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Executive Summary Management Discussion and Analysis

For the Quarter Ended September 30, 2012

Amid a mixed economic picture that featured slowing international trade which has been

adversely affected by lingering uncertainties in major economies, contrary to ongoing growth in

domestic spending that has helped drive the overall economy, it seems that each customer segment

has been affected to varying degrees, through opportunities and risks incurred by such economic

circumstances. Being aware of these conditions, KASIKORNBANKGROUP (KGroup) has continued

to pursue a “Customer-Centric” strategy to achieve the status of becoming our customers’ “Main

Bank”. This endeavor carried us to an increase in net profit of 7.15 percent over-quarter, excluding

non-recurring items, in tandem with higher net interest income. Our net profit also increased over-

year.

Our financial position as of September 30, 2012 included consolidated assets totaling Baht

2,005,460 million, increasing by Baht 118,424 million – 6.28 percent higher over-quarter – due mainly

to rising loans. At the end of September 2012, consolidated loans equaled Baht 1,287,299 million,

rising Baht 31,247 million – 2.49 percent higher over-quarter – mirroring a broad-based increase in

loans across the Corporate, SME and Retail Business segments. Our NPL ratio also dropped.

Consolidated deposits totaled Baht 1,398,295 million, rising Baht 72,665 million – 5.48-percent higher

over-quarter – due to continuous introduction of special savings and investment products with

attractive returns that matched customer risk appetites. Our capital status remained solid, with a

capital adequacy ratio of 16.53 percent as of September 30, 2012, comprising Tier-1 and Tier-2

capital ratios of 10.90 percent and 5.63 percent, respectively.

Aside from these achievements, we received warm recognition with many awards from home

and abroad during the third quarter of 2012, which emphasized not only the success of our core

business growth, but also our dedication and focus on quality. This was all grounded in good

corporate governance, efficient risk management and harmonious corporate synergies provided by

support functions – human resources and IT management – all becoming state-of-the-art via the

K-Transformation program.

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Content Page

1. Overview 1 1.1 Overview of Economy, Banking Industry and Regulatory Changes 1

Thailand’s Economy in the Third Quarter of 2012 1

Banking Industry and Competition 1

Regulatory Changes 2

1.2 Business Directions of KASIKORNBANKGROUP 4

2. Operating Performance and Financial Position Analysis 6 2.1 Operating Performance 6

2.2 Financial Position Analysis 9

2.3 KASIKORNBANK’s Loans and Deposits 12

2.4 Treasury Operations 13

2.5 Capital Requirements and Credit Ratings 14

3. Operations of Core Businesses 16 3.1 Business Overview 16

3.2 Customer Segments 16

3.3 Product Domains and Sales Channels 19

3.3.1 Product Domains 19

3.3.2 Sales and Service Channels 26

4. Risk Management and Risk Factors 30 4.1 Credit Risk Management 30

4.2 Market Risk Management 33

4.3 Liquidity Risk Management 34

5. Operations of Support Groups 35 Human Resource Management for Sustainable Business Growth of

KASIKORNBANKGROUP

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IT Management 36

K-Transformation 37

1. Overview

1.1 Overview of Economy, Banking Industry and Regulatory Changes

Thailand’s Economy in the Third Quarter of 2012 In the third quarter of 2012, the Thai economy is estimated to have grown 3.5 percent YoY,

lower than the 4.2-percent growth in the second quarter of 2012. This deceleration could be attributed

to global economic uncertainty and the fading positive effects of consumption and investments

boosted by post-flood recovery work. Meanwhile, Headline Inflation accelerated on cost-push factors,

e.g., higher wages, a higher electricity Ft tariff surcharge and certain items of excise tax, as well as a

low base from 2011. Given persistently high economic risks that seemed to outweigh inflationary risks

over the near term, the Bank of Thailand (BOT)’s Monetary Policy Committee has maintained an

accommodative monetary policy stance in order to support economic growth momentum.

Looking into the final quarter of 2012,

exports may remain affected by global

economic risks, despite additional monetary

easing by many major central banks.

Nonetheless, domestic spending, largely

supported by continued Thai budgetary

disbursements, will be the main thrust for the

economy. Due to a low 2011 base when

Thailand was hit by catastrophic floods, the

Thai economy in the fourth quarter of 2012

may look brighter, resulting in 2012 full-year growth rate of around 5.0 percent. Amid prevailing global

downsides, however, the Thai authorities are expected to keep their accommodative monetary stance

intact. Meanwhile, fragility in advanced economies, plus more easing measures around the globe,

may induce financial asset prices and foreign exchange rates to become more volatile. Close

attention will thus be needed to ensure effective preparations to avert any adverse impacts from the

global situation.

Source: National Economic Social Development Board and Ministry of CommerceNote: * Forecasted Figure

Banking Industry and Competition In the third quarter of 2012, Thai commercial banks managed to achieve satisfactory

operating performance, mainly supported by ongoing growth in loans as their core business. As of

the end of September 2012, net loans (less deferred revenue, allowance for doubtful accounts and

revaluation allowances for debt restructuring) at 14 Thai commercial banks had grown 2.98 percent

over-quarter and 13.89 percent over-year, led by retail loan demand toward the purchase of durable

goods, as evidenced by higher auto financing, as well as corporate loans for working capital.

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Qualitatively, asset quality at most commercial banks remained sound. To cope with rising interest

expenses in light of higher contributions to the Deposit Protection Agency (DPA) and the Financial

Institutions Development Fund (FIDF), restructuring of funding sources was undertaken by many

banks, as seen in their fund mobilizations via deposits and debentures in replacement for matured

B/Es. As a result, deposits at the 14 Thai commercial banks grew 8.73 percent over-quarter and

28.01 percent over-year.

Looking at the remainder of 2012, global economic uncertainty and competitiveness

constraints in certain industries may affect loan demand, especially to those most affected. However,

yearend domestic spending is expected to boost core business, particularly loans, nearing or

meeting full-year growth targets. Commercial banks are likely to focus on savings products that are

competitive with other savings alternatives in offering tax benefits to maintain customers. This is

despite the fact that deposit rates are generally moving in line with policymaker adjustments to their

key rate as a response to economic risks. Against a backdrop of economic fragility globally,

commercial banks may continue to focus on fine-tuning their strategies and risk management

processes for efficient business operations.

Regulatory Changes Some significant regulatory changes in the third quarter of 2012 that may affect KBank

business operations include:

• Rules, Procedures and Conditions for Electronic Payment Service Business The Electronic Transactions Commission issued a notification on “Rules, Procedures and

Conditions for the Electronic Payment Service Business” (No.2), B.E. 2555, which was published in

the Government Gazette on September 1, 2012, and became effective on the following day. The

notification cited rules governing debit card businesses which are used for spending domestically,

whereby debit card issuers are required to report transaction switching, clearing and settlements to

the acquirers via the domestic switching system only.

This notification is an important initiative aimed at reducing cash settlement costs domestically

per the BOT’s settlement system development plan. Its objective is to encourage the public to make

greater use of electronic payment services, rather than cash that carries higher settlement costs. The

development of the domestic switching system is perceived as a good starting point, offering greater

security and helping to reduce cash management costs for financial institutions. This system should

benefit both debit card service providers and participating merchants in terms of the service charge

that they are required to pay to overseas networks, while the domestic switching system is

considered as an important mechanism toward improving national settlement systems and financial

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activities. However, KBank, as a debit card service provider for acquirers, will have to make

preparations to meet the new rules, procedures and conditions contained in this notification.

• Regulations Governing Bills and Short-term Debentures Notification of the Capital Market Supervisory Board, TorChor. 16/2555, on “Applications for

and Approval of Offers for Sale of Newly Issued Debt Securities” (No.3), dated March 28, 2012.

Notification of the Securities and Exchange Commission, KorChor. 2/2555, on “Determination of

Characteristics of Bills Deemed as Securities” (No.2), dated March 29, 2012, had the following

details:

− Bills issued by companies or financial institutions for the purpose of mobilizing funds from

the general public are deemed as securities and they are under the supervision of the Office

of Securities and Exchange Commission.

− Bills eligible to be approved for sale to the general public must have a face value not less

than Baht 10 million, with the exception of limited offers of bills, e.g., not exceeding ten bills

at any time, including all outstanding bills previously issued and yet to reach maturity.

− The statement, e.g., “This bill is not eligible for Deposit Protection Agency protection” must

appear on the face of the bill.

− To mitigate risk to investors, either of the following statements: “non-transferable” or “transfer

without recourse” must be indicated on face of the bill.

− Bills deemed as securities must not have features of a structured debenture.

− Bills offered for sale must be made through an intermediary having a permit to operate

securities business. They can be a securities company or a financial institution and they

must ensure that the bills offered are suitable for investment.

These notifications were enforced to help prospective investors avoid risks amid the many bills

distributed to retail investors, because most thought that the bills being offered by financial institutions

were eligible for Deposition Protection Agency protection. Meanwhile, bill endorsers also might not

realize that they may incur legal risk, and that bills with features of structured debentures may not

carry a comprehensive legal commitment. As a result, the sale of bills for the purpose of mobilizing

funds by commercial banks was brought under the supervision of the Office of Securities and

Exchange Commission to limit such risks.

• Suitability Test Requirement for Securities Companies Prior to Undertaking Securities Underwriting

Notification of the Capital Market Supervisory Board, TorThor. 28/2555, on “Rules, Conditions

and Procedures for Controlling Operation of Security Underwriting” (No. 3), dated May 18, 2012,

came into force on July 1, 2012, as an amendment to regulations requiring stock and debenture

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underwriters to conduct a suitability test in same manner as with other securities services, whereby

they shall take into account the investment objectives, knowledge and experience of retail investors

as part of the advice or offer for sale of financial products suitable to the risk appetites of retail

investors. This is a principle-based regulation established in the same manner as those governing

brokers on stock exchanges and bond markets to ensure that securities companies establish suitable

formats and details for customer inquiry forms.

