Financial Highlights
Improved earnings capability Continued improved margin Net profit
bn 5.0 NII (LHS) 0.4 NIM (RHS) THB 2007 2008
-5.0 bn 20 4.0% THB 2.55% -15 2.24% 2.70% 15 2.30% 3.0% 2.29% -25 10 2.0%
-35 5 1.0% -45 -43.7 0 0.0% 2004 2005 2006 -55 2007 2008
Better cost income ratio Improved liquidity
200% Cost to income LDR Cost to income (exc. extra items) LDR+ST borrowing 105% 154% 150% 105% 100% 100% 99%
95% 100% 95% 93% 94% 75% 90% 65% 62% 90% 89% 90% 50% 85% 87%
80% Dec 50 Mar 50 0% Jun 51 Sep 51 Dec 51 2007 2008
A n n u a l R e p o r t 2 0 0 8 (Unit : Million Baht) Consolidated Financial Statements Bank Only Financial Statements 2008 2007 2006 2008 2007 2006
Financial Statement Information Total Assets 601,985 622,161 751,877 599,389 619,151 750,689 Total Liabilities 556,939 577,641 703,877 555,132 575,829 703,528 Shareholders’ Equity 45,046 44,520 48,000 44,257 43,322 47,161 Interest and Dividend Income 29,152 33,724 36,111 29,181 33,429 36,052 Interest Expenses 13,359 17,282 20,970 13,179 17,293 20,975 Net Interest and Dividend Income 15,793 16,442 15,141 16,002 16,136 15,077 Non-Interest Income 7,014 6,591 6,323 5,745 2,121 3,919 Fees and service 5,011 5,420 4,734 4,136 4,340 3,848 income Gain on exchange rate 951 1,095 787 940 1,115 788 Other income 1,052 76 802 669 (3,334) (717) Non-Interest Expenses 17,114 35,459 20,431 16,386 31,172 19,661 Non-interest expenses exclude 14,889 15,037 14,893 14,206 14,468 14,224 loss on impairment of assets/ goodwill and obligation from the transferred non-performing assets Total Income 36,166 40,315 42,434 34,926 35,550 39,971 Net Profit (Loss) 424 (43,677) (12,292) 289 (43,916) (12,515)
Financial Ratio Net Profit (Loss) to Total Income Ratio (%) 1.17 (108.34) (28.97) 0.82 (123.53) (31.31) Return on Equity (%) 0.95 (94.42) (24.77) 0.66 (97.07) (25.54) Return on Asset (%) 0.07 (6.36) (1.68) 0.05 (6.41) (1.71) Basic Earnings (Loss) Per Share (Baht) 0.01 (2.60) (0.86) 0.01 (2.61) (0.87) Diluted Earnings (Loss) Per Share (Baht) 0.01 (2.31) (0.75) 0.01 (2.33) (0.76) Book Value Per Share (Baht) 1.03 1.02 2.59 1.02 1.00 2.55 NPLs to Loans (%) 14.30 16.06 11.32 13.55 15.17 10.23 Net NPLs to Net Loans (%) 7.53 8.88 7.18 6.98 8.21 6.33 Capital Adequacy Ratio (%) 16.81 14.35 10.43 13.91* 14.43 10.44
* *Note: As required by BOT, the Bank only CAR ratio in 2008 includes the effect of using the Basel II approach.
T M B B a n k P u b l i c C o m p a n y L i m i t e d
Board of Directors
Nomination, Remuneration Credit Committee and Corporate Governance Committee
Chief Executive Officer
Chief Retail Banking Chief SME Banking Chief Wholesale Banking Officer (CRBO) Officer (CSBO) Officer (CWBO)
Corporate Banking Branch Banking SME Business Relationship Management Group Marketing and Product Group Group Retail Marketing Group Lending & Structured SME Business Products Group Relationship Wealth Management Management Group Transactional Banking Group Group Alternative Channels Group Capital Markets Group Unsecured Lending Investment Banking Business Group Group Secured Lending Business Group Credit Product Deposit & Payment Corporate Marketing & Business Channel Products Management Management Retail Banking Strategy Corporate Portfolio and Profitability & Key Projects Management Business Planning & Analysis
10 A n n u a l R e p o r t 2 0 0 8 Organization Chart February 16, 2009
Board of Executive Risk Management Audit Committee Directors Committee
Audit Group
Chief Risk Officer (CRO) Chief Financial Officer Chief Operating Officer (CFO) (COO)
Strategy and Transformation Commercial Finance Group Information Group Credit Group Technology Group Management Human Resource Retail Credit Accounting Operations and Group Group Group Services Group Corporate Balance Sheet Governance NPA Management Management Corporate Group Group Group Services Group Corporate Market Risk Communications Management IFRS Reporting Data Warehouse and Office Group Project Data Management Dpt. Operational Risk Management Business Continuity Group Management Office Risk Analytics and Research Group Compliance Group Legal Group Credit Administration Dpt.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 11
TMB’s Directors As of December 31, 2008
Dr. Sathit Limpongpan General Anupong Paojinda Age 58 years old Age 59 years old
Position at TMB - Chairman of the Board Position at TMB - Director of the Board Education and - Ph.D.(Development Education and - Master of Public Administration Directorship training Administration), National Institute Directorship training (Honor), Directorship training course of Development Administration course National Institute of Development (NIDA) Administration (NIDA) - Master of Laws, Tulane University, - Bachelor of Arts (Political U.S.A. Science), Ramkhamhaeng University - MA (Economics), Sukhothai - Command and General Staff Thammathirat Open University College, RTA - Barrister-At-Law, Office of Law Study of The Thai Bar - Chulachomklao Royal Military - Bachelor of Laws, Thammasat Academy University - National Defence College - Leaders in Development : - Director Accreditation Program, Managing Political & Economic Thai Institute of Directors Association Reform, Harvard University - Advanced Management Program, Position in other Businesses Oxford University Oct 2007 - Present - Commander - in - Chief - The Role of Chairman, Director Certification Program and Audit Working Experience in the Last 5 Years Committee Program, Thai Institute 2005 - Aug 2008 - Chairman of the Audit Committee, of Directors Association Mida - Medalist Entertainment Plc. 2003 - Aug 2008 - Chairman of the Audit Committee, Position in other Businesses Mida Assets Plc. Apr 2008 - Present - Director and Chairman of the 2006 - Sep 2007 - Assistant Commander - in - Chief Audit Committee, Ratchaburi 2005 - 2006 - Commanding General, First Army Generating Holding Plc. Area Apr 2008 - Present - Chairman, CAT Telecom Plc. 2004 - 2005 - Deputy Commanding General, First 2007 - Present - Deputy Permanent Secretary, Army Area Ministry of Finance 2003 - 2004 - Commanding General, First Division, the King’s Guard Working Experience in the Last 5 Years 2007 - Apr 2008 - Director, The Bangchak Petroleum Plc. 2006 - Feb 2008 - Director, CAT Telecom Plc. 2006 - 2007 - Director, Siam City Bank Pcl. 1995 - 2007 - Director, Kuang Pei San Food Products Plc. 2004 - 2006 - Director - General, Customs Department, Ministry of Finance 2000 - 2006 - Director/ Chairman, TOT Plc. 2002 - 2004 - Director - General, Excise Department, Ministry of Finance 2002 - 2004 - Chairman, Thailand Tobacco Monopoly
14 A n n u a l R e p o r t 2 0 0 8 Mr. Vijit Supinit Mr. Philippe G.J.E.O. Damas Age 67 years old Age 58 years old
Position at TMB - Director of the Board Position at TMB - Director of the Board - Chairman of the Audit Committee - Chairman of the Executive Director - Independent Director Education and - MA (Economics), Yale University, U.S.A. - Member of the Nomination, Directorship training - BA (Economics) (Honors), Remuneration and course The University of Manchester, U.K. Corporate Governance Committee - Southend College of Technology, U.K. Education and - MBA, Concentration Accounting & - Faculty of Engineering, Directorship training International Finance, Columbia Chulalongkorn University course University, U.S.A. - National Defence College - Military Service, Belgiam Army - Senior Executive Program - Advanced Automatics, Ecole Nationale Certificate, Capital Market Academy (The Stock Exchange of Thailand) de I’Aeronautique et de I’Espace, - Director Accreditation Program and Toulouse the Role of Chairman, - Ingenieur Civil Electricien Mecanicien, Thai Institute of Directors Association Universite Libre de Bruxelles, Brussels
Position in other Businesses Position in other Businesses Apr 2008 - Present - Chairman, Office of the Securities 2005 - Present - CEO, Retail Banking Asia & Global Exchange Commission Private Banking, ING Group (Singapore) 2007 - Present - Dean, Graduate school of Management (MBA) Siam University Working Experience in the Last 5 Years 2006 - Present - Chairman, G Steel Public Co., Ltd. 2006 - Present - Advisor, Thai – Laos Association 2002 - Dec 2008 - CEO, Global Private Banking and ING for Friendship Trust, ING Group (Amsterdam) 2005 - Present - Board member, Capital Market Development Fund Foundation 1998 - Present - Director, Institute of Social and Economic Policy 1993 - Present - Director, Wat Kaew Pichitre Foundation 1990 - Present - Director, Puey Ungphakorn Foundation Working Experience in the Last 5 Years 2006 - 2007 - Consultant, Bangkok Commercial Asset Management Co., Ltd. 2005 - 2007 - Chairman, The Stock Exchange of Thailand Foundation 2004 - 2007 - Chairman, Thailand Future Exchange Co., Ltd. 2003 - 2007 - Chairman, Asset Management Corporation of the Ministry of Finance 2003 - 2007 - Chairman, The Stock Exchange of Thailand 2003 - 2007 - Chairman, Thailand Securities Depositories Co., Ltd. 2003 - 2007 - Chairman, Set Trade.com Co., Ltd. 2003 - 2007 - Chairman, Family Knowhow Co., Ltd. 2003 - 2007 - Member, The National Corporate Governance Committee 2003 - 2006 - Director, Public Enterprises Supervisory Board 2003 - 2006 - Director, Small and Medium Size Enterprises Promotion Board
T M B B a n k P u b l i c C o m p a n y L i m i t e d 15 TMB’s Directors As of December 31, 2008
Dr. Juanjai Ajanant Mrs. Saowanee Kamolbutr Age 60 years old Age 56 years old
Position at TMB - Director of the Board Position at TMB - Director of the Board - Chairman of the Nomination, - Chairman of the Credit Committee Remuneration and Corporate - Executive Director Governance Committee - Member of the Nomination, - Independent Director Remuneration and Corporate Education and - Ph.D. Economics, Temple University, Governance Committee Directorship training Philadelphia, U.S.A. Education and - Master of Public Administration, course - M.Sc International Economics, University Directorship training Thammasat University of Surrey, Guildford, U.K. course - Bachelor of Public Administration, - BA (Honors) (Economics), University of Thammasat University Lancaster, U.K. - National Defence College - Postgraduate Diploma International - Senior Executive Program (Kellogg - Economics, University of Surrey, Sasin) Guildford, U.K. - Senior Executive Program (SES 39) - Director Certification Program, - The Management Development Thai Institute of Directors Association Program, Wharton School - Senior Executive Program Position in other Businesses Certificate, Capital Market Academy 1994 - Present - Executive Director, Artlink Co., Ltd. - Director Certification Program, Thai Institute of Directors Association Working Experience in the Last 5 Years May 2008 - Dec 2008 Position in other Businesses - Director, Industrial Estate Authority of Oct 2008 - Present - Inspector - General, Ministry of Finance Thailand 2007 - Mar 2008 - Managing Director, Chulalongkorn Working Experience in the Last 5 Years Unisearch Center 2004 - Oct 2008 - Member of the Board, Member of 2004 - Mar 2008 - Director, Chulalongkorn Uniserach the Audit Committee and Chairman Center of Labor Relation Committee, Thailand 1973 - Mar 2008 - Associate Professor, Faculty of Institute of Scientific and Economics, Chulalongkorn University Technological Research (Tistr) 2004 - 2005 - Chairman of Student Recruitment, 2007 - Sep 2008 - Principal Advisor on Performance Faculty of Economics, Improvement, Ministry of Finance Chulalongkorn University 2008 - Apr 2008 - Member of the Audit Committee, KTB Leasing Co., Ltd. 2004 - Apr 2008 - Director, KTB Leasing Co., Ltd. 2004 - 2007 - Deputy Director - General, Revenue Remark : Appointed as TMB director and the Chairman of the Department Nomination, Remuneration and Corporate 2002 - 2004 - Director, Bureau of Tax Collection Governance Committee on April 18, 2008 Standards, Revenue Department
Remark : Appointed as TMB director on April 25, 2008 and as the Chairman of the Credit Committee on May 14, 2008 16 A n n u a l R e p o r t 2 0 0 8 Mr. Willem Frederik Nagel Mr. Nipon Poapongsakorn Age 52 year old Age 60 years old
Position at TMB - Director of the Board Position at TMB - Director of the Board - Chairman of the Risk Management - Member of the Audit Committee Committee - Member of the Risk Management - Executive Director Committee - Member of the Credit Committee - Independent Director Education and - Master of Economics, University of Education and - Ph.D. (Economics), University of Hawaii, Directorship training Amsterdam, Netherlands Directorship training U.S.A. course course - MA (Economics) (Honors), Middle Tennessee State University, U.S.A. Position in other Businesses - BA (Economics) (Honors), Thammasat Mar 2008 - Present - Chairman, ING Asia Private Bank Ltd. University (Singapore) - Director Certification Program, 2006 - Present - Commissioner, PT ING Securities Thai Institute of Directors Association Indonesia 2005 - Present - CEO & Head of Wholesale Banking, Position in other Businesses Asia, ING Bank N.V. (Singapore) Oct 2008 - Present 2005 - Present - Director, ING Vysya Bank Ltd. (India) - Chairman, Thailand Development 2005 - Present - Chairman of Risk Management Research Institute (TDRI) Review Committee, ING Vysya Bank 2002 - Present - Board of Directors, Institute of Trade Ltd. (India) Strategy 2005 - Present - Director, ING Asia Private Bank Ltd. 1999 - Present - Public Information Disclosure Tribunal (Singapore) for the Public information on National Economy and Finance Working Experience in the Last 5 Years 1984 - Present - Visiting Professor of the Executive MBA 2002 - 2005 - Head of Group Credit Risk Program and Mini MBA Program, Management, ING Group Faculty of Commerce and Accountancy, (Netherlands) Thammasat University
Working Experience in the Last 5 Years 2006 - Sep 2008 - Dean Faculty of Economics, Thammasat University 2003 - Sep 2008 - Associate Professor, Faculty of Economics, Thammasat University 2007 - Feb 2008 - Director, Public Warehouse Organization Board 2006 - Feb 2008 - Director, Port Authority of Thailand Board 1998 - 2006 - Senior Consultant, The Sectoral Economic Program, TDRI 2001 - 2005 - Board of Directors, The National Economic and Social Development Board
T M B B a n k P u b l i c C o m p a n y L i m i t e d 17 TMB’s Directors As of December 31, 2008
Mr. Vaughn Nigel Richtor Mr. Amorn Asvanunt Age 52 years old Age 60 years old
Position at TMB - Director of the Board Position at TMB - Director of the Board Education and - BA (Honors) (Economics), South Bank, - Executive Director Directorship training London, U.K. - Member of the Risk Management course - Corporate Finance Diploma, London Committee Business School - Member of the Credit Committee - General Management Program Cedep, Education and - MBA, Bowling Green State University, Insead, Fontainbleu (France) Directorship training Ohio, U.S.A. - Management in International Banking course - BA (Accountancy), Chulalongkorn Cedep, Insead, Fountainbleu (France) University - Stanford-NUS Executive Program, Position in other Businesses Stanford University and National 2006 - Present - Managing Director & CEO, ING Vysya University of Singapore Bank Ltd. (India) - Changing Organizational Behavior Program, Wharton School, University Working Experience in the Last 5 Years of Pennsylvania, U.S.A. 2001 - 2005 - Chief Executive Officer, ING Bank - Director Accreditation Program and (Australia) Ltd. CEO Performance Evaluation, Thai Institute of Directors Association
Position in other Businesses Mar 2006 - Present - Member of the Audit Committee, Sahacogen (Chonburi) Plc. 2005 - Present - Independent Director, Krungdhep Sophon Plc. 2003 - Present - Member of the Audit Committee, I.C.C International Plc. 2003 - Present - Chairman of the Audit Committee, People’s Garment Plc. 2003 - Present - Member of the Audit Committee, Far East DDB Plc. 1988 - Present - Independent Director, BNH Medical Center Co., Ltd.
Working Experience in the Last 5 Years 2003 - Mar 2006 - Chairman of the Audit Committee, Sahacogen (Chonburi) Plc. 1997 - 2005 - Director, Christiani & Nielsen (Thai) Plc. 1984 - 2004 - Director, T.L. and Sons Co., Ltd.
18 A n n u a l R e p o r t 2 0 0 8 Mr. Christopher John King Mr. Boontuck Wungcharoen Age 64 years old Age 52 years old
Position at TMB - Director of the Board Position at TMB - Director of the Board - Member of the Audit Committee - Executive Director - Member of the Nomination, - Member of the Risk Management Remuneration Committee Corporate Governance Committee - Member of the Credit Committee - Independent Director - Chief Executive Officer Education and - Bachelor of Laws (LL.B) (Honors), Education and - MBA, New York University, U.S.A. Directorship training University of Bristol, U.K. Directorship training - BCE, Chulalongkorn University course - Postgraduate Practical Certificate course - Director Accreditation Program , in Law, University of Singapore Thai Institute of Directors Association - Director Certification Program, Thai Institute of Directors Association Position in other Businesses 1982 - Present - Director, Benjaboon Enterprise Co., Ltd. Position in other Businesses 1997 - 2004 - Partner and Director, Linklaters Working Experience in the Last 5 Years (Thailand) Ltd. 1999 - 2007 - First Executive Vice President, KASIKORN BANK Plc. Working Experience in the Last 5 Years 2005 - Present - Director, Singer Thailand Plc. 1992 - Present - Director, Thivatharn Ltd.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 19
Chief Executive Officer
Mr. Boontuck Wungcharoen Mr. Bart F.M. Hellemans Age 52 Years Age 53 Years Chief Executive Officer Chief Risk Officer
Position - Director of the Board of Directors Position - Chief Risk Officer - Director of the Board of Executive Directors Education - Bachelor in Applied Economics, - Member of the Board Risk Catholic University of Leuven, Management Committee Belgium - Member of the Credit Committee - Chief Executive Officer Working Experience in the Last 5 Years (Appointed on July 14, 2008) 2008 – Present Chief Risk Officer, TMB Bank Pcl. 2005 – 2008 Managing Director, Head Credit Education - MBA in Finance and International Capitals, ING Bank, Amsterdam, Business from New York The Netherlands University, U.S.A 2003 – 2005 Managing Director, ING Vysya Bank Ltd. - B.Sc. in Chemical Engineering 1999 – 2002 Deputy Managing Director and BBL from Chulalongkorn University representative, The Vysya Bank Ltd. - Director Accreditation Program, Thai Institute of Directors Association Mr. Ramakrishnan Subramanian Working Experience in the Last 5 Years Age 40 Years 2008 – Present Chief Executive Officer, TMB Bank Pcl. Chief Retail Banking Officer 1982 – Present Director, Benjaboon Enterprise Co., Ltd. 1999 – 2007 Executive Vice President, Position - Chief Retail Banking Officer KASIKORNBANK Pcl. (Upto February 28, 2009) Education - Master of Commerce, Madras Mr. Donald Joseph Koch University, India Age 47 Years - Bachelor of Commerce, Madras Chief Operating Officer University, India - Chartered Accountant – The Position - Chief Operating Officer Institute of Chartered Accountants Education - Master in Banking and Finance of India from University of Technology, - Cost Accountant – The Institute Sydney, Australia of Cost & Works Accountants of India Working Experience in the Last 5 Years 2008 – Present Chief Operating Officer, TMB Bank Pcl. Working Experience in the Last 5 Years 2006 – 2008 Chief Operating Officer, ING Vysya 2008 – Present Chief Retail Banking Officer, Bank, India TMB Bank Pcl. 2004 – 2006 Vice President, Member of 2007 – 2008 Managing Director, Retail Banking - Management Board Deputy Chairman, Asia, ING Bank, Singapore ING Bank Slaski, Poland 2005 – 2007 Regional Director, Global Consumer Bank, Asia Pacific, CITIBANK, Singapore 1999 – 2005 Senior Vice President & Country Head - Retail Assets Group, HDFC Bank, India
22 A n n u a l R e p o r t 2 0 0 8 Mr. Piti Tantakasem Mr. Sayam Prasitsirigul Age 38 Years Age 39 Years Chief Wholesale Banking Officer Chief SME Banking Officer
Position - Chief Wholesale Banking Officer Position - Chief SME Banking Officer
Education - Ph.D. in Strategic Management Education - MBA in Finance from The Peter under the collaboration program F. Drucker Center – Claremont between the University of Graduate School, California, U.S.A Nebraska at Lincoln and Bangkok University Working Experience in the Last 5 Years - Master of Business Administration, 2008 – Present Chief SME Banking Officer, TMB Bank Pcl. The University of North Carolina at 2007 – 2008 First Vice President, Head of Supply Chapel Hill Chain Financing and Head of Cash - Bachelor of Engineering (Industrial), Management Department, Chulalongkorn University KASIKORNBANK Pcl. 2006 – 2007 Senior Vice President, Head of Local Working Experience in the Last 5 Years Product Management, Standard Nov. 2008 – Present Chief Wholesale Banking Chartered Bank (Thai) Pcl. Officer, TMB Bank Pcl. 2003 – 2006 Senior Vice President, Head of Supply Jan. 2007 – Jul. 2008 First Senior Vice President, Chain Finance, Standard Chartered KASIKORNBANK Pcl. Bank (Thai) Pcl.
Mrs. Chandraleka Wiriyawit Age 55 Years Acting Chief Financial Officer
Position - Acting Chief Financial Officer (From July 1, 2008) - Senior Executive Vice President, Head of Finance Group
Education - Doctorate Degree in Economics, Clark University, U.S.A.
Working Experience in the Last 5 Years 2008 – Present Acting Chief Financial Officer, TMB Bank Pcl. 2004 – Present Senior Executive Vice President, Head of Finance Group, TMB Bank Pcl. 2003 – 2004 Senior Executive Vice President, TMB Bank Pcl. 1995 – 2003 Executive Vice President, TMB Bank Pcl.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 23 Executive Officers (Group Level)
Mr. Pradit Leosirikul Mr. Agapol Na Songkhla Head of Branch Banking Group Head of Strategy and Transformation Group
Mr. Sopon Kluaymai-Na-Ayudhya Mr. Thawatchai Techawatanawana Head of BKK Branch Banking Group Head of Human Resource Group (until January 5, 2009) M.L. Ayuth Jayant Mr. Vasan Choophaichitr Head of Corporate Governance Group Head of UPC Branch Banking Group (retired on December 31, 2008) Mr. Paradai Theerathada Head of Corporate Communications Group Mrs. Kanchana Rojvatunyu (appointed on March 9, 2009) Head of Retail Marketing Group Miss Utoomphorn Kunakorn Mr. Luecha Sukrasebya Head of Commercial Credit Group Head of Alternative Channels Group Mr. Martin Alan Searle Mr. Willem Feyo Alexander Baron Van Heemstra Head of Retail Credit Group Head of Secured Lending Business Group (appointed on March 5, 2009) Mr. Surakiat Wongwasin (Acting) Head of NPA Management Group Mr. Paphon Mangkhalathanakun Head of SME Business Marketing and Product Group Miss Oranuj Tantimedh Head of Market Risk Management Group Mrs. Vallapa Posyanond Head of SME Business Relationship Management Group Mr. Surakiat Wongwasin Head of Operational Risk Management Group Mr. Vikran Paovarojkit Head of Corporate Banking Relationship Management Group Miss Sutapa Amornvivat Head of Risk Analytics and Research Group Mr. Sopon Kluaymai-Na-Ayudhya Head of Corporate Banking Relationship Management Group M.L. Siriwan Kasemsant (since January 5, 2009) Head of Compliance Group
Miss Yiu Chung Mei Sandra Mr. Somsak Woravijak Head of Lending and Structured Products Group Head of Legal Group (appointed on January 28, 2009) Mrs. Chandraleka Wiriyawit Mr. Silawat Santivisat Head of Finance Group Head of Transactional Banking Group (until March 31, 2009) Miss Saipin Kittipornpimol Head of Information Technology Group Mr. Satian Tantanasarit Head of Capital Markets Group Mr. Charan Mongkolchan Head of Corporate Services Group Mr. Siripong Sombatsiri (retired on December 31, 2008) (until December 31, 2008) Mr. Teerapong Ninvoraskul Mr. Peera Chinwannabutr (appointed on February 18, 2009) Head of Audit Group Head of Investment Banking Group
24 A n n u a l R e p o r t 2 0 0 8 Executive Officers (Department Level)
Branch Banking Group Unsecured Lending Business Group Mr. Jarin Pintusopon Mr. Amorn Sukhonpitumart Mrs. Waroon Soison (Acting) (appointed on February 3, 2009) BKK Branch Banking Region 1 Credit Cards Corporate Banking Relationship Mr. Pichai Chirungsapprasuk Mrs. Waroon Soison Management 3 BKK Branch Banking Region 2 Personal Loan Mrs. Nuanual Swasdikula Mrs. Thanita Vongruamlarp (until December 31, 2008) BKK Branch Banking Region 3 Secured Lending Business Group Mr. Ekanat Kieatinapasin Mrs. Nuanwan Sanvises Mr. Willem Feyo Alexander Baron (appointed on February 3, 2009) (until February 1, 2009) Van Heemstra Corporate Banking Relationship Mr. Vichien Vithayaveroj (until March 5, 2009) Management 4 (appointed on February 2, 2009) Mortgages Business Mr. Anuphun Tungsnga BKK Branch Banking Region 4 Corporate Banking Relationship Mr. Kitti Kokpol Deposit & Payment Products Management 5 (until February 1, 2009) Management Miss Arpaporn Palungvitvatana Mr. Choompong Hutananda Ms. Tamara van den Ban Corporate Banking Relationship (appointed on February 2, 2009) Management 7 Northern Branch Banking Region Business Planning & Analysis Miss Tientip Narach Mr. Sompop Pookkapund Miss Kanokwan Tantivongskorn Corporate Banking Relationship Northeastern Branch Banking Management 8 Region SME Business Marketing and Miss Yuwadee Chawawatnapong Mrs. Sakulrak Watanasitisin Product Group (until February 16, 2009) (until February 1, 2009) Miss Mantinee Akarasern Corporate Banking Relationship Miss Sukanya Dechjiratham SME Marketing and Integrated Management 10 (appointed on February 1, 2009) Marketing Communications Mr. Kittipat Peanthum Central Branch Banking Region Mrs. Panicha Buraparat Corporate Banking Relationship Mr. Suvit Vithayasai SME Sale Management Management 11 Eastern Branch Banking Region and Support Mrs. Kalaya Chaiyawan Mr. Vorayuth Charoenloet Financial Institution Relationship Southern Branch Banking Region SME Business Relationship and Global Network Management Management Group Retail Marketing Group Mrs. Chulida Tanpetcharat Transactional Banking Group Mrs. Wacharaporn Mahadthai SME Regional Office - Bkk 1 Miss Ninlawan Jeeraboon Marketing Operation Miss Duangkamol Limpuangthip Cash Management Department SME Regional Office - Bkk 2 Mrs. Wadaporn Techasuwanna Wealth Management Group Mr. Bunsak Sriprasertying Trade Finance Department Mr. Jittiwat Kantamala SME Regional Office - Northern Mrs. Srisunan Dutiyabodhi Private Banking Mrs. Usa Subthavorn Agent and Securities Services Mrs. Nanda Sethi SME Regional Office - Migration Department Affluent Relationship Management and Retrofit Miss Rachada Rukponspibul Capital Markets Group Wealth Management - Corporate Banking Relationship Mrs. Arunee Sinswas Bancassurance Management Group Capital Markets Product Sales Mrs. Naravadee Jaijongkit Miss Savitri Chaichavalit Mr. Woraboon Chinwatanakit Wealth Management – Corporate Banking Relationship Capital Markets Product Trading Mutual Fund Management 1 Mr. Somchai Yongkrittaya Mr. Suttichai Tiranuchit Capital Markets Business Analytics Alternative Channels Group Corporate Banking Relationship and Supports Mr. Luesak Lohjitsieng Management 2 Bureau de Change
T M B B a n k P u b l i c C o m p a n y L i m i t e d 25 Executive Officers (Department Level)
Credit Product Miss Chalaiporn Tharatip Pol. Col. Pavares Ganjanarintr Mrs. Pachana Rujirek SME Credit Department 2 Security Department Corporate Marketing and Mr. Sornchai Pongsuwan Mrs. Harintorn Uthayopas Business Channel Management SME Credit Department 3 Reporting and Support Department Mrs. Chaowapat Lertwongsatien Mr. Somporn Limpworawon Mrs. Thientong Saenghiranwatana SME Credit Department 4 Corporate Portfolio and Mr. Franciscus Gerardus Rokers Internal Control Department Profitability Management SME Credit Underwriting Risk Analytics and Research Group Miss Piyamas Aengkhumsub Department Miss Wipaporn Techamaitrechit Mr. Jaroonsak Hengtragul Credit Risk Management Strategy and Transformation Group Credit Policy Department Department Mr. Thawat Hirancharukorn Mrs. Ratana Lengsiriwat Corporate Strategy Department Retail Credit Group Industry Analysis Mrs. Ratanaporn Thepchatri Mr. Sithipong Narkvajara Mrs. Chamaree Ananatsiri Corporate Development Small and Micro SME Credit Independent Credit Review Department Approval Department Department Miss Sansanee Pangmanee Mr. Sittibhan Supasornadiwat Corporate Transformation Office Consumer Credit Approval Compliance Group Department Mrs. Nuntawan Suwannasri Human Resource Group Mr. Niti Sirovetnukul Banking Business Compliance Mrs. Chuenjit Potranun Retail Collection Department Department Compensation and Performance Mrs. Anchalee Sekanandana Mrs. Haruthai Sukying Management Department Retail SAM Department Securities Business Compliance Miss Somsri Likitpreeda Department Corporate Governance Group Retail Credit Policy and Process Mrs. Suchewin Chantrasuriyarat Management Department Legal Group Business Principles and Mr. Khajohnsak Argephul (Acting) Mrs. Vipada Kromplasak Governance Department Fraud Management Department Legal Advisory and Mr. Passakorn Linmaneechote Documentation Department Investor Relations Department NPA Management Group Mr. Somsak Khuncharoen Mr. Sirichai Phirom (until February 1, 2009) Corporate Communications Group NPA Sales Department Mr. Charoon Chaivichean Miss Onticha Rattanawannathip (appointed on February 1, 2009) Corporate Communications Office Market Risk Management Group Litigation and Miss Areerat Sulanchupakorn Execution Department Commercial Credit Group Market Risk Policies and Mrs. Supanee Tharanon Mr. Sunthorn Ruckpanich Development Legal Management Corporate Credit Department 1 Mrs. Nantapak Kaewkedthong Mr. Kraisit Tanpaitoonditi Market Risk Support Credit Administration Department Corporate Credit Department 2 Miss Puangpet Orankitvanit Mr. Maarten Jurriaan den Otter Operational Risk Management Corporate Credit Underwriting Group Finance Group Department Mr. Apiwat Jariyavilas Miss Supamas Woranantakul Mrs. Nattaya Booncharoen Operational Risk Management General Accounting Department Commercial Asset Management Department Miss Nisa Laohasomboon Department Mr. Bart Wilhelmus Roelofsma Financial Reporting Department Mrs. Chariwan Chatikavanij Information Risk Management Mrs. Ruamporn Nanthawong SME Credit Department 1 Department Cost Management and Control Department
26 A n n u a l R e p o r t 2 0 0 8 Management Accounting Group Mrs. Vajira Ditsarapong Mr. Kamran Rafi Treasury and Markets Operations Performance Measurement Department Mrs. Voraluck Chokchaitam Miss Chayaporn Luannapavan Management Reporting & Analysis Securities Services and Department Investment Banking Operations Mr. Chanpichai Chinsamran Department Financial Application System Mr. Thaworn Lohaviriyasiri Support Department International Banking Operations Department Balance Sheet Management Group Corporate Services Group Miss Supaporn Taechachokewiwat Mr. Kuasak Laorsuwan Asset – Liability Management General Administration Group Department Mr. Uthai Monthawornwong Mrs. Soontaree Rojanapenkul Procurement Department Liquidity Management Department Mr. Prasert Krongsaksree Miss Pranee Chiemprabha Premises and Building Balance Sheet Management Management Department Support Department Mr. Phonglert Roeksasuttphairach Asset Appraisal Department Information Technology Group Mr. Somsak Phokhawannakorn Data Warehouse and Data IT Infrastructure Department Management Department Mr. Surachai Manaso Mr. Surin Matayatana Information Security Department Mrs. Sunisa Lapruttanatrai Audit Group Planning and Vendor Mr. Buntoon Tohtong Management Department Branch Audit Department 1 Miss Ubolluck Luevoravinyu Mrs. Tantila Pholpoke IT Development Department 1 Branch Audit Department 2 Mr. Dhanis Klongnarong Mr. Sorachoat Kuntiseth IT Support and Services Credit Audit Department Department Miss Wanvipa Sringangam IT Audit Department Operations and Services Group Mr. Narong Preedanan Mr. Paichit Koamornsup Financial Market Audit Banking Services Department Department Mr. Pichet Triratanavanit Mr. Tipakorn Boonsuwan Card Operations Department Professional Practices Mr. Prasert Thongpracharn Management Department Credit Operations Department Mrs. Waewdao Jirangpitakul Credit Registration and Insurance Operations Department Mr. Prakit Pilungasa Customer Information Monitoring and Management Department
T M B B a n k P u b l i c C o m p a n y L i m i t e d 27 World Economic Review 2008 and Outlook 2009
World Economic Review 2008 the European Central Bank and the Bank of Japan have successively cut their policy rates from 4.25%, The IMF reported that world economic growth 4.25%, and 0.5%, respectively, to 0-0.25%, 2.50% rate dropped from 5.0% in 2007 to 3.7% in 2008 and 0.1% by the end of 2008. following the economic slowdown in the leading With the industrialized economies, the main developed countries. The U.S., the Euro-zone, and export markets, stalling, the overall Asian economy Japan expanded only 1.4%, 1.2% and 0.5%, decelerated to 8.3% growth in 2008, down from respectively, down from 2.0%, 2.6% and 2.1% in 10.0% in 2007. The economic activity in the latter 2007 due to soaring world oil price in the first half of half of the year shows a clear sign of slowdown, the year, and the U.S. financial meltdown which particularly in the export sector. The volatility of quickly spreaded into Europe. During the course of capital flows undermines the stability of Asian the year, several large financial institutions went financial markets, sending the stock indices tumbling bankrupt, exacerbating the global credit crunch as down. Moreover, the tightened credit condition financial institutions tried to preserve cash and halt makes consumption and investment loan increasingly their lending activities altogether. The liquidity freeze more difficult. culminated in a widespread global economic downturn affecting financial markets, stock markets World Economic Outlook in 2009 and real sectors. This adverse environment prompted each country’s government to inject massive amount According to the IMF’s report released in of liquidity into the economy to increase bank capital November 2008, the IMF forecasts that the world reserve, in addition to providing loan guarantee for economic growth in 2009 would slowdown to only financial institutions to restore the private sector’s 2.2%. The U.S., the Euro-zone, and Japan to confidence. Consequently, the Federal Reserve, contracted for the first time since World War II, by
28 A n n u a l R e p o r t 2 0 0 8 0.7%, 0.5%, and 0.2%, respectively. The U.S. will industrialized nations, especially in the U.S. with shrink in the first three quarters of the year as the Barack Obama leading the effort, push for real economy deteriorates. The European economy expansionary measures to be enacted as swiftly will suffer from similar factors to the U.S. economy as possible. These include large fiscal packages as the real sector weakens and further financial and unconventional monetary operations. These glitches unfold. Japan will be heavily affected measures may pave the road to recovery by the by falling in export demand coupled with the latter half of 2009. strengthening of the yen. As for the Asian region, the IMF forecasts an To battle with the economic and financial economic growth rate of 7.1% in 2009, down from downturns, the central authorities in the major 8.3% in 2008. The main factors contributing to
World Economic Outlook % 2007 2008 f 2009 f World 5.0 3.7 2.2 US 2.0 1.4 -0.7 Euro 2.6 1.2 -0.5 Germany 2.5 1.7 -0.8 Japan 2.1 0.5 -0.2 Asia 10.0 8.3 7.1 China 11.9 9.7 8.5 India 9.3 7.8 6.3 South Korea 5.0 4.1 2.0 Hong Kong 6.4 3.7 2.0 Taiwan 5.7 3.8 2.2 Singapore 7.7 2.7 2.0 Indonesia 6.3 6.0 4.5 Philippines 7.2 4.4 3.5 Malaysia 6.3 5.7 3.8 Vietnam 8.5 6.3 5.5 Thai 4.8 4.5 4.0 Note : f = forecast Source : IMF, as of November 2008.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 29 the Asian economic slowdown include decreasing by 5.7% in the first half of 2008 with the help of low global trade volume and vanishing foreign bases from 2007 for consumption and investment investments. As major trade partners descend and the favorable shift in terms of trade from rising deeper into recession, export-oriented Asian prices of commodities. Moreover, the robust economies, such as Taiwan, Singapore, Hong Kong, economic growth of Asian trade partners such as and South Korea, will be severely affected by the China and India and strong growth of exports to spillover. With the western world still disentangling emerging markets contributed to the economic the financial cobweb, there remains the risk of expansion in the early part of 2008. Exports alone continuing capital outflows causing further volatilities expanded 24.7% compared to 16.7% from the and weakening the regional currencies. previous year. The private sector’s confidence dwindled in the Thai Economic Review 2008 and Outlook 2009 latter part of 2008 as political unrest induced more Thai Economic Review 2008 violence and the central government was replaced twice. This significantly delayed the public budget In 2008, Thai economy faced several negative disbursement and consequently public investment factors continuing from 2007, including the unrest in projects. These domestic factors, coupled with the three Southern border provinces, in inflation external demand’s deterioration, began to weigh during the first 7 months of the year, the domestic down Thai economic growth. Globally, many political uncertainty, and the global economic industrialized economies entered a recession in slowdown. Despite these factors, Thai economy grew the third quarter of 2008. Global factors, together
30 A n n u a l R e p o r t 2 0 0 8 with the closure of the two Bangkok’s airports, supplementary budget. The package includes caused Thai tourism industry an exports to plunge in targeting aid towards the most troubled economic the fourth quarter. From previously growing by an sectors, such as real estate, exports, and tourism, as average of 5.1% in the first three quarters of 2008, well as using tax provisions to stimulate consumption Thai economy contracted sharply by 4.3% in the and investment. With low inflationary threats in 2009, fourth quarter and overall economic expansion in the Bank of Thailand has cut its policy rate, which will 2008 was 2.6%, slowed down significantly from a help accommodate the expansionary fiscal policy. 4.9% growth in 2007. Together, fiscal and monetary easing will help shore up
Thai Economic Outlook 2009
Thailand is expected to grow at a slower rate in 2009 than in 2008. In particular, the economy will grow the slowest in the first quarter, suffering further from the global factors. Rising unemployment and an expected sliding of the commodity prices will directly weaken private consumption and exports. Positive drivers will only come from the new government, whose priority is to combat the economic woes. The government proposes an economic stimulus package totaling Bt 115 billion for 2009 mid-year
T M B B a n k P u b l i c C o m p a n y L i m i t e d 31 the faltering aggregate demand in the economy. inflation would continue at a very low level as the oil It is expected that the government’s stimulus measures price risk subsided. Nevertheless, if the global will produce positive effects by the end of second economy enters a deeper recession than expected quarter to uplift the Thai economy in the second half of and domestic political unrest disrupts the government’s the year. TMB’s Risk Analytics and Research Group stimulus activities, the Thai economy may grow less (RARG) forecasts in February 2009 that Thai economic than projected. growth in 2009 would be 0.4% and the headline
Thai Economic Estimates
% growth rate 2007 2008 f 2009 f GDP growth 4.9 2.6 0.4 Total Consumption 2.7 2.2 3.6 Private Consumption 1.6 2.5 2.5 Public Consumption 9.2 0.4 9.7 Total investment 1.3 1.1 -2.3 Private Investment 0.6 3.2 -4.8 Public Investment 3.4 -4.8 10.2 Exports 7.1 5.5 -9.9 Imports 3.4 7.5 -10.2 Trade Balance (Billion US$) 11.6 0.2 4.8 Share of GDP 4.8 0.1 1.9 Current Account (Billion US$) 14.0 -0.2 2.6 Share of GDP 6.1 -0.1 1.0 Inflation rate (%) 2.3 5.5 (-1)-(0) Note : f is forecasted by RARG, TMB Bank, as of February, 2009.
32 A n n u a l R e p o r t 2 0 0 8 Commercial Banking in 2008 and Competitive Trends in 2009
In the period since the 1997 financial crisis, still sufficient to accommodate financial fluctuations, Thailand has witnessed a great reform in its financial with commercial banks having excess liquid assets of sector. Regulatory measures have been upgraded to 1.1 trillion Baht above what was required by law. conform to international practice, reinforcing the Yet the impact on the real sector, i.e. the production stability of the financial institution system and sector, from the sluggish world economy began to increasing long-term competitiveness. Meanwhile, intensify. This, together with the pressure from commercial banks have made improvements to their political instability, especially the airport closures at operations, accelerated the development of their the end of the year, led to and increasing slowdown competitiveness, and welcomed foreign partners in the Thai economy. Consumption and investment to enhance their strengths. All of this has placed visibly slackened. The result was a slowdown in loan Thai commercial banks in a stronger position. growth during the last quarter of the year, compared Yet the volatile economy and financial environment to the loan growth of over 10% during the first half have continued to test the commercial banks’ ability of the year when increased demand for loans to adjust. accompanied a sharp increase in the prices of goods and services. In 2008 commercial banking was facing significant challenges, one of which was the severe Overall, commercial banking in 2008 was global financial crisis which started from the characterised by a high level of competition for subprime problems in the United States and deposits as each banks aimed to maintain its eventually led to liquidity problems for many of the customer base and minimize the liquidity risk after world’s leading companies and financial institution. the Deposit Protection Agency Act took effect in The direct impact on Thai financial institutions’ August. Nevertheless, the extra provisioning required investment in foreign assets was limited as such of commercial banks under the IAS 39 as mandated investments accounted for only 1.3% of their total by BOT decreased sharply compared to the previous assets, and liquidity in the Thai financial system was year. This factor, and the high growth performance
T M B B a n k P u b l i c C o m p a n y L i m i t e d 33 during the first half of the year, and improved direction of commercial banks has shifted from management efficiency, were the key elements that focusing on growth to surviving and minimizing the led to significantly improved performance by the effects of this round of economic crisis. The key issues listed commercial banks, with their aggregated net for commercial banking this year will be customer profit rising from 3,134 million Baht in 2007 to relations, especially small and medium sized customers 76,092 million Baht. that are vulnerable to the economic downturn, credit quality control, risk management and liquidity As 2009 began, the world economy and the management. Competition in 2009 is not expected to Thai economy were seeing continued slowdown. This be intense in terms of either deposits or loans. put the operations of Thailand’s commercial banks under greater risk, despite their considerable strengths. The average capital adequacy ratio was at 15% and expected to drop to approximately 14% in 2009 following the Basel II implementation in Thailand at the end of 2008. This was still considerably higher than the minimum requirement and could provide some immunity from the fluctuations in global money markets. Still, the
34 A n n u a l R e p o r t 2 0 0 8 With regard to loans, most banks have lowered their In general, 2009 will be a significantly challenging loan growth target from 2008. The emphasis will be year for the commercial banking system.If commercial on good relationships with existing quality customers. banks can make adjustment to cope with pressure For deposits and liquidity, despite most banks’ high and revise their business strategies to deal with liquidity that can meet the demand for loans variables such as loan quality control, cost -- a result of the competition to raise deposits management, and the ability to sustain profit and through special fixed deposit product campaigns in competitiveness, they will be taking a step further the previous year -- it is still essential for banks to toward becoming strong and stable banks with raise more deposits to increase liquidity and be potential to sustain growth, competitiveness, and prepared to cope with abrupt changes in the global profitability in the future. money market that can happen at any time. There will be more short-term products because interest rates are going down. At the same time, there will be high competition to generate income from fees for services such as bancassurance, cash management, and from serving as financial advisors to compensate for the imminent decrease in interest income.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 35
The Bank’s main targets in business operations
Main targets for 2009-2011 1. Market leadership Towards its vision to be “the Leading Thai Bank with • Obtain deposit market share of 14% with 50%
World Class Financial Solutions”, TMB has set contribution from savings and current deposits the main targets for the initial three years 2009-2011, • Be the main operating bank for our target
as detailed below: customers
2. Sustained profitability & shareholder return • Gain 40% contribution from consumer banking
and 35% from non-interest income • Generate total shareholders’ return within the top quartile for Thailand’s financial services sector
3. Stakeholders’ satisfaction • Achieve top tier customer satisfaction/ engagement level • Ensure good corporate governance with good ratings by regulators • Build employee engagement and be the employer
of choice in the financial services sector
36 A n n u a l R e p o r t 2 0 0 8 Key Strategic Focus for 2009 3. Service excellence: TMB focuses on creating To achieve the main targets, the Bank has set its customer satisfaction and customer engagement as strategic focus as follows: the foundation to our long term growth. Starting in 2009, TMB will leverage a world class research 1. Customer centricity: TMB builds its business company to systematically measure customer around three business groups: Wholesale, SME, and engagement across its touch points. This initiative Retail. Their unique requirements are further distilled covers a comprehensive plan to upgrade the into seven customer segments. Since November 2008, capabilities of the Bank’s staff through training as well the Bank has implemented a new organizational as continuous interaction with each of its target structure that focuses on understanding their needs, customer segments. developing customer value propositions, and delivering these service in a way that allows the Bank to continuously improve.
2. Deposit-led growth: A critical element in building market leadership for TMB is its deposit-led growth strategy. With this strategic focus, the Bank will grow the TMB franchise through deposit relationships with its customers. Deposit-led growth will help TMB increase its cross-selling and deepen the Bank’s share of wallet. TMB’s strong transactional banking capabilities, such as cash management and retail savings products, contribute to support the strategy.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 37 Concerted teamwork drives performance
38 A n n u a l R e p o r t 2 0 0 8
About ING
ING is a global financial institution of Dutch origin programmes, and replicate successful processes and offering banking, investments, life insurance and systems into our partnership. retirement services to over 85 million private, At the most immediate level, ING has appointed corporate and institutional clients in more than 40 senior, experienced executives in Retail Banking, countries. With a diverse workforce of about 125,000 Operations and Risk, and they form part of the core people, ING is dedicated to setting the standard in management under Khun Boontuck’s leadership to helping our clients manage their financial future. spearhead the transformation of TMB into a leading In the Asia Pacific region, ING Group is active in Thai bank, with strong financial performance, focused insurance, banking and asset management across on customer-centricity. 14 major economies. ING/TMB partnership going well, plan is on track and ING Retail Banking’s operations in Asia include a key milestones have been met 16.07% stake in Bank of Beijing, China; a 44% stake Working in close collaboration with TMB, ING also in ING Vysya Bank, India. In December 2007, ING brought strong capabilities in risk management, retail acquired a 30% stake in TMB Bank, marking its distribution, wholesale banking, private banking, retail banking entry into Thailand. product origination in insurance and mutual funds, operational & IT processes to help transform the bank Making a difference at TMB into a leading Thai bank with international standards. The strategic investment provides ING with a unique opportunity to enter a major growth market in Asia. Overall, integration activates at the operational The partnership leverages ING’s expertise in retail level have progressed well in terms of functional banking and TMB’s superior distribution platform, alignment,business initiatives and bank transformation. thereby greatly enhancing the quality of service and breadth of financial products to be offered to TMB’s The journey of turning TMB into a leading Thai bank customers. requires teamwork on all fronts. It requires strong leadership and vigour in driving transformation, and When ING takes a strategic stake, ING devotes the support of all employees to embrace a culture of active management resources and expertise and change to become a high-performing, customer- works in close partnership with our retail affiliates to centric bank. Only then can the entire organization build sustainable growth. This means that beyond collaborate as one, with understanding and capital, ING also believes in providing critical commitment to a common vision of always putting the resources to the partnership with TMB. We send key customers first. senior staff and direct substantial knowledge transfer
T M B B a n k P u b l i c C o m p a n y L i m i t e d 39 For Society and the Environment
Corporate Social Responsibility
As a Thai company that employs nearly 10,000 people nationwide, TMB feels responsibility to give back to the society in which operates by positively contributing to the nation’s communities, institutions, and individuals.
In 2008 TMB was involved in a number of Enriching Youth Knowledge programs that benefited Thai society. These included 24th Young Investors Training Program activities for youth, educational and religious activities, along with activities to alleviate the hardship of needy The 24th Young Investors Training Program people and disaster victims throughout the country. organized in 2008 attracted a record number of TMB also advocates conservation of the environment applicants. Over 1,500 students from various higher and encourages Bank employees to participate in education institutions applied and 80 were accepted. At constructive activities for society and the environment the completion of the program, trainees were required organized regularly by the Bank. In addition, TMB Bank to prepare and submit their business plans to the coordinates with the public and private sectors to judges comprising qualified and experienced personnel promote energy and environment conservation as from the Bank. The Outstanding Business Plan Awards well as to encourage entrepreneurs to operate their were presented to those with exceptional achievements. businesses in an environmentally friendly manner. This annual program for third and fourth year university students provides skills development and foundations for business and investments to prepare them for their future careers. To date, over 2,000 students have participated in this program, with a large number now operating successful small and medium enterprises.
40 A n n u a l R e p o r t 2 0 0 8 2008 New Entrepreneur Creation (NEC) Program
Over the past seven years, TMB Bank, in support of the government’s policy to nurture new entrepreneurs, has joined the “New Entrepreneur Creation” training program initiated by the Department of Industrial Promotion, Ministry of Commerce. This program, implemented for new graduates, unemployed persons, and heirs of business owners or those Support to Education aspiring to attain entrepreneurship, provides Scholarships for Children of Military Personnel and prospective entrepreneurs with knowledge in project General Public analysis and sustainable and systematic business The Bank has offered scholarships to children of operations while enhancing their creativity in setting up military personnel for 45 consecutive years. These new businesses. The program also emphasizes scholarships are allotted to various military agencies business ethics and concern for the impact on the such as the Office of the Permanent Secretary of environment. In 2008, three classes were organized for Defence, the Royal Thai Supreme Command 120 selected participants. So far 37 classes have been Headquarters, the Royal Thai Army, the Royal Thai organized for over 2,900 trainees. The Bank has Navy, and the Royal Thai Air Force, to be granted to extended special credit facilities to these trainees to selected military children as they deem appropriate. stimulate potential entrepreneurs and assist them to In 2008, 2,750 scholarships worth Baht 5,500,000 were actually achieve their business goals. granted as the Bank realizes the importance of education and the opportunities for these students to pursue their education to their fullest potential. Children of military personnel, who are key elements of national security, especially deserve support to enable them to achieve the highest possible level of education and
can take further steps toward a bright future and eventually become an integral part of the nation’s quality manpower.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 41 In 2009, TMB Bank also offered 50 scholarships to undergraduate students studying in the finance/ banking related fields such as economics, business administration, commerce, accounting, and management science at state universities in Bangkok and other provinces. Commencing in 1974, this Creative Activities to Promote Youth scholarship program has been ongoing for 34 years. Development The Bank has a policy to continue with the program, 27th Marching Band Contest which aims at alleviating the burden of parents/ guardians of students with high academic TMB Bank and the Office of Sport and Recreation achievements who are in need of financial support. Development jointly organized the 27th Marching Band Other program objectives are to instill among students Contest at the National Stadium on Children’s Day in an awareness of the significance of education and January 2008. This contest has been organized for 27 self-development for a brighter and more secure future, consecutive years. The objective is to encourage and to promote human resource development students to develop their musical talents and learn in the country’s finance and banking sector. about concentration, discipline, teamwork and sportsmanship. A total of 49 marching bands entered the competition to win the Royal trophies of His Majesty the King, His Royal Highness Prince Maha Vajiralongkorn and Her Royal Highness Princess Maha Chakri Sirindhorn and scholarships worth over two million Baht. Since the first contest in 1981, participating marching bands have always brought international fame to Thailand.
42 A n n u a l R e p o r t 2 0 0 8 Religious and Development Activities in the Public Interest TMB Bank Sponsoring Royal Kathin Ceremony On 1 November 2008, TMB Bank sponsored the Royal Kathin Ceremony (robe offering ceremony) at Wat Nakhon Sawan, a royal temple at Pak Nam Pho Energy Conservation and Environment Sub-district, Muang District, Nakhon Sawan Province. Protection Directors, executives and employees of the Bank, Reforestation Project in Honor of His Majesty the King customers, government officials in the province, and faithful Buddhists attended the ceremony. The Bank To create and preserve forest areas that also presented scholarships to five educational contribute to the long-term conservation of the institutions in the province, i.e. Nakhon Sawan School, country’s important water sources and the reduction of Satri Nakhon Sawan School, Nawamindarachudhit threatening global warming, TMB has joined the Matchim School, Suankularb Witthayalai (Jiraprawat) reforestation project to commemorate the occasion of School Nakhon Sawan, and Nakhon Sawan Buddhist the 50th Anniversary of His Majesty the King’s Monks College. Accession to the throne. The project, which is under the management and care of the Rajapruek Institute TMB Helps Victims of Cold Weather Foundation, is divided into three phases: Phase 1 2008 marked the 25th year of the Bank’s effort to (2003-2007), Phase 2 (2006-2008) and Phase 3 organize activities for society by encouraging its (2007–2009). This is a sustainable reforestation employees, customers, and the general public to project in the country’s water source areas that donate money to buy blankets for needy people during involves the planting of new trees and close monitoring the cold season. Recipients were villagers in remote of the growth of planted trees in order to maintain the areas in the North and the Northeast who do not have fertile condition of the forests. In the long run this access to amenities. Blankets were allocated through project will also yield maximum benefits to nearby the Bank’s branches as in the past. communities and forests. The reforestation areas under the Banks’ responsibility during Phase 2 are located in the national reserved forest on the right bank of the Nan River, in Ban Nam Tae, Ban Nam Lee and Ban Nam Mun Villages, Ta Pla District, Uttaradit Province and at Cho Hae Sub-district, Muang District, Phrae Province.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 43 Energy and Environment Conservation Outreach
TMB Bank recognizes the importance of the country’s industrial and economic development in tandem with support for efficient energy and environment management. In line with the government’s policy to invigorate entrepreneurs, the Bank lends support to their investment in energy conservation projects, which in turn will help entrepreneurs to reduce energy cost, Thai Industries, the Thailand Greenhouse Gas increase revenues and returns on their investment, and Management Organization, the Energy for Environment increase their trade competitiveness. Foundation, and the Energy Conservation Foundation of Thailand to support energy conservation investment Moreover, the Bank serves as a mechanism of and activities. the government in the management of environment and energy funds and projects, and also provides a • Cooperation with the World Bank, the Ministry of channel for entrepreneurs throughout Thailand to seek Finance, and the Ministry of Industry in the financial support from governments and international management of the Ozone Project Trust Fund to organizations in the form of loans at special interest ensure that all the commitments ratified by Thailand
rates and financial grants. Some of the Banks’ as a member state of the Vienna Convention and activities along this line include: the Montreal Protocol are met. In 2008 a project was • Co-management of the Energy Conservation implemented to mitigate and reduce the use of ozone Fund with the Ministry of Energy to provide loans for depleting substances among manufacturers of
energy conservation and alternative energy projects to fire-retardants and garments, automobile air the manufacturing and service sectors. This includes conditioner repair and maintenance shops, and cooperation with agencies and experts to provide refrigerator and cooler repair and maintenance shops. advice to entrepreneurs on investment in various Over the past decade, the Bank’s role has been that of technologies, and working with various agencies such finance management, having managed 49 financial as the Institute of Industry Energy, the Federation of assistance projects. Over 4,000 entrepreneurs have
44 A n n u a l R e p o r t 2 0 0 8 received financial assistance for modification and replacement of equipment and machinery as well as technical advice. So far over 800 million Baht has been granted free of obligation. Moreover, the Bank also serves as a channel to disseminate information on ozone layer conservation to students and the pubic on various occasions.
• Co-management of the Partnership Facility Programme (PFP) with the Danish Embassy in Thailand is another project undertaken by the Bank. This is part of the special assistance program implemented by the Danish Ministry of Foreign Affairs TMB Bank is committed to creating and promoting to improve the environment in Thailand and increase constructive activities for the benefit of Thai society, Thai entrepreneurs’ potential in receiving technology making it a warm and happy community where people transfer from Denmark, which is globally acclaimed for live in a good and safe environment. technologies and products relating to energy and the environment. The program offers funds of over 100 million Baht to subsidize selected partners. The goal is for Thai-Danish partner companies to operate their businesses for sustainable improvement of the environment in Thailand.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 45 Nature of business
Background
TMB Bank Plc. (“TMB” or “the Bank”) was established on November 5, 1957 at Mansion 2, Rajdamnern Avenue in Bangkok. At that time, Field Marshal Saridi Dhanarajata was the Chairman of the Board of Directors and Mr. Chote Guna-Kasem was the Bank’s President, and the Bank had a total workforce of 26. TMB’s initial registered capital was Baht 10 million, divided into 100,000 shares, each with Baht 100 par value. Most of its shareholders in the initial stage were military personnel both in and out of service. The year 1982 marked a milestone of the Bank as His Majesty King Bhumibol Adulyadej graciously accepted TMB as a royal bank and its registered capital had its first increase, from Baht 10 million to Baht 100 million. To expand channels for fund raising, the Bank was listed on the Stock Exchange of Thailand (SET) on December 23, 1983 and transformed into a public limited company in 1994.
Thai Military Bank Plc., DBS Thai Danu Bank Plc. and the Industrial Finance Corporation of Thailand legally merged into TMB Bank Plc. on September 1, 2004. This merger has enabled the Bank to operate as universal banking, with total asset of about Baht 602 billion as of December 31, 2008.
Throughout all its years of operation, the Bank has focused on quality improvement and expanding its scope of services to boost its operational efficiency to international standards. Foreign consultants were hired to build up the fundamentals for a strong retail banking service platform and a sound risk management system. TBM also underwent an organizational restructure to expand its product development capability and distribution channels. A Risk Management Unit and Corporate Governance and Compliance Unit were established, along with the implementation of a core banking service system development project to enhance service levels.
In December 2007, TMB underwent a share capital increase of Baht 37,622 million by forming a new business partnership with ING Group, a leading financial institution from the Netherlands. After recapitalization, the Ministry of Finance held 26.1% and ING Group held 25.2% of the entire issued and offered shares of the Bank. ING Group also held NVDRs (Non-Voting Depository Receipts) representing rights to TBM’s securities and/ or ordinary shares for 4.92% of the entire issued and offered shares of the Bank.
Significant changes and developments in 2008 There were many significant changes and developments at TMB during 2008. After the recapitalization,
the Bank’s management was restructured to increase the flexibility and suitability of TMB’s administration. The Bank appointed a new chairperson of the Board of Directors, a new chairperson of the Audit Committee and
a new chairperson of the Board of Executive Directors. The committees of the boards were restructured with an
48 A n n u a l R e p o r t 2 0 0 8 objective to oversee the Bank’s operations more efficiently. In addition, the Bank recruited a new Chief Executive Officer (CEO), replaced top management with experienced executives including ING experts seconded to TMB, restructured its organization, and reviewed its vision and business operation strategy. The Bank also received solid support from ING Group.
The significant changes are as follows:
1. Vision and strategy Following the entrance of the new strategic partner and a joint consideration and analysis by the Board of Directors and the new top management of the Bank’s expected internal and external environment over the next three to five years, the Bank has set a vision to be “the leading Thai bank with world class financial solutions” under a “Customer Centricity the TMB Way” strategy. TMB has conducted a customer segmentation exercise that will contribute to the creation of optimal value and the highest satisfaction for each customer segment.
Vision : To be the Leading Thai Bank with World Class Financial Solutions Strategy : Customer Centricity the TMB Way
2. Understand customer 3. Set guidelines for needs in all lifecycle stages customer value creation
Muti- Mass le a Corporate C s o le n o s h Mid- u Corporate m W
1. Customer income e r
segmentation
Medium
Affluent
EnterpriseE
M
S Small
Enterprise
5. Follow up & determine 4. Deliver products & services customer satisfaction results with customer satisfaction
TMB has a mission to achieve this vision with a view to addressing mutual interests and encouraging pride among all concerned parties, customers, shareholders/investors, and employees, as well as contributing to Thailand’s economic and social development for sustainable growth.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 49 2. The Bank’s customers In its corporate transformation effort towards a customer - centric organization, TMB has divided its customers into seven segments based on their income as follows:
Income amount 1. Wholesale 1.1. Multi-Corporate Over Baht 5 billion/year 1.2. Corporate Baht 500 million - 5 billion/year 2. SME 2.1. Medium Enterprise Baht 50 million - 500 million/year 2.2. Small Enterprise Less than Baht 50 million/year 3. Retail 3.1. Affluent Over Baht 100,000/month 3.2. Mid-Income Baht 30,000-100,000/month 3.3. Mass Less than Baht 30,000/month
3. Organizational structure The Bank underwent an organizational restructuring in alignment with its customer centricity strategy. TMB has adopted the following principles to develop into a customer - centric organization:
• The organizational structure allows for individual employees and business/support units to clearly identify their customers and assume full responsibility for ensuring customer satisfaction. • The organizational structure enhances a teamwork environment to create customer satisfaction. • Chief officers drive the development of guidelines regarding customer value creation. Under the new
organizational structure, the top management team is comprised of:
1. Chief Executive Officer (CEO) 2. Chief Retail Banking Officer (CRBO) 3. Chief SME Banking Officer (CSBO) 4. Chief Wholesale Banking Officer (CWBO) 5. Chief Risk Officer (CRO) 6. Chief Operating Officer (COO) 7. Chief Financial Officer (CFO)
50 A n n u a l R e p o r t 2 0 0 8 Organizational Structure
Business Retail SME Wholesale Segment
Risk Management Business Support Operations and Technology Group Finance
Stategy and Transformation HR Management Support Group Communications and PR
Corporate Governance
The new organizational structure will help to reduce the overlap between work units and enhance the alignment between business units and support units, making the Bank more efficient.
4. Support from ING Group
Since ING Group became a TMB shareholder in late 2007, TMB has obtained a wide range of support from ING Group, which has proven to be a strategic partner that strongly contributes to the Bank’s business and customer value creation.
TMB receives support and coordination from ING Group in the following areas: • Products and services - Deposits and insurance - Internet banking and telemarketing - Wealth management • Risk management • Operations and technology • Global network • Marketing and branding
T M B B a n k P u b l i c C o m p a n y L i m i t e d 51 Presently, the Bank serves as a selling agent for funds and unit trusts of ING Funds (Thailand) Co., Ltd. and has offered bancassurance products in association with ING Life Ltd.
• The Bank has entered into a Bancassurance Product Distribution Agreement with ING Insurance Co., Ltd. (ING Life). Under this agreement, ING Life appointed TMB as a broker and distributor to sell its life and health insurance products through the Bank’s branches. TMB started the distribution of the ING Life’s products on May 15, 2008.
• The Bank has entered into Distribution Agent Agreement with ING Funds (Thailand) Co., Ltd. (ING Funds) to sell and repurchase its unit funds and fund products through TMB’s branches. The Bank started distribution of the ING Funds’ products on June 12, 2008.
In addition to the above business cooperation, a number of high-caliber senior executives from ING Group have joined TMB to help drive the Bank to realize its vision of being the Leading Thai Bank with World Class Financial Solutions.
Business overview of the Bank
TMB is a universal bank offering services to wide spectrum of customers ranging from corporate wholesale to retail and from transactional banking business all the way up to high-end investment banking services.
TMB’s commercial banking business is carried out in accordance with the provisions of Thailand’s Commercial Banking Act, which covers the acceptance of deposits, rendering of credit facilities, money transfer, issuance of guarantee and aval facilities, foreign exchange transactions, international remittance, issuance of letters of credit, ATM card and credit card services, cash management service, custodian service, and telephone banking service. The Bank’s core business is to render services and products to a variety of customer segments such corporate, SME and consumer groups via TMB branches nationwide.
In addition, the Bank engages in other businesses relating to commercial banking as follows:
1. Investment banking business including financial advisory services, being a securities brokerage, securities trading, underwriting of unit trusts (Limited BDU), debt instrument trading and underwriting, and being a selling agent of securities, bondholders’ representative, registrar and providing custodian service.
2. Other businesses as permitted by the regulatory authorities, with the businesses carried out through the Bank’s subsidiary and associated companies such as being an alliance partner with insurance companies, being an insurance broker (Bancassurance), providing a securities business, rental and hire-purchase services, and so on.
52 A n n u a l R e p o r t 2 0 0 8 Business description of subsidiary and associated companies As of December 31, 2008, TMB had invested in three subsidiaries, one associated company and four property funds, as described below:
Investment value % of shareholding Name Type of business by cost method by TMB as of Dec 31, 2008 as of Dec 31, 2008 (Bt. million)
Subsidiary companies 1. Phayathai Asset Management Co., Ltd. NPL and NPA management 3,870 100.00 2. Designee for ETA Contracts Co., Ltd. Infrastructure - 99.40 3. TMB Asset Management Co., Ltd Fund management 188 75.00 Total investment in subsidiary companies 4,058 Less Allowance for impairment (3,870) Net investment in subsidiary companies 188 Associated companies 1. Siam Resort Fund Type 4 property fund 587 56.26 2. Thai Orix Leasing Co., Ltd. Leasing 383 45.96 3. Thai Business Fund 2 Type 4 property fund 247 32.00 4. Phayathai Property Fund Type 2 property fund 180 30.00 5. The Column Property Fund Type 4 property fund 638 29.90 Total investment in associated companies 2,035 Less Allowance for impairment - Net investment in associated companies 2,035 Net investment in subsidiary and 2,223 associated companies
T M B B a n k P u b l i c C o m p a n y L i m i t e d 53 • Phayathai Asset Management Co., Ltd. - Established by TMB to manage non-performing loans and
non-performing assets and relevant collateral transferred from the Bank to ensure optimum returns. • Designee for ETA Contracts Co., Ltd. - Specially established under an agreement made between
a group of major creditors and Bangkok Expressway Plc. (BECL) to transfer to the creditors all rights under
the second stage expressway construction and the operating concession agreement signed between the Expressway and Rapid Transit Authority of Thailand and BECL. Such transfer will take place in the event that BECL fails to perform the obligations or defaults on any condition under the credit facility agreement. TMB, as the security agent, is the company’s principal shareholder. • TMB Asset Management Co., Ltd. - Engaging in fund management in compliance with the Securities and Exchange Act and in investment management under the permission of the Securities and Exchange Commission. • Siam Resort Fund - A property fund and right of claim (4th Fund) established to mobilize funds from institutional investors, with the main objective to use the proceeds obtained from the sale of the unit trusts for purchasing or renting property and generating benefits from such property, or for investing in the right of claim or in other assets. Such investment is aimed at solving problems in the financial sector. It is a closed-end fund, with MFC Asset Management Plc. as the fund manager. (In this respect, Siam Resort Fund is not included in the Bank’s consolidated financial statements as the Bank does not have the controlling power to set out the Fund’s financial and operational policies.) • Thai Orix Leasing Co., Ltd. - Providing leasing and hire-purchase services for office equipment, machinery and vehicles. • Thai Business Fund 2 - A property fund and right of claim (4th Fund) established to mobilize funds from institutional investors, with the main objective to use the proceeds obtained from the sale of the unit trusts for purchasing or renting property and generating benefits from such property, or for investing in the right of claim or in other assets. Such investment is aimed at solving problems in the financial sector. It is a closed-end fund, with Krung Thai Asset Management Plc. as the fund manager. • Phayathai Property Fund - A property fund (2nd Fund) aimed at solving problems in the financial sector, with the main objective to use the proceeds obtained from the sale of the unit trusts for purchasing or renting property or investing in the right of claim arising from the business operation of a financial institution with property placed as collateral, and generating benefits from such property or right of claim. It is a closed-end fund, with TMB Asset Management Co., Ltd. as the fund manager. • The Column Property Fund - A property fund and right of claim (4th Fund) established to mobilize funds from institutional investors, with the main objective to use the proceeds obtained from the sale of the unit trusts for purchasing or renting property and generating benefits from such property, or for investing in the right of claim or in other assets. Such investment is aimed at solving problems in the financial sector. It is a closed-end fund, with MFC Asset Management Plc. as the fund manager.
54 A n n u a l R e p o r t 2 0 0 8 Business Consolidation Policy
TMB segregates the business activities of its group members in accordance with the Bank of Thailand’s consolidated supervision regulation, which calls for a bank’s setting up of a financial business group. The financial business group consists of member companies divided into two categories, based on the bank’s ownership portion and type of business, as follows:
1. Solo consolidation comprising subsidiary companies serving as credit institution in which the bank owns 75% or more of the individual companies’ issued and paid-up shares, and with its management under supervision of the bank. 2. Non-Solo consolidation comprising companies engaging in the financial business and businesses supporting the bank’s operations, as follows:
• Financial business group consisting of subsidiary companies conducting financial business in which the bank owns 50% or more of the individual companies’ issued and paid-up shares, including affiliated companies engaged in credit provision in which the bank holds between 50% and 75% of the issued and paid-up shares. • Supporting business group consisting of subsidiary companies conducting businesses that support the bank’s operations in which the bank holds 50% or more of the individual companies’ issued and paid-up shares.
Commercial banks in Thailand are not allowed to own more than 10% of any other company without the specific consent of the Bank of Thailand (BoT). Under the BoT’s Consolidated Supervision Policy, TMB applied for and on September 30, 2008, obtained approval from the BoT to establish a financial business group. TMB intends to hold and invest in those companies with a view to enabling the Bank to render a universal banking service to its customers. As for other subsidiaries whose businesses are not related to the financial business group and hold more than 10%, TMB will gradually divest its investments when the price is reasonable but within the time limit for the holding set by the BoT.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 55 The Bank’s subsidiaries are classified based on this group structure as shown in the chart below:
TMB group structure chart
TMB Bank Plc.
Solo consolidation Non-Solo consolidation
100%
Phayathai Asset Financial business Management Co., Ltd. Supporting business 75% TMB Asset Management Co., Ltd. 99.40% 45.96% Designee for ETA Thai Orix Leasing Co., Ltd. Contracts Co., Ltd. (TOLC) (Note: TMB has asked for BoT’s permission to include TOLC in the group due to TMB’s plan to hold more shares in the future.)
Remark : There are no persons in the Bank that may have conflicts of interest, holding share in the subsidiary or associated companies of more than 10% of the shares sold of such subsidiary or associated companies.
56 A n n u a l R e p o r t 2 0 0 8 Income structure TMB’s income structure consists of interest and dividend income and non-interest income. Details are in the following Income Structure Table, which shows the Bank’s consolidated financial statements for the accounting years ended December 31, 2006-2008:
Unit: Bt. Million Accounting year ended December 31, Income structure 2008 % 2007 % 2006 %
Interest and dividend income Loans 24,150 66.8 29,180 72.4 30,886 72.8 Interbank and money market items 1,581 4.4 756 1.9 1,127 2.7 Investments 3,421 9.5 3,788 9.4 4,098 9.7
Total interest and dividend income 29,152 80.6 33,724 83.7 36,111 85.1
Non-interest income Gain (loss) on investments (353) (1.0) (831) (2.1) 77 0.2 Share of profit (loss) on equity 465 1.3 282 0.7 216 0.5 Fees and service income - Acceptances, aval and guarantees 524 1.4 649 1.6 628 1.5 - Others 4,487 12.4 4,771 11.8 4,105 9.7 Gain on exchange 951 2.6 1,095 2.7 787 1.9 Gain on sale of assets 626 1.7 - - 171 0.4 Other income 313 0.9 626 1.6 338 0.8
Total non-interest income 7,014 19.4 6,591 16.3 6,323 14.9
Total income 36,166 100.0 40,315 100.0 42,434 100.0
T M B B a n k P u b l i c C o m p a n y L i m i t e d 57 Description of services
TMB’s business operations
TMB’s core business activities include corporate banking services, SME banking services and retail banking services under which the Bank offers a variety of products and services. The Bank is dedicated to developing new and innovative products and services to serve this broad customer base, many of which are delivered to relevant target customer segments via an extensive branch banking network.
Wholesale Banking Group
The Bank offers a wide spectrum of financial services to blue chip and other large corporate banking customers. Key products and services for corporate banking customers include medium to long-term funding, working capital financing, bank guarantees, trade financing, syndicated loans, correspondent banking and cash management. The Bank also provides investment banking services such as financial advisory services, underwriting debt securities and other investor services. Following a review of its largest corporate banking customers in 2008, the Bank now offers a more directed menu of products and services to its corporate banking customers. In particular, TMB has rationalized its internal working process and now offers a one-stop service. This enables corporate banking customers to apply for credit or financial services via a single relationship manager who has detailed knowledge of the Bank’s products and services and who can serve the customers’ needs in a timely manner.
From December, 2008, the Bank defines corporate banking customers as entities that have total annual revenue of Baht 500 million or more. As of December 31, 2008, corporate banking customers constituted 45.1% of TMB’s total loan portfolio, amounting to Baht 191,163 million.
The key financial services that TMB provides to its corporate banking customers are described below.
• Project and Corporate Finance TMB provides medium and long-term loans (i.e., loans with a duration of three to seven years) for corporate and project finance. Project financing is provided to companies in the manufacturing, construction and service sectors. Project finance is usually provided in Baht but may be made available in foreign currencies as needed. Interest is charged at either a fixed or a floating rate. Corporate finance is offered to corporate banking customers based on the Bank’s appraisal of the quality of management, industry, prospects, business model and financial strength of the firm, including the quality of security of the Project.
58 A n n u a l R e p o r t 2 0 0 8 TMB believes that the current market climate in Thailand provides opportunities to increase its infrastructure lending. Large infrastructure projects in Thailand benefit from some form of Government support. The Bank provides project and infrastructure finance to private projects as well as Government projects.
• Working Capital The most common forms of working capital financing are cash credit, working capital loans and overdraft facilities. These loans are funded facilities usually secured by working capital assets. In most cases, facilities are subject to an annual review. Interest is collected on a monthly basis, based on daily outstanding amounts and typically charged at a floating rate.
• Guarantees Guarantees, which also include stand-by letters of credit, can be drawn down in a revolving manner over the life of the facility. Guarantees are issued for various purposes such as bid bonds, performance guarantees on behalf of borrowers for execution of contracts, deferral/exemption from payment of statutory duties against performance obligations, advance payments, release of retention money and other purposes. TMB also provides shipping guarantees as part of its trade finance operations.
The term of the Bank’s guarantees is generally 12 months or less, although certain guarantees with a longer term may be approved. As of December 31, 2008, TMB’s outstanding loan guarantees amounted to Baht 41,744 million.
• Trade Finance Trade finance is one of the Bank’s primary growth products and a major focus area of its business.
TMB offers trade finance products and services to both its corporate banking and SME customers and has established trade finance centers within its branch network. Trade finance products are offered as standardized products but may be tailored to match the specific needs of corporate customers. The Bank provides a wide range of trade finance products to facilitate the trading operations of Thai companies and multi-national corporations, including:
- Letters of credit: The Bank issues letters of credit for the purchase of goods, machinery and raw materials from overseas and provides financing as needed. As of December 31, 2008, the Bank’s documentary credit portfolio was approximately Baht 27,691 million. - Trust receipt financing: The Bank offers bridging loans against trust receipts for underlying trade transactions (covering both domestic and international goods purchases) until the sales proceeds are available to settle the loans. - Shipping guarantees: TMB issues shipping guarantees to facilitate import transactions in the event that necessary documents have not been received.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 59 - Packing credit: TMB provides export financing to be used as working capital both pre and post shipment, provided that the customers will use the proceeds derived from the sale of goods to repay loans. - Export Bills for collection and Bill purchased/discounted: TMB provides collection services as well as purchasing bills. - Forfaiting: TMB launched its forfaiting service as another method of providing cash up-front to exporters. The Bank discounts international trade receivables, including letters of credit, on a non-recourse basis. - Trade credit insurance: TMB has entered into agreements with leading world-class international and trade insurance providers to allow it to offer trade credit insurance together with working capital finance to its valued customers. - Internet banking: Trade finance services, including the issuance of letters of credit, are offered to the Bank’s online customers via TMB BizDirect. TMB is also planning to introduce factoring services under which it will purchase the receivables of exporters by accepting the transfer of exporters’ claims in order to provide them with cash up-front.
• Loan Syndication TMB has developed significant syndication capabilities while structuring and arranging large corporate and project finance transactions. The Bank seeks to leverage these syndication capabilities to arrange project and corporate finance for its corporate banking customers. The Bank still provides facility agent and security agent services to groups of creditors to earn fee income.
• Investor Services TMB provides a variety of investor services to its institutional customers in general, both domestic and overseas. These services include bondholders’ representation, registrar and paying agency services, fund supervisory for mutual funds and custodian/sub-custodian services for private and provident funds, safekeeping, fund administrative, fund registrar and escrow agency services and other services as permitted by governmental authorities.
SME Banking Group
The development of Small and Medium Enterprises (SMEs) is a key strategy to stimulate the Thai economy while government and the private sector are focusing on encouraging the growth of SME businesses. TMB has been aware and always supported SME business as they are major area of business and key revenue generating base for the bank.
As of December 31, 2008, SME credit outstanding constituted Baht 165,459 million, representing 39% of TMB’s total loan portfolio. To concentrate more on SME banking, TMB established SME Banking Group in 2008 to gain a better understanding of SME customer needs and behaviors to be able to provide them with more relevant and targeted products and services.
60 A n n u a l R e p o r t 2 0 0 8 TMB classifies the SME market into two segments by sales volume. • Small Enterprise is defined by annual sales volume not exceeding Baht 50 million. • Medium Enterprise is defined by annual sales volume of over Baht 50 million but not exceeding Baht 500 million.
In 2009, the Bank will concentrate on expanding its SME customer base and increasing revenue from new and existing SME customers. TMB aims to be on of the top-ranking brands in SME customers’ minds by efficiently supporting their day-to-day business operations with packaged financial products and services that matched their needs and are tailored to the unique requirements of a small business.
To strengthen customer relationships, TMB is focusing on a deeper understanding of customer to define customer behaviors and needs in greater detail. This will allow TMB to develop products and services that really suit SME customer needs while reducing cost for the Bank and building a loyal, long-term customer base. TMB plans to offer both transaction related and credit packages together with value-added services in form of a completed, customer-tailored package. For existing customers, - The Bank will increase the number of main operating accounts for existing customers by increasing the number of financial transactions, while attracting new customers by offering trial programs. TMB will provide a variety of credit programs that are specifically designed for each sub-segment. The key element to acquire new customers and retain existing customers is a streamlined and improved credit process that is more predictable and reliable. By creating a new standard of service for TMB’s SME Banking Group, the Bank will be able to build a quality portfolio.
Dedicated Relationship Managers offer SME customers rapid financial and advisory services, supported by a SME zone office. TMB has established 37 SME zone offices throughout the country to get closer to SME customers. In 2009, the Bank will set up six SME Regional offices and expand the network to 50 SME Zone offices with 700 member of the Relationship Management team ready to serve SME customers in all areas.
TMB’s branch network is a key channel for SME customers in terms of regular contact and transaction services. The Bank will serve its SME customers through the 470 branches currently operating nationwide.
To further develop its SME business in Thailand, TMB will co-operate with government departments to conduct training courses for new entrepreneurs. The Bank considers this a social responsibility program, as it will help increase SME competitiveness and enable them to sustain their business over the long term. Some of the key projects under this initiative are:
• New Entrepreneurs Creation (NEC) in cooperation with Department of Industrial Promotion, Ministry of Industry. During the last six years this program has run, The Bank has given knowledge to more than 2,800 new entrepreneurs all over the country.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 61 • Young Investor Program (YIP), a course which targets senior students who aim to be entrepreneurs. More than 2,500 students have graduate from this program.
In recent years, TMB has contributed to social responsibility by coordinating with partners including government departments, state enterprises, and NGOs through various projects and activities related to environmental protection such as:-
• Ozone Project Trust Fund (OTF): The World Bank provides funding to SMEs to adjust or change their air conditioning systems to reduce the impact on earth’s ozone layer. TMB manages the project and has coordinated program implementation with over 4,000 SME businesses.
• Partnership Facility Program (PFP): In cooperation with the Danish Embassy, TMB manages the project and gives consultation to business to help them protect environment or reduce energy consumption through initiatives such as bio mass absorption chillers and energy saving houses.
In 2009, the bank will continue giving back to society by encouraging SMEs to run their businesses in an environmentally-responsible way by supporting them with knowledge, finance, and technology.
Retail Banking Group
TMB has defined its vision to be “the leading Thai bank with world class financial solutions” and is undergoing corporate transformation under a strategy of “Customer Centricity the TMB Way.” For its Retail Banking Group, TMB has introduced an array of deposit and financial products such as home loans, personal loans, welfare loans, and credit card loans. A network of 470 branches and 1,946 ATMs throughout Thailand facilitate the customers’ use of and access to our products and services. The Bank, has developed branch transformation initiatives that include strategic channel expansion, improved service excellence and efficiency, and extensive staff training and development. Despite the economic slowdown in the past year, TMB expanded its branch network and service channels with TMB Internet Banking, TMB M-Banking and a Call Center (1558) to continually enhance customer services. In addition, TMB has organized ongoing marketing and sales promotion campaigns to strengthen relationships with existing customers and acquire new ones.
To respond to the true needs of customers and ensure the highest degree of satisfaction, the Bank’s customer segmentation approach has divided Retail Banking customers into three major groups: Affluent, Middle Income, and Mass.
62 A n n u a l R e p o r t 2 0 0 8 • Consumer Credit TMB has offers a wide variety of consumer credit products such as home loans, personal loans and credit cards, The Bank’s consumer credit portfolio as of December 31, 2008 accounted for Baht 67,583 million, representing 15.9% of TMB’s total loan portfolio. These products are delivered directly to customers through the Bank’s branch network. For home loans, the Bank has developed secured loans and adopted strategies to satisfy all categories of customers who want to have their own home. These strategies include an offer of interest rates that match customer demands, a longer repayment term, faster service, a larger sales force, and special privileges granted upon credit approval and utilization. TMB will continue to seek new approaches to serve an ever-expanding range of customer’ requirements.
The Bank charges special interest rates based on each type of home loans, consisting of the TMB Easy Home Loan which is intended for general housing estate projects and the TMB Premier Home Loan which is for projects by SET-listed developers and projects financially supported by the Bank. The interest rates are also classified by the type of properties, whether a land and house or a condominium.
In addition to the distinct features of the individual products to satisfy all customer segments, TMB also attracts customers to use our services with efficient sales teams who give quick, one-stop service to customers such as information on special interest rates clearly determined by customer segments, a document pick-up service, and fast credit analysis for prompt approval.
Therefore, by using our services, customers not only will obtain a home loan, but also can access a one stop financial solution. Once they have maintained a loan account, they can open a savings account that is entitled to a higher-than-usual interest rate. Also, by using our direct debit service for public utilities bill payment, customers will also receive a higher-than-usual interest rate on their savings.
The Bank has developed unsecured personal loan products such as TMB Ready Cash, TMB Cash-2-Go and TMB Balance Transfer. Sales campaigns for these products have been launched continually to diversify into a new customer base while retaining the existing one. To boost its loan portfolio, the Bank will expand credit lines for customers with good payment records and offers welfare loans to employees of state enterprises, government agencies and private entities that used its payroll service. TMB has offered international credit and debit cards to its customers in association with Visa and MasterCard, and also issued TMB FIT Platinum Cards for upper- middle income consumers, TMB Top Brass Cards to high-ranking military officers and TMB G Cards to government agency officials. This will help to build up good relationships with public sector agencies and individual customers, increasing credit card loyalty. Thailand is one of the fastest-growing credit card markets in the world. As of December 31, 2008, the Bank has issued approximately 250,000 credit cards and over three million debit cards.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 63 • Other Fee-based Consumer Services After the merger and as part of its corporate transformation to a universal bank, TMB is focused on providing more fee-based services to its retail customers. Fee income from retail banking services is generated from ATMs, credit cards, deposit transactions, and EDC services, as well as the products described below. The Bank believes that by using the existing customer base, it can continually boost fee income from the retail banking products. The Bank is also confident that it will be able to expand or modify its customer base to further increase fee income.
Deposits
The Bank’s deposit products include: • Savings accounts: Demand deposits that accrue interest at a fixed rate and offer a withdrawal facility through debit cards, ATMs and pass books. • Current accounts: Non-interest-bearing demand deposits that offer a withdrawal facility through cheques and ATMs. The Bank may offer interest-bearing current accounts for large customers. • Time deposits: Tenure-based deposits of a fixed amount over a fixed term that accrue interest at
a fixed rate specified by the Bank and may be withdrawn before maturity in accordance with applicable rates. Tenures range from three to 60 months.
In addition to conventional deposit products, TMB offers a variety of special value-added products and services that increase product offering alternatives and provide greater convenience for customers. These value-added products and services include insurance coverage attached to deposit accounts, accounts for government officials and state enterprise employees who are nearing their retirement, salary accounts, and
non-resident baht accounts.
As of December 31, 2008, TMB had total deposits of approximately Baht 450,560 million, which included time deposits of about Baht 276,025 million; saving account deposits of around Baht 152,536 million; current account deposits of approximately Baht 21,999 million, and bills of exchange of about Baht 24,740 million. The Bank intends to increase the number of savings and current accounts by offering further incentives and providing easier access to credit for loyal deposit customers.
64 A n n u a l R e p o r t 2 0 0 8 Distribution Network
The Bank distributes its products and services through various access points ranging from traditional bank branches to ATMs, telephone and the internet.
• Domestic Branches The Bank uses its branches as the primary selling points for financial products and services to retail customers across Thailand. As of December 31, 2008, the Bank had a network of 470 branches nationwide. Before opening a branch, TMB conducts a demographic study in strategic areas to assess the branch’s business potential. The Bank monitors existing branches regularly and closes branches with poor performance. In 2008,
TMB shut down the Rajabhat University Sakon Nakhon Sub-Branch and the Nonthaburi Branch and opened new branches in promising areas, which are the Ha Yaek Chalong Phuket Branch and Central Plaza Chiang Mai Airport Branch, to serve retail and SME customers. TMB plans to open more branches which, in principle, will be small outlets in easily accessible areas such as department stores. They will be open for service every day to efficiently and comprehensively satisfy customer needs.
The Bank is implementing a branch remodeling program to ensure modernity, transparency, and cleanliness and also upgrading brach service equipment and facilities.
Additionally, TMB has accelerated the enhancement of its staff’s competence and readiness to deliver a full range of banking services at all branches through training and product development. By doing so, the Bank is able to provide its customers with useful advice and tailor-made products as well as other non-traditional banking services that fit their particular needs.
As of December 31, 2008, the Bank’s branches were located in all parts of Thailand. They are geographically categorized in the table below:
Region Total Number of Branches(1) As % of Total Bangkok and vicinity 216 46 Central and Eastern 52 11 Eastern 41 9 Northern 53 11 Northeastern 49 10 Southern and Western 59 13 Total 470 100
(1) Excluding the Bank’s three overseas branches.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 65 • Overseas Branches The Bank also has three overseas branches in the Cayman Islands, Hong Kong and Vientiane, Lao P.D.R.
The Cayman Islands branch was registered on August 24, 1994 under Part IX of the Companies Law (2007 Revision) of the Cayman Islands. TMB operates the branch with a Category “B” Banking License under the Banks and Trust Companies Law (2007 Revision and its amendment in 2008) of the Cayman Islands. This allows the branch to conduct businesses with other licensees and offshore companies, but not to engage in businesses locally with the public or residents of Cayman Islands, subject to the terms of local regulatory requirements. The Cayman Islands branch acts primarily as an offshore funding center for the Bank. The address of the Cayman Islands branch is Close Bank (Cayman) Ltd., 4th Floor Harbour Place, 103 South Church Street, PO Box 1034 GT Grand Cayman, Cayman Islands, British West Indies.
The Hong Kong branch was established in 1987 and was authorized in 1992 to operate as a restricted- license bank under the supervision of Hong Kong Monetary Authority. The Hong Kong branch offers various services to corporate banking customers, including advisory services on letters of credit and packaging credits and purchasing of export bills. It also provides short and long-term loans to its customers. The Hong Kong branch is located at Room 1601, 16th Floor, New World Tower 1, 18 Queen’s Road, Central Hong Kong.
The Laos branch was established in 1993 when it was granted a full banking license by the Governor of the Bank of Lao P.D.R. and operates under the supervision of the Bank of Lao P.D.R. The Laos branch mainly provides commercial banking services to SME and corporate banking customers, including cross-border trading firms and joint venture companies. It offers a range of products such as deposits, short and long-term loans, letters of credit, guarantees and foreign money transfers. The branch is situated at 34/2 Samsenthai Road, Chanthabouli, Vientiane, Lao P.D.R.
• SME Zone Offices SME zone offices provide advisory and support services to SME customers and are typically located within existing and prominent full service branches. Currently, the Bank has 37 SME zone offices across Thailand. In 2009, the SME network will expand to 50 zone offices and six Regional offices.
• Foreign exchange offices TMB’s foreign exchange service is offered to customers via bureau de change or foreign exchange offices, with foreign tourists and travelers as the target market. As of December 31 2008, there were a total of 106 foreign exchange offices (including mobile units) nationwide, ranking second in the market. Of the total, 18 are located in the passenger terminal of Suvarnabhumi Airport in Samut Prakarn, with the Bank being one of the only two banks authorized to operate a foreign exchange service in this airport. TMB has considerable experience in the foreign exchange business and was the first Bank to offer this service at Don Muang Airport.
66 A n n u a l R e p o r t 2 0 0 8 The Bank’s FX mobile unit offers foreign exchange services in Bangkok and the provinces.
• Trade finance centers As of December 31, 2008, the Bank operated 13 trade finance centers around the country, with the objective of selling its products, facilitating the provision of financial services and advising on international trade in terms of imports, exports and international trading laws.
• Electronic Banking As of December 31, 2008, TMB had installed 1,946 ATMs across Thailand, with 972 in Bangkok and 974 in the provinces. These ATMs are at strategic locations based on high traffic areas with high transaction volumes. Apart from offering services to its own cardholders, the Bank’s ATMs also process Visa, Visa Electron, Plus, MasterCard, Cirrus, Maestro card, JCB and China Union Pay transactions. The Bank has entered into ATM sharing arrangements with other banks that also allow its customers to access their TMB accounts through the ATM networks of these banks. Similarly, customers of these banks can access their bank accounts using TMB’s ATM network. In 2008, TMB increased new services via ATMs that includes an SMS Alert application, Internet Banking application and M-Banking application. In 2009, the Bank plans to expand its ATM network by 400 units nationwide. The Bank is investing in its ATM network in order to gain greater geographic coverage to provide a wider suite of services to more customers.
• Merchant Services As part of TMB’s merchant services business, the Bank provides point-of-sale transactions services for its customers. As of December 31, 2008, the Bank had 12,733 merchants using its services and 14,562 terminals throughout Thailand.
• Internet Services TMB offers Internet banking services to its customers through www.tmbdirect.com. The Bank expects to expand its Internet service offerings and strengthen online security to build customer confidence and encourage greater usage.
With TMB Internet Banking, customers have access to a range of banking services such as balance inquiries, funds transfers, stop payments on cheques, bill payments, third-party fund transfers, interbank transfers, and future transfer scheduling. The Bank’s Internet services are available 24 hours a day, every day and are deployed with high standards of technology and to international security levels. TMB has successfully implemented a Two Factor Authentication System for higher transactional security and enhanced its Internet system design to provide customers with a more efficient interface, faster service and higher system stability.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 67 • M- Banking (Mobile Banking) TMB has expanded its channels by introducing a new Mobile-Banking service called “TMB M-Banking”. The service is adapted from TMB’s own Internet Banking service to use Internet technology on a modern cellular phone to serve the Bank’s personal customers. M-Banking opens up a new alternative channel that allows access to TMB’s services such as account balance inquiry, transfer, bill payment, and Online Real-Time Inter- bank Transfer where the customer can send an SMS Notification to recipients free of charge. Customers can use a mobile phone to access TMB M-Banking at www.tmbdirect.com.
In addition, TMB provides TMB SMS Alert, a notification service to customers by SMS (Short Message Service) to inform them of funds movements in (credit) and out (debit) of their savings/current accounts.
The service is real-time. Customers can apply for this service at TMB’s ATM machine using a TMB ATM/Debit card. TMB SMS Alert will be ready to use immediately after completing the application process.
• Call Center TMB has a call center service, operating 24 hours a day and seven days a week. Customers can call “1558” to contact the Bank for their banking enquires/requests or to conduct telephone banking services using an Interactive Voice Response (IVR) system. Based on customers’ preferred choice of service, they can perform account balance enquiries, transfer funds, pay bills, request banking statements by fax, request cheque return information and do many other tasks. By speaking to a Customer Service Officer, customers can perform the same transactions as well as access additional services such as obtain interest rates & foreign exchange rates, products & services details, report lost or stolen ATM/Debit/Credit Cards, request a temporary credit line increase for credit cards and request a change in mailing address for a credit card. The Call Center also functions as one of the Bank’s customer contact channels to manage feedback and complaints.
• Direct Sales Force TMB’s direct sales force is a channel for selling customer banking customers both secured and unsecured loan products, which includes credit cards and personal loans. Unsecured loan products are sold by Direct Sales Agents and Tele Sales Agents, who cross sell the Bank’s products by telephone. The Direct Sales and Tele Sales Agents are contract staff and managed by Direct Sales Managers or Tele Sales Managers.
The Bank pays the agents performance-based commissions. As of December 2008, the Bank had 450 sales agents who generated over 45,000 accounts per year. The Bank’s secured loan products are sold by Direct Sales Agents who work with well-known property developers in order to acquire new customers and are managed by Mobile Sales Managers.
68 A n n u a l R e p o r t 2 0 0 8 Other services
• Correspondent Banking TMB maintains relationships with a worldwide network of correspondent banks to bolster its international operations. The Bank offers global transaction services through these correspondent relationships, including trade finance, cross-border payments and other treasury services. TMB also offers non-resident Baht clearing accounts to correspondent banks to enable them to manage their Baht payments.The Bank has exchanged Bilateral Keys or BKEs with almost 1,000 correspondent banks to support global transaction services worldwide. Currently, TMB has allocated credit lines to accommodate business relationships with more than 300 banks and other financial institutions worldwide. The Bank plans to expand its network of correspondent banks in order to support its international trade operations and foreign currency payment business.
• Cash Management For the past four years, TMB’s Cash Management Division has been developing its Cash Management services to meet customer needs. The Bank now offers a full range of Cash Management Services including Cash Management Payments, Collections, and Liquidity Management. In addition, its Corporate eBanking system called TMB BizDirect offers Account Services, Cash Management Services, and Trade Finance Services.
TMB BizDirect allows customers to transact conveniently with the bank via the Internet with security that meets the International standards. With these offerings, TMB can service its customers with quality and efficiency.
To expand its services, TMB plan to expand Corporate eBanking to offer EBPP (Electronic Bill Presentment and Payment), E-Payment, and Direct Debit Online. These services will provide customers with alternative channels for making payments online. Currently, these services are under development and will be available soon.
• Investment Banking Services TMB provides corporate customers with investment banking services including financial advisory services, acting as a mutual fund trustee and selling agent and bondholder representative, advising on loans, debt underwriting, corporate restructuring, share valuation, and business partner and investor matchmaking. To increase its portfolio of financial products, the Bank is offering more complex products such as asset-backed securities and interests in property funds. Although investment banking services are mainly for corporate customers, certain types of these services are also provided to SMEs. The investment banking services are an important source of TMB’s fee income.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 69 The Bank has a license to perform debt securities underwriting activities and provides underwriting services for public and private placement offerings of debt securities. TMB underwrites a wide spectrum of debt products, including asset-backed securities and interests in property funds, both on its own and on a syndicated basis.
The Bank uses its extensive branch network as one of the distribution channels for the securities offerings.
To expand its brokering, trading, underwriting and investment advisory services, TMB in October 2005 acquired a 51% stake in TMB Macquarie from Macquarie International Holdings Ltd. This acquisition enabled the Bank to enter into the equity underwriting, dealing and retail brokerage businesses, as well as to expand its institutional brokerage and advisory services. On September 3, 2008, the Bank sold its shares in TMB Macquarie back to Macquarie International Holdings Ltd. with the objective to reorganize its business structure under TMB’s financial group. TMB also acts as a selling agent for equity offerings to retail investors through its branches.
• Asset Management The Bank provides a selling agent service through TMB Asset Management Co, Ltd. (“TMBAM”), a 75%- owned subsidiary of the Bank, and ING Funds (Thailand) Co., Ltd. (“ING Funds”), a member of the world-class ING financial group. Both companies offer a variety of asset management products via the TMB branch network nationwide. This enables the Bank to offer a broader range of products to its customers.
• Life and non-life Insurance The Bank offers brokerage services for life and non-life insurance through its bancassurance service channels. Currently, TMB is partnered with ING Life Limited to provide a range of life insurance products, with individual life and credit life coverage. For its non-life insurance business, the Bank has offered insurance for loan collateral in association with non-life insurance companies. TMB also provides other non-life insurance products such as motor insurance and health insurance.
On May 15, 2008, TMB officially launched the partnership with ING Life Limited, aiming to gear the Bank towards being the leader in universal banking in Thailand. The Bank is offering bancassurance products from ING Life Limited to serve customers’ diverse needs through TMB’s own service channels.
• Treasury Products TMB operates in the domestic and international money, foreign exchange and derivatives markets to hedge customer’s risks on foreign exchange and interest rates. The provision of treasury products and services to corporate banking and SME customers is a significant source of non-interest income for the Bank.
70 A n n u a l R e p o r t 2 0 0 8 TMB offers a variety of products for hedging short-term exchange rate risk on foreign currency denominated receivables and payables, such as spots, forwards, swaps and options. The Bank also offers interest rate and currency swaps and options for hedging medium and long-term risks caused by interest rate currency exchange rate movements. TMB is an active participant in the Thai fixed income market, primarily in Baht-denominated government bonds. In 2008, the Bank was ranked number five in the category of “The Most Active Member Dealer (Outright Transactions)” by The Thai Bond Market Association.
TMB believes that the demand for risk hedging products will grow and is building capabilities to expand its product and customer bases. To further expand the Bank’s clientele and to respond to its customers’ increasingly diverse and complex needs, TMB has focused on providing more information on these products to its sales channels.
Apart from offering products to hedge against foreign exchange risk, TMB also provides foreign exchange transactions, telegraphic transfers, MONEYGRAM service, foreign currency deposits, and international remittance, all of which generated fee income for the Bank.
Competitive advantages
• Strong Relationships with Corporate, SME and Retail Banking Customers TMB’s nationwide presence has allowed it to build a strong base of corporate, SME and consumer banking customers. As of December 31, 2008, corporate loans, SME loans and consumer loans amounted to 45.1%, 39.0% and 15.9%, respectively, of TMB’s total loan portfolio.
• Strong Brand Recognition The Bank currently enjoys strong brand recognition. TMB completed an extensive re-branding exercise in November 2005 that included introducing a new logo to emphasize the new, post-merger identity of the Bank. TMB believes its brand name is well recognized throughout Thailand.
• Extensive Branch Network TMB has an extensive branch network. As of December 31, 2008, the Bank had a network of 470 branches across Thailand and three overseas branches, 106 Bureau de changes (Fx booths) and 1,946 ATMs.
• Strong Deposit Franchise The Bank has established a strong deposit franchise among consumers as well as institutions, holding approximately 7% market share by total assets as of December 31, 2008. The strength is a result of TMB’s effective distribution network, innovative products and full range of additional services catering to the needs of
T M B B a n k P u b l i c C o m p a n y L i m i t e d 71 customers such as asset management, cash management and payments. The Bank continues to attract a diverse range of depositors in addition to its traditional core consumers and payroll customers.
• Innovative Business Technology TMB aims to use technology to provide efficient services to customers, achieve product differentiation, and support internal business units, while maintaining low IT operating costs. It has employed business-driving technologies such as a Core Banking System that is in operation 24 hours a day, seven days a week; Corporate eBanking, an electronic channel for corporate customers to do transactions; Internet Banking; Mobile Banking, which features an unmatched technology enabling customers to use TMB’s services without the need to change a SIM card and phone number; and SMS Notification, which serves the lifestyles of today’s customers for whom technology is becoming increasingly indispensable. In terms of security, TMB has initiated the Two Factors Authentication system, applicable with both Token and SMS authentication. Further, the Bank has introduced a SMS Alert services for all financial transactions to strengthen customer confidence. TMB’s overall technological capability enables the Bank to efficiently drive its business, create product differentiation and have a competitive edge over its competitors while bolstering TMB’s Customer Centricity strategy.
TMB has established an IT infrastructure, known as a Service Oriented Architecture (“SOA”), and “infrastructure virtualization” to improve its IT service capability and operational efficiency while better supporting business needs. This infrastructure enables customers to conduct their business with increased flexibility and responsiveness to address new market opportunities and challenges.
In 2007, the Bank was recognized for its technological innovation in the financial industry both in Thailand and abroad. TMB was awarded the “SOA Innovation Award” from Financial Insights, a provider of business and technology advice and strategic planning for the financial services industry. The award highlights TMB’s SOA technology application of a Straight Thru Process for an unsecured personal loan project, which helps to automate and quicken the loan approval process with greater more efficiency.
• Well-established Asset Management Company The Bank offers asset management products to middle-income and affluent customer segments. These products are managed by TMB Asset Management Co, Ltd. (“TMBAM”) and ING Funds (Thailand) Co., Ltd. (“ING Funds”). TMBAM is 75% owned by the Bank and ranks number four in market share with assets under management worth Baht 128,236 million (excluding special fund and Vayupak Funds) or a 10.48% market share. ING Funds is a member of the world-class ING financial group and ranks number six in market share with assets under management worth Baht 51,498 million, representing a market share of 4.21%. As a selling agent for both TMBAM and ING Funds, TMB is able to offer the widest variety of products to its clients.
72 A n n u a l R e p o r t 2 0 0 8 Provision of products and services
Sources of funds
Major sources of funds for TMB are deposits, borrowings, interbank and money market items, securities sold under repurchase agreement, and liabilities payable on demand. As per December 31, 2008, TMB had total deposits of Baht 450,560 million, which represented 85.1% of total funds, comprised of time deposits of Baht 276,025 million, savings accounts of Baht 152,536 million, and current accounts of Baht 21,999 million, representing 52.1%, 28.8%, and 4.2% of total funds respectively. In addition, the Bank recorded total borrowings of Baht 66,342 million, interbank and money market items of Baht 9,299 million, and liabilities payable on demand of Baht 3,297 million, making up 12.5%, 1.8%, and 0.6% of total funds respectively.
TMB’s sources of funds during the specified period are as follows:
As of December 31 2008 2007 2006 Amount As % of Amount As % of Amount As % of (Bt.million) total fund (Bt.million) total fund (Bt.million) total fund
Time deposits 276,025 52.1 271,531 49.2 415,179 60.4 Savings accounts 152,536 28.8 174,286 31.6 131,431 19.1 Current accounts 21,999 4.2 19,808 3.6 16,101 2.3 NCD 0 0.0 3 0.0 5,963 0.9 Total deposits 450,560 85.1 465,628 84.3 568,674 82.7 Interbank and money market items 9,299 1.8 25,081 4.5 21,786 3.2 Liabilities payable on demand 3,297 0.6 3,610 0.7 3,518 0.5 Securities sold under repurchase agreements - - 4,765 0.9 - 0.0 Borrowings 66,342 12.5 53,215 9.6 93,271 13.6 Total 529,498 100.0 552,298 100.0 687,249 100.0
T M B B a n k P u b l i c C o m p a n y L i m i t e d 73 • Policy on funding and pricing TMB has a policy to mobilize funds from the sources mentioned above with the amount and tenor that is closest aligned to its requirements. Other factors taken into account are proper liquidity for the Bank’s operation and comparison of funding costs from various sources. Meanwhile, the suitable deposit interest rates are determined based on liquidity in the money market and of the Bank itself, together with external factors such as interest rate trend, the BoT’s monetary policy, competition in mobilizing deposits, national economic trends and other such factors.
• Policy on liability management TMB has adopted a policy to manage its liabilities to match with the assets or customers’ demands for loans. In order to hedge against both interest rate and FX risks, various financial instruments such as FX swaps, interest rate swaps and cross currency swaps are applied with an aim to implement this policy efficiently, which constitutes the alignment of the Bank’s cash inflow and outflow. As of December 31, 2008, outstanding swaps and derivatives were approximately USD 270 million for long term and USD 95 million for short term.
Credit extension
• Credit Risk Management Lending can expose TMB’s earnings and capital to credit risk. Effective management of the portfolio and credit functions is crucial to the Bank’s safety and soundness. Credit portfolio management is a process by which risks that are inherent in the credit processes are managed and controlled. The Bank ensures that credit portfolio is well diversified and generates the required risk-adjusted return. TMB’s core credit risk principles are as follows:
Credit Portfolio Management The Bank strategically formulates composition of its credit portfolio and sets limits to cap concentration risk at an acceptable level.
Checks and Balances TMB has established Credit Delegation of Authority to segregate the duties of a recommending authority from an approving authority. Credit approval may not be given at the sole discretion of any one bank officials.
Sound Credit Granting Operational procedures are set out in writing with sufficient details to provide guidance to staff throughout the credit process.
74 A n n u a l R e p o r t 2 0 0 8 Standard for Professionalism The Bank ensures that staff who are involved in the credit process comply with all applicable policies, appropriate laws and regulations, and the Bank’s code of conducts.
Monitoring and Control Adequate reporting standards are defined to monitor and maintain effectiveness of credit portfolio management.
• Credit Risk Policies The credit risk policies are developed with a clearly-defined guideline under the common framework and standard documentation requirement, as follows:
Core Credit Risk Policy: The policy provides guidance on sound practices in credit risk management and ensures that the Bank formulates all supplementary credit policies, processes, and procedures under common principles and standards.
Single Exposure Limit Policy: The policy provides guidance to business units to prudently manage the growth of portfolios in a manner that is adequately diversified.
Country Risk Management Policy: The policy sets out operational guidelines to establish country exposure limits to ensure appropriate diversification of the portfolio and avoid concentration of country risk.
Industry Concentration Framework: The policy provides guidance to establish a bank-wide industry concentration limit structure to protect the Bank from excessive credit risk exposure to any major industry sectors or sub-sectors.
Core Credit Risk Policy on Conflict of Interest: The policy supplements the Bank’s code of conduct by outlining specific policies on conflict of interest that could arise in the course of TMB’s lending activities.
Core Retail Credit Risk Policy: The policy is established to highlight additional minimum requirements and standards for retail credit. This policy is an annex of the Core Credit Risk Policy.
Collective Provision for Loan Portfolio Policy: The policy sets out a consistent framework for collective provisioning for the Bank’s credit portfolio to minimize impacts from unexpected events or changes.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 75 Credit Quality Review Policy: The policy outlines the scope of credit quality review function, which is an independent assessment of all aspects of credit risk exposure.
Credit Risk Mitigation Policy: The policy provides guidance in credit risk mitigation practices to reduce or transfer credit risk to which the Bank is exposed. This policy is an annex of the Core Credit Risk Policy.
• Credit Policies TMB has implemented a policy on credit extension covering corporate loans, SME loans and consumer loans. The loans are not provided for businesses that are against the law and the code of ethics.
This policy covers the following:
1. As a basis for the Bank’s operations, policies and customer qualifications are set out according to risk levels, divided into three groups-credit that is prohibited/suspended, credit that is discouraged, and credit requiring special attention. 2. Credit portfolio management is carried out to prevent the concentration of the credit extension, for example, to any particular industrial/business sector or group of borrowers. To ensure a check and balance in the approval process, the Bank clearly separates the roles and duties of the business relationship management unit, credit risk analysis unit and parties with approval authority. 3. The working procedures and practices of credit analysis are set out in writing to provide officials with guidelines for customer screening, customer payment ability analysis, risk analysis, collateral consideration, and risk mitigation through financial covenants.
TMB’s retail credit portfolios comprise consumer and small/micro SME exposures and are now managed on a product portfolio basis. Policy scope and product terms & conditions are packaged and standardized in order to achieve maximum efficiency and reliability in portfolio underwriting, management and collections. Scorecards and credit risk rating tools are also used where available.
The key policies used for managing consumer products and developed for small/micro SME products include: - Product or Service Approval Process (PSAP), which describes the product target market, terms and conditions, and product features as well as eligibility criteria - Product Credit Policy, which describes the policy criteria and required checks and controls for the particular product - Underwriting Standards, which give detailed instructions to credit officers on the assessment and approval of applications
76 A n n u a l R e p o r t 2 0 0 8 - Risk Appetite Statements, which set the boundary of a particular product and, where necessary, specify higher risk segments within it in terms of outstanding and also identify the probability of default and loss given default
• Credit approval and monitoring The Bank has a separate credit process for commercial credit (Corporate and SME) and retail credit and has segregated the role by credit process into ‘relationship management’ and ‘credit management’ for proper checks and balances. Relationship groups report to their respective Chief Officers, while credit management group reports to Chief Risk Officer. Relationship managers (RMs) for Commercial Credit are responsible for marketing, sales and deal origination, customer service, and preparation of credit applications that will be forwarded to credit officers for further credit risk assessment. RMs also have duties to endorse the proposed facilities structure, terms and conditions that match the borrowers’ financial position, cash flow, and risk involved. The credit applications are then proposed to the relevant credit committee that has the authority to approve based on the credit limit and the policy and qualitative justification. Credit beginning to run into problems or delinquent customers are forwarded to the Commercial Asset Management Committee.
For Retail Credit, the credit process is structured on a product basis. Again, marketing and credit management are separated into different groups, with the BU handling the marketing reporting to the Chief Retail Banking Officer and the credit management group reporting to the Chief Risk Officer. Customer acquisition is either through branches or direct sales under the marketing and sales guidance of the product manager. Consumer credit applications for unsecured products are processed through the credit scoring system and for secured products through the predefined underwriting standard under the expert judgment system. The collection team, currently under the Retail Credit Group, will then continue with the preventive collection and recovery collection process.
In terms of credit risk measurement, the Bank is using a credit risk rating system developed by an external advisor for its commercial credit. Plans are in place for further risk-based credit management such as on customer exposure limits, portfolio risk limits, and pricing. TMB has prepared and economic capital framework that will be implemented in 2009 and will be the basis for further improvement in risk management and will be the basis for single exposure limits, portfolio risk limits and pricing.
Funding or lending through parties related to the Bank’s executives or major shareholders As of December 31, 2008:
- The proportion of deposits accepted from businesses related to executives or major shareholders was 2.22%. - The proportion of loans and accrued interest receivable to businesses related to executives or major shareholders was 3.84%
T M B B a n k P u b l i c C o m p a n y L i m i t e d 77 Shareholding and Management
Shareholders
Below is the list of the 10 largest shareholders as of the latest share register closing date on April 4, 2008, in order to determine the right to attend the Annual General Meeting of Shareholders no. 1/2008 held on April 25, 2008:
Number of ordinary Number of class B % Major shareholders shares preferred shares
1. Ministry of Finance 9,372,279,805 1,991,992,200 26.11 2. ING Bank N.V. 10,970,893,359 - 25.20 3. DBS BANK A/C 003 2,977,989,892 - 6.84 4. Thai NVDR Co., Ltd. 2,975,491,074 - 6.84 5. JPMorgan Special Situations(Mauritius) Limited 1,560,000,000 - 3.58 6. Deutsche Bank AG, London Prime Brokerage 1,393,212,978 - 3.20 7. J.P. Morgan Ireland (Nominees) Limited 564 833,118,889 - 1.91 8. Royal Thai Army 596,879,860 - 1.37 9. Gerlach & Co. – Orbis Sicav 398,281,377 - 0.92 10. State Street Bank and Trust Company, for London 338,312,766 - 0.78
Source: Information on the latest share register closing date on April 4, 2008 prepared by Thailand Securities Depository
Co., Ltd. Investors may look for the list of shareholders from www.set.or.th
The number of shares or impacts on shareholders’ voting rights from the issuance of Non-Voting Depository Receipt (NVDR)
Non-Voting Depository Receipt (NVDR) is a trading instrument issued by Thai NVDR Co., Ltd., a subsidiary wholly owned by Stock Exchange of Thailand (SET). By investing in NVDRs, investors will receive all financial benefits including dividends, right issues or warrants, as if they had invested in a company’s ordinary shares. Unlike ordinary shareholders, NVDR holders are not entitled to voting rights in a shareholders’ meeting except for the case of voting to pass a resolution concerning the delisting of shares from the SET. If the Bank’s shares are issued as NVDRs in a great number, its shares with voting rights will decrease and the voting rights of other shareholders will increase.
As of April 4, 2008, the latest share register closing date to determine the right to attend the Annual General Meeting of Shareholders no. 1/2008 held on April 25, 2008, Thai NVDR Co., Ltd. issued NVDRs with TMB shares as reference asset amounting to 2,975,491,074 shares or 6.84% of TMB’s issued and paid-up ordinary shares. However, the issuance of NVDR securities does not fall within the realm of the bank’s control. Investors may check the information on NVDR shares from website of the SET at www.set.or.th/nvdr
78 A n n u a l R e p o r t 2 0 0 8 Management structure
TMB’s management structure comprises the Board of Directors and five board committees which has been appointed by the Board of Directors. At the Board of Directors meeting no. 5/2551 held on May 14, 2008, a resolution was passed for the board committee restructure to include five committees, namely the Audit Committee, the Board of Executive Directors, the Credit Committee, the Nomination, Remuneration and Corporate Governance Committee and the Risk Management Committee. All the committees aforementioned are responsible for overseeing the Bank’s operations and are tasked to scrutinize crucial issues to be in accordance with good corporate governance before submission to the Board of Directors.
The duties and responsibilities of each board committee are clearly determined in writing. Committee members have profound knowledge, skills, and experience that are aligned with their responsibilities. Most of the Committee member are not the Bank’s executives with some acting as independent directors providing a balance and separation of authorities for governance and management.
1. Board of Directors
The Board of Directors as of December 31, 2008 consisted of 12 members, one holding executive position, seven holding non executive positions, and four being independent directors to ensure a balance of the board’s authorities.
The Board of Directors as of December 31, 2008: Name Position 1. Dr. Sathit Limpongpan Chairman 2. General Anupong Paojinda Director 3. Mr. Philippe G.J.E.O. Damas Director/Chairman of Board of Executive Directors 4. Mr. Vijit Supinit Director/Independent director/Chairman of Audit Committee 5. Dr. Juanjai Ajanant Director/Independent director/Chairman of Nomination, Remuneration and Corporate Governance Committee 6. Dr. Nipon Poapongsakorn Director/Independent director/Audit Committee Member 7. Mr. Amorn Asvanunt Director 8. Mrs. Saowanee Kamolbutr Director/Chairman of Credit Committee 9. Mr. Willem Frederik Nagel Director/Chairman of Risk Management Committee 10. Mr. Vaughn Nigel Richtor Director 11. Mr. Christopher John King Director/Independent director/Audit Committee Member 12. Mr. Boontuck Wungcharoen Director/Chief Executive Officer
M.L. Ayuth Jayant is Secretary to the Board. The Board meeting is held at minimum on a monthly basis or as deemed necessary.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 79 Authorized signatories
Dr. Sathit Limpongpan, Chairman, or Mr. Boontuck Wungcharoen, Chief Executive Officer and in his capacity as the President, or any two directors are authorized to co-sign with the Bank’s seal affixed.
The scope of responsibilities of the Board of Directors is as follows:
Policy
1. To set the overall strategic direction and targets for the Bank, review and approve business policies, operational direction, business plans and yearly budgets. 2. To appoint some of the board members as the Board of Executive Directors to operate the Bank’s business as assigned by the Board of Directors. 3. To approve the scope of responsibilities of board committees and their composition as well as other significant changes to their activities. 4. To review the Bank’s Memorandum and Articles of Association and communicate them to the shareholders. 5. To consider plans for capital injection, whenever appropriate.
Management
1. To oversee management’s operations of the business that enhances the Bank’s competitiveness and operational effectiveness and efficiency with core focus upon the interest of the Bank and the shareholders. These operations are in alignment with the Bank’s vision and mission as defined by the Board. 2. To ensure management has in palce established policies and procedures of risk management with regard to approvals, reviews, and practices encompassing credit risk, market risk, investment risk, operational risk, reputational risk, legal and compliance risk, asset and liability management risk, liquidity risk, interest rate risk, and others according to the regulations of the Central Bank (BOT) 3. To set approval powers and delegation of authority for transactions that are binding for the Bank and for a third party. 4. To effect reporting by Management and the Board of Executive Directors in a timely and appropriate manner on issues to the Board of Directors. 5. To follow up meeting minutes and monitor performance of all board committees. 6. To delegate authority to subcommittees to approve transactions within their respective approval limits. The Board of Directors shall delegate authority to subcommittees for approval of transactions according to credit limits and authority as determined by the Board.
80 A n n u a l R e p o r t 2 0 0 8 Oversight and internal control
1. To ensure high transparent in Bank’s management with check and balance in place for good corporate governance. 2. To review the Bank’s management report and accounting report on a quarterly basis. 3. To ensure the Bank strictly complies with the regulatory rules and requirements through a monthly review. 4. To ensure the Bank has adequate and effective internal control and audit systems and to appoint and supervise the Audit Committee and the Risk Management Committee to perform their duties with best integrity. 5. To establish codes of best practices and business ethics for the directors, the executives and staff members as internal operational guidelines.
Human resource
1. To approve the employment, appointment, rotation, remuneration, disciplinary action, severance of employment, and resignation of top executives, as well as the recommendations of the Nomination, Remuneration and Corporate Governance Committee. 2. To assess twice a year the performance of the following executives: Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief Risk Officer, Chief Retail Banking Officer, Chief Wholesale Banking Officer and Chief SME Banking Officer.
The delegation of authority and responsibilities of the Board of Directors shall not be the delegation or sub- delegation that will allow for the Board of Directors or the persons so authorized to approve any transactions that they themselves or their related parties (as defined in the SEC’s notification or by other concerned authorities) have vested interest or conflict of interest with the Bank or any of its subsidiaries, unless it is an approval of the transactions that is in accordance with the policies and regulations approved by the shareholders’ meeting or the Board of Directors.
Board of Directors composition and appointment
The composition, appointment, discharge or removal of the directors are determined in the Bank’s Articles of Association, which could be summed up as follows:
1. There shall be a Board of Directors to run the TMB business, consisting of at least nine but not more than twenty two directors as periodically determined by the meeting of shareholders of the Bank, provided that not less than half of the total number of directors shall have residence in the Kingdom of Thailand. 2. Election of directors shall be effected in accordance with the following rules and procedures: (1) Each shareholder shall have one vote for each share held. (2) Each shareholder shall cast his votes in accordance with clause (1) to elect one or several directors as decided by the Meeting but each shareholder may not divide his votes into portions and assign them to various candidates.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 81 (3) The candidates who receive the highest votes, in descending order of votes, shall be elected as directors in the number equal to the required number of the directors of the Bank or the number of the directors to be elected at such Meeting. In the event of a tie which causes the number of candidates to be elected in exceed of the number of directors of the Bank or the number of the directors to be elected at such Meeting, the chairman of the Meeting shall have a casting vote. 3. At the annual ordinary meeting of shareholders, one-third of the total number of the directors of the Bank shall retire. If the number of directors cannot be equally divided into three parts, the number of directors nearest to one-third shall retire. The directors to retire from their office in the first and second years following the registration of the Bank shall, unless otherwise agreed, be determined by drawing lots. In any subsequent years, the directors who have been in office the longest shall retire. Retired directors may be re-elected. 4. Any director wishing to resign from his office shall submit his resignation letter to the Bank.
Such resignation shall be effective on the date the resignation letter reaches the Bank. 5. In case of vacancy in the Board of Directors (for reasons other than retirement by rotation), the Board of Directors shall elect a person who has the qualifications without any prohibited characteristics under the laws as a replacement at the following meeting of the Board of Directors, unless the remaining duration of the director’s term of office is less than two months. The replacing directors shall hold office only for the remaining term of office of the directors whom they have replaced. The resolution of the Board of Directors shall be supported by a vote of not less than three-fourths of the number of remaining directors.
Selection of independent directors
The Bank realizes the key role of independent directors is in protecting the benefits of the Bank and small shareholders. The Bank has promoted directors’ independence and managed conflicts of interest to be in compliance with the principles laid down by the authorities and good corporate governance guidelines. The Board of Directors therefore set a guideline for a selection of independent directors. The nominated persons shall be selected from among the various fields of professions with appropriate qualifications and experience.
The Nomination, Remuneration and Corporate Governance Committee then screen qualified persons before proposing to the Board of Directors for further election.
As of December 31, 2008, the Bank’s Board of Directors consists of 12 members, four of whom are independent directors. The minimum number of independent directors is set to be one-third of the total number of directors and not less than three persons.
Independent directors shall be selected from the persons in various fields of occupations with appropriate qualifications and experience. The shareholders or the Bank’s Board of Directors (as the case may be) shall appoint the independent directors. The preliminary qualifications of the independent directors are in accordance with the provisions as prescribed by the Office of the Securities and Exchange Commission, the Stock Exchange of Thailand and the Bank of Thailand and in line with the good corporate governance and guidelines on board structure to promote good governance of commercial banks. Definitions of independent directors are as follows:
82 A n n u a l R e p o r t 2 0 0 8 1. Holding not over 0.5% of paid-up shares of the Bank, its subsidiary companies, associated companies, or related companies, inclusive of shares held by related persons. 2. Not participating in the administration of the Bank, or being employees or officials or advisers who receive regular salaries from the Bank, or being the persons with controlling power of the Bank, its subsidiary companies, associated companies, related companies or the Bank’s major shareholders, or not being or related with professional service providers, auditors, lawyers or any professionals that will constrain them from giving independent opinions to the Bank, its subsidiary companies, associated companies, related companies or the Bank’s major shareholders. Moreover, they shall not be the persons who may have conflicts of interest and must not have had vested interest in the manners mentioned above or in other manners for at least one year before they become fully qualified to be independent directors, except that the Board of Directors have carefully considered that such vested interest will not affect their performing of duties and giving of independent opinions. 3. Not having business relationship, benefits, or interests, either directly or indirectly, in financial or administrative aspects in the Bank, its subsidiary companies, associated companies, or the Bank’s major shareholders or persons with possible conflicts of interest in such manner that may cause a lack of independence. 4. Not being related to or being close relatives of the Bank’s executives, major shareholders, subsidiary companies, associated companies, or persons with possible conflicts of interest. 5. Not being appointed as representatives to protect the benefits of the major shareholders or being shareholders who are related to the Bank’s major shareholders.
2. Board of Executive Directors
The Board of Directors at the meeting no. 5/2551 on May 14, 2008 approved to segregate Board of Executive Directors into 2 committees, namely Board of Executive Directors and Credit Committee, with matters related to credits and investments that are normal transactions of the Bank to be under the purview and responsibility of the Credit Committee. The purpose of this is to clearly distinguish the policy management and credit approval, thereby enhancing its efficiency and effectiveness. The Credit Committee approval authority in relation to such normal credit and investment transactions shall be equivalent to that of the pre-segregated Board of Executive Directors.
As of December 31, 2008, the Board of Executive Directors was composed of members as follows: Name Position Note 1. Mr. Philippe G.J.E.O. Damas Chairman Non executive position 2. Mr. Willem Frederik Nagel Executive Director Non executive position 3. Mrs. Saowanee Kamolbutr Executive Director Non executive position 4. Mr. Amorn Asvanunt Executive Director Non executive position 5. Mr. Boontuck Wungcharoen Executive Director Executive position
M.L. Ayuth Jayant is Secretary to the Board of Executive Directors. The Board of Executive Directors’ meeting is usually held twice a month or as deemed essential and instructed by Chairman of the Board of Executive Directors.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 83 The scope of responsibilities is as follows:
1. To screen the Bank’s business policies, strategies, plans, and budgets before submitting for the Board of Director’s approval as well as regularly follow up the Bank’s performance. 2. To monitor and recommend to the Board of Directors the level of the Bank’s capital as well as the amendment to the Bank’s Memorandum and Articles of Association. 3. To consider and approve strategic investments, other than the usual transactions, expenditure, equity participation, and human resource management which are beyond the Management’s approval authority. 4. To oversee and manage the Bank’s transformation project, conduct an analysis and conclusion on the Bank’s situation to devise and propose strategies to the Board of Directors, and approve an organization and human resource restructuring within the delegated authority. 5. To approve the employment, appointment, rotation, dismissal, fixing of remuneration, disciplinary action, severance of employment, and resignation of executives in the ranks specified. 6. To examine the performance of the Chief Executive Committee and report the examination results to the Board of Directors; provide advice to the Chief Executives on urgent or important issues, and to monitor and screen the critical issues raised by the Management and propose to the Board of Directors.
The delegation of authority and responsibilities of the Board of Executive Directors shall not be the delegation or sub-delegation that will allow for the Board of Executive Directors or the persons so authorized to approve any transactions that they themselves or their related parties (as defined in the SEC’s notification or by other concerned authorities) have vested interest or conflict of interest with the Bank or any of its subsidiaries, unless it is an approval of the transactions that is in accordance with the policies and regulations approved by the shareholders’ meeting or the Board of Directors.
3. Credit Committee
Set up as a seperate entity from Board of Executive Directors, the Credit Committee is to approve all matters which related to credits and investments that form part of the normal transactions of the Bank. The Credit Committee approval authority in relation to such normal credit and investment transactions shall be equivalent to that of the pre-segregated Board of Executive Directors. (The Board of Directors at the meeting no. 5/2551 on May 14, 2008)
84 A n n u a l R e p o r t 2 0 0 8
As of December 31, 2008, the Credit Committee was composed of members as follows: Name Position Note 1. Mrs. Saowanee Kamolbutr Chairperson Non executive position 2. Mr. Willem Frederik Nagel Committee Member Non executive position 3. Mr. Amorn Asvanunt Committee Member Non executive position 4. Mr. Boontuck Wungcharoen Committee Member/ Executive position Chief Executive Officer 5. Mr. Bart F.M. Hellemans Committee Member/ Management Chief Risk Officer Miss Puangpet Orankitvanit is Secretary to the Credit Committee. The Credit Committee’s meeting is usually held twice a month or as deemed essential as instructed by Chairperson of the Credit Committee.
The scope of responsibilities is as follows:
1. To consider and approve credits that are beyond the Management’s approval authority. 2. To consider and approve investments of the usual transactions, and debt restructuring that are beyond the Management’s approval authority. 3. To review the medium- and large-sized NPLs. 4. To set and review the strategies and carry out credit-related development so as to achieve the Bank’s targets and make appropriate recommendations to the Board of Directors. 5. To review credit and investment performance of the Bank.
4. Audit Committee
As of December 31, 2008, the Audit Committee was comprised of members as follows: Name Position 1. Mr. Vijit Supinit Chairman of the Audit Committee/Independent Director 2. Dr. Nipon Poapongsakorn Committee Member/Independent Director 3. Mr. Christopher John King Committee Member/Independent Director
Mr. Peera Chinwannabutr is Secretary to the Audit Committee. The Audit Committee’s meeting is usually held once a month or as deemed essential as instructed by Chairman of the Audit Committee.
The scope of responsibilities is as follows:
1. To review and ensure that the Bank’s financial reports are adequate and accurate. 2. To oversee the Bank’s internal control system that has in place all appropriate and effective internal audit processes as well as to ensure that Audit Group has appropriate and adequate personnel to effectively perform its duties.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 85 3. To ensure that the Bank strictly operates in compliance with the laws and regulatory requirements. 4. To recommend the nomination of the Bank’s auditor and adjust appropriate auditing fee by taking into account the reliability, experience, personnel adequacy and independence of such audit office. 5. To approve the hiring or the design of agreement with the auditor for services other than the audit work. 6. To ensure that the Bank’s disclosure of information is accurate and adequate for concerned transactions or transactions that may involve conflicts of interest. 7. To prepare a report on the Audit Committee’s supervisory; review activities; disclose the report in the Bank’s annual report; and secure the sign off from the Chairman of the Audit Committee. 8. To report to the Board of Directors so that remedial guidelines would be set out when any of the following observations is made: conflicts of interest, frauds or suspected fraudulent acts, activities that contain risk exposure; Administrative errors; and acts againts the relevant laws or regulatory rules. 9. To investigate complaints made by the Bank’s employees and customers. 10. To consider the examination results and orders of the Bank of Thailand, the Office of the Securities and Exchange Commission, the Stock Exchange of Thailand and other relevant agencies, and to consider the appropriateness of the measures and remedial actions taken by the Management. 11. To carry out any assignment given by the Board of Directors as consented by the Audit Committee. 12. To comply with the regulations of the Bank of Thailand, the Office of the Securities and Exchange Commission, the Stock Exchange of Thailand and other relevant agencies.
It is noted that the scope of responsibilities of the Audit Committee had reviewed in February 2009.
5. Nomination, Remuneration and Corporate Governance Committee
The Board of Directors at the meeting no. 5/2551 on May 14, 2008 approved the following integrate corporate governance (CG) issues to the Nomination and Remuneration Committee(NRC), as the CG issues have always been given high degree of importance by the BoD and changed the name to Nomination Remuneration and Corporate Governance Committee (NRCC)
86 A n n u a l R e p o r t 2 0 0 8 As of December 31, 2008, the Nomination, Remuneration and Corporate Governance Committee was comprised of the directors not holding executive position, namely:
Name Position Note 1. Dr. Juanjai Ajanant Chairman Independent director 2. Mr. Philippe G.J.E.O. Damas Committee Member Non executive position 3. Mrs. Saowanee Kamolbutr Committee Member Non executive position 4. Mr. Christopher John King Committee Member Independent director Mr. Thawatchai Techawatanawana is Secretary to the Committee. The meeting of this Committee is usually held four times a year or as deemed necessary as instructed by Chairman of the Nomination, Remuneration and Corporate Governance Committee.
The scope of responsibilities is as follows:
Nomination and remuneration
1. To set policies, criteria and methodology for nomination of directors and top executives for the Board of Director’s consideration and approval. 2. To select and nominate qualified persons to be appointed as members of the Board of Directors, senior executives and directors on the board of any company in which the Bank holds at least 50% of its equity for the Board of Directors’ consideration. 3. To set a policy on the payment of remuneration and other benefits as well as on the amount of remuneration and other benefits for directors and top executives in a clear and transparent manner for the Board of Director’s consideration and approval. 4. To ensure that the Board members and top executives of the Bank receive remuneration appropriate and commensurate with their roles and responsibilities. 5. To lay down guidelines on performance assessment for the Board members and top executives in relation to annual adjustment of their remuneration based on the scope of their responsibilities and the risks involved and also on the increase shareholder’s value in the long term. 6. To set a succession plan for the top-executive level.
Corporate governance
1. To assist the Board of Directors in monitoring and ensuring that the operations of the Bank and its practices and operations of the Board of Directors, relevant committees, the Management and staff members are in compliance with good corporate governance. Moreover, it is to formulate, follow up and communicate the guidelines on corporate governance practices to the internal and external relevant parties.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 87 2. To formulate guidelines and all policies related to good corporate governance principles for the Bank. 3. To regularly review the relevant policies, principles and guidelines and make recommendations on the business ethics and code of conduct. 4. To follow up the new development on good corporate governance guidelines of government agencies and international organizations and adopt the suitable ones for bank practices. 5. To supervise and ensure the continuity and suitability of good corporate governance in the Bank. 6. To report to the Board of Directors the Bank’s good corporate governance with recommendations
for improvement.
6. Risk Management Committee
As of December 31, 2008, the Risk Management Committee was comprised of members as follows: Name Position Note 1. Mr. Willem Frederik Nagel Chairman Non executive position 2. Dr. Juanjai Ajanant Committee Member Independent director 3. Dr. Nipon Poapongsakorn Committee Member Independent director 4. Mr. Amorn Asvanunt Committee Member Non executive position 5. Mr. Boontuck Wungcharoen Committee Member Executive position Mr. Buntoon Tohtong is Secretary to the Committee. The meeting of this Committee is usually held on a monthly basis or as deemed necessary as instructed by Chairman of the Risk Management Committee.
The scope of responsibilities is as follows:
1. To approve the Comprehensive risk management strategies in a holistic manner. 2. To approve significant policies and frameworks that govern the management of risks including risk governance matters which are required by the authorities to be approved by the Board of Directors. 3. To recommend the risk levels and its concentration for the Board of Directors’ approval. 4. To approve the supplemental risk limits as defined in the relevant policies and frameworks. 5. To review and monitor all risks and risk management including preparedness for Basel II compliance. 6. To approve the appointment, review of committee structure and composition, and roles and duties of the management-level risk management committees. 7. To report the risk management performance and all risk management matters and measures to the Board of Directors and the Audit Committee.
88 A n n u a l R e p o r t 2 0 0 8 7. Other committees/working groups
Policy issues (5 main committees)
1. Chief Executive Committee: To supervise and ensure the Bank’s operations are aligned with its vision, objectives and strategies; to develop business strategies and plans, and annual budgets; to supervise, manage, encourage, and follow up the operations and performances of all functional groups to ensure they meet the targets.; execute orders, supervise a remedy of critical situation, and solve problems in all situations including liquidity crisis or when damage has been incurred to the Bank to ensure business continuity.
2. Asset and Liability Management Committee: To review/endorse, under the scope provided by the Board of Directors, the policies, guidelines, standards, processes and risk tolerance levels related to liquidity and money market risk management which impacts both banking book and trading book; and to review and supervise the asset and liability management of the Bank to be in compliance with the rules and regulations of the concerned authorities.
3. Credit Policy Committee: To review/endorse the credit risk policies, credit underwriting standards and criteria, and non-transactional credit risk limits; to review the firm-wide credit risk profile, credit risk tolerance level and instruments for credit-risk control; and to provide guidelines related to the credit risk management for current situation and also after new product launch.
4. Operational Risk Management Committee: To review/endorse the operational risk management policies, standards, processes and operational risk tolerance levels; to monitor and review the firm-wide operational risk profile and issues; and to provide guidelines on the operational risk management.
5. Basel II Steering Committee: To supervise and ensure that Basel II project implementation is aligned with the Bank’s direction and strategy; and to monitor the Bank’s direction and highlight any business need changes that necessitate changes in the project objectives.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 89 Credit Management (10 main committees)
1. Credit Underwriting Committee: To consider loans proposed by Commercial Credit Group and Retail Credit Group within its approval authority; and to scrutinize the matters within the approval authority of the Board of Directors and the Credit Committee.
2. Commercial Credit Underwriting Committee and Retail Credit Underwriting Committee: To consider loans proposed by Commercial Credit Group and Retail Credit Group within their respective approval authority.
3. Appraisal Consideration and Approval Committee (4 committees): To approve list of outside independent appraisers; to formulate appraisal procedures; and to approve the appraisal result or revaluation result conducted by independent external appraisers and internal appraisers for every property value.
4. Commercial Asset Management Committee: To review and monitor and to consider the issues related to NPLs and NPAs within it approval authority; and to scrutinize the matters within the approval authority of the Board of Directors and the Credit Committee.
5. Retail Asset Management Committee: To review and monitor and to consider the issues related to NPLs of Retail Credit Group.
6. Collateral Bidding Committee: To approve the purchasing price of collateral for bidding with Legal Execution Department as per the Bank’s criteria.
In addition, the approval given by the authorized officers and committees for credit underwriting and asset management, based on credit limit, business type and collateral type, shall be subject to the authority limit as approved by the Board of Directors.
Products (1 committee)
New Product and Service Committee: To approve product/service conditions offered to customers; and to adjust or cancel the existing products/services as deemed appropriate.
90 A n n u a l R e p o r t 2 0 0 8 Information technology (1 main committee)
IT Committee: To devise the policies and plans on IT system development in the short and long term; to follow up the progress and review the plans on IT and work process development.
Human resources (1 main committee)
Human Resource Committee: To propose the principles, policies, strategies and plans on manpower and the regulations on human resource management as well as staff’s annual remuneration, salary structure, compensation and welfare; to review manpower plans, rotation plans, training plans, and performance management methods; and to approve the employment, appointment, and rotation of staff within the scope assigned.
