 1,391,380 1,428,318 1,467,058 1,552,217 1,529,835 1,529,835Total Liabilities 1,555,974 1,876,621 1,896,632 2,007,654 2,013,315 2,053,038 2,053,038Total Equity attributable to equity holders of the Bank 154,799 184,946 195,877 200,250 209,058 219,232 219,232

Notes:

* In accordance with the corporate income tax rate reduction from 30% of taxable profit to 23% in 2012 and 20% in 2013, KBank recognized a one-time Bt1.9bn impact to the 4Q11 income statement due to deferred tax item adjustments; there was no affect on the business undertakings, profitability, or capital fund of the Bank and its subsidiaries

44

Earnings Before Provision and Tax (EBPT) and Net Profit

37.1430.20

47.49

57.37

68.05

0

10

20

30

40

50

60

70

2009 2010 2011 2012 2013

(Bt bn)


EBPT Net Profit

2009 2010 2011* 2012 2013 1Q13 2Q13 3Q13 4Q13

EBPT (Bt bn) 30.20 37.14 47.49 57.37 68.05 17.22 17.53 17.42 15.88

EBPT Growth (% YoY) n.a. 22.97% 27.86% 20.81% 18.61% 18.65% 21.32% 16.34% 18.17%

Net Profit (Bt bn) 14.73 20.05 24.23 35.26 41.33 10.11 10.98 10.71 9.53

Net Profit Growth (% YoY) n.a. 36.07% 20.85% 45.55% 17.20% 12.44% 17.21% 16.29% 23.85%

* In accordance with the corporate income tax rate reduction from 30% of taxable profit to 23% in 2012 and 20% in 2013, KBank recognized a one-time Bt1.9bn impact to the 4Q11 income statement due to deferredtax items adjustment; there was no affect on the business undertakings, profitability, or capital fund of the Bank and its subsidiaries

Note:

**

EBPT and net profit in 2013 grew 18.6% and 17.2% YoY, respectively

20.0514.73

24.23

35.26

41.33

0

10

20

30

40

50

2009 2010 2011 2012 2013

(Bt bn)

45

12.7915.73 16.72

20.4520.76

0

4

8

12

16

20

24

2009 2010 2011 2012 2013

(%)

1.101.38 1.48

1.891.86

0.00

0.50

1.00

1.50

2.00

2.50

2009 2010 2011 2012 2013

(%)

2009 2010 2011* 2012 2013 1Q13 2Q13 3Q13 4Q13

ROA (%) 1.10 1.38 1.48 1.86 1.89 1.93 2.03 1.92 1.68

ROE (%) 12.79 15.73 16.72 20.76 20.45 21.23 22.17 20.94 17.80

Note:

ROA and ROE

ROA ROE


* In accordance with the corporate income tax rate reduction from 30% of taxable profit to 23% in 2012 and 20% in 2013, KBank recognized a one-time Bt1.9bn impact to the 4Q11 income statement due to deferredtax items adjustment; there was no affect on the business undertakings, profitability, or capital fund of the Bank and its subsidiaries

**

46

Net Interest Margin

3.23 3.48 3.553.583.75

0

1

2

3

4

5

2009 2010 2011 2012 2013

(%) (%)

NIM


Note: * Cost of deposits including contributions to the Financial Institutions Development Fund (FIDF) and Deposit Protection Agency (DPA)

Yield on Loans

Yield on Earnings Assets

Cost of Fund

Cost of Deposit*

Yield on Earnings Assets and Cost of Fund

NIM was 3.55% in 2013, remaining the highest level among large commercial banksNIM position will be maintained, focusing on the high-yield lending market; pressure from rising competition will remain

5.185.424.63

5.55

5.245.94

6.24 6.37

1.932.142.08

1.321.891.991.70

1.050

2

4

6

8

2010 2011 2012 2013

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13

NIM (%) 3.23 3.48 3.75 3.58 3.55 3.49 3.52 3.52 3.60

Yield on Earnings Assets (%) n.a. 4.63 5.55 5.42 5.18 5.09 5.11 5.16 5.24Yield on Loans (%) n.a. 5.24 5.94 6.24 6.37 6.26 6.29 6.44 6.46

Cost of Fund (%) n.a. 1.32 2.08 2.14 1.93 1.89 1.89 1.95 1.97

Cost of Deposit (%), incl DPA n.a. 1.05 1.70 1.99 1.89 1.81 1.82 1.92 1.93

47

72.80

63.5856.49

39.8646.74

0

20

40

60

80

2009 2010 2011 2012 2013

Interest Income - net

(Bt bn)106.23

96.17

62.27

83.69

15.5327.20

32.59 33.43

0

20

40

60

80

100

120

2010 2011 2012 2013Interest Income Interest Expenses

(Bt bn)

Interest Income - net

Interest Income and Interest Expenses Interest Income- net


Note: KBank acquired additional ordinary shares in MTGH, to hold a 51% stake valued at Bt7,529mn; the MTGH Acquisition was completed on November 30, 2009. As the MTGH acquisition was completed on November 30, 2009, the Bank’s consolidated financial statements from 2010 include the performance of companies in the MTGH Group for the whole year.

2013 net interest income grew 14.50% YoY

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13

Interest Income (Bt bn) n.a. 62.27 83.69 96.17 106.23 25.09 26.05 27.16 27.93

Interest Expenses (Bt bn) n.a. 15.53 27.20 32.59 33.43 7.88 8.12 8.64 8.78

Interest Income - net (Bt bn) 39.86 46.74 56.49 63.58 72.80 17.21 17.93 18.52 19.14

Interest Income - net (% Growth YoY) n.a. 17.28% 20.85% 12.55% 14.50% 15.33% 15.95% 14.27% 12.65%

48

15%

2%0.04%2%

18%16%

60%61%

0

10

20

30

40

50

2010 2011 2012 2013

Other Operating Income

Fee and Service Income - net

Net Premium Earned - net*

Dividend Income

Share of Profit from Investmentson Equity Method

Gain on Investment

Gain on Trading and FXtransactions

4%

2%

64%

0.02%2%

14%

12%2%

2%

20%

61%

0.4%

16%

2%

14%

3%

2%

0.05%

3%

2%

1.621.95 2.08 2.14 2.21

0

1

2

3

4

2009 2010 2011 2012 2013

(%)

4039383835

0

10

20

30

40

50

60

2009 2010 2011 2012 2013

(%)

Non-interest Income and StructureNon-interest Income to Average Assets

Non-interest Income Ratio**

Non-interest Income Structure

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13Non-interest Income (Bt bn) 21.68 28.40 34.02 40.72 48.15 11.50 12.64 12.38 11.64

Non- interest Income Growth (%YoY) n.a. 30.97 19.78 19.72 18.24 16.72 21.39 20.09 14.61

Non- interest Income Ratio (%) 35.23 37.79 37.58 39.04 39.81 40.06 41.34 40.07 37.80


Note: * Net Premium Earned - net = Net Premium Earned less Underwriting expense** Non-interest income ratio = Non-interest income / Total operating income-net

(Bt bn)

28.40

34.02

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

40.72

48.15

49

24%23%23%24%

26%

0

10

20

30

2009 2010 2011 2012 2013

(%)29.44

24.47

18.2315.94

20.64

0

10

20

30

2009 2010 2011 2012 2013

(Bt bn)

Net Fee IncomeDecember 2013 (Consolidated)

Net Fee Income to Net Total Operating IncomeNet Fee Income

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13Fee Income (Bt bn) 19.54 22.82 26.07 31.43 37.25 9.04 9.24 9.42 9.55Fee Income-net (Bt bn) 15.94 18.23 20.64 24.47 29.44 7.14 7.37 7.52 7.41

Fee Income Growth (%YoY) n.a. 16.77 14.25 20.55 18.51 26.19 20.53 18.73 10.18Net Fee Income Growth (%YoY) n.a. 14.36 13.22 18.56 20.34 29.52 23.63 20.64 9.67

Net Fee Income to Net Operating Income (%) 25.90 24.26 22.80 23.46 24.34 24.86 24.12 24.34 24.09

2013 net fee income grew 20.34% YoY, driven by a rise in card business, mutual fund business and brokerage business in line with market growthNet fee income growth will continue to be helped by the cross-selling capabilities of our customer-centric strategyNet fee income to net total operating income was 24% in 2013Consolidated net fee income reflects the accounting treatment following the MTGH consolidation; Bancassurance fees were not included

50

Others10%

Bancassurance16%

Trade Finance6%

Cash Management

5%

Commercial Credit24%

Transaction Services

24%

Credit Card Business

15%

Credit Card Business

Transaction Services

Commercial Credit

Cash Management

Trade Finance

Bancassurance

Others

Net Fee Income Structure (Bank only)

Net Fee Income by Product

Loan Related and Non-loan Related Fees - net

Loan related24%

Non-loan related76%

(mainly from credit card merchant fees)

(such as ATM & debit cards, bill payments, money transfers, etc.)

(such as mutual funds, securities services, capital market business, etc.)

(mainly from commercial credit related fees)

(such as fees from payroll accounts)

(fee income obtained from selling Bancassurance products)

Note: - On the consolidated basis, Bancassurance fees are not

included, due to the elimination of inter-company transactions (the accounting treatment from the Muangthai Group Holding consolidation)

- On the consolidated basis, Net Premium Earned - net (Net Premium Earned Less Underwriting Expenses) from Muang Thai Life Assurance (MTL) is reported as a part of non-Interest Income; KBank has a 38.25% economic interest in MTL

December 2013

51

9.73

7.33

5.41

0.26

3.87

0

5

10

15

20

2009 2010 2011 2012 2013

Net Premium Earned - net

(Bt bn)58.41

47.52

37.12

2.20

29.09

1.94

25.22

31.71

40.19

48.69

0

20

40

60

2009 2010 2011 2012 2013

Net Premium Earned Underwriting Expenses

(Bt bn)

Net Premium Earned - net

Net Premium Earned and Underwriting Expenses Net Premium Earned – net


Note: KBank acquired additional ordinary shares in MTGH, to hold a 51% stake valued at Bt7,529mn; the MTGH Acquisition was completed on November 30, 2009. As the MTGH acquisition was completed on November 30, 2009, the Bank’s consolidated financial statements from 2010 include the performance of companies in the MTGH Group for the whole year.

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13

Net Premium Earned (Bt bn) 2.20 29.09 37.12 47.52 58.41 14.10 14.82 14.98 14.51

Underwriting Expenses (Bt bn) 1.94 25.22 31.71 40.19 48.69 11.87 11.97 12.40 12.45

Net Premium Earned - net (Bt bn) 0.26 3.87 5.41 7.33 9.73 2.23 2.85 2.59 2.07

Net Premium Earned - net (% Growth YoY) n.a. n.a. 39.84 35.41 32.79 22.17 47.24 27.88 33.70

Net Premium Earned - net = Net Premium Earned less Underwriting Expense

52

Other Operating ExpensesOther Operating Expenses Structure


46%46%43%

21%22%

23%

8%7%

7%0.3%

0.2%0.2%

25%

25%27%

3%

0

10

20

30

40

50

60

2010 2011 2012 2013

Impairment on ApplicationSoftware & Related Expenses

Others

Directors' remuneration

Taxes & Duties

Premises & Equipment

Employee's expenses

44%

20%

7%

25%

0.2%38.00

43.0246.93

(Bt bn) 52.90

2013 other operating expenses rose 12.72% YoY, the majority came from other promotion, advertising and marketing expenses, and employee expensesIn 2Q13, the Bank set the allowance for impairment on application software and related expenses at Bt1.6bn as a result of changes to some parts of the deposit core banking development under the K-Transformation Strategic Project; in addition, the Bank has made a reversal of estimate for loss sharing for asset management amounting to Bt1.1bn by Thai Asset Management Corporation (TAMC)

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13Other Operating Expenses (Bt bn) 31.34 38.00 43.02 46.93 52.90 11.49 13.04 13.48 14.90

% Growth (YoY) n.a. 21.27 13.20 9.10 12.72 11.97 14.10 16.79 8.69

53

14.4312.43

9.578.46

0

5

10

15

20

2010 2011 2012 2013

(%)

Loan Growth December 2013 (Consolidated)

Loans grew sensibly at 8.46% YoY from all business segments: Corporate, SME, and Retail

Loan Growth (% YoY)

2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13Loans (Bt bn) 1,077 1,211 1,327 1,439 1,356 1,390 1,413 1,439

Loan Growth (% YoY) 14.43 12.43 9.57 8.46 11.12 10.67 9.77 8.46

Loan Growth (% YTD) 14.43 12.43 9.57 8.46 2.19 4.78 6.51 8.46

54

31%31%

36%36%

26%26%

7%7%

0

500

1,000

1,500

2012 2013

Corporate Loans SME Loans Retail Loans Other Loans

(Bt bn)1,327 1,439

Loan Structure and Loan Growth Targets

(Amount in Bt bn) Dec 12** Y2012 Dec 13 Y2013 2013 Y2014Loan Loan Yield Loan Growth

Growth Growth Range Target (%)(%) (%) (%)

1) Corporate 416 5.5 443 6.7 4-6 6-8Multi-Corporate Business 203 5.2 220 8.3Large Corporate Business 212 5.8 223 5.2

2) SME 469 8.7 521 10.9 7-8 9-11Medium Business 260 1.9 277 6.6Small and Micro Business 207 18.5 241 16.9

