Determined and Dedicated To Your Success
It has been 4 decades that Kiatnakin has determined to conduct financial business, with Good Corporate Governance along with creation of good society. We are ready to provide integrated financial services, with our team of experts who are willing to work to their fullest capacity to create opportunity and fulfill potential of our valued customers and business partners to reaching for sustainable successes.
Ready to Serve with Full Capacity To Respond to Customers’ Needs
Expertise You Can Trust Along the Path of Savings and Financial Investments
Annual Report 2010
40 Years of Determination for Customers’ Success
1971 It was awarded a license to operate in finance and securities
Kiatnakin Finance and Securities Company Limited was established with a registered capital of 10 million baht
1973 It became Broker No. 19 on the Stock Exchange of Thailand
1993
1988
Kiatnakin Finance and Securities Company Limited became a Public Company Limited
The Company became listed on the Stock Exchange of Thailand Together with 57 financial institutions, the Company was forced to temporarily suspend operations due to the economic crisis.
1982
1997
Kiatnakin Bank Public Company Limited
1998
It was granted permission by the Ministry of Finance to resume its business operations.
2004 It received an upgrade in credit rating from BBB+ to A- by TRIS Rating Company Limited On October 3, the Company received approval from the Ministry of Finance to establish a commercial bank under the name Kiatnakin Bank Public Company Limited
2005
2007
It was one of ten companies to receive the “Best Shareholder Treatment Awards” from Thailand Securities Depository Company Limited
2008
It was one of twenty-two companies to receive the award for Excellence by the Institute of Directors Association (IOD)
Present Kiatnakin Bank is a fully-fledged commercial bank which
provides integrated financial services covering savings, fixed and current accounts, funds and loans which is the Bank’s areas of expertise.
Vision
Annual Report 2010
To be recognized as the bank that stands for customers’ success and builds a sustainable community
Mission 1. 2.
To provide a complete and expert services and to enhance customers’ potential for
a sustainable achievement To operate under corporate governance with emphasis on the best outcomes for all
stakeholders
Values Expert Result - Oriented Motivated
Trustworthy Entrepreneurship Integrity Responsibility
Kiatnakin Bank Public Company Limited
Awards of Success: 40 Years of Kiatnakin Kiatnakin Bank Public Company Limited SET Awards 2010 on Top Corporate Governance Report
Kiatnakin Bank received the SET Awards 2010 on Top Corporate Governance Report Awards, as one of the listed companies with outstanding compliance report under the Good Corporate Governance principles by the Stock Exchange of Thailand and Money and Banking Magazine.
Bank of the Year 2007 – 2010
Kiatnakin Bank was ranked 4th ‘Bank of the Year’ in 2007, 2008 and 2010 and 3rd ‘Bank of the Year’ in 2009 from the survey on performance of the 15 Thailand commercial banks by the Money and Banking Magazine.
A- Credit Rating and Stable Outlook 200 - 2010 TRIS Rating Company Limited confirmed the A- credit rating and non-secure debenture of Kiatnakin Bank which is due to the Bank’s team of experienced executives and acceptable risk management system and stable profitability.
Excellent (5 Stars), 2008 – 2010
Kiatnakin Bank was granted ‘Excellent (5 Stars)’ rating by the Institute of Directors Association (IOD) in association with the Securities and Exchange Commission (SEC) and the Stock Exchange of Thailand (SET).
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Annual Report 2010
Awards of Success: 40 Years of Kiatnakin Kiatnakin Bank Public Company Limited Excellent and Recognized as Good Example, 2009 – 2010
Kiatnakin Bank was granted the ‘Excellent and Recognized as a good example from Annual General Shareholders Meeting Assessment Program, by the Thai Investors Association (TIA), the Securities and Exchange Commission (SEC) and the Listed Companies Association (LCA).
Best Shareholder Treatment Awards
Kiatnakin Bank was awarded “Best Shareholder Treatment Awards, 2007” conducted by the Thailand Securities Depository Company Limited (TSD) in collaboration with the Thai Investors Association (TIA), the Listed Companies Association (LCA), and the Thai Investor Relations Club (TIRC). The Bank was 1 in 10 awardees from a total of 460 listed companies.
Board of the Year, 200 /200
Kiatnakin Bank was awarded ‘Board of the Year’, (2006/2007) by the Institute of Directors Association (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), the Listed Companies Association (LCA), and the Federation of Thai Capital Market Organizations (FETCO).
Excellent Exhibition Booth on Activities
at SET in the City 2008 from the Stock Exchange of Thailand (SET) based on the total score on impression of the visitors
Kiatnakin Bank Public Company Limited
Kiatnakin Securities Company Limited Best
Analyst Awards 200
Ms.Viriya Lapromrattana, Executive Vice President of Kiatnakin Securities Company Limited, was granted the Best Analyst Awards 2007: Institution Investor in Energy and Banking Sector from the Securities Analysts Association. (SAA)
1 Of Best Securities Companies 200
Kiatnakin Securities Company Limited was among the 6 nominees for Best Securities Company from SET in the City 2008. The nomination was considered based on 2 main qualifications – capacity to perform as a stock broker with distinction in quality and performance on Securities analysis. The nomination was based on information in both quantity and quality of the performance as well as customers’ survey.
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Annual Report 2010
Financial Highlights KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
Baht million
2008
2009
2010
Balance Sheet Assets Investment in loans, net 5,113 4,523 6,700 Total loans 80,813 87,117 107,726 Allowance for doubtful accounts & troubled debt restructuring (3,553) (3,796) (4,235) Total assets 114,733 127,414 141,900 Total deposits 71,156 76,109 75,932 Total borrowings 19,949 26,064 35,307 Total liabilities 97,565 109,468 120,989 Shareholders’ equity 17,167 17,946 20,911 Operating Results Total interest and dividend income 7,792 8,376 8,841 Total interest expenses 3,120 3,039 2,650 Net interest and dividend income 4,672 5,337 6,191 Bad debts & doubtful accounts & loss on debt restructuring (990) (684) (647) Non-interest income 1,538 1,779 3,455 Non-interest expenses 3,174 3,334 4,920 Income before income tax 2,046 3,097 4,080 Income tax 175 866 1,213 Net income 1,867 2,229 2,840 Financial Ratios (%) Return on average equity 11.0 12.7 14.7 Return on average assets 1.8 1.8 2.1 Dividend payout 49.0 48.0 **50.8 Loans to deposit and borrowing ratio 88.7 85.3 96.8 NPL to total loans (BoT regulation) 7.1 5.6 4.4 Net NPL to total loans (BoT regulation) 4.5 3.5 2.6 Capital Adequacy Ratio 15.1 16.3 15.2 KK Share Information Share price - High (Baht) 31.00 28.25 41.75 - Low (Baht) 8.55 9.80 23.50 - Close (Baht) 10.20 25.50 39.00 - Average (Baht) 20.77 19.87 31.56 No. of shares outstanding (Thousand shares) 523,152 523,152 565,826 Market Capitalization (Baht million) 5,336 13,340 22,067 EPS - Basic (Baht) 3.57 4.26 5.20 - Diluted (Baht) 3.46 4.26 4.97 PE ratio (time) 2.95 5.99 7.85 PBV ratio (time) 0.31 0.74 1.07 Book value per share (Baht) 32.82 34.30 36.51 Dividend per share (Baht) 1.75 2.00 *2.40 Dividend yield (%) 22.49 6.86 6.15 Credit ratings by TRIS Rating Co., Ltd. Company rating A- A- A- Rating outlook Stable Stable Stable * 2010 dividend payment at the rate of Baht 2.40 per ordinary share, 1.00 Baht per share had been paid as interim dividend on August 20, 2010, while the remaining Baht 1.40 per ordinary share will be proposed to the meeting of the ordinary shareholders on April 21, 2011 ** Dividend payout ratio is calculated based on paid-up capital of 634,328,864 shares as of 31 December 2010
Kiatnakin Bank Public Company Limited
Financial Highlights Continuous growth in assets
Impressive growth in outstanding loans
Year
Year
2010 2009 2008
141,900 127,414 114,733 0
50,000
100,000
150,000
Millicn Baht
Rigorous growth in shareholders’ equity
87,117 80,813 85,000
95,000
Millicn Baht
105,000
Year
2010 2009 2008
20,911 17,946 17,167 5,000
10,000
15,000
Millicn Baht
20,000
More branches to reach more customers Year
2010 2009 2008 1,500
2,840 2,229 1,867 2,000
2,500
3,000
Millicn Baht
More personnel to provide better services Year
2010 2009 2008
2010 2009 2008
61 44 37 0
75,000
107,726
Significant improved financial performance
Year
0
2010 2009 2008
20
40
60
Branches
1,500
2,451 2,032 1,889 2,000
2,500
Employees
13
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Annual Report 2010
Message from the Chairman Customers’ satisfaction and engagement of the employees are crucial goals that the Bank would strive for to accomplish better operational outcomes than those we achieved in the previous year.
Kiatnakin Bank Public Company Limited
The Thai economy in 2010 continued to recover from 2009 following global economic recovery. Nonetheless, the recovery was still on a fluctuated manner due to the unemployment issues in western countries as well as debt crises in Europe that had not been effectively solved. In that respect, the United States of America has implemented the second economic stimulation measure to sustain its economic recovery. Such an effort led to profit speculation via a large movement of capital to Asia including Thailand. Another reason for the fluctuation in economic recovery was the instability of domestic politics and natural disasters rendering negative impacts on national economy. Yet, the relatively strong economic base of Thailand and its financial system enabled consumption, investment and exportation to substantially expand, hence an overall growth of the Thai economy in the year 2010. Despite an increase in competition in the commercial bank system, both in hirepurchase and deposit acquirement, the year 2010 for Kiatnakin Bank was one of the years with highest achievements in terms of quality and growth, as evidenced by expansion of assets to 141.90 Billion Baht, an increase of 11.4 percent; total loans of 107.72 Billion Baht, an increase of 23.7 percent; net profits of 2.84 Billion Baht, an increase of 27.4 percent; non-interest incomes of 3.45 Billion Baht, a remarkable increase of 94.3 percent; Return on Assets (ROA) ratio of 2.1 percent compared with 1.9 percent in 2009 and 1.8 percent in 2008; non-performing loan (NPL) of 4.97 Billion Baht or 4.41 percent compared with 5.44 Billion Baht or 5.62 percent in 2009; and a provision for NPL of 85.1 percent, yet another remarkable increase from 69.2 percent in the previous year. The Board of Directors therefore passed a resolution to propose to the meeting of the shareholders to approve dividend payment for 2010 at a rate of 2.40 Baht per share, which was the highest ever rate paid by the Bank. The proposed dividend sum accounted for 50.8 percent of the net profit (consolidated financial statements). The remaining profit would be put in the capital fund of the Bank which will be sufficient for business expansion in the future. In addition, the Bank has purchased investment in claims from foreign investors, totaling 4.14 Billion Baht, to accommodate future expansion and 16 more branches have been established, hence currently a total of 61 branches. Finally, the Bank has expanded the depository base nationwide, resulting in an increase in deposit accounts from 48,565 to 88,088 in 2010.
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Annual Report 2010
With regards to management, the Bank has restructured the organization and senior executive positions to accommodate the next phase of development. There have been establishments of the Compliance & Governance Committee and the Main Credit & Foreclosed Property Committee, with Mr.Supol Wattanavekin as the appointed Chairman; Mr.Tawatchai Sudtikitpisan, Chief Executive Officer and President; Ms.Thitinan Wattanavekin, Director; and Mr.Pracha Chumnarnkitkosol, Chairman of the Credit & Foreclosed Property Committee. The Bank has issued a total of 26,000,000 warrants for ordinary shares for allocation to directors and/or employees of the Bank and its Subsidiaries to enhance work motivation and long-term success of the Bank. Furthermore, 2010 was also a year in which the Bank was granted several awards which clearly reflected acceptance of its quality and ethics of operation as follows: - SET Award 2010 for Top Corporate Governance Report by the Stock Exchange of Thailand and Money and Banking Magazine; - The 4th rank of Bank of the Year 2010 by Money and Banking Magazine; - Excellence Award (Five Stars) from Corporate Governance Report of Thai Listed Companies 2010 by the Institute of Directors Association (IOD); - A- Credit Rating and ‘Stable’ level by TRIS Rating Company Limited In 2011, it is expected that the Thai economy will continue to grow from the previous year, though at a sluggish rate. To be more exact, the Thai economy is predicted to grow at a rate of 4 - 5 percent, yet still with apparent sensibility and fluctuation. The risk factors worthy of close scrutiny are political unrest, both domestic and international; inflation; and appreciation of Thai Baht which may affect confidence of consumers, investors, and exporters, leading to less economic growth than expected. Besides this, the competition for deposit and hire purchase acquirement would remain high, while domestic investment would expand rendering growth potential for business lending.
Kiatnakin Bank Public Company Limited
The Bank would continue to expand business of its expertise with an aim to open up more branches across the country in 2011. As for deposit, the Bank aims to expand the depository base via all branches to ensure competitive capital and reduce risk on concentration of deposit. Risk management is to be bettered via more implementation of risk management technology and tools in the Bank management to ensure that each unit has sufficient information and potential to manage their respective risks. Enhancement of long-term competitive potential, customers’ satisfaction, and mutuality of the employees are crucial targets that the Bank would strive for in every way possible to achieve better operational outcomes than those accomplished in the previous year. On behalf of the Board of Directors, I would like to take this opportunity to convey our profound gratitude to all shareholders for the continued support, confidence, and trust offered to us throughout the years, without which it would be impossible for Kiatnakin Bank to grow with desired stability and sustainability or to continue to deliver benefits to our shareholders, employees, customers, and society for years to come.
Mr. Supol Wattanavekin Chairman of the Board of Directors
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Annual Report 2010
Board of Directors
04 02 01 03 05 01 Mr.Supol Wattanavekin Chairman of the Board of Directors /
04 Mr.Chet Pattrakornkul Independent Director/Chairman of the Compliance and
1
Chairman of the Risk Management Committee
Governance Committee/Member of the Audit Committee/ Member of the Nomination and Remuneration Committee
02 Mr.Pichai Dachanapirom Independent Director/Chairman of the
05 Mr.Pravit Varutbangkul Independent Director/Member of the
Audit Committee
Audit Committee/Member of the Compliance and Governance Committee
03 Mr.Manop Bongsadadt Independent Director/Chairman of the 1
Nomination and Remuneration Committee/ Member of the Audit Committee
Appointed as Chairman in replacement of Ms. Nawaaporn Ryansakul effective on January 1, 2011
Kiatnakin Bank Public Company Limited
19
Board of Directors
09 07 08 06 10 06 Mr.Suraphol Kulsiri Director/Member of the Nomination and
09 Mr.Pracha Chumnarnkitkosol Director/Member of the Executive Committee/Member of
Remuneration Committee/Member of the Main Credit and Foreclosed Property Committee
the Risk Management Committee/Member of the Main Credit and Foreclosed Property Committee
07 Mr.Tarnin Chirasoonton Director/Member of the Compliance and
10 Miss Thitinan Wattanavekin Director /Member of the Executive Committee/
Governance Committee
08 Mr.Tawatchai Sudtikitpisan Director/Chief Executive Officer and President/Chairman
2
of the Main Credit and Foreclosed Property Committee/ Member of the Risk Management Committee
Appointed as Director effective on January 1, 2011
2
Member of the Risk Management Committee
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Annual Report 2010
Management Team
02 01 04 03 01 Mr.Tawatchai Sudtikitpisan Chief Executive Officer and President /Chairman
03 Mr.Chavalit Chindavanig Member of the Executive Committee/
02 Mr.Pracha Chumnarnkitkosol Member of the Executive Committee/Member of the
04 Mr.Patom Amorndechawat Member of the Executive Committee/
1
1
of the Main Credit and Foreclosed Property Committee/Member of the Risk Management Committee
Risk Management Committee/Member of the Main Credit and Foreclosed Property Committee
Member of the Risk Management Committee/ Head of Finance and Budgeting
Member of the Risk Management Committee/ Head of Operations
Appoited as Chief Executive officer and President effective on January 1, 2011 - The Executives, no. 02, 07-13, were appointed as Member of the Executive Committee on January 17, 2011
Kiatnakin Bank Public Company Limited
Management Team
0 05 Mr.Sarawut Charuchinda
05
0
0 Mr.Sathit Bovornsantisuth
Member of the Executive Committee/ Executive Vice President, Deposit and Marketing
Member of the Executive Committee/ Member of the Risk Management Committee/ Head of Debt Restructuring
0 Miss Thitinan Wattanavekin
0 Mr.Verasak Tantinikorn
Member of the Executive Committee/ Member of the Risk Management Committee/ Head of Deposit and Marketing
Member of the Executive Committee/ Executive Vice President, Retail Lending
0
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Annual Report 2010
Management Team
10 09 Mrs.Piradee Chongsiriwanchai Member of the Executive Committee/ Executive Vice President, Deposit and Marketing
10 Miss Nujaree Sithasrivong Member of the Executive Committee/ Executive Vice President, Human Resource Management
11 Mr.Somkiat Pongjunyakul Member of the Executive Committee/ Executive Vice President, Information Technology
09
11
13
12
12 Mr.Siri Senajak Member of the Executive Committee/ Executive Vice President, Retail Lending
13 Mrs.Suwannee Wattanavekin Member of the Executive Committee/ Executive Vice President, Debt Restructuring
Kiatnakin Bank Public Company Limited
Report on Corporate Social Responsibility 2010 It is our belief that Kiatnakin Bank, as a business entity serving the general public, will achieve sustainability not only because of its business success but also ultimate responsibility for society, community, and environmental preservation. Throughout the past 40 years, the Bank has strictly adhered to conducting the business with highest ethics enabling the Bank to overcome a myriad of hardships and crises as well as to move forward and gain an ever-increasing acceptance from its customers and the public. The Bank has grown from a small finance and securities company to a full-fledged commercial bank, with its total assets of exceeding 14 Billion Baht and with currently 61 branches in operation nationwide. The Bank realizes that social responsibility implies business conduct that takes into consideration the real benefits of its customers, business partners, and employees as well as impact on the economy and society at large, both directly and indirectly. The Bank has therefore placed its emphasis on supporting entrepreneurs and lending to business that benefits national development and without negative social impacts. Furthermore, the Bank has annually allocated budgets from its income to assist the underprivileged, to promote activities relating to human resources development, to produce smart and ethical citizens, to support CSR activities in communities where its branches are located, and to craft volunteering spirits and publicmindedness among our employees to render social benevolent activities for the society at large. It is our commitment that Kiatnakin Bank would grow side by side with the good and progressing society as per our corporate motto, ‘To be recognized as the bank that stands for customers’ success and builds a sustainable community.‘
Mr. Supol Wattanavekin
Chairman of the Board of Directors
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Annual Report 2010
People Development for Nation Development with Kiatnakin Projects Kiatnakin Bank PLC is determined to conduct its business with social responsibility based on the philosophy that what we do must yield value to the community, society, customers, employees, shareholders, and related organizations as well as promote economic development and quality of life for everyone to ensure sustainable prosperity, progresses, and strength of the country. “Wherever Kiatnakin goes, development of the community goes hand in hand. When our business enjoys success, we give back to the community to which we belong.” Kiat Wattanavekin The founder of Kiatnakin Bank PLC. Throughout the past 40 years, the Bank has carried out social benevolent activities under the ‘People Development for Nation Development with Kiatnakin’ projects focusing on three main aspects, namely, 1. Education 2. Social Ethics and Immunity 3. Relief and Charity Education : “Education” is one of the key policies that the Bank has continuously promoted with the belief that power of education would ensure young people of today to grow up as high-quality human resources of the nation in the future. The Bank aims to equip youths with ‘volunteer spirits’ to ensure good educational opportunities and develop them into ‘smart’ citizens through continuous scholarships and financial training programs for students from primary to post-graduate levels. Kiatnakin and Kiat Ruam Mit Education Foundation Scholarship Programme The joint program has been granting scholarships to kindergartens up to secondary students in need and providing funds for construction of school buildings and acquisition of educational materials. Over 3,000 students have been granted their educational opportunity yearly. Kiatnakin Responsibility Scholarship The Bank, in collaboration with Chulalongkorn University, Thammasart University, and the Metropolitan Police Bureau, have granted non-obligation scholarships for undergraduates in the fields of Economy, Accounting, Engineering, and Law on the conditions that the scholarship awardees’ proof of good behaviors, volunteering spirits, and dedication to society. The first phase of the Project is between 1998 and 2013, with a total of 91 students receiving the scholarships, all of whom have voluntarily carried out social philanthropic activities. I was granted a scholarship from Kiatnakin Bank last year. I was a freshman at that time. The scholarship is for the whole 4 years until my graduation. I’m very proud of it as the scholarship from Kiatnakin is for young people whose charitable deed has contributed to society. It is not a fund specifically for the needy or brainy kids like the other scholarships. Miss Taranan Asavatewawich Second-year undergraduate student, BBA International Program, Faculty of Commerce and Accountancy Chulalongkorn University
Kiatnakin Bank Public Company Limited
Bicycles for the Young Ones
25
School Cooperative Promotion Program The Bank, with realization of the importance of instilling the savings discipline in children, and in collaboration with Bangkok Metropolitan Administration, has initiated the School Cooperatives Promotion Program for schools since 2001. The objective of the program is to nurture attitudes, values, and concepts of cooperation, as well as stimulate learning and appreciation toward savings and money management among children, so that what these children have learned from the program can be subsequently applied to ensure better living for themselves and families, the practice which would in turn contribute to the prosperity of the nation as a whole.
The Bank has co-operated “the Bicycle for the Young Ones Program” in collaboration with World Vision Foundation of Thailand since 2002 to extend educational opportunity of children in remote areas to have access to their otherwise ‘far away’ schools by donating bicycles for them as a means to get to their school. Children attending this school are mostly from poor families. Those with more money have normally transferred to other schools. The mai Bangkok Business Challenge @ Sasin Some of them live very far and have to walk The Bank has been a main sponsor of to get to the school; only very few are driven the mai Bangkok Business Challenge @ here. The bicycles from Kiatnakin Bank really make it more convenient for them. I’m Sasin since 2002 to help students learn delighted that the Bank really helped with how to write effective business plans in what we really lacked. English as well as to create a new Mr. Thin Tianhom generation of entrepreneurs. Headmaster, Chonpratan Keang Krajan School, Phetchaburi Province
Social Ethics and Immunity : The Bank has realized the importance of instillation of intellect and morality to help build immunity against negative temptations of the modern days. Intellect and Peace Development Program The Bank has joined forced with the Young Buddhists Association of Thailand under the Royal Patronage since 1994 to carry out the Intellect and Peace Development Program including preaching and meditation practices course of YMA for executives, employers, and the general public. I was grateful to have a chance to participate in the meditation practice of Kiatnakin Bank. I don’t think many banks would do something like this. Personally, I’m a customer of several commercial banks, but I prefer Kiatnakin because the Bank has carried out Dhamma activities. That makes me have faith and trust in the bank. I always tell my Buddhist fellows that it is a good bank because it follows the Buddhist path. Kiatnakin is like our Dhamma comrade. Ms. Chutikan Kayan A Bank’s customer Participant in Intellect and Peace Development Program
Royal Buddhist Robe Presentation Ceremony (Katin) 2010 The Bank organized the Royal Buddhist Robe Presentation Ceremony (Katin) for the year 2010 at Wat Kawitsararam Ratchaworawihan, Lopburi Province, to uphold Buddhism and promote the development of ethics and morality in the community.
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Annual Report 2010
Youth Relations Against Drugs Program The Bank has joined force with the Metropolitan Police Bureau and the Youth Centre to set up the Youth Relations Development Program since 2005 with the aim to educate young people in the Bangkok metropolitan areas on the dangers of drugs and the virtue of savings. Up to the present, there have been hundred thousands of youths participating in the program.
Relief and Charity :
The Bank has collaborated with various entities from both the public and private sectors such as the Bank of Thailand, Ministry of Finance, the Stock Exchange of Thailand, the Thai Bankers’ Association, the National Council on Social Welfare of Thailand under the Royal Patronage, the Thai Red Cross Society, and other charities to carry out charitable activities. Some of the recent engagements are as follows: - Donation of floating lavatories and necessary disaster relief packages to flood victims in Nakornratchasima, Ayutthaya, Lopburi, Chaiyaphum, Songkhla (Amphur Had Yai), and Surat Thani provinces. - Monetary donation to Haiti victims through the Thai Red Cross Society - Blood donations to the Thai Red Cross Society Kiatnakin has opened its branch in Ayutthaya for two years. Since then, we have conducted community activities by finding out what the community members lack and how we can be of some help. We brainstormed until we have come up with various projects. Recently, it was the donation of floating toilets and boats for flood victims. In service business, we have to pay attention to the society, and it’s also the Bank’s policy to give back to the society. We are a part of the society, and our existence definitely depends on it. Khun Samrit Phongam Branch Manager Kiatnakin Bank, Ayutthaya Branch Policy to Promote Social, Community, and Environmental Development The Bank has a policy to instill professional responsibility with integrity and transparency as well as ethics in all of its employees. Furthermore, the Bank also encourages ‘employees of a volunteering spirit’ to contribute to social, community, and the environmental development. In 2010, the Bank’s employees from both the headquarters and its branches nationwide combined their various skills and expertise to carry out over 50 charitable community projects.
Kiatnakin Bank Public Company Limited
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• Social Benevolent Projects - Give Women a Second Chance Project, a training course on miniature model making for female inmates to ensure their intellectual capital after their release - KK Helps First Jobber Program to raise awareness of financial disciplines - Panel Discussion on “Money Management for Modern Women” in association with the business sector and financial institutes to provide personal financial management knowledge on the Thai Women’s Day. • Community Benevolent Projects - KK for Society Program to support the work of Surin Police Station - Ethics and Moral Development Program for Youths - KK Car Thief Prevention Program - KK School’s New Look Program, a restoration of Phokaoton Temple School in Lopburi province after the 2010 flood - KK Campaign for Road Safety Program in collaboration with Phuket Police Station - Police Booth Pressing Traffic Light Program with Traffic Division, Rachburi Police Station - Lunch and Donation of Daily Commodities Program for Sri Trang Elderly Nursing Home in Trang Province - Donation of Bulletproof Vest and Shield Program for Nakorn Pathom Police • Environmental Preservation Projects - Save Energy @ Kiatnakin Bank Program which has been continuously carried out since 2006 to raise awareness of the significance of energy conservation as well as efficient use of resources, including environmental preservation, among the Bank’s employees and their families - Energy Conservation Training Program for KK Energy Ambassadors, maids, and security guards by guest speakers from the Pollution Control Department, Ministry of Natural Resources and Environment, to highlight on guidelines for energy saving both at work and at home, with an expectation that the KK Energy Ambassadors would subsequently relate the knowledge learned from the program to their colleagues Beautiful Park for the Young Ones Project: transforming deteriorating landscape after 2009 flood to a multi-purpose garden by using donated plants from Kiatnakin Bank’s staff Our school is near the town center, located close to Nawanakorn Industrial Promotion Zone. Most of the parents are wage earners with low income. Being near the city center makes us be overlooked by many agencies who mistakenly think that we already have it all. But Kiatnakin employees spotted what we lacked and helped with the re-landscape of our park for the kids. I feel proud and am happy for them that at least someone realized their importance and gave them moral boost and also further educational opportunity.. Sommai Naimok Headmaster, Jarisornbumrung School
The CSR activities driven by Kiatnakin employees lead to a good relationship between the Bank and the communities. All KK employees feel happy and proud to get involved in nurturing sustainable growth and offering a better quality of life and a higher standard of living to members of the local communities.
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Annual Report 2010
Kiatnakin Group History Kiatnakin Finance and Securities Company Limited was founded in 1971 by Mr. Kiat Wattanavekin with a registered capital of 10 Million Baht. It was later awarded a license to operate in finance and securities business, thus becoming a broker no. 19 of the Stock Exchange of Thailand in 1982 before being listed on the Stock Exchange of Thailand in 1988. With remarkable business growth in all regions, Kiatnakin Finance and Securities Company Limited established its branches in major cities all over Thailand and transformed itself into a Public Company Limited in 1993. Nonetheless, the economic crisis which widely affected all business sectors in Thailand in 1997 resulted in widespread economic regression. Of particular importance was the suspension of 57 financial institutions, including Kiatnakin Finance and Securities Company Limited from their business operations. However, the Company was one of the two allowed to resume their business in the following year. The Company respectively separated its finance business from securities business. Later on in 2005, Kiatnakin Finance Company Limited began to officially operated as a commercial bank under the name “Kiatnakin Bank Public Company Limited.” Services provided by Kiatnakin Bank cover hire-purchase loans residential project loans, corporate loans, Assets for sale, deposits funds, and insurances, with 61 branches now in operation nationwide. At the same time, Kiatnakin Securities Company Limited provides a myriad of securities services including stock brokerage, Internet trading, securities borrowing and lending, investment banking, and securities analyses to assist investment decisions by a widely recognized team of knowledgeable, experienced, and specialized professionals with a total of 11 branches nationwide. At present, Kiatnakin Group comprises Kiatnakin Bank Public Company Limited and Kiatnakin Securities Company Limited, with Kiatnakin Bank holding 99.99 percent of the total shares, and Erawan Laws Office Company Limited.
Total Asset ÅÒŒ ¹ºbaht Ò· Million 1,000,000
141,900 114, 33
199 3rd financial crisis, caused by the floating of the Baht.
100,000 19 4 2nd financial crisis, a result of the compounded effects from the previous one.
10,000
13,34
19 9 1st financial crisis, initiated by Raja Finance Company Limited.
1,000
, 3 35,359
19,042
200 4th financial crisis, triggerd by financial institutions from overseas.
1,455 23 3 3
3 9 100
2 15 19 2
19 2 Kiatnakin became the Broker No.19 of the SET.
25 19 2
19 Kiatnakin became a listed company in the SET.
31 19
1993 Kiatnakin 1999 Kiatnakin sepaits finance and became a Public rated securities businesses Company Limited. from each other.
36 1993
42 1999
2005 Kiatnakin became a commercial bank.
48 2005
53 2010
Kiatnakin Bank Public Company Limited
29
Business Group
Banking Business
Securities Business Debt Restructuring*
Legal Services Commercial lending
Retail lending
Residential Project Lending
Deposit
*Debt restructuring operate by the Bank and the subsidiaries which the bank owned. 1.Asia Recovery 1 Fund (99.95%) 2.Asia Recovery 2 Fund (99.59%) 3.Asia Recovery 3 Fund (99.97%) 4.Thai Restructuring Fund (98.91%) 5.Asia Recovery Property Fund 1 (99.50%) 6.Asia Recovery Property Fund 3 (98.77%) 7) Bangkok capital Fund (95.72%) 8) Gamma capital Fund (94.03%)
Kiatnakin Group The group comprises Kiatnakin Bank Public Company Limited which is a fully commercial bank with 61 branches nationwide and Kiatnakin Securities Company Limited providing complete securities business with 11 branches in all regions. Services include the following:
Commercial Bank Business
1. Retail Hire-Purchase for: 1) Automobile hire-purchase for both new and used cars with prompt approval as well as appropriate interest rate and installment payment period wherein customers can adjust their down payment and installment plan. 2) Personal loan to increase liquidity of hire-purchase for customers with good credit. The lessee is able to receive cash rapidly. 3) Car for cash loan to increase liquidity for car owners whereas the customers can still use their own vehicles during the loan period
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Annual Report 2010
4) Used car auction by the Bank to auction used car of its customers on a weekly basis at Car Auction Centre (Bangna - Trad Road, KM 8 and Udon Thani) The Bank has provided a variety of vehicles and related services such as annual road tax renewal and other related permissions. 5) Non-life insurance services namely all types of automobile insurances and auto-loan protection life insurance. 2 Residential Project Lending The Bank provides integrated loan service for all types of residential project developers with timely consideration process and credit limit responsive to requirement of the entrepreneurs and repayment scheme in accordance with the revenue from the project progress. In addition to financial support, the residential project lending department also has a team of experts to offer consultation and advices on real estate business, be it research and development information; asset valuation; construction engineering; architectural design; laws and regulations as well as marketing and customer relations both prior to and following the loan approval to enhance competitiveness for the Bank’s customers in their market. 3. Commercial Lending The Bank provides loans to potential businesses wherein the customers would receive rapid service and confirmation with maximum provision of revolving capital and repayment scheme according to their income. Types of preferred business include automobile industries e.g. car dealers, second-hand car dealers; residential rental business e.g. apartment; logistic business; printing and packaging business. 4. Deposit and Investment Under the ‘One Stop Services’ concept, the Bank collectively offers deposit and investment products to ensure completeness of services for the customers. 4.1 Deposit Service : the Bank offers deposit service for both individual and corporate customers with 3 account types - current, savings and fixed deposit. The Bank focuses on worthy return for the customers as well as continuous development of products and services to better meet the customers’ requirement and heighten their satisfaction such as TD - Roll up where interest rate is higher the longer the deposit term. 4.2 Investment Service (Mutual Fund and Insurance) The Bank provides brokerage service for mutual fund of over 16 leading fund management companies in Thailand covering all mutual products namely equity instruments; fix income securities, commodities, derivative and real estate. With regards to insurance, the Bank has selected products that best suit the requirements of its target customers with worthy return on investment from leading insurance companies. Products include savings, pension and life insurance. The above mentioned products could completely respond to the varied investment requirements of the customers to increase investment value; distribute risk; manage tax or simply plan for retirement and legacy. The completeness is the strong point equipping the Bank’s customers with sufficient information to aid decision making and select an investment that best suits their investment objective and risk tolerance. 5. Debt Management The Bank has a variety of property for sales such as residential assets; assets for investment; assets for commercial purposes and project asset for further development. Asset locations are both in the Greater Bangkok and other provinces nationwide. The Bank holds a policy to serve all customer groups being investors, retail buyers, and real estate developers. With an attempt to ensure that all customer groups are reached, the Bank has held sales promotional events in Greater Bangkok and other provinces nationwide. Interested persons could contact the Call Center 0-2680-3333 ext. 3 or visit www.kkasset.com to search assets by types, location, and lot size or price range. Additionally, the website also offers automatic installment calculation for initial loan estimation.
Kiatnakin Bank Public Company Limited
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Securities Business 1. Securities Brokerage Service KKS is member no. 19 of the Stock Exchange of Thailand (Broker no. 19) providing a brokerage service for securities trading to Thai and foreign clients, both private and institute investors. Services offered include securities trading via sales agents (trade order through trade floor) for both cash and credit balance accounts and internet trading account. 2. Securities Trading Service KKS invests in bonds issued by the government, state enterprise and private sector as well as equity securities such as shares. The investment is for both short and long terms with a clear policy framework and risk management with regular revision of investment policy in order to keep up with the current situation and market conditions. 3. Investment Advisory Service KKS offers advisory service, feasibility study and consultation on listing of securities such as equity in the Stock Exchange of Thailand and other secondary markets as well as seeking Joint Venture Partners and Merger and Acquisition. 4. Securities Sales Service KKS offers securities sales and sales guarantee services (ordinary share, preference share, debenture, warrant, mutual fund investment units, etc) for securities issuing company for further dispersion to general investors. 5. Future Contract Brokerage KKS was granted a derivatives agent license by the Securities and Exchange Commission (SEC) and has become a member of Thailand Future Exchange and Thailand Clearing House Company Limited where as the brokerage service on TFEX has begun since 2006.
Revenues Structure
The majority of Kiatnakin Group’s revenues derived from commercial banking activities, of which 50 percent of total assets come from hire-purchase; and from investment business (debt management business) which is obtained from the Asset Management Fund managing auctioned properties from the Financial Restructuring Agency and the Legal Execution Department.
Hire-Purchase
2.6 Billion Baht 28%
Residential Project Development Lending
0.7 Billion Baht 8%
Business Lending
1.0 Billion Baht 10%
4.1 Billion Baht 45%
Debt Management
1.0 Billion Baht 9%
Others and Securities Business 2.2 Billion Baht 18 % 1.7 Billion Baht 14 %
1.2 Billion Baht 10%
0.7 Billion Baht 8%
1.0 Billion Baht 11%
2.3 Billion Baht 23%
0.8 Billion Baht 8%
2009
2010 4.9 Billion Baht 45%
1.2 Billion Baht 12%
6.1 Billion Baht 49 %
2008
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Annual Report 2010
Business and Competition Banking Business Total Assets At the end of 2010, a total number of Thai commercial banks stood at 13. The combined total asset of the 11 listed commercial banks was 9.6 Trillion Baht, of which 70 percent or 6.8 Trillion Baht were from a total asset of the 4 large scale banks, whose assets accounted for over 10 percents of the commercial bank’s grand total. The total asset of large scale commercial banks has increased by 11 percent from the previous year. The 3 medium scale banks (with a total assets ratio over 3 percent and under 10 percent) had combined total assets of 2.3 Trillion Baht or 25 percent of the grand total with a 31 percent growth from the previous year. The remaining 4 small scale banks (with total assets ratio less than 3 percent) had a combined total asset of 0.5 Trillion Baht or only 5 percent of the grand total with a 15 percent growth from the previous year. At the end of 2010, Kiatnakin Bank Public Company Limited, belonging to the small scale bank group, had a total asset of 141.9 Billion Baht or an increase of 11 percent. The Bank was ranked no. 9 in terms of total assets which accounted for 1.5 percent of the total commercial banks’ assets. Large-scale Banks 0% .
25% 2.3
Medium-scale Banks Small-scale Banks
5% 0.5 Trillion baht
Total Loans At the end of 2010, the total accrued loan of the Thai commercial banks stood at 6.6 Trillion Baht, an increase of 15.7 percent from the previous year. The large scale bank had a combine accrued loan amount of 4.6 Trillion Baht or an increase of 11.6 percent which accounted for 70 percent of the grand total. The medium scale banks had a combine accrued loan amount of 1.6 Trillion Baht or an increase of 27 percent which accounted for 24 percent of the grand total. Meanwhile, the small scale banks had a combined accrued loan amount of 0.4 Trillion Baht or an increase of 21 percent which accounted for 6 percent of the grand total. The Bank, as of end of 2010, had the accrued loan amount of 107.7 Billion Baht or a 23.7 percent increase which was higher than that of the industry and accounted for 1.6 percent of the grand total. 0% 4.
Large-scale Banks Medium-scale Banks
24% 1.
Small-scale Banks
% 0.4 Trillion baht
Kiatnakin Bank Public Company Limited
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Total Deposit As of 2010, the total deposit of the Thai commercial banks was 6.6 Trillion Baht, or an increase of 9.8 from the previous year. The large scale banks had a combine deposit of 4.8 Trillion Baht, an increase of 5.9 percent which accounted for 73 percent of the grand total. The medium scale banks had a combined deposit of 1.5 Trillion Baht, an increase of 27.5 percent which accounted for 23 percent of the grand total while the small scale had a combined deposit of 0.3 Trillion Baht, a decrease of 2.5 and accounted for 4 percent of the grand total. In 2010, the interest rate was relatively low yet with positive outlook rendering the commercial banks to intensively mobilize deposit and offered various depository products to attract depositor. As of 2010, the Bank had a total deposit of 75.9 Billion Baht, a decrease of 0.2 percent which was higher than that of the industry since the Bank mobilized more deposit via debenture.
Shareholders’ Equity
73% 4.8
23% 1.5
Large-scale Banks Medium-scale Banks Small-scale Banks
4% 0.3 Trillion baht
At the end of 2010, the Thai commercial banks had a combined shareholders’ equity of 940.17 Billion Baht, an increase of 13.9 percent from last year. The large scale banks had a combined shareholders’ equity of 658.02 Billion Baht, an increase of 12 and accounted for 70 percent of total shareholders. The medium scale banks had a combined shareholders’ equity of 220.67 Billion Baht, an increase of 18.2 percent and accounted for 24 percent of total shareholders. The small scale banks had a combined shareholders’ equity of 61.47 Billion Baht, an increase of 19 percent and accounted for 6 percent of total shareholders. The increment of shareholders’ equity was a result from improved performance yielding an increased accumulated profit. As of end of 2010, the Bank had a total shareholders’ equity of 20.91 Billion Baht, an increase of 16.5 percent and accounted for 2.2 percent of the total of the industry.
70% 658,021
24% 220,677 6% 61,472
Million baht
Large-scale Banks Medium-scale Banks Small-scale Banks
Annual Report 2010
Hire-Purchase Business Year 2010 is viewed as a golden year of automobile industry as various automobile companies launched their new models into the domestic market rendering an increase in alternatives for consumers coupled with an economic recovery. Even though, Thailand has seen some domestic disruptions mainly related to politics that posed as risk factors for the consumer’s confidence, the overall mood has been normalized which has in turn led to an increased demand for consumption. External factors affecting the Thai automobile industry were partly direct foreign investment which led to increased money supply in the system yielding positive impact on automobile credit loan; and partly from the fact that Thailand is the crucial manufacturing base for exportation of the region yielding further growth of the industry. The oil price in 2010, on the other hand, was not a risk factor with significant impact on the industry as the current oil price has not been sharply increased nor greatly fluctuated as before. Additionally, alternative fuel vehicles have been introduced into the market. All of the aforementioned factors led to an increase in hire-purchase applications. The total sales volume in 2010 was 800,357 units, an increase from 548,871 units in the previous year or 45.8 percent. Of which 346,644 units were passenger cars or a 50 percent increase from last year while the sales of commercial vehicle was 453,713 units or an increase of 42 percent. Regarding the number of hire-purchase customers of the top 6, it was found that the total accrued amount was 686.57 Billion Baht, an increase of 16.5 percent. At present, the Bank’s market share ranked 5th in the hire-purchase loan segment of the banking group, exclusive of captive loan by automobile companies. The top 5 were 1) Thanachart Bank; 2) Bank of Ayudhaya; 3) Tisco Bank; 4) Siam Commercial Bank and 5) Kiatnakin Bank. Thanachart bank had a market share of 34.9 percent while Kiatnakin 11.2 percent whereas the volume of hire-purchase debtors increased by 28 percent which reflected the Bank’s ability in credit loan. As for the outlook of 2011, it was expected that the hire-purchase loan application would continue to rise, yet at not an acute rate as in 2010. This is because in 2011, there will be a slowdown of domestic and foreign demand withheld by household consumption despite various consumption stimuli. There would still be consumer concerns over economy instability following a general increase of price while income has been increased with a lesser proportion leading to a decrease of actual income. With such, household consumers would be more cautious on their spending. The public sector’s investment would be lessened and net product exportation and service would reduce compared with the same period last year.
250,000
2010
239,943
2009
211,564
Million Baht
TCAP
BAY
TISCO
SCB Leasing
KK
53,908
77,020
40,603
50,000
60,119
83,093
106,168
63,254
100,000
86,632
150,000
126,444
200,000 111,794
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KBANK
Kiatnakin Bank Public Company Limited
Residential Project Lending Residential Market Analysis for 2011 The overall climate for real estate business in 2010 changed rapidly depending on affecting external factor in each quarter. In Q1, the real estate entrepreneurs benefitted from the expiring tax measures which encouraged sales volume and transfers. Nonetheless, Q2 saw a sluggish movement due to political situation before beginning to show positive recovery following a positive growth of an overall domestic economy. Nonetheless, there were also negative factors hindering such intense growth. The increment of policy interest rate by the Monetary Policy Committee of the Bank of Thailand in Quarter 3, for instance, has led to potential adjustment of interest rate in depository market and credit of financial institutes accordingly. Such movement had direct impact on the entrepreneur’s cost and interest burden for house buyers. The determination of Loan to Value ratio (LTV) as a preventive measure for bubble condition in the real estate business of the Bank of Thailand in Quarter 4 would have consequences in 2011. The measure, effective from January 1, 2011, would be imposed mainly on the residential loan under 10 Million Baht in which loan for condominiums cannot be over 90 percent of the collateral value or borrower must pay a down payment of 10 percent. The horizontal residential project, on the other hand, still enjoys the 95 percent credit limit over collateral value. The entrepreneurs, undoubtedly, have to adjust in accordance to the said measure. Nonetheless, the overall market as of 2010, if considering from the new market supply figure (residential only), can be seen that the total figure was 107,508 (F) units, an increase from 57,604 units for 2009 by 86 percent. Sales volume has likewise increased substantially whereas the total sales volume as of 2010 was 100,339 (F) units, an increase of 70 percent from 2009. Projects with high demand and supply were still condominiums with a new market supply of 59,659 (F) units and the sales volumes of 53,454 units or 53 percent of total sales volume in 2010. Thereafter was townhomes with a sales volume of 27,728 units or 27 percents of total sales. Units % 500,000 50 46% 46% 41% 400,000 40 37% 37% 36% 35% 300,000 30 200,000 20 100,000 10 0 0 2004 2005 2006 2007 2008 2009 2010 Total Supply New Supply Units Sold (%) of Sold Supply and Sales Volume of Residential Market, 2004 - 2010 (Source: Agency for Real Estate Affairs Co., Ltd.) As for the outlook of residential market in 2011, there would be a continuity of development for residential projects, condominiums and horizontal residence, by major listed companies, medium and small sized entrepreneurs. The volume and size of the projects may, however, be moderated accordingly to the negative factors affecting the real estate business including
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Annual Report 2010
tendency for rising interest estimated to be adjusted by 0.75 percent in 2011; confidence of consumers affected by the warning signal for bubble condition in real estate business from the Bank of Thailand; tendency for increase in oil price and construction materials; and the implementation of LTV measure to control relaxation of down payment from the financial institutes. All these would lead to lesser new supply than in 2010. Nonetheless, condominium projects would still be the group with entering supply, yet at lesser extent than last year. Location with over supply would see some decelerations whereas projects tend to spread to outer areas along new electrified train lines currently under construction and provide low-end condominiums in expanding communities. Such movement would lead to moderation of average unit price in the condominium market. It is seen that condominium projects still demanded by the market would be in a price range of 1 - 3 Million Baht. As for the horizontal residential project, namely townhomes, it is estimated to see the most number of entering supply, particularly townhomes with a price range of 1 - 2 Million Baht. Major entrepreneurs in the market are expected to embark on more development in this segment. Townhomes with a price range of 2 - 4 Million Baht would also be sought after, yet depending on individual project’s location. In the detach house segment, on the other hand, it is expected to see lesser number of new project launched in order to sell off remaining units in the market. Sales volume is also forecasted to reduce by 8 - 10 percent from 2010 following changes in consumers’ behaviors. The price range seen desirable by the market would be under 3 Million and 3 - 5 Million Baht. On the issue of potential for bubble crisis for an overall real estate business, it is argued as unlikely to happen in 2011 when considering the ratio of new demand and supply in 2010 which has been steady since 2008. In 2008 and 2009, the average new selling units in the market were 60,000 - 70,000 units while numbers of unit sold were 60,000 - 70,000. The estimation at the end of 2010 showed the number of new units for sell in the market at 100,000 units while the sales volume was also estimated at approximately 100,000 units. When considering the current over supply with the estimation at year end of 116,000 units, it was found to be at a lower level than before the last bubble crisis and was manageable by the entrepreneurs. There might be slight incident of over supply in some locations caused by a larger number of entrepreneurs than necessary. Nonetheless, without the bubble economy crisis at present, entrepreneurs should cautiously consider alternatives in project development for 2011.
