The Siam Commercial Bank Public Company Limited and its Subsidiaries

The Siam Commercial Bank Public Company Limited and its Subsidiaries Interim financial statements for the three-month and six-month periods ended 30 June 2018 and Independent Auditor s Report

Independent Auditor s Report To the Board of Directors of The Siam Commercial Bank Public Company Limited Audit Report Opinion I have audited the interim consolidated and the Bank s financial statements of The Siam Commercial Bank Public Company Limited and its subsidiaries (the Group ) and of The Siam Commercial Bank Public Company Limited (the Bank ), respectively, which comprise the consolidated and the Bank s statements of financial position as at 30 June 2018, the consolidated and the Bank s statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. In my opinion, the accompanying interim consolidated and the Bank s financial statements present fairly, in all material respects, the financial position of the Group and the Bank, respectively, as at 30 June 2018 and their financial performance and cash flows for the six-month period then ended in accordance with Thai Financial Reporting Standards (TFRSs). Basis for Opinion I conducted my audit in accordance with Thai Standards on Auditing (TSAs). My responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Interim and the Bank s Financial Statements section of my report. I am independent of the Group and the Bank in accordance with the Code of Ethics for Professional Accountants issued by the Federation of Accounting Professions that is relevant to my audit of the interim consolidated and the Bank s financial statements, and I have fulfilled my other ethical responsibilities in accordance with these requirements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my opinion. Key Audit Matters Key audit matters are those matters that, in my professional judgment, were of most significance in my audit of the interim consolidated and the Bank s financial statements of the current period. These matters were addressed in the context of my audit of the interim consolidated and the Bank s financial statements as a whole, and in forming my opinion thereon, and I do not provide a separate opinion on these matters.

Allowance for doubtful accounts on loans to customers For disclosures related to credit risk of loans to customers and allowance for doubtful accounts, refer to notes 3.5, 4.1 and 11. The key audit matter The allowance for doubtful accounts on loans to customers is considered a Key Audit Matter as it requires the application of judgments and use of subjective assumptions over both the timing of recognition, and the estimation of the amount of the allowance of certain loans and portfolios of loans to customers. As at 30 June 2018, loans to customers recorded in the interim consolidated and the Bank s financial statements amounted to Baht 2,130 billion and Baht 2,115 billion (approximately 68.7% and 75.8% of total assets), against which allowances for doubtful accounts of Baht 92 billion and Baht 92 billion, respectively, were provided. Management has established a control framework over the estimation process of the allowance for doubtful accounts which includes governance procedures, management review and approval, and controls to ensure the integrity of data used in the process. The allowance for doubtful accounts is in accordance with the Bank of Thailand s guidelines which require the Bank to perform both quantitative and qualitative reviews of loans as an ongoing process. Within this framework: Individual assessments are made by management of loan grading and classification. Collateral valuation estimates are used in determining allowance for Non- Performing Loans. The allowances are assessed on a portfolio basis for certain portfolios with similar risk characteristics. Expected Loss Model methodologies incorporating assumptions such as customer behavior and repayment abilities are selected, approved and applied to portfolios of loans of a similar nature and risk profile. How the matter was addressed in the audit In planning my audit procedures I performed a risk assessment by considering internal and external factors which could affect the performance of individual customers, industry sectors, customer segments, or which could influence the judgments and estimates. My audit procedures included testing the design and operating effectiveness of selected controls surrounding the credit and impairment process. I performed credit review procedures for a sample of loans, including a detailed review of the individual credit profile and other relevant information, from which I formed my own independent assessment. My sample included individually large exposures, loans subject to restructuring and reschedule, as well as a selection of loans identified in my risk assessment. I tested model parameter assumptions and methodologies, where appropriate, with involvement of my own credit risk specialists, including a review of reconciliations of data to underlying systems and back-testing results. 2

Valuation of financial instruments in the statement of financial position For disclosures related to financial instruments and fair values, refer to notes 3.3, 3.25, 3.26, 4, 5, 8 and 9. The key audit matter The valuation of financial instruments is considered a Key Audit Matter due to the degree of complexity involved in valuing certain level 2 instruments and the significance of judgment and estimates involved. As at 30 June 2018, financial assets measured at fair value in the interim consolidated and the Bank s financial statements amounted to Baht 470 billion and Baht 298 billion, respectively. Financial liabilities measured at fair value in the interim consolidated and the Bank s financial statements amounted to Baht 50 billion and Baht 49 billion, respectively. As at 30 June 2018, financial assets measured at fair value classified as level 2 in the interim consolidated and the Bank s financial statements amounted to Baht 442 billion and Baht 288 billion, respectively. Financial liabilities measured at fair value classified as level 2 in the interim consolidated and the Bank s financial statements amounted to Baht 49 billion and Baht 49 billion, respectively. There is a risk that financial instruments classified as level 2 in the fair value hierarchy, may be mispriced in the statement of financial position because they are not based on objective external prices or, where these are not easily observable, the best estimate of what they may be. How the matter was addressed in the audit In planning my audit procedures I performed a risk assessment by considering the factors which could affect the fair value of financial instruments, both in terms of the inputs used for valuation and the appropriateness of valuation techniques applied. For a sample of financial instruments, I checked that pricing inputs used were externally sourced and were correctly input into pricing models, including an assessment of the liquidity of prices, where applicable. I used my own valuation specialists to assess that the models were appropriate and tested the fair value of a sample of the Group and the Bank s debt securities and derivative positions independently and compared their valuation to the Group and the Bank s valuation. 3

