TMB in Other Companies

Table of Contents

Vision and Mission ...... 2

Financial Highlights ...... 4

Message from the Chairperson ...... 6

Message from the Chief Executive Officer...... 8

Board of Directors ...... 36

Board of Directors’ Profile ...... 38

Chief Officers ...... 48

Leadership Team ...... 50

Organization Chart ...... 54

Thai Economy and Banking Industry ...... 56

Management Discussion and Analysis ...... 59

Strategy and Business ...... 70

Risk Management and Key Risk Factors ...... 76

Corporate Governance and Management ...... 80

Shareholders Structure ...... 111

Statement of The Audit Committee ...... 112

Report of the Nomination, Remuneration and Corporate Governance Committee ...... 113

Board of Directors’ Responsibility for Financial Reports ...... 114

Report of Independent Auditor ...... 117

Financial Statements and Notes to Financial Statements ...... 118

Basel II Pillar III Disclosure ...... 218

Company Information ...... 249

Investment of TMB in Other Companies ...... 250

TMB Branches in Bangkok Metropolitan ...... 251

TMB Branches in Upcountry ...... 258

TMB Overseas Branches ...... 266

TMB Currency Exchange Service Offices ...... 267

TMB Supply Chain and Business Center ...... 271

Main Correspondent Banks ...... 272 2 | Vision and Mission Annual Report 2010

Our Vision: T o be the leading Thai bank with world-class financial solutions

Our Mission: 01 02 Understand our customers and Create shareholder value offer high quality financial services with appropriate and sustainable designed to meet their needs and aspirations shareholder returns TMB Bank PCL Vision and Mission | 3

To be the leading Thai bank with world-class financial solutions

03 04 T rust in employees and provide Create value to society opportunities while operating our business with internationally to develop and perform to their full capabilities accepted standards of good corporate governance as well as reward them based on their performance 4 | Financial Highlights Annual Report 2010

financialF inancial Hhighlightsighlights

(Unit: THB million) (Consolidated Financial Statements) 2010 2009 2008 2007 2006

(Restated) (Restated) (Restated) (Restated) Selected income statements items Interest and dividend income 18,499 20,481 29,242 33,813 36,159 Interest expenses 6,240 8,074 13,359 17,282 20,970 Net income from interest and dividend 12,259 12,407 15,883 16,531 15,189 Bad debts and doubtful accounts 1,654 2,627 5,076 30,983 13,013 Net interest income after provision 10,605 9,780 10,807 (14,452) 2,176 Non-interest income 6,966 10,077 6,647 6,434 6,209 Non-interest expenses 14,346 17,859 17,114 35,459 20,430 Net income (loss) before income tax 3,225 1,998 340 (43,477) (12,045) Income tax 14 33 87 132 200 Minority interests 9 20 106 136 113 Net income 3,202 1,945 147 (43,745) (12,358)

Selected balance sheets items Loans and Accrued Interest Receivable 363,742 369,063 427,582 468,921 546,152 Total Assets 589,592 543,142 601,573 622,026 751,810 Deposits 413,116 407,776 450,297 465,462 568,467 Total Liabilities 539,737 496,385 556,939 577,641 703,877 Shareholders' Equity 49,772 46,682 44,543 43,751 47,422 Minority Interests 83 75 91 634 511

Basis earning per share (THB) 0 .07 0 .05 0 .01 (2 .60) (0 .86)

Net income and ROE Net interest income (NII) and NIM THB THB million million 10,000 20% 18,000 7% 4.3% 6.6% 16,531 0.3% 15,189 15,883 0 0% 15,000 6% 147 1,945 3,202 12,407 12,259 -25.1% -20% 5% -10,000 12,000 -12,358 -40% 4% -20,000 9,000 -60% 3% 2.1% 2.4% 2.6% 2.2% 2.2% -30,000 6,000 -80% 2% -40,000 -96.0% -100% 3,000 1% -43,745 -50,000 -120% 0 0%

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

█ Net income (LHS) ROE (RHS) █ NII (LHS) NIM (RHS) TMB Bank PCL Financial Highlights | 5

(Unit: THB million) 2010 2009 2008 2007 2006

Key financial ratio

Profitability Return on equity (ROE) 6 .6% 4 .3% 0 .3% -96 .0% -25 1. % Return on assets (ROA) 0 .6% 0 .3% 0 .0% -6 .4% -1 7. % Cost to Income 74 .6% 79 .4% 76 .0% 152 .5% 95 .5% Net interest margin (NIM) 2 .3% 2 .2% 2 .6% 2 .4% 2 1. %

Liquidity Loan to deposit ratio (LDR) 87 .9% 90 .3% 94 .2% 99 .9% 95 .2% % current and saving accounts to total deposits (CASA) 46 .3% 49 .5% 38 .6% 41 .6% 25 .9%

Capital adequancy Tier I 11 .3%* 12 .3%* 12 .3% 10 .5% 7 .3% Capital adequacy ratio (CAR) 16 .6%* 17 .0%* 16 .8% 14 .4% 10 .4%

Asset quality Consolidated NPL ratio 8 .3% 12 7. % 14 .3% 16 1. % 11 .3% NPL coverage 57 .0% 57 7. % 65 .8% 68 1. % 51 .3% % excess reserve to performing loan 2 .3% 2 .5% 2 .2% 3 .0% 0 .5% Book value per share (BVPS) 1 1. 5 1 .09 1 .03 1 .02 2 .59 Number of employees 8,750 8,236 9,039 8,700 9,077 Number of branches 455 483 470 470 464 Number of ATMs 2,300 2,257 1,949 1,714 1,751

Note: * based on Basel II’s criteria

Tier I and CAR CASA and LDR

18% 16.8% 17.0% 16.6% 60% 102% 99.9% 16% 100% 14.4% 49.5% 50% 46.3% 98% 14% 41.6% 95.2% 38.6% 96% 12% 10.4% 40% 12.3% 12.3% 94% 11.3% 94.2% 10% 92% 10.5% 30% 90.3% 8% 25.9% 90% 7.3% 6% 20% 87.9% 88% 86% 4% 10% 84% 2% 82% 0% 0 80%

2006 2007 2008 2009 2010 2006 2007 2008 2009 2010

CAR Tier I █ CASA (LHS) LDR (RHS) 6 | Message from the Chairperson Annual Report 2010

Message from THE CHAIRPERSON TMB Bank PCL Message from the Chairperson | 7

The year 2010 marked an important milestone for Thailand and and consumer behaviors. At the same time, TMB reinforces its TMB Bank. Thailand emerged from one of the most difficult contribution to the community through the “FAI-FAH” program political crises to strongly record positive GDP growth of 7.8% which joins forces of our employees and inspired contributors compared to a contraction of 2.3% a year earlier. TMB Bank from the society to build better life skills for inner-city children not only staged a strong 64.6% earnings growth with the and teenagers. 2010 earnings reaching THB 3.2 billion, but also cleaned up our retained losses to close out the legacy from the previous Good corporate governance is of our utmost priority. In 2010 the financial crisis. Board of Directors further improved the corporate governance framework for TMB to ensure strong supervisory roles while In both cases, the country and TMB emerged stronger having supporting the best practices of the market. We are again endured critical challenges. TMB built its strength on the pleased to report that in 2010, TMB received the highest score success of the transformation plan’s “Lay the Foundation” phase of “Excellent” from the Thai Institute of Directors Association during 2008 – 2009. Our 4.2% net growth in performing loans supported by Securities and Exchange Commission and the and simultaneous reduction in non-performing loans (NPL) of Stock Exchange of Thailand, reflecting our intention to continue an additional THB 18 billion representing 8.3% of consolidated to make the difference for all our stakeholders. total loans set TMB on the path to the asset quality level of the Thai market. In line with the new transformation phase We thank our shareholders for their continued trust and support “Differentiate and Grow with Quality” which started in 2010, through this historic transformation journey of TMB. We are TMB has invested in the capability to acquire quality customers grateful to our valuable customers for giving us the opportunity to further enlarge the foundations of our sustained growth. The to make the difference in their lives and aspirations. We are results are already evident in the success of our campaigns certain that with relentless dedication from TMB staff and throughout the year. management, our future vision of ‘the leading Thai bank with world-class financial solutions’ is within reach. Our 2010 achievements in product innovations, improvements in service and rise in brand consideration enabled TMB to contribute even more to our customers and the Thai market. TMB won the coveted FIIA (Financial Insights Innovation Awards) for our product innovations which significantly shifted market

Saowanee Kamolbutr Chairperson 8 | Message from the Chief Executive Officer Annual Report 2010

M Essage FROM The CHIEF EXECUTIVE OFFICER TMB Bank PCL Message from the Chief Executive Officer | 9

When individuals and businesses trust a financial institution with 159% of Bank of Thailand requirements . At the same time, their money, they find reassurance in strength . A strong bank TMB minimized the formation of NPLs through strong risk as a partner means stability, peace of mind and confidence management capabilities . TMB also cleaned up retained losses in the future . of THB 101 .6 billion and share discounts of THB 303 .0 billion . The result — a healthy balance sheet with the ability to pay Starting from our already solid foundation, TMB is getting dividends for the first time in 14 years upon approval from the stronger every day . By strengthening our team of over Bank of Thailand, the Board of Directors, and shareholders . 8,600 employees, TMB is continually improving its financial strength — certainly a key measure for any bank . But there is TMB is committed to sustained profitability, which is vitally much more to what makes us a strong and solid bank . With important to our investors and stakeholders and helps customer centricity as our main focus to drive business, we strengthen the overall Thai banking sector . Our firm financial gain in-depth understanding of customers’ needs which allow foundation further cements the trust-based relationships us to effectively create and deliver innovative products and that we continue to build with our customers . As a top-tier services . With more efficient systems and real innovations, financial institution with a solid reputation, TMB can fully our operational strength is increasing . TMB is also asserting contribute in its role amid the increasingly inter-connected its presence in the highly competitive Thai market by financial system . strengthening the brand . We are even playing our part to build a stronger community . 2010 was a year of measured loan growth for TMB with total performing loans increasing by approximately 4 .2% from Financial strength 2009 . SME, Retail unsecured lending, and Trade Financing, In 2010, TMB enjoyed continued earnings momentum . We in particular, grew by 13%, 40%, and 300% respectively . reached over THB 3 .20 billion in net profits with 64 6. % growth Growth in SME and Retail unsecured lending are examples compared to 2009 . This was the third consecutive year of of TMB’s diversification of its portfolio which has in the past growing profits since our recapitalization in December 2007 . been dominated by Wholesale customers . During 2010, the This trend alone is a sure sign of TMB’s increasing strength . Bank simultaneously took actions to strengthen the loan book by reducing exposure to lower quality customers by There are many factors behind TMB’s stronger earnings . Higher approximately THB 18 .05 billion . Excluding those actions NIM and core non-interest income, coupled with lower risk the bank-wide performing loan growth would have been costs, were the major drivers of the Bank’s improved profits . more than 10% . During 2010, we emphasized quality growth and managed down NPLs and NPAs through resolutions and sales . Our Meanwhile, the Bank’s fee-generating ability has improved NPL ratio has dropped from 14 .3% in 2008, 12 7. % in 2009 substantially . Enhancements to Trade Finance and Capital to 8 .3% in 2010, with a strong loan loss reserve equal to Markets resulted in dramatically higher business volumes 10 | Message from the Chief Executive Officer Annual Report 2010

from Wholesale customers whilst Retail banking saw higher comprehensive revamp of HR management . We launched the income from Bancassurance, currency exchange service and TMB Way culture to ensure all of our people remained focused deposit related fees . Disregarding large one-off items, the core on making things better and easier for customers . non-interest income grew by 10 1. 6% year-on-year . Our staff has been aligned through the TMB WAY, which At the end of 2010, Fitch Ratings revised TMB’s outlook ensures a common culture and language throughout the Bank . It to stable from negative . The rating took into account our focuses TMB staff on our core values which include customer- sizeable domestic franchise, solid capital, improving centricity, integrity, high performance, open communications and profitability and asset quality . Fitch also noted that TMB’s risk management . The Bank recognizes and rewards individuals overall risk management had improved, with tougher credit and teams who live the TMB WAY in their work . The monthly policies and standards and a more comprehensive risk “Chief Recognition Award” recognized outstanding applicants management system . who were then considered for the annual TMB WAY Awards . The coveted CEO Recognition Award, the grand prize, goes Strength in product innovations to cross-functional initiatives . TMB led the market in product innovations during 2010 . Some of our unique products included the ‘No Fee Savings Account’, At TMB, we cultivate high performance and groom talent to ‘No Limit Debit Card’, ‘No Asset OD’, and ‘3X Express Loans’ . succeed . Our annual TMB Way Award 2010 showcased more Our innovations in deposit products won the coveted 2010 FIIA than two hundred initiatives of excellence . Individuals across (Financial Insights Innovation Awards) for customer engagement, the Bank regularly collaborate to achieve breakthroughs for beating out competitors across Asia Pacific . customers, including the 2010 winner “15 Day SME Approval and Disbursement” which has helped to drive TMB’s return to the With a strong focus on being customer-centric, TMB also top tier for SME customers . As people are our most important improved service levels during the year . We enhanced our retail asset, TMB has created an environment where people can be call center platform to seamlessly integrate correspondence . the best they can be . TMB’s new Corporate e-banking portals allow our customers to directly interface with the Bank across core corporate banking These efforts of the past year resulted in tangible improvements products . We also were first to market the best supply chain in employee engagement scores . The 2010 Employee solutions that clearly set TMB apart from our competitors . Engagement score by Gallup showed a dramatic increase from 13th percentile in 2009 to 70th percentile in 2010, compared TMB will continue to lead the way with new innovations . to Gallup’s global organizational data . Employee engagement We will soon roll out retail loan origination systems that will at TMB is now at a level closer to the world-class threshold . let us provide retail approval in a matter of hours, not days . According to Gallup, our improvement of employee engagement Key to our sustained delivery of high-quality financial services scores in just one year normally takes other organizations to is a robust technology platform that is supported by a high achieve in four . performance staff base that lets TMB quickly and efficiently develop innovative products that exceed customer expectations Building a stronger brand as well as enhance their quality of life . The essence of the TMB brand is its people . During late 2010, we introduced TMB staff across Thailand to a comprehensive D eveloping a stronger team campaign called “Make THE Difference ”. To be launched in TMB has been undergoing a journey of transformation into the first quarter of 2011, it will guide our staff to focus heavily a customer-centric organization since 2008 . This included a on TMB’s goal of delivering the best customer service in the TMB Bank PCL Message from the Chief Executive Officer | 11

business while challenging the norms of the banking industry for change in their own communities . The FAI-FAH program with unmatched product innovations that set trends and add will expand in 2011 with two more locations . Besides FAI-FAH, value to customers . TMB other social contribution programs include scholarships for undergraduate students in finance and banking related fields, The TMB brand represents a promise of excellence to our scholarships to military official’s children, donations to victims customers . A strong brand will keep our existing customers of natural disasters, project loans to energy and environment fulfilled and attract new ones to TMB resulting in our management projects, and cooperation with the World Bank, strengthening market presence . Our brand grew in strength Ministry of Finance and Ministry of Industry in managing the during 2010 . A survey conducted in September 2010, compared Ozone Project Trust Fund (OPTF) . with the results of the previous year, showed TMB’s brand consideration jumped from 31% to 79%, while brand rejection Strong corporate governance dropped to 2% from 29% . TMB Bank is committed to high standards of corporate governance . Good corporate governance is the bedrock What has been done this year has gained traction . People are of TMB with its efficiency and transparency, management recognizing just how much we are accomplishing . TMB has policies and systems that create trust and confidence amongst been featured in numerous events and studies about corporate its shareholders, investors, and other stakeholders (clients, transformation . Our innovative no-fee products have set new including in particular depositors, employees, regulators benchmarks for the market and efforts are being made to and society) . broaden the use of electronic banking throughout Thailand . In 2010, the Board of Directors enhanced the Corporate TMB’s CEO and Chiefs held 46 ‘Make THE Difference’ Governance Framework of TMB to reflect these philosophies Management Roadshows across the country throughout 2010 while ensuring that our path toward the future aspirations are and in the beginning of 2011 . They met with small groups of strongly governed on behalf of the shareholders . staff in informal sessions that encouraged two-way dialogues . The goal was to engage staff with our ‘Make THE Difference’ With strong corporate governance based on local and philosophy and introduce brand DNA (being genuine, simple & international best practices, TMB remains true to operational easy and intelligent, with a “Why Not?” attitude) . We will practices that deliver the greatest value to our customers, officially launch this brand positioning in Q1 2011 . employees, shareholders and society while sustaining our long-term growth . H elping to strengthen the community As a good corporate citizen, TMB is also involved in strengthening the communities with innovative CSR programs . Our flagship program, called “FAI-FAH,” kicked off in early 2010 . Using the arts as a learning tool, over 100 TMB volunteers are helping 150 children in lower-income communities to become catalysts

M r. Boontuck Wungcharoen Chief Executive Officer • • M ake The Difference

Question: WHY MAKE THE DIFFERENCE?

Answer:

There are big advantages to being a smaller-sized bank. TMB isn’t a large bank in terms of either size or assets but this gives us the ability to differentiate our approach towards financial services. By constantly challenging the status quo, TMB is committed to capturing the hearts and minds of consumers — an effect of viewing size in a completely different way.

Size matters. TMB is small enough to be nimble and responsive to the needs of customers. And yet, we are a solid financial institution that creates products and services that start trends in the marketplace.

When people ask how TMB is truly different, we simply offer this: at TMB, we believe in opening up a realm of possibilities for our customers. We create financial products and services in a market that had previously been underserved.

That’s the kind of difference that allows us to make the difference — the TMB difference.

Boontuck Wungcharoen Chief Executive Officer

• • Financial Performance

Question: WHAT DIFFERENCE CN A MAke THE DIFFERENCE ? WHAT DIFFERENCE CAN MAKE THE DIFFERENCE ? • • Financial performance

Answer:

Facts, fi gures, and graphs alone don’t tell the whole story .

It is the will to create a positive difference that enables TMB to produce financial solutions which excite customers and provide them with real, tangible beneﬁ ts that they have never seen before .

Our goal is not only to provide good services and better products, but also to make things possible for our customers . We believe each challenge requires a tailor-made approach that results in unique offers and market breakthroughs exceeding customer expectations .

3.2 BILLION IN NET PROFIT TMB turned THB 3.2 billion net profit in 2010, marking three consecutive years of profits and continued growth with higher NIM and core non-interest income. 2008

2009

2010 3.2 billion

64.6% GROWTH WITH CONTINUED EARNINGS MOMENTUM Resuming quality growth with 64.6% increase in net profit as compared to the previous year. • • P eople

Question: HOWO D 8,600 PEOPLE E MBraCE ONE CULTURE, ONE Dna? HOW DO 8,600 PEOPLE EMBRACE ONE CULTURE, ONE DNA? • • P eople

Answer:

Definitely, they have to do so with conviction and commitment .

Big changes have taken place within TMB . All of us now share one customer- centric culture through the “TMB Way ”. This common culture provides TMB with a platform to ensure everything we do for our customers share the same DNA of common values.

These changes have come about from opening our channels of communication to listen to concerns of the staff and then together finding creative solutions that are based on expertise and trust .

It is the respect for the staff’s individual contributions as well as their interaction within group dynamics that allow our vision to be translated into real actions — actions that translate into the power within all of our employees to Make THE Difference for all of our stakeholders .

70 th PercenTile eMPloyee engageMenT score TMB’s employee engagement score compared to Gallup global organization database showed a dramatic increase from 13th percentile in 2009 to 70th percentile in 2010, which is now closer to the world-class threshold.

46 eMPloyee roaDshoWs anD coUnTing A total of 46 nationwide roadshow events with the management meeting all 8,600 TMB employees. • • P eople

> Our DNA Make The Difference At TMB, we believe in our people’s potential to Make THE Difference in order to enhance the quality of our customers’ lives through our products and services

“Why not?” Attitude G enuine Always find solutions to turn Real and authentic impossibilities into possibilities

• Challenge market norms • Be open and transparent • Break through the status quo • Provide customers with what they really need • Act courageously to Make THE Difference • Put customers’ best interest as a priority for all stakeholders • Take ownership in protecting customers’ interests

▼ ▼ > Our Culture TyMB Wa TMB’s cultural values is the foundation that ensures consistency of character throughout our entire employee base

C ustomer Centricity O pen Communications H igh Performance TMB’s business is service-related All TMB staff can communicate Working passionately as a team, at and as such, our customers are very freely and are encouraged to both TMB we are able to keep in mind mutual important to us . Working hand-in-hand creatively and courageously offer achievement rather than individual gain . to create the best experience possible, suggestions while taking constructive And by together being committed to and everyone at TMB is responsible for feedback . In this culture of open responsible for each and every single task, protecting customers’ interests as if learning, both personal expression we are able to help achieve a standard of they were their own — sometimes and group progression are nurtured work that is beyond normal expectations even challenging the status quo to alongside responsive and timely and of true benefit to all related parties — ensure complete mid- and long-term communication to achieve faster as TMB, its stakeholders, employees, and satisfaction . well as better results . society at large . I ntelligent Simple & Easy Sharp and in-depth knowledge Honest, open, and clear

• Apply knowledge in products and services for • Focus on solutions rather than problems our customers’ benefit • Communicate with simple language • Demonstrate strong expertise • Provide information to customers as necessary • Be aware of and deeply understand our target • Deliver convenient and speedy services that customers’ needs exceed customers’ expectations • Keep learning

R isk Management I ntegrity Essential to our business, risk management is the Integrity and honesty are the two key characteristics that responsibility of all our employees — but it is our ability dictate if a customer will return to our bank . By consistently to balance risk against opportunity that has set us apart . delivering what is promised, correcting faults as well as In every department, from the very beginning, our staff admitting them and also pointing out what is wrong strive to understand the exact circumstances of each of elsewhere, we are able to generate an ongoing atmosphere our accounts so as to pre-empt and then mitigate risk in of transparency and trust . a responsible way . Effective risk management will enhance customers’ confidence in their business achievement and trust in TMB . • • P roducts and Services

Question: HOW DO WE MAKE IN VEntors OUT OF BankERS? HOW DO WE MAKE INVENTORS OUT OF BANKERS? • • products and Services

Answer:

Inventors know that when conditions change, previously successful solutions could become obsolete . If bankers are to indeed become inventors, we need to proactively find successful solutions that provide our customers with real benefi ts topre-empt new challenges before they arise.

At TMB, we constantly push ourselves to make the right difference for our customers — asking the right questions before consumers do, eliminating redundancies and unnecessary processes, breaking through industry barriers, and offering more benefi ts to consumers . In sum, we have transformed ourselves from bankers to inventors in Thailand’s dynamic fi nancial market .

Fiia aWarD for cUsToMer eMgageMenT TMB innovation in deposit products won the coveted 2010 FIIA for customer engagement, beating strong competition across Asia Pacific.

branD consiDeraTion 79% 2009 31%

2010 79%

As a market leader in product innovations with several successful financial products, TMB brand consideration dramatically jumped from 31% to 79% in the year 2010, while brand rejection simultaneously dropped from 29% to 2%. • • products and Services

Simple questions from our customers TMb and our ‘Make the Difference’ philosophy offer answers with tangible, real-world beneﬁ ts.

TMB Customers have gotten accustomed to being charged fees for using their own money: withdrawals, bill payments, and no fee funds transfers . Savings account At TMB, we asked “why?” Why do customers need to be charged fees to access their own money? TMB chose to Make THE Difference by answering the question that other banks failed to mention . Customers enrolled in the TMB No Fee Savings Account are exempt from having to pay such fees .

TMB Why pay a fee to withdraw your own money, especially if you are withdrawing from the ATM of a different bank or from no liMit an ATM in a different province? debit card AT TMB, we felt this was not in the customers’ best interest . The TMB No Limit Debit Card — the only card that removes unnecessary limitations by allowing customers to withdraw from any banks’ ATM in any province, without being charged a fee .

TMB Occasionally, customers need the fl exibility to withdraw money from their term deposit accounts before maturity . Why then UP & UP must customers surrender the interest accumulated during the term deposit time their money stayed in the account? TMB invented Up & Up Term Deposit that allows customers to withdraw without being penalized . Even if customers withdraw their funds before the fi xed period of time, the accumulated interest on the account will not be forfeited .

With the TMB Up & Up Term Deposit account, your interest will be calculated based on the time of your withdrawal . TMB Why pay such high interest rates for withdrawing cash using so Chill your credit card from an ATM? TMB offers a credit card for fi nancially-savvy customers, giving credit card them the freedom to choose their preferred benefi t program . TMB So Chill is a low-interest rate credit card that allows our customers to make cash withdrawals from ATMs without having to pay penalties or fees .

TMB Why must payroll accounts be limited to only direct deposit 3d and withdrawals? TMB created a payroll account with additional benefi ts to give Salary customers the freedom to choose which attributes best suit their lifestyle .

TMB Every business owner wants their business to grow and expand . But if opportunities for growth are stagnated because sMe 3X of low collateral and lack of working capital, what’s a business express credit owner to do? TMB believes in the potential of our SME customers and offers support by providing a business loan up to three times the value of a customer’s collateral . Eliminating the obstacles to growth and maximizing the potential of every business — that’s how TMB makes the difference .

TMB As a business expands, the amount of transactions expand along with it, too . But having more suppliers involved does not sUPPlY mean that business needs to be more complicated . Chain TMB understands and would like to help smoothen fi nancial & Business transactions for our corporate customers with the TMB Supply Chain and Business Portal program, created to help portal facilitate fi nancial transactions between buyer and seller and to best maximize the effectiveness of their business . • • C orporate Social Responsibility

Question: HOW DO WE EMPOWER POEE PL TO MAKE THE DIFFERENCE ? HOW DO WE EP M Ower PEOPLE TO MAKE The DIFFERENCE ? • • corporate Social responsibility

Answer:

Every individual possesses the power to make the difference . Once one feels a sense of empowerment to make a positive change in themselves and their community, the world opens itself up for the taking .

TMB is committed to empowering anyone on this quest for the greater social good through nurturing the imagination and offering up expertise and support . We believe that once the mind is ignited, the body will take on the rest of the journey to pave the way towards a better society .

150 chilDren ParTiciPaTe in oUr fai-fah PrograM Since the inception of the FAI-FAH program in April 2009, 150 children have joined the program so far and it continues to grow .

A survey conducted by ACNielsen in 2010 found that 99% of parents in the communities surveyed rated FAI-FAH as extremely useful (73%) or useful (27%) • • C orporate Social Responsibility

TMB volunteers, FAI-FAH children and community members joined hands to paint new walls for the Tawalsak Community in July 2010 TMB volunteers enjoying “Community Clean-up Rally” at three communities (Uthairat, Tawalsak and Wat Pai Tun)

TMB volunteers take part in the FAI-FAH Festival organized to give inner-city children an opportunity to demonstrate their new skills

Empowering children through arts and life skills 36 | Board of Directors Annual Report 2010

boarD of direCtors

01 Mrs. saowanee 02 general PraYUt 06 11 kaMolbUtr Chan-o-Cha 07 09 12 02 05 08 04 Chairperson Director 03 10 01

07 Mr. kritsda 08 Mr. VaUghn UdYanin nigel riChtor Director Director TMB Bank PCL Board of Directors | 37

03R D . VijiT 04 Mr. Philippe 05 v Mr. A iruth 06 Mr. Willem Supinit G.J.E.O. Damas Wongbuddhapitak Frederik Nagel Director Director Director Director

09 m Mr. A orn 10 Mr. Christopher 11 Mr. Tara 12 Mr. Boontuck Asvanunt John King Tiradnakorn Wungcharoen Director Director Director Director and Chief Executive Officer 38 | Board of Directors’ Profile Annual Report 2010

BOARD OF DIRECTORS’ PROFILE

MRS. SAOWANEE KAMOLBUTR Age 58 Shareholding in TMB: 0%

Chairperson of the Board

Education - Master of Public Administration, Thammasat University - Bachelor of Public Administration, Thammasat University - National Defence College - Senior Executive Program Certiﬁ cate, Capital Market Academy (CMA) - Senior Executive Program (Kellogg - Sasin) - Senior Executive Program (SES 39) - The Management Development Program, Wharton School - Director Certiﬁ cation Program, Role of the Compensation Committee, Role of the Chairman Program and Financial Institutions Governance Program, Thai Institute of Directors Association

Work Experience May 2010 – Present Director, Provincial Waterworks Authority Oct 2009 – Present Deputy Permanent Secretary, Ministry of Finance Apr 2009 – Present Director, Don Muang Tollway Plc 2008 – Present Executive Director, Neighbouring Countries Economic Development Cooperation Agency (Public Organization) (NEDA) Oct 2008 – Sep 2009 Inspector-General, Ministry of Finance 2004 – Oct 2008 Member of the Board, Member of the Audit Committee and Chairman of Labor Relation Committee, Thailand Institute of Scientiﬁ c and Technological Research (Tistr) 2007 – Sep 2008 Principal Advisor on Performance Improvement, Ministry of Finance 2007 – Apr 2008 Member of the Audit Committee, KTB Leasing Co., Ltd. 2005 – Apr 2008 Director, KTB Leasing Co., Ltd. 2004 – Mar 2007 Deputy Director – General, Revenue Department TMB Bank PCL Board of Directors’ Profile | 39

gENERAL PRAyuT ChAN-O-ChA Age 57 Shareholding in TMB: 0%

Director of the Board (appointed on October 7, 2010)

Education - Bachelor of Science, Chulachomklao Royal Military Academy - Diploma, RTA Command and General Staff College - National Defence College - Director Certifi cation Program, Thai Institute of Directors Association

Work Experience Oct 2010 - Present Commander-in-Chief, Royal Thai Army 2009 - Sep 2010 Deputy Commander-in-Chief, Royal Thai Army 2008 - 2009 Chief of Staff, Royal Thai Army 2007 - Apr 2010 Independent Director and Chairman of the Corporate Governance Committee, Thai Oil Plc . 2006 - 2008 Independent Director, Metropolitan Electricity Authority 2006 - 2008 1st Army Area Commanding General, Royal Thai Army 2006 - 2007 Member of the National Legislative Assembly, Parliament 40 | Board of Directors’ Profile Annual Report 2010

DR. VIJIT SuPINIT Age 69 Shareholding in TMB: 0%

Director of the Board Chairman of the Audit Committee Independent Director

Education - Honorary Doctorate Degree of Philosophy (Economics), Ramkhamhaeng University - MA (Economics), Yale University, USA - BA (Economics) (Honors), The University of Manchester, UK - Southend College of Technology, UK - National Defence College - Senior Executive Program Certifi cate, Capital Market Academy (CMA) - Director Accreditation Program, Audit Committee Program and Role of the Chairman, Thai Institute of Directors Association

Work Experience Apr 2008 – Present Chairman, Securities and Exchange Commission (SEC) 2007 – Present Dean, Graduate school of Management (MBA) Siam University 2006 – Present Chairman, G Steel Public Co ., Ltd . 2006 – Present Advisor, Thai – Laos Association for Friendship 2005 – Present Board member, Capital Market Development Fund Foundation 1998 – Present Director, Institute of Social and Economic Policy 1993 – Present Director, Wat Kaew Pichitre Foundation 1990 – Present Director, Puey Ungphakorn Foundation 2006 – 2007 Consultant, Bangkok Commercial Asset Management Co ., Ltd . 2005 – 2007 Chairman, Stock Exchange of Thailand Foundation 2004 – 2007 Chairman, Thailand Future Exchange Co ., Ltd . 2003 – 2007 Chairman, Asset Management Corporation of the Ministry of Finance 2003 – 2007 Chairman, Stock Exchange of Thailand 2003 – 2007 Chairman, Thailand Securities Depositories Co ., Ltd . 2003 – 2007 Chairman, Settrade .com Co ., Ltd . 2003 – 2007 Chairman, Family Knowhow Co ., Ltd . 2003 – 2007 Member, The National Corporate Governance Committee 1993 – 1996 Chairman, Export and Import Bank of Thailand 1990 – 1996 Governor & Chairman of the Court of Directors, Bank of Thailand TMB Bank PCL Board of Directors’ Profile | 41

MR. PhILIPPE g.J.E.O. DAMAS Age 60 Shareholding in TMB: 0.0028%

Director of the Board Chairman of the Board of Executive Directors Member of the Nomination, Remuneration and Corporate Governance Committee

Education - MBA (Accounting & International Finance), Columbia University, New York, USA - Military Service, Belgian Army - Advanced Automatics, Ecole Nationale de l’Aéronautique et de l’Espace, Toulouse, France - Ingénieur Civil Electricien Mécanicien, Université Libre de Bruxelles, Brussels, Belgium - Directors Refresher Program, ING Vysya Bank Ltd . (India)

Work Experience Mar 2011– Present Independent Director, METROCOM Bank in Kazakhstan 2006 – Present Vice Chairman of the Board, ING Vysya Bank Ltd . (India) 2006 – Present Director, ING Mauritius 2001 – Present Director, ING Asia Private Bank (Singapore) Nov 2008 – Nov 2009 CEO, Retail and Banking Asia, ING Group (Singapore) 2005 – 2008 CEO, Retail Banking Asia, Global Private Banking & ING Trust, ING Group (Singapore) 42 | Board of Directors’ Profile Annual Report 2010

MR. AVIRuTh WONgBuDDhAPITAk AGE 62 Shareholding in TMB: 0%

Director of the Board Chairman of the Nomination, Remuneration and Corporate Governance Committee Member of the Audit Committee Independent Director

Education - MBA, New York University, USA - BA in Accountancy, Chulalongkorn University - Director Certifi cation Program and The Board’s Roles in Setting Effective Compensation Policy, Thai Institute of Directors Association

Work Experience Aug 2010 – Present Director, Advanced Wireless Network Co., Ltd. Mar 2010 – Present Director, Siam Bioscience Marketing Co., Ltd. Aug 2009 – Present Director, Siam Bioscience Co., Ltd. 2008 – Present Advisor, Crown Property Bureau 2008 – Present Director, China Town Community Development Co., Ltd. 2008 – Present Director, Siam Pioneer Therapeutics Co., Ltd. 2007 – Present Director, Ladawan Palace Co., Ltd. 2006 – Present Advisor, Siam Cement Plc . 2006 – Present Director & Chairman of the Audit Committee, Advance Info Service Plc . 2003 – Present Director & Member of the Executive Committee, Thai Plastic and Chemicals Plc . 2003 – Present Director, CPB Equity Co., Ltd. 2003 – Present Director, CPB Property Co., Ltd. 1995 – Present Director & Chairman of the Executive Committee, Deves Insurance Plc . 1995 – Present Director, NAVA 84 Co., Ltd. 2003 - Jul 2009 Member of the Executive Committee, CPB Equity Co., Ltd. 2007 – Jun 2009 Chairman of the Board of Director, Thai Marble Co., Ltd. 2006 – 2009 Expert Member of Board of Director and Expert Member of Investment Committee, Government Pension Fund 2007 – 2008 Director, Thai Airways International Plc . 2005 – 2008 Assistant Director General, Crown Property Bureau 2001 – 2008 Chairman, IT One Co ., Ltd . TMB Bank PCL Board of Directors’ Profile | 43

MR. WILLEM FREDERIk NAgEL Age 54 Shareholding in TMB: 0% Director of the Board Chairman of the Risk Management Committee Member of the Credit Committee

Education - Master of Economics, University of Amsterdam, Netherlands - Bachelor Degree, University of Amsterdam, Netherlands - Corporate Governance, Indian Institute of Management Centre for Corporate Governance & Citizenship

Work Experience Jan 2010 – Present CEO & Board Member, ING Bank A.S. (Turkey) 2006 – Present Commissioner, PT ING Securities Indonesia 2008 – Jan 2010 Chairman, ING Asia Private Bank Ltd. (Singapore) 2005 – Jan 2010 Director, ING Vysya Bank Ltd. (India) 2005 – Jan 2010 Chairman of Risk Management Review Committee, ING Vysya Bank Ltd. (India) 2005 – Jan 2010 Director, ING Asia Private Bank Ltd. (Singapore) 2005 – Dec 2009 CEO & Head of Wholesale Banking, Asia, ING Bank N.V. (Singapore) 44 | Board of Directors’ Profile Annual Report 2010

MR. kRITSDA uDyANIN AGE 51 Shareholding in TMB: 0%

Director of the Board Chairman of the Credit Committee Member of the Board of Executive Directors Member of the Nomination, Remuneration and Corporate Governance Committee

Education - MSc . (Fiscal Studies), University of Bath, UK - MA (Economics), Thammasat University - BA (Economics), Chulalongkorn University - National Defence College - Executive Program, Kellogg School of Management, USA - Senior Executive Program Certifi cate, Capital Market Academy (CMA) - Director Certifi cation Program, Director Accreditation Program and Role of the Compensation Committee, Thai Institute of Directors Association

Work Experience Apr 2009 – Present Director, National Credit Bureau Co ., Ltd . 2007 – Present Chairman, Secondary Mortgage Corporation 2007 – Present Financial Policy Advisor, Fiscal Policy Offi ce, Ministry of Finance 2005 – Dec 2009 Director, ACL Bank Plc . 2007 – Mar 2009 Advisor, National Credit Bureau Co ., Ltd . 2005 – 2007 Deputy Director-General, Fiscal Policy Offi ce, Ministry of Finance TMB Bank PCL Board of Directors’ Profile | 45

Mr.m A orn Asvanunt Age 62 Mr. Vaughn Nigel Richtor Shareholding in TMB: 0%

Age 55 Director of the Board Shareholding in TMB: 0% Member of the Board of Executive Director of the Board Directors Member of the Board of Executive Directors Member of the Credit Committee Member of the Risk Management Education Committee --BA (Honors) First Class (Business Studies), London Southbank, UK Eduation --Corporate Finance Diploma, London Business --MBA, Bowling Green State University, School, UK Ohio, USA --General Management Program Cedep and --BA (Accountancy), Chulalongkorn Management in International Banking Cedep, University Insead, Fountainbleu, France --Stanford-NUS Executive Program, --Directors Colloquium on Corporate Governance, Stanford University and National International Financial Reporting Standards University of Singapore (IFRS) and its implications on Indian Banking --Changing Organizational Behavior Sector and Director’s Liabilities and Program, Wharton School, University Competition Law from ING Vysya Bank India of Pennsylvania, USA --Legal Developments in Corporate --Director Accreditation Program and Governance, Accounting and Finance CEO Performance Evaluation, Thai Developments, Developments in Directors Institute of Directors Association and Officers, Insurance and Regulator Update - APRA from ING Direct Australia Work Experience Jun 2009 – Present Director, Drafting Work Experience Committee for Specialized Financial Feb 2010 – Present Non Executive Director, Institution Development Plan Member of Audit Committee and Risk (2009 – 2013), Ministry of Finance Committee, ING Bank (Australia) Ltd. Mar 2006 – Present Member of the Jan 2010 – Present CEO, ING Banking Asia Audit Committee, Sahacogen Sep 2009 – Present Member of Corporate (Chonburi) Plc Governance Committee, Member of Board 2005 – Present Independent Director, Credit Committee, Chairman of Risk Krungdhep Sophon Plc Management and Review Committee, ING 2003 – Present Member of the Audit Vysya Bank Ltd. (India) Committee, I.C.C International Plc Jun 2009 – Present Non Executive Director, 2003 – Present Chairman of the Audit ING Vysya Bank Ltd. (India) Committee, People’s Garment Plc 1997 – Present Member of Leadership 2003 – Present Member of the Audit Council, ING Group N.V. Committee, Far East DDB Plc Feb 2006 – Apr 2009 Managing Director & 1988 – Present Independent Director, CEO, ING Vysya Bank Ltd. (India) BNH Medical Center Co., Ltd. 1997 – Feb 2006 Chief Executive, ING Bank 2003 – Mar 2006 Chairman of the Audit (Australia) Ltd. Committee, Sahacogen (Chonburi) Plc 46 | Board of Directors’ Profile Annual Report 2010

MR. TARA TIRADNAkORN Age 54 Shareholding in TMB: 0% Director of the Board Member of the Risk Management Committee MR. ChRISTOPhER JOhN kINg Independent Director Age 66 Education Shareholding in TMB: 0% - Master of Management, Sasin Graduate Institute of Business Administration of Chulalongkorn University Director of the Board - M .S . (Chemical Engineering), Stanford University, USA Member of the Audit Committee - B .Eng . (Chemical Engineering), (fi rst-class honors, gold medal), Member of the Nomination, Chulalongkorn University - Senior Executive Program Certifi cate, Capital Market Remuneration and Corporate Academy (CMA) Governance Committee - Program for Global Leadership, Harvard Business School, USA Independent Director - Director Accreditation Program and Director Certifi cation Program, Thai Institute of Directors Association Education - Bachelor of Laws (LL .B) (Honors), Work Experience 2007 – Present Member, Petroleum Institute of Thailand (PTIT) University of Bristol, UK Foundation - Postgraduate Practical Certifi cate Jan 2010 – Jun 2010 Director, Exploration and Production Standing in Law, University of Singapore Committee, Petroleum Institute of Thailand - Director Certifi cation Program, 2008 – Jun 2010 President, Chevron Petroleum (Thailand) Ltd . Thai Institute of Directors 2008 – Jun 2010 Director, Chevron Electricity (Thailand) Co ., Ltd . Association 2007 – Jun 2010 Director, Chevron Energy Development (Thailand) Ltd . 2006 – Jun 2010 Director, Tri Energy Co ., Ltd . Work Experience 2006 – Jun 2010 President and Director, Chevron Pattani Ltd . Jun 2009 – Present 2006 – Jun 2010 Vice President and Director, Chevron Asia South Ltd . Director, Kingfi sher 2006 – Jun 2010 Member ot the Advisory Board, Asia Institute and Holdings Ltd . Technology (AIT) Jun 2009 – Present 2006 – Jun 2010 President, Chevron Offshore (Thailand) Co ., Ltd . Director, Southeast Asian 2006 – Jun 2010 President, Chevron Block B8/32 (Thailand) Ltd . Packaging And Canning Ltd . 2005 – Jun 2010 Director, Chevron Offshore (Thailand) Jun 2009 – Present Co ., Ltd . Director, Oceanic Cannery 2005 – Jun 2010 Director, Chevron Block B8/32 (Thailand) Ltd . Co ., Ltd . 2005 – Jun 2010 Member of Management Committee, Chevron Jun 2009 – Present Corporation, USA Director, KF Foods Ltd . 2005 – Jun 2010 President, Chevron Thailand Exploration and 2005 – Present Director, Production, Ltd . Singer Thailand Plc 2005 – Jun 2010 Director, B8/32 Partners Ltd . 1992 – Present 2004 – Jun 2010 Advisory Council, Sasin Graduate Institute of Director, Business Administration, Chulalongkorn University Council Thivatharn Ltd . 2004 – Jun 2010 Member, Council of Trustees, Petroleum Institute of Thailand 1998 – Jun 2010 Director, Chevron Thailand Exploration and Production, Ltd . 2008 – Dec 2009 Chairman, Exploration and Production Standing Committee, Petroleum Institute of Thailand 2006 – Jun 2009 Vice President and Director, Chevron New Ventures (Thailand) Ltd . -(this company was dissolved) TMB Bank PCL Board of Directors’ Profile | 47

MR. BOONTuCk WuNgChAROEN Age 54 Shareholding in TMB: 0%

Director of the Board and Chief Executive Offi cer Member of the Board of Executive Directors Member of the Credit Committee Member of the Risk Management Committee

Education - MBA (Finance and International Business), New York University, USA - B .Eng . (Chemical Engineering), Chulalongkorn University - Director Accreditation Program, Thai Institute of Directors Association

Work Experience Jul 2008 – Present Chief Executive Offi cer, TMB BankPCL 1982 – Present Director, Benjaboon Enterprise Co ., Ltd . 1999 – 2007 Executive Vice President, KASIKORNBANK PCL 48 | Chief Officers Annual Report 2010

C hief Officers

01 Mr. Boontuck 02 Mr. Bart 03 I Mr. S MON 04 05 07 02 wungcharoen F.m. Hellemans Patrick Andrews 06 Chief Excetive Officer Chief Risk Officer Chief Operating Officer 01 03

04 Mr. Michal 05 Mr. Piti 06 Mr. Sayam jan Szczurek Tantakasem Prasitsirigul Chief Retail Banking Chief Wholesale Banking Chief SME Banking Officer Officer Officer

07 Mr. Thanomsak Chotikaprakai Chief Financial Officer TMB Bank PCL Chief Officers | 49

M ontr. Bo uck M r. BaRT F.M. M monr. Si M c r. Mi hal Wungcharoen Hellemans Patrick Andrews Jan Szczurek Director of the Board Chief Risk Officer Chief Operating Officer Chief Retail Banking Officer Member of the Board of Age 55 Age 45 Age 39 Executive Directors Education Education Education Member of the Risk --Bachelor in Applied Economics, --MBA in Banking and Finance, --Master Of Science, Economic Management Committee Catholic University of Leuven, University of Technology, Sciences University of Warsaw Member of the Credit Belgium Sydney, AUS and Columbia University, Committee Poland Chief Executive Officer Work Experience Work Experience (Appointed on July 14, 2008) 2008 – Present Chief Risk Officer, 2009 – Present Chief Operating Work Experience Age 54 TMB Bank Pcl . Officer, TMB Bank PCL 2009 – Present Chief Retail 2005 – 2008 Managing Director, 2005 – 2009 Risk Director, ING Banking Officer, TMB Bank PCL Education Head Credit Capitals, ING Bank, DIRECT (UK) 2004 – 2009 Vice President --MBA in Finance and Amsterdam, The Natherlands 1994 – 2005 Head of Direct of the Management Board , International Business from 2003 – 2005 Managing Director, Sales and Operations, ING ING Bank Slaski New York University, USA ING Vysya Bank Ltd . DIRECT (Australia) 1998 – 2009 Vice President --B .Eng ., Chemical Engineering 1999 – 2002 Deputy Managing of the Management Board , from Chulalongkorn Director and BBL representative, ING Nationale-Nederlanden University The Vysya Bank Ltd . Poland Life Insurance Work Experience Company 2008 – Present Chief Executive Officer, TMB Bank PCL 1999 – 2007 Senior Executive Vice President, at Kasikornbank PCL

M tir. Pi M mr. Saya M nomsar. Tha k Tantakasem Prasitsirigul Chotikaprakai Chief Wholesale Banking Chief SME Banking Officer Chief Financial Officer Officer Age 41 Age 47

Age 40 Education Education Education --MBA in Finance from The --Master of Business --h P .D . in Strategic Peter F . Drucker Center, The Administration, University of Management from Claremont Graduate School, Eastern Michigan, USA California, USA Bangkok University Work Experience and The University of Work Experience 2009 – Present Chief Financial Nebraska, Thailand, 2008 – Present Chief SME officer, TMB Bank PCL Lincoln, NE, USA Banking Officer, TMB Bank PCL 1996 – 2009 Director & Chief Work Experience 2007 – 2008 First Vice Financial Officer, Standard 2008 – Present Chief President, Head of Supply Chain Chartered Bank (Thai) Wholesale Banking Officer, Financing and Head of Cash 1991 – 1996 Business Planning & TMB Bank PCL Management Department at Analysis Manager, 2007 – 2008 First Senior KASIKORNBANK PCL American Express (Thai) Co .,Ltd . Vice President, Segment 1989 – 1991 Manager, J . Film Head of Large Corporate Process Co ., Ltd . Clients at KASIKORNBANK PCL 50 | Leadership Team Annual Report 2010

LEADERSHIP TEAM

EXECUTIVE Standing – from left to right Paradai Theerathada Corporate Communications Group Dr. Agapol Na Songkhla Strategy and Transformation Group Peera Chinwannabutr Audit Group M.L. Ayuth Jayant Corporate Governance Group

Seated Boontuck Wungcharoen Chief Executive Ofﬁ cer

FINANCE From left to right Waewalai Wattana Financial Control Group Thanomsak Chotikaprakai Chief Financial Ofﬁ cer Arwiwan Tangtrongchit Financial Planning and Analysis Group Apiradee Lamsam Balance Sheet Management Group TMB Bank PCL Leadership Team | 51

OPERATIONS Standing – from left to right Saipin Kittipornpimol Information Technology Group Jean-Pierre Nelissen Project and Process Management Montree Thirasakthana MIS

Seated – from left to right Chompoonoot Pathomporn Corporate Services Group Simon Patrick Andrews Chief Operating Officer

RISK MANAGEMENT From left to right Wipaporn Techamaitrechit Risk Analytics and Policy Group M.L. Siriwan Kasemsant Compliance Group Chamaree Ananatsiri Independent Credit Review Bart Hellemans Chief Risk Ofﬁ cer Martin Alan Searle Consumer & SME Credit Group Surakiat Wongwasin Operational Risk Management Group Fabienne Leone Louise Marie Libert Credit Risk Intelligence Group Utoomphorn Kunakorn Wholesale Credit and Restructuring Group Somsak Woravijak Legal Group Oranuj Tantimedh Market Risk Management Group 52 | Leadership Team Annual Report 2010

RETAIL BANKING From left to right Ouracha Pongwattan Unsecured Lending Business Group Pradit Leosirikul Branch Banking Group Willem Feyo Alexander Baron Van Heemstra Secured Lending Business Group Kamolwan Imruthaicharoenchok Bank Assurance Kanchana Rojvatunyu Retail Marketing Group Michal Szczurek Chief Retail Banking Ofﬁ cer Luecha Sukrasebya Alternative Channel Group Tamara Van Den Ban Deposit & Payment Products Management Group

SME BANKING Standing – from left to right Panicha Buraparat SME Portfolio Management and Sale Service Piti Krasaesian Medium SME Segment Group Paphon Mangkhalathanakun Small SME Segment Group Phongsak Tantbirojn Supply Chain Solutions

Seated Sayam Prasitsirigul Chief SME Banking Ofﬁ cer TMB Bank PCL Leadership Team | 53

WHOLESALE BANKING Standing – from left to right Vallapa Posyanond Corporate Banking Relationship Management Group Saranya Phuphatana Capital Market Group Sakda Pongcharoenyong Corporate Banking Relationship Management Group Chaowapat Lertwongsatien Corporate Marketing Management Patchanee Vongsilpawattana Transactional Banking Group

Seated – from left to right Sandra Yiu Lending & Structured Products Group Sopon Kluaymai Na Ayudhaya Military Business Relationship Management Group Vikran Paovarojkit Corporate Banking Relationship Management Group Dr. Piti Tantakasem Chief Wholesale Banking Officer 54 | Organization Chart Annual Report 2010

ORGANIZATION CHART

Board of Directors

Nomination, Remuneration and Board of Executive Risk Management Credit Committee Audit Committee Corporate Governance Committee Directors Commitee

Chief Executive Ofﬁcer Audit Group

Chief Retail Banking Chief SME Banking Chief Wholesale Banking Chief Risk Officer Chief Financial Officer Chief Operating Officer Officer (CRBO) Officer (CSBO) Officer (CWBO) (CRO) (CFO) (COO)

Branch Banking Group Medium SME Corporate Banking Strategy and Wholesale Credit and Financial Control Group Information Segment Group Relationship Transformation Group Restructuring Group Technology Group Management Group 1

Retail Marketing Group Financial Planning Small SME Consumer and and Analysis Group Operations and Segment Group Corporate Banking SME Credit Group Services Group Relationship Human Resource Group Wealth Management Management Group 2 Group Balance Sheet SME Portfolio Market Risk Management Group Corporate Management & Management Group Services Group Sale Service Military Business Corporate Relationship Governance Group Alternative Channels Management Group Performance Group Operational Risk Measurement MIS Supply Chain Solutions Management Group Lending & Structured Corporate Unsecured Lending Products Group 1 Communications Group Project and Process Business Group Risk Analytics and Management Policy Group Lending & Structured Secured Lending Products Group 2 Business Group Credit Risk Intelligence Group Transactional Deposit & Payment Banking Group Products Management Compliance Group Group Capital Markets Group Legal Group Direct Business Credit Product Independent Business Planning Credit Review & Analysis Corporate Marketing Management Macroprudential Risk

Corporate Portfolio and Proﬁtibility Management TMB Bank PCL Organization Chart | 55

Board of Directors

Nomination, Remuneration and Board of Executive Risk Management Credit Committee Audit Committee Corporate Governance Committee Directors Commitee

Chief Executive Ofﬁcer Audit Group

Chief Retail Banking Chief SME Banking Chief Wholesale Banking Chief Risk Officer Chief Financial Officer Chief Operating Officer Officer (CRBO) Officer (CSBO) Officer (CWBO) (CRO) (CFO) (COO)

Corporate Portfolio and Proﬁtibility Management 56 | Thai Economy and Banking Industry Annual Report 2010

Thai Economy and Banking Industry

2010 Economic Review Thai exports will face a challenging year ahead as the The path of the Thai economy in 2010 reverted to a global recovery will still be patchy . The U .S . economy will remarkable growth at 7 .8% . This was mainly driven by the see moderate improvement but will remain weak from high strong performance of exports and was aligned with a robust household leverage and the lingering housing market slump, recovery across Thailand’s trading partners in Asia and other while the Euro-zone will be crippled by the sovereign crisis emerging markets . Private consumption and investment that may spread across the region . A similar outlook is also partly contributed to growth, expanding continually as predicted for Japan with its prolonged sluggish economy and remnants of the political crisis abated . minimal monetary and fiscal policy headroom .

Rising exports and private spending led to improved capacity On the capital market front, foreign funds flow will continually utilization and more production in the real sector . This was be tilted towards emerging Asia and Thailand, especially in the supported by exceptionally low interest rates and a lax debt market . This will put upward pressure on the Thai baht and monetary policy . Overall in 2010, the Thai economy proved result in an appreciation path of between 30 – 28 .5 THB/USD . itself to be resilient in light of the recent baht appreciation Against the backdrop of rising global commodity prices such as and massive domestic floods in agricultural areas . energy and agriculture products, core inflation, which excludes raw food and energy, is projected to notch up to 2 – 3% . As 2011 Economic Outlook a result, the Bank of Thailand’s policy rate is expected to be The upward momentum of the Thai economy will likely be lifted from 2% as of end 2010 to 3-3 .25% by year-end 2011 . carried forward into 2011 . However, given the 2010 impressive turnaround, economic growth is projected to moderate around Ban king Industry in 2010 3 .6% owing partly to high base from the previous year . Even The Thai banking industry significantly expanded from the year though exports will still feature as the critical engine of 2009 . During 2010, total assets increased by 13% to around growth, more emphasis will be on private consumption, which THB 11 7. trillion . In line with a strong economic performance, is expected to gain further traction as the market sentiment total loans rose 11% to THB 7 4. trillion, whereas total deposits continually improves . Pre-election government policies, grew 5% to THB 7 4. trillion as well . The loan-to-deposit ratio ranging from the public’s welfare subsidy to nation-wide consequently edged up to 98% on an average . Nonetheless, minimum wage increase, will also support this year’s growth . there is still ample liquidity in Thai commercial banks, which stands at THB 1 .2 trillion . This comes from alternative financing % change on previous year sources, specifically the issuances of bills of exchange and debentures by commercial banks . The total industry-wide capital adequacy ratio slightly rose from the previous year to 16 .2% .

Retail loans, accounting for 24% of total system-wide loans, grew remarkably around 18 .3% year-on-year . Corporate lending, accounting for 43% of total loans, expanded 10 .8%, while SME loans increased 9 6. % . On a sectoral basis, loans to construction and manufacturing sectors rose 6% . For service sectors including restaurant, hotel, and transportation, loan outstanding grew 4% .

2006 2007 2008 2009 2010P 2011F Loans to retail-wholesale commerce and agricutural sectors

█ Net export █ Change in stock expanded significantly at 10% and 12%, respectively . In contrast, █ Investment █ Consumption GDP growth real estate lending contracted at 3% .

Source: NESDB and TMB Analytics TMB Bank PCL Thai Economy and Banking Industry | 57

In December 2010, total non-performing loans decreased Thai Banking System: Total Deposits by THB64,000 million from 2009-end. Gross NPL ratio also 7.5 10% dropped to 3.57%. The sectors that feature a high NPLs were 8% construction and real estate, manufacturing, and retail-whole- 7.0 sale commerce, with a NPL ratio around 10%, 8%, and 5% 6% 6.5 respectively (data as of September 2010). 4% 6.0 2% Industry-aggregate operating performance of 2010 resulted in 5.5 0% THB 123,000 million in net profit, growing at 33% year-on-year. Net interest income plus dividends increased 9%, while 5.0 -2% fee-based income grew 15%. Net interest margin (NIM) Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 improved marginally to 3.10%, driven by interest rate up-cycle █ Deposits (trln. Baht) % Growth YTD during the latter half of the year.

Thai Banking System: Total Assets Thai Banking System: Total NPL

13.0 14% 0.50 8% 12.0 12% 0.45 7% 11.0 10% 0.40 6% 10.0 8% 9.0 0.35 5% 6% 8.0 0.30 4% 4% 7.0 0.25 3% 6.0 2% 5.0 0% 0.20 2%

Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 06 Dec 07 Dec 08 Dec 09 Dec 10

█ Assets (trln. Baht) % Growth YTD █ Gross NPL (trln. Baht) % NPL ratio

Thai Banking System: Total Loans Thai Banking System: Fee Income

8.0 15% 110 18% 100 14%

6.0 10% 90 12%

80 10% 4.0 5% 70 8%

60 6% 2.0 0% 50 4%

- - 40 2% Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 2006 2007 2008 2009 2010

█ Loans (trln. Baht) % Growth YTD █ Fee and service income (bln. Baht) % Growth YoY 58 | Thai Economy and Banking Industry Annual Report 2010

Trend of Commercial Banks in 2011 3 . The government and Bank of Thailand have recently Four important factors that could potentially affect the put more emphasis on microfinance lending, a part of landscape of the Thai banking industry are: the Financial Sector Master Plan Phase II (2010-2014). The Thai Post office, with its large branch network, has 1 . On August 11, 2011, the current unlimited coverage of the been identified as one of the main channels to disperse state’s deposit protection guarantee will be downgraded micro-loans and will start lending in 2011, supported to a maximum guarantee of THB 50 million per individual by non-commercial state banks. This will lead to more and per bank. The reduction in coverage will induce competition in the consumer lending segment. large-scale deposit accounts to be relocated across banks. Since 66% of deposit accounts that exceed THB 50 million 4 . Following pressure from the government in the second baht are concentrated on large commercial banks, while half of 2010, commercial banks agreed to reduce the fees medium-sized banks and small banks carry only 24% for certain electronic fund transfers. The government has and 10%, respectively, the impact will likely fall on major made it clear that going forward it will continue to work players in the banking industry. Competition for deposit with banks to further reduce bank charges for customer financing by commercial banks is likely to be stiff going transactions and this will result in lower fee income. forward. Overall this year will see more competition among commercial 2 . To counter pressure on the baht, the Bank of Thailand has banks on both loan and deposit fronts. Total loans are put in place a measure that provides incentive for the private projected to grow at 8% from the previous year. Total deposits sector to invest abroad. This will effectively imply increasing will register a smaller growth figure no more than 5% as the amount of commercial banks’ facilities that have foreign depositors will be covered less by the state deposit protection exposure. Commercial banks’ credit underwriting will be guarantee and will be presented with more diverse choices concerned more with issues of country risks. of saving alternatives. TMB Bank PCL Management Discussion and Analysis | 59

Management Discussion and Analysis

Ee x cutive summary Together with growing quality loans, the Bank managed In 2010, TMB enjoyed continued earnings momentum. Net to lower the number of Non-performing loans (NPLs) and profit of the Bank and its subsidiaries were recorded at Non-performing assets (NPAs) through resolutions and sales. THB 3,202 million, an increase of 64.6% from 2009 and ROE Our NPL ratio has dropped continuously from 14.3% in 2008, improved from 4.3% to 6.6%. This is the third consecutive year 12.7% in 2009 to 8.3% in 2010, with a strong loan loss reserve of growing profits since our recapitalization in December 2007. equal to 159% of the Bank of Thailand requirements. At the same time, TMB minimized the formation of NPLs through our There are many factors behind TMB’s earnings growth. A strong risk management capabilities. Foreclosed properties higher net interest margin (NIM) and improvement of core declined from THB 19,260 million in 2008, to THB 11,132 million non-interest income, coupled with lower risk costs, were the in 2009 and THB 6,436 million in 2010. During 2010, TMB also major drivers of the Bank’s improved profits. In 2010, NIM cleaned up retained losses and share discounts by adjusting was enhanced from 2.26% in the previous year to 2.31% the equity account. This resulted in a healthy balance sheet while the core non-interest income grew by 10%. The Bank’s and the ability to pay dividends after approval from the Board fee-generating ability has improved on the back of enhanced of Directors and shareholders, and upon relevant regulations trade finance and higher income from retail banking products. of the Bank of Thailand. The gain on exchange rose 26.9%, driven by higher exchange volume at the Bank’s retail booth, better currency trading and The Bank’s financial position continued to improve during the a growing trade finance business. year. The Bank’s Tier I capital and Capital Adequacy Ratio (CAR) in 2010 was 11.3% and 16.6%, which was comfortably During 2010, the Bank emphasized quality growth. Performing higher than the Bank of Thailand’s minimum requirement of loans increased by 4.2% from 2009, or 5.5% if the impact of 4.25% and 8.50% respectively. The Bank also continued to the settlement with BAM was excluded. In addition, the Bank maintain a strong liquidity position with a high allocation simultaneously took actions to strengthen its loan book quality to liquid and low risk earning assets as well as retaining a by reducing the exposure in low quality loans. Excluding these healthy loan to deposit ratio of 87.9%. actions the bank-wide performing loan growth would have been more than 10%.

Figure 1: 2010 operating performance Consolidated net profit and ROE Tier I and Capital adequacy ratio 3,500 20% 18% 3,202 18% 17.13% 3,000 16% 16.59% 16% 2.500 14% 12% 2,000 1,945 10% 14% 8% 6.6% 1,500 6% 12.31% 12% 4.3% 4% 1,000 11.33% 2% 500 0% 10% THB million 2009 2010 2009 2010 ██ Net profit (LHS) ROE (RHS) CAR Tier I

Note: Consolidated financial statements Note: Bank-only 60 | Management Discussion and Analysis Annual Report 2010

Figure 2: 2010 operating performance (continued) Total loans and loan growth Non-performing loans (NPL) and gross NPL ratio

400,000 5% 55,000 54,095 14% 12.7% 368,092 12% 363,177 50,000 0% 10% 350,000 -1.3% 8.3% 45,000 8% -5% 40,000 6% 300,000 36,047 4% -10% 35,000 2% -13.2% 250,000 -15% 30,000 0% THB million 2009 2010 THB million 2009 2010

██ Total loan (LHS) Loan growth (RHS) ██ NPL (LHS) Gross NPL ratio (RHS)

Note: Consolidated financial statements Note: Consolidated financial statements

Figure 3: 2010 operating performance (continued) Loan to deposit ratio Deposit breakdown

100% 100% 10.5% 9.6%

80% 90.3% 39.0% 36.6% 90% 87.9% 60%

40% 50.5% 53.8% 80% 20%

0% 2009 2010 2009 2010 70%

Loan to deposit ratio █ Current █ Savings █ Fixed

Note: Consolidated financial statements Note: Bank-only

Ds i cussion of operating performance growth momentum which was mainly due to the improvement TMB Bank and its subsidiaries reported a net profit of of core non-interest income on the back of better fee income THB 3,202 million in 2010, an increase of 64.6% or THB 1,257 and gain on exchange, lower non-interest expense and a million from a net profit of THB 1,945 million in 2009. The decrease in loan loss provisioning from better quality of Bank’s return on equity (ROE) also rose to 6.6% in 2010 from loan portfolio. The core operating performance improved as 4.3% in 2009. This better profitability reflected an earnings highlighted below. TMB Bank PCL Management Discussion and Analysis | 61

Figure 4: Consolidated net profit Figure 5: Return on Equity

3,500 8% 3,202 3,000 6.6% 2,500 6% 2,000 1,945

1,500 4.3% 4% 1,000

500

- 2% THB million 2009 2010 2009 2010 ██ Net profit ██ Return on equity Note: Consolidated financial statements Note: Consolidated financial statements

Figure 6: Consolidated income statements

Change (Unit: THB million) 2010 2009 Amount % Interest and dividend income 18,499 20,481 (1,982) -9.7% Interest expenses 6,240 8,074 (1,834) -22.7% Net income from interest and dividend (NII) 12,259 12,407 (148) -1.2% Bad debts and doubtful accounts (reversal) 1,654 2,628 (973) -37.0% NII after provision 10,605 9,780 825 8.4% Non-interest income 6,966 10,077 (3,111) -30.9% Non-interest expenses 14,346 17,858 (3,512) -19.7% Net income (loss) before income tax 3,225 1,999 1,226 61.3% - Income tax 14 33 (20) -58.4% - Minority interests in net profit 9 20 (11) -55.4% Net profit 3,202 1,945 1,257 64.6%

Note: Consolidated financial statements

Total interest income and expenses Figure 7: Total interest income and expenses

Total interest and dividend income of the Bank and its subsidiaries was THB 18,499 25,000 million, a decrease of THB 1,982 million or 9.7% from 2009. The decrease was 20,481 20,000 18,499 mainly due to lower interest on loans which declined by 9.7% to THB 15,810 million in 2010, as a result of a loan portfolio rebalance. Investment income also decreased 15,000 by THB 320 million or 14.3% due to lower investment portfolio. 10,000 8,074 6,240 Total interest expenses amounted to THB 6,240 million in 2010, a decline of THB 1,834 5,000 million or 22.7% mainly due to a reduction in interest on deposits which decreased 0 by THB 1,483 million or 25.5% and in interest from short-term borrowing which THB million 2009 2010 decreased by THB 231 million or 42.1%. █ Total interest income █ Total interest expense

Note: Consolidated financial statements 62 | Management Discussion and Analysis Annual Report 2010

N et interest income P rovisions for loan losses Net interest income (NII) of the Bank and its subsidiaries was Due to efficient NPL resolution, loan loss provisions for 2010 THB 12,259 million in 2010, a slight decline of THB 148 million declined by THB 973 million or 37.0% from THB 2,628 million or 1.2% from 2009. This was mainly due to the reduction in to THB 1,654 million. The decrease was mainly due to a lower loan volume which was a result of loan portfolio rebalance provision for NPLs as well as lower general provision. and lower investment income. However, net interest margin (NIM) improved from 2.26% in 2009 to 2.31% in 2010 mainly due to a reduction in cost of fund.