3) Retail 347 16.0 382 10.3 6-7 10-134) Others 95 10.8 93 (2.9)Total Loans 1,327 9.6 1,439 8.5 6.4 9-11

December 2013 (Consolidated, TFRS 8: Operating Segments*)

Loan Portfolio Structure Loan Structure, Loan Yield and Loan Growth Targets

** December 2012 loan base is not comparable with previous reports, due to customer migration to larger segments and changes to comply with TFRS 8

Loan Definition (TFRS 8: Operating Segments)Corporate Loans: Loans of KBank and KBank’s Subsidiaries in Corporate Segments (Annual sales turnover > Bt400mn)SME Loans: Loans of KBank and KBank’s Subsidiaries in SME Segments (Annual sales turnover ≤ Bt400mn)Retail Loans: Loans of KBank and KBank’s Subsidiaries in Retail SegmentsOther Loans: Loans in Enterprise Risk Management Division (NPL + Performing Restructured Loans), and other loan types

Note: * Since 1Q13, as per the Bank of Thailand’s requirement, the Bank has complied with TFRS 8 (Operating Segments) to present operating results for each key segment in financial reports

55

Loan by Retail Products December 2013 (Consolidated, TFRS 8: Operating Segments*)

Loan Definition (TFRS 8: Operating Segments)Housing Loans: KBank’s housing loans to retail customer segmentsCredit Cards: KBank’s credit card loans to all eight customer segmentsConsumer Loans: KBank’s consumer loans to retail customer segmentsKLeasing: KLeasing’s loans to all eight customer segments

(Amount in Bt bn) Dec 12** Y2012 Dec 13 Y2013 % Portion

Loan Loan to

Growth Growth Total Loan(%) (%)

Housing Loans 203 10.1 215 5.5 14.9Credit Cards 54 27.7 66 21.8 4.6Consumer Loans 37 38.7 44 17.8 3.1KLeasing 83 29.8 89 7.7 6.2

Note: * Since 1Q13, as per the Bank of Thailand’s requirement, the Bank has complied with TFRS 8 (Operating Segments) to present operating results for each key segment in financial reports

Loan by Retail Products

** December 2012 loan base is not comparable with previous reports, due to customer migration to larger segments and changes to comply with TFRS 8

56

6 months and over16.0%

Immediate Repricing61.0%

< 6 months11.5%

Other11.5%

48.4%48.9%51.2%54.3%55.4%

6.5%6.5%6.2%5.7%

6.3%10.8%

13.1%13.0%12.4%

10.7%

15.7%16.0%16.0%

15.5%14.0%

13.9%13.1%

11.6%

11.4%

10.9%

0

200

400

600

800

1,000

1,200

1,400

1,600

2009 2010 2011 2012 1H13

OthersHousing LoansUtilities & ServicesReal Estate & Construction

Manufacturing & commerceAgricultural and mining

(Bt bn)

2.7% 2.5%

942

1,077

2.5%

1,211

2.4%

1,327

2.3%

1,390

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

Loan Portfolio by Industry (June 2013)*

Definition of Loans1) by industry = Gross loans = Loans to customers less deferred revenue2) by top 20 borrowers = Loans excluding the wholly-owned subsidiaries of KBank and Phethai Asset

Management Company 3) by currency = Loans to customers and AIR - net4) by maturity of interest repricing = Loans to customers less deferred revenue

By Maturity of Interest Repricing (June 2013)*

By Currencies (June 2013)*

Note:

Thai Baht92.46%

US Dollar6.60%

Other Currencies0.94%

* The data as of December 2013 is not available until the release of the audited financial statements** The information on loans breakdown by currencies and maturity of interest repricing are disclosed on half year basis

57

134.52131.83127.12111.02

91.64

0

50

100

150

2009 2010 2011 2012 2013

3.762.91

2.45 2.16 2.11

0

2

4

6

8

2009 2010 2011 2012 2013

Asset QualityDecember 2013 (Consolidated)

NPL Ratio(%)

Coverage Ratio(%)

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13

NPL Ratio (%) 3.76 2.91 2.45 2.16 2.11 2.09 2.13 2.13 2.11

Coverage Ratio (%) 91.64 111.02 127.12 131.83 134.52 138.62 133.93 132.85 134.52

NPL ratio was 2.11% in 2013Coverage ratio was 134.52%; this ratio has been maintained above 100% since 2Q10

58

85666466

102

0

50

100

150

2009 2010 2011 2012 2013

9.38

6.707.35

8.39

11.74

0

4

8

12

2009 2010 2011 2012 2013

Impairment Loss of Loans and Debt Securities (Provision) and Credit CostDecember 2013 (Consolidated)

Impairment Loss of Loans and Debt Securities Credit Cost

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13Impairment Loss of Loans and Debt Securities (Bt bn) 9.38 6.70 7.35 8.39 11.74 3.53 2.20 2.98 3.04

Credit Cost (bps) 102 66 64 66 85 105 64 85 85

(Bt bn) (bps)

In 2013, KBank set aside a higher provision expense, partially to serve as a countercyclical provision to prepare the Bank for any potential future economic downturn or changing economic circumstance, both domestic and abroad

Credit cost was 85bps in 2013

59

0.0

10.0

20.0

Write-off 11.6 8.7 4.3 5.5 4.3 3.9 5.0 10.3

2006 2007 2008 2009 2010 2011 2012 2013

17%26%22%24%22%27%38% 22%

83%62%

73%78%

76% 78% 74% 78%

0

20

40

60

80

100

2006 2007 2008 2009 2010 2011 2012 2013

% of Performing Restructured loans to Restructured loans

% of Non-Performing Restructured loans to Restructured loans

Bad Assets Resolution

(Bt bn)


Outstanding Foreclosed Properties

Note: * Accrued interest receivables included

(Bt bn)

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

2007: KBank and Phethai AMC sold NPLstotaling Bt11.4bn to Standard Bank Asia Limited and Morgan Stanley Emerging Markets Inc. at Bt7.6bn and Bt3.8bn, respectively

2008-2013: NPLs continue to decline without bulk NPL sales

Write-offs NPL Portfolio Sales Sale of Foreclosed Properties

Restructured Loans

(Bt bn)

52.33

67.01

77.1974.50

% of Restructured loans to Total loans

Outstanding Restructured Loans was Bt85.83bn in 2013; 83% were performing restructured loans Definition: Outstanding Restructured Loans is the accumulated outstanding amount of restructured loans, comprised of performing restructured loans and non-performing restructured loans. Non-performing restructured loans are already counted as part of Non-Performing Loans (NPLs)

Restructured loans

61.51

76.7082.38

9.1%6.9% 7.4%

8.2%6.9% 6.3% 6.2% 5.9%

0%

4%

8%

12%

16%

2006 2007 2008 2009 2010 2011 2012 2013

12.5

15.115.9

18.717.3

16.1 16.7

0

5

10

15

20

2006 2007 2008 2009 2010 2011 2012 2013

(Bt bn)

12.1

85.83

4.14.85.6

7.2

5.05.65.45.06.0

0

2

4

6

8

10

2005 2006 2007 2008 2009 2010 2011 2012 2013

60

85% 83% 78%

79%81%6% 8% 12%

11%

10%

4%

4%

4%

5% 3%5%

6%

4% 6%

5%0.4%

0.5%

0.1%0.3%0.1%

0

100

200

300

400

500

600

2009 2010 2011 2012 2013Other Investment (Investments in Receivables, Investments in Subsidiaries and Other Investments)Equity InvestmentForeign BondsCorporate BondsGovernment & State Enterprise Bonds

(Bt bn)

255 251 264

382

80%

497

Investment in Securities Portfolio and Structure

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


Instrument Type Holding Type

KBank continues to manage its investment portfolio to reflect the BOT's interest rate trend and enhance risk adjusted returns

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13

Investment Portfolio (Bt bn 254.98 251.22 264.29 382.33 496.93 342.18 440.18 461.19 496.93

% Growth (YoY) 147.69 (1.48) 5.21 44.66 29.97 (8.09) 15.70 23.08 29.97

3% 6% 2% 2% 2%

73%65% 64%

68% 68%23% 28% 33%

29%

29%

1%0.1%

0.7%

0.4%0.1%

0.1% 0.1%

0.04%

0.07%

0

100

200

300

400

500

600

2009 2010 2011 2012 2013

Trading Available-for-sales Held-to-maturity

General Investment in Receivables Investments Subsidi

(Bt bn)

255251 264

382497

0.4%

0.4%

0.3%

61

Deposits Growth and Loans to Deposits Ratio

Deposits & B/E Loans to Deposits Ratio


(Bt bn)

2009 2010 2011 2012 2013 1Q13 2Q13 3Q13 4Q13Deposits (Bt bn) 975 1,100 1,242 1,391 1,530 1,428 1,467 1,552 1,530

Deposit (% YoY) 0.8% 12.8% 12.9% 12.0% 10.0% 9.4% 10.7% 11.0% 10.0%

Deposit (% YTD) 0.8% 12.8% 12.9% 12.0% 10.0% 2.7% 5.4% 11.6% 10.0%

Loans to Deposits (%) 96.5% 97.9% 97.5% 95.4% 94.1% 94.9% 94.8% 91.0% 94.1%

62

6% 6% 5% 6% 6%

55%62% 55%

60% 58%

39%32%

39%

34%36%

0

400

800

1,200

1,600

2009 2010 2011 2012 2013

Current Savings Term

975

(Bt bn)

1,1001,242

1,391 1,530

0

40

80

120

2009 2010 2011 2012 2013ST Debentures B/E & Others LT Borrowing

(Bt bn)

9579 72

89 72

22%

78%45%

51%

4%

34%

59%

7%

53%

47%

74%

26%

Deposit Structure

Funding Structure and Interest Rate Movement

ST and LT Borrowings

Funding Structure

KBank Interest Rate Movement (Retail customers)

Savings 0.63

Fixed 3M-12M 1.40-2.15

Fixed 24M-36M 2.30

B/E 14D-1M 1.15-1.50

MLR 6.88%

MOR 7.43%

MRR 8.10%

Deposit and Bill of Exchange Rates (Jan 23, 2014)

Lending rates (Jan 6, 2014)

(%)


89%90%

91% 84%86%

7%7%

5%5%

4%

4%3%

4%11%

10%

0200400600800

1,0001,2001,4001,6001,800

2009 2010 2011 2012 2013

Deposits ST and LT Borrowings Interbank and Money Market

(Bt bn)

1,1011,228 1,368

1,654 1,769

63

Long-term Senior/Subordinated DebenturesIssued Date

Name Type Embedded Option

AmountMaturity

Years

Interest Rate

(Per annum)

Interest Payment period

Credit Rating

Thai Currency Long-term Senior/Subordinated Debentures

15/02/2012 Subordinated debentures of

KASIKORNBANK PCL

No.1/2555

Unsecured Callable

after

5 years

Bt22,000mn 10 Years

(15/02/2022)

4.5% Quarterly AA- (tha)

by Fitch Ratings

and axA by S&P


KASIKORNBANK PCL

No.1/2553

Unsecured Callable

after

5 years

Bt7,500mn 10 Years

(22/06/2020)

4.5% Quarterly AA- (tha)

by Fitch Ratings


KASIKORNBANK PCL

No.1/2552

Unsecured Callable

after

5 years

Bt600mn 10 Years

(17/07/2019)

Year 1-3: 4.85%

Year 4-7: 5.25%

Year 8-10: 5.75%

Quarterly AA- (tha)

by Fitch Ratings

Foreign Currency Long-term Senior/Subordinated Debentures

20/09/2012 Senior Unsecured Debentures of

KASIKORNBANK PCL

Unsecured - USD500mn* 5.5

(20/03/2018)

3.0% Semi-annually

A3 by Moody’s

BBB+ by S&P

and BBB+ by

Fitch Ratings


KASIKORNBANK PCL

Unsecured - USD183.31mn 20

(21/08/2016)

8.25% Semi-annually

BBB by S&P

Baa3 by Moody’s

Note: *The issued noted is drawn down from the Bank’s USD2.5bn Euro Medium Term Note Programme

64

KBank: The wholly-owned subsidiaries, and

Muang Thai Life Assurance

65

The wholly-owned subsidiaries of KBank: Business Profile and AspirationDecember 2013

* In February 2012, KBank and Macquarie signed an Exclusive Strategic Alliance (ESA) covering a range of investment banking and securities operations; KSecurities and Macquarie Securities (Thailand) are traded under a new ticket called KSMACQ

KAsset

EST. 1992

KResearch

EST. 1995KSecurities*EST. Jul 2005

KLeasingEST. Aug 2005

KF&EEST.1990

Company Name

KASIKORN ASSET MANAGEMENT CO., LTD.

KASIKORN RESEARCH CENTER CO., LTD.

KASIKORN SECURITIES PCL KASIKORN LEASING CO., LTD.

KASIKORN FACTORY AND EQUIPMENT CO., LTD.

