ANNUAL REPORT 2016 Thanachart BANK public company limited

Long live the king

The management and staff of Thanachart Bank Public Company Limited and its subsidiaries CONTENTS

005 Vision and Mission 006 Financial Highlights 018 Message from the Board of Directors 022 Board of Directors Thanachart Bank Public Company Limited 024 Management Discussion and Analysis 039 Nature of Business Operations 058 Risk Factors 070 Corporate Social Responsibility (CSR) 082 Corporate Governance 094 Internal Control and Risk Management 096 Report of the Nomination and Remuneration Committee 097 Management Structures 105 Board of Directors and Management Team 130 General Information 137 Shareholders and Dividend Payment Policy 140 Responsibilities of the Board of Directors for the Financial Report 141 Report of the Audit Committee 143 Independent Auditor’s Report 145 Financial Statements and Note to Financial Statements 291 Branches of TBANK 306 Summary of Specified Items per Form 56-2 in 2016 Annual Report

“Investors can learn more on the issuing company’s annual statement (Form 56-1) shown in www.sec.or.th or the Bank’s website: www.thanachartbank.co.th Four Strategic Intents for the Business Operation in 2016

To attract and retain customers by offering excellent services, innovative savings 1 and investment products.

To ensure our customers succeed financially by helping them choose the right insurance and protection 2 products from across the entire Thanachart Group.

To provide borrowing solutions to all customer segments that meet their current and future needs and 3 help them to become financially better off.

To provide digital banking solutions that permit customers to bank where they want, when they want, 4 and how they want.

Vision of Thanachart Group Three Items for the Business

To be the best at providing fully Philosophy integrated solution to our customers’ 1. Belief in our employees: Thanachart Group believes that complete financial needs by offering employees are the most valuable assets. Thanachart Group the highest quality products, services, owes its growth to the contribution of its employees and advice through competence and integrity. 2. Dedicate to excellence: Thanachart Group earnestly focuses on excellence. We are constantly evolving and adapting to the rapid pace of technological change through innovation. 3. Concern for social responsibility: Thanachart Group has a strong sense of responsibility towards the society. Financial highlights

As at and for the year ended 31 December Consolidated Financial Statements Separate Financial Statements 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012 Operating results (THB million) Interest income 44,886 48,217 52,445 53,879 48,736 41,843 45,125 49,102 50,542 46,331 Interest expenses 16,174 20,536 24,884 27,290 25,556 15,295 19,572 23,920 26,489 25,371 Net interest income 28,712 27,681 27,561 26,589 23,180 26,548 25,553 25,182 24,053 20,959 Non-interest income 11,694 11,957 11,750 24,948 12,098 8,960 10,441 8,643 22,079 10,902 Total income(1) 40,406 39,638 39,311 51,537 35,277 35,508 35,994 33,825 46,132 31,861 Non-interest expenses 20,626 19,721 19,515 20,408 21,660 17,843 17,096 17,029 17,692 19,522 Bad debt and doubtful accounts(2) 6,251 8,592 7,122 11,497 2,980 5,808 8,007 7,181 11,110 4,680 Net income(3) 12,434 10,743 9,922 15,385 8,354 11,962 11,452 7,918 14,113 6,855

Operating performance Basic earnings per share (THB) 2.05 1.90 1.80 2.79 1.52 1.97 2.03 1.44 2.56 1.24 Return on average assets (ROAA) (Percent) 1.29 1.11 0.98 1.51 0.90 1.31 1.24 0.82 1.46 0.78 Return on average equity (ROAE) (Percent) 10.27 9.83 9.93 16.99 10.72 10.64 11.39 8.60 16.91 9.55 Interest spread(4) (Percent) 3.03 2.84 2.68 2.62 2.48 3.02 2.83 2.66 2.66 2.58 Cost to income ratio net insurance premium income(5) (Percent) 51.05 49.75 49.64 39.60 61.40 50.25 47.50 50.34 38.35 61.27

Statement of financial position (THB million) Loans 690,907 713,446 754,370 790,017 754,063 651,613 676,001 714,436 750,494 723,023 Total assets 950,511 980,972 1,008,890 1,038,349 1,018,620 906,868 938,834 967,216 990,724 953,209 Deposits and borrowings 725,966 741,145 787,189 811,308 776,521 712,329 726,002 773,578 799,186 769,677 Total liabilities 824,391 863,281 902,726 941,109 934,435 791,283 830,784 871,614 901,572 875,708 Shareholders’ equity(6) 124,488 116,226 104,977 96,218 83,330 115,585 108,050 95,602 89,152 77,501

Definition and Formula (1) Total income = Net interest income + Non-interest income (2) Including loss on debt restructuring (3) Excluding non-controlling interest (4) Interest spread = Yield - Cost of fund Yield = Interest income / Average earning assets Earning assets = Interbank and money market from interest bearing + net investment + loans Cost of fund = Interest expenses / Average paying liabilities Paying liabilities = Total deposits + interbank and money market from interest bearing + total borrowings (5) Cost to income ratio = Non-interest expenses / Total income (6) Excluding non-controlling interest

006 ANNUAL REPORT 2016 As at and for the year ended 31 December Consolidated Financial Statements Separate Financial Statements 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012 Asset quality Loans to deposits and borrowings ratio (Percent) 95.17 96.27 95.83 97.38 97.11 91.48 93.11 92.35 93.91 93.94 NPL-gross to total loans (Percent) 2.29 2.84 4.09 4.36 4.17 1.90 2.20 2.97 3.07 2.65 NPL-net to total loans (Percent) 1.07 1.26 2.02 2.25 2.05 1.05 1.15 1.61 1.66 1.35 Coverage ratio (Percent) 151.16 119.42 85.52 83.36 73.65 151.64 127.41 90.64 89.18 78.02 Total allowance to BOT regulation (Percent) 192.38 159.33 133.38 127.87 124.50 202.23 171.94 138.16 138.38 134.94 Non-performing loans (NPL) (THB million) 16,434 21,681 32,761 36,377 33,047 12,893 15,986 22,595 24,394 20,036

Capital measures Tier I capital ratio (Percent) 13.27 12.04 10.70 9.47 8.49 Total capital ratio (Percent) 19.15 17.92 15.83 14.80 13.99 Risk weighted assets (THB million) 682,373 682,245 724,209 747,992 724,801

Common share information Common shares outstanding (Million shares) - Average-basic 6,065 5,641 5,514 5,514 5,514 6,065 5,641 5,514 5,514 5,514 - End of period 6,065 6,065 5,514 5,514 5,514 6,065 6,065 5,514 5,514 5,514 Book value (THB) 20.80 19.41 19.25 17.64 15.11 19.06 17.82 17.34 16.17 14.06 Dividends per share (THB) 0.35 0.62 0.45 0.45 0.37

Other information Employees 14,553 14,719 14,806 15,358 15,765 12,305 12,468 12,676 13,286 13,642 Branches 592 614 617 621 630 Exchange booth 45 49 51 54 55

Thanachart bank public company limited 007

Deliver the highest possible level of customer experience, with a touch of digital, and always be available to assist customers as their professional financial advisor. Offer a comprehensive line of products and services to customers that can be accessed and tracked quickly and easily on their mobile devices anywhere and anytime.

Equip our people with the tools to be more skilled and effective, through maximizing our understanding of customer expectations and needs, and strengthening our capabilities to provide the highest level of professional financial advice.

Continuously innovate and stay ahead of the competition by leveraging visionary and fully integrated technology that is convenient, easily accessible, and highly secure.

Promote economic security to individuals, groups, organizations and society at large, where smart spending and saving habits with a sense of sharing and sustainability are instilled in individual’s minds while preserving and enriching Thai culture and national identity. Message from the Board of Directors

(Mr. Banterng Tantivit) Chairman of the Board of Directors

Dear Shareholders,

In the past year, the Thai economy confronted both financial instruments (IFRS 9). Accordingly, the overall Thai global and domestic headwinds ranging from slow global banking industry continued to demonstrate strong financial economic recovery, sluggish growth of the Chinese economy, stability with high levels of capital adequacy and strong financial risk and political uncertainty in Europe, falling global coverage ratios. However, loan growth continued to show trade growth, weakening commodity prices to domestic lackluster momentum, placing downward pressure on the risk factors in terms of household and SMEs debts and profitability of Thai commercial banks. the impact of drought. Nonetheless, the Thai economy still showed stability and achieved a continuous expansion, mainly In response to the gradual economic recovery, underpinned by the tourism sector, Government budget we continued our strategy of focusing on maintaining disbursements relating to the local mega transportation and strong asset quality, efficiently managing cost of funds, water management infrastructure projects, and monetary and and increasing fee income from banking, securities, and fund fiscal stimuli. Meanwhile, the profound influence of Digital management businesses. Hence, our Bank and its subsidiaries Disruption in terms of changed business platforms and achieved a net profit in 2016 of THB 12,434 million, economic activities of various countries has become evident, an increase of THB 1,691 million, or 15.74 percent from last with increasing numbers of Technology and Fintech startups year. The Bank’s total income went up from last year while emerging as the key driving force to propel businesses and operating expenses increased as a result of investments value-added services. Uber, Airbnb, SamsungPay, and PayPal in IT systems, infrastructure and personnel to boost are good examples. operational efficiency. Concurrently, loan loss impairment expense (excluding additional provision) decreased, As a consequence of the aforementioned risk factors, attributable to effective management and materially stronger the Thai commercial banks’ operations in 2016 focused asset quality as NPLs, based on the consolidated financial on asset quality management and financial stability to statements, decreased by THB 5,247 million from the accommodate loan expansion. All the banks also prepared previous year. Consequently, the NPL ratio reduced to 2.29 to comply with the capital requirements pursuant to Basel III percent and the coverage ratio improved to 151.16 percent. criteria and the international financial reporting standard for We further strengthened our capital adequacy position,

018 ANNUAL REPORT 2016 (Mr. Suphadej Poonpipat) Chairman of the Executive Committee

which ended at 19.15 percent, while putting in place a solid partners, developed a number of convenient and secure Liquidity Coverage Ratio (LCR) pursuant to Basel III criteria. e-payment innovations including virtual and physical prepaid The all-round improvement in our profitability, asset quality, cards to suit “new generation” lifestyles. Examples of this capital position, and liquidity demonstrates the Bank’s development were “True You MasterCard”, jointly developed potential and capabilities. Pertaining to the statement of with True Money, and “AirPay Card”, jointly developed with financial position for the year 2016, despite a decline in the AirPay. The auto loan business, a traditional core segment total asset size, we remained committed to securing our for our Bank, showed an upward trend. In connection with market-leading position in auto loans, while still succeeding our subsidiaries, a variety of new products and services in achieving a continuous reduction in NPLs, as a result of were initiated. Thanachart Securities Public Company our prudent risk management policies. Limited launched “Think Application” to facilitate customers’ securities trading via mobile phone with offers of research of During the preceding year, we successfully restructured the last 2 years, user-friendly stock picks in terms of technical the composition of our deposit base through a new financial and valuation analyses, and comprehensive fundamental product concept we call “Thanachart Smart Solution”. data for stock scanning. Thanachart Fund Management It consists of the “Thanachart e-Savings Account” (providing Company Limited enhanced its system in order for flexibility with a high interest rate), and the “Freever Savings customers to trade their investment units and access their Account” (designed to lessen the burden of transaction portfolio via Thanachart Connect on a daily basis. It also fees). The “Thanachart Smart Solution” provides customers offered T-PrimeLowBeta for sale. This fund benefits customers with an innovative alternative to maximizing savings and by carefully managing the risks from fluctuation of securities’ minimizing banking costs. To provide our customers with prices, while providing access to market returns. Thanachart easy access to all banking services, we launched “Thanachart Insurance Public Company Limited launched “Motor Type Connect”, our highly secure, competitive and easy to use 2+” and “Happy PA for Child” insurance policies, providing mobile banking application. Moreover, realizing the growth protection designed to meet the specific needs of our potential in the e-payment business (as promoted by the customers. Additionally, the insurance arm focused on the Government), the Bank, in cooperation with leading business quality of after-sale service by enhancing the capabilities of

Thanachart bank public company limited 019 (Mr. Somjate Moosirilert) Chief Executive Officer and President

surveyors and employing state-of-the-art tools and systems, Company Limited received the Best Fund House Award for (e.g. Tablet, CRM mobile application), allowing for the delivery Domestic Fixed Income 2016 and the Morning Star Award of services in a more expedient and rapid manner. The Bank in the Short-Term Bond Fund category from Morningstar also placed emphasis on the National e-Payment Master Research (Thailand) Limited. Thanachart Insurance Public Plan, and supported the Bank of Thailand in driving the Company Limited received the Most Outstanding Non-Life implementation, by communicating with customers to ensure Insurance Company Award 2015 from the Office of Insurance both their understanding of the importance of PromptPay Commission and the Best Surveyor Award 2015 from Thai and to educate them in how to use this payment system. General Insurance Association.

In 2016 our Bank and its subsidiaries were proud and Aside from the commitment to performance, our Bank honored to receive many awards and recognitions including: and its subsidiaries continue to realize the importance of the No.1 Brand Thailand 2015 - 2016 for Auto Hire Purchase Corporate Social Responsibility (CSR), and have implemented Loan from Marketeer Magazine, the Thailand Energy Awards strong Anti-Corruption measures. Thanachart Group’s 2016, the Suriyasasithorn’s Best Desk Calendar Design Award organization culture and human resources development and the First Runner up Award in the Best Hanging Calendar are based on our stated principle of being “a Moral and under category of “Commemorating the Royal Institution”, Transparent Organization against Corruption.” A total of to name a few. With respect to awards for subsidiaries, 12 companies in the Thanachart Group were granted Thanachart Securities Public Company Limited, with support the Certified Companies Award under the Private Sector from the Bank, received the Thailand Capital Markets Deal of Collective Action Coalition against Corruption (CAC) Program. the Year Award from IFR ASIA Magazine for being the co-lead Significant actions taken during the past year included: underwriter of Banpu Power Public Company Limited on its completing the self-assessment form for executives and initial public offering (IPO). This was also Thailand’s largest staff via E-Learning program; organizing training courses initial market capitalization in 2016. In addition, it was awarded regarding policies, measures and regulations for new staff’s second place in the Best Local Brokerage from Asiamoney acknowledgement and acceptance of compliance; organizing Brokers Poll 2016. Thanachart Fund Management the training course “Power Synergy towards Transparency

020 ANNUAL REPORT 2016 (Mr. Peter Bessey) Vice Chairman of the Executive Committee and Deputy Chief Executive Officer

and No Corruption” for existing staff; organizing a lecture endeavors to deliver continuously improving customer entitled “Join Thanachart to Promote Anti-Corruption” for our experiences in the delivery of our financial services. We do business partners and representatives; and so on. this through all channels, including through digital platforms such as enhanced internet and mobile banking systems, In 2017, the Thai banking sector is expected to continue which are designed to accommodate all kinds of customers’ facing a multitude of challenges due to stagnant economic transactions while fully ensuring the security and privacy of growth of trade partner countries, household and business debts, all of our customers’ information. This is definitely in line with upward trends in interest rates, increasing Fintech competition, our strategy of being the “Main Bank” for our customers. the launch of PromptPay, the Government’s policy to drive Furthermore, we continue to develop the knowledge and Digital Economy and the National e-Payment Master Plan, capabilities of our human resources in order to deliver the together with enforcement of new rules and regulations. most suitable products and services, as conveniently as Nevertheless, commercial loan growth is anticipated to possible, to meet the needs of our customers. We have be higher than that of 2016, following the Thai economic also continued to improve our infrastructure related to key recovery, which will be stimulated by Government budget business operations by adopting Digital Technology to boost disbursements and economic stimulus packages, as well as process efficiency and productivity of staff. private investment to accommodate the mega infrastructure and transportation projects. In this regard, it will still be On behalf of the Board of Directors, we extend our necessary for all commercial banks to follow prudent policies heartfelt gratitude to you, our partners, customers, and staff on credit underwriting to maintain sound asset quality, and to for the advancements we achieved in 2016, as well as for efficiently manage costs so that they are poised to cope with your unyielding support and for your trust and confidence challenging factors affecting both fee and interest income. in Thanachart Bank. Your continued support has provided the solid foundation on which our Bank is built. We will In preparation for the challenges that lie ahead, as continue to draw on this strength in delivering great customer well as to ensure we retain existing customers and continue experiences as we embrace the challenges and opportunities acquiring new customers, Thanachart Bank tirelessly of our emerging Digital Society.

Thanachart bank public company limited 021 Board of directors thanachart bank public company limited

Mr. Banterng Tantivit Mr. Suphadej Poonpipat Chairman Vice Chairman Chairman of the Executive Committee Member of the Succession Committee

Mr. Somjate Moosirilert Director Member of the Executive Committee Chairman of the Risk Management Committee Chief Executive Officer and President

022 ANNUAL REPORT 2016 Mr. Peter Clifford Bessey Ms. Suvarnapha Suvarnaprathip Mr. Kiettisak Meecharoen Director Director Independent Director Vice Chairman of the Executive Committee Vice Chairperson of the Executive Chairman of the Audit Committee Vice Chairman of the Risk Management Committee Committee Deputy Chief Executive Officer Mr. Narong Chivangkur Mr. Sataporn Jinachitra Assoc. Prof. Dr. Somjai Phagaphasvivat Independent Director Independent Director Independent Director Chairman of the Nomination and Member of the Audit Committee Member of the Audit Committee Remuneration Committee Member of the Nomination and Chairman of the Succession Committee Remuneration Committee Member of the Succession Committee Mr. Rod Michael Reynolds Mr. Walter Tas Mr. Adil Aziz Chaudhry Director Director Director Member of the Nomination and Remuneration Committee Member of the Succession Committee Thanachart bank public company limited 023 Management Discussion and Analysis

Economics Outlook and Competition in Banking Industry

The National Economic and Social Development Board reported a 3.20 percent GDP growth for the Thai economy in 2016, an increase from 2.90 percent in the previous year. The key contributing factor was an on-going government investment. Tourism experienced a consistent growth while private consumption was slowly recovered from stimulus measures issued by the government. Export sector showed sign of an upturn once compared to last year while private investment remained low. Overall, the Thai economy in 2016 has picked up from last year, and thus, the Monetary Policy Committee of the Bank of Thailand (“BOT”) issued resolutions to maintain a policy interest rate at 1.50 percent throughout 2016 in order to further stimulate the economy.

From a gradually recovering Thai economy, loan volume in 2016 grew at a slower rate when compared to last year. Many corporations turned to raise funds through debt securities issuance to leverage from the low rate environment. In line with loan volume, deposit volume also grew at a slower rate.

In 2017, the National Economic and Social Development Board estimated 3.00 - 4.00 percent GDP growth with government spending and tourism as key drivers. Export sector is expected to improve while private consumption will continue to increase. Loan volume in 2017 is estimated to grow gradually following the economic recovery and cautious credit policies of the commercial banks, as a result of concern over asset quality deterioration in 2016. Major Events in 2016

• On 5 April 2016, the Annual General Meeting of Shareholders of 2016 issued a resolution to approve dividend payments for shareholders of Thanachart Bank Public Company Limited (“the Bank”) at THB 0.40 per share, equivalent to THB 2,426 million. Together with the interim dividend payment of THB 0.22 per share equivalent to THB 1,334 million, the dividend payment of the year 2015 totaled to THB 0.62 per share equivalent to THB 3,760 million, or 32.83 percent of 2015 net profit in the Bank only financial statements or 35.00 percent of 2015 net profit in consolidated financial statements. This is in accordance with the dividend payout policy and dividends were paid on 25 April 2016.

• The Bank’s Board of Directors No. 8/2016 dated 18 August 2016 issued a resolution for an interim dividend payment from the operating results in the first six-month period of 2016 at THB 0.35 per share, an equivalent of THB 2,123 million or 34.07 percent of first half of 2016 net profit in the Bank only financial statements or 35.37 percent in consolidated financial statements. This is in accordance with the dividend payout policy and dividends were paid on 15 September 2016. Consolidated Financial Statements were of the Bank and its subsidiaries as follows:

Subsidiaries directly held by the Bank

Thanachart Securities Public Company Limited Thanachart Insurance Public Company Limited Thanachart Fund Management Company Limited Thanachart Broker Company Limited Thanachart Group Leasing Company Limited

024 ANNUAL REPORT 2016 Thanachart Management and Services Company Limited Thanachart Training and Development Company Limited TS Asset Management Company Limited Security SCIB Services Company Limited (Formerly known as “SCIB Services Company Limited”) Ratchthani Leasing Public Company Limited

Subsidiary indirectly held by the Bank

National Leasing Company Limited Overall Operating Result

(Analysis comparing performance of 2015 and 2016 based on consolidated financial statements) (Unit: THB million) Variance Statement of Comprehensive Income 2016 2015 Increase / (Decrease) Percentage Interest income 44,886 48,217 (3,331) (6.91) Interest expenses 16,174 20,536 (4,362) (21.24) Net interest income 28,712 27,681 1,031 3.72 Net fees and service income 5,904 5,475 429 7.84 Other operating income (1) 5,790 6,482 (692) (10.68) Net operating income 40,406 39,638 768 1.94 Other operating expenses (2) 20,626 19,721 905 4.59

Profit before impairment loss of loans and debt securities 19,780 19,917 (137) (0.69)

Impairment loss of loans and debt securities from Normal Business Operation 5,141 6,376 (1,235) (19.37) Impairment loss of loans - Special Provision 1,110 2,216 (1,106) (49.91)

Profit before income tax 13,529 11,325 2,204 19.46

Income Tax 691 198 493 248.99

Net profit 12,838 11,127 1,711 15.38 The Bank’s 12,434 10,743 1,691 15.74 Non-controlling interests 404 384 20 5.21

Earnings per share (THB) 2.05 1.90 Weighted average number of ordinary shares (million shares) 6,064.86 5,640.52

Notes: (1) Operating income deducted by insurance expense. (2) Excluding insurance expense.

Thanachart bank public company limited 025 Operating Results for the Year 2016 On Bank Only basis, NPL ratio was at 1.90 percent with coverage ratio at 151.64 percent. Reserve to required In 2016, the Bank and its subsidiaries’ net profit reserve was at 202.23 percent. Capital adequacy ratio of totaled THB 12,434 million, an increase of THB 1,691 million the Bank ended at 19.15 percent, an increase from 17.92 or 15.74 percent from last year. A success in maintaining percent at the end of last year. operating results marks the 8th consecutive quarterly growth. This was due to successes in strategic direction The Bank and its subsidiaries’ operating results in the amid apprehensive economic environment to focus on asset year 2016 comparing with that of 2015 can be summarized quality and to effectively manage cost of fund while increase as follows: banking fee income. Furthermore the Bank and its subsidiaries further strengthened their capital adequacy positioning • Net interest income increased 3.72 percent from while the Bank put in place a solid liquidity coverage (LCR) cost of fund management and interest spread that widened ratio in accordance to Basel III regulation implementation. to 3.03 percent. An all-round improvement in profitability and financial positions had undoubtedly validated the potential and • Non-interest income decreased 2.20 percent mainly capability of the organization. from decline in gains on investments while fee and service income increased. In this digital era, the Bank has launched a mobile banking application under the name Thanachart Connect. • Total income increased 1.94 percent from The Bank also offered PromptPay registration together with improvement in net interest income and fee and service Freever Saving account or e-Saving account reaffirming the income. progress of digital banking and Main Bank strategy. This also was a response to the cashless society national agenda • Operating expenses increased 4.59 percent from under a National e-Payment program rollout with PromptPay personnel expense and increase investment in IT system and launched as first phase. infrastructures.

In 2016, asset size declined following loan volume. • Impairment loss of loan expense not including However, loan outstanding has increased in the 4th quarter additional provision decreased 19.37 percent from effective from all loan types while asset quality continued to strengthen, asset quality management. as a result of effective NPL and prudent risk management. Furthermore, CASA ratio improved from last year from deposit • Net profit increased 15.74 percent from an increase structure management. in total income and a decrease in impairment loss of loans and debt securities. Total income increased 1.94 percent from last year while operating expenses increase 4.59 percent. Impair loss • NPLs decreased by THB 5,247 million with NPL of loan expense excluding additional provision decrease ratio decreased to 2.29 percent and coverage ratio increased 19.37 percent from effective management and stronger to 151.16 percent. asset quality as NPLs have been declining for the past 10th consecutive quarters.

NPLs on consolidated basis declined THB 5,247 million from the previous year, resulting in NPL ratio at 2.29 percent and coverage ratio at 151.16 percent. Reserve to required reserve as of 31 December 2016 was at 192.38 percent.

026 ANNUAL REPORT 2016 Net Interest Income (Unit: THB million)

Change Change Net Interest Income 2016 2015 Percentage

Interest Income 44,886 48,217 (3,331) (6.91)

Interbank and Money Market Items 1,307 1,580 (273) (17.28) Investments for trading 30 73 (43) (58.90) Investments for debts securities 3,504 3,761 (257) (6.83) Loans 18,337 19,474 (1,137) (5.84) Hire Purchase and Financial Leases 21,708 23,329 (1,621) (6.95)

Interest Expenses 16,174 20,536 (4,362) (21.24)

Deposits 9,526 12,832 (3,306) (25.76) Interbank and Money Market Items 741 957 (216) (22.57) Fund Contributed to FIDF and DPA 3,326 3,405 (79) (2.32) Debts Issued and Borrowing 2,576 3,336 (760) (22.78) Borrowing Fee 5 6 (1) (16.67)

Net Interest Income 28,712 27,681 1,031 3.72

For the year 2016, the Bank and its subsidiaries’ net interest income totaled THB 28,712 million, an increase of THB 1,031 million or 3.72 percent from last year.

• Interest income decreased by THB 3,331 million or 6.91 percent due to a shrinking loan portfolio and decline in yield on earning assets following loan rate adjustment and the market rate trend.

• Interest expenses decreased by THB 4,362 million or 21.24 percent, a result strategically management on the cost of fund to enhance liquidity and deposit restructuring.

Consequently, interest spread in 2016 was at 3.03 percent, an increase from 2.84 percent last year. The details are shown in the table below.

4Q15 1Q16 2Q16 3Q16 4Q16 2015 2016

Average Policy Interest Rate 1.50 1.50 1.50 1.50 1.50 1.63 1.50

Yield 5.16 5.10 5.06 5.09 5.00 5.36 5.06 Cost of Fund 2.29 2.23 2.08 1.92 1.89 2.52 2.03 Interest Spread 2.87 2.87 2.98 3.17 3.11 2.84 3.03

Thanachart bank public company limited 027 Non-interest Income (Unit: THB million)

Change Change Non-interest Income 2016 2015 percentage

Net Fees and Service Income 5,904 5,475 492 7.84

Gains on Trading and Foreign Exchange Transactions 491 658 (167) (25.38) Gains on Investments 714 1,553 (819) (53.42) Share of Profit from Investments in Associated Companies Accounted for under Equity Method 207 169 38 22.49 Gains (Losses) on Other Assets 31 22 9 40.91 Net Insurance Income 2,689 2,552 137 5.37 Dividend Income 400 295 105 35.59 Other Income 1,258 1,253 5 0.40

Total Other Operating Income 5,790 6,482 (692) (10.68)

Non-interest Income 11,694 11,957 (263) (2.20)

Non-interest income of the Bank and its subsidiaries in 2016 totaled THB 11,694 million, a decrease of THB 263 million or 2.20 percent from last year. This was mainly due to gains on investments and gains on trading and foreign exchange transactions.

• Net fee and service income totaled THB 5,904 million, an increase of THB 429 million or 7.84 percent mainly due to brokerage fee and insurance payment fee.

• Other Operating income totaled THB 5,790 million, a decrease of THB 692 million or 10.68 percent from last year. This was mainly due to gains on investments which decreased by THB 819 million or 53.42 percent and gain on trading and foreign exchange transactions which decreased by THB 167 million or 25.38 percent, partially offset by dividend income which increased THB 105 million.

Consequently, non-interest income ratio in 2016 was 28.94 percent, a decrease from 30.17 percent in the previous year. Other Operating Expenses (Unit: THB million)

Change Change Other Operating Expenses 2016 2015 percentage

Employee’s Expenses 11,647 11,952 695 6.35 Premises and Equipment Expenses 3,051 2,970 81 2.73 Taxes and Duties 757 837 (80) (9.56) Directors’ Remuneration 46 44 2 4.55 Other Expenses 5,125 4,918 207 4.21

Total Other Operating Expenses 20,626 19,721 905 4.59

028 ANNUAL REPORT 2016 In 2016, other operating expenses totaled THB 20,626 million, an increase of THB 905 million or 4.59 percent from last year, mainly due to the followings:

• Employee’s expenses increased by THB 695 million or 6.35 percent as a result of annual salary increase, bonus and incentive expense following the growing sale volume.

• Premises and equipment expense increased by THB 81 million or 2.73 percent as a result of depreciation expense from branch renovation and decoration.

• Other expenses increased by THB 207 million or 4.21 percent from IT system and infrastructure investment and advertising expenses.

Consequently, cost to income ratio in 2016 was 51.05 percent, an increase from 49.75 percent in the previous year. However, operating expenses compared to net profit decreased from the previous year as there was more expenses related to asset quality management. Impairment Losses of Loans and Debt Securities (Unit: THB million) Variance Impairment Losses of Loans and Debt Securities 2016 2015 Increase / (Decrease) Percentage Impairment Losses of Loans and Debt Securities 5,141 6,376 (1,235) (19.37) Impairment Losses of Loans – Special Provision 1,110 2,216 (1,106) (49.91)

Total Impairment Losses of Loans and Debt Securities 6,251 8,592 (2,341) (27.25)

Credit Cost (Percent) 0.87 1.13 (0.26) (23.01) Credit Cost excluding special provision (Percent) 0.72 0.84 (0.12) (14.29)

In 2016, the Bank and its subsidiaries had THB 5,141 million in impairment loss of loans and debt securities excluding special provision, a decrease of THB 1,235 million or 19.37 percent from last year. Credit cost was at 0.72 percent, a decrease from 0.84 percent last year from an effective risk management. In addition, the Bank has utilized its tax benefit to put in THB 1,110 million of special provision to be vigilant against volatile economic conditions and to enhance a financial position. Furthermore, there was a substantial reduction in NPL ratio, and thus, the coverage ratio improved significantly. The details are included in the non-performing loans section. Income Tax

As at 31 December 2016, the Bank had tax losses totaling THB 14,669 million, equivalent to a tax benefit of THB 2,934 million, based on a 20 percent corporate income tax rate.

Thanachart bank public company limited 029 Financial Position of the Bank and Its Subsidiaries’ (Unit: THB million) 31 December 31 December Variance Statement of Financial Position 2016 2015 Increase / (Decrease) Percentage Assets Cash 12,077 13,337 (1,260) (9.45) Interbank and money market items - net 47,476 57,583 (10,107) (17.55) Investments - net 175,081 171,782 3,299 1.92 Loans to customers and accrued interest receivables - net 691,527 714,124 (22,597) (3.16) Allowance for doubtful accounts and Revaluation allowance for debt restructuring (24,618) (25,680) 1,062 (4.14) Properties foreclosed - net 3,112 4,093 (981) (23.97) Land, premises and equipment - net 9,546 8,005 1,541 19.25 Goodwill and intangible assets - net 20,649 20,954 (305) (1.46) Other assets 15,661 16,774 (1,113) (6.64) Total Assets 950,511 980,972 (30,461) (3.11)

Assets

As of 31 December 2016, the Bank and its subsidiaries’ total assets totaled THB 950,511 million, a decrease of THB 30,461 million or 3.11 percent from the end of 2015. The key changes are as follows:

• Net interbank and money market items were in the amount of THB 47,476 million, a decrease of THB 10,107 million or 17.55 percent from the end of last year, mainly due to liquidity management.

• Net investments totaled THB 175,081 million, an increase of THB 3,299 million or 1.92 percent from the end of last year, mainly due to financial assets management based on opportunistic timing in the market.

• Loans and accrued interest receivables totaled THB 691,527 million, a decrease of THB 22,597 million or 3.16 percent from the end of last year. This was mainly due to hire purchase loans which decreased by 5.39 percent following a slow automotive vehicles market while other retail loans grew 9.93 percent from the end of last year, especially housing loan which grew 10.65 percent. Corporate and commercial loans decreased 5.29 percent from last year. Furthermore, the Bank put focus on asset quality improvement and NPL reduction. The proportion of retail to corporate and SME loans was 69 to 31 percent.

030 ANNUAL REPORT 2016 (Unit: THB million) 31 December 31 December Variance Statement of Financial Position 2016 2015 Increase / (Decrease) Percentage Liabilities and Equity Deposits 676,557 669,504 7,053 1.05 Interbank and money market items 65,834 86,688 (19,854) (23.17) Liability payable on demand 1,986 2,202 (216) (9.81) Debt issued and borrowing 49,409 71,641 (22,232) (31.03) Provisions 3,579 3,294 285 8.65 Insurance contracts liabilities 4,937 4,793 144 3.00 Other liabilities 22,089 26,159 (4,070) (15.56) Total liabilities 824,391 863,281 (38,890) (4.50) Equity attributable to owner of the Bank 124,488 116,226 8,262 7.11 Non-controlling interests of the subsidiaries 1,632 1,465 167 11.40 Total Liabilities and Equity 950,511 980,972 (30,461) (3.11)

Liabilities and Equity

The Bank and its subsidiaries’ total liabilities as of 31 December 2016 totaled THB 824,391 million, a decrease of THB 38,890 million or 4.50 percent from the end of 2015. The key changes are as follows:

• Deposits totaled THB 676,557 million, an increase of THB 7,053 million or 1.05 percent from the end of last year. This was due to deposit restructuring and cost of fund management following a strategic liquidity management.

CASA to total deposits portion was 45.58 percent, an increase from 40.14 percent at the end of last year.

• Debt issued and borrowings totaled THB 49,409 million, a decrease of THB 22,232 million or 31.03 percent, which was mainly due to the decreasing of short-term debentures.

Total equity as of 31 December 2016 was in the amount of THB 126,120 million, an increase of THB 8,429 million or 7.16 percent from the end of 2015. The details are as follows:

• Equity attributable to owner of the Bank was in the amount of THB 124,488 million, an increase of THB 8,262 million or 7.11 percent. This was mainly due to a profitable operating results of the Bank and its subsidiaries in 2016 which totaled THB 12,434 million, the land asset revaluation of THB 1,281 million, share of other comprehensive income of associates which increased by THB 317 million, investment mark to market which decreased by THB 1,163 million and THB 4,549 million in dividend payment.

• Equity attributable to non-controlling interests was in the amount of THB 1,632 million, an increase of THB 167 million or 11.40 percent, a result of profitable operating results of subsidiaries.

Thanachart bank public company limited 031 Asset Quality

The asset quality was considered based on consolidated financial statements.

1. Loans

1.1 Net Loans to customers and accrued interest receivables

As of 31 December 2016, the Bank and its subsidiaries’ net loan to customers and accrued interest receivables totaled THB 691,527 million, decreased from the previous year by THB 22,597 million or 3.16 percent mainly due to a decrease in hire purchase lending, in line with the contracting hire purchase market. Hire purchase loan outstanding dropped by 5.39 percent, while retail loan and housing loan increased by 9.93 percent and 10.65 percent respectively, corporate and commercial loan decreased by 5.29 percent. Furthermore, the Bank put focus on asset quality improvement and NPL reduction. The ratio of retail to corporate and commercial lending was 69 : 31 as well as NPL management. During the year 2016, the Bank and its subsidiaries had made debt restructuring agreements with 1,951 debtors using various approaches such as amending terms and conditions of repayment, transferring assets and/or shares and/or amending terms of repayment, of which outstanding before restructuring was approximately THB 5,618 million. By the end of 2016, 13,857 debtors joined the debt restructuring program, of which their principal and accrued interest receivable amounted to THB 14,354 million.

Loan diversification

At the end of 2016, hire purchase loans accounted for 50.00 percent, followed by corporate and commercial loans of 31.11 percent, housing loans of 14.71 percent, and others of 4.18 percent.

Structure Loans

(THB million) 800,000 4.47% 4.56% 4.34% 4.14% 4.03% 4.10% 4.20% 4.18% 9.87% 10.17% 9.99% 10.40% 10.38% 10.60% 10.73% 10.76% 600,000 20.79% 20.60% 21.52% 21.41% 21.18% 20.42% 19.82% 20.35% 11.73% 12.03% 400,000 12.42% 12.87% 13.44% 14.30% 14.76% 14.71%

200,000 53.14% 52.65% 51.74% 51.18% 50.97% 50.59% 50.49% 50.00%

0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16

HP Housing Corporate Commercial Other

1.2 Loans to customers’ classified in accordance with the BOT’s regulation of the Bank and its financial institution subsidiary

As of 31 December 2016, the Bank and its subsidiaries that are financial institutions (Asset Management Company) had an amount of loan to customers and accrued interest receivables classified in accordance with the BOT’s guidelines of THB 653,679 million, a decreased from the previous year by THB 26,948 million or 3.96 percent. Allowance for doubtful accounts records as of 31 December 2016, was of 22,492 million and total allowance for doubtful accounts to total loans and accrued interest receivable was 3.44 percent.

032 ANNUAL REPORT 2016 Borrowers classified by the BOT’s regulations (Unit: THB million) Loans and accrued interest Allowance for doubtful receivables accounts 31 December 31 December 31 December 31 December 2016 2015 2016 2015 Normal 613,276 629,475 9,805 8,101 Special mention 25,506 30,993 3,046 3,525 Substandard 4,258 4,039 1,705 1,798 Doubtful 3,362 3,332 974 1,351 Doubtful of loss 7,277 12,788 4,617 7,555

Total 653,679 680,627 20,147 22,330

Additional allowance for doubtful accounts 2,345 1,502

Total allowance for doubtful accounts 22,492 23,832

Ratio of total allowance for doubtful accounts to loans and accrued interest receivables (percentage) 3.44 3.50

1.3 Non-performing Loans

Although market and economic conditions improved gradually, the Bank and its subsidiaries managed to reduce NPLs through systematic and effective control. Consequently, NPLs had been a steady decline for the past 10th consecutive quarters. NPLs as of 31 December 2016 was at THB 16,434 million, a decrease of THB 5,247 million or 24.20 percent from the end of last year. NPL ratio of the Bank and its subsidiaries was at 2.29 percent, a reduction from 2.84 percent at the end of last year. For Bank only, NPLs was reduced by THB 3,093 million from the end of last year. Consequently, NPL ratio of the Bank was at 1.90 percent, a reduction from 2.20 percent at the end of last year.

Coverage ratio of the Bank and its subsidiaries as of 31 December 2016 was at 151.16 percent, an increase from 119.42 percent at the end of December 2015. The Bank and its subsidiaries have an excess reserve of THB 11,928 million and a reserve to required reserve ratio of 192.38 percent as of 31 December 2016, an increase from 159.33 percent at the end of December 2015. Coverage ratio of the Bank as of 31 December 2016 was at 151.64 percent, an increase from 127.41 percent at the end of December 2015. The Bank has a excess reserve of THB 9,883 million and a reserve to required reserve ratio of 202.23 percent, an increase from 171.94 percent at the end of December 2015.

Thanachart bank public company limited 033 Non-performing Loans

TBANK Only TBANK Consolidated 31 December 31 December 31 December 31 December 2016 2015 2016 2015

NPL-gross (THB million) 12,893 15,986 16,434 21,681 Total Allowance * (THB million) 19,550 20,367 24,841 25,893 NPL-gross to Total Loans (Percentage) 1.90 2.20 2.29 2.84 NPL-net to Total Loans (Percentage) 1.05 1.15 1.07 1.26 Reserve to Required Reserve (Percentage) 202.23 171.94 192.38 159.33 Coverage Ratio (Percentage) 151.64 127.41 151.16 119.42

* Including revaluation allowance for debt restructuring. Consolidated Financial Statements

Non-performing Loans (THB million) Coverage Ratio (Percentage) and NPL Ratio (Percentage) and Reserve to Required Reserve (Percentage)

21,681 192.38% 20,573 172.39% 165.82% 151.16% 18,649 162.92% 17,906 159.33% 136.31% 2.84% 2.70% 16,434 129.01% 2.59% 121.91% 2.44% 119.42% 2.29%

4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 Non-performing Loans NPL Ratio Coverage Ratio Reserve to Required Reserve

Separated Financial Statements

Non-performing Loans (THB million) Coverage Ratio (Percentage) and NPL Ratio (Percentage) and Reserve to Required Reserve (Percentage)

15,986 202.23% 195.57% 15,158 186.43% 182.18% 13,555 171.94% 151.64% 12,877 12,893 147.91% 2.20% 2.09% 139.24% 1.99% 130.10% 1.86% 1.90% 127.41%

4Q15 1Q16 2Q16 3Q16 4Q16 4Q15 1Q16 2Q16 3Q16 4Q16 Non-performing Loans NPL Ratio Coverage Ratio Reserve to Required Reserve

034 ANNUAL REPORT 2016 2. investments in securities

In 2016, the Bank and its subsidiaries had a total amount of investment in securities of THB 175,081 million. A major portion of approximately 75.41 percent was in government and state enterprises securities, followed by 12.71 percent in private debt securities. After adding (deducting) allowance for change in values and impairment, net investment increased from 2015 of THB 171,782 million. Details of securities investment were as follows: Securities Investment classified by types of instruments (Unit: THB million) 31 December 31 December Type of investment 2016 Percentage 2015 Percentage

Debt securities Government and state enterprises securities • Trading 7,166 4.09 3,063 1.80 • Available-for-sale 125,033 71.29 117,141 68.66 • Held-to-maturity 62 0.03 8,448 4.95 Private debt securities • Trading 0 0.00 0 0.00 • Available-for-sale 22,076 12.59 24,492 14.36 • Held-to-maturity 205 0.12 205 0.12 Foreign debt securities • Trading 0 0.00 0 0.00 • Available-for-sale 11,465 6.54 10,006 5.86 • Held-to-maturity 0 0.00 0 0.00 Equity securities Listed securities • Trading 1,613 0.92 110 0.06 • Available-for-sale 3,910 2.23 3,069 1.80 Investment in receivables purchased • Held-to-maturity 0 0.00 0 0.00 General Investment 3,843 2.19 4,079 2.39 Total debt securities 175,373 100.00 170,613 100.00 Add (less) Allowance for change in value (217) 1,246 Allowance for impairment (75) (77)

Total investment – net 175,081 171,782

Liquidity

As of 31 December 2016, loans to deposits and debt issued and borrowings ratio of the Bank and its subsidiaries was 95.17 percent, a decrease from 96.27 percent at the end of 2015, due to liquidity management in coherent with market condition. The Bank maintained its strong liquidity with liquid and low risk assets portion in high level. As of 31 December 2016 (Consolidated Financial Statements), liquid assets portion which includes cash, interbank and money market items, and short-term investments was 9.77 percent of total assets, an decreasing from 12.79 percent at the end of 2015.

With a focus on liquidity management, the Bank followed the Liquidity Coverage Ratio (LCR) Standard pursuant to Basel III criteria, and could achieve the LCR ratio of more than 100 percent. The LCR ratio as of 31 December 2016 was higher than the 100-percent criteria prescribed by the BOT.

Thanachart bank public company limited 035 At the end of 2016, the Bank and its subsidiaries had a net cash flow from operating activities of THB 26,182 million, from investing activities of THB 3,657 million, and used in financing activities of THB 31,099 million, attributed to a net decrease in cash of THB 1,260 million. At the end of 2016, the Bank had an amount of THB 12,077 million in cash and cash equivalents. Key items consisted of the followings:

- Cash flows from operating activities mainly stemmed from the decreases of loans, interbank and money market items (assets), and the increases of CASA, amounting to THB 10,083 million, THB 10,225 million, and THB 7,052 million respectively, offset by a reduction of THB 20,032 million interbank and money market items (liabilities).

- Cash flows from investing activities were largely a result of cash receipt from interest on investment of THB 3,876 million.

- Cash flows used in financing activities were spent on repayment of borrowing of THB 35,921 million and cash received from borrowings was of THB 13,689 million. (Unit: THB million) Major changes items 2016 2015 Net cash flows from operating activities 26,182 38,450 Net cash flows from (used in) investing activities 3,657 (22,412) Net cash flows used in financing activities (31,099) (19,306)

Net decrease in cash (1,260) (3,268) Cash at beginning of the year 13,337 16,605

Cash at end of the year 12,077 13,337

Relations between sources and uses of funds

In 2016, the Bank and its subsidiaries’ sources of fund from deposits and borrowings was of THB 676,557 million and THB 49,409 million, respectively. Use of fund in giving credits was THB 690,907 million and investments before adjustment was of THB 175,373 million. List of sources and uses of major fund by remaining tenor to 31 December 2016, the record date of the financial statement, are as follows:

At call Less than 1 year Over 1 year Unspecified Total Type THB million Percent THB million Percent THB million Percent THB million Percent THB million Percent

Sources of fund Deposits 308,515 42.50 335,686 46.24 32,356 4.46 0 0.00 676,557 93.19 Borrowing 937 0.13 9,721 1.34 38,751 5.34 0 0.00 49,409 6.81

Total sources of fund 309,452 42.63 345,407 47.58 71,107 9.79 0 0.00 725,966 100.00

Uses of fund Loans(1) 38,343 4.43 204,421 23.60 448,143 51.73 0 0.00 690,907 79.76 Investment 261 0.03 31,355 3.62 134,416 15.52 9,341 1.08 175,373 20.24

Total uses of fund 38,604 4.46 235,776 27.22 582,559 67.25 9,341 1.08 866,280 100.00

Note: (1) Loan at call includes stop-accrued loans

036 ANNUAL REPORT 2016 From the breakdown of sources and uses of fund by remaining tenor of the financial instruments as of 31 December 2016, sources of funds consisted of a major portion of deposits reaching maturity in less than 1 year of 46.24 percent and deposits at call of 42.50 percent of total sources of fund. Whereas the uses of fund consisted of a major portion of loans with remaining tenors of over 1 year of 51.73 percent and loans with remaining tenors of less than 1 year of 23.60 percent of total uses of fund. However, this incongruence between the sources and uses of fund was commonly found in the industry of commercial banks and financial institutions as most depositors tend to keep the matured cash deposited after the due date. Furthermore, the Bank had formulated policies to minimize such discrepancy between the sources and uses of fund using financial instruments to efficiently manage risk that the Bank would receive warning signals in advance in case of the possible impact on the sources and uses of fund.

Commitments and Contingent Liabilities

As of 31 December 2016, the Bank and its subsidiaries’ total commitments and contingent liabilities totaled THB 83,448 million, increased by THB 1,663 million (2.03 percent) from THB 81,785 million at the end of December 2015. The rise was largely on account of an increase in letter of credits and other obligations as shown in the table below. (Unit: THB million) 31 December 31 December Variance 2016 2015 Increase / (Decrease) Percentage Aval to bills 629 1,270 (641) (50.47) Liability under unmatured import bills 637 497 140 28.17 Letter of credits 2,667 2,310 357 15.45 Other obligations Committed (but not drawn) overdraft 24,244 24,506 (262) (1.07) Others 55,271 53,202 2,069 3.89

Total 83,448 81,785 1,663 2.03

Capital Adequacy

As of 31 December 2016, the Bank’s capital funds totaled THB 130,673 million, of which an amount of THB 90,561 million was Tier I capital and THB 40,112 million was Tier II capital. The capital adequacy ratio was at 19.15 percent, increased from 17.92 percent at end of 2015, comprising of 13.27 percent of Tier I capital and 5.88 percent of the Tier II capital. An increase in total capital funds was due to an inclusion of profit gained from operating result in the first 6 months of 2016.

However, the capital adequacy ratio was well over the minimum requirement of BOT of not below 9.125 percent. Details were as follows: Capital Adequacy Ratio

31 December 2016 31 December 2015 THB million Percentage THB million Percentage Tier I capital 90,561 13.27 82,124 12.04 Total capital funds 130,673 19.15 122,242 17.92

Thanachart bank public company limited 037 Operating Results of Subsidiaries increase of THB 332 million or 5.45 percent when compared with that of 2015. The increase in total insurance premium Thanachart Securities Public Company Limited was higher than that of the Thai insurance industry which is expected to grow by 2.5 - 3.0 percent. Average daily trading volume of Thanachart Securities Public Company Limited in 2016 was THB 3,921 million, an For operating results of 2016, the company had increase from THB 3,275 million in a year earlier. The average a net profit of THB 1,005 million, a decrease of THB daily trading of the company was in line with the overall 112 million or 10.03 percent comparing to that of the year stock market condition. Market share of securities trading in 2015. This was due to a reduction in gains on investments. 2016 was at 4.17 percent, an increase from 4.07 percent of The main factors affecting the company’s performance and the previous year. The trading volume could be divided into contributing to the company’s net profit were a focus on 59.85 percent of retails, 30.31 percent of institutions, and the profitable products as well as efficient management of 9.84 percent of foreign investors. claim expenses.

Net profit for the year ended 31 December 2016 TS Asset Management Company Limited amounted to THB 662 million, an increase of 35.66 percent comparing with the previous year. Total income was THB In 2016, TS Asset Management Company Limited 2,157 million, an increase of 14.37 percent. Main sources of has been restructuring and selling non-performing debts in income comprised of THB 1,604 million in income brokerage accordance with the policy and business plan of Thanachart fees and THB 207 million in interest income on margin loans. Group continuously. As a result, on 31 December 2016, Fees and service income amounted to THB 131 million, the company’s the total assets were THB 2,651 million, an increased of THB 100 million from the previous year a decrease of THB 1,213 million or 31.39 percent from from investment banking fees. Financial costs and securities the end of the previous year. For the operating result of expenses were THB 255 million, showing a slight increase the year 2016, the company had a net profit of THB 189 from the previous year. Operating expenses amounted to million, an increase of THB 207 million from the previous year. THB 1,085 million, a decrease of 2.26 percent. Net interest income and non-interest income were THB 164 million and THB 322 million, respectively while non-interest As of 31 December 2016, the company maintained expenses were THB 162 million. its liquidity ratio (Net Liquid Capital Rules: NCR) at 47.92 percent, higher than the minimum requirement regulated Ratchthani Leasing Public Company Limited by the Securities and Exchange Commission (SEC) of 7.00 percent of general indebtedness and securities pledged. At the end of 2016, Ratchthani Leasing Public Company Limited has still had a strong financial structure. Thanachart Fund Management Company Limited The company’s total assets were THB 33,365 million, an increase of THB 3,860 million or 13.08 percent from the end of As of 31 December 2016, Thanachart Fund the previous year. As well, the company had hire purchase Management Company Limited had asset under management loans in the amount of THB 32,748 million, an increase of THB 189,008 million, an increase of THB 22,654 million of THB 3,827 million or 13.23 percent. The Hire purchase or 13.62 percent from the end of 2015. Assets under loans accounted for 98.15 percent of the total assets. Total management comprised of 84.59 percent mutual funds, 8.00 liabilities and shareholders’ equity were THB 28,356 million percent private funds, and 7.41 percent provident funds. and THB 5,009 million, respectively.

Mutual fund business of the company ranked 8 with Net profit for the year 2016 amounted to THB market share of 3.44 percent. Private fund business ranked 881 million, an increase from the previous year of THB 10 with market share of 2.04 percent while provident fund 132 million or 17.62 percent. Total income amounted to business ranked 13 with market share of 1.45 percent. THB 2,985 million, an increase of THB 203 million or 7.30 percent, due to the fact that the company was able to For operating results of 2016, the company had continue maintaining its market share in hire purchase loans. a net profit of THB 355 million, an increase of THB 35 At the same time, interest expenses were THB 947 million, million or 10.94 percent from the previous year. This was a decrease of THB 69 million or 6.79 percent. This was due to increases in fund management fees. a result of its ability to acquire lower costs of borrowings to support lending during the year 2016. Provision expenses Thanachart Insurance Public Company Limited amounted to THB 496 million, an increase of THB 84 million or 20.39 percent. This was due to its decision to provide In 2016, Thanachart Insurance Public Company additional provision to support the economic uncertainties. Limited had total insurance premium of THB 6,420 million, an

038 ANNUAL REPORT 2016 Nature of Business Operations

An Overview of the Business Operation

Thanachart Bank Company Limited (“TBANK” or “the Bank”) commenced its operation on 22 April 2002 with Thanachart Capital Public Company Limited (“TCAP”) as the major shareholder. On 21 December 2006, the Bank of Thailand (“BOT”) granted approval for TBANK and TCAP to form financial business group in consolidation and having TCAP as a parent company.

In 2007, the Bank of Nova Scotia (“Scotiabank”) became our strategic partner by holding 24.98 percent of TBANK shares, which later increased to 48.99 percent. The current major shareholders are TCAP and Scotiabank, and in 2011, the Bank merged with Siam City Bank Public Company Limited (“SCIB”).

TBANK business structure, TCAP as a parent company, consists of two groups: 1) Financial Group and 2) Supporting Group, which serves a full range of financial services through TBANK branch network and service outlet. It is strongly committed to the good corporate governance principles. Financial Group

1. Thanachart Capital Public Company Limited (“TCAP”) operates as the holding company being a parent company of Thanachart Financial Conglomerate. 2. Thanachart Bank Public Company Limited (“TBANK”) operates commercial banking business and other businesses permitted by the BOT, such as life and non-life insurance broker, a provider of services relating to unit trust and securities such as securities brokerage, proprietary trading, unit trust underwriting, mutual fund trustee service, provident fund custodian service, debt instrument underwriting and trading, securities registrar, and gold derivative trading. 3. Thanachart Securities Public Company Limited (“TNS”) was permitted by the Ministry of Finance and the Office of the Securities and Exchange Commission of Thailand (“SEC”) to operate the following activities: 3.1 TNS was granted a Full-Service License to operate securities businesses and related businesses such as securities brokerage (domestically and internationally), securities underwriting, investment advisory service, securities borrowing and lending, financial advisory service, unit trust underwriting and repurchasing, and securities registrar. 3.2 TNS was granted a Derivative Business Sor 1 License to engage in a full range of derivative businesses and related businesses such as derivative brokerage and proprietary trading. 4. Thanachart Fund Management Company Limited (“TFUND”), which is a joint venture between TBANK (holding 75 percent of the total shares) and the Government Saving Bank (holding 25 percent shares), operates a full range of investment management services in mutual fund management business, private fund and provident fund management business, and investment advisory business. 5. Thanachart Insurance Public Company Limited (“TNI”) operates a non-life insurance business and a disaster insurance business such as fire insurances, automobile insurances, marine and transportation insurances miscellaneous insurance, and investment business. 6. MBK Life Assurance Public Company Limited (“MBKLIFE”) (formerly known as “Siam City Life Assurance Public Company Limited”) operates a life insurance business. The Company provides individual and group life insurance to assure savings. Life and health protection is also offered to individuals, institutions and organizations in general through the Company’s sale channels; telesales, brokers, and other channels that are not TBANK or its subsidiaries. 7. Thanachart Group Leasing Company Limited (“TGL”) operates a hire purchase business for cars. At present, there is no new business; only existing hire purchase contracts remain.

Thanachart bank public company limited 039 8. Ratchthani Leasing Public Company Limited Business Policy and Strategies of (“THANI”) operates a hire purchase business and financial Thanachart Group lease business for both new and used private cars. The Company also focuses on commercial automobiles such as In 2017, Thanachart Group has determined its pick-ups, taxis, tractors, and large trucks. strategic direction to become a fully integrated financial 9. NFS Asset Management Company Limited services group capable of offering a full range of quality (“NFS AMC”) is permitted to operate an asset management products and services that cater to the financial needs of business by buying or receiving transfers of NPLs and NPAs the customers in an efficient manner. To achieve this goal, from financial institutions under Thanachart Group as well as Thanachart Group has set up its vision “To be the best others. at providing fully integrated solutions to our customers’ 10. MAX Asset Management Company Limited complete financial needs by offering the highest quality (“MAX AMC”) is permitted to operate an asset management products, services, and advice”. business by buying or receiving transfers of NPLs and NPAs from other financial institutions. Such vision was developed from three major 11. TS Asset Management Company Limited fundamentals which are providing fully integrated financial (“TS AMC”) operates and asset management business by services (Universal Banking) with the Bank being the main buying or receiving transfers of NPLs and NPAs from SCIB services offering, focusing on satisfying our customers’ and TBANK. different needs (Customer Centric), and cooperating with 12. National Leasing Company Limited (“National all departments to provide excellent services to customers Leasing”) operates asset leasing business but not with (Collaboration). The endeavor and accomplishment from external juristic persons. the three major fundamentals not only allow Thanachart Group to be a fully integrated financial services group with Supporting Business Group highly successful in competition, but also are keys to drive Thanachart Group to become one of Thailand’s leading banks 1. Thanachart Management and Services Company over the next three to five years. Limited (“TMS”) provides services to the Group’s service staff. 2. Thanachart Broker Company Limited (“TBROKE”) Moreover, under the business partnership, Thanachart operates a brokerage business of life and non-life insurance. Group has adopted the expertise and innovation of Scotiabank The Company introduces or offers products of life and in the continuous development and modernization of its non-life insurance companies under Thanachart Group and own operating systems. CRM Tools for Sales and Service of other life and non-life insurance companies to Thanachart is considered to be a significant tool to increase advisory Group’s customer and the general public. The Company capacity, and introduce products that match customers’ also operates other businesses associated with the life and needs. LEAP for Internet Banking and Mobile Banking is a non-life insurance industries. system that will drive TBANK forward becoming a Digital 3. Thanachart Training and Development Company Bank in order to gain access and respond to the current Limited (“TTD”) organizes training activities for employees lifestyles of the customers. LOS (Loan Origination System) of member companies of Thanachart Group. is a modern loan approval system. It uplifts the quality of 4. Security SCIB Services Company Limited (“SCIB the Bank’s loan approvals to be more accurate and quicker Services”) (formerly known as “SCIB Services Company to reduce risks of becoming bad loans by using reliable Limited”) provides general services to TBANK and companies Credit Scoring to meet and satisfy the customers’ demands. in the Group, such as janitor, security, delivery, car rental, The systems also increase the capacity of customer car drivers, and outsourcing service. relationship management that delivers satisfaction and good 5. TM Broker Company Limited (“TM Broker”) experiences to customers, as well as more product holdings operates a brokerage business of life and non-life insurance and revenue boost to the Bank. for customers of companies under MBK Group, Thanachart Group and business alliance of the shareholding companies, Besides, Thanachart Group has communicated its not including TBANK and its subsidiaries. business strategy to employees at all levels so that every 6. MT Service 2016 Company Limited (“MT Service”) employee in every business unit has the same intention in provides back office and business support to companies line with the vision and seriously takes actions to accomplish under Thanachart Group. the established strategic goals. In 2017, Thanachart Group

040 ANNUAL REPORT 2016 has 4 Strategic Intents to meet demands of the customers, 3. Concern for social responsibility: Thanachart Group in parallel with being the financial group that delivers products has a strong sense of responsibility towards the society. and services for every life stage. The intents are as follows: 1. To attract and retain customers by offering Shareholding Structure of Thanachart excellent services, innovative savings, and investment Group products. 2. To ensure our customers succeed financially by Policy on Division of Operational Functions helping them choose the right insurance and protection among Member Companies of Thanachart products from across the entire Thanachart Group. Group 3. To provide borrowing solutions to all customer segments that meet their current and future needs and help Being a parent company of Thanachart Financial them to become financially better off. Conglomerate with a controlling interest (i.e. owning more 4. To provide digital banking solutions that permit than fifty percent of issued and paid-up capital), TCAP has customers to bank where they want, when they want, and adopted the following policies and approaches in managing how they want. the member companies of the Group as follows:

In addition, Thanachart Group came up with the CEO’s Business policies Focus Agenda comprising 4 items as a tool to successfully achieve its goal efficiently and systematically. The CEO’s TCAP and the Bank are responsible for establishing Focus Agenda is as follows: annual key business policies of Thanachart Group. Each subsidiary is required to formulate business plans and 1. Financial Targets: Meet or exceed our key financial budgets for 3-5 years and submit them to the parent targets of Net Income, Loan, and NIR growth and Cost to company for consideration, in order to ensure that they Income Ratio. are in alignment with the established key business policies. 2. Customer Growth Initiatives: To focus on The business plans and budgets are also subject to evaluation improvements of core infrastructure, end-to-end process and review regularly. The objective is to ensure that the reengineering with digital technology, and sales tools to business plans and budgets are in line with the changing support all sales channels in order to meet demands of each business conditions. customer segmentation efficiently. 3. Operational Improvement: To focus on centralizing Supervision of subsidiaries support units, upgrading technology, revamping processes to enhance service, manage risks and expenses effectively. The directors and high-ranking executives of TCAP 4. Enhancing Human Capital Capabilities: To focus and the Bank are assigned to be the members of the Board on strengthening the potential of staff, supervisors and of Directors of the subsidiaries. The arrangement not only teams by developing leadership, decentralizing authority enables TCAP and the Bank to assist the subsidiaries in and responsibilities, and job rotation in order to increase establishing their policies and in determining their future knowledge and skills of employees. direction, but also ensures the close supervision of the subsidiaries’ business operations. Importantly, the Chief For every Strategic Intent, every target, and operations Executive Officers of the subsidiaries are required to present to go on efficiently and drive the organization in the same a monthly performance report to the Executive Committee direction, Thanachart Group has communicated its Business and the matters in the Executive Committee Meeting are Philosophy comprising 3 items as follows: than reported to the Bank’s Board of Directors.

1. Belief in our employees: Thanachart Group Centralizing of support services believes that employees are the most valuable assets. Thanachart Group owes its growth to the contribution of its It is a policy of the Thanachart Group to centralize employees through competence and integrity. specific functions of the support services into one company 2. Dedicate to excellence: Thanachart Group which, then, is responsible for providing such services to earnestly focuses on excellence. We are constantly evolving all other member companies of the Group. The purpose is and adapting to the rapid pace of technological change to maximize benefits within the existing resources including through innovation. THANACHART BANK PUBLIC COMPANY LIMITED 041 expertise of operations staff and various information management of each company. The purpose is to ensure technologies, and to reduce staffing costs. The centralized that internal control and audit systems are effective and that support services available now within Thanachart Group the financial statements are properly reviewed. included information technology, human resource, systems and internal regulatory development, internal audit, operation Regarding to the corporate governance, the Board control, etc. of Directors of TCAP and the companies in the Group place a strong emphasis on the good corporate governance Internal control, audit, and corporate governance both at the level of the Board of Directors and the level of of parent company and subsidiaries various Committees. Independent directors are appointed to the Board of Directors and the Committees to provide Thanachart Group places strong emphasis on internal effective checks and balances on the powers of executive control. The Group adheres to the principle of adequate and directors. The established scope of responsibilities of the appropriate internal control by establishing procedures for Board of Directors and the Committees are also in line with business conducts, provision of services, and operations. the principles of good corporate governance. In addition, The Group also separates the duties and responsibilities of the Board of Directors of the TCAP and the subsidiaries each unit to allow internal examination of each other, based have established the corporate governance policy and the on a check and balance system. In addition, it puts in writing code of conduct which the directors, executives, and staff the announcements as well as order mandates, rules and of the member companies of Thanachart Group are required regulations’ covering key business areas and operations, and to adhere to. Focus is given to integrity, transparency, and this information was also disclosed to all staff in such a way avoidance of any conflict of interest. that they can always study them to gain a full understanding. A central unit at the Bank is responsible for preparing and Risk management proposing the announcements, order mandates rules and regulations of all member companies of the Group. TCAP ensured that the member companies of the Group analyze and assess various risks of their business Regarding to the internal audit, the internal audit group operations and that the risks are properly managed in line is responsible for auditing the business operations of all with the guidelines given by the authorities. In addition, member companies of the Group, ensuring that they comply TCAP conducts an analysis of the key risks faced by the with the regulations and the established work systems. member companies of the Group which may need direct The internal audit group also assesses an adequacy and financial or management policy of the Thanachart Financial effectiveness of an internal control system in operations to Conglomerate is in line with the guidelines given by the BOT ensure the use of resources and properties and prevention or reduction of errors, damages in order in propose corrective Relationship with business group of major measures for improvement. In addition, the Thanachart shareholder Group has established the Compliance Unit responsible for closely monitoring changes of laws, notifications, and orders Scotiabank is the leading international banking relating to the Group’s business affairs and operations and institution with branches in 50 countries worldwide. disseminating the information to the staff. The Compliance It holds 48.99 percent of the Bank issued shares via Scotia Unit is also responsible for ensuring that the conduct of Netherlands Holdings B.V., which is the juristic person in business affairs of the member companies of the Group is Netherlands. Scotiabank is a strategic partner that helps to in compliance with the legal requirements. forge the Bank’s capacity in fund business and management. It passes on the knowledge of professionalism in banking Moreover, the Audit Committee of each member sector, risk management, information technology, and company of the Group is responsible for governing, expansion of the Bank services abroad through the network of controlling, and auditing their respective business operations. Scotiabank. Moreover, it sends representatives to participate The Audit Committee is also allowed to carry out its duties in the management in the director and executive level. and give its opinions in an independent manner of the

042 ANNUAL REPORT 2016 Chart of Shareholding Structure of Thanachart Group

As of 31 December 2016

Thanachart Capital Public Company Limited Scotia Netherlands Holdings B.V.

Commercial Banking Business Asset Management Business Life Insurance Business

50.96% 100.00% 51.00% 48.99% Thanachart Bank NFS Asset Management MBK LIFE Assurance Public Company Limited Company Limited Public Company Limited 83.44% 51.00% MAX Asset Management Company Limited TM BROKER Company Limited 51.00% MT SERVICE 2016 Company Limited

Financial Business Supporting Business 100.00% Thanachart Securities Public Company Limited 100.00% Thanachart Management and Securities Business 75.00% Services Company Limited Thanachart Fund Management Company Limited 100.00% Thanachart Broker 100.00% Company Limited Thanachart Insurance Insurance Business Public Company Limited 100.00% Thanachart Training and 100.00% Development Company Limited Asset Management TS Asset Management Business Company Limited 100.00% 100.00% 100.00% Security SCIB Services Thanachart Group Leasing Company Limited Company Limited National Leasing Company Limited Leasing Business 65.18% Ratchthani Leasing Public Company Limited

Notes: 1. The above shareholding structure includes shares held by the related parties. 2. On 9 May 2012, the Bank of Thailand granted approval for Scotiabank to adjust the shares holding structure of Thanachart Group, which holds 48.99 percent of issued shares via Scotia Netherlands Holdings B.V., the registered juristic person in Netherlands. 3. On 29 June 2016, SCIB Services Company Limited has registered to change its name to Security SCIB Services Company Limited. 4. On 5 August 2016, Siam City Life Assurance Public Company Limited has registered to change its name to MBK LIFE Assurance Public Company Limited.

Thanachart bank public company limited 043 Income Structures of the Bank and its subsidiaries

Income structures of the Bank and its subsidiaries based on the consolidated financial statements as of 31 December 2016, 2015, and 2014 are as follows:

Table of income structures of the Bank and its subsidiaries

As of December 31 2016 2015 2014 THB Million Percent THB Million Percent THB Million Percent Interest Income Interbank and money market items 1,307 3.24 1,580 3.98 1,894 4.82 Investment for trading 30 0.07 73 0.19 238 0.60 Investment for debts securities 3,504 8.67 3,761 9.49 4,106 10.45 Loans 18,337 45.38 19,474 49.13 20,320 51.69 Hire Purchase and Financial Leases 21,708 53.72 23,329 58.85 25,887 65.85

Total Interest Income 44,886 111.08 48,217 121.64 52,445 133.41 Interest Expenses 16,174 40.03 20,536 51.81 24,884 63.30

Net Interest Income 28,712 71.05 27,681 69.83 27,561 70.11

Non-interest Income Net Fees and Service Income 5,904 14.61 5,475 13.81 5,927 15.08 Gains on Trading and Foreign Exchange Transactions 491 1.22 658 1.66 859 2.18 Gains on Investments 714 1.77 1,533 3.87 769 1.96 Shares of Profit from Investments in Associated Companies Accounted for Equity Method 207 0.51 169 0.43 152 0.38 Insurance Premium/Life Insurance Premium Income - Net 2,689 6.66 2,552 6.44 2,091 5.32 Dividend Income 400 0.99 295 0.75 305 0.78 Other Income 1,290 3.19 1,275 3.21 1,647 4.19

Total Non-interest Income 11,695 28.95 11,957 30.71 11,750 29.89

Net Operating Income 40,407 100.00 39,638 100.00 39,311 100.00

044 ANNUAL REPORT 2016 Business Operations of Each Business Group Earlier this year, the Bank launched Freever savings campaign that put an end to all fees so that the customers Commercial Banking Business could enjoy no-fee transactions such as withdrawals, transfers, and bill payments through the Bank’s electronic The Bank operated its businesses in compliance with channels. Moreover, the Bank expanded its juristic customer the Financial Institutions Business Act and other relevant base using Premium Current Plus and Freever-More that also notifications issued by the BOT. It acted as a non-life and offered free deposits, withdrawals, and transfers, including life insurance brokerage agent, an advisor and investment unit checkbooks at an exclusive price. distributor for mutual funds, trustee services for mutual funds, custodian services for private fund, securities brokerage, Toward the end of 2016, the Bank responded to the securities trading, debt instrument trading, securities registrar, government’s promotion of electronic transactions through and a selling agent for gold derivatives. the launch of Thanachart e-Savings, a high-interest savings deposit account, that encouraged customers to do self-service As of 31 December 2016, the Bank had a total of 592 transactions through Internet Banking (Thanachart iNet) and branches, 42 foreign exchange booths (20 in-branches, and Mobile Banking (Thanachart Connect) in conjunction with 22 stand-alone), 2,066 ATMs (Automatic Teller Machines), PromptPay registration. Moreover, the Bank introduced a new 2 Recycling Machines, 36 CDMs (Cash Deposit Machine), 53 concept called “Thanachart Smart Solution” about saving up Multi-Function Machines, and 99 PUMs (Passbook Update and spending wisely. Machine). Furthermore, during the second half of the year, the Group of Products and Services Bank introduced a long-term fixed deposit (18 and 22 months) in addition to the existing short and mid-term deposits The Bank improves and develops to better serve (5 and 10 months) to cater to different needs of the customers. various needs of our customers. Its five main products and services were as follows: Group 2 Lending Products

Group 1 Deposit Products 2.1 Corporate Loan

Characteristics Characteristics

Deposit products are offered to customer, both Corporate Loans are used to meet capital individuals and corporate. There are six major types of deposit requirements or enhance financial liquidity of businesses. products which are saving deposit, fixed deposit, negotiable Customers can choose a variety of corporate loan services. certificate of deposit, tax free deposit, current deposit, and foreign currency deposit. 1) Corporate Banking: products and services have been developed to accommodate requirements of Competitive Strategies corporate customers; various forms of credit facilities such as flexible loans, letters of guarantee for bidding, In 2016, the Bank maintained the focus on expanding contracts, performances and payments of utilities, E-GP, its customer base and strived to develop products that namely electronic letters of guarantee and payments of matched demands of every customer segment; mostly bidding documents under e-Government Procurement of transaction-based such as withdrawals, transfers, and the Comptroller General’s Department, project finance, and payments through convenient and secure channels for utmost financial advisory service. These also include the debt and benefits to the customers as customer satisfaction would capital market aspect which is debenture issuance and lead to Main Bank customers. fundraising to be listed in the Stock Exchange of Thailand. Customers are also offered risk management products

Thanachart bank public company limited 045 such as Interest Rate SWAP (IRS), Forward Contract and For Corporate Banking and Commercial Banking, Foreign Currency SWAP to hedge against volatile interest the Bank still keeps its focus on retaining good relationships or exchange rates. Moreover, Cash Management is offered and offering integrated financial products, e.g. loans, trade to meet individual demands. finance, and cash management to suit the demands of each customer. 2) Commercial Banking: commercial banking customers are offered flexible and diverse loans based on 2.2 Automobile SMEs each customer’s needs. The range of loans includes Top-Up facilities, which are additional limits for O/D customers to Characteristics use as working capital, letters of guarantee for enterprises or individuals who need to guarantee performance for public and The Bank offers this product to car related private companies. E-GP is also available. It offers electronic entrepreneurs who have short-term financial needs with the letters of guarantee and payments for e-bidding under proceeds of the loans to be used as their working capital or e-Government Procurement of the Comptroller General’s for enhancing their liquidity position as well as those who Department. The Bank also supports the Portfolio Guarantee have long-term financial needs with the proceeds of the loans Scheme and the SME Soft Loan Program and offers Cash to be used for business expansion or reducing funding cost Management. for example fleet and financial lease.