The amended regulations may result in KGroup having to conduct suitability tests on securities

underwritten for retail clients, together with a need to adjust certain operational and communication

processes. An understanding of those processes should be given to relevant staff, and controls

should be reviewed to ensure compliance with the SEC regulations.

• Rules and Methods for the Calculation of Average Deposit and Types of Deposit Eligible for the Protection of Deposit Protection Agency

Notification of the Deposit Protection Agency on “Rules and Methods for the Calculation of

Average Deposit and Types of Deposit Eligible for Deposit Protection Agency Protection”, B.E. 2555,

was published in the Government Gazette on July 16, 2012. Aside from rules and methods

overseeing contributions to the Deposit Protection Fund, consistent with the Royal Decree

“Specifying Contributions to Financial Deposit Protection Agency (DPA)”, B.E. 2555, published in the

Government Gazette on June 22, 2012, this notification sets out the types of deposit that are eligible

for protection, including Thai Baht deposits in domestic current accounts, deposits in savings

accounts, call deposits, time deposits, certificates of deposit, deposit receipts and deposits in

accounts that financial institutions offer the general public, and for which they are obliged to give

returns to depositors. These deposits exclude deposits in Thai Baht deposit accounts of non-

residents, deposits having features of structured notes and inter-bank deposits.

This notification is consistent the guidelines announced earlier by the Thai authorities on

deposits eligible for protection, remaining consistent with existing rules. It does not have any

significant impact on KBank.

1.2 Business Directions of KASIKORNBANKGROUP During the third quarter of 2012, the Thai economy was affected by exports that were below

expectations, as did several other Asian nations, due to the unfavorable economic situations within

major trade partner countries. Nonetheless, ongoing expansion in private sector spending, coupled

with the Thai government’s stimulus efforts, are helping to sustain economic growth momentum over

the remainder of 2012.

Realizing current economic uncertainties, KASIKORNBANKGROUP (KGroup) remains vigilant

in business undertakings as we proceed with “Customer-Centric” operating practices, plus ongoing

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efforts to achieve the status of being our customers’ “Main Bank”. We are firmly committed to

satisfying customer needs, via exceptionally sound and useful financial solutions, along with the

finest services, plus efficient risk management. Our accomplishments have gained us many marks of

recognition, domestically and abroad:

Awards to KGroup Business Divisions Other Important Awards

• Best Retail Bank 2012, by Money and Banking

magazine, for the fifth successive year

• Thailand Best Bond House of 2012, by FinanceAsia

magazine

• Best Domestic Providers of FX Services in Thailand for

2012 by Asiamoney magazine for the sixth consecutive

year

• Three awards, including Best Bank, Best Cash Management and Best FX Bank for Corporations & Financial Institutions, given by Alpha Southeast Asia

magazine

• Best Cash Management House in Thailand, given as part

of the ‘Corporate Treasurer Alliance Awards 2012’

• Thailand Domestic Trade Finance Bank of the Year, by

Asian Banking & Finance magazine

• Best Trade Finance Bank in Thailand, by Global Trade

Review magazine

• Asian Corporate Director Recognition Award 2012, granted to Khun Banthoon Lamsam, KBank CEO and

President, for the third year running

• Corporate Governance Asia Recognition Awards 2012, by

Corporate Governance Asia magazine for the eighth

consecutive year

• Most Attractive Booth in Money Expo 2012, by Money and

Banking magazine for sixth successive year

• Outstanding Labor, Welfare and Relations Award 2012, by

the Ministry of Labour for the seventh year in a row

KBank maintains a focus on corporate governance practices via policies to promote them

consistent with international standards, as well as regulations of the Bank of Thailand (BOT),

Securities and Exchange Commission (SEC) and Capital Market Supervisory Board (CMSB). In 2012,

KGroup Code of Conduct compliance assessments, per the KGroup CG Index program, were

undertaken on P Companies and KGroup employees.

Having placed considerable importance on corporate governance, we have attained many

marks of recognition toward these efforts. As evidence of this during the third quarter of 2012, KBank

was rated “Excellent” for the seventh successive year in the Annual General Meeting (AGM)

assessment of 2012 conducted by the Securities and Exchange Commission, Thai Investors

Association and Thai Listed Companies Association. KBank was also honored with the Corporate

Governance Asia Recognition Award 2012 by Corporate Governance Asia Journal for the eighth

consecutive year, wherein Mr. Banthoon Lamsam, KBank Chief Executive Officer and President, was

awarded the Asian Corporate Director Recognition Award 2012, making it his third year running in

getting that award.

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2. Operating Performance and Financial Position Analysis

2.1 Operating Performance

The Bank’s consolidated net profit for the third quarter of 2012 totaled Baht 9,212 million,

decreasing Baht 155 million or 1.66 percent over-quarter due partly to non-recurring item from stock

dividend obtained in the previous quarter. Excluding the non-recurring item, the net profit increased

7.15 percent, over-quarter. Over-year, the net profit rose as a result of reduction in corporate income

tax rate from 30 to 23 percent in 2012. Meanwhile, our operating profit before income tax expense for

the third quarter of 2012 equaled Baht 12,953 million, also higher than the same period of 2011.

Operating Performance for the Third Quarter of 2012 (Units: Million Baht)

Q3-2012 Q2-2012 Change Q3-2011 Change Million Baht Percent Million Baht Percent

Interest income 24,393 23,589 804 3.41 22,119 2,274 10.28

Interest expenses 8,189 8,124 65 0.80 7,440 749 10.07

Interest income - net 16,204 15,465 739 4.78 14,680 1,525 10.39

Fees and service income - net 6,233 5,964 269 4.50 5,498 735 13.37

Other income 15,191 14,758 433 2.93 12,568 2,623 20.87

Total operating income 37,628 36,188 1,441 3.98 32,746 4,883 14.91

Underwriting expenses 11,114 10,311 803 7.79 9,187 1,927 20.98

Total operating income - net 26,514 25,876 638 2.47 23,559 2,955 12.54

Total other operating expenses 11,544 11,426 118 1.03 10,265 1,279 12.46

Operating profit

(Before impairment loss on loans and debt

securities, and income tax expense) 14,970 14,450 520 3.60 13,294 1,676 12.61

Impairment loss on loans and debt securities 2,018 1,894 124 6.53 1,719 299 17.39

Operating profit before income tax expense 12,953 12,556 397 3.16 11,575 1,378 11.90

Income tax expense 3,010 2,561 449 17.50 3,424 (414) (12.09)

Net profit 9,943 9,995 (52) (0.52) 8,151 1,792 21.99

Net profit attributable to:

Equity holders of the Bank 9,212 9,367 (155) (1.66) 7,761 1,451 18.70

Non-controlling interests 731 628 103 16.48 390 341 87.44

Net profit 9,943 9,995 (52) (0.52) 8,151 1,792 21.99

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Income Structure (Units: Million Baht)

Q3-2012 Q2-2012 Change Q3-2011 Change

Million Baht Percent Million Baht Percent

Interest income Interbank and money market items 1,117 948 169 17.83 1,847 (730) (39.51) Deposits 93 104 (11) (9.53) 68 25 37.43

Loans without repurchase agreements 139 74 65 88.20 33 106 327.43

Repurchase agreements 885 770 115 14.86 1,746 (861) (49.34)

Investments 3,192 3,190 2 0.06 2,222 970 43.69 Trading investments 191 103 88 85.41 98 93 95.29

Available-for-sale investments 1,704 1,884 (180) (9.57) 1,123 581 51.83

Held-to-maturity investments 1,297 1,203 94 7.82 1,001 296 29.52 Loans 19,087 18,499 588 3.18 17,209 1,878 10.91 Finance leases 1,032 963 69 7.17 859 173 20.10 Others (35) (11) (24) (218.18) (18) (17) (103.93) Total interest income 24,393 23,589 804 3.41 22,119 2,274 10.28 Total interest expenses 8,189 8,124 65 0.80 7,439 750 10.07 Total interest income - net 16,204 15,465 739 4.78 14,680 1,524 10.38

Non-interest income

Fees and service income 7,932 7,667 265 3.46 6,897 1,035 15.02

Fees and service expenses 1,699 1,703 (4) (0.20) 1,399 300 21.51

Fees and service income - net 6,233 5,964 269 4.50 5,498 735 13.37 Gain on trading and foreign exchange

transactions 1,344 1,207 137 11.37 1,584 (240) (15.12)

Loss on financial liabilities designated at

fair value through profit or loss (7) (20) 13 64.54 (39) 32 81.15

Gain on investments 226 118 108 90.99 58 168 293.51

Share of profit from investments using

equity method 3 7 (4) (50.58) 3 - 3.38

Dividend income 247 939 (692) (73.73) 219 28 12.87

Net premiums earned 13,137 12,243 894 7.30 10,602 2,535 23.91

Other operating income 241 264 (23) (8.74) 141 100 70.59

Less Underwriting expenses 11,114 10,311 803 7.79 9,187 1,927 20.98

Total non-interest income 10,310 10,411 (101) (0.97) 8,879 1,431 16.12 Total operating income - net 26,514 25,876 638 2.47 23,559 2,955 12.55

The over-quarter rise in net profit, excluding non-recurring item from stock dividend obtained

in the previous quarter, was mainly attributable to increased net interest income with a slight

decrease in non-interest income. Nonetheless, net fees and service income maintained its growth.

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The efficiency ratio equaled 43.54 percent, down from the previous quarter, due to higher growth of

operating income than that of other operating expenses.

When compared to the same period of 2011, the increase in operating profit before income

tax expense was due largely to increased net interest income and non-interest income. Of note were

increases in net fees and service income as well as earned premium net of underwriting expenses.

The efficiency ratio was thus close to the level seen in the third quarter of 2011.