Deposit Business
In 2010, the deposit volume in the industry showed a minimal growth while competition trend was geared toward ease of service usage, product variety and standardization of service better responded to the lifestyle of customers of modern days. Kiatnakin has seen continuous growth of deposit volume according to its organizational growth. As of December 31, 2010, the Bank had a total deposit and Bill of Exchange (BE) of 101.97 Billion Baht and 88,088 accounts in total, an increase of 81 percent from 2009 or over 39,000 accounts. Such increase was in accordance with the expansion of customer base strategy via continuous opening of new branches to accommodate business expansion and increase of competitiveness for the future. Moreover, the Bank has also developed and modernized its service procedure to enhance customer’s convenience as well as developed electronic channel to an international standard in order to accommodate complete financial transaction. Overall, Kiatnakin Bank has a persistent good performance together with the development and growth amidst the server competition environment which unarguably reflects the Bank’s exceptional competitiveness.
Competitive Strategy
The Bank emphasizes on segmentation of deposit market particularly an expansion of medium scale customers with a depository base of 0.1 - 10 Million Baht. Meanwhile, the Bank also concentrates on building a rapport with customers via the ‘Priority Banking’ program rendering myriad of privileges and customer relations activities. As for the marketing strategy, the Bank carried out a strategy of worthy and attractive interest to induce the customers. As for service channel, the Bank’s consideration is based on density of target customers in the area prior to opening up a branch to enhance convenience of service. There is also a tendency to open an integrated branch providing service 7 days/ week in leading business areas and department stores. At present, the clients could access the Bank’s service via 61 branches
Kiatnakin Bank Public Company Limited
nationwide (as of December 31, 2010), over 60 percent of which are open for service on Saturdays. Additionally, the Bank also offers electronic service via KK ATM , KK - eBanking and KK SMS Alert.
Securities Business
In 2010, the financial crisis in the United States of America and Europe has caused the influx of foreign capital into Asia which was one of the crucial factors leading to a sharp increase in the Stock Exchange of Thailand’s index (SET index) from the previous year. At the end of 2010, the market closed at 1,032.76 points with the highest point at 1049.79 and lowest at 685.89 points, while in 2009, SET index closed at 734.54 points with highest being 751.86 and lowest 411.27. As for Mai market in 2010, the index direction was in accordance with that of SET index as it closed at 272.79 points which was the highest for the year while the lowest being 199.21 points. In 2009, mai index closed at 215.30 points with the highest being 217.83 and lowest 148.96. With regards to trade value, in 2010, a combined daily average in SET and mai was 29.06 Billion Baht, an increase of 59.5 percent from 2009 in which the daily average of securities trading was 18.22 Billion Baht. When considering ratio of securities trading for each investor category in 2010, it could be seen that domestic investor was still the group with the highest trade value, accounted for 62 percent of the total, an increase from 2009 wherein the ratio was 61 percent. Second was foreign investor with a trading ratio of 18.4 percent, a decrease from 19.4 percent of the market. Securities firm and institution investors have a trading ratio of 12.0 and 7.6 percent respectively. Nonetheless, the trading value of foreign investor in 2010, though declined from the previous year, was equivalent to a net purchase of 81 Billion Baht. They were also the only group with net purchase status while the others with net sales status. The domestic investors had the highest net sales value of 66 Billion Baht; institution investor 15 Billion Baht; and securities companies 400 Million Baht. The TFEX market in 2010 was seen to grow substantially from 2009, with a total trading of 4.5 Million contracts, an increase of 47 percent from 2009 with a total trade of 3.1 Million contracts. Capital mobilization through the Stock Exchange of Thailand in 2010 showed a total of 15 companies which was lesser than in 2009 wherein 22 companies did so. Nonetheless, the capital mobilization value in 2010 increased by 31 percent or an equivalent of 12 Billion Baht while the value of 2009 was only 9.2 Billion Baht.
Outlook for Securities Business in 2011
As for 2011, it has been predicted that the economy would recover continuously. There is also a tendency for an inflow of foreign capital into the Stock Market of Thailand and trade value has been expected to improve from the previous year. However, 2011 would be the last year with sliding scale commission calculation as liberation of commission fee would be put in place in 2012, requiring securities companies to prepare for an even more severe competition. The Bank is of opinion that preparation would be an increment of revenue seeking channel and expansion of customer base via new products and services such as derivative and warrant which were expected to be issued by securities companies. As for the investment banking, the economic recovery would induce more capital mobilization in the Stock Exchange of Thailand as well as securities with higher mobility value into the market than the previous year. Nonetheless, financial advisory service would dominate the investment banking similarly to last year. The business of TFEX is expected to grow from last year as TFEX could be employed as a channel to distribute investment risk in the stock market. Moreover, in 2011, TFEX would introduce new products which were ‘Silver Futures’ and ‘Oil Futures’ into the trading arena. TFEX has also placed importance on enhancement of liquidity of current products and estimated that the daily trade volume would increase to 20,000 contracts per day.
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Annual Report 2010
Risk Management and Risk Factors
The Bank acknowledges risk factors, both internal and external, that may affect its operation such as changes in the economy, industry, the environment or business operational procedures. In this regard, the Bank has placed importance on regular and continuous risk management with a Risk Management Division which is an independent unit to regulate and support the risk management practice of the Bank and subsidiaries. The Bank’s Risk Management Committee plays a crucial role in determining risk management policy, revising adequacy of policy and risk management system as well as supervising and monitoring risk volume of the Bank to be at a level cohesive to the Bank’s risk appetite. The aim is to maintain all risks within an acceptable boundary and conduct business at a suitable rate of return. The Bank’s key policy for risk management is to manage overall risk of the Bank and subsidiaries. The Bank as a mother company is responsible for risk management centralization to ensure its appropriateness and effectiveness whereas each business and its
Kiatnakin Bank Public Company Limited
respective divisions are required to understand their risks and manage them sufficiently, rightly and effectively under the centralized framework and risk management policy of the Bank. The Risk Management Department plays a role to regulate and examine to ensure that each business line and unit have sufficient risk management and control system. Furthermore, there is an allocation of fund suitable to revenues and risk of such business line based on operational risk and business damages that may inflict the determination of revenue-generating policy of such business. The Bank’s risk management conforms to the guidance of the Bank of Thailand and expands to its business group, Kiatnakin Securities Co., Ltd. The five aspects of risk are as follows: 1. Strategic Risk 2. Credit Risk 3. Market Risk 4. Liquidity Risk 5. Operational Risk
Risk Factors in 2010 and Risk Projection for 2011
2010 was the year in which the Thai economy began to recover from foreign financial crisis in 2008 and high monetary influx from the United States of America and Europe which has high fluctuation tendency. The risk policies of the Bank were therefore to: 1. Cautiously increase credit in industry that may be widely affected by the influx of currency with fluctuation. 2. Provide sufficient capital to accommodate any crisis that may arise. As for 2011, an overall economic situation will regain more equilibrium with a more stabilized risk conditions while the economy shows more stability signs. Nonetheless, the Bank sill continuously and cautiously carries on the risk policy while having a plan to develop more efficient database and risk management tools as well as integrate risk management into every step of business operation. Furthermore, the Bank has also assessed business scenario and prepared responding plan for unexpected crises. The Bank also adheres to the risk management principle of maintaining high liquidity, good credit procedure and secure capital management.
Strategic Risks
Strategic risk arises from the derivation of strategic plan and implementation that are improper or inconsistent with the strategies, policies, organizational goals, competition and resources of the organization, which would eventually affect the revenues and capital of the Bank. This is a result from both internal and external factors. The Bank has a policy on being a specialized bank focusing on hire-purchase, residential project lending and investment management business to achieve expertise and competitiveness in that business. With that strategy, the Bank therefore has the following risk control measures:
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Annual Report 2010
1. Maintain Capital Adequacy Ratio (CAR) at an adequate level to respond to the impact of business concentration of the Bank and fluctuation of future incomes. Nonetheless, the Bank maintains a higher ratio than the average industrial level. As of December 31, 2010, the ratio was 15.18 percent, higher than the 8.5 percent as per the Bank of Thailand’s guidance, or a capital sum of 18,829 Million Baht. 2. Minimize market and liquidity risk while addressing the credit risk with the Bank’s long-standing expertise. 3. Control the diversification of present core business of the Bank at an appropriate level while seeking potential new core business (details in the Credit Risk section).
Credit Risk
Credit risk is a risk wherein a debtor is unable to fulfill the terms and conditions of a contract making him unable to repay the due debt or intends to default the contract. Should the credit risk occur with uncertainty, the Bank would have to increase its provision which would affect its net profit and capital fund. At present, the Bank’s loan consists of 71.5 percent hirepurchase loan, 14.6 percent residential development project and 13.9 percent commercial loan (of which 3.5 percent are restructured capital loan and other loans). Non performing loan (NPL) amounted to 4,968 Million Baht or 4.43 percent of the total loan. Hire-purchase is business with low fluctuation and high growth rate, yet, the competition in terms of service and interest rate is visibly high. However, it is a business wherein the risk is self-distributed. Major risk factors would arise from changes in economy, laws and automobile industry which would affect the repayment ability of debtors as well as policy and business operation of the Bank. Business Loans 13.9%
Others 3.5%
Residenticl Project Loans 14.6% Hire Purchase Loans 71.5%
As of end of 2010, the Bank has accrued non-performing hire-purchase loans of 863 Million Baht or 1.1 percent of the total hire-purchase loan. At the end of 2010, for the residential development project, the Bank had a total NPL of 2.76 Billion Baht or 17.5 percent of the total, a decrease of 693 Million Baht or 20.1 percent from end of 2009. The majority was NPL from loan concluded before 2006 prior to a tightening of loan policy. The Bank has also gradually resolved the problems leading a continuous decrease of NPL volume.
Kiatnakin Bank Public Company Limited
The residential project Lending risk management therefore focuses on the selection and approval process for projects with potential and prospect of success within the current and forthcoming market conditions. Additionally, the Bank also looks for dispersion of projects and product characteristics. Determination of return is based on an apparent credit risk level to reduce impact from changes in real estate environment, competitors and consumers. Meanwhile, verification of credit quality focuses on suitability with loan limit of each group along with close monitoring of subprime loan. The Bank has tightened its commercial lending and residential development project loan policies leading to better quality of new loans and appropriate dispersion of project location in consistent with the market conditions. Commercial lending is loan granted to business related to the Bank’s core credit groups including apartment, car dealing, logistic, and printing and packaging loans. Nonetheless, the Bank is of opinion that these loans have the potential to yield positive performance and continuous growth for the Bank. At the end of 2010, the accrued commercial loan was 11,151 Million Baht, an increase of 2,713 Million Baht from 2009 or 32.2 percent. Non performing loan was 433 Million Baht or 3.9 percent of the total commercial loan. Credit claim management is a business with volatility of cash flow, debt restructuring period and collateral value. The success of which therefore depends upon ability and efficiency of restructuring process that is appropriate to the repayment ability of debtor and credit collateral as well as internal and external legal process. With regards to overall concept for business lending, the Bank, with realization of such business fluctuation, has placed importance on selection of quality loan process and high level of capital reserve and provision for doubtful debt. At the end of 2010, the doubtful debt provision was 85.24 percent of total NPL, along with close debt collection and management and legal execution. The Bank also allocated provision of devaluation of assets and depreciation of NPA at rates higher than standard to sufficiently accommodate impact from changes in economic environment with impact on the business.
Market Risk
Market risk is the risk caused by movement of interest rate, foreign exchange rate and debt instrument prices in both money and capital markets that have impact on the financial performance of the Bank. Since the above mentioned are market risk factors that have direct impact on the Bank’s status and performance, policies have been crafted to ensure set of operations to minimize such fluctuations. With realization on the importance of interest rate variability which has direct effect on net interest incomes, the Bank’s executives have therefore assigned the Assets and Liability Management Committee (ALCO) to monitor and control their impact through the adjustment of terms and time period for restructuring of liability interest rate in accordance with assets. Monitoring tools have also been used by ALCO, for example, to track and measure impact on net interest incomes under simulated scenarios within the specific time period. The practice has resulted in low market risk for the Bank. For instance, should the interest rate increases by 1 percent, the Bank’s net interest incomes would reduce by only 139.06 Million Baht or 2.26 percent of estimated net interest incomes for 2011. Due to the fact that ratio of foreclosed assets when compared to the Bank’s overall assets is relative high, the real estate market price therefore has an effect on the status and performance. Though the past sales records showed that selling prices were relatively close to the appraised ones, the Bank still strictly adheres to the bookkeeping policy of provision for sliding scale devaluation of assets throughout the term of tenure. As of December 31, 2010, the Bank has a book recorded foreclosed assets of 7. 7 Billion Baht whose appraised prices were at 13.8 Billion Baht or 179 percent of the book recorded value.
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Annual Report 2010
At present, the Bank has neither significant transaction nor impact from the foreign exchange rate as well as no investment in securities for trading. The Bank instead reports on the daily market value for investment in security available for sale and specifies loss threshold to minimize impact.
Liquidity Risk
Liquidity risk is the risk wherein the Bank may be unable to fulfill its obligation within a specified time period. The objective of liquidity risk is to ensure that the Bank holds appropriate and adequate capital to pay or repay its current and future obligation while being able to suitably utilize such capital to yield benefits during positive market climate. The Bank fully realized parameters of its small size and credit portfolio that concentrates on certain industries. When coupled with the fact that cash inflow from real estate and return on investment in credit claim business are highly fluctuated and unpredictable and cash outflow from deposit withdrawal, the Bank may be affected from future changes in laws relating to deposit protection. In this regards, the Bank has cautiously carried out liquidity risk management as well as assessed the situation and conducted activities to minimize the impact on a continuous basis. The liquidity risk management of the Bank is under the supervision of the Assets and Liability Management Committee (ALCO) who has strictly and continuously carried out policies to maintain and manage the Bank’s liquidity to ensure appropriate liquidity level which are as follows: • Maintenance of high level of liquidity on a continuous basis • Control difference between Liabilities and asset at an acceptable level • Maintenance of high long-term liabilities ratio • Maintenance of distribution of liability genres • Expansion of deposit base both major customers and dispersion of due date period • Provision of contingent liquidity reserves.
Operational Risk
Operation risk can occur from defect within the internal operational system or procedure, human error at both employee and management level or failure of operation levels caused by external parameters. In the operation of the Bank, there exist potential of operation risk in all work procedures which could cause damage to the business, hence the importance of operational risk management. The objectives are to minimize operational losses, improve efficiency of work process and enhance efficiency of internal audit via consideration of impact from operation risks. The practice could increase value for shareholders and competitiveness of the Bank. In the past year, the Bank has emphasized on the development of operational risk management in the following aspects: • Development of work process and improvement of internal work procedures on a continuously basis to increase business operational efficiency of the Bank. There is a dedicated unit to study, analyze and recommend work process improvement across the organization to encourage betterment of service and maximum operational efficiency and effectiveness.
Kiatnakin Bank Public Company Limited
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• Derivation of risk controlling and monitoring plan which is a continuous process upon the completion of risk information database system (risk identification and assessment) from all units to rectify and prevent causes of risk as well as communication practice to suppress recurrence of such incident in other units. • Risk assessment and consideration for new financial product services and work process to ascertain that related risks are at acceptable level together with suitable risk controlling process prior to actual launch of service. • As for management of business continuity, the Bank has continuously set up a policy and action plan for business operation to ensure that in case of any calamity the Bank is still able to continue significant service or resume its operation within an appropriate period. Moreover, the Bank has tested and revised the said plan regularly to ensure its efficiency and applicability. • The Bank has also placed importance on the provision of fraud from external party by setting up a dedicated unit to monitor and examine irregular risk factors in retail credit division to prevent and promptly mitigate potential damage. • Communication of knowledge on operational risk management by both internal and external speakers on a continuous basis to raise awareness of all related parties on the potential risk in their work process. As of December 31, 2010, the Bank has maintained the capital requirement for operational risk in accordance to the Basel II under the Basic Indicator Approach (BIA) a total of 1,114 Million Baht. The Bank has initiated the Internal Capital Adequacy Assessment Process (ICAAP) which is a part of Basel II Pillar 2 capital requirement guidance. The project aims to cover all significant risks which are credit concentration risk, interest rate risk on banking book, liquidity risk, strategic risk and reputation risk. Additionally, the Bank has also considered risks that may arise during crisis which are credit concentration risk, interest rate risk on banking book and liquidity risk by assessing risk and impact on capital fund as well as drawing up responsive plan for each risk. The policy, process and operational steps have been put down in writing and approved by the Board of Directors. The aforementioned project is scheduled to commence within the first quarter of 2011.
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Annual Report 2010
Management Discussion and Analysis
The Management Discussion and Analysis compares Kiatnakin Bank Public Company Limited and subsidiaries’ consolidated financial performances and financial status for the year 2010 with those of the year 2009 financial statements. This report discusses principal changes in the audited consolidated financial statements.
1. Business Policy in 2010 Kiatnakin Bank’s business policy in 2010 is to focus on loan growth and asset quality improvement. Additionally, the Bank targeted to expand deposit base nationwide through bank branches and to emphasize on wealth management business. The Bank’s operating performance comparing with the target is as follows; Type of assets
Hire-purchase loans Residential project loans General loans Total loans
Growth rate (%) Target 2010 31 Dec 2010 15-20 0-5 25-30 10-15
28.1 3.8 33.0 23.7
NPL (%) Target 2010 31 Dec 2010
Less than 2.0 Less than 20.0 Less than 3.0 Below 6.0
* NPLs/Gross loans excluding interbank
The Bank opened 16 new branches, adding to totally 61 branches at the end of 2010.
1.1 17.5 4.5 4.6*
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2. Summary of Performance of the Bank and Subsidiaries 2.1 Operating results of the Bank and subsidiaries, comparing the financial performance 2010 with 2009, the consolidated net profit totaled Baht 2,840 million, rose by 27.4% yoy, compared with the net profit of Baht 2,229 million for the year 2009. Interest and dividend income increased by 5.6% yoy following loan expansion of 23.7% from the end of 2009. Also, loan spread rose significantly this year as a result of a large drop of cost of fund while loan yield remained continually high. According to success in asset quality control and management, the Bank’ NPLs were Baht 4,968 million, or 4.43% of total loans based on the Bank of Thailand’s definition, declined from Baht 5,442 million or 5.64% of total loans at the end of 2009. However, the Bank set aside additional general provision of Baht 340 million, raising the loan loss reserve to NPLs (coverage ratio) to 85.1%, hence net interest income after provision increased by 19.2% yoy. Non-interest income was Baht 3,455 million, rose by 94.3% yoy from gain from sale of foreclosed assets increased by 114% yoy as a results of the Bank’s promotion and campaign to stimulate NPA sales this year. Meanwhile, fee and service income also increased by 32.0% yoy, mostly coming from bancassurance business, gain on disposal investment in securities increased by 1325% yoy and brokerage fee income increased by 28.9% yoy following trading volumes in the capital market. However, in 4Q10 the Bank recorded the special expenses from the legal issue with the Legal Execution Department in foreclosed assets bidding process amounting Baht 583 million. Meanwhile the Bank, as a creditor in the collateral pool of such foreclosed asset, recorded the reversion of impairment of investment in loan, making net gain on impairment of investment in loans amounting Baht 166 million. Basic and diluted earnings per share for the year 2010 equaled to Baht 5.20 and Baht 4.97 respectively. Book value was Baht 36.51 per share. The return on equity (ROE) was 14.7%, and the return on assets (ROA) was 2.1%. Table 1 : Revenue Structure
Type of revenue
Interest and dividend income Interest expenses Net Interest and dividend income Non-interest income Total income before bad debts and doubtful accounts Bad debts and doubtful accounts Loss on debt restructuring Total income - net of bad debts and doubtful accounts Non-interest expenses Income before income tax and minority interest Corporate income tax Income before minority interest in subsidiaries Minority interest Net income Basic earnings per share Diluted earnings per share
4Q10 4Q09 YoY 2010 2009 YoY (million baht) (million baht) % (million baht) (million baht) %
2,401 (735) 1,666 1,372
2,569 (6.5) (723) 1.7 1,846 (9.8) 498 175.7
8,841 (2,650) 6,191 3,455
8,376 5.6 (3,039) (12.8) 5,337 16.0 1,779 94.3
3,038 (107) (7)
2,344 29.6 (579) (81.6) (2) -
9,647 (614) (32)
7,116 35.6 (683) (10.0) (2) -
2,925 (1,954) 971 (466) 505 (14) 491 0.90 0.86
1,763 65.9 (964) 102.7 799 21.5 (298) 56.0 501 0.9 (1) 1,160.1 499 (1.7) 0.95 0.95
9,000 (4,920) 4,080 (1,213) 2,866 (26) 2,840 5.20 4.97
6,431 39.9 (3,334) 47.6 3,097 31.7 (866) 40.0 2,231 28.5 (2) 1,091.9 2,229 27.4 4.26 4.26
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Annual Report 2010
2.2. Items in the Income Statement 2.2.1 Interest and dividend income was Baht 8,841 million, rose by 5.6% yoy, attributable mostly to interest income from hire purchase business. Interest income from hire purchase and financial lease income increased by 15.4% yoy, interest income from loans was up 10.4% yoy. Meanwhile, interest income from investment, which is depending on success of debt restructuring and litigation process, declined by 43.9% yoy and interest and dividend income on securities reduced by 40.1% yoy mainly from investment in fixed income. 2.2.2 Interest expenses were Baht 2,650 million, declined by 12.8% yoy, mainly due to the benefit from re-pricing because of long average days to maturity of deposits and borrowings. Meanwhile, the Bank is still focus on deposit base expansion to support business growth and strong liquidity by launching attractive promotions. 2.2.3 Net interest and dividend income was Baht 6,191 million, rose by 16.0% yoy. Yield on loans was 7.9%, while cost of fund was 2.5%. Therefore, loan spread stood at 5.5% rose from 5.0% in 2009.
Table 2 : Interest spread Yield on loan Cost of fund Interest spread
2009
1Q10
2Q10
3Q10
4Q10
2010
8.0 3.0 5.0
8.0 2.4 5.6
7.8 2.3 5.5
7.9 2.5 5.3
8.1 2.6 5.5
7.9 2.5 5.5
2.2.4 Bad debt and doubtful accounts and loss on debt restructuring, according to success in asset quality control and management, the asset quality improved with NPL ratio decreased continually. The Bank set provision for bad debts and doubtful accounts totaling Baht 275 million. However, the Bank set aside additional general provision of Baht 340 million, adding total general reserve of Baht 1,124 million and raising up the coverage ratio to the same level as the average of the commercial banking industry. The Bank recorded loss from troubled debt restructuring of Baht 32 million for the year 2010. 2.2.5 Non-interest income totaled Baht 3,455 million, increased by 94.3% yoy, from gain from sale of foreclosed assets amounting Baht 1,483 million, increased by 114% yoy. The fee and service income from banking business was Baht 835 million, up 32.0% yoy, mainly from bancassurance business, while gain on disposal investment in securities was Baht 328 million increased by 1325% yoy, and brokerage fee income was Baht 421 million, up 28.9% yoy following trading volumes in the capital market. Moreover, the Bank recorded the net gain on impairment of investment in loans at the amount of Baht 166 million as mentioned above. 2.2.6 Operating expenses were Baht 4,920 million, rose by 47.6% yoy, largely increase in personnel expenses and branches expansion as a result of additional new branches and more staff, higher fee and service expenses following increasing business volumes, and the special expenses from the legal issue with the Legal Execution Department amounting Baht 583 million as mentioned above. Cost-to-income ratio was 50.6% accordingly. 2.2.7 Corporate Income Tax was Baht 1,213 million, equivalent to the effective tax rate of 29.7% resulting from the special expenses as mentioned above which was not considered as tax expense. 2.3. Financial Status of the Bank and Subsidiaries 2.3.1 Total Assets, as at 31 December 2010, were totally Baht 141,900 million, up Baht 14,486 million or 11.4% yoy. Total loans and receivables grew by 23.7% yoy from Baht 87,117 million to Baht 107,726 million, mainly from hire-purchase loans, which increased by 28.1% ytd. Additionally, net investment in loans increased by 48.1% yoy from the purchase of investment units of Gamma Capital Fund and Bangkok Capital Fund in 1Q10 causing an increase in net investment in loan and net foreclosed assets.
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Table 3 : Assets breakdown Assets Cash Interbank and Money Market items Investment in securities - net Investment in loans - net Investment in properties - net Loans Allowance for doubtful accounts General Provision Allowance for troubled debt restructuring Properties foreclosed - net Other assets Total Assets
31 December 2010 (million Baht) % 282 7,912 12,293 6,700 78 107,726 (3,109) (1,124) (2) 7,736 3,408 141,900
0.2 5.6 8.7 4.7 0.1 75.9 (2.2) (0.8) (0.0) 5.5 2.4 100.0
31 December 2009 (million Baht) % 229 11,017 18,219 4,523 78 87,117 (2,986) (784) (26) 7,215 2,813 127,414
0.2 8.7 14.3 3.6 0.1 68.4 (2.3) (0.6) (0.0) 5.7 2.2 100.0
Change (%) 23.1 (28.2) (32.5) 48.1 0.0 23.7 4.1 43.4 (93.6) 7.2 21.2 11.4
The Bank’s gross non-performing loans (gross NPLs) to total loans, based on the Bank of Thailand’s definition, declined to 4.43% from 5.64% at the end of 2009, while the ratio of NPLs net of provision (net NPLs) to total loans remained at 2.62% compared to 3.49% at the end of 2009. The Bank only’s allowance for bad debt and doubtful accounts amounted to Baht 3,103 million, general provision was Baht 1,124 million, and allowance for debt restructuring was Baht 2 million. 2.3.2 Liabilities were totally Baht 120,989 million, increased by Baht 11,521 million or 10.5% yoy. Total deposits were Baht 75,932 million, down 0.2% yoy, with current and saving accounts accounted for 6.3% of total deposits, down from 7.6% at the end of year 2009 partly resulting from the 4 month fixed deposit campaign of the bank. Meanwhile, total borrowings were Baht 35,307 million, up 35.5% yoy mainly coming from bill of exchanges (BE) and long-term debentures issued in 2010 totaling Baht 14,262 million. Loan to deposits and borrowings ratio was 96.8% compared with 85.3% at the end of 2009.
Table 4 : Liabilities breakdown Liabilities
Deposits Interbank and money market items Short term borrowings Long term borrowings Other liabilities Total Liabilities
31 December 2010 (million Baht) % 75,932 3,201 21,866 13,442 6,549 120,989
62.8 2.6 18.1 11.1 5.4 100.0
31 December 2009 (million Baht) % 76,109 3,648 18,729 7,334 3,647 109,468
69.6 3.3 17.1 6.7 3.3 100.0
Change (%) (0.2) (12.3) 16.7 83.3 79.6 10.5
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Annual Report 2010
Table 5 : Deposits breakdown 31 December 2010 31 December 2009 Change Type of deposits (million Baht) % (million Baht) % (%) Current accounts 254 0.3 452 0.6 (43.8) Saving accounts 4,553 6.0 5,323 7.0 (14.5) Term deposits 71,124 93.7 70,334 92.4 1.1 Promissory notes 0.4 0.0 0.4 0.0 0.0 Total deposits 75,932 100.0 76,109 100.0 (0.2) 2.3.3 Shareholders’ equity was Baht 20,911 million, up Baht 2,965 million or 16.5% ytd. This is attributable to an increase of 19.3% ytd or Baht 1,607 million to Baht 9,927 million of unappropriated retained earnings. On 20 May 2010, the Bank paid the remaining dividend for the financial performance 2009 at the rate of 1.25 baht per share, totaling 678 million baht and equivalent to dividend payout ratio of 49.0%. On 20 August 2010, the Bank paid interim dividend for the first half of 2010 financial performance at the rate of 1.00 baht per share, totaling 554 million baht. Moreover, the shareholder’s meeting approved the issuance of not more than 26,000,000 units of warrants for the purchase of the Bank’s ordinary shares, for allotment to directors and/or employees of the Bank and its subsidiaries. Therefore, the Bank reduced its registered capital from Baht 7,228,455,710 to Baht 6,700,999,870 for the unsold registered shares, and increased its registered capital to Baht 6,960,999,870 for the exercise of ESOP warrants totaling 26,000,000 units. On 18 August 2010, total 25,890,000 units of warrants for the purchase of the Bank’s ordinary shares (ESOP-W2) were allotted to the directors and employees of the Bank and its subsidiaries, the remaining of 110,000 units of warrants will be cancelled. Book value of the Bank and its subsidiaries as of 31 December 2010 was Baht 36.51 per share with total paid-up capitals of Baht 5,658 million. On 31 December 2010, the last exercise of KK-W#4 warrants was 68,500,036 units, equivalent to 68,500,036 shares totaling of Baht 1,337,805,703.08. The remaining of KK-W#4 was 158,811 units of warrants will be cancelled. These additional shares were available for trading on 13 January 2011.
3. Performance of Business Group The Bank and subsidiaries are still focusing on 5 main business groups including 1) hire purchase business, 2) residential project loans, 3) general loans i.e. SME loans and personal loans, 4) special asset management covering investment in loans and foreclosed assets, and 5) securities business. The breakdown of total loan portfolio is as follows; Table 6 : Loans breakdown 31 December 2010 31 December 2009 Change Type of loans (million Baht) % (million Baht) % (%) Hire purchase loans 77,020 71.5 60,119 69.0 28.1 Residential project loans 15,749 14.6 15,176 17.4 3.8 General loans 11,219 10.4 8,438 9.7 33.0 Financial claims and old loans 2,985 2.8 2,834 3.3 5.3 Other loans 754 0.7 550 0.6 37.1 Total loans and receivables 107,726 100.0 87,117 100.0 23.7
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3.1 Hire purchase business totaled Baht 77,020 million, up Baht 16,901 million or 28.1% yoy. New hire purchase business volume approved in 2010 equaled to Baht 37,872 million. The domestic car sales for the 12 months period was 800,357 units, up 45.8% compared with the same period of last year. The penetration rate of KK new car hire purchase to the domestic car sales for the 12 months stood at 5.2%. The NPLs of hire-purchase loan stood at 1.1%, down from 1.6% at the end of 2009. 3.2 Residential project loans were Baht 15,749 million, increased by Baht 573 million or 3.8% yoy. Meanwhile, the Bank still places great effort to help and support our customers in order to reduce NPLs. The NPLs stood at 17.5%, down slightly from 22.8% in 2009. 3.3 General loans were Baht 11,219 million, grew by 33.0%. General loans comprises of SME loans, which are loans offered to several business sectors including automobile business, apartment business, transportation business, and packaging and printing business, totaled Baht 8,035 million, up 29.2% yoy, and personal loans totaled Baht 3,184 million, rose by 43.4% yoy. The NPLs was 4.5%, increased from 3.0% in 2009 mainly increasing from apartment business lending. 3.4 Special asset management comprises of investment in loans totaling Baht 6,700 million, increased by 48.1% yoy, and net foreclosed assets amounting Baht 7,736 million, up 7.2% yoy as a result of the purchase of investment units of Gamma Capital Fund and Bangkok Capital Fund in 1Q10. Meanwhile, general commercial loans prior to financial crisis, and investments in financial claims restructured and transferred to loans were Baht 2,985 million, up 5.3% ytd. 3.5 Securities business operated by Kiatnakin Securities Co., Ltd., generated brokerage fee income of Baht 421 million, compared with Baht 327 million in 2009. The market share of Kiatnakin Securities in SET and MAI market was 1.51% in 2010, ranked 23 from total 35 brokerage houses, compared with 1.57% in 2009, ranked 25 from total 38 houses. Total trading volumes of Kiatnakin Securities were Baht 186,823 million in 2010, increaseing from Baht 135,984 million in 2009, while the total market trading volumes in 2010 were Baht 14,067,895 million. According to the Bank’s business strategy in 2010 during economic downturn to place great emphasize on asset quality control and management, the Bank’ NPLs were reduced, details are as follows; Table 7 : NPLs breakdown (Consolidated)
Type of loans
Hire purchase loans Residential project loans General loans Financial claims and old loans Total NPLs
31 December 2010 31 December 2009 (million Baht) % % of Loan (million Baht) % % of Loan 863 2,762 501 842 4,974
17.3 55.5 10.1 16.9 100.0
1.1 17.5 4.5 28.2 4.6
986 18.1 3,455 63.4 256 4.7 746 13.7 5,449 100.0
1.6 22.8 3.0 26.3 6.3
4. Liquidity As of 2010, the Bank had a slight increase in cash flow together with cash flow at beginning of year, with a total cash flow of 282 Million Baht compared with 299 Million Baht of last year. The net cash flow used in various activities are as follows: l Cash used in business operation totaled Baht 5,334 million, compared with cash flow gain of Baht 16,047 million in 2009. This resulted from changed in crucial operating assets covering interbank and market money (assets) items which decreased by Baht 3,205 million investment in trading and available-for-sales securities which decreased by Baht 4,208 million while loans and receivables increased by Baht 23,798 million and other assets
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Annual Report 2010
increased by Baht 255 million. Significant changes of operating liabilities included a decrease in deposit by Baht 178 million, a decrease in interbank and money market (liabilities) item by Baht 446 million and an increase of short-term borrowing by Baht 818 million. l Cash used in investment activities totaled Baht 2,818 million compared with Baht 11,689 million in 2009 resulted from cash payable to purchase subsidiaries totaling Baht 4,164 million via the purchase of investment units in Bangkok Capital and Gamma Capital funds and cash payable to purchase long-term securities totaling Baht 492 million. l Cash received from fund raising activities amounted Baht 8,207 million compared with the spent amount of Baht 4,340 million in the previous year. This was because the Bank issued additional debentures in 2010 leading to a cash receivable from debenture issuance totaling Baht 13,469 million while cash payable for redemption of debentures amounted to Baht 5,043 million. Additionally, the Bank also had cash receivable from increase capital stocks and surplus share value totaling Baht 833 million. l Liquid Asset Ratio The Bank has maintained the average liquid asset ratio of not less than 6.0% of total deposit and certain types of borrowing as stipulated by the Bank of Thailand’s regulations. As of December 31, 2010, the Bank has cash in hand, cash at central cash center, deposit at the Bank of Thailand and eligible securities totaling Baht 14,076 million.
5. Investment Expenditure In 2010, majority of investment was on the information technology system, totaling Baht 116 million and other tangible assets totaling Baht 438 million. All of the aforesaid projects were to accommodate betterment of customer services.
6. Capital Fund Source and Expenditure and Relationship
Capital structure as per the financial statements as of December 31, 2010 consisted of liabilities of Baht 120,989 million and shareholders’ equity of Baht 20,911 million, or a total debt to equity ratio of 5.8 times. The crucial components of liabilities fund included deposit and borrowing which were 53.5% and 24.9% of total capital fund respectively. Capital expenditure of the Bank and subsidiaries comprised credit loan of Baht 106,973 million or 75.3% of total assets. The loan to deposit and borrowing ratio was 96.8% compared with 84.7% at the end of 2010. The remaining liquidity has been diversified by the Bank in other liquid assets such as interbank and money market items, securities with resale agreement and securities investment.
Sources and Used of Funds and Their Relationship as of December 31, 2010
Deposit and Borrowing Loan and Accrued Interest Receivable Term December % December % December % December Percent 31, 2009 31, 2010 31, 2009 31, 2010 (Baht) (Baht) (Baht) (Baht) Less than 1 Year 64,836,506,283 63.5 78,714,946,558 70.8 6,526,772,933 7.4 6,740,368,704 6.2 Over 1 Year 37,336,480,147 36.5 32,524,174,113 29.2 81,111,211,704 92.6 101,572,378,033 93.8 Total 102,172,986,430 100.0 111,239,120,671 100.0 87,637,984,637 100.0 108,312,746,737 100.0
Kiatnakin Bank Public Company Limited
As of December 31, 2010, the Bank’s deposit and borrowing with remaining maturity of less than 1 year was 70.8% of total deposit and borrowing while the loan and accrued interest receivable of the same maturity period accounted for 6.2% of total loan and accrued interest receivable. The sum reflected that Bank has mainly mobilized short-term capital to be used as long-term credit loan or investment. Nonetheless, majority of the Bank’s deposit have been continuously renewed upon their maturities. The Bank also increased investment options via issuance of bill of exchange for retail customers and short and long term debenture for general, major and institution investors with appropriate rates of interest. The capital fund structure has also been managed in such a way to increase flexibility and in accordance with the Deposit Protection Agency Act which came into effect on August 11, 2008 and extended the total deposit protection to 3 years until 2011.
7. Credit Ratings
On October 8, 2010, TRIS Rating Co., Ltd. affirmed that the company rating and non-secured debt of the Bank remain at “A-” with “Stable” credit outlook. The above credit rating reflected the Bank’s experienced management team; acceptable risk management system; ability to improve asset quality; expansion of retail depository customer base; and capital stability. Nonetheless, the credit was still limited due to the Bank’s scale of operation, being small scale commercial bank with relatively few branches, and potential risk in deposit mobilization after the introduction of a new Deposit Protection Act in August 2012. The “Stable” credit outlook reflected that the Bank still maintained level of business growth and profitability within the next 2 – 3 years as well as ability to control credit quality; maintenance of adequate capital provision to absorb economic risk and future fluctuation of financial condition. Credit Rating by TRIS Rating Co., Ltd. Credit Rating January 15, 2010 October 8, 2010 Company Rating A- A- KK10NA : Baht 966 million senior debentures due 2010 A- A- KK115A : Baht 1,289 million senior debentures due 2011 A- A- KK119A : Baht 1,450 million senior debentures due 2011 A- A- KK127A: Baht 2,493 million senior debentures due 2012 - A- Up to Baht 2,000 million senior debentures due 2012 A- Rating Outlook Stable Stable Source: Credit News, Announcement No. 27/2010 dated October 8, 2010. Credit Rating by Fitch Rating (Thailand) Co., Ltd. Credit Rating (Unsolicited Rating) May 30, 2009 September 30, 2010 Long-term National Rating BBB+ (tha) BBB+ (tha) Short-term National Rating F2 (tha) F2 (tha) Rating Outlook Stable Positive
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Annual Report 2010
Corporate Governance
corporateThe governance Board of Directors has placed utmost importance on good which was specified by banking regulatory
bodies. In 2010, the Bank has complied with the 5 main good governance principles under the Stock Exchange of Thailand’s guidelines, namely:
1 Good Corporate Governance Policy
The Board of Directors has placed importance on good corporate governance to increase transparency, business competency, and confidence among shareholders, investors and related parties. The Board of Directors has approved good corporate governance policy in writing in the 2/2006 meeting with core contents covering the rights and equality of shareholders and stakeholders; committee structure as
Kiatnakin Bank Public Company Limited
well as its roles, responsibilities, accountabilities and independency; disclosure of information and transparency; risk control and management; and business ethics. The details are presented in the Bank website: www.kiatnakin.co.th as well as widely communicated to the executives and employees to ensure better understanding on the matter.
2 Implementation of Good Corporate Governance
The Bank has implemented good corporate governance to its shareholders, investors, stakeholders and related parties in 2010 as follows:
2.1 Shareholders’ Rights
• Advance and Adequate Disclosure of Information to Shareholders The Bank has stipulated that a General Shareholders Meeting be held once within 4 months after the end date of accounting year. In 2010, the General Shareholders Meeting was held on April 22. Prior to the meeting, invitations and relevant meeting materials were sent to the shareholders no lesser than 30 days, via the Bank’s website (www.kiatnakin.co.th). The Bank also assigned Thailand Securities Depository Co., Ltd., the registrar of the Bank’s shareholders, to send out invitation letters to the shareholders 17 days in advance. Attached therewith were list of directors along with their profiles, both newly nominated and re-elected directors by the Board of Directors; list of auditors and remuneration; dividend payment policy with explanation and sum payable; and statement of objectives and rationale for the meeting with the Board of Directors’ opinion. Prior to the meeting, the Office of Directors compiled all inquiries sent by shareholders to the Board of Directors via the Bank’s website (www.kiatnakin.co.th). Records of the meeting were available both in written form and video recording. Before the meeting, the Chairman of the Board explained the voting and vote counting procedure. Questions from the shareholders and answers from the directors were recorded. Resolutions on each agenda whether it be agreeing, disagreeing or silent votes were available to ensure that shareholders have sufficient information to cast their votes in each agenda. The Minutes of 2010 Meeting was posted on the Bank’s website (www.kiatnakin.co.th), within 14 days after the actual meeting. • Facilitate Shareholders to Fully Exercise their Rights to Participate
and Vote The Bank held the Annual General Shareholders Meeting on the date, time and venue that would facilitate the shareholders. Those unable to attend could grant the power of attorney to others to attend and raise questions from the floor as well as cast votes on their behalves. Shareholders also had the rights to propose an agenda and nominate a candidate for directorship prior to the dispatch of invitations by the Bank via the Stock Exchange system to be publicized on the Bank’s website (www.kiatnakin.co.th). • Allocate Proper Time and Encourage Shareholders to Express
Themselves As clearly stated in the agenda, the Bank facilitated shareholders by allowing them to raise questions or share concerns and allocated ample time to answer those queries clearly and adequately.
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Annual Report 2010
• Meeting Participation of all Directors The Bank has a policy requiring that all Chairman - the Board, Audit Committee, Nomination and Remuneration Committee, Executive Committee; the President; Heads of Departments as well as Senior Executives and auditors participate in all shareholders meetings to provide additional information and answer questions. In 2010, the Chairman of the Executive Committee, the President, Heads of Departments, Senior Executives and auditors were present at the meeting. Additionally, the Bank also aims to promote more rights of shareholders such as disclosure of information on performance, benefits and crucial activities of the Bank via its website (www.kiatnakin.co.th) to offer all shareholders continuous and equal access of information. 2.2 Treating Shareholders Equally The Bank realizes that all shareholders be treated fairly and justly in every aspect. In 2010, the Bank treated the shareholders as follows: • Facilitate Minor Shareholders to Suggest Meeting Agenda in Advance The Bank allowed shareholders the rights to propose additional meeting agenda and nominate a candidate for directorship prior to the dispatch of invitations to meeting by the Bank via the Stock Exchange system to be publicized on the Bank’s website (www.kiatnakin.co.th). Additionally, shareholders were granted the rights to select directors individually and to consider and approve the conditions and policy on director’s remuneration. • Criteria for Advance Notification of Agenda Proposed by Minor Shareholders (1) For minor shareholders to propose a meeting agenda for the General Shareholders Meeting and nominate a candidate for directorship, the Bank has specified the procedure wherein shareholders submit their nominations to the Board of Directors, 4 months in advance of the shareholders meeting. Criteria for shareholders qualified to do so are as follows: Holder of at least 200,000 shares (two hundred thousand shares) either on an individual level or a group of shareholders. Hold the above number of shares for at least 1 year and continue to hold such amount of shares on the date of proposing an agenda or nominating a candidate for directorship. Able to show proof of share ownership such as certified letter from the Securities Company or other certification from the Stock Exchange of Thailand or Thailand Securities Depository Co., Ltd. (2) Qualified shareholders could propose meeting agenda by filling a form to propose topics to the agenda of the 2010 General Shareholder Meeting and submit the form along with supporting document to the Bank within a specified period. To ensure efficiency, the Bank applies the following conditions when considering the meeting agenda: a. Matters related to normal business operation of the Bank whereas the shareholders have notified cause/s for suspicion of unusual operation. b. Matters within the ability of the Bank to carry out. c. Matters not in violation of laws, announcements or regulations of the banking authorities, regulatory agencies, related organizations or Articles of Associations of the Bank, resolutions of shareholders meetings, Good Corporate Governance and business ethics. d. Matters beneficial to shareholders and the public at large. e. Matters proposed by qualified shareholders whereas the shareholders have fulfilled the criteria set forth by the Bank on the proposed agenda and nomination of a candidate for directorship. f. Matters that are equipped with complete, adequate and accurate information or evidence submitted in a timely manner.
n
n
n
Kiatnakin Bank Public Company Limited
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g. Mattes considered by the Board of Directors to be worthy of being added in the Agenda. h. Matters never been executed by the Bank and the Board of Directors considered to be beneficial for the operation of the Bank. i. Matters that the Bank has never considered or passed resolution on. The Board of Directors shall consider the appropriateness of agenda matters proposed by shareholders which are in accordance with the above criteria, unless the Board of Directors sees otherwise. The Board of Directors’ consideration is final. In cases where various shareholders proposing similar matters, the Board of Directors may combine them as one additional agenda. Matters approved by the Board of Directors shall be added to the Agenda stated in the Letter of Invitation along with comments from the Board of Directors. On the other hand, matters not approved by the Board of Directors, the shareholders will be informed by the Bank following the meeting of the Board of Directors, yet prior to the shareholders meeting, via the Bank’s website or other communication channel deemed appropriate. Furthermore, shareholders who are also executives will not be able to propose additional agenda. The meeting will be conducted as per Agenda informed to the shareholders. Meanwhile, the Bank also encourages shareholders who are unable to attend to use the power of attorney which the shareholders could dictate voting direction and nominate independent director. The Bank promotes the use of voting ballot on crucial occasions such as on related transaction and purchase and sell of assets to ensure transparency and accountability. • Policy and Monitoring of Internal Information Usage by Executives To prevent an abuse of internal information that has not been publicly disclosed, the Bank requires that all directors and executives including their spouses and minor children as well as individuals with relations to the directors and/or executives declare changes in the Bank’s securities under their ownership within 3 days to the Security and Exchange Commission as well as submit a copy of such report (Form 59-2) to the Company Secretary on the very same day to report such changes to the meeting. The Bank also has articles on honesty and integrity prohibiting the Bank’s directors and employees to use their authorities or working opportunities to seek any benefit in conflict with code of ethics and code of conduct stipulated by the Bank as well as corporate culture and benefits of the Bank. The Internal Audit Unit is responsible to cross-examine the compliance on the use of internal information and professional code of conduct; any person found in jeopardy of such shall be reported to the Audit Committee and the Board of Directors for further disciplinary action.