Health and safety: To organize projects encouraging and supporting safety-related activities; and to define regulations on safety, occupational health and working environment to be in compliance with the regulations of the Ministry of Labor and Social Welfare.
Board of Directors’ meeting
A whole-year board meeting schedule shall be set in advance so that the directors could spare time to attend each meeting. Besides normal meetings, special meeting sessions may be arranged as deemed necessary with consent from the Board Chairman. The meeting agenda shall be set, with clearly-divided items, by the Chief Executive Officer and approved by the Board Chairman. The Board Secretary shall deliver an invitation letter together with the meeting agenda and meeting documents to the directors at least 7 days in advance of the meeting date, except in an urgent case, so that the directors would have sufficient time to study the information. In this regard, the directors may propose other issues to the meeting as deemed appropriate.
In each meeting, the directors will take time in considering each item and expressing independent opinions for the best interest of the Bank. The Chairman will process the comments and conclude results of the meeting. The Board Secretary is responsible for preparing the meeting minutes to be adopted by the meeting as well as for storing the meeting minutes for future reference and for inspection by concerned parties.
Besides, the directors having related interests to the issue proposed to the meeting shall not join the deliberation of such issue. The Board of Directors is able to hold a meeting, where the directors holding executive position are not present with consideration of Bank and management performance.
In 2008, there were 16 meetings of the Board of Directors. Details of the meeting attendance of the Board of Directors and board committee members are as follows:
T M B B a n k P u b l i c C o m p a n y L i m i t e d 91 Meeting attendance of board and committee members in 2008 is tabulated below:
(Unit: Times) Nomination, Board of Board of Credit Audit Remuneration Risk Name Directors Executive Committee Committee and Management Directors Corporate Committee Governance Committee Total no. of meetings in 2008 16 25 13 12 18 9 (*) 1. Mr. Somchainuk Engtrakul 2/2 (Until January 31, 2008) 2. Dr. Sathit Limpongpan 15/15 2/5 2/2 (From January 15, 2008) (Until February (Until February 28, 2008) 28, 2008) 3. Mr. Chulakorn Singhakowin(*) (Until April 25, 2008) 5/5 11/11 4. Gen. Anupong Paojinda 6/16 5. Mr. Bodi Chunnananda(*) 4/4 3/3 (Until March 31, 2008) 6. Mr. Kampree Kaocharern(*) -/1 -/1 (Until January 18, 2008) 7. Mrs. Chantra Purnariksha(*) 3/3 3/3 -/1 (Until March 3, 2008) 8. Mr. Vijit Supinit (From January 28, 2008) 15/15 11/11 9. Mr.Philippe G.J.E.O. Damas 14/16 20/25 17/17 10. Mrs. Saowanee Kamolbutr (From April 25, 2008) 11/11 12/13 13/13 9/10 11. Dr. Juanjai Ajanant 12/12 13/13 6/6 (From April 18, 2008) 12. Mr. Willem Frederik Nagel 7/16 6/25 6/13 8/9 13. Dr. Nipon Poapongsakorn (From January 28, 2008) 14/15 10/11 7/7 14. Mr. Vaughn Nigel Richtor 8/16 15. Mr. Amorn Asvanunt 15/16 24/25 13/13 9/9
92 A n n u a l R e p o r t 2 0 0 8 (Unit: Times) Nomination, Board of Board of Credit Audit Remuneration Risk Name Directors Executive Committee Committee and Management Directors Corporate Committee Governance Committee Total no. of meetings in 2008 16 25 13 12 18 9 16. Mr. Christopher John King 15/16 11/12 17/18 2/3 (Until May.
14, 2008) (*) 17. Dr. Subhak Siwaraksa 8/8 14/16 1/2 3/5 (Until July 14, 2008) 18. Mr. Boontuck Wungcharoen 8/8 9/9 7/11 3/4 (From July 14, 2008) (*) Not holding a board member position as of December 31, 2008. (Notes) (1) Mr. Philippe G.J.E.O. Damas is a director who does not has residence in Thailand. - The Board of Executive Directors meetings no. 4/2551, 14/2551 and 24/2551 and the Nomination, Remuneration and
Corporate Governance Committee meetings no. 6/2551, 9/2551, 12/2551 and 14/2551: Mr. Philippe G.J.E.O. Damas joined the meetings through teleconferencing/videoconferencing system. (2) Mr. Willem Frederik Nagel is a director who does not has residence in Thailand. - The Board of Executive Directors meetings no. 3/2551, 8/2551, 13/2551, 14/2551 and 15/2551 and the Credit Committee
meetings no. 1/2551, 6/2551, 7/2551, 9/2551, 11/2551 and 13/2551: Mr. Willem Frederik Nagel joined the meetings
through teleconferencing/videoconferencing system. (3) In the Nomination, Remuneration and Corporate Governance Committee meetings no. 7/2551 and 9/2551, Mr. Christopher John King joined the meetings through teleconferencing system.
Recruitment of directors and executive officers
Recruitment of directors
According to the Bank’s clear and transparent director appointment process, the Nomination, Remuneration and Corporate Governance Committee is responsible for the selection, screening, and nomination of qualified persons to the Board of Directors for consideration before proposing to the shareholders’ meeting for further election as directors of the Bank. Apart from the qualifications prescribed in the Bank’s Articles of Association and the appropriate personal qualifications, the persons nominated must be competent, knowledgeable and experienced in business operations with the possession of leadership skills, visionary and strategic ideas that can lead the Bank to a strong and sustainable growth and must be able to dedicate their time for the optimum benefits of the Bank.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 93 In case of vacancy due to the resignation of a director, the Board of Directors shall appoint a person to fill the vacant position through the nomination made by the Nomination, Remuneration and Corporate Governance Committee. The said new director shall hold office only for the remaining term of office of the director whom he/ she has replaced.
Recruitment of executive officers
In the appointment process of the executive officers at group head level and higher, the Nomination, Remuneration and Corporate Governance Committee is responsible for selecting and screening qualified persons from both internal and external organizations as defined in TMB’s Articles of Association. The nominated persons will be proposed for approval from the Board of Directors. Regarding the appointment process of the executive officers at department head level and lower, the Management shall consider, select and appoint qualified persons as deemed appropriate.
In this regard, the selection process shall be made at least 6 months in advance for the position of the executive who has a specified term of office.
Remuneration for directors and executives
The Bank has a policy to set the remuneration for directors in an appropriate amount and in accordance with their roles and responsibilities to achieve the Bank’s targets and in line with relevant regulations and expectation of all stakeholders. The remuneration shall also be set on a par with those of other institutions. Board of Directors can set the remuneration for additional sub committee (if any) Sub committee remuneration will be included in the amount approved by the AGM.
The remuneration policy is set out in a clear and transparent manner. The Nomination, Remuneration and Corporate Governance Committee is responsible for reviewing the remuneration for directors before submission for the Board of Directors consideration. The remuneration shall be proposed for approval from the annual shareholders’ meeting. The remuneration is set as follows:
1. Monthly fee 1.1 Retaining fee - Director is entitled to the retaining fee for one position only. 1.2 Committee fee - Director is entitled to the committee fee for every board and committee that he/she sits on.
2. Attendance fee - Director is entitled to the attendance fee for every meeting where he/she is present.
94 A n n u a l R e p o r t 2 0 0 8 Cash remuneration 1. Retaining fee Chairman - The Board of Directors Bt. 1,800,000 / year - The Board of Executive Directors Bt. 1,440,000 / year - The Credit Committee Bt. 696,000 / year - The Audit Committee Bt. 696,000 / year - The Nomination, Remuneration and Bt. 446,400 / year Corporate Governance Committee - The Risk Management Committee Bt. 696,000 / year
Member - The Board of Directors Bt. 384,000 / year - The Board of Executive Directors Bt. 422,400 / year - The Credit Committee Bt. 374,400 / year - The Audit Committee Bt. 374,400 / year - The Nomination, Remuneration and Bt. 331,200 / year Corporate Governance Committee - The Risk Management Committee Bt. 374,400 / year
2. Committee fee Chairman - The Board of Directors Bt. 1,800,000 / year - The Board of Executive Directors Bt. 1,440,000 / year - The Credit Committee Bt. 696,000 / year - The Audit Committee Bt. 696,000 / year - The Nomination, Remuneration and Bt. 446,400 / year Corporate Governance Committee - The Risk Management Committee Bt. 696,000 / year
Member - The Board of Directors Bt. 384,000 / year - The Board of Executive Directors Bt. 422,400 / year - The Credit Committee Bt. 374,400 / year - The Audit Committee Bt. 374,400 / year - The Nomination, Remuneration and Bt. 331,200 / year Corporate Governance Committee - The Risk Management Committee Bt. 374,400 / year
3. Attendance fee Chairman - The Board of Directors Bt. 40,000 / attendance - The Board of Executive Directors Bt. 40,000 / attendance - The Credit Committee Bt. 32,400 / attendance - The Audit Committee Bt. 32,400 / attendance
T M B B a n k P u b l i c C o m p a n y L i m i t e d 95 - The Nomination, Remuneration and Bt. 30,400 / attendance Corporate Governance Committee - The Risk Management Committee Bt. 32,400 / attendance
Member - The Board of Directors Bt. 30,000 / attendance - The Board of Executive Directors Bt. 31,200 / attendance - The Credit Committee Bt. 24,600 / attendance - The Audit Committee Bt. 24,600 / attendance - The Nomination, Remuneration and Bt. 23,200 / attendance Corporate Governance Committee - The Risk Management Committee Bt. 24,600 / attendance
In 2008, all of the 18 directors received remuneration for serving on the Board of Directors and other committees in a total amount of Baht 24,308,200. The details are as follows:
Name of director Details 1. Mr. Somchainuk Engtrakul (*) Receiving Baht 380,000 for serving as Chairman of the Board of Directors. (Until January 31, 2008) 2. Dr. Sathit Limpongpan Receiving Baht 4,041,600 for serving as Chairman of the Board of Directors (From January 15, 2008) and on the Board of Executive Directors and the Nomination and Remuneration and Corporate Governance Committee. 3. Mr. Chulakorn Singhakowin (*) Receiving Baht 1,678,000 for serving on the Board of Directors (Until April 25, 2008) and as Chairman of the Board of Executive Directors. 4. Gen. Anupong Paojinda Receiving Baht 948,000 for serving on the Board of Directors. 5. Mr. Bodi Chunnananda (*) Receiving Baht 661,200 for serving on the Board of Directors (Until March 31, 2008) and as Chairman of the Audit Committee. 6. Mr. Kampree Kaocharern (*) Receiving Baht 95,200 for serving on the Board of Directors (Until January 18, 2008) and the Audit Committee. 7. Mrs. Chantra Purnariksha (*) Receiving Baht 525,200 for serving on the Board of Directors (Until March 3, 2008) and the Risk Management Committee and as Chairman of the Nomination, Remuneration and Corporate Governance Committee. 8. Mr. Vijit Supinit Receiving Baht 2,300,200 for serving on the Board of Directors (From January 28, 2008) and the Audit Committee and as Chairman of the Audit Committee. 9. Mr. Philippe G.J.E.O. Damas Not entitled to receive the monetary remuneration as per the criteria of ING Bank N.V. 10. Mrs. Saowanee Kamolbutr Receiving Baht 3,052,800 for serving on the Board of Directors, (From April 25, 2008) the Board of Executive Directors, and the Nomination, Remuneration and Corporate Governance Committee and as Chairman of the Credit Committee.
96 A n n u a l R e p o r t 2 0 0 8 Name of director Details 11. Dr. Juanjai Ajanant Receiving Baht 2,056,800 for serving on the Board of Directors (From April 18, 2008) and the Risk Management Committee and as Chairman of the Nomination, Remuneration and Corporate Governance Committee. 12. Mr. Willem Frederik Nagel Not entitled to receive the monetary remuneration as per the criteria of ING Bank N.V. 13. Dr. Nipon Poapongsakorn Receiving Baht 2,198,200 for serving on the Board of Directors, (From January 28, 2008) the Audit Committee and the Risk Management Committee. 14. Mr. Vaughn Nigel Richtor Not entitled to receive the monetary remuneration as per the criteria of ING Bank N.V. 15. Mr. Amorn Asvanunt Receiving Baht 3,592,800 for serving on the Board of Directors, the Board of Executive Directors, the Credit Committee and the Risk Management Committee. 16. Mr. Christopher John King Receiving Baht 2,778,200 for serving on the Board of Directors, the Audit Committee, the Nomination, Remuneration and Corporate Governance Committee and the Risk Management Committee. 17.Dr. Subhak Siwaraksa (*) Not entitled to receive the monetary remuneration as per the criteria (Until July 14, 2008) of TMB. 18. Mr. Boontuck Wungcharoen Not entitled to receive the monetary remuneration as per the criteria (From July 14, 2008) of TMB. Note : * Not holding a board member position as of December 31, 2008.
Other benefits The Bank provided other benefits and necessary welfares to the directors in a total amount of Baht 2,544,400.
Remuneration for executives During the accounting year ended December 31, 2008, the Bank’s 32 executives received remuneration in a total amount of Bt. 144.08 million, consisting of salary, bonus, provident fund and other benefits. (Executives refer to managers, the first four executives under each manager’s command line, and every 4th executive, excluding accounting manager or finance manager if the position of the department manager is not at the same level as that of the 4th executive.)
Moreover, on February 1, 2006 the Bank issued and offered for sale the warrants to purchase the Bank’s ordinary shares to the Bank’s employees under the Employee Stock Option Program (ESOP) amounting to 68,158,000 units at the offering price of Bt. 0/unit. The warrants are valid for a period of 5 years from the date of issue and offering for sale. The warrant of 1 unit is entitled to a purchase of 1.051 ordinary shares, with the exercise price of Bt. 4.480 (as per the right adjustment in 2006). The warrant holder may exercise the right to purchase the Bank’s ordinary shares after a lapse of 2 years of the warrant life. The right may be exercised every
T M B B a n k P u b l i c C o m p a n y L i m i t e d 97 6 months on the 31st of January and July each year throughout the period of the warrants. The first date of exercise is on July 31, 2008 and the last on July 31, 2011. In this regard, the warrants allocated to the Bank’s executives accounted for 0.26% of the warrants issued and offered for sale.
Shareholding of the Board of Directors and Executives as at December 31, 2008
Board of Directors
Shareholding Family Name - Surname Positions In TMB Relationship** (%)* 1. Dr. Sathit Limpongpan Chairman of the Board - - 2. General Anupong Paojinda Director 0.0002 - 3. Mr. Philippe G.J.E.O. Damas Director - - 4. Mr. Vijit Supinit Director - - 5. Dr. Juanjai Ajanant Director - - 6. Dr. Nipon Poapongsakorn Director - - 7. Mr. Amorn Asvanunt Director - - 8. Mrs. Saowanee Kamolbutr Director - - 9. Mr. Willem Frederik Nagel Director - - 10. Mr. Vaughn Nigel Richtor Director - - 11. Mr. Christopher John King Director - - 12. Mr. Boontuck Wungcharoen Director / Chief Executive Officer 0.0053 -
Executive Officers Shareholding Family Name - Surname Positions In TMB Relationship** (%)* 1. Mr. Donald Joseph Koch Chief Operating Officer - - 2. Mr. Ramakrishnan Subramanian Chief Retail Banking Officer - - 3. Mr. Bart F.M. Hellemans Chief Risk Officer - - 4. Mr. Sayam Prasitsirigul Chief SME Banking Officer - - 5. Dr. Piti Tantakasem Chief Wholesale Banking Officer - - 6. Dr. Chandraleka Wiriyawit Acting Chief Financial Officer and Senior Executive Vice President 0.0013 - 7. Miss Saipin Kittipornpimol Executive Vice President - - 8. Mr. Peera Chinwannabutr Executive Vice President - -
98 A n n u a l R e p o r t 2 0 0 8
Shareholding Family Name - Surname Positions In TMB Relationship** (%)* 9. Mr. Satian Tantanasarit Executive Vice President - - 10. Mr. Surakiat Wongwasin Executive Vice President - - 11. Mr. Vasan Choophaichitr *** Executive Vice President - - 12. Mr. Charan Mongkolchan *** Executive Vice President 0.0004 - 13. Mr. Sopon Kluaymai-Na-Ayudhya Executive Vice President - - 14. M.L. Ayuth Jayant Executive Vice President 0.0028 - 15. Mr. Luecha Sukrasebya Executive Vice President 0.0003 - 16. Miss Utoomphorn Kunakorn Executive Vice President - - 17. Dr. Agapol Na Songkhla Executive Vice President 0.0002 - 18. Mr. Siripong Sombatsiri **** Executive Vice President - - 19. Mr. Somsak Woravijak Executive Vice President่ - - 20. Mr. Martin Alan Searle Executive Vice President - - 21. Miss Oranuj Tantimedh Executive Vice President - - 22. Dr. Sutapa Amornvivat Executive Vice President่ - - 23. Mr. Paphon Mangkhalathanakun Executive Vice President - - 24. Mrs. Vallapa Posyanond Executive Vice President - - 25. Mr. Vikran Paovarojkit Executive Vice President - - 26. Mr. Thawatchai Techawatanawana Executive Vice President 0.0549 - 27. Mrs. Kanchana Rojvatunyu Executive Vice President่ - - 28. Mr. Silawat Santivisat Executive Vice President - - 29. Mr. Pradit Leosirikul Executive Vice President - - 30. Mr. Vichit Chantachaeng Executive Vice President 0.0000 - 31. M.L. Siriwan Kasemsant Senior Vice President, - - Head of Compliance Group 32. Miss Nisa Laohasomboon Senior Vice President, - - Head of Financial Reporting Department 33. Miss Supamas Woranantaku Senior Vice President, - - Head of General Accounting Department 34. Mrs. Voraluck Chokchaitam Senior Vice President, - - Head of Management Accounting Department 35. Mr. Kamran Rafi Senior Vice President, - - Head of Performance Measurement
T M B B a n k P u b l i c C o m p a n y L i m i t e d 99
Shareholding Family Name - Surname Positions In TMB Relationship** (%)* 36. Mr. Chanpichai Chinsamran First Vice President, - - Head of Financial Application System Support Department 37. Mrs. Ruamporn Nanthawong First Vice President, Head of Cost - - Management and Control Department
Remark: Executives refer to managers, the first four executives under each manager’s command line, those in the positions equivalent to the 4th person at the executive level, and also refer to those in the positions
at the executive level in the Accounting Group or Finance Group at the level of department head or equivalence * Including shareholding of spouse and minor children ** Family relationship by blood, marriage or registration under the laws *** Retired December 31, 2008 **** Resigned January 1, 2009
100 A n n u a l R e p o r t 2 0 0 8
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T M B B a n k P u b l i c C o m p a n y L i m i t e d 101 Details of the Subsidiaries Directors
1. Phayathai Asset Management Co., Ltd. There are three directors as follows: 1. Mr. Krissada Jeenawijarana 2. Mr. Vichit Chantachaeng 3. Ms. Utoomphorn Kunakorn
2. Designee for ETA Contracts Co., Ltd. There are three directors as follows: 1. Mr. Thawatchai Techawatanawana 2. Ms. Sawittree Chaichoavalit 3. Mr. Somsak Koonchareon
3. TMB Asset Management Co., Ltd. There are eight directors as follows: 1. Mrs. Jotika Savanananda 2. Mr. Subhak Siwaraksa 3. Mrs. Sirichan Pipitwitayakul 4. Ms. Somnuk Wiwatana 5. Mrs. Ratana Lengsiriwat 6. Ms. Nisa Laohasomboon 7. Mr. Luecha Sukrasebya 8. Mr. Anuphun Tungsnga
Corporate Governance Report
Business operations with adherence to morality and ethics as well as prudent and competent management are key components in the promotion of good governance in an organization. This will provide a solid foundation for a standard business entity with efficient, transparent and reliable operations; hence enhancing its competitiveness, added business value, and sustainable profitability and growth.
Financial institutions, especially the “banking business,” play a vital role in promoting the national economic and social development. The banking business is intertwined with the general public way of life through deposit acceptance, credit rendering and other financial services. The public confidence and trust are crucial to banks’ survival. Thus, the banks’ duties and responsibilities toward the public are of high significance compared with those of other business sectors.
102 A n n u a l R e p o r t 2 0 0 8 TMB has recognized the utmost importance of corporate governance and has adhered to this. It is our belief that with good governance principles and procedure, including transparent operations on the part of the directors, executives and employees of all levels, the Bank will be able to carry out its business successfully even amid the changing economic circumstances and fierce competition, and with optimum benefits to its shareholders, customers, investors and all other stakeholders. The Bank has also operated with assurance that its operations meet international standards and strictly comply with relevant laws and regulatory requirements.
In order to ensure integrity and transparency in the business operations and management, with equitable treatment to all stakeholders to safeguard against conflicts of interest and maintain good reputation, the Bank has laid down a Corporate Governance Policy. The policy covers all relevant regulatory issues and serves as guidelines for strict compliance by the Board of Directors, executives and employees of all levels so as to bring about good corporate governance for the Bank.
The Board of Directors of the Bank has approved the Corporate Governance Policy as written guidelines announced to all bank personnel, i.e. Board of Directors, management and bank staff for their acknowledgement and on-going compliance. The Board of Directors has put best efforts in ensuring the policy is implemented; and review, improvement and modification are undertaken to updated and align with the changing situations, as well as its translated into rigorous practice for the benefits of the Bank, shareholders and other stakeholders.
In 2008, the Bank continued its commitment to the transparent and fair operations under good corporate governance, on-going development of which will be pursued. Its corporate governance practice in the year can be summarized here:
1. The Board of Directors passed a resolution ranaming and restructuring the Nomination and Remuneration Committee as the Nomination, Remuneration and Corporate Governance Committee to assist the Board of Directors in overseeing and ensuring the Bank’s operations and the performance of duties of the Board of Directors, Board committees, management and employees in compliance with corporate governance principles. (Please refer to details in the item “Scope of duties and responsibilities of Nomination, Remuneration and Corporate Governance Committee”). 2. The Board of Directors passed a resolution appointing the Company Secretary to perform duties and responsibilities as prescribed by law and to perform duties that support the Board of Directors’ performance of duties in relation to rules, regulations and laws, as well as best practice. 3. The Board of Directors mapped out procedures for the shareholders to propose items on the agenda of the shareholders’ meeting and nominate candidates in the election of directors before the shareholders’ meeting is held. This allows the shareholders to participate in raising the issues that will benefit the Bank’s development, and nominating qualified and competent candidates for election as directors to perform duties efficiently in the best interests of the Bank and all stakeholders.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 103 4. The Board of Directors passed a resolution approving the implementation of a corporate governance self-assessment exercise of the Board of Directors and Board committees as a channel for them to review their performance and address problems and hindrances arising in the past year.
To enable the banking business to be in compliance with the principles of good corporate governance for listed companies as per the SET’s guidelines, the Bank would like to present a summarized report on its compliance with the principles of good corporate governance as follows:
1. Rights of shareholders The Bank has facilitated all shareholders to ensure they can fully exercise their basic rights, i.e. independent purchase, sales and transfer of securities they hold, and safeguarded the interests of all shareholders, comprising major shareholders, minor shareholders, individuals and institutions on an equitable basis in the access to accurate and updated information of the Bank.
The annual general meeting of shareholders has been determined to be held annually within four months from the end of the fiscal year (December 31). In case of any special issue that needs to be proposed as an urgent and necessary case, and where the approval of the shareholders’ meeting is required pursuant to the applicable conditions, rules or laws, the Bank will call an extraordinary general meeting of shareholders on a case by case basis.
The Bank has a policy to arrange the shareholders’ meeting with efficiency and transparency and in compliance with relevant regulations and regulatory requirements. Meeting agenda and documents are to be delivered to the shareholders in advance, with sufficient information provided to support the shareholders’ consideration and decision to vote on each agenda with their full use of rights. On the meeting date, appropriate registration procedure has been prepared by the Bank, with facilities provided by Bank staff for the shareholders and proxies.
In 2008, the Bank held the 2008 Annual General Meeting of Shareholders (AGM) on Friday, April 25, 2008, at the Auditorium, Floor 7, TMB Head Office. Altogether 1,300 shareholders and proxies, holding a total number of 32,216,750,713 shares or 74.01% of the total shares sold, and eight directors attended the meeting. The meeting procedures conformed to the good corporate governance principles as below:
1.1 Before the meeting The shareholders had full access to necessary information on the meeting date and the agenda in advance on the Bank’s website so that they would have adequate time to study the information before receiving the documents. The Bank had assigned Thailand Securities Depository Co., Ltd. (TSD), its share registrar, to send out to all shareholders the invitation notice, with details stipulated therein regarding the meeting date, time and venue, as well as complete information necessary for the meeting. The invitation notice stated the objectives and rationale as well as the opinions of the Board of Directors on each item, accompanied by complete and
104 A n n u a l R e p o r t 2 0 0 8 sufficient details for the consideration of each item and for the decision to vote on each item. Shareholders were clearly informed which item would be for consideration and which one for acknowledgement. Moreover, in the invitation notice, the shareholders were informed of the details regarding necessary evidence documents to be brought to the meeting.
A proxy form was also enclosed so that the shareholders could use in appointing any of the Bank’s designated independent directors or other persons as their proxies in case they could not attend the meeting.
1.2 During the meeting The meeting was arranged with transparency, fairness and equitable treatment of all shareholders. Appropriate registration procedure was prepared by the Bank, with facilities provided by Bank staff, classified by type of attendees, i.e. shareholders attending in person and proxies attending on shareholders’ behalf. This aimed at ensuring rapid and accurate registration procedure. Voting card was available for each attendee to vote on each item on the agenda. Moreover, the Bank also provided shuttle bus service at various spots and sufficient parking space to serve the shareholders.
At the 2008 AGM, the Chairman of the Board of Directors served as Chairman of the meeting, and Chairman of each Board committee, namely Audit Committee; Nomination, Remuneration and Corporate Governance Committee, and Risk Management Committee, together with the President and Chief Executive Officer, were also present at the meeting to clarify and answer questions of relevant issues. Before the beginning of the meeting, the Chairman clearly informed the meeting of the voting and counting methods. For more convenience to the shareholders, a simultaneous English translation was provided by Bank staff for foreign shareholders. In this regard, the shareholders’ right to study of the Bank’s information memorandum would not be undermined, such as no abrupt distribution of additional document with key information during the meeting, no addition of new items on the agenda or change in the key information without prior notice to the shareholders, no prohibition of meeting attendance of late attendees, and so on.
The Chairman proceeded with the meeting in order of the items on the agenda. In consideration of certain items on the agenda in which directors who joined the meeting have interests or have relation thereto, e.g. election of directors to replace those who retire by rotation, the Chairman informed the meeting thereof and such directors would abstain from joining the consideration and voting thereon. The Chairman also encouraged the shareholders to cast votes and raise questions and comments. Importance was given to all the recommendations or comments made by the shareholders, with all questions comprehensively clarified and all useful suggestions brought into account. The vote casting and the vote counting were undertaken openly and transparently. At the 2008 AGM, White & Case (Thailand), Ltd., legal consultant, was invited to witness the vote counting on all agenda items. The meeting minutes and detailed votes on all items, as well as crucial questions, answers and comments, were recorded completely and accurately by the Company Secretary.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 105 1.3 After the meeting After the meeting, the minutes of the meeting that would be proposed for adoption at the next meeting were submitted to the relevant authority within the specified period, and also available to the shareholders on the Bank website.
In 2008, the Office of the Securities and Exchange Commission (SEC) in cooperation with the Thai Investors Association and the Listed Companies Association jointly conducted quality assessment of the Annual General Meeting for 2008, thereby the 2008 AGM of the Bank was rated “Very Good.”
2. Equitable treatment of shareholders The Bank has been determined to conducting business under good corporate governance principles to assure all shareholders, i.e. major shareholders, minor shareholders, individuals and institutions, Thai and foreign alike, of their rights to fair and equitable treatment as follows:
2.1 Right to attend the shareholders’ meeting For each shareholders’ meeting, all shareholders will have equitable right to attend the meeting. Opportunity is opened to those who are unable to attend the meeting in person to appoint proxies to attend and vote at the meeting on their behalf. The Bank has arranged to have its independent directors who do not have interests in the business on the agenda be available for the appointment as proxies. The shareholders may appoint other persons as their proxies.
2.2 Right to vote at the shareholders’ meeting At each meeting of shareholders, the Bank specifies that the rights to vote shall be accordance with the amount of shares held by the shareholders, with one share equivalent to one vote. The voting shall be carried out rapidly and the counting of the votes shall be transparently disclosed, with one share equivalent to one vote. The majority votes will be considered as the resolution except for special resolutions of certain cases set forth by the laws requiring the votes of at least three-fourths of the votes of all the shareholders attending the meeting and having the rights to vote. As regards the voting method, the Bank shall have the shareholders vote by ballot in the case of dissenting votes and abstentions. Furthermore, the Bank will notify to the shareholders the voting result on every item once the counting is finished, divided into approval votes, dissenting votes and abstentions, as well as invalid ballots. The resolution of the meeting according to the voting result on each item will be recorded in writing and all ballots will be kept for further examination.
2.3 Right to appoint directors individually At each meeting of shareholders, the Bank has an agenda item concerning the election of the Bank’s directors. The shareholders are allowed to vote for the election of directors one by one which is the practice in conformity with good corporate governance that shareholders have the rights to choose the person/s that they deem having proper qualifications to perform duties as directors so as to safeguard the shareholders’ interests. This will enable the Bank to have directors from diversified fields to represent the shareholders. The Bank also has an agenda on directors’ remuneration to be proposed for consideration and approval on an annual basis.
106 A n n u a l R e p o r t 2 0 0 8 2.4 Management of conflict of interest The Bank has scrupulously placed importance to the management of conflict of interest of the Bank and its subsidiaries on a transparent and fair basis, disclosed information and transactions in a complete and timely manner, and also overseen the directors, executives and staff at all levels to concern and comply with regulatory requirements regarding conflict of interest.
The consideration of the transactions that may involve conflict of interest or the connected transactions or the related transactions has been made stringently in accordance with the regulatory regulations and international standards, as well as in its normal business operation course and criteria. These transactions have been treated the same as those made with outside parties. Stakeholders in any transaction shall not participate in the consideration and approval of such transaction. The information is disclosed transparently under corporate governance practice.
The Bank exercises caution to prevent the Bank and/or its employees from using customers’ information or secret to conduct business in competition with the customers’ business, and not to support any employees’ activities that will lead to conflict of interest including prevent them from abuse of their duty and authority for personal benefits.
In the monitoring of the use of inside information, the Bank requires that all directors, executives and concerned officials comply fully with the rules and regulations regarding securities trading and disclosure of their securities holding. They must also acknowledge the prohibitions and penalties relating to the use of inside information for their personal or others’ benefits and the premature disclosure of information to the general public.
2.5 Right to propose to the meeting agenda items and make director nominations The Bank has realized the importance of the rights and the equitable treatment of shareholders which are part of corporate governance practice. It has allowed the shareholders to propose issues for the meeting agenda and make director nominations in advance. The Bank has clearly posted on its website as well as through the SET informing the shareholders of such right and procedure as well as the Bank’s criteria and timeframe set at one month within which they are to make proposals.
3. Role of stakeholders The Bank has realized the importance of equitably treating all stakeholders, comprising shareholders, employees, customers, business partners and creditors, investors, government authorities and the society, and other relevant parties. The Bank has put in place the system to handle customers’ complaints and resolve their problems with prudence and fairness. Customer information is to be kept confidential in compliance with the agreements made with business partners. The Bank‘s business operations are based on fair and ethical competition. The employees have been treated fairly and equally. Training has been provided to enhance staff’s knowledge and efficiency, and fair compensation scheme has been mapped out. The Bank has also promoted corporate governance culture within the organization.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 107 To ensure all stakeholders’ full access to their rights, the Bank has laid down guidelines for all stakeholders as follows: • Shareholders The Bank has targeted to achieve satisfactory operational performance, with consistent growth of returns, which will boost the Bank’s value contributed to the shareholders in form of higher share price and attractive dividend payment, as well as complete and transparent information disclosure in line with regulatory requirements and standards.
• Employees The Bank is determined to provide personnel development and training programs to create optimal benefits to the Bank. It has also set sight to creating good organizational culture and work environment, and ensuring employees’ opportunity to grow in their career path, with attractive and reasonable compensation, which will enhance their pooled efforts in operations.
• Customers The Bank has taken the customer centricity strategy in its business operations to provide the customers with diversified services and products that can well respond to their needs and create maximum customer satisfaction.
• Business partners and creditors The Bank has all along honored business agreements, with emphasis placed on the fostering of long- term relationship and sustainable business partnership.
• Investors The Bank has been committed to disclosure of correct, complete and sufficient information to timely serve investors’ decision making.
• Government agencies TheBank has been determined to strictly carry out business in compliance with the relevant laws, rules, regulations and criteria of the authorities.
• Corporate social responsibility The Bank has recognized the significance of corporate social responsibility (CSR). With a strong commitment to and awareness of its accountability to the society, the Bank has supported various activities relating to the promotion of social quality in many respects and has followed up the results of which for further improvement. In 2008, the Bank supported a number of social and environmental activities, e.g. Young Investors Training Program in central and regional areas, New Entrepreneur Creation Program, Marching Band Contest, scholarships for military officers’ children, undergraduate scholarships, Royal Kathin Ceremony, donation to those hit by cold weather, etc.
108 A n n u a l R e p o r t 2 0 0 8 4. Disclosure and Transparency The Bank has ensured transparent and adequate disclosure of information to support investment decision. The Board of Directors is responsible for reporting the Bank’s operating results and significant events in each year for shareholders’ acknowledgement, and confirming the completeness and accuracy of its financial report submitted to the shareholders in conformity with the generally accepted accounting standards. Notes to financial statements are made available in the annual report. The Bank also provides in the annual report the Board of Directors’ responsibility for financial statements and report of the independent auditor. In addition to the disclosure of financial report and other information as prescribed by the law, the Bank has emphasized on the disclosure of essential news and information to timely serve the shareholders, investors and the public. To this effect, Investor Relations Department has been set up under Corporate Governance Group to clearly take charge of disclosing information to the parties concerned. Its policy is to disseminating both financial and non-financial information to both Thai and non-Thai shareholders, investors, analysts and credit rating agencies, with accuracy, completeness, transparency and timeliness, and in accordance with the relevant laws and regulations so that those stakeholders will receive useful information for their investment decisions. This will help build up confidence, good image and reliability to the Bank among the investors and concerned parties.
In 2008, the Bank met with and provided information to concerned parties on the following occasions:
Types of meeting Number Number Number of times of companies of persons One-on-one meeting 42 43 54 Teleconference call 2 5 5 Investor and analyst conference 1 56 76 Total 45 104 135 In addition, the Bank arranged for information dissemination through the following channels: 1. The Stock Exchange of Thailand (SET) 2. The Office of the Securities and Exchange Commission (SEC) 3. Ministry of Commerce 4. Newspapers/magazines 5. Television 6. Electronics media: TMB website (http://www.tmbbank.com) 7. News release and press conference 8. Newsletters sent directly to shareholders 9. Questions and answers through E-mail and call center
Investor relations contact: Investor Relations Department, Corporate Governance Group Floor 28, TMB Head Office Tel. 0-2299-2519 Fax. 0-2273-7640 Email address : [email protected] Website: http://www.tmbbank.com
T M B B a n k P u b l i c C o m p a n y L i m i t e d 109 Shareholder service: Tel. 0-2299-1391 or 0-2299-1406 Fax. 0-2299-2758
5. The Responsibilities of the Board of Directors TMB Board of Directors is composed of independent directors, non-executive directors, and executive directors. It is thus a diversified composition that allows for independent expression of opinions and balance of management power. The members are professionals from diversified fields of knowledge, expertise and backgrounds, which have essentially contributed to the consideration and resolution of meeting issues. They have attached importance and devoted their time to the Bank’s business, through the Board of Directors’ meetings and those of Board committees to ensure efficiency in the business operations with optimum benefits to the Bank.
The Board of Directors plays a key role in drawing up the Bank’s vision and mission, and formulate its policies, targets, and direction in the operations, both short-term and long-term, to be in line with the economic conditions and cope with the competitive environment. These policies are practical and adjustable amidst the complex and rapidly changing business circumstances. There are clear guidelines set out for evaluation of operational performance. Besides, the Board has supervised to ensure that the management has run the business in line with the policies and plans set forth and in an effective, efficient, and transparent manner. The Board has also monitored the Bank’s management of risk to ensure acceptable risk level, and its audit and internal control systems in conformity with the laws and regulatory requirements.
Another important role of the Board is to seek, promote, and develop the employee competence and ethics with suitable compensation scheme drawn up to be competitive with those in the financial market and support the Bank’s business expansion for the utmost benefits of not only the Bank, but also the shareholders and all other stakeholders.
Structure of the Bank’s Board of Directors
1. Board of Directors’ structure
As of December 31, 2008, the Board of Directors was composed of 12 members as follows: • 1 executive director • 7 non-executive directors • 4 independent directors
The Board structure has been set out with clear and transparent scope of responsibilities, not allowing any person or group of persons to have unlimited power. To enable an appropriate check and balance, one-third of the total number of the directors are independent directors pursuant to the regulatory criteria and with the qualifications as required by the relevant laws or regulations. The qualifications of independent directors defined
110 A n n u a l R e p o r t 2 0 0 8 by the Bank are more rigorous than those by the SEC. In this respect, independent directors are able to express their opinions on an independent and impartial basis to bring about the best benefits to the Bank as well as to prevent conflicts of interest.
In order to relieve the Board of Directors’ burden in scrutinizing and considering essential businesses of the Bank, a number of Board committees have been set up by the approval of the Board of Directors to be tasked with overseeing and ensuring the Bank’s transparent and effective business operations. The Board committees shall have the authority to make decision on behalf of the Board subject to the Board’s delegation of authority, duty and responsibility. The Bank’s Board committees comprise the Board of Executive Directors; the Audit Committee; the Risk Management Committee; the Nomination, Remuneration and Corporate Governance Committee; the Credit Committee; and others as deemed necessary.
The qualified persons to be appointed as members in each Board committee are selected by taking into account the appropriate qualifications, capabilities, and experience. The responsibilities of each committee are clearly defined. Meetings have been held regularly. Committee members have devoted their time to the supervision of the Bank’s business operations to ensure that they are in line with the plans and consistently submission of the reports of which for the Board’s acknowledgement.
2. Board of Directors’ meeting
The Board of Directors’ meeting is held regularly on a monthly basis. The meeting date shall be set in advance so that the Board members are able to plan the attendance of the meeting. Besides normal meetings, special meeting sessions may be arranged as deemed necessary. The meeting agenda shall be determined by the Chief Executive Officer and approved by the Chairman of the Board. Meeting documents shall be distributed to the directors in advance so that they can study the information to support their decision making. In addition, each director may propose items to be put in the agenda for the meeting, and fully and independently express their opinions. The directors with conflict of interest in any agenda item shall not participate and exercise their voting right on such item. To allow for independent consideration, the Chairman will process the comments and make conclusion on the consideration results of the meeting.
After every Board meeting, the Secretary to the Board is responsible for preparation of the meeting minutes which are to be adopted in the first agenda item at the next meeting. The adopted meeting minutes shall be filed and kept in an orderly manner available for use as reference and inspection at all times.
3. Appointment of Company Secretary
The Board of Directors has appointed M.L. Ayuth Jayant, Executive Vice President, Head of Corporate Governance Group, as Company Secretary to perform duties and responsibilities on behalf of the Bank or the Board of Directors as prescribed by the laws, and support as well as handle the Board’s activities in relation to the laws, rules, regulations and best practices.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 111 Besides the duties prescribed by the laws, the Company Secretary has the following roles and responsibilities: 1. For the Bank (1) Serving as the center for corporate records, such as certificate of corporation, memorandum and articles of association, shareholder register and business licenses. (2) Arranging and ensuring that disclosure of corporate information and relevant regulatory filings are in accordance with the laws and regulations as well as the disclosure policy of the Bank.
2. For the Board (1) Arranging the meetings of the Board and Board committees in conformity with the relevant laws, the Bank’s articles of association, the respective charters of the Board and Board committees, and best practices. (2) Informing the management of the Board’s resolutions and policies and follow up the management’s implementation thereof. (3) Providing preliminary advice and recommendations pertaining to legal, regulatory and governance issues and practices to the Board and Board committees. (4) Providing data and information on the issues relating to the Bank’s business operations to the Board members to support the Board’s performance of duties. (5) Providing director briefings to newly elected directors. (6) Encouraging and facilitating the Board members to participate in director training and development programs.
3. For the Shareholders (1) Arranging the shareholders’ meetings in conformity with the relevant laws, the Bank’s articles of association, relevant rules and regulations, and best practices. (2) Informing and communicating to the shareholders in general about their rights and the Bank’s developments.
4. Nomination and appointment of directors and executives 4.1 Director nomination criteria The Bank has put in place a definite and transparent director nomination process. The Nomination, Remuneration and Corporate Governance Committee shall be in charge of seeking, screening and nominating qualified candidates to the Board for endorsement before proposal to the shareholders’ meeting for election of directors. The candidates, besides having qualifications as prescribed by the regulatory criteria and the Bank’s regulations, shall have knowledge, expertise and experience in the business arena, and leadership, visionary and strategic thinking skills and competence, as well as be able to contribute their time for the best benefits and the firm and sustainable growth of the Bank’s business operations.
112 A n n u a l R e p o r t 2 0 0 8 In case of any directorship vacancy for reasons other than retirement by rotation, the Board shall appoint a person as replacement upon consideration and endorsement by the Nomination, Remuneration and Corporate Governance Committee. The replacing director shall hold office only for the remaining term of office of the director whom he has replaced.
4.2 Independent director nomination criteria The Bank has been aware that independent directors take a vital role in safeguarding the interests of the Bank and the minor shareholders. To enhance independence of the Board of Directors and manage conflicts of interest pursuant to the regulatory criteria and the corporate governance principles, the Board has formulated criteria for nomination of independent directors from professionals of diversified fields with proper qualifications and experience who can deliver independent opinions and have fairness in the performance of duty. The Nomination, Remuneration and Corporate Governance Committee shall make preliminary consideration of the nomination of independent directors before submission to the Board meeting or the shareholders’ meeting (as the case may be) for appointment thereof. The basic qualifications of an independent director shall be as defined by the SEC, the SET and the Bank of Thailand (BoT), and in accordance with corporate governance practices.
At present (as of December 31, 2008), there are 12 Board members, four of whom are independent directors. According to the Bank’s criteria, the number of independent directors shall be at least one-third of the total number of directors and shall not be fewer than three. The Bank’s definition of independent directors is more rigorous than that set as a minimum by the SET.
4.3 Senior executive nomination criteria In the appointment of senior executives from the level of heads of function groups upward, the Nomination, Remuneration and Corporate Governance Committee shall screen and nominate either internal or external individuals with proper qualifications to the Board for consideration and appointment. The nomination procedures shall be in conformity with the Bank’s regulations and criteria.
The appointment of executives from the level of heads of departments downward has been delegated to the authority of the management in selecting and appointing individuals as considered appropriate.
For certain executive positions where definite terms of office are specified, the Nomination, Remuneration and Corporate Governance Committee shall proceed with the nomination at least six months before the end of such terms of office.
5. Remuneration for directors and executives The Bank has a policy on determining the remuneration for directors and executives on a transparent and appropriate manner and to be attractive to capable individuals to join the Bank or stay on with the Bank. The remuneration paid is considered based on the experience, proficiency and dedication of work, together with the performance and contribution of such directors or executives to the Bank. The remuneration for directors and
T M B B a n k P u b l i c C o m p a n y L i m i t e d 113 executives may be set to be on a par with that of other institutions in the same industry, and is subject to the approval by the shareholders. Disclosure of the remuneration shall be made in the annual report pursuant to the regulatory requirement. The criteria for remuneration are as follows:
1. For the members of the Board of Directors and the Board committees appointed by the Board to monitor and supervise the Bank’s operations to be in line with the policies set forth, comprising the Board of Executive Directors, the Audit Committee, the Risk Management Committee, and the Nomination, Remuneration and Corporate Governance Committee, the remuneration has been determined as follows:
1.1 Board and Board committee members who are external persons will receive retaining fee, committee fee and attendance fee. 1.2 Board and Board committee members who are Bank employees will receive
no remuneration.
2. Remuneration for executives will be based on the Bank’s operating results and the
individual performance.
6. Internal control and audit system The Bank has put emphasis on internal control at both the management and the operation levels to ensure that interests of the customers and the Bank are appropriately taken care of. The Board has regularly monitored the adequacy of the internal control and audit system by assigning the Audit Committee to examine and ensure proper internal control and audit in line with the Bank’s policies and regulations, as well as relevant regulatory requirements.
In addition, the Bank has the Audit Group in place to take charge of considering and evaluating the Bank’s internal control and report the results of which to the Audit Committee on a regular basis.
7. Monitoring of the use of inside information Directors’ and executives’ trading of securities issued by the Bank The Bank has drawn up practices for the transactions of the Bank’s securities by the directors and executives in compliance with the regulatory requirements. In this respect, the directors, senior management from executive vice president level upward and department head or the equivalent in Finance Group are duty-bound to disclose and report to the SEC the Bank-issued securities holdings by them, their spouses and minor children, as well as any changes thereof, such as sale, purchase, transfer or acceptance of transfer of those securities in the report format and within the period of time specified by the SEC.
8. Business ethics and code of conduct The Bank is determined to run its business with integrity and ethics. Besides the corporate governance policy, the Bank has instituted a written code of conduct with the latest revision made in 2007, thereby clear classification and stipulation has been made for strict and consistent compliance by Bank staff of all levels.
114 A n n u a l R e p o r t 2 0 0 8 The core issues addressed and covered by its code of conduct are integrity, information confidentiality, conflict of interest, abuse of authority, misconduct, and so on.
The Bank has been adhered to business operations in a straightforward manner under the relevant laws, rules, regulations and standards of the regulators and the Bank itself, in the best interests of the customers, shareholders and other stakeholders.
9. Enhancement of directors’ performance The Bank has a policy to encourage its directors to participate in training courses in order to expand their knowledge in the fields related to their responsibilities. The training courses for directors are provided by Thai Institute of Directors (IOD), such as Directors Certification Program (DCP) and Directors Accreditation Program (DAP), etc., aimed at bolstering their understanding in director’s roles and responsibilities in compliance with the corporate governance practices.
Besides, the Bank has prepared the directors’ handbook for new directors. The contents of the handbook cover such significant issues as the relevant rules and regulations issued by the regulators and the Bank. The Company Secretary will prepare documents and information that contribute to the new directors’ performance of duties and summarized description of the Bank’s nature of business and operational framework. It is regarded as an orientation for the new directors. Certain significant documents are as below:
1. The Director’s handbook: It covers details on the Bank’s business operations and regulatory requirements applicable to directors and others. 2. Handbook for director of a registered company: It features key information on the role, responsibility and duty of a director and the Board of Directors, guidelines for a director’s performance of duty, protection of a director’s rights, and arrangements of the shareholders’ meeting. 3. Other documents: These include memorandum and articles of association, annual report, corporate governance policy, handbook for directors of financial institutions, and relevant regulatory letters and notifications, featuring rules, criteria and practices prescribed by the relevant regulators, i.e. the SET, the SEC and the BoT. This aims at enhancing directors’ awareness of their roles and responsibilities, and the Bank’s business operations. Such handbooks are subject to regular updating and review to ensure information is current in market practices.
10. Performance self-assessment of the Board The Board resolved in December 2008 for the Board to conduct performance self-assessment on an annual basis. This aims at allowing the Board members to review their roles and duties and the performance of the Board as a whole as well as addressing any problems and obstacles arising under the good corporate governance principles. The self-assessment is undertaken in two tiers below:
1. Assessment of the whole Board of Directors’ performance 2. Assessment of the performance of each Board committees, i.e. the Audit Committee, the Board of
T M B B a n k P u b l i c C o m p a n y L i m i t e d 115 Executive Directors, the Credit Committee, the Nomination, Remuneration and Corporate Governance Committee, and the Risk Management Committee.
The self-assessment of the above Board’s and committees’ performances will be made by all the Board members and the members of the Board committees on an individual committee basis. The secretary of each committee will also join in the assessment.
The self-assessment results will be reported to the Nomination, Remuneration and Corporate Governance Committee for acknowledgment and then proposed for consideration of the Board of Directors accordingly.
Control on use of insider information
Policy and procedure on insider information TMB is aware of the importance of monitoring the use of inside information, especially non-public information that may impact its share price. As such, the Bank has assigned Financial Statement Division under Financial Reporting Department to be the only unit responsible for delivering financial statements and all financial reports to the SET and the SEC after undergoing a correctness and completeness review by the Audit Committee and the Board of Executive Directors respectively to make sure the Bank’s inside information is not prematurely disclosed to the public.
Additionally, to ensure the control of inside information usage complies with good corporate governance principles and the confidential information is efficiently kept, the Bank has revised the procedures for maintaining the Chinese Walls and for employees’ securities trading, and set a silent period to prevent employees from gaining from such information so that the said procedures will always be consistent with the most updated regulatory rules.
Penalty Measures The Bank’s punishment for the use of inside information accords with the provisions of the Securities and Exchange Act B.E. 2535 and all other relevant rules and regulations of the authorities. It has also imposed punishment for employees’ disciplinary misconduct regarding business code of conduct and ethics to ensure
the employees perform duties with transparency and based on professional code of conduct and treat all stakeholders fairly.
Internal Control
Opinion of the Board of Directors The Bank has set its policy and direction with a strong focus on internal control at all levels from the management down to the operations to ensure that customers as well as the Bank’s interests are protected. To this end, the Bank has also set up Audit Committee, Risk Management Committee, Risk Management Group and Compliance Group to oversee the Bank’s governance process, risk management and system of internal control. In addition, Group Audit conducts regular review of the Bank’s operation and related-party transactions.
116 A n n u a l R e p o r t 2 0 0 8 Group Audit reports the audit results to Audit Committee and the committee reports the results to the Board of Directors. The Board of Directors, in its meeting no. 2/2552 on February 19, 2009 which was attended by members, among them were all independent directors and members of Audit Committee, acknowledged the internal control assessment report presented by Head of Group Audit. The assessment was conducted based on internal control core components; including Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring.
The Board of Directors was updated of the status of the internal control systems and they are monitoring the efforts of management to improve the internal control environment of the Bank. In addition, the Audit Committee had recommended that the management take expeditious actions to address deficiencies identified and update the Committee and the Board of Directors progress report regularly. The Board of Directors has emphasized the importance of developing the internal control systems to be effective and comprehensive. In this regard, the Bank is taking actions to review and improve credit management processes, monitoring compliant to the regulations and other controls as recommended by auditors and regulator.
Personnel Total number of employees As of December 31, 2008, TMB had a total workforce of 9,051, broken down by group as follows:
Group No. of employees (persons) Legal Group 92 Corporate Strategy Group 42 Finance Group 125 SME Business Marketing and Product Group 33 Compliance Group 22 Audit Group 124 Human Resource Group 106 Information Technology Group 205 Wealth Management Group 34 Transactional Banking Group 67 BKK Branch Banking Group 2,552 UPC Branch Banking Group 2,688 Secured Lending Business Group 22 Unsecured Lending Business Group 46 Corporate Governance Group 33 Corporate Services Group 529 Corporate Relationship Management Group 123 SME Business Relationship Management Group 8 Market Risk Management Group 12
T M B B a n k P u b l i c C o m p a n y L i m i t e d 117 Group No. of employees (persons) Operations and Information Risk Management Group 12 Corporate Treasury Group 26 Alternative Channels Group 365 Treasury and Markets Group 36 NPA Management Group 64 Management Accounting Group 24 Operations and Services Group 709 Investment Banking Group 26 Risk Analytics and Research Group 58 Retail Marketing Group 19 Retail Business Development Group 82 Commercial Credit Group 285 Retail Credit Group 319 Branch Banking 1 Report directly to Chief Executive Officer 28 Report directly to Chief Risk Officer 70 Report directly to Chief Operating Officer 38 Report directly to Chief SME Banking Officer 2 Report directly to Chief Wholesale Banking Officer 8 Report directly to Chief Retail Banking Officer 16 Total 9,051
Note: If excluding 12 contract staff, the total number of employees was 9,039.
Staff turnover during the past three years 2006-2008, the total number of employees was as follows:
As of December 31 No. of Employee 2006 9,513 2007 8,713 2008 9,051
Note: Total number of employees included contract staff.
118 A n n u a l R e p o r t 2 0 0 8 Key labor disputes during the past three years
Type of case No. of cases Status As of December 31, 2008 1. Lawsuit brought by TMB against employees 1.1 Internal fraud 9 - Case not yet finalized 2 - All cases are under the First Instance Court’s - Case finalized 7 proceedings. 1.2 Duty performed with negligence - Case not yet finalized - - Case finalized - 2. Lawsuit brought by employees against TMB 2.1 Retirement dispute 3 - Case not yet finalized 3 - All cases are under the Supreme Court’s proceedings. - Case finalized - 2.2 Unfair employment termination 4 - Case not yet finalized 3 - Two cases are under the Central Labor Court’s proceedings and one under the Supreme Court’s proceedings. - Case finalized 1 2.3 Request for bonus payment 18 - Case finalized 18 2.4 Request for salary increase 6 - Case not yet finalized - - Case finalized 6 2.5 Request for adjustment of 2006 1 performance evaluation - Case not yet finalized 1 - Case is under the Central Labor Court’s proceedings. - Case finalized -
Staff’s compensation
TMB is well aware that employees are its valued assets and key contributors to its success. Therefore, the Bank gives priority to boosting the employees’ morale and ensuring they receive compensation based on their performance, skills and competence, as well as other welfares and benefits that are reasonable, fair and comparable to other financial institutions’.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 119 • Total compensation and types of compensation for employees The Bank semi-annually conducts employee performance evaluation for annual performance-based salary increase. It also provides other financial allowances for the employees such as allowance for working
in the upcountry, which will be specially increased for office locations in areas such as island, hills, and the three risky southernmost provinces, allowance for staff at branches that are opened seven days a week, etc.
In 2008, total compensation for the employees given in the forms of salary, cost of living allowance, special gratuity, allowance for working in the upcountry, position allowance, overtime, and others accounted
for Baht 4,328.64 million.
• Other allowances The Bank gives other forms of allowances to employees on several occasions such as uniform allowance, grants for staff’s wedding, childbirth, ordination, Islamic pilgrimage, and scholarship for staff’s children. The Bank also grants gratuity to the employees in case they themselves or any of their family members have passed away.
• Provident fund The TMB Employee Provident Fund was registered in 1998 under the Provident Fund Act B.E. 2530 (1987). A contribution at 5%-10% of the staff’s salary is paid by the Bank into the Fund. The Bank’s staff may choose to pay their own portion into the Fund at the rate of 2%-10% of their salary to ensure that they will have funds available from the savings for use after retirement or resignation.
• Other welfares and fringe benefits • Medical care- The Bank provides medical care bill payment for the employees and their spouse and children based on the set criteria. The medical care includes dental treatment, annual health checkup,
in-house medical clinic at the head office with specialized physicians to give medical treatment and health consultancy, etc.
• Group life insurance, personal accident insurance, and health & accident insurance while on overseas business trips- These insurance programs are aimed at strengthening the employees’ security while working with the Bank. The insurance has been taken out in several types with around-the-clock coverage.
• Welfare loans- These are provided for the employees as deemed necessary, available in different forms such as interest-free loans comprising educational loans for staff’s children and emergency loans for staff hit by natural disasters or fire; and loans bearing welfare interest rates comprising housing loans, residence repair/modification loans, car/motorcycle loans, and multi-purpose loans.
• Employee clubs and activities- The Bank promotes activities among the employees dependent upon their individual interest. Several clubs were set up for the employees to join, namely Buddhism Club, Photo Club,
120 A n n u a l R e p o r t 2 0 0 8 Eco-Tourism Club, Bowling Club, Dancing Club, and Health Club. In addition, spaces at the Head Office are made available for indoor sports and workout. An employee club is also provided at Lat Lumkaew of Pathum Thani province to serve as a recreational venue as well as provide lodgings for upcountry branch staff attending a seminar or training in Bangkok.
• Canteen and cooperative store- “The Bank” provides a canteen at its Head Office and a cooperative mini-mart where cheap merchandise is available.
• Library and learning center- To encourage staff to study, research and enrich their knowledge, the Bank has provided a library and a learning center where books, textbooks, publications and VCDs are available.
• Souvenirs for staff with long service years or retired staff- As a token for staff members who have worked long stretches with the Bank, the Bank will give a souvenir to employees who have reached service periods of 20 years, 25 years, 30 years, 35 years and 40 years and to staff about to retire.
Human resource development
• Policy on human resource development TMB has placed an emphasis on employees’ knowledge, potential and behavioral development so that they could perform their work in line with the job description and in response to the Bank’s vision, mission and goals. The Bank organized training programs in the form of classroom training, both in-house and off-premises, and encouraged self learning through E-learning, as well as developed skills at executive levels by granting educational and training scholarships.
• Training overview In 2008, TMB organized a total of 90 training courses for 355 classes with total attendants of 7,897 persons and average training period of 30 hours/person. Moreover, it dispatched 549 employees to attend off-premises training programs, of whom 19 persons attended overseas training. As for self-learning program, there were 12,000 participants. Total number of E-learning participants was 2,572 persons. Educational and training scholarships were granted to 22 executives. Total expenses on all types of training and scholarships were around Baht 38 million.
• Training results From post-training evaluation, participants rated their knowledge enrichment at 81.32% on average and supervisors rated their satisfaction of staff’s performance at 82.25%.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 121 • Major training courses 1. Business development: After the entrance of ING as TMB’s strategic partner, we have conducted training courses on “Product Knowledge: ING Bancassurance and ING Funds” and “Selling Skills” for all branches. In addition, we have arranged a Mini MBA course for all branch managers and training courses for specific positions, e.g. Pre-Branch Manager, Customer Service Supervisor, Account Advisor, etc. We have also emphasized on regulatory compliance by filling the contents on rules and regulations into most of the courses arranged for the branches. For Head Office staff, the Bank focused on credit officer training in order to standardize the work process and procedure through courses such as “Review of Operational Manuals and Credit Request Form,” explanation on credit underwriting and procedure, credit analysis, debt management and collection, etc. Moreover, we have arranged SME Product Knowledge courses, e.g. SME Select, SME Smart Biz & SME Plus, etc.
2. Training for regulatory compliance: For the branch staff, we provided training courses on selling agent for ING Fund, bancassurance product selling, working procedures for staff dealing with investors and enhancement of their knowledge, Financial Institution Business Act, Anti Money-Laundering Act, and Deposit Protection Agency Act of 2008. Moreover, we arranged training courses for Head Office staff on new laws such as the amended Securities and Exchange Act, Deposit Protection Agency Act, the new labor protection law, credit-related law, laws relevant to banking business and legal documentation.
3. Process & application training: To ensure the Bank has a business process of international standard, we have accelerated the installation of essential applications and new operation systems such as Moody’s MRA system, KMV Risk Analyst, DSS system, Credit Scoring Models, asset appraisal system, PV loss calculation, credit risk rating (CRR), and branch operation manuals based on PSAP-NPA.
Additionally, we have given importance to new employees and are aware of the need to educate them on the Bank’s business process and products & services while instilling a positive attitude toward their work and customer service. Thus, all new employees at both the Head Office and Branch Banking Group are to attend an “orientation” program, whereas all Branch Banking staff are trained in a “Customer Service Officer” course
4. Competencies & core skill: In 2008, the competencies and core skill courses were arranged for the staff such as Report Writing, Effective E-Mail Writing, PowerPoint for Presentation, Communication Techniques, Service Mind, Teamwork, English Language Study, Presentation & Negotiation Techniques, etc.
5. Management skill: This was aimed at enabling executive officers at all levels to strengthen their personnel and business management skills and keep well abreast of the changing business environment, as well as become a leader who could drive their team members to perform their tasks at optimum levels. The courses included Excellent Professional People Manager and Leadership Development programs arranged for top and middle management and Mini MBA courses held for branch managers under BKK and Upcountry Branch Banking Groups.
122 A n n u a l R e p o r t 2 0 0 8 6. FX skills: As TMB ranks among the top in market share of Thai commercial banks’ foreign exchange fee income, there is operational risk in FX operations arising from fast-developing an exotic forms of frauds, the Bank has accordingly arranged training to mitigate the said risk once to twice a year for its staff members across the country.
• Off-site training programs Besides the in-house training, the Bank also sends its executives and staff to attend training/seminar courses organized by reputable institutions, both local and overseas, so as to develop and enable the staff to gain diverse knowledge and new technologies which could be efficiently applied to their works. These courses included- Monetary Policy in a Volatile World: Challenges and Strategies Going Forward conducted by the Bank of Thailand; Low Cost Marketing Technique conducted by Thailand Management Association; Sales Force Performers 2008; Certificate in Strategic HR Transformation and Organization Development, etc.
• Executive development • Management Associate Program: This program was intended for young executives in preparation for future business expansion. It was arranged in the form of on the job training in core business functions and other training courses to develop their leadership skills, innovative thinking, problem solving, etc. These executive staff will grow and become key persons of the Bank in the future.
• Educational and training scholarships: TMB provided scholarships for local master’s degree programs for the executives and staff members in relevant fields and also training scholarships for executive development at all levels such as MOBEX, YOBEX, FINEX, etc. In addition, executive officers were dispatched to attend the joint public and private national defense course, the public economic management for top executives program, etc.
• Promotionof self-learning program Aside from classroom training, the Bank in 2008 arranged several programs and activities to encourage self-learning by employees through E-learning as an alternative learning channel for the employees, particularly those at branch offices across the country, as follows:
• Learning through the Intranet: Learning method has been developed to encourage staff’s continuous self-development. Useful knowledge has been made available in the form of courseware on topics designed according to the BOT policy such as ROSCs Monitoring System: RMS and courses under TMB risk management policy such as Moody Credit Skills and Process Development, etc. • E-Learning Center: This serves as a center of compiled knowledge in various fields and available in different forms such as VCD, DVD, and CD-Rom for interested employees to learn by themselves. The fields of knowledge provided are laws, finance, banking, accounting, marketing, foreign languages, healthcare, documentary, hobbies, etc.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 123 Measures for employee security
The Bank has attached importance to its staff’s welfare and security by strictly complying with security measures as required by law as well as setting out additional measures as follows:
• Legal measures 1. The Bank has established the Security, Profession Health and Workplace Committee to monitor the action/working condition to ensure it is safe from hazard, illness or disturbance.
2. The Bank has regularly conducted a fire drill at the Head Office at least once a year.
3. Training is arranged on fire prevention and firefighting with basic fire extinguishing tools for employees representing their departments.
• The Bank’s security measures 1. The Bank has installed security systems within and around its buildings such as digital CCTV, Burglar Alarm, a fire prevention system inside the buildings, a computer back-up center, Access Control System, and BAS.
2. A number of staff is assigned to handle the building control and security system for the Bank’s staffs and assets around the clock.
3. The Bank has arranged training and rehearsal on employee evacuation from the buildings in emergency event and was awarded a certificate for Standard Fire Safety Building 2006 from the Bangkok Metropolitan Administration.
4. The Bank has implemented a measure to make a bomb-detecting check on all incoming vehicles 24 hours.
5. The Bank has made available communication device and bomb detectors to facilitate security function.
6. The Bank has coordinated with the public agencies, state enterprises, and private companies, namely military forces, Royal Thai Police Office, Metropolitan Electricity Authority, TOT, Metropolitan Waterworks Authority, and Chatuchak District Office to seek assistance in case of any critical incident.
7. Training has been regularly arranged for staff concerned with building management and security on a semi-annual basis.
124 A n n u a l R e p o r t 2 0 0 8 Dividend payment
The Bank’s policy The Bank set out a policy on dividend payment from financial statements (the Bank only) to ensure that the shareholders would obtain a reasonable rate of return, depending however on the Bank’s operational performance and relevant legal conditions as well as the capital adequacy and reserve requirements.
In addition, the dividend payment must be in line with the BoT’s Notification Re: Classification and Provision of the Financial Institutions dated August 3,2008 which stated that as long as financial institutions have not yet written off the impaired assets or has not yet made full provision for the assets and contingent liabilities whether they are impaired or not, financial institutions are not allowed to pay dividend nor any other forms of returns to its shareholders; and the BoT’s Notification Re: Regulation for Accounting Treatment of the Financial Institutions dated August 3,2008, Section 8: Dividend Policy, requiring that financial institutions should not make dividend payments out of the unrealized profit or profit that is not based on actual cash flow such as profit from mark to market securities value, or out of any profit derived from the reclassifying of financial assets or financial institutions should not make dividend payments out of the profit from sale of assets, which is not actually completed and which may result in abnormal profit or loss such as profit from sale of properties foreclosed where a repurchase option is part of the agreement.
Currently, no dividend is paid due to the fact that the Bank still has accumulated loss and discount on shares. According to the Public Limited Companies Act and other relevant regulations, dividend shall be paid if the Bank is able to clean up the accumulated loss and discount on shares.
Policy of subsidiary companies Subsidiary companies’ dividend payment is subject to the approval of their boards of directors and is to be proposed to their meetings of shareholders for consent. The Bank has not set out the payment rate. Their dividend payment will depend on their operational performance and business plans and must be in compliance with each company’s regulations and relevant laws governing the company’s dividend payment.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 125 Related Transactions
Details of related transactions are in note of financial statement no. 5.23 of this annual report.
Opinion of Audit Committee regarding related party transactions
The Bank’s Audit Committee has reviewed related-party transactions that occurred during the 2008 and opinioned that the related-party transactions were conducted only when necessary and at fair market value. In addition, the Board of Directors does not have opinions different from that of Audit Committee.
Measures or procedures to approve the making of related transactions
The Bank has given importance to the prevention of conflicts of interest and also to related party transactions and connected transactions according to the regulatory requirements. To that effect, the Bank requires that its directors and senior management at executive vice president level and higher disclose their relations or connections in any business with a conflict of interest on a quarterly basis. Moreover, a manual on the related party transactions and connected transactions has been prepared in order to eradicate conflicts of interest. Transactions with related parties or connected persons are carried out by the Bank on a fair and equitable basis. Therefore, the Bank has set out a policy on pricing and conditions based on the same criteria for the transactions made with clients in general. In addition, the Bank’s directors and executives having conflicts of interest in such transactions are not allowed to participate in the approval thereof, nor to vote in a meeting.
Loans provided to or investments in an entity in which the Bank, its directors or senior management have conflicts of interest are subject to the consideration of the project’s status, operational performance or feasibility analysis with conditions and price to be the same as those approved for other clients in general. The loan or investment amount must be controlled so that it will not exceed a suitable limit and is subject to TMB Board of Directors’ unanimous approval. The concerned directors or executives shall not participate in the approval of such transaction and the approval must be consistent with the regulations of related authorities.
The Bank has assigned the Audit Committee to consider, review, and audit connected transactions in order to prevent and mitigate the conflicts of interest.
Information will be disclosed by the Bank concerning its transactions with related parties and connected persons, including related transactions on a complete and transparent basis according to the criteria of the Bank of Thailand, the Securities and Exchange Commission Office, the Stock Exchange of Thailand, and the accounting standards.
126 A n n u a l R e p o r t 2 0 0 8 Policies or trends of making the prospective related transactions
Related party transactions (except welfare loans for the Bank’s employees) in 2008 mostly were normal business transactions with general commercial terms or were lease of office buildings to its affiliated companies under a lease contract term of not over three years. However, the transaction value was insignificant compared with the Bank’s total assets and the transaction details had been reported to the Audit Committee.
In conducting any future related party transactions, the Bank will comply with the above policy and guideline. If there is any amendment to the regulatory requirements, the Bank will relatively update its policy and guideline in line with the said amendment.
Persons who may have conflicts of interest to hold more than a 5% of stake in subsidiary company or associated company instead of direct shareholding by the Bank.
The Bank has no policy to allow a person who may have a conflict of interest to hold shares on its behalf, unless such shareholding is essential for the Bank to comply with the law.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 127 Analysis of the Financial Position and Operational Performance of the Bank
Executive summary
Improving earnings capability For the year ending 2008, the Bank and its subsidiaries’ net profit amounted to THB424 million, a significant improvement from net losses of THB43,677 million in 2007. The Bank’s core business continues to grow with consolidated pre-provision profit (PPOP) in 2008 rising to THB8,438 million from THB8,149 million in 2007. The marked improvement in net profit was driven mainly by significantly fewer loan loss provisions, increase in non-interest income and drop in non-interest expenses.