Valuation of Life Insurance Policy Reserves For disclosures related to Life Insurance Policy Reserves, refer to notes 3.28, 4.6 and 23. The key audit matter How the matter was addressed in the audit The valuation of life insurance policy reserves is considered a Key Audit Matter as it involves In planning my audit procedures I performed a risk assessment by considering factors which significant complex and subjective judgments could affect the major valuation assumptions and about future events, applying actuarial controls framework over data input. These major methodologies and assumptions, which could assumptions include economic assumptions such materially affect the amount of the recorded as investment returns and discount rates and nonliability and expense. economic assumptions such as mortality and persistency. As at 30 June 2018, liabilities under insurance contracts recorded by the subsidiary in the interim consolidated financial statements amounted to Baht 267 billion, mainly comprising long-term technical reserves (approximately 99.6% of liabilities under insurance contracts). In performing my audit procedures, was assisted by my actuarial specialists for assessments of the methodology and assumptions used in calculating the reserves and testing the significant inputs, including evaluating the design, implementation and operating effectiveness of selected controls over the actuarial assumptions and the valuation process. I considered, in particular, the validity of management s liability adequacy testing, including assessing the reasonableness of the projected cash flows, discount rate and of the assumptions adopted in the context of company experience, specific product features and industry practice. The discount rates adopted by management are consistent with market practice. Responsibilities of Management and Those Charged with Governance for the Interim and the Bank s Financial Statements Management is responsible for the preparation and fair presentation of the interim consolidated and the Bank s financial statements in accordance with TFRSs, and for such internal control as management determines is necessary to enable the preparation of the interim consolidated and the Bank s financial statements that are free from material misstatement, whether due to fraud or error. In preparing the interim consolidated and the Bank s financial statements, management is responsible for assessing the Group s and the Bank s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group and the Bank or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Group s and the Bank s financial reporting process. 4

Auditor s Responsibilities for the Audit of the Interim and the Bank s Financial Statements My objectives are to obtain reasonable assurance about whether the interim consolidated and the Bank s financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes my opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with TSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these interim consolidated and the Bank s financial statements. As part of an audit in accordance with TSAs, I exercise professional judgment and maintain professional skepticism throughout the audit. I also: Identify and assess the risks of material misstatement of the interim consolidated and the Bank s financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group s and the Bank s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group s and the Bank s ability to continue as a going concern. If I conclude that a material uncertainty exists, I am required to draw attention in my auditor s report to the related disclosures in the interim consolidated and the Bank s financial statements or, if such disclosures are inadequate, to modify my opinion. My conclusions are based on the audit evidence obtained up to the date of my auditor s report. However, future events or conditions may cause the Group and the Bank to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the interim consolidated and the Bank s financial statements, including the disclosures, and whether the interim consolidated and the Bank s financial statements represent the underlying transactions and events in a manner that achieves fair presentation. Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the interim consolidated financial statements. I am responsible for the direction, supervision and performance of the group audit. I remain solely responsible for my audit opinion. I communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that I identify during my audit. I also provide those charged with governance with a statement that I have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on my independence, and where applicable, related safeguards. 5

From the matters communicated with those charged with governance, I determine those matters that were of most significance in the audit of the interim consolidated and the Bank s financial statements of the current period, and are therefore the key audit matters. I describe these matters in my auditor s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, I determine that a matter should not be communicated in my report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Review Report I have also reviewed the accompanying interim consolidated and the Bank s statements of profit or loss and other comprehensive income for the three-month period ended 30 June 2018 of the Group and the Bank, respectively. Management is responsible for the preparation and presentation of these interim consolidated and the Bank s statements of profit or loss and other comprehensive income in accordance with Thai Financial Reporting Standards. My responsibility is to express a conclusion on these interim consolidated and the Bank s statements of profit or loss and other comprehensive income 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 consolidated and the Bank s statements of profit or loss and other comprehensive income for the three-month period ended 30 June 2018 are not prepared, in all material respects, in accordance with Thai Financial Reporting Standards. (Winid Silamongkol) Certified Public Accountant Registration No. 3378 KPMG Phoomchai Audit Ltd. Bangkok 21 August 2018 6

