Thai Commercial Banks and Specialized Financial Institutions (Sfis)

KASIKORNBANK Investor Presentation as of 3Q18 October 2018 For further information, please contact the Investor Relations Unit or visit our website at www.kasikornbank.com 1 KASIKORNBANK at a Glance Established on June 8, 1945 with registered capital of Bt5mn (USD0.15mn) Listed on the Stock Exchange of Thailand (SET) since 1976 Consolidated (as September of 2018) Assets Bt3,054bn (USD94.3bn) Ranked #4 with 15.2% market share** Loans* Bt1,849bn (USD57.1bn) Ranked #4 with 15.0% market share** Deposits Bt1,921bn (USD59.3bn) Ranked #4 with 15.6% market share** CAR 18.96% *** ROE (9M18) 11.65% ROA (9M18) 1.41% Number of Branches 1,000 Number of ATMs 9,228 Number of K PLUS Users 9.4mn Number of Employees 20,599 Share Information SET Symbol KBANK, KBANK-F Share Capital: Authorized Bt30.5bn (USD0.9bn) Issued and Paid-up Bt23.9bn (USD0.7bn) Number of Shares 2.4bn shares Market Capitalization Bt464bn (USD14.0bn) Ranked #1 in Thai banking sector 3Q18 Avg. Share Price: KBANK Bt209.55 (USD6.47) KBANK-F Bt212.57 (USD6.56) EPS (9M18) Bt13.13 (USD0.41) BVPS Bt154.82 (USD4.78) Notes: * Loans = Loans to customers less deferred revenue ** Assets, loans and deposits market share is based on C.B.1.1 (Monthly statement of assets and liabilities) of 14 Thai commercial banks as of September 2018 *** Capital Adequacy Ratio (CAR) has been reported in accordance with Basel III Capital Requirement from 1 January 2013 onwards. CAR is based on KASIKORNBANK FINANCIAL CONGLOMERATE. KASIKORNBANK FINANCIAL CONGLOMERATE means the company under the Notification of the Bank of Thailand re: Consolidated Supervision, consisted of KBank, K Companies and subsidiaries operating in supporting KBank, Phethai Asset Management Co., Ltd. and other subsidiaries within the permitted scope from the BOT’s to be financial conglomerate Exchange rate at the end of September 2018 (Mid Rate) was Bt32.41 per USD (Source: Bank of Thailand) 2 Table of Contents Topic Slide Page Operating Environment 5 - 6 2019 Financial Targets 7 Composition of Growth 8 - 10 The K-Strategy 11 - 14 Financial Performance 15 - 17 Capital and Dividend 18 - 19 Summary 20 Appendix 21 - 159 3 Appendix Topic Slide Page KBank Strategic Issues 22-35 Strategy and Segment Highlights 36-45 Risk and Credit Management 46-54 Financial Performance 55-78 • 9M18 Highlights 56-58 • Interest Income - net 59 • Non-interest Income 60-61 • Net Fee Income 62-63 • Net Premium Earned - net 64 • Other Operating Expenses 65 • Loan 66-68 • Asset Quality 69-74 • Investment in Securities and Funding Structure 75-78 The Wholly-owned Subsidiaries 79-86 Muang Thai Life Assurance (MTL) 87-95 Other Information 96-104 Banking System and Regulations Update 105-114 Government Policy 115-135 Thai Economic Figures 136-157 IR Contact Information and Disclaimer 158-159 4 Operating Environment: Economic Outlook for 2019 Key GDP Forecasts and Assumptions 6.0 4.6 3.9 4.3 Key Points: 3.0 % YoY The projected base case for 2019 GDP growth is 4.3% 0.0 (range 4.1-4.6%) supported by domestic demand 2017 2018F 2019F % YoY 2019F* Progress from public infrastructure investment will 2017 2018F* provide a crowding in effect to private investment Range Base Case Exports and tourism will contribute growth, but to a GDP 3.9 4.6 4.1-4.6 4.3 lesser extent, from a high base effect and trade dispute Private Consumption 3.2 4.2 3.3-3.9 3.6 Government Consumption 0.5 2.5 2.4-2.9 2.7 Total Investment 0.9 4.1 4.1-5.7 5.0 - Public investment -1.2 6.0 5.0-9.0 7.0 Risk Factors: - Private investment 1.7 3.5 3.8-4.5 4.2 Continued US-China trade dispute Gov't Budget Deficit (% of GDP) -3.5 -3.0 -3.2 to -2.5 -2.7 Vulnerability in emerging market countries amidst Exports (Customs Basis) 14.7 8.8 4.5-6.8 5.0 tightening US monetary policy Imports (Customs Basis) 49.3 16.5 4.0-8.0 6.9 Current Account (USD bn) 0.7 36.4 30.0-38.0 35.2 High household debt amidst looming interest rate Headline Inflation 1.5 1.1 0.7-1.5 1.1 up-cycle Policy Interest Rate** 1.50 1.50 2.00 Notes: MPC’s policy rate is at 1.50% (as of September 19, 2018), Source: * KResearch (as of October 17, 2018) ** KBank Capital Markets Research (as of October 22, 2018) 5 Operating Environment: Economic Outlook for 2019 Outlook Possible Impacts to Thai Economy Global Economy Global economy: economic growth faces headwinds amid heightened trade dispute risk Export growth will be moderate, due to a rather high US: economic recovery continues; Fed will continue to tighten monetary policy base effect as well as strain in China-US trade dispute Eurozone: mild to moderate economic growth as ECB provides less support. Moreover, Diminishing reflation trade will become a challenge for BREXIT may pose moderate risk to near-term prospects Thai exports China: decreasing economic