Company Profile

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

Professional in providing knowledge in economics, business, money, and banking

Only research house which is an affiliate of a bank

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

Professional in providing three core products: hire purchase, financial lease,

and floor plan

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

Asset Size Bt1.75bn Bt0.06bn Bt10.69bn Bt87.62bn Bt11.29bn

Market Share 22.31**% (#1) N/A 6.02% (#2)* 7% (as of 3Q13) N/A

2014 Targets #1 in overall market

Top of mind research house for media and for the clients of KBank and

its wholly-owned subsidiaries

Maintain leading position in securities business

10-13% YoY growth on outstanding loans

9-11% YoY growth on outstanding loans

3-year Aspiration

Maintain #1 position Top of mind research house

Maintain position as a leading securities firm

Maintain leading position in equipment leasing industry

** KAsset’s market share is based on the AUM of mutual funds as of December 2013, and AUM of provident fund and private fund as of November 2013

66

1.19 1.431.84

2.25

3.23

0

1

2

3

4

2009 2010 2011 2012 2013

The wholly-owned subsidiaries of KBank: Y2013 Key Operating Performance

The wholly-owned subsidiaries of KBank: Net Profit

Net profit continues to rise, along with synergy among KBank and its wholly-owned subsidiaries

(Bt bn)

Since January 1, 2011, financial statements have been reclassified per the Bank of Thailand’s requirements; the 2010 financial statements were restated and adjusted for comparison purposes; in 4Q10, KBank early adopted TAS 19 (Employee Benefits) and TAS 12 (Income Taxes) to align with international practices and standards; 2009 financial statements were restated for comparison purposes

Note:

* In February 2012, KBank and Macquarie signed an Exclusive Strategic Alliance (ESA) covering a range of investment banking and securities operations; KSecurities and MacquarieSecurities (Thailand) are traded under a new ticket called KSMACQ

KAsset

EST. 1992

KResearch

EST. 1995KSecurities*EST. Jul 2005

KLeasingEST. Aug 2005

KF&EEST.1990

2013 Key Operating Performance

Assets Under Management (AUM)**: Bt943.65bn

(10.94% YoY)

Most quoted research house in the media

- Trading volume: Bt1.3trn

- Number of customers grew 63% YoY

Outstanding loans:

Bt89.22bn (7.67% YoY)

Outstanding loans:

Bt10.86bn (16.23% YoY)

December 2013

67

1,7562,228 2,167 2,576

2,883 3,0153,633 4,230

241 319 353 509635 742

851 944

0

2,000

4,000

2006 2007 2008 2009 2010 2011 2012 2013

0

500

1,000

Total Industry AUM KAsset AUM

KAsset Highlights in Y2013

(Bt bn)(Bt bn)

Provident Fund18%Private

Fund9% Mutual

Fund75%

KAsset AUM* Breakdown by Type

AUM (KAsset vs. Industry)

Market Share by AUM

22.019.5

11.09.0 7.8

30.6

24.6

19.3

12.08.9

5.9

29.3

23.4

18.3

11.88.3 7.2

30.9

22.3119.18

12.89

7.89 9.31

28.42

0

10

20

30

40

KAsset SCBAM KTAM MFC BBLAM Other

2010 2011 2012 2013

Industry Outlook:

Y2013 industry AUM* at Bt4.23trn, rising 16.44% YoY; KAsset AUM* at Bt943.65bn, growing 10.94% YoY

KAsset Highlights:

Continuously ranked #1 since 2009, with 22.31% market share in Y2013

Mutual fund accounts for 75% of KAsset AUM

(%)

December 2013

Note: * AUM is based on the AUM of mutual funds as of December 2013, and AUM of provident fund and private fund as of November 2013

68

KResearch Highlights in Y2013December 2013

Industry Outlook:

Only bank affiliated research house providing knowledge in economics, business, money, and banking

KResearch Highlights:

Most quoted research house in the media. Top of mind research house for media, and for the clients of KBank and its wholly-owned subsidiaries

69

7,967 8,544 7,962 8,640

12,377 12,486 13,772

21,551

41 91 117207

430 411 817

1,296

02004006008001,0001,2001,400

0

5,000

10,000

15,000

20,000

2006 2007 2008 2009 2010 2011 2012 2013

Total Industry Trading Volume KSMACQ Trading Volume

3.5 3.24.6 4.4 4.5

12.8

3.3 3.04.2 4.8 4.4

11.9

5.9

2.84.1 4.8 4.8

11.9

6.0

3.5 3.44.5 4.6

11.5

0

5

10

15

KSMACQ SCBS KTZ BLS TNS MBKET

2010 2011 2012 2013

KSecurities Highlights in Y2013

(Bt bn) (Bt bn)

KSecurities Revenue by Business

Trading Volume (KSecurities vs. Industry)

Market Share by Trading Volume(%)

CAGR’06-’13: 54%

Investment Banking

11%

Brokerage 89%

December 2013 Industry Outlook:

Y2013 industry trading volume* was Bt21.55trn, increasing 56% YoYKSMACQ** trading volume was Bt1.3trn

KSecurities Highlights:

KSMACQ** ranked #2, with 6.02% market share; maintained position as one of the leading securities firmsMajority of revenue came from brokerage

Number of customers grew 63% YoY, to 52,000 customers in 2013

* Industry trading volume excluding proprietary trade** In February 2012, KBank and Macquarie signed an Exclusive Strategic Alliance (ESA) covering a range of investment banking and securities operations; KSecurities and Macquarie

Securities (Thailand) are traded under a new ticket called KSMACQ

**

Note:

**

70

KLeasing Highlights in Y2013

(Thousand Units) (Bt bn)

KLeasing Outstanding Loans Breakdown**

KLeasing vs. Industry

KLeasing Highlights:

2013 KLeasing loans totaled Bt89.22bn, growing 7.67% YoY

NPL ratio remained in a very low single digit range, and better than industry average

Note: * Excluding captive and non-bank leasing ** Definition of loan type: Hire Purchase = car loans to retail customers; Fleet = a bulk of car loans to corporate and SME customers; Floor Plan = a bulk of car loans to car dealers

Market Share by Total Outstanding Loans (%)*

(%)

December 2013

Industry Outlook:

2013 industry car sales totaled 1,330,678 units, declining 7.35% YoY

Floor Plan6%Fleet /

Financial Lease25%

Hire Purchase

69%

37

18 15 12 11 8

35

18 15 12 11 8

34

17 16 14 11 8

35

18 14 15 11 7

35

18 15 15 10 7

0

25

50

TBANK AYCAL TISCO SCB KK KLeasing

2009 2010 2011 2012 3Q13

K-Car to Cash8.0%

Used Car

0.1%

New Car91.9%

71

KF&E Outstanding Loans

(Bt bn)

Industry Outlook:

Growth in Equipment Finance (EQF) business forecasted using numerous factors including total import volume and total registration volume of equipment and machinery from the Department of Industrial Works and Capital Investment Index

KF&E Highlights:

KF&E outstanding loans were Bt10.86bn, rising 16.23% YoY; Equipment Finance (EQF) was Bt10.60bn, rising 17.75% YoY

KF&E currently ranked #3; maintain the leading position in equipment leasing industry

Note: In 2010, KASIKORN FACTORING (KFactoring) was renamed KASIKORN FACTORY AND EQUIPMENT (KF&E) to better reflect their business, which is focused on offering leasing services for machinery and equipment; the factoring business operation of KFactoring was transferred to KBank

KF&E Highlights in Y2013December 2013

3.91

8.01

9.3410.86

0.0

2.0

4.0

6.0

8.0

10.0

2010 2011 2012 2013

72

26.3

12.5 12.5 10.7

8.9 7.4

5.8 3.8 2.9 1.4 7.8

24.4

14.0 12.3

10.6 9.6 8.2

5.5 3.1 2.8 2.2

7.3

-

5.0

10.0

15.0

20.0

25.0

30.0

AIA MTL TLI SCBLife BLA KTAL AZAY OLIC FWD PLT Others

2011 2012 9M13

133.1 151.1 166.8 173.3202.5 222.0

259.2296.3

328.6391.4

323.6

20

40

60

80

100

0

100

200

300

400

500

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 9M13

Total Premium First Year Premium

Market Share by Total Premium in Life Insurance (%)

Premium per % GDP by Country

(%)

Life Insurance Industry in Thailand

(%)

Size of Market by Premium(%)

CAGR’03-’12: 13%

Total Premium

(Bt bn)

First Year Premium

(Bt bn)

Source: The Thai Life Assurance Association


Source: Swiss Reinsurance

Note: Total Premium = New Business Premium + Renewal Premium; New Business Premium = First Year Premium + Single Premium

In 2012, low penetration rate of 3.0% in Thailand with a high opportunity for growth

Muang Thai Life Assurance (MTL) ranked #2 in life insurance industry in Thailand, in 9M13

#2 in total premium with 14.0% market share and 22% growth

#1 in new business premium with 18.7% market share and 28% growth

* First Year Premium in 9M13 = Bt 69.55 bn

*

73

Bancassurance Highlights in 3Q13The Bancassurance Life industry continued its positive trend in 9M13 with total premium growth of 26% and new business premium growth of 29%

MTL ranked #1 in Bancassurance market

#1 in Bancassurance total premium with 23.9% market share and 27% growth

#1 in Bancassurance new business premium with 25.7% market share and 27% growth

(%)

Bancassurance Market Share by Total Premium (%)

Bancassurance Market Share by New Business Premium (%)

22.3 25.3 15.0 3.7 3.5 6.4 2.6

23.9 22.7

11.6

4.3 3.9 3.6 3.4 3.3 2.9

11.3 2.4 4.0

16.2

0

10

20

30

MTL SCBLife BLA KTAL PLT TLI FWD AZAY TLA AIA

2011 2012 9M13

Source: Muang Thai Life Assurance (MTL)

Note: Bancassurance premium include all bank partners‘ premiums of MTL

23.5 24.2 9.8 10.7 2.7 10.4 3.5 6.2 3.2 0.0

25.7

21.0

11.6 10.8

5.7 5.0 4.6 4.5 3.2 3.0

0

10

20

30

MTL SCBLife BLA KTAL PLT TLA AIA TLI FWD DLA

2011 2012 9M13

(%)

74

KBank’s Economic Interest

MTFH MTI MTL MTB

10.0% 8.5% 7.5% 9.8%

KBank’s Economic Interest

MTGH MTI MTL MTB

51.0% 10.1% 38.3% 50.5%

KBank’s Strategic Acquisition in Muangthai Group Holding (MTGH)

Currently: 51% Stake in MTGH after Acquisition

Note: * MTFH = Muangthai Fortis Holding Company Limited, MTL = Muang Thai Life Assurance PCL, MTI = Muang Thai Insurance PCL, MTR = Muangthai Real Estate PCL, MTB = Muangthai Broker Company

Limited, MTGS = Muangthai Group Service Company Limited, PL = Phatra Leasing PCL, Group A Persons = Group of retail shareholders; Muangthai Fortis Holding (MTFH) changed its name to Muangthai Group Holding (MTGH) in July 2009

** The details of Group A Persons can be found in Appendix A of Opinion Report of the Independent Financial Advisor Regarding to Connected Transaction*** Fortis Insurance International NV changed its name to Ageas in 2010

FortisKBank

10.0%

MTFH

20.0%25.0%

75.0%

4.95%

Swiss ReGroup A Persons

65.05%

25.2%

MTB MTGSPL

100.0%98.0%

6.0% 10.0%

FortisKBank

10.0%

MTFH*

20.0%

MTL*

25.0%

75.0%

4.95%

Swiss ReGroup A Persons

65.05%

25.2%

MTR* MTB* MTGS*PL*

100.0%2.0%53.7%

MTI*

6.0% 10.0%

Before: 10% Stake in MTGH

MTGH*

Ageas***

MTL*

25.0%51.0 % 41.2% 7.8%

75.0%

KBank

MTI* MTB*

19.9% 99.0%

Group A PersonsGroup A Persons**

Source: Information from the General Meeting of Shareholders No. 97, April 3, 2009

75

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

Source: Muang Thai Life Assurance, data based on book value except for RBC

Strategy in 2014

Continue to enhance process efficiency and service quality as well as developing new products and services to effectively satisfy the needs of all customer groups

2014 Key Financial Targets

Bt bn 2011 2012 2013 2014T

Total Premium after refund 37.9 48.9 60.2

% Growth 28% 29% 23% ≥ 15%

Statements of Comprehensive Income (Bt bn)2011 2012 9M13

Net premiums earned 37.1 47.6 43.9Net investment income 5.2 6.4 5.4Total revenues 42.3 54.0 49.3Life policy reserve increase from the previous period 21.0 28.0 25.6Benefits payments to life policyholders 5.9 6.9 6.4Insurance claims and loss adjustment expenses 1.9 1.9 1.5Commissions and brokerages 6.3 8.4 7.9Other underwriting expenses 0.3 0.4 0.4Operating expenses & Other 2.5 2.8 2.3Total Expenses 37.9 48.5 44.1Profit before income tax expense 4.4 5.6 5.8

Income tax expense 1.5 1.4 1.1

Net profit (loss) 2.9 4.1 4.7

Statements of Financial Position (Bt bn)2011 2012 9M13

Total Assets 116.4 151.9 183.0Total Liabilities 101.5 130.8 159.2Total Equities 14.9 21.1 23.9

2011 2012 9M13

ROE (%) 21.1% 22.8% 27.8%

ROA (%) 2.8% 3.1% 3.7%

Risk-Based Capital (RBC) 319.8% 436.6% 459.6%

76

13.1 16.4

21.7 20.9

16.5 21.5 27.2

24.5

29.6

37.9

48.9 45.4

0

10

20

30

40

50

60

2010 2011 2012 9M13

First Year and Single Premium Renewal Premium Total Premium

MTL Investment Portfolio and Insurance Premium

Total Premium by Channels: Bancassurance accounted for about 70% in 9M13with an increasing proportion