Prudent NPL classification and provisioning The Bank has adopted more stringent NPLs classification and provisioning in compliance with the international standards. This includes: 1) NPL classification from “by accounts” to “by customers”; 2) more conservative recognition of collateral value; and 3) more stringent qualitative loan downgrade. Nevertheless, NPLs as at the end of 2008 still declined by THB6,735 million or 8.8% yoy to THB69,777 million. The decline was the results of bank’s efforts in debt restructuring, bad debt resolution, NPL sales and write-off.
Proactive transformation expenses to prime for a stronger platform Other key initiatives during 2008 were: 1) THB850 million provisions for the HR realignment to be executed in 2009; and 2) realignment of Bank’s investment portfolio by cutting exposures in equity investment and in the same time taking impairment losses related to equity investments (THB523 million) and derivatives exposures (THB428 million). These initiatives were aimed to prime for a stronger banking platform, i.e. a more efficient HR platform and reduction in overall risk profile of Bank’s investment portfolio.
Loan book contracted but better quality As at 2008, Banks’ total loans were THB424,286 million, an 8.7% decrease from 2007. The decline was due mainly to the NPL sales as well as scheduled loan repayment. Despite Bank’s tightened underwriting standards, the loan contraction in the fourth quarter of 2008 had slowed down, attributed to the new high-quality credit underwriting, in particular the trade finance, which showed more than 50% yoy growth.
Improving deposit profile While Bank’s total deposits in 2008 dropped to THB450,297 million (3.3% yoy), total deposits in the fourth quarter of 2008 increased by THB16,798 million (4% qoq) with better mix of CASA (current and savings deposits) at 38.7% from 37.2% in the previous quarter. This was attributable to the Bank’s “Deposit-Led Strategy” implemented in 4Q08 and the focus to achieve the higher mix of CASA.
128 A n n u a l R e p o r t 2 0 0 8 Improving liquidity, margin and cost to income With Bank’s decision to cut down exposures to equity investment, Bank’s liquidity has improved with 14% of earning assets allocated to cash and interbank while loan to deposit (including short-term borrowing) dropped to 87% as at 2008. Net interest margin in 2008 expanded by 15 basis points to 2.7% due to the active asset and liability management, while the cost to income improved markedly to 75% (and 62% excluding extra items) in 2008, as a result of Bank’s cleaner balance sheet.
CAR of 13.9% of which Tier 1 was 10.1% As at 2008, Bank’s consolidated shareholders’ equity was THB45,046 million, an increase of 1.2% or THB526 million from 2007. The capital adequacy ratio (CAR) of the Bank under Basel II calculation was 13.9%, of which 10.1% was Tier 1 capital, comfortably above the Bank of Thailand’s minimum requirement of 8.5% and 4.25% of CAR and Tier 1 capital, respectively.
Analysis of operational performance Analysis of operational performance for the accounting year ended December 31, 2008 compared with those of the accounting year ended December 31, 2007:
The following table sets forth the principal components of the Bank’s net income (loss) for the periods indicated: For the year ended December 31 2008 2007 (Unit: Bt. million) Interest and dividend income 29,152 33,724 Interest expense 13,359 17,282 Net interest and dividend income 15,793 16,442 Bad debts and doubtful accounts 5,177 31,732 Loss on debt restructuring (reversal) (101) (750) Net interest and dividend income after bad debts and doubtful accounts and loss on debt restructuring (reversal) 10,716 (14,541) Non-interest income 7,014 6,591 Non-interest expense 17,114 35,459 Profit (loss) before income tax 616 (43,409) Income tax expense 87 132 Net profit (loss) of minority interests 106 136 Net profit (loss) 424 (43,677)
T M B B a n k P u b l i c C o m p a n y L i m i t e d 129 • Interest and dividend income The principal components of the Bank’s net interest and dividend income are reflected in the following table: For the year ended December 31 2008 2007 (Unit: Bt. million, except where expressed in %) Interest and dividend income Interest on loans 24,150 29,180 Interest on interbank and money market items 1,581 756 Investment income 3,421 3,788 Total interest and dividend income 29,152 33,724 Interest expense Interest on deposits 10,197 14,078 Interest on interbank and money market items 127 557 Interest on short-term borrowings 1,166 1,282 Interest on long-term borrowings 1,870 1,365 Total interest expense 13,359 17,282 Net interest and dividend income 15,792 16,442
For the year ended December 31 2008 2007 (Unit: Bt. million, except where expressed in %)
Average total assets 612,073 687,019 Average earning assets 585,630 644,545 Average interest-bearing liabilities 536,353 615,193 Net interest margin on total assets (%) 2.6 2.4 Net interest margin on earning assets (%) 2.7 2.6 Net interest rate spread (%) 2.5 2.4
Total interest and dividend income decreased by 13.6% from Baht 33,724 million in 2007 to Baht 29,152 million in 2008, primarily due to a decrease in interest on loans.
Interest on loans decreased by 17.2% from Baht 29,180 million in 2007 to Baht 24,150 million in 2008. This decrease resulted mainly from loan contraction and lower interest rates received on loans.
Interest on interbank and money market items increased by 109.1% from Baht 756 million in 2007 to Baht 1,581 million in 2008 due to an increase in the Bank’s weighting on investment in high-liquid assets.
Investment income fell by 9.7% from Baht 3,788 million in 2007 to Baht 3,421 million in 2008, caused mainly by reduction in investment in debt and equity securities.
130 A n n u a l R e p o r t 2 0 0 8 • Interest expense Total interest expense was down by 22.7% from Baht 17,282 million in 2007 to Baht 13,359 million in 2008, ascribed primarily to a decrease in interest expense on deposits.
Interest on deposits declined by 27.6% from Baht 14,078 million in 2007 to Baht 10,197 million in 2008. Such decrease was primarily a result of declince in deposit outstanding and deposit rates.
Interest on interbank and money market items fell by 77.3% from Baht 557 million in 2007 to Baht 127 million in 2008, resulting principally from reduction in interbank borrowing, which was a result of the Bank’s active assets & liabilities management, and reduction in interest rates.
Interest on short-term borrowings decreased by 9.1% from Baht 1,282 million in 2007 to Baht 1,166 million in 2008 owing to reduction in average short-term borrowing.
Interest on long-term borrowings increased by 37.0% from Baht 1,365 million in 2007 to Baht 1,870 million in 2008. This was attributable to an increase in interest rates of the long-term borrowing.
• Net interest and dividend income Due to the above, the net interest and dividend income decreased by 3.9% from Baht 16,442 million in 2007 to Baht 15,792 million in 2008.
• Bad debts and doubtful accounts Allowance for bad debts and doubtful accounts decreased significantly from Baht 31,732 million in 2007 to Baht 5,177 million in 2008. In 2007, the Bank and its subsidiaries set provisions for bad debts and doubtful accounts in line with the Bank of Thailand’s provision requirement in preparation for the International Accounting Standard No.39 (IAS39) implementation. In 2008, the Bank set provisions for bad debts and doubtful accounts according to its asset quality, NPL sale and write-off. Moreover, the Bank raised its provisioning standard to meet the international standard, which mainly included classification of NPL by customers, conservative treatment of collateral value as well as more stringent qualitative classification.
• Loss on debt restructuring (reversal) The Bank and its subsidiaries had reversal of loss on debt restructuring amounted to Baht 750 million in 2007, compared with Baht 101 million in 2008.
• Non-interest income The following table summarizes the principal components of the Bank’s non-interest income for the periods indicated:
T M B B a n k P u b l i c C o m p a n y L i m i t e d 131 For the year ended December 31 2008 2007 (Unit: Bt. million) Non-interest income Gain/loss on investments (353) (831) Share of profit (loss) from investments accounted for using the equity method 465 282 Fees and service income Acceptances, avals and guarantees 524 649 Other fee and service income 4,487 4,771 Gain on exchange rate 951 1,095 Gain on sale of assets 626 - Other income(1) 313 626 Total non-interest income 7,014 6,591 (1) Other income includes unclaimed customer balances, miscellaneous income and income from subsidiaries.
Non-interest income rose 6.4% from Baht 6,591 million in 2007 to Baht 7,014 million in 2008 thanks to less investment loss, increase in share of profit from associated companies and gain on sale of assets.
Loss on investments lowered from Baht 831 million in 2007 to Baht 353 million in 2008.
Fees and service income was down by 5.9% from Baht 4,771 million in 2007 to Baht 4,487 million
in 2008, mainly as a result of reduction in credit-related fee income which mainly stemmed from loan contraction.
Gain on exchange rate decreased by 13.1 % from Baht 1,095 million in 2007 to Baht 951 million in 2008 due mainly to the market situation.
Other income dropped 49.9% from Baht 626 million in 2007 to Baht 313 million in 2008, mainly due to loss from a derivation settlement transaction.
132 A n n u a l R e p o r t 2 0 0 8 • Non-interest expense The following table shows information with respect to the Bank’s non-interest expense for the periods indicated: For the year ended December 31 2008 2007 (Unit: Bt. million) Non-interest expense Personnel expenses 6,041 4,814 Premises and equipment expenses 2,585 2,565 Taxes and duties 884 1,345 Fees and service expenses 1,249 1,250 Directors’ remuneration 31 39 Loss on impairment of properties foreclosed and other assets 1,124 3,982 Contributions to the FIDF 1,863 2,157 Loss on provisions of obligations from transferred non-performing assets (49) 3,978 Loss on provisions of obligations - others 1,150 225 Loss on impairment of goodwill - 12,237 Loss on sales of assets - 242 Other expense(1) 2,236 2,625 Total non-interest expense 17,114 35,459 (1) Other expense includes expenses relating to off-balance sheet items and zero coupon bond acquired from BAMC for the sale
of NPAs.
Non-interest expense decreased by 51.7% from Baht 35,459 million in 2007 to Baht 17,114 million in 2008, principally due to an absence of loss on impairment of goodwill and declines in provisions of obligation and loss on impairment of properties foreclosed.
Loss on provisions of obligation from transferred non-performing assets was lower from Baht 3,978 million in 2007 to a reversal of Baht 49 million in 2008. In 2007, the Bank had provisions of obligations for possible loss sharing from TAMC of Baht 774 million and provisions of obligations for possible loss sharing from BAMC of Baht 3,204 million.
Loss on provisions of obligation (others) increased from Baht 225 million in 2007 to Baht 1,150 million in 2008. This was because the Bank began to set aside collective provisions for off-balance sheet items in 2008.
In 2007, the Bank charged an impairment loss on the full amount of the goodwill arising from the merger with the Industrial Finance Corporation of Thailand (IFCT) and DBS Thai Danu Bank Plc.(DTDB) of Baht 12,237 million. From 2008 onward, no carrying amount of goodwill from such merger is included in the financial statement.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 133 • Profit (Loss) before income tax The Bank and its subsidiaries recored loss before income tax amounted to Baht 43,409 million in 2007, while profit before income tax was recorded at Baht 616 million for the Bank and its subsidiaries in 2008. Income tax decreased by 34.1% from Baht 132 million in 2007 to Baht 87 million in 2008.
• Net profit (loss) Due to the above, a net loss of Baht 43,677 million was recoreded in 2007 while net profit of Baht 424 million in was recorded in 2008.
Analysis of financial position • Assets Total assets decreased by 3.2% from Baht 622,161 million in 2007 to Baht 601,985 million in 2008.
Total loans (excluding accrued interest receivable) decreased by 8.7% from Baht 464,895 million in 2007 to Baht 424,286 million in 2008, due mainly to the Bank’s loan portfolio realignment, loan repayment and sale of non-performing loans.
Net investments reduced by 12.8% from Baht 96,346 million in 2007 to Baht 83,983 million in 2008 as a result of sale of investment in debt and equity securities.
Net properties foreclosed decreased by 14.6% from Baht 22,556 million in 2007 to Baht 19,260 million in 2008 from the sale during the year.
• Liabilities Total liabilities decreased by 3.6% from Baht 577,641 million at the end of 2007 to Baht 556,939 million at the end of 2008.
Deposits declinded by 3.3 % from Baht 465,462 million at the end of 2007 to Baht 450,297 million at the end of 2008. The decrease was mainly from the decrease in savings deposit as some of the desposit moved to other types of the Bank’s products or term-deposit.
Borrowings increased by 24.2% from Baht 53,416 million at the end of 2007 to Baht 66,317 million at the end of 2008 due to increase in Bill of Exchange (BE) and short-term bond.
Interbank and money market items decreased by 62.8% from Baht 24,993 million in 2007 to Baht 9,299 million in 2008, ascribed to the Bank’s liquidity management.
134 A n n u a l R e p o r t 2 0 0 8 • Shareholders’ equity Shareholders’ equity rose by 1.2% from Baht 44,520 million in 2007 to Baht 45,046 million in 2008. This was attributed largely to an increase in surplus on revaluation of fixed assets amounted to Baht 2,039 and the net profit of the year amounted to Baht 424 million. However, the increase was partly offset by a decrease in unrealized gain on revaluation of investment of Baht 1,454 million.
Fully diluted book value per share increased slightly from Baht 1.02 as of December 31, 2007 to Baht 1.03 as of December 31, 2008.
Off-balance sheet items • Contingencies The Bank’s contingencies comprise aval to bills and guarantees of loans, liabilities under un-matured import bills, letters of credit, other contingencies, and forward bonds. Other contingencies consist of other guarantees, exchange contracts, interest rate contracts, and undrawn balances of borrowers. The Bank’s contingencies increased by 12.1% from Baht 349,998 million as of December 31, 2007 to Baht 392,463 million as of December 31, 2008, primarily as a result of increased interest rate swaps as part of the Bank’s management of its liabilities and risk management service.
Asset quality Loans • Loan concentrations Loan portfolio by industry TMB follows a strategy of building a diversified asset portfolio and limiting its exposure to particular sectors or borrowers. As of December 31, 2008, TMB’s largest exposure was to the production industry at 24.2% of total loans. Financial intermediary became the second largest portflio in 2008 with the contribution of 18.4%. Other sectors that constituted significant portions include the personal consumption (15.6% of total loans) and wholesale and retail sector (15.1% of total loans), while the remaining sectors contributed 45.1% to total loans.
The following table sets forth in further detail TMB’s industry-wide exposure as at the dates indicated:
T M B B a n k P u b l i c C o m p a n y L i m i t e d 135 For the year ended December 31 (Bank only) 2008 2007 2006 Amount % of total Amount % of total Amount % of total Industry (Bt. million except in %) Production 118,229 24.2 134,608 28.2 165,327 30.1 Financial intermediary 89,866 18.4 40,996 8.6 41,323 7.5 Financial consumption 75,912 15.6 77,868 16.3 79,828 14.6 Wholesale and retail 73,692 15.1 74,416 15.6 92,265 16.8 Real estate activities 26,380 5.4 28,226 5.9 25,457 4.6 Electricity 25,962 5.3 23,936 5.0 23,325 4.3 Hotels and restaurants 23,400 4.8 30,067 6.3 35,280 6.4 Transport and storage 19,914 4.1 22,391 4.7 33,330 6.1 Construction 11,949 2.5 16,313 3.4 19,481 3.6 Agriculture 9,802 2.0 11,055 2.3 11,638 1.2 Provision of services 4,320 0.9 5,849 1.2 7,442 1.4 Health and social work 2,900 0.6 5,189 1.1 5,996 1.1 Mining and quarrying 2,247 0.5 2,487 0.5 3,300 0.6 Fishery 1,142 0.2 1,444 0.3 1,870 0.3 Education 1,069 0.2 1,551 0.3 1,747 0.3 Community service 929 0.2 942 0.2 915 0.2 Private households - 0.0 - 0.0 - 0.0 Extra - territorial - 0.0 - 0.0 - 0.0 Total(1) 487,713 100.0 477,339 100.0 548,524 100.0
(1) Including interbank loans and money market items.
Loan portfolio by maturity The following table sets forth TMB’s loans by remaining maturity as at the dates indicated:
For the year ended December 31 (Bank only) 2008 2007 2006 (Bt. million) At call 50,673 59,795 61,885 Due on or within 1 month 51,664 40,911 42,411 Due after 1 month but on or within 3 months 47,889 51,999 74,474 Due after 3 months but on or within 12 months 25,493 22,518 30,262 Due after one year but on or within 5 years 82,113 95,033 101,014 Due after 5 years but on or within 10 years 97,104 128,498 160,386 Due after 10 years 69,269 67,321 72,326 Total 424,205 466,075 542,758
136 A n n u a l R e p o r t 2 0 0 8 Loan portfolio by type of interest The following table sets forth the loans with predetermined fixed interest rates and floating interest rates as at the dates indicated: For the year ended December 31 (Bank only) 2008 2007 2006 (Bt. million) Floating rate 373,372 417,324 448,523 Fixed rate 50,833 48,751 94,235 Total loans 424,205 466,075 542,758
Loan portfolio by customer segment The following table sets forth TMB’s loans by customer segment as at the dates indicated: For the year ended December 31 (Bank only) 2008** 2007* Amount % of total Amount % of total (Bt. million except in %) Corporate (1) 191,163 45.1 171,425 36.8 SME (2) 165,459 39.0 216,871 46.5 Consumer (3) 67,583 15.9 77,780 16.7 Total (4) 424,205 100.0 466,075 100.0
*From December 2008 onward, the Bank applies new definition to classify its customer segment (1) Corporate loans are loans to customers that have total annual revenue of over Baht 500 million. (2) SME loans are loans to customers that have total annual revenure of less than Baht 500 million including owner operator (3) Consumer loans are loans to individual person. Before 2008, the Bank defined customer segment as follows; (1) Corporate loans are loans to customers that either (i) have credit limits of more than Baht 300 million for each borrower or (ii)
have total annual revenue of over Baht 1,000 million or (iii) are listed on the SET. (2) SME loans represent loans to customers that either (i) have credit limits of less than Baht 300 million for each borrower or (ii)
have total annual revenue of less than Baht 1,000 million or (iii) are not listed on the SET. (3) Consumer loans represent personal consumption loans that fall within certain BOT loan definitions. (4) Total loans include interbank loans and money market items.
• Classification of assets TMB classifies its loans and other assets in compliance with BOT guidelines. TMB and its subsidiaries have classified their loan portfolios into six categories, primarily based on the non-accrual basis. For loans classified as pass and special mention, the calculation of allowances for doubtful accounts is based on the regulatory minimum percentage requirement, taking into consideration the collateral value, where the collateral type and date of the latest appraisal are qualifying factors. For loans classified as sub-standard, doubtful and doubtful of loss, the allowance on these accounts is set at 100% of the difference between the outstanding book value of the debt and the present value of future cash flows expected to be received or the expected proceeds from the disposal of collateral in accordance with BOT criteria.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 137 The table below sets forth the classification of loans for the periods indicated: For the year ended December 31 (Bank only) 2008 2007 2006 Loans and Loans and Loans and accrued accrued accrued interest interest interest receivable(1) Provision receivable(1) Provision receivable(1) Provision (Bt. million) Pass 306,980 1,172 364,042 1,390 462,207 2,422 Special Mention 53,729 378 32,176 213 27,736 200 Substandard 9,229 4,001 13,463 7,011 8,423 1,557 Doubtful 7,505 2,490 16,755 8,165 12,250 3,482 Doubtful Loss 50,141 28,070 43,732 21,262 37,279 18,269 Total 427,584 36,111 470,168 38,041 547,895 25,930 Add: Excess over BOT minimum requirement - 7,821 - 11,889 - 2,586 Total 427,584 43,932 470,168 49,930 547,895 28,516 (1) Excluding loans to banks and money market items.
Assets classified as substandard, doubtful or doubtful loss are considered NPAs. NPAs include loans and receivables, securities and other assets held by TMB that meet these classifications. NPLs are a subset of NPAs.
• NPLs As of December 31, 2008, the Bank and its subsidiaries’s NPLs classified as substandard, doubtful, and doubtful loss amounted to Baht 69,777 mllion, a decline of Baht 6,7 35 million from December 31, 2007, as a result of success of debt restructuring, bad debt resolution and non-performing loans sale & write-off.
As of December 31 2008, the Bank’s NPLs (excluding subsidiaries and associated companies) was Baht 66,082 million, a decline of Baht 6,333 million from December 31, 2007.
Percentage of NPLs for the Bank and its subsidiaries as of December 31, 2008 was 14.3%, decreased from 16.1% at the end of 2007. Percentage of NPLs for the Bank (only) was 13.6%, decreased from 15.2% at the end of 2007.
• Debt restructuring As of December 31, 2008, the Bank and its subsidiaries executed troubled debt restructuring agreements as follows:
138 A n n u a l R e p o r t 2 0 0 8 (Unit: Bt. million)
No. of accounts Transferred assets Loss on Debt restructuring debt method No. Pre- No. Post- Type Fair restructuring restructure restructure value
Modification of terms 99 4,898 42 3,711 - - 608 Land Various restructuring 14 1,349 3 39 and 879 30 building Total 113 6,247 45 3,750 879 638
• Allowance for doubtful accounts The table below shows the Bank’s allowance for doubtful accounts for the periods indicated: For the year ended December 31 (Bank only) 2008 2007 2006 (Bt. million) Allowance for doubtful accounts and debt restructuring at beginning of year 49,930 28,516 31,541 Provisions set aside during the year 5,285 31,715 13,120 Bad debts recovered 166 697 160 Bad debt write-off (4,563) (2,947) (7,833) Allowance for debts sold (6,887) (8,051) (8,451) Others 1 - (21) Ending balance 43,932 49,930 28,516
• The Thai Asset Management Corporation (TAMC) In accordance with the conditions of the Emergency Decree on the Thai Asset Management Corporation B.E. 2544, the Bank and its subsidiaries entered into an Asset Transfer Agreement with TAMC in 2001 for sales of sub-standard quality assets to TAMC and the Bank and its subsidiaries had received promissory notes from TAMC for the transfers (see Note to financial statements no. 5.3). TAMC and the transferors are to share the profits or losses from TAMC’s managing of the non-performing assets, in accordance with the conditions specified in the agreements, at the end of the fifth year and at the end of the tenth year, commencing July 1, 2001.
In the case of losses, the transferors will be responsible for the first portion of losses, not exceeding 20% of the transfer price. The second portion of losses, not exceeding 20% of the transfer price, will be equally shared between TAMC and the transferors. The remaining losses will be absorbed by TAMC.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 139 In case of profits, the first portion of profits, not exceeding 20% of the transfer price, will be equally shared between TAMC and the transferors. Should there be any profits remaining, the transferors are entitled to receive this portion up to an amount not exceeding the book value of non-performing assets less the transfer price and the transferors’ share in the first portion of the profits.
In 2006, TAMC informed the Bank and its subsidiaries of a loss sharing at the end of the fifth year of Baht 730 million. The Bank and its subsidiaries had recognized potential loss sharing from TAMC by the said amount as provision for contingent liability. In addition, the Bank had been informed of potential loss on an adjustment to the transferred price of non-performing assets on pledged machinery of Baht 4,341 million
in November 2006. The Bank denied such adjustment on the ground that it was non-compliant with the Asset Transfer Agreement dated October 12, 2001, hence not enforceable by law. The Bank, however, had recorded a potential loss from the adjustment of machinery of Baht 4,341 million as a provision for contingent liability.
At present, the Bank has already started legal proceedings against TAMC.
As of December 31, 2008 and 2007, the Bank and its subsidiaries have estimated the present value of expected loss sharing from TAMC (excluding provision for contingent liability on an adjustment to the transfer price for previously pledged machinery, as discussed above) as at the end of the tenth year in the consolidated financial statements at the amount of Baht 1,240 million and Baht 1,228 million, respectively, and in the financial statements (Bank only) at the amount of Baht 1,201 million and Baht 1,198 million, respectively, based on the report from TAMC on the status of transferred assets and other historical information related to non-performing assets management. The discount rate used to calculate the present value of expected future loss is equal to the rate of return on assets or financial instruments having similar properties. The cumulative provisions for contingent liability (including provision for contingent liability on an adjustment to the transfer price on previously pledged machinery) is Baht 5,857 million in the consolidated financial statements and Baht 5,818 million in the financial statements (Bank only). For the year ended December 31, 2008, the Bank and its subsidiaries recognized the present value of expected loss shairing from TAMC Baht 61 million as an interest expense in the consolidated statement of income and the statement of income (Bank only).
• Phayathai Asset Management Company (PAMC) Phayathai Asset Management Company Limited (“PAMC”) was registered with the Ministry of Commerce on August 9, 2000 and registered with the Bank of Thailand to operate as an asset management company on September 1, 2000. The Bank holds approximately 100% of the share capital of PAMC.
As of December 31, 2008 and 2007, the Bank had obligations to register the transfer of ownership of the transferred assets, referred to below.
Under conditions of the asset transfers, the Bank (transferor) delivers the documents relating to these assets to PAMC (transferee) within 30 days from the transfer date (the date stated in the contract to transfer non-performing assets), unless mutually agreed by the contracting parties to extend the delivery period. The transferor or the transferee has the right to revise the transfer prices of such assets within 180 days from the transfer date.
140 A n n u a l R e p o r t 2 0 0 8 The sale of assets by Phayathai Asset Management Company Limited On September 3, 2003, PAMC signed an agreement with Bangkok Commercial Asset Management Co., Ltd. (“BAMC”) for the sale of assets as mentioned above. The effective date of the asset transfer was September 30, 2003. The transfer of the assets and their underlying collateral was made under the provisions of the Emergency Decree on Asset Management Company, B.E. 2541 (1998), allowing the fixing of transfer prices as agreed by PAMC and BAMC.
On the transfer date, BAMC paid PAMC the total value of the assets in the form of a negotiable promissory note issued on September 30, 2003 for an amount of Baht 19,533 million, which was the non-performing loan amount of Baht 16,634 million and the properties foreclosed amount of Baht 2,899 million, with the maturity date falling on September 30, 2015. The interest on the promissory note was fixed at a rate equivalent to the weighted average interest rates for all types of Thai Baht deposits of the five largest local commercial banks. The first payment is due on the 6th anniversary of the promissory note issuing date while subsequent payments will be on a yearly basis after the first payment until the maturity date. One condition was that endorsement on the promissory note by the transferor to negotiate the promissory note with any party other than TMB Bank, the Bank of Thailand or the Financial Institutions Development Fund was non-exercisable. In case of BAMC’s decision to go into liquidation before the promissory note’s maturity date, BAMC is required to transfer the rights and obligatory commitments over the promissory note to another juristic person as consented to by PAMC.
Both PAMC and BAMC have the right to call for an adjustment to the prices of the transferred assets within 180 days from the transfer date. The price adjustment, if in effect, could be done by issuing an additional promissory note by PAMC or by BAMC, as the case may be.
PAMC and BAMC have mutually agreed that recognition of profit or loss would be computed at the end of the sixth year and the twelfth year after the transfer date.
Computation of profit or loss from asset management is to be made on the value received from the debt collection process. The debt collection can be accumulated on a cash basis until the computation date, only on the debts that are fully settled. The recognition must come from the value received less cost of each asset at the transfer date, administrative expenses on each of the debts settled, and interest expense on the promissory note. At the end of the sixth year and the twelfth year from the transfer date, results of the management of assets under the agreement must be shared between BAMC and PAMC. In case of debt settlement done through asset transfer, recognition of profit or loss occurs only after the asset is successfully disposed of to clear the debt.
In case of a loss from the management of group 1 assets, PAMC will absorb the first 20% of the loss. The next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAMC. The rest of the loss will be absorbed in full by BAMC.
In case of a loss from the management of group 2 assets: (a) If the transfer prices are not at a discount, PAMC will absorb the first 30% of the loss, while the next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAMC. The rest of the
loss will be absorbed in full by BAMC.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 141 (b) If the transfer prices are at a discount of 5%, PAMC will absorb the first 25% of the loss, while the
next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAMC. The rest of the loss will be absorbed in full by BAMC. (c) If the transfer prices are at a discount of 10%, PAMC will absorb the first 20% of the loss, while the
next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAMC. The rest of the loss will be absorbed in full by BAMC. (d) If the transfer prices are at a discount of 15%, PAMC will absorb the first 20% of the loss, while the
next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAMC. The rest of the loss will be absorbed in full by BAMC.
In case of a profit from the management of group 1 and group 2 assets, the first portion of the profit not exceeding 20% of the transfer prices will be shared equally at a ratio of 1:1 between PAMC and BAMC. The rest of the profit will be taken by PAMC in full, but not exceeding the margin between the book value and the transfer prices. The remaining profit thereof, if any, will be taken in full by BAMC.
Between September 30, 2003 and the end of 2005, PAMC sold and transferred the assets comprising investments in receivables, loans and receivables, both secured and unsecured, non-performing assets, and related assets to BAMC at a total price of Baht 19,712 million. BAMC paid PAMC the said total value of the assets in the form of a negotiable promissory note and PAMC then endorsed the promissory note to transfer the whole amount thereof to TMB for repayment of long-term loans.
Adjustments to the transfer prices and returns of the non-performing loans and non-performing assets made between PAMC and BAMC for various reasons until end-2005 amounted to Baht 1,011 million in total. PAMC issued a promissory note of Baht 1,011 million to BAMC as payment for the said adjustments. Presently, PAMC is in the process of issuing a promissory note of Baht 4 million to BAMC for a spread of prices from sales of the non-performing assets in 2003. PAMC then recognized interest payable on the said promissory note for the years ended December 31, 2008 and 2007 in an amount of Baht 17 million and Baht 20 million respectively and presented these as interest expenses in its financial statements.
In 2006, PAMC and BAMC prepared minutes of a meeting regarding details of the calculation of indemnity to be paid by PAMC to BAMC according to the non-performing asset purchase agreement, under which the two parties agree to settle an indeminity between them by the end of the sixth year or the twelfth year
by means of offsetting with the amount payable by BAMC under the promissory note on the date stated in the agreement dated September 3, 2003.
As at 31 December 2008 and 2007, the Group estimated the present value of expected loss sharing from BAM as at the end of the twelfth year at the amount of Baht 3,390 million and Baht 3,204 million, respectively, by considering the report from BAM on the status of assets transferred from the subsidiary and other historical information related to non-performing assets management. The discount rate used to calculate the present value of expected future loss is equal to the rate of return on assets or financial instruments having similar properties. For the year ended 31 December 2008, the Group recognised the increase in provision for contingent liability of Baht 186 million as an interest expense in the consolidated statement of income.
142 A n n u a l R e p o r t 2 0 0 8 • Bangkok Commercial Asset Management Co., Ltd. (BAMC) On October 9, 2006, the Bank entered into an agreement with Bangkok Commercial Asset Management Co., Ltd. (“BAMC”) for the transfer of non-performing assets (NPA). The transfer price would be prorated by the appraised value of each asset group based on the liquidity condition of the asset. This is in compliance with the Bank of Thailand’s Notification Re: “Requirements and Operation Procedures for Asset Management Companies” dated November 27, 2000, and the Royal Decree on Asset Management Companies, B.E. 2541. The Bank is required to complete the classification of NPA within 120 days from the agreement-signing date. BAMC will examine the assets before confirming to the Bank the purchase price on individual assets within 30 days from the date of asset classification made by the Bank. The Bank and BAMC will enter into a sale and purchase agreement within 30 days from the signing date of the NPA transfer agreement. Payment for NPA will be in the form of non-interest bearing promissory notes. The term of the promissory notes will depend upon the liquidity of the NPA transferred.
For the years ended December 31, 2008 and 2007, the Bank entered into sale and purchase agreements with BAMC (transferee) to sell NPA at net book value (net of allowance for impairment) totaling Baht 266 million and Baht 1,482 million respectively, with related gain of Baht 0.11 million and related loss of Baht 331 million, respectively. The Bank received promissory notes avaled by the Financial Institutions Development Fund of Baht 266 million and Baht 1,151 million, respectively which mature in 2009-2016. Upon receipt, the Bank recognized present value losses on these notes of Baht 33 million and Baht 160 million respectively, which have been recorded in other expenses.
Non-Performing Assets (NPA) (Bank only) NPAs consist of properties acquired from auction, properties acquired from debt settlement, and disused properties, all of which generate a small amount of revenues or none at all, while the Bank still has to set aside provisions for impairment of these assets. The impairment of these NPAs is booked in accordance with the Bank’s NPA sale acceleration plan. Shown in the below table are the Bank’s disposal of NPAs and provisions for impairment of NPAs and other assets in 2007 and 2008: As of December 31, 2008 As of December 31, 2007 (Bt. million) (Bt. million) Beginning balance 23,450 26,853 Increase (Decrease) (2,719) (3,403) Ending balance 20,731 23,450 Provision for impairment (3,913) (3,980) Total NPAs-net 16,818 19,470
• NPA Management (Bank only) The NPAs held by the Bank are scattered nationwide. Overhead expenses to keep the properties in good condition and ready for disposal is around Baht 38 million a year. However, the Bank has put up some of the properties for rent to help save the maintenance cost on the properties. In 2007 and 2008, income from the rental of such properties was Baht 62 million and Baht 60 million respectively.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 143 To facilitate the asset sales, the Bank has prepared the property database to be available via the Bank’s Internet and intranet system and other printed materials to support both internal and external sale channels.
All bank employees, of more than 8,000 persons at different branch locations nationwide, as well as estate agents and the public, have taken part in the sale pitch, with sale commission provided by the Bank as incentives. In 2007 and 2008, TMB’s net income from disposal of its NPAs totaled Baht 7,918 million and Baht 5,221 million respectively.
Investments in securities (Bank only) As of December 31, 2007 and December 31, 2008, the Bank’s net investments in securities (excluding investments in subsidiaries and associated companies) stood at Baht 92,640 million and Baht 80,739 million, respectively, and the market value of investments in debt securities was Baht 82,080 million and Baht 77,356 million, respectively. The Bank principally holds debt securities for investment purpose. Corporate Treasury Group, which handles the asset and liability management, is responsible for managing the debt securities portfolio, except those held for trading purpose. Meantime, Treasury & Markets Group is responsible for managing the minor portion of the debt securities. The majority of the debt instruments invested by the Bank are government and state enterprise bonds giving long-term fixed yields. The Bank also invests in private sector debt instruments but in a limited amount and has gradually decreased this portfolio in order to lower the credit risk. The debt securities held for investment purpose consist of available-for-sale securities and held-to-maturity securities.
Investment Banking Group is responsible for managing the Bank’s equity securities investments, which as of December 31, 2007 and December 31, 2008 (excluding investments in subsidiaries and associated companies) amounted to Baht 11,776 million and Baht 7,285 million, respectively. The Bank principally invests in equity securities that are marketable on the stock market, unit trusts, and non-listed securities acquired through either investments in joint venture projects or debt restructuring.
144 A n n u a l R e p o r t 2 0 0 8 The table below illustrates TMB’s investment portfolio for the periods indicated: As of December 31, (Bank only) 2008 2007 2006 Acquisition cost/ Market Acquisition cost/ Market Acquisition cost/ Market Amortized cost value Amortized cost value Amortized cost value (Bt. million except in) Investments for trading Debt securities 5,003 5,010 4,538 4,539 1,025 1,019 Equity securities 79 53 - - - - Available for sales investments Debt securities 34,934 35,362 41,158 41,235 64,940 64,788 Equity securities 4,137 2,398 7,647 7,424 6,828 5,344 Held to maturity investments Debt securities 36,053 36,984 36,609 36,306 37,275 35,827 Equity securities ------General investments Debt securities ------Equity securities 3,069 2,610 4,129 4,115 5,066 5,604 Less Allowance for revaluation (216) - 1,258 - (1,592) - Less Allowance for impairment (2,320) - (2,699) - (940) - Total investments 80,739 82,417 92,640 93,619 112,602 112,582 Investments in subsidiaries/ associated companies 2,223 2,223 2,957 2,957 4,306 4,306 Total 82,962 84,640 95,597 96,576 116,908 116,888
• Allowance for impairment of investments Allowance for impairment of investments as of December 31, 2007 and December 31, 2008 was set aside based on the accounting standards for securities impairment. The allowance for investments in equity securities was set at Baht 2,649 million and Baht 2,270 million, respectively, and debt securities at Baht 50 million in both periods, making Baht 2,699 million and Baht 2,320 million in total, respectively.
• Interbank and money market instruments TMB’s interbank and money market items as of December 31, 2008 were Baht 72,384 million, up by Baht 52,785 million or 269.3% from December 31, 2007 due to the Bank’s assets and liabilities management.
Liquidity and funding • Liquidity management The objective of liquidity management is to keep the Bank’s financially capable of performing its financial obligations at present and in future and generating benefits when the market condition serves. The financial obligations arise from deposit withdrawal, repayment of debts incurred on matured investments, loan expansion, working capital requirement, and legally required provisioning. The Bank has adequate liquidity sources and can manage its liquidity through the domestic and foreign money market, the exchange market, and the repurchase market.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 145 The table below shows the Bank’s liquidity status for the periods indicated: December 31 2008 2007 2006 (Bt. million except in %) Liquid assets 163,877 140,980 162,085 Loans/Deposits (%) 94.2 100.1 95.2 Loans/Deposits (baht only) (%)) 92.0 98.0 92.2 Liquid assets/Assets (%) 27.3 22.8 21.6 Liquid assets/Deposits (%) 36.4 30.3 28.5
• Liquidity (Bank Only) As of December 31, 2008, TMB had liquid assets of Baht 163,877 million, shifted from Baht 140,980 million as of December 31, 2007 resulting largely from a increase in interbank and MM items.
Net cash used in operating activities was in a deficit of Baht 12,754 million as of December 31, 2008, compared with Baht 49,570 million a year earlier, caused chiefly by a drop in loan.
Deposits decreased by 3.2% from Baht 465,628 million as of December 31, 2007 to Baht 450,560 million as of December 31, 2008. Borrowings increased by 24.7% from Baht 53,215 million as of December 31, 2007 to Baht 66,342 million as of December 31, 2008, due primarily to issuing bills of exchange.
Capital expenditures Capital expenditures (the total increment in addition to land, premises & equipment but excluding revaluation surplus on assets) amounted to Baht 2,844 million in 2006, Baht 1,578 million in 2007, and Baht 549 million as of December 31, 2008.
In 2008, the Bank’s capital expenditures mainly were investments in electronic appliances and in the expansion of branch network and ATM/EDC for service point expansion; procurement of consumer sale tools to enhance the speed and segmented product and service offering by branches with a complete and updated availability of consumer product information; intra-group service system development with member companies such as ING Funds (Thailand) Co., Ltd., ING Life Ltd., and TMB Asset Management Co., Ltd.; enhancement of credit process rapidness through projects such as one-day approval process to help boost the Bank’s business volume and income; remodeling of some of the existing un-refurbished branches; replacement of computers, printers, and automatic pass-book update machines for branches; IT security system improvement; enhancement of application system flexibility in a mix & match pattern for a more diverse product development; application program development for all units to increase their efficiency and compliance with Basel II and BoT standards; and automation of the business process improvement for operational cost reduction and risk mitigation.
Capital adequacy According to the Bank of Thailand’s notification, commercial banks registered in Thailand are required to maintain, at end of day, a combined Tier 1 and Tier 2 capital adequacy ratio (CAR) at a minimum of 8.5%, with Tier 1 CAR of not less than 4.25%. To meet this requirement, as of December 31, 2008 TMB had total capital of Baht 63,105 million, of which Baht 45,986 million was Tier 1 and Baht 17,794 million was Tier 2, and maintained a CAR under Basel II standards at 13.91%, which was well above the BOT’s minimum requirement.
146 A n n u a l R e p o r t 2 0 0 8 ธนาคารทหารไทย จำกัด (มหาชน) TMB BANK PUBLIC COMPANY LIMITED
Risk Factors
Risk from economic condition
Thai economy in 2008 experienced a slowdown from last year due to several risks from external and internal factors. Key external factors were the impact from US financial crisis which led to global economic slowdown and global oil price hike during the first 7 month of this year. Internal factors such as increasing inflationary pressure and loss of confidence in uncertain political situation led consumer to be cautious on their spending while investors postponed their investments. Meanwhile, Government investment decreased from political uncertainty and changing of government itself in which it delayed the implementation of several government projects. So, budget disbursement was not able to meet its target. Furthermore, the prolonged anti- government protest which led to the closure of Suvarnabhumi and Don Mueang airports in the late November until early December, deteriorated foreign investors confidence as well as damaged tourism industry. The US economy, EU and Japan, Thailand’s major trading countries, have also entered recession period since the third quarter of 2008 and have had a large negative impact on exports of goods and services in the last quarter. The affected manufacturing industries have had to layoff workers which subsequently decrease domestic demand and also had a crucial part slowdown of Thai economy from average 5.1% growth in the first 3 quarter of this year to experience a growth contraction in the last quarter of 2008, the first contraction in nearly 10-year.
The Thai economy in 2009 is expected to encounter a tough period. The export sector, the main driver of Thai economic growth in the past several years, would rapidly slowdown especially in the first half of this year after global recession heading to its bottom as well as increasing trade barriers from trading’s partners. Moreover, the ongoing political instability and the downward trend of agriculture prices in line with decreasing global commodity prices would cause both consumers and investors to lower their consumptions. Unemployment is expected to rise. However, in 2009, there are several positive factors that can help to deter the slowdown of domestic demand such as the downward trend of inflation from decreasing oil prices and commodity prices, low interest rate and also the stream line of government stimulus packages in which it can help to restore confidence as well as domestic expenditure. Therefore, the Thai economy in 2009 could avoid recession period.
In 2009, TMB is well aware of risks from severe global economic slowdown as well as deterioration of Thai economy. The bank has given important priority to analysis, close assessment on economy and risk management that relate to bank performance by preparing measures and proper actions at all time so as to minimize the loss to all related parties and the bank.
Risks from Material changes in the regulations that govern the Bank and its business activities.
2008 marked a major change in the regulations governing financial institutions following the enactment of the Financial Institution Business Act, which came into force on August 3, 2008, and the Deposit Protection Agency Act, which took effect on August 11, 2008.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 147 Financial Institution Business Act
The main objectives of this act can be summed up into three major aspects: 1. The act aims to monitor risks incidental to the transactional concentration in activities such as lending and lending-equivalent transactions, particularly transactions made with related parties and the transactions favoring directors/senior management. The Bank therefore put in place an efficient control process to avoid breaching this regulation. The act also covers a consolidated supervision of financial business group of the financial institutions with the same regulation. 2. Financial institutions must implement risk management, with their board of directors and management responsible for defining policies and business plans, prudently identifying risks from launching of new transactions, regularly conducting a control self-assessment, and exercising good governance principles in the business management. 3. To ensure consumer protection, banks must render customer services on the basis of equality, transparency and openness through a thorough process and procedure and must have a complaint center to cater to service users.
Based on the above objectives of the new legislation, it is essential for financial institutions to establish a control process to make sure they could prevent risks of violating or failing to fully comply with the regulations. After all, facing a complaint or lawsuit from customers or outsiders will certainly tarnish the Bank’s reputation, image and operations.
Deposit Protection Agency Act
The act has become effective since August 11, 2008. Under this act, the full deposit guarantee provided by the Financial Institutions Development Fund will be terminated and instead the Deposit Protection Agency (“DPA”) will provide a protection for baht-denominated deposits in a limited amount per customer and per institution. The protection amount will be gradually reduced on a yearly basis as follows: year 1 (2008) 100% protected, year 2 protected for Baht 100 million/customer/institution, year 3 Baht 50 million, year 4 Baht 10 million, and year 5 onwards Baht 1 million.
Due to the fallouts from financial crisis in the USA and the EU countries, financial institutions have come under liquidity crunch, thereby prompting their respective governments to implement urgent bailout plans including government expanding the level of deposit protection. Likewise, ASEAN member countries have announced a full deposit protection to restore the public confidence in the financial sector. For Thailand, to be prepared for the global financial system fluctuations and to fend off impacts on domestic liquidity from international deposit and capital outflows, as well as to build up depositors’ confidence, the Ministry of Finance has accordingly extended the full protection period to cover second and third years.
As a result, the full 100% deposit protection will cover years 1-3 (August 11, 2008 - August 10, 2011), then decreased to a maximum of Baht 50 million in year 4 (August 11, 2011 - August 10, 2012) and to Baht 1 million in year 5 (August 11, 2012 onwards). This measure will help to alleviate the liquidity problem in the banking sector to some degree.
148 A n n u a l R e p o r t 2 0 0 8 Currently, this act is not yet been applicable to specialized financial institutions. These institutions must hasten to strengthen their financial status and business management efficiency to maintain their competitiveness by speedily building a strong retail customer base. Otherwise, they may risk facing a liquidity problem.
New laws related to financial institutions’ activities that are now under the government’s consideration include the draft legislation on personal information protection and the business collateral act.
These laws, once endorsed by concerned authorities and coming into force, will affect the Bank’s operations. Thus, it is necessary for the Bank to take a preparatory action to safeguard against all possible impacts.
Overview of TMB’s risk management
The Bank has set up its risk management structure in order to efficiently manage its core risks i.e. credit, market, operational, liquidity, reputational and strategic risks. Various risk policies and procedures have been established to provide common guidelines and standards to be applied consistently across the Bank.
The Bank manages its risks under the following key principles: core risks must be identified, measured, monitored, reported, analysed and controlled; business activities are managed under a risk-return framework. The Bank risk governance structure consists of the Risk Management Committee (RMC) and senior management risk committees which provide forums to discuss specific risk areas: Asset and Liabilities Management Committee (ALCO), the Credit Policy Committee, the Operational Risk Management Committee and the Chief Executive Committee. The RMC has been delegated by the Board of Directors to review and oversee the management of all risks across the enterprise and is authorized to approve the Bank’s overall risk management strategies, policies, frameworks and standards, as well as aggregate risk tolerance and risk concentration levels.
While business units are primarily responsible for managing risks, all the risk management related functions are under the stewardship of the Chief Risk Officer (CRO). There are dedicated units for market risk management, credit risk management and operational risk management which are responsible for establishing firm-wide risk management policies and guidelines, act as centers for risk management activities and assumes the following roles: to develop and maintain risk management policies; to propose risk strategy and recommend risk appetite to top management for approval, and to monitor, control and report risk levels to top management.
Risk factors associated with the Bank’s management Key risks and risk management measures of the Bank are as follows:
Strategic risk
Strategic risk results from the exercise of strategic plans, business plans, strategic implementation, and control which are considered inappropriate and inconsistent with both internal and external business environments. The strategic risk is directly harmful to the bank’s income, capital and existence.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 149 In 2008, TMB, led by new management team and directors, has set the vision “to be the leading Thai bank with world class financial solutions” and restructured the Bank to be the “Customer Centric Organization” with the implementation of deposit-led strategy to reduce the credit risks from traditional loan-led strategy. TMB has developed a 3-year strategic plan with the clear direction of market leadership in deposit and produced a 2009 business plan in line with the rapidly changing economic environment resulting from the global financial crisis and global economic downturn.
To succeed in bank transformation and strengthen the bank foundation, TMB has devised the project governance framework covering the initiation of projects, approval authority, implementation monitoring and reporting of project progress.
Furthermore, TMB has improved the process of performance tracking and strategic control. Regular meetings of the management team and business units are held to review the performance together with a remedial plan in case of missing target. The strategic risk dashboard has been initiated to keep the management informed and be aware of the strategic risk status on a quarterly basis. The control self assessment in strategic risk is also annually evaluated by the management.
In all, TMB is strongly determined to increase its capability in strategic risk management starting from the process of strategic planning, organization restructuring, staffing and project implementation till the performance monitoring and controlling go in line with the bank’s key strategies. In addition, the strategic planning will be reviewed continuously and regularly to be consistent with the changing situation.
Credit risk
The Bank is exposed to credit risk resulting from the possibility that a borrower or counterparty may fail to meet its obligations in accordance with agreed terms, principally the failure to make required payments on loans or obligations due to the Bank. To minimize this risk, the financial position of each potential customer or counterparty is analyzed under certain financial and quantitative parameters according to a credit rating system for its corporate banking and SME customers. The models’ performance are monitored and where necessary redeveloped. In addition, the Bank analyses cash flow and other qualitative features such as industry trends, competitiveness and management capabilities. Part of the Bank’s risk strategy is to mitigate concentration of its credit exposure in any one industry or individual customer or counterparty in any country. For consumer credit, the Bank utilizes credit scoring method for its approval. For housing loan products, the Bank additionally utilized predefined expert judgment underwriting standards. The development of a credit bureau in Thailand under which the Bank can obtain the credit status of its existing and potential customers has improved the Bank’s ability to analyze credit and counterparty risk. The significant credit risk are as follows:
• Risk from credit quality The risk of non-payment by the Bank’s customers is affected by changes in economic and industry conditions, the credit profile of its borrowers, the duration of its loans and the Bank’s risk management policies. In
150 A n n u a l R e p o r t 2 0 0 8 addition, in recent years, SME debt, consumer debt, and particularly credit card debt have increased rapidly in Thailand. These increased debt levels may cause certain of the Bank’s customers to become delinquent on their loans. Further, when the Bank restructures NPLs, it may receive lower interest payments than originally agreed to and, in some cases, the Bank may collect less than the original principal amount of loans.
• Risk from credit concentrations Although the Bank has provided credits to a broad range of business sectors, its business, cash flows, financial condition, results of operations and prospects may be adversely impacted from financial troubles plaguing any business sector and the general economic condition. However, slumps in the manufacturing and the wholesale & retail sectors may result in a greater number of NPLs in these sectors. The Bank monitors concentration risk via single exposure limits as well as the establishment of industry limits.
• Risk from impairment of collaterals value A substantial portion of the Bank’s loan portfolio is secured by real estate and other assets, the value of which may be affected by the overall economic conditions of Thailand. A downturn in the real estate market could result in the principal amount of loans secured by real estate exceeding the loan to value proportion as that at the time of origination. Therefore, if Thai economy in general or real estate values in particular deteriorate, the Bank may be required to adjust downward the value of collaterals securing its loans in future periods. Any decline in the value of collaterals securing loans may result in an increase in the Bank’s allowance for doubtful accounts.
Market risk Market risk exposes the Bank to fluctuations in interest rates, foreign exchange rates or stock prices that can change the value of financial products of the Bank, leading to a potential loss.
For risk management purposes, the Bank has established various market risk policies, which set standards and guidelines for market risk management. The business unit designated with the responsibility for market risk management accomplishes this task under the standards set in the policies, while Market Risk Management Group independently monitors the firm-wide market risk.
The Bank controls the actual market risk exposure by setting limits to the maximum exposure and maximum loss approved by the Board of Directors through delegated authority. The significant market risks are as follows: • Foreign exchange risk The Bank’s Treasury and Markets Group is responsible for managing foreign exchange positions of the Bank’s trading book. In addition, Market Risk Management Group puts in place a framework of risk management measurement designed to minimize the excessive risk from unfavorable changes in market conditions, which adversely affect the prices or returns on the Bank’s trading and investment portfolios related to foreign currencies, with strict limits on:
1. Foreign Exchange Risk Limit (Delta Limit) covers all foreign currency transactions. These are set in accordance with the BOT regulations regarding daily foreign exchange overbought/oversold position (open position).
T M B B a n k P u b l i c C o m p a n y L i m i t e d 151 2. FX Derivative Risk Limit applies to FX derivative products and related hedges. These refer to the expected changes in the derivative prices for a given change in the underlying foreign exchange rate and are imposed on: 2.1 FX Option Delta: the expected change in the derivative price for a given change in the underlying foreign exchange rate. 2.2 Matrix Limit: the profit and loss that arises given market rate changes such as FX spot and FX volatility change by 1% respectively. The limit is set against a worst-case scenario, i.e. the maximum loss figure that may occur if the market parameters move against the existing position.
Within these limits, the Treasury and Markets Group is responsible for managing and trading the portfolio and to optimize the return on the funds invested. Procedures, strategies and performance are reviewed by ALCO, and adherence to the limits is monitored by market risk management.
• Interest rate risk The Bank’s net interest income or net interest margin is dependent on the movement of interest rates and mismatches in cash flows or re-pricing dates. Interest rate movements directly affect the Bank’s income and expenses from assets and liabilities as well as capital fund. Interest rate risk management is undertaken in accordance with the policy framework as approved by the Bank’s Board of Directors, by establishing and monitoring various risk curbing limits such as Earnings-at-Risk, interest rate sensitivity gap limits and stop loss limits. The ALCO oversees the firm-wide structural interest rate risk.
The Bank has adopted interest rate risk hedging measures to cushion the interest rate volatility, e.g. rebalancing of assets and liabilities or setting of a proper mismatch by considering external and internal factors including interest rate forecasted by the Bank’s Research Department under ALCO’s responsibility.
Liquidity risk Liquidity risk is the risk that the Bank fails to perform the obligations on due dates given the failure to raise the required amount of funds or to change assets into cash within the specified period of time at a reasonable cost, which might cause damage to the Bank. The ALCO is responsible for the oversight of liquidity management. The primary aim is to provide liquidity to the Bank in order to ensure that liquidity position is sufficient for the Bank’s normal operations as well as for any crisis that may arise. The Bank’s liquidity level is to exceed the minimum as required by BoT and complies with the risk framework approved by the Risk Management Committee and the Board of Directors. The Bank reviews its liquidity risk policy for a normal and a critical situation on regular bases or as required given any material change that may impact the bank’s position and to ensure alignment with the Bank’s core policy, the organization structure, the regulatory rules, and the market condition that might be changing.
Balance Sheet Management Group (BSMG) has been entrusted by the ALCO with the duties of liquidity management to maintain highly liquid assets in both baht and foreign currencies, and procurement of short-term and long-term funding sources for the Bank to meet funding requirements for its business operations. BSMG also closely reviews and controls the Bank’s liquidity position by preparing various forms of reports and simulates liquidity crisis situations to facilitate management and maintaining of a portfolio of appropriately liquid assets and liabilities.
152 A n n u a l R e p o r t 2 0 0 8 According to its funding structure as of 31 December 2008, the Bank’s deposits, interbank & money market items, short-term and long-term borrowings were 85.1%, 1.8%, 6.6% and 5.9%, respectively. Previously, the Bank relied chiefly on short-term funding. The Bank’s ongoing deposit-led strategy seeks to further strengthen its financial position and operating results in order to boost depositors’ and customers’ confidence. Meanwhile, priority is also given to liquidity risk management by increasing the minimum level of liquid assets, keeping abreast of risk levels on a daily, weekly and monthly basis, setting risk limits, and taking proactive steps to contain risks at an acceptable level. Plans for risk management in critical situations have been devised and tested to ensure that the Bank has strategic plans for taking remedial action should an early warning signal be triggered.
Operational risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk.
The Bank has developed an Operational Risk Management Framework to ensure that the Operational Risks are properly identified, measured, monitored, reported, analysed and controlled in a systematic and consistent manner. The framework consists of an Operational Risk Governance Structure, Operational Risk Management Policies which cover all Basel II loss event categories, other supplementary policies, and three Operational Risk Tools; Control Self Assessment (CSA), Key Risk Indicators (KRI), and Loss Data Collection and Incident Management.
Business and Support Units are primarily responsible and accountable for their own Operational Risk Management and Control. The Bank has appointed a number of Unit Operational Risk Managers (UORM) in the Business and Support Units who, with support from the Operational Risk Management Department, take on carry out the Operational Risk Management responsibilities of their respective units.
Other major Operational Risk Mitigation Programs/Mechanisms include Product and Service Approval Process (PSAP), Outsourcing Risk Management, and Business Continuity Planning (BCP).
To ensure that products and services are offered in a safe manner, the Product and Services Approval Process (PSAP) is established to set guidelines for sign-off and approval of new products and services. This due diligence process ensures that the risks created by the new products and services are properly identified and addressed and the necessary infrastructure and controls are in place to support the new business.
The Bank has established the Outsourcing Risk Management Policy to set out the principles and standards for the effective identification of the major risks created by outsourcing and the management of such risks.
The Bank has established the Business Continuity Management Policies and Standards to provide guidance and standards for all units to develop Business Continuity Plan. The Business Continuity Management Office is set up to oversee the implementation of BCM Policies and Standards and monitor BCM readiness of the Group and lead the co-ordination of group-wide BCP initiatives to raise the overall BCP readiness of the Bank.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 153 Report of the Nomination, Remuneration and Corporate Governance Committee
The Nomination, Remuneration and Corporate Governance Committee of the TMB Bank Public Company Limited comprises two independent and two non-executive directors. In 2008 the Committee held 18 meetings.
With respect to nomination and remunerations, the Committee formulates policies and criteria for selection of the Bank’s directors and high level executives; selects and nominates qualified persons to be the Bank’s directors and senior executives; formulates policies on remuneration and other benefits including those offered to directors, executives and staff. Other responsibilities are ensuring that directors and executives receive appropriate remuneration, setting guidelines for their performance appraisal with a view to make adjustment to their annual remuneration accordingly, and developing the Bank’s succession plan.
With respect to corporate governance, the Committee assists the Bank’s Board of Directors and the various committees established by the Bank to conform to the principles of good corporate governance. The Committee also prepares and monitors the Company’s Corporate Governance Guidelines and disseminates them to internal and external parties involved, to keep them informed of the Bank’s important criteria and code of practice in line with the principle of good corporate governance. Other responsibilities are to review and revise relevant policies, principles, and performance guidelines regularly; recommend requirements relating to moral principles and business ethics; consider good corporate governance practices of other institutions in Thailand and abroad, recommend the adoption of such practices as modifications where appropriate to the Bank. In addition the Committee oversees the implementation of good corporate governance to ensure its practical effectiveness, continuity and appropriateness to the Bank’s business operations. The results are reported to the Bank’s Board of Directors together with comments and recommendations for rectification and improvement where appropriate.
(Dr. Juanjai Ajanant) Chairman of the Committee
154 A n n u a l R e p o r t 2 0 0 8 Report of the Audit Committee
In 2008, the Bank’s Audit Committee, served fully by independent directors who were not the bank’s executives or employees of any kind, carried out its responsibilities, within its given authority and in accordance with the guidelines set out by the Stock Exchange of Thailand and the Bank of Thailand. Major areas of responsibilities can be summarised as follows:
1. Review and ensure quarterly, half-yearly and year-end financial statements are accurate and compliant to accounting standards and regulatory requirements. 2. Review and ensure adequate and efficient internal control. 3. Review the disclosure of connected transactions or transactions that may lead to conflict of interest so as to ensure the transparency, accuracy and completeness. 4. Review the Bank’s compliance practices to ensure that the Bank strictly complies with the provisions of the Commercial Banking Act and the Securities and Exchange Act and other related regulatory and legal requirements. Points of observation and recommendations were given to the Bank’s management to prevent damaging circumstances. The Committee also insisted that the management be required to supervise the staff to strictly adhere to all legal and regulatory requirements. 5. Select and propose to the Board of Directors and shareholder meeting the appointment of Bank’s auditor and audit fee. In addition, the Committee is responsible for reviewing the non-audit-related engagements with the Bank’s external auditor. 6. Closely supervise the Bank’s internal audit function including approving internal audit plans and assessing audit performance to ensure sufficient audit resources and that all auditing activities were independently and effectively conducted in accordance with the regulatory requirements.
The Audit Committee gained full co-operation from the Management as well as full access to all information relevant to the Bank’s operations, necessary for them to discharge their responsibilities. The Committee held twelve meetings in 2008. Relevant executive officers were invited to attend and clarify issues in the meetings, at the discretion of the Committee. During the year, Audit Committee had recommended that Management rectify deficiencies in unternal controls and operation and tighten internal controls accordingly. The Bank’s Board of Directors and the Management had taken internal control and audit as well as the principles of good governance practices very seriously.
(Vijit Supinit) Chairman of Audit Committee
T M B B a n k P u b l i c C o m p a n y L i m i t e d 155 Board of Directors’ Responsibilities for Financial Reports
The Consolidated Financial Statements of TMB Bank Pcl. and its subsidiaries have been prepared under the Public Limited Company Act, B.E. 2535 (1992), the Accountancy Act, B.E.2543 (2000), the notifications of the Bank of Thailand, the Securities and Exchange Act and notification of the Securities and Exchange Commission governing criteria, conditions and methods of report on disclosure of information relating to financial standing and operational performance. Such reports must comply with the relevant accounting standards prescribed by the Accounting Profession Council (Association of Certified Public Accountants and Auditors of Thailand). In preparation of financial reports, consideration was made to select the appropriate accounting policy and apply consistent practices. All material information has been sufficiently disclosed in the Notes to the Financial Statements, upon which the auditor’s opinions are stated therein.
TMB’s Board of Directors is held accountable for the financial statement, including financial information as shown in the Annual Report. The Board also viewed that the Consolidated Financial Statements of TMB Bank Pcl. and its subsidiaries were prudently prepared with adequate disclosure of material information in showing the financial standing and operational performance, with accuracy and reliability and in compliance with the related laws and regulations.
(Mr. Boontuck Wungcharoen) (Mr. Sathit Limpongpan) Chief Executive Officer Chairman
156 A n n u a l R e p o r t 2 0 0 8 Audit Report of Certified Public Accountant To the Shareholders of TMB Bank Public Company Limited
I have audited the accompanying consolidated and Bank-only balance sheets as at 31 December 2008 and 2007, and the related statements of income, changes in equity and cash flows for the years then ended of TMB Bank Public Company Limited and its subsidiaries, and of TMB Bank Public Company Limited, respectively. The Bank’s management is responsible for the correctness and completeness of information presented in these financial statements. My responsibility is to express an opinion on these financial statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.
158 A n n u a l R e p o r t 2 0 0 8 In my opinion, the consolidated and Bank-only financial statements referred to above present fairly, in all material respects, the financial positions as at 31 December 2008 and 2007 and the results of operations and cash flows for the years then ended of TMB Bank Public Company Limited and its subsidiaries, and of TMB Bank Public Company Limited, respectively, in accordance with generally accepted accounting principles.
(Wilai Buranakittisopon) Certified Public Accountant Registration No. 3920
KPMG Phoomchai Audit Ltd. Bangkok 19 February 2009
T M B B a n k P u b l i c C o m p a n y L i m i t e d 159 Balance Sheets TMB Bank Public Company Limited and its Subsidiaries As at 31 December 2008 and 2007
(in Baht) Consolidated Bank only Assets Note 2008 2007 2008 2007
Cash 11,317,138,700 10,288,753,062 11,313,907,152 10,287,302,723 Interbank and money market items 5.1 Domestic items - Interest bearing 62,427,612,096 10,670,317,707 62,224,931,959 9,826,145,358 - Non-interest bearing 3,894,007,458 4,919,391,500 3,894,007,458 4,706,389,651 Foreign items - Interest bearing 2,913,190,682 2,981,955,498 2,913,190,682 2,981,955,498 - Non-interest bearing 3,352,112,792 2,187,864,073 3,352,112,792 2,084,712,613 Total interbank and money market items - net 72,586,923,028 20,759,528,778 72,384,242,891 19,599,203,120 Securities purchased under resale agreements 5.2 - 27,800,000,000 - 27,800,000,000 Investments 5.3, 5.5, 5.22 Current investments - net 30,547,327,833 28,749,804,476 30,547,327,833 28,249,771,329 Long-term investments - net 50,872,136,171 65,117,449,804 50,191,893,885 64,391,316,990 Investments in subsidiary and associated companies - net 2,563,814,517 2,479,000,005 2,222,984,141 2,957,383,256 Total investments - net 83,983,278,521 96,346,254,285 82,962,205,859 95,598,471,575 Loans and accrued interest receivable 5.4, 5.5 Loans 424,286,287,677 464,894,832,060 424,205,411,141 466,075,265,113 Accrued interest receivable 3,295,283,330 4,026,123,704 3,378,541,136 4,092,444,892 Total loans and accrued interest receivable 427,581,571,007 468,920,955,764 427,583,952,277 470,167,710,005 Less Allowance for doubtful accounts 5.6 (45,462,522,673) (51,485,940,125) (43,932,355,863) (49,930,496,665) Less Revaluation allowance for debt restructuring 5.7 (453,251,875) (628,190,669) (453,251,875) (628,190,669) Loans and accrued interest receivable - net 381,665,796,459 416,806,824,970 383,198,344,539 419,609,022,671 Properties foreclosed - net 5.8 19,260,132,928 22,555,597,333 16,817,928,476 19,469,594,025 Customers’ liabilities under acceptances 102,483,987 279,984,976 102,483,987 279,984,976 Premises and equipment - net 5.9 14,387,717,494 13,066,851,952 14,315,550,037 12,941,957,740 Accounts receivable - net 11,364,747,081 8,750,008,461 11,149,448,353 8,652,524,292 Goodwill - net 4.2 59,988,168 322,761,632 - - Other assets - net 5.5 7,257,222,376 5,184,919,324 7,145,283,676 4,913,018,441 Total assets 601,985,428,742 622,161,484,773 599,389,394,970 619,151,079,563
The accompanying notes are an integral part of these finalcial statements
160 A n n u a l R e p o r t 2 0 0 8 Balance Sheets TMB Bank Public Company Limited and its Subsidiaries As at 31 December 2008 and 2007
(in Baht) Consolidated Bank only Assets Note 2008 2007 2008 2007
Deposits 5.10 Deposits in baht 449,736,846,008 465,008,687,591 449,994,595,070 465,174,203,032 Deposits in foreign currencies 560,340,835 453,676,766 565,561,600 453,676,766 Total deposits 450,297,186,843 465,462,364,357 450,560,156,670 465,627,879,798 Interbank and money market items 5.11 Domestic items - Interest bearing 6,749,518,364 22,958,846,600 6,749,518,364 23,310,803,075 - Non-interest bearing 624,014,678 701,062,864 624,014,678 584,971,655 Foreign items - Interest bearing 1,666,769,500 1,073,377,742 1,666,769,500 1,073,377,742 - Non-interest bearing 258,877,212 259,620,927 258,877,212 111,460,037 Total interbank and money market items 9,299,179,754 24,992,908,133 9,299,179,754 25,080,612,509 Liabilities payable on demand 3,297,331,305 3,609,975,110 3,297,331,305 3,609,975,110 Securities sold under repurchase agreements 5.12 - 4,765,000,000 - 4,765,000,000 Borrowings 5.13 Short-term borrowings 34,930,037,158 22,401,922,531 34,955,037,158 22,200,675,897 Long-term borrowings 31,386,832,474 31,014,100,371 31,386,832,474 31,014,100,371 Total borrowings 66,316,869,632 53,416,022,902 66,341,869,632 53,214,776,268 Bank’s liabilities under acceptances 102,483,987 279,984,976 102,483,987 279,984,976 Accrued interest payable 1,891,165,715 2,412,941,673 1,891,178,145 2,412,989,316 Provisions of obligation from the 5.14,5.26, 5.27 9,247,063,902 9,048,962,622 5,817,520,521 5,814,790,521 transferred non-performing assets Other provisions 5.15 3,160,657,011 1,093,369,263 4,559,299,300 2,878,121,552 Accounts payable 5,413,749,790 8,291,715,749 5,413,658,201 8,274,881,709 Other liabilities 7,913,355,442 4,267,837,095 7,849,747,880 3,869,655,175 Total liabilities 556,939,043,381 577,641,081,880 555,132,425,395 575,828,666,934
The accompanying notes are an integral part of these finalcial statements
T M B B a n k P u b l i c C o m p a n y L i m i t e d 161 Balance Sheets TMB Bank Public Company Limited and its Subsidiaries As at 31 December 2008 and 2007
(in Baht) Consolidated Bank only Assets Note 2008 2007 2008 2007
Equity Share capital 5.16 Authorised share capital, Baht 10 par value 1,991,997,200 preferred shares 19,919,972,000 19,919,972,000 19,919,972,000 19,919,972,000 and 41,716,741,279 ordinary shares 417,167,412,790 417,167,412,790 417,167,412,790 417,167,412,790 Issued and paid-up share capital 1,991,997,200 preferred shares 19,919,972,000 19,919,972,000 19,919,972,000 19,919,972,000 and 41,536,741,279 ordinary shares 415,367,412,790 415,367,412,790 415,367,412,790 415,367,412,790 Discount on ordinary shares - net 5.16 (303,088,346,225) (303,088,346,225) (303,088,346,225) (303,088,346,225) Surplus on revaluation of fixed assets 5.9, 5.17 5,288,040,203 3,249,390,425 5,288,040,203 3,249,390,425 Unrealised gain / (loss) on revaluation 5.3, 5.17 (191,739,644) 1,262,505,202 (191,188,394) 1,262,497,854 of investments Currency translation changes 8,800,286 10,324,286 8,800,286 10,324,286 Retained earnings / (deficit) Appropriated Legal reserve 5.17 2,100,000,000 2,100,000,000 2,100,000,000 2,100,000,000 Others 8,717,165,400 8,717,165,400 8,717,165,400 8,717,165,400 Unappropriated (103,166,427,235) (103,652,056,633) (103,864,886,485) (104,216,003,901) Total equity attributable to equity holders of the Bank 44,954,877,575 43,886,367,245 44,256,969,575 43,322,412,629 Minority interest 91,507,786 634,035,648 - - Total equity 45,046,385,361 44,520,402,893 44,256,969,575 43,322,412,629 Total liabilities and equity 601,985,428,742 622,161,484,773 599,389,394,970 619,151,079,563
The accompanying notes are an integral part of these finalcial statements
162 A n n u a l R e p o r t 2 0 0 8 Balance Sheets TMB Bank Public Company Limited and its Subsidiaries As at 31 December 2008 and 2007
(in Baht) Consolidated Bank only Assets Note 2008 2007 2008 2007
Off-balance sheet items - contingencies 5.21 Aval to bills and guarantees of loans 3,610,514,735 5,236,279,603 3,610,514,735 5,236,279,603 Liabilities under unmatured import bills 1,233,034,380 1,321,386,533 1,233,034,380 1,321,386,533 Letters of credit 27,690,457,185 22,281,735,512 27,690,457,185 22,281,735,512 Other contingencies 359,928,834,194 321,158,834,930 359,928,834,194 321,158,834,930
(Boontuck Wungcharoen) (Sathit Limpongpan) Chief Executive Officer Chairman of the Board
The accompanying notes are an integral part of these finalcial statements
T M B B a n k P u b l i c C o m p a n y L i m i t e d 163 Statements of income TMB Bank Public Company Limited and its Subsidiaries As at 31 December 2008 and 2007
(in Baht) Consolidated Bank only Note 2008 2007 2008 2007
Interest and dividend income Loans 24,150,176,454 29,180,277,713 23,883,175,815 28,751,014,886 Interbank and money market items 1,581,005,556 755,518,119 1,565,441,473 742,599,736 Investments 3,420,678,642 3,788,220,157 3,732,522,795 3,936,031,130 Total interest and dividend income 29,151,860,652 33,724,015,989 29,181,140,083 33,429,645,752
Interest expense Deposits 10,197,339,499 14,078,037,770 10,199,092,189 14,089,347,177 Interbank and money market items 126,588,611 557,275,914 147,462,557 557,275,914 Short-term borrowings 1,165,703,066 1,282,248,614 1,165,349,862 1,282,206,145 Long-term borrowings 1,869,712,346 1,364,522,315 1,666,764,611 1,364,522,315 Total interest expense 13,359,343,522 17,282,084,613 13,178,669,219 17,293,351,551
Net interest and dividend income 15,792,517,130 16,441,931,376 16,002,470,864 16,136,294,201 Bad debts and doubtful accounts 5,177,138,202 31,732,393,026 5,191,784,680 31,770,049,771 Loss on debt restructuring (reversal) (100,968,042) (749,837,413) (121,494,337) (775,110,437) Net interest and dividend income / (expense) after bad debts, doubtful accounts and loss on debt restructuring 10,716,346,970 (14,540,624,237) 10,932,180,521 (14,858,645,133)
Non-interest income Loss on investments 5.3 (353,378,205) (830,802,522) (196,943,773) (3,917,509,958) Share of profit from investments accounted for using the equity method 465,463,156 281,625,017 - - Fees and service income Acceptances, aval and guarantees 523,721,756 648,808,302 523,721,756 648,808,302 Others 4,487,406,499 4,770,703,913 3,611,929,742 3,690,732,718 Gain on exchange 951,405,272 1,095,299,490 939,593,555 1,114,555,295 Gain on sale of assets 626,159,148 - 576,047,797 - Other income 313,376,950 625,575,700 291,063,706 583,968,666 Total non-interest income 7,014,154,576 6,591,209,900 5,745,412,783 2,120,555,023
The accompanying notes are an integral part of these finalcial statements
164 A n n u a l R e p o r t 2 0 0 8 Statements of income TMB Bank Public Company Limited and its Subsidiaries As at 31 December 2008 and 2007
(in Baht) Consolidated Bank only Note 2008 2007 2008 2007
Non-interest expenses Personnel expenses 5.15 6,040,896,392 4,814,639,122 5,694,397,355 4,401,372,991 Premises and equipment expenses 2,585,178,481 2,564,958,954 2,476,224,185 2,456,700,518 Taxes and duties 884,126,765 1,344,870,225 879,279,798 1,334,240,892 Fees and service expenses 1,249,116,828 1,249,643,218 1,188,990,205 1,199,433,611 Directors’ remuneration 30,912,744 38,598,405 26,734,256 32,804,730 Loss on impairment of properties foreclosed and other assets 1,123,496,906 3,981,581,047 1,103,903,990 3,468,463,823 Contributions to Financial Institutions Development Fund and Deposit Protection Agency 1,863,386,730 2,157,095,748 1,863,386,730 2,157,095,748 Loss on provisions of obligation from the transferred non-performing assets (reversal) 5.14, 5.26, 5.27 (48,628,720) 3,978,189,862 (58,000,000) 773,910,521 Loss on other provisions 5.15 1,150,107,000 225,025,000 1,133,997,000 225,025,000 Loss on impairment of goodwill 5.28 - 12,237,426,473 - 12,237,426,473 Loss on sale of assets - 241,877,877 - 467,662,265 Other expenses 5.31 2,235,679,098 2,625,364,338 2,077,442,967 2,418,500,451 Total non-interest expenses 17,114,272,224 35,459,270,269 16,386,356,486 31,172,637,023
Profit / (loss) before income tax expense 616,229,322 (43,408,684,606) 291,236,818 (43,910,727,133) Income tax expense 5.18, 5.31 86,632,009 132,491,792 2,090,857 4,821,082 Net profit / (loss) 529,597,313 (43,541,176,398) 289,145,961 (43,915,548,215)
Attributable to: Equity holders of the Bank 423,657,943 (43,676,945,294) 289,145,961 (43,915,548,215) Minority interest 105,939,370 135,768,896 - - 529,597,313 (43,541,176,398) 289,145,961 (43,915,548,215) Earnings / (loss) per share 5.19 Basic 0.01 (2.60) 0.01 (2.61) Diluted 0.01 (2.31) 0.01 (2.33)
(Boontuck Wungcharoen) (Sathit Limpongpan) Chief Executive Officer Chairman of the Board The accompanying notes are an integral part of these finalcial statements
T M B B a n k P u b l i c C o m p a n y L i m i t e d 165
- -
Total 4,270,916 equity (1,524,000) 644,852,387 529,597,313 (12,845,565) (543,803,232) (104,664,000) 2,838,640,905 2,100,621,233 1,174,449,700 2,842,911,821 48,000,385,712 45,046,385,361 44,520,402,893 (1,454,244,846) 250,000,000,000 (43,541,176,398) (40,698,264,577) (212,768,872,677)
------
interest 91,507,786 Minority 135,768,896 511,112,317 135,768,896 634,035,648 105,939,370 105,939,370 (12,845,565) (543,803,232) (104,664,000)
- - - - 4,270,916 (1,524,000) 644,852,387 423,657,943 2,842,911,821 of the Bank the of Total equity Total 2,838,640,905 2,100,621,233 1,068,510,330 attributable to attributable equity holders equity 47,489,273,395 44,954,877,575 43,886,367,245 (1,454,244,846) 250,000,000,000 (43,676,945,294) (40,834,033,473) (212,768,872,677)
------
55,794,688 55,794,688 61,971,455 61,971,455 423,657,943 485,629,398 (43,676,945,294) Unappropriated (60,030,906,027) (43,621,150,606) (103,166,427,235) (103,652,056,633)
------
Others 8,717,165,400 8,717,165,400 8,717,165,400
- - Retained earnings / (deficit) / earnings Retained
------
Appropriated
Legal reserve (in Baht) (in 2,100,000,000 2,100,000,000 2,100,000,000 Consolidated
------Foreign 8,800,286 4,270,916 4,270,916 currency 6,053,370 4,270,916 translation 10,324,286 (1,524,000) (1,524,000) (1,524,000)
------
Unrealised gain / (loss) / gain (191,739,644) on revaluation on of investments of 2,838,640,905 1,262,505,202 2,838,640,905 2,838,640,905 (1,454,244,846) (1,576,135,703) (1,454,244,846) (1,454,244,846)
------
of (55,794,688) (55,794,688) (55,794,688) Surplus on Surplus revaluation 3,305,185,113 5,288,040,203
fixed assets fixed 3,249,390,425 2,038,649,778 2,038,649,778 2,038,649,778
------
capital on share on (discount) Premium / Premium (90,319,473,548) (212,768,872,677) (303,088,346,225) (303,088,346,225)
------
paid-up Issued and Issued share capital share 185,287,384,790 250,000,000,000 435,287,384,790 435,287,384,790
of investments of equity in shares ordinary investments of equity in Statements of changes in equity TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Balance at 1 January 2007 January 1 at Balance assets fixed of revaluation on Surplus revaluation on gain Unrealised translation currency Foreign directly recognised (expense) / income Net (loss) / profit Net expense and income recognised Total paid-up fully and issued in Increase shares ordinary on discount in Increase interests minority in Decrease 2007 December 31 at Balance 2008 in holders equity in Changes assets fixed of revaluation on Surplus revaluation on loss Unrealised translation currency Foreign directly recognised (expense) / income Net profit Net expense and income recognised Total interest minority in Decrease paid Dividend 2008 December 31 at Balance
The accompanying notes are an integral part of these finalcial statements finalcial these of part integral an are notes accompanying The 166 A n n u a l R e p o r t 2 0 0 8
- -
4,270,916 Total (1,524,000) 645,410,985 equity 289,145,961 934,556,946 2,841,486,714 2,845,757,630 2,100,621,233 44,256,969,575 47,161,075,891 43,322,412,629 (1,453,686,248) (43,915,548,215) 250,000,000,000 (41,069,790,585) (212,768,872,677)
------
55,794,688 55,794,688 61,971,455 289,145,961 351,117,416 - 61,971,455 - (60,356,250,374) (43,915,548,215) (43,859,753,527) (103,864,886,485) (104,216,003,901)
------
Unappropriated
Others 8,717,165,400 8,717,165,400 8,717,165,400
------Retained earnings / (deficit) / earnings Retained
Appropriated
Legal reserve 2,100,000,000 2,100,000,000 2,100,000,000
------
8,800,286 6,053,370 4,270,916 4,270,916 4,270,916 10,324,286 (1,524,000) (1,524,000) (1,524,000) Foreign currency
(in Baht) (in
translation Bank only Bank
------Unrealised (191,188,394) 2,841,486,714 1,262,497,854 2,841,486,714 2,841,486,714 gain / (loss) / gain (1,578,988,860) (1,453,686,248) (1,453,686,248) (1,453,686,248) on revaluation on of investments of
------
of (55,794,688) (55,794,688) (55,794,688) Surplus on Surplus revaluation fixed assets fixed 2,038,649,778 3,305,185,113 3,249,390,425 2,038,649,778 5,288,040,203 2,038,649,778
------
capital on share on (discount) Premium / Premium (90,319,473,548) (212,768,872,677) (303,088,346,225) (303,088,346,225)
- - - -
------
paid-up
Issued and Issued share capital share 185,287,384,790 250,000,000,000 435,287,384,790 435,287,384,790
Statements of changes in equity TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Balance at 1 January 2007 January 1 at Balance assets fixed of revaluation on Surplus investments of revaluation on gain Unrealised translation currency Foreign equity in directly recognised (expense) / income Net loss Net expense and income recognised Total shares ordinary paid-up fully and issued in Increase shares ordinary on discount in Increase 2007 December 31 at Balance 2008 in holders equity in Changes assets fixed of revaluation on Surplus investments of revaluation on loss Unrealised translation currency Foreign equity in directly recognised (expense) / income Net profit Net expense and income recognised Total 2008 December 31 at Balance
The accompanying notes are an integral part of these finalcial statements finalcial these of part integral an are notes accompanying The
T M B B a n k P u b l i c C o m p a n y L i m i t e d 167 Statements of cash flows TMB Bank Public Company Limited and its Subsidiaries As at 31 December 2008 and 2007
(in Baht) Consolidated Bank only 2008 2007 2008 2007 Cash flows from operating activities Net profit / (loss) 529,597,313 (43,541,176,398) 289,145,961 (43,915,548,215) Adjustments to reconcile net profit / (loss) to net cash provided by / (used in) operating activities Depreciation and amortisation 1,159,003,811 1,258,266,538 1,121,064,237 1,212,001,660 Goodwill amortisation - 373,529,365 - 356,429,897 Loss on impairment of goodwill - 12,237,426,473 - 12,237,426,473 Loss on impairment in value of securities 1,099,520,208 1,965,187,963 1,092,585,138 5,029,154,098 Unrealised loss / (gain) on revaluation of trading securities 19,060,018 (6,746,169) 19,060,018 (6,746,169) Loss on transfer of investments 2,561,748 - 3,347,750 - Loss on impairment of properties foreclosed and other assets 1,123,496,906 3,981,581,047 1,103,903,990 3,468,463,823 Share of profit from investments accounted for using the equity method (465,463,156) (281,625,017) - - Dividend income from associated companies 212,015,962 162,323,513 - - Bad debts, doubtful accounts and loss on debt restructuring 5,076,170,160 30,982,555,613 5,070,290,343 30,994,939,334 Gain on disposal of premises and equipment (14,712,906) (249,503,648) (16,130,108) (23,719,259) Loss on provisions of obligation from the transferred non-performing assets (reversal) (48,628,720) 3,978,189,862 (58,000,000) 773,910,521 Loss on other provisions 1,150,107,000 225,025,000 1,133,997,000 225,025,000 Expense for retirement project 917,180,748 - 917,180,748 - Gain on sale of investments (703,727,579) (1,037,537,649) (853,768,097) (1,014,511,785) Unrealised loss(gain) on exchange rate on debentures 239,360,000 (459,400,000) 239,360,000 (459,400,000) Amortisation of discount on investments (722,746,882) (689,608,170) (722,746,882) (689,608,170) Amortisation of premium on debentures (167,573,200) (283,448,260) (167,573,200) (283,448,260) Increase / (decrease) in other accrued expenses (54,166,715) (154,594,584) 22,905,181 (201,734,447) Net interest and dividend income (15,792,517,130) (16,441,931,376) (16,002,470,864) (16,136,294,201) Income tax expense 86,632,009 132,491,792 2,090,857 4,821,082 Interest and dividend received 30,120,028,475 34,422,257,634 30,129,754,586 34,080,421,748 Interest paid (13,634,389,479) (19,679,474,554) (13,639,750,390) (19,690,753,988) Income tax paid (181,387,265) (82,477,044) (3,830,855) (1,691,723) Profit from operating activities before before changes in operating assets and liabilities 9,949,421,326 6,811,311,931 9,680,415,413 5,959,137,419 (Increase) / decrease in operating assets Interbank and money market items (assets) (53,444,991,324) (2,943,954,882) (52,664,218,719) (2,427,308,508) Securities purchased under resale agreements 27,800,000,000 (2,300,000,000) 27,800,000,000 (2,300,000,000) Investments in trading securities (543,484,508) (3,513,145,632) (543,484,508) (3,513,145,632) Loans 26,983,051,483 62,647,477,461 28,441,794,347 64,301,017,264 Properties foreclosed 4,607,363,913 7,751,549,649 3,863,652,558 6,660,443,902 Other assets (7,175,464,342) (2,508,484,975) (6,573,124,682) (2,754,721,808) Increase / (decrease) in operating liabilities Deposits (15,165,177,514) (103,004,607,663) (15,067,723,128) (103,046,571,421) Interbank and money market items (liabilities) (14,470,244,489) 3,545,380,392 (15,781,432,755) 3,294,815,422 Liabilities payable on demand (312,643,805) 92,048,707 (312,643,805) 92,048,707 Securities sold under repurchase agreements (4,765,000,000) 4,765,000,000 (4,765,000,000) 4,765,000,000 Short-term borrowings 12,442,044,467 (26,563,330,000) 12,384,797,100 (26,563,330,000) Other liabilities 642,645,914 5,418,567,535 783,103,393 5,962,507,147 Net cash used in operating activities (13,452,478,879) (49,802,187,477) (12,753,864,786) (49,570,107,508) The accompanying notes are an integral part of these finalcial statements
168 A n n u a l R e p o r t 2 0 0 8 Statements of cash flows TMB Bank Public Company Limited and its Subsidiaries As at 31 December 2008 and 2007
(in Baht) Consolidated Bank only 2008 2007 2008 2007 Cash flows from investing activities Purchases of available-for-sale investments (251,527,802,266) (44,269,657,723) (251,527,802,266) (41,846,657,723) Sales of available-for-sale investments 262,851,173,117 68,323,469,844 262,348,801,456 66,123,866,854 Purchase of held-to-maturity investments (3,079,768,074) - (3,079,768,074) - Proceeds from redemption of held-to-maturity investments 3,734,863,634 766,000,000 3,696,433,627 728,000,000 Purchases of general investments (2,430,000) (213,782,690) (2,430,000) (213,782,690) Sales of general investments 1,450,273,018 1,492,650,841 1,438,258,757 1,479,507,261 Purchases of investments in subsidiary and associated companies (163,152,300) (150,000,200) (533,152,300) (169,125,200) Sales of investments in subsidiary and associated companies 860,430,164 232,193,829 887,275,702 270,154,237 Purchases of premises , equipment and leasehold (548,617,825) (1,578,567,052) (524,436,944) (1,561,122,460) Sales of premises and equipment 198,796,219 341,611,642 168,943,793 110,940,370 Net cash provided by investing activities 13,773,765,687 24,943,918,491 12,872,123,751 24,921,780,649
Cash flows from financing activities Repayment of long-term borrowings (1,023,657,170) (7,727,493,810) (822,410,536) (7,928,740,444) Redemption of debentures (102,380,000) (5,280,865,140) (102,380,000) (5,280,865,140) Redemption of subordinated debenture (800,000,000) - (800,000,000) - Proceeds from issuance of long-term bill of exchanges 2,634,660,000 - 2,634,660,000 - Increase in issued and fully paid-up - ordinary shares - 37,231,127,323 - 37,231,127,323 Foreign currency translation (1,524,000) 4,270,916 (1,524,000) 4,270,916 Net cash provided by financing activities 707,098,830 24,227,039,289 908,345,464 24,025,792,655
Net increase / (decrease) in cash and cash equivalents 1,028,385,638 (631,229,697) 1,026,604,429 (622,534,204) Cash and cash equivalents at beginning of year 10,288,753,062 10,919,982,759 10,287,302,723 10,909,836,927 Cash and cash equivalents at end of year 11,317,138,700 10,288,753,062 11,313,907,152 10,287,302,723
The accompanying notes are an integral part of these finalcial statements
T M B B a n k P u b l i c C o m p a n y L i m i t e d 169 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 These notes form an integral part of the financial statements.
The financial statements were authorised for issue by the directors on 19 February 2009.
1 General information
TMB Bank Public Company Limited, “the Bank”, is incorporated in Thailand. The Bank has been granted a license to conduct commercial banking business. Its Head Office is located at 3000 Phaholyothin Road, Chomphol Subdistrict, Chatuchak District, Bangkok, Thailand. The Bank has branches throughout Thailand and in certain overseas countries.
The Bank was listed on the Stock Exchange of Thailand (“SET”) on 23 December 1983.
The principal businesses of the Bank are financial services.
On 28 December 2007, the Bank issued new ordinary shares allotted to ING Bank N.V., foreign and Thai institutional investors and existing Thai residential shareholders totaling 25,000 million shares, for a total amount of Baht 37,622 million. This resulted in ING Bank N.V. becoming one of the major shareholders of the Bank.
The consolidated financial statements relate to the Bank and its subsidiaries, together referred to as “the Group”, and the Group’s interest in associates. Details of the Bank’s subsidiaries as at 31 December 2008 and 2007 were as follows:
Name of the entity Type of Country of Ownership interest business incorporation 2008 2007 Phayathai Asset Management Co., Ltd. Financial Thailand 100.00 100.00 IFCT Advisory Co., Ltd. Financial Thailand - 100.00 Designee for ETA Contract Ltd. Designee Thailand 99.40 99.40 TMB Asset Management Co., Ltd. Asset Thailand 75.00 56.25 management TMB Macquarie Securities (Thailand) Ltd. Securities Thailand - 51.00
170 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
The consolidated financial statements of the Bank and its subsidiaries for the years ended 31 December 2008 and 2007 exclude investments in Siam Resort Fund in which the Bank holds more than 50% of the issued investment units as the Bank does not have any control over the financial and operating policies of the mutual fund (Type 4 property fund).
On 14 August 2008, the Bank entered into a Share Purchase Agreement with Macquarie International Holdings Limited, London (“Macquarie”) to sell the TMB Macquarie Securities (Thailand) Limited shares held by the Bank to Macquarie International Holdings Limited. This transaction was completed in September 2008.
The consolidated financial statements of the Bank and its subsidiaries for the year ended 31 December 2008 includes the operations of TMB Macquarie Securities (Thailand) Ltd. until the date that the Bank sold its shares in this entity in September 2008, and IFCT Advisory Co., Ltd. until the date that IFCT Advisory Co., Ltd. ceased its operations in December 2008.
2 Basis of preparation of financial statements
The financial statements issued for Thai reporting purposes are prepared in the Thai language. This English translation of the financial statements has been prepared for the convenience of readers not conversant with the Thai language.
The financial statements are prepared in accordance with Thai Accounting Standard (“TAS”) including related interpretations and guidelines promulgated by the Federation of Accounting Professions and have been presented in accordance with the announcement of the Bank of Thailand dated 3 August 2008 prescribing the preparation of financial statements of commercial banks and holding parent companies of financial services groups, applicable rules and regulations of the Securities and Exchange Commission and with generally accepted accounting principles in Thailand.
The financial statements are presented in Thai Baht, rounded in the notes to the financial statements to the nearest million unless otherwise stated. They are prepared on the historical cost basis except as stated in the accounting policies.
In 2008, the Group adopted the following new and revised TAS which are relevant to its operations:
TAS 25 (revised 2007) Cash Flows Statements
TAS 29 (revised 2007) Leases
T M B B a n k P u b l i c C o m p a n y L i m i t e d 171 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
TAS 33 (revised 2007) Borrowing Costs
TAS 35 (revised 2007) Presentation of Financial Statements
TAS 39 (revised 2007) Accounting Policies, Changes in Accounting Estimates and Errors
TAS 41 (revised 2007) Interim Financial Reporting
TAS 43 (revised 2007) Business Combinations
TAS 51 Intangible Assets
The adoption of these new and revised TAS does not have any material impact on the consolidated or Bank only financial statements.
The FAP has issued during 2008 a number of revised TAS which are only effective for financial statements beginning on or after 1 January 2009 and have not been adopted in the preparation of these financial statements. These revised TAS are disclosed in note 5.30.
Accounting policies and methods of computation applied in the financial statements for the year ended 31 December 2008 are consistent with those applied in the financial statements for the year ended 31 December 2007 except for the change in accounting policy discussed in Note 4.2 to the financial statements in respect of goodwill arising from business combinations and the provision for off-balance sheet contingencies in respect of performing loans as a provision of obligation. 3 Use of estimates and judgements
The preparation of financial statements in conformity with TAS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. These judgements, estimates and assumptions are based on historical experience and various other factors , including the potential impact on the Group’s operations and financial position of the global economic crisis. Actual results may differ from these estimates.
The estimates and underlying assumptions used in the preparation of these financial statements are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
172 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
The accounting policies which involve the most complex or subjective decisions or assessments relate to the allowance for doubtful debts, provisions of obligations for non-performing assets, the recovery value of properties foreclosed and the impairment of equity securities. The determination of these items is key to the financial condition and results of operations, and requires management to make complex judgements based on information and financial data that may change in future periods. As a result, determinations regarding these items necessarily involve the use of assumptions and subjective judgements as to future events and are subject to change, as the use of different assumptions or data could produce materially different results.
The identification of impairment and the determination of recoverable amount are an inherently uncertain process involving various assumptions and factors including the financial condition of the counterparty, expected future cash flows, observable market prices and expected net selling prices.
Portfolios of financial assets are collectively evaluated for impairment on the basis of outstanding assets in the portfolio at the balance sheet date and historical loss experience for assets with credit risk characteristics similar to those in the portfolio. Historical loss experience is adjusted on the basis of current observable data. Where the Bank has a specific plan to manage its non-performing assets, the Bank has estimated recovery value by considering factors such as past sales and the expected rate of return by investors.
The Bank continues to consider a sale of packages of NPLs and NPAs. However given the current depressed market, purchase offers may reflect a significant discount to the expected recovery value to the Bank from retaining, or deferring disposal of, these assets as represented by their current carrying values. The Bank will consider purchase offers against the direct and indirect benefits to it of reducing its total NPL and NPA portfolios.
4 Significant accounting policies
4.1 Basis of consolidation
The consolidated financial statements relate to the Bank and its subsidiaries, and the Group’s interest in associates.
Significant intra-group transactions between the Bank and its subsidiaries are eliminated on consolidation.
Subsidiaries
Subsidiaries are those entities controlled by the Bank. Control exists when the Bank has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 173 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Associates
Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group’s share of the total recognised income and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.
Business combinations
Business combinations are accounted for using the purchase method. The cost of an acquisition is measured at the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition.
4.2 Changes in accounting policy
The following changes of accounting policy by the Group has no effect on the Bank only financial statements.
Until 31 December 2007, the Group accounted for goodwill arising from a business combination at cost less accumulated amortisation and impairment losses. Amortisation was charged to the statement of income over the estimated useful life of 20 years.
During 2007, the Federation of Accounting Professions issued TAS 43 (revised 2007) “Business Combinations” which is effective for accounting periods beginning on or after 1 January 2008. TAS 43 (revised 2007) requires that the acquirer shall, at the acquisition date, recognise goodwill acquired in a business combination as an asset at cost. After initial recognition, goodwill shall be measured at cost less any accumulated impairment losses. Goodwill is not amortised and is instead tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired.
The Group has, accordingly, changed its accounting policy for goodwill prospectively from 1 January 2008. The effect of the change in accounting policy on the Group’s consolidated financial statements for the year ended 31 December 2008 is to reduce the charge to the statement of income resulting from the amortisation of goodwill that would have been recognised under the previous accounting policy by approximately Baht 13 million, with a corresponding increase in reported profit for the period. Management has determined that there is no impairment in the carrying value of goodwill as at 31 December 2008.
174 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
4.3 Recognition of income
Interest income and dividend
Interest and discount income on loans are generally recognised on an accrual basis. In accordance with the Bank of Thailand’s regulation, interest in arrears for more than three months, regardless of whether the loans are covered by collateral, is not accrued but is instead recognised as income on a cash basis.
The Bank has reversed accrued interest income on loans which have been recognised as income, for interest in arrears more than three months, in accordance with the Bank of Thailand’s regulations.
Dividend income is recognised in the statement of income on the date that the Bank’s right to receive payments is established.
Fees and service income
Fees and service income (mutual fund management, trading securities, brokerage, advisory and underwriting) are recognised as income when services are rendered.
4.4 Recognition of interest expense
Interest expense on deposits, borrowings, and deferred discount or premium is recognised on an accrual basis. Premiums on currency hedging contracts of borrowings are amortised using the straight-line method over the term of the contracts.
4.5 Income tax
Income tax on the profit or loss for the period comprises current tax. Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted at the balance sheet date and applicable to the reporting period, and any adjustment to tax payable in respect of previous periods.
4.6 Loans
Loans (except overdrafts) are shown exclusive of accrued interest receivable. Unearned discounts received in advance on loans are shown as deductions from the loans.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 175 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Investments in receivables are investments in receivables of the subsidiary, Phayathai Asset Management Co., Ltd., which are shown at cost, net of allowances for impairment of investments in receivables and revaluation allowance for debt restructuring. The subsidiary’s accounting policies comply with the Bank of Thailand’s regulations. These procedures require that investments in receivables, if they are restructured debts, must be recorded as loans and receivables at fair value as at the transfer date. The value shall be based on the present value of the future collections according to the restructuring agreements and discounted by the discount rate with the result that the present value of the future collections is equal to the book value of the investments in receivables. Differences between the net book value and the fair value at the transfer date must be shown as a loss on debt restructuring from transferring financial assets in the statement of income.
4.7 Allowance for doubtful accounts
Allowance for doubtful accounts is determined through methods based on the Bank of Thailand’s regulations and based on the Bank’s estimated loan loss. The Bank provides allowance for doubtful accounts by analysing individual accounts. The allowance for non-performing loans has been specifically determined by the natures of loans and the related factors such as payment ability, collateral, historical loss and estimated loss. The allowance for performing loans has been assessed based upon general related factors such as historical loss, credit risk and management experience. This allowance for performing loans includes the regulatory minimum percentage requirement and allowance for losses which have been incurred but not yet identified. Where the Bank has a specific plan to manage its non-performing loans such as NPL sale, the Bank has estimated recovery value by considering past NPL sales and the expected rate of return by investors.
Under the BOT’s directive, with amended criteria in accordance with the International Accounting Standard No.39 (IAS 39) dated 7 December 2006, the Bank and certain subsidiaries have classified its loan portfolios into six categories, primarily based on the days past due. For loans classified as pass and special mention, the calculation of allowances for doubtful accounts is based on the regulatory minimum percentage requirement, taking into consideration the collateral value, where the collateral type and date of the latest appraisal are qualifying factors. For loans classified as sub-standard, doubtful and doubtful of loss, the allowance on these accounts is set at 100 percent of the difference between the outstanding book value of the debt and the present value of future cashflows expected to be received or the expected proceeds from the disposal of collateral in accordance with the BOT criteria.
Any additional allowances for doubtful accounts are charged to the expense for each period.
The Bank writes off bad debts against the allowance for doubtful accounts for the uncollectible amounts.
Bad debts recovered are credited to the allowance for doubtful accounts.
176 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
4.8 Troubled debt restructuring
Foreclosed assets transferred from troubled debt restructuring are recorded at the fair value of the assets net of estimated disposal expenses not exceeding the investment in loans and unearned interest to which the Bank is legally entitled. Where restructuring a loan involves modification of its terms, the present value of the future cash flows expected to be received from those customers is calculated by using discount rates equivalent to the market rates at the time of restructuring. The difference between this and the outstanding balances of investment in loans is recorded as an allowance for revaluation on debt restructuring in the balance sheet. This allowance for revaluation is amortised to the statement of income according to the amounts received over the remaining period of the debt restructuring contract.
4.9 Investments
The Bank classifies debt instruments and marketable equity securities as trading securities, available-for-sale securities or held-to-maturity debt instruments, and classifies non-marketable equity securities as general investments or investments in subsidiary or associated companies.
Investments in subsidiaries and associates
Investments in subsidiaries and associates in the Bank only financial statements are accounted for using the cost method. Investments in associates in the consolidated financial statements are accounted for using the equity method.
Investments in debt and equity securities
Debt securities and marketable equity securities held for trading are classified as current investments and are stated at fair value, with any resultant gain or loss recognised in the statement of income.
Debt securities (including non-negotiable promissory notes availed by FIDF and received on the transfer of impaired assets to Thai Asset Management Corporation) that the Group intends and is able to hold to maturity are stated at amortised cost less impairment losses. The difference between the acquisition cost and redemption value of such debt securities is amortised using the effective interest rate method over the period to maturity.
Debt securities and marketable equity securities, other than those securities held for trading or intended to be held to maturity, are classified as being available-for-sale and are stated at fair value, with any resultant gain or loss being recognised directly in equity. The exceptions are impairment losses and gains or losses from transfer investment, which are recognised in the statement of income. When these investments are derecognised, the cumulative gain or loss previously recognised directly in equity is recognised in the statement of income. Where these investments are interest-bearing, interest calculated using the effective interest method is recognised in the statement of income.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 177 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Equity securities which are not marketable are stated at cost less impairment losses.
The fair value of financial instruments classified as held-for-trading and available-for-sale for equity securities is determined at the quoted bid price at the balance sheet date.
The market values of debt instruments in government securities are computed using the Thai Bond Market Association’s yield curve.
The market values of debt instruments in the domestic market are based on the market values appraised by reliable institutions, by using yields of those debt instruments, or by computations based on the Thai Bond Market Association’s yield curve, adjusted by an appropriate risk factor. The institutions performing appraisals have to provide written documentation of the basis of their appraisal.
Disposal of investments
On disposal of an investment, the difference between net disposal proceeds and the carrying amount together with the associated cumulative gain or loss that was reported in equity is recognised in the statement of income.
If the Group disposes of part of its holding of a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying value of the total holding of the investment.
4.10 Properties foreclosed
Immovable properties foreclosed acquired from debt settlement before 2002 are stated at the lower of appraised value or book value of the related debts, and immovable properties foreclosed acquired from debt settlement after 2002 are recognised at the fair value less expected direct selling expenses, not exceeding the investment in loans and unearned interest to which the Bank is legally entitled. The assets bought from public auction are recognised at purchase price plus transfer costs, less expected direct selling expenses.
Where the Bank has a specific plan to sell immovable properties foreclosed, the Bank will assess the expected recovery value of the immovable properties foreclosed according to their grade (based on attributes such as location, available utilities, and potential property usage), number of years holding and market demand. The recovery values are assessed individually for higher value properties. Other properties are assessed on portfolio basis and grouped according to their grade and number of years holding. Then, the discount rates will be applied to the properties based on their grade and number of years holding. The discount used is based on historical selling data and market demand.
Loss on impairment is charged to the statement of income. Gains or losses on the sales of properties foreclosed are recognised in the statement of income upon disposal.
178 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 4.11 Premises and equipment
Owned assets
Land and buildings and equipment are stated at cost less accumulated depreciation and impairment losses except for land and buildings which are stated at their revalued amounts. The revalued amount is the fair value determined on the basis of the property’s existing use at the date of revaluation less any subsequent accumulated depreciation and subsequent accumulated impairment losses.
Revalued assets
Revaluations are performed by independent professional valuers with sufficient regularity in compliance with the Bank of Thailand’s notification to ensure that the carrying amount of these assets does not differ materially from that which would be determined using fair values at the balance sheet date.
Any increase in value, on revaluation, is credited to equity under the heading ‘revaluation surplus’ unless it offsets a previous decrease in value recognised in the statement of income in respect of the same asset. A decrease in value is recognised in the statement of income to the extent it exceeds an increase previously recognised in equity in respect of the same asset. Upon disposal of a revalued asset, any related revaluation surplus is transferred from equity to retained earnings and is not taken into account in calculating the gain or loss on disposal.
Depreciation
Depreciation of buildings and equipment is charged to the statement of income on a straight-line basis over the estimated useful lives of assets as follows:
Depreciation of buildings (including surplus on revaluation) is computed using the straight-line method over their remaining useful lives, (total useful lives are not more than 50 years), as assessed by independent appraisal companies. Depreciation is included in premises and equipment expenses.
Depreciation of equipment is computed using the straight-line method over their useful lives of 3-10 years.
No depreciation is provided on land, assets under construction or installation work.
Depreciation of fixed assets of overseas branches is computed at rates specified by the laws applicable in each locality at 20-25% of cost.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 179 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
4.12 Intangible assets
Goodwill (see note 4.2)
Goodwill arises on the acquisition of subsidiaries.
Goodwill arising on the acquisition of an interest in a subsidiary represents the excess of the cost of the additional investment over the carrying amount of the net assets acquired at the date of acquisition.
Acquisitions prior to 1 January 2008 Goodwill represents the amount recognised under the Group’s previous accounting policy under which goodwill was stated at cost less accumulated amortisation and impairment losses.
In 2008 goodwill is not amortised and is instead tested for impairment annually, or more frequently if events or changes in circumstances indicate that it might be impaired.
4.13 Impairment
Impairment
The carrying amounts of the Group’s assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.
Goodwill and intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and when indicators of impairment are identified.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statement of income unless it reverses a previous revaluation credited to equity, in which case it is charged to equity.
When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the value of the asset is impaired, the cumulative loss that had been recognized directly in equity is recognised in the statement of income even though the financial asset has not been derecognised. The amount of the cumulative loss that is recognised in the statement of income is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the statement of income.
180 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Calculation of recoverable amount
The recoverable amount of the Group’s investments in held-to-maturity securities and receivables carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate. Receivables with a short duration are not discounted.
The recoverable amount of available-for-sale financial assets is calculated by reference to the fair value.
The recoverable amount of non-financial assets is the greater of the assets’ net selling price and value in use. 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. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
Reversals of impairment
An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. For financial assets carried at amortised cost and available-for-sale financial assets that are debt securities, the reversal is recognised in the statement of income. For available-for-sale financial assets that are equity securities, the reversal is recognised directly in equity.
An impairment loss in respect of goodwill is not reversed. Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
4.14 Provident fund
The Bank, subsidiary companies and its permanent employees established contributory provident funds for its employees. Membership to the funds is on a voluntary basis. Contributions are made monthly by the employees at rates ranging from 2% to 10% of their basic salaries and by the Bank and subsidiary companies at 5% to 10% of the employees’ basic salaries. The provident funds are registered with the Ministry of Finance as juristic entities and are managed by a licensed fund manager and are therefore not presented in the balance sheets.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 181 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 4.15 Provisions
A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are deter- mined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
Provisions for contingent liabilities
Where accounts have been classified as substandard, doubtful, doubtful of loss and loss, the Bank provides provision for the off-balance sheet contingencies which are high credit risk such as loan guarantees, avals or commitments irrevocable by financial institutions. The provision rate for such off-balance sheet items will be equal to the allowance rate for loans in that particular case.
The Bank provides provision for the off-balance sheet contingencies on performing loans since 30 June 2008 and for letter of guarantees which were claimed.
4.16 Foreign currencies
Foreign currency transactions
Transactions in foreign currencies are translated to Thai Baht at the buying and selling rates specified by the Bank when the transactions occur.
Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Thai Baht at the reference rates announced by the Bank of Thailand at that date. Foreign exchange differences arising on translation are recognised in the statement of income.
The financial statements of overseas branches are translated at the reference rates announced by the Bank of Thailand at the period end. Foreign exchange differences arising on translation are recognised in a separate component of equity until disposal of the investments, except for the Cayman Islands Branch for which the foreign exchange difference arising on translation is included in the statement of income.
4.17 Derivative financial instruments
Trading derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, they are
182 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 remeasured at fair value by using the market price. The gain or loss on remeasurement to fair value is recognised immediately in the statement of income.
The fair value of derivatives is determined based on market price, if available, derived from reliable sources. If mar- ket price is not available, the fair value is derived from using valuations incorporating the market data from reliable sources. The market price or market data are mainly based on exchange-traded prices, broker/dealer quotations, or counterparties quotations.
For the Bank’s management of Banking book, financial derivatives in the form of interest rate contracts such as interest rate swaps are recognised on an accrual basis. Foreign currency funding of financial derivatives such as currency / FX swaps are recognised on an amortisation basis. The difference between the forward rate and the spot rate at the contract date is recognised as income or expense using the straight-line method over the period of the contract.
4.18 Cash and cash equivalents
Cash and cash equivalents in the statements of cash flows include cash on hand and cash in the process of collection.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 183 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 5 Supplementary information
5.1 Interbank and money market items (assets)
Consolidated 2008 2007 At call Term Total At call Term Total (in million Baht) Domestic The Bank of Thailand and Financial Institutions Development Fund 3,848 55,700 59,548 4,629 - 4,629 Commercial banks 47 585 632 778 9,336 10,114 Securities companies - - - 8 690 698 Other banks - 5,818 5,818 1 - 1 Other financial institutions 31 256 287 55 181 236 Total 3,926 62,359 66,285 5,471 10,207 15,678 Add Accrued interest receivable - 43 43 - 11 11 Less Allowance for doubtful accounts - (6) (6) (1) (98) (99) Total domestic 3,926 62,396 66,322 5,470 10,120 15,590
Foreign US Dollar 2,438 2,907 5,345 1,144 2,970 4,114 Japanese Yen 414 - 414 405 - 405 Other currencies 501 - 501 539 103 642 Total 3,353 2,907 6,260 2,088 3,073 5,161 Add Accrued interest Receivable - 18 18 - 23 23 Less Allowance for doubtful accounts - (13) (13) - (14) (14) Total foreign 3,353 2,912 6,265 2,088 3,082 5,170
Total domestic and Foreign 7,279 65,308 72,587 7,558 13,202 20,760
184 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 2007 At call Term Total At call Term Total (in million Baht) Domestic The Bank of Thailand and Financial Institutions Development Fund 3,848 55,700 59,548 4,629 - 4,629 Commercial banks 46 384 430 76 9,171 9,247 Securities companies - - - 8 500 508 Other banks - 5,818 5,818 1 - 1 Other financial institutions 31 256 287 55 181 236 Total 3,925 62,158 66,083 4,769 9,852 14,621 Add Accrued interest receivable - 42 42 - 10 10 Less Allowance for doubtful accounts - (6) (6) (1) (98) (99) Total domestic 3,925 62,194 66,119 4,768 9,764 14,532
Foreign US Dollar 2,438 2,907 5,345 1,144 2,970 4,114 Japanese Yen 414 - 414 405 - 405 Other currencies 501 - 501 539 - 539 Total 3,353 2,907 6,260 2,088 2,970 5,058 Add Accrued interest Receivable - 18 18 - 23 23 Less Allowance for doubtful accounts - (13) (13) - (14) (14) Total foreign 3,353 2,912 6,265 2,088 2,979 5,067
Total domestic and Foreign 7,278 65,106 72,384 6,856 12,743 19,599
5.2 Securities purchased under resale agreements
Consolidated and Bank only 2008 2007 (in million Baht) The bonds of Government and the Financial Institutions Development Fund - 27,800 Total - 27,800
T M B B a n k P u b l i c C o m p a n y L i m i t e d 185 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 5.3 Investments Consolidated 2008 2007 Cost value/ Market Cost value/ Market book value value book value value (in million Baht) Current investments Trading investments Government and state enterprise securities 5,003 5,010 4,399 4,400 Private debt instruments - - 139 139 Domestic marketable equity securities 79 53 - - Total 5,082 5,063 4,538 4,539 Add (less) Allowance for revaluation (19) - 1 - Total 5,063 5,063 4,539 4,539
Available-for-sale securities Government and state enterprise securities 23,292 23,401 21,850 21,954 Private debt instruments 50 - 863 820 Domestic marketable equity securities 165 74 1,270 1,268 Total 23,507 23,475 23,983 24,042 Add Allowance for revaluation 80 - 109 - Less Allowance for impairment (112) - (50) - Total 23,475 23,475 24,042 24,042
Held-to-maturity debt instruments Government and state enterprise securities 742 752 - - Private debt instruments 1,267 1,272 168 168 Total 2,009 2,024 168 168
Total current investments - net 30,547 30,562 28,749 28,749
186 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated 2008 2007 Cost value/ Market Cost value/ Market book value value book value value (in million Baht) Long-term investments Available-for-sale securities Government and state enterprise securities 11,126 11,515 16,954 16,937 Private debt instruments - - 840 858 Foreign debt instrument 465 445 - - Domestic marketable equity securities 3,985 2,331 6,890 6,669 Others - - 651 666 Total 15,576 14,291 25,335 25,130 Add (less) Allowance for revaluation (277) - 1,148 - Less Allowance for impairment (1,008) - (1,353) - Total 14,291 14,291 25,130 25,130
Held-to-maturity debt instruments Government and state enterprise securities 34,718 35,634 35,969 35,631 Private debt instruments - - 1,185 1,220 Total 34,718 35,634 37,154 36,851
General investments Domestic non-marketable equity securities 2,989 2,502 4,050 4,095 Foreign non-marketable equity securities 80 108 79 20 Total 3,069 2,610 4,129 4,115 Less Allowance for impairment (1,206) - (1,296) - Total 1,863 2,610 2,833 4,115
Total long-term investments - net 50,872 52,535 65,117 66,096
T M B B a n k P u b l i c C o m p a n y L i m i t e d 187 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 2007 Cost value/ Market Cost value/ Market book value value book value value (in million Baht) Current investments Trading investments Government and state enterprise securities 5,003 5,010 4,399 4,400 Private debt instruments - - 139 139 Domestic marketable equity securities 79 53 - - Total 5,082 5,063 4,538 4,539 Add (less) Allowance for revaluation (19) - 1 - Total 5,063 5,063 4,539 4,539
Available-for-sale securities Government and state enterprise securities 23,292 23,401 21,850 21,954 Private debt instruments 50 - 863 820 Domestic marketable equity securities 165 74 770 768 Total 23,507 23,475 23,483 23,542 Add Allowance for revaluation 80 - 109 - Less Allowance for impairment (112) - (50) - Total 23,475 23,475 23,542 23,542
Held-to-maturity debt instruments Government and state enterprise securities 742 752 - - Private debt instruments 1,267 1,272 168 168 Total 2,009 2,024 168 168
Total current investments - net 30,547 30,562 28,249 28,249
188 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 2007 Cost value/ Market Cost value/ Market book value value book value value (in million Baht) Long-term investments Available-for-sale securities Government and state enterprise securities 11,126 11,515 16,954 16,937 Private debt instruments - - 840 858 Foreign debt instrument 465 445 - - Domestic marketable equity securities 3,972 2,325 6,877 6,656 Others - - 651 666 Total 15,563 14,285 25,322 25,117 Add (less) Allowance for revaluation (276) - 1,148 - Less Allowance for impairment (1,002) - (1,353) - Total 14,285 14,285 25,117 25,117
Held-to-maturity debt instruments Government and state enterprise securities 34,044 34,960 35,256 34,918 Private debt instruments - - 1,185 1,220 Total 34,044 34,960 36,441 36,138
General investments Domestic non-marketable equity securities 2,989 2,502 4,050 4,095 Foreign non-marketable equity securities 80 108 79 20 Total 3,069 2,610 4,129 4,115 Less Allowance for impairment (1,206) - (1,296) - Total 1,863 2,610 2,833 4,115
Total long-term investments - net 50,192 51,855 64,391 65,370
T M B B a n k P u b l i c C o m p a n y L i m i t e d 189 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 As at 31 December 2008, the Bank and its subsidiary classified non-negotiable promissory notes avaled by the Financial Institutions Development Fund (“FIDF”) that the Bank and its subsidiary had received for the loans transferred to the Thai Asset Management Corporation (“TAMC”) as held-to-maturity debt instruments of Baht 9,566 million in the consolidated financial statements and Baht 8,891 million in the Bank only financial statements (31 December 2007 : Baht 10,043 million in consolidated financial statements and Baht 9,330 million in the Bank only financial statements). (See Note 5.26) The notes are due in 2011 to 2015 and bear interest rate at the average interest rates for deposits of the five largest domestic commercial banks and the interest is payable on the last working day of each year.
At 31 December 2008 and 2007 available-for-sale and held-to-maturity debt instruments classified by the remaining maturity are as follows :
Consolidated 2008 Maturity Total Within Over Over 1 year 1-5 years 5-10 years (in million Baht) Available-for-sale securities Government and state enterprise securities 23,292 10,726 400 34,418 Private debt instruments 50 - - 50 Foreign debt instrument 137 329 - 466 Total 23,479 11,055 400 34,934 Add Allowance for revaluation 111 309 57 477 Less Allowance for impairment (50) - - (50) Total 23,540 11,364 457 35,361
Held-to-maturity debt instruments Government and state enterprise securities 742 31,315 3,403 35,460 Private debt instruments 1,267 - - 1,267 Total 2,009 31,315 3,403 36,727
Total debt instruments 25,549 42,679 3,860 72,088
190 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated 2007 Maturity Total Within Over Over 1 year 1-5 years 5-10 years (in million Baht) Available-for-sale securities Government and state enterprise securities 21,851 12,610 4,344 38,805 Private debt instruments 863 840 - 1,703 Others - 651 - 651 Total 22,714 14,101 4,344 41,159 Add Allowance for revaluation 111 16 - 127 Less Allowance for impairment (50) - - (50) Total 22,775 14,117 4,344 41,236
Held-to-maturity debt instruments Government and state enterprise securities - 27,392 8,576 35,968 Private debt instruments 168 1,185 - 1,353 Total 168 28,577 8,576 37,321
Total debt instruments 22,943 42,694 12,920 78,557
T M B B a n k P u b l i c C o m p a n y L i m i t e d 191 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Bank only 2008 Maturity Total Within Over Over 1 year 1-5 years 5-10 years (in million Baht) Available-for-sale securities Government and state enterprise securities 23,292 10,726 400 34,418 Private debt instruments 50 - - 50 Foreign debt instrument 137 329 - 466 Total 23,479 11,055 400 34,934 Add Allowance for revaluation 111 309 57 477 Less Allowance for impairment (50) - - (50) Total 23,540 11,364 457 35,361
Held-to-maturity debt instruments Government and state enterprise securities 742 30,641 3,403 34,786 Private debt instruments 1,267 - - 1,267 Total 2,009 30,641 3,403 36,053
Total debt instruments 25,549 42,005 3,860 71,414
192 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2007 Maturity Total Within Over Over 1 year 1-5 years 5-10 years (in million Baht) Available-for-sale securities Government and state enterprise securities 21,851 12,610 4,344 38,805 Private debt instruments 863 840 - 1,703 Others - 651 - 651 Total 22,714 14,101 4,344 41,159 Add Allowance for revaluation 111 16 - 127 Less Allowance for impairment (50) - - (50) Total 22,775 14,117 4,344 41,236
Held-to-maturity debt instruments Government and state enterprise securities - 26,698 8,558 35,256 Private debt instruments 168 1,185 - 1,353 Total 168 27,883 8,558 36,609
Total debt instruments 22,943 42,000 12,902 77,845
T M B B a n k P u b l i c C o m p a n y L i m i t e d 193 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
The unrealised gain / (loss) on the revaluation of investments as of 31 December 2008 and 2007 is as follows:
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Unrealised gain on revaluation of investments Debt instruments 509 220 509 220 Equity securities 78 1,877 77 1,876 Total 587 2,097 586 2,096
Unrealised loss on revaluation of investments Debt instruments (25) (87) (25) (87) Equity securities (754) (748) (752) (747) Total (779) (835) (777) (834)
Unrealised gain / (loss) on revaluation of investments – net Debt instruments 484 133 484 133 Equity securities (676) 1,129 (675) 1,129 Total (192) 1,262 (191) 1,262
194 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Gain / (loss) on investments in the statements of income for the years ended 31 December 2008 and 2007 are as follows: Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Gain on sale of securities Trading investments 114 147 114 147 Available-for-sale securities 1,259 705 1,258 697 Held-to-maturity debt instruments 2 - 2 - General investments 410 422 409 402 Investments in subsidiaries / associates - 11 - 11 Total 1,785 1,285 1,783 1,257
Loss on sale of securities Trading investments (50) (58) (50) (58) Available-for-sale securities (801) (20) (801) (20) General investments (4) (73) (4) (73) Investments in subsidiaries / associates (162) (7) (10) (2) Total (1,017) (158) (865) (153)
Loss on transfer of investments (3) - (3) - Gain / (loss) from revaluation (19) 7 (19) 7 Loss on impairment of securities (1,100) (1,965) (1,093) (5,029) Total loss on investments (354) (831) (197) (3,918)
In September 2008, the Bank sold the TMB Macquarie Securities (Thailand) Limited shares held by the Bank to Macquarie International Holdings Limited, and recorded a loss on sale of investment of Baht 158 million in the consolidated financial statements and Baht 6 million in the Bank’s financial statements.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 195 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Investments of over 10% of the paid-up share capital (excluding investments in subsidiaries and associates) are held in the following industries:
Consolidated and Bank only 2008 2007 (in million Baht) Manufacturing and commerce 18 42 Property development and construction 46 34 Infrastructure and service 45 140 Others 1,116 1,937 Total 1,225 2,153
As of 31 December 2008 and 2007 investments held by the Bank in investments in listed companies which meet SET’s criteria for delisting, or companies whose ability to continue as a going concern is uncertain, or unlisted companies whose financial position and operating result are similar to those companies which meet SET’s criteria for delisting are as follows: Consolidated and Bank only 2008 Cost value / book value Fair value of Allowance for of equity equity impairment securities securities (in million Baht) 1. Listed companies which meet SET’s criteria for delisting, and are in default on debt instruments 12 - (12) 2. Companies whose ability to continue as a going concern is uncertain, or unlisted companies whose financial position and operating results are similar to those companies which meet SET’s criteria for delisting 1,379 185 (1,194) Total 1,391 185 (1,206)
196 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated and Bank only 2007 Cost value / book value Fair value of Allowance for of equity equity impairment securities securities (in million Baht) 1. Listed companies which meet SET’s criteria for delisting, and are in default on debt instruments 12 - (12) 2. Companies whose ability to continue as a going concern is uncertain, or unlisted companies whose financial position and operating results are similar to those companies which meet SET’s criteria for delisting 1,445 161 (1,284) Total 1,457 161 (1,296)
Investments in subsidiary and associated companies
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) At 1 January 2,479 2,444 2,957 4,306 Share of net profit of investments - equity method 466 282 - - Acquisitions 46 150 533 169 Dividend income (212) (162) - - Allowance for impairment - - (370) (1,250) Disposals (215) (235) (897) (268) At 31 December 2,564 2,479 2,223 2,957
T M B B a n k P u b l i c C o m p a n y L i m i t e d 197 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Investments in subsidiary and associated companies at 31 December 2008 and 2007 are as follows:
Type of Type of business share capital Subsidiary companies Phayathai Asset Management Co., Ltd. Financial Ordinary shares IFCT Advisory Co., Ltd. (see note 1) Financial Ordinary shares Designee for ETA Contract Ltd. Designee Ordinary shares TMB Asset Management Co., Ltd. Asset management Ordinary shares TMB Macquarie Securities (Thailand) Ltd. (see note 1) Securities Ordinary shares
Associated companies Siam Resort Fund Type 4 property fund Unit trust Thai ORIX Leasing Co., Ltd. Leasing Ordinary shares The Thai Business Fund II Type 4 property fund Unit trust The Column Property Fund Type 4 property fund Unit trust Phayathai Property Fund Type 2 property fund Unit trust
198 A n n u a l R e p o r t 2 0 0 8 income Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 follows: as net Dividend - were equity ended then years the for investments those (in million Baht) million (in from method Impairment At income dividend and Consolidated method Equity 2007, and 2008 December capital Cost
31 at companies
interest Paid-up
(%)
associated and II 32.00 32.00 772 1,019 247 326 247 326 - - 247 326 18 23
Fund
subsidiary associated in Fund 56.26 59.62 1,100 1,192 587 710 997 836 - - 997 836 44 50 net 2,035 2,203 2,564 2,479 - - 2,564 2,479 212 162 in Fund 29.90 31.51 2,124 2,055 638 650 640 660 - - 640 660 46 39 Fund 30.00 30.00 600 600 180 180 199 198 - - 199 198 13 13 - Leasing Business
Ltd. 45.96 45.96 300 200 383 337 481 459 - - 481 459 91 37 Resort ORIX Column Thai
Property Property Co., TMB Bank Public Company Limited and its Subsidiaries Notes to the financial statements ended 31 December 2008 and 2007 For the years Thai The Investments companies Associated Siam 2008 Phayathai 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 The Investments companies Ownership
T M B B a n k P u b l i c C o m p a n y L i m i t e d 199 Notes to the income financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 net Dividend - cost (in million Baht) million (in only method Impairment At Bank capital Cost
99.40 ------
interest Paid-up (%)
2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 99.40
4,058 4,254 (3,870) (3,500) 188 754 111 - - 51.00 - 200 - 656 - - - 656 109 - 100.00 100.00 1,070 700 3,870 3,500 (3,870) (3,500) - - - - net Ltd. - Ltd.
Ownership 75.00 56.25 100 100 188 71 - - 188 71 - -
Co., Ltd.
Ltd. (Thailand) companies Co., - 100.00 - 10 - 27 - - - 27 2 - Ltd. Contract Management Securities subsidiary Co., ETA in Management Asset for Advisory Asset Macquarie TMB Bank Public Company Limited and its Subsidiaries Notes to the financial statements ended 31 December 2008 and 2007 For the years companies Subsidiary Phayathai IFCT Designee TMB TMB Investments
200 A n n u a l R e p o r t 2 0 0 8 income Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 net Dividend - cost (in million Baht) million (in only method Impairment At Bank capital Cost
interest Paid-up 6,093 6,457 (3,870) (3,500) 2,223 2,957 323 162 (%)
net - 2,035 2,203 - - 2,035 2,203 212 162 companies net -
Ownership associated 45.96 45.96 300 200 383 337 - - 383 337 91 37 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 2008 2007 29.90 31.51 2,124 2,055 638 650 - - 638 650 46 39 companies 32.00 32.00 772 1,019 247 326 - - 247 326 18 23 and II 30.00 30.00 600 600 180 180 - - 180 180 13 13 Ltd. Fund Fund Co., Fund 56.26 59.62 1,100 1,192 587 710 - - 587 710 44 50 associated subsidiary Fund Property in in Leasing Property Business Resort ORIX Thai Column TMB Bank Public Company Limited and its Subsidiaries Notes to the financial statements ended 31 December 2008 and 2007 For the years companies Associated Siam Thai The Phayathai The Investments Investments
T M B B a n k P u b l i c C o m p a n y L i m i t e d 201 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
The following summarised financial information on associated companies which have been accounted for using the equity method is not adjusted for the percentage of ownership held by the Group:
Ownership Total Total Total Net interest assets liabilities revenues profit (%) (in million Baht) 2008 Siam Resort Fund 56.26 1,777 4 539 534 Thai ORIX Leasing Co., Ltd. 45.96 4,678 3,620 413 145 The Thai Business Fund II 32.00 1,478 706 472 309 Phayathai Property Fund 30.00 673 10 63 45 The Column Property Fund 29.90 2,189 46 119 23 Total 10,795 4,386 1,606 1,056
2007 Siam Resort Fund 59.62 1,406 5 181 177 Thai ORIX Leasing Co., Ltd. 45.96 4,870 3,872 449 170 The Thai Business Fund II 32.00 1,633 614 450 287 The Column Property Fund 31.51 2,141 45 104 45 Phayathai Property Fund 30.00 671 9 58 37 Total 10,721 4,545 1,242 716
202 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 The following are extracts of the financial statements of Phayathai Asset Management Company Limited which is a subsidiary company, as required by Bank of Thailand guidelines:
Phayathai Asset Management Company Limited Condensed balance sheets As at 31 December 2008 and 2007
2008 2007 (in Baht) Assets Cash and deposits at financial institutions 250,763,223 138,431,383 Investments in securities - net 680,242,286 1,226,165,961 Investments in receivables - net 910,974,144 1,225,558,115 Total investments-net 1,591,216,430 2,451,724,076 Loans and receivables and accrued interest receivable - net 1,254,536,723 1,662,009,094 Properties foreclosed - net 2,442,204,452 3,086,003,308 Equipment - net 1,296,965 1,816,989 Other receivables 231,737,434 110,361,660 Other assets 18,253,335 21,924,527 Total assets 5,790,008,562 7,472,271,037
Liabilities and deficit in shareholders’ equity Liabilities Borrowings from financial institutions 2,600,000,000 4,800,000,000 Promissory notes payable 1,010,622,012 1,010,622,012 Accounts payable from non-performing loans transferred - 982 Other payables 10,222,375 58,588,968 Accrued interest payable 83,257,806 67,153,906 Provisions of obligations from the transferred non-performing assets 3,429,543,380 3,234,172,101 Other provisions 16,110,000 - Other liabilities 32,452,441 86,485,356 Total liabilities 7,182,208,014 9,257,023,325 Deficit in shareholders’ equity (1,392,199,452) (1,784,752,288) Total liabilities and deficit in shareholders’ equity 5,790,008,562 7,472,271,037
T M B B a n k P u b l i c C o m p a n y L i m i t e d 203 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Phayathai Asset Management Company Limited Condensed statements of income For the years ended 31 December 2008 and 2007
2008 2007 (in Baht) Interest income Loan and deposits 135,272,770 239,809,719 Investments in receivables 185,356,662 271,753,444 Investments in securities 11,422,329 14,512,540 Total interest income 332,051,761 526,075,703
Interest expense Interest expense 238,292,941 80,346,791 Total interest expense 238,292,941 80,346,791
Net interest income 93,758,820 445,728,912 Bad debts and doubtful accounts (reversal) (79,507,884) (177,969,027) Loss on impairment of investments in receivables 64,861,406 141,081,976 Loss on debt restructuring 20,524,947 21,773,012 Net interest income after bad debts, doubtful accounts, loss on impairment of investments in receivables and loss on debt restructuring 87,880,351 460,842,951 Non-interest income 59,260,705 301,173,706 Non-interest expenses Loss on provisions of obligation from the transferred non-performing assets 9,371,280 3,204,279,341 Loss on other provisions 16,110,000 - Other expenses 98,548,341 617,371,356 Total non-interest expenses 124,029,621 3,821,650,697 Net profit / (loss) 23,111,435 (3,059,634,040)
204 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Phayathai Asset Management Company Limited Statements of cash flows For the years ended 31 December 2008 and 2007 2008 2007 (in Baht) Cash flows from operating activities Net profit / (loss) 23,111,435 (3,059,634,040) Adjustments to reconcile net profit / (loss) to net cash provided by / (used in) operating activities Depreciation and amortization 1,099,812 1,580,617 Loss on impairment in value of securities 6,935,070 - Loss on impairment of investments in receivables 64,861,406 141,081,976 Loss on impairment of properties foreclosed and other assets 19,592,917 515,480,224 Bad debts and doubtful accounts (reversal) (79,507,884) (177,969,027) Loss on debt restructuring 20,524,948 21,773,012 Loss / (gain) on sale of equipment 5,020 (11,108) Gain on sale of investments (1,628,297) (27,609,524) Loss on provisions of obligation from the transferred non-performing assets 9,371,280 3,204,279,341 Loss on other provisions 16,110,000 - Increase / (decrease) in other accrued expenses 846,802 (10,458) Net interest income (93,758,821) (445,728,912) Income tax expense 181,062 307,940 Interest received 324,842,261 438,732,779 Interest paid (36,189,041) (60,273,973) Income tax paid (181,062) (307,940) Net profit from operations before changes in operating assets and liabilities 276,216,908 551,690,907
T M B B a n k P u b l i c C o m p a n y L i m i t e d 205 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Phayathai Asset Management Company Limited Statements of cash flows For the years ended 31 December 2008 and 2007
2008 2007 (in Baht) (Increase) / decrease in operating assets Investments in receivables (23,439,214) 212,454,020 Loans and receivables 398,833,325 570,762,579 Properties foreclosed 723,818,223 1,088,431,419 Other accounts receivable 128,959,701 149,417,678 Other assets 1,219,694 (2,425,075) Increase / (decrease) in operating liabilities Other account payables (48,366,593) 35,610,501 Other liabilities (54,880,700) (212,382,106) Net cash provided by operating activities 1,402,361,344 2,393,559,923
Cash flows from investing activities Purchases of available-for-sale investments - (2,423,000,000) Sales of available-for-sale investments 501,174,143 2,180,124,930 Redemptions of held-to-maturity investments 38,430,007 38,000,000 Sales of general investments 454,155 339,492 Purchases of equipment (104,632) (871,137) Sales of equipment 16,823 11,600 Purchases of intangible assets - (37,500) Net cash provided by / (used in) investing activities 539,970,496 (205,432,615)
Cash flows from financing activities Increase in issued and fully paid-up-ordinary shares 370,000,000 - Payments of loans from financial institutions (2,200,000,000) (2,200,000,000) Net cash used in financing activities (1,830,000,000) (2,200,000,000)
Net increase / (decrease) in cash and cash equivalents 112,331,840 (11,872,692) Cash and cash equivalents at beginning of year 138,431,383 150,304,075 Cash and cash equivalents at end of year 250,763,223 138,431,383
206 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.4 Loans and accrued interest receivable Classified by types of loans Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Overdrafts 38,880 41,398 38,755 41,268 Loans 268,453 301,213 267,597 301,815 Bills 116,576 121,421 117,504 122,340 Others 377 863 349 652 Total 424,286 464,895 424,205 466,075 Add Accrued interest receivable 3,296 4,026 3,378 4,092 Less Allowance for doubtful accounts (45,463) (51,486) (43,932) (49,930) Revaluation allowance for debt restructuring (453) (628) (453) (628) Total 381,666 416,807 383,198 419,609
Classified by remaining period to maturity of contracts Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Within 1 year 178,944 179,315 175,719 175,223 Over 1 year 245,342 285,580 248,486 290,852 Total 424,286 464,895 424,205 466,075
T M B B a n k P u b l i c C o m p a n y L i m i t e d 207 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Classified by currencies and residence of debtors Consolidated 2008 2007 Domestic Overseas Total Domestic Overseas Total (in million Baht) Baht 410,019 3,773 413,792 450,644 2,371 453,015 US Dollar 8,679 256 8,935 9,996 282 10,278 Other currencies 344 1,215 1,559 548 1,054 1,602 Total 419,042 5,244 424,286 461,188 3,707 464,895
Bank only 2008 2007 Domestic Overseas Total Domestic Overseas Total (in million Baht) Baht 409,938 3,773 413,711 451,824 2,371 454,195 US Dollar 8,679 256 8,935 9,996 282 10,278 Other currencies 344 1,215 1,559 548 1,054 1,602 Total 418,961 5,244 424,205 462,368 3,707 466,075
208 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Classified by type of business and by loan classification
Consolidated 2008 Pass Special Sub-standard Doubtful Doubtful Total mention of loss (in million Baht) Agriculture and mining 6,135 1,416 301 541 4,950 13,343 Manufacturing and commerce 121,071 30,259 5,477 4,101 32,561 193,469 Property development and construction 26,922 4,981 1,219 1,064 5,178 39,364 Infrastructure and services 59,787 12,373 1,089 722 4,936 78,907 Housing loans 50,245 2,447 713 808 3,821 58,034 Others 36,885 1,988 271 235 1,790 41,169 Total 301,045 53,464 9,070 7,471 53,236 424,286
Consolidated 2007 Pass Special Sub-standard Doubtful Doubtful Total mention of loss (in million Baht) Agriculture and mining 8,876 1,293 853 535 3,596 15,153 Manufacturing and commerce 144,585 18,801 8,548 11,779 27,152 210,865 Property development and construction 33,764 3,015 1,538 1,816 5,690 45,823 Infrastructure and services 77,137 5,835 1,439 1,388 4,588 90,387 Housing loans 51,446 1,246 644 672 3,620 57,628 Others 40,285 1,908 400 404 1,850 44,847 Total 356,093 32,098 13,422 16,594 46,496 464,703 TMB Macquarie Securities (Thailand) Ltd. 192 Total 464,895
T M B B a n k P u b l i c C o m p a n y L i m i t e d 209 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Bank only 2008 Pass Special Sub-standard Doubtful Doubtful Total mention of loss (in million Baht) Agriculture and mining 6,134 1,416 301 541 4,797 13,189 Manufacturing and commerce 121,071 30,259 5,477 4,101 31,013 191,921 Property development and construction 26,922 4,981 1,219 1,064 4,144 38,330 Infrastructure and services 59,787 12,373 1,089 722 4,525 78,496 Housing loans 50,245 2,447 713 808 3,821 58,034 Others 40,500 1,988 271 235 1,241 44,235 Total 304,659 53,464 9,070 7,471 49,541 424,205
Bank only 2007 Pass Special Sub-standard Doubtful Doubtful Total mention of loss (in million Baht) Agriculture and mining 8,876 1,293 853 535 3,428 14,985 Manufacturing and commerce 144,502 18,735 8,471 11,779 25,537 209,024 Property development and construction 33,670 2,998 1,489 1,805 4,577 44,539 Infrastructure and services 77,114 5,825 1,420 1,388 4,179 89,926 Housing loans 51,446 1,246 644 672 3,620 57,628 Others 46,069 1,886 372 404 1,242 49,973 Total 361,677 31,983 13,249 16,583 42,583 466,075
210 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Classified by loan classification
As at 31 December 2008 and 2007 the Bank and its subsidiaries have classified loans and accrued interest receivable (excluding loans to banks and money market items) in accordance with the announcement of the Bank of Thailand, regarding worthless and irrecoverable assets and doubtful assets that may be worthless or irrecoverable of com- mercial banks, as follows:
Consolidated 2008 Loans and Total debt net Allowance Allowance accrued interest of collateral * amount receivables (in million Baht) (%) (in million Baht) Pass 303,282 113,579 1 1,172 Special mention 53,729 18,893 2 378 Sub-standard 9,229 4,001 100 4,001 Doubtful 7,505 2,490 100 2,490 Doubtful of loss 53,836 29,378 100 29,378 Total 427,581 168,341 37,419 Add Excess over Bank of Thailand minimum requirement 8,044 Total 45,463
* In the case of allowance for sub-standard, doubtful and doubtful of loss, total debt net of collateral means total debt after deduction of the present value of future cash flows expected to be received from debt repayment, or the expected proceeds from the disposal of collateral.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 211 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated 2008 Loans and Total debt net Allowance Allowance accrued interest of collateral * amount receivables (in million Baht) (%) (in million Baht) Pass 358,391 133,228 1 1,390 Special mention 32,291 10,623 2 213 Sub-standard 13,636 7,049 100 7,049 Doubtful 16,766 8,165 100 8,165 Doubtful of loss 47,645 22,587 100 22,587 Total 468,729 181,652 39,404 Add Excess over Bank of Thailand minimum requirement 12,082 Loans of TMB Macquarie Securities (Thailand) Ltd. 192 - Total 468,921 51,486
* In the case of allowance for sub-standard, doubtful and doubtful of loss, total debt net of collateral means total debt after deduction of the present value of future cash flows expected to be received from debt repayment, or the expected proceeds from the disposal of collateral.