Statement of financial position 30 June 31 December 30 June 31 December Assets Note 2018 2017 2018 2017 (in thousand Baht) Cash 39,263,592 40,797,176 39,065,367 40,591,037 Interbank and money market items, net 7 346,203,987 316,733,080 331,809,905 303,476,880 Derivative assets 8 50,947,688 43,499,427 51,443,322 46,035,173 Investments, net 9 541,716,800 570,370,844 260,486,871 299,032,913 Investments in subsidiaries and associate, net 10 - - 18,502,748 18,016,700 Loans to customers and accrued interest receivables, net 11 Loans to customers 2,129,947,517 2,059,948,448 2,115,177,164 2,046,282,647 Accrued interest receivables 3,155,811 3,328,131 2,856,093 2,963,859 Total loans to customers and accrued interest receivables 2,133,103,328 2,063,276,579 2,118,033,257 2,049,246,506 Less deferred revenue (27,308,364) (25,216,416) (27,308,364) (25,216,417) Less allowance for doubtful accounts 11.9 (92,439,773) (85,699,301) (91,677,822) (84,936,081) Less revaluation allowance for debt restructuring 12 (4,257,389) (4,291,141) (4,257,389) (4,291,141) Total loans to customers and accrued interest receivables, net 2,009,097,802 1,948,069,721 1,994,789,682 1,934,802,867 Properties for sale, net 14 12,307,240 11,283,644 12,303,698 11,280,102 Premises and equipment, net 15 43,721,721 44,164,383 42,445,391 42,890,983 Goodwill and other intangible assets, net 16 20,459,498 18,107,161 10,997,876 8,778,161 Assets pending transfer 17 1,853,922 2,234,515 1,962,289 2,300,059 Deferred tax assets 43 510,499 110,753 25,616 25,740 Other assets, net 18 33,479,155 28,661,317 25,842,769 18,401,385 Total assets 3,099,561,904 3,024,032,021 2,789,675,534 2,725,632,000 The accompanying notes are an integral part of these financial statements. 7

Statement of financial position 30 June 31 December 30 June 31 December Liabilities and shareholders' equity Note 2018 2017 2018 2017 (in thousand Baht) Liabilities Deposits 19 2,145,592,341 2,092,457,200 2,143,397,384 2,087,890,289 Interbank and money market items 20 114,746,126 108,573,192 119,332,273 110,911,960 Liability payable on demand 15,926,833 23,670,751 15,924,876 23,670,230 Liabilities to deliver security 3.11 22,592 59,900 - - Derivative liabilities 8 51,805,478 44,984,107 50,576,067 44,620,824 Debt issued and borrowings 21 80,303,520 78,538,067 77,774,069 75,379,761 Provisions 22 8,086,917 7,729,706 7,682,195 7,340,382 Liabilities under insurance contracts 23 267,016,055 248,244,534 - - Liabilities pending transfer 24 11,605,042 14,615,892 11,536,574 14,488,352 Deferred tax liabilities 43 2,152,617 3,589,507 2,012,416 2,559,950 Other liabilities 25 34,578,638 37,806,171 28,416,042 29,802,716 Total liabilities 2,731,836,159 2,660,269,027 2,456,651,896 2,396,664,464 Shareholders equity Share capital 27 Authorised share capital 3,582,888,606 preferred shares of Baht 10 each 35,828,886 35,838,257 35,828,886 35,838,257 3,417,111,394 common shares of Baht 10 each 34,171,114 34,161,743 34,171,114 34,161,743 Issued and paid-up share capital 3,764,249 preferred shares of Baht 10 each 37,643 37,850 37,643 37,850 3,395,427,949 common shares of Baht 10 each 33,954,279 33,954,072 33,954,279 33,954,072 Premium on share capital Premium on preferred shares 14,721 14,802 14,721 14,802 Premium on common shares 11,109,470 11,109,389 11,109,470 11,109,389 Other reserves 28 14,620,655 19,985,092 17,979,956 18,654,960 Retained earnings Appropriated Legal reserve 28 7,000,000 7,000,000 7,000,000 7,000,000 Unappropriated 300,378,025 291,362,368 262,927,569 258,196,463 Total owners of the company 367,114,793 363,463,573 333,023,638 328,967,536 Non-controlling interests 610,952 299,421 - - Total shareholders equity 367,725,745 363,762,994 333,023,638 328,967,536 Total liabilities and shareholders equity 3,099,561,904 3,024,032,021 2,789,675,534 2,725,632,000 (Mr. Arthid Nanthawithaya) President and Chief Executive Officer The accompanying notes are an integral part of these financial statements. 8

Statement of profit or loss and other comprehensive income (Unaudited) Three month period ended 30 June Three month period ended 30 June Note 2018 2017 2018 2017 (in thousand Baht) Interest income 31,966,813 31,096,396 29,373,028 28,774,811 Interest expenses 8,118,035 8,308,670 8,115,247 8,299,609 Net interest income 23,848,778 22,787,726 21,257,781 20,475,202 Fees and service income 9,157,195 8,730,585 9,006,573 8,880,990 Fees and service expenses 2,073,193 1,588,598 1,757,361 1,289,027 Net fees and service income 7,084,002 7,141,987 7,249,212 7,591,963 Gains on trading 1,697,889 1,774,259 1,754,646 1,700,496 Gains on investments 573,585 248,928 582,058 90,491 Share of loss from investment in associate - (5,314) - - Dividend income 503,993 401,588 392,439 1,966,545 Net earned insurance premiums 14,553,025 13,594,499 - - Other operating income 254,885 681,788 178,384 585,619 Total operating income 48,516,157 46,625,461 31,414,520 32,410,316 Net insurance claims 14,173,419 12,645,313 - - Net operating income 34,342,738 33,980,148 31,414,520 32,410,316 Other operating expenses Employee s expenses 7,312,957 7,016,617 6,419,890 6,255,937 Directors remuneration 21,190 21,625 17,570 18,480 Premises and equipment expenses 3,242,181 2,914,239 3,012,707 2,723,374 Taxes and duties 1,130,226 1,070,545 1,027,774 999,217 Others 4,072,874 3,234,133 4,807,407 3,761,563 Total operating expenses 15,779,428 14,257,159 15,285,348 13,758,571 Impairment loss on loans and debt securities 5,006,621 5,010,326 5,010,000 5,010,000 Profit from operating before income tax expense 13,556,689 14,712,663 11,119,172 13,641,745 Income tax expenses 43 2,433,076 2,786,680 1,946,887 2,229,888 Net profit 11,123,613 11,925,983 9,172,285 11,411,857 The accompanying notes are an integral part of these financial statements. 9