Total Premium by Products: Ordinary product accounted for around 90%

0%

20%

40%

60%

80%

100%

2010 2011 2012 9M13

Agents Bancassurance Direct Marketing Other

MTL Total Premium:Growth continues to outpace the industry

MTL Investment Portfolio: Fixed Income accounted for around 80%


Total Premium Growth

MTL Industry

(%YOY)Y2010Y2011Y20129M13

38%28%29%22%

14%11%19%16%

(bn)

0%

20%

40%

60%

80%

100%

2010 2011 2012 9M13

Ordinary Industrial Personal Accident Group

Total Investment (3Q13): Bt 172.2 bn

Gov & S/E Bond55.9%

Debenture21.3%

Stock6.6%

Note7.5%

Policy Loan3.9%

Unit Trust3.0%

Deposit1.3%

Mortgage Loan0.6%

77

MTL’s Life Insurance Product ProfileFour Major Types of Life Insurance Product

Ordinary Life Insurance Products: Provide life protection for a fixed amount to an insured person

Can be further classified into four sub-categories;

Endowment Life Insurance: Savings type product; insured person receives an amount at the certain period of

time or a designated beneficiary receives death benefits upon the death of the insured person within the insured

period (e.g. Pro Saving products)

Term Life Insurance: provides temporary protection with no savings component. Claim can be made upon death

within the stated term period (e.g. MRTA products)

Whole Life Insurance : provides life time protection (to the age of 90 or 99) with the death benefit paid to the

beneficiary upon the death of the insured (e.g. Pro Life products)

Rider : additional coverage desired by the insured (sample of additional coverage: medical expense, accident)

Group Life Insurance Products : term insurance covering a group of people, usually employees of a company or

members of a union or association

Industrial Insurance Products : life insurance with a modest amount of coverage, low premium, and no health check

requirement

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

78

Life Coverage at 100% of the sum insured amount

End of Policy Year

Premium Payment at the Beginning of

Policy year

Maturity Benefit100%

Maturity Benefit100%

End of Policy Year

Premium Payment at the Beginning of

Policy year

Life Coverage at 100% of the sum insured amount

Sample of K-Bancassurance and MTL Products

Pro-Savings 615Life insurance with a premium payment of only 6 years, but the coverage continues for 15 years

MRTA-Home (Mortgage Reducing Term Assurance)

Ormsap 20/14Pay premium for only 14 years, but the coverage continues for 20 years

Healthy Value1 year coverage period, covered medical expenses up to Bt2mn

Endowment Life Insurance

K-Bancassurance Products* Muang Thai Life Assurance Products**

Endowment Life Insurance

Term Life Insurance Term Life Insurance

* K-Bancassurance products are MTL’s life insurance products selling through KBank

** Muang Thai Life Assurance products are MTL’s life insurance products selling through MTL sales agents, and/or other channels

79

Sample of K-Bancassurance and MTL Products

Pro Life 90/5Whole life coverage to the age of 90 with annual cash bonus payment from the end of policy year 1 and requires only 5 years premium payment

Kumkrong TalodcheepSaving plan with whole life coverage: pay premium for only 20 years and get coverage to the age of 99

Pure CancerAdditional cancer insurance which provides cash benefits up to Bt1mn

K-Bancassurance Muang Thai Life Assurance

PA PlusAccident coverage

Health Care PlusHospital and surgery benefit rider

Whole Life Insurance Whole Life Insurance

Rider Rider

* K-Bancassurance products are MTL’s life insurance products selling through KBank

** Muang Thai Life Assurance products are MTL’s life insurance products selling through MTL sales agents, and/or other channels

80

KBank: Other Information

81

September 13, 2013 (Closing Registration Date)Shareholder Structure

Top 10 Shareholders* % Shareholder Structure

1. THAI NVDR CO., LTD

2. STATE STREET BANK EUROPE LIMITED

3. CHASE NOMINEES LIMITED 42

4. STATE STREET BANK AND TRUST COMPANY

5. HSBC (SINGAPORE) NOMINEES PTE LTD

6. NORTRUST NOMINEES LIMITED-NT0 SEC LENDING THAILAND

7. CHASE NOMINEES LIMITED 1

8. THAILAND SECURITIES DEPOSITORY COMPANY LIMITED FOR DEPOSITORS (THAI SECURITIES –HOLDER ACCOUNT)**

9. THE BANK OF NEW YORK MELLON-CGTTAXABLE

10. GIC PRIVATE LIMITED – C***

Other Shareholders

Total

26.754

8.542

4.912

4.366

2.434

2.158

1.999

1.599

1.335

1.331

44.569

100.00

Foreign Shareholders

49%

Thai Shareholders

51%

(NVDR = 26.75%)

Thai Shareholding Limit 51%

Foreign Shareholding Limit 49%

NVDR stands for Non-Voting Depository Receipt

Note:

Source: Thailand Securities Depository Company Limited (TSD), the Stock Exchange of Thailand website (www.set.or.th), and KBank

Note: * The top 10 shareholders are based on individual accounts** Thailand Securities Depository Company Limited (TSD), a subsidiary of the Stock Exchange of Thailand, provides three types of securities post trade services: securities

depository services, securities registration services, and provident fund registration services; the shareholders booked under TSD are those who are not eligible for dividend payments as their investment is not aligned with their citizenship (i.e. foreign investors buying KBank shares on the local board or Thai investors buying KBank shares on the foreign board)

*** GIC holds KBank shares via three accounts. Combining those three accounts, GIC holds 1.721% of KBank shares, ranking them at number 8

82

Credit Ratings As of January 15, 2014

Outlook Government Outlook

Long-term* Senior Unsecured

Notes

Subordinated Debts

Long-term Subordinated Debts

Moody's Baa1 A3 Baa3 A3 N/A Stable Baa1 Stable

S&P's BBB+ BBB+ BBB N/A N/A Stable BBB+ Stable

Fitch BBB+ BBB+ BBB AA(tha) AA-(tha) Stable BBB+ Stable

KBank Thailand

Local Currency/ National RatingsForeign Currency

Note: * Moody's: Foreign Currency Long-term Deposit Rating; S&P's: Long-term Counterparty Credit Rating; Fitch Ratings: Foreign Currency Long-term Issuer Default Rating

83

Organization Chart

Risk Management Committee

ShareholdersAuditor

Corporate Secretary Board of Directors

Advisory Directors to the Management

Committee

Management Committee

Corporate Governance Committee

Human Resources and Remuneration Committee

Audit Committee

Advisory Council to the Board of Directors/

Legal Adviser

World BusinessDivision

World BusinessDivision

Human ResourceDivision

Human ResourceDivisionSystems DivisionSystems DivisionFinance and Control

Division

Finance and Control Division

Enterprise Risk Management Division

Enterprise Risk Management Division

Customer Service Fulfillment Division

Customer Service Fulfillment Division

Corporate Secretariat Division

Corporate Secretariat Division

Corporate Strategy Management DivisionCorporate Strategy

Management Division

Corporate Business Division

Corporate Business Division

Corporate and SME Products Division

Corporate and SME Products Division

SME Business Division

SME Business Division

Compliance and Audit Division

Compliance and Audit Division

Retail Business Division

Retail Business Division

Capital Markets Business Division

Capital Markets Business Division

Investment Banking Business Division

Investment Banking Business Division

Independent Directors Committee

84

Board of Directors Structure

• Mr. Somchai Bulsook(Vice Chairman, Lead Independent Director and Chairman of the Human Resources and Remuneration Committee)

• Prof. Khunying Suchada Kiranandana(Chairperson of the Audit Committee)

• Prof. Dr. Yongyuth Yuthavong

• Prof. Dr. Pairash Thajchayapong

• Ms. Kobkarn Wattanavrangkul

• Sqn. Ldr. Nalinee Paiboon, M.D.

• Mr. Saravoot Yoovidhya

• Dr. Piyasvasti Amranand

• Mr. Kalin Sarasin

Executive Directors (3)

• Mr. Krisada Lamsam(Vice Chairman and Chairman of the Corporate Governance Committee)

• Ms. Sujitpan Lamsam

• Dr. Abhijai Chandrasen(Legal Adviser)

• Mr. Somkiat Sirichatchai(Chairman of the Risk Management Committee)

• Mr. Rapee Sucharitakul

17 board members: 9 Independent Directors, 3 Executive Directors, and 5 Non-Executive DirectorsDirector age limit is not to exceed 72 years oldTerm limit of directorship for Independent directors is not more than three consecutive terms of directorship, effective after the Annual General Meeting of Shareholders (AGM) in 2013Lead Independent Director and Independent Directors Committee were appointed in order to ensure proper checks and balances

Independent Directors (9) Non-Executive Directors (5)

• Mr. Banthoon Lamsam(Chairman of the Board and Chief Executive Officer)

• Mr. Predee Daochai(President)

• Mr. Teeranun Srihong(President)

85

Statement of Corporate Governance Principles: The Board of Directors strongly believes that good corporate governance will enhance the sustainable growth of performance of the Bank, and is central to achieving the Bank’s primary objective of maximizing shareholder value. The corporate governance practices at KASIKORNBANK provide the structure which enables this objective to be achieved, whilst ensuring that the business and affairs of the Bank are conducted competitively under high ethical standards and in accordance with the law.

Environmental

Economic

Social

In-Process CSR: Environmental In-Process CSR: Social

In-Process CSR: Economic

Sustainability Development

Note: More information on our sustainability development can be found on our website and KBank’s Sustainability Development 2012 report

Aim towards best practice on renewable energy and reducing the direct environmental impact of our operations• Green Building• Green Financing• Green Product K-ATM • Recycling Project • Electricity Cost Cutting Campaign

Support and facilitate life skills for youth development• Cultivation of Wisdom Project• K-Expert: Knowledge Enhancement Project

• Corporate Governance• Risk Management• Green Procurement

• K Global Business Center (AEC)• Chinese – Thai Business Center

• K-Value Chain Solutions• K Fam Club• K SME Care

• K-Expert • K Home Smiles Club

Provide solutions and knowledge to achieve a sustainable economy

86

Public Recognition Highlight: 2012 – 2013

- Best SME Bank in Thailand 2012- Best SME Banker in Thailand 2012- The Asset’s Platinum Awards in 2012

2012

- Asia’s Best CEO (Investor Relations) - Best Investor Relations Company (Thailand)- Asian Corporate Director Recognition Award 2012- Corporate Governance Asia Recognition Award 2012

- Best Retail Bank in Thailand - The Bankers Choice Awards in Thailand - The Leading Counterparty Bank in Thailand- Best Cash Management Bank in Thailand

- Product Excellence in Debit Cards 2012- Strategy Excellence in Business Innovation (Special Commendation)

- Best Bond House-Thailand 2012

- Best Investor Relations Professional

- Best Bank- Best Cash Management Bank- Best FX Bank for Corporates and FIs

- Best Cash Management House in Thailand

SET Awards 2012:- SET Award of Honor for Excellence in Corporate Governance Report 2008-2013- Outstanding Investor Relations Award - Corporate Social Responsibility Award

- House of the Year, Thailand

-Best Retail Bank of the Year 2012

- Best Investor Relations by a Thai Company for Excellence in Investor Relations

Awards for Listed Companies 2012:- Best Chief Executive Officer- Best Investor Relations

2013

- Best Retail Bank in Thailand- Best Cash Management Bank in Thailand - The Best Managed Banks Achievement Awards 2013- The Achievement in Credit Risk Management Award

-Best Retail Bank of the Year 2013

- Asia’s Best CEO (Investor Relations) - Asia’s Best CFO (Investor Relations)- Best Investor Relations Company (Thailand)

- The Asset’s Platinum Awards, Banking and Finance Sector- Best in Treasury and Working Capital – SMEs, Thailand- Best Regional Cash Management Solution

- Best Local Bank in Thailand

- Channel Excellence in Branch

-Best Business Leader of the Year in the Overall Business Performance

- Best Use of Social Media in Customer Service

- Thailand Zocial Award 2013 – Top Finance brand in Social network

- The Best Acquiring Institution in SEA (K-PowerP@y (mPOS))

- ESCO Excellent Supporting Bank Awards 2013

- Best Domestic Providers of FX services 2012

- Thailand Capital Market Deal 2012- Branch Innovation of the Year - Bronze- Thailand Domestic Cash Management Bank of the Year - Thailand Domestic Trade Finance Bank of the Year

- SME Bank of the Year – Asia 2013

- Best Bank- Best Cash Management Bank

- Best Investor Relations by a Thai Company 2013

SET Awards 2012:- SET Award of Honor for Excellence

in Corporate Governance Report 2008-2012

- SET Award of Honor for Excellence in Investor Relations 2010-2012

ThaiBMA Best Bond Awards 2012- Best Bond House- Deal of the Year- Best Dealer Compliance- Most Creative Issue- Dealer of the Year- MOF Award

87

Banking System and Regulations Update

88

Thai Commercial Banks and Specialized Financial Institutions (SFIs)November 2013

Market Share (% of Total Loans) Market Share (% of Total Deposits)

6 SFIs

Note: 6 SFIs include Government Saving Bank (GSB), Government Housing Bank (GHB), Export-Import Bank of Thailand (EXIM Bank), Bank for Agriculture and Agricultural Co-operatives (BAAC), Small and Medium Enterprise Development Bank of Thailand (SME Bank), and Islamic Bank of Thailand (IBank)

14 Commercial Banks

As of Nov-2013

8,824 9,1729,935

10,99613,439

8,622 8,87210,074

11,79313,573

14,77014,569

As of Nov-2013

89

Regulations Update

International Accounting Standards (IASs and IFRSs)