3) SME-S: SME-S loans are loans that have Competitive Strategies a limit of THB 10 million offered to small businesses. The loans can be term-loans, overdrafts (O/D), promissory notes The Bank concentrates on providing loan (P/N) and letters of guarantee (L/G). Underwriting and services to its long lasting business partners in automobile operational processes will be in line with the retail lending hire purchase sector. Database has been used to develop policy. The Bank has also joined forces with Thai Credit the tools for considering and screening credit extension and Guarantee Corporation (TCG) to provide credit guarantee for ensuring appropriate risk control (credit scoring). Emphasis the Bank’s small business customers who have potential but is also placed on development of products and processes are restricted by insufficient collateral, providing them with that suit the respective groups of customers and their credit more access to the Bank’s credit facilities. SME-S loans are access channels, for example, customers via automobile offered through the branch network and the existing branches manufacturers, new and used automobile customers via to ensure thorough coverage of customer service. automobile hire purchase businesses, or used automobile business operators via automobile auction companies. Competitive Strategies For the fleet finance and financial lease sector, the Bank focuses on providing services through its long lasting According to a great and dispersed number high potential and financially sound customer, as well as of SME customers throughout the country, operational and developing information system to expand the capabilities of credit policies have been designed to mirror those of retail its sale channels countrywide. borrowers and lent products to meet customers’ requirements. Competition-wise, although the SME loan market has a high 2.3 Trade Finance market value, the competition is also intense. Therefore, other than tending to and catering to the existing customer base, Characteristics the Bank is also focusing on acquiring new customers through lending programs such as the TCG program. Moreover, The Bank provides a full range of trade finance public relations, marketing activities, sale promotions are products and services including Import Letter of Credit (L/C), held continuously to boost the loan outstanding. Trust Receipt, Collection Agency of D/P and D/A for oversea buyers, Packing Credit, Export Bills Purchased / Discounted, Export Bills for Collection, Letter of Guarantee, Stand-by L/C, and Oversea Money Transfer.

046 ANNUAL REPORT 2016 Competitive Strategies promoted to first-car buyers. Furthermore, a “Cash back for disciplined installment payment” campaign is launched aiming The main factors that promote trade finance to provide advices to customers on borrowing needs as well services to customers are accuracy in services, convenience, as to offer benefit to customers who pay on time throughout competitive interest rate and fees. The Bank took into the installment period that they will regain an entire amount consideration the customers’ needs and the promotion of of the interest paid during the last year of installment period. business transactions as the main concerns. For the corporate clients, the Bank has the target to expand customer base 2.5 Secured Personal Loan to large scale businesses and SMEs. The Bank provides trade finance credit limit, liquidity supports, and specialist Characteristics advices on trade finance documents for customers. The Bank also develops trade finance products and services to cater Secured Personal Loan consists of: home loans to customer needs. The global business alliance network under the brand of “TBANK Home Loan”, multi-purposed is useful for fast and convenience service which provides loans named “Cash Your Home” and “Home Plus”. customers’ satisfactory on the Bank’s products and services. Competitive Strategies 2.4 Automobile Hire Purchase Loans The Bank focuses on convenience and Characteristics integrated services that cover every need of the customer. Marketing promotions are conducted based on the situation The Bank offers three types of automotive hire and competition with Retail and Small Business Product purchase loans. The new car and used car loans are offered Development as a unit responsible for product development, through dealers and the loan of sale and lease back or conditions, and interest rates. Target customers are customers “Thanachart Cash Your Car” is offered through the branch looking for houses and those who need multi-purposed loans channel. Cash Your Car product can serve customers’ need using their house as collateral. In addition, the Bank provides for cash with higher limit and longer installment period service channels where personal sales and marketing teams than the normal personal loans. The product also allows are responsible for the sales target set in the Business Plan. customers to choose the installment period and amount to Moreover, new products are advertised through the branch suit their debt service ability. In 2016, the Bank became the network. first commercial bank to adopt Credit Bureau Scoring in its underwriting under appropriate risk control. The adoption 2.6 Unsecured Personal Loan resulted in customer screening and customer quality control that met the Bank’s criteria. Characteristics

Competitive Strategies The Bank provides many types of unsecured personal loans. To be accessible and responsive to cover The domestic new car sales in 2016 were similar a wide range of customer needs, therefore, the purpose of to 2015 at a slower growth rate by 3.85 percent. However, loans may or may not be specified. The Bank’s personal loans the Bank obtained more strategic partnerships with leading are served under the product names as follows: carmakers and launched promotional campaigns which led to its higher new car market share. 1) Credit Card is a product that provides the line of credit to purchase products / services as cash or As for the used car lending, the Bank improved allows cardholders to withdraw cash. The Bank collaborates its underwriting policy, as well as process and enhanced with VISA and MasterCard to provide credit card in multiple efficiency of its debt quality control. The Bank also continues types suitable to customers’ qualifications and needs under to focus on offering Cash Your Car to the existing customers the following names: via over 600 branches nation-wide. Cash You Car was also

Thanachart bank public company limited 047 - Thanachart Drive Card: for customers 7) Unsecured Flash O/D is an overdraft who want a credit card with a key feature of cash back up amount with no collateral. The Bank provides the service to to 3.5 percent for every payment made at any gas station. important customers with the investment purpose. - Thanachart MAX Platinum Card: for customers who are looking for privilege and benefits of Competitive Strategies a luxurious and convenient lifestyle. Customers also receive cash back up to 0.8 percent for every spending made via Products under unsecured personal loans MAX Platinum card. defined competitive strategies on product development, - Thanachart LIVE Platinum Card: for new marketing campaign, distribution channel, and appropriate generation customers who are interested in key features of services to serve target customers’ needs. Thus, the Bank installment payment and lower interest rate (15 percent) provides a variety of products for customers to choose comparing to other credit cards, while still receive privilege appropriately by life stage and life style. These products have of a platinum card holder. been designed in such a way that are easily understandable 2) FLASH Plus is a revolving personal loan and practical for every day needs. offered in a form of card product under the name “FLASH Plus”. The product highlights convenient and fast cash Group 3 Electronic Products and Services withdrawal, transferring and payment by installment accommodating customers’ need of the services any time Characteristics with the following features: 2.1 Sabai Cash: cash transferred to the The Bank offers electronic products and services that customer’s account on the card, with a maximum installment enable customers to make financial transactions at a better period up to 60 months. efficient manner. These services include fund transfer, Automatic 2.2 Cash Transfer: cash transferred to the Transfer Service (ATS), online settlement for financial customer’s account on call, with a minimum repayment of transactions through the Bank of Thailand’s Automatic High- 3 percent for each bill cycle. volume Transaction Network (BAHTNET), automatic money 2.3 Cash Advance: cash withdrawal via transfers between banks (Bulk Payment System), Bill payment ATMs worldwide, 24 hours, and free of charge, with a minimum service for goods and services and a debit card. To meet the repayment of 3 percent for each bill cycle. customer needs, the Bank has also developed the service 2.4 Smile Plan: customers can make system through the internet, which are as follows: installment payment for goods and services purchased at - Thanachart Connect Mobile Banking Application participating stores, with a maximum installment period up service to 60 months. - Thanachart iNet service 3) Flash Plus SPN Loan is a multi-purposed - Thanachart SMS Alert service loan offered on top to hire purchase customers with good - Cash Back Debit Card / Debit Sure Card payment record. The customers can repay equally by monthly installments up to a maximum period of 60 months for an Competitive Strategies amount of not exceeding THB 1 million, under the Flash Plus personal loan limit. The Bank aims to accommodate needs for both small 4) Welfare Loan is a specifically loan to and large-scale companies as well as individual customers customers whose companies have a campaign with who demand convenience and speed for transactions. The the Bank. strategy focuses on cross-selling and up-selling to individual 5) Scholar Loan is a loan for payment of tuition customers via branches with a plan to increase channels of or any expenses for obtaining a master’s or doctorate degree. services to attract more customers with emphasis on easy 6) Pension Secured Loan, this is a special access, ease of use, convenience and security, while the multi-purpose loan for government employees who receive money can be received on the same day as the transfer monthly pension payment from the Comptroller General’s order date is made. Moreover, customers can make inquiries Department. at branches or through call center (1770). Service offerings are as follows:

048 ANNUAL REPORT 2016 1. Mobile Banking for individuals allows deposit 2. Physical prepaid cards are prepaid cards that balance inquiries, account activities, balance inquiries and cardholders can use to pay for goods and services both at payments for hire purchase, housing loans, personal loans, physical and online merchants with Visa or MasterCard logos. credit cards and FLASH Plus, subscription, redemption and switching of Thanachart Fund Management’s mutual These 2 types of prepaid cards are suitable to funds, Credit Bureau Report requests, service and utility the young generation, teenagers, students, and those without bill payments. The Mobile Banking service is under the access to credit cards. concept “Connects Every Step of Life”; convenient and fast transactions wherever, whenever. Competitive strategies 2. Internet Banking Services are available for both individual and juristic person to facilitate customers. For New payments services have been emerging example, account balance information, internal and interbank from both existing and new service providers, resulting in fund transfer, including the bill payment service. intensifying competition, especially electronic payments. 3. Financial Transaction Notification via SMS service, Therefore, the Bank focuses on forging business alliance this 24-hour service notifies all transactions i.e. deposits, to improve its services and keep up with the digital trends, withdrawal and money transfer via SMS to the customers’ changes of consumers’ behaviors and attitudes regarding mobile phone number registered with the Bank. financial transactions. The attempt is also a response to 4. Debit Cash Back has been offered exclusive support the National e-Payment strategy. services throughout 2016. The services include cash back for every card spending and the best-in-class security for 4.2 Merchants cardholders with the EMV chip technology that prevented data theft effectively. Moreover, Debit Sure has been launched Characteristics under the slogan “No worries about injuries, Debit Sure pays”. Other than the abovementioned special privileges, Debit Sure The merchants’ service supports payments cardholders also receive accident protection coverage of up channels by type of merchants and businesses as follows: to THB 100,000 and medical expense for accidents of up 1. Electronic Data Capture machines (EDC) to THB 5,000 per time, unlimited times, 24-hour, worldwide, are suitable for medium to large size merchants that have without any advance payment required at more than 300 high demand and transactions processed through EDC participating hospitals nationwide. terminals such as restaurants, hospitals, hotels, resorts and educational institutions. Group 4 Payments and Merchants 2. Mobile point of sale (mPOS) Pay N’ Go is good for small merchants that do not have many monthly 4.1 Payments payment transactions, and for medium to large enterprises with agents or sale staff for convenient off-site jobs and Characteristics quick deal-closing. 3. Thanachart Payment Gateway is perfect for The BIN (Bank Identification Number) e-Commerce businesses such as airlines and online shops. Sponsorship is cooperation between the Bank as a member of Visa/MasterCard, and e-Wallet service providers in issuing Competitive Strategies Visa or MasterCard-branded prepaid cards to enable e-wallets to make payments for goods and services at worldwide The Merchant Acquiring business is geared merchants who accept Visa or MasterCard. The prepaid cards towards customers with business potentials and is opened to can be categorized into 2 groups as follows: small businesses seeking financial management assistance. 1. Virtual prepaid cards are in an electronic The Bank sets a business strategy to go out and acquire form on e-Wallet applications. Cardholders can use the virtual new merchants, and to consistently launch sale promotions prepaid card to make payments for goods and services for in order to maintain the customer base and create confidence online merchants only. in the Bank’s products.

Thanachart bank public company limited 049 4.3 Western Union Competitive Strategies

Characteristics To fully offer all range of services to meet customer needs, the Bank’s custodian and trustee services Quick international money reception and sending offer supplementary products that enhance financial and to over 200 countries through Western Union’s network that investment management flexibilities to investment funds, such meets global security standards. as cash management products. The Bank has made use of its business network and good relationship with customers Competitive Strategies to expand the debenture holder representative, securities registrar and payment agent services. The Bank aims for convenient, quick and secure services for the customers. An alternative channel of ATMs Factors Influencing Opportunities or Constraints provides the customers with easy money reception and to Business Operations sending at the Bank’s ATMs nationwide. In 2016, the Thai economy saw a continuous Group 5 Other Products expansion at 3.2 percent against 2.9 percent in the previous year, thanks to the tourism industry which relied on demands 5.1 Foreign Exchange Service of foreign tourists, and the government’s spending and investments. Private consumption and domestic investment Characteristics improved slightly but they were still restricted by household and SME debts, drought and sluggish economies of key The Bank’s services include foreign exchange trading partner countries. Although the overall tourism industry services in forms of: bank notes and traveler’s cheques, posted strong growth, it suffered a short-term impact of money changers, forward foreign exchange for international the suppression of illegal providers of tour packages and business transaction, inward and outward foreign currency the suspension of festivities during the mourning period for transfer for goods and services, transfer for personal King Bhumibol Adulyadej. The government’s expenditure was accounts, account opening for Foreign Currency Deposit aimed at maintaining the economic growth. Budgets were (FCD), etc. allocated to project investments, especially communication, transport and water management. Additional monetary and Competitive Strategies fiscal measures were issued as short-term economic stimulus or easing of troubled grass roots. Such measures were tax The Bank has expanded its branch network incentives to boost tourism and consumption during important and currency exchange booths to serve all business sectors festivals, real-estate incentives, income-boost for the and tourists nationwide. The Bank also adjusts exchange low-income, a project to strengthen the fundamental economy rates by benchmarking with the movements of the world’s in accordance with the civil state guideline, and drought currency market. As a result, its customers receive real time victim assistance measures. However, the exports, formerly rates and fair prices. a key engine that drove the country’s economy, remained dull, similar to the economies of trading partner countries. 5.2 Securities Business Support Services The global competitiveness of certain exported goods deteriorated as a result of structural issues of manufacturing Characteristics for exports: high labor costs and low labor efficiency.

Securities Business Support Services consist of: The Thai economy grew gradually but relatively Custodian, Fund Supervisor, Bondholder Representative and steadily as reflected from the low headline inflation in 2016 Registrar and Paying Agent. at 0.2 percent compared to - 0.9 in 2015, a slight increase in line with the recovering domestic demands which would heighten the commodities’ prices, and low unemployment

050 ANNUAL REPORT 2016 rate at only 0.97 percent. In terms of offshore stability, implementation of Thailand, Asian countries and key economic the Thai economy still had consistent overbalanced current countries, corporate governance issues of the commercial account in parallel with the tourism revenue while the capital banking industry in the United States and Europe, including and finance account ran deficit. This was partly an outcome geopolitical risks. These factors have implications on the of Thai entrepreneurs investing overseas and lower foreign overall economy and volatility in the Thai financial market. investments due to the policy rate hike projection of the Federal Reserve of the United States of America (“USA”). In terms of business opportunities in 2017, the government sector still plays a key role in stimulating and For 2017, the commercial banking industry will still driving the Thai economy, creating economic activities, and face both domestic and global risk factors that will impact elevating the country’s overall competitive potential through the economic growth. It is expected that BOT’s monetary investments in development of transport and logistics policies will be increasingly pressured by the minimum wage infrastructure such as the dual-track railway, expansion raise by THB 5-10 in 69 provinces from 1 January 2017 of Skytrain lines, Motorway, expansion of Suvarnabhumi onwards, coupled with the oil production cut agreement Airport, infrastructures and logistics in the Special Economic by OPEC and Non-OPEC that will cause global oil prices Zones, etc. These projects align with the infrastructure and to surge. However, BOT still applies the average headline logistics development plan in the 12th National Economic inflation range at 2.5 percent ± 1.5 percent in 2017 as and Social Development Plan (2017 - 2021). The government a medium-term monetary policy target which will help sector has encouraged the private sector to join the Public maintain the country’s price/cost competitiveness. External Private Partnership (PPP) and implemented PPP Fast risk factors to be closely watched comprise of economic Track to accelerate and reduce steps and time frame for uncertainties of the US, political instability, financial risks, project approval in a bid to attract private investors and monetary policy implementation, sluggish European and concretely implement the projects swiftly. This is a factor Chinese economies which will impact international trade, that helps boost investors’ confidence, promote and stimulate Thailand’s monetary and fiscal policy implementation, as private investments in relevant industries of 2017 such as well as bringing about volatility to Thai and global financial construction, transport and logistics, including the Special markets. However, BOT forecasts the Thai economy to grow Economic Zones of East-West and Southern Corridors. at 3.2 percent in 2017. The growth will be backed mainly by the government’s expenditure and investments, especially Moreover, the first phase of Thailand’s Digital in new communication and transport infrastructures such as Economy and Society Development Plan in 2017, that will dual-track railway, extended Skytrains lines, Motorway and see the investment and development in digital foundation: Highway, short-term economic stimulus, continuous growth in nationwide high-speed internet, enhancement of international the tourism industry, and improvements in the export sector network, promotion of tech startups based on innovation pursuant to the Ministry of Commerce’s 2017 goods and creation, and the National e-Payment System, are important service export plan focusing on food, construction materials, steps towards a variety of transactions with government medical equipment, health and entertainment and logistics. agencies, private entities, the general public and commercial Nevertheless, private investments will be a crucial factor to banks in the future through electronic channels, without the country’s larger and stronger economy. physical or location restrictions. The emergence of FinTech (Financial Technology) to close the gaps in financial services The fragile global economy and the slowly recovering of commercial banks is both an opportunity and a challenge Thai economy has prompted the Bank’s plans for closely to the financial sector. monitoring and reviewing domestic and foreign economic and political situations; expansion of domestic industrial Industry and Competition Outlook economics, debt service ability of households and businesses, the private sector’s competitiveness and ability to adapt In 2016, commercial banks encountered domestic and to the innovation-driven economy, changes of consumer international challenge factors that affected the commercial behaviors, evolutions in the global financial markets and banking business and financial statuses of households and international fund mobilization, monetary and fiscal policy private entities who were bank customers. Such challenge

Thanachart bank public company limited 051 factors were household debts and drought that hurt the The commercial banking industry in 2017 will see customers’ purchasing power, illegal tour packages that intensifying competition in deposit mobilization and lending directly disturbed the tourism industry and other related due to the expected recovery of the Thai economy and businesses, refraining from festivities, entertainment and expansion of private investments to support the government’s advertisement during the mourning period due to the passing megaprojects. Although commercial banks focuses on of King Bhumibol Adulyadej, emergence of non-bank service growing the customer base by delivering excellent customer providers concentrating on Financial Technology (FinTech), experience and deepening customer relationships, evolving cyber security threats, lackluster economy in key trading competition due to digital technology will require them to partner countries affecting international trades, volatile place importance on changes of the customer behaviors money and capital markets due to the United Kingdom’s and various influencers affecting decisions to use financial referendum to exit the European Union (BREXIT), the United services. The banks must understand these changes States’ presidential election, investors’ concern on the Federal in conjunction with appropriate cost management and Reserve’s policy rate increase, and preparation for compliance maintenance of asset quality. with new regulations such as capital requirements by Basel III and International Financial Reporting Standard (IFRS 9). TBANK Accomplishment in 2016

Despite the many economic challenges the commercial • In 2016, the Bank still prioritized diversifying the banks may have faced, their financial stability remained firm loan portfolio structure to create balance by growing its as evidenced by high capital funds and reserves. In addition, non-hire purchase lending products: corporate loans, the commercial banks were still an important source of funds commercial loans, housing loans, retail loans, credit cards and for businesses and households. This is reflected in the loan personal loans, in conjunction with total financial solutions volume increase from THB 13,218,274 million in 2015 to THB offered to the customers. The focus was to offer and develop 13,627,117 million in 2016, generating a total net profit of products, life and non-life insurance, securities, and mutual THB 198,997 million, a 3.6 percent growth compared to last funds, with the subsidiaries. Special attention was paid to life year’s profit of THB 192,137 million. Higher bad and doubtful insurance products as the Bank partnered with Prudential Life debts coupled with personnel productivity were key factors Assurance (Thailand) Plc. The partnership led to innovative that restrained the performance of commercial banks. products well suited to diverse needs of the customers.

In 2017, commercial banks in general will still uphold • Development of systems was continued to the direction of Customer Centricity, offering integrated strengthen the business, especially information technology financial products and services (Universal Banking) that meet improvements to solidify the foundation and support changes requirements of each customer segment. The service channel of products and distribution channels in order to better serve through the digital platform will play an increasingly bigger the customers’ needs. Examples of system development role as consumer behaviors change towards full financial included the mobile banking application called Thanachart transactions without having to go to a bank branch in Connect, support for PromptPay, which was the national response to the government’s Digital Economy policy. Hence, e-payment system, more complete Origination Manager commercial banks will focus on developing and adopting System (OM) to truly respond to users’ requirements, a digital technology to enhance financial services through customer relationship management tool called T-Advisor that internet banking and mobile banking such as an application enabled a 360-degree perspective into the customers, and that enables customers to perform various transactions Predictive Dialer for Contact Center (outbound), telesales quickly and effortlessly, and be assured of data security and Collection for convenient and quick customer contact. and user privacy. Furthermore, commercial banks are paying more attention to personnel productivity and appropriate • The Bank took part in infrastructure development cost management, including forging business partnerships to enhance Thailand’s payment systems by joining the to add more service channels and fill service gaps of installation of over 400,000 EDC terminals countrywide in the banks. response to the National e-Payment Master Plan. Merchants could have EDC terminals installed at a lower cost, less expense and fees.

052 ANNUAL REPORT 2016 • The Bank conducted staff segmentation in 2015 to loan portfolios to bring balance between risks and maximum learn true capabilities, strengths and weaknesses of the staff. returns and to maintain the asset quality at an appropriate Pursuant to this initiative, the focus on people development level. This is evident in the reduction of NPL ratio to only 2.29 was carried on in order to improve the management of percent compared to 2.84 percent at the end of the previous services, sale and personnel. In 2016, customer-oriented sale year. Additional reserves resulted in better coverage ratio at and service training were carried out to branch employees to 151.16 percent from 119.42 in 2015. In addition, in 2016, develop skills for sale conversation, product knowledge, and the Bank’s total deposits and borrowings were THB 725,966 customer analysis. Branch service was standardized (TBANK million, a minor decrease from the previous year due to Service Standard) nationwide. Human resource initiatives, short-term debentures that matured in 2016. Nevertheless, such as training, coaching, and e-Learning, were reviewed. the Bank managed to expand its deposit base from the previous Talent Management was launched to raise the human capital year, particularly retail deposits. The ratio of the Bank’s deposits competitiveness. In addition, Human Resource IT system to total deposits of commercial banks registered in Thailand called HRIS 9.2 was developed to upgrade the capacity was 5.90 percent. and provided efficiency of information to employees so that they could work efficiently and drives the Bank towards its In terms of the Bank’s strengths, its BIS ratio is as mission and goals. high as 19.15 percent, higher than the industry average at 17.44 percent and BOT’s criteria. Its liquidity coverage ratio • Awareness was raised among executives in every (LCR) is above 100 percent. Consequently, the Bank had department of internal communication through various sufficient potential to take risks or losses from unexpected channels so that every level of employees understood the circumstances. Overall, efficient and continuous maintenance Bank’s goals and that the understanding could be reflected of asset quality coupled with strong capital and balance through professional customer service. In the past year, sheets are key factors that allow the Bank to grow robustly external communication was consistently made to create and sustainably. recognition and impression through many channels such as social media and CSR activities to access the current Apart from excellent products and services offered lifestyles of existing customers. through the branch network and internet or “Thanachart iNet”, the Bank developed another channel of mobile banking to • Other than business accomplishments, the Bank support online transactions on a mobile application called also received “Suriyasasithorn” awards from the Public Thanachart Connect. Plans are in place for continuous Relations Society of Thailand; first prize in the desk calendar improvements of the application in order to meet requirements type and runner-up in the hanging calendar type in the of the customers such as mutual funds and securities and Honoring the Royal Institution category. Thai histories were loan application thoroughly in every channel in an integrated expressed through the calendar series called “234 Years manner (Total Financial Solution) under the data security and of Ratanakosin Era under Chakri Royal Family” under the user privacy policies. theme “Passing on Values through Time with Advanced Technology” using techniques of Art Nouveau and digital On service quality and efficiency enhancement, painting combined with AR codes. development and improvement of infrastructure related to core banking were made to connect the processes. Personnel Competitive advantage and competitors capabilities were also boosted so that they became proficient, knowledgeable and prepared to give advice to customers Compared to other commercial banks, the Bank is and deliver excellent experience through the Bank’s financial considered as one that has long-term growth potential. In services. 2016, the Bank’s assets were THB 950,511 million, making up 5.92 percent of total assets of commercial banks registered In addition, under the partnership and cooperation in Thailand. Its net loans were THB 666,909 million, or 6.20 with the Bank of Nova Scotia, the Bank planned to adopt percent of gross net loans of commercial banks registered in Scotia’s globally accepted technological innovation, financial Thailand. A slight decrease in total loans from the previous products and new service to add to its competitiveness and year was attributable to the commitment to adjust the Bank’s service efficiency.

THANACHART BANK PUBLIC COMPANY LIMITED 053 Securities Business Competition and Market Outlook

Securities Business is provided to customers through 1. In 2016, the Thai economy recovered quickly in Thanachart Securities Public Company Limited (“TNS”). a continuation from 2015 as the SET index picked up by The company was granted a full license to operate a full range 19.80 percent amid volatile trading volumes and SET index of securities businesses including securities brokerage (inside caused by key domestic and international political factors. and outside Thailand), securities underwriting, investment advisory service, securities borrowing and lending service, During 2016, domestic and foreign economic and financial advisory service, mutual fund management, private political situations still presented challenges to the Thai stock fund management, venture capital management, securities market, both in terms of trade volumes and stock index. registrar, and derivatives business Sor 1. 5 key external factors that mainly caused volatility Characteristics in the Thai stock market but generally supported the recovery of the SET index were: 1) possible drastic drop in China’s TNS operates two key of business, brokerage business economy and outflow of the Yuan worried central banks and investment banking business. As of 31 December 2016, worldwide and pressured the Federal Reserve Bank (Fed) the company had a total of 34 branches and offered the to signal the delay of the rate increase. This resulted in high following services: global liquidity and continuous inflows to the Thai stock market, 2) overall economic upturn, particularly the strong 1. Brokerage Business covers brokerage services recovery of the US economy and gradual improvement of which include a service of securities dealing, securities the European and Japanese economies, was backed by trading, and giving investment advices to investors whether the quantitative easing whose byproduct was even higher individual, retail, institutional, local or foreign, to make decision global liquidity, 3) the United Kingdom’s referendum to exit on their investment. the European Union (BREXIT) unpredicted by the majority 2. Derivative Business covers trading services for of investors and polls caused short-term volatility, 4) the future contracts and derivatives. United States’ Presidential Election won by Donald Trump 3. Securities Borrowing and Lending (SBL) covers that contradicted most polls also caused a temporary stir. services of borrowing or lending securities for customers However, the policy that supported extreme economic growth who has a desire to borrow or lend securities. drove global risk asset prices and Thai SET index to move 4. Derivative Warrant (DW) is issued and sold for up, and 5) the successful agreement of the Organization of customers as an alternative of investment to increase liquidity Petroleum Exporting Countries (OPEC) to cut oil production and spread of risk investment. for the first time in 8 years drove oil prices upward, and the 5. Investment Unit Dealer covers services of sale Thai SET index increased as an indirect result. support and provides fund facts and related information on mutual funds of various asset management companies that Since the beginning of 2016, the Thai economy TNS represents. showed signs of continued recovery from 2015. The 6. Financial Advisory and Securities Underwriting recuperation was mainly driven by consistently growing Services cover financial advisory business, underwriting tourism and government’s investments. Prices of agricultural service of debt and equity securities both as a role of lead produce posted strong improvement, especially fruits and underwriter, co-underwriter, and dealer. rice in the first half of the year, in conjunction with better 7. Securities Registrar covers three types of services, rubber prices throughout the year helped boost revenues namely, a securities issuance registrar, securities holder in the agricultural sector. However, the Thai economy in registrar and a registrar for the Employee Stock Option Q4/2016 weakened after a tragic loss on 13 October 2016 Program (ESOP). when the entire country suffered emotionally. The grief that 8. Equity-Linked Notes are issued and sold for ensued weighed down spending atmosphere despite the customers in order to increase an opportunity of investment government’s tax incentive measures launched in hopes of and spread of risks. stimulating year-end spending. However, the measures were not enough to compensate the lower private spending. In

054 ANNUAL REPORT 2016 addition, the government’s policy to suppress “zero-dollar 2. There are a total of 44 members in the Thailand tours” from China for long-term sustainability would have Futures Exchange (TFEX). In 2016, total trading volumes was short-term pressure on tourism. 69 million contracts, or a daily average of 285,189 contracts, an increase of 43 percent from 2015. The majority of the For 2017, the Thai economy is expected to continue trading volumes were from stock futures and SET50 Index its recovery from 2016, particularly the agricultural sector Futures with a growing number of investors of over 15,000 as drought has eased in 2016. Consequently, agricultural accounts. TNS’ trading volumes were 8,503,303 contracts produce in 2017 would also improve from the drought in and its market share was 6.11 percent, or the 3rd among all 2014-2016. Most agricultural produce prices, including fruits, TFEX members. rubber, sugarcane, will pick up. Moreover, the new income tax structure that will ease the burden of income tax and 3. In financial advisory and securities underwriting the ending burden of the tax-deductible first-car scheme will services, competition was aggressive, especially in mergers help stimulate the private spending, supporting the overall & acquisitions, IPOs and fund raising. Though competition consumption. The government’s investments are still strong focuses on price, the key competitive factor, thus, remains and likely to be accelerated, which will be another push to on service quality, expertise on providing a customer with the Thai economy. relevant advice and solutions to a problem, having a wide network, as well as product innovation, which can create The Stock Exchange of Thailand (SET) disclosed value-added and greater benefits to customers of TNS. information that, during January 2016 to November 2016, IPO values of listed companies were THB 157,766 million, Fund Management Business a 45 percent increase compared to the end of 2015. The majority of the values were from fund raising in the primary Thanachart Fund Management Company Limited market. As of December 2016, SET’s market capitalization (“TFUND”) operates in a business of fund for investment was THB 15.08 trillion, a 23 percent increase from 2015. including fund management, private fund, provident fund, MAI’s market capitalization was THB 425,634 million, a 31 and investment advisory business. percent increase from the end of 2015. Characteristics The market share of TNS is 4.17 percent, ranked 7th among 36 securities companies. In 2016, the competition TFUND provides various types of fund investment in remained intense and the main customer target was retail order to respond to different types of customers at all levels. investors. New securities companies introduced in 2014; AEC The company utilizes many types of distribution channels for Securities Plc. (AEC), Apple Wealth Securities Plc. (Apple sales, such as the Bank’s branches and other investment Wealth) and Land & House Securities Plc. (LHSEC) have unit distributors licensed by SEC. TFUND’s staffs are legally gained greater influence in the competition in the securities qualified and strictly adhere to related laws and regulations. brokerage business as seen from their increasing market shares. In 2015, two new securities companies emerged; Competition and Market Outlook ASL Securities Co., Ltd. (ASL) and SBI Thai Online Securities Co., Ltd. (SBITO). Investment consultants in the industry As of 31 December 2016, there were a total of constantly switched workplaces. In addition, the competition 22 fund management companies, with total assets under in general was geared towards offering innovations to management of THB 4,230,701.60 million (excluding Vayupak investors; readymade programs to provide customers with Fund, Foreign Funds, Property Fund for Resolving Financial fundamental and technical information, a new trading system Institution Problem and Property and Loan Fund), an increase called Algo Trading and other trading platforms as alternate of 12.50 percent from 2015. During 2016, there were 605 channels for submission of buy and sell orders. Apart from newly issued funds, accounting for THB 1,322,907 million of competition from Thai securities companies, foreign securities net assets. Among the newly issued funds, 453 were debt companies were also able to secure more market shares. securities with both domestic and foreign investment, which More cooperation in various forms among banks and their accounted for THB 1,249,292 million of net assets or 94.40 affiliate securities companies is still seen. percent of total net assets of the newly issued funds during 2016. 89.40 percent of funds issued by TFUND in 2016 were domestic and offshore bonds.

THANACHART BANK PUBLIC COMPANY LIMITED 055 As of 31 December 2016, TFUND’s assets under automobile, personal accident, and fire insurance and these management were THB 189,008.27 million, an increase customers mainly are the Bank’s lending customers as well as of THB 22,654.08 million or 13.62 percent from 2015. customers from the company’s marketing campaigns. The increase of assets under management was from mutual Customers with sum insured of over THB 5 million are funds offered to the general public of THB 18,948.81 million private organizations that operate many areas of business, or 13.44 percent. Assets under management comprised of both commercial and industrial. Key products offered to this 84.59 percent mutual funds, 8.00 percent private funds, and group of customers are miscellaneous and fire insurance. 7.41 percent provident funds. Based on the characteristics of the aforementioned customer base, it can be concluded that since TNI began its non-life Insurance Business insurance business, it has not relied solely on a single customer by more than 30 percent of TNI’s total revenue. Non-life insurance business is operated by Thanachart Moreover, TNI provides insurance services to domestic Insurance Public Company Limited (“TNI”), which offers all customers only. types of non-life insurance services. Based on the Thai General Insurance Association’s Characteristics 2017 direct premium forecast, the Thai non-life insurance industry is expected to grow at 2.50 percent in 2017 with TNI offers all types of insurance services e.g. fire, total premiums of THB 214,328 million. automobile, marine, and miscellaneous. In addition, the company also operates investment businesses. Assets Management Business

Competition and Market Outlook Characteristics

During January – September 2016, the Thai non-life Assets Management Business operates by TS Asset insurance business saw growth in direct premiums compared Management Company Limited (“TS AMC”) received the with the same period of 2015 at 1.64 percent. Total direct transfer of non-performing assets from SCIB, including both premiums were THB 153,642 million. The non-life insurance non-performing loans and non-performing assets, in order to market structure during January - September 2016 showed conduct debt restructuring with the debtors, hence, allowing that the automobile insurance dominated up to 59 percent them to repay the debts at their real capacity and turning of the total market value, followed by the miscellaneous non-performing assets back to becoming the performing ones. insurance with the market share of 34 percent. Fire and marine insurance gained market shares of 5 percent and Competition and Market Outlook 2 percent respectively. TS AMC operates its business with a primary objective TNI focuses on a standard of products, service quality, to manage and restructure the non-performing assets received productivity, efficiency and honesty, as well as development from SCIB. To manage, divest, or sell those non-performing of new products in order to offer new policies which are assets (NPAs) to third parties who are interested in real more coherent with economic and social conditions and estate market, TS AMC hires a professional advisory in assets responsive to customer needs, by taking into consideration sales to determine the selling price and manage the assets a fair premium rate to customers. Furthermore, the company in such a way that creates the highest value. It also appoints constantly adjusts its progressive competitive strategy to a professional asset selling agent to develop value-added be coherent with ever-changing conditions, by ways of asset packages as well as collaborates with the related group increasing sales channels, expanding the customer base, of companies to expand sales channels, such as brokers or and maintaining the existing customer base. As much as auction agents as well as cross selling and through website 98 percent of all customers are those with a policy claim limit of TNS and the other channels to reach the target customers not exceeding THB 5 million. The customers mostly select as much as possible.

056 ANNUAL REPORT 2016 Leasing Business However, THANI planned to maintain its commercial portfolio in the next 3 - 5 years at the 65 percent - 70 percent Characteristics of the company’s hire purchase portfolio. The reason was that this customer group was expected to grow continuously Ratchthani Leasing Public Company Limited (“THANI”) and to generate high profitability. In addition, the company’s operates high purchase business and financial leasing. THANI extensive experience and business expertise proved to be focuses on both new and used car markets, especially advantageous for competitiveness, customer retention, high commercial cars such as pickups, taxis, tail trailers and large yield to used car dealers, fast services, market share retention, trucks, and personal cars. Moreover, the company also offers and tighter relationship with used car dealers, in order to credit for both new and used cars at 60 percent and 40 increase business opportunities and business channels. percent of the total credit respectively, and credit for trucks and other car types at 70 percent and 30 percent respectively. With high experience, business expertise, fast services, combined with relationship retention and high Compared with providing credit for new cars, used yield for used car dealers, THANI was confident to maintain car credit is exposed to greater risk from customers are its competitiveness and its market share under the intense commercial vehicles, which are sensitive to overall domestic competition at the present. economy. The company must consider many aspects of risk factors in granting credit approval. Such factors are Products and Services Management car conditions, used car price in the market, evidence investigation and car registration. Consequently, the company Sources of fund needs experienced team to survey the conditions and prices of the used car market. The source of the Bank’s and its subsidiaries’ fund comprises of issued and paid-up capital, whereby as of 31 Moreover, the company also provides after-sale December 2016, was in the amount of THB 60,649 million, services, e.g. annual renewal of the motor-vehicle tax, in which the statutory reserve and retained earnings were insurance policy renewal, and car check-up to renew the included. Another two key sources of fund were: motor-vehicle tax. This will not only provide a convenience to the customers, but also generates income to the company. 1. Deposits as at the end of 2016 were in the amount In addition, this approach is beneficial to the company as it of THB 676,557 million. protects the customers’ properties. 2. Borrowings were in the amount of THB 49,409 million, of which THB 32,516 million were Tier 2 subordinated Competition and Market Outlook debentures, THB 13,905 million were non-subordinated debentures, THB 2,000 million were short-term debentures, Though the overall domestic leasing and hire purchase THB 937 million were promissory notes, THB 50 million were industry displayed a slowdown in 2016 as compared to structured notes, and THB 1 million were borrowing others. the previous years, the fierce competition in the industry continued. The reason was that financial institutions, Funding or lending to related parties commercial banks, as well as leasing and hire purchase business of car manufacturers and dealers, carried out their The Bank extended loans to parent companies, marketing activities with a focus on credit for new and used subsidiaries, and related companies in Thanachart Group. personal cars. This resulted in the increased expansion of At the end of 2016, it extended loans to THANI, the Bank’s some manufacturers to credit for used cars. However, these subsidiary, for business operations under Thanachart Group manufacturers were not considered to be direct competitors Policy amounting to THB 3,180 million, increased by THB of the company, as the company’s targeted market was new 1,279 million from the end of 2015. There was remaining and used commercial cars, where the competition in this balance of THB 1,901 million (from lending to TS AMC of market was not quite aggressive as compared to the market THB 691 million and THANI of THB 1,210 million). of personal cars. The aforementioned loan outstanding balance accounted for 0.49 percent of total loans at the end of 2016. All lending and borrowing transactions were conducted under the permission of the BOT.

Thanachart bank public company limited 057 Risk Factors

An overview of the Risk Management

In 2016, the Thai economy continuously improved as a result of the government’s economic stimulus package and a consistent growth of tourism. While the private consumer sector and domestic investment slightly improved, there were still limitations from external and domestic impacts of foreign-trade countries’ economic slowdown, weakened product exportation, household debt, SMEs, and drought.

In 2016, total loans of commercial banks continued to expand as compared to last year, in line with the slow economic recovery. Despite various economic challenges, commercial banks were able to strongly maintain their financial stability, which were reflected in high mutual funds and reserve. However, commercial banks continue to be cautious with business operations, especially in loan approval.

In 2017, the Thai economy tended to recover continuously with the government sector’s budget disbursement and investment as key drivers. However, the overall economy remained fragile and needed to be monitored closely in various areas, which may impact market risk, credit risk, and liquidity risk, for example.

The Bank and its subsidiaries realize the importance of continuous risk management that the Internal Capital Adequacy Assessment Process (ICCAP) was employed to manage risks in compliance with the Bank of Thailand (“BOT”)’s capital supervisory measures of Basel III framework. This allows the Bank and its subsidiaries to efficiently manage the capital and have a strong capital status to firmly support the business growth.

Nevertheless, the Board of Directors and executives of the Bank closely oversee, monitor and develop the risk management system regularly to ensure that the measures are updated and in line with the ever-changing internal and external risk factors. The Bank strategically establishes an organization structure to support the risk management under the policy outline via various committees’ supervisions as follows: The Board and Committees at the Policy Level:

The Bank’s Board of Directors and the Executive Committee have a role in policy making and establish guidelines for an efficient enterprise-wide risk management by taking into consideration the impact of risks on the Bank’s operational goal and financial position that have to be in line with its normal operation.

Risk Management Committee has a role in establishing strategic plans and developing the risk management procedure as well as considering appropriate risk management policies and guidelines to be proposed to the Executive Committee and the Bank’s Board of Directors for consideration and approval.

Audit Committee has a role in determining the supervisory guidelines for the operation to comply with measures of related authorities as well as assessing the effectiveness and sufficiency of the risk management process and internal control system.

058 ANNUAL REPORT 2016 The Committees at the Operation Level:

Asset and Liability Management Committee has a role in supervising the structure of the Bank’s assets and liabilities to be appropriate for characteristics of the business and in line with the Bank’s risk management policy.

Investment Portfolio Committee played a role in overseeing the investment in financial instruments, to be in line with the Bank’s market risk management policy.

Credit Committee has a role in supervising the credit lending and other credit-related transactions to be in line with the Bank’s credit risk management policy.

IT Security Management Committee has a role in establishing policies regarding the IT Security System, proposing preventive measures against risks arising from information and technology system, as well as monitoring, supervising and controlling the operation of the IT Security System to be in line with the proposed plan.

Audit Division has a key role in reviewing internal control system, risk management system, the conduct and disclosure of financial information, the operation, the report and supervisory procedures to ensure practices in accordance with policies, work plans, rules and regulations of the Bank and its subsidiaries, official rules and regulations of relevant regulators and good corporate governance principle, and providing consultation with other divisions for further development and proper internal control of the Bank’s and its subsidiaries’ systems.

The Bank’s Risk Management Structure

As of 31 December 2016

Board of Directors

Risk Management Committee Audit Committee

Chief Risk Officer Chief Audit Executive Committee

Risk Policy and Capital Markets Compliance

Credit Risk Management Asset and Liability Management Committee Chief Executive Officer and President Retail Risk Management Investment Portfolio Committee

Special Risk Management Credit Committee

Deputy Chief Executive Officer IT Security Management Committee

Thanachart bank public company limited 059 • The conduct of business affairs is under the Under its credit risk management policies and system of check and balance with the Middle Office, guidelines, the Bank has successfully established a credit comprising the Risk Control Unit and the Back Office, being culture. To start with, the credit risk of the borrowers, separated from the Front Office. counterparties or issuers of debt instruments will be independently assessed by the model developed specifically • The Bank puts in writing all the established to each type of borrowers or counterparties by the Credit policies and guidelines regarding the risk management that Risk Management Unit. At this juncture, authorized Credit specify responsibilities of related units as the operational Committee would then consider and determine the level of guidelines for the employees. Moreover, the Bank has credit risk of borrowers or counterparties, appropriate credit established a four-step guideline for risk management lines and investment budget, as well as terms and conditions comprising: 1) identification of the characteristics of risks on loans or other obligations. The Committee also controls as well as risk factors, 2) development of appropriate tools the overall risk status by appropriately diversifying credit and models for risk measurement, 3) control of risks within risk into various business sectors and groups of customers acceptable limits and 4) monitoring of risk status in order to within the established risk ceilings. In addition, the Committee properly manage any possible risks in a timely manner. closely monitors the quality of loans to ensure proper and vigilant management by emphasizing business capability and • The determination of size and proportion of repayment ability under the supervision of an independent different risk values by the use of risk calculation tools and risk control unit. Apart from the aforementioned units, there models allows the Bank to perceive the degree of severity is also an Internal Audit Division to verify that the credit from possible risks. These risk variables could also be used transactions are in compliance with the BOT’s guidelines. as the ceiling to control risk under the acceptable level as well as to provide warning signals before severe losses occur. To ensure optimal returns under acceptable risk, the Bank has employed measuring tool called RAROC • The aforementioned risk management systems (Risk Adjusted Return on Capital) to reflect the appropriate are developed based on prudent principles, and will be level of capital. Moreover, the Bank also performed stress reviewed regularly to suit prevailing situations. The systems tests to estimate any damage that may occur during the crisis. are designed to be transparent, examinable, and to take into Under this condition, the borrower’s ability to repay could consideration the interests of shareholders, customers and erode or they could fail to make a repayment under terms employees of the Bank. and conditions stated in the hypothesized contract. The risk factors in the tests were assumed to affect the industry that Key Risk Categories the debtors’ business belonged to. 1. credit Risk Important credit risk factors

Credit risk arises from a situation in which the 1.1 credit concentration risk debtors or counterparties fail to repay or fulfill their agreed obligations. This might be contributed by the fact that the The Bank aims to appropriately diversify its loans debtor’s financial position is under distress due to volatilities to various groups of customers, focusing on high potential of economic conditions that pose adverse impact on customers and attempt to prevent concentration of loans to businesses or the debtors’ mismanagement, which as a result, a particular group of customers. Under such goal, the Bank may adversely affect the Bank and the subsidiaries’ earnings pursues proper risk management on overall credit portfolios and capital. The credit risk may arise from ordinary financial with close monitoring and comprehensive assessment transactions such as credit lending, financial obligations in to report to the assigned committees on a regular basis. the form of avals or guarantees, other transactions related The purpose is to mitigate exogenous risks that may adversely to credit lending, as well as investment in debt instruments affect any particular group of business excessively financed issued by state agencies or state enterprises with neither by the Bank. guarantee from government nor the BOT and private debt instruments such as debentures.

060 ANNUAL REPORT 2016 Credit status, as of 31 December 2016 and 31 December 2015 classified by business types was as follows:

2016 2015 Business type Debt balance Debt balance (THB Million) Percent (THB Million) Percent Agricultural and mining 14,070 2.04 14,993 2.10 Manufacturing and commerce 78,054 11.30 78,608 11.02 Real estate and construction 47,686 6.90 49,677 6.96 Public utilities and services 59,990 8.68 65,550 9.19 Private consumption Housing loans 97,689 14.14 89,005 12.48 Margin loans for securities business 3,536 0.51 3,458 0.48 Hire purchase 345,294 49.98 364,929 51.15 Others 28,590 4.14 26,631 3.73 Others 15,998 2.31 20,615 2.89

Total loans 690,907 100.00 713,466 100.00

The overall credit data showed that the portion of hire purchase lending granted by the Bank and its subsidiaries decreased from 51.15 percent as of 31 December 2015 to 49.98 percent of total loan outstanding as of 31 December 2016. Most of the hire purchase credits were granted to retail customers, whose credit lines were relatively small and the customers were well diversified.

1.2 Risks from non-performing loans

The non-performing loans are loans classified as substandard, doubtful and doubtful of loss. They have been the major concerns across financial institutions due to their adverse effect on earnings and capital of the Bank and its subsidiaries. At this juncture, the Bank has put its efforts into controlling credit quality through appropriate policies and procedures to regularly monitor the quality of the loans.

The NPLs ratios of the Bank and its subsidiaries that were financial institution

As of 31 December 2016 and 31 December 2015 were as follows:

2016 2015 Loan classification Debt balance Debt balance (THB Million) Percent (THB Million) Percent Substandard 4,252 28.55 4,038 20.03 Doubtful 3,362 22.58 3,332 16.53 Doubtful of loss 7,277 48.87 12,788 63.44

Total 14,891 100.00 20,158 100.00

Thanachart bank public company limited 061 The non-performing loans of the Bank and its subsidiaries decreased from THB 20,158 million as of 31 December 2015 to THB 14,891 million as of 31 December 2016. As for the overview, the non-performing loans accounted for 2.16 percent of total loan outstanding, decreased from 2.83 percent as of 31 December 2015. The Non-Performing Loans of the Bank and its subsidiaries that are financial institution (excluding accrued interest receivables)

2016 2015 Business type Debt balance Debt balance (THB Million) Percent (THB Million) Percent Agricultural and mining 351 2.36 404 2.00 Manufacturing and commerce 3,164 21.25 5,614 27.85 Real estate and construction 2,169 14.57 1,352 6.71 Public utilities and services 1,263 8.48 1,322 6.56 Private consumption Housing loans 2,204 14.80 2,075 10.29 Margin loans for securities business - 0.00 - 0.00 Hire purchase 4,588 30.81 7,907 39.23 Others 1,128 7.58 1,279 6.34 Others 24 0.15 205 1.02

Total loans 14,891 100.00 20,158 100.00

Troubled Debt Restructuring (Unit: THB Million) 2016 2015 Number of debtors (persons) 13,857 21,321 Outstanding principal and accrued interest receivables 14,354 16,519 Loans not fully covered by collateral 5,773 7,924 Revaluation allowance for debt restructuring 2 4

Total loans and accrued interest receivables 691,527 714,124

Restructured debts to total loans (percent) 2.08 2.31

The risk on debt restructuring arises from the re-entry of the NPL debtors that is, after the debt restructuring, the debtors default on their repayments again and resume the non-performing status, having adverse effects on the Bank and its subsidiaries. The numbers of debtors agreed to enter the debt restructuring program, as of 31 December 2016, accounted for the amount of principal and the accrued interest receivables totaling THB 14,354 million or 2.08 percent of total loan outstanding and accrued interest receivables. The total value of the restructured debt based on net collaterals would amount to THB 5,773 million, approximately.

062 ANNUAL REPORT 2016 1.3 Risks from Collaterals based on the same guideline used for its regular lending procedure of the Bank. For collateralized loans, the Bank has established a procedure of quality analysis and classification for each As of 31 December 2016, the Bank and its type of collateral by taking into account the liquidity and subsidiaries’ obligations in the form of avals and guarantees risk of the collateral type. The analysis result is one of the for loans amounted to THB 28,955 million or 3.05 percent key factors used to classify credit risk level. The value of of the total assets. collaterals, either immovable or movable, will be appraised in accordance with the BOT’s guideline. The main types 2. Market Risk of collaterals of the Bank consisted of deposits and bills of exchange, marketable securities, non-listed securities, The market risk arises from movements in interest immovable commercial property, immovable housing property, rates, exchange rates and prices of instruments in money vehicles, machinery, etc. The Bank has determined the price market and capital market, which may adversely affect appraisal guidelines, standards, and frequency for each type earnings and capital of the Bank and its subsidiaries. The of collateral. Furthermore, the Bank required that the appraisal market risk can be segmented into three categories including price report is prepared to ensure clear and adequate data/ price risk, interest rate risk and exchange rate risk. At this information as well as analysis required for reasonable price juncture, the Bank’s policies are to control and manage these setting. In case the collateral is devalued or impaired by risks to remain at an appropriate level and in line with the aging or usage, its impairment costs must be considered by Bank’s policy on risk management. the concerned unit. 2.1 Price Risk With reference to the BOT’s notification regarding the valueless and non-callable assets in December Price risk arises when the Bank and its 2006 stipulating that the provision setting was to be in line subsidiaries’ earnings or capital are adversely affected by with the IAS39, cars could be counted as collaterals and changes in the price of debt and equity instruments, causing their ownership belonged to the Bank and its subsidiaries. the value of the Bank and its subsidiaries’ trading and In case the debtor was unable to service the debt, the Bank available-for-sales investment portfolio to decline. and its subsidiaries could immediately repossess and sell the collateral asset in used car market. Consequently, the The Bank has developed risk measurement tools Bank and its subsidiaries were exposed to the risk from based on the Value-at-Risk (VaR) model to estimate the maximum unsuccessful cars repossession as well as from the sale that loss amount at a certain confidence level and over a given did not cover the incurred loss. The risk factors involved, for asset holding period. The Bank also determines the various instance, the used car market condition and repossessed car limits of transactions in order to control risk to remain in an condition. Basing on the Bank’s statistical data, Loss Given acceptable level, for example; Position Limit and Loss Limit. Default (LGD) was identified at 44 percent and the Bank’s The Risk Control Unit, separated from the front office and the provision was set at a higher portion than LGD, to ensure back office, has the duty of risk control and reporting on the full coverage of the possible loss. status of the limits to the Board of Directors, departments and executives associated to the risk management. For prompt 1.4 Risks from Guarantees and Avals risk management, the Bank assigns the Investment Portfolio Committee to control and monitor of this particular risk Providing the current customer service, the Bank aspect. In order to ensure the efficiency and accuracy of its and its subsidiaries are also obligated in forms of avals, tools for risk measurement, the Bank requires that the tools letter of credits and loan guarantees, which the Bank and its are subject to back-testing in accordance with the Bank of subsidiaries are held responsible for, should the customers International Settlement (BIS) standards. Moreover, the Bank are unable to fulfill their obligations. In managing such risk, has conducted stress testing by formulating stress scenarios the Bank carefully scrutinizes supporting information and which can create extraordinary reduction in stock prices. The test applies strict approval procedures to these obligations. result could therefore shed light on the impact on the Bank’s The close monitoring on these transactions is undertaken earnings and required capital should such events occur.

THANACHART BANK PUBLIC COMPANY LIMITED 063 As of 31 December 2016, the Bank and its subsidiaries’ trading investments and available-for-sale securities classified by type of investment were as follows:

Fair Value (THB Million) 2016 2015 Trading investments Government and state enterprise securities 7,171 3,065 Private debt securities 0 0 Foreign debt securities 0 0 Domestic marketable equity securities 1,597 105

Total trading investments 8,768 3,170

Available-for-sale investments Government and state enterprise securities 124,678 117,669 Private debt securities 22,175 25,181 Foreign debt securities 11,434 10,068 Domestic marketable equity securities 3,991 3,039

Total available-for-sale investments 162,278 155,957

Total trading and available-for-sale investments 171,046 159,127

The Bank’s value of trading and available-for-sale investments increased from the previous year mainly because of additional investment in government and state enterprise securities. As a result, the overall Price Risk of the Bank and its subsidiaries increased.

2.2 interest Rate Risk

The interest rate risk is the risk that earnings or capital are adversely affected by changes in interest rates that pose impact on its rate-sensitive items including assets, liabilities and off-balance sheet items whose repricing periods are mismatched. These changes may have a negative impact on net interest income of the Bank and its subsidiaries.

It is the goal of the Bank to run their business operations under a long-term effective interest rate risk management system. In other words, to maintain an appropriate structure of assets and liabilities which are rate-sensitive at different time intervals. To ensure maximum benefits of the Bank and the Bank’s shareholders, the Bank has developed the Repricing Gap Analysis Model as a tool for measuring interest rate risk by assessing the impact that may arise from the mismatch of the repricing periods of assets, liabilities and obligations at different time intervals, which is used for risk measurement every month. In order to ensure that the risk of the Bank business operations is within an acceptable limit, they have also established an acceptable risk ceiling and an early warning risk level, taking into account the structure of assets, liabilities and obligations as well as interest rate repricing which are expected to take pace in each period of the Bank business plan. The Asset and Liability Management Committee (ALCO) is responsible for monitoring and controlling such risk very closely. To effectively design appropriate measures to accommodate the risks, the committee has to monitor economic conditions, development in the money market and capital market and the interest rate trend which could become important risk factors to the Bank’s rate-sensitive items.

064 ANNUAL REPORT 2016 Details of financial assets and liabilities as of 31 December 2016, classified by the period when the interest rates would be repriced in accordance with contracts related to financial assets and liabilities of the Bank and its subsidiaries were as follows: (Unit: THB Million) Period of interest rate repricing or due date Interest rate Items adjusted in 0-3 3-12 Over accordance with At call months months 1-5 years 5 years No interest Total market interest rate Financial assets Cash ------12,077 12,077 Interbank and money market items 734 - 41,092 496 500 - 4,781 47,603 Derivatives assets ------3,564 3,564 Investments - - 3,312 28,043 127,656 6,735 9,627 175,373 Loans 219,956 2,950 51,671 28,345 242,898 144,948 139 690,907 Receivables from purchase and sale of securities ------1,126 1,126 Receivables from clearing house ------1,332 1,332

Total financial assets 220,690 2,950 96,075 56,884 371,054 151,683 32,646 931,982

Financial liabilities Deposits 307,104 92 98,927 232,934 31,190 - 6,310 676,557 Interbank and money market items 13,902 449 28,872 17,046 2,779 1,483 1,303 65,834 Liabilities payable on demand ------1,986 1,986 Derivative liabilities ------4,912 4,912 Debt issued and Borrowings 4 933 50 9,671 6,235 32,516 - 49,409 Payables from purchase and sale of securities ------2,366 2,366 Payables to clearing house ------2 2

Total financial liabilities 321,010 1,474 127,849 259,651 40,204 33,999 16,879 801,066

With reference to the financial structure of assets and liabilities, should the market interest rate increase, the Bank’s net interest income of the next year would decrease. This was mainly because the Bank’s hire purchase business used the fixed interest rate as reference.

2.3 Exchange Rate Risk

The exchange rate risk is a risk that the earnings or capital of the Bank and its subsidiaries can be adversely affected by exchange rate fluctuations from transactions in foreign currencies, exchange rate exposures in their possession of assets or liabilities in foreign currencies. There are two types of exchange rate risk-risk from transactions in foreign currencies (Transaction Risk) and risk from exchanging foreign currency to local currency (Translation Risk).

The ALCO is responsible for monitoring and controlling this type of risk through the consideration in the proper matching between the structure and the maturity of assets and liabilities in foreign currencies. The Bank’s policy is to also rely on the VaR ceiling in order to control the impact of exchange rate movements on earnings and capital. Nevertheless, in order to avoid the exchange rate risk, the Bank has also relied on hedging instruments such as forward contracts.

Thanachart bank public company limited 065 As of 31 December 2016, the Bank and its subsidiaries had assets and liabilities in foreign currencies of THB 41,826 million and THB 17,436 million, respectively, equaled to net assets of THB 24,390 million. And as most of the assets in foreign currencies were hedged against the exchange rate risk by forward contracts, the Bank and its subsidiaries were exposed to low risks. The total non-hedged assets in foreign currencies amounted to THB 610 million or 0.06 percent of total assets. 3. Liquidity Risk

Liquidity risk arises from the inability of the Bank and its subsidiaries to repay their debts or obligations upon the delivery date due to the lack of ability to convert assets into cash or to mobilize adequate funds or to mobilize funds at an acceptable cost. This could adversely affect the current and future earnings and capital of the Bank and its subsidiaries. The liquidity risk management mechanism starts with the assessment of the cash flows and liquidity position over particular time horizons of the Bank when the different levels of funds may be required to accommodate deposit withdrawal, reduce other types of the Bank’s liabilities or increase the Bank’s assets by using the Liquidity Gap Analysis. Various liquidity ratios and “What if” scenarios to evaluate the sufficiency of the cash flow liquidity depending on customer behavior in extending contracts upon maturity and estimate the need of liquidity in various “What if” scenarios depending on the economic climate and extraordinary situations that may happen to the Bank and the financial institution system.

Meanwhile, the Bank and its subsidiaries developed an emergency plan in case of a liquidity problem and there will be a revision of the significant occurrences that affect working operations. In this regard, the Bank and its subsidiaries have assigned ALCO, controlling and managing the liquidity risk with two weekly meeting to monitor and manage risk.

The structure of the Bank’s and its subsidiaries’ capital fund could be classified by different types and maturities of sources of funds as follows:

Capital Funds Classified by Sources (Unit: THB Million) 2016 Percent 2015 Percent Deposits 676,557 85.45 669,504 80.97 Interbank and money market items 65,834 8.31 85,688 10.36 Debt issued and Borrowings 49,409 6.24 71,641 8.67

Total 791,800 100.00 826,833 100.00

Capital Fund Classified by Maturities (Unit: THB Million) 2016 Percent 2015 Percent Less than 1 year 716,431 90.48 769,969 93.12 More than 1 year 75,369 9.52 56,864 6.88

Total 791,800 100.00 826,833 100.00

As of 31 December 2016, deposits and borrowings of the Bank and its subsidiaries amounted to THB 791,800 million. The major source of fund was the public, of which the maturity was less than one year; a common structure of the commercial banks. Nevertheless, the Bank issued other products such as NCD and debentures as saving alternatives for customers.

066 ANNUAL REPORT 2016 The financial assets and liabilities of the Bank and its subsidiaries as of 31 December 2016 classified by maturity date were as follows: (Unit: THB Million) The maturity date of financial instruments Items Less than More than At call 1 year 1 year Not specified Total Financial assets Cash 12,077 - - - 12,077 Interbank and money market items 5,516 41,587 500 - 47,603 Derivatives assets - 1,009 2,555 - 3,564 Investments 261 31,355 134,416 9,341 175,373 Loans 38,343 204,421 448,143 - 690,907 Receivables from purchase and sale of securities - 1,126 - - 1,126 Receivables from clearing house - 1,332 - - 1,332

Total financial assets 56,197 280,830 585,614 9,341 931,982

Financial liabilities Deposits 308,515 335,686 32,356 - 676,557 Interbank and money market items 15,654 45,918 4,262 - 65,834 Liabilities payable on demand 1,986 - - - 1,986 Derivative liabilities - 1,609 3,303 - 4,912 Debt issued and Borrowings 937 9,721 38,751 - 49,409 Payables from purchase and sale of securities - 2,366 - - 2,366 Payables to clearing house - 2 - - 2

Total financial liabilities 327,092 395,302 78,672 - 801,066

Off-balance sheet items Avals to bills 4 596 29 - 629 Obligation under unmatured import bills 40 597 - - 637 Letter of credits 457 2,210 - - 2,667 Other commitments 41,129 36,031 2,355 - 79,515

Total off-balance sheets 41,630 39,434 2,384 - 83,448

Thanachart bank public company limited 067 4. Operational Risk aspect of data and technology. A particular focus is given to the prevention of damages from unauthorized access to The operational risk is the risk that arises from the the Bank’s information. damage that occurs from lack of good corporate governance within the organization. Risk may also arise from the • Formulate the Business Continuity Plan which inadequate efficiency of the internal audit and internal control consists of an emergency plan, a plan for backup systems, systems which could be relating to internal operation process, and a business recovery plan to prevent disruption in personnel, systems or external events. This also includes legal business operation. In addition, the drills are essential to test risks such as litigations, exploitation by the government and the readiness and to consistently improve the plans for its also damage from settlements outside the courtroom. Such effective implementation. risks can pose adverse impact on other risks, especially strategic risk and reputation risk. The Bank also employs the services of the third party to operate some group activities as per the direction of the The Bank has established policies and guidelines to work operations of financial institutions at present and in the ensure the prevention and monitoring of this type of risk. future. The Bank determines policies in order to manage the As the internal control system is an important tool in controlling risk that may occur from outsourcing. These policies have to and preventing potential risk that may occur, the Bank has also be subject to regulations of BOT and must be beneficial implemented an efficient internal control system as follows: to the internal control of the Bank as well.

• Regarding the organization of the Bank’s structure, In the measurement and assessment of operational the Bank has specified the roles, the scope of duties and risk, the Bank determines a principle, form or condition of responsibilities for each position, based on a system of check the process used in the measurement and assessment of and balance. The Front Office where all the transactions take risk in the Bank. In the determination of this process, the place is separated from the Middle Office, comprised of the Bank considers the circumstantial factors such as supervising Risk Control Unit and the Back Office who record all items guidelines of the government units associated with the Bank, in the transactions. state and complexity of the business, the capability of the Bank in accepting risk, probability, likelihood or frequency • Establish the transaction-supporting units which are as well as the impact or severity of risk that has happened independent and have expertise in their respective fields of or may happen. As per BOT’s specification for commercial work such as information technology unit, legal and appraisal banks to maintain funds in proportion to risk-weighted assets unit in order to prevent any possible errors that may arise. in terms of credit, market and operation according to Basel III guidelines, the Bank has employed the Basic Indicator • Put operational procedures and regulations related Approach to calculate operational risks. to all types of transaction, staff manuals as well as the authority ranks for approval in writings as a guideline to In addition, to monitor operational risk, the Bank set the same standards for all internal operations within the determines a policy for executives of each department to organization be responsible for monitoring the risk by considering this as a part of their regular duties. This will help promptly identify • Establish the Audit Committee and the Risk all risks and problems that occur in order to respond to the Management Committee to control, monitor, and assess changes in an appropriate and timely manner, not damaging the risks of the Bank. The committees are responsible for to the Bank. Nevertheless, to be informed of the result of examining and correcting the pitfalls in order to create business operations and problems that occur, as well as soundness and efficiency in the Bank’s operation. trends and changes in information of risk factors, the Bank organizes a filing and reporting of the information associated • Improve the management of the information with operational risk management such as information on technology system and information security system in data loss, key risk indicators and important risk points to be order to enhance its potential to accommodate business continually and regularly reports to the Board of Directors, expansion and gain credibility from the customers in the the Risk Management Committee and the executives to use

068 ANNUAL REPORT 2016 in the determination of policies, to develop a sufficient risk To manage regulatory risks, the Compliance would management system and to be a tool in aiding the Bank to evaluate the risks in activities taking into account the evaluate the capability and efficiency of the internal control internal and external factors that may impact the Bank and system. its subsidiaries, including direction of regulatory supervision, official audit result, business policy, inquiries, complaints, 5. strategic Risk internal control and systems involved the matter. The Risk Based Approach (RBA) was employed to determine impact This type of risk arises from the inappropriate and probability of incident and used as a guideline for the formulation of strategies, business planning and implementation Control and Monitor process to ensure compliance. The which are not compatible with internal setups and external Compliance’s duties also include following up with the found environment, resulting in an adverse impact on earnings, issues and propose recommendations on corrective actions. capital or the existence of the Bank and its subsidiaries. In managing the strategic risk, the Bank formulates strategies 7. Risk from Capital Adequacy for the next three years which are reviewed annually or when there is an external event that may impact the achievement The Bank’s capital adequacy was calculated basing of the Bank’s business goals. The Executive Committee on the supervisory guideline of Basel III, as follows: is responsible for regular monitoring and evaluating the performance of the work units upon the established targets • Credit risk by means of the Standardized Approach stated in the annual operation plan. • Market risk to explore status of market risk by means of the Standardized Approach 6. Regulatory Risk • Operational risk by means of the Basic Indicator Approach The regulatory risk arises from non-compliance of laws, regulations, requirements, standards, and practice In addition, the Bank has assessed its future capital guidelines regulated the Bank’s transactions, which could adequacy based on budget and 3-year business plan. cause serious financial loss, reputational damage, or state of The calculated risk is capped with risk capital budget in being intervened. Any amendment or change in regulations, which the Risk Management Division monthly reports the laws, or requirements made by the authorities such as the adequacy of capital to the Executive Committee and the Bank of Thailand, the Securities and Exchange Commission, Board of Directors to ensure that the Bank has sufficient the Stock Exchange of Thailand, the Office of Insurance capital after risk capital allocation to support sustainable Commission, the Anti-Money Laundering Office, and others business’ growth as planned. may affect the business strategies and operations of the Bank and its subsidiaries. As of 31 December 2016, the Bank’s capital totaled THB 130,673 million, of which THB 90,561 million was The Bank established the team of Compliance, common equity Tier I capital and Tier I capital while Tier reporting directly to both the Audit Committee and the CEO II capital was THB 40,112 million. Thus, the ratios of Total and President, to monitor and ensure compliance of Bank and Common Equity Tier 1 to risk-weighted assets, Total Tier I its subsidiaries under the financial group with the laws and to risk-weighted assets, and Total capital to risk-weighted requirements of the regulators and business ethics; provide assets were 19.15 percent, 13.27 percent, and 13.27 percent, consultations; educate executives and staff; and enable the respectively, higher than the BOT’s minimum requirements at executives to perform and manage regulatory risks efficiently, 5.125 percent, 6.625 percent, and 9.125 percent, respectively. without redundancy with other internal units or special task forces such as the anti-money laundering, coordination and monitoring, official regulators.

Thanachart bank public company limited 069 Corporate Social Responsibility

Thanachart Group’s Corporate Social Responsibility Activities

Thanachart Group is a business organization which is determined to offer a full range of integrated financial services, aiming at successfully fulfilling all customers’ needs at each stage of their life cycle. In this connection, the Group is committed to attain profit in its business operation, and adhere to the policy on Corporate Social Responsibility (CSR), along with the code of business ethics and corporate governance principles. All of these demonstrate the transparency of business operation, which leads to social development while achieving a sustainable balance between economy, society, and environment. In establishing a guideline on CSR of Thanachart Group, it encompasses both CSR in Process and CSR after Process, enabling the CSR practices to prevail in Thanachart Group’s operations. These include, among others, the followings:

1. Anti-fraud and corruptions 2. Fair labor practices 3. Righteous operations 4. Responsibility towards consumers 5. Participation in social and environmental development Apart from focusing on the above areas, Thanachart Group also takes into consideration the interests of all stakeholder groups, regardless of whether they are shareholders, lenders, directors, executives, employees, customers, trade partners, competitors, the Government, or even the society and the environment, which are included in the CSR action plan, to ensure that they are treated in an appropriate and fair manner. Although Thanachart Group had not yet included the stakeholder engagement in the implementation of its CSR ac- tivities in order to establish linkages with all stakeholder groups, it clearly recognized the importance of such engagement. Therefore, it endeavored to develop the stakeholder engagement in due course, to ensure coherence between its CSR activities and all stakeholders’ needs. In 2016, Thanachart Group initiated more projects that demonstrated its consideration of all stakeholder groups continuously as follows: 1. “Rethink” Campaign

Thanachart Group initiated the Rethink Campaign in 2015 as it recognized the importance of enhancing the financial knowledge and developing financial discipline as a key foundation for living. The Rethink Campaign began with the main objective of promoting awareness among the general public to change their spending habits, in order to manage the spending to be in line with the income, and to develop financial self-discipline, which would lead to stable and sustainable happy lives. The campaign’s slogan of “Rethink, Spend Wisely, Be Happy”, was adopted from the late His Majesty King Bhumibhol Adulyadej’s “Self Sufficient Economy” philosophy. The project implementation in 2016 was distributed and promoted through series of daily financial knowledge via various television programs. In addition, the campaign was publicized through story-telling financial videos of famous celebrities in different age groups, with varied financial management perspectives, in order to respond to the digital society and current data-recognition behavior of customers. Moreover, the financial-management knowledge, awareness-raising and financial-disciplinary information, and financial advice were dispersed via social media channels such as the Bank’s Facebook pages, Instagram, Line, and on www.thanachartcsr.com. 2. Thanachart Insurance “Yes - We Safe” Project

With recognition on the issue of road traffic accidents, and the concerns on safety and assets of road travelers, Thanachart Insurance Public company Limited initiated a project called “Yes, We Safe”, with the objectives of reducing road traffic accidents and preventing potential loss to human lives and assets. The project had 2 parts: (1) Prevention: Focused on the promotion and creation of road safety, and (2) Assistance: Focused on providing support and material assistance to those affected by traffic accidents. The implemented activities in 2016 were as follows:

070 ANNUAL REPORT 2016 Prevention: “Drive DD United Season 2” conducted every group of stakeholders. The campaign focused on a video contest under the theme “It’s Cool to be Calm”, taking the Energy Conservation Policy to actual implementation, with the objective of promoting a conscious-minded promoting the resource utilization in the most efficient manner, driving in order to reduce road traffic accidents causing by raising awareness, encouraging participation of staffs and recklessness, unconscious mindset, carelessness, and business units. A committee was established to consider and provoked minds, leading to potential accidents and develop various policies and measures related to efficient physical assaults. University students nationwide were invited energy management through a monthly meeting. In order to display their knowledge, skills, and capacity by creating to promote efficient energy usage as well as to enhance a campaign video that promoted safe driving and employees’ knowledge and participation, the Bank additionally awareness-raising on the consequences of careless driving. implemented the following activities in 2016: The contest also provided opportunities for contestants to express opinions and to share ideas with their peers and the 1. Organizing study trips on energy conservation at general public of the same age group. Teams of students prototype buildings, which were Richmond Stylish Convention from 30 different universities submitted a total of 118 videos Hotel, Tan Land Learning Center, and Phyathai 2 Hospital. to the contest. More than 20 percent of the teams were 2. Organizing the Electricity Bill Contest and Energy students from upcountry. Conservation Ambassador Contest for executives and staffs to participate. Assistance: Provided scholarships to students 3. Organizing training courses to promote understanding of Sirindhorn School of Prosthetics and Orthotics, Faculty and knowledge on energy conservation for executives and of Medicine, Mahidol University, continuously since 2012. staffs at 5 Bank office buildings. There were 4 scholarships of THB 25,000 each, total THB 100,000. Sirindhorn School of Prosthetics and Orthotics In 2016, the Bank’s Petchburi Building entered the was a Bachelor-degree academic institution that produced 2016 Thailand Energy Awards and won Creative Energy prospective prosthetists and orthotists, in order to rehabilitate Conservation Prize for retrofitted building. patients, and to make prosthetics and orthotics that were the same quality as international standards. Furthermore, the Bank has encouraged its staff to use paper in an appropriate manner, to reduce paper consumption 3. “Thanachart Reduces Global Warming” in the operations. This represented an indirect way to protect Campaign the environment. There are also other related activities implemented, i.e. using electronic systems in operations Thanachart Group implemented the “Thanachart and at meetings, launching promotion campaigns to reduce Reduces Global Warming” campaign continuously since paper consumption so that they changed their behavior to 2012, as a good member of the society, and to reduce minimize paper use, and encouraging employees to make use business footprints on the environment that could affect of recycled papers in their respective work units, and so on.

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1 - 2 “Rethink” Campaign 3 “Thanachart Insurance - Yes, We Safe” Project 4 Thanachart... “Power of ants... Reducing Global Warming” 4

Thanachart bank public company limited 071 Process in Preparing Thanachart Group’s Reports

The standards adopted by Thanachart Group in developing practice guidelines and preparing CSR reports are based on the Stock Exchange of Thailand (“SET”)’s Approach to Social Responsibility Implementation for Corporations, which are widely recognized by organizations and practitioners working in the field of corporate social responsibility. Adoption of the SET’s approach represents a good start for the Group in developing its reports and in preparing itself for sustainable reports in the future to cover every necessary issue, both at the national and international levels. Key Areas in Implementation of CSR Activities

Having analyzed the impacts on the stakeholders and the business operations, Thanachart Group has prioritized key areas in relation to the CSR activities. There were 5 areas in 2016 altogether. The practice guidelines for each area could be summarized as follows:

1. Anti-frauds and corruptions

Explanation is given in “Disclosure of Prevention of Corruption Involvement”.

