Annual Report 2019
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INNOVATIVE FINANCIAL SOLUTIONS PUT DREAMS WITHIN REACH We collaborate with leading partners to give our customers the best digital financial services. Because a better banking experience makes it easier to live — and to dream. INNOVATIVE FINANCIAL SOLUTIONS PUT DREAMS WITHIN REACH We collaborate with leading partners to give our customers the best digital financial services. Because a better banking experience makes it easier to live — and to dream. EMPOWERING ENTREPRENEURS WITH A TOTAL BANKING SOLUTION Our platform lets SMEs reach for opportunity. We offer all kinds of useful business management tools, to serve Thailand's full spectrum of companies. EMPOWERING ENTREPRENEURS WITH A TOTAL BANKING SOLUTION Our platform lets SMEs reach for opportunity. We offer all kinds of useful business management tools, to serve Thailand's full spectrum of companies. LIMITLESS POTENTIAL, WITH BEST-IN-CLASS PRIVATE WEALTH MANAGEMENT With sound advice, strong solutions and total professionalism, we help high net worth investors flourish. LIMITLESS POTENTIAL, WITH BEST-IN-CLASS PRIVATE WEALTH MANAGEMENT With sound advice, strong solutions and total professionalism, we help high net worth investors flourish. WITH TRUSTED GLOBAL PARTNERS, WE EXPAND BUSINESS HORIZONS World-leading partners help us deliver better financial and lifestyle experiences. WITH TRUSTED GLOBAL PARTNERS, WE EXPAND BUSINESS HORIZONS World-leading partners help us deliver better financial and lifestyle experiences. DOING BUSINESS BETTER WITH A SUSTAINABILITY MINDSET We help finance clean energy projects, to protect people and the environment as the economy grows. DOING BUSINESS BETTER WITH A SUSTAINABILITY MINDSET We help finance clean energy projects, to protect people and the environment as the economy grows. A COMMITMENT TO UNIVERSAL FINANCIAL LITERACY We help build a learning society and teach the importance of financial skills. Spending and saving wisely is crucial to quality of life and a strong economy. A COMMITMENT TO UNIVERSAL FINANCIAL LITERACY We help build a learning society and teach the importance of financial skills. Spending and saving wisely is crucial to quality of life and a strong economy. Contents 2019 Highlights Message from the 016 Corporate Governance Board of Directors 091 Corporate Governance Report 2019 125 Internal Control and Risk Management Total assets 130 Related Party Transactions Digital users 132 Nomination, Compensation and Corporate Governance Committee Report 2,964 134 Report of the Executive Committee 10.5 Baht billion Board of Directors and 135 Report of the Technology Committee Senior Executive Officers million Board of Directors 020 Senior Executive Officers 029 Organization Structure 037 Financial Reports Total loans Individual customers 137 Report of the Board of Directors’ Responsibility for the Financial Statements 138 Audit Committee Report 2,114 Business Overview 143 Management Discussion and Analysis 16.4 Baht billion million Thailand’s Economy in 2019 041 157 Key Financial Statistics and Outlook for 2020 159 Independent Auditor’s Report 166 Financial Statements and Notes Industry and Competition Review 042 to the Financial Statements Corporate Business Overview and Strategy 045 of the Bank and Its Subsidiaries 36% Awards and Honors in 2019 056 SME 16% 312 Supplementary Information Retail 958 % branches Risk Management and 059 48 Risk Factors Report of the Risk Oversight Committee 076 Net profit Corporate Social Responsibility 9,372 40.4 ATMs SCB Sustainability Report 079 Report of the Corporate 080 Baht billion Social Responsibility Committee THE SIAM COMMERCIAL BANK PUBLIC COMPANY LIMITED 015 Contents 2019 Highlights Message from the 016 Corporate Governance Board of Directors 091 Corporate Governance Report 2019 125 Internal Control and Risk Management Total assets 130 Related Party Transactions Digital users 132 Nomination, Compensation and Corporate Governance Committee Report 2,964 134 Report of the Executive Committee 10.5 Baht billion Board of Directors and 135 Report of the Technology Committee Senior Executive Officers million Board of Directors 020 Senior Executive Officers 029 Organization Structure 037 Financial Reports Total loans Individual customers 137 Report of the Board of Directors’ Responsibility for the Financial Statements 138 Audit Committee Report 2,114 Business Overview 143 Management Discussion and Analysis 16.4 Baht billion million Thailand’s Economy in 2019 041 157 Key Financial Statistics and Outlook for 2020 159 Independent Auditor’s Report 166 Financial Statements and Notes Industry and Competition Review 042 to the Financial Statements Corporate Business Overview and Strategy 045 of the Bank and Its Subsidiaries 36% Awards and Honors in 2019 056 SME 16% 