Best Shareholder Treatment Award Board of the Year for Distinctive Practices “Bank of the Year” KIATNAKIN BANK PUBLIC COMPANY LIMITED
A- Level
[Level 4]
“STABLE”
ANNUAL REPORT 2007
KIATNAKIN BANK PUBLIC COMPANY LIMITED
ANNUAL REPORT 2007
KIATNAKIN BANK PUBLIC COMPANY LIMITED 500 Amarin Tower, 11th Floor, Ploenchit Road, Lumphini Pathumwan, Bangkok 10330 Tel. +662-680-3333 Fax. +662-256-9933
www.kiatnakin.co.th
Best Shareholder Treatment Award
Awarded “Best Shareholder Treatment Award” in relation to equal treatment to all shareholders as held by Thailand Securities Depository Company Limited (TSD) in collaboration with Thai Investors Association (TIA), Listed Companies Association (LCA), and Thai Investor Relations Club (TIRC).
“Best Board of the Year for Distinctive Practices 2006/2007” held by the Institute of Directors Association Honorably awarded
Board of the year for Distinctive Practices
Bank of the Year
A-
Level “Stable”
Level
“Excellent”
(IOD) in collaboration with the Stock Exchange of Thailand (SET), The Thai Chamber of Commerce (TCC), The Federation of Thai Industries (FTI), The Thai Bankers’ Association (TBA), Listed Companies Association (LCA), and The Federation of Thai Capital Market Organizations (FETCO).
“Human Development for Nation Development with Kiatnakin” by Kiatnakin Bank Foundation Educational Promotion
Supported the “Bangkok Business Challenge” held by Sasin Institute of Business Administration of Chulalongkor n University and SET
Joined with Duang Pratheep Foundation Joined with World Vision Foundation of in training on financial saving to Thailand in providing bicycles to housewives in communities. schools located in remote areas to increase the educational opportunities for rural children.
Awarded “Bank of the Year Money & Banking Magazine.
2007” (Level 4), from the survey by
The credit rating of the Bank has been sustained and it is likely to gain “STABLE” level from TRIS Company Limited.
Awarded “Excellent AGM of the Year” from the Annual General Shareholders Meeting Assessment Project by the Securities and Exchange Commission (SEC) in collaboration with Thai Investors Association (TIA) and Listed Companies Association (LCA).
Philanthropy and Public Disaster Relief
Donated to help teachers in the South
The Bank in collaboration with the Vocational Education Commission helped flood victims by constructing floating toilets for them in 2006.
Joined with Kiat Ruammitr Foundation to construct school buildings and present scholarship to students in communities
Ethical Development and Social Immunity
Join with the Youth Relation Center of Metropolitan Police in conducting “Hand in Hand, Heart to Heart, Against Drug” project.
Supported Young Buddhist Association of Thailand to promote wisdom and happiness through meditation
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Table of Contents Financial Highlights
4
Message from the Chairperson
6
Report of the Audit Committee
8
General Information
9
Nature of Business
12
Risk Factors
17
Shareholding and Management Structure
21
Related Transactions
41
Analysis of Financial Position and Operating Performance
43
Profiles of Directors and Executives
51
Report from the Board of Directors
64
Report from the Nomination and Remuneration Committee
65
Financial Statements
66-136
Branch Offices
Kiatnakin Bank Public Company Limited
137
Kiatnakin Securities Company Limited
138
List of Information Required by The Office of Securities Exchange Commission
140
KIATNAKIN BANK PUBLIC COMPANY LIMITED
KIATNAKIN BANK PUBLIC COMPANY LIMITED VISION
“To be specialized bank of customers’ first choice”
MISSION “To provide financial services and support to enhance
the competitiveness of customers/business partners while
maintaining social responsibilities”
VALUE
Discipline - determined to perform our job in an orderly manner Integrity - honest and adhering to the code of ethics Expertise - determined to acquire more knowledge and skills Teamwork - determined to work as a team Entrepreneurship - determined to drive business and contributed to the bottom line of the Bank. Dynamic - adaptable to changes
ANNUAL REPORT 2007
Financial Highlights KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Assets continued to grow due to success in lending
68,051
2005
2005
16,209
76,763
2006
2006
17,504
2007
2007
88,839
18,608
Million Baht 0
20,000
40,000
60,000
80,000
46,122
2005
Million Baht
100,000
Success in the expansion of hire purchase lending and commercial lending caused the overall lending to expand
Satisfactory operating performance, shareholder equities grew continuously
0
Growth in deposits provided the Bank with continuous source of funds
51,842
2005
15,500 16,000 16,500 17,000 17,500 18,000 18,500 19,000
51,858
2006
59,259
2006
65,700
2007 0
2007
Million Baht
Million Baht 10,000 20,000 30,000 40,000 50,000 60,000 70,000
Increasing the number of branches as the means to expand operations and better serve our customers
70,231
0
10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000
Increasing the number of employees / staffs as another mean to expand operations and better serve our customers
2005
16
1,466
2005
19
2006
1,489
2006
2007
27
2007
1,896
Branches
0
10
15
20
25
30
Persons 0
500
1,000
1,500
2,000
Financial Highlights Unit : Baht Million
2007
2006
2005
2007
2006
2005
Total Assets
88,839
76,763
68,051
89,189
76,299
68,658
Total Loans
65,700
51,858
46,122
65,102
51,175
45,554
Total Liabilities
70,231
59,259
51,842
73,797
62,749
52,489
Deposits*
44,420
44,560
43,420
44,480
44,567
44,556
Shareholders’ Equity
18,608
17,504
16,209
15,392
13,550
16,170
Net interest and dividend income after bad debts and doubtful accounts and loss on troubled debt restructuring
3,443
3,497
3,328
4,415
2,673
2,526
Non-intererst Income
1,811
1,121
1,534
1,160
698
2,034
Total income
5,254
4,618
4,861
5,575
3,371
4,560
Non-intererst Expenses
2,653
2,296
2,147
2,238
2,087
1,849
445
285
275
445
285
275
2
3
3
2,154
2,034
2,436
2,892
999
2,436
601
610
473
602
610
473
Income tax Monority Interest, Net Net Profile [Loss] Unrealized loss in Financial Claim Recorded in Shareholder’s Equity
Financial Ratios 2007
2006
Bank
Consolidated 2007
2005
2006
2005
Return on Equity [%]
11.96
12.09
15.89
19.98
6.72
15.91
Return on Assets [%]
2.60
2.81
3.88
3.50
1.38
3.84
Earnings per share [Baht]
4.15
3.98
4.95
5.57
1.95
4.95
33.59
33.93
32.60
29.50
26.32
32.60
Tier 1 and Tier 2 Capital Ratio [%]
16.39
22.17
22.59
Dividend [Baht]
2.30
2.20
2.30
Book Value [Baht]
* Including interbank and money market items
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Bank
Consolidated
Operating Results
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Message from the Chairperson During the past year, Thai economy continuously expanded even with impact from domestic and external factors. The main factors were continuing rise in oil prices and conflicts between leading industrialized nations and the Middle East nations, which caused many people to suspect that oil prices will continue to remain high. The issue with sub-prime mortgage loans from US was another factor that contributed to the slowdown of the economy; it is expected to affect other US trading countries and the expansion of world economy including Thailand as an exporter to US. However, since Thailand export to other regions as well, overall export volume is expected to continue to expand. On the political side, the general election was held at the end of 2007 and the economy had many challenging issues awaiting resolution, such as high inflation rate of 3.2%, continually strong Thai Baht, and lower consumer and investor confidence. These were the major factors that contributed to the low level of growth in loan volume in the commercial banking system which is at 5.5%. Total deposits grew by 0.2% with high liquidity. Investments in the stock market increased as reflected in the SET index which rose to 858.1 and trading volume average Baht 15,782 million per day, representing decrease of 7.5%. Eventhough there are many unfavorable factors, the Bank was able to maintain good operating performance by focusing on developing the businesses that the Bank has expertise in. The Bank’s performance as at year end 2007 are summarized below: • The Bank continued to grow with an increase in total assets of 15.7% to Baht 88,839 million, while the entire commercial banking system grew at 3.4%. • The Bank was able to satisfactorily increase the outstanding hire purchase loans by 42.4%, and effectively
increased net loan by 27%, while the entire commercial banking system had a total loan growth of 5.5%. • Net profits in 2007, at Baht 2,154 million, increased Baht 120 million, an increase of 5.9% when combined with the revaluation gain on investment in financial claims and assets for sale, equaled Baht 2,145.7 million, a reduction of 1.1% when compared to Baht 2,171 million at year end 2006. The reduction can be attributed to the mobilizing of funds through short-term debentures and an increase in bills of exchange, which resulted in higher cost of capital while non-performing loans and doubtful accounts expenses that increased proportionally to the number of new loan customers. In addition, there was an increase in non-interest income resulting from the Bank’s expansion in terms of branches and personnel. • The Bank made continuous progress in restructuring the debts from investment in financial claims during 2007. Year end outstanding amount was Baht 6, 876 million, a reduction of Baht 2,205 million. • Foreclosed assets for sale increased by Baht 960 million to Baht 9,293.6 million due to debt restructuring and legal processes. The Bank must accelerate the sale of such assets in the future. • The Bank mobilized funds to use in its operations by accepting deposits and issuing debentures in an amount consistent with its lending; thus, total liabilities for the Bank was Baht 70,231 million, an increase of 18.5%. • The Bank received approval by Bank of Thailand to open ten more branches, eight of which were opened by the end of 2007. As at end of 2007, the Bank has a total of 27 branches.
• Received “Excellent” appraisal for Annual Shareholder Meeting Quality Assessment in 2007 conducted by the Securities Exchange Commission and Listed Companies Club. The Bank was 1 of 19 companies that received over 100 points. • The Bank is one of the 62 companies from 402 listed companies that received a “Very Good” rating from Thai Institute of Directors (IOD) on the good corporate governance. • Awarded for having “Best Board of the Year for Distinctive Practices 2006/2007”. • Ranked 4th for Bank of the Year in 2007 ranking by Money and Banking Magazine. In 2008, it is expected that the world economy will expand slightly, while high oil prices remain constant and the US dollar remain weak when compared to Thai Baht. There are no violent situations in world politics and Thailand political conditions will improve once the new government from election is installed. Thai economy is expected to grow noticeably depending on exports, tourism and government investments. Financial institutions will continue to expand under intensified competition, especially for personal and hire purchase loans because large commercial banks have fully entered into the market. Interest rate is likely to rise following the increase in inflation rate. New automobile purchases and residential development projects are expected to slow down with an exception of budget condominium projects along the skytrain and subway routes. Kiatnakin’s plan in 2008 will concentrate on expanding the businesses in which the Bank has expertise and add more branches as required to serve the existing market in order to increase our competitive position and provide better service. The Bank plans to focus mainly on expanding hire purchase loan and commercial loan businesses while becoming more cautious on loan quality and be consistent with the economic situation that is slowing down as well as expediting debt restructuring process from investment in financial claims and assets for sale in order to maintain
the growth in assets and profitability. Nevertheless, in this sluggished and volatile environment, the Bank will proceed cautiously by expanding on good quality assets rather than on volume; focusing on developing the market the Bank has expertise in; maintaining liquidity by effectively manage assets and liabilities; and maintaining sufficient capital requirement to support the risk of asset devaluation as a result of economic instability. The Bank will continue to develop new technology to provide more efficient service; become more specialized in the Bank’s area of expertise to create more value for our customers; and reinforce higher level of good corporate governance as well as ensure compliance by all related parties. Overall, this strategy is certain to ensure long-term profitability and growth for Kiatnakin bank. On behalf of the Bank’s Board of Directors, I would like to take this opportunity to thank each one of our shareholder in entrusting Kiatnakin Bank with your investments and in supporting our operations during 2007.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
• The Bank received Best Shareholder Treatment Awards at the Shareholder Awards 2007 Ceremony sponsored by Thailand Securities Depository Company Limited in conjunction with Thai Investors Association, Authorized Companies Club, and Thailand Investor Relations Club.
(Ms. Nawaaporn Ryanskul) Chairperson
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Report of the Audit Committee Dear shareholders, The Audit Committee was appointed as per Board of Directors meeting no. 3/50 on 26 April 2007, comprising of 3 independent directors as follows: 1. Mr. Pichai Dachanapirom 2. Mr. Manop Bongsadadt 3. Mr. Chet Pattrakornkul
Chairperson Member Member
The Audit Committee operated according to its Charter. The responsibilities of the Committee are to report the audit procedures to the Bank’s Board of Directors and provide accurate, complete and reliable disclosure of financial information and reports. Other responsibilities are to propose the name and remuneration of an external auditor to the Bank’s Board of Directors in order to obtain approval for an appointment at the Annual General Shareholders Meeting; to ensure that business has been conducted in accordance with relevant laws and regulations; to coordinate with the Risk Management Committee to make sure that the operations adhered to the Bank’s risk management policy; to make certain that there are no conflicts of interest; to supervise, provide recommendations and observations on the Internal Audit Office’s work practice; and to consider and approve the Internal Audit Office’s annual audit inspection plan.
Moreover the audit committee met with the auditor 4 times and met together with the auditor from Bank of Thailand 1 time in order to obtain the audit result and consider the opinion and suggestions in how to operate from the 2 external parties. The meeting was also held as a means to follow up and ensure management consider, make improvement and adjust the approach of the internal auditor to be in alignment, while emphasizing on good management and corporate governance. The Internal Audit Office, which is under the jurisdiction of the Audit Committee, had conducted audits on various departments to ensure sufficient internal control compliance with rules, regulations and announcements; and review of financial reports. It also served as a central unit to receive complaints to improve the Bank’s services, facilitate efficient work, treat all stakeholders equally, consider the rights of the shareholders, and transparently disclosed all information. Quarterly reports were submitted to the Bank’s Board of Directors.
The Audit Committee found that the Bank’s financial statement preparation and information disclosure process had appropriate and sufficient control. The Bank’s financial statements were reliable and in accordance to the Generally Accepted Accounting Principles (GAAP) and the Bank’s operations was The Audit Committee held a total of seven
appropriate. meetings in 2007. In addition to performing the abovementioned duty over the past year, the Committee also emphasized on credit review and risk management
operations. The Committee examined and monitored branch performance throughout the country and audited cash deposit operations and transactions to ensure that this new banking service is sound and in line with set regulations. Special measures were in place to closely (Mr. Pichai Dachanapirom) monitor to make certain that the regulations are being Chairperson of the Audit Committee adhered to.
1. General Information 1.1 General Information / Other References Company
Kiatnakin Bank Public Company Limited
Nature of Business
Banking
Registration Number
172
Address
500 Amarin Tower, 12th Floor, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel. 0-2680-3333 Fax 0-2256-9933 www.kiatnakin.co.th
No. of ordinary shares sold
521,687,004 shares as of December 31, 2007
Registrar
Thailand Securities Depository Company Limited 62 Stock Exchange of Thailand Building Ratchadapisek Road, Klongtoey, Bangkok 10110 Tel. 0-2229-2800, 0-2654-5599 Fax. 0-2359-1259
Auditor
Legal Adviser
Ms. Unakorn Phruithithada Price Water House Cooper ABAS Limited 179/74-80 Bangkok City Tower, 15th Floor, South Sathorn Road, Bangkok 10120 Tel. 0-2286-9999 Fax: 0-2286-5050 None
Consultant / Manager under Contract
None
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
1.2 Companies in which Kiatnakin Bank holds 10% or more of the total registered shares (as of 31 December 2007)
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
10
2. aa Name and Address Business Type
% Shares owned by the Bank
No. of ordinary shares issued
1.
BTMU Leasing (Thailand) Company Limited 54 Harindhorn Tower, 4th Floor, North Sathorn Road, Silom, Bangrak, Bangkok 10500 Tel. 0-2266-3060 Fax. 0-2266-3067
Leasing / Hire-purchase
10
600,000
2.
Attakorn Company Limited 200 Juldis Haadyai Plaza, 4th Floor, Niphat Uthit 3 Road, Haadyai, Songkhla 90110 Tel. 0-7435-4334-5 Fax. 0-7435-4336
Car Hire-purchase
10
800,000
3.
Kiatnakin Securities Company Limited 500 Amarin Tower, 7th Floor, Ploenchit Road, Pathumwan, Bangkok 10330 Tel. 0-2680-2222 Fax. 0-2680-2233
Securities Business
99.99
65,000,000
4.
Kiatnakin Fixed Income Fund Tisco Asset Management Company Limited 48/16-17 Tisco Tower, 9th Floor, North Sathorn, Sathorn, Bangkok 10120 Tel. 0-2633-7777 Fax. 0-2633-7300
Fund Management
10.33
7,221,223
5.
Asia Recovery Fund 1 Thai Farmers Asset Management Company Limited 252/38-41 Maungthai-Phatra Tower 1, 31st Floor, Rachadaphisek Road, Huaykwang, Bangkok 10320 Tel. 0-2693-2300 Fax. 0-2693-2320
Fund Management
99.95
125,947,412
6.
Asia Recovery Fund 2 Thai Farmers Asset Management Company Limited 252/38-41 Maungthai-Phatra Tower 1, 30th - 32nd Floor, Rachadaphisek Road, Huaykwang, Bangkok 10320 Tel. 0-2693-2300 Fax. 0-2693-2320
Fund Management
99.59
187,239,308
% Shares owned by the Bank
No. of ordinary shares issued
7.
Asia Recovery Fund 3 Thai Farmers Asset Management Company Limited 252/38-41 Maungthai-Phatra Tower 1, 31st Floor, Rachadaphisek Road, Huaykwang, Bangkok 10320 Tel. 0-2693-2300 Fax. 0-2693-2320
Fund Management
99.97
190,832,895
8.
Thai Restructuring Mutual Fund One Asset Management Company Limited 989 Siam Tower Building, 24th Floor, Rama 1 Road, Pathumwan, Bangkok 10330 Tel. 0-2659-8888 Fax. 0-2659-8860-1
Fund Management
98.91
78,698,484
9.
Asia Recovery Property Fund 1 One Asset Management Company Limited 989 Siam Tower Building, 24th Floor, Rama 1 Road, Pathumwan, Bangkok 10330 Tel. 0-2659-8888 Fax. 0-2659-8860-1
Fund Management
99.50
24,418,404
10.
Asia Recovery Property Fund 3 One Asset Management Company Limited 989 Siam Tower Building, 24th Floor, Rama 1 Road, Pathumwan, Bangkok 10330 Tel. 0-2659-8888 Fax. 0-2659-8860-1
Fund Management
98.77
93,340,000
11.