growth foreseeable, but a hard-landing situation can be Increased interest rates in the US may cause fund avoided. Economic stimuli are expected if trade dispute between US and China outflow from emerging market countries, including worsens Thailand ASEAN economies: Repercussions from US-China trade dispute may become Repercussions from BREXIT and US protectionist headwinds for economic growth. However, some countries may gain benefits from policy may lead to fragility in global financial and inward supply chain relocation capital markets; Thailand may encounter some volatility Government Stimulus Plan Accelerating investment in transport infrastructure projects and initiatives in the Eastern Possible pick up in growth momentum (App. pages 115-130) Economic Corridor (EEC); this will be a key driver for the new S-curve Improvement in private consumption and investment stimuli Inflation Inflation remains restricted, due to stickiness of core inflation. Downside risk from rising Policy rate expected to remain rather accommodative (App. pages 138 and 140) global crude prices may push headline inflation to above the base case, depending on to economic growth throughout 2019, despite a few whether government measure on energy price subsidy program will be extended to interest rate increases 2019 Exports and Tourism Moderate export performance due to worsening global trade prospects Export and tourism sectors remain contributors of (App. pages 138, 141-143) Tourist arrivals will continue to grow in 2019, albeit at a slower rate economic growth, albeit to a lesser extent Fed Policy Normalization Fed is expected to have four rate hikes in 2018 and keep to its balance sheet reduction Expect Thai MPC to have two rate hikes in 2019 to (App. pages 149) plan. In 2019, the Fed may deliver additional three rate hikes catch up with the Fed’s move and demand-driven US economy is expected to grow at a solid pace despite US-China trade dispute, due to inflation the positive impact of US tax reform and fiscal boosting of economic growth However, strong Thai current account surplus is to keep external stability intact Baht (App. pages 137) Thai rate rise coupled with low external financial vulnerability will attract capital inflow; Thai policy rate hike in 1H19 will attract money inflow the rate is expected to rise two times, in 1H19 and 2H19, from 1.50% to 2.00% Gradual Fed fund rate hikes and external risks will put However, trade uncertainty and risks surrounding emerging markets could result in pressure on Thai Baht depreciation afterward capital outflows and weakening Baht Source: KResearch and KBank Capital Markets Research (as of October 22, 2018) 6 2019 Financial Targets Consolidated 2017 Actual 9M18 Actual 2018 Targets 2019 Targets Notes ROE 10.24% 11.65% N/A N/A ROA 1.20% 1.41% N/A N/A Improving from rising interest rate and retail lending NIM 3.44% 3.41% 3.2-3.4% 3.3-3.5% despite rising long term deposit rate (Page 16) 2.56% YTD Sensible loan growth in line with economic growth; Loan Growth 6.20% YoY 5-7% 5-7% increase in retail lending using data analytics 5.51% YoY capability (Page 8 and 66-68) Non-Interest Income -7.34% YoY -6% to -8% -5% to -7% Under pressure from full year effect of fee waiver Growth* -1.62% YoY through digital channels; one-time gain on investment sales last year; insurance business remains slow Non-Interest Income Ratio 39.97% 37.80% About 40% About 35% (Page 9 and 60-64) Focus on cost management; under pressure due to Cost to Income Ratio** 42.31% 41.60% Mid-40s Low to Mid-40s slower growth in income and new investments (Page 17) Credit cost peaked in 2017; maintain prudence Credit Cost per year (bps) 239 bps 175 bps Up to 185 bps Up to 165 bps onward. Reversed our decision to sell some NPLs due to a revised outlook for the economy and a recent bottom- up review of the NPL portfolio. As a result, the NPL ratio will rise slightly with no further reserves required. NPL Ratio (Gross)*** 3.30% 3.30% 3.3-3.4% 3.3-3.7% We avoid an immediate loss on these loans, and we expect a greater recovery rate in the long-term. (Page 10, 49-50, 69-70, and 74) Note: * Non-Interest Income includes Net Premium Earned - net (Net Premium Earned less Underwriting Expenses) from Muang Thai Life Assurance PCL (MTL); KBank has a 38.25% economic interest in MTL; on the consolidated basis, Bancassurance fees are not included in net fee income, due to the elimination of inter-company transactions (the accounting treatment from the Muang Thai Group Holding consolidation); Non-Interest Income = Total Operating Income – net less Interest Income – net ** Cost to Income Ratio = Total Other Operating Expenses to Total Operating Income – net (Total Operating income less Underwriting Expenses) *** NPL Ratio (Gross) =

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