#1K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KASIKORNBANK Investor Presentation as of 2Q20 August 2020 For further information, please contact the Investor Relations Unit or visit our website at www.kasikornbank.com บริการทุกระดับประทับใจ K KASIKORNTHAI KASIKORNBANK at a Glance ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Established on June 8, 1945 with registered capital of Bt5mn (USD0.15mn) ■Listed on the Stock Exchange of Thailