TMB Bank Public Company Limited and its subsidiaries

Transcription

1 TMB Bank Public Company Limited and its subsidiaries Interim financial statements for the three-month period ended and Independent auditor s report on review of interim financial information

2 Independent Auditor s Report on Review of Interim Financial Information To the Board of Directors of TMB Bank Public Company Limited I have reviewed the accompanying consolidated and statements of financial position of TMB Bank Public Company Limited and its subsidiaries, and of TMB Bank Public Company Limited respectively, as at ; the consolidated and statements of comprehensive income, changes in equity and cash flows for the three-month period ended ; and the condensed notes ( interim financial information ). Management is responsible for the preparation and presentation of this interim financial information in accordance with Thai Accounting Standard 34, Interim Financial Reporting. My responsibility is to express a conclusion on this interim financial information based on my review. Scope of Review I conducted my review in accordance with the Thai Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Thai Standards on Auditing and consequently does not enable me to obtain assurance that I would become aware of all significant matters that might be identified in an audit. Accordingly, I do not express an audit opinion. Conclusion Based on my review, nothing has come to my attention that causes me to believe that the accompanying interim financial information is not prepared, in all material respects, in accordance with Thai Accounting Standard 34, Interim Financial Reporting.

3 Other Matter The consolidated and statements of financial position of TMB Bank Public Company Limited and its subsidiaries, and of TMB Bank Public Company Limited as at 31 December, which are included as comparative information, were audited by another auditor who expressed an unqualified opinion thereon in her report dated 18 February. Furthermore, the consolidated and statements of comprehensive income, changes in equity and cash flows of TMB Bank Public Company Limited and its subsidiaries, and of TMB Bank Public Company Limited, for the three-month period ended, which are included as comparative information, were reviewed by another auditor who expressed an unmodified conclusion thereon in her report dated 14 May. (Chanchai Sakulkoedsin) Certified Public Accountant Registration No KPMG Phoomchai Audit Ltd. Bangkok 12 May 2

4 TMB Bank Public Company Limited and its subsidiaries Statements of financial position Assets 31 December 31 December Note (Unaudited) (Unaudited) (in thousand Baht) Cash 11,380,603 16,427,953 11,380,534 16,427,874 Interbank and money market items, net ,158, ,096, ,409, ,426,118 Claims on securities 9,629,600 22,689,700 9,629,600 22,689,700 Derivative assets 8,932,173 10,875,999 8,932,173 10,875,999 Investments, net 6, ,924, ,859, ,238, ,785,569 Investments in subsidiaries and associate, net ,229,428 3,229,428 Loans to customers and accrued interest receivable, net 8, 14 Loans to customers 539,054, ,446, ,014, ,403,628 Accrued interest receivable 1,024,753 1,068,201 1,024,753 1,068,201 Total loans to customers and accrued interest receivable 540,079, ,514, ,039, ,471,829 Less deferred revenue (83,613) (86,162) (83,613) (86,162) Less allowance for doubtful accounts 8.3, 10, 14 (28,638,551) (28,252,268) (28,611,764) (28,224,616) Less revaluation allowance for debt restructuring 8.6 (146,928) (109,818) (146,928) (109,818) Total loans to customers and accrued interest receivable, net 511,209, ,066, ,196, ,051,233 Customers liabilities under acceptances 13,334 15,095 13,334 15,095 Properties for sale, net 1,878,340 1,860,150 1,835,443 1,817,253 Premises and equipment, net 10,507,033 10,672,208 10,480,134 10,645,551 Goodwill and other intangible assets, net 1,007,925 1,002, , ,812 Deferred tax assets ,987,679 2,065,370 1,979,306 2,057,586 Other receivables, net 14 19,962,229 12,973,198 19,686,023 12,188,199 Other assets, net 14 3,560,248 3,577,057 3,528,209 3,432,069 Total assets 805,152, ,182, ,482, ,579,486 The accompanying notes are an integral part of these financial statements. 3

5 TMB Bank Public Company Limited and its subsidiaries Statements of financial position Liabilities and equity 31 December 31 December Note (Unaudited) (Unaudited) (in thousand Baht) Liabilities Deposits ,707, ,625, ,780, ,720,372 Interbank and money market items 14 59,497,416 72,716,662 59,497,416 72,716,662 Liabilities payable on demand 3,473,934 3,145,176 3,473,934 3,145,176 Liabilities to deliver security 9,629,600 22,689,700 9,629,600 22,689,700 Financial liabilities designated at fair value through profit or loss 240, , , ,337 Derivative liabilities 8,573,398 10,171,992 8,573,398 10,171,992 Debt issued and borrowings, net 11, 14 38,977,656 36,249,255 38,977,656 36,249,255 Bank s liabilities under acceptances 13,334 15,095 13,334 15,095 Provisions for obligation on transfers of non-performing assets 14 5,998,333 5,998,333 5,998,333 5,998,333 Provisions for employee benefits 1,539,803 1,534,712 1,522,561 1,513,303 Provisions for other liabilities 453, , , ,490 Deferred tax liabilities , Other payables 15,501,083 5,636,688 15,498,625 5,629,503 Other liabilities 14 8,120,276 8,888,207 7,899,510 8,673,907 Total liabilities 733,727, ,389, ,552, ,236,125 Equity Share capital Authorised share capital 44,108,738,479 ordinary shares of Baht 0.95 each 41,903,302 41,903,302 41,903,302 41,903,302 Issued and paid-up share capital 43,678,764,288 ordinary shares of Baht 0.95 each 41,494,826 41,494,826 41,494,826 41,494,826 Premium on share capital 157, , , ,690 Other reserves 4,191,297 4,164,566 4,133,579 4,116,641 Retained earnings Appropriated Legal reserve 1,250,000 1,250,000 1,250,000 1,250,000 Unappropriated 24,237,446 22,637,090 23,893,929 22,324,204 Equity attributable to equity holders of the Bank 71,331,259 69,704,172 70,930,024 69,343,361 Non-controlling interest 93,468 88, Total equity 71,424,727 69,793,036 70,930,024 69,343,361 Total liabilities and equity 805,152, ,182, ,482, ,579,486 Mr. Boontuck Wungcharoen Mr. Singha Nikornpun Chief Executive Officer Chairman of the Audit Committee The accompanying notes are an integral part of these financial statements. 4

