• Multi-Corporat ass e Bu • M sin es e s m o • c y T L In lit ru a a s r e t g u l e d Q d C i o M r p • o r a S t e i Customer strives to offer g KASIKORNBANKGROUP B n u a s t financial services of unsurpassed quality and i u n r e Centricity e s s a satisfying experience to match our slogan • • S m “ Towards Service Excellence ” a ll Co ce ss an nvenien ne d M usi icro m B Business • Mediu • Multi-Corporat ass e Bu • M sin es e s m o • c y T L In lit ru a a s r e t g u l e d Q d C i o M r p • o r a S t e i Customer strives to offer g KASIKORNBANKGROUP B n u a s t financial services of unsurpassed quality and i u n r e Centricity e s s a satisfying experience to match our slogan • • S m “ Towards Service Excellence ” a ll Co ce ss an nvenien ne d M usi icro m B Business • Mediu MISSION VISION VALUE Mission KASIKORNBANKGROUP aims to be a strong Thai financial group that provides a variety of financial services of world-class quality responsive to serve customers’ needs by harmoniously combining technology and human resources so as to achieve optimal benefits to customers, shareholders, employees and the country. Vision KASIKORNBANKGROUP aims to be the strongest, the most innovative and the most proactive Thai financial group in serving customers. Value • Customer Satisfaction • Belief in Teamwork • Dedication to Professional and Ethical Conduct • Commitment to Discipline • Proactiveness FINANCIAL HIGHLIGHTS (CONSOLIDATED FINANCIAL STATEMENTS) As of or for the year ended December 31, 2008 2007 2006 2005 2004 COMMON SHARE INFORMATION Per share (Baht) - basic earnings 6.41 6.28 5.74 5.87 6.49 - book value 47.49 41.87 37.04 32.91 28.07 - dividends 2.00 2.00 1.75 1.25 1.00 Share price (Baht) 1) - high 64.00 91.50 73.50 70.50 66.50 - low 38.50 78.00 49.75 50.00 41.50 - closing 45.00 87.00 61.50 70.00 52.50 Common shares outstanding - average basic ( thousand share) 2,393,122 2,387,438 2,381,474 2,371,366 2,362,467 - end of year (thousand share) 2,393,260 2,388,202 2,382,147 2,373,294 2,363,625 Market capitalization (Million Baht) 107,697 207,774 146,502 166,131 124,090 VALUE MEASURES Price to earnings ratio (PER) 7.02 13.84 10.72 11.92 8.09 Price to book value ratio (PBV) 0.95 2.08 1.66 2.13 1.87 Dividend yield (based on closing share price) 4.44% 2.30% 2.85% 1.79% 1.90% Dividend payout Ratio 32.33% 31.88% 30.55% 21.36% 15.45% OPERATING RESULTS (Million Baht) Interest and dividend income 60,130 55,516 51,810 38,065 32,999 Interest expenses 17,694 18,085 17,197 7,283 7,033 Net income from interest and dividends 42,436 37,431 34,613 30,782 25,966 Bad debt and doubtful accounts 2) 7,834 5,887 5,419 3,662 2,761 Non-interest income 22,646 18,897 14,155 12,302 12,149 Non-interest expenses 35,071 29,029 25,561 21,426 19,847 Total income 3) 65,082 56,328 48,768 43,084 38,115 Net income 15,333 15,005 13,664 13,930 15,340 OPERATING MEASURES Interest margin 3.97% 4.13% 4.10% 3.84% 3.20% Efficiency ratio 53.89% 51.54% 52.41% 49.73% 52.07% Return on average assets (ROA) 1.33% 1.55% 1.54% 1.68% 1.86% Return on average equity (ROE) 14.35% 15.94% 16.43% 19.29% 25.98% Number of employees 13,560 12,320 11,219 10,303 10,110 BALANCE SHEET INFORMATION (Million Baht) Loans 904,008 762,505 677,207 626,946 592,588 Allowance for doubtful accounts 4) 29,772 25,852 32,993 37,439 46,346 Non-performing loans net (NPL net) 5) 15,712 17,600 27,282 N/A N/A Non-performing loans (NPL gross) 33,686 34,980 46,495 56,217 72,809 Total assets 1,303,554 994,518 935,509 837,309 824,974 Deposits 967,950 783,822 746,260 690,337 705,570 Total liabilities 1,189,892 894,522 847,271 759,193 758,308 Shareholders’ equity 6) 113,662 99,995 88,238 78,114 66,348 Average assets 1,149,036 965,014 886,409 831,142 823,130 Average earning assets 1,067,946 907,383 844,867 802,289 811,832 Average shareholders’ equity 6) 106,829 94,117 83,176 72,231 59,057 Risk weighted assets 949,832 769,952 687,638 653,636 611,104 BALANCE SHEET QUALITY MEASURES Loans to deposits ratio 93.39% 97.28% 90.75% 90.82% 83.99% Equity to risk weighted assets 11.97% 12.99% 12.83% 11.95% 10.86% Return on risk weighted assets 1.61% 1.95% 1.99% 2.13% 2.51% Tier 1 capital ratio 9.84% 10.74% 10.46% 9.53% 7.98% Total capital ratio 15.05% 14.62% 14.74% 14.47% 13.13% NPL net to loans 7) 1.47% 2.29% 4.14% N/A N/A NPL gross to loans 8) 3.09% 4.45% 6.85% 8.88% 12.30% Total allowance to loans 3.29% 