Net Interest Income The Bank’s consolidated net interest income rose over-quarter, mainly the result of increased

interest income – comprising an increase in interest income from growth in loans following larger

average loan volume and from interbank and money market items, derived mainly from higher volume

of repurchase agreement transactions. Meanwhile, interest expenses rose slightly, due mainly to

increased interest expenses from deposits following higher average deposit volume whereas interest

expenses from interbank and money market items decreased in line with decreased volume of private

repurchase transactions. As a result, our net interest margin (NIM) for the third quarter of 2012

equaled 3.55 percent, slightly higher than the previous quarter.

Over-year, the Bank’s consolidated net interest income increased, due primarily to increased

interest income. Of note was an increase in interest income from loans following larger average loan

volume. Our interest expenses also increased, mostly the consequence of increased interest expense

from deposits following larger average deposit volume and special fixed-term deposit campaign

offerings as well as higher contributions to Deposit Protection Agency (DPA) and Financial Institutions

Development Fund (FIDF). This caused our net interest margin (NIM) to be lower than the 3.65

percent seen in the third quarter of 2011.

Non-Interest Income For the third quarter of 2012, the Bank’s consolidated non-interest income decreased Baht

101 million, or 0.97 percent over-quarter, due in part to non-recurring item from stock dividend

obtained in the previous quarter. Meanwhile, net fees and service income still maintained its growth.

Over-year, increase in non-interest income was derived largely from net fees and service income and

earned premium net of underwriting expenses from Muang Thai Life Assurance Company (MTL).

The over-quarter increase in net fees and service income was supported by increased fees

from sales of products and financial services such as card businesses. When compared to the same

quarter of 2011, our net fees and service income increased, largely the result of increased fees from

sales of products and financial services, such as card businesses, mutual fund management, card

accepting merchant services, and loan-related business. All of which was the result of our “Customer-

Centricity” concept, leading to continual growth in the number of new customers.

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Other Operating Expenses For the third quarter of 2012, our other operating expenses rose over-quarter, in light of an

increase in personnel expenses despite decreased expenses for promotion, advertisement and

marketing activities. Over-year, other operating expenses increased, due mainly to increased

personnel expenses following increases in salary and the number of employees, other expenditures,

as well as premises and equipment expenditures. As a consequence, the efficiency ratio in the third

quarter of 2012 equaled 43.54 percent, lower than the 44.16 percent in the previous quarter and

close to the 43.57 percent in the same period of last year.

Impairment Loss on Loans and Debt Securities For the third quarter of 2012, the Bank and our subsidiaries set aside allowances for

impairment loss on loans and debt securities at levels higher than those of the previous quarter and

the same period of last year. This was mainly in alignment with domestic and internationally

economic conditions.

2.2 Financial Position Analysis

Assets and Liabilities Structure

0

400,000

800,000

1,200,000

1,600,000

2,000,000

2,400,000

Jun. 30, 2012 Sep. 30, 2012

64% 77%

19%5%

11% 5%2% 4%

7%

67%

20%

2% 4%7%

78%

4%

7%6%

Loans to customers and accrued interest receivables Investments - netInterbank and money market items - net (asset)CashOther assets

DepositsDebts issued and borrowingsInterbank and money market items (liability)Life policy reserve

Units: Million Baht

Jun. 30, 2012 Sep. 30, 2012

Other liabilities

5%6%

Assets As of September 30, 2012, the Bank’s consolidated assets totaled Baht 2,005,460 million,

increasing by Baht 118,424 million, or 6.28 percent, over the end of June 2012. The increase was

mainly due to increases in net interbank and money market items (asset) as well as loans to

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customers. Meanwhile, net investments dropped over-quarter. Consolidated assets that had changed

significantly relative to the previous quarter included:

• Net interbank and money market items (asset), at the end of September 2012, equaled

Baht 223,197 million, rising by Baht 98,247 million, or 78.63 percent, from the end of

June 2012. This was the result of the Bank’s liquidity management.

• The Bank’s consolidated loans to customers, at the end of September 2012, totaled Baht

1,287,299 million, growing by Baht 31,247 million, or 2.49 percent, over the end of June

2012, mainly attributable to increases in commercial and housing loans. Our

consolidated loans were the fourth-largest among the group of large commercial banks.

In the meantime, our net non-performing loans1 (Net NPLs) ratio to total loans,

at the end of September 2012, equaled 0.93 percent, down from 1.01 percent at the end

of June 2012. Similarly, the gross NPL ratio to total loans was at 2.07 percent at the end

of September 2012, dropping from 2.20 percent at the end of June 2012. Such NPL

ratio decreases were due largely to an increase in total loans.

• Net investments, at the end of September 2012, amounted to Baht 374,554 million,

falling by Baht 5,752 million, or 1.51 percent, over the end of June 2012, as a result of

sales of investments in government and state enterprise securities.

Investments

317,452 302,476

34,543 40,92011,478 12,523

16,820 18,623

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

Jun. 30, 2012 Sep. 30, 2012

Units: Million Baht

Equity Securities Foreign Debt Instruments

Private Enterprise Debt Instruments Government and State Enterprise Securities

Liabilities and Equity The consolidated liabilities of the Bank, as of September 30, 2012, totaled Baht 1,812,026

million, increasing by Baht 108,650 million, or 6.38 percent, over the end of June 2012. Of note were

1 Details of non-performing loans are shown in the “Non-Performing Loans and Debt Restructuring” portion of the “Credit Risk

Management” section.

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increases in deposits, interbank and money market items, debts issued and borrowings, as well as

life policy reserves. Consolidated liabilities that had changed significantly relative to the previous

quarter included:

• Deposits, at the end of September 2012, equaled Baht 1,398,295 million, increasing by

Baht 72,665 million, or 5.48 percent, over the end of June 2012. This was mainly the

result of increased savings deposits as well as special fixed-term deposits. Our

consolidated deposits were the fourth-largest among the group of large commercial

banks.

• Interbank and money market items, at the end of September 2012, amounted to Baht

108,374 million, up by Baht 11,102 million, or 11.41 percent, over the end of June 2012.

This was in response to the “Soft Loans per the Flood Relief Program 2011” project,

which in collaboration with the Bank of Thailand.

• Debts issued and borrowings, at the end of September 2012, totaled Baht 86,952 million,

rising by Baht 10,403 million, or 13.59 percent, over the end of June 2012, due largely to

U.S. Dollar 500 million in foreign debenture issuance.

• Life policy reserves, at the end of September 2012, equaled Baht 119,074 million, up by

Baht 7,693 million, or 6.91 percent, over the end of June 2012. This was the result of

growth in the life-insurance business.

At the end of September 2012, total equity attributable to equity holders of the Bank equaled

Baht 178,599 million, increasing by Baht 8,569 million, or 5.04 percent, over the end of June 2012.

This increase was mainly the result of Baht 9,212 million in our net operating income for the third

quarter of 2012, although the dividends generated from Baht 1,197 million in the first six months of

2012 net operating income were paid in September 2012.

Relationship Between Sources and Uses of Funds At the end of September 2012, the funding structure as shown in the consolidated financial

statement comprised Baht 1,812,026 million in liabilities and Baht 193,434 million in total equity,

resulting in a debt-to-equity ratio of 9.37. The major source of funds on the liabilities side was

deposits, which equaled Baht 1,398,295 million, or 69.72 percent of the total. Other sources of funds

included interbank and money market items as well as debts issued and borrowings, which

accounted for 5.40 percent and 4.34 percent of the total, respectively.

The Bank and subsidiaries’ major use of funds was loans. At the end of September 2012,

loans (less deferred revenue) amounted to Baht 1,287,299 million, resulting in a loan-to-deposit ratio

of 92.06 percent. Meanwhile, the loan-to-deposit plus bills of exchange ratio was 90.86 percent. As

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for the remaining liquidity, the Bank invested it in various selections of liquid assets, such as interbank

and money market items, and investments in securities.

2.3 KASIKORNBANK’s Loans and Deposits Loans Classified by Business and Product Groups

KASIKORNBANK’s Loans Classified by Business and Product Groups* (Units: Million Baht)

Sep. 30, 2012 Jun. 30, 2012 Corporate

Business SME

Business Retail

Business Corporate Business

SME Business

Retail Business

Loans 372,698 452,533 280,967 368,744 443,957 267,901 Domestic credit loans 266,891 412,667 258,028 404,673

Trade finance loans 92,105 39,866 95,887 39,284

Foreign currency credits (formerly BIBF) 13,702 14,829

Housing loans 201,072 194,173

Credit card loans 44,698 41,970

Consumer loans 35,197 31,758

Note: * Excluding non-performing loans and other loans, such as those of subsidiary companies and others.

Regarding KBank’s loans, when classified by business and product groups, at the end of the

third quarter of 2012, Corporate Business loans increased by Baht 3,954 million, or 1.07 percent, over

the end of June 2012. This was mainly attributable to growth in domestic credit loans – both in long-

term credit for power plants and the property sector, as well as short-term credit for machinery and

metal, agriculture, electrical appliance and electronics industries. In the meantime, SME Business

loans increased over-quarter by Baht 8,576 million, or 1.93 percent, largely the result of an increase in

domestic credit loans, particularly in agribusiness, trading, service, chemicals and chemical products,

as well as automotive industries. Retail Business loans also reported growth of Baht 13,066 million, or

4.88 percent, over-quarter. Of note were housing loans, which recorded the largest increase in

volume, driven by our efforts to maintain good relationships with our leading property developer allies,

continuously arrange promotional activities and special campaigns, as well as coordinate with the

authorities to provide a soft-loan program for flood-affected customers. Meanwhile, consumer loans

registered the highest growth, in tandem with aggressively driving our K-Express Cash forward,

through various promotional campaigns that effectively meet the needs of target customers.