6 TMB Bank Public Company Limited and its subsidiaries Statements of comprehensive income (Unaudited) Three-month period ended Three-month period ended Note (in thousand Baht) Interest income 14 8,934,680 8,733,649 8,925,669 8,697,220 Interest expenses 14 3,231,098 3,696,954 3,231,081 3,696,936 Net interest income 5,703,582 5,036,695 5,694,588 5,000,284 Fees and service income 14 2,160,725 1,686,724 2,018,322 1,560,922 Fees and service expenses , , , ,368 Net fees and service income 1,687,695 1,135,506 1,572,510 1,030,554 Gains on trading and foreign exchange transactions, net 410, , , ,990 Loss on financial liabilities designated at fair value through profit or loss, net (6,823) (9,158) (6,823) (9,158) Gains on investments, net 70,636 36,141 70,636 36,141 Other operating income 14 98,747 96,064 94,672 79,164 Total operating income 7,964,014 6,828,238 7,835,760 6,669,975 Other operating expenses Employee expenses 1,828,672 1,923,729 1,775,292 1,869,639 Directors' remuneration 6,956 7,727 6,866 7,637 Premises and equipment expenses 757, , , ,853 Taxes and duties 300, , , ,764 Others , , , ,867 Total other operating expenses 3,558,391 3,762,958 3,459,529 3,676,760 Impairment loss on loans and debt securities 14 2,387,087 1,160,699 2,401,877 1,201,707 Profit from operations before income tax expense 2,018,536 1,904,581 1,974,354 1,791,508 Income tax expense , , , ,153 Profit for the period 1,642,261 1,605,592 1,607,026 1,516,355 Other comprehensive income Items that will not be reclassified subsequently to profit or loss Change in revaluation surplus on assets (3,149) (1,459) (3,149) (1,459) Income tax relating to items that will not be reclassified subsequently to profit or loss (2,519) (1,167) (2,519) (1,167) Items that will be reclassified subsequently to profit or loss Gains (losses) on remeasuring available-for-sale investments 33,110 (147) 20,869 (10,569) Losses arising from translating the financial statements of foreign operations (10,179) (10,071) (10,179) (10,071) Income tax relating to items that will be reclassified subsequently to profit or loss 17 (4,586) 2,043 (2,138) 4,128 18,345 (8,175) 8,552 (16,512) Total other comprehensive income for the period, net of income tax 15,826 (9,342) 6,033 (17,679) Total comprehensive income for the period 1,658,087 1,596,250 1,613,059 1,498,676 The accompanying notes are an integral part of these financial statements. 5

7 TMB Bank Public Company Limited and its subsidiaries Statements of comprehensive income (Unaudited) Three-month period ended Three-month period ended Note (in thousand Baht) Profit attributable to: Equity holders of the Bank 1,637,657 1,601,905 1,607,026 1,516,355 Non-controlling interest 4,604 3, Profit for the period 1,642,261 1,605,592 1,607,026 1,516,355 Total comprehensive income attributable to: Equity holders of the Bank 1,653,483 1,592,563 1,613,059 1,498,676 Non-controlling interest 4,604 3, Total comprehensive income for the period 1,658,087 1,596,250 1,613,059 1,498,676 Earnings per share 18 Basic earnings per share (in Baht) Diluted earnings per share (in Baht) Mr. Boontuck Wungcharoen Mr. Singha Nikornpun Chief Executive Officer Chairman of the Audit Committee The accompanying notes are an integral part of these financial statements. 6

8 TMB Bank Public Company Limited and its subsidiaries Statements of changes in equity (Unaudited) Other reserves Retained earnings Translation adjustment arising from translating Revaluation the financial Equity Issued and Other reserve - Revaluation supplus on statements Total other attributable to paid-up Premium on share-based surplus on available-for-sale of foreign components of equity holders Non-controlling Note share capital share capital payments assets, net investments, net operations, net equity Legal reserve Unappropriated of the Bank interest Total equity (in thousand Baht) Three-month period ended Balance at 1 January 41,426,006 81, ,596 3,918,131 57,781 43,563 4,276, ,000 15,203,983 61,757,256 76,131 61,833,387 Comprehensive income for the period Profit for the period ,601,905 1,601,905 3,687 1,605,592 Other comprehensive income (1,167) (118) (8,057) (9,342) - - (9,342) - (9,342) Total comprehensive income for the period (1,167) (118) (8,057) (9,342) - 1,601,905 1,592,563 3,687 1,596,250 Transfer to retained earnings (18,312) - - (18,312) - 18, Expenses in relation to share-based payments , , ,751-46,751 Balance at 41,426,006 81, ,347 3,898,652 57,663 35,506 4,295, ,000 16,824,200 63,396,570 79,818 63,476,388 Three-month period ended Balance at 31 December - as reported 41,494, , ,836 3,748, ,773 43,563 4,164,566 1,250,000 22,637,090 69,704,172 88,864 69,793,036 Impact of changes in accounting policy (50,925) (50,925) - (50,925) Balance at 1 January 41,494, , ,836 3,748, ,773 43,563 4,164,566 1,250,000 22,586,165 69,653,247 88,864 69,742,111 Comprehensive income for the period Profit for the period ,637,657 1,637,657 4,604 1,642,261 Other comprehensive income (2,519) 26,488 (8,143) 15, ,826-15,826 Total comprehensive income for the period (2,519) 26,488 (8,143) 15,826-1,637,657 1,653,483 4,604 1,658,087 Transfer to retained earnings (13,624) - - (13,624) - 13, Expenses in relation to share-based payments , , ,529-24,529 Balance at 41,494, , ,365 3,732, ,261 35,420 4,191,297 1,250,000 24,237,446 71,331,259 93,468 71,424,727 The accompanying notes are an integral part of these financial statements. 7