2. Fair labor practices Focus Areas Practice Guideline Employment - Strict compliance with the Labor Protection Act B.E. 2541 (1998), Labor Relations B.E. 2518 (1975), and related laws. - Establish clear criteria with transparent, verifiable process for selection, employment, and working condition arrangement. - Put in place systematic recruitment and selection processes.

Welfare and Staff Care - Set up a welfare committee for various buildings in the business establishment. The Committee represents the staff in discussions, supervision and comments regarding staff welfare. - Develop clear personnel regulations and a staff manual, with a focus to prevent discrimination. Also clearly specify the employee benefits to be received. - Conduct the survey called Voice of Employee (VOE) to allow the senior management to hear employees’ feedbacks, problems, or needs for improvement, which would be incorporated into improvement plan with an aim to promote employees well-being.

Human Resource Development and - Focus on creating a learning organization by supporting the appropriate Enhancement of Employee Potential development of employee potential in a continuous manner. - Develop an efficient, transparent, fair and accountable employee performance.

Encouragement of employee participation - Encourage employees to participate in the planning and implementation of CSR activities. - Provide employees with opportunities to give their opinions or suggestions through various channels.

072 ANNUAL REPORT 2016 3. Righteous Operations

Focus Areas Practice Guideline

Code of Conduct - Establish a Code of Conduct for Thanachart Group’s directors, executives and employees. The Code will serve as practice guidelines and examples to shape how one should carry out duties and responsibilities in a fair manner and how one should take responsibility for one’s self, colleagues, supervisors, subordinates, as well as all the stakeholder groups. - Establish a Code of Conduct for directors, executives, and employees clearly in the Bank’s practice guidelines for Code of Conduct. - Ensure observance of the Code of Conduct, which also includes prevention of conflict of interest and money-laundering. - In 2016, Thanachart Group’s implementations on the Code of Conduct were as follows: 1) The code-of-conduct training course for new employees at all levels, including the monthly signing-for-acknowledgement on code of conduct, as well as the development of knowledge and mindset enhancement curriculum. 2) Development and distribution of CG E-learning on Intranet to enable self-learning for the staff. 3) Additional complaint handling guidelines and copyright procedures for the Bank’s website. 4) Obligation of executives and employees at all levels to provide written compliance to the Code of Conduct manual and written abstention from any action seeking interests that create conflict of interest to Thanachart Group. 5) Semiannual group-wide evaluation of every employee at all levels to develop, test, and assess knowledge and understanding of good corporate governance and code of conduct. 6) Lecturing programs for business partners and business representatives to acknowledge good corporate governance, business ethics, and employees’ ethics of Thanachart Group.

Support to socially responsible trade - Adopt a clear policy not to do business with any trade partners with partners social irresponsibility, such as violation of human rights by using child labor or engagement in illegal or immoral business activities.

Thanachart bank public company limited 073 4. Responsibility towards consumers

Focus Areas Practice Guideline

Provision of clear information of goods and - Publication of details of goods and products and issuance of clear products to consumers manuals available to customers and consumers in general.

Protection of consumer rights - Deliver services that meet professional standards. - Require employees to strictly safeguard the confidentiality of customers to not disclose customer information to any third party. - Prohibit inappropriate use of customers’ data/information for advantages of the Bank and related parties, unless it is obliged by law. - Establish systems or channels for customers’ opinions or complaints regarding services and take corrective actions accordingly, and revert to the customers in a timely manner either via www.thanachartbank.co.th, Thanachart Contact Center 1770, or www.facebook.com/thanachartbank.

Educate consumers for the knowledge - As aforementioned of “Rethink” Campaign. and financial discipline

5. Participation in social and environmental development

Focus Areas Practice Guideline

Support and promotion of social development - Plan and organize activities to develop social and community, with concerned organization, including collaboratively with organizations from the public, private, and public, private, and non-profitable sectors non-profitable sectors in various aspects such as financial literacy promotion, education, Thai culture promotion and preservation, environmental preservation, and society strengthening.

Promotion of energy conservation and - Establish clear policies on energy conservation. environmental preservation. - Establish measures for energy conservation. - Support, encourage, and promote participation of employees in energy and environment conservation enthusiastically and sustainably.

CSR after process

This type of corporate social responsibility covers any activities other than those undertaken in the ordinary course of its business. Thanachart Group has been involved in this type of activities since the beginning of its operations. Later, as the commercial banking services became one of Thanachart Group’s main businesses with an extensive branch network nationwide, the regional HUBs participated in the CSR activities under the cooperation of Thanachart Group’s employees. Customers, trade partners, and locals are invited to participate. In 2016, activities held for the society and the environment as the engagement in various aspects of social development are as follows:

074 ANNUAL REPORT 2016 1. Campaign and promotion of Thai culture and knowledge, ideas, and practical skills. Moreover, community religion: to promote activities related to Thai culture, local members would be confident and able to make decisions cultures and religions under the encouraged participation of on their own, with the right attitudes, appropriate values for communities, employees and the general public. the lifestyle, and betterment of their own living situations. 2. Promotion and support of charitable work: to This was in line with the late His Majesty King Bhumibhol display good citizenship, engagement in social development Adulyadej’s philosophy of Sufficiency Economy, which through the support of CSR activities held by charitable included creating a network of cooperation for social organizations aimed at strengthening the society to be assistance in many situations. Furthermore, the Bank also sustainable. All target groups were covered, whether they maintained and operated the Garuda Museum, in order to are patients, children, youth, women, or other underprivileged preserve Thai arts and culture for the general public and people. the next generations. 3. Promotion and development of education: to improve and develop the Thai educational system to be more 1. Campaign and promotion of Thai culture efficient so that the potential of the young Thais meets the and religion international standards and the competitiveness is increased. This will be a significant foundation for a strong nation. Presentation of Royal Krathin Robes in 2016 4. Environmental management: to express the dedication to reduce indirect environmental impacts, which Presentation of Royal Krathin Robes in 2016 marked could result from the Thanachart Group’s operations. This is the 10th Anniversary that His Majesty the King had graciously expressed through the promotion of knowledge and bestowed the Royal Robes to Thanachart Group to offer to understanding of maximizing the use of energy as well the Royal Temples nationwide. This year, Thanachart Group as creating awareness of energy conservation among the offered the Royal Robes to the monks during the Buddhist executives and employees. Lent at the Royal Temple’s Wat Payap in Nakhon Ratchasima province. On this occasion, companies under Thanachart In addition, Thanachart Foundation for the Thai Group, customers, business partners, executives, employees, Society was founded as a key drive of Thanachart Group’s CSR and the general public, jointly donated an amount of THB activities. Most of the foundation’s activities focused on 8,888,999 to the temple in good faith, as part of the fund building and developing the society in parallel. The foundation’s for the construction of the temple’s main hall. In addition, 20 main objective was to create a model for community and scholarships were awarded to students in need, who showed social development in various forms, so that community good academic records and good behaviors. In addition, members were capable of developing, improving, and funds were granted to support 3 non-profit organizations in changing independently. They would also be equipped with the province.

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5 - 6 Presentation of Royal Krathin Robes in 2016 6

Thanachart bank public company limited 075 Since 2006, Thanachart Bank had been continuously the Thai Manner Contests for youths with hearing impairment hosting the presentation of the Royal Krathin robes, started to compete for Her Royal Highness Maha Chakri Sirindhorn at Wat Keaw Kro Wararam Temple in Krabi. Since then, the honorary plaques, certificates of honor, and scholarships. 104 Bank had been organizing this activity on an annual basis. students from 12 schools participated, in order to promote It promoted the maintenance of Buddhism, the royal temples, and support children with hearing disability to be included and sacred places to remain with the Thai nation. in social activities, to boost their ability to live equally with others, to demonstrate determination and to recognize “Thanachart Initiates and Fulfills Thai Identity” Project potential of these children in being a part conserving the Thai identity. In 2016, the implementation of “Thanachart Initiates and Fulfills Thai Identity” project marked the 45th consecutive Garuda Museum by Thanachart Bank years since it was inherited from Siam City Bank. The main objective of the project was to maintain and preserve the Thai “The Garuda Museum by Thanachart Bank” was identity, including reading aloud in Thai and Thai manners in considered the first and only Garuda Museum in ASEAN. daily life. The project helped preserve the unique identity and Its establishment was traced back to 1 October 2011 when prevent their dissolution over time. It also brought balance Thanachart Bank acquired Siam City Bank. Before the to social values as Thai culture was being more and more acquisition, Siam City Bank had been operating for over influenced by the foreign cultures. Moreover, the project 70 years and the Royal Garuda Emblems had been graciously helped inculcate in Thai youth the love of Thai culture. bestowed by His Majesty the King upon the Bank for display This love made them cherish the culture and helped keep at its headquarters and branches since 1941. After the merger it as part of Thai society. Both Thai language and Thai with Thanachart Bank in 2011, it was necessary to dismount manners were widely recognized as unique characteristics Garuda Emblem in compliance with the Garuda Emblem of Thai identity. Act (No. 2) B.E. 2535 (1992). Thanachart Bank recognized the value and the importance of the Royal Garuda Emblem, The project comprised two main activities, which which Thai people had great faith in and a strong relationship were Reading Aloud Contests and Thai Manners Contests. with. The Emblem also represented Kings of Thailand. As a Students from 1st grade to university levels were eligible result, the Bank respectfully relocated the Emblems from the to participate in the contests, on behalf of their academic headquarters and branches to its Bangpu Training Center institutions, to compete for Her Royal Highness Maha Chakri in the municipal area of Bangpu sub-district, Samut Prakan Sirindhorn honorary plaques, certificates of honor, and province. This was followed by the founding of the Garuda scholarships. In 2016, more than 4,000 students from every Museum to compose stories related to Garuda with multimedia region entered the contests. This was also the 2nd year of based on the Thai understanding of Garuda with strong beliefs

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9 7 - 9 “Thanachart Initiates and Fulfills Thai Identity” Project

076 ANNUAL REPORT 2016 in Buddhism. The museum was created and designed so that 3. 41st Years Death Anniversary in Remembrance of visitors could learn about the origin of Garuda in the history Reverend Grand Father Tim Issariko of Laharn Rai Temple, from the viewpoints of both Buddhism and Brahmanism. Rayong province An area in the museum was set to display the Garuda 4. Songkran Festival, Prapadaeng, Samut Prakan Emblems respectfully relocated from the branches of Siam 5. 2016 Buddhist lent candle procession, Ubon City Bank to reflect the relationship between Garuda and the Ratchathani Nation, the Religion, and the Monarchy, as well as to pay tribute 6. Lotus Reception Tradition (14th day of the 11th month), to the late His Majesty King Bhumibol Adulyadej. In addition, Samut Prakan the museum served as a resourceful place for children, youth, 7. The end of Buddhist Lent, Wat Praputthachai and interested members of the general public to learn about Temple, Saraburi Thai history. 8. Vegetarian Festival, Phuket 9. Lantern Festival, Chiang Mai “Continuation and Conservation of Local Traditions” activities 2. Promotion and support of charitable programs

It was recognized that the values of Thai identity, customs, “Annual Red Cross Fair” and traditions in regions nationwide reflected the inherited lifestyles, wisdoms, and cultural prosperity, representing an The Bank participated in issuing Red Cross lottery identity unmatched by any other countries, and therefore tickets and setting up a booth at the Annual Red Cross Fair were worth preserving. As a result, the “Continuation and every year. Started in 1976, when Bangkok Metropolitan Bank Conservation of Local Traditions” activities were originated. Plc. (Bangkok Metropolitan Bank) was the only commercial The Bank’s nationwide branch network was responsible for bank invited to participate in the Red Cross Fair under the hosting the activities and being part of the communities as name “Bangkok Metropolitan Bank Red Cross Booth”. In 2002, one of the members. The activities resulted in participation when Bangkok Metropolitan Bank merged with Siam City Bank, among employees, customers, the general public, and local the booth at the Red Cross Fair was then named “Siam City public and private organizations. Regional tourism was also Bank Red Cross Booth”. In 2011, when the Bank acquired Siam promoted and publicized. In 2016, the Continuation and City Bank, the booth was set under the name of “Thanachart Conservation of Local Traditions activities were as follows: Bank Red Cross Booth”. Currently, the Bank was still the only 1. Chinese New Year in China Town commercial bank invited to set up a booth at the Annual Red 2. 100th Years Anniversary of Traditional Inheritance, Cross Fair at Amporn Garden Palace (Suan Amporn). Nakhon Sawan province

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10 The Garuda Museum by TBANK 11 - 12 Annual Red Cross Fair 12

THANACHART BANK PUBLIC COMPANY LIMITED 077 In 2016, the Bank set up its booth at the Annual machines, and online free of charge. Charitable organizations Red Cross Fair held at Suan Amporn during 31st March to 7th eligible for joining the project must have a core purpose April 2016. The booth was set under the concept of “Let’s of helping the underprivileged groups, truly solving social Play - Let’s Learn”, equipped with playground play sets as problems, and must be well accepted by the general public. a creative space for children to play and learn. After the fair, At present, there are 18 charitable organizations joining the pieces of playground equipment such as slides, ball pool for Merit Bridge project as follows: kids, swings, and teeter-totters, were donated to schools in 1. The Association for the Promotion of the Status need, in order to promote learning development of children. of Women Wat Ruechai School and Wat Mab Po School in Ayutthaya 2. Baan Nokkamin Foundation province were recipients of the donation. Net proceedings from 3. The Cardiac Children Foundation of Thailand the sale of 2016 Thanachart Bank Red Cross tickets and the under the Royal Patronage of the Princess of Naradhivas Red Cross booth were offered to H.R.H. Princess Maha Chakri 4. The Foundation for Children with Disability Sirindhorn, the Executive Vice President of the Thai Red Cross 5. The Foundation for Slum Child Care under the Society. The Princess then donated THB 6,300,000 for the Royal Patronage of the Princess of Naradhivas under the maintenance of the Thai Red Cross Society. Royal Patronage of the Princess of Naradhivas 6. Ramathibodi Foundation Merit Bridge Project 7. Thammasat University 8. Princess Mother’s Medical Volunteer - PMMV The Bank intended to partake in supporting charitable 9. Foundation for Veterans’ Family Aid under the organizations sustainably. This originated from the “Tha- Royal Patronage of Princess Mother nachart Initiates and Fulfills: Merit Savings Expo” in 2009. 10. Saijaithai Foundation under the Royal Patronage Charitable organizations were invited to set up booths and 11. Srithanya Hospital Foundation publicize their works to be more widely known. The project 12. Pradabos Foundation received good feedback from customers, the general public, 13. Phrakhruba Noi Khemmapunyo Foundation and charitable organizations. Therefore, the project was con- 14. Khumklao Foundation under the Royal Patronage tinued in 2011 to maintain the intention to provide sustainable 15. Sokka Gakkai Thailand support to charitable organizations. The main objective of 16. Foundation of Phra Mahathat Nopmethaneedon Merit Bridge was to fill the gap between the givers and the Nopponphumsiri receivers, and to connect the givers and the receivers. The 17. The King’s Scholarships for Thai Monks customers and the general public could donate to charitable 18. Queen Sirikit Centre for Breast Cancer Foundation organizations through ATMs, bank counters, cash deposit

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14 13 - 14 Blood Donation in Unity for the King and the Queen

078 ANNUAL REPORT 2016 Supporting for Chakri Narubodin Medical Institution 3. Promotion and Development of Education project, Ramathibodi Foundation “Reuse” project Realizing the importance of contributing to the healthcare system development and providing access to This project was initiated from the intention to promote public health services and disease prevention for the general and develop the quality of Thai education under the concept public, Thanachart Capital Plc., Thanachart Bank Plc., Thanachart of reusing. Office supplies that are no longer in use but still Fund Management Co., Ltd., and Thanachart Insurance in good conditions from the Bank’s renovation at its head Plc., jointly donated THB 1,500,000 to support the Chakri office and branches are given to government organizations, Narubodin Medical Institution project of Ramathibodi associations, foundations and schools. In 2016, 5,378 items Foundation. The project was to serve as a medical school of desks, cabinets, chairs and computers were given to 136 and a 400-bed hospital for integrated medical services for government organizations, associations, foundations and all patients. The project aimed to promote health and schools nationwide. rehabilitation, disease prevention, and to provide standardized public health services. It would also serve as a Medical 4. Environmental management Learning Center aiming at creating a learning network and academic services to promote public health in the eastern “Thanachart Reduces Global Warming” region of Thailand. Explanation is given in “Thanachart Group’s Corporate “Blood Donation in Unity for the King and the Queen” Social Responsibility Activities”.

This activity had been held for 12 consecutive years Thanachart Group’s CSR activities were not only by the Northeastern Hub 2 (Khon Kaen). The main objective limited to the 4 areas of (1) promotion of Thai culture and was to urge residents and employees in Khon Kaen, Roi religions, (2) promotion and support of charitable work, Et, Kalasin, and Maha Sarakham to do good deeds for His (3) promotion and development of education, and Majesty King Bhumibol Adulyadej and Queen Sirikit through (4) environment management as mentioned above, but the blood donation to help emergency patients and to reduce group also conducted mourning activities in remembrance blood shortage in hospitals. The Faculty of Medicine, Khon of the late His Majesty King Bhumibol Adulyadej as follows: Kaen University, had always provided cooperation and facilitation of the blood donation. In addition, a financial 1. The mourning activity in remembrance of the checkup was provided for participants. In 2016, there were late His Majesty King Bhumibol Adulyadej was conducted 823 participants donated a total of 359,000 cc of blood to on 20 October 2016 at Thanachart Bank, Suan Mali the Thai Red Cross Society. Building. A memorial speech was conducted in mourning of

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15 - 16 Mourning and Paying Tribute to the Memory of His Majesty King Bhumibol Adulyadej’s Boundless Generosity 16

Thanachart bank public company limited 079 the late His Majesty the King. Participants stood in silence for Disclosure of Prevention of Corruption 99 seconds, sang the Royal Anthem, and transformed into a Involvement black ribbon in remembrance of the late His Majesty the King. 2. Volunteering for the making of black ribbons Thanachart Group realizes that corruptions are harmful distributed the general public who did not own black clothing, and impede the nation’s social and economic development or had to wear uniforms for work, in mourning of the late His and they also create business unfairness. Therefore, the Majesty King Bhumibol Adulyadej. More than 3,000 pieces Group cooperates with the public and private sectors of black ribbons were made for distribution by voluntary under the “Private Sector Collective Action Coalition Against Thanachart Group employees. Corruption (CAC)” by signing the declaration to join and 3. Pathumwan District locals doing good deeds became a certified member. for the Father was conducted on 28 November 2016 in During 2014-2015, 12 companies under Thanachart coordination with Pathumwan District Office, Pathumwan Group became certified members of the Private Sector Institute of Technology, and Siam Synergy Trade Association. Collective Action Coalition against Corruption (CAC). As part The ceremony of offering rice and dried food was conducted of the Coalition, the CAC provided the Group with a gold to 999 Buddhist monks starting at Siam Paragon to Tesco CAC logo with the “the Gold CAC Logo Usage Guidelines Lotus at Charoen Phon Intersection on Rama I Road. for Thanachart Group” to comply with CAC’s regulation, 4. The project, Tree Planting for the Father, including the usage of CAC logo on the intranet, the Bank’s honoring King Rama IX at San Pa Tong district, Chiang Mai website, and the Group’s website. Province, under cooperation of the Bank, the local government body, and the locals. The project activities In 2016, Thanachart Group’s implementations related included landscaping the community environment by planting to fraud and corruption prevention are as follows: trees to increase the green space. 25 kilometers of Mahogany trees were planted along the entire road. This project would 1. Thanachart Group’s corruption risk assessment is be implemented continuously in order to collectively lift the based on risk and control self assessment (RCSA), which is locals’ quality of lives. In addition, this project demonstrated a tool for operational risk management. Risks are reviewed the private sector’s determined awareness and sustainable every 3 years. Progress of action plans and execution of risk responsibilities toward the society, economy, and environment. control is followed up, or any time significant changes in risk factors to the operations occur. The review will be presented to the Risk Management Committee for acknowledgement and for further risk management information.

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17 - 18 Pathumwan People Do Good Deeds for Father 19 Tree Planting - Retracing Our Father’s Footsteps - in Honor of King Rama IX 19

080 ANNUAL REPORT 2016 2. Every executive and employee was strictly the anti-corruption project by not giving gifts to executives obligated to provide a written compliance to the Anti-Corruption or employees of Thanachart Group, either during festivals Policy, measures, and related regulations via e-Learning. or special occasions. Trade partners and business agents 3. Every executive and employee must conduct the provided their signatures of acknowledgement and commit- bi-annual self evaluation via e-Learning, in order to develop, test, ment to comply back with the Thanachart Group. Cooperation and measure the level of knowledge and understanding of from customers were asked on printed material, e.g. invoices, the Anti-Corruption Policy, measures, and related regulations. receipts, payments, tax invoices, and on the Bank’s website; 4. Training courses on the Anti-Corruption Policy, www.thanachartbank.co.th. measures, and related regulations to new employees at 10. To evaluate compliance with the anti-corruption all levels were conducted with a written form indicating policy and measures, the Audit Committee will review and their acknowledgement and compliance. In addition, the ensure sufficient internal control in the Group, and ensure “Corruption Free / Transparent Movement” training courses that the operations are in line with the anti-corruption policy were conducted to current staffs to raise awareness, by including it in the annual plan. acknowledgement, and understanding on the topics, which 11. Giving advice and lecturing involving “Membership included the “Awareness Raising - Build Consciousness – Certification of the Private Sector Collective Action Doing Good Deeds” activities. Coalition against Corruption by the Private Sector 5. Continuous communication to employees for Collective Action Coalition against Corruption Council” to external acknowledgement and staff development via Thanachart organizations. Various organizations continued to request Channel. For example, TV media, print media, and Thanachart Thanachart Group to provide consultation and facilitators Group’s online media. The communication format would free of charge. have to be easy to access, such as Video Tape Recorder 12. Conducting “Raising Awareness – Enhancing (VTR) and short films. There was coordination with the Office Consciousness – Doing Good Deeds” year-round activities for of the National Anti-Corruption Commission (ONACC), the external academic institutions, at school levels and university Anti-Money Laundering Office (AMLO), and the Anti-Corruption levels. Organization of Thailand (ACT), on the anti-corruption and 13. Conducting trainings and external study trips anti-money laundering cognitive media. In addition, there for employees on “Membership Certification of the Private were TV programs - “Dhamma Sawasdee” and “Governance Sector Collective Action Coalition against Corruption by Guru”. This year, Thanachart was honored to be invited by the Private Sector Collective Action Coalition against ACT’s Chairperson, to be interviewed under the theme “How Corruption Council”, that the membership would be expired to Develop Corporate Governance in the Organization?” in 2017. The objective was to provide employees with 6. The development of easy-to-understand knowledge and understanding on the government’s Compliance anti-corruption e-Learning that was distributed on the intranet Department, especially on risk assessment and internal for staffs’ self-learning. measures on government officials’ bribery prevention. 7. The development of complaint channels via As Thanachart Group was aware of the importance and telephone, website, and other channels. The complaint handling benefits of the anti-corruption program to the business process must be well-defined, transparent, and fair. Moreover, operations, it required additional two companies to provide the Bank disclosed the “Guidelines on Complaint Handling” written compliances to join the program, and to have the on its website. membership certification within 2017. 8. The lecture on “Thanachart Anti-Corruption Advocate” to business partners and business representatives For the public to acknowledge the intention of to be informed about the Anti-Corruption Policy of Thanachart Thanachart Group against corruption, the Group has Group, to be aware of and to understand the benefits of publicized anti-corruption policy on the website of each being a certified member of CAC, as well as the verification company. For the Bank, the policy was announced on process as a CAC member. For those interested in joining www.thanachartbank.co.th. Thanachart Group was determined the project, Thanachart Group would provide consultation to develop concrete anti-corruption measures to be a part of and facilitators free of charge. the organizational culture, especially the staff development to 9. Thanachart Group sent emails to trade partners publicize to the general public that Thanachart Group was and business agents to ask for cooperation and support of “Virtuous, Transparent, Anti-Corruption Organization”

Thanachart bank public company limited 081 Corporate Governance

Corporate Governance Policy

The Board of Directors had put in place written Corporate Governance Policy (“the Policy”) since 2003, with an annual review to conform with the principle of corporate governance assessment issued by the Thai Institute of Directors Association (IOD: CGR), and the principle of good corporate governance for listed companies issued by the Stock Exchange of Thailand (“SET”). The Bank also established the reporting process on business compliance with corporate governance principles of the Bank, and improved the business ethics as well as codes of conduct for directors, executives, and staffs, in order to establish a framework for all personnel of the Bank.

The Bank had disclosed the Policy as well as business codes of conduct and codes of conduct for directors, executives, and staffs. The Policy can be accessed via the Bank’s website: www.thanachartbank.co.th and Thanachart Group’s intranet system, which was intended to be the communication channel with staffs of the Group at every level and every stakeholder about corporate governance established and practice by the Board of Directors.

In 2016, the developments in the area of corporate governance include:

• Revision of the Corporate Governance Policy to be consistent with the principle of corporate governance assessment issued by the Thai Institute of Directors Association (IOD: CGR) for listed companies; • Requirement for companies under Thanachart Group to revise the Policy in alignment with the Bank; • Training on the Corporate Governance Policy and codes of conduct for newly recruited employees of all levels, and the training course called “Transparency and Anti-Corruption Driving Force” for current employees of Thanachart Group; • Requirement for Thanachart Group’s executives and staffs of all levels to sign a written compliance on the Corporate Governance Policy, codes of conduct, and conflict of interest; • Evaluation of all staffs at Thanachart Group at all levels, in order to develop, assess, and evaluate their knowledge and comprehension of corporate governance practices twice a year; • Continuous development of CG E-learning on the Intranet to be current, up-to-date, and user friendly, in order to enable the employees to conduct self learning; • Posting of Guidelines for Complaints Handling and Copy Rights and Trademark Guidelines on the Bank’s website; • Conducting seminars on the Corporate Governance Policy and codes of conduct to the business representatives of Thanachart Group for acknowledgement and cooperation.

In addition, Thanachart Group continuously promoted corporate governance and reinforced corporate social responsibility (CG & CSR projects) through its policies and various activities among Thanachart Group’s employees consistently. The objective was to encourage practical learning in the units pursuant to corporate governance through internal communication channels under the “Thanachart Corporate Governance and Morality Initiation” project, advocating awareness and understanding of the Policy and ethics, in compliance with the foundation of values, morality, and professional ethics. This was communicated through easily accessible format such as short films. Cooperation was made with the Office of the National Anti-Corruption Commission (“ONACC”), the Anti-Money Laundering Office (“AMLO”), and the Anti-Corruption Organization of Thailand (“ACT”), for assistance in the learning aid about anti-corruption and money laundering in Dharma Sawasdee and Governance Guru TV programs. This year, Thanachart was honored to be invited by ACT’s Chairperson, to be interviewed under the theme “How to Develop Corporate Governance in the Organization?” In addition, staffs jointly organized an activity called “Principle and Morality of the Orange”, where staffs and their family members shared viewpoints and ideas on personal and professional lives, principles, voluntary activities for family members, and team-building activities for co-workers. This activity brought pride to staffs and their families and promoted good relationship among members of the Orange Family and Thanachart Group. In addition,

082 ANNUAL REPORT 2016 the Thanachart Group also conducted Buddhist meditation 5. Mr. Sataporn Jinachitra events in Bangkok, Bangkok’s perimeters, and upcountry for Director spiritual management of the employees in their professional 6. Assoc. Prof. Dr. Somjai Phagaphasvivat lives and daily lives. As for social activities, Thanachart Director Group provided consultation and facilitators for the “Raising 7. Mr. Rod Michael Reynolds Awareness – Enhancing Consciousness – Doing Good Deeds” Director activities for external academic institutions, at school levels 8. Mr. Walter Tas and university levels year-round. Furthermore, the Bank took Director part at the judging panel in the “SME Corporate Governance 9. Mr. Adil Aziz Chaudhry Contest”, hosted by Puey Ungphakorn Institute, the Bank of Director Thailand (“BOT”), the Thai Bankers’ Association and the 10. Ms. Suvarnapha Suvarnaprathip Institute for Small and Medium Enterprise Development Director (ISMED). 11. Mr. Peter Clifford Bessey Director Thanachart Group was determined to develop concrete 12. Mr. Somjate Moosirilert anti-corruption measures to be a part of the organizational Director culture, especially the staff development to publicize to the Executive Vice President, Office of Executive general public that Thanachart Group was a “Virtuous, Committee Chairman and CEO, acting as Secretary to the Transparent, and Anti-Corruption Organization” Board of Directors

Board of Directors and Sub-Committees Roles and Responsibilities of the Board of Directors

Board of Directors 1. Discharge duties with responsibility and to the best of their abilities and fairness to the organization, shareholders, The Board of Directors’ composition, duties and executives, and employees of the Bank; responsibilities are as follows: 2. Set out key policies, strategic plans, financial goals and budgets and make a review as deemed fit and Composition of the Board of Directors the business can be sustainable; 3. Specify a clear policy and guideline for the Bank’s The Bank has specified the number of the Board Chief Executive Officer and President, and high executives of Directors to be in accordance with the rule of law and in assuming a director position at other companies including harmonize with the type and size of the business so that the type of director position and number of companies that the Board of Directors shall be effective. Moreover, of the can assume the position, for example, a prior approval from total number of the Board members, not more than a half the Board of Directors shall be obtained, etc.; shall be executive directors and at least one-third shall be 4. Oversee and control its affiliated companies in directors who are independent of the management and do order to protect the interest of the Bank’s investment. The not have any vested interest in or any connection with the Board of Directors has considered the appropriateness of Bank’s business and in fair proportion of the investment the person to be sent to assume a director position at an of each shareholders group. As of 31 December 2016, the affiliated company to control business management to be name list of the Bank’s Board of Directors was as follows: in accordance with the Bank’s policy and to ensure that all transactions shall be executed in accordance with the 1. Mr. Banterng Tantivit law and criteria of the securities and stock exchange laws, Chairman declarations of the stock exchange, and other related laws; 2. Mr. Suphadej Poonpipat 5. Oversee, monitor and ensure the Bank’s business Vice Chairman conduct is in compliance with the objectives, goals, Articles 3. Mr. Kiettisak Meecharoen of Association, resolutions of the shareholders’ meeting Director and principles of good corporate governance on the basis 4. Mr. Narong Chivangkur of integrity and honesty, while exercising due care in the Director protection of the interests of the Bank;

Thanachart bank public company limited 083 6. Ensure that the Bank has in place the audit 1. Mr. Suphadej Poonpipat process, internal control, risk management, and monitoring Chairman and compliance systems that are adequate and fit with the 2. Ms. Suvarnapha Suvarnaprathip prevailing business environment; Vice Chairperson 7. The Board of Directors shall provide a system to 3. Mr. Peter Clifford Bessey control work execution, financial reporting, and compliance Vice Chairman to the rules, regulations, and policies. The Board of Directors 4. Mr. Somjate Moosirilert shall provide independent person or institute to audit such Member monitoring system and must be exhibited in the annual report; Mr. Kriangkrai Phurivitvattana 8. The Board of Directors or the Audit Committee Secretary shall comment on the sufficiency of the internal control system and risk management in the annual report; Roles and Responsibilities of the Executive Committee 9. Ensure fair treatment to all groups of stakeholders and assume responsibility for financial reporting and 1. Authorized to approve lines of credit for the information disclosure on an accurate, transparent and benefit of the Bank as well as approve debt restructuring timely basis; in compliance with the Financial Institution Business Act as 10. Prepare a report on responsibilities of the Board well as the rules and regulations of the BOT; of Directors for financial report for publishing, together with 2. Authorized to approve investments aimed at report of an auditor, in the Bank’s annual report, covering generating earnings for TBANK in compliance with the therein all crucial matters specified in the ‘code of best Financial Institutions Businesses Act as well as the rules and practices for listed company directors,’ to assure that the regulations of the BOT; Bank’s financial reports are accurate, complete and reliable. 3. To manage business operations in line with the The Bank has duly complied with the accounting standards Bank’s business objectives as well as managing liquidity, by adopting and adhering consistently to appropriate risks and the interest rate structures; accounting policies; 4. Authorized to make purchases, take transfers, and 11. Appoint members of all Board committees as dispose of TBANK’s assets in an amount up to 5 percent of deemed appropriate; the Bank’s share capital; 12. Determine scope of power and duties of the Chief 5. To consider and screen matters which are beyond Executive Officer and President; the authority of the Executive Committee and to present them 13. Conduct a performance evaluation, determine to those having higher authority for consideration; compensation and employ terms and conditions for the Chief 6. Authorized to restructure and manage the Executive Officer and President based on recommendation organization, to establish rules and regulations related to by the Nomination and Remuneration Committee; work process, to appoint and remove employees, to appoint 14. Evaluate the whole Board performance; advisors, as well as directing and governing the conduct of 15. Ensure one’s continuous knowledge and the Bank’s business affairs; competence development. 7. Authorized to approve salaries or other compensation benefits for employees and advisors to support TBANK’s Sub-Committees normal business operations; 8. To consider and approve appointments of The Executive Committee independent appraisers; 9. To establish expense budgets for appraising The Board of Directors appoints the Executive the value of the collateral as well as controlling the related Committee which consists of executive directors or directors expenses; representing major shareholders or directors who are 10. Authorized to delegate its authority to other staff external parties. The Executive Committee reports directly to of the Bank for the purpose of efficiency. the Board of Directors. As of 31 December 2016, the name list of the Executive Committee was as follows:

084 ANNUAL REPORT 2016 The Executive Committee is authorized to approve 2. Internal Control and Risk Management lines of credit, investments and obligations in compliance • To review the Bank’s internal control, including with the requirements imposed by the BOT. Chairman of the the internal control of its information technology system, Executive Committee considers agenda for approval proposed sufficient anti-corruption measures, as well as the guidelines by Chief Executive Officer and President. The Executive for communicating the significance of internal control and Committee has also established a number of Sub-Committees risk management throughout the Bank; to consider and manage the Bank’s business conducts in a • To ensure that the internal auditors’ and correct, proper, efficient, and effective manner. the auditors’ recommendations on internal control are implemented by the management; The Audit Committee • To review the supervision of the policies and duties relating to risk management of the Bank, so as to The Board of Directors appoints the Audit Committee ensure its adequacy. consisting of three independent directors, all of which posses knowledge, understanding and experience in accounting 3. Internal Audit or finance, as its important tool for monitoring the Bank’s • To review and approve the internal audit charter, management of business affairs to ensure that it upholds annual plan as well as necessary personnel and resources appropriate standards and transparency and complies with for the performance of duties; the rules and regulations of concerned authorities and those • To review the audit reports and recommendations of the Bank. The Audit Committee is responsible for ensuring of the auditors, as well as to follow up the results of the that the Bank puts in place sound internal control systems implementation of such recommendations; and reporting systems that are reliable and useful to all • To ensure that the Internal Audit Group complies concerned parties including the shareholders. As of with the internal audit standards; 31 December 2016, the members of the Audit Committee • To evaluate the independence of the Internal were as follows: Audit Group.

1. Mr. Kiettisak Meecharoen 4. Compliance with the Rules and Regulations Chairman (Independent Director) • To review and approve the charter of the 2. Mr. Sataporn Jinachitra Compliance Group, its annual plan as well personnel and Member (Independent Director) resources necessary for the performance of duties; 3. Assoc. Prof. Dr. Somjai Phagaphasvivat • To review the process of monitoring the business Member (Independent Director) conducts of the Bank to ensure compliance with the Mrs. Vijitra Thumpothong related laws, rules, codes of conducts, policy guidelines and Secretary regulations; • To review any amendments to the laws and Roles and Responsibilities of the Audit Committee regulations which affect the Bank’s operations; • To review any findings by the Compliance 1. Financial Reporting Group and the authorities, as well as to follow up on the • To review the Bank’s financial reports and implementation of their recommendations. the disclosure of information therein, and to evaluate the appropriateness of significant accounting policies; 5. Auditors • To review the accountability of material • To consider the qualifications, independence, transactions in financial reports, including complex or performance and remuneration of the auditors, and to irregular transactions and transactions requiring an exercise of provide recommendations on the appointment of auditors discretion. and determination of auditors’ fee to the Board of Directors; • To hold a meeting with the auditors without other management present at least once a year.

Thanachart bank public company limited 085 6. Connected Transactions or Transactions which 3) Any violation of the law relating to financial May Lead to Conflicts of Interest institution businesses, or regulations of the authorities or other • To review connected transactions as well related laws. If the Bank’s Board of Directors or management as transactions which may lead to conflicts of interest in fails to make improvement and rectification within a reasonable accordance with the law and regulations of the authorities, time, the Audit Committee shall disclose such failure in the to ensure that they are reasonable and for the best interests annual report and report it to the Bank of Thailand. of the Bank. 4) To conduct a self-evaluation of the entire Audit Committee and submit it to the Board of Directors on 7. Report of the Audit Committee an annual basis; • To prepare and disclose a report of the Audit 5) To perform any other duties assigned by the Committee which is signed by the Chairman of the Audit Board of Directors with the approval of the Audit Committee. Committee and consists of at least the information stipulated under the regulations of the SET in the Bank’s annual report; The Nomination and Remuneration Committee • To provide opinions in an annual compliance report submitted to the BOT; Recognizing the importance of good corporate • To review the accountability of the charter of governance, the Board of Directors has therefore appointed the Audit Committee at least once a year, and to submit it the Nomination and Remuneration Committee to propose to the Board of Directors for its approval in the case of any policy, forms, and criteria relating to nomination and amendments thereto. remuneration of directors and Sub-Committee’s directors, Chief Executive Officer and President, and executives to 8. Other Responsibilities ensure that the nomination and payments of remuneration • To ensure that the business conducts of the are in line with the related law, the organization’s visions Bank and its subsidiaries are in compliance with the Bank’s and missions. As of 31 December 2016, the members of the policies, by giving the Internal Audit Group the following Nomination and Remuneration Committee were as follows: assignments: 1) To report a summary of the overall performance 1. Mr. Narong Chivangkur of the Internal Audit Group which is responsible for auditing Chairman (Independent Director) the subsidiaries to the Bank’s Audit Committee; 2. Mr. Sataporn Jinachitra 2) To report a summary of the overall performance Member (Independent Director) of the Internal Audit Group, which is responsible for auditing 3. Mr. Rod Michael Reynolds the Bank and its subsidiaries, to the Audit Committee of Member (Non-Executive Director) Thanachart Capital Public Company Limited (“TCAP”) and Mr. Thaneit Khantikaroon to further submit this summary report to the Bank’s Board Secretary of Directors; 3) For the reporting under 1) and 2), if there Roles and Responsibilities of the Nomination and are material issues, i.e. conflicts of interest, fraud, corruptions Remuneration Committee and violation of law, the Internal Audit Group must report them in detail. 1. To propose policy relating to nomination and • To report to the Bank’s Board of Directors in remuneration of directors, Sub-Committee’s directors, Chief order to make improvement and rectification in a timely manner Executive Officer and President, and executives to the Bank’s as deemed appropriate by the Audit Committee if it finds Board of Directors; or is doubtful that there are transactions or acts which may 2. To propose criteria relating to nomination and materially affect the Bank’s financial position and operating remuneration of directors and Sub-Committee’s directors, results, etc. Chief Executive Officer and President, and executives to the 1) Conflict of interest transactions; Bank’s Board of Directors; 2) Any fraud, corruptions, irregularity or material deficiency in the internal control system;

086 ANNUAL REPORT 2016 3. To propose performance appraisal criteria of Chief 1. Mr. Narong Chivangkur Executive Officer and President and Executives for annual Chairman (Independent Director) consideration of remuneration package; 2. Mr. Suphadej Poonpipat 4. To select and examine the candidates with Member (Executive Director) appropriate qualifications for appointment as director, 3. Mr. Sataporn Jinachitra Sub-Committee’s directors, or Chief Executive Officer and Member (Independent Director) President and to propose qualified candidates to the Bank’s 4. Mr. Rod Michael Reynolds Board of Directors or Annual General Meeting of Shareholders Member (Non-Executive Director) (depending on the situation); 5. To consider annual remunerations of director, Roles and Responsibilities of the Succession Committee Sub-Committee’s directors, Chief Executive Officer and President, and executives which are in alignment of the 1. To determine steps of nomination; criteria that have been set; 2. To define conditions and qualifications of 6. To review policy and principles of nomination recruitment agencies; and remuneration of directors, Chief Executive Officer and 3. To consider and select suitable and efficient President, and executives to be appropriate with job recruitment agencies; descriptions and the market; 4. To prescribe qualifications of the Chief Executive 7. Ensuring that the Bank’s appropriate succession Officer and President in accordance with the current business plans and continuity of management for senior executive directions, market trends and BOT’s regulations; positions and key positions are always up to date; 5. To determine employment conditions for the Chief 8. Ensuring that the remuneration policy is fair, Executive Officer and President; competitive, and attractive in order to retain quality and 6. To allow disclosure of information to directors potential staff. associated with items 1 through 5; 7. To select a person to take the position of Chief The Corporate Governance Committee Executive Officer and President, and to propose for approval to Thanachart Capital Plc., the Bank and BOT; The Board of Directors places a strong emphasis on 8. To approve expenses related to the succession upholding good corporate governance in conformity with processes; the code of best practices for listed companies, as well as 9. To report on the performance and progress to disclosure of information on corporate governance practices the Board of Directors every month until the succession in the Bank’s annual report. To this end, the Bank therefore processes end. deems to appoint the Board of Directors as a whole to act as the Corporate Governance Committee whom determines The Risk Management Committee policy on corporate governance in compliance with the Securities and Exchange Commission (“SEC”), the SET, The Board of Directors appoints the Risk Management and the BOT’s guidelines, and international standards. Committee with a duty in specifying risk management policy to cover the entire organization. Such policy must be The Succession Committee presented to be approved and overseen by the Board of Directors and the management shall follow the policy and The Board of Directors established the Succession report back to the Board of Directors on a regular basis. Committee in order to seek a person eligible and capable of A revision or assessment of risk management shall be done succeeding the existing Chief Executive Officer and President. at least once a year, must be disclosed in the annual report, As of 31 December 2016, the members of the Committee and in each interval that risk has changed. Advance warnings were as follows: and report of unusual incidents shall be given importance. As of 31 December 2016, the members of the Risk Management Committee were as follows:

Thanachart bank public company limited 087 1. Mr. Somjate Moosirilert 7. To consider and appoint a committee or an officer, Chairman as well as delegate the authority to the appointed committee 2. Mr. Peter Clifford Bessey or officer under roles and responsibilities of the Risk Vice Chairman Management Committee; 3. Mr. Ziad El-Hoss 8. To monitor and control the risk management Member conduct of committees and/or business units to ensure that 4. Mr. Anuwat Luengtaweekul they adhere to the established policy; Member 9. To report the committee’s performance to the 5. Mr. Enghug Nontikarn Audit Committee regularly on areas that need improvement, Member ensuring that the improvements are in line with the 6. Mr. Boonlerd Sinsombat established risk management policy and strategies. Member 7. Mr. Ricky Jon Yakabowich The Asset and Liability Management Committee Member 8. Ms. Kavita Boonpochanasoontorn The Executive Committee has established the Asset Member and Liability Management Committee to manage the Bank’s Head of Risk and Capital Markets liquidity, interest rates and exchange rates effectively. As of Secretary 31 December 2016, the members of the Asset and Liability Management Committee were as follows: Roles and Responsibilities of the Risk Management Committee 1. Mr. Suphadej Poonpipat Chairman 1. To propose policy on overall risk management of 2. Mr. Somjate Moosirilert the Bank to the Board of Directors for approval. In this regard, Vice Chairman monitoring and auditing standards must be established to 3. Ms. Suvarnapha Suvarnaprathip ensure that the risk management policy is strictly adhered Member to; 4. Mr. Peter Clifford Bessey 2. To formulate risk management strategies in Member accordance with the risk management policy and to ensure 5. Mrs. Noossara Roonsamrarn that the Bank’s risks are appropriately measured, monitored, Member and maintained at an appropriate level; 6. Mr. Piyaphong Artmangkorn 3. To review the adequacy of risk management policy, Member including the effectiveness of the risk management system 7. Mr. Anuwat Luengtaweekul and the adherence to the established policy; Member 4. To establish risk management measures which 8. Mr. Ajay Pratap Mundkur aims at preventing possible losses from occurring and finding Member 1 resolutions; 9. Mr. Enghug Nontikarn 5. To assess both internal and external factors that Member might have material impact on the Bank’s financial positions. 10. Mr. Sanong Kumnuch The assessment results will be taken into account in the Member adjustment of the Bank’s overall risk management policy; 11. Mr. Ziad El-Hoss 6. To determine and instruct business units under Member the Risk Management Committee for the development of 12. Ms. Wisarnsri Nilodom more efficient risk managing, controlling, and monitoring Member mechanisms;

Remark: 1 Mr. Ajay Pratap Mundkur’s service at the Bank has ended as assigned by the Bank of Nova Scotia and his successor has not yet been recruited.

088 ANNUAL REPORT 2016 13. Mr. Lalit Dodampe Gamage Dharmaseri Roles and Responsibilities of the Investment Portfolio Member Committee Representative of the Risk Control Department Secretary 1. To determine investment policies as well as to consider and approve investment plans; Roles and Responsibilities of the Asset and Liability 2. To approve investments within the scope of Management Committee authority specified by the Bank, which must be complied within established position limits and VaR limits and to 1. To formulate the Bank’s liquidity, interest rate, examine investment proposals that exceed its approval and exchange rate risk management plans under the policy authority before proposing them to the Executive Committee established by the Executive Committee; which has higher approval authority; 2. To manage the Bank’s liquidity and exchange rate 3. To review the investment performance and determine risks in accordance with the trends of the money market and guidelines aimed at improving investment performance; capital market conditions; 4. To acknowledge and delegate the approving 3. To manage the Bank’s interest rate structure and authority to the respected committee or individuals under determine the rate of interest both floating and fixed interest the roles and responsibilities of the Investment Portfolio rates in order to prevent any adverse impacts from interest Committee; rate volatility; 5. To manage the market risk arising from changes 4. To approve investments in bonds and private debt in prices of investment portfolios; instruments within budget limits; 6. To establish and review the ratio of provisioning 5. To authorize a person or a group of persons or determine the impairment value of the securities invested. under the authority of the Asset and Liability Management Committee; The Credit Committee 6. To report on the performance of liquidity, interest rate and exchange rate management to the Executive The Executive Committee has established the Credit Committee. Committee to enhance the efficiency of the Bank’s credit approval process. As of 31 December 2016, the members The Investment Portfolio Committee of the Credit Committee were as follows:

The Executive Committee has established the 1. Mr. Somjate Moosirilert Investment Portfolio Committee in order to ensure efficient Chairman investments of the Bank. As of 31 December 2016, the 2. Ms. Suvarnapha Suvarnaprathip members of the Investment Portfolio Committee were as Vice Chairperson follows: 3. Mr. Peter Clifford Bessey Vice Chairman 1. Mr. Suphadej Poonpipat 4. Mr. Ziad El-Hoss Chairman Member 2. Mr. Somjate Moosirilert 5. Mrs. Noossara Roonsamrarn/ Vice Chairman Ms. Wisarnsri Nilodom/ 3. Ms. Suvarnapha Suvarnaprathip Mr. Sutut Chitmonkongsuk Member Member * 4. Mr. Peter Clifford Bessey 6. Mrs. Sasima Taweeskulchai Member Member 5. Mr. Piyaphong Artmangkorn 7. Mr. Wuttichai Suraratchai Member Member Representative of the Risk Control Department Secretary

Thanachart bank public company limited 089 8. Mr. Noel Singh directors and independent directors of which have been Member clearly written in the good corporate governance policy of Representative of the Risk Control Department the Bank as follows: Secretary 1. Have knowledge, skill and experience in diverse *Remarks Attends only when his/her agendas are fields that are useful and contribute to the Bank’s business presented and must be an expertise in the area that should benefit the Bank with at least one non-executive director with experience Roles and Responsibilities of the Credit Committee in the Bank’s business, whereby gender is disregarded; 2. Not possess any of the prohibited characteristics 1. To regulate operating plan and credit approval prescribed by applicable laws and regulations; procedures, management and corporate governance under 3. Not hold board positions in any other entity that the policy of the Executive Committee and the Board of operates a business of the same nature as and competing Directors; with the Bank, whether for personal benefit or for the benefit of 2. To establish covenants and conditions of other parties, unless it is notified in the shareholders’ meeting credit lines and approve new credit lines as well as adjust before any appointment. The Nomination and Remuneration conditions on credit lines within the delegated authority, Committee, which has the duty to nominate director candidates taking into account the credit risk assessments within the for shareholders’ consideration and election, shall examine and scope specified by the Bank’s Executive Committee or Board ensure that those candidates do not hold board positions in of Directors; or operate a business of the same nature as and competing 3. To establish the authority on credit approval to a with the Bank; person or a group of persons within delegated authority of 4. Directors, executives or related persons are allowed the Credit Committee; to enter into a transaction that is in the usual course of business 4. To consider the approval of the retail credit with the Bank and members of its group, provided that the policies, which include credit risk, market risk, legal risk and transaction is under the same commercial terms as those an operational risk; ordinary person would agree with any unrelated counterparty 5. To manage the level of credit risk and qualities under the similar circumstances, on the basis of commercial of loans under the Bank’s acceptable risk level, in terms of negotiation and without any dependent interest, except for the business prioritization by clearly monitoring the end to end transactions prohibited by laws or the authority’s directives; process; 5. Additional qualifications required for each of the 6. To screen credit applications which exceed the following positions: scope of authorization of the Credit Committee in order to propose them to the Bank’s Executive Committee or Executive Directors Board of Directors for approval. In case of urgency, the Credit Committee may propose credit applications to the • Being involved with day-to-day management of aforementioned committee without screening; the Bank and overseeing and ensuring that the management 7. To report credit approval results, credit risk implements the policies established by the Board of Directors. management and loan qualities to the Bank’s Executive • Numbering not more than a half of the total Board Committee or Board of Directors. members.

The Nomination and Appointment of Executives Independent Directors (applicable to public of the Highest Level limited companies or as required by the authority)

Qualifications of Directors Qualifications of Directors • Not holding more than 0.5 percent of the Bank’s paid-up registered capital. The Bank has specified the qualifications of directors • Qualifications are in accordance with the criteria including the additional qualifications required for executive set by the BOT, SET, or SEC, or other governing bodies.

090 ANNUAL REPORT 2016 • Not exhibiting any characteristics that violate the criteria for independent directors set out by the Capital Market Supervisory Board. • Numbering not less than one-third of the total Board members. • At least 1 independent director that has banking experience.

6. The Chairman of the Board of Directors and Chief Executive Officer and President shall not be the same person and must be exhibited in the annual report and on the Bank’s website; 7. Each director should assume a director position in not more than 5 listed companies. If over, the director should be confident that he/she can allocate sufficient time in taking a director role of the Bank. Anyhow, the director position of other companies shall not conflict with the rules and regulations of other governing bodies.

Director Nomination Procedures

The Nomination and Remuneration Committee selects and examines the candidates with appropriate qualifications for appointment as directors, and to propose qualified candidates to the Bank’s Board of Directors or the Annual General Meeting of Shareholders (depending on the situation) for approval to fill in any vacancies due to the completion of directorship tenure and for other cases as specified in the Nomination and Remuneration policy and the charter of the Nomination and Remuneration Committee. The directorship must conform to the Articles of Association of the Bank and other related laws, and receive the approval from the BOT as per the Financial Institution Business Act B.E. 2551.

In addition, to enhance the good corporate governance relating to the Annual General Meeting of Shareholders specifically in regards to the protection of shareholders’ right to propose agenda, and nominate qualified candidate(s) to be appointed as director(s). The shareholders can nominate qualified candidate(s) whom have been approved by the Nomination and Re- muneration Committee not less than 3 months prior to the Annual General Meeting day, and submit the documents with the details of qualifications, and the consent letter from the nominee(s).

Currently, the directors are from 2 groups of major shareholders as follows:

Company Number of Director (person) 1. Thanachart Capital Public Company Limited 4

2. Scotia Netherlands Holdings B.V. 4

Director Appointment Criteria and Methods

According to the Bank’s Articles of Association and the good corporate governance policy, the director appointment criteria and methods are as follows:

1. In case of the appointment of a new director to replace the one who is retired by rotation, the approval from the shareholders’ meeting is required.

According to Article 18 of the Bank’s Articles of Association which specifies the criteria and methods as follows:

(1) A shareholder shall have one vote per share; (2) At the election of the directors, the shareholders’ meeting may vote for the directors, either one candidate at a time or candidates consisting in a group or by any other method as it deems expedient. However, at each voting time, a shareholder must exercise his right according to the number of votes specified under (1) and his votes may not be distributed howsoever to elect any other person;

Thanachart bank public company limited 091 (3) At the election of the directors, the votes shall will make a written announcement to the Chairman of the be decided by majority. In case of an equality of vote, the subsidiaries to accept the appointment of directors pursuant Chairman of the meeting shall have a casting vote. to the related criteria, conditions of laws, and regulations.

2. In case of the appointment made during the Managing Directors of the subsidiaries are directorship tenure due to a vacancy, the Board of Directors obliged by the Bank to report on their monthly operating is able to approve the director’s appointment as selected and performance compared with the estimation in the Business proposed by the Nomination and Remuneration Committee. Plan to the Bank’s Executive Committee every month. The report shall also include business strategies. The Chief According to Articles 21 and 23 of the Bank’s Articles Executive Officer will present the report to the Board of of Association which states that if the office of director is vacant Directors within the same month. otherwise than by completion of a vacating director’s term of office, the Board of Directors, by votes of not less than Scopes of responsibilities of directors and three-fourths (3/4) of the remaining directors, may appoint a executives representing the Bank in the subsidiaries must person who is qualified and is not of a forbidden nature under be as prescribed in the regulations of the subsidiaries. The the laws, as a director in his or her place at the following directors and executives must ensure that the operating meeting of the Board of Directors, except for the event that performance of the subsidiaries is in line with the resolution of the vacating director’s term of office is less than the period the shareholders’ meeting and related laws. Moreover, since stipulated by the law. Any person appointed or elected as a the Bank’s business is under a financial group, the directors replacement director shall retain his or her office during such and executives representing the Bank in the subsidiaries time only for the remaining tenure of his or her predecessor. must ascertain that the strategic plans of the subsidiaries go as planned and in line with Thanachart Group’s risk Nomination of Executives of the Highest Level management policy.

The Nomination and Remuneration Committee For related transactions with the subsidiaries, the conducts preliminary consideration and proposes for the Bank has established authority level for transaction approval Board of Directors’ approval of the qualified candidate(s) based on types, volumes, and counterparties. Disclosure of possessing the knowledge, competency, skills and experience transactions is controlled and monitored. Every 6 months, of use to the Bank’s operations to be nominated for the related transactions with the subsidiaries are required to position of the Chief Executive Officer and President. This be reported to the Bank’s Executive Committee and the position requires thorough understanding of the Bank’s Board of Directors respectively. Moreover, units performing business, and the ability to manage the business in a way transactions are obligated to submit the information to that achieves objectives and goals set by the Bank’s Board Compliance for further gathering of information of internal of Directors. and related transactions. The gathered information will be then reported to related committees. Public disclosure Governance of the Business Conducts of of transactions is also required in accordance with the Subsidiaries and Associated Companies regulator’s principles as well as the accounting standard.

(1) Governance of the business conducts of For the establishment of internal control and subsidiaries and associated companies mechanism for monitoring subsidiaries, the Bank has set The Bank monitors and controls its subsidiaries authority levels for significant transactions and types of to protect the interest in its investments. The Bank’s counterparties, e.g. loan grants, investments, obligations or executives are assigned to be the directors in the transactions similar to loan grants to subsidiaries or related subsidiaries consistent with the shareholding portions in parties. If a subsidiary wishes to participate in the transaction, order to monitor and ensure that the performance of the it must seek approval from an authorized person in subsidiaries is appropriate, smooth, in line with the Bank’s consistency with the established approval levels. In addition, policies and operations. After the consideration and consent the Board of Directors has assigned the Bank’s Audit of the Board of Director for the Bank’s executives to be the Committee and Audit team to cover the operations of the directors in the subsidiaries, the CEO, representing the Bank, subsidiaries to ensure alignment to the Bank’s policies.

092 ANNUAL REPORT 2016 The Audit team must summarize the overall auditing of the Auditors’ Fee subsidiaries for acknowledgement of the Audit Committee and further report to the Board of Directors. Significant issues, The Audit Committee considers the appointment i.e. conflicts of interest, frauds, corruptions, and violations of auditors and compensation to propose for the Board of of laws, must be reported to the Board of Directors in detail Directors’ approval, and determines of auditors’ fee to for improvement within a period of time deemed appropriate propose to the Board of Directors and the shareholders for by the Audit Committee. approval during the Annual General Meeting of Shareholders. According to the 23rd Annual General Meeting of Shareholders (2) Agreements between the Bank and other held on 5 April 2016, the shareholders considered and shareholder(s) in regards to the management of subsidiaries approved the appointment of EY Office Limited as the auditor and associated companies of the Bank. The BOT approved the 3 auditors as follows: - None - 1. Ms. Ratana Jala The Controls of the Use of Internal Information Certified Auditor No. 3734 and/or 2. Ms. Somjai Khunapasut The Bank has specified the controls of the use of Certified Auditor No. 4499 and/or internal information in the ethics and code of conduct which 3. Ms. Rachada Yongsawadvanich can be summarized as follows: Certified Auditor No. 4951

• An appropriate oversight on the internal data The 2016 auditors’ fee charged by EY Office Limited, maintenance system is required for all business units within the office which audited the accounting of the Bank and the Bank; its subsidiaries, for the Bank’s accounting audit conducted by Ms. Ratana Jala, Certified Auditor No. 3734; details were • In compliance with the SEC regulations, executives as follows: in manager position, the next four positions below manager position and the highest ranking position in the Accounting (1) Audit Fee and Finance Department are required to report their holdings 1.1 Audit Fee of the Bank of THB 11,000,000. of the Bank’s shares on a quarterly basis; 1.2 Audit Fee of 11 Subsidiaries of THB 6,115,000. • Directors, executives, staffs, employees and advisors who have accessed to the confidential information are (2) Non - Audit Fee prohibited from seeking any benefit from such information for The Bank and its subsidiaries paid the non-audit their own or other’s interest. This is indicated in Thanachart fee for the audit of electronic money transfer system as Group’s ethics and code of conduct; required by the BOT, the review and audit of the report • According to the Bank’s notification on securities on the risk-based capital requirement as required by the trading supervision and abusive internal data control, the Bank’s Office of Insurance Commission for the fiscal year 2016 in directors and executives are prohibited from engaging in any an amount of THB 830,000. trading of the TCAP’s shares fifteen days before the end of each quarter until two days after the disclosure of the financial Other Practices In Accordance With Good statements; Corporate Governance

• The use of internal data for the individual interest In accordance with the good corporate governance is considered as policy misconduct and will be subject to policy of the Bank. the penalties according to the judgment of the Disciplinary Committee. Related Transactions

Details of related transactions are shown in the notes to financial statements No. 43: Related party transactions.

Thanachart bank public company limited 093 Internal Control and Risk Management

The Bank recognizes the importance of internal control by constantly emphasizing that a good internal control procedure will enable the bank to conduct business effectively, achieve goals and help prevent damage that may derive from the operation and exploitation of their executives and employees. In addition to the focus on internal control procedure, the Bank recognizes that recommendations from external auditors and inspectors from the Bank of Thailand (“BOT”) will help the development of the internal control system to be effective. The internal control system is summarized as follows: 1. Organization and Environment

The Bank establishes organizational structure to support appropriate organization’s goals, determine, assign and authority level duty and responsibility of staff and executives in a clear written form. Internal control is in place, dividing duties of the worker, approver, controller and evaluator apart. In order to prevent conflicts of interests and to balance the influence of each other as well as to ensure the Bank’s in appropriate business operations and good governance, and to issue policies, procedures and operation manuals in writing, as well as the appointment of the Audit Committee to consider the adequacy of internal control system and subcommittees to consider and make decisions on banking matters effectively.

The Board of Directors determines clear and measurable targets for business operations and follows up to ensure the progress and achievement. In addition, the Bank has established Corporate Governance Policy, Codes of Conduct, Anti-Corruption Policy, measures, as well as related rules and regulations to be the practice guidelines for the directors, executives, and employees. The self-evaluation is also conducted annually to raise awareness and recognition of good governance among all employees. Communication system and channels are established for customers and staff to express their opinions, make complaint regarding the Bank’s services, and blow the whistle, along with the protection measure for the fraud and corruption whistle-blower via Bank’s channels and fair treatment for the accused. 2. Risk Assessment

The Board of Directors delegates its authority to the Risk Management Committee and the Risk Management Unit to consider and ensure that the Bank has effective risk management for all areas, in line with the purpose of the business operations. Policies and guidelines for risk management were established and published on the Intranet, which all directors, executives, and employees were to comply with. Evaluation procedures for external factor changes that may impact business operations, internal controls, and financial report, as well as measures to cope with changes adequately, were well established. Significant risks related to Bank’s business operating were reported to the Audit Committee on a quarterly basis and Risk Management Committee will report meeting resolution to the Bank’s Executive Committee and Board of Directors on a monthly basis. 3. The Operational Control

The Bank establishes appropriate internal control activities for all levels covering all processes. Explicit authorization and level of approval authority are in place. As for the related transactions, the Bank has established in Good Corporate Governance Policy the practice guidelines to prevent conflicts of interests prohibiting the related persons to partake in the approving process. Regarding giving credits or investment, recognized as the Bank’s core business, policies were formulated to regulate lending to major shareholders or related parties, and investing in certain businesses with related interest, according

094 ANNUAL REPORT 2016 to the BOT’s criteria. As for IT controlling system, the Head of Internal Audit and Head of formulation of IT procedures, security policy/standard, Compliance of the Bank as well as general control standard, development and maintenance, are established as standards for controlling head of Internal Audit and protecting IT operations of the Bank. The Bank assigned Mrs. Vijitra Thumpothong as Head 4. Information and Communication System of Internal Audit and responsible for Bank internal audit. As she has been working in internal audit area for commercial The Bank provides significant, complete, and necessary banking for over ten years, she possesses the knowledge and for Bank’s directors, executives, and supervisory business professionalism in banking operations. Thus, she is suitable units for their operation and makes decisions adequately. to perform the task. When considering the appointment, The Bank continuously develops its information system as well as evaluation, demotion, transfer, and layoff, the Head of Internal its financial business group’s focusing on enhancing efficiency Audit must obtain the approval from the Audit Committee. and enabling the system to properly support business growth. Communication channel (Whistle-blower hotline) is also head of Compliance provided for internal as well as external persons/units to report information concerning fraud or corruption. The Bank assigned Ms. Kavita Boonpochanasoontorn as Head of Compliance to be in charge of rules and regulations, 5. Monitoring and Tracking System which align with the operating business.

The Bank provides the performance monitoring and reporting process to report on business units’ performance target to the Board of Directors on a monthly basis and review goals every six months.

The Audit, reporting directly to the Audit Committee, is responsible for monitoring and reviewing units and processes, evaluating the effectiveness and efficiency of internal control systems and risk management system of the Bank as well as the Financial Business Group, and reporting on significant issues as well as following up corrective actions to ensure such issues are corrected appropriately. End-to-end Process audit and Continuous Control and Monitoring audit are performing to control and monitor irregular transactions.

The Bank has set up the Compliance Unit to monitor the compliance of practices in accordance with the codes of conduct and prohibitions that prevent conflicts of interest. The Compliance reports to the Audit Committee, Executive Committee, and Board of Directors every six months.

The Board of Directors Meeting No. 2/2017 on 23 February 2017, the Board of Directors agreed that the Bank’s internal control system was adequate and appropriate for its business operations.

Thanachart bank public company limited 095 Report of the Nomination and Remuneration Committee

On 26 March 2002, the Bank’s Board of Directors approved the establishment of the Nomination Committee and the Remuneration Committee. On 25 March 2009, the Bank’s Board of Directors’ meeting adopted a resolution to combine the Nomination Committee and the Remuneration Committee together and name the Committee to “the Nomination and Remuneration Committee”. The Committees consisted of two independent directors and one non-executive director whose names as of 31 December 2016 were as follows:

1. Mr. Narong Chivangkur Chairman (Independent Director) 2. Mr. Sataporn Jinachitra Member (Independent Director) 3. Mr. Rod Michael Reynolds Member (Non-Executive Director) Mr. Thaneit Khantikaroon Secretary

In 2016, the Nomination and Remuneration Committee convened fourteenth meetings to process the following matters;

1. To select and nominate appropriate persons to be appointed as directors replacing the directors resigning to the Bank’s Board of Directors. 2. To review and nominate appropriate persons to be appointed as directors replacing the directors retiring by rotation for the year 2016 to the Bank’s Board of Directors’ meeting and the Annual General Meeting of the Shareholders. 3. To select and nominate to the Board of Director the appropriate persons to be appointed as Executives. 4. To provide opportunities for shareholders to propose appropriate persons to be appointed as Bank’s directors in the 2017 Annual General Meeting of Shareholders of TBANK. 5. To review and recommend the annual remuneration packages for directors and members of sub-committees, taking into consideration that such remuneration package commensurate with the assigned duties and responsibilities, the Board of Directors’ and sub-committee performances, and the Bank’s policy and performance. The 2016 remuneration packages were proposed for approval at the Bank’s Board of Directors’ meeting and the Annual General Meeting of Shareholders for the year 2016. 6. To consider and recommend the performance evaluation, adjustment of annual salary and bonus of Chairman of the Executive Committee, Chief Executive Officer and President, and Executives. 7. To consider and recommend the remuneration of the Chairman of the Executive Committee and Chief Executive Officer and President. 8. To review, recommend, and monitor the Chief Executive Officer and President Recruitment process. 9. To review, recommend and monitor the Bank’s succession planning for senior executives and key positions. 10. To review and recommend the salary structure based on salary survey results of other financial institutions and other dimensions.

(Mr. Narong Chivangkur) Chairman of the Nomination and Remuneration Committee

096 ANNUAL REPORT 2016 Management Structure

The Board of Directors

The Bank’s Board of Directors consists of those with high competence who posses expertise and experience in finance & accounting, management, and other professional areas, which allows the Bank to benefit from the well-managed business.

The Bank has established the number of directors to be in accordance with the rule of law as well as the type and size of the business so that the Board of Directors could perform effectively. Of the total Board’s members, the number of executive directors shall not exceed one half and the number of independent directors, who are independent from the management and neither benefit from or associate with the Bank’s businesses, shall account at least one-third and be proportional to each shareholder’s investment amount.

Members of the Bank’s Board of Directors as of 31 December 2016 were as follows:

Name Position Executive Non-Executive Independent Director Director Director

1. Mr. Banterng Tantivit Chairman - ✓ - 2. Mr. Suphadej Poonpipat Vice Chairman ✓ - - 3. Mr. Kiettisak Meecharoen Director - - ✓ 4. Mr. Narong Chivangkur Director - - ✓ 5. Mr. Sataporn Jinachitra Director - - ✓ 6. Assoc. Prof. Dr. Somjai Phagaphasvivat Director - - ✓ 7. Mr. Rod Michael Reynolds Director - ✓ - 8. Mr. Walter Tas Director - ✓ - 9. Mr. Adil Aziz Chaudhry Director - ✓ - 10. Ms. Suvarnapha Suvarnaprathip Director ✓ - - 11. Mr. Peter Clifford Bessey Director ✓ - - 12. Mr. Somjate Moosirilert Director ✓ - - Directors retired from position in 2016 1. Mr. Alberto Jaramillo Director - ✓ -

Notes: 1) Mr. Alberto Jaramillo resigned from his directorship on 1 March 2016. 2) Mr. Adil Aziz Chaudhry has assumed his directorship since 1 April 2016. 3) The Bank’s directors who are authorized signatories representing the Bank include Mr. Suphadej Poonpipat, Ms. Suvarnapha Suvarnaprathip, Mr. Peter Clifford Bessey, and Mr. Somjate Moosirilert. Any two out of the four can jointly sign and stamp the Bank’s seal.

Thanachart bank public company limited 097 Board of Directors Meetings

Each year, The Bank schedules meetings and their agendas for the key panels in advance and informs directors of the schedules to allow each of them to plan and arrange their time for the following key meetings:

1. The Board of Directors meeting is held approximately once a month. 2. The Executive Committee meeting is held at least once a month. 3. The Audit Committee meeting is held at least once a quarter. 4. The Nomination and Remuneration Committee meeting is held at least twice a year. 5. For all other committees, the decision on schedules rests with the Chairman of each committee.

The Bank’s Board of Directors convenes its meeting regularly in the last week of each month. It may also hold additional meetings as deemed appropriate. The meeting’s agendas are to be clearly established in advance including regular agendas such as performance reports, approval of operating transactions, and risk management. The Office of the Chairman of Executive Committee and the CEO is responsible for sending meeting invitations to the directors along with the agendas as well as supporting documents in advance to allow the directors to have sufficient time to study data and information before attending the meetings. In 2016, the Board of Directors convened 12 general meetings.

In the Board of Directors meeting, all directors are encouraged to express their opinions freely and vote independently. The Chairman of the Board of Directors shall provide opportunities to all directors to express their opinions before adopting any resolution. The observations and comments from directors made at the venue are documented. The minutes are to be certified by the Board of Directors and made available for inspection by the Board and related parties.

Table of directors’ meeting attendance in 2016

Board of Executive Audit Nomination and Risk Management List of TBANK’s Directors Directors Committee Committee Remuneration Committee Committee (12 Meetings) (42 Meetings) (12 Meetings) (14 Meetings) (12 Meetings) 1. Mr. Banterng Tantivit 12 - - - - 2. Mr. Suphadej Poonpipat 12 40 - - - 3. Mr. Kiettisak Meecharoen 12 - 12 - - 4. Mr. Narong Chivangkur 12 - - 14 - 5. Mr. Sataporn Jinachitra 12 - 12 14 - 6. Assoc. Prof. Dr. Somjai Phagaphasvivat 12 - 12 - - 7. Mr. Rod Michael Reynolds 8 - - 9 - 8. Mr. Walter Tas 8 - - - - 9. Mr. Adil Aziz Chaudhry 9 - - - - 10. Ms. Suvarnapha Suvarnaprathip 11 39 - - - 11. Mr. Peter Clifford Bessey 11 38 - - 11 12. Mr. Somjate Moosirilert 12 39 - - 12 Directors retired from position in 2016 1. Mr. Alberto Jaramillo 1 - - - -

Notes: 1) Mr. Alberto Jaramillo resigned from his directorship on 1 March 2016. 2) Mr. Adil Aziz Chaudhry has assumed his directorship since 1 April 2016. 098 ANNUAL REPORT 2016 Performance Evaluation of the Board of Directors

The Bank arranges a self-evaluation of the Board of Directors at least once a year for the Board to jointly scrutinize their performance and issues for further improvement. The performance evaluation of the Board of directors is conducted in 2 manners i.e. the collective performance evaluation and the individual performance evaluation. The evaluation forms are in line with the corporate governance of the Stock Exchange of Thailand and the Bank. Executives

As of 31 December 2016, there were executive officers and executives as defined by the Securities and Exchange Commission (“SEC”)’s criteria, and the persons of managing authority as defined by section 4 and 25 of the Financial Institution Business Act B.E. 2551 guidelines as follows:

1. Mr. Suphadej Poonpipat Chairman of the Executive Committee 2. Ms. Suvarnapha Suvarnaprathip Vice Chairperson of the Executive Committee 3. Mr. Somjate Moosirilert Chief Executive Officer and President 4. Mr. Peter Clifford Bessey Deputy Chief Executive Officer 5. Mrs. Noossara Roonsamrarn Executive Vice President, Corporate Banking Team 1 6. Mr. Piyaphong Artmangkorn Executive Vice President, Investment Management 7. Mr. Anuwat Luengtaweekul Executive Vice President, Chief Financial Officer 8. Mr. Enghug Nontikarn Executive Vice President, Treasury and Debt Capital Markets 9. Mr. Sanong Kumnuch Executive Vice President, Retail and Small Business Distribution 10. Mr. Ziad El-Hoss Executive Vice President, Chief Risk Officer 11. Ms. Wisarnsri Nilodom Executive Vice President, Corporate Banking Team 2 12. Mr. Boonlerd Sinsombat Executive Vice President, Information Technology 13. Mr. Praphan Anupongongarch Executive Vice President, Automotive Lending 14 Mr. William George Said Executive Vice President, Chief Administrative Officer 15. Mrs. Sasima Taweeskulchai Executive Vice President, Special Asset Management 16. Mr. Ricky Jon Yakabowich Executive Vice President, Shared Services 17. Mr. Wutthichai Suraratchai Executive Vice President, Credit Risk Management 18. Ms. Kanoksri Rojmeta Executive Vice President, Retail and Small Business Distribution 3 (North) 19. Mrs. Vijitra Thumpothong Executive Vice President, Chief Audit 20. Mr. Kriangkrai Phurivitvattana Executive Vice President, Office of Executive Committee Chairman and CEO 21. Mr. Wichak Praditavanij Executive Vice President, Retail and Small Strategic Management 22. Dr. Sutut Chitmongkongsuk Executive Vice President, Commercial Banking 23. Mr. Songwut Chaowalit Executive Vice President, Retail & Small Business Distribution 1 (BKK 1) 24. Mr. Pompet Rasanon Executive Vice President, Sales Network – Automotive Lending 25. Mr. Lalit Dodampe Gamange Dharmaseri Executive Vice President, Treasury 26. Mr. Wisoot Tangadulrat Executive Vice President, Corporate Banking Sales 1 27. Mr. Noel Singh Executive Vice President, Corporate and Commercial Products 28. Mrs. Anisa Choocharn Executive Vice President, Non-Branch Channels and CEM 29. Mrs. Chanaporn Chantaprateep Executive Vice President, Human Resources 30. Mr. Yuadrith Dhiantravan Executive Vice President, Retail Risk Management 31. Mrs. Teranuj Koomsap Executive Vice President, Retail and Small Business Product Development 32. Mr. Tirachart Chiracharasporn Executive Vice President, Product and Marketing Management - Automotive Lending 33. Mr. Taweesak Songsithichoke Executive Vice President, Business Transformation 34. Mr. Smart Saensuk Executive Vice President, Investment Banking 35. Mrs. Pittimart Sanguansook Senior Vice President, Finance 36. Mr. Premsak Chitprapaporn First Vice President, Accounting

Thanachart bank public company limited 099 Notes: 1. Number 3 - 14 are executive officers and number 35-36 are those in the top four levels after the President as defined by the SEC. 2. Number 1 - 34 are those with managing authority under section 4 and 25 of the Financial Institution Business Act B.E. 2551. 3. The changes during 2016 were as follows: 3.1 Mrs. Chanaporn Chantaprateep has been appointed as Executive Vice President, Human Resources with effect from 29 April 2016. 3.2 Ms. Angkana Swasdipoon retired from Executive Vice President, Office of Executive Committee Chairman and CEO on 1 May 2016. 3.3 Mr. Yuadrith Dhiantravan has been appointed as Executive Vice President, Retail Risk Management with effect from 23 May 2016. 3.4 Mr. Wathanyu Nithyayon, Executive Vice President, Corporate Banking Sales 2, retired early with an effect on 1 June 2016. 3.5 Mr. Ajay Pratap Mundkur, Executive Vice President, Retail and Small Business Banking, completed the obligation to work in the Bank effective on 13 June 2016. 3.6 Mrs. Teranuj Koomsap has been appointed as Executive Vice President, Retail and Small Business Product Development with effect from 18 June 2016. 3.7 Mrs. Pittimart Sanguansook has been appointed as Senior Vice President, Finance with effect from 1 August 2016. 3.8 Mr. Premsak Chitprapaporn has been appointed as First Vice President, Accounting with effect from 1 August 2016. 3.9 Mr. Tirachart Chiracharasporn has been appointed as Executive Vice President, Product and Marketing Management - Automotive Lending with effect from 27 August 2016. 3.10 Mr. Praphan Anupongongarch has been appointed as Executive Vice President, Automotive Lending with effect from with effect from 17 September 2016. 3.11 Mr. Taweesak Songsithichoke has been appointed as Executive Vice President, Business Transformation with effect from 17 September 2016. 3.12 Mr. William George Said has been appointed as Executive Vice President, Chief Administrative Officer with effect from 4 November 2016. 3.13 Mr. Smart Saensuk has been appointed as Executive Vice President, Investment Banking with effect from 7 November 2016.

On 1 January 2017, the Bank had a change of manager and executive position according to the criteria of the SEC, including the authority to deal under Section 4 and Section 25 of the Financial Institution Business Act B.E. 2551 as follows: 1. Mr. Enghug Nontikarn retired from Executive Vice President, Treasury and Debt Capital Markets on 1 January 2017. 2. Mr. Wichak Praditavanij, had new work scope due to the revised organizational structure, from Executive Vice President, Retail & Small Strategic Management, to Executive Vice President, Non-Branch Channels. 3. Mrs. Anisa Choocharn resigned from Executive Vice President, Non-Branch Channels and CEM on 15 January 2017. 4. Mr. Boonlerd Sinsombat resigned from Executive Vice President, Information Technology on 8 February 2017.

100 ANNUAL REPORT 2016 Thanachart bank public company limited 101 inance F Accounting inancial Officer irst Vice President, enior Vice President, F F S 13 14 Chief Executive Vice President, Vice Executive President, Vice Executive Investment Management 11 12 Chief Risk Management Executive Vice President, President, Vice Executive 10 Management uman Resources H enior Vice President, enior Vice President, Nomination and S S Credit Committee Asset and Liability Executive Vice President, Marketing Communication Communication and B rand S uccession Committee Management Committee Remuneration Committee Risk Management Committee Investment Portfolio Committee Executive Vice President, ebt Capital Markets Capital ebt D enior Vice President, Office of Executive Committee Chairman and CEO and Chairman Committee Executive of Office S Automotive Lending irectors Executive Vice President, Vice Executive Collections and Recoveries D Executive Vice President, 8 9 Treasury and and Treasury and President oard of B Executive Committee Chief Executive Officer 1 anking anking B B anking Team 1 anking Team 2 B B Chief Audit Investment Commercial Executive Vice President, Executive Vice President, Executive Vice President, Executive Vice President, Executive Vice President, Vice Executive President, Vice Executive Corporate Corporate 6 7 Corporate and Commercial Products Commercial and Corporate ecember 2016 D Audit Committee ervices S Compliance hared ank as at 31 S enior Vice President B S usiness Transformation B Executive Vice President, Executive Vice President, Information Technology Executive Vice President, 5 Executive Vice President, Chief Administrative Officer 4 Officer tructure of the istribution eputy Chief Executive S D D 2 usiness Product B usiness usiness 14 B - means executives according to SEC’s definition. means evelopment mall 1 mall mall S D S ranch Channels and CEM B Executive Vice President, Executive Vice President, Executive Vice President, Vice Executive Retail and Retail and and Retail Non- 3 Management Remark:

100 ANNUAL REPORT 2016 Thanachart bank public company limited 101 inance F Accounting inancial Officer irst Vice President, enior Vice President, F F S 13 14 Chief Executive Vice President, Vice Executive President, Vice Executive Investment Management 11 12 Chief Risk Management Executive Vice President, President, Vice Executive 10 Management uman Resources H enior Vice President, enior Vice President, Nomination and S S Credit Committee Asset and Liability Executive Vice President, Marketing Communication Communication and B rand S uccession Committee Management Committee Remuneration Committee Risk Management Committee Investment Portfolio Committee Executive Vice President, ebt Capital Markets Capital ebt D enior Vice President, Office of Executive Committee Chairman and CEO and Chairman Committee Executive of Office S Automotive Lending irectors Executive Vice President, Vice Executive Collections and Recoveries D Executive Vice President, 8 9 Treasury and and Treasury and President oard of B Executive Committee Chief Executive Officer 1 anking anking B B anking Team 1 anking Team 2 B B Chief Audit Investment Commercial Executive Vice President, Executive Vice President, Executive Vice President, Executive Vice President, Executive Vice President, Vice Executive President, Vice Executive Corporate Corporate 6 7 Corporate and Commercial Products Commercial and Corporate Audit Committee ervices S Compliance hared ank as at 1 January 2017 S enior Vice President B S usiness Transformation B Executive Vice President, Executive Vice President, Information Technology Executive Vice President, 5 Executive Vice President, Chief Administrative Officer 4 Officer tructure of the istribution eputy Chief Executive S D D 2 usiness Product anking B usiness usiness B 14 B - means executives according to SEC’s definition. means evelopment mall 1 mall mall S D igital S D Executive Vice President, Executive Vice President, Executive Vice President, Vice Executive Retail and Retail and and Retail 3 Management Remark:

102 ANNUAL REPORT 2016 Company Secretary *

The Bank’s Board of Directors does not appoint a corporate secretariat. However, to be incompliant with the principles of good corporate governance as well as to ensure continuity and effectiveness of the Bank’s operation, the Board of Directors has assigned the Office of the Chairman of Executive Committee and the CEO to administer company secretary tasks. The Remuneration of Directors and Executives (1) financial remuneration

(a) Remuneration of the Board of Directors each year

As of 31 December 2016, the Bank has remunerated 3 panels of the Board of Directors, the Audit Committee, and the Nomination and Remuneration Committee totaling THB 35,965,000. The remuneration was paid in the forms of monthly compensation, meeting stipend, and performance allowance (based on the performance in 2015), which can be summarized as follows:

Table of the remuneration of the Board of Directors

Type of remuneration (THB per year) List of Directors Monthly Meeting Performance compensation stipends allowance Total 1. Mr. Banterng Tantivit 1,200,000.00 600,000.00 3,307,692.32 5,107,692.32 2. Mr. Suphadej Poonpipat 600,000.00 300,000.00 1,653,846.15 2,553,846.15 3. Mr. Kiettisak Meecharoen 600,000.00 300,000.00 1,653,846.15 2,553,846.15 4. Mr. Narong Chivangkur 600,000.00 300,000.00 1,653,846.15 2,553,846.15 5. Mr. Sataporn Jinachitra 600,000.00 300,000.00 1,653,846.15 2,553,846.15 6. Assoc. Prof. Dr. Somjai Phagaphasvivat 600,000.00 300,000.00 1,653,846.15 2,553,846.15 7. Mr. Rod Michael Reynolds 600,000.00 200,000.00 1,653,846.15 2,453,846.15 8. Mr. Walter Tas 600,000.00 200,000.00 1,386,512.13 2,186,512.13 9. Mr. Adil Aziz Chaudhry 450,000.00 225,000.00 - 675,000.00 10. Ms. Suvarnapha Suvarnaprathip 600,000.00 275,000.00 1,653,846.15 2,528,846.15 11. Mr. Peter Clifford Bessey 600,000.00 275,000.00 1,653,846.15 2,528,846.15 12. Mr. Somjate Moosirilert 600,000.00 300,000.00 1,653,846.15 2,553,846.15 Directors retired from position in 2015 1. Mr. Kobsak Duangdee - - 267,334.05 267,334.05 Directors retired from position in 2016 1. Mr. Alberto Jaramillo 100,000.00 25,000.00 1,653,846.15 1,778,846.15 Total 7,750,000.00 3,600,000.00 21,500,000.00 32,850,000.00

Notes: 1) Mr. Kobsak Duangdee resigned from his directorship on 1 March 2015. 2) Mr. Alberto Jaramillo resigned from his directorship on 1 March 2016. 3) Mr. Adil Aziz Chaudhry has assumed his directorship since 1 April 2016.

* The Bank is exempted from the enforcement of Division 3/1 of the Securities and Exchange Act B.E. 2535, in congruence with the Notification of the Securities and Exchange Commission No. Tor Chor. 20/2015 Re: Characteristics of companies exempted from the enforcement of Division 3/1 of the Securities and Exchange Act B.E. 2535, dated 21 May 2015.

Thanachart bank public company limited 103 Table of the remuneration of the Audit Committee

Type of remuneration (THB per year) List of Directors Monthly compensation Meeting stipends Total 1. Mr. Kiettisak Meecharoen 540,000.00 360,000.00 900,000.00 2. Mr. Sataporn Jinachitra 360,000.00 180,000.00 540,000.00 3. Assoc. Prof. Dr. Somjai Phagaphasvivat 360,000.00 180,000.00 540,000.00 Total 1,260,000.00 720,000.00 1,980,000.00

Table of the remuneration of the Nomination and Remuneration Committee

Type of remuneration (THB per year) List of Directors Monthly compensation 1. Mr. Narong Chivangkur 560,000.00 2. Mr. Sataporn Jinachitra 350,000.00 3. Mr. Rod Michael Reynolds 225,000.00 Total 1,135,000.00

The remuneration of independent director of the subsidiaries

None of the Bank’s independent director sits as an independent director of the subsidiaries.

(b) 2016 total remuneration, number of executive directors and executives, and forms of remuneration

In 2016, remuneration was paid in the form of salary, allowances, provident fund, etc. to executive directors and executives in accordance with the regulations as follows: • By the SEC’s definition, there were 15 executive directors and executives (including 1 executive changed during the past year) that a total remuneration paid amounted to THB 134,765,826. • With reference to the Bank of Thailand’s guideline, which as in accordance with section 4 and 25 of the Financial Institution Business Act B.E. 2551, there are 37 of those with managing authority (including 3 executives changed during the past year) that a total remuneration paid amounted to THB 275,039,120. (2) Other remuneration (if any)

Other remuneration of Directors

There is no other compensation paid to the directors.

Other remuneration of executive directors and executives

The Bank provides provident fund to executives in a rate of 3 or 5 or 7 or 10 percent of the salary depending on years of service of the person. In 2016, provident fund was paid in compliance with the regulations as follows: • By the SEC’s definition, there were 15 executive directors and executives (including 1 executive changed during the past year) that a total provident fund paid amounted to THB 6,103,899. • With reference to the Bank of Thailand’s guideline, which as in accordance with section 4 and 25 of the Financial Institution Business Act B.E. 2551, there are 37 of those with managing authority (including 3 executives changed during the past year) that a total provident fund paid amounted to THB 11,405,320.

104 ANNUAL REPORT 2016 Board of Directors and Management Team

Mr. Banterng Tantivit Chairman (Non-Executive Director)

Date of Appointment 22 April 2002

Age 72 years

Education(s) • Master of Science (Finance) in Management, Massachusetts Institute of Technology, U.S.A. • Bachelor of Science in Electrical Engineering, Massachusetts Institute of Technology, U.S.A.

Training Program Related to Roles, Duties, and Thai Institute of Directors Association Skills of Directorship • Certificate, Director Accreditation Program (DAP), Class 25/2004

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2003 - 2015 • Chairman, Plan Estate Company Limited 2001 - 2015 • Advisor, Patum Rice Mill and Granary Public Company Limited • Advisor, Dusit Thani Public Company Limited 2012 - 2014 • Chairman, Thanachart Insurance Public Company Limited 2005 - 2013 • Chairman, Thanachart Life Assurance Public Company Limited 2006 - 2012 • Vice Chairman, Thanachart Insurance Public Company Limited 2010 - 2011 • Chairman, Siam City Bank Public Company Limited Position(s) in Other Listed Companies 2015 - Present • Director, Dusit Thani Public Company Limited 2006 - Present • Chairman, Thanachart Capital Public Company Limited • Chairman, MBK Public Company Limited 1994 - Present • Chairman of the Executive Committee, MBK Public Company Limited Position(s) in Other Legal Entities 2016 - Present • Director, Lam Sai Village Company Limited 2006 - Present • Director, Siam Piwat Holding Company Limited 2003 - Present • Chairman, MBK Resort Public Company Limited • Director, Siam Piwat Company Limited • Director, B.V. Holding Company Limited 1987 - Present • Director, Deebuk Company Limited • Director, Thai Farming Company Limited

Thanachart bank public company limited 105 Mr. Suphadej Poonpipat Vice Chairman, Chairman of the Executive Committee, and Member of the Succession Committee (Executive Director)

Date of Appointment 1 September 2005 Age 66 years Education(s) • Master of Science, University of Wisconsin, U.S.A. • Bachelor of Business Administration and Accounting, Chulalongkorn University Training Program Related to Roles, Duties, and Thai Institute of Directors Association Skills of Directorship • Certificate, Role of the Chairman Program (RCP), Class 28/2012 • Certificate, Role of the Compensation Committee (RCC), Class 15/2012 • Certificate, Financial Institutions Governance Program (FGP), Class 4/2012 • Certificate, Director Accreditation Program (DAP), Class 8/2004 Thanachart Bank Public Company Limited • Anti Corruption for Executive, Class 1/2014 Capital Market Academy, the Stock Exchange of Thailand • Certificate, Leadership Program, Class 8/2009 Ernst & Young Office Limited with Thanachart Training and Development Company Limited • Overview and Principles of International Accounting Standards No. 39 (IAS39) (2009) Thanachart Training and Development Company Limited with SASIN • Thailand in the New Global Landscape (2009) Percentage of Shareholding in TBANK None Family Relationship with Director and Management None Experience(s) in the Past 5 Years 2011 - 2015 • Director, DMS Property Investment Private Limited 2003 - 2015 • Director, Plan Estate Company Limited 2002 - 2015 • Member of the Compensation and Nomination Committee, MBK Public Company Limited 2012 - 2014 • Vice Chairman, Thanachart Insurance Public Company Limited 2005 - 2013 • Chairman of the Executive Committee, Thanachart Life Assurance Public Company Limited 2003 - 2013 • Director, Thanachart Life Assurance Public Company Limited 2011 - 2012 • Vice Chairman, Patum Rice Mill and Granary Public Company Limited 2010 - 2011 • Vice Chairman, Siam City Bank Public Company Limited 2000 - 2011 • Advisor, Patum Rice Mill and Granary Public Company Limited Position(s) in Other Listed Companies 2015 - Present • Chairman of the Compensation and Nomination Committee, MBK Public Company Limited 2012 - Present • Chairman, Patum Rice Mill and Granary Public Company Limited 2011 - Present • Chairman of the Executive Committee, Patum Rice Mill and Granary Public Company Limited 2010 - Present • Chief Executive Officer, Thanachart Capital Public Company Limited 2007 - Present • Vice Chairman and Chairman of the Executive Committee, Thanachart Capital Public Company Limited • Director, Royal Orchid Hotel (Thailand) Public Company Limited 2006 - Present • Vice Chairman, MBK Public Company Limited 2003 - Present • Vice Chairman of the Executive Committee, MBK Public Company Limited 1994 - Present • Director, MBK Public Company Limited Position(s) in Other Legal Entities 2015 - Present • Chairman, DMS Property Investment Private Limited 2014 - Present • Chairman, MBK Life Assurance Public Company Limited (Formerly known as “Siam City Life Assurance Public Company Limited”) • Chairman, Thanachart Insurance Public Company Limited 2007 - Present • Director, Thai Royal Orchid Real Estate Company Limited 2006 - Present • Director, Siam Piwat Holding Company Limited 2005 - Present • Director and Chairman of the Executive Committee, Thanachart Insurance Public Company Limited • Director, MBK Resort Public Company Limited 2003 - Present • Director, Siam Piwat Company Limited

106 ANNUAL REPORT 2016 Mr. Kiettisak Meecharoen Chairman of the Audit Committee (Independent Director)

Date of Appointment 22 April 2002

Age 70 years

Education(s) • Master of Arts in Theoretical Economics, Keio University, Tokyo, Japan • Bachelor of Science in Finance, Hitotsubashi University, Kunitachi, Tokyo, Japan

Training Program Related to Roles, Duties, Thai Institute of Directors Association and Skills of Directorship • Certificate, Director Accreditation Program (DAP), Class 40/2005 • Certificate, Audit Committee Program (ACP), Class 10/2005 Thanachart Bank Public Company Limited • Anti Corruption for Executivesม Class 1/2014 World Bank • Futures Exchange (1995) Merrill Lynch, New York • Portfolio Investment (1994) JP Morgan, New York • Management Reserves (1993) Harvard Institute for International Development, Harvard University • Banking and Monetary Policy in Developing Countries (1988)

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2000 - 2013 • Independent Director, Thanachart Life Assurance Public Company Limited 2010 - 2011 • Independent Director and Chairman of the Audit Committee, Siam City Bank Public Company Limited Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2005 - Present • Independent Director, Tararom Enterprise Public Company Limited 2000 - Present • Independent Director and Chairman of the Audit Committee, Safety Insurance Public Company Limited

Thanachart bank public company limited 107 Mr. Narong Chivangkur Chairman of the Nomination and Remuneration Committee and Chairman of the Succession Committee (Independent Director)

Date of Appointment 22 April 2002

Age 72 years

Education(s) • Higher Diploma in Business and Marketing, Assumption Commercial College

Training Program Related to Roles, Duties, and Thai Institute of Directors Association Skills of Directorship • Certificate, Boards that Make a Difference (BMD), Class 3/2016 • Certificate, Board Matters and Trends (BMT), Class 1/2016 • Certificate, Advanced Audit Committee Program (AACP), Class 23/2016 • Certificate, Ethical Leadership Program (ELP), Class 3/2016 • Certificate, Anti-Corruption Executive Program (ACEP), Class 3/2011 • Certificate, Role of the Nominations and Governance Committee (RNG), Class 1/2011 • Certificate, Financial Institutions Governance Program (FGP), Class 2/2011 • Certificate, Audit Committee Program (ACP), Class 32/2010 • Certificate, Financial Statement for Directors (FSD), Class 4/2009 • Certificate, Successful Formulation & Execution of Strategy (SFE), Class 2/2008 • Certificate, Role of the Compensation Committee (RCC), Class 4/2007 • Certificate, Chartered Director Class (CDC), Class 1/2007 • Certificate, Corporate Social Responsibility (CSR), Class 1/2007 • Certificate, Director Certification Program (DCP), Class 34/2003 • Certificate, Director Examination, Class 11/2003 Thanachart Bank Public Company Limited • Anti Corruption for Executives, Class 1/2014 Pennsylvania State University • Advanced Executive Development Program (1987) Rochester Institute of Technology, New York, U.S.A. • Financial Management Program (1986) Asian Institute of Management, Philippines • Management Development Program (1982)

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2005 - 2014 • Director, Momchailai Development Company Limited 2003 - 2012 • Director, Momentum IM Company Limited 2010 - 2011 • Independent Director and Chairman of the Nomination and Remuneration Committee, Siam City Bank Public Company Limited 2004 - 2011 • Director, Momentum Sale and Distribution Company Limited Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2000 - Present • Director, Momentum BBS Company Limited

108 ANNUAL REPORT 2016 Mr. Sataporn Jinachitra Member of the Audit Committee, Member of the Nomination and Remuneration Committee, and Member of the Succession Committee (Independent Director)

Date of Appointment 19 July 2007

Age 68 years

Education(s) • Master of Science (Econometrics), The London School of Economics and Political Science (University of London), England • Bachelor of Science (Economics) (Upper Second Class Honours), University College London, England • Bachelor of Art (Law), Sukhothai Thammathiraj Open University

Training Program Related to Roles, Duties, and Thai Institute of Directors Association Skills of Directorship • Certificate, Boards that Make a Difference (BMD), Class 3/2016 • The Thailand’s 5th National Conference on Collective Action against Corruption, under the theme of “Tackling Corruption through Public-Private Collaboration • Certificate, Anti-Corruption for Executive Program (ACEP), Class 4/2012 • Certificate, the Executive Director Course (EDC), Class 1/2012 • Certificate, Role of the Chairman Program (RCP), Class 24/2010 • Certificate, Role of the Compensation Committee (RCC), Class 10/2010 • Certificate, Successful Formulation and Execution of Strategy (SFE), Class 4/2009 • Certificate, Corporate Social Responsibility (CSR), Class 1/2007 • Certificate, Chartered Director Class (CDC), Class 1/2007 • Certificate, DCP Refresher Course, Class 2/2006 • Certificate, Director Certification Program (DCP), Class 0/2000 Thanachart Bank Public Company Limited • Anti Corruption for Executives, Class 1/2014

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2010 - 2011 • Independent Director, Member of the Audit Committee and Member of the Nomination and Remuneration Committee, Siam City Bank Public Company Limited 2006 - 2011 • Dispute Resolution Committee, Interconnection Institution, NTC 1999 - 2011 • Director, Thai Institute of Directors Association Position(s) in Other Listed Companies None Position(s) in Other Legal Entities None

Thanachart bank public company limited 109 Assoc. Prof. Dr. Somjai Phagaphasvivat Member of the Audit Committee (Independent Director)

Date of Appointment 26 March 2009

Age 70 years

Education(s) • Doctorado de Estado, Facultad de Ciencia Politica, Universidad Complutense de Madrid, Spain • Diplome d’Etudes Superieures (Economic Integration), Universite de Nancy, France • Licenciatura, Facultad de Ciencia Politica y Economica, Universidad Complutense de Madrid, Spain • Bachelor of Arts, Chulalongkorn University

Training Program Related to Roles, Duties, and Thai Institute of Directors Association Skills of Directorship • Certificate, Director Accreditation Program (DAP), Class 34/2005

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2007 - 2016 • Director and Chairman of the Audit Committee, Thai Hua Rubber Public Company Limited • Director and Chairman of the Audit Committee, The Krungthep Thanakom Company Limited 2006 - 2013 • Chairman of the Audit Committee, SEAFCO Public Company Limited 1996 - 2013 • Member of the Audit Committee, Amarin Printing and Publishing Public Company Limited 2010 - 2011 • Independent Director and Member of the Audit Committee, Siam City Bank Public Company Limited Position(s) in Other Listed Companies 2015 - Present • Director, Supalai Public Company Limited 2013 - Present • Chairman, SEAFCO Public Company Limited • Chairman of the Audit Committee, Amarin Printing and Publishing Public Company Limited 2007 - Present • Independent Director and Chairman of the Audit Committee, Lee Feed Mill Public Company Limited 2006 - Present • Independent Director, SEAFCO Public Company Limited 1996 - Present • Independent Director, Amarin Printing and Publishing Public Company Limited Position(s) in Other Legal Entities None

110 ANNUAL REPORT 2016 Mr. Rod Michael Reynolds Member of the Nomination and Remuneration Committee and Member of the Succession Committee (Non-Executive Director)

Date of Appointment 15 January 2013

Age 59 years

Education(s) • Master of Business Administration, York University, Toronto, Canada • Bachelor of Science in Engineering, Queen’s University, Ontario, Canada

Training Program Related to Roles, Duties, and Euromoney Training Skills of Directorship • Euromoney Asia Corporate Governance Program (2012)

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in Other Listed Companies 1983 - 2016 • Various executive positions at The Bank of Nova Scotia 2012 - 2015 • Senior Independent Director, C.H. Bailey Public Limited Company 2009 - 2013 • Director, Tulsa Inspection Resources Limited Liability Company Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2009 - Present • Director, Logarithmics Limited

Thanachart bank public company limited 111 Mr. Walter Tas Director (Non-Executive Director)

Date of Appointment 1 March 2015

Age 45 years

Education(s) • Master of Arts, Economics and Business Administration, Vrije Universiteit Amsterdam, The Netherlands • Bachelor of Commerce - Economics, Hogeschool voor Economische Studies, Amsterdam, The Netherlands Training Program Related to Roles, Duties, and The Hong Kong Institute of Bankers Skills of Directorship • Regulator’s Perspective - Account Opening, KYC Information Collection and Financial Inclusion (2016) • Trends and Updates on Credit Risk Regulations and Requirements: Impact on Banking and Finance Sector of HK and China (2016) • Resolution Regime for Financial Institutions in Hong Kong (2015) • Implementation of Basel III in Hong Kong and Regulatory Requirements (2015) • Corporate Governance for AIs (2014)

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2014 - 2016 • Vice President, CFO & Corporate Development, Asia Pacific, Bank of Nova Scotia 2011 - 2014 • Vice President, Strategic Transactions and Review, Bank of Nova Scotia Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2016 - Present • Director, Scotia Securities Asia Limited • Chief Operating Officer & CFO, Global Banking and Markets, Asia Pacific, Bank of Nova Scotia 2014 - Present • Director, Scotiabank (Hong Kong) Limited, Hong Kong

112 ANNUAL REPORT 2016 Mr. Adil Aziz Chaudhry Director (Non-Executive Director)

Date of Appointment 1 April 2016

Age 59 years

Education(s) • Master of International Law and Banking, Asian Studies, Columbia University in the City of New York • Bachelor of Arts, English and Political Science, Rutgers University, New Brunswick

Training Program Related to Roles, Duties, and The Institute of Banking and Finance Singapore (IBF) Skills of Directorship • The Capital Markets and Financial Advisory Services Examination (CMFAS Exam) Module 1B - Rules and Regulations for Dealing in Securities (2016) The National Association of Securities Dealers (NASD) • The Series 7 Exam (General Securities Representative Examination) (1986)

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years None Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2004 - President • Vice President and Head Regional Credit Markets, The Bank of Nova Scotia Asia Limited, Singapore

Thanachart bank public company limited 113 Ms. Suvarnapha Suvarnaprathip Vice Chairperson of the Executive Committee (Executive Director)

Date of Appointment 22 April 2002

Age 71 years

Education(s) • Bachelor of Economics, Monash University, Australia

Training Program Related to Roles, Duties, and Thai Institute of Directors Association Skills of Directorship • Certificate, Director Accreditation Program (DAP), Class 20/2004 Ernst & Young Office Limited with Thanachart Training and Development Company Limited • Overview and Principles of International Accounting Standards No. 39 (IAS39) (2009) Thanachart Training and Development Company Limited with SASIN • Thailand in the New Global Landscape (2009) Banker Trust, New York, U.S.A. • Certificate, Executive Commercial Lending Training Program

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2005 - 2013 • Director and Member of the Executive Committee, Thanachart Life Assurance Public Company Limited 2010 - 2011 • Director and Vice Chairperson of the Executive Committee, Siam City Bank Public Company Limited Position(s) in Other Listed Companies 2008 - Present • Vice Chairperson of the Executive Committee, Thanachart Capital Public Company Limited 2005 - Present • Director, Thanachart Capital Public Company Limited Position(s) in Other Legal Entities 1991 - Present • Director, Seacon Development Public Company Limited

114 ANNUAL REPORT 2016 Mr. Peter Clifford Bessey Vice Chairman of the Executive Committee, Vice Chairman of the Risk Management Committee, and Deputy Chief Executive Officer (Executive Director)

Date of Appointment 1 September 2014

Age 56 years

Education(s) • Bachelor of Business Administration, University of New Brunswick, Canada

Training Program Related to Roles, Duties, and Richard Ivey School of Business Skills of Directorship • Ivey Executive Program Investment Funds in Canada • Institute of Canadian Bankers Associate of the Institute of Canadian Bankers • Institute of Canadian Bankers

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2011 - 2014 • President and Chief Executive Officer, Scotiabank de Puerto Rico 2008 - 2011 • Senior Vice President, Retail and Small Business Banking Atlantic Region, Halifax, Nova Scotia, Canada Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2014 - Present • Director, Thanachart Insurance Public Company Limited

Thanachart bank public company limited 115 Mr. Somjate Moosirilert Member of the Executive Committee, Chairman of the Risk Management Committee, and Chief Executive Officer and President (Executive Director)

Date of Appointment 29 October 2009 Age 60 years Education(s) • Master of Management, Sasin Graduate Institute of Business Administration of Chulalongkorn University • Bachelor of Business Administration, Thammasat University Training Program Related to Roles, Duties, and Thai Institute of Directors Association Skills of Directorship • Certificate, Corporate Governance for Capital Market Intermediaries (CGI), Class 15/2016 • Certificate, Role of the Chairman Program (RCP), Class 5/2001 Thanachart Bank Public Company Limited • Anti Corruption for Executives, Class 1/2014 Thai Listed Companies Association, the Stock Exchange of Thailand • Certificate, TLCA Leadership Development Program (LDP) (2012) Capital Market Academy, the Stock Exchange of Thailand • Certificate, Leadership Program, Class 5/2007 Judicial Training Institute • Certificate in the program for Senior Executives on Justice Administration, Class 9/2005

Percentage of Shareholding in TBANK None Family Relationship with Director and Management None Experience(s) in the Past 5 Years 2014 - 2016 • Member of the Steering Committee, Sasin Graduate Institute of Business Administration of Chulalongkorn University 2011 - 2016 • Director, The Thai Bankers’ Association 2011 - 2015 • Director and Vice Chairman, Thai Listed Companies Association 2010 - 2014 • Chairman and Chairman of the Executive Committee, Siam City Life Assurance Public Company Limited 2009 - 2012 • Governor, The Stock Exchange of Thailand 2010 - 2011 • Chairman, Siam City Asset Management Company Limited • Chairman, Thanachart Fund Management Company Limited • Chairman, Siam City Securities Company Limited • Director, Chairman of the Executive Committee and Chief Executive Officer and President, Siam City Bank Public Company Limited 2009 - 2011 • Vice Chairman, The Stock Exchange of Thailand • Director, Thai Capital Market Development Committee Position(s) in Other Listed Companies 2010 - Present • Senior Executive Vice President, Thanachart Capital Public Company Limited 2009 - Present • Director and Member of the Executive Committee, Thanachart Capital Public Company Limited Position(s) in Other Legal Entities 2016 - Present • Advisor to the Board, The Thai Bankers’ Association 2015 - Present • Advisory Chairman, Thai Listed Companies Association 2014 - Present • Vice Chairman, Thanachart Insurance Public Company Limited 2013 - Present • Chairman, Thanachart Fund Management Company Limited • Chairman of the Executive Committee, Thanachart Securities Public Company Limited • Vice Chairman of the Executive Committee, Thanachart Insurance Public Company Limited 2011 - Present • Chairman, TS Asset Management Company Limited • Chairman of the Executive Committee, Thanachart Fund Management Company Limited 2010 - Present • Director, Thanachart Fund Management Company Limited • Director and Member of the Executive Committee, Thanachart Insurance Public Company Limited • Advisory Board, Association of Thai Securities Companies 2009 - Present • Chairman, Thanachart Securities Public Company Limited

116 ANNUAL REPORT 2016 Mrs. Noossara Roonsamrarn Executive Vice President, Corporate Banking Team 1

Date of Appointment 22 April 2002

Age 58 years

Education(s) • Master of Business Administration, National Institute of Development Administration • Bachelor of Political Science, Chulalongkorn University

Training Program Thai Institute of Directors Association • Certificate, DCP Refresh Course, Class 4/2007 • Certificate, Director Certification Program (DCP), Class 19/2002 Harvard Business School • Certificate in Advanced Management Program (AMP 168) Capital Market Academy, The Stock Exchange of Thailand • Certificate, Leadership Program, Class 7 (CMA 7) The National Defence College • Diploma, National Defence College, The Joint-State-Private Sector Course (Class 22)

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 1997 - 2014 • Member of the Audit Committee, Thanachart Insurance Public Company Limited Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 1997 - Present • Director, Thanachart Insurance Public Company Limited

Thanachart bank public company limited 117 Mr. Piyaphong Artmangkorn Executive Vice President, Investment Management

Date of Appointment 1 September 2005

Age 59 years

Education(s) • Master of Public Administration (Taxation), University of Southern California, U.S.A. • Bachelor of Economics, Thammasat University

Training Program Thai Institute of Directors Association • Certificate, Director Accreditation Program (DAP), Class 8/2004 Thanachart Bank Public Company Limited • Anti Corruption for Executives, Class 1/2014

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years None Position(s) in Other Listed Companies 2006 - Present • Member of the Executive Committee, MBK Public Company Limited 1998 - Present • Director, MBK Public Company Limited Position(s) in Other Legal Entities 2016 - Present • Director, Thanachart Fund Management Company Limited

118 ANNUAL REPORT 2016 Mr. Anuwat Luengtaweekul Executive Vice President, Chief Financial Officer

Date of Appointment 1 June 2009

Age 53 years

Education(s) • Master of Business Administration, Rangsit University • Bachelor of Science (Accounting), Kasetsart University

Training Program Thai Institute of Directors Association • Certificate, Role of the Compensation Committee (RCC), Class 21/2016 • How to Measure the Success of Corporate Strategy (HMS), Class 4/2014 • Certificate, Successful Formulation and Execution of Strategy (SFE), Class 3/2009 • Certificate, Director Certification Program (DCP), Class 24/2002 • Certificate, Board and Performance Evaluation Program Thanachart Bank Public Company Limited • Anti Corruption for Executives, Class 1/2014 Association of Finance Companies • Financers’ Executive Development Program, Class 9/1994

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years None Position(s) in Other Listed Companies 2012 - Present • Member of the Nomination and Remuneration Committee, Ratchthani Leasing Public Company Limited 2010 - Present • Director, Ratchthani Leasing Public Company Limited Position(s) in Other Legal Entities 2016 - Present • Independent Director and Member of the Audit Committee, Information and Communication Networks Company Limited

Thanachart bank public company limited 119 Mr. Enghug Nontikarn Executive Vice President, Treasury and Debt Capital Markets *

Date of Appointment 1 June 2011

Age 60 years

Education(s) • Master of Business Administration, Thammasat University • Bachelor of Economics, Thammasat University

Training Program Thai Institute of Directors Association • Certificate, Director Accreditation Program (DAP), Class 25/2004 Thanachart Bank Public Company Limited • Anti Corruption for Executives, Class 1/2014

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2006 - 2011 • Senior Executive Vice President, Siam City Bank Public Company Limited Position(s) in Other Listed Companies 1995 - Present • Independent Director, Member of the Audit Committee and Member of the Nomination Committee, Srithai Superware Public Company Limited Position(s) in Other Legal Entities 2013 - Present • Director, TRIS Corporation Limited 2014 - Present • Director and Chairman of the Risk Management Committee, Thanachart Fund Management Company Limited ** • Member of the Nomination Committee, TRIS Corporation Limited

Notes: * Mr. Enghug Nontikarn retired from Executive Vice President – Treasury and Debt Capital Markets on 1 January 2017. ** Mr. Enghug Nontikarn resigned from his directorship and Chairman of the Risk Management Committee of Thanachart Fund Management Company Limited, effective on 1 January 2017.

120 ANNUAL REPORT 2016 Mr. Sanong Kumnuch Executive Vice President, Retail and Small Business Distribution

Date of Appointment 12 February 2015

Age 55 years

Education(s) • Master of Business Administration (Finance), University of the Thai Chamber of Commerce • Bachelor of Laws, Sukhothai Thammathirat Open University • Bachelor of Accountancy, Ramkhamhaeng University

Training Program Association of Investment Management Companies • Securities Investment Consultant Tutoring PacRim Group • Leadership Greatness The Bank of Thailand • Anti-Corruption for Executives Grid Business Solutions Limited • The Leadership Grid The Continuing Education Center Chulalongkorn University • Psychology of Leadership for Executives

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2010 - 2015 • Executive Vice President, Thanachart Bank Public Company Limited Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2016 - Present • Director, Thanachart Fund Management Company Limited

Thanachart bank public company limited 121 Mr. Ziad El-Hoss Executive Vice President, Chief Risk Officer

Date of Appointment 12 February 2015

Age 61 years

Education(s) • Master of Business Administration, The American University of Beirut, Lebanon

Training Program Canadian Securities Course The Bank of Nova Scotia • Anti-Corruption • Anti-Money Laundering • Operational Risk • Integrity and Privacy • Global Sanctions • Information and Cyber Security • Managing High Risk Customers

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2013 - 2015 • Executive Vice President, Chief Risk Officer, Thanachart Bank Public Company Limited 2008 - 2013 • Vice President, The Bank of Nova Scotia Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2015 - Present • Vice Chairman, TS Asset Management Company Limited

122 ANNUAL REPORT 2016 Ms. Wisarnsri Nilodom Executive Vice President, Corporate Banking Team 2

Date of Appointment 12 February 2015

Age 53 years

Education(s) • Master of Business Administration, SASIN Graduate Institute of Business Administration of Chulalongkorn University • Bachelor of Accountancy, Chulalongkorn University

Training Program Capital Market Academy, The Stock Exchange of Thailand • Certificate, Leadership Program, Class 21 (CMA 21) The National Defence College • Diploma, The National Defence Course for the Joint State – Private Sectors, Class 24 • Certificate of Achievement, Advanced Security Management Program (ASMP 5) The Bank of Thailand • Anti-Corruption for Executives Thanachart Bank Public Company Limited • Security officials in the executive management Course, Class 2/2014 • BANK GUARANTEE and STAND BY L/C and International Regulations, Class 3/2013 • Knowledge of the Money Laundering Act and the Terrorism Financing Act for Branch Executives

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in Other Listed Companies 2013 - 2015 • Executive Vice President, Thanachart Bank Public Company Limited 1999 - 2013 • Executive Vice President, Standard Chartered Bank (Thai) Public Company Limited Position(s) in Other Listed Companies None Position(s) in Other Legal Entities 2015 - Present • Director and Shareholder, CSR Alliance (Thailand) Company Limited • Director and Shareholder, Money M Company Limited

Thanachart bank public company limited 123 Mr. Boonlerd Sinsombat Executive Vice President, Information Technology

Date of Appointment 1 April 2015

Age 48 years

Education(s) • Master of Science (Computer & Engineering Management), Assumption University • Bachelor of Science (Mathematics), King Mongkut’s Institute of Technology Thonburi Training Program PacRim • Leadership Great Leader Great Team Great Result GE Capital • Executive Information Leadership Program – U.S.A. Thai Banking Association • Banker Managerial Training

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 1998 - 2015 • Executive Vice President, KGCP Information Technology, Ayudhya Capital Services Company Limited Position(s) in Other Listed Companies None Position(s) in Other Legal Entities None

124 ANNUAL REPORT 2016 Mr. Praphan Anupongongarch Executive Vice President, Automotive Lending

Date of Appointment 9 September 2016

Age 53 years

Education(s) • Master of Business Administration, National Institute of Development Administration • Bachelor of Business Administration (Marketing), Sukhothai Thammathirat Open University • Bachelor of Science (Mathematics), King Mongkut’s Institute of Technology Thonburi

Training Program Thai Institute of Directors Association • Certificate, Successful Formulation and Execution of Strategy (SFE), Class 22/2014 • Certificate, Director Certification Program (DCP), Class 173/2003

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2014 - 2016 • Executive Vice President, Automotive Lending, Thanachart Bank Public Company Limited 2010 - 2014 • Executive Vice President, Secured Lending and Deposits, Thanachart Bank Public Company Limited Position(s) in Other Listed Companies 2011 - Present • Director and Member of the Executive Committee, Ratchthani Leasing Public Company Limited Position(s) in Other Legal Entities 2010 - Present • Director, Thanachart Insurance Public Company Limited

Thanachart bank public company limited 125 Mr. William George Said Executive Vice President, Chief Administrative Officer

Date of Appointment 4 November 2016

Age 44 years

Education(s) • Master of Business Administration, Queen’s University, Kingston, Canada • Bachelor of Commerce, Dalhousie University

Training Program None

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2011 - 2015 • Managing Director and Head of Greater China, Scotiabank 2015 - 2016 • Managing Director, Structural Cost Transformation, Scotiabank Position(s) in Other Listed Companies None Position(s) in Other Legal Entities None Mrs. Pittimart Sanguansook Senior Vice President, Finance

Date of Appointment 1 August 2016

Age 52 years

Education(s) • Bachelor of Accounting, Thammasat University • High Diploma in Auditing, Thammasat University

Training Program • Seminar IFRS, Toronto, Canada • Seminar Fundamental Practice for CFO

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in the Past 5 Years 2008 - 2013 • Vice President, Citibank 2014 - 2016 • Senior Vice President, Accounting, Thanachart Bank Public Company Limited Position(s) in Other Listed Companies None Position(s) in Other Legal Entities None

126 ANNUAL REPORT 2016 Mr. Premsak Chitprapaporn First Vice President, Accounting

Date of Appointment 1 August 2016

Age 40 years

Education(s) • Bachelor of Accounting, Thammasat University • Master of Accountancy, Chulalongkorn University

Training Program • Seminar IFRS Update, Toronto, Canada

Percentage of Shareholding in TBANK None

Family Relationship with Director and Management None

Experience(s) in Other Listed Companies 2011 - 2016 • Vice President, Financial Analysis and Data Management & BNS Support, Thanachart Bank Public Company Limited Position(s) in Other Listed Companies None Position(s) in Other Legal Entities None

Thanachart bank public company limited 127 X 40

X 39

X 38

X 37

X 36

X 35

34

X Member of the Executive Committee Executive the of Member Authorized Person Management Power Management Person Authorized 33 /

F

32

f X 31

X 30

X 29

X 28

27 XXX

X 26 Vice Chairman / Vice Chairperson of the Executive Committee Executive the of Chairperson Vice / Chairman Vice Executive Vice President

X E // 25

X 24

X Related Companies 23

X 22

21 XXX

20 XXX

ubsidiary, Associated, and Related Companies

X Chairman of the Executive Committee Executive the of Chairman Senior Executive Vice President Vice Executive Senior 19 S

D /// 18 XXX XXX

X 17

X 16

X 15

X 14

X X 13

X 12 XXX Deputy Chief Executive Office Executive Chief Deputy Director

X X 11 X C

X 10

F

9 X / XX // XXX /// Company Associated

8

7

X 6 X /

5 XX XXX

X X X 4 XX // XXX /// ubsidiary Companies

S X X X 3 XXX ///

2 XXX /// Chief Executive Officer and President First Vice President Vice Chairman

1 B H X // XXX X / D XX XX /// A Parent

Company

K AN B T X X X X X X X E E E E E E E E E E H G X // XXX X / B XX /// X // C

Chief Executive Officer Chairman Senior Vice President A G Name ecember 2016 XXX D Mr. Banterng Tantivit Mr. Suphadej Poonpipat Mr. Narong Chivangkur Mr. Sataporn Jinachitra Phagaphasvivat Somjai Dr. Prof. Assoc. Mr. Rod Michael Reynolds Mr. Walter Tas Mr. Adil Aziz Chaudhry Ms. Suvarnapha Suvarnaprathip Mr. Peter Clifford Bessey Mr. Somjate Moosirilert Mrs. Noossara Roonsamsarn Mr. Piyaphong Artmongkorn Mr. Anuwat Luengtaweekul Mr. Enghug Nontikarn Mr. Sanong Kumnuch Mr. Ziad El-Hoss Ms. Wisarnsri Nilodom Mr. Boonlerd Sinsombat Mr. Praphan Anupongongarch Mr. William George Said Mrs. Pittimart Sanguansook Mr. Premsak Chitprapaporn Mr. Kiettisak Meecharoen

The Information of the Executives and Authorized Persons’ Position in As of 31 Notes:

128 ANNUAL REPORT 2016 List of Parent Company, Subsidiary, Associated, and Related Companies Parent Company

1. Thanachart Capital Public Company Limited Subsidiary Companies

2. Thanachart Securities Public Company Limited 6. Ratchthani Leasing Public Company Limited 3. Thanachart Fund Management Company Limited 7. Thanachart Management and Services Company Limited 4. Thanachart Insurance Public Company Limited 8. Thanachart Training and Development Company Limited 5. TS Assets Management Company Limited Associated Company

9. MBK Public Company Limited Related Companies

10. Dusit Thaini Public Company Limited 26. Supalai Public Company Limited 11. Siam Piwat Holding Company Limited 27. SEAFCO Public Company Limited 12. MBK Resort Public Company Limited 28. Amarin Printing & Publishing Public Company Limited 13. Siam Piwat Company Limited 29. Lee Feed Mill Public Company Limited 14. B.V. Holding Company Limited 30. Logarithmics Limited 15. Deebuk Company Limited 31. Scotia Securities Asia Limited 16. Thai Farming Company Limited 32. The Bank of Nova Scotia – Asia Pacific 17. Lam Sai Village Company Limited 33. Scotiabank (Hong Kong) Limited, Hong Kong 18. Patum Rice Mill and Granary Public Company Limited 34. The Bank of Nova Scotia Asia Limited, Singapore 19. Royal Orchid Hotel (Thailand) Public Company Limited 35. Seacon Development Public Company Limited 20. DMS Property Investment Private Limited 36. Information and Communication Networks Company Limited 21. MBK Life Assurance Public Company Limited 37. Srithai Superware Public Company Limited 22. Thai Royal Orchid Real Estate Company Limited 38. TRIS Corporation Limited 23. Tararom Enterprise Public Company Limited 39. CSR Alliance (Thailand) Company Limited 24. Safety Insurance Public Company Limited 40. Money M Company Limited 25. Momentum BBS Company Limited

Thanachart bank public company limited 129 General Information

Investment of the Bank in Other Companies

Juristic persons in which the Bank holds 10 percent or above of the total issued shares

Type of Type of Total number of Total number Percent of No. Company/Location TBANK’s Business shares paid-up shares of share held shareholding1 1. Thanachart Securities PCL. Securities Ordinary 1,500,000,000 1,499,999,930 100.00 444 MBK Tower, 14th, 18th and 19th Floor, Share Phayathai Road, Wangmai, Pathumwan, Bangkok 10330 Tel. +66 (0) 2217-8888, 2217-9595

2. Thanachart Insurance PCL. Non-life Ordinary 74,000,000 73,999,434 100.00 999/1 the Nine Tower, Rama 9 Road, Insurance share Suanluang, Bangkok 10250 Tel. +66 (0) 2308-9300 Fax. +66 (0) 2308-9333

3. Thanachart Management and Services Co., Ltd. Services Ordinary 600,000 599,993 100.00 2 Suan Mali Building, 2nd Floor, share Chalerm Khet 4 Road, Wat Thep Sirin, Pom Prap Sattru Phai, Bangkok 10110 Tel. +66 (0) 2220-2222 Ext. 1569 Fax. +66 (0) 2220-2522

4. Thanachart Training and Development Co., Ltd. Training Ordinary 500,000 499,993 100.00 2 Suan Mali Building, M Floor, Chalerm Khet 4 Road, share Wat Thep Sirin, Pom Prap Sattru Phai, Bangkok 10110 Tel. +66 (0) 2220-2222 Ext. 1018 Fax. +66 (0) 2220-2300

5. Thanachart Group Leasing Co., Ltd. Leasing Ordinary 36,000,000 35,999,994 100.00 444 MBK Tower, 19th Floor, share Phayathai Road, Wangmai, Pathumwan, Bangkok 10330 Tel. +66 (0) 2217-8000, 2613-6000 Fax. +66 (0) 2217-8098

6. National Leasing Co., Ltd.2 Leasing Ordinary 600,000 599,994 100.00 444 MBK Tower, 19th Floor, share Phayathai Road, Wangmai, Pathumwan, Bangkok 10330 Tel. +66 (0) 2217-8000

130 ANNUAL REPORT 2016 Type of Type of Total number of Total number Percent of No. Company/Location TBANK’s Business shares paid-up shares of share held shareholding1 7. Security SCIB Services Co., Ltd. Services Ordinary 100,000 99,998 100.00 1091/230 New Petchburi Road, Share Makkasan, Ratchathewi, Bangkok 10400 Tel. +66 (0) 2208-5061-2 Fax. +66 (0) 2651-6611

8. TS Asset Management Co., Ltd. Non-performing Ordinary 200,000,000 199,999,997 100.00 1101 Petchburi Building, 9th Floor, asset Share New Petchburi Road, Makkasan, Ratchathewi, management Bangkok 10400 Tel. +66 (0) 2208-5000 Fax. +66 (0) 2253-6130

9. Thanachart Broker Co., Ltd. Life and Ordinary 10,000,000 9,999,000 99.99 999/3, 999/4 The Nine Tower D, E, F, 4th Floor, Non-life Share Rama 9 Road, Suanluang, Insurance Bangkok 10250 Broker Tel. +66 (0) 2308-9700 Ext. 2235 Fax. +66 (0) 2308-9775

10. Thanachart Fund Management Co., Ltd. Mutual fund Ordinary 10,000,000 7,499,993 75.00 231 MBK Life Building, 5th-7th Floor, management Share Ratchadamri Road, Lumpini, Pathumwan, Bangkok 10330 Tel. +66 (0) 2126-8300 Fax. +66 (0) 2252-1733

11. Ratchthani Leasing PCL. Leasing Ordinary 2,416,227,209 1,574,951,400 65.18 77/35-36 Sinn Sathorn Tower, 11 Up Floor, Share Krung Thonburi Road, Klong Ton Sai, Klong San, Bangkok 10600 Tel. +66 (0) 2440-0844 Fax. +66 (0) 2440-0848

12. Thoon Ruam Kan Co., Ltd.3 Others Ordinary 240,000 80,000 33.33 133/2 Soi Sukhumvit 21, Sukhumvit Road, Share Klongtoey, Bangkok 10110

13. Siam Media and Communication Co., Ltd.3 Communication Ordinary 7,000,000 1,633,800 23.34 18 Building 2 West SCB Park Plaza, Share 17th-22nd Floor, Ratchadapisek Road, Ladyao, Chatuchak, Bangkok 10900

14. High Pressure Steal Pipe Industry Co., Ltd.3 Industrial Ordinary 500,001 70,470 14.09 36/4 Moo 2, Soi Wat Mahawong, pipe Share Phuchaosmingprai Road, Samrong, Manufacturing Prapha Daeng, Samut Prakarn 10130

Thanachart bank public company limited 131 Type of Type of Total number of Total number Percent of No. Company/Location TBANK’s Business shares paid-up shares of share held shareholding1 15. Puen Pob Paet Co., Ltd.3 Medical Ordinary 100,000 9,998 10.00 444 MBK Tower, 9th Floor, Phayathai Road, Clinic Share Wangmai, Pathumwan, Bangkok 10330

16. Crystal City Development Co., Ltd. Construction Ordinary 750,000 75,000 10.00 419 Sathupradit Road, Chong Nonsi, Share Yannawa, Bangkok 10120

17. Metropolitan Industrial Leasing Co., Ltd. Leasing Ordinary 2,500,000 250,000 10.00 81/42 Moo 5, Surasak, Share Sriracha, Chonburi 20110 Tel. +66 (0) 3804-8052 Fax. +66 (0) 3804-8053

18. Sahakol Chassis Co., Ltd. Vehicle Ordinary 45,000,000 4,500,000 10.00 1418/6-8 Phaholyotin Road, Lad Yao, Share Chatuchak, Bangkok 10900

19. Siam Tire Cord Co., Ltd. Textiles and Ordinary 20,000 2,000 10.00 46/1 Moo 9, Bangna – Trad Road, K.M. 39, apparel Share Bangprakong, Chachoengsao, 24180 Tel: +66 (0) 3853-8403-5 Fax: +66 (0) 3853-8399

20. Soonvijai Development Co., Ltd.3 Construction Ordinary 13,000 1,300 10.00 1740 New Petchburi Road, Bangkapi, Share Huay Klang, Bangkok 10310

21. Modular Samko Co., Ltd.3 Household Ordinary 3,500,000 350,000 10.00 155 Moo 14, Sukhumvit Sai Kao Road, Share Bangpakong, Chachoengsao 24130

22. Siam Euro Leasing Co., Ltd.3 Finances and Ordinary 13,000,000 1,300,000 10.00 20/22 Soi Prommitr, Sukhumvit Road, Securities Share Klong Tan Nuea, Watthana, Bangkok 10110

23. Siam City Real Estate Services Co.,Ltd.3 Construction Ordinary 1,000,000 100,000 10.00 62 Thaniya Building, 1st Floor, Silom Road, Suriyawong, Share Bangrak, Bangkok 10500

Notes: 1 Shareholding percentage has shown included the shareholding of related companies. 2 The Bank indirectly held shares through TGL which was in line with the definition of subsidiary company announced by the SET. 3 Held by the Bank, which is in the process of liquidation, dissolution, bankruptcy, receivership or abandoned.

132 ANNUAL REPORT 2016 The Bank’s References

Location of Head Office : 444 MBK Tower, Phayathai Road, Wangmai, Pathumwan, Bangkok 10330, Thailand

Registration No. : 0107536001401

Type of Business : Commercial Banking

Registered Capital : THB 99,136,649,030, consist of common shares of 9,913,664,903 shares with a value of THB 10 per share.

Paid-up Capital : THB 60,648,621,700, consist of common shares of 6,064,862,170 shares with a value of THB 10 per share.

Website : www.thanachartbank.co.th

Telephone : 0-2217-8000

Fax : 0-2217-8333

Thanachart Contact Center : 1770

Other References Registrar :

Ordinary shares Thailand Securities Depository Company Limited 93 Ratchadaphisek Road, Din Dang, Bangkok 10400 Tel. +66 (0) 2009-9000 Call Center +66 (0) 2009-9999 Fax. +66 (0) 2009-9476 Website www.set.or.th/tsd

Debenture TBANK227A, Thanachart Bank Public Company Limited TBANK22OA, TBANK24DA, Registrar and Paying Agent Department and TBANK25NA 1101 Petchburi Building, 2nd Floor, New Petchburi Road, Makkasan, Ratchathewi, Bangkok 10400 Tel. +66 (0) 2208-5000 ext. 5017, 4519 Fax. +66 (0) 2651-7899, +66 (0) 2651-7915 Website www.thanachartbank.co.th

Thanachart bank public company limited 133 Bondholders’ Representative :

Debenture TBANK227A, and TBANK22OA Bank of Ayudhya Public Company Limited 1222, 17th Floor, Rama III Road, Bang Phongphang, Yan Nawa, Bangkok 10120 Tel. +66 (0) 2296-3582 Fax. +66 (0) 2683-1298 Website www.krungsri.co.th

Debenture TBANK24DA and TBANK25NA - None -

Auditor : Miss Ratana Jala Certified Public Accountant (Thailand) No. 3734 EY Office Limited 193/136-137 Lake Rajada Office Complex, 33rd Floor, New Ratchadaphisek Road, Klongtoey, Bangkok 10110 Tel. +66 (0) 2264-0777 Fax +66 (0) 2264-0789-90 Website www.ey.com

Legal Advisor : - None -

Advisor or management under the - None - management agreement :

0134 ANNUAL REPORT 2016 Companies in Thanachart Group

Thanachart Capital Public Company Limited Thanachart Insurance Public Company Limited 444 MBK Tower, 16th - 17th Floor, 999/1 The Nine Tower, Rama 9 Road, Phayathai Road, Wangmai, Pathumwan, Suanluang, Suanluang, Bangkok 10330, Thailand Bangkok 10250, Thailand Tel. +66 (0) 2217-8000 Tel. +66 (0) 2308-9300 Fax +66 (0) 2217-8312 Fax +66 (0) 2308-9333 www.thanachart.co.th www.thanachartinsurance.co.th Registration No. 0107536000510 Registration No. 0107555000473 Thanachart Bank Public Company Limited MBK Life Assurance Public Company Limited 444 MBK Tower, 231 MBK Life Building, Rachadamri Road, Phayathai Road, Wangmai, Pathumwan, Lumpini, Pathumwan, Bangkok 10330, Thailand Bangkok 10330, Thailand Tel. +66 (0) 2252-5070 Tel. +66 (0) 2217-8000 Fax +66 (0) 2252-7155 Fax +66 (0) 2217-8333 www.mbklife.co.th www.thanachartbank.co.th Registration No. 0107555000481 Registration No. 0107536001401 NFS Asset Management Company Limited Thanachart Securities Public Company Limited 444 MBK Tower, 444 MBK Tower, 17th Floor, Phayathai Road, Wangmai, 14th, 18th and 19th Floor, Phayathai Road, Wangmai, Pathumwan, Bangkok 10330, Thailand Pathumwan, Bangkok 10330, Thailand Tel. +66 (0) 2217-8000 Tel. +66 (0) 2217-8888 Fax +66 (0) 2217-8289 Fax +66 (0) 2217-9642 Website: None www.tnsitrade.com Registration No. 0105540086022 Registration No. 0107557000591 MAX Asset Management Company Limited Thanachart Fund Management Company Limited 444 MBK Tower, 17th Floor, 231 MBK Life Building, Wangmai, Pathumwan, 5th-7th Floor, Rachadamri Road, Lumpini, Bangkok 10330, Thailand Pathumwan, Bangkok 10330, Thailand Tel. +66 (0) 2217-8000 Tel. +66 (0) 2126-8300 Fax +66 (0) 2217-8289 Fax +66 (0) 2253-8483 Website: None www.thanachartfund.co.th Registration No. 0105540093282 Registration No. 0105535049696

Thanachart bank public company limited 135 TS Asset Management Company Limited Thanachart Management and Services Company Limited 1101 Petchburi Building, 9th Floor, 2 Suan Mali Building, 2nd Floor, New Petchburi Road, Makkasan, Ratchathewi, Chalerm Khet 4 Road, Wat Thep Sirin, Bangkok 10400, Thailand Pom Prap Sattru Phai, Bangkok 10100, Thailand Tel. +66 (0) 2208-5555 Tel. +66 (0) 2220-2222 Fax +66 (0) 2208-5892 Fax +66 (0) 2220-2520 www.thanachartnpa.com Website: None Registration No. 0105554031624 Registration No. 0105533119077 Ratchthani Leasing Public Company Limited Thanachart Training and Development Company Limited 77/35-36 Sinn Sathorn Tower, 11th UP Floor, 2 Suan Mali Building, M Floor, Chalerm Khet 4 Road, Krung Thonburi Road, Klong Ton Sai, Klong San, Wat Thep Sirin, Pom Prap Sattru Phai, Bangkok 10600, Thailand Bangkok 10100, Thailand Tel. +66 (0) 2431-9000 Tel. +66 (0) 2220-2222 Fax +66 (0) 2431-9099 Fax +66 (0) 2220-2300 www.ratchthani.com Website: None Registration No. 0107545000209 Registration No. 0105550042966 Thanachart Group Leasing Company Limited Thanachart Broker Company Limited 444 MBK Tower, 19th Floor, 999/3, 999/4 The Nine Tower D, E, F 4th Floor, Phayathai Road, Wangmai, Pathumwan, Rama 9 Road, Suanluang, Suanluang, Bangkok 10330, Thailand Bangkok 10250, Thailand Tel. +66 (0) 2217-8000 Tel. +66 (0) 2685-0200, +66 (0) 2308-9700 Fax +66 (0) 2217-8098 Fax +66 (0) 2685-0333, +66 (0) 2308-9775 Website: None Website: None Registration No. 0105538045861 Registration No. 0105540075314 National Leasing Company Limited Security SCIB Services Company Limited 444 MBK Tower, 19th Floor, 1091/230 New Petchburi Road, Phayathai Road, Wangmai, Pathumwan, Makkasan, Ratchathewi, Bangkok 10330, Thailand Bangkok 10400, Thailand Tel. +66 (0) 2217-8000 Tel. +66 (0) 2208-5091-2 Fax None Fax +66 (0) 2651-6611 Website: None Website: None Registration No. 0105532078407 Registration No. 0105534009895

136 ANNUAL REPORT 2016 Shareholders and Dividend Payment Policy

Shareholders (1) List of major shareholders

(a) Top ten major shareholders with number of shares and percentage of shareholders as of 1 September 2016 (the latest closing date of the suspended share-transfer register) were as follows:

Percentage of Rank List of Shareholders Number of Shares Shareholding

1. Thanachart Capital Public Company Limited1 3,090,699,234 50.961 2. Scotia Netherlands Holdings B.V.2 2,971,739,163 48.999 3 Mr. Thung-ngern Pum-ngern 460,309 0.008 4. Ms. Kittima Tolieng 173,278 0.003 5. Mr. Sathit Mujarintangkur 121,360 0.002 6. Ms. Piengjai Hanphanit 96,665 0.002 7. Mr. Kobchai Chirathivat 84,809 0.001 8. Mr. Thanawat Chareonthassanont 70,000 0.001 9. Mr. Pinit Laosoontorn 69,926 0.001 10. Mr. Somyos Jittipralangsri 60,000 0.001 By redeivership of Legal Execution Department of Thai Finance and Securities PCL. 11. Other Shareholders 1,287,426 0.021

Issued and Paid-up Shares 6,064,862,170 100.000

Thai Shareholders 3,093,079,707 51.000

Foreign Shareholders 2,971,782,463 49.000

Source: Report of the Bank’s major shareholders as of 1 September 2016 prepared by Thailand Securities Depository Company Limited Remark 1. The number 1 shareholder (Thanachart Capital Public Company Limited), which operates an investment business (a holding company), was granted approval to undertake transactions as follows: 1) investing and giving credit to the subsidiaries under Thanachart Financial Group and 2) any investment made in other company that cause the holding company to have controlling power, such other company must be a financial institution, or that of supporting financial business, and the holding company must obtain approval from the Bank of Thailand (“BOT”).

Thanachart bank public company limited 137 Name list of the company’s major shareholders as at 31 October 2016 (the latest closing date of the suspended share-transfer registerwere as follows:

Name of shareholders Ordinary Preferred Total Shares Percentage of Shares Shares Shareholding 1. Thai NVDR Company Limited 217,746,901 - 217,746,901 18.048 2. MBK Public Company Limited 129,914,400 - 129,914,400 10.768 Primacy Elegance Investments 3,400,000 - 3,400,000 0.282 Limited 3. State Street Bank Europe Limited 59,071,353 - 59,071,353 4.896 4. Thanachart Capital Public 41,350,000 - 41,350,000 3.427 Company Limited 5. State Street Bank and Trust 29,188,023 - 29,188,023 2.419 Company 6. Chase Nominees Limited 26,772,229 - 26,772,229 2.219 7. Krungsri Dividend Stock LTF 22,710,600 - 22,710,600 1.882 8. Nortrust Nominees LTD-CL AC 17,684,198 - 17,684,198 1.466 9. The Bank of New York (Nominees) 15,458,690 - 15,458,690 1.281 Limited 10. HSBC (Singapore) Nominees 12,916,800 - 12,916,800 1.071 PTE LTD

Other Shareholders 630,253,293 13,216 630,266,509 52.240

Issued and Paid-up Shares 1,206,466,487 13,216 1,206,479,703 100.000

Thai Shareholders 844,721,941 13,156 844,735,097 70.017

Foreign Shareholders 361,744,546 60 361,744,606 29.983

Notes: 1) The second Shareholders including related parties under Section 258 of the Securities and Exchange Act (No. 4) B.E. 2551 is the same order. 2) The fourth largest shareholder (Thanachart Capital Public Company Limited) was obtained from the repurchase of shares under the Treasury Stock Program during 10 February 2015 to 9 August 2015. 2. The number 2 shareholder (Scotia Netherlands Holdings B.V.) is a juristic person registered in Netherlands. BOT granted approval to Scotiabank to make changes to the Bank’s shareholding structure by holding 48.999 percent of the Bank’s total paid-up shares via Scotia Netherlands Holding B.V. on 9 May 2011.

(b) The groups of major shareholders who in fact have influence over the formulation of the Bank’s management policies and operation include Thanachart Capital Public Company Limited (“TCAP”) holding 50.961 percent and the Scotia Netherlands Holdings B.V. holding 48.999 percent of the total paid-up shares. TCAP does not have any major shareholder with significant influence over its management policies or operation. (2) shareholders’ Agreement

TCAP and Scotiabank mutually established the Shareholders’ Agreement with the key condition requiring each party’s representatives to contribute to the Bank’s management as directors and executives of the Bank as well as directors of the Bank’s key subsidiaries. Moreover, any resolution made by the Board of Directors and the Shareholders Meeting on significant issues shall be compliant with the Bank’s Articles of Association aiming to achieve the common goal of both shareholders via the Bank’s management.

138 ANNUAL REPORT 2016 Dividend Payment Policy Dividend Payment Policy of the Bank

The Bank has a policy to pay dividend out of its net profit after deduction of all reserve funds according to requirements of the relevant laws. Payment of dividends is subject to investment plans and other necessaries as seen appropriate by the Board of Directors. The Board, however, may approve to pay an interim dividend and will report to the shareholders at the next Shareholders Meeting. Dividend Payment Policy of the Subsidiary Companies

The Bank has not fixed a dividend payout ratio for its subsidiaries. Their dividend payments shall depend on the operating results of each company.

The subsidiary companies, similar to the Bank, have a policy to pay dividend out of their net profit after deduction of all reserve funds according to requirements of the relevant laws. Payment of dividends is subject to investment plans and other necessaries as seen appropriate by the Board of Directors. The Board, however, may approve to pay an interim dividend and will report to the shareholders at the next Shareholders Meeting. Previous Dividend Payment

Performance of the year 2011 2012* 2013 2014 2015*** Paid in 2012 2013 2014 2015 2016 Earnings per share (THB) 1.21 1.24 2.56 1.44 2.03

Interim dividend payment per share for the performance during the first half of the year (THB) - - - - 0.22

Dividend payment per share for the performance during the second half of the year (THB) 0.35 0.37 0.45 0.45 0.40

Dividend Payout Ratio 28.94 29.76 **17.58 31.34 32.83

Notes: * Net profit from restated separate financial statements. ** The dividend payout ratio represented 17.58 percent of the net profit based on the Bank’s separate financial statements. (In case of excluding profit from extraordinary item, the dividend payout ratio represented 32.17 percent) *** During 2015, the Bank called up additional paid-up share capital of 551,197,267 shares at THB 10 and registered additional share capital. The Bank has issued and paid-up share capital totaling THB 60,648,621,700.

However, on 15 September 2016, the Bank paid an interim dividend for the year 2016 at the rate of THB 0.35 per share, an equivalent of 35.37 percent of the first half of 2016 net profit in consolidated financial statements.

Thanachart bank public company limited 139 RESPONSIBILITIES OF THE BOARD OF DIRECTORS FOR THE FINANCIAL REPORT

TBANK’s Board of Directors is responsible for the separated and consolidated financial statements and for financial information presented in this annual report. The aforementioned financial statements were prepared in accordance with financial reporting standards, applying appropriate and consistent accounting policies along with careful judgments and reasonable estimates. Important information is fully disclosed to shareholders and other investors in the notes to financial statements reflecting the Bank’s accurate financial status and performance and its commitment to transparency.

TBANK’s Board of Directors has established and maintained appropriate and effective risk management and internal control systems in order to rationally assure that the accounting information is correctly and completely recorded and adequate to sustain TBANK’s assets, as well as to prevent any significant irregular operations or frauds.

TBANK’s Board of Directors has appointed the Audit Committee comprising independent directors who have knowledge and expertise in finance and accounting. They are responsible for revision of accounting policies and the quality of the Bank’s financial statements, internal control, and internal audit, as well as the disclosure of related party transactions. The committee’s comments on these issues were included in the Audit Committee Report in this annual report.

TBANK and its subsidiaries’ separated and consolidated financial statements were audited by the certified public accountant of EY Office Limited. TBANK’s Board of Directors had provided the auditing team all information and document supports in order that the auditor would be able to audit and address his/her opinion to the auditing standards. The auditor’s opinion was included in the Report of Independent Auditor in this annual report.

TBANK’s Board of Directors is of the opinion that TBANK’s overall internal control is at a satisfying level and provides reliability on TBANK and its subsidiaries’ separated and consolidated financial statements for the year ended 31 December 2016 which is in compliance with financial reporting standards and relevant rules and regulations.

(Mr. Banterng Tantivit) (Mr. Somjate Moosirilert) Chairman of the Board of Director Chief Executive Officer and President

140 ANNUAL REPORT 2016 REPORT OF THE AUDIT COMMITTEE

The Audit Committee of Thanachart Bank Public Company Limited (“the Bank”) consisted of three independent directors, who are highly qualified and have experience in accounting, finance, financial institutions and large corporations. The composition was as follows;

1. Mr. Kiettisak Meecharoen Chairman 2. Assoc. Prof. Dr.Somjai Phagaphasvivat Member 3. Mr. Sataporn Jinachitra Member

Mrs. Vijitra Thumpothong, Executive Vice President, Audit, served as the secretary of the Audit Committee.

The Audit Committee was responsible for carrying out the duties as assigned by TBANK’s Board of Directors in line with the regulations imposed by the Securities and Exchange Commission (“SEC”), notifications of the Stock Exchange of Thailand (“SET”) and the Bank of Thailand (“BOT”) as stated in the charter stipulated by the Board of Directors.

In 2016, the Audit Committee convened twelve meetings in total with the management, top level executives of the related business units and auditors to acknowledge and consider numerous matters as of the following:

• Financial Statement

Reviewed the quarterly, year-end and consolidated financial statements of TBANK and its subsidiaries by consulting with the external audits and Chief Financial Officer (CFO) in order to ensure financial reporting standards, the accuracy of its significant matters, and the appropriate disclosure of information. In addition, the Audit Committee convened the meetings without the presence of TBANK management in order to ensure the independence of the auditors’ duties and comments.

• Internal Control and Internal Audit

Reviewing the Bank’s internal control system and internal audit are efficient, as well as sufficient anti-corruption measures, inclusive of whistle-blowing processes, independent scrutiny, and protection of the whistle-blowers to ensure they will not be in predicament and that the accused are treated fairly. Consulting with the internal auditors in planning and approv- ing the annual audit plan, considering the adequacy and appropriateness of personnel in the performance and independence of internal audit by monitoring and evaluating the monthly performance, assessing the ability of officers in order to improve auditing knowledge and efficiency, and considering examination report of the BOT’s and the auditor in order to assess the adequacy of the internal control system.

• Regulatory Compliance

Reviewed the performance of the Bank to comply with laws and regulations, such as the SEC, SET, IOC and BOT and acknowledged changes of any rules or regulations that affected operation and ensured the adjustment of operations in response to those changes.

THANACHART BANK PUBLIC COMPANY LIMITED 141 • Risk Management

The Audit Committee has focused on risk management and is aware that any change in economy, politics and society will significantly affect the risk management of the Bank. We have meetings with the risk management group in order to make sure that of the Bank has appropriate, adequate and effective oversight.