Figure 8: Net interest income Figure 9: Provisions for loan losses and net interest margin (NIM)

15,000 5% 3,000 2,628 12,407 12,259

10,000 3% 2,000 1,654 2.31% 2.26% 5,000 2% 1,000

0 1% 0

THB million 2009 2010 THB million 2009 2010

██ Net interest income (LHS) ██ Loan loss provision Net interest margin (RHS)

Note: Consolidated financial statements Note: Consolidated financial statements

Figure 10: Net interest income

Change (Unit:THB million) 2010 2009 Amount % Interest on loans 15,810 17,506 (1,697) -9.7% Interest on interbank and money market items 771 737 34 4.7% Investment income 1,918 2,238 (320) -14.3% Total interest and dividend income 18,499 20,481 (1,982) -9.7% Interest on deposits 4,344 5,827 (1,483) -25.5% Interest on interbank and money market items 93 158 (65) -41.1% Interest on short-term borrowings 318 549 (231) -42.1% Interest on long-term borrowings 1,486 1,540 (54) -3.5% Total interest expenses 6,240 8,074 (1,834) -22.7% Net interest and dividend income 12,259 12,407 (148) -1.2%

Note: Consolidated financial statements TMB Bank PCL Management Discussion and Analysis | 63

N on interest income Figure 11: Non-interest income The Bank and its subsidiaries reported a non-interest income of THB 6,966 million, 12,000 a decrease of THB 3,111 million or 30.9% from 2009, mainly due to lower extra-gain from buy-back hybrid tier I securities and an unwinding interest rate swap. However, core non-interest income, which included fee income and gain on exchange, rose 10,077 10,000 by 10% to THB 6,087 million. The consolidated fee income was THB 4,803 million, or an increase of 6.4% from last year, and was mainly driven by trade finance, card business, sales of Bancassurance and mutual funds. Gain on exchange increased by 26.9% due to an increase in exchange volume at retail booths, better currency 8,000 trading and a growing trade finance business. 6,966

6,000 THB million 2009 2010 ██ Non-interest income

Note: Consolidated financial statements

Figure 12: Non interest income

Change (Unit:THB million) 2010 2009 Amount % Gain/loss on investments 157 14 143 1030.8% Share of profit (loss) using the equity method 36 95 (59) -62.3% Fees and service income 4,803 4,514 289 6.4% - Acceptances, avals and guarantees 337 425 (88) -20.7% - Others 4,466 4,089 377 9.2% Gain on exchange 1,284 1,012 273 26.9% Gain on sale of assets 0 0 0 N/A Other income 686 4,443 (3,757) -84.6% Total non-interest income 6,966 10,077 (3,111) -30.9%

Note: Consolidated financial statements 64 | Management Discussion and Analysis Annual Report 2010

N on interest expenses Non-interest expenses for the Bank and its subsidiaries in 2010 was THB 14,346 Figure 13: Non-interest expenses million, a decrease of THB 3,512 million or 19.7% from 2009, and was mainly due to lower personnel expenses, lower impairment of foreclosed properties and lower 18,000 17,858 loss on provisions of obligations from transferred non-performing assets.

Personnel expenses dropped 10.4% year-on-year, mainly due to the absence of the 16,000 mutual-separation early retirement program expense of THB 1.3 billion which was booked in 2009. However, it was offset by the additional early retirement program 14,346 expense of THB 165 million and a higher marketing cost of THB 302 million, and the 14,000 extra expense of a service staff conversion program.

Loss on impairment of properties foreclosed decreased by THB 1,789 million or 65.4% year-on-year, mainly because in 2009, the Bank executed THB 4.4 billion 12,000 worth of NPA sales which resulted in a THB 1,551 million loss in impairment of THB million 2009 2010 properties foreclosed. Loss on provisions of obligation decreased by THB 1,148 ██ Non-interest expense million or 371.2% mainly due to a reversal of loss on provisions of obligations of Note: Consolidated financial statements THB 831 million from the settlement with BAM on the NPLs transferred.

Figure 14: Non-interest expenses

Change (Unit: THB million) 2010 2009 Amount % Personnel expenses 5,861 6,543 (682) -10.4% Premises and equipment expenses 2,907 2,688 219 8.1% Taxes and duties 628 672 (44) -6.5% Fees and service expenses 1,424 1,333 91 6.8% Directors’ remuneration 30 27 3 11.5% Loss on impairment of properties foreclosed 948 2,737 (1,789) -65.4% and other assets Contributions to the DPA 1,613 1,745 (132) -7.6% Loss on provisions of obligations from (839) 309 (1,148) -371.2% transferred non-performing assets Loss on provisions of obligations - others (547) (380) (168) N/A Other expenses 2,321 2,183 138 6.3% Total non-interest expenses 14,346 17,858 (3,512) -19.7%

Note: Consolidated financial statements TMB Bank PCL Management Discussion and Analysis | 65

Ds i cussion of financial position its loan book quality by reducing the exposure to lower quality Assets loans. Excluding the actions the bank-wide performing loan As of 31 December 2010, total assets of the Bank and its growth would have been more than 10%. subsidiaries were THB 589,592 million, an increase of 8.6% from THB 543,142 million as of 31 December 2009. The In terms of a loan mix (bank-only basis), as of 31 December increase was mainly due to a rise in interbank & money 2010, corporate, small & medium enterprises (SME) and retail market and investment. Loans remained the biggest items loans accounted for 51.2%, 29.6% and 19.1% of total loans accounting for 65.2% of the Bank’s earning assets, compared respectively, while term loans including promissory notes, with 69.2% in 2009. Investment and interbank & money market overdrafts and trade finance represented a 72.7%, 15.1% and represented a 17.0% and 15.2% share of the Bank’s earning 8.8% share of total loans respectively. assets respectively. * The bank had an early settlement of NPLs transferred to BAM. Figure 15: Composition of the Bank’s earning assets BAM replaced the promissory note of THB 19,712 million, which has been booked as performing loans with the promissory note of 100.0% 69.2% 65.2% THB 15,681 million. Therefore, performing loans of the bank declined

80.0% by THB 4.0 billion.

60.0% Note: 1) Corporate loans are loans to customers that have a total annual 40.0% 17.0% revenue of over THB 500 million. 15.4% 20.0% 2) SME loans are loans to customers that have a total annual 12.5% 15.2% revenue of less than THB 500 million including owner operator 2.8% 0.0% 2.6% 3) Consumer loans are loans to individual persons. 2009 2010 █ Cash █ Interbank █ Investments █ Loans

Note: Consolidated financial statements

Figure 16: Total loans L oans As of 31 December 2010, total loans of the Bank and its 400,000 subsidiaries were THB 363,177 million, a decline by 1.3% from 368,092 363,177 31 December 2009, mainly due to (1) the THB 18 billion reduction in NPLs, which largely resulted from the THB 9.3 billion NPL 350,000 sale in 2Q10, the NPL resolution and write-off, (2)*the THB 4.0 million performing loan reduction from an early settlement of NPL transferred to the Bangkok Commercial Asset Management 300,000 (BAM) in December 2010. However, the decline was offset by an increase in performing loans from all customer segments. 250,000

THB million 2009 2010 Performing loans increased by 4.2%, or 5.5% if the impact of early settlement of NPLs transferred with BAM was excluded. ██ Total Loan

During 2010, the Bank simultaneously took actions to strengthen Note: Consolidated financial statements 66 | Management Discussion and Analysis Annual Report 2010

Figure 17: Loan breakdown by customer group I nvestment Consolidated net investments were THB 94,538 million as of 31 DEC 10 December 2010, an increase by 15.0% from THB 82,194 million

Retail as of 31 December 2009. The increase was from long-term 19.1% investment in government bonds. Short-term investment was

Corporate THB 46,249 million, representing 48.9% of total investments, 51.2% while long-term investment was THB 48,289 or 51.1% of total

SME investments. The majority of the Banks’ investment was debt 29.6% instruments, which were mostly government bonds. Total allowance for investments in debt and equity securities, based on the bank-only financial statements was at THB 1,090 DEC 09 million and THB 1,293 million as of 31 December 2010 and 31 December 2009, respectively. Retail 18.4%

Corporate 50.2% Figure 19: Investments

SME 100,000 31.4% 94,538 82,194 █ Current investments 80,000 471 48,289 █ Long-term 22,358 investments 60,000 Figure 18: Loan breakdown by type █ Investments in subsidiaries 40,000 59,365 and associated companies DEC 10 46,249 20,000

Trade finance 8.8% 0 Loans and OD THB million 2009 2010 RPN 15.1% 72.7% Note: Consolidated financial statements Others 3.4%

I nterbank and Money market As of 31 December 2010, net interbank & money market DEC 09 was THB 84,625 million, an increase of THB 18,010 million or 27.0% due mainly to an increase in private repurchase items Trade finance according to liquidity management. 7.6% Loans and OD RPN 79.7% 10.1% A sset quality Others As of 31 December 2010, the Bank and its subsidiaries’ 2.5% non-performing loans (NPLs), classified as substandard, doubtful and doubtful loss, were THB 36,047 million compared TMB Bank PCL Management Discussion and Analysis | 67

to THB 54,095 million as of 31 December 2009. The reduction The Bank’s net properties foreclosed were THB 6,436 million was mainly due to the THB 9.3 billion NPLs sale in 2Q10, as of 31 December 2010, a substantial decline from THB 11,132 and a resolution of major NPLs and NPL write-offs. NPL ratio million in 2009, which was mainly due to the on-going as of 31 December 2010 dropped to 8.3% from 12.7% in properties foreclosed sales during the year. The Bank will 2009. Total allowance for doubtful accounts and revaluation continue to reduce the properties foreclosed with a stringent allowance for debt restructuring was at THB 20,546 million policy in foreclosing properties. with NPL coverage ratio of 57.0% compared to 57.7% in 2009.

Figure 20: Non-performing loans (NPL) Figure 21: Loan loss allowance Figure 22: Properties foreclosed and NPL ratio and NPL coverage and % to total assets

60,000 54,095 16% 40,000 80% 15,000 4%

50,000 14% 31,208 11,132 12.7% 3% 12% 30,000 70% 10,000 40,000 36,047 10% 2.0% 6,436 2% 30,000 20,546 8.3% 8% 20,000 60% 5,000 57.7% 1.1% 1% 57.0% 20,000 6%

1,000 0% 10,000 4% 10,000 50%

THB million 2009 2010 THB million 2009 2010 THB million 2009 2010 ██ Non-performing loans (LHS) ██ Loan loss allowance (LHS) ██ Property foreclosed (LHS) NPL ratio (RHS) NPL coverage (RHS) % properties foreclosed to total assets (RHS)

Note: Consolidated financial statements Note: Consolidated financial statements Note: Consolidated financial statements

F unding and liquidity such as “Quick interest” and “Up and Up”. Total borrowings as Total liabilities of the Bank and its subsidiaries as of 31 of 31 December 2010 increased to THB 62,104 million or 22.6% December 2010 were THB 539,737 million, an increase by year-on-year mainly due to the issuance of the THB 11,131 8.7% from 2009, mainly driven by a rise in interbank and million bill of exchange (BE) in 4Q10. money market. Deposits increased by 1.3% from 2009, mostly from term deposits, to THB 413,115 million at the end of the During the year, the Bank continued to maintain its strong year. Deposits remained the largest composition of interest- liquidity position with a high allocation to liquid and low-risk bearing liabilities, representing 83.0% of total interest-bearing earning assets. As of 31 December 2010, total liquid assets liabilities, with 12.5% for borrowings and 4.5% for interbank (cash, interbank & money market and short-term investment) & money market. represented 26.1% of the total earning assets, compared to 26.5% as of 31 December 2009. Most of these investments Current and saving accounts (CASA), represented 46.4% of were in government bonds. With strong liquidity, the Bank’s total deposits in 2010, a decline from 49.6% in 2009. The loan to deposit ratio was at 87.9% as of 31 December 2010 decline was mainly due to the rise in fixed deposits which was compared to 90.3% as of 31 December 2009. a result from the success of innovative term deposit products 68 | Management Discussion and Analysis Annual Report 2010

Figure 23: Breakdown of Figure 24: Total deposit Figure 25: Loan to deposit ratio interest-bearing liabilities and % CASA

100.0% 5.5% 5.2% 450,000 60% 100% 5.4% 7.3% 2.1% 413,115 4.5% 407,776 90.3% 80.0% 400,000 49.6% 50% 87.9% 46.4% 60.0% 80% 350,000 40%

40.0% 87.0% 83.0% 300,000 30% 20.0% 60% 250,000 20% 0.0% 2009 2010 THB million 2009 2010 2009 2010 █ Deposit █ Interbank and money market ██ Total deposit (LHS) % CASA (RHS) █40%█ Loan to deposit ratio █ ST borrowing █ LT borrowing

Note: Consolidated financial statements Note: Consolidated financial statements Note: Consolidated financial statements

S hareholders’ equity and capital adequacy The Bank’s capital position remained strong during the As of 31 December 2010, the consolidated shareholders’ year, with the capital adequacy ratio (CAR) under Basel II equity rose to THB 49,855 million or 6.6%, an increase from calculation at 16.59% and Tier I capital ratio at 11.33%, which 2009, mainly due to the net profit for the period. were comfortably above the Bank of Thailand’s minimum requirement of 8.5% and 4.25% of CAR and Tier 1 capital, With the shareholders’ approval at the Extraordinary General respectively. The decrease of CAR was due to higher risk Meeting on 24 June 2010, the Bank adjusted shareholders’ weighted assets partly offset by capital increase of Tier 2. In equity accounts. A par value reduction from THB 10 to THB 0.95 April 2010, the Bank issued subordinated debenture of THB 8.0 and reserves were used to offset the write-down of retained billion to replace redemption in subordinated debenture of losses and share discount. This clean-up resulted in flexibility THB 4.9 billion in March 2010, therefore increasing net capital for the Bank to pay a dividend (subject to relevant laws). by about THB 3.1 billion.

Figure 26: Tier I capital and Figure 27: Capital adequacy ratio BOT’s minimum requirement and BOT’s minimum requirement

14% 18% 12.31% 17.13% 16.59% 12% 11.33% 10% 14% 8% 10% 6% 8.50% 8.50% 4% 4.25% 4.25% 6% 2% 0% 2% 2009 2010 2009 2010 ██ Tier I Capital ██ ARC BOT minimum requirement BOT minimum requirement

Note: Bank-only Note: Bank-only TMB Bank PCL Management Discussion and Analysis | 69

N ote: Restated financial statement cost method and 2) re-classified from investment in associated The financial statement of the Bank and its subsidiaries for company to general investment. This was in line with the the year ended 2009 have been restated in relation to the substance of transaction. The impact to the 2009 financial recognition of investment in two property funds, The Column statement can be summarized as below. Property fund and Siam Resort fund 1) from equity method to

I mpact from restated financial statement

31 December 2009 Balance Sheet (unit: million baht) Consolidated Bank only Previously Previously Asset Restated reported Change Restated reported Change Investment Long-term investment — net 22,358 21,226 1,132 21,694 20,562 1,132 Investments in subsidiaries and associated companies — net 472 2,114 -1,642 605 1,737 -1,132 Liabilities and Shareholders’ equity Retained earnings Unappropriate (deficit) -101,559 -101,048 -511 -101,742 -101,742 -

31 December 2009 Profit and Loss (unit: million baht) Consolidated Bank only Previously Previously Restated reported Change Restated reported Change Interest and dividend income Investment 2,238 2,165 73 - - - Non-interest income Share of profits from investment in associated companies 95 267 -172 - - - Net 2,333 2,432 -99 - - - 70 | Strategy and Business Annual Report 2010

S trategy and Business

Our vision and strategic intent

Be “the Leading Thai ▶▶ Main bank with sustained profitability bank with world-class ▶▶ Value long-term relationships financial solutions” ▶▶ Cultivate customer centricity

▶▶ Realize benefits of partnerships

How we deliver: TMB Strategy

D eposit-led Strategy TMB aims to establish strong relationships with customers through transactional deposit accounts, allowing TMB to better understand customers and use that understanding to provide value-added services addressing their financial needs.

Service and TMB believes that customer-centric service is central to building sustainable business Operational Excellence relationships. The Bank is therefore focused on improving end-to-end service and operational excellence through our processes and people across channels in ways that reflect the TMB brand values.

Value-Added TMB aims to provide alternative financial services that are matched with customers’ needs Financial Services and that have been overlooked by others. In particular, we strategically invest to unlock the benefits of Supply Chain Solutions for both customers and the Bank, where customers can better manage financing and transactions whilst allowing TMB to improve the risk-return of the whole value chain.

Supported by our ways of working

T MB Brand, Rooted in the core DNAs:

“Make THE Difference” ▶▶ Genuine – Offer financial services that put customers’ best interests first

▶▶ Simple and Easy – Make banking easy for customers

▶▶ Intelligent – Understand our customers well in order to provide products that cater to their financial needs

▶▶ Why Not Attitude – Challenge market norms with creative and innovative financial solutions that are beneficial to customers TMB Bank PCL Strategy and Business | 71

Key Performance Indicators

Leading Thai bank with Deposit-led Service and Operational Valued-Added Services world-class financial Strategy Excellence solutions

ROE (Consolidated) Deposit market share (2) Customer engagement Core non-interest (Bank only) (percentile) income/total income (consolidated) (5)

8% 8% 80% 30% 6.6% 6.1% 6.1% 63% 24% 59% 6% 6% 60% 18% 4.2% 20% 4% 4% 40% 2% 2% 20% 10% 0% 0% 0% 0% 2009 2010 2009 2010 2009 2010 2009 2010

TMB brand Wholesale and SME consideration (1) performing loans market share (3) (Bank only)

100% 8% 79% 6.0% 5.9% 80% 6% 60% 56% 4% 40% 20% 2% 0% 0% 2009 2010 2009 2010

Employee Retail performing engagement loans market share (4) (percentile) (Bank only)

80% 3% 70% 2.3% 2.1% 60% 2% 40% 1% 20% 13% 0% 0% 2009 2010 2009 2010

(1) It’s the only bank I would consider + It’s one of only 2 or 3 banks I would consider + It’s one of several banks I would consider (2) TMB deposits includes B/E (3) Wholesale + SME Performing Loans (Excluding Loans to Financial Institutions) / Commercial Banks Total Loans (Excluding Loans to Individuals and Financial Institutions) (4) Retail Performing Loans / Commercial Banks Total Loans to Individuals (5) Core Non-Interest Income = Fees & Service + Gain on Exchange 72 | Strategy and Business Annual Report 2010

TM B Transformation PROGRAm

To deliver our strategic business model, the Bank follows The Transformation program will affect every aspect of a three-stage plan to transform it into a customer-centric, the Bank, enhancing value for all stakeholders, including high-performance organisation. customers, shareholders, employees and Thai society.

Stage: Key Highlights: Status:

▶▶ Re-organization Complete

▶▶ Branch transformation ▶▶ Improved overall asset quality 01 ▶▶ End-to-end process ▶▶ Dramatic improvement in employee engagements L aying the Foundation Improvement

▶▶ HR transformation

▶▶ Enhanced risk management

▶▶ Ensure service & O n Track

operational excellence ▶▶ Significant increase in customer engagement 02 ▶▶ Provide innovative financial ▶▶ TMB products become industry-standard e.g. D ifferentiation and products that match SME 3X Express Credit, Up&Up Term Deposit

Quality Growth customers’ needs ▶▶ TMB brand consideration on par with top banks

▶▶ Enhance service channels

▶▶ TMB brand enhancement

▶▶ New standards for customer 2012 onwards service 03 ▶▶ New standards for financial M arket Leadership management

▶▶ TMB group offering TMB Bank PCL Strategy and Business | 73

WH Olesale Banking 2010 Performance Highlights O ur intent: Wholesale banking remains a key contributor to TMB revenue,

▶▶ Differentiated proposition as a Thai local bank with with wholesale loans making up approximately 50% of the Bank’s global reach and capabilities through our strategic total loan book. In 2010, the team successfully increased our partners customer-base by approximately 300 new active relationships.

▶▶ Establish long-term relationships with our customers Meanwhile, substantial moves have been taken to rebalance the

▶▶ Become a trusted partner, with friendly, efficient Wholesale loan book, lowering exposure to higher risk segments services of the market. Excluding this rebalancing effort, the performing loan book would have expanded by more than 15% from 2009. How we plan to deliver

▶▶ Leverage strategic partners in terms of network, Trade Finance and Capital Markets are considered two key infrastructure and products value added services, and TMB has taken major steps to

▶▶ Build relationships through practical sector-based ensure the products meet the requirements of our customers. solutions and excellence in transactional banking. So far the results have been very encouraging with Trade ▶▶ Increase penetration of TMB supply chain solutions Finance business volumes up 290% compared with 2009 as a key value added service following the release of new services such as “Trade on Demand” and “Document Preparation”. Similarly for Capital I ntroduction Markets, the Bank worked with our strategic partners to Wholesale Banking covers the large corporate segment of the release several competitive products resulting in volume market and is divided into 2 sub-segments, allowing TMB to growth of 165% year-on-year. better serve the differing requirements of each: The Bank’s latest value added service, “Supply Chain Solutions”, ▶▶ Corporate banking — Companies with an annual turnover which enables the Bank’s customers to more efficiently between THB500 and 5,000 million. manage their cash flow and balance sheet, was successfully ▶▶ Large corporate banking — Companies with an annual launched and has gained the support of 17 major Thai business turnover over THB5,000 million. chains together with 500 dealers, resulting in new credit limits of THB6,000 million. As a further demonstration of TMB’s Such customers encompass all areas of the Thai economy and commitment to understand and better serve our customer’s TMB offers a wide spectrum of financial services through the needs, the Bank opened 16 Supply Chain and Business main service channel of a dedicated Relationship Manager (RM) Centers in key business areas around Thailand to provide supported by strong e-channels, corporate call-centre and better accessibility and convenience. Together with Trade the branch/ATM network. Finance and Capital Markets, these initiatives have boosted Such services include: non-interest income by approximately 15% over 2009. ▶▶ Working capital and medium to long term funding

▶▶ Operating and deposit bank accounts P lans for 2011

▶ ▶▶ Cash Management ▶ Work closely with TMB’s partners to bring more value to

▶▶ Trade Finance our customers by access to global networks, services and

▶▶ Supply Chain Solutions products

▶ ▶▶ Capital Markets products ▶ Acquire new customers through excellence in transactional

▶▶ Investment Banking banking services and TMB sector-based solutions

▶ ▶▶ Agent and Securities Services ▶ Improve our accessibility through e-channels, corporate call

▶▶ Global Network Services center and increased nationwide coverage 74 | Strategy and Business Annual Report 2010

SME Banking 2010 Performance Highlights O ur intent: From our research and by listening to customers, insufficient

▶▶ Become the leading SME bank in Thailand collateral can be a major barrier for many customers applying

▶▶ Generate real value by focusing on customer for credit at commercial banks. In response to this, TMB centricity — understanding customer businesses launched the “3x Express Credit” at the beginning of 2010 to and needs provide a source of sufficient funding for SMEs. The product itself was very well received by customers (and quickly How we plan to deliver adopted by several competitors) and it signified TMB’s strong ▶▶ SME customers will receive a high level of service purpose of intent to provide innovative solutions to challenges normally reserved for corporate segment customers faced by SMEs. In the second half of the year “OD No Asset” ▶▶ Provide innovative funding options, a key pain point was released, cementing TMB’s place in the SME market. for SME businesses

▶▶ Effectively serve and support our customers through In terms of our service capabilities, over 250 relationship the physical branch network or via convenient and business development managers were recruited during alternative channels 2010 to greatly improve our customer-to-service staff ratio. Furthermore, in a bid to maximise customer facetime and service quality, all non-service related tasks which used to be performed by RMs have been moved to the back-office. I ntroduction TMB has given strategic priority to the SME segment due in part As of 2010, in addition to the extensive branch network, to the importance of SMEs to the Thai economy and also due 50 SME business zone offices are now in place across the to the belief that the segment remains under served. The Bank country in strategic areas to allow convenient accessibility categorizes SME customers into two sub-segments to reflect for our customers to perform their transactions. SMEs are the inherently different banking requirements of each: also able to securely access and make transactions on their account via alternative channels such as TMB Internet banking ▶▶ Small enterprises with annual sales not exceeding THB50 and electronic cards. million

▶▶ Medium enterprises with annual sales between THB50 and Knowledge is a vital tool for customers to succeed in their 500 million business and in 2010, TMB arranged many academic seminars While the products and services required by SMEs are largely for SME customers throughout Thailand to share information similar as for wholesale customers, TMB has conducted on topics such as economic conditions and forecasts, in-depth research and spent time listening to customers accounting management systems and even how SMEs can so that we now believe we have a greater understanding of benefit from AFTA and AEC. The feedback from the events the challenges and real needs of Thai SMEs. The Bank has was overwhelmingly positive and allowed customers to view outlined a customer value proposition based on the following TMB as a trusted partner. key requirements: P lans for 2011

▶▶ Sufficient Funding ▶▶ Continue to release customer-centric products to help SMEs

▶▶ Relationship with their funding requirements

▶▶ Service and Accessibility ▶▶ Expand our physical and alternative channels to provide even

▶▶ Knowledge better accessibility for customers and improve our service TMB Bank PCL Strategy and Business | 75

R etail Banking 2010 Performance Highlights O ur intent: Retail banking showed a strong performance in meeting the

▶▶ Become the first choice transactional bank objective to be the first choice transactional bank. In 2010, the

▶▶ Build customer value by offering products correctly number of new transactional accounts (Current and Savings) matched to their individual needs accelerated by more than 25% over 2009, bringing the total number of retail customers to over 5 million. Furthermore, in How we plan to deliver: reaction to our ongoing improvements to alternative channels, ▶▶ Provide transactional convenience at fair prices to the number of Internet-banking transactions increased by acquire active customers 250%, and ATM-based transactions were up 35% year-on-year. ▶▶ Offer superior alternative channels with best-in-class

accessibility, functionality and efficiency TMB continued to release innovative savings products and ▶▶ Fully understand the needs of customers through provide new flexible savings options for our customers, such strong segment management and market intelligence as “Up and Up TD” and “Quick Interest TD”. The products ▶▶ Offer right service at the right time through excellent have been successful in attracting new deposits and, as campaign management another sign of their success, have since been emulated by several of TMB’s competitors.

In another demonstration of how TMB strives to provide I ntroduction financial services linked to customer needs, “TMB So Chill” Retail banking offers a variety of deposit and other financial credit card is a brand new unsecured lending concept, services via a network of 455 branches and 2,300 ATMs addressing the gap in the market between credit cards and supported by TMB Internet Banking, TMB M-Banking and personal loans. Other unsecured loans such as “Ready Cash” the TMB Call Center (1558). To respond to the evolving and “Cash 2 Go” showed growing momentum with sales needs of retail customers with the highest possible service increasing 24% over 2009. levels, the Bank first divides the segment into three major groups: Affluent, Middle Income and Mass, and then further Efforts to enhance customer experience has resulted in several differentiates customers by their individual status or life-stage. developments such as the use of an ID Card Reader for our bank branches and the ability to provide “No-Slip Service” Under the strong segment management model, TMB provides which won a Financial Insights Innovation Award for customer retail bank services including the following: engagement. The TMB call center (1558), a key channel with which customers communicate with the Bank, was thoroughly ▶▶ Current, savings and deposit accounts upgraded, significantly improving the capabilities and service ▶▶ Home mortgage loans quality. ▶▶ Unsecured consumer credit such as personal loans and credit cards P lans for 2011 ▶▶ Currency exchange ▶▶ Continue to focus on our key customer value proposition ▶▶ Asset management under TMB Asset Management Co., Ltd which is best-in-class transactional banking together with (“TMBAM”) and ING Funds (Thailand) Co., Ltd providing services and products to match customer needs (“ING FUNDS”) in terms of lifestyle, lifecycle and wealth. ▶▶ Life and non-life insurance through partnership with ING ▶▶ Target 35% growth in high margin loans and 15% growth Life Limited and other non-life insurance companies in deposits. 76 | Risk Management and Key Risk Factors Annual Report 2010

Risk Management and Key Risk FActors

Risk Management at TMB TMB’s approaches to risk management is founded on solid Risk management is essential to TMB’s business to being able risk governance where the Board of Directors holds ultimate to create shareholder value with appropriate and sustainable responsibility of bank-wide risk management. The Board has shareholder returns. Management of the Bank’s major risks delegated risk management related authorities to relevant risk include credit, operational, market, liquidity and strategic committees whose responsibilities are to set up, promote the risks, as well as other risk factors. TMB manages these risks implementation, review, oversee and monitor the management on the basis that the risks must be identified, assessed and of all risks, such as risk strategies, comprehensive policies, measured for both normal and stress situations, continuously frameworks and standards as well as several aggregate risk monitored and that control mechanism have been set as tolerance and risk concentration levels, across the Bank and well as initiate risk mitigation strategies, and reporting in subsidiaries with appropriate quality of coverage and to ensure a timely manner and with transparently risk management that proper action is taken by the responsible line managers information. at the appropriate level.

Board of Directors

Credit Committee Chief Executive Officer Risk Management Committee

Credit Underwriting Risk Policy Chief Risk Officer (CRO) Committee (CUC) Committee (RPC)

Credit Restructuring Wholesale Credit and Restructuring Group Operational Risk Committee 1 (CRC1) Committee (ORC) Consumer and SME Credit Group Credit Restructuring Asset and Liability Committee 2 (CRC2) Management Committee Risk Analytics and Policy Group (ALCO)

Strategy and Credit Risk Intelligence Group Transformation Group Market Risk Management Group

Operational Risk Management Group

Compliance Group

Legal Group

Independent Credit Review

Macroprudential Risk

TMB has embedded risk management into the Bank’s daily In recent years, TMB has improved and continues to improve business activities and strategic planning with the objective to its risk management capabilities with investments in people, optimize risks and returns as well as promote risk management processes, measurement tools and systems and more culture where all employees look for risks, consider their importantly, provides several training modules to improve risk impacts and apply appropriate risk mitigation strategies. knowledge of employees to being at par with best practices. TMB Bank PCL Risk Management and Key Risk Factors | 77

Credit Risk Management on loan types or debtor types and loss given default based TMB’s credit risk management objective is to maximize the on collateral types. Bank’s risk-adjusted return by maintaining credit risk exposure within acceptable level and build a sustainable competitive I mpairment in value of physical collateral advantage by integrating credit risk management into business A substantial portion of TMB’s loan portfolio is secured by physical activities and strategic planning. collateral and other assets, the value of which may be affected by the overall economic conditions of Thailand. A downturn Realizing the importance of effectiveness and timeliness of in the real estate market could result in the principal amount risk management in a changing business environment, TMB of loans secured by real estate exceeding the loan-to-value has improved its credit risk management governance, policies, proportion compared to that at the time of origination. Any guidelines and standards to reflect regulatory and business decline in the value of collaterals securing loans may result environment changes as well as lesson-learnt from the past in an increase in the Bank’s allowance for doubtful accounts. experience. The Bank has proactively set up risk pre-defined TMB manages collateral value impairment risk by establishing set of minimum performance criteria of credit portfolio to collateral assessment policy and procedures which are in ensure that the Bank’s business grows within acceptable accordance with BOT’s regulation. The reappraisal frequency boundaries of risk. For credit decision making, the Bank has is also driven by level of risk based on loan performance. continued to improve its risk measurement tools by using the most accurate possible quantitative assessment of credit risk C redit concentration to which TMB is exposed. The Bank also developed an early Concentration risk in credit portfolios is an important aspect warning system for effective credit risk monitoring. In addition, of credit risk management. TMB manages and monitors the Bank has conducted the exercises to assess credit quality credit concentration with respect to industries, countries and and capital impact in various stress circumstances. borrowers by establishing the Bank-wide industry diversification threshold, country limits and names concentration and K ey Credit Risk Factors single exposure limits to manage both existing and potential Credit quality exposures within acceptable level to ensure appropriate di- TMB manages quality of credit portfolio by monitoring and versification of the portfolio and avoid excessive credit risk reviewing status of the borrowers and/or counterparties exposure in certain industries or countries. In addition, TMB regularly. Early warning system is in place to detect customers sets risk-based Single Exposure Limit to manage the maximum that may be moving toward adverse classification or further exposure for single obligor and related lending. deterioration performance. Special attention is paid to problem exposures, which are subject to more frequent review and O perational Risk Management reporting. Dedicated Debt Restructuring team and Credit TMB believes that effective operational risk management leads Restructuring Committees are established to restructure to more stable business processes and lower operational problem loan in an effective manner and to provide advice costs. Therefore, Operational Risk Management Framework on debt restructuring conditions. TMB sets aside loan loss has been developed and updated regularly to ensure that the provision adequately in accordance with guidelines from the operational risk are properly identified, assessed, monitored, Bank of Thailand (BOT). TMB also takes additional excess reported, analyzed and controlled in a systematic and provisions for performing loan as a further cushion for losses consistent manner. The Framework consist of an Operational expected as a result of future events or operation for loss Risk Management Structure applying the three lines of defense incurred but not yet recognized (IBNR) using probability of risk governance model, and aligning with the COSO risk default based on risk level and exposure at default based management framework. 78 | Risk Management and Key Risk Factors Annual Report 2010

In order to promote risk management culture within the Bank involved in the market risk management of the Bank: the Asset and subsidiaries, all Business and Support Units have primarily and Liability Management Committee (ALCO) and the Market responsibilities and accountabilities for their own operational Risk Management Group (MRMG). risk management and control. The Bank has appointed a number of Unit Operational Risk Managers (UORM) in the Business The Business Units undertaking business activities that involve and Support Units who, with support from and reporting to the market risks are responsible for ensuring that they abide by Operational Risk Management Group, take on/carry out the the standards/guidelines set out in the policies. The MRMG operational risk management responsibilities of their respective ensures that the risk levels stay within the approved limits, units. While, Audit Group provides specific recommendations and that any foreseeable major impending risks or adverse for improving the governance, risk & control framework. events are escalated to the appropriate authorities to take the necessary and timely actions. The Capital Markets Group O perational Risk Management Tools and Mitigating Techniques (CMG) is responsible for managing and trading the portfolio The Bank has established the risk appetite level for operational to optimize the return on the funds invested. risk utilizing the potential loss (probability and impact) concept. The level is determined based on consideration of Liquidity Risk the historical loss data of the bank, the financial strength, Liquidity risk is the risk that the Bank or any one of its and the overall operational risk management environment. subsidiaries cannot meet its financial liabilities when they For potential loss over a threshold amount, the bank will take come due, at reasonable costs and in a timely manner. The further mitigating action to bring down the potential loss level liquidity risk management framework is determined by the to within threshold. ALCO which has to be approved by the Board of Directors. The Balance Sheet Management Group (BSMG) is assigned Several policies, minimum standards, and guidelines have to maintain a sound liquidity profile. been established and updated regularly to manage various operational risks covering on all key processes. Various tools The liquidity risk management function is delegated to the are used to identify, assess, control and report of operational Market Risk Management Group (MRMG), which joins with risk such as Risk & Control Self-Assessment (R&CSA), Control BSMG in bearing the responsibility for liquidity risk stress Self Assessment (CSA), Key Risk Indicator (KRI), and Incident testing. The liquidity positions are stress tested under various Management Report. In addition, the Bank has put in place scenarios to assess whether the Bank can withstand a programs/mechanisms that help mitigate operational Risk such as prolonged period of stress. Product and Service Approval Process (PSAP), Action Tracking, Outsourcing/Insourcing Risk Management, and Business C ontingency Plan Continuity Plan and Disaster Recovery Plan (BCP/DRP). The Bank has a contingency plan, which establishes procedures and actions for managing liquidity in crisis M arket Risk situations. The plan is regularly reviewed and tested to ensure Market risk exposures that the Bank is well prepared for a potential liquidity crisis. Market risks comprise of both price and liquidity risks. Price risk is the potential loss due to fluctuations in interest rates, For other companies in TMB Financial Business Group, which foreign exchange rates, equity and commodity prices. include Phayathai Asset Management Company Limited (PAMC), TMB Asset Management Company Limited (TMBAM) Market Risk Management Structure and Designee for ETA Contract Limited (Designee), the Bank Two entities independent from the Business Units are directly has established policies to define minimum guidelines in TMB Bank PCL Risk Management and Key Risk Factors | 79

managing market (price) risk and liquidity risk leaves certain Bank and the IMF on Thailand’s compliance to the FATF’s 40 discretion to subsidiaries to develop their own policies in line Recommendations. The Bank continuously take action in with their business. ensuring compliance and perform due diligence in customer screening and monitoring. R isks from material changes in the regulations that govern the Bank and its business activities. In ensuring effective compliance risk management, Compliance Key regulatory non compliance risks of the Bank lie in Group implement various tools such as compliance checklists, compliance to Financial Institutions’ Businesses Act, Bank advisory and regulatory updates, monitoring and review of Thailand’s Regulations and Notifications, The Securities programs and management reports as well as compliance and Exchanges Act, the Securities Laws and Regulations as training to Business Units and their staff on regular basis. issued by the Stock Exchange of Thailand, the Securities and Exchange Commission, the Anti Money Laundering Laws and Sta r tegic Risk their Royal Decrees. TMB is aware of the strategic risk resulting from the strategic plans, business plans, strategic implementations, and controls In 2010, the material changes in banking regulations lie in the which are considered inappropriate and inconsistent with both Notifications issued by the Bank of Thailand for compliance internal and external business environments. with Basel II Pillar II, in particular Internal Capital Adequacy Assessment Process (ICAAP). The Bank has actively and TMB’s vision is to become “the leading Thai bank with world continuously taken actions to complete requirements within class financial solutions” with “Customer Centric Organization” required time lines. The Bank’s activities and achievements and has implemented a Deposit-Led Strategy to ensure a strong are mentioned in other sections of this Annual Report. For foundation for sustainable growth. In order to achieve our securities laws, material changes that impact the Bank are vision, TMB has developed a clear 5-year strategic plan to in compliance to for client suitability requirements to be achieve market leadership which is updated on annual basis. performed in Selling Agent Business in assessing the risk appetite of the customers who buy and sell mutual fund In order to manage the strategic risk, TMB has improved the units from the licensed staff of the Bank so as to protect process of performance tracking and strategic control. Regular their interests and invested funds from mis-selling and mis- meetings of the management team and business units are held presentation. Compliance has actively been working with the to review the performance together with remedial planning in responsible Business Units in preparing for the new regulation case of target shortfalls. A strategic risk dashboard has been that will be effective in 2011 to ensure full compliance. developed and is produced regularly to keep management informed and aware of the changing strategic risk status. A On Anti-Money Laundering, the material changes is in the issue self assessment of strategic risk is also evaluated with priority of The Anti-Money Laundering Act (No. 3) B.E. 2552 (2009) by management. declared on 22nd July 2009 and enacted on 19th November 2009 which requires business operators in other 9 professions In all, TMB is strongly determined to maintain a high level to report cash transactions to the Anti-Money Laundering of strategic risk management. Starting from the process of Office (AMLO). According to this laws, the Bank will have strategic planning, organization restructuring, staffing and to report electronic fund transfer transactions to AMLO. project implementation as well as the performance monitoring, The emphasis of AMLO is still on compliance with Know- all managed to be in line with the Bank’s key strategies. In Your-Customer (KYC) and Customer Due Diligence (CDD) in addition, the strategic plan itself is reviewed regularly to ensure order to be prepare for the next assessment by the World it is consistent with the changing business environment. 80 | Corporate Governance and Management Annual Report 2010

Cr o porate Governance and Management

Cr o porate Governance Report investment in the Bank’s important projects including corporate branding, communications, public relations as well TMB Bank Public Company Limited (“the Bank”) is committed as business continuity plan, consider business strategy of to high standards of good corporate governance which means subsidiaries and review the Bank’s performance. that the Bank has efficient, transparent, and able-to-be- audited management systems to build trust and confidence The Board of Directors has put best efforts in ensuring the policy among its shareholders, investors, and other stakeholders is implemented and review, improvement and modification are (clients, employees, customers, business partners, creditors undertaken to update and align with the changing situations regulators and society). Good corporate governance is means to so that the implementation creates maximum benefits for the increase value and encourage sustainable growth of the Bank. Bank, shareholders and all stakeholders.

Corporate governance refers to the set of relationships In 2010, the Bank continued its commitment to the transparent among groups of persons, namely the Board of Directors, the and fair operations under good corporate governance, on- management, the shareholders, and all stakeholders. In this going development of which will be pursued. According to regard, good corporate governance structure enable the Bank the Corporate Governance Report of Thai Listed Company to set business objectives and goals, including the methods 2010, the Bank received the highest score with “excellent” and process of achieving the objectives and goals and continuously, ranked by the Thai Institute of Directors. In the monitoring & measuring performance whether the set goals previous year, the banking business had been in compliance are reached or not. Corporate governance provides proper with the principles of good corporate governance as per the incentives for the Board and management to pursue objectives SET’s guidelines which are summarized as follows: that are in the interests of the Bank and its stakeholders and acilitates effective performance monitoring and measurement. 1.Rgt i h s of shareholders Shareholders are the owners of the Bank. They control the Bank The Board of Directors of the Bank has approved the by appointing the directors to act as the representatives of all “Corporate Governance Policy” as written guidelines and the shareholders to make decisions on significant corporate announced to all bank personnel from the Board of Directors, changes. The Bank complies with the recommendations of the management to bank staff for their acknowledgement and SET for listed companies on shareholder rights, encourages on-going compliance. In addition, the Board of Directors shareholders to exercise their rights, and is committed to the has approved the TMB Corporate Governance Framework equal treatment of all shareholders. to scope and allocate role and responsibilities of the Board of Directors, the board committees, Chief Executive Officer The Bank facilitates all shareholders to ensure they (CEO) and management more precisely. CEO has power and can fully exercise their basic rights, i.e. to buy, sell duty to manage the Bank’s activities in accordance with and transfer of securities they hold, and safeguarded policies, strategies and plans as assigned by the Board of the interests of all shareholders, comprising majority Directors. The Bank also has Chief Executive Committee (CEC) shareholders, minority shareholders, and institutions on an comprising CEO and Chiefs as members to manage and run equitable basis in the access to accurate and updated the Bank’s daily business as per the short-term and long-term information of the Bank. strategies, oversee the review of business operation to achieve goal and strategy, propose for the Board’s approval business The annual general meeting of shareholders has been plan and annual budget, control number of manpower to be determined to be held annually within four months from the in line with the staff member plan, consider and approve end of the fiscal year (December 31). In case of any special TMB Bank PCL Corporate Governance and Management | 81

issue that needs to be proposed as an urgent and necessary 32,158,724,297 shares or 73.88 % of the total shares sold, case, and where the approval of the shareholders’ meeting and eight directors attending the meeting. is required pursuant to the applicable conditions, rules or laws, the Bank will call an extraordinary general meeting of The meeting procedures conformed to the good corporate shareholders on a case by case basis. governance principles as below:

Agenda and related documents in regard to annual shareholder Before the meeting meeting will be sent to shareholder in advance, of which the Shareholders had full access to necessary information on the procedure will be in accordance with regulation in terms of meeting date, location, and the agenda in advance on the timing and sufficiency of information to ensure sufficient time Bank’s website so that they would have adequate time to for shareholders to review the information. For the shareholders study the information before receiving the documents. The who cannot attend the meeting by themselves, the Bank Bank had assigned Thailand Securities Depository Co., Ltd. designates independent director of which shareholders can (TSD), its share registrar, to send out to all shareholders the appoint to attend in the meeting and perform on their behalf invitation notice, with details stipulated therein regarding the as their proxies. meeting date, time and venue, as well as complete information necessary for the meeting. The invitation notice stated the The Bank has a policy to arrange the shareholders’ meeting objectives and rationale as well as the opinions of the Board with efficiency and transparency and in compliance with of Directors on each item, accompanied by complete and relevant regulations and regulatory requirements. Meeting sufficient details for the consideration of each tem and for agenda and documents are to be delivered to the shareholders the decision to vote on each item. Shareholders were clearly in advance, with sufficient information provided to support informed which item would be for consideration and which one the shareholders’ consideration and decision to vote on for acknowledgement. Moreover, in the invitation notice, the each agenda with their full use of rights. On the meeting shareholders were informed of the details regarding necessary date, appropriate registration procedure has been prepared evidence documents to be brought to the meeting. by the Bank, with facilities provided by Bank staff for the shareholders and proxies. A proxy form was also enclosed so that the shareholders could use in appointing any of the Bank’s designated independent In 2010, two meetings of shareholders were arranged, directors or other persons as their proxies in case they could consisting of: not attend the meeting.

1. The 2010 Annual General Meeting of Shareholders (AGM) D uring the meeting which was held on Friday, April 23, 2010, at the Auditorium, The meeting was arranged with transparency, fairness and 7th Floor, TMB Head Office with altogether 1,805 shareholders equitable treatment of all shareholders. Appropriate registration and proxies, holding a total number of 30,207,428,507 shares procedure was prepared by the Bank, with facilities provided or 69.88% of the total shares sold, and nine directors attending by Bank staff, classified by type of attendees, i.e. shareholders the meeting. attending in person and proxies attending on shareholders’ behalf. This aimed at ensuring rapid and accurate registration 2. The Extraordinary General Meeting of Shareholders (EGM) procedure. Voting card was available for each attendee to No. 1/2553 which was held on Thursday, June 24, 2010, at vote on each item on the agenda. Moreover, the Bank also the Auditorium, 7th Floor, TMB Head Office with altogether provided shuttle bus service at various spots and sufficient 1,619 shareholders and proxies, holding a total number of parking space to serve the shareholders. 82 | Corporate Governance and Management Annual Report 2010

At the 2010 AGM, the Chairperson of the Board of Directors The meeting minutes and detailed votes on all items, as well served as Chairperson of the meeting, and Chairperson of each as essence of shareholders’ inquiries, clarifications of the Board committee, namely the Board of Executive Directors, Board of Directors & CEO and resolutions were recorded Audit Committee; Nomination, Remuneration and Corporate completely and accurately by the Company Secretary. Governance Committee, together with the Chief Executive Officer, were also present at the meeting to clarify and answer A fter the meeting questions of relevant issues. Before the beginning of the After the meeting, the minutes of the meeting that would be meeting, the Chairperson assign Company Secretary clearly proposed for adoption at the next meeting were submitted informed the meeting of the voting and counting methods. For to the relevant authority within the specified period, and made more convenience to the shareholders, a simultaneous English available to the shareholders on the Bank website including translation was provided by Bank staff for foreign shareholders. the systematic filing for monitoring and reference. In this regard, the shareholders’ right to study of the Bank’s information memorandum would not be undermined, such Furthermore, the Bank recorded the meeting into DVD for the as no abrupt distribution of additional document with key shareholders who could not attend the meeting by notifying information during the meeting, no addition of new items on them via the Bank’s website to request the DVD free of charge. the agenda or change in the key information without prior notice to the shareholders, no prohibition of meeting attendance of From such operation, the Thai Investors Association late attendees, and so on. qualitatively assessed the 2010 Annual General Meeting of the Bank at “Excellent and recognized as Good Example” The Chairperson proceeded with the meeting in order of the items on the agenda. In consideration of certain items on 2. i eQu table treatment of shareholders the agenda in which directors who joined the meeting have The Bank has been determined to conducting business interests or have relation thereto, e.g. election of directors to under good corporate governance principles to assure all replace those who retire by rotation, the Chairperson informed shareholders, i.e. majority shareholders, minority shareholders, the meeting thereof and such directors would abstain from investors and institutions, Thai and foreign alike, of their rights joining the consideration and voting thereon. The Chairperson to fair and equitable treatment as follows: also encouraged the shareholders to cast votes and raise questions and comments. Importance was given to all the R ight to attend the shareholders’ meeting recommendations or comments made by the shareholders, For each shareholder’s meeting, all shareholders will have with all questions comprehensively clarified and all useful equitable right to attend the meeting. Opportunity is opened suggestions brought into account. The vote casting and the to those who are unable to attend the meeting in person to vote counting were undertaken openly and transparently. At appoint proxies to attend and vote at the meeting on their the 2010 AGM, Weerawong, Chinnavat & Peangpanor Ltd., behalf. The Bank has arranged to have its independent legal consultant, was invited to witness the vote counting on directors who do not have interests in the business on the all agenda items. agenda be available for the appointment as proxies. The shareholders may appoint other persons as their proxies. In addition, assessment forms of shareholders’ meeting were disseminated to gather feedbacks and comments from the R ight to vote at the shareholders’ meeting shareholders to improve and develop shareholders’ meetings At each meeting of shareholders, the Bank specifies that in the future to be more efficient and maximize benefits for the rights to vote shall be accordance with the amount of the shareholders. shares held by the shareholders, with one share equivalent TMB Bank PCL Corporate Governance and Management | 83

to one vote. The voting shall be carried out rapidly and the The consideration of the transactions that may involve counting of the votes shall be transparently disclosed, with conflicts of interest or the connected transactions or the one share equivalent to one vote. The majority votes will be related transactions has been made stringently in accordance considered as the resolution except for special resolutions with the regulatory and international standards, as well as of certain cases set forth by the laws requiring the votes in its normal business operation course and criteria. These of at least three-fourths of the votes of all the shareholders transactions have been treated the same as those made attending the meeting and having the rights to vote. As regards with outside parties. Stakeholders in any transaction shall the voting method, the shareholders can vote to agree, not not participate in the consideration and approval of such agree, or abstain from on each agenda in the voting cards. transaction. The information is disclosed transparently under The Bank collects the voting cards form the shareholders corporate governance practice. on every agenda that needs to be voted for resolution and vote counting by barcode system. The Bank will notify to the The Bank exercises caution to prevent the Bank, directors shareholders the voting result on every item once the counting and/or its employees from using customers’ information or is finished, divided into approval votes, dissenting votes and secret to conduct business in competition with the customers’ abstentions, as well as invalid ballots. The resolution of the business, and not to support any employees’ activities that will meeting according to the voting result on each item will be lead to conflict of interest including prevent them from abuse recorded in writing and all ballots will be kept for further of their duty and authority for personal benefits. In this case, examination. the Bank formulate relevant procedures include Trading and Investment of TMB’s financial instruments by employee, and R ight to appoint directors individually Trading of securities on the Watch List/Restricted List and At each meeting of shareholders, the Bank has an agenda Blackout Period by employees, and directors also. item concerning the election of the Bank’s directors. The shareholders are allowed to vote for the election of In the monitoring of the use of inside information, the Bank directors one by one which is the practice in conformity requires that all directors, management and relevant officers with good corporate governance that shareholders have comply fully with the rules and regulations regarding securities the right to choose the person/s that they deem having trading and disclosure of their securities holding. They must proper qualifications to perform duties as directors so as to also acknowledge the prohibitions and penalties relating to the safeguard the shareholders’ interests. This will enable the use of inside information for their personal or others’ benefits Bank to have directors from diversified fields to represent and the premature disclosure of information to the general the shareholders. The Bank also has an agenda on directors’ public. remuneration to be proposed for consideration and approval on an annual basis. R ight to propose to the meeting agenda items and nominate candidates for directors M anagement of conflicts of interest The Bank has realized the importance of the rights and the The Bank has scrupulously placed importance to the equitable treatment of shareholders which are part of corporate management of conflicts of interest of the Bank and its governance practice. It has allowed the shareholders to propose subsidiaries on a transparent and fair basis, disclosed issues for the meeting agenda and nominate candidates for information and transactions in a complete and timely manner, directors in advance. The Bank has clearly posted on its and also overseen the directors, executives and staff at all website as well as through the SET informing the shareholders levels to concern and comply with regulatory requirements of such right and procedure as well as the Bank’s criteria and regarding conflict of interest. timeframe within which they are to make proposals. 84 | Corporate Governance and Management Annual Report 2010

3. Role of stakeholders Customers: The Bank has taken the customer centricity The Bank has realized the importance of equitably treating all strategy in its business operations to provide the customers stakeholders, comprising shareholders, employees, customers, with diversified services and products that can well respond business partners, creditors, investors, government authorities, to their needs and create maximum customer satisfaction. the society, and other relevant parties. The Bank has put in place the system to handle customers’ complaints and resolve Business partners: The Bank gives importance to operate their problems with prudence and fairness. Customer information business with partners in long-term and sustainable way is to be kept confidential in compliance with the agreements as the good business alliances. The Bank has determined made with business partners. The Bank‘s business operations clear policy for partner treatment regarding all kinds of are based on fair and ethical competition. The employees have procurement of materials, hardware, employment, leasing and been treated fairly and equally. Training has been provided to hire purchase. The practices have been orderly and strictly in enhance staff’s knowledge and efficiency, and fair compensation compliance with criteria for fair treatment and mutual ultimate scheme has been mapped out. The Bank has also promoted benefits in terms of quality, price, terms and conditions of corporate governance culture within the organization. services and products. The Bank’s guidelines on partner treatment are as follows: To ensure all stakeholders’ full access to their rights, the Bank 1 . Procurement officers and those related to procurement has laid down guidelines for all stakeholders as follows: process shall perform duty impartially, honestly, independently and transparently regarding contact and G uidelines for stakeholders coordination with suppliers. Shareholders: The Bank has targeted to achieve satisfactory 2 . Procurement officers and relevant persons, including operational performance, with consistent growth of returns, their direct family members, who have direct or indirect which will boost the Bank’s value contributed to the shareholders vested interest with procurement and employment, for in form of higher share price and attractive dividend payment, example, employee, director, partner or advisor of the sale as well as complete and transparent information disclosure in company, shall not participate in considering the specific line with regulatory requirements and standards. procurement whether there is remuneration or not. 3 . Procurement officers and relevant persons, including their Employees: Employees are the most valuable resources and direct family members, shall not obtain any personal gain important factor for the Bank’s success so the Bank has of commission, fee or token of appreciation from suppliers. focused on developing and creating good work culture and 4 . In case of receiving presents and/or gifts, procurement environment and encouraging team work. Employees are officers and relevant persons, including their direct treated with politeness and their individuality is respected. family members, shall comply with the regulation The consideration of employment, promotion and rotation of “Accepting Gifts.” employees are based on fair treatment and use of human 5 . Procurement officers and relevant persons, including their resources for the Bank’s optimum benefits. direct family members, should not be the one borrowing from or lending to the existing suppliers or suppliers who Moreover, the Bank is determined to promote the employees’ are making an offer to the Bank. development and training so that the employees can work with 6 . Procurement officers and persons related to procurement skills and knowledge that will create the maximum benefits shall not disclose names of the persons selecting supplier, for the Bank. Employees also have opportunity of career-path price, offer or technical information of procurement apart with satisfactory and proper returns to stimulate their from public information of the selection team to those not work contribution. being directly responsible or other suppliers to prevent non- TMB Bank PCL Corporate Governance and Management | 85

transparent supplier selection and to provide fair treatment to do and learn from activities of interest, e.g. arts, music, to all suppliers making price proposal to the Bank. recreation, and academic skills improvement, and etc.

Creditors: The Bank has policy to strictly honor and comply C orporate Social Activities of 2010 with conditions with creditors. Loan and interest payment ▶▶ FAI-FAH, TMB’s CSR program for community children: are monitored to ensure complete and timely payment to all “FAI-FAH” is TMB’s innovative and interactive CSR creditors. Loan conditions are rigorously complied with without program designed to provide economically-disadvantaged any mismatched fund allowed. Besides, the Bank operates community youth a “third place” that integrates work and business in the way to build confidence for creditors in the play through fun and experiential activities such as arts, Bank’s good financial status and debt serviceability as well music, singing, cooking, etc. as well as other life-skills as report the complete and accurate information to creditors. that maybe beneficial to the children’s lives and future professions. The program is free of charge for children age Investors: The Bank has been committed to disclosure of 12-17 living in lower-income communities. correct, complete and sufficient information to timely serve investors’ decision making. ▶▶ Scholarships for military officials’ children: The Bank has granted scholarships to military officials’ children for 47 Government agencies: The Bank has been determined to consecutive years. To ensure the scholarships are broadly strictly carry out business in compliance with the relevant laws, distributed, the Bank provides funds to all military units for rules, regulations and criteria of the authorities. allocation to their staff’s children as deemed appropriate. Recipients were from Office of the Permanent Secretary for Corporate social responsibility: The Bank has recognized the Defence, Royal Thai Military, Royal Thai Army, Royal Thai significance of corporate social responsibility (CSR). With a Navy, and Royal Thai Air Force. strong commitment to and awareness of its accountability to the society, the Bank has supported various activities relating ▶▶ Undergraduate scholarships: The Bank deems it one of the to the promotion of social quality in many respects and has crucial duties of a financial institution such as the Bank to followed up the results of which for further improvement. create young promising personnel in financial and banking In addition, Corporate Branding and Social Responsibility field. The Bank has granted scholarships to undergraduate was established under Corporate Communications Group students in finance and banking related fields, such as to be responsible for social and environmental projects economics, business administration, commerce, accounting, and activities and ensure of continual proceeding and their and management, of state colleges throughout the country. contribution to the entire society. Realizing significance of

Thai youth development, TMB has promoted opportunities ▶▶ Donations to victims of disaster: Due to the flooding for adolescents to develop their creativity and make good use disaster in north-eastern provinces in October 2010, the of their free time through art, music, skill training, and other Bank provided emergency assistance by donating food various activities. TMB’s “Fai Fah” project (the place for art to the victims living nearby TMB branches. In addition, learning and youth-development activities has received very the Bank made donation to Rajaprajanugroh Foundation good cooperation from not only the Bank’s staff and valuable under the Royal Patronage and opened “TMB for victims customers but also many volunteered lecturers, artists, and of inundation” account for donations from clients, TMB others, who have devoted their times continuously passing employees and the public. All donations were deposited on knowledge to young people. The project encourages the in saving account which will be delivered to organizations youth to spend their free time after school and during holidays that provide support to victims of disaster. 86 | Corporate Governance and Management Annual Report 2010

C orporate Environment Activities of 2010 ensure all stakeholders are able to communicate, report, or

▶▶ Efficient energy and environment management project: complain about improper deeds. These include violations of TMB recognizes the importance of national economic and laws and regulations, misconduct and unethical behaviors, industrial development in parallel with the promotion of embezzlement, frauds committed by employees or external efficient energy and environment management. To that parties that may have impact on the interests of the Bank, effect, the Bank has responded to the government policy either financially or non financially. The stakeholders can to enhance support entrepreneurs by encouraging their report or make complaints either in writing or through the investments in energy conservation projects, which will Bank’s website at www.tmbbank.com. The complaints will help to save their energy costs, boost their income, and be forwarded to relevant units for quick investigation and strengthen their competitiveness. correction. After that, the whistleblowers, whose identities and complaints will be kept confidential, will get notified of In 2010, the Bank in cooperation with the Institute of the Bank’s operation. Industrial Energy promoted energy conservation among manufacturers. The Bank has granted Baht 2,000 – 3,000 4.s Di closure and Transparency Million loan to industrial manufacturers to invest in energy The Bank has ensured transparent and adequate disclosure conservation initiatives and alternative energy. of information to support investment decision. The Board of Directors is responsible for reporting the Bank’s operating Moreover, the Bank has been entrusted with the task of results and significant events in each year for shareholders’ managing the energy and environment funds/projects and acknowledgement, and confirming the completeness and acting as a channel to funnel financial supports from the accuracy of its financial report submitted to the shareholders in government sector and international organizations in the form conformity with the generally accepted accounting standards. of soft loans and grants to entrepreneurs across the country Notes to financial statements are made available in the annual such as Cooperation with the World Bank, the Ministry of report. The Bank also provides in the annual report the Board Finance and the Ministry of Industry in managing the Ozone of Directors’ responsibility for financial statements and report Project Trust Fund (OPTF) to comply with the requirements of the independent auditor. under the Vienna Treaty and Montreal Protocol, of which Thailand has been an associate member, on the reduction and In addition to the disclosure of financial report and other phase-out of ozone-layer depleting substances. The Bank information as prescribed by the law, the Bank has emphasized implemented OPTF projects for a number of industries on the disclosure of essential news and information to such as fire extinguishing substances, garments, air- timely serve the shareholders, investors and the public. To conditioning services for automobiles, refrigerator/chiller this effect, Investor Relations unit has been set up under repair services, etc. The program has been ongoing for Strategy and Transformation Group to clearly take charge of over 15 years and the Bank is currently reviewing its role disclosing information to the parties concerned. Its policy is to continue cooperation with the World Bank for the next to disseminating both financial and non-financial information phase of the environmental projects concerning ozone to both Thai and non-Thai shareholders, investors, analysts depleting products. and credit rating agencies, with accuracy, completeness, transparency and timeliness, and in accordance with the W histle blowing or complaints relevant laws and regulations so that those stakeholders will The Board of Directors has approved in writing the Whistle receive useful information for their investment decisions. This Blowing Policy and the Audit Committee has performed will help build up confidence, good image and reliability to the its duties in supervising the whistleblower procedures to Bank among the investors and concerned parties. TMB Bank PCL Corporate Governance and Management | 87

In 2010, the Bank met and provided information to concerned of opinions and balance of management power. The members parties on the following occasions: are professionals from diversified fields of knowledge, expertise and backgrounds, which have essentially contributed Types of meeting Number of Number of Number of to the consideration and resolution of meeting issues. They times companies persons have attached importance and devoted their time to the Bank’s

One-on-one meeting 24 34 44 business, through the Board of Directors’ meetings and those of Board committees to ensure efficiency in the business Teleconference call 6 7 9 operations with optimum benefits to the Bank.

Group analyst and 3 88 109 Investor Meeting The Board of Directors plays a key role in drawing up the Bank’s vision and mission, and formulate its policies, targets, Non-deal Roadshow 5 69 73 and direction in the operations, both short-term and long-term, Total 38 198 235 to be in line with the economic conditions and cope with the competitive environment. These policies are practical In addition, the Bank arranged for information dissemination and adjustable amidst the complex and rapidly changing through the following channels: business circumstances. There are clear guidelines set out

▶▶ The Stock Exchange of Thailand for evaluation of operational performance. Besides, the Board

▶▶ The Office of the Securities and Exchange Commission has supervised to ensure that the management has run the

▶▶ Ministry of Commerce business in line with the policies and plans set forth and in

▶▶ Newspapers/magazines an effective, efficient, and transparent manner. The Board

▶▶ Television has also monitored the Bank’s management of risk to ensure

▶▶ Electronics media: TMB website (http://www.tmbbank.com) acceptable risk level, and its audit and internal control systems

▶▶ News release and press conference in conformity with the laws and regulatory requirements.

▶▶ Questions and answers through E-mail and call center Another important role of the Board is to seek, promote, and I nvestor relations contact: develop the employee competence and ethics with suitable Investor Relations, Strategy and Transformation Group compensation scheme drawn up to be competitive with those Floor 28, TMB Head Office in the financial market and support the Bank’s business Tel. 02-299-1178 | Fax. 02-299-1211 expansion for the utmost benefits of not only the Bank, but E-mail address: ir @ tmbbank.com also the shareholders and all other stakeholders. Website: http://www.tmbbank.com S tructure of the Board of Directors S hareholders Services Contact: As of December 31, 2010, the Board of Directors was composed Corporate Secretariat and Shareholder Services of 12 members as follows:

Floor 28, TMB Head Office ▶▶ 1 executive director

Tel. 02-299-2769, 02-299-1406 | Fax. 02-299-2758 ▶▶ 7 non-executive directors

▶▶ 4 independent directors 5. The Responsibilities of the Board of Directors TMB Board of Directors is composed of independent directors, The Board structure has been established with clear and non-executive directors, and executive directors. It is thus a transparent scope of responsibilities, not allowing any person diversified composition that allows for independent expression or group of persons to have unlimited power. To enable an 88 | Corporate Governance and Management Annual Report 2010

appropriate check and balance, one-third of the total number be distributed to the directors in advance so that they can of the directors are independent directors pursuant to the study the information to support their decision making. In regulatory criteria and with the qualifications as required by the addition, each director may propose items to be put in the relevant laws or regulations. The qualifications of independent agenda for the meeting, and fully and independently express directors defined by the Bank are more rigorous than those their opinions. The directors with conflict of interest in any by the SEC. In this respect, independent directors are able agenda item shall not participate and exercise their voting to express their opinions on an independent and impartial right on such item. To allow for independent consideration, the basis to bring about the best benefits to the Bank as well as Chairperson will process the comments and make conclusion to prevent conflicts of interest. on the consideration results of the meeting.