9 TMB Bank Public Company Limited and its subsidiaries Statements of changes in equity (Unaudited) Other reserves Retained earnings Translation adjustment arising from translating Revaluation the financial Issued and Other reserve - Revaluation supplus on statements Total other paid-up Premium on share-based surplus on available-for-sale of foreign components of Note share capital share capital payments assets, net investments, net operations, net equity Legal reserve Unappropriated Total equity (in thousand Baht) Three-month period ended Balance at 1 January 41,426,006 81, ,596 3,918,131 42,543 43,563 4,260, ,000 14,986,829 61,524,864 Comprehensive income for the period Profit for the period ,516,355 1,516,355 Other comprehensive income (1,167) (8,455) (8,057) (17,679) - - (17,679) Total comprehensive income for the period (1,167) (8,455) (8,057) (17,679) - 1,516,355 1,498,676 Transfer to retained earnings (18,312) - - (18,312) - 18,312 - Expenses in relation to share-based payments , , ,751 Balance at 41,426,006 81, ,347 3,898,652 34,088 35,506 4,271, ,000 16,521,496 63,070,291 Three-month period ended Balance at 31 December - as reported 41,494, , ,836 3,748,394 58,848 43,563 4,116,641 1,250,000 22,324,204 69,343,361 Impact of changes in accounting policy (50,925) (50,925) Balance at 1 January 41,494, , ,836 3,748,394 58,848 43,563 4,116,641 1,250,000 22,273,279 69,292,436 Comprehensive income for the period Profit for the period ,607,026 1,607,026 Other comprehensive income (2,519) 16,695 (8,143) 6, ,033 Total comprehensive income for the period (2,519) 16,695 (8,143) 6,033-1,607,026 1,613,059 Transfer to retained earnings (13,624) - - (13,624) - 13,624 - Expenses in relation to share-based payments , , ,529 Balance at 41,494, , ,365 3,732,251 75,543 35,420 4,133,579 1,250,000 23,893,929 70,930,024 The accompanying notes are an integral part of these financial statements. 8

10 TMB Bank Public Company Limited and its subsidiaries Statements of cash flows (Unaudited) Three-month period ended Three-month period ended (in thousand Baht) Cash flows from operating activities Profit from operations before income tax expense 2,018,536 1,904,581 1,974,354 1,791,508 Adjustments to reconcile profit from operations before income tax expense to net cash provided by (used in) operating activities Depreciation and amortisation 294, , , ,962 Impairment loss on loans and debt securities 2,387,087 1,160,699 2,401,877 1,201,707 Impairment loss on premises and equipment 2, , Impairment loss on properties for sale and other assets (reversal of) (3,494) 31,625 (3,515) 31,627 Provisions for employee benefits and other liabilities (reversal of) (22,372) 135,369 (23,423) 137,823 Losses (gains) on revaluation of trading investments (10,371) 3,810 (10,371) 3,810 Losses (gains) on disposal of premises and equipment (4,787) 7,521 (4,787) 7,521 Gains on disposal of investments (70,636) (36,141) (70,636) (36,141) Unrealised losses (gains) on remeasurement of financial liabilities designated at fair value through profit or loss 6,823 (4,732) 6,823 (4,732) Unrealised losses (gains) on exchange on borrowings and derivatives 245,154 (331,731) 245,154 (331,731) Expenses in relation to share-based payments 24,529 46,751 24,529 46,751 Net interest income (5,703,582) (5,036,695) (5,694,588) (5,000,284) Dividend income (7,890) (10,080) (7,890) (10,080) Proceeds from interest 8,173,933 8,076,991 8,166,780 8,042,398 Interest paid (2,641,953) (2,701,809) (2,641,970) (2,701,827) Income tax paid (68,031) (53,009) (65,803) (45,422) Profit from operations before changes in operating assets and liabilities 4,620,167 3,493,866 4,590,444 3,430,733 Decrease (increase) operating assets Interbank and money market items 1,746,104 (18,541,964) 1,822,487 (18,495,898) Trading investments 988,840 (5,788,606) 988,840 (5,788,606) Loans to customers (10,429,368) (1,717,173) (10,446,280) (1,820,840) Properties for sale 43,462 76,700 43,462 76,700 Other receivables 554, ,826 53, ,148 Other accrued income 141,950 84,753 43,817 83,521 Other assets 1,006,215 5, ,658 6,313 Increase (decrese) in operating liabilities Deposits 10,141,207 29,028,486 10,118,757 29,132,140 Interbank and money market items (13,219,246) 101,674 (13,219,246) 101,674 Liabilities payable on demand 328,758 (409,143) 328,758 (409,143) Financial liabilities designated at fair value through profit or loss 50, ,000 50, ,000 Short-term debt issued and borrowings (3,872) 37,509 (3,872) 37,509 Provisions for employee benefits (48,484) (42,066) (46,163) (39,917) Provisions for other liabilities (5,171) (21,104) (5,171) (15,965) Account payables (450,141) (1,604,137) (445,414) (1,598,656) Other accrued expenses (1,011,787) (801,615) (1,019,448) (814,647) Other liabilities (1,196,450) (803,159) (1,178,003) (791,330) Net cash provided by (used in) operating activities (6,743,432) 4,202,879 (7,338,280) 4,221,736 The accompanying notes are an integral part of these financial statements. 9