12

Deposits Classified by Type of Deposit Account

KASIKORNBANK’s Deposits*

(Units: Million Baht)

Percent Deposits Change of Total

Deposits Sep. 30, 2012 Jun. 30, 2012 Million

Baht Percent

Total Deposits 100.00 1,400,627 1,328,208 72,419 5.45 Current accounts 5.79 81,094 74,819 6,275 8.39

Savings accounts 58.40 817,919 773,824 44,095 5.70

Fixed-term deposit accounts 35.81 501,614 479,565 22,049 4.60

Note: * Bank-only

At the end of September 2012, total deposits – comprising the deposits of all our Corporate,

SME and Retail Business customers – had increased by Baht 72,419 million, or 5.45 percent, over the

end of June 2012. This was due mainly to an increase in savings deposits, as customers tended to

park their money after their fixed-term deposits came due. Meanwhile, we continued to offer special

fixed-term deposit campaigns, as well as other investment alternatives with attractive returns and

acceptable risk.

2.4 Treasury Operations

KBank continues to pursue a strategy of properly managing liquidity to suit the demands of

each unit, as well as changing economic circumstances and the money market rate direction. In the

third quarter of 2012, the money market situation did not record any significant over-quarter change;

meanwhile, the BOT continued to encourage KBank to increase the volume of our term interbank

borrowing and BIBOR-based transactions, e.g., lending to corporate customers, and borrowing or the

issuance of bills of exchange (B/E), etc. Cooperation was also sought from commercial banks to use

the BIBOR as a reference rate for transactions in the derivatives market. Treasury Operations Income

(Unit: Million Baht)

Income Structure of Treasury Operations (Banking Book)

Percent of Total Income

Q3-2012 Q2-2012 Change Million Baht Percent

Interest income* Interbank and money market items** 37.72 1,024 866 158 18.24

Investments 62.28 1,691 1,887 (196) (10.39)

Total 100.00 2,715 2,753 (38) (1.38) Notes: * Managerial figures

** Including loans

13

During the third quarter of 2012, total interest income from our treasury operations (banking

book), totaled Baht 2,715 million, falling by Baht 38 million, being 1.38 percent less than in the second

quarter of 2012; this was the result of a Baht-15,550-million decrease over-quarter in liquidity.

2.5 Capital Requirements and Credit Ratings

Capital Funds As of September 30, 2012, the Bank had capital funds of Baht 220,447 million, consisting of

Baht 145,405 million in Tier-1 capital, and Baht 75,042 million in Tier-2 capital. The capital adequacy

ratio of the Bank was 16.53 percent, significantly above the Bank of Thailand’s minimum requirement

of 8.50 percent. Details of the capital adequacy ratio of the Bank are shown in the following table:

Capital Adequacy Ratio* (Units: Percent)

Capital Adequacy Ratio Sep. 30,

2012 Jun. 30,

2012 Mar. 31,

2012 Dec. 31,

2011 Sep. 30,

2011

Tier-1 Capital Ratio 10.90 9.76 9.59 9.63 9.72

Tier-2 Capital Ratio 5.63 5.80 5.89 4.18 4.18

Capital Adequacy Ratio 16.53 15.56 15.48 13.81 13.90 Note: * Excluding the net profit of each period; under the Bank of Thailand’s regulations, net profit in the first period is to be

counted as capital after approval by the Board of Directors as per Bank’s regulations. Net profit in the second period

is also counted as capital after approval of the General Meeting of Shareholders. However, whenever a net loss

occurs, the capital must be immediately reduced accordingly.

Credit Ratings At the end of September 2012, the Bank’s credit ratings given by Moody’s Investors Service,

Standard & Poor’s and Fitch Ratings remained unchanged from the end of June 2012. Details are

shown in the following table:

KASIKORNBANK Credit Ratings Credit Ratings Agency Sep. 30, 2012

Moody’s Investors Service * Foreign Currency Outlook Stable

Long-term - Senior Unsecured Notes A3

- Deposit Baa1

Short-term - Debt/Deposit P-2

Subordinated Debt Baa1

Bank Financial Strength Rating (BFSR) D+

Outlook for BFSR Stable

Baseline Credit Assessment Baa3

14

Credit Ratings Agency Sep. 30, 2012 Domestic Currency

Outlook Stable

Long-term - Deposit A3

Short-term - Debt/Deposit P-1

Standard & Poor’s *

Global Scale Ratings

Outlook Stable

Long-term Counterparty Credit Rating BBB+

Long-term Certificate of Deposit BBB+

Short-term Counterparty Credit Rating A-2

Short-term Certificate of Deposit A-2

Senior Unsecured Notes (Foreign Currency) BBB+

Subordinated Debt (Foreign Currency) BBB ASEAN Regional Scale Ratings Long-term axA+

Short-term axA-1

Fitch Ratings *

International Credit Ratings (Foreign Currency)

Outlook Stable

Long-term Issuer Default Rating BBB+

Short-term Issuer Default Rating F2

Subordinated Debt BBB

Viability bbb+

Support 2

Support Rating Floor BBB-

National Credit Ratings

Outlook Stable

Long-term AA(tha)

Short-term F1+(tha)

Subordinated Debt AA-(tha)

Note: * The base levels for investment grade on long-term credit ratings for Moody’s Investors Service, Standard & Poor’s, and Fitch Ratings

are Baa3, BBB- and BBB-, respectively. For short-term credit ratings, the base levels for investment grade as viewed by these three

agencies are P-3, A-3, and F3, respectively.

15

3. Operations of Core Businesses

3.1 Business Overview While the Thai economy maintained its growth momentum, driven by private sector spending,

exports continued to be plagued by the global slowdown, with each customer segment having been

affected to varying degrees. Given the opportunities and risks seen in this economic situation,

KGroup continued to pursue “Customer-Centricity” and “Customer’s Main Bank” strategies to achieve

our sustainable growth and business goals. During the third quarter of 2012, the Bank remained

determined to develop our business in all dimensions – across all customer segments, product

domains, plus major sales and service channels – to ensure the best service experience to our clients.

In essence:

3.2 Customer Segments

Multi-Corporate Business As this customer segment – comprising quite large businesses – has long played an important

role in driving the Thai economy, KBank has not only realized their importance, but has also revised

our strategies to meet with changing business circumstances affecting them. We continue to upgrade

our staff competencies for better performance in presenting these customers with services and

financial tools that help sustain their business growth and fit specific needs. In the third quarter of

2012, we conducted an in-depth study to gain a better understanding of ASEAN business operations

overall, gearing up for AEC integration and thus be ready to support customers wishing to invest in

other ASEAN members states, or vice versa. Via collaboration within KGroup units, KBank continues

to assist the business operations of customers in other countries.

Large Corporate Business Focusing on ‘excellent sales and service’ to our Large Corporate Business customers, we

make great efforts toward providing financial advisory service solutions that cater to their needs,

transmitted to them via our Capital Market Development Team. A recent ‘RM Champion’ project was

organized as a hub-based promotion to further the industry-specific knowledge of our Relationship

Managers (RMs). To ensure faster and more efficient service, new ‘Customer Relationship

Management (CRM)’ tools were devised to assist our RMs in analyzing and formulating strategic

plans that include products and services that would efficiently meet their needs. These tools also

permit close after-sales monitoring to further develop our services. These efforts ensure a continued

satisfactory experience for these large customers.

16

Medium Business Amid economic volatility, in particular on the global front, KBank strategies were revised and

services further improved in the third quarter of 2012 to assist this business segment. ‘Industry

Solutions’ were introduced with post-financing to auto spare-part producers and recruitment

agencies; also offered were factoring and supplier financing products to boost liquidity for their

business operations. We also developed the ‘K-Insured Export Factoring’ product to enhance the

confidence of export-oriented customers. Processes related to international transactions and trade

finance were improved for greater speed and more thorough processing.

Small and Micro Business Adhering to our goal of becoming the bank of choice for SME customers, by mean of having

the largest number of SME clients and being chosen as their ‘main bank’ for financial services, the

Bank, in the third quarter of 2012, rolled out many products. Notable items included the ‘K-SME PG

Start-up’, featuring a credit facility guaranteed by the Small Business Credit Guarantee Corporation

(SBCG) and earmarked for entrepreneurs having been in operation for only two years or less. This

program provides training courses jointly organized with Mahidol University to improve their

knowledge of topics useful to successful business start-ups. Additionally, ‘K-SME Automotive Credit’

was offered with financial support of up to Baht 15 million for auto dealer investments and branch

expansion, as well as working capital for pre-owned vehicle business.

Furthermore, ‘K-SME Franchise Credit’ was further developed, in order to provide better

support to franchise operators for use as investment capital, branch expansion or for other business

enhancements. A number of quality franchise participants were added, reaching 60 franchisees, as

targeted, and thus increasing our business opportunity in increasing market share for this type of loan

to SMEs. Meanwhile, we also emphasized brand positioning and marketing activities in four provinces

with rising potential, where we offered our ‘K-SME Credit: Choose as Your Wish’ program. Social

media and branch networking were widely used to communicate this program to entrepreneurs.

High Net Worth Individual We are avidly cross-selling products to this segment to achieve higher product holdings and

greater use of KGroup services by them with KBank as their main operating bank. A focus has been

placed on expanding our customer base in Bangkok and other provinces via activities tailor-made to

meet the financial needs and lifestyles of the High Net Worth Individual segment. This is aimed at

quickening their decisions toward accepting multiple KGroup products to meet their investment

objectives and risk appetites. Notable activities in the financial dimension included our ‘KPB Exclusive

Dinner Talks’ organized in Bangkok and other provinces to offer updates on equity trading, led by

guest experts. For the non-financial dimension, hobby-themed lifestyle workshops were organized for

17

our customers with higher investment through KBank, in addition to other activities as gestures of

appreciation for their continued trust in us.

Affluent In order to increase the number of customers using KBank as their main bank, we continue to

pursue a strategy of acquiring new customers, upgrading Middle Income customers to the Affluent

segment – particularly business owners and high-ranking executives – as well as expanding our

customer base in provincial communities. During the third quarter of 2012, aside from in Bangkok

Metropolitan Region (BMR), we expanded further into strategic provinces that are key economic

centers with ongoing growth. Many special services, plus financial and non-financial activities were

launched to meet diverse needs and lifestyles of customers in each area under the ‘Customer Centric’

strategy. Notable efforts included activities increasing customer knowledge of investments via

advisory services for wealth management, plus lifestyle trips/activities, to please these customers. We

took the opportunity to promote ‘THE WISDOM’ as a ‘top-of-mind’ brand for customers, using local

media marketing communications such as leading magazines, Chamber of Commerce journals and

provincial cable TVs services to reach targeted customer groups.

Middle Income In the third quarter of 2012, our Middle Income customer base was enlarged using strategies

to win customers’ hearts and become their main bank, leading to larger product holdings and

frequencies in service usage. Tapping into those strategic provinces across the country, KBank

organized Pull-Marketing activities via local media to gain access to customers. Appropriate products

and services that well respond to their financial needs and lifestyles were launched, including ‘Wow!

Step-up Fixed Deposit’, ‘K-Auto Finance: Auto Refinance (Used Car)’ and ‘Doraemon – Come Pay

Your Bill Quickly’ promotions. To emphasize our leadership in advisory services, we also promoted

‘K-Expert’ teams at KBank branches nationwide, along with the distribution of handbooks on ‘Tips for

Managing Your Financial Dream’, organized group seminars, set up new websites and posted

interesting news on social media networks. Emphasis was placed on bundled deposit products for

customers opening new KBank accounts to ensure greater convenience, while also increasing our

sales performance. In addition, KBank has implemented a database marketing strategy using

customer transaction behaviors to imply their needs and wants, and thus enhance efficiency in

product presentations. Our ‘KBank THE PREMIER’ service, aside from inviting distinguished

customers to participate in the trial service, also offered special privileges for those with at least Baht

2 million commitment in KGroup products for over six months. Upon application for THE PREMIER

service, they are entitled to gift air tickets plus three other privileges in the lifestyle, wealth and

financial service categories, plus use of THE PREMIER card points to upgrade domestic air tickets

under the established conditions.

18

Mass To gain the forefront in customers’ minds and become their main bank, KBank launched a

variety of marketing activities to ensure greater familiarity with our products and services to meet the

financial needs of the Mass segment. We mainly targeted university students and those earning less

than Baht 15,000/month in these activities. Services via electronic channels were continually

upgraded for greater convenience and more effective response to their lifestyles. In the third quarter

of 2012, we introduced a ‘fast-lane’ service at branches, which is aimed at more convenient use of

our services via active queue management, while also spurring more bill payment transactions. A

‘Apply with Your Gang and Pay 0% Interest Up to 6 Months’ campaign was launched to offer

customers instant cash for everyday expenditures. Through collaboration between three of our

business divisions, KBank also staged a promotional campaign entitled ‘Decorate Your Dream Home

– Special Prize Offer with K-Payroll Benefits’, wherein customers with a KBank payroll account are

entitled to many privileges, including participation in a sweepstakes to win home decoration vouchers

and many other prizes when applying for and using our products.

3.3 Product Domains and Sales Channels

3.3.1 Product Domains During the third quarter of 2012, amid the lingering global and domestic economic

uncertainty that remains a challenge to our customers and their businesses, KBank introduced

and/or upgraded many products and services, while continuing to deliver the finest service to

customers. Sales promotional activities and knowledge-based support were launched to assist

customers in their decision-making. Our more notable efforts are classified into four product

domains, i.e., Operation & Transaction, Saving & Investing, Funding & Borrowing, and

Protection & Information. In essence:

Operation & Transaction Details

New Products and Services

• Introduction of K-My Debit Card with the motif of ‘Yak’, the first Thai animation movie

for children and family groups. This was an effort continuing from the successful

launch of Hello Kitty and Angry Birds Space K-My Debit Cards and K-Max Debit Cards

earlier this year. Newly designed ‘GTH is me’ debit cards were also introduced on the

occasion of the 7th anniversary of GTH operation.

• Occasion Gift Cheque Set: A product which combines gift cheques with attractive

blessing cards for customers’ selections in special occasions, while creating brand

awareness and emphasizing KBank leadership in product innovations.

19

Details

Product and Service Enhancements

• Introduction of ‘Fast Lane’ at KBank Branches for greater convenience to customers

in need of fast and complete bill payment services. The ‘Doraemon – Come Pay Your

Bill Quickly’ promotional campaign, running from August 8 to November 30, 2012, has

been launched to persuade customers to make their bill payments at KBank branches

or K-ATMs and collect stamps to redeem them for special Doraemon gift collections.

• K-Merchant on Mobile: In cooperation with our business allies, KBank introduced a

card-accepting merchant service innovation via applications on smartphones – the

first of its kind in Thailand – which welcomes the VISA and MasterCard cards of all

banks.

Enhancement of Business Operation Efficiency

• Upgraded custodial and mutual fund supervisory services: KBank has been entrusted

by a new asset management company to provide mutual fund supervisory services.

Despite our having the largest single market share in this market, that move gave us

an even larger market share over peers. We also offered private fund custodial

services to two large corporate customers – with a combined asset value of over Baht

3 billion – and educational institutions, while providing provident fund custodial

services to new state enterprise customers. KBank is now preparing to offer new types

of funds per regulatory requirements to meet customers’ business needs and benefits

of unit holders.

• Fund Accounting: We extended our fund accounting services to new securities firms

and the private funds of educational institutions. These services, combined with our

custodial and mutual fund supervisory services, highlight our capability toward

providing complete service solutions ranging from investment fund management to

facilitating back office work, such as the preparation of statements of financial position

and updating investment status reports to customers, not only for mutual funds, but

also securities and insurance firms.

• Improvement in registrar services for unit trusts, debentures and bonds: We have

improved our registrar services to cope with a growing volume of investments into

fixed-income funds and other types of mutual funds that have enjoyed continued

growth, enabling us to gain the largest market share in registrar services for asset

management business. In addition, KBank is preparing to provide registrar services on

new types of debentures, wherein KSecurities will be the underwriter.

• A facility and security agent for project finance and debenture holder

representatives: KBank has acted as a facility and security agent on syndicated loans

for several large projects in the energy industry. We expect the number of customers

20

Details

entrusting KBank with these services will increase over the remainder of 2012. We

have also acted as a holder representative of debentures issued by large

entertainment business companies and subsidiaries of financial institutions.

Sales and Marketing Promotional Programs

• Sales promotional programs on all types of K-Debit Cards: KBank joined hands with

business allies to offer privileges that match lifestyles of our target customers,

including watching movies, enjoying ice-cream, getting cash back when shopping

online and getting reward points when spending via cards. Hello Kitty K-My Debit

Cardholders were also entitled to get a discount when shopping at any Central

Department store during June 15-September 17, 2012.

• Programs to promote sales of ‘K-mAlert: Transaction Alert’ have been provided, with

greater options to customers making annual bill payments.

• Sales promotional programs for Global Outward, wherein customers with

accumulated outward fund transfers in excess of every Baht 500,000 during the

promotion period were entitled to a Baht 250 discount coupon to be used in lieu of

cash, for fee payments up to Baht 10,000.

Saving & Investing Details

New Products and Services

• New deposit products for medium- to high-end customers, e.g., a ‘Special 7-Month

Fixed Deposit’ product, offering an attractive interest rate for High Net Worth

Individual and Affluent segments, as well as KBank THE WISDOM cardholders.

Meanwhile, a promotional campaign on the ‘Special 5-Month Fixed Deposit’ and

‘Special 5-Month Fixed Deposit’ for THE WISDOM cardholders were extended to meet

customer demand, also maintaining our competitiveness. Earmarked for the Middle

Income segment, we launched ‘Wow! Step-up Fixed Deposit’, a 18-month period that

offers a higher interest rate than savings deposits even when withdrawal is made

before maturity. The promotional campaign for this deposit product was made, via TV

commercials (TVC) to attract new customers.

• Initial Public Offering on 50 funds: During the third quarter of this year, KBank joined

hands with KAsset to offer 50 funds, investing in bonds domestically and

internationally, most of which were 3-6 month fixed-income funds offering higher

returns than fixed deposits.

Sales and Marketing

• Marketing activities for mutual fund investments: To encourage customers to invest

21

Details

Promotional Programs

more in LTFs/RMFs during the year, customers buying investment units via their

K-Credit Card during May-July received up to 3x reward points, and during August-

September, 2x reward points.

Funding & Borrowing Details

New Products and Services

• Letter of Indemnity (L/I) for SME customers, which can be used as collateral in lieu of

other securities for their enhanced liquidity.

• Industry Solutions for post-shipment financing – the first of its kind in Thailand, to

ensure enhanced working capital of our SME customers in recruitment agency

business and auto spare parts production.

• K-Insured Export Factoring for increased security in exports for our customers dealing

with international trade business

• K-SME PG Start-up, which features a credit facility guaranteed by Small Business

Credit Guarantee Corporation (SBCG) in the combined amount of Baht 10 billion,

earmarked for entrepreneurs having operated business in Thailand for up to two

years. Borrowers are required to pass the SBCG-approved training courses organized

by public or private agencies.

• K-SME Automotive Credit, as a financial support for new investments and working

capital to pre-owned car dealers with high market capitalization that are in need of a

large funding resources for inventories to boost their competitiveness.

Product and Service Enhancements

• Rebranding of K-Credit Card, into a classic and modern look with multiple benefits to

fulfill the lifestyles of all K-Credit Cardholders per the concept of ‘K-Credit Card…Your

Daily Happiness’. Our notable effort included a new campaign ‘Always Special and

Superior! Dining, Flying, Traveling Anywhere: Get 15% Cash Back when Redeeming

Your Points Equal to Your Spending’.