Financial Sector Master Plan II (FSMP II)

Capital (Basel III)

Note: TAS = Thai Accounting Standards; BCBS = Basel Committee on Banking Supervision

Year 2013 onwards: The time frame is specified by the Federation of Accounting Professions; TFRS 8 (Operating Segment) and TAS21 (Foreign Exchange) has been implemented since January 2013; full IFRS conversion is expected in 2016

Expected impacts on Thai banks: More logical and transparent presentation and disclosure, with different impacts on each bank

Expected impacts on KBank: Manageable impacts expected, as the Bank early adopted some IASs and IFRSs and continues to prepare for full implementation

January 2013 onwards: Basel III implementation on bank only and consolidated basis (early adopt). Requirements are in line with international guidelines

Expected impacts on Thai banks: Manageable impacts expected based on quantitative impact study by the BOT

Expected impacts on KBank: Manageable impacts to KBank expected

Source: The Bank of Thailand, KResearch

Year 2010-2014: The BOT’s FSMP II consists of three key policies:

Reducing system-wide operating costs

Promoting competition and access to financial services

Strengthening financial infrastructure, including market liberalization, increased access by foreign financial institutions via granting licenses in some business areas, and permission for an increased number of branches and ATMs

June 2013: The BOT announced the new “Guidelines and Conditions for Establishing a Branch and Undertaking the Business of a Branch of Foreign Commercial Bank’s Subsidiary”, allowing for new subsidiaries’ licenses of foreign commercial banks to open up to 20 branches and 20 off-premise ATMs

Year 2014: The BOT will establish a licensing framework for new types of business operation for underserved specific markets, i.e. Islamicbanking, investment banking and micro-finance

Expected impacts on Thai banks: Move toward more liberalization, along with higher competition

Expected impacts on KBank: Ability to maintain competitiveness over both existing and new players, helped by an effective customer-centric strategy and preparation for a changing environment

90

Basel III: The BOT Implementation TimeframeThe BOT implementation timeframe is mostly in line with the BCBS timeframe

Effective implementation: January 1, 2013 (Bank) and January 1, 2014 (Consolidated)Banks able to early adopt Basel III on consolidated basis since January 1, 2013Full Implementation: January 1, 2019

Transitional Arrangement for Capital Requirement

All dates are as of 1 January 2013 2014 2015 2016 2017 2018 2019

Conservation Buffer* - - - 0.625% 1.25% 1.875% 2.5%

CET1: Minimum Common Equity Tier 1 Ratio (after conservation buffer) 4.5% 4.5% 4.5% 5.125%(4.5%+0.625%)

5.75%(4.5%+1.25%)

6.375%(4.5%+1.875%)

7.0%(4.5%+2.5%)

Tier 1: Minimum Tier 1 Ratio (after conservation buffer) 6.0% 6.0% 6.0% 6.625%(6.0%+0.625%)

7.25%(6.0%+1.25%)

7.875%(6.0%+1.875%)

8.5%(6.0%+2.5%)

CAR: Minimum Total Capital Ratio (after conservation buffer) 8.5% 8.5% 8.5% 9.125%(8.5%+0.625%)

9.75%(8.5%+1.25%)

10.375%(8.5%+1.875%)

11.0%(8.5%+2.5%)

Countercyclical Buffer (Subject to the BOT consideration)** - - - 0.0-2.5% 0.0-2.5% 0.0-2.5% 0.0-2.5%

Source: Bank of Thailand (BOT), KBank

* Conservation Buffer is to ensure adequate capital to absorb losses during periods of financial and economic stress. Banks with a CET1 ratio less than the required conservation buffer (i.e. 2.5% CET1) will face various degrees of constraint on distribution of dividends and bonuses

** In periods of excess aggregate credit growth, the BOT may require banks to set a Countercyclical Buffer up to 2.5% to achieve the broader macroprudential goal of protecting the banking sector*** Requirements for liquidity ratios have not been finalized. Banks are required to submit data to the BOT for further calibration

Net Stable Funding Ratio (NSFR)*** Effective

Leverage Ratio Parallel run period Effective

Liquidity Coverage Ratio (LCR)*** Effective (Phase-in)

91

Tier 1• Issued and paid-up share capital• Premium on ordinary shares• Legal reserve and Retained earnings

• Hybrid Tier 1 (<15% of total Tier 1)• Minority interest, Preferred stock

Common Equity Tier 1• Issued and paid-up share capital• Premium on ordinary shares• Legal reserve and Retained earnings• Other comprehensive income (OCI)

e.g. surplus on AFS bond and equity (100%), surplus on land & premises (100%)

Additional Tier 1• Hybrid Tier 1 with loss absorbency feature*• Minority interest, Preferred stock*

Deduction of Tier 1• Goodwill, Treasury stock, Deferred tax asset

• Investment in insurance (50% Tier 1 and 50% Tier 2)

Deduction of Tier 1• Goodwill, Treasury stock*, Deferred tax asset• Intangible assets (new item: gradually deduct CET1)

• Investment in insurance (Threshold Deduction) - Amount ≤ 10% of CET1, %RW = 250% (KBank’s Case) - Amount > 10% of CET1, deduct CET1

• Long-term subordinated debt• Hybrid Tier 1 (exceeds from Tier 1 limit)

• General Provision (reserve on ‘Pass’ loans and the excess allowance of required reserves)

• Surplus on AFS equity (45%)• Surplus on land & premises (70% and 50%)

• Long-term sub-debt with loss absorbency feature**

• General Provision (reserve on ‘Pass’ loans and the excess allowance of required reserves)

Tie

r 1

cap

ital

Tie

r 1

cap

ital

Capital Definition Change (Consolidated)

Tie

r 2

cap

ital

Tie

r 2

cap

ital

Basel II Basel III

1

3

* Currently, KBank has no Hybrid Tier 1, Preferred Stock, or Treasury Stock** Long-term subordinated debentures must have loss absorbency feature, if issued

since 1 January 2013

2

1

92

Financial Sector Master Plan (FSMP) Implementation StagesFSMP III

(Y2015 onwards)FSMP II (Y2010-2014)

Looking forward to liberalizationFSMP I

(Y2004-2009)

Increase efficiency of the financial institutions system- ‘One Presence’ policy- Expand scope of business: ‘Universal Banking’

- New licenses for retail banks and foreign bank subsidiaries

Promote financial inclusion- Strengthen financial institutions (FIs) by promoting voluntary mergers

Protect customers

Source: BOT and KResearch

Reducing system-wide operating costs

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

Further development based on FSMP II resultsAnother feasibility study in light of empirical resultsNo official announcement regarding FSMP III

Streamlining regulationsTackling remaining NPLs and NPAs(Allow banks to partner with private firms to work on raising attractiveness of NPAs, promote efficiency in the trading of NPLs and NPAs by establishing an NPA Information Center, and encourage write-offs of fully provisioned ‘doubtful of loss’ loans)

Promote competition- Encourage voluntary mergers to lower operating costs- Enhance the role of existing service providers (Liberalization of branch network, widen business scope, upgrade qualified retail banks to commercial banks, and expand branch network of foreign banks)

- Introduce new entry to fill gaps and create value-added - Reduce government ownership in the commercial banking sector

Promote financial access- Facilitate bank expansion of business, as well as support Specialized FIs in focusing on providing services to the populations without access to banks

- Introduce new service providers with microfinance expertise into the system

Promote development of financial products that help support risk managementEnhance information system for risk managementPush for draft/review of necessary financial laws to support risk management and an expedited resolutions to NPLsPromote information technology utilizationDevelop human resources in the financial sector

Promoting competition and access to financial services

Strengthening financial infrastructure (including market liberalization, increased access for foreign financial institutions via grants of licenses for some business areas, and permission for an increased number of branches and ATMs)

93

TAS and IFRS Implementation

31 Dec 2010 : TAS Implementation

TAS 19: Employee Benefits

(KBank early adopted in 4Q10; the formal effective date is January 1, 2011)

Use actuarial techniques to determine retirement reserve for eligible staff

TAS 12: Income Taxes (KBank early adopted)

(KBank early adopted in 4Q10; the formal effective date is January 1, 2013)

Use deferred income tax concept to record tax asset/ liability

BOT’s New Financial StatementPresentation/Convention

New and reclassified presentation lines in financial statement in order to align with the revised TAS

1 Jan 2011: New financial statement

IFRS 9 (IAS 39), IFRS 7 and IAS 32: Financial Instruments

Thai banks have implemented a new provisioning rule under IAS 39, since December 2006Thai banks have complied with IAS 39 when reporting embedded derivatives, since 2008

IFRS 4: Insurance ContractsRe-measuring insurance liability to reflect current market situation Unbundling of deposit components

IFRS13: Fair value measurement(Revised timeline from 2013 by Federation of Accounting Professions)

Clear required factors in fair valuation and disclosure about valuation techniques

Full IFRS Conversion

4Q10 2013 2016 (Tentative)

Note: TAS = Thai Accounting Standard

presentation

2014

TFRI 13: Customer Loyalty Programmes

Defer portion of income for reward credit granted

IFRS Conversion

TAS 21: Effects of Changes in Foreign Exchange Rates

Translate ‘Functional Currency’ to ‘Presentation Currency’

TFRS 8: Operating Segments

Present operating results for each key segment

TAS/TFRS Implementation

94

Updates on the Deposit Protection Agency (DPA)

Insured Deposit Under new Royal Decree

11 August 2012 – 10 August 2015 Up to Bt50mn

11 August 2015 – 10 August 2016 Up to Bt25mn

10 August 2016, onwards Up to Bt1mn

DPA Objectives and Missions

Amount of Insured DepositsInsured deposits include deposits and accrued interest denominated in Thai Baht accounts, excluding non-resident Thai Baht accounts Blanket guarantee will be gradually phased-out to a limited coverage of Bt1mn per depositor per institutionUntil 2011, Thai banks paid 0.40% per year of the daily average deposit amount (paid in June and December), excluding deposits in foreign currencies and deposits from financial institutions not insured by the DPASince January 27, 2012, the contribution rate has increased from 0.40% to 0.47%, of which 0.46% is paid to the BOT to manage FIDF debts* and 0.01% is paid to the DPARoyal Decree on an extension of deposit protection coverage was announced in the RoyalGazette on September 24, 2012

Deposit Accounts in Thailand (as of November 2013)

Enhanced understanding of the deposit protection schemeClose cooperation with related authorities to maintain stability of the financial institution systemEstablishment of an appropriate system for premium collection and sound management of the Deposit Protection FundDevelopment of an effective information system to ensure fairness of the deposit protection scheme, with accurate and rapid reimbursementManagement according to Good Governance Principles and in compliance with international standards established by the International Association of Deposit Insurers

Source: DPA, Bank of Thailand (BOT), KBank, KResearch

* According to the BOT announcement in the Royal Gazette, per the authority of the emergency decree dated May 11, 2012, financial institutions are required to pay 0.46% of the average deposit amount, B/Es, debt instrument (excluding the amount counted as capital), borrowings, and securities transactions under repurchase agreements, beginning January 27, 2012

Deposits (Corporate and Retail Deposits) # of Accounts % Amount (Bt mn) %

Less than Bt1mn 82,852,298 98.50% 2,559,197 23.20%

More than Bt1mn, but less than Bt50mn 1,240,539 1.47% 4,841,381 43.88%

More than Bt50mn 17,144 0.02% 3,631,660 32.92%

Total 84,109,981 100.00% 11,032,238 100.00%

95

Government Policy

96

Sources and Uses of Public Fund

Tax Revenue + Non-Tax Revenue

(Bt2.275trn)

Borrowing under the Annual Budget Act (Bt250bn)

+

Budget Planning

Annual Budget(Bt2.525trn)

Budget Execution

Budget Disbursement

(95% target disbursement rate +

carry-over)

FY2014 Annual Budget

Extra-Budget Borrowing Quasi-Fiscal Instrument

Extra-Budget Borrowing under

Special Act/Decree

1. Water ResourceManagement project (Bt350bn) Details in App. Page 99

2. Infrastructure Investment Project (Bt2trn)Details in App. Page 100

SFIs taking deposits, borrowing, as well

as government subsidy

Quasi-fiscal activities (e.g. Rice Pledging Scheme,

Soft Loan Program)

General Administration (Bt912.9bn)

DefenseDebt services

Economic Services(Bt527.9bn)

Subsidy to SFIs (e.g. loss from rice pledging scheme)Subsidy to SOEs(e.g. Infrastructure project, free bus and train service policy)Infrastructure/Agricultural Development

Social and Community Services (Bt1,084.2bn)

One Tablet per ChildUniversal Healthcare

97

Calendar Year2011 2012 2013 2014

2015-2019Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

FY2013 Budget Disbursement

Total Bt2.4trn

Disbursed

FY2014 BudgetTotal Bt2.525trn

Disbursed

Emergency Decree for Water Management*

Total Bt350bn

Disbursed

Infrastructure Development Project*

Total

Other Investment Stimuli

Consumption Stimuli

Sources: MOF, NESDB, KResearch as of December 9, 2013Note: * Preliminary details for water management scheme: Central Administrative Court ordered the government to hold public hearings on all nine modules as required by the constitution before the construction

process could begin. Therefore, there will be some delays in the disbursement of funds

Government Investment and Stimulus: Progress Update

Bt2trn, still pending the enactment processas the House of Representatives has been

dissolved

FY2013 = Bt2,171.5bn (Disbursement rate = 90.5%)