• Audit Committee’s Charter

Approved the amendment in the Audit Committee’s Charter to make it up-to-date and more appropriate and evaluation of the performance of the Audit Committee including the results of the evaluation which showed that audit compliance as set forth in the Charter and performance were in line with the best practices that strengthened good governance effectively.

• Independent Auditor

Consider and make recommendations on the appointment of the auditor of the Bank by considering qualifications, capabilities, experiences, independence and quality of previous works and the remuneration of the auditors in line with responsibility by the Board of Directors to propose to the shareholders for an approval of the auditors and the remuneration of the auditors.

• Related transactions or conflict of interest

Related transactions or transactions which may have conflict of interest based on the principle of accountability, transparency and adequate disclosure to the relevant authorities, as reported from business units before proposing to the Board of Directors.

The Audit Committee performed its duties prudently and independently, and provided straightforward comments based on transparency and good governance. The Audit Committee considered core operation jointly with senior executive in charge of concerned groups, and internal and external auditors. The Audit Committee is of the opinion that financial statements have been prepared accurately with adequate information disclosure. The internal control, internal audit and risk management have been appropriate, effective, and in compliance with laws and regulations. Independent auditor was independent to perform duties. Transactions and transactions that may have potential conflicts of interests are reasonable and normal business activities, including adequate disclosure.

(Mr. Kiettisak Meecharoen) Chairman of the Audit Committee

142 ANNUAL REPORT 2016 INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Thanachart Bank Public Company Limited Opinion I have audited the accompanying consolidated financial statements of Thanachart Bank Public Company Limited and its subsidiaries (the Group), which comprise the consolidated statement of financial position as at 31 December 2016, and the related consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and have also audited the separate financial statements of Thanachart Bank Public Company Limited for the same period. In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Thanachart Bank Public Company Limited and its subsidiaries and of Thanachart Bank Public Company Limited as at 31 December 2016, their financial performance and cash flows for the year then ended in accordance with Thai Financial Reporting Standards. Basis for Opinion I conducted my audit in accordance with Thai Standards on Auditing. My responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of my report. I am independent of the Group in accordance with the Code of Ethics for Professional Accountants as issued by the Federation of Accounting Professions under the Royal Patronage of His Majesty the King as relevant to my audit of the financial statements, and I have fulfilled my other ethical responsibilities in accordance with the Code. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Emphasis of matter I draw attention to Note 4 to the consolidated financial statements regarding the change in accounting policy on the measurement of land, from cost method to revaluation method. My opinion is not qualified in respect of this matter. Other Information Management is responsible for the other information. The other information comprise the information included in annual report of the Group, but does not include the financial statements and my auditor’s report thereon. My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon. In connection with my audit of the financial statements, my responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or my knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work I have performed, I conclude that there is a material misstatement of this other information, I am required to report that fact. I have nothing to report in this regard. Responsibilities of Management and Those Charged with Governance for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with Thai Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group’s financial reporting process.

THANACHART BANK PUBLIC COMPANY LIMITED 143 Auditor’s Responsibilities for the Audit of the Financial Statements My objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Thai Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with Thai Standards on Auditing, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion. I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. The engagement partner on the audit resulting in this independent auditor’s report is Ratana Jala.

Ratana Jala Certified Public Accountant (Thailand) No. 3734

EY Office Limited Bangkok: 23 February 2017

144 ANNUAL REPORT 2016 STATEMENT OF FINANCIAL POSITION

Thanachart Bank Public Company Limited and its subsidiaries

Statement of financial position

As at 31 December 2016

(Unit: Thousand Baht)

Consolidated Separate

financial statements financial statements

Note 2016 2015 2016 2015

Assets

Cash 12,076,997 13,337,280 12,072,227 13,336,176

Interbank and money market items - net 7 47,475,583 57,583,120 47,465,946 56,941,123

Derivatives assets 8 3,564,235 5,446,810 3,563,917 5,446,786

Investments - net 9 175,081,237 171,782,138 167,275,226 163,667,389

Investments in subsidiary and associated companies - net 10 2,253,187 1,899,982 7,359,391 7,359,391

Loans to customers and accrued interest receivables 11

Loans to customers 739,078,351 764,002,978 695,679,822 722,792,730

Accrued interest receivables 619,974 657,621 620,272 657,840

Total loans to customers and accrued interest receivables 739,698,325 764,660,599 696,300,094 723,450,570

Less: Deferred revenue (48,171,212) (50,536,590) (44,066,834) (46,791,967)

Allowance for doubtful accounts 12 (24,615,884) (25,676,138) (19,300,696) (20,141,589)

Revaluation allowance for debt restructuring 13 (1,976) (4,080) (1,976) (4,080)

Net loans to customers and accrued interest receivables 666,909,253 688,443,791 632,930,588 656,512,934

Customers' liability under acceptances 9,544 9,944 9,544 9,944

Properties foreclosed - net 15 3,111,894 4,093,136 1,443,860 1,837,462

Land, premises and equipment - net 16 9,546,383 8,004,706 9,295,669 7,764,063

Goodwill and intangible assets - net 17 20,649,159 20,953,948 20,533,529 20,856,782

Deferred tax assets 18 790,631 740,976 - -

Receivables from purchase and sale of securities 1,125,862 1,006,278 - -

Other assets - net 19 7,917,733 7,670,312 4,917,923 5,102,392

Total assets 950,511,698 980,972,421 906,867,820 938,834,442

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

THANACHART BANK PUBLIC COMPANY LIMITED 145 STATEMENT OF FINANCIAL POSITION (CONTINUED)

Thanachart Bank Public Company Limited and its subsidiaries

Statement of financial position (continued)

As at 31 December 2016

(Unit: Thousand Baht)

Consolidated Separate

financial statements financial statements

Note 2016 2015 2016 2015

Liabilities and equity

Deposits 20 676,556,502 669,504,133 677,807,238 670,575,221

Interbank and money market items 21 65,834,486 85,687,630 56,155,845 78,698,898

Liability payable on demand 1,986,425 2,201,580 1,986,425 2,201,580

Derivatives liabilities 8 4,912,489 6,757,528 4,912,407 6,750,929

Debt issued and borrowings 22 49,408,917 71,641,089 34,522,128 55,426,489

Banks' liability under acceptances 9,544 9,944 9,544 9,944

Provisions 23 3,578,928 3,293,614 3,340,786 3,046,619

Deferred tax liabilities 18 867,710 893,302 799,034 873,765

Payables from purchase and sale of securities 2,366,288 2,072,513 1,000,000 -

Accrued interest payables 2,053,948 2,962,116 1,969,591 2,859,200

Accrued expenses 5,113,739 4,960,675 4,400,753 4,298,048

Insurance contracts liabilities 24 4,936,796 4,793,269 - -

Other liabilities 25 6,765,334 8,504,301 4,379,393 6,043,743

Total liabilities 824,391,106 863,281,694 791,283,144 830,784,436

Equity

Share capital

Registered

9,913,664,903 ordinary shares of Baht 10 each 99,136,649 99,136,649 99,136,649 99,136,649

Issued and paid-up share capital 26

6,064,862,170 ordinary shares of Baht 10 each 60,648,622 60,648,622 60,648,622 60,648,622

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

Other components of equity 27 1,556,365 1,121,529 947,584 820,220

Retained earnings

Appropriated - statutory reserve 28 3,601,763 3,003,674 3,601,763 3,003,674

Unappropriated 56,581,148 49,351,232 48,286,013 41,476,796

Equity attributable to owner of the company 124,488,592 116,225,751 115,584,676 108,050,006

Non-controlling interests of the subsidiaries 1,632,000 1,464,976 - -

Total equity 126,120,592 117,690,727 115,584,676 108,050,006

Total liabilities and equity 950,511,698 980,972,421 906,867,820 938,834,442

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

146 ANNUAL REPORT 2016 STATEMENT OF COMPREHENSIVE INCOME

Thanachart Bank Public Company Limited and its subsidiaries

Statement of comprehensive income

For the year ended 31 December 2016

(Unit: Thousand Baht except earnings per share expressed in Baht)

Consolidated Separate

financial statements financial statements

Note 2016 2015 2016 2015

Profit or loss

Interest income 31 44,885,834 48,217,216 41,843,450 45,124,869

Interest expenses 32 (16,174,138) (20,536,160) (15,295,196) (19,572,064)

Net interest income 28,711,696 27,681,056 26,548,254 25,552,805

Fees and service income 8,814,210 8,179,528 6,423,610 6,132,836

Fees and service expenses (2,909,701) (2,704,730) (2,642,782) (2,488,314)

Net fees and service income 33 5,904,509 5,474,798 3,780,828 3,644,522

Gains on trading and foreign exchange transactions 34 491,315 658,040 435,055 629,881

Gains on investments 35 714,390 1,532,714 616,243 1,491,635

Share of profit from investments accounted for under equity method 206,567 169,095 - -

Insurance income 36 6,035,644 5,961,637 - -

Dividend income 399,846 295,456 2,828,821 3,346,744

Other operating income 1,290,019 1,274,436 1,298,917 1,328,581

Total operating income 43,753,986 43,047,232 35,508,118 35,994,168

Insurance expenses 37 (3,346,848) (3,409,215) - -

Net operating income 40,407,138 39,638,017 35,508,118 35,994,168

Other operating expenses

Employee's expenses 11,646,882 10,952,116 9,889,374 9,269,982

Directors' remuneration 38 45,641 43,967 33,995 32,809

Premises and equipment expenses 3,051,097 2,969,738 2,728,323 2,646,065

Taxes and duties 757,490 837,225 732,235 785,683

Other expenses 5,124,715 4,918,207 4,459,267 4,361,705

Total other operating expenses 20,625,825 19,721,253 17,843,194 17,096,244

Impairment losses of loans and debt securities 39 6,251,266 8,591,933 5,808,275 8,007,369

Profit before income tax 13,530,047 11,324,831 11,856,649 10,890,555

Income tax 18.2 (691,423) (198,421) 105,118 561,413

Profit for the year 12,838,624 11,126,410 11,961,767 11,451,968

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

THANACHART BANK PUBLIC COMPANY LIMITED 147 STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)

Thanachart Bank Public Company Limited and its subsidiaries

Statement of comprehensive income (continued)

For the year ended 31 December 2016

(Unit: Thousand Baht except earnings per share expressed in Baht)

Consolidated Separate

financial statements financial statements

Note 2016 2015 2016 2015

Other comprehensive income 40

Transactions will be reclassified subsequently to profit or loss

Losses on changes in value of available-for-sale investments (1,454,017) (1,162,976) (1,438,751) (672,332)

Share of other comprehensive income of associate (loss) 153,392 (75,640) - -

Income tax relating to components of other comprehensive income 275,449 240,868 287,750 134,467

Transactions that will never be reclassified subsequently to profit or loss

Surplus on revaluation of assets 4 1,605,507 - 1,602,581 -

Share of other comprehensive income of associate 199,361 - - -

Actuarial gains (losses) on defined benefit plan 16,041 (214,270) (11,894) (177,661)

Income tax relating to components of other comprehensive income (344,233) 41,507 (318,137) 35,532

Total other comprehensive income (loss) 451,500 (1,170,511) 121,549 (679,994)

Total comprehensive income 13,290,124 9,955,899 12,083,316 10,771,974

Total profit attributable to:

The Bank 12,434,329 10,742,829 11,961,767 11,451,968

Non-controlling interests 404,295 383,581

12,838,624 11,126,410

Total comprehensive income attributable to:

The Bank 12,886,025 9,573,026 12,083,316 10,771,974

Non-controlling interests 404,099 382,873

13,290,124 9,955,899

Earnings per share of the Bank 41

Basic earnings per share

Profit attributable to the Bank (Baht per share) 2.05 1.90 1.97 2.03

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

148 ANNUAL REPORT 2016 - - - (74,538) (20,863) 451,500 (105,172) (237,075) 5,511,973 (3,815,419) (4,548,646) (1,170,511) Total 11,126,410 12,838,624 117,690,727 117,690,727 126,120,592 106,164,309 (Unit: Thousand Baht) ------(708) (196) 383,581 404,295 (105,172) (237,075) 1,464,976 1,464,976 1,632,000 1,187,275 interests Non-controlling Non-controlling - - - 3,700 13,160 (74,538) (20,863) (572,598) (172,055) (598,089) (3,815,419) (4,548,646) 49,351,232 49,351,232 56,581,148 43,189,338 10,742,829 12,434,329 Unappropriated ------Retained earnings 572,598 598,089 3,003,674 3,003,674 3,601,763 2,431,076 Appropriated - statutory reserve ------(68,076) 145,766 145,766 463,243 213,842 317,477 Share Share of associate income of other comprehensive ------(64,087) (929,672) 1,099,142 1,099,142 2,028,814 (1,163,229) Surplus on Surplus Consolidated financial statementsConsolidated changes inchanges value of investments - net ------(3,700) 1,280,588 1,284,288 Other components of equity of assets revaluation Surplus on Surplus ------(123,379) (123,379) (123,379) (123,379) business Surplus from Surplus common control combination under ------2,100,694 2,100,694 2,100,694 2,100,694 Share Share premium ------5,511,973 60,648,622 60,648,622 55,136,649 60,648,622 Issued and Issued fully paid-up fully share share capital 28 28 30 30 26 Note 10.6 STATEMENTS OF CHANGES IN EQUITY Decrease in non-controlling interests inDecrease non-controlling of the subsidiaries Transfer of retained earnings to statutory reserve Decrease in non-controlling interests inDecrease ofnon-controlling the subsidiaries Transfer of retained earnings to statutory reserve Dividend paid Dividend paid Effect of share reductioncapital of associate Increase inIncrease share capital Balance as at 1 January 2016 as Balance at 1 January Other comprehensive income for the year The notes accompanying are an partintegral of the financial statements. Cumulative Cumulative effect of inchange accounting for fair policy measurementvalue Balance as Balance at 2015 31 December Transferred to retained earnings Balance as at 1 January 2015 as Balance at 1 January Other comprehensive income for the (loss) year Balance as atBalance 2016 31 December Profit for the year Profit for the year Thanachart Bank Public Company Limited Thanachartits Public and Company Bank subsidiaries Statements inof equity changes 2016 31 December For ended the year

THANACHART BANK PUBLIC COMPANY LIMITED 149 - - - (20,863) 121,549 (679,994) 5,511,973 (4,548,646) (3,815,419) 11,961,767 11,451,968 95,602,341 Total 115,584,676 108,050,006 108,050,006 (Unit: Thousand Baht) - 3,700 (9,515) (20,863) (598,089) (142,129) (572,598) (4,548,646) (3,815,419) 11,961,767 48,286,013 41,476,796 41,476,796 11,451,968 34,575,837 Unappropriated ------Retained earnings 598,089 572,598 3,601,763 3,003,674 3,003,674 2,431,076 Appropriated - statutory reserve statutory ------820,220 820,220 (330,781) (537,865) 1,358,085 (1,151,001) in value of investments net - Surplus on changes ------Separate financial statements (3,700) 1,282,065 1,278,365 Other componentsOther of equity of assets revaluation Surplus on ------2,100,694 2,100,694 2,100,694 2,100,694 Share premium ------5,511,973 60,648,622 60,648,622 60,648,622 55,136,649 Issued and fully paid-up fully share capital 28 30 28 30 26 Note STATEMENTS OF CHANGES IN EQUITY (CONTINUED) Transferred to retained earnings Balance as31 at December 2016 Other comprehensiveOther income the for year The accompanying notes an are integral ofpart the financial statements. Profit the for year Transfer of retained earnings reserve to statutory Balance as31 at December 2015 2016 Balance as1 January at Dividend paid Other comprehensiveOther (loss) income the for year Profit the for year Transfer of retained earnings reserve to statutory Dividend paid Cumulative effect of change in accounting fair policy for value measurement Balance as at 1 January 2015 Balance as1 January at Increase in share capital Thanachart Bank Public Company Limited and its subsidiaries subsidiaries its and Limited Public Company Bank Thanachart (continued) equity in changes of Statements 31 2016December ended year the For

150 ANNUAL REPORT 2016 STATEMENT OF CASH FLOWS

Thanachart Bank Public Company Limited and its subsidiaries

Statements of cash flows

For the year ended 31 December 2016

(Unit: Thousand Baht)

Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Cash flows from operating activities

Profit before income tax 13,530,047 11,324,831 11,856,649 10,890,555

Adjustments to reconcile profit before income tax

to net cash received (paid) from operating activities:

Share of profit from investments accounted for under equity method (206,567) (169,095) - -

Depreciation and amortisation 1,598,545 1,478,967 1,513,763 1,392,780

Impairment losses of loans and debt securities 6,251,266 8,591,933 5,808,275 8,007,369

Increase in provisions 673,302 773,247 647,521 754,618

Amortisation of premiums (discounts) on investment in debt securities 244,296 (83,870) 247,196 (82,766)

Decrease in allowance for impairment of investments (2,603) (2,848) (2,576) (2,845)

Gain on capital refunded from a subsidiary company - - - (152,059)

Loss on liquidation from a subsidiary company - 12,771 - -

Decrease (increase) in allowance for change in value of investment 9,104 10,847 (2,648) 10,284

Increase (decrease) in allowance for impairment of

properties foreclosed (143,629) 239,658 781 112,150

Decrease in allowance for impairment of land, premises and equipment (753) - - -

Loss from revaluation of land 13,640 - 13,640 -

Decrease in allowance for impairment of intangible assets (18,244) (14,316) (18,244) (14,316)

Interest income and other income from the assets

transferred for debt repayment (10) (4,574) (10) (4,574)

Gain from disposal of land, premises and equipment (26,650) (19,754) (27,976) (16,038)

Loss from disposal of intangible assets 43,864 6,957 43,515 6,957

Unrealised loss (gain) on exchange 299,496 (1,557,526) 299,496 (1,557,526)

Increase (decrease) in allowance for impairment of other assets 10,623 (9,497) (21,387) 3,949

Decrease (increase) in other income receivable 21,256 (36,088) 14,231 (33,217)

Decrease in fees and rental received in advance (159,697) (142,435) (159,697) (142,435)

Decrease in deferred income (47,014) (42,911) (47,014) (42,911)

Increase (decrease) in accrued expenses 227,177 (94,339) 176,817 (66,540)

22,317,449 20,261,958 20,342,332 19,063,435

Net interest income (28,955,992) (27,597,186) (26,795,450) (25,470,039)

Dividend income (399,846) (295,456) (2,828,821) (3,346,744)

Cash received from interest income 41,271,745 44,455,095 38,348,905 41,528,985

Cash paid for interest expenses (14,400,790) (18,017,525) (14,236,481) (17,826,058)

Cash paid for corporate income tax (961,995) (1,749,241) (205,624) (890,642)

Income from operating activities before changes in

operating assets and liabilities 18,870,571 17,057,645 14,624,861 13,058,937

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

THANACHART BANK PUBLIC COMPANY LIMITED 151 STATEMENT OF CASH FLOWS (CONTINUED)

Thanachart Bank Public Company Limited and its subsidiaries

Statements of cash flows (continued)

For the year ended 31 December 2016

(Unit: Thousand Baht)

Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Cash flows from operating activities (continued)

Decrease (increase) in operating assets

Interbank and money market items 10,225,051 7,845,601 9,566,089 8,392,203

Investments in trading securities (5,606,659) 3,005,882 (4,103,253) 2,917,063

Derivatives assets 2,427,331 906,728 2,427,625 906,439

Loans to customers 10,082,618 25,667,631 13,087,388 26,347,436

Properties foreclosed 6,369,275 8,533,524 5,099,419 7,105,248

Receivables from purchase and sale of securities (119,584) 831,132 - -

Other assets (204,783) (2,381,279) 274,108 (1,396,165)

Increase (decrease) in operating liabilities

Deposits 7,052,370 (27,487,490) 7,232,017 (29,159,692)

Interbank and money market items (20,032,334) 5,218,650 (22,722,242) 5,352,287

Liability payable on demand (215,156) 546,198 (215,155) 546,198

Derivatives liabilities (2,495,400) (1,129,263) (2,488,883) (1,132,812)

Payables from purchase and sale of securities 293,775 552,817 1,000,000 (100,286)

Insurance contract liabilities 143,526 95,745 - -

Other liabilities (609,112) (813,508) (417,977) (84,268)

Net cash flows from operating activities 26,181,489 38,450,013 23,363,997 32,752,588

Cash flows from investing activities

Decrease (Increase) in investments in securities held for investment 715,291 (25,469,946) (1,196,051) (25,181,497)

Cash received from capital refunded from a subsidiary company - - - 1,536,753

Cash received from interest on investments 3,875,519 3,679,340 3,752,462 3,487,489

Cash received from dividend 399,444 407,535 2,828,821 3,346,744

Cash paid for purchase of equipment (967,345) (763,163) (878,963) (673,109)

Cash received from disposal of land, premises and equipment 70,891 25,105 66,237 21,187

Cash paid for purchase of intangible assets (436,441) (290,565) (399,656) (260,880)

Net cash flows from (used in) investing activities 3,657,359 (22,411,694) 4,172,850 (17,723,313)

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

152 ANNUAL REPORT 2016 STATEMENT OF CASH FLOWS (CONTINUED)

Thanachart Bank Public Company Limited and its subsidiaries

Statements of cash flows (continued)

For the year ended 31 December 2016

(Unit: Thousand Baht)

Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Cash flows from financing activities

Cash received from issued additional share capital - 5,511,973 - 5,511,973

Cash received from borrowings 13,689,312 61,582,824 8,000,000 58,703,000

Cash paid for borrowings (35,921,484) (80,139,555) (28,904,361) (77,119,832)

Cash paid for interest from borrowings (2,746,973) (3,664,864) (2,013,519) (2,904,955)

Cash paid for dividend (5,882,916) (2,481,149) (5,882,916) (2,481,149)

Cash paid for dividend to non-controlling interests (237,070) (115,303) - -

Cash paid for capital refunded to non-controlling interests - (317) - -

Net cash flows used in financing activities (31,099,131) (19,306,391) (28,800,796) (18,290,963)

Net decrease in cash (1,260,283) (3,268,072) (1,263,949) (3,261,688)

Cash at beginning of the year 13,337,280 16,605,352 13,336,176 16,597,864

Cash at end of the year 12,076,997 13,337,280 12,072,227 13,336,176

Supplemental cash flows information

Non-cash transactions

Transfer of properties foreclosed from receivables for debt settlement 5,207,030 6,280,107 4,669,225 5,671,800

Accounts payable for purchase of fixed assets 61,632 154,281 60,250 143,698

Bad debt written-off 6,708,749 7,850,747 6,588,906 7,624,117

Dividend payable - 1,334,270 - 1,334,270

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

THANACHART BANK PUBLIC COMPANY LIMITED 153 NOTES TO FINANCIAL STATEMENTS

Thanachart Bank Public Company Limited and its subsidiaries Notes to consolidated financial statements For the year ended 31 December 2016

1. General information

Thanachart Bank Public Company Limited (“Thanachart Bank” or “the Bank”) was incorporated as a public limited company under Thai laws and its parent company is Thanachart Capital Public Company Limited (herein after referred to as “the Parent company”), a public limited company also existing under Thai laws. The Parent company holds 50.96 percent of the Bank’s issued shares and Scotia Netherlands Holdings B.V., a company registered in Netherlands, holds 49.00 percent of the Bank’s issued shares. The Bank’s registered address is 444, MBK Tower, Phayathai Road, Wangmai, Pathumwan, Bangkok. The Bank has 592 operational branches (2015: 614 operational branches).

All subsidiaries are registered limited or public limited companies under Thai laws and operate their businesses in Thailand. The subsidiaries’ businesses include non-performing assets management business, securities business, leasing and hire purchase business, non-life insurance business, fund management business and others.

2. Basis of preparation of the financial statements

2.1 The financial statements have been prepared in accordance with Thai Financial Reporting Standards enunciated under the Accounting Professions Act B.E. 2547 and the principles stipulated by the Bank of Thailand (“BOT”). The presentation of the financial statements has been made in compliance with the BOT’s Notification relating to the preparation and format of the financial statements of commercial banks and holding company of financial business groups, dated 4 December 2015.

The financial statements in Thai language are the official statutory financial statements of the Bank. The financial statements in English language have been translated from the Thai language financial statements.

The financial statements have been prepared on a historical cost basis except where otherwise disclosed in the accounting policies.

154 ANNUAL REPORT 2016

2.2 Basis of preparation of the consolidated financial statements

a) The consolidated financial statements included the financial statements of the Bank and the following subsidiary companies (“the subsidiaries”).

Percentage of holding

Nature of business 2016 2015

Subsidiaries directly held by the Bank

Thanachart Securities Plc. Securities business 100.00 100.00

Thanachart Insurance Plc. Non-life insurance 100.00 100.00

Thanachart Fund Management Co., Ltd. Fund management 75.00 75.00

Thanachart Broker Co., Ltd. Non-life insurance 100.00 100.00

broker

Thanachart Group Leasing Co., Ltd. Hire purchase 100.00 100.00

Thanachart Management and Services Co., Ltd. Services 100.00 100.00

Thanachart Training and Development Co., Ltd. Training services 100.00 100.00

TS Asset Management Co., Ltd. Non-performing 100.00 100.00

asset management

Security Scib Services Co., Ltd. Services 100.00 100.00

(Formerly known as “SCIB Services Co., Ltd.”)

Ratchthani Leasing Plc. Hire purchase and 65.18 65.18

leasing business

Subsidiary indirectly held by the Bank

National Leasing Co., Ltd. Leasing business 100.00 100.00

b) Total assets and net operating income of the subsidiaries that have significant impact to and are included in the consolidated financial statements as at 31 December 2016 and 2015 and for the years then ended, after eliminating significant intercompany transactions, are as follows:

(Unit: Million Baht) Net operating income

Total assets for the years

2016 2015 2016 2015

Ratchthani Leasing Plc. 32,779 28,849 2,002 1,727 TS Asset Management Co., Ltd. 2,856 4,295 323 443 Thanachart Insurance Plc. 11,236 10,718 3,090 3,098 Thanachart Securities Plc. 9,307 7,233 1,914 1,640

THANACHART BANK PUBLIC COMPANY LIMITED 155 c) The Bank is deemed to have control over an investee or subsidiaries if it has rights, or is exposed, to variable returns from its involvement with the investee, and it has the ability to direct the activities that affect the amount of its returns.

d) All subsidiaries are fully consolidated, being the date on which the Bank obtains control, and continue to be consolidated until the date when such control ceases.

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

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

g) Non-controlling interests represent the portion of profit or loss and net assets of the subsidiaries that are not held by the Bank and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position.

2.3 The separate financial statements present investments in subsidiary and associated companies under the cost method.

3 New financial reporting standards

3.1 Financial reporting standards that became effective in the current year

During the year, the Bank and its subsidiaries have adopted the revised (revised 2015) and new financial reporting standards and accounting treatment guidance issued by the Federation of Accounting Professions which become effective for fiscal years beginning on or after 1 January 2016. These financial reporting standards were aimed at alignment with the corresponding International Financial Reporting Standards, with most of the changes directed towards revision of wording and terminology, and provision of interpretations and accounting guidance to users of standards. The adoption of these financial reporting standards does not have any significant impact on the Bank and its subsidiaries’ financial statements. However, some of these standards involve changes to key principles, which are summarised below:

156 ANNUAL REPORT 2016 TFRS 4 Insurance Contracts

The objective of Thai Financial Reporting Standard No. 4 (TFRS 4) is to specify the financial reporting for insurance contracts (including reinsurance contracts) issued by any entity and the reinsurance contracts held by an entity, and to provide limited amendments in accounting for insurance contracts until the second phase of the project on the financial reporting standard regarding insurance contracts is completed. In particular, this standard requires disclosure that identifies and explains the amounts in an insurer’s financial statements arising from insurance contracts and prohibits provisions for possible claims under contracts that are not in existence at the end of the reporting period. It also requires insurers to test for the adequacy of recognised insurance contract liabilities and perform an impairment test for reinsurance assets. Moreover, this standard temporarily exempts insurers from some requirements of other standards, including the requirement to consider the framework in selecting accounting policies for insurance contracts.

The management of the Bank and its subsidiaries consider that this standard does not have any significant impact to the financial statements.

3.2 Financial reporting standard that will become effective in the future

During the current year, the Federation of Accounting Professions issued a number of the revised financial reporting standards and interpretations (revised 2016) and new accounting treatment guidance which is effective for fiscal years beginning on or after 1 January 2017. These financial reporting standards were aimed at alignment with the corresponding International Financial Reporting Standards with most of the changes directed towards revision of wording and terminology, and provision of interpretations and accounting guidance to users of standards.

The management of the Bank and its subsidiaries believe that the revised financial reporting standards and interpretations and new accounting treatment guidance will not have any significant impact on the financial statements when they are initially applied. However, one standard involves changes to key principles, which are summarised below.

TAS 27 (revised 2016) Separate Financial Statements

This revised standard stipulates an additional option to account for investments in subsidiaries, joint ventures and associates in separate financial statements under the equity method, as described in TAS 28 (revised 2016) Investments in Associates and Joint Ventures. However, the entity is to apply the same accounting treatment for each category of investment. This standard will not have any significant impact on the Bank and its subsidiaries’ financial statements because the management has decided to continue accounting for such investments under the cost method in the separate financial statements.

THANACHART BANK PUBLIC COMPANY LIMITED 157 4. Change in accounting policy

During the year, the Bank and its subsidiaries reviewed and changed their accounting policy for recording the value of land from the cost method to the revaluation method, under which value is the fair value of the asset at the valuation date appraised by an independent professional appraiser.

In making the changes in accounting policy, the Bank and its subsidiaries adopted TAS 8. This is considered to be a revaluation of assets in accordance with TAS 16 Property, Plant and Equipment, which does not require the change to be applied retroactively. Therefore, the Bank and its subsidiaries have applied the change prospectively.

The amounts of adjustments affecting the statements of financial position as at 31 December 2016 and the statements of comprehensive income for the year then ended are as follows.

(Unit: Million Baht) 31 December 2016 Consolidated Separate financial statements financial statements The statements of financial position: Increase in investment in associated 198 - Increase in land, premises and equipment 1,580 1,577 Increase in deferred tax liabilities 336 315 Increase in retained earnings - unappropriated 4 4 Increase in other components of equity 1,460 1,278

(Unit: Million Baht) For the year ended 31 December 2016 Consolidated Separate financial statements financial statements The statements of comprehensive income: Profit or loss Increase in premises and equipment expenses (14) (14) Decrease in share of profit from investments accounted for under (1) - equity method Decrease in income tax 3 3 Decrease in profit for the year (12) (11) Other comprehensive income Increase in surplus on revaluation of assets 1,606 1,603 Increase in share of other comprehensive income of associate 199 - Increase in income tax relating to components of other 341 321 comprehensive income Earnings per share of the Bank Decrease in basic earnings per share (Baht per share) (0.002) (0.002)

158 ANNUAL REPORT 2016 5. Significant accounting policies

5.1 Revenue recognition

a) Interest and discounts on loans

Interest on loan is recognised as income on an accrual basis, based on the amount of principal outstanding. Interest on hire purchase and financial lease is recognised based on the effective interest method.

For loans on which principal or interest payments have been defaulted for more than three months past the due date, the Bank and its subsidiaries cease accrual of interest income, and accrued interest already recorded is reversed from the Bank and its subsidiaries’ accounts. Interest is then recognised as income on a cash basis until settlement of such overdue balance has been received from the debtors.

Interest income on restructured loans is recognised as income on an accrual basis, with reference to the interest rate stipulated in the agreements, with the exception of interest on loans that are subject to monitoring for compliance with restructuring conditions, which the Bank and its subsidiaries recognise as income on a cash basis until the receivable is able to comply with the restructuring conditions for a period of no less than three months or three installments, whichever is longer.

The Bank and its subsidiaries recognise interest income on investments in purchased/transferred loans for which loan repayment is received during the year based on the effective yield rate of the portfolio multiplied by the new book value (acquisition cost) of the outstanding balances of receivables, to the extent that this is not greater than the amount received from such receivables. After the restructuring, interest income is recognised using the effective interest method, for those receivables from which loan repayment was received during the year.

Interest or discounts already included in the face value of notes receivable or loans are recorded as deferred interest and taken up as income evenly throughout the term of the notes or loans or in proportion of debt repayment.

Interest income received in advance on hire purchase represents discounted on interest given to debtors by dealers, is recognised based on the effective interest method, in the same manner as interest income on hire purchase receivables.

b) Interest and dividends on investments

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

THANACHART BANK PUBLIC COMPANY LIMITED 159 c) Brokerage fee income

Brokerage fees on trading of securities and derivatives are recognised as income on the transaction date.

d) Interest on margin loans for purchase of securities

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

e) Gains (losses) on investments and derivatives

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

f) Fees and service income

Fees and service income are recognised on an accrual basis. When the Bank and its subsidiaries provide loyalty programmed to customers, they apportion compensation received from such services based on the fair value of accumulated reward points and realise it as deferred revenue. This deferred revenue is recorded under “other liabilities” in the statement of financial position. The Bank and its subsidiaries then realise it as revenue through the statement of comprehensive income when the customers claim a reward and the Bank and its subsidiaries have fulfilled their commitment to provide such reward.

g) Insurance premium income

Premium income consists of direct premium and reinsurance premium less premium of cancelled policies and premiums refunded to policy holders, and adjusted with unearned premium reserve.

Direct premium income is recognised on the date the insurance policy comes into effect. For long-term insurance policies with coverage periods of longer than 1 year, related premium are recorded as unearned items, and recognised as income over the coverage period.

Reinsurance premium income is recognised as income when the reinsurer places the reinsurance application or the statement of accounts.

160 ANNUAL REPORT 2016 5.2 Expenses recognition

a) Interest expenses

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

b) Commission and direct expenses charged on hire purchase/financial leases

Initial direct expenses at the inception of a hire purchase/financial lease contract (i.e. commission expenses and stamp duty expenses) are to be deferred and amortised using the effective interest method, with amortisation deducted from interest income throughout the contract period, in order to reflect the effective rate of return on the contracts.

Unearned income on hire purchase/financial leases is presented net of commission expenses and initial direct cost on the inception of the contracts.

c) Fees and service expenses

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

5.3 Investments

Investments in securities held for trading are stated at fair value. Changes in the fair value of these securities are recorded in profit or loss in the statements of comprehensive income.

Investments in available-for-sale securities are stated at fair value. Changes in the fair value of these securities are recorded in other comprehensive income in the statements of comprehensive income, and will be recognised in profit or loss when the securities are sold.

Investments in held-to-maturity debt securities are stated at amortised cost. Premiums/ discounts on debt securities are amortised/accreted by the effective rate method with the amortised/accreted amount presented as an adjustment to the interest income.

Investments in non-marketable equity securities, which are classified as general investments, are stated at cost net of allowance for impairment (if any).

The fair value of marketable securities is based on the latest bid price of the last working day of the year. The fair value of debt securities is determined using the yield rates quoted by the Thai Bond Market Association, other markets, or yield rate of government bond adjusted by an appropriate risk factor, as the case may be. The fair value of unit trusts is determined from their net asset value.

THANACHART BANK PUBLIC COMPANY LIMITED 161 The Bank and its subsidiaries recognise loss on impairment (if any) of available-for-sale securities, held-to-maturity debt securities and general investments in profit or loss in the statements of comprehensive income.

In the event that the Bank and its subsidiaries transfer investments to another category, the investments are valued at their fair values prevailing on the transfer date. Differences between the carrying amount of the investments and their fair value on that date are recorded as profit or loss or other comprehensive income in the statements of comprehensive income, depending on the type of investment being reclassified.

On disposal of an investment, the difference between net disposal proceeds and the carrying amount of the investment is recognised in profit or loss in the statements of comprehensive income. In case of disposal partial of the investment, the carrying value per share used to calculate the cost of the portion sold is determined using the weighted average method.

5.4 Investments in receivables purchased and allowance for impairment

Investments in receivables purchased are presented at their acquisition cost net of allowance for impairment (if any). Loss on impairment is recognised as an expense in profit or loss in the statements of comprehensive income.

In case that the receivables purchased enter into debt restructuring agreements, they are transferred to loans to customers and presented at fair value. The fair value is determined based on the outstanding balance of investments as at the transfer date or as at the date of restructuring.

Allowance for impairment of investments in receivables purchased is determined based on the fair value, with reference to the collateral value.

5.5 Investments in subsidiary and associated companies

Investments in subsidiary and associated companies in the separate financial statements are accounted for under the cost method net of allowance for impairment (if any). Loss on impairment is recognised as expenses in part of profit or loss in the statements of comprehensive income.

Investments in associated companies in the consolidated financial statements are accounted for under the equity method. Under this method, investments are initially recorded at acquisition cost and are adjusted to reflect the attributable shares of the net income from the operations of the associated companies, in proportion to the investment.

162 ANNUAL REPORT 2016 5.6 Loans to customers

Loans to customers are stated at the principal balances, excluding accrued interest receivables, except for overdrafts which are presented at the principal balances plus accrued interest receivables. Unrecognised deferred income and discounts on loans are deducted from the loan balances.

Hire purchase receivables and financial lease receivables are stated at the contract value of the hire purchase receivables and financial lease receivables net of unearned income, which is presented after netting commission expenses and initial direct cost on the inception of the contracts.

Securities and derivatives business receivables comprise the net balances of securities business receivable and derivatives business receivables. Securities business receivable comprises credit balance receivables (for which the securities purchased are used as collateral), securities borrowing and lending receivables and guarantee deposit receivables (which comprise cash placed as guarantee for borrowers of securities or Thailand Securities Depository) as well as other receivables, such as overdue amounts in cash accounts and receivables which are under legal proceedings, are undergoing restructuring, or are being settled in installments. The receivable balance of cash accounts is presented as “Receivables from purchase and sale of securities”.

5.7 Allowances for doubtful accounts

a) Allowance for doubtful accounts for loans

The Bank and its subsidiary that operates in asset management business provide allowance for doubtful accounts in accordance with the Notifications of the BOT and adjust these by the additional amount which is expected not to be collectible based on an evaluation of the current status of the debtors, taking into consideration the recovery risk and the value of collateral. Increase (decrease) in an allowance for doubtful accounts is recognised as an expense during the year.

For loans, excluding hire purchase receivable - personal consuming of the Bank, the Bank and its subsidiary set provision for normal loans (including restructured receivables) and special mention loans at minimum rates of 1 percent and 2 percent, respectively, of the loan balances (excluding accrued interest receivable) net of collateral value. For non-performing loans, provision is set at a rate of 100 percent of the debt balance remaining after deducting the present value of expected future cash flows from debt collection or the present value of expected cash flows from collateral disposal, based on the use of a discount rate and assumptions as to the time needed to dispose of the collateral, in accordance with the BOT’s guideline.

THANACHART BANK PUBLIC COMPANY LIMITED 163 However, non-performing hire purchase receivables and financial lease receivables are treated as uncollateralised.

The Bank sets provision for hire purchase receivable - personal consuming of the Bank using the collective approach, which classifies groups of receivables having similar credit risk characteristics, and taking into account the historical loss of loans calculated based on the probability of default and a percentage of the loss given default. Furthermore, the Bank has set aside an additional provision by taking into consideration the potential additional loss arising from changes in economic circumstances that may impact certain borrowers’ ability to pay. This methodology, its parameters and assumptions have been reviewed in detail and will be monitored on an ongoing basis for continued applicability.

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

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

d) Allowance for doubtful accounts for other receivables is set up based on the amount of debt that may not be collectible, determined from a review of the current status of the receivables as at the financial reporting date.

e) The Bank and its subsidiaries write off receivables when they determine that such receivables may not be collectible. Amounts written off as bad debts or bad debt recovery are deducted from or added to the allowance for doubtful accounts.

164 ANNUAL REPORT 2016 5.8 Troubled debt restructuring

In cases where the debt restructuring involves modifications of the terms of repayment, the fair value of the receivables after restructuring is based on the net present value of expected future cash flows, discounted by the market’s minimum loan rate for credit to large customers prevailing at the restructuring date. The differences between the fair values of receivables as of the restructuring date and their previous book values is recorded as “Revaluation allowance for debt restructuring”, and recognised as an expense in part of profit or loss in the statements of comprehensive income in the restructuring period. The Bank and its subsidiaries review such revaluation allowance based on the net present value of future cash flows over the remaining period to maturity, recognising adjustments against impairment losses of loans accounts.

In cases where the troubled debt restructuring involves the transfer of assets or equity, the Bank and its subsidiaries record the assets or equity interest received as a result of debt restructuring at their fair value (based on the value appraised by internal appraisers or external independent appraisers) providing this does not exceed the amount of principal legally claimable from the debtor (including interest of which recognition has ceased until the restructuring date). Any excess of the fair value of the assets over the book value is recognised as gain on restructuring or interest income in part of profit or loss in the statements of comprehensive income, as the case may be.

Losses arising from debt restructuring through waivers of part of principal or recorded accrued interest receivable are recognised as losses in part of profit or loss in the statements of comprehensive income when incurred.

5.9 Recognition and amortisation of customers’ assets

Assets which customers have placed with the subsidiary company for securities trading, in term of cash accounts and credit balance accounts, including amounts which customers have placed as security for derivative trading, are recorded as assets and liabilities of the subsidiary company for internal control purpose. As at the reporting date, the subsidiary company eliminates those amounts which there are no guarantee obligations from both assets and liabilities and present only those assets which belong to the subsidiary company.

THANACHART BANK PUBLIC COMPANY LIMITED 165 5.10 Property foreclosed

Property foreclosed is stated at the lower of cost (fair value with reference to appraisal value, providing this does not exceed the legally claimable amount of debt) or net realisable value, which is determined with reference to the latest appraisal value less estimated selling expenses, adjusts these in accordance with the BOT’s guideline and taking into consideration the type and the nature of the assets.

Gains on disposal of property foreclosed are recognised as income in part of profit or loss in the statements of comprehensive income on the disposal date, unless the purchase is made with a loan from the Bank. In such cases, gains are recognised in accordance with the BOT’s guideline. Losses on disposal and impairment losses are recognised as expenses in part of profit or loss in the statement of comprehensive income.

5.11 Land, premises and equipment and depreciation

a) Land is stated at revalued amount less allowance for impairment (if any). No depreciation is provided on land.

The Bank and its subsidiaries initially record land at its cost on the acquisition date, and subsequently have it revalued by an independent professional appraiser, and state it at the revalued amount. Revaluations are made with sufficient regularity to ensure that the carrying amount does not differ materially from fair value at the end of reporting period.

The Bank and its subsidiaries recognise the differences arising from the revaluation as follows:

- When an asset’s carrying amount is increased as a result of the revaluation, the increase is credited directly to other comprehensive income and the cumulative increase is recognised in equity under the heading of “Surplus on revaluation of assets”. However, the revaluation increase is recognised as income to the extent that it reverses the revaluation decrease in respect of the same asset previously recognised as an expense.

- When an asset’s carrying amount is decreased as a result of the revaluation, the decrease is recognised in profit or loss. However, the revaluation decrease is charged to other comprehensive income to the extent that it does not exceed the amount already held in “Surplus on revaluation of assets” in respect of the same asset.

b) Assets under installation are stated at cost, and depreciation is not provided.

166 ANNUAL REPORT 2016 c) Premises and equipment are stated at cost less accumulated depreciation and allowance for impairment (if any). Depreciation is calculated by reference to their cost on a straight-line basis over the following estimated useful lives:

Buildings - 20 - 30 years

Buildings improvement - 5 - 10 years

Furniture, fixtures and equipment - 3 - 10 years

Motor vehicles - 5 years

Depreciation is included in determining income.

d) Land, premises and equipment are derecognised upon disposal or when no future economic benefits are expected from their use or disposal. Any gain or loss arising on disposal of these assets (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is recognised in profit or loss in the statement of comprehensive income.

e) The Bank and its subsidiaries derecognise the revaluation surplus on an asset upon disposal or when no future economic benefits are expected from its use or disposal. The revaluation surplus, remaining upon derecognition, is transferred directly to retained earnings.

5.12 Intangible assets and amortisation

Intangible assets acquired through business combination are initially recognised at their fair value on the date of business acquisition while intangible assets acquired in other cases are recognised at cost. Following the initial recognition, the intangible assets are carried at cost less accumulated amortisation and accumulated impairment losses (if any).

The Bank and its subsidiaries amortised intangible assets with finite lives on a systematic basis over their economic useful life and tested for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method of such intangible assets are reviewed at least at each financial year end. The amortisation expense and loss on impairment are recognised as expenses in part of profit or loss in the statement of comprehensive income.

The intangible assets with finite useful lives have useful lives of approximately 3 - 10 years.

No amortisation for computer software under development.

THANACHART BANK PUBLIC COMPANY LIMITED 167 5.13 Leasehold rights

Leasehold rights are stated at cost less accumulated amortisation. Leasehold rights are amortised on a straight-line basis over the lease periods and the amortisation amounts are recognised as expenses in part of profit or loss in the statements of comprehensive income.

5.14 Business combination and goodwill

Business combination accounted for under purchase method.

Goodwill is initially recorded at cost, which equals to the excess of the cost of business combination over the fair value of the net assets acquired. Goodwill is carried at cost less accumulated impairment losses (if any). Goodwill is tested for impairment annually or when circumstances indicate that the carrying value may be impaired.

5.15 Receivable from/payable to Clearing House

Receivable from/payable to Clearing House comprise the net balance receivable/payable in respect of securities trades settled and derivatives business. These also include amounts pledged with Thailand Clearing House as security for derivatives trading.

5.16 Classification of insurance contracts

A subsidiary classifies insurance contracts and reinsurance contracts based on the nature of the contract. An insurance contract is one under which the insurer has accepted significant insurance risk from another party by agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder. Determination of whether a significant insurance risk has been accepted is based on comparison of the amount of benefit payable under the contract if an insured event occurs with the payment obligation if the insured event does not occur. If a contract does not meet these criteria, the subsidiary classifies it as an investment contract. Investment contracts are those contracts that transfer significant financial risk but not significant insurance risk. Financial risks are the interest rate risk, exchange rate risk and price risk.

A subsidiary classifies insurance contracts by determining significant insurance risk individually. Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its lifetime, unless all rights and obligations are extinguished or expire. Investment contracts can, however, be reclassified as insurance contracts after inception if insurance risk becomes significant.

168 ANNUAL REPORT 2016 5.17 Securities purchased under resale agreements/ securities sold under repurchase agreements

The Bank enters into agreements with private entities to purchase/sell securities whereby there is an agreement to resell/repurchase the securities at certain dates and at fixed price. Amounts paid for the securities purchased under resale agreement are presented as assets under the caption of interbank and money market items or loans to customers, depending on the counterparty, and the underlying securities are treated as collateral to such receivables. The securities sold under repurchase agreement at the amounts received are presented as liabilities under the caption of interbank and money market items in the statement of financial position and the underlying securities are treated as collateral.

5.18 Premium receivable and allowance for doubtful accounts

Premium receivable from both direct and reinsurance is stated at its net realisable value. The subsidiary provides an allowance for doubtful accounts based on the estimated loss that may be incurred in the collection of the premium due, on the basis of collection experience and a review of current status of the premium receivable as at the end of reporting period.

5.19 Reinsurance assets and liabilities

a) Reinsurance assets represent amounts due from reinsurers (consisting of claims receivable and various other items receivable for reinsurers excluding reinsurance premium receivable less allowance for doubtful accounts), amounts deposited on reinsurance and insurance reserve refundable from reinsurers. Insurance reserve refundable from reinsurers is estimated based on the proportion of premium reserve and loss reserve made in accordance with the law regarding insurance reserve calculation that has been reinsured.

b) Amounts due to reinsurers are stated at the outstanding balances payable from reinsurance and amounts withheld on reinsurance. Amounts due to reinsurers consist of reinsurance premiums and other items payable to reinsurers.

THANACHART BANK PUBLIC COMPANY LIMITED 169 5.20 Premium reserve

Premium insurance reserve comprises unearned premium reserve and unexpired risks reserve.

a) Unearned premium reserve

Unearned premium reserve is calculated based on direct premium before deducting premium ceded as follows:

Transportation (cargo), travelling - 100% of premium as from the date policy is accident with coverage periods effective, throughout the period of insurance of not over six-months coverage

Others - Monthly average basis (the one-twenty fourth basis)

Unearned reinsurance premiums reserve is calculated based on the proportion of premiums ceded, using the same method as that applied for direct insurance policies that transfer the insurance risk throughout the term of the insurance contract to a reinsurer.

b) Unexpired risks reserve

Unexpired risks reserve is the reserve for the future claims that may be incurred in respect of in-force policies. Unexpired risks reserve is set aside using an actuarial method, at the best estimate of the claims that are expected to be incurred during the remaining period of coverage, based on historical claims data.

At the end of each reporting date, the subsidiary compares the amounts of unexpired risks reserve with the unearned premium reserve, and if unexpired risks reserve is higher than unearned premium reserve, the difference is recognised as unexpired risks reserve in the financial statements.

5.21 Loss reserve and outstanding claims

Outstanding claims are recorded at the actual amount to be paid. Loss reserve is recorded upon the receipt of the claims advice from the insured based on the number of claims notified by the insured and estimates made by a subsidiary’s management. The estimated value of losses is limited to not more than the sum insured of the related insurance policies.

In addition, the subsidiary set up additional reserve for losses incurred but not reported (IBNR) using an actuarial method based on a best estimate of claims which are expected to be paid in the future for losses occurring before or as at the reporting date, including both reported and unreported claims, and net of recorded claims.

170 ANNUAL REPORT 2016 5.22 Long-term leases

Leases that transfer substantially all the risks and rewards of ownership to the Bank and its subsidiaries are classified as financial leases. Financial leases are capitalised at the lower of the fair value of the leased assets and the present value of the minimum lease payments. The outstanding rental obligations, net of finance charges, are included in other payables, while the interest element is charged to profit or loss in the statement of comprehensive income over the lease period. Assets acquired under finance leases are depreciated over their estimated useful lives.

Leases of assets which do not transfer substantially all the risks and rewards of ownership are classified as operating leases. Operating lease payments are recognised as expenses on a straight-line basis over the lease term.

5.23 Financial derivatives

The Bank and its subsidiaries have entered into derivative financial instruments in order to manage risk of the Bank and its subsidiaries and in response to customer needs.

Financial derivative contracts which were originated for trading purposes are recorded as off-balance items. Gains or losses arising from changes in the fair value of the contracts are recognised as part of profit or loss in the statement of comprehensive income. The fair values of the contracts are based on the quoted market prices. If the fair value of financial derivatives cannot be determined with reference to market price, it is determined using valuation techniques and models, in which the variables used, are derived from observable market factors and adjusted to reflect counterparty credit risk.

Other financial derivative contracts (forward foreign currency contracts, interest rate swap contracts and cross currency and interest rate swap contracts) which were not originated for trading purposes are recorded as off-balance items, and presented on an accrual basis. Foreign currency components are translated at the year-end exchange rate, in the same manner as the hedged items, with unrealised gains or losses on translation recognised as part of profit or loss in the statement of comprehensive income. Interest rate components are presented on an accrual basis, in the same manner as the hedged assets or liabilities, with gains or losses recorded to interest income and interest expense over the terms of the contracts. Receivables and payables under foreign exchange contracts are presented at the net amount in the statement of financial position.

THANACHART BANK PUBLIC COMPANY LIMITED 171 5.24 Related party transactions

Related parties comprise enterprises and individuals that control, or are controlled by, the Bank and its subsidiaries, whether directly or indirectly, or which are under common control with the Bank and its subsidiaries.

They also include associated companies and individuals which directly or indirectly own a voting interest in the Bank and its subsidiaries that give them significant influence over the Bank and its subsidiaries, key management personnel, directors and officers with authority in the planning and direction of the Bank’s and its subsidiaries’ operations.

5.25 Impairment of assets

At the end of each reporting date, the Bank and its subsidiaries assess whether there is an indication that an asset may be impaired. The Bank and its subsidiaries perform impairment review whenever events or changes in circumstances indicate that an asset may be impaired. Loss on impairment is recognised when the asset’s recoverable amount is less than the book value. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. Fair value less costs to sell reflects the amount that the Bank and its subsidiaries could obtain at the financial reporting date from the disposal of the asset in an arm’s length transaction between knowledgeable, willing parties, after deducting the costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

The Bank and its subsidiaries recognise impairment losses as expenses in part of profit or loss in the statement of comprehensive income.

In assessing impairment of asset other than goodwill, if there is any indication that previously recognised impairment losses may no longer exist or may have decreased, the Bank and its subsidiaries estimate the asset’s recoverable amount. A previously recognised impairment loss for assets other than goodwill is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised. The increased carrying amount of the asset attributable to a reversal of an impairment loss shall not exceed the carrying amount that would have been determined in case that no impairment loss been recognised for the asset in prior years. Such reversal is recognised in part of profit or loss in the statement of comprehensive income.

172 ANNUAL REPORT 2016 5.26 Structured notes

Structured notes are debentures which a subsidiary offered to customers, who are institutional investors or high net worth investors. The notes are issued under conditions approved by the Office of the Securities and Exchange Commission, and the underlying assets are securities listed on the Stock Exchange of Thailand.

The notes are recorded at amortised cost, adjusted by the discount on the notes. The discount is amortised by the effective rate method with the amortised amount presented as interest expenses in profit or loss.

Embedded derivatives are recorded as derivative assets at fair value and the changes in fair value are recorded in profit or loss. In determining the fair value, the subsidiary uses a valuation technique and theoretical model. The input to the model is derived from observable market conditions that include liquidity, dividend, interest rate, and the price and the volatility of the underlying asset.

5.27 Employee benefits

a) Short-term employee benefits

The Bank and its subsidiaries recognised short-term employee benefits such as salary, wages, bonuses, contributions to the social security fund and vacation as expenses when incurred.

b) Post-employment benefits (Defined contribution plans)

The Bank, its subsidiaries and its employees have jointly established a provident fund. The fund is monthly contributed by employees and by the Bank and its subsidiaries. The fund’s assets are held in a separate trust fund, and the Bank and its subsidiaries’ contributions are recognised as expenses when incurred.

c) Post-employment benefits (Defined benefit plans)

The Bank and its subsidiaries have obligations in respect of the severance payments it must make to employees upon retirement under labor law. The Bank and its subsidiaries treat these severance payment obligations as a defined benefit plan.

The obligation under the defined benefit plan is determined by a professionally qualified independent actuary, using the projected unit credit method.

The Bank and its subsidiaries recognise actuarial gains and losses in other comprehensive income.

THANACHART BANK PUBLIC COMPANY LIMITED 173 5.28 Foreign currencies

The consolidated and separate financial statements are presented in Baht, which are also the Bank and its subsidiaries’ functional currency. Items of each entity included in the consolidated financial statements of each entity are measured using the functional currency of that entity.

Foreign currency transactions are translated into Baht at the exchange rates ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies and commitment outstanding on the financial reporting date have been translated into Baht at the rates ruling at the reporting date.

Exchange gains and losses arising from trading or translation of foreign currencies are included in determining income.

5.29 Income tax

Income tax expense represents the sum of current income tax and deferred tax.

Current income tax

Current income tax is provided in the accounts at the amount expected to be paid to the taxation authorities, based on taxable profits determined in accordance with tax legislation.

Deferred tax

Deferred tax is provided on temporary differences between the tax bases of assets and liabilities and their carrying amounts at the end of each reporting period, using the tax rates enacted at the end of the reporting period.

The Bank and its subsidiaries recognise deferred tax liabilities for all taxable temporary differences while they recognise deferred tax assets for all deductible temporary differences and unused tax losses to the extent that it is probable that future taxable profit will be available against which such deductible temporary differences and unused tax losses can be utilised.

At each reporting date, the Bank and its subsidiaries review and reduce the carrying amount of deferred tax assets to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

The Bank and its subsidiaries record deferred tax directly to equity if the tax relates to items that are recorded directly to equity.

174 ANNUAL REPORT 2016 5.30 Provisions

Provisions are recognised when the Bank and its subsidiaries have a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.

5.31 Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Bank and its subsidiaries use the quoted price in an active market to measure the fair value of a financial asset and liability whenever such a price is available. If a quoted price in an active market is not available, the Bank and its subsidiaries measure fair value using a generally accepted valuation technique, which includes analysis of the present value of cash flows and use of a theoretical valuation model.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy into three levels based on categorise of input to be used in fair value measurement as follows:

Level 1 - Use of quoted market prices for the same assets or liabilities in an observable active market

Level 2 - Use of other inputs that are observable for the assets or liabilities, whether directly or indirectly

Level 3 - Use of unobservable inputs such as estimates of future cash flows

At the end of each reporting period, the Bank and its subsidiaries determine whether transfers have occurred between levels within the fair value hierarchy for assets and liabilities held at the end of the reporting period that are measured at fair value on a recurring basis.

6. Significant accounting judgements and estimates

The preparation of financial statements in conformity with Thai Financial Reporting Standards at times requires management to make subjective judgements and estimates regarding matters that are inherently uncertain. These judgements and estimates affect reported amounts and disclosures; and actual results could differ from these estimates. Significant judgements and estimates are as follows:

THANACHART BANK PUBLIC COMPANY LIMITED 175 6.1 Recognition and derecognition of assets and liabilities

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

6.2 Allowance for doubtful accounts for loans and allowance for impairment of investment in receivables

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

6.3 Allowance for impairment of investments in securities

The Bank and its subsidiaries review an impairment of investments in securities when indication of impairment exists. The determination of what is indication of impairment requires the management’s judgement.

6.4 Assessment of investment funds as structured entities

In determining whether the funds to which a subsidiary provides asset management services are structured entities, the management is required to use judgement, taking into consideration the voting rights and other similar rights afforded to other parties, including the rights to remove the subsidiary as fund manager, liquidate the funds, or redeem holdings in the funds, and determining whether such rights are the dominant factor when deciding who controls the funds.

6.5 Fair value of financial instruments

In determining the fair value of financial instruments that are not actively traded and for which quoted market prices are not readily available, the management exercise judgement, using a variety of valuation techniques and models. The input to these models is taken from observable markets, and includes consideration of credit risk of counterparty, liquidity, correlation and longer-term volatility of financial instruments. Change in assumptions about these factors could affect the fair value and disclosures of fair value hierarchy.

176 ANNUAL REPORT 2016 6.6 Allowance for impairment of properties foreclosed

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

6.7 Land, premises and equipment and depreciation

In determining depreciation of premises and equipment, the management is required to make estimates of the useful lives and salvage values of the premises and equipment, and to review these estimated useful lives and salvage values when there are any changes.

The Bank and its subsidiaries measure land at revalued amounts. Such amounts are determined by the independent appraisers using the market approach. The valuation involves certain assumptions and estimates as described in Note 16 to the financial statements.

In addition, the management assesses whether there are indicators of the impairment of land, premises and equipment, and record impairment losses in the year when it is determined that the recoverable amounts are lower than the carrying amounts. This requires judgements in terms of forecasting future revenues and expenses relating to the assets subject to the review.

6.8 Goodwill and intangible assets

The initial recognition and measurement of goodwill and intangible assets, and subsequent impairment testing, require management to exercise judgement as to the recoverable amount to be generated by the asset, using the discounted cash flows method, and including the selection of a suitable discount rate in order to determine the present value of that cash flow. The estimated cash flows may differ as a result of competitive forces, or changes in revenue trends, cost structures, and the discount rate, industry circumstances or related market conditions.

6.9 Deferred tax assets

Deferred tax assets are recognised for deductible temporary differences and unused tax losses to the extent that it is probable that future taxable profit will be available against which the temporary differences and unused tax losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of estimated future taxable profits.

THANACHART BANK PUBLIC COMPANY LIMITED 177 6.10 Finance lease/Operating lease

In determining whether a lease is to be classified as an operating lease or finance lease, the management is required to use judgement regarding whether significant risk and rewards of ownership of the leased asset has been transferred, taking into consideration terms and conditions of the arrangement.

6.11 Unearned premium reserve

Unexpired risk reserve is calculated under an actuarial method, which reflects the best estimate of losses expected to be incurred over the remaining period of the insurance.

6.12 Loss reserve and outstanding claims

At the end of each reporting date, the subsidiary estimates loss reserves and outstanding claims in two parts; loss incurred for which the claims advice has been received from the insured, and loss incurred but not reported (IBNR). The IBNR reserve is calculated using an international standard actuarial method. The main assumptions underlying these techniques relate to historical claims experience, including development of estimates of paid and incurred losses, average costs per claim, and claim numbers. Such estimates require the management to exercise judgement in order to reflect the best estimates available at that time.

6.13 Post-employment benefits under defined benefit plans

Obligations under the defined benefit plan are determined by using actuarial technique. Such determination is made based on various assumptions, including discount rate, future salary increase rate, staff turnover rate, and mortality rate, based on their best knowledge of current situation.

6.14 Litigation and contingent liabilities

The Bank and its subsidiaries have contingent liabilities as a result of litigation and contingent liabilities as a result of transfer of business and transfer of non-performing assets. The management has used judgement to assess of the results of such transactions, and in case where they believe that there will be no losses, no provisions are recorded as at the end of the reporting period.

178 ANNUAL REPORT 2016 7. Interbank and money market items (assets)

(Unit: Million Baht)

Consolidated financial statements

2016 2015

At call Term Total At call Term Total

Domestic Bank of Thailand and Financial Institutions Development Fund 3,606 5,500 9,106 2,985 3,000 5,985 Commercial banks 245 2,875 3,120 364 28,150 28,514 Specialised financial institutions 1 3,450 3,451 1 211 212

Other financial institutions 2 22,196 22,198 28 21,470 21,498

Total 3,854 34,021 37,875 3,378 52,831 56,209 Add: Accrued interest receivables - 24 24 - 17 17 Less: Deferred revenues - (2) (2) - - -

Less: Allowance for doubtful accounts - (222) (222) (1) (209) (210)

Total domestic items 3,854 33,821 37,675 3,377 52,639 56,016

Foreign US Dollar 1,368 8,068 9,436 1,066 246 1,312 Euro 32 - 32 53 3 56

Others 262 - 262 202 - 202

Total 1,662 8,068 9,730 1,321 249 1,570 Add: Accrued interest receivables - 71 71 - - - Less: Deferred revenues - - - - (1) (1)

Less: Allowance for doubtful accounts - - - - (2) (2)

Total foreign items 1,662 8,139 9,801 1,321 246 1,567

Total 5,516 41,960 47,476 4,698 52,885 57,583

THANACHART BANK PUBLIC COMPANY LIMITED 179 (Unit: Million Baht)

Separate financial statements

2016 2015

At call Term Total At call Term Total

Domestic Bank of Thailand and Financial Institutions Development Fund 3,605 5,500 9,105 2,984 3,000 5,984 Commercial banks 136 970 1,106 252 27,000 27,252 Specialised financial institutions - 3,000 3,000 - - -

Other financial institutions 2,502 22,196 24,698 878 21,470 22,348

Total 6,243 31,666 37,909 4,114 51,470 55,584 Add: Accrued interest receivables - 5 5 1 8 9 Less: Deferred revenues - (2) (2) - - -

Less: Allowance for doubtful accounts (25) (222) (247) (10) (209) (219)

Total domestic items 6,218 31,447 37,665 4,105 51,269 55,374

Foreign US Dollar 1,368 8,068 9,436 1,066 246 1,312 Euro 32 - 32 53 3 56

Others 262 - 262 202 - 202

Total 1,662 8,068 9,730 1,321 249 1,570 Add: Accrued interest receivables - 71 71 - - - Less: Deferred revenues - - - - (1) (1)

Less: Allowance for doubtful accounts - - - - (2) (2)

Total foreign items 1,662 8,139 9,801 1,321 246 1,567

Total 7,880 39,586 47,466 5,426 51,515 56,941

As at 31 December 2016, the Bank had loan to a subsidiary company, which was a financial institution, of Baht 2,500 million in the separate financial statements (2015: Baht 850 million).

180 ANNUAL REPORT 2016 8. Derivatives

As at 31 December 2016 and 2015, the notional amount and the fair value of trading derivatives, and the adjustments made on an accrual basis for hedging derivatives (banking book), were classified by type of risk as follow.

(Unit: Million Baht) Consolidated financial statements

2016 2015

Fair value/Adjustments Fair value/Adjustments

on an accrual basis Notional on an accrual basis Notional Assets Liabilities amount* Assets Liabilities amount*

Types of risk Foreign exchange rate Derivatives for trading 642 698 85,966 1,282 1,160 86,309 Derivatives for banking book 44 103 11,076 3 56 4,661 Interest rate Derivatives for trading 2,505 2,485 309,647 3,749 3,712 345,178 Derivatives for banking book - - 1,000 - - 3,000 Foreign exchange rate and interest rate Derivatives for trading 373 335 9,693 395 342 8,570 Derivatives for banking book - 1,291 11,430 18 1,484 11,129 Others Derivatives for trading - - 1,713 - 4 432

Total 3,564 4,912 430,525 5,447 6,758 459,279

* Disclosed only in case that the Bank and its subsidiaries have an obligation to pay

(Unit: Million Baht) Separate financial statements

2016 2015

Fair value/Adjustments Fair value/Adjustments

on an accrual basis Notional on an accrual basis Notional Assets Liabilities amount* Assets Liabilities amount*

Types of risk Foreign exchange rate Derivatives for trading 642 698 85,966 1,282 1,157 86,308 Derivatives for banking book 44 103 11,076 3 56 4,661 Interest rate Derivatives for trading 2,505 2,485 309,647 3,749 3,712 345,178 Derivatives for banking book - - 1,000 - - 3,000 Foreign exchange rate and interest rate Derivatives for trading 373 335 9,693 395 342 8,570 Derivatives for banking book - 1,291 11,430 18 1,484 11,129

Total 3,564 4,912 428,812 5,447 6,751 458,846

* Disclosed only in case that the Bank has an obligation to pay

THANACHART BANK PUBLIC COMPANY LIMITED 181 Derivatives for hedging (banking book) are obligations under contracts which are not held for trading, and are measured on an accrual basis. Gain (loss) on exchange at the end of the year is presented under derivatives assets/derivatives liabilities. Accrued interest receivables/payables per the contracts are recorded as receivables and payables in other assets/other liabilities.

Below are the proportions of trading derivatives transactions classified by counterparty, determined based on the notional amount, as at 31 December 2016 and 2015.

Consolidated financial statements Separate financial statements

Counterparties 2016 2015 2016 2015

Percent Percent Percent Percent Financial institutions 93.04 94.42 93.43 94.48

Companies within Thanachart Group - - - 0.03 Third parties 6.96 5.58 6.57 5.49

Total 100.00 100.00 100.00 100.00

9. Investments

9.1 Classified by type of investments

(Unit: Million Baht) Consolidated financial statements Separate financial statements

2016 2015 2016 2015

Cost/ Cost/ Cost/ Cost/ Amortised Amortised Amortised Amortised cost Fair value cost Fair value cost Fair value cost Fair value

Trading securities Government and state enterprises securities 7,166 7,171 3,063 3,065 7,166 7,171 3,063 3,065 Domestic marketable equity securities 1,613 1,597 110 105 - - - - 8,779 8,768 3,173 3,170 7,166 7,171 3,063 3,065 Add (less): Allowance for change in value (11) (3) 5 2

Net 8,768 3,170 7,171 3,065

Available-for-sale securities Government and state enterprises securities 125,033 124,678 117,141 117,669 121,883 121,556 112,978 113,499 Private debt securities 22,076 22,175 24,492 25,181 21,069 21,155 22,593 23,193 Foreign debt securities 11,465 11,434 10,006 10,068 11,465 11,434 10,006 10,068 Domestic marketable equity securities 3,910 3,991 3,069 3,039 1,876 1,735 1,460 1,302 162,484 162,278 154,708 155,957 156,293 155,880 147,037 148,062

Add (less): Allowance for change in value (206) 1,249 (413) 1,025 Net 162,278 155,957 155,880 148,062

182 ANNUAL REPORT 2016 (Unit: Million Baht) Consolidated financial statements Separate financial statements

2016 2015 2016 2015 Cost/ Cost/ Cost/ Cost/ Amortised Amortised Amortised Amortised cost Fair value cost Fair value cost Fair value cost Fair value Held-to-maturity debt securities Government and state enterprises securities 62 67 8,448 8,634 - - 8,406 8,586 Private debt securities 205 237 205 247 474 508 150 190

Net 267 304 8,653 8,881 474 508 8,556 8,776 General investment Unit trusts 24 254 24 254 Domestic non-marketable equity securities 3,780 3,786 3,762 3,768 Foreign non-marketable equity securities 39 39 39 39 3,843 4,079 3,825 4,061 Less: Allowance for impairment (75) (77) (75) (77) Net 3,768 4,002 3,750 3,984

Total investments - net 175,081 171,782 167,275 163,667

9.2 Classified by remaining period of debt securities

(Unit: Million Baht) Consolidated financial statements

2016 2015

Due within Due within

Less than 1 - 5 Over Less than 1 - 5 Over

At call 1 year years 5 years Total At call 1 year years 5 years Total

Available-for-sale securities Government and state

enterprises securities 261 18,927 105,011 834 125,033 263 37,361 78,928 589 117,141

Private debt securities - 1,630 16,126 4,320 22,076 - 3,917 18,120 2,455 24,492

Foreign debt securities - 3,592 7,512 361 11,465 - 1,314 8,328 364 10,006

Total 261 24,149 128,649 5,515 158,574 263 42,592 105,376 3,408 151,639

Add (less): Allowance for

change in value - 78 (227) (138) (287) - 82 1,025 172 1,279

Total 261 24,227 128,422 5,377 158,287 263 42,674 106,401 3,580 152,918

Held-to-maturity debt securities Government and state enterprises securities - 20 - 42 62 - 8,406 - 42 8,448

Private debt securities - 20 35 150 205 - 15 40 150 205

Total - 40 35 192 267 - 8,421 40 192 8,653

Total debt securities 261 24,267 128,457 5,569 158,554 263 51,095 106,441 3,772 161,571

THANACHART BANK PUBLIC COMPANY LIMITED 183 (Unit: Million Baht)

Separate financial statements

2016 2015

Due within Due within

Less than 1 - 5 Over Less than 1 - 5 Over

At call 1 year years 5 years Total At call 1 year years 5 years Total

Available-for-sale securities Government and state

enterprises securities 261 17,040 104,582 - 121,883 263 34,204 78,081 430 112,978 Private debt securities - 1,440 15,819 3,810 21,069 - 3,787 17,266 1,540 22,593

Foreign debt securities - 3,592 7,512 361 11,465 - 1,313 8,329 364 10,006

Total 261 22,072 127,913 4,171 154,417 263 39,304 103,676 2,334 145,577

Add (less): Allowance for

change in value - 76 (228) (120) (272) - 81 981 121 1,183

Total 261 22,148 127,685 4,051 154,145 263 39,385 104,657 2,455 146,760

Held-to-maturity debt securities Government and state enterprises securities ------8,406 - - 8,406

Private debt securities - - 84 390 474 - - - 150 150 Total - - 84 390 474 - 8,406 - 150 8,556

Total debt securities 261 22,148 127,769 4,441 154,619 263 47,791 104,657 2,605 155,316

9.3 Investments in securities in which the Bank and its subsidiaries hold not less than 10 percent of the equity of the investee

As at 31 December 2016 and 2015, investments in securities in which the Bank and its subsidiaries hold not less than 10 percent of the equity of the investee, but which are not treated as subsidiary or associated companies, separated by industry as follows:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

2016 2015 2016 2015

Banking and finance sector 2 4 2 4

184 ANNUAL REPORT 2016 10. Investments in subsidiary and associated companies

10.1 Separate financial statements

As at 31 December 2016 and 2015, investments in subsidiary and associated companies in the separate financial statements stated under the cost method, consist of investment in ordinary shares of the following subsidiary and associated companies:

(Unit: Million Baht)

Separate financial statements

Value of investment

Paid-up share Percentage of under the Dividend income

Company’s name capital holding (%) cost method for the years

2016 2015 2016 2015 2016 2015 2016 2015

Subsidiary companies TS Asset Management Co., Ltd. 2,000 2,000 100 100 2,000 2,000 700 1,500 Thanachart Securities Plc. 1,500 1,500 100 100 1,858 1,858 480 555

Ratchthani Leasing Plc. 2,416 2,416 65.18 65.18 1,201 1,201 283 39

Thanachart Insurance Plc. 740 740 100 100 867 867 600 500 Thanachart Group Leasing Co., Ltd. 360 360 100 100 400 400 52 26

Thanachart Broker Co., Ltd. 100 100 100 100 104 104 100 172

Thanachart Fund Management Co., Ltd. 100 100 75 75 97 97 257 283 Security Scib Service Co., Ltd.

(Formerly Known as “SCIB Services

Co., Ltd.”) 10 10 100 100 5 5 - - Thanachart Management and Services 6 6 100 100 6 6 - -

Co., Ltd.

Thanachart Training and Development 5 5 100 100 5 5 18 15 Co., Ltd.

