KASIKORNBANKGROUP strives to offer financial services of unsurpassed quality and a satisfying experience to match our slogan “Towards Service Excellence” 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, 2007 2006 2005 2004 2003 COMMON SHARE INFORMATION Per share (Baht) - basic earnings 6.28 5.74 5.87 6.49 6.27 - book value 41.87 37.04 32.91 28.07 21.99 - dividends 2.00 1.75 1.25 1.00 - Share price (Baht) 1) - high 91.50 73.50 70.50 66.50 66.00 - low 78.00 49.75 50.00 41.50 25.75 - closing 87.00 61.50 70.00 52.50 65.00 Common shares outstanding - average basic (thousand share) 2,387,438 2,381,474 2,371,366 2,362,467 2,353,010 - end of year (thousand share) 2,388,202 2,382,147 2,373,294 2,363,625 2,353,518 Market capitalization (Million Baht) 207,774 146,502 166,131 124,090 152,979 VALUE MEASURES Price to earnings ratio (PER) 13.84 10.72 11.92 8.09 10.37 Price to book value ratio (PBV) 2.08 1.66 2.13 1.87 2.96 Dividend yield (based on closing share price) 2.30% 2.85% 1.79% 1.90% - Dividend payout ratio 31.88% 30.55% 21.36% 15.45% - OPERATING RESULTS (Million Baht) Interest and dividend income 55,516 51,810 38,065 32,999 32,786 Interest expenses 18,085 17,197 7,283 7,033 13,212 Net income from interest and dividends 37,431 34,613 30,782 25,966 19,574 Bad debt and doubtful accounts 2) 5,887 5,419 3,662 2,761 1,434 Non-interest income 18,897 14,155 12,302 12,149 13,693 Non-interest expenses 29,029 25,561 21,426 19,847 16,953 Total income 3) 56,328 48,768 43,084 38,115 33,267 Net income 15,005 13,664 13,930 15,340 14,756 OPERATING MEASURES Interest margin 4.13% 4.10% 3.84% 3.20% 2.43% Efficiency ratio 51.54% 52.41% 49.73% 52.07% 50.96% Return on average assets (ROA) 1.55% 1.54% 1.68% 1.86% 1.87% Return on average equity (ROE) 15.94% 16.43% 19.29% 25.98% 32.47% Number of employees 12,320 11,219 10,303 10,110 9,912 BALANCE SHEET INFORMATION (Million Baht) Loans 762,505 677,207 626,946 592,588 547,918 Allowance for doubtful accounts 4) 25,852 32,993 37,439 46,346 67,533 Non-performing loans net (NPL net) 5) 17,600 27,282 N/A N/A N/A Non-performing loans (NPL gross) 34,980 46,495 56,217 72,809 92,319 Total assets 994,518 935,509 837,309 824,974 821,285 Deposits 783,822 746,260 690,337 705,570 684,946 Total liabilities 894,522 847,271 759,193 758,308 769,171 Shareholders’ equity 6) 99,995 88,238 78,114 66,348 51,765 Average assets 965,014 886,409 831,142 823,130 791,027 Average earning assets 907,383 844,867 802,289 811,832 805,244 Average shareholders’ equity 6) 94,117 83,176 72,231 59,057 45,446 Risk weighted assets 769,952 687,638 653,636 611,104 543,878 BALANCE SHEET QUALITY MEASURES Loans to deposits ratio 97.28% 90.75% 90.82% 83.99% 79.99% Equity to risk weighted assets 12.99% 12.83% 11.95% 10.86% 9.52% Return on risk weighted assets 1.95% 1.99% 2.13% 2.51% 2.71% Tier 1 capital ratio 10.74% 10.46% 9.53% 7.98% 10.46% Total capital ratio 14.62% 14.74% 14.47% 13.13% 17.48% NPL net to loans 7) 2.29% 4.14% N/A N/A N/A NPL gross to loans 8) 4.45% 6.85% 8.88% 12.30% 16.85% Total allowance to loans 3.39% 4.87% 5.97% 7.82% 12.33% Total allowance to NPLs 73.91% 70.96% 66.60% 63.65% 73.15% NPLs after allowance (Million Baht) 9,128 13,502 18,778 26,463 24,786 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 after allowance for 4) Including revaluation allowance for debt restructuring doubtful account of non-performing loans 8) Loans used in calculation are loans to general customers and loans to financial institutions CONTENTS 7 Board of Directors’ Report 10 Management Report 12 Management Discussion and Analysis 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 52 Risk Management and Risk Factors 1. Overall Risk Management 2. Risk Management 72 Report of the Board of Directors’ Responsibilities for Financial Reports 73 Report of the Audit Committee 75 Audit Report of Certified Public Accountant 76 Financial Statements 84 Notes to Financial Statements 188 Financial Summary 194 Corporate Governance Committee Report 195 Human Resources and Remuneration Committee Report 196 Corporate Governance 