Corporate Income Tax Reduction (from 30% to 23% in 2012 and to 20% in 2013 and 2014), The National Catastrophe Insurance Fund

Rice pledging policy; Performing-debt suspension;Bt300 daily minimum wage, Bt15,000 monthly income for civil servants;VAT maintained at 7.0%, Energy / cost of living

The BOT Soft Loans

‘First-Car’ buyer

Bt16.3bn or 4.7% (Cumulative disbursement as of October 2013)

Completely disbursed

Expired: December 2012‘First-Home’ buyer

Expired: December 2012

Personal Income Tax Restructuring

3MFY2014 = Bt760.8bn (Disbursement rate = 30.1%)

98

Funding Needed from the Government for Investment Stimuli In addition to commercial bank loan expansion, the government’s funding needs for financing the budget deficit as well as extra-budget investment, i.e. water resource management and infrastructure projects, may affect liquidity in the system

Due to the current political impasse, however, extra-budget borrowing may be very limited

Economic Policies

Key Points Implementation Process Possible Impacts/ Expected Budget

2014 Budget Act FY2014 budget at Bt2.525trn with a deficit of Bt250bn

FY2014Effective date: to recommence Oct 1, 2013 after being announced in the Royal Gazette on Oct 11, 2013

Government spending will help maintain economic momentumFiscal sustainability to remain manageable in the near-term; however, continued debt creation, both from budget deficit and other borrowings, may impact long-term fiscal sustainability

Sources: MOF, KResearch (As of January 2014)Note: FY2012 is actual data. FY2013 and FY2014 budget deficits are based on budget documentation whereas extra-budget borrowing is projected by KResearch

344 282 250

1.913.7

0

200

400

600

800

1,000

FY2012 FY2013 FY2014 F

Bill

ion B

aht

Budget Deficit Financing Extra-budget borrowing

99

Budget: Bt350bn* in 2012 - June 2013(Disbursement as of October 2013: Bt16.3bn or 4.7%)

Investment Period: 2012 - 2016

Objective:

To prevent severe flooding in the Central regionTo enhance investor confidence

Summary Information

Emergency Decree for Water Resource ManagementBt300bn long-term projects*

Sources: Strategic Committee for Water Resource Management, KResearch (As of January 2014)

Key Activity Plan

2Q13 2H13 2014- 2016

Announce winners and start borrowing to finance projectComplete borrowing as stated by the Emergency Decree

Award contractsContractors start their projects - Design and build projects- Compliance with related regulatory

requirements, e.g., EIA and public hearing process

Project implementation will experience a severe delay, due to the political impasse

Adapting irrigated agricultural areas into

retention areas (20%)

Flood ways or flood division

channel (40%)

Reservoir construction (16.7%)

Land use zoning and land utilization

(16.7%)

Others (6.7%)

Bt300bn for long-term projects

Bt50bn for short-term projects

Bt350bn Budget*

Note: * Bt50bn is allocated for short-term /emergency projects, and Bt300bn is allocated for long-term projects** In June 2013, the Central Administrative Court ordered the government to hold public hearings before starting on the main parts of the water management

and flood infrastructure plan

Source of Funds

50% borrowing

from commercial

banks

50% borrowing from SFIs

Borrowing from SFIs and commercial banks

100

Bt2trn infrastructure Development

Budget: Around Bt2trn

Investment Period: 2013 - 2020 (7 Years)

Objective:

Enhance long-term competitivenessCreate 1.5-2.0mn jobsStimulate domestic economyEnhance quality of life

Summary Information

Note: Preliminary data; pending more information from the authorities

Infrastructure Development (Thailand 2020)

High-speed trains and inter-city highways

(52.1%)

Electric trains in and around Bangkok plus road networks linking

rural areas with industrial and tourist

areas (29.7%)

Dual-track railways, port construction, and

distribution centers (17.7%)

Support systems and contingency funds

(0.5%)

Progress Update

2013 2014 2015 - 2020

The draft act was approved by both the House and the Senate in 3Q13; however, the enactment process has been frozen since the House resolution in 4Q13

A full-scale implementation of infrastructure projects under the draft act may not be achievable in 2014; however, some projects in the pipeline, i.e. mass-transit projects and dual track railways, remain intact and will likely resume, using traditional means of financing, once the new government comes into office

Construction work will peak around 2016-2017

60% Domestic Funding

40% USD- dominated

Bond

Source of Funds

Main funding is expected to be domestic borrowing under a special act

The infrastructure development project is expected to increase long-term potential economic growth by 1% each year and reduce the share of logistic cost to GDP by 2%, from 15.2% to 13.2%

Sources: Newspaper complied by KResearch, as of January 2014

101

Economic Policies Key Points

Corporate income tax cut Reduction in corporate income tax from 30% to 23% in 2012 and 20% in 2013 and 2014

Personal income tax restructuring Lowering maximum tax rate from 37% to 35% and increasing tax brackets

Enhancing Competitiveness for SMEs Financial assistance through cooperation between SME Bank, Thai Credit Guarantee Corporation (TCG), and the Social Security Fund, as well as tax breaks

Bt300 daily minimum wage Daily minimum wage rising to Bt300 until December 2015

Bt15,000 monthly salary or equivalent income for civil servants with undergraduate degrees

Salaries (wages plus benefits) increasing to at least Bt15,000 per month

Rice pledging policyThe Bank for Agriculture and Agricultural Co-operatives (BAAC) has been used as an arm of the government to support the rice pledging program

The government announced a reduction in the pledging price and imposed a white rice quota per family to ease the fiscal burden caused by this policyFor in-season rice (Oct13-Feb14), the pledging price is maintained at Bt15,000 per ton with a quota of Bt 350,000 per family

3-Year Performing Debt Moratorium 3-year debt moratorium for small-scale farmers and low income earners with outstanding debt not to exceed Bt500,000 per person with the interest rate reduced by 3% per year

Monthly welfare allowance for citizens over age 60 Monthly welfare allowance of Bt600-1,000 paid to citizens between ages 60-90

Fund for Entrepreneurship Provide startup capital/soft loans for entrepreneurs who want to open businesses

Expired Measures

‘First Home’ program (Expired measure)

10% maximum personal income tax deduction (maximum Bt100,000 deduction per year) for first-time buyers of new houses or condominiums valued below Bt5mn

‘First Car’ tax incentives(Expired measure)

Rebate of the excise tax (capped at Bt100,000) on small passenger cars (engine size less than or equal to 1,500cc) and pickup trucks worth up to Bt1mn

GHB home loans with 0% interest for 3 years (Expired measure)

Government Housing Bank (GHB) will provide up to Bt1mn in housing loans for first-time home buyers with 0% interest for the first three years

Summary on Government Stimulus Plans

Source: KResearch, information as of January 2014

102

Decree Name Key Points ImplementationProcess

Possible Impacts/ Expected Budget

Emergency decree authorizing government borrowing for strategic investment plans covering water resource management

Establishing water management system; flood prevention program to regain investor confidence

Approved (by Cabinet): Jan 10, 2012Effective date: Jan 27, 2012

Funding wholly financed by borrowing; the government has already secured the full amount of the contract loan with 4 financial institutions, i.e. GSB, BBL, KBank, and KTB. This fund can be disbursed until fiscal year 2017Boosting infrastructure investment

Emergency decree providing assistance loans to flood-hit SMEs and individuals

Providing soft-loans with fixed interest rate of no more than 3% for flood-affected parties


Bt300bn in soft-loansBank of Thailand contributes up to 70% of total amountState-owned and commercial banks contribute the remaining amountAs of September 2012, this measure has provided support to more than 520,000 affected customers nationwide

Emergency decree establishing flood-related insurance fund

Establishing a flood insurance scheme, with favorable insurance premiums in light of partial government support


Bt50bn in fundsFunding comes mainly from government borrowing

Emergency decree improving management of the Financial InstitutionsDevelopment Fund (FIDF) debt

Set a clear responsibility to manage debts, particularly yearly interest rate burdens, by introducing additional sources of funds from financial institution contributions


Until 2011, Thai banks paid 0.40% per year of the daily average deposit amount to the Deposit Protection Agency; since January 27, 2012, the contribution rate has been increased from 0.40% to 0.47%, of which 0.46% is paid to the BOT to manage FIDF debts and 0.01% is paid to the DPA

Source: KResearch, information as of May 2013

Summary of Four Financial Emergency Decrees in 2012

103

Source: KResearch, information as of February 2013

Measures Details

Tax measures Reduce income taxIf annual income ≤ Bt300,000, income tax rate = 0%If annual income between Bt300,000 and Bt1mn, income tax rate = 15%If annual income over Bt1mn, income tax rate = 20%

Cut withholding tax to 2% (from 3%)Allow 100% depreciation in the first year for machineryExempt income tax from the sale of old machinery Offer tax deductions for 1.5 times incremental wages Effective Period: January 1, 2013 - December 31, 2013

Financial measures Offer soft loans worth Bt20bn from SME Bank and Bt10bn from Social Security FundOffer credit line guarantee worth Bt240bn by Thai Credit Guarantee CorporationEffective Period: March 2013 - December 31, 2016 for credit line guarantee;

March 2013 - December 31, 2018 for soft loan

Productivity-boosting measures Offer soft loans (0.1% p.a.) for staff training costs, by the Skill Development Fund Effective Date: January 1, 2013 - December 31, 2013

Other measures Reduce employer contributions to Social Security Fund to 4% (from 5%)Increase budget for state officer trainings and seminars at provincial hotels Reduce business tax by 50% to Bt40 per room (from Bt80) for small scale hotels under the supervision of the Local Administration Organization Effective Period: January 1, 2013 - December 31, 2013

Government Assistance Measures for SMEs Affected by Wage HikeDaily minimum wage rose to Bt300 and will remain at Bt300 until December 2015

104

Ongoing Government Measures to Assist Cost of Living

Source: KResearch

Measures Details

Household Assistance Train and Bus Fares: A subsidized fare for buses and trains; some buses and trains provided for free

Electricity: A full subsidy on electricity bills for households using less than 50 units of electricity per month

Energy Prices Diesel Fuel: The government intends to control diesel fuel prices to not exceed Bt30/litre by adjusting the amount contributed to the Oil Fund and implementing an excise tax on diesel fuel

NGV and LPG Price: The government has subsidized NGV and LPG costs, allowing retail selling prices to be lower than global market prices. However, the government has restructured the fuel pricing system to better reflect global market price movements

NGV price fixed at Bt10.50/kg LPG prices are as follows:

Household sector implemented a price increase of Bt0.50 per month starting September 1, 2013 until the price equals the transport sector price(as of January 2014, price at Bt20.63/kg) Transport sector adjusted in accordance with Oil Fund levies and thedirection of global prices (as of January 2014, price at Bt21.38/kg)Industrial sector adjusted in alignment with relevant production costs (as of January 2014, price at Bt30.13/kg)

FT Rate: Fuel Adjustment Tariff (FT) Rate for electricity is set to increase by less than the actual cost (from January-April 2014, FT Rate at Bt0.59/unit )

Value-added-tax (VAT) Rate On August 7, 2012, the Cabinet approved the following VAT Rates:Maintain the 7% value-added-tax (VAT) rate until September 30, 2014 After Sep 2014, the VAT rate may be increased to 10% unless the government

extends the VAT reduction period.

29.99

25

27

29

31

33

35

37

Dec-1

0

Jun-1

1

Dec-1

1

Jun-1

2

Dec-1

2

Ba

ht/L

itre

Diesel Price

Uncontrolled PricePegged Price

Elimination of some Oil Fund levies (effective Aug. 29, 2011)

29.99

105

Government budget disbursement rate for 3MFY2014 was 30.1%, on par with FY2013

The FY2014 budget disbursement target is 95%, compared to 94% in FY2013

Source: Ministry of Finance

9.7

18.9

30.1

12.1

23.429.2

36.742.1

50.557.6

62.969.3

75.981.4

90.5

0

10

20

30

40

50

60

70

80

90

100

Oct

Nov

Dec Jan

Feb

Mar

Apr

May Jun

Jul

Aug

Sep

% C

umul

ative

Bud

get D

isbur

sem

ent R

ate

(%)

FY 2014 FY 2013 FY 2012

Public Debt to GDP and Fiscal BudgetThe public debt to GDP ratio was 45.28% as of October 2013, still under the 60% limit set by the fiscal sustainability framework

The Thai government has committed to keep the ratio of public debt to GDP under 50%, including borrowing on the Bt2trn infrastructure development project

41.0

43.6

45.28

38

40

42

44

46

48

4,000

4,200

4,400

4,600

4,800

5,000

5,200

5,400

Oct-

11

De

c-1

1

Fe

b-1

2

Ap

r-1

2

Ju

n-1

2

Au

g-1

2

Oct-

12

De

c-1

2

Fe

b-1

3

Ap

r-1

3

Ju

n-1

3

Au

g-1

3

Oct-

13

% to GDPBt bn

Public Debt

% to GDP

106

Thai Economic Figures

107

33.3230.15 31.54

30.60

32.68 33.50

30

32

34

4Q09 4Q10 4Q11 4Q12 4Q13 4Q14FUSD/THB

USD/THB: End Period Interest Rate Trend

Currency and Interest Rate Outlook

Bt

The U.S. economy is likely to see continued progress, giving the Fed more confidence to further reduce QE

The markets expect the Fed to end its asset purchases in 2014. This means higher interest rates for investors investing in emerging markets

Outlook for Thailand’s weaker current account balance and political uncertainties indicates a negative impact on the economy and reduced investor appetite for Thai assets in the near term

Capital outflows are expected to continue, pressuring USDTHB to rise further to test a 34.50 level during 1H14 before normalizing to 33.50 at year-end

Note: F is estimated by KBank Capital Markets Research (as of Jan 22, 2013)

MPC voted 4:3 to maintain the policy rate at 2.25% in January 2014, as they may await clarity over political issues. MPC deems that sound fundamentals and monetary accommodation will help to support recovery

The policy rate is expected to remain at 2.25% in 1H14; a further rate cut would have limited impact on growth, given political uncertainties. Nevertheless, the markets view the bias toward risk to growth vs. inflation

MPC had revised down the growth forecast for 2013 and 2014 and is prepared to do more to lift growth

Over the medium term, the policy rate is expected to be normalized to 2.50-2.75%, possibly as soon as end of 2014, with economic recovery and higher inflation

1.252.00

3.25 2.75 2.25 2.75

0-0.250-0.250-0.250-0.250-0.25 0-0.250.00

2.00

4.00

Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14F

% p

.a.