• K-Home Loan, via the ‘@ Home Banking Solution Version 1.0’ program was launched

jointly with our allied telecom service provider to offer a complete communication

package to new homebuyers. In cooperation with four leading property developers,

we introduced a promotional campaign to grant scores of privileges to our customers

via ‘iButterfly’ application on smartphone, aiming at emphasizing our innovation

leadership. KBank also joined hands with other property developers in the Bangkok

Metropolitan Region to launch various promotional activities, in addition to our

22

Details

participation in home and building fairs, as well as money expos in Bangkok and

Nakhon Ratchasima. All of these efforts helped our new loans to reach the set target.

• Soft Loans per the Flood Relief Program, 2011: In response to a government policy,

KBank not only arranged PR activities to promote this soft loan program actively, but

also extended the loan to flood-affected K-Home Loan customers at the full quota set

aside by the Bank of Thailand in the third quarter.

• More franchise companies under the K-SME Franchise Credit program were

selected to join, putting the total number of quality franchise participants at 60, as

targeted. This would increase our market share on this type of loan for SMEs for

investment, expansion and improvement of franchise business.

• Development of O/D-linked payment system, via mobile phones and an O/D network

for the over 200 dealers of Thai Beverage Plc. nationwide. This systems helps ensure

faster and more efficient payment management, as well as enhanced liquidity for the

company, which records over Baht 50 billion in sales via the system and represents

credit lines totaling Baht 4,500 million. Given the inherently better systemic credit risk

management using this system, KBank has been able to acquire a large number of

new quality customers in a short time.

• Revised criteria for K-Trade Premier has been instituted, e.g., guarantor

qualifications, plus the addition of trade finance products for pre- or post-shipment

financing on domestic and international transactions to serve the needs of our

customers.

• K-SME Credit Solutions was revised and renamed as K-Credit Solutions. As part of

our efforts to conduct our business with a ‘Customer-Centric’ strategy, we have

focused on acquisitions in every customer segment, including foreign investors, to

widen our client base and add products to cover long-term and revolving credits, as

well as certain derivative products, such as Interest Rate Swap and Cross Currency

Swap.

• Enhancement of K-Taiwan EXIM Bank Trade Credit; it was also renamed K-Taiwan

Equipment Finance to better serve customer demand. In cooperation with KF&E, we

incorporated K-Equipment Leasing services into the program, as well as streamlined

processing and documentation to reduce paperwork, as well as increased credit

limits to Baht 600 million (equivalent to USD 20 million), while also extending the

promotion period to January 21, 2014. Enhancement of • Adjustments in operational procedures, to ensure faster transactions with reduced

23

Details

Business Operation Efficiency

application processing and fewer requisite documents for timely customer

responsiveness. Emphasis was also placed on the offering of financial solutions to

customers using KBank as their main bank, to add customers and increase their use

of credit lines.

Sales and Marketing Promotional Programs

• Sales promotional programs for L/C: New programs were staged for customers with

accumulated L/C issuances exceeding the minimum value of every Baht 1,000,000

during the promotion period, wherein they were entitled to a discount coupon to be

used in place of cash for fee payments up to Baht 10,000.

• Sales promotions to expand credit card base were launched. Notable efforts

included promotional activities of co-branded cards, such as Bangkok Hospital Group

- KBank Credit Card, Robinson-KBank Credit Card, Mercedes-KBank Credit Card, to

offer cardholders privileges under the established conditions. As part of our effort to

reach high-end customers, KBank granted THE WISDOM, THE PREMIER and

Platinum cards to both new and existing customers via cross-selling for complete

service delivery.

• Marketing campaigns to gain more card applications and greater spending via

cards: With the ‘K-Credit Card…Your Daily Happiness, with privileges provided

throughout the year’ concept, ‘Spend 1,000 Baht, Get 1,000 Baht’ program was

extended to customers in other provinces at different locations each month, e.g.,

Udon Thani, Nakhon Ratchasima and Pattaya during the third quarter of 2012.

Another notable promotional campaign was ‘Make Merit for Mom and Get Lucky with

Luxury Dining-Traveling-Beauty Treatment, Good Deeds with Double Privileges’ to

celebrate Mother’s Day.

• Marketing activities for consumer loans: KBank offered a special interest rate to

group applicants for K-Express Cash, per the promotional campaign ‘Apply with your

gang and pay 0% interest for up to six months’, when they utilize 70 percent of their

approved loans that will be credited to their account instantly.

• PR program and brand image creation, through the debut of Life Innovation Solution

Center by ‘K Home Smiles Club’ at Mega Bangna. The center is equipped with

‘K-Home Feng Shui’, our innovative service with user-friendly and advanced

technology platform to provide information on feng shui and DIY feng shui

consultations; ‘K-eBook Gallery’ that provides multi-touch screen-based home design

and decoration assistance with customer choice of style; and e-Magazine featuring

home-related matters via multi-touch screens. Placing emphasis on relationship

24

Details

management with our existing customers, we arranged special activities for K-Home

Loan customers via a family day-themed ‘K Home Smiles Talk & Musical’ show.

Protection & Information Details

New Products and Services

• Discount without recourse under export L/C Sight was introduced, which was aimed

at enhancing competitiveness for our target customers, while also increasing our

opportunities and potential for international trade service.

• Life insurance products with loan protection for a period of one year: Some insurance

products, earmarked for SME clients who applied for loans of less than one-year term,

are available with 3-month, 6-month or annual premium payment period options.

Another notable effort was the introduction of a critical illness (CI) rider with major

insurance policies, i.e., Perfect Business Smart, Perfect Business Smart Plus and

Perfect Business Future, with a single premium payment. In addition, we have

expanded our life insurance products with loan protection to large corporate

customers.

• Launch of ‘Pro Saving 1/10, plus Pro Life 90/5’, which offer returns of up to 4.20

percent on the Pro Saving 1/10 policy and longer coverage on the Pro Life 90/5 to

meet the demand of High Net Worth Individual and Affluent customers seeking fixed

returns with low risk over long terms.

Product and Service Enhancements

• MRTA products with single coverage of death from accident have been introduced to

a specific group of customers as an alternative for a regular MRTA policy.

• Development of insurance products with loan protection that offer cash benefits upon

maturity to better meet customer demand. We plan to expand this product line in the

final quarter of 2012.

• Offering of non-life insurance products, e.g., Industrial All Risks insurance, trade

credit insurance, transportation insurance, cash flow insurance and employee integrity

insurance to customers within a supply chain of large companies. KBank also plans to

extend this program to clients in other supply chains for complete services and

benefits, i.e., hedging against risk in business operations, in addition to providing

working capital.

Enhancement of Business Operation

• Enhancement of operational efficiency on insurance products: In cooperation with

Muang Thai Life Assurance, KBank developed a customer information transfer system

25

Details

Efficiency for different units, resulting in faster underwriting and more efficient monitoring and

assessment. We also joined hands with Muang Thai Insurance to enhance their online

working program to ensure faster and more convenient application processing with

immediate coverage for non-life insurance customers. Efforts have been made to

develop a ‘Top-Up’ setting system to accommodate insurance products with loan

protection that offer cash benefits upon maturity, expected to be finished by the fourth

quarter of 2012

Sales and Marketing Promotional Programs

• PR campaigns for life and non-life insurance products have been planned to be

arranged, in order to promote greater brand awareness among general public during

the final quarter of 2012.

• Information support to customers for their effective decision-making toward the use

of risk protection products: KBank added an information channel for our customers via

two TV programs – ‘Get Set’ and ‘Money Forum’ – broadcast on the Money Channel.

Audiences are informed of daily money market movements on ‘Currency Watch with

KBank’ in the ‘Get Set’ program aired Mondays to Fridays, while monthly seminars

feature news on the interest rate trend and commodity prices, as well as useful advice

on risk protection during the ‘Money Forum’ program. Each seminar is rerun six times

to ensure that customers gain access to useful information and risk management

methods provided by KGroup.

• Arrangement of special seminars, entitled ‘Looking through the Money Market -

Connecting to the Business World with Professional KBank’ was staged, in addition to

monthly seminars for our customers. The forum provided in-depth information on the

global crisis, how to manage forex and commodity risks, as well as preparation for the

ASEAN Economic Community (AEC) in 2015 to assist our customers in their decision-

making.

3.3.2 Sales and Service Channels KASIKORNBANKGROUP works diligently to enhance our service capabilities and

efficiency as provided via numerous channels which are one of the crucial elements connecting

the products and services of KGroup with each target customer segment, as well as delivering

a satisfactory service experience. Lists of these channels as in the third quarter of 2012 are

summarized below:

26

Branches and Financial Service Offices/Centers Number of

Locations Key Implementations in the Third Quarter of 2012

Sep. 30 2012

Jun. 30 2012

Branch Network

824 824 • Differentiation with K-Expert’s Advisory Services: Through the

introduction of K-Expert professional advisers at all KBank branches,

KBank is ready to deliver an impressive and caring financial experience

to customers with need-based solutions, rather than product-based

offerings. Our advisors are equipped with need-based KBank

guidebooks that depict product solutions which have been designed to

meet the needs of each customer segment throughout customers’ life

stages.

Foreign Exchange

Booths

97 99 • A slight decrease in the number of foreign exchange booths was due

to an expiry of space lease contracts, while the Bank is in the relocation

process.

• Sales Promotional Programs: KBank introduced a free roaming SIM for

callbacks at cheaper prices to customers using KBank forex service via

any channel in an amount of Baht 25,000 or more during July-October

2012.