3.39% 4.87% 5.97% 7.82% Total allowance to NPLs 88.38% 73.91% 70.96% 66.60% 63.65% NPLs after allowance (Million Baht) 3,914 9,128 13,502 18,778 26,463 1) Local board / High-low share prices during the year 5) Non-performing loans net refer to the non-performing loan value, net of total allowances for doubtful accounts 2) Including loss on debt restructuring 6) Excluding minority interest 3) Total income = Net income from interest and dividends + Non-interest income 7) Loans used in calculation are loans to general customers and loans to financial institutions 4) Including revaluation allowance for debt restructuring after allowance for doubtful account of non-Performing loan 8) Loans used in calculation are loans to general customers and loans to financial institutions FINANCIAL HIGHLIGHTS (CONSOLIDATED FINANCIAL STATEMENTS) CONTENTS BOARD OF DIRECTORS’ REPORT 7 MANAGEMENT REPORT Management Report 9 Management Discussion and Analysis 11 1. Overview 2. Operating Performance and Financial Position Analysis 3. Operations of Core Businesses 4. Operations of Support Groups 5. KASIKORNBANK’s Investments in Subsidiary and Associated Companies Risk Management and Risk Factors 58 1. Overall Risk Management 2. Risk Management FINANCIAL REPORTS Report of the Board of Directors’ Responsibilities for Financial Reports 79 Report of the Audit Committee 80 Audit Report of Certified Public Accountant 81 Financial Statements 82 Notes to Financial Statements 91 Financial Summary 193 CORPORATE GOVERNANCE Corporate Governance Committee Report 199 Human Resources and Remuneration Committee Report 200 Corporate Governance 201 1. Rights of Shareholders 2. Equitable Treatment of Shareholders 3. Roles of Stakeholders 4. Disclosure and Transparency 5. Responsibilities of the Board of Directors Dividend Policy 232 Corporate Social Responsibility (CSR) Activities 233 Factors Affecting Investment Decisions 243 STRUCTURE Organization Chart 246 Board of Directors 248 Board of Directors and Executives 250 Directorship of Directors and Executives in Subsidiaries, Associated and Related Companies 264 Changes in KASIKORNBANK Shares held by Directors and Executives in 2008 265 Management Team 266 Investments of KASIKORNBANK in Other Companies 270 OTHER INFORMATION Reference Information 273 Major Shareholders 274 Awards and Commendations 275 KASIKORNBANKGROUP KASIKORNBANK 279 1. Domestic Branch 2. Foreign Exchange Booth 3. Signature Exclusive Center 4. K-WePlan Center 5. Corporate Business Center 6. International Trade Services Office 7. SME Business Center 8. Overseas Office K Companies 300 SUMMARY OF SPECIFIED ITEMS PER FORM 56-2 301 1) Local board / High-low share prices during the year 5) Non-performing loans net refer to the non-performing loan value, net of total allowances for doubtful accounts 2) Including loss on debt restructuring 6) Excluding minority interest 3) Total income = Net income from interest and dividends + Non-interest income 7) Loans used in calculation are loans to general customers and loans to financial institutions 4) Including revaluation allowance for debt restructuring after allowance for doubtful account of non-Performing loan 8) Loans used in calculation are loans to general customers and loans to financial institutions BOARD OF DIRECTORS’ REPORT KASIKORNBANKGROUP has been striving for system, reporting and new accounting system in order to financial service excellence, through a customer-centric upgrade the central automated management and financial strategy, managing our high quality financial products and information services of the KGroup network of financial services for a high level of variety and comprehensiveness, businesses. Two more projects showing considerable giving full satisfaction and good experiences to our customers progress are the Channel Enhancement and Extension (CEE) of every segment. The overall performance of KGroup and IT-Capital (ITC) projects. The Channel Enhancement in 2008 was satisfactory and consistent with market and Extension project will enhance capabilities in sales expectations, despite the global economic slowdown. and services, and ensure favorable customer experiences in every contact with KBank. The new IT System will respond Through 2008, KASIKORNBANKGROUP continued to diverse business needs, increasing competitive potential to develop new products and services.