In order to relieve the Board of Directors’ burden in scrutinizing After every Board meeting, the Secretary to the Board is and considering essential businesses of the Bank, a number responsible for preparation of the meeting minutes which are of Board committees have been set up by the approval of the to be adopted in the first agenda item at the next meeting. Board of Directors to be tasked with overseeing and ensuring The adopted meeting minutes shall be filed and kept in an the Bank’s transparent and effective business operations. The orderly manner available for use as reference and inspection Board committees shall have the authority to make decision at all times. on behalf of the Board subject to the Board’s delegation of authority, duty and responsibility. The Bank’s Board committees A ppointment of Company Secretary comprise the Board of Executive Directors; the Audit The Board of Directors has appointed M.L.Ayuth Jayant, Committee; the Risk Management Committee; the Nomination, Executive Vice President, Head of Corporate Governance Remuneration and Corporate Governance Committee; the Group to hold position of Company Secretary. Credit Committee; and others as deemed necessary. The Company Secretary’s roles and responsibilities are to The qualified persons to be appointed as members in each perform duty in compliance with laws and best practices Board committee are selected by taking into account the including follow up activities of the Board of Directors and appropriate qualifications, capabilities, experience, and also the Bank’s to be in line with relevant laws and regulations. The relevant regulatory. The responsibilities of each committee are Company Secretary is also to support the Board of Directors, clearly defined. Meetings have been held regularly. Committee management, and the Bank to implement operation in line members have devoted their time to the supervision of the with good corporate governance and other best practice to Bank’s business operations to ensure that they are in line with make sure that the Bank’s operation is under relevant legal the plans and consistently submission of the reports of which framework and good corporate governance. for the Board’s acknowledgement. The Company Secretary has roles and responsibilities as Board of Directors’ meeting follows: The Board of Directors’ meeting is held regularly on a monthly basis. The meeting date shall be set in advance so that the 1. For the Bank Board members are able to plan the attendance of the meeting. (1) To monitor and supervise the Bank’s overall operation with Besides normal meetings, special meeting sessions may be relevant laws and regulatory requirements arranged as deemed necessary. The meeting agenda shall (2) To file and keep the Bank’s important documentation such be determined by the Chief Executive Officer and endorsed as certificate, memorandum & articles of association, by the Chairperson of the Board. Meeting documents shall shareholder register, licenses and power of attorney, etc. TMB Bank PCL Corporate Governance and Management | 89

(3) To push for guidelines so that the Bank shall formulate nomination process. The Nomination, Remuneration and policies, comply with good corporate governance and Corporate Governance Committee shall be in charge of conduct regular review. seeking, screening and nominating qualified candidates to the Board for endorsement before proposal to the shareholders’ 2. For the Board meeting for election of directors. The candidates, besides (1) To advice the Board of Directors and management on laws having qualifications as prescribed by the regulatory criteria and regulations relevant to their duties and the Bank’s regulations, shall have knowledge, expertise (2) To oversee and conduct meetings of the Board and board and experience in the business arena, and leadership, visionary committees established by the Board of Directors to be in and strategic thinking skills and competence, as well as be line with laws, regulations, articles of association, charters, able to contribute their time for the best benefits and the firm and best practices and sustainable growth of the Bank’s business operations. (3) To perform the Board’s secretary and board committees’ secretary as assigned including Chief Executive Committee, In case of any directorship vacancy for reasons other than record accurate and complete minutes, inform to relevant retirement by rotation, the Board shall appoint a person as management the resolution and follow up the resolution replacement upon consideration and endorsement by the implementation Nomination, Remuneration and Corporate Governance Committee. (4) To oversee the changes of directors and examine director’s The replacing director shall hold office only for the remaining qualifications in case of appointment of new directors in term of office of the director whom he has replaced. Except line with regulatory requirements, including propose the the remaining duration of the director’s term in less than two issue to the Bank of Thailand for endorsement months, the replacement must be elected at a general meeting (5) To review director’s qualifications during the directorship of the shareholders. period to ensure that the qualifications are always in line with regulatory requirements I ndependent director nomination criteria (6) To oversee insider information practices of directors The Bank has been aware that independent directors take a (7) To facilitate directors’ training and development vital role in safeguarding the interests of the Bank and the (8) To provide Board’s performance assessment minority shareholders. To enhance independence of the Board (9) To arrange Directors and Officers Liability Insurance (D&O of Directors and manage conflicts of interest pursuant to the Insurance) for the directors and management. regulatory criteria and the corporate governance principles, the Board has formulated criteria for nomination of independent 3. For the Shareholders directors from professionals of diversified fields with proper (1) To conduct shareholders’ meeting to be in line with laws, qualifications and experience who can deliver independent articles of association and good corporate governance opinions and have fairness in the performance of duty. principle, including perform duty of secretary to the The Nomination, Remuneration and Corporate Governance shareholders’ meeting. Committee shall make preliminary consideration of the (2) To oversee the right of shareholders and create good nomination of independent directors before submission to relationship with shareholders. the Board meeting or the shareholders’ meeting (as the case may be) for appointment thereof. The basic qualifications of N omination and appointment of directors and an independent director shall be as defined by the Bank and executives officers more stringent than that under the criteria set by the Securities Director nomination criteria and Exchange Commission and in accordance with corporate The Bank has put in place a definite and transparent director governance practices. 90 | Corporate Governance and Management Annual Report 2010

S enior executive officers nomination criteria 1.1) Board and Board committee members who are In the appointment of executive officers from the level of heads external persons will receive retaining fee, committee fee of function groups upward, the Nomination, Remuneration and attendance fee. and Corporate Governance Committee shall screen and 1.2) Board and Board committee members who are Bank nominate either internal or external individuals with proper employees will receive no remuneration. qualifications to the Board for consideration and appointment. 2 . Remuneration for executives will be based on the Bank’s The nomination procedures shall be in conformity with the operating results and the individual performance. Bank’s regulations and criteria. I nternal control and audit system The appointment of executive officers from the level of heads The Bank has put emphasis on internal control at both the of departments downward has been delegated to the authority management and the operation levels to ensure that interests of the management in selecting and appointing individuals as of the customers and the Bank are appropriately taken care considered appropriate. of. The Board has regularly monitored the adequacy of the internal control and audit system by assigning the Audit For certain executive positions where definite terms of office Committee to examine and ensure proper internal control and are specified, the Nomination, Remuneration and Corporate audit in line with the Bank’s policies and regulations, as well Governance Committee shall proceed with the nomination at as relevant regulatory requirements. least six months before the end of such terms of office. In addition, the Bank has the Audit Group in place to take charge R emuneration for directors and executive officers of considering and evaluating the Bank’s internal control and report The Bank has a policy on determining the remuneration for the results of which to the Audit Committee on a regular basis. directors and executives on a transparent and appropriate manner and to be attractive to capable individuals to join M onitoring of the use of inside information the Bank or stay on with the Bank. The remuneration paid is Directors’ and executives’ trading of considered based on the experience, proficiency and dedication securities issued by the Bank of work, together with the performance and contribution of The Bank has drawn up practices for the transactions of the such directors or executives to the Bank. The remuneration Bank’s securities by setting blackout period for the directors for directors and executives may be set to be on a par with that and executive officers in compliance with the regulatory of other institutions in the same industry, and is subject to the requirements. In this respect, the directors, chief executive approval by the shareholders. Disclosure of the remuneration officer, chiefs, and department head or the equivalent in Finance shall be made in the annual report pursuant to the regulatory Control Group, and Financial Planning and Analysis Group are requirement. The criteria for remuneration are as follows: duty-bound to disclose and report to the SEC the Bank-issued 1 . For the members of the Board of Directors and the Board securities holdings by them, their spouses and minor children, committees appointed by the Board to monitor and as well as any changes thereof, such as sell, buy, transfer or supervise the Bank’s operations to be in line with the acceptance of transfer of those securities in the report format policies set forth, comprising the Board of Executive and within the period of time specified by the SEC. Directors, the Audit Committee, the Risk Management Committee, and the Nomination, Remuneration and D irectors’ Code of Conduct Corporate Governance Committee, the remuneration has The Board of Directors plays an important role as the persons been determined as follows: who lead the Bank to the business sustainability, determine the Bank’s policies and guide the Bank’s staff to behave in TMB Bank PCL Corporate Governance and Management | 91

the right direction and monitor the Bank’s operations to be in Personal businesses and transactions compliance with good corporate governance principles. The The directors shall not engage in any businesses similar to and/ directors’ code of conduct is established by the Board of or competing with the Bank’s businesses, neither for the benefit Directors which covers high level of ethics so that they can of their own nor for the benefit of other parties both directly be the good role models for the Bank’s staff of all levels, with and indirectly. In addition, the directors shall not be directors the following key principles: of the companies or the public companies whose businesses are similar to and/or compete with those of the Bank. Loyalty and integrity The directors shall perform their duty with loyalty and integrity, Business judgment rule and shall not use their status as a director to seek personal gain, The directors shall perform with the duty of honesty and shall neither discriminate nor support any particular person/ care, and on the basis of sufficiently informed decision and group. In addition, in order to safeguard against the conflicts resolution as well as rational decision on a par with that of a of interest, the directors shall not either directly or indirectly financial and banking professional. participate or be involved in the decision making regarding transactions or other business dealings by which the directors Business ethics and code of conduct themselves and the relevant persons may gain or loss. Besides, The Bank has a code of conduct and business ethics that the directors shall monitor to ensure that there is no intervention addresses compliance with laws, reporting of violations of the in any decision making which will cause damage to the Bank. code or of laws or regulations; employment; confidentiality of information; protection and proper use of TMB assets; conflicts Confidentiality of information of interest; related and connected party transactions; personal The directors shall ensure that the Bank’s confidential securities and other financial transactions. Each director and information and customer information is not given either TMB’s staff is expected to be familiar with and to follow the inadvertently or deliberately to third parties, and shall not use code of conduct. the information to seek personal gain or to obtain benefits for other persons/ businesses without the Bank’s consent or The Bank is determined to run its business with integrity and permission by laws, while in office or within 1 year after having ethics. Besides the corporate governance policy, the Bank completed term of office. has instituted a written code of conduct,. The core issues addressed and covered by its code of conduct are integrity, Disclosure of interests information confidentiality, conflicts of interest, abuse of The directors shall carefully and thoughtfully perform their duties authority, misconduct, and so on. In addition, the Board of as assigned, based on the principle of performing duties in Directors has provided the staff handbook written of which the manner that will cause no conflicts of interest. Therefore, the latest revision was in 2009 thereby clear classification they shall disclose their personal information and information and stipulation have been made for strict and consistent concerned to their related parties in compliance with the rules compliance by the staff of all levels. and regulations of the government and the Bank. The directors shall also disclose the information which may lead to the actual The Bank has been adhered to business operations in or the potential conflicts of interest against the Bank’s business. a straightforward manner under the relevant laws, rules, regulations and standards of the regulators and the Bank Besides, any dealings between the Bank and the related itself, in the best interests of the customers, shareholders persons shall always be at arm’s length to avoid the possibility and other stakeholders. of actual or perceived conflicts of interest. 92 | Corporate Governance and Management Annual Report 2010

E nhancement of directors’ performance P erformance self-assessment of the Board The Bank has a policy to encourage its directors to participate The Board of Directors provided the Board to conduct in training courses in order to expand their knowledge in the performance self-assessment regularly. This aims at allowing fields related to their responsibilities. The training courses the Board members to review their roles and duties and the for directors are provided by Thai Institute of Directors (IOD), performance of the Board as a whole as well as addressing such as Directors Certification Program (DCP) and Directors any problems and obstacles arising under the good corporate Accreditation Program (DAP), etc. In addition the foreign governance principles. The self-assessment is undertaken directors already participated in the professional director in two tiers below: training from aboard same as IOD programs to aimed at 1 . Assessment of the whole Board of Directors’ performance. bolstering their understanding in director’s roles and responsi- 2 . Assessment of the performance of each Board committees, bilities in compliance with the corporate governance practices. i.e. the Audit Committee, the Board of Executive Directors, In addition, the Bank provides knowledge that relevant with the Credit Committee, the Nomination, Remuneration the Bank’s business and other related business continually. and Corporate Governance Committee, and the Risk Management Committee. Besides, the Bank has prepared the directors’ handbook for directors (including the new director). The contents of the The self-assessment of the above Board’s and board committees’ handbook cover such significant issues as the relevant rules performances will be made by all the Board members and and regulations issued by the regulators and the Bank. The the members of the Board committees on an individual Company Secretary will prepare documents and information committee basis. The secretary of each committee will also that contribute to the directors’ performance of duties and join in the assessment. summarized description of the Bank’s nature of business and operational framework. It is regarded as an orientation for the M anagement structure new directors. Certain significant documents are as below: TMB’s management structure comprises of the Board of 1 . The Director’s handbook: It covers details on the Bank’s Directors and other sub-committees which have been appointed business operations and regulatory requirements applicable by the Board of Directors, namely the Audit Committee, to directors and others. the Board of Executive Directors, the Credit Committee, 2 . Handbook for director of a registered company: It features the Nomination, Remuneration and Corporate Governance key information on the role, responsibility and duty of a Committee and the Risk Management Committee. All the director and the Board of Directors, guidelines for a director’s committees aforementioned are responsible for overseeing the performance of duty, protection of a director’s rights, Bank’s operations and are tasked to scrutinize crucial issues in and arrangements of the shareholders’ meeting. accordance with good corporate governance before submission 3 . Other documents: These include memorandum and articles to the Board of Directors. of association, annual report, corporate governance policy, directors’ code of conduct, handbook for directors of The duties and responsibilities of each board committee financial institutions, and relevant regulatory letters and are clearly delineated in writing. Committee members have notifications, featuring rules, criteria and practices prescribed profound knowledge, skills, and experience that are aligned by the relevant regulators, i.e. the BOT, the SEC and the SET. with their responsibilities. Most of the committee members are This aims at enhancing directors’ awareness of their roles not the Bank’s executives with some acting as independent and responsibilities, and the Bank’s business operations. directors providing a balance and separation of authorities for Such handbooks are subject to regular updating and review governance and management. to ensure information is current in market practices. TMB Bank PCL Corporate Governance and Management | 93

The composition, appointment, discharge themselves from decisions when they themselves or someone or removal of the directors related to or connected with them have a conflict of interest The directors are elected by the shareholders at the Annual that makes them incapable of properly fulfilling their duties to General Meeting, each for a three year term, with one third the Bank, and Safeguard corporate reputation. of the Board retiring each year. A director whose term has expired may be reelected for a further term. If a director leaves The current size of the Board is 12, of which 4 are classified the Board before the end of his term, the Board itself has as independent directors, whose qualifications must powers to appoint a replacement to serve the remainder of conform to the Bank and more strength than requirements. that term. If the remaining duration of the director’s term is The composition of the Board is subject to regulatory less than two months the replacement must be elected at requirements, including those of the Bank of Thailand, the a general meeting of the shareholders. The Board has the Securities and Exchange Commission, and the Stock Exchange responsibility of selecting and nominating suitable candidates of Thailand. for election as directors. Nominations may also be made by shareholders, and the Board has established a process for S election of independent directors receiving and reviewing the qualifications of such nominations. The Bank realizes that the key role of independent directors is in protecting the benefits of the Bank and minority Setting the criteria for the composition of the Board and shareholders. The Bank has promoted directors’ independence for the selection of new directors are Board functions. and managed conflicts of interest to be in compliance with The Nomination, Remuneration and Corporate Governance the principles laid down by the authorities and good corporate Committee (the “NRCC”) periodically reviews the criteria governance guidelines. The Board of Directors therefore for composition of the Board and evaluates potential new sets a guideline for a selection of independent directors. candidates for Board membership. The committee then makes The nominated persons shall be selected from among the recommendations to the Board, which will then give its opinion various fields of professions with appropriate qualifications to the shareholders in advance of a shareholders’ meeting on and experience. The Nomination, Remuneration and Corporate candidates nominated for election by that meeting. Governance Committee then screens qualified persons before proposing to the Board of Directors for further election. In general, the Board wishes to balance the needs for professional knowledge, business expertise, varied industry I ndependent Directors knowledge, financial expertise business management expertise TMB Bank Plc. has defined the term “Independent Director” and independence in position and decision making. as a director who is independent from any major shareholder, executive, and related person thereof, and is in charge of With the exception of the Chief Executive Officer, directors protecting the interests of all the shareholders and stakeholders are not TMB employees and do not participate in the daily on an equitable basis. The minimum number of independent business management of TMB. The Bank’s directors play an directors is set to be one-third of the total number of directors important role as the person who lead the Bank to supervise and not less than three persons. the Bank’s operations to be incompliance with good corporate governance principles, laws, and resolution of shareholders. In addition, The qualification set by the Bank is also more Director must devote the time and attention necessary to stringent than that under the criteria set by the Securities and fulfill the obligations of a director. Director exercise their “duty Exchange Commission (SEC) details of which are as follows: of loyalty” and “duty of care” to the Bank, avoid conflicts of interest and the appearance of such conflicts, excuse 94 | Corporate Governance and Management Annual Report 2010

(1) Not hold shares in excess of 0.5 percent of total voting to be liable for debt settlement to another party in an amount shares of the Bank, or the Bank’s parent company, equivalent to 3 percent or more of the net tangible assets subsidiary, associated company, major shareholder, or of the Bank or twenty million baht or more, whichever is any person with controlling power over the Bank, whilst lower. The calculation of the said debt shall accord with the number of shares held by any related person of that the calculation of a connected transaction prescribed in the independent director must also be counted. Capital Market Supervisory Board’s notification regarding (2) Not be and have not been a director participating in criteria on connected transactions mutatis mutandis. management role, an employee, an officer, an advisor However, consideration of the said debt shall include the who receives regular salary, or a person having controlling debt incurred during the one-year period prior to the date power over the Bank, the Bank’s parent company, on which such business relationship takes place. subsidiary, associated company, subsidiary at the same (5) Not be and have not been an auditor of the Bank, its level, or major shareholder, unless such independent parent company, subsidiary, associated company, major director has not been a person referred to above for at shareholder, or a person having controlling power. The least two years prior to the date of his/her appointment. independent director shall not be and have not been (3) Not be a person having relationship either through a shareholder in material respect, a person having bloodline or legal registration as the father, mother, spouse, controlling power, a partner of an auditing firm for which sibling and child, as well as the spouse of a child of an the auditor of the Bank, or that of its parent company, executive, major shareholder, a person having controlling subsidiary, major shareholder, or a person with controlling power, or a person to be nominated as the executive power over the Bank has been working, unless such or that who has controlling power over the Bank or its independent director has not been a person referred subsidiary. to above for at least two years prior to the date of (4) Have no or have had no any business relationship with his/her appointment. the Bank or its parent company, subsidiary, associated (6) Not be and have not been a professional advisor, including company, major shareholder, or person having controlling legal or financial advisor, who obtains fee more than two power over the Bank, in a manner that may prevent million baht a year from the Bank, its parent company, his/her due and independent use of discretion. The subsidiary, associated company, major shareholder, or a independent director shall not be and have not been person having controlling power. The independent director a shareholder in material respect or a person who shall not be and have not been a shareholder in material has controlling power over the person with business respect, a person with controlling power, or a partner of relationship with the Bank, its parent company, subsidiary, such professional service provider, unless the independent associated company, major shareholder, or a person director has not been a person referred to above for at having controlling power over the Bank, unless such least two years prior to the date of his/her appointment. independent director has not been a person referred (7) Not be a director who has been appointed as a to above for at least two years prior to the date of representative of the Bank’s director, the major shareholder, his/her appointment. or the shareholder related to the Bank’s major shareholder. Business relationship in the above paragraph shall cover any (8) Not engage in the business of the same nature as ordinary course of business or trade for business engagement or competing with that of the Bank or its subsidiary. The purpose, property rent, transaction relevant to asset or independent director shall not be a partner in material service, giving or receiving financial assistance in form of respect in a partnership, or director participating in loan or guarantee, offering assets as collateral, and any other management role, an employee, officer, or advisor similar conduct, which causes the Bank or its counterparty obtaining regular salary, or a shareholder holding more than TMB Bank PCL Corporate Governance and Management | 95

one percent of total voting shares of any other company M.L. Ayuth Jayant is Secretary to the Board. which engages in the business of the same nature as or competing with that of the Bank or its subsidiary. The Board meeting is held at minimum on a monthly basis or (9) Not have any characteristics that prevent the director from as deemed necessary. giving independent opinions on the Bank’s operations. A uthorized signatories Board of Directors Mrs.Saowanee Kamolbutr, Chairperson, or Mr. Boontuck The Board of Directors as of December 31, 2010 consisted Wungcharoen, Chief Executive Officer, or any two directors of 12 members, one holding executive director position, are authorized to co-sign with the Bank’s seal affixed. seven holding non executive directors positions, and four independent directors. T he scope of responsibilities of the Board of Directors is as follows: Name Position Policy (1) To set the overall strategic direction and targets for the 1. Mrs. Saowanee Kamolbutr Chairperson Bank, review and approve business policies, operational 2. General Prayut Chan-o-cha* Director direction, business plans and yearly budgets. (2) To appoint some of the board members as the board 3. Mr. Philippe G.J.E.O. Damas Director / Chairman of Board of Executive Directors committees in a way that promotes efficiency and strategic discussion and operate the Bank’s business as assigned 4. Dr. Vijit Supinit Independent Director / by the Board of Directors. Chairman of Audit Committee (3) To approve the scope of responsibility of board committees and their composition as well as other significant changes 5. Mr. Aviruth Wongbuddhapita Independent director / to their activities. Chairman of Nomination, (4) To review the Bank’s Memorandum and Articles of Remuneration and Corporate Governance Committee Association and communicate them to the shareholders. (5) To consider plans for capital injection, whenever appropriate. 6. Mr. Willem Frederik Nagel Director / Chairman of Risk (6) To review and, where permissible or required under Management Committee applicable regulations, consider approval of connected 7. Mr. Kritsda Udyanin Director / transactions as prescribed by the SEC and related party Chairman of Credit credit limits as prescribed by the BOT. Committee (7) To approve all credit limits to single borrower groups 8. Mr. Vaughn Nigel Richtor Director for amounts in excess of the amount delegated to management. 9. Mr. Amorn Asvanunt Director

10. Mr. Christopher John King Independent director Management (1) To oversee management’s operations of the business that 11. Mr. Tara Tiradnakorn Independent director enhances the Bank’s competitiveness and operational 12. Mr. Boontuck Wungcharoen Director / effectiveness and efficiency with core focus upon the Chief Executive Officer interest of the Bank and shareholders. These operations Remark: *Performing directorship in TMB since October 7, 2010 are in alignment with the Bank’s vision and mission as defined by the Board. 96 | Corporate Governance and Management Annual Report 2010

(2) To ensure management has in place established policies Human resource and procedures of risk management with regard to (1) To approve the employment, appointment, rotation, approvals, reviews, and practices encompassing credit remuneration, disciplinary action, severance of risk, market risk, investment risk, operational risk, employment, and resignation of top executives, as well reputational risk, legal and compliance risk, asset and as the recommendations of the Nomination, Remuneration liability management risk, liquidity risk, interest rate risk, and Corporate Governance Committee. and others according to the regulations of the Bank of (2) Select, monitor and where necessary replace key Thailand (BOT). executives, while ensuring that the Bank has an appropriate (3) To set approval powers and delegation of authority for plan for executive succession and that any intended transactions that are binding for the Bank and for a third successor(s) will be qualified, fit and proper to manage the party. affairs of the Bank. (4) To effect reporting by Management and the Board (3) Ensure that the Bank’s compensation and benefits committees in a timely and appropriate manner on issues programs are appropriate and consistent with the strategic to the Board of Directors. objectives and compliant with relevant regulations. (5) To follow up meeting minutes and monitor performance of (4) To assess the performance of Chief Executive Officer all board committees. and Chiefs. (6) Continuously review the organization structure of the Bank to ensure that management there are clear lines scope of The delegation of authority and responsibilities of the Board responsibilities. of Directors shall not be the delegation or sub-delegation that will allow for the Board of Directors or the persons so Oversight and internal control authorized to approve any transactions that they themselves (1) To ensure high transparency in Bank’s management or their related parties (as defined in the SEC’s notification or with checks and balances in place for good corporate by other concerned authorities) have vested interest or conflict governance. of interest with the Bank or any of its subsidiaries, unless it (2) To consider the Bank’s management report and accounting is an approval of the transactions that is in accordance with report on a quarterly basis. the policies and regulations approved by the shareholders’ (3) To consider to ensure the Bank strictly complies with meeting or the Board of Directors. the regulatory rules and requirements such as capital adequacy through a regularly review. Board Committees (4) To ensure that the Bank has adequate and effective internal The Board has found it beneficial to establish certain control and audit systems and to appoint and supervise specialized committees to assist the Board in its oversight the board committees to perform their duties with integrity. function and to advise the Board on issues requiring specific (5) To encourage the good corporate governance Policy to technical expertise. In addition, the Board set composition, establish codes of best practices and business ethics accountability, the mandate, and working procedures of each for the directors, the executives and staff members as committees in written. The board committees will generally internal operational guidelines. report to the Board at the next regularly scheduled Board (6) Meet regularly with senior management to review meeting following the committee meeting. policies, establish communication lines and monitor progress toward corporate objectives and provide sound Membership on the committees is reviewed each year by advice to management and recommend sound practices the Nomination, Remuneration and Corporate Governance appropriately. Committee and approved by the full Board, which will also TMB Bank PCL Corporate Governance and Management | 97

designate a chair for each committee. The membership of The delegation of authority and responsibilities of the each board committee is based on board committee needs, Board of Executive Directors shall not be the delegation director experience, interest and availability and evolving legal or sub-delegation that will allow for the Board of Executive and regulatory considerations. Directors or the persons so authorized to approve any transactions that they themselves or their related parties The board committees of TMB has the following committees: (as defined in the SEC’s notification or by other concerned authorities) have vested interest or conflict of interest with Board of Executive Directors the Bank or any of its subsidiaries, unless it is an approval of the transactions that is in accordance with the policies Name Position and regulations approved by the shareholders’ meeting or the Board of Directors. 1. Mr. Philippe G.J.E.O. Damas Chairman (Non Executive Director) A udit Committee 2. Mr. Vaughn Nigel Richtor Committee Member (Non Executive Director) Name Position 3. Mr. Kritsda Udyanin Committee Member 1. Dr. Vijit Supinit Chairman (Non Executive Director) (Independent Director and have 4. Mr. Amorn Asvanunt Committee Member significant experience in reviewing (Non Executive Director) financial reports)

5. Mr. Boontuck Wungcharoen Committee Member / 2. Mr. Aviruth Wongbuddhapitak Committee Member Chief Executive Officer (Independent Director and have (Executive Director) significant experience in reviewing financial reports)

M.L. Ayuth Jayant is Secretary to the Board of Executive 3. Mr. Christopher John King Committee Member Directors. (Independent Director)

The Board of Executive Directors’ meeting is usually held Mr. Peera Chinwannabutr is Secretary to the Audit Committee. twice a month or as deemed necessary and instructed by the Chairperson of the Board of Executive Directors. The Audit Committee’s meeting is usually held once a month or as deemed necessary and instructed by the Chairperson The scope of responsibilities is as follows: of the Audit Committee. The primary responsibility of the Board of Executive Directors is the detailed review of business performance by business The scope of responsibilities is as follows: segment and subsidiaries, starting from endorsement of (1) To review the Bank’s financial statements to ensure annual budget and business plan, including capital planning, accuracy and adequacy. to performance tracking by business lines, and financial (2) To review and ensure that the Bank has suitable and efficient results, including large capital expenditure in relation to internal control system and internal audit, and reviewing plan and strategy. In addition the Board of Executive to ascertain that internal audit function is independence. Directors monitors progress of the branding and corporate Hiring, transferring, removal and performance appraisal of communications programs. Chief Internal Audit shall be concurred by Audit Committee. 98 | Corporate Governance and Management Annual Report 2010

(3) To review to ensure compliance with the laws and within 30 days. The Committee also is to report to the regulations imposed by the SEC, SET and other relevant Board of Directors so that the board can rectify the issues regulators including compliance report prepared by the within the timeline specified by audit committee on the Bank’s Compliance unit. following findings or suspected transactions or actions: (4) To select, nominate and recommend remuneration of the (a) Conflict of interest; Bank’s external auditor by taking into account the credibility, (b) Fraud, possible fraud, or significant deficiency of adequacy of resources, experience and independence. The internal control; Audit Committee shall meet with the External Auditors without (c) Breaching of the applicable laws and regulations. the members of the Executive Management being presented In case where the Board of Directors or Executive Management as often as it determines but at least once a year. failed to rectify the issues within the specified timeline, (5) To approve audit-related and other services engagements audit committee shall report such deed to the Bank with the Bank’s external auditor. of Thailand, the Office of the Securities and Exchange (6) To review connected transaction or transaction that may Commission, the Stock Exchange of Thailand and disclose lead to conflict of interest to ensure transactions are in the Bank’s annual report. conducted and disclosed in compliance with the law (9) To review the appropriateness of corrective measures and and regulation and that transactions are entered with actions taken by management in response to the reports reasonableness for the benefit to the Bank. or instructions from the Bank of Thailand, the Office of (7) To prepare audit committee report, signed by the the Securities and Exchange Commission, the Stock Chairperson of the audit committee, and disclose it in an Exchange of Thailand and any other relevant regulators. annual report of the Bank. The report should at least contain (10) To review the accuracy and reliability of the financial the following information; statements of the Bank’s subsidiaries, and to review (a) The audit committee’s opinion regarding the accuracy, compliance with the policies, processes and standards completeness and integrity of the Bank’s financial statements. set by the bank for its subsidiaries, including those related (b) The audit committee’s opinion regarding adequacy of to internal controls and audit. the Bank’s internal controls. (11) To perform any other duties as delegated by the Board (c) The audit committee’s opinion regarding compliance of Directors and agreed by the audit committee. to the applicable laws and regulations. (12) To perform other duties as required by law. (d) The audit committee’s opinion regarding suitability of the Bank’s External Auditor. N omination, Remuneration and (e) The audit committee’s opinion regarding transaction Corporate Governance Committee that may lead to conflict of interest. Name Position (f) Number of the meeting held during the year and number of each member’s attendance. 1. Mr. Aviruth Wongbuddhapitak Chairman (g) Overall opinion arisen from discharging of audit (Independent director) committee’s duties according to the charter. 2. Mr. Kritsda Udyanin Committee Member (h) Other information, within the scope of the roles and (Non Executive Director) responsibilities of audit committee, which is deemed to 3. Mr. Philippe G.J.E.O. Damas Committee Member be necessary for shareholders and general investors (Non Executive Director) (8) To commence investigation without delay upon being informed by external auditor of suspicious circumstance 4. Mr. Christopher John King Committee Member (Independent Director) and report SEC and external auditor the preliminary result TMB Bank PCL Corporate Governance and Management | 99

Mr. Akarin Phureesitr is Secretary to the Committee. (2) To formulate guidelines and all policies related to good corporate governance principles for the Bank. The meeting of this Committee is usually held four times a year or (3) To regularly review the relevant policies, principles and as deemed necessary and instructed by the Chairperson of the guidelines and make recommendations on the business Nomination, Remuneration and Corporate Governance Committee. ethics and code of conduct. (4) To follow up the new development on good corporate T he scope of Nomination, Remuneration and Corporate governance guidelines of government agencies and Governance Committee responsibilities is as follows: international organizations and adopt the suitable ones Nomination and remuneration for bank practices. (1) To set and review policies, criteria and methodology for (5) To supervise and ensure the continuity and sustainability nomination of directors and top executives for the Board of good corporate governance in the Bank. of Director’s consideration and approval. (6) To report to the Board of Directors the Bank’s good (2) To screen name list of qualified persons to be appointed as corporate governance with recommendations for members of the Board of Directors, senior executives and improvement and also reports and disclosures on directors on the board of any company in which the Bank information of directors to the regulators, shareholders, holds at least 50% for the Board of Directors’ consideration. and the public as are required by applicable regulations (3) To set and review a policy, criteria, and guideline on the or deemed appropriate payment of remuneration and other benefits as well as on the amount of remuneration and other benefits for directors R isk Management Committee and top executives in a clear and transparent manner for the Board of Director’s consideration and approval. Name Position (4) To ensure that the Board members and top executives 1. Mr. Willem Frederik Nagel Chairman of the Bank receive remuneration appropriate and (Non Executive Director) commensurate with their roles and responsibilities. (5) To lay down guidelines on performance assessment for the 2. Mr. Amorn Asvanunt Committee Member (Non Executive Director) Board members and top executives in relation to annual adjustment of their remuneration based on the scope of 3. Mr. Tara Tiradnakorn Committee Member their responsibilities and the risks involved and also to (Independent Director) increase shareholder’s value in the long term. 4. Mr. Boontuck Wungcharoen Committee Member / (6) To advise a succession plan for the top-executive level to Chief Executive Officer the Board of Directors. (Executive Director)

5. Mr. Bart F.M.Hellemans Committee Member / Corporate governance Chief Risk Officer (1) To advise the Board of Directors in monitoring and (Management) ensuring that the operations of the Bank and its practices and operations - Board of Directors, relevant committees, Head of Risk Analytics and Policy Group is Secretary to the the Management and staff members are in compliance Committee. with good corporate governance. Moreover, it is to formulate, follow up and communicate the guidelines The meeting of this Committee is usually held on a monthly basis on corporate governance practices to the internal and or as deemed necessary and instructed by the Chairperson external relevant parties. of the Risk Management Committee. 100 | Corporate Governance and Management Annual Report 2010

T he scope of responsibilities is as follows: T he scope of responsibilities is as follows: (1) To approve the comprehensive risk management strategies (1) To consider and approve credits that are beyond the in a holistic manner. Management’s approval authority. (2) To approve significant policies and framework that govern (2) To consider and approve investments of the usual the management of risks including risk governance matters transactions, and debt restructuring that are beyond the which are required by the authorities to be approved by Management’s approval authority. the Board of Directors. (3) To review the medium- and large-sized NPLs. (3) To recommend the risk levels and its concentration for the (4) To set and review the strategies and carry out credit-related Board of Directors’ approval. development so as to achieve the Bank’s targets and make (4) To approve the supplemental risk limits as defined in the appropriate recommendations to the Board of Directors. relevant policies and frameworks. (5) To review credit and investment performance of the Bank. (5) To review and monitor all risks and risk management including preparedness for Basel II compliance. O ther committees/working groups (6) To approve the appointment, review of committee structure 1. Chief Executive Committee: and composition, and roles and duties of the management- To operate short term and long term strategy of the Bank, level risk management committees. conduct regular review of progress in achieving long-term (7) To report the risk management performance and all risk strategic goals. To propose the Annual Business Plan, Annual management matters and measures to the Board of Budget, Capital Budget and control headcount against Directors and the Audit Committee. headcount plan to the Board of Directors for consideration and endorsement. To propose investment, main projects of Credit Committee the Bank, branding, advertising, corporate communication and approve measures to deal with crisis situations to the Board of Name Position Directors for consideration and approval. In addition, to consider 1. Mr. Kritsda Udyanin Chairman strategic of subsidiaries and review their performance. (Non Executive Director)

2. Mr. Willem Frederik Nagel Committee Member 2.A sset and Liability Management Committee: (Non Executive Director) To define and decide on the formulation and execution of asset and liability management policies; and to endorse/approve for all 3. Mr. Amorn Asvanunt Committee Member (Non Executive Director) matters relating to the asset and liability management of the Bank.

4. Mr. Boontuck Wungcharoen Committee Member / Chief Executive Officer 3.R isk Policy Committee: (Executive Director) To assess the integrity and adequacy of the credit management of the Bank ; to review and endorse or approve the Bank’s 5. Mr. Bart F.M. Hellemans Committee Member / Chief Risk Officer credit risk policies, credit underwriting standards, credit criteria (Management) of products, and guidelines within the delegated authority.

Mr. Jaroonsak Hengtragul is Secretary to the Credit Committee. 4.O perational Risk Management Committee: To develop tools and techniques for risk identification, approve The Credit Committee’s meeting is usually held twice a month operational risk minimum standard and guidelines, set targets or as deemed necessary and instructed by the Chairperson for key risk indicators, initiate action on reported incidents or of the Credit Committee. events and approval new products. TMB Bank PCL Corporate Governance and Management | 101

5.C redit Underwriting Committee: 11. safety, Occupational Health and To consider loans proposed by Wholesale Banking Group Work Environment Committee: and SME Banking Group within its approval authority; and To consider policy and plan on workplace safety and to scrutinize the matters within the approval authority of the safety outside works; to organize projects encouraging and Board of Directors and the Credit Committee. supporting safety-related activities; and to define regulations on safety, occupational health and working environment to 6.A ppraisal Consideration and Approval Committee: be in compliance with the regulations of the Ministry of Labor To approve list of outside independent appraisers; to formulate and Social Welfare. appraisal procedures; and to approve the appraisal result of revaluation result conducted by independent external Board of Directors’ meeting appraisers and internal appraisers for ever property value. A whole-year board meeting schedule shall be set in advance so that the directors could plan to attend each meeting. 7.C redit Restructuring Committee 1 Besides normal meetings, special meeting sessions may be To review and monitor and to consider the issues related to arranged as deemed necessary with consent from the Board NPLs and NPAs within it approval authority; and to scrutinize Chairperson. The meeting agenda shall be set, with clearly-di- the matters within the approval authority of the Board of vided session, by the Chief Executive Officer and endorsed by Directors and the Credit Committee. the Board Chairperson. The Board Secretary shall deliver an invitation letter together with the meeting agenda and meeting 8.C redit Restructuring Committee 2 documents to the directors at least 7 days in advance of the To review and monitor and to consider the issues related to meeting date, except in an urgent case, so that the directors NPLs and NPAs within it approval authority. would have sufficient time to study the information. In this regard, the directors may propose other issues to the meeting 9. it Committee: as deemed appropriate. To endorse IT Strategic Plan and Blueprint to ensure proper alignment with corporate plan; to be informed and updated of In each meeting, the directors will take good time in considering the Bank and Market crucial banking technology. each item and expressing independent opinions for the best interest of the Bank. The Chairperson will process the comments 10. Human Resource Committee: and conclude results of the meeting. The Board Secretary is responsible for preparing the meeting minutes to be adopted To consider and approve the framework governing the by the meeting as well as for keeping the meeting minutes for Bank’s human resources management polices, compensation future reference and for inspection by concerned parties. standards, rules and regulations, succession plan, performance review, salary adjustment, bonus and incentive award of Besides, the directors having related interests to the agenda employees at below Group Head and Executive level. To proposed to the meeting shall not join the deliberation of such approve the governance structure of job grading and function agenda. The Board of Directors is able to hold a meeting of title or any issues under HR transformation. To approve which the Executive Director is not present with consideration the Bank’s human resource development structure and of Bank and management performance. corporate culture. In 2010, there were 15 meetings of the Board of Directors. Details of the meeting attendance of the Board of Directors and board committee members are as follows: 102 | Corporate Governance and Management Annual Report 2010

Meeting attendance of board and committee members in 2010 is tabulated below: (Unit: Times)

Name Board of Board of Credit Audit Nomination, Remuneration Risk Directors Executive Directors Committee Committee and Corporate Management Governance Committee Committee

Total no. of meetings in 2010 15 22 21 12 13 12

1. Mrs. Saowanee Kamolbutr 15/15

2. Gen. Anupong Paojinda (1) 1/11 (Until September 30, 2010)

3. Gen. Prayut Chan-o-cha (2) 3/4 (From October 7, 2010)

4. Mr. Philippe G.J.E.O. Damas 14/15 17/22 12/13

5. Dr. Vijit Supinit 15/15 11/12

6. Mr. Aviruth Wongbuddhapitak 13/15 12/12 13/13

7. Mr. Willem Frederik Nagel 7/15 8/21 7/12

8. Mr. Kritsda Udyanin 14/15 17/22 20/21 12/13

9. Mr. Vaughn Nigel Richtor 12/15 18/22

10. Mr. Amorn Asvanunt 14/15 21/22 19/21 11/12

11. Mr. Christopher John King 12/15 10/12 10/13

12. Mr. Tara Tiradnakorn 14/15 12/12

13. Mr. Boontuck Wungcharoen 13/15 19/22 13/21 7/12

(1) Not holding a board member position as of December 31, 2010. (2) According to the resolution passed by the Board of Directors meeting no. 9/2553 on September 30, 2010, Gen. Prayut Chan-o-cha was appointed as a director. The appointment is effective on October 7, 2010 by BOT.

Notes: (1) Mr. Philippe G.J.E.O. Damas is a director who does not have residence in Thailand. The Board of Executive Directors meetings no. 2/2553, 4/2553, 13/2553, 17/2553 and 21/2553: Mr. Philippe G.J.E.O. Damas joined the meetings through teleconferencing/videoconferencing system. (2) Mr. Willem Frederik Nagel is a director who does not have residence in Thailand. The Credit Committee meetings no. 2/2553, 3/2553, 6/2553, 8/2553, 8/2552, 9/2553, 11/2553, 14/2553 and 21/2553, and the Risk Management Committee meetings no. 1/2553, 2/2553 and 3/2553: Mr. Willem Frederik Nagel joined the meetings through teleconferencing/videoconferencing system. (3) Mr. Vaughn Nigel Richtor is a director who does not have residence in Thailand. The Board of Executive Directors meetings no. 2/2553, 4/2553, 5/2553, 7/2553, 11/2553, 15/2553, 17/2553 and 21/2553: Mr. Vaughn Nigel Richtor joined the meetings through teleconferencing/videoconferencing system. TMB Bank PCL Corporate Governance and Management | 103

R emuneration for directors and executives - Audit Committee THB 374,400 / year The Bank has a policy to set the remuneration for directors - Nomination, Remuneration and THB 374,400 / year in an appropriate amount and in accordance with their roles Corporate Governance Committee and responsibilities to achieve the Bank’s targets and in line - Risk Management Committee THB 374,400 / year with relevant regulations and expectation of all stakeholders. The remuneration shall also be set on par with those of other 2. Committee fee institutions. The Board of Directors can set the remuneration Chairman for additional sub committee (if any). The remuneration for - Board of Directors THB 1,800,000 / year the additional sub committee will be included in the amount - Board of Executive Directors THB 1,440,000 / year approved by the AGM. - Credit Committee THB 696,000 / year - Audit Committee THB 696,000 / year The remuneration is set out in a transparent manner. The - Nomination, Remuneration and THB 696,000 / year Nomination, Remuneration and Corporate Governance Corporate Governance Committee Committee is responsible for reviewing the remuneration - Risk Management Committee THB 696,000 / year for directors before submission for the Board of Directors’ Member consideration. The remuneration shall be proposed for - Board of Directors THB 384,000 / year approval from the annual shareholders’ meeting. The - Board of Executive Directors THB 422,400 / year remuneration is set as follows: - Credit Committee THB 374,400 / year - Audit Committee THB 374,400 / year M onthly fee consist of - Nomination, Remuneration and THB 374,400 / year

▶▶ Retaining fee: Director is entitled to the retaining fee for one Corporate Governance Committee position only. - Risk Management Committee THB 374,400 / year

▶▶ Committee fee: Director is entitled to the committee fee for every board and committee that he/she sits on. 3. Attendance fee

▶▶ Attendance fee: Director is entitled to the attendance fee Chairman for every meeting where he/she is present. - Board of Directors THB 40,000/attendance - Board of Executive Directors THB 40,000 / attendance Cash remuneration - Credit Committee THB 32,400 / attendance 1. Retaining fee - Audit Committee THB 32,400 / attendance Chairman - Nomination, Remuneration and THB 32,400 / attendance - Board of Directors THB 1,800,000 / year Corporate Governance Committee - Board of Executive Directors THB 1,440,000 / year - Risk Management Committee THB 32,400 / attendance - Credit Committee THB 696,000 / year Member - Audit Committee THB 696,000 / year - Board of Directors THB 30,000 / attendance - Nomination, Remuneration and THB 696,000 / year - Board of Executive Directors THB 31,200 / attendance Corporate Governance Committee - Credit Committee THB 24,600 / attendance - Risk Management Committee THB 696,000 / year - Audit Committee THB 24,600 / attendance Member - Nomination, Remuneration and THB 24,600 / attendance - Board of Directors THB 384,000 / year Corporate Governance Committee - Board of Executive Directors THB 422,400 / year - Risk Management Committee THB 24,600 / attendance - Credit Committee THB 374,400 / year 104 | Corporate Governance and Management Annual Report 2010

In 2010, all of the 13 directors received remuneration for serving on the Board of Directors and other committees in a total amount of THB 28,444,400. The details are as follows:

Name of director Details

1. Mrs. Saowanee Kamolbutr Receiving THB 4,200,000 for serving as Chairperson of the Board of Directors.

2. Gen. Anupong Paojinda (1) Receiving THB 606,000 for serving on the Board of Directors. (Until September 30, 2010)

3. Gen. Prayut Chan-o-cha (2) Receiving THB 282,000 for serving on the Board of Directors. (From October 7, 2010)

4. Mr. Philippe G.J.E.O. Damas Receiving THB 5,033,600 for serving on the Board of Directors and as Chairman of the Board of Executive Directors and Member of the Nomination, Remuneration and Corporate Governance Committee.

5. Dr. Vijit Supinit Receiving THB 2,582,400 for serving on the Board of Directors and as Chairman of the Audit Committee.

6. Mr. Aviruth Wongbuddhapitak Receiving THB 3,256,800 for serving on the Board of Directors and as Chairman of the Nomination, Remuneration and Corporate Governance Committee and Member of the Audit Committee.

7. Mr. Willem Frederik Nagel Not entitled to receive the monetary remuneration as per the criteria of ING Bank N.V.

8. Mr. Kritsda Udyanin Receiving THB 4,466,400 for serving on the Board of Directors and as Chairman of the Credit Committee and member of the Board of Executive Directors and Member of the Nomination, Remuneration and Corporate Governance Committee.

9. Mr. Vaughn Nigel Richtor Not entitled to receive the monetary remuneration as per the criteria of ING Bank N.V.

10. Mr. Amorn Asvanunt Receiving THB 3,790,800 for serving on the Board of Directors, and as member of the Board of Executive Directors, and member of the Credit Committee and the Risk Management Committee.

11. Mr. Christopher John King Receiving THB 2,368,800 for serving on the Board of Directors, and as member of the Audit Committee and the Nomination, Remuneration and Corporate Governance Committee.

12. Mr. Tara Tiradnakorn Receiving THB 1,857,600 for serving on the Board of Directors and as member of the Risk Management Committee.

13. Mr. Boontuck Wungcharoen Not entitled to receive the monetary remuneration as per the criteria of TMB.

O ther benefits No other benefits. TMB Bank PCL Corporate Governance and Management | 105

O ther related information M easures or procedures to approve the and factors effecting making of related transactions The Bank has given importance to the prevention of conflicts of 1. Related transaction interest and also to related party transactions and connected Opinion of the Board of Directors on Internal Controls transactions according to the regulatory requirements. To The Bank has set its policy and direction with a strong focus that effect, the Bank requires that its Directors and Senior on internal control at all levels from the management down Management at Executive Vice President level and higher to to the operations to ensure that customers as well as the disclose their relations or connections in any business with a Bank’s interests are protected. The Bank has also set up conflict of interest on a quarterly basis. Moreover, the Policy Audit Committee, Risk Management Committee, Nomination, and the Regulation on Doing Business with Persons Having Remuneration and Corporate Governance Committee to Possible Conflict of Interests has been issued and enforced oversee the Bank’s governance, risk management and system in order to eradicate conflict of interests. Transactions with of internal control. In addition, Audit Group conducts regular related parties or connected persons are carried out by the review of the Bank’s operations and related-party transactions. Bank on a fair and equitable basis. Therefore, the Bank has Audit Group reports the audit results to Audit Committee and set out a policy on pricing and conditions based on the same the committee reports the results to the Board of Directors. criteria for the transactions made with clients in general. In addition, the Bank’s Directors and Executives having conflict The Board of Directors, in its meeting no. 1/2554 on of interests in such transactions are not allowed neither to January 27, 2011 which was attended by members, among participate in the approval thereof, nor to vote in a meeting. them were all independent directors and members of Audit Committee, acknowledged the internal control assessment Loans provided to or investments in any entity in which the report presented by Head of Audit Group. The assessment Bank, its Directors or Senior Management have conflict of was conducted based on internal control core components; interests are subject to the consideration of the project’s including Control Environment, Risk Assessment, Control viability, operational performance or feasibility analysis with Activities, Information and Communication, and Monitoring. terms, conditions and prices to be the same as those approved for other clients in general. The loan or investment amount The Board of Directors was updated of the status of the must be controlled so that it will not exceed an appropriate internal control systems and is monitoring the efforts of limit and is subject to unanimous approval of TMB’ s Board management to improve the internal control environment of of Directors. The concerned Directors or Executives shall the Bank. In addition, the Audit Committee had recommended not participate in the approval of such transaction and the that the management take expeditious actions to address approval must be consistent with the regulations of related deficiencies identified and regularly report progress to the authorities. Committee and the Board of Directors. The Board of Directors has emphasized the importance of developing the internal The Bank has assigned the Audit Committee to prevent and control systems to be effective and comprehensive. In this mitigate the conflict of interests. The possible conflict of regard, the Bank is continuously taking actions to review interest transactions over threshold values or limits must be and improve processes on monitoring compliance with the submitted to Audit Committee for validation and/or approval regulations and other controls as recommended by auditors, prior to execution. Audit Committee and relevant regulators. Information will be disclosed by the Bank concerning its transactions with related parties and connected persons, 106 | Corporate Governance and Management Annual Report 2010

including related transactions on a complete and transparent L egal dispute between Luang Bumrung basis according to the criteria of the Bank of Thailand, the Limited Partnership and TMB Securities and Exchange Commission Office, the Stock On August 7, 2000, Luang Bumrung Limited Partnership Exchange of Thailand, and the accounting standards. (“LBP”) which is a juristic person registered with the Ministry of Commerce, with a registered capital of THB 5 million, was P ersons who may have conflicts of interest to hold more the plaintiff bringing a lawsuit to the Southern Bangkok Civil than a 5% of stake in subsidiary company or associated Court against DBS Thai Danu Bank Plc. (“DTDB”) (which company instead of direct shareholding by the Bank. has now merged with TMB, hence all of the rights and The Bank has no policy to allow any person who may have a obligations has been transferred to TMB) as the 1st defendant conflict of interest to hold shares on its behalf, unless such together with 16 directors with regards to the violation of shareholding is essential for the Bank to comply with the law. guarantee agreement, and claimed for compensation of about THB 140.261 billion. The court accepted only the claim against 2.A uditor’s remuneration DTDB and dismissed the claim against all the directors. Audit fee The Bank and its subsidiaries companies paid remuneration Pursuant to the claim by LBP, LBP had contacted and entered to the following parties:- into agreement with Bangchak Petroleum Plc. (BCP) regarding

▶▶ The external auditor in the previous accounting year oil purchase. DTDB, Ladprao Branch, by Mrs. Panee Boonnak amounting to THB 10,425,000. (Mrs. Panee), is claimed to have issued a letter of guarantee

▶▶ The audit office of the auditor, individual or business that is (L/G) to LBP to guarantee the trading of oil with BCP in an related with the auditor and the audit office of the auditor in amount of up to THB 200 million. Later, BCP informed LBP that the previous accounting year amounting to THB 1,238,000. an account for the trading of oil with LBP could not be opened as, upon examination of the L/G, DTDB was not the issuer N on-audit fee of the L/G. DTDB then requested to have the L/G returned The Bank and its subsidiary companies paid remuneration to be used in bringing a criminal case against its staff. LBP for other services, which included the fee for special audit, deems that DTDB’s denial of being the issuer of the L/G is summation of gross profit margin on foreign exchange considered as a violation of the agreement with LBP and has transactions and foreign money, and information technology caused damage to LBP. review on electronic money transfer system to the following parties the external auditor, which payable in the future due DTDB defended the case that the L/G was fraudulently issued. to the agreement on incomplete audit services in the previous Mrs. Panee, DTDB’s Assistant Branch Manager, issued the L/G accounting year totaling amount of THB 1,670,000. upon LBP’s request without the due authorization of DTDB. Furthermore, as regards the case which DTDB together with 3.L egal disputes the public prosecutor were plaintiffs bringing a criminal case Legal disputes in which TMB is defendant against Mrs. Panee, the final judgment was passed and the As of December 31, 2010, TMB Bank Plc. (TMB) or its court ruled that the L/G was a forgery. Therefore, in informing subsidiary was involved in one case of legal dispute, which BCP that DTDB was not the issuer of the L/G, DTDB could is not yet finalized. This could negatively affect the Bank’s not be deemed as having violated the agreement and did not assets in an amount of higher than 5% of its shareholders’ do any harm to LBP. equity as per financial statements, ending December 31, 2010. Details of the case are summarized as follows: On December 29, 2004, the Southern Bangkok Civil Court passed a judgment for the red case no. 10000/2547 that the TMB Bank PCL Corporate Governance and Management | 107

L/G used by LBP in the litigation was the L/G fraudulently against Thai Asset Management Corporation (TAMC) and issued by Mrs. Panee without the due authorization of DTDB. Financial Institution Development Fund (FIDF) as the 1st and Moreover, the final judgment already passed for the case 2nd defendants respectively with regards to the violation of which DTDB together with the public prosecutor were plaintiffs promissory notes and aval, claiming for compensation of about bringing a criminal case against Mrs. Panee regarding the THB 7.196 billion. issue of the L/G. The criminal court ruled that such L/G was a forgery and that DTDB was not the issuer of the L/G to Pursuant to the case that DTDB and the Industrial Finance LBP. Therefore, DTDB did not have to be liable for the L/G. Corporation of Thailand (IFCT) entered into asset transfer The Southern Bangkok Civil Court, in this regard, dismissed agreements with TAMC. Later, following the Bank’s merger the claim. with DTDB and IFCT, all of the rights and obligations under these asset transfer agreements were transferred to the Bank. On March 15, 2005, LBP appealed this judgment to the Appellate Court, and on August 31, 2005, TMB defended Later, TAMC sent a letter requesting downward adjustment the case. The Appellate Court, on May 14, 2010, decided to of the NPA transfer price comprising machinery and/ or other uphold the earlier judgment (Case Dismissal). assets pledged as guarantee on the basis that machinery and/ or other assets pledged as guarantee were not legally Later, on August 16, 2010, LBP submitted the case further perfected. TMB did not consent to this request and sent a to the Supreme Court, including making motions requesting letter contradicting such downward adjustment. On July 20, to stay for execution and sue in forma pauperis (court fees 2006, TAMC informed TMB to return three promissory notes waived). TMB defended the case and its motions on October totaling about THB 6.525 billion to TAMC, as TAMC would 20, 2010. The Court, on November 15 2010, rejected the like to adjust the amount and redeem the notes via a partial LBP’s motion regarding to sue in forma pauperis (court fees payment. In this respect, TAMC agreed to issue and deliver waived) and ordered LBP to pay court fees within 15 days new promissory notes with aval provided by FIDF to TMB. upon hearing date of rejection in order to continue the case. Therefore, the Bank returned the promissory notes to TAMC. LBP, however, appealed the rejection result. The Court has However, TAMC did not comply with the agreement, i.e. TAMC not yet to decide the matter. would not issue and deliver new promissory notes with aval provided by FIDF to TMB. In this respect, the Bank’s Management deems that the claim against the Bank in the stage of the Supreme Court has little Moreover, on November 14, 2006, TAMC did not make debt merit and is unlikely to succeed; therefore, the Bank will not repayment of about THB 520 million to TMB, refused to make have to be liable for this case. a partial payment and revoked one promissory note with aval provided by FIDF for the partial payment of the transfer price L egal disputes in which TMB is plaintiff of the NPAs. Apart from the above case, TMB is still engaged in another case of legal dispute in which the Bank is plaintiff. In this On April 2, 2007, the Bank therefore initiated legal proceedings regard, the Bank deems it suitable to inform the investors of against TAMC and FIDF to the Civil Court to seek the following the matter. Details of the case are summarized as follows: relief from the Court. Details are summarized as follows:

L egal dispute between TMB and Thai Asset 1 . TAMC to issue a promissory note of about THB 4.432 billion Management Corporation (TAMC) avaled by FIDF with a maturity date on December 31, 2012 On April 2, 2007, TMB brought a lawsuit to the civil court and with interest to be payable on the last business day 108 | Corporate Governance and Management Annual Report 2010

of every year to TMB which is entitled to the payment. If FIDF and delivered to TMB entitling as payee. FIDF and TAMC TAMC and FIDF fail to do this, they are required to jointly shall be mutual responsibly for the judicial fees incurred and pay such amount plus interest from the date of the court the lawyer fee amount THB 200,000. Other filing claims apart filing. from the judgment are dismissed.

2 . TAMC to issue a promissory note of about THB 2.027 billion The aforesaid judgment has dismissed the filing claim no. 4 avaled by FIDF with a maturity date on October 31, 2011 mentioned hereinabove on the basis that TMB has not right and with interest to be payable on the last business day to filing this claim since, on the filing date (April 2, 2007), the of every year to TMB which is entitled to the payment. If Promissory Note of THB 520 million being hold by TMB is not TAMC and FIDF fail to do this, they are required to jointly honored yet due to its maturity date on February 14, 2013. pay such amount plus interest from the date of the court filing. Case is being held in the Appellate Court. TMB appealed case on August 23, 2010. Both FIDF and TAMC made their appeal 3 . TAMC to issue a promissory note of about THB 12 million file on September 21, 2010 as well. avaled by FIDF with a maturity date on February 28, 2013 and with interest to be payable on the last business day 4. dividend policy of every year to TMB which is entitled to the payment. If The Bank’s policy TAMC and FIDF fail to do this, they are required to jointly The Bank has set out a policy on dividend payment from pay such amount plus interest from the date of the court financial statements (Bank only). Dividend payment will filing. depend on the Bank’s operating performance and relevant legal conditions as well as the capital adequacy and reserve 4 . TAMC and FIDF to jointly pay about THB 520 million requirements. In addition, the dividend payment must be in line plus interest calculated from the average deposit interest with the BOT’s Notification Re: Classification and Provision of rate until the date of the court filing amounting to about the Financial Institutions dated August 3, 2008 which stated THB 15 million, hence a total amount of about THB 535 that as long as financial institutions have not yet written off million plus interest from the date of the court filing onwards. the impaired assets or has not yet made full provision for the assets and contingent liabilities whether they are impaired On April 27, 2010, the Civil Court passed a judgment for or not, financial institutions are not allowed to pay dividend the red case no. 1681/2553 that TAMC to issue 3 (three) nor any other forms of returns to its shareholders; and the Promissory Notes. The first note amount THB 4,431,879,337.93 BOT’s Notification Re: Regulation for Accounting Treatment with a maturity date on December 31, 2012. The second of the Financial Institutions dated August 3, 2008, Section 8: one amount THB 2,027,134,274.65 with a maturity date on Dividend Policy, requiring that financial institutions should not October 31, 2011 and, the third one amount THB 12,002,000 make dividend payments out of the unrealized profit or profit with a maturity date on February 28, 2013. All ones shall be that is not based on actual cash flow such as profit from mark honored at the issuer bank with interest, to be payable on the to market securities value, or out of any profit derived from last business day of every year, at rate quarterly calculation the reclassifying of financial assets or financial institutions from the arithmetic mean of the average deposit interest rate should not make dividend payments out of the profit from weighted on all kind of deposit accounts (including currency sale of assets, which is not actually completed and which account) only in Thai Baht provided by Bangkok Bank PLC, may result in abnormal profit or loss such as profit from sale Krung Thai Bank PLC, Kasikorn Bank PLC, Siam Commercial of properties foreclosed where a repurchase option is part of Bank PLC and Bank of Ayudhya PLC. They shall be avaled by the agreement. TMB Bank PCL Corporate Governance and Management | 109

5. Control on user of insider information and ethics to ensure the management and the staff perform Policy and procedure on insider information duties with transparency and based on professional code of TMB is aware of the importance of monitoring the use of conduct and treat all stakeholders fairly. inside information, especially non-public information that may impact its share price. As such, TMB has assigned Financial 6.I nternal control Statement Division under Financial Reporting Department Statement of the Audit Committee to be the only unit responsible for submitting the financial In 2010, the Bank’s Audit Committee, served fully by statements and all financial reports to the SET and the SEC independent directors who were not the bank’s executives or after undergoing a correctness and completeness review by employees of any kind, carried out its responsibilities, within the Audit Committee and the Board of Executive Directors its given authority and in accordance with the guidelines respectively to make sure TMB’s inside information is not set out by the Stock Exchange of Thailand and the Bank of prematurely disclosed to the public. Thailand. Major areas of responsibilities can be summarised as follows. Additionally, to ensure the control of inside information usage complies with relevant laws and regulations and also good 1. Review the Bank’s financial statements to ensure accuracy corporate governance principles, TMB has specified policy and adequacy. on Confidential and Insider Information, Chinese Wall, Insider 2. Review and ensure adequate and efficient internal control. Trading and Personal Account Dealing to ensure that the 3. Review connected transaction or transaction that may lead confidential information is efficiently and effectively managed. to conflict of interest to ensure transactions are conducted and disclosed in compliance with the law and regulation TMB has accordingly issued Policy, Regulations and Guidelines and that transactions are entered with reasonableness for to prevent its staff with potential access to inside information the benefit to the Bank. from exploiting such information for personal benefits and/ 4. Review to ensure compliance with the laws and regulations or the others’ benefits before the information is disclosed imposed by the SEC, SET and other relevant regulators to the public by setting a black-out period prohibiting staff, including compliance report prepared by the Bank’s who has right or opportunity to access the inside information Compliance unit.. by nature of their job function / responsibility, from trading 5. Select and propose to the Board of Directors and on TMB’ s financial instruments until insider information is Shareholder meeting the appointment of bank’s auditor and disclosed to the public. Compliance Group is responsible for fee. In addition, the Committee is responsible for reviewing assisting Management with the implementation, enforcement the non-audit-related engagements with the Bank’s external and updating of the aforementioned policy and regulations auditor. and also provides for appropriate monitoring mechanism to 6. Closely supervising the Bank’s internal audit function ensure compliance with the policy as well as relevant laws including approving internal audit plans and assessing and regulations. audit performance to ensure sufficient audit resources and that all auditing activities were independently and effectively P enalty Measures conducted in accordance with the regulatory requirements. The Bank’s punishment for the use of inside information accords with the provisions of the Securities and Exchange The Audit Committee held twelve meetings in 2010, and the Act B.E. 2535 and all other relevant rules and regulations of attendance record of each committee members is reported the authorities. It has also imposed punishment for employees’ in the Shareholding and Management section in the Annual disciplinary misconduct regarding business code of conduct Report. Overall, the Audit Committee gained full co-operation 110 | Corporate Governance and Management Annual Report 2010

from the Management as well as full access to all information D etails of the Subsidiaries Directors relevant to the Bank’s operations, necessary for them to 1. Phayathai Asset Management Co., Ltd. discharge their responsibilities. Relevant executive officers There are five directors as follows: were discretionary invited to attend and clarify issues in the 1. Mr. Bart F.M. Hellemans meetings. The Audit Committee made inquiries and took into 2. Ms. Utoomphorn Kunakorn account clarifications from the Management and the auditor 3. Mr. Martin Alan Searle as to the accuracy and adequacy of the financial statements 4. Mr. Anuphun Tungsnga and the sufficient disclosure of information. The Audit 5. Mrs. Nattaya Booncharoen Committee is of the opinion in agreement with the auditor that the Bank’s financial report fairly presents accurate and 2.D esignee for ETA Contracts Co., Ltd. reliable information in material aspects in compliance with There are three directors as follows: generally accepted accounting principles. In addition, entering 1. Ms. Sawittree Chaichoavalit into any transactions which may cause conflict of interest 2. Mr. Thawatchai Techawatanawana was reasonable and most of them were the normal course of 3. Mr. Somsak Koonchareon business or supporting normal course of business conducted on arm’s length basis. During the year, Audit Committee had 3. TMB Asset Management Co., Ltd. recommended the Management to rectify the deficiencies in There are nine directors as follows: control and operation and tighten internal controls accordingly. 1. Mr. Somjin Sornpaisarn The Bank’s Board of Directors and the Management had taken 2. Mrs. Sirichan Pipitwitayakul internal control and audit as well as the principles of good 3. Mr. John Michael Flanders governance practices very seriously. 4. Mr. Michal Jan Szczurek 5. Mr. Luecha Sukrasebya Furthermore, the Audit Committee has assessed the 6. Mr. Agapol Na Songkhla performance and independence of external auditor and agreed 7. Mr. Pradit Leosirikul to propose the Board of Directors to seek shareholders’ 8. Mrs. Kanchana Rojvatunyu meeting approval on the appointment and remuneration of 9. Ms. Arwiwan Tangtrongchit the independent auditors of Ernst & Young Office Limited to be the Bank’s independent auditors for the year 2011. TMB Bank PCL Shareholders Structure | 111

Sh areholders Structure

Below is the list of the 10 largest shareholders as of the latest share register closing date on June 8, 2010, in order to determine the right to attend the 2010 Extraordinary General Meeting of Shareholders held on June 24, 2010:

Major shareholders Number of ordinary shares %

1. Ministry of Finance 11,364,272,005 26.11

2. ING Bank N.V. 10,970,893,359 25.20

3. DBS BANK A/C 003 2,977,989,892 6.84

4. Thai NVDR Co., Ltd. 2,745,382,859 6.31

5. JP Morgan Special Situations(Mauritius) Limited 1,560,000,000 3.58

6. Royal Thai Army 596,669,860 1.37

7. State Street Bank and Trust Company for London 425,307,542 0.98

8. Thai Life Insurance Co., Ltd. 334,693,724 0.77

9. Chase Nominees Limited 57 242,839,557 0.56

10. Somers (U.K.) Limited 188,088,200 0.43

Source: Information on the latest share register closing date on June 8, 2010 prepared by Thailand Securities Depository Co., Ltd. may look at www.set.or.th

The number of shares or impacts on As of June 8, 2010, the latest share register closing date to shareholders’ voting rights from the issuance determine the right to attend the Extraordinary General Meeting of Non-Voting Depository Receipt (NVDR) of Shareholders no. 1/2010 held on June 24, 2010 Thai NVDR Non-Voting Depository Receipt (NVDR) is a trading instrument Co., Ltd. issued NVDRs with TMB shares as reference asset issued by Thai NVDR Co., Ltd., a subsidiary wholly owned by amounting to 2,745,382,859 shares or 6.31% of TMB’s issued Stock Exchange of Thailand (SET). By investing in NVDRs, and paid-up ordinary shares. However, the issuance of NVDR investors will receive all financial benefits including dividends, securities does not fall within the realm of the Bank’s control. right issues or warrants, as if they had invested in a company’s Investors may check the information on NVDR shares from ordinary shares. Unlike ordinary shareholders, NVDR holders are website of the SET at www.set.or.th/nvdr not entitled to voting rights in a shareholders’ meeting except for the case of voting to pass a resolution concerning the delisting of shares from the SET. If the Bank’s shares are issued as NVDRs in a great number, its shares with voting rights will decrease and the voting rights of other shareholders will increase. 112 | Statement of The Audit Committee Annual Report 2010

S tatement of The Audit Committee

In 2010, the Bank’s Audit Committee, served fully by The Audit Committee held twelve meetings in 2010, and independent directors who were not the bank’s executives or the attendance record of each committee members is employees of any kind, carried out its responsibilities, within its reported in the Management section in the Annual Report. given authority and in accordance with the guidelines set out Overall, the Audit Committee gained full co-operation from by the Stock Exchange of Thailand and the Bank of Thailand. the Management as well as full access to all information Major areas of responsibilities can be summarised as follows. relevant to the Bank’s operations, necessary for them to discharge their responsibilities. Relevant executive officers 1 . Review the Bank’s financial statements to ensure accuracy were discretionary invited to attend and clarify issues in the and adequacy. meetings. The Audit Committee made inquiries and took into 2 . Review and ensure adequate and efficient internal control. account clarifications from the Management and the auditor as 3 . Review connected transaction or transaction that may lead to the accuracy and adequacy of the financial statements and to conflict of interest to ensure transactions are conducted the sufficient disclosure of information. The Audit Committee and disclosed in compliance with the law and regulation is of the opinion in agreement with the auditor that the Bank’s and that transactions are entered with reasonableness for financial report fairly presents accurate and reliable information the benefit to the Bank. in material aspects in compliance with generally accepted 4 . Review to ensure compliance with the laws and regulations accounting principles. In addition, entering into any transactions imposed by the SEC, SET and other relevant regulators which may cause conflict of interest was reasonable and most of including compliance report prepared by the Bank’s them were the normal course of business or supporting normal Compliance unit. course of business conducted on arm’s length basis. During 5 . Select and propose to the Board of Directors and the year, Audit Committee had recommended the Management Shareholder meeting the appointment of bank’s auditor to rectify the deficiencies in control and operation and tighten and fee. In addition, the Committee is responsible for internal controls accordingly. The Bank’s Board of Directors and reviewing the non-audit-related engagements with the the Management had taken internal control and audit as well Bank’s external auditor. as the principles of good governance practices very seriously. 6 . Closely supervising the Bank’s internal audit function including approving internal audit plans and assessing Furthermore, the Audit Committee has assessed the performance audit performance to ensure sufficient audit resources and independence of external auditor and agreed to propose the and that all auditing activities were independently and Board of Directors to seek shareholders’ meeting approval on effectively conducted in accordance with the regulatory the appointment and remuneration of the independent auditors requirements. of Ernst & Young Office Limited to be the Bank’s independent auditors for the year 2011.

