KASIKORNBANK Investor Presentation as of 1Q13 July 2013 For further information, please contact the Investor Relations Unit or visit our website at www.kasikornbankgroup.com or www.kasikornbank.com 1 KASIKORNBANK at a Glance Established on June 8, 1945 with registered capital of Bt5mn (USD 0.17mn) Listed on the Stock Exchange of Thailand (SET) since 1976 Consolidated (as of March 2013) Asse ts Bt2,110bn (USD72.0bn) Ranked #4 with 14.7% market share** Loans* Bt1,356bn (USD46.3bn) Ranked #4 with 14.8% market share** Deposits Bt1,428bn (USD48.7bn) Ranked #4 with 15.1% market share** CAR 15.79% *** ROE (1Q13) 21.23% ROA (1Q13) 1.93% Number of Branches 877 Number of ATMs 7,689 Number of Employees 17,718 Share Information SET Symbol KBANK, KBANK-F Share Capital: Authorized Bt30.5bn (USD1.0bn) Issued and Paid-up Bt23.9bn (USD0.8bn) Number of Shares 2.4bn shares Market Capitalization Bt498bn (USD17.0bn) Ranked #2 in Thai banking sector 1Q13 Avg. Share Price: KBANK Bt204.75 (USD6.99) KBANK-F Bt206.72 (USD7.05) EPS (1Q13) Bt4.22 (USD0.14) BVPS Bt81.85 (USD2.79) 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) *** 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 March 2013 (Mid Rate) was Bt29.31per USD (Source: Bank of Thailand) 2 Table of Contents Topic Slide Page Operating Environment 5 - 6 The K-Strategy 7 2013 Financial Targets 8 Composition of Growth 9 - 14 Capital and Dividend 15 - 16 Summary 17 Appendix 18 - 117 3 Appendix Topic Slide Page KBank ¾ Highlights 19-24 ¾ Strategy 25-35 ¾ Risk and Credit Management 36-40 ¾ Financial Performance 41-60 • 1Q13 Highlights 42-45 • Net Interest Margin 46 • Non-interest Income 47 • Net Fee Income 48 • Net Premium Earned - net 49 • Other Operating Expenses 50 • Loan 51-54 • Asset Quality 55-57 • Investment in Securities and Funding Structure 58-60 ¾ The wholly-owned subsidiaries of KBank 61-68 ¾ Muang Thai Life Assurance (MTL) 69-76 ¾ Other Information 77-80 Banking System and Regulation Update 81-88 Government Policy 89-99 Thai Economic Figures 100-115 IR Contact Information and Disclaimer 116-117 4 Operating Environment: Economic Outlook for 2013 Key GDP Forecasts and Assumptions Key Points: Private consumption and investment are expected to grow, albeit at a sharply decelerating rate Due to an economic slowdown in China, Thailand’s main export destination, and weak global sentiment, a robust recovery is unlikely in Thai exports in 2H13. Thus, exports are expected to expand rather modestly in 2013 % YoY 2011 2012 2013F Range Base Given this weaker economic outlook, GDP growth Case forecast for 2013 was revised down to 4.0% (base case) GDP 0.1 6.5 3.8-4.3 4.0 with the forecast range between 3.8%-4.3% Private Consumption 1.3 6.7 2.3-2.8 2.6 Total Investment 3.3 13.2 2.8-3.8 3.3 Gov. Budget Deficit (% of GDP)* -3.3 -2.8 -2.9 to -2.2 -2.7 Risk Factors: Exports 14.3 3.2 2.0-7.0 4.0 Lingering global economic uncertainties, especially China Imports 24.9 7.8 3.5-9.0 5.7 Current Account (USD bn) 5.9 2.7 -2.1 to 0.7 -0.5 Geopolitical risks Headline Inflation 3.8 3.0 2.2-2.7 2.5 Uncertainties in domestic politics and progress in the Policy Interest Rate** 3.25 2.75 2.50 2.50 public investment plan Note: * Does not include borrowing under the emergency decree for water resource management Source: KResearch (as of June 28, 2013) and **KBank Capital Markets Research (as of June 21, 2013) 5 Operating Environment: Economic Outlook for 2013 Government Stimulus Plan (App. pages 89-99) Uncertainties remain regarding the implementation of Water Resource Management and the infrastructure development project. Satisfactory progress in the disbursement of these extra-budgetary funds in 2013 is not expected, however, there is a high degree of hope that these projects will be fully implemented in the next and subsequent years Outlook on Europe, the US, China, and ASEAN Global economic growth is expected to modestly rise: ¾ The Eurozone should experience progress in measures which are already in the pipeline, such as the establishment of a banking union. This development, plus existing financial supports, should help prevent the Eurozone from slipping into a severe economic spiral ¾ The US may experience headwinds from sequestration and the expiration of payroll tax cut measures before gaining traction in 2H13 ¾ The Chinese economy recently revealed weakness underlying its banking system. Meanwhile, the subdued global economy seems to be suppressing its exports ¾ ASEAN economies will