Fed Funds rate BOT's 1-Day Repurchase rate

108

Monthly Economic Conditions: November - December 2013 Key economic figures in November 2013 indicated that the Thai economy decelerated further

Both private consumption and investment experienced a contraction due to heightened political uncertainties and the high base effect

Exports remained lackluster, dragged down by poor performance in fishery and electronic product exports

Trade balance remained in surplus, helped by a substantial decline in imports

Current account also registered a surplus after the profit repatriation season ended

Dec13 inflation declined amid dismal economic data

Sources: Bank of Thailand (BOT), Ministry of Commerce (MOC), University of the Thai Chamber of Commerce (UTCC),

Office of Industrial Economics (OIE), Office of Agricultural Economics (OAE)

Units: % over-year, otherwise indicated 20132012 1Q 2Q 3Q YTD. Sep Oct Nov Dec

Private Consumption Index (PCI) 5.7 3.8 0.7 -2.2 0.4 -6.2 0.1 -2.4Sales Volume of Benzene and Gasohol 5.1 7.0 10.6 9.1 7.9 5.5 5.1 2.4

Value-added Tax at 1995 prices 15.7 6.9 -0.1 -7.2 -0.8 -19.4 2.7 -7.8Imports of Consumer Goods at 1995 prices 10.6 8.6 4.9 -2.6 2.1 -4.0 0.8 -7.4

Passenger Car Sales 86.7 97.2 -3.3 -24.8 -3.2 -30.7 -44.1 -48.0Motorcycle Sales 6.1 5.7 -6.4 -8.6 -5.0 -11.2 -10.8 -16.3

Private Investment Index (PII) 17.4 5.2 -3.6 -3.5 -2.6 -3.5 -4.9 -7.8Domestic Sales Volume of Cement 10.9 17.5 10.6 8.5 10.7 6.2 0.4 9.0Sales Volume of Commercial Cars 75.4 19.4 3.2 -26.2 -7.8 -26.2 -31.2 -25.0

Imports of Capital Goods at 1995 prices 24.3 -2.1 -10.8 -9.3 -9.4 -10.9 -13.5 -19.6Value of BOI Applications 121.6 25.9 58.1 -60.9 -8.4 -64.1 -51.5 -46.0

Manufacturing Production Index 2.2 2.9 -4.9 -3.5 -2.9 -2.9 -4.0 -10.6Industrial Capacity Utilization 66.0 67.4 64.0 63.9 64.8 63.6 63.5 63.1

Agriculture Production Index 4.0 0.8 1.8 -4.1 1.0 -5.6 5.9 5.3Agriculture Price Index -9.7 -4.4 -0.4 2.1 -0.7 1.8 -0.2 0.5

Exports (In terms of US Dollars) 3.1 4.1 -1.9 -1.8 -0.4 -6.3 -0.5 -4.0Unit Value 0.6 0.4 -0.4 -0.6 -0.4 -0.9 -1.0 -1.3

Volume 2.5 3.8 -1.6 -1.2 0.0 -5.5 0.5 -2.7Imports (In terms of US Dollars) 8.8 8.5 1.0 -2.9 0.4 -6.1 -4.6 -9.3

Unit Value 1.6 -1.8 -3.0 -2.0 -2.2 -1.9 -1.5 -1.5Volume 7.1 10.6 4.1 -0.8 2.6 -4.3 -3.1 -7.9

Trade Balance (USD millions) 6,015 -1,571 -956 5,033 4,358 2,561 337 1,514Current Account (USD millions) -1,470 70 -7,169 -888 -5,317 -534 376 2,294Headline CPI 3.0 3.1 2.3 1.7 2.2 1.4 1.5 1.9 1.7Core CPI 2.1 1.5 1.0 0.7 1.0 0.6 0.7 0.8 0.9

109

75.0

46.9

30354045505560

70

75

80

85

90

Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13

BSI

CC

I

Consumer Confidence Index (CCI) Business Sentiment Index (BSI)

Sources: BOT, MOC, UTCC, OIE

800

1,300

1,800

2,300

2,800

Jan Apr Jul Oct

No.

of F

orei

gn T

ouris

t Arri

vals

(T

hous

and)

2010 2011 2012 2013

2,395

1,780

1,819

2,399

Nov13 CCI and BSI continued declining amid heightened concerns over political uncertainties

Nov13 private consumption and investment experienced substantial slowdowns due to heightened economic

uncertainties as well as the high base effect

Nov13 foreign tourist arrivals were still well above previous years, but lingering political turmoil slashed growth

Nov13 exports remained sluggish amid muted global demands and supply restrictions in certain marine

products

-2.4% -7.8%

-48.0%

-25.0%-19.6%

-7.8%

-60%

-40%

-20%

0%

20%

PCI PII Passenger Car Sales

Commercial Car Sales

Imports of Capital Goods

Imports of Consumer

Goods

%Yo

Y

2Q13 3Q13 Oct-13 Nov-13

-4.0%

-3.0%

-20%-15%-10%-5%0%5%10%15%20%25%30%35%

0

5,000

10,000

15,000

20,000

25,000

Nov-11 Mar-12 Jul-12 Nov-12 Mar-13 Jul-13 Nov-13

% Y

oY

Expo

rt Va

lue

(USD

Milli

on)

Exports Exports (excluding gold)

% YoY for Exports % YoY for Exports exc Gold

Economic Condition Highlights: November - December 2013

110

Nov13 MPI contracted further due to lukewarm domestic and external demand, as well as a high base effect

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

New condominium registration picked up on transferring of completed units

Dec13 inflation declined in light of dismal economic dataLand and property prices continued to rise in 3Q13

amid good demand in Bangkok and vicinity due to the development of public mass transit

-10.5

63.1

3545556575

(100)(50)

-50

100

Aug-11 Dec-11 Apr-12 Aug-12 Dec-12 Apr-13 Aug-13

%C

apac

ity U

tiliz

atio

n R

ate

%Yo

Y of

MPI

MPI (lhs) %Capacity Utilization (rhs)

0.0

1.0

2.0

3.0

4.0

5.0

-0.5

0.0

0.5

1.0

1.5

Jul-12 Nov-12 Mar-13 Jul-13 Nov-13

%Y

oY

%M

oM

Headline CPI (MoM-lhs) Core CPI (MoM-lhs)

Headline CPI (YoY-rhs) Core CPI (YoY-rhs)

Economic Condition Highlights: November - December 2013

0.9% YoY

1.7% YoY

111

Exports and Imports: 11M13Exports by Country

Top 10 Exports by Product (BOP Basis)

Source: Bank of Thailand (BOT), BOP Basis = Balance of Payment Basis

Imports by Country

Top 10 Imports by Product (BOP Basis)

Total Imports (BOP Basis)11M13

USD Millions Weight %YoY Total Imports 201,199 100.0% -0.4%

Fuel 45,471 22.6% 4.2%Machinery, equipment, and supplies 42,080 20.9% -9.9%Electronics parts and electrical appliances 24,539 12.2% -2.8%Materials of base metal 20,120 10.0% -0.7%Non-monetary gold 14,077 7.0% 34.3%Automotive 12,463 6.2% -3.8%Chemicals 12,460 6.2% -2.4%Non-durables Consumer goods 12,085 6.0% 5.4%Agricultural and agro-manufacturing products 8,155 4.1% -4.9%Plastics 7,013 3.5% -2.7%

Total Exports (BOP Basis)11M13

USD Millions Weight %YoY Total Exports 207,315 100.0% -0.3%

Electronics 30,094 14.5% -0.6%Automotive 29,031 14.0% 9.8%Agro-manufacturing Products 25,745 12.4% -2.5%Machinery & Equipment 16,293 7.9% 3.0%Petroleum products 11,733 5.7% -3.3%Petro-chemical Products 11,386 5.5% 5.8%Electrical Appliances 10,918 5.3% 2.5%Metal & Steel 10,047 4.8% -2.0%Chemicals 8,317 4.0% 8.1%Other Manufacturing products 7,389 3.6% 5.8%

112

US

D M

illio

n

Top 10 Exports by Product (BOP Basis) Top 10 Imports by Product (BOP Basis)

Export and Import Data: 2008-2012Exports by Country

Source: Bank of Thailand (BOT), BOP Basis = Balance of Payment Basis

Imports by Country

21.5%5.3%5.7%11.4%11.3%9.1%13.2%22.6%

23.0%5.7%6.2%10.9%10.3%10.6%11.9%21.3%

22.7% 22.5%4.9% 4.7%6.7% 5.4%10.3% 9.8%10.5% 10.7%11.0% 11.8%11.2% 10.9%22.7% 24.3%

23.2%6.4%18.7%12.2%8.0%16.8%

15.7%

18.5% 16.6% 16.2% 16.1%9.0% 7.6% 7.8% 8.1%12.7% 13.2% 13.3% 14.8%18.7%20.7%

18.4% 19.8%6.3%

5.8%5.9% 5.0%

12.4%11.6%

13.3% 12.9%24.4%25.0% 23.2%

22.4%

US

D M

illio

n

Total Exports (BOP Basis)2012

USD Millions Weight %YoYTotal Exports 225,875 100.0% 3.1%

Electronics 33,004 14.6% 0.9%Automotive 29,366 13.0% 26.3%Agro-manufacturing Products 28,557 12.6% 4.1%Machinery & Equipment 17,091 7.6% 1.9%Petroleum products 13,096 5.8% 15.7%Petro-chemical Products 11,703 5.2% -1.8%Electrical Appliances 11,531 5.1% 2.2%Metal & Steel 11,406 5.0% 21.2%Rubber 8,746 3.9% -31.1%Chemicals 8,384 3.7% 2.1%

Total Imports (BOP Basis)2012

USD Millions Weight %YoYTotal Imports 219,860 100.0% 8.8%

Machinery, equipment, and supplies 50,537 23.0% 28.3%Fuel 47,359 21.5% 9.5%Electronics parts and electrical appliances 27,247 12.4% 1.0%Materials of base metal 21,866 9.9% 1.5%Automotive 14,259 6.5% 43.4%Chemicals 13,675 6.2% -4.6%Non-durables Consumer goods 12,418 5.6% 11.5%Non-monetary gold 12,379 5.6% -24.8%Agricultural and agro-manufacturing products 9,311 4.2% 6.4%Plastics 7,894 3.6% 10.7%

24.6%9.5%11.7%10.2%9.9%5.7%5.1%23.1%

113

106

49.5

24.2

210.

7

100.

5

80.9

455.