V ijit Supinit Chairman of Audit Committee TMB Bank PCL Report of the Nomination, Remuneration and Corporate Governance Committee | 113

R eport of the Nomination, Remuneration and Corporate Governance Committee

The Nomination, Remuneration and Corporate Governance With respect to corporate governance, the committees Committee of the TMB Bank Public Company Limited assists to oversee and ensure the Bank’s Conduct as well as comprises two independent and two non-executive directors. the practices and operations, to conform to the principles of In 2010 the Committee held 13 meetings. good corporate governance. The Committee also prepares and monitors the Company’s Corporate Governance Guidelines and With respect to nomination and remunerations, the Committee disseminates them to internal and external parties involved, formulates policies and criteria for selection of the Bank’s to keep them informed of the Bank’s important criteria and directors and high level executives; considers and nominates code of practice in line with the principle of good corporate qualified persons to be the Bank’s directors and senior governance. Other responsibilities are to review and revise executives; formulates policies on remuneration and other relevant policies, principles, and performance guidelines benefits including those offered to directors, executives and regularly; recommend requirements relating to moral principles staff. Other responsibilities are ensuring that directors and and business ethics; consider good corporate governance executives receive appropriate remuneration, setting guidelines practices of other institutions in Thailand and abroad, for their performance appraisal with a view to make adjustment recommend the adoption of such practices as modifications to their annual remuneration accordingly, and developing the where appropriate to the Bank. In addition the Committee Bank’s succession plan. oversees the implementation of good corporate governance to ensure its practical effectiveness, continuity and appropriateness to the Bank’s business operations. The results are reported to the Bank’s Board of Directors together with comments and recommendations for rectification and improvement where appropriate.

A viruth Wongbuddhapitak Chairman of the Committee

P hillippe G.J.E.O Damas K ritsda Udyanin Christopher John King Member of the Committee Member of the Committee Member of the Committee 114 | Board of Directors’ Responsibility for Financial Reports Annual Report 2010

Boaro d f DirectorS’ Responsibility for Financial Reports

The Board of Directors is responsible for the Bank’s financial Audit Committee entirely comprising independent directors statements. The financial statements for the year ended responsible for the quality of Bank’s financial reporting, the December 31, 2010 have been prepared in accordance with internal control systems as well as complete and appropriate generally accepted accounting standards with appropriate disclosure of connected transactions. The opinion of the Audit accounting policies applied on a conservative and consistent Committee with regard to these matters appears in the Report basis. Judgement and estimates where required have been of the Audit Committee in this Annual Report. applied with careful and reasonable considerations, with adequate material information disclosures made available The Board is of the view that the Bank has maintained an in the notes to the financial statements. These financial effective internal control system which provides an adequate statements have been audited by independent auditors who and appropriate level of protection, and therefore can assure have given their unqualified opinions. the credibility of the Bank’s financial statements as of December 31, 2010. The Board has also adopted and maintained an appropriate and effective risk management, internal control, and compliance, so that the Bank can be assured that the financial records are accurate, complete and the protections are appropriate for the Bank’s assets. These controls also serve as preventive measures against any significant operational risk of the Bank. The Board of Directors has appointed an

Boontuck Wungcharoen S aowanee Kamolbutr Chief Executive Officer Chairperson TM B Bank Public Company Limited and its subsidiaries

R eport and financial statements 31 December 2010 and 2009

TMB Bank PCL Report of Independent Auditor | 117

R eport of Independent Auditor

T o the Shareholders of TMB Bank Public Company Limited

I have audited the accompanying consolidated balance In my opinion, the financial statements referred to above sheets of TMB Bank Public Company Limited and its present fairly, in all material respects, the financial position subsidiaries as at 31 December 2010 and 2009 and the of TMB Bank Public Company Limited and its subsidiaries consolidated statements of income, changes in shareholders’ and of TMB Bank Public Company Limited as at 31 December equity and cash flows for the years then ended, and the 2010 and 2009, and the results of their operations and cash separate financial statements of TMB Bank Public Company flows for the years then ended, in accordance with generally Limited for the same periods. These financial statements accepted accounting principles. are the responsibility of the Bank’s management as to their correctness and the completeness of the presentation. My Without qualifying my opinion on the above mentioned financial responsibility is to express an opinion on these financial statements, I draw attention to the matter as discussed in statements based on my audits. Note 38 to the financial statements whereby, in 2010, the Bank adjusted the measurement of and revenue recognition I conducted my audits in accordance with generally accepted on investments in the consolidated financial statements in auditing standards. Those standards require that I plan order to reflect the nature and conditions of the returns on and perform the audit to obtain reasonable assurance the investments. The Bank has thus adjusted the consolidated about whether the financial statements are free of material financial statements for the year ended 31 December 2009, misstatement. An audit includes examining, on a test basis, presented herein for comparative purposes, and I have audited evidence supporting the amounts and disclosures in the and agreed with such adjustments. financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that my audits provide a reasonable basis for my opinion.

R atana Jala Certified Public Accountant (Thailand) No. 3734 Ernst & Young Office Limited Bangkok: 24 February 2011 118 | Financial Statements and Notes to Financial Statements Annual Report 2010

Ba lance sheets TMB Bank Public Company Limited and its subsidiaries As at 31 December 2010 and 2009

(Unit: Baht)

Consolidated financial statements Separate financial statements

Note 2010 2009 2010 2009 (Restated) Assets Cash 14,713,978,702 15,134,030,856 14,713,480,464 15,133,926,525

Interbank and money market items 8, 34 Domestic items Interest bearing 77,120,112,137 59,155,830,186 76,925,292,932 58,986,121,221 Non-interest bearing 4,149,363,888 2,886,070,501 4,149,363,888 2,886,070,501 Foreign items Interest bearing 1,861,570,876 1,447,199,037 1,861,570,876 1,447,199,037 Non-interest bearing 1,494,276,441 3,125,470,103 1,494,276,441 3,125,470,103 Interbank and money market items — net 84,625,323,342 66,614,569,827 84,430,504,137 66,444,860,862 Investments

Short-term investments — net 9.1 46,248,845,208 59,365,406,141 45,945,276,922 59,365,406,141

Long-term investments — net 9.1 48,288,803,266 22,357,803,934 47,799,400,470 21,694,305,380 Investments in subsidiaries and associated companies — net 10 7,500 470,617,968 2,023,191,662 605,473,248 Investments — net 94,537,655,974 82,193,828,043 95,767,869,054 81,665,184,769

Loans and accrued interest receivables 11, 34 Loans 363,176,505,062 368,091,604,559 361,119,388,397 366,730,206,447 Accrued interest receivables 564,672,509 971,810,172 564,701,277 974,133,640 Total loans and accrued interest receivables 363,741,177,571 369,063,414,731 361,684,089,674 367,704,340,087

Less: Allowance for doubtful debts 13, 34 (20,389,883,488) (30,995,310,499) (18,926,507,177) (29,548,185,438)

Revaluation allowance for debt restructuring 14 (155,812,886) (212,836,540) (155,812,886) (212,836,540) Loans and accrued interest receivables — net 343,195,481,197 337,855,267,692 342,601,769,611 337,943,318,109

Properties foreclosed — net 15 6,435,549,461 11,132,193,552 6,326,861,465 10,756,889,666 Customers' liability under acceptance 26,162,740 50,643,261 26,162,740 50,643,261

Premises and equipment — net 16 12,115,962,510 13,219,972,134 12,086,531,168 13,178,000,853 Accounts receivable — net 19,304,416,689 9,490,722,960 18,977,473,900 9,168,713,135 Goodwill — net 59,988,168 59,988,168 - -

Other intangible assets — net 17 793,480,956 868,829,077 785,429,726 853,811,088 Financial derivative assets 9,244,296,113 3,015,291,930 9,244,296,113 3,015,291,930

Other assets — net 18, 34 4,540,165,986 3,507,063,041 4,465,347,259 3,426,524,048 Total assets 589,592,461,838 543,142,400,541 589,425,725,637 541,637,164,246

The accompanying notes are an integral part of the financial statements. TMB Bank PCL Financial Statements and Notes to Financial Statements | 119

Ba lance sheets (Continued) TMB Bank Public Company Limited and its subsidiaries As at 31 December 2010 and 2009

(Unit: Baht)

Consolidated financial statements Separate financial statements

Note 2010 2009 2010 2009 (Restated) Liabilities and shareholders' equity

Deposits 19, 34 Deposits in Baht 412,325,958,205 407,345,091,316 412,446,896,718 407,515,517,995 Deposits in foreign currencies 789,539,525 430,773,652 789,539,525 433,485,157 Total deposits 413,115,497,730 407,775,864,968 413,236,436,243 407,949,003,152

Interbank and money market items 20, 34 Domestic items Interest bearing 16,652,044,459 7,198,980,726 16,652,044,459 7,198,980,726 Non-interest bearing 684,977,731 432,412,297 684,977,731 432,412,297 Foreign items Interest bearing 5,821,511,491 2,864,422,874 5,821,511,491 2,864,422,874 Non-interest bearing 332,330,280 242,108,602 332,330,280 242,108,602 Total interbank and money market items 23,490,863,961 10,737,924,499 23,490,863,961 10,737,924,499 Liability payable on demand 3,725,315,242 4,957,974,454 3,725,315,242 4,957,974,454

Borrowings 21, 34 Short-term borrowings 36,372,727,257 25,081,094,337 36,386,727,257 25,092,594,337 Long-term borrowings 25,731,551,256 25,554,727,337 25,731,551,256 25,554,727,337 Total borrowings 62,104,278,513 50,635,821,674 62,118,278,513 50,647,321,674 Bank's liability under acceptance 26,162,740 50,643,261 26,162,740 50,643,261 Accrued interest expenses 1,138,512,988 938,770,073 1,138,556,638 938,807,733 Provisions for obligation on transfers of non-performing assets 6, 7, 22 6,235,216,475 9,764,325,241 6,204,870,521 6,139,450,521

Provisions for other liabilities 23 850,317,632 2,125,524,933 815,497,632 4,450,167,864 Accounts payable 12,419,129,869 2,329,992,114 12,416,102,453 2,326,644,240 Financial derivative liabilities 9,705,893,887 3,244,851,950 9,705,893,887 3,244,851,950

Other liabilities 24, 34 6,926,195,369 3,823,554,900 6,897,724,151 3,703,636,546 Total liabilities 539,737,384,406 496,385,248,067 539,775,701,981 495,146,425,894

The accompanying notes are an integral part of the financial statements. 120 | Financial Statements and Notes to Financial Statements Annual Report 2010

Ba lance sheets (Continued) TMB Bank Public Company Limited and its subsidiaries As at 31 December 2010 and 2009

(Unit: Baht)

Consolidated financial statements Separate financial statements

Note 2010 2009 2010 2009 (Restated) Liabilities and shareholders' equity (Continued) Shareholders' equity

Registered share capital 25 Preference shares (2009: 1,991,997,200 preference shares of Baht 10 each) - 19,919,972,000 - 19,919,972,000 44,108,738,479 ordinary shares of Baht 0.95 each (2009: 41,716,741,279 ordinary shares of Baht 10 each) 41,903,301,555 417,167,412,790 41,903,301,555 417,167,412,790

Issued and paid-up share capital 25 Preference shares (2009: 1,991,997,200 preference shares of Baht 10 each) - 19,919,972,000 - 19,919,972,000 43,528,738,479 ordinary shares of Baht 0.95 each (2009: 41,536,741,279 ordinary shares of Baht 10 each) 41,352,301,555 415,367,412,790 41,352,301,555 415,367,412,790

Share discount — net 25 - (303,088,346,225) - (303,088,346,225) Unrealised gains

Revaluation surplus on assets 28 4,783,699,224 5,155,120,474 4,783,699,224 5,155,120,474

Revaluation surplus on investments 9.5 65,774,370 58,324,421 64,983,154 49,619,404

Other capital reserve — Share-based payments 27 33,903,639 - 33,903,639 - Translation adjustments 19,258,527 11,815,598 19,258,527 11,815,598

Retained earnings 25 Appropriated

Statutory reserve 29 200,000,000 2,100,000,000 200,000,000 2,100,000,000 Others - 8,717,165,400 - 8,717,165,400 Unappropriated (deficit) 3,316,892,370 (101,558,851,572) 3,195,877,557 (101,742,021,089) Equity attributable to the Bank's shareholders 49,771,829,685 46,682,612,886 49,650,023,656 46,490,738,352 Equity attributable to minority shareholders of subsidiaries 83,247,747 74,539,588 - - Total shareholders' equity 49,855,077,432 46,757,152,474 49,650,023,656 46,490,738,352 Total liabilities and shareholders' equity 589,592,461,838 543,142,400,541 589,425,725,637 541,637,164,246

The accompanying notes are an integral part of the financial statements. TMB Bank PCL Financial Statements and Notes to Financial Statements | 121

Ba lance sheets (Continued) TMB Bank Public Company Limited and its subsidiaries As at 31 December 2010 and 2009

(Unit: Baht)

Consolidated financial statements Separate financial statements

Note 2010 2009 2010 2009 (Restated)

Off-balance sheet items — commitments 33.1, 34 Aval to bills and guarantees of loans 342,194,126 846,738,229 342,194,126 846,738,229 Liability under unmatured import bills 1,679,074,784 956,538,611 1,679,074,784 956,538,611 Letters of credits 15,699,994,150 16,921,760,586 15,699,994,150 16,921,760,586 Other commitments 906,132,435,318 396,171,203,206 906,132,435,318 396,171,203,206

Boontuck Wungcharoen S aowanee Kamolbutr Chief Executive Officer Chairperson of the Board

The accompanying notes are an integral part of the financial statements. 122 | Financial Statements and Notes to Financial Statements Annual Report 2010

S tatements of Income TMB Bank Public Company Limited and its subsidiaries For the years ended 31 December 2010 and 2009

(Unit: Baht)

Consolidated financial statements Separate financial statements

Note 2010 2009 2010 2009 (Restated) Interest and dividend income Loans 15,809,816,378 17,506,409,697 15,565,454,628 17,351,836,312 Interbank and money market items 771,200,585 736,730,586 768,651,630 733,570,776 Investments 1,918,456,627 2,238,094,243 2,195,615,344 2,481,981,410 Total interest and dividend income 18,499,473,590 20,481,234,526 18,529,721,602 20,567,388,498 Interest expenses Deposits 4,343,628,455 5,827,094,860 4,344,111,926 5,828,079,106 Interbank and money market items 93,047,856 157,919,996 93,047,856 157,919,996 Short-term borrowings 317,860,262 549,164,123 318,051,629 549,670,446 Long-term borrowings 1,485,600,281 1,539,600,114 1,294,934,281 1,343,600,114 Total interest expenses 6,240,136,854 8,073,779,093 6,050,145,692 7,879,269,662 Net interest and dividend income 12,259,336,736 12,407,455,433 12,479,575,910 12,688,118,836 Bad debt and doubtful accounts 1,710,725,052 2,845,855,199 1,105,567,561 2,931,375,578 Reversal of losses on debt restructuring (56,492,167) (218,350,753) (56,822,277) (224,851,674) Net interest and dividend income after bad debt and doubtful accounts and reversal of losses on debt restructuring 10,605,103,851 9,779,950,987 11,430,830,626 9,981,594,932 Non-interest income

Gains (losses) on investments 9.6 157,130,331 13,896,172 (48,079,026) 31,122,994

Gains (losses) on investments in subsidiaries 9.7 - - 140,161,176 (921,090,642) Shares of profits from investments in associated companies 10 35,760,393 94,814,249 - - Fees and charges Acceptances, avals and guarantees 337,051,678 424,876,872 337,051,678 424,876,872 Others 4,465,806,628 4,089,116,713 4,115,567,854 3,681,215,066 Gains on exchange 1,284,427,552 1,011,765,477 1,284,466,854 1,011,878,489 Gains on buyback of perpetual non-cumulative Tier 1 securities 21 3,917,150 2,301,483,276 3,917,150 2,301,483,276

Gains on unwinding of interest rate swap contracts 33.1 260,227,423 954,769,876 260,227,423 954,769,876 Other income 421,805,505 1,186,442,091 406,245,088 1,259,516,608 Total non-interest income 6,966,126,660 10,077,164,726 6,499,558,197 8,743,772,539

The accompanying notes are an integral part of the financial statements. TMB Bank PCL Financial Statements and Notes to Financial Statements | 123

S tatements of Income (Continued) TMB Bank Public Company Limited and its subsidiaries For the years ended 31 December 2010 and 2009

(Unit: Baht)

Consolidated financial statements Separate financial statements

Note 2010 2009 2010 2009 (Restated) Non-interest expenses Personnel expenses 5,861,448,607 6,543,354,879 5,691,945,135 6,376,889,592 Premises and equipment expenses 2,906,598,509 2,687,644,039 2,843,993,016 2,621,762,188 Taxes and duties 627,762,958 671,587,380 623,589,077 668,661,041 Fees and charges 1,424,397,208 1,333,250,662 1,383,052,536 1,285,959,062 Directors' remuneration 30,264,400 27,137,740 28,444,400 23,511,419 Losses on impairment of properties foreclosed and other assets 947,800,895 2,736,978,484 816,756,634 1,917,210,992 Contributions to the Deposit Protection Agency 1,613,316,119 1,745,225,230 1,613,316,119 1,745,225,230 Provisions for obligation on transfers of non-performing assets (reversal) (839,018,462) 309,331,339 - 310,000,000 Reversal of provisions for other liabilities (547,498,313) (379,631,944) (571,118,313) (374,721,944) Other expenses 2,320,834,507 2,184,072,148 2,236,018,080 2,102,597,608 Total non-interest expenses 14,345,906,428 17,858,949,957 14,665,996,684 16,677,095,188 Earnings before income tax 3,225,324,083 1,998,165,756 3,264,392,139 2,048,272,283

Income tax 31 14,378,489 33,453,766 - - Net income 3,210,945,594 1,964,711,990 3,264,392,139 2,048,272,283 Net income attributable to: Equity holders of the Bank 3,202,237,435 1,945,180,145 3,264,392,139 2,048,272,283 Minority shareholders of subsidiaries 8,708,159 19,531,845 3,210,945,594 1,964,711,990

Earnings per share 32 Basic earnings per share Net income attributable to equity holders of the Bank 0.07 0.05 0.08 0.05 Diluted earnings per share Net income attributable to equity holders of the Bank 0.07 0.04 0.07 0.05

Boontuck Wungcharoen S aowanee Kamolbutr Chief Executive Officer Chairperson of the Board

The accompanying notes are an integral part of the financial statements. 124 | Financial Statements and Notes to Financial Statements Annual Report 2010 - - (Unit: Baht) - - (412,197,595) -- (58,326,616) - (486,235,377) - 3,015,312 (541,546,681) - 736,299,442 - (510,916,692) -- (161,817,153) - 7,449,949 - 7,442,929 (146,924,275) - - 33,903,639 to minority subsidiaries Total shareholders of Equity attributable - - (36,500,043) (36,500,043) - the Bank's Total Total equity shareholders attributable to -- (486,235,377) 3,015,312 - 736,299,442 - -- 7,449,949 7,442,929 - 33,903,639 - (412,197,595) (412,197,595) - 3,316,892,370 49,771,829,685 83,247,747 49,855,077,432 -- - 74,593,113- (58,326,616) - - 74,593,113 (541,546,681) - 1,945,180,145 1,945,180,145- 2,019,773,258 19,531,845 2,139,932,906 1,964,711,990 19,531,845 2,159,464,751 - (510,916,692) (510,916,692) -- - 209,604,097 (161,817,153) -- 209,604,097 (146,924,275) 3,202,237,435 3,202,237,435 8,708,159 3,210,945,594 - (200,000,000) - - 3,411,841,532 3,089,216,799 8,708,159 3,097,924,958 —

thers Unappropriated O Appropriated ------Retained earnings (deficit) —

tatutory reserve Appropriated S - (2,100,000,000) (8,717,165,400) 101,663,902,410 ------200,000,000 - Translation adjustments - - 8,800,286 2,100,000,000 8,717,165,400 (103,166,427,235) 44,954,877,575 91,507,786 45,046,385,361 - - 8,800,286 2,100,000,000 8,717,165,400 (103,578,624,830) 44,542,679,980 91,507,786 44,634,187,766 - 11,815,598 2,100,000,000- 8,717,165,400 11,815,598 (101,558,851,572) 2,100,000,000 46,682,612,886 8,717,165,400- 74,539,588 (101,047,934,880) 46,757,152,474 11,815,598 47,193,529,578 2,100,000,000 74,539,588 8,717,165,400 47,268,069,166 (101,558,851,572) 46,682,612,886 74,539,588 46,757,152,474 - - - 3,015,312 - 3,015,312 - - - 3,015,312 - - - - - 7,442,929 - 7,442,929 - - Consolidated financial statements hare- s

—

Other capital reserve based payments ------33,903,639 - Revaluation Equity attributable to the Bank's shareholders on investments surplus (deficit) - - - (486,235,377) - -- 736,299,442 - - -- 7,449,949 - - - lders' equity surplus on assets Revaluation o h - - 4,783,699,224 65,774,370 33,903,639 19,258,527 200,000,000 - (132,919,729) - - - (132,919,729)- (486,235,377) - - (132,919,729)- 250,064,065 - - (371,421,250) - - - (371,421,250)- - 7,449,949 - (371,421,250) 7,449,949- 33,903,639 7,442,929 . re a h 303,088,346,225 s ------Issued and paid-up share capital Share discount 41,352,301,555 435,287,384,790 (303,088,346,225) 5,288,040,203 (191,739,644) 435,287,384,790 (303,088,346,225) 5,288,040,203 (191,739,644) 435,287,384,790 (303,088,346,225) 5,155,120,474435,287,384,790 58,324,421 (303,088,346,225) 5,155,120,474 58,324,421 435,287,384,790 (303,088,346,225) 5,155,120,474 58,324,421 nges in (393,935,083,235) a h c

f — — — — — (Note29)

(Note27) (Note38) (Note38) e m s previouslysreported s restateds restateds previouslysreported restateds a of investmentsof a a a a in equityin equitydirectlyin statementincomeinof yearthefor subsidiaryof investmentsof equityin equitydirectlyin yearthefor appropriatedretained earnings tooffset sharediscount andreduce thedeficit (Note25) t Balance as at 31 December312008 atBalance as Cumulativeeffect ofvaluation adjustment Balance as at 31 December312008 atBalance as Income(expense)recognised directly assets on surplusrevaluation Amortisation of Revaluation investmentsdeficit on adjustmentsTranslation income(expense) recognised Total investments on deficit revaluationRecognised income(restated)Net income(expense) recognised Total Dividendsminoritytopaidshareholders December312009 atBalance as December312009 atBalance as Cumulativevaluationofeffectadjustment December312009 atBalance as Income(expense)recognised directly assets on surplusrevaluation Amortisation of Revaluationsurplus oninvestments Translationadjustments income(expense) recognised Total Share-basedpayments incomeNet income(expense) recognised Total Reductionofcapital andtransfer of Appropriatedstatutorytoreserve December312010 atBalance as The accompanying notes are an integral part of the financial statements S ate TMB Bank Public Company Limited and its subsidiariesFor the years ended 31 December 2010 and 2009 nts o TMB Bank PCL Financial Statements and Notes to Financial Statements | 125 - - (Unit: Baht) Total -- (495,491,644) 3,015,312 - 736,299,442 -- 15,363,750 7,442,929 - 33,903,639 -- - 74,593,113- (58,326,616) - 74,593,113- (550,802,948) - 2,048,272,283 2,048,272,283 2,122,865,396 2,233,768,777 -- 209,604,097- (161,817,153) -- 209,604,097 (139,010,474) - 3,195,877,557 49,650,023,656 -- 3,264,392,139 3,264,392,139 3,473,996,236 3,159,285,304 - (200,000,000) —

thers Unappropriated O Appropriated ------Retained earnings (deficit) —

tatutory reserve Appropriated S - (2,100,000,000) (8,717,165,400) 101,663,902,410 ------200,000,000 Translation adjustments - 8,800,286 2,100,000,000 8,717,165,400 (103,864,886,485) 44,256,969,575 - - 11,815,598 2,100,000,000 8,717,165,400 (101,742,021,089) 46,490,738,352 - - -- 3,015,312 - 3,015,312 - - 3,015,312 - - -- 7,442,929 7,442,929 - - —

payments reserve hare-based s Other capital Separate financial statements ------33,903,639 - - ntinued) o C ( Revaluation on investments surplus (deficit) - -- (495,491,644) -- 736,299,442 -- 15,363,750 - - - assets surplus on Revaluation -- (132,919,729) - - (132,919,729)- (495,491,644) - - (132,919,729) 240,807,798 -- (371,421,250) - -- (371,421,250) 15,363,750 - 4,783,699,224 64,983,154 33,903,639 19,258,527 200,000,000 - - (371,421,250) 15,363,750- 33,903,639 7,442,929 lders' equity o h ------. re a Issued h and paid-up 41,352,301,555 share capital Share discount s 435,287,384,790 (303,088,346,225) 5,288,040,203 (191,188,394) 435,287,384,790 (303,088,346,225) 5,155,120,474 49,619,404 (393,935,083,235) 303,088,346,225 nges in a h c

(Note 29) f (Note 27) (Note 25) e m statement of income retained earnings to offset share discount and reduce the deficit t Balance as at 31 December 2008 Income (expense) recognised directly in equity Amortisation of revaluation surplus on assets Revaluation deficit on investments Translation adjustments Total income (expense) recognised directly in equity Recognised revaluation deficit on investments in Net income Total income (expense) recognised for the year Balance as at 31 December 2009 Income (expense) recognised directly in equity Amortisation of revaluation surplus on assets Revaluation surplus on investments Translation adjustments Total income (expense) recognised directly in equity Share-based payments Net income Total income (expense) recognised for the year Reduction of capital and transfer of appropriated Appropriated to statutory reserve Balance as at 31 December 2010 The accompanying notes are an integral part of the financial statements S ate TMB Bank Public Company Limited and its subsidiariesFor the years ended 31 December 2010 and 2009 nts o 126 | Financial Statements and Notes to Financial Statements Annual Report 2010

S tatements of CASH Flows TMB Bank Public Company Limited and its subsidiaries For the years ended 31 December 2010 and 2009

(Unit: Baht) Consolidated financial statements Separate financial statements 2010 2009 2010 2009 (Restated) Cash flows from operating activities Earnings before income tax 3,225,324,083 1,998,165,756 3,264,392,139 2,048,272,283 Adjustments to reconcile earnings before income tax to net cash provided by (paid from) operating activities: Depreciation and amortisation 1,241,968,845 1,168,288,970 1,218,620,681 1,146,072,900 Losses on impairment of investments 14,360,000 902,969,774 226,360,000 902,969,774 Gains (losses) on investments in subsidiaries - - (140,161,176) 921,090,642 Unrealised losses on revaluation of investments 434,781 7,156,080 434,781 7,156,080 Losses on impairment of properties foreclosed and other assets 947,800,895 2,736,978,484 816,756,634 1,917,210,992 Share of profits from investments in associated companies (35,760,393) (94,814,249) - - Bad debts and doubtful accounts 1,710,725,052 2,845,855,199 1,105,567,561 2,931,375,578 Reversal of losses on debt restructuring (56,492,167) (218,350,753) (56,822,277) (224,851,674) Gains on disposals of equipment (5,099,622) (11,184,895) (7,383,195) (11,184,895) Provisions for obligation on transfers of non-performing assets (reversal) (839,018,462) 309,331,339 - 310,000,000 Reversal of provisions for other liabilities (547,498,313) (379,631,944) (571,118,313) (374,721,944) Provision for expenses relating to employees 157,496,862 243,907,032 157,496,862 243,907,032 Provisions for share-based payments to employees 33,903,639 - 33,903,639 - Gains on disposals of investments (159,048,187) (968,985,556) (165,838,829) (986,212,378) Unrealised gains on exchange on borrowings and derivatives (409,734,328) (366,060,312) (409,734,328) (366,060,312) Gain on buyback of perpetual non-cumulative Tier 1 securities (3,917,150) (2,301,483,276) (3,917,150) (2,301,483,276) Other income from tax refundable (98,982,052) (278,858,907) (98,982,052) (278,858,907) Increase in other accrued income (50,765,955) (3,598,315) (54,030,386) (20,345,745) Increase in other accrued expenses 993,585,514 327,936,784 992,642,350 331,097,308 Income from operating activities before changes in operating assets and liabilities 6,119,283,042 5,917,621,211 6,308,186,941 6,195,433,458 (Increase) decrease in operating assets Interbank and money market items (17,767,358,908) 5,715,183,610 (17,742,343,267) 5,682,649,867 Trading securities 598,699,519 5,906,005,308 598,699,519 5,906,005,308 Loans (13,457,735,139) 35,082,558,541 (12,997,705,808) 35,609,839,352 Properties foreclosed 4,450,904,030 3,844,455,906 4,315,696,349 3,480,755,965 Accounts receivable 1,591,599,006 1,558,978,310 1,388,293,876 1,539,478,897 Other assets 393,545,779 1,868,965,214 391,604,902 1,859,882,522 Increase (decrease) in operating liabilities Deposits 5,339,632,762 (42,521,321,875) 5,287,433,090 (42,611,153,518) Interbank and money market items 12,752,939,462 1,438,744,745 12,752,939,462 1,438,744,745 Liability payable on demand (1,232,659,212) 1,660,643,149 (1,232,659,212) 1,660,643,149 Short-term borrowings 11,598,006,324 (11,732,992,179) 11,600,506,324 (11,746,492,179) Provisions for obligation on transfer of non-performing assets 73,823,697 - - - Provisions for other liabilities (575,348,722) (899,407,166) (575,348,721) (899,407,166) Accounts payable 430,396,662 195,876,954 430,717,119 192,620,668 Other liabilities 501,395,265 (2,435,193,471) 587,094,693 (2,486,060,069)

The accompanying notes are an integral part of the financial statements. TMB Bank PCL Financial Statements and Notes to Financial Statements | 127

S tatements of CASH Flows (Continued) TMB Bank Public Company Limited and its subsidiaries For the years ended 31 December 2010 and 2009

(Unit: Baht) Consolidated financial statements Separate financial statements 2010 2009 2010 2009 (Restated) Cash provided by operating activities 10,817,123,567 5,600,118,257 11,113,115,267 5,822,940,999 Net interest and dividend income (12,259,336,736) (12,407,455,434) (12,479,575,910) (12,688,118,837) Cash received on interest income 17,087,075,371 20,584,320,402 16,865,095,620 20,507,084,117 Cash paid on interest expense (4,589,649,000) (7,395,152,363) (4,590,317,847) (7,396,617,702) Cash refunded on income tax 98,982,052 278,858,907 98,982,052 278,858,907 Cash paid on income tax (118,501,676) (105,531,756) (97,432,315) (80,682,709) Net cash provided by operating activities 11,035,693,578 6,555,158,013 10,909,866,867 6,443,464,775 Cash flows from investing activities Cash received on interest and dividend income 1,631,787,732 1,652,280,540 1,625,843,673 1,641,257,817 Purchases of available-for-sale securities (134,566,822,588) (155,402,405,303) (133,966,822,588) (155,302,405,303) Sales of available-for-sale securities 122,913,172,983 150,313,235,189 122,455,764,298 150,213,235,189 Investments in held-to-maturity securities (23,112,047,598) - (23,112,047,598) - Proceeds from redemption of held-to-maturity debt securities 22,176,000,000 2,713,306,674 22,159,000,000 2,687,306,674 Capital return from and sales of general investments 495,173,347 1,057,870,159 494,833,856 1,056,675,454 Investments in an associated company - (34,481,100) - (34,481,100) Capital return from and sales of investments in associated- companies 213,696,545 451,833,013 213,696,545 451,833,013 Dividends received from subsidiary and associated companies 282,223,872 139,880,784 282,223,872 249,380,740 Purchases of premises and equipment (665,408,217) (504,470,019) (655,723,047) (497,811,691) Cash paid for leasehold rights (40,120,155) (177,146,204) (40,120,155) (177,146,204) Purchases of intangible assets (257,767,558) (412,919,720) (257,518,713) (412,140,692) Proceeds from disposals of equipment 178,122,948 117,344,485 174,313,972 116,945,013 Net cash used in investing activities (10,751,988,689) (85,671,502) (10,626,555,885) (7,351,090) Cash flows from financing activities Cash paid for long-term borrowings (1,139,881,583) (1,138,454,840) (1,139,881,583) (1,138,454,840) Cash paid for interest on long-term borrowings (1,194,658,939) (1,423,092,372) (1,194,658,939) (1,423,092,372) Cash paid for redemption of debentures (2,040,110,000) (702,380,000) (2,040,110,000) (702,380,000) Proceeds from issuance of subordinated debentures and perpetual non-cumulative Tier 1 securities 8,000,000,000 9,300,000,000 8,000,000,000 9,300,000,000 Cash paid for redemption of subordinated debentures and perpetual non-cumulative Tier 1 securities (8,079,499,450) (9,092,172,412) (8,079,499,450) (9,092,172,412) Proceeds from issuance of long-term bills of exchange 3,742,950,000 436,990,000 3,742,950,000 436,990,000 Dividends paid to minority shareholders of subsidiaries - (36,500,043) - - Net cash used in financing activities (711,199,972) (2,655,609,667) (711,199,972) (2,619,109,624) Net increase (decrease) in cash and cash equivalents (427,495,083) 3,813,876,844 (427,888,990) 3,817,004,061 Increase in translation adjustments 7,442,929 3,015,312 7,442,929 3,015,312 Cash and cash equivalents at beginning of the years 15,134,030,856 11,317,138,700 15,133,926,525 11,313,907,152 Cash and cash equivalents at end of the years 14,713,978,702 15,134,030,856 14,713,480,464 15,133,926,525

Supplemental cash flows information Non-cash transactions Receipt of properties foreclosed from debtors in settlement of loans and receivables 2,060,122 46,933,901 2,060,122 46,933,901 Receipt of promissory notes in settlement of NPAs sale and loans and receivables 2,204,446,513 5,808,805,175 2,178,451,627 5,682,594,666 Settlement of the losses sharing on transfer of non-performing assets by offsetting with promissory note receivables 3,020,000,000 - - - Debt forgiveness to a subsidairy (Note 7.2) - - 4,030,622,012 -

The accompanying notes are an integral part of the financial statements. 128 | Financial Statements and Notes to Financial Statements Annual Report 2010

N otes to financial statements T MB Bank Public Company Limited and its subsidiaries For the years ended 31 December 2010 and 2009

1.G eneral information TMB Bank Public Company Limited, (“the Bank”), is a public company incorporated and domiciled in Thailand. The Bank operates banking businesses. The Bank’s head office is located at No. 3000, Phaholyothin Road, Chomphon Sub-district, Chatuchak District, Bangkok. As at 31 December 2010, the Bank had altogether 452 branches, including the Head Office, in all regions throughout Thailand and 3 overseas branches (31 December 2009: 483 branches in Thailand and 3 overseas branches).

All subsidiaries were incorporated as limited companies under Thai laws and operate in Thailand, with their core businesses being provisions of asset management and fund management services.

2. Basis of preparation of financial statements 2.1 Basis of preparation of financial statements These financial statements have been prepared in accordance with accounting standards enunciated under the Accounting Profession Act B.E. 2547, except for the early adoption of TFRS 2 “Share-based Payment” (see the relevant accounting policy in Note 4.18 to financial statements).

The presentation of the financial statements has been made in compliance with the Notification of the Bank of Thailand (“BOT”) regarding “Preparation and Announcement of Financial Statements of Commercial Banks and Parent Companies of Financial Holding Groups”, dated 3 August 2008, and relevant notifications of the Securities and Exchange Commission (“SEC”).

The financial statements have been prepared on a historical cost basis except where otherwise disclosed in Note 4 to the financial statements regarding significant accounting policies.

The financial statements in Thai language are the official statutory financial statements of the Bank. The financial statements in English language have been translated from such Thai language financial statements.

2.2 Basis of consolidation (a) The consolidated financial statements include the financial statements of TMB Bank Public Company Limited and the following subsidiaries:

Revenue included as Assets included as a percentage to the Percentage of shares a percentage to the consolidated totals held by the Bank consolidated totals for the years ended as at 31 December as at 31 December 31 December

Type of business 2010 2009 2010 2009 2010 2009

Phayathai Asset Management Co., Ltd. Asset management business 100.00 100.00 0.43 0.61 1.14 0.36

Designee for ETA Contract Ltd. Financial support business 99.40 99.40 - - - -

TMB Asset Management Co., Ltd. Fund management business 75.00 75.00 0.05 0.05 2.18 1.87 TMB Bank PCL Financial Statements and Notes to Financial Statements | 129

(b) The Bank and its subsidiaries do not treat investments in any mutual funds in which they hold more than 50% of outstanding units as investments in subsidiaries because they do not have control over the financial and operating policies of these funds. In addition, in case that the Bank and its subsidiaries receive shares as a result of debt restructuring of a borrower, which causes the Bank and its subsidiaries to hold more than 50 percent of the paid-up share capital of such company, the Bank and its subsidiaries will not treat that investee company as a subsidiary, since they intend to hold such investment temporality.

(c) Subsidiaries’ financial statements are fully consolidated as from the date of acquisition, being the date on which the Bank obtains control, and continue to be consolidated until the date when such control ceases.

(d) The financial statements of the subsidiaries are prepared using the same significant accounting policies as the Bank.

(e) Material balances and transactions between the Bank and its subsidiaries have been eliminated from the consolidated financial statements. The investments in subsidiaries as recorded in the Bank’s books of accounts have been eliminated against shareholders’ equity of the subsidiaries.

(f) Minority interests represent the portion of net income or loss and net assets of the subsidiaries that are not held by the Bank and are presented separately in the consolidated statements of income and within equity in the consolidated balance sheets.

2.3S eparate financial statements The separate financial statements, which present investments in subsidiaries and associated companies under the cost method, have been prepared solely for the benefit of the public.

3.A doption of new accounting standards During the current year, the Federation of Accounting Professions issued a number of revised and new accounting standards as listed below.

(a) Accounting standards that are effective for fiscal years beginning on or after 1 January 2011 (except Framework for the Preparation and Presentation of Financial Statements, which is immediately effective): Framework for the Preparation and Presentation of Financial Statements (revised 2009)

▶▶ TAS 1 (revised 2009) Presentation of Financial Statements

▶▶ TAS 2 (revised 2009) Inventories

▶▶ TAS 7 (revised 2009) Statement of Cash Flows

▶▶ TAS 8 (revised 2009) Accounting Policies, Changes in Accounting Estimates and Errors

▶▶ TAS 10 (revised 2009) Events after the Reporting Period

▶▶ TAS 11 (revised 2009) Construction Contracts

▶▶ TAS 16 (revised 2009) Property, Plant and Equipment

▶▶ TAS 17 (revised 2009) Leases

▶▶ TAS 18 (revised 2009) Revenue

▶▶ TAS 19 Employee Benefits 130 | Financial Statements and Notes to Financial Statements Annual Report 2010

▶▶ TAS 23 (revised 2009) Borrowing Costs

▶▶ TAS 24 (revised 2009) Related Party Disclosures

▶▶ TAS 26 Accounting and Reporting by Retirement Benefit Plans

▶▶ TAS 27 (revised 2009) Consolidated and Separate Financial Statements

▶▶ TAS 28 (revised 2009) Investments in Associates

▶▶ TAS 29 Financial Reporting in Hyperinflationary Economies

▶▶ TAS 31 (revised 2009) Interests in Joint Ventures

▶▶ TAS 33 (revised 2009) Earnings per Share

▶▶ TAS 34 (revised 2009) Interim Financial Reporting

▶▶ TAS 36 (revised 2009) Impairment of Assets

▶▶ TAS 37 (revised 2009) Provisions, Contingent Liabilities and Contingent Assets

▶▶ TAS 38 (revised 2009) Intangible Assets

▶▶ TAS 40 (revised 2009) Investment Property

▶▶ TFRS 2 Share-based Payment

▶▶ TFRS 3 (revised 2009) Business Combinations

▶▶ TFRS 5 (revised 2009) Non-current Assets Held for Sale and Discontinued Operations

▶▶ TFRS 6 Exploration for and Evaluation of Mineral Resources

▶▶ TFRIC 15 Agreements for the Construction of Real Estate

(b) Accounting standards that are effective for fiscal years beginning on or after 1 January 2013:

▶▶ TAS 12 Income Taxes

▶▶ TAS 20 (revised 2009) Accounting for Government Grants and Disclosure of Government Assistance

▶▶ TAS 21 (revised 2009) The Effects of Changes in Foreign Exchange Rates The management of the Bank and its subsidiaries believes that these accounting standards will not have any significant impact on the financial statements for the years when they are initially applied, except for the following accounting standards which management expects the significant impact on the financial statements for the years when they are adopted.

TAS 19 Employee Benefits This accounting standard requires employee benefits to be recognised as expense in the period in which the service is performed by the employee. In particular, an entity has to evaluate and make a provision for post-employee benefits using actuarial techniques. The Bank and its subsidiaries currently account for such employee benefits when they are incurred.

The change in this accounting policy in 2011 will have the effect of decreasing the retained earnings brought forward as at 1 January 2011 in the consolidated and separate financial statements by Baht 1,061 million and Baht 1,051 million, respectively.

TAS 12 Income Taxes This accounting standard requires an entity to identify temporary differences, which are differences between the carrying amount of an asset or liability in the accounting records and its tax base, and to recognise deferred tax assets and liabilities under the stipulated guidelines.

At present, the management is evaluating the impact on the financial statements for the year when this standard is adopted. TMB Bank PCL Financial Statements and Notes to Financial Statements | 131

4.S ignificant accounting policies 4.1 Revenue recognition Interest and dividend income The Bank and its subsidiaries recognise interest and discount received on loans as revenue on an accrual basis. In accordance with the Bank of Thailand’s regulation, interest in arrears for more than three months, regardless of whether the loans are covered by collateral, is not accrued but is instead recognised as revenue on a cash basis.

The Bank reverses accrued interest income on loans which interest has been recognised as revenue in arrears for more than three months, and loans classified as doubtful and doubtful of loss in accordance with the Bank of Thailand’s regulations.

Interest income on restructured loans is recognised as revenue on an accrual basis, with reference to the interest rate stipulated in the agreements, with the exception of interest on loans that are subject to monitoring for compliance with restructuring conditions, which the Bank recognises as revenue on a cash basis until the debtor is able to comply with the restructuring conditions for a period of no less than three months or three instalments, whichever is longer.

Interest on investment in debt securities is recognised as revenue in the statement of income based on the effective yield rates over the holding periods.

Dividend is recognised as revenue in the statement of income on the date that the Bank’s and its subsidiaries’ right to receive dividends is established.

Fees and service income Fees and service income are recognised as revenue when services are rendered.

4.2R ecognition of interest expense Interest expense are recognised in the statement of income on an accrual basis.

4.3C ash and cash equivalents Cash and cash equivalents include cash on hand and cash in the process of collection.

4.4S ecurities purchased under resale agreements/Securities sold under repurchase agreements The Bank enters into agreements to purchase securities or to sell securities that include agreements to sell or purchase the securities back at certain dates in the future at fixed prices. Amounts paid for securities purchased subject to a resale commitment are presented as assets under the caption of “Interbank and money market items - assets” or “Loans”, depending upon the type of its counterparty, in the balance sheets, and the underlying securities are treated as collateral to such receivables. Securities sold subject to repurchase commitments are presented as liabilities under the caption of “Interbank and money market items - liabilities” or “Borrowings”, depending upon the type of its counterparty, in the balance sheets, at the amounts received from the sale of those securities, and the underlying securities are treated as collateral.

The difference between the purchase and sale considerations is recognised as interest income or expenses, as the case may be, over the transaction periods. 132 | Financial Statements and Notes to Financial Statements Annual Report 2010

4.5I nvestments The Bank and its subsidiaries classify their investments in debt securities and marketable equity securities as trading securities, available-for-sale securities or held-to-maturity debt securities, and classify their investments in non-marketable equity securities as general investments or investments in subsidiaries or associated companies.

Investments in subsidiaries and associated companies Investments in subsidiaries and associated companies in the Bank’s separate financial statements are accounted for using the cost method (cost net of allowance for impairment on investments in subsidiaries and associated companies). Losses on impairment are charged to the statements of income.

Investments in associated companies in the consolidated financial statements are accounted for using the equity method. Investments are initially recorded at the acquisition cost and are adjusted to reflect the attributable share of profits or losses from the operations of the associated companies, in proportion to the investments and reduced by dividend received.

If the Bank and its subsidiaries receive shares as a result of debt restructuring of a borrower, which cause the Bank and its subsidiaries to hold more than 50 percent or 20 percent of the paid-up share capital of such company, the Bank and its subsidiaries will not treat that investee company as a subsidiary or an associated company, respectively, since they intend to hold such investment temporarily. Such investments are classified as general investments and stated at cost less allowance for impairment (if any).

The Bank and its subsidiaries do not treat investments in any mutual funds in which it holds more than 50% or 20% of the issued units of the fund as investments in a subsidiary or an associated company, respectively, because they do not have control over the financial and operating policies of these funds, which are independently managed by the fund managers in accordance with the details stipulated in the mutual fund prospectus and under the supervision of the Office of Securities and Exchange Commission.

Investments in debt and equity securities Debt securities and marketable equity securities held for trading are classified as trading securities and are stated at fair value. Change in the fair value of these securities are recorded as gains or losses in the income statement.

Debt securities, including rights to receive non-negotiable promissory notes avaled by the Financial Institution Development Fund (“FIDF”) on the transfer of non-performing assets to Thai Asset Management Corporation (“tamc”), that the Bank and its subsidiaries intend and are able to hold to maturity are stated at amortised cost less allowance for impairment (if any). The difference between the acquisition cost and redemption value of such debt securities is amortised using the effective interest rate method over the remaining period to maturity, counting from acquisition date or investment date.

Debt securities and marketable equity securities, other than those held for trading or held to maturity, are classified as available-for-sale securities and are stated at fair value, with any resultant gain or loss from revaluation being recognised directly in shareholders’ equity. The exceptions are impairment losses and gains or losses from investment reclassification, which are recognised in the statements of income. TMB Bank PCL Financial Statements and Notes to Financial Statements | 133

Non-marketable equity securities or investment in unit trust having the conditions of the return on the investments similar to debt securities, which are not classified as investments in subsidiaries or associated companies, are classified as general investments and are stated at cost less allowance for impairment (if any).

Fair value of securities The fair value of marketable equity securities held for trading and as available-for-sale is determined at the last bid price quoted on the last working day of the period.

Fair value of unit trust is determined using the net asset value announced on the balance sheet dates.

The fair value of investments in government sector debt securities is determined, using yield rate or price quoted on the Thai Bond Market Association (“TBMA”). The fair value of investments in other debt securities issued locally is determined based on market value appraised by the reliable institutions, their respective yields, or the TBMA’s yield rate adjusted by appropriate risk factors.

Disposal of investments On disposal of an investment, the difference between net disposal proceeds and the carrying amount, together with the associated cumulative gain or loss that was reported in shareholders’ equity, is recognised in the statement of income.

If the Bank and its subsidiaries dispose of part of their holding in a particular investment, the deemed cost of the part sold is determined using the weighted average method applied to the carrying value of the total holding of the investment.

4.6 Loans Loans (except overdrafts) are shown exclusive of accrued interest receivables. Unearned discounts received in advance on loans are shown as deductions from the loans.

Investments in receivables are investments in receivables of Phayathai Asset Management Company Limited (the Bank’s subsidiary), which are shown at cost, net of allowance for impairment and revaluation allowance for debt restructuring. The subsidiary’s accounting policies comply with the Bank of Thailand’s regulations. These procedures require that only investments in those receivables that have been restructured must be recorded as loans and accrued interest receivables at fair value as at the transfer date, to the extent that this does not exceed their book value. The fair value shall be based on the present value of the future collections according to the restructuring agreements and discounted by the discount rate that results in the present value of the future collections being equal to the book value of the investments in receivables. Differences between the net book value and the fair value at the transfer date are shown as a loss on debt restructuring in the statements of income.

4.7A llowance for doubtful debts Allowance for doubtful debts is determined based on the BOT’s criteria and regulations. The Bank and its subsidiaries provide allowance for doubtful debts based specifically on the nature of loans and relevant factors such as debtor’s payment ability, collateral, historical loss, estimated loss, debtor’s credit risk, and experience of management. 134 | Financial Statements and Notes to Financial Statements Annual Report 2010

For loans classified as ‘Pass’ and ‘Special mention’, the Bank provides allowance for doubtful debts based on the nature of loans and relevant factors such as historical loss, debtor’s credit risk, and experience of management. The allowance for doubtful debts on performing loans includes an allowance determined at the minimum percentage required by the BOT and an allowance in excess of such minimum regulatory requirement, which is set aside for losses incurred but not yet reported.

For loans classified as ‘sub-standard’, ‘doubtful’ and ‘doubtful of loss’, the Bank provides allowance for doubtful debts on each loan, taking into accounts the specific nature of the loans and relevant factors, such as debtor’s payment ability and collateral; at the rate of 100 percent of the excess of the book value of the outstanding debt and the present value of future cashflows expected to be collected from debtors or from the disposal of collateral in accordance with the BOT’s criteria. Where the Bank and its subsidiaries have a specific plan to manage its certain group of non-performing loans (“NPL”) such as NPL sale, they provide allowance for doubtful debts for those loans based on, for examples, estimated proceeds from such NPL sale and the rate of return expected by investors.

Any additional allowances for doubtful debts are charged to expense in each period. The Bank writes off bad debts against the allowance for doubtful debts for uncollectible amounts and bad debts recovered are credited to the allowance for doubtful debts.

4.8T roubled debt restructuring Foreclosed assets transferred as a result of troubled debt restructuring are recorded at the fair value of the assets net of estimated disposal expenses, to the extent that this does not exceed the book value of the debt plus non-booked interest to which the Bank is legally entitled. Where restructuring a loan involves modification of its terms, the present value of the future cash flows expected to be collected from those debtors is calculated by using discount rates equivalent to the market rates at the time of restructuring. The difference between the then-determined present value and the outstanding balances of loans and accrued interest receivables is recorded as a revaluation allowance on debt restructuring in the balance sheets. Such revaluation allowance is reviewed using the present value of the projected expected cash to be received over the remaining terms.

4.9 Properties foreclosed Properties foreclosed are stated at the lower of cost or net realisable value. Loss on impairment is recognised in statements of income. Gains or losses on disposal are recognised in statements of income when disposal is made.

Cost of properties foreclosed as a result of settlement from a debtor are stated at the lower of the appraised value or book value of the related debt for properties acquired from debt settlement before 2002, and at fair value less expected direct selling expenses for properties acquired from debt settlement after 2002, to the extent that this does not exceed the book value of the debts plus non-booked interest to which the Bank and its subsidiaries are legally entitled. Cost of properties foreclosed through a public auction process are the purchase price plus transfer costs and less expected direct selling expenses.

The Bank and its subsidiaries assess net realisable value taking into account the quality of the assets, which are classified into various grades based on attributes such as location, available utilities, and potential property usage, holding periods and market demand. In cases where each property has a high value, the recoverable value less direct selling expenses is assessed individually. The remainders of properties foreclosed are assessed on a portfolio basis categorised by quality of TMB Bank PCL Financial Statements and Notes to Financial Statements | 135

the assets and the holding periods, whereby the Bank and its subsidiaries group the assets according to their quality and holding period. The properties in each group are discounted by varying discount rates, determined based on their quality and holding period, historical data on disposals of properties foreclosed and market demand. Where the Bank and its subsidiaries have a specific plan to sell certain items or groups of properties foreclosed, they apply the present value of the expected cash to be received from disposal of those properties foreclosed less direct selling expenses.

4.10 Premises and equipment Land is stated at revalued amount less allowance for impairment (if any), buildings are stated at revalued amount less accumulated depreciation and allowance for impairment (if any) and equipment is stated at cost less accumulated depreciation and allowance for impairment (if any).

The Bank and its subsidiaries initially record land, buildings and equipment at their costs on the acquisition dates. They, thereafter, arrange to have the independent appraisers valued the land and buildings on a regular basis and record then at the revalued amount (Revalued amounts are determined by the independent valuer using the market approach for land and the depreciated replacement cost approach for buildings) such that the carrying values of such assets as at the balance sheet dates do not differ materially from their fair values.

The Bank recognises surplus/deficit arising as a result of revaluation of its assets as follows:

(a) When an asset’s carrying amount is increased as a result of the revaluation, the increase is credited directly to the equity under the heading of “Revaluation surplus on assets”. However, a revaluation increase will be recognised as revenue in statements of income to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense in statements of income.

(b) When an asset’s carrying amount is decreased as a result of the revaluation, the decrease is recognised as an expense. However, a revaluation decrease will be charged directly against the related “Revaluation surplus on assets” to the extent that the decrease does not exceed the amount held in the surplus on revaluation in respect of the same asset and the excess amount is recognised as an expense in statements of income.

Depreciation of buildings and equipment is calculated by reference to their cost or the revalued amount, on a straight line basis over the following estimated periods of useful lives. (Depreciation of fixed assets of overseas branches is computed at rates specified by the laws applicable in each locality at 20 – 25% of cost)

▶▶ Buildings 50 years

▶▶ Equipment 3 – 10 years

Depreciation is included in statements of income. No depreciation is determined for land and assets under construction and installation.

The revaluation surplus on assets, that are in use, is amortised, using the straight-line method, over the estimated remaining periods of those assets’ estimated useful lives, and directly credited to the retained earnings. The remaining of revaluation 136 | Financial Statements and Notes to Financial Statements Annual Report 2010

surplus on an item of land and buildings, that is retired or disposed of, is transferred directly to retained earnings when the asset is retired or disposed of.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on disposal of an asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement when the asset is derecognised.

4.11 Leasehold rights Leasehold rights are stated at cost less accumulated amortisation and are presented under the caption of “other assets”. Leasehold rights are amortised, using a straight-line method, over the lease periods, and the amortisation amounts are recognised as expenses in statements of income.

4.12I ntangible assets Goodwill Goodwill arising on the acquisition of an interest in a subsidiary represents the excess of the cost of the investment over the carrying amount of the net assets acquired at the date of acquisition. Goodwill is stated at cost less allowance for impairment (if any).

Other intangible assets Other intangible assets are carried at cost less accumulated amortisation and allowance for impairment (if any). Intangible assets with finite useful lives or with useful lives that can be estimated on a systematic basis are amortised over the periods of their economic benefit and are tested for impairment whenever there is an indication that the asset may be impaired. The amortisation periods and methods for such intangible assets are reviewed at least at each financial year-end. The amortisation amount and loss on impairment (if any) are recognised as expenses in the statements of income.

Other intangible assets are computer software, which are amortised over the estimated period of its economic benefit of 5 years. No amortisation is record for computer software under development.

4.13A llowance for impairment Impairment The carrying amounts of the Bank and its subsidiaries’ assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any such indication exists, the assets’ recoverable amounts are estimated.

Goodwill and other intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment annually and when indicators of impairment are identified earlier.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. The impairment loss is recognised in the statements of income unless it reverses a previous revaluation surplus on assets credited to equity, in which case an impairment loss on a revalued asset is recognised in equity to the extend that the impairment does not exceed the amount in the revaluation surplus for the same asset. TMB Bank PCL Financial Statements and Notes to Financial Statements | 137

When a decline in the fair value of an available-for-sale financial asset has been recognised directly in equity and there is objective evidence that the value of the asset is impaired, the cumulative loss that had been recognised directly in equity is recognised in the statements of income. The amount of impairment loss that is recognised in the statements of income is the difference between the acquisition cost and current fair value, less any impairment loss on that financial asset previously recognised in the statements of income.

Calculation of recoverable amount The recoverable amount of the Bank and its subsidiaries’ investments in held-to-maturity securities is calculated as the present value of estimated future cash flows, discounted at the original effective interest rate.

The recoverable amount of loans and receivables is calculated based on those discussed in Notes 4.6 to 4.8 to the financial statements.

The recoverable amount of available-for-sale financial assets is calculated by reference to their fair value.

The recoverable amount of non-financial assets is the greater of the assets’ net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate cash inflows largely independent of those from other assets, the recoverable amount is determined for the cash- generating unit to which the asset belongs.

Reversals of impairment An impairment loss in respect of a financial asset is reversed if the subsequent increase in recoverable amount can be related objectively to an event occurring after the impairment loss was recognised. For financial assets carried at amortised cost, available-for-sale financial assets, general investments and investments in subsidiaries and associated companies, the reversal is recognised in the statements of income.

An impairment loss in respect of goodwill is not reversed.

Impairment losses recognised in prior periods in respect of other non-financial assets are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount and will be reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of accumulated depreciation or amortisation, if no impairment loss had been recognised.

4.14 Provisions Provisions for contingent liabilities as a result of obligation having credit risk exposures The Bank provides provision for contingencies having credit risk exposures, such as loan guarantees, avals or commitments irrevocable by financial institutions, where accounts have been classified as substandard, doubtful, doubtful of loss and loss, for which the provision rate will be equal to the allowance rate for loans in that particular case, and the Bank provides provision for the expected loss on obligation according to letter of guarantee of which the Bank was claimed against. 138 | Financial Statements and Notes to Financial Statements Annual Report 2010

Provisions for liabilities - others Provisions are recognised when the Bank and its subsidiaries have a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect is material, provisions are determined by discounting the expected future cash outflows by a pre-tax discount rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

4.15 Derivatives Trading derivatives are initially and subsequently measured at fair value. Gains or losses on measurement are recognised as income or expenses in the statements of income. In case where there is active market, the Bank uses the market value as the fair value of derivatives and if there is no active market, the fair value is derived from valuations incorporating market data obtained from reliable sources. The market price or market data are mainly based on exchange-traded prices, broker/ dealer quotations, or counterparties quotations.

Derivatives entered into by the Bank for its banking book, and derivative contracts with interest components are recognised on an accrual basis, in the same manner as the hedged assets and liabilities. That is, the interest income or interest expense is recognised in the statements of income over the term of the contracts. Derivative contracts with foreign exchange components are recognised based on exchange rate at the end of the period. Unrealised gain or loss on exchange rate is recognised in the statement of income and the difference between the forward rate and the spot rate at the contract date is recognised as income or an expense using the straight-line basis over the contract periods.

4.16T ranslation of foreign currencies Transactions in foreign currencies are translated to Thai Baht at the buying and selling rates specified by the Bank when the transactions occur.

Monetary assets and liabilities denominated in foreign currencies outstanding on the balance sheet dates are translated into Thai Baht at the reference rates announced by the Bank of Thailand at those dates. Foreign exchange differences arising on translation are recognised in the statements of income.

The financial statements of overseas branches are translated at the reference rates announced by the Bank of Thailand at the period-end dates. Foreign exchange differences arising on translation are recognised as a separate component in the shareholders’ equity until disposal of the investments, except for the Cayman Islands Branch, for which the foreign exchange differences arising on translation are included in the statements of income.

4.17E mployee benefits Salary, wages, bonuses, and contributions to the social security fund and provident fund are recognised as expenses on an accrual basis. TMB Bank PCL Financial Statements and Notes to Financial Statements | 139

4.18S hare-based payment transactions The cost of the TMB Performance Share Bonus 2010 Project (“Share-based payment plan”) is recognised as employees render services. The cost of the share-based payment plan is measured by reference to the fair value of the issued shares on the grant date. The fair value is determined by using the last bid price quoted on the Stock Exchange of Thailand.

The cost of the share-based payment plan is recognised in the statements of income together with a corresponding increase in “other capital reserve-share-based payment” in shareholders’ equity over the periods in which the performance and/or service conditions are fulfilled. The cumulative expense recognised for the share-based payment plan at each reporting date until the vesting date and the Bank’s management best estimate of number of equity instruments that will ultimately vest. The expense or reversal of expense for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

4.19I ncome tax Income tax is provided in the accounts based on the taxable profits determined in accordance with tax legislation.

4.20R elated party transactions Related parties comprise enterprises and individuals that control, or are controlled by, the Bank and its subsidiaries, whether directly or indirectly, or which are under common control with the Bank and its subsidiaries.

They also include associated companies and individuals which directly or indirectly own a voting interest in the Bank and its subsidiaries that gives them significant influence over the Bank and its subsidiaries, key management personnel, directors and officers with authority in the planning and direction of the Bank’s and its subsidiaries’ operations, together with close family members of such persons and companies which are controlled or influenced by them, whether directly or indirectly.

5.S ignificant accounting judgments and estimates The preparation of financial statements in conformity with generally accepted accounting principles at times requires management to make subjective judgments and estimates regarding matters that are inherently uncertain. These judgments and estimates affect reported amounts and disclosures and actual results could differ. Significant accounting judgments and estimates are as follow:

5.1 Fair value of financial instruments In determining the fair value of financial instruments that are not freely traded in an open market or for which quoted market prices are not readily available, the management exercises judgment in estimating the fair value of such financial instruments, using the generally accepted valuation method. The inputs used in such fair value calculation are comparable to those from the observable markets, taking into consideration of liquidity and correlation and long-term volatility of financial instruments.

5.2A llowance for doubtful debts on loans and accrued interest receivables Allowances for doubtful debts on loans and accrued interest receivables are intended to adjust the value of loans and receivables for probable credit losses. The management follows the BOT’s guidelines regarding the provision of allowance for doubtful debts, including the use of judgment to estimate losses expected to be incurred on loans and/or accrued interest receivables, taking into consideration an analysis of each debtor’s status, payment history, collection experience 140 | Financial Statements and Notes to Financial Statements Annual Report 2010

from the debtor, the value of collateral and surrounding economic conditions. However, the use of different estimates and assumptions could affect the amounts of allowances for doubtful debts and adjustments to the allowances may therefore be required in the future.

5.3A llowance for impairment on investments The Bank and its subsidiaries consider that investments are impaired when the management exercises judgment that there has been a significant and prolonged decline in the fair value below their cost or an indicator of impairment. The determination of what is “significant” or “prolonged” or “indicator of impairment” requires judgment.

5.4A llowance for impairment on properties foreclosed The Bank and its subsidiaries consider allowance for impairment of properties foreclosed when net realisable value is below book value. The management uses judgment to estimate impairment loss, taking into consideration the latest appraisal values, the types, the characteristics of the assets and disposal plans for properties foreclosed. However, the use of different estimates and assumptions could affect the amounts of allowance for impairment and adjustments to the allowances may therefore be required in the future.

5.5 Premises and equipment/Depreciation In determining depreciation of buildings and equipment, the management is required to estimate the useful lives and salvage values of the Bank’s buildings and equipment and to review estimated useful lives and salvage values whenever circumstances change.

The Bank measures land and buildings at revalued amounts. Such amounts are determined by the independent valuer using the market approach for land and the depreciated replacement cost approach for buildings. The valuation involves certain assumptions and estimates.

In addition, the management is required to review premises and equipment for impairment on a periodical basis and record impairment losses in the period when it is determined that their recoverable amounts are lower than the carrying amounts. This requires judgments regarding forecast of future revenues and expenses relating to the assets subject to the review.

5.6R ecognition and derecognition of assets and liabilities In considering whether to recognise or derecognise assets and liabilities, the management is required to make judgment on whether significant risk and rewards have been transferred. Although management uses their best judgment and knowledge of current events in making assessments of risk and rewards, actual risks and rewards may ultimately differ.

5.7C laims, litigation and the transfer of non-performing assets The Bank and its subsidiaries have contingent liabilities as a result of (a) claims, (b) litigation cases being made against them and (c) loss sharing from the transfer of non-performing assets. The determination of the provisions on the balance sheet requires the use of various assumptions and judgments by the management. However, actual outcomes could differ from the estimates. TMB Bank PCL Financial Statements and Notes to Financial Statements | 141

6.S ale of non-performing assets to Thai Asset Management Corporation (“TAMC”) In accordance with the conditions of the Emergency Decree on the Thai Asset Management Corporation B.E. 2544, the Bank and a subsidiary entered into the Asset Transfer Agreements with TAMC in 2001 for sales of non-performing assets to TAMC and the Bank and its subsidiary (as the transferors) had received promissory notes from TAMC (as the transferee) for settlement of the transfer prices. Under the agreements, TAMC and the transferors are jointly responsible for sharing the profits or losses from TAMC’s management of the non-performing assets, in accordance with the following conditions as specified in the agreements, at the end of the fifth year and the tenth year commencing 1 July 2001.

▶▶ In the case of losses, the transferor will be responsible for the first portion of losses, not exceeding 20% of the transfer price. The second portion of losses, not exceeding 20% of the transfer price, will be equally shared between TAMC and the transferor. The remaining losses will be absorbed by TAMC.

