MANAGEMENT S DISCUSSION AND ANALYSIS

Transcription

1 MANAGEMENT S DISCUSSION AND ANALYSIS For the three-month period ended 31 March 2018 (Reviewed Financial Statements) Thanachart Bank Public Company Limited Tel: , Fax: Website:

2 Thanachart Bank Public Company Limited and Its Subsidiaries Management s Discussion and Analysis (Reviewed Financial Statements) Economics Outlook and Competition in Banking Industry The Thai economy in the first quarter in 2018 showed a tendency to grow from the previous quarter with export and tourism factors being the key drivers following the recovering global economy. Furthermore, the government continued to be the core engine driving the Thai economy, while private consumption should expand, as the domestic demand gradually recovered amidst persisting high household debt. Private investment is expected to expand as the overall economy showed a tendency for consistent growth. Consequently, the Monetary Policy Committee of the Bank of Thailand issued a resolution to maintain the policy rate at 1.50 percent per annum regardless of the continuous economic growth and inclining inflation. In the first quarter of 2018, the loan volume in the commercial bank industry grew from the previous quarter, following the improving domestic and international demand. Deposit volume also grew in line with loan volume. Key Events On 25 April 2018, the Annual General Meeting of Shareholders of 2018 issued a resolution to approve dividend payments for shareholders of Thanachart Bank Public Company Limited at 0.52 baht per share, equivalent to 3,154 million baht. Together with the interim dividend payment of 0.40 baht per share equivalent to 2,426 million baht, the dividend payment of the year 2017 totaled to 0.92 baht per share equivalent to 5,580 million baht, or percent of 2017 net profit in the bank only financial statements and percent of 2017 net profit in consolidated financial statements. Dividends were paid on 11 May

3 Financial Highlights For the three-month period ended Reviewed Financial Statements 31 Mar Dec Mar 17 Operating Performance (Million Baht) Interest Income 11,259 11,181 10,765 Interest Expenses 3,738 3,777 3,624 Net Interest Income 7,521 7,404 7,141 Non-interest Income 3,380 3,507 2,794 Net Operating Income (1) 10,901 10,911 9,935 Other Operating Expenses 5,352 4,534 5,328 Pre-Provision Operating Profit (PPOP) 5,549 6,377 4,607 Impairment Loss of Loans and Debt Securities 1,427 2, Profit before Tax 4,122 4,057 3,710 Income Tax Profit for the Period 3,956 3,841 3,413 Other Comprehensive Income 58 (267) 310 Total Comprehensive Income 4,014 3,574 3,723 Total Attributable to: Net Profit 3,956 3,841 3,413 Non-Controlling Interests The Bank 3,779 3,674 3,272 Operating Performance Ratios (Percent) ROAA ROAE (2) Interest Spread (3) Loan Spread (4) Credit Cost (4) Non-interest Income Ratio (5) Cost to Income Ratio (6) Mar Dec Mar 17 Financial Position (Million Baht) Loans 712, , ,117 Total Assets 1,010,350 1,009, ,610 Deposits and Debt Issued and Borrowings 743, , ,607 Total Liabilities 870, , ,766 Total Equity 140, , ,844 Financial Position Quality (Consolidated) Loans to Deposits and Debts Issued and Borrowings (Percent) Non-performing Loans (Million Baht) 19,146 18,108 15,636 NPL Ratio (Percent) Reserve (Million Baht) 24,954 24,278 24,520 Coverage Ratio (7) (Percent) Reserve to Required Reserve (8) (Percent) Financial Position Quality (Bank Only) Non-performing Loans (Million Baht) 15,399 14,412 12,130 NPL Ratio (Percent) Reserve (Million Baht) 20,747 20,149 19,216 Coverage Ratio (7) (Percent) Reserve to Required Reserve (8) (Percent) Capital Adequacy Ratio (Percent) Tier I Ratio (Percent) (1) Net Operating Income = Net Interest Income + Non-interest Income (4) Loan Spread = Loan Yield - Cost of Fund (2) ROAE is calculated from equity attributable to the Bank's shareholders. (5) Non-interest Income Ratio = Non-interest Income/ Net Operating Income (3) Interest Spread = Yield - Cost of Fund (6) Cost to Income Ratio = Other Operating Expenses/ Net Operating Income Yield = Interest Income/ Average Earning Assets (7) Coverage Ratio = Total Allow ance/ Non-performing Loans Cost of Fund = Interest Expenses/ Average Paying Liabilities (8) Reserve to Required Reserve = Total Allow ance/ Reserve Required by the BOT 2

4 Operating Results of the First Quarter in 2018 Operating Result Overview The success in the strategic aim at becoming Customer Centric as an organization, and thus, becoming the Main Bank for the customers through excellence in services in all channels coupled with offering products suitable for the specific needs of each customer, and the increase in the productivity in business operation, especially in the core businesses. These strategic aims resulted in the continuous improvement in performances. As a result, the Bank and its subsidiaries net profit had grown for the 13 th consecutive quarter with the amount for the first quarter of 2018 as high as 3,779 million baht, an increase of 507 million baht or percent from the same period last year. This was also due to pre-provision operating profit (PPOP) which grew from improving core business. Furthermore, the Bank continued to maintain its asset quality, liquidity position and capital adequacy consistently, illustrating strength in business operation and competitive edge. In the first quarter of 2018, pre-provision operating profit (PPOP) grew percent from the same period last year and totaled 5,549 million baht. This was due to the total income which grew 9.72 percent which was contributed by both net interest income and non-interest income. Net interest income increased 5.32 percent from growing loan volume while non-interest income increased percent from gains on investments, net fees and service income and net insurance premium income. On the other hand, operating expenses increased slightly at 0.45 percent while impairment loss of loans and debt securities expenses increased percent following loan growth. The Bank s total assets grew slightly from the end of the previous year while loan volume grew 4.47 percent from the same period last year from retail and SME loans, especially hire purchase loan, while asset quality was stable from prudent risk management policy. On the other hand, deposit volume declined 2.11 percent from the end of last year mainly from fixed deposit product. Consequently, CASA ratio ended at percent, an increase from percent at the end of last year. NPL on consolidated financial statements increased 1,038 million baht from the end of last year. NPL ratio ended at 2.38 percent with coverage ratio at percent. Reserve to required reserve as of 31 March 2018 was percent. For Bank Only financial statements NPL ratio ended at 2.03 percent with coverage ratio at percent. Reserve to required reserve was at percent. For Capital adequacy, BIS ratio was at percent, a decrease from percent at the end of Tier 1 capital ratio of the Bank is at percent, a decrease from percent at the end of

5 Summary of Key Operating Results The Bank and its subsidiaries operating results in the first quarter of 2018 comparing with the first quarter of 2017 can be summarized as follows: Net interest income grew by 5.32 percent due to growing loan volume. Non-interest income grew percent mainly from gains on investments, net fees and service income and net insurance premium income. Total income increased 9.72 percent from both net interest income and non-interest income. Pre-provision operating profit (PPOP) grew 942 million baht or percent from increase in total income. Impairment loss of loans and debt securities expenses increased percent from growing loan volume. Net profit increased 507 million baht or percent. Net Interest Income Net Interest Income (Million Baht) Change 1Q18 1Q17 +/(-) % Interest Income 11,259 10, % Interbank and Money Merket Items % Investments for Tradings % Investments for Debts Securities (184) (22.58%) Loans 4,308 4,353 (45) (1.03%) Hire Purchase and Financial Leases 5,828 5, % Interest Expenses 3,738 3, % Deposits 2,258 2, % Interbank and Money Market Items % Fund Contributed to FIDF and DPA % Debts Issued (160) (27.78%) Borrowing Fee % Net Interest Income 7,521 7, % In the first quarter of 2018, the Bank and its subsidiaries net interest income totaled 7,521 million baht, an increase of 380 million baht or 5.32 percent from the same period last year. Interest income totaled 11,259 million baht, an increase of 494 million baht or 4.59 percent from growing loan volume. 4