212 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
At 31 December 2008 and 2007 the Bank has classified loans and accrued interest receivable (excluding loans to banks and money market items) in accordance with the announcement of the Bank of Thailand, regarding worth- less and irrecoverable assets and doubtful assets that may be worthless or irrecoverable of commercial banks as follows:
Bank only 2008 Loans and Total debt net Allowance Allowance accrued interest of collateral * amount receivables (in million Baht) (%) (in million Baht) Pass 306,980 117,194 1 1,172 Special mention 53,729 18,893 2 378 Sub-standard 9,229 4,001 100 4,001 Doubtful 7,505 2,490 100 2,490 Doubtful of loss 50,141 28,070 100 28,070 Total 427,584 170,648 36,111 Add Excess over the Bank of Thailand minimum requirement 7,821 Total 43,932
* In the case of allowance for sub-standard, doubtful and doubtful of loss, total debt net of collateral means total debt after deduction of the present value of future cash flows expected to be received from debt repayment, or the expected proceeds from the disposal of collateral.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 213 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 Loans and Total debt net Allowance Allowance accrued interest of collateral * amount receivables (in million Baht) (%) (in million Baht) Pass 364,042 139,039 1 1,390 Special mention 32,176 10,621 2 213 Sub-standard 13,463 7,011 100 7,011 Doubtful 16,755 8,165 100 8,165 Doubtful of loss 43,732 21,262 100 21,262 Total 470,168 186,098 38,041 Add Excess over the Bank of Thailand minimum requirement 11,889 Total 49,930
* In the case of allowance for sub-standard, doubtful and doubtful of loss, total debt net of collateral means total debt after deduction of the present value of future cash flows expected to be received from debt repayment, or the expected proceeds from the disposal of collateral.
As at 31 December 2008 and 2007 the Bank and its subsidiaries have unearned discounts as follows :
Consolidated and Bank only 2008 2007 (in million Baht) Unearned discounts 22 33
214 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Non-performing loans (NPLs)
NPLs per BOT’s regulations refers to all sub-standard, doubtful, doubtful of loss and loss loans.
According to the Bank of Thailand’s regulations, commercial banks are required to report information on non-per- forming loans: - Non-performing loans (net) which refers to the non-performing loans value after allowances for doubtful accounts of NPLs. - The ratio of total loans after allowances for doubtful accounts which means the ratio of NPLs (net) to total loans after allowances for doubtful accounts of NPLs.
As at 31 December 2008 and 2007 the Bank and its subsidiaries’ non-performing loans (net) (including inter-bank and money market items) based on the above directive can be summarised as follows:
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Non-performing loans (net) 34,042 38,965 31,654 36,231 Total loans – net 452,059 438,905 453,286 441,155 Percentage of NPLs (net) 7.53 8.88 6.98 8.21
As at 31 December 2008 and 2007 the Bank and its subsidiaries non-performing loans (gross) (including inter-bank and money market items) based on the above directive can be summarised as follows:
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Non-performing loans (gross) 69,777 76,512 66,082 72,415 Total loans 487,794 476,453 487,713 477,339 Percentage of NPLs (gross) 14.30 16.06 13.55 15.17
T M B B a n k P u b l i c C o m p a n y L i m i t e d 215 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Troubled debt restructuring
For the years ended 31 December 2008 and 2007, the Bank and its subsidiaries entered into contracts for troubled debt restructuring which resulted in loss in the following cases:
Consolidated 2008 Type of Before restructuring After restructuring Asset acquired Loss on debt restructuring at end of year restructuring Number of Amount Number of Amount Type Fair value receivables receivables (in million Baht) (in million Baht) (in million Baht) Modifica- tion of terms 99 4,898 42 3,711 - - 608
Various Land and restructuring 14 1,349 3 39 building 879 30 Total 113 6,247 45 3,750 879 638
The Bank and its subsidiaries measure the expected recoverable amounts of loans restructured by changing repay- ment conditions by using the present value of future cash flows discounted by the market rate.
Consolidated 2008 Before restructuring After restructuring at end of year Term of debt restructuring agreements Number of Amount Number of Amount receivables receivables (in million Baht) (in million Baht) Not over 5 years 74 2,109 22 531 Over 5 - 10 years 26 1,447 15 667 Over 10 years 13 2,691 8 2,552 Total 113 6,247 45 3,750
For the year ended 31 December 2008, the Bank and its subsidiaries recognised interest income of Baht 466 million.
As at 31 December 2008, the Bank and its subsidiaries have 597 troubled debt restructuring receivables with a total carrying amount of Baht 7,913 million.
216 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated 2007 Type of Before restructuring After restructuring Asset acquired Loss on debt restructuring at end of year restructuring Number of Amount Number of Amount Type Fair value receivables receivables (in million Baht) (in million Baht) (in million Baht) Transfer of assets 2 5 1 2 - - 2 Modification of terms 210 4,319 75 3,161 - - 1,139 Various Land and restructuring 39 2,016 12 1,472 building 126 164 Total 251 6,340 88 4,635 126 1,305
Consolidated 2007 Before restructuring After restructuring at end of year Term of debt restructuring agreements Number of Amount Number of Amount receivables receivables (in million Baht) (in million Baht) Not over 5 years 200 3,203 58 1,797 Over 10 years 19 3,052 14 2,806 Over 10 years 30 80 15 30 Total 249 6,335 87 4,633
For the year ended 31 December 2007, the Bank and its subsidiaries recognised interest income of Baht 343 million.
As at 31 December 2007, the Bank and its subsidiaries have 215 troubled debt restructuring receivables with a total carrying amount of Baht 11,224 million.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 217 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
For the years ended 31 December 2008 and 2007, the Bank and its subsidiaries entered into contracts for troubled debt restructuring which resulted in loss in the following cases:
Bank only 2008 Type of Before restructuring After restructuring Asset acquired Loss on debt restructuring at end of year restructuring Number of Amount Number of Amount Type Fair value receivables receivables (in million Baht) (in million Baht) (in million Baht) Modifica- tion of terms 99 4,898 42 3,711 - - 608
Various Land and restructuring 3 1,264 - - building 879 9 Total 102 6,162 42 3,711 879 617
Bank only 2008 Before restructuring After restructuring at end of year Term of debt restructuring agreements Number of Amount Number of Amount receivables receivables (in million Baht) (in million Baht) Not over 5 years 63 2,024 19 492 Over 5 - 10 years 26 1,447 15 667 Over 10 years 13 2,691 8 2,552 Total 102 6,162 42 3,711
For the year ended 31 December 2008, the Bank received interest income recognised on restructured loans of Baht 451 million.
As at 31 December 2008, the Bank has 553 troubled debt restructuring receivables with a total carrying amount of Baht 7,709 million.
218 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2007 Type of Before restructuring After restructuring Asset acquired Loss on debt restructuring at end of year restructuring Number of Amount Number of Amount Type Fair receivables receivables value (in million Baht) (in million Baht) (in million Baht) Modification of terms 210 4,319 75 3,161 - - 1,139
Various Land and restructuring 20 1,806 4 1,406 building 123 144 Total 230 6,125 79 4,567 123 1,283
Bank only 2007 Before restructuring After restructuring at end of year Term of debt restructuring agreements Number of Amount Number of Amount receivables receivables (in million Baht) (in million Baht) Not over 5 years 181 2,993 50 1,731 Over 5 - 10 years 19 3,052 14 2,806 Over 10 years 30 80 15 30 Total 230 6,125 79 4,567
For the year ended 31 December 2007, the Bank received interest income recognised on restructured loans of Baht 330 million.
As at 31 December 2007, the Bank has 157 troubled debt restructuring receivables with a total carrying amount of Baht 10,965 million.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 219 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.5 Classified assets
Classified assets, which consist of investment in securities, loans and accrued interest receivable (including loans to banks and money market items), properties foreclosed, premises and equipment and other assets, as at 31 De- cember 2008 and 2007, were classified in accordance with the regulation of the Bank of Thailand as follows:
Consolidated 2008 Type of assets Investments Loans and Properties Premises Other assets Total in securities accrued foreclosed and interest equipment receivables (in million Baht) Pass - 366,850 - - - 366,850 Special mention - 53,729 - - - 53,729 Sub-standard - 9,229 - - - 9,229 Doubtful - 7,505 - - - 7,505 Doubtful of loss 3,134 53,836 4,319 736 520 62,545 Total 3,134 491,149 4,319 736 520 499,858
Consolidated 2007 Type of assets Investments Loans and Properties Premises Other assets Total in securities accrued foreclosed and interest equipment receivables (in million Baht) Pass - 369,642 - - - 369,642 Special mention - 32,326 - - - 32,326 Sub-standard - 13,636 - - - 13,636 Doubtful - 16,766 - - - 16,766 Doubtful of loss 3,536 47,645 4,469 675 531 56,856 3,0536 480,015 4,469 675 531 489,226 Loans of TMB Macquarie Securities (Thailand) Ltd. - 192 - - - 192 Total 3,536 480,207 4,469 675 531 489,418
220 A n n u a l R e p o r t 2 0 0 8
Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 Type of assets Investments Loans and Properties Premises Other assets Total in securities accrued foreclosed and interest equipment receivables (in million Baht) Pass - 370,548 - - - 370,548 Special mention - 53,729 - - - 53,729 Sub-standard - 9,229 - - - 9,229 Doubtful - 7,505 - - - 7,505 Doubtful of loss 6,997 50,141 3,913 736 511 62,298 Total 6,997 491,152 3,913 736 511 503,309
Bank only 2008 Type of assets Investments Loans and Properties Premises Other assets Total in securities accrued foreclosed and interest equipment receivables (in million Baht) Pass - 375,294 - - - 375,294 Special mention - 32,211 - - - 32,211 Sub-standard - 13,463 - - - 13,463 Doubtful - 16,755 - - - 16,755 Doubtful of loss 7,035 43,732 3,980 675 521 55,943 Total 7,035 481,455 3,980 675 521 493,666
T M B B a n k P u b l i c C o m p a n y L i m i t e d 221 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.6 Allowance for doubtful accounts
Movements in the allowance for doubtful accounts (see also Note 5.4) for the years 31 December 2008 and 2007 are as follows: Consolidated 2008 Pass Special Sub-standard Doubtful Doubtful Allowance Total mention of loss for doubtful accounts in excess of the BOT minimum requirement (in million Baht) Balance at beginning of the year 1,390 213 7,049 8,165 22,587 12,082 51,486 Provision during the year (218) 165 (3,048) (5,675) 18,074 (4,038) 5,260 Bad debts recovered - - - - 167 - 167 Bad debts written off - - - - (4,563) - (4,563) Allowance for loans sold - - - - (6,887) - (6,887) Balance at end of year 1,172 378 4,001 2,490 29,378 8,044 45,463
222 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated 2007 Pass Special Sub-standard Doubtful Doubtful Allowance Total mention of loss for doubtful accounts in excess of the BOT minimum requirement (in million Baht) Balance at beginning of the year 2,422 200 1,622 3,499 19,647 2,718 30,108 Provision during the year (1,031) 13 5,427 4,666 13,240 9,364 31,679 Bad debts recovered - - - - 697 - 697 Bad debts written offี - - - - (2,947) - (2,947) Allowance for loans sold - - - - (8,051) - (8,051) Others (1) - - - 1 - - Balance at end of year 1,390 213 7,049 8,165 22,587 12,082 51,486
T M B B a n k P u b l i c C o m p a n y L i m i t e d 223 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 Pass Special Sub-standard Doubtful Doubtful Allowance Total mention of loss for doubtful accounts in excess of the BOT minimum requirement (in million Baht) Balance at beginning of the year 1,390 213 7,011 8,165 21,262 11,889 49,930 Provision during the year (218) 165 (3,010) (5,675) 18,091 (4,068) 5,285 Bad debts recovered - - - - 167 - 167 Bad debts written off - - - - (4,563) - (4,563) Allowance for loans sold - - - - (6,887) - (6,887) Balance at end of year 1,172 378 4,001 2,490 28,070 7,821 43,932
Bank only 2007 Pass Special Sub-standard Doubtful Doubtful Allowance Total mention of loss for doubtful accounts in excess of the BOT minimum requirement (in million Baht) Balance at beginning of the year 2,422 200 1,557 3,482 18,269 2,586 28,516 Provision during the year (1,031) 13 5,454 4,683 13,293 9,303 31,715 Bad debts recovered - - - - 697 - 697 Bad debts written off - - - - (2,947) - (2,947)
224 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Allowance for loans sold - - - - (8,051) - (8,051) Others (1) - - - 1 - - Balance at end of year 1,390 213 7,011 8,165 21,262 11,889 49,930
5.7 Revaluation allowance for debt restructuring
Consolidated and Bank only 2008 2007 (in million Baht) Balance at beginning of the year 628 1,520 Decrease during the year (175) (892) Balance at end of the year 453 628
5.8 Properties foreclosed Consolidated 2008 Beginning balance Increase Disposal Ending balance (in million Baht) Type of properties foreclosed Assets from settlement Immovable assets 26,239 2,421 (5,741) 22,919 Movable assets 199 175 (63) 311 Others 587 14 (252) 349 Total 27,025 2,610 (6,056) 23,579 Add (less) Allowance for impairment (4,469) (990) 1,140 (4,319) Properties foreclosed – net 22,556 1,620 (4,916) 19,260
T M B B a n k P u b l i c C o m p a n y L i m i t e d 225 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Consolidated 2007 Beginning balance Increase Disposal Ending balance (in million Baht) Type of properties foreclosed Assets from settlement Immovable assets 29,331 5,688 (8,780) 26,239 Movable assets 532 18 (351) 199 Others 822 51 (286) 587 Total 30,685 5,757 (9,417) 27,025 Add (less) Allowance for impairment (873) (3,834) 238 (4,469) Properties foreclosed - net 29,812 1,923 (9,179) 22,556
Bank only 2008 Beginning balance Increase Disposal Ending balance (in million Baht) Type of properties foreclosed Assets from settlement Immovable assets 22,664 2,409 (4,928) 20,145 Movable assets 199 93 (55) 237 Others 587 14 (252) 349 Total 23,450 2,516 (5,235) 20,731 Add (less) Allowance for impairment (3,980) (974) 1,041 (3,913) Properties foreclosed - net 19,470 1,542 (4,194) 16,818
Bank only 2007 Beginning balance Increase Disposal Ending balance (in million Baht) Type of properties foreclosed Assets from settlement Immovable assets 25,593 4,503 (7,432) 22,664 Movable assets 532 18 (351) 199 Others 728 51 (192) 587 Total 26,853 4,572 (7,975) 23,450 Add (less) Allowance for impairment (777) (3,387) 184 (3,980) Properties foreclosed - net 26,076 1,185 (7,791) 19,470
226 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
On 9 October 2006, the Bank entered into an agreement with Bangkok Commercial Asset Management Co., Ltd. (“BAM”) for the transfer of non-performing assets (NPA). The transfer price would be prorated by the appraised value of each property varied by the liquidity condition of the asset. This is in compliance with the Bank of Thailand Direc- tive, Re: “Requirements and Operation Procedures for Asset Management Companies” dated 27 November 2000, and the Royal Decree on Asset Management Companies, B.E. 2541. The Bank is required to complete the clas- sification of NPA within 120 days from the agreement-signing date. BAM will examine the assets before confirming to the Bank the purchase price on individual assets within 30 days from the date of asset classification made by the Bank. The Bank and BAM will enter into a sale and purchase agreement within 30 days from the signing date of the NPA transfer agreement. Payment for NPA will be in the form of non-interest bearing promissory notes. The term of the promissory notes will depend upon the liquidity of the NPA transferred.
For the years ended 31 December 2008 and 2007, the Bank entered into sale and purchase agreements with BAM (transferee) to sell NPA totaling Baht 266 million and Baht 1,482 million, respectively at net book value (net of al- lowance for impairment) with related gain of Baht 0.11 million and related loss of Baht 331 million, respectively. The Bank received promissory notes aval by the Financial Institutions Development Fund of Baht 266 million and Baht 1,151 million, respectively which mature in 2009-2016. Upon receipt, the Bank recognised present value losses on these notes of Baht 33 million and Baht 160 million, respectively, which have been recorded in other expenses.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 227 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.9 Premises and equipment
Changes in premises and equipment (including revalued incremental cost) for year ended 31 December 2008 are summarised as follows: Consolidated 2008 Land Buildings Equipment Installation Total cost Revalued cost Revalued work incremental incremental cost cost (in million Baht) Book value At beginning of year 4,516 1,869 2,484 1,381 2,815 2 13,067 Changes in cost during the year At beginning of year 5,104 1,869 4,971 1,835 8,747 2 22,528 Surplus on revaluation - 1,246 - 1,675 - - 2,921 Purchased / transfer in 7 - 39 - 469 2 517 Disposal / transfer (30) - (96) (1) (1,717) (4) (1,848) At end of year 5,081 3,115 4,914 3,509 7,499 - 24,118
Changes in accumulated depreciation during the year At beginning of year - - 2,401 454 5,932 - 8,787 Accumulated depreciation on revaluation surplus - - - 820 - - 820 Depreciation - - 111 61 845 - 1,017 Disposal / transfer - - (34) - (1,596) - (1,630) At end of year - - 2,478 1,335 5,181 - 8,994
Less Allowance for impairment (627) - (109) - - - (736)
Book value at end of year 4,454 3,115 2,327 2,174 2,318 - 14,388
Depreciation for the year ended 31 December 2008 in the amount of Baht 1,017 million was included in premises and equipment expenses.
As at 31 December 2008, premises and equipment with a cost of Baht 5,983 million were fully depreciated, but still in use.
228 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Changes in premises and equipment (including revalued incremental cost) for the year ended 31 December 2007 are summarised as follows: Consolidated 2007 Land Buildings Equipment Installation Total Cost Revalued Cost Revalued work incremental incremental cost cost (in million Baht) Book value At beginning of year 4,524 1,869 2,406 1,437 2,428 31 12,695 Changes in cost during the year At beginning of year 5,133 1,869 4,762 1,844 8,411 31 22,050 Purchased / transfer in 39 - 287 - 1,313 32 1,671 Disposal / transfer (68) - (78) (9) (977) (61) (1,193) At end of year 5,104 1,869 4,971 1,835 8,747 2 22,528
Changes in accumulated depreciation during the year At beginning of year - - 2,270 407 5,983 - 8,660 Depreciation - - 154 49 892 - 1,095 Disposal / transfer - - (23) (2) (943) - (968) At end of year - - 2,401 454 5,932 - 8,787
Less Allowance for impairment (588) - (86) - - - (674)
Book value at end of year 4,516 1,869 2,484 1,381 2,815 2 13,067
Depreciation for the year ended 31 December 2007 in the amount of Baht 1,095 million was included in premises and equipment expenses.
As at 31 December 2007, premises and equipment with a cost of Baht 6,873 million were fully depreciated, but still in use.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 229 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Changes in premises and equipment (including revalued incremental cost) for the year ended 31 December 2008 are summarised as follows: Bank only 2008 Land Buildings Equipment Installation Total Cost Revalued Cost Revalued work incremental incremental cost cost (in million Baht) Book value At beginning of year 4,516 1,869 2,484 1,381 2,692 - 12,942 Changes in cost during the year At beginning of year 5,104 1,869 4,971 1,835 8,439 - 22,218 Surplus on revaluation - 1,246 - 1,675 - - 2,921 Purchased / transfer in 7 - 39 - 448 - 494 Disposal / transfer (30) - (96) (1) (1,596) - (1,723) At end of year 5,081 3,115 4,914 3,509 7,291 - 23,910
Changes in accumulated depreciation during the year At beginning of year - - 2,401 454 5,747 - 8,602 Accumulated depreciation on revaluation surplus - - - 820 - - 820 Depreciation - - 111 61 807 - 979 Disposal / transfer - - (34) - (1,509) - (1,543) At end of year - - 2,478 1,335 5,045 - 8,858
Less Allowance for impairment (627) - (109) - - - (736)
Book value at end of year 4,454 3,115 2,327 2,174 2,246 - 14,316
Depreciation for the year ended 31 December 2008 in the amount of Baht 979 million was included in premises and equipment expenses.
As at 31 December 2008, premises and equipment with a cost of Baht 5,938 million were fully depreciated, but still in use.
230 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Changes in premises and equipment (including revalued incremental cost) for the year ended 31 December 2007 are summarised as follows: Bank only 2007 Land Buildings Equipment Installation Total Cost Revalued Cost Revalued work incremental incremental cost cost (in million Baht) Book value At beginning of year 4,524 1,869 2,406 1,437 2,276 25 12,537 Changes in cost during the year At beginning of year 5,133 1,869 4,762 1,844 8,074 25 21,707 Purchased / transfer in 39 - 287 - 1,298 29 1,653 Disposal / transfer (68) - (78) (9) (933) (54) (1,142) At end of year 5,104 1,869 4,971 1,835 8,439 - 22,218
Changes in accumulated depreciation during the year At beginning of year - - 2,270 407 5,798 - 8,475 Depreciation - - 154 49 846 - 1,049 Disposal / transfer - - (23) (2) (897) - (922) At end of year - - 2,401 454 5,747 - 8,602
Less Allowance for impairment (588) - (86) - - - (674)
Book value at end of year 4,516 1,869 2,484 1,381 2,692 - 12,942
Depreciation for the year ended 31 December 2007 in the amount of Baht 1,049 million was included in premises and equipment expenses.
As at 31 December 2007, premises and equipment with a cost of Baht 6,816 million were fully depreciated, but still in use.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 231 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.10 Deposits
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Classified by type of deposit Current 21,987 19,799 21,999 19,808 Savings 152,285 174,156 152,536 174,286 Term - Within 6 months 151,725 128,805 151,725 128,817 - 6 months to 1 year 33,301 24,404 33,301 24,419 - Over 1 year 90,999 118,295 90,999 118,295 Certificates of deposit - 3 - 3 Total 450,297 465,462 450,560 465,628
Classified by remaining period to maturity of contracts Within 1 year 419,432 443,150 419,695 443,316 Over 1 year 30,865 22,312 30,865 22,312 Total 450,297 465,462 450,560 465,628
Classified by currency and residence of depositors Consolidated 2008 2007 Domestic Overseas Total Domestic Overseas Total (in million Baht) Baht 447,188 2,549 449,737 463,015 1,993 465,008 US Dollar 237 117 354 295 121 416 Other currencies 176 30 206 26 12 38 Total 447,601 2,696 450,297 463,336 2,126 465,462
Bank only 2008 2007 Domestic Overseas Total Domestic Overseas Total (in million Baht) Baht 447,445 2,549 449,994 463,181 1,993 465,174 US Dollar 243 117 360 295 121 416 Other currencies 176 30 206 26 12 38 Total 447,864 2,696 450,560 463,502 2,126 465,628
232 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.11 Interbank and money market items (liabilities)
Consolidated 2008 2007 At call Term Total At call Term Total (in million Baht) Domestic The Bank of Thailand and Financial Institutions Development Fund - 4,035 4,035 - 12,821 12,821 Commercial banks 138 - 138 1,801 41 1,842 Other banks 58 17 75 50 4,917 4,967 Finance, securities and credit foncier companies 150 4 154 164 422 586 Other financial institutions 2,547 424 2,971 2,741 703 3,444 Total domestic 2,893 4,480 7,373 4,756 18,904 23,660
Foreign US Dollar 465 175 640 94 - 94 Other currencies 589 697 1,286 361 878 1,239 Total foreign 1,054 872 1,926 455 878 1,333
Total domestic and foreign 3,947 5,352 9,299 5,211 19,782 24,993
T M B B a n k P u b l i c C o m p a n y L i m i t e d 233 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Bank only 2008 2007 At call Term Total At call Term Total (in million Baht) Domestic The Bank of Thailand and Financial Institutions Development Fund - 4,035 4,035 - 12,821 12,821 Commercial banks 138 - 138 1,801 41 1,842 Other banks 58 17 75 50 4,917 4,967 Finance, securities and credit foncier companies 150 4 154 519 303 822 Other financial institutions 2,547 424 2,971 2,741 703 3,444 Total domestic 2,893 4,480 7,373 5,111 18,785 23,896
Foreign US Dollar 465 175 640 94 - 94 Other currencies 589 697 1,286 361 730 1,091 Total foreign 1,054 872 1,926 455 730 1,185
Total domestic and foreign 3,947 5,352 9,299 5,566 19,515 25,081
234 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 5.12 Securities sold under repurchase agreements
Consolidated and Bank only 2008 2007 (in million Baht) The bonds of government and the Financial Institutions Development Fund - 4,765 Total - 4,765
5.13 Borrowings
Classified by type of instrument and source of borrowing
Consolidated 2008 2007 Domestic Foreign Total Domestic Foreign Total (in million Baht) Subordinated debentures 12,624 - 12,624 13,591 - 13,591 Hybrid debentures 250 - 250 250 - 250 Perpetual Non-Cumulative Tier 1 Securities - 6,989 6,989 - 6,750 6,750 Debentures - Within 270 days 10,218 - 10,218 5,912 - 5,912 - Others 2,743 - 2,743 2,845 - 2,845 Bills of exchange 24,715 - 24,715 14,027 - 14,027 Fixed-rate note payables 518 - 518 1,843 - 1,843 Others 731 7,529 8,260 1,159 7,039 8,198 Total 51,799 14,518 66,317 39,627 13,789 53,416
T M B B a n k P u b l i c C o m p a n y L i m i t e d 235 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 2007 Domestic Foreign Total Domestic Foreign Total (in million Baht) Subordinated debentures 12,624 - 12,624 13,591 - 13,591 Hybrid debentures 250 - 250 250 - 250 Perpetual Non-Cumulative Tier 1 Securities - 6,989 6,989 - 6,750 6,750 Debentures - Within 270 days 10,218 - 10,218 5,912 - 5,912 - Others 2,743 - 2,743 2,845 - 2,845 Bills of exchange 24,740 - 24,740 14,027 - 14,027 Fixed-rate note payables 518 - 518 1,843 - 1,843 Others 731 7,529 8,260 958 7,039 7,997 Total 51,824 14,518 66,342 39,426 13,789 53,215
236 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Classified by type of instrument and maturity
Type Interest rate Maturities Consolidated Bank only (%) 2008 2008 (in million Baht) Subordinated debentures 3.50 - 5.25 2009 - 2015 12,624 12,624 Hybrid debentures 5.75 2013 250 250 Perpetual Non-Cumulative Tier 1 Securities 7.75 2016 6,989 6,989 Debentures - Within 270 days 3.60 - 4.05 2009 10,218 10,218 - Others 4.00 - 10.25 2009 - 2010 2,743 2,743 Bills of exchange 2.00 - 5.50 2009 - 2011 24,715 24,740 Fixed-rate note payables 3.00 - 3.50 2009 518 518 Others 0 - 5.02 2010 - 2031 8,260 8,260 Total 66,317 66,342
Type Interest rate Maturities Consolidated Bank only (%) 2007 2007 (in million Baht) Subordinated debentures 3.50 - 18.02 2009 - 2015 13,591 13,591 Hybrid debentures 4.625 2013 250 250 Perpetual Non-Cumulative Tier 1 Securities 7.75 2016 6,750 6,750 Debentures - Within 270 days 3.15 - 3.40 2008 5,912 5,912 - Others 4.00 - 10.25 2008 - 2010 2,845 2,845 Bills of exchange 2.75 - 4.00 2007 - 2008 14,027 14,027 Fixed-rate note payables 2.00 - 4.00 2008 - 2009 1,843 1,843 Others 0 - 6.01 2008 - 2031 8,198 7,997 Total 53,416 53,215
T M B B a n k P u b l i c C o m p a n y L i m i t e d 237 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Classified by currencies
Consolidated 2008 2007 Currencies Foreign currencies Baht equivalent Foreign currencies Baht equivalent (million) (in million Baht) (million) (in million Baht) US Dollar 403 14,090 395 13,315 Euro 9 444 10 497 Baht 51,783 39,604 Total 66,317 53,416
Bank only 2008 2007 Currencies Foreign currencies Baht equivalent Foreign currencies Baht equivalent (million) (in million Baht) (million) (in million Baht) US Dollar 403 14,090 395 13,315 Euro 9 444 10 497 Baht 51,808 39,403 Total 66,342 53,215
238 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Subordinated debentures
On 20 September 1999 the Bank issued 10 year subordinated debentures of Baht 742 million with an interest rate of 5% per annum. Interest is payable yearly.
On 18 January 2000 the Bank issued 10 year subordinated debentures of Baht 1,077 million with an interest rate of 4.25% per annum. Interest is payable yearly.
On 28 December 2000 the Bank issued 10 year subordinated debentures of Baht 260 million and Baht 545 million with an interest rate of 3.5% per annum. Interest is payable yearly.
On 20 March 2003 the Bank issued 10 year subordinated debentures of Baht 800 million. The interest rate for the first 5 years is 4% per annum and the remaining 5 years is MLR-2% per annum. Interest is payable semiannually on 20 March and 20 September. On 20 March 2008 the Bank redeemed the above mentioned subordinated debentures before the maturity date.
On 30 July 2003 the Bank issued 10 year subordinated debentures of Baht 2,000 million. The interest rate for the first 5 years is 18.02% per annum and the remaining 5 years is MLR-2% per annum, but not lower than 3.23% per annum. Interest is payable semiannually on 30 January and 30 July.
On 9 March 2005 the Bank issued 10 year subordinated debentures of Baht 8,000 million. In years 1-5, interest is payable at the higher of the floating rate equal to the 12 month fixed deposit rate of the Bank plus 2% per annum or 4% per annum. In years 6-10, interest is payable at the higher of the floating rate equal to the 12 month fixed deposit rate of the Bank plus 2% per annum or 5% per annum. Interest is payable quarterly in March, June, September and December. The Bank can redeem the subordinated debentures before the fifth year after the issuing date or according to certain specified conditions.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 239 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Hybrid debentures
On 20 March 2003 the Bank issued 10 year subordinate debentures of Baht 250 million. The interest rate for the first 5 years of the principal is 4.625% per annum and the remaining 5 years interest rate is MLR-1.5% per annum. The Bank can redeem hybrid debentures before the maturity date, 5 years after the issuing date or according to certain specified conditions. The hybrid debentures have the right to receive debt repayment in sequence after the general subordinated debentures.
Perpetual Non-Cumulative Tier 1 Securities
On 3 May 2006, the Bank issued USD 200 million in aggregate as a principal amount of Perpetual Non-Cumula- tive Tier 1 securities (Hybrid Tier1). The securities are perpetual, however the Bank has an early redemption option subject to the prior written approval of the Bank of Thailand and the Bank being solvent at the time. Early redemption is permitted in the following circumstances:
1. From year 10 onwards, on each interest payment date. 2. In the event of certain changes affecting taxation in Thailand or the Cayman Islands made by any political sub-division or other authority with the power to tax. 3. In the event the securities no longer qualify as Tier 1 capital of the Bank, under the Bank of Thailand’s capital adequacy requirements and applicable regulations.
Interest is payable for the first 10 years at a fixed interest rate of 7.75% per annum payable semi-annually on 30 June and 30 December, and for year 11 onwards at a floating interest rate of 3.13% per annum above 3-month USD LIBOR and is payable quarterly on 30 March, 30 June, 30 September and 30 December.
At the end of the period after which the interest is due, if the Bank does not expect a net profit in the consolidated financial statements, the Bank is not obliged to make any interest payments for that period. Moreover, this interest will be non-cumulative and will not be carried forward to another payment period.
For the year ended 31 December 2008, the Bank paid interest expenses of Baht 527 million for Hybrid Tier1.
For the year ended 31 December 2007, the Bank did not report net profit in the consolidated financial statements. However, the Bank requested the Bank of Thailand’s permission to pay interest to the note holders. Strictly applying the notes’ condition, the Bank of Thailand did not allow the Bank to pay the above mentioned interest for the year ended 31 December 2007.
240 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Other Borrowing
Borrowings with specific uses as at 31 December 2008 are as follows:
Consolidated and Bank only
Borrowing From Objectives Outstanding balances Currencies Baht equivalent (million) (in million Baht) Ministry of Finance Agro-industrial enterprises THB 19 19 Enterprises in major basic EUR 0.31 15 industries Energy Conservation Investing in energy conservation THB 604 604 Promotion Fund National Science and Research and development activities THB 93 93 Technology Development Agency Nordic Investment Bank Joint ventures with the Nordic countries USD 73 2,558 (NIB) and businesses using Nordic machinery/equipment Japan Bank for International For equity investment & on-lending to USD 130 4,543 Cooperation (JBIC) non-SET listed enterprises and non-environmental impact having a joint-venture with Japanese or Japanese connection, or Tsunami adversely affected entrepreneurs having Japanese connection Kreditanstalt fur Small industry businesses EUR 9 428 Wiederaufbau (KfW) 8,260
T M B B a n k P u b l i c C o m p a n y L i m i t e d 241 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.14 Provisions of obligation from the transferred non-performing assets
Consolidated TAMC BAM Total (note 5.26) (note 5.27) (in million Baht) At 1 January 5,071 - 5,071 Provisions made for Increase in loss 774 3,204 3,978 At 31 December 2007 and 1 January 2008 5,845 3,204 9,049 Provisions made for Decrease in loss (49) - (49) Present value 61 186 247 At 31 December 2008 5,857 3,390 9,247
Bank only TAMC BAM Total (note 5.26) (note 5.27) (in million Baht) At 1 January 5,041 - 5,041 Provisions made for Increase in loss 774 - 774 At 31 December 2007 and 1 January 2008 5,815 - 5,815 Provisions made for Decrease in loss (58) - (58) Present value 61 - 61 At 31 December 2008 5,818 - 5,818
Refer to note 5.26 for the provision made from the selling of loans to Thai Asset Management Corporation (“TAMC”) and note 5.27 for the selling of assets of Phayathai Asset Management Company Limited to Bangkok Commercial Asset Management Company Limited (“BAM”).
242 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 5.15 Other provisions
Consolidated 2008 2007 Type of provisions Beginning Increase Ending Beginning Increase Ending balance balance balance balance (in million Baht) Off-balance sheet contingencies 157 1,111 1,268 53 104 157 Litigation (note 5.21) 936 39 975 816 120 936 Early retirement project - 850 850 - - - Others - 67 67 - - - Total 1,093 2,067 3,160 869 224 1,093
Bank only 2008 2007 Type of provisions Beginning Increase Ending Beginning Increase Ending balance balance balance balance (in million Baht) Off-balance sheet contingencies 157 1,111 1,268 53 104 157 Litigation (note 5.21) 936 23 959 816 120 936 Loss on investment in subsidiary in excess of cost 1,785 (370) 1,415 - 1,785 1,785 Early retirement project - 850 850 - - - Others - 67 67 - - - Total 2,878 1,681 4,559 869 2,009 2,878
The Bank provides provision for the off-balance sheet contingencies (see note 4.15).
The provision for the early retirement project relates to the expected costs of the voluntary early retirement plan an- nounced by the Bank to the employees in December 2008. The expected cost is based on management estimates and will depend on the number of eligible employees under the terms of the plan, and their respective compensation. The provision is expected to be used in 2009.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 243 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.16 Share capital and warrants
Share capital
Consolidated and Bank only Par value 2008 2007 per share Number Amount Number Amount (in Baht) (million shares/million Baht)
Authorised Balance at 1 January - preferred shares 10 1,992 19,920 1,992 19,920 - ordinary shares 10 41,717 417,167 16,737 167,367 Reduction of shares - ordinary shares 10 - - (128) (1,283) Increase of new shares - ordinary shares 10 - - 25,108 251,083
Balance at 31 December - preferred shares 10 1,992 19,920 1,992 19,920 - ordinary shares 10 41,717 417,167 41,717 417,167
Issued and paid Balance at 1 January - preferred shares 10 1,992 19,920 1,992 19,920 - ordinary shares 10 41,537 415,367 16,537 165,367 Increase of new share - ordinary shares 10 - - 25,000 250,000 Balance at 31 December - preferred shares 10 1,992 19,920 1,992 19,920 - ordinary shares 10 41,537 415,367 41,537 415,367
244 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
As at 31 December 2008 and 2007 the Bank had authorised share capital of Baht 437,087 million, consisting of 41,716,741,279 ordinary shares of Baht 10 par value, and 1,991,997,200 preferred shares of Baht 10 par value.
As at 31 December 2008 and 2007 the Bank had fully paid-up share capital of Baht 435,287 million, consisting of 41,536,741,279 ordinary shares of Baht 10 par value, and 1,991,997,200 preferred shares of Baht 10 par value.
The Extraordinary General Meeting of Shareholders No. 1/2007, convened on 27 November 2007 , passed the following resolutions : 1. To approve the revocation of 131,842,000 units of warrants and 128,365,942 ordinary shares newly issued for accommodation the warrants not yet issued and allocated to the Bank ’s employees. 2. To approve the Bank’s recapitalisation as the following details : 2.1 To consider approving the decrease of the Bank’s registered capital from Baht 187,287,384,790 to Baht 186,003,725,370 by means of eliminating 128,365,942 unallocated ordinary shares with a par value of Baht 10 per share. 2.2 To approve the increase of the Bank’s registered capital from Baht 186,003,725,370 to Baht 437,087,384,790 by issuing 25,108,365,942 new ordinary shares with a par value of Baht 10 per share. 2.3 To approve the allocation of the Bank’s 25,000,000,000 newly issued ordinary shares and the details of the allocation of shares. The allocations shall be made in the following orders: 2.3.1 Not exceeding 10,970,893,359 newly issued ordinary shares will be offered for sale to ING Bank N.V., at the offering price of Baht 1.60 per share. 2.3.2 Not exceeding 2,141,728,186 newly issued ordinary shares will be offered for sale to Thai NVDR Co., Ltd. due to the purchase of Non-Voting Depository Receipts (the “NVDR”) in an equal amount by ING Support Holding B.V. from Thai NVDR Company Limited at an offering price of Baht 1.60 per share. 2.3.3 Not exceeding 11,887,378,455 newly issued ordinary shares will be offered through a preferential offering in Thailand to the existing shareholders of the Bank. Details of the allocation are as follows: 1) Not exceeding 5,586,944,825 newly issued ordinary shares will be allocated to : a) the Ministry of Finance on the right offering basis determined from the shareholding proportion of not exceeding 2,854,559,829 shares, at the offering price of Baht 1.40 per share. b) the Ministry of Finance based on the excess rights to its shareholding proportion of not exceeding 2,732,384,996 shares, at the offering price of Baht 1.40 per share. 2) Not exceeding 6,300,433,630 newly issued ordinary shares will be allocated through a preferential offering in Thailand to the existing shareholders of the Bank whose names are listed in the shareholders register book on 7 November 2007 (except the Ministry of Finance), at the offering price of Baht 1.40 per share. The existing shareholders may exercise their rights to subscribe any number of shares as they wish, but the shares will be allocated in proportion to their shareholdings as appeared in the shareholders register book as at the closing date(except the Ministry of Finance), at a ratio of 1 existing share to 0.4941 new shares. Any fraction of the shares remaining from the allocation shall be discarded.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 245 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
2.4 To approve the offering of newly issued ordinary shares, at the price discounted from the market price by more than 10%. 2.5 To approve the entering into the connected transaction between the Bank and the Ministry of Finance in the portion of the excess rights to shareholding proportion of not more than 2,732,384,996 shares. 2.6 To approve the allocation of additional 108,365,942 ordinary shares of Baht 10 par value for accommodating the adjustment of rights under the warrants to purchase the Bank’s ordinary shares. 2.7 To approve the waiver from making a tender offer to purchase all securities of the Bank by ING Bank N.V.
On 7 December 2007 the Bank registered the increased authorized share capital from Baht 186,003,725,370 to Baht 437,087,384,790 with the Ministry of Commerce, consisting of 41,716,741,279 ordinary shares of Baht 10 par value and 1,991,997,200 preferred shares of Baht 10 par value.
On 28 December 2007 the Bank registered the increase in fully paid-up shared capital of Baht 250,000 million, consisting of 25,000 million ordinary shares of Baht 10 par value.
All expenses involving the issuing of new share capital of Baht 391 million have been included in the amount disclosed as the discount on new ordinary shares of Baht 212,769 million as at 31 December 2007.
Preferred shares
The only preferred shares outstanding are the class B non-cumulative preferred shares with voting rights, issued to the Ministry of Finance under the Tier 1 Capital Support Scheme on 19 May 2000, which have the right to receive dividend prior to the ordinary shares. The rights and benefits of the class B preferred shares are summarised as follows:
1. Right to receipt of dividend is superior to that of ordinary shares. - At the rate of 3.75% per annum. If in any year the Bank pays dividend for ordinary shares at a rate higher than that of preferred shares, the Bank has to pay the same rate of dividend for preferred shares. - If the profit is inadequate to pay dividend for preferred shares at the determined rate, the Bank will pay dividend for preferred shares according to its eligible profit and financial ability. 2. In case of capital decrease due to the following events. - The operating losses arising from the assets acquired before the capital injection of the Ministry of Finance, the Bank will reduce the capital of the ordinary shares before a reduction of the capital of the preferred shares. - The operational loss resulting from the assets existing after the Ministry of Finance’s increase of capital, the Bank shall proportionately decrease capital according to the holding portion of the ordinary shares and the preferred shares. - Other circumstances, or in the event of the Bank’s liquidation , the preferred shares will have the preferential right over the ordinary shares in receiving the return of capital.
246 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Class B preferred shares will have the preemptive right for 10 years i.e. until 19 May 2010, when each such preferred share outstanding shall automatically become an ordinary share, with the same rights as other ordinary shares. The holder of a class B preferred share shall be entitled to convert it into a ordinary share before 19 May 2010 on any 20 March, 20 June, 20 September or 20 December.
Warrants
On 1 February 2006 the Bank issued 68,158,000 warrants with zero price to the Bank’s employees. The warrants can be exercised to buy ordinary shares. These warrants are in the bearer’s name and are non-negotiable, except for legacy transfers.
The details of the warrants issued is as follows:
1. Offer date 1 February 2006 2. Maturity Five years from the issuance date 3. Offer price Baht zero 4. Right to exercise 1 warrant : 1.051* ordinary share 5. Exercise price Baht 4.48* per share except in case of adjustment in accordance with the terms and conditions 6. Exercise date (every last business day) 31 January and 31 July of each year 7. Term of exercise period 31 July 2008 - 31 January 2011
* Adjusted
The structure of shareholders as at 31 December 2008 and 2007 are summarised as follows:
Classified by type of persons Consolidated and Bank only 2008 2007 (%) Individuals 1 1 Juristic entities 99 99
Classified by nationality Consolidated and Bank only 2008 2007 (%) Thai 55 50 Foreign 45 50
T M B B a n k P u b l i c C o m p a n y L i m i t e d 247 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Restrictions on dividend payments
Payment of dividends by the Bank is regulated by law and is also subject to the discretion of its Board of Directors, and will depend on, among other things, its earnings, financial condition, capital requirements and other factors. Under Thai law, the Bank may only pay dividends if its retained earnings are positive, even if a net profit is recorded in the current year.
In accordance with the Bank of Thailand’s announcement regarding bad or doubtful assets, the Bank is not allowed to pay any dividends to the shareholders during any period in which the bad or irrecoverable assets have not been written off or an allowance for doubtful assets has not been fully provided.
According to the Bank of Thailand’s announcement on guidelines for commercial banks dividend payments, commercial banks should not take unrealised profit or profit that is not based on actual cash flow to make dividend payments such as profit from mark-to-market securities value, or any profit deriving from the reclassifying of financial assets or the profit sharing from associated and subsidiary companies. Commercial banks should not make dividend payments out of profit from the sale of assets, which is not actually completed, and which may result in abnormal profit or loss, nor out of the sale of properties foreclosed where repurchase conditions are part of the arrangement.
5.17 Reserves
Currency translation changes
The currency translation changes recognised in shareholders’ equity relate to foreign exchange differences arising from translation of the financial statements of foreign operations to Thai Baht.
Fair value changes and revaluation surpluses
Fair value changes and revaluation surpluses recognised in equity relate to cumulative net changes in the fair value of available-for-sale investments and surpluses arising from the revaluations of land and buildings.
248 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Surplus on revaluation of fixed assets
The Bank completed the revaluation of its lands and buildings during the quarter ended 30 September 2008. As at the date of revaluation, the surplus on asset revaluation increased by Baht 2,101 million while there was an increase in allowance for impairment losses on lands and buildings of Baht 48 million. This allowance for impairment losses was recorded as loss on impairment of assets in the statement of income. The Bank will include the appreciation in value of premise in Tier 2 capital after the BOT’s approval.
As at 31 December 2008 and 2007 the surplus on revaluation of fixed assets represented the surplus on land re- valuation of Baht 3,115 million and Baht 1,869 million, respectively, and the surplus on building revaluation of Baht 2,174 million and Baht 1,381 million, respectively, (net of accumulated depreciation of Baht 1,335 million and Baht 454 million, respectively). The land and building revaluation was assessed by independent appraisal companies.
Legal reserve
Section 116 of the Public Companies Act B.E. 2535 requires that a company shall allocate not less than 5% of its annual net profit, less any accumulated losses brought forward (if any), to a reserve account (“legal reserve”), until this account reaches an amount not less than 10% of the registered authorised capital. The legal reserve is not available for dividend distribution.
5.18 Income tax
The current income tax expense in the consolidated and the Bank only statements of income is less than the amount determined by applying the Thai corporation income tax rate to the accounting profit for the year principally because unutilised tax losses brought forward from the previous years have been utilised during the year to set-off against the current year’s taxable income.
The income tax expense for the previous year in the consolidated and the Bank only statements of income related to the profit of the Bank’s subsidiaries and foreign branches. The losses suffered by the Bank only and certain sub- sidiaries cannot be set-off against the profit of the Bank’s other subsidiaries and foreign branches.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 249 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.19 Earnings / (loss) per share
Basic earnings / (loss) per share
The calculation of basic earnings / (loss) per share for the years ended 31 December 2008 and 2007 was based on the net profit / (loss) attributable to ordinary shareholders and the weighted average number of shares outstanding during each year as follows:
Net profit /(loss) attributable to ordinary shareholders (basic)
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Net profit / (loss) attributable to ordinary shareholders (basic) 424 (43,677) 289 (43,916)
Weighted average number of ordinary shares (basic)
Consolidated and Bank only 2008 2007 (in million shares) Issued ordinary shares at 1 January 41,537 16,537 Effect of issued ordinary shares at 28 December 2007 - 274 Weighted average number of ordinary shares (basic) 41,537 16,811
250 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Diluted earnings / (loss )per share
The calculation of diluted earnings / (loss) per share for the years ended 31 December 2008 and 2007 was based on the net profit / (loss) attributable to ordinary shareholders as above and the weighted average number of shares outstanding during each year as follows:
Weighted average number of ordinary shares (diluted)
Consolidated and Bank only 2008 2007 (in million shares) Weighted average number of ordinary shares (basic) 41,537 16,811 Effect of conversion of convertible preferred shares 1,992 1,992 Weighted average number of ordinary shares (diluted) 43,529 18,803
There is no diluting effect on earnings / (loss) per share that might result from an assumed exercise of warrants.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 251 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 5.20 Capital requirements
The capital maintained by the Bank and Phayathai Asset Management Company Limited (subsidiary) as required by the Bank of Thailand, as at 31 December 2008 and 2007 consisted of:
Consolidated and Bank only 2008 2007 (in million Baht) Tier 1 capital Issued and fully paid share capital and premium (discount) on ordinary and preferred shares 132,199 132,199 Hybrid Tier1 6,897 6,837 Legal reserve 2,100 2,100 Other reserves 8,717 8,717 Net loss after appropriation (103,927) (104,272) Total Tier 1 capital 45,986 45,581
Tier 2 capital Surplus on land revaluation 1,302 1,302 Surplus on premises revaluation 660 690 Hybrid Tier1 615 675 Provision for assets classified as “pass” 5,040 1,503 Hybrid debt-capital instruments 200 250 Subordinated debentures 9,977 11,701 Unrealised gain on revaluation of available-for-sale equity securities (net) - 508 Total Tier 2 capital 17,794 16,629
Total Capital before deductive transaction 63,780 62,210 Less Unrealised loss on revaluation of available-for-sale equity securities (net) (675) - Total 63,105 62,210
252 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated Bank only 2008 2007 2008 2007 (%) Tier 1 capital 12.25 10.52 10.14* 10.57 Total capital 16.81 14.35 13.91* 14.43 Minimum tier 1 capital ratio requirement 4.25 4.25 4.25 4.25 Minimum total capital ratio requirement 8.50 8.50 8.50 8.50
The consolidated capital ratios above are based on the financial statements of the Bank and Phayathai Asset Management Company Limited.
* As required by BOT, the Bank only ratios in 2008 include the effect of using the Basel II approach (i.e. this includes an adjustment for operational risk). All the other ratios shown above are arrived at under the Basel I approach.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 253 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.21 Contingencies and commitments
Consolidated and Bank only 2008 2007 Baht Foreign Total Baht Foreign Total Currency Currency (in million Baht) Aval to bills and guarantees of loans Aval to bills 296 - 296 822 - 822 Loan guarantees 1,765 1,549 3,314 2,630 1,784 4,414 Total 2,061 1,549 3,610 3,452 1,784 5,236 Customer liabilities under unmatured import bills 151 1,082 1,233 293 1,028 1,321 Letters of credit 1,142 26,549 27,691 1,467 20,815 22,282 Other contingencies Other guarantees 29,703 8,727 38,430 36,881 6,882 43,763 Foreign exchange contracts Forward foreign exchange agreements Bought - 50,983 50,983 - 46,572 46,572 Sold - 52,766 52,766 - 49,842 49,842 Bought Bought - 71 71 - - - Sold - 344 344 - - - Currency swaps Bought - 2,546 2,546 - 3,116 3,116 Sold - 883 883 - 918 918 Interest rate contracts Interest rate swaps 155,757 8,982 164,739 114,373 7,676 122,049 Interest rate options - 6,989 6,989 - 6,749 6,749 Swaptions - - - 201 - 201 Unused overdraft credit lines 42,178 - 42,178 47,861 1 47,862 Total other contingencies 227,638 132,291 359,929 199,316 121,756 321,072 Private R/P agreement - - - 87 - 87 Total 230,992 161,471 392,463 204,615 145,383 349,998
254 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Litigation
As at 31 December 2008, legal proceedings under guarantees and other claims had commenced against the Group and the Bank in 195 cases and 182 cases, respectively (2007 : 200 cases and 191 cases, respectively) with an amount claimed of approximately Baht 18,488 million and Baht 13,735 million, respectively (2007 : Baht 22,532 million and Baht 18,188 million, respectively). As at 31 December 2008, the Group and the Bank recognised provisions for contingent loss from legal cases of approximately Baht 975 million and Baht 959 million, respectively (2007 : Baht 936 million). Management has concluded that such provisions are adequate to cover any possible loss from these legal cases.
In addition, the Bank is the defendant to a claim for approximately Baht 140,261 million arising from a guarantee allegedly issued by the Bank. The court rejected this claim, and the judgment is now being appealed. Management has been counseled that the appeal has no merit and is very unlikely to succeed. Management accordingly believes that the Bank will have no material liability in this case.
The Bank issued a letter of guarantee to a foreign bank in accordance with a share purchase contract dated 3 April 1996 in the proportion of its shareholding percentage of 10% amounting to Hong Kong Dollar 73 million and USD 0.07 million. As at 31 December 2008 and 2007 the outstanding amount, in proportion with the shareholding percentage, is Hong Kong Dollar 4 million.
As at 31 December 2008 and 2007 there were commitments with listed companies under rehabilitation plans of Baht nil and Baht 1 million, respectively.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 255 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Capital commitments
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Contracted but not provided for Buildings and other constructions 12 - 12 - Equipment 90 218 90 215 Total 102 218 102 215
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Non-cancellable operating lease commitments Within one year 230 262 218 237 After one year but within five years 240 257 233 233 Total 470 519 451 470
5.22 Pledged assets
As at 31 December 2008 and 2007, government securities used as collateral at face value are as follows:
Consolidated and Bank only 2008 2007 (in million Baht) Pledged as securities for repurchase agreements - 4,751 Pledged as securities for Ruam Jai Housing Loan 17 17 Pledged as securities with the court 8 8 Total 25 4,776
256 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.23 Related party transactions and balances
1. Loans and contingencies made to executives*, and to enterprises where over 10% of their paid-up capital is held by the Bank, executive officers (in 2008, including their related parties), are summarised below.
Consolidated 2008 2007 Balance at the Balance at the end of year end of year (in million Baht) Loans Related companies 149 774 Executive officers* 20 87
Bank only 2008 2007 Balance at the Balance at the end of year end of year (in million Baht) Loans Related companies 2,749 5,574 Executive officers* 20 87
* For the year ended 31 December 2008 executives are directors or executive officers and senior or first vice president of Finance Group (for the year ended 31 December 2007, executives include all first vice presidents).
T M B B a n k P u b l i c C o m p a n y L i m i t e d 257 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
2. Related parties are those parties linked to companies in the Group and the Bank by shareholders, co-investors or directors. Transactions with related persons or related companies are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices.
Related parties are as follows :
1. Major shareholders who own over 10% of the Bank’s paid-up share capital and related companies of such major shareholders.
2. Companies who are controlled by the Bank or significantly influenced by the Bank.
3. Companies whose shares are owned by over 20% of paid-up capital is held by the Bank or are controlled or significantly influenced by the Bank’s directors or executive officers.
4. Companies in which the Bank’s directors or executive officers, including related parties, own shares, or in which they are the directors with control or significant influence.
5. The Bank’s directors or executive officers, including related parties.
The additional information on investments in subsidiaries, associates and related companies is disclosed in note 5.3 to the financial statements.
* For the year ended 31 December 2008 executives are directors or executive officers and senior or first vice presi- dent of Finance Group (for the year ended 31 December 2007, executives include all first vice presidents).
258 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
The followings are relationships with related parties that control or jointly control the Bank or are being controlled or jointly controlled by the Bank or have transactions with the Bank / Group.
Name of entities Country of incorporation Nature of relationships Companies whose shares were owned or Thailand Major shareholder has 10% or more shareholding in this company. were controlled by the Ministry of Finance
ING Life Ltd. Thailand Major shareholder has 10% or more shareholding in this company.
ING Funds (Thailand) Co., Ltd. Thailand Major shareholders have 10% or more shareholding in this company.
Phayathai Asset Management Co., Ltd. Thailand Subsidiary, 100% shareholding, more than 50% of of directors are representatives of the Bank.
IFCT Advisory Co., Ltd. Thailand Subsidiary, 100% shareholding until 29 December 2008, more than 50% (see note 1) of directors are representatives of the Bank.
Designee for ETA Contract Ltd. Thailand Subsidiary, 99.40% shareholding, more than 50% of directors are representatives of the Bank.
TMB Asset Management Co., Ltd. Thailand Subsidiary, 75.00% shareholding, equal to 50% of directors are representatives of the Company. TMB Macquarie Securities (Thailand) Ltd. Thailand Subsidiary, 51% shareholding until 2 September 2008, less than 50% (see note 1) of directors were representatives of the Company. The Thai Business Fund 2 Thailand Being property funds under category 4 which issued for institutional investor and 32% shareholding, less than 50% of directors are representatives of the Company. Siam Resort Fund Thailand Being property funds under category 4 which issued for institutional investor and 56.26% shareholding, less than 50% of directors are representatives of the Company. Thai Orix Leasing Co., Ltd Thailand Associate, 45.96% shareholding, less than 50% of directors are representatives of the Bank. Phayathai Property Fund Thailand Being property funds under category 2 which issued for institutional investor and 30% shareholding, less than 50% of directors are representatives of the Company. The Column Property Fund Thailand Being property funds under category 4 which issued for institutional investor and 29.90% shareholding, less than 50% of directors are representatives of the Company.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 259 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Pricing and interest rate policy for related party transactions
The Bank’s pricing and interest rate policy is as follows :
- Interest rates of loans are in accordance with the market rate except for the interest rate of staff welfare loans which are in accordance with the Bank’s regulation, and the interest rate of loans to some subsidiary companies which are based on the deposit interest rate.
- Fee and service income such as annual registrar fees, transfer service fees to investment unitholders who have entered into transactions with the Bank, services fees for acting as a subsidiary’s paying agent in respect of funds managed by that subsidiary and a related company and trailing agent fees from that subsidiary and a related company are charged at the rate based on conditions specified in contracts negotiated in the normal course of business, which are determined by the size of funds and the purchase and sale volumes of investment units where the Bank acts as the selling agent.
- Interest rates on deposits are in accordance with the market rate.
- Fee and service income is in accordance with the market price except that the monthly service income for acting as the agent for debt collection and receiving debt repayment for a subsidiary is equal to Baht 10,000 and fees and service income for providing collateral appraisal services to a subsidiary company is equal to Baht 500 per case. If the appraisal involves more than one of title document, an additional fee is charged of Baht 200 per piece. For verification of land right-holding documents, the actual charge will be reimbursed. For appraisal and verification of documents outside Bangkok, there is an extra service charge of Baht 500 per day.
- The Bank entered into office rental and service agreements
- The Bank entered into office rental and service agreements with an associated company and a related company for a branch, and the rental and service fees are based on market rate.
- The Bank entered into office rental and service agreements where the term is a period of 3 years to rent office space and render services to 2 subsidiaries and a related company, and the rental and service fees are based on a mutually agreed basis and market rate.
Significant agreements with related parties
1. On 25 April 2008, the Annual General Meeting of Shareholders approved the connected transaction between the Bank and companies under the ING Group which are connected persons of the Bank as follows:
260 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
1.1 Distribution Agent Agreement between TMB and ING Funds (Thailand) Co., Ltd. The contract has a duration of 10 years. The agreement provides co-exclusive distribution rights to TMB Asset Management Company Limited and ING Funds (Thailand) Co., Ltd. Prior to the expiration of the agreement, negotiations can be conducted to review the appropriateness of the agreements and conditions, and if TMB wishes to continue the arrangement, the issue must be proposed to the shareholders meeting for approval.
Fees to be received by TMB vary according to the type of fund, and will be determined jointly by the parties.
1.2 Bancassurance Product Distribution Agreement between TMB and ING Life Ltd. The contract, which is exclusive (precludes TMB from selling life insurance products from other companies except ING Life), has a duration of 10 years. Prior to the expiration of the agreement, negotiations can be conducted to review the appropriateness of the agreements and conditions, and should TMB wish to continue the arrangement, the issue must be proposed to the shareholders meeting for approval.
Fees and other commercial terms are to be mutually agreed by both parties.
2. On 28 August 2008, The Bank’s Board of Directors unanimously approved that The Bank can enter into 2 referral agreements (“The Agreements”) with ING Asia Private Bank Limited, who is considered as connected person. Details are as follow;
The Agreements were executed by The Bank and ING Asia Private Bank Limited on 10 November 2008. Each party has its rights to terminate The Agreements by giving one-month advanced notice to its counterparty.
Fees to be received by each party vary according to the type of banking services and products, which are stipulated in The Agreements.
Other benefits payable to the directors and executives
The Bank’s directors and executives from the rank of department manager upwards do not receive other benefits, monetary or non-monetary items, except for the benefits that are normally paid such as monthly directors’ remuneration, directors’ fees, salary and bonus. Directors who are TMB’s executives and directors representing ING Bank N.V. for the year 2008 decline to receive remuneration as per the Bank and ING Bank N.V.’s policies. Nevertheless, Directors with permanent residence abroad can reimburse travelling and accommodation expenses in connection with the operation of TMB business as actually incurred. Certain foreign executives are eligible to be reimbursed for home rental, utilities and home trip expenses according to the relevant guidelines.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 261 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
2.1 Significant balances between the Bank and shareholders whose shares are over 10% of the Bank’s paid-up capital and their related parties as at 31 December 2008 and 2007 are as follows:
Consolidated and Bank only 2008 2007 (in million Baht) Loans and accrued interest receivable (before allowance for doubtful accounts) Companies whose shares were owned or were controlled by the Ministry of Finance 16,423 1,642 16,423 1,642 Allowance for doubtful accounts Companies whose shares were owned or were controlled by the Ministry of Finance 250 16 250 16 Other assets Companies whose shares were owned or were controlled by the Ministry of Finance 4 -
Deposits Companies whose shares were owned or were controlled by the Ministry of Finance 9,706 11,832 ING Life Ltd. 168 6 ING Funds (Thailand) Co., Ltd. 4 - Total 9,878 11,838
262 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Consolidated and Bank only 2008 2007 (in million Baht) Borrowings Companies whose shares were owned or were controlled by the Ministry of Finance 51 3,963
Other liabilities Companies whose shares were owned or were controlled by the Ministry of Finance 113 13
Contingencies Companies whose shares were owned or were controlled by the Ministry of Finance 422 1
For the years ended 31 December 2008 and 2007 the significant transactions are as follows:
Consolidated and Bank only 2008 2007 (in million Baht) Interest income 290 85 Non-interest income 195 1 Interest expenses 389 414 Non-interest expenses 113 108
T M B B a n k P u b l i c C o m p a n y L i m i t e d 263 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 2.2 Significant balances between the Bank and its subsidiaries, and associates (the Bank’s share is over 20% of the paid-up capital) as at 31 December 2008 and 2007 are as follows:
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Loans and accrued interest receivable (before allowance for doubtful accounts) Subsidiary companies Phayathai Asset Management Co., Ltd. - - 2,601 4,801 Associated companies Thai Orix Leasing Co., Ltd. 100 125 100 125
Allowance for doubtful accounts Subsidiary companies - - 26 48 Associated companies 1 1 1 1
Other assets Subsidiary companies TMB Asset Management Co., Ltd. - - 16 12
Associated companies The Thai Business Fund II 1 5 1 5 Siam Resort Fund 3 12 3 12 Phayathai Property Fund - 3 - 3 The Column Property Fund - 12 - 12
264 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Deposits Subsidiary companies Phayathai Asset Management Co., Ltd. - - 248 140 IFCT Advisory Co., Ltd. - - - 12 TMB Asset Management Co., Ltd. - - 173 440 TMB Macquarie Securities (Thailand) Ltd. - - - 312
Associated companies The Thai Business Fund II - 1 - 1 Phayathai Property Fund 17 13 17 13 Thai Orix Leasing Co., Ltd. 49 - 49 -
Other liabilities Subsidiary companies TMB Asset Management Co., Ltd. - - 10 3 TMB Macquarie Securities (Thailand) Ltd. - - - 2
For the years ended 31 December 2008 and 2007 the significant transactions are as follows:
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Interest and dividend income Subsidiary companies - - 147 60 Associated companies 199 25 199 25 Non-interest income (fees and service income) Subsidiary companies - - 155 98 Interest expenses Subsidiary companies - - 6 9 Non-interest expenses Subsidiary companies - - 2 1 Associated companies 17 17 17 17
T M B B a n k P u b l i c C o m p a n y L i m i t e d 265 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
2.3 Significant balances between the Bank and companies whose shares are owned by over 20% of paid-up capital is held by the Bank or are controlled or significantly influenced by the Bank’s directors or executive officers as at 31 December 2008 and 2007 are as follows :
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Loans and accrued interest receivable (before allowance for doubtful accounts) Witcorp Chemicals Ltd. - 61 - 61 M Home SPV1 Co., Ltd. - 45 - 45 Thaibaroda Industries Co. Ltd. - 375 - 375 Mahachai Land Development Co., Ltd. - 25 - 25 Total - 506 - 506
Allowance for doubtful accounts - 397 - 397
Deposits TMB Property Development Co., Ltd. 4 4 4 4 Witcorp Chemicals Ltd. - 1 - 1 Charan Insurance PCL - 81 - 81 MSIG Insurance (Thailand) Co., Ltd. - 125 - 125 Mahachai Land Development Co., Ltd. - 7 - 7 Total 4 218 4 218
Contingencies - 1 - 1 Other liabilities - 1 - 1
266 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
For the years ended 31 December 2008 and 2007 the significant transactions are as follows:
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Interest income 1 8 1 8 Interest expenses 3 10 3 10 Non-interest expenses 2 16 2 16
The related parties include debtors under restructuring.
2.4 Significant balances between the Bank and companies in which the Bank’s directors or executive officers, including related parties, own shares, or in which they are the directors with control or significant influence as at 31 December 2008 and 2007 are as follo
Consolidated and Bank only 2008 2007 (in million Baht) Loans and accrued interest receivable (before allowance for doubtful accounts) Major Cineplex Group PCL - 167 Allowance for doubtful accounts - 2
T M B B a n k P u b l i c C o m p a n y L i m i t e d 267 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated and Bank only 2008 2007 (in million Baht) Deposits Phutathum Insurance Co., Ltd. - 91 Victory Tool Co., Ltd. - 3 Dhipaya Insurance PCL - 282 RPM Detailing Co., Ltd. - 1 Major Cineplex Group PCL - 1 Total - 378
Contingencies - 10
For the years ended 31 December 2008 and 2007 the significant transactions are as follows:
Consolidated and Bank only 2008 2007 (in million Baht) Interest income - 18 Interest expenses - 13 Non-interest expenses 6 8 2.5 Additionally, significant balances between the Bank and the Bank’s directors or executive officers, including
268 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
related parties as at 31 December 2008 and 2007 are as follows:
Consolidated and Bank only 2008 2007 (in million Baht) Loans and accrued interest receivables 6 26 Welfare loans 14 80 Allowance for doubtful accounts - 1 Deposits 133 258 Other liabilities - 1
For the years ended 31 December 2008 and 2007 the significant transactions are as follows:
Consolidated and Bank only 2008 2007 (in million Baht) Interest income 1 3 Non-interest income - 12 Interest expenses 2 8
T M B B a n k P u b l i c C o m p a n y L i m i t e d 269 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.24 The financial position and results of operations
Financial position categorised by type of business
Consolidated 2008 Domestic Overseas Eliminated Total business business transactions (in million Baht) Total assets 601,048 11,860 (10,923) 601,985 Interbank and money market items - net (assets) 72,308 279 - 72,587 Investments - net 83,983 - - 83,983 Loans 423,685 601 - 424,286 Deposits 450,083 214 - 450,297 Interbank and money market items (liabilities) 9,228 71 - 9,299 Borrowings 54,786 11,531 - 66,317 Contingencies 385,459 7,004 - 392,463
Consolidated 2007 Domestic Overseas Eliminated Total business business transactions (in million Baht) Total assets 620,993 11,166 (9,998) 622,161 Interbank and money market items - net (assets) 20,546 214 - 20,760 Securities purchased under resale agreements 27,800 - - 27,800 Investments - net 96,346 - - 96,346 Loans 464,019 876 - 464,895 Deposits 465,190 272 - 465,462 Interbank and money market items (liabilities) 24,950 43 - 24,993 Securities sold under repurchase agreements 4,765 - - 4,765 Borrowings 42,954 10,462 - 53,416 Contingencies 343,238 6,760 - 349,998
270 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Results of operations categorised by type of business
The results of operations categorised by type of business for the years ended 31 December 2008 and 2007 which are summarised as follows: Consolidated 2008 Domestic Overseas Eliminated Total business business transactions (in million Baht) Interest and dividend income 29,135 745 (729) 29,151 Interest expense 13,358 717 (716) 13,359 Net income from interest and dividends 15,777 28 (13) 15,792 Non-interest income 6,984 17 13 7,014 Non-interest expenses 22,164 26 - 22,190 Profit before income tax 597 19 - 616
Consolidated 2007 Domestic Overseas Eliminated Total business business transactions (in million Baht) Interest and dividend income 33,699 905 (880) 33,724 Interest expense 17,835 335 (888) 17,282 Net income from interest and dividends 15,864 570 8 16,442 Non-interest income 6,579 21 (8) 6,592 Non-interest expenses 66,415 28 - 66,443 Profit / (loss) before income tax (43,972) 563 - (43,409)
T M B B a n k P u b l i c C o m p a n y L i m i t e d 271 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.25 Financial instruments
A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.
Accounting policies
Details of significant accounting policies and methods adopted, including criteria for recognition, the basis of measurement and the basis on which revenue and expenses are recognised in respect of each class of financial assets and financial liabilities are disclosed in Note 4.
Risk Management Approach
The Bank has set up its risk management structure in order to efficiently manage its core risks i.e. credit, market, operational, liquidity, reputational and strategic risks. Various risk policies and procedures have been established to provide common guidelines and standards to be applied consistently across the Bank.
The Bank manages its risks under the following key principles: core risks must be identified, measured, monitored, reported, analysed and controlled; business activities are managed under a risk-return framework to ensure that risks undertaken are commensurate with an appropriate return.
The Bank risk governance structure consists of the Risk Management Committee (RMC) and senior management risk committees which provide forums to discuss specific risk areas: Asset and Liabilities Management Committee (ALCO), the Credit Policy Committee, the Operational Risk Management Committee and the Chief Executive Com- mittee. The RMC has been delegated by the Board of Directors to review and oversee the management of all risks across the enterprise and is authorised to approve the Bank’s overall risk management strategies, policies, frameworks and standards, as well as aggregate risk tolerance and risk concentration levels.
While business units are primarily responsible for managing risks, all the risk management related functions are under the stewardship of the Chief Risk Officer (CRO). There are dedicated units for market risk management, credit risk management and operational risk management which are responsible for establishing firm-wide risk management policies and guidelines, act as centres for risk management activities and assumes the following roles: to develop and maintain risk management policies; to propose risk strategy and recommend risk appetite to top management for approval, and to monitor, control and report risk levels to top management.
272 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Credit risk
Credit risk refers to the risk that a counter-party or an obligor or an issuer will default on its contractual obligations resulting in a financial loss to the Bank. This potential earnings volatility is caused by the inability or unwillingness of an obligor to fulfill its contractual obligations. Credit exposure mainly arises from lending and derivatives activities, payment transactions and securities settlements.
Credit Policies/Framework
The Bank’s credit risk appetite and strategy are approved by the Risk Management Committee. To properly manage credit risk, the Bank has put in place the Core Credit Risk Policies (CCRP) and frameworks in order to ensure that credit decisions are prudently made and make credit risk management an integrated part of all credit-related business processes. All relevant Business Units and Support Units are required to formulate their own specific policies and supplementary policies under the CCRP. The Bank has also established policies to ensure diversification of its credit portfolio to address various concentration risks covering single exposure concentration risk on a group basis that is economically interdependent, industry/business sector concentration risk and country exposure concentration risk.
Credit Approval Process
In managing credit risk, the Bank segregates the roles and responsibilities of the credit marketing function from the credit granting function to ensure proper checks and balance. Individual credit risk is analysed and assessed by experienced credit officers and approved by an appropriate authority depending on the size and risk levels of credit requested.
The Bank has contingent liabilities by issuing loan payment guarantees, and other forms of guarantee as well as issuing letters of credit and endorsing aval on commercial bills and notes for its customers. Such contingent transaction activities require assessment on financial condition of customers in the same manner as those for direct lending. The Bank normally demands the placement of adequate collateral by customers in various forms including, for example, bank deposits, securities and personal/corporate guarantees. The Bank also makes it a standard practice to set credit terms and conditions to mitigate the elements of risk in the same manner as for other credit granting procedures.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 273 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Credit Quality Review
The Bank has set up Credit Quality Review Department independent from credit processes to provide on-going surveillance on potential credit quality deterioration trend. An independent review of the credit quality function is fully dedicated to identifying early-warning signs of changes in portfolio quality and providing senior management with insight and in-depth information on the quality of the credit portfolio, weaknesses of policies, processes and procedures together with corrective and protective recommendations. Changes and improvements to relevant credit policies, procedures and processes could be made based on lessons-learned recommendations to relevant parties.
Market risk
Market risk refers to the risk of the fluctuation of foreign exchange rates, interest rates and prices of equity securities, all of which have a strong impact on the Bank’s assets and liabilities including off-balance sheet items.
The ALCO holds the responsibility to ensure that bank-wide market risk management follows the relevant risk policies and levels of risk appetite. The Bank classifies the overall market risk into 2 parts: trading book and banking book. The Bank has set a policy to set standards on the book definitions and classification criteria.
Market risk in the trading book: The trading market risk consists of market risk from financial instruments, equities and derivatives which are held with trading intent, as well as Bank-wide currency risk. The Bank manages all the trading market risks within the guidelines set under the established Trading Market Risk Management Policy including setting up the appropriate risk appetite.
Market risk in the banking book: This risk consists of market risk embedded in the Bank’s on and off-balance sheet structure, and derivatives designated to hedge other banking book items. The Bank has developed a Balance Sheet Risk Management Policy, which outlines the approach towards managing such market risk and setting the maximum risk limit in a way which is appropriate to the Bank’s balance sheet structure. The Bank also regularly employs the tools set under the policy to analyse the impact of changes in the market environment to the Bank’s balance sheet as part of the practice of asset and liability management.
274 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Currency risk
Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.
Foreign currency positions in Baht equivalent, as of 31 December 2008 and 2007 were as follows:
Consolidated 2008 Currency US Dollars Yen Pounds Euro Others Total (in million Baht) Assets Cash 97 70 18 100 68 353 Interbank and money market items 5,643 414 36 192 171 6,456 Investments - net 445 - - 1 17 463 Loans 8,935 897 4 315 343 10,494 Total assets 15,120 1,381 58 608 599 17,766
Liabilities Deposits 354 11 5 133 57 560 Interbank and money market items 640 - - 2 - 642 Liabilities payable on demand 2,041 283 - - 1 2,325 Borrowings 14,090 - - 444 - 14,534 Total liabilities 17,125 294 5 579 58 18,061 Foreign currency position of on-balance items-net (2,005) 1,087 53 29 541 (295) Off-balance sheet items-net 1,750 (1,135) (93) (364) (551) (393) (Forward exchange contracts, cross currency swaps and FX options)
T M B B a n k P u b l i c C o m p a n y L i m i t e d 275 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated 2007 Currency US Dollars Yen Pounds Euro Others Total (in million Baht)
Assets Cash 124 46 29 111 67 377 Interbank and money market items 4,114 405 54 197 196 4,966 Investments - net - - - 1 16 17 Loans 10,278 356 66 495 685 11,880 Total assets 14,516 807 149 804 964 17,240
Liabilities Deposits 416 13 4 8 13 454 Interbank and money market items 94 - - - 50 144 Liabilities payable on demand 1,967 217 1 - - 2,185 Borrowings 13,315 - - 497 - 13,812 Total liabilities 15,792 230 5 505 63 16,595 Foreign currency position of on-balance items-net (1,276) 577 144 299 901 645 Off-balance sheet items-net 1,080 (562) (168) (613) (809) (1,072) (Forward exchange contracts, cross currency swaps and FX options)
276 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 Currency US Dollars Yen Pounds Euro Others Total (in million Baht)
Assets Cash 97 70 18 100 68 353 Interbank and money market items 5,643 414 36 192 171 6,456 Investments - net 445 - - 1 17 463 Loans 8,935 897 4 315 343 10,494 Total assets 15,120 1,381 58 608 599 17,766
Liabilities Deposits 360 11 5 133 57 566 Interbank and money market items 640 - - 2 - 642 Liabilities payable on demand 2,041 283 - - 1 2,325 Borrowings 14,090 - - 444 - 14,534 Total liabilities 17,131 294 5 579 58 18,067 Foreign currency position of on-balance items-net (2,011) 1,087 53 29 541 (301) Off-balance sheet items-net 1,750 (1,135) (93) (364) (551) (393) (Forward exchange contracts, cross currency swaps and FX options)
T M B B a n k P u b l i c C o m p a n y L i m i t e d 277 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2007 Currency US Dollars Yen Pounds Euro Others Total (in million Baht)
Assets Cash 124 46 29 111 67 377 Interbank and money market items 4,114 405 54 197 196 4,966 Investments - net - - - 1 16 17 Loans 10,278 356 66 495 685 11,880 Total assets 14,516 807 149 804 964 17,240
Liabilities Deposits 416 13 4 8 13 454 Interbank and money market items 94 - - - 50 144 Liabilities payable on demand 1,967 217 1 - - 2,185 Borrowings 13,315 - - 497 - 13,812 Total liabilities 15,792 230 5 505 63 16,595 Foreign currency position of on-balance items-net (1,276) 577 144 299 901 645 Off-balance sheet items-net 1,080 (562) (168) (613) (809) (1,072) (Forward exchange contracts, cross currency swaps and FX options)
278 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Interest rate risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.
The Bank’s principal financial assets, loans, mostly earn interest at floating rates, based on MRR, MLR, MOR, interest rates of time deposits or other benchmark floating rates (SIBOR or LIBOR).
Information concerning fixed versus floating rates of loans as at 31 December 2008 and 2007 are as follows:
Consolidated Bank only 2008 2007 2008 2007 (in million Baht) Fixed interest rate 51,001 49,254 50,833 48,751 Floating interest rate 373,285 415,641 373,372 417,324 Total 424,286 464,895 424,205 466,075
T M B B a n k P u b l i c C o m p a n y L i m i t e d 279 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
The average balances of the interest-bearing financial assets and liabilities of the Bank and its subsidiaries, calculated by using the monthly average of financial assets and liabilities and the average of interest and dividend rates for the year ended 31 December 2008 and 2007 are as follows:
Consolidated 2008 2007 Interest and Interest and dividend dividend Average Income/ Average Average Income/ Average balance expense rate (%) balance expense rate (%) (in million Baht) (in million Baht) Interest-bearing financial assets Interbank and money market items 40,712 1,581 3.88 9,650 564 5.84 Securities purchased under resale agreements - - - 10,211 192 4.23 Investments 103,483 3,421 3.31 100,532 3,788 3.77 Loans 441,075 24,150 5.48 503,690 29,180 5.79 Total 585,270 29,152 4.98 624,083 33,724 5.40 Interest-bearing liabilities Deposits 449,544 10,197 2.27 508,615 14,078 2.77 Interbank and money market items 11,510 127 1.10 24,992 466 1.87 Securities sold under repurchase agreements - - - 5,195 91 3.94 Borrowings 66,412 3,035 4.57 68,575 2,647 3.86 Total 527,466 13,359 2.53 607,377 17,282 2.85
280 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 2007 Interest and Interest and dividend dividend Average Income/ Average Average Income/ Average balance expense rate (%) balance expense rate (%) (in million Baht) (in million Baht) Interest-bearing financial assets Interbank and money market items 40,090 1,565 3.90 9,003 551 6.12 Securities purchased under resale agreements - - - 10,211 192 4.23 Investments 102,954 3,733 3.63 99,640 3,936 3.95 Loans 441,508 23,883 5.41 505,210 28,751 5.69 Total 584,552 29,181 4.99 624,064 33,430 5.36
Interest-bearing liabilities Deposits 449,801 10,199 2.27 508,738 14,089 2.77 Interbank and money market items 11,708 147 1.26 25,370 466 1.84 Securities sold under repurchase agreements - - - 5,195 91 3.94 Borrowings 66,310 2,832 4.27 68,452 2,647 3.87 Total 527,819 13,178 2.50 607,755 17,293 2.85
T M B B a n k P u b l i c C o m p a n y L i m i t e d 281 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 performing Total - follows: interest Non as - are 2008 (in million Baht) million (in year bearing assets December 31 at as months 1 repricing interest of months 3-12
Consolidated 2008 3 7,363 1,136 42 758 - 9,299 59,456 25,137 5,843 14,987 36,974 - 6,885 7,246 - - 83,983 72,545 41,844 9,825 14,252 396 - 66,317 306,390 390,983 25,071 45,901 331,069 21,544 58,518 72,179 380,276 1,504 15,635 30,865 83,140 69,777 69,777 16,184 45,159 424,286 580,814 17,338 - 450,297 - 525,913 maturity Repricing Over Over Non by within classified liabilities and items items assets market market
financial assets liabilities net money money - and and assets liabilities financial financial significant
Investments Financial Interbank
The Loans Deposits Borrowings Total Financial Interbank Total Notes to the financial statements TMB Bank Public Company Limited and its subsidiaries ended 31 December 2008 and 2007 For the years
282 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 performing Total - follows: interest Non as - are 2007 (in million Baht) million (in year bearing assets December 31 at as months 1 repricing interest of months 3-12 Consolidated 2007
3 13,144 20,879 8 16,646 45,572 22 22,703 13,249 7,665 29,522 984 9,516 - - 280 13,201 96,346 20,839 1,026 1,177 - - 24,993 53,416 348,032 409,855 14,765 31,419 327,224 23,968 69,562 96,130 1,618 384,214 22,532 22,312 76,512 106,630 76,512 19,796 464,895 35,793 609,880 - 21,999 465,462 - 548,636 maturity Repricing Over Over Non by within classified liabilities agreements 27,800 - - - - 27,800 agreements 4,765 - - - - 4,765 and items items resale assets market market repurchase under under financial assets liabilities net money money - purchased sold and and liabilities assets financial financial significant Investments The Loans Deposits Borrowings Securities Total Financial Interbank Securities Total Financial Interbank Notes to the financial statements TMB Bank Public Company Limited and its subsidiaries ended 31 December 2008 and 2007 For the years
T M B B a n k P u b l i c C o m p a n y L i m i t e d 283 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 performing Total - follows: interest Non as - are only 2008 (in million Baht) million (in year bearing assets December 31 at as months 1 repricing interest of months 3-12
Bank 2008 3 7,363 1,136 42 758 - 9,299 59,254 24,463 5,843 14,987 36,974 - 6,538 7,246 - - 82,962 72,343 41,869 9,825 14,252 396 - 66,342 310,005 393,722 25,071 45,901 331,320 21,544 58,518 72,179 380,552 1,504 15,288 30,865 83,140 66,081 66,081 16,196 45,159 424,205 579,510 17,350 - 450,560 - 526,201 maturity Repricing Over Over Non by within classified liabilities and items items assets market market net financial assets liabilities money money - and and assets liabilities financial financial significant
เInvestments Financial Interbank
Total Financial Interbank Total The Loans Deposits Borrowings
Notes to the financial statements TMB Bank Public Company Limited and its subsidiaries ended 31 December 2008 and 2007 For the years
284 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 performing Total - follows: interest Non as - are only 2007 (in million Baht) million (in year bearing assets December 31 at as months 1 repricing interest of months 3-12 Bank 2007 3 23,055 29,522 984 9,516 280 13,201 762 976 - - 25,081 53,215 20,166 16,646 45,572 13,214 - 95,598 12,301 8 22 7,348 - 19,679 353,517 413,784 14,765 31,419 327,365 23,952 69,546 96,145 1,426 384,707 21,988 22,312 72,415 106,645 72,415 19,806 466,075 35,793 609,152 - 21,544 465,628 - 548,689 maturity Repricing Over Over Non by within classified liabilities agreements 27,800 - - - - 27,800 agreements 4,765 - - - - 4,765 and items items resale assets market market repurchase under
under financial assets liabilities net money money - sold purchased and and assets liabilities financial financial significant
Financial
The Loans Deposits Borrowings Total Financial Interbank Securities Total Investments Interbank Securities Notes to the financial statements TMB Bank Public Company Limited and its subsidiaries ended 31 December 2008 and 2007 For the years
T M B B a n k P u b l i c C o m p a n y L i m i t e d 285 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Risk from changes in price of equities
Risk from changes in price of equities is any risk that arises from changes in price of equities that may cause volatility in the Bank’s earnings or value of financial assets.
Equities portfolio management of the Bank is managed under the Investment Banking Group, and overseen by the Investment Committee (IC) and / or Chief Executive Committee (CEC). (All equity investment must comply with the bank-wide Investment Policy and Framework, and related risk policies.) The Consideration criteria for equity investments includes consideration on risk factors such as on credit risk, market risk, and liquidity risk. Various limits are set including Gross Investment Limits and Loss Limit Levels. All of these measures are established to ensure that securities investments comply with policies and remain within approved limits and that the impact on capital adequacy is also taken into consideration. Liquidity risk
Liquidity risk refers to the risk that arises if the Bank fails to meet its obligation when due as assets cannot be liquidated into cash at current market prices in time or from an inability to raise funds deemed adequate by management to the Bank’s operations.
The Bank’s ALCO is responsible for the oversight of liquidity management. Its main purposes are to maintain the Bank’s liquidity level as required by the Bank of Thailand’s regulations and to ensure that the Bank’s liquidity position is sufficient for the Bank’s normal operations as well as at any critical situation that may arise. In addition, ALCO is also responsible for considering appropriate funding sources to cope with the change in market situation. The Corporate Treasury Group (CTG) is the Bank’s unit tasked with monitoring, assessing, reporting as well as proposing fund raising strategies to ALCO under the liquidity risk management policy. The policy is reviewed once a year or as and when necessary to ensure that it is appropriate for all situations.
Liquidity limits/guidelines are established to manage and control liquidity risk. Maturity profile reports based on contractual and behavioral maturity dates are routinely prepared. MCO (Maximum Cumulative Outflows) are established to measure the Bank’s biggest liquidity shortfall at a particular point in time, enabling future planning such as liquid assets and credit line assessments to be done to prepare liquidity reserves. In addition, liquidity assessments for critical situations are set up in order to deal with unexpected situations. A Contingency Liquidity Plan has been established and acknowledged by the Board of Directors (BOD) to prepare the Bank for crisis situations.
The Bank uses a standard risk management computer software program to process data from the Bank’s own database and to collect historical data to forecast customer behaviour.
286 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 years maturity Total years 10 years 5-10 Consolidated (in million Baht) million (in follows: as months 1-5 summarised are months 3-12 2008 December month 1-3 51,675 47,907 25,593 82,444 93,629 69,269 - 424,286
31 at
as - 2,644 10,071 15,285 44,201 4,897 - 6,885 83,983 2 11,736 18,239 4,953 10,890 20,385 112 - 66,317
Within Over Over Over Over 2008 Over No call 1 7,716 57,385 403 6,996 3,947 45 2,829 1,345 - 1,136 - 42 - - 72,545 - - 9,299 At 72,802 111,704 58,381 47,874 126,690 98,526 69,269 6,885 592,131 11,317 - 53,769 ------11,317 maturity 174,272 50,237 122,769 72,154 30,865 - - - 450,297 178,221 64,802 142,353 78,243 41,797 20,385 112 - 525,913 maturity. by original classified their under liabilities and items items classified assets are market market loans financial assets liabilities net money money - and and * financial financial significant Non-performing Financial liabilities Financial Total Interbank Loans Interbank Notes to the financial statements TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 The assets Financial Cash Deposits Investments Borrowings * Total
T M B B a n k P u b l i c C o m p a n y L i m i t e d 287 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 years maturity Total years 10 years 5-10 Consolidated (in million Baht) million (in follows: as months 1-5 summarised are months 3-12 2007 December month 1-3 31 at
as - 3,848 2,726 19,385 44,217 12,920 - 13,250 96,346 75 11,298 7,498 3,531 8,215 22,673 126 - 53,416 Within Over Over Over Over 2007 Over No call 1 8,120 10,620 217 50 5,212 1,832 11,723 - 6,794 985 - 79 - 200 20,839 - - 24,993 At 10,289 - 63,272 81,681 41,119 - 83,387 52,013 54,956 22,911 - 42,346 95,222 141,271 123,036 - 135,956 67,322 67,322 - 13,250 - 620,169 464,895 - - 10,289 maturity 193,954 61,650 91,205 199,241 96,341 89,436 22,312 105,497 100,857 - 30,606 22,873 - 126 - 465,462 - 548,636 maturity. by original classified their under liabilities agreements - 27,800 ------27,800 agreements - 4,765 ------4,765 and items items resale classified assets are market market repurchase under loans under financial assets liabilities net money money - purchased sold and and * financial financial significant Non-performing Interbank Investments Loans Total liabilities Financial Interbank Total * Notes to the financial statements TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 The assets Financial Cash Deposits Borrowings Securities Securities
288 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 years maturity Total years 10 only years 5-10 Bank (in million Baht) million (in follows: as months 1-5 summarised are months 3-12 2008 December month 1-3 51,664 47,889 25,493 82,113 97,104 69,269 - 424,205
31 at
as - 2,644 10,071 15,285 43,527 4,897 - 6,538 82,962 2 11,736 18,264 4,953 10,890 20,385 112 - 66,342 Within Over Over Over Over 2008 Over No call 1 7,696 57,315 291 6,996 3,947 45 2,829 1,345 - 1,136 - 42 - - 72,343 - - 9,299 At 11,314 ------11,314 50,673 69,683 111,623 58,251 47,774 125,685 102,001 69,269 6,538 590,824 maturity 174,535 50,237 122,769 72,154 30,865 - - - 450,560 178,484 64,802 142,378 78,243 41,797 20,385 112 - 526,201 maturity. by original classified their under liabilities and items items classified assets are market market loans
net financial assets liabilities money money and and * financial financial significant Non-performing Notes to the financial statements TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Interbank Interbank The assets Financial Cash liabilities Financial Deposits Borrowings Investments – Total Total Loans *
T M B B a n k P u b l i c C o m p a n y L i m i t e d 289 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 years maturity Total years 10 only years 5-10 Bank (in million Baht) million (in follows: as months 1-5 summarised are months 3-12 2007 December month 1-3 31 at
as - 3,848 2,725 19,385 43,523 12,902 - 13,215 95,598 75 11,097 7,498 3,531 8,215 22,673 126 - 53,215 Within Over Over Over Over 2007 Over No call 1 7,418 10,271 108 50 5,566 1,832 11,457 - 6,794 985 - 79 - 200 19,679 - - 25,081 At 10,287 - 59,795 77,500 40,911 - 82,830 51,999 54,832 22,518 - 41,953 95,033 140,388 128,498 - 141,400 67,321 67,321 - 13,215 - 619,439 466,075 - - 10,287 maturity 194,094 61,650 91,215 199,735 96,357 88,969 22,312 105,507 100,873 - 30,606 22,873 - 126 - 465,628 - 548,689 maturity. by original classified their under liabilities agreements - 27,800 ------27,800 agreements - 4,765 ------4,765 and items items resale classified assets are market market repurchase under loans under financial assets liabilities net money money - purchased sold and and * financial financial significant Non-performing Interbank Investments Loans Total Interbank Total * Notes to the financial statements TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 The assets Financial Cash liabilities Financial Deposits Borrowings Securities Securities
290 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 years Total years 10 only years 5-10 Bank and 2008 (in million Baht) million (in months 1-5 Consolidated 3-12
months follows: month 1-3 as call Within Over Over Over Over Over summarised are
922 364 519 1,278 527 - - 3,610 - 2,046 1,942 10,507 13,196 - - 27,691 5 917 114 250 82 437 1,193 85 517 10 - - - - 3,314 296 2008
At 1
December 31 at as bills 1 394 605 233 - - - 1,233 import maturity by loans of unmatured under contingencies guarantees sheet sheet and liabilities credit bills bills of guarantees to to Customer Total Letters Notes to the financial statements TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Off-balance
Off-balance Aval Loan Aval
T M B B a n k P u b l i c C o m p a n y L i m i t e d 291 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 years Total years 10 only years 5-10 Bank and 2008 (in million Baht) million (in months 1-5 Consolidated 3-12
months month 1-3 call Within Over Over Over Over Over
3,259 42,885 16,270 4,335 13,451 - 1,608 18,003 - 3,938 60 - 344 - - 1,900 - 11 - - - 11,980 - - - - 11,527 - - 298 - 51,941 - 50,983 - - 78,537 139 573 - 52,766 2,407 - 8,854 - 12 ------164,739 6,989 - - 71 - 344 - 2,546 883 - 6,989 5,967 999 2,964 6,913 359 13 21,215 38,430
At 1
agreements exchange contracts swaps options swaps contracts foreign rate rate rate exchange guarantees Contingencies options Sold Bought Sold Bought Sold Bought Currency FX Interest Interest Forward
Notes to the financial statements TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Interest
Other Other Foreign
292 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 years Total years 10 only years 5-10 Bank and 2007 (in million Baht) million (in months 1-5 Consolidated 3-12
months follows: month 1-3 as call Within Over Over Over Over Over summarised are
891 445 937 2,300 92 571 - 5,236 - 2,256 3,066 4,319 12,641 - - 22,282 36 855 179 266 418 519 167 2,133 22 70 571 - - - 4,414 822 2007
At 1
December 31 at as bills - 64 186 43 - - 1,028 1,321 import
maturity by loans of unmatured under contingencies
guarantees sheet sheet and liabilities credit bills bills of guarantees to to
Total Notes to the financial statements TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Off-balance Customer Letters Aval Aval Loan
Off-balance
T M B B a n k P u b l i c C o m p a n y L i m i t e d 293 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 years Total years 10 only years 5-10 Bank and 2007 (in million Baht) million (in months 1-5 Consolidated 3-12
months month 1-3 call Within Over Over Over Over Over
- - 11,399 15,048 - 11,412 - 12,867 23,761 509 21,865 - - - - - 62 - 999 - - - 4,080 - - - - 87 30,899 - 2,607 - 77,690 - - - - 46,572 918 8,381 49,842 - - - - 6,749 - - - 122,049 - - - 3,116 - 201 918 - - - 6,749 - 201 87 6,043 1,347 3,448 8,503 772 14 23,636 43,763
At 1
agreements exchange contracts swaps options contracts swaps Agreement foreign rate rate rate exchange R/P guarantees Contingencies Sold Bought Sold Bought Currency Interest Interest Swaptions Forward
Notes to the financial statements TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Interest Private
Other Other Foreign
294 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007 Derivative financial instruments risk
In the normal course of business, the Bank uses derivative financial instruments to serve the needs of its customers and to manage its exposure against fluctuations in foreign exchange rates and interest rates.
These instruments allow the Bank and its customers to transfer, modify or reduce their foreign exchange and interest rate risks.
The Bank has established risk policies and limits, reporting lines and control procedures to manage and control its derivative activities. Risk control functions are independent from the trading units.
Settlement risk related to financial derivatives are managed as part of the overall credit limits granted to customers. To control the level of credit risk taken, the Bank assesses counterparties using the same techniques as for lending decisions.
The notional amounts of certain types of financial instruments provide a basis for comparison with instruments recognised on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank’s exposure to credit or price risks. The derivative instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market interest rates or foreign exchange rates relative to their terms. Therefore, the extent to which the financial derivative instruments are favourable or unfavourable can fluctuate significantly from time to time.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 295 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Estimated fair value of financial instruments
The fair values have been estimated by using available market information and appropriate valuation methodologies. Fair values of financial instruments, together with the carrying values shown in the balance sheets at 31 December 2008 and 2007 were as follows:
Consolidated 2008 2007 Balance Balance Carrying value Fair value Carrying value Fair value (in million Baht) Financial assets Cash 11,317 11,317 10,289 10,289 Interbank and money market items - net 72,587 72,587 20,760 20,760 Securities purchased under resale agreements - - 27,800 27,800 Investments - net 83,983 85,661 96,346 97,324 Loans and accrued interest receivable - net 381,666 381,666 416,807 416,807 Customers’ liabilities under acceptances 103 103 280 280 Total financial assets 549,656 551,334 572,282 573,260
Financial liabilities Deposits 450,297 450,752 465,462 465,766 Interbank and money market items 9,299 9,300 24,993 25,011 Securities sold under repurchase agreements - - 4,765 4,765 Borrowings 66,317 63,717 53,416 52,434 Bank’s liabilities under acceptances 103 103 280 280 Total financial liabilities 526,016 523,872 548,916 548,256
296 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Consolidated 2008 2007 Balance Balance Carrying value Fair value Carrying value Fair value (in million Baht) Derivatives Foreign exchange contracts Forward foreign exchange agreements Bought 50,983 1,077 46,572 (550) Sold 52,766 (1,071) 49,842 619 FX options Bought 71 1 - - Sold 344 (3) - - Currency swaps Bought 2,546 (449) 3,116 (435) Sold 883 76 918 191 Interest rate contracts Interest rate swaps 164,739 1,937 122,049 548 Interest rate options 6,989 - 6,749 - Swaptions - - 201 1
T M B B a n k P u b l i c C o m p a n y L i m i t e d 297 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 2007 Balance Balance Carrying value Fair value Carrying value Fair value (in million Baht) Financial assets Cash 11,314 11,314 10,287 10,287 Interbank and money market items - net 72,384 72,384 19,599 19,599 Securities purchased under resale agreements - - 27,800 27,800 Investments - net 82,962 84,640 95,598 96,577 Loans and accrued interest receivable - net 383,198 383,198 419,609 419,609 Customers’ liabilities under acceptances 103 103 280 280 Total financial assets 549,961 551,639 573,173 574,152
Financial liabilities Deposits 450,560 451,015 465,628 465,932 Interbank and money market items 9,299 9,300 25,081 25,099 Securities sold under repurchase agreements - - 4,765 4,765 Borrowings 66,342 63,742 53,215 52,233 Bank’s liabilities under acceptances 103 103 280 280 Total financial liabilities 526,304 524,160 548,969 548,309
298 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Bank only 2008 2007 Balance Balance Carrying value Fair value Carrying value Fair value (in million Baht) Derivatives Foreign exchange contracts Forward foreign exchange agreements Bought 50,983 1,077 46,572 (550) Sold 52,766 (1,071) 49,842 619 FX options Bought 71 1 - - Sold 344 (3) - - Currency swaps Bought 2,546 (449) 3,116 (435) Sold 883 76 918 191 Interest rate contracts Interest rate swaps 164,739 1,937 122,049 548 Interest rate options 6,989 - 6,749 - Swaptions - - 201 1
T M B B a n k P u b l i c C o m p a n y L i m i t e d 299 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Methods and assumptions in estimating market value or fair value of financial instruments are as follows:
- Cash and interbank and money market items (assets)
The fair value approximates the carrying value.
- Securities purchased under resale agreements
The fair value approximates the carrying value.
- Investments in securities - net
The fair value of investments in securities is disclosed in Notes 4.9 and 5.3
- Loans and accrued interest receivable
The fair value is based on the carrying value of loans and accrued interest receivable net of allowance for doubtful accounts as most loans are floating rate loans.
- Customers’ liabilities under acceptances
The fair value approximates the carrying value.
- Deposits
The fair value is based on the carrying value of deposits, except for the fair value of fixed rate deposits with remaining maturities greater than 1 year which is estimated by using a discounted cash flow calculation applying interest rates currently being offered on such or similar deposits.
- Interbank and money market items (liabilities)
The fair value is based on the carrying value of interbank and money market items, except for the fair value of fixed rate deposits with remaining maturities greater than 1 year which is estimated by using a discounted cash flow calculation applying interest rates currently being offered on such or similar deposits.
300 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
- Securities sold under repurchase agreements
The fair value approximates the carrying value.
- Borrowings
The fair value approximates the carrying value except for fixed rate borrowings with remaining maturities greater than 1 year which is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
- Bank’s liabilities under acceptances
The fair value approximates the carrying value.
- Derivatives
The fair value approximates the market value.
Operational risk
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk.
The Bank has developed an Operational Risk Management Framework to ensure that the operational risks are properly identified, measured, monitored, reported, analysed and controlled in a systematic and consistent manner. The framework consists of an Operational Risk Governance Structure, Operational Risk Management Policies which cover all Basel II loss event categories, other supplementary policies, and three Operational Risk Tools; Control Self Assessment (CSA), Key Risk Indicators (KRI), and Loss Data Collection and Incident Management.
Business and Support Units are primarily responsible and accountable for their own Operational Risk Management and Control. The Bank has appointed a number of Unit Operational Risk Managers (UORM) in the Business and Support Units who, with support from the Operational Risk Management Department, take on / carry out the Operational Risk Management responsibilities of their respective units.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 301 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
Other major Operational Risk Mitigation Programs/Mechanisms include Product and Service Approval Process (PSAP), Outsourcing Risk Management, and Business Continuity Planning (BCP).
To ensure that products and services are offered in a safe manner, the PSAP is established to set guidelines for sign-off and approval of new products and services. This due diligence process ensures that the risks created by the new products and services are properly identified and addressed and the necessary infrastructure and controls are in place to support the new business.
The Bank has established the Outsourcing Risk Management Policy to set out the principles and standards for the effective identification of the major risks created by outsourcing and the management of such risks.
The Bank has established the Business Continuity Management Policies and Standards to provide guidance and standards for all units to develop a BCP. The Business Continuity Management Office is set up to oversee the implementation of BCM Policies and Standards and monitor BCM readiness of the Group and lead the co-ordination of group-wide BCP initiatives to raise the overall BCP readiness of the Bank.
5.26 Sale of loans to Thai Asset Management Corporation (“TAMC”)
In accordance with the conditions of the Emergency Decree on the Thai Asset Management Corporation B.E. 2544, the Bank and its subsidiaries entered into an Asset Transfer Agreement with TAMC in 2001 for sales of sub-standard quality assets to TAMC and the Bank and its subsidiaries had received promissory notes from TAMC for the trans- fers (see Note 5.3). Under the agreement, TAMC and the transferors are jointly responsible for sharing the profits or losses from TAMC’s managing of the non-performing assets, in accordance with the conditions specified in the agreements, at the end of the fifth year and at the end of the tenth year commencing 1 July 2001.
In the case of losses, the transferors will be responsible for the first portion of losses, not exceeding 20% of the transfer price. The second portion of losses, not exceeding 20% of the transfer price, will be equally shared between TAMC and the transferors. The remaining losses will be absorbed by TAMC.
In case of profits, the first portion of profits, not exceeding 20% of the transfer price, will be equally shared between TAMC and the transferors. Should there be any profits remaining, the transferors are entitled to the remaining profits up to an amount not exceeding the book value of non-performing assets less the transfer price and the transferors’ share in the first portion of the profits.
In 2006, TAMC informed the Bank and its subsidiaries of its loss sharing at the end of fifth year of Baht 730 million The Bank and its subsidiaries had recognised potential loss sharing from TAMC of above amount as provision for contingent liability. In addition, the Bank had been informed of an adjustment to the transferred price for non-
302 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
performing assets being pledged machinery of Baht 4,341 million in November 2006. The Bank denied such adjustment with the reason of default on assets transferring agreement dated 12 October 2001 by TAMC, therefore it may not force by law. The Bank, however had recorded potential loss from the adjustment of machinery of Baht 4,341 million as a provision for contingent liability.
At present, the Bank has commenced legal proceedings against TAMC.
As at 31 December 2008 and 2007, the Bank and its subsidiaries have estimated the present value of expected loss sharing from TAMC (excluding provision for contingent liability on an adjustment to the transfer price for previously pledged machinery, as discussed above) as at the end of the tenth year in the consolidated financial statements at the amount of Baht 1,240 million and Baht 1,228 million, respectively, and in the Bank’s financial statements at the amount of Baht 1,201 million and Baht 1,198 million, respectively, by considering the report from TAMC on the status of transferred assets and other historical information related to non-performing assets management. The discount rate used to calculate the present value of expected future loss is equal to the rate of return on assets or financial instruments having similar properties. The cumulative provisions for contingent liability (including provi- sion for contingent liability on an adjustment to the transfer price on previously pledged machinery) is Baht 5,857 million in the consolidated financial statements and Baht 5,818 million in the Bank’s financial statements. For the year ended 31 December 2008, the Bank and its subsidiaries recognised the present value of expected loss sharing from TAMC of Baht 61 million as an interest expense in the consolidated statement of income and the Bank’s statement of income.
5.27 Phayathai Asset Management Company Limited
Phayathai Asset Management Company Limited (“the subsidiary”) was registered with the Ministry of Commerce on 9 August 2000 and registered with the Bank of Thailand to operate as an asset management company on 1 September 2000. The Bank holds approximately 100% of the share capital of the subsidiary.
At 31 December 2008 and 2007, the Bank had obligations to register the transfer of ownership of the transferred assets, referred to below.
Under conditions of the asset transfers, the Bank (transferor) delivers the documents relating to these assets to the subsidiary company (transferee) within 30 days from the transfer date (the date stated in the contract to transfer non-performing assets). The contracting parties can agree to extend the delivery period. The transferor or transferee has the right to revise the transfer prices of such assets within 180 days from the transfer date.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 303 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
The sale of assets by Phayathai Asset Management Company Limited
On 3 September 2003, the subsidiary signed an agreement with Bangkok Commercial Asset Management Co., Ltd. (“BAM”) for the sale of assets as mentioned above. The effective date of the asset transfer was 30 September 2003. The transfer of the assets and their underlying securities was arranged under the provisions of the Emergency Decree on Asset Management Company, B.E. 2541 (1998) allowing the fixing of transfer prices as agreed by the subsidiary and BAM.
At the transfer date, BAM paid the subsidiary the total value of the assets in the form of a negotiable promissory note issued on 30 September 2003 for an amount of Baht 19,533 million, which was the non performing loans amount of Baht 16,634 million and the properties foreclosed amount of Baht 2,899 million, with a maturity date of 30 September 2015. The interest on the promissory note was fixed at a rate equivalent to the weighted average interest rates for all types of Thai Baht deposits at the 5 largest local commercial banks. The first payment is due on the 6th anniversary of the promissory note issuing date while subsequent payments will be on a yearly basis after the first payment until the maturity date. One condition was that endorsement on the promissory note by the transferor to negotiate the promissory note with any party other than the TMB Bank Public Company Limited, the Bank of Thailand or the Financial Institutions Development Fund was non-exercisable. In case of BAM’s decision to go into liquidation before the promissory note’s maturity date, BAM is required to transfer the rights and obligatory commitments over the promissory note to another juristic person as consented to by the subsidiary.
Both the subsidiary and BAM have the right to call for an adjustment to the prices of the transferred assets within 180 days from the transfer date. The price adjustment, if in effect, could be done by issuing an additional promissory note by the subsidiary or by BAM as the case may be.
An agreement was made between the subsidiary and BAM that recognition of profit or loss would be computed at the end of sixth year and twelfth year after the transfer date.
Computation of profit or loss from management is to be made on the value received from the debt collection process. The debt collection can be accumulated on a cash basis until the computation date, only on the debts that are fully settled. The recognition must come from the value received less cost of each asset at the transfer date, administra- tive expenses on each of the debts settled and interest expense on the promissory note. At the end of sixth year and twelfth year from the transfer date, results of the management of assets under the agreement must be shared between BAM and the subsidiary. In case of debt settlement done through asset transfer, recognition of profit or loss only occurs after the asset is successfully disposed off to clear the debt.
In case of a loss from the management of group 1 assets, the subsidiary will absorb the loss of the first 20%. The next 20% of the loss will be shared equally at a ratio of 1:1 between the subsidiary and BAM. The rest of the loss will be absorbed in full by BAM.
304 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
In case of a loss from the management of group 2 assets;
(a) if the transfer prices were not at a discount, the subsidiary will absorb the loss of the first 30% while the next 20% of the loss will be shared equally at a ratio of 1:1 between the subsidiary and BAM. The rest of the loss will be absorbed in full by BAM
(b) if the transfer prices were at a discount of 5%, the subsidiary will absorb the loss of the first 25% while the next 20% of the loss will be shared equally at a ratio of 1:1 between the subsidiary and BAM. The rest of the loss will be absorbed in full by BAM.
(c) if the transfer prices were at a discount of 10%, the subsidiary will absorb the loss of the first 20% while the next 20% of the loss will be shared equally at a ratio of 1:1 between the subsidiary and BAM. The rest of the loss will be absorbed in full by BAM.
(d) if the transfer prices were at a discount of 15%, the subsidiary will absorb the loss of the first 20% while the next 20% of the loss will be shared equally at a ratio of 1:1 between the subsidiary and BAM. The rest of the loss will be absorbed in full by BAM.
In case of a profit from the management of both group 1 and group 2 assets, the first portion of not more than 20% of the transfer prices will be shared equally at a ratio of 1:1 between the subsidiary and BAM and the rest of the profit will be taken by the subsidiary. However, this portion must not be greater than the margin between the book value and the transfer prices. The rest of the profit, if any, will be taken by BAM.
Regarding the transfer of non-performing assets to BAM from 30 September 2003 to the end of year 2005, the subsidiary has transferred its loans and investment in loans of various categories to BAM. These assets were in the forms of loans and debts, both secured and unsecured, as well as properties foreclosed and related assets. The total transfer price was Baht 19,712 million. BAM paid for those assets to the subsidiary in the form of a negotiable promissory note and the subsidiary endorsed the said promissory note to the Bank in settlement of a long-term loan installment.
The subsidiary and BAM agreed an adjustment of Baht 1,011 million to the selling price, accepting the recovery of NPLs and the properties foreclosed to the end of 2005. The subsidiary issued a promissory note to the transferee for Baht 1,011 million in respect of the agreed adjusted price. The subsidiary is waiting to issue a promissory note to BAM for Baht 4 million, which is the difference arising from the sale of properties foreclosed in 2003. In this regard, the subsidiary has recorded the interest expenses on the said promissory notes in the financial statements of the subsidiary for the years ended 31 December 2008 and 2007 of Baht 17 million and Baht 20 million, respectively.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 305 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
In the year 2006, the subsidiary and BAM met regarding the loss claims calculation of the subsidiary claimed by BAM on non-performing assets (purchase agreement) with both parties agreeing to examine the loss claims by the end of sixth year or twelfth year with an offset between the claim amount and the cash payment by BAM for promissory notes as noted in the purchase and sale agreement dated 3 September 2003.
As at 31 December 2008 and 2007, the Group estimated the present value of expected loss sharing from BAM as at the end of the twelfth year at the amount of Baht 3,390 million and Baht 3,204 million, respectively, by considering the report from BAM on the status of assets transferred from the subsidiary and other historical information related to non-performing assets management. The discount rate used to calculate the present value of expected future loss is equal to the rate of return on assets or financial instruments having similar properties. For the year ended 31 December 2008, the Group recognised the increase in provision for contingent liability of Baht 186 million as an interest expense in the consolidated statement of income.
5.28 Goodwill
As at 30 June 2007, due to unfavourable results and a sluggish economy, the Bank reviewed the carrying value of goodwill in respect of the businesses transferred from DBS Thai Danu Bank Public Company Limited (“DTDB”) and the Industrial Finance Corporation of Thailand (“IFCT”) for impairment. The Bank compared the projected net book value as at 30 June 2007 to the net present value of forecasted future economic benefits derived from DTDB and IFCT assuming that both financial institutions were still in operation. The Bank also hired an independent financial adviser to advise on the re-evaluation of the carrying value of goodwill.
The Bank projected the net book values of DTDB and IFCT as at 30 June 2007 by adjusting the respective net book values at the merger date by allocating pre-provision profit and shareholder’s equity items such as the unrealised gain / (loss) on revaluation of investments since the merger, based on the net loan proportions of each financial institution. Specific bad debts, doubtful accounts and other expenses were similarly allocated.
In estimating the net present value of forecasted future economic benefits from DTDB and IFCT, the Bank considered the expected economic growth of the country, its economic environment, preliminary impact estimation of Basel 2 implementation, the performance and financial status of the Bank and its peers and the Bank’s business targets. An average long-term growth rate of 6% was assumed in this calculation. The required rate of return from investing in the Bank was used as a discount rate, estimated at 14 - 15%, derived from the Capital Asset Pricing Model (CAPM).
The result of the impairment review revealed that the projected net book value of DTDB and IFCT was higher than the net present value of forecasted future economic benefits. The Bank therefore wrote off the entire amount of goodwill relating to DTDB and IFCT as at 30 June 2007.
306 A n n u a l R e p o r t 2 0 0 8 Notes to the financial statements
TMB Bank Public Company Limited and its Subsidiaries For the years ended 31 December 2008 and 2007
5.29 New regulations related to the Bank
On 3 August 2008, the Financial Institution Businesses Act 2008 and the related notifications, circulars and notices as issued by the Bank of Thailand became effective, as announced in the Government Gazette on 5 February 2008.
On 11 August 2008, the Deposit Protection Act 2008 and the related notifications, circulars and notices as issued by the Bank of Thailand became effective, as announced in the Government Gazette on 13 February 2008.
As at 31 December 2008, compliance with such laws above does not have any material impact on the consolidated and Bank only financial statements.
5.30 Thai Accounting Standards (TAS) not yet adopted
The Group has not adopted the following revised TAS that have been issued as of the balance sheet date but are not yet effective. These revised TAS will become effective for financial periods beginning on or after 1 January 2009.
TAS 36 (revised 2007) Impairment of Assets TAS 54 (revised 2007) Non-current Assets Held for Sale and Discontinued Operations
The adoption and initial application of these revised TAS is not expected to have any material impact on the con- solidated or Bank’s financial statements.
5.31 Reclassification of accounts
Tax paid and interest paid are now shown as part of cashflows from operating activities, and withholding tax is expensed and shown as part of other expenses. Comparatives have accordingly been reclassified.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 307 Financial statistics and results of operations “As at 31 December 2008, 2007, 2006, 2005 and 2004” (Million Baht) 2008 2007 2006 2005 2004 (Restated) Assets Cash 11,314 10,287 10,910 9,029 9,145 Interbank and money market items - net 72,384 19,599 17,248 9,611 10,053 Securities perchased under resale agreements - 27,800 25,500 - 12,000 Investments - net 82,962 95,598 116,909 107,509 94,509 Loans and accrued interest receivable - net 383,198 419,609 517,859 527,122 479,262 Properties foreclosed - net 16,818 19,470 26,076 28,369 28,453 Customers’ liabilities under acceptances 102 280 358 377 924 Premises and equipment - net 14,316 12,942 12,537 11,724 13,276 Accounts receivable - net 11,150 8,653 5,562 4,045 4,251 Goodwill - net - - 12,594 13,307 14,019 Other assets - net 7,145 4,913 5,136 2,993 4,718 Total assets 599,389 619,151 750,689 714,086 670,610 Liabilities and shareholders’ equity Deposits 450,560 465,628 568,675 517,215 456,007 Interbank and money market items 9,299 25,081 21,786 41,180 42,240 Liabilities payable on demand 3,297 3,610 3,518 1,611 1,221 Securities sold under repurchase agreements - 4,765 - 14,000 - Borrowings 66,342 53,215 93,271 72,690 112,455 Bank’s liabilities under acceptances 102 280 358 377 924 Accrued interest payables 1,891 2,413 4,810 2,465 1,926 Provisions of obligation from the transferred non-performing assets 5,818 5,814 5,041 - - Provisions of obligation -others 4,559 2,878 869 - - Account payables 5,414 8,275 1,437 8,945 4,800 Other liabilities 7,850 3,870 3,763 4,753 5,886 Total liabilities 555,132 575,829 703,528 663,236 625,459 Shareholders’ equity 44,257 43,322 47,161 50,850 45,151 Total liabilities and shareholders’ equity 599,389 619,151 750,689 714,086 670,610 Off-balance sheet items-contingencies Aval to bills and guarantees of loans 3,610 5,236 7,277 8,797 7,722 Liabilities under unmatured import bills 1,233 1,321 1,926 2,799 1,509 Letters of credit 27,691 22,282 13,358 9,131 12,980 Other contingencies 359,929 321,159 321,150 250,699 183,839
Interest and dividend income 29,181 33,429 36,052 25,846 17,162 Interest expense 13,179 17,293 20,975 11,304 6,401 Net interest and dividend income 16,002 16,136 15,077 14,542 10,761 Bad debts and doubtful accounts 5,192 31,770 13,157 3,834 4,508 Loss on debt restructuring (reversal) (122) (775) (1,401) (3,780) 912 Net interest and dividend income / (expense) after bad debts, doubtful accounts and loss on debt restructuring 10,932 (14,859) 3,321 14,488 5,341 Non-interest income 5,745 2,121 3,919 5,657 4,429 Non-interest expenses 16,386 31,173 19,661 12,255 8,772 Profit / (loss) before income tax expense 291 (43,911) (12,421) 7,890 998 Income tax expense 2 5 94 90 50 Net profit / (loss) 289 (43,916) (12,515) 7,800 948 Basic earnings / (loss)per share(baht) 0.01 (2.61) (0.87) 0.59 0.09 Ordinary shares (million shares) 41,536.7413 41,536.7413 16,536.7413 13,314.3020 13,314.3006 Number of employees 9,039 8,700 9,077 8,221 7,925 Number of branches 473 473 467 429 453 “*Starting from 1 January 2007, the Bank has changed the accounting policy for investment in subsidiary companies and associate companies from the equity method to the cost method.
308 A n n u a l R e p o r t 2 0 0 8 Results of Operations in 2008 TMB BANK PUBLIC COMPANY LIMITED
The Bank’s Board of Directors has reported the results of the operations on follows: Amounts: Baht Retained deficit brought forward (104,216,003,901) Add: Net profit for the year ending 31 December 2008 289,145,961 Amortization of surplus on fixed assets revaluation 61,971,455 Retained deficit carried forward (103,864,886,485)
Besides the retained deficit of Bht. 103,865 million , the Bank also has discount on ordinary shares – net of Bht. 303,088 million. According to the Public Companies Act B.E. 2535 and other related regulations. The Bank therefore is unable to make dividend payment.
The Bank’s Board of Directors has decided that there will be no dividend payment.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 309 General Information
Company Information TMB Bank Public Company Limited (“TMB” or “the Bank”) conducts a financial services business in accordance with the Commercial Banking Act and under the permission of the Ministry of Finance, the Bank of Thailand, and other parties concerned.
Head Office : 3000 Phahon Yothin Road, Chomphon, Chatuchak, Bangkok 10900 Registration No. : 0107537000017 Telephone : +66 2299 1111 Facsimile : +66 2273 7640, +66 2299 2758 TMB Phone Banking : 1558 Website : http://www.tmbbank.com Email : [email protected]
The Bank changed its name from “Thai Military Bank Public Company Limited” to “TMB Bank Public Company Limited” as of 9 May 2005 and launched its new logo as of 24 May 2005.
As of December 31, 2008, the Bank’s registered capital was Baht 437,087,384,790 of which Baht 435,287,384,790 was paid up, divided into:
Ordinary shares 41,536,741,279 shares at par value of Baht 10 / share Class B preferred shares 1,991,997,200 shares at par value of Baht 10 / share
310 A n n u a l R e p o r t 2 0 0 8 Investment of TMB Bank Pcl. in other companies As at December 31, 2008 investments in companies in which the TMB Public Company Limited held more than 10 % of the paid-up capital in each company were as follows: TMB's ownership Company Head Type of Type of Paid-up Amount Percentage Amount Office Business Capital Capital (Share) (%) (Baht) Location (Share) (Share) (net of allowance for diminution in value) 1 Phayathai Asset Bangkok Finance Common Stock 107,000,000 107,000,000 100.00 0.00 Management Co., Ltd. Tel. 0-2354-5001, Fax 0-2354-5014 2 IFCT Advisory Co., Ltd. Bangkok Services Common Stock 1,000,000 999,993 99.99 11,560,105.83 Tel. 0-2242-3287, Fax 0-2273-7641 3 TMB Property Bangkok Real Estate Common Stock 10,000 9,993 99.93 4,169,342.92 Development Co., Ltd. Tel. 0-2299-1172, Fax 0-2242-3871 4 Designee For ETA Bangkok Support Common Stock 1,000 994 9.40 13,617.80 Contract Co., Ltd. Financial Tel. 0-2299-1670, Institution Fax 0-2242-3871 5 TMB Asset Bangkok Finance Common Stock 10,000,000 7,499,997 75.00 188,230,287.36 Management Co., Ltd. Tel. 0-2636-1800 , Fax 0-2636-1823 6 Siam Resort Fund Bangkok Property Unit Trust 110,037,778 61,903,241 56.26 587,487,153.00 Tel. 0-2649-2000, Fund Fax 0-2649-2107-8 7 Thai Orix Leasing Co., Ltd. Bangkok Finance Common Stock 60,000,000 27,578,880 45.96 382,748,243.35 Tel. 0-2231-0589, Fax 0-2231-0661, 02-231-0936 8 Thai Business Fund 2 Bangkok Property Unit Trust 250,000,000 80,000,000 32.00 246,944,000.00 Tel. 0-2670-4900, Fund Fax 0-2679-1820 9 Phayathai Property Fund Bangkok Property Unit Trust 60,000,000 17,999,900 29.99 179,998,073.09 Tel. 0-2636-1800 Fund 10 The Column Property Fund Bangkok Property Unit Trust 212,421,538 63,518,545 29.90 637,562,766.40 Tel. 0-2649-2000, Fund Fax 0-2649-2107-8 11 Witcorp Chemicals Co., Ltd. Bangkok Wholesale/ Preferred 29,570,818 7,736,557 26.16 11,836,073.49 Tel. 0-2440-0809, Retail Stock Fax 0-2440-0827
T M B B a n k P u b l i c C o m p a n y L i m i t e d 311
TMB's ownership Company Head Type of Type of Paid-up Amount Percentage Amount Office Business Capital Capital (Share) (%) (Baht) Location (Share) (Share) (net of allowance for diminution in value) 12 N D Group Feedmill Co., Ltd. Lumphun Wholesale/ Common Stock 120,000 30,000 25.00 0.00 Tel. -, Retail Fax - 13 Wing Group Co., Ltd. Chiang Mai Wholesale/ Common Stock 9,000 2,250 25.00 0.00 Tel. 053-271071, Retail Fax 053-331316 14 Rural Capital Partners Co., Ltd. Bangkok Finance Common Stock 1,000,000 175,000 17.50 257,250.00 Tel. 0-2318-3958, Fax 0-2718-1851 15 Thai Chareonphol Phrae Production Common Stock 15,500 2,500 16.13 0.00 Industry Co., Ltd. Tel. 054-581202, Fax 054-581876 16 Thai Rating and Information Bangkok Services Common Stock 1,000,000 153,000 15.30 14,361,948.00 Service Co., Ltd. Tel. 0-2231-3011, Fax 0-2231-3681 17 Thai Business Fun 5 Bangkok Property Fund Unit Trust 220,000,000 30,000,000 13.64 179,319,000.00 Tel. 0-2670-4900, Fax 0-2679-1820 18 Thai Business Fund 4 Bangkok Property Fund Unit Trust 870,318,647 97,145,065 11.16 546,304,984.99 Tel. 0-2670-4900, Fax 0-2679-1820 19 M-HOME SPV 1 Co., Ltd. Bangkok Real Estate Common Stock 10,000 1,000 10.00 0.00 Tel. 0-2633-6950, Fax 0-2633-6990 20 Wholesale Town Co., Ltd. Bangkok Transportation Common Stock 22,000 2,200 10.00 0.00 Tel. 0-2531-6860, Fax 0-2532-3009 21 NAVA SC Securities Hongkong Finance Common Stock 95,075,925 9,507,592 10.00 0.00 Investment LTD. Tel. 2822-6888, Fax 2845-0971 22 M THAI Estate Co., Ltd. Bangkok Real Estate Common Stock 30,000,000 3,000,000 10.00 0.00 Tel. 0-2261-1144, Fax 0-2261-1143 23 Paiboon Insurance Co., Ltd. Bangkok Services Common Stock 2,000,000 200,000 10.00 30,200,000.00 Tel. 0-2246-9635, Fax 0-2246-9660-1
312 A n n u a l R e p o r t 2 0 0 8 Other referral parties
Share Registrar : Thailand Securities Depository Co., Ltd. The Stock Exchange of Thailand Building 62 Ratchadapisek Road, Klongtoey Bangkok 10110, Thailand Tel. 0-2229-2800
Auditors: Mr. Supot Singhasaneh CPA Registered No. 2826 Or Mr. Winid Silamongko CPA Registered No. 3378 Or Mrs. Wilai Buranakittisopon CPA Registered No. 3920 Or Ms. Somboon Supasiripinyo CPA Registered No. 3731
KPMG Phoomchai Audit Ltd. 50th- 51st Fl., Empire Tower 195 South Sathorn Road, Yannawa Zone Sathorn District, Bangkok 10120
T M B B a n k P u b l i c C o m p a n y L i m i t e d 313 Auditor’s remuneration
• Audit fee The Bank and its subsidiaries paid remuneration to the following parties:-
- The external auditor for the accounting period of 2008 in a total amount of Baht 11,245,000 - Individual or business that is related with the auditor and the audit office of the auditor in the previous accounting year amounting to Baht 1,415,000
• Non-audit fee The Bank and its subsidiary companies paid remuneration for other services, which included the fee for special audit, consulting fee for preparing information for the prospectus and other consulting fees tothe following parties: The audit office for the accounting year ended 2008 amounting to Baht 1,700,000 and payable in the future due to the agreement on incomplete audit services in the previous accounting year totaling Baht 900,000 Individual or business that is related with the auditor or the audit office in the previous accounting year amounting to Baht 4,500,000 and payable in the future due to the agreement on incomplete audit in the previous accounting year totaling Baht 1,500,000.
314 A n n u a l R e p o r t 2 0 0 8 Other factors which may impact the investors’ decision
Legal Dispute Legal disputes in which TMB is defendant As of December 31, 2008, TMB Bank Plc. (TMB) or its subsidiary was involved in one case of legal dispute, which is not yet finalized. This could negatively affect the Bank’s assets in an amount of higher than 5% of its shareholders’ equity as per financial statements, ending December 31, 2008. Details of the case are summarized as follows:
Legal dispute between Luang Bumrung Limited Partnership and TMB On August 7, 2000, Luang Bumrung Limited Partnership (“LBP”) which is a juristic person registered with the Ministry of Commerce, with a registered capital of Baht 5 million, was the plaintiff bringing a lawsuit to the Southern Bangkok Civil Court against DBS Thai Danu Bank Plc. (“DTDB”) (which has now merged with TMB, hence all of the rights and obligations has been transferred to TMB) as the 1st defendant together with 16 directors with regards to the violation of guarantee agreement, and claimed for compensation of about Baht 140.261 billion. The court accepted only the claim against DTDB and dismissed the claim against all the directors.
Pursuant to the claim by LBP, LBP had contacted and entered into agreement with Bangchak Petroleum Plc. (BCP) regarding oil purchase. DTDB, Ladprao Branch, by Mrs. Panee Boonnak (Mrs. Panee), is claimed to have issued a letter of guarantee (L/G) to LBP to guarantee the trading of oil with BCP in an amount of up to Baht 200 million. Later, BCP informed LBP that an account for the trading of oil with LBP could not be opened as, upon examination of the L/G, DTDB was not the issuer of the L/G. DTDB then requested to have the L/G returned to be used in bringing a criminal case against its staff. LBP deems that DTDB’s denial of being the issuer of the L/G is considered as a violation of the agreement with LBP and has caused damage to LBP.
DTDB defended the case that the L/G was fraudulently issued. Mrs. Panee, DTDB’s Assistant Branch Manager, issued the L/G upon LBP’s request, without the due authorization of DTDB. Furthermore, as regards the case which DTDB together with the public prosecutor were plaintiffs bringing a criminal case against Mrs. Panee, the final judgment was passed and the court ruled that the L/G was a forgery. Therefore, in informing BCP that DTDB was not the issuer of the L/G, DTDB could not be deemed as having violated the agreement and did not do any harm to LBP.
On December 29, 2004, the Southern Bangkok Civil Court passed a judgment for the red case no. 10000/ 2547 that the L/G used by LBP in the litigation was the L/G fraudulently issued by Mrs. Panee without the due
T M B B a n k P u b l i c C o m p a n y L i m i t e d 315 authorization of DTDB. Moreover, the final judgment was already passed for the case which DTDB together with the public prosecutor were plaintiffs bringing a criminal case against Mrs. Panee regarding the issue of the L/G. The criminal court ruled that such L/G was a forgery and that DTDB was not the issuer of the L/G to LBP. Therefore, DTDB did not have to be liable for the L/G. The Southern Bangkok Civil Court, in this regard, dismissed the claim.
Later, on March 15, 2005, LBP appealed this judgment to the Appellate Court, and on August 31, 2005, TMB defended the case. The Appellate Court has yet to decide the matter.
In this respect, the Bank’s Management deems that the claim against the Bank has little merit and is unlikely to succeed; therefore, the Bank will not have to be liable for this case.
Legal disputes in which TMB is plaintiff Apart from the above case, TMB is still engaged in another case of legal dispute in which the Bank is plaintiff. In this regard, the Bank deems it suitable to inform the investors of the matter. Details of the case are summarized as follows:
Legal dispute between TMB and Thai Asset Management Corporation (TAMC) On April 2, 2007, TMB brought a lawsuit to the civil court against Thai Asset Management Corporation (TAMC) and Financial Institution Development Fund (FIDF) as the 1st and 2nd defendants respectively with regards to the violation of promissory notes and aval, claiming for compensation of about Baht 7.196 billion.
Pursuant to the case that DTDB and the Industrial Finance Corporation of Thailand (IFCT) entered into asset transfer agreements with TAMC. Later, following the Bank’s merger with DTDB and IFCT, all of the rights and obligations under these asset transfer agreements were transferred to the Bank.
Later, TAMC sent a letter requesting downward adjustment of the NPA transfer price comprising machinery and/ or other assets pledged as guarantee on the basis that machinery and/ or other assets pledged as guarantee were not legally perfected. TMB did not consent to this request and sent a letter contradicting such downward adjustment. On July 20, 2006, TAMC informed TMB to return three promissory notes totaling about Baht 6.525 billion to TAMC, as TAMC would like to adjust the amount and redeem the notes via a partial payment. In this respect, TAMC agreed to issue and deliver new promissory notes with aval provided by FIDF to TMB. Therefore, the Bank returned the promissory notes to TAMC. However, TAMC did not comply with the agreement, i.e. TAMC would not issue and deliver new promissory notes with aval provided by FIDF to TMB.
Moreover, on November 14, 2006, TAMC did not make debt repayment of about Baht 520 million to TMB, refused to make a partial payment and revoked one promissory note with aval provided by FIDF for the partial payment of the transfer price of the NPAs.
316 A n n u a l R e p o r t 2 0 0 8 On April 2, 2007, the Bank therefore initiated legal proceedings against TAMC and FIDF to the Civil Court to seek the following relief from the Court. Details are summarized as follows:
1. TAMC to issue a promissory note of about Baht 4.432 billion avaled by FIDF with a maturity date on December 31, 2012 and with interest to be payable on the last business day of every year to TMB which is entitled to the payment. If TAMC and FIDF fail to do this, they are required to jointly pay such amount plus interest from the date of the court filing.
2. TAMC to issue a promissory note of about Baht 2.027 billion avaled by FIDF with a maturity date on October 31, 2011 and with interest to be payable on the last business day of every year to TMB which is entitled to the payment. If TAMC and FIDF fail to do this, they are required to jointly pay such amount plus interest from the date of the court filing.
3. TAMC to issue a promissory note of about Baht 12 million avaled by FIDF with a maturity date on February 28, 2013 and with interest to be payable on the last business day of every year to TMB which is entitled to the payment. If TAMC and FIDF fail to do this, they are required to jointly pay such amount plus interest from the date of the court filing.
4. TAMC and FIDF to jointly pay about Baht 520 million plus interest calculated from the average deposit interest rate until the date of the court filing amounting to about Baht 15 million, hence a total amount of about Baht 535 million plus interest from the date of the court filing onwards.
The case is now under the consideration of the Civil Court.