▶▶ In case of profits, the first portion of profits, not exceeding 20% of the transfer price, will be equally shared between TAMC and the transferor. Should there be any profits remaining, the transferor is entitled to the remaining profits up to an amount of not exceeding the book value of non-performing assets after deducting the transfer price and the transferors’ share in the first portion of the profits.

In 2006, TAMC informed the Bank and its subsidiary of preliminary profit/loss sharing information as at the end of the fifth year whereby the Bank and its subsidiary incurred loss of Baht 730 million from such asset management. In addition, in November 2006 the Bank had been informed by TAMC that TAMC requested for the transfer price adjustment of Baht 4,341 million, being the collateral value of the pledged machinery transferred to TAMC. The Bank denied such adjustment since it breached the condition in the Asset Transfer Agreements dated 12 October 2001. Therefore, such request could not be valid and the Bank has already taken legal action against TAMC. Later on 27 April 2010, the court of first instance judged in favor of the Bank. The case is in the process of being reconsidered by the Appeals Court.

As at 31 December 2010 and 2009, the Bank and its subsidiary have estimated its share of contingent losses arising from such non-performing assets transferred to TAMC at the amount of Baht 6,235 million and Baht 6,178 million, respectively (the Bank only: Baht 6,205 million and Baht 6,140 million, respectively), with the following significant details.

▶▶ As at 31 December 2010 and 2009, the Bank and its subsidiary have estimated the present value of expected loss sharing from TAMC as at the end of the tenth year at the amount of Baht 1,618 million and Baht 1,561 million, respectively (the Bank only: Baht 1,588 million and Baht 1,523 million, respectively), taking into accounts the report from TAMC on the asset management performance and other historical information related to non-performing loan management of the Bank. The discount rate used to determine the present value of expected future loss is equal to the rate of return on assets or financial instruments having similar risks.

▶▶ As at 31 December 2010 and 2009, the Bank has estimated contingent loss of Baht 4,617 million (included accrued interest receivable of Baht 276 million) as a result of the transferred price adjustment request on non-performing loans having machinery pledged as collateral. 142 | Financial Statements and Notes to Financial Statements Annual Report 2010

▶▶ For the years ended 31 December 2010 and 2009, the Bank amortised the present value of expected loss sharing from TAMC of Baht 65 million and Baht 12 million, respectively to be recognised as an interest expense in the statements of income.

7. pHayathai Asset Management Company Limited Phayathai Asset Management Company Limited (“PAMC” or “the subsidiary”) was registered with the Ministry of Commerce on 9 August 2000 and registered with the Bank of Thailand to operate as an asset management company on 1 September 2000. The Bank holds approximately 100% of the paid-up share capital of the subsidiary.

Under conditions of the asset transferring, the Bank (as the transferor) delivers the documents relating to these assets to the subsidiary (as the transferee) within 30 days from the transfer date (the date stated in the contract to transfer non-performing assets), except that the counterparties agree to extend the delivery period. The transferor or transferee has the rights to revise the transfer prices of such assets within 180 days from the transfer date.

As at 31 December 2010 and 2009, the Bank still has obligations to transfer the mortgage right of collaterals of such transferred assets.

7.1T he sale of assets by PAMC to Bangkok Commercial Asset Management Company Limited 7.1.1 Transferring of non-performing assets and the adjustment of transfer prices On 3 September 2003, PAMC signed an Asset Sale Agreement with Bangkok Commercial Asset Management Company Limited (“BAM”) with the effective date of the asset transfer on 30 September 2003. The transfer of the assets and their underlying securities was arranged under the provisions of the Emergency Decree on the Asset Management Company B.E. 2541 whereby transfer prices were determined in accordance with agreement between the subsidiary and BAM.

On the transfer date, BAM settled the transfer prices to the subsidiary the total value of the assets in the form of a negotiable promissory notes of Baht 19,533 million dated 30 September 2003, which comprised the transfer price of the non-performing loans (“the first and second asset groups”) of Baht 16,634 million and the transfer price of the properties foreclosed (“the third asset group”) of Baht 2,899 million. The promissory note will be matured on 30 September 2015 and carries interest at a rate equivalent to the weighted average interest rates for all types of only Thai Baht deposits of the 5 largest local commercial banks. The first interest payment will be due on the 6th anniversary of the issuing date of promissory note while subsequent payments will be on an annual basis after the first payment until the maturity date. However, PAMC is not allowed to endorse to transfer the note to any party except that the endorsement is made to TMB Bank Public Company Limited, the Bank of Thailand or the Financial Institutions Development Fund. In case of BAM’s decision to go into liquidation before the promissory note’s maturity date, BAM is required to transfer the rights and obligatory commitments over the promissory note to another juristic person as consented to by PAMC.

Both PAMC and BAM have the right to call for an adjustment to the prices of the transferred assets within 180 days from the transfer date. The price adjustment, if in effect, could be done by issuing an additional promissory note by PAMC or by BAM as the case may be. TMB Bank PCL Financial Statements and Notes to Financial Statements | 143

Regarding the transferring of non-performing assets to BAM since 30 September 2003 to the end of year 2005, PAMC had transferred its investments in receivables, loans and receivables (both secured and unsecured), properties foreclosed and related assets to BAM for the total transfer price of Baht 19,712 million (Baht 179 million in addition to those have been transferred on the transfer date). PAMC had been settled for those transferred assets from BAM in the form of a negotiable promissory note and PAMC endorsed the said promissory note to the Bank in settlement of a long-term loan granted by the Bank to PAMC.

Until the end of 2005, PAMC and BAM had agreed a total adjustment of Baht 1,011 million to the transfer price and accepted back certain non-performing loans and properties foreclosed previously transferred due to various reasons. PAMC issued a promissory note of Baht 1,011 million to BAM in respect of the agreed adjusted price and accepted the transfer of such assets back. Currently, PAMC is waiting to issue a promissory note of Baht 4 million to BAM, which is the difference arising from the sale of properties foreclosed in 2003. PAMC has recognised interest expenses on the promissory notes issued to BAM for the years ended 31 December 2010 and 2009 amounting Baht 7 million and Baht 9 million, respectively, as interest expenses in the statements of income.

In the year 2006, PAMC and BAM had a meeting memorandum regarding the calculation of loss claimed by BAM according to Asset Sale Agreement and PAMC has to pay for such claim whereby both parties agree to settle the loss claims at the end of sixth year or the twelfth year by offsetting the loss claim amount with cash payment by BAM on the promissory notes as specified in Asset Sale Agreement dated 3 September 2003.

7.1.2 Computation of profit or loss sharing from transferring of non-performing assets to BAM Computation of profit or loss from asset management is determined, only on the debts that are fully settled, for the value of assets collected and accumulated on a cash basis until the computation date, deducted by the transfer price and administrative expenses on each transferred asset, including interest expense on the promissory note. At the end of the sixth year and the twelfth year from the transfer date, profit or loss from the management of assets under the agreement must be shared between BAM and PAMC. In case of debt settlement done through asset transfer, recognition of profit or loss only occurs after the asset is successfully disposed off to clear the debt.

An agreement was made between PAMC and BAM that sharing of profit or loss would be computed only for the first and second asset groups at the end of the sixth year and the twelfth year after the transfer date.

In case there is a profit from the management of both the first and second asset groups, the first portion of not more than 20% of the transfer prices will be shared equally at a ratio of 1:1 between PAMC and BAM and the rest of the profit will be taken by PAMC. However, this portion must not be greater than the margin between the book value and the transfer prices. However, the rest of the profit, if any remained in excess of such margin, will be taken by BAM.

In case there is a loss from the management of the first asset group, PAMC will absorb the loss of the first 20%. The next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAM. The rest of the loss will be absorbed in full by BAM. 144 | Financial Statements and Notes to Financial Statements Annual Report 2010

In case there is a loss from the management of the second asset group;

(a) if there was no discount on the transfer prices, PAMC will absorb loss of the first 30% while the next 20% of loss will be shared equally at a ratio of 1:1 between PAMC and BAM. The rest of the loss will be absorbed in full by BAM.

(b) if there was a 5% discount on the transfer prices, PAMC will absorb loss of the first 25% while the next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAM. The rest of the loss will be absorbed in full by BAM.

(c) if there was a 10% discount on the transfer prices, PAMC will absorb loss of the first 20% while the next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAM. The rest of the loss will be absorbed in full by BAM.

(d) if there was a 15% discount on the transfer prices, PAMC will absorb loss of the first 20% while the next 20% of the loss will be shared equally at a ratio of 1:1 between PAMC and BAM. The rest of the loss will be absorbed in full by BAM.

7.1.3 Provision for obligation on transfers of non-performing assets As at 31 December 2010, PAMC has no provision for obligation on transfers of non-performing assets since PAMC agreed to settle loss with BAM prior to the date specified in the Asset Sale Agreement as discussed in Note 7.1.4 to the financial statements and as at 31 December 2009, PAMC estimated the present value of expected loss sharing from BAM as at the end of the twelfth year at the amount of Baht 3,586 million, taking into consideration the asset management report from BAM and other historical information related to non-performing asset management of the Bank. The discount rate used to calculate the present value of expected future loss is equal to the rate of return on assets or financial instruments having similar risks. From the estimate of loss sharing, PAMC recorded cash receipts of Baht 74 million in preliminary profit sharing from BAM at the end of the sixth year in addition to provisions for obligation on transfers of non-performing assets.

For the years ended 31 December 2010 and 2009, PAMC recognised increases in provisions for obligation on transfers of non-performing assets of Baht 190 million and Baht 196 million, respectively, as interest expenses in the statements of income.

7.1.4 Memorandum on profit or loss sharing from transferring of non-performing assets to BAM prior to the end of twelveth year On 28 December 2010, PAMC and BAM entered into a memorandum of understanding on profit or loss sharing prior to the end of the twelfth year from the date specified in the Asset Sale Agreement. PAMC agreed to settle loss of Baht 3,020 million and promissory notes of Baht 1,011 million to BAM in respect of the price adjustment and the transfer back of certain assets as discussed in Note 7.1.2 to the financial statements. Such amounts were offset with promissory notes of Baht 19,712 million issued by BAM to PAMC. BAM thus issued a new promissory note of Baht 15,681 million to PAMC, with the same remaining maturity period, interest payment conditions and interest rate as the previous notes. On 28 December 2010, PAMC endorsed the promissory note to the Bank in settlement of a long-term loan granted by the Bank to PAMC. As a result of such memorandum, the profit or loss sharing between PAMC and BAM as specified in the Asset Sale Agreement dated 3 September 2003 was nullified. Hence, PAMC reversed the outstanding balance of provision for obligation on transfer of non-performing assets amounting to Baht 830 million in the statement of income. TMB Bank PCL Financial Statements and Notes to Financial Statements | 145

7.2 Debt restructuring agreement between the Bank and PAMC On 28 December 2010, the Bank entered into a debt restructuring agreement with PAMC to give a debt hair-cut on a long-term loan of Baht 4,031 million to the subsidiary due to changes made to the conditions relating to the transfer of non-performing assets between PAMC and BAM as discussed in Note 7.1.4 to the financial statements. The Bank recorded loss on debt forgiveness of Baht 4,031 million in the statements of income under the caption of “Gains (losses) on investments in subsidiaries”.

8.I nterbank and money market items (assets)

(Unit: Million Baht)

Consolidated financial statements

31 December 2010 31 December 2009 At call Term Total At call Term Total Domestic Bank of Thailand and Financial Institutions Development Fund 4,116 4,400 8,516 2,852 7,800 10,652 Commercial banks 34 36,683 36,717 35 32,071 32,106 Other banks - 30,571 30,571 - 19,260 19,260 Finance, finance and securities, securities, credit foncier companies - 356 356 --- Other financial institutions 35 5,040 5,075 31 208 239 Total domestic items 4,185 77,050 81,235 2,918 59,339 62,257 Add: Accrued interest receivables - 89 89 - 182 182 Less: Allowance for doubtful debts - (55) (55) - (397) (397) Domestic items — net 4,185 77,084 81,269 2,918 59,124 62,042

Foreign US Dollars 1,142 1,326 2,468 2,651 1,178 3,829 Yen 111 - 111 282 - 282 Other currencies 744 40 784 414 48 462 Total foreign items 1,997 1,366 3,363 3,347 1,226 4,573 Less: Allowance for doubtful debts - (7) (7) --- Foreign items — net 1,997 1,359 3,356 3,347 1,226 4,573 Domestic and foreign items — net 6,182 78,443 84,625 6,265 60,350 66,615 146 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht) Separate financial statements

31 December 2010 31 December 2009 At call Term Total At call Term Total Domestic Bank of Thailand and Financial Institutions Development Fund 4,116 4,400 8,516 2,852 7,800 10,652 Commercial banks 34 36,537 36,571 34 31,902 31,936 Other banks - 30,523 30,523 - 19,260 19,260 Finance, finance and securities, securities, credit foncier companies - 356 356 --- Other financial institutions 35 5,040 5,075 31 208 239 Total domestic items 4,185 76,856 81,041 2,917 59,170 62,087 Add: Accrued interest receivables - 89 89 - 182 182 Less: Allowance for doubtful debts - (55) (55) - (397) (397) Domestic items — net 4,185 76,890 81,075 2,917 58,955 61,872

Foreign US Dollars 1,142 1,326 2,468 2,651 1,178 3,829 Yen 111 - 111 282 - 282 Other currencies 744 40 784 414 48 462 Total foreign items 1,997 1,366 3,363 3,347 1,226 4,573 Less: Allowance for doubtful debts - (7) (7) --- Foreign items — net 1,997 1,359 3,356 3,347 1,226 4,573 Domestic and foreign items — net 6,182 78,249 84,431 6,264 60,181 66,445 TMB Bank PCL Financial Statements and Notes to Financial Statements | 147

9.I nvestments 9.1 Classified by investment type (Unit: Million Baht) Consolidated financial statements 31 December 2010 31 December 2009 Cost value / Cost value / book value Fair value book value Fair value Short-term investments Trading securities Government and state enterprise securities 1,866 1,866 1,804 1,803 Less: Allowance for revaluation - - (1) - Trading securities — net 1,866 1,866 1,803 1,803 Available-for-sale securities Government and state enterprise securities 41,286 41,283 35,747 35,760 Private sector debt securities 50 - 50 - Domestic marketable equity securities 161 162 - - Total 41,497 41,445 35,797 35,760 Add(less): Allowance for revaluation (2) - 13 - Less: Allowance for impairment (50) - (50) - Available-for-sale securities — net 41,445 41,445 35,760 35,760 Held-to-maturity debt securities Government and state enterprise securities 2,938 21,802 Total held-to-maturity debt securities 2,938 21,802 Short-term investments — net 46,249 59,365

Long-term investments Available-for-sale securities Government and state enterprise securities 14,318 14,318 7,738 7,756 Domestic marketable equity securities 309 278 342 264 Total 14,627 14,596 8,080 8,020 Add: Allowance for revaluation 64 - 40 - Less: Allowance for impairment (95) - (100) - Available-for-sale securities — net 14,596 14,596 8,020 8,020 Held-to-maturity debt securities Government and state enterprise securities 31,894 12,188 Total held-to-maturity debt securities 31,894 12,188 General investments Non-marketable equity securities Domestic 2,712 3,266 Foreign 32 32 Total 2,744 3,298 Less: Allowance for impairment (945) (1,148) General investments — net 1,799 2,150 Long-term investments — net 48,289 22,358 148 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht) Separate financial statements 31 December 2010 31 December 2009 Cost value / Cost value / book value Fair value book value Fair value Short-term investments Trading securities Government and state enterprise securities 1,866 1,866 1,804 1,803 Less: Allowance for revaluation - - (1) - Trading securities — net 1,866 1,866 1,803 1,803 Available-for-sale securities Government and state enterprise securities 41,286 41,283 35,747 35,760 Private sector debt securities 50 - 50 - Total 41,336 41,283 35,797 35,760 Add(less): Allowance for revaluation (3) - 13 - Less: Allowance for impairment (50) - (50) - Available-for-sale securities — net 41,283 41,283 35,760 35,760 Held-to-maturity debt securities Government and state enterprise securities 2,796 21,802 Total held-to-maturity debt securities 2,796 21,802 Short-term investments — net 45,945 59,365

Long-term investments Available-for-sale securities Government and state enterprise securities 14,318 14,318 7,738 7,756 Domestic marketable equity securities 309 278 330 248 Total 14,627 14,596 8,068 8,004 Add: Allowance for revaluation 64 - 31 - Less: Allowance for impairment (95) - (95) - Available-for-sale securities — net 14,596 14,596 8,004 8,004 Held-to-maturity debt securities Government and state enterprise securities 31,405 11,540 Total held-to-maturity debt securities 31,405 11,540 General investments Non-marketable equity securities Domestic 2,711 3,266 Foreign 32 32 Total 2,743 3,298 Less: Allowance for impairment (945) (1,148) General investments — net 1,798 2,150 Long-term investments — net 47,799 21,694 TMB Bank PCL Financial Statements and Notes to Financial Statements | 149

As at 31 December 2010 and 2009, the Bank and its subsidiary have non-transferable promissory notes of Baht 8,495 million and Baht 8,869 million, respectively (the Bank only: Baht 7,864 million and Baht 8,221 million, respectively) avaled by the Financial Institutions Development Fund, which were received by the Bank and its subsidiary from Thai Asset Management Corporation (“TAMC”) for transfer price settlement. The Bank and its subsidiary classified them as held-to-maturity debt securities. The notes are due during 2011 to 2015 and bear an interest rate at the average rate of deposit rates announced by the 5 major Thai banks and the interest is payable on the last working day of each year.

As at 31 December 2010 and 2009, the Bank has pledged its government securities as collateral, having the face value of Baht 29 million and Baht 11 million, respectively.

As at 31 December 2010, the Bank has pledged its securities as collateral for repurchase agreements, having the face value of Baht 10,749 million (31 December 2009: Nil).

9.2C lassified by remaining periods to maturity of debt securities As at 31 December 2010 and 2009, the Bank and its subsidiaries have investments in debt securities, except for those held for trading, which can be classified by remaining periods to maturity dates as follows:

(Unit: Million Baht)

Consolidated financial statements

31 December 2010 31 December 2009 Remaining periods Remaining periods Over 5 Over 5 1 year 1 – 5 years years Total 1 year 1 – 5 years years Total Available-for-sale securities Government and state enterprise securities 41,286 14,318 - 55,604 35,747 7,738 - 43,485 Private sector debt securities 50 - - 50 50 - - 50 Total 41,336 14,318 - 55,654 35,797 7,738 - 43,535 Add(less): Allowance for revaluation (3) - - (3) 13 18 - 31 Less: Allowance for impairment (50) - - (50) (50) - - (50) Available-for-sale securities — net 41,283 14,318 - 55,601 35,760 7,756 - 43,516 Held-to-maturity debt securities Government and state enterprise securities 2,938 20,185 11,709 34,832 21,802 8,854 3,334 33,990 Total held-to-maturity debt securities 2,938 20,185 11,709 34,832 21,802 8,854 3,334 33,990 Total debt securities 44,221 34,503 11,709 90,433 57,562 16,610 3,334 77,506 150 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht)

Separate financial statements

31 December 2010 31 December 2009 Remaining periods Remaining periods

Over 5 Over 5 1 year 1 – 5 years years Total 1 year 1 – 5 years years Total

Available-for-sale securities Government and state enterprise securities 41,286 14,318 - 55,604 35,747 7,738 - 43,485 Private sector debt securities 50 - - 50 50 - - 50 Total 41,336 14,318 - 55,654 35,797 7,738 - 43,535 Add(less): Allowance for revaluation (3) - - (3) 13 18 - 31 Less: Allowance for impairment (50) - - (50) (50) - - (50) Available-for-sale securities — net 41,283 14,318 - 55,601 35,760 7,756 - 43,516 Held-to-maturity debt securities Government and state enterprise securities 2,796 19,696 11,709 34,201 21,802 8,206 3,334 33,342 Total held-to-maturity debt securities 2,796 19,696 11,709 34,201 21,802 8,206 3,334 33,342 Total debt securities 44,079 34,014 11,709 89,802 57,562 15,962 3,334 76,858

9.3I nvestments in entities in which the Bank and its subsidiaries hold more than 10% As at 31 December 2010 and 2009, the Bank had investments in entities in which the Bank holds 10% or more of the paid-up share capital of the investee companies but such companies are not treated as its subsidiaries and associated companies. Those investments were summarised below.

(Unit: Million Baht)

Consolidated and separate financial statements

31 December 2010 31 December 2009

Property development and construction 34 34 Public utilities and services 45 45 Mutual funds and financial services 1,091 1,290 Others 11 11 Total 1,181 1,380 Less: Allowance for impairment (41) (45) Investments — net 1,140 1,335 TMB Bank PCL Financial Statements and Notes to Financial Statements | 151

9.4I nvestments in companies having problems relating to financial position and operating results As at 31 December 2010 and 2009, the Bank had the following investments in listed companies which meet criteria for delisting from the Stock Exchange of Thailand (“SET”), default debt securities, or companies whose ability to continue as a going concern is uncertain, or unlisted companies whose financial position and operating results are similar to the listed companies which meet criteria for delisting from the SET:

(Unit: Million Baht)

Consolidated and separate financial statements

31 December 2010 31 December 2009 Cost value / Allowance for Cost value / Allowance for Fair value Fair value book value impairment book value impairment

1. Listed companies under delisting conditions/ defaulted debt securities 62 - (62) 62 - (62) 2. Companies whose ability to continue as a going concern is uncertain, or unlisted companies whose financial position and operating results are similar to the listed companies which meet criteria for delisting from the SET 1,480 547 (933) 1,576 439 (1,137) Total 1,542 547 (995) 1,638 439 (1,199)

9.5R evaluation surplus on investments As at 31 December 2010 and 2009, revaluation surplus on investments can be summarised as follows:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009

Revaluation surplus on investments: Debt securities 19 39 19 39 Equity securities 68 28 67 20 Total 87 67 86 59

Revaluation deficit on investments: Debt securities (18) (3) (18) (3) Equity securities (3) (6) (3) (6) Total (21) (9) (21) (9) Revaluation surplus on investments – net 66 58 65 50 152 | Financial Statements and Notes to Financial Statements Annual Report 2010

9.6G ains (losses) on investments Gains (losses) on investments, excluding on investments in subsidiaries which have been shown in Note 9.7, for years ended 31 December 2010 and 2009 consisted of the followings:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

For the years ended 31 December For the years ended 31 December 2010 2009 2010 2009

Gains on sales of investments Trading securities 69 85 69 85 Available-for-sale securities 12 775 - 775 General investments 157 287 157 286 Investments in associates - 1 8 18 Total gains on sales of investments 238 1,148 234 1,164 Losses on sales of investments Trading securities (56) (130) (56) (130) Available-for-sale securities - (92) - (92) General investments - (1) - (1) Investment in associates (11) (1) - - Total losses on sales of investments (67) (224) (56) (223) Losses from revaluation - (7) - (7) Losses on impairment (14) (903) (226) (903) Gains (losses) on investments 157 14 (48) 31

9.7G ains (losses) on investments in subsidiaries Gains (losses) on investments in subsidiaries for years ended 31 December 2010 and 2009 consisted of the followings:

(Unit: Million Baht)

Separate financial statements

For the years ended 31 December 2010 2009

Loss on investment - (921) Loss on debt restructuring with a subsidiary company (Note 7.2) (4,031) - Reversal of allowance for impairment 4,171 - Gains (losses) on investments in subsidiaries 140 (921)

At the balance sheet date, the management of the Bank has considered that PAMC has an improved financial position and will be able to increase its profitability after settlement of losses from transferring non-performing assets to BAM, which is an indication for reversal of impairment. Hence, the Bank reversed allowance for impairment on investment in PAMC in the statements of income for the year ended 31 December 2010. TMB Bank PCL Financial Statements and Notes to Financial Statements | 153

10.I nvestments in subsidiaries and associated companies

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

For the years ended 31 December For the years ended 31 December 2010 2009 2010 2009

(Restated) Balance — beginning of the year 471 927 605 998 Share of profit under equity method for the year 36 95 - - Investments during the year - 34 - 34 Dividend income for the year (282) (140) - - Reversal of allowance for impairment - - 1,835 - Disposals/return of capital for the year (225) (445) (417) (427) Balance — end of the year - 471 2,023 605

In September 2010, the Bank sold its investment in Thai ORIX Leasing Co., Ltd. at Baht 214 million, which approximates its carrying value.

On 31 August 2009, Phayathai Property Fund was liquidated and the Bank received a capital return of Baht 197 million, which approximates its carrying value.

On 5 November 2009, The Thai Business Fund 2 was liquidated and the Bank received a capital return of Baht 182 million, which approximates its carrying value.

Investments in subsidiaries and associated companies as at 31 December 2010 and 2009, and share of profits from investments in associated companies and dividend income for the years ended 31 December 2010 and 2009 were as follows:

(Unit: Million Baht)

Consolidated financial statements

Shares of profits from investments Percentage of Paid-up Investment value − Investment value − in associated shareholding share capital cost method equity method companies as at as at as at as at for the years ended 31 December 31 December 31 December 31 December 31 December 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 (%) (%) (restated) (restated) Associated companies Thai ORIX Leasing Co., Ltd. - 45.96 - 375 - 417 - 471 36 33 Metro Designee Co., Ltd. 30.00 30.00 ------The Thai Business Fund 2 ------10 Phayathai Property Fund ------52 Investments in associated companies — net - 417 - 471 36 95 154 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht) Separate financial statements

Percentage of Paid-up share Cost Allowance for Investment value − Dividend income shareholding as at capital as at as at impairment as at cost method as at for the years ended 31 December 31 December 31 December 31 December 31 December 31 December 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 (%) (%)

Subsidiaries Phayathai Asset Management Co., Ltd. 100.00 100.00 1,070 1,070 3,870 3,870 (2,035) (3,870) 1,835 - - - Designee for ETA Contract Ltd. 99.40 99.40 ------TMB Asset Management Co., Ltd. 75.00 75.00 100 100 188 188 - - 188 188 - 109 Investments in subsidiaries— net 4,058 4,058 (2,035) (3,870) 2,023 188 - 109

Associated companies Thai ORIX Leasing Co., Ltd. - 45.96 - 375 - 417 - - - 417 282 78 Metro Designee Co., Ltd. 30.00 30.00 ------The Thai Business Fund 2 ------10 Phayathai Property Fund ------52 Investments in associated companies — net - 417 - - - 417 282 140 Investments in subsidiaries and associated companies — net 4,058 4,475 (2,035) (3,870) 2,023 605 282 249

The summarised financial information of the associated companies, which were extracted from the management accounts of those associated companies, is shown below. Such information is not adjusted to reflect the proportionate shares held by the Bank.

(Unit: Million Baht) 31 December 2010 31 December 2009 Percentage of Total Total Percentage of Total Total shareholding assets liabilities shareholding assets liabilities (%) (%) Thai ORIX Leasing Co., Ltd. - - - 45.96 3,693 2,667 Metro Designee Co., Ltd. 30.00 - - 30.00 - -

(Unit: Million Baht)

For the years ended 31 December

2010 2009 Total revenues Net income Total revenues Net income Thai ORIX Leasing Co., Ltd. 182 80 329 82 Metro Designee Co., Ltd. - - - - The Thai Business Fund 2 - - 1,075 939 Phayathai Property Fund - - 231 171 TMB Bank PCL Financial Statements and Notes to Financial Statements | 155

The statements of cash flows for the years ended 31 December 2010 and 2009 of Phayathai Asset Management Company Limited, the Bank’s subsidiary, which was extracted from the management accounts of that company, are disclosed herein in accordance with the Bank of Thailand’s requirement.

(Unit: Million Baht) For the years ended 31 December 2010 2009 Cash flows from operating activities Earnings (losses) before income tax 4,140 (910) Adjustments to reconcile earnings (losses) before income tax to net cash provided by (paid from) operating activities Bad debts and doubtful accounts (reversal) 148 (34) Losses on impairment of investments in receivables (reversal) 457 (51) Losses on debt restructuring - 7 Losses on impairment for properties foreclosed and other assets 131 820 Reversal of provisions for obligation on transfers of non-performing assets (839) (1) Provisions for other liabilities (reversal) 19 (5) Gain on debt forgiveness from the parent company (4,031) - Others (7) (2) Income (losses) from operating activities before changes in operating assets and liabilities 18 (176) (Increase) decrease in operating assets Investments in receivables (693) 45 Loans and receivables 382 216 Properties foreclosed 135 390 Other accounts receivable 273 (12) Other assets (1) 5 Increase (decrease) in operating liabilities Other account payables (45) 130 Other liabilities (5) (4) Cash provided by operating activities 64 594 Net interest expense (income) (59) 35 Cash received on interest income 242 185 Cash paid for interest expense (16) (105) Net cash provided by operating activities 231 709 Cash flows from investing activities Cash paid on proceed from purchases of available-for-sale securities (600) (100) Sales of available-for-sale securities 458 100 Proceeds from redemptions of held-to-maturity securities 17 26 Others (2) (2) Net cash provided by (used in) investing activities (127) 24 Cash flows from financing activities Cash paid for repayment of loans from financial institutions (144) (843) Net cash used in financing activities (144) (843) Net decrease in cash and cash equivalents (40) (110) Cash and cash equivalents at beginning of the years 141 251 Cash and cash equivalents at end of the years 101 141 156 | Financial Statements and Notes to Financial Statements Annual Report 2010

11.L oans and accrued interest receivables 11.1 Classified by loan type

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009

Overdrafts 56,952 39,376 56,839 39,260 Loans 218,081 236,753 216,488 234,608 Bills (1) 87,797 91,771 87,574 92,698 Others 347 192 218 164 Total 363,177 368,092 361,119 366,730 Add: Accrued interest receivables 564 971 565 974 Total loans and accrued interest receivables 363,741 369,063 361,684 367,704 Less: Allowance for doubtful debts (20,390) (30,995) (18,927) (29,548) Revaluation allowance for debt restructuring (156) (213) (156) (213) Loans and accrued interest receivables — net 343,195 337,855 342,601 337,943

(1) As at 31 December 2010 and 2009, the Bank and its subsidiary presented net of unearned interest income of Baht 12 million and Baht 12 million, respectively.

11.2C lassified by remaining periods to maturity of loan agreements

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009

Within 1 year 162,052 153,036 159,386 149,811 Over 1 year 201,125 215,056 201,733 216,919 Total loans 363,177 368,092 361,119 366,730 TMB Bank PCL Financial Statements and Notes to Financial Statements | 157

11.3C lassified by currency and residency of debtors

(Unit: Million Baht)

Consolidated financial statements

31 December 2010 31 December 2009 Domestic Foreign Total Domestic Foreign Total

Baht 344,634 5,161 349,795 353,844 4,738 358,582 US Dollars 11,247 1,106 12,353 7,670 1,122 8,792 Other currencies 965 64 1,029 632 86 718 Total loans 356,846 6,331 363,177 362,146 5,946 368,092

(Unit: Million Baht)

Separate financial statements

31 December 2010 31 December 2009 Domestic Foreign Total Domestic Foreign Total

Baht 342,576 5,161 347,737 352,482 4,738 357,220 US Dollars 11,247 1,106 12,353 7,670 1,122 8,792 Other currencies 965 64 1,029 632 86 718 Total loans 354,788 6,331 361,119 360,784 5,946 366,730

11.4C lassified by type of business and by loan classification

(Unit: Million Baht)

Consolidated financial statements

31 December 2010 Pass Special Sub-standard Doubtful Doubtful Total mention of loss Agriculture and mining 4,372 454 79 42 1,522 6,469 Manufacturing and commerce 127,693 16,572 3,042 698 15,868 163,873 Property development and construction 16,882 1,891 1,057 619 3,056 23,505 Infrastructure and services 63,849 4,929 508 55 3,996 73,337 Housing loans 52,789 1,539 298 429 3,157 58,212 Others 35,706 454 184 109 1,328 37,781 Total loans 301,291 25,839 5,168 1,952 28,927 363,177 158 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht)

Consolidated financial statements

31 December 2009 Pass Special Sub-standard Doubtful Doubtful Total mention of loss Agriculture and mining 4,198 1,359 94 121 4,263 10,035 Manufacturing and commerce 100,019 27,429 2,762 3,124 24,197 157,531 Property development and construction 14,382 5,992 1,041 1,142 4,948 27,505 Infrastructure and services 58,967 9,917 2,631 177 3,372 75,064 Housing loans 52,900 1,862 536 573 3,240 59,111 Others 36,049 922 180 154 1,541 38,846 Total loans 266,515 47,481 7,244 5,291 41,561 368,092

(Unit: Million Baht)

Separate financial statements

31 December 2010 Pass Special Sub-standard Doubtful Doubtful Total mention of loss Agriculture and mining 4,372 454 79 42 1,437 6,384 Manufacturing and commerce 127,693 16,572 3,042 698 14,690 162,695 Property development and construction 16,882 1,891 1,057 619 2,395 22,844 Infrastructure and services 63,849 4,929 508 55 3,840 73,181 Housing loans 52,789 1,539 298 429 3,157 58,212 Others 36,405 454 184 109 651 37,803 Total loans 301,990 25,839 5,168 1,952 26,170 361,119

(Unit: Million Baht)

Separate financial statements

31 December 2009 Pass Special Sub-standard Doubtful Doubtful Total mention of loss Agriculture and mining 4,198 1,359 94 121 4,113 9,885 Manufacturing and commerce 100,019 27,429 2,762 3,124 22,758 156,092 Property development and construction 14,382 5,992 1,041 1,142 4,021 26,578 Infrastructure and services 58,967 9,917 2,631 177 3,008 74,700 Housing loans 52,900 1,862 536 573 3,240 59,111 Others 38,063 922 180 154 1,045 40,364 Total loans 268,529 47,481 7,244 5,291 38,185 366,730 TMB Bank PCL Financial Statements and Notes to Financial Statements | 159

11.5C lassified by loan classification The Bank and its subsidiary have classified loans and accrued interest receivables (excluding interbank and money market items-assets) in accordance with the BOT’s notifications, regarding the Classification and Provisions made by Financial Institutions, as follows: (Unit: Million Baht) Consolidated financial statements 31 December 2010 31 December 2009 Loans and Allowance Loans and Allowance accrued Balance provided accrued Balance provided interest net of Minimum in the interest net of Minimum in the receivables collateral (1) percentage accounts (2) receivables collateral (1) percentage accounts (%) (%) Pass 301,770 131,488 1 1,322 266,938 102,859 1 1,049 Special mention 25,911 6,652 2 133 47,677 15,341 2 307 Sub-standard 5,172 1,708 100 1,685 7,365 1,777 100 1,777 Doubtful 1,953 276 100 263 5,302 1,518 100 1,518 Doubtful of loss 28,935 9,368 100 9,438 41,781 18,227 100 18,227 Total 363,741 149,492 12,841 369,063 139,722 22,878 Add: Excess over the BOT’s minimum requirement 7,549 8,117 Total 20,390 30,995

(1) In determining allowance for doubtful debts on loans classified as sub-standard, doubtful and doubtful of loss, balance net of collateral means debt balance after deduction of the present value of future cash flows expected to be received from debt collection or from the disposal of collateral. (2) Allowance for doubtful debts on loans guaranteed by Small Business Credit Guarantee Corporation according to the Portfolio Guarantee Scheme was made in accordance with the Bank of Thailand’s notification on supervisory guidelines on loans guaranteed in the Portfolio Guarantee Scheme by Small Business Credit Guarantee Corporation.

(Unit: Million Baht) Separate financial statements 31 December 2010 31 December 2009 Loans and Allowance Loans and Allowance accrued Balance provided accrued Balance provided interest net of Minimum in the interest net of Minimum in the receivables collateral (1) percentage accounts (2) receivables collateral (1) percentage accounts (%) (%) Pass 302,470 132,188 1 1,322 268,955 104,874 1 1,049 Special mention 25,911 6,652 2 133 47,677 15,341 2 307 Sub-standard 5,172 1,708 100 1,685 7,365 1,777 100 1,777 Doubtful 1,953 276 100 263 5,302 1,518 100 1,518 Doubtful of loss 26,178 8,366 100 8,436 38,405 16,973 100 16,973 Total 361,684 149,190 11,839 367,704 140,483 21,624 Add: Excess over the BOT’s minimum requirement 7,088 7,924 Total 18,927 29,548

11.6N on-performing loans (NPLs) NPLs per BOT’s regulations refer to all sub-standard, doubtful, doubtful of loss and loss loans.

As at 31 December 2010 and 2009, the Bank and its subsidiary’ NPLs (including interbank and money market items) were summarised as follows:

(Unit: Million Baht)

Consolidated financial statements (1) Separate financial statements

31 December 31 December 2010 2009 2010 2009

Net NPLs (principal net of allowance for doubtful debts) NPLs after allowance for doubtful debt on NPLs 24,689 32,726 22,935 30,604 Total loans after allowance for doubtful debts on NPLs 424,975 405,967 423,920 405,860 Percentage of net NPLs 5.81 8.06 5.41 7.54 NPLs (principal) NPLs 36,047 54,095 33,290 50,719 Total loans 436,333 427,337 434,276 425,976 Percentage of NPLs 8.26 12.66 7.67 11.91

(1) The consolidated financial statements included the balances of the Bank and Phayathai Asset Management Co., Ltd.

On 24 December 2010, the Bank disposed its NPLs with principal of approximately Baht 1,410 million to Phayathai Asset Management Company Limited. The selling price of such NPLs was approximately Baht 397 million, which approximated their net book value.

On 21 April 2010, the Bank disposed its NPLs with principal of approximately Baht 550 million to Phayathai Asset Management Company Limited. The selling price of such NPLs was approximately Baht 320 million, which approximated their net book value.

On 28 April 2010, the Bank and its subsidiary signed Sale and Purchase Agreement on NPLs of principal of approximately Baht 9,400 million with Bangkok Commercial Asset Management Company Limited (“BAM”). The selling price of such NPLs was approximately Baht 2,500 million, which approximated their net book value.

On 7 May 2009, the Bank and its subsidiary signed Sale and Purchase Agreement on NPLs and Properties foreclosed (“NPAs”) with BAM comprising NPLs of approximately Baht 15,000 million and NPAs of approximately Baht 4,300 million, which were the carrying value before allowance of doubtful debts and allowance for impairment. The selling price of NPLs and NPAs according to such agreement were Baht 4,500 million and Baht 1,900 million, respectively, which approximated their carrying value net of allowance for doubtful debts and allowance for impairment.

As at 31 December 2010 and 2009, the Bank has loans on which they ceased accrual of interest income in amount of Baht 41,972 million and Baht 52,753 million, respectively. TMB Bank PCL Financial Statements and Notes to Financial Statements | 161

11.7T roubled debt restructuring For the years ended 31 December 2010 and 2009, the Bank and its subsidiary entered into contracts for troubled debt restructuring, which resulted in present value loss/losses on debt structuring in the following cases:

(Unit: Million Baht)

For the year ended 31 December 2010

Consolidated financial statements Separate financial statements

Amount Amount Number of Number of debtors Before After debtors Before After restructuring restructuring restructuring restructuring Type of restructuring Modification of terms of payments 94 7,843 4,419 92 7,841 4,417 Total 94 7,843 4,419 92 7,841 4,417

Term of debt restructuring agreements Not over 5 years 75 7,495 4,073 73 7,493 4,071 5 – 10 years 5 310 309 5 310 309 Over 10 years 14 38 37 14 38 37 Total 94 7,843 4,419 92 7,841 4,417

(Unit: Million Baht)

For the year ended 31 December 2009

Consolidated financial statements Separate financial statements

Amount Amount Number of Number of debtors Before After debtors Before After restructuring restructuring restructuring restructuring Type of restructuring Modification of terms of payments 104 5,868 4,902 104 5,868 4,902 Combination of methods 11 39 32 - - - Total 115 5,907 4,934 104 5,868 4,902

Term of debt restructuring agreements Not over 5 years 89 3,803 2,922 78 3,764 2,890 5 – 10 years 14 1,592 1,500 14 1,592 1,500 Over 10 years 12 512 512 12 512 512 Total 115 5,907 4,934 104 5,868 4,902

The Bank and its subsidiary recognised losses on debt restructuring for the year by the excess of the net book value of loans and interest receivables and the present value of cashflow expected to be recouped.

The Bank and its subsidiary measure the expected recoverable amounts of loans restructured by means of modification of repayment conditions, using the present value of future cash expected to be received, discounted by the market interest rate. 162 | Financial Statements and Notes to Financial Statements Annual Report 2010

Supplemental information for the years ended 31 December 2010 and 2009 relating to the restructured debts is as follows:

(Unit: Million Baht)

For the years ended 31 December

2010 2009 Consolidated Separate Consolidated Separate financial financial financial financial statements statements statements statements Interest income on restructured debts, which is recognised in the statements of income 171 153 261 257 Cash settlement by debtors 1,378 1,289 1,523 1,455 Reversal of losses on debt restructuring 56 57 218 225

As at 31 December 2010 and 2009, the Bank and its subsidiary have the outstanding balances with troubled debt restructuring debtors, as follows:

(Unit: Million Baht)

31 December 2010 31 December 2009

Consolidated Separate Consolidated Separate financial statements financial statement financial statements financial statement Number of Outstanding Number of Outstanding Number of Outstanding Number of Outstanding debtors balance debtors balance debtors balance debtors balance Troubled debt restructuring debtors 306 3,705 281 3,594 430 3,746 393 3,572

12. Classified assets Assets, which consisted of investments in securities, loans and accrued interest receivables (including interbank and money market items-assets), properties foreclosed, premises and equipment and other assets, as at 31 December 2010 and 2009, were classified in accordance with the regulation of the Bank of Thailand as follows: TMB Bank PCL Financial Statements and Notes to Financial Statements | 163 (Unit: Million Baht) (Unit: Million Baht) - 326,365 - 328,382 - 47,677 - 47,677 - 7,365 - 7,365 - 5,302 - 5,302 ------and and Premises Premises equipment Other assets Total equipment Other assets Total ------31 December 2009 31 December 2009 Categories of assets Categories of assets Properties Properties foreclosed foreclosed interest interest accrued accrued Loans and Loans and receivables receivables - 326,365 - 328,382 - 47,677 - 47,677 - 7,365 - 7,365 - 5,302 - 5,302 1,309 41,781 2,920 731 135 46,876 5,174 38,405 2,885 731 128 47,323 1,309 428,490 2,920 731 135 433,585 5,174 427,131 2,885 731 128 436,049 in securities in securities Investments Investments Separate financial statements - 375,015 - 375,715 - 25,911 - 25,911 - 5,172 - 5,172 - 1,953 - 1,953 Consolidated financial statements ------and and Premises Premises equipment Other assets Total equipment Other assets Total ------31 December 2010 31 December 2010 Categories of assets Categories of assets Properties Properties foreclosed foreclosed interest interest accrued accrued Loans and Loans and receivables receivables - 375,015 - 375,715 - 25,911 - 25,911 - 5,172 - 5,172 - 1,953 - 1,953 1,111 28,935 1,857 648 144 32,695 3,146 26,178 1,729 648 138 31,839 1,111 436,986 1,857 648 144 440,746 3,146 434,929 1,729 648 138 440,590 in securities in securities Investments Investments Pass Pass Special mention Special mention Sub-standard Sub-standard Doubtful Doubtful Doubtful of loss Doubtful of loss Total Total 164 | Financial Statements and Notes to Financial Statements Annual Report 2010

13.A llowance for doubtful debts Allowance for doubtful debts for the years ended 31 December 2010 and 2009 are as follows:

(Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2010 Excess of the BOT’s Special Doubtful minimum Pass mention Sub-standard Doubtful of loss requirement Total Balance — beginning of the year 1,049 307 1,777 1,518 18,227 8,117 30,995 Allowance for doubtful debts 273 (174) (92) (1,255) 3,714 22 2,488 Bad debt recovery - - - - 588 - 588 Bad debts written-off - - - - (5,714) - (5,714) Allowance for doubtful debts on the disposed NPLs - - - - (7,377) (590) (7,967) Balance — end of the year 1,322 133 1,685 263 9,438 7,549 20,390

(Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2009 Excess of the BOT’s Special Doubtful minimum Pass mention Sub-standard Doubtful of loss requirement Total Balance — beginning of the year 1,172 378 4,001 2,490 29,378 8,044 45,463 Allowance for doubtful debts (123) (71) (2,224) (972) 6,182 73 2,865 Bad debt recovery - - - - 807 - 807 Bad debts written-off - - - - (7,725) - (7,725) Allowance for doubtful debts on the disposed NPLs - - - - (10,415) - (10,415) Balance — end of the year 1,049 307 1,777 1,518 18,227 8,117 30,995 TMB Bank PCL Financial Statements and Notes to Financial Statements | 165

(Unit: Million Baht)

Separate financial statements

For the year ended 31 December 2010 Excess of the BOT’s Special Doubtful minimum Pass mention Sub-standard Doubtful of loss requirement Total Balance — beginning of the year 1,049 307 1,777 1,518 16,973 7,924 29,548 Allowance for doubtful debts 273 (174) (92) (1,255) 3,377 (246) 1,883 Bad debt recovery - - - - 588 - 588 Bad debts written-off - - - - (5,713) - (5,713) Allowance for doubtful debts on the disposed NPLs - - - - (6,789) (590) (7,379) Balance — end of the year 1,322 133 1,685 263 8,436 7,088 18,927

(Unit: Million Baht)

Separate financial statements

For the year ended 31 December 2009 Excess of the BOT’s Special Doubtful minimum Pass mention Sub-standard Doubtful of loss requirement Total Balance — beginning of the year 1,172 378 4,001 2,490 28,070 7,821 43,932 Allowance for doubtful debts (123) (71) (2,224) (972) 6,238 103 2,951 Bad debt recovery - - - - 805 - 805 Bad debts written-off - - - - (7,725) - (7,725) Allowance for doubtful debts on the disposed NPLs - - - - (10,415) - (10,415) Balance — end of the year 1,049 307 1,777 1,518 16,973 7,924 29,548

14.R evaluation allowance for debt restructuring

(Unit: Million Baht)

Consolidated and separate financial statements

For the years ended 31 December 2010 2009

Balance — beginning of the year 213 453 Decrease during the year (57) (240)

Balance — end of the year 156 213 166 | Financial Statements and Notes to Financial Statements Annual Report 2010

15.P roperties foreclosed

(Unit: Million Baht)

For the year ended 31 December 2010

Consolidated financial statements Separate financial statements Beginning Ending Beginning Ending balance Increase Disposal balance balance Increase Disposal balance Type of properties foreclosed Assets foreclosed in settlement of debts Immovable assets (1) 13,792 2 (5,931) 7,863 13,410 2 (5,757) 7,655 Internal appraiser 2,948 2,946 External appraiser 4,915 4,709 Movable assets 162 - (57) 105 134 - (57) 77 Others 98 736 (510) 324 98 736 (510) 324 Total 14,052 738 (6,498) 8,292 13,642 738 (6,324) 8,056 Add (less): Allowance for impairment (2,920) (904) 1,967 (1,857) (2,885) (772) 1,928 (1,729) Properties foreclosed — net 11,132 (166) (4,531) 6,435 10,757 (34) (4,396) 6,327

(1) Disclosed in accordance with the BOT’s notification regarding the Guideline for appraisal value of collateral and immovable assets foreclosed in settlement of debts, dated 9 December 2009, enforced from 1 January 2010 onwards.

(Unit: Million Baht)

For the year ended 31 December 2009

Consolidated financial statements Separate financial statements Beginning Ending Beginning Ending balance Increase Disposal balance balance Increase Disposal balance Type of properties foreclosed Assets foreclosed in settlement of debts Immovable assets (1) 22,919 85 (9,212) 13,792 20,145 85 (6,820) 13,410 Internal appraiser 4,998 4,998 External appraiser 8,794 8,412 Movable assets 311 2 (151) 162 237 1 (104) 134 Others 349 72 (323) 98 349 72 (323) 98 Total 23,579 159 (9,686) 14,052 20,731 158 (7,247) 13,642 Add (less): Allowance for impairment (4,319) (2,651) 4,050 (2,920) (3,913) (1,836) 2,864 (2,885) Properties foreclosed — net 19,260 (2,492) (5,636) 11,132 16,818 (1,678) (4,383) 10,757

During the year ended 31 December 2009, the Bank and its subsidiary agreed to transfer NPAs to BAM, as described in Note 11.6 to the financial statements. TMB Bank PCL Financial Statements and Notes to Financial Statements | 167

As at 31 December 2010 and 2009, the Bank and its subsidiary had properties foreclosed which were subject to disposal restrictions, buyback options or first refusal rights, the carrying value of which amounted to Baht 265 million and Baht 242 million, respectively (the Bank only: Baht 259 million and Baht 195 million, respectively).

16.P remises and equipment Changes in premises and equipment (including the incremental revaluation) for the year ended 31 December 2010 are summarised as follows:

(Unit: Million Baht)

Consolidated financial statements

Land Buildings The The incremental incremental Cost revaluation Cost revaluation Equipment Total Cost/Reappraised value 31 December 2009 5,017 3,066 4,939 3,494 4,748 21,264 Purchases/transfer in - - 165 - 836 1,001 Disposals/written-off/transfer out (539) (246) (267) (97) (583) (1,732) 31 December 2010 4,478 2,820 4,837 3,397 5,001 20,533

Accumulated depreciation 31 December 2009 - - (2,547) (1,404) (3,363) (7,314) Depreciation during the year - - (87) (73) (607) (767) Accumulated depreciation on disposals/ written-off/transfer out - - 90 44 178 312 31 December 2010 - - (2,544) (1,433) (3,792) (7,769)

Allowance for impairment 31 December 2009 (622) - (109) - - (731) Decrease during the year 73 - 10 - - 83 31 December 2010 (549) - (99) - - (648)

Net book value 31 December 2009 4,395 3,066 2,283 2,090 1,385 13,219 31 December 2010 3,929 2,820 2,194 1,964 1,209 12,116

Depreciation included in the statements of income for the years ended 31 December

2009 750 2010 767 168 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht)

Separate financial statements

Land Buildings The The incremental incremental Cost revaluation Cost revaluation Equipment Total Cost/Reappraised value 31 December 2009 5,017 3,066 4,939 3,494 4,633 21,149 Purchases/transfer in - - 165 - 825 990 Disposals/written-off/transfer out (539) (246) (267) (97) (565) (1,714) 31 December 2010 4,478 2,820 4,837 3,397 4,893 20,425

Accumulated depreciation 31 December 2009 - - (2,547) (1,404) (3,289) (7,240) Depreciation during the year - - (87) (73) (590) (750) Accumulated depreciation on disposals/ written-off/transfer out - - 90 44 166 300 31 December 2010 - - (2,544) (1,433) (3,713) (7,690)

Allowance for impairment 31 December 2009 (622) - (109) - - (731) Decrease during the year 73 - 10 - - 83 31 December 2010 (549) - (99) - - (648)

Net book value 31 December 2009 4,395 3,066 2,283 2,090 1,344 13,178 31 December 2010 3,929 2,820 2,194 1,964 1,180 12,087

Depreciation included in the statements of income for the years ended 31 December

2009 735 2010 750

As at 31 December 2010 and 2009, the Bank and its subsidiaries have certain equipment which has been fully depreciated but is still in use. The gross carrying amount (before deducting accumulated depreciation and allowance for impairment loss) of those assets amounted to approximately Baht 1,935 million and Baht 1,747 million, respectively (The Bank only: Baht 1,902 million and Baht 1,712 million, respectively). TMB Bank PCL Financial Statements and Notes to Financial Statements | 169

17. oTHer intangible assets

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

Computer Computer Computer software under Computer software under software development Total software development Total Cost 31 December 2009 2,957 98 3,055 2,865 98 2,963 Additions/transfer in 192 255 447 191 255 446 Disposals/transfer out (13) (199) (212) (12) (199) (211) 31 December 2010 3,136 154 3,290 3,044 154 3,198

Accumulated amortisation 31 December 2009 (2,186) - (2,186) (2,109) - (2,109) Amortisation during the year (314) - (314) (307) - (307) Accumulated amortisation on disposals 4 - 4 3 - 3 31 December 2010 (2,496) - (2,496) (2,413) - (2,413)

Net book value 31 December 2009 771 98 869 756 98 854 31 December 2010 640 154 794 631 154 785

Amortisation expenses included in the statements of income for the years ended 31 December 2009 265 - 265 259 - 259 2010 314 - 314 307 - 307

Remaining amortisation periods as at 31 December 2009 0 - 5 Years 0 - 5 Years 2010 0 - 5 Years 0 - 5 Years 170 | Financial Statements and Notes to Financial Statements Annual Report 2010

18. oTHer assets

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009

Accrued income 787 1,014 731 953 Leasehold right — net 350 464 350 464 Deposit to derivative contracts 580 461 580 461 Suspense accounts — debtors 1,544 1,041 1,542 1,040 Prepaid expenses 495 95 485 87 Suspense accounts between head office and branches 376 193 376 193 Others 495 323 487 311 Total 4,627 3,591 4,551 3,509 Less: Allowance for impairment (87) (84) (86) (82) Other assets – net 4,540 3,507 4,465 3,427

19.D eposits 19.1 Classified by types of deposits

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009

Current accounts 39,881 42,935 39,901 42,947 Saving deposits 151,823 159,269 151,924 159,430 Time deposits Within 6 months 58,284 53,079 58,284 53,079 6 months to 1 year 5,226 6,427 5,226 6,427 Over 1 year 157,901 146,066 157,901 146,066 Total deposits 413,115 407,776 413,236 407,949

19.2C lassified by the remaining periods of deposit contracts

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009

Within 1 year 367,773 330,730 367,894 330,903 Over 1 year 45,342 77,046 45,342 77,046 Total 413,115 407,776 413,236 407,949 TMB Bank PCL Financial Statements and Notes to Financial Statements | 171

19.3C lassified by currency and residency of depositors

(Unit: Million Baht)

Consolidated financial statements

31 December 2010 31 December 2009 Domestic Foreign Total Domestic Foreign Total

Baht 408,834 3,492 412,326 404,827 2,518 407,345 US Dollars 472 145 617 175 123 298 Other currencies 151 21 172 106 27 133 Total 409,457 3,658 413,115 405,108 2,668 407,776

(Unit: Million Baht)

Separate financial statements

31 December 2010 31 December 2009 Domestic Foreign Total Domestic Foreign Total

Baht 408,955 3,492 412,447 404,997 2,518 407,515 US Dollars 472 145 617 178 123 301 Other currencies 151 21 172 106 27 133 Total 409,578 3,658 413,236 405,281 2,668 407,949

20.I nterbank and money market items (liabilities)

(Unit: Million Baht)

Consolidated and separate financial statements

31 December 2010 31 December 2009 At call Term Total At call Term Total

Domestic Bank of Thailand and Financial Institutions Development Fund - 2,509 2,509 - 3,167 3,167 Commercial banks 169 11,806 11,975 142 - 142 Other banks 28 - 28 35 - 35 Finance, finance and securities, securities, credit foncier companies 441 4 445 211 4 215 Other financial institutions 2,095 285 2,380 2,877 1,195 4,072 Total domestic items 2,733 14,604 17,337 3,265 4,366 7,631

Foreign US Dollars 521 3,920 4,441 330 1,502 1,832 Other currencies 1,342 371 1,713 516 759 1,275 Total foreign items 1,863 4,291 6,154 846 2,261 3,107 Total domestic and foreign items 4,596 18,895 23,491 4,111 6,627 10,738 172 | Financial Statements and Notes to Financial Statements Annual Report 2010

21. Borrowings

(Unit: Million Baht) Consolidated Separate financial statements financial statements 31 December 31 December Interest rate Maturities 2010 2009 2010 2009

(%) Subordinated debentures 4.70, 5.00 2019 and 2020 13,300 12,087 13,300 12,087 Perpetual Non-Cumulative Tier 1 Securities 7.00, 7.75 2011(1) and 2014(1) 4,160 5,562 4,160 5,562 Debentures 1.80 2011 1,000 2,040 1,000 2,040 Bills of exchange 1.00 - 5.00 2011 - 2013 37,731 23,538 37,745 23,549 Fixed-rate note payables - - - 10 - 10 Others 0 - 3.25 2011 - 2031 5,913 7,399 5,913 7,399 Total 62,104 50,636 62,118 50,647

(1) The years in which call option exercise periods start.

Subordinated debentures On 18 January 2000, the Bank issued 10-year subordinated debentures of Baht 1,077 million with an interest rate of 4.25% per annum. Interest is payable annually. On 18 January 2010, the subordinated debentures were already redeemed.

On 28 December 2000, the Bank issued 10-year subordinated debentures of Baht 260 million and Baht 545 million with an interest rate of 3.5% per annum payable annually. On 28 December 2010, the subordinated debentures were already redeemed.

On 9 March 2005, the Bank issued the 10-year Subordinated Debenture No.12 of Baht 8,000 million. For the first 5 years, interest is payable at the higher of the floating rate equal to the 12 month fixed deposit rate of the Bank plus 2% per annum or the fixed rate of 4% per annum. For the remaining 5 years, interest is payable at the higher of the floating rate equal to the 12-month fixed deposit rate of the Bank plus 2% per annum or the fixed rate of 5% per annum. Interest is payable quarterly in March, June, September and December of every year. The Bank can early redeem the subordinated debentures on every interest payment date after 5 years from the issuing date or according to certain specified conditions. However, the Bank proposed to buyback these subordinated debentures, and offered the newly issued Subordinated Debentures No.1/2552 to the existing subordinated debenture holders on 6 November 2009. Existing subordinated debenture holders sold back the debentures totaling Baht 3,095 million and on 9 March 2010, the outstanding of the Subordinated Debenture No.12 totaling Baht 4,905 million was early redeemed.

On 6 November 2009, the Bank issued the Subordinated Debenture No. 1/2552 to be offered to the existing debenture holders and the newly issued debentures of Baht 3,813 million was bought. In addition, general investors bought the newly issued debentures totaling Baht 1,487 million. The Bank has therefore issued Baht 5,300 million of the Subordinated Debenture No.1/2552. The Subordinated Debenture No. 1/2552 has a 10-year maturity period and bears fixed a interest rates of 5.00% for the first 3 years, 5.25% for the fourth and the fifth years and 6.50% for the sixth to the tenth years. Interest is payable TMB Bank PCL Financial Statements and Notes to Financial Statements | 173

quarterly in February, May, August and November of every year. The Bank can early redeem the Subordinated Debentures No.1/2552 after 5 years from the issuing date or according to certain specified conditions.

On 2 April 2010, the Bank issued the Subordinated Debenture No.1/2553 amounting to Baht 8,000 million. The Subordinated Debenture No. 1/2553 carries 10-year maturity period with a fixed rate of 4.70% per annum over the first 5 years and at a fixed rate of 6% per annum over the remaining 5 years. Interest is payable quarterly in January, April, July and October of every year. The Bank can early redeem the Subordinated Debenture No. 1/2553 after 5 years from the issuing date or according to certain specified conditions.

Perpetual Non-Cumulative Tier 1 Securities On 3 May 2006, the Bank issued USD 200 million in aggregate as a principal amount of Perpetual Non-Cumulative Tier 1 Securities (“Hybrid Tier 1”). The securities are perpetual. However the Bank has an early redemption option subject to the prior written approval of the Bank of Thailand and the Bank being solvent at that time. Early redemption is permitted in the following circumstances:

1 . From year 10 onwards, on each interest payment date.

2 . In the event of certain changes affecting taxation in Thailand or the Cayman Islands made by any political sub-division or other authority with the power to tax.

3 . In the event the securities no longer qualify as Tier 1 capital of the Bank, under the Bank of Thailand’s capital adequacy requirements and applicable regulations.

Interest is payable for the first 10 years at a fixed interest rate of 7.75% per annum, payable semi-annually on 30 June and 30 December and for the eleventh year onwards at a floating interest rate of 3.13% per annum above three-month USD LIBOR, payable quarterly on 30 March, 30 June, 30 September and 30 December of every year.

In any interest payment period, if the Bank does not expect a net profit in the consolidated financial statements, the Bank is not obliged to make any interest payments for that period and such interest will be non-cumulative and will not be carried forward to the next payment periods.

During 2009, the Bank partially bought back Hybrid Tier 1 Securities in an aggregate principal amount of USD 153 million. The payment of USD 86 million on such buyback and of USD 4 million on related accrued interest were made. The Bank recognised gain on Hybrid Tier 1 buyback of Baht 2,301 million in the statements of income for the year ended 31 December 2009.

During 2010, the Bank additionally bought back Hybrid Tier 1 securities in an aggregate principal amount of USD 42 million. The Bank recognised gain on Hybrid Tier 1 buyback of Baht 4 million in the statements of income for the year ended 31 December 2010. 174 | Financial Statements and Notes to Financial Statements Annual Report 2010

During October 2010, the Securityholders’ meeting passed a resolution to amend the conditions of the securities to grant the Bank an option to redeem all of the remaining securities, from 3 May 2011 onward, rather than the original option to redeem them after ten years.

As at 31 December 2010 and 2009, the remaining principal amount of Hybrid Tier 1 Securities remained at USD 5 million and USD 47 million, which was equivalent to approximately Baht 160 million and Baht 1,562 million, respectively.

On 30 April 2009, the Bank issued Baht 4,000 million in aggregate as a principal amount of Perpetual Non-Cumulative Tier 1 Securities (“Hybrid Tier 1”). The securities are perpetual. However, the Bank has an early redemption option subject to the prior written approval of the Bank of Thailand and the Bank being solvent at that time. Early redemption is permitted under the following circumstances:

1 . At every interest payment date, after the fifth year of the issuing date.

2 . In the event that any change or amendment in the tax laws resulting in the more tax liabilities to the Bank or the Bank not being able to claim interest on such securities as tax-deductible expenses.

3 . In the event that the Hybrid Tier 1 is no longer qualified as Tier 1 capital of the Bank.

Interest is semi-annually payable on 30 April and 30 October every year, for the first 10 years at a fixed interest rate of 7.00% per annum and from the eleventh year onwards at a floating interest based on 6-month Time Deposit rate of the Bank plus 7.00% per annum.

In case that the Bank incurs loss in the latest fiscal period before the interest payment date or in case that the interest payment on any interest payment date results in the Bank having a loss in the latest fiscal period before such interest payment date, the Bank will not be obliged to make any interest payment for that period and such interest will be non-cumulative and will not be carried forward to the next payment period unless allowed by the Bank of Thailand to pay such interest.

The Bank recognised interest expenses for the years ended 31 December 2010 and 2009 of Baht 351 million and Baht 464 million, respectively. TMB Bank PCL Financial Statements and Notes to Financial Statements | 175

Other Borrowings Borrowings with specific uses as at 31 December 2010 and 2009 are as follows:

Consolidated and separate financial statements

Borrowing From Objectives 31 December 2010 31 December 2009 Outstanding Baht Outstanding Baht balance equivalent balance equivalent

(Million Baht) (Million Baht) Ministry of Finance - For agro-industrial THB 11 million 11 THB 15 million 15 enterprises

- For enterprises in major - - EUR 0.15 million 7 basic industries of the Country

Energy Conservation Promotion - For enterprises investing THB 543 million 543 THB 425 million 425 Fund for energy conservation

National Science and Technology - For enterprises involving in THB 42 million 42 THB 66 million 66 Development Agency research and development activities

Nordic Investment Bank (NIB) - For joint ventures with USD 51 million 1,525 USD 62 million 2,065 the Nordic countries and businesses using Nordic machinery/equipment

Japan Bank for International - For equity investment & USD 117 million 3,518 USD 133 million 4,449 Cooperation (JBIC) on-lending to non-SET listed enterprises and non-environmental impact having a joint-venture with Japanese or Japanese connection, or Tsunami adversely affected entrepreneurs having Japanese connection

Kreditanstalt fur Wiederaufbau - For small industry EUR 7 million 274 EUR 8 million 372 (KfW) businesses

Total 5,913 7,399 176 | Financial Statements and Notes to Financial Statements Annual Report 2010

22. Provisions for obligation on transfers of non-performing assets

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

Bangkok Bangkok Commercial Commercial Asset Asset Thai Asset Management Thai Asset Management Management Company Management Company Corporation Limited Corporation Limited (Note 6) (Note 7) Total (Note 6) (Note 7) Total As at 31 December 2009 6,178 3,586 9,764 6,140 - 6,140 Increase during the year 65 264 329 65 - 65 Settlement during the year - (3,020) (3,020) - - - Reversal of provisions (8) (830) (838) - - - As at 31 December 2010 6,235 - 6,235 6,205 - 6,205

23. Provisions for other liabilities

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

For the year ended For the year ended 31 December 2010 31 December 2010 Beginning Increase Ending Beginning Increase Ending balance (decrease) balance balance (decrease) balance

Off-balance sheet contingencies 1,071 (871) 200 1,071 (871) 200 Obligation for litigation cases (Note 33.2) 776 (635) 141 764 (658) 106 Loss on investment in a subsidiary in excess of its cost of investment - - - 2,336 (2,336) - HR transformation programme 207 165 372 207 165 372 Others 72 65 137 72 65 137 Total 2,126 (1,276) 850 4,450 (3,635) 815

The Bank sets aside provision for the HR transformation programme based on estimates made by the management. Expected cost will depend on new HR structure. Following the balance sheet date and up to the date of approval of the financial statements, the Bank has already paid a total of Baht 245million under the HR transformation programme. TMB Bank PCL Financial Statements and Notes to Financial Statements | 177

24. oTHer liabilities

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009 Accrued expenses 2,155 1,183 2,130 1,151 Deposits 791 878 775 858 Deposit from derivative contracts 1,336 - 1,336 - Suspense accounts - creditors 2,332 1,448 2,367 1,406 Others 312 315 290 289 Total 6,926 3,824 6,898 3,704

25. Capital shares 25.1 Preference shares The preference shares outstanding as at 31 December 2009 are the class B non-cumulative preference shares with voting rights, issued to the Ministry of Finance and certain retail shareholders under the Tier 1 Capital Support Scheme on 19 May 2000, which have the right to receive dividend prior to the ordinary shares and convert to ordinary shares.