Ayudhya Tuntawee Fund 5 One Asset Management Company Limited 898 Ploenchit Tower Building, 12th Floor, Ploenchit Road, Lumpini, Pathumwan Bangkok 10330 Tel. 0-2657-5757 Fax. 0-2263-0199
Fund Management
83.57
5,983,265
12.
CMIC Development Company Limited 209 K Tower, 10th Floor Sukhumvit 21 Road, Klongtoey Nue, Wattana, Bangkok 10110 Tel. 0-2664-1396-7 Fax. 0-2664-2163
Office Building Rental
80.58
230,000,000
13.
Nippon Pack (Thailand) Company Limited 53/34 Petchkasem Road, Nhongkangplu, Nhong Kham, Bangkok 10160 Tel. 0-2421-2060-1 Fax. 0-2421-0496
Packaging
11.01
12,000,000
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Name and Address Business Type
11
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
12
2. Nature of Business
2.1 Important Business Characteristics Kiatnakin Bank Public Company Limited offers a full range of commercial banking services, such as accepting deposits, extending credits, issuing and endorsing bills of exchange or negotiable instruments, trading in foreign currency, avalisation of trade bills, acceptance of bills, issuing letters of credit or guarantee, and operating hire purchase and leasing business, etc. Kiatnakin Bank Public Company Limited received permission to operate a financial group as per the document BOT. FSD. (21) 1984/2549 from the Bank of Thailand dated 4 December 2006. The Bank is the parent company and has one subsidiary company name Kiatnakin Securities Company Limited (KKS). KKS is a full service securities company and is member #19 of the Stock Exchange of Thailand. Currently, the Bank has 27 branch offices throughout the provinces and Greater Bangkok Metropolitan area. The Bank has plans to open 10 more branches in 2008 in order to provide better service to our customers.
Commercial Bank Main Businesses • Deposit Service The Bank offered a variety of ways to save money. Depositors can choose from several types of account including savings and current account with step up interest rates. Moreover, the two accounts can be joined by requesting automatic fund transfer between accounts (Sweep In-Out). Depositors can choose a short or long-term fixed deposit schemes or choose the type of savings that uses a passbook or a certificate of deposit or choose a scheme with higher yield such as bill of exchange. • Hire-Purchase Loan The Bank offered auto hire purchase services for all types of automobiles, both
new and second-hand, so that borrowers of such loans are able to manage their cash flow properly at a suitable interest rate and repayment period. Due to our expertise in hire- purchase loans, the Bank also offers the following related services in order to provide most convenience for our customers: 1. Automobile Services: Provide annual registration service and licensing service 2. Insurance Services: Provide insurance against fire or any other damage (e.g. automobile insurance) as well as life insurance in the form of car loan protection. The current plan is to offer more insurance products such as personal accident insurance and personal loan protection. 3. Personal Loan: Provide personal loan for customer with excellent repayment records at low interest rate with credit limits 5 times the salary. 4. Book Loan: Provide book loan for second hand automobiles for customers with excellent repayment records. The automobile must be less than 10 years old. • Auction of Repossessed Automobile In the beginning of 2007, the Bank opened an automobile auction house Kiatnakin Car Center (KKCC), located on Bangna-Trad Highway (Km. 8) with a budget of 30 million Baht. It is one of the modern and comprehensive auction houses in Thailand to support automobile auction and training needs. The Bank organized trainings for the general public that are interested in learning more about second-hand automobiles. The Bank hold weekly auction of second-hand automobiles in the central region
• Residential Project Loan The Bank offered comprehensive residential project loan services for developers of all types of residential projects. Our clients received rapid credit processing, desirable credit limits and repayment schedules that corresponded to their project revenue. The Bank’s team of professionals provided advice on finance, project development and management. Furthermore, the Bank continued to hold the policy to provide on-going customer support in the areas of public relations and sales promotion of their projects. • Corporate Loan The Bank offered a full range of corporate credits for qualified businesses. Customers received rapid credit processing and prompt response on their credit request, sufficient short term credit limit, and a repayment schedule that corresponded to their business revenue. The main businesses in which the Bank focused on supporting were automobile business such as new automobile dealers and second hand auto dealers, other business such as apartment business, transportation business, packaging business, and printing business.
Security Brokerage Service Kiatnakin Securities Company Limited (KKS), a subsidiary of the Bank, has an objective to become a leading financial service provider. KKS offers comprehensive financial and investment services by highly proficient personnel in the following areas of service: 1. Securities Brokerage Agent KKS has an experienced team of advisors to provide sound advice and present analysis which can add real value to our investors’ investments. Investors can trade securities via our marketing personnel during office hours or internet using KK E-Trade service. Our internet service also allows investors to check the status of their buy-sell orders and portfolio at anytime. 2. Investment Banking Service KKS offered financial advisory service which comprises of consultation in issuing equity, such as initial Public offering and offering other types of equities, such initial Public warrants. In addition, the company also provides advice on other financial matters, such as mergers and acquisitions, financial arrangement/structuring, and debt restructuring, etc.
3. Mutual Fund Selling Agent Many types of mutual funds can be bought and sold via KKS, such as Retirement Mutual Funds (RMF), Long-term Mutual • Assets for Sale The Bank had a variety of
Funds (LTF), Fixed Income Funds and Equities Funds, assets for sale to people seeking a place of residence or etc. investment, such as houses, townhouses, vacant land, commercial buildings and office buildings. Customers were able to contact Call Center 0-2680-3420-1 or 2.2 Revenue Structure www.kkasset.com to obtain more information on Kiatnakin Bank Public Company Limited’s revenue available assets based on type, location, size, or price. structures and shareholdings in its subsidiaries and affiliates In addition, the Bank can estimate the loan amount and are specified in section 1.2. The revenue structure by each monthly payment for customers who wanted to obtain business groups is as follows: some preliminary figures.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
and other parts of Thailand. Each time, there are over 100 automobiles up for auction. The Bank developed an efficient customer service system to provide maximum satisfaction for our customers.
13
2007
Securities Business
2005
Fund Management
Fund Management
Baht 1,076 Mill. 13%
Baht 1,26 Mill. 18%
Securities Business
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Banking Business
Baht 297 Mill. 3%
Baht 389 Mill. 5%
Baht 7,134 Mill. 84%
Banking Business Baht 5,472 Mill. 77%
2006 Fund Management Baht 1,108 Mill. 15% Securities Business Baht 343 Mill. 5%
Banking Business Baht 5,641 Mill. 80%
14 * Consisted of 6 Mutual Funds as shown in 1.2 juristic entities in which our Bank holds at least 10% (sequence number 5-10)
2.3 Summary of Significant Changes during 2007
from Thai Institute of Directors Association (IOD) on supervision and good governance.
* Appoint Ms. Nawaaporn Ryangsakul Independent Director and Chairperson of the Audit Committee as Chairperson
* The Bank maintained its “A-” credit rating from Thai Rating and Information Services Ltd. (TRIS) which reflected our stable credit position.
* Received Best Shareholder Treatment Awards at the Shareholder Awards 2007 Ceremony sponsored by Thailand Securities Depository Company Limited in conjunction with Thai Investors Association, Authorized Companies Club, and Thailand Investor Relations Club. * Received “Excellent” appraisal for Annual Shareholder Meeting Quality Assessment in 2007 conducted by the Securities Exchange Commission and Listed Companies Club. The Bank was 1 of 19 companies that received over 100 points. * One of the 62 companies from 402 listed companies that received a “Very Good” rating
* Awarded for having the Best Board of the year for Distinctive Practices 2006/2007 * Ranked 4th for Bank of the Year in 2007 ranking by Money and Banking Magazine * The Board of Directors authorized the payment
of interim dividend of Baht 1 per share to
ordinary shareholders based on financial results from 1 January to 30 June 2007. The Board authorized dividend in the amount of Baht 1.30 per share based on the financial results from
1 July to 31 December 2007. When combined with the interim dividend, total dividend for the year is Baht 2.30 per share.
2.4 Business Situations and CompetitionsTotal Assets 4 Medium Banks
10 Small Banks
25.2%
Total assets Baht 0.97 trillion 12.2%
4 Large Banks Total assets Baht 5 trillion
62.6%
(Baht Million)
Assets and Liabilities
Balance sheet Large Banks
Medium Banks
Small Banks
Change (%) KK
Total
Large Banks
Medium Banks
Small Banks
KK
Total
Total assets
4,964,351
2,002,535 965,429
88,839
7,932,316
6.4
(6.8)
12.4
15.7
3.4
Loans (net)
3,465,487
1,301,671
545,648
63,051
5,312,806
10.7
(5.4)
3.1
28.9
5.5
Deposits
3,913,520
1,489,202
575,526
41,354
5,978,248
4.8
(11.6)
5.7
(1.8)
0.2
Liabilities
4,492,200
1,811,472
866,422
70,231
7,170,095
6.0
(7.7)
13.9
18.4
3.0
472,151
191,063
99,007
18,567
762,120
10.1
23.0
0.6
6.6
11.6
Shareholders’ Equities
Sources : Financial Statements, The Stock Exchange of Thailand
At the end of 2007, there were 18 Thai commercial banks, of which 3 were retail banks with total assets of Baht 7.93 trillion, an increase of 3.4% from the year before the four large-scale commercial banks (proportion of assets is more than 10%) had total assets of Baht 5.0 trillion, represented 62.6% of total assets of the industry and a 6.4% increase from previous year. The four medium-scale commercial banks (proportion of assets more than 3% but lower than 10%) had total assets of Baht 2.0 trillion, represented 25.2% of total assets of the industry and a 6.8% decrease from previous year. The remaining 10 small-scale commercial banks (proportion of assets lower than 3%) had total assets of Baht 0.97 trillion, represented 12.2% of total assets of the industry and a 12.4% increase from previous year. At the end of 2007, Kiatnakin Bank, which is a small-scale commercial bank, had total assets of Baht 88,839 million, reflecting a 15.7% increase over the previous year, which is higher than the rate of market expansion. The Bank was ranked as number
13 in terms of asset size, which is equivalent to 1% of total commercial bank’s assets.
Total Loans (Net) At the end of 2007, net loans of Thai commercial banks were Baht 5.3 trillion, which represented a 5.5% increase from previous year. Net loans of large-scale commercial banks were Baht 3.5 trillion, reflecting an increase of 10.7%. That is the highest expansion of commercial banks. Net loans of medium-scale commercial banks were Baht 1.3 trillion, which was a 5.4% decrease. Net loans of small-scale commercial banks were Baht 0.55 trillion, represented a 3.1% increase. Manufacturing sector received the highest percentage of loans at 25% of total loans, reflecting a slight decline from previous year figure of 26%. Due to the expansion of the commercial bank personal consumption loans, the figure increased from 18% to 20%, mainly attributed to the auto hirepurchase loans.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Total assets Baht 2.0 trillion
15
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
At the end of 2007, the Bank’s net loans amounted to Baht 63,051 million or a 28.9% increase, which is higher than the commercial banking industry. Total amount of net loans for the Bank represents 1% of the total amount of all commercial banks.
Total Deposits At the end of 2007, total deposits for Thai commercial banks amounted to Baht 5.98 trillion, an increase of 0.2% from the previous year. Total deposits for large-scale commercial banks were Baht 3.9 trillion, a 4.8% increase. Total deposits of medium-scale commercial banks were Baht 1.5 trillion, a 11.6% decrease. Total deposits of small scale commercial banks were Baht 0.57 trillion, a 1.8% decrease. 2007 was one of the years which commercial banks intensively competed for deposits. Banks offered high interest rates to attract depositors. At the end of 2007, the Bank had a total deposit of Baht 41,354 million, reflecting a 1.8% decrease. The Bank was able to expand less than the industry by mobilizing deposits through BE and issuance of debentures.
At the end of 2007, the Bank’s total shareholders’ equity amounted to Baht 18,567 million or a 6.6% increase. Overall, the Bank’s total shareholders’ equity represented 2.4% of the commercial banking sector. Competitive outlook for commercial banks is expected to be very challenging due to economic slowdown that occurs due to factors external to Thailand especially the sub-prime issue and domestic factors which effect deposits and need for loans. Changing banking regulations, such as the utilization of a new international accounting standard IAS39 and application of Basel II Framework make lending more burdensome for banks. Additional competition for deposits is expected to intensify when the Deposit Insurance Agency is come into effect because it will cause the commercial banks to focus on increasing the number of depositors. Another source of competition is from which entered the loan market, especially by offering personal loans as well as payment services.
Hire-Purchase Business
Shareholders’ Equity 16
total shareholders’ equity of Baht 0.10 trillion, representing a 0.6% increase. This was partly attributed to better performance and rise in accumulated profits.
At the end of 2007, Thai commercial banks had total shareholders’ equity of Baht 0.76 trillion, representing an 11.6% increase from last year. Largescale commercial banks had total shareholders’ equity of Baht 0.47 trillion representing a 10.1% increase. Medium-scale commercial banks had total shareholders’ equity of Baht 0.19 trillion, representing a 23% increase. Small-scale commercial banks had
At the end of 2007 automobile sales volume was 631.2 thousand vehicles, which reflected a decrease of 7.5% from last year’s sales volume of 682 thousand vehicles. Personal automobile sales volume was decrease by 11.4% and finished the year at 169.5 thousand vehicles. Commercial vehicle sales volume declined by 5.9% from previous year and finished at 461.7 thousand vehicles. (Baht Million)
Bank TCAP
2007
2006
Change
Market Share 07
Market Share 06
191,025
163,259
17%
49%
53%
SCB Leasing
74,848
52,095
44%
19%
17%
TISCO
64,684
54,245
19%
16%
17%
KK
42,238
29,666
42%
11%
10%
K Leasing
20,185
9,631
110%
5%
3%
392,980
308,896
27%
100.0%
100.0%
Total
Sources : Financial Statements, The Stock Exchange of Thailand
Top 5 hire-purchase debtors of commercial banks’ outstanding loan amounted to Baht 392,980 million, representing a 27% increase. Thanachart Bank had the highest market share of 49% a slight decrease from 53% last year. For Kiatnakin Bank, the number of hire-purchase loan increased by 42% and total number of loan ranked the fourth highest with market share of 11% compared to last year’s of 10%.
In 2007, the Bank expects to witness high expansion rate for hire-purchase loans because many commercial banks still have strong interest in this business based on the publicly released bank’s policies; returns and risk level for this business remains attractive; and there are incentives from the reduction of minimum capital reserves specified in IAS 39 and Basel II Framework.
Banking operations is directly related to dynamic changes in business and the environment, such as macro economic outlook and various changes in industries and organizations. These changes create a variety of risks that must be tracked, managed and controlled. The Bank consistently and continuously places great emphasis on risk management by establishing an independent Risk Management Unit, which reports directly to the Risk Management Committee. The Unit is responsible for setting risk management policies, developing strategic plans and advocating risk protection measures in order to reduce the existing and expected risks. The Risk Management Committee plays a significantrole in determining risk management policies; reviewing the sufficiency of such policies and risk management system; and controlling and monitoring the Bank’s risk level to ensure that it remains consistent with the Bank’s policy. The goals of risk management are to manage various risks to be within specified range and operate the business to achieve appropriate returns. The main risk management policy regarding for the Bank is to manage overall risks of the Bank and its subsidiaries and affiliates and consolidate all the risks in order to manage risks effectively and sufficiently. Each business unit and internal department is responsible for understanding and managing risk suitably to ensure that it covers all operations within their respective area of responsibility while complying to risk management policy and framework set forth by the Bank. The Risk Management Unit provides supplemental managerial review and verification to make sure that each business unit and department has set up sufficient managerial and control procedures to handle risks. Each line of business has set aside capital appropriate to their revenue. Business risks is measured by various risks inherent in each transaction along with overall
business risks which impact future strategy and policy in generating revenue. In conformity with Risk Management Policies of Bank of Thailand, five major risk classifications have been identified and are described as follows: • • • • •
Strategic Risks Credit Risks Market Risks Liquidity Risks Operational Risks
The Bank’s risk management in the past year has expanded to include the Bank’s subsidiary Kiatnakin Securities Company Limited
Strategic Risks Strategic risk arises from the process of developing strategic plans and improperly carrying out the plans. It could be due to inconsistency between strategies, policies, goals, organization structure, competition and resources. In the end, these internal and external factors will impact the Bank’s revenue and capital. Kiatnakin Bank’s main strategy is to be the Bank that has expertise in specialized area in order to build proficiency and competitiveness. At the same time, the Bank has expanded its major businesses and sought out additional core businesses so that the Banks’ competencies are spread out. With aforementioned business strategies, the Bank implemented basic level of risk control by 1) Maintaining a high capital/assets ratio in order to protect the business from the impact of future income fluctuations. The Bank sustained a capital/assets ratio that is higher than the average of all financial institutions. As of 31 December 2007, the Bank maintained a consolidated capital/assets ratio at 16.39%, which was higher than the guideline established by the Bank of Thailand at 8.5%. The Bank
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
3. Risk Factors
17
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
also established proportions for various types of loans in order to ensure that there is appropriate balance. 2) Reducing major risk areas and only leave the areas that can be mitigated by the Bank’s own expertise. 3) Controlling and diversifying the Bank’s main businesses to be at appropriate level along with searching for other major business areas as specified in the Credit Risk section.
Credit Risks Credit risk is a risk in which partner or contractor or debtor is unable to adhere to the terms and agreements in the contracts. If the credit risk arises without any collateral, it will cause the Bank to set higher provision for doubtful accounts. At present, the Bank’s loans comprised of 58.6% hire purchase loans, 21.1% residential project loans, and 10.7% commercial loans (of which 10% are investments in financial claims). Doubtful accounts amounted to Baht 8,202 million or 12.45% of total loans. Hire-purchase loan is a low fluctuation and high growth business in which the service and interest rates are highly competitive; therefore, the risk is automatically distributed. Major risks will arise from
significant changes in the economy, legislation and automobile industry which will affect customer loan repayment ability as well as the Bank’s own policy and business processes. In managing the risk for hire purchase loans, the Bank focused on major factors that affected the entire hire purchase loan portfolio as well as on the development of loan approval process. At the same time, the Bank monitored the quality of loans as well as net benefits received. The Bank clearly segmented business types in order for the business to be highly effective and adaptable. Residential project lending is a business with high fluctuations depending on the condition of the property market. The residential project loan portfolio is characterized by having a high number of clients and the top twenty major clients represented about 50% of total residential project loans. At the end of 2007, total principal outstanding for residential project loans was Baht 15,184 million of which Baht 5,412 million were classified loans (35.64%). Reserves had been set at a level higher than the required standard as per the table below:
18 (Baht Million)
Principal
Allowance for doubtful A/C’s
Allowance for Doubtful A/C’s by IAS 39
Normal debts
9,772
4.48
74.74
Classified loans
5,412
1,164.40
1,199.30
15,184
1,168.88
1,274.04
Total
In managing risks involved in residential project financing, the Bank emphasized having sufficient level of capital fund that is much higher than the standard level; making provisions for higher than normal non-performing loans including diversifying project locations and types of properties; and selecting projects of good standing and likely to succeed in current and future market conditions. Rate of return varies according to loan risk in order to minimize the impact from changes in real estate market, competitors and consumers. Loan quality was verified according to the size of loans in each group, and loans that are below standards were followed up more closely. Moreover, the Bank improved its lending policy for residential project which took effect in 2007. We believe that it will improve the quality of new loans and
disperse the location of the projects appropriately and consistently in line with the market. Managing investments in financial claims is a fluctuating business in terms of revenue, duration of the restructuring processes and collateral value. The success depends on the capability and efficiency of restructuring processes that suits the customers’ repaymentability, collateral, and internal and external legal processes. The Bank realizes the fluctuations in business performance, including project’s remaining time to completion; thus, higher than normal standard loan allowances were imposed. The Bank closely followed up on management of the loan along with all legal procedures. In addition, the Bank allocated higher than
As per the Bank of Thailand’s instruction for all financial institutions to use the IAS 39 accounting standards, the Bank has set aside adequate provisions according to the guideline since the end of 2006.
Market Risks Market risk arises from the fluctuation in interest rates, exchange rates and price of debt instruments in money and capital market that has an effect on the Bank’s financial performance. Interest rates, market value of assets and exchange rates are market risk factors that have direct effect on the Bank’s status and performance. Nevertheless, the Bank has a policy to operate by reducing the effect of the above–mentioned risk factors to a very low level. The Bank recognizes the importance of interest rate variations, which directly impact net interest income, and therefore, has assigned the Assets and Liabilities Management Committee (ALCO) to monitor and minimize the impact by adjusting the terms and types of liabilities to be in line with the assets. ALCO also uses a monitoring instruments to measure the impact on net interest income based on various simulated scenarios to be within an acceptable range. As a result, the Bank was able to achieve low market risk, e.g. if the interest rate rise by 1%, the Bank’s net interest income will be reduced by only Baht 60.55 million, or 1.31% of net interest income in 2007. Because the Bank has a high proportion of foreclosed assets for sale when compared to overall Bank’s assets, real estate market price affects the Bank’s status and performance even when past sales were close to appraisal value. The Bank still maintained the accounting policy of strictly adhering to the progressive asset value reduction model for the specified holding period. As of 31 December 2007, the Bank has Baht 9.2 billion of foreclosed assets for sale, where by the appraisal value was at Baht 13.4 billion, or 145% of book value. At present, the Bank has no significant related transactions or impact from exchange rate and has no investment in securities for trading. The Bank reports asset values based on daily market rate for securities for sales and has specified a threshold to stop loss.
Liquidity Risks Liquidity risk is risk in which the Bank may not be able to pay according to the obligations within the specified duration. The purpose of managing liquidity risk is to have appropriate and sufficient amount of capital to pay all the creditors in the current and future. At the same time, the Bank must be able to use the capital to generate benefits in accordance with market conditions. Being a small bank, our loan portfolios and cash flow are in clusters of industries, such as residential project financing and asset management businesses, which are characterized by high fluctuations and unpredictability; therefore, limited the ability to forecast cash flow. In addition, future changes in legislations regarding Deposit Insurance Agency will greatly impact the future financial instruments and cause all banks to have higher liquidity risk. Thus, the Bank places great importance in maintaining high level of liquidity by assigning the Assets and Liabilities Management Committee (ALCO) to strictly maintain and manage the Bank’s liquidity on a regular basis through the implantation of the following policies: o Continuously maintain high level of liquidity while setting the average due date of all liabilities as of 31 December 2007 at 306 days. o Adjust the terms of liabilities to be in line with the terms of assets o Maintain high proportion of long-term liability o Disburse of liability types o Expand the deposit base from major depositors and disburse the due dates, even for large customers. o Have liquidity contingency plan to handle liquidity crisis.
Operational Risks Operational risk may occur from flaws in the system and internal operating processes; mistakes made by employees or executives; or operation breakdown due to external incidents. In operating a commercial bank, it is possible to have operational risks in any operation, which can result in damages to the Bank; thus, the Bank believes that effective operational risk management will help the Bank achieve its goals in reducing operational losses, improving efficiency of operating procedures, and increasing efficiency of internal audit process by
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
standard allowances for depreciations and devaluation of assets for sale to ensure that they are sufficient to support the variations in the market conditions that affect the business.
19
assessing the impact for each operational risk. Managing operational risks is essential for the Bank in order to create more value for our shareholders and enhance our competitive advantage.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
20
During the past year, the Bank has arranged training for personnel to increase their knowledge in managing operational risks and applied various operational risk management tools (e.g. recording actual operational losses in Loss Data, Risk & Control SelfAssessment and Key Risk Indicators) to all business areas throughout the Bank. The plan is to officially expand the use of operational risk management tools to cover all of the Bank’s subsidiaries by the first quarter of 2008 so that the Bank can fully manage its overall operational risks. In addition, the Bank has performed risk assessment and evaluation for all new products, financial services, and processes to ensure there are appropriate level of risk management prior to offering new service to our customers. The Bank is focusing on developing systems and procedures to continually manage risks to ensure that in an emergency the Bank can still provide core business services or can resume normal operations within an appropriate time. The Bank will test and review the risk management plan regularly in order to manage risks in accordance with the Bank’s policies and Bank of Thailand’ guidelines, which includes supporting Basel II Framework in maintaining minimum standard of capital. As of 31 December 2007, the Bank used the new framework and computed the minimum capital requirement using the Basic Indicator Approach (BIA) and the result was approximately Baht 678.9 million.
Preparation for Basel II The Bank submitted a request to use the Basel II Framework by utilizing the Standardized Approach (SA) to compute the minimum capital requirement for credit risks and Basic Indicator Approach (BIA) for operational risks. The computation was carried out at the end of 31 December 2006. The Bank’s minimum capital requirement as per Basel II Framework was at 19.36%, which is more than 8.5% minimum guideline specified by the Bank of Thailand.
Important Risk Factors • The Sub-Prime Mortgage Loan issue in U.S.A. may impact Thailand’s economy, both the inflow and outflow of money as well as interest rates. • The slowing down of the real estate sector. Higher construction cost and declining in consumer expenditure may have an effect on business operation and the Bank’s clients in generating profit, as well as liquidity of the Bank’s customers. Moreover, this situation will also impact the real estate loan quality. • The highly competitive hire-purchase loan market may have an effect on the Bank’s ability to generate profit and the break-even point of the hirepurchase loan. • The announcement to adopt the Deposit Protection Act may impact the movement of deposits in the monetary system nationwide including changes in deposit customer base of all the commercial banks. The Bank has been proceeding cautiously and continuously monitoring future risk exposure including issuing policies and developing risk management plans
to minimize any impact that may occur. The Bank regularly reports the status to the management team
and Risk Management Committee.
Organization Chart Kiatnakin Bank Public Company Limited Board of Directors
Nomination and Remuneration Committee
Audit Committee Internal Audit
Risk Management Committee Risk Management
Executive Board
Investment Committee
Investment Committee Debt Restructuring Sub-Committee
Assets and Liabilities Management Committee
Personal Loan Sub-Committee Development Committee
Assets Management Sub-Committee
Human Resources Committee
President Office of the Directors
Deposit and Marketing
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
4. Shareholding and Management Structure
Residential Project Lending
Consumer Lending
General Lending
Finance and Budgeting
Operations
Human Resources Management
Debt Restructuring
Information Technology
21
4.1 List of 10 Largest Shareholders (as of August 27, 2007)
Name
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Number of shares
Percentage
The Stock Exchange of Thailand
65,034,112
12.47
Ms. Panida Thepkanchana*
41,583,089
7.97
Ms. Thitinan Wattanavekin*
29,934,911
5.74
Thai NVDR Company Limited
26,025,000
4.99
Chase Nominees Limited 42
25,747,400
4.94
Chase Nominees Limited 30
21,890,200
4.20
Norbax Inc., 18
21,707,820
4.16
Ms. Vansamorn Wannamethee*
21,325,118
4.08
State Street Bank and Trust Company, for London
18,339,070
3.52
Morgan Stanley & Co. International Plc.
17,100,000
3.28
Source: Top 20 Major Shareholders Report, Thailand Securities Depository Company Limited. * including related shareholders as per Section 258
Juristic Persons
22
Name
Address
Shareholders
1. The Stock Exchange of Thailand
62 The Stock Exchange of Thailand Building, Ratchadapisek Road, Klongtoey, Bangkok 10110
N.A.
2. Thai NVDR Company Limited
62 The Stock Exchange of Thailand Building, 7th Floor, Ratchada Pisek Road, Klongtoey, Bangkok 10110
N.A.
3. Chase Nominees Limited 30*
Standard Chartered Bank, Custody and Clearing Services Dept. 100 Sathornnakorn Tower, 14Bth Fl., North Sathorn Road, Bangrak, Bangkok 10500
N.A.
4. Norbax Inc., 18*
Standard Chartered Bank, Custody and Clearing Services Dept. 100 Sathornnakorn Tower, 14Bth Floor, North Sathorn Road, Bangrak, Bangkok 10500
N.A.
5. State Street Bank and Trust Company*
Standard Chartered Bank, Custody and Clearing Services Dept. 100 Sathornnakorn Tower, 14Bth Floor, North Sathorn Road, Bangrak, Bangkok 10500
N.A.
6. Morgan Stanley & Co. International Plc.
Custody and Clearing Services Dept. 968 HSBC Building, 5th Floor, Rama 4 Road, Bangrak, Bangkok 1050
N.A.
* There is no one in the Wattanavekin’s family or in the Bank’s subsidiary, along with stakeholders in the capacity of a shareholder’s nominee in the list of investors of the Bank.
The Bank does not have any major shareholder who has significant influence on management policy or the Bank’s operations.
1) Management structure The Bank’s management structure is made up of five major panels as follows: Board of Directors, Audit Committee, Executive Board, Risk Management Committee and Nomination and Remuneration Committee. ❑ Board of Directors As a representative of shareholders, the Board’s roles, duties and responsibilities is to manage the Bank to achieve stability, giving good returns on investment by having integrity and preventing issues related to conflicts of interest. The authorities and responsibilities of the Board were set and are described as follows: • Set key policies and strategic goals of the Bank. Review and approve strategic plans recommended by the Executive Committee. Supervise and monitor the Executive Board to manage the Bank according to the approved plans efficiently and effectively. • Set up regulations to ensure good corporate governance in matters related to professional ethics of Bank’s directors and staff. Supervision aims to establish guidelines for the organization to follow; to consistently maintain a fair and high level of business ethics as well as responsibilities towards all stakeholders; and to raise awareness and prevent conflicts of interest. • Set up internal audits and ensure that there are sufficient reports and information for the Board of Directors. • Supervise the Risk Management Committee to ensure that they set up policies, procedures and control measures on management of major types of risks, namely credit risks, strategic risks, market risks, liquidity risks and operational risks. • Consider the appointment and set the authority level of executives starting with the Head of Ms. Nawaaporn Ryanskul Mr. Pichai Dachanapirom Mr. Manop Bongsadadt Mr. Chet Pattrakornkul Mr. Tarnin Chirasoontorn * Mr. Pravit Varutbangkul * Mr. Suraphol Kulsiri * Mr. Pracha Chumnarnkitkosol Mr. Supol Wattanavekin * Mr. Tawatchai Sudtikitpisan Ms. Sineenath Tejagupta * Have authorities in the Bank
Business Unit and upwards, as well as the Four major committees in order for them to assist in managing of the Bank according to set policies. These committees include the Audit Committee, the Nomination and Remuneration Committee, the Risk Management Committee and the Executive Committee. • Endorse the annual financial reports that have been examined by the auditor and reviewed by both the Executive Committee and the Audit Committee in order to seek approval at the Shareholders’ Meeting. Acknowledge the auditor’s opinion through the Management Letter as well as the opinion of the Executive Committee. • Conduct business in accordance with the governing laws and regulations, Articles of Association and Memorandum of Association of the Bank, including the resolutions passed in the Shareholders’ Annual Meeting. In addition, the Board of Directors may seek further professional opinion from external consultants related to banking operations, on the Bank’s expense. The Board of Directors must meet at least once every 3 months. Each meeting must have at least half of total number of directors present to form a quorum and the meeting resolutions must be based on the majority votes from all attending directors. The Board of Directors consists of 10 directors, 5 of which are independent directors, 3 are executives, 2 are non-executive directors and a secretary. Their names are as follows: ❑ Audit Committee The Audit Committee has been assigned the following duties by the Board of Directors: • Ensure that the Bank produces accurate and sufficient financial reports.
Independent Director / Chairperson Independent Director / Chairperson of the Audit Committee Independent Director / Chairperson of the Nomination and Remuneration Committee Independent Director Independent Director Non-Executive Director Non-Executive Director Executive Director Executive Director, Chairman of the Executive Board Executive Director, President Secretary
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
4.2 Management
23
• Ensure that the Bank has appropriate and efficient internal control and internal audit system in place.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
24
• Ensure that the Bank conducted its business in accordance with the securities laws, the Stock of Exchange regulations and the relevant laws related to the Bank’s business. • Consider, select and recommend an auditor for the Bank and the auditor’s remuneration. • Review all disclosures of the Bank’s information where connected transactions have taken place or where there may be conflicts of interest in order to ensure their accuracy and completeness.
• The Audit Committee is required to meet at least 4 times per year or more if necessary. The Committee may invite the management team or any connected person(s) to join the meeting to give additional information related to the matter being audited. • The Audit Committee must coordinate with the Risk Management Committee to ensure that management adhere to the Bank’s Risk Management Policy approved by the Board of Directors and endorsed by the Audit Committee.
• Carry out other duties assigned
• Consider, select, rotate, transfer or terminate internal audit officers.
Each meeting held by the Audit Committee must have at least half of its members present to form a quorum and the meeting’s resolutions must be based on the majority votes from the members present at each meeting. The Chairperson and members of the Audit Committee are all independent directors.
• Report on the Audit Committee’s operations and make recommendations to the Board of Directors.
The Audit Committee consists of 3 members and a secretary as follows:
• Present a report of the Audit Committee by disclosing the information in the Annual Report, duly signed off by the Chairperson of the Audit Committee.
• The Audit Committee has the authority to inspect or to question any relevant personnel regarding any related issues to the Bank. The Audit Committee is authorized to hire or bring in specialists to assist with the auditing process, as they deemed appropriate.
Mr. Pichai Mr. Manop Mr. Chet Mr. Kriengsak
Dachanapirom Bongsadadt Pattrakornkul Sukhanaphorn
management team accordingly. Thus, the Board of Directors decided to set the following authorities and responsibilities for the Executive Committee:
❑ Executive Committee The Executive Committee was appointed by the Board of Directors to set strategies, develop business plans and efficiently and effectively supervise the
Independent Director / Chairperson Member Member Secretary
• Efficiently set work procedures, rules, operational processes and internal control system.
• Set strategies, business plans, annual budget to be in line with the policy and goals approved by the Board of Directors and comply with the authority’s rules and regulations.
• Consider and approve credit lines, authorize sales of foreclosed assets, and set prices of foreclosed assets to be auctioned from the Legal Execution Department and raise objections in accordance with the set limits.
• Set the organization structure for all business units under its responsibility. Appoint and set limits for the authority and responsibilities for the Bank’s management officers from the position of deputy managing director downwards.
• Supervise and manage the Bank to be within the framework set by the Risk Management Committee, which includes: strategic risks, credit risks, market risks, liquidity risks, operational risks, reputation risks and legal risks.
• Set limits on credit line approval, investments, purchasing and expenses to maximize the Bank’s benefits while complying with the respective laws.
• Conduct as well as supervise the management team and staff members to ensure compliance with the regulations related to the Bank’s code of ethics and code of conduct.
• P r e p a r e q u a r t e r l y m a n a g e m e n t a n d operational reports for the Board of Directors. The Executive Committee may seek further professional opinion from external consultant related to Bank’s business operations with expense incurred to be
Mr. Supol Mr. Tawatchai Mr. Chavalit Mr. Patom Ms. Thitinan Mr. Sarawut Ms. Sineenath Ms. Porntip
Wattanavekin Sudtikitpisan Chindavanig Amorndechawat Wattanavekin Charuchinda Tejagupta Chuprakhun
❑ Risk Management Committee The Risk Management Committee has the following authorities and responsibilities: • Set the overall risk management policy which covers important types of risk such as strategic risks, credit risks, market risks, liquidity risks, operational risks, including legal risks and reputation risks. • Set strategies that are consistent with the Bank’s risk management policies, which enables the Bank to assess, monitor and control risks to be within an acceptable level.
paid by the Bank. The Executive Committee must meet at least once a month. Each meeting must have at least half of its members present to form a quorum and the meeting resolutions must be based on majority votes from the members present at each meeting. The Executive Committee consists of 7 members and a secretary as follows:
Chairman Member Member Member Member Member Member Secretary
• Regularly report the results of the operations to the Board of Directors in order to make further improvements and corrections and remain in line with the risk management policies and principles. Periodically inform the Audit Committee of the status. The Risk Management Committee must meet at least once every 3 months. Each meeting must have at least half of its members present to form a quorum and the meeting’s resolutions must be based on the majority votes from the members present at each meeting. The Risk Management Committee consists of 9 members and a secretary as follows:
• Review the adequacy, effectiveness and practicality of existing risk policy management and systems.
Mr. Supol Mr. Tawatchai Mr. Chavalit Mr. Patom Mr. Pracha Ms. Thitinan Mr. Sarawut Ms. Sineenath Mr. Kriengsak Mr. Siwaphong
Wattanavekin Sudtikitpisan Chindavanig Amorndechawat Chumnarnkitkosol Wattanavekin Charuchinda Tejagupta Sukhanaphorn Plangthrakul
Chairman Member Member Member Member Member Member Member Member Secretary
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
• Appoint one or more committees or sub-committees to scrutinize, consider and approve specialized work on behalf of the Board of Directors.
25
❑ Nomination and Remuneration Committee The Nomination and Remuneration Committee has the following authorities and responsibilities:
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
• Set the policy, principles and procedures for recruiting and selecting qualified candidates for directors and senior executives from the President level upwards. The selected candidates will be proposed to the Board of Directors for approval. • Screen and propose candidates with suitable qualifications for the following positions in the Bank: o Directors o Member for the committees which would receive authorization and responsibilities directly from the Board of Directors o Senior executives from the President level upwards. • Ensure that the number of Bank directors is sufficient and appropriate for the Bank, paying special attention to the qualification of members of the Board of Directors who must have diversified knowledge, ability and experience. • Disclose the recruiting policy as well as detailed procedures in the Annual Report.