Statement of profit or loss and other comprehensive income (Unaudited) Three month period ended Three month period ended 30 June 30 June Note 2018 2017 2018 2017 (in thousand Baht) Other comprehensive income (loss) Items that will be reclassified subsequently to profit or loss (Losses) gains on remeasuring available-for-sale investments (4,136,727) 1,864,250 (543,622) 177,116 Gains (losses) arising from translating the financial statements of a foreign operation 155,018 (29,885) - - Share of other comprehensive income of associate (using equity method) - 72 - - Changes in hedge reserve (350,961) 10,752 - (12) Income tax relating to components of other comprehensive income (loss) will be reclassified subsequently to profit or loss 43 897,538 (375,000) 108,725 (35,421) Total other comprehensive (loss) income, net of income tax (3,435,132) 1,470,189 (434,897) 141,683 Total comprehensive income 7,688,481 13,396,172 8,737,388 11,553,540 Net profit attributable to: Owners of the company 11,111,207 11,910,949 9,172,285 11,411,857 Non-controlling interests 12,406 15,034 - - Total comprehensive income (loss) attributable to: Owners of the company 7,702,189 13,369,877 8,737,388 11,553,540 Non-controlling interests (13,708) 26,295 - - Earnings per share of parent company Basic earnings per share (in Baht) 44 3.27 3.50 2.70 3.36 (Mr. Arthid Nanthawithaya) President and Chief Executive Officer The accompanying notes are an integral part of these financial statements. 10

Statement of profit or loss and other comprehensive income Six month period ended Six month period ended 30 June 30 June Note 2018 2017 2018 2017 (in thousand Baht) Interest income 37 63,254,856 61,940,517 58,170,515 57,395,254 Interest expenses 38 16,074,107 16,591,570 16,055,010 16,580,491 Net interest income 47,180,749 45,348,947 42,115,505 40,814,763 Fees and service income 39 19,199,319 17,648,198 18,942,148 18,239,989 Fees and service expenses 39 3,970,705 3,214,192 3,368,325 2,614,992 Net fees and service income 39 15,228,614 14,434,006 15,573,823 15,624,997 Gains on trading 40 4,279,709 3,448,248 4,143,085 3,346,317 Gains on investments 41 904,787 421,730 758,554 211,631 Share of loss from investment in associate - (9,118) - - Dividend income 796,849 597,658 474,942 2,050,627 Net earned insurance premiums 28,249,901 26,928,850 - - Other operating income 344,941 780,105 195,400 612,875 Total operating income 96,985,550 91,950,426 63,261,309 62,661,210 Net insurance claims 27,264,646 24,785,008 - - Net operating income 69,720,904 67,165,418 63,261,309 62,661,210 Other operating expenses Employee s expenses 14,761,431 13,878,409 12,980,030 12,328,731 Directors remuneration 46,830 47,230 41,760 42,825 Premises and equipment expenses 6,380,604 5,566,138 5,945,314 5,191,087 Taxes and duties 2,229,476 2,166,398 2,046,422 2,027,320 Others 8,591,036 6,060,830 9,956,799 7,264,939 Total operating expenses 32,009,377 27,719,005 30,970,325 26,854,902 Impairment loss on loans and debt securities 42 10,018,254 10,020,326 10,020,000 10,020,000 Profit from operating before income tax expense 27,693,273 29,426,087 22,270,984 25,786,308 Income tax expenses 43 5,190,592 5,575,010 4,078,323 4,507,209 Net profit 22,502,681 23,851,077 18,192,661 21,279,099 The accompanying notes are an integral part of these financial statements. 11

Statement of profit or loss and other comprehensive income Six month period ended Six month period ended 30 June 30 June Note 2018 2017 2018 2017 (in thousand Baht) Other comprehensive income (loss) Items that will be reclassified subsequently to profit or loss (Losses) gains on remeasuring available-for-sale investments (6,063,364) 3,071,132 (674,738) 403,193 Gains (losses) arising from translating the financial statements of a foreign operation 39,559 (116,027) - - Share of other comprehensive income of associate (using equity method) - 72 - - Changes in hedge reserve (569,975) 97,154-51,212 Income tax relating to components of other comprehensive income (loss) will be reclassified subsequently to profit or loss 43 1,326,668 (633,657) 134,948 (90,881) Total other comprehensive (loss) income, net of income tax (5,267,112) 2,418,674 (539,790) 363,524 Total comprehensive income 17,235,569 26,269,751 17,652,871 21,642,623 Net profit attributable to: Owners of the company 22,475,659 23,822,859 18,192,661 21,279,099 Non-controlling interests 27,022 28,218 - - Total comprehensive income (loss) attributable to: Owners of the company 17,248,001 26,223,534 17,652,871 21,642,623 Non-controlling interests (12,432) 46,217 - - Earnings per share of parent company Basic earnings per share (in Baht) 44 6.61 7.01 5.35 6.26 (Mr. Arthid Nanthawithaya) President and Chief Executive Officer The accompanying notes are an integral part of these financial statements. 12