The rights and benefits of the class B preference shares are summarised as follows:

1 . Right to receive of dividend is superior to that of ordinary shares. - At the rate of 3.75% per annum. If, in any year, the Bank pays dividend for ordinary shares at a rate higher than that of preference shares, the Bank has to pay the same rate of dividend for preference shares. - If the profit is inadequate to pay dividend for preference shares at the determined rate, the Bank will pay dividend for preference shares according to its eligible profit and financial ability.

2 . In case of capital decrease due to the following events. - The operating losses arising from the assets acquired before the capital injection of the Ministry of Finance, the Bank will reduce the capital of the ordinary shares before a reduction of the capital of the preference shares. - The operating losses arising from the assets acquired after the Ministry of Finance’s increase of capital, the Bank shall proportionately decrease capital according to the holding portion of the ordinary shares and the preference shares. - In the event of the Bank’s liquidation or reduction in the Bank’s capital, the preference shares will have the preferential right over the ordinary shares in receiving the return of capital.

Class B preference shares had the pre-emptive right for 10 years i.e. until 19 May 2010, after which the pre-emptive right expired and each preference share automatically became an ordinary share, with the same rights as other ordinary shares. The holders of a class B preference share were entitled to convert it into an ordinary share before 19 May 2010 on any 20 March, 20 June, 20 September or 20 December. 178 | Financial Statements and Notes to Financial Statements Annual Report 2010

During 2009, 3,600 class B preference shares were converted into ordinary shares. As at 31 December 2009, outstanding of ordinary shares after conversion is 41,536,744,879 shares and outstanding of class B preference shares is 1,991,993,600 shares. The Bank registered these convert authorised share capital with the Ministry of Commerce on 4 January 2010.

During 2010, 1,400 class B preference shares were converted into ordinary shares. The Bank registered these convert authorised share capital with the Ministry of Commerce on 24 March 2010 and on 24 May 2010, the Ministry of Finance exercised its rights to convert 1,991,992,200 class B preference shares into ordinary shares and hence there was no preference shares remained. The Bank registered such conversion with the Ministry of Commerce on 25 May 2010. The Bank had registered share capital of Baht 437,087,384,790, consisting of 43,708,738,479 ordinary shares of Baht 10 per share and the paid-up share capital of Baht 435,287,384,790, consisting of 43,528,738,479 ordinary shares of Baht 10 per share.

25.2O rdinary shares On 24 June 2010, the Extraordinary General Meeting of Shareholders No.1/2553 passed the following resolutions:

1. The transfer of the following reserve funds to offset for the Bank’s deficit. Other reserves Baht 8,717,165,400 Legal reserve Baht 2,100,000,000 Total Baht 10,817,165,400

2. The reduction of the Bank’s registered and paid-up share capital by means of decrease of the share par value from Baht 10 per share to Baht 0.95 per share, resulting in the decrease of registered share capital from Baht 437,087,384,790 to Baht 41,523,301,555 and the decrease of the paid-up share capital from Baht 435,287,384,790 to Baht 41,352,301,555. The decrease paid-up capital as a result of such reduction in the share par value shall be brought to eliminate the discount on shares and reduce the Bank’s deficit.

On 25 June 2010, the Bank has been granted permission from the Bank of Thailand (“BOT”) to decrease of the Bank’s registered and paid-up capital. The Bank also registered the changes in registered capital and paid-up capital with the Ministry of Commerce on 29 June 2010.

3. 3. The offering of the 400,000,000 newly-issued ordinary shares of the Bank to its employees under TMB Performance Share Bonus 2010 and approve the increase of the registered capital from Baht 41,523,301,555 to Baht 41,903,301,555 by issuing the Bank’s new ordinary shares in the number of 400,000,000 shares, at the par value of Baht 0.95 per share.

The Bank registered increased registered share capital with the Ministry of Commerce on 6 July 2010.

As at 31 December 2010 and 2009, the registered capital of the Bank as presented in the balance sheets is the registered capital per the Bank’s Memorandum of Association. TMB Bank PCL Financial Statements and Notes to Financial Statements | 179

25.3R econciliation of preference shares and ordinary shares

For the years ended 31 December

2010 2009 No. of shares Par Amount No. of shares Par Amount value value (Share) (Baht (Baht) (Share) (Baht (Baht) per per share) share) Preference shares Registered share capital Preference shares at the beginning of the years 1,991,997,200 10 19,919,972,000 1,991,997,200 10 19,919,972,000 Registered conversion of preference shares into ordinary shares (1,991,997,200) 10 (19,919,972,000) -- - Preference shares at the end of the years -- - 1,991,997,200 10 19,919,972,000 Issues and paid-up share capital Preference shares at the beginning of the years 1,991,997,200 10 19,919,972,000 1,991,997,200 10 19,919,972,000 Conversion of preference shares into ordinary shares (1,991,997,200) 10 (19,919,972,000) -- - Preference shares at the end of the years -- - 1,991,997,200 10 19,919,972,000

Ordinary shares Registered share capital Ordinary shares at the beginning of the years 41,716,741,279 10 417,167,412,790 41,716,741,279 10 417,167,412,790 Registered conversion of preference shares into ordinary shares 1,991,997,200 10 19,919,972,000 -- - Ordinary shares before capital reduction 43,708,738,479 10 437,087,384,790 -- - Reduction of share capital by means of decrease of the share par value - (9.05) (395,564,083,235) -- - Ordinary shares after capital reduction 43,708,738,479 0.95 41,523,301,555 -- - Increased share capital under the TMB PSBP 2010 400,000,000 0.95 380,000,000 -- - Ordinary shares at the end of the years 44,108,738,479 0.95 41,903,301,555 41,716,741,279 10 417,167,412,790 Issues and paid-up share capital Ordinary shares at the beginning of the years 41,536,741,279 10 415,367,412,790 41,536,741,279 10 415,367,412,790 Conversion of preference shares into ordinary shares 1,991,997,200 10 19,919,972,000 -- - Ordinary shares before capital reduction 43,528,738,479 10 435,287,384,790 -- - Reduction of share capital by means of decrease of the share par value - (9.05) (393,935,083,235) -- - Ordinary shares at the end of the years 43,528,738,479 0.95 41,352,301,555 41,536,741,279 10 415,367,412,790 180 | Financial Statements and Notes to Financial Statements Annual Report 2010

26.W arrants On 1 February 2006, the Bank issued 68,158,000 units of warrants with zero prices to the Bank’s employees. The warrants can be exercised to buy ordinary shares. These warrants are in the bearer’s name and are non-transferable, except for legacy transfers.

The details of the warrants issued are as follows:

▶▶ Offer date 1 February 2006

▶▶ Maturity Five years from the issuance date

▶▶ Offer price Baht zero

▶▶ Right to exercise 1 warrant: 1.051 ordinary shares (after adjusted)

▶▶ Exercise price Baht 4.48 (after adjusted) per share except in case of adjustment in accordance with the terms and conditions

▶▶ Exercise date 31 January and 31 July of each year (every last business day)

▶▶ Term of exercise period 31 July 2008 - 31 January 2011

From 31 July 2008 to 31 January 2011, no warrant holders exercised their rights and hence 68,158,000 warrants expired.

27. sHare-based payments On 24 June 2010, the Extraordinary General Meeting of Shareholders No. 1/2553 approved the TMB Performance Share Bonus 2010 Project (TMB PSBP 2010) which will offer newly issued ordinary shares of the Bank to its employees (including employees who hold a position of director of the Bank) who have qualifications under TMB PSBP 2010. The Employees under TMB PSBP 2010 shall be entitled to subscribe for the newly issued shares according to the conditions specified in TMB PSBP 2010 with mandatory participation of top management but optional participation of staff at other levels.

Term of Continuing Scheme: 5 years starting from the first offering date.

Number of Ordinary Shares Not exceeding the total of 400,000,000 newly issued ordinary shares with the par to be Offered: value of Baht 0.95 each, which will be offered pursuant to the continuing scheme.

Offering Price per Share: The offering price per share to be offered to the Employees under TMB PSBP 2010 is equivalent to the average closing price of ordinary shares of the Bank on the Stock Exchange of Thailand (“SET”) on each trading day for the period of 90 calendar days prior to each offering date of the newly issued shares. The offering price may be lower than 90% of the market price as prescribed in the notification of the Securities and Exchange Commission relating to the calculation of the offering price and the determination of the offering price for issuance of the newly issued shares. In the case that the calculation of the offering price in any offering is lower than the par value of the ordinary shares of the Bank, the Bank is required to offer newly issued shares to the Employees under TMB PSBP 2010 Project at the price equivalent to the par value of the ordinary shares of the Bank. TMB Bank PCL Financial Statements and Notes to Financial Statements | 181

Condition for Subscription The Employees under TMB PSBP 2010 who will subscribe for the newly issued shares for the newly Issued Shares: shall be employees of the Bank as of the subscription date of such newly issued shares (still retain the rights for employees who are retired pursuant to the Bank’s regulation or death).

During 2010, the Bank recorded share-based payment expense in the consolidated and separate statements of income of Baht 34 million.

28.R evaluation surplus on assets This represents surplus arising from revaluation of land and buildings. The revaluation surplus can neither be offset against deficit nor used for dividend distribution.

(Unit: Million Baht)

Consolidated and separate financial statements

For the year ended For the year ended 31 December 2010 31 December 2009 Balance — beginning of the year 5,155 5,288 Amortisation during the year (73) (75) Derecognition of assets during the year (136) - Transfer out during the year (162) (1) (58) Balance — end of the year 4,784 5,155

(1) Including the amount of impairment losses on revaluation surplus on land and buildings, recognised directly in shareholders’ equity, of Baht 79 million and Baht 1 million, respectively.

29. sTatutory reserve Before 23 April 2010, under the Bank’s Articles of Association, the Bank is required to set aside a statutory reserve at least 10 percent of its net earnings after deducting accumulated deficit brought forward (if any) until the reserve reaches 25 percent of the registered capital.

On 23 April 2010, the 2010 Annual General Meeting of Shareholders passed a resolution of the amendment on the Bank’s Articles of Association in order to have the same requirement as prescribed by the law whereby the Bank is required to set aside a statutory reserve at least 5 percent of its net earnings after deducting accumulated deficit brought forward (if any) until the reserve reaches 10 percent of the registered capital.

The statutory reserve is not available for dividend distribution.

As at 31 December 2010, the Bank appropriated Baht 200 million from its operating results for the year 2010 to be a statutory reserve. 182 | Financial Statements and Notes to Financial Statements Annual Report 2010

30. Capital funds The primary objectives of the Bank’s capital management are to maintain the Bank’s ability to continue as a going concern and to maintain a capital adequacy ratio in accordance with the Financial Institution Business Act B.E. 2551.

(Unit: Million Baht)

Separate financial statements

31 December 2010 31 December 2009

Tier 1 capital Issued and fully paid share capital 41,352 435,287 Discount on ordinary and preference shares - (303,088) Hybrid Tier 1 4,200 5,758 Statutory reserve - 2,100 Other reserves - 8,717 Net loss after appropriation (78) (102,868) Total Tier 1 capital 45,474 45,906

Tier 2 capital Revaluation surplus on land 1,973 2,145 Revaluation surplus on buildings 980 1,043 Provision for assets classified as “pass” 4,800 4,600 Subordinated debentures 13,300 10,205 Unrealised gain on revaluation of available-for-sale equity securities 29 6 Total Tier 2 capital 21,082 17,999 Total capital funds 66,556 63,905

(Unit: percentage)

Separate financial statements

31 December 2010 31 December 2009

Tier 1 capital ratio 11.33 12.31 Total capital ratio 16.59 17.13 Minimum tier 1 capital ratio requirement 4.25 4.25 Minimum total capital ratio requirement 8.50 8.50

In compliance with the BOT’s notification regarding Public Disclosure of Capital Maintenance for Commercial Banks, the Bank has disclosed capital adequacy information on solo consolidation level as of 30 June 2010 through the Bank’s website at www.tmbbank.com on 15 September 2010.

For public disclosure of capital maintenance for commercial banks of full consolidation level (Basel II’s Pillar III) according to the Bank of Thailand’s notification, the Bank is to disclose capital adequacy and capital risk exposure information as at 31 December 2010 through the Bank’s website at www.tmbbank.com, by April 2011, in the 2010 annual report of TMB Bank Public Company Limited, and as an attachment to its 2010 56-1 report. TMB Bank PCL Financial Statements and Notes to Financial Statements | 183

31.I ncome tax The income tax expenses in the separate financial statements of income are less than the amount determined by applying the Thai corporate income tax rate to the accounting profit for the year principally because unutilised tax losses brought forward from the prior years have been utilised during the period to set-off against the current year’s taxable income.

The income tax expenses in the consolidated financial statements of income related to the profit of the Bank’s subsidiaries and were calculated on earnings after adding back expenses, which are disallowable for tax computation purposes.

32.E arnings per share Basic earnings per share is calculated by dividing net income attributable to equity holders of the Bank, after deducting the dividend paid to the preference shareholders (if any), by the weighted average number of ordinary shares held by outside shareholders in issue during the year.

Diluted earnings per share is calculated by dividing net income attributable to equity holders of the Bank, after deducting the dividend paid to the preference shareholders (if any), by the sum of weighted average number of ordinary shares held by outside shareholders in issue during the year and the weighted average number of ordinary shares which would need to be issued to convert all potential ordinary shares into ordinary shares. The calculation assumes that the conversion took place either at the beginning of the period or on the date the potential ordinary shares were issued (the warrants are excluded in determining the potential ordinary shares since the exercise price is higher than the fair value of the ordinary shares). 184 | Financial Statements and Notes to Financial Statements Annual Report 2010

Basic earnings per share and diluted earnings per share are presented below.

Consolidated financial statements

For the year ended 31 December Weighted average number Net income Earnings per share of ordinary shares 2010 2009 2010 2009 2010 2009 (Million (Million (Million (Million (Baht) (Baht) Baht) Baht) shares) shares) Basic earnings per share Net income attributable to equity holders of the Bank 3,202 1,945 42,743 41,537 0.07 0.05 Effect of dilutive potential ordinary shares from the conversion of preference shares - - 786 1,992 Diluted earnings per share 3,202 1,945 43,529 43,529 0.07 0.04

Separate financial statements

For the year ended 31 December Weighted average number Net income Earnings per share of ordinary shares 2010 2009 2010 2009 2010 2009 (Million (Million (Million (Million (Baht) (Baht) Baht) Baht) shares) shares) Basic earnings per share Net income attributable to equity holders of the Bank 3,264 2,048 42,743 41,537 0.08 0.05 Effect of dilutive potential ordinary shares from the conversion of preference shares - - 786 1,992 Diluted earnings per share 3,264 2,048 43,529 43,529 0.07 0.05 TMB Bank PCL Financial Statements and Notes to Financial Statements | 185

33. Commitments and contingencies 33.1 Commitments

(Unit: Million Baht)

Consolidated and separate financial statements

31 December 2010 31 December 2009 Foreign Foreign Baht Total Baht Total Currencies Currencies

Avals to bills and guarantees of loans Avals to bills 86 - 86 129 - 129 Guarantees of loans - 256 256 - 717 717 Total avals to bills and guarantees of loans 86 256 342 129 717 846 Liabilities under unmatured import bills 8 1,671 1,679 215 742 957 Letters of credit 397 15,303 15,700 252 16,670 16,922 Other commitments Other guarantees 25,212 5,677 30,889 26,940 6,845 33,785 Forward foreign exchange contracts Bought - 219,130 219,130 - 57,946 57,946 Sold - 228,753 228,753 - 66,232 66,232 FX options contracts Bought - 3,525 3,525 - 1,625 1,625 Sold - 1,046 1,046 - 671 671 Cross currency and interest rate swap contracts Bought - 16,675 16,675 - 6,003 6,003 Sold - 12,100 12,100 - 492 492 Interest rate swaps contracts 318,918 21,027 339,945 172,696 3,853 176,549 Interest rate futures contracts - - - - 4,174 4,174 Interest rate options contracts Bought 1,619 - 1,619 - 3,337 3,337 Sold 1,619 - 1,619 - 3,337 3,337 Unused overdraft credit lines 50,832 - 50,832 42,019 1 42,020 Total other commitments 398,200 507,933 906,133 241,655 154,516 396,171 Total 398,691 525,163 923,854 242,251 172,645 414,896

For the year ended 31 December 2010, the Bank early terminated 3 interest rate swap contracts, having a gain on the termination of approximately Baht 260 million (For the year ended 31 December 2009: 20 interest rate swap contracts, having a gain on the termination of approximately Baht 955 million). 186 | Financial Statements and Notes to Financial Statements Annual Report 2010

33.2 Litigation As at 31 December 2010 and 2009, legal proceedings under guarantees and other claims are made against the Bank and its subsidiaries in 179 cases and 191 cases, respectively, with the claim amounts of approximately BBaht 17,987 million and Baht 18,789 million, respectively (the Bank only: 160 cases and 171 cases, respectively, with the claim amounts of approximately Baht 12,912 million and Baht 13,414 million, respectively) with amounts liable for performance of approximately Baht 8,044 million(1) and Baht 8,493 million (1) and Baht 8,493 million (1), respectively (the Bank only: Baht 2,969 million (1) and Baht 3,118 million (1), respectively).

As at 31 December 2010 and 2009, the Bank and its subsidiaries recognised provisions for contingent loss from legal cases of approximately Baht 141 million and Baht 776 million, respectively (the Bank only: Baht 106 million and Baht 764 million, respectively). The management concluded and believed that such provisions were adequate to cover any possible loss from these legal cases.

In addition, the Bank is the defendant of a claim of approximately Baht 140,261 million arising from a guarantee allegedly issued by the Bank with an amount of Baht 200 million. The court of First Instance and Appeal rejected this claim. Currently, the case is in trial of the Supreme Court. The management has been given consultation that the Supreme file submission has no merit and is very unlikely that the plaintiff would succeed. The management therefore believes that the Bank will have no liability resulting from this case.

(1) Excluded claims for compensation as at 31 December 2010 and 2009 on the Bank amounting to Baht 1,819 million and Baht 2,446 million, respectively for which the court of first instance or the appeal court dismissed claims or passed the judgment to reduce the liable amount, causing obligations of the Bank to decrease.

33.3O ther commitments 33.3.1 Capital commitments (Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 2010 31 December 2009 31 December 2010 31 December 2009

Contracted but not yet recognised Buildings and other constructions 44 23 44 23 Equipment 92 191 92 191 Software 150 227 150 225 Total 286 441 286 439

33.3.2 Non-cancellable operating lease commitments (Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 2010 31 December 2009 31 December 2010 31 December 2009

Within one year 241 234 230 218 After one year but within five years 332 279 312 266 Total 573 513 542 484 TMB Bank PCL Financial Statements and Notes to Financial Statements | 187

34.R elated party transactions 34.1 Definitions and characteristics of relationship Related parties are those parties related to the Bank and its subsidiaries by way of shareholding, or having common shareholders or directors. Transactions with related parties are conducted at prices based on market prices or, where no market price exists, at contractually agreed prices.

Related parties are as follows:

1. Major shareholders who own over 10% of the Bank’s paid-up share capital and related companies of such major shareholders.

2. Entities who are controlled by the Bank or significantly influenced by the Bank.

3. Entities, excluding those in item 2, in which the Bank holds 20% or more of paid-up share capital or in which the Bank holds less than 20% of paid-up share capital and has control or significant influence through the Bank’s directors of executive officers.

4. Entities in which the Bank is not a shareholder, but in which the Bank’s directors or executive officers, including related parties, own shares, or in which they are the directors exercising control or significant influence.

5. The Bank’s directors or executive officers, including their related parties.

The additional information on investments in subsidiaries and associated companies is disclosed in Note 10 to the financial statements. 188 | Financial Statements and Notes to Financial Statements Annual Report 2010

The followings are relationships with related parties that control or jointly control the Bank or are being controlled or jointly controlled by the Bank or have transactions with the Bank and its subsidiaries.

Name of entities Country of incorporation Nature of relationships

Ministry of Finance and entities Thailand The major shareholder of the Bank owning over 10% whose shares have owned or have of the Bank’s paid-up share capital and related through been controlled by the Ministry the major shareholder of Finance

ING Bank N.V. Netherlands The major shareholder of the Bank owning over 10% of the Bank’s paid-up share capital

ING Life Ltd. Thailand Related through the major shareholder of the Bank owning over 10% of the Bank’s paid-up share capital

ING Funds (Thailand) Co., Ltd. Thailand Related through the major shareholder of the Bank owning over 10% of the Bank’s paid-up share capital

Phayathai Asset Management Thailand Subsidiary, 100% shareholding, more than 50% Co., Ltd. of directors are representatives of the Bank.

Designee for ETA Contract Ltd. Thailand Subsidiary, 99.40% shareholding, more than 50% of directors are representatives of the Bank.

TMB Asset Management Co., Ltd. Thailand Subsidiary, 75.00% shareholding, more than 50% of directors are representatives of the Bank.

Thai Orix Leasing Co., Ltd (1) Thailand Associate, 45.96% shareholding, less than 50% of directors are representatives from the Bank.

Metro Designee Co., Ltd Thailand Associate, 30.00% shareholding, less than 50% of directors are representatives from the Bank.

Phayathai Property Fund (2) Thailand Being property a fund under type 2 which was established for institutional investors, 30.00% shareholding and less than 50% of directors are representatives from the Bank.

The Thai Business Fund 2 (3) Thailand Being property a fund under type 4 which was established for institutional investors, 32.00% shareholding and less than 50% of directors are representatives from the Bank.

(1) This entity was a related party until 15 September 2010 (date of disposal of investment) (2) This entity was a related party until 31 August 2009 (date of liquidation) (3) This entity was a related party until 5 November 2009 (date of liquidation) TMB Bank PCL Financial Statements and Notes to Financial Statements | 189

34.2 Pricing policy The Bank’s pricing and interest rate policy is as follows:

▶▶ Interest rates of loans are in accordance with the market rate except for the interest rate of staff welfare loans which are in accordance with the Bank’s regulation, and the interest rate of loans to a subsidiary, which is based on the deposit interest rates.

▶▶ Fee and service income as a result of the Bank’s providing registrar and related services, money transfer services for unitholders, agent and support services for funds managed by its subsidiary and related company are charged at the rate based on conditions specified in contracts negotiated in the normal course of business, taking into accounts the size of funds and the purchase and sale volumes of investment units.

▶▶ Interest rates on deposits and borrowings are in accordance with the market rates.

▶▶ Fee and service income for other types of services is in accordance with the market price except that the monthly service income for acting as the agent for debt collection for a subsidiary is equal to Baht 10,000.

▶▶ The Bank entered into office rental and service agreements as follows: - The Bank entered into office rental and service agreements with 9 related companies for its branches. The rental and service expenses are based on market rates. - The Bank entered into office rental and service agreements with a related company. The rental and service income are based on a mutually agreed rate or market rate on the contracted date.

▶▶ Sale of non-performing assets to a subsidiary is made at the fair value or the market price for each asset item (See Note 11.6).

34.3S ignificant agreements with related parties 1. On 25 April 2008, the Annual General Meeting of Shareholders approved the connected transaction between the Bank and companies under the ING Group which are connected persons of the Bank as follows:

1.1) Distribution Agent Agreement between the Bank and ING Funds (Thailand) Co., Ltd. The agreement has a duration of 10 years. The agreement provides co-exclusive distribution rights to TMB Asset Management Company Limited and ING Funds (Thailand) Co., Ltd. Prior to the expiration of the agreement, negotiations can be conducted to review the appropriateness of the agreement and conditions, and should the Bank wish to continue the arrangement, this must be proposed at the shareholders’ meeting for approval.

Fees to be received by the Bank vary according to the type of fund, and will be determined jointly by the parties. 190 | Financial Statements and Notes to Financial Statements Annual Report 2010

On 24 June 2010, the Meeting of the Board of Directors approved the amendment to Distribution Agent Agreement. The Bank will offer service of provident fund and private fund to its clients and will refer them to ING Funds which act as a fund manager, and receive fee in return. Additionally, ING Funds’ right for exclusivity is relaxed such that the Bank can offer asset management products of other asset management companies to particular client segments of the Bank.

1.2) Bancassurance Product Distribution Agreement between the Bank and ING Life Ltd. The agreement, which is exclusive (precludes the Bank from selling life insurance products for other companies except ING Life), has a duration of 10 years. Prior to the expiration of the agreement, negotiations can be conducted to review the appropriateness of the agreement and conditions, and should the Bank wish to continue the arrangement, this must be proposed at the shareholders’ meeting for approval.

Fees and other commercial terms are to be mutually agreed by both parties.

2. On 28 August 2008, the Bank’s Board of Directors unanimously approved that the Bank can enter into the referral agreement (“the Agreement”) made with ING Asia Private Bank Limited, who is considered as a connected person to the Bank. Details are as follows:

The Agreement was executed by the Bank and ING Asia Private Bank Limited on 10 November 2008. Each party has its rights to terminate the Agreement by giving one-month advance notice to its counterparty.

Fees to be received by each party vary according to the type of banking services and products, which are stipulated in the Agreement.

Since 29 January 2010 onwards, ING Asia Private Bank Limited has been operated as a wholly-owned subsidiary of Oversea Chinese Banking Corporation Limited (“OCBC Bank”) and has been renamed to Bank of Singapore Limited. Hence, it is no longer considered as a connected person to the Bank.

3. On 26 May 2009, the Bank engaged ING Bank N.V., Singapore Branch, which is a connected person to the Bank, to assist on negotiations with bondholders in relation to the buyback of the Bank’s USD 200 million Perpetual Non-Cumulative Tier I Securities issued in 2006, the buyback arrangement, settlement, and cancellation of the bought back securities.

The engagement is one-time basis and has concluded after the buyback of USD 22 million securities on 5 June 2009. The fee in relation to the engagement is agreed based on market rate.

4. On 18 June 2010, the Bank sold of 1,165,500 ordinary shares in ASEAN Potash Mining Public Company Limited to Bangchak Petroleum Public Company Limited which is a connected person of the Bank and offered the highest bid price through bidding process, for Baht 80 per share, totaling Baht 93,240,000.

5. On 28 December 2010, the Bank entered into a debt restructuring agreement to give the debt hair-cut to PAMC, as described in Note 7.2 to the financial statements. TMB Bank PCL Financial Statements and Notes to Financial Statements | 191

6. On 21 April 2010 and 24 December 2010, the Bank disposed of NPLs to PAMC, as described in Note 11.6 to the financial statements.

34.4O ther benefits payable to the directors and executives The Bank’s directors and executives from the rank of department manager upwards do not receive other benefits both in term of monetary and non-monetary items, except for the benefits that are normally received such as monthly directors’ remuneration, meeting allowance, salary and bonus (See Note 27). Directors who are the Bank’s executives and the representative directors who are the executive of ING Bank N.V. shall not receive remuneration as per ING Bank N.V.’s policies. Nevertheless, directors with permanent residence abroad can reimburse travelling and accommodation expenses in connection with the operation of the Bank’s business as actually incurred. Foreign executives are eligible for additional benefits, which are housing allowances, including utilities, telephone and home trip expenses in accordance with the established criteria.

34.5T ransactions with related parties which occurred during the years For the years ended 31 December 2010 and 2009, significant transactions with related parties are as follows:

(Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2010 For the year ended 31 December 2009 Interest and Non- Non- Interest and Non- Non- Interest Interest dividend interest interest dividend interest interest expenses expenses income income expenses income income expenses

1. Major shareholders who own over 10% of the Bank’s paid-up share capital and related companies of such major shareholders. 657 575 88 125 784 388 61 113

2. Subsidiaries and associated companies. - --- 3 - - 12

3. Entities whose shares are owned for 20% or more of paid-up share capital by the Bank (exclude subsidiaries and associated) or owned for less than 20% and controlled or significantly influenced by the Bank’s directors or executive officers. 70 - - 2 73 - - 2

4. Entities, whose share are not owned by the Bank, but in which the Bank’s directors or executive officers, including their related parties, own shares, or in which they are the directors with control or significant influence. - - 1 - - - 1 -

5. The Bank’s directors or executive officers, including their related parties. 1 - 1 - - - 2 - 192 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht)

Separate financial statements

1. Major shareholders who own over 10% of the Bank’s paid-up share capital and related companies of such major shareholders. 657 575 88 125 784 388 61 113

2. Subsidiaries and associated companies. 289 (3,828) 1 - 267 164 2 12

5. The Bank’s directors or executive officers, including their related parties. 1 - 1 - - - 2 - TMB Bank PCL Financial Statements and Notes to Financial Statements | 193

34.6O utstanding balances with related parties As at 31 December 2010 and 2009, outstanding balances with related persons or parties comprised of:

34.6.1 Significant balances between the Bank and the major Bank’s shareholders who own over 10% or more of the Bank’s paid-up share capital and their related parties as at 31 December 2010 and 2009 are as follows:

(Unit: Million Baht)

Consolidated and Separate financial statements 31 December 2010 31 December 2009 Loans and accrued interest receivables (Including interbank and money market items) (before allowance for doubtful debts) Ministry of Finance and entities whose shares are owned or controlled by the Ministry of Finance 59,691 45,162

Allowance for doubtful debts Ministry of Finance and entities whose shares are owned or controlled by the Ministry of Finance 74 418

Other assets Entities whose shares are owned or controlled by the Ministry of Finance 39 3 ING Life Ltd. 58 26 ING Funds (Thailand) Co., Ltd. 3 2

Deposits (Including interbank and money market items) Ministry of Finance and entities whose shares are owned or controlled by the Ministry of Finance 4,724 6,479 ING Life Ltd. 223 552 ING Funds (Thailand) Co., Ltd. 11 22

Borrowings (Including interbank and money market items) Ministry of Finance and entities whose shares are owned or controlled by the Ministry of Finance 10,498 1,022 ING Bank N.V. 3,015 1,503

Other liabilities Ministry of Finance and entities whose shares are owned or controlled by the Ministry of Finance 32 14 ING Bank N.V. - 1

Contingencies Entities whose shares are owned or controlled by the Ministry of Finance 40,682 13,175 ING Bank N.V. 424 183 194 | Financial Statements and Notes to Financial Statements Annual Report 2010

34.6.2 Significant balances between the Bank and its subsidiaries, and associated companies as at 31 December 2010 and 2009 are as follows:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 2010 31 December 2009 31 December 2010 31 December 2009 Loans and accrued interest receivables (before allowance for doubtful debts) Subsidiary Phayathai Asset Management Co., Ltd. - - 700 1,000 Associated company Thai ORIX Leasing Co., Ltd. - 100 - 100

Allowance for doubtful debts Subsidiary Phayathai Asset Management Co., Ltd. - - 7 10 Associated company Thai ORIX Leasing Co., Ltd. - 1 - 1

Other assets Subsidiary TMB Asset Management Co., Ltd. - - 24 10

Borrowings Subsidiary TMB Asset Management Co., Ltd. - - 14 12

Deposits Subsidiaries Phayathai Asset Management Co., Ltd. - - 101 141 TMB Asset Management Co., Ltd. - - 20 32 Associated company Thai ORIX Leasing Co., Ltd. - 1 - 1

Other liabilities Subsidiary TMB Asse Management Co., Ltd. - - 53 12 TMB Bank PCL Financial Statements and Notes to Financial Statements | 195

34.6.3 Significant balances between the Bank and companies whose shares are owned 20% or more of paid-up share capital by the Bank (exclude subsidiaries and associated) or entities whose share are owned for less than 20% of paid up share capital and controlled or significantly influenced by the Bank’s directors or executive officers as at 31 December 2010 and 2009 are as follows:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009 Deposits TMB Property Development Co., Ltd. 4 4 4 4 Other assets Siam Resort Fund 2 3 2 3

34.6.4 Significant balances between the Bank and companies, whose shares are not owned by the Bank, but in which the Bank’s directors or executive officers, including their related parties, own shares, or in which they are the directors with control or significant influence as at 31 December 2010 and 2009 are as follows:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009 Deposits The Deves Insurance Plc. 46 18 46 18 Thai Plastic and Chemicals Plc. 1 - 1 - Borrowings The Deves Insurance Plc. 60 - 60 -

34.6.5 Significant balances between the Bank and the Bank’s directors or executive officers, including their related parties as at 31 December 2010 and 2009 are as follows:

(Unit: Million Baht)

Consolidated and separate financial statements

31 December 2010 31 December 2010 Loans and accrued interest receivables 13 8 Welfare loans 24 16 Deposits 187 160 196 | Financial Statements and Notes to Financial Statements Annual Report 2010

34.6.6 Loans and contingencies given to executives, and to enterprises where over 10% of their paid-up share capital is held by the Bank and the Bank’s executive officers (including their related parties) as at 31 December 2010 and 2009, are as follows:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 31 December 2010 2009 2010 2009 Loans Related companies 3 103 703 1,103 Executive officers 37 24 37 24

Executives are directors or executive officers and Head of Financial Control Group and Financial Planning and Analysis Group.

35.P rovident fund The Bank, its subsidiaries and their employees have jointly established provident fund schemes under the Provident Fund Act B.E. 2530. The employees contribute to the funds at rates ranging from 2 − 10 percent of their basic salaries and the Bank and its subsidiaries contribute at rates ranging from 5 − 10 percent depending on number of years of service of each employee. The fund will be paid to the employees upon death, termination or dissolution of the business, in accordance with the rules of the funds. For the years ended 31 December 2010 and 2009, the Bank and its subsidiaries contributed Baht 314 million and Baht 310 million, respectively to the funds (the Bank only: Baht 308 million and Baht 304 million, respectively).

36. The financial position and results of operations classified by domestic and overseas business 36.1 Financial position categorised by type of business

(Unit: Million Baht)

Consolidated financial statements

31 December 2010 31 December 2009 Domestic Overseas Domestic Overseas business business Total business business Total Total assets 589,251 341 589,592 542,706 436 543,142 Interbank and money market items — net (assets) 84,390 235 84,625 66,375 240 66,615 Investments — net 94,538 - 94,538 82,194 - 82,194 Loans 363,098 79 363,177 367,930 162 368,092 Deposits 412,929 187 413,116 407,553 223 407,776 Interbank and money market items (liabilities) 19,512 3,979 23,491 9,207 1,531 10,738 Borrowings 58,426 3,678 62,104 44,625 6,011 50,636 Contingencies 923,854 - 923,854 408,175 6,721 414,896 TMB Bank PCL Financial Statements and Notes to Financial Statements | 197

36.2R esults of operations categorised by type of business The results of operations categorised by type of business for the years ended 31 December 2010 and 2009 are summarised as follows:

(Unit: Million Baht)

Consolidated financial statements

For the year ended 31 December 2010 For the year ended 31 December 2009 Domestic Overseas Eliminated Domestic Overseas Eliminated business business transactions Total business business transactions Total Interest and dividend income 18,496 131 (128) 18,499 20,470 430 (418) 20,482 Interest expenses 6,249 119 (128) 6,240 8,108 384 (418) 8,074 Net interest and dividend income 12,247 12 - 12,259 12,362 46 - 12,408 Bad debt and doubtful accounts (reversal) (1) 1,656 (2) - 1,654 2,631 (3) - 2,628 Non-interest income 6,964 2 - 6,966 7,806 2,271 - 10,077 Non-interest expenses 14,319 27 - 14,346 17,807 51 - 17,858 Earnings (losses) before income tax 3,236 (11) - 3,225 (270) 2,269 - 1,999

(1) Including losses on debt restructuring

37.F inancial instruments A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.

Risk Management Approach The Bank has set up its risk management structure in order to manage its core risks i.e. credit, market, operational, liquidity, reputational and strategic risks. Various risk policies and procedures have been established to provide common guidelines and standards to be applied consistently across the Bank and subsidiaries with appropriate quality of coverage.

The Bank manages its risks under the following key principles: core risks must be identified, measured, monitored, reported, analysed and controlled; business activities are managed under a risk-return framework to ensure that risks undertaken are commensurate with an appropriate return.

The Bank’s risk governance structure consists of the Board of Directors (BOD), which holds the ultimate responsibility for the Bank’s overall risk management, the Risk Management Committee (RMC) and senior management risk committees that provide forums to discuss specific risk areas: Asset and Liabilities Management Committee (ALCO), the Risk Policy Committee (RPC), the Operational Risk Management Committee (ORMC). The RMC has been delegated by the Board of Directors to review and oversee the management of all risks across the Bank and is authorised to approve certain risk management strategies, policies, frameworks and standards, as well as aggregate risk tolerance and risk concentration levels. 198 | Financial Statements and Notes to Financial Statements Annual Report 2010

While business units are primarily responsible for managing risks within responsible portfolio, all the risk management related functions are under the stewardship of the Chief Risk Officer (CRO). There are dedicated Market Risk Management Group, Risk Analytics and Policy Group, Credit Risk Intelligence Group and Operational Risk Management Group responsible for establishing firm-wide risk management policies and guidelines, and assumes the following roles: to develop and maintain risk management policies; to propose risk strategy and recommend risk appetite to top management for approval, and to monitor, control and report risk levels to top management, respective committees and the BOD.

37.1C redit risk Credit risk is the risk of loss to TMB as a result of borrowers and/or counterparties failing to meet their financial and contractual obligations in accordance with agreed terms. It arises principally from granting loans and undertaking contingent liabilities, and also from certain off-balance sheet products such as guarantees and credit derivatives.

The maximum credit risk exposure is the carrying value of the financial assets after deducting allowance for losses as presented in the balance sheets, and the risk from off-balance sheet commitments arising as a result of loan guarantees and other guarantees.

Credit Policies/Framework The Bank’s credit risk appetite and strategy are approved by the Risk Management Committee. To properly manage credit risk, the Bank has put in place the Core Credit Risk Policies (CCRP) and frameworks to ensure that credit decisions are prudently made and make credit risk management an integrated part of all credit-related business processes. All relevant Business Units and Support Units are required to formulate their own specific policies and supplementary policies under the CCRP. The Bank has also established policies to ensure diversification of its credit portfolio to address various concentration risks covering single exposure concentration risk on a group basis that is economically interdependent, industry/business sector concentration risk and country exposure concentration risk.

Credit Approval Process In managing credit risk, the Bank segregates the roles and responsibilities of the credit marketing function from the credit granting function to ensure proper checks and balance. Individual credit risk is analysed and assessed by experienced credit officers and approved by an appropriate authority depending on the size and risk levels of credit requested.

The Bank has contingent liabilities by issuing loan payment guarantees, and other forms of guarantee as well as issuing letters of credit and endorsing aval on commercial bills and notes for its customers. Such contingent transaction activities require assessment on financial conditions of customers in the same manner as those for direct lending. The Bank normally demands the placement of adequate collateral by customers in various forms including, for example, bank deposits, securities and personal/corporate guarantees. The Bank also makes it a standard practice to set credit terms and conditions to mitigate the elements of risk in the same manner as for other credit granting procedures. TMB Bank PCL Financial Statements and Notes to Financial Statements | 199

Credit Quality Review The Bank has set up Credit Quality Review Department independent from credit processes to provide on-going surveillance on potential credit quality deterioration trend. An independent review of the credit quality function is fully dedicated to identifying early-warning signs of changes in portfolio quality and providing senior management with insight and in-depth information on the quality of the credit portfolio, weaknesses of policies, processes and procedures together with corrective and protective recommendations. Changes and improvements to relevant credit policies, procedures and processes could be made based on lessons-learned recommendations to relevant parties.

37.2 Market risk Market risk refers to the risk of the fluctuation of foreign exchange rates, interest rates and prices of equity securities, all of which have a strong impact on the Bank’s assets and liabilities including off-balance sheet items.

The ALCO holds the responsibility to assist the BOD and the RMC to ensure that bank-wide market risk management follows the relevant risk policies and levels of risk appetite. The Bank classifies the overall market risk into 2 parts: trading book and banking book. The Bank has set a policy to set standards on the book definitions and classification criteria.

Market risk in the trading book: The trading market risk consists of market risk from financial instruments, equities and derivatives that are held with trading intent, as well as Bank-wide currency risk. The Bank manages all the trading market risks within the guidelines set under the established Market Risk Management: Trading Book Policy including setting up the appropriate risk appetite.

Market risk in the banking book: This risk consists of market risk embedded in the Bank’s on-and off-balance sheet structure, and derivatives designated to hedge other banking book items. The Bank has developed Market Risk Management: Banking Book Policy, which outlines the approach towards managing such market risk and setting the maximum risk limit in a way which is appropriate to the Bank’s balance sheet structure. The Bank also regularly employs the tools set under the policy to analyse the impact of changes in the market environment to the Bank’s balance sheet as part of the practice of asset and liability management.

37.2.1 Interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

The Bank’s principal financial assets, loans, mostly earn interest at floating rates, based on MRR, MLR, MOR, interest rates of time deposits or other benchmark floating rates (SIBOR or LIBOR). 200 | Financial Statements and Notes to Financial Statements Annual Report 2010

As at 31 December 2010 and 2009, financial assets and liabilities classified by type of interest rate are as follows:

(Unit: Million Baht)

Consolidated financial statements

31 December 2010 Floating Fixed Non-interest Descriptions interest rate interest rate bearing Total Financial Assets Cash - - 14,714 14,714 Interbank and money market items 8,885 70,068 5,644 84,597 Investments — net 23,812 68,487 2,239 94,538 Loans 272,465 88,221 2,491 363,177

Financial Liabilities Deposits 177,017 219,785 16,313 413,115 Interbank and money market items 3,567 18,907 1,017 23,491 Liability payable on demand - - 3,725 3,725 Borrowings 5,042 56,937 125 62,104

(Unit: Million Baht)

Consolidated financial statements

31 December 2009 Floating Fixed Non-interest Descriptions interest rate interest rate bearing Total Financial Assets Cash - - 15,134 15,134 Interbank and money market items 295 60,524 6,011 66,830 Investments — net 15,950 63,359 2,885 82,194 Loans 289,853 76,137 2,102 368,092

Financial Liabilities Deposits 191,247 201,538 14,991 407,776 Interbank and money market items 3,432 6,631 675 10,738 Liability payable on demand - - 4,958 4,958 Borrowings 11,419 38,974 243 50,636 TMB Bank PCL Financial Statements and Notes to Financial Statements | 201

(Unit: Million Baht)

Separate financial statements

31 December 2010 Floating Fixed Non-interest Descriptions interest rate interest rate bearing Total Financial Assets Cash - - 14,713 14,713 Interbank and money market items 8,885 69,874 5,644 84,403 Investments — net 23,181 68,487 4,100 95,768 Loans 270,466 88,162 2,491 361,119

Financial Liabilities Deposits 177,118 219,785 16,333 413,236 Interbank and money market items 3,567 18,907 1,017 23,491 Liability payable on demand - - 3,725 3,725 Borrowings 5,042 56,951 125 62,118

(Unit: Million Baht)

Separate financial statements

31 December 2009 Floating Fixed Non-interest Descriptions interest rate interest rate bearing Total Financial Assets Cash - - 15,134 15,134 Interbank and money market items 294 60,355 6,011 66,660 Investments — net 15,302 63,359 3,004 81,665 Loans 288,529 76,099 2,102 366,730

Financial Liabilities Deposits 191,408 201,538 15,003 407,949 Interbank and money market items 3,432 6,631 675 10,738 Liability payable on demand - - 4,958 4,958 Borrowings 11,419 38,985 243 50,647 202 | Financial Statements and Notes to Financial Statements Annual Report 2010

The significant financial assets and liabilities classified by interest repricing periods as at 31 December 2010 and 2009 are as follows:

(Unit: Million Baht) Consolidated financial statements 31 December 2010 Repricing within Over 3 − 12 Non-interest Non-performing 3 months months Over 1 year bearing assets Total Financial Assets Cash - - - 14,714 - 14,714 Interbank and money market items 78,839 114 - 5,644 - 84,597 Investments — net 53,195 12,767 26,337 2,239 - 94,538 Loans 287,298 26,997 10,344 2,491 36,047 363,177 Total financial assets 419,332 39,878 36,681 25,088 36,047 557,026

Financial Liabilities Deposits 260,358 91,567 44,877 16,313 - 413,115 Interbank and money market items 22,127 86 261 1,017 - 23,491 Liability payable on demand - - - 3,725 - 3,725 Borrowings 26,793 13,709 21,477 125 - 62,104 Total financial liabilities 309,278 105,362 66,615 21,180 - 502,435

(Unit: Million Baht) Consolidated financial statements 31 December 2009 Repricing within Over 3 − 12 Non-interest Non-performing 3 months months Over 1 year bearing assets Total Financial Assets Cash - - - 15,134 - 15,134 Interbank and money market items 57,831 2,988 - 6,011 - 66,830 Investments — net 52,590 22,726 3,993 2,885 - 82,194 Loans 260,924 44,172 6,799 2,102 54,095 368,092 Total financial assets 371,345 69,886 10,792 26,132 54,095 532,250

Financial Liabilities Deposits 273,002 43,389 76,394 14,991 - 407,776 Interbank and money market items 8,554 1,497 12 675 - 10,738 Liability payable on demand - - - 4,958 - 4,958 Borrowings 25,868 10,140 14,385 243 - 50,636 Total financial liabilities 307,424 55,026 90,791 20,867 - 474,108 TMB Bank PCL Financial Statements and Notes to Financial Statements | 203

(Unit: Million Baht) Separate financial statements 31 December 2010 Repricing within Over 3 − 12 Non-interest Non-performing 3 months months Over 1 year bearing assets Total Financial Assets Cash - - - 14,713 - 14,713 Interbank and money market items 78,663 96 - 5,644 - 84,403 Investments — net 52,564 12,767 26,337 4,100 - 95,768 Loans 287,997 26,997 10,344 2,491 33,290 361,119 Total financial assets 419,224 39,860 36,681 26,948 33,290 556,003

Financial Liabilities Deposits 260,459 91,567 44,877 16,333 - 413,236 Interbank and money market items 22,127 86 261 1,017 - 23,491 Liability payable on demand - - - 3,725 - 3,725 Borrowings 26,807 13,709 21,477 125 - 62,118 Total financial liabilities 309,393 105,362 66,615 21,200 - 502,570

(Unit: Million Baht) Separate financial statements 31 December 2009 Repricing within Over 3 − 12 Non-interest Non-performing 3 months months Over 1 year bearing assets Total Financial Assets Cash - - - 15,134 - 15,134 Interbank and money market items 57,709 2,940 - 6,011 - 66,660 Investments — net 51,942 22,726 3,993 3,004 - 81,665 Loans 262,938 44,172 6,799 2,102 50,719 366,730 Total financial assets 372,589 69,838 10,792 26,251 50,719 530,189

Financial Liabilities Deposits 273,163 43,389 76,394 15,003 - 407,949 Interbank and money market items 8,554 1,497 12 675 - 10,738 Liability payable on demand - - - 4,958 - 4,958 Borrowings 25,879 10,140 14,385 243 - 50,647 Total financial liabilities 307,596 55,026 90,791 20,879 - 474,292 204 | Financial Statements and Notes to Financial Statements Annual Report 2010

The average balances of the financial assets and liabilities of the Bank and its subsidiaries and the average rates of interest and dividend for the years ended 31 December 2010 and 2009 are as follows:

(Unit: Million Baht)

Consolidated financial statements

For the years ended 31 December 2010 2009 Interest and Average Interest and Average Average dividend rate Average dividend rate balance income/expenses (%) balance income/expenses (%)

Financial assets Interbank and money market items 56,733 771 1.36 58,534 737 1.26 Investments 92,765 1,918 2.07 101,534 2,238 2.20 Loans 355,959 15,810 4.44 377,417 17,506 4.64 Total 505,457 18,499 537,485 20,481

Financial liabilities Deposits 384,210 4,344 1.13 400,045 5,827 1.46 Interbank and money market items 10,932 93 0.85 15,143 158 1.04 Borrowings 53,740 1,803 3.36 59,114 2,089 3.53 Total 448,882 6,240 474,302 8,074

(Unit: Million Baht)

Separate financial statements

For the years ended 31 December 2010 2009 Interest and Average Interest and Average Average dividend rate Average dividend rate balance income/expenses (%) balance income/expenses (%)

Financial assets Interbank and money market items 56,541 769 1.36 58,368 734 1.26 Investments 91,945 2,196 2.39 100,847 2,482 2.46 Loans 354,948 15,565 4.39 376,746 17,351 4.61 Total 503,434 18,530 535,961 20,567

Financial liabilities Deposits 384,365 4,344 1.13 400,253 5,828 1.46 Interbank and money market items 10,932 93 0.85 15,143 158 1.04 Borrowings 53,756 1,613 3.00 59,146 1,893 3.20 Total 449,053 6,050 44,542 7,879 TMB Bank PCL Financial Statements and Notes to Financial Statements | 205

37.2.2 Currency risk Currency risk is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.

In addition to the financial assets and liabilities denominated in foreign currencies already disclosed in the relevant notes to the financial statements, as at 31 December 2010 and 2009, the Bank has the following net foreign currency positions categorised by major foreign currencies:

(Unit: USD Million)

Separate financial statements

31 December 2010 31 December 2009 Other Other USD Euro (1) currencies (1) Total USD Euro (1) currencies (1) Total Spot 56 5 38 99 8 1 26 35 Forward (86) (6) (40) (132) (25) (1) (25) (51) Net position (30) (1) (2) (33) (17) - 1 (16)

(1) Balances denominated in Euro and other currencies are stated in USD equivalents.

37.2.3 Equity price risk Risk from changes in price of equities is any risk that arises from changes in price of equities that may cause volatility in the Bank’s earnings or value of financial assets.

The equity portfolio management of the Bank is managed under specified managing units depend on the type of business, TMB’ s direction and strategy and overseen by the Asset and Liability Management Committee (ALCO) and/or the Chief Executive Committee (CEC) (all equity investment must comply with the bank-wide investment policy and framework, and related risk policies.) The criteria for equity investments include consideration of risk factors such as credit, market, and liquidity risks. Various limits are set including Gross Investment Limits and Loss Limit Levels. All of these measures are established to ensure that securities investments comply with policies and remain within approved limits and that the impact on capital adequacy is also taken into consideration. 206 | Financial Statements and Notes to Financial Statements Annual Report 2010

37.3 Liquidity risk Liquidity risk refers to the risk that arises if the Bank fails to meet its obligation when due as assets cannot be liquidated into cash at current market prices in time or from an inability to raise funds deemed adequate by management to the Bank’s operations.

The ALCO is responsible for assisting the BOD and the RMC in monitoring that the liquidity risk management of the Bank complies with the Bank of Thailand’s regulations, and ensuring that the Bank has sufficient liquidity for its operations in both normal circumstances and crisis situations. In addition, ALCO is responsible for identifying and securing appropriate funding sources through changing market circumstances. The Balance Sheet Management Group (BSMG) is the unit of the Bank responsible for liquidity management, including measurement, monitoring, and reporting to ALCO under the liquidity risk management policy. The policy is reviewed once a year or when necessary to ensure that it is appropriate for all situations. The Bank and each company in the Bank’s financial group manage liquidity risk separately.

In order to mitigate liquidity risk, the Bank practices continuous management of its funding sources and access to capital markets, and recognizes the importance of holding highly marketable assets that it can both exchange for cash and use as collateral for funds.

Risk indicators are used as a tool to measure and monitor risk. These comprise financial ratios (such as Loan to Deposit and BE ratio, and Liquid asset ratio), liquidity gap reporting based on contractual maturity and behavioral maturity, and the determined MCO (Maximum Cumulative Outflow). The Bank sets risk indicator limits in order to maintain liquidity risk within the Bank’s risk tolerance. Risk indicators are monitored against the limits and reported to ALCO on a weekly and monthly basis. In addition, liquidity status is monitored in day-to-day management of the Bank, to ensure the effectiveness of liquidity risk management.

Stress tests are performed under various scenarios, in accordance with the BOT’s guidelines, in order to assess the Bank’s ability to withstand a crisis. The stress testing results are used for liquidity planning and in preparing liquidity reserves. In addition, contingency plans are prepared for various crisis situations, and these identify the roles and responsibilities of relevant units, and plans for funding and communications.

Risk Indicators as at 31 December 2010

▶▶ Loan to Deposit & BE ratio 82.2%

▶▶ Liquid Asset Ratio 28.5% TMB Bank PCL Financial Statements and Notes to Financial Statements | 207

The financial instruments classified by maturity as at 31 December 2010 and 2009 are summarised as follows:

(Unit: Million Baht)

Consolidated financial statements

31 December 2010 Within 3 Over 3 − 12 Over 1 − 5 Over 5 No At call month months years years maturity Total Financial assets Cash 14,714 - - - - - 14,714 Interbank and money market items 6,192 70,292 8,113 - - - 84,597 Investments — net - 33,579 12,444 34,567 11,709 2,239 94,538 Loans (1) 66,823 73,331 21,898 88,335 112,790 - 363,177 Total financial assets 87,729 177,202 42,455 122,902 124,499 2,239 557,026

Financial liabilities Deposits 191,704 83,723 92,346 45,342 - - 413,115 Interbank and money market items 4,596 18,549 85 261 - - 23,491 Liability payable on demand 3,725 - - - - - 3,725 Borrowings - 25,847 10,526 11,037 14,694 - 62,104 Total financial liabilities 200,025 128,119 102,957 56,640 14,694 - 502,435

Off-balance sheet items Avals to bills and guarantees of loans Avals to bills 5 69 12 - - - 86 Guarantees of loans 29 - - 227 - - 256 Total 34 69 12 227 - - 342 Liability under unmatured import bills - 1,544 135 - - - 1,679 Letters of credits 696 5,428 5,084 4,492 - - 15,700 Other guarantees 11,862 9,378 7,940 1,144 565 - 30,889

(1) Non-performing loans are classified under their original maturity dates. 208 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht)

Consolidated financial statements

31 December 2009 Within 3 Over 3 − 12 Over 1 − 5 Over 5 No At call month months years years maturity Total Financial assets Cash 15,134 - - - - - 15,134 Interbank and money market items 6,264 57,545 2,988 33 - - 66,830 Investments — net - 37,554 21,476 16,885 3,394 2,885 82,194 Loans (1) 51,197 73,748 28,091 71,172 143,884 - 368,092 Total financial assets 72,595 168,847 52,555 88,090 147,278 2,885 532,250

Financial liabilities Deposits 202,205 81,915 46,610 77,046 - - 407,776 Interbank and money market items 4,111 5,119 1,497 11 - - 10,738 Liability payable on demand 4,958 - - - - - 4,958 Borrowings - 19,657 5,424 8,724 16,831 - 50,636 Total financial liabilities 211,274 106,691 53,531 85,781 16,831 - 474,108

Off-balance sheet items Avals to bills and guarantees of loans Avals to bills 8 90 31 - - - 129 Guarantees of loans 365 - - 352 - - 717 Total 373 90 31 352 - - 846 Liability under unmatured import bills - 826 131 - - - 957 Letters of credits 352 3,348 3,424 9,798 - - 16,922 Other guarantees 13,812 9,567 8,468 1,386 552 - 33,785

(1) Non-performing loans are classified under their original maturity dates. TMB Bank PCL Financial Statements and Notes to Financial Statements | 209

(Unit: Million Baht)

Separate financial statements

31 December 2010 Within 3 Over 3 − 12 Over 1 − 5 Over 5 No At call month months years years maturity Total Financial assets Cash 14,713 - - - - - 14,713 Interbank and money market items 6,181 70,126 8,096 - - - 84,403 Investments — net - 33,579 12,303 34,077 11,709 4,100 95,768 Loans (1) 64,212 73,330 21,844 88,243 113,490 - 361,119 Total financial assets 85,106 177,035 42,243 122,320 125,199 4,100 556,003

Financial liabilities Deposits 191,825 83,723 92,346 45,342 - - 413,236 Interbank and money market items 4,596 18,549 85 261 - - 23,491 Liability payable on demand 3,725 - - - - - 3,725 Borrowings - 25,861 10,526 11,037 14,694 - 62,118 Total financial liabilities 200,146 128,133 102,957 56,640 14,694 - 502,570

(1) Non-performing loans are classified under their original maturity dates. 210 | Financial Statements and Notes to Financial Statements Annual Report 2010

(Unit: Million Baht)

Separate financial statements

31 December 2009 Within 3 Over 3 − 12 Over 1 − 5 Over 5 No At call month months years years maturity Total Financial assets Cash 15,134 - - - - - 15,134 Interbank and money market items 6,264 57,423 2,940 33 - - 66,660 Investments — net - 37,554 21,476 16,237 3,394 3,004 81,665 Loans (1) 47,997 73,745 28,069 71,047 145,872 - 366,730 Total financial assets 69,395 168,722 52,485 87,317 149,266 3,004 530,189

Financial liabilities Deposits 202,378 81,915 46,610 77,046 - - 407,949 Interbank and money market items 4,111 5,119 1,497 11 - - 10,738 Liability payable on demand 4,958 - - - - - 4,958 Borrowings - 19,668 5,424 8,724 16,831 - 50,647 Total financial liabilities 211,447 106,702 53,531 85,781 16,831 - 474,292

(1) Non-performing loans are classified under their original maturity dates. TMB Bank PCL Financial Statements and Notes to Financial Statements | 211

37.4E stimated fair value of financial instruments Methods and assumptions in estimating market value or fair value of financial instruments are as follows:

Cash and interbank and money market items (assets) The fair value approximates the carrying value.

Investments in securities — net The fair value of investments in securities is based on the method disclosed in Note 4.5 to the financial statements.

Loans and accrued interest receivable The fair value is based on the carrying value of loans and accrued interest receivable net of allowance for doubtful debts as most loans are floating rate loans.

Deposits The fair value is based on the carrying value of deposits, except for the fair value of fixed rate deposits with remaining maturities greater than 1 year which is estimated by using a discounted cash flow calculation applying interest rates currently being offered on such or similar deposits.

Interbank and money market items (liabilities) The fair value is based on the carrying value of interbank and money market items, except for the fair value of fixed rate items with remaining maturities greater than 1 year which is estimated by using a discounted cash flow calculation applying interest rates currently being offered on such or similar deposits.

Liability payable on demand The fair value approximates the carrying value.

Borrowings The fair value is based on the carrying value of borrowings, except for the fair values of fixed rate borrowings with remaining maturities greater than 1 year which is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date, in case where there is no active market, and the Bank uses the market value as the fair value of borrowings, in case where there is active market.

Derivatives In case where there is active market, the Bank uses the market value as the fair value of derivatives and if there is no active market, the fair value is derived from valuations incorporating market data obtained from reliable sources. The market price or market data are mainly based on exchange-traded prices, broker/dealer quotations, or counterparties quotations. 212 | Financial Statements and Notes to Financial Statements Annual Report 2010

The fair values of significant financial instruments have been estimated by using available market information or appropriate valuation methodologies in case of no market value information available. Fair values together with the carrying values shown in the balance sheets at 31 December 2010 and 2009 were as follows:

(Unit: Million Baht)

Consolidated financial statements Separate financial statements

31 December 2010 31 December 2009 31 December 2010 31 December 2009 Book Fair Book Fair Book Fair Book Fair value (1) value value (1) value value (1) value value (1) value Financial assets Cash 14,714 14,714 15,134 15,134 14,713 14,713 15,134 15,134 Interbank and money market items — net 84,625 84,625 66,615 66,615 84,431 84,431 66,445 66,445 Investments — net 94,538 94,606 82,194 82,690 95,768 95,836 81,665 82,161 Loans and accrued interest receivable — net 343,195 343,195 337,855 337,855 342,601 342,601 337,943 337,943 Total financial assets 537,072 537,140 501,798 502,294 537,513 537,581 501,187 501,683

Financial liabilities Deposits 413,115 413,013 407,776 407,304 413,236 413,134 407,949 407,477 Interbank and money market items 23,491 23,490 10,738 10,738 23,491 23,490 10,738 10,738 Liability payable on demand 3,725 3,725 4,958 4,958 3,725 3,725 4,958 4,958 Borrowings 62,104 62,975 50,636 50,182 62,118 62,989 50,647 50,194 Total financial liabilities 502,435 503,203 474,108 473,182 502,570 503,338 474,292 473,367

Derivatives Forward foreign exchange contracts Bought 219,130 5,728 57,946 1,024 219,130 5,728 57,946 1,024 Sold 228,753 (5,574) 66,232 (744) 228,753 (5,574) 66,232 (744) FX options contracts Bought 3,525 12 1,625 9 3,525 12 1,625 9 Sold 1,046 (4) 671 (2) 1,046 (4) 671 (2) Cross currency and interest rate swap contracts Bought 16,675 (1,539) 6,003 (625) 16,675 (1,539) 6,003 (625) Sold 12,100 840 492 32 12,100 840 492 32 Interest rate swaps contracts 339,945 87 176,549 281 339,945 87 176,549 281 Interest rate futures contracts -- 4,174 3 -- 4,174 3 Interest rate options contracts Bought 1,619 12 3,337 - 1,619 12 3,337 - Sold 1,619 (12) 3,337 - 1,619 (12) 3,337 -

(1) For derivatives, the figures presented under the book value caption are notional amounts. TMB Bank PCL Financial Statements and Notes to Financial Statements | 213

37.5 Financial derivative instruments risk In the normal course of business, the Bank uses financial derivative instruments to serve the needs of its customers and to manage its exposure against fluctuations in foreign exchange rates and interest rates.

These instruments allow the Bank and its customers to transfer, modify or reduce their foreign exchange and interest rate risks.

The Bank has established risk policies and limits, reporting lines and control procedures to manage and control its derivative activities. Risk control functions are independent from the trading units.

Settlement risk related to financial derivatives is managed as part of the overall credit limits granted to customers. To control the level of credit risk taken, the Bank assesses counterparties using the same techniques as for lending decisions.

The notional amounts of certain types of financial instruments provide a basis for comparison with instruments recognised on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank’s exposure to credit or price risks. The derivative instruments become favourable (assets) or unfavourable (liabilities) as a result of fluctuations in market interest rates or foreign exchange rates relative to their terms. Therefore, the extent to which the financial derivative instruments are favourable or unfavourable can fluctuate significantly from time to time.

As at 31 December 2010 and 2009, financial derivatives as classified by their maturities are as follows:

(Unit: Million Baht)

Consolidated and separate financial statements 31 December 2010 31 December 2009 Less than Over Less than Over 1 year 1 year Total 1 year 1 year Total Forward foreign exchange contracts Bought 218,491 639 219,130 57,946 - 57,946 Sold 227,791 962 228,753 66,232 - 66,232 FX options contracts Bought 3,525 - 3,525 1,625 - 1,625 Sold 1,046 - 1,046 671 - 671 Cross currency and interest rate swap contracts Bought 4,039 12,636 16,675 2,391 3,612 6,003 Sold 830 11,270 12,100 - 492 492 Interest rate swap contracts 139,924 200,021 339,945 56,736 119,813 176,549 Interest rate futures contracts - - - 4,174 - 4,174 Interest rate option contracts Bought - 1,619 1,619 3,337 - 3,337 Sold - 1,619 1,619 3,337 - 3,337 214 | Financial Statements and Notes to Financial Statements Annual Report 2010

37.6O perational risk Operational risk is defined as the risk of loss, both financial and non-financial, resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk. Effective operational risk management leads to more stable business processes and lower operational costs.

Operational Risk Management at the Bank is managed through a governance structure where the Board of Directors holds the ultimate responsibility for bank-wide risk management. The Board has delegated several operational risk management related authorities to the Operational Risk Management Committee (ORC), chaired by the CEO and whose responsibilities are to identify, measure, monitor, and manage the operational risks of the Bank and its subsidiaries with appropriate quality of coverage (granularity) and to ensure that appropriate management action is taken by the responsible line managers at the appropriate level of granularity.

The Bank has established a dedicated Operational Risk Management Group (ORMG), reporting to the CRO, which consists of specialized departments to oversee specific operational risk management concerns such as processing risk, control risk, unauthorised activity risk, information (technology) risk, crisis management & business continuity / disaster recovery risk, fraud risk, personal & physical security risk, and employment practice & workplace safety risk.

Business and Support Units are primarily responsible and accountable for their own operational risk management and control. The Bank has appointed a number of Unit Operational Risk Managers (UORM) in the Business and Support Units who, with support from the Operational Risk Management Group, take on / carry out the operational risk management responsibilities of their respective units.

Audit Group operates as the “third line of defence”. Their mission is to provide an independent assurance of the design and effectiveness of internal controls established by the first and second line of defence. In carrying out this work, Audit Group will provide specific recommendations for improving the governance, risk & control framework.

The Bank has developed an Operational Risk Management Framework to ensure that the Operational Risks are properly identified, assessed, monitored, reported, analysed and controlled in a systematic and consistent manner. The Framework provides the foundations and a common infrastructure for delivering, maintaining, and governing risk management. The Framework consists of an Operational Risk Governance Structure applying the three lines of defence risk governance model, and aligning with the COSO risk management framework.

The Bank has established the risk appetite level for operational risk utilising the potential loss (probability and impact) concept. The level is determined based on consideration of the historical loss data of the bank, the financial strength, and the overall operational risk management environment. For potential loss over a threshold amount, the bank will take further mitigating action to bring down the potential loss level to within threshold.

Various policies, minimum standards, and guidelines have been established to manage the various operational risks as per Basel New Capital Accord (Basel II) guideline including coverage on all key processes and tools such as Risk & Control Self-Assessment (R&CSA), Control Self Assessment (CSA), Key Risk Indicators (KRI), and Incident Management. TMB Bank PCL Financial Statements and Notes to Financial Statements | 215

R&CSA / CSA is a process that helps identify and assess key risks and controls as well as to determine the mitigating actions. The Bank has also established KRI at corporate level to be a warning signal for all levels of management enabling them to proactively manage and control their operational risks. Incident reporting is established to enable detection, resolution, analysis of operational risk incidents as well as collection of loss data. This incident reporting and response is key in order to facilitate management’s insight in and awareness of the actual costs of operational risks, existing control weaknesses and the Bank’s specific risk profile.

Other major Operational Risk Mitigation Programs/Mechanisms include Product and Service Approval Process (PSAP), Action Tracking, Outsourcing / Insourcing Risk Management, and Business Continuity Plan and Disaster Recovery Plan (BCP / DRP).

To ensure that products and services are offered in a safe manner, the Product and Services Approval Process (PSAP) is established to set guidelines for sign-off and approval of new products and services. This due diligence process ensures that the risks created by the new products and services are properly identified and addressed, and that the necessary infrastructure and controls are in place to support the new business.