26
Mr. Manop Mr. Chet Mr. Suraphol Ms. Nujaree
• Set the remuneration policy and other benefits for directors and senior executives from the President level upwards. • Set the guidelines on performance appraisal for directors and senior executives from the President level upwards in order to appropriately adjust the annual remuneration package. The performance appraisal takes into consideration the responsibilities, associated risks and ability to increase long-term shareholders’ values. • Disclose the remuneration policy and available options and comments from the Nomination and Remuneration Committee in the Annual Report. • Propose and search for successor for the President and present it to the Board of Directors. The Nomination and Remuneration Committee must meet at least twice a year. Each meeting must have at least half of its members present to form a quorum and the meeting’s resolutions must be based on the majority votes from the members present at each meeting. The Nomination and Remuneration Committee consists of 3 members, of which the Chairperson and 2 members are independent directors and another is not, as follows:
Bongsadadt Pattrakornkul Kulsiri Sithasrivong
2) Director and Executive Recruitment
Independent Director / Chairperson Member Member Secretary are to be divided up.
• The process of selecting directors begins with the nomination of names and background of the candidates by shareholders, directors and senior executives. The Nomination and Remuneration Committee evaluate each candidate’s qualifications based on good governance and necessity, determine appropriate remuneration, and then make a proposal at the Board of Directors meeting. The Board of Directors makes recommendations and obtains final approval at the General Shareholders Meeting.
(3) The candidates who receive the most votes, in descending order, are appointed as Directors. Total number of appointment may be based on the existing number of Directors or the number desired at the time. In case of an equal score for the final available appointment, the chairman cast the deciding vote.
This procedures must be governed by the following Bank’s rules and regulations:
In setting the director’s remuneration, 3 main portions are considered as follows:
(1) Each shareholder’s total number of votes is based on one vote per share.
– Monthly compensation while the director is a chairperson and directors on the Board of Directors.
(2) Each shareholder must exercise all votes granted under rule number 1; he/she can select one or more directors, but cannot determine how the votes
– Meeting allowance paid to the chairperson and directors on attendance basis to each meeting on various boards.
3) Executive’s Remuneration
• Financial remuneration • Other remunerations (None)
The Bank set a clear and transparent policy for the director’s remuneration that is in line with the industry. The remuneration is sufficiently high to attract and retain directors with desirable qualities. Shareholders’ approval has been duly sought and granted at the shareholders’ meetings. In 2007, total remuneration for the Bank’s 8 senior executives, which included salaries, bonus and provident fund, amounted to Baht 55.5 Million. The Bank did not offer stock options or opportunity to buy
or sell Bank’s assets to the senior executives. The Nomination and Remuneration Committee conduct an annual assessment of the Bank’s president every year and use it as a basis in determining the President’s remuneration. The Chairman of the Nomination and Remuneration Committee, who is an independent director and has high seniority in the Board of Directors, communicated the result of the assessment to the President. The remuneration of other Board members on Executive Board, Audit Committee, and Nomination and Remuneration Committee, will be increased as appropriate. Details are as follows:
Remuneration Meeting (baht / year)
Name-Surname
Position
Board of Directors
Nomination and Remuneration Committee
Audit Committee
Bonus Paid in 2008
Total
1
Ms. Nawaaporn Ryanskul(1)
Independent Director / Chairperson
465,000
135,000
-
275,000
875,000
2
Mr. Supol Wattanavekin(2)
Director
435,000
-
-
199,375
634,375
Independent Director / Chairperson
of the Nomination and Remuneration
Committee
360,000
180,000
82,500
285,313
907,813
3
Mr. Manop Bongsadadt
4
Mr. Chet Pattrakornkul(3)
Independent Director
360,000
135,000
30,000
240,625
765,625
5
Mr. Tarnin Chirasoonton
Independent Director
360,000
-
-
165,000
525,000
360,000
247,500
-
278,438
885,938
6
(4)
Mr. Pichai Dachanapirom
(5)
Independent Director / Chairperson of Audit Committee
7
Mr. Pravit Varutbangkul
Director
360,000
60,000
-
192,500
612,500
8
Mr. Suraphol Kulsiri
Director
360,000
-
30,000
178,750
568,750
9
Mr. Tawatchai Sudtikitpisan
Director
360,000
-
-
165,000
525,000
10
Mr. Pracha Chumnarnkitkosol
Director
360,000
-
-
165,000
525,000
3,780,000
757,500
142,500
2,145,000
6,825,000
Remarks: (1) Nominated as Chairperson since June 1, 2007 (4) Nominated as Chairperson of Audit Committee since June 1, 2007
(2) (5)
(3) Nominated as Director since June 1, 2007 Nominated as Audit Committee since April 26, 2007 Received additional remuneration from subsidiary company Baht 300,000 in 2007
Number of Ordinary Shares held by Executives in 2007 Name
Position
Number of Shares
Changes in 2007
1
Mr. Supol Wattanavekin
Chairman
8,668,808
-
2
Mr. Tawatchai Sudtikitpisan
President
0
-
3
Mr. Pracha Chumnarnkitkosol
Head of Risk Management
0
-
4
Mr. Chavalit Chindavanig
Head of Finance and Budgeting
-
-
5
Mr. Patom Amorndechawat
Head of Operations
-
-
6
Ms. Thitinan Wattanavekin
Head of Deposit and Marketing
25,979,861
increase 1,237,889
7
Mr. Sarawut Charuchinda
Head of Debt Restructuring
0
-
8
Ms. Sineenath Tejagupta
Senior Executive Vice President - Director Office
0
-
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
– Annual bonus based on the Bank’s overall performance and length of service as a director. The average bonus for a director is equivalent to the average bonus of all the employees.
27
4) Auditor’s Remuneration
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
28
The Bank incurred Baht 2,101,816 in external auditor’s fee for auditing its financial statements, Baht 1,557,648 for the consolidated financial statements, Baht 22,540 for other Expenses and Baht 2,999,900 for auditing all subsidiaries’ financial statements. An additional amount of Baht 13,500 has been paid for training and Baht 290,000 for special audit procedure required by the Bank of Thailand. 5) Good Corporate Governance The Bank’s Board of Directors placed a great deal of importance on having good corporate governance policy issued by the Bank’s regulators. In 2007, the Bank operated using 5 principles of good corporate governance established by the Stock Exchange of Thailand as follows: 5.1) Good Corporate Governance Policy The Bank’s Board of Directors emphasizes on having good corporate governance in order to enhance transparency, raise the ability to conduct businesses, and increase confidence of shareholders, investors, and all related parties. The Board of Directors has approved a corporate governance policy in writing at its 2/2549 meeting. The content includes details regarding equal rights of shareholders and all stakeholders; structure, responsibilities and independence of the Board of Directors; information disclosure and transparency; risk control and management; and business ethics. All relevant details are posted on the Bank’s website (www.kiatnakin.co.th) along with seminars conducted to circulate information to employees and Bank’s executives. 5.2) Applying Good Corporate Governance The Bank a applies good corporate governance toward our shar holders, investors, stakeholders and other related parties throughout 2007 in the following ways. 5.2.1) Shareholders: Equal Rights of Shareholders - Providing sufficient information for shareholders in advance The Bank’s policy stipulates that General Shareholders Meeting must be held once a year and within four months from the date of the accounting year end. In 2007, the General Shareholders Meeting will hold on 18 April 2008. Prior to the meeting, letters of invitation and supporting information for various
agenda items were posted in advance through the Bank’s website (www.kiatnakin.co.th) at least 30 days prior to the meeting date. Meeting documents will be sent to the shareholders 14 working days prior to the meeting date. The meeting invitation contained a list of all the members of the Board of Directors, both new and re-elected directors, and their profile; the auditor’s name, profile and remuneration; dividend payment policy, explanation and the amount paid; meeting agenda together with meeting objectives, rationale and the Board of Directors’ opinion for each agenda item. Prior to the meeting date, the meeting secretary consolidated all the questions the shareholders sent to the Board of Directors through the Bank’s website (www. kiatnakin.co.th). Moreover, the Bank recorded the meeting minutes as well as made video recording of the meeting in VCD format. The Board of Directors also provided previous discussion for each agenda item, including questions, answers, discussion and voting results and guideline information on how shareholders can cast their votes and how votes are counted in order provide shareholders with complete and sufficient information to arrive at their voting decision. The minutes of the 2007 meeting was posted on the Bank’s website (www.kiatnakin.co.th) 14 days after the meeting. - Providing convenience for shareholders to fully exercise their rights For the General Shareholders Meeting, the Bank sets a convenient date, time and location for the shareholders. If any shareholders cannot attend the meeting, he/she can authorize a proxy to attend, ask questions, and vote on his/her behalf as well as propose a new agenda and nominate a director before the Bank sends out the meeting invitation via The Stock Exchange of Thailand and share the information on the Bank’s website (www.kiatnakin.co.th) - Setting appropriate timeline and encourage shareholders to voice their opinion An appropriate amount of time is scheduled and specified in the meeting agenda for questions and answers to provide clarity for the shareholders. - Having all Directors attend the General Shareholders Meeting The Bank has a policy for the Bank’s Chairperson, Audit Committee Chairperson, Nomination and Remuneration Committee Chairperson, Executive Committee, President, chairpersons of various sub-
Furthermore, the Bank attempts to enhance the rights of the shareholders by revealing the Bank’s performance, benefits, or other important activities through the Bank’s website (www.kiatnakin.co.th) so that shareholders can have continuous access to the Bank’s information anytime. 5.2.2) Rights of the Shareholders The Bank emphasizes the rights of shareholders in all aspects. Shareholders will receive a fair and equitable treatment. In 2007, the Bank has allowed Minority Shareholders to propose the agenda in the General Shareholders Meeting and naminate director in advance through The Stock Exchange o f T h a i l a n d a n d t h e B a n k ’s w e b s i t e ( w w w. kiatnakin.co.th). Furthermore, the Bank allowed shareholders to take part in the selection of each director through voting. Shareholders can also take part in considering and deciding the guidelines and policy of the Bank regarding remuneration of directors, in which the Bank must obtain approval from the shareholders annually. - Criteria for Evaluating Proposed Agenda Item from Minority Shareholders (1) In allowing Minority Shareholders to propose the agenda in the General Shareholders Meeting and nominate a director, the Bank has set forth the criteria which allows shareholders to propose in advance to the Board of Directors 3 months prior to the meeting date. The criteria are as follows Qualifications of shareholders The shareholders who wish to propose the agenda or nominate director for the General Shareholders Meeting and must possess the following qualifications: ❑ Be the Bank shareholders holding a minimum
of 200,000 shares (two hundred thousand shares) which can be either owned by one shareholder or combined shareholders. ❑ Own the shares as stipulated above continuously for at least 1 year leading up to the date of the proposal of the agenda or director nomination.
❑ Able to show proof of share ownership, such
as certified letter of the securities company or other evidence from The Stock Exchange of Thailand or Thailand Securities Depository Co., Ltd. (2) Proposal of the Meeting Agenda Qualified shareholders can propose the agenda for the General Shareholders Meeting by filling out the “Agenda Proposal Form for the 2008 Annual General Shareholders Meeting” and send the documents along with appropriate evidence as set forth by the Bank so that the Bank receives it before the deadline. - Criteria for Evaluating Proposed Agenda Item for the Shareholders Meeting In order to ensure an effective ordinary shareholders meeting, the Bank use the following criteria in evaluating whether the proposed agenda item from the shareholders should be added to the meeting agenda. a) The proposal is not related to normal banking operations and the shareholders have highlighted the suspicious nature of the incident. b) The proposal is within the control of the Bank. c) The proposal complies with the law, rules, regulations of government agencies or other governing agencies, the Articles of Association, the shareholders’ resolution and good corporate governance of the Bank. d) The proposal is beneficial to the shareholders and the public. e) The proposal has been proposed by qulified shareholders and the shareholder has acted according to the criteria set forth by the Bank regarding the proposal of the agenda for the General Shareholders Meeting f) The shareholders who made the proposal provided information and supporting documents that is complete, sufficient, correct and within the specified duration. g) The proposal is deemed necessary by the Board of Directors to add to the agenda. h) The proposal is an activity the Bank has never engaged in before and the Board of Directors has evaluated and agreed that it is beneficial to the Bank’s operations.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
committees and the auditors to attend the General Shareholders Meeting every time in order to provide supplemental information and answer shareholders questions. In 2007, everyone as mentioned above attended the Meeting.
29
i) The proposal is something that the Bank has never considered or made prior decision on.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
30
The Board of Directors determines the suitability of the agenda proposed by the shareholders, who must possess the qualifications outlined in the above criteria unless the Board says otherwise. The resolution passed by the Board of Directors shall be deemed final. In the case where the agenda is proposed by several shareholders regarding the same issue or can be collectively considered, the proposal may be consolidated into one agenda item by the Board of Directors. The proposal(s) that are approved by the Board along with the Board’s opinion will be included in the agenda in the shareholder meeting invitation. Proposal(s) that are disapproved by the Board, the Bank will immediately inform the shareholder(s) after the Board of Directors meeting and prior to the General Shareholders Meeting via the Bank’s website (www.kiatnakin.co.th) other appropriate channel. Furthermore, a shareholder that is an executive is not allowed to add meeting agenda. The meeting will adhere only to the agenda that was distributed to the shareholders. For shareholders that cannot attend the meeting, the Bank recommends the independent directors as proxy. The Bank still promotes the use of voting slips for important agenda items, such as related transactions and purchasing and selling of assets in order to create transparency and to be auditable. - Policies and Procedures for Monitoring Executives on Usage of Internal Information To prevent the usage of insider information that has not yet been disclosed to general public, the Bank defines that its directors and management prepare holding report of the Bank shares, inclusive of their spouses and minors and their relevant persons, within 3 working days as from the date of trading transaction to the Stock Exchange of Thailand and within the same day to the Bank office of the Directors. Regarding honesty, every director and officer of the Bank is prohibited from using his/her authority or working opportunity to seek any interest contrary to his/her ethics, code of conduct, working cultures, or benefits of the Bank. The Internal Audit Office reviewed the operations regarding the use of insider information and compliance with the requirements concerning the code of conduct. Whoever violates such code of conduct or commit offenses will be reported to the Audit Committee and the Board of Directors of the Bank for judgement.
5.2.3) Rights for Stakeholders The Bank places great emphasis on all our stakeholders by putting in place a policy to take care of the various factors that directly impact the Bank’s operations. These policies aim to increase stakeholder’s confidence that the Bank has taken into account environment factors to ensure long term development and protection for the stakeholders. Regardless of whether they are internal stakeholders, such as employees and executives of the Bank and its subsidiary, or external stakeholders. All transactions that occur between the Bank and other individuals and related businesses are clear, fair, transparent and auditable. Moreover, the Bank publishes the details of such transactions in the Notes to the Financial Statements every quarter as well as in the Annual Report. The Bank realizes that strong stakeholders’ support can enhance the Bank competitiveness, which ultimately leads to long term success. The Bank has mechanisms to protect those who reported the wrong doing or conducted related party transactions that was certain to cause damage to the Bank. The Bank has the following guidelines for each group of stakeholders: - Customers The Bank believes our customers are the key supporters that enable the Bank to achieve our main goals; therefore, the Bank is determined to deliver high quality of service by making sure that our employees have in-depth knowledge on our customer’s business as well as continuously building new and innovative products and services for our customers. For these reasons, the Bank is obligated to continually develop our work systems, branch network and new technology in order to provide prompt, accurate and superior services. To facilitate service improvements, the Bank has provided a means to receive customer feedback from our website (www. kiatnakin.co.th). Alternatively, customers can send in information to the Bank’s Audit Office. Moreover, the Bank has set up a way to carefully protect information of any fraud or non-transparent transactions that may cause damage to the Bank. - Employees The Bank considers our personnel to be our most important assets; therefore, the efficiency of our personnel management system are continuously enhanced in order to maintain and develop quality personnel and achieve the Bank’s main goals. We achieved this by making sure that work environment is favorable for conducting
Benefits Policy: The Bank provided many benefits for the employees, such as provident fund, group life and accident insurance, health insurance for employees and their families, good work environment. Safety Policy: To foster safety at the workplace and for all employees, the Bank created a Work Safety System in order to set forth policy and standard procedures for every work unit to adhere to, such as have security guards on duty from 7.00 a.m. to 7.00 p.m.; prohibit outsiders or customers to enter the office area and have them meet or hold their discussions in meeting rooms or other locations arranged by the Bank; close the Security Doors at all times; develop a list of name and phone number of people to contact in case of an emergency, schedule the period each person is responsible for and post the list in a visible location; set up a Closed Circuit TV (CCTV) to record events; have an alarm system and finger scan security doors; have fire extinguishers at every branch installed at appropriate locations and are properly maintained to ensure they are in workable conditions at all times. In addition, the Bank requests employees’ cooperation in keeping a look out for anything out of the ordinary, and promoting safety as means to raise the level of awareness and caution. - Creditors The Bank continues to strictly adhere to agreed terms and conditions we had with creditors, while being deeply grateful to our creditors and depositors for their continuous support and trust, especially during the past crisis. - Business Partners The Bank acknowledges the importance of our business partners because their support made a significant contribution to our success. The Bank continues to strictly adhere to agreed terms and conditions we had with our partners, which are based on the concept of succeeding together as business partners. In 2007, the Bank had no disputes with any its business partners.
- Social, Community and Environmental Responsibilities Kiatnakin Bank’s purpose is to create value for shareholders while being mindful of social, community and environment responsibilities. In addition to its financial objectives, the Bank also has another key objective in establishing relationships with local people and making social contributions. These objectives have been communicated to the management and staff throughout the organization. Aside from generating employment opportunities in the area where the Bank has expanded its network to, the Bank also adhered to the policy of continual sharing and contributing back to the community through the “Better People for a Better Nation with Kiatnakin” project, which comprises of 3 major groups of activities as follows: (1) Educational Activities • Joined Sasin Institute as the main sponsor of “Bangkok Business Challenge”, a business plan competition conducted in English, which Kiatnakin has been involved for 6 consecutive years to challenge people’s skills and abilities for continuous learning. • Joined with Kiat Ruammitr Education Foundation in providing scholarships to underprivileged students, constructing school buildings and providing educational supplies. (2) Activities on Ethics and Social Immunity Creation • Worked in conjunction with the Young Buddhist Association of Thailand to support meditation training by Khun Mae Siri Karinchai called “Spiritual Development for Wisdom and Peace” and a variety of other courses since 1994. • Joined with the Metropolitan Police Bureau and Youth Relations Center in arranging the Youth Relations Cooperation to Suppress Drugs Project training, aiming to train the youths in schools in Bangkok Metropolis Area to know and understand the danger of drugs. • Worked together with World Vision Foundation of Thailand, which is a public meritorious organization that focused on assisting disadvantaged children and families,
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
business, and the policies regarding security and health care; code of ethics and code of conducts; transparent and auditable management systems; and employee’s benefits are appropriate, clearly defined, and are easily accessible by all personnel. Furthermore, the Bank provides appropriate and competitive compensation and benefits as well as training programs to develop the skills and capabilities of our personnel so that everyone is able to progress in their chosen career path. The Bank also has policies regarding safety and benefits as follows:
31
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
by arranging “Bicycles for Children Project” to assist underprivileged students who live far from the schools so that they can borrow the bicycles and travel to schools with more convenience. • The Bank together with Duang Pratheep Foundation supported the activities to spread knowledge and understanding on investments and savings. We recognize the importance of savings with cooperatives which is deemed an essential factor in having a sufficient lifestyle and assist the communities to be strong and self-reliant. Thus, the Bank supports “Annual Awards for Excellent Member of the Cooperatives” to build members’ confidence in the cooperatives and see value in saving money. (3) Support in the form of donation on other special opportunities. • Donated money to public charity to assist in 27 local municipals where that Bank has branches.
32
• Funds were also donated to support the Chaipattana Water Mill Project by the Chaipattana Foundation, Under The Royal Patronage of His Majesty the King. • Donated money to sponsor the World Robot Football Competition by the Engineering Science Department of Chulalongkorn University. • Donated money to sponsor Returning Elephant to the Forest Project for His Majesty the King’s 80th Birthday Anniversary under Elephant Reintroduction. • Foundation Provided financial assistance to create peace and harmony in the Southern provinces under the Peace and Harmony in Southern Provinces Promotion and Support Fund. • Donated money to sponsor the printing of a book by Thai Journalist Association which consolidates the Southern unrest events in the three Southern provinces. • Donated money to Uniting Hearts with Love and Allegiance to the King project by Office of the Permanent Secretary for Defense.
• Donated money to sponsor the Robot Competition at the Motor Exposition 2007. • Donated a meeting room plus complete audiovisual education equipment to Nongjorg Pittayanusorn High School. These social events instill and develop the nation’s youth. The Bank believes that human resources is our most important and valuable for the development of the nation. All of the aforementioned projects aimed to embed and develop the youths and other Thai people, because we believe that human resources are most crucial and valuable for country’s development. The Bank aims to instill the concepts of environmental and energy conservation in our executives and employees. We have issued energy conservation measures relating to the usage of electricity, telephone, water and office equipments. These social, community and environmental responsibilities are the wishes of our founder who is determined to operate a sound business that goes hand in hand with high level of social responsibilities. 5.2.4) Information Disclosure and Transparency The Board of Directors focuses on correct, complete, transparent and thorough information disclosure, covering reports, financial information, and general information, such as the Annual Disclosure Form (Form 56-1) and the Annual Report, and inclusive of critical information affecting the prices of the Bank’s shares. The Bank discloses such information to enable investors and related parties via a variety of information channels and media of the Stock Exchange of Thailand, the Bank ‘s website, and Investor Relations Unit (IR Unit) to provide the Bank’s data and activities to investors, shareholders, analysts, and general public. The investors can contact at telephone number 0-2680-3159-61 or www.kiatnakin. co.th or E-mail address: investor_relation@kiatnakin. co.th. Additionally, the Bank has held analyst meetings to distribute information on a continuous basis and has cooperated with the Securities Analysts Association to arrange such meetings on a regular basis. In 2007, the Bank held 4 domestic analyst meetings and directly invited the analysts/investors to meet the management of the Bank 57 times. The Bank also arranged for 5 foreign investors meetings in foreign countries.
5.2.5) Responsibilities of the Board of Directors - Board of Directors Structure Board of Directors comprises 10 directors, of which 3 are executives, 5 are independent directors and 3 are members of the Audit Committee. In adhering to principles of good corporate governance, the Bank appointed independent directors to be Chairperson of the Board of Directors. The Bank’s Chief Executive Officer is not an independent director, nor is he the same person as the Bank’s President; therefore, there is clear separation of responsibilities between policy setting and day-to-day operations. If there are any related transactions with the Bank’s Chairperson, a senior independent director will be appointed to take up the duty of the Chairperson on that issue. The Bank’s has defined the meaning of an independent director to be more stringent than the one provided in Securities and Exchange Commission, Thailand guideline. Such director: - Can hold no more than 0.5% of the total number of voting shares of the Bank, its subsidiaries or affiliates, or a person that may have conflicts of interest (including a related person according to Section 258 of the Securities and Exchange Act BE 2534). - Cannot be involved with the management of the Bank. Such a person must not be a staff member of the Bank, or a consultant who receives regular income from the Bank. Such a person does not have authority over the Bank, its subsidiaries or related companies, nor may the person have conflicts of interest with the Bank. Such person must not receive any gain or suffer any loss from providing service
to the Bank as mentioned above for at least one year. - Has no business relationship or receives any gains or loss, whether directly or indirectly, from the financial and managerial position with the Bank, its subsidiaries or related companies. The person must not have conflict of interest that may lead to the loss of independence. - Is not a close relative of any members of the Bank’s management major shareholders of the Bank, its subsidiaries or related companies. Such person must not be appointed to look after the interests of the Bank’s directors or major shareholders. - Sub-Committees The Board of Directors has set up the Audit Committee, Risk Management Committee, and the Nomination and Remuneration Committee in order to assist in managing the Bank. Details of the committee responsibilities and authorities have been included in the Management section. SubCommittee such as Audit Committee and Nomination and Remuneration Committee have an independent director as a Chairperson and almost all of the members are independent directors, to ensure transparency and independence. - R o l e s a n d R e s p o n s i b i l i t i e s o f t h e Board of Directors • Business Ethics The Bank has definite stance on professional ethics. We made announcements, which served as a guide to good practice, and issued the Code of Professional Ethics for executives to ensure that all related parties used them as guidelines and conduct their duties for the Bank with honesty, integrity and fairness towards the Bank and all other stakeholders. The Bank regularly communicates this message to all personnel and followed up to ensure that everyone abides by it. Seminars were conducted regularly to ensure that all staffs and executives are aware of this issue and have the same understanding. Details of Business Ethics are summarized as follow. Responsibilities and Conducts toward Shareholders The Bank performs our duties in an honest and equitable manner towards shareholders. We manage our work carefully and with prudence without seeking personal
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Moreover, the Bank arranged press conference to announce the performance and answer questions for the press every year at the beginning of the year and at mid-year in order to correctly and completely inform the public of the Bank’s performance. Furthermore, the Bank’s Board of Directors provides the financial report together with the Auditor’s report in this Annual Report on pages 64. The Board of Directors ensures the disclosure of information on roles, responsibilities, details of remuneration policy, number of meetings, number of times the directors attend the committee and sub-committee meetings. These details are located on page 35.
33
gains by using the Bank’s information, which includes disclosing confidential information to external parties / competitors.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
34
Responsibilities and Conducts toward Customers The Bank introduces products that meets the needs of the customers; discloses news, product information, and services completely and accurately; and allows the customers to raise issues or file complaints about the Bank’s services in order for customer to rapidly satisfy the customers, while strictly maintaining the customer’s privacy. Moreover, the Bank will not set policies or regulations that are not equitable for the customers. Responsibilities and Conducts toward Business Partner / Creditors The Bank will not demand, receive or pay any fraudulent benefits while conducting business with business partners or creditors. If any such event occurs, the Bank will demand a disclosure of the details of business partners or creditors and will work cooperatively to fairly and rapidly resolve situation, including following certain protocols to the officials as appropriate and reasonable. Responsibilities and Conducts toward the Government Sector The Bank operates business responsibly and according to the related policies, laws, and regulations that promote and protect democracy under Constitutional Monarchy. Responsibilities and Conducts toward Employees/ Staffs The Bank’s compensation structure is fair and equitable for all employees, including providing safe work environment for employee’s life and assets. The Bank set up human resource management system to handle promotions and transfers; systematically give rewards and punishments. We emphasize development of employee’s knowledge and capability as well as avoid engaging in any unfair activities that may impact the stability and workability of the employee. Responsibilities and Conducts toward Competitors The Bank operates within the boundaries of the regulations of good competition. We don’t attempt to unlawfully obtain our competitor’s secrets, nor do we try to defame our competitors with accusations. Responsibilities and Conducts toward Society and
Community, the Bank does not engage in any activity that is harmful for the natural resources and environment. We regularly promote activities that create something positive for society, including instilling social responsibility in all level of employees on-goingly and intentionally. • Conflicts of Interest To prevent any conflicts of interest, the Bank’s Board of Directors exercised utmost care in monitoring transactions that may potentially cause conflicts. The Board formally set up policies and procedures for the approval of related transactions. Bank executives must report any changes of their shareholding in the Bank to the Securities and Exchange Commission (SEC), as per Article 59 of the Securities Exchange Act (BE 2535). In addition, any Bank director involved with the related transactions must abstain from voting due to conflicts of interest. The Bank adhered to the guideline stipulated by the Stock Exchange of Thailand which states that the price and terms of transaction which must be carried out as we normally do with any outside parties. All the details including price and contract partners are disclosed in the Annual Report and Form 56-1. • Internal Control and Internal Audit Systems The Bank placed great emphasis on having efficient internal control system, both at the management and operational levels. Staff and executive authorities and duties were clearly and formally defined in writing. Control was instigated to ensure that all assets are used to create benefits in the most optimal way. The duties of the operational staffs, supervisors and approvers were separated in order to create an appropriate checks and balance system and proper audit capability. Financial reports also had their own control system, and reports were regularly disclosed to the public. The accounting standards used for financial institutions was audited by an external auditor. The Audit Committee met with the external auditor 4 times and met with auditor from the Bank of Thailand once time during the past year to acquire audit results, suggestions, and opinions in order to follow up, make any necessary improvements and changes. Financial reports were also regularly submitted to the responsible executive. The Bank has an Internal Audit Office, an independent unit directly reported to the Audit Committee, to maintain confidence that our major work and key financial activities were carried out effectively and as designated. Our Internal Audit Office conducted their work consistently with legal
The Board of Directors Meeting Attendance in 2007
Board of
Executive
Audit
Nomination and
Directors
Committee
Committee
Remuneration
Name-Surname
Position
1
Ms. Nawaaporn Ryanskul
Independent Director /
8/8
Chairperson
Independent Director /
2
Mr. Pichai Dachanapirom
Chairperson of Audit Committee
Independent Director /
3
Mr. Manop Bongsadadt
Committee
6/12(1)
8/8
12/12
Chairperson of Nomination and
Remuneration Committee
8/8
11/12
4/4
4
Mr. Chet Pattrakornkul
Independent Director
8/8
8/12(2)
4/4
5
Mr. Tarnin Chirasoonton
Independent Director
8/8
6
Mr. Pravit Varutbangkul
Director
8/8
7
Mr. Suraphol Kulsiri
Director
8/8
8
Mr. Pracha Chumnarnkitkosol
Director
7/8
9
Mr. Supol Wattanavekin
Chairman
8/8
12/12
10
Mr. Tawatchai Sudtikitpisan
President
8/8
12/12
11
Mr. Chavalit Chindavanig
Head of Finance
and Budgeting
6/6
12
Mr. Patom Amorndechawat
Head of Operations
2/2
13
Ms. Thitinan Wattanavekin
Head of Deposit
and Marketing
11/12
14
Mr. Sarawut Charuchinda
Head of Debt Restructuring
10/12
15
Ms. Sineenath Tejagupta
Senior Executive Vice President
11/12
Remarks: (1) Attend the meeting from 1st - 6th before Nominated to Chairperson of the Board of Directors
(2)
Nominated since 4th meeting.
3/4
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Attendance No. of meeting held
35
Sub-Committees Meetings Attendance in 2007
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
36
Number of Meeting
Number of Committee Member
% of Meeting Attendance
Risk Management Committee
5
8
87
Executive Committee
12
7
95
Investment Committee
12
3
94
Assets and Liabilities Management Committee
12
4
92
Development Committee
12
3
92
Credit Committee
49
4
99
Retail Lending Sub-Committee
12
8
94
Asset Management Sub-Committee
46
5
90
Debt Restructuring Sub-Committee
46
2
95
Sub-Committees Meetings
requirements. To maintain its independence and a system of checks and balance for our Internal Audit Office, the Board of Directors instructed the Internal
Audit Office to report their audit findings directly to the Audit Committee and the Board of Directors.
Board of Directors Self-Assessment
Subject
(%)
Score 1
Score 2
Score 3
Score 4
Total
1 Qualification structure of the Board
0
11
58
31
100
2 Roles and responsibilities of the Board
2
12
57
29
100
3 The meetings
0
4
41
55
100
4 Duties of the Board
1
3
37
59
100
5 Relationship with management
0
2
44
54
100
6 Development of directors and executives
0
5
59
36
100
1
8
51
40
100
Another area of great importance to the Board of Directors is risk management. The Risk Management Committee and Risk Management Unit have set up protective measures and steps in managing risks by having the Risk Management Unit report directly to the Risk Management Committee and the Board of Directors.
Furthermore, the Bank’s Board of Directors developed and distributed the Internal Control Assessment Form for each director to review and evaluate the Bank’s internal control system and determine whether it’s acceptable and stringent enough. The Internal Audit Office collected the forms, summarized the findings, include it in the Annual Report and disclosed it to the public.
The Board of Directors closely manages risks via the Risk Management Committee. The Bank has a Risk Management Policy that covers the entire Bank and its subsidiaries, including the review and assessment of Risk Managements. The Board still places great importance on warning signals and abnormal transactions. The Risk Management Committee has a Risk Management Unit who adheres to policy and regularly reports to the Board. - The Board Meetings The Board of Directors scheduled the Board Meetings in advance with a clearly defined agenda. The office of the Board of Directors is responsible for arranging the meetings and sending meeting invitations along with the agenda, which included the objectives and explanations to each item of the agenda, to members of the Board at least 7 days in advance. These tasks are carried out to allow sufficient time for the directors to consider matters prior to attending each meeting. In 2007, the Bank’s Board of Directors held 10 meetings, each lasting approximately 4 hours. For each meeting, minutes was formally prepared, endorsed by the Board, and made available for the Board and other relevant parties to examine. In order to be clear in our communication, the Chairperson invited the Bank’s President to attend the meeting to provide additional information to the Committee and is a way to familiarize each other. The Bank allowed the Committee to request additional information from the President or the Bank Secretary to the Board or other executives within the boundary of the set policy, which includes allowance of director who is not an executive to hold meetings among themselves to discuss certain management issues. - Board of Directors Self-Assessment The Bank’s Board of Directors conduct its own self-assessment every year which includes the assessment of the Chief Executive Officer, the President, the Chairperson, and executives and non-executives directors. The purpose of the assessment is to determine whether during the past year, they performed their duties completely and appropriately as per their duties and how they adhered to good corporate governance. The assessment is also used to determine the remuneration of the President. The results of the self-assessment of the Board of Directors for 2007 are as follows:
- Remuneration The details of Executive’s Remuneration is in Section 3) Executive’s Remuneration - Development of directors and executives The Board of Directors is the one who sets and takes part in the development of the vision, mission, strategies, goals, business plans and budget. They also ensure at executives operate towards the goals of the business and the budget effectively and productively. The Bank held meetings to disseminate business plans to the management team and staff so that everyone has the same understanding as well as arrange to have good internal control and risk management. All of the Bank’s directors has been through trainings from Thai Institute of Directors Association (IOD). For the directors, the Bank stipulates the duties and provides basic information about the Bank so that they gain better understanding of the Bank. The Board of Directors and the Executive Committee are responsible for the shareholders. Their duties are clearly separated and are described in the Management Structure section. Clearly defined policies and procedures for Bank’s directors and senior executives in type of directorship position they can hold in other companies and in how many companies. The Bank is a commercial bank that operates under the supervision of the Bank of Thailand which has clear regulations on holding directorship in other companies by directors and senior executives of commercial banks as per announcement FPG.(31) C.94/2546 issued on 15 September 2003. The announcement prohibits directors and senior executives of commercial banks from assuming the position of chairman, executive director, or director with full signatory authority in more than three business groups. A group of business is determined based on who has controlling power over the businesses. The Bank has disclose the other directorship positions of each directors including executive director in section “Profiles of Kiatnakin’s Directors and Executives” on page 51. - Terms of Directorship The Bank specifies in regulation number 18 of the Bank that in each General Shareholders Meeting, remove at least 1 out of 3 directors from the position. If the number of directors cannot be split evenly into three groups then remove the number of directors that is closest to the 1/3 ratio. This means that the directorship term of each director is 3 years.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
- Risk Management Policy
37
- Appointing Secretary of the Company The Bank appoints the Secretary for the Bank, whose responsibilities are as follows:
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
❑ Provide basic advice to the directors regarding
legal provisions, the Bank’s rules and regulations and follow up to ensure it’s being applied correctly and regularly. This includes informing the directors of any significant changes. ❑ Be a laison between executives and directors
Follow up to ensure execution of resolutions that arises from Shareholder’s meeting as well as Board of Directors meetings ❑ Manage the activities of the Board of Directors
Nomination and Remuneration Committee has developed succession plan policy which includes developing a success plan for President and has development plan for approximately 30 senior executives at 3 levels to hone their capabilities and prepare them to succeed in the position in case the incumbent executive cannot perform his/her duties. The committee regularly reports progress to the Board of Directors. The Bank recognizes the importance in upholding good corporate governance that emphasizes management system that is effective, transparent; creates confidence and assurance for everyone; and will increase the Bank’s value, promote long-lasting growth. The Bank is committed to enhance operations while adhering to good corporate governance. There are some areas that the Bank has not adhered to yet, such as
Reason / Compensation measures that the Bank used
1. Compensation when stakeholder received damages because the company violated the legal rights of the stakeholder.
Bank’s stakeholders are customers, staffs, creditors, business partners, community, society, the environment, etc. In the past, there has never been any conflict that violates the rights of the stakeholders stated above. Thus, the Bank has not specified any measures in how to deal with it. If such violation does occur, the Bank will compensate the stakeholder as stipulated by the law.
2. Monthly reporting of Committee’s progress when the meeting is not held monthly
The Bank did not hold committee meetings every month, but the committee reported their progress to the Board of Directors every quarter. It was deemed sufficient to do quarterly report because there is no significant progress in the Bank’s operations each month.