1. Rights of Shareholders 2. Equitable Treatment of Shareholders 3. Roles of Stakeholders 4. Disclosure and Transparency 5. Responsibilities of the Board of Directors 223 Dividend Policy 224 Corporate Social Responsibility Activities 231 Factors Affecting Investment Decisions 234 Organization Chart 236 Board of Directors 238 Board of Directors and Executives 245 Directorship of Directors and Executives in Subsidiaries, Associated and Related Companies 246 Changes in KASIKORNBANK Shares held by Directors and Executives in 2007 247 Management Team 251 Investments of KASIKORNBANK in Other Companies 256 Reference Information 257 Major Shareholders 258 Awards and Commendations 262 KASIKORNBANK 1. Domestic Branch 2. Foreign Exchange Booth 3. Signature Exclusive Center 4. Business Banking Center 5. Corporate Business Center 6. SME Business Center 7. Overseas Office 288 K Companies 289 Summary of Specified Items per Form 56-2 K Now A new dimension of knowledge that goes beyond financial services BOARD OF DIRECTors’ REPORT KASIKORNBANK has always strived to grow and in every dimension, thus enabling the Bank to quickly develop into a strong Thai financial group, that provides introduce products and services which are appropriate to for our customers’ every financial need while generating the needs of each individual customer. maximum return for our shareholders. In addition, we continue our commitment to good corporate governance Despite the slowing Thai economy in 2007, due to our guidelines and social responsibility. strong commitment to excellence, KASIKORNBANKGROUP has achieved highly satisfactory results leading to the In 2007, customer centricity remained the vision and continuous growth of reputation and credibility, both within strategy of KASIKORNBANK, and was the guideline under Thai and foreign financial institutions. Our success reflects which the KASIKORNBANKGROUP operated. Guided by the strong commitment and competency of our employees, our service philosophy - “KASIKORNBANKGROUP: as well as the tremendous support we receive from our A People to Simplify Your Life” - and our newest financial shareholders, customers, and the general public, to whom innovation - “K Now” - the Bank offers advice and knowledge the Board of Directors of KASIKORNBANK would like to in various areas to customers at all levels, in addition to express its sincere gratitude. the full range of financial services already offered. This innovation benefits both retail customers, giving them a “Life of Comfort”, and business customers, supporting their ability to conduct “Business with No Limits”. To ensure long-term growth and leadership position, the Bank has initiated the “K-Transformation” project that helps build up competitiveness for the future. This project combines new technologies and detailed work and service procedures which are designed to create maximum satisfaction for our customers. The project will enhance Banyong Lamsam our employee’s capabilities in analyzing customers’ needs Chairman MANAGEMENT REPORT • Management Report • Management Discussion and Analysis • Risk Management and Risk Factors K Excellence Serving every aspect of financial life under the mark of quality financial service MANAGEMENT REPORT For the year ending December 31, 2007 To enhance our competitiveness and maintain our or 5.58 percent, over the end of 2006. This was mainly leadership in banking business amid steadily intensifying attributable to an increase in deposits, which equaled Baht competition, KASIKORNBANKGROUP works to respond 783,822 million at the end of 2007, showing a Baht 37,562 to the diverse needs of each customer segment. One of million gain-representing 5.03 percent growth-over the end our latest efforts to reach all customers is presented with of 2006. Total shareholders’ equity was Baht 99,995 million, our ‘K Now’: a new dimension of knowledge that goes beyond rising by Baht 11,757 million, or 13.32 percent, over the end financial services, embodying a business philosophy best of 2006, due to 2007 profits.