6 Interest expenses totaled 3,738 million baht, an increase of 114 million baht or 3.15 percent from higher deposit volume. Consequently, interest spread in the first quarter of 2018 was at 3.05 percent, similar to the same period last year. Yield, Cost of Fund, and Spread (Percent) 1Q18 4Q17 3Q17 2Q17 1Q17 Average Policy Interest Rate Yield Cost of Fund Interest Spread Interest Income and Interest Expenses (Million Baht) Net Interest Income (Million Baht) Interest Income Interest Expenses 10,765 11,012 11,408 11,181 11,259 3,624 3,719 3,836 3,777 3,738 7,141 7,293 7,572 7,404 7,521 Non-interest Income Non-interest Income Change 1Q18 1Q17 +/(-) % Net Fees and Service Income* 1,701 1, % Gains on Trading and F/X Transactions (16) (9.82%) Gains on Investments % Share of Profit from Investments in Associated (8) (13.33%) Companies Accounted for under Equity Method Net Insurance Income % Dividend Income % Other Income % Operating Income 1,679 1, % Non-interest Income 3,380 2, % *Net Fees and Service Income including Hire Purchase Fees, Brokerage Fees, Commission Fees from Selling Insurance, Fund Management Fees, and Other Fees and Service Income 5

7 Non-interest income of the Bank and its subsidiaries totaled 3,380 million baht in the first quarter of 2018, an increase of 586 million baht or percent from the same period last year. This was mainly due to the following: Net fees and service income totaled 1,701 million baht, an increase of 259 million baht or percent, mainly from fund management fees, brokerage fees and insurance premium commission. Other operating income totaled 1,679 million baht, an increase of 327 million baht or percent from the same period last year. The main components were gains on investments which increased 233 million baht, net insurance premium income which increased 76 million baht and other income which increased from hire purchase related income. Consequently, non-interest income ratio in the first quarter of 2018 was at percent, an increase from percent in the same period last year. Fees Income Portion* (Percent) Acceptance, Aval and Guarantees ATM and Electronic Banking Services Insurance Brokerage Fees Credit Card Fees For the three-month period Ended 31 March % 2.14% 15.86% Brokerage Fees Hire Purchase Fees Fund Management Fees Others For the three-month period Ended 31 March % 1.79% 15.68% 11.27% 10.71% 10.92% 8.66% 10.04% 20.66% 17.41% 13.57% 19.52% 15.30% *Fees Income Portion is based on Gross Fees and Service Income excluding Fees Expenses. Non-interest Income (Million Baht) Non-interest Income Ratio (Percent) 2,794 2,981 3,192 3,507 3,

8 Other Operating Expenses Other Operating Expenses (Million Baht) Change 1Q18 1Q17 +/(-) % Employee's Expenses 2,887 3,011 (124) (4.12%) Premises and Equipment Expenses (62) (8.81%) Taxes and Duties (6) (3.30%) Directors' Remuneration % Other Expenses 1,639 1, % Operating Expenses 5,352 5, % For the first quarter of 2018, operating expenses of the Bank and its subsidiaries totaled 5,352 million baht, an increase of 24 million baht or 0.45 percent from the same period last year. As a result, cost to income ratio in the first quarter of 2018 was at percent, a decrease from percent in the same period last year. Impairment Loss of Loans and Debt Securities Impairment Loss of Loans and Debts Securities (Million Baht) Change 1Q18 1Q17 +/(-) % Impairment Loss of Loans and Debts Securities 1, % Credit Cost (Percent) % In the first quarter of 2018, the Bank and its subsidiaries had 1,427 million baht in impairment loss of loans and debt securities, an increase of 530 million baht or percent from the same period last year. Consequently, credit cost was at 0.72 percent, an increase from 0.52 percent in the same period last year. 7

9 Other Operating Expenses (Million Baht) and Cost to Income (Percent) Impairment Loss of Loans and Debt Securities (Million Baht) and Credit Cost (Percent) Other Operating Expenses Cost to Income Ratio Impirment Loss of Loans and Debt Securities Credit Cost 2,320 5,328 5,326 5,152 5,352 4, ,703 1,324 1, Corporate Income Tax As at 31 March 2018, the Bank has tax losses totaling 1,543 million baht, equivalent to a tax benefit of 310 million baht, based on a 20 percent corporate income tax rate. Net Profit Attributable to the Bank In the first quarter of 2018, net profit attributable to the Bank totaled 3,779 million baht, an increase of 507 million baht or percent from the same period last year. Earnings per share (EPS) was 0.62 baht, an increase from 0.54 baht in the same period last year. ROAA and ROAE were 1.52 percent and percent respectively. Net Profit (Million Baht) For the three-month period ended Reviewed Financial Statements 31 Mar Dec Mar 17 Net Profit (Million Baht) Profit for the Period 3,956 3,841 3,413 Net Profit Attributable to the Company 3,779 3,674 3,272 Net Profit Attributable to Non-controlling Interest Basic Earning per Share ROAA (Percent) ROAE (Percent)