11 TMB Bank Public Company Limited and its subsidiaries Statements of cash flows (Unaudited) Three-month period ended Three-month period ended (in thousand Baht) Cash flows from investing activities Interest received 665, , , ,557 Dividend received 7,890 10,080 7,890 10,080 Purchase of available-for-sale investments (15,355,248) (26,650,852) (14,755,248) (26,650,852) Proceeds from sales of available-for-sale investments 11,146,033 20,228,349 11,146,033 20,228,349 Proceeds from redemption of matured held to maturity debt securities 3,014,639 5,750 3,014,639 5,750 Capital return from investment units and proceeds from sales of general investments 43,719 37,000 43,719 37,000 Purchase of premises and equipment (119,712) (171,191) (116,767) (170,647) Purchase of leasehold rights (977) (434) (977) (434) Purchase of intangible assets (70,496) (109,984) (70,440) (109,984) Proceeds from disposals of premises and equipment 23,676 10,036 23,676 10,031 Net cash used in investing activities (645,234) (6,064,281) (50,392) (6,063,150) Cash flows from financing activities Proceeds from (repayments of) long-term debts issued and borrowings 2,655,294 (663,198) 2,655,294 (663,198) Interest paid on long-term debts issued and borrowing (303,799) (160,206) (303,783) (160,188) Net cash provided by (used in) financing activities 2,351,495 (823,404) 2,351,511 (823,386) Change in translation adjustments of foreign operations (10,179) (10,071) (10,179) (10,071) Net decrease in cash (5,047,350) (2,694,877) (5,047,340) (2,674,871) Cash at 1 January 16,427,953 16,576,203 16,427,874 16,556,121 Cash at 11,380,603 13,881,326 11,380,534 13,881,250 Supplementary disclosures of cash flow information Non-cash transactions: Change in remeasuring available-for-sale investments 33,110 (147) 20,869 (10,569) Change in revaluation surplus on assets and transferred revaluation surplus on assets directly to retained earnings (20,179) (24,349) (20,179) (24,349) The accompanying notes are an integral part of these financial statements. 10

12 Note Contents 1 General information 2 Basis of preparation of the interim financial statements 3 Change in accounting policy 4 Fair value of financial instruments carried at fair value 5 Maintenance of capital fund 6 Investments, net 7 Investments in subsidiaries and associate, net 8 Loans to customers and accrued interest receivables, net 9 Classified assets 10 Allowance for doubtful accounts 11 Debts issued and borrowings, net 12 Assets pledged as collateral and under restriction 13 Commitments and contingency liabilities 14 Related parties 15 Segment information 16 The financial position and results of operations classified by domestic and foreign business 17 Deferred tax and income tax expense 18 Earnings per share 19 Events after the reporting period 11

13 These notes form an integral part of the interim financial statements. The interim financial statements issued for Thai regulatory reporting purposes are prepared in the Thai language. These English language financial statements have been prepared from the Thai language statutory financial statements, and were approved and authorised for issue by the Audit Committee on 12 May. 1 General information TMB Bank Public Company Limited, the Bank, is incorporated and in Thailand and has its registered office at 3000, Phaholyothin Road, Chomphon, Chatuchak, Bangkok. The principal business of the Bank is operating commercial banking businesses. All subsidiaries are incorporated as limited companies under Thai laws and have been operating in Thailand, with their core businesses being provisions of asset management and fund management services. Details of the Bank s subsidiaries and associate as at and 31 December are given in note 7. 2 Basis of preparation of the interim financial statements (a) Statement of compliance The interim financial statements are prepared on a condensed basis in accordance with Thai Accounting Standards (TAS) No. 34 (revised ) Interim Financial Reporting, guidelines promulgated by the Federation of Accounting Professions ( FAP ); and applicable rules and regulations of the Thai Securities and Exchange Commission; and presented as prescribed by the Bank of Thailand (BoT) Notification No. Sor Nor Sor 11/2553, directive dated 3 December 2010, regarding The preparation and announcement of the financial statements of commercial banks and holding companies which are a parent company of a group of companies offering financial services. The interim financial statements are prepared to provide an update on the financial statements for the year ended 31 December. They do not include all of the financial information required for full annual financial statements but focus on new activities, events and circumstances to avoid repetition of information previously reported. Accordingly, these interim financial statements should be read in conjunction with the financial statements of the Bank and its subsidiaries for the year ended 31 December. The accounting policies and methods of computation applied in these interim financial statements are consistent with those applied in the financial statements for the year ended 31 December except that the Bank and its subsidiaries have adopted all the new and revised TFRS that are effective for annual periods beginning on or after 1 January. The adoption of these new and revised TFRS did not have any material effect on the accounting policies, methods of computation, financial performance or position of the Bank and its subsidiaries except as disclosed in note 3. (b) Functional and presentation currency The interim financial statements are presented in Thai Baht, which is the Bank and its subsidiaries functional currency. All financial information is presented in Thai Baht and has been rounded to the nearest thousand and in the notes to financial statements to the nearest million unless otherwise stated. 12

14 (c) Judgments and estimates The preparation of interim financial statements in conformity with TFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from estimates. In preparing these interim financial statements, the significant judgements made by management in applying the Bank and its subsidiaries accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 31 December. (d) Basis of consolidation The consolidated financial statements include the account of the Head Office, all domestic and overseas branches and the Bank s subsidiaries and have been prepared on the same basis as that apply for the consolidated financial statements for the year ended 31 December, with no structural changes in the subsidiaries occuring during the period. All inter-company transactions and balances within this Group have been eliminated. 3 Change in accounting policy (a) Overview From 1 January, consequent to the adoption of new and revised TFRS as set out in note 2, the Bank and its subsidiaries have adopted the following new and revised TFRS having a material effect on the Bank and its subsidiaries financial statements: TFRS 13 Fair Value Measurement A description of the nature and effect of the changes in accounting policy consequent to the adoption of these new and revised TFRS is included in notes 3 (b) below: (b) Fair value measurement TFRS 13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are required or permitted by other TFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to transfer a liability would take place between market participants at the measurements date. It also replaces and expands the disclosure requirements about fair value measurements in other TFRSs. Some of these disclosures are specifically required in interim financial statements; accordingly, the Bank and its subsidiaries have included additional disclosures in this regard as disclosed in note 4. In accordance with the transitional provisions of TFRS 13, the Bank and its subsidiaries has applied the new fair value measurement guidance as follows: (1) Through decrease in unappropriated retained earning as at 1 January amounting to Baht 51 million (net of income tax) for the effect of changes resulting from assessment of credit risk when measuring the fair value of over-the-counter derivatives recorded at fair value as at 31 December ; (2) Prospectively for the effects of all other changes; (3) Comparative information for new disclosures is not provided. 13

15 Fair values measurement of financial assets and liabilities of the Bank and its subsidiaries are based on unadjusted quoted market prices, where available. In determining the fair value of financial instruments that are not freely traded in an open market or for which quoted market prices are not readily available, the management exercises judgement in estimating the fair value of such financial instruments, using the generally accepted valuation method. The inputs used in such fair value calculation are comparable to those from the observable markets, taking into consideration of liquidity, correlation, credit risk and long-term volatility of financial instruments. 4 Fair value of financial instruments carried at fair values The fair values of financial assets and liabilities together with the carrying amounts in the consolidated and s statement of financial position are as follows. Fair value Level 1 Level 2 Level 3 Total Financial Assets Derivatives assets - trading book - 8,802-8,802 Debt securities held for trading - 22,137-22,137 Equity/Debt securities available for sale - 47,852-47,852 Total - 78,791-78,791 Financial Liabilities Financial liabilities designated at fair value through profit or loss Derivatives liabilities - trading book - 8,557-8,557 Total - 8,797-8,797 Fair value Level 1 Level 2 Level 3 Total Financial Assets Derivatives assets - trading book - 8,802-8,802 Debt securities held for trading - 22,137-22,137 Equity/Debt securities available for sale - 45,166-45,166 Total - 76,105-76,105 Financial Liabilities Financial liabilities designated at fair value through profit or loss Derivatives liabilities - trading book - 8,557-8,557 Total - 8,797-8,797 14

16 Fair value hierarchy The table above analyses fair value measurements for financial assets and financial liabilities. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The different levels are defined as follows. Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that the Bank and its subsidiaries can access at the measurement date. Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3: unobservable inputs for the asset or liability. The Bank and its subsidiaries determine Level 2 fair values for government debt securities using yield rate or price quoted on the Thai Bond Market Association ( ThaiBMA ). The fair value of investments in other debt securities issued locally is determined based on market value appraised by the reliable institutions or their respective yield, or the ThaiBMA s yield rates adjusted by appropriate risk factors. Level 2 fair values for simple over-the-counter derivative financial instruments are based on broker quotes. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest rate for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the Bank and its subsidiaries and counterparty when appropriate. The Bank and its subsidiaries recognise transfers between levels of the fair value hierarchy as of the end of the reporting period during which the transfer has occurred. There were no transfers between Level 1 to Level 2 of the fair value hierarchy during the three-month period ended. 5 Maintenance of capital fund The Bank maintains its capital fund in accordance with the Financial Institution Business Act B.E by maintaining its capital fund as a proportion of risk weighted assets in accordance with the criteria, methodologies, and conditions prescribed by the Bank of Thailand. As announced by the BoT in its circulars dated 8 November 2012 and 17 December 2012, the Bank is required to calculate its Capital Fund in accordance with Basel III. As at and 31 December, the Bank s total capital funds can be categorised as follows: 31 December Tier 1 capital Common Equity Tier 1 capital (CET1) Paid-up share capital 41,495 41,495 Share premium Legal reserve 1,250 1,250 Net profits after appropriation 15,719 15,770 Other comprehensive income 3,637 3,658 Capital deduction items on CET1 (3,317) (3,208) Total Tier 1 Capital 58,941 59,122 15