Corporate & SME

Service Centers

61 61 • New Cheque Point: The 26th Cheque Point was opened at the Sut

Banthat Branch, Saraburi. Cheque Points 26 25

Corporate Business

Centers

6 6

SME Business

Centers*

115 115

Note: *Excluding Corporate & SME Service Centers

Electronic Banking Service

Number of Units Key Implementations in the Third Quarter of 2012 Sep. 30 2012

Jun. 30 2012

K-ATM 7,525 7,441 • K-ATM service enhancements: For better service and differentiation

from peers, KBank has improved our K-My ATM concept with the

27

Number of Units Key Implementations in the Third Quarter of 2012 Sep. 30 Jun. 30 2012 2012

display of ATM screens featuring motifs from festivals and the launch of

promotional campaigns.

K-CDM

(Cash Deposit

Machines)

1,177 1,141 • K-ATM service enhancements: For better service and differentiation

from peers, KBank has improved our K-My ATM concept with the

display of ATM screens featuring motifs from festivals and the launch of

promotional campaigns.

K-PUM

(Passbook Update

Machines)

943 937 • Increases in number and relocation of K-PUMs: We added a number

of K-PUMs and relocated some to more suitable locations for enhanced

convenience and expanded service coverage.

Key Implementations in the Third Quarter of 2012

K-Cyber Banking • Efficiency enhancement of our Internet banking system: Our notable efforts included

development of a more user-friendly web interface to brace for an increased number of

customers, and providing real-time payment for participating merchants, including mobile

phone shops. 2012

• Sales promotional campaigns: KBank, with business allies in airline, cinema and

telecommunications services, organized sweepstakes wherein customers making bill

payments, funds transfers or mobile top-ups via K-Cyber Banking were entitled to win air

tickets, prizes or complimentary gifts. In addition, promotional activities at various

expositions, including ‘Happy Money Festivals’ were held in strategic provinces to increase

brand awareness, use of our services, new applications and financial transactions.

K-Speed Top Up

(formerly K-MOBILE

BANKING SMS)

• Sales promotional campaigns: In addition to ‘Happy Money Festivals’ in strategic provinces,

KBank continued to hold promotional activities at several expositions to promote K-Speed

Top Up, together with K-MOBILE BANKING PLUS and other KBank electronic services to

increase new users of these services.

K-MOBILE BANKING

PLUS • Service enhancement has been made for higher system efficiency to accommodate the new

network utilization, including provision of terms and conditions to customers via e-mails upon

their first login.

• Sales promotional campaigns: KBank, with business allies in airline, cinema and

telecommunications services, organized sweepstakes wherein customers making bill

payments, funds transfers or mobile top-ups via K-MOBILE BANKING PLUS were entitled to

win air tickets, prizes or complimentary gifts. In addition, promotional activities at various

expositions, including ‘Happy Money Festivals’ were held in strategic provinces to increase

28

Key Implementations in the Third Quarter of 2012

brand awareness, use of our services, new applications and financial transactions.

K-MOBILE BANKING PLUS campaigns were also launched as part of our ATM SIM

customer retention program, given that the use of ATM SIM is not compatible with some

mobile systems.

K-Payment Gateway • Payments to CUP (China Union Pay) credit and debit cards via K-Payment Gateway can

be made via the UPOP (UnionPay Online Payment) platform, which is CUP’s secure system.

• K-Payment Gateway Clinic offered advisory services on online payments via credit cards for

e-commerce businesses. Lectures were also arranged on e-commerce and e-banking

businesses, plus seminars on topics beneficial to executives and business owners who are

prospective customers.

K-Contact Center and K-BIZ Contact Center

Key Implementations in the Third Quarter of 2012

K-Contact Center

(0-2888-8888)

• K-Contact Center service is now available in the Myanmar language: Since July 2, 2012, K-

Contact Center services have been available in the Myanmar language at Tel. 0-2888-8888,

and press *5, from 12.00-21.00 hrs. Service hours will likely be extended to meet customer

demand.

• Introduction of askKBank.com website: This new service channel enables customers to

search information related to financial knowledge and lifestyle matters to match their needs

through inquiry services classified by KGroup product categories, including Finance and

Banking, What’s Hot, Investment (domestic and foreign), Smart Planning and Casual

Lifestyle, covering such topics as tourism, restaurants, health and financial benefits. All

customer questions are answered by our K-Contact Center staff.

• PR activities for Web Chat service extended to 24/7 have been organized and announced

via banners on KBank websites, as well as the K-Cyber Service homepage, so that

customers are able to engage in a live chat with our K-Contact Center staff.

• Exchange of knowledge with public agencies: Officials from the BOT’s Financial Consumer

Protection Center (FCPC) paid a visit to the K-Contact Center to exchange knowledge and

experiences, which was beneficial to efficient contact center services.

K-BIZ Contact Center

(0-2888-8822) • Web Chat service extended to 24/7 has been promoted via banners on the KBank website,

so that our corporate customers are able to engage in a live chat with our K-BIZ Contact

Center staff.

29

4. Risk Management and Risk Factors2

4.1 Credit Risk Management

Credit Risk Position

− Outstanding loans As of September 30, 2012 the Bank’s consolidated outstanding loans stood at Baht

1,287,229 million, increasing by Baht 31,247 million, or 2.49 percent, compared to Baht 1,256,052

million as of June 30, 2012.

As of September 30, 2012, 56.17 percent of the Bank’s outstanding loans to customers were

loans exceeding Baht 20 million. Credit extended to the 20 largest borrowers, excluding Phethai

Asset Management Company Limited and the K Companies, accounted for Baht 61,421 million, or

4.81 percent of the Bank’s total loan portfolio, which is a small ratio. Classified by customers and

terms, juristic persons accounted for Baht 741,177 million, or 58.04 percent, of outstanding loans;

while sole proprietorship and individual customer credit accounted for the remaining 41.96 percent.

In terms of maturity, credit with maturities of less than or equal to 1 year accounted for 46.69 percent

of the Bank’s total loans.

The Bank’s Consolidated Lending Portfolio – Profile

.0%

.20%

.40%

.60%

.80%

.100%

Type of Customer

Credit Maturity

Credit Amount

Less than 20 MB Over 20 MB

Business entities Individual

Less than or equal to 1 year Over 1 year

As of Sep. 30, 2012

As of Jun. 30, 2012

As of Sep. 30, 2012

As of Jun. 30, 2012

As of Sep. 30, 2012

As of Jun. 30, 2012

43.43% 56.57%

43.83% 56.17%

58.64% 41.36%

58.04% 41.96%

47.74% 52.26%

46.69% 53.31%

2 The details of Overall Risk Management, as well as management of each type of risks and Capital Management, can be viewed

in the MD&A report for the year ended December 31, 2011.

30

The Bank’s Consolidated Lending Portfolio

49.09%

6.68%

12.99%

16.31%

12.40%2.53%

49.94%

6.79%

12.54%

16.17%

12.03%2.53%

Sep. 30, 2012 Jun. 30, 2012• Agricultural & Mining• Manufacturing & Commerce• Real Estate & Construction• • Uti Utilities & Services• Housing Loans• Others

• Agricultural & Mining• Manufacturing & Commerce• Real Estate & Construction

lities & Services• Housing Loans• Others

As of Sep. 30, 2012

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

0%

20%

40%

60%

80%

100%

เกษตร อุต อสังหา สาธารณู ท่ีอยูอาศัย อื่นๆ

Doubtful Sub-Standard Special Mention Normal

Agric

ultur

al &

Mini

ng

Real

Esta

te &

Cons

truct

ion

Man

ufac

turin

g &

Com

mer

ce

Agr

icultu

ral &

Mini

ng

Othe

rs

Real

Esta

te &

Cons

truct

ion

Utilit

ies &

Ser

vices

Hous

ing L

oans

Man

ufac

turin

g &

Com

mer

ce

Unit: Million Baht

Percent of Consolidated Loans Classified by Type of Business and Loan

Classification

Consolidated Loans Classified by Type of Business and Loan

Classification

Utilit

ies &

Ser

vices

Othe

rs

Hous

ing L

oans

Doubtful and Loss

Of the Bank’s consolidated lending portfolio, 96.09 percent was classified as ‘Normal’ loans.

Classified by type of business, Manufacturing & Commerce accounted for 49.09 percent of total

31

consolidated lending, which was the highest ratio. Of this figure, 95.36 percent was classified as

‘Normal’ loans.

− Non-Performing Loans and Debt Restructuring Non-Performing Loans As of September 30, 2012, the Bank’s consolidated NPLs stood at Baht 30,162 million, equal

to 2.07 percent of total outstanding credit, including that of financial institutions. For Bank-only NPLs,

the amount totaled Baht 28,582 million, accounting for 1.96 percent of total outstanding credit,

including that of financial institutions, which the ratios decreased from the end of the second quarter

of 2012. These NPL figures are shown in the table below: Non-Performing Loans

(Units: Million Baht)

Quarter Ending Sep. 30, 2012 Jun. 30, 2012

The Bank’s consolidated NPLs 30,162 29,575

Percent of total outstanding credit, including that of financial institutions 2.07 2.20

The Bank-only NPLs 28,582 27,967

Percent of total outstanding credit, including that of financial institutions 1.96 2.09

Net Non-Performing Loans As of September 30, 2012, the Bank’s consolidated net NPLs stood at Baht 13,370 million,

equal to 0.93 percent of total outstanding credit, including that of financial institutions. For the Bank-

only net NPLs, the amount totaled Baht 12,671 million, accounting for 0.88 percent of total

outstanding credit, including that of financial institutions, which the ratios decreased from the end of

the second quarter of 2012. The net NPL figures are shown in the table below: Net Non-Performing Loans

(Units: Million Baht)

Quarter Ending Sep. 30, 2012 Jun. 30, 2012

The Bank’s consolidated net NPLs 13,370 13,340

Percent of total outstanding credit, including that of financial institutions 0.93 1.01

The Bank-only net NPLs 12,671 12,636

Percent of total outstanding credit, including that of financial institutions 0.88 0.95

Debt Restructuring In the third quarter of 2012, the Bank’s consolidated pre-written off, restructured debts

totaled Baht 48,189 million, increasing by Baht 4,068 million when compared to the same period of

2011. Losses from debt restructuring stood at Baht 1,831 million, or 3.80 percent of total restructured

32

debts, which was equivalent to a decrease of Baht 1,243 million compared to Baht 3,074 million in the

third quarter of 2011, or 2.82 percent of total restructured debts.

Non-Performing Loans of Asset Management Company, and Foreclosed Properties Non-Performing Loans of Phethai Asset Management Company Limited

As of September 30, 2012, Phethai AMC had resolved and/or restructured NPLs amounting

to Baht 73,229 million, or 98.94 percent of the total initial unpaid principal balance, with an expected

recovery rate of 48.00 percent.

The details of NPL resolution and/or restructuring over the past four quarters are shown in

the table below:

Loans Resolved/Restructured at Phethai Asset Management Company Limited (Units: Million Baht)

Quarter Ending Sep. 30, 2012

Jun. 30, 2012

Mar. 31, 2012

Dec. 31, 2011

Sep. 30, 2011

Phethai Asset Management Company Limited

Cumulative loans resolved/restructured 73,229 73,185 72,994 72,968 72,931

Percent of the total initial unpaid principal balance 98.94 98.88 98.62 98.59 98.54

Foreclosed Properties

As of September 30, 2012, the Bank’s consolidated foreclosed properties had a book value

of Baht 12,345 million, accounting for 0.62 percent of total assets.

As of September 30, 2012, consolidated allowances for impairment of foreclosed properties

stood at Baht 1,660 million, equivalent to 13.45 percent of the cost value of those foreclosed

properties, which is believed to be sufficient to cover holding, maintenance and disposal expenses,

as well as losses on the liquidation of foreclosed properties.

Allowance for Doubtful Accounts and Allowance for Impairment of Assets

As of September 30, 2012, the Bank’s consolidated allowance for doubtful accounts and

revaluation allowance for debt restructuring totaled Baht 43,114 million. This amount was equivalent

to 155.77 percent of the level required by the Bank of Thailand.

4.2 Market Risk Management In the third quarter of 2012, global economic risks eased somewhat after the central banks and

governments of many countries implemented accommodative monetary and fiscal policies to

stimulate their economies. Notable efforts were seen in the Fed’s open-ended QE3 via the purchase

of agency mortgage-backed securities (MBS) to spur their recovery and labor market, as well as to

stabilize the economy. Meanwhile, the European Central Bank’s announcement of measures to assist

33

debt-laden nations and a plan to directly inject liquidity into the European banking sector enhanced

clarity toward their direction in solving the Euro crisis.

As for China, their government resorted to fiscal policy assistance measures via investments in

infrastructural projects, plus a monetary policy initiative via reductions in their key policy rate. Such

developments had some repercussions on domestic and international financial markets, leading to a

Thai Baht appreciation versus the U.S. Dollar.

In spite of more positive signals being seen globally, the Thai economy has been affected by

lackluster demand from major trade partners. The BOT, as a result, has resolved to maintain their key

policy rate steady in the third quarter, while preparing appropriate future policies to limit downside

risks to the overall economy. In order to brace for greater risks that could be caused by many factors

– including the prolonged Euro crisis, as well as elected leadership transitions in the U.S. and China –

KBank, with the supervision of the Enterprise Risk Management Division and Risk Management

Committee, have taken steps to ensure that there are effective procedures of risk assessment and

management in place within specified limits.

4.3 Liquidity Risk Management The Euro crisis remained a pressure on financial markets in the third quarter of 2012. Although

it had eased somewhat toward the end of the quarter, during which tight liquidity in major foreign

currencies improved following accommodative measures taken by many central banks – especially

the Fed and ECB – the Euro crisis, plus slowing U.S. and China economies, may resume a pressure

on financial markets later on. Therefore, KBank is keeping a close watch on these situations, as well

as carefully monitoring and managing our liquidity risk accordingly.

Accommodative measures globally have helped enhance liquidity, especially in foreign

currencies, thus allowing KBank to conduct a variety of liquidity management prerogatives. These

included the opportunity to resort to foreign currency liquidity management to support long-term

business growth.

Also, we have streamlined the liquidity risk management of all KGroup units to ensure that it

meets international standards amid rising banking business competition and our own business

expansion. This enhancement will prepare us against any possible liquidity risk that could affect

KGroup performance in the future, and help assure our customers’ confidence in our risk monitoring

and management.

34

5. Operations of Support Groups

Human Resource Management for Sustainable Business Growth of KASIKORNBANKGROUP

To pursue KGroup strategies and brace for ASEAN Economic Community (AEC) integration,

KBank has placed emphasis on developing staff leadership, strengthening our corporate K-Culture,

and upgrading staff skills in terms of languages, cultures and business-related knowledge vis-à-vis

ASEAN nations. In addition, the Bank has focused on increasing the number of employees and

enhancing their potential to support business expansion abroad. Notable developments include:

• Staff Recruitment and Allocation: In the third quarter of 2012, KBank hired 2,350 employees,

in response to our business plan. An event titled “A Day@KBank Career Opportunities for

Chinese and Japanese Speakers” was organized in July 2012 to receive applications and to

interview 160 applicants, concentrating on those with skills in Chinese or Japanese language.

Examinations were held to screen qualified candidates to fill positions in business units of the

Bank and KGroup.

• Staff Potential Development and Leadership Enhancement: The Bank recognizes the

importance of creating knowledge and understanding for adaptation of employee behaviors

that conform with the organization’s expectations. As it is our firm belief that sustainable

business will be maintained through adherence to the K-Culture by employees from

generation to generation, various activities have been held to seek the employees with the

best knowledge and practices of the K-Culture, while “K-Culture on Tour” campaigns have

been launched for provincial units to communicate with and encourage staff in complying

with the four Core Values of KGroup. Moreover, the Bank has continually promoted

leadership qualities of employees under the project of “Leaders Create Leaders”, wherein

KBank Senior Executive Vice Presidents share their concepts and experience of being good

leaders, and their views on how to create the next generation of leaders. So doing is

believed to enhance smooth succession and efficient drive of the organization.

• Staff Retention: The annual Employee Engagement Survey has been conducted to elicit

employee opinions towards the Bank, in terms of their engagement and satisfaction. Data

and survey results have been used to determine guidelines for necessary improvements,

with an aim to better respond to staff requirements and to attain higher efficiency of Bank

operations. For the Service and Sales Network staff, the survey will be conducted in the

fourth quarter of 2012.

35

• Performance Management: A performance assessment was undertaken at mid-2012 to

monitor and evaluate half-year performance of employees, and for supervisors to discuss

and advise their staff, aiming at ensuring the achievement of full-year targets.

• Efforts to Support Business Expansion in China: KBank has mapped out the targets of staff

performance to be consistent with all changes, criteria of staff engagement via agents, joint

operations with business units in a more proactive manner, determination of appropriate

skills, as well as staff recruitment planning. Also, we have put a focus on human resource

development planning for the China Project, leadership enhancement and succession

planning, preparation of an IT development plan and human resource tasks, along with the

creation of networks with agencies in Thailand and China. All of these efforts are to ensure

the compliance of human resource management with regulatory requirements in China, while

facilitating the Bank to efficiently meet our business goals there.

• Human Resource Development in Overseas Branches and Offices: The Bank has prioritized

preparations for the establishment of branches and offices in ASEAN nations. An

International Human Resource Management unit has been set up to support the human

resource tasks of overseas business unit establishment, and to assure non-Thai KBank staff

and expatriates of appropriate treatment and benefits.

• Labor Relations Management and Welfare: The Bank has been granted the Best Labor

Relations and Welfare Award 2012 from the Ministry of Labour for the seventh straight year,

and remains the only commercial bank to have been awarded this commendation.

• Corporate Activities and Relations: Diverse activities have been organized for employee

participation, in both social and corporate aspects, for example the “Green at Heart” activity

of reforestation in selected communities, and “Cutting Electric Bills” for energy-saving

purposes. In addition, the Bank has prepared a handbook on business continuity

management as it concerns human resource management, in the event of any unrest or

natural disaster, in order to prepare ourselves for effective business continuity management.

IT Management • IT Security Policy

To meet the requirements of the Payment Card Industry’s Data Security Standards (PCI-DSS),

during the third quarter of 2012, we improved our IT policy accordingly, as well as implementing the

system for surveillance and analysis of security incidents to ensure prompt and timely protection, as well

as remedial actions.

36

• IT System Development to Support Operations of KASIKORNBANK FINANCIAL CONGLOMERATE

In the third quarter of 2012, apart from improvements in KBank’s IT to cope with rising

business needs and volume, we developed the Global CASHplus (GCP) system for the cash

management transactions of the Corporate Business Division via e-channels, which resulted in

greater efficiency and service capability.

K-Transformation As of the end of the third quarter of 2012, the K-Transformation strategic project has been

progressing continuously, supporting the achievement of our business goals and differentiating us

from peers. Major advancement was seen in the development of the new core banking system under

the IT Capital (ITC) program. The Multi-Channels Sales & Service (MSS) project was also progressing

with the preparation to maintain KBank branch systems nationwide, keeping them continuously up-to-

date.

37

Disclaimer

Certain statements shown in this document are forward-looking statements in respect of financial position or

performance of KASIKORNBANK Public Company Limited (“KBank”). KBank has prepared such statements based on

several assumptions, and has relied on the financial and other information made available from public sources as of

the date these statements were made. Statements with words such as “expect”, “believe”, “estimate”, etc., are types of

forward-looking statements involving uncertainties and subject to change at any time due to future events, including

but not limited to, changes in the global/national economic, political and regulatory environment. KBank is under no

obligation to update these forward-looking statements to correspond to the current situation. Thus, recipients shall

carefully review these statements and make an independent decision prior to investing or entering into any transaction.

38

39