10 Net Profit (Million Baht), ROAA, and ROAE (Percent) Net Profit ROAE ROAA 3,533 3,674 3,779 3,158 3,202 3,230 3,272 3,331 2,561 2,703 2,713 2,767 2, Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 9

11 Financial Position Consolidated Statements of Financial Position (Million Baht) 31 Mar Dec 17 Change Amount % Amount % +/(-) % Cash 9, % 11, % (2,181) (19.04%) Interbank and Money Market Items - net 111, % 94, % 16, % Investment - net 148, % 167, % (18,681) (11.16%) Investment in Associated Company - net 2, % 2, % % Loans 712, % 711, % % Accrued Interest Receivables % % (22) (3.74%) Allowance for Doubtful Accounts and (24,743) (2.45%) (24,034) (2.38%) (709) 2.95% Revaluation Allowance for Debt Restructuring Property Foreclosed - net 2, % 2, % (89) (3.19%) Lands, Premises, and Equipment - net 8, % 8, % (243) (2.82%) Intangible Assets Acquired in a Business Combination - net 2, % 2, % (91) (4.04%) Goodwill 17, % 17, % - - Other Assets 19, % 13, % 5, % Total Assets 1,010, % 1,009, % % Deposits 701, % 716, % (15,084) (2.11%) Interbank and Money Market Items 81, % 82, % (1,204) (1.46%) Debt Issued and Borrowings 41, % 39, % 2, % Other Liabilities 45, % 35, % 10, % Total Liabilities 870, % 873, % (3,166) (0.36%) Company's Shareholders' Equity 138, % 134, % 3, % Non-controlling Interests 2, % 1, % % Total Shareholders' Equity 140, % 136, % 3, % Total Liabilities and Shareholders' Equity 1,010, % 1,009, % % Book Value per Share (Baht) No. of Issued and Paid-up Share Capital (Million Shares) Average No. of Shares 6,065 6,065 As of Period Ended 6,065 6,065 Assets As of 31 March 2018, the Bank and its subsidiaries total assets totaled 1,010,350 million baht, an increase of 793 million baht or 0.08 percent from the end of The key changes are as follows: Net interbank and money market items were in the amount of 111,124 million baht, an increase of 16,473 million baht or percent from the end of last year, mainly due to liquidity management. Net investments totaled 148,687 million baht, a decrease of 18,681 million baht or percent from the end of last year, mainly due to management for suitable yield return. 10

12 Loans totaled 712,589 million baht, an increase of 914 million baht or 0.13 percent from the end of last year from retail and SME loans. In particular, hire purchase loans have experienced good growth of The proportion of retail to corporate and SME loans was 72 to 28 percent. The details of loans breakdown were as follows: Loans (Million Baht) Change From 4Q17 Change From 1Q17 Loans 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 +/(-) % +/(-) % Corporate 118, , , , , , , , ,655 (9,151) (7.15%) (7,749) (6.12%) SME 81,317 81,281 78,678 76,479 75,405 76,587 74,987 75,046 74, % 5, % Retail 503, , , , , , , , ,151 9, % 32, % Hire Purchase 380, , , , , , , , ,517 9, % 31, % Housing 103, , , , , , ,274 98,262 94, % 1, % Other Retail 19,483 20,281 19,832 19,867 19,799 20,510 19,742 19,136 18,601 (798) (3.93%) (316) (1.60%) Others 8,977 8,311 7,673 8,412 9,269 9,356 9,188 9,574 10, % (292) (3.15%) Total Loans 712, , , , , , , , , % 30, % * Other loans including loans of TS AMC and staff loans Loans Breakdown (Percent) Corporate SME Hire Purchase Housing Others Q16 2Q16 3Q16 4Q16 Liabilities The Bank and its subsidiaries total liabilities as of 31 March 2018 totaled 870,183 million baht, a decrease of 3,166 million baht or 0.36 percent from the end of The key changes are as follows: 11