17 31 December Tier 2 capital Allowance for classified assets of pass category 5,700 5,700 Subordinated debentures 31,555 33,350 Total Tier 2 Capital 37,255 39,050 Total Capital funds 96,196 98,172 Total Risk-Weighted Assets 540, ,363 The BoT s regulation minimum requirement (%) 31 December Capital Adequacy Ratio/Total Risk-Weighted Asset Tier 1 Capital ratio/total Risk-Weighted Asset Common Equity Tier 1 capital ratio/total Risk- Weighted Asset According to Bank of Thailand notification number For Nor Sor (23) Wor 263/2556 dated 22 February 2013, the Bank is required to disclose CET1 after deducting capital add-on arising from Single Lending Limit, effective at the end of January. As at, the Bank has no add-on arising from Single Lending Limit. The Bank disclosed capital adequacy and capital risk exposure information for the Bank and the full consolidation as at 31 December through the Bank s website at in April. Capital management The Bank s capital management approach is driven by its desire to maintain a strong capital base to support the development of its business, to meet regulatory capital requirements and to maintain appropriate credit ratings. 6 Investments, net 6.1 Classified by type of investments 31 December 31 December Trading securities - Fair value Government and state enterprise securities 22,137 20,201 22,137 20,201 Total 22,137 20,201 22,137 20,201 16

18 31 December 31 December Available-for-sale securities - Fair value Government and state enterprise securities 45,162 41,549 45,162 41,549 Domestic marketable equity securities 2,690 2, Total 47,852 43,627 45,166 41,554 Held-to-maturity debt securities - Cost/Amortised cost Government and state enterprise securities 43,292 46,346 43,292 46,346 Total 43,292 46,346 43,292 46,346 General investments - Cost Domestic non-marketable equity securities 1,425 1,467 1,425 1,467 Foreign non-marketable equity securities Total 1,457 1,501 1,457 1,501 Less allowance for impairment (813) (816) (813) (816) Net Total investments, net 113, , , , Investments in entities in which the Bank and its subsidiaries hold 10% or more As at and 31 December, the Bank had investments in entities in which the Bank holds 10% or more of the paid-up share capital of the investee companies but such companies are not treated as its subsidiaries and associate. Those investments were summarised below. and 31 December Property development and construction Public utilities and services Mutual funds and financial services Others Total Less allowance for impairment (41) (41) Investment, net

19 6.3 Investments in companies with problems in their financial position and operating results As at and 31 December, the Bank had the following investments in listed companies which meet the Stock Exchange of Thailand ( SET ) s criteria for delisting, and are in default on debt securities, or companies whose ability to continue as a going concern is uncertain, or unlisted companies whose financial position and operating results are similar to the listed companies which meet criteria for delisting from the SET: and 31 December No. of Cost value/ No. of Cost value/ Companies book value Fair value Impairment Companies book value Fair value Impairment - Listed companies under delisting conditions/ defaulted debt securities (62) (62) - Companies whose ability to continues as a going concern is uncertain, or unlisted companies whose financial position and operating results are similar to the listed companies which meet criteria for delisting from the SET (733) (733) Total (795) (795) 18

20 7 Investment in subsidiaries and associate, net Type of Business Ownership interest Paid-up capital Cost Impairment At cost, net Dividend for the three-month period ended 31 December 31 December 31 December 31 December 31 December (%) Subsidiaries Phayathai Asset Management Co., Ltd. Asset management business ,070 1,070 3,870 3,870 (945) (945) 2,925 2, Designee for ETA Contract Ltd. Financial support business TMB Asset Management Co., Ltd. Fund management business Total investment in subsidiaries, net 4,174 4,174 (945) (945) 3,229 3, Associate Metro Designee Co., Ltd. Financial support business Total investment in associate Total investment in subsidiaries and associate, net 4,174 4,174 (945) (945) 3,229 3,

21 8 Loans to customers and accrued interest receivable, net 8.1 Classified by loan type 31 December 31 December Overdrafts 147, , , ,808 Loans 236, , , ,207 Bills 154, , , ,331 Others Less deferred revenue (84) (86) (84) (86) Loans to customers net of deferred revenue 538, , , ,318 Add accrued interest receivables 1,025 1,068 1,025 1,068 Total loans to customers net of deferred revenue add accrued interest receivables 539, , , ,386 Less allowance for doubtful debts - Provision at BoT s minimum rates required (12,620) (12,362) (12,593) (12,334) - Provision in excess of BoT s minimum rates required (16,019) (15,890) (16,019) (15,890) Less revaluation allowance for debt restructuring (147) (110) (147) (110) Loans to customers and accrued interest receivables, net 511, , , , Classified by business type and quality of loan classification Special Sub- Doubtful Pass mention standard Doubtful of loss Total Agriculture and mining 7, ,146 Manufacturing and commerce 307,858 9,462 1, , ,047 Property development and construction 13, ,358 Infrastructure and services 57,822 3, ,503 62,775 Housing loans 50,830 1, ,035 53,807 Others 65,988 1, ,838 Total* 503,441 16,340 2, , , December Special Sub- Doubtful Pass mention standard Doubtful of loss Total Agriculture and mining 6, ,867 Manufacturing and commerce 305,541 9, , ,742 Property development and construction 13, ,448 Infrastructure and services 57,376 3, ,306 62,290 Housing loans 50,106 1, ,042 53,037 Others 63,290 1, ,976 Total* 495,810 16,457 1, , ,360 20

22 Special Sub- Doubtful Pass mention standard Doubtful of loss Total Agriculture and mining 7, ,137 Manufacturing and commerce 307,858 9,462 1, , ,039 Property development and construction 13, ,335 Infrastructure and services 57,822 3, ,503 62,775 Housing loans 50,830 1, ,035 53,807 Others 65,988 1, ,838 T otal* 503,441 16,340 2, , , December Special Sub- Doubtful Pass mention standard Doubtful of loss Total Agriculture and mining 6, ,858 Manufacturing and commerce 305,541 9, , ,731 Property development and construction 13, ,426 Infrastructure and services 57,376 3, ,306 62,290 Housing loans 50,106 1, ,042 53,037 Others 63,290 1, ,976 Total* 495,810 16,457 1, , ,318 *Loans to customers net of deferred revenue. 8.3 Classified by loan classification Net amount Loans to used to set customers and the allowance Minimum Allowance accrued interest for doubtful rates for doubtful receivables accounts (1) required accounts (2) (%) Minimum allowance as per BoT s Regulations Pass 504, , ,551 Special mention 16,413 9, Sub-standard 2,199 1, ,236 Doubtful Doubtful of loss (3) 16,100 4, ,016 Total * 539, ,233 12,620 Provision in excess of BoT s minimum rates required 16,019 (4) Total 28,639 21