Total investments in subsidiary

companies 6,543 6,543 2,490 3,090

Less: Allowance for impairment (5) (5)

Total investments in subsidiary

companies - net 6,538 6,538 Associated company MBK Plc. 1,708 1,886 4.50 4.07 821 821 51 46

Total investment in an associated company 821 821 51 46

Total investments in subsidiary and

associated companies - net 7,359 7,359 2,541 3,136

THANACHART BANK PUBLIC COMPANY LIMITED 185 In January 2015, SCIB Plc. returned capital to its shareholders at a rate of Baht 0.7275 per share, totaling Baht 1,537 million. The Bank therefore recognised this amount by deducting it against the value of its investments amounting to Baht 1,385 million and recognised gain on capital refunded from a subsidiary company amounting to Baht 152 million.

On 20 April 2015, SCIB Plc. registered the completion of its liquidation with the Ministry of Commerce.

10.2 Details of investments in subsidiaries that have non-controlling interests

(Unit: Million Baht)

Other comprehensive Accumulated Dividend paid to Profit allocated to income allocated to

Proportion of balance of non-controlling non-controlling non-controlling

equity interest held by non - controlling interests during interests during interests during

Company’s name non-controlling interests interests the years the years the years

2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

(%) (%)

Ratchthani Leasing Plc. 34.82 34.82 1,560 1,396 151 21 315 304 - 1

Thanachart Fund 25.00 25.00 72 69 86 94 89 80 - -

Management Co., Ltd.

10.3 Summarised financial information, before eliminating intercompany transactions, of subsidiaries that have non-controlling interests are as follows:

Summarised information about financial position

(Unit: Million Baht) Thanachart Fund Ratchthani Leasing Plc.(1) Management Co., Ltd. 2016 2015 2016 2015

Total assets 32,856 28,977 457 424 Total liabilities 28,376 24,968 169 149

(1) Presents in the amount after adjustment for the effect of differences in accounting policies.

186 ANNUAL REPORT 2016 Summarised information about comprehensive income

(Unit: Million Baht)

For the years ended 31 December

Thanachart Fund Management

Ratchthani Leasing Plc.(1) Co., Ltd.

2016 2015 2016 2015

Net operating income 1,959 1,697 736 671 Profit for the year 906 873 355 320

Other comprehensive income (loss) (1) (3) - 1 Total comprehensive income 905 870 355 321

(1) Presents in the amount after adjustment for the effect of differences in accounting policies.

Summarised information about cash flow

(Unit: Million Baht)

For the years ended 31 December

Thanachart Fund Management

Ratchthani Leasing Plc. Co., Ltd.

2016 2015 2016 2015

Cash flow from operating activities 2,587 3,845 363 329

Cash flow used in investing activities (50) (54) (23) (1)

Cash flow used in financing activities (2,533) (3,797) (342) (377)

Net increase (decrease) in cash 4 (6) (2) (49)

THANACHART BANK PUBLIC COMPANY LIMITED 187 10.4 Cash flow information of an asset management company that is a subsidiary

Cash flow information of TS Asset Management Company Limited, a subsidiary, for the years ended 31 December 2016 and 2015 is as follows:

(Unit: Million Baht)

2016 2015

Cash flows from operating activities Profit (loss) before income tax 148 (83) Adjustments to reconcile profit (loss) before income tax to net cash provided by (paid for) operating activities Reversal of bad debt and doubtful account 16 (811) Increase (decrease) in allowance for impairment of property foreclosed and other assets (146) 134 Increase in provisions 1 1 Interest income - net (297) (346) Cash received from interest income 300 409 Cash paid for interest expense (4) (52)

Cash paid for corporate income tax (6) (73) Income (loss) from operating activities before changes in operating assets and liabilities 12 (821) Decrease (increase) in operating assets Loans to customers 663 3,630 Properties foreclosed 862 920 Other assets 10 (4) Decrease in operating liabilities Interbank and money market items (691) (2,211) Provisions - (8)

Other liabilities (21) (5)

Net cash flows from operating activities 835 1,501 Cash flows from financing activities

Dividend paid (700) (1,500)

Net cash flows used in financing activities (700) (1,500) Net increase in cash and cash equivalents 135 1

Cash and cash equivalents at beginning of the year 55 54

Cash and cash equivalents at end of the year 190 55

188 ANNUAL REPORT 2016 10.5 Investment in associated company in consolidated financial statements

As at 31 December 2016 and 2015, investment in an associated company, which presented under the equity method, in the consolidated financial statements consists of investment in ordinary shares of the following company which operates in Thailand:

(Unit: Million Baht) Share of other comprehensive

Paid-up share Percentage Value of investment Dividend income Share of profit income (loss) Company’s name capital of holding (%) Cost method Equity method during the years during the years during the years

2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015

MBK Plc. (operating 1,708 1,886 10.94 9.90 984 984 2,253 1,900 123 112 207 169 352 (76) in property rental, hotel and services businesses)

Total investment in an associated company 984 984 2,253 1,900 123 112 207 169 352 (76)

The Bank and its subsidiaries classified investment in MBK Plc. as investment in an associated company since the Parent company, the Bank and its subsidiaries had significant influence in that company.

10.6 Summarised financial information of an associated company

a) Summarised financial information of MBK Plc. as at 30 September 2016 and 2015 and for the years then ended are as follows:

Summarised information about financial position

(Unit: Million Baht) 30 September 30 September

2016 2015

Total assets 44,626 39,487 Total liabilities (22,672) (22,173)

Other equity items of an associated company (936) 1,810

Net assets 21,018 19,124

Shareholding percentage (%) 10.94 9.90

Share of net assets 2,299 1,893 Elimination entries (348) (295) Goodwill 302 302

Carrying amounts of associate based on equity method 2,253 1,900

THANACHART BANK PUBLIC COMPANY LIMITED 189 Summarised information about comprehensive income

(Unit: Million Baht) For the years ended 30 September (1)

2016 2015

Revenue 12,654 10,812 Profit for the year 2,046 1,707 Other comprehensive income (loss) 3,498 (795) Total comprehensive income for the year 5,544 912

(1) Presents in the amount after adjustment for the effect of differences in accounting policies.

The share of profit from investment in MBK Plc. accounted for under the equity method was determined based on financial statements of MBK Plc. that were prepared for periods different from those of the Bank, due to limited information available. However, they are financial statements prepared for the same length of time and based on the principle of consistency. Therefore, share of profit of the associate under the equity method for the year ended 31 December 2016 was determined based on financial statements that were prepared with reference to financial statements for the year ended 30 September 2016 that had been audited or reviewed by the associate’s auditor and adjusted for the effect of differences in accounting policies by the Bank’s management. In addition, the Bank’s management considered that the income for the year ended 30 September 2016 is not materially different from the income for the year ended 31 December 2016.

On 13 October 2016, MBK Plc. registered a decrease in its share capital in relation to its scheme to acquire 178,331,000 shares of treasury stock. As a result, paid-up share capital was reduced from 1,886,291,000 shares to 1,707,960,000 shares and the shareholding of the Bank and its subsidiaries increased from 9.90 percent to 10.94 percent. The Bank and its subsidiaries recognised the effect of the share capital reduction, amounting to Baht 75 million, in retained earnings.

b) The fair value of investment in an associated company

As at 31 December 2016 and 2015, the fair value of investment in an associated company which is listed on the Stock Exchange of Thailand is as follows:

(Unit: Million Baht) Consolidated Separate financial statements financial statements

2016 2015 2016 2015

MBK Plc. 2,690 2,634 1,107 1,083

190 ANNUAL REPORT 2016 11. Loans to customers and accrued interest receivables

11.1 Classified by loan type

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Loans to customers Overdrafts 17,261 18,294 17,261 18,294 Loans 260,596 270,272 256,078 264,468 Notes receivables 62,527 54,885 65,708 56,786 Hire purchase receivables 393,273 415,278 355,248 381,893 Financial lease receivables 1,744 1,465 1,245 1,001 Others 141 351 141 351

Less: Deferred revenues (48,171) (50,537) (44,067) (46,792) Total loans to customers net of deferred revenues 687,371 710,008 651,614 676,001

Add: Accrued interest receivables 620 658 620 658 Total loans to customers and accrued interest receivables net of deferred revenues 687,991 710,666 652,234 676,659 Less: Allowance for doubtful accounts 1) BOT’s minimum requirement provision - Individual Approach (14,843) (15,506) (9,835) (10,085) - Collective Approach (7,194) (8,555) (7,194) (8,555) 2) Excess provision (2,565) (1,502) (2,272) (1,502) Less: Revaluation allowance for debt restructuring (2) (4) (2) (4) Loans to customers and accrued interest receivables - net 663,387 685,099 632,931 656,513 Securities business receivables Credit balances receivables 3,508 3,336 - -

Other receivables 28 122 - - Total securities business receivables 3,536 3,458 - -

Less: Allowance for doubtful accounts (14) (113) - -

Securities business receivables - net 3,522 3,345 - - Loans to customers and accrued interest receivables - net 666,909 688,444 632,931 656,513

THANACHART BANK PUBLIC COMPANY LIMITED 191 11.2 Classified by currency and country

(Unit: Million Baht) Consolidated financial statements

2016 2015

Domestic Foreign Total Domestic Foreign Total

Baht 671,638 - 671,638 691,195 - 691,195 US Dollar 11,916 6,455 18,371 14,054 7,082 21,136 Other currencies 120 778 898 346 789 1,135

Total* 683,674 7,233 690,907 705,595 7,871 713,466

* Total loans net of deferred revenues

(Unit: Million Baht) Separate financial statements

2016 2015

Domestic Foreign Total Domestic Foreign Total

Baht 632,345 - 632,345 653,730 - 653,730 US Dollar 11,916 6,455 18,371 14,054 7,082 21,136 Other currencies 120 778 898 346 789 1,135

Total* 644,381 7,233 651,614 668,130 7,871 676,001

* Total loans net of deferred revenues

11.3 Classified by type of business and loan classification

(Unit: Million Baht) Consolidated financial statements

2016

The Bank and a subsidiary company which is a financial institution

Other Special Sub- Doubtful subsidiary Normal mention standard Doubtful of loss Total companies Consolidated

Agricultural and mining 13,704 14 299 35 17 14,069 1 14,070

Manufacturing and commerce 74,383 206 937 424 1,803 77,753 301 78,054

Real estate and construction 45,370 111 362 887 920 47,650 36 47,686

Public utilities and services 58,275 349 183 50 1,030 59,887 103 59,990 Personal consuming

Housing loans 94,087 1,344 570 517 1,117 97,635 54 97,689

Securities business ------3,536 3,536

Hire purchase 284,130 22,826 1,363 1,264 1,961 311,544 33,750 345,294

Others 26,760 636 534 184 410 28,524 66 28,590

Others 15,970 3 4 1 19 15,997 1 15,998

Total* 612,679 25,489 4,252 3,362 7,277 653,059 37,848 690,907

* Total loans net of deferred revenues

192 ANNUAL REPORT 2016 (Unit: Million Baht)

Consolidated financial statements

2015

The Bank and a subsidiary company which is a financial institution

Other Special Sub- Doubtful subsidiary

Normal mention standard Doubtful of loss Total companies Consolidated

Agricultural and mining 14,562 24 14 33 357 14,990 3 14,993

Manufacturing and commerce 72,181 552 507 303 4,804 78,347 261 78,608

Real estate and construction 47,943 350 170 163 1,019 49,645 32 49,677

Public utilities and services 62,803 1,317 181 271 870 65,442 108 65,550

Personal consuming

Housing loans 85,730 1,170 598 487 990 88,975 30 89,005

Securities business ------3,458 3,458

Hire purchase 300,555 26,914 1,804 1,917 4,186 335,376 29,553 364,929

Others 24,678 624 592 157 530 26,581 50 26,631

Others 20,392 16 172 1 32 20,613 2 20,615

Total* 628,844 30,967 4,038 3,332 12,788 679,969 33,497 713,466

* Total loans net of deferred revenues

(Unit: Million Baht)

Separate financial statements

2016

Special Doubtful

Normal mention Substandard Doubtful of loss Total

Agricultural and mining 13,681 14 293 7 13 14,008

Manufacturing and commerce 72,977 204 926 421 875 75,403

Real estate and construction 45,311 105 359 883 650 47,308 Public utilities and services 57,641 339 173 40 518 58,711

Personal consuming

Housing loans 94,015 1,331 541 499 1,048 97,434 Hire purchase 283,917 22,813 1,362 1,263 1,960 311,315

Others 26,747 631 518 180 342 28,418

Others 18,992 3 4 - 18 19,017

Total* 613,281 25,440 4,176 3,293 5,424 651,614

* Total loans net of deferred revenues

THANACHART BANK PUBLIC COMPANY LIMITED 193 (Unit: Million Baht)

Separate financial statements

2015

Special Doubtful

Normal mention Substandard Doubtful of loss Total

Agricultural and mining 14,522 5 13 18 326 14,884

Manufacturing and commerce 72,098 539 330 298 2,073 75,338

Real estate and construction 47,892 347 149 157 691 49,236 Public utilities and services 61,671 1,286 173 147 644 63,921

Personal consuming

Housing loans 85,631 1,121 579 478 836 88,645 Hire purchase 300,424 26,903 1,803 1,917 4,184 335,231

Others 24,658 617 574 153 405 26,407

Others 22,286 15 10 - 28 22,339

Total* 629,182 30,833 3,631 3,168 9,187 676,001

* Total loans net of deferred revenues

11.4 Non-performing loans

As at 31 December 2016 and 2015, the Bank and its subsidiaries (securities and asset management businesses) had non-performing loans classified in accordance with the Notification of the BOT and SEC (debtors classified as substandard, doubtful and doubtful of loss) as follows:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Non-performing loans (excluding accrued interest receivables) Banking business 12,895 15,989 12,893 15,986 Securities business 14 113 - - Asset management business 1,996 4,169 - -

The above definition of non-performing loans does not include overdue loans which have been already restructured and are now qualified for classification as Normal or Special mention debt.

194 ANNUAL REPORT 2016 Additionally, the Bank and its subsidiary engaged in the securities business had loans for which income recognition under an accrual basis has been discontinued, as follows:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Banking business 12,978 16,972 12,974 16,968

Securities business 14 113 - -

The subsidiary company engaged in the asset management business recognises income from loan on a cash basis.

11.5 Debt restructuring

During the years 2016 and 2015, the Bank and its subsidiaries, asset management and securities businesses, have entered into debt restructuring agreements with their debtors as follows:

Consolidated financial statements

For the years ended 31 December

Outstanding Outstanding Fair value of

balance balance Type of assets assets to be Number of before after to be transferred under

Type of restructuring debtors restructuring (1) restructuring (1) transferred agreement

Million Baht Million Baht Million Baht

2016 Modification of repayment conditions 1,943 5,451 5,406

Transfer of assets and/or ordinary 8 167 160 Land and 195

shares and/or modification of building repayment conditions

Total 1,951 5,618 5,566

2015 Modification of repayment conditions 2,232 3,592 3,475

Transfer of assets and/or ordinary 34 309 308 Land and 310

shares and/or modification of building

repayment conditions

Total 2,266 3,901 3,783

(1) Presents the outstanding balance per the books of account (principal plus accrued interest receivable)

THANACHART BANK PUBLIC COMPANY LIMITED 195

Separate financial statements

For the years ended 31 December

Fair value of

Outstanding Outstanding Type of assets assets to be

Number of balance before balance after to be transferred under

Type of restructuring debtors restructuring (1) restructuring (1) transferred agreement

Million Baht Million Baht Million Baht

2016 Modification of repayment conditions 1,917 3,532 3,513

Transfer of assets and/or ordinary 6 35 32 Land and 32 shares and/or modification of building repayment conditions

Total 1,923 3,567 3,545

2015 Modification of repayment conditions 2,122 3,034 2,978

Transfer of assets and/or ordinary 26 226 226 Land and 214 shares and/or modification of building

repayment conditions

Total 2,148 3,260 3,204

(1) Presents the outstanding balance per the books of account (principal plus accrued interest receivable)

Counting from the end of the year, the remaining periods to maturity of receivables which entered into debt restructuring agreements during the years 2016 and 2015, are summarised below.

Consolidated financial statements

2016 2015

Outstanding Outstanding

Number of balances after Number of balances after

Periods debtors restructuring debtors restructuring

Million Baht Million Baht

Past due after restructuring 899 947 799 1,143

Due within the year 218 787 377 1,697

Less than 5 years 562 2,744 633 243

5 - 10 years 172 646 356 388

10 - 15 years 42 322 40 177

Over 15 years 58 120 61 135

Total 1,951 5,566 2,266 3,783

196 ANNUAL REPORT 2016

Separate financial statements

2016 2015

Outstanding Outstanding

Number of balances after Number of balances after

Periods debtors restructuring debtors restructuring

Million Baht Million Baht

Past due after restructuring 895 885 782 1,127 Due within the year 208 445 322 1,237

Less than 5 years 555 1,159 615 191

5 - 10 years 166 624 332 361 10 - 15 years 41 312 36 153

Over 15 years 58 120 61 135

Total 1,923 3,545 2,148 3,204

Supplemental information for the years 2016 and 2015 relating to restructured loans is as follows:

(Unit: Million Baht)

Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Interest income recognised in the statements of

comprehensive income 972 1,205 695 858 Cash repayment from receivables 5,173 5,121 3,075 4,155

Properties foreclosed received for debts

settlement 215 336 52 240 Loss on debt restructuring (net of allowance for

doubtful accounts as previously recorded) - - - -

As at 31 December 2016 and 2015, the Bank and its subsidiaries have the following restructured receivables balances (principal and accrued interest receivable):

Restructured receivables

Outstanding balances, Number of receivables Outstanding balances net of collateral

2016 2015 2016 2015 2016 2015

Million Baht Million Baht Million Baht Million Baht Thanachart Bank Plc. 13,532 20,756 10,093 11,196 2,850 4,668 Thanachart Securities Plc. - 1 - 7 - 7 TS Asset Management Co., Ltd. 325 564 4,261 5,316 2,923 3,249

THANACHART BANK PUBLIC COMPANY LIMITED 197 11.6 Hire purchase/Financial lease receivables

As at 31 December 2016 and 2015, hire purchase /financial lease receivables of the Bank and its subsidiaries, which are engaged in the hire purchase and financial lease businesses, mostly comprise hire purchase agreements or financial lease agreements for cars, trucks and motorcycles. The terms of the agreements are generally between 3 and 7 years and they carry interest at fixed rates stipulated in the agreements.

(Unit: Million Baht)

Consolidated financial statement as at 31 December 2016

Amounts due under lease agreements

Less than

1 year* 1 - 5 years Over 5 years Total

Gross investment in the lease 115,575 260,267 19,175 395,017

Less: Unearned finance income (17,546) (29,592) (1,016) (48,154)

Present value of minimum lease payments receivables 98,029 230,675 18,159 346,863 Allowance for doubtful accounts (9,609)

Hire purchase/Financial lease receivables - net 337,254

* Included non-performing receivables (Unit: Million Baht)

Consolidated financial statement as at 31 December 2015

Amounts due under lease agreements

Less than

1 year* 1 - 5 years Over 5 years Total

Gross investment in the lease 126,730 270,797 19,216 416,743

Less: Unearned finance income (19,134) (30,287) (1,073) (50,494)

Present value of minimum lease payments receivables 107,596 240,510 18,143 366,249 Allowance for doubtful accounts (10,792)

Hire purchase/Financial lease receivables - net 355,457

* Included non-performing receivables

198 ANNUAL REPORT 2016 (Unit: Million Baht)

Separate financial statement as at 31 December 2016

Amounts due under lease agreements

Less than

1 year* 1 - 5 years Over 5 years Total

Gross investment in the lease 112,924 224,662 18,907 356,493

Less: Unearned finance income (17,492) (25,576) (982) (44,050)

Present value of minimum lease payments receivables 95,432 199,086 17,925 312,443 Allowance for doubtful accounts (7,499)

Hire purchase/Financial lease receivables - net 304,944

* Included non-performing receivables

(Unit: Million Baht)

Separate financial statement as at 31 December 2015

Amounts due under lease agreements

Less than

1 year* 1 - 5 years Over 5 years Total

Gross investment in the lease 124,546 239,369 18,979 382,894

Less: Unearned finance income (19,069) (26,640) (1,040) (46,749)

Present value of minimum lease payments receivables 105,477 212,729 17,939 336,145 Allowance for doubtful accounts (9,061)

Hire purchase/Financial lease receivables - net 327,084

* Included non-performing receivables

THANACHART BANK PUBLIC COMPANY LIMITED 199 11.7 Classified by classification

As at 31 December 2016 and 2015, the Bank and its financial institution subsidiary (asset management business) classified and made allowances against their loans in accordance with the BOT’s guidelines as summarised below.

(Unit: Million Baht)

Consolidated financial statements (1)

Net balance used in making

Loans and accrued interest allowance for doubtful Allowance for doubtful

receivables accounts accounts (2)

2016 2015 2016 2015 2016 2015

Normal 613,276 629,475 404,054 424,400 9,805 8,101

Special mention 25,506 30,993 23,188 27,995 3,046 3,525

Substandard 4,258 4,039 2,443 2,703 1,705 1,798

Doubtful 3,362 3,332 1,656 2,440 974 1,351

Doubtful of loss 7,277 12,788 4,267 8,472 4,617 7,555

Total 653,679 680,627 435,608 466,010 20,147 22,330

Additional allowance for possible uncollectability debts 2,345 1,502

Total 22,492 23,832

(1) Only the Bank and a subsidiary company subject to BOT’s regulations; and after deducting intragroup transactions.

(2) As at 31 December 2016, the provisions set aside by the Bank and a subsidiary company exceeded the minimum requirement per the BOT’s notification by a total of Baht 11,707 million (2015: Baht 9,641 million). The Bank and a subsidiary company allocated Baht 9,362 million (2015: Baht 8,139 million) of the excess provision to a specific provision for an individual debtor and so combined with the minimum provision requirement of Baht 10,785 million (2015: Baht 14,191 million), the total provision set aside in accordance with BOT requirements is Baht 20,147 million (2015: Baht 22,330 million).

200 ANNUAL REPORT 2016 (Unit: Million Baht)

Separate financial statements

Net balance used in making

Loans and accrued interest allowance for doubtful Allowance for doubtful

receivables accounts accounts (3)

2016 2015 2016 2015 2016 2015

Normal 613,878 629,814 405,407 425,117 8,185 7,395

Special mention 25,457 30,858 23,183 27,965 3,039 3,484

Substandard 4,182 3,632 2,419 2,597 1,671 1,658

Doubtful 3,293 3,168 1,627 2,356 941 1,264

Doubtful of loss 5,424 9,187 2,940 6,085 3,193 4,839

Total 652,234 676,659 435,576 464,120 17,029 18,640

Additional allowance for possible uncollectability debts 2,272 1,502

Total 19,301 20,142

(3) As at 31 December 2016, the provisions set aside by the Bank exceeded the minimum requirement per the BOT’s notification by a total of Baht 9,883 million (2015: Baht 8,522 million). The Bank allocated Baht 7,611 million (2015: Baht 7,020 million) of the excess provision to a specific provision for an individual debtor and so combined with the minimum provision requirement of Baht 9,418 million (2015: Baht 11,620 million), the total provision set aside in accordance with BOT requirements is Baht 17,029 million (2015: Baht 18,640 million).

Percentage of allowance for doubtful account

The Banks’ hire purchase receivables-

personal consumer (4) Other loans

2016 2015 2016 2015

Normal 0.77 0.76 1 1

Special mention 9.50 8.56 2 2

Substandard 43.83 46.40 100 100

Doubtful 40.96 41.47 100 100

Doubtful of loss 94.69 60.98 100 100

(4) These percentages are average rates used in setting up allowance for doubtful accounts

THANACHART BANK PUBLIC COMPANY LIMITED 201 11.8 Loans to companies which have settlement problems

As at 31 December 2016 and 2015, loans of the Bank and its subsidiaries (which engaged in asset management and hire purchase and financial lease businesses) in the consolidated financial statements and the separate financial statements included amounts due from companies with weak financial positions and poor operating results, as follows:

Consolidated financial statements

Allowance for doubtful

accounts provided

Number of debtors Debt balances Collateral value in the accounts

2016 2015 2016 2015 2016 2015 2016 2015

Million Million Million Million Million Million

Baht Baht Baht Baht Baht Baht

1. Listed companies possible to 4 2 211 416 6 8 2 408

delisting from the SET

2. Non - listed companies with 22 39 476 490 365 322 111 169

similar operating results and

financial position to listed

companies possible to

delisting from the SET

3. Companies which have loan 427 842 7,809 7,985 3,836 3,369 3,937 4,623

settlement problems or have

defaulted on the repayment

Separate financial statements

Allowance for doubtful

accounts provided

Number of debtors Debt balances Collateral value in the accounts

2016 2015 2016 2015 2016 2015 2016 2015

Million Million Million Million Million Million

Baht Baht Baht Baht Baht Baht

1. Listed companies possible to 4 1 211 8 6 8 2 -

delisting from the SET

2. Non - listed companies with 22 39 476 490 365 322 111 169

similar operating results and

financial position to listed

companies possible to

delisting from the SET

3. Companies which have loan 340 694 3,909 3,583 2,942 1,920 967 1,662

settlement problems or have

defaulted on the repayment

202 ANNUAL REPORT 2016 11.9 Classification of securities business receivables in accordance with the Notification of the Securities and Exchange Commission

As at 31 December 2016 and 2015, a subsidiary company operating in the securities business classified securities business receivables and accrued interest receivables, and provided related allowance for doubtful accounts, in accordance with the Notification of the Securities and Exchange Commission (SEC), as follows:

(Unit: Million Baht)

Debt balances net of allowance

Debt balances Allowance for doubtful accounts for doubtful accounts

2016 2015 2016 2015 2016 2015

Normal 3,522 3,345 - - 3,522 3,345

Substandard 1 1 1 1 - - Doubtful 13 112 13 112 - -

Total 3,536 3,458 14 113 3,522 3,345

Allowance for doubtful accounts for substandard loans set aside by the subsidiary is higher than the minimum amount required by the SEC, and takes into account uncertainties as to collateral value and the risk from collection of such receivables.

11.10 Hire purchase/financial lease receivables of subsidiaries classified by aging

As at 31 December 2016 and 2015, hire purchase and financial lease receivables balances of subsidiary companies engaged in hire purchase and financial lease businesses are classified by the due date of the contracts (after elimination) as follows:

(Unit: Million Baht)

2016 2015

Current or overdue not over 90 days 32,663 28,549 Overdue 91 - 365 days 813 922 Overdue more than 1 year 170 218 Debtors under legal actions 545 270

Total 34,191 29,959

Allowance for doubtful accounts provided in the accounts 2,110 1,731

THANACHART BANK PUBLIC COMPANY LIMITED 203 12. Allowance for doubtful accounts

(Unit: Million Baht) Consolidated financial statements

For the year ended 31 December 2016

The Bank and a subsidiary company which is a financial institution

Other Special Sub- Doubtful General subsidiary Normal mention standard Doubtful of loss provision Total companies Consolidated

Balance - beginning of the year 8,101 3,525 1,798 1,351 7,555 1,502 23,832 1,844 25,676 Increase (decrease) during the year 1,704 (479) (93) (377) 2,340 843 3,938 349 4,287 Bad debts recovery - - - - 1,355 - 1,355 7 1,362

Bad debts written-off - - - - (6,633) - (6,633) (76) (6,709)

Balance - end of the year 9,805 3,046 1,705 974 4,617 2,345 22,492 2,124 24,616

(Unit: Million Baht) Consolidated financial statements

For the year ended 31 December 2015

The Bank and a subsidiary company which is a financial institution

Other Special Sub- Doubtful General subsidiary Normal mention standard Doubtful of loss provision Total companies Consolidated

Balance - beginning of the year 5,832 4,342 2,392 1,703 11,141 294 25,704 1,993 27,697 Increase (decrease) during the year 2,269 (817) (594) (352) 2,430 1,208 4,144 63 4,207

Bad debts recovery - - - - 1,608 - 1,608 15 1,623 Bad debts written-off - - - - (7,624) - (7,624) (227) (7,851)

Balance - end of the year 8,101 3,525 1,798 1,351 7,555 1,502 23,832 1,844 25,676

(Unit: Million Baht) Separate financial statements

For the year ended 31 December 2016

Special Doubtful General Normal mention Substandard Doubtful of loss provision Total

Balance - beginning of the year 7,395 3,484 1,658 1,264 4,839 1,502 20,142 Increase (decrease) during the year 790 (445) 13 (323) 3,588 770 4,393 Bad debts recovery - - - - 1,355 - 1,355 Bad debts written-off - - - - (6,589) - (6,589)

Balance - end of the year 8,185 3,039 1,671 941 3,193 2,272 19,301

204 ANNUAL REPORT 2016 (Unit: Million Baht)

Separate financial statements

For the year ended 31 December 2015

Special Doubtful General

Normal mention Substandard Doubtful of loss provision Total

Balance - beginning of the year 5,088 4,305 2,052 1,502 6,909 294 20,150 Increase (decrease) during

the year 2,307 (821) (394) (238) 3,946 1,208 6,008 Bad debts recovery - - - - 1,608 - 1,608 Bad debts written-off - - - - (7,624) - (7,624)

Balance - end of the year 7,395 3,484 1,658 1,264 4,839 1,502 20,142

13. Revaluation allowance for debt restructuring

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

2016 2015 2016 2015

Balance - beginning of the year 4 103 4 103

Decrease during the year - (97) - (97)

Amortised during the year (2) (2) (2) (2)

Balance - end of the year 2 4 2 4

14. Classification of assets

As at 31 December 2016 and 2015, the quality of assets of the Bank and its financial institution subsidiary (asset management business) classified in accordance with the announcements of the Bank of Thailand are as follows:

(Unit: Million Baht)

Consolidated financial statements

2016

Loans to

Interbank and customers and

money market accrued interest Properties

items receivables Investments foreclosed Other assets Total

Normal 26,213 613,276 - - 213 639,702

Special mention - 25,506 - - 115 25,621

Substandard - 4,258 - - 13 4,271

Doubtful - 3,362 - - 10 3,372

Doubtful of loss - 7,277 1,115 356 258 9,006

Total 26,213 653,679 1,115 356 609 681,972

THANACHART BANK PUBLIC COMPANY LIMITED 205 (Unit: Million Baht) Consolidated financial statements

2015

Loans to Interbank and customers and money market accrued interest Properties items receivables Investments foreclosed Other assets Total

Normal 48,755 629,475 - - 236 678,466

Special mention - 30,993 - - 127 31,120

Substandard - 4,039 - - 14 4,053

Doubtful - 3,332 - - 14 3,346

Doubtful of loss - 12,788 397 496 288 13,969

Total 48,755 680,627 397 496 679 730,954

(Unit: Million Baht)

Separate financial statements

2016

Loans to

Interbank and customers and

money market accrued interest Properties

items receivables Investments foreclosed Other assets Total

Normal 28,713 613,878 - - 213 642,804

Special mention - 25,457 - - 115 25,572

Substandard - 4,182 - - 13 4,195

Doubtful - 3,293 - - 10 3,303

Doubtful of loss - 5,424 1,120 313 255 7,112

Total 28,713 652,234 1,120 313 606 682,986

(Unit: Million Baht)

Separate financial statements

2015

Loans to

Interbank and customers and

money market accrued interest Properties

items receivables Investments foreclosed Other assets Total

Normal 49,605 629,814 - - 236 679,655

Special mention - 30,858 - - 127 30,985

Substandard - 3,632 - - 14 3,646

Doubtful - 3,168 - - 14 3,182

Doubtful of loss - 9,187 402 312 282 10,183

Total 49,605 676,659 402 312 673 727,651

206 ANNUAL REPORT 2016 15. Properties foreclosed

(Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2016

Balance - Balance - beginning end of

of the year Additions Disposals the year

Assets transferred for settlement of debts Immovable assets External appraiser 3,195 204 (1,150) 2,249 Movable assets 604 5,173 (5,359) 418 Assets from purchase by bid on the open market Immovable assets External appraiser 736 156 (156) 736 Non-used branches

External appraiser 90 29 (22) 97 Total properties foreclosed 4,625 5,562 (6,687) 3,500

Less: Allowance for impairment (532) (940) 1,084 (388)

Properties foreclosed - net 4,093 4,622 (5,603) 3,112

(Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2015

Balance - Balance - beginning end of

of the year Additions Disposals the year

Assets transferred for settlement of debts Immovable assets External appraiser 4,409 325 (1,539) 3,195 Movable assets 1,544 6,066 (7,006) 604 Assets from purchase by bid on the open market Immovable assets External appraiser 604 204 (72) 736 Non-used branches

External appraiser 242 11 (163) 90 Total properties foreclosed 6,799 6,606 (8,780) 4,625

Less: Allowance for impairment (292) (938) 698 (532)

Properties foreclosed - net 6,507 5,668 (8,082) 4,093

THANACHART BANK PUBLIC COMPANY LIMITED 207 (Unit: Million Baht)

Separate financial statements

For the year ended 31 December 2016

Balance - Balance - beginning end

of the year Additions Disposals of the year

Assets transferred for settlement of debts Immovable assets External appraiser 1,112 34 (244) 902 Movable assets 483 4,635 (4,789) 329 Assets from purchase by bid on the open market Immovable assets External appraiser 464 70 (105) 429 Non-used branches

External appraiser 90 29 (22) 97 Total properties foreclosed 2,149 4,768 (5,160) 1,757

Less: Allowance for impairment (312) (681) 680 (313)

Properties foreclosed - net 1,837 4,087 (4,480) 1,444

(Unit: Million Baht)

Separate financial statements

For the year ended 31 December 2015

Balance - Balance - beginning end

of the year Additions Disposals of the year

Assets transferred for settlement of debts Immovable assets External appraiser 1,416 223 (527) 1,112 Movable assets 1,428 5,458 (6,403) 483 Assets from purchase by bid on the open market Immovable assets External appraiser 418 102 (56) 464 Non-used branches

External appraiser 242 11 (163) 90 Total properties foreclosed 3,504 5,794 (7,149) 2,149

Less: Allowance for impairment (200) (731) 619 (312)

Properties foreclosed - net 3,304 5,063 (6,530) 1,837

208 ANNUAL REPORT 2016 16. Land, premises and equipment

(Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2016

Revaluation

basis Cost basis

Buildings and Furniture, Assets

building fixtures and under

Land improvement equipment Vehicles installation Total

Cost

1 January 2016 4,432 2,375 6,884 87 56 13,834

Additions - 15 696 4 137 852

Appraisal increase 1,606 - - - - 1,606

Appraisal decrease (14) - - - - (14)

Transfers/disposals (50) (1) (148) (19) (181) (399)

31 December 2016 5,974 2,389 7,432 72 12 15,879

Accumulated depreciation

1 January 2016 - 625 5,034 70 - 5,729

Transfers/disposals - (6) (302) (18) - (326)

Depreciation for the year - 119 706 6 - 831

31 December 2016 - 738 5,438 58 - 6,234

Allowance for impairment

1 January 2016 68 26 6 - - 100

Decrease during the year - (1) - - - (1)

31 December 2016 68 25 6 - - 99

Net book value

31 December 2016 5,906 1,626 1,988 14 12 9,546

Depreciation charge for the years

2015 752

2016 831

THANACHART BANK PUBLIC COMPANY LIMITED 209 (Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2015

Cost basis

Buildings and Furniture, Assets

building fixtures and under

Land improvement equipment Vehicles installation Total

Cost

1 January 2015 4,444 2,330 6,272 105 90 13,241

Additions - 49 519 4 268 840

Transfers/disposals (12) (4) 93 (22) (302) (247)

31 December 2015 4,432 2,375 6,884 87 56 13,834

Accumulated depreciation

1 January 2015 - 512 4,613 82 - 5,207

Transfers/disposals - (4) (205) (21) - (230)

Depreciation for the year - 117 626 9 - 752

31 December 2015 - 625 5,034 70 - 5,729

Allowance for impairment

1 January 2015 68 26 6 - - 100

31 December 2015 68 26 6 - - 100

Net book value

31 December 2015 4,364 1,724 1,844 17 56 8,005

210 ANNUAL REPORT 2016 (Unit: Million Baht)

Separate financial statements

For the year ended 31 December 2016

Revaluation basis Cost basis Buildings and Furniture, Assets

building fixtures and under

Land improvement equipment Vehicles installation Total

Cost

1 January 2016 4,350 2,224 5,624 31 56 12,285

Additions - - 667 - 106 773

Appraisal increase 1,603 - - - - 1,603

Appraisal decrease (14) - - - - (14)

Transfers/disposals (50) (13) (50) (17) (151) (281)

31 December 2016 5,889 2,211 6,241 14 11 14,366

Accumulated depreciation

1 January 2016 - 581 3,909 26 - 4,516

Transfers/disposals - (2) (197) (16) - (215)

Depreciation for the year - 111 652 1 - 764

31 December 2016 - 690 4,364 11 - 5,065

Allowance for impairment

1 January 2016 - - 5 - - 5

31 December 2016 - - 5 - - 5

Net book value

31 December 2016 5,889 1,521 1,872 3 11 9,296

Depreciation charge for the years

2015 681

2016 764

THANACHART BANK PUBLIC COMPANY LIMITED 211 (Unit: Million Baht)

Separate financial statements

For the year ended 31 December 2015

Cost basis

Buildings and Furniture, Assets

buildings fixtures and under

Land improvement equipment Vehicles installation Total

Cost

1 January 2015 4,359 2,227 4,984 34 90 11,694

Additions - - 474 4 267 745

Transfers/disposals (9) (3) 166 (7) (301) (154)

31 December 2015 4,350 2,224 5,624 31 56 12,285

Accumulated depreciation

1 January 2015 - 470 3,474 29 - 3,973

Transfers/disposals - (1) (130) (7) - (138)

Depreciation for the year - 112 565 4 - 681

31 December 2015 - 581 3,909 26 - 4,516

Allowance for impairment

1 January 2015 - - 5 - - 5

31 December 2015 - - 5 - - 5

Net book value

31 December 2015 4,350 1,643 1,710 5 56 7,764

As at 31 December 2016 and 2015, the Bank and its subsidiaries have vehicles acquired under financial lease agreements with net book values amounting to approximately Baht 4 million and Baht 6 million, respectively. In addition, the Bank and its subsidiaries have office equipment and vehicles which have been fully depreciated but are still in use. The gross carrying amount before deducting accumulated depreciation and allowance for impairment amounting to approximately Baht 3,410 million and Baht 3,065 million, respectively (separate financial statements: the Bank have vehicles acquired under financial lease agreements with net book values amounting to approximately Baht 3 million and Baht 5 million, respectively and have office equipment and vehicles which have been fully depreciated but are still in use. The gross carrying amount before deducting accumulated depreciation and allowance for impairment amounting to approximately Baht 3,007 million and Baht 2,749 million, respectively).

The Bank and its subsidiaries arranged for an independent professional appraiser to appraise the value of land in 2015, using the market approach.

212 ANNUAL REPORT 2016 Had the land been carried in the financial statements on a historical cost basis, its net book value as of 31 December 2016 would have been as follows:

(Unit: Million Baht) Consolidated Separate financial statements financial statements

Land 4,326 4,312

Assumptions used in the valuation are summarised below. Result to fair value where as an Consolidated Separate increase in financial statements financial statements assumption value

Price per square wah (Baht) 6,300 - 1,000,000 8,000 - 1,000,000 Increase in fair value

Surplus on revaluation of assets

Movements in surplus on revaluation of assets arising from revaluation of land of the Bank and its subsidiaries during the year ended 31 December 2016 are summarised below.

(Unit: Million Baht) Consolidated Separate financial statements financial statements

Beginning balance - - Increased during the year 1,606 1,603

Transferred out during the year (5) (5)

Ending balance 1,601 1,598

Surplus on revaluation of assets can neither be offset against deficit nor used for dividend distribution.

THANACHART BANK PUBLIC COMPANY LIMITED 213 17. Intangible assets

(Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2016

Membership

fees for

Intangible Thailand Computer

assets from Futures software

business Computer Exchange under

Goodwill combination software and others development Total

Cost

1 January 2016 17,951 4,100 2,382 8 270 24,711

Additions - - 180 - 279 459

Transfers/disposals - - 239 - (373) (134)

31 December 2016 17,951 4,100 2,801 8 176 25,036

Accumulated amortisation

1 January 2016 - 2,589 1,112 7 - 3,708

Transfers/disposals - - (89) - - (89)

Amortisation for the year - 451 287 - - 738

31 December 2016 - 3,040 1,310 7 - 4,357

Allowance for impairment

1 January 2016 - - 49 - - 49

Decrease during the year - - (19) - - (19)

31 December 2016 - - 30 - - 30

Net book value

31 December 2016 17,951 1,060 1,461 1 176 20,649

Remaining amortisation period (years) - 3.25 0 - 9.99 - -

Amortisation expenses for the years

2015 691

2016 738

214 ANNUAL REPORT 2016 (Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2015

Membership

fees for

Intangible Thailand Computer

assets from Futures software

business Computer Exchange under

Goodwill combination software and others development Total

Cost

1 January 2015 17,951 4,100 2,167 7 228 24,453

Additions - - 115 1 154 270

Transfers/disposals - - 100 - (112) (12)

31 December 2015 17,951 4,100 2,382 8 270 24,711

Accumulated amortisation

1 January 2015 - 2,127 888 7 - 3,022

Transfers/disposals - - (5) - - (5)

Amortisation for the year - 462 229 - - 691

31 December 2015 - 2,589 1,112 7 - 3,708

Allowance for impairment

1 January 2015 - - 63 - - 63

Decrease during the year - - (14) - - (14)

31 December 2015 - - 49 - - 49

Net book value

31 December 2015 17,951 1,511 1,221 1 270 20,954

THANACHART BANK PUBLIC COMPANY LIMITED 215 (Unit: Million Baht) Separate financial statements

For the year ended 31 December 2016

Intangible

assets from Computer

business Computer software under

Goodwill combination software development Total

Cost

1 January 2016 17,941 3,613 2,080 265 23,899

Additions - - 161 261 422

Transfers/disposals - - 274 (350) (76)

31 December 2016 17,941 3,613 2,515 176 24,245

Accumulated amortisation

1 January 2016 - 2,102 891 - 2,993 Transfers/disposals - - (32) - (32)

Amortisation for the year - 451 269 - 720

31 December 2016 - 2,553 1,128 - 3,681

Allowance for impairment

1 January 2016 - - 49 - 49

Decrease during the year - - (19) - (19)

31 December 2016 - - 30 - 30

Net book value

31 December 2016 17,941 1,060 1,357 176 20,534

Remaining amortisation period (years) - 3.25 0 - 9.99 -

Amortisation expenses for the years

2015 677

2016 720

216 ANNUAL REPORT 2016 (Unit: Million Baht) Separate financial statements

For the year ended 31 December 2015

Intangible

assets from Computer

business Computer software under

Goodwill combination software development Total

Cost

1 January 2015 17,941 3,613 1,895 217 23,666

Additions - - 99 141 240

Transfers/disposals - - 86 (93) (7)

31 December 2015 17,941 3,613 2,080 265 23,899

Accumulated amortisation

1 January 2015 - 1,640 677 - 2,317

Transfers/disposals - - (1) - (1)

Amortisation for the year - 462 215 - 677

31 December 2015 - 2,102 891 - 2,993

Allowance for impairment

1 January 2015 - - 63 - 63

Decrease during the year - - (14) - (14)

31 December 2015 - - 49 - 49

Net book value

31 December 2015 17,941 1,511 1,140 265 20,857

As at 31 December 2016 and 2015, the Bank and its subsidiaries have computer software which have been fully amortised but are still in use with the gross carrying amount before deducting accumulated amortisation and allowance for impairment, amounting to approximately Baht 162 million and Baht 84 million, respectively (separate financial statements: Baht 88 million and Baht 22 million, respectively).

THANACHART BANK PUBLIC COMPANY LIMITED 217 Goodwill

The Bank and its subsidiaries allocated goodwill acquired through business combinations to the cash generating unit (CGU) for annual impairment testing, on the assumption that the CGU is the consolidated financial statements of the Bank and its subsidiaries.

The recoverable amount of the CGU have been determined based on value in use calculation using cash flow projections for the consolidated operating results of the Bank and its subsidiaries covering a five-year period.

Key assumptions used in value in use calculation are summarised below:

Rate (Percentage)

Terminal growth rate 5 Discount rate 12

The management of the Bank determined these key assumptions based on historical operating results and expected market growth. The discount rate used is a rate that reflects risks specific to the Bank and its subsidiaries.

The management of the Bank believes that changes in the key assumptions used to determine the value in use of the CGU would not result in impairment.

The management of the Bank believes that there is no impairment of goodwill.

218 ANNUAL REPORT 2016 18. Deferred tax assets/ liabilities and income tax

18.1 Deferred tax assets/ liabilities

As at 31 December 2016 and 2015, deferred tax assets and liabilities are as follows:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

2016 2015 2016 2015

Deferred tax assets 791 741 - - Deferred tax liabilities (868) (893) (799) (874)

Net (77) (152) (799) (874)

The components of deferred tax assets and deferred tax liabilities are as follows:

(Unit: Million Baht)

Consolidated financial statements

2016 2015

Deferred tax assets Non-accrued interest income 64 81 Allowance for doubtful accounts - general provision/other assets 929 703 Provisions for employee benefits 480 417 Provisions 231 235 Accrued expenses 100 96 Fees income received in advance 369 381 Late payment fee income 178 176 Insurance contract liabilities 306 290 Others 482 592

Deferred tax assets 3,139 2,971

Deferred tax liabilities Assets transferred as a result of business combination (1,104) (1,115) Deferred commission fee and direct expenses charged on hire purchase (1,379) (1,348) Intangible assets (212) (302) Others (521) (358)

Deferred tax liabilities (3,216) (3,123)

Net (77) (152)

THANACHART BANK PUBLIC COMPANY LIMITED 219 (Unit: Million Baht)

Separate financial statements

2016 2015

Deferred tax assets

Non-accrued interest income 64 78

Allowance for doubtful accounts - general provision/other assets 513 364

Provisions for employee benefits 437 374

Provisions 231 235

Accrued expenses 82 80

Fees income received in advance 369 381

Late payment fee income 178 176

Others 264 337

Deferred tax assets 2,138 2,025

Deferred tax liabilities

Assets transferred as a result of business combination (1,104) (1,115)

Deferred commission fee and direct expenses charged on

hire purchase (1,294) (1,276)

Intangible assets (212) (302)

Others (327) (206)

Deferred tax liabilities (2,937) (2,899)

Net (799) (874)

As at 31 December 2016, the Bank has tax losses totaling Baht 14,669 million arising from investment in a subsidiary company that has already completed the liquidation process, which will expire by 2020. The Bank has not recognised deferred tax assets in respect of these losses because management’s assessment is that there is uncertainty regarding their future benefit.

220 ANNUAL REPORT 2016 18.2 Income tax

Income tax expenses for the years ended 31 December 2016 and 2015 are as follows:

(Unit: Million Baht) Consolidated Separate financial statements financial statements

2016 2015 2016 2015

Current income tax: Corporate income tax charge 825 726 - - Adjustment in respect of income tax from previous year 2 12 - 9 Deferred tax: Relating to origination and reversal of temporary differences (136) (540) (105) (570) Income tax expense reported in statements of comprehensive income (income) 691 198 (105) (561)

The Bank has no income tax expenses for the year ended 31 December 2016 because it has unused tax losses resulting from the liquidation of a subsidiary company.

The amounts of income tax relating to each component of other comprehensive income for the years ended 31 December 2016 and 2015 are as follows:

(Unit: Million Baht) Consolidated Separate financial statements financial statements

2016 2015 2016 2015

Deferred tax relating to surplus on revaluation of assets 321 - 321 - Deferred tax relating to loss on changes in value of available-for-sale investments (291) (233) (288) (134) Deferred tax relating to actuarial gain (loss) on

defined benefit plan 3 (41) (3) (36) Deferred tax relating to share of other comprehensive income of associated company 35 (8) - - 68 (282) 30 (170)

THANACHART BANK PUBLIC COMPANY LIMITED 221 Reconciliations between income tax expenses and the product of accounting profit multiplied by the applicable tax rates for the years ended 31 December 2016 and 2015 are as follows:

(Unit: Million Baht) Consolidated Separate financial statements financial statements 2016 2015 2016 2015

Accounting profit before tax 13,530 11,325 11,857 10,891 Applicable tax rate 20% 20% 20% 20% Accounting profit before tax multiplied by applicable tax rate 2,706 2,265 2,371 2,178 Adjustment in respect of income tax from previous year 2 12 - 9 Effects of non - taxable revenue and non-deductible expenses - net (2,017) (2,079) (2,476) (2,748) Income tax expenses reported in statements of comprehensive income (income) 691 198 (105) (561)

19. Other assets

(Unit: Million Baht) Consolidated Separate financial statements financial statements

2016 2015 2016 2015

Accrued premium insurance income 254 265 - - Other receivables 701 602 670 597 Accrued interest and dividend income receivable 892 1,001 870 964 VAT refundable 297 450 259 407 Prepaid leasehold rights 162 191 162 191 Other receivables - VAT paid in advance for customers 255 292 205 243 Deposits 271 289 274 268 Estimated insurance claims recoveries 230 285 - - Receivable from clearing house 1,332 1,101 - - Prepaid expenses 373 440 92 148 Deposits from derivative contracts 1,034 1,226 1,034 1,226 Reinsurance assets 200 175 - -

Others 2,330 1,754 1,662 1,388 Total 8,331 8,071 5,228 5,432 Less: Allowance for impairment (413) (401) (310) (330)

Other assets - net 7,918 7,670 4,918 5,102

222 ANNUAL REPORT 2016 20. Deposits

20.1 Classified by type of deposits

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Current 11,427 9,786 11,471 9,822 Saving 296,978 258,930 297,417 259,343 Certificates of deposit 125,493 113,598 125,493 113,598 Fixed deposits - Less than 6 months 39,442 38,632 39,942 38,858 - 6 months and up to 1 year 93,129 122,076 93,129 122,385

- Over 1 year 110,088 126,482 110,355 126,569

Total deposits 676,557 669,504 677,807 670,575

20.2 Classified by currency and country

(Unit: Million Baht)

Consolidated financial statements

2016 2015

Domestic Foreign Total Domestic Foreign Total

Baht 675,363 1 675,364 668,613 1 668,614 US Dollar 837 30 867 738 24 762 Other currencies 317 9 326 111 17 128

Total 676,517 40 676,557 669,462 42 669,504

(Unit: Million Baht)

Separate financial statements

2016 2015

Domestic Foreign Total Domestic Foreign Total

Baht 676,613 1 676,614 669,684 1 669,685 US Dollar 837 30 867 738 24 762 Other currencies 317 9 326 111 17 128

Total 677,767 40 677,807 670,533 42 670,575

THANACHART BANK PUBLIC COMPANY LIMITED 223 21. Interbank and money market items (liabilities)

(Unit: Million Baht)

Consolidated financial statements

2016 2015

At call Term Total At call Term Total

Domestic Bank of Thailand and Financial Institutions Development Fund 416 2,779 3,195 416 3,348 3,764 Commercial banks 649 17,478 18,127 424 22,886 23,310 Specialised financial institutions 47 3,724 3,771 40 2,850 2,890

Other financial institutions 10,813 9,922 20,735 10,353 17,294 27,647

Total domestic items 11,925 33,903 45,828 11,233 46,378 57,611 Foreign US Dollar 118 15,766 15,884 85 19,546 19,631 Euro 1 - 1 3 - 3

Baht 3,610 511 4,121 7,650 793 8,443

Total foreign items 3,729 16,277 20,006 7,738 20,339 28,077

Total 15,654 50,180 65,834 18,971 66,717 85,688

(Unit: Million Baht)

Separate financial statements

2016 2015

At call Term Total At call Term Total

Domestic Bank of Thailand and Financial Institutions Development Fund 416 2,779 3,195 416 3,348 3,764 Commercial banks 183 8,359 8,542 123 16,526 16,649

Specialised financial institutions 47 3,424 3,471 40 2,450 2,490

Other financial institutions 11,020 9,922 20,942 10,385 17,334 27,719

Total domestic items 11,666 24,484 36,150 10,964 39,658 50,622

Foreign US Dollar 118 15,766 15,884 85 19,546 19,631 Euro 1 - 1 3 - 3

Baht 3,610 511 4,121 7,650 793 8,443

Total foreign items 3,729 16,277 20,006 7,738 20,339 28,077

Total 15,395 40,761 56,156 18,702 59,997 78,699

224 ANNUAL REPORT 2016 As at 31 December 2016, interbank and money market items in the consolidated financial statements included loans of a subsidiary company amounting to Baht 1,750 million, consisting of (i) a loan of Baht 800 million, repayable in full within 3 years from the date of the loan drawdown, and carrying interest at a fixed rate per annum, payable monthly, (ii) a loan of Baht 500 million, repayable in full within 4 years from the date of the loan drawdown, carrying interest at a fixed rate per annum, payable monthly, (iii) a loan of Baht 200 million, repayable in full within 3 years from the date of the loan drawdown, and carrying interest at a fixed rate per annum, payable quarterly and (iv) a loan of Baht 250 million in the form of promissory notes, repayable at the date as specified in each promissory note, and carrying interest at fixed rates per annum, payable monthly. In addition, the subsidiary has to comply with the terms and conditions specified in the loan agreements, such as maintenance of a debt to equity ratio (2015: included loans of a subsidiary company amounting to Baht 1,573 million).

22. Debt issued and borrowings

As at 31 December 2016 and 2015, the balance of domestic debt issued and borrowings, which stated in Baht, are as follows:

(Unit: Million Baht)

Interest rate

per annum (as at Consolidated Separate

31 December financial statements financial statements

Types of borrowings 2016) Maturity date 2016 2015 2016 2015

Subordinated debentures 4.70 percent 2022 12,516 12,516 12,516 12,516

issued under Tier II (a- b) Subordinated instruments 4.65, 6.00 percent 2024 and 2025 20,000 20,000 20,000 20,000

issued under Tier II (c - d)

Unsubordinated debentures 2.6 0 - 4.8 0 percent 2017 - 2019 13,905 15,071 - - (e - ae) Short-term debentures 1.65 percent 2017 2,000 22,900 2,000 22,900

Structured notes 1.00 percent 2017 50 - - -

Promissory notes 0.20 - 2.50 percent At call 937 1,149 5 5 Borrowings - Department of 0.50 percent 2017 1 5 1 5 Alternative Energy Development and Efficiency

Total debt issued and borrowings 49,409 71,641 34,522 55,426

THANACHART BANK PUBLIC COMPANY LIMITED 225 (a) On 20 July 2012, the Bank issued 8,497,000 units of name registered subordinated, unsecured debentures with debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2022 and bear interest at a fixed rate of 4.70 percent per annum, payable quarterly. The Bank has a call option to early redeem these debentures at par if the conditions specified are met.

(b) On 19 October 2012, the Bank issued 4,018,500 units of name registered subordinated, unsecured debentures with debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2022 and bear interest at a fixed rate of 4.70 percent per annum, payable quarterly. The Bank has a call option to early redeem these debentures at par if the conditions specified are met.

(c) On 19 June 2014, the Bank issued 13,000,000 units of name registered Tier II capital subordinated unsecured instruments with no instrument holder’s representative, with a face value of Baht 1,000 each. The instruments will be fully converted to ordinary shares of the Bank in the event that a Point of Non-Viability is triggered requiring financial assistance from the regulators. The instruments mature in 2024 and bear interest at a fixed rate of 6.00 percent per annum, payable quarterly. The Bank has a call option to early redeem these instruments at par if the conditions specified are met.

(d) On 11 May 2015, the Bank issued 7,000,000 units of name registered Tier II capital subordinated unsecured instruments with no instrument holder’s representative, with a face value of Baht 1,000 each. The instruments will be fully converted to ordinary shares of the Bank in the event that a Point of Non-Viability is triggered requiring financial assistance from the regulators. The instruments mature in 2025 and bear interest at a fixed rate of 4.65 percent per annum, payable quarterly. The Bank has a call option to early redeem these instruments at par if the conditions specified are met.

(e) On 27 April 2012, a subsidiary company issued 2,500,000 units of name registered unsubordinated, unsecured debentures with debenture holders’ representative, with a face value of Baht 1,000 each and bear interest at a fixed rate of 5.50 percent per annum, payable quarterly. The subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio. The debentures mature in the second quarter of 2016.

226 ANNUAL REPORT 2016 (f) On 1 November 2012, a subsidiary company issued 3,000,000 units of name registered unsubordinated, unsecured debentures with debenture holders’ representative, with a face value of Baht 1,000 each and bear interest at a fixed rate of 5.00 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio. The debentures mature in the fourth quarter of 2016.

(g) On 14 June 2013, a subsidiary company issued 2,000,000 units of name registered unsubordinated, unsecured debentures with debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 4.70 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(h) On 30 August 2013, a subsidiary company issued 760,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 4.759 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(i) On 25 October 2013, a subsidiary company issued 3,000,000 units of name registered unsubordinated, unsecured debentures with debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 4.80 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(j) On 30 April 2014, a subsidiary company issued 280,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 4.25 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(k) On 2 May 2014, a subsidiary company issued 2,000,000 units of name registered unsubordinated, unsecured debentures with debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2018 and bear interest at a fixed rate of 4.75 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

THANACHART BANK PUBLIC COMPANY LIMITED 227 (l) On 21 May 2014, a subsidiary company issued 210,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 4.25 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(m) On 3 July 2014, a subsidiary company issued 150,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 4.22 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(n) On 25 September 2014, a subsidiary company issued 300,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 4.10 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(o) On 28 April 2015, a subsidiary company issued 200,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 3.35 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(p) On 3 September 2015, a subsidiary company issued 150,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2018 and bear interest at a fixed rate of 3.10 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(q) On 11 September 2015, a subsidiary company issued 350,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2018 and bear interest at a fixed rate of 3.10 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

228 ANNUAL REPORT 2016 (r) On 23 September 2015, a subsidiary company issued 150,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2018 and bear interest at a fixed rate of 3.10 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(s) On 2 October 2015, a subsidiary company issued 150,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2018 and bear interest at a fixed rate of 3.00 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(t) On 9 October 2015, a subsidiary company issued 300,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2018 and bear interest a fixed rate of 3.00 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(u) On 15 February 2016, a subsidiary company issued 200,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 2.88 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(v) On 11 March 2016, a subsidiary company issued 770,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2017 and bear interest at a fixed rate of 2.60 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(w) On 8 April 2016, a subsidiary company issued 200,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 2.88 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

THANACHART BANK PUBLIC COMPANY LIMITED 229 (x) On 25 April 2016, a subsidiary company issued 1,000,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 2.70 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(y) On 9 June 2016, a subsidiary company issued 200,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 3.00 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(z) On 21 June 2016, a subsidiary company issued 215,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 3.00 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(aa) On 21 July 2016, a subsidiary company issued 300,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 3.00 percent per annum, payable semi-annually. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(ab) On 3 August 2016, a subsidiary company issued 500,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 3.00 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(ac) On 9 August 2016, a subsidiary company issued 200,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 3.00 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

230 ANNUAL REPORT 2016 (ad) On 9 September 2016, a subsidiary company issued 300,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 2.95 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

(ae) On 15 September 2016, a subsidiary company issued 320,000 units of name registered unsubordinated, unsecured debentures with no debenture holders’ representative, with a face value of Baht 1,000 each. The debentures mature in 2019 and bear interest at a fixed rate of 2.95 percent per annum, payable quarterly. In addition, the subsidiary has to comply with the terms and conditions as specified in the loan agreement, such as maintenance of a debt to equity ratio.

23. Provisions

(Unit: Million Baht)

Consolidated financial statements

2016

Obligations from Loss from Employee off-balance

litigation benefits items Others Total

Balance as at 1 January 2016 336 2,118 447 393 3,294 Increase during the year 64 411 13 658 1,146 Utilised (20) (106) (13) (230) (369) Reversal of provisions (15) - (13) (464) (492)

Balance as at 31 December 2016 365 2,423 434 357 3,579

THANACHART BANK PUBLIC COMPANY LIMITED 231 (Unit: Million Baht)

Consolidated financial statements

2015

Obligations from Loss from Employee off-balance

litigation benefits items Others Total

Balance as at 1 January 2015 162 1,902 434 302 2,800 Increase during the year 280 402 33 277 992 Utilised (102) (186) (20) (186) (494) Reversal of provisions (4) - - - (4)

Balance as at 31 December 2015 336 2,118 447 393 3,294

(Unit: Million Baht)

Separate financial statements

2016

Obligations from Loss from Employee off-balance

litigation benefits items Others Total

Balance as at 1 January 2016 336 1,871 447 393 3,047 Employee benefits for staff transferred to subsidiary - (1) - - (1) Increase during the year 64 417 13 658 1,152 Utilised (20) (102) (13) (230) (365)

Reversal of provisions (15) - (13) (464) (492)

Balance as at 31 December 2016 365 2,185 434 357 3,341

232 ANNUAL REPORT 2016 (Unit: Million Baht)

Separate financial statements

2015

Obligations from Loss from Employee off-balance

litigation benefits items Others Total

Balance as at 1 January 2015 162 1,705 434 302 2,603 Employee benefits for staff transferred from subsidiary - 6 - - 6 Increase during the year 280 341 33 277 931 Utilised (102) (181) (20) (186) (489)

Reversal of provisions (4) - - - (4)

Balance as at 31 December 2015 336 1,871 447 393 3,047

Long-term employee benefits

Provision for long-term employee benefits, which are compensations on employees’ retirement, was as follows:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Defined benefit obligation at the beginning of the year 2,085 1,847 1,838 1,650 Employee benefits for staff transferred to/from subsidiaries - - (1) 6 Included in profit or loss: Current service cost 150 131 125 110 Interest cost 69 74 60 66 Past service cost and gains or losses arising from the payment of benefits (89) (137) (77) (129) Included in other comprehensive income: Actuarial (gain) loss arising from - Demographic assumptions changes 25 3 47 (12) - Financial assumptions changes (66) 170 (59) 150 - Experience adjustments 25 41 24 40

Benefits paid (47) (44) (43) (43)

Defined benefit obligation at the end of the year 2,152 2,085 1,914 1,838

THANACHART BANK PUBLIC COMPANY LIMITED 233 As at 31 December 2016 and 2015, the Bank and its subsidiaries expect to pay Baht 69 million and Baht 47 million, respectively, in long-term employee benefits during the next one year (separate financial statements: Baht 65 million and Baht 43 million, respectively).

The principal actuarial assumptions used to calculate the defined benefit obligations are as follows:

(Percent per annum) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Discount rate 2.71 - 3.51 2.71 - 3.83 3.51 3.21 Future salary increase rate 5.00 - 6.39 5.00 - 7.43 5.00 5.00 Average staff turnover rate 0.00 - 100 0.00 - 92.86 0.20 - 28.22 0.31 - 23.46 (depending on age)

The result of sensitivity analysis for significant assumptions that affect the increasing in present value of long-term employee benefit obligation as at 31 December 2016 and 2015 are summarised below:

(Unit: Million Baht) Consolidated financial Separate financial Change statements statements 2016 2015 2016 2015 Discount rate Decrease 0.25% 55 58 49 49 Future salary increase rate Increase 0.25% 54 56 48 48 Average staff turnover rate Decrease 0.25% 55 58 50 52 (depending on age)

As at 31 December 2016 and 2015, the weighted average durations of the liabilities for long-term employee benefit obligation of the Bank and its subsidiaries are 10,15,16 and 20 years and 11, 16 and 24 years, respectively (separate financial statements: 16 years and 16 years, respectively).

234 ANNUAL REPORT 2016 24. Insurance contract liabilities

(Unit: Million Baht) 2016 2015 Insurance Insurance

contract Reinsurance contract Reinsurance liabilities assets Net liabilities assets Net Loss reserves and

outstanding claims 1,558 (159) 1,399 1,707 (153) 1,554

Premium reserves 3,379 (41) 3,338 3,086 (22) 3,064

Total 4,937 (200) 4,737 4,793 (175) 4,618

Assumptions used in determining liabilities from insurance contracts

The assumptions used in determining liabilities from insurance contracts are set taking into consideration the model used to assess, the nature of the data, including actual experience up to the date the assessment is made. The analysis performed considers both internal and external factors that affect the pattern of experience, such as the underwriting process, the proportion of insurance, the process of claims handling, the reinsurance policy, economic trends and regulatory changes. In the event that historical loss data is insufficient to be a credible basis for the determination of the assumptions, industry information is used to ensure that this method is appropriate. In addition, the assumptions used in determining insurance liabilities should be consistent with the assumptions used in determining claims liabilities.

Sensitivity analysis

Sensitivity analysis is performed to analyse the risk that insurance liabilities will increase or decrease as a result of changes in the assumptions used in calculating those liabilities, which will impact claims liabilities both before reinsurance and after reinsurance. The risk may occur because the frequency and severity of the damage or loss adjustment claim expense may not be in line with expectations.

THANACHART BANK PUBLIC COMPANY LIMITED 235 (Unit: Million Baht)

2016

Increase/ Increase/ Change in Change in Change in net (decrease) on (decrease) on

assumption gross liabilities liabilities profit before tax equity

Ultimate loss ratio + 2% 146 145 (145) (116) Ultimate loss ratio - 2% (141) (140) 140 112 Loss adjustment expense +2% 11 11 (11) (9)

Loss adjustment expense -2% (11) (11) 11 9

(Unit: Million Baht)

2015

Increase/ Increase/ Change in Change in Change in net (decrease) on (decrease) on

assumption gross liabilities liabilities profit before tax equity

Ultimate loss ratio + 2% 146 146 (146) (117) Ultimate loss ratio - 2% (140) (139) 139 111 Loss adjustment expense +2% 12 12 (12) (10)

Loss adjustment expense -2% (12) (12) 12 10

24.1 Loss reserve and outstanding claims

(Unit: Million Baht) Consolidated financial statements 2016 2015 Balance - beginning of the year 1,707 1,644 Claims expenses for the year 3,159 3,095 Change in loss reserve and outstanding in claim and assumption 186 266 Claims expenses paid during the year (3,494) (3,298)

Balance - end of the year 1,558 1,707

24.2 Unearned premium reserve

(Unit: Million Baht)

Consolidated financial statements 2016 2015 Balance - beginning of the year 3,086 3,053 Premium written for the year 6,421 6,088 Premium earned for the current year (6,128) (6,055)

Balance - end of the year 3,379 3,086

236 ANNUAL REPORT 2016 24.3 Insurance risk

Insurance risk is the risk that the frequency and severity of losses may deviate from the assumptions used in determining the premium rate, reserve calculations and underwriting. Insurance risk can be divided into three types, depending on the source of the risk, and these consist of product development and pricing risk, underwriting risk and claims management risk.

A subsidiary has insurance risk management procedures covering risk identification, risk assessment using risk measurement indexes like the estimated ultimate combine ratio and claim management, as well as the monitoring and reporting of risk, in order to ensure that risk is appropriately reflected.

25. Other liabilities

(Unit: Million Baht)

Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Other payables 1,282 1,674 1,043 1,387 Suspense cash received from account receivables 376 468 289 389 Insurance premium payable 250 306 266 244 Income received in advance 1,875 1,899 1,828 1,886 Corporate income tax payable 381 306 - - Dividend payable - 1,334 - 1,334

Others 2,601 2,517 953 804

Total other liabilities 6,765 8,504 4,379 6,044

26. Share capital

From 28 September 2015 to 5 October 2015, the Bank called up additional paid-up share capital of 551,197,267 shares with a par value of Baht 10, or a total of Baht 5,511,972,670, and registered the additional share capital on 9 October 2015. As a result its issued and paid-up share capital is equal to Baht 60,648,621,700. The increase in the Bank’s registered share capital was approved by the Annual General Meeting of the Bank’s shareholders on 2 April 2015.

THANACHART BANK PUBLIC COMPANY LIMITED 237 27. Other components of equity

(Unit: Million Baht) Consolidated Separate financial statements financial statements

2016 2015 2016 2015

Surplus from business combination under common control (123) (123) - - Surplus on revaluation of assets 1,601 - 1,598 -

Less: The effect of deferred tax liabilities (320) - (320) -

Net surplus on revaluation of assets 1,281 - 1,278 - Revaluation surplus (deficit) on investments Revaluation surplus on investments Available-for-sale investments Debt instruments 530 1,370 504 1,268

Equity instruments 725 645 123 77

Total 1,255 2,015 627 1,345 Revaluation deficit on investments Available-for-sale investments Debt instruments (814) (87) (776) (85)

Equity instruments (547) (579) (264) (235)

Total (1,361) (666) (1,040) (320) Total revaluation surplus (deficit) on investments (106) 1,349 (413) 1,025

Add (less): The effect of deferred tax liabilities 41 (250) 83 (205)

Net revaluation surplus on investments (65) 1,099 (330) 820 Share of other comprehensive income of associate 514 162 - -

Less: The effect of deferred tax liabilities (51) (16) - - Net share of other comprehensive income of associate 463 146 - -

Total 1,556 1,122 948 820

28. Statutory reserve

Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Bank is required to set aside to a statutory reserve at least 5 percent of its net profit after deducting accumulated deficit brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory reserve is not available for dividend distribution.

238 ANNUAL REPORT 2016 On 18 August 2016, the Bank’s Board of Director passed a resolution to allocate Baht 312 million of net income to statutory reserve, and on 31 December 2016, the Bank additional allocated Baht 286 million of net income for the year 2016 to the statutory reserve, a total of Baht 598 million (2015: Baht 573 million).

29. Capital funds

The primary objectives of the Bank’s capital management are to maintain the Bank’s ability to continue as a going concern and to maintain a capital adequacy ratio in accordance with the Act on Undertaking of Banking business B.E. 2551.

As at 31 December 2016 and 2015, capital funds of the Bank calculated in accordance with the BOT’s regulation regarding “Elements of Capital Funds’ for Commercial Bank Incorporate in Thailand”, consist of the following:

(Unit: Million Baht) 2016 2015 Tier I capital Common Equity Tier I capital Issued and fully paid-up share capital 60,649 60,649 Share premium 2,101 2,101 Statutory reserve 3,315 2,710 Retained earnings - unappropriated 42,837 35,398 Other components of equity - Revaluation surplus on land - net 1,272 - Other components of equity - Revaluation deficit on investments in equity securities - net (113) (127) Other components of equity - Revaluation surplus (deficit) on investments in debt securities - net (131) 379 109,930 101,110 Less: goodwill (17,941) (17,941) Less: intangible assets (1,428) (1,045) Total Common Equity Tier I capital 90,561 82,124 Total Tier I capital 90,561 82,124 Tier II capital Reserve for assets classified as normal 7,596 7,602 Subordinated debentures 32,516 32,516 Total Tier II capital 40,112 40,118 Total capital funds 130,673 122,242

On 18 August 2016, the Bank’s Board of Director passed a resolution approving the allocation of Baht 312 million from net income for the six-month period ended 30 June 2016 to the statutory reserve. The remaining net income of Baht 3,796 million was allocated as capital funds of the Bank.

THANACHART BANK PUBLIC COMPANY LIMITED 239 As at 31 December 2016 and 2015, the capital adequacy ratios of the Bank calculated in accordance with the BOT’s regulation regarding the calculation of capital fund, dated 8 November 2012, are as follows:

2016 2015

Minimum Minimum Capital ratio requirement Capital ratio requirement

of the Bank by BOT of the Bank by BOT

Total capital to risk-weighted assets (percent) 19.15 9.125 17.92 8.50 Total Common Equity Tier I to risk-weighted 13.27 5.125 12.04 4.50 assets (percent)

Total Tier I to risk-weighted assets (percent) 13.27 6.625 12.04 6.00

The Bank will disclose qualitative and quantitative information regarding capital maintenance as at 31 December 2016 in accordance with the Notification of the Bank of Thailand Re: Public Disclosure of Capital Maintenance Information for Commercial Banks on its website at www.thanachartbank.co.th, within April 2017.