2.3 Rights of Stakeholders
The Bank, with acknowledgement on the right of all stakeholders, has a policy to manage impacts from business operation in all aspects to ascertain all concerned parties that the business has taken into consideration the environmental factor for sustainable development and stakeholders protection scheme for both internal stakeholders i.e. employees and executives and subsidiaries and external stakeholders. In case of transaction between the Bank and related individual or business, there is a clear, fair, transparent and accountable set of procedure. The Bank also presents details of such transactions in the notes to quarterly financial statements as well as in the annual report. The Bank also notes with gratitude the support from stakeholders that render competitiveness for long-term success of the Bank and entails a guideline of treatment for each group of stakeholders as follows: • Shareholders The Board of Directors deems it their responsibility to ensure that executives and employees work with honesty and integrity; upholding their responsibilities and accountabilities for their work performance to achieve shareholders’ trust and acceptance that any action is done with fairness and consideration for both major and minor shareholders.
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Furthermore, shareholders have the rights to protect their interest via comments, recommendations and votes on any changes of significance as well as election of directors and remuneration scheme, profit allocation and dividend payment, appointment of auditors and remuneration in the shareholders meeting. The Bank is obliged to disclose information with correctness, completeness and accountability. • Customers The Bank has always cared for and paid attention to the requirement of the customers with dedication to offer the best financial products and services. The Bank has paid attention to details and been ready to closely listen to all issues to maintain long-term relationship, been trustworthy and been alongside with the customers supporting them according to their competitiveness to succeed. In that regard, the Bank has developed a system and network of branches together with implementation of advanced technologies to increase management efficiency to become more rapid, flexible and responsive to the customers’ requirements. The customers receive attentive care as well as the most appropriate financial and investment advices rendering maximum benefits from the Bank’s employees who are knowledgeable and expert on the financial products with profound understanding of the need and business of the customers. In case of suggestions on services or complaints or reports on irregularity of operation, the customers could do so via the website (www.kiatnakin.co.th) or contact the Internal Audit Unit of the Bank at any instance. The Bank has placed utmost importance to the suggestions, complaints and reports on irregularity or suspicious operation which would damage the Bank. Informant of any nature shall be protected under the Bank strict protection mechanism. • Employees The Bank realizes the importance of the employees who are the most valuable assets. With that notion, there has been a constant human resource development both in terms of management and personnel development so that the employees would be a key development driving force for the Bank to become a leading financial institute able to best serves the customers. The Bank has compensation policy providing proper remuneration management for executives and employees at rates compatible with other leading companies. There is also a clear description of duties as well as continuous development and promotion of potential scheme to enhance their skills and competency in order to advance in their career. Regarding the welfare policy, the Bank has provided employee welfare including Provident Fund, Social Security Fund, Group Health Insurance, Group Life Insurance, Group Accident Insurance, Annual Medical Check-Up, Nurse Office within the Bank, Mother Corner (breast milk collection room) as well as Kiatnakin Responsibility Scholarship for employees’ children. Furthermore, the Bank has placed significance on corporate governance in accordance to the ‘Good Corporate Governance’ principle taking into consideration virtue, ethics and fairness which would lead to positive culture and image for the Bank or its overall business. The Bank has therefore established the code of ethics and code of conduct and communicated to employees at all levels be it managerial and operational, to ensure that their performance are under the same guidance. As for the policy on the environment, the Bank has restructured to ensure orderliness of the office. The activities were focused on the environment and cleanliness and green aspects under the name “KK Clean and Green Provincial Branches”; an energy saving program named ‘Save Energy @ Kiatnakin Bank Year 5’ on waste assortment and reduce usage of resources. Trainings on assortment of office and household waste are offered by experts from Pollution Control Division, Ministry of Natural Resources and Environment to volunteering KK Energy Ambassador, maids and security guards who are key persons for energy and resource saving campaign; 1 Month 1 House 1 Tree programme: Garden for the Young Ones at Jarisornbumrung School, Pathumthani; support the ‘You..Can Help by Stop Using Car Once a Month to Relieve Traffic’ by Ministry of Transport, Bangkok Metropolitan and JS100. Regarding policy on health and safety, the Bank has set up working environment taking into account safety, health
Kiatnakin Bank Public Company Limited
and the environment suitable for employees to work while ensuring convenience of the customers. Furthermore, the Bank has organized fire drills and office security system. The Bank has also announced ‘Guidelines for Safety and Unusual Sight’ to ensure safety to the buildings and its employees. The Bank has developed positive corporate culture and working atmosphere as well as equal treatment for employees with respect to their honor, pride and privacy. The Bank also aims to promote and develop the employees via additional trainings to enhance their knowledge and expertise. The Bank also stipulates policy on information technology requiring the employees to adhere to the rules and regulations related to copy right and intellectual properties with clear set of guidance. The Bank has prepared communication channels for employees to voice their comments or complaints over working condition, management, and information of suspicious activities among them through the Bank’s website at www.kiatnakin.co.th or forward information directly to the Internal Audit Unit or Human Resource Development Unit. Furthermore, the Bank has laid down strict mechanism to protect any informant of corruption or suspicious activities that would damage the Bank. • Creditors The Bank has strictly adhered to the terms and conditions given with the creditors with full gratification for the trust and support rendered to the Bank from all creditors and depositors throughout the economic crisis. • Business Partners Part of the Bank’s success comes from the support of its business partners. Thus, the Bank has strictly adhered to the terms and conditions of contracts with the business partners based on the concept of building success side by side. In 2010, the Bank has no dispute with its business partners. • Society, Community and the Environment The Bank is determined to conduct its business with responsibilities to the society, community and the environment on the philosophy that its business must yield benefits to the community, society, customers, employees, shareholders, stakeholders and related organizations to promote development of the economy, quality of life and standard of living for all to ensure sustainable progress and strength. The Bank was among the 16 private organizations piloting ‘volunteer-minded employees for sustainable organization and social development organized by the Center for the Promotion of National Strength on Moral Ethics and Values (Moral Center) with Kenan Institute Asia to carry out activities as per detailed in the Report on Corporate Social Responsibility section.
2.4 Disclosure of Information and Transparency
The Board of Directors has placed importance on disclosure of information with correctness, completeness, thoroughness and timeliness covering financial information and general information such as financial statements, Annual Disclosure Form (Form 56-1) and Annual Reports as well as crucial information affecting share prices of the Bank. The aforementioned updated information are disseminated to investors and related parties via communication channels of the Stock Exchange of Thailand and the Bank’s website (www.kiatnakin.co.th). There is also an Investor Relations Centre to provide news, information and activities of the Bank to the investors, shareholders, analysts and general public. Interested individuals could contact the mentioned centre at Tel: 0-2841-5925 or at website: www.kiatnakin.co.th or E-mail: investor_ relation@kiatnakin.co.th. Furthermore, the Bank, with collaboration with the Securities Analysts Association, has regularly held meetings with securities analysts to directly disseminate the Bank’s information. In 2010, the Bank’s high-ranking executives as well as the Investors Relations Unit has met and provided information to domestic and foreign shareholders and investors on various occasions as follows:
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Annual Report 2010
Type of Meeting Frequency 1. One-on-One Meeting 30 2. Conference Call 10 3. Analyst Meeting 4 4. Investor Conference 1 5. Road show (Shareholders and Investors) 8 6. Press Conference 4 The Bank has also stipulated that the Board of Directors disclose of their responsibilities to the financial statement alongside the report of the auditor in this Annual Report, details as per page 86 The Board of Directors also supervised the disclosure of information, authorities, responsibilities, details of remuneration policy, numbers of meetings, records of attendance of each committee both main and sub-committees, details as per page 62-63 Details of remuneration received by the Directors from subsidiaries are also disclosed in the Director’s Remuneration Table.
2.5 Responsibilities of the Board of Directors
The Board of Directors consists of 10 directors of which 3 are executives; 3 non-executives and 4 independent directors. To comply with good corporate governance, the Bank has appointed a non-executive director as a Chairman of the Board of Directors. The Chairman of the Executive Committee and the President are 2 individuals. The practice has led to a clear separation of duties on policy making, regulating and managing. The details are as follows:
• Chairman of the Board of Directors
Responsible for the Board of Directors in their conduct to ensure that strategies, vision and missions have been materialized and achieved as specified by the Board. Regulate to ensure ethics and transparency of business and provide efficient internal control system and appropriate risk management. Protect benefits of the shareholders and uphold image of the Bank to gain creditability from all parties concerned.
• Chief Executive Officer (CEO) and President
Supervise the organization to progress in the specified direction, vision and strategic plans. Ensure that operation in all aspects is under proper monitoring system while management is in accordance with good corporate governance via provision of policy, code of practice, regulations and controlling system to ensure transparency, ethics and clarity as well as sufficient internal control system, compliance and risk management pursuance with public laws and regulations to yield maximized benefits to shareholders, achieve creditability and social responsibility.
• Independent Director
Furthermore, the Bank has specified that an independent director with the highest seniority act as chairman should there be any agenda of relevant. The Bank has laid down stricter qualification requirement for an independent director than the minimum requirement of the Securities and Exchange Commission as follows: (1) Holds shares not exceeding 0.5 percent of total share with voting right of the Bank, parent company, subsidiaries, associated companies, major shareholders or person with controlling power of the Bank. This includes shares held by individual related to that independent director. (2) Never been or was director participating in management, employee, officer, or advisor receiving regular salary or person with controlling power over the Bank, parent company, subsidiaries, associated companies, subsidiaries of other company of the same level, major shareholders or person with controlling power over the Bank, unless having been dismissed from such position at present and for the last 2 years. Nonetheless, such restriction does not include an independent director
Kiatnakin Bank Public Company Limited
who has been a civil servant or advisor to a government agency that is a major shareholder or having controlling power over the Bank. (3) Not having relation either by blood or legal registration as father, mother, spouse, sibling and children, including spouse of children of executives, major shareholders, person with controlling power or individual nominated as executive or person with controlling power over the Bank and subsidiaries. (4) Never have or had business relation with the Bank, parent company, subsidiaries, associated companies, major shareholders or person with controlling power over the Bank in such manner that may prevent independent discretion of self; nor being substantial shareholder or person with controlling power of person with business relation with the Bank, subsidiaries, associated companies, major shareholders or person with controlling power over the Bank, unless having been dismissed from such position at present and for the last 2 years. The business relation as stipulated in Clause 1 above includes normal trading transaction in lease taking or leasing out of real estate; transactions on securities and services or taking or giving of financial assistance by means of borrowing or lending; guaranteeing; collateral providing; or other similar manners which would render the Bank or the party financial obligation to each other at the amount of 3 percent or more on the net tangible assets of the Bank or from 20 Million Baht, depending on whichever is lesser. The calculation of debt obligation is as per the method of calculation of value of connected transaction pursuant to the Notification of the Capital Market Supervising Committee on Regulation in Respect of Entering into a Connected Transaction mutatis mutandis. Yet consideration of such obligation shall take into account the obligation occurred in the past 1 year prior to the business relation with such person. (5) Never been or was auditor of the Bank, parent company, subsidiaries, associated companies, major shareholders or person with controlling power over the Bank; nor being substantial shareholder, person with controlling power or partner of the auditing firm that the auditor of the Bank, parent company, subsidiaries, associated company, major shareholders or person having controlling power over the Bank, belongs to, unless having been dismissed from such position at present and for the last 2 years. (6) Never been or was provider of any profession service including legal advisor or financial advisor receiving a fee of over 2 Million Baht per annum from the Bank, parent company, subsidiaries, associated company, major shareholders or person having controlling power over the Bank, nor being substantial shareholder with controlling power or partner of person providing such professional service, unless having been dismissed from such position at present and for the last 2 years. (7) Not a director being selected as representative of the Board of Directors, major shareholder or shareholder with relation to the major shareholders. (8) Not engaged in any business of similar nature and in substantial competition with the Bank or subsidiaries nor being a substantial partner in any partnership nor director participating in management, employee or official earning regular salary nor holding more than 1 percent of the total share with voting right of other companies of similar nature and in substantial competition with the Bank or subsidiaries. (9) Not having any other characteristics that may jeopardize ability of self to provide independent discretion relating to the operation of the Bank. A person appointed as independent director, upon fulfilling the above (1) - (9) criteria, may be assigned by the Board of Directors to make decisions on the operation of the Bank, parent company, subsidiaries, associated company, subsidiaries of the same level, major shareholders or person with controlling power over the Bank, by means of collective decision.
• Sub-Committee
The Board of Directors appointed 4 sub-committees to further study and screen matters of particular areas, namely: Audit Committee, Nomination and Remuneration Committee, Risk Management Committee and Executives Committee. On January 17, 2011, the Board of Directors passed a resolution to appoint 2 other committees namely Compliance and
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Governance Committee and Main Cvedit and Foreclosed Property Committee with authorities as detailed under the Management section. • Business Ethics The Bank has publicized professional ethics as guidance for good practices and issued Code of Professional Ethics for Executives so that all related parties could adhere to while carrying out their duties with honesty, integrity and fairness towards the Bank and stakeholders. In this regard, the Bank has regularly communicated with the employees and monitored their compliance with such principles together with seminars to ensure mutual knowledge and understanding between the executives and employees on business ethics, which are as follows: Treatment and Responsibilities to Shareholders Carry out their respective duties with honesty, integrity and fairness to shareholders; manage the business with caution and prudent without seeking benefits for self or related individuals by using any information of
the Bank; and do not disclose of the Bank’s confidentiality to external entities particularly competitors. Treatment and Responsibilities to Customers Present products/services that best suit the customers’ requirement with complete and accurate disclosure of information; render customers an opportunity to file a complaint on services and ensure prompt responses from the Bank; as well as strictly maintain the customers’ confidentiality; and refrain from setting unfair business conditions for customers. Treatment and Responsibilities to Business Partners/Creditors Refrain from asking for or receiving or paying any fraudulent benefits when dealing with business partners or creditors. Should such incident occur, it is required that business partner/creditor be informed of such information to jointly resolve such predicament with fairness and promptness; and carry out all obligations to the creditors appropriately and fairly. Treatment and Responsibilities to the Public Sector Comply with relevant policies, laws and regulations; promote the democracy under a constitutional monarchy regime; and conduct business with responsibility. Treatment and Responsibilities to Employees Provide fair and just compensation scheme for employees; maintain safe working environment for life and property of the employees; establish explicit human resource management system on promotion and transfer as well as reward and penalty; place importance on development of employees’ knowledge and skills; and manage by avoiding any unfair act that may affect job security of employees. Treatment and Responsibilities to Business Competitors Operate within a good competition framework; do not seek out confidential information of business competitors by perfidious means; and do not jeopardize business competitor’s reputation by means of defamation. Treatment and Responsibilities to Society and Community Refrain from any action that cause damage to natural resources and the environment; support social benevolent activities habitually; and continuously and seriously instill social responsibility in employees at all levels.
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Kiatnakin Bank Public Company Limited
• Conflict of Interest The Board of Directors has always proceeded with caution on matters of conflict of interest. Policy and approval process for related transactions have been written down stipulating that concerned directors shall refrain from casting a vote on any transaction with potential conflict of interest. The Bank has also complied with the regulations of the Stock Exchange of Thailand offering prices and conditions similar to external individuals. The details of transaction values and contract parties have already been disclosed in the Annual Report and Form 56-1. Moreover, the Board of Directors has made it a policy that directors and executives have to report to their business stakeholders and related personnel and submit the report to the Company Secretary with copies to the Chairman of the Board and Chairman of the Audit Committee within 7 days of receiving such report. They are also required to report any changes to the Board of Directors meeting.
• Internal Control and Internal Audit Systems
The Bank places importance on efficient internal control and internal audit systems at both executives and operational levels. Authorities and responsibilities of employees and executives have been clearly described in writing. Controlling measures are in placed to govern utilization of assets whereas duties of operator, supervisor and grantor are clearly separated to ensure appropriate check and balance. Financial statements of the Bank disclosed to the public are made in accordance with accounting principles and standards imposed upon financial institutes and under the scrutinization of external auditor. The Auditing Committee met with the external auditor 4 times last year to acquire audit results, recommendations and comments for further monitoring and improvement. The internal control system has been verified and the report submitted to the respective executives. The Bank has an Internal Audit body to ascertain that the main operations and crucial financial activities of the Bank adhered efficiently to the specified principles as well as to verify their compliances with laws and regulations related to the Bank. In an effort to ensure independency of the Internal Audit Unit to fully carry out their check and balance responsibility, the Board of Directors has stipulated that the unit report directly to the Audit Committee and the Board of Directors. Additionally, the Board of Directors has assessed adequacy of the internal control system annually so that each director could revise the accuracy and conciseness of the Bank’s internal control system according to the specified principles. The Internal Audit Unit is assigned to compile, summarize and present such revision in the annual report and disclose to the public. • Risk Management Policy The Board of Directors closely regulates risk management via the Risk Management Committee. The Bank has an organizational-wide risk management policy for the Bank and its subsidiaries as well as continuous revision of system or assessment of risk management efficiency. Furthermore, the Board of Directors also places importance on advance warning and irregularities. The policy is carried out by the Risk Management unit under the Risk Management Committee who reports regularly to the Board of Directors.
• Board Meeting
The Bank schedules Board meetings in advance with clear meeting agenda as well as appointing a secretary of the Office of the Directors to be in charge of the meeting. The invitation to the meeting along with the meeting agenda with objectives and rationale for each agenda item is sent out 7 days in advance so that the Directors have sufficient time to consider the information prior to the meeting. Additionally, the Chairman of the Board also allocates ample meeting time for
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the management to report and for the directors to discuss the matters in depth. Minutes of Meeting is made in writing and endorsed by the Board of Directors and made available for examination by the Board and relevant parties. In 2010, the Board of Directors met 9 times wherein the Chairman of the Board encouraged the President to invite senior executives to the meetings to present additional information and get acquainted with the Directors. The Bank also granted opportunities for the Directors to request additional and necessary information from the President, Company Secretary or other senior executives within the specified policy framework including an opportunity for non-executive directors to hold their internal meeting to discuss management matters of interest. In 2010, the Board of Directors allowed non-executive directors to arrange a meeting amag themeseleves to discuss curtain management issues. The Board of Directors Meeting Attendance in 2010
Board of Directors Audit Committee Nommination and Remuneration Committee
Mr.Pracha Chumnarnkitkosol Executive Director
9/9
Mr.Tawatchai Sudtikipisan President ** Mr.Supol Wattanavekin Executive Director Mr.Suraphol Kulsiri Non-Executive Director
9/9 9/9 4/4 8/9
Mr.Pravit Varutbangkul Non-Executive Director
9/9
Mr.Tarnin Chirasoonton Non-Executive Director
9/9
Mr.Chet Pattrakornkul Independent Director Mr.Manop Bongsadadt
Chairman of the Nomination and Remuneration Committee
4/4 9/9 4/4
11/11 11/11
7/9
Mr.Pichai Dachanapirom Chairman of the Audit Committee
9/9
Chairperson of the Board of Directors
9/9
11/11
* Mr.Nawaaporn Ryanskul Attendance/No. of meetings held 2
4
* The resigned director, effective on December 31, 2010. ** Appointed as Chairman of the Board of Directors effective on January 1, 2011
6
8
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Meeting Attendance of Members of the Executive Committee in 2010 Mr.Surawut Charuchinda Head of Debt Restructuring
20/20
Mr.Patom Amorndechawat Head of Operations Mr.Thitinan Wattanavekin
20/20
Head of Deposit and Marketing
14/20
Mr.Chavalit Chindavanig Head of Finance and Budgeting
19/20
Mr.Tawatchai Sudtikitpisan (President)
20/20
Mr.Supol Wattanavekin (Chairman)
20/20 0
5
Attendance No. of meetings held
10
15
20
Committees and Sub-Committees Meeting Attendance in 2010
Dept Restructuring Property Appraisal & Pricing Retail Loans Credit Loans System Development Assets & Liabilities Management Investment Human Resources Management Credit Loans Management Risk Management %
97 89 94 93 73 90 100 100 99 80 70
75
80
85
90
95
100
Remark : Calculated from the percentage of individual committee members attending the meeting
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Annual Report 2010
• The Board of Directors Self Assessment 2010
The Board of Directors has conducted their annual self-assessment which includes the performance assessment of the Chairman of the Board and the President. The purpose is to determine whether or not, over the past year, they have carried out their duties completely and appropriately according to the framework of authorities and responsibilities and good corporate governance. The Internal Audit unit is assigned to compile and summarize the self-assessment result of the Board of Directors, the overall of which was in the range of 3 - 4 (out of a total of 4) or an equivalent of 3.54 percent. The details of which are as follows:
The Board of Directors Self Assessment 2010 2009
2010
Score (%) 4.00 3.70
3.41 3.28
3.00
3.41
3.26
3.65
3.67 3.61
3.66 3.62
3.47
3.54 3.42
3.30
ture s s the the ard tS ruc bers ctor es ctor s f o h e e t o B r r i t i s i n r d g w e s e m of D xecutiv ilitie Membe rd of D meetin f th hip nagem s an rd Me t s b o n i n n s o s i e o n t lati Ma pm and E Boa utie spo Board fica he Boa e o i D l e l R e R a v Qu of t nd f-de a l e s S Role
l Tota
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• Remuneration
The remuneration for directors and executives are detailed under heading 3) Remuneration for Executives, on page 79
• Development of Directors and Executives
The Board of Directors has identified and participated in the derivation of vision, missions, strategies, goals, business plans and budget of the Bank as well as regulated to ensure that the executives have operated according to the specific business goals and budget efficiently and effectively. The Bank has repeatedly held meetings to convey business plans to the executives and employees to create mutual understanding among them. There is also a monthly report on actual performance against the target of the employees together with sound internal control, business regulation and risk management systems. Furthermore, all Directors have passed training courses from the Thai Institute of Directors (IOD). The Bank has explained the scope of authorities as well as fundamental details of the Bank to better the directors’ understanding. The Board of Directors and Executive Committee are accountable to the shareholders. Meanwhile their responsibilities have been clearly defined and separated as detailed in the Management Structure section. In 2010, 2 directors namely Mr. Chet Pattrakornkul and Mr. Suraphol Kulsiri attended courses by the Thai Institute of Directors (IOD), the details of which are in the Director Biography section. • Directorship with Other Companies of Directors and Executives As a commercial bank under the supervision of the Bank of Thailand, the Bank has clear directives on directors holding directorship or senior executives positions with other companies as per the Announcement Sor Nor Sor 60/2551 dated August, 2008 which stipulated that directors or senior executives of the Bank could be either chairman or managing director or authorized director or all of the aforementioned in other companies, yet not exceeding 3 business groups. Consideration of business group is based on the controlling power over the business. The Bank has disclosed the information on directorship of each director as well as the Executives Committee in this Annual Report under the Board of Directors and Executive section on page 168. • Orientation of New Director Upon changes in director, the Office of the Director is responsible to prepare a set of following document for a new director - annual report entailing vision, mission, core values and performance of the past year; articles and memorandum of association; director handbook and relevant announcement.
• Terms of Directorship
The Bank stipulated in Clause 18 of the Bank that in each annual general shareholders meeting, at least 1 of 3 of the directors shall retire. Should the total number of directors cannot be divided exactly by 3, the number of directors closest to the 1/3 ratio shall apply. In short, an average term of director is 3 years.
• Appointment of Company Secretary
The Bank passed a resolution to appoint Ms. Pornthip Chuprakhun as an official Company Secretary on January 13, 2010 to act on behalf of the company or the Board of Directors on the following duties: Prepare and keep the following documents: the register of directors, invitations to the Board of Directors meeting, Minutes of Board meetings, invitations to shareholders meeting and minutes of shareholders meeting. Other duties, as specified in the announcement and stipulation of the Capital Market Supervisory Board.
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Annual Report 2010
Provide fundamental advice to directors on laws, regulations and other directives of the Bank requiring their acknowledgement and follow up to ensure their compliance; report to director any legal changes with significance. Keep on file Stakeholders Reports submitted by directors or executives Execute other activities set forth by the Committee The Bank has planned the replacement policy and laid down a succession plan for directors and senior executives via the development plan for approximately 30 senior executives in 3 levels to increase their potential and prepare to succeed in the position wherein the incumbent executive ceases to perform along with periodical progress report to the Board of Directors. Good corporate governance reflects efficiency, transparency and accountability of management; creates sense of trust among related parties; and nurtures sustainable and efficient growth of the Bank. Furthermore, the Bank is determined to further develop its operations under the good corporate governance including some matters that have not been carried out, such as 1. Compensation scheme in case of damages caused to stakeholders whose legal rights have been violated by the Bank. • The Bank’s stakeholders include customers, employees, creditors, community, society and the environment, etc. Due to the fact that throughout the years, the Bank has never been in dispute relating to violation of stakeholders’ legal rights, hence no stipulation of compensation scheme. Nonetheless, should a violation occur, the Bank is obliged to compensate as per stipulated by laws. 2. Report on operational performance to the Board of Directors on a monthly basis in case where the Board meeting is not held monthly. • The Bank does not hold monthly Board meetings, yet submitting performance report to the Board on a quarterly basis. Exception is made in case of occurrence of changes with significance to the operation of the Bank between months. 3. Individual Performance Assessment of Directors • The Bank assesses the directors’ performance collectively as individual assessment may induce some deviation. In 2010, the Bank has provided communication channels for stakeholders to contact/complain directly to the Independent Directors via the Bank’s website www.kiatnakin.co.th.
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Kiatnakin Bank Public Company Limited
Report of the Audit Committee Dear Kiatnakin Bank PCL Shareholders The Audit Committee of Kiatnakin Bank Public Company Limited consists of Mr.Pichai Dachanapirom as a chairman and Mr.Manop Bongsadadt, Mr.Chet Pattrakornkul and Mr.Pravit Varutbangkul1 as members. In year 2010, the Audit Committee has had 11 meetings and carried out the followings, in summary: • In each quarter, reviewed the financial report via meetings with executives from Finance and Budgeting and external auditors to consider all the comments made from auditing or financial statement revision as well as holding meetings with external auditors in an absence of the executives; • Cross-examined the internal control system and security of the information technology system with internal auditors to assess the efficiency and sufficiency of both systems. The audit committee also reviewed the report on the internal control system assessment; oversaw the revision of internal control system on sensitive issues with information safety risk to ensure appropriate control measures; and considered management assessment report with the internal auditors; • The Audit Committee considered and approved the Assessment Master Plan and Action Plans for 2011; • Verified risk management related to the internal control system in order to manage risk across the Bank. The risk management verification was done via Risk Management and Internal Audit by determining objectives, risk indicators, risk assessment, risk management and monitoring report on a quarterly basis. There was also determination of critical risk indicators regarded as a warning system; draw up of crisis management plan appropriately to the current situation; determination of risk appetite and risk tolerance; and revision of risk according to changed situations. At present, following the risk management policy that the Bank laid down and the five risk management areas which are strategy, loan, market, liquidity and operations specified by the Bank of Thailand, the Audit Committee is of opinion that the Bank has appropriate and effective risk management; • Revised related transactions and considered related transactions and transactions adhering to the principle of transparency and sufficient disclosure of information which was in accordance with the Bank’s policy and Good Corporate Governance; • Revised the regulatory system in accordance with laws and regulations related to the business of the Bank as well as regulations of the Stock Exchange of Thailand; Money Launderette Prevention; and Suppression Act and Consumer Protection Act via the meeting with the internal auditors to ensure that respective agents have conducted accordingly; 1
Appointed as Member of the Audit Committee on January 17, 2011
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Annual Report 2010
• Considered performance of the external auditors on their duties in the past year as well as considered and proposed a list of external auditors for the Bank and determined the auditing remuneration for 2011 to the Board of Director for further consideration. In carrying out the duties as Audit Committee to revise and consider the core operation of the Bank with respective executives, internal auditors and external auditors, the Audit Committee is of opinion that the Financial Statement of the Bank has been made with sufficient control system and in accordance with Generally Accepted Accounting Principles (GAAP) and is reliable. Such consideration has already taken into account risk management and examination process. The Audit Committee has considered the performance of the external auditors and proposed Dr.Supamit Techamontreekul, CPA License No. 3356 or Mr.Permsak Jirajakwattana, CPA License No. 3427 or Mr.Nithi Jeungnitnirand, CPA License No. 3809, from Deloitte and Touche Tohmatsu Chaiyod Audit Company Limited to be auditors for 2011 and approved the auditing remuneration for 2011 to the Board of Directors to further propose in the Shareholders Meeting to consider the appointment of auditors and remuneration. As of January 18, 2011 On behalf of the Audit Committee
(Pichai Dachanapirom) Chairman of the Audit Committee Kiatnakin Bank Public Company Limited
Kiatnakin Bank Public Company Limited
Report of the Nomination and Remuneration Committee The Board of Director in their meeting no. 4/2006 dated October 26, 2006 unanimously agreed to appoint Mr.Manop Bongsadadt as the Chairman of the Nomination and Remuneration Committee Mr.Chet Pattrakornkul and Mr.Suraphol Kulsiri as member. In that respect, the Committee now consists of 3 members of which 2 are independent and 1 nonexecutive member. In 2010, there were 4 meetings in which the Committee has strictly conducted their duties within the boundaries of responsibilities to select and nominate qualified individuals to various positions in other committees; regulate and ensure appropriate size and component of the Bank’s Committees taking into consideration knowledge, expertise and experience of individual nominees; determine remuneration policy and other benefits for committee members and executives from Executive Vice President level onward; determine performance assessment guidelines for members and executives from Assistance Vice President level onward to monitor annual remuneration taking into account their responsibilities and related risk as well as their magnitude in increment of value for long-term shareholders; revise and consider Succession Plan for executive level whereas in 2010, the number of qualified individuals has increased from that of 2009. The Nomination and Remuneration Committee has disclosed of remuneration in various forms as well as produced reports on remuneration and comments of the Committee as inclusive in the 2010 Annual Report.
(Mr. Manop Bongsadadt) Chairman of the Nomination and Remuneration Committee
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Annual Report 2010
Shareholding Structure Kiatnakin Bank has enjoyed the single group of major shareholder from its early day of business, resulting in continuity and unity in business decision making. Meanwhile shareholder structure has been highly distributed to individuals and foreign institutional investors. At present, the ratio of Thai shareholders, mainly individuals, is 63.86 percent while the foreign institutional investors 36.14 (as of 6 August 2010) which reflect acceptance and trust from investors. No. Name
Number of Shares
Percentage (%)
1 2 3 4 5 6 7 8 9 10
Thai NDVR Company Limited Mrs.Vansamorn Wannamethee Miss Thitinan Wattanavekin Chase Nominees Limited 42 Chase Nominees Limited 30 HSBC Bank PLC-Clients General A/C Mr.Sukkarn Wattanavekin Mrs.Panida Thepkanchana Miss Yapa Thepkanchana N.C.B.Trust Limited-RBS as Dep For FS Others The major and relevant shareholders are the ones listed under no. 2, 3, 7, 8 and 9 respectively
63,481,243 38,703,803 34,782,761 25,513,300 22,466,422 21,930,460 27,900,275 29,576,689 17,199,900 16,007,975 256,778,040 148,163,428
11.45 6.98 6.28 4.60 4.05 3.96 5.03 5.34 3.10 2.89 46.32 26.73
Total Shareholders - Thai Shareholders - Foreigner
554,340,868 353,989,097 200,351,771
100.00 63.86 36.14
(December 31, 2010) Authorized share capital 696,099,987 ordinary shares of Baht 10 each (August 6, 2010 : 696,099,987 shares of Baht 10 each) (December 31, 2010) Issued and fully paid-up share capital 565,825,828 ordinary shares of Baht 10 each (August 6, 2010 : 554,340,868 shares of Baht 10 each) Note :
1. Information as of Book Closing Date on 6 August 2010 2. Inclusive of related shareholders as per Clause 258 3. Information summarized from Top 20 Major Shareholders Report by Thailand Securities Depository Co. Ltd.,
Kiatnakin Bank Public Company Limited
71
Juristic Persons Company
Address
Shareholder
1. Thai NVDR Company Limited
62, The Stock Exchange of Thailand building, Ratchadapisek Road, Klong Toey, Bangkok 10110
N.A.
2. Chase Nominees Limited 42
Standard Chartered Bank, Custody and Clearing Services Department, 90 Sathornnakorn Tower B, 14th Fl., Sathorn Road, Bangrak, Bangkok 10500
N.A.
3. State Street Bank and Trust Company, For London
Standard Chartered Bank, Custody and Clearing Services Department, 90 Sathornnakorn Tower B, 14th Fl., Sathorn Road, Bangrak, Bangkok 10500
N.A.
4. Chase Nominees Limited 30
Standard Chartered Bank, Custody and Clearing Services Department, 90 Sathornnakorn Tower B, 14th Fl., Sathorn Road, Bangrak, Bangkok 10500
N.A.
5. N.C.B Trust Limited- RBS as Dep For FS
Citibank N.A. Securities services as Dep For FS* 82 North Sathorn Road, Bangrak, Bangkok 10500
N.A.
* There is no one from the Wattanavekin family or from any of the Bank’s subsidiaries who is a nominee shareholder in the list of the Bank’s investors. The Bank does not have any major shareholder who has significant influence on management policies, on the Bank operations or on nominating an individual as an Authorized Director of the Bank.
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Annual Report 2010
Organization Structure
Organization Structure Kiatnakin Bank Public Company Limited Board of Directors
Risk Management Committee
Nomination & Remuneration Committee
Executive Committee
Main Credit & Foreclosed Property Committee*
Asset Quality Review Committee
Audit Committee
Compliance & Governance Committee*
Internal Audit
Compliance
Risk Management
Credit & Foreclosed Property Committee
Investment Committee Assets and Liabilities Management Committee
Credit Sub-Committee
Human Resource Management Committee
Retail Banking Sub-Committee
System Development & Information Technology Committee
Foreclosed Property Sub-Committee
Purchasing & Procurement SubCommittee (Non-IT)
Asset Appraisal & Valuation Sub-Committee
Information Technology Purchasing & Procurement Sub-Committee (IT)
Chief Executive Officer & President Director Office
Residential Project Lending
Banking Products
Debt Restructuring Management
Retail Lending
Finance and Budgeting
* The Board of Directors appointed other 2 Committees on January 17, 2011
Operations
Commercial Lending
Deposit and Marketing
Information Technology
Human Resource Management
Kiatnakin Bank Public Company Limited
1. Management To ensure efficient performance and excellent customer service, the Bank has categorized its business into 6 groups, which are: 1. Retail Lending Business 2. Banking Products Business 3. Residential Project Development Lending Business 4. Commercial Lending Business 5. Deposit and Marketing Business 6. Debt Management Business There are also supporting units such as Administration, Financial and Budgeting, Information Technology, Human Resource Management, Compliance, Internal Audit, Risk Management and the Office of Directors to assist the operation of those business groups as well as monitor and regulate the business. Additionally, in the management of the Bank, the directors have been assigned into the following 7 committees: Board of Directors; Audit Committee; Nomination and Remuneration Committee; Risk Management Committee; Compliance and Governance Committee; Main credit & Foreclosed Property Committee and Executive Committee, each of which having the following details:- Board of Directors : as representatives of the shareholders, the committee has roles, duties and responsibilities to conduct business to achieve stability, satisfaction and integrity and refrains from any conflict of interest. The scope of authorities of the Board is as follows: (1) Determine an overall directions and strategic goals of the Bank as well as approve operational policy and directions as proposed by the management. Supervise and regulate the operation of the executives in accordance with the approved policies with efficiency and effectiveness in order to protect benefits of the Bank and its shareholders. Determine and approve other policies in compliance with rules and regulations set forth by laws or regulatory agencies. (2) Provide terms on professional ethics and codes of conducts for the business, directors as well as authorized parties and employees as an internal operational framework. (3) Supervise the management in the determination and provision of business regulation both by legal requirement and business operational characteristics. Approve the regulatory system as well as monitor the effectiveness of such system in order to recommend the executives for further improvement. (4) Supervise the Bank’s executives to ensure the determination of policy, procedures and control measures on risk management on various aspects, at least to cover the risk on lending, marketing and investment, liquidity, operation, reputation, legal and strategy. The Board of Directors is required to approve those policies as well as review actual operation strategy and its policies on a regular basis. (5) Ensure that the Bank has efficient internal control and internal audit systems. (6) Ascertain an appropriate balance of power between the executives and/or major shareholders while taking into consideration ratio or number of independent committee members of the Bank.
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(7) Appoint and determine roles and responsibilities of other committees as deemed appropriate for the Bank to supervise the management as per the specified policies such as Audit Committee, Nomination and Remuneration Committee, Risk Management Committee and Executive Committee. (8) Ensure that the executives inform matters of significance to the Board of Directors as well as having sufficient communication channels so that the Board of Directs receive adequate information from the executives to perform its authorities, duties and responsibilities accordingly. (9) Endorse annual financial report that has been previously audited by the Bank’s auditor and reviewed by both the Executives and Audit Committees before seeking approval at the shareholders meeting. Acknowledge comments from the auditor via Management Letter as well as comments from the Executives Committee. (10) Appoint and set forth authority of the Bank’s executives from the Executive Vice President level upward. (11) Supervise the Bank to lay down policy on lending and investment to individuals with relations to the Bank. (12) Consider and approve the proposal from the executives on designation of authority to approve loan limit, investment, and make obligation or conduct business similar to lending including purchase and expenses relating to management for the benefit of the Bank under related laws and regulations. (13) The Directors are required to attend at least half of the total meeting held in a given year. Furthermore, the Board of Directors may seek further professional opinion from external consultants on the operation of the Bank with the expenses borne by the Bank. The Board holds a meeting at least quarterly, the quorum consists of not less than half of the total number of members and the meeting resolution is measured by the majority of the members present in the meeting. The Board of Directors consists of 10 directors, 4 of which are independent directors, 3 executives and 3 non-executives together with 1 company secretary, namely:- Chairman/Non-Executive Director 1. Mr.Supol Wattanavekin1 2. Mr.Pichai Dachanapirom Independent Director 3. Mr.Manop Bongsadadt Independent Director 4. Mr.Chet Pattrakornkul Independent Director 5. Mr.Pravit Varutbangkul Independent Director 6. Mr.Tarnin Chirasoonton* Non-Executive Director 7. Mr.Suraphol Kulsiri* Non-Executive Director 8. Mr.Tawatchai Sudtikitpisan* Executive Director 9. Mr.Pracha Chumnarnkitkosol* Executive Director 10. Ms.Thitinan Wattanavekin2 * Executive Director Ms.Pornthip Chuprakhun Company Secretary Note * - Director with power of attorney
Audit Committee carries out the following duties as assigned by the Board of Directors : (1) Verify that the Bank has financial reporting procedure that is accurate and adequate. (2) Ensure that the Bank has internal control system and internal audit system that are suitable and efficient as well as consider the independence of the Internal Audit Department including approving the appointment, transfer and dismissal of Head of Internal Audit Department or any other department in charge of internal audit. (3) Consider, select and nominate an independent person to be the Bank’s auditor and propose remuneration for such person as well as attend a meeting with the auditor in absence of the management team at least once a year. 1 2
Appointed as Chairman of Board of Directors effective on January 1, 2011 Appointed as Director effective on January 1, 2011
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(4) Consider the disclosure of the Bank’s information, related transactions and transactions that may have conflict of interest in compliance with the laws and the Stock Exchange of Thailand’s regulation to ensure that those transactions are reasonable and for the utmost benefits to the Bank. (5) Document in clear writing the duties of the Audit Committee as well as changes in terms of components and changes with significance to the performance of the Audit Committee as approved by the Board of Directors. The document shall be disclosed to the shareholders in the Bank’s annual report. (6) Prepare a report of the Audit Committee for disclosure in the Bank’s annual report, signed by the Chairman of the Audit Committee. The report shall consist of at least the following information: (a) Opinion on correctness, completeness and reliability of the Bank’s financial statement. (b) Opinion on adequacy of the Bank’s internal control system. (c) Opinion on the Bank’s compliance with laws on securities and exchange, the Stock Exchange of Thailand’s regulations or other laws relating to banking business. (d) Opinion on suitability of the auditor. (e) Opinion on transactions that may have conflict of interest. (f) Number of meetings of the Audit Committee and attendant record of each member. (g) Comment or observation received by the Audit Committee from operation in accordance with the Charter. (h) Other items that shareholders and general investors should know under the framework of duties and responsibilities assigned by the Board of Director. (7) Report to the Board of Directors so that remedial action be taken within the time period deemed appropriate by the Audit Committee in case the Audit Committee finds or suspect the existence of the following item or misconduct: (a) Transaction which causes a conflict of interest. (b) Fraud, irregularity or significant defect in the Internal Control System. (c) Violation of laws pertaining to the financial institutions, laws on security and exchange, regulations of the Bank of Thailand or other laws related to banking business and securities and other laws. Should the Board of Directors or executives fail to rectify within the time period specified by the Audit Committee, the Audit Committee shall disclose of such action in the annual report and report to the Bank of Thailand, the Office of the Securities and Exchange Commission or the Stock Exchange of Thailand. (8) The Audit Committee has the authority to inspect and question any relevant person and issues within the framework of authority and duties. The Audit Committee also has authority to hire or bring in specialist to assist in the auditing process and investigation as deemed appropriate. (9) When necessary, the Audit Committee may invite executives or relevant person to the meeting to give additional related information. (10) Coordinate with the Risk Management Committee to ensure that the performance adhere to the risk management policy of the Bank. (11) Perform other tasks assigned by the Board of Directors and accepted by the Audit Committee. The Audit Committee is required to meet at least quarterly, the quorum consists of not less than half of the total number of members and the meeting resolution is by majority of members present in the meeting. The Chairman and members of the Audit Committee, a total of 4, are all independent directors, as follows: 1. Mr.Pichai Dachanapirom Chairman 2. Mr.Manop Bongsadadt Member 3. Mr.Chet Pattrakornkul Member Member 4. Mr.Pravit Varutbangkul3 Mr.Kriengsak Sukhanaphorn Secretary 3
Appointed as Member of the Audit Committee on January 17, 2011
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Annual Report 2010
Nomination and Remuneration Committee : the committee component and authorities and responsibilities are as follows : (1) Determine criteria and procedure for selection of directors and executives from the Executive Vice President level upward and propose to the Board of Directors for approval. (2) Ensure that the Board of Directors is of appropriate size and adjusted to any change in the organization.The Board of Directors shall comprise individuals with knowledge, expertise and experience on various aspects. (3) Disclose selection criteria and details in the Bank’s annual report. (4) Determine framework of remuneration and other benefits offered to the directors and senior executives from the Executive Vice President level upward. (5) Ensure that directors and executives receive remuneration appropriate to their duties and responsibilities and that any director assigned additional duties and responsibilities shall be remunerated accordingly. (6) Specify evaluation framework for directors and executives from the Executive Vice President level upward to consider their annual remuneration taking into account their responsibilities and related risk as well as ability to increase long-term value of shareholders’ equity. (7) Disclose remuneration policy and form as well as prepare the report on remuneration policy and comment of the Remuneration Committee for the annual report. (8) Supervise to ensure that the executives has succession plan and carry out selection process for position from Executive Vice level upwards to be proposed to the Board of Directors. The Nomination and Remuneration Committee shall meet at least twice yearly, the quorum consists of not less than half of the total members and the meeting resolution is by majority of members present in the meeting. The Committee comprises 3 members, of which the Chairman is independent director, 2 independent director and 1 nonexecutive director. 1. Mr.Manop Bongsadadt Chairman 2. Mr.Chet Pattrakornkul Member 3. Mr.Suraphol Kulsiri Member Ms.Nujaree Sithasrivong Secretary Risk Management Committee : the committee component and authorities and responsibilities are as follows: (1) Determine overall risk management policies covering all significant risks on such aspect as credit, market, liquidity, operation and reputation to be proposed to the Board of Directors for consideration. (2) Set up strategies in accordance with the risk management policies of the Bank to enable the Bank to assess, monitor and regulate risk tolerance as well as set up framework for provisioning of classified assets. (3) Review adequacy of risk management policies and system including effectiveness and compliance with the specified policies. (4) Report to the Board of Directors regularly on their performance to ensure modification and improvement in accordance with the specified risk management policies and framework prior to reporting to the Audit Committee. (5) Consider and approve criteria of relevance and/or related to lending, making obligation or conducting business similar to lending in accordance with the risk management framework specified by the Bank and the public sector as well as screen lending policies for further approval of the Board of Directors. (6) Consider the appointment of specialized sub-committees to conduct risk management activities and/or other activities assigned by the Board of Directors under the Good Corporate Governance. (7) Regulate the risk management of the Bank and financial subsidiaries to report to the Board of Directors as assigned.
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The Risk Management Committee shall meet at least once quarterly, the quorum consists of not less than half of the total number of members and the meeting resolution is by majority of members present in the meeting. The Risk Management Committee consists of 7 members as follows: 1. Mr.Supol Wattanavekin Chairman 2. Mr.Tawatchai Sudtikitpisan Member 3. Mr.Chavalit Chindavanig Member 4. Ms.Thitinan Wattanavekin Member 5. Mr.Patom Amondechawat Member 6. Mr.Pracha Chumnarnkitkosol Member 7. Mr.Sarawut Charuchinda Member Mr.Siwaphong Plangthrakul Secretary Compliance and Governance Committee : The authorities and responsibilities are as follows: (1) Ensure that the Bank and its financial business group comply with laws, rules, regulations, business framework as well as market tradition, professional standard, clauses related to Good Corporate Governance and Compliance Policy through the Compliance Unit. (2) Ensure existence of efficient and independent Compliance and Good Corporate Governance systems. (3) Approve Annual Compliance Plan of the Compliance Unit and monitor its operation to ensure its consistency with the annual action plan in completeness and success. (4) Consider and comment on annual compliance report to report to the Board of Directors prior to submitting the report to the regulating body within a specified time period. (5) Determine set of best practices for the Board of Directors or other committees as well as executives and employees. Specify code of conducts for banking and financial business. (6) Approve the appointment, transfer and evaluation of Head of Compliance Unit according to the rules and regulations. The Compliance and Governance Committee shall meet at least once a month, the quorum consists of not less than half of the total number of members and the meeting resolution is by majority of members present in the meeting. The Compliance and Governance Committee consists of 4 members as follows:- 1. Mr.Chet Pattrakornkul Chairman 2. Mr.Pravit Varutbangkul Member 3. Mr.Tarnin Chirasoonton Member 4. Ms.Porntip Chuprakhun Member Mr.Pongphan Sukhyanga Secretary Main Credit and Foreclosed Property Committee : The authorities and responsibilities are as follows : (1) The Committee shall review and make recommendations to the Risk Management Committee on guidelines with
respect to loans, including debt restructuring loans, and foreclosed property loans. (2) The Committee shall review and approve loans, including debt restructuring loans, and sale of large foreclosed properties. The Committee is in charge of setting prices for properties purchased through auctions. In addition, the Committee shall have the right to reject the deal if the proposed price is not within the approved budget. (3) The Committee shall, within its scope of authority, approve any necessary legal actions against borrowers, and any expenses incurred.