23 31 December Net amount Loans to used to set customers and the allowance Minimum Allowance accrued interest for doubtful rates for doubtful receivables Accounts (1) required accounts (2) (%) Minimum allowance as per BoT s Regulations Pass 496, , ,491 Special mention 16,529 10, Sub-standard 1, ,058 Doubtful Doubtful of loss (3) 15,601 4, ,148 Total * 531, ,221 12,362 Provision in excess of BoT s minimum rates required 15,890 (4) Total 28,252 *Loans to customers net of deferred revenue add accrued interest receivables (1) (2) (3) (4) Balance net of collateral: In the case of loans that are classified as pass and special mention means the principal balance net of the value of collateral, excluding land, buildings and constructions thereon, leasehold rights and machinery. In the case of loans that are classified as substandard, doubtful and doubtful of loss, it means the debt balance after deduction of the present value of future cash flows expected to be received from debt collection, or from the disposal of collateral, excluding machinery. Allowance for doubtful debts on loans guaranteed by Small Business Credit Guarantee Corporation according to the Portfolio Guarantee Scheme was made in accordance with the Bank of Thailand s notification on supervisory guidelines on loans guaranteed in the Portfolio Guarantee Scheme by Small Business Credit Guarantee Corporation. Loans classified as doubtful of loss in the consolidated financial statements included the balances of the Bank and Phayathai Asset Management Co., Ltd. As at and 31 December, this included provision of Baht 3,741 million and Baht 3,285 million, respectively, provided for non-performing loans for consolidated financial statements. Net amount Loans to used to set customers and the allowance Minimum Allowance accrued interest for doubtful rates for doubtful receivables Accounts (1) required accounts (2) (%) Minimum allowance as per BoT s Regulations Pass 504, , ,551 Special mention 16,413 9, Sub-standard 2,199 1, ,236 Doubtful Doubtful of loss 16,060 4, ,989 Total * 539, ,218 12,593 Provision in excess of BoT s minimum rates required 16,019 (3) Total 28,612 22

24 31 December Net amount Loans to used to set customers and the allowance Minimum Allowance accrued interest for doubtful rates for doubtful receivables accounts (1) required accounts (2) (%) Minimum allowance as per BoT s Regulations Pass 496, , ,491 Special mention 16,529 10, Sub-standard 1, ,058 Doubtful Doubtful of loss 15,559 4, ,120 Total * 531, ,193 12,334 Provision in excess of BoT s minimum rates required 15,890 (3) Total 28,224 *Loans to customers net of deferred revenue add accrued interest receivables (1) Balance net of collateral: In the case of loans that are classified as pass and special mention means the principal balance net of the value of collateral, excluding land, buildings and constructions thereon, leasehold rights and machinery. In the case of loans that are classified as substandard, doubtful and doubtful of loss, it means the debt balance after deduction of the present value of future cash flows expected to be received from debt collection, or from the disposal of collateral, excluding machinery. (2) Allowance for doubtful debts on loans guaranteed by Small Business Credit Guarantee Corporation according to the Portfolio Guarantee Scheme was made in accordance with the Bank of Thailand s notification on supervisory guidelines on loans guaranteed in the Portfolio Guarantee Scheme by Small Business Credit Guarantee Corporation. (3) As at and 31 December, this included provision of Baht 3,741 million and Baht 3,285 million, respectively, provided for non-performing loans for s financial statements. 8.4 Non-performing loans NPLs per BoT s regulations refer to all sub-standard, doubtful, doubtful of loss and loss loans. As at and 31 December, the Bank and its subsidiaries NPLs (including interbank and money market items) were summarised as follows: (1) 31 December 31 December Net NPLs (principal net of allowance for doubtful debts) NPLs after allowance for doubtful debt on NPLs 7,672 7,234 7,659 7,220 Total loans after allowance for doubtful debts on NPLs 626, , , ,875 Percentage of net NPLs (%)

25 (1) 31 December 31 December NPLs (principal) NPLs 19,190 18,093 19,150 18,051 Total loans 637, , , ,706 Percentage of NPLs (%) (1) Non-performing loans in the consolidated financial statements included the balances of the Bank and Phayathai Asset Management Co., Ltd. On 17 March, the Bank sold non-performing loans, with principal totalling approximately Baht 300 million to Bangkok Commercial Asset Management Company Limited ( BAM ). The selling price in excess of the carrying value of those non-performing loans was presented as a deduction from Impairment loss on loans and debt securities in the statement of comprehensive income. As at and 31 December, the Bank had loans to customers, amounting to Baht 29,150 million and Baht 27,466 million, respectively, on which it ceased recognition of interest income on an accrual basis. 8.5 Troubled debt restructuring During the three-month periods ended and, the Bank and its subsidiary entered into contracts for troubled debt restructuring, (only the case where debtor has present value loss/losses on debt structuring is presented), which can be summarised as followed: and Three-month period ended Number of debtors Before After restructuring restructuring Type of restructuring Modification of terms of payments 898 2,496 2,496 Total 898 2,496 2,496 Term of debt restructuring agreements Not over 5 years 524 1,748 1, years Over 10 years Total 898 2,496 2,496 24