Statement of changes in equity Other reserves (Losses) gains arising from translating Issued and Premium on Gains (losses) the financial paid-up share capital share capital on remeasuring statements of Changes in Total Retained earnings Total Non- Total Preferred Common Preferred Common available-for-sale a foreign Changes in revaluation other Legal owners of controlling shareholders Note shares shares shares shares investments operation hedge reserve surplus Others reserves reserve Unappropriated the company interests equity Six month period ended 30 June 2018 (in thousand Baht) Balance at 1 January 2018 37,850 33,954,072 14,802 11,109,389 6,014,558 (330,032) 335,172 16,329,890 (2,364,496) 19,985,092 7,000,000 291,362,368 363,463,573 299,421 363,762,994 Dividend paid 29 - - - - - - - - - - - (13,596,769) (13,596,769) - (13,596,769) Acquisition of non-controlling interests without a change in control - - - - 3 - - - (15) (12) - - (12) (37) (49) Non-controlling interests arising on acquisition of subsidiary - - - - - - - - - - - - - 324,000 324,000 Conversion of preferred shares to common shares (207) 207 (81) 81 - - - - - - - - - - - Net profit - - - - - - - - - - - 22,475,659 22,475,659 27,022 22,502,681 Other comprehensive (loss) income - - - - (4,815,011) 39,559 (452,206) - - (5,227,658) - - (5,227,658) (39,454) (5,267,112) Total comprehensive (loss) income - - - - (4,815,011) 39,559 (452,206) - - (5,227,658) - 22,475,659 17,248,001 (12,432) 17,235,569 Transfer to retained earnings - - - - - - - (136,767) - (136,767) - 136,767 - - - Balance at 30 June 2018 37,643 33,954,279 14,721 11,109,470 1,199,550 (290,473) (117,034) 16,193,123 (2,364,511) 14,620,655 7,000,000 300,378,025 367,114,793 610,952 367,725,745 The accompanying notes are an integral part of these financial statements. 13

Statement of changes in equity Other reserves Share of Losses arising other from translating comprehensive Issued and Premium on Gains on the financial (loss) income paid-up share capital share capital remeasuring statements of of associate Changes in Total Retained earnings Total Non- Total Preferred Common Preferred Common available-for-sale a foreign (using equity Changes in revaluation other Legal owners of controlling shareholders Note shares shares shares shares investments operation method) hedge reserve surplus Others reserves reserve Unappropriated the company interests equity Six month period ended 30 June 2017 (in thousand Baht) Balance at 1 January 2017 38,903 33,953,019 15,213 11,108,978 1,186,362 (125,943) (72) 40,608 16,605,336 (2,364,207) 15,342,084 7,000,000 266,630,575 334,088,772 209,450 334,298,222 Dividend paid 29 - - - - - - - - - - - - (13,596,769) (13,596,769) - (13,596,769) Conversion of preferred shares to common shares (922) 922 (361) 361 - - - - - - - - - - - - Net profit - - - - - - - - - - - - 23,822,859 23,822,859 28,218 23,851,077 Other comprehensive income (loss) - - - - 2,439,211 (116,027) 72 77,419 - - 2,400,675 - - 2,400,675 17,999 2,418,674 Total comprehensive income (loss) - - - - 2,439,211 (116,027) 72 77,419 - - 2,400,675-23,822,859 26,223,534 46,217 26,269,751 Transfer to retained earnings - - - - - - - - (136,983) - (136,983) - 136,983 - - - Balance at 30 June 2017 37,981 33,953,941 14,852 11,109,339 3,625,573 (241,970) - 118,027 16,468,353 (2,364,207) 17,605,776 7,000,000 276,993,648 346,715,537 255,667 346,971,204 The accompanying notes are an integral part of these financial statements. 14

Statement of changes in equity Other reserves Issued and paid-up share capital Premium on share capital Gains (losses) on remeasuring Changes in Total Retained earnings Total Preferred Common Preferred Common available-for-sale Changes in revaluation other Legal shareholders Note shares shares shares shares investments hedge reserve surplus reserves reserve Unappropriated equity Six month period ended 30 June 2018 Balance at 1 January 2018 37,850 33,954,072 14,802 11,109,389 2,899,569 (in thousand Baht) (8) 15,755,399 18,654,960 7,000,000 258,196,463 328,967,536 Dividend paid 29 - - - - - - - - - (13,596,769) (13,596,769) Conversion of preferred shares to common shares (207) 207 (81) 81 - - - - - - - Net profit - - - - - - - - - 18,192,661 18,192,661 Other comprehensive loss - - - - (539,790) - - (539,790) - - (539,790) Total comprehensive (loss) income - - - - (539,790) - - (539,790) - 18,192,661 17,652,871 Transfer to retained earnings - - - - - - (135,214) (135,214) - 135,214 - Balance at 30 June 2018 37,643 33,954,279 14,721 11,109,470 2,359,779 (8) 15,620,185 17,979,956 7,000,000 262,927,569 333,023,638 The accompanying notes are an integral part of these financial statements. 15

