Vision The Most Admired Bank Table of Content Message from the Board of Directors 04 About This Report 10 SCB at a Glance 16 Sustainability at SCB 20 To be... The Most Sustainable Return Company 26 To be... The Most Preferred Partner 36 To be... The Most Caring Employer 52 To be... The Most Responsible Corporate Citizen 76 To be... The Most Prudent Bank 100 Awards and Recognitions 123 Sustainability Performance 124 GRI Content Index 132 Independent Assurance 136 004 SUSTAINABILITY REPORT 2018 Message from the Board of Directors Dr. Vichit Suraphongchai Mr. Anand Panyarachun Mr. Arthid Nanthawithaya Director and Chairman of the Board Director and Chairman of the Executive Committee Chief Executive Officer THE SIAM COMMERCIAL BANK PUBLIC COMPANY LIMITED 005 The year 2018 was still a challenging year for the Bank For more than two years, the Bank has undergone which must operate in an environment that was a major organisational reform under SCB continuously and rapidly changing. Although the Thai Transformation with a focus on customer centricity to economy grew at a reasonable pace, the second increase the Bank resilience in the face of emerging half of the year was fraught with challenges from disruptions. Through the Transformation programme, global economic slowdown and vulnerability from the Bank focuses on developing digital and data the US-China trade war. Moreover, technological analytics capabilities to best enhance its service disruption and shift in customer behaviour to quality as well as forming strategic partnerships emphasise convenience and financial solutions for across different industries to develop platforms and new lifestyles have forever altered the landscape ecosystems that can deliver personalised product for the banking industry. The Bank must adapt in and service solutions to meet customer needs of many dimensions to achieve sustainable growth and all groups. realise its vision of being “the Most Admired Bank”. In March 2018, the Bank had taken an important Siam Commercial Bank, the first Thai bank to lay step that set off a rippling effect in the finance a financial and banking foundation for Thailand, has and banking sector, that is, an announcement to weathered and overcome many economic storms eliminate fees for transfer, payment, and top-up for more than a century. The Bank recognises transactions on digital channels which also led that a sustainable business is not one that focuses other banks to follow suit. Such decision stemmed solely on economic performance, but an agile from management’s belief that the Bank must put and balanced organisation that can quickly adapt the customer first and when customers benefit, to changes and create sustainable and equitable the Bank will also benefit. In other words, the Bank benefits for all groups of stakeholders. Therefore, can grow its digital customer base exponentially starting in 2016, the Bank has stepped up its which will bring down its operating cost in sustainability efforts by integrating economic, social the long run as the cost-to-serve is lower on and environmental considerations into the business digital platforms than at bank branch network. operation with measurable goals to ensure concrete This decision to eliminate digital transaction fees results. Marking another important success for the also represents a meaningful contribution to Bank is the fact that RobecoSAM, a global leader support the government policy to drive Thailand in corporate sustainability assessment, selected SCB towards a cashless society. Considering the overall to be a member of the Dow Jones Sustainability long-term impacts for all organisation, society, and Indices in 2018 for the World Index and the Emerging country, this is a clear win-win decision. Markets Index. The Bank was ranked #6 among global banking businesses on its sustainability performance in this assessment. 006 SUSTAINABILITY REPORT 2018 Furthermore, the Bank places great importance On the social front, the Bank recognises the to investing and preparing for the future by importance of financial inclusion for low-income experimenting with new business models to ensure consumers and senior citizens. The Bank sustainable growth in the future context of uncertainty has therefore collaborated with government and rapid technological change. The Bank has organisations and relevant regulatory agencies partnered with experts to develop digital capabilities with the support of the Bank of Thailand and through its subsidiaries, namely Digital Ventures the Thai Bankers’ Association to develop and and SCB Abacus, which give the Bank access to launch the “Basic Banking Account”. To ensure cutting-edge technologies that can be applied to an inclusive and fair access to basic financial the Bank’s business. The Bank also set up SCB 10X with services, this new product offers state welfare a mandate to translate digital technologies into strategic card holders and senior citizens a savings account products through a new business model to create that has no minimum balance requirements, distinct customer experience and value propositions. no card issuance and annual debit card/ATM fees, This new unit operates in a startup-like culture which and no account maintenance fees. The Bank also encourages independence and experimentation to launched an initiative to apply AI technology to create disruptive innovations. The Bank believes its personal loan and small business loan products that the combined strength of Digital Ventures, to give an inclusive financial access to low-income SCB Abacus, and SCB 10X will ultimately lead SCB people and business owners. The Bank uses to become “Bank of the Future”. big data analytics to understand customer purchase behaviour to improve its risk assessment At the same time, the Bank believes that sustainable which will help address the problem of informal business success requires a strong foundation debt and borrowing outside the formal financial in human capital and organsational culture, system. risk management, and corporate governance. The Bank creates organisational agility by having On the environmental front, the Bank recognises a team-oriented work structure that draws on that climate change is a major global issue employees diverse strengths and expertise, that impacts the quality of life in which a flat organisational structure to speed up the all entities should do their parts in reducing decision making process, a customer-centric such negative impacts. As a financial institution mindset, and a spirit of experimentation and with an intermediary role of capital mobilisation willingness to learn from mistakes, which are all and allocation, the Bank has pledged to take necessary to foster internal innovations. Moreover, part in driving Thailand toward a low-carbon the Bank has set up Digital Academy under the economy by lending to businesses and projects supervision of SCB Academy to prepare employees that help reduce greenhouse gas emissions, such for their new roles and new operations in the as solar power project, wind power project, and digital age. The Bank also places high emphasis on mass rapid transit project. In addition, the Bank adequate and proper risk management covering also focuses the efforts on building a culture credit risk, operational risk, and cyber security, of eco-efficiency and fostering environmental as well as market conduct which is one of the awareness among employees through various fundamental rights of all consumers. campaigns. THE SIAM COMMERCIAL BANK PUBLIC COMPANY LIMITED 007 Sustainability Roadmap for 2019 The Bank will continue to focus on creating value incorporating social, environmental, and governance and leveraging new capabilities from its early risk assessment into the project finance approval investment in SCB Transformation to create distinct process. This ESG risk assessment will be integrated customer experience and migrate more products in the database for verifiability to ensure that and services to digital platforms. In addition, the Bank’s project finance approval process is the Bank will still focus on growing the business based on sound practices and aligned with global from new capabilities by generating new revenue standards for responsible lending. streams and lowering the Bank’s cost base in different areas (please refer to “SCB 2019 Business Lastly, we thank all stakeholders for their support Outlook” section for more details). and helpful feedback on the Bank’s sustainability operations. We pledge our continued commitment In addition to being proactive in the economic to conducting business responsibly with sound dimension, the Bank will strive to be a socially and environmental, social, and governance management environmentally responsible organisation. The Bank to deliver value for all groups of stakeholders which plans to build on its responsible lending initiative will lead to lasting prosperity and sustainability for after the review and revision of its credit policy by the society. (Dr. Vichit Suraphongchai) (Mr. Anand Panyarachun) (Mr. Arthid Nanthawithaya) Director and Chairman of the Board Director Chairman of the Executive and Chief Executive Officer Committee 008 SUSTAINABILITY REPORT 2018 Sustainable Banking SCB is committed to operating its business with the goal of building economic and social developments Investing in digital technology Supporting renewable energy throughout its value chain. The Bank provides financial supports to mega capital project developments and to small business entreprenuers.