5

0

100

200

300

400

500

Agricultu

re

Minerals&Ceramics

Light Industr

y

Metal Processing

Electro

nics & Electri

cal

Chemical P

lastic Paper

Service & Inf

rastructu

re

Inve

stm

ent V

alue

(Bt b

n)

2009 2010 2011 2012 2013

281.4

491.3 447.3

983.6 1,027.3

0

200

400

600

800

1,000

1,200

2009 2010 2011 2012 2013

Inve

stm

ent V

alue

(B

t bn

)

Economic Condition Highlights: CAPEX and Investment Cycle

Source: BOT, MOC, OIE

(Data as of January 2014)

Capacity Utilization by Key Industries:

Investment value of BOI-approved applications (by Industry)*

Source: BOINote: *Figures above indicate investments of approved projects requesting investment promotion benefits from BOI

Investment value of BOI-approved applications (Total)*

51.86

48.97

43.32

69.05

88.76

77.80

50.11

98.62

71.26

61.81

0 50 100 150

Food and Beverage

Tobacco

Garments

Paper and Paper Products

Chemical & Chemical Products

Rubber & Plastic Products

Basic Metal

Vehicles

Integrated Circuits & Parts

Household Electrical Appliances

2010

2011

2012

11M 2013

Avg 04-08

114

19.4

13.5

10.9

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

25.0

Land Single House Townhouse

1,000 Units

Supply Side: New Housing Completions and New Projects Launched in BMR*

1,000 Units

Demand Side: Transferred Properties in BMR*

Price Growth of Properties

Sources : National Economic and Social Development Board (NESDB), BOT, Real Estate Information Center (REIC), Agency for Real Estate Affairs (AREA), the BOT, and KResearch Note: * Including Condominium, Single House and Townhouse; BMR = Bangkok and Metropolitan Area

% (YoY)

Property Market: No clear sign of property bubble Outstanding Mortgage Loans to Individuals and Property Developers loan to GDP

%

Mortgage loans to GDP is higher than the pre-crisis level, due to several factors such as changes in consumer behavior, intense competition among banks, and a more accessible credit market

Outstanding loans granted to property developers (including contractors) to GDP was 6.1%, still lower than the pre-crisis level

Supply Side: New housing completions and new projects launched were still below the pre-crisis level

Demand Side: In the last 5 years, the number of transferred properties was still higher than the supply side figures

Prices: Property prices are on an upward trend because of the minimum wage increase and increasing cost of construction materials

Mortgage loans’ NPL among Thai commercial banks remained low at 2.3%, as of 3Q13

Avg. price growth in last 5-years (2008-2012): Land 7.1%; Single House 1.7%; Townhouse 3.1%

Avg. 5-year price growth before the crisis (1992-1996): Land 9.4%; Single House 6.3%; Townhouse 6.3%

5.4

6.7

7.8

146 161 178 151 156 124

0

100

200

2008 2009 2010 2011 2012 9M13

136 145 135 125

43 16 20 13 20 37 49 46 51 50 62 75 84 62

101 75

284

190 132

44 3

4 9 14

31 52 68 64 66 81 68 58 117 86 10290

0 50

100 150 200 250 300 New Housing Completions New Projects Launched

115

Household Borrowing

Source: BOT, Bank for International Settlements (BIS), National Statistical Office (NSO), and KResearch

Debt Service Ratio of Thai households

Household Borrowing to GDP

Household borrowing to GDP is higher than the pre-crisis level, due to several factors such as changes in consumer behavior, intense competition among banks, and a more accessible credit market

Thailand’s household debt to GDP is comparable to other countries and the debt service ratio of Thai households is still well below 40%, indicating that the household debt situation is unlikely to trigger any problems in the foreseeable future

NPL ratio for consumption loans of Thai commercial banks slightly increased; however, it is still below the 5-year average, reflecting a better quality of loans

Old Definition: Data from 1991 – 1997 are lending from commercial banks and SFIs to individual persons for consumption onlyNew Definition: Data from 2010 onwards takes into account individual persons’ outstanding loans from all types of financial

institutions, including saving Co-ops and non-banks

% NPL for Consumption Loans of Thai Commercial Banks

Old Definition New Definition

Cross-Country Comparison of Household Debt

116

Key Regulations for Mortgage Loans

Note: * The effective date is postpone from January 2012, due to the severe floods in 2011

Source: The Bank of Thailand

Price Condominium HouseLoan to Value

(LTV)Risk

WeightsEffective Date

≥ Bt10mn > 80%

75%

March 2009

< Bt10mn > 90% January 2011

< Bt10mn > 95% January 2013*

≥ Bt10mn ≤ 80%

35%

March 2009

< Bt10mn ≤ 90% January 2011

< Bt10mn ≤ 95% January 2013*

The BOT has taken preventive actions and closely monitored risk in the property market

Risk weights for mortgage loans dropped from 50% to 35% under Basel II since 2008

However, the BOT announced revised criteria in 2009-2010 on mortgage loan risk weights with a different effective date

117

QE Tapering and Thailand Economic Impacts

The Dec13 FOMC meeting resulted in QE tapering (US Treasuries and Mortgage-backed securities) as much as USD10bn in the Jan14 meeting. Further tapering will likely depend on US economic sentiment, going forward

Instances where QE tapering or domestic political issues triggerdrastic fund outflows, Thailand’s external stability will likely be maintained, as our FX reserves should be more than enough to meet all obligations

Thai banking system liquidity is sufficient to sustain loan growth, with a high CAR ratio (16.6%, as of Oct 13), low NPLs(2.2%, as of 3Q13), and strong profit-generating capacity (Bt173.8bn and Bt164.6bn in 2012 and 9M13)

Pace of Fed’s asset purchases under Quantitative Easing Program

Source: KResearch and *FOMC (18 Dec 2013) 23.6

167.6

0

50

100

150

200

$Billion

FX Reserves

Net Fwd Position

$191.3 Bn

64.3

22.0

43.0

5.0

0

50

100

150

200

$BillionCurrent Account DeficitReserves backing banknotesNR Bond HoldingsST External Debt

$134.3 Bn

Thailand has enough FX reserves to meet all of its internal and external obligations

Thai commercial banks have high liquidity AssetsThai commercial banks have high liquidity assets

Note: Liquidity includes cash, as well as net positions in short-term money market and net investments

Tapering size depends on economic momentum

118

High international reserve / Imports (Import Coverage)

High international reserve ratio / External debts

Low foreign holding ratio in Thai government bonds

Thailand’s external balances remain relatively strong compared to peers

QE tapering will likely pose manageable impact on the Thai economy, as well as Thai commercial banks, due to:

High import coverage (international reserves/monthly imports) compared with the IMF’s three months of imports coverage guideline

More than 100% of external debt is covered by international reserves

Low portion of foreign holdings in Thai government bonds compared with other countries

Notes: 1) International Reserve as of August 2013 was USD168.8bn2) Foreign investor holdings as of September 2013:

- Thai Government bonds: Bt570bn or 17.9% of the total Bt3.3trn in Thai Government bonds- Thai bonds: Bt770bn or 8.6% of the total Bt8.9trn in Thai bond market size

Source: Various central banks, ADB, Bloomberg, World Bank Complied by KResearch

119

Bond Yields

Current Account and FX Reserve

Other FiguresThai Bond Market Size (Gov. and Private bonds)

Foreign Holdings of Thai Bonds

4,88

8,17

7

5,08

5,98

0

6,11

8,23

7

6,96

2,13

6

7,32

7,10

0

8,57

9,95

7

8,63

6,04

0

8,87

5,30

0

8,91

9,66

6

8,56

3,86

7

57%56%68%69%70%75%76%78%78%

72%

0%10%20%30%40%50%60%70%80%90%

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

2007

2008

2009

2010

2011

2012

1Q 1

3

2Q 1

3

3Q 1

3

4Q 1

3

Per

cen

t to

GD

P

Mil

lio

n B

aht

Thai Bond Outstanding (LHS)

Bond Market Size to GDP (RHS)

49,0

15

76,4

55

65,8

92 280,

459

418,

549

710,

467

849,

971

770,

168

770,

967

718,

420

1.0%1.5%1.1%

4.0%5.9%

8.3%9.9%8.7%8.6%8.4%

0%

2%

4%

6%

8%

10%

12%

-100,000

100,000

300,000

500,000

700,000

900,000

20

07

20

08

20

09

20

10

20

11

20

12

1Q

13

2Q

13

3Q

13

4Q

13

%o

f T

ota

l B

on

d M

arke

t

Mil

lio

n B

aht

Foreign Holding Outstanding (LHS)

% of Thai Bond Market (RHS)

2.2 2.22.5 2.8

3.13.4 3.5 3.7 3.7 3.9 4.0 4.2

2.00

3.00

4.00

6M 2Y 4Y 6Y 8Y 10Y

Dec-11 Dec-12 Dec-13 Jan-14

%

* Data as of January 17, 2014

*

020,00040,00060,00080,000100,000120,000140,000160,000180,000200,000

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

15,000

20,000

25,000

US

D M

illio

n

US

D M

illio

n

Current Account (LHS) FX Reserves (RHS)

USD167.2bn (Dec13)

(-)USD5.3bn (11M13)

120

Other FiguresHousing Loans/GDP

Credit Card Loans/GDP

Personal Loans/GDP

Source: BOT, NESDB

Note: 2013 GDP is based on 3Q13 GDP annualized

Note : Housing loans represent outstanding housing loans for personal consumption granted to individuals of householders by financial institutions (including Commercial banks, Finance companies, Credit financiers, SFIs, and Insurance companies but excluding Saving Cooperatives and others financial Institution)

Note : Credit card loans represent outstanding credit card loans from commercial banks and non-banks, excluding SFIs, saving cooperatives and others financial Institutions

Note : Personal Loans represent outstanding personal loans under supervision(including commercial banks and non-banks, excluding SFIs, saving cooperatives and others financial Institution)

.

121

Other Figures

Credit Card Statistics

Loans to GDP as of 2012

Source: BOT, NSO, CEIC, and KResearch

Thai Banks’ Net Loans and NPLs

Note: Data on China, Korea and Japan include loans from commercial banks as well as financial institutions, the rest include loans only from commercial banks

Note : %YoY Net loans represent growth of net loans in 14 Thai commercial banks, % Gross NPLs as of Sep-13

Note: The credit card statistics number includes foreign bank and non-bank credit cards

GDP Per Capita

8.3%9.8%

7.9%5.8%

-1.1%

11.1%

3.9%

7.3%

4.50%

-2.0%0.0%2.0%4.0%6.0%8.0%10.0%12.0%

-

50,000

100,000

150,000

200,000

2005 2006 2007 2008 2009 2010 2011 2012 2013F

Bath

GDP Per Capita % YoY

122

Other Figures

Net Foreign Direct Investment

Population and Labour force Unemployment Rate

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

65.7 66.3 66.9 67.3 67.6 67.9 68.3

39.036.9 37.7 38.4 38.6 38.5 38.9

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2007 2008 2009 2010 2011 2012 10M2013

Population Labour force

% YoY

million

Foreign Direct Investment Position by Countries

35.8%

14.6%

18.8%

9.7%

21.1% 21.2%

9.5%

18.8%

17.1%

33.5%

24.5%

9.2%

17.5%

17.0%

31.7%

24.4%

9.3%16.5%

19.8%

30.0%

23.1%

9.2%16.3%

20.4%

31.0%

%

Note: - FDI refers to equity investment, lending to affiliates, and reinvested earnings; investment in equity is treated as a direct investment when the direct investors own 10% or more of ordinary shares- Net FDI is the net flow of FDI data in each year as per flow concept- FDI position by countries is an investment outstanding that nonresident investors have with resident enterprises as stock concept

123

1.89 2.18 2.33 2.41 2.50 2.70

2010 2011 2012 2013F 2014F 2015F

CompetitiveEconomic

Region

CompetitiveEconomic

Region

EquitableEconomic

Development

EquitableEconomic

Development

IntegrationWith theGlobal

Economy

IntegrationWith theGlobal

Economy

Single Market and Production

Base

Single Market and Production

Base

Average Projected GDP Growth = 5-5.5%

Average Projected GDP Growth = 5-5.5%

Source: IMF (October 2013), KResearch

Thailand-ASEAN Trade: around 12.5% average growth expected during 2013-2015

Size of ASEAN Economy (USD Trillion)

The ASEAN Economic Community (AEC)

Source: The Association of Southeast Asian Nations, KResearch

AEC by 2015

By 2015, ASEAN will be transformed into the “ASEAN Economic Community,” with free movement ofgoods, services, investment, and skilled labour, and a freer flow of capital

MYANMAR

124

For Further Enquiries, Contact KASIKORNBANK Investor Relations:

Chief Investor Relations Officer Tel (66) 2470 2673-4

Fax (66) 2470 2680

Investor Relations Team Tel (66) 2470 6900-1

Tel (66) 2470 2659-62

Fax (66) 2470 2690

Email: [email protected]

IR Website www.kasikornbank.com Investor Relations

Disclosure Practice:

Unreviewed/unaudited quarterly financial reports are released within 21 days from the end of each period

Reviewed financial reports are released within 45 days from the end of the period for 1Q and 3Q; Audited financial reports are released within 60 days from the end of the period for 2Q and 4Q

Following good governance practice, KASIKORNBANK maintains a "silent period" for approximately 7 days prior to the unreviewed/unaudited earnings announcement. During this period, the Bank refrains from replying to questions or commenting on the earnings announcement

125

This document is intended to provide material information relating to investment or product in discussion and for reference during

discussion, presentation or seminar only. It does not represent or constitute an advice, offer, contract, recommendation or solicitation and

should not be relied on as such. In preparation of this document, KASIKORNBANK PUBLIC COMPANY LIMITED (“KBank”) has made

several crucial assumptions and relied on the financial and other information made available from public sources, and thus KBank assumes

no responsibility and makes no representations with respect to accuracy and/or completeness of the information described herein. Before

making your own independent decision to invest or enter into transaction, the recipient of the information (“Recipient”) shall review

information relating to service or products of KBank including economic and market situation and other factors pertaining to the transaction

as posted in KBank’s website at URL www.kasikornbank.com and in other websites including to review all other information, documents

prepared by other institutions and consult financial, legal or tax advisors each time. The Recipient understands and acknowledges that the

investment or execution of the transaction may be the transaction with low liquidity and that KBank shall assume no liability for any loss or

damage incurred by the Recipient arising out of such investment or execution of the transaction.

The Recipient also acknowledges and understands that the information so provided by KBank does not represent the expected yield or

consideration to be received by the Recipient arising out of the execution of the transaction. Further the Recipient should be aware that the

transaction can be highly risky as the markets are unpredictable and there may be inadequate regulations and safeguards available to the

Recipient.

KBank reserves the rights to amend either in whole or in part of information so provided herein at any time as it deems fit and the Recipient

acknowledges and agrees with such amendment. Where there is any inquiry, the Recipient may seek further information from KBank or in

case of making complaint, the Recipient can contact KBank at [email protected] or +(662) 470 6900 to 01, +(662) 470 2673 to 74.

* The information herewith represents data in the Bank's consolidated financial statements, some of the numbers and ratios are calculated

before netting with KBank’s non-controlling interest.

DISCLAIMER:

126

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