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Annual Report 2010
The Main Credit and Foreclosed Property Committee consists of 4 members as follows; 1. Mr.Tawatchai Sudtikitpisan Chairman 2. Mr.Suraphol Kulsiri Member 3. Mr.Pracha Chumnarnkitkosol Member 4. Mr.Sarawut Charuchinda Member Ms.Khochakorn Sukjarun Secretary Executive Committee : The Executive Committee is assigned by the Board of Director to set up strategies and operation plans as well as to regulate the performance of the management to be in consistence with the operation plan with efficiency and effectiveness. In this regard, the authorities and responsibilities of the Executive Committee are as follows: (1) Set up the operation plan and budget in accordance with the specified policies, goals and strategic plans for further approval of the Board of Directors and regulate the operation of the executives to be in line with the operation plan. (2) Identify structure of organizations under the Committee’s responsibility as well as authorities and responsibilities of executives in positions lower than the Executive Vice President. (3) Approve investment, purchase and expenses of the Bank of the approved operation plans. (4) Ensure the existence of efficient work system, regulations and work procedure together with internal control practice. (5) Regulate and monitor the management to be in accordance with the risk framework specified by the Risk Management Committee covering aspects of strategy, lending, market, investment, liquidity, operation, reputation and legality. (6) Monitor the compliance with business code of conduct and professional ethics of the executives and employees. (7) Appoint one or more committee or sub-committee to screen, consider and approve any particular matter as per assigned, on behalf of the Board of Directors. (8) Prepare quarterly report on management and performance to be submitted to the Board of Directors. Additionally, the Executives Committee may seek professional opinion from external consultants on the operation of the Bank whereas expenses shall be borne by the Bank; hold a meeting at least once a month and the quorum of each meeting must be not less than half of the total number of members. The meeting resolution must be made by majority of directors present in the meeting. The Executive Committee consists of the following 13 members with Mr. Supol Wattanavekin as advisor: 1. Mr.Tawatchai Sudtikitpisan Chairman 2. Mr.Chavalit Chindavanig Member 3. Ms.Thitinan Wattanavekin Member 4. Mr.Patom Amorndechawat Member 5. Mr.Pracha Chumnarnkitkosol Member 6. Mr.Sarawut Charuchinda Member 7. Ms.Nujaree Sithasrivong Member 8. Mrs.Piradee Chongsiriwanchai Member 9. Mr.Verasak Tantinikorn Member 10. Mr.Somkiat Pongjunyakul Member 11. Mr.Satit Bovornsantisuth Member 12. Mr.Siri Senajak Member 13. Mrs.Suwannee Wattanavekin Member Ms.Porntip Chuprakhun Secretary
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2 Selection of Directors and Executives The selection of individuals to be appointed as a member of the Nomination and Remuneration Committee is based on careful selection and screening of qualified candidates taking into account the Good Corporate Governance and organizational requirement. The Nomination and Remuneration Committee shall take into consideration the suggestions of the minor shareholders who have right to nominate individuals qualified as candidates for director or independent director of the Bank. In the nomination and appointment of individuals to become independent director, such individual shall have qualification as required in the announcements of the Securities and Exchange Commission and the Stock Exchange of Thailand. The process includes shareholders, directors and executives with detailed biography to the Nomination and Remuneration Committee to consider the suitability and remuneration prior to proposing such nomination to the shareholders meeting, as specified by the regulation of the Bank, in that: l Voting right of a shareholder is based on one share one vote. l Each shareholder shall use up the total vote as per the above condition to select one or more directors. However, the voter is unable to determine how the vote would be divided up for any particular candidate. l Candidates with the most votes, in descending order, shall be appointed as directors. In case of equal vote for the final available appointment, the chairman of the meeting shall cast the final vote.
3
Remuneration for Executives
Monetary remuneration and other remuneration (None) The policy and guidelines for remuneration for executives are based on the 3 main factors which are: l Monthly compensation payable by the Bank during the time of being chairman and directors in the Board of Directors. l Attendance fee paid to the chairman and director for attending each meeting. l Gratuity or an annual compensation paid to the directors based on the annual incomes of the Bank and average annual bonus of employees. The director’s length of service is also taken into account. The Bank has set forth a clear and transparent remuneration policy for director that is in line with the industry and at the rate sufficient to retain directors with designable qualification. The aforementioned remuneration rate shall, however, be approved at the shareholder meeting. As for 2010, the Bank has remunerated 8 senior executives (including Senior Director of the Accounting Department), a total of 70.8 Million Baht in forms of salaries, provident fund and bonus which varied by the Bank performance. Furthermore, the Bank has not offer any asset trading title document to senior executives. The Nomination and Remuneration Committee has conducted an annual assessment of the President, the result of which is used as basis to consider the remuneration. The Chairman of the Nomination and Remuneration Committee who is an independent director and among the most senior director has communicated the consideration to the President. As for the remuneration of directors who are assigned to perform in other sub-committees namely the Audit Committee, the Nomination and Remuneration Committee and Executives Committee, such directors have been further remunerated appropriately. The details are as follows:
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Annual Report 2010
Board of Directors Compensation Last Name Position Board of Audit Directors Committee 720,000 - 1. Ms.Nawaaporn Ryanskul1 Chairperson/ Independent Director 2. Mr.Pichai Dachanapirom Independent Director/ 410,000 200,000 Chairman of the Audit Committee 3. Mr.Manop Bongsadadt Independent Director/ 415,000 120,000 Chairman of the Nomination and Remuneration Committee 4. Mr.Chet Pattrakornkul Independent Director, 405,000 120,000 Member of the Audit Committee/Member of the Nomination and Remuneration Committee 5. Mr.Tarnin Chirasoonton Director 360,000 - 6. Mr.Pravit Varutbangkul* Director 360,000 - 7. Mr.Suraphol Kulsiri** Director/Member of 375,000 - Nomination and Remuneration Committee 8. Mr.Supol Wattanavekin Director 360,000 - 9. Mr.Tawatchai Sudtikitpisan Director 360,000 - 10. Mr.Pracha Chumnarnkitkosol Director 360,000 - 4,125,000 440,000
Baht Total
Nomination Total 2010 and Bonuses Remuneration to be paid Committee in 2011 - 720,000 316,200 1,036,200 -
610,000 267,900 877,900
100,000
635,000 278,900 913,900
60,000
585,000 256,900 841,900
- - 60,000
360,000 158,100 518,100 360,000 158,100 518,100 435,000 191,000 626,000
- 360,000 158,100 518,100 - 360,000 158,100 518,100 - 360,000 158,100 518,100 220,000 4,785,000 2,101,400 6,886,400
* Extra earnings to recive in 2010 From holding the Position of Director in one of the bank’s affiates: 375,000 baht. ** Extra earnings to recive in 2010 From holding the Position of Director in one of the bank’s affiates: 575,000 baht.
Shareholding of Management Team Members as of the end of 2010 Name 1. Mr.Supol Wattanavekin 2. Mr.Tawatchai Sudtikitpisan 3. Mr.Chavalit Chindavanig 4. Mr.Thitinan Wattanavekin 5. Mr.Pracha Chumnarnkitkosol 6. Mr.Patom Amorndechawat 7. Mr.Sarawut Charuchinda 8. Ms.Suree Harnpinijsak
Position Chairman of the Executive Board President Head of Finance and Budgeting Head of Deposit and Marketing Head of Risk Management Head of Operations Head of Debt Restructuring Senior Vice President of Accounting
No. of Shares at Year’s End 12,426,850 100,000 0 34,782,761 0 0 0 0
*The decrease was due to the fact that one or more of his children has reached his or her legal age. 1 The resigned, effective on 31 December 2010
Differences + 2,945,808* None None + 8,802,900* None None None - 37,500
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4 Remuneration for Auditor In 2010, the Bank and its subsidiaries engaged Deloitte Touche Tohmatsu Jaiyos Audit Co., Ltd. for audit and other related service and incurred the following expenses : Audit Fee : the Bank and subsidiaries paid an audit fee, to the audit firm that the auditor belongs to, individual or business related to the said auditor and audit firm, a total amount of 8,320,000 Baht in the last accounting period. Non-Audit Fee : the Bank and subsidiaries paid non-audit fee for other services including services for special regulatory reports required by the Bank of Thailand, Collective Impairment Calculation Model and training courses to the audit firm that the auditor belongs to, a total amount of 300,000 Baht in the last accounting period and will pay for the service agreed upon that will be completed in the future a total amount of 10,810,000 Baht.
5 Internal Control
Regulation Policy : The executives and employees, with realization of internal control’s importance, have laid down the following framework of practice: l The Bank has promoted and created channel of access to internal control in order to foster good relationship between the management and employees via internal communication activities under the support of the executives. l The Bank has promoted and supported each unit to conduct self-regulation under the integrated organizational risk management - COSO ERM. Internal Control : It is the Bank’s policy to set up efficient and effective internal control system whereas the Audit Committee and executives would regularly review its efficacy. The internal control covers control over financial, operation and regulation to ensure the compliance with official laws and regulations. Evaluation process is set up in accordance with each component of the internal control, namely, internal environment, objective setting, event identification, risk assessment, risk response, control activities, information and communication, and monitoring. The Bank has also ascertained the continuity of internal control development. The 8 aspects of internal control that the Bank promoted so that each unit could conduct self-regulation under the integrated organizational risk management - COSO ERM consists of the followings: n
n
Internal Environment The Bank encourages all individuals to realize the necessity of the internal control system. The Committee supervises the setting of clear and measurable business goals to be a framework of operation for employees; organization structuring to enable efficiency of management, and code of conduct, declared in writing, prohibiting actions of the management and employees that may lead to conflict of interest with the organization and penalty in case of breach. Additionally, the Bank also set up the internal audit division as an integral part of the internal control system and a management tools to facilitate good control environment. Policy and written work procedures have been derived governing the financial transaction, procurement and general administration to ensure conclusiveness and prevent fraud. The Bank also laid down policy on human resource management covering proper recruitment and employment, orientation, training and development. The performance of the staff is under the monitoring of supervisors with a check and balance system.
Objective Setting The management of each unit has identified their objectives that relate to the Bank’s vision, mission and strategies as
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well as their own Balance Scorecard and Key Performance Indicator. In effect, the objective setting has followed the SMART principle wherein S: Specific refers to clarity and understandable reward or result; M: Measurable refers to ability to measure degree of objective achievement; A: Achievable refers to possibility to achieve the Bank’s objectives with existing resources; R: Relevant refers to relevance with strategies and operational goals of the Bank; and T: Timeliness refers to clear specification of time period to achieve the objectives. The setting of objectives is to ensure efficient operation in accordance with the Bank’s mission and risk tolerance.
Event Identification The Bank has identified internal and external events that may affect the achievement of objectives by setting up appropriate stress test, estimating stress scenario and extent of damage or problems that may arise under each stress scenario as well as counter measures for such damage and problem. The Bank has revised and improved procedures and test scenario periodically under the policy framework set forth by the Bank of Thailand. n
Risk Assessment The Bank has policy on risk management and regular risk assessment to identify both internal and external risk factors which may have significant adversary effect on the operation of the Bank. Measures to monitor the events leading to risk factor as well as to mitigate such risks have been identified whereas the employees are informed and requested to comply with the specified risk management measures. The Internal Audit Department and Compliance Department also monitor their performance to ensure its accordance with the risk management plan.
n
Risk Response The Bank sets up responses to the risk tolerance by selecting appropriate responses to the likelihood and impact of the risk based on comparison of cost and benefits to the Bank. n
Control Activities The Bank has clearly specified in writing the scope of authority and financial limit that the executives are authorized including bookkeeping, information recording and assets management to ascertain balance and check system. In case that the Bank engages in transactions with major shareholders, directors, executives or any individual related to the aforesaid parties, such transactions must be monitored with caution to ensure their compliance with the specified approval procedure. In case of investment with subsidiaries or joint ventures, the Bank regularly monitor the performance of such companies as well as set forth the procedural direction for the individuals appointed by the Bank to be directors or executives of such companies to follow. The Bank also set up the Compliance Department to ascertain that the operation of the Bank complies with all relevant laws. All of which are to minimize the risk of operation and preserve the Bank’s reputation. In case of misconduct, the Fact Finding Committee would be set up comprising of representatives from the headquarters to find out factual information and actions to remedy and improve work process to prevent the recurrence of such mishap. n
Information and Communication The Bank has provided information technology system to support information management as well as internal communication that are good, lucid, up-to-date to assist decision making. The information is neatly categorized in an easy to understand format. The Bank has also developed learning process via intranet to ensure that all employees could access the body of knowledge and apply them to enhance their potential conveniently along with formal human resource development so that they gain business expertise and readiness to advice customers, trade partners and other concerned parties to yield maximum benefits as per the Bank’s vision and missions. n
Monitoring The Bank has procedures, steps and tools to assist the executives and committees to monitor, develop potential and assess the performance according to Balance Scorecard and Key Performance Indicator to ensure that the performance and n
Kiatnakin Bank Public Company Limited
83
efficiency of the internal control system are still in continuity. Adjustments have been made accordingly as well as remedies for any shortfall made promptly. The Bank has stipulated a quarterly and monthly report of performance, operation and comparison with target according to significance as well as actual impact and damage to evaluate and revise work procedures and steps including efficiency and effectiveness of risk management tools currently in use. The consideration and revision are based on performance report, minutes of meeting, damage report and complaints that have been acted upon and self-assessed of each unit following the form that is randomly and periodically checked by the Internal Audit Department, the Compliance Department and External Auditor. The Board of Directors also evaluates the adequacy of the Internal Control System annually to ascertain that the Bank has suitable system to surely achieve its goals.
6 Personnel Policy
Since the Bank has continuously expanded its business with significant increase of employee number at operational, managerial and executive levels, the personnel strategy is therefore crucial to achieve strategies and specified business goals. The emphasis is on recruitment of quality workforce and employee development to equip them with knowledge and capacity to carry out their duties with dedication to best serve the customers as well as creation of staff morale and thorough and swift internal communication. n Personnel Recruitment and Selection The Bank has employed state-of-the-art technology and myriad of communication channels to reach target audience qualified for the required vacancies in the recruitment and selection process to ensure efficiency in the severe competition for quality workforce. The selectors and interviewers have been trained to enhance their skills. Furthermore, the Bank has placed importance on the development and increment of recruitment equipment to assess qualification, skills and potential suitable for the position and organizational growth under the Competency-based Selection as well as attitude, ethics and creativity to promote sustainable growth of the business. n Human Resource Management The Bank has continuously developed human resource in terms of knowledge and skills to enhance their expertise and positive impression for the customers as well as quality of life for its employees from day one as follows: 1) Development of skills, knowledge and capacity according to the principles of Core Competency, Functional Competency and Leadership Competency for employees at all levels from director, senior executives, middle executives and operational staff as well as setting up the self-learning library: KK Link & Learn to further develop the employees’ capacity and skills to carry out their duties efficiently and enhance the collateral growth for the employees and the Bank. Furthermore, the Bank has carried out the Knowledge Management programme to continuously manage the organizational body of knowledge as well as setting up more Community of Practice. 2) Development of quality of life for employee alongside sound performance to enable efficient work and good heath via organization of a myriad of activities such as Love @ First Height, Healthy Contest, Yoga and Aerobic, Fitness Membership, Hobbies and Recreation and Philanthropic Activities. Furthermore, the Bank has also continuously looked after the employees throughout their working life and prepared activities for the retiring employees to prepare them for life after retirement based on the success of their working days. n Internal Communication The Bank engages in continuous, regular and speedy communication with its employees via state-of-the-art media such as intranet aka KK World, KK SMS, KK VDO Conference, bulletin board and premiums on special occasions to ensure that all employees are up-to-date with both internal and external news and able to exchange opinions. The internal communication also acts as medium of communication for the executives and the staff to render collaboration and positive work atmosphere
84
Annual Report 2010
and reflects good corporate image to assist the Bank to achieve its intended business goals.
7 Related Transactions
Name and Relationship Details and Value Necessity and Reasonability
Fairness of Price and Item Terms and Conditions
The Bank leases land to use as storage and auction yard for reprocessed cars from Chotthanawat Co.,Ltd. A total leasing and servicing fee is 8.4 million Baht per annum
Leasing and servicing fee for land used as parking and auction yard for reprocessed cars which has been used continuously since 2004
Leasing and servicing fee at competitive market conditions
2 Deposit transactions of directors/executives/ related individuals
Deposit transaction of directors/ executives/related individuals totaling 49 persons, a total deposit of 585.4 million Baht and total interest paid 11.3 million Baht
Normal Deposit transaction made by directors/executives/ related individuals
Service with same interest rate as other customers
3 Securities trading transactions of the directors/executives with securities company
Securities trading transactions of the directors/executives with Kiatnakin Securities Co.,Ltd. with a total commission fee of 6.9 million Baht
Normal provision of brokerage service for securities trading to directors/executives
Service at same commission rate as other customers
1
Land leasing transaction with Chotthanawat Co.,Ltd. whose shareholders with some relations with the Bank’s directors/ shareholders/has controlling power or are able to influence with significance hold 99.96 percent of the shares
More details presented in the Notes to Financial Statements on Related Individuals and Business, No 37
Kiatnakin Bank Public Company Limited
Dividend Policy
Kiatnakin Bank Public Company Limited has a policy to pay dividend not exceeding 60 percent of net profit from an annual consolidated financial statement. Payout of dividend has to be approved at a general meeting of shareholders. An interim dividend can also be made if the Bank’s profit is appropriate to do so and such payment shall be reported in the next general meeting. In considering dividend payment, the Bank takes into account long-term return to shareholders and adequacy of capital encompassing business plan, banking industry risk both in normal and crisis condition and pre- and post-impacts from a given dividend payment. Dividend payment is made in such a rate that would not make BIS ratio lower than the Minimum Capital Requirement as specified in the Bank’s risk appetite and does not obstruct the Bank to gradually increase its reserve level for NPL to be on par with the average of other commercial Thai banks according to the Bank’s policy on reserve.
85
86
Annual Report 2010
Report on Accountability of the Board of Directors for the Financial Statement The Board of Directors is accountable for the consolidated financial statements and its subsidiaries as well as the financial information as presented in the annual report. The financial statements have been prepared in accordance with the Generally Accepted Accounting Principles (GAAP) with an appropriate and well maintained accounting policy, using the mostprudent discretion and best judgment while sufficient information is disclosed in the notes to the financial statements. 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 and identifying any potential weakness and prevent fraudulent or significant mismanagement of its business operation. In this respect, the Board of Directors has appointed the Audit Committee consisting of independent non bank executive members to be responsible for ensuring that the Bank produces accurate and sufficient financial reports; cross-examining that the Bank has appropriate and effective internal control and internal audit; reviewing all disclosures of the Bank’s information where related transactions have taken place or where there may be conflicts of interest to ensure their accuracy and completeness and other duties according to their terms of responsibilities including the monitoring of the internal control system. The opinion of the Audit Committee related to these matters is included in the Report of the Audit Committee section in this annual report. The Board of Directors is of opinion that the overall internal control of the Bank is satisfactory in that it sufficiently and appropriately provides credibility to the financial statement of the Bank and its subsidiaries for the accounting year ending December 31, 2010.
(Supol Wattanavekin) Chairman of the Board of Directors
Kiatnakin Bank Public Company Limited
87
Report of the Independent Certified Public Accountants TO THE SHAREHOLDERS AND BOARD OF DIRECTORS KIATNAKIN BANK PUBLIC COMPANY LIMITED We have audited the accompanying consolidated balance sheets of Kiatnakin Bank Public Company Limited and subsidiaries and the separate balance sheets of Kiatnakin Bank Public Company Limited as at December 31, 2010 and 2009 and the related consolidated and the separate statements of income, changes in shareholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Bank’s management as to their correctness and completeness of the presentation. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the aforementioned consolidated and the separate financial statements present fairly, in all material respects, the financial position of Kiatnakin Bank Public Company Limited and subsidiaries and of Kiatnakin Bank Public Company Limited as at December 31, 2010 and 2009 and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles.
Dr.Suphamit Techamontrikul Certified Public Accountant (Thailand) Registration No. 3356 DELOITTE TOUCHE TOHMATSU JAIYOS AUDIT CO., LTD. BANGKOK February 14, 2011
88
Annual Report 2010
BALANCE SHEETS KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2010 AND 2009
BAHT
Notes
ASSETS
CASH INTERBANK AND MONEY MARKET ITEMS DOMESTIC ITEMS Interest bearing Non-interest bearing Total interbank and money market items
7
INVESTMENTS IN SECURITIES Short-term investments, net Long-term investments, net Investments in subsidiaries, net Total investments in securities, net
8
INVESTMENTS IN LOANS, NET INVESTMENTS IN PROPERTIES NET RECEIVABLES FROM CLEARING HOUSE LOANS AND ACCRUED INTEREST RECEIVABLE Loans Securities and derivative business receivables Total loans and receivables Accrued interest receivable
9 10
Total loans and accrued interest receivable Less Allowance for doubtful accounts Allowance for troubled debt restructuring Net loans and accrued interest receivable PROPERTIES FORECLOSED - NET LAND, PREMISES AND EQUIPMENT - NET INTANGIBLE ASSETS - NET OTHER ASSETS TOTAL ASSETS
10, 11 10, 13 14 15 16 17
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2010 2009
282,132,097 228,648,692 6,669,459,340 10,166,651,892 1,242,686,687 850,254,943 7,912,146,027 11,016,906,835
S E P A R AT E F I N A N C I A L S TAT E MENTS 2010 2009
280,882,097 227,398,692 6,413,307,075 9,851,758,589 1,082,912,086 701,650,460 7,496,219,161 10,553,409,049
2,821,051,089 6,170,066,200 2,254,444,109 9,471,504,614 12,048,452,061 9,463,220,034 - - 9,159,909,229 12,292,555,703 18,218,518,261 20,877,573,372
5,080,458,409 12,040,167,481 6,859,484,350 23,980,110,240
6,699,802,108 4,523,461,184 2,528,575,569 2,585,572,179 78,070,000 78,040,002 - - 140,779,925 234,558,450 - - 106,972,755,283 86,560,031,073 106,972,755,283 86,560,031,073 753,661,663 556,925,082 - 7,504,938 107,726,416,946 87,116,956,155 106,972,755,283 86,567,536,011 586,329,791 521,028,482 584,927,521 519,888,134 108,312,746,737 (4,233,392,759) (1,650,775) 104,077,703,203 7,736,299,057 901,146,899 230,081,430 1,549,370,290 141,900,086,739
The notes to the financial statements form an integral part of these statements
87,637,984,637 107,557,682,804 87,087,424,145 (3,770,051,263) (4,226,900,921) (3,763,489,619) (25,710,718) (1,650,775) (25,710,718) 83,842,222,656 103,329,131,108 83,298,223,808 7,214,636,952 6,986,972,718 6,393,016,769 727,806,441 864,314,240 698,710,205 175,059,625 220,418,579 164,635,777 1,154,505,054 1,364,981,546 1,179,425,394 127,414,364,152 143,949,068,390 129,080,502,113
Kiatnakin Bank Public Company Limited
89
BALANCE SHEETS (CONTINUED) KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2010 AND 2009 BAHT
Notes
LIABILITIES AND SHAREHOLDERS’ EQUITY DEPOSITS Deposits in Baht Total deposits
18
INTERBANK AND MONEY MARKET ITEMS DOMESTIC ITEMS Interest bearing Non-interest bearing Total interbank and money market items
19
LIABILITIES PAYABLE ON DEMAND PAYABLES TO CLEARING HOUSE SECURITIES AND DERIVATIVE BUSINESS PAYABLE BORROWINGS Short-term borrowings Long-term borrowings Total borrowings
20
ACCRUED INTEREST EXPENSES OTHER PAYABLES LEGAL EXECUTION DEPARTMENT PAYABLE INCOME TAX AND SPECIFIC BUSINESS TAX PAYABLE OTHER LIABILITIES TOTAL LIABILITIES
21 22
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2010 2009
S E P A R AT E F I N A N C I A L S TAT E MENTS 2010 2009
75,931,621,954 76,109,216,305 75,932,741,843 76,109,227,559 75,931,621,954 76,109,216,305 75,932,741,843 76,109,227,559 3,200,799,386 1,142,179 3,201,941,565
3,644,727,985 3,412,793 3,648,140,778
3,316,837,456 3,722,507,639 9,388,406 5,815,487 3,326,225,862 3,728,323,126
282,603,995 195,492,397 282,603,995 195,492,397 16,135,429 35,081,034 - - 475,852,684 431,400,288 - - 21,865,722,331 18,729,310,439 24,425,722,331 21,399,310,439 13,441,776,386 7,334,459,686 13,441,776,386 7,334,459,686 35,307,498,717 26,063,770,125 37,867,498,717 28,733,770,125 453,762,685 927,411,669 575,380,000
484,231,846 656,482,622 -
460,907,739 866,561,610 575,380,000
488,347,436 628,378,230 -
745,637,744 638,235,813 698,507,520 634,866,083 3,071,156,778 1,206,279,287 3,056,363,382 1,142,270,439 120,989,003,220 109,468,330,495 123,066,790,668 111,660,675,395
The notes to the financial statements form an integral part of these statements
90
Annual Report 2010
BALANCE SHEETS (CONTINUED) KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES AS AT DECEMBER 31, 2010 AND 2009
BAHT
Notes
LIABILITIES AND SHAREHOLDERS’ EQUITY (CONTINUED) SHAREHOLDERS’ EQUITY SHARE CAPITAL 23 Authorized share capital 696,099,987 ordinary shares of Baht 10 each (December 31, 2009 : 722,845,571 shares of Baht 10 each) Issued and fully paid-up share capital 565,825,828 ordinary shares of Baht 10 each (December 31, 2009 : 523,152,466 shares of Baht 10 each) SHARE PREMIUM GAIN ON FAIR VALUE RESERVES ON INVESTMENTS IN LOANS GAIN (LOSS) ON FAIR VALUE RESERVES ON AVAILABLE-FOR-SALE SECURITIES RETAINED EARNINGS Appropriated Legal reserve 25 Other reserve Unappropriated TOTAL SHAREHOLDERS’ EQUITY OF THE BANK MINORITY INTEREST TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY OFF-BALANCE SHEET ITEMS - CONTINGENCIES 27 AVALS ON BILLS AND GUARANTEES ON LOANS LETTERS OF CREDIT OTHER CONTINGENCIES AND COMMITMENTS
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2010 2009
S E P A R AT E F I N A N C I A L S TAT E MENTS 2010 2009
6,960,999,870
7,228,455,710
6,960,999,870 7,228,455,710
5,658,258,280
5,231,524,660
5,658,258,280 5,231,524,660
3,062,444,548 2,655,779,138 3,062,444,548 2,655,779,138 1,130,659,582 1,218,803,372 165,013,981 131,602,422 169,171,728 (236,265,579) 169,093,330 (227,208,845) 722,845,571 722,845,571 722,845,571 722,845,571 380,000 380,000 380,000 380,000 9,926,787,786 8,319,290,406 11,104,242,012 8,904,903,772 20,670,547,495 17,912,357,568 20,882,277,722 17,419,826,718 240,536,024 33,676,089 - - 20,911,083,519 17,946,033,657 20,882,277,722 17,419,826,718 141,900,086,739 127,414,364,152 143,949,068,390 129,080,502,113 12,973,700 482,933,337 12,973,700 482,933,337 17,238,334 - 17,238,334 - 6,469,984,206 9,357,419,998 6,469,984,206 9,357,419,998
Mr.Tawatchai Suddtikitpisan Director The notes to the financial statements form an integral part of these statements
Mr.Pracha Chumnarnkitkosol Director
Kiatnakin Bank Public Company Limited
91
STATEMENTS OF INCOME KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 BAHT
Notes
INTEREST AND DIVIDEND INCOME Interest on loans Interest on interbank and money market items Hire-purchase and financial lease income Interest and dividend on securities Interest on investments in loans Total interest and dividend income INTEREST EXPENSES Interest on deposits Interest on interbank and money market items Interest on short-term borrowings Interest on long-term borrowings Fees and charges on borrowings Total interest expenses NET INTEREST AND DIVIDEND INCOME BAD DEBTS AND DOUBTFUL ACCOUNTS LOSS ON DEBT RESTRUCTURING NET INTEREST AND DIVIDEND INCOME AFTER BAD DEBTS AND DOUBTFUL ACCOUNTS AND LOSS ON DEBT RESTRUCTURING NON-INTEREST INCOME Gain on disposal of investments in securities Gain (loss) on revaluation of investment Reversal of impairment (loss) on investment in loans 9, 21 Reversal of impairment (loss) on investment in properties Brokerage fees Fees and services income Acceptance, avals and guarantees Others Gain on exchanges Gain from sales of foreclosed assets Other income 30 Total non-interest income
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2010 2009
S E P A R AT E F I N A N C I A L S TAT E MENTS 2010 2009
2,331,238,860 91,688,196 5,212,372,038 536,330,328 669,855,840 8,841,485,262 1,742,075,002 64,025,709 563,102,156 267,394,177 13,805,896 2,650,402,940 6,191,082,322 614,497,888 32,287,985
2,111,773,929 2,322,661,555 2,106,033,417 169,990,252 89,100,892 162,573,894 4,516,891,274 5,212,372,038 4,516,891,274 382,864,353 2,694,104,265 998,164,936 1,194,586,758 364,306,768 670,058,175 8,376,106,566 10,682,545,518 8,453,721,696 2,233,628,195 1,735,836,454 2,229,121,226 99,897,748 72,180,663 108,206,943 436,556,840 610,538,544 489,881,634 268,617,595 267,394,177 268,617,595 258,615 13,805,896 258,615 3,038,958,993 2,699,755,734 3,096,086,013 5,337,147,573 7,982,789,784 5,357,635,683 682,541,682 596,578,417 685,734,582 1,898,147 32,287,985 1,898,147
5,544,296,449 328,489,458 38,824,838 165,677,704
4,652,707,744 23,051,731 203,567,648 (228,066,189)
7,353,923,382 4,670,002,954 199,750,051 45,863,127 (341,064,425) 174,884,112 133,471,098 (266,275,022)
29,998 420,835,217 22,957,039 811,764,111 1,854,456 1,482,577,794 182,483,450 3,455,494,065
(8,603,682) 326,592,258 28,118,841 604,165,108 4,088,743 692,063,447 133,648,329 1,778,626,234
- - - - 22,957,039 28,118,841 817,414,473 605,483,931 1,852,545 4,086,703 556,821,789 119,058,809 127,087,421 114,779,065 1,518,289,991 825,999,566
92
Annual Report 2010
STATEMENTS OF INCOME (CONTINUED) KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
BAHT
Notes
NON-INTEREST EXPENSES Personnel expenses Premises and equipment expenses Taxes and duties Fee and service expenses Directors’ remuneration Contributions to the Deposit Protection Agency Loss from revaluation of foreclosed assets Loss incurred from breach of contract bidding Other expenses Total non-interest expenses INCOME BEFORE INCOME TAX LESS INCOME TAX NET INCOME
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2010 2009
S E P A R AT E F I N A N C I A L S TAT E MENTS 2010 2009
38 21 31 32
1,817,122,385 721,448,525 208,398,194 406,720,955 9,184,000 291,240,333 71,826,725 582,748,900 811,415,462 4,920,105,479 4,079,685,035 1,213,435,460 2,866,249,575
1,466,816,830 559,567,310 130,999,153 234,074,710 7,408,700 270,415,793 15,936,507 - 648,694,898 3,333,913,901 3,097,420,077 866,488,867 2,230,931,210
NET INCOME ATTRIBUTABLE TO: EQUITY HOLDERS OF THE BANK MINORITY INTEREST
2,840,151,758 26,097,817 2,866,249,575
2,228,767,559 3,431,992,618 1,676,307,356 2,163,651 - - 2,230,931,210 3,431,992,618 1,676,307,356
BASIC EARNINGS PER SHARE BAHT
28
5.20
4.26
6.29
3.20
DILUTED EARNINGS PER SHARE BAHT
28
4.97
4.26
6.00
3.20
Mr.Tawatchai Suddtikitpisan Director
The notes to the financial statements form an integral part of these statements
1,540,555,291 652,147,658 207,418,036 243,501,376 6,389,000 291,240,333 48,864,088 582,748,900 713,594,096 4,286,458,778 4,585,754,595 1,153,761,977 3,431,992,618
Mr.Pracha Chumnarnkitkosol Director
1,263,158,179 475,822,397 130,434,679 192,836,689 5,906,200 270,415,793 24,047,722 - 593,792,410 2,956,414,069 2,539,588,451 863,281,095 1,676,307,356
Unappropriated retained earnings
Minority interest
Total
BAHT
- - (1,020,207) (1,020,207) 380,000 8,319,290,406 33,676,089 17,946,033,657
380,000 6,875,215,396 33,340,141 17,167,498,775 - - (542,493) (666,427,041) - - (542,493) (666,427,041) - 2,228,767,559 2,163,651 2,230,931,210 - 2,228,767,559 1,621,158 1,564,504,169 - (784,692,549) - (784,692,549) - - - 9,921 - - - (1,449) - - (265,003) (265,003)
Gain (loss) on Gain (loss) on fair value fair value Appropriated reserves on reserves on General Share investments in available-for- Legal reserve premium loans sale securities reserve
CONSOLIDATED FINANCIAL STATEMENTS
Opening balance as at January 1, 2009 5,231,517,800 8,483,233 2,647,294,293 1,617,507,040 30,915,301 722,845,571 Fair value reserve decrease - - - (398,703,668) (267,180,880) - Net loss recognized in the shareholders’ equity - - - (398,703,668) (267,180,880) - Net income - - - - - - Total net (loss) gain recognized - - - (398,703,668) (267,180,880) - 26 - - - - - - Dividend paid 23 6,860 - 3,061 - - - Ordinary shares 24 - (8,483,233) 8,481,784 - - - Warrants Repayments of capital reduction for - - - - - - minority interest Dividend paid for minority interest - - - - - - Closing balance as at December 31, 2009 5,231,524,660 - 2,655,779,138 1,218,803,372 (236,265,579) 722,845,571
Issued and paid-up share capital Warrants Notes
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
Kiatnakin Bank Public Company Limited
93
- 2,655,779,138 1,218,803,372 (236,265,579) 722,845,571 - - (88,143,790) 405,437,307 - - - (88,143,790) 405,437,307 - - - - - - - - (88,143,790) 405,437,307 - - - - - - - 406,665,410 - - - - - - - - - - - - - - 3,062,444,548 1,130,659,582 169,171,728 722,845,571
- - - 26 - 23 426,733,620 - - 5,658,258,280
Share premium
Unappropriated retained earnings
Minority interest
Total
BAHT
- - - - - - - 380,000
- 2,840,151,758 2,840,151,758 (1,232,654,378) - - - 9,926,787,786
965,624 318,259,141 26,097,817 2,866,249,575 27,063,441 3,184,508,716 - (1,232,654,378) - 833,399,030 183,404,505 183,404,505 (3,608,011) (3,608,011) 240,536,024 20,911,083,519
380,000 8,319,290,406 33,676,089 17,946,033,657 - - 965,624 318,259,141
Gain (loss) on Gain (loss) on fair value fair value Appropriated reserves on reserves on General investments in available-for- Legal reserve loans sale securities reserve
CONSOLIDATED FINANCIAL STATEMENTS
5,231,524,660 -
The notes to the financial statements form an integral part of these statements
Opening balance as at January 1, 2010 Fair value reserve (decrease) increase Net (loss) gain recognized in the shareholders’ equity Net income Total net (loss) gain recognized Dividend paid Ordinary shares Increase of share capital from minority interest Dividend paid for minority interest Closing balance as at December 31, 2010
Issued and paid-up share capital Warrants Notes
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)
94 Annual Report 2010
The notes to the financial statements form an integral part of these statements
380,000 8,904,903,772
- 2,655,779,138 131,602,422 (227,208,845) 722,845,571 380,000 8,904,903,772 - - 33,411,559 396,302,175 - - - - - 33,411,559 396,302,175 - - - - - - - - - 3,431,992,618 - - 33,411,559 396,302,175 - - 3,431,992,618 - - - - - - (1,232,654,378) - 406,665,410 - - - - - - 3,062,444,548 165,013,981 169,093,330 722,845,571 380,000 11,104,242,012
- 2,655,779,138 131,602,422 (227,208,845) 722,845,571
- - - - - - - -
17,419,826,718 429,713,734 429,713,734 3,431,992,618 3,861,706,352 (1,232,654,378) 833,399,030 20,882,277,722
5,231,524,660 - - - - 26 - 23 426,733,620 5,658,258,280
5,231,524,660
16,990,304,444 (462,101,005) (462,101,005) 1,676,307,356 1,214,206,351 (784,692,549) 9,921 (1,449)
Total
Opening balance as at January 1, 2010 Fair value reserve increase Net gain recognized in the shareholders’ equity Net income Total net gain recognized Dividend paid Ordinary shares Closing balance as at December 31, 2010
Minority interest
- 17,419,826,718
Unappropriated retained earnings
General reserve
Closing balance as at December 31, 2009
Legal reserve
Appropriated
- - - - - - - -
Gain (loss) on Gain (loss) on fair value fair value reserves on reserves on Share investments in available-for- premium loans sale securities
SEPARATE FINANCIAL STATEMENTS
BAHT
Opening balance as at January 1, 2009 5,231,517,800 8,483,233 2,647,294,293 316,112,818 50,381,764 722,845,571 380,000 8,013,288,965 Fair value reserve decrease - - - (184,510,396) (277,590,609) - - - Net loss recognized in the shareholders’ equity - - - (184,510,396) (277,590,609) - - - Net income - - - - - - - 1,676,307,356 Total net (loss) gain recognized - - - (184,510,396) (277,590,609) - - 1,676,307,356 26 - - - - - - - (784,692,549) Dividend paid 23 6,860 - 3,061 - - - - - Ordinary shares Warrants 24 - (8,483,233) 8,481,784 - - - - -
Issued and paid-up share capital Warrants Notes
FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (CONTINUED)
Kiatnakin Bank Public Company Limited
95
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Annual Report 2010
STATEMENTS OF CASH FLOWS KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
CASH FLOWS FROM OPERATING ACTIVITIES Income before tax Adjustments to reconcile net income to cash provided by (paid in) operating activities: Depreciation and amortization Bad debt and doubtful accounts Loss on troubled debt restructuring Unrealized gain on foreign exchange Provision for diminution in value of securities (reversal) Provision for diminution in value of properties foreclosed (Gain) loss on impairment of investments in loans and revaluation of properties Gain on transferring investments in loans to loans Loss (gain) on disposal of securities Gain on disposal of equipment Loss on written off of equipment Loss incurred from breach contract bidding Provision for retirement benefits Increase (decrease) in specific business tax payable Increase in accrued expenses The excess of the acquier’s interest in the fair values of net assets acquired over the cost of acquisition Dividend received from subsidiaries Net income from interest and dividends Proceeds from interest and dividends Interest paid Cash paid for corporate income tax Profit from operations before changes in operating assets and liabilities
BAHT C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2010 2009
4,079,685,035 457,434,819 977,284,510 32,287,985 (3,356,611) (47,795,467) 85,587,888 (153,178,090) (18,399,980) 15,296,585 (12,485,741) 4,284,562 582,748,900 28,160,042 3,807,285 249,672,386 (23,401,274) - 6,257,632,834 (6,191,082,322) 8,819,191,376 (2,680,872,100) (1,110,732,701) 5,094,137,087
3,097,420,077 357,319,573 902,715,543 1,898,147 (1,253,354) (22,738,528) 15,936,507 290,672,724 (171,116,203) (224,999) (8,806,029) 3,092,787 - 82,700,274 (4,981,755) 102,668,700 - - 4,645,303,464 (5,337,147,573) 8,246,595,666 (3,349,175,354) (245,329,490) 3,960,246,713
S E P A R AT E F I N A N C I A L S TAT E MENTS 2010 2009
4,585,754,595 2,539,588,451 437,971,016 330,292,077 972,730,348 906,472,945 32,287,985 1,898,147 (3,356,611) (1,253,354) 343,398,534 925,805 48,864,088 24,047,722 (120,941,486) 320,277,875 (18,399,980) (171,116,203) 68,348,503 (45,320,614) (7,281,899) (5,166,633) 4,059,433 1,848,467 582,748,900 - 7,021,392 82,417,086 3,676,186 (5,082,041) 222,880,522 145,556,694 - - (2,260,155,627 (517,936,083) 4,899,605,899 3,607,450,341 (7,982,789,784) (5,357,635,683) 10,759,991,881 8,224,316,085 (2,727,195,431) (3,410,273,355) (1,095,630,549) (243,809,715) 3,853,982,016 2,820,047,673
Kiatnakin Bank Public Company Limited
97
STATEMENTS OF CASH FLOWS (CONTINUED) KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009 BAHT
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2010 2009
S E P A R AT E F I N A N C I A L S TAT E MENTS 2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES (CONTINUED) (Increase) decrease in operating assets Interbank and money market items 3,205,062,422 8,170,282,704 3,076,121,560 8,327,456,401 Investments in trading and available-for-sale securities 4,208,174,842 (4,466,715,821) 3,642,946,689 (3,884,893,457) Investments in loans 266,077,017 (353,046,972) (247,113,047) (714,171,934) Investments in properties - 20,000,000 - - Receivables from Clearing House 93,778,525 (199,140,271) - - Loans and receivables (23,797,464,565) (10,362,629,706) (23,043,622,826) (9,895,508,697) Properties foreclosed 3,738,327,610 4,349,339,652 3,103,932,980 4,085,811,369 Other assets (254,975,475) (47,255,883) (169,084,489) (52,907,889) Increase (decrease) in operating liabilities Deposits (177,594,351) 4,953,453,871 (176,485,716) 4,953,465,125 Interbank and money market items (446,199,213) (114,127,784) (402,097,264) (323,425,468) Liabilities payable on demand 87,111,598 (81,717,603) 87,111,598 (81,717,603) Payables to Clearing House (18,945,605) 35,081,034 - - Securities and derivative business payables 44,452,396 231,065,166 - - Short-term borrowings 817,728,592 9,669,190,303 1,517,728,592 8,009,190,303 Other payables 270,929,047 182,756,951 238,183,380 176,403,399 Other liabilities 1,534,742,651 100,178,602 1,569,536,807 104,900,583 Net cash provided by (used in) operating activities (5,334,657,422) 16,046,960,956 (6,948,859,720) 13,524,649,805 CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for purchase of long-term investments in securities Proceeds from sales of long-term investments in securities Cash paid for purchase of investments in subsidiaries Proceeds from sales of investments in subsidiaries Proceeds from capital reduction of subsidiaries Dividend received from subsidiaries Purchase of equipment Proceeds from sales of equipment Purchase of intangible assets Proceeds from sales of intangible assets Net cash used in investing activities
(491,599,910) (11,407,765,388) 2,358,062,698 225,000 (4,163,801,754) - 20,000,000 - - - - - (438,335,029) (227,961,159) 13,463,457 9,217,602 (116,189,781) (64,166,534) - 975,405 (2,818,400,319) (11,689,475,074)
(501,510,315) (11,401,129,290) 2,357,934,499 225,000 (4,163,801,754) - 20,000,000 - 335,904,506 528,734,297 2,260,155,627 517,936,083 (417,173,430) (208,682,955) 7,894,860 5,457,002 (113,805,520) (60,984,270) - - (214,401,527) (10,618,444,133)
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STATEMENTS OF CASH FLOWS (CONTINUED) KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
BAHT
CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from increase in share capital Proceeds from share premium Proceeds from sales of debenture Cash paid for debenture redemption Dividend payment Increase (decrease) of share capital from minority interest in subsidiaries Dividend paid for minority interest Net cash provided by (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at January 1, Cash and cash equivalents at December 31,
Additional cash flows information Non-cash transactions Transfer of assets for loan settlement Transfer of assets from pay in kind Transfer of investments in loans to be loans Increase (decrease) in fair value reserves on investments in loans Increase (decrease) in fair value reserves on available-for-sale securities
C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S 2010 2009
S E P A R AT E F I N A N C I A L S TAT E MENTS 2010 2009
426,733,620 5,411 426,733,620 5,411 406,665,410 3,061 406,665,410 3,061 13,469,000,000 63,000,000 20,779,000,000 1,513,000,000 (5,043,000,000) (3,617,000,000) (13,163,000,000) (3,617,000,000) (1,232,654,378) (784,692,549) (1,232,654,378) (784,692,549) 183,404,505 (1,020,207) (3,608,011) (265,003) 8,206,541,146 (4,339,969,287) 53,483,405 228,648,692 282,132,097
17,516,595 211,132,097 228,648,692
- - - - 7,216,744,652 (2,888,684,077) 53,483,405 227,398,692 280,882,097
17,521,595 209,877,097 227,398,692
3,077,921,845 3,856,096,705 2,535,447,415 3,716,046,544 - - 1,212,547,166 - 455,382,709 258,326,694 455,382,709 258,326,694 (88,143,790) (398,703,668) 33,411,559 (184,510,396) 405,437,307 (267,180,880) 396,302,175 (277,590,609)
The notes to the financial statements form an integral part of these statements
Kiatnakin Bank Public Company Limited
99
NOTES TO THE FINANCIAL STATEMENTS KIATNAKIN BANK PUBLIC COMPANY LIMITED AND SUBSIDIARIES FOR THE YEARS ENDED DECEMBER 31, 2010 AND 2009
1 GENERAL
Kiatnakin Bank Public Company Limited “the Bank” is a public company limited and is listed on the Stock Exchange of Thailand. Its head office is located at 500, Amarin Tower, Ploenchit Road, Pathumwan, Bangkok. The Bank provides banking business through its branch network in Thailand.