3. Performance assessment of individual directors
The Bank assess the director’s performance in groups because to assess by individual may have some inaccuracies.
38
The Bank evaluates internal control systems under good corporate governance by taking into account the following 5 factors: (1) Control Environment The Bank promotes all Bank personnel to be aware of the necessity of internal control systems by determining clear and measurable missions and goals. Manuals and checklists are provided to assist with the supervision and control of the operations such that everyone conforms to the rules and regulations. The Bank also emphasizes the importance of honesty and business ethics as well as having appropriate organization the structure. (2) Risk Assessment The Bank has Credit Policy and Risk Management Policy to manage risk in all 5 areas as per the guideline from the Bank of Thailand. The Risk Management Unit report directly to the Risks Committee in order to manage risks to be within appropriate level for the Bank, clear, transparent and auditable. The Bank has Internal Audit Unit to monitor and ensure compliance with the Risk Management Policy. (3) Control Activities The Bank clearly specified the scope, power, duties of various committees and the levels of authority and transaction approval process. Preventive measures against lost property, dishonesty and recovery procedures have been established along with the culture of having every employee report irregularities and operational errors to the supervisor so that it can be immediately rectified. Other measures include segregation of duties, review of operations by the chief of each section, and auditing to ensure compliance with relevant laws and regulations. If any irregularities are found, ad hoc committee will be set up to investigate. This committee comprises a central unit who will do fact finding and how to rectify the situation, improve the operation in order to prevent it from happening again and propose to the Human Resources Committee (4) Information and Communication The Bank has set up an information technology system to provide up-to-date and relevant information for decision-making which are organized and presented in an easy to understand format. The information is
communicated internally within the Bank and distributed to all stakeholders. Moreover, the Bank developed systems that disseminated knowledge and business understandings to enhance staff’s knowledge, business expertise and acumen so that they can provide the most beneficial advice and opinions to the customers and others as per the Bank’s vision and mission. (5) Monitoring and Evaluation The Bank has procedures and tools to assist executives and supervisors in monitoring and assessing performance by using Balanced Scorecard & Key Performance Indicators (KPIs). Modifications and enhancements are made promptly and as necessary to reflect the changing situations or to correct any insufficiency. Furthermore, the Internal Control System is being evaluated by the Board of Directors every year. 7) Dividend Policy The Bank’s policy on dividend payments stated that no more than 60 percent of net income will be allocated to dividend distribution annually. The dividend policy of the Bank’s subsidiaries is decided by the Board of Directors with no preset rate or amount. 8) Personnel Policy In 2007, the Bank steadily grew in terms of number of branches and development of new products for the customers. Therefore, we have recruited a large number of employees, orientate, train and develop them based on the Competency Base Training need to enable the Bank to achieve it’s mission and as required by the business.The Bank trained and developed our employees throughout the nation by holding in house seminars and external seminars as per the Training Road Map. There are over 35 programs and 108 groups. All the programs emphasize knowledge and capabilities development, changing attitudes in order to directly develop the capability. (1) Management Category
- Unleash Your Potential - Satisfy My Customer - Coaching for High Performance Team - Problem Solving & Decision Making - Six Thinking Hats - Coaching for Success - Essential Communication Skill - Managing Yourself
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
6) Internal Control
39
(2) Job Specific Category
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
40
- Enhance Selling Technique - Debt Collection - Managing loans in BASEL II era - Verifying Bank Notes, Signature and Check - Negotiation & Win Workshop - Interviewing Techniques Workshop - Hire-Purchase Loan Market
(3) General / Foundation Category - The Heart of Success at Work - Mind Management for Life and Family - Wr i t i n g Te c h n i q u e f o r K n o w l e d g e Management - Business Images & Make up - KK Hand in Hand In 2008, over and above what the Bank has done in terms of employee development as per their Core
Competency, we also focused on leadership development under KK Leadership Development Program (KK LDP) for a group of managers that must develop leadership ability. This year, the Bank aim to emphasize on creating an Individual Development Plan and Career Development information so that every employee can grow in their fields, expertise, and Functional Competency. Because the Bank grew rapidly, we must consider the importance in organizing the knowledge management system, exchanging knowledge and transferring knowledge capital to the organization and other employees in order to achieve sustainable organizational development. Thus, the Bank set up Knowledge Management in 2008 also. In addition to focusing on employee development and knowledge management, the Bank also developed a Human Resource Information System within a tool called HR Online. This system is convenient for managers and Bank employees and enables them to obtain accurate information due to effective human resource management practices.
5. Related Transactions Name and Relationship
Necessity and Reasonableness
Fairness of Price and Terms
• A person related to the Bank’s director/ executive gave a short-term loan to CMIC Development Co., Ltd. Total loan amount was Baht 62 million with no collateral.
• CMIC Development Co., Ltd. is a property leasing company that need funds to renovate buildings for leasing and generate income, but do not have sufficient credit to obtain loan from other financial institutions
• Interest rate MLR of the Bank +1% p.a., which is a normal term for financial businesses.
2* Leasing transaction between the Bank and The Erawan Group PLC. (formerly known as Amarin Plaza PLC. which the Bank’s executive is a shareholder in The Erawan Group PLC.
• The Bank lease spaces as a place of business from The Erawan Group PLC. Total leasing and service fees are Baht 6.36 million per annum.
• Leasing and service fee for Bank’s business that has been on-going since 1984.
• Leasing and service fees are comparable with market rates.
3
Leasing transaction with Chotthanawat Co., Ltd. which has shareholders related to the director or Bank’s executive who is also a shareholder or has controlling power or able to significantly influence decisions. The Bank own 99.83 % of the shares.
• The Bank lease storage and parking spaces from Chotthanawat Co., Ltd. Total leasing and service fees are Baht 9.74 million per annum.
• Leasing and service fees for the Bank’s parking spaces and auction place for repossessed automobiles that have been ongoing since 2004.
• Leasing and service fees are comparable with market rates.
4
Deposit transactions by the Bank’s directors, executives and related persons
• Conducted by 33 of the Bank’s directors, executives and related persons. Total deposits were Baht 398.53 million and total interest paid was Baht 5.82 million.
• A normal deposit transactions by the Bank’s directors, executives, and related persons.
• Provided service with the same interest rates as other customers.
1
*
Description and Amount (per annum)
Lending transaction by which a person related to the Bank’s director/ executive lend money to CMIC Development Co., Ltd., which is a company that the Bank own 80.57% of the shares through debt-restructuring process.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
During 2007, the Bank had the following related transactions:
41
Since 1 April 2007 onward, The Erawan Group Plc is not the bank’s related company.
Name and Relationship
Description and Amount (per annum)
Necessity and Reasonableness
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
5
Securities trading transactions by the Bank’s directors/ executives with the securities company (KKS)
• Securities trading transactions by the Bank’s directors/ executives with Kiatnakin Securities Co., Ltd. (KKS) totalled Baht 534.4 million in 2007, which resulted in a total commission of Baht 1.16 million
• A normal security brokerage service provided by KKS to directors/executives.
• Provided service with the same commission fee as other customers
6
Guaranteed a loan for a person related to the Bank’s directors /executives
• A loan guaranteed by persons related to the Bank’s directors/executives for debt auctioned from FRA. Total number of loan guarantors was 16 for a total loan amount of Baht 38.8 million.
• Transaction based on auction won from FRA has been restructured and resolved as per normal procedures for all debts acquired from auctions.
• A guarantee for debted auction from FRA that has been restructured as per normal terms for debts acquired from auctions.
See Note accompanying Financial Report on Personal and Related Transactions, Note #34
42
Fairness of Price and Terms
Performance The Bank’s consolidated financial statements for the 12-month period ended December 31, 2007 recorded a net profit before tax of Baht 2,154 million, which is a Baht 120 million or 5.9% increase from last year. It posted a revaluation gain of the investment in financial claims of Baht 464 million, a reduction of Baht 121.8 million from 2006 and an improvement in revaluation gain of the investment in financial claims and asset waiting to be sold of Baht 137 million, an increase of Baht 113.5 million from 2006. In 2007, the Bank derived its income from the following 5 main businesses: investment in financial claims, commercial lending, hire-purchase lending, residential project lending, and securities brokerage business that is operated by Kiatnakin Securities Co., Ltd. The detailed performance of each business is as follows: 1) Investment in Financial Claims In 2007, Kiatnakin Bank continued to make good progress in managing its investment in financial claims. The progress of debt-restructuring proceeded as plan. The total outstanding of investment in financial claims at 2007 year end was Baht 6,876 million, which reflected a decrease of Baht 2,205 million from 2006. 2) Commercial Lending The Bank expanded its commercial lending service to several new sectors that has strong potential, namely logistics, packaging, printing, apartment, and used automobile dealer business. In 2007, the Bank succeeded in its expansion strategy and was able to manage to keep non-performing loan in the sector at low level. Additionally, a portion of outstanding loan was the remainder from past financial and economic crisis. The Bank is under going a debtrestructuring negotiation in order to decrease the
outstanding balance. The reminder of the loans was an investment in claim that has completed the debtrestructuring negotiation and reverted to be general loans. At the end of 2007, the Bank had an outstanding commercial loan balance of Baht 7,662 million. 3) Residential Project Lending The Bank began its residential project lending services since 2001. As at the end of 2007, the Bank had a total outstanding residential project loan of Baht 15,183 million. Majority of the loans were from medium to small scale developers and projects, usually single houses and townhouses construction situated in greater Bangkok Metropolitan area. Real estate business was affected by economic slow down due to lower consumer confidence in future income. Overall, there was an increase in new residential construction project completions in Bangkok Metropolitan area. For apartments and condominiums, growth in 2007 was more than doubled from previous year. In 2007, the Bank gave residential project loans of more than Baht 8,000 million to developers. The Bank’s goal was to focus on increasing portfolio size of existing clients as they launch new projects. Since the prospects were existing clients, the Bank is familiar with their profile and business records. The Bank assisted clients by providing rapid transfer of houses, marketing support for developers, and house loans for the home buyers. 4) Hire-Purchase Lending Hire-purchase lending business has been another core business for the Bank for many years. At the end of 2007, auto hire-purchase loans recorded a balance of Baht 42,238 million, an increase of 42.4%. We set nearly proportions for used auto hire-purchase loan clients and new automobile loan clients. The ratio of personal cars to other types of cars was 35:65. The ratio
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
6. Analysis of Financial Position and Performance
43
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
of clients in Bangkok Metropolitan area and in the provinces was 20:80. Overall, the majority of the Bank’s auto hire-purchase loan clients are in used commercial vehicle in the province. In order to expand customer base and provide better services, the Bank aims to add 10 more branches in the provinces and greater Bangkok Metropolitan area in 2008. Thus, in additional to existing 27 branches, the Bank will have a total of 37 branches. 5) Securities Business The Bank has one subsidiary named Kiatnakin Securities Co., Ltd. (KKS) which is listed as broker
number 19 in the Stock Exchange of Thailand. KKS has been in business for an extended number of years ever since the Bank received permission to operate securities business in 1973. KKS mainly provide stock brokerage service to retail customers through our marketing officers and internet channel. At the end of 2007, company trading volume was Baht 117.9 billion with 1.48% market share. In September 2006, Company began allowing clients to make forward agreement to buy or sell securities and was very successful in gaining market share. In 2008, company plans to offer it as an alternative investment choice for existing securities clients and is expected to achieve rapid expansion.
Analysis of the performance of the Bank 1) Interest and Dividend Income (Unit: Baht Million)
44
Interest and Dividend Income
2007
2006
2005
Interest on loans* Hire-Purchase and Financial lease income Interest and dividend on securities Interest on investment in loans
2,023 3,209 253 1,211
2,424 2,465 174 954
2,288 2,093 124 1,084
6,696
6,017
5,589
Total
* including transactions between money market items banks
Total interest and dividend income at 31 December 2007 increased to Baht 6,696 million in from Baht 6,017 million in 2006, an improvement of Baht 679 million. The improvement was accounted for by overall loan growth during the year. The interest income for hire-purchase loans increased from Baht 2,465 million to Baht 3,209 million, or 11% over the year in conjunction with loan growth of 42%. The interest income for other loan products decreased from
Baht 2,424 million to Baht 2,033 million, or 17% over the year in conjunction with the growth in commercial loan. There was a reduction in the number of outstanding loan customers created prior to the past financial and economic crisis. The interest income on investment in financial claims increased by Baht 257 million to Baht 1,211 million. The reduction was due to the success of loan restructuring process.
2) Interest Expenses (Unit: Baht Million)
Interest Expenses
2007
2006
2005
Interest on deposits Others
1,746 863
1,759 469
1,178 338
2,609
2,228
1,516
Total
rise in loan growth over the period which stimulated additional deposits. Total loans and deposits as at December 31, 2007 increased 17% to Baht 67,138 million from Baht 57,093 million in 2006.
3) Loan Recovery/ Provisions for bad debts and doubtful accounts (Unit: Baht Million) Loan Recovery/ Provisions for bad debts and doubtful accounts Total Allowance, 1 January Recoveries Provisions for bad debt and doubtful accounts Charged off
Total Allowance, 31 December
Provision for doubtful accounts at December 31, 2007 was Baht 3,063 million which is a Baht 320 million decrease from 2006. Total allowance stipulated by the Bank of Thailand amounted to Baht 2,910 million or
2007
2006
2005
3,383 136 641 (1,097)
3,883 76 287 (863)
3,611 18 724 (470)
3,063
3,383
3,883
105% compared to 110% in 2006. In 2007, the Bank still uses a stringent loan classification model combined with conservative loan losses reserve policy.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Total interest expenses increased from Baht 2,228 million in 2006 to Baht 2,609 million in 2007, an increase of Baht 381 million, or 17%. The increase resulted from new policy to expand short term loan customer base,
4) Non-Interest Income (Unit: Baht Million)
Non-Interest Income
2007
2006
Gain on disposal investment in securities Gain on revaluation of investment Impairment gain (loss) on investment in financial claims Brokerage fees Gain from revaluation and sale of foreclosed assets Other income
348 165 (135) 275 623 535
108 198 5 274 46 489
65 728 (206) 370 235 342
1,811
1,120
1,534
Total
Non-interest income for the 12-month period as at December 31, 2007 increased to Baht 1,811 million from Baht 1,120 million in 2006. The increase was
2005
mainly due to the profit from selling investments and earnings from financial claim.
5) Non-interest expenses (Unit: Baht Million)
Non-interest expenses
Personnel expenses Premises and equipment expenses Tax and duties Fee and service expenses Contributions to Financial Institutions Development Fund Other expenses
Total
2007
2006
2005
866 348 155 275 164 845
696 311 158 310 179 642
680 229 144 220 136 738
2,653
2,296
2,147
45
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
46
The Bank aimed to control operating expenses such that it does not keep growing as the company grew. However, in 2007 the Bank still opened more branches and increased marketing personnel, improved the workplace at headquarter and increased investment in IT systems to provide better customer service. In 2007,
operating expenses (excluded uncontrollable expenses such contributions to FRA Fund and specific business tax) totaled Baht 2,334 million, representing an increase of 19% or Baht 1,959 million from last year. The Bank still had an expense to income ratio of 0.44, which is about the same as ratio of 0.42 in 2006.
Analysis of Financial Status Assets (Unit: Baht Million)
Assets
2007
2006
2005
Investment in securities, net Investment in loans, net Investment in properties, net Loans Securities business receivables Allowance for doubtful accounts Properties foreclosed, net Land premises and equipment, net Other assets
4,300 6,876 237 65,094 605 (3,063) 9,294 621 4,875
5,368 9,082 164 51,157 701 (3,383) 8,333 518 4,823
3,705 10,154 164 45,536 586 (3,883) 5,969 429 5,391
88,839
76,763
68,051
Total Assets
On a consolidated basis, the Bank ended 2007 with the total assets of Baht 88,839 million, an increase of Baht 12,076 million or 15.7 % from Baht 76,763 million last year. There was growth in all core Bank assets especially in commercial loans. The Bank’s five assets
included Investment in Financial Claims, Funds, Commercial lending and Properties Foreclosed. More details of each major type of assets are as follows:
(Unit: Baht Million)
Core business
2007
2006
2005
Investment in loans Investment in properties Loans Allowance for doubtful accounts Properties foreclosed
6,876 237 65,094 (3,063) 9,294
9,082 164 51,157 (3,383) 8,333
10,154 164 45,536 (3,883) 5,969
78,438
65,353
57,940
Total core business
1) Investment in Securities Investment in securities decreased to Baht 4,300 million from Baht 5,368 million in 2006. The Bank normally invests temporary excess liquidity in government
bonds. According to the present regulations from the Bank of Thailand, up to 6% of the 7% cash reserve requirement can be maintained in government bonds or debt securities issued by various states enterprises
2) Investment in Financial Claims
Investment in loans
2007
2006
2005
From FRA, set up in funds From FRA, set up in KK From Loan Execution Dept. set up in KK
2,893 671 3,312
4,070 739 4,273
5,105 971 4,078
6,876
9,082
Total
During 2007, the Bank was able to manage down the total investment claims, booked in the Funds to Baht 2,893 million from a total of Baht 4,070 million in 2006, which represented an decrease of 29%. In the same token, those that were booked in the company’s book were managed down to Baht 3,983 million in 2007 from Baht 5,011 million in 2006. These decrease in outstanding amount represented success in the process of restructuring these assets. These restructuring were
10,154
made in four ways: fully settled in cash, installment payment over a period of time, giving up the collaterals in lieu of cash, or the combination thereof. While installment payments were still being treated as part of the investment for those that were booked in the funds, it will be reclassified to loans for those that were booked in the company. Settlement by collateral in lieu of cash will be booked as foreclosed assets.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
(Unit: Baht Million)
3) Credit (Unit: Baht Million) Finance Business Loans
2007
2006
2005
General Loans Residential Project Loans Hire-Purchase Loans
7,672 15,184 42,238
6,243 15,248 29,666
6,247 15,733 23,556
65,094
51,157
45,534
Total
The Bank made a significant growth in extending credits in 2007. Total loans grew from Baht 51,157 million in 2006 to Baht 65,094 million, an increase of Baht 13,937 million or 27% over the year. The Bank divided the total credits into three main categories: general loans, residential project loans and hire-purchase loans. General Loans Majority of the Bank’s general loans can be categorized into three main types: general commercial loans, investment in financial claims and new loans. The Bank managed general commercial loans that were created prior to financial and economic crisis by either improving quality through restructuring process and maintaining them as normal loans or liquidating them through settlement process. In the past years, these loans made up the highest proportion of all general
loans. Investments in claims had been restructured and transferred to be loans from debt-restructuring process. Continuous progress was made in restructuring problem loans during the year. In 2007, the Bank offered new loans in new sectors that the Bank thought had high potential and was able to compete in. The strategy turned out to be very successful and the new loans made up more than 60% of all general loans for the Bank. The outstanding balance at 2007 year end was Baht 4,604 million. Residential Project Loans The Bank continued to finance new residential projects, mostly to the same developers with proven track records. At the end of 2007, the Bank supported over 60 projects with an outstanding balance of Baht 15,183 million plus another Baht 237 million booked in
47
two property funds, compared to Baht 15,248 million and Baht 164 million in 2006, respectively. While these projects were financed strategically countrywide, 67% were in the greater Bangkok Metropolitan area. Most
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Classified by Location
Central 10%
Classified by Type
Northeast 3% North 2%
Resident Condo 2%
South 8% East 10%
Greater Bangkok 67% Single / Town House 98%
Hire-Purchase Loans
48
of these projects are medium size single house and townhouse units. Following are two charts illustrating the demographic in term of loan outstanding by location and type of projects.
Hire-purchase loans have also achieved a satisfactory growth rate. The Bank was able to record an outstanding loan of Baht 42,238 million at year-end 2007, an increase of Baht 12,572 million from Baht 29,666 million in
2006, or about 42.4%. A large percentage of its hire purchase loans portfolio was still in the used car financing. Following are two charts illustrating the demographic in term of accounts by vehicle type and in term of loan outstanding by new/used vehicles.
Classified by type
Classified by new / used
Others 4% (6,904 account)
Used cars 47% New cars 53%
Sedan 39% (67,310 account)
One ton pick-up vans 57% (8,376 account)
4) Classified Loans (Unit: Baht Million)
2007
2006
2005
General Loans Residential Project Loans Hire-Purchase Loans
1,652 5,411 1,139
2,063 4,227 1,274
2,806 4,122 1,132
8,202
7,564
8,060
Total
Classified Loans
purchase loans uses much more stringent classification model than the Banking regulation. During 2007, the Bank wrote off bad debt, causing classified debtors to decrease. Details of classification in each type of loan are shown in the table above:
5) Allowance for Doubtful Accounts
Allowance for Doubtful Accounts
Actual
Required
General Loans Residential Project Loans Hire-Purchase Loans Transaction between money market Items
966 1,274 796 8
937 1,169 796 8
29 105 -
3,044
2,910
134
Total
Excess
The Bank issued a conservative loan reserve policy to closely match with the loan classifications. The objective was to maintain a loan reserve policy, which is more stringent than the requirement of the Bank of Thailand at all time. In the 4th quarter of 2007, the Bank revised policy and began to set aside allowance for doubtful accounts according to the new international accounting standard IAS39 set forth by the Bank of Thailand. This new standard causes an increase in the burden for the Bank because it increased the required allowance for secured loans. However, in hire-purchase lending business, the total allowance dropped because the Bank was more stringent than the industry standard. As the result in 2007, required reserve are nearly to the Bank reserve details are as above.
6) Assets for sale The total outstanding assets for sale increased to Baht 9,294 million in 2007 from Baht 8,333 million in 2006 or about 12% as a result of negotiations and litigation to obtain asset as form of settlement in lieu of cash. The total assets for sale in 2007 amounted to Baht 3,679 million the total sale amount to Baht 2,860 million. The Bank utilized the marketing promotion measures by taking part in Property Sales Festival and by supporting low-interest credits to motivate and enhance purchasing power of those interested in buying properties of the Bank. The majority of these assets are land and residential house in the greater Bangkok Metropolitan area. The followings chart shows breakdown in term of amount by location and by type.
classified by Location
classified by Type
Northeast 8%
Resident / Condo 3%
North 8%
Housing 32%
South 7%
East 7%
Central 13%
Greater Bangkok 57%
Lands 65%
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
The Bank continued to maintain rather stringent loan classification model, especially for residential project loans and hire-purchase loans. Residential project loans were not only classified as a breach in financial commitment, they were also classified as a breach in progress rate of developing, progress of sales, etc. Hire-
49
Liabilities and Shareholders’ Equities (Unit: Baht Million)
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
50
Liabilities and Shareholders’ equities
Current deposit Savings deposit Fixed deposit Bill of exchange Debenture Total borrowings Issued and fully paid-up Retained earnings Fair value reserves on investment in loans Fair value reserves on available-for-sale securities
Total Shareholders’ equities
1) Deposits and Borrowings The Bank focused on increasing time deposits from general public as our stable sources. In 2007, the Bank places greater importance on mobilizing current deposits and savings deposits to expand customer base as well as to decrease the concentration of deposit amount. In that, the Bank was successful in expanding its customer base and reduced the amount of deposits per customer from Baht 5.3 million per account to Baht 4.8 million. The Bank closely manages liquidity risk by controlling maturity profile of short and long term loans, ensuring appropriate balance.
2007
2006
2005
558 358 43,503 9,107 13,500 67,026 7,869 10,097 464 137
10 113 44,436 100 12,434 57,093 7,774 9,079 586 24
4 48 43,368 - 6,435 49,855 7,483 8,213 503 (29)
18,567
17,463
16,170
As a preventative measure to control liquidity risks from the interest rate volatility at the end of 2007, the Bank’s deposits and loans have a maturity date of over 300 days. The Bank’s ratio of liability to number of shareholders is 3.78, which is lower than the average Thai commercial bank that has ratio of 10.85 The low ratio is result of the Bank’s good operating performance and policy of allocating high loan allowance to accommodate future growth and to be consistent with business that manages auctioned assets.
1.1) Shareholders’Equities (Unit: Baht Million)
Equities
2007
2006
2005
Beginning of the year 17,463 16,170 Dividends payment (1,137) 1,168 Conversion of warrants 95 290 Net profit 2,154 2,034 Improvement (Deterioration) of unrealized Profit (Loss) in investment in financial claims (122) 83 Improvement(Deterioration) of unrealized Profit (Loss) in investment in securities 114 53
14,454 (1,104) 316 2,436
16,170
Ending of the year
18,567
17,463
138 (70)
improvement in revaluation of investment in financial claims as well as an improvement in unrealized gain of investment in securities. At year-end 2007, the Bank’s BIS ratio stood at 16.39 which was higher than the 8.5 % set forth by the Bank of Thailand.
7. Profiles of Kiatnakin’s Directors and Executives Details of company directors, executives and controlling authorities (educational background and training)
NameSurname/ Position 1. Ms. Nawaaporn Ryanskul (NonAuthorized Director)
Age (Yr.)
Education / Training
63
Master of Arts (ECON), University of California at Los Angeles, (UCLA), U.S.A. - Directors Certification Program (DCP 1/2000) Thai Institute of Directors (IOD) - Audit Committee Program (ACP10/2005) Thai Institute of Directors (IOD) - The Role of the Chaiman Program (August 2007) Thai Institute of Directors (IOD)
Number of Shareholding (%)*
Family Relationship with the executives
-
-
Work Experiences in 5 years Period
Apr. 2007 Present
2005 - Apr. 2007
2007 Present 2006 Present
2004 2005
2005 Present 2001 Present
1993 Present
Position
Independent Director and Chairperson of the Board of Directors Independent Director and Chairperson of the Audit Committee Member of the Audit Committee Member of the Risk Management Committee Independent Director and Chairperson of the Audit Comittee Director of Chulalongkorn University Council Member of Council of Trustees and Board of Directors Director
Name of Company
Kiatnakin Bank Public Company Limited
Kiatnakin Bank Public Company Limited
National Health Security Office TMB Asset Management Company Limited Kiatnakin Finance Public Company Limited
Chulalongkorn University Thailand Development Research Institute (TDRI) Thai Coating Industrial Public Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
The shareholders’ equity increased to Baht 18,567 million in 2007 from Baht 17,463 at the end of 2006. This is an increase of Baht 1,104 million, or about 6%. This was mainly due to three reasons: 1) warrants conversions during the year 2) net profit of 2007 generated for the year and some pay out of dividend during the year 3) an
51
NameSurname/ Position
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
2. Mr. Pichai Dachanapirom (NonAuthorized Director)
Age (Yr.)
61
52
3. Mr. Manop Bongsadadt (NonAuthorized Director)
66
Education / Training
- Bachelor of Accountancy, Thammasat University - Directors Certification Program (DCP 32/2003) Thai Institute of Directors (IOD) - Certified Public Accountant - Audit Committee Program (ACP 9/2005) Thai Institute of Directors (IOD) - Monitoring the system of Internal Control & Risk Management Program (MIR) Thai Institute of Directors (IOD)
- Master of Regional Planning, Institute of Social Studies, The Netherlands
Number of Shareholding (%)*
50,000 shares (0.01%)
Family Relationship with the executives
-
Work Experiences in 5 years Period
P.A. Lynn Philips Company Limited Thai Property Appraisal Company Limited
Director
Apr. 2007 Present
Independent Director and Chairperson of the Audit Committee Independent Director and Member of the Audit Committee Independent Director and Member of the Audit Committee
Kiatnakin Bank Public Company Limited
1989 Present 1986 Present 2001 Present 1998 Present
Director
1998 Present
Director
1993 Present 1990 Present
Director
Dharmaniti Public Company Limited Dharmaniti Anditing Company Limited Dharmaniti Press Company Limited Dharmaniti Office of Management Company Limited Dharmaniti Seminar and Training Company Limited Dharmaniti Foundation Grand Success Company Limited
Oct 2006 Present
Independent Director, Chairperson of the Nomination and Remuneration Committee
1994 - 2005
-
Name of Company
1989 Present 1987 Present
2005 - Apr. 2007
-
Position
Director
Managing Director Director Director
Director
Kiatnakin Bank Public Company Limited
Kiatnakin Finance Public Company Limited
Kiatnakin Bank Public Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
Age (Yr.)
Education / Training
Number of Shareholding (%)*
Family Relationship with the executives
- Master of Architecture, Kansas State University U.S.A. - Directors Accreditation Program (DAP8/2004), Thai Institute of Directors (IOD) - Audit Committee Program (ACP10/2005), Thai Institute of Directors (IOD) - The Role of the Chairman Program (RCP17/2007), Thai Institute of Directors (IOD) - The National Defence Course, The National Defence college (class 38)
Work Experiences in 5 years Period
2005 Oct. 2006
2005
2004 2005
2004 2007
2004 Present 2002 -
4. Mr. Chet Pattrakornkul (NonAuthorized Director)
59
- Master of Marketing (Certificate program), Thammasat University - Directors Certification Program (DCP9/2001), Thai Institute
10,000 shares (0.01%)
-
Apr. 2007 Present Oct. 2006 Present 2005 Present
Position
and Member of the Audit Committee Independent Director, Member of the Nomination and Remuneration Committee and Member of the Audit Committee Member of the Audit Committee Independent Director and Member of the Nomination and Remuneration Committee Chairperson of the Audit Committee Member of the Audit Committee Member of the Audit Committee Associate Present Professor
Member of the Audit Committee Member of the Nomination and Remuneration Committee Independent Director
Name of Company
Kiatnakin Bank Public Company Limited
Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited
N.C. Housing Public Company Limited Kiatnakin Bank Public Company Limited The Erawan Group Public Company Limited Architecture Faculty, Chulalongkorn University Kiatnakin Bank Public Company Limited Kiatnakin Bank Public Company Limited Kiatnakin Finance Public Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
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NameSurname/ Position
53
NameSurname/ Position
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Age (Yr.)
Education / Training
of Directors - Role of The Compensation Committee Motivating Excellence in Performance Program, (1/2006) Thai Institute of Directors (IOD) - DCP Refresher Course (3/2006), Thai Institute of Directors (IOD) - Audit Committee Program (ACP17/2007), Thai Institute of Directors (IOD) - Seminar : Corporate Governance Report of Thai Listed Companies Association - Monitoring the Internal Audit Function : MIA(1/2007), Thai Institute of Directors (IOD)
Number of Shareholding (%)*
Family Relationship with the executives
-
-
Work Experiences in 5 years Period
2004 2005 2002 2004
2000 2002
Position
Head of Consumer Lending Managing Director, Consumer Lending Assistant Managing Director
Name of Company
Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
5. Mr. Tarnin Chirasoonton (NonAuthorized Director)
Age (Yr.)
Education / Training
55
- Bachelor of Law, Ramkamhaeng University - Directors Certification Program (DCP10/2001), Thai Institute of Directors (IOD) - Public Administration 1997, Political Science Faculty, Thammasat University - Accounting & Finance System Tools for Executive ABM EXEC (III) The Continueing Education Center Chulalongkorn University - DCP Refresher Course (5/2007), Thai Institute of Directors (IOD)
Number of Shareholding (%)*
Family Relationship with the executives
-
-
Work Experiences in 5 years Period
Position
Name of Company
2006 Present 2005 2006
Independent Director Independent Director and Chairperson of the Nomination and Remuneration Committee Independent Director And Chairperson of the Nomination and Remuneration Committee Independent Director and Member of the Nomination and Remuneration Committee Independent Director and Chairperson of the Audit Committee
Kiatnakin Bank Public Company Limited Kiatnakin Bank Public Company Limited
2004 - 2005
2003 - 2004
2001 - 2004
Kiatnakin Finance Public Company Limited
Kiatnakin Finance Public Company Limitied
Kiatnakin Finance Public Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
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NameSurname/ Position
55
NameSurname/ Position
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6. Mr. Pravit Varutbangkul (Authorized Director)
Family Relationship with the executives -
Age (Yr.)
Education / Training
60
- Master of Business Administration (Operations Research) University of Santa Clara, California, USA - Directors Certification Program (DCP5/2001), Thai Institute of Directors (IOD) - DCP Refresher Course (3/2006), Thai Institute of Directors (IOD) - Audit Committee Program (ACP1/-2007), Thai Institute of Directors (IOD)
-
- Bachelor of Marketing, Bangkok University - Directors Certification Program (DCP13/2001), Thai Institute of Directors
-
56
7. Mr. Suraphol Kulsiri(1) (Authorized Director)
Number of Shareholding (%)*
55
Work Experiences in 5 years Period
Name of Company
2007 Present
Director
Kiatnakin Securities Company Limited
Apr. 2006 Present 2005 - 2006
Director
2004 - 2005
Director and Head of Central Support Director and Managing Director of Central Support
Kiatnakin Bank Public Company Limited Kiatnakin Bank Public Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited
2002 - 2004
-
Position
2005 Present
Mar. 2007 Present
Director, Vice Chairman
Independent Director and Member of the Nomination and Remuneration Committee Chairman of the Information Technology Association
Kiatnakin Bank Public Company Limited
Association of Securities Companies
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
Age (Yr.)
Education / Training
Number of Shareholding (%)*
Family Relationship with the executives
Work Experiences in 5 years Period
2005 2007 2005 2007 2005 2006
(IOD) - Role of The Compensation Committee Program (RCC) Thai Institute of Directors (IOD) - Capital Market for Executives (CMA 2) Capital Market Academy
2004 - 2005
2003 2007
2003 Present 1999 - 2003
8. Mr. Pracha Chumnankit kosol (Authorized Director)
45
- Master of Business Administration (Finance) University of Texas Arlington, U.S.A. - Risk Management of Banking & Finance, Thai Institute of Directors (IOD) - Directors Certification Program (DCP75/2006), Thai Institute of Directors
-
-
Position
Association Director Director Chairman of the Information Technology Sub-Committee Director and Member of the Nomination and Remuneration Committee Member of Nomination and Remuneration Committee Chief Executive Officer Managing Director
2006 Present
Director
2005 Present
Head of Risk Management
2005
Head of Risk Management
2004 2005
Head of Credit Committee
1999 2004
Managing Director
Name of Company
The Stock Exchange of Thailand Settrade Company Limited The Stock Exchange of Thailand Kiatnakin Finance Public Company Limited
Kiatnakin Securities Company Limited
Kiatnakin Securities Company Limited Kiatnakin Securities Company Limited
Kiatnakin Bank Public Company Limited Kiatnakin Bank Public Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited Asia Recovery Management Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
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NameSurname/ Position
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NameSurname/ Position
Age (Yr.)
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Education / Training
Number of Shareholding (%)*
Family Relationship with the executives
Work Experiences in 5 years Period
Position
2007 Present
Chairman of the Executive Board Chairman of the Board of Directors and Chairman of the Executive Committee Director Director
Name of Company
(IOD) - EVA : Managing for Value Creation, Sasin Graduate Institute of Business Administration of Chulalongkorn University - Blue Ocean Strategy, Strategic Business Development Center
9. Mr. Supol Wattanavekin(2) (NonAuthorized Director)
53
- Master of Business Administration (Executive), Sasin Graduate Institute of Business Administration of Chulalongkorn University - Orchestrating Winning Performance 2005 (IMD) - Board & CEO Assessment, Thai Institute of Directors (IOD) - The Role of the Chairman Program, Thai Institute of Directors (IOD)
11,105,510 shares (2.13%)
Head of Deposit and Marketing’s Brother
2005 - Apr. 2007
2004 Present 1999 Present 2000 2005
Director
1999 2005
Chairman of the Executive board
Chairman
Kiatnakin Bank Public Company Limited Kiatnakin Bank Public Company Limited
The Erawan Group Public Company Limited Kiatnakin Securities Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
Age (Yr.)
Education / Training
Number of Shareholding (%)*
Family Relationship with the executives
Work Experiences in 5 years Period
Position
Name of Company
- Directors Accreditation Program (DAP 56/2006), Thai Institute of Directors (IOD) - Directors Certification Program (DCP 76/2006), Thai Institute of Directors (IOD) - Organizing and Managing Strategic Alliances for Success and Profit, Thai Institute of Directors (IOD) - Leadership, Strategic Growth and Change, Sasin Graduate Institute of Business Administration of Chulalongkorn University - Corporate Governance Report of Thai Listed Companies
Remark: * including with shareholding of spouse and child who is not become legal age as of Aut. 27, 2007
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NameSurname/ Position
59
NameSurname/ Position
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10. Mr. Tawatchai Sudtikitpisan(2) (Authorized Director)
Family Relationship with the executives -
Age (Yr.)