In this regard, if TMB loses the cases, its NPA transfer price will be adjusted downward by about Baht 4.341 billion. Therefore, the Bank has already recognized provisions on contingent loss in full amount.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 317 Credit Rating on TMB
Credit rating agency Dec 31, 2008 Dec 31, 2007
TRIS Rating * Baht Long-term - Debt instrument A+ A - Unsecured subordinated debt instrument A A- Outlook Stable Stable
Standard & Poor’s Foreign Currency Long-term - Debt instrument BB+ BB+ - Hybrid tier 1 debt instrument B+ CC Short-term - Deposits / Debt instrument B B BFSR D+ D+ Outlook Stable Negative
Moody’s Investors Service Foreign Currency Long-term - Deposits Baa2 Baa2 - Hybrid tier 1 debt instrument B1 B1 Short-term - Deposits / Debt instrument Prime-2 Prime-2 Outlook Stable Stable BFSR D- D- BFSR outlook Stable Stable
318 A n n u a l R e p o r t 2 0 0 8
Credit rating agency Dec 31, 2007 Dec 31, 2006
Fit Rating*** Foreign Currency Long-term BBB- BB+ Short-term F3 B Subordinated Debenture BB+ BB Hybrid tier 1 debt instrument BB- B BFSR C/D D Supporting Rating Floor BB BB Support Rating 3 3 Outlook Negative Rating watch evolving Domestic Long-term A+(tha) A(tha) Short-term F1(tha) F1(tha) Subordinated Debenture A(tha) A-(tha) Outlook Stable Rating watch evolving
Note: 1. On 16 July 2008, TRIS Rating upgrade the Bank rating to “A+” from “A”, subordinated debentures
to “A” from “A-”. 2. On 2 January 2008, S&P rating on Hybrid Tier 1 Securities was lowered to “D” from “CC” following the Bank’s announcement of non-payment of Hybrid Tier 1 interest for December 2007. However, on 22 January 2008, S&P raised Hybrid Tier 1 securities rating to “B+” from “D”, reflecting expectations that the Bank will pay the coupon on Hybrid Tier 1. On 8 December 2008, S&P revised the outlook on TMB Bank from “Negative” to “Stable”, supported by the bank’s strengthened management team and its improve financial profile. 3. On 23 January 2008, Fitch Rating upgraded ratings on Long-term foreign currency Issuer Default Rating (IDR) to “BBB-” from “BB+” with “Stable” outlook, Short-term foreign currency IDR to “F3” from “B”, and Foreign currency subordinated debt to “BB+” from “BB”, Hybrid Tier 1 to “BB-” from “B”, Individual to “C/D” from “D”, National Long-term rating to “A+(tha)” from “A(tha)” with “Stable” outlook, and National
subordinated debt to “A(tha)” from “A-(tha)”. On 2 December 2008, Fitch Ratings revised the international rating outlooks of TMB from “Stable” to “Negative”. This action followed the revise of the outlook of Thailand’s Long term foreign and local currency Issuer Default Rating (IDRs) from “Stable” to “Negative”.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 319 List of TMB’s Branches in Bangkok TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
1 MINISTRY OF DEFENCE 0-2222-1215, 0-2221-7736 0-2224-7406 2 KRA THUM BAEN 0-3484-8968,8971, 0-3484-8977-9 All numbers 3 KRUNG KASEM 0-2222-5158-9, 7801, 5724 0-2222-5667 4 KLUAY NAM THAI 0-2712-4048-51 All numbers 5 ROYAL THAI ARMY HEADQUARTERS 0-2280-1537, 1799 0-2280-1537 6 ROYAL THAI NAVY HEADQUARTERS 0-2891-0051-5 All numbers 7 ROYAL THAI AIR FORCE HERADQUARTERS 0-2531-8560-2 0-2531-8561 8 SUPREME COMMAND HEADQUARTERS - 0-2575-6425-7 All numbers CHAENGWATTHANA 9 KHLONG CHUN 0-2377-1370, 9737 0-2377-1360 10 KHLONG TOEI 0-2249-1518, 1831 0-2249-1619 11 KHIRLAI 0-2588-1418, 1778 0-2588-1418 12 NGAM WONG WAN 0-2588-0021, 0023 0-2588-3148 13 CHARAN SANIT WONG 0-2424-0087, 5520-1 0-2435-2393 14 CHAENG WATTHANA 0-2574-0203-5, 0097 0-2574-0205 15 CHONG NONSI 0-2285-3939-44 0-2285-3944 16 CHOK CHAI 4 0-2538-3125, 3126 0-2539-2165 17 SOI LANG SUAN 0-2652-2090-4, 0-2652-2096-7, 0-2652-1762, 0-2652-1726 0-2652-2095 18 CENTRAL RATANA THIBET 0-2525-4570-4 All numbers 19 DAO KHANONG 0-2476-6561-2, 3840-1, 0-2476-3631, 0-2468-0429 All numbers 20 TRI PHET 0-2221-1371, 2908 0-2221-8706 21 TALAD NOI 0-2236-1004, 0-2235-3436-7 0-2235-3436 22 TALAD PONG PHET 0-2953-3901-5, 0-2953-3907, 0-2580-9859-60, 0-2589-3228 0-2953-3906 23 TALAD PHLU 0-2465-9949-9955-6, 0-2465-9987 All numbers 24 TALAD SI MUM MUEANG - RANGSIT 0-2536-4173-7 All numbers 25 TALING CHAN 0-2880-8070-3 All numbers 26 TAO POON 0-2585-1123, 0-2587-8990-1 0-2585-1233 27 THANON CHOM THONG 0-2476-5965, 3951, 4203 0-2476-3886 28 THANON CHAN 0-2213-2540-3, 1308-9 0-2213-2541 29 THANON CHEANG WATTANA 0-2584-5549-50, 0-2583-9996-7, 0-2962-1695-8 0-2584-5548 30 THANON TIWANON 0-2950-0251-5, 0-2591-0390 0-2591-0390 31 THANON THEPARAK 0-2383-5618-20, 0-2393-5968 0-2383-5620 32 THANON THEPHARAK KM.12 0-2312-2123-5, 0-2312-2440-1, 0-2312-2621 0-2312-2126 33 THANON THEPHARAK KM.22 0-2706-0992-8 All numbers 34 THANON THEPARAK KM.3 0-2753-2860-6 0-2753-2864 35 THANON BOROMMARAT – CHONNI 0-2434-9791-3, 0-2886-5433-4 All numbers 36 THANON BANGNA - TRAT KM.4 0-2398-8116, 0-2398-8230-1, 0-2744-1214-6, 0-2398-8224 0-2744-1213
320 A n n u a l R e p o r t 2 0 0 8 List of TMB’s Branches in Bangkok TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
37 THANON PRACHA RAT - NONTHABURI 0-2525-3074-5, 0-2967-5501-5, 0-2526-5836 0-2526-3526 38 THANON PRACHAUTHIT 0-2870-9124-8 0-2870-9125 39 THANON RAMA IX 0-2643-0212,0383-4, 0-2643-0398-9 0-2643-0212 40 THANON RAMA IX - THANON SERI 7 0-2718-2743-8 All numbers 41 THANON PHAHON YOTHIN SAPANMAI 0-2972-5583-7 0-2972-5587 42 THANON PHATTHANAKAN 0-2722-6845-9 All numbers 43 THANON PHIBUN SONGKHRAM 0-2526-2020-2 0-2526-2022 44 THANON PHETCHA KASEM - BANG KHAE 0-2413-0922-3, 0-2413-0932, 0-2804-5450-1, 0-2454-2869 0-2804-6001 45 THANON PHETCHA KASEM - NONG KHAEM 0-2431-0308-12, 0-2810-6874-5 0-2431-0313 46 THANON NEW PHETCHA BURI 0-2319-1520-24, 1450 0-2319-1522 47 THANON RATCHADAPHISEK - NANGLINCHI 0-2678-0164-7, 0-2285-3493, 0-2285-3237 0-2678-0168-9 48 THANON RATTANA THIBET 0-2921-8740-4 All numbers 49 THANON RAMA INTRA KM.6 0-2509-3211-7, 0-2944-2373-4 0-2509-3218 50 THANON WAT KING KAEO 0-2312-4703, 0-2750-1920-3, 1875 0-2750-1923 51 THANON SRINAKARIN-TARA 0-2320-0098, 0-2322-0691 0-2320-0099 52 THANON SRINAKARIN TARA - LA SALLE 0-2748-7484-6 0-2748-7483 53 THANON SETTHAKIT 1 - SAMUT SAKHON 0-3481-5609-13 0-3481-5608 54 THANON SONG PRAPHA 0-2929-7100-1,7103-4 0-2929-7100-1 55 THANON SAMAKKHI 0-2574-6291, 0-2980-0401 0-2574-6221 56 THANON SAI LUAT - SAMUTPRAKAN 0-2389-5021-2, 0-2389-5063-4, 0-2389-3746-7, 0-2701-6695 0-2389-3302 57 THANON SUK SAWAT - RATBURANA 0-2428-4507-11, 0-2428-4386, 0-2872-0023-4 0-2428-4387 58 THANON SUKHAPHIBAN 1 0-2509-1062-7, 0-2946-8793-4 0-2509-1068 59 THANON SUKHAPHIBAN 2 0-2704-8156-8 0-2704-8159 60 THANON SUKHAPHIBAN 3 0-2735-2581-4 0-2735-2585 61 THANON SUKHUMWIT KM.28 - SAMUT PRAKAN 0-2702-3418-21, 0-2702-3424-25 0-2702-3426 62 THANON SUKHUMWIT - SAMRONG 0-2394-5858-9, 0-2756-8082, 0-2756-9013-4, 0-2384-4330 0-2384-2856 63 THANON LUANG - WORACHAK 0-2226-4780-7 0-2226-4788 64 THANON EKKACHAI 0-2893-2040-5 All numbers 65 THONGLO 0-2390-0437-40, 0-2712-7625-6 0-2392-3496 66 THA PHRA 0-2869-0910-6 0-2869-0915 67 DON MUANG AIRPORT 0-2504-2684-5, 0-2535-2455-6, 0-2535-2458-9 All numbers 68 SUVARNABHUMI AIRPORT 0-2134-1818-21 0-2134-1878 69 THAMMASAT - RANGSIT 0-2516-9968, 9970-73 0-2516-9973 70 THATTHONG 0-2391-3146, 0-2392-3495 0-2392-3495 71 NAKORN CHAI SRI 0-3422-8338-342 All numbers 72 BANG KAPI 0-2375-7556, 7558, 6347 0-2375-7558
T M B B a n k P u b l i c C o m p a n y L i m i t e d 321 List of TMB’s Branches in Bangkok TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
73 BANG KHUN NON 0-2424-2826, 2829, 2832, 0-2424-5740, 2322 All numbers 74 BANG KHEN 0-2513-2805, 2807 0-2513-3132 75 BANG KHAE 0-2454-8110-8112 0-2454-8110 76 BANG CHAK 0-2332-9290-2 0-2332-9294 77 BANGNA 0-2398-4859-60, 4862-3 0-2398-4864 78 BANG BON 0-2451-0630-4 0-2451-0633 79 BANG BUA 0-2972-9693-9 0-2972-9694 80 BANG BUA THONG 0-2920-2510-4 0-2920-2513 81 BANG PHO 0-2585-6400, 6594 0-2585-6594 82 BANG RAK 0-2237-1844, 2620 0-2266-4115 83 BANG LAMPHU 0-2282-5040, 5021 0-2282-5395 84 BO BAE 0-2225-2823, 4255 0-2222-3631 85 PATHUM THANI 0-2581-1740-2, 2156 0-2581-2155 86 PRACHA NIWET 1 0-2953-8160-2, 8164 0-2953-8163 87 PRA TU NAM PHRA IN 0-3521-9784-8 0-3521-9789 88 POM PHRACHULA CHOMKLAO 0-2425-8499, 8204-5 0-2425-8499 89 PAK KRET 0-2583-7153, 8220 0-2583-4435 90 PAK KHLONG TALAD 0-2222-5828, 5826 0-2222-5809 91 POO CHAO SAMING PRAI 0-2394-6317, 4412 0-2384-1673 92 PHAYA THAI 0-2246-0020 0-2245-8898 93 PHRA KHANONG 0-2381-1117-8 0-2381-1117 94 PHRA PRADAENG 0-2463-3872-4, 3725 0-2463-3909 95 PHRAPINKLAO 0-2433-3370-2, 0-2433-5406, 0-2883-2884-6, 0-2433-7051 0-2433-5407 96 PHRAN NOK 0-2412-2764, 3040 0-2412-3527 97 PATPONG 0-2236-9395-9 0-2236-0112 98 PHUTTHAMONTHON 0-2441-9392, 0120 0-2441-9392 99 PENINSULA PLAZA 0-2253-0067-8, 0-2253-9756-7, 0-2253-4837 0-2253-9755 100 MAHAPRUTHARAM 0-2238-5029-31, 0-2233-7035 0-2233-6999 101 KASETSART UNIVERSITY 0-2561-4289,4290 0-2561-4289 102 THAMMASAT - THAPHRACHAN 0-2225-8186-8 All numbers 103 PHRANAKHON RAJABHAT UNIVERSITY 0-2522-6187-9 All numbers 104 RAMKAMHAENG - HUAMAK 0-2369-1820-2 All numbers 105 MAH BOONKRONG CENTER 0-2217-9233-34, 0-2215-2136-7 0-2215-2136 106 MINBURI 0-2517-1221-2 0-2517-3779 107 MUANG MAI BANG PHLI 0-2312-8268-70, 0-2740-0208-9 0-2312-8270 108 YANNAWA 0-2289-2612, 0-2289-4337, 0-2291-3464, 0-2688-1510 0-2291-3465
322 A n n u a l R e p o r t 2 0 0 8 List of TMB’s Branches in Bangkok TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
109 YAWARAJ 0-2225-9453, 7290 0-2225-8254 110 PHRAMONGKUTKLAO HOSPITAL 0-2354-7878, 0-2354-7880-4 0-2354-7877 111 SOMDEJ PHRAPINKLAO HOSPITAL 0-2468-9844, 0-2460-0269-70 0-2476-3061 112 RANG SIT 0-2959-2090-3 All numbers 113 RANGSIT - KHLONG 3 0-2990-9130-5 All numbers 114 RANG SIT - PATHUM THANI 0-2516-8892-4, 0-2516-8686, 0-2958-1007-9, 0-2516-2908 0-2516-8551 115 RATCHADAPHISEK - HUAI KHWANG 0-2692-3105-8 0-2692-3109 116 RAJDAMNERN 0-2222-3131-40 0-2224-3216 117 RAJPRASONG 0-2252-6689-91, 0-2253-3132-3 0-2252-6967 118 RAJAWONGSE 0-2221-0599, 0-2225-3721, 0-2226-3324-5, 0-2222-0478 0-2226-3323 119 RAMKHAMHAENG 0-2377-2892-3, 0-2375-7932, 0-2732-9137, 0-2732-0962 0-2375-7931 120 RARM INTRA KM.4 0-2973-0741-4 0-2973-0741 121 RARM INTRA KM.8 0-2519-3579-80 0-2519-3581 122 BANGKOK HOSPITAL SOI SOONVIJAI 0-2369-2657-9 0-2369-2659 123 BANGKOK HOSPITAL DENTAL 0-2319-0674-9 0-2319-0680 CENTER BUILDING 124 ST.LOUIS HOSPITAL 0-2212-6300-2, 0-2675-7904-9 0-2212-6303 125 BHUMIBOL ADULYADEJ HOSPITAL 0-2532-2854-7, 0-2531-6278 0-2531-6278 126 LAT KRABANG 0-2739-1820-5 All numbers 127 LAT PHRAO 103 0-2370-3165-70 All numbers 128 LAT PHRAO 124 0-2514-0802, 0-2539-7220 0-2514-0562 129 LAT PHRAO 42 0-2938-3260-3 All numbers 130 LAT PHRAO 6 0-2511-1819, 0-2511-3982-3, 0-2513-0779, 0-2513-4052 0-2513-8112 131 LATPRAO SOI 136 0-2378-1300, 0-2374-4616-7, 0-2378-0792, 0-2374-5496 0-2374-5001 132 LAT YA 0-2437-1078, 1147 0-2439-1064 133 LANDMARK PLAZA 0-2255-8430-4 All numbers 134 WONG WIEN YAI 0-2472-1432, 0-2890-0361-2 All numbers 135 WANG BURAPA 0-2221-5121-5, 0-2222-6583, 0-2623-8830-4, 0-2223-9870-1 0-2221-5125 136 SRIYAN 0-2241-3865-6, 0-2243-1446-7 0-2243-0664 137 SIRIRAJ 0-2411-3548, 3552 0-2411-3552 138 POO CHAO SAMING PRAI 0-2384-6333-34, 5282 0-2384-4697 SHOPPING CENTER 139 METRO SHOPPING CENTER 0-2252-9014,9009-10, 0-2254-1288-9 All numbers 140 WARARAT SHOPPING CENTER 0-2287-0961-2, 3683-5 0-2287-0961 141 CHATUCHAK PARK STATION 0-2624-4600 All numbers 142 SANAM PAO 0-2270-0252, 0-2278-5240-1 0-2270-0252
T M B B a n k P u b l i c C o m p a n y L i m i t e d 323 List of TMB’s Branches in Bangkok TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
143 SANAM SUAPA 0-2281-6181, 0-2282-3269 0-2282-6099 144 SAMUT PRAKAN 0-2389-5917-8, 5895-7 0-2389-5896 145 SIAM SQUARE 0-2252-6049, 0-2251-3797, 0-2251-7672, 0-2251-5714-5 0-2252-5856 146 SUAN CHATUCHAK 0-2272-4415-6, 4233-35 0-2271-4499 147 KRUNG THON BRIDGE 0-2424-2577, 0-2434-3536 0-2424-5939 148 SAPHAN KHWAI 0-2278-2090-2, 0-2278-2122, 0-2279-2268, 0-2618-4755-6 0-2279-0413 149 SAPHAN NONTHABURI 0-2976-5500-5 All numbers 150 SAPHAN LUANG 0-2216-9650-2, 2526-7 0-2216-2527 151 SAPANMAI DONMUEANG 0-2521-3007-8, 2559 0-2521-5377 152 SATHU PRADIT 0-2295-4217-8, 0-2294-5510 0-2294-4021 153 SAM PHRAN 0-3431-1282-3 0-3432-4915 154 SAM YAK FAI CHAY 0-2866-6956-60 All numbers 155 SAINAMTIP SUKHUMVIT 0-2258-0047-8, 0-2260-2834-7, 0-2663-4226-8 0-2259-3035 156 HEAD OFFICE (PHAHONYOTHIN OFFICE) 0-2299-1111, 0-2273-7020 0-2273-7121 157 SAMRONG 0-2384-0352, 4661 0-2384-4653 158 SIYAK SOI ON NUJ - THANON SRINAKARIND 0-2321-6924-6, 0-2322-6091-2, 0-2720-5161-3 0-2322-6093 159 SIYAK THANON BANG KHUNTHIAN - 0-2415-0151-3, 0-2416-5304-6, 0-2415-0155, 0-2416-0041 0-2415-0154 THANONRAMA 2 160 SILOM 0-2236-9500, 4452-3, 0-2236-4410, 4432 0-2236-4410 161 SILOM SOI 7 0-2230-5000 0-2230-5194 162 SUKHUMWIT 11 0-2253-0334, 0-2651-0243, 0-2254-1330-2 0-2651-0242 163 SUKHUMVIT 71 0-2711-3080-1, 0-2711-3083, 0-2391-6514, 0-2391-0708 0-2392-0312 164 SURAWONG 0-2266-5230-3, 0-2235-9015, 8999 0-2236-3651 165 SENANIKOM 0-2570-0874, 1386-7 0-2570-1710 166 NONG CHOK 0-2543-1308, 1344 0-2543-1346 167 LAK SONG 0-2801-4291-5 0-2801-4291 168 HUAI KHWANG 0-2274-3200-5, 0-2690-2606 0-2274-3206 169 HUA MAK 0-2718-8057-8 0-2718-8058 170 ASOK 0-2259-3312-4, 0-2261-6653-5 0-2261-6654 171 ON NUT 0-2333-0395-9 0-2333-0399 172 AOM YAI 0-2810-3325-9 All numbers 173 INDRA - PRATUNAM 0-2208-0981-2 0-2208-0981 174 INTHRARAK 0-2374-0290-5 0-2374-0293 175 UDOM SUK 0-2383-9223-7 0-2383-9227 176 EKKAMAI 0-2381-7088-90, 0-2711-4548 0-2381-7092
324 A n n u a l R e p o r t 2 0 0 8 Sub-branches
TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
1 PROVINCIAL ELECTRICITY AUTHORITY 0-2591-1424-6 All numbers SUB-BRANCH 2 KHLONG TAN SUB-BRANCH 0-2717-9411-5 All numbers 3 J.J.MALL CHATUCHAK SUB-BRANCH 0-2265-9556-8 0-2265-9558 4 CENTRAL BANGNA SUB-BRANCH 0-2745-7263-5 All numbers 5 CENTRAL PINKLAO SUB-BRANCH 0-2433-1386-7, 1390 All numbers 6 CENTRAL RAMA II SUB-BRANCH 0-2872-4564-5 0-2872-4566 7 CENTRAL RAMA III SUB-BRANCH 0-2213-0203-5 All numbers 8 CENTRAL PLAZA LADPRAO SUB-BRANCH 0-2937-0356-8 0-2937-0358 9 CENTRAL WORLD PLAZA SUB-BRANCH 0-2646-1284-6 0-2646-1286 10 ZEER RANGSIT SUB-BRANCH 0-2992-6370-2 0-2992-6372 11 THE PLATINUM FASHION MALL SUB-BRANCH 0-2121-9241-3 All numbers 12 THE MALL BANGKAPI SUB-BRANCH 0-2704-7727-7 0-2704-7729 13 THE MALL BANGKAE SUB-BRANCH 0-2454-9433.4 0-2803-8325 14 THANON CHAROENNAKORN SUB-BRANCH 0-2862-4910-4 0-2862-4914 15 TOPS ROBINSON SILOM SUB-BRANCH 0-2652-5165-7 0-2652-5167 16 TESCO LOTUS NAVANAKORN SUB-BRANCH 0-2909-0829-31 0-2909-0831 17 BANG KHRU SUB-BRANCH 0-2819-2165-9 All numbers 18 BANG SUE SUB-BRANCH 0-2911-3142-6 All numbers 19 BANG PHLAD SUB-BRANCH 0-2424-5221, 6499, 0-2423-0230 All numbers 20 BIG C - THANONRAMA 2 SUB-BRANCH 0-2416-7806, 7881 All numbers 21 FUTURE PARK RANGSIT SUB-BRANCH 0-2958-0930-2 0-2958-0932 22 FASHION ISLAND SUB-BRANCH 0-2992-6370-2 0-2992-6372 23 BANGKOK UNIVERSITY - RANGSIT 0-2516-8492-4 All numbers CAMPUS SUB-BRANCH 24 CHANDRAKASEM RAJABHAT UNIVERSITY 0-2513-1700, 0-2513-7264-5 All numbers SUB-BRANCH 25 DHONBURI RAJABHAT UNIVERSITY 0-2465-5690, 5744 All numbers SUB-BRANCH 26 RAMKHAMHAENG UNIVERSITY – 0-2397-7047-9 All numbers BANGNA CAMPUS SUB-BRANCH 27 SRINAKHARINWIROT UNIVERSITY - 0-2260-5734-6 All numbers PRASANMIT SUB-BRANCH 28 SRIPATUM UNIVERSITY SUB-BRANCH 0-2579-2268, 6094, 8473 All numbers 29 SIAM UNIVERSITY SUB-BRANCH 0-2868-5338, 5375, 5932 All numbers 30 MUANG THONG THANI SUB-BRANCH 0-2504-5141-3 All numbers 31 SUVARNABHUMI FREE ZONE SUB-BRANCH 0-2134-1851-3 0-2134-1874 32 SUVARNABHUMI AIRPORT FL.2 ARRIVAL 0-2134-1804-6 0-2134-1876 SUB-BRANCH 33 SUVARNABHUMI AIRPORT FL.4 0-2134-1827-8 0-2134-1877 DEPARTURE SUB-BRANCH 34 SUVARNABHUMI THAI AIRWAY 0-2134-1848-50 0-2134-1873 TECHNICAL SUB-BRANCH 35 SUVARNABHUMI AOB SUB-BRANCH 0-2134-1845-7 0-2134-1875 36 COLUMN TOWER RATCHADAPISEK 0-2259-7712-4 0-2259-7714 SUB-BRANCH 37 INDRA SQUARE SUB-BRANCH 0-2631-9457-9 0-2631-9459
T M B B a n k P u b l i c C o m p a n y L i m i t e d 325 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
KRABI 1 KRABI 0-7561-2718-20 0-7561-2719 2 PLAI PHRAYA 0-7568-7018-9 0-7568-7019 3 LUM THAP 0-7564-3595-7 0-7564-3599 4 KO LANTA SUB-BRANCH 0-7568-4224, 4337, 4344 0-7568-4350 5 AUO NANG KRABI SUB-BRANCH 0-7563-7657, 7624, 7596 0-7563-7685 KANCHANABURI 6 KANCHANABURI 0-3451-1677, 2441 0-3451-2442 7 THA RUA 0-3456-1822, 2046, 1745 0-3456-1745 8 KANOKPHET KANCHANABURI 0-3462-3736-8 0-3462-3738 SUB-BRANCH KALASIN 9 KALASIN 0-4381-2133-5 0-4381-2134 KAMPHAENG PHET 10 KAMPHAENG PHET 0-5571-3801-3 0-5571-3803 11 SALOKBAT SUB-BRANCH 0-5572-6258-60 All numbers KHON KAEN 12 KHON KAEN 0-4324-1497-9, 1618 0-4324-2053 13 CHUM PHAE 0-4331-1170, 1270 0-4331-2470 14 THANON MITTRAPHAP KHON KAEN 0-4332-4861-6 0-4332-4867 15 THANON SRICHAN - KHONKAEN 0-4324-6490-2 0-4324-6492 16 BAN PHAI 0-4327-2750, 2790, 2733 0-4327-2790 17 MUANG PHON 0-4341-4060-1 0-4341-4762 18 FAIRYPLAZA KHONKAEN SUB-BRANCH 0-4332-1217, 1237, 1257 All numbers CHANTHABURI 19 CHANTHABURI 0-3931-1799, 1777, 0-3932-1215 0-3931-1777 20 THANON BENJAMARACHUTIT - 0-3932-2150, 0-3932-2051, 0-3932-2152-3, 0-3935-1154-7 0-3932-2053 CHANTHABURI 21 NONG KHLA 0-3939-5471-3 0-3939-5474 CHACHOENGSAO 22 THANON MAHAJAKKAPAD - 0-3851-1912, 0-3851-2390, 0-3881-2652-5, 0-3851-4322 0-3851-2549 CHACHOENGSAO 23 THANON SUKPRAYUN - 0-3882-3795-7 0-3882-3796 CHACHOENGSAO 24 BANGKHLA 0-3854-1123, 0-3854-1208, 0-3854-1690, 0-3882-7231-3 0-3854-1689 25 BANG WUA 0-3853-8255, 8277, 9003 0-3853-8255 26 PLANG YAO 0-3858-9132-3 0-3858-9133 27 PHANOM SARAKHAM 0-3883-6516-9 All numbers 28 GATEWAY CITY INDUSTRIAL ESTATE 0-3857-5662-4 0-3857-5664 SUB-BRANCH
326 A n n u a l R e p o r t 2 0 0 8 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
CHON BURI 29 JOMTIEN 0-3823-2079, 2973, 2086 0-3823-2080 30 CHON BURI 0-3827-2984-5, 4088-9 0-3827-4089 31 BANG PLASOI - CHON BURI 0-3827-3579-81, 0-3827-6579 0-3827-3578 0-3827-8717-8, 0-3827-6564 32 BANG LAMUNG 0-3872-7046-7, 7060 0-3872-7046 33 BAN SUAN - CHON BURI 0-3879-9301-4, 0-3879-9405-6 0-3879-9301 34 PHANAT NIKHOM 0-3847-3168-9 0-3847-3169 35 PATTAYA 0-3842-2966, 0816, 1005 0-3842-9501 36 PATTAYA KLANG 0-3841-1935-7 All numbers 37 THANON THAP PHRAYA PATTAYA 0-3830-3778-80, 3877 38 THANON SUKHUMVIT - CHONBUR 0-3826-0960-3 All numbers 39 ROYAL GARDEN 0-3842-5011-2, 0-3841-1751, 0-3871-0401-3 0-3841-1752 40 SI RACHA 0-3831-3239-40, 1824 0-3831-3240 41 SATTAHIP 0-3843-7339, 7123, 7678 0-3843-7678 42 NONG MON 0-3839-2065-7 0-3839-2065 43 HUAGUNJAE - BAN BUENG 0-3820-1026, 1211-2 0-3820-1212 44 AOU - UDOM 0-3835-1642-3, 1744 0-3835-1643 45 SOI BUA KHAO PATTAYA SUB-BRANCH 0-3872-0092, 0099 0-3872-0083 46 SUN SHINE PATTAYA SUB-BRANCH 0-3837-1440-2 0-3837-1442 47 NIKHOM AMATA NAKORN CHONBURI 0-3871-7588-9 All numbers SUB-BRANCH 48 PAKRUAM BORWIN SUB-BRANCH 0-3833-7949-50 0-3833-7951 49 KASETSART UNIVERSITY SRIRACHA 0-3876-8970-1 0-3876-8972 SUB-BRANCH 50 SAHAPATTANA SRIRACHA 0-3833-7949-51 0-3833-7951 INDUSTRIAL PARK SUB-BRANCH 51 HOMEWORKS PATTAYA SUB-BRANCH 0-3837-4943, 4945 0-3837-4948 CHAI NAT 52 CHAI NAT 0-5641-1118, 1564, 2382 0-5641-1118 CHAIYAPHUM 53 CHAIYAPHUM 0-4481-1659, 1666, 0-4482-2123 0-4481-1659 CHUMPHON 54 CHUMPHON 0-7750-2544-5, 4960 0-7750-2544 55 THUNG TAKO 0-7753-6122, 0-7758-5209 0-7753-6007 56 LANG SUAN 0-7754-1233, 1244, 1894 0-7754-1333 CHIANG RAI 57 CHIANG RAI 0-5371-1100-1, 7515-6 0-5371-3590 58 DOI MAE SALONG 0-5376-5159-60 0-5376-5160 59 THANON PHAHON YOTHIN - 0-5371-4886-7 0-5371-4890 CHIANG RAI T M B B a n k P u b l i c C o m p a n y L i m i t e d 327 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
60 THOENG 0-5379-5001-3, 0-5379-5040 0-5379-5002 61 MAESAI 0-5373-3145-6 0-5373-3146 62 HUAI KHRAI 0-5376-3001-2 0-5376-3001 CHIANGMAI 63 CHIANG MAI 0-5325-1058-62 0-5323-3159 64 CENTRAL PLAZA CHIANG MAI AIRPORT 0-5320-1843-5 65 TALAD VAROROT - CHIANGMAI 0-5323-3117-8, 0-5325-2877 0-5325-2882 66 TALAD NONG HOI - CHIANGMAI 0-5314-0123-8 0-5380-1456 67 THANON CHANGKHLAN CHIANGMAI 0-5390-3630-3 0-5390-3535 68 THANON CHANGPUEK CHIANGMAI 0-5321-1061-2, 0-5322-2975, 0-5322-2966, 0-5321-8901-2 0-5322-1545 69 HUAIKAEO ROAD - CHIANGMAI 0-5340-4042-3 0-5340-4044 70 FANG 0-5345-3506-7, 1154 0-5345-1002 71 SANPAKHOY - CHIANG MAI 0-5324-9858-9, 9595 0-5324-9861 72 SI YAK KUANG SING - CHIANGMAI 0-5341-0980-2 0-5341-0983 73 HOT 0-5346-1055-6 0-5346-1056 74 THANON MOONMUANG CHIANGMAI 0-5320-8956-7 0-5320-8956 SUB-BRANCH 75 THANON SUTHEP CHIANGMAI 0-5381-1674-5, 1164 All numbers SUB-BRANCH 76 HANGDONG SUB-BRANCH 0-5343-1591, 1593, 1546 All numbers TRANG 77 KHLONG PANG 0-7528-6055, 6066 0-7528-6055 78 TRANG 0-7521-4025-6, 0811 0-7521-8344 79 HUAI YOT 0-7527-1147-8, 1425 0-7527-1148 TRAT 80 TRAT 0-3952-0637-8, 0363 0-3952-0637 81 BO RAI 0-3959-1041-2 0-3959-1041 82 KO CHANG SUB-BRANCH 0-3955-1040-1 All numbers TAK 83 TAK 0-5551-2093-4 0-5551-2890 84 MAE SOT 0-5553-3038-40 0-5553-3383 NAKHON NAYOK 85 NAKHON NAYOK 0-3731-2350, 2352, 2346 0-3731-2588 NAKHON PATHOM 86 KAMPHAENG SAEN 0-3435-1020-1 0-3435-1022 87 NAKHON PATHOM 0-3421-9737-41 0-3421-9742 88 PHRA PATHOMCHEDI 0-3425-0750-1 0-3425-0751 89 PHRAPRATONE - NAKHON PATHOM 0-3421-2006, 2010, 2014 All numbers 90 SILPAKORN UNIVERSITY - 0-3425-0822-5, 0-3421-9177-9 0-3425-0826 SANAM CHANDRA PALACE 91 SAMPRAN NAKORNPATHOM 0-3432-2885-7, 0-3422-5155, 0-3422-5498-9, 0-3432-2564-5 0-3432-1990 328 A n n u a l R e p o r t 2 0 0 8 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
NAKHON PHANOM 92 THART PHANOM 0-4254-1008-9 0-4254-1009 93 NAKHON PHANOM 0-4251-1023, 1322, 2614 0-4251-2614 NAKHONRATCHASIMA 94 SURANAREE CAMP - 0-4434-1872-5 0-4434-1875 NAKHONRATCHASIMA 95 DAN KHUN THOT 0-4438-9101-2, 9279 0-4438-9279 96 THANON PRAJAK - 0-4425-2665, 0-4426-7471 0-4425-6202 YAK SANLAKMUEANG 0-4425-5191, 0-4425-5567-8 97 THANON PHIBUNLA - IAT - 0-4427-5200-2 0-4427-5203 NAKHON RATCHASIMA 98 NAKHON RATCHASIMA 0-4425-7680-1,5552 0-4424-5916 99 PRATHAI 0-4447-9128, 9511 0-4447-9511 100 PAK THONG CHAI 0-4444-1019, 1100, 1641 0-4444-1100 101 PAK CHONG 0-4431-2734, 4690 All numbers 102 PHIMAI 0-4447-1334-5 0-4447-1335 103 MUANG KHONG 0-4445-9234-5 0-4445-9235 104 SUNG NOEN 0-4441-9241, 9865, 9588 0-4441-9588 105 THE MALL NAKHON RATCHASIMA 0-4439-3750-1 0-4439-3752 SUB-BRANCH 106 HUA THALAE NAKHON RATCHASIMA 0-4426-4964-5 0-4426-4980 SUB-BRANCH NAKHON SI THAMMARAT 107 CHANDI 0-7548-6184-5, 6304-5 0-7548-6184 108 TALAD HUA IT - 0-7531-6164-8 0-7531-6168 NAKHON SI THAMMARAT 109 THUNG SONG 0-7521-4025-6, 0811 0-7541-2447 110 NAKHON SI THAMMARAT 0-7534-2893, 6050, 0-7535-6801 0-7535-6979 111 NAKHON SI THAMMARAT RAJABHAT 0-7539-2116-8 All numbers UNIVERSITY SUB-BRหANCH NAKHONSAWAN 112 CHUMSAENG 0-5628-2498-9, 2699 0-5628-2499 113 TAKHLI 0-5626-1537-8, 2155 0-5626-2155 114 NAKHON SAWAN 0-5622-7006-7 0-5622-7414 115 WING 4 TAKHLI SUB-BRANCH 0-5631-5737-9 116 THANON ASIA NAKHONSAWAN 0-5622-8223-5 0-5622-8224 117 PHAYUHA KHIRI 0-5634-1497-8 0-5634-1497 NARATHIWAT 118 TAK BAI 0-7364-2327, 2329 0-7364-2328 119 NARATHIWAT 0-7351-2273-5 0-7351-2274 120 SUNGAI KOLOK 0-7361-1555-6, 1587 0-7361-1587 T M B B a n k P u b l i c C o m p a n y L i m i t e d 329 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
NAN 121 NAN 0-5471-0455,0477, 0-5477-1971 0-5477-2818 122 BAN LUANG 0-5476-1076, 1003 All numbers 123 THA WANG PHA SUB-BRANCH 0-5479-9679, 9634 0-5479-9138 BURI RAM 124 NANG RONG 0-4463-1456-7 0-4463-1457 125 BURI RAM 0-4461-3441-3 0-4461-3443 126 NONG KI 0-4464-1111-2 0-4464-1112 PRACHUAP KHIRI KHAN 127 PRACHUAP KHIRI KHAN 0-3260-1547-8, 0-3261-1919 0-3261-1918 128 PRAN BURI 0-3262-1989-90, 1829 0-3262-1991 129 HUA HIN - PRACHUAP KHIRI KHAN 0-3251-2205, 0-3251-2425 0-3251-2347 0-3251-2500, 0-3253-2151-2 130 HUA HIN MARKET VILLAGE 0-3252-6314-6 0-3252-6316 SUB-BRANCH PRACHINBURI 131 PRACHANTAKHAM 0-3729-1251-2, 1509 0-3729-1251 132 PRACHINBURI 0-3721-1355-6, 1655 0-3721-1355 PATTANI 133 PATTANI 0-7333-2677-9 0-7333-1038 AYUTTHAYA 134 BANG BAN 0-3539-9508-10 0-3539-9510 135 WANG NOI 0-3521-5649-53 All numbers 136 AYUTTHAYA 0-3524-1417-8, 2417 0-3524-2417 137 UTHAI - AYUTTHAYA 0-3533-5417-8, 5043 0-3533-5418 PHAYAO 138 PHAYAO 0-5448-1720-21, 2329-30 0-5448-2330 139 NARESUAN UNIVERSITY 0-5446-6768-9 0-5446-6770 SUB-BRANCH PHANGNGA 140 PHANGNGA 0-7641-1627, 1555 0-7641-1626 141 KHAO LHUK PHANGNGA SUB-BRANCH 0-7644-3445-8 0-7644-3448 PHATTHALUNG 142 PHATTHALUNG 0-7461-3305, 3313, 1965 0-7461-1965 PHICHIT 143 KHAO SAI 0-5664-9111, 9060 0-5664-9060 144 TAPHAN HIN 0-5662-1325, 1194, 1477 0-5662-1477 145 PHICHIT 0-5661-2219, 2216, 0-5665-1330-1 0-5661-2216 146 SAK LEK 0-5669-9266-7, 9367 0-5669-9367 147 SAM NGAM 0-5669-1210-1 0-5669-1210
330 A n n u a l R e p o r t 2 0 0 8 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
PHITSANULOK 148 KHOK MATUM - PHITSANULOK 0-5521-2432-6 0-5521-2436 149 SAPPHRAIWAN 0-5524-5001-3 0-5524-5001 150 PHITSANULOK 0-5524-5770-2, 5543-4 0-5524-1911 151 PHITSANULOK 2 0-5524-5770-2, 0-5524-5543 0-5524-5543 PHETCHABURI 152 PHETCHABURI 0-3242-6005, 6115, 7300 0-3242-7165 153 PHETCHABURI RAJABHAT 0-3249-3000-2 All numbers UNIVERSITY SUB-BRANCH PHETCHABUN 154 PHETCHABUN 0-5671-1386, 0-5672-1250, 2765 0-5672-1290 155 LOM SAK 0-5670-1044, 1579, 1708 0-5670-1708 PHRAE 156 PHRAE 0-5451-1659, 1655, 1646 0-5451-1646 157 SUNG MEN 0-5454-1360,1231 0-5454-1360 PHUKET 158 MONTRI ROAD - PHUKET 0-7622-5177-8, 5486 0-7623-0104 159 THALANG 0-7631-1366-7, 1484 0-7631-1501 160 PHUKET 0-7621-2123, 2987, 3488 0-7621-3487 161 BANGKOK PHUKET HOSPITAL 0.7621-0059, 0065, 0140 All numbers 162 VAJIRA HOSPITAL - PHUKET 0-7623-7237-40 0-7623-7241 163 PATONG BEACH 0-7634-0545-7 0-7634-0547 164 HA YAEK CHALONG PHUKET 0-7638-1749-51, 0-7638-1736 165 CENTRAL FESTIVAL PHUKET 0-7624-8509-11 SUB-BRANCH 166 PHUKET AIRPORT SUB-BRANCH 0-7632-8383-5 All numbers MAHA SARAKHAM 167 MAHA SARAKHAM 0-4372-2111-3 0-4372-2113 168 MAHA SARAKHAM UNIVERSITY 0-4375-4141-3 All numbers SUB-BRANCH MUKDAHAN 169 MUKDAHAN 0-4261-1520, 1855, 1892 0-4261-1892 MAE HONG SON 170 MAE HONG SON 0-5362-0120-4 0-5362-0125 YASOTHORN 171 YASOTHON 0-4571-2301-3 0-4571-2303 YALA 172 YALA 0-7321-4029, 4384, 4231 0-7321-4384 ROI ET 173 ROI ET 0-4351-1369, 1612, 2449 0-4351-2449
T M B B a n k P u b l i c C o m p a n y L i m i t e d 331 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
RANONG 174 KRA BURI 0-7789-1027-8 0-7789-1028 175 RANONG 0-7782-3028-30 0-7782-3030 RAYONG 176 KLAENG 0-3888-4595-7 0-3888-4597 177 NOEN KHAO DIN 0-3866-9498-500 0-3866-9499 178 BAN KHAI 0-3864-1001-3 0-3864-1001 179 BAN CHANG 0-3860-1027, 1357, 1727 0-3860-1727 180 RAYONG 2 0-3861-7311-4, 0-3861-7470-4 0-3861-7475 RATCHABURI 181 DAMNOEN SADUAK 0-3225-3701, 3348-9 0-3225-3349 182 THANON KHATHATHORN 0-3231-5645-50, 0-3231-5651 0-3231-5817 RATCHABURI 183 BAN PONG 0-3220-0382-3, 0-3234-4767-8 0-3220-0383 184 PHOTHARAM 0-3223-1062, 1637 All numbers 185 RATCHABURI 0-3232-1808 0-3232-2047 LOP BURI 186 LOP BURI 0-3641-1596, 1945 0-3641-2093 187 WONG WIEN SRA KAEW - 0-3642-2670,2915, 0-3641-3369, 2729 0-3642-2915 LOP BURI LAMPANG 188 NGAO 0-5426-1193-4, 1007 0-5426-1007 189 THANON CHATCHAI - LAMPANG 0-5422-4816, 0-5422-8143, 0-5435-2048-53, 0-5422-5072 0-5422-5073 190 LAMPANG 0-5422-6522-3, 4154-5 0-5422-4153 191 HANG CHAT 0-5426-9206-8 0-5426-9206 LAMPHUN 192 LAMPHUN 0-5356-1460-1, 0-5351-0460 0-5351-0460 193 LAMPHUN INDUSTRIAL ESTATE 0-5355-4821, 4385, 0-5353-9618 0-5353-9618 SUB-BRANCH LOEI 194 LOEI 0-4281-2122, 2133 0-4281-2133 195 LOEI RAJABHAT UNIVERSITY 0-4283-5754-5 0-4283-5756 SUB-BRANCH SI SA KET 196 SI SA KET 0-4561-2518-20 0-4561-3279 SAKON NAKHON 197 SAKON NAKHON 0-4271-1393, 1993, 2152 0-4271-3403 SONGKHLA 198 KHUAN NIANG 0-7438-7155-7 0-7438-7157 199 DAN NOK 0-7443-4271-5 All numbers 200 TALADSANTISUK 0-7423-0575-6 0-7423-0575 332 A n n u a l R e p o r t 2 0 0 8 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
201 THANON JUTI ANUSORN HATYAI 0-7424-4187, 0-7424-4324 0-7423-7858 0-7423-0883-4, 0-7435-5774-7 0-7435-5778 202 THANON PHET KASEM - HATYAI 0-7423-6403-4, 9830 0-7423-6405 203 THANON RATHAKHAN - HAT YAI 0-7423-7575-6, 8801-2 0-7423-8800 204 RANOT 0-7439-1030-1, 2555 0-7439-1031 205 SONGKHLA 0-7431-1333, 2001, 4803 0-7431-4803 206 HAT YAI 0-7423-5301, 1141-3 0-7423-5300 SATUN 207 SATUN 0-7472-1219-22 0-7472-1221 SAMUT SONGKHRAM 208 SAMUT SONGKHRAM 0-3471-5454-5 0-3471-5456 SAMUT SAKHON 209 SAMUT SAKHON 0-3441-2333, 0-3442-2245, 5992 0-3442-5993 210 OM NOI 0-2420-2347-9, 0-2431-0975-6 All numbers SA KAEO 211 SA KAEO 0-3724-2688-91 0-3724-2692 212 ARANYAPRATHET 0-3723-1280, 1290 0-3723-2601 SARABURI 213 THANON PHAHON YOTHIN SARABURI 0-3631-8270-3, 0-3621-2023-4 0-3631-8270 214 PHRAPHUTTHABAT 0-3626-6744-5 0-3626-6745 215 MUAK LEK 0-3634-1017, 1024, 1990 0-3634-1024 216 WANG MUANG 0-3635-9211-3 0-3635-9213 217 WIHAN DAENG 0-3637-7725, 7258-9 0-3637-7725 218 SARABURI 0-3622-2430-2431, 0-3622-1229 0-3622-1229 219 NONG KHAE SUB-BRANCH 0-3637-1020-2 0-3637-0095 SING BURI 220 SING BURI 0-3651-1326, 2276 0-3651-2276 SUKHOTHAI 221 BAN DAN LAN HOI 0-5568-9070, 9110 0-5568-9070 222 SAWANKHALOK 0-5564-2317-8, 1124 0-5564-1124 223 SUKHOTHAI 0-5561-1147, 1590, 1995 0-5561-1995 SUPHAN BURI 224 SUPHAN BURI 0-3552-2356, 2358, 2360 0-3552-2360 225 U THONG 0-3555-2009, 2020, 2007 0-3555-2007 SURAT THANI 226 KO SAMUI 0-7742-0360-62, 1143 0-7742-1143 227 THANON SURAT THANI - PHUNPHIN 0-7728-3459-61 0-7728-3460 228 NA SAN 0-7734-1037-8, 1538 0-7734-1538 229 THONGSALA KO PHANGAN 0-7723-8920-2 All numbers 230 SURAT THANI 0-7727-2753-4, 0-7728-1009 0-7728-1010 231 KO PHANGAN SUB-BRANCH 0-7737-5046, 5089 0-7737-5010 T M B B a n k P u b l i c C o m p a n y L i m i t e d 333 List of TMB’s Branches in Upcountry TMB BANK PUBLIC COMPANY LIMITED NO. OFFICE TEL. FAX.
232 BO PHUT KO SAMUI SUB-BRANCH 0-7724-6225-7 All numbers 233 BAN SONG SURATTHANI 0-7725-7138, 7093, 7127 All numbers SUB-BRANCH 234 BIG C SURATTHANI SUB-BRANCH 0-7722-4201, 4324, 4809 All numbers 235 SURATTHANI RAJABHAT 0-7735-5162, 5483, 5234 All numbers UNIVERSITY SUB-BRANCH 236 MAENUM KO SAMUI SUB-BRANCH 0-7724-7879, 7649 0-7724-7889 237 CHAWENG BEACH 2 KO SAMUI 0-7723-1959-60 0-7723-1960 SUB-BRANCH 238 CHAWENG BEACH KO SAMUI 0-7723-1955-6 0-7723-1957 SUB-BRANCH 239 LAMAI BEACH KO SAMUI SUB-BRANCH 0-7723-3292-5 All numbers SURIN 240 SURIN 0-4451-4250-2 0-4451-4252 NONG KHAI 241 PHON PHISAI 0-4247-1266-7, 0-4240-5552 0-4247-1266 242 NONG KHAI 0-4242-0562-3, 0-4245-0564 0-4242-0562 NONG BUA LAMPHU 243 NONG BUA LAMPHU 0-4236-1547-50 0-4236-0551 ANG THONG 244 ANG THONG 0-3561-1262 0-3561-2418 AMNAT CHAROEN 245 AMNAT CHAROEN 0-4551-1590-4 0-4551-1593 UDON THANI 246 THANON THAHAN UDONTHANI 0-4234-1951-6 0-4234-1957 247 THANON PHOSI - UDON THANI 0-4224-9551-3 0-4224-9554 248 BAN PHU 0-4228-1264-5 0-4228-1265 249 UDON THANI 0-4224-1130, 4776-8 0-4224-4391 250 UDON THANI RAJABHAT 0-4224-8238,8680, 0-4222-2786 All numbers UNIVERSITY SUB-BRANCH UTTARADIT 251 UTTARADIT 0-5541-1800, 1655, 2380 0-5541-2380 UTHAI THANI 252 THAP THAN 0-5659-1220-2 0-5659-1221 253 UTHAI THANI 0-5651-1122, 1187 0-5651-1613 254 BAN RAI 0-5653-9002-3 0-5653-9004 UBON RATCHATHANI 255 TRAKAN PHUTPHON 0-4548-1015,1111 0-4548-1015 256 THANON PHROMMARAT - 0-4524-0214-8 0-4524-0215 UBON RATCHATHANI 257 UBON RATCHATHANI 0-4524-1313,1257,1978 0-4524-2572 334 A n n u a l R e p o r t 2 0 0 8 Currency Exchange Service Offices
TMB BANK PUBLIC COMPANY LIMITED NO. NAME ADDRESS TEL. OFFICE HOURS
1 Andaman Barzaar 188/2 Thaweewong Rd., Patong, Kathu, Phuket 0-7634-1015 2 Andaman Promanard, Andaman Club Room No.120/10-11 Raj-U-Thit 0-7634-1357,1387 Phuket 200 years Rd., Patong, Kathu, Phuket 3 Ao Nang Sub Branch, 146/2 Moo.2, Ao Nang, Muang , Krabi 0-7563-7656 Krabi 4 Ao Nang Sunset 268 Moo.2, Ao Nang, Muang , Krabi 0-7563-7408 5 Ao Pra Nang 208/2-3 Moo.2, Ao Nang, Muang, Krabi 0-7569-5462 6 Arrival Hall 1 (AH 1), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 7 Arrival Hall 2 (AH 2), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 8 Arrival Hall 3 (AH 3), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 9 Arrival Lounge 1 (AL 1), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 10 Arrival Lounge 2 (AL 2), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 11 Arrival Lounge 3 (AL 3), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 12 Banthai 94 Thaweewong Rd., Patong, Kathu, Phuket 0-7634-0618 13 Bangkok Hospital Soi. Inside Inter Nation Building at Bangkok Hospital Soi. 0-2369-2657-8 Soonvijai Soonvijai, BKK 14 Bangla 1 136/1 Thaweewong Rd., Patong, Kathu, Phuket 0-7634-0157 15 Bo Phud Sub Branch, 25/21-22 Moo.6, Bo Phud, Koh Samui, Suratthani 0-7724-6225-7 Koh Samui 16 Caesar Palace Hotel 382/34 Moo.9, Nongprue, Banglamung, Chonburi 0-3842-5011-2 17 Central Festival Sub 74-75 Central Festival Shopping Center 2nd Floor. 0-7624-8515 Branch ,Phuket Moo.5, Wichit, Muang, Phuket 18 Central World Inside Center World 2nd Floor. Unit No.K-B 205 0-2646-1284-6 Open Daily Room.K2-10/2, BKK 10.00 a.m. -8.00 p.m. 19 Chatuchak Gate 2 FX Booth Gate 2 Chatuchak Administration Office 0-2272-4715-6 Open Saturday and Bangkok, Kamphaeng Phet 2 Rd., Ladyao, Chatuchak, BKK Sunday 8.30a.m -5.00p.m.
T M B B a n k P u b l i c C o m p a n y L i m i t e d 335 Currency Exchange Service Offices
TMB BANK PUBLIC COMPANY LIMITED NO. NAME ADDRESS TEL. OFFICE HOURS
20 Chatuchak Gate 3 FX Booth Gate 3 Chatuchak Administration Office 0-2272-4105 Open Saturday and Bangkok ,Kamphaeng Phet 2 Rd., Ladyao, Chatuchak , BKK Sunday 8.30a.m -5.00p.m. 21 Cherry Hotel ,Pattaya Cherry Hotel Pattaya 270/3 Moo.10, Nongprue, 0-3842-9501-2 Banglamung, Chonburi 22 Departure Hall 1 (DH 1), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 23 Departure Hall 2 (DH 2), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 24 Departure Hall 3 (DH 3) , 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 25 Departure Hall 4 (DH 4) , 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 26 Departure Hall 5 (DH 5), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 27 Departure Lounge 1 (DL 1) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 28 Departure Lounge 2 (DL 2) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 29 Departure Lounge 3 (DL 3) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 30 Devana 49/145 Raj-U-Thit 200 years Rd., Patong, Kathu, Phuket 0-7634-0035 31 Domestic Departure (DD) , Domestic Terminal Donmuang Airport 2nd Floor. 0-2535-3171 Open Daily Donmuang Airport Viphavadee-Rangsit Rd., Donmuang, BKK 7.00 a.m. -10.00 p.m. 32 Domestic South (DS), Domestic Terminal Donmuang Airport 1st Floor. 0-2535-3172 Open Daily Donmuang Airport Viphavadee-Rangsit Rd., Donmuang, BKK 7.00 a.m. -10.00 p.m. 33 Gallery (GL 1), 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Suvarnabhumi Airport 34 Ha Yaek Chalong 16/43-44 Chao-Fa East Rd., Chalong, Muang, Phuket 0-7623-7237 Branch, Phuket 0-7638-1750 35 Had Chaweng 1 Front of Chaweng Villa Bangalow 157 Moo.2 Liab Had 0-7742-2492 Chaweng Rd., Bo Phud, Koh Samui, Suratthani 36 Had Chaweng 2 Front of Chaweng Rd., (Near by Malibu Resort), Bo Phud, 0-7741-3346 Koh Samui, Suratthani
336 A n n u a l R e p o r t 2 0 0 8 Currency Exchange Service Offices
TMB BANK PUBLIC COMPANY LIMITED NO. NAME ADDRESS TEL. OFFICE HOURS
37 Had Chaweng 3 97 Moo.2, Bo Phud, Koh Samui, Suratthani 0-7741-4437 38 Had Chaweng 1 167/36-37 Moo.2, Bo Phud, Koh Samui, Suratthani 0-7723-1955-6 Sub Branch, Koh Samui 39 Had Chaweng 2 30/11 Moo.3, Bo Phud, Koh Samui, Suratthani 0-7723-1959-60 Sub Branch, Koh Samui 40 Had Dongtan ,Pattaya 69 Nongprue, Bangprue, Banglamung, Chonburi 0-3842-9501-2 41 Had Jomtien 405 Moo.12, Nongprue , Muang Pattaya, Chonburi 0-3823-2074 42 Had Karon 643 Patak Rd., Karon, Muang, Phuket 0-7639-6978 43 Had Kata Corner Plaza Shopping Complex 112/3 Taina Rd., Karon, 0-7633-0088 Muang, Phuket 44 Had Lamai ,Koh Samui 124/105 Moo.3, Maret, Koh Samui, Suratthani 0-7723-3292-3 45 Had Lamai Sub Branch , 124/42 Moo.3, Maret, Koh Samui, Suratthani 0-7723-3292-3 Koh Samui 46 Had Patong Branch 158 Thaweewong Rd., Patong, Kathu, Phuket 0-7634-0092 47 Had Thong Nai Pan , 10/5 Ban -Tai, Koh Phangan, Suratthani 0-7723-8920-2 Koh Phangan 48 Hua-Hin 1 160 Naresdamri Rd., Hua-Hin, Prachuapkhirikhan 0-3253-2372 49 Hua-Hin 3, Hua-Hin 226/2 Phetkasem Rd., Hua-Hin, Prachuapkhirikhan 0-3251-5735 Prachuapkhirikhan Branch 50 Hua-Hin Tourist In Front Hua-HinTourist Information Center, - Information Center (Mobile) Phetkasem Rd., Prachuapkhirikhan 51 Indra Pratunam Branch 120/67 Soi. Indra , Rajprarob Rd., Thanon Phayathai, 0-2208-0982-3 Rajthevi, BKK 52 Indra Square Sub Branch 120/126 Rajprarob Rd., Thanon Phayathai, Rajthevi, BKK 0-2631-9457-9 53 International Baggage 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. Claim (IB 1), Suvarnabhumi Airport 54 International Departure 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. (East)(ID 1), Suvarnabhumi Airport 55 International Departure 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 24 Hours. (West)(ID 2), Suvarnabhumi Airport 56 Jomtien Branch 334/1-2 Moo.12 Jomtien Beach Rd., Nongprue, 0-3823-2079 Banglamung, Chonburi T M B B a n k P u b l i c C o m p a n y L i m i t e d 337 Currency Exchange Service Offices
TMB BANK PUBLIC COMPANY LIMITED NO. NAME ADDRESS TEL. OFFICE HOURS
57 Kata Noi 183 Koktanode Rd., Karon, Muang, Phuket 0-7633-3236 58 Khao-Lak Sub Branch, 19/4-5 Moo.6, Khukkhak, Takuapa, Pang-Nga 0-7644-3445-7 Pang-Nga 59 Khaosan 212 Pimanwit School Khaosan Rd., Pranakorn, BKK 0-2629-0578-9 Open Daily (Pimanwit School) 11.00 a.m. -9.00 p.m. 60 Koh Chang Sub Branch 9/41 Moo.4, Ban Had Sai Khao, Koh Chang, Trat 0-3958-6242 61 Koh Lanta Sub Branch 99/1 Moo.1, Saladan, Koh Lanta, Krabi 0-7568-4337 62 Koh Phangan 1 95/15 Moo. 6 ,Ban-Tai, Koh Phangan, Suratthani 0-7737-5202 63 Koh Phangan Sub Branch 120/1 Moo.6, Ban-Tai, Koh Phangan, Suratthani 0-7737-5089,5046 64 Koh Samui Branch 67/12-13 Moo.3, Angthong, Koh Samui, Suratthani 0-7742-0360-2 65 Krabi Airport Phetkasem Rd., Nue-Klong, Nue-Klong, Krabi 0-7563-6487 66 Landmark Plaza 138 Landmark Plaza Building Sukhumvit Rd., Klongtoey, 0-2252-6032, Sub Branch Klongtoey, BKK 0-2252-6092 67 Maenam Sub Branch, 44/36-37 Moo.1, Maenam, Koh Samui, Suratthani 0-7724-7879,7649 Koh Samui 68 Mae Sai Branch 44/1-2 Moo.7 Phahonyothin Rd., Mae Sai, Mae Sai, 0-5373-3145-6 Chiangrai 69 Mah Boonkrong Center 444 Mah Boonkrong Department Store(MBK), 0-2215-2136-7, Branch Phayathai Rd., Wangmai, Pathumwan, BKK 0-2217-9234 70 Marina Cottage Hotel 47 Karon Rd., Karon, Muang, Phuket 0-7633-3051-2 71 Mark Land Hotel 436/541 Moo.9 North Pattaya Beach Rd., Nongprue, 0-3842-9501-2 Banglamung , Chonburi 72 Mountain Beach Hotel , 378/24 Moo.12, Nongprue, Banglamung, Chonburi 0-3842-9501-2 Pattaya 73 National Stadium National Stadium BTS Station W1-29 ,Rama I Rd., 0-2612-3132 Open Daily BTS Station Wangmai, BKK 9.30 a.m. -8.30 p.m. 74 Night Barzaar ,Chiangrai 870/12 Moo.4 Phahonyothin Rd., Wieng, Muang, Chiangrai 0-5371-5657 75 Otop Patong OTOP Shopping Center Patong (Opposite Holiday 0-7634-0164 Shopping Center Inn Hotel), Raj-U-Thit 200 years Rd., Phuket 76 Otop Patong Shopping 237/2 Raj-U-Thit 200 years Rd., Patong, Kathu, Phuket 0-7634-0545-6 Center (Mobile) 77 Patong Merlin Hotel Front of Patong Merlin Hotel Thaweewong Rd., Phuket 0-7634-1048 78 Pattaya Beach Naklur, Banglamung, Chonburi 0-3841-0747 79 Pattaya 2nd Rd.(Alcaza) Thai Palace Hotel ,212 Moo.9 Pattaya 2nd Rd., 0-3841-5302 Nongprue, Banglamung, Chonburi 338 A n n u a l R e p o r t 2 0 0 8 Currency Exchange Service Offices
TMB BANK PUBLIC COMPANY LIMITED NO. NAME ADDRESS TEL. OFFICE HOURS
80 Pattaya Branch 325/67-70 Pattayaland Shopping Center, Moo. 10, 0-3842-6107 Nongprue, Muang Pattaya,Chonburi 81 Phromphong BTS Station Promphong BTS Station E5-10/1A, Sukhumvit 24 Rd., 0-2663-7485 Open Daily Klongtoey, BKK 10.00 a.m. -8.30 p.m. 82 Phuket International 222 Moo.6, Mai Khao, Talang, Phuket 0-7632-8383-5 Airport Branch 83 Platinum Pratunam The Platinum Fashion Mall, 222 Petchaburi Rd., 0-2121-9404 Open Daily Thanon Petchaburi, Rajthevi, BKK 10.30 a.m. -7.00 p.m. 84 Platinum Pratunam 2 In Front of The Platinum Fashion Mall, 0-2121-9493 Open Daily 222/226 Petchaburi-Tadmai Rd., BKK 9.30 a.m. -8.30 p.m. 85 Rambuttri 323 Rambuttri Rd., Taladyod, Pranakhon, BKK 0-2629-0620-1 Open Daily 11.00 a.m. -9.00 p.m. 86 Rose Garden At Rose Garden Reverside, Nakorn Pathom 0-3432-2885-7 87 Royal Garden Plaza 218 Moo.10, Nongprue, Banglamung, Muang Pattaya,Chonburi 0-3841-1750 88 Royal Paradise Hotel ,Phuket 160 Raj-U-Thit 200 years Rd., Patong, Talang, Phuket 0-7634-0545-6 89 Sabana Resort Hotel 14/53 Moo.1, Rawai, Muang, Phuket 0-7634-0545-6 90 Sai Nam Yen 271 Raj-U-Thit 200 years Rd., Patong, Kathu, Phuket 0-7634-0545-6 Center Point ,Phuket 91 Soi Bua Khao 210 Moo.9, Nongprue, Banglamung , Chonburi 0-3841-0615 92 Soi Bua Khao 66/38 Moo.9, LK Royal Suite Building, Nongprue, 0-3872-0092,0083 Sub Branch, Pattaya Banglamung, Chonburi 93 Soi Chaiyos, Sukhumvit 11 2/6 Soi. Chaiyos Sukhumvit Rd., Klongtoey-Nue, 0-2651-1619 Open Daily Wattana, BKK 8.30 a.m. -9.00 p.m. 94 Suan Lum Night Barzaar 1875 Rama IV Rd., Lumphini, Pathumwan, BKK. 0-2251-5255-6 Open Daily 3.30 p.m. -11.30 p.m. 95 Sunshine Sub Branch, 240/12 Moo.5 Pattaya -Naklur Rd., Naklur, Banglamung, 0-3841-0617 Pattaya Chonburi 96 Tappaya Nongprue, Banglamung, Chonburi 0-3825-1449 97 Thanon Chaiyaphum 314 Chaiyaphum Rd., Changmoi, Muang, Chiangmai 0-5323-3158 98 Thanon Loy Kro 70 Loy Kro Rd., Changklan, Muang, Chiangmai 0-5320-6541 99 Thanon Moon Muang 5 Ratchamankha Rd., Phra-Sing, Muang, Chiangmai 0-5327-0376 100 Thanon Phahonyothin 897/7-8 Phahonyothin Rd., Wieng, Muang, Chiangrai 0-5371-4886-7 Chiangrai Branch 101 Thanon Tappaya 315/297 Moo.12, Nongprue, Banglamung, Chonburi 0-3830-3778
T M B B a n k P u b l i c C o m p a n y L i m i t e d 339 Currency Exchange Service Offices
TMB BANK PUBLIC COMPANY LIMITED NO. NAME ADDRESS TEL. OFFICE HOURS
Sub Branch ,Pattaya 102 Thong Sala Sub Branch, 161/21 Moo.1, Koh Phangan, Suratthani 0-7723-8920-2 Koh Phangan 103 U-Taphao Airport 70 Moo.2 Sukhumvit Rd., Samnak-Krathon, 0-3824-5595 Banchang, Rayong 104 Winmill Resort Hotel , Inside Windmill Resort Pattaya, 665 Moo.5, 0-3837-1441-3 Pattaya Pattaya-Naklur, Banglamung, Chonburi 105 Wong Wien Karon 240 Karon Rd., Karon, Muang, Phuket 0-7639-6088
340 A n n u a l R e p o r t 2 0 0 8 International Business Center
TMB BANK PUBLIC COMPANY LIMITED Name-IBC ADDRESS TEL. FAX.
Asoke 189/1 Grand Park View Building , 1 Floor, 0-2204-2723-5 0-2204-2726 Sukhumvit 21 Road (Asoke) Wattana, Bangkok 10110
Chaeng Watthana 72/8 Moo 2, Chaeng Watthana Road, Tumbon 0-2982-9548-9 0-2982-9547 Klongklua, Ampur Pakkred Nonthaburi 11120
Chiangmai 275/5, 2nd Floor, Chang Puak Road, 0-5341-0102-3, 0-5341-0987 0-5341-0909 Tumbon Chang Puak Ampur Muang Chiangmai 50300
Chonburi 870 Kor. Sukhumvit Road, Tumbon 0-3828-3526, 0-3827-0794 0-3828-3652 Bangplasoi, Ampur Muang Chonburi 20000
Hat Yai 160 Niphatuthit 2 Road, Tumbon Hat Yai, 0-7435-5314, 0-7435-5749 0-7435-4491 Ampur Hat Yai, Songkhla 90110
Krung Kasem 1514 Krungkasem Road, Thepsirin, 0-2221-1085, 0-2226-1598 0-2221-1275 Pomprab Bangkok 10100
Phaya Thai 34 Phayathai Road, Thungphaya Thai, 0-2354-5109, 0-2354-5074 0-2354-5070 Rajthevee, Bangkok 10400 0-2354-5190
Rayong 139/1 Sukhumvit Road, Tumbon Cherngnurn, 0-3880-0401 0-3880-0402 Ampur Muang, Rayong 21000
Samutsakorn 824/48-52 Norrasing Road, Tumbon Mahachai, 0-3481-1419-20 0-3481-1418 Ampur Muang, Samutsakorn 74000
Silom 393 1st Floor, Korntong Building, 0-2230-5494, 0-2230-5320 0-2230-6008 Silom Road, Bangrak Bangkok 10500 0-2230-5633, 0-2230-5337
Thanon 906,908,910 Thanon Borommaratchonni, 0-2886-5435-6 0-2434-1756 Borommaratchonni Bangbumru, Bangplad, Bangkok 10700
Thanon 103/1 Soi Thonglor, Sukhumvit 55 Road, 0-2392-0346-8 0-2712-7612 Phetchaburi-Tadmai North Klongton, Wattana, Bangkok 10110
Theparak 88 Moo 3, Theparak Road, Tumbon Theparak, 0-2753-3600-1 0-2753-3602 Ampur Muang, Samutprakarn 10270
T M B B a n k P u b l i c C o m p a n y L i m i t e d 341 Overseas Branches
TMB BANK PUBLIC COMPANY LIMITED
1. Hong Kong Branch General Manager : Mr. Pongsak Fookirkkiat (คุณพงษ์ศักดิ์ ฟูเกริกเกียรติ) Address : Room 1601, 16th /Floor, New World Tower 1, 18 Queen’s Road Central Hong Kong E-mail : [email protected] Tel : 001-852-2845-6677 Fax : 001-852-2845-1182
2. Vientiane Branch Branch Manager : Mr. Louchai Louchaisa Address : 34/2 Unit 6 Ban Haysok Samsenthai Road, Chanthabouli Vientiane, Lao PDR E-mail : [email protected] Tel : 007-856-2121-6486, 007-856-2121-7174 Fax : 007-856-2121-4726 Telex 4327 TMBVTELS
3. Cayman Island Branch Manager : Mrs. Soontaree Rojanapenkul Address : P.O. Box 501 GT, Cardinall Avenue Grand Cayman, Cayman Islands, B.W.I. c/o TMB Bank Public Company Limited 3000 Phahonyothin Road, Chatuchak, Bangkok 10900 Thailand E-mail : [email protected] Tel : 662-230-5791 Fax : 662-230-5788
342 A n n u a l R e p o r t 2 0 0 8 Main Correspondent Banks
TMB BANK PUBLIC COMPANY LIMITED
ASIA AUSTRALIA AND NEW ZEALAND SWEDEN : Nordea Bank AB (publ) CHINA : AUSTRALIA : Svenska Handelsbanken AB (publ) Agricultural Bank of China Australia and New Zealand Banking SWITZERLAND : Bank of China Ltd. Group Ltd. Credit Suisse Bank of Communications Commonwealth Bank of Australia UBS AG China Construction Bank Corporation National Australia Bank Ltd. Zurcher Kantonalbank Industrial and Commercial Bank of NEW ZEALAND UNITED KINGDOM : China Ltd. ANZ National Bank Ltd. Barclays Bank Plc. HONG KONG : Bank of New Zealand HSBC Bank Plc. DBS Bank (Hong Kong) Limited Royal Bank of Scotland Hongkong and Shanghai Banking EUROPE Standard Chartered Bank Corporation Ltd. Standard Chartered Bank AUSTRIA : NORTH AMERICA (Hong Kong) Ltd. Unicredit Austria INDIA : Raiffeisen Zentralbank Oesterreich CANADA : ICICI Bank Ltd. BELGIUM : Bank of Nova Scotia Bank of India ING Belgium SA/NV National Bank of Canada State Bank of India DENMARK : Toronto-Dominion Bank JAPAN : Danske Bank A/S U.S.A : Bank of Tokyo-Mitsubishi UFJ, Ltd. Nordea Bank Denmark A/S Bank of America N.A. Mizuho Corporate Bank Ltd. FINLAND: Bank of New York Sumitomo Mitsui Banking Nordea Bank Finland Plc Citibank, N.A. Corporation FRANCE : Deutsche Bank Trust Company LAOS : BNP Paribas Americas Banque Pour Le Commerce NATIXIS JPMorgan Chase Bank, N.A. Exterieur Lao Societe Generale Wachovia Bank, N.A. Lao Development Bank Calyon Group MALAYSIA : GERMANY : MIDDLE EAST Malayan Banking Berhad Commerzbank AG CIMB Bank Berhad Deutsche Bank AG KUWAIT : Public Bank Berhad HSH Nordbank AG National Bank of Kuwait SINGAPORE : ITALY : BAHRAIN : DBS Bank Ltd. Banca Nazionale del Lavoro Arab Banking Corporation United Overseas Bank Ltd. Intesa Sanpaolo S.p.A. UNITED ARAB EMIRATE : Overseas Chinese Banking Corp. UniCredito Italiano S.p.A. Abu Dhabi Commercial Bank VIETNAM : NETHERLANDS : Vietnam Bank for Industry and Trade ING Bank N.V. AFRICA Industrial and Commercial Bank of Rabobank Nederland SOUTH AFRICA : Vietnam (ICB) NORWAY : ABSA Bank DnB Nor Bank Standard Bank of South Africa Nordea Bank Norge ASA and other correspondents throughout the world
T M B B a n k P u b l i c C o m p a n y L i m i t e d 343 Summary of Specified Items per Form 56-2 in 2008 Annual Report TMB BANK PUBLIC COMPANY LIMITED
Content Page 1. General Information 310 1.1 Company Information 310 1.2 Investment in other companies 313 1.3 Other referral parties 2. Financial Highlights 6-7 3. Nature of Business 3.1 Background 48 3.2 Significant changes and developments in 2008 48-52 3.3 Business overview of the Bank and its subsidiary and associated companies 52-56 3.4 Income structure 57 3.5 Description of services 58-72 3.6 Provision of products and services 73-77 4. Risk Factors 147-153 5. Shareholding and Management 5.1 Shareholders 78 5.2 Management 79 - Organization chart as of December 31, 2008 10-11 - Management structure 79-91 - Board of Directors’ meeting 91-93 - Recruitment of directors and executive officers 93-94 - Remuneration for directors and executives 94-98 - Shareholding of the Board of Directors and Executives 98-102 - Corporate Governance Report 102 - Control on use of insider information 114, 116 - Internal Control 114, 116-117 - Personnel 117-124 5.3 Dividend Payment Policy 125 6. Related Transactions 126-127 7. Analysis of the Financial Position and Operational Performance of the Bank 128-146 8. Financial Statements - Comparison of the Bank only financial statements and consolidated financial statements 157-169 - Auditor’s remuneration 314 9. Business competition 33 10. Other factors which may impact the investors’ decision 315-317
344 A n n u a l R e p o r t 2 0 0 8