2.1 Basis for Preparation of the Financial Statements The consolidated and separate financial statements for the years ended December 31, 2010 and 2009, are presented as prescribed by the Bank of Thailand’s Notification dated August 3, 2008, related to the Preparation and Announcement of Financial Statements of Commercial banks and Holding companies of Financial Industry, issued under the Financial Institution Business Act B.E. 2551 and the Bank changes the format of presentation of the financial statements to comply with the Thai Accounting Standard (TAS) No.1 (Revised 2007) “Presentation of Financial Statement” which are effective for financial periods beginning on or after January 1, 2008 onward. Thai Accounting Standards No. 7 (Revised 2007) “Cash Flow Statements” was announced by the Federation of Accounting Professions and applied for the financial statements of periods beginning on or after January 1, 2008 and No. 103 (Revised 2006) “Disclosures in Financial Statements of Banks and Similar Financial Institutions” was revised and announced by the Federation of Accounting Professions and applied for the financial statements of periods beginning on or after January 1, 2007. The revised standards have no material impact on the Bank’s financial statements. On December 3, 2010, the Bank of Thailand issued the Notification No. SorNorSor. 11/2553 regarding “Preparation and Announcement of Financial Statement of Commercial Banks and Holding Companies of Financial Industry” to be effective of the financial statements for the accounting period since January 1, 2011 onwards. The Bank maintains its accounting records in Thai Baht and prepares its statutory financial statements in the Thai language in conformity with financial accounting standards used by the banking industry in Thailand. The financial statements are prepared in accordance with accounting principles and practices generally accepted in Thailand and the Bank of Thailand’s guidelines. The financial statements have been prepared under the historical cost convention except as disclosed in the accounting policies below. Disclosure regarding accounting standards issued but not yet effective The Federation of Accounting Professions has issued the Notifications regarding the new and revised Thai Accounting Standards (TAS), Thai Financial Reporting Standards (TFRS) and Thai Financial Reporting Interpretation (TFRI), which are not yet effective for the current period are as follows: TAS, TFRS and TFRI which are effective on January 1, 2011: TAS TAS 1 (Revised 2009) Presentation of Financial Statements
2 BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS
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TAS 7 (Revised 2009) Statement of Cash Flows TAS 8 (Revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors TAS 10 (Revised 2009) Events after the Reporting Period TAS 16 (Revised 2009) Property, Plant and Equipment TAS 17 (Revised 2009) Leases TAS 18 (Revised 2009) Revenue TAS 19 Employee Benefits TAS 23 (Revised 2009) Borrowing Costs TAS 24 (Revised 2009) Related Party Disclosures TAS 26 Accounting and Reporting by Retirement Benefit Plans TAS 27 (Revised 2009) Consolidated and Separate Financial Statements TAS 28 (Revised 2009) Investments in Associates TAS 29 Financial Reporting in Hyperinflationary Economies TAS 33 (Revised 2009) Earnings Per Share TAS 34 (Revised 2009) Interim Financial Reporting TAS 36 (Revised 2009) Impairment of Assets TAS 37 (Revised 2009) Provisions, Contingent Liabilities and Contingent Assets TAS 38 (Revised 2009) Intangible Assets TAS 40 (Revised 2009) Investment Property TFRS TFRS 2 Share-based Payment TFRS 3 (Revised 2009) Business Combinations TFRS 5 (Revised 2009) Non-current Assets Held for Sale and Discontinued Operations TFRS 6 Exploration for and Evaluation of Mineral Resources TFRI TFRI 15 Agreements for the construction of Real Estate The Bank’s management will adopt the above TAS, TFRS and TFRI relevant to the Bank in the preparation of Bank’s financial statements when they become effective. The Bank’s management has assessed the effects of these standards and believes that they will not have any significant impact on the financial statements for the period in which they are initially applied. TAS which are effective on January 1, 2013: TAS TAS 12 Income Taxes TAS 20 Accounting for Government Grants and Disclosure of Government Assistance TAS 21 (Revised 2009) The Effects of Changes in Foreign Exchange Rates The Bank’s management anticipates that the Bank will adopt the above TAS relevant to the Bank in the preparation of the Bank’s financial statements when they become effective. The Bank’s management is in the process of assessing the initially applied. The excludes TAS 12 “Income Taxes” for which management is still evaluating the first-year impact to the financial statements, and has yet to reach a conclusion. 2.2 Basis for Preparation of the Consolidated Financial Statements The consolidated financial statements include the accounts of the Bank and the subsidiaries where more than 50% of the shares are owned by the Bank. Significant intercompany transactions and balances have been eliminated. The subsidiaries which were incorporated in Thailand are as follows:
Kiatnakin Bank Public Company Limited 101
Type of Business
Kiatnakin Securities Co.,Ltd. Erawan Law Office Co.,Ltd. Asia Recovery 1 Fund Asia Recovery 2 Fund Asia Recovery 3 Fund Thai Restructuring Fund Asia Recovery Property Fund 1 Asia Recovery Property Fund 3 Bangkok Capital Fund Gamma Capital Fund CMIC Development Company Limited
Securities Law Office Unit trust Unit trust Unit trust Unit trust Unit trust Unit trust Unit trust Unit trust Real estate
Ownership Interest (%) As at As at December December 31, 2010 31, 2009
99.99 99.93 99.95 99.59 99.97 98.91 99.50 98.77 95.72 94.03 80.58
99.99 99.93 99.95 99.59 99.97 98.91 99.50 98.77 - - 80.58
The consolidated financial statements for the years ended December 31, 2010 and 2009 did not consolidate financial statements of CMIC Development Company Limited which the Bank holds 80.58% of common shares since the shares were received from conversion of debts to equity according to the debt restructuring agreement. This practice is in accordance with the Notification of Federation of Accounting Professions No. 27/2550: Exemption of TAS 27 (Revised 2007) “Consolidated Financial Statements and Separate Financial Statements” and TAS 28 (Revised 2007) “Investment in Associates” for financial institutions (see Note 8.3).
3.1 Cash and cash equivalents Cash and cash equivalents includes cash on hand and cash on collection. 3.2 Investments in securities 3.2.1 Basis of investments classification Investments other than investments in subsidiaries and interest in joint ventures are classified into the following four categories: trading, held-to-maturity, available-for-sale and general investments. The classification is dependent on the purpose for which the investments were acquired. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis. Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations in price are classified as trading investments and included in short-term investments. Investments with fixed maturity that the management has the intent and ability to hold to maturity are classified as held-to- maturity and are included in long-term investments, except for maturities within 12 months from the balance sheet date, which are classified as short-term investments. Investments intended to be held for an indefinite period of time, which may be sold in response to liquidity needs or changes in interest rates, are classified as available-for- sale; and are included in long-term investments unless management has expressed the intention of holding the investments for less than 12 months from the balance sheet date or unless they will need to be sold to raise operating capital, in which case they are included in short-term investments. Investments in non-marketable equity securities are classified as general investments.
3 SIGNIFICANT ACCOUNTING POLICIES
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3.2.2 Trading and available-for-sale investments Trading and available-for-sale investments are stated at fair value. The fair value of debt securities traded in the established market is based on the quoted prices or yields of the debt securities at the balance sheet date, or the latest trading date prior to the balance sheet date if there was no trading on that date. If the debt securities are not traded in the established market, the fair value is calculated by reference to the risk-free yield curve adjusted by an appropriate risk premium. The fair value of equity securities is based on the last bid price quoted by the Stock Exchange of Thailand at the balance sheet date. The fair value of unit trusts is determined from the net assets value (NAV) published by mutual fund management companies as the fund managers. Unrealized gain or loss resulting from changes in fair value of trading investments are recognized in the statements of income. Unrealized gain or loss resulting from changes in fair value of available-for-sale investments are recognized as a net amount in a separate component of shareholders’ equity, except where the securities are sold out, the realized gain or loss will be recognized in the statements of income. 3.2.3 Held-to-maturity investments Held-to-maturity investments are carried at amortized cost using the effective yield method. 3.2.4 General investments General investments are stated at cost less allowance for impairment in value. 3.2.5 Investments in subsidiaries Investments in subsidiaries are stated at cost method in the separate financial statements. Subsidiaries are entities in which Kiatnakin Bank Public Company Limited has an interest of more than one half of the voting rights or otherwise has power to exercise control over the financial and operating policies are consolidated. Subsidiaries are consolidated from the date on which control is transferred to the group and are no longer consolidated from the date that control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus costs directly attributable to the acquisition. All intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated; unrealized losses are also eliminated unless cost cannot be recovered. Where necessary, significant accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Bank. Separate disclosure is made for minority interests in the consolidated balance sheet and consolidated statement of income. A list of the subsidiaries is set out in Note 2.2. A test of impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying amount of the investment is higher than its recoverable amount, impairment loss is charged to the statements of income. 3.2.6 Income recognition relative to investments On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged or credited to the statement of income. When partly disposing of a particular investment in debt or equity securities, the carrying amount of disposed part is determined by the weight average carrying amount of the total holding of the investment. 3.3 Valuation of investments in loans The investment in loans is the investment in commercial and hire-purchase loans with and without collateral. These
Kiatnakin Bank Public Company Limited 103
commercial and hire-purchase loans have no readily ascertainable market values available and, therefore, are reported at estimated fair value. Unrealized gain or losses resulting from changes in fair value of investments in loans of the bank are reported as a net amount in a separate component of shareholders’ equity, except where the investments are sold out, the realized gain or losses will be recognized in the statements of income. A test for impairment is carried out when there is a factor indicating that an investment might be impaired. If the carrying value of the investment is higher than its recoverable amount, impairment loss is charged to the statement of income. For the Bank, where there is a change in terms or contracts, the investments in loans will be transferred to loans account to comply with the Bank of Thailand’s Notification Sor Nor Sor. 67/2551 Re: Accounting procedures for financial institution. The fair value was adopted for transfer. The difference between net book value and fair value is recognized as gain on revaluation in the statement of income by determining the possibility of future cash inflow. 3.4 Valuation of investments in property The investment in property is the investment in real estate business of the subsidiaries, which are mutual funds. These investments generally have no readily ascertainable market values available and, therefore, are reported at the lower of cost or estimated fair value. 3.5 Allowance for doubtful accounts The Bank classifies its loan portfolios into categories and sets allowance for doubtful accounts for loans in accordance with the Bank of Thailand’s Notification dated August 3, 2008 and with the management estimation over the allowance for doubtful accounts from the ending balance of loans. The period of time that a loan is past due and the ability to repay the debt are the principal criteria utilized in classifying a loan. Allowance for doubtful accounts for securities business receivables has been determined on the basis in accordance with the requirements of the Securities and Exchange Commission’s Notification dated February 15, 2001. The increase or decrease in allowance for doubtful accounts is recorded as expenses or decrease in expenses during the accounting period. Bad debts are written off during the year in which they are identified. Bad debts recovery is recorded by credit to bad debts and doubtful accounts expenses in the statements of income. 3.6 Troubled debt restructuring The Bank accounts for troubled debt restructuring in accordance with guidelines approved by the Bank of Thailand. The Bank records the assets or equity securities transferred to the Bank for debt settlements at the lower of fair values of the assets or equity securities, less estimated selling expenses, or the amount of investments in receivables (including non-accrued interest income at the restructuring date). In case that the debt restructuring involves modifications of terms of receivables, the fair value of investments in receivables after restructuring is based on the net present value of the expected future cash flows, using the Minimum Lending Rates (MLR) prevailing at the restructuring date. Losses arising from restructuring by waiver of principal or recorded accrued interest receivable, less recorded allowance, are recognized in the statement of income when incurred. Legal fees and other direct costs incurred to affect the debt restructuring are expensed when incurred. 3.7 Properties foreclosed Properties foreclosed represent land and/or construction, leasehold, condominium and repossessed vehicles.
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The repossessed land and/or construction, leasehold and condominium are stated at the lower of the outstanding loan principal including accrued interest or fair value. As at December 31, 2010, the repossessed vehicles are stated at their market value (Red Book) of the transferred date but not higher than the outstanding loan principal or fair value which are lower. As at December 31, 2009, the repossessed vehicles are stated at the lower of the outstanding loan principal including accrued interest and accrued value added tax or fair value. Fair value of the repossessed vehicles is based on the external appraised value less estimated discount according to risk that might incur of each repossessed vehicle (see Note 5). 3.8 Premises and equipment and depreciation Land is stated at historical cost. Buildings and equipment are stated at historical cost less accumulated depreciation. Depreciation is calculated on the straight-line basis to write off the cost of each asset, except for land, to its residual value over its estimated useful life as follows: Buildings 10 - 20 years Equipments 3 - 5 years Furniture and fixtures 5 years Vehicles 5 years Gains and losses on disposal of fixed assets are determined by comparing proceeds with the carrying amount and are included in operating profit. Repairs and maintenance are charged to the income statement during the financial period in which they are incurred. The cost of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the group. Major renovations are depreciated over the remaining useful life of the related asset. 3.9 Goodwill in a business combination Goodwill in a business combination represents the excess of the cost of acquisition over the Bank’s interest in the fair value of the identifiable net assets acquired as at the date of acquisition. The Bank recognizes goodwill in a business combination as an asset recorded as of the acquisition date in the consolidated financial statements. Goodwill is stated at cost less allowance for impairment (if any). Excess of net fair value of the identifiable net assets which over purchase cost as at the date of acquisition. The Bank recognizes that excess as a revenue recorded in the consolidated financial statements. 3.10 Intangible assets 3.10.1 Computer software Acquired computer software licenses are capitalized on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortized over their estimated useful lives of 10 years. Expenditure which enhances or extends the performance of computer software programs beyond their original specifications is recognized as a capital improvement and added to the original cost of the software. Computer software development costs are recognized as assets and are amortized using the straight-line method over their estimated useful lives, not exceeding a period of 10 years. 3.10.2 TFEX membership license The subsidiary which is the securities business recognized TFEX membership license as intangible asset without amortization. The Company tests it for impairment annually and allowance for impairment, if any, will be set up.
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3.11 Foreign currency transactions Foreign currencies transactions are accounted for at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities at the balance sheet date denominated in foreign currencies are translated into Baht using the reference rates of exchange of the Bank of Thailand ruling as of that date. Gains and losses on exchange resulting from the settlements and the translation of monetary assets and liabilities denominated in foreign currencies, are recognized in the statement of income. 3.12 Accounting for lease Leases of premises or equipment which substantially transfer all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalized at the inception of the lease at the lower of the fair value of the leased property or the present value of the minimum lease payments. Each lease payment is allocated to the principal and to the finance charges so as to achieve a constant rate on the finance balance outstanding. The outstanding rental obligations, net of finance charges, are included in other long-term payables. The interest element of the finance cost is charged to the statement of income over the lease period so as to achieve a constant periodic rate of interest on the remaining balance of the liability for each period. The premises or equipment acquired under finance leases is depreciated over the shorter of the useful life of the asset or the lease term. Leases not transferring a significant portion of the risks and rewards of ownership to the lessee are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of income on a straight-line basis over the period of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognized as an expense in the period in which termination takes place. 3.13 Interest on loans and deposits Interest on loans and deposits is recognized as income on the accrual basis, except in the case of interest on loans which is over three months past due from the due date where interest is recognized on collection basis. The Bank reverses accrued interest income on loan when its principal or interest payment has become over three months past due to comply with the Bank of Thailand’s Notification dated August 3, 2008. The Bank continues its income recognition on the accrual basis when the entire amount of the principal and overdue interest has been paid. 3.14 Hire-purchase and financial lease income Income from hire-purchase contracts is recognized on the effective interest Income from hire-purchase contracts which are originated on or after January 1, 2008 is recognized method. - based on the effective interest method. - Income from hire-purchase contracts which are originated before January 1, 2008 is recognized based on the effective interest method, using the brought forward balances of hire-purchase receivables as of January 1, 2008 as the beginning balances. The method of revenue recognition under the effective interest method will also be used for the remaining period of the hire-purchase contract. Interest on hire-purchase which is over three months past due from the due date is recognized on collection basis. The Bank reverses accrued interest income on hire-purchase when its principal or interest payment has become over three months past due to comply with the Bank of Thailand’s Notification dated August 3, 2008. The Bank continues its income recognition on the accrual basis when the entire amount of the principal and overdue interest has been paid. Lease contracts are recorded by financial lease method. Income from financial lease contracts is recognized on the effective interest method over the year of contracts. 3.15 Interest and dividend income Interest on investment is recognized as income on accrual basis except in the case of interest on debt securities
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which is over three months past due from the due date where interest is recognized on collection basis. Dividend income is recognized when dividend is declared. 3.16 Income from investments in loans Interest on investment in loans is recognized as income on the collection basis based on the outstanding loans multiplied by the effective yield according to contract or new agreement. 3.17 Fees and services income Fees and services are recognized as income when services are rendered. 3.18 Expenses and dividend recognition Expenses are recognized on an accrual basis. Dividends are recorded in the consolidated and separate financial statements in the period in which they are approved by the shareholders. 3.19 Income taxes Income tax expense is based on tax paid and accrued for the year. 3.20 Basic earnings per share Basic earnings per share amount are computed by dividing the net income for period by the weighted-average number of paid-up ordinary shares in issue during the year. The diluted earnings per share are therefore computed by dividing the net income for year adjusted by expense (after tax effect) saved from the conversion of dilutive potential ordinary shares, by the weighted-average number of ordinary shares (included potentially dilutive shares). 3.21 Provident fund The group operates a provident fund that is a defined contribution plan, the assets of which are held in a separate trust fund. The provident fund is funded by payments from employees and by the relevant group companies. Contributions to the provident fund are charged to the statement of income in the period to which they relate. 3.22 Post employment benefit The group provides for post employment benefits, payable to employees under Thai Labour Law. The amounts payable in the future depend on the salary and the maximum years of service of the respective employees. The liability arising as a result of such regulation is recorded by the present value of estimated future cash outflows using interest rates of government bond which have terms to maturities approximating the terms of the related liabilities. 3.23 Derivatives The Bank has entered into off-balance sheet transactions involving derivative financial instruments in order to support its customers’ needs and hedge against exchange rate risk and interest rate risk. Financial derivative contracts are recorded as off-balance sheet items. Forward foreign exchange contracts are marked to fair value using the market price as at the balance sheet date. Gains and losses from the translation are included in determining income. For interest rate swap contracts, the Bank recognized the net amount of interest to be received from or paid to the counterparty under the interest rate swap contracts as income or expenses on an accrual basis. Derivatives financial instruments which a subsidiary enters are futures contracts and options contracts with the Thailand Future Exchange Public Company Limited (TFEX), which are classified as trading derivatives. Cash pledged as collateral for the futures contracts and options contracts are recorded as receivable from Thailand Clearing House. The company recorded the paid (long position) and the premium received (short position) under SET 50 index options contracts at trade date of futures contracts and options contracts as other derivative assets and other derivative liabilities, respectively. Gains or losses from changes in the fair value of the contracts are recorded in the statements of income against receivable from Thailand Clearing House. The fair value of futures contracts and options contracts are based on the daily settlement price quoted by TFEX.
Kiatnakin Bank Public Company Limited 107
4 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY
Preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in certain circumstances, affecting reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period. Actual results could differ from these estimates. The significant areas requiring management to make judgments and estimates that affect reported amounts and disclosures are as follows: 4.1 Allowance for doubtful accounts 4.1.1 Loans The Bank classifies its loan portfolios into categories and sets allowance for doubtful accounts for loans in accordance with the Bank of Thailand’s Notification dated August 3, 2008 and with the management estimation over the allowance for doubtful accounts from the ending balance of loans. The period of time that a loan is past due and the ability to repay the debt are the principal criteria utilized in classifying a loan. The collateral value (appraised by an independent valuer or internal valuer every 3 years) used in calculating the required allowance for doubtful accounts is based on the type of collateral according to the Bank of Thailand’s guideline. The Bank sets loans reserve at the rate 100% for the discrepancies between debts and net present value of estimated future cash flows from selling of collateral or from collection except for the normal and specially mentioned debts where reserve is set at the rates of 1% and 2% per annum, respectively. 4.1.2 Hire - purchase receivables The Bank provided allowance for doubtful accounts on hire-purchase loans by using Collective Approach method which considers historical loss experience of loan which are calculated by the probability of default and the percentage of loss given default. In addition, the Bank adjusted historical loss experience with the significant factor related to the ability to repay loan in the future such as the increasing of loss on sales of foreclosed assets. In addition, the Bank considered the additional allowance for doubtful accounts for hire-purchase receivables by considering from the discrepancies between outstanding receivables and present value of estimated cash flow from selling of collateral regarding the Bank of Thailand’s guideline in order to comply with the Bank of Thailand’s Notification dated August 3, 2008. The Bank provided the allowance for doubtful accounts for hire- purchase receivables at the rate of 100% for the discrepancies between debts and net present value of estimated future cash flow from selling of collaterals and discounted for the holding period regarding the Bank of Thailand’s guideline. For the normal and specially mentioned debts, the Bank provided the allowance for doubtful accounts at the rate of 1% and 2%, respectively. 4.1.3 Securities business receivables Allowance for doubtful accounts for securities business receivables has been determined on the basis in accordance with the requirements of the Securities and Exchange Commission’s Notification dated February 15, 2001. 4.2 Valuation of investments in loans Fair value of investments in loans is determined by the net present value of estimated future cash flows from selling of collateral, appraised by an external independent valuer or internal valuer according to the Bank of Thailand’s guideline, discounted by interest rate at 7% per annum with the expected selling period of 4-5 years but not exceeding the balance in the original contract. The values assigned to the investment portfolio are based upon available information and assumptions which do not necessarily represent amounts which might ultimately be realized because of the uncertainty of economic’s circumstance which is the significant factor to determine the fair value.
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The subsidiaries, which are mutual funds, which invest in the investments in loans measured the fair values of the investments in restructured commercial loans based upon net present value of estimated future cash flows (interest rate as identified in restructuring agreements). Fair value of the investments in non-restructured commercial loans is based upon the net present value of estimated future cash flows from selling of collateral, appraised by an external independent valuer or internal valuer according to the Bank of Thailand’s guideline, discounted by interest rate at 7% per annum with the expected selling period of 4-5 years but not exceeding the balance in the original contract. For Bangkok Capital Fund and Gamma Capital Fund, fair value of investments in loans is calculated based upon the net present value of estimated future cash flows from selling of collateral, appraised by an external independent valuer or internal valuer according to the Bank of Thailand’s guideline, discounted by interest rate with the expected selling period of 2.4-8.4 years but not exceeding the balance in the original contract. 4.3 Valuation of investments in property Fair value is calculated from the appraisal value, appraised by an external independent valuer or internal valuer according to the Bank of Thailand guideline and discounted by the risk premium according to the holding period. The values assigned to the investment portfolio are based upon available information and assumptions which do not necessarily represent amounts which might ultimately be realized because of the uncertainty of economic’s circumstance which is the significant factor to determine the fair value. 4.4 Valuation of properties foreclosed Fair value of immovable assets are calculated from the appraisal value, appraised by an external independent valuer or internal valuer of the Bank every year and less estimated selling expenses and discounted by the risk premium according to the holding period. As at December 31, 2010, the Bank provided allowance for impairment of repossessed vehicles at 100% of their valuation. As at December 31, 2009 fair value of the repossessed vehicles is based on the external appraised value less estimated discount according to risk that might incur of each repossessed vehicle. For Bangkok Capital Fund and Gamma Capital Fund, fair value is calculated from appraisal value, appraised by an external independent valuer or internal valuer of the Bank every year less estimated selling expenses and discounted by rate of refund which is expected to be sold in approximately 2.4 years. 4.5 Provision for post - employment benefit The Bank provides the provision for post employment benefits, payable to employees by estimation from the amount to pay to employees in the future depending on the salary and the maximum years of service of the respective employees and discounts the value of future cash outflows by using interest rates of government bond.
5 CHANGE IN ACCOUNTING ESTIMATION
Since November 1, 2010, the Bank recorded repossessed vehicles by recording repossessed vehicles at their market value (Red Book) of the transferred date but not higher than the outstanding loan principal or fair value which are lower which were previously recorded at the lower of the outstanding loan principal including accrued interest and accrued value added tax or fair value. For the year ended December 31, 2010, the Bank changed the method for consideration of allowance for impairment of repossessed vehicles by providing 100% of their valuation. For the year ended December 31, 2009, the Bank considered allowance for impairment of repossessed vehicles by consideration from the external appraised value less estimated discount according to risk that might incur of each repossessed vehicle.
Kiatnakin Bank Public Company Limited 109
The change resulted in the increase in allowance for impairment of repossessed vehicles as at December 31, 2010 in the amount of Baht 38,414,701.
The financial statements for the year ended December 31, 2009 have been reclassified to conform to classifications used in the financial statements for the year ended December 31, 2010 by presenting VAT payable amounting to Baht 60,311,227 which was previously included in other assets to be reclassified to other liabilities.
Interbank and money market items (assets) as at December 31, 2010 and 2009 comprised of:
6 RECLASSIFICATIONS
7 INTERBANK AND MONEY MARKET ITEMS - DOMESTIC ITEMS (ASSETS) Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 On demand Term Total On demand Term Total The Bank of Thailand and FIDF 673,602,930 - 673,602,930 379,301,863 1,800,000,000 2,179,301,863 Commercial Banks 2,338,033,234 4,900,000,000 7,238,033,234 856,026,780 8,000,000,000 8,856,026,780 Total 3,011,636,164 4,900,000,000 7,911,636,164 1,235,328,643 9,800,000,000 11,035,328,643 Add Accrued interest receivable - 2,059,863 2,059,863 - 2,198,192 2,198,192 Less Allowance for doubtful accounts (1,550,000) - (1,550,000) (620,000) (20,000,000) (20,620,000) Tota 3,010,086,164 4,902,059,863 7,912,146,027 1,234,708,643 9,782,198,192 11,016,906,835 Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 On demand Term Total On demand Term Total The Bank of Thailand and FIDF 673,602,930 - 673,602,930 379,301,863 1,800,000,000 2,179,301,863 Commercial Banks 1,767,106,368 4,900,000,000 6,667,106,368 330,528,994 8,000,000,000 8,330,528,994 Finance, Securities and Credit froncier companies 155,000,000 - 155,000,000 62,000,000 - 62,000,000 Total 2,595,709,298 4,900,000,000 7,495,709,298 771,830,857 9,800,000,000 10,571,830,857 Add Accrued interest receivable - 2,059,863 2,059,863 - 2,198,192 2,198,192 Less Allowance for doubtful accounts (1,550,000) - (1,550,000) (620,000) (20,000,000) (20,620,000) Total 2,594,159,298 4,902,059,863 7,496,219,161 771,210,857 9,782,198,192 10,553,409,049
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8 INVESTMENTS IN SECURITIES 8.1 Classification of investments in securities As at December 31, 2010 and 2009, the Bank and subsidiaries classify their investments in securities as follows: Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Cost/ Fair value Cost/ Fair value Amortized cost Amortized cost Short-term investments Trading securities Equity securities Listed securities 94,538,600 91,184,050 85,511,745 85,825,348 Unit trusts 150,641,667 208,266,990 105,805,388 120,849,827 Total 245,180,267 299,451,040 191,317,133 206,675,175 Add Provision for changes in value of investments 54,270,773 - 15,358,042 - Net equity securities 299,451,040 299,451,040 206,675,175 206,675,175 Net trading securities 299,451,040 299,451,040 206,675,175 206,675,175 Available-for-sale securities Debt instruments Government and state enterprise securities Corporate debt instruments Foreign debt securities Total Add Provision for changes in value of investments Net debt instruments Equity securities Listed securities Unit trusts Total Add Provision for changes in value of investments Less Allowance for impairments of investments Net equity securities Net available-for-sale securities
1,859,125,501 36,000 - 1,859,161,501 2,963,210 1,862,124,711 410,926,884 145,100,000 556,026,884 87,861,429 (1,192,880) 642,695,433 2,504,820,144
1,862,124,711 - - 1,862,124,711
4,485,985,399 36,000 833,700,580 5,319,721,979
4,494,221,192 - 834,220,000 5,328,441,192
- 1,862,124,711
8,719,213 5,328,441,192
- 5,328,441,192
477,963,805 164,731,628 642,695,433
444,664,013 100,170,896 544,834,909
525,222,614 109,727,219 634,949,833
-
90,114,924
-
- 642,695,433 2,504,820,144
- 634,949,833 5,963,391,025
- 634,949,833 5,963,391,025
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Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Cost/ Fair value Cost/ Fair value Amortized cost Amortized cost General investments Equity securities 16,779,905 17,670,000 - - Total general investments 16,779,905 17,670,000 - - Net short-term investments 2,821,051,089 2,821,941,184 6,170,066,200 6,170,066,200 Long-term investments Available-for-sale securities Debt instruments Government and state enterprise securities Corporate debt instruments Foreign debt securities Total Add (less) Provision for changes in value of investments Net debt instruments Net available-for-sale securities General investments Equity securities Unit trusts Total Less Allowance for impairments of investments Total general investments Net long-term investments Net investments in securities
6,644,788,888 6,111,603 2,751,384,264 9,402,284,755
6,522,228,788 - 2,929,718,266 9,451,947,054
9,939,675,814 6,239,803 2,447,087,950 12,393,003,567
9,451,222,104 - 2,577,879,055 12,029,101,159
49,662,299 9,451,947,054 9,451,947,054
- 9,451,947,054 9,451,947,054
(363,902,408) 12,029,101,159 12,029,101,159
- 12,029,101,159 12,029,101,159
46,838,801 20,000 46,858,801
68,748,357 20,697 68,769,054
20,256,707 20,000 20,276,707
54,192,442 18,442 54,210,884
(27,301,241) 19,557,560 9,471,504,614 12,292,555,703
- 68,769,054 9,520,716,108 12,342,657,292
(925,805) 19,350,902 12,048,452,061 18,218,518,261
- 54,210,884 12,083,312,043 18,253,378,243
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Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 Cost/ Fair value Cost/ Fair value Amortized cost Amortized cost Short-term investments Available-for-sale securities Debt instruments Government and state enterprise securities 1,609,145,778 1,612,144,988 3,634,102,514 3,642,336,461 Corporate debt instruments 36,000 - 36,000 - Foreign debt securities - - 833,700,580 834,220,000 Total 1,609,181,778 1,612,144,988 4,467,839,094 4,476,556,461 Add Provision for change in value of investments 2,963,210 - 8,717,367 - Total debt instruments 1,612,144,988 1,612,144,988 4,476,556,461 4,476,556,461 Equity securities Listed securities 410,607,289 477,567,493 404,637,060 494,267,338 Unit trusts 145,100,000 164,731,628 100,100,000 109,634,610 Total 555,707,289 642,299,121 504,737,060 603,901,948 Add Provision for changes in value of investments 87,784,712 - 99,164,888 - Less Allowance for impairments of investments (1,192,880) - - - Net equity securities 642,299,121 642,299,121 603,901,948 603,901,948 Net available-for-sale securities 2,254,444,109 2,254,444,109 5,080,458,409 5,080,458,409 Net short-term investments 2,254,444,109 2,254,444,109 5,080,458,409 5,080,458,409 Long-term investments Available-for-sale securities Debt instruments Government and state enterprise securities 6,644,788,888 6,522,228,788 9,939,675,814 9,451,222,104 Foreign debt securities 2,751,384,264 2,929,718,266 2,447,087,950 2,577,879,055 Total 9,396,173,152 9,451,947,054 12,386,763,764 12,029,101,159 Add (less) Provision for changes in value of investments 55,773,902 - (357,662,605) - Net debt instruments 9,451,947,054 9,451,947,054 12,029,101,159 12,029,101,159 Net available-for-sale securities 9,451,947,054 9,451,947,054 12,029,101,159 12,029,101,159 General investments Equity securities 12,042,516 58,973,942 11,982,127 45,917,862 Unit trusts 10,000 10,373 10,000 9,221 Total 12,052,516 58,984,315 11,992,127 45,927,083 Less Allowance for impairments of investments (779,536) - (925,805) - Net general investments 11,272,980 58,984,315 11,066,322 45,927,083 Net long-term investments 9,463,220,034 9,510,931,369 12,040,167,481 12,075,028,242 Investments in subsidiaries Equity securities 650,999,230 802,778,330 650,999,230 678,768,950 Unit trusts 8,851,221,061 9,839,277,877 6,208,485,120 7,983,239,367 Total 9,502,220,291 10,642,056,207 6,859,484,350 8,662,008,317 Less Allowance for impairment of investments (342,311,062) - - - Total investments in subsidiaries 9,159,909,229 10,642,056,207 6,859,484,350 8,662,008,317 Net investments in securities 20,877,573,372 22,407,431,685 23,980,110,240 25,817,494,968
Kiatnakin Bank Public Company Limited 113
8.2 Time to maturity of debt securities Time to maturity of the Bank and subsidiaries’ investments in debt securities classified as available-for-sale securities and held-to-maturity securities as at December 31, 2010 and 2009 are presented as follows: Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 On demand Mature Mature within Mature within Total within 1 year 2-5 years 6-10 years Available-for-sale debt instruments Government and state enterprise securities - 1,859,125,501 1,149,382,893 5,495,405,995 8,503,914,389 Corporate debt instruments 6,111,603 36,000 - - 6,147,603 Foreign debt securities - - 2,386,159,116 365,225,148 2,751,384,264 Total 6,111,603 1,859,161,501 3,535,542,009 5,860,631,143 11,261,446,256 (Less) add Provision for changes in value of investments (6,111,603) 2,963,210 69,597,771 (13,823,869) 52,625,509 Net debt securities - 1,862,124,711 3,605,139,780 5,846,807,274 11,314,071,765
Unit : Baht CONSOLIDATED FINANCIAL 2009 On demand Mature Mature within within 1 year 2-5 years Available-for-sale debt instruments Government and state enterprise securities - 4,485,985,399 1,775,789,112 Corporate debt instruments 6,239,803 36,000 - Foreign debt securities - 833,700,580 1,998,672,468 Total 6,239,803 5,319,721,979 3,774,461,580 (Less) add Provision for changes in value of investments (6,239,803) 8,719,213 41,768,072 Net debt securities - 5,328,441,192 3,816,229,652
STATEMENTS Mature within 6-10 years
Total
8,163,886,702 14,425,661,213 - 6,275,803 448,415,482 3,280,788,530 8,612,302,184 17,712,725,546 (399,430,677) (355,183,195) 8,212,871,507 17,357,542,351 Unit : Baht
SEPARATE FINANCIAL STATEMENTS 2010 Mature Mature within Mature within within 1 year 2-5 years 6-10 years Available-for-sale debt instruments Government and state enterprise securities 1,609,145,778 1,149,382,893 5,495,405,995 Corporate debt instruments 36,000 - - Foreign debt securities - 2,386,159,116 365,225,148 Total 1,609,181,778 3,535,542,009 5,860,631,143 (Less) add Provision for changes in value of investments 2,963,210 69,597,771 (13,823,869) Net debt securities 1,612,144,988 3,605,139,780 5,846,807,274
Total 8,253,934,666 36,000 2,751,384,264 11,005,354,930 58,737,112 11,064,092,042
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Unit : Baht SEPARATE FINANCIAL STATEMENTS 2009 Mature Mature within Mature within Total within 1 year 2-5 years 6-10 years Available-for-sale debt instruments Government and state enterprise securities 3,634,102,514 1,775,789,112 8,163,886,702 13,573,778,328 Corporate debt instruments 36,000 - - 36,000 Foreign debt securities 833,700,580 1,998,672,468 448,415,482 3,280,788,530 Total 4,467,839,094 3,774,461,580 8,612,302,184 16,854,602,858 (Less) add Provision for changes in value of investments 8,717,367 41,768,072 (399,430,677) (348,945,238) Net debt securities 4,476,556,461 3,816,229,652 8,212,871,507 16,505,657,620 8.3 Investments in companies with holdings of 10% and upwards As at December 31, 2010 and 2009, investments in companies other than subsidiaries, of which the Bank hold 10% and upwards of the paid-up capital in each company, classified by industry, are as follows: CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2010 Principal activities Investment amount Holding (Baht) (%) Other companies BTMU Leasing Co.,Ltd. Leasing 3,085,200 10.00 Attakorn Co.,Ltd. Hire-purchase - 10.00 CMIC Development Co.,Ltd.* Real estate 1 80.58 Fund (which is not a legal juristic entity) Ayudthya Tuntawee Fund 5** Investing in debt and equity securities 50,000,000 46.49 CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2009 Principal activities Investment amount Holding (Baht) (%) Other companies BTMU Leasing Co.,Ltd. Leasing 3,085,200 10.00 Attakorn Co.,Ltd. Hire-purchase - 10.00 CMIC Development Co.,Ltd.* Real estate 1 80.58 Fund (which is not a legal juristic entity) Ayudthya Tuntawee Fund 5** Investing in debt and equity securities 50,000,000 46.00 * The consolidated financial statements for the years ended December 31, 2010 and 2009, do not consolidate financial statements of CMIC Development Company Limited which the Bank holds 80.58% of common shares since the shares were received from conversion of debts to equity according to the debt restructuring agreement. This practice is in accordance with the Notification of Federation of Accounting Professions No. 27/ 2550: Exemption of TAS 27 and TAS 28 for financial institutions. In the unaudited financial statements as at December 31, 2010 of CMIC Development Company Limited, total assets show amounted to Baht 1,445.86 million (December 31, 2009: Baht 1,383.81 million) and shareholders’ equity show amounted to Baht 207.87 million. (December 31, 2009: Baht 115.94 million). ** The Bank has no control over the Ayudthaya Tuntawee Fund 5’s operations therefore the Bank did not consolidate the financial statements of this fund.
Unit : Baht
* Investments in commercial loans auction from Financial Restructuring Authority (FRA) ** Investments in loans, which have properties as collateral or properties *** Investments in loans or properties
SEPARATE FINANCIAL STATEMENTS 2010 Principal Relationship Paid-up capital/ Cost method Holding Dividend paid activities outstanding Cost Impairment Net cost (%) by subsidiaries capital Kiatnakin Securities Co., Ltd. Securities Ordinary shareholder 650,000,000 649,999,930 - 649,999,930 99.99 - Erawan Law Office Co., Ltd. Law office Ordinary shareholder 1,000,000 999,300 - 999,300 99.93 - Asia Recovery 1 Fund Unit trust* Unit holder 356,331,975 367,893,224 (39,770,659) 328,122,565 99.95 153,801,178 Asia Recovery 2 Fund Unit trust* Unit holder 1,613,000,595 1,690,143,182 (300,777,943) 1,389,365,239 99.59 577,459,351 Asia Recovery 3 Fund Unit trust* Unit holder 1,412,543,429 1,491,053,462 - 1,491,053,462 99.97 248,012,256 Thai Restructuring Fund Unit trust* Unit holder 738,546,867 730,925,810 - 730,925,810 98.91 1,181,632,016 Asia Recovery Property Fund 1 Unit trust** Unit holder 43,817,463 45,931,842 (1,762,460) 44,169,382 99.50 - Asia Recovery Property Fund 3 Unit trust*** Unit holder 933,405,003 941,000,000 - 941,000,000 98.77 - Bangkok Capital Fund Unit trust* Unit holder 389,891,030 2,042,064,898 - 2,042,064,898 95.72 - Gamma Capital Fund Unit trust* Unit holder 341,595,553 1,542,208,643 - 1,542,208,643 94.03 - 9,502,220,291 (342,311,062) 9,159,909,229 2,160,904,801
8.4 Investments in subsidiaries As at December 31, 2010 and 2009, the Bank has investments in subsidiaries as follows:
Kiatnakin Bank Public Company Limited 115
* Investments in commercial loans auction from Financial Restructuring Authority (FRA) ** Investments in loans, which have properties as collateral or properties *** Investments in loans or properties
SEPARATE FINANCIAL STATEMENTS 2009 Relationship Paid-up capital/ Cost method Holding Dividend paid Principal activities outstanding Cost Impairment Net cost (%) by subsidiaries capital Kiatnakin Securities Co., Ltd. Securities Ordinary shareholder 650,000,000 649,999,930 - 649,999,930 99.99 - Erawan Law Office Co., Ltd. Law office Ordinary shareholder 1,000,000 999,300 - 999,300 99.93 - Asia Recovery 1 Fund Unit trust* Unit holder 512,928,223 529,570,263 - 529,570,263 99.95 88,278,784 Asia Recovery 2 Fund Unit trust* Unit holder 1,812,061,257 1,898,724,023 - 1,898,724,023 99.59 225,570,059 Asia Recovery 3 Fund Unit trust* Unit holder 1,908,328,946 2,014,395,044 - 2,014,395,044 99.97 303,338,067 Thai Restructuring Fund Unit trust* Unit holder 786,984,835 778,863,948 - 778,863,948 98.91 - Asia Recovery Property Fund 1 Unit trust** Unit holder 43,817,463 45,931,842 - 45,931,842 99.50 - Asia Recovery Property Fund 3 Unit trust*** Unit holder 933,405,003 941,000,000 - 941,000,000 98.77 - 6,859,484,350 - 6,859,484,350 617,186,910
Unit : Baht
116 Annual Report 2010
Kiatnakin Bank Public Company Limited 117
8.5 Acquisition of units in mutual funds
On March 23, 2010 (closing date), the Bank acquired investments units of Bangkok Capital Fund and Gamma Capital Fund. The total investments value under the Units Sale and Purchase Agreements was amounting to Baht 4,210.88 million and the Bank paid amounting to Baht 3,769.79 million to the seller and deposited amounting to Baht 441.09 million in the Escrow Account in order to be adjustable to the net assets value of Gamma Capital Fund and Bangkok Capital Fund. According to such sale and purchase agreement, the Bank obliged to pay 5 percent of purchase price or Baht 220.54 million after 30 days from the closing date and another 5 percent of purchase price or Baht 220.54 million after 90 days from the closing date by transferring from Escrow Account to the seller’s account. On April 23, 2010, which was the due date of 30 days after closing date, the Bank transferred Baht 186.37 million from the Escrow Account to the seller’s account. In addition, on June 29, 2010, which was the due date of 90 days after the closing date, the Bank adjusted the valuation of net assets of such funds. This results in the payment by the Bank of Baht 207.63 million by transferring from the Escrow Account to the seller’s account and also received payment from the Escrow Account in amounting to Baht 47.08 million then the Escrow Account was closed. On May 13, 2010, the Bank sold 180,587 units of Bangkok Capital Fund and 206,142 units of Gamma Capital Fund to non related people totally amount of Baht 20 million while cost was Baht 19.78 million so net purchase was Baht 4,144.01 million and the percentage of the Bank holding those funds were 95.72% and 94.03%, respectively. As at March 22, 2010, book value and fair value of assets and identified liabilities of subsidiaries of each item are as follows: Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS Book value and Fair value Bangkok Capital Gamma Capital Total Fund Fund Assets Deposits at financial institutions 37,748,959 43,620,983 81,369,942 Investments in securities, net - 613,195 613,195 Investments in loans, net 1,886,960,432 947,944,424 2,834,904,856 Properties foreclosed, net 669,200,157 593,337,707 1,262,537,864 Others 13,829,034 10,717,641 24,546,675 2,607,738,582 1,596,233,950 4,203,972,532 Liabilities 19,005,226 17,543,502 36,548,728 Net assets 2,588,733,356 1,578,690,448 4,167,423,804 Cash payment to acquire investments units 4,144,022,530 The excess of the interest in the fair values of net assets acquired over the cost of acquisition 23,401,274
The Bank recognized the excess of the interest in the fair values of the net assets acquired over the cost of acquisition as at the date of acquisition as other income recorded in the consolidated financial statements (see Note 30).
118
Annual Report 2010
8.6 Reduction of the capital of the mutual funds According to the Notification of the Capital Market Supervisory Board No. ThorNor. 22/2552: Rules, Conditions and Procedures for Establishment and Management of Mutual Funds for Solving Financial Institutions Problems has been amended by the Notification of the Capital Market Supervisory Board No. ThorNor. 10/2553 determined that management company has already acquired by way of debt repayment with other assets, foreclosure of the mortgage, or public auction the property in the category which a mutual fund cannot invest or posses prior to March 1, 2006, the management company shall dispose such property when the first opportunity arises by taken into account the best interest of unitholders, but in any case no later than December 31, 2010 and has determined the capital reduction of the mutual fund by pay in kind will be obtained the unanimous resolution of unitholders. The management company must reduce the number of units and transfer the non-cash assets and cash (if any) to the unit holders. The asset management company cannot dispose such assets within December 31, 2010, thus proceed the capital reduction of the mutual fund, which obtained the unanimous resolutions from unitholders by pay in kind assets to Bank and pay in cash to other unit holders. For the capital reduction of 6 mutual funds; consist of, Asia Recovery 1 Fund, Asia Recovery 2 Fund, Asia Recovery 3 Fund, Thai Restructuring Fund, Bangkok Capital Fund and Gamma Capital Fund, the Bank has received the properties foreclosed in the amount of Baht 1,206.19 million and investment in securities in the amount of Baht 6.36 million, which results as loss from capital reduction in the amount of Baht 62.07 million and deferred gain from capital reduction in the amount of Baht 100.22 million, which recognize when the properties foreclosed has been sold.
9. INVESTMENTS IN LOANS - NET
As at December 31, 2010 and 2009, the details of bidding receivables from the Financial Restructuring Authority (FRA), the Legal Execution Department (LED) and purchasing receivables are as follows: Unit : Baht
CONSOLIDATED AND SEPARATED FINANCIAL STATEMENTS 2010 Purchase date Number of Outstanding balance Cost Fair value customers per original and renewed agreements Kiatnakin Bank Public Company Limited Receivables auctioned from FRA September 30, 1999 335 2,353,192,108 327,081,947 211,507,454 December 15, 1999 174 475,309,315 15,265,310 14,465,229 Receivables purchased January 2009 - December 2010 10 1,992,701,073 889,614,006 931,051,602 Nakornluang Surat Leasing Co., Ltd. 43 1,535,501 1,542,500 943,510 Receivables auctioned from LED 1,383 12,799,669,632 1,605,240,312 1,370,607,774 Total 1,945 17,622,407,629 2,838,744,075 2,528,575,569 Subsidiaries (unit trust)
3,539 5,484
61,581,849,772 79,204,257,401
3,276,381,678 4,171,226,539 6,115,125,753 6,699,802,108
Kiatnakin Bank Public Company Limited 119
Unit : Baht CONSOLIDATED AND SEPARATED FINANCIAL STATEMENTS 2009 Purchase date Number of Outstanding balance Cost Fair value customers per original and renewed agreements Kiatnakin Bank Public Company Limited Receivables auctioned from FRA September 30, 1999 359 2,484,046,258 407,813,915 295,503,625 December 15, 1999 201 598,954,754 18,287,169 18,694,552 Receivables purchased January 2009 - December 2009 10 2,014,824,487 893,717,329 888,810,588 Investments in hire-purchase loans transferred from RT-KK 688 99,309,095 7,677,224 - Nakornluang Surat Leasing Co.,Ltd. 257 14,732,798 14,786,286 6,753,869 Receivables auctioned from LED 1,546 13,567,345,843 1,628,295,726 1,375,809,545 Total 3,061 18,779,213,235 2,970,577,649 2,585,572,179 Subsidiaries (unit trust) 1,833 7,570,906,546 954,666,786 1,937,889,005 4,894 26,350,119,781 3,925,244,435 4,523,461,184 In consolidated and separate financial statements for the year ended December 31, 2010, investments in loans had reversal of impairment charge amounting to Baht 165.68 million and Baht 133.47 million, respectively. (for the year ended December 31, 2009: impairment charge amounting to Baht 228.07 million and Baht 266.28 million, respectively which was a result of the uncertainty in the abilities to repay.)