To ensure adequate and timely resolution of audit and non-audit items, ORMG has also implemented an action tracking system as a tool to keep track of the status of their items. Through this action tracking system, all outstanding audit and non-audit findings can be monitored and managed efficiently by all appropriate parties.

The Bank has established the Outsourcing / Insourcing Risk Management Policy to set out the principles and standards for the effective identification of the major risks created by outsourcing / insourcing and the management of such risks.

The Bank has established the Business Continuity Management Policies and Standards to provide guidance and standards for all units to develop Business Continuity Plan. The Business Continuity Management under ORMG is set up to oversee the implementation of BCM Policies and Standards, monitor and lead the co-ordination of group-wide BCP initiatives to raise the overall BCP / DRP readiness of the Bank.

In term of operational risk management at the subsidiaries, the subsidiaries have started to align and adopt TMB’s Operational Risk Management Framework, Policies, and Minimum Standards, where applicable. Their organization structure including dedicated operational risk management functions and Committees have been established to oversee proper operational risk management.

To date, TMB’s Subsidiaries have already implemented loss data collection, Business Continuity Plan, and Operational Risk Control Self Assessment. Implementation plan of additional operational risk policies and tools are put in place for further execution from 2011 onwards.

38.V aluation adjustment of investments in the consolidated financial statements During 2010, the Bank adjusted the measurement of and revenue recognition on investments in Siam Resort Fund and The Column Property Fund in the consolidated financial statements whereby it has changed the recording of those investments from the equity method to the cost method, in order to reflect the nature and conditions of the return on the investments. Hence, the Bank has adjusted the previous year’s consolidated financial statements, as presented herein for comparative 216 | Financial Statements and Notes to Financial Statements Annual Report 2010

purposes, under the heading of “Cumulative effect of valuation adjustment of investments” in the consolidated statement of changes in shareholders’ equity.

The effects of the above adjustment to the consolidated financial statements for the year ended 31 December 2009 are as follows:

(Unit: Million Baht) Consolidated balance sheet as at 31 December 2009 Increase in long-term investments — net 1,132 Decrease in investments in subsidiaries and associated companie — net (1,643) Increase in deficit (511) Consolidated statement of income for the year ended 31 December 2009 Increase in interest and dividend income on investment 73 Decrease in share of profits from investments in associated companies (172) Decrease in net income (99) Decrease in basic earnings per share (Baht per share) (0.0024) Decrease in diluted earnings per share (Baht per share) (0.0023)

Such adjustments do not have an impact on the separate financial statements, except for the reclassification of investments in the balance sheet from investments in associated companies to long-term investments (See Note 39 to the financial statements).

39.R eclassification Certain amounts in the financial statements as at 31 December 2009 and for the year ended 31 December 2009 have been reclassified to conform to the current year’s classification but with no effect to previously reported net income or shareholders’ equity. The reclassifications are as follow:

(Unit: Million Baht)

31 December 2009

Separate financial statement After As previously reclassification reported Long-term investments — net 21,694 20,562 Investment in subsidiaries and associated companies — net 605 1,737 TMB Bank PCL Financial Statements and Notes to Financial Statements | 217

(Unit: Million Baht)

31 December 2009

Consolidated financial statements Separate financial statement After As previously After As previously reclassification reported reclassification reported

Off-balance sheet items — commitments Avals to bills and guarantees of loans 847 2,753 847 2,753 Other commitments 396,171 394,265 396,171 394,265

(Unit: Million Baht)

For the year ended 31 December 2009

Consolidated financial statements Separate financial statement After As previously After As previously reclassification reported reclassification reported

Interest and dividend income Loans 17,506 17,650 17,352 17,496 Non-interest income Fees and charges — others 4,089 4,053 3,681 3,645 Gains on disposals of assets - 332 - 411 Other income 1,186 710 1,259 704 Non-interest expenses Premises and equipment expenses 2,688 2,652 2,622 2,586 Other expenses 2,184 2,183 2,102 2,101 Income tax 33 34 - 1

40.S ubsequent events On 24 February 2011, the Board of Directors of the Bank passed a resolution to propose for consideration and approval the payment of a dividend of Baht 0.015 per share to the Bank’s ordinary shareholders from its 2010 operating results or a total of Baht 653 million, to the Annual General Meeting of Shareholders. Such dividend will be paid and recorded after it is approved by the Annual General Meeting of the Bank’s shareholders.

41.A pproval of financial statements These financial statements were authorised for issue by the Bank’s Board of Directors on 24 February 2011. 218 | Basel II Pillar III Disclosure Annual Report 2010

BaseI l I Pillar III Disclosure

1. sCope of Application In this annual disclosure report over the reporting year 2010, TMB discloses any quantitative information on full consolidation and solo basis (Bank Only), in line with Bank of Thailand (BOT) notification.

As this is the first disclosure on full consolidation, no quantitative information for comparison is included. The subsidiaries below are included in the full consolidation. Name Type of business 1. Phayathai Asset Management Co., Ltd. NPL and NPA management 2. TMB Asset Management Co., Ltd. Fund Management 3. Designee for ETA Contract Co., Ltd. Infrastructure

2. Capital 2.1 Capital Structure Table 1: Regulatory Capital composition (Unit: Million Baht) Full Solo basis consolidation Item Dec 31, 2010 Jun 30, 2010 Dec 31, 2010 1. Tier I Capital 45,474 46,168 45,617 1.1 Ordinary shares capital 41,352 41,352 41,352 1.2 Warrants - - - 1.3 Net premium (discount) - - - 1.4 Non Cumulative Preferred share - - - 1.5 Statutory reserves - - - 1.6 Reserve appropriated from the net profit - - - 1.7 Cumulative profit (loss) after appropriation* (78) (78) 42 1.8 Hybrid Tier 1 that BOT allows to be counted as Tier I capital 4,200 4,894 4,200 1.9 Minority shareholders - - 83 1.10 Less: Deduction items - - - 1.10.1 Deduction items for Tier I capital - - 60 1.10.2 Deductions from Tier 1 capital and Tier 2 capital 50% each - - - 1.10.3 Deductions from the excess portion of Tier 2 capital requirement - - - 2. Tier II Capital 21,082 20,956 21,082 2.1 Tier II Capital before deductions 21,082 20,956 21,082 2.2 Deductions from Tier 1 capital and Tier 2 capital 50% each - - - 3. Total regulatory capital 66,556 67,124 66,699 3.1 Total regulatory capital before deductions 66,556 67,124 66,699 3.2 Less: Negative valuation of AFS equity - - - Total capital to risk-weighted assets 16.59% 18.37% 16.55% Tier I capital to risk-weighted assets 11.33% 12.64% 11.32%

Risk Weighted Assets (RWA) 1. Credit Risk Weighted Assets 361,088 322,412 362,226 2. Market Risk Weighted Assets 10,116 12,301 10,116 3. Operational Risk Weighted Assets 30,059 30,629 30,729 Total RWA 401,263 365,342 403,071 * excluding 2010 net profit TMB Bank PCL Basel II Pillar III Disclosure | 219

1. After the tenth year onwards, on each interest payment date. 2. In the event of certain changes affecting taxation in Thailand or the Cayman Islands made by any political sub-division or other authority with the power to tax. 3. In the event the securities no longer qualify as Tier 1 capital of the Bank, under the Bank of Thailand’s capital adequacy requirements and applicable regulations.

Interest is payable for the first 10 years at a fixed interest rate of 7.75% per annum, payable semi-annually on 30 June and 30 December of every year during the first 10 years, and for the eleventh year onwards at a floating interest rate of 3.13% per annum above three-month USD LIBOR, payable quarterly on 30 March, 30 June, 30 September and 30 December of every year.

During 2009, the Bank partially bought back Hybrid Tier 1 Securities in an aggregate principal amount of USD 153 million.

During 2010, the Bank additionally bought back Hybrid Tier 1 in an aggregate principal amount of USD 42 million.

As at 31 December 2010, the remaining principal amount of Hybrid Tier 1 Securities remained at USD 5 million, which is equivalent to approximately Baht 160 million.

1. At every interest payment date, after the fifth year of the issuing date. 2. In the event that any change or amendment in the tax laws resulting in the more tax liabilities to the Bank or the Bank not being able to claim interest on such securities as tax-deductible expenses. 3. In the event that the Hybrid Tier 1 is no longer qualified as Tier 1 capital of the Bank. 220 | Basel II Pillar III Disclosure Annual Report 2010

2.2C apital Adequacy At the end of 2010 the Bank reported a Basel II Capital Adequacy Ratio (CAR) ratio of 16.59%, 16.55% and a Tier 1 ratio of 11.33%, 11.32% for Solo basis and Full consolidation, respectively. The CAR ratio is significantly above the regulatory minimum of 8.5%. CAR Ratio for Solo basis slightly decreased when compared to 18.37% as at the end of June 2010 mainly due to an increase in credit risk weighted assets reflecting a higher outstanding loan book, combined with lower Tier 1 capital upon buy back Hybrid Tier 1.

The bank has implemented an Internal Capital Adequacy Assessment Process (ICAAP), with regular reporting to management and Board of Directors about the bank’s capital adequacy and all relevant capital management issues.

Table 2: Calculation Approach capital requirement

Approach implemented by risk type Approach Credit risk SA Equity risk SA Market risk SA Operational risk BIA

Table 3: Minimum capital requirements for credit risk classified by types of assets under the SA approach

(Unit: Million Baht) Full Minimum capital requirement for credit risk Solo basis consolidation classified by types of assets under SA approach Dec 31, 2010 Jun 30, 2010 Dec 31, 2010 1. Performing assets 27,935 24,083 27,838 1.1 Claims on Sovereigns and Central Banks and Multilateral Development Banks (MDBs) 145 138 145 1.2 Claims on Banks, Public Sector Entities (PSEs) that are treated as claims on banks and securities companies 3,168 2,069 3,180 1.3 Claims on Corporate and Public Sector Entities (PSEs) that are treated as claims on corporate 15,894 13,726 15,894 1.4 Claims on retail portfolios 3,959 3,631 3,958 1.5 Residential mortgage exposures 1,791 1,848 1,791 1.6 Other assets 2,978 2,671 2,870 2. Non-performing assets 2,758 3,322 2,951 3. First-to-default credit derivatives and securitisation - - - Total minimum capital requirement for credit risk under the SA approach 30,693 27,405 30,789 TMB Bank PCL Basel II Pillar III Disclosure | 221

Table 4: Minimum capital requirement for market risk for positions in the trading book (Unit: Million Baht) Full Solo basis consolidation Minimum capital requirement for market risk (positions in the trading book) Dec 31, 2010 Jun 30, 2010 Dec 31, 2010

Total minimum capital requirement for market risk (Standardized Approach) 860 1,046 860 * Minimum capital requirement based on regulatory minimum CAR ratio of 8.5%

Table 5: Minimum capital requirement for operational risk (Unit: Million Baht) Full Solo basis consolidation Minimum capital requirement for operational risk Dec 31, 2010 Jun 30, 2010 Dec 31, 2010

Total minimum capital requirement for operational risk (Basic Indicator Approach) 2,555 2,603 2,612 * Minimum capital requirement based on regulatory minimum CAR ratio of 8.5%

3.R isk exposures and assessment Management of risk is fundamental to TMB and is an integral part of TMB’s strategic focus. TMB takes a disciplined approach to managing credit, market and operational risk. Risk management is essential to our business being able to create shareholder value with appropriate and sustainable shareholder returns. Risk management is embedded in the daily business activities and strategic planning with the objective to optimize risks and returns. Our approach to risk is founded on solid risk governance and embedding a risk management culture where all employees look for risks and consider their impacts and apply appropriate risk mitigation strategies.

This section outlines TMB’s approaches to risk management, explaining our objectives as well as the high level policies, processes, measurement techniques and controls that are used. This section also presents a summary of information and disclosure on our portfolios and positions.

3.1C redit risk Credit risk is the risk of loss to TMB as a result of borrowers and/or counterparties failing to meet their financial and contractual obligations in accordance with agreed terms. It arises principally from granting loans and undertaking contingent liabilities, and also from certain off-balance sheet products such as guarantees and credit derivatives.

3.1.1 Overall Credit Risk Management: Credit risk management is the process by which risks that are inherent in the credit processes and credit portfolios are managed and controlled.

TMB’s credit risk management objective is to maximize the Bank’s risk-adjusted return by maintaining credit risk exposure within acceptable level and build a sustainable competitive advantage by integrating risk management into business activities and strategic planning. In recent years, TMB has improved and continues to improve its credit risk management capabilities with investments in people, risk management governance, processes, measurement tools and systems including the development of an economic capital framework, improved risk measurement processes and tools, such as risk rating model for Corporate and SME, Application Scorecard and Behavior Scorecard for Retail portfolio and small SME portfolio, and established frameworks 222 | Basel II Pillar III Disclosure Annual Report 2010

which sets out credit policies, procedures and lending guidelines covering the measurement and management of credit risk.

TMB Financial Business Group consists of Phayathai Asset Management Company (PAMC) and TMB Asset Management (TMBAM). Currently PAMC and TMBAM are not involve of credit-risk taking transactions. The business nature of PAMC primarily involves in the liquidation of NPA and NPL, while TMBAM is a fund management company and also does not have credit-granting transactions.

3.1.2 Credit risk management processes: The granting of credit and the undertaking of contingent liabilities is one of TMB’s major sources of income. However, lending can expose TMB’s earnings and capital to credit risk. Effective management of the portfolio and credit functions is crucial to TMB’s safety and soundness as it ensures that risks inherent in the credit processes and credit portfolios are managed and controlled. This is achieved by building strong credit culture, adhering to the sound credit risk management principles from time of business origination to the final settlement.

TMB operates under the following core credit risk management principles.

▶▶ Credit Portfolio Management: TMB strategically manages the composition of its credit portfolio and sets limits to cap concentration risk at an acceptable level to ensure that its credit portfolio is well-diversified, credit portfolio are growing within acceptable risk appetite and generates the required risk- adjusted return.

▶▶ Checks and Balances: TMB has established a framework of Delegation of Authority for credit approval to segregate the duties of a recommending authority from an approving authority. This is to ensure that all credit decisions are taken at the most appropriate level of experience and knowledge within the Bank.

▶▶ Sound Credit Granting: Credit risk is managed through a framework which sets out policies and procedures covering the management, underwriting and measurement of credit risk. The operational procedures are set out in writing with sufficient details to provide guidance to staff throughout the credit process.

▶▶ Standard for Professionalism: TMB ensures that staffs who are involved in the credit process comply with all applicable policies, procedures and guidelines, appropriate laws and regulations, and TMB’s code of conduct. TMB also provides several training modules to ensure that credit risk knowledge is at par with the best practices.

▶▶ Monitoring and Control: Adequate reporting standards are defined to monitor and maintain effectiveness of credit portfolio management.

3.1.3 Structure and organization of relevant credit risk management function: TMB maintains a risk governance structure that is intended to strengthen risk management while ensuring that risk-taking authorities are cascaded down from the Board through to the appropriate committees and functional levels. Risk issues and the changing regulatory and business environment are addressed in an effective manner. TMB Bank PCL Basel II Pillar III Disclosure | 223

The following chart highlights TMB’s credit risk governance structure.

Bdoar of Directors

Board Credit Committee Chief Executive Officer Board Risk Management Committee

Credit Underwriting Chief Risk Officer (CRO) Risk Policy Committee (CUC) Committee (RPC) Wholesale Credit and Restructuring Group Credit Restructuring Operational Risk Committee 1 (CRC1) Consumer and SME Credit Group Committee (ORC)

Credit Restructuring Risk Analytics and Policy Group Asset and Liability Committee 2 (CRC2) Management Committee Credit Risk Intelligence Group (ALCO) Market Risk Mana-gement Group

Operational Risk Management Group

Compliance Group

Legal Group

Independent Credit Review

Macroprudential Risk

The Board of Directors (BOD) holds ultimate responsibility of bank-wide risk management. The Risk Management Committee (RMC) has been delegated by the Board of Directors to review and oversee the management of all risks across the Bank and is authorized to approve the Bank’s overall risk management strategies, policies, frameworks and standards, as well as aggregate risk tolerance and risk concentration levels.

All the risk management related functions are under the stewardship of the Chief Risk Officer (CRO). The CRO has several direct reports responsible for specific risk management functions within TMB.

As for credit risk management structure, the Board of Directors (BOD), Risk Management Committee (RMC), Risk Policy Committee (RPC) provide forums to discuss and decide credit risk matters, while the Credit Committee (CC), the Credit Underwriting Committee (CUC), the Credit Restructuring Committee 1 and Credit Restructuring Committee 2 (CRC1 and CRC2) make transactional credit decisions. At transactional level, the Wholesale Credit and Restructuring Group and the Consumer and SME Credit Group create consistency throughout the Bank by providing common credit underwriting standards, credit manuals and tools, and performing credit underwriting, portfolio proactive management, credit review, collection and remedial (including credit restructuring and workout and loan recovery) management activities. The Risk Analytics and Policy Group is responsible for establishing bank-wide risk management policies and guidelines and the measurement and management of credit risk, and additionally performs validation of the credit risk models, conducts credit risk stress testing and undertakes comprehensive industry analysis and provision of internal industry ratings. The Credit Risk Intelligence Group supports credit risk stakeholders on data support and rule management system, credit risk and regulatory reporting, develops and monitors credit risk models, develops and manages risk system and processes to be in line with credit risk strategy.

The Independent Credit Review Department provides the required independent review of credit of individual significant credits and provides support on the review of performance and end-to-end process for identified high-risk segments.

The Macroprudential Risk undertakes forecasting and commentary on macro economic developments in support to risk as well as business strategies. 224 | Basel II Pillar III Disclosure Annual Report 2010

Business Units, as a first line of defense, are directly accountable for the management of risks arising from their business activities. A key objective is to ensure that business decision strike an appropriate balance between risk and reward, consistent with the Bank’s risk appetite.

3.1.4 Scope and nature of credit risk measurement, approval, monitoring and reporting system: Credit risk policies: The credit risk policies are developed with a clearly defined guideline under the common framework for credit extension. Loans are not provided for businesses that are against the laws, the code of ethics or which could have an impact on TMBs reputation as defined by the BOD. The policies cover the followings:

1. As a basis for the operations, policies and customer qualifications are set out according to risk levels, divided into three groups, credits that are prohibited/suspended, credits that are discouraged, and credits requiring special attention.

2. Credit portfolio management is carried out to prevent concentration of the credit extension, for example, to any particular industrial/business sector or group of borrowers. To ensure a check and balance in the approval process, the Bank clearly separates the roles and duties of business relationship management unit, credit risk analysis unit and parties with approval authority.

3. The working procedure and practice of credit analysis are set out in writing so as for the officials to have a guideline for customer screening, customer payment ability analysis, risk analysis, collateral consideration, and risk mitigation through financial covenants.

TMB’s retail credit portfolios comprise consumer and small/micro SME exposures and are now managed on a product portfolio basis. Policy scope and product terms and conditions are packaged and standardized in order to achieve maximum efficiency and reliability in portfolio underwriting, management and collections. Scorecards and credit risk rating tools are also used where available.

Credit risk measurement and reporting: Credit risk measurement plays an important role in portfolio management decisions by producing the most accurate possible quantitative assessment of the credit risk to which TMB is exposed, from the level of an individual facility up to the total portfolio.

TMB currently uses internal Probability of Default (PD) models, Loss Given Default (LGD) and Exposure at Default (EAD) parameters for measurement of credit risk at transactional as well as portfolio level, for quantification of Economic Capital (EC) and IBNR provision as well as credit portfolio monitoring.

TMB set up risk pre-defined set of risk boundaries for each business, segment and some portfolio and products through Risk Appetite Statement (RAS). The actual performance is monitored against the defined RAS and subject to review with all stakeholders on a regular basis so as to determine appropriate actions where required. TMB Bank PCL Basel II Pillar III Disclosure | 225

The RAS, credit exposures and portfolio performance are reported via credit dashboard which is presented to the Risk Management Committee on a monthly basis. The credit dashboard contains comprehensive information with respect to the overall risk (including credit risk) profile of TMB and also includes credit concentration, credit risk rating distribution, and regulatory and economic capital for the Bank overall but also for each of the Business Unit.

Credit approval and monitoring process: Credit exposures to individual counterparties, groups of connected counterparties are reviewed and approved by respective committees or individuals within a defined credit approval authority framework with clearly defined roles and responsibilities based on check and balance concept. Credit risk rating models are used in the approval process, along with judgment and experience, for the Wholesale and SME portfolios. In retail portfolios (and small business facilities), application scorecards are used as a tool in decision making process.

The Bank has a separate credit process for wholesale, SME and retail credit and has segregated the role by credit process into relationship management (Front Office) and credit management for proper checks and balances. Front Office groups report to their respective Chief Officers, while credit management groups report to the Chief Risk Officer. Front Office staff for wholesale portfolio comprising Relationship Management and Lending and Structuring Product (LSP) are responsible for marketing, sales and deal origination, customer service, pre-screening and preparation of credit applications that will be forwarded to credit underwriters for further credit risk assessment and recommendation. Front Office staff also have the responsibility to manage the full credit life cycle: origination, monitoring, managing and review of their credit portfolio including all risks involved. The credit applications (including recommendation from credit underwriter) are then proposed to the relevant approval authorities that have the authority to approve on the basis of borrower- and industry data, subject to TMB’s policies and BOT regulations. Credits that show deterioration in performance are the subject of increased attention from Relationship Managers (RMs) and underwriters by way of proper monitoring and management processes to prevent delinquency. Delinquent customers in need of restructuring are transferred to Credit Restructuring and NPA Management.

For Retail Credit and Small SMEs, the credit process is structured on a product basis. Again, sales/marketing and credit management are separated into different functions, with the Business Unit handling the marketing and reporting to the Chief Retail Banking Officer or Chief SME Banking Officer and the credit management function reporting to the Chief Risk Officer. Customer acquisition is through branches, relationship managers or other sales channels under the marketing and sales guidance of the product manager and sales/account manager. A Loan Origination System is under development for consumer credit applications both secured and unsecured products. Full implementation is expected in late 2011. Credit Scoring plays an important role in credit decisions for Unsecured Consumer and also Small SME applicants. The Retail Collection team under the Consumer and SME Credit Group is responsible for the remedial management and collections follow up on high risk or delinquent consumer and small SME customers, as well as NPL recovery on unsecured consumer debts. Management of NPL recovery for SME customers & secured consumer product customers is handled by specialists in Retail Credit Restructuring in Credit Restructuring and NPA.

Credit quality management: TMB manages quality of credit portfolio by monitoring and reviewing status of the borrowers and/or counterparties regularly. Special attention is paid to problem exposures, which are subject to more frequent review and reporting. Early warning system is in place to detect customers that may be moving toward adverse classification or further deterioration performance. 226 | Basel II Pillar III Disclosure Annual Report 2010

Dedicated Debt Restructuring team and Credit Restructuring Committees are established to restructure problem loan in an effective manner and to provide advice on debt restructuring conditions. TMB sets aside loan loss provision adequately in accordance with guidelines from the Bank of Thailand (BOT). TMB also takes additional excess provisions for performing loan as a further cushion for losses expected as a result of future events or operation for loss incurred but not yet recognized (IBNR) using probability of default based on risk level and exposure at default based on loan types or debtor types and loss given default based on collateral types.

3.1.5 Policies for hedging and/or mitigating of credit risk and processes for monitoring the continuing effectiveness of hedges/mitigants: Credit Risk Mitigation (CRM) is defined in the Core Credit Risk Policy (CCRP) and is determined through methods based on the Bank of Thailand’s Basel II regulations. In principle, TMB takes the CRM effects of financial collateral, guarantees into account using credit risk substitution method on credit risk exposures.

TMB has implemented robust procedures for the timely liquidation of collateral to ensure that any legal conditions required for declaring the default of the counterparty and liquidating the collateral are observed, and that collateral can be liquidated promptly.

TMB has established collateral assessment policy and procedures which are in accordance with BOT’s regulation. The reappraisal frequency is also driven by level of risk based on loan performance.

TMB takes credit risks in an informed and measured fashion. As such, the creditworthiness of our customers, trading partners and investments is continually evaluated for their ability to meet their financial obligations to TMB. During the assessment process of creating new loans, trading limits, or investments, as well as reviewing existing loans trading positions and investments, TMB determines the amount and type of collateral, if any, that a customer may be required to pledge to the Bank. Generally, the greater the Probability of Default of a viable borrower or financial counterparty, the more collateral the customer or counterparty will have to provide. Within counterparty trading activities, TMB actively enters into various legal arrangements whereby TMB and/or counterparties may have to post collateral to one another to cover market fluctuations of their relative positions. Laws in various jurisdictions also affect the type and amount of collateral that TMB can receive or pledge. Additionally, TMB will sometimes enter into credit default swaps, and other similar instruments, in order to reduce the perceived credit risk on a given borrower or portfolio. The type of collateral which is held as security is determined by the structure of the loan or position.

3.1.6 Guidelines for setting risk controlling limits: Concentration risk in credit portfolios is an important aspect of credit risk management. TMB manages and monitors credit concentration with respect to industries, countries and borrowers by establishing the bank-wide industry diversification threshold and country limits and names concentration to manage both existing and potential exposures within acceptable level to ensure appropriate diversification of the portfolio and avoid excessive credit risk exposure in certain industries or countries. In addition, TMB sets risk-based Single Exposure Limit to manage the maximum exposure for single obligor and related lending.

3.1.7 Roles and responsibilities of internal auditor relevant to credit risk: The Bank has established the Audit Group as an independent function to evaluate and recommend improvements on the adequacy and effectiveness of risk management, control and governance processes throughout the Bank. Auditors review TMB Bank PCL Basel II Pillar III Disclosure | 227

to ensure relevant units carry out their duties in compliance with credit risk management policies established by the Bank and rules set by the regulator.

In addition to Audit Group, TMB sets up the Independent Credit Review Department independent from credit underwriting and booking processes to provide on-going surveillance on potential credit quality deterioration trends. An independent review of the credit quality function is fully dedicated to identifying early-warning signs of changes in portfolio quality and providing senior management with insight and in-depth information on the quality of the credit portfolio, weaknesses of policies, processes and procedures together with corrective and protective recommendations. Changes and improvements to relevant credit policies, procedures and processes could be made based on lessons-learned recommendations to relevant parties.

3.1.8 Loan Classification and provision TMB classify loan based on past due status and qualitative classification using historical and future financial performance, liquidity and historical debt repayment.

TMB sets aside loan loss provision according to guidelines from Bank of Thailand (BOT). The guidelines require all banks to categorize their loan portfolios into 6 loan classification, which are subject to different levels of provisioning based on percentages prescribed by BOT. TMB also takes additional excess provisions for loan classified as Pass (P) and Special Mention (SM) in its credit portfolio to provide further cushion for losses expected as a result of future events or operation for loss incurred but not yet recognized (IBNR) using probability of default based on risk level and exposure at default based on loan types or debtor types.

TMB will at all times ensure that its provisions held equal or exceed the minimum level prescribed by BOT.

Table 6: Outstandings of on-balance sheet assets and off-balance sheet items before credit risk mitigation

(Unit: Million Baht)

Full Solo basis consolidation Average Item during 2010 Dec 31, 2010 Dec 31, 2009 Dec 31, 2010 1. On-balance sheet assets 500,876 518,701 483,050 520,120 1.1 Net loans (1) (including interbank and money market item) (1) 406,380 415,786 396,973 416,379 1.2 Net investments in debt securities (2) 85,165 91,668 78,662 92,299 1.3 Deposits (including accrued interests) 9,331 11,247 7,415 11,442 2. Off-balance sheet items (3) 609,155 870,542 347,768 870,542 2.1 Aval of bills, guarantee, and letter of credits 18,223 17,721 18,725 17,721 2.2 OTC derivatives (4) 564,292 816,316 312,268 816,316 2.3 Undrawn committed line 26,640 36,505 16,775 36,505

(1) Including accrued interests receivable and net of deferred revenues, allowances for doubtful accounts and revaluation allowances for debt restructuring. (2) Excluding accrued interests and net of revaluation allowances for investments and allowances for impairment. (3) Before multiplying by CCF (4) Including equity derivatives 228 | Basel II Pillar III Disclosure Annual Report 2010 ------1 1,908 Undrawn Undrawn (Unit: Million Baht) (Unit: Million Baht) committed line committed line - - (3) (3) 4,547 1,189 3,309 8,598 OTC OTC derivatives derivatives - 10,330 - - - - 10,906 - 30 72 Off-balance sheet items Off-balance sheet items Aval of bills, Aval of bills, letter of credit letter of credit guarantees, and guarantees, and - - 4,547 1,189 5,247 8,671 Total Total - - 444 10,330 176 7,415 347,768 18,725 312,268 16,775 1,047 10,906 2,507 1,026 1,229 8,730 844,059 17,691 791,771 34,597 3,503 333,361 18,653 297,934 16,774 Deposit Deposit interest) interest) (include accrued (include accrued (2) (2) ------in debt in debt securities securities Net investment Net investment (1) (1) - - - - 6 47 6,406 2,974 On-balance sheet assets On-balance sheet assets - - 491 182 1,047 2,507 7,432 4,203 Total Net Loan Total Net Loan 518,701 415,786 91,668 11,247 870,542 17,721 816,316 36,505 483,050 396,973 78,662 509,731 409,333 91,668 476,158 393,993 78,662 B I and include interbank and money market item. E efore multiplying by CCF xcluding accrued interest receivable and net of revaluation allowances for investments and allowances for impairment. ncluding accrued interest receivable and net of deferred revenues, allowances for doubtful accounts and revaluation allowances for debt restructuring asis (1) (2) (3) b

lo o Total Total Europe Europe Africa and Middle East Africa and Middle East North America and Latin America North America and Latin America Asia Pacific (exclude Thailand) Asia Pacific (exclude Thailand) Table 7: Outstandings of on-balance sheet assets and off-balanceS sheet items before CRM classified by Deccountry 31, 2010 or geographic area of debtors Country or geographic area of debtor Thailand Dec 31, 2009 Country or geographic area of debtor Thailand TMB Bank PCL Basel II Pillar III Disclosure | 229 - - - Total 1,908 Undrawn (Unit: Million Baht) (Unit: Million Baht) committed line - 11,442 - 36,505 - (3)

1 year Maturity 3,310 exceeding OTC Dec 31, 2010 derivatives Full consolidation - 10,330 - - 10,906 1 year 75,761 244,359 520,120 29 Maturity 2 not exceeding Off-balance sheet items Aval of bills,

letter of credit guarantees, and Total - 5,247 Total - 7,415 11,442 - 16,775 36,505 1 year Maturity exceeding - Dec 31, 2009 444 10,330 1,047 10,906 1,027 8,924 844,059 17,692 791,770 34,597 Deposit interest) (include accrued 1 year 56,090 226,960 483,050 Maturity 2

(2) not exceeding - - - - Solo basis in debt securities Total Net investment (1) - - 47 - 11,247 7,415 - 36,505 16,775 6,405 On-balance sheet assets 1 year Maturity exceeding Dec 31, 2010 - 491 1,047 7,432 Total Net Loan 1 year 45,882 45,786 91,668 59,031 19,631 78,662 46,371 45,928 92,299 11,247 13,002 4,719 17,721 8,576 10,149 18,725 13,002 4,719 17,721 36,505 520,120 416,379 92,299 11,442 870,542 17,721 816,316 36,505 511,150 409,927 92,299 Maturity 217,948 197,838 415,786638,838 189,644 231,704 207,329 870,542 396,973 213,983 217,948 133,785 198,431 347,768 416,379 638,838 231,704 870,542 275,077 243,624 518,701 589,331 226,985 816,316 188,632 123,636 312,268 589,331 226,985 816,316 not exceeding (1) (3)

(including interbank (2) (1) uding accrued interest receivables and net of deferred revenues, allowances for doubtful accounts and revaluation allowances for debt restructuring Incl Before multiplying by CCF and include interbank and money market item. E Before multiplying by CCF Excluding accrued interest receivables and net of revaluation allowances for investments and allowances for impairment. Including accrued interest receivables and net of deferred revenues, allowances for doubtful accounts and revaluation allowances for debt restructuring.

xcluding accrued interest receivables and net of revaluation allowances for investments and allowances for impairment. TC derivatives et investments in debt et loans ndrawn committed line eposits (including accrued val of bills, guarantee, and (1) (2) (3) (1) (2) (3) and money market item) interests) D N A letter of credits securities N O U c

ff-balance sheet items .3 .2 .1 .1 .2 .3 O 1 1 2 1 O 2 2

urope u Total E Africa and Middle East North America and Latin America Asia Pacific (exclude Thailand) F ll Dec 31, 2010 ONSOLIDATION Country or geographic area of debtor Thailand Table 8: Outstandings of on-balance sheet assets and off-balance sheet items before credit risk mitigation classified by residual maturity Item 1. n-balance sheet assets

230 | Basel II Pillar III Disclosure Annual Report 2010

Table 9: Loans and accrued interest receivables and investments in debt securities before credit risk mitigation classified by country or geographic area of debtors and by asset classification specified by the Bank of Thailand

Solo basis Dec 31, 2010 (Unit: Million Baht)

Loan and accrued interest receivables (1) Investment in debt Special Sub Doubtful securities Country or geographic area of debtor Normal mentioned standard Doubtful loss Total Doubtful loss Thailand 369,146 25,905 5,172 1,952 26,080 428,256 53,273 Asia Pacific (exclude Thailand) 6,558 5 - - 63 6,626 - North America and Latin America ------Africa and Middle East ------Europe 11 1 - - 35 47 - Total 375,715 25,911 5,172 1,952 26,178 434,929 53,273

(1) Including loans and accrued interest receivables of interbank and money market item.

Dec 31, 2009 (Unit: Million Baht)

Loan and accrued interest receivables (1) Investment in debt Special Sub Doubtful securities Country or geographic area of debtor Normal mentioned standard Doubtful loss Total Doubtful loss Thailand 325,346 47,672 7,281 5,302 38,403 424,004 - Asia Pacific (exclude Thailand) 3,030 5 83 1 2 3,121 - North America and Latin America ------Africa and Middle East ------Europe 6 - - - - 6 - Total 328,382 47,677 7,364 5,303 38,405 427,131 -

(1) Including loans and accrued interest receivables of interbank and money market item.

Fll u cONSOLIDATION Dec 31, 2010 (Unit: Million Baht)

Loan and accrued interest receivables (1) Investment in debt Special Sub Doubtful securities Country or geographic area of debtor Normal mentioned standard Doubtful loss Total Doubtful loss Thailand 368,446 25,905 5,172 1,952 28,838 430,313 53,273 Asia Pacific (exclude Thailand) 6,558 5 - - 62 6,626 - North America and Latin America ------Africa and Middle East ------Europe 11 1 - - 35 47 - Total 375,015 25,911 5,172 1,952 28,935 436,986 53,273

(1) Including loans and accrued interest receivables of interbank and money market item. TMB Bank PCL Basel II Pillar III Disclosure | 231

Table 10: Provisions (divided into general provisions and specific provisions) and charge-offs for loans and accrued interest receivables and investments in debt securities classified by country or geographic area

Solo basis Dec 31, 2010 (Unit: Million Baht)

Loan and accrued interest receivables (1) Investment in debt Charges-off securities Country or geographic area of debtor General Provision Specific Provision between period (2) Specific Provision Thailand 10,330 13,093 68 Asia Pacific (exclude Thailand) 63 - - North America and Latin America - - - Africa and Middle East - - - Europe - - - Total 8,751 10,393 13,093 68

(1) Include provisions and charge-offs for loans and accrued interest receivables of interbank and money market item (2) Include provisions for NPL disposal

Dec 31, 2009 (Unit: Million Baht)

Loan and accrued interest receivables (1) Investment in debt Charges-off securities Country or geographic area of debtor General Provision Specific Provision between period (2) Specific Provision Thailand 20,196 18,139 - Asia Pacific (exclude Thailand) 84 - - North America and Latin America - - - Africa and Middle East - - - Europe - - - Total 9,879 20,280 18,139 -

(1) Include provisions and charge-offs for loans and accrued interest receivables of interbank and money market item (2) Include provisions for NPL disposal

Fll u cONSOLIDATION Dec 31, 2010 (Unit: Million Baht)

Loan and accrued interest receivables (1) Investment in debt Charges-off securities Country or geographic area of debtor General Provision Specific Provision between period (2) Specific Provision Thailand 11,333 13,682 68 Asia Pacific (exclude Thailand) 63 - - North America and Latin America - - - Africa and Middle East - - - Europe - - - Total 9,212 11,396 13,682 68

(1) Include provisions and charge-offs for loans and accrued interest receivables of interbank and money market item (2) Include provisions for NPL disposal 232 | Basel II Pillar III Disclosure Annual Report 2010

Table 11: Loans and accrued interest receivables* before credit risk mitigation classified by type of business and by asset classification specified by the Bank of Thailand

Solo basis Dec 31, 2010 (Unit: Million Baht)

Special Sub Doubtful Type of business Normal mentioned standard Doubtful loss Total Agriculture and Mining 4,382 454 79 41 1,437 6,394 Manufacturing and Commerce 127,854 16,623 3,044 698 13,973 162,192 Property and Construction 14,680 1,729 976 613 2,165 20,163 Public Utilities and Services 55,836 5,022 590 61 4,795 66,304 Housing 52,610 1,528 296 429 3,140 58,003 Others 120,353 555 187 110 668 121,873 Total 375,715 25,911 5,172 1,952 26,178 434,929

Dec 31, 2009 (Unit: Million Baht)

Special Sub Doubtful Type of business Normal mentioned standard Doubtful loss Total Agriculture and Mining 4,202 1,362 94 124 4,158 9,940 Manufacturing and Commerce 100,196 27,547 2,829 3,130 22,856 156,558 Property and Construction 13,122 5,669 1,037 1,105 3,676 24,609 Public Utilities and Services 47,270 10,304 2,687 216 3,400 63,878 Housing 52,464 1,844 536 571 3,235 58,650 Others 111,127 951 181 157 1,080 113,496 Total 328,382 47,677 7,364 5,303 38,405 427,131

Fll u cONSOLIDATION Dec 31, 2010 (Unit: Million Baht)

Special Sub Doubtful Type of business Normal mentioned standard Doubtful loss Total Agriculture and Mining 4,382 454 79 41 2,110 7,067 Manufacturing and Commerce 127,854 16,623 3,044 698 14,558 162,777 Property and Construction 14,680 1,729 976 613 2,165 20,163 Public Utilities and Services 55,836 5,022 590 61 5,482 66,991 Housing 52,610 1,528 296 429 3,244 58,107 Others 119,653 555 187 110 1,376 121,881 Total 375,015 25,911 5,172 1,952 28,935 436,986

* Including loan and accrued interest receivable of interbank and money market item. TMB Bank PCL Basel II Pillar III Disclosure | 233

Table 12: Provisions (divided into general provisions and specific provisions) and charge-offs for loans and accrued interest receivables* classified by type of business

Solo basis (Unit: Million Baht)

Dec 31, 2010 Dec 31, 2009 Charges-off Charges-off General Specific between General Specific between Type of business Provision Provision period (1) Provision Provision period (1) Agriculture and Mining 361 294 2,132 1,370 Manufacturing and Commerce 6,631 1,494 13,979 766 Property and Construction 599 394 991 127 Public Utilities and Services 1,377 83 1,495 1,864 Housing 957 255 1,066 297 Others 468 10,573 617 13,715 Total 8,751 10,393 13,093 9,879 20,280 18,139

(1) Including provision for NPL disposal

Fll u cONSOLIDATION (Unit: Million Baht)

Dec 31, 2010 Charges-off General Specific between Type of business Provision Provision period (1) Agriculture and Mining 702 394 Manufacturing and Commerce 6,931 1,591 Property and Construction 599 401 Public Utilities and Services 1,565 207 Housing 1,005 294 Others 594 10,795 Total 9,212 11,396 13,682

(1) Including provision for NPL disposal

* Including loans and accrued interest receivables of interbank and money market item 234 | Basel II Pillar III Disclosure Annual Report 2010

Table 13: Reconciliation of changes in provisions for loans and accrued interest receivables*

Solo basis (Unit: Million Baht)

Dec 31, 2010 Dec 31, 2009 General Specific General Specific Item Provision Provision Total Provision Provision Total Provisions at the beginning of the period 9,879 20,280 30,158 9,685 34,720 44,405 Charge-offs during the period - 13,093 13,093 - 18,139 18,139 Increases or (decreases) of provisions during the period (1,128) 3,207 2,079 194 3,699 3,893 Other provisions (provisions for losses from foreign exchange, provisions for merger and sale of businesses) ------Provisions at the end of the period 8,751 10,393 19,144 9,879 20,280 30,159

Fll u cONSOLIDATION (Unit: Million Baht)

Dec 31, 2010 General Specific Item Provision Provision Total Provisions at the beginning of the period 10,072 21,534 31,606 Charge-offs during the period - 13,682 13,682 Increases or (decreases) of provisions during the period (860) 3,544 2,684 Other provisions (provisions for losses from foreign exchange, provisions for merger and sale of businesses) - - - Provisions at the end of the period 9,212 11,396 20,608

* Including loans and accrued interest receivables of interbank and money market item TMB Bank PCL Basel II Pillar III Disclosure | 235

Table 14: Outstanding of on-balance sheet assets and off-balance sheet items for credit risk under the SA approach classified by type of assets

Solo basis (Unit: Million Baht)

Dec 31, 2010 Dec 31, 2009 On- Off- On- Off- balance balance balance balance sheet sheet sheet sheet Type of assets assets items* Total assets items* Total 1. Performing assets 570,953 62,215 633,168 515,339 32,179 547,518 1.1 Claims on sovereigns and central banks and Multilateral Development Banks (MDBs) 133,514 3,166 136,680 125,663 2,965 128,628 1.2 Claims on Banks, Public Sector Entities (PSEs) that are treated as claims on banks and securities companies 89,052 24,034 113,086 63,486 8,170 71,656 1.3 Claims on Corporate and Public Sector Entities (PSEs) that are treated as claims on corporate 169,725 32,281 202,006 151,974 17,371 169,345 1.4 Claims on retail portfolios 66,212 2,734 68,946 70,746 3,673 74,419 1.5 Residential mortgage exposures 52,912 - 52,912 52,751 - 52,751 1.6 Other assets 59,538 - 59,538 50,719 - 50,719 2. Non-performing assets 22,941 1,574 24,515 30,854 2,726 33,580 3. First-to-default credit derivatives and Securitisation ------Total 593,894 63,789 657,683 546,193 34,905 581,098

* After multiplying by CCF

Fll u cONSOLIDATION (Unit: Million Baht)

Dec 31, 2010 On- Off- balance balance sheet sheet Type of assets assets items* Total 1. Performing assets 570,526 62,215 632,741 1.1 Claims on sovereigns and central banks and Multilateral Development Banks (MDBs) 134,145 3,166 137,311 1.2 Claims on Banks, Public Sector Entities (PSEs) that are treated as claims on banks and securities companies 89,247 24,034 113,281 1.3 Claims on Corporate and Public Sector Entities (PSEs) that are treated as claims on corporate 169,725 32,281 202,006 1.4 Claims on retail portfolios 66,212 2,734 68,946 1.5 Residential mortgage exposures 52,912 - 52,912 1.6 Other assets 58,285 - 58,285 2. Non-performing assets 23,996 1,574 25,570 3. First-to-default credit derivatives and Securitisation - - - Total 594,522 63,789 658,311

* After multiplying by CCF 236 | Basel II Pillar III Disclosure Annual Report 2010

3.1.9 Disclosure of methodology to calculate capital required for credit risk External Credit Assessment Institutions (ECAIs) used by TMB For capital calculation purpose, TMB uses ratings assigned by the following external credit rating agencies to determine risk weight of credit risk assets:

▶▶ Moody’s Investors Service

▶▶ Fitch Rating (Thailand)

▶▶ Tris Rating

How the bank assign ECAI’s rating to customer The lowest external ratings will be used for regulatory capital calculation. In case there is no external rating available, the Standardized Approach provides for specific risk-weights depending on the counterpart type. TMB Bank PCL Basel II Pillar III Disclosure | 237 -- (Unit: Million Baht) (Unit: Million Baht) ------

34,856 - - - 31,945 58,499 2,697 - - - 70,202 - - - - Unrated outstanding Unrated outstanding 47,561 3,452 1,839 - - - 48,207 2,302 2,151 ------0 20 50 35 75 100 0 20 50 35 75 100 0 20 50 35 75 100 625 937.5 100/8.5% 0 20 50 35 75 100 625 937.5 100/8.5% 47,247 869 22,894 2,258 319 8,228 24,924 1,092 4,644 18,144 Rated outstanding Rated outstanding - 66,203- 12 5,420 23,934 13,674 170,819 5,497 64 - 52,750- 6,040 - 10,061 5,915 153,666 1,609 1 0 20 50 100 150 0 20 50 1000 150 20 50 100 150 0 20 50 100 150 147,308 - 3,119 - 97 137,558 44 2,915 - - Risk weight (%) Risk weight (%) Risk weight (%) Risk weight (%) (1) (1) asis b

laims on sovereigns and central banks and lo F For the part with no CRM whose risk weights depend on the ratio of provisions to total exposures. Multilateral Development Banks (MDBS) (PSEs) that are treated as claims on banks and securities companies (PSEs) that are treated as claims on corporate Multilateral Development Banks (MDBS) (PSEs) that are treated as claims on banks and securities companies (PSEs) that are treated as claims on corporate C C C C R O C C C C R O o

or the part with no CRM whose risk weights depend on the ratio of provisions to total exposures.

Table 15: Outstanding on-balance15: of Table sheetassetsoff-balanceand sheetitemsaftercredit riskmitigationassets eachtypeclassifiedapproachof for SA weight risk under the by S Dec 31, 2010 of Type assets Performing assets - - laims on Banks, Public Sector Entities - laims on Corporate and Public Sector Entities - - laims on retail portfolios - esidential mortgage exposures ther assets Non-performing assets FIs of capital from deduct to allows BOT which Items (1) Dec 31, 2009 of Type assets Performing assets - laims on sovereigns and central banks and - laims on Banks, Public Sector Entities - laims on Corporate and Public Sector Entities - - laims on retail portfolios - esidential mortgage exposures ther assets Non-performing assets FIs of capital from deduct to allows BOT which Items (1) 238 | Basel II Pillar III Disclosure Annual Report 2010 (Unit: Million Baht) ------

33,588 - - - 58,499 2,697 - - - Unrated outstanding 47,561 3,452 1,839 - - - -- 0 20 50 35 75 100 6250 937.5 100/8.5% 20 50 35 75 100 47,262 869 1,257 4,601 19,076 Rated outstanding - 66,278- 12 5,420 24,054 13,674 170,819 64 5,497 0 20 50 100 150 0 20 50 100 150 147,939 - 3,119 - 97 Risk weight (%) Risk weight (%) (1) c

31, 2010 For the part with no CRM whose risk weights depend on the ratio of provisions to total exposures. C Multilateral Development Banks (MDBS) C (PSEs) that are treated as claims on banks and securities companies C (PSEs) that are treated as claims on corporate C R O ec

F ll D ONSOLIDATION of Type assets Performing assets - laims on sovereigns and central banks and - laims on Banks, Public Sector Entities - laims on Corporate and Public Sector Entities - laims - on retail portfolios esidential - mortgage exposures ther assets Non-performing assets FIs of capital from deduct to allows BOT which Items (1) TMB Bank PCL Basel II Pillar III Disclosure | 239

Table 16: Part of outstanding that is secured by collateral under the SA approach classified by type of assets and collateral

Solo basis (Unit: Million Baht)

Dec 31, 2010 Dec 31, 2009 Eligible financial Guarantee and Eligible financial Guarantee and Type of assets collateral (1) credit derivative collateral (1) credit derivative 1. Performing assets 23,434 14,369 7,871 9,011 1.1 Claims on sovereigns and central banks and Multilateral Development Banks (MDBs) - - - - 1.2 Claims on Banks, Public Sector Entities (PSEs) that are treated as claims on banks and securities companies 10,601 12,600 2 8,872 1.3 Claims on Corporate and Public Sector Entities (PSEs) that are treated as claims on corporate 6,113 680 3,433 93 1.4 Claims on retail portfolios 6,665 1,085 4,370 45 1.5 Residential mortgage exposures 55 4 66 1 1.6 Other assets - - - - 2. Non-performing assets 548 370 - - Total 23,982 14,739 7,871 9,011

(1) Eligible financial collateral that the Bank of Thailand allows to use for risk mitigation such as cash, deposit etc.

Fll u cONSOLIDATION (Unit: Million Baht)

Dec 31, 2010 Eligible financial Guarantee and Type of assets collateral (1) credit derivative 1. Performing assets 23,434 14,369 1.1 Claims on sovereigns and central banks and Multilateral Development Banks (MDBs) - - 1.2 Claims on Banks, Public Sector Entities (PSEs) that are treated as claims on banks and securities companies 10,601 12,600 1.3 Claims on Corporate and Public Sector Entities (PSEs) that are treated as claims on corporate 6,113 680 1.4 Claims on retail portfolios 6,665 1,085 1.5 Residential mortgage exposures 55 4 1.6 Other assets - - 2. Non-performing assets 548 370 Total 23,982 14,739

(1) Eligible financial collateral that the Bank of Thailand allows to use for risk mitigation such as cash, deposit etc. 240 | Basel II Pillar III Disclosure Annual Report 2010

3.2 Market risk Market risk exposures Market risks comprise of both price and liquidity risks. Price risk is the potential loss due to fluctuations in interest rates, foreign exchange rates, equity and commodity prices.

3.2.1 Market Risk Management Structure Two entities independent from the Business Units are directly involved in the market risk management of the Bank: the Asset and Liability Management Committee (ALCO) and the Market Risk Management Group (MRMG).

The Asset and Liability Management Committee (ALCO) The ALCO is a supervisory body with delegated authority from the Risk Management Committee (RMC) to ensure that the bank-wide market risk management is in compliance with the Bank’s overall risk management policies and level of risk appetite established by the Board of Directors. The RMC delegates the day-to-day responsibility for asset and liability management and market risk management to the ALCO. The ALCO is responsible for establishing market risk directives as well as endorsing/or approving all market risk issues and limits concerning asset and liability management. ALCO is also responsible for monitoring liquidity positions and capital management programs approved from the RMC and the Board of Directors, which is the case for major policies and liquidity risks.

The ALCO membership currently comprises of the Bank’s Chief Executive Officer who serves as chairman of the committee, and the Bank’s senior management. The ALCO meets at least once a month, or as needed, to review policies used for managing the Bank’s assets and liabilities, market risks, and to review the alignment of the Bank’s assets and liabilities with the changing market environment, as well as to determine that interest rates on loans, deposits, and bills of exchange are set at appropriate levels.

The Market Risk Management Group (MRMG) The MRMG is the supporting unit directly responsible for managing the market risks of the Bank with reporting line to the Chief Risk Officer. The MRMG is responsible for:

▶▶ Developing relevant new market risk management policies and implementation or amendment of existing policies to be in line with changes in the Bank’s strategy, market environment and regulatory requirements.

▶▶ Developing, implementing and enforcing market risk management processes in the Trading Book.

▶▶ Developing, implementing and enforcing market risk management processes in the Banking Book.

▶▶ Developing and validating the risk models.

3.2.2 Market Risk Management Process The Business Units undertaking business activities that involve market risks are responsible for ensuring that they abide by the standards/guidelines set out in the policies.

The MRMG ensures that the risk levels stay within the approved limits, and that any foreseeable major impending risks or adverse events are escalated to the appropriate authorities to take the necessary and timely actions. TMB Bank PCL Basel II Pillar III Disclosure | 241

The limits strictly imposed include, but are not limited to,

▶▶ Foreign Exchange Risk Limits (FX Limits) cover all foreign currency transactions. These are set in accordance with the BOT regulations regarding daily foreign exchange overbought/oversold position (open position).

▶▶ Interest Rate Sensitivity Limits (PV01) control the effect of 1 basis point movement in interest rates on interest rate sensitive products. The PV01 limits are established and monitored for all relevant discrete tenor buckets.

▶▶ Management Action Trigger Limits (MAT) set the maximum tolerance levels that the management will tolerate. MAT breaches must be escalated to the ALCO for making decisions to rectify the breaches within the defined periods.

▶▶ Stop Loss Limits set the maximum losses on portfolios that the Bank must not exceed.

Within these limits, the Capital Markets Group (CMG) is responsible for managing and trading the portfolio to optimize the return on the funds invested. Procedures, strategies and performance are reviewed by ALCO, which also monitors adherence to the limits

For other companies in TMB Financial Business Group, which include Phayathai Asset Management Company Limited (PAMC), TMB Asset Management Company Limited (TMBAM) and Designee for ETA Contract Limited (Designee), the Bank has established policies to define minimum guidelines in managing market (price) risk in the trading book and leaves certain discretion to subsidiaries to develop their own policies in line with their business. However, due to the nature of their business, the market (price) risk is negligible (if any).

Table 17: Minimum capital requirements for each type of market risk under the Standardized Approach (Trading only)

(Unit: Million Baht)

Solo basis Full Consolidation Minimum capital requirement for market risk under the Standardized Approach Dec 31, 2010 Jun 30, 2010 Dec 31, 2010 1. Interest rate risk 714 939 714 2. Equity position risk - - - 3. Foreign exchange rate risk 146 107 146 4. Commodity risk - - - Total minimum capital requirement 860 1,046 860

* Minimum capital requirement based on regulatory minimum CAR ratio of 8.5% 242 | Basel II Pillar III Disclosure Annual Report 2010

3.3 Liquidity Risk Liquidity risk is the risk that the Bank or any one of its subsidiaries cannot meet its financial liabilities when they come due, at reasonable costs and in a timely manner. Within the Bank, the liquidity risk management framework is determined by the ALCO which has to be approved by the Board of Directors. It sets limits where applicable and takes appropriate actions in case of limit breaches. The Balance Sheet Management Group (BSMG) is assigned to maintain a sound liquidity profile through:

▶▶ Managing a well diversified mix of funding sources in terms of instrument types, fund providers, geographic markets and currencies;

▶▶ Actively managing access to the capital markets;

▶▶ Holding a portfolio of highly liquid marketable assets that can be used to obtain secured funding;

▶▶ Maintaining structural liquidity gaps that taking into account the asset mix as well as possibilities of the Bank to obtain funding from both the secured and unsecured sources;

▶▶ Maintaining a funds transfer pricing methodology in which the Bank’s cost of liquidity is properly reflected both under normal and contingency situations; and

▶▶ Day-to-day liquidity management

In determining cash flows for the liquidity gap report, the non-contractual cash flows are adjusted with client behavioral based on historical data. The client behavioral analysis is regularly reviewed and continuously studied in order to fully optimize the result in the Bank’s liquidity gap report.

The liquidity risk management function is delegated to the Market Risk Management Group (MRMG), which joins with BSMG in bearing the responsibility for liquidity risk stress testing. The BSMG jointly with the MRMG undertake quarterly liquidity risk stress testing. The liquidity positions are stress tested under various scenarios to assess whether the Bank can withstand a prolonged period of stress.

The MRMG’s roles and responsibilities pertaining to liquidity risk management include, but are not limited to the following:

▶▶ Owns, develops, reviews, and updates the liquidity risk management policy and stress testing scenarios;

▶▶ Endorses and recommends the supplementary guidelines under the Bank’s liquidity risk management policy; and

▶▶ Identifies, monitors and reports liquidity risk to ensure compliance with the Bank’s policy and regulatory framework.

Contingency Plan The Bank has a contingency plan, which establishes procedures and actions for managing liquidity in crisis situations. The plan is regularly reviewed and tested to ensure that the Bank is well prepared for a potential liquidity crisis.

For other companies in TMB Financial Business Group, the Bank has established policies to define minimum guidelines in managing liquidity risk and leaves certain discretion to subsidiaries to develop their own policies in line with their business. However, due to the nature of their business, their liquidity risk is negligible (if any). TMB Bank PCL Basel II Pillar III Disclosure | 243

3.4E quity exposures in banking book The equity exposures in the Bank’s Banking Book consists of equity considered “Available-for-Sale” and “Other Investment”.

Those in the “Available-for-Sale” portfolio comprise of quoted equities held for the following purposes:

▶▶ Joint Venture,

▶▶ Debt Restructuring,

▶▶ Property Funds and

▶▶ Financial & Supporting Business.

Those in the “Other Investment” portfolio comprise of non-quoted equities held for the following purposes:

▶▶ Joint Venture - General Investment,

▶▶ Debt Restructuring - General Investment,

▶▶ Property Funds - General Investment,

▶▶ Financial & Supporting Business - General Investment,

▶▶ Financial & Supporting Business - Associated Company, and

▶▶ Financial & Supporting Business - Subsidiary Company.

With the exception of those held in the last two portfolios: “Financial & Supporting Business-Associated Company” and “Financial & Supporting Business-Subsidiary Company” as strategic investments, the Bank’s strategy is to liquidate.

Table 18: Equity exposures in the banking book (Unit: Million Baht)

Solo basis Full Consolidation Equity exposures Dec 31, 2010 Dec 31, 2009 Dec 31, 2010 1. Equity exposures 1.1 Equities listed and publicly traded in the Stock Exchange (include Thailand and Foreign) - Cost 309 329 470 - Market value 278 248 440 1.2 Other equities (include Thailand and Foreign) * 6,802 7,774 2,743 2. Gains (losses) of sale of equities in the reporting period 166 779 178 3. Net surplus (loss) from valuation AFS equity 64 14 65 4. Minimum capital requirements for equity exposures classified by the calculation methods - SA approach 349 256 190

* Including subsidiaries only solo basis

3.5O perational risk Operational risk is defined as the risk of loss, both financial and non-financial, resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputational risk. Effective operational risk management leads to more stable business processes and lower operational costs. 244 | Basel II Pillar III Disclosure Annual Report 2010

Operational Risk Management at the Bank is managed through a governance structure where the Board of Directors holds the ultimate responsibility for bank-wide risk management. The Board has delegated several operational risk management related authorities to the Operational Risk Management Committee (ORC), chaired by CEO, whose responsibilities are to identify, measure, monitor, and manage the operational risks of the Bank and its subsidiaries with appropriate quality of coverage (granularity) and to ensure that appropriate management action is taken by the responsible line managers at the appropriate level of granularity.

The Bank has established a dedicated Operational Risk Management Group (ORMG), reporting to the CRO, which consists of specialized departments to oversee specific operational risk management concerns such as processing risk, control risk, unauthorized activity risk, information (technology) risk, crisis management & business continuity/disaster recovery risk, fraud risk, personal & physical security risk, and employment practice & workplace safety risk.

The Bank has developed an Operational Risk Management Framework to ensure that the operational risks are properly identified, assessed, monitored, reported, analysed and controlled in a systematic and consistent manner. The Framework provides the foundations and a common infrastructure for delivering, maintaining, and governing risk management. The Framework consists of an Operational Risk Governance Structure applying the three lines of defence risk governance model, and aligning with the COSO risk management framework.

The Bank has established the risk appetite level for operational risk utilizing the potential loss (probability and impact) concept. The level is determined based on consideration of the historical loss data of the bank, the financial strength, and the overall operational risk management environment. For potential loss over a threshold amount, the bank will take further mitigating action to bring down the potential loss level to within threshold.

Various policies, minimum standards, and guidelines have been established to manage the various operational risks as per Basel New Capital Accord (Basel II) guideline including coverage on all key processes and tools such as Risk & Control Self- Assessment (R&CSA), Control Self Assessment (CSA), Key Risk Indicators (KRI), and Incident Management.

To ensure that products and services are offered in a safe manner, the Product and Service Approval Process (PSAP) is established to set guidelines for sign-off and approval of new products and services. This due diligence process ensures that the risks created by the new products and services are properly identified and addressed, and that the necessary infrastructure and controls are in place to support the new business.

3.6I nterest rate risk in the banking book (IRRBB) The interest rate risk in the Banking Book is the risk that the Bank’s earnings or economic value resulting from the non-trading positions is negatively impacted by movements in interest rates. The Bank has established policies that set a framework for managing interest rate risk in the Banking Book (IRRBB) to ensure that the risk management practices are prudently carried out.

The Bank’s key elements for sound interest rate risk management include, but are not limited to the following:

▶▶ The Board of Directors and senior management oversight;

▶▶ In-place risk management policies and procedures;

▶▶ The risk identification, measurement, monitoring, and control procedures; and

▶▶ The internal controls and independent audits. 246 | Basel II Pillar III Disclosure Annual Report 2010

The Assets and Liabilities Management Committee (ALCO) is delegated by the Board of Directors to oversee the firm-wide structural interest rate risk to stay within the Bank’s aggregated interest rate risk limit. ALCO endorses and/or approves limits where applicable and takes appropriate actions in case of limit breaches.

The Balance Sheet Management Group (BSMG) is a designated unit with full responsibility to operate day to day management of interest rate risk in the Banking Book and ensure that all activities undertaken are carried out in full compliance with relevant policies. The Market Risk Management Group (MRMG) is an independent unit responsible to ensure that the IRRBB is properly and appropriately identified, measured, monitored, controlled and reported. In case of any non-compliance matters, the MRMG reports/escalates the matters with suggestions on corrective measures to the senior management and ALCO, whereby ALCO reports such non-compliance matters to the RMC. The BSMG is responsible to submit a corrective action plan and seek for approval/endorsement from the senior management and ALCO. The Financial Control Group (FCG) ensures that the accounting treatment is consistent with related policies and statutory requirements.

In managing the IRRBB, the Bank uses the Repricing Gap approach to determine the impact of interest rate changes on the net interest income (NII) and economic value on a monthly basis. The Repricing Gap uses the remaining term or next repricing date as stipulated in the contract. There are established interest rate risk limits to monitor and control the impact of interest rate changes on the NII and economic value.

The Bank adopts interest rate risk hedging measures to cushion the interest rate volatility, e.g. rebalancing of assets and liabilities with consideration of external and internal factors including interest rates forecasted by the Bank’s Research Department.

To examine the effect of exceptional but plausible events, stress testing is performed. Currently, changes to the net interest income and economic value are computed assuming different size shocks in interest rate yield curves. Going forward, the Bank will measure the possible loss under probable and severe stress scenarios to be determined by the ALCO measured via NPV-at-Risk and Earnings-at-Risk. The Bank also reports on the effect of changes in interest rate by 100 bps upward shift to net interest income, economic value and stress testing results.

The organizational structure of the Bank is established to promote and ensure appropriate check and balance systems including suitable lines of control and segregation of duties. Internal control systems are established by specifying detailed frameworks and processes, delegation of authority, verification of transactions, reconciliation of inputs, accounts and records of documents and agreements with accuracy and completeness. TMB Bank PCL Basel II Pillar III Disclosure | 247

Table 19: The effect of changes in interest rates to earnings (net) by 100 bps parallel in the next 1 year

Solo basis (Unit: Million Baht)

Solo basis Full consolidation Dec 31, 2010 Dec 31, 2009 Dec 31, 2010 Upward shift Downward shift Upward shift Downward shift Upward shift Downward shift Currency 100 bps 100 bps 100 bps 100 bps 100 bps 100 bps THB 849 (1,636) 735 (1,682) 853 (1,642) USD 34 (56) 21 (17) 34 (56) Others (5) 4 (4) 4 (5) 4 Total Effect 878 (1,688) 752 (1,695) 882 (1,694)

Based on the balance sheet structure of the Bank, for assets and liabilities of which the repricing periods are within 1 year, the asset side has a relatively shorter term repricing period while the liability side has a relatively longer term repricing period. This results in positive impact on the net interest income when interest rates increase. On the other hand, the Bank’s interest income is more sensitive to interest rate decreases as the deposit cost cannot be reduced by the full 100 bps for all deposit products.

The impact to net interest income for the full consolidation of the group mostly resulted from the effect from the Bank where the nature of its business is to undertake interest rate risks.

Based on the 2010 balance sheet structure of Phayathai Asset Management Company (PAMC), for assets and liabilities of which the repricing periods are within 1 year, the asset side has a higher proportion of relatively shorter term repricing period while that of the liability side remains unchanged. The cumulative asset and liability gap is positive.

For other companies in TMB Financial Business Group, the Bank has established policies to define minimum guidelines in managing interest rate risk in the non-trading book (including interest rate risk management of assets, liabilities and off- balance-sheet items) and leaves certain discretion to subsidiaries to develop their own policies in line with their business. However, due to the nature of their business, the interest rate risk is negligible (if any).

3.7S trategic risk Strategic risk is defined as the risk that results from the exercise of strategic plans, business plans, strategic implementation, and control that are inappropriate and inconsistent with both internal and external business environments.

Core Strategic Risk Policy (“the Policy”) is one of risk management policies to assure overall sound risk management practices of TMB and its subsidiaries. The Policy consists of two key interrelated processes.

▶▶ Strategic management process deals with how TMB and Subsidiaries deploys its existing resources and capabilities to add most value in an environmental setting, divided into 3 steps: Strategic Formation, Strategic Implementation, and Strategic Control. 248 | Basel II Pillar III Disclosure Annual Report 2010

▶▶ Strategic risk management is concerned with the development of risk preventive and corrective tools in order not only to lower the likelihood of strategic risk exposure, but also to maintain the bank’s awareness of strategic risks which address the best practice framework for identifying, monitoring, and controlling strategic risks

Sound governance will support TMB and Subsidiaries to maintain and reinforce the effectiveness of both strategic management process and strategic risk management. In order to ensure effective check and balance, RMC will play a key role with support from RMG in oversight for managing strategic risks and maintaining and controlling strategic risk management process

The Policy is subject to be reviewed annually to reflect changes in internal and external business environments. Where relevant, changes in the Policy must be followed by changes to supplementary policies, frameworks, or guidelines maintained by respective BU/SUs and Subsidiaries.

The bank does an annual assessment of the level and trend relating to strategic risk.

3.8R eputational risk Reputational Risk can be described as the exposure incurred from unexpected incidents or from unanticipated response to TMB’s initiatives, actions, and day-to-day activities, which generate reputation damage ranging from negative perception to corporate litigation, unintentional non compliance to governing laws and regulations. Since 2007, TMB has implemented the Reputational Risk Management Policy based on both preventive and corrective basis.