Education / Training
48
- Master of Business Administration and Master of Science in Electrical Engineering, The University of Texas at Austin, Texas, U.S.A. - Directors Certification Program (DCP31/2003), Thai Institute of Directors (IOD) - Senior Executive Program, Sasin Graduate Institute of Business Administration of Chulalongkorn University - The Job of the Chief Executive, Singapore Institute of Management (SIM)
-
- MBA, Eastern Michigan University, U.S.A. - Director Accreditation Program (DAP 21/2004)
-
60
11. Mr. Chavalit Chindavanig
Number of Shareholding (%)*
44
Work Experiences in 5 years Period
June 2006 Present 2005 Present 2005 Present
2005 Present 2005
2002 2007 2001 2002
-
July 2007 Present 1998 -2006
Position
Name of Company
Director
Kiatnakin Securities Company Limited
President
Kiatnakin Bank Public Company Limited Kiatnakin Bank Public Company Limited
Head of Residential Project Lending and Head of Commercial Lending Head of Retial Lending Head of Commercial Lending Head of Residential Project Lending Assistant Managing Director
Head of Finance & Budgeting Acting Managing Director
Kiatnakin Bank Public Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited
Kiatnakin Bank Public Company Limited TISCO Securities Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
Age (Yr.)
Education / Training
Number of Shareholding (%)*
Family Relationship with the executives
-
-
Work Experiences in 5 years Period
Position
Name of Company
Thai Institute of Directors (IOD) - Directors Certification Program (DCP 76/2006) Thai Institute of Directors (IOD)
12. Mr. Patom Amorndechawat
50
13. Ms. Thitinan(2) Wattanavekin
50
- Master of Accountancy, Thammasat University
- Master of Management Sasin Graduate Institute of Business Administration of Chulalongkorn University - Directors Certification Program (DCP1/2000), Thai Institute of Directors (IOD) - Board Performance Evaluation, Thai Institute of Directors (IOD)
25,979,861 shares (4.98%)
Chairman of the Executive Committee’s Sister
Nov. 2007 Present 2000 2007
Head of Operations
2005 Present 2002 2005
Head of Deposit and Marketing Head of Treasury and Funding
1999 Present 1987 2002
Director
Executive Vice President of Operation and Retail
Director and Assistant Managing Director
Kiatnakin Bank Public Company Limited Bank Thai Public Company Limited
Kiatnakin Bank Public Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Securities Company Limited Kiatnakin Finance Public Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Dec. 31, 2007
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
NameSurname/ Position
61
NameSurname/ Position
Age (Yr.)
Education / Training
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Number of Shareholding (%)*
Family Relationship with the executives
-
-
Work Experiences in 5 years Period
Position
Name of Company
- Politics and Governance (KPI 8), The King Prajadhi pok’s Institute - Capital Market for Executives (CMA 2), Capital Market Academy - The Joint State-Private Course (NDC 2549) Thailand National Defence College - Corporate social Responsibility (1/2007), Thai Institute of Directors (IOD)
62
14. Mr. Sarawut Charuchinda
49
- Master of Business Arlington, U.S.A. - Risk Management, of Banking & Finance, Thai Institute of Directors - Directors Certificate Program (DCP75/2006), Thai Institute of Directors (IOD)
2005 Present 2002 - 2005
Head of Debt Restructuring Head of Asset Management
1991 - 2002
Assistant Managing Director
Kiatnakin Bank Public Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007
15. Ms. Sineenath Tejagupta
Age (Yr.)
54
Education / Training (2)
- Master of Science in Business, Mississippi University for Women, Mississippi, U.S.A. - Company Secretary Program #16, Thai Institute of Directors (IOD) - Understanding the Fundamental of Financial Statement, Thai Institute of Directors (IOD)
Number of Shareholding (%) (3)*
Family Relationship with the executives (4)
-
-
Work Experiences in 5 years Period
Position
2005 Present
Senior Executive Vice President
2002 2005
Senior Executive Vice President
1991 2002
Deputy Managing Director
Name of Company (5)
Kiatnakin Bank Public Company Limited Kiatnakin Finance Public Company Limited Kiatnakin Finance Public Company Limited
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
NameSurname/ Position (1)
63
Remark: * including with shareholding of spouse and child who is not become legal age as of Aug. 27, 2007 (1) Have authority in Subsidiary company, Kiatnakin Securities Company Limited, as the Chief Executive officer, (2) Do not have authority in Subsidiary, Kiatnakin Securities Company Lomited, as Directos
None of the executive at Kiatnakin Bank Public Company Limited has a history of illegal conduct, none has ever declared bankruptcy, nor eriminal offenses in the past ten years. (History of executive as of 31 December, 2007)
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
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Report from the Board of Directors Dear Shareholders The Board of Directors is responsible for the consolidated financial statements of the Bank and its subsidiaries as well as the financial information which appear in the Annual Report. The financial information was prepared in accordance with the Generally Accepted Accounting Principles (GAAP). An appropriate accounting policy was chosen and consistently maintained, using the most prudent discretion and best judgement. The financial statements were also prepared based on full disclosure of essential information and are include in the Notes to Financial Statement Section. The Board of Directors has established an effective internal control system to ensure that all accounting records are accurate, complete and sufficient to facilitate the Bank in maintaining all of its assets. The system helped the Bank to identify any potential weakness and prevent fraudulent or significant mismanagement of its business operations.
The Board of Directors has also appointed the Audit Committee, which consisted of independent directors to be responsible for ensure that the Bank produces accurate and sufficient financial reports, the Bank has appropriate and efficient internal control and internal audit system in place, review all disclosures of the Bank’s information where connected transactions have taken place or where there may be conflicts of interest in order to ensure their accuracy and completeness and others under their duties. The opinion of the Audit Committee related to these matters is in the report from the Audit Committee Section of the Annual Report. In the Board of Directors’ opinion, the Bank’s overall internal control system is satisfactory and able to confidently and reflect the financial statements as of 31 December 2007 for the Bank and its subsidiaries.
(Ms. Nawaaporn Ryanskul) Chairperson
Dear Shareholders The Board of Directors # 5/2549 dated October 26, 2006, Mr. Manop Bongsodadt as Chairperson of the Nomination and Remuneration Committee. The Board also appointed Mr. Chet Pattrakornkul as a member of the Nomination and Remuneration Committee. The Committee comprised of 3 members, of which 2 are independent directors and 1 is a non-executive director. The Committee held 4 meetings in 2007, and during the past year, all the Committee members conducted their duties while adhering strictly within the boundary of their responsibilities. The responsibilities of the committee are to
level upwards in order to appropriately adjust the annual remuneration package. The performance appraisal takes into consideration the responsibilities, associated risks and ability to increase long-term shareholders’ values. The Nomination and Remuneration Committee has disclosed the remuneration in various forms, the preparation of remuneration reports and comments from the Normination and Remuneration Committee in the 2007 Annual Report.
– Screen and propose candidates with suitable qualifications for various director’s position. – Ensure that the overall size, level of knowledge and capability, and variety of experience of the Board of Directors are appropriate for the Bank. – Set the remuneration policy and other benefits for directors and senior executives from the President level upwards. – Set the guidelines on performance appraisal for directors and senior executives from, the President
(Mr. Manop Bongsadadt) Chairperson of the Nomination and Remuneration Committee
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
Report from the Nomination and Remuneration Committee
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Auditor’s Report To the Shareholders of Kiatnakin Bank Public Company Limited I have audited the accompanying consolidated and company balance sheets as at 31 December 2007, and the related consolidated and company statements of income, changes in shareholders’ equity and cash flows for the year ended 31 December 2007 of Kiatnakin Bank Public Company Limited and its subsidiaries and of Kiatnakin Bank Public Company Limited. The Bank’s management is responsible for the correctness and completeness of information in these financial statements. My responsibility is to express an opinion on these financial statements based on my audit. The comparative consolidated and company financial statements for the year ended 31 December 2006 of Kiatnakin Bank Public Company Limited and its subsidiaries and of Kiatnakin Bank Public Company Limited, were audited by another auditor from the same firm as myself in accordance with generally accepted auditing standards, whose report dated 20 February 2007 expressed an unqualified opinion on those statements. I conducted my audit in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amount and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall
financial statements persentation. I believe that my audit provides a reasonable basis for my opinion. In my opinion, the consolidated and company financial statements referred to above present fairly, in all materials respects, the consolidated and company financial position as at 31 December 2007 and the consolidated and company results of operations and cash flows for the year ended 31 December 2007 of Kiatnakin Bank Public Company Limited and its subsidiaries and of Kiatnakin Bank Public Company Limited in accordance with generally accepted accounting principles.
Ms. Unakorn Phruithithada Certified Public Accountant (Thailand) No. 3257 PricewaterhouseCoopers ABAS Limited Bangkok 18 February 2008
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
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The note to the consolidated and company financial statements on page 77 to 136 are an integral part of these financial statements.
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1. Head Office
500 Amarin Tower 12th, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel. 0 2680 3333 Fax. 0 2256 9933
2. Asoke Office 209/1 K Tower B, 27th Floor, Sukhumvit 21 Road, Klong Toei Nue, Wattana, Bangkok 10110 Tel. 0 2625 5000 Fax. 0 2664 1454 3. P h e t k a s e m - K a n c h a n a p h i s e k Office 119/42-43 Moo 4, Bang Kae, Bangkok 10160 Tel. 0 2454 5656 Fax. 0 2454 8657 4. Srinakarin Office 903, 905 Srinakarin Road Suan Luang, Bangkok 10250 Tel. 0 2320 0622 Fax. 0 2320 0623 5. Chiangrai Office 56/5-6 Moo 13, Paholyothin Road, Tambon Robvieng, Amphur Muang, Chiangrai 57000 Tel. 0 5371 9427-32 Fax. 0 5371 9434 6. Chiangmai Office 33 Chiangmai-Lampang Road, Tambon Chang Phueak, Amphur Muang, Chiangmai 50300 Tel. 0 5321 8711-3, 0 5340 9620-4 Fax. 0 5340 9625 7. Lampang Office 142-144 High-way Lampang-Ngao , Tambon Phra Bat, Amphur Muang, Lampang 52000 Tel. 0 5431 7799 Fax. 0 5431 7699 8. Khon Kaen Office 9/2 Prachasamosorn Road, Tambon Nai Muang, Amphur Muang, Khon Kaen 40000 Tel. 0 4333 7725-32 Fax. 0 4333 7734 9. Nakhon Ratchasima Office 192/1-4 Jomsurangyart Road, Tambon Nai Muang, Amphur Muang, Nakhon Ratchasima 30000 Tel. 0 4426 0401-8 Fax. 0 4426 0409
0. Udonthani Office 1 119/7-8 Moo 14, Soi Ban Kao Jan, Tambon Mark-kang, Amphur Muang, Udonthani 41000 Tel. 0 4222 4270-4 Fax. 0 4222 4275 11. Ubonratchathani Office 466 Suriyat Road, Tambon Nai Muang, Amphur Muang, Ubonratchathani 34000 Tel. 0 4520 9260 Fax. 0 4520 9258 12. Kanchanaburi Office 275/1-2 Saeng Chuto Road, Tambon Ban Nue, Amphur Muang, Kanchanaburi 71000 Tel. 0 3462 0645 Fax. 0 3462 0646 13. Chachoengsao Office 508, 510 Chachoengsao Bang Pakong Road, Tambon Na Muang, Amphur Muang, Chachoengsao 24000 Tel. 0 3851 6611 Fax. 0 3851 6106 14. Nakhonpathom Office 992/2 Petchkasem Road, Tambon Huay Chorakhe, Amphur Muang, Nakhonpathom 73000 Tel. 0 3427 1583 Fax. 0 3427 1584 5. Ratchburi Office 1 286/25-26 Srisuriyawong Road, Tambon Na Muang, Amphur Muang, Ratchburi 70000 Tel. 0 3231 0382-9 Fax. 0 3231 0391 16. Saraburi Office 568/7-9 Paholyothin Road, Tambon Pak Prew, Amphur Muang, Saraburi 18000 Tel. 0 3631 8445 Fax. 0 3631 8446 17. Chantaburi Office 29/1 Moo 7, Tambon Chantanimit, Amphur Muang, Chantaburi 22000 Tel. 0 3934 3616 Fax. 0 3934 3615 8. Chonburi Office 1 7/41 Moo 4 Sukhumvit Road, Tambon Huaykapi, Amphur Muang, Chonburi 20130 Tel. 0 3838 4946-9 Fax. 0 3838 4950
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19. Pattaya Office 120/17-18 Moo 6 Tambon Naklua, Amphur Bang-lamung, Chonburi 20150 Tel. 0 3848 9161 Fax. 0 3848 9162
BRANCH OFFICES KIATNAKIN SECURITIES COMPANY LIMITED
20. Rayong Office 375/4-5 Sukhumvit Road, Tambon Noenphra, Amphur Muang, Rayong 21000 Tel. 0 3880 8090-4 Fax. 0 3880 8095
Provinces
1. Nakhonsawan Office 2 795/8 Moo 10, Tambon Nakhonsawantok, Amphur Muang, Nakhonsawan 60000 Tel. 0 5622 0973-6 Fax. 0 5622 0977 22. Phitsanulok Office 286/10 Pichaisongkram Road, Tambon Nai Muang, Amphur Muang, Phitsanulok 65000 Tel. 0 5521 1683-6, 0 5521 1773-4 Fax. 0 5521 1687 23. Krabi Office 254, 254/1-2 Moo 11, Tambon Krabi Noi, Amphur Muang, Krabi 81000 Tel. 0 7566 3922 Fax. 0 7566 3923 24. Chumphon Office 67/4-5 Krom Luang Chumphon Road, Tambon Tha Taphao, Amphur Muang, Chumphon 86000 Tel. 0 7757 0508 Fax. 0 7757 0509 25. Nakhonsithammarat Office 6/144-5 Phatthanakan Khukhwang Road, Tambon Nai Muang, Amphur Muang, Nakhonsithammarat 80000 Tel. 0 7535 8531-6 Fax. 0 7535 8538 26. Phuket Office 101/2 Bangkok Road Tambon Talad-nue Amphur Muang, Phuket 83000 Tel. 0 7622 3464, 0 7622 3234, 0 7622 3293 Fax. 0 7622 3550 27. Surat Thani Office 22/144-146 Rat-uthit, Tambon Talad, Amphur Muang, Surat Thani 84000 Tel. 0 7721 7405-7, 0 7720 5454-5 Fax. 0 7721 7408 28. Haad Yai Office 24,24/1 Suwannavong Road, Tambon Haad Yai, Amphur Haad Yai, Songkhla 90110 Tel. 0 7434 6262 Fax. 0 7434 6260
1.
Khon Kaen Office 9/2 Prachasamosorn Road, Tambon Nai Muang, Amphur Muang, Khon Kaen 40000 Tel. 0 4333 7700-24 Fax. 0 4333 7721 Email : khonkaen@kks.co.th
2. Chonburi Office 7/18 Moo 4, Tambon Huaykapi, Amphur Muang, Chonburi 20130 Tel. 0 3838 4931-43 Fax. 0 3838 4794 Email : chonburi@kks.co.th 3. Chiangmai Office 33 Chiangmai-Lampang Super High-way, Tambon Chang Phueak, Amphur Muang, Chiangmai 50300 Tel. 0 5322 0753-60 Fax. 0 5322 0763 Email : chiangmai@kks.co.th 4. Phitsanulok Office 83/9 Top Land Arcade Department store, 3rd Floor, Boromtrailoknat Road, Tambon Nai Muang, Amphur Muang, Phitsanulok 65000 Tel. 0 5523 5000-6 Fax. 0 5523 5006 Email : phitsanulok@kks.co.th 5. Rayong Office 125/1 Janta-udom Road, (Rayong-Baan Khai), Tambon Choeng Noen, Amphur Muang, Rayong 21000 Tel. 0 3861 7476-90 Fax. 0 3861 7490 Email : rayong@kks.co.th 6. Si Racha Office 86/4-5 4th Floor, Sukhumvit Road Tambon Si Racha, Amphur Si Racha, Chonburi 20110 Tel. 0 3832 8345-54 Fax. 0 3832 8354 Email : sriracha@kks.co.th 7. Samutsakorn Office 1400/33 Ekkachai Road, Tambon Mahachai, Amphur Muang, Samutsakorn 74000 Tel. 0 3442 7123-5 Fax. 0 3442 3565 Email : samutsakorn@kks.co.th
BRANCH OFFICES KIATNAKIN SECURITIES COMPANY LIMITED Bangkok Office 1. Head Office 500 Amarin Tower 7th, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel. 0 2680 2222 Fax. 0 2680 2233 Email : esupport@kks.co.th 2. Asoke Office 159 Sukhumvit 21 Road, Klong Toei Nue, Wattana, Bangkok 10110 Tel. 0 2204 1270-84 Fax. 0 2661 6329 Email : asoke@kks.co.th 3. Ngamwongwan Office 30/39-50 Office Building, 11st Floor, The Mall Ngam Wong Wan, Ngam Wong Wan Road, Bangkhen, Amphur Muang, Nontaburi 11000 Tel. 0 2550 0353-80 Fax. 0 2550 0354 Email : ngamwongwan@kks.co.th 4. Bangna Office 1093/56-57 Central City Tower, 11st Floor, Bangna-Trad Road, Bangna, Prakanong, Bangkok 10260 Tel. 0 2745 6458-66 Fax. 0 2745 6467 Email : bangna@kks.co.th 5. Ratchadaphisek Office 202 Le Concorde 11st Floor, Room No. 1101, Ratchadaphisek Road, Huai Khwang, Bangkok 10320 Tel. 0 2694 1788 Fax. 0 2694 1799 Email : rajchada@kks.co.th 6. Ladprao Office 1693 Room No. 503/1, 507/1, 508/2, Paholyothin Road, Latyao, Chatuchak, Bangkok 10900 Tel. 0 2937 1240-54 Fax. 0 2937 1254 Email : lardprao@kks.co.th
KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
8. Haad Yai Office 200 Nipat - Uthit Road, Tambon Haad Yai, Amphur Haad Yai, Songkhla 90110 Tel. 0 7435 4470-9 Fax. 0 7423 9515 Email : haadyai@kks.co.th
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List of Information required by the Office of the Securities and Exchange Commission KIATNAKIN BANK PUBLIC COMPANY LIMITED ANNUAL REPORT 2007
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Page
1. General Information
1.1 The company
1.2 Juristic entity in which the company holds 10% or more of the total registered shares 1.3 Other References
9 10 9
2. Financial Highlights
4
3. Nature of Business
12
3.1 Business Operations
12
3.2 Revenue Structure
13
3.3 Significant changes in the previous year
14
4. Risk Factors
17
5. Shareholding and Management Structure
21
5.1 Shareholders
22
5.2 Management
23
• Management Structure
23
• Director and Management Selection Process
26
• Management Remuneration
27
• Business Administration
23
• Company Policy and Disclosure
39
• Internal Control
39
5.3 Dividend Policies
39
6. Related Party Transactions
41
7. Management Discussion and Analysis
43
8. Financial Statement 8.1 Financial Statement 8.2 Auditor’s Remuneration
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