30. Dividends

During the years ended 31 December 2016 and 2015, the Bank has dividends payments as follow:

Dividends Approved by Total dividends Dividend per share

Million Baht Baht Interim dividends on net income The Board of Directors of the for the first haft of the year 2016 Bank on 18 August 2016 2,123 0.35 Dividends on net income for the Annual General Meeting of the year 2015 Shareholders on 5 April 2016 2,426 0.40

Total 4,549

Interim dividends on net income The Board of Directors of the for the first haft of the year 2015 Bank on 17 December 2015 1,334 0.22 Dividends on net income for the Annual General Meeting of the year 2014 Shareholders on 2 April 2015 2,481 0.45

Total 3,815

240 ANNUAL REPORT 2016 31. Interest income

Interest income for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated Separate financial statements financial statements

2016 2015 2016 2015

Interbank and money market items 1,307 1,580 1,279 1,555 Investments and trading transactions 30 73 30 74 Investments in debt securities 3,504 3,761 3,392 3,582 Loans to customers 18,337 19,474 17,852 18,908

Hire purchase and financial lease 21,708 23,329 19,290 21,006

Total interest income 44,886 48,217 41,843 45,125

32. Interest expenses

Interest expenses for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Deposits 9,526 12,832 9,539 12,847 Interbank and money market items 741 957 558 742 Contribution fee to FIDF and the Deposit Protection Agency 3,326 3,405 3,326 3,405 Debts issued and borrowings - Subordinated debentures 590 1,085 590 1,085 - Unsubordinated debentures and short-term debentures 842 1,217 173 502 - Subordinated instruments 1,109 990 1,109 990 - Others 35 44 - -

Borrowing cost 5 6 - 1

Total interest expenses 16,174 20,536 15,295 19,572

THANACHART BANK PUBLIC COMPANY LIMITED 241 33. Fees and service income

Fees and service income for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Fees and service income Acceptance, aval and guarantees 238 255 239 255 Brokerage fee from securities/ derivatives 1,599 1,431 - - ATM and electronic banking services 922 878 922 878 Hire purchase fee income 1,575 1,506 1,428 1,369 Insurance brokerage fee income 1,448 1,239 1,673 1,476

Management fees 833 759 - - Credit card fee 907 938 908 938

Others 1,292 1,174 1,254 1,217 Total fees and service income 8,814 8,180 6,424 6,133

Fees and service expenses (2,910) (2,705) (2,643) (2,488)

Net fees and service income 5,904 5,475 3,781 3,645

34. Gains on trading and foreign exchange transactions

Gains on trading and foreign exchange transactions for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Foreign exchange and derivatives contract relating to foreign exchange 400 577 416 573 Derivatives contract relating to interest rate 5 31 5 31 Debt securities 14 26 14 26 Equity securities (11) (45) - -

Others 83 69 - -

Total 491 658 435 630

242 ANNUAL REPORT 2016 35. Gains on investments

Gains on investments for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Gains (losses) on disposal Available-for-sale securities 709 1,534 611 1,328 General investments 3 8 3 8 Investment in receivables purchased - (1) - (1) Reversal of losses on impairment General investments 2 3 2 3

Gains on capital refunded General investments - 2 - 2 Investment in a subsidiary company - - - 152 Loss on liquidation from investment in a subsidiary company - (13) - -

Total 714 1,533 616 1,492

36. Insurance premium income

Insurance premium income for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated

financial statements

2016 2015

Gross premium written 6,412 6,078

Less: Premium ceded to reinsurers (103) (89) Net insurance premium income 6,309 5,989 Less: unearned premium reserve decreased from prior year (273) (27)

Total 6,036 5,962

THANACHART BANK PUBLIC COMPANY LIMITED 243 37. Insurance expenses

Insurance expenses for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated financial statements 2016 2015 Gross claim and loss adjustment expenses 3,177 3,267 Other underwriting expenses 202 184 Less: Claims recovery from reinsurers (32) (42)

Total 3,347 3,409

38. Directors’ remuneration

Directors’ remuneration represents the benefits paid to the directors of the Bank and public subsidiary companies in accordance with Section 90 of the Public Limited Companies Act, exclusive of salaries and related benefits payable to directors who hold executive positions but including the payment of remuneration amounting to Baht 24 million (separate financial statements: Baht 22 million) to the Bank’s and its subsidiaries’ directors, which were approved by the Annual General Meeting of Shareholders of the Bank and its subsidiaries.

39. Impairment losses of loans and debt securities

Impairment losses of loans and debt securities for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Impairment losses of loans (reversal) Loans to customers 6,243 8,599 5,784 8,016 Interbank and money market items 10 (4) 26 (6) Amortisation of revaluation allowance for debts restructured during the year (2) (2) (2) (2)

Reversal of impairment loss on debt securities - (1) - (1)

Total 6,251 8,592 5,808 8,007

244 ANNUAL REPORT 2016 40. Components of other comprehensive income

Components of other comprehensive income for the years ended 31 December 2016 and 2015 consisted of the following:

(Unit: Million Baht) Consolidated Separate financial statements financial statements

2016 2015 2016 2015

Other comprehensive income Transactions that will be reclassified subsequently to profit or loss Available-for-sale securities: Unrealised gains (losses) during the year (745) 371 (828) 656 Less: Reclassification of adjustment for the realised gains that included in profit or loss (709) (1,534) (611) (1,328)

(1,454) (1,163) (1,439) (672)

Share of other comprehensive income of associate (loss) 153 (76) - -

Other comprehensive income for the year (loss) (1,301) (1,239) (1,439) (672) Impact from related income tax Income tax - losses on changes in value of available-for- sale securities 291 233 288 134 Income tax - share of other comprehensive income of associate (15) 8 - -

Impact from related income tax 276 241 288 134 (1,025) (998) (1,151) (538)

Transactions that will never be reclassified subsequently to profit or loss Surplus on revaluation of assets 1,606 - 1,603 - Share of other comprehensive income in associate 199 - - -

Actuarial gains (losses) on defined benefit plan 16 (214) (12) (178)

Other comprehensive income for the year (loss) 1,821 (214) 1,591 (178) Impact from related income tax Income tax - surplus on revaluation of assets (321) - (321) - Income tax - share of other comprehensive income of associate (20) - - - Income tax - actuarial gains (losses) on defined benefit plan (3) 41 3 36

Impact from related income tax (344) 41 (318) 36

1,477 (173) 1,273 (142)

Other comprehensive income for the year - net of related income tax (loss) 452 (1,171) 122 (680)

THANACHART BANK PUBLIC COMPANY LIMITED 245 41. Earnings per share

Basic earnings per share is calculated by dividing profit for the years attributable to equity holders of the Bank (excluding other comprehensive income) by the weighted average number of ordinary shares issued during the years.

Consolidated Separate

financial statements financial statements

2016 2015 2016 2015 Profit for the year (Million Baht) 12,434 10,743 11,962 11,452 Earnings per share (Baht/share) 2.05 1.90 1.97 2.03 Weighted average number of ordinary shares (Million shares) 6,065 5,641 6,065 5,641

42. Provident fund

The Bank, its subsidiaries and its employees have jointly established a provident fund in accordance with the Provident Fund Act B.E. 2530. Employees contributed to the fund monthly, at rates of 3 -10 percent of their basic salaries, and the Bank and its subsidiaries contributed to the fund at stipulated rates. The fund will be paid to the employees upon termination of employment in accordance with the fund rules. During the year 2016, the Bank and its subsidiaries contributed Baht 426 million to the fund (separate financial statements: Baht 370 million) (2015: Baht 424 million in the consolidated financial statements and Baht 370 million in the separate financial statements).

246 ANNUAL REPORT 2016 43. Related party transactions

During the years, the Bank and its subsidiaries have significant business transactions with its related parties. These transactions have been concluded on commercial terms and based agreed upon in the ordinary course of businesses between the Bank and those companies. Below is a summary of those significant transactions.

(Unit: Million Baht)

For the years ended 31 December

Consolidated Separate

financial statements financial statements Transfer pricing policy

2016 2015 2016 2015 (For the year 2016)

Transactions occurred

during the years

Parent company

Purchase of debt securities - 477 - 477

Sales of debt securities 2,019 3,327 2,019 3,327 At market price

Fee and service income - 1 - -

Income on supporting service 7 10 7 10 At the rate agreed under the service

contract

Other income 1 3 - -

Interest expenses - 201 - 201

Rental expenses 5 8 5 7 At the rate agreed under the rental

contract

Other expenses 38 40 38 40

Dividend payment 2,318 1,944 2,318 1,944 As declared

THANACHART BANK PUBLIC COMPANY LIMITED 247 (Unit: Million Baht)

For the years ended 31 December

Consolidated Separate

financial statements financial statements Transfer pricing policy

2016 2015 2016 2015 (For the year 2016)

Transactions occurred during

the years (continued)

Subsidiary companies

Purchase of debt securities - - 2,990 3,722 At market price

Sales of debt securities - - 3,480 2,744 At market price

(Related loss) - - 1 -

Purchase/sales of forward

exchange contracts - - 993 1,471 At market price

Interest income - - 122 124 At interest rate of 1.47 - 2.47 and 7.68 percent per annum

Dividend income - - 2,490 3,090 As declared

Fee and service income - - 866 798 At the rate agreed under the service

contract

Income on supporting service - - 277 288 At the rate agreed under the service

contract

Other income - - 20 23 Interest expenses - - 87 112 At interest rate of 0.13 - 2.70 percent per annum

Rental expenses - - - 1

Other expenses - - 189 190

Associated company

Dividend income - - 51 46 As declared

Other income 6 5 - -

Interest expenses 1 1 1 1 At interest rate of 0.40 percent per

annum

Rental expenses 112 103 83 79 At the rate agreed under the rental

contract

Other expenses 3 6 1 4

248 ANNUAL REPORT 2016 (Unit: Million Baht)

For the years ended 31 December

Consolidated Separate

financial statements financial statements Transfer pricing policy

2016 2015 2016 2015 (For the year 2016)

Transactions occurred during

the years (continued)

Related parties

Purchase of debt securities 2,182 2,514 2,182 2,514 At market price

Sales of debt securities 6,078 3,878 5,979 3,878 At market price

(Related gain) 1 - 1 -

Purchase/sales of forward exchange contracts 106,563 226,231 105,505 223,536 At market price Interest income 270 284 270 284 At interest rate of 0.05 - 7.68 percent per annum

Dividend income 94 25 55 5 As declared

Fee and service income 4 5 4 5 At the rate agreed under the service

contract Income on supporting service 5 7 5 7 At the rate agreed under the service

contract

Other income 8 8 - -

Interest expenses 166 307 166 307 At interest rate of 0.05 - 2.95 and

6.00 percent per annum

Rental expenses 135 116 71 60 At the rate agreed under the rental

contract

Insurance expense 22 14 - - At the rate agreed under the service contract

Other expense 42 51 26 35

Dividend payment 2,229 1,870 2,229 1,870 As declared

THANACHART BANK PUBLIC COMPANY LIMITED 249 The outstanding balances of the above transactions during the years ended 31 December 2016 and 2015 have been shown at the average balance at the end of each month as follows:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Parent company Loans to customers 1 5 - - Deposits 79 85 79 85 Debt issued and borrowings - 2,798 - 2,798

Subsidiary companies Interbank and money market items (assets) - - 1,850 958 Loans to customers - - 1,404 1,969 Deposits - - 1,275 1,313 Interbank and money market items (liabilities) - - 129 706

Associated company Deposits 135 119 135 119

Related companies Interbank and money market items (assets) 286 241 286 241 Loans to customers 8,198 7,339 7,857 6,998 Deposits 1,618 1,403 1,618 1,403 Interbank and money market items (liabilities) 14,415 12,578 14,415 12,578 Debt issued and borrowings 481 3,314 481 3,314

250 ANNUAL REPORT 2016 As at 31 December 2016 and 2015, the significant outstanding balances of the above transactions are as follows:

(Unit: Million Baht)

Consolidated financial statements

2016

Assets Liabilities

Interbank Loans to Interbank

and money Investments customers and money Debt issued

market - debt and interest Other market and Other

items securities receivables assets Deposits items borrowings liabilities Commitments

Parent company

Thanachart Capital Plc. - - 1 2 32 - - - -

Associated company

MBK Plc. - - - 32 135 - - - -

Related companies

The Bank of Nova Scotia 250 - - - - 14,333 - 19 195

Krungthai Card Plc. - 1,056 1,400 6 6 - - - -

Synphaet Co., Ltd. - - 1,243 - 16 - - - 36

Iconsiam Co., Ltd. - - 1,928 - 7 - - - 30

Srithai Superware Plc. - - 829 - 13 - - - 30

Pruksa Real Estate Plc. - - 400 - 1 - - - 463

Big C Supercenter Plc. - - 1,910 ------

Other related companies - 407 1,191 39 1,562 204 470 21 297

250 1,463 8,902 79 1,772 14,537 470 40 1,051

(Unit: Million Baht) Consolidated financial statements

2015

Assets Liabilities

Interbank Loans to Interbank and money customers and money Debt issued market and interest Other market and Other items receivables assets Deposits items borrowings liabilities Commitments

Parent company Thanachart Capital Plc. - 2 - 27 - - 680 -

Associated company MBK Plc. - - 35 63 - - - -

Related companies The Bank of Nova Scotia 244 - - - 15,063 - 666 625 Krungthai Card Plc. - 3,018 - 5 - - - - Synphaet Co., Ltd. - 1,136 - 21 - - - 36 Iconsiam Co., Ltd. - 1,897 - 39 - - - 30 Srithai Superware Plc. - 883 - 25 - - - 37 Pruksa Real Estate Plc. ------851

Other related companies - 1,516 127 1,278 267 610 17 412

244 8,452 162 1,458 15,330 610 1,363 1,991

THANACHART BANK PUBLIC COMPANY LIMITED 251 (Unit: Million Baht)

Separate financial statements

2016

Assets Liabilities

Interbank Loans to Interbank

and money Investments customers and money Debt issued

market - debt and interest Other market and Other

items securities receivables assets Deposits items borrowings liabilities Commitments

Parent company

Thanachart Capital Plc. - - - 2 32 - - - -

Subsidiary companies

Thanachart Group Leasing

Co., Ltd. - - - 1 350 - - - -

Thanachart Securities Plc. 2,500 - - 11 - 166 - 6 670

Thanachart Insurance Plc. - - - 91 339 - - 179 50

Thanachart Broker Co., Ltd. - - - 11 207 - - 1 -

TS Asset Management

Co., Ltd. - - - - 191 - - - 2

Ratchthani Leasing Plc. - 1,000 3,180 1 68 - - 1,000 30

Other subsidiary companies - - - 63 110 45 - 14 -

Associated company

MBK Plc. - - - 24 135 - - - -

Related companies

The Bank of Nova Scotia 250 - - - - 14,333 - 19 195

Krungthai Card Plc. - 1,056 1,400 6 6 - - - -

Synphaet Co., Ltd. - - 1,243 - 16 - - - 36

Iconsiam Co., Ltd. - - 1,928 - 7 - - - 30

Srithai Superware Plc. - - 829 - 13 - - - 30

Pruksa Real Estate Plc. - - 400 - 1 - - - 463

Big C Supercenter Plc. - - 1,910 ------

Other related companies - 407 849 25 1,562 204 470 7 297

2,750 2,463 11,739 235 3,037 14,748 470 1,226 1,803

252 ANNUAL REPORT 2016 (Unit: Million Baht)

Separate financial statements

2015

Assets Liabilities

Interbank Loans to Interbank

and money customers and money Debt issued

market and interest Other market and Other

items receivables assets Deposits items borrowings liabilities Commitments

Parent company

Thanachart Capital Plc. - - - 27 - - 680 -

Subsidiary companies

Thanachart Group Leasing

Co., Ltd. - - - 388 - - 2 -

Thanachart Securities Plc. 850 - 2 - 186 - 19 642

Thanachart Insurance Plc. - - 51 209 - - 140 50

Thanachart Broker Co., Ltd. - - 6 211 - - 1 -

TS Asset Management

Co., Ltd. - 691 1 55 - - - 2

Ratchthani Leasing Plc. - 1,210 - 115 - - - 30

Other subsidiary companies - 1 42 103 41 - 23 -

Associated company

MBK Plc. - - 27 63 - - - -

Related companies

The Bank of Nova Scotia 244 - - - 15,063 - 666 625

Krungthai Card Plc. - 3,018 - 5 - - - -

Synphaet Co., Ltd. - 1,136 - 21 - - - 36

Iconsiam Co., Ltd. - 1,897 - 39 - - - 30

Srithai Superware Plc. - 883 - 25 - - - 37

Pruksa Real Estate Plc. ------851

Other related companies - 1,175 19 1,278 267 610 4 270

1,094 10,011 148 2,539 15,557 610 1,535 2,573

THANACHART BANK PUBLIC COMPANY LIMITED 253 As at 31 December 2016, the Bank has loans to Ratchthani Leasing Plc. amounting to Baht 3,180 million, carrying interest at rates of 1.75, 2.00 and 7.68 percent per annum (2015: loans to TS Asset Management Co., Ltd. amount to Baht 691 million at interest rates of 2.47 - 2.97 percent per annum and Ratchthani Leasing Plc. amounting to Baht 1,210 million at interest rates of 2.17 - 3.75 and 7.68 - 7.78 percent per annum).

As at 31 December 2016, the Bank and its subsidiaries have investments amounting to approximately Baht 833 million (Baht 350 million in the separate financial statements) in related companies in which they are related by means of members of their management being shareholders and/or directors of those companies (2015: Baht 811 million in the consolidated financial statements, and Baht 344 million in the separate financial statements).

As at 31 December 2016 and 2015, the Bank and its subsidiaries have the following related parties transactions with executive employees of the Bank and companies within Thanachart Group from management level up, including related persons who together with these employees:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Loans to customers 125 84 114 77 Deposits 815 768 815 768

Directors and management’s remuneration

During the years 2016 and 2015, the Bank and its subsidiaries paid the following benefits to their key management personnel, including directors, totaled 116 persons and 115 persons, respectively (the separate financial statements: 45 persons and 43 persons, respectively):

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Short-term employee benefits 631 625 323 293 Post-employment benefits 16 14 7 7

647 639 330 300

254 ANNUAL REPORT 2016 44. Financial information classified by operating segment

44.1 Financial position and results of operations classified by business activity

The financial position as at 31 December 2016 and 2015, and the operating results for the years then ended, classified by domestic and foreign operations, are as follows:

(Unit: Million Baht)

Consolidated financial statements

2016

Domestic Foreign

operations operations Eliminations Total

Total assets 950,286 21,854 (21,628) 950,512 Interbank and money market items (assets) 53,308 15,796 (21,628) 47,476 Investments 169,068 6,013 - 175,081

Investment in an associated company 2,253 - - 2,253 Loans to customers and accrued interest receivables 666,909 - - 666,909 Deposits 676,557 - - 676,557 Interbank and money market items (liabilities) 65,834 21,628 (21,628) 65,834 Debt issued and borrowings 49,409 - - 49,409

(Unit: Million Baht)

Consolidated financial statements

2015

Domestic Foreign

operations operations Eliminations Total

Total assets 980,765 22,837 (22,630) 980,972 Interbank and money market items (assets) 60,640 19,573 (22,630) 57,583 Investments 168,544 3,238 - 171,782 Investment in an associated company 1,900 - - 1,900 Loans to customers and accrued interest receivables 688,444 - - 688,444 Deposits 669,504 - - 669,504 Interbank and money market items (liabilities) 85,688 22,630 (22,630) 85,688 Debt issued and borrowings 71,641 - - 71,641

THANACHART BANK PUBLIC COMPANY LIMITED 255 (Unit: Million Baht)

Consolidated financial statements

2016

Domestic Foreign

operations operations Eliminations Total

Interest income 44,811 292 (217) 44,886

Interest expenses (16,174) (217) 217 (16,174) Net interest income 28,637 75 - 28,712 Net fees and service income 5,904 - - 5,904 Net insurance income 2,689 - - 2,689 Other operating income 3,101 1 - 3,102 Other operating expenses (20,626) - - (20,626)

Impairment losses of loans and debt securities (6,251) - - (6,251) Profit before income tax 13,454 76 - 13,530

Income tax (691) - - (691)

Profit before non-controlling interests 12,763 76 - 12,839

(Unit: Million Baht)

Consolidated financial statements

2015

Domestic Foreign

operations operations Eliminations Total

Interest income 48,145 191 (119) 48,217

Interest expenses (20,538) (117) 119 (20,536) Net interest income 27,607 74 - 27,681 Net fees and service income 5,475 - - 5,475 Net insurance income 2,552 - - 2,552 Other operating income 3,916 14 - 3,930 Other operating expenses (19,721) - - (19,721)

Impairment losses of loans and debt securities (8,592) - - (8,592) Profit before income tax 11,237 88 - 11,325

Income tax (198) - - (198)

Profit before non-controlling interests 11,039 88 - 11,127

256 ANNUAL REPORT 2016 (Unit: Million Baht)

Separate financial statements

2016

Domestic Foreign

operations operations Eliminations Total

Total assets 906,642 21,854 (21,628) 906,868 Interbank and money market items (assets) 53,298 15,796 (21,628) 47,466 Investments 161,262 6,013 - 167,275 Investments in subsidiary and associated companies 7,359 - - 7,359 Loans to customers and accrued interest receivables 632,931 - - 632,931 Deposits 677,807 - - 677,807 Interbank and money market items (liabilities) 56,156 21,628 (21,628) 56,156 Debt issued and borrowings 34,522 - - 34,522

(Unit: Million Baht)

Separate financial statements

2015

Domestic Foreign

operations operations Eliminations Total

Total assets 938,627 22,837 (22,630) 938,834 Interbank and money market items (assets) 59,998 19,573 (22,630) 56,941 Investments 160,429 3,238 - 163,667 Investments in subsidiary and associated companies 7,359 - - 7,359 Loans to customers and accrued interest receivables 656,513 - - 656,513 Deposits 670,575 - - 670,575 Interbank and money market items (liabilities) 78,699 22,630 (22,630) 78,699 Debt issued and borrowings 55,426 - - 55,426

THANACHART BANK PUBLIC COMPANY LIMITED 257 (Unit: Million Baht)

Separate financial statements

2016

Domestic Foreign

operations operations Eliminations Total

Interest income 41,768 292 (217) 41,843

Interest expenses (15,295) (217) 217 (15,295) Net interest income 26,473 75 - 26,548 Net fees and service income 3,781 - - 3,781 Other operating income 5,178 1 - 5,179 Other operating expenses (17,843) - - (17,843)

Impairment losses of loans and debt securities (5,808) - - (5,808) Profit before income tax 11,781 76 - 11,857

Income tax 105 - - 105

Profit for the year 11,886 76 - 11,962

(Unit: Million Baht)

Separate financial statements

2015

Domestic Foreign

operations operations Eliminations Total

Interest income 45,053 191 (119) 45,125

Interest expenses (19,574) (117) 119 (19,572) Net interest income 25,479 74 - 25,553 Net fees and service income 3,645 - - 3,645 Other operating income 6,782 14 - 6,796 Other operating expenses (17,096) - - (17,096)

Impairment losses of loans and debt securities (8,007) - - (8,007) Profit before income tax 10,803 88 - 10,891

Income tax 561 - - 561

Profit for the year 11,364 88 - 11,452

258 ANNUAL REPORT 2016 44.2 Financial positions and results of operations classified by business type

Identification of the Bank’s operating segments

The Bank’s operating segments are identified in accordance with the Bank’s organisation structure, which is determined based on the Bank’s management policies. The three operating segments identified are as follows:

1. Retail banking segment: This serves individual customers, with related products offering such as deposits, housing loans, hire purchase loans, and credit card services.

2. Corporate and SME segment: This serves business customers, with related products offering such as short-term and long-term loans, and import and export trade financing.

3. Treasury, investment and other business segment: These deals with money market and investment transactions, transactions with related companies, staff welfare loans and others.

The accounting policies for segment reporting are the same as those applied by the Bank. The Bank allocates only revenue-generating assets based on the type of business. Assets that do not generate revenue are allocated to other business segment.

The chief operating decision maker reviews the operating results of each segment separately in order to make decisions on the allocation of resources to each operating segment and to assess performance. The Bank measures segment performance based on net interest income generated by each segment with net interest income being interest income and interest expenses from external customers, net of interest income and interest expenses from inter-segment lending and borrowing that is presented in the other business segment. For inter-segment borrowing, market interest rates are charged. Operating expenses are allocated in proportion to the operations of each segment. Expenses arising in respect of the assets that do not generate income, such as depreciation and leasehold amortisation, are presented in other business segment.

Operating segments: Thanachart Bank and its subsidiaries

The Bank and its subsidiaries have four operating segments, which are 1) the banking segment, consisting of the three segments described above 2) the securities business segment 3) the non-life insurance segment and 4) the asset management segment. Financial information of the Bank and its subsidiaries presented by segment is as follow:

THANACHART BANK PUBLIC COMPANY LIMITED 259 (691) 9,006 2,689 (6,251) 12,839 13,530 28,712 (20,626) Consolidated (Unit: Million Baht) 61 (12) (61) 557 894 (3,675) (2,236) (2,224) Eliminations - 991 (490) (252) (845) 1,031 1,547 1,243 Other Other businesses - 24 99 (16) (49) 148 296 (156) Asset business management - life 221 191 (963) (239) 1,005 1,795 1,244 Non - business insurance - 2 the year ended 31 December 2016 191 (244) 1,018 2,445 1,262 (1,376) For business Securities - 754 (868) 3,984 2,086 4,039 1,953 (1,917) and others Treasury & Investment

- 568 167 business ( 711) 2,842 4,443 3,553 (1,625) and SME Corporate Banking - 4,301) 4,408 6,351 5,081 (5,107) (1,270) Retail 21,351 (1 controlling interest - Net interest income Net insurance income Other operating income Other operating expenses Impairment losses of loans and debt securities Profit income before tax Income tax Profit non before

260 ANNUAL REPORT 2016 ) ) ) 325 , 721 127 592 681 552 405 , , , , , , ( 198 2 9 11 ( 8 11 27 ( 19 950,512 980,972 Consolidated Consolidated ) ) ) ) ) (Unit: Million Baht) Million (Unit: Baht) Million (Unit: 798 546 144 ( 34 ( 38 022 988 438 , , , ( 3 ( 2 ( 4 (15,679) (12,190) Eliminations Eliminations ) ) ) - 6 4 110 362 83 94 , , ( 400 ( 227 ( 79 8 1 1 Other Other Other Other 34,296 30,584 businesses businesses ) ) ) - ) 45 2 23 347 ( 83 ( 28 (111) ( 1 ( 35 2015 3,047 4,350 Asset Asset Asset Asset business managemen t businesses management management ) ) - 245 394 54 315 117 , , ( 920 ( 277 - life 7 - life 1 , 1 1 11,532 12,045 Non Non business insurance insurance business insurance insurance are as follows: ) ) - 23 212 001 808 098 332 , , , ( 193 1 2 ( 1 7,862 9,935 business business For the year ended 31 December ended For the year Securities Securities Securities Securities 3 - 803 3,042 5,425 2,131 5,173 (1,555) (1,631)

243,56 236,686 and others and and others and Treasury & Treasury Investment Treasury & Treasury Investment - business business SME 662 (177) (721) 2,883 4,565 3,604 (1,446) atDecember 31 2016 and 2015 226,010 212,469 and SME and and Corporate Corporate Corporate Banking Banking - (849) Retail 4,245 3,396 4,354 Retail (6,275) 20,185 469,261 457,713 (14,019) controlling interest - controlling before non before (loss) Impairment losses of loans securities losses and debt Impairment of loans As at 31 December 2015 December As at 31 Net interest income interest Net tax income before Profit (loss) Profit Assets for segment 2016 December As at 31 Net insurance income insurance Net Other operating income Other operating Other operating expenses Other operating Assets for segment of the Bank and its subsidiaries as Income taxIncome

THANACHART BANK PUBLIC COMPANY LIMITED 261

44.3 Major customers

For the years 2016 and 2015, the Bank and its subsidiaries have no major customer with revenue of 10 percent or more of an entity’s revenues.

45. Encumbrance of assets

As at 31 December 2016 and 2015, the Bank and its subsidiaries have the assets, which are subject to restriction, presented at book value as follows:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Interbank and money market items (assets) Guarantee placed with the registrar 650 650 - -

Placed with court for stay of execution 3 7 - - Investments in securities Guarantee placed with the registrar 17 17 - - Placed with court for stay of execution 399 405 262 266 Properties foreclosed Immovable assets subject to buyback options or first refusal rights 166 259 - 143 Immovable assets subject to purchase or sell agreements with clients but currently being settled in installments or through transfer of ownership 21 94 19 21

1,256 1,432 281 430

262 ANNUAL REPORT 2016

46. Commitments and contingent liabilities

As at 31 December 2016 and 2015, significant commitments and contingent liabilities consisted of:

46.1 Commitments

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

2016 2015 2016 2015

Aval to bills 629 1,270 629 1,270 Liability under unmatured import bills 637 497 637 497 Letter of credits 2,667 2,310 2,667 2,310 Other obligations Committed (but not drawn) overdraft 24,244 24,506 24,244 24,506

Others 55,271 53,202 55,234 53,172

Total 83,448 81,785 83,411 81,755

In addition, the Bank and its subsidiaries have commitments in respect of foreign exchange contracts, cross currency and interest rate swap contracts, interest rate swap contracts, and gold futures contracts, as mentioned in Note 8 to the financial statements.

46.2 As at 31 December 2016, the Bank and its subsidiaries have commitments to pay the service fees in relation to properties foreclosed, computer system services and other services, including commitments in respect of office rental and related service fees under long-term contracts, as follows:

(Unit: Million Baht) Consolidated Separate

financial statements financial statements

Other Parent Other Parent Subsidiary

Year parties company parties company companies

2017 2,212 11 2,102 11 64 2018 1,094 - 1,023 - - 2019 onward 792 - 493 - -

In addition, the Bank has obligations to pay an administrative fee to a subsidiary company, determined at actual cost plus a margin, for the period stipulated in the agreement.

THANACHART BANK PUBLIC COMPANY LIMITED 263

46.3 Commitments of SCIB from transfer of business from Bangkok Metropolitan Bank Public Company Limited and transfer of non-performing assets to Sukhumvit Asset Management Company Limited

SCIB entered into a business transfer agreement with Bangkok Metropolitan Bank Plc. (“BMB”), effective from 1 April 2002, and transferred its assets and those of BMB to Petchburi Asset Management Co., Ltd. (“PAM”), before they were transferred to Sukhumvit Asset Management Co., Ltd. (“SAM”). Subsequently, SCIB transferred its entire business, including commitments and agreements with PAM and SAM, to Thanachart Bank, effective from 1 October 2011. Thanachart Bank thus has commitments as a result of such transfer. However, the commitments of FIDF to SCIB have been transferred to/assumed by Thanachart Bank as the purchaser of SCIB’s shares from the Financial Institutions Development Fund (“FIDF”). As at 31 December 2016, outstanding obligations are summarised below.

a) There was an outstanding difference of Baht 2 million, as a result of the transfer of assets to SAM. This comprised receivables awaiting collection and the difference is presented under the caption of “Differences as a result of assets transferred to SAM” in the statements of financial position. Such amount relate to transfers of guarantee claims, for which there are pending issues with regard to proof of rights of claim or the qualification of the assets transferred under the conditions set out in the transfer agreements. Such differences, for which full allowance for doubtful debts has been set aside, are now being examined and/or negotiated among Thanachart Bank, SAM and the FIDF for final resolution.

b) SAM is re-examining certain previously transferred assets (both of SCIB and BMB) in order to determine whether to transfer the assets back, to request price adjustments or to request settlement together with interest. The major pending issue relates to the proof of rights of claim over these assets.

As at 31 December 2016, the transferred assets which SAM is re-examining totaling Baht 29 million of transactions incurred by BMB. If losses arise, Thanachart Bank will receive compensation for those from FIDF and any adjusting transactions will be within the limit of the funds set aside by FIDF to compensate losses in such cases, amounting to approximately Baht 29 million.

c) Lawsuits in which SCIB is involved as a result of the transfer of business from BMB amounting to Baht 456 million, as disclosed under contingent liabilities in Note 47 to the financial statements.

264 ANNUAL REPORT 2016

d) Outstanding letters of guarantee

The FIDF deposited an amount equal to the loss compensation limit with Thanachart Bank in FIDF’s account. This deposit account is to compensate for losses incurred as a result of the transfer of business from BMB, if actual losses are incurred due to the outstanding issues described in a), b), c) and d) above. As at 31 December 2016, the deposit account of the FIDF with Thanachart Bank to fund the payment of compensation for losses has an outstanding balance of approximately Baht 407 million.

However, Thanachart Bank and SAM had a meeting and mutually agreed a resolution to such pending issues. Thanachart Bank believes that no significant further loss will be incurred, other than losses for which it has already set aside full allowance for doubtful debts and/or amount that will be compensated by FIDF.

47. Contingent liabilities/Litigation

a) As at 31 December 2016, the Bank and its subsidiaries have contingent liabilities amounting to approximately Baht 3,069 million (separate financial statements: Baht 2,793 million) in respect of litigation. However, the Bank and its subsidiaries’ management have already made certain provisions for contingent losses, and for the remaining portion the management believes that no loss will result and therefore no liabilities are currently recorded.

Part of the contingent liabilities for litigation mentioned above, amounting to Baht 456 million, relates to lawsuits involving the Bank as a result of the transfer of business from BMB to SCIB, and the Bank is entitled to compensation for actual losses incurred if such losses are in accordance with the conditions agreed with the FIDF.

b) Furthermore, an organisation supervised by a government agency requested that the Bank pay compensation amounting to Baht 2,100 million, plus interest at 7.5 percent per annum. However, the management of the Bank is confident that no losses will be incurred.

48. Letter of guarantees

As at 31 December 2016, the Bank and its subsidiaries had letter of guarantees issued by banks on behalf of the Bank and its subsidiaries, amounting approximately Baht 30 million, placed for electricity usage of the branches (separate financial statements: Baht 30 million).

49. Financial instruments

Financial instruments are any contracts which give rise to both a financial assets of one enterprise and a financial liability or equity instruments of another enterprise.

THANACHART BANK PUBLIC COMPANY LIMITED 265

49.1 Credit risk

Credit risk is the risk that the party to a financial instrument will fail to fulfill an obligation, causing the Bank and its subsidiaries to incur a financial loss. The amount of maximum credit risk exposure is the carrying amount of the financial assets less provision for losses as stated in the statements of financial position and the risk of commitments from avals, guarantees of loans, other guarantees and derivative contracts.

In addition, the Bank and its subsidiaries manage credit risk by the means of careful consideration of credit approval process, analysis of risk factors and the ability to service debt of customers, and a credit review process, which examines and reviews the quality of the loan portfolio so as to prevent and provide a remedy for problem loans in the future.

49.2 Market risk

Market risk is the risk that changes in interest rates, foreign exchange rates and securities prices may have an effect on the Bank and its subsidiaries’ foreign currency position and investment status. As such, market risk consists of interest rate risk, foreign exchange risk and equity/commodity position risk.

a) Interest rate risk

Interest rate risk is the risk that the value of financial instrument will fluctuate as a result of changes in market interest rates.

The Bank and its subsidiaries manage the changes in interest rate risk by means of an appropriate structuring of holdings in assets and liabilities with different repricing dates, taking into account the direction of market interest rates, in order to generate a suitable yield while maintaining risk at acceptable levels. Such management is under the supervision of the Asset and Liabilities Management Committee.

266 ANNUAL REPORT 2016

As at 31 December 2016 and 2015, financial assets and liabilities classified by types of interest rate are as follows:

(Unit: Million Baht) Consolidated financial statements

2016

Floating Fixed Non- interest interest interest

Transactions rate rate bearing Total

Financial assets Cash - - 12,077 12,077 Interbank and money market items 734 42,088 4,781 47,603 Derivatives assets - - 3,564 3,564 Investments - 165,746 9,627 175,373 Loans to customers(1) 219,956 470,812 139 690,907 Receivables from purchase and sale of securities - - 1,126 1,126 Other assets - receivable from clearing house - - 1,332 1,332

Financial liabilities Deposits 307,104 363,143 6,310 676,557 Interbank and money market items 13,902 50,629 1,303 65,834 Liability payable on demand - - 1,986 1,986 Derivatives liabilities - - 4,912 4,912 Debt issued and borrowings 4 49,405 - 49,409 Payables from purchase and sale of securities - - 2,366 2,366 Other liabilities - payable to clearing house - - 2 2

(1) The outstanding balances of loans to customers which have floating interest rates or fixed interest rates include loans on which interest recognition is discontinued

THANACHART BANK PUBLIC COMPANY LIMITED 267

(Unit: Million Baht) Consolidated financial statements 2015 Floating Fixed Non- interest interest interest Transactions rate rate bearing Total

Financial assets Cash - - 13,337 13,337 Interbank and money market items 500 53,080 4,198 57,778 Derivatives assets - - 5,447 5,447 Investments - 163,355 7,258 170,613 Loans to customers(1) 241,289 471,762 415 713,466 Receivables from purchase and sale of securities - - 1,006 1,006 Other assets - receivable from clearing house - - 1,101 1,101 Financial liabilities Deposits 267,371 395,615 6,518 669,504 Interbank and money market items 17,015 67,155 1,518 85,688 Liability payable on demand - - 2,202 2,202 Derivatives liabilities - - 6,758 6,758 Debt issued and borrowings 4 71,637 - 71,641 Payables from purchase and sale of securities - - 2,073 2,073

(1) The outstanding balances of loans to customers which have floating interest rates or fixed interest rates include loans on which interest recognition is discontinued

268 ANNUAL REPORT 2016

(Unit: Million Baht) Separate financial statements 2016 Floating Fixed Non- interest interest interest Transactions rate rate bearing Total

Financial assets Cash - - 12,072 12,072 Interbank and money market items 674 42,232 4,731 47,637 Derivatives assets - - 3,564 3,564 Investments - 161,796 5,962 167,758 Loans to customers(1) 211,903 439,583 128 651,614 Financial liabilities Deposits 307,543 363,910 6,354 677,807 Interbank and money market items 14,079 40,761 1,316 56,156 Liability payable on demand - - 1,986 1,986 Derivatives liabilities - - 4,912 4,912 Debt issued and borrowings 4 34,518 - 34,522 Payables from purchase and sale of securities - - 1,000 1,000

(1) The outstanding balances of loans to customers which have floating interest rates or fixed interest rates include loans on which interest recognition is discontinued

(Unit: Million Baht) Separate financial statements 2015 Floating Fixed Non- interest interest interest Transactions rate rate bearing Total

Financial assets Cash - - 13,336 13,336 Interbank and money market items 446 52,568 4,139 57,153 Derivatives assets - - 5,447 5,447 Investments - 157,196 5,521 162,717 Loans to customers(1) 232,026 443,577 398 676,001 Financial liabilities Deposits 267,784 396,237 6,554 670,575 Interbank and money market items 17,178 59,997 1,524 78,699 Liability payable on demand - - 2,202 2,202 Derivatives liabilities - - 6,751 6,751 Debt issued and borrowings 4 55,422 - 55,426

(1) The outstanding balances of loans to customers which have floating interest rates or fixed interest rates include loans on which interest recognition is discontinued

THANACHART BANK PUBLIC COMPANY LIMITED 269

With respect to financial instruments that carry fixed interest rates, the periods from the financial statements date to the repricing or maturity date (whichever is the earlier) are presented below:

(Unit: Million Baht)

Consolidated financial statements

2016

Repricing or maturity date Weighted

0 - 3 3 - 12 1 - 5 Over 5 average

Transactions At call months months years years Total interest rates

Percent

Financial assets

Interbank and money market items - 41,092 496 500 - 42,088 1.36 - 2.76

Investments - 3,312 28,043 127,656 6,735 165,746 1.89 - 3.86

Loans to customers 2,950 51,671 28,345 242,898 144,948 470,812 5.61 - 7.92

Financial liabilities

Deposits 92 98,927 232,934 31,190 - 363,143 1.61

Interbank and money market items 449 28,872 17,046 2,779 1,483 50,629 1.10 - 2.11

Debt issued and borrowings 933 50 9,671 6,235 32,516 49,405 1.00 - 5.00

(Unit: Million Baht)

Consolidated financial statements

2015

Repricing or maturity date Weighted

0 - 3 3 - 12 1 - 5 Over 5 average

Transactions At call months months years years Total interest rates

Percent

Financial assets

Interbank and money market items 1 52,068 511 500 - 53,080 2.63 - 3.04

Investments 263 15,670 37,706 106,116 3,600 163,355 2.20 - 2.41

Loans to customers 3,441 45,839 21,674 271,393 129,415 471,762 6.36 - 8.13

Financial liabilities

Deposits 133 88,833 299,467 7,182 - 395,615 2.13

Interbank and money market items 439 39,352 21,522 5,107 735 67,155 1.08 - 2.71

Debt issued and borrowings 1,145 10,100 18,300 9,576 32,516 71,637 3.74 - 4.69

270 ANNUAL REPORT 2016

(Unit: Million Baht)

Separate financial statements

2016

Repricing or maturity date Weighted

0 - 3 3 - 12 1 - 5 Over 5 average

Transactions At call months months years years Total interest rates

Percent

Financial assets

Interbank and money market items 2,500 39,732 - - - 42,232 2.69

Investments - 2,791 26,448 126,968 5,589 161,796 1.90

Loans to customers 5,537 51,518 26,581 211,379 144,568 439,583 6.23

Financial liabilities

Deposits 92 99,583 233,046 31,189 - 363,910 1.61

Interbank and money market items - 28,572 8,927 1,779 1,483 40,761 1.14

Debt issued and borrowings 1 - 2,001 - 32,516 34,518 5.00

(Unit: Million Baht)

Separate financial statements

2015

Repricing or maturity date Weighted

0 - 3 3 - 12 1 - 5 Over 5 average

Transactions At call months months years years Total interest rates

Percent

Financial assets

Interbank and money market items 850 51,718 - - - 52,568 2.63

Investments 263 13,169 36,905 104,375 2,484 157,196 2.20 Loans to customers 5,038 45,707 20,058 243,653 129,121 443,577 6.34

Financial liabilities

Deposits 133 89,333 299,589 7,182 - 396,237 2.13

Interbank and money market items - 38,993 16,562 3,707 735 59,997 1.13

Debt issued and borrowings 1 10,100 12,800 5 32,516 55,422 3.74

THANACHART BANK PUBLIC COMPANY LIMITED 271

In addition, the average balances of the financial assets and liabilities of the Bank and its subsidiaries generating revenues and expenses, calculated based on the average balances outstanding during the years, and the average interest rate for the years ended 31 December 2016 and 2015 can be summarised as follows:

(Unit: Million Baht)

Consolidated financial statements

For the years ended 31 December

2016 2015

Average Average Average Average

balances Interest rate (%) balances Interest rate (%)

Interest bearings financial assets Interbank and money market items 49,486 1,307 2.64 54,207 1,580 2.91 Investments and trading operations 3,132 30 0.95 4,382 73 1.68

Investment in debt securities 159,555 3,504 2.20 135,136 3,761 2.78

Loans to customers/hire purchase and finance leases 681,878 40,045 5.87 702,381 42,803 6.09

Interest bearings financial liabilities Deposits 667,329 12,852 1.93 664,895 16,237 2.44 Interbank and money market items 68,325 741 1.09 70,706 957 1.35

Debt issued and borrowings 59,719 2,581 4.32 80,541 3,342 4.15

(Unit: Million Baht)

Separate financial statements

For the years ended 31 December

2016 2015

Average Average Average Average balances Interest rate (%) balances Interest rate (%)

Interest bearings financial assets Interbank and money market items 48,116 1,279 2.66 53,699 1,555 2.90

Investments and trading operations 3,132 30 0.95 4,382 74 1.68

Investment in debt securities 155,115 3,392 2.19 129,658 3,582 2.76

Loans to customers/hire purchase

and finance leases 638,266 37,142 5.82 662,877 39,914 6.02

Interest bearings financial liabilities Deposits 668,484 12,865 1.92 666,194 16,252 2.44

Interbank and money market items 59,235 558 0.94 62,514 742 1.19

Debt issued and borrowings 43,216 1,872 4.33 64,648 2,578 3.99

272 ANNUAL REPORT 2016

b) Foreign exchange risk

Foreign exchange risk is the risk that changes in foreign exchange rates may result in changes in the value of financial instruments, and fluctuations in revenues or the values of financial assets and liabilities.

Since the Bank and its subsidiaries have foreign exchange transactions, it may be exposed to foreign exchange risk. However, the Bank and its subsidiaries have a policy to mitigate this foreign exchange exposure through management of its net exchange position and operation in accordance with a risk management policy which has been approved by their Board of Directors and is in strict accordance with BOT guidelines.

The status of the Bank and its subsidiaries’ foreign currency balances as at 31 December 2016 and 2015 can be summarised as follows:

(Unit: Million Baht)

Consolidated financial statements

2016

Australian

US Dollar Euro Yen Dollar Others

Foreign currency in the statement of financial position Cash 77 72 8 9 35 Interbank and money market items 9,507 32 122 21 119 Investments 11,466 - - - 38 Loans to customers and accrued interest receivable 18,414 73 43 781 4

Other assets 1,005 - - - -

Total assets 40,469 177 173 811 196 Deposits 867 36 - 49 241

Interbank and money market items 16,242 1 - - -

Total liabilities 17,109 37 - 49 241

Net 23,360 140 173 762 (45)

Foreign currency commitments Liability under unmatured import bills 571 6 19 - 2 Letter of credits 2,067 97 63 - 10 Others 686 24 - - 1

THANACHART BANK PUBLIC COMPANY LIMITED 273

(Unit: Million Baht)

Consolidated financial statements

2015

Australian

US Dollar Euro Yen Dollar Others

Foreign currency in the statement of financial position Cash 95 79 10 11 39 Interbank and money market items 1,311 56 90 19 93 Investments 8,874 - - - 1,171 Loans to customers and accrued interest receivable 21,177 214 83 796 51

Other assets 1,221 - - - 2

Total assets 32,678 349 183 826 1,356 Deposits 762 79 - 28 21

Interbank and money market items 22,157 3 - - -

Derivatives liabilities 3 - - - -

Total liabilities 22,922 82 - 28 21

Net 9,756 267 183 798 1,335

Foreign currency commitments Liability under unmatured import bills 365 21 84 - 8 Letter of credits 2,108 47 56 - 43 Others 934 25 2 - 29

274 ANNUAL REPORT 2016

(Unit: Million Baht)

Separate financial statements

2016

Australian

US Dollar Euro Yen Dollar Others

Foreign currency in the statement of financial position Cash 77 72 8 9 35 Interbank and money market items 9,507 32 122 21 119 Investments 11,466 - - - 38 Loans to customers and accrued interest receivable 18,414 73 43 781 4

Other assets 1,005 - - - -

Total assets 40,469 177 173 811 196 Deposits 867 36 - 49 241

Interbank and money market items 16,242 1 - - -

Total liabilities 17,109 37 - 49 241

Net 23,360 140 173 762 (45)

Foreign currency commitments Liability under unmatured import bills 571 6 19 - 2 Letter of credits 2,067 97 63 - 10 Others 686 24 - - 1

THANACHART BANK PUBLIC COMPANY LIMITED 275

(Unit: Million Baht)

Separate financial statements

2015

Australian

US Dollar Euro Yen Dollar Others

Foreign currency in the statement of financial position Cash 95 79 10 11 39 Interbank and money market items 1,311 56 90 19 93 Investments 8,874 - - - 1,171 Loans to customers and accrued interest receivable 21,177 214 83 796 51

Other assets 1,221 - - - 2

Total assets 32,678 349 183 826 1,356 Deposits 762 79 - 28 21

Interbank and money market items 22,157 3 - - -

Total liabilities 22,919 82 - 28 21

Net 9,759 267 183 798 1,335

Foreign currency commitments Liability under unmatured import bills 365 21 84 - 8 Letter of credits 2,108 47 56 - 43 Others 934 25 2 - 29

276 ANNUAL REPORT 2016

In addition, the Bank and its subsidiaries have commitments from foreign currency exchange contracts, cross currency and interest rate swap contracts, interest rate swap contracts and other derivative contracts which have to pay or receive repayment in foreign currency that the Bank and its subsidiaries made for trading transactions or hedging transactions (banking book) as follows:

(Unit: Million Baht) Consolidated financial statements

2016

Australian US Dollar Euro Yen Dollar Others

Foreign exchange contracts - Bought 42,370 1,187 459 26 621 - Sold 53,861 1,353 394 791 585 Cross currency and interest rate swap contracts - Bought 4,917 - - - - - Sold 16,543 - - - - Interest rate swap contracts - Bought 70,013 - - - - - Sold 70,013 - - - -

(Unit: Million Baht) Consolidated financial statements

2015

Australian US Dollar Euro Yen Dollar Others

Foreign exchange contracts - Bought 45,537 377 336 - 397 - Sold 45,634 679 521 796 593 Cross currency and interest rate swap contracts - Bought 5,513 - - - - - Sold 14,553 - - - 1,134 Interest rate swap contracts - Bought 70,573 - - - - - Sold 70,573 - - - -

THANACHART BANK PUBLIC COMPANY LIMITED 277

(Unit: Million Baht) Separate financial statements

2016

Australian US Dollar Euro Yen Dollar Others

Foreign exchange contracts - Bought 42,370 1,187 459 26 621 - Sold 53,861 1,353 394 791 585 Cross currency and interest rate swap contracts - Bought 4,917 - - - - - Sold 16,543 - - - - Interest rate swap contracts - Bought 70,013 - - - - - Sold 70,013 - - - -

(Unit: Million Baht) Separate financial statements

2015

Australian US Dollar Euro Yen Dollar Others

Foreign exchange contracts - Bought 45,400 377 336 - 397 - Sold 45,771 679 521 796 593 Cross currency and interest rate swap contracts - Bought 5,513 - - - - - Sold 14,553 - - - 1,134 Interest rate swap contracts - Bought 70,573 - - - - - Sold 70,573 - - - - c) Equity position risk/commodity risk

Equity position risk/commodity risk is the risk that changes in the market prices of equity securities/commodity which will result in fluctuations in revenue and the value of financial assets.

The Bank and its subsidiaries have a policy to manage market risk by setting manageable limits on transactions, such as position limit and loss limits. The Risk Control Unit, which is separated from front office and back office functions, is responsible for control of risk and reporting on compliance with the various limits to the Board of Directors, related business unit and related management, in order to facilitate responsive risk management, under the supervision of the Investment Portfolio Committee.

278 ANNUAL REPORT 2016

49.3 Liquidity risk

Liquidity risk is the risk that the Bank and its subsidiaries will be unable to liquidate their financial assets and/or procure sufficient funds to discharge their obligations in a timely manner, resulting in the Bank and its subsidiaries incurring a financial loss.

The Bank and its subsidiaries manage liquidity risk by means of appropriate structuring of short-term and long-term sources of capital. In addition, the Bank and its subsidiaries have a policy to maintain liquidity to ensure that it has sufficient liquidity to meet both present and future requirements, under the supervision of the Asset and Liability Management Committee.

Counting from the financial position date, the periods to maturity of financial instruments held as at 31 December 2016 and 2015 are as follows:

(Unit: Million Baht) Consolidated financial statements 2016 Less than Over Transactions At call 1 year 1 year Unspecified Total Financial assets Cash 12,077 - - - 12,077 Interbank and money market items 5,516 41,587 500 - 47,603 Derivatives assets - 1,009 2,555 - 3,564 Investments 261 31,355 134,416 9,341 175,373 Loans to customers(1) 38,343 204,421 448,143 - 690,907 Receivables from purchase and sale of securities - 1,126 - - 1,126 Other assets - receivable from clearing house - 1,332 - - 1,332 Financial liabilities Deposits 308,515 335,686 32,356 - 676,557 Interbank and money market items 15,654 45,918 4,262 - 65,834 Liability payable on demand 1,986 - - - 1,986 Derivatives liabilities - 1,609 3,303 - 4,912 Debt issued and borrowings 937 9,721 38,751 - 49,409 Payables from purchase and sale of securities - 2,366 - - 2,366 Other liabilities - payable to clearing house - 2 - - 2 Commitments Aval to bill 4 596 29 - 629 Liability under unmatured import bills 40 597 - - 637 Letter of credits 457 2,210 - - 2,667 Other commitments 41,129 36,031 2,355 - 79,515

(1) The outstanding balances of loans to customers at call included loans for which revenue recognition has been discontinued.

THANACHART BANK PUBLIC COMPANY LIMITED 279

(Unit: Million Baht) Consolidated financial statements

2015

Less than Over Transactions At call 1 year 1 year Unspecified Total

Financial assets Cash 13,337 - - - 13,337 Interbank and money market items 4,699 52,579 500 - 57,778 Derivatives assets - 1,548 3,899 - 5,447 Investments 263 54,075 109,041 7,234 170,613 Loans to customers(1) 44,430 202,516 466,520 - 713,466 Receivables from purchase and sale of securities - 1,006 - - 1,006 Other assets - receivable from clearing house - 1,101 - - 1,101 Financial liabilities Deposits 268,869 391,705 8,930 - 669,504 Interbank and money market items 18,972 60,874 5,842 - 85,688 Liability payable on demand 2,202 - - - 2,202 Derivatives liabilities - 1,639 5,119 - 6,758 Debt issued and borrowings 1,149 28,400 42,092 - 71,641 Payables from purchase and sale of securities - 2,073 - - 2,073 Commitments Aval to bill 278 868 124 - 1,270 Liability under unmatured import bills 19 478 - - 497 Letter of credits 615 1,690 5 - 2,310 Other commitments 36,967 39,165 1,576 - 77,708

(1) The outstanding balances of loans to customers at call included loans for which revenue recognition has been discontinued.

280 ANNUAL REPORT 2016

(Unit: Million Baht)

Separate financial statements

2016

Less than Over

Transactions At call 1 year 1 year Unspecified Total

Financial assets Cash 12,072 - - - 12,072 Interbank and money market items 7,905 39,732 - - 47,637 Derivatives assets - 1,009 2,555 - 3,564 Investments 261 29,238 132,582 5,677 167,758 Loans to customers(1) 35,398 202,385 413,831 - 651,614

Financial liabilities Deposits 308,998 336,453 32,356 - 677,807 Interbank and money market items 15,395 37,499 3,262 - 56,156

Liability payable on demand 1,986 - - - 1,986 Derivatives liabilities - 1,609 3,303 - 4,912 Debt issued and borrowings 5 2,001 32,516 - 34,522 Payables from purchase and sale of securities - 1,000 - - 1,000

Commitments Aval to bill 4 596 29 - 629 Liability under unmatured import bills 40 597 - - 637 Letter of credits 457 2,210 - - 2,667 Other commitments 41,129 36,031 2,318 - 79,478

(1) The outstanding balances of loans to customers at call included loans for which revenue recognition has been discontinued.

THANACHART BANK PUBLIC COMPANY LIMITED 281

(Unit: Million Baht)

Separate financial statements

2015

Less than Over

Transactions At call 1 year 1 year Unspecified Total

Financial assets Cash 13,336 - - - 13,336 Interbank and money market items 5,435 51,718 - - 57,153 Derivatives assets - 1,548 3,899 - 5,447 Investments 263 50,773 106,184 5,497 162,717 Loans to customers(1) 38,385 200,688 436,928 - 676,001

Financial liabilities Deposits 269,318 392,327 8,930 - 670,575 Interbank and money market items 18,702 55,555 4,442 - 78,699

Liability payable on demand 2,202 - - - 2,202 Derivatives liabilities - 1,632 5,119 - 6,751 Debt issued and borrowings 5 22,900 32,521 - 55,426

Commitments Aval to bill 278 868 124 - 1,270 Liability under unmatured import bills 19 478 - - 497 Letter of credits 615 1,690 5 - 2,310 Other commitments 36,967 39,165 1,546 - 77,678

(1) The outstanding balances of loans to customers at call included loans for which revenue recognition has been discontinued.

282 ANNUAL REPORT 2016

49.4 Fair value

As at 31 December 2016 and 2015, the Bank and its subsidiaries have the financial assets and financial liabilities which presented based on fair value hierarchy as follows:

(Unit: Million Baht)

Consolidated financial statements

2016

Book value Fair value

Total Level 1 Level 2 Level 3

Assets and liabilities measured at fair value

Derivatives assets 3,520 3,520 - 3,520 -

Investments 171,046 171,046 5,586 165,460 -

Land, premises and equipment - land 5,906 5,906 - - 5,906

Derivatives liabilities 3,518 3,518 - 3,518 -

Financial assets and liabilities for which

fair value are disclosed

Cash 12,077 12,077 12,077 - -

Interbank and money market items (assets) 47,476 47,476 5,514 19,358 22,604

Derivatives assets 44 44 - 44 -

Investments 4,035 8,008 - 352 7,656

Loans to customers 666,909 673,842 - 328,482 345,360

Receivables from purchase and sale of 1,126 1,126 - 1,126 -

securities

Other assets - receivable from clearing house 1,332 1,332 - 1,332 -

Deposits 676,557 676,767 313,414 363,353 -

Interbank and money market items (liabilities) 65,834 65,866 15,206 34,565 16,095

Liability payable on demand 1,986 1,986 1,986 - -

Derivatives liabilities 1,394 1,256 - 1,256 -

Debt issued and borrowings 49,409 50,331 - 50,331 -

Payables from purchase and sale of securities 2,366 2,366 - 2,366 -

Other liabilities - payable to clearing house 2 2 - 2 -

THANACHART BANK PUBLIC COMPANY LIMITED 283

(Unit: Million Baht)

Consolidated financial statements

2015

Book value Fair value

Total Level 1 Level 2 Level 3

Financial assets and liabilities measured

at fair value

Derivatives assets 5,426 5,426 - 5,426 -

Investments 159,127 159,127 3,142 155,985 -

Derivatives liabilities 5,218 5,218 4 5,214 -

Financial assets and liabilities for which

fair value are disclosed

Cash 13,337 13,337 13,337 - -

Interbank and money market items (assets) 57,583 57,583 4,671 31,401 21,511

Derivatives assets 21 22 - 22 -

Investments 12,655 16,314 - 9,138 7,176

Loans to customers 688,444 693,961 - 330,972 362,989

Receivables from purchase and sale of

securities 1,006 1,006 - 1,006 -

Other assets - receivable from clearing house 1,101 1,101 - 1,101 -

Deposits 669,504 669,616 273,890 395,726 -

Interbank and money market items (liabilities) 85,688 85,707 18,533 54,162 13,012

Liability payable on demand 2,202 2,202 2,202 - -

Derivatives liabilities 1,540 1,427 - 1,427 -

Debt issued and borrowings 71,641 72,953 - 72,953 -

Payables from purchase and sale of securities 2,073 2,073 - 2,073 -

284 ANNUAL REPORT 2016

(Unit: Million Baht)

Separate financial statements

2016

Book value Fair value

Total Level 1 Level 2 Level 3

Assets and liabilities measured at fair value

Derivatives assets 3,520 3,520 - 3,520 -

Investments 163,051 163,051 1,735 161,316 -

Land, premises and equipment - land 5,889 5,889 - - 5,889

Derivatives liabilities 3,518 3,518 - 3,518 -

Financial assets and liabilities for which

fair value are disclosed

Cash 12,072 12,072 12,072 - -

Interbank and money market items (assets) 47,466 47,466 5,403 16,984 25,079

Derivatives assets 44 44 - 44 - Investments 4,224 8,171 - 539 7,632

Loans to customers 632,931 639,073 - 327,986 311,087

Deposits 677,807 678,017 313,897 364,120 - Interbank and money market items (liabilities) 56,156 56,164 15,395 34,565 6,204

Liability payable on demand 1,986 1,986 1,986 - -

Derivatives liabilities 1,394 1,256 - 1,256 -

Debt issued and borrowings 34,522 35,336 - 35,336 -

Payables from purchase and sale of securities 1,000 1,000 - 1,000 -

THANACHART BANK PUBLIC COMPANY LIMITED 285

(Unit: Million Baht)

Separate financial statements

2015

Book value Fair value

Total Level 1 Level 2 Level 3

Financial assets and liabilities measured

at fair value Derivatives assets 5,426 5,426 - 5,426 - Investments 151,127 151,127 1,302 149,825 -

Derivatives liabilities 5,211 5,211 - 5,211 -

Financial assets and liabilities for which

fair value are disclosed Cash 13,336 13,336 13,336 - -

Interbank and money market items (assets) 56,941 56,941 4,557 30,031 22,353 Derivatives assets 21 22 - 22 -

Investments 12,540 16,154 - 9,033 7,121

Loans to customers 656,513 661,471 - 329,429 332,042 Deposits 670,575 670,687 274,338 396,349 -

Interbank and money market items (liabilities) 78,699 78,702 18,702 54,203 5,797

Liability payable on demand 2,202 2,202 2,202 - - Derivatives liabilities 1,540 1,427 - 1,427 -

Debt issued and borrowings 55,426 56,569 - 56,569 - Valuation techniques and inputs used for fair value measurement

Cash - The fair value is assumed to approximate its book value in the statement of financial position.

Interbank and money market - The fair value is assumed to approximate their book value items (asset) in the statement of financial position due to their short-term nature.

Derivatives - The fair value is based on quoted market prices. When there is no observable market price, the fair value is measured using a valuation technique that uses observable inputs such as interest rates and foreign exchange rates obtained from reliable sources and adjusted to reflect counterparty credit risk, as mentioned in Note 5.23 to the financial statements.

286 ANNUAL REPORT 2016

Investments - The fair value of marketable securities is based on the latest bid price of the last working day of the year. - The fair value of debt securities is determined using the yield rates quoted by the Thai Bond Market Association or on other markets. - The fair value of unit trusts is determined from their net asset value, as mentioned in Note 5.3 to the financial statements. - The fair value of investments in non-marketable equity securities is determined using common valuation techniques such as the market approach, cost approach or income approach, as well as book value or adjusted book value.

Loans to customers - The fair value of floating rate loans is assumed to approximate their book value, net of allowance for doubtful debt and allowance for debt restructuring. - The fair value of fixed rate loans is determined by discounting the expected future cash flows at the interest rate of similar loans, net of allowance for doubtful debt and deferred revenue. - The fair value of fixed rate loans for which revenue recognition has discontinued is assumed to approximate their book value, net of allowance for doubtful debt or to approximate the amount expected to be derived from their sale.

Land, premises and - The fair value of land is determined using market equipment - land comparison approach which is used whereby the buying and selling prices for assets with similar characteristics are obtained.

Receivables from purchase - The fair value is assumed to approximate their book and sale of securities values in the statement of financial position due to their short-term nature.

Receivables from and - The fair value is assumed to approximate their book payables to clearing house values in the statement of financial position due to their short-term nature.

THANACHART BANK PUBLIC COMPANY LIMITED 287

Deposits - The fair value of payable on demand deposits, floating rate deposits or fixed rate deposits with not more than 1 year from the statement of financial position date remaining to maturity is assumed to approximate their book values. - The fair value of fixed rate deposits with more than 1 year from the statements of financial position date remaining to maturity is determined by discounting the expected future cash flows at the Bank’s interest rate for similar deposits.

Interbank and money market - The fair value of interbank and money market items items (liabilities) payable on demand, floating rate deposits or fixed rate deposits with not more than 1 year from the statement of financial position date remaining to maturity is assumed to approximate their book values. - The fair value of fixed rate interbank and money market items with more than 1 year from the statement of financial position date remaining to maturity is determined by discounting the expected future cash flows at the market interest rate of debt or the Bank’s announced interest rate for similar deposits.

Liability payable on demand - The fair value is assumed to approximate its book value in the statement of financial position due to its short-term nature.

Debt issued and borrowings - The fair value of floating rate or fixed rate debt issues and borrowings with not more than 1 year from the statement of financial position date remaining to maturity is assumed to approximate their book values. - The fair value of fixed rate debt issues and borrowings with more than 1 year from the statements of financial position date remaining to maturity is determined by discounting the expected future cash flows at the market interest rate for similar debt.

During the year, the Bank and its subsidiaries did not transfer any items among fair value hierarchy levels.

288 ANNUAL REPORT 2016

49.5 Financial derivatives

The Bank and its subsidiaries engage in financial derivatives activities as required in the normal course of their business to manage risk and to meet their clients’ needs. These financial derivatives include foreign exchange contracts, cross currency and interest rate swap contracts, interest rate swap contracts, and commodity futures contracts.

The Bank and its subsidiaries have set a policy and limit to mitigate related risk, and require risk reporting for the various types of risk, as a control over financial derivative activities. The Bank and its subsidiaries manage the credit risk associated with financial derivatives on the basis of the credit limits granted to customers in general. The same credit approval process as used when granting loans to a customer is adopted for financial derivative customers, as a result the Bank and its subsidiaries are able to maintain overall risk at an acceptable level.

As at 31 December 2016 and 2015, the Bank and its subsidiaries have financial derivatives for trading and hedging (banking book) as classified by their maturities as follows: (Unit: Million Baht) Consolidated financial statements

2016 2015

Less than Over Less than Over

1 year 1 year Total 1 year 1 year Total

Foreign exchange contracts - Bought 44,663 - 44,663 46,583 64 46,647 - Sold 56,983 - 56,983 48,159 64 48,223 Cross currency and interest rate swap contracts - Bought 699 4,218 4,917 1,153 4,360 5,513 - Sold 4,282 12,261 16,543 2,468 13,219 15,687 Interest rate swap contracts - Paid fixed interest rate 41,265 114,131 155,396 37,466 137,655 175,121 - Paid floating interest rate 40,070 115,181 155,251 33,391 139,667 173,058 - Received fixed interest rate 39,070 115,181 154,251 33,391 138,667 172,058 - Received floating interest rate 42,265 114,131 156,396 37,466 138,655 176,121 Future contracts - Bought 76 - 76 104 - 104 - Sold 1,587 - 1,587 239 - 239 Derivative warrants - Sold - - - 89 - 89 Other - Sold 50 - 50 - - -

THANACHART BANK PUBLIC COMPANY LIMITED 289

(Unit: Million Baht)

Separate financial statements

2016 2015

Less than Over Less than Over

1 year 1 year Total 1 year 1 year Total

Foreign exchange contracts - Bought 44,663 - 44,663 46,446 64 46,510 - Sold 56,983 - 56,983 48,296 64 48,360 Cross currency and interest rate swap contracts - Bought 699 4,218 4,917 1,153 4,360 5,513 - Sold 4,282 12,261 16,543 2,468 13,219 15,687 Interest rate swap contracts - Paid fixed interest rate 41,265 114,131 155,396 37,466 137,655 175,121

- Paid floating interest rate 40,070 115,181 155,251 33,391 139,667 173,058 - Received fixed interest rate 39,070 115,181 154,251 33,391 138,667 172,058 - Received floating interest rate 42,265 114,131 156,396 37,466 138,655 176,121

50. Events after the reporting period

On 23 February 2017, the Board of Directors of the Bank passed a resolution to propose the payment of a dividend of Baht 0.40 per share to the ordinary shareholders, or a total of Baht 2,426 million, to be considered by the Annual General Meeting of Shareholders.

51. Approval of financial statements

These financial statements were authorised for issue by the Bank’s Board of Directors on 23 February 2017.