10 LOANS AND ACCRUED INTEREST RECEIVABLE
10.1 Classified by product as at December 31, 2010 and 2009
Unit : Baht
CONSOLIDATED SEPARATE FINANCIAL STATEMENTS FINANCIAL STATEMENTS 2010 2009 2010 2009 Banking business loans Loans 29,627,739,745 26,184,560,086 29,627,739,745 26,184,560,086 Hire-purchase receivables* 77,019,718,353 60,118,642,873 77,019,718,353 60,118,642,873 Leasing receivables* 325,297,185 256,828,114 325,297,185 256,828,114 Total banking business loans 106,972,755,283 86,560,031,073 106,972,755,283 86,560,031,073 Add Accrued interest receivable 584,927,521 519,888,134 584,927,521 519,888,134 Less Allowance for doubtful accounts (4,226,900,921) (3,756,354,441) (4,226,900,921) (3,756,354,441) Allowance for troubled debt restructuring (1,650,775) (25,710,718) (1,650,775) (25,710,718) Net banking business loans and accrued interest receivable 103,329,131,108 83,297,854,048 103,329,131,108 83,297,854,048
120
Annual Report 2010
Unit : Baht CONSOLIDATED SEPARATE FINANCIAL STATEMENTS FINANCIAL STATEMENTS 2010 2009 2010 2009 Securities business receivables Cash accounts 419,922,316 293,181,839 - 7,504,938 Margin accounts 333,739,347 263,743,243 - - Total securities business receivables 753,661,663 556,925,082 - 7,504,938 Add Accrued interest receivable 1,402,270 1,140,348 - - Less Allowance for doubtful accounts (6,491,838) (13,696,822) - (7,135,178) Net securities business receivables and accrued interest receivable 748,572,095 544,368,608 - 369,760 Net loans and accrued interest receivable 104,077,703,203 83,842,222,656 103,329,131,108 83,298,223,808 *
Hire-purchase and leasing receivables are shown net of unearned interest income in the consolidated and the separate financial statements of Baht 12,162,827,403 and Baht 39,929,009, respectively (December 31, 2009: Baht 10,261,584,951 and Baht 33,215,450, respectively). Unearned interest income of hire-purchase and finance lease contracts is stated net of commissions and direct expenses incurred at the initiation of hire-purchase.
10.2 Classified by maturity as at December 31, 2010 and 2009
Unit : Baht
CONSOLIDATED SEPARATE FINANCIAL STATEMENTS FINANCIAL STATEMENTS 2010 2009 2010 2009 On demand or become due 2,039,123,228 1,687,027,700 2,039,025,379 1,687,027,700 Less than one year 4,701,245,476 4,839,745,233 3,952,646,044 4,295,746,384 Over one year 101,572,378,033 81,111,211,704 101,566,011,381 81,104,650,061 Total loans and accrued interest receivable 108,312,746,737 87,637,984,637 107,557,682,804 87,087,424,145 10.3 Classified by currency and residence of customer as at December 31, 2010 and 2009
Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Domestic Total Domestic Total Baht 108,312,746,737 108,312,746,737 87,637,984,637 87,637,984,637 Total loans and accrued interest receivable 108,312,746,737 108,312,746,737 87,637,984,637 87,637,984,637 Unit : Baht
SEPARATE FINANCIAL STATEMENTS 2010 2009 Domestic Total Domestic Total Baht 107,557,682,804 107,557,682,804 87,087,424,145 87,087,424,145 Total loans and accrued interest receivable 107,557,682,804 107,557,682,804 87,087,424,145 87,087,424,145
Kiatnakin Bank Public Company Limited 121
10.4 Classified by business type and loan classification as at December 31, 2010 and 2009 Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 Normal Special Substandard Doubtful Doubtful mentioned loss Agriculture and mining Manufacturing and commerce Real estate and constructions Public utility and services Housing loans Hire-purchase loans Leasing loans Others Total loans Accrued interest receivable Total
752,077
-
2,584,537,911
25,221,098
16,645,531,332 800,277,472 1,383,419,550 69,102,481,610 316,686,161 3,937,844,280 94,771,530,393 461,478,205 95,233,008,598
-
-
Total -
752,077
41,232,397 32,168,875 233,541,216 2,916,701,497
633,094,185 535,502,416 520,814,862 - 17,567,977 81,482,700 96,742,419 36,446,978 12,793,329 7,054,705,061 426,062,557 309,495,884 - - - 170,766,232 49,990,699 50,388,386 7,980,528,995 1,106,803,024 1,007,144,036 124,753,737 - - 8,105,282,732 1,106,803,024 1,007,144,036
2,272,522,520 20,607,465,315 43,196,120 942,524,269 123,992,163 1,653,394,439 126,973,241 77,019,718,353 8,611,024 325,297,185 51,574,214 4,260,563,811 2,860,410,498 107,726,416,946 97,849 586,329,791 2,860,508,347 108,312,746,737 Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS 2009 Normal Special Substandard Doubtful Doubtful mentioned loss Agriculture and mining 803,432 - - - - Manufacturing and commerce 1,724,415,295 29,045,420 29,389,766 27,713,069 303,383,800 Real estate and constructions 14,753,635,338 634,928,105 406,567,260 400,428,868 2,964,157,802 Public utility and services 634,021,566 9,704,646 20,799,234 30,239,428 20,161,987 Housing loans 1,092,282,628 79,268,824 67,757,174 19,380,987 14,884,061 Hire-purchase loans 52,079,201,099 7,053,414,491 489,455,148 371,971,932 124,600,203 Leasing loans 238,730,048 8,192,928 - - 9,905,138 Others 3,231,318,578 99,458,636 61,807,627 38,424,247 47,507,390 Total loans 73,754,407,984 7,914,013,050 1,075,776,209 888,158,531 3,484,600,381 Accrued interest receivable 402,547,679 118,382,954 - - 97,849 Total 74,156,955,663 8,032,396,004 1,075,776,209 888,158,531 3,484,698,230
Total 803,432 2,113,947,350 19,159,717,373 714,926,861 1,273,573,674 60,118,642,873 256,828,114 3,478,516,478 87,116,956,155 521,028,482 87,637,984,637
122
Annual Report 2010
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 Normal Special Substandard Doubtful Doubtful Total mentioned loss Agriculture and mining 752,077 - - - - 752,077 Manufacturing and commerce 2,584,537,911 25,221,098 41,232,397 32,168,875 233,541,216 2,916,701,497 Real estate and constructions 16,645,531,332 633,094,185 535,502,416 520,814,862 2,272,522,520 20,607,465,315 Public utility and services 800,277,472 - 17,567,977 81,482,700 43,196,120 942,524,269 Housing loans 1,383,419,550 96,742,419 36,446,978 12,793,329 123,992,163 1,653,394,439 Hire-purchase loans 69,102,481,610 7,054,705,061 426,062,557 309,495,884 126,973,241 77,019,718,353 Leasing loans 316,686,161 - - - 8,611,024 325,297,185 Others 3,190,576,607 170,766,232 49,990,699 50,388,386 45,180,224 3,506,902,148 Total loans 94,024,262,720 7,980,528,995 1,106,803,024 1,007,144,036 2,854,016,508 106,972,755,283 Accrued interest receivable 460,173,784 124,753,737 - - - 584,927,521 Total 94,484,436,504 8,105,282,732 1,106,803,024 1,007,144,036 2,854,016,508 107,557,682,804 Unit : Baht SEPARATE FINANCIAL STATEMENTS 2009 Normal Special Substandard Doubtful Doubtful mentioned loss Agriculture and mining Manufacturing and commerce Real estate and constructions Public utility and services Housing loans Hire-purchase loans Leasing loans Others Total loans Accrued interest receivable Total
803,432
-
1,724,415,295
29,045,420
14,753,635,338 634,021,566 1,092,282,628 52,079,201,099 238,730,048 2,688,362,228 73,211,451,634 401,505,180 73,612,956,814
-
-
Total -
803,432
29,389,766 27,713,069 303,383,800 2,113,947,350
634,928,105 406,567,260 9,704,646 20,799,234 79,268,824 67,757,174 7,053,414,491 489,455,148 8,192,928 - 99,458,636 61,807,627 7,914,013,050 1,075,776,209 118,382,954 - 8,032,396,004 1,075,776,209
400,428,868 30,239,428 19,380,987 371,971,932 - 38,424,247 888,158,531 - 888,158,531
2,964,157,802 20,161,987 14,884,061 124,600,203 9,905,138 41,043,596 3,478,136,587 - 3,478,136,587
19,159,717,373 714,926,861 1,273,573,674 60,118,642,873 256,828,114 2,929,096,334 86,567,536,011 519,888,134 87,087,424,145
Kiatnakin Bank Public Company Limited 123
10.5 Loan classification and allowance as at December 31, 2010 and 2009 by considering from the present valuation of future cash flow from the customers repayment of the selling of collaterals.
The Bank provided allowance for doubtful accounts for hire-purchase receivables by using Collective Approach method which considers historical losses experience of receivables. In addition, the Bank considered additional allowance for doubtful accounts for the hire-purchase receivables by setting aside provision after deducting the value of collateral in accordance with the Bank of Thailand’s guideline in order to cover the uncertainties that may arise from economic factors and trends that may consequently lead to the decrease in the ability to repay debts as shown in the following table: Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010
Loan classification
Loan outstanding Loan net of Allowance Allowance Allowance Increase Total allowance and accrued collateral/ % for doubtful per BOT’s (decrease) per BOT* interest Present value of account guideline allowance per guideline receivable cash flow % BOT*
Normal Loans 25,813,577,307 Hire-purchase receivables - New car 41,034,474,284 - Used car 28,384,957,007 Special mentioned Loans 941,293,843 Hire-purchase receivables - New car 3,002,153,275 - Used car 4,161,835,614 Substandard Loans 680,740,467 Hire-purchase receivables - New car 173,119,510 - Used car 252,943,047 Doubtful Loans 697,648,152 Hire-purchase receivables - New car 109,801,404 - Used car 199,694,480 Doubtful loss 2,860,508,347 Total loans and accrued interest receivable 108,312,746,737 Additional allowance for some doubtful accounts General reserve Allowance for troubled debt restructuring Total
4,625,712,140
1.00
46,227,140
1.00
-
46,227,140
40,901,972,697 28,200,508,913
1.00 1.00
409,019,727 282,005,089
1.00 1.00
- 409,019,727 - 282,005,089
277,451,269
2.00
5,549,026
2.00
-
5,549,026
2,967,229,739 4,087,475,322
2.57 2.94
76,257,804 120,171,774
2.00 2.00
(16,913,209) (38,422,268)
59,344,595 81,749,506
193,510,351 100.00
193,510,351
100.00
- 193,510,351
173,119,510 11.84 252,943,047 9.59
20,497,350 24,257,238
100.00 100.00
152,622,160 173,119,510 228,685,809 252,943,047
169,348,036 100.00
168,128,116
100.00
- 168,128,116
109,801,404 11.84 199,694,480 9.59 913,509,852 100.00
13,000,486 19,150,702 913,509,852
100.00 100.00 100.00
96,800,918 109,801,404 180,543,778 199,694,480 - 913,509,852
83,072,276,760
2,291,284,655
603,317,188 2,894,601,843
214,790,916 1,124,000,000
- 214,790,916 - 1,124,000,000
1,650,775 3,631,726,346
- 1,650,775 603,317,188 4,235,043,534
124
Annual Report 2010
Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2009
Loan classification
Loan outstanding Loan net of Allowance Allowance Allowance per Increase Total allowance and accrued collateral/ % for doubtfu BOT’s (decrease) per BOT’s interest Present value of account guideline allowance per guideline receivable cash flow % BOT *
Normal Loans 21,814,449,091 Hire-purchase receivables - New car 30,845,259,831 - Used car 21,497,246,741 Special mentioned Loans 869,394,045 Hire-purchase receivables - New car 3,144,128,151 - Used car 4,018,873,808 Substandard Loans 586,321,060 Hire-purchase receivables - New car 195,943,091 - Used car 293,512,058 Doubtful Loans 516,186,600 Hire-purchase receivables - New car 137,706,631 - Used car 234,265,300 Doubtful loss 3,484,698,230 Total loans and accrued interest receivable 87,637,984,637 Additional allowance for some doubtful accounts General reserve Allowance for troubled debt restructuring Total *
3,865,838,275
1.00
37,393,062
1.00
30,735,400,637 21,360,722,323
1.00 1.09
307,354,006 232,831,873
1.00 1.00
142,686,104
2.00
2,741,337
2.00
3,117,906,819 3,965,579,624
4.77 5.37
148,724,155 212,951,626
147,438,721 100.00
147,438,721
100.00
- 147,438,721
196,682,330 18.74 294,786,518 15.88
36,858,269 46,812,099
100.00 100.00
159,824,061 196,682,330 247,974,419 294,786,518
72,419,604 100.00
72,419,604
100.00
138,260,713 18.74 25,910,058 235,310,352 15.88 37,367,284 1,075,397,973 100.00 1,075,397,973
100.00 100.00 100.00
112,350,655 138,260,713 197,943,068 235,310,352 - 1,075,397,973
2,384,200,067
478,861,500 2,863,061,567
124,221,228 784,000,000
(1,231,532) 122,989,696 - 784,000,000
25,710,718 3,318,132,013
- 25,710,718 477,629,968 3,795,761,981
65,348,429,993
-
37,393,062
- 307,354,006 (19,224,650) 213,607,223 -
2,741,337
2.00 (86,366,019) 2.00 (133,640,034)
62,358,136 79,311,592
-
72,419,604
In addition, the Bank considered the additional allowance for doubtful accounts for hire-purchase receivables in order to comply with the Bank of Thailand’s Notification dated August 3, 2008 by considering the valuation of collateral regarding the Bank of Thailand’s guideline. The Bank provided the allowance for doubtful accounts for hire-purchase receivables at the rate of 100% for the discrepancies between debts and net present value of estimated future cash flow from customers’’ repayment or selling of collaterals and discounted by the rate and holding period regarding the Bank of Thailand’s guideline. For the normal and specially mentioned debts, the Bank provided the allowance for doubtful accounts at the rate of 1% and 2%, respectively.
Kiatnakin Bank Public Company Limited 125
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 Loan classification
Normal Loans Hire-purchase receivables - New car - Used car Special mentioned Loans Hire-purchase receivables - New car - Used car Substandard Loans Hire-purchase receivables - New car - Used car Doubtful Loans Hire-purchase receivables - New car - Used car
Loan outstanding Loan net of Allowance Allowance Allowance per Increase Total allowance and accrued collateral/ % for doubtfu BOT’s (decrease) per BOT’s interest Present value of account guideline allowance per guideline receivable cash flow % BOT *
25,065,005,213 4,625,712,140
1.00
46,227,140
1.00
-
41,034,474,284 40,901,972,697 28,384,957,007 28,200,508,913
1.00 1.00
409,019,727 282,005,089
1.00 1.00
- 409,019,727 - 282,005,089
277,451,269
2.00
5,549,026
2.00
-
5,549,026
3,002,153,275 2,967,229,739 4,161,835,614 4,087,475,322
2.57 2.94
76,257,804 120,171,774
2.00 2.00
(16,913,209) (38,422,268)
59,344,595 81,749,506
680,740,467
193,510,351 100.00
193,510,351
100.00
- 193,510,351
173,119,510 252,943,047
173,119,510 11.84 252,943,047 9.59
20,497,350 24,257,238
100.00 100.00
152,622,160 173,119,510 228,685,809 252,943,047
697,648,152
169,348,036 100.00
168,128,116
100.00
- 168,128,116
109,801,404 199,694,480
109,801,404 11.84 199,694,480 9.59
13,000,486 19,150,702
100.00 100.00
96,800,918 109,801,404 180,543,778 199,694,480
Doubtful loss 2,854,016,508 907,018,014 100.00 907,018,014 Total loans and accrued interest receivable 107,557,682,804 83,065,784,922 2,284,792,817 Additional allowance for some doubtful accounts 214,790,916 General reserve 1,124,000,000 Allowance for troubled debt restructuring 1,650,775 Total 3,625,234,508
100.00
- 907,018,014
603,317,188 2,888,110,005
- 214,790,916 - 1,124,000,000
- 1,650,775 603,317,188 4,228,551,696
941,293,843
46,227,140
126
Annual Report 2010
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2009 Loan classification
Normal Loans Hire-purchase receivables - New car - Used car Special mentioned Loans Hire-purchase receivables - New car - Used car Substandard Loans Hire-purchase receivables - New car - Used car Doubtful Loans Hire-purchase receivables - New car - Used car Doubtful loss Total loans and accrued interest receivable Additional allowance for some doubtful accounts General reserve Allowance for troubled debt restructuring Total *
Loan outstanding Loan net of Allowance Allowance Allowance per Increase Total allowance and accrued collateral/ % for doubtfu BOT’s (decrease) per BOT’s interest Present value of account guideline allowance per guideline receivable cash flow % BOT *
21,270,450,242 3,865,838,275
1.00
37,393,062
1.00
30,845,259,831 30,735,400,637 21,497,246,741 21,360,722,323
1.00 1.09
307,354,006 232,831,873
1.00 1.00
142,686,104
2.00
2,741,337
2.00
3,144,128,151 3,117,906,819 4,018,873,808 3,965,579,624
4.77 5.37
148,724,155 212,951,626
586,321,060
147,438,721 100.00
147,438,721
100.00
- 147,438,721
195,943,091 293,512,058
196,682,330 18.74 294,786,518 15.88
36,858,269 46,812,099
100.00 100.00
159,824,061 196,682,330 247,974,419 294,786,518
516,186,600
72,419,604 100.00
72,419,604
100.00
137,706,631 138,260,713 18.74 25,910,058 234,265,300 235,310,352 15.88 37,367,284 3,478,136,587 1,068,836,329 100.00 1,068,836,329
100.00 100.00 100.00
112,350,655 138,260,713 197,943,068 235,310,352 - 1,068,836,329
2,377,638,423
478,861,500 2,856,499,923
869,394,045
87,087,424,145 65,341,868,349
-
37,393,062
- 307,354,006 (19,224,650) 213,607,223 -
2,741,337
2.00 (86,366,019) 2.00 (133,640,034)
62,358,136 79,311,592
-
72,419,604
124,221,228 784,000,000
(1,231,532) 122,989,696 - 784,000,000
25,710,718 3,311,570,369
- 25,710,718 477,629,968 3,789,200,337
In addition, the Bank considered the additional allowance for doubtful accounts for hire-purchase receivables in order to comply with the Bank of Thailand’s Notification dated August 3, 2008 by considering the valuation of collateral regarding the Bank of Thailand’s guideline. The Bank provided the allowance for doubtful accounts for hire-purchase receivables at the rate of 100% for the discrepancies between debts and net present value of estimated future cash flow from s customes’ repayment or selling of collaterals and discounted by the rate and holding period regarding the Bank of Thailand’s guideline. For the normal and specially mentioned debts, the Bank provided the allowance for doubtful accounts at the rate of 1% and 2%, respectively.
Kiatnakin Bank Public Company Limited 127
10.6 Non-performing loans As at December 31, 2010 and 2009, the Bank had non-performing loans, defined according to the Bank of Thailand’s Notification as loans classified as substandard, doubtful, and doubtful loss, including interbank and money market items, but excluding accrued interest receivable, as follows: Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS SEPARATE FINANCIAL STATEMENTS 2010 2009 2010 2009 Non-performing loans (excluded accrued interest) 4,974,357,558 5,448,535,121 4,967,963,568 5,442,071,327 % of Non-performing loans to total loans (included loans to financial institutions) 4.41 5.62 4.43 5.64 Non-performing loans net of allowance for doubtful accounts (excluding accrued interest receivable) 2,878,555,342 3,287,355,580 2,878,653,191 3,287,443,640 % of Non-performing loans net of allowance for doubtful accounts to total loans net of allowance for doubtful accounts of non - performing loans (included loans to financial institutions) 2.60 3.51 2.62 3.49 % of Non-performing loans to the total of each type of loans - Loans 13.71 16.82 13.71 16.82 - Hire-purchase 1.12 1.64 1.12 1.64 - Securities and derivative business receivables 0.85 2.44 - 100.00 Loans and accrued interest receivable from which recognition of income has been discontinued based on accrual basis are as follows: Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Principal Accrued interest receivable Principal Accrued interest receivable Loans and bills receivables 4,105,431,886 - 4,448,539,106 Securities business receivables 6,366,652 97,849 13,968,732 97,849 Hire-purchase receivables 862,531,682 - 986,027,283 Total loans and receivables from which recognition of income has been discontinued 4,974,330,220 97,849 5,448,535,121 97,849 Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 Principal Accrued interest receivable Principal Accrued interest receivable Loans and bills receivables 4,105,431,886 - 4,448,539,106 Securities business receivables - - 7,504,938 Hire-purchase receivables 862,531,682 - 986,027,283 Total loans and receivables from which recognition of income has been discontinued 4,967,963,568 - 5,442,071,327 -
128
Annual Report 2010
11 ALLOWANCE FOR DOUBTFUL ACCOUNTS
Allowance for doubtful accounts as at December 31, 2010 and 2009 consists of the following: Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS 2010
Normal
Special mentioned
Sub- Doubtful standard
At beginning of year 674,250,966 150,610,967 638,907,569 445,990,669 Add Allowance for doubtful accounts (reversal) 179,855,493 8,873,118 (15,266,000) 59,363,053 Less Bad debt written-off - - - - Allowance for doubtful accounts at end of year 854,106,459 159,484,085 623,641,569 505,353,722
Doubtful loss
General reserve
Total
1,076,291,092 784,000,000 3,770,051,263 444,954,382 340,000,000 1,017,780,046 (554,438,550) - (554,438,550) 966,806,924 1,124,000,000 4,233,392,759
Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2009 Normal
Special mentioned
Sub- Doubtful standard
Doubtful loss
General reserve
At beginning of year 620,739,016 140,679,712 1,190,255,572 567,805,220 979,752,102 - Add Allowance for doubtful accounts (reversal) 53,511,950 9,931,255 (551,348,003) (121,814,551) 726,253,784 784,000,000 Less Bad debt written-off - - - - (629,714,794) - Allowance for doubtful accounts at end of year 674,250,966 150,610,967 638,907,569 445,990,669 1,076,291,092 784,000,000
Total
3,499,231,622 900,534,435 (629,714,794) 3,770,051,263
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010
Normal
Special mentioned
Sub- Doubtful standard
At beginning of year 674,250,966 150,610,967 638,907,569 445,990,669 Add Allowance for doubtful accounts (reversal) 179,855,493 8,873,118 (15,266,000) 59,363,053 Less Bad debt written-off - - - - Allowance for doubtful accounts at end of year 854,106,459 159,484,085 623,641,569 505,353,722
Doubtful loss
General reserve
Total
1,069,729,448 784,000,000 3,763,489,619 445,024,188 340,000,000 1,017,849,852 (554,438,550) - (554,438,550) 960,315,086 1,124,000,000 4,226,900,921
Kiatnakin Bank Public Company Limited 129
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2009 Normal
Special mentioned
Sub- Doubtful standard
Doubtful loss
General reserve
At beginning of year 620,739,016 140,679,712 1,190,255,572 567,805,220 950,100,953 - Add Allowance for doubtful accounts (reversal) 53,511,950 9,931,255 (551,348,003) (121,814,551) 729,446,683 784,000,000 Less Bad debt written-off - - - - (609,818,188) - Allowance for doubtful accounts at end of year 674,250,966 150,610,967 638,907,569 445,990,669 1,069,729,448 784,000,000
Total
3,469,580,473 903,727,334 (609,818,188) 3,763,489,619
12 TROUBLED DEBT RESTRUCTURINGS
As at December 31, 2010 and 2009 the Bank has troubled debt restructurings classified by default period as follows:
0 - 1 month More than 1 month - 3 months More than 3 months - 6 months More than 6 months - 12 months More than 12 months Total
Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2010 Number of Principal balance Loan net of Allowance for customer collateral doubtful account 93 2,878.18 245.95 27.27 22 562.96 109.42 14.73 41 545.57 153.28 157.35 51 556.04 118.35 142.96 90 1,389.38 606.96 660.26 297 5,932.13 1,233.96 1,002.57
0 - 1 month More than 1 month - 3 months More than 3 months - 6 months More than 6 months - 12 months More than 12 months Total
Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2009 Number of Principal balance Loan net of Allowance for customer collateral doubtful account 162 3,709.91 384.46 42.99 38 641.04 43.26 7.41 39 494.73 102.54 102.54 23 455.28 30.03 30.03 72 1,656.43 658.90 658.90 334 6,957.39 1,219.19 841.87
130
Annual Report 2010
As at December 31, 2010, the Bank has 10 troubled debt restructurings (December 31, 2009: 4 debts) where the outstanding balance before restructuring amounted to Baht 213.13 million (December 31, 2009: Baht 25.92 million). For the year ended December 31, 2010, the Bank recognized loss on restructuring amounting to Baht 32.29 million (for the year end December 31, 2009: Baht 1.90 million) in the statement of income under loss on troubled debt restructuring.
Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2010 Restructuring conditions Number of Outstanding Outstanding Type of Fair loans balance balance assets value of (1) (1) before TDR after TDR transferred assets Transfer of properties 5 99.10 - Land and buildings 88.43 Modifications of payment terms 2 1.80 - - - Transfer of properties and modifications of payment terms 3 112.23 1.74 Land and buildings 79.18 Total 10 213.13 1.74 Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2009 Restructuring conditions Number of Outstanding Outstanding Type of Fair loans balance balance assets value of (1) (1) before TDR after TDR transferred assets Transfer of properties Modifications of payment terms Total (1)
1 3 4
20.68 5.24 25.92
- 2.80 2.80
Land -
20.68 -
Net book value (principal including accrued interest).
13 ALLOWANCE FOR TROUBLED DEBT RESTRUCTURINGS
Allowance for troubled debt restructuring as at December 31, 2010 and 2009, consist of the following:
Unit : Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2010 2009 At beginning of year 25,710,718 53,866,276 decrease during year (24,059,943) (28,155,558) At end of year 1,650,775 25,710,718
Kiatnakin Bank Public Company Limited 131
14 PROPERTIES FORECLOSED – NET
Properties foreclosed as at December 31, 2010 and 2009, consist of the following: Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 8,514,901,989 7,872,081,951
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Properties foreclosed 9,345,621,552 8,752,132,722 Less Provision for diminution in value of properties foreclosed (1,609,322,495) (1,537,495,770) (1,527,929,271) (1,479,065,182) Net properties foreclosed 7,736,299,057 7,214,636,952 6,986,972,718 6,393,016,769
Properties foreclosed are acquired by assets transferred, by auction and by the repossession for the debt settlement.
Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 Immovable assets Movable assets Total At beginning of year 8,650,262,104 101,870,618 8,752,132,722 Additions 3,162,956,557 1,250,241,090 4,413,197,647 Disposals (2,513,724,447) (1,305,984,370) (3,819,708,817) At end of year 9,299,494,214 46,127,338 9,345,621,552 Less Provision for diminution in value of properties foreclosed (1,563,495,394) (45,827,101) (1,609,322,495) Net properties foreclosed 7,735,998,820 300,237 7,736,299,057 Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2009 Immovable assets Movable assets Total At beginning of year 8,968,587,510 276,788,160 9,245,375,670 Additions 1,433,662,409 2,422,434,295 3,856,096,704 Disposals (1,751,987,815) (2,597,351,837) (4,349,339,652) At end of year 8,650,262,104 101,870,618 8,752,132,722 Less Provision for diminution in value of properties foreclosed (1,497,062,519) (40,433,251) (1,537,495,770) Net properties foreclosed 7,153,199,585 61,437,367 7,214,636,952
132
Annual Report 2010
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 Immovable assets Movable assets Total At beginning of year Additions Disposals At end of year Less Provision for diminution in value of properties foreclosed Net properties foreclosed
7,770,211,333 2,496,728,220 (1,797,948,610) 8,468,990,943 (1,482,108,225) 6,986,882,718
101,870,618 1,250,024,798 (1,305,984,370) 45,911,046
7,872,081,951 3,746,753,018 (3,103,932,980) 8,514,901,989
(45,821,046) 90,000
(1,527,929,271) 6,986,972,718 Unit : Baht
SEPARATE FINANCIAL STATEMENTS 2009 Immovable assets Movable assets Total At beginning of year 7,965,058,617 276,788,160 8,241,846,777 Additions 1,293,612,248 2,422,434,295 3,716,046,543 Disposals (1,488,459,532) (2,597,351,837) (4,085,811,369) At end of year 7,770,211,333 101,870,618 7,872,081,951 Less Provision for diminution in value of properties foreclosed (1,438,631,931) (40,433,251) (1,479,065,182) Net properties foreclosed 6,331,579,402 61,437,367 6,393,016,769
The details of assets at fair value where the Bank granted an option to debtors for repurchasing classified by duration of buy-back period are as follows:
Unit : Baht 2009
Less than 2 months 2 - 12 months Over 12 months but less than 24 months Over 24 months but less than 36 months Over 36 months but less than 60 months Total
2010 2,500,000 297,459,340 106,529,476 - 26,815,845 433,304,661
22,430,621 260,043,051 127,235,086 7,437,503 45,105,989 462,252,250
Kiatnakin Bank Public Company Limited 133
Immovable assets foreclosed classified by external and internal appraisers as at December 31, 2010 and 2009 consist of the following: Unit : Million Baht CONSOLIDATED SEPARATE FINANCIAL STATEMENTS FINANCIAL STATEMENTS 2010 2009 2010 2009 Foreclosed assets - Immovable assets - Appraised by external appraisers 5,293 3,655 4,853 3,305 - Appraised by internal appraisers 4,007 4,995 3,616 4,465 Total 9,300 8,650 8,469 7,770
15 LAND, PREMISES AND EQUIPMENT - NET
Lands, premises and equipment as at December 31, 2010 and 2009 consist of the following: Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS 2010 Cost Accumulated depreciation Land,
Beginning Additions Disposals balance
Ending balance
Land 99,548,277 - (4,580,000) 94,968,277 Premises 73,034,325 10,292,425 (6,774,936) 76,551,814 Equipment 742,646,882 177,771,466 (20,152,403) 900,265,945 Furniture and fixtures 504,226,856 201,332,822 (58,897,093) 646,662,585 Vehicles 186,020,002 64,650,000 (27,947,364) 222,722,638 Total 1,605,476,342 454,046,713 (118,351,796) 1,941,171,259
Beginning Depreciation Disposals balance
premises and Ending equipment balance - net
- - - - 94,968,277 (36,455,547) (3,586,482) 6,237,041 (33,804,988) 42,746,826 (483,077,239) (135,160,943) 19,740,289 (598,497,893) 301,768,052 (266,149,024) (97,141,597) 54,883,901 (308,406,720) 338,255,865 (91,988,091) (34,437,060) 27,110,392 (99,314,759) 123,407,879 (877,669,901) (270,326,082) 107,971,623 (1,040,024,360) 901,146,899
Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2009 Cost Accumulated depreciation Land,
Beginning Additions Disposals balance
Land 99,548,277 - Premises 73,034,325 - Equipment 701,143,099 101,635,100 Furniture and fixtures 424,814,054 93,383,979 Vehicles 165,184,492 40,195,500 Total 1,463,724,247 235,214,579 Depreciation for the years ended
Ending balance
- 99,548,277 - 73,034,325 (60,131,317) 742,646,882 (13,971,177) 504,226,856 (19,359,990) 186,020,002 (93,462,484) 1,605,476,342
- December 31, 2010 - December 31, 2009
Beginning Depreciation Disposals balance - - (33,105,223) (3,350,324) (433,681,715) (109,112,443) (199,338,901) (77,813,800) (81,148,952) (30,076,668) (747,274,791) (220,353,235)
Baht Baht
premises and Ending equipment balance - net
- - 99,548,277 - (36,455,547) 36,578,778 59,716,919 (483,077,239) 259,569,643 11,003,677 (266,149,024) 238,077,832 19,237,529 (91,988,091) 94,031,911 89,958,125 (877,669,901) 727,806,441
270,326,082 220,353,235
134
Annual Report 2010
As at December 31, 2010 and 2009, the Bank and subsidiaries had land, premises and equipment, fully depreciated but still in use, at the original cost amounting to Baht 404.62 million and Baht 372.22 million, respectively. Unit : Baht
SEPARATE FINANCIAL STATEMENTS 2010 Cost Accumulated depreciation Land,
Beginning Additions Disposals balance
Land 99,548,277 - Premises 67,052,388 10,292,426 Equipment 545,520,179 164,846,628 Furniture and fixtures 423,625,750 192,595,596 Vehicles 158,254,502 63,834,000 Total 1,294,001,096 431,568,650
Ending balance
(4,580,000) 94,968,277 (793,000) 76,551,814 (10,724,203) 699,642,604 (18,039,176) 598,182,170 (16,541,664) 205,546,838 (50,678,043) 1,674,891,703
Beginning Depreciation Disposals balance - - (30,473,611) (3,586,482) (302,502,042) (125,315,353) (192,125,645) (94,472,079) (70,189,593) (32,800,413) (595,290,891) (256,174,327)
premises and Ending equipment balance - net
- - 94,968,277 255,105 (33,804,988) 42,746,826 10,332,589 (417,484,806) 282,157,798 14,234,407 (272,363,317) 325,818,853 16,065,654 (86,924,352) 118,622,486 40,887,755 (810,577,463) 864,314,240
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2009 Cost Accumulated depreciation Land,
Beginning Additions Disposals balance
Land 99,548,277 - Premises 67,052,388 - Equipment 484,870,246 91,083,151 Furniture and fixtures 340,396,346 89,329,551 Vehicles 133,607,393 36,317,500 Total 1,125,474,650 216,730,202 Depreciation for the years ended
Ending balance
- 99,548,277 - 67,052,388 (30,433,218) 545,520,179 (6,100,147) 423,625,750 (11,670,391) 158,254,502 (48,203,756) 1,294,001,096
- December 31, 2010 - December 31, 2009
Beginning Depreciation Disposals balance - - (27,123,287) (3,350,324) (235,505,092) (97,149,533) (124,738,881) (71,751,163) (54,755,602) (26,981,929) (442,122,862 (199,232,949)
Baht Baht
premises and Ending equipment balance - net
- - 99,548,277 - (30,473,611) 36,578,777 30,152,583 (302,502,042) 243,018,137 4,364,399 (192,125,645) 231,500,105 11,547,938 (70,189,593) 88,064,909 46,064,920 (595,290,891) 698,710,205
256,174,327 199,232,949
As at December 31, 2010 and 2009, the Bank had equipment, fully depreciated but still in use, at the original cost amounting to Baht 193.22 million and Baht 124.57 million, respectively.
Kiatnakin Bank Public Company Limited 135
16 INTANGIBLE ASSETS - NET
Intangible assets as at December 31, 2010 and 2009 consist of the following: Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS 2010
Cost Accumulated amortization
Ending balance
Beginning Amortization Disposals balance
Ending balance
Intangible assets - net
Beginning Additions Disposals balance
Software TFEX Membership Total
271,867,278 116,189,781
- 388,057,059 (102,263,752) (61,167,976)
- (163,431,728) 224,625,331
6,918,250 - 278,785,528 116,189,781
- 6,918,250 (1,462,151) - - 394,975,309 (103,725,903) (61,167,976)
- (1,462,151) 5,456,099 - (164,893,879) 230,081,430
Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2009
Cost Accumulated amortization
Beginning Additions Disposals balance
Software TFEX Membership Total
232,710,812 62,566,784 (23,410,318) 271,867,278 (90,129,569) (34,569,094) 22,434,911 (102,263,752) 169,603,526
Beginning Amortization Disposals balance
Ending balance
5,318,500 1,599,750 - 6,918,250 (1,462,151) - - (1,462,151) 5,456,099 238,029,312 64,166,534 (23,410,318) 278,785,528 (91,591,720) (34,569,094) 22,434,911 (103,725,903) 175,059,625
Amortization for the years ended
Ending balance
Intangible assets - net
- December 31, 2010 - December 31, 2009
Baht Baht
61,167,976 34,569,094
As at December 31, 2010 and 2009, the Bank and subsidiaries had software, fully amortized but still in use, at the original cost amounting to Baht 28.38 million and Baht 25.94 million, respectively. Unit : Baht
SEPARATE FINANCIAL STATEMENTS 2010
Cost Accumulated amortization
Beginning Additions Disposals balance
Software Total
240,688,272 113,805,520 240,688,272 113,805,520
Ending balance
Beginning Amortization Disposals balance
- 354,493,792 (76,052,495) (58,022,718) - 354,493,792 (76,052,495) (58,022,718)
Ending balance
Intangible assets - net
- (134,075,213) 220,418,579 - (134,075,213) 220,418,579
136
Annual Report 2010
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2009
Cost Accumulated amortization
Beginning Additions Disposals balance
Software Total
201,622,116 60,984,270 (21,918,114) 240,688,272 (67,285,951) (30,684,657) 21,918,113 201,622,116 60,984,270 (21,918,114) 240,688,272 (67,285,951) (30,684,657) 21,918,113
Amortization for the years ended
- December 31, 2010 - December 31, 2009
Ending balance
Baht Baht
Beginning Amortization Disposals balance
58,022,718 30,687,657
Ending balance
Intangible assets - net
(76,052,495) 164,635,777 (76,052,495) 164,635,777
As at December 31, 2010 and 2009, the Bank had software, fully amortized but still in use, at the original cost amounting to Baht 7.78 million and Baht 6.25 million, respectively.
17 OTHER ASSETS
Other assets as at December 31, 2010 and 2009, consist of the following: Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Interest and dividend receivables 167,917,628 207,706,729 Other income receivables 4,306,506 15,607,380 Prepaid expenses and deferred fee expenses 47,684,456 31,566,429 Prepaid output tax for hire-purchase receivables 50,472,801 51,251,379 Other receivables, net 303,599,294 212,672,321 Refundable deposit 71,602,814 80,176,395 Withholding tax 26,246,133 25,354,246 Receivables from trading securities 5,619,423 11,084,717 Input VAT - pending tax invoice 301,203,264 211,086,934 Pre payment for leasehold right 87,937,404 101,306,104 Derivative revaluation 278,853,335 97,461,852 Others 203,927,232 109,230,568 Total other assets 1,549,370,290 1,154,505,054
SEPARATE FINANCIAL STATEMENTS 2010 2009 167,618,510 306,885,938 3,966,168 15,280,876 39,122,945 24,738,035 50,472,801 51,251,379 285,715,181 210,457,810 65,173,530 74,261,852 25,192,894 23,359,071 5,619,423 11,084,717 299,958,132 211,086,934 76,565,446 87,837,516 278,853,335 97,461,852 66,723,181 65,719,414 1,364,981,546 1,179,425,394
Interest, other income receivables and other receivables as at December 31, 2010 are shown net of allowance for doubtful accounts of Baht 24,406,400 and Baht 15,662,079 in the consolidated and separate financial statements, respectively (December 31, 2009: Baht 18,910,078 and Baht 10,165,756, respectively).
Kiatnakin Bank Public Company Limited 137
18 DEPOSITS
18.1 Classified by type as at December 31, 2010 and 2009 Unit : Baht CONSOLIDATED SEPARATE FINANCIAL STATEMENTS FINANCIAL STATEMENTS 2010 2009 2010 2009 Current accounts 254,048,331 452,414,344 254,048,331 452,414,344 Saving deposits 4,553,310,519 5,322,831,589 4,554,430,408 5,322,842,843 Term deposits - Less than 6 months 23,170,900,253 7,399,733,864 23,170,900,253 7,399,733,864 - 6 months to one year 5,413,493,810 12,322,896,077 5,413,493,810 12,322,896,077 - Over one year 42,539,515,910 50,610,987,300 42,539,515,910 50,610,987,300 Promissory notes 353,131 353,131 353,131 353,131 Total deposits 75,931,621,954 76,109,216,305 75,932,741,843 76,109,227,559 18.2 Classified by maturity as at December 31, 2010 and 2009 CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Less than 6 months 39,663,657,631 39,614,597,883 More than 6 months but less than one year 17,185,566,596 6,492,597,961 Over one year 19,082,397,727 30,002,020,461 Total deposits 75,931,621,954 76,109,216,305
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 39,664,777,520 39,614,609,137 17,185,566,596 6,492,597,961 19,082,397,727 30,002,020,461 75,932,741,843 76,109,227,559
18.3 Classified by currency and territory as at December 31, 2010 and 2009 Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Domestic Foreign Total Domestic Foreign Thai Baht 75,716,468,466 215,153,488 75,931,621,954 76,021,584,106 87,632,199 Total deposits 75,716,468,466 215,153,488 75,931,621,954 76,021,584,106 87,632,199
Total 76,109,216,305 76,109,216,305
138
Annual Report 2010
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 Domestic Foreign Total Domestic Foreign Thai Baht 75,717,588,355 215,153,488 75,932,741,843 76,021,595,360 87,632,199 Total deposits 75,717,588,355 215,153,488 75,932,741,843 76,021,595,360 87,632,199
Total 76,109,227,559 76,109,227,559
19 INTERBANK AND MONEY MARKET ITEMS - DOMESTIC ITEMS (LIABILITIES)
Interbank and money market items (liabilities) as at December 31, 2010 and 2009, are as follows:
Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 On demand Term Total On demand Term Commercial Banks Finance, Securities and Credit froncier Other financial institutions Total
30,781
250,000,000
250,030,781
- 785,931,260 785,931,260 2,529,305 2,163,450,219 2,165,979,524 2,560,086 3,199,381,479 3,201,941,565
5,042
Total -
5,042
- 907,215,304 907,215,304 3,767,821 2,737,152,611 2,740,920,432 3,772,863 3,644,367,915 3,648,140,778
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 On demand Term Total On demand Term Commercial Banks Finance, Securities and Credit froncier Other financial institutions Total
-
250,000,000
250,000,000
-
Total -
-
8,246,338 902,000,000 910,246,338 2,529,305 2,163,450,219 2,165,979,524
2,402,694 985,000,000 987,402,694 3,767,821 2,737,152,611 2,740,920,432
10,775,643 3,315,450,219 3,326,225,862
6,170,515 3,722,152,611 3,728,323,126
Kiatnakin Bank Public Company Limited 139
20 BORROWINGS
Borrowings as at December 31, 2010 and 2009, are as follows:
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Short - term borrowings Bills of exchange 19,126,722,331 15,632,310,439 Debentures 2,739,000,000 3,097,000,000 Total short - term borrowings 21,865,722,331 18,729,310,439 Long - term borrowings Bills of exchange 1,918,776,386 4,595,459,686 Debentures 11,523,000,000 2,739,000,000 Total long - term borrowings 13,441,776,386 7,334,459,686 Total borrowings 35,307,498,717 26,063,770,125
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 21,046,722,331 16,852,310,439 3,379,000,000 4,547,000,000 24,425,722,331 21,399,310,439 1,918,776,386 11,523,000,000 13,441,776,386 37,867,498,717
4,595,459,686 2,739,000,000 7,334,459,686 28,733,770,125
The details of unsecured and senior debentures are as follows:
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 At beginning of year 5,836,000,000 9,390,000,000 Less Redemption during year (5,043,000,000) (3,617,000,000) Add Issuing during year 13,469,000,000 63,000,000 At end of year 14,262,000,000 5,836,000,000
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 7,286,000,000 9,390,000,000 (13,163,000,000) (3,617,000,000) 20,779,000,000 1,513,000,000 14,902,000,000 7,286,000,000
KK10NA KK105A KK115A KK119A KK10714A KK10720A KK10728A KK122A KK123A KK123B KK135A KK123C KK10O26A KK10O26B KK10O26C KK127A KK128A KK129A KK12OA KK12NA
4.70 per annum 4.25 per annum 4.54 per annum 5.00 per annum 1.60 per annum 1.50 per annum 1.40 per annum Floating 2.87 per annum Floating 3.35 per annum 2.90 per annum 1.62 per annum 1.62 per annum 1.60 per annum 2.83 per annum 2.88 per annum 2.85 per annum 2.88 per annum 2.88 per annum
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Term of interest payment
966,000 966,000 - - 15th of May and November 2,131,000 2,131,000 - - 8th of May and November 1,289,000 - - 1,289,000 8th of May and November 1,450,000 - - 1,450,000 11th of March and September - 300,000 300,000 - Maturity date - 215,000 215,000 - Maturity date - 40,000 40,000 - Maturity date - - 1,000,000 1,000,000 24th of February, May, August and November - - 600,000 600,000 5th of March and September - - 1,000,000 1,000,000 12th of March, June, September and December - - 1,000,000 1,000,000 17th of March and September - - 320,000 320,000 19th of March and September - 391,000 391,000 - Maturity date - 200,000 200,000 - Maturity date - 800,000 800,000 - Maturity date - - 2,493,000 2,493,000 28th of January and July - - 500,000 500,000 17th of February and August - - 1,310,000 1,310,000 20th of March and September - - 2,000,000 2,000,000 14th of April and October - - 1,300,000 1,300,000 25th of May and November 5,836,000 5,043,000 13,469,000 14,262,000
CONSOLIDATED FINANCIAL STATEMENTS Unit : Share Interest rate Par value December Redemption Issuing December (percentage) (Baht) 31, 2009 during year during year 31, 2010
May 17, 2013 March 19, 2012 October 26, 2010 October 26, 2010 October 26, 2010 July 28, 2012 August 17, 2012 September 20, 2012 October 14, 2012 November 25, 2012
March 5, 2012 March 12, 2012
November 15, 2010 May 8, 2010 May 8, 2011 September 11, 2011 July 14, 2010 July 20, 2010 July 28, 2010 February 24, 2012
Due for redemption
140 Annual Report 2010
KK10NA KK105A KK115A KK119A KK10315A KK10714A KK10720A KK10728A KK122A KK123A KK123B KK10615A KK135A KK123C KK10O26A KK10O26B KK10O26C KK10715A KK10823A KK127A KK128A KK129A KK12OA KK12NA KK11423A
4.70 per annum 4.25 per annum 4.54 per annum 5.00 per annum 1.25 per annum 1.60 per annum 1.50 per annum 1.40 per annum Floating 2.87 per annum Floating 1.30 per annum 3.35 per annum 2.90 per annum 1.62 per annum 1.62 per annum 1.60 per annum 1.10 per annum 1.30 per annum 2.83 per annum 2.88 per annum 2.85 per annum 2.88 per annum 2.88 per annum 2.10 per annum
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
966,000 2,131,000 1,289,000 1,450,000 1,450,000 - - - - - - - - - - - - - - - - - - - - 7,286,000
966,000 2,131,000 - - 1,450,000 300,000 215,000 40,000 - - - 2,670,000 - - 391,0003 200,000 800,000 2,000,000 2,000,000 - - - - - - 13,163,000
- - - - - 300,000 215,000 40,000 1,000,000 600,000 1,000,000 2,670,000 1,000,000 320,000 91,000 200,000 800,000 2,000,000 2,000,000 2,493,000 500,000 1,310,000 2,000,000 1,300,000 640,000 20,779,000
- - 1,289,000 1,450,000 - - - - 1,000,000 600,000 1,000,000 - 1,000,000 320,000 - - - - - 2,493,000 500,000 1,310,000 2,000,000 1,300,000 640,000 14,902,000
SEPARATE FINANCIAL STATEMENTS Unit : Share Interest rate Par value December Redemption Issuing December (percentage) (Baht) 31, 2009 during year during year 31, 2010 15th of May and November 8th of May and November 8th of May and November 11th of March and September Maturity date Maturity date Maturity dateJuly 20, 2010 Maturity date 24th of February, May, August and November 5th of March and September 12th of March, June, September and December Maturity dateJ 17th of March and September 19th of March and September Maturity date Maturity date Maturity date Maturity date Maturity date 28th of January and July 17th of February and August 20th of March and September 14th of April and October 25th of May and November Maturity date
Term of interest payment
une 15, 2010 May 17, 2013 March 19, 2012 October 26, 2010 October 26, 2010 October 26, 2010 July 15, 2010 August 23, 2010 July 28, 2012 August 17, 2012 September 20, 2012 October 14, 2012 November 25, 2012 April 23, 2011
March 5, 2012 March 12, 2012
July 28, 2010 February 24, 2012
November 15, 2010 May 8, 2010 May 8, 2011 September 11, 2011 March 15, 2010 July 14, 2010
Due for redemption
Kiatnakin Bank Public Company Limited 141
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Annual Report 2010
21 LEGAL EXECUTION DEPARTMENT PAYABLE
As at December 31, 2010, the Bank recorded the Legal Execution Department payable amounting to Baht 575.38 million with the loss incurred from breach of contract from the foreclosed assets between first and final biding. Meanwhile the Bank recorded the portion received from the collateral pool of such foreclosed assets by reversing impairment of investment in loan amounting to Baht 278.44 million.