Statement of changes in equity Other reserves Issued and paid-up share capital Premium on share capital Gains on remeasuring Changes in Total Retained earnings Total Preferred Common Preferred Common available-for-sale Changes in revaluation other Legal shareholders Note shares shares shares shares investments hedge reserve surplus reserves reserve Unappropriated equity Six month period ended 30 June 2017 Balance at 1 January 2017 38,903 33,953,019 15,213 11,108,978 2,325,667 (in thousand Baht) (40,970) 16,027,739 18,312,436 7,000,000 238,765,712 309,194,261 Dividend paid 29 - - - - - - - - - (13,596,769) (13,596,769) Conversion of preferred shares to common shares (922) 922 (361) 361 - - - - - - - Net profit - - - - - - - - - 21,279,099 21,279,099 Other comprehensive income - - - - 322,554 40,970-363,524 - - 363,524 Total comprehensive income - - - - 322,554 40,970-363,524-21,279,099 21,642,623 Transfer to retained earnings - - - - - - (135,430) (135,430) - 135,430 - Balance at 30 June 2017 37,981 33,953,941 14,852 11,109,339 2,648,221-15,892,309 18,540,530 7,000,000 246,583,472 317,240,115 (Mr. Arthid Nanthawithaya) President and Chief Executive Officer The accompanying notes are an integral part of these financial statements. 16

Statement of cash flows Six month period ended Six month period ended 30 June 30 June 2018 2017 2018 2017 (in thousand Baht) Cash flows from operating activities Profit from operating before income tax expense 27,693,273 29,426,087 22,270,984 25,786,308 Adjustments to reconcile profit from operating before income tax expense to cash receipts (payments) from operating activities Depreciation and amortisation 2,183,123 1,507,885 2,088,437 1,428,211 Impairment loss on loans and debt securities 11,463,932 11,138,906 11,519,919 11,138,581 Losses (reversal) on impairment of properties for sale 40,027 (4,597) 40,027 (5,792) Reversal of impairment losses on assets (21,998) - (21,998) - Losses (gains) on sale of premises and equipment 23,256 (19,495) 24,054 (18,191) Losses on trading 899,594 1,415,303 622,950 1,218,304 Gains on investments (904,787) (421,730) (758,554) (211,631) Share of loss from investment in associate - 9,118 - - 41,376,420 43,051,477 35,785,819 39,335,790 Net interest income (47,180,749) (45,348,947) (42,115,505) (40,814,763) Dividend income (796,849) (597,658) (474,942) (2,050,627) Proceeds from interest 62,759,089 63,548,015 57,595,885 58,783,050 Interest paid (15,678,176) (16,517,105) (15,644,286) (16,502,470) Proceeds from dividend 736,876 604,768 559,092 1,223,815 Income tax paid (5,603,480) (6,231,807) (3,597,796) (4,217,749) Profit from operating before changes in operating assets and liabilities 35,613,131 38,508,743 32,108,267 35,757,046 (Increase) decrease in operating assets Interbank and money market items (29,447,359) (104,486,073) (28,360,708) (104,612,904) Derivatives assets (7,191,088) 7,958,026 (5,048,984) 9,509,104 Investment in securities for trading (6,478,008) 11,259,765 (8,281,654) 11,442,121 Loans to customers (77,660,553) (42,135,145) (76,610,719) (41,325,257) Properties for sale 3,940,100 4,219,605 3,940,100 4,219,605 Other assets (4,785,940) 3,899,334 (7,179,446) 6,346,477 Increase (decrease) in operating liabilities Deposits 53,135,141 31,091,843 55,507,095 32,296,220 Interbank and money market items 6,172,934 49,879,266 8,420,313 50,522,386 Liability payable on demand (7,743,918) 5,333,837 (7,745,354) 5,338,055 Liabilities to deliver security (37,308) 68,149 - - Derivatives liabilities 6,276,607 (11,764,698) 5,671,268 (13,149,954) Short-term debt issued and borrowings (660,140) 836,621 (31,285) 346,035 Liabilities under insurance contracts 18,771,521 17,421,356 - - Other liabilities (5,972,659) (5,635,112) (5,298,701) (7,238,927) Net cash (used in) from operating activities (16,067,539) 6,455,517 (32,909,808) (10,549,993) The accompanying notes are an integral part of these financial statements. 17