26 and Three-month period ended Number of debtors Before After restructuring restructuring Type of restructuring Modification of terms of payments Total Term of debt restructuring agreements Not over 5 years years Over 10 years Total Supplemental information relating to restructuring debtors for the three-month periods ended and is as follows: Three-month periods ended Interest income on restructured debts, which is recognised for the periods Cash settlement by debtors Losses on debt restructuring As at and 31 December, the Bank and its subsidiary have the outstanding balances with troubled debt restructuring debtors which had been performing in accordance with debt restructuring agreements, as follows: 31 December Number of debtors Outstanding balance Number of debtors Outstanding balance Number of debtors Outstanding balance Number of debtors Outstanding balance (in million Baht) (in million Baht) (in million Baht) (in million Baht) Troubled debt restructuring debtors 1,418 3,463 1,417 3, , ,386 25

27 8.6 Revaluation allowance for debt restructuring and 31 December Beginning balance Increase during period/year Ending balance Loan to customers having problems with financial position and operating results As at and 31 December, the Bank and its subsidiary had loans and accrued interest receivables due from listed companies having problems with their financial position and operating results, and set aside allowances for doubtful debts as follows: Listed companies under delisting 9 Classified assets Number of debtors and 31 December Loans and accrued interest receivables Collateral Allowance Classified assets, as at and 31 December, were classified in accordance with the BoT s regulation, consisting of investments (including investments in subsidiaries and associate), loans to customer and accrued interest receivables (including interbank and money market items), properties for sale, premises and equipment and other assets as follows: for doubtful accounts Number of debtors Loans and accrued interest receivables Collateral Allowance conditions for doubtful accounts Investments Loans and accrued interest receivables Properties for sale Premises and equipment Other assets Total Pass - 603, ,438 Special mention - 16, ,413 Sub-standard - 2, ,201 Doubtful Doubtful of loss , ,119 Total , ,063 26

28 Investments Loans and accrued interest receivables 31 December Properties for sale Premises and equipment Other assets Total Pass - 601, ,312 Special mention - 16, ,529 Sub-standard - 1, ,826 Doubtful Doubtful of loss , ,651 Total , ,987 Investments Loans and accrued interest receivables Premises Properties for sale and equipment Other assets Total Pass - 603, ,438 Special mention - 16, ,413 Sub-standard - 2, ,201 Doubtful Doubtful of loss 1,813 16, ,022 Total 1, , ,966 Investments Loans and accrued interest receivables 31 December Premises Properties for sale and equipment Other assets Total Pass - 601, ,311 Special mention - 16, ,529 Sub-standard - 1, ,826 Doubtful Doubtful of loss 1,824 15, ,552 Total 1, , ,887 27

29 10 Allowance for doubtful accounts The movement in the allowance for doubtful accounts during the period/year were as follow: Three-month period ended Provision in excess of BoT s Provision at BoT s minimum rates required minimum Pass Special mention Substandard Doubtful Doubtful of loss rates required Total Beginning balance 4, , ,148 15,890 28,252 Allowance for doubtful debts 60 (4) , ,305 Bad debt recovery Bad debts written-off (1,805) - (1,805) Allowance for doubtful debts of the disposed debts (229) - (229) Ending balance 4, , ,016 16,019 28,639 Year ended 31 December Provision in excess of BoT s Provision at BoT s minimum rates required minimum Pass Special mention Substandard Doubtful Doubtful of loss rates required Total Beginning balance 4, , ,518 15,932 31,400 Allowance for doubtful debts (921) (100) 4,888 (42) 4,110 Bad debt recovery Bad debts written-off (4,316) - (4,316) Allowance for doubtful debts of the disposed debts (3,359) - (3,359) Ending balance 4, , ,148 15,890 28,252 28

30 Pass Three-month period ended Provision at BoT s minimum rates required Special mention Doubtful Doubtful of loss Provision in excess of BoT s minimum rates required Beginning balance 4, , ,120 15,890 28,224 Allowance for doubtful debts 60 (4) , ,320 Bad debt recovery Bad debts written-off (1,805) - (1,805) Allowance for doubtful debts of the disposed debts (229) - (229) Ending balance 4, , ,989 16,019 28,612 Pass Year ended 31 December Provision at BoT s minimum rates required Special mention Substandard Substandard Doubtful Doubtful of loss Provision in excess of BoT s minimum rates required Beginning balance 4, , ,461 15,932 30,343 Allowance for doubtful debts (921) (100) 5,015 (42) 4,237 Bad debt recovery Bad debts written-off (3,779) - (3,779) Allowance for doubtful debts of the disposed debts (2,925) - (2,925) Ending balance 4, , ,120 15,890 28, Debts issued and borrowings, net Total Total 33,350-33,350 33,350-33,350 and Interest rates as at 31 December Maturities Domestic Foreign Total Domestic Foreign Total (%) Subordinated debentures (1) 4.50, 4.70 and (2), 2017 (2) 5.50 and 2019 (2) Senior debentures ,151 3, Bills of exchange Other borrowings ,116 2, ,220 2,351 Total 33,772 5,267 39,039 34,205 2,220 36,425 Less prepaid interest expenses (61) - (61) (176) - (176) Debts issued and bor r owings, net 33,711 5,267 38,978 34,029 2,220 36,249 (1) Counted as a part of Tier 2 capital, which is determined under the conditions as specified in the BoT s Notification (Note 5) (2) The years in which call option exercise periods start 29