22 OTHER LIABILITIES
Other liabilities as at December 31, 2010 and 2009, consist of the following: Unit : Baht
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Stocks subscription payable 1,337,853,165 - Accrued bonus 387,513,218 295,345,130 Accrued fee and other expenses 335,126,552 161,910,571 Up-front fee 222,019,332 167,553,202 Income received in advance 243,175,542 88,341,031 Deposits 197,113,601 134,376,705 Provisions 192,639,539 164,479,497 Suspense cash received from customer 67,157,488 56,998,104 Others 88,558,341 137,275,047 Total other liabilities 3,071,156,778 1,206,279,287
23 SHARE CAPITAL
SEPARATE FINANCIAL STATEMENTS 2010 2009 1,337,853,165 - 340,000,000 277,479,920 310,216,503 135,460,841 222,019,332 167,553,202 343,392,543 88,341,031 195,770,051 133,003,855 163,965,441 156,944,049 66,592,084 56,986,604 76,554,263 126,500,937 3,056,363,382 1,142,270,439
The annual Shareholders’ Meeting for the year 2010 on April 22, 2010, passed a resolution to reduce the Bank’s registered capital from the original amount of Baht 7,228,455,710 to Baht 6,700,999,870 by retiring 52,745,584 unissued ordinary shares and increase the registered capital from Baht 6,700,999,870 to Baht 6,960,999,870 by registering additional 26,000,000 ordinary shares with a par value of Baht 10 per share, in order to facilitate the exercise of ESOP warrants. The Bank registered the reduction and increase in share capital with the Ministry of Commerce on May 10, 2010 and May 11, 2010, respectively. The amount of 19,570,202 unit of warrants have been converted into 19,570,202 ordinary shares. The Bank registered the conversion of warrants with the Ministry of Commerce on April 7, 2010. The amount of 11,618,200 unit of warrants have been converted into 11,618,200 ordinary shares. The Bank registered the conversion of warrants with the Ministry of Commerce on July 12, 2010 The amount of 11,484,960 unit of warrants have been converted into 11,484,960 ordinary shares. The Bank registered the conversion of warrants with the Ministry of Commerce on October 7, 2010
Warrants as at December 31, 2010 and 2009, consist of the following:
111,329,209 6,000 - 111,335,209
- - -
- - - 42,670,362 - - - 3,000 - 26,000,000 110,000 - - 26,000,000 110,000 42,673,362
- - - -
1.00000 42,670,362 1.00000 3,000 1.00000 - 42,673,362
3,688,362 111,329,209 19,500 115,037,071
2.30 - -
8,483,233 3,687,732 - - - 13,500 8,483,233 3,701,232 -
-
630 8,483,233
-
-
630 8,483,233
-
686
1.00000
-
686
1.00000
1.13362
15.62
19.53
12.35
- - - -
- -
6,000
8,472 111,335,209
- 111,329,209
8,472
-
-
2.30
-
-
-
-
As at December 31, 2009 Amount Unit Price per Amount (Baht) unit (Baht)
Unit : Baht
- - -
Warrant KK#3 can be exercised on the 30th of every quarters ended starting from December 31, 1999 to March 30, 2009. Warrant KK#4 can be exercised on the 30th of every quarters ended starting from March 30, 2001 to December 30, 2010. ESOP-W1 warrant which are offered to the management and directors of the Bank and of its subsidiaries can be exercised on the 30th of every quarter ended starting from December 31, 2002 to March 30, 2011. ESOP-W2 warrant which are offered to the management and directors of the Bank and of its subsidiaries can be exercised on the 30th of every quarter ended starting from September 30, 2011 to June 30, 2015.
KK#3 KK#4 ESOP-W1
Unit : Baht As at December 31, 2010 Amount Unit Price per Amount (Baht) unit (Baht)
19.53 833,352,170 68,658,847 15.62 46,860 3,000 29.27 - 25,890,000 833,399,030 94,551,847
As at December 31, 2008 Decrease during the year Unit Price Amount Cancel Exercise Amount Exercise rate to Share Exercise per unit (Baht) (Unit) (Unit) (Baht) purchase capital price ordinary share issued per 1 unit during year of warrant (Share)
KK#4 ESOP-W1 ESOP-W2
As at December 31, 2009 Increase Decrease during the year Unit Price Amount (Unit) Cancel Exercise Amount Exercise rate to Share Exercise per unit (Baht) (Unit) (Unit) (Baht) purchase capital price ordinary share issued per 1 unit during year of warrant (Share)
24 WARRANTS
Kiatnakin Bank Public Company Limited 143
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Annual Report 2010
25 LEGAL RESERVE
Under the Public Companies Act, the Bank which is public company is required to set aside as legal reserve at least 5% of its net income, net of accumulated deficit brought forward (if any), until the reserve is not less than 10% of the registered capital. Such reserve fund is not available for distribution as dividend. According to the Civil and Commercial Code, subsidiaries which are private companies must appropriate to a reserve fund at each distribution of dividend at least 5% of the profit arising from the business of the company until the reserve fund reaches 10% of the capital of the company. Such reserve fund is not available for distribution as dividend.
On April 21, 2009, the meeting of the ordinary shareholders for the year 2009 approved the resolutions regarding the payment of dividend for the year 2008 at the rate of Baht 1.75 per ordinary share a part of which had been paid as interim dividend at the rate of Baht 1.00 per share on August 22, 2008, amounting to Baht 523,054,712 and the remaining amount was paid on May 15, 2009 at the rate of Baht 0.75 per share, totaling Baht 392,350,025. On July 23, 2009, the meeting of the Board of Directors of the Bank No. 6/2009 approved the resolutions regarding the payment of interim dividend from half-year operating performance at the rate of Baht 0.75 per ordinary share, totaling 392,342,524. The dividend was paid on August 21, 2009. On April 22, 2010, the meeting of the ordinary shareholders for the year 2010 approved the resolutions regarding the payment of dividend for the year 2009 at the rate of Baht 2.00 per ordinary share a part of which had been paid as interim dividend at the rate of Baht 0.75 per share on August 21, 2009, amounting to Baht 392,342,524 and the remaining amount was paid on May 20, 2010 at the rate of Baht 1.25 per share, totaling amounting to Baht 678,380,710. On July 22, 2010, the meeting of the Board of Directors of the Bank No. 5/2010 approved the resolutions regarding the payment of interim dividend from half-year operating performance at the rate of Baht 1.00 per ordinary share, totaling 554,273,668. The dividend was paid on August 20, 2010.
As at December 31, 2010 and 2009, contingencies of the Bank and subsidiaries are as follows:
26 DIVIDEND
27 CONTINGENCIES
Unit : Baht CONSOLIDATED FINANCIAL STATEMAENTS 2010 2009 Aval - bills of exchange Letters of credit Guarantee - others Interest rate swap contract Cross currency swap contracts Commitments on forward contract - Buying - Selling Unused overdraft credit facilities Total
12,973,700 17,238,334 1,281,156,869 2,000,000,000 3,064,309,600
482,933,337 - 1,161,242,982 4,651,000,000 3,445,176,100
8,195,121 2,205,696 114,116,920 6,500,196,240
- - 100,000,916 9,840,353,335
Kiatnakin Bank Public Company Limited 145
28 EARNINGS PER SHARE
Earnings per share in the consolidated and separate financial statements for the years ended December 31, 2010 and 2009 are calculated as follows:
CONSOLIDATED FINANCIAL STATEMENTS 2010 Net income Ordinary shares Earnings per share Baht Baht Basic earnings per share Net profit available to ordinary shareholders 2,840,151,758 545,976,985 5.20 Effect of assumed conversion Warrants - 26,009,899 Diluted earnings per share Net profit available to ordinary shareholders 2,840,151,758 571,986,884 4.97 plus assumed conversions CONSOLIDATED FINANCIAL STATEMENTS 2009 Net income Ordinary shares Earnings per share Baht Baht Basic earnings per share Net profit available to ordinary shareholders 2,228,767,559 523,152,269 4.26 Effect of assumed conversion Warrants - - Diluted earnings per share Net profit available to ordinary shareholders 2,228,767,559 523,152,269 4.26 plus assumed conversions SEPARATE FINANCIAL STATEMENTS 2010 Net income Ordinary shares Earnings per share Baht Baht Basic earnings per share Net profit available to ordinary shareholders 3,431,992,618 545,976,985 6.29 Effect of assumed conversion Warrants - 26,009,899 Diluted earnings per share Net profit available to ordinary shareholders 3,431,992,618 571,986,884 6.00 plus assumed conversions
146
Annual Report 2010
SEPARATE FINANCIAL STATEMENTS 2009 Net income Ordinary shares Earnings per share Baht Baht Basic earnings per share Net profit available to ordinary shareholders 1,676,307,356 523,152,269 3.20 Effect of assumed conversion Warrants - - Diluted earnings per share Net profit available to ordinary shareholders 1,676,307,356 523,152,269 3.20 plus assumed conversions
29 CAPITAL MANAGEMENT
According to the Financial Institutions Business Act B.E. 2551 and the related Bank of Thailand’s Notification, the Bank has to maintain capital funds in proportion to asset and contingent liabilities at not less than 8.5% on the condition that the Tier 1 capital funds shall not be less than 4.25% of such assets and contingent liabilities and the maximum amount of the Tier 2 capital funds must not exceed the Tier 1 capital funds.
Capital fund as at December 31, 2010 and 2009 are as follows:
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 Tier 1 capital Issued and paid-up capital 5,658,258,280 5,231,524,660 Share premium 3,062,444,548 2,655,779,138 Legal reserve 722,845,571 722,845,571 General reserve 380,000 380,000 Retained earnings after appropriation 8,607,086,470 7,647,234,383 Total tier 1 capital 18,051,014,869 16,257,763,752 Tier 2 capital Allowance for normal classification loans 738,831,938 580,239,612 Unrealized gain (net) on revaluation of available-for-sale equity securities 39,503,120 44,624,199 Total tier 2 capital 778,335,058 624,863,811 Total capital fund 18,829,349,927 16,882,627,563
Disclosure of capital maintenance information under the Notification of the Bank of Thailand Re : Public Disclosure of Capital Maintenance for Commercial Banks Location of disclosure : www.kiatnakin.co.th Date if disclosure : within April 2011 Information as of : December 31, 2010
Kiatnakin Bank Public Company Limited 147
As at December 31, 2010 and 2009, capital adequacy ratios maintained by the Bank in accordance with the notification of the BOT are as follows: SEPARATE FINANCIAL STATEMENTS 2010 2009 Bank Minimum Bank Minimum ratio required ratio required by BOT by BOT Tier 1 capital to risk weighted assets 14.55% 4.25% 15.69% 4.25% Capital funds to risk weighted assets 15.18% 8.50% 16.29% 8.50%
30 OTHER INCOME
Other income for the years ended December 31, 2010 and 2009, are as follows:
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Penalty income 107,497,782 103,614,879 Profit from sales of fixed assets 12,485,741 8,806,029 Excess of net fair value of the identifiable net assets which over purchase cost (see Note 8.5) 23,401,274 - Other income 39,098,653 21,227,421 Total other income 182,483,450 133,648,329
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 107,309,547 103,395,273 7,281,899 5,166,633
- 12,495,975 127,087,421
- 6,217,159 114,779,065
31 OTHER EXPENSES
Other expenses for the years ended December 31, 2010 and 2009, are as follows:
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Repossessed cars expenses 82,249,575 102,278,955 Properties foreclosed expenses 73,083,578 54,693,504 Transportation expenses 84,526,429 69,963,910 Advertising and promotion expenses 303,089,146 174,035,117 Core banking expenses 42,678,563 36,250,116 Provision expenses - 53,159,131 Other expenses 225,788,171 158,314,165 Total other expenses 811,415,462 648,694,898
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 82,249,575 102,278,955 73,083,578 54,693,504 76,789,133 63,449,474 297,481,971 171,466,782 42,678,563 36,250,116 - 53,159,131 141,311,276 112,494,448 713,594,096 593,792,410
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Annual Report 2010
32 INCOME TAX
Income tax for the years ended December 31, 2010 and 2009 are as follows:
The income tax in consolidated financial statements for the year ended December 31, 2010 included the income tax of subsidiaries of Baht 59.67 million (December 31, 2009 : Baht 3.21 million). 1) The adjustment in income tax of last year was due to adjustment of taxable advance income for credit fee and other which have been calculated for corporate income tax purposes. 2) The adjustment in income tax of last year was due to changes in estimate. According to the Royal Decree No. 475 B.E. 2551 issued under the Revenue Code regarding the corporate income tax rate deduction effective on August 7, 2008, the corporate income tax for listed companies in the Stock Exchange of Thailand has been reduced from 30% to 25% of net profit which does not exceed Baht 300 million. This will remain in effect for three consecutive accounting periods beginning on or after January 1, 2008.
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 Income before income tax 4,585,754,595 2,539,588,451 Income not subject to tax or additional deductible expense (2,458,678,416) (760,909,738) Expenses not deductible for tax purposes 1,750,484,573 957,067,153 Taxable income 3,877,560,752 2,735,745,866 Corporate income tax 1,148,268,226 805,723,760 2) Add Adjustment income tax of last year 5,493,751 57,557,335 1) Total income tax 1,153,761,977 863,281,095
33 OPERATING LEASE COMMITMENTS
As at December 31, 2010 and 2009, the Bank has operating lease commitments in respect of vehicles, office space, computer software expense, payable from the balance sheet dates as follows: Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 Office space Computer software Total expense expense Within one year 87,484,233 43,600,080 131,084,313 Within two years 58,747,049 43,600,080 102,347,129 Over three years 126,300,577 90,833,500 217,134,077 Total 272,531,859 178,033,660 450,565,519
Unit : Baht CONSOLIDATED FINANCIAL STATEMENTS 2009 Office space Computer software Total expense expense Within one year 81,368,728 3,020,843 84,389,571 Within two years 55,583,462 - 55,583,462 Over three years 136,483,401 - 136,483,401 Total 273,435,591 3,020,843 276,456,434
Kiatnakin Bank Public Company Limited 149
Unit : Baht SEPARATE FINANCIAL STATEMENTS 2010 Office space Computer software Total expense expense Within one year Within two years Over three years Total
75,818,936 52,168,575 113,234,896 241,222,407
43,600,080 43,600,080 90,833,500 178,033,660
119,419,016 95,768,655 204,068,396 419,256,067 Unit : Baht
SEPARATE FINANCIAL STATEMENTS 2009 Office space Computer software Total expense expense Within one year Within two years Over three years Total
66,004,092 46,137,359 120,605,819 232,747,270
3,020,843 - - 3,020,843
69,024,935 46,137,359 120,605,819 235,768,113
34 SEGMENT INFORMATION 34.1 The results of operations classified into banking and securities businesses for the years ended December
31, 2010 and 2009 are as follows: Unit : Million Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 Banking business Securities business Total Net interest and dividend income after 5,530.34 13.96 5,544.30 bad debts and doubtful accounts Non-interest income 2,909.82 545.67 3,455.49 Total income 8,440.16 559.63 8,999.79 Non-interest expenses 4,560.56 359.54 4,920.10 Income tax 1,156.22 57.22 1,213.44 Total expenses and income tax 5,716.78 416.76 6,133.54 Income before minority interests 2,723.38 142.87 2,866.25 Less Share in net income to minority interests in subsidiaries 26.10 - 26.10 Net income for year 2,697.28 142.87 2,840.15
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Annual Report 2010
Unit : Million Baht CONSOLIDATED FINANCIAL STATEMENTS 2009 Banking business Securities business Total Net interest and dividend income after 4,646.97 5.73 4,652.70 bad debts and doubtful accounts Non-interest income 1,392.22 386.41 1,778.63 Total income 6,039.19 392.14 6,431.33 Non-interest expenses 3,022.07 311.84 3,333.91 Income tax 863.59 2.90 866.49 Total expenses and income tax 3,885.66 314.74 4,200.40 Income before minority interests 2,153.53 77.40 2,230.93 Less Share in net income to minority interests in subsidiaries 2.16 - 2.16 Net income for year 2,151.37 77.40 2,228.77 34.2 As at Cecember 31, 2010 and 2009, the financial position by banking and securities businesses are
as follows: Unit : Million Baht CONSOLIDATED FINANCIAL STATEMENTS 2010 Banking business Securities business Total Interbank and money market items 7,784.79 127.36 7,912.15 Net investments in securities 11,968.04 324.52 12,292.56 Net investments in loans 6,699.80 - 6,699.80 Net investments in properties 78.07 - 78.07 Net loans and accrued interest receivable 103,329.13 748.57 104,077.70 Other assets 10,603.62 236.19 10,839.81 Total assets 140,463.45 1,436.64 141,900.09 Deposits 75,931.62 - 75,931.62 Interbank and money market items 3,201.91 0.03 3,201.94 Borrowings 35,307.50 - 35,307.50 Other liabilities 5,928.97 618.97 6,547.94 Total liabilities 120,370.00 619.00 120,989.00
Kiatnakin Bank Public Company Limited 151
Unit : Million Baht CONSOLIDATED FINANCIAL STATEMENTS 2009 Banking business Securities business Total Interbank and money market items 10,938.14 78.77 11,016.91 Net investments in securities 18,003.56 214.96 18,218.52 Net investments in loans 4,523.46 - 4,523.46 Net investments in properties 78.04 - 78.04 Net loans and accrued interest receivable 83,298.22 544.00 83,842.22 Other assets 9,352.00 322.90 9,674.90 Total assets 126,193.42 1,160.63 127,354.05 Deposits 76,109.22 - 76,109.22 Interbank and money market items 3,648.13 0.01 3,648.14 Borrowings 26,063.77 - 26,063.77 Other liabilities 3,074.14 512.75 3,586.89 Total liabilities 108,895.26 512.76 109,408.02
The Bank operates only in Thailand and no segment information by geographical area is presented accordingly.
Significant financial assets carried on the balance sheet include cash, interbank and money market items, investments in securities, investments in loans and loans. Significant financial liabilities carried on the balance sheet include deposits, interbank and money market items and borrowings.
The group’s activities expose it to a variety of financial risks. The group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the group. Risk management is carried out by a treasury department and risk management department under policies approved by the Board of Directors. The board provides written principles for overall risk management, as well as written policies covering specific areas, such as interest rate risk, credit risk, use of derivative financial instruments and investing excess liquidity.
Risks relating to significant financial instruments held by the Bank are summarized below.
35.1 Credit risk The group has policies in place to ensure that loans are made to customers with an appropriate credit history. Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The group has policies that limit the amount of credit exposure to any clients or financial institutions.
35 FINANCIAL INSTRUMENTS
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Annual Report 2010
Concentration of credit risk relative to the Bank’s loans summarized by type of industry is as follows:
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Agriculture and mining 752 803 Manufacturing and commerce 2,916,702 2,113,947 Real estate and constructions 20,607,465 19,159,718 Public utilities and services 942,524 714,927 Housing loans 1,653,394 1,273,574 Hire-purchase - automobile 77,019,718 60,118,643 Leasing loans 325,297 256,828 Others 4,260,565 3,478,516 Total loans and receivables 107,726,417 87,116,956
Unit : Baht’000 SEPARATE FINANCIAL STATEMENTS 2010 2009 752 803 2,916,702 2,113,947 20,607,465 19,159,718 942,524 714,927 1,653,394 1,273,574 77,019,718 60,118,643 325,297 256,828 3,506,903 2,929,096 106,972,755 86,567,536
35.2 Interest rate risk and liquidity risk The matching of the long-term source of funds and investments or long-term loans is the fundamental policy of the Bank’s liquidity risk management policy. In addition, the management over liabilities with the proper maturity and low funding cost is also the Bank’s fundamental policy. It is unusual for the Bank to completely match since business transaction is often of uncertain term and of different types. The Bank has the committee to oversee interest rate risk and liquidity risk by having weekly meeting to balance the two risks to be at an acceptable cost.
35.2.1 Interest rate risk Most of the Bank’s financial assets and liabilities are subject to fluctuations in interest rates in the market. Interests on loans and receivables are mainly based on fixed rate. Certain loans and receivables are based on floating rates, linked to, for examples, Minimum Lending Rate (MLR) plus or Minimum Overdraft Rate (MOR) plus. Loans and receivables summarized under fixed and floating interest rate classifications are as follows: Unit : Baht’000
CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Loans and receivables with fixed interest rate 85,912,001 69,225,000 Loans and receivables with floating interest rate 21,814,416 17,891,956 Total loans and receivables 107,726,417 87,116,956
SEPARATE FINANCIAL STATEMENTS 2010 2009 85,912,001 69,225,000 21,060,754 17,342,536 106,972,755 86,567,536
Kiatnakin Bank Public Company Limited 153
The Bank and its subsidiaries have summarized financial assets and liabilities classified on maturity of interest repricing periods as at December 31, 2010 and 2009, as follows: Unit : Baht’000
CONSOLIDATED FINANCIAL STATEMENTS 2010
Financial assets Interbank and money market items Investments in securities, net Investments in loans, net Receivables fromclearing house Loans Financial liabilities Deposits Interbank and money market items Liabilities payables on demand Payables to clearing house Securities and derivative business payables Borrowings
0-3 Months 3-12 Months 1- 5 Years Greater than Non-Performing Non-Interest 5 Years Loans Bearing
Total
6,669,459 - 1,618,707 243,418 105,992 56,597 - - 26,721,359 17,247,662
- 3,605,140 6,248,856 - 55,890,918
- 5,846,807 287,164 - 2,892,122
- - - - 4,974,357
1,242,687 7,912,146 978,484 12,292,556 1,193 6,699,802 140,780 140,780 - 107,726,418
29,557,175 27,428,037 1,378,800 352,000 - - - -
18,898,860 1,470,000 - -
- - - -
- - - -
47,550 75,931,622 1,142 3,201,942 282,604 282,604 16,138 16,138
- - 9,883,146 13,982,576
- 11,441,777
- -
- -
475,853 475,853 - 35,307,499
Unit : Baht’000 CONSOLIDATED FINANCIAL STATEMENTS 2009
Financial assets Interbank and money market items Investments in securities, net Investments in loans, net Receivables fromclearing house Loans Financial liabilities Deposits Interbank and money market items Liabilities payables on demand Payables to clearing house Securities and derivative business payables Borrowings
0-3 Months 3-12 Months 1- 5 Years Greater than Non-Performing Non-Interest 5 Years Loans Bearing
10,166,652 - 3,282,556 2,045,885 89,282 40,254 - - 22,151,316 13,896,000
Total
- 3,816,230 4,292,705 - 42,981,882
- 8,212,871 101,220 - 2,017,778
- - - - 6,069,980
850,255 11,016,907 860,976 18,218,518 - 4,523,461 234,558 234,558 - 87,116,956
29,898,775 15,757,007 30,001,020 96,500 2,313,748 1,234,480 - - - - - -
-
-
452,414 76,109,216
-
-
3,413 3,648,141
- -
- -
195,492 35,081
- -
- -
431,400 431,400 - 26,063,770
- 9,575,999
- 8,986,530
- 7,501,241
195,492 35,081
154
Annual Report 2010
Unit : Baht’000 SEPARATE FINANCIAL STATEMENTS 2010
0-3 Months 3-12 Months 1- 5 Years Greater than Non-Performing Non-Interest 5 Years Loans Bearing
Total
Financial assets Interbank and money market items Investments in securities, net Investments in loans, net Loans
6,413,307 - 1,368,727 243,418 446 934 25,974,090 17,247,662
- 3,605,140 2,331,572 55,890,918
- 5,846,807 194,431 2,892,122
- - - 4,967,963
1,082,912 7,496,219 9,813,481 20,877,573 1,193 2,528,576 - 106,972,755
Financial liabilities Deposits Interbank and money market items Liabilities payables on demand Borrowings
29,558,295 27,428,037 1,494,838 352,000 - - 12,443,146 13,982,576
18,898,860 1,470,000 - 11,441,777
- - - -
- - - -
47,550 75,932,742 9,388 3,326,226 282,604 282,604 - 37,867,499
Unit : Baht’000 SEPARATE FINANCIAL STATEMENTS 2009
0-3 Months 3-12 Months 1- 5 Years Greater than Non-Performing Non-Interest 5 Years Loans Bearing
Total
Financial assets Interbank and money market items Investments in securities, net Investments in loans, net Loans
9,851,759 - 2,430,671 2,045,885 330 3,073 21,608,360 13,896,000
- 3,816,230 2,582,169 42,981,882
- 8,212,871 - 2,017,778
- - - 6,063,516
701,650 10,553,409 7,474,453 23,980,110 - 2,585,572 - 86,567,536
Financial liabilities Deposits Interbank and money market items Liabilities payables on demand Borrowings
29,898,786 15,757,007 2,391,528 1,234,480 - - 12,245,999 8,986,530
30,001,021 96,500 - 7,501,241
- - - -
- - - -
452,414 76,109,228 5,815 3,728,323 195,492 195,492 - 28,733,770
Kiatnakin Bank Public Company Limited 155
The average balances of significant performing financial assets and financial liabilities, including the average interest and dividend income, are summarized as follows: Unit : Baht’000
CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2010 Average Interest and Average outstanding dividend Rate balances income % Significant performing financial assets Interbank and money market items Investments in securities Investments in loans Loans
7,821,844 13,248,655 6,984,433 97,913,791 125,968,723
91,688 536,330 669,856 7,543,611 8,841,485
1.17 4.05 9.59 7.70 7.02
Significant financial liabilities Deposits and Interbank and money market items Borrowings
74,740,959 33,649,441 108,390,400
1,806,101 830,496 2,636,597
2.42 2.47 2.43
Unit : Baht’000 CONSOLIDATED FINANCIAL STATEMENTS For the year ended December 31, 2009 Average Interest and Average outstanding dividend Rate balances income % Significant performing financial assets Interbank and money market items Investments in securities Investments in loans Loans
13,851,197 14,702,115 3,739,445 83,623,177 115,915,934
169,990 382,864 1,194,587 6,628,666 8,376,107
1.23 2.60 31.95 7.93 7.23
Significant financial liabilities Deposits and Interbank and money market items Borrowings
80,797,499 20,266,890 101,064,389
2,333,526 705,174 3,038,700
2.89 3.48 3.01
156
Annual Report 2010
Unit : Baht’000 SEPARATE FINANCIAL STATEMENTS For the year ended December 31, 2010 Average Interest and Average outstanding dividend Rate balances income % Significant performing financial assets Interbank and money market items Investments in securities Investments in loans Loans
7,348,953 23,175,850 2,884,455 95,575,876 128,985,134
89,101 2,694,104 364,307 7,535,034 10,682,546
Significant financial liabilities Deposits and Interbank and money market items Borrowings
74,516,977 36,233,486 110,750,463
1,808,017 877,933 2,685,950
1.21 11.62 12.63 7.88 8.28 2.43 2.42 2.43
Unit : Baht’000 SEPARATE FINANCIAL STATEMENTS For the year ended December 31, 2009 Average Interest and Average outstanding dividend Rate balances income % Significant performing financial assets Interbank and money market items Investments in securities Investments in loans Loans
11,909,889 18,455,904 2,998,829 82,633,438 115,998,060
162,574 998,165 670,058 6,622,925 8,453,722
1.37 5.41 22.34 8.01 7.29
Significant financial liabilities Deposits and Interbank and money market items Borrowings
79,035,879 22,382,958 101,418,837
2,337,328 758,499 3,095,827
2.96 3.39 3.05
Kiatnakin Bank Public Company Limited 157
35.2.2 Liquidity risk Significant assets and liabilities of the Bank analyzed by relevant maturity groupings are as follows: Unit : Baht’000
CONSOLIDATED FINANCIAL STATEMENTS 2010 On demand Within 1 - 5 years Over 1 year 5 years Financial assets Cash Interbank and money market items Net investments in securities Net investments in loans Net investments in properties Receivables from clearing house Hire-purchase receivables Leasing receivables Loans and receivables Total financial assets Financial liabilities Deposits Interbank and money market items Liabilities payables on demand Payables to clearing house Securities and derivative business payables Borrowings Total financial liabilities
Total
282,132 3,010,086 - - - - - - 37,160 3,329,378
- 4,902,060 2,821,051 2,682,133 - 140,780 31,140 - 1,265,859 11,843,023
- - 9,471,505 3,917,666 78,070 - 31,675,254 318,728 7,461,983 52,923,206
- 282,132 - 7,912,146 - 12,292,556 100,003 6,699,802 - 78,070 - 140,780 45,313,324 77,019,718 6,569 325,297 21,616,400 30,381,402 67,036,296 135,131,903
4,807,712 2,530 282,604 -
29,515,302 1,665,912 - 16,135
41,608,608 1,533,500 - -
- - - -
- - 5,092,846
475,853 12,728,691 44,401,893
- 22,578,808 65,720,916
- 475,853 - 35,307,499 - 115,215,655
75,931,622 3,201,942 282,604 16,135
158
Annual Report 2010
Unit : Baht’000 CONSOLIDATED FINANCIAL STATEMENTS 2009 On demand Within 1 - 5 years Over 1 year 5 years Financial assets Cash Interbank and money market items Net investments in securities Net investments in loans Net investments in properties Receivables from clearing house Hire-purchase receivables Leasing receivables Loans and receivables Total financial assets Financial liabilities Deposits Interbank and money market items Liabilities payables on demand Payables to clearing house Securities and derivative business payables Borrowings Total financial liabilities
Total
228,649 1,234,709 - - - - - - 32,686 1,496,044
- 9,782,198 6,170,066 107,756 - 234,558 39,284 - 1,505,096 17,838,958
- - 12,048,452 4,304,035 78,040 - 24,991,088 253,721 5,710,727 47,386,063
- 228,649 - 11,016,907 - 18,218,518 111,670 4,523,461 - 78,040 - 234,558 35,088,271 60,118,643 3,107 256,828 19,492,976 26,741,485 54,696,024 121,417,089
5,775,599 3,773 195,492 -
29,773,673 2,593,388 - 35,081
40,559,944 1,050,980 - -
- - - -
- - 5,974,864
431,400 11,273,336 44,106,878
- 14,790,434 56,401,358
- 431,400 - 26,063,770 - 106,483,100
76,109,216 3,648,141 195,492 35,081
Kiatnakin Bank Public Company Limited 159
Unit : Baht’000 SEPARATE FINANCIAL 2010 On demand Within 1 - 5 years 1 year Financial assets Cash 280,882 - - Interbank and money market items 2,594,159 4,902,060 - Net investments in securities - 2,254,444 18,623,129 Net investments in loans - - 2,528,576 Hire-purchase receivables - 31,140 31,675,254 Leasing receivables - - 318,728 Loans and receivables 37,160 518,590 7,455,589 Total financial assets 2,912,201 7,706,234 60,601,276 Financial liabilities Deposits 4,808,832 29,515,302 41,608,608 Interbank and money market items 10,776 1,781,950 1,533,500 Liabilities payables on demand 282,604 - - Borrowings - 15,288,691 22,578,808 Total financial liabilities 5,102,212 46,585,943 65,720,916
STATEMENTS Over 5 years
Total
- 280,882 - 7,496,219 - 20,877,573 - 2,528,576 45,313,324 77,019,718 6,569 325,297 21,616,401 29,627,740 66,936,294 138,156,005 - 75,932,742 - 3,326,226 - 282,604 - 37,867,499 - 117,409,071 Unit : Baht’000
SEPARATE FINANCIAL 2009 On demand Within 1 - 5 years 1 year Financial assets Cash 227,399 - - Interbank and money market items 771,211 9,782,198 - Net investments in securities - 5,080,458 18,899,652 Net investments in loans - - 2,585,572 Hire-purchase receivables - 39,284 24,991,088 Leasing receivables - - 253,721 Loans and receivables 32,686 962,140 5,704,263 Total financial assets 1,031,296 15,864,080 52,434,296 Financial liabilities Deposits 5,775,610 29,773,674 40,559,944 Interbank and money market items 6,170 2,671,173 1,050,980 Liabilities payables on demand 195,492 - - Borrowings - 13,943,336 14,790,434 Total financial liabilities 5,977,272 46,388,183 56,401,358
STATEMENTS Over 5 years
Total
- 227,399 - 10,553,409 - 23,980,110 - 2,585,572 35,088,271 60,118,643 3,107 256,828 19,492,976 26,192,065 54,584,354 123,914,026 - 76,109,228 - 3,728,323 - 195,492 - 28,733,770 - 108,766,813
160
Annual Report 2010
Unit : Baht’000 35.3 Fair values The fair value of financial instruments has been estimated by the Bank using available market information and appropriate valuation methodologies for each type of financial instruments. A summary of carrying amounts and fair value of financial instruments as at December 31, 2010 and 2009, are as follows: Unit : Baht’000 CONSOLIDATED FINANCIAL STATEMENTS 2010 2009 Carrying amount Fair value Carrying amount Fair value Financial assets Cash 282,132 282,132 228,649 228,649 Interbank and money market items 7,912,146 7,912,146 11,016,907 11,016,907 Investments in securities, net 12,292,556 12,342,657 18,218,518 18,253,378 Investments in loans, net 6,699,802 6,699,802 4,523,461 4,523,461 Investments in properties, net 78,070 78,070 78,040 78,040 Receivables from clearing house 140,780 140,780 234,558 234,558 Loans and accrued interest receivable, net 104,077,703 104,077,703 83,842,223 83,842,223 Financial liabilities Deposits 75,931,622 75,931,622 76,109,216 76,109,216 Interbank and money market items 3,201,942 3,201,942 3,648,141 3,648,141 Liabilities payable on demand 282,604 282,604 195,492 195,492 Payables to clearing house 16,135 16,135 35,081 35,081 Securities and derivative business payables 475,853 475,853 431,400 431,400 Borrowings 35,307,499 35,327,550 26,063,770 26,244,031 Accrued interest payable 453,763 453,763 484,232 484,232 Unit : Baht’000 SEPARATE FINANCIAL STATEMENTS 2010 2009 Carrying amount Fair value Carrying amount Fair value Financial assets Cash 280,882 280,882 227,399 227,399 Interbank and money market items 7,496,219 7,496,219 10,553,409 10,553,409 Investments in securities, net 20,877,573 22,407,432 23,980,110 25,817,495 Investments in loans, net 2,528,576 2,528,576 2,585,572 2,585,572 Investments in properties, net 103,329,131 103,329,131 83,298,224 83,298,224 Financial liabilities Deposits 75,932,742 75,932,742 76,109,228 76,109,228 Interbank and money market items 3,326,226 3,326,226 3,728,323 3,728,323 Liabilities payable on demand 282,604 282,604 195,492 195,492 Borrowings 37,867,499 37,887,594 28,733,770 28,914,328 Accrued interest payable 460,908 460,908 488,347 488,347
Kiatnakin Bank Public Company Limited 161
35.4 Derivatives
The Bank has set up objectives and policies to manage the foreign exchange risk and interest rate risk from the volatility of foreign exchange rates and interest rates by using the derivatives for serving the client’s need and the Bank’s assets and liability management purpose.
The Bank controls the counterparty risks by setting-up the credit limit based on the normal lending procedures.
The notional amount and the fair value of derivatives as at December 31, 2010 and 2009 are as follows:
Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2010 Notional amount Net
Less than 1 Within 1- 5 More than 5 Total year years years
Forward contracts Interest rate swap contracts Cross currency swap contracts
10.40 - -
- 2,000.00 2,265.79
- - 798.52
10.40 2,000.00 3,064.31
fair value of derivatives
0.01 (8.28) 298.18
Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2009 Notional amount Net
Less than 1 Within 1- 5 More than 5 Total year years years
Interest rate swap contracts Cross currency swap contracts
- -
4,651.00 2,895.23
- 549.95
4,651.00 3,445.18
fair value of derivatives
9.06 133.47
36 INFORMATION ON QUALITY OF ASSETS
The quality of assets classified in accordance with the guidelines of the Securities Exchange Commission as at December 31, 2010 and 2009 are as follows:
162
Annual Report 2010
36.1 Investments in securities The Bank has investment in debt instruments in companies which were ordered to discontinue their operations and defaulted their debts as at December 31, 2010 and 2009 as follows: Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS Type of Number Cost Market Provision investment Value Non-listed companies which have Senior defaulted 1 0.04 - 0.04 ebenture on interest payment 0.04 - 0.04
The Bank has recognized impairment loss on such debt instruments to the statement of income in the period when incurred.
36.2 Loans and accrued interest receivable The Bank has given loans and accrued interest receivables to companies which face the financial difficulties and provided related allowance for doubtful accounts in the consolidated and separate financial statements as follows: Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2010 Numbers Total debts Collateral Allowance for doubtful accounts Listed company which is under restructuring plan 1 106 35 84 Company which is under default problem 71 3,261 5,370 853 72 3,367 5,405 937 Unit : Million Baht CONSOLIDATED AND SEPARATE FINANCIAL STATEMENTS 2009 Numbers Total debts Collateral Allowance for doubtful accounts Listed company which is under restructuring plan 1 142 35 120 Company which is under default problem 77 3,579 6,141 750 78 3,721 6,176 870
Kiatnakin Bank Public Company Limited 163
37 RELATED PARTIES TRANSACTIONS
Enterprises and individuals that directly, or indirectly through one or more intermediaries, control, or are controlled by, or are under common control with the Bank, including holding companies, subsidiaries and fellow subsidiaries are related parties of the Bank. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Bank that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Bank and close members of the family of these individuals and entities associated with these individuals also constitute related parties.
In considering each possible related party relationship, attention is directed to the substance of the relationship, and not merely the legal form.
According to the Bank of Thailand’s Notification Sor.Nor.Sor. 66/2551 regarding the Guideline on Consolidated Supervision dated August 3, 2008, the Bank is required to disclose the Inter Group- Transactions in the Financial Business Group Policy and the Risk Management for Inter Group- Transaction in the Financial Business Group Policy as follows:
1.
Financial Business Group Policy The Board of the Bank set the policy for Inter-Group transaction in the Financial Business Group in conformity with the guideline prescribed by the Bank of Thailand’s Notification and the Bank’s Policy. For quantitative basis, the Bank set the limit for Inter-Group transaction in the Financial Business Group and/or approval from the related committee. As for pricing basis, the transactions depend on each type of the transaction which will vary on cost, market price, appraisal price, or general customers.
2.
Risk management for Inter-Group transaction in the Financial Business Group Policy To manage the operation and consolidated supervision, the Board of Director assigned Risk management committee to take the policy into action, control and monitor business and supporting unit to conform with the Financial Business Group Policy. Moreover, the Board of the Bank acknowledge the significant risk of the Financial Business Group based on the regularly basis.
Furthermore, the Risk management committee of each company in the Financial Business Group was responsible to perform the risk assessment according to its policy, and report the results to the Bank’s risk management committee on a regularly basis. In case there was any significant change or any circumstance that would impact on the current business operation, the Risk management committee should report such matters immediately.
The following material transactions were carried out with related parties for the years ended December 31, 2010 and 2009.
164
Annual Report 2010
37.1 Income Unit : Million Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 Interest and dividend income Kiatnakin Securities Co.,Ltd. Asia Recovery 1 Fund Asia Recovery 2 Fund Asia Recovery 3 Fund Thai Restructuring Fund
18.06 153.80 577.46 248.01 1,181.63 2,178.96
0.08 88.28 225.57 303.34 - 617.27
(17.63) (44.44) 9.02 (53.05)
45.10 - - 45.10
Fee and services income Kiatnakin Securities Co.,Ltd. Erawan Law Office Co.,Ltd. Asia Recovery 1 Fund Asia Recovery 2 Fund Asia Recovery 3 Fund Thai Restructuring Fund
4.40 2.33 0.36 0.36 0.36 0.36 8.17
3.84 - 0.36 0.36 0.36 0.36 5.28
Other income Kiatnakin Securities Co.,Ltd. Erawan Law Office Co.,Ltd.
3.87 0.89 4.76
3.30 - 3.30
Gain (loss) on repurchasing of unit trust Asia Recovery 1 Fund Asia Recovery 2 Fund Asia Recovery 3 Fund
The consolidated financial statements for the year ended December 31, 2010 included the brokerage income received from Kiatnakin Bank Public Company Limited and the directors and management at the position of department head and above amounting to Baht 0.87 million and Baht 6.93 million, respectively (2009: Baht 0.44 million and Baht 3.31 million, respectively).
Kiatnakin Bank Public Company Limited 165
37.2 Expenses Unit : Million Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 Interest and discounts on borrowings Kiatnakin Securities Co.,Ltd. 8.15 8.31 Asia Recovery 1 Fund 1.03 2.53 Asia Recovery 2 Fund 3.55 1.03 Asia Recovery 3 Fund 6.01 7.29 Thai Restructuring Fund 16.94 22.54 Asia Recovery Property Fund 3 17.21 19.94 Bangkok Capital Fund 0.69 - Gamma Capital Fund 2.01 - Directors and management at the position of department head including their related person who have control or significant influences 11.33 13.59 66.92 75.23 Rental and services expenses CMIC Development Co.,Ltd. (1) Chotitanawan Co., Ltd.(2) Ruam Wattana Co.,Ltd. (2) Other service Erawan Law Office Co.,Ltd. Amarin Law Office Co.,Ltd. (3) Other services fee paid by subsidiaries to Erawan Law Office Co., Ltd. and Amarin Law Office Co.,Ltd. amounting to Baht 5.40 million and Baht 106.40 million, respectively (December 31, 2009 : Baht 4.50 million and Baht 9.30 million, respectively). Relationship details : (1) Shares received from troubled debt restructuring (2) Major shareholder is an authorized director (3) Major incomes come from Kiatnakin Bank Group
24.75 8.40 0.44 33.59
23.16 7.73 0.22 31.11
64.80 - 64.80
37.00 7.40 44.40
166
Annual Report 2010
37.3 Outstanding balances as at December 31, 2010 and 2009 are as follows: Unit : Million Baht SEPARATE FINANCIAL STATEMENTS 2010 2009 Loans to financial institutions / Loan Kiatnakin Securities Co., Ltd. 155.00 62.00 CMIC Development Co., Ltd. 521.33 539.33 Directors and management at the position of department head including their related person who have control or significant influences 0.23 1.25 676.56 602.58 Accounts receivable/Other assets Kiatnakin Securities Co.,Ltd. Asia Recovery 2 Fund CMIC Development Co.,Ltd. Other liabilities/Accrued interest expenses Kiatnakin Securities Co.,Ltd. Asia Recovery 1 Fund Asia Recovery 2 Fund Asia Recovery 3 Fund Thai Restructuring Fund Asia Recovery Property fund Bangkok Capital Fund Gamma Capital Fund
0.82 - 10.81 11.63
0.62 99.25 6.38 106.25
5.91 0.01 0.11 0.03 0.33 0.58 0.04 0.14 7.15
2.56 - - - 0.84 0.71 - - 4.11
Unit : Million Baht SEPARATE FINANCIAL STATEMENTS Weighted Average Balance 2010 2009 2010 2009 Deposits Kiatnakin Securities Co.,Ltd. 581.67 393.53 124.32 80.19 Erawan Law Office Co.,Ltd. 0.14 0.45 1.12 0.01 Director and management at the position of department head including their related person have control or significant influences 585.41 520.57 207.88 689.83 1,167.22 914.55 333.32 770.03
Kiatnakin Bank Public Company Limited 167
Unit : Million Baht SEPARATE FINANCIAL STATEMENTS Weighted Average Balance 2010 2009 2010 2009 Short-term Borrowing Asia Recovery 1 Fund 76.02 153.86 26.00 - Asia Recovery 2 Fund 252.32 80.47 225.00 - Asia Recovery 3 Fund 421.16 414.16 54.00 - Thai Restructuring Fund 1,269.81 1,311.97 640.00 1,450.00 Asia Recovery Property Fund 3 1,222.92 1,194.60 1,235.00 1,220.00 Bangkok Capital Fund 43.49 - 80.00 - Gamma Capital Fund 126.16 - 300.00 - Director and management at the position of department head including their related person have control or significant influences 152.28 134.39 140.63 140.06 3,564.16 3,289.45 2,700.63 2,810.06
37.4 Pricing policies Transactions between the Bank and related parties have been priced as follows: • Fee and services income, which the funds paid to the Bank is calculated at the rate specified in service agreement. • Income under commitment agreement under securities business receivables is calculated based on outstanding balance which the Bank could not claim from securities business receivables. • Other income is based on actual cost incurred. • Interest income is based on market price. • Dividend income is received at the rate declared by the fund. • Gain on repurchasing of unit trust is calculated from net asset value of unit trust at the repurchased date deducted by the carrying value. • Brokerage commission is charged at the same rate given to third parties. • Interest and discounts on borrowing are based on market price. • Rental and service income are based rate identified in rental and services contracts.
The Bank has no special benefits given to the directors and executives beyond the general benefits made as usual such as directors remuneration, executives salary and bonus (if any) included ESOP warrants as disclosed in Note 24.
The amount of 68,503,036 unit of warrants have been converted into 68,503,036 ordinary shares. The Bank registered the conversion of warrants with the Ministry of Commerce on January 7, 2011.
These financial statements have been approved for issuing by the Bank’s authorized director on February 14, 2011.