312 Supplementary Information Retail 958 % branches Risk Management and 059 48 Risk Factors Report of the Risk Oversight Committee 076 Net profit Corporate Social Responsibility 9,372 40.4 ATMs SCB Sustainability Report 079 Report of the Corporate 080 Baht billion Social Responsibility Committee 016 ANNUAL REPORT 2019 Message from the Board of Directors DR. VICHIT SURAPHONGCHAI MR. ARTHID NANTHAWITHAYA Chairman of the Chief Executive Officer and Board of Directors Chairman of the Executive Committee THE SIAM COMMERCIAL BANK PUBLIC COMPANY LIMITED 017 Dear Shareholders, 2019 was another challenging year for the Thai The Bank recorded a consolidated net profit of Baht commercial banking sector, amid unfavorable 40,436 million in 2019, an increase of 0.9% yoy, while economic conditions and a lackluster business the pre-provision operating profit improved 29.9%, environment. Thailand’s GDP growth slowed to 2.4% primarily due to extraordinary gains from the sale of in 2019, compared to 4.2% in the prior year, dragged SCB Life Assurance PCL in September 2019 as well as down by an export slump linked to a slower global higher net interest income and net fee income, but economy; the China-U.S. trade war; and steep partly offset by an increase in operating expenses. appreciation of the Thai baht. These factors adversely impacted income, employment, and consumer and Net interest income for 2019 grew at 3.1% yoy to entrepreneur confidence, despite multiple economic Baht 99,402 million. Despite falling interest rates in stimulus measures by the government, cuts in 2019, the Bank was able to grow its income base by the policy interest rate, and the tourism sector’s rebalancing its loan portfolio toward higher margin expansion during the second half of the year. products. Non-interest income surged 59.3% yoy to Certainly, commercial banks still faced challenges like Baht 66,696 million, due mainly to a large investment competition from other banks and non-bank players, gain from the sale of SCB Life Assurance PCL. Excluding including regional and global fintech companies; this extraordinary one-off gain, the growth of non- rapid changes in customers’ behaviors; and a push interest income was 2.0% yoy. to achieve rigorous IT security standards and strict compliance with policies, rules and regulations of Operating expenses rose 9.1% yoy to Baht 70,538 supervisory bodies. million in 2019, primarily due to one-time personnel expenses associated with a reserve for employee In 2019, the Bank continued to pursue its SCB benefits to comply with the new labor law as well Transformation initiative under the “Going Upside as transformation-related costs. Overall, the cost- Down” strategy, which overhauls its business model to-income ratio in 2019 decreased to 42.5%. and optimizes its technological capabilities. This ongoing effort will tap into new customer acquisition As of December 31, 2019, the Bank’s gross NPL ratio opportunities and leverage customer data to stood at 3.41%, increasing from the level of 2.85% the fullest while simultaneously developing SCB’s recorded at the end of 2018. This deterioration foundations and people, thereby strengthening reflected both a challenging business environment competitiveness of the Bank’s core business in the as economic headwinds intensified in the second new operating environment. half of 2019 and the Bank’s prudent loan classification policy. Given current economic uncertainties and 2019 Operational Results the recent trend in asset quality, the Bank set aside total loan loss provisions of Baht 36,211 million for In 2019, SCB implemented several key strategic 2019. At the end of 2019, the NPL coverage ratio initiatives that strengthened its position in important was maintained at 134.1%. ways. Highlights included the strategic partnership with FWD Group to reshape the Bank’s life insurance The Bank maintained a solid capital base. Its total business model; the establishment of a joint venture, capital funds on a consolidated basis under Basel III SCB-Julius Baer Securities Co., Ltd., as its wealth were high, at 18.1% of total risk-weighted assets at management arm; and the improvement of online the end of 2019. As a result of successful completion and offline sales channels, which encompassed the of the sale of SCB Life Assurance PCL, the Board upgrade of product offering standards and digital approved a special dividend payment at Baht 0.75 platforms. per share. 018 ANNUAL REPORT 2019 Corporate Governance and Sustainability As the business landscape continued to undergo • The Board held two meetings of independent rapid change, the Bank stayed committed to directors and non-executive directors in 2019 enhancing its corporate governance to achieve and arranged for the performance assessment greater efficiency and sustainable growth