13 Deposits (Million Baht) 31 Mar Dec 17 Change Amount % Amount % +/(-) % Current 11, % 11, % (692) (5.79%) Savings 310, % 295, % 15, % Fixed Deposits Less than 6 Months 34, % 36, % (1,601) (4.38%) 6 Months and up to 1 Year 46, % 63, % (16,953) (26.58%) Over 1 Year 175, % 165, % 9, % Certified of Deposits 122, % 142, % (20,435) (14.34%) Total Deposits 701, % 716, % (15,084) (2.11%) Debt Issued and Borrowings 41, % 39, % 2, % Total Deposits and Debt Issued and Borrowings 743, % 755, % (12,572) (1.66%) Deposits totaled 701,194 million baht, a decrease of 15,084 million baht or 2.11 percent from the end of last year. A decrease was mainly due to fixed and NCD deposits. Consequently, CASA ratio was percent, an increase from percent at the end of last year. Debt issued and borrowings totaled 41,820 million baht, an increase of 2,512 million baht or 6.39 percent. Deposits Breakdown (Percent) CASA FIXED Q16 2Q16 3Q16 4Q16 Liquidity and Loan to Deposit Ratio As of 31 March 2018, loan to deposit and debt issued and borrowing ratio of the Bank and its subsidiaries was percent, an increase from percent at the end of 2017, due to liquidity management in coherent with market condition. The Bank maintained its strong liquidity with liquid and low risk asset portion in high level. The Bank also put focus on the implementation of Basel III Liquidity Coverage Ratio (LCR) and currently had been maintaining LCR ratio of more than 100 percent, higher than the regulated requirement of the Bank of Thailand of 80 percent. 12

14 Shareholders Equity Shareholders equity as of 31 March 2018 was in the amount of 140,167 million baht, an increase of 3,959 million baht or 2.91 percent from the end of The details are as follows The Bank s shareholders equity was in the amount of 138,127 million baht, an increase of 3,837 million baht or 2.86 percent. This was mainly due to profitable operating results of the Bank and its subsidiaries in the first quarter of 2018 which totaled 3,779 million baht and share of other comprehensive income of associates which increased by 73 million baht. Equity attributable to non-controlling interests was in the amount of 2,040 million baht, an increase of 122 million baht or 6.36 percent, a result of profitable operating results of subsidiaries. Non-performing Loans: NPLs Non-performing Loans TBANK (Consol.) 1Q18 4Q17 3Q17 2Q17 1Q17 NPL - gross (Million Baht) 19,146 18,108 16,087 15,652 15,636 Total Allowance* (Million Baht) 24,954 24,278 23,552 22,978 24,520 NPL - gross to Total Loans (Percent) NPL - net to Total Loans (Percent) Reserve to Required Reserve (Percent) Coverage Ratio (Percent) * Total Allow ance including Allow ance for Interbank and Money Market Items and Revaluation Allow ance for Debt Restructuring Non-performing Loans TBANK Only 1Q18 4Q17 3Q17 2Q17 1Q17 NPL - gross (Million Baht) 15,399 14,412 12,496 12,057 12,130 Total Allowance* (Million Baht) 20,747 20,149 19,392 18,837 19,216 NPL - gross to Total Loans (Percent) NPL - net to Total Loans (Percent) Reserve to Required Reserve (Percent) Coverage Ratio (Percent) * Total Allow ance including Allow ance for Interbank and Money Market Items and Revaluation Allow ance for Debt Restructuring Amid gradual economic recovery, the Bank and its subsidiaries managed NPL through systematic and effective control. NPL as of 31 March 2018 was 19,146 million baht, an increase of 1,038 million baht or 5.73 percent from the end of last year. NPL ratio of the Bank and its subsidiaries was at 2.38 percent. For Bank only, NPLs increased 987 million baht from the end of last year. NPL ratio of the Bank was at 2.03 percent, an increase from 1.94 percent at the end of last year. Coverage ratio of the Bank and its subsidiaries as of 31 March 2018 was at percent. The Bank and its subsidiaries have an excess reserve of 10,221 million baht and a reserve to required reserve ratio of