likely resume their recovery, given the benefits of regional economic integration as well as their flexibility in pushing forward fiscal and monetary policies needed to withstand impacts from lingering global economic uncertainties Outlook on Inflation (App. pages 103 and 105) Headline inflation is benign in 2013 as a result of: ¾ Stable oil prices ¾ Baht appreciation, which may reduce production costs as well as import prices ¾ Continuation of government measures to assist cost of living (i.e. LPG subsidy for household use and reduction of excise tax on diesel) Outlook on Exports and Tourism (App. pages 104 and 106-107) Exports will slightly expand, due mainly to subdued global economic sentiment and China’s slowdown Tourism will likely register double-digit growth, supported by an increasing number of Chinese tourists, as well as regional integration Outlook on CAPEX cycle (App. page 108) Capacity utilization is unlikely to improve, consistent with a weak MPI. This is mainly due to weak external demand for Thai exports, especially those in the global supply chain. Hence, the new investment cycle may be delayed, pending FDI flow Baht (App. page 101) Thai Baht will stay under depreciation pressure in the near-term due to portfolio outflows, larger trade deficits, and global market risk aversion; the Baht looks oversold and will likely rebound to 30.00 by year-end as the market reassesses Q.E. exit timing Source: KResearch and KBank Capital Markets Research (as of June 28, 2013) 6 The K-Strategy Long-Term Risk-Adjusted Sustainable Profitability Customer Centricity Customer Strategy TO BE CUSTOMER’S MAIN BANK PRODUCTPRODUCT && SOLUTIONSOLUTION BRANDINGBRANDING && MARKETINGMARKETING SERVICESERVICE QUALITYQUALITY Clear & consistent communication ExcellentExcellent customercustomer experienceexperience InnovateInnovate && bebe responsiveresponsive Clear & consistent communication atat allall channelschannels KASIKORNBANK, its wholly-owned 8 Customer Segments* 4 Product Domains subsidiaries, and its strategic partner I N T E G R A T I O N The Way We Work + Strategic Understanding Innovative & Managing Sales & Service Proactive Risk Capabilities Customer Needs Products Excellence Management Note: * The definition of eight customer segments can be found in App. page 26 7 2013 Financial Targets (Consolidated) 2012 Actual 1Q13 Actual 2013 Targets Notes ROE 20.76% 21.23% N/A ROA 1.86% 1.93% N/A NIM 3.58% 3.49% 3.4-3.6% System ranking maintained (Page 46) Loan Growth 9.57% 2.19% YTD 9-11% Decent and sustainable loan growth; in line with economic growth (Page 9 and 51-54) 11.12% YoY Non-Interest Income Mainly driven by fee income and insurance business; net fee 19.72% 16.72% YoY Mid-teens income to grow up to mid-teens** and net premium earned-net Growth* to grow up to 20% in 2013 (Page 12-13 and 47-49) Approximately Bt2bn plus Higher provision was set aside to serve as countercyclical Provision Average per Q Bt2.1bn Bt3.5bn Countercyclical Provision provision; credit cost revised up to range between 70 - 80+bps in 2013; prudent and aligned with global market environment Low cost to income ratio in 1Q13, to reflect normal seasonal Cost to Income Ratio 45.00% 40.02% Mid-40s pattern; cost to income ratio will range in mid-40s (Page 14) Manageable with lingering global economic environment NPL Ratio (Gross) 2.16% 2.09% Below 2.4% (Page 11 and 55) Note: * Non-Interest Income includes Net Premium Earned - net (Net Premium Earned less Underwriting Expenses) from Muang Thai Life Assurance (MTL); KBank has a 38.25% economic interest in MTL ** On the consolidated basis, Bancassurance fees are not included, due to the elimination of inter-company transactions (the accounting treatment from the Muangthai Group Holding consolidation) 8 Composition of Growth: Loans by Business Loan Portfolio Y2013 Loan Growth Target: 9-11% Corporate Loans: 4-6% Consolidated Amount (Bt bn) %YTD Growth % Yie ld Ra nge Loan Growth ¾ Growth target on long term investment and high capacity Dec12 1Q13 1Q13 1Q13 Target (Y2013) utilization industries and a focus on international trade Corporate Loans 416 424 2.1% 4-6% 4-6% customers SME Loans 469 473 0.8% 7-8% 10-12% ¾ Focused Industries: Auto & Parts, Construction Materials, Retail Loans 347 350 0.9% 6-7% 10-13% Food & Beverage, Commerce and Transportation Other Loans 95 109 14.3% - SME Loans: 10-12% Total Loans 1,327 1,356 2.2% 6.3% 9-11% ¾ Growth target reflects high demand from domestic consumption