38 BENEFITS PAID TO DIRECTORS AND EXECUTIVES 39 EVENTS AFTER THE BALANCE SHEET DATE 40 APPROVAL OF FINANCIAL STATEMENTS
168
Annual Report 2010
Board of Directors’ Profiles Mr.Supol Wattanavekin Age : 55 years Position : Chairman of the Board of Directors* and Chairman of the Risk Management Committee Education : Master of Business Administration (Executive), Sasin Graduate Institute of Business Administration of Chulalongkorn University Bachelor of Law, Ramkhamhaeng University Director Training Programs : Financial Institutes Reform in Thailand from Present to the Future (2010), Thai Institute of Directors Association (IOD) 5th SEACEN / ABAC / ABA / PECC Public Private Dialogue for the Asia Pacific Region (2009), The South East Asia Central Bank Research and Training Center, Malaysia Corporate Governance Report of Thai Listed Companies (2007), Thai Listed Companies Association Leadership Strategic, Growth and Change (2006), Sasin Graduate Institute of Business Administration of Chulalongkorn University Organizing and Managing Strategic Alliances for Success and Profit (2006), Sasin Graduate Institute of Business Administration of Chulalongkorn University Director Certification Program (DCP 76/2006), Thai Institute of Directors Association (IOD) Director Accreditation Program (DAP 56/2006), Thai Institute of Directors Association (IOD) Orchestrating Winning Performance (2005), IMD International, Switzerland Board & CEO Assessment (2003), Thai Institute of Directors Association (IOD) The Role of the Chairman Program (RCP1/2000), Thai Institute of Directors Association (IOD) Years as director : 37 years (appointed in 1973) KK shares held (As of 31 December 2010) : 12,426,850 shares (including his spouse) % of total shares with voting rights : 2.1962 % (including his spouse’s) Family Relationship with the Executive : Head of Deposit and Marketing’s brother. Experiences : 2011-Present Chairman of the Board of Directors and Chairman of the Risk Management Committee, Kiatnakin Bank Public Company Limited 2004-Present Director, The Erawan Group Public Company Limited 1990-Present Chairman, BTMU Leasing (Thailand) Company Limited 1999-2011 Director, Kiatnakin Securities Company Limited 2007-2010 Director, Chairman of the Executive Board and Chairman of the Risk Management Committee, Kiatnakin Bank Public Company Limited 2005-2007 Chairman of the Board of Directors, Kiatnakin Bank Public Company Limited 2000-2005 Chairman of the Board of Directors, Kiatnakin Finance Public Company Limited 1999-2005 Chairman of the Executive Board, Kiatnakin Finance Public Company Limited l
l
l l
l l
l
l l l l l
*Appointed as Chairman in replacement of Ms. Nawaaporn Ryansakul effective on January 1, 2011
Kiatnakin Bank Public Company Limited 169
Mr.Pichai Dachanapirom Age : 64 years Position : Independent Director and Chairman of the Audit Committee Education : B.A. (Accounting), Thammasat University Certified Public Accountant, Registration No.2421 Director Training Programs : Monitoring Fraud Risk Management (MFM1/2009), Thai Institute of Directors Association (IOD) Monitoring the Internal Audit Function (MIA 4/2008), Thai Institute of Directors Association (IOD) Monitoring the System of Internal Control and Risk Management (MIR 1/2007), Thai Institute of Directors Association (IOD) Audit Committee Program (ACP 9/2005), Thai Institute of Directors Association (IOD) Director Certification Program (DCP 32/2003), Thai Institute of Directors Association (IOD) Years as director : 9 years (appointed in 2001) KK shares held (As of 31 December 2010) : 50,000 shares % of total shares with voting rights : 0.0088 Family Relationship with the Executive : None Experiences : 2007-Present Independent Director and Chairman of the Audit Committee, Kiatnakin Bank Public Company Limited 2005-2007 Independent Director and Member of the Audit Committee, Kiatnakin Bank Public Company Limited 2001-2005 Independent Director and Member of the Audit Committee, Kiatnakin Finance Public Company Limited 2001-Present Executive Director, Dharmniti Press Company Limited 1998-Present Executive Director, Dharmniti Seminar and Training Company Limited . 1998-Present Executive Director, Dharmniti Office of Management Development Company Limited . 1990-Present Executive Director, Grand Success Company Limited 1989-Present Executive Director, Dharmniti Public Company Limited 1986 present Managing Director, Dharmniti Auditing Company Limited l l
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Associate Professor Manop Bongsadadt Age : 69 years Position : Independent Director, Member of the Audit Committee and Chairman of the Nomination and Remuneration Committee Education : Master of Regional Planning, Institute of Social Studies, The Netherlands Master of Architecture, Kansas State University, U.S.A. Bachelor of Architecture, Chulalongkorn University Director Training Programs : Role of The Compensation Committee (RCC 8/2009), Thai Institute of Directors Association (IOD) Role of the Chairman Program (RCP 17/2007), Thai Institute of Directors Association (IOD) Audit Committee Program (ACP 10/2005), Thai Institute of Directors Association (IOD) Director Accreditation Program (DAP 8/2004), Thai Institute of Directors Association (IOD) Years as director : 6 years (appointed in 2004) KK shares held (As of 31 December 2010) : None % of total shares with voting rights : None l l l
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170
Annual Report 2010
Family Relationship with the Executive : None Experiences : 2006-Present Chairman of the Nomination and Remuneration Committee, Kiatnakin Bank Public Company Limited 2005-Present Independent Director and Member of the Audit Committee, Kiatnakin Bank Public Company Limited 2004-2005 Independent Director, Kiatnakin Finance Public Company Limited 2006-Present Director, Krungthep Thanakom Company Limited 2004-Present Member of the Audit Committee, The Erawan Group Public Company Limited 2003-Present Chairman of the Board of Director, Rasa Property Development Public Company Limited 2002-Present Associate Professor, Faculty of Architecture, Chulalongkorn University 1992-Present Executive Director, Tubkaew-Hori Kindergarten School and Nursery
Mr.Chet Pattrakornkul Age : 62 years Position : Independent Director, Member of the Audit Committee, Member of the Nomination and Remuneration Committee and Chairman of the Compliance and Governance Committee* Education : Master in Marketing (Certificate program), Thammasart University Bachelor’s Degree in Public Administration, Ramkhamhaeng University Director Training Programs : Financial Institutes Reform in Thailand from Present to the Future (2010), Thai Institute of Directors Association (IOD) Economy After the Crisis (2010), Thai Institute of Directors Association (IOD) The Board’s Role on Fraud Prevention and Detection (2010), Thai Institute of Directors Association (IOD) Monitoring the System of Internal Control and Risk Management (MIR 5/2009), Thai Institute of Directors Association (IOD) Monitoring of the Quality of Financial Reporting (MFR7/2009), Thai Institute of Directors Association (IOD) Monitoring Fraud Risk Management (MFM1/2009), Thai Institute of Directors Association (IOD) Board and Director Performance Evaluation (R-WS workshop 2/2008), Thai Institute of Directors Association (IOD) Corporate Governance Report of Thai Listed Companies (2007), Thai Listed Companies Association Monitoring the Internal Audit Function (MIA 1/2007), Thai Institute of Directors Association (IOD) Audit Committee Program (ACP17/2007), Thai Institute of Directors Association (IOD) Role of the Compensation Committee (RCC 1/2006), Thai Institute of Directors Association (IOD) DCP Refresher Course (3/2006), Thai Institute of Directors Association (IOD) Director Certification Program (DCP 9/2001), Thai Institute of Directors Association (IOD) Years as director : 5 years (appointed in 2005) KK shares held (As of 31 December 2010) : 10,000 shares % of total shares with voting rights : 0.0018 Family Relationship with the Executive : None Experiences : 2011-Present Chairman of the Compliance and Governance Committee, Kiatnakin Bank Public Company Limited 2007-Present Member of the Audit Committee, Kiatnakin Bank Public Company Limited 2006-Present Member of the Nomination and Remuneration Committee, Kiatnakin Bank Public Company Limited 2005-Present Independent Director, Kiatnakin Bank Public Company Limited 2004-2005 Head of Consumer Lending, Kiatnakin Finance Public Company Limited l l
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* Appointed as Chairman of the Compliance and Governance Committee on January 17, 2011.
Kiatnakin Bank Public Company Limited 171
Mr.Pravit Varutbangkul Age : 63 years Position : Independent Director, Member of the Audit Committee and Member of the Compliance and Governance Committee1 Education : Master of Business Administration in Operations Research and General, University of Santa Clara, Santa Clara, California, U.S.A. Bachelor of Science (Operations Research & Finance), Brigham Young University, Provo, Utah, U.S.A. Director Training Programs : Effective Business Performance Leadership (5/2008), Thai Institute of Directors Association (IOD) Monitoring Strategy Implementation and Execution (2008), Thai Institute of Directors Association (IOD) Improving The Quality of Financial Reporting (QFR 5/2007), Thai Institute of Directors Association (IOD) Audit Committee Program (ACP 16/2007), Thai Institute of Directors Association (IOD) DCP Refresher Course (3/2006), Thai Institute of Directors Association (IOD) Director Certification Program (DCP 5/2001), Thai Institute of Directors Association (IOD) Years as director : 14 years (appointed in 1996) KK shares held (As of 31 December 2010) : 270,000 shares % of total shares with voting rights : 0.0477 Family Relationship with the Executive : None Experiences : 2011-Present Member of the Audit Committee and Member of the Compliance and Governance Committee, Kiatnakin Bank Public Company Limited 2010-Present Independent Director, Kiatnakin Bank Public Company Limited 2009-2011 Member of the Audit Committee, Kiatnakin Securities Company Limited 2007-2011 Director, Kiatnakin Securities Company Limited 2006-2010 Director, Kiatnakin Bank Public Company Limited 2005-2006 Director, Vice Chairman of the Executive Board, Kiatnakin Bank Public Company Limited 2004-2005 Director and Head of Central Support, Kiatnakin Finance Public Company Limited l l
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Mr.Tanin Chirasoonton Age : 58 years Position : Director and and Member of the Compliance and Governance Committee2 Education : Bachelor of Law, Ramkamhaeng University Director Training Programs : DCP Refresher Course (5/2007), Thai Institute of Directors Association (IOD) Advanced Business Management For Executive [ABM Exec.] Program (2005), The Continuing Education Center, Chulalongkorn University Public Administration Course (2003), Political Science Faculty, Thammasat University Director Certification Program (DCP 10/2001), Thai Institute of Directors Association (IOD) Real Estate and Skyscraper Management (1993), Faculty of Architecture, Chulalongkorn University l
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1 2
Appointed as Member of the Audit Committee and Member of the Compliance and Governance Committee on January 17, 2011 Appointed as Member of the Compliance and Governance Committee on January 17, 2011
172
Annual Report 2010
Years as director : 11 years (appointed in 1999) KK shares held (As of 31 December 2010) : None % of total shares with voting rights : None Family Relationship with the Executive : None Experiences : 2011-Present Member of the Compliance and Governance Committee, Kiatnakin Bank Public Company Limited 2011-Present Chairman of the Board of Directors, Erawan Law Office Company Limited 2009-Present Director, Kiatnakin Bank Public Company Limited 2009-2011 Managing Director, Erawan Law Office Company Limited 2006-2009 Independent director, Kiatnakin Bank Public Company Limited 2004-2006 Independent director and Chairman of the Nomination and Remuneration Committee, Kiatnakin Bank Public Company Limited
Mr.Suraphol Kulsiri Age : 58 years Position : Director, Member of the Nomination and Remuneration Committee and Member of the Main Credit and Foreclosed Property Committee* Education : Bachelor of Business Administration (Marketing), Bangkok University Director Training Programs : Role of the Chairman Program (RCP 23/2010), Thai Institute of Directors Association (IOD) Successful Formulation and Execution of Strategy (SFE 7/2010), Thai Institute of Directors Association (IOD) Role of the Compensation Committee (RCC3/2007), Thai Institute of Directors Association (IOD) Director Certification Program (DCP 13/2001), Thai Institute of Directors Association (IOD) Years as director : 6 years (appointed in 2004) KK shares held (As of 31 December 2010) : None % of total shares with voting rights: None Family Relationship with the Executive : None Experiences : 2011-Present Member of the Main Credit and Foreclosed Property Committee, Kiatnakin Bank Public Company Limited 2004-Present Director and Member of the Nomination and Remuneration Committee, Kiatnakin Bank Public Company Limited 2003-2010 Director and Chairman of the Executive Board, Kiatnakin Securities Company Limited 1999 -2003 Managing Director, Kiatnakin Securities Company Limited 2005-2009 Chairperson of Information Technology Club, Association of Securities Companies 2005-2007 Director, The Stock Exchange of Thailand 2005-2007 Director, Settrade Company Limited 2005-2006 Chairman of Technology Development Committee, The Stock Exchange of Thailand l
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*Appointed as Member of the Main Credit and Foreclosed Property Committee on January 17, 2011
Kiatnakin Bank Public Company Limited 173
Mr.Tawatchai Sudtikitpisan Age : 50 years Position : Director, Chief Executive Officer and President1, Chairman of the Main Credit and Foreclosed Property Committee and Member of the Risk Management Committee
Education : Master of Business Administration, University of Texas at Austin, U.S.A. Master of Science in Electrical Engineering, University of Texas at Austin, U.S.A. Bachelor of Science in Electrical Engineering, University of Texas at Austin, U.S.A. Director Training Programs : The Job of the Chief Executive (2007), Singapore Institute of Management (SIM) Senior Executive Program (2005), Sasin Graduate Institute of Business Administration of Chulalongkorn University Director Certification Program (DCP 31/2003), Thai Institute of Directors Association (IOD) Years as director : 8 years (appointed in 2002) KK shares held (As of 31 December 2010) : 100,000 shares % of total shares with voting rights : 0.0177 Family Relationship with the Executive : None Experiences : 2011-Present Director, Chief Executive Officer and President, Chairman of the Main Credit and Foreclosed Property Committee and Member of the Risk Management Committee, Kiatnakin Bank Public Company Limited 2011-Present Chairman of the Board of Directors, Kiatnakin Securities Company Limited 2006-2011 Director, Kiatnakin Securities Company Limited 2005-2010 Director, President, Member of the Executive Committee and Member of the Risk Management Committee, Kiatnakin Bank Public Company Limited 2005-2005 Director and Head of Residential Project Lending, Corporate Lending and Consumer Lending, Kiatnakin Finance Public Company Limited 2002-2005 Director and Head of Residential Project and Corporate Lending, Kiatnakin Finance Public Company Limited l l l
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Mr.Pracha Chumnarnkitkosol Age : 48 years Position : Director, Member of the Executive Committee, Member of the Risk Management Committee and Member of the Main Credit and Foreclosed Property Committee2 Education : Master of Business Administration (Finance), University of Texas Arlington U.S.A. Bachelor of Engineering, Chulalongkorn University Director Training Programs : Senior Executive Program (SEP-22) (2008), Sasin Graduate Institute of Business Administration of Chulalongkorn University Overview of Current Macro Economic Condition and Prudential Regulation-Impact to Thai Corporation (2007), The Thai Banker’s Association Blue Ocean Strategy (STRATEGIC) (2007), Business Development Center EVA : Managing for Value Creation (2006), Sasin Graduate Institute of Business Administration of Chulalongkorn University l l
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Appointed as Chief Executive Officer and President effective on January 1, 2011 Appointed as Member of the Executive Committee and Member of the Main Credit and Foreclosed Property Committee on January 17, 2011
174
Annual Report 2010
Director Certification Program (DCP 75/2006), Thai Institute of Directors Association (IOD) Risk Management (2005), The Thai Institute of Banking and Finance Association Years as director : 5 years (appointed in 2006) KK shares held (As of 31 December 2010) : None None % of total shares with voting rights : Family Relationship with the Executive : None Experiences : 2011-Present Director, Member of the Executive Committee, Member of the Risk Management Committee and Member of the Main Credit and Foreclosed Property Committee, Kiatnakin Bank Public Company Limited 2006-2011 Director, Member of the Risk Management Committee and Head of Risk Management, Kiatnakin Bank Public Company Limited 2005-2006 Head of Risk Management, Kiatnakin Bank Public Company Limited 2004-2005 Head of the Credit Committee, Kiatnakin Finance Public Company Limited l l
Miss Thitinan Wattanavekin Age : 53 years Position : Director*, Member of the Executive Committee, Member of the Risk Management Committee, Head of Deposit and Marketing
Education : Master of Management, Sasin Graduate Institute of Business Administration of Chulalongkorn University Bachelor of Public Affairs, University of Southern California, U.S.A. Director Training Programs : Corporate Governance and Social Responsibility (CSR 1/2007), Thai Institute of Directors Association (IOD) Capital Market for Executives (CMA/2006), Capital Market Academy Board Performance Evaluation (2006), Thai Institute of Directors Association (IOD) DCP Refresher Course (1/2005), Thai Institute of Directors Association (IOD) Directors Certification Program (DCP 1/2000), Thai Institute of Directors Association (IOD) Years as director : (appointed in 2011) KK shares held (As of 31 December 2010) : 34,782,761 shares % of total shares with voting rights : 6.1473 Family Relationship with the Executive : Chairman of the Board of Director’s sister Experiences : 2011-Present Director, Member of the Executive Committee, Member of the Risk Management Committee and Head of Deposit and Marketing, Kiatnakin Bank Public Company Limited 1999-Present Director, Kiatnakin Securities Company Limited 2006-Present Director, Chai Talay Hotel Company Limited 2005-2010 Member of the Executive Committee, Member of the Risk Management Committee and Head of Deposit and Marketing, Kiatnakin Bank Public Company Limited 2004-2005 Head of Treasury and Funding, Kiatnakin Finance Public Company Limited l l
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* Appointed as Director effective on January 1, 2011
Kiatnakin Bank Public Company Limited 175
Management Team’s Profiles
Mr.Tawatchai Sudtikitpisan Age : 50 years Position : Director, Chief Executive Officer and President, Chairman of the Main Credit and Foreclosed Property Committee and Member of the Risk Management Committee Detail are in page 173
Mr.Pracha Chumnarnkitkosol Age : 48 years Position : Director, Member of the Executive Committee, Member of the Risk Management Committee and Member of the Main Credit and Foreclosed Property Committee Detail are in page 173
Miss Thitinan Wattanavekin Age : 53 years Position : Director, Member of the Executive Committee, Member of the Risk Management Committee, Head of Deposit and Marketing, Detail are in page 174
Mr.Chavalit Chindavanig Age : 47 years Position : Member of the Executive Committee, Member of the Risk Management Committee and Head of Finance and Budgeting Education : Master of Business Administration, Eastern Michigan University, U.S.A. Bachelor of Mechanical Engineering, Chulalongkorn University l l
Director Training Programs : TLCA Executive Development Program (EDP 2/2008), Thai Listed Companies Association Directors Certification Program (DCP 76/2006), Thai Institute of Directors Association (IOD) Directors Accreditation Program (DAP 21/2004), Thai Institute of Directors Association (IOD)
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Annual Report 2010
KK shares held : (As of 31 December 2010) None % of total shares with voting rights : None Family Relationship with the Executive : None Experiences : 2009 - Present Director, Kiatnakin Securities Company Limited 2009 - Present Director, Erawan Law Office Company Limited 2007 - Present Member of the Executive Committee, Member of the Risk Management Committee and Head of Finance and Budgeting, Kiatnakin Bank Public Company Limited 1998 - 2006 Acting Managing Director, Tisco Securities Company Limited
Mr.Patom Amorndechawat Age : 53 years Position : Member of the Executive Committee, Member of the Risk Management Committee and Head of Operations Education : Master of Accountancy, Thammasat University Bachelor of Law, Thammasat University Bachelor of Accountancy, Chulalongkorn University Director Training Programs : Director Certification Program (DCP 121/2009), Thai Institute of Directors Association (IOD) KK shares held : (As of 31 December 2010) None % of total shares with voting rights : None Family Relationship with the Executive : None Experiences : 2010 - Present Member of the Audit Committee, Kiatnakin Securities Company Limited 2009 - Present Director, Kiatnakin Securities Company Limited 2007 - Present Member of the Executive Committee, Member of the Risk Management Committee and Head of Operations, Kiatnakin Bank Public Company Limited 2000 - 2007 Executive Vice President of Operation and Retail, Bank Thai Public Company Limited l l l
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Mr.Sarawut Charuchinda Age : 52 years Position : Member of the Executive Committee, Member of the Risk Management Committee and Head of Debt Restructuring Education : Master of Business Administration, University of Mississippi, U.S.A. Bachelor of Accountancy (2nd Class Honors), Chulalongkorn University l l
Kiatnakin Bank Public Company Limited 177
Director Training Programs : Director Certification Program (DCP 31/2003), Thai Institute of Directors Association (IOD) KK shares held: (As of 31 December 2010) None % of total shares with voting rights : None Family Relationship with the Executive : None Experiences : 2011 - Present Managing Director , Erawan Law Office Company Limited 2005 - Present Member of the Executive Committee, Member of the Risk Management Committee and Head of Debt Restructuring, Kiatnakin Bank Public Company Limited 2002 - 2005 Head of Asset Management, Kiatnakin Finance Public Company Limited l
Miss Nujaree Sithasrivong Age : 47 years Position : Member of the Executive Committee and Executive Vice President, Human Resource Management Education : Bachelor of Political Science Honours, Chulalongkorn University Director Training Programs : Role of the Compensation Committee (2007), Thai Institute of Directors Association (IOD) KK shares held: (As of 31 December 2010) None % of total shares with voting rights : None Family Relationship with the Executive : None Experiences : 2011 - Present Member of the Executive Committee, Kiatnakin Bank Public Company Limited 2005 - Present Executive Vice President, Human Resource Management, Kiatnakin Bank Public Company Limited l
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Mrs.Piradee Chongsiriwanchai Age : 56 years Position : Member of the Executive Committee and Executive Vice President, Deposit and Marketing Education : Bachelor Degree Business Administration (Finance), Dhurakijbundit University Director Training Programs : None KK shares held : (As of 31 December 2010) 10,000 shares % of total shares with voting rights : 0.0018% of total shares with voting rights Family Relationship with the Executive : None l
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Annual Report 2010
Experiences : 2011 - Present 2008 - Present 1995 - 2008
Member of the Executive Committee, Kiatnakin Bank Public Company Limited Executive Vice President, Business Development 1, Kiatnakin Bank Public Company Limited Senior Vice President, Business Development 1, Kiatnakin Bank Public Company Limited
Mr.Verasak Tantinikorn Age : 49 years Position : Member of the Executive Committee and Executive Vice President, Retail Lending
Education : Master of Public Administration Program, The National Institute of Development Administration (NIDA) Bachelor of Law, Ramkhamhaeng University l l
Director Training Programs : None KK shares held : (As of 31 December 2010) 8,000 shares % of total shares with voting rights : 0.0014% of total shares with voting rights Family Relationship with the Executive : None Experiences : 2011 - Present Member of the Executive Committee, Kiatnakin Bank Public Company Limited 2010 - Present Executive Vice President, Retail Lending, Kiatnakin Bank Public Company Limited 2006 - 2010 Senior Vice President, Retail Lending, Kiatnakin Bank Public Company Limited
Mr.Somkiat Pongjunyakul Age : 55 years Position : Member of the Executive Committee and Executive Vice President, Information Technology Education : Master of Science (Computer), Chulalongkorn University Master of Science (Statistic), National Institute of Development Administration (Nida) Bachelor of Education (Mathematics), Khon Kaen University Director Training Programs : None KK shares held : (As of 31 December 2010) 50,000 shares % of total shares with voting rights : 0.0088% of total shares with voting rights Family Relationship with the Executive : None l l l
Experiences : 2011 - Present Member of the Executive Committee, Kiatnakin Bank Public Company Limited 2004 - Present Executive Vice President, Information Technology, Kiatnakin Bank Public Company Limited 2001 - 2004 Senior Vice President, Information Technology, Kiatnakin Bank Public Company Limited
Kiatnakin Bank Public Company Limited 179
Mr.Sathit Bovornsantisuth Age : 49 years Position : Member of the Executive Committee and Executive Vice President, Deposit and Marketing Education : Master of Business Administration (Major in Marketing), The National Institute of Development Administration (NIDA) Bachelor of Pharmacy, Mahidol University l l
Director Training Programs :
None
KK shares held : (As of 31 December 2010)
None
% of total shares with voting rights :
None
Family Relationship with the Executive :
None
Experiences : 2011 - Present Member of the Executive Committee, Kiatnakin Bank Public Company Limited 2010 - Present Executive Vice President, Deposit and Marketing Division, Kiatnakin Bank Public Company Limited 2009 - 2010 First Senior Vice President, Agency Marketing Division, Muang Thai Life Assurance Company Limited 2007 - 2009 Executive Vice President, Investment Marketing Department, Kiatnakin Securities Company Limited 2006 - 2007 Executive Vice President, Asset Plus Fund Management 1994 - 2006 Senior Vice President, Head of Mutual Fund Division, Kasikorn Asset Management Company Limited
Mr.Siri Senajak Age : 45 years Position : Member of the Executive Committee and Executive Vice President, Retail Lending Education : Master of Economics, The University of Michigan, Ann Arbor, USA Bachelor of Economics, Chulalongkorn University l l
Director Training Programs :
None
KK shares held : (As of 31 December 2010) None % of total shares with voting rights :
None
Family Relationship with the Executive :
None
Experiences : 2011 - Present Member of the Executive Committee, Kiatnakin Bank Public Company Limited 2007 - Present Executive Vice President, Retail Lending, Kiatnakin Bank Public Company Limited 2005 - 2007 Senior Vice President, Retail Lending, Kiatnakin Bank Public Company Limited
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Annual Report 2010
Mrs.Suwannee Wattanavekin Age : 48 years Position : Member of the Executive Committee and Executive Vice President, Debt Restructuring Education : Master of Business Administration, New Hampshire College, New Hampsire, USA Bachelor of Science in Management, Northeastern University, Boston, USA l l
Director Training Programs :
None
KK shares held : (As of 31 December 2010) None % of total shares with voting rights :
None
Family Relationship with the Executive :
Chairman of Board Director’s sister in law
Experiences : 2011 - Present 2009 - Present 2006 - 2009 2001 - 2006
Member of the Executive Committee, Kiatnakin Bank Public Company Limited Executive Vice President, Asset Management, Kiatnakin Bank Public Company Limited Senior Vice President, Asset Management, Kiatnakin Bank Public Company Limited Vice President, Asset Management, Kiatnakin Bank Public Company Limited
Ms.Sujaree Monchon Age : 37 years Position : Executive Vice President, Risk Management Education : Master of Business Administration, Sasin Graduate Institute of Business Administration of Chulalongkorn University . Bachelor of Business Administration, Kasetsart University l l
Director Training Programs :
None
KK shares held : (As of 31 December 2010) None % of total shares with voting rights :
None
Family Relationship with the Executive :
None
Experiences : 2010 - Present Executive Vice President, Risk Management, Kiatnakin Bank Public Company Limited 1995 - 2010 Team Executive, Supervision Group, The Bank of Thailand
Kiatnakin Bank Public Company Limited 181
Ms.Suree Harnpinijsak Age : 52 years Position : Senior Vice President, Accounting Department Education : Master of Accounting, Chulalongkorn University Master of Political Science, Thammasat University Bachelor of Accounting (1st Class Honors), The University of the Thai Chamber of Commerce Diploma in Accounting, Thammasat University Certified Public Accountant, registration No. 3432 l l l l l
Director Training Programs :
None
KK shares held : (As of 31 December 2010) None % of total shares with voting rights :
None
Family Relationship with the Executive :
None
Experiences : 2005 - Present Senior Vice President, Kiatnakin Bank Public Company Limited 2002 - 2005 Senior Vice President, Kiatnakin Finance Public Company Limited
182
Annual Report 2010
General Information Name of Company Type of Business Company Registration No. Location
Number of ordinary shares sold Contact Personnel Securities Registrar
Kiatnakin Bank Public Company Limited Commercial Bank 0107536000986 500, Amarin Tower, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330, Thailand. Tel: +(66) 2680-3333 Fax:+(66) 2256-9933 www.kiatnakin.co.th 565,825,828 shares (as at December 31, 2010)
Thailand Securities Depository Co., Ltd. 62, Stock Exchange of Thailand Building, Rachadapisek Road, Klongtoey, Bangkok 10110, Thailand Tel: 0-2229-2800 Fax: 0-2359-1259 Mr.Supamitr Techamontrikul Deloitte Touche Tomatsu Jaiyos Auditing Co., Ltd. 25th Floor, Rajanakarn Building 183 South Sathorn Rd., Yannawa, Sathorn, Bangkok 10120 Tel: 0-2676-5700 / Fax: 0-2676-5757 Erawan Legal Office Co., Ltd. 12th Floor, K Tower B, 209/1, Sukhumwit 21 Road, Klong Toei Nua, Wattana, Bangkok 10110 Tel : 0-2664-1396-7, Fax : 0-2664-2163
Adviser / Manager under management contract
Not appointed
Authorized Auditor
Legal Adviser
Kiatnakin Bank Public Company Limited 183
Capital Structure The Bank’s Securities
1. 2. 3.
As of December 31, 2010, the Bank has a registered capital of 6,960,999,870 Baht of which 5,658,258,280 is paid up. This translates to 565,825,828 ordinary shares value at 10 Baht per share. Debenture As of December 31, 2010, the Bank had outstanding debenture, the details of which as per page 140 of the Notes to Financial Statements. Warrant • KK-W4 Warrant: a total of 138,613,188 units were offered to the existing ordinary shareholders at 19.53 baht per share. The right can be exercised at 30th day of the end month of each quarter. The first date was scheduled at March 30, 2001 and last December 30, 2010. The unutilized warrants of 158,811 units were revoked from being listed security in the Stock Exchange since December 31, 2010. • ESOP Warrant: The General Meeting of Shareholders passed the resolution for an issuance of warrant, in 2000, for the directors and/or employees of the Banks and subsidiaries to purchase not over 10 million units of ordinary share at the offering price of 0 Baht per unit. The holders can exercise their right to purchase new ordinary share at a ratio of 1:1 at 15.62 Baht per share at the 30th day of the end month of each quarter. The first date was scheduled at June 30, 2002 and the last March 30, 2011. As of December 31, 2010 there is none unutilized warrant left. • 2nd Batch of ESOP Warrant: The Annual Shareholder Meeting on April 22, 2010 passed a resolution on the issuance of warrant for directors and/or employees of the Banks and subsidiaries to purchase 26,000,000 units of ordinary share at the offering price of 0 Baht per unit. The holders can exercise their right to purchase new ordinary share at a ratio of 1:1 at 29.27 Baht per share at the 30th day of the end month of each quarter. The first date was scheduled at September 30, 2011 and the last June 30, 2015. End of 2010, there were 25,890,000 units of warrant remaining which was cancellation of 110,000 united during the year.
184
Annual Report 2010
Kiatnakin Bank holds over 10% of shares in the following juristic persons (as of December 31st, 2010) Juristic Person Name / Address Type of Business 1 Kiatnakin Securities Co., Ltd., Securities th 7 Floor, Amarin Tower, 500, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel 0-2680-2222 Fax 0-2680-2233 2
Erawan Legal Office Co., Ltd. 12th Floor, K Tower B, 209/1, Sukhumwit 21 Road, Klong Toei Nua, Wattana, Bangkok 10110 Tel 0-2664-1396-7, Fax 0-2664-2163
3
Shareholding Number of common Percentage shares sold 99.99 65,000,000
Legal Service
99.93
10,000
Asia Recovery Mutual Fund 1, Kasikorn Asset Management Co., Ltd. 6th Floor, Kasikorn Bank Building, 400/22, Phahon Yothin Avenue, Samsen Nai,Phaya Thai, Bangkok 10400 Tel 0-2673-3999 Fax 0-2673-3900
Investment Fund
99.95
35,633,198
4
Asia Recovery Mutual Fund 2, Kasikorn Asset Management Co., Ltd. 6th Floor, Kasikorn Bank Building, 400/22, Phahon Yothin Avenue, Samsen Nai,Phaya Thai, Bangkok 10400 Tel 0-2673-3999 Fax 0-2673-3900
Investment Fund
99.59
161,300,060
5
Asia Recovery Mutual Fund 3, Kasikorn Asset Management Co., Ltd. 6th Floor, Kasikorn Bank Building, 400/22, Phahon Yothin Avenue, Samsen Nai,Phaya Thai, Bangkok 10400 Tel 0-2673-3999 Fax 0-2673-3900
Investment Fund
99.97
141,254,343
6
Thai Restructuring Fund, One Asset Management Limited 24th Floor, Siam Tower (Siam Discovery), 989 Rama 1 Road, Patumwan, Bangkok 10330 Tel 0-2659-8888, Fax 0-2659-8860-1
Unit Trust
98.91
73,854,687
7
Asia Recovery Property Fund 1 One Asset Management Limited 24th Floor, Siam Tower (Siam Discovery), 989, Rama 1 Road, Patumwan, Bangkok 10330 Tel 0-2659-8888 Fax 0-2659-8860-1
Investment Fund
99.5
4,381,746
Kiatnakin Bank Public Company Limited 185
Juristic Person Name / Address Type of Business 8 Asia Recovery Property Fund 3 Investment Fund One Asset Management Limited 24th Floor, Siam Tower (Siam Discovery), 989, Rama 1 Road, Patumwan, Bangkok 10330 Tel 0-2659-8888, Fax 0-2659-8860-1 9
Shareholding Number of common Percentage shares sold 98.77 93,340,500
Bangkok Capital Fund One Asset Management Limited 24th Floor, Siam Tower (Siam Discovery), 989, Rama 1 Road, Patumwan, Bangkok 10330 Tel 0-2659-8888, Fax 0-2659-8860-1
Investment Fund
95.72
38,989,103
10. Gamma Capital Fund One Asset Management Limited 24th Floor, Siam Tower (Siam Discovery), 989, Rama 1 Road, Patumwan, Bangkok 10330 Tel 0-2659-8888, Fax 0-2659-8860-1
Investment Fund
94.03
34,159,555
11 Ayudhya Tuntavee Fund 5 Ayudhya Fund Management Co., Ltd. 12th Floor, Ploenchit Tower, 898, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel 0-2657-5757, Fax 0-2263-0199
Investment Fund
46.49
11,546,031
12 CMIC Development Co., Ltd. 10th Floor, K Tower, 209, Sukhumwit 21 Road, Klong Toei Nua, Wattana, Bangkok 10110 Tel 0-2664-1396-7 Fax 0-2664-2163
Space Rental
80.58
230,000,000
13 BTMU Leasing (Thailand ) Co., Ltd. 4th Floor, Harinthorn Tower, 54, Sathorn Nua Road, Silom, Bangrak, Bangkok 10500 Tel 0-2266-3060 Fax 0-2266-3067
Hire-purchase/ Leasing
10
600,000
14 Attakorn Company Limited 456 Petchkasem Road, Amphoe Hat Yai, Songkhla, 90110 Tel 0-7435-4334-5 Fax 0-7435-4336
Automotive Hire-purchase
10
800,000
186
Annual Report 2010
Branches Kiatnakin Bank and Kiatnakin Securities Branches Over 4 decades of operations, Kiatankin has been trusted and supported by valued customers in various segments and industries. Today, we operate with and efficient network that spans across the country, covering all regions with 61 branches.
Bangkok and Perimeters Head Office Asoke Branch Petkasem-Kanjanapisek Branch Srinakarin Branch Silom Branch Suvarnabhumi Branch The Mall Bangkapi Branch Crystal Design Center (CDC) Branch Pin Klao Branch Kaset-Vibhavadi Branch Charoen Krung Branch Yaowarat Branch
Address 500 Amarin Tower, 11th Floor, Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 209 K Tower, Sukhumvit 21 (Asoke), Khlong Toey Nua, Wattana, Bangkok 10110 919/42-43 Petkasem Road, Bang Kae, Bangkok 10160 903, 905 Srinakarin Road, Suan Luang, Bangkok 10250 323 United Center Building, 2nd Floor, Silom Road, Khwaeng Silom, Khet Bang Rak, Bangkok 10500 9/3 Moo 7, King Kaew Rd., Tambon Racha Thewa, Amphoe Bangplee, Samut Prakan 10540 3522 The Mall Bangkapi Department Store, 2nd Floor., Lat Phrao Road Khwaeng Khlong Chan, Khet Bangkapi, Bangkok 10240 1448/4 Crystal Design Center (CDC) (Building J2 Room 108-109), Soi Lat Phrao, Khwaeng Klongjun, Khet Bang Kapi, Bangkok 10240 77/7 - 9 Borommaratchachonnani Road, Khwaeng Arun Amarin, Khet Bangkok Noi, Bangkok 10700 47/11 Ngamwongwan Road, Khwaeng Lad Yao, Khet Jatujak, Bangkok 10900 273/8 Charoen Krung Road, Khwaeng Pom Prap, Khet Pom Prap Sattru Phai, Bangkok 10100 289 Yaowarat Road, Khawaeng Samphanthawong, Samphanthawong, Bangkok 10100
Phone 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333
Kiatnakin Bank Public Company Limited 187
Siphaya Branch Ramintra Branch Suksawas Branch Nonthaburi Branch Phatum Thani Branch Samut Prakan Branch Samut Sakhon Branch Central Ratchaburi Branch Supan Buri Branch Phetchaburi Branch Saraburi Branch Nakhon Pathom Branch Ayuthaya Branch Chachengsao Branch Lop Buri Branch Kanchanaburi Branch
Address 78 Trok Captain Bush (Charoen Krung 30), Khwaeng Bangrak, Khet Bangrak, Bangkok 10500 43, 45, 47, 49 Ramintra Road, Khwaeng Minburi, Khet Minburi, Bangkok 10510 178, 180, 182, Suksawas Road, Khwoeng Bangpakok, Khet Ratburana, Bangkok 10140 68/30-32 Moo8, Tambon Bangkrasor, Amphoe Muang, Nonthaburi 11000 433, 435, 437 Rangsit-Nakhon Nayok Road, Tanbon Prachathipat, Amphoe Thanyaburi, Pathum Thani 12130 89/8-10 Moo 5, Tambon Bang Muang, Amphoe Muang, Samut Prakarn 10270 1400/98-101, Ekkachai Road, Tambon Mahachai, Amphoe Muang 74000 286/25-28 Srisuriyawong Road, Tambon Na Muang, Amphoe Muang, Ratchaburi 70000 290/3-6 Moo 4 Tambon Sanamchai, Amphoe Muang, Suphan Buri 72000 132/8-10 Moo. 1, Tambon Tonmamuang, Amphoe Muang Phetchaburi Province, 568/7-9, Paholyothin Road, Tambon Pak Priao, Amphoe Muang, Saraburi 18000 992/2-3 Petkasem Road, Tambon Huay Jarakae, Amphoe Muang, Nakhon Pathom 73000 100 Moo 1, Tambon Pailing, Amphoe Phranakorn, Sri Ayuthaya 10300 508, 510 Chachengsao-Bang Pakong Road, Tambon Na Muang, Amphoe Muang, Chachengsao 24000 205 Moo 2, Tambon The Sala, Amphoe Muang, Lop Buri 15000 275/1-2 Saeng Chootoh Road,Tambon baan Nua, Amphoe Muang, Kanchanaburi 71000
Phone 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333
0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333
188
Annual Report 2010
Hua Hin Branch North Chiang Mai Branch Phitsanulok Branch Nakhon Sawan Branch Chiang Rai Branch Lampang Branch Petchaboon Branch Phrae Branch Kamphangphet Branch Phichit Branch Northeast Khon Kaen Branch Nakhon Ratchasima Branch Ubon Rachathani Branch UdonThani Branch Roi Et Branch
Address 60/27-28 Moo Ban Bor Fai, Tambon Hua Hin, amphoe Hua Hin, Prachuab Kirikun 77110 33 Chiang Mai-Lampang Road, Tambon Chang Phueak, Amphoe Muang, Chiang Mai 50300 286/10 Pichaisongkram Road Tambon Noi Muang, Amphoe Muang, Phitsanulok 65000 1311/18-21 Moo 10, Tambon Nakornsawan Tok, Amphoe Muang, Nakhon Sawan 60000 102, 102/1-3 Moo 13, Tambon Rob Wieng, Amphoe Muang, Chiang Rai 57000 142-144 Highaway-lampang-Ngua, Tambon Phra Bat, Amphoe Muang, Lampang 52000 3/48 Samakkeechai Road, Tambon Nai Muang, Amphoe Muang, Petchabun 67000 162 Yantrakitkosol Road, Tambon Naiwiang, Amphoe Muang, Phrae 54000 546 Charoensuk Road, Tambon Nai Muang, Amphoe Muang, Kamphangphet 62000 31/79-81 Sa Luang Road, Tambon Nai Mueng, Amphoe Mueang, Phichit 66000 9/2 Prachasomosorn Road, Tambon Nai Muang, Amphoe Muang, Khon Kaen 40000 192/1-4, Jomsurongyart Road, Tambon Nai Muang, Amphoe Muang, Nakhon Ratchasima 30000 466 Suriyat Road, Tambon Nai Muang, Amphoe Muang, Ubon Rachathani 34000 215/25, 215/27 Udon Dusadee Road, Tambon Mak Keng, Amphoe Muang, Udon Thani 41000 49, 49/1-3 Tawapiban Road, Tambon Nai Muang, Amphoe Muang, Roi Et 45000
Phone 0-2680-3333
0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333
0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333
Kiatnakin Bank Public Company Limited 189
Surin Branch Sakhon Nakhon Branch Chaiyaphum Branch Si Sa Ket Branch Loei Branch Kalasin Branch Sa Kaeo Branch East Chonburi Branch Pattaya Branch Rayong Branch Chantaburi Branch Prachin Buri Branch South Hat Yai Branch Surathani Branch Nakhon Si Thammarat Branch
Address 6/7 Lak Muang Road, Tambom Nai Muang, Amphoe Muang, Surin 32000 1773/63 Ratpattana Road, Tambon Thatchoengchum, Amphoe Muang, Sakhon Nakhon 47000 31/12-14, Haruthai Road, Tambon Nai Muang, Amphoe Muang, Chaiyaphum 36000 151 Thepa Road, Tambon Muang Nuea, Amphoe Muang, Si Sa ket 33000 22/9 Chumsai Road, Tambon Kut Pong, Amphoe Muang, Loei 42000 4/1-2-3 Thinanon Road, Tambon Kalasin, Amphoe Muang, Kalasin 46000 330 Suwansorn Road, Tambon Sa Kaeo, Amphoe Muang, Sa Kaeo 27000 7/41 Moo 4, Sukhumvit Road, Tambon Huaykapi, Amphoe Muang, Chonburi 20130 Pattaya Branch Address : 120/17-18 Moo 6, Tambon Na Klua, Amphoe Bang Lamung, Chonburi 20150 375/4-7 Sukhumvit Road, Tambon Noenphra, Amphoe Muang, Rayong 21000 29/1-4 Moo 7, Tambon Chantanimitr, Amphoe Muang, Chantaburi 20000 41/18-20 Prachin Takarm Road, Tambon Na Muang, Amphoe Muang, Prachin Buri 25000 20/1 Ratyindee Road, Tambon Hat Yai, Amphoe Hat Yai, Song Khla Province, 90110 22/144-145-146, Raj-Uthit Road, Tambon Talad, Amphoe Muang, Surathani 84000 111, 111/1-4 Pattanakarn kookwang Road Tambon Klung, Amphoe Muang, Nakhon Si Thammarat 80000
Phone 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333
0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333 0-2680-3333
0-2680-3333 0-2680-3333 0-2680-3333
190
Annual Report 2010
Phuket Branch Chumporn Branch Krabi Branch Trang Branch Kiatnakin Securities Branch Head Office Bangkok and Perimeter Nonthaburi Bangna Asoke Rama 3 Up Country Khon Kaen Chonburi Chiang Mai
Address 63/714-716 Moo 4 Tambon Vichit, Amphoe Muang, Phuket 83000 67/4, 67/5 Krom Luang Chumphon Road, Tambon Tha Taphao, Amphoe Muang, Chumporn 86000 254, 254/1, 254/2 Moo 11, Tambon Krabi Noi, Amphoe Muang, Krabi 81000 59/12-14 Huay Yod Road, Tambon Thap Thieng, amphoe Muang, Trang 92000
Phone 0-2680-3333 0-2680-333362 0-2680-3333 0-2680-3333
500 Amarin Tower 7th Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330
0-2680-2222
68/30-32 Moo 8, Tambon Bang Krasor, Amphoe Muang, Nonthaburi 11000 1093/56 Central City Tower, 11th Floor, Bangna-Trad, Bangna, Pra-Kanong Bangkok 10260 209/1 K Tower, (A Building), Sukhumvit 21 (Asoke), Khlong Toei Nue, Wattana, Bangkok 10110 493/4 - 6 Nang Lingee Road Khwaeng Chong Nonsi Khet Yannawa, Bangkok 10120
0-2527-8744
9/2 Prachasamosorn Road, Tambon Nai Muang, Amphoe Muang, Khon Kaen 20130 7/18 Moo 4, Sukhumvit Road, Tambon Huaykapi, Amphoe Muang, Chonburi 20130 33 Kiatnakin Building, Khuangsingh Junction, Chiang Mai-Lampang Road, Tambon Chang Phueak, Amphoe Muang, Chiang Mai 50300
0-2745-6458-66, 0-2745-6307-9 0-2680-2900 0-2287-3229
(043) 337-700-10 (038) 384-931-43 (053) 220-751-62, (053) 220-764
Kiatnakin Bank Public Company Limited 191
Pitsanulok Rayong Samut Sakorn Hat Yai Hat Yai (Mini branch)
Address Phone 169/2-3-4 Baromtrailokanart Road, Tambon Nai Muang, (055) 243-060 Amphoe Muang, Pitsanulok, 65000 125/1 Janta-udom Road, (Rayong-Baan Khai), (038) 617-477-85 Tambon Choeng Noen, Amphur Muang, Rayong 21000 1400/98-101, Ekkachai Road, Tambon Mahachai, (034) 837-246-64, Amphoe Muang, Samut Sakorn 74000 (034) 427-123-5 (074) 354-747-51 200, 4th Floor, Room No. 414-424, Juladis Plaza Hatyai Building, Niphat-Uthit 3 Road, Amphoe Hat Yai Songkhla 90110 20/1 Radyindee Road Tambon Hat Yai (074) 209-837-40 Amphoe Hat Yai, Songkhla, 90110
192
Annual Report 2010
Information required by the Securities and Exchange Commission 1. General information 1.1 Bank 182 1.2 Juristic persons in which the bank holds more than 10% of shares 184 1.3 Other individuals of reference 182 2. Summarized financial information of the bank
12
3. Nature of business
29
3.1 Key information of nature of business 3.2 Revenue structure 3.3 Changes in the past year
29 31 27
4. Risk factors
38
5. Shareholding and management structure 5.1 Shareholders 70 5.2 Management l Management structure 72 l Selection of directors and executives 79 l Remuneration of executives 79 l Corporate governance 52 l Internal information usage supervision 55 l Internal control 81 5.3 Dividend payment policy 85 6. Related transactions
84
7. Explanations and analysis of financial status and performance
44
8. Financial statement
87-167
8.1 Comparative financial statements 8.2 Compensation of auditor
87-167 81