15 percent. Coverage ratio of the Bank as of 31 March 2018 was at percent. The Bank has an excess reserve of 9,620 million baht and a reserve to required reserve ratio of percent. Non-performing Loans (Million Baht) and NPL Ratio (Percent) of TBANK and Its Subsidiaries Coverage Ratio (Percent) and Reserve to Required Reserve (Percent) of TBANK and Its Subsidiaries Non-performing Loans NPL Ratio 18,108 19,146 15,636 15,652 16, Coverage Ratio Reserve to Required Reserve Non-performing Loans (Million Baht) and NPL Ratio (Percent) of TBANK Coverage Ratio (Percent) and Reserve to Required Reserve (Percent) of TBANK Non-performing Loans NPL Ratio Coverage Ratio Reserve to Required Reserve 12,130 12,057 12,496 14,412 15, Capital Adequacy The Bank had capitals according to Basel III regulation in a total of 125,289 million baht as of 31 March 2018, of which 97,948 million baht was Tier I capital and 27,341 million baht was Tier II capital. BIS ratio was at percent, of which percent was Tier I capital and 4.10 percent was Tier II capital, as compared to BIS ratio of percent in the end of Capital Adequacy Ratio (Percent) Capital Ratio of TBANK Minimum Requirement By 1Q18 4Q17 3Q17 2Q17 1Q17 BOT Total Common Equity Tier I to Risk Weighted Assets Total Tier I to Risk Weighted Assets Total Tier II to Risk Weighted Assets Total Capital to Risk Weighted Assets

16 Operating Results of Subsidiaries Operating Results of Subsidiaries (Million Baht) Subsidiaries Thanachart Bank Public Company Limited Percent of Holding Direct/ Indirect Net Profit (Loss) 1Q18 4Q17 1Q17 Consolidated Financial Statements 3,779 3,674 3,272 Thanachart Securities Public Company Limited % Thanachart Fund Management Company Limited 75.00% Thanachart Insurance Public Company Limited % TS AMC Company Limited % (4) Ratchthani Leasing Public Company Limited 65.18% Thanachart Securities Public Company Limited Average daily trading volume of Thanachart Securities Public Company Limited in first quarter of 2018 was 4,024 million baht, an increase from 3,598 million baht in the same quarter last year. The average daily trading of the company was in line with the overall stock market condition. Market share of securities trading was at 3.23 percent. The trading volume could be divided into percent of retails, percent of institutions, and percent of foreign investors. Net profit for the first quarter of 2018 amounted to 249 million baht, an increase of 81 million baht or percent comparing with the same quarter previous year. Total income amounted to 613 million baht, an increase of percent. Brokerage fees amounted to 408 million baht, an increase of percent and gains and returns on financial instruments amounted to 110 million baht, an increase of 8.91 percent. Financial costs and securities expenses amounted to 77 million baht, an increase of percent in line with the increases in transactions and income. Operating expenses were 230 million baht, a decrease of percent from the cost control policy. As of 31 March 2018, the company maintained its liquidity ratio (Net Liquid Capital Rules: NCR) at percent, higher than the minimum requirement regulated by the Securities and Exchange Commissions (SEC) of 7.00 percent of general indebtedness and securities pledged. Thanachart Fund Management Company Limited As of 30 March 2018, Thanachart Fund Management Company Limited had assets under management of 237,397 million baht, an increase of 8,807 million baht or 3.85 percent from the end of Assets under management comprised of percent mutual funds, 6.53 percent provident funds, and 4.83 percent private funds. As of 30 March 2018, mutual fund business of the company ranked 8 with market share of 4.17 percent. Private fund business ranked 12 with market share of 1.30 percent while provident fund business ranked 13 with market share of 1.41 percent. For operating results in the first quarter of 2018, the company had a net profit of 171 million baht, an increase of 71 million baht or percent from the same quarter previous year. This was due to an increase in sale volume of 15

17 investment units. As a result, fund management fees increased by 218 million baht or percent while fees and service expenses increased by 120 million baht which was in line with the increase in income. For operating results of the year 2017, the company had a net profit of 426 million baht, an increase of 70 million baht or percent from the previous year. This was due to an increase in sale volume of funds. Thanachart Insurance Public Company Limited In the first quarter of 2018, Thanachart Insurance Public Company Limited had total insurance premium of 1,882 million baht, a decrease of 10 million baht or 0.53 percent when compared with that of the same quarter last year. This was mainly due to a decrease in auto insurance premium income which was in the amount of 1,593 million baht, a decrease of 26 million baht or 1.61 percent from the same quarter last year as a result of decreases in sales volume from bancassurance and direct sales. For operating results, the company had a net profit in the first quarter of 2018 of 274 million baht, an increase of 58 million baht or percent when compared with the same quarter last year. This was due to the increases in insurance premium income and investment income. TS AMC Company Limited TS AMC Company Limited has been managing non-performing debts in accordance with the policy and business plan of Thanachart Group continuously. As a result, on 31 March 2018, the company s the total assets were 2,543 million baht, an increase of 34 million baht or 1.36 percent from the end of the previous year. For operating result of the first quarter of 2018, the company had a net loss of 4 million baht, comparing to a net profit of 51 million baht in the same quarter last year. This was mainly from decreases in income from NPL repayments and gains on NPA management. Ratchthani Leasing Public Company Limited As of 31 March 2018, Ratchthani Leasing Public Company Limited has still had a strong financial structure. The company s total assets were 41,918 million baht, an increase of 2,426 million baht or 6.14 percent from the end of the previous year. The company had hire purchase loans and financial lease in the amount of 41,056 million baht, an increase of 2,458 million baht or 6.37 percent. Moreover, the hire purchase loans and financial lease accounted for percent of the total assets. Total liabilities and shareholders equity were 35,927 million baht and 5,991 million baht, respectively. Net profit for the first quarter of 2018 amounted to 364 million baht, an increase of 118 million baht or percent from the same quarter last year. Total income increased by 122 million baht or percent. At the same time, financial costs decreased by 10 million baht or 4.44 percent, due to its ability to acquire lower costs of borrowings. Provision expenses decreased by 15 million baht or percent, due to its closely monitoring debtors which resulted in a better quality of debtors. 16

18 Risk Management As of 31 March 2018 TBANK s total capital according to Basel III regulation amounted to 125,289 million baht, a decrease from 125,527 million baht at the end of the previous year. Consequently, Common Equity Tier I capital and Tier I capital amounted to 97,948 million baht, a decrease from 98,209 million baht at the end of 2017 as a result of a deduction of intangible assets from 80 percent to 100 percent. Tier II capital amounted to 27,341 million baht, an increase from 27,318 million baht at the end of last year. This was due to an increase in reserve for normal loans. TBANK Solo Consolidated Capital Fund according to Basel III (Million Baht) Capital Fund according to Basel III Change 31-Mar Dec-17 +/(-) % Common Equity Tier I Capital 97,948 98,209 (261) (0.27%) Tier I Capital 97,948 98,209 (261) (0.27%) Tier II Capital 27,341 27, % Total Capital 125, ,527 (238) (0.19%) Risk Weighted Assets 666, ,905 3, % Credit risk increased due to an increase in loans. Furthermore, market risk increased from an increase in trading transactions. Although market and economic conditions slowed down, the Bank has managed NPLs systematically and effectively. As of 31 March 2018, NPL ratio of the Bank was at 2.03 percent, an increase from the end of the previous year of 1.94 percent. Coverage ratio of the Bank as of 31 March 2018 was at percent, a decrease from percent at the end of The Bank had 9,619 million baht in excess reserve based on the BOT s regulation with percent of reserve required by the BOT, a result of vigilant reserve policy. Capital was adequate with common equity Tier I ratio, Tier I ratio, and total capital ratio at 14.70, 14.70, and percent, respectively. These are higher than the minimum requirement by the BOT of 6.375, 7.875, and percent, respectively. In summary, risk evaluation concluded that the Bank s risk level is within the controlled limit and the Bank has sufficient capital after allocation to support business expansion in sustainable and secure manners as planned. Disclaimer Thanachart Bank Public Company Limited ( the Bank ) had provided this report to publish the Bank s performance. Information contained in this report is the Bank s past performance. Some information may be based on financial information and any information from the other sources as of the date of this report, which are subject to be changed according to economies and politics both inside and outside country. The readers or recipients should consider the information carefully and please use your discretion before making a decision in any transaction. However, the Bank reserves the right with its own discretion to amend or modify the information contained in this report without any prior notice. The Bank shall have no responsibility for any inaccuracy, inappropriate or incomplete of any information contained in this report. 17