290 ANNUAL REPORT 2016 BRANCHES OF TBANK Information as of 31 December 2016

HEAD OFFICE Charan Sanitwong 35 Branch Century the Movie Plaza Branch Tel. +66 (0) 2217 8000 Tel. +66 (0) 2411 0511, +66 (0) 2411 0605 Tel. +66 (0) 2245 8500-2 Fax +66 (0) 2217 8333 Fax. +66 (0) 2411 0607 Fax. +66 (0) 2245 8504 BANGKOK AND VICNITIES Charan Sanitwong 86/2 Branch Central Bang Na Branch Tel. +66 (0) 2435 7205, Tel. +66 (0) 2398 9572-3 BANGKOK +66 (0) 2435 6808-10 Fax. +66 (0) 2398 9574 Fax. +66 (0) 2435 6807 Chit Lom Branch Central Pin Klao Branch Tel. +66 (0) 2251 5821-3 Chamchuri Square Branch Tel. +66 (0) 2884 9680-3 Fax. +66 (0) 2658 5504 Tel. +66 (0) 2160 5254-6 Fax. +66 (0) 2884 9684 Fax. +66 (0) 2160 5258 Phetburi Branch Central Rama II Branch Tel. +66 (0) 2208 5000 ext. 5099, 5108 Cha Ru Mueang Branch Tel. +66 (0) 2872 4770 Fax. +66 (0) 2208 5118 Tel. +66 (0) 2214 1488, +66 (0) 2214 1739 Fax. +66 (0) 2872 4769 Fax. +66 (0) 2214 2038 Suan Mali Branch Central Rama III Branch Tel. +66 (0) 2220 2222 ext. 2106-7, 2112 Charoen Krung 17 Branch Tel. +66 (0) 2211 8260 Fax. +66 (0) 2224 3810, +66 (0) 2226 2437 Tel. +66 (0) 2224 1839, +66 (0) 2225 7194 Fax. +66 (0) 2211 8190 Fax. +66 (0) 2224 2059 Department of Land Transport Branch Central Plaza Grand Rama IX Branch Tel. +66 (0) 2272 6073-5 Charoen Nakhon Soi 36 Branch Tel. +66 (0) 2160 2950-2 Fax. +66 (0) 2272 6077 Tel. +66 (0) 2862 5010-3, Fax. +66 (0) 2160 2954 +66 (0) 2862 5016 Green Place (Soi Wat Phai Ngoen) Fax. +66 (0) 2862 5017 Central Ram Inthra Branch Branch Tel. +66 (0) 2552 7462, Tel. +66 (0) 2211 3515, Charoen Phon Branch +66 (0) 2552 7467-8 +66 (0) 2211 3519-20 Tel. +66 (0) 2215 6628-30 Fax. +66 (0) 2970 5518 Fax. +66 (0) 2674 9704 Fax. +66 (0) 2215 6627 Central Lat Phrao Branch Kluai Nam Thai Branch Charn Issara Tower (Rama IV) Branch Tel. +66 (0) 2937 1280-2 Tel. +66 (0) 2258 6620-1 Tel. +66 (0) 2267 4296-98 Fax. +66 (0) 2937 1283 Fax. +66 (0) 2258 5505 Fax. +66 (0) 2267 4299 Central World Branch Crystal Design Center Branch Charn Issara Tower II Branch Tel. +66 (0) 2646 1346-9 Tel. +66 (0) 2102 2410-2 Tel. +66 (0) 2308 2955-7, Fax. +66 (0) 2646 1350 Fax. +66 (0) 2102 2413 +66 (0) 2718 1834 Fax. +66 (0) 2308 2950 Don Mueang Branch Khlong Chan Branch Tel. +66 (0) 2929 7004, Tel. +66 (0) 2377 1364, Chok Chai 4 Branch +66 (0) 2566 1950-1 +66 (0) 2377 1368-9 Tel. +66 (0) 2931 0895-7 Fax. +66 (0) 2566 3425 Fax. +66 (0) 2377 3609 Fax. +66 (0) 2931 0798 The Avenue Chaengwattana Branch Khlong Toei Branch Seacon Square Branch Tel. +66 (0) 2573 0673-5 Tel. +66 (0) 2240 0161, +66 (0) 2249 2633 Tel. +66 (0) 2721 8548-50 Fax. +66 (0) 2573 0677 Fax. +66 (0) 2249 4789 Fax. +66 (0) 2721 8551 The Nine (Thanon Rama IX) Branch Charan Sanitwong 13 Branch Seacon Square Srinagarindra Branch Tel. +66 (0) 2319 1662-4 Tel. +66 (0) 2864 1560-3 Tel. +66 (0) 2721 9955 Fax. +66 (0) 2718 7869 Fax. +66 (0) 2864 1566 Fax. +66 (0) 2721 8321

Thanachart bank public company limited 291 The Paseo (Lat Krabang) Branch Tao Pun Branch Thanon Phrasumen (Bang Lamphu) Tel. +66 (0) 2346 4103-4, Tel. +66 (0) 2587 7292, Branch +66 (0) 2346 4109 +66 (0) 2587 7284-5 Tel. +66 (0) 2281 6821, +66 (0) 2281 6332 Fax. +66 (0) 2346 4111 Fax. +66 (0) 2587 7379 Fax. +66 (0) 2281 7457

The Mall 2 Ramkhamhaeng Branch TOYOTA BUZZ Kaset-Nawamin Thanon Phatthanakan Branch Tel. +66 (0) 2369 2482, +66 (0) 2369 2486 Branch Tel. +66 (0) 2369 2814-7 Fax. +66 (0) 2369 2484 Tel. +66 (0) 2561 0069-71 Fax. +66 (0) 2369 2818 Fax. +66 (0) 2561 0073 The Mall Tha Phra Branch Thanon Phatthanakan 22 Branch Tel. +66 (0) 2477 7321-3 Thanon Kanchanaphisek Tel. +66 (0) 2318 7241-2, Fax. +66 (0) 2477 7324 (Thawi Watthana) Branch +66 (0) 2318 7620 Tel. +66 (0) 2447 9206-8 Fax. +66 (0) 2318 7393 The Mall Bang Khae Branch Fax. +66 (0) 2447 9209 Tel. +66 (0) 2803 8310 Thanon Petchaburi Soi 20 Branch Fax. +66 (0) 2803 8305 Thanon Romklao Housing Branch Tel. +66 (0) 2251 6018-9, Tel. +66 (0) 2543 9200-1, +66 (0) 2251 6852 The Mall Bangkapi Branch +66 (0) 2543 9191 Fax. +66 (0) 2252 6935 Tel. +66 (0) 2375 1575 Fax. +66 (0) 2543 9192 Fax. +66 (0) 2375 1686 Thanon Petchaburi Tat Mai Branch Thanon Chan Branch Tel. +66 (0) 2254 0252-4 Trok Chan Branch Tel. +66 (0) 2285 5360, +66 (0) 2285 5368 Fax. +66 (0) 2254 0255 Tel. +66 (0) 2211 1286, +66 (0) 2211 4511 Fax. +66 (0) 2285 5361 Fax. +66 (0) 2211 4653 Thanon Mangkon Branch Thanon Charoen Nakhon Branch Tel. +66 (0) 2225 3331, +66 (0) 2225 3863 Talat Bang Khae Branch Tel. +66 (0) 2438 6953-5 Fax. +66 (0) 2225 8364 Tel. +66 (0) 2801 1004-6 Fax. +66 (0) 2860 4355 Fax. +66 (0) 2801 1007 Thanon Sathon Nuea Branch Thanon Chalong Krung Branch Tel. +66 (0) 2267 7512-4 Talat Phlu Branch Tel. +66 (0) 2327 8111-3 Fax. +66 (0) 2637 8975 Tel. +66 (0) 2466 7404, +66 (0) 2466 7423 Fax. +66 (0) 2327 8114 Fax. +66 (0) 2465 1767 Thanon Sathon Tai (Thai CC Tower) Thanon Nang Linchi Branch Branch Talat Ying Charoen Branch Tel. +66 (0) 2286 1971, +66 (0) 2286 1898 Tel. +66 (0) 2675 5697-9, Tel. +66 (0) 2552 8043, +66 (0) 2552 8045 Fax. +66 (0) 2286 1939 +66 (0) 2675 5700 Fax. +66 (0) 2972 3161 Fax. +66 (0) 2675 5701 Thanon Borom Rat Chonnani Branch Talat Saphan Mai Don Mueang Tel. +66 (0) 2446 8061-4 Thanon Sirindhorn Branch Branch Fax. +66 (0) 2446 8065 Tel. +66 (0) 2434 5028-9 Tel. +66 (0) 2521 1670, Fax. +66 (0) 2434 5661 +66 (0) 2521 0612-3 Thanon Burapha (Phahurat) Branch Fax. +66 (0) 2521 0611 Tel. +66 (0) 2221 2069, +66 (0) 2221 5239 Thanon Suea Pa Branch Fax. +66 (0) 2221 5128 Tel. +66 (0) 2221 4327-9 Talat Samrae Branch Fax. +66 (0) 2623 0579 Tel. +66 (0) 2472 2045-50 Thanon Rama II Fax. +66 (0) 2472 2052 (Thon Buri Housing 3) Branch Thanon Ekkachai (Bang Bon 5) Tel. +66 (0) 2451 4402, +66 (0) 2451 4409 Branch Talat Mo Chit Branch Fax. +66 (0) 2451 4882 Tel. +66 (0) 2450 3741-3 Tel. +66 (0) 2278 5300-1, Fax. +66 (0) 2450 3744 +66 (0) 2270 0308 Thanon Rama II (Soi 3) Branch Fax. +66 (0) 2279 3411 Tel. +66 (0) 2427 1552-3 Thong Lo Branch Fax. +66 (0) 2427 1551 Tel. +66 (0) 2381 8421-2, Taling Chan Branch +66 (0) 2381 8364-5 Tel. +66 (0) 2882 7790-4 Thanon Rama IX Branch Fax. +66 (0) 2381 8423 Fax. +66 (0) 2882 7796 Tel. +66 (0) 2246 7829-30 Fax. +66 (0) 2246 8473 Thong Lo Soi 17 Branch Tel. +66 (0) 2185 2756, +66 (0) 2185 2758-61 Fax. +66 (0) 2185 2757

292 ANNUAL REPORT 2016 Tops RCA Branch Nang Loeng Branch BigC Don Mueang Branch Tel. +66 (0) 2203 0267-9 Tel. +66 (0) 2281 0842, +66 (0) 2281 2169 Tel. +66 (0) 2551 0638-9 Fax. +66 (0) 2641 5121 Fax. +66 (0) 2281 2322 Fax. +66 (0) 2551 0642

Tha Din Daeng Branch Na Na Nuea Branch BigC Bang Na Branch Tel. +66 (0) 2863 1283-5 Tel. +66 (0) 2252 0709, +66 (0) 2252 6540 Tel. +66 (0) 2396 0482, Fax. +66 (0) 2863 1289 Fax. +66 (0) 2253 5668 +66 (0) 2396 0484-5 Fax. +66 (0) 2396 0500 Tha Phra Chan Branch Bang Khun Non Branch Tel. +66 (0) 2221 7511, +66 (0) 2222 0686 Tel. +66 (0) 2424 9778-9, BigC Bang Bon Branch Fax. +66 (0) 2222 4794 +66 (0) 2433 6028-9 Tel. +66 (0) 2416 9969-71 Fax. +66 (0) 2434 9772 Fax. +66 (0) 2416 9974 Thewet Branch Tel. +66 (0) 2628 7240-4, Bang Khae Branch BigC Phet Kasem Branch +66 (0) 2628 7247 Tel. +66 (0) 2454 2790-2 Tel. +66 (0) 2444 2927, +66 (0) 2444 2904 Fax. +66 (0) 2282 8810 Fax. +66 (0) 2413 1329 Fax. +66 (0) 2444 2909

Tesco Lotus Phet Kasem 81 Branch Bang Khlo Branch BigC Sukhaphiban 3 (Ramkhamhaeng) Tel. +66 (0) 2489 2087-9 Tel. +66 (0) 2289 4223, +66 (0) 2289 4236 Branch Fax. +66 (0) 2812 4073 Fax. +66 (0) 2289 4159 Tel. +66 (0) 2916 3584-5, +66 (0) 2916 3603 Tesco Lotus Rama II Branch Bang Sue Branch Fax. +66 (0) 2916 3607 Tel. +66 (0) 2415 9130-2 Tel. +66 (0) 2587 0616, +66 (0) 2587 0686 Fax. +66 (0) 2892 8004 Fax. +66 (0) 2585 9659 BigC Sukhaphiban 5 Branch Tel. +66 (0) 2153 1513-4, Tesco Lotus Wang Hin Branch Bang Na Branch +66 (0) 2153 1566 Tel. +66 (0) 2578 6194-6 Tel. +66 (0) 2398 0182-4 Fax. +66 (0) 2153 1567 Fax. +66 (0) 2578 6197 Fax. +66 (0) 2398 0185 BigC Ekkamai Branch Thian Kua Thian Branch Bang Na-Trat K+m. 4 Branch Tel. +66 (0) 2714 8274-7 Tel. +66 (0) 2221 3575-6, Tel. +66 (0) 2399 2841-3 Fax. +66 (0) 2714 8268 +66 (0) 2622 9063 Fax. +66 (0) 2399 2845 Fax. +66 (0) 2221 3575 Bobae Tower Branch Bang Bon Branch Tel. +66 (0) 2628 1693-5, Thai Summit Tower Tel. +66 (0) 2899 8533-5 +66 (0) 2628 1690 (Thanon Petchaburi Tat Mai) Branch Fax. +66 (0) 2899 8540 Fax. +66 (0) 2628 1696 Tel. +66 (0) 2252 6458, +66 (0) 2251 1327 Fax. +66 (0) 2251 1357 Bang Pakok Branch Pracha Chuen Branch Tel. +66 (0) 2427 7527-9 Tel. +66 (0) 2585 6811, Thaniya Branch Fax. +66 (0) 2872 3245 +66 (0) 2585 9656-7 Tel. +66 (0) 2236 3520-1, Fax. +66 (0) 2585 2666 +66 (0) 2236 9129 Bang Mod Branch Fax. +66 (0) 2236 9119 Tel. +66 (0) 2428 6913-5 Pracha Uthit Branch Fax. +66 (0) 2428 6994 Tel. +66 (0) 2873 4721-3, Nawamin 42 Branch +66 (0) 2873 5848 Tel. +66 (0) 2375 1281-2, Bang Rak Branch Fax. +66 (0) 2873 5849 +66 (0) 2375 1284 Tel. +66 (0) 2234 4227-9 Fax. +66 (0) 2375 1285 Fax. +66 (0) 2630 9027 Pracha Uthit (Huai Khwang) Branch Tel. +66 (0) 2934 4181-3 Nawamin 66 Branch Bang Lamphu Branch Fax. +66 (0) 2934 4184 Tel. +66 (0) 2519 5724, +66 (0) 2519 4616 Tel. +66 (0) 2356 0785-6 Fax. +66 (0) 2519 4627 Fax. +66 (0) 2356 0787 Pratu Nam Branch Tel. +66 (0) 2208 0072, Nawamin Market Place Branch Bamrung Mueang Branch +66 (0) 2208 0074-5 Tel. +66 (0) 2519 1142, +66 (0) 2519 1154 Tel. +66 (0) 2216 9794-7, Fax. +66 (0) 2208 0076 Fax. +66 (0) 2946 7432 +66 (0) 2214 0606-8 Fax. +66 (0) 2216 9798

Thanachart bank public company limited 293 Prawet Branch Phet Kasem 69 Branch Ratchadamnoen Klang Branch Tel. +66 (0) 2322 2223, Tel. +66 (0) 2809 3034-8 Tel. +66 (0) 2226 3083-5, +66 (0) 2722 1371-2 Fax. +66 (0) 2809 3041 +66 (0) 2621 2185 Fax. +66 (0) 2322 8943 Fax. +66 (0) 2621 2186 Phloen Chit Center Branch Pak Khlong Talat Branch Tel. +66 (0) 2656 8403-7 Ratchadamri Branch Tel. +66 (0) 2221 7511, +66 (0) 2222 7467 Fax. +66 (0) 2656 8400 Tel. +66 (0) 2251 4314, Fax. +66 (0) 2222 4794 +66 (0) 2251 4348-9 Platinum Pratu Nam Branch Fax. +66 (0) 2251 4316 Pin Klao Branch Tel. +66 (0) 2121 9683-5 Tel. +66 (0) 2435 4273-4, Fax. +66 (0) 2121 9687 Ratchawong Branch +66 (0) 2435 7374 Tel. +66 (0) 2224 5705, +66 (0) 2224 5870 Fax. +66 (0) 2435 4518 Fashion Island Branch Fax. +66 (0) 2224 5792 Tel. +66 (0) 2947 6402-5 Rama III Branch Fax. +66 (0) 2947 6410 Ratcha Wat Branch Tel. +66 (0) 2682 7322-6, Tel. +66 (0) 2241 0868, +66 (0) 2243 6183 +66 (0) 2682 7328-9 Money Park Branch Fax. +66 (0) 2241 1483 Fax. +66 (0) 2682 7327 Tel. +66 (0) 2686 3960-62 Fax. +66 (0) 2686 3959 Ramkhamhaeng 73 Branch Rama IV Branch Tel. +66 (0) 2375 2126-7, Tel. +66 (0) 2249 4201-3, Mah Boon Krong Branch +66 (0) 2374 9644 +66 (0) 2671 0260 Tel. +66 (0) 2611 5710-4 Fax. +66 (0) 2375 2452 Fax. +66 (0) 2249 4204 Fax. +66 (0) 2611 5717 Ramkhamhaeng 160 Branch Phran Nok Branch Min Buri Branch Tel. +66 (0) 2540 3132-4 Tel. +66 (0) 2418 0785, +66 (0) 2418 0787 Tel. +66 (0) 2517 8014-5, Fax. +66 (0) 2917 0047 Fax. +66 (0) 2418 0786 +66 (0) 2517 9321 Fax. +66 (0) 2517 8016 Ramkhamhaeng Soi 122 Branch Phahon Yothin Soi 6 Branch Tel. +66 (0) 2372 2377-9 Tel. +66 (0) 2279 9874-5 Major Ratchayothin Branch Fax. +66 (0) 2728 2950 Fax. +66 (0) 2279 9895 Tel. +66 (0) 2512 1082, +66 (0) 2512 1102 Fax. +66 (0) 2939 5372 Ramkhamhaeng Soi 129 Branch Phahon Yothin Soi 9 Branch Tel. +66 (0) 2372 3318-20 Tel. +66 (0) 2270 1371-3 Union Mall Lat Phrao Branch Fax. +66 (0) 2729 5832 Fax. +66 (0) 2619 6339 Tel. +66 (0) 2511 0236, +66 (0) 2511 0246 Fax. +66 (0) 2511 0268 Ram Inthra Branch Phatthanakan Branch Tel. +66 (0) 2943 5630-1, Tel. +66 (0) 2719 4580-3 Yaowarat Branch +66 (0) 2519 0824-5 Fax. +66 (0) 2719 4591 Tel. +66 (0) 2221 1868, Fax. +66 (0) 2519 0826 +66 (0) 2221 1845-7 Paradise Park Branch Fax. +66 (0) 2221 1869 Ram Inthra (Km. 7) Branch Tel. +66 (0) 2325 9072-4 Tel. +66 (0) 2510 9610, +66 (0) 2510 9882 Fax. +66 (0) 2325 9075 Ratchada Phisek Branch Fax. +66 (0) 2510 9197 Tel. +66 (0) 2641 2225-7 Phahurat Branch Fax. +66 (0) 2641 3233 Ram Inthra (Km. 8) Branch Tel. +66 (0) 2221 4409, Tel. +66 (0) 2510 6900, +66 (0) 2510 2342 +66 (0) 2221 4419-20 Ratchada Phisek (Glas Haus Building) Fax. +66 (0) 2510 9875 Fax. +66 (0) 2623 8098 Branch Tel. +66 (0) 2693 9811 Paolo Memorial Hospital Chok Chai P.B. Tower (Khlong Tan) Branch Fax. +66 (0) 2693 9820 4 Branch Tel. +66 (0) 2381 3114-5, Tel. +66 (0) 2514 3277, +66 (0) 2381 3121-2 Ratchada Phisek-Tha Phra Branch +66 (0) 2514 3293-4 Fax. +66 (0) 2381 3124 Tel. +66 (0) 2878 8845-7 Fax. +66 (0) 2933 2292 Fax. +66 (0) 2878 8852 Phet Kasem Branch Navaminthra 9 Hospital Branch Tel. +66 (0) 2456 0337-42 Ratchada-Huai Khwang Branch Tel. +66 (0) 2518 1100, Fax. +66 (0) 2454 4116 Tel. +66 (0) 2694 1489-91, +66 (0) 2518 2360-1 +66 (0) 2694 1495 Fax. +66 (0) 2518 2363 Fax. +66 (0) 2694 1496

294 ANNUAL REPORT 2016 Phyathai 1 Hospital Branch Wong Sawang Branch Siam Square Branch Tel. +66 (0) 2246 7713-5 Tel. +66 (0) 2834 9999 Tel. +66 (0) 2252 7363-5, Fax. +66 (0) 2246 7716 Fax. +66 (0) 2834 9905 +66 (0) 2252 7360 Fax. +66 (0) 2252 7367 Ramkhamhaeng Hospital Branch Wong Sawang Town Center Branch Tel. +66 (0) 2374 1523-5 Tel. +66 (0) 2586 0420-2 Song Prapha Branch Fax. +66 (0) 2374 1562 Fax. +66 (0) 2910 7949 Tel. +66 (0) 2928 8542-5 Fax. +66 (0) 2928 8546 Vichaiyut Hospital Branch Watcharaphon Branch Tel. +66 (0) 2278 2194-6 Tel. +66 (0) 2508 2185-7 Suan Phlu Branch Fax. +66 (0) 2278 2606 Fax. +66 (0) 2508 2207 Tel. +66 (0) 2287 3084-5, +66 (0) 2287 3074 Vibhavadi Hospital Branch Wat Phra Ya Kai Branch Fax. +66 (0) 2679 3028 Tel. +66 (0) 2561 5320-2 Tel. +66 (0) 2289 3026-7, Fax. +66 (0) 2941 3006 +66 (0) 2289 5033 Saphan Khwai Branch Fax. +66 (0) 2289 5032 Tel. +66 (0) 2279 6060-1 Samitivej Hospital Sukhumwit 49 Fax. +66 (0) 2616 6747 Branch Wutthakat Branch Tel. +66 (0) 2712 7013-4 Tel. +66 (0) 2466 9981-2, Rama VII Bridge (Bang Phlat) Branch Fax. +66 (0) 2712 7016 +66 (0) 2466 6160 Tel. +66 (0) 2423 9011-3 Fax. +66 (0) 2472 5838 Fax. +66 (0) 2423 9015 Lat Krabang Branch Tel. +66 (0) 2327 2754-6 Woeng Nakhon Khasem Branch Sathu Pradit 49 Branch Fax. +66 (0) 2327 2706 Tel. +66 (0) 2222 2430, Tel. +66 (0) 2682 0610-8 +66 (0) 2221 7201-4 Fax. +66 (0) 2682 0619 Lat Phrao Branch Fax. +66 (0) 2222 6475 Tel. +66 (0) 2512 2343-4, Sam Yaek Branch +66 (0) 2938 2433 Si Worachak Branch Tel. +66 (0) 2223 2706-8 Fax. +66 (0) 2512 2342 Tel. +66 (0) 2222 1912, +66 (0) 2222 1917 Fax. +66 (0) 2223 2705 Fax. +66 (0) 2622 9338 Lat Phrao 53 Branch Sam Yaek Fai Chai Branch Tel. +66 (0) 2539 1167, +66 (0) 2539 1507 Siwara Branch Tel. +66 (0) 2411 3446, Fax. +66 (0) 2539 2261 Tel. +66 (0) 2538 8466, +66 (0) 2538 8986 +66 (0) 2418 3575-6 Fax. +66 (0) 2538 9378 Fax. +66 (0) 2411 2321 Lat Phrao 80 Branch Tel. +66 (0) 2933 9172, Appeal Court Branch Sam Yan Branch +66 (0) 2933 9174-5 Tel. +66 (0) 2938 3421-6 Tel. +66 (0) 2215 1549, +66 (0) 2215 4199 Fax. +66 (0) 2933 9178 Fax. +66 (0) 2938 3428 Fax. +66 (0) 2216 6170

Lat Phrao 118 Branch Sirirat Branch Sam Pheng Branch Tel. +66 (0) 2539 2925-7 Tel. +66 (0) 2412 4515, Tel. +66 (0) 2222 7396, +66 (0) 2223 2898 Fax. +66 (0) 2530 4348 +66 (0) 2412 4583-4 Fax. +66 (0) 2225 8468 Fax. +66 (0) 2866 3218 Lat Phrao Soi 101 Branch Samrae Branch Tel. +66 (0) 2187 0162-4 The Government Complex Tel. +66 (0) 2468 0609, Fax. +66 (0) 2187 0161 Commemorating Chaengwattana +66 (0) 2468 1008-9 (Building B) Branch Fax. +66 (0) 2476 5423 Lam Sa Li Branch Tel. +66 (0) 2143 9393-5, Tel. +66 (0) 2735 2060-3 +66 (0) 2143 9396 Si Kak Phra Ya Si Branch Fax. +66 (0) 2735 2067 Fax. +66 (0) 2143 9397 Tel. +66 (0) 2222 4477-8, +66 (0) 2226 2267 Leng Noei Yi Branch Sanam Pao Branch Fax. +66 (0) 2225 7036 Tel. +66 (0) 2221 1248, +66 (0) 2221 3501 Tel. +66 (0) 2271 0026-8 Fax. +66 (0) 2223 3211 Fax. +66 (0) 2271 0030 Si Phra Ya Branch Tel. +66 (0) 2233 5305-7, Wongwian Yai Branch Siam Paragon Branch +66 (0) 2267 2191-4 Tel. +66 (0) 2437 0188, +66 (0) 2437 2596 Tel. +66 (0) 2129 4374-7 Fax. +66 (0) 2233 4174 Fax. +66 (0) 2437 5784 Fax. +66 (0) 2129 4372

Thanachart bank public company limited 295 Si Yaek Kaset Branch Seri Thai 32 Branch Siam Kit Building Branch Tel. +66 (0) 2579 1340, +66 (0) 2579 3483 Tel. +66 (0) 2376 1043-6 Tel. +66 (0) 2251 6763, +66 (0) 2252 5252 Fax. +66 (0) 2579 6794 Fax. +66 (0) 2376 1122 Fax. +66 (0) 2253 9429

Si Yaek Chaloem Buri (Yaowarat) Nong Khaem Branch Ekkamai 28 Branch Branch Tel. +66 (0) 2445 4790-2 Tel. +66 (0) 2392 2831, Tel. +66 (0) 2221 1236, +66 (0) 2221 7194 Fax. +66 (0) 2445 4789 +66 (0) 2392 7278-9 Fax. +66 (0) 2225 0580 Fax. +66 (0) 2392 2832 Huai Khwang Branch Si Yaek Ban Khaek Branch Tel. +66 (0) 2692 0061, MBK Center Branch Tel. +66 (0) 2465 2115, +66 (0) 2465 5072 +66 (0) 2692 2098-100 Tel. +66 (0) 2611 4752-4 Fax. +66 (0) 2465 5071 Fax. +66 (0) 2276 1134 Fax. +66 (0) 2611 4751

Si Yaek Prawet Branch Hua Lam Phong Branch Esplanade Ratchada Branch Tel. +66 (0) 2328 8023-5 Tel. +66 (0) 2237 9710-4 Tel. +66 (0) 2354 2052-4 Fax. +66 (0) 2328 8027 Fax. +66 (0) 2237 9713 Fax. +66 (0) 2660 9250

Silom Branch Hua Mak Branch Udom Suk Branch Tel. +66 (0) 2266 7414, +66 (0) 2266 7417 Tel. +66 (0) 2314 2627, Tel. +66 (0) 2398 4024-7 Fax. +66 (0) 2266 7416 +66 (0) 2314 0086-7 Fax. +66 (0) 2398 4028 Fax. +66 (0) 2314 7277 Silom (Thanon Pan) Branch Ocean Tower II Branch Tel. +66 (0) 2237 9317-20, Anu Wong Branch Tel. +66 (0) 2204 1695-6 +66 (0) 2235 5800-2 Tel. +66 (0) 2222 0161-3 Fax. +66 (0) 2204 1698-9 Fax. +66 (0) 2237 9321 Fax. +66 (0) 2225 8931 IT Square Branch Silom Complex Branch Victory Monument Branch Tel. +66 (0) 2576 0104-5 Tel. +66 (0) 2231 3237, Tel. +66 (0) 2644 7474-6 Fax. +66 (0) 2576 0106 +66 (0) 2231 3663-5 Fax. +66 (0) 2354 9351 Fax. +66 (0) 2235 8833 VICNITIES Asok Branch Sukhumwit 71 Branch Tel. +66 (0) 2260 7831-3 King Kaeo Branch Tel. +66 (0) 2391 6067, +66 (0) 2392 5944 Fax. +66 (0) 2260 7839 Tel. +66 (0) 2316 1990-2 Fax. +66 (0) 2392 2534 Fax. +66 (0) 2317 1312 Asok-Din Daeng Branch Sukhumwit Soi 25 Branch Tel. +66 (0) 2641 7547-9 Khru Nai Branch Tel. +66 (0) 2259 4727-9 Fax. +66 (0) 2641 7566 Tel. +66 (0) 2462 8020, +66 (0) 2462 8034 Fax. +66 (0) 2259 4730 Fax. +66 (0) 2462 6193 On Nuch 52 Branch Sukhumwit Soi 47 Branch Tel. +66 (0) 2322 1557-9 Khlong Luang Branch Tel. +66 (0) 2204 0307-9 Fax. +66 (0) 2322 1556 Tel. +66 (0) 2516 1230-2, Fax. +66 (0) 2662 5632 +66 (0) 2516 1202 All Seasons Place Branch Fax. +66 (0) 2516 1203 Sukhumwit Soi 66 Branch Tel. +66 (0) 2250 7611-3 Tel. +66 (0) 2393 5782 Fax. +66 (0) 2250 7615 Chaeng Wattana Branch Fax. +66 (0) 2399 2399 Tel. +66 (0) 2982 9192-5 Berli Jucker House (Kluai Nam Thai) Fax. +66 (0) 2982 9441 Sukhumwit Soi 101/1 (Piyarom Place) Branch Branch Tel. +66 (0) 2381 5065-7 Chaeng Wattana Tel. +66 (0) 2332 7060-2 Fax. +66 (0) 2381 5068 (Software Park Building) Branch Fax. +66 (0) 2741 8017 Tel. +66 (0) 2962 0066, Vorawat Building Silom Branch +66 (0) 2962 0415-6 Sutthi San Branch Tel. +66 (0) 2635 1150-2 Fax. +66 (0) 2962 0376 Tel. +66 (0) 2616 3553-5 Fax. +66 (0) 2635 1157 Fax. +66 (0) 2616 3561 Central Chaengwattana Branch Vibulthani Tower (Rama IV) Branch Tel. +66 (0) 2193 8114-6 Surawong Branch Tel. +66 (0) 2661 5534-7 Fax. +66 (0) 2101 0710 Tel. +66 (0) 2234 5964-6 Fax. +66 (0) 2661 5539 Fax. +66 (0) 2631 7031

296 ANNUAL REPORT 2016 Central Rattanathibet Branch Tesco Lotus Srinagarindra Branch Pathum Thani Branch Tel. +66 (0) 2525 4736-8 Tel. +66 (0) 2175 7844-6 Tel. +66 (0) 2581 5766, +66 (0) 2581 6976 Fax. +66 (0) 2969 7537 Fax. +66 (0) 2759 9054 Fax. +66 (0) 2581 6925

Zeer-Rangsit Branch Nonthaburi Branch Pak Kret Branch Tel. +66 (0) 2992 6807-9 Tel. +66 (0) 2526 3453-6 Tel. +66 (0) 2960 9928-9, Fax. +66 (0) 2992 6810 Fax. +66 (0) 2526 3457 +66 (0) 2583 7246 Fax. +66 (0) 2583 7562 The Mall Ngamwongwan Branch Navanakhon Branch Tel. +66 (0) 2550 1231-3 Tel. +66 (0) 2909 0620-3, Pu Chao Saming Prai Branch Fax. +66 (0) 2550 1235 +66 (0) 2909 0626 Tel. +66 (0) 2183 2044, Fax. +66 (0) 2909 0625 +66 (0) 2183 2046-7 Talat Klang Bang Yai Branch Fax. +66 (0) 2183 2043 Tel. +66 (0) 2595 0682-4 Bang Pu Industrial Estate Branch Fax. +66 (0) 2595 0685 Tel. +66 (0) 2324 0360, +66 (0) 2324 0364 Phra Pradaeng Branch Fax. +66 (0) 2324 0805 Tel. +66 (0) 2463 3940-1, Talat Thai Branch +66 (0) 2463 8415-7 Tel. +66 (0) 2529 6171-2 Bang Kruai Branch Fax. +66 (0) 2463 6897 Fax. +66 (0) 2529 6175 Tel. +66 (0) 2447 2897, +66 (0) 2447 5095 Fax. +66 (0) 2883 8619 Future Park Rangsit Branch Talat Bang Bua Thong Branch Tel. +66 (0) 2958 5116-8 Tel. +66 (0) 2571 3598-9, Bang Khru Branch Fax. +66 (0) 2958 5121 +66 (0) 2571 3373-5 Tel. +66 (0) 2817 5417-9 Fax. +66 (0) 2571 7845 Fax. +66 (0) 2817 5423 Huachiew Chalermprakiet University Branch Talat Pak Nam Branch Bang Bo Branch Tel. +66 (0) 2312 6600-5 Tel. +66 (0) 2702 8380-4 Tel. +66 (0) 2338 1822-3, Fax. +66 (0) 2312 6603 Fax. +66 (0) 2702 8388 +66 (0) 2338 1248 Fax. +66 (0) 2708 3242 Market Village Suvarnabhumi Branch Talat Samrong Branch Tel. +66 (0) 2040 3124-6 Tel. +66 (0) 2756 8411-4 Bang Bua Thong Branch Fax. +66 (0) 2040 3129 Fax. +66 (0) 2756 8419 Tel. +66 (0) 2571 7124, +66 (0) 2571 7142-3 Megabangna Branch Thanon Samakkhi Branch Fax. +66 (0) 2920 9603 Tel. +66 (0) 2105 1681-3 Tel. +66 (0) 2574 2794-5 Fax. +66 (0) 2105 1684 Fax. +66 (0) 2574 2793 Bang Pu Branch Tel. +66 (0) 2323 2960-3 Mueang Mai-Bang Phli Branch Tha Nam Phra Pradaeng Branch Fax. +66 (0) 2323 2964 Tel. +66 (0) 2706 0322-6 Tel. +66 (0) 2463 0488, +66 (0) 2463 2228 Fax. +66 (0) 2706 0329 Fax. +66 (0) 2464 2156 Bang Yai Branch Tel. +66 (0) 2594 1143, +66 (0) 2594 1152 Rangsit Branch Thepharak Branch Fax. +66 (0) 2594 1161 Tel. +66 (0) 2567 1117, +66 (0) 2567 5586 Tel. +66 (0) 2759 6061-4, Fax. +66 (0) 2567 6694 +66 (0) 2759 6066 BigC Bang Phli Branch Fax. +66 (0) 2759 6067 Tel. +66 (0) 2312 2284, +66 (0) 2312 2300 Rangsit-Khlong 3 Branch Fax. +66 (0) 2312 2321 Tel. +66 (0) 2990 8806-8 Tesco Lotus Navanakhon Branch Fax. +66 (0) 2533 1659 Tel. +66 (0) 2529 6187-9 BigC Samut Prakan Branch Fax. +66 (0) 2909 7097 Tel. +66 (0) 2702 1792-3, Rattanathibet Branch +66 (0) 2702 1859 Tel. +66 (0) 2969 9040-1, Tesco Lotus Rattana Thibet Branch Fax. +66 (0) 2702 1982 +66 (0) 2969 9043 Tel. +66 (0) 2950 1160, +66 (0) 2950 1297 Fax. +66 (0) 2969 9048 Fax. +66 (0) 2950 1157 BigC Samrong 2 Branch Tel. +66 (0) 2380 1100-2 Paolo Memorial Hospital Samut Tesco Lotus Lam Luk Ka Khlong 6 Fax. +66 (0) 2755 0240 Prakan Branch Branch Tel. +66 (0) 2182 7239-41 Tel. +66 (0) 2569 1694, +66 (0) 2569 1655 BigC Suk Sawat Branch Fax. +66 (0) 2182 7243 Fax. +66 (0) 2998 8164 Tel. +66 (0) 2463 0992-3 Fax. +66 (0) 2463 0980

Thanachart bank public company limited 297 Lam Luk Ka Branch Kamphaeng Saen Branch Thanon Songphon Branch Tel. +66 (0) 2994 5747-9 Tel. +66 (0) 3435 1100, +66 (0) 3435 1614 Tel. +66 (0) 3220 0427, +66 (0) 3221 1900 Fax. +66 (0) 2994 5753 Fax. +66 (0) 3435 1094 Fax. +66 (0) 3220 0426

Samut Prakan Branch Kaeng Khoi Branch Thanon Bowon Branch Tel. +66 (0) 2395 0045, +66 (0) 2702 8086 Tel. +66 (0) 3624 4176, Tel. +66 (0) 3451 1022, +66 (0) 3451 4205 Fax. +66 (0) 2395 2021 +66 (0) 3624 5127-8 Fax. +66 (0) 3451 1597 Fax. +66 (0) 3624 4178 Bang Kadi Industrial Park Branch Thanon Phahon Yothin (Saraburi) Tel. +66 (0) 2501 1254-6 Khao Wang Branch Branch Fax. +66 (0) 2501 1257 Tel. +66 (0) 3242 5622, +66 (0) 3242 8352 Tel. +66 (0) 3621 1166, Fax. +66 (0) 3242 8351 +66 (0) 3621 2420-1 Sam Yaek Phra Pradaeng Branch Fax. +66 (0) 3621 2421 Tel. +66 (0) 2463 2156-7, Khlong Khru Branch +66 (0) 2462 6284 Tel. +66 (0) 3482 7086, +66 (0) 3482 7093 Thanon Ratchawithi (Nakhon Pathom) Fax. +66 (0) 2462 5355 Fax. +66 (0) 3482 7094 Branch Tel. +66 (0) 3424 2348, +66 (0) 3425 1080 Samrong Branch Cha-am Branch Fax. +66 (0) 3425 1081 Tel. +66 (0) 2396 0278-80 Tel. +66 (0) 3243 4130-1, Fax. +66 (0) 2399 5103 +66 (0) 3247 1158 Thanon Setthakit 1 (Om Noi) Branch Fax. +66 (0) 3247 1185 Tel. +66 (0) 2810 4596-8 Samrong Nuea Branch Fax. +66 (0) 2810 4605 Tel. +66 (0) 2384 7141, +66 (0) 2384 7244 Dan Chang Branch Fax. +66 (0) 2384 7678 Tel. +66 (0) 3559 5497-8 Thanon Sut Banthat (Saraburi) Branch Fax. +66 (0) 3559 5499 Tel. +66 (0) 3631 4512, Si Mum Mueang-Rangsit Branch +66 (0) 3631 4256-7 Tel. +66 (0) 2531 9774, +66 (0) 2531 3445 Damnoen Saduak Branch Fax. +66 (0) 3631 5404 Fax. +66 (0) 2531 9636 Tel. +66 (0) 3225 3810-2 Fax. +66 (0) 3225 3813 Thanon Amarin (Ratchaburi) Branch Nam Daeng Branch Tel. +66 (0) 3233 7142, Tel. +66 (0) 2385 2511-2, Talat Chao Prom Branch +66 (0) 3232 5802-5 +66 (0) 2385 2920 Tel. +66 (0) 3524 4768, Fax. +66 (0) 3232 5801 Fax. +66 (0) 2385 2921 +66 (0) 3524 5162-3 Fax. +66 (0) 3524 5441 Thanon Ekkachai (Samut Sakhon) Ha Yaek Pak Kret Branch Branch Tel. +66 (0) 2583 7574, +66 (0) 2583 9144 Talat Tha Na (Nakhon Chai Si) Branch Tel. +66 (0) 3441 1127, Fax. +66 (0) 2584 3959 Tel. +66 (0) 3433 1107-9 +66 (0) 3442 5205-8 Fax. +66 (0) 3433 1151 Fax. +66 (0) 3442 5204 Imperial World Samrong Branch Tel. +66 (0) 2380 2943-5, Talat Mahachai Branch Thong Pha Phum Branch +66 (0) 2756 9023 Tel. +66 (0) 3481 0287-8 Tel. +66 (0) 3459 9073, +66 (0) 3459 9352 Fax. +66 (0) 2756 9024 Fax. +66 (0) 3481 0467 Fax. +66 (0) 3459 9613

Homework Ratchaphruek Branch Talat Suphan Buri Branch Tha Ruea-Kanchanaburi Branch Tel. +66 (0) 2447 6690-2 Tel. +66 (0) 3551 1330, +66 (0) 3552 3882 Tel. +66 (0) 3456 1130, +66 (0) 3456 2074 Fax. +66 (0) 2447 6693 Fax. +66 (0) 3552 3881 Fax. +66 (0) 3456 2073

CENTRAL REGION Thanon Khun San (Sing Buri) Branch Tha Ruea-Ayutthaya Branch Tel. +66 (0) 3651 1199, Tel. +66 (0) 3534 1019, +66 (0) 3534 1029 Krathum Baen Branch +66 (0) 3652 1200-1 Fax. +66 (0) 3534 1795 Tel. +66 (0) 3447 2422, Fax. +66 (0) 3652 1202 +66 (0) 3447 2651-2 Tha Muang Branch Fax. +66 (0) 3447 1511 Thanon Sai Phra (Nakhon Pathom) Tel. +66 (0) 3461 1119, Branch +66 (0) 3461 2417-8 Kanchanaburi Branch Tel. +66 (0) 3425 5317-9 Fax. +66 (0) 3461 2419 Tel. +66 (0) 3451 5096-100 Fax. +66 (0) 3425 4915 Fax. +66 (0) 3451 5102 Tha Yang Branch Tel. +66 (0) 3246 1445-6 Fax. +66 (0) 3246 1447

298 ANNUAL REPORT 2016 Thung Khok Branch Pak Phriao Branch Lat Bua Luang Branch Tel. +66 (0) 3556 8086-7 Tel. +66 (0) 3621 1833-4, Tel. +66 (0) 3537 9290-1 Fax. +66 (0) 3556 8069 +66 (0) 3622 1286 Fax. +66 (0) 3537 9292 Fax. +66 (0) 3622 1884 Nakhon Chai Si Branch Wat Thian Dat Branch Tel. +66 (0) 3433 1350-1 Phra Nakhon Si Ayutthaya Branch Tel. +66 (0) 2429 0216, +66 (0) 2429 0813 Fax. +66 (0) 3433 1349 Tel. +66 (0) 3521 3892-4, Fax. +66 (0) 2429 0847 +66 (0) 3524 4381 Nakhon Nayok Branch Fax. +66 (0) 3524 2136 Wiset Chai Chan Branch Tel. +66 (0) 3731 1131, +66 (0) 3731 2609 Tel. +66 (0) 3563 2801-4 Fax. +66 (0) 3731 2610 Phra Pathom Chedi Branch Fax. +66 (0) 3563 2805 Tel. +66 (0) 3425 4203-5, Nakhon Pathom Branch +66 (0) 3421 3541 Si Prachan Branch Tel. +66 (0) 3421 9131 Fax. +66 (0) 3425 9131 Tel. +66 (0) 3558 1150, +66 (0) 3558 1160 Fax. +66 (0) 3421 9160 Fax. +66 (0) 3558 1140 Phutthamonthon Sai 4 Branch Bang Sai Branch Tel. +66 (0) 2420 0444, +66 (0) 2420 5964 Salaya Branch Tel. +66 (0) 3528 2118, +66 (0) 3537 5226 Fax. +66 (0) 2813 1116 Tel. +66 (0) 2441 4557-9 Fax. +66 (0) 3537 5144 Fax. +66 (0) 2441 4560 Phetchaburi Branch Bang Pahan Branch Tel. +66 (0) 3242 7023-5 Samut Songkhram Branch Tel. +66 (0) 3538 1023-5 Fax. +66 (0) 3241 5455 Tel. +66 (0) 3471 1361, +66 (0) 3471 1510 Fax. +66 (0) 3538 1026 Fax. +66 (0) 3471 5555 Photharam Branch Bang Len Branch Tel. +66 (0) 3274 7591-4 Samut Sakhon Branch Tel. +66 (0) 3439 1026-9 Fax. +66 (0) 3274 7595 Tel. +66 (0) 3482 0359-60, Fax. +66 (0) 3439 1030 +66 (0) 3482 0365-6 Pho Hak Branch Fax. +66 (0) 3482 0445 Ban Phaeo Branch Tel. +66 (0) 3238 7021-2 Tel. +66 (0) 3448 1088, Fax. +66 (0) 3238 7023 Saraburi Branch +66 (0) 3448 0111-2 Tel. +66 (0) 3621 8500 Fax. +66 (0) 3448 1606 Mahachai Mueang Mai Branch Fax. +66 (0) 3631 6601 Tel. +66 (0) 3481 2620-2 Ban Pong Branch Fax. - Rojana Industrial Park Ayutthaya Tel. +66 (0) 3220 0429-31, Branch +66 (0) 3221 1993 Ratchaburi Branch Tel. +66 (0) 3571 9710-2 Fax. +66 (0) 3221 1035 Tel. +66 (0) 3231 1203-5 Fax. +66 (0) 3533 1651 Fax. +66 (0) 3231 1207 Ban Mo Branch Song Phi Nong Branch Tel. +66 (0) 3620 1141, Phetcharat Hospital (Phetchaburi) Tel. +66 (0) 3553 2890-3 +66 (0) 3620 1391-2 Branch Fax. +66 (0) 3553 2894 Fax. +66 (0) 3620 1142 Tel. +66 (0) 3241 0505-6, +66 (0) 3241 0514 Sam Chuk Branch BigC Lop Buri 2 Branch Fax. +66 (0) 3240 0618 Tel. +66 (0) 3557 1644, +66 (0) 3557 1666 Tel. +66 (0) 3678 0731-4 Fax. +66 (0) 3557 1099 Fax. +66 (0) 3678 0736 Robinson Ratchaburi Branch Tel. +66 (0) 3232 7711-13 Sam Phran Branch Prachuap Khiri Khan Branch Fax. +66 (0) 3232 7714 Tel. +66 (0) 3432 2781, +66 (0) 3432 2783 Tel. +66 (0) 3260 4464-7 Fax. +66 (0) 3432 2782 Fax. +66 (0) 3260 4468 Robinson Suphan Buri Branch Tel. +66 (0) 3545 4360-62 Sing Buri Branch Pran Buri Branch Fax. +66 (0) 3545 4364 Tel. +66 (0) 3653 0410, +66 (0) 3653 0413 Tel. +66 (0) 3262 1643, Fax. +66 (0) 3651 2021 +66 (0) 3262 2373-4 Lop Buri Branch Fax. +66 (0) 3262 2055 Tel. +66 (0) 3642 1020-2 Suphan Buri Branch Fax. +66 (0) 3642 1023 Tel. +66 (0) 3552 1575, +66 (0) 3552 1963 Fax. +66 (0) 3552 1964

Thanachart bank public company limited 299 Sena Branch Chai Nat Branch Tesco Lotus Phitsanulok Branch Tel. +66 (0) 3520 1035, +66 (0) 3520 1748 Tel. +66 (0) 5641 6650-3 Tel. +66 (0) 5525 3701-3 Fax. +66 (0) 3520 1749 Fax. +66 (0) 5641 6654 Fax. +66 (0) 5525 3705

Nong Khae Branch Central Plaza Phitsanulok Branch Nakhon Sawan Branch Tel. +66 (0) 3637 1504, +66 (0) 3637 1517 Tel. +66 (0) 5533 8412-4 Tel. +66 (0) 5631 3848 Fax. +66 (0) 3637 1516 Fax. +66 (0) 5521 6612 Fax. +66 (0) 5631 3850

Hua Hin Branch Talat Varorot Branch Nan Branch Tel. +66 (0) 3251 1098, +66 (0) 3251 2218 Tel. +66 (0) 5387 4018-9, Tel. +66 (0) 5471 1095-9 Fax. +66 (0) 3251 2219 +66 (0) 5387 4002 Fax. +66 (0) 5471 1098 Fax. +66 (0) 5387 4006 Ayutthaya Branch Bo Sang Branch Tel. +66 (0) 3525 2431-4, Tak Branch Tel. +66 (0) 5333 7004-6 +66 (0) 3525 2359 Tel. +66 (0) 5551 1275, +66 (0) 5551 1360 Fax. +66 (0) 5333 7007 Fax. +66 (0) 3525 2437 Fax. +66 (0) 5551 3486 BigC Kamphaeng Phet Branch Ayutthaya Park Branch TaKhli Branch Tel. +66 (0) 5585 3928-30 Tel. +66 (0) 3522 9560-1 Tel. +66 (0) 5626 1093, +66 (0) 5626 1133 Fax. +66 (0) 5585 3932 Fax. +66 (0) 3522 9554 Fax. +66 (0) 5626 2383 BigC Chiang Mai Branch Om Yai Branch Thanon Chang Chlan (Chiang Mai) Tel. +66 (0) 5324 1248-9, Tel. +66 (0) 2420 4920, +66 (0) 2420 4930 Branch +66 (0) 5324 1336 Fax. +66 (0) 2811 6538 Tel. +66 (0) 5382 0538-41 Fax. +66 (0) 5324 1337 Fax. +66 (0) 5382 0543 Om Noi Branch BigC Hang Dong Branch Tel. +66 (0) 2420 1450, Thanon Nimmanhemin Branch Tel. +66 (0) 5380 4092, +66 (0) 5380 4094 +66 (0) 2420 2565-6 Tel. +66 (0) 5322 5483, Fax. +66 (0) 5380 4086 Fax. +66 (0) 2420 1132 +66 (0) 5340 0672-4 Fax. +66 (0) 5340 0675 Pak Nam Pho Branch Amphawa Branch Tel. +66 (0) 5621 2082, Tel. +66 (0) 3475 1177-8, Thanon Barom Trai Lokanart 2 +66 (0) 5621 2847-8 +66 (0) 3475 1640-1 (Phitsanulok) Branch Fax. +66 (0) 5621 3516 Fax. +66 (0) 3475 1642 Tel. +66 (0) 5521 8645-9 Fax. +66 (0) 5521 8648 Fang Branch Ang Thong Branch Tel. +66 (0) 5345 1007-9 Tel. +66 (0) 3561 1099, Thanon Bunyawat Branch Fax. +66 (0) 5338 2041 +66 (0) 3561 2301-3 Tel. +66 (0) 5421 7444, +66 (0) 5421 8790 Fax. +66 (0) 3561 1100 Fax. +66 (0) 5422 4667 Phran Kratai Branch Tel. +66 (0) 5576 2111-12 U Thong Branch Thanon Wet Suwan (Nakhon Sawan) Fax. +66 (0) 5576 2113 Tel. +66 (0) 3555 1299, +66 (0) 3555 1618 Branch Fax. +66 (0) 3555 1868 Tel. +66 (0) 5622 2998, +66 (0) 5622 7835 Phayao Branch Fax. +66 (0) 5623 1462 Tel. +66 (0) 5443 1124, NORTHERN REGION +66 (0) 5448 2386-8 Thanon Sueksa Charoen (Phetchabun) Fax. +66 (0) 5443 1272 Kamphaeng Phet Branch Branch Tel. +66 (0) 5571 3325-6 Tel. +66 (0) 5674 4076-8 Phichit Branch Fax. +66 (0) 5571 3368 Fax. +66 (0) 5672 2415 Tel. +66 (0) 5661 1033, +66 (0) 5661 1651 Fax. +66 (0) 5661 1127 Khuang Sing Branch Thanon Ekathossaros (Phitsanulok) Tel. +66 (0) 5321 0826-8, Branch Phitsanulok Branch +66 (0) 5321 6586 Tel. +66 (0) 5524 3871-2, Tel. +66 (0) 5530 4313 Fax. +66 (0) 5322 2718 +66 (0) 5525 9322 Fax. +66 (0) 5530 4279 Fax. +66 (0) 5524 4268 Chong Khae Branch Phetchabun Branch Tel. +66 (0) 5626 9163, Tha Phae Branch Tel. +66 (0) 5672 3103 +66 (0) 5626 9128-30 Tel. +66 (0) 5323 5755 Fax. +66 (0) 5672 3104 Fax. +66 (0) 5626 9127 Fax. +66 (0) 5323 5757

300 ANNUAL REPORT 2016 Phrae Branch Lom Sak Branch The Mall Nakhon Ratchasima Branch Tel. +66 (0) 5452 2004, +66 (0) 5452 2006 Tel. +66 (0) 5670 1540, +66 (0) 5670 4207 Tel. +66 (0) 4439 3931-3 Fax. +66 (0) 5452 2005 Fax. +66 (0) 5670 4513 Fax. +66 (0) 4439 3934

Phaisali Branch Hankha Branch Talat Pak Chong Branch Tel. +66 (0) 5625 9721-2 Tel. +66 (0) 5645 1040, +66 (0) 5645 1500 Tel. +66 (0) 4431 3798-9, Fax. +66 (0) 5625 9723 Fax. +66 (0) 5645 1499 +66 (0) 4431 3855-6 Fax. +66 (0) 4431 3255 Mae Sot Branch Ha Yaek Phokhun Mengrai (Chiang Tel. +66 (0) 5553 3311-3, Rai) Branch Thanon Klang Mueang (Khon Kaen) +66 (0) 5553 3319 Tel. +66 (0) 5374 5244-5 Branch Fax. +66 (0) 5553 3320 Fax. +66 (0) 5374 5247 Tel. +66 (0) 4322 8266, +66 (0) 4332 2630 Fax. +66 (0) 4332 2386 Mae Sai Branch Hang Dong Branch Tel. +66 (0) 5373 1675, +66 (0) 5373 1904 Tel. +66 (0) 5343 4035-7 Thanon Kuang Heng (Si Sa Ket) Fax. +66 (0) 5373 1905 Fax. +66 (0) 5343 4038 Branch Tel. +66 (0) 4561 7861-3 Lampang Branch Hang Nam Sakorn Branch Fax. +66 (0) 4561 7860 Tel. +66 (0) 5431 8927-9 Tel. +66 (0) 5643 1232-3 Fax. +66 (0) 5431 8960 Fax. +66 (0) 5643 1234 Thanon Prachak (Nong Khai) Branch Tel. +66 (0) 4241 2890-4 Lamphun Branch Uttaradit Branch Fax. +66 (0) 4241 2895 Tel. +66 (0) 5351 0371, +66(0) 5351 2060 Tel. +66 (0) 5544 1777, +66 (0) 5544 2240 Fax. +66 (0) 5351 0372 Fax. +66 (0) 5541 4096 Thanon Mittraphap (Nakhon Ratchasima) Branch Wang Chao Branch Uthai Thani Branch Tel. +66 (0) 4425 9003-4, Tel. +66 (0) 5555 6059, +66 (0) 5555 6061 Tel. +66 (0) 5657 1616-9 +66 (0) 4425 1376 Fax. +66 (0) 5555 6063 Fax. +66 (0) 5657 1620 Fax. +66 (0) 4425 9002

Sawankhalok Branch Happy Plaza (Phichit) Branch Thanon Si Chan Branch Tel. +66 (0) 5564 1478-9, Tel. +66 (0) 5661 6471-3 Tel. +66 (0) 4322 7275-8 +66 (0) 5564 2512 Fax. +66 (0) 5665 0987 Fax. +66 (0) 4322 7279 Fax. +66 (0) 5564 1480 NORTH EASTERN REGION Thanon Sappasit Branch San Sai Branch Tel. +66 (0) 4524 4315, +66 (0) 4524 4729 Tel. +66 (0) 5349 1457, +66 (0) 5349 1934 Kalasin Branch Fax. +66 (0) 4524 3193 Fax. +66 (0) 5349 1728 Tel. +66 (0) 4382 1080-1, +66 (0) 4382 1420 Thanon Suranari Branch San Pa Khoi Branch Fax. +66 (0) 4381 6584 Tel. +66 (0) 4424 2560, +66 (0) 4424 2904 Tel. +66 (0) 5324 4157, Fax. +66 (0) 4425 6706 +66 (0) 5324 9167-8 Khon Kaen Branch Fax. +66 (0) 5324 1157 Tel. +66 (0) 4332 4321, +66 (0) 4322 6888 Thanon Na Mueang (Khon Kaen) Fax. +66 (0) 4332 5919 Branch Sukhothai Branch Tel. +66 (0) 4322 1163, +66 (0) 4322 3234 Tel. +66 (0) 5561 6022, Chum Phae Branch Fax. +66 (0) 4322 1822 +66 (0) 5562 2465-6 Tel. +66 (0) 4331 1684, +66 (0) 4331 2292 Fax. +66 (0) 5562 2469 Fax. +66 (0) 4331 2395 Thanon Hai Srok (Roi Et) Branch Tel. +66 (0) 4352 3335-7 Nong Ben Branch Central Plaza Khon Kaen Branch Fax. +66 (0) 4352 3339 Tel. +66 (0) 5629 6163-5 Tel. +66 (0) 4328 8361-3 Fax. +66 (0) 5629 6166 Fax. +66 (0) 4328 8365 Thanon Udon Dutsadi Branch Tel. +66 (0) 4224 7574, +66 (0) 4224 7732 Lom Kao Branch Central Plaza Udon Thani Branch Fax. +66 (0) 4224 7510 Tel. +66 (0) 5670 8492-93 Tel. +66 (0) 4292 1344, Fax. +66 (0) 5670 8494 +66 (0) 4292 1346-7 Tesco Lotus Khorat Branch Fax. +66 (0) 4292 1369 Tel. +66 (0) 4426 3564, +66 (0) 4426 3567 Fax. +66 (0) 4426 3565

Thanachart bank public company limited 301 Tesco Lotus Chaiyaphum Branch Roi Et Branch Amnat Charoen Branch Tel. +66 (0) 4483 8324-6 Tel. +66 (0) 4303 3213-5 Tel. +66 (0) 4551 1721-4 Fax. +66 (0) 4481 3352 Fax. +66 (0) 4351 8644 Fax. +66 (0) 4551 1726

Nakhon Phanom Branch Loei Branch Udon Thani Branch Tel. +66 (0) 4251 6125-8 Tel. +66 (0) 4283 0851-3 Tel. +66 (0) 4234 2550 Fax. +66 (0) 4251 6129 Fax. +66 (0) 4281 4472 Fax. +66 (0) 4234 2398

Nakhon Ratchasima Branch Wang Sam Mo Branch Ubon Ratchathani Branch Tel. +66 (0) 4426 9797 Tel. +66 (0) 4238 7486-7 Tel. +66 (0) 4531 9401-3 Fax. +66 (0) 4426 9790 Fax. +66 (0) 4238 7488 Fax. +66 (0) 4531 9405

Nang Rong Branch Warin Chamrap Branch EASTERN REGION Tel. +66 (0) 4463 1049, Tel. +66 (0) 4532 2788, +66 (0) 4463 1586-8 +66 (0) 4532 2791-3 Kabin Buri Branch Fax. +66 (0) 4463 1050 Fax. +66 (0) 4532 2790 Tel. +66 (0) 3728 0796, +66 (0) 3728 0798 Fax. +66 (0) 3728 0799 Ban Phai Branch Si Sa Ket Branch Tel. +66 (0) 4327 4038-40 Tel. +66 (0) 4562 0500-2 Ko Chang Branch Fax. +66 (0) 4327 4043 Fax. +66 (0) 4564 4197 Tel. +66 (0) 3955 1026-9 Fax. +66 (0) 3955 1030 BigC Buri Ram Branch Sakon Nakhon Branch Tel. +66 (0) 4469 0450, +66 (0) 4469 0458 Tel. +66 (0) 4271 6446-50 Klaeng Branch Fax. +66 (0) 4469 0469 Fax. +66 (0) 4271 6451 Tel. +66 (0) 3888 7003-5 Fax. +66 (0) 3867 8002 BigC Yasothon Branch Sang Khom Branch Tel. +66 (0) 4572 4361, +66 (0) 4572 4376 Tel. +66 (0) 4227 6222-4 304 Industrial Park Branch Fax. +66 (0) 4572 5067 Fax. +66 (0) 4227 6225 Tel. +66 (0) 3741 4378-80 Fax. +66 (0) 3741 4381 BigC Udon Thani Branch Sam Yaek Pak Thong Chai Branch Tel. +66 (0) 4212 8551-3 Tel. +66 (0) 4421 3993-5, Chanthaburi Branch Fax. +66 (0) 4212 8548 +66 (0) 4428 1815-6 Tel. +66 (0) 3960 7463-5 Fax. +66 (0) 4421 3994 Fax. +66 (0) 3960 7466 Bueng Kan Branch Tel. +66 (0) 4249 1779, +66 (0) 4249 1781 Surin Branch Chachoengsao Branch Fax. +66 (0) 4240 3097 Tel. +66 (0) 4451 4455-8 Tel. +66 (0) 3851 5835-7 Fax. +66 (0) 4451 4459 Fax. +66 (0) 3851 5838 Buri Ram Branch Tel. +66 (0) 4460 1555, +66 (0) 4460 2000 Surin Plaza Branch Chon Buri Branch Fax. +66 (0) 4460 2123 Tel. +66 (0) 4453 8517-20 Tel. +66 (0) 3827 6930-6 Fax. +66 (0) 4453 8521 Fax. +66 (0) 3827 6935 Pak Chong Branch Tel. +66 (0) 4431 6866-9 Suwannakhuha Branch Central Festival Pattaya Beach Fax. +66 (0) 4431 6859 Tel. +66 (0) 4237 2515-6 Branch Fax. +66 (0) 4237 2517 Tel. +66 (0) 3300 3571-3 Maha Sarakham Branch Fax. +66 (0) 3804 3194 Tel. +66 (0) 4374 0681-3 Nong Khai Branch Fax. +66 (0) 4372 2958 Tel. +66 (0) 4246 0119-22 Central Chon Buri Branch Fax. +66 (0) 4246 0199 Tel. +66 (0) 3805 3531-3 Mukdahan Branch Fax. +66 (0) 3805 3535 Tel. +66 (0) 4263 1367-70 Nong Bua Lam Phu Branch Fax. +66 (0) 4263 1374 Tel. +66 (0) 4231 1107, +66 (0) 4231 1166 Trat Branch Fax. +66 (0) 4231 1657 Tel. +66 (0) 3953 1641-3 Yasothon Branch Fax. +66 (0) 3952 2662 Tel. +66 (0) 4571 4051-6 Ha Yaek Nampu (Udon Thani) Branch Fax. +66 (0) 4571 4054 Tel. +66 (0) 4222 1703, Thanon Khwang (Chanthaburi) Branch +66 (0) 4224 7211-2 Tel. +66 (0) 3932 5925, +66 (0) 3931 1079 Fax. +66 (0) 4224 7209 Fax. +66 (0) 3932 5926

302 ANNUAL REPORT 2016 Thanon Chetchamnong (Chon Buri) BigC Chachoengsao 2 Branch Wang Nam Yen Branch Branch Tel. +66 (0) 3851 5188, +66 (0) 3851 5190 Tel. +66 (0) 3725 1543-7 Tel. +66 (0) 3879 2203-4 Fax. +66 (0) 3851 5219 Fax. +66 (0) 3725 1546 Fax. +66 (0) 3879 2178 BigC Chon Buri 2 Branch Wang Sombun Branch Thanon Phraya Satcha (Chon Buri) Tel. +66 (0) 3878 3032-4 Tel. +66 (0) 3744 9193-4 Branch Fax. +66 (0) 3838 7923 Fax. +66 (0) 3744 9195 Tel. +66 (0) 3879 2214-5 Fax. +66 (0) 3879 2216 BigC Pattaya Tai Branch Sa Kaeo Branch Tel. +66 (0) 3837 4270, +66 (0) 3837 4273 Tel. +66 (0) 3724 1061, Thanon Sukhumwit (Chon Buri) Fax. +66 (0) 3837 4463 +66 (0) 3724 1585-6 Branch Fax. +66 (0) 3724 1062 Tel. +66 (0) 3879 6066, +66 (0) 3879 5639 BigC Rayong Branch Fax. +66 (0) 3827 7841 Tel. +66 (0) 3887 3094, +66 (0) 3887 3301 Saha Pathana Industrial Park Fax. +66 (0) 3862 2659 (Si Racha) Branch Thanon Sukhumwit (Rayong) Branch Tel. +66 (0) 3848 1826-8 Tel. +66 (0) 3861 4913-4 BigC Sa Kaeo Branch Fax. +66 (0) 3848 1829 Fax. +66 (0) 3861 2342 Tel. +66 (0) 3742 1761-3 Fax. +66 (0) 3742 1765 Sattahip Branch Thanon Sukhumwit (Si Racha) Branch Tel. +66 (0) 3843 7321, +66 (0) 3843 7986 Tel. +66 (0) 3877 3415-8 Prachin Buri Branch Fax. +66 (0) 3843 7717 Fax. +66 (0) 3877 3421 Tel. +66 (0) 3721 1300, +66 (0) 3721 3855-9 Sam Yaek Klaeng Branch Thanon Surasak 1 (Si Racha) Branch Fax. +66 (0) 3721 3080 Tel. +66 (0) 3888 4503-5 Tel. +66 (0) 3831 1872, Fax. +66 (0) 3888 4506 +66 (0) 3831 2206-7 Pluak Daeng Branch Fax. +66 (0) 3831 1871 Tel. +66 (0) 3865 9768-9 Nong Mon Branch Fax. +66 (0) 3865 9770 Tel. +66 (0) 3839 2302, +66 (0) 3839 2125 Tesco Lotus Bo Win Branch Fax. +66 (0) 3839 2501 Tel. +66 (0) 3811 7133-5 Pacific Park (Si Racha) Branch Fax. +66 (0) 3811 7136 Tel. +66 (0) 3831 3226, +66 (0) 3831 3236 Huai Sathon Branch Fax. +66 (0) 3831 3245 Tel. +66 (0) 3939 5381-3 Tesco Lotus Pattaya Nuea Branch Fax. +66 (0) 3939 5384 Tel. +66 (0) 3841 1410, +66 (0) 3841 1316 Pranom Sarakham Branch Fax. +66 (0) 3841 1423 Tel. +66 (0) 3855 1005, Hat Pattaya (Nuea) Branch +66 (0) 3855 1824-5 Tel. +66 (0) 3841 5772-4, Tesco Lotus Amata Nakhon Branch Fax. +66 (0) 3855 1659 +66 (0) 3841 5884 Tel. +66 (0) 3845 7485-7 Fax. +66 (0) 3841 5885 Fax. +66 (0) 3845 7489 Pattaya Branch Tel. +66 (0) 3872 0334, +66 (0) 3872 0339 Laem Chabang Branch Na Kluea (Pattaya) Branch Fax. +66 (0) 3842 9973 Tel. +66 (0) 3840 0740-3 Tel. +66 (0) 3822 6060-1 Fax. +66 (0) 3840 0745 Fax. +66 (0) 3822 6117 Pattaya Nuea Branch Tel. +66 (0) 3842 8901-2, Laem Thong Bang Saen Branch Nikhom Phatthana Branch +66 (0) 3842 8905 Tel. +66 (0) 3815 3930-1, Tel. +66 (0) 3863 6090-1 Fax. +66 (0) 3842 8963 +66 (0) 3815 3936 Fax. +66 (0) 3863 6092 Fax. +66 (0) 3815 3994 PASSiONE Rayong Branch Bang Pla Soi Branch Tel. +66 (0) 3802 3405-7 Aranyapraphet Branch Tel. +66 (0) 3827 1819, +66 (0) 3827 6651 Fax. +66 (0) 3802 3409 Tel. +66 (0) 3722 3505-7 Fax. +66 (0) 3827 6652 Fax. +66 (0) 3722 3511 Map Ta Phut Branch Ban Bueng Branch Tel. +66 (0) 3868 2531-3 Kabin Buri Industrial (Nongki) Branch Tel. +66 (0) 3844 3060-1, Fax. +66 (0) 3868 1995 Tel. +66 (0) 3745 5428-29, +66 (0) 3844 4015-6 +66 (0) 3745 5420-1 Fax. +66 (0) 3844 3713 Rayong Branch Fax. +66 (0) 3745 5439 Tel. +66 (0) 3886 4114 Fax. +66 (0) 3886 4115 Harbor Mall Laem Chabang Branch Tel. +66 (0) 3849 3194-6 Fax. +66 (0) 3314 5215

Thanachart bank public company limited 303 SOUTHERN REGION Takua Pa Branch Thanon Sala Daeng (Chumphon) Tel. +66 (0) 7642 5176, Branch Krabi Branch +66 (0) 7643 1503-5 Tel. +66 (0) 7750 5051-2 Tel. +66 (0) 7563 2838-41 Fax. +66 (0) 7642 5177 Fax. +66 (0) 7750 5054 Fax. +66 (0) 7563 2835 Thanon Chuti Uthit (Hat Yai) Branch Thanon Sai Buri (Songkhla) Branch Kantang Branch Tel. +66 (0) 7434 6396-8 Tel. +66 (0) 7431 1638, Tel. +66 (0) 7525 1250, +66 (0) 7525 1640 Fax. +66 (0) 7434 6393 +66 (0) 7432 3735-6 Fax. +66 (0) 7525 1644 Fax. +66 (0) 7431 3543 Thanon Chon Kasem (Surat Thani) Ko Tao Branch Branch Thalang Branch Tel. +66 (0) 7745 6533-4 Tel. +66 (0) 7728 3627-30 Tel. +66 (0) 7631 1020, +66 (0) 7631 1432 Fax. +66 (0) 7745 6784 Fax. +66 (0) 7728 4080 Fax. +66 (0) 7631 1433

Ko Pha-ngan Branch Thanon Thawi Wong (Hat Patong) Thap Thiang (Trang) Branch Tel. +66 (0) 7737 7051, Branch Tel. +66 (0) 7521 8059, +66 (0) 7521 1321 +66 (0) 7723 8186-7 Tel. +66 (0) 7629 2116-8 Fax. +66 (0) 7521 1320 Fax. +66 (0) 7737 7052 Fax. +66 (0) 7634 5687 Tha Ruea Bang Rak (Ko Samui) Ko Lanta Branch Thanon Thammanun Withi (Hat Yai) Branch Tel. +66 (0) 7566 8152 Branch Tel. +66 (0) 7741 7184 Fax. +66 (0) 7566 8151 Tel. +66 (0) 7423 5549, Fax. +66 (0) 7741 7185 +66 (0) 7435 5396-7 Ko Samui Branch Fax. +66 (0) 7424 3648 Thai Mueang Branch Tel. +66 (0) 7742 1110-1, Tel. +66 (0) 7657 1234-7 +66 (0) 7742 0363 Thanon Punnakan (Hat Yai) Branch Fax. +66 (0) 7657 1215 Fax. +66 (0) 7742 1112 Tel. +66 (0) 7450 0040, +66 (0) 7450 0044-5 Thung Song Branch Khao Lak Branch Fax. +66 (0) 7450 0089 Tel. +66 (0) 7541 1087, +66 (0) 7541 1956 Tel. +66 (0) 7648 5493-4 Fax. +66 (0) 7541 1054 Fax. +66 (0) 7648 5560 Thanon Montri Branch Tel. +66 (0) 7621 2993, +66 (0) 7621 5393 Tesco Lotus Krabi Branch Khian Sa Branch Fax. +66 (0) 7621 3149 Tel. +66 (0) 7565 0833, Tel. +66 (0) 7738 7407-8 +66 (0) 7565 0836-7 Fax. +66 (0) 7738 7409 Thanon Ratthakan (Hat Yai) Branch Fax. +66 (0) 7565 0834 Tel. +66 (0) 7434 9070-2, Central Festival Phuket Branch +66 (0) 7426 1751 Tesco Lotus Chao Fa (Phuket) Tel. +66 (0) 7620 9290, +66 (0) 7620 9292 Fax. +66 (0) 7426 1752 Branch Fax. +66 (0) 7620 9291 Tel. +66 (0) 7626 8059-61 Thanon Ratsada (Phuket) Branch Fax. +66 (0) 7621 9248 Central Hat Yai Branch Tel. +66 (0) 7621 9664, Tel. +66 (0) 7423 9010 +66 (0) 7625 6873-5 Tesco Lotus Chumphon Branch Fax. +66 (0) 7423 0414 Fax. +66 (0) 7621 9731 Tel. +66 (0) 7765 9930-2 Fax. +66 (0) 7765 9933 Diana Si Phuwanart Branch Thanon Ramet (Phatthalung) Branch Tel. +66 (0) 7446 5316-8 Tel. +66 (0) 7462 6952-4 Tesco Lotus Choeng Thale (Phuket) Fax. +66 (0) 7446 5319 Fax. +66 (0) 7461 5451 Branch Tel. +66 (0) 7632 5919-21 Trang Branch Thanon Ratchadamnoen Fax. +66 (0) 7627 0572 Tel. +66 (0) 7522 3240-3 (Nakhon Si Thammarat) Branch Fax. +66 (0) 7522 3244 Tel. +66 (0) 7534 2779-80, Tesco Lotus Thung Song Branch +66 (0) 7535 6119 Tel. +66 (0) 7541 3003-5 Talat Tha Phae Fax. +66 (0) 7535 6741 Fax. +66 (0) 7541 3007 (Nakhon Si Thammarat) Branch Tel. +66 (0) 7538 3271, +66 (0) 7538 3316 Thanon Si Wichai (Surat Thani) Tesco Lotus Phuket Branch Fax. +66 (0) 7538 3110 Branch Tel. +66 (0) 7625 5472-4 Tel. +66 (0) 7720 6488, Fax. +66 (0) 7652 3400 +66 (0) 7726 4170-1 Fax. +66 (0) 7720 6671

304 ANNUAL REPORT 2016 Tesco Lotus Songkhla Branch Phatthalung Branch Sai Buri Branch Tel. +66 (0) 7430 7937-9 Tel. +66 (0) 7461 3082, Tel. +66 (0) 7341 1021, Fax. +66 (0) 7435 2735 +66 (0) 7461 3951-2 +66 (0) 7341 1314-5 Fax. +66 (0) 7461 1918 Fax. +66 (0) 7341 1138 Nakhon Si Thammarat Branch Tel. +66 (0) 7532 2689-90 Phunphin Branch Surat Thani Branch Fax. +66 (0) 7532 2144 Tel. +66 (0) 7731 1449, Tel. +66 (0) 7721 4581-7 +66 (0) 7731 2368-70 Fax. +66 (0) 7721 3560 Narathiwat Branch Fax. +66 (0) 7731 1537 Tel. +66 (0) 7351 2013, Su-ngai Kolok Branch +66 (0) 7351 4463-5 Phuket Branch Tel. +66 (0) 7361 1359, +66 (0) 7361 1002 Fax. +66 (0) 7351 2014 Tel. +66 (0) 7626 1570-5 Fax. +66 (0) 7361 3632 Fax. +66 (0) 7626 1576 Ban Don Branch Lang Suan Branch Tel. +66 (0) 7721 0365, Mae Nam Branch Tel. +66 (0) 7754 1965, +66 (0) 7728 1551-2 Tel. +66 (0) 7724 8375, +66 (0) 7733 2259 +66 (0) 7758 1417-8 Fax. +66 (0) 7721 0366 Fax. +66 (0) 7733 2260 Fax. +66 (0) 7754 1987

Ban Na Doem Branch Yala Branch Huai Yot Branch Tel. +66 (0) 7735 9013, +66 (0) 7735 9015 Tel. +66 (0) 7321 2592, +66 (0) 7321 3375 Tel. +66 (0) 7523 5033-5, Fax. +66 (0) 7735 9014 Fax. +66 (0) 7321 1691 +66 (0) 7527 1013 Fax. +66 (0) 7527 1064 BigC Pattani Branch Yan Ta Khao Branch Tel. +66 (0) 7333 8004, Tel. +66 (0) 7528 1003, +66 (0) 7528 1101 Ha Yaek Chalong (Phuket) Branch +66 (0) 7331 3982-3 Fax. +66 (0) 7528 1102 Tel. +66 (0) 7638 3222, +66 (0) 7638 3431 Fax. +66 (0) 7333 8005 Fax. +66 (0) 7638 3348 Ranong Branch BigC Satun Branch Tel. +66 (0) 7781 1198, +66 (0) 7781 1752 Hat Chaweng Branch Tel. +66 (0) 7472 5251-3 Fax. +66 (0) 7781 1751 Tel. +66 (0) 7723 0405, Fax. +66 (0) 7472 5254 +66 (0) 7723 1089-90 Robinson Trang Branch Fax. +66 (0) 7742 2051 BigC Hat Yai 2 Branch Tel. +66 (0) 7559 0128-9, Tel. +66 (0) 7446 9235-7 +66 (0) 7559 0120 Hat Yai Branch Fax. +66 (0) 7455 5609 Fax. +66 (0) 7522 6157 Tel. +66 (0) 7435 4690 Fax. +66 (0) 7435 4696 Betong Branch Robinson Ocean Nakhon Si Tel. +66 (0) 7323 1120, +66 (0) 7323 1416 Thammarat Branch Hat Yai Nai Branch Fax. +66 (0) 7323 0914 Tel. +66 (0) 7534 1875, Tel. +66 (0) 7436 1313-5 +66 (0) 7534 1960-1 Fax. +66 (0) 7425 9704 Pattani Branch Fax. +66 (0) 7534 1876 Tel. +66 (0) 7333 5950-1, Hat Karon Branch +66 (0) 7333 1851 Wiang Sa Branch Tel. +66 (0) 7639 6981, Fax. +66 (0) 7333 5949 Tel. +66 (0) 7736 1461-2, +66 (0) 7639 6485-6 +66 (0) 7736 3550 Fax. +66 (0) 7639 6980 Pak Phanang Branch Fax. +66 (0) 7725 7268 Tel. +66 (0) 7551 7132, +66 (0) 7551 8023 Hat Lamai Branch Fax. +66 (0) 7551 8021 Songkhla Branch Tel. +66 (0) 7745 8159-60, Tel. +66 (0) 7444 1198-9, +66 (0) 7745 8162-4 Patong Branch +66 (0) 7444 1232 Fax. +66 (0) 7745 8161 Tel. +66 (0) 7629 0585-7 Fax. +66 (0) 7444 1233 Fax. +66 (0) 7629 0588 Ao Nang Branch Sadao Branch Tel. +66 (0) 7566 1434, Phang-nga Branch Tel. +66 (0) 7441 4315-7 +66 (0) 7566 1430-2 Tel. +66 (0) 7641 1295, Fax. +66 (0) 7446 0501 Fax. +66 (0) 7566 1433 +66 (0) 7641 1527-8 Fax. +66 (0) 7641 1326 Sam Kong (Phuket) Branch Ao Luek Branch Tel. +66 (0) 7622 2838-40 Tel. +66 (0) 7561 0739, Fax. +66 (0) 7622 2841 +66 (0) 7563 4335-7 Fax. +66 (0) 7561 0755

Thanachart bank public company limited 305 Summary of Specified Items per form 56-2 in 2016 Annual Report

Items Page

1. Policy and Overall Business Operation 039

2. Nature of Business Operations 044

3. Risk Factors 058

4. General and Other Key Information 130

5. Shareholders 137

6. Dividend Payment Policy 139

7. Management Structures 097

8. Corporate Governance 082

9. Corporate Social Responsibility 070

10. Internal Control and Risk Management 094

11. Related Transactions 093

12. Financial Highlight 006

13. Management Discussion and Analysis 024

306 ANNUAL REPORT 2016 444 MBK Tower, Phayathai Road, Wangmai, Pathumwan, Bangkok 10330, THAILAND Tel. +66 (0) 2217 8000 Fax +66 (0) 2217 8333 Thanachart Contact Center Call 1770 Thanachart Smartcar Call Center +66 (0) 2217 5555 www.thanachartbank.co.th Registration No. 0107536001401