The scope of Policy governs all TMB units by recognizing TMB’s employee behaviors, operations, products/services and external factors as the main sources of reputational risk exposure. Corporate Communications Group is responsible to monitor reputational risk issues and incidents from media and public on a regular basis and take appropriate actions as deemed necessary to comply with the Communication Guideline as stated in the Policy.

To minimize the likelihood of risk exposures, the Policy identifies the factors of the risk which may cause the damage to the bank’s reputation and states the guidelines to prevent and mitigate the reputational risk. Moreover, to effectively implement the Policy and reduce potential risk exposures, the Bank has conducted Guideline of Reputational Risk issue’s Escalation based on the severity of its possible consequence.

The Boards and Senior Management are ultimately responsible for setting up the right “Tone & Priorities” and ensuring that the developed and implemented risk management practices are appropriate for TMB. At organizational level, Risk Management Group will assist Risk Management Committee in overseeing relevant matters relating to reputational risk management.

Eventually, to ensure compliance with policies, plans, procedures, and business objectives relevant to Reputational Risk Management Policy, Audit Group will regularly review the adequacy of controls established and report the results to the Board, Audit Committee, and Executive Management as deem appropriate TMB Bank PCL Company Information | 249

Cp om any Information

G eneral Information

Name of the company TMB Bank Public Company Limited

Nature of Business Commercial bank’s businesses in accordance with Financial Institutions Businesses Act and the businesses concerning financial services under the permission of the Ministry of Finance, the Bank of Thailand, and other parties concerned.

Head Office 3000 Phahon Yothin Road, Chom Phon, Chatuchak, Bangkok 10900

Registration No. 0107537000017

Telephone 0-2299-1111

Facsimile 0-2273-7640, 0-2299-2758

TMB Phone Banking 1558

Website http://www.tmbbank.com

Email [email protected]

Registered capital 41,903,301,555 Baht (as of 31 December 2010)

Paid-up capital 41,352,301,555 Baht

Common share 43,528,738,479 shares at par value 0.95 Baht

O ther referral parties

Share Registrar Thailand Securities Depository Co., Ltd. The Stock Exchange of Thailand Building 62 Ratchadapisek Road, Klongtoey Bangkok 10110, Thailand Tel. 0-2229-2800

Auditors Ms. Ratana Jala CPA Registered No. 3734 Or Ms. Rungnapa Lertsuwankul CPA Registered No. 3516 Or Mr. Narong Puntawong CPA Registered No. 3315 Ernst & Young Office Limited 33nd Floor, Lake Rajada Office Complex 193/136-137 New Rajadapisek Road, Klongtoey, Bangkok 10110 Tel. 0-2264-0777 250 | Investment of TMB in Other Companies Annual Report 2010

I nvestment of TMB in other Companies

Investment in other companies as of Dec.31, 2010 holding more than 10 % of the paid-up capital in each company were as follows:

TMB’s ownership Type of Amount (Baht) Head office Type of capital Paid-up Amount Percentage (net of allowance for Company location business (share) capital (share) (share) ( % ) diminution in value) 1 Phayathai Asset Management Co.,Ltd. Bangkok Finance Common 107,000,000 107,000,000 100.00 1,834,940,256.70 Tel. 0-2354-5001, Fax 0-2354-5014 stock

2 TMB Property Development Co., Ltd. Bangkok Real estate Common 10,000 9,993 99.93 4,169,342.92 Tel. 0-2299-1159, Fax 0-2242-3138-9 stock

3 Designee For Eta Contract Co., Ltd. Bangkok Support Common 1,000 994 99.40 13,617.80 Tel. 0-2299-1217, Fax 0-2299-1278 financial stock institution

4 TMB Asset Management Co., Ltd. Bangkok Finance Common 10,000,000 7,499,997 75 188,230,287.36 Tel. 0-2636-1800 ext. 1725 stock (customer service center)

5 Siam Resort Fund Bangkok Property Unit 92,816,465 44,681,927.89 48.14 319,771,489 Tel. 0-2649-2000, Fax 0-2649-2107-8 fund trust

6 Metro Designee Co., Ltd. Bangkok Support Common 1,000 300 30.00 7,500 Tel. 0-2230-6201, Fax 0-2230-6200 financial stock institution

7 The Column Property Fund Bangkok Property Unit 212,430,342 63,138,715.66 29.72 633,750,256.10 Tel. 0-2649-2000, Fax 0-2649-2107-8 fund trust

8 N D Group Feedmill Co., Ltd. Lumphun Wholesale/ Common 120,000 30,000 25.00 0.00 Retail stock

9 Wing Group Co., Ltd. Chiang mai Garment Common 9,000 2,250 25.00 0.00 Tel. 0-5333-1315-6, Fax 0-5333-1314, manufacturer stock 0-5333-1336

10 Rural Capital Partners Co., Ltd. Bangkok Finance Common 1,000,000 175,000 17.50 257,250.00 Tel. 0-2318-3958, Fax 0-2718-1851 stock

11 Thai Chareonphol Industry Co., Ltd. Phrae Production Common 15,500 2,500 16.13 0.00 Tel. 0-5458-1202, Fax 0-5458-1876 stock

12 Tris Corporation Limited Bangkok Services Common 1,000,000 153,000 15.30 14,361,948.00 Tel. 0-2231-3011, Fax 0-2231-3681 stock

13 Thai Business Fund 5 Bangkok Property Unit trust 220,000,000 30,000,000 13.64 137,343,000 Tel. 0-2670-4900 ext. 1291-2 fund Fax 0-2679-1820

14 M-Home Spv 1 Co., Ltd. Bangkok Real estate Common 10,000 1,000 10.00 0.00 Tel. 0-2633-6950, Fax 0-2633-6990 stock

15 Wholesale Town Co., Ltd. Bangkok Transportation Common 22,000 2,200 10.00 0.00 Tel. 0-2531-6860, Fax 0-2532-3009 stock

16 M_Thai Estate Co., Ltd. Bangkok Real estate Common 30,000,000 3,000,000 10.00 0.00 Tel. 0-2261-1144, Fax 0-2261-1143 stock

17 Paiboon Insurance Co., Ltd. Bangkok Services Common 2,000,000 200,000 10.00 30,200,000.00 Tel. 0-2246-9635, Fax 0-2246-9660-1 stock TMB Bank PCL TMB Branches in Bangkok Metropolitan | 251

T MB Branches in Bangkok Metropolitan

Office Telephone Fax Ministry Of Defence 0-2222-1215, 0-2222-1218, 0-2224-4197 (Manager) 0-2224-7407

K rung Kasem 0-2222-5158-9, 0-2222-7801, 0-2222-5724, 0-2222-3504 0-2222-5667

K luay Nam Thai 0-2712-4048-9, 0-2712-4051 0-2712-4050

R oyal Thai Armed Forces Headquarters 0-2575-6425-7 0-2575-6427

R oyal Thai Army Headquarters 0-2280-1825, 0-2280-1799 0-2280-1537

R oyal Thai Navy Headquarters 0-2891-0052-5 All numbers

R oyal Thai Air Force Heradquarters 0-2531-8560-2 0-2531-2427

Provincial Electricity Authority 0-2591-1424-5 0-2591-1426

K hlong Chun 0-2377-1370, 0-2377-9636, 0-2377-9737, 0-2375-7872, 0-2377-1360 0-2375-7871

K hlong Toei 0-2249-1831, 0-2249-6067, 0-2249-1619, 0-2249-1518 0-2240-2237

C arrefour Lamlukka Khlong 4 0-2563-3236-7 0-2563-3238

C arrefour Suan Luang 0-2328-0745-7 0-2328-0747

K i hae Ra 0-2951-0840, 0-2951-0842, 0-2588-1778, 0-2588-1418 0-2951-0841

N gam Wong Wan 0-2580-2187 (Manager), 0-2588-0021, 0-2588-0023 0-2588-3148

C haran Sanit Wong 0-2424-5520-1, 0-2882-4548-9 0-2435-2393

C hamchuri Square 0-2160-5212-6 0-2160-5215-6

C haeng Watthana 0-2574-0203-5, 0-2574-5655 All numbers

C hong Nonsi 0-2285-3939-42 0-2285-3943

C hok Chai 4 0-2538-8412, 0-2538-3125-6, 0-2539-2615, 0-2933-2745 0-2538-3125-6

S oi Lang Suan 0-2652-2090-4, 0-2652-1761-2 0-2652-2095

S eacon Square 0-2721-9560-2 0-2721-9563

C entral Bangna 0-2745-7263-5 All numbers

C entral Pinklao 0-2433-1386-7 0-2433-1390

C entral Rama II 0-2872-4564-5 0-2872-4566

C entral Rama III 0-2213-0803-5 All numbers

C entral Ratana Thibet 0-2525-4570-4 All numbers

C entralplaza Chaengwattana 0-2835-3589-91 0-2835-3592

C entral Plaza Ladprao 0-2937-0356-8 All numbers

C entral World 0-2646-1284-6 0-2646-1286

Zeer Rangsit 0-2992-6370-2 0-2992-6372 252 | TMB Branches in Bangkok Metropolitan Annual Report 2010

Office Telephone Fax T he Platinum Fashion Mall 0-2121-9241-3 All numbers

T he Mall 3 Ramkhamhaeng 0-2319-1401-3 All numbers

T he Mall Ngamwongwan 0-2550-0437-8 0-2550-0439

T he Mall Bangkapi 0-2704-7727-9 All numbers

T he Mall Bangkae 0-2454-9433-4 0-2803-8325

T ri Phet 0-2224-4281, 0-2221-6841, 0-2224-1921, 0-2221-1371, 0-2221-8706 0-2224-3819, 0-2221-2908, 0-2224-9196

T alad Thanommit WatcharaPhon 0-2347-0157-8 0-2347-0159

T i alad No 0-2235-1720-1, 0-2235-3437, 0-2236-1004, 0-2236-0998 0-2235-3436

T alad Pong Phet 0-2953-3901-2, 0-2953-3904-5, 0-2589-3228 0-2953-3906

T alad Phlu 0-2465-2322, 0-2465-9949, 0-2465-9955-6 All numbers

T aling Chan 0-2880-8070-3 0-2880-8073

T ao Poon 0-2585-1123, 0-2585-1233, 0-2587-8990-1, 0-2585-9215, 0-2911-5386 0-2911-5387

T hanon Chom Thong 0-2476-3886, 0-2476-3951, 0-2476-3631 0-2468-8190

T hanon Chan 0-2213-2540-3, 0-2213-1308-9 0-2213-2541

T hanon Charoennakhon 0-2862-4910-2 0-2862-4913

T hanon Cheang Wattana 0-2584-5549-50, 0-2583-9997, 0-2962-1695, 0-2962-1697 0-2548-5548

T hanon Tiwanon 0-2950-0252-4 0-2591-0390

T hanon Theparak 0-2383-5618-9, 0-2383-5968 0-2383-5969

T hanon Thepharak Km.12 0-2312-2123-5 0-2312-2126

T hanon Thepharak Km.22 0-2706-0995-8 0-2706-0998

T hanon Theparak Km.3 0-2753-2860-3 0-2753-2864

T hanon Borommarat-Chonni 0-2434-9791-3, 0-2434-2411 0-2434-2411

T hanon Bangna-Trat Km.4 0-2744-1214-7 0-2744-1213

T hanon Pracha Rat – Nonthaburi 0-2525-3074, 0-2967-5501-4 0-2526-3526

T hanon Prachauthit 0-2870-9124-6 0-2870-9127

T hanon Rama IX 0-2643-0383-4, 0-2643-0398-9 0-2643-0212

T hanon Rama IX – Thanon Seri 7 0-2718-2743-8 0-2718-2747

T hanon Phatthanakan 0-2722-6846-8 0-2722-6849

T hanon Phibun Songkhram 0-2526-2020-2, 0-2966-5503 0-2526-2020-1 TMB Bank PCL TMB Branches in Bangkok Metropolitan | 253

Office Telephone Fax T hanon Phetcha Kasem – Bang Khae 0-2413-0922-3, 0-2413-3179-80 0-2804-6001

T hanon Phetcha Kasem – Nong Khaem 0-2431-0308-12 0-2431-0313

T hanon New Phetcha-Buri 0-2319-1520-4 0-2319-1522

T hanon Ratchadaphisek-Nanglinchi 0-2678-0164-7 0-2678-0169

Ta h Non Rattana Thibet 0-2921-8740-3 0-2921-8740

T hanon Wat King Kaeo 0-2750-1920-2, 0-2750-1875 (Manager) 0-2750-1923

T hanon Srinakarin-Tara 0-2322-0691-2, 0-2320-0100, 0-2320-0098 0-2320-0099

T hanon Srinakarin Tara – La Salle 0-2748-7484-6 0-2748-7483

T hanon Song Prapha 0-2929-7100-3 0-2929-7104

T hanon Samakkhi 0-2574-6221, 0-2980-0400-1 0-2980-1368

T hanon Sai Luat – Samutprakan 0-2389-5021-2, 0-2389-5063-4, 0-2389-3747 0-2389-3302

T hanon Suk Sawat – Ratburana 0-2428-4507-11 0-2428-4387

T hanon Sukhaphiban 1 0-2509-1062, 0-2509-1064, 0-2509-1065 0-2509-1068

T hanon Sukhaphiban 2 0-2704-8156-8, 0-2704-8160 0-2704-8159

T hanon Sukhaphiban 3 0-2735-2581-4 0-2735-2585

T hanon Sukhumwit – Samrong 0-2394-5858-9, 0-2756-8082, 0-2756-9013-4 0-2384-2856-7

T hanon Luang – Worachak 0-2226-4781-5 0-2226-4788

T honglo 0-2390-0437-40, 0-2712-7625-6, 0-2712-7624, 0-2712-5879 0-2392-3496

T ha Phra 0-2869-0910-2 0-2869-0915

S uvarnabhumi Airport 0-2134-1818-21 0-2134-1878

T esco Lotus Navanakorn 0-2909-0829-31 0-2909-0831

T esco Lotus Srinakarin 0-2175-7575, 0-2175-7824-5 0-2175-7826

T hammasat – Rangsit 0-2516-9970-2 0-2516-9973

T hatthong 0-2392-9235, 0-2395-9582, 0-2381-6281-2, 0-2391-3146 0-2392-3495

Bang Khun Non 0-2424-2826, 0-2424-2322, 0-2424-5740 0-2424-2829

Bang Khen 0-2513-2805, 0-2513-2807, 0-2513-8201 0-2513-3132

Bang Chak 0-2332-9290-3 0-2332-9294

Bange Su 0-2911-3142-4 0-2911-3145

Bangna 0-2398-4859-60, 0-2398-4862-3 All numbers

Bang Bon 0-2451-0630-3 0-2451-0634

Bang Bua 0-2972-9693-5, 0-2972-9699 0-2972-9693 254 | TMB Branches in Bangkok Metropolitan Annual Report 2010

Office Telephone Fax Bang Bua Thong 0-2920-2510-3 0-2920-2514

Bang Phlad 0-2435-4910, 0-2424-5221, 0-2424-6499 0-2435-4864

Bangk Ra 0-2237-1844, 0-2237-2620-21 0-2266-4115

Bang Lamphu 0-2629-1011-3 0-2282-5395

Big T C – hanonrama 2 0-2416-7806, 0-2416-7881, 0-2416-7950 0-2416-7950

Bo Bae 0-2222-0024, 0-2225-2823, 0-2225-4255, 0-2225-4284 0-2222-3631

Pathum Thani 0-2581-1740-2 0-2581-2155

Pracha Niwet 1 0-2953-8161-2, 0-2953-8164 0-2953-8163

Pom Phrachula Chomklao 0-2425-9879, 0-2425-8205, 0-2425-8499, 0-2425-9667 0-2819-8188

Pak Kret 0-2583-8220, 0-2583-8685, 0-2583-4434, 0-2583-4435 0-2583-7153

Pak Khlong Talad 0-2222-5828, 0-2222-5809, 0-2222-5826 0-2623-8708

Poo Chao Saming Prai 0-2384-1387-8, 0-2394-4412, 0-2394-6317 0-2384-1673

Phaya Thai 0-2354-5052-3, 0-2354-5076, 0-2354-5228, 0-2354-5059 0-2354-5163

Phra Khanong 0-2381-1117-8, 0-2381-1126 0-2390-0022

Phra Pradaeng 0-2463-3872-4 0-2463-3909

Phrapinklao 0-2883-2884-7 0-2433-5406

Phrank No 0-2412-2764, 0-2412-3527, 0-2412-3040, 0-2412-2223, 0-2412-3527 0-2412-3778, 0-2412-2435

Phahonyothin 0-2299-2349-50, 0-2299-1282, 0-2299-1283, 0-2299-1295 0-2273-7806

Patpong 0-2236-9395-9 0-2634-3246

Pantip Plaza Ngamwongwan 0-2953-5167-9 0-2953-5169

Pantip Plaza Bangkapi 0-2187-3059-60 0-2187-3061

Phutthamonthon 0-2441-0120-1, 0-2441-9392-3 0-2889-3432

Peninsula Plaza 0-2253-0067-8, 0-2253-9756-7, 0-2253-4837 0-2253-9755

Future Park Rangsit 0-2958-0930-2 All numbers

Fashion Island 0-2947-5129-31 0-2947-5131

Mahaprutharam 0-2238-5029-30, 0-2238-0867-8 0-2237-6302

Bangkok University – Rangsit Campus 0-2516-8492-4 0-2516-8494

K asetsart University 0-2561-4289, 0-2940-5728, 0-2940-5729 0-2561-4290

T hammasat – Thaphrachan 0-2225-8186-7 0-2225-8188

C handrakasem Rajabhat University 0-2513-7264-5 0-2513-1700 TMB Bank PCL TMB Branches in Bangkok Metropolitan | 255

Office Telephone Fax Dhonburi Rajabhat University 0-2465-5690-1 0-2465-5744

Phranakhon Rajabhat University 0-2522-6187-9 All numbers

R amkhamhaeng University – Bangna Campus 0-2397-7048, 0-2397-7049 0-2397-7047

R amkhamhaeng – Huamak 0-2369-1820-2 0-2369-1822

S ripatum University 0-2579-2268, 0-2579-6094 0-2579-8473

S iam University 0-2868-5338, 0-2868-5375 0-2868-5932

Mah Boonkrong Center 0-2215-2136-7, 0-2620-9233-4, 0-2686-3690 0-2686-3689

Minburi 0-2517-3778-9, 0-2517-1222, 0-2918-5714 0-2918-5712

Muang Thong Thani 0-2504-5141-3 0-2504-5143

Muang Ake Rangsit 0-2536-4173-6 All numbers

Makro Charansanitwongse 0-2864-6066-7 0-2864-6068

Y annawa 0-2289-1132, 0-2291-3464, 0-2688-1508-9 0-2291-3465

Y awaraj 0-2225-9453-4, 0-2224-7829, 0-2224-7263 0-2225-8254

R Kangsit – hlong 3 0-2990-9131-4 0-2990-3134

R t ang Si – Pathum Thani 0-2958-1007-9 0-2516-8551

R atchadaphisek – Huai Khwang 0-2692-3105-8 0-2692-3109

R ajdamnern 0-2280-0101-3 0-2280-0107

R ajprasong 0-2252-6689-91, 0-2255-1472 0-2252-6967

R ajawong 0-2221-0599, 0-2225-3721, 0-2226-3324-5 0-2226-3323

R arm Intra Km.8 0-2943-1451-2, 0-2519-3579-80, 0-2943-1450 0-2519-3581

R arm Intra Km.4 0-2973-0741-3 0-2973-0745

Bangkok Hospital Soi Soonvijai 0-2369-2657-8 0-2369-2659

Bangkok Hospital Dental Center Building 0-2319-0674-9 0-2319-0680

S t.Louis Hospital 0-2212-6300-2, 0-2675-7905-6 0-2212-6303

Phramongkutklao Hospital 0-2354-7880-84 0-2354-7879

Bhumibol Adulyadej Hospital 0-2532-2854-6, 0-2531-6278 All numbers

S omdej Phrapinklao Hospital 0-2460-0269-70, 0-2498-9844, 0-2476-3062 (Manager) 0-2476-3061

Lat Krabang 0-2739-1820-3 0-2739-1820

Lat Phrao 103 0-2370-3167-69, 0-2370-3165-6 0-2370-3170

Lat Phrao 124 0-2514-0802, 0-2514-0562, 0-2514-2916, 0-2934-0974-5 0-2530-1891 256 | TMB Branches in Bangkok Metropolitan Annual Report 2010

Office Telephone Fax Lat Phrao 6 0-2511-1819, 0-2511-4052, 0-2511-5186, 0-2511-3983, 0-2513-8112 0-2938-6618, 0-2938-6619

Lat Ya 0-2439-7134, 0-2437-3882, 0-2437-1078 0-2439-1064

Landmark Plaza 0-2255-8431-3 0-2255-8434

Wong Wien Yai 0-2472-1304, 0-2472-1432, 0-2890-0361-2 0-2890-0362

Wang Burapa 0-2221-5121-2, 0-2623-8833 0-2221-5124-5

S riyan 0-2243-1446-7, 0-2241-3865, 0-2243-3867 0-2243-0664

S iriraj 0-2866-2674-6, 0-2411-3606, 0-2411-3548 0-2411-3552

Metro Shopping Center 0-2252-9009-10, 0-2252-9014, 0-2254-1288 0-2254-1289

Wararat Shopping Center 0-2287-3683-5 All numbers

T he Government Complex (Building B) 0-2143-8310-14 0-2143-8314

T he Government Complex (Building A) 0-2143-8307-8 0-2143-8309

S anam Pao 0-2278-5240-1, 0-2278-2555-6 0-2270-0252

S anam Suapa 0-2282-3451-2, 0-2281-6180 0-2282-6099

S amut Prakan 0-2389-5917-8, 0-2389-5895-6, 0-2389-5919, 0-2387-0307 0-2389-5897

S iam Paragon 0-2129-4585-6, 0-2129-4588, 0-2129-4587 0-2129-4587

S iam Square 0-2658-1752-3, 0-2251-2232, 0-2252-6049 0-2252-5856

S uan Chatuchak 0-2272-4415-6, 0-2272-4233 0-2271-4499

K rung Thon Bridge 0-2424-2577, 0-2434-3536, 0-2883-3711 0-2424-5939

S aphan Khwai 0-2278-2090-2, 0-2278-2122, 0-2279-2268, 0-2618-4756 0-2279-0413

S aphan Nonthaburi 0-2976-5500-5 All numbers

S aphan Luang 0-2216-9650-2, 0-2216-2527 0-2216-2527

S apanmai Donmuang 0-2521-3007-8, 0-2971-1107 0-2971-1106

S athu Pradit 0-2294-3487, 0-2294-5510, 0-2295-4217-18 0-2294-4021

S amrong 0-2384-0352-3, 0-2384-4653, 0-2384-4661 0-2754-1904

S iyak Soi On Nuj – Thanon Srinakarind 0-2321-6924-7 0-2322-6093

S iyak Thanon Bang Khunthian – Thanon Rama II 0-2415-0151-3 0-2415-0154

S ilom 0-2236-4452-3, 0-2236-4432, 0-2236-4824, 0-2236-9500, 0-2236-4410 0-2236-0213

S ilom Soi 7 0-2230-5439, 0-2230-5241, 0-2230-5732, 0-2230-5145, 0-2230-5194 0-2230-5253

S ukhumwit 11 0-2254-1330-2, 0-2253-0334, 0-2651-0243 0-2651-0242 TMB Bank PCL TMB Branches in Bangkok Metropolitan | 257

Office Telephone Fax S ukhumvit 31 0-2662-3546-7 0-2662-1933

S ukhumvit 71 0-2711-3080-1, 0-2711-3083, 0-2391-6514, 0-2391-6785, 0-2392-0312 0-2392-0313, 0-2391-0710

T hanon Sukhumwit Km.28 – Samut Prakan 0-2702-3418-20 0-2702-3426

S urawong 0-2266-5230-3, 0-2634-0208 0-2236-3651

S uvarnabhumi Free Zone 0-2134-1851-3 0-2134-1874

S uvarnabhumi Airport Fl.2 Arrival 0-2134-1804-5 0-2134-1876

S uvarnabhumi Thai Airway Technical 0-2134-1848-50 0-2134-1873

S uvarnabhumi Aob 0-2134-1845-6 0-2134-1875

S enanikom 0-2570-1386-7, 0-2570-1710 0-2570-0874

N ong Chok 0-2543-1344-6, 0-2988-2852 0-2543-1344-6

Lak Song 0-2801-4291-3 0-2081-4294

Huai Khwang 0-2274-3200-5 0-2274-3206

Hua Mak 0-2318-0503-5 0-2718-8057-8

A sok 0-2259-3312-4, 0-2261-6653, 0-2261-6654, 0-2261-6655 0-2261-6654 (Manager)

O t n Nu 0-2333-0395-6, 0-2742-1724 0-2333-0399

C olumn Tower Ratchadapisek 0-2259-7712-4 0-2259-7714

Y ada Building Silom 0-2652-5165-6, 0-2652-5175-6, 0-2236-3915 0-2652-5167

I ndra – Pratunam 0-2208-0981-2, 0-2208-0978 0-2208-0906

I nthrarak 0-2374-0291-2 0-2374-0293

U dom Suk 0-2383-9224-6 0-2383-9227

E kkamai 0-2381-7088-90 0-2381-7092

E nergy Complex 0-2936-0314-6 0-2936-0316

Home Works Phetchakasem 0-2809-1574-5 0-2809-1576 258 | TMB Branches in Upcountry Annual Report 2010

T MB Branches in Upcountry

Province Office Telephone Fax Knh a c anaburi K anchanaburi 0-3451-2441-2, 0-3451-1677, 0-3452-1101-2 All Numbers T aha Ru 0-3456-1745, 0-3456-1822, 0-3456-2046 All Numbers

Kar bi K rabi 0-7561-2718-20 0-7563-0086 Plai Phraya 0-7568-7018-9 0-7568-7019 Lum Thap 0-7564-3595-6, 0-7564-3598 0-7564-3599 A ou Nang Krabi 0-7563-7657, 0-7563-7624 0-7563-7685 Boot Exc. 0-7563-7596

K amphaeng Phet K amphaeng Phet 0-5571-3801, 0-5571-3802 0-5571-3803

K alasin K alasin 0-4381-2133, 0-4381-2135, 0-4382-1848 0-4381-2134

Kh on Kaen K hon Kaen 0-4324-1497-9 0-4333-4419 C hum Phae 0-4331-1170, 0-4331-1270, 0-4338-6387 0-4331-2470 C entral Plaza Khon Kaen 0-4328-8034-5 0-4328-8036 T hanon Mittraphap Khon Kaen 0-4332-4861-6 0-4332-4867 Ban Phai 0-4327-2750, 0-4327-2790 0-4327-2733 Muang Phon 0-4341-4060, 0-4341-4061 0-4341-4762 T hanon Srichan - Khon Kaen 0-4324-6490-1 0-4324-6492

Cnhha t aburi C hanthaburi 0-3932-1215, 0-3931-1799, 0-3935-0440-1 0-3931-1777 T hanon Benjamarachutit - 0-3932-2150-2 0-3932-2053 Chanthaburi N ong Khla 0-3939-5471-3 0-3939-5474 R obinson Chanthaburi 0-3932-2823-5 0-3932-2886

Ch hac oengsao T hanon Mahajakkapad - 0-3851-1912, 0-3851-2390, 0-3851-4322 0-3851-2549 Chachoengsao Bangkhla 0-3854-1123, 0-3882-7231-3 0-3854-1689 Bang Wua 0-3853-8255, 0-3853-8277, 0-3853-9003-4 0-3884-0909 Plango Ya 0-3858-9132-3, 0-3857-5230, 0-3885-1215 0-3885-1214 Phanom Sarakham 0-3883-6516-8 0-3883-6519 T hanon Sukprayun - Chachoengsao 0-3882-3794-7 0-3882-3795-7

C hai Nat C t hai Na 0-5641-1118, 0-5641-2394, 0-5641-0129, 0-5641-2372 0-5641-2372

C hon Buri C hon Buri 0-3827-2984-5, 0-3827-4088 0-3827-4089 Jomtien 0-3823-2079, 0-3823-2080, 0-3823-2973, All Numbers 0-3823-2086 C entral Plaza Chon Buri 0-3300-3240-2 0-3300-3243 C entral Festival Pattaya Beach 0-3300-3644-6 0-3300-3647 T hanon Thap Phraya Pattaya 0-3830-3778-80, 0-3830-3877 All Numbers TMB Bank PCL TMB Branches in Upcountry | 259

Province Office Telephone Fax N ong Mon 0-3839-2065-7 0-3839-2065 Bang Lamung 0-3836-7749-51 0-3836-7752 Ban Suan - Chon Buri 0-3879-9301-3 0-3879-9304 Pakruam Borwin 0-3833-7949-50 0-3833-7951 Pattaya Klang 0-3841-1936-7 0-3841-1937 Phanat Nikhom 0-3878-7699-700, 0-3847-3168-9 0-3847-3169 Pattaya 0-3842-9501-2, 0-3842-2966, 0-3842-1002 0-3842-1005 K asetsart University Sri-racha 0-3876-8970-1 0-3876-8972 R oyal Garden 0-3871-0401-2, 0-3842-9216 0-3841-1752 H.M.Queen Sirikit Hospital 0-3824-4022, 0-3824-4555 0-3824-4114 Sattahip R obinson Sri-racha 0-3831-4356-9 0-3831-4360 T esco Lotus Laemchabang 0-3876-8442, 0-3876-8923-4 0-3876-8280 S ri-racha 0-3831-3239-40, 0-3831-1824 All Numbers T hanon Sukhumwit - Chon Buri 0-3826-0960-3 0-3826-0960 S attahip 0-3843-7123, 0-3843-7339, 0-3843-7678, All Numbers 0-3843-8561 Huaghunjae - Ban Bung 0-3820-1211-2, 0-3820-1026 0-3820-1212 AuU o - dom 0-3835-1642-4 0-3835-1643

C humphon C humphon 0-7750-2545, 0-7750-4960-1 0-7750-2544 T hung Tako 0-7753-6902, 0-7758-5209 0-7758-5209 Lang Suan 0-7754-1233, 0-7754-1894 0-7754-1333

C hiang Mai C hiang Mai 0-5325-1058-61 0-5323-3159 T hanon Chang Khlan Chiang Mai 0-5390-3630-2 0-5390-3535 C entral Plaza Chiang Mai Airport 0-5320-1843-5 All Numbers T hanon Changpuak Chiang Mai 0-5321-1061-2, 0-5322-2966, 0-5321-8901 0-5322-1545 T alad Nong Hoi - Chiang Mai 0-5314-0123-5 0-5380-1456 Fang 0-5345-1154, 0-5345-1002 0-5345-3507 T alad Varorot - Chiang Mai 0-5323-3117-8 0-5325-2882 S i Yak Kuang Sing - Chiang Mai 0-5341-0980-2 0-5341-0983 T hanon Suthep Chiang Mai 0-5381-1674, 0-5381-1675, 0-5381-1164 All Numbers S anpakhoy - Chiang Mai 0-5324-9858, 0-5324-9859, 0-5324-9595 0-5324-9861 Huaikaeo Road - Chiang Mai 0-5340-4042-4 0-5340-4128 Hot 0-5346-1055, 0-5346-1056, 0-5383-1333 0-5383-1334

C haiyaphum C haiyaphum 0-4481-1659, 0-4481-1666, 0-4482-2123 0-4481-1666 260 | TMB Branches in Upcountry Annual Report 2010

Province Office Telephone Fax

C hianG Rai C i hiang Ra 0-5371-1100-1, 0-5371-4822, 0-5371-5657 0-5371-3590 Doi Mae Salong 0-5376-5159-60 0-5376-5159-60 T hoeng 0-5379-5001, 0-5379-5003, 0-5379-5040 0-5379-5002 T hanon Phahon Yothin - Chiang Rai 0-5371-4886-7, 0-5360-0716-7 0-5371-4890 Maesai 0-5373-3145-6, 0-5364-0351-2 0-5373-3145 Huai Khrai 0-5376-3001, 0-5366-7350-2 0-5376-3001

Tak Tka 0-5551-2093-4 0-5551-5451 Maet So 0-5553-3038, 0-5553-3039, 0-5553-3040 0-5553-3383

Trang T rang 0-7521-0811-2, 0-7521-4026 0-7521-8344 K hlong Pang 0-7528-6055, 0-7528-6066 0-7528-6055 Huait Yo 0-7527-1147, 0-7527-1425, 0-7523-5562 0-7527-1148

Trat T rat 0-3952-0636, 0-3952-0638 0-3952-0637 K o Chang 0-3955-1040-1 All Numbers Boi Ra 0-3959-1041-2 0-3959-1041

N hong K ai N ong Khai 0-4242-0562-3 0-4242-0564 Phon Phisai 0-4247-1266-7, 0-4240-5552 All Numbers

Nk a hon Pathom N akhon Pathom 0-3421-9731-4 0-3421-9736 K amphaeng Saen 0-3435-1020-2 0-3428-1103 N akhon Chai Si 0-3422-8340, 0-3422-8341, 0-3422-8339 0-3422-8342 Phra Pathomchedi 0-3425-0750, 0-3425-6116, 0-3425-6137 0-3425-0751 S ilpakorn University - Sanam 0-3425-0823-5 0-3425-0826 Chandra Palace S ampran Nakornpathom 0-3432-2885-7, 0-3422-5155, 0-3432-1990 0-3422-5498-9, 0-3422-5564-5 A i om Ya 0-2810-3325-7 0-2810-3329

N harat iwat N arathiwat 0-7351-2273-5 0-7351-2273-5 S ungai Kolok 0-7361-1555-6, 0-7361-5234 0-7361-1587

Nna Nn a 0-5471-0455, 0-5477-1971, 0-5477-2818 0-5471-0477 T ha Wang Pha 0-5479-9679, 0-5479-9963, 0-5479-9964 0-5479-9138 Ban Luang 0-5476-1003, 0-5476-1076 0-5476-1003

Nk a hon Phanom N akhon Phanom 0-4251-1023, 0-4251-1322, 0-4251-2234 0-4251-2614 T hat Phanom 0-4254-1008-9 0-4254-1010

N ong Bua Lamphu N ong Bua Lamphu 0-4236-0547-9 0-4236-0551 TMB Bank PCL TMB Branches in Upcountry | 261

Province Office Telephone Fax

Nk a hon N akhon Ratchasima 0-4425-2505, 0-4425-2545, 0-4425-7680 0-4425-7681 Ratchasima S uranaree Camp - Nakhon 0-4434-1872, 0-4434-1873 0-4434-1874 Ratchasima Dan Khun Thot 0-4438-9101, 0-4438-9102 0-4438-9279 T he Mall Nakhon Ratchasima 0-4439-3750-1 0-4439-3752 Pak Thong Chai 0-4444-1019, 0-4444-1641 0-4444-1100 Prathai 0-4447-9511, 0-4447-9128 0-4448-9537 T hanon Prajak - Yak Sanlakmueang 0-4425-5567-8, 0-4426-7471, 0-4425-5191 0-4425-6202 Pak Chong 0-4431-5996, 0-4431-5997, 0-4431-5998 All Numbers Phimai 0-4447-1334, 0-4428-7407, 0-4428-7408 0-4447-1335 T hanon Phibunla-iat - Nakhon 0-4427-5200-2, 0-4427-5204 0-4427-5203 Ratchasima Muang Khong 0-4445-9234, 0-4445-9266 0-4445-9235 S ung Noen 0-4441-9241, 0-4441-9865, 0-4441-9588 All Numbers Hua Thalae Nakhon Ratchasima 0-4426-4964-5 0-4426-4980

Nk a hon Nayok N akhon Nayok 0-3731-2350, 0-3731-2346, 0-3731-2348-9 0-3731-2588

Nk a honsawan C humsaeng 0-5628-2498, 0-5628-2499 0-5628-2699 T akhli 0-5626-1537, 0-5626-1538 0-5626-2155 Phayuha Khiri 0-5634-1498, 0-5631-6699 0-5634-1497 Farry Land Nakhonsawan 0-5622-2913, 0-5622-2672, 0-5622-1782, 0-5622-7414 0-5631-3056 T hanon Asia Nakhonsawan 0-5622-8223, 0-5622-8225 0-5622-8224

Nk a hon Si N akhon Si Thammarat 0-7534-2893, 0-7534-5616, 0-7535-6801 0-7535-6979 Thammarat C handi 0-7548-6185, 0-7548-6304, 0-7548-6305 0-7548-6184 T alad Hua It - Nakhon Si Thammarat 0-7531-6164-7 0-7531-6168 T hung Song 0-7541-2446-8 0-7541-2446-8 N akhon Si Thammarat Rajabhat 0-7539-2116, 0-7539-2117 0-7539-2118 University

Burim Ra Burim Ra 0-4461-3441-3 0-4461-3433 N ong Ki 0-4464-1111, 0-4464-1112 0-4464-1112 N ang Rong 0-4462-2722, 0-4463-1456-7 0-4463-1456

Pah r c uap Prachuap Khiri Khan 0-3260-1547-8, 0-3261-1919 0-3261-1918 Khiri Khan Pran Buri 0-3262-1989-0, 0-3262-1829, 0-3254-4557 0-3262-1991 Hua Hin - Prachuap Khiri Khan 0-3251-2205, 0-3251-2500, 0-3251-2151 0-3251-2347 Hua Hin Market Village 0-3252-6314-6 0-3252-6316 262 | TMB Branches in Upcountry Annual Report 2010

Province Office Telephone Fax

Pahnr c i buri Prachinburi 0-3721-1355-6, 0-3721-1655 0-3721-1355-6 Prachantakham 0-3729-1252, 0-3729-1509 0-3729-1251

Pt at ani Pattani 0-7333-2677-9 0-7333-1038

Auth y t aya A yutthaya 0-3524-1417-18, 0-3524-2417 0-3524-2417 Bang Ban 0-3530-7942-43 0-3530-7944 Pra Tu Nam Phra In 0-3521-9784-8 0-3521-9789 Wangi No 0-3521-5649-50 0-3521-5652 A yutthaya Park 0-3521-3061-2 0-3521-3008 U Athai - yutthaya 0-3533-5417-8, 0-3521-3623-4 All Numbers

Ph angnga Phangnga 0-7641-1626-7, 0-7641-1555 0-7641-1555 K hao Lak Phangnga 0-7644-3445-8 0-7644-3448

Phh ic it Phichit 0-5665-1331, 0-5661-3558, 0-5661-2219 0-5661-2216 K i hao Sa 0-5664-9060, 0-5664-9111 0-5664-9060 T aphan Hin 0-5662-1194, 0-5662-1325 0-5662-1477 S am Ngam 0-5669-1210-1, 0-5666-5511, 08-9707-8878 0-5666-5511 S ak Lek 0-5669-9266, 0-5669-9367 0-5669-9267

Phchet abun Phetchabun 0-5671-1386, 0-5672-1250 0-5672-1290 Lom Sak 0-5670-1044, 0-5670-1579, 0-5674-6270 0-5674-6269 PhAtth alung Phatthalung 0-7461-3305, 0-7461-3313, 0-7462-6801 0-7461-1965

Phchet aburi Phetchaburi 0-3242-6005, 0-3242-6115 0-3242-7165 Phetchaburi Rajabhat University 0-3249-3000-1 All Numbers

Ph ayao Phayao 0-5448-1720-1, 0-5448-2329 0-5448-2330

Ph rae Phrae 0-5451-1655, 0-5462-1327 0-5451-1646 S ung Men 0-5454-1231, 0-5454-2001 0-5454-1360

Ph itsanulok Phitsanulok 0-5524-5770-2 0-5524-5544 Phitsanulok 2 0-5528-3007-8 0-5524-2790 K hok Matum - Phitsanulok 0-5521-2432, 0-5521-2434-6 0-5521-2436 S apphraiwan 0-5529-3076 0-5529-3077

Ph uket Phuket 0-7621-2123, 0-7621-2978, 0-7621-3488 0-7621-3487 Jungceylon Phuket 0-7636-6166-8 0-7636-6169 C entral Festival Phuket 0-7624-8509-11 0-7624-8511 T halang 0-7631-1366-7, 0-7631-1484, 0-7631-1500, 0-7631-1501 0-7631-1777 TMB Bank PCL TMB Branches in Upcountry | 263

Province Office Telephone Fax Phuket Airport 0-7632-8383-5 0-7632-8255 T hanon Phra Barami 0-7634-3455-7 0-7634-3458 Patong Beach Montri Road - Phuket 0-7622-5486, 0-7623-0104, 0-7622-5178, 0-7623-0102 0-7623-0137 Bangkok Phuket Hospital 0-7621-0059, 0-7621-0065, 0-7621-0140 0-7621-0140 V ajira Hospital - Phuket 0-7623-7238-40 0-7623-7241 Ha Yaek Chalong Phuket 0-7638-1749-51 0-7638-1751

M aha Sarakham Maha Sarakham 0-4372-2111-2 0-4372-2113 Maha Sarakham University 0-4375-4141-2 0-4375-4143

M ae Hong Son Mae Hong Son 0-5362-0123-4 0-5362-0125

M ukdahan Mukdahan 0-4261-1520, 0-4261-1855, 0-4263-1451-2 0-4261-1892

Y ala Y ala 0-7321-4029, 0-7321-4384, 0-7321-1587, 0-7321-5380 0-7321-4231

YAohn s t o Y asothon 0-4571-2301, 0-4571-2302, 0-4572- 0-4571-2303 0602(NAC), 0-4572-0603(NAC)

R anong R anong 0-7782-3028, 0-7782-3029 0-7782-3030 K ra Buri 0-7789-1027-8 0-7789-1294

Rchat aburi R atchaburi 0-3232-1808, 0-3232-2048, 0-3231-0410 0-3232-2047 Damnoen Saduak 0-3225-3348, 0-3225-3349, 0-3234-5331 0-3225-3701 T hanon Khathathorn Ratchaburi 0-3231-5645-47 0-3231-5817 Ban Pong 0-3220-0382-3, 0-3234-4767-8 0-3220-0382-3 Photharam 0-3235-4047-8, 0-3223-1637, 0-3223-1062 All Numbers

R ayong R ayong 2 0-3861-7470-4 0-3861-7475 K laeng 0-3888-4595-7 0-3888-4463 N oen Khao Din 0-3866-9498, 0-3866-9500 0-3866-9499 Ban Khai 0-3864-1002-3 0-3864-1001 Ban Chang 0-3888-0585-7 0-3888-0588 Laemthong Plaza Rayong 0-3861-0229-32 All Numbers

R toi E R oi Et 0-4351-1369, 0-4351-1612 0-4351-2449

L op Buri Lop Buri 0-3641-1945, 0-3642-2931, 0-3642-1570, 0-3641-2093 0-3641-2093 C arrefour Lopburi 0-3661-2480-1 0-3661-2482 Wong Wien Sra Kaew - Lop Buri 0-3641-2729, 0-3641-3369 0-3642-2915 264 | TMB Branches in Upcountry Annual Report 2010

Province Office Telephone Fax

L ampang Lampang 0-5422-4154, 0-5422-6223, 0-5422-6522, 0-5422-6155 0-5432-2455 N gao 0-5426-1193, 0-5426-1194 0-5426-1007 T hanon Chatchai - Lampang 0-5435-2050-1 0-5422-5073 Hang Chat 0-5426-9206, 0-5426-9207 0-5426-9208

L namphu Lamphun 0-5356-1460-1, 0-5351-0461-3 0-5351-0460 Lamphun Industrial Estate 0-5355-4821, 0-5355-4385, 0-5353-9618 0-5353-9618

L oei Loei 0-4281-2122-3 0-4283-3568 Loei Rajabhat University 0-4283-5754-5 0-4283-5756

S i Sa Ket S i Sa Ket 0-4561-2518, 0-4561-2519 0-4561-2520

S a Kaeo S a Kaeo 0-3724-2688-90 0-3724-2692 A ranyaprathet 0-3723-1280, 0-3723-1290 0-3723-2601

S ongkhla S ongkhla 0-7431-1333, 0-7431-2001, 0-7432-4373 0-7431-4803 K huan Niang 0-7438-6572-3 0-7438-6574 T hanon Juti Anusorn - Hat Yai 0-7423-0883-4, 0-7424-4324 0-7423-1289 T hanon Phet Kasem - Hat Yai 0-7423-6403-4, 0-7423-9830 0-7423-6405 R anot 0-7439-1030-1, 0-7439-2555 0-7439-1030-1 T hanon Rathakhan - Hat Yai 0-7423-8800-2 0-7423-8501 T aladsantisuk 0-7423-0576, 0-7435-1611-3 0-7423-0575 Hati Ya 0-7423-1141-3, 0-7435-5311, 0-7435-5313 0-7435-5312

S amut Sakhon S amut Sakhon 0-3441-2333, 0-3442-2245, 0-3442-5992 0-3442-5993 K ra Thum Baen 0-3484-8977-9 0-3484-8977-9 T hanon Setthakit 1- Samut Sakhon 0-3481-5609, 0-3481-5610, 0-3481-5611 0-3481-5608 O i m No 0-2431-0975-7, 0-2420-2347 0-0242-0347

S T urat hani S urat Thani 0-7727-2753-4 , 0-7728-1009, 0-7728-1010, 0-7728-1010 0-7721-0283-4 N n a Sa 0-7734-1037, 0-7734-1038 0-7734-1538 Front of Surat Thani Hospital 0-7728-3459-61 All Numbers S uratthani Rajabhat University 0-7735-5162, 0-7735-5234 0-7735-5162 K o Samui 0-7742-1137, 0-7742-0360-1 0-7742-1143 C haweng Beach Ko Samui 0-7723-1955-7 All Numbers T hongsala Ko PHangan 0-7723-8920-2 All Numbers Big C Suratthani 0-7722-4201, 0-7722-4324, 0-7722-4809 All Numbers Ban Song Suratthani 0-7725-7093, 0-7725-7127 All Numbers Bo Phut Ko Samui 0-7724-6225-6 0-7724-6227 TMB Bank PCL TMB Branches in Upcountry | 265

Province Office Telephone Fax

Snatu S atun 0-7472-1219, 0-7472-1220 0-7472-1221

Skhu hot ai S ukhothai 0-5561-1147, 0-5561-1590 , 0-5561-4358 , 0-5561-1995 0-5561-4359 (manager) Ban Dan Lan Hoi 0-5568-9110, 0-5568-9070 0-5568-9070 S awankhalok 0-5564-2317, 0-5564-2381 0-5564-1124

S akon Nakhon S akon Nakhon 0-4271-1393, 0-4271-1993, 0-4271-2195, 0-4271-3403 0-4271-4691-2, 0-4274-1993

S araburi S araburi 0-3622-2430-1, 0-3621-1039, 0-3622-1429 0-3622-1229 Phraphutthabat 0-3626-6744-5, 0-3626-7799 0-3626-7800 T hanon Phahon Yothin Saraburi 0-3631-8271-3, 0-3621-2023, 0-3621-2024 0-3631-8270 Muak Lek 0-3634-1990, 0-3634-1017 0-3634-1024 Wihan Daeng 0-3637-7258-9 0-3637-7725 Wang Muang 0-3635-9211-2 0-3635-9213

Sp u han Buri S uphan Buri 0-3552-2356, 0-3552-2358 0-3552-2360 U Thong 0-3555-2007, 0-3555-2009 0-3555-2020

S urin S urin 0-4451-4250, 0-4451-4251, 0-4451-4252 0-4451-4252

S amut Songkhram S amut Songkhram 0-3471-5454-5, 0-3471-4018-9, 0-3471-5456 0-3471-1682, 0-3474-0123

S ing Buri S ing Buri 0-3651-1326, 0-3651-2803 0-3651-2276

A Cmnat haroen A mnat Charoen 0-4551-1590-1, 0-4551-1594 0-4551-1592

U don Thani U don Thani 0-4224-1130, 0-4224-1594, 0-4224-4776-8 0-4224-4391 C arrefour Udonthani 0-4293-1700-1 0-4293-1702 T hanon Thahan - Udonthani 0-4234-1951-3 0-4234-1957 Ban Phu 0-4228-1264-5 0-4228-1265 T hanon Phosi - Udonthani 0-4224-9551-3 0-4224-9554 U don Thani Rajabhat University 0-4224-4042, 0-4224-4258 0-4224-4043

Utt aradit U ttaradit 0-5541-1655, 0-5541-1800 0-5541-2380

A ng Thong A ng Thong 0-3561-1262, 0-3561-2418, 0-3562-5130 0-3562-5131

Uth ai Thani U thai Thani 0-5651-1187, 0-5651-1122, 0-5652-4942 0-5651-1613 Bani Ra 0-5653-9002, 0-5653-9003

Ub on RatchAthani U bon Ratchathani 0-4524-1313, 0-4525-4308, 0-4525-4890 T rakan Phutphon 0-4548-1111 T hanon Phrommarat - Ubon 0-4524-0215-7 Ratchathani 266 | TMB Overseas Branches Annual Report 2010

T MB Overseas Branches

Branch Information Hong Kong General Manager Mr. Pongsak Fookirkkiat

A ddress Room 1601, 16th Floor, New Road Tower 1 18 Queen’s Road Central Hong Kong

E -mail [email protected]

T elephone +852-2845-6677

Facsimile +852-2845-1182

T elex 82645 tmbhk hx

V ientaine General Manager Mr. Louchai Louchaisa

A ddress 34/2 Unit 76, Ban Haysok Samsemthai Road, Chanthabouli, Vientiane, Lao PDR

E -mail [email protected]

T elephome +856-2121-7174, +856-2121-6486

Facsimile +856-2121-6486

T elex 4327 tmbvtels

Cayman Islands Address P.O. Box 501, Cardinal Avenue, George Town Grand Cayman, Cayman Islands

c/o TMB Bank Public Company Limited 3000 Phahonyothin Road, Chatuchak, Bangkok 10900 Thailand

E -mail [email protected]

T elelepone +662-230-5791, +662-230-5792

Facsimile +662-230-5788

T elex 20040 militfx th, 20356 militfx th TMB Bank PCL TMB Currency Exchange Service Offices | 267

T MB Currency Exchange Service Offices

Name Booth Address Telephone A ndaman Barzaar 188/2 Thaweewong Road, Patong, Kathu, Phuket 0-7634-1015

A ndaman Promanard Andaman Club Room No.120/10-11, Raj-U-Thit 200 years Road, 0-7634-1357, 0-7634-1387 Patong, Kathu, Phuket

A o Nang Br. Krabi 146/2 Moo.2, Ao Nang, Muang, Krabi 0-7563-7656

A o Nang Sunset 268 Moo.2, Ao Nang, Muang, Krabi 0-7563-7408

A o Pra Nang 208/2-3 Moo.2, Ao Nang, Muang, Krabi 0-7569-5462

A rrival Hall 1 (AH1) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

A rrival Hall 2 (AH2) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

A rrival Hall, Phuket Airport 222 Moo.6, Mai Khao, Talang, Phuket 0-7632-6737

A rrival Hall3 (AH3) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

A rrival Hall 4 (AH4) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

A rrival Lounge 1 (AL1) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

A rrival Lounge 2 (AL2) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

A rrival Lounge 3 (AL3) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

Bangkok Hospital Inside Inter Nation Building at Bangkok Hospital, Soi Soonvijai, 0-2318-9770 Soi Soonwijai Bangkok

Bangla 1 136/1 Thaweewong Road, Patong, Kathu, Phuket 0-7634-0157

Banthai 94 Thaweewong Road, Patong, Kathu, Phuket 0-7634-0618

Bo Phud Br. 25/21-22 Moo.6, Bo Phud, Koh Samui, Suratthani 0-7724-6225-7

BS T Asoke E4-9 Sukhumvit Road, Klongtan, Klongtoey, Bangkok 0-2651-0192

BS T Nana E3-11 Sukhumvit Road, Klongtan, Klongtoey, Bangkok 0-2651-0228

C aesar Plalace Hotel 382/34 Moo.9, Nongprue, Banglamung, Chonburi 0-3842-5011-2

C entral Festival Phuket 74-75 Central Festival Shopping Center 2nd Floor, Moo.5, 0-7624-8515 Wichit, Muang, Phuket

C entral World Inside Center World 2nd Floor, Unit No.K-B 205, Room K2-10/2 0-2646-1326 Rama I Road, Patumwan, Bangkok

C hatuchak Gate2 FX Booth Gate 2 Chatuchak Administration Office Bangkok, 0-2272-4715-6 Kamphaeng Phet 2 Road, Ladyao, Chatuchak, Bangkok

C hatuchak Gate3 FX Booth Gate 3 Chatuchak Administration Office Bangkok, 0-2272-4105-6 Kamphaeng Phet 2 Road, Ladyao, Chatuchak, Bangkok 268 | TMB Currency Exchange Service Offices Annual Report 2010

Name Booth Address Telephone C herry Hotel Pattaya Cherry Hotel Pattaya 270/3 Moo.10, Nongprue, Banglamung, 0-3842-9501-2 Chonburi

Departure Hall 1 (DH1) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

Departure Hall 2 (DH2) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

Departure Hall 3 (DH3) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

Departure Hall 4 (DH4) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

Departure Hall 5 (DH5) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

Departure Lounge 2 (DL2) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

Devana 49/145 Raj-U-Thit 200 years Road, Nongprue, Bang Phli, Phuket 0-7634-0035

Domestic Departure (DD) Domestic Terminal Donmuang Airport 2nd Floor Viphavadee- 0-2535-3171 Rangsit Road, Donmuang, Bangkok

Domestic South (DS) Domestic Terminal Donmuang Airport 1st Floor Viphavadee- 0-2535-3172 Rangsit Road, Donmuang, Bangkok

Floting Market Pattaya 451/304 Moo.12, Nongprue, Banglamung, Chonburi 0-3807-6845-6

G allery (GL) 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4

Had Chaweng 1 167/36-37 Moo.2, Bo Phud, Koh Samui, Suratthani 0-7723-1955-6 Br. Koh Samui

Had Chaweng 1 Front of Chaweng Villa Bangalow 157 Moo.2 Liab Had 0-7742-2492 Chaweng Road, Bo Phud, Koh Samui, Suratthani

Had Dongtan, Pattaya 69 Nongprue, Nongprue, Banglamung, Chonburi 0-3842-9501-2

Had Jomtian 75/19 Moo.12, Nongprue, Banglamung, Chonburi 0-3823-1442

Had Karon 643 Patak Road, Karon, Muang, Phuket 0-7639-6978

Had Kata Corner Plaza Shopping Complex 112/3 Taina Road, Karon, 0-7633-0088 Muang, Phuket

Hua-Hin 1 160 Naresdamri Road, Hua-Hin, Prachuapkhirikhan 0-3253-2372

Hua-Hin 3, Hua-Hin 226/2 Phetkasem Road, Hua-Hin, Prachuapkhirikhan 0-3251-5735 Prachuapkhirikhan Br.

I ndra Pratunam 120/67 Soi Indra, Rajprarob Road, Phayathai, Rajthevi, Bangkok 0-2208-0982-3

I ndra Square 120/126 Rajprarob Road, Phayathai, Rajthevi, Bangkok 0-2631-9457-9 TMB Bank PCL TMB Currency Exchange Service Offices | 269

Name Booth Address Telephone I nternational Baggage 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 claim (IB)

I nternational Baggage 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 claim (IB2)

I nternational Baggage 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 claim (IB3)

I nternational Departure 999 Moo.1, Nongprue, Bang Phli, Samut Prakarn 0-2134-1813-4 (East) (ID1)

Jomtien 334/1-2 Moo.12, Jomtien Beach Road, Nongprue, Banglamung, 0-3823-2079 Chonburi

Jungcelon Phuket 181 Jungceylon Shopping Center FL., B Raj-U-Thit 200 years 0-7636-6170 Road, Kathu, Phuket, Phuket

K i ata No 183 Koktanode Road, Karon, Muang, Phuket 0-7633-3236

K hao-Lak Br. 19/4-5 Moo.6, Khukkhak, Takuapa, Pang-Nga 0-7644-3445-7

K haosan(Pimanwit School) 212 Pimanwit School Khaosan Road, Pranakorn, Bangkok 0-2629-0579

K oh Chang Br. 9/41 Moo.4, Ban Had Sai Khao, Koh Chang, Trat 0-3958-6242

K oh Samui Br. 67/12-13 Moo.3, Angthong, Koh Samui, Suratthani 0-7742-0360-2

K rabi Airport Phetkasem Road, Nue-Klong, Nue-Klong, Krabi 0-7570-1587

Landmark Plaza 138 Landmark Plaza Building, Sukhumvit Road, Klongtoey, 0-2252-6092 Klongtoey, Bangkok

Mae Sai Br. 44/1-2 Moo.7, Phahonyothin Road, Mae Sai, Mae Sai, Chiangrai 0-5373-3145-6

Mah Boonkrong Center 444 Mah Boonkrong Department Store (MBK), Phayathai Road, 0-2215-2136-7, 0-2217-9234 Wangmai, Pathumwan, Bangkok

Marina Cottage Hotel 47 Karon Road, Karon, Muang, Phuket 0-7633-3051-2

Mark Land Hotel 436/541 Moo.9, North Pattaya Beach Road, Nongprue, 0-3841-5294 Banglamung, Chonburi

Mountain Beach Hotel Pattaya 378/24 Moo.12, Nongprue, Banglamung, Chonburi 0-3825-2994

N ational Stadium BTS.station National Stadium BTS Station W1-29, Rama I Road, Wangmai, 0-2612-3132 Pathumwan, Bangkok

N ight Barzaar, Chiang Rai 870/12 Moo.4 Phahonyothin Road, Wieng, Muang, Chiangrai 0-5371-5657

O top Patong shoping Center OTOP Shopping Center Patong (Opposite Holiday Inn Hotel), 0-7634-0164 Raj-U-Thit 200 years Road, Phuket 270 | TMB Currency Exchange Service Offices Annual Report 2010

Name Booth Address Telephone Patong Merlin Hotel (Phuket) Front of Patong Merlin Hotel, Thaweewong Road, Phuket 0-7634-1048

Pattaya 325/67-70 Pattayaland Shopping Center, Moo. 10, Nongprue, 0-3842-6107 Banglamung, Chonburi

Pattaya Beach Naklur, Banglamung, Chonburi 0-3842-0747

Pattaya Road 2nd (Alcaza) Thai Palace Hotel, 212 Moo.9, Pattaya 2nd Road, Nongprue, 0-3841-5302 Banglamung, Chonburi

Phromphong Promphong BTS Station, E5-10/1A Sukhumvit 24 Road, 0-2663-7485 Klongtoey, Bangkok

Phuket International Airport 222 Moo.6, Mai Khao, Talang, Phuket 0-7632-8383-5

Platinum Pratunam The Platinum Fashion Mall, 222 Petchaburi Road, Petchaburi, 0-2121-9404 Rajthevi, Bangkok

Platinum Pratunam 2 In Front of The Platinum Fashion Mall, 222/226 Petchaburi-Tad- 0-2121-9493 mai Road, Petchaburi, Rajthevi, Bangkok

R ambuttri 323 Rambuttri Road, Taladyod, Pranakhon, Bangkok 0-2629-0620-1

R oyal Garden 218 Moo.10, Muang Pattaya, Nongprue, Banglamung, Chonburi 0-3841-1750

S abana Resort Hotel 14/53 Moo.1, Rawai, Muang, Phuket 0-7634-0545-6

S ai Nam Yen Center Point 271 Raj-U-Thit 200 years Road, Patong, Kathu, Phuket 0-7634-0545-6

S oi Bua Khao 210 Moo.9, Nongprue, Banglamung, Chonburi 0-3872-0083, 0-3872-0092

S oi Chaiyos, Sukumvit11 2/6 Soi Chaiyos Sukhumvit Road, Klongtoey-Nue, Wattana, 0-2253-1045 Bangkok

S unshine Pattaya 240/12 Moo.5, Pattaya -Naklur Road, Naklur, Banglamung, 0-3841-0617 Chonburi

T appaya 31502 Tappaya Road, Nongprue, Banglamung, Chonburi 0-3825-1449

T hanon Phra Barami 256,256/3 Phra Barami Road, Patong, Kathu, Phuket 0-7634-3454-61 Patong Beach

T hanon Tappaya (Pattaya) 315/297 Moo.12, Nongprue, Banglamung, Chonburi 0-3830-3778

T he Loft Samui Hotel, 30/11 Moo.3, Bo Phud, Koh Samui, Suratthani 0-7723-1959-60 Had Chaweng 2 Br., Koh Samui

T hong Sala Branch 161/21 Moo.1, Koh Phangan, Koh Phangan, Suratthani 0-7723-8920-2 (Koh Phangan)

Winmill Resort Hotel Pattaya Inside Windmill Resort Pattaya, 665 Moo.5, Pattaya-Naklur, 0-3837-1441-3 Banglamung, Chonburi

Wong Wien Karon 240 Karon Road, Karon, Muang, Phuket 0-7639-6088

Y ada Building Silom 56 Yada Building, Silom Road, Suriyawong, Bangrak, Bangkok 0-2267-0969 TMB Bank PCL TMB Supply Chain and Business Center | 271

T plMB Sup y Chain and Business Center

Business Center Address Telephone Fax A soke 189/1 Grand Park View Building, 2nd Floor 0-2204-2723-5 0-2204-2726 Sukhumvit 21 Road, Wattana, Bangkok 10110

Baromratchonnee 906, 908, 910 Baromratchonnee Road, 0-2886-5435-6, 0-2434-1756 Bangbumru, Bangplad, Bangkok 10700 0-2435-6819

C hiangmai 275/5, 2nd Floor, Chang Puak Road, Tumbon 0-5341-0102-3, 0-5341-0909 Chang Puak, Ampur Muang Chiangmai 50300 0-5341-0987

Cn ho buri 62/9 Sukhumvit Road, Tumbon Bangplasoi, 0-3827-0794, 0-3828-3652 Ampur Muang Chonburi 20000 0-3828-3526

C hongnonsee 360/16-19 Rama III Road, Chongnonsee, 0-2285-3881-2 0-2285-3875 Yannawa, Bangkok

Hai t Ya 160 Niphatuthit 2 Road, Tumbon Hat Yai, 0-7435-5314, 0-7435-4491 Ampur Hat Yai, Songkla 90110 0-7435-5749

K HOnkaen 127/12 Prachasamosorn Road, Nai Muang, 0-4324-2406-7 0-4324-2405 Ampur Muang, Khonkaen 40000

K rung Kasem 1514 Krungkasem Road, Thepsirin, Pomprab 0-2221-1085, 0-2221-1275 Bangkok 10100 0-2226-1598

Ph aholyothin 3000 3rd Floor, Phaholyothin Road, Jomphol, 0-2299-1429, 02-299-3231, 0-2242-3505 Jatuchak, Bangkok 10900 0-2299-1422, 02-299-1449

Ph uket 37/53 Montri Road, Tumbon Taladyai, Ampur 0-7622-5177, 0-7623-0084 Muangphuket, Phuket 83000 0-7623-0083

P HRapradaeng 127/27, Moo 14, Suksawat Road, Bangpeung, 08-9924-3248, 0-2818-1807 Phrapradaeng, Samutprakarn 10130 08-9924-3253

R angsit- Pathumthani 42 Rangsit Pathumthani Road, Prachathipat, 0-2567-5646, 0-2567-5629 0-2567-5662 Thanyaburi, Pathumthani 12130 0-2567-5634

R ayong 139/1 Sukhumvit Road, Tumbon Cherngnurn, 0-3880-0401 0-3880-0402 Ampur Muang, Rayong 21000

S amutprakarn 88 Moo 3, Theparak Road, Tumbon Theparak, 0-2753-3600-1 0-2753-3602 Ampur Muang, Samutprakarn 10270

S amutsakorn 824/48-52 Norrasing Road, Tumbon Mahachai, 0-3481-1419-20 0-3481-1418 Ampur Muang, Samutsakorn 74000

S ilom 393 1st Floor, Silom Road, Bangrak 0-2230-5320, 0-2230-6059 0-2230-6008 Bangkok 10500 272 | Main Correspondent Banks Annual Report 2010

Mn Ai Correspondent Banks

Country Bank

AUS TRalia Australia and New Zealand Banking Group, Commonwealth Bank of Australia, Westpac Banking Corp, National Australian Bank

B Elgium BNP Paribas Fortis

C Anada Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, Toronto Dominion Bank

CH Ina Bank of China Limited, Industrial and Commercial Bank of China, Hua Xia Bank

DENMARK Danske Bank

FINLAND Nordea Bank Finland, Sampo Bank

FRANCE Le Crédit Lyonnais, Crédit Industriel et Commercial, Société Générale, BNP Paribas, Crédit Agricole CIB, Natixis

GERMANY Commerzbank, Deutsche Bank, UniCredit Bank AG, Landesbank Baden-Württemberg

H Ong Kong Hongkong and Shanghai Banking Corporation Ltd., Shanghai Commercial Bank Limited

INDIA State Bank of India

ISRAEL Bank Hapoalim B.M. Tel-Aviv, Bank Leumi le - Israel, Israel Discount Bank

I TAly Deutsche Bank S.p.A.

J Apan Bank of Tokyo-Mitsubushi UFJ, Mizuho Bank, Mizuho Corporate Bank, Sumitomo Mitsui Banking Corporation, Sumitomo Trust & Banking Co., Ltd.

MALAYSIA CIMB Bank Berhad, Malayan Banking Berhad, RHB Bank Berhad

NEH T Erlands ABN AMRO Bank N.V., The Royal Bank of Scotland N.V., ING Bank N.V., Rabobank Nederland

NEWZ Ealand Bank of New Zealand

NORWAY DnB Nor Bank, Nordea Bank Norge ASA

P HIlippines Asian Development Bank

SINGAPORE Overseas Chinese Banking Corp, DBS Group, United Overseas Bank Limited

SWEDEN Nordea Bank AB (publ), Skandinaviska Enskilda Banken (publ), Svenska Handelsbanken AB (publ)

SWIZ T Erland Credit Suisse, UBS AG

UNID TE Kingdom Barclays Bank Plc, Lloyds TSB Bank, National Westminster Bank, The Royal Bank of Scotland N.V.

USA Bank of America N.A., Bank of New York Mellon, HSBC Bank USA, N.A., Wells Fargo Bank N.A., Citibank N.A., Deutsche Bank Trust Company America, JP Morgan Chase Bank N.A.