Statement of cash flows Six month period ended Six month period ended 30 June 30 June 2018 2017 2018 2017 (in thousand Baht) Cash flows from investing activities Acquisition of available-for-sale securities (176,892,676) (251,430,991) (106,353,971) (203,646,505) Proceeds from sale of available-for-sale securities 205,841,315 260,086,561 152,814,623 229,919,317 Acquisition of held-to-maturity securities (2,115,725) (264,600) (237,321) (264,600) Proceeds from redemption of held-to-maturity securities 2,863,524 2,284,268 939,399 1,470,900 Acquisition of general securities (303,277) (71,068) (295,299) (71,068) Proceeds from sale of general securities 830,155-830,155 - Acquisition of investments in subsidiaries and/or associate - - (486,049) (2,000) Acquisition of premises and equipment (1,209,513) (1,208,704) (1,155,236) (1,183,700) Proceeds from sale of premises and equipment 176,630 38,829 175,809 37,500 Acquisition of intangible assets (3,035,802) (1,481,694) (2,863,786) (1,394,033) Net cash from investing activities 26,154,631 7,952,601 43,368,324 24,865,811 Cash flows from financing activities Proceeds from long-term debt issued 1,515,000 14,347,791 1,515,000 14,347,791 Repayment of long-term debt issued - (20,000,000) - (20,000,000) Proceeds from long-term borrowings 122,173 72,183 122,173 72,183 Repayment of long-term borrowings (24,590) - (24,590) - Dividend paid to equity holders of the Bank (13,596,769) (13,596,769) (13,596,769) (13,596,769) Acquisition of non-controlling interests 323,951 - - - Net cash used in financing activities (11,660,235) (19,176,795) (11,984,186) (19,176,795) Gains (losses) arising from translating the financial statements of a foreign operation 39,559 (116,027) - - Net decrease in cash (1,533,584) (4,884,704) (1,525,670) (4,860,977) Cash at 1 January 40,797,176 40,488,512 40,591,037 40,317,033 Cash at 30 June 39,263,592 35,603,808 39,065,367 35,456,056 Supplementary disclosures of cash flow information Significant non-cash items were as follows: (Losses) gains on remeasuring available-for-sale investments (6,063,364) 3,071,132 (674,738) 403,193 Gains (losses) arising from translating the financial statements of a foreign operation 39,559 (116,027) - - Share of other comprehensive income of associate (using equity method) - 72 - - Changes in hedge reserve (569,975) 97,154-51,212 Properties for sale from loan payment 5,003,723 3,919,082 5,003,723 3,919,082 (Losses) gains from foreign exchange revaluation on long-term debt issued (811,136) 3,912,548 (811,136) 3,912,548 Losses from foreign exchange revaluation on banking book derivatives (1,702,121) (204,082) (1,702,121) (204,082) (Mr. Arthid Nanthawithaya) President and Chief Executive Officer The accompanying notes are an integral part of these financial statements. 18

Note Contents Pages 1 General information 20 2 Basis of preparation of the interim financial statements 20 3 Significant accounting policies 23 4 Financial risk management 39 5 Fair value of assets and liabilities 51 6 Maintenance of capital fund 56 7 Interbank and money market items, net (Assets) 60 8 Derivatives 62 9 Investments, net 65 10 Investments in subsidiaries and associate, net 68 11 Loans to customers and accrued interest receivables, net 70 12 Troubled debt restructuring 79 13 Disclosure of the statement of cash flows of the asset management company 80 14 Properties for sale, net 81 15 Premises and equipment, net 83 16 Goodwill and other intangible assets, net 87 17 Assets pending transfer 89 18 Other assets, net 89 19 Deposits 90 20 Interbank and money market items (Liabilities) 91 21 Debt issued and borrowings 93 22 Provisions 94 23 Liabilities under insurance contracts 97 24 Liabilities pending transfer 97 25 Other liabilities 98 26 Advance received from electronic payment 98 27 Share capital 98 28 Reserves 98 29 Dividends 99 30 Assets pledged as collateral and under restriction 100 31 Contingencies 100 32 Related parties 100 33 Key management personnel compensation 104 34 Operating leases 104 35 Operating segments 105 36 The financial position and results of operations classified by domestic and foreign business 108 37 Interest income 110 38 Interest expenses 110 39 Net fees and service income 111 40 Gains on trading 111 41 Gains on investments 111 42 Impairment loss on loans and debt securities 112 43 Income tax 112 44 Basic earnings per share 118 45 Events after the reporting period 118 19

These notes form an integral part of the interim financial statements. The interim financial statements issued for Thai statutory and regulatory reporting purposes are prepared in the Thai language. These English language financial statements have been prepared from and are consistent with the Thai language statutory financial statements, and both the English and Thai language financial statements were approved and authorised for issue by the Board of Directors on 21 August 2018. 1 General information The Siam Commercial Bank Public Company Limited, the Bank, is incorporated in Thailand and has its registered office at 9 Ratchadapisek Road, Jatujak, Bangkok. was established by Royal Charter on 30 January 1906 and was listed on the Stock Exchange of Thailand on 6 February 1976. The principal business of the Bank is the provision of financial products and services through its Head Office and branch network in Thailand, its branches in Singapore, Hong Kong, Laos, Vietnam, Shanghai and Cayman Islands and its subsidiaries in Thailand and Cambodia. also has a sizeable investment in its life insurance subsidiary. Details of the Bank s subsidiaries as at 30 June 2018 and 31 December 2017 are given in note 10. 2 Basis of preparation of the interim financial statements (a) Statement of compliance The interim financial statements are prepared in accordance with Thai Accounting Standard (TAS) No. 34 (revised 2017) 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 number Sor Nor Sor 21/2558, directive dated 4 December 2015, regarding The preparation and announcement of the financial statements of commercial banks and holding companies which are the parent company of a group of companies offering financial services. The FAP has issued revised TFRS effective for annual accounting periods beginning on or after 1 January 2018. The initial application of these new and revised TFRS has resulted in changes in certain of the Bank and its subsidiaries accounting policies. These changes have no material effect on the interim financial statements. In addition to the above new and revised TFRS, The FAP has issued TFRS 15 Revenue from Contracts with Customers which is effective for annual periods beginning on or after 1 January 2019. and its subsidiaries have not early adopted this standard in preparing these interim financial statements. 20

TFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. Revenue should be recognised when (or as) an entity transfers control over goods or services to a customer, measured at the amount to which the entity expects to be entitled. It replaces existing revenue recognition standards as follows: - TAS 11 (revised 2017) Construction Contracts, - TAS 18 (revised 2017) Revenue, - TSIC 31 (revised 2017) Revenue-Barter Transactions Involving Advertising Services, - TFRIC 13 (revised 2017) Customer Loyalty Programmes, - TFRIC 15 (revised 2017) Agreements for the Construction of Real Estate, and - TFRIC 18 (revised 2017) Transfers of Assets from Customers. Management is presently considering the potential impact of adopting and initially applying TFRS 15 on the consolidated and Bank s financial statements. (b) Basis of measurement The interim financial statements have been prepared on the historical cost basis except for the following items. Items Derivative financial instruments Trading investments Available-for-sale investments Premises Measurement bases Fair value Fair value Fair value Revaluation to fair value (c) Functional and presentation currency The interim financial statements are presented in Thai Baht, which is the Bank and its subsidiaries functional currency. (d) Use of judgments and estimates The preparation of interim financial statements in conformity with TFRS requires management to make judgments, 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 these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised prospectively. Assumptions and estimation uncertainties Information about assumptions and estimation uncertainties that create a significant risk of resulting in a material adjustment to the amounts recognised in the interim financial statements is included in the following notes: Note 8 Note 11.9 Note 23 Derivatives Allowance for doubtful accounts Liabilities under insurance contracts 21

Long-term technical reserves Process involved in determining assumptions for long-term technical reserves The subsidiary determines the long-term technical reserves by using Net Level Premium Valuation which are dependent on assumptions made by the management of the subsidiary such as mortality, morbidity and discount rate that were established at the time when insurance products were designed and as submitted to the Office of Insurance Commission. The assumptions used for calculating the liabilities throughout the life of the contract are generally unchanged. The assumptions are reviewed annually to assess whether they reflect actual experience, and where there is an indication that they are not appropriate then the assumption will be revised to reflect actual experience. These assumptions will not be adjusted unless there is further adverse experience. Process involved in determining assumptions of loss reserve and outstanding claims The subsidiary determines the loss reserve and outstanding claims in accordance with internationally recognised practices. The assumptions used in the estimation of assets and liabilities are intended to result in provisions which are sufficient to cover any liabilities arising out of insurance contracts to the extent that can be reasonably foreseen. However, given the uncertainty in establishing a provision for insurance claims, it is possible that the final outcome could prove to be significantly different from the original liability established. Provision is made at the reporting date for the expected ultimate cost of settlement of all claims incurred in respect of events up to that date, whether reported or not, together with related claims handling expenses, less amounts already paid. The subsidiary uses past experience and actuarial methods to estimate the ultimate cost of claims. Process involved in determining premium reserves The subsidiary determines the premium reserves by using unearned premium reserves which are calculated on a uniform basis for all types of short-term insurance contracts. Measurement of fair values A number of the Bank and its subsidiaries accounting policies and disclosures require the measurement of fair values, for both financial and non-financial assets. Details of the methods and assumptions over the measurement of fair values are provided in notes 5 and 15. 22

3 Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. 3.1 Basis of consolidation The consolidated financial statements relate to the Bank and its subsidiaries (together referred to as the Bank and its subsidiaries ) and the Bank and its subsidiaries interests in associate. Business combinations applies the acquisition method for all business combinations when control is transferred to the Bank, as describe in subsidiaries section, other than those with entities under common control. The acquisition date is the date on which control is transferred to the acquirer. Judgment is applied in determining the acquisition date and determining whether control is transferred from one party to another. Goodwill is measured as the fair value of the consideration transferred including the recognised amount of any non-controlling interests in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. Consideration transferred includes the fair values of the assets transferred, liabilities incurred by the Bank to the previous owners of the acquiree, and equity interests issued by the Bank. Consideration transferred also includes the fair value of any contingent consideration. A contingent liability of the acquiree is assumed in a business combination only if such a liability represents a present obligation and arises from a past event, and its fair value can be measured reliably. Transaction costs that the Bank incurs in connection with a business combination, such as legal fees, and other professional and consulting fees are expensed as incurred. If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Bank reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date. Step acquisition When a business combination is achieved in stages, the Bank s previously held equity interest in the acquiree is remeasured to its acquisition-date fair value and the resulting gain or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reclassified to profit or loss where such treatment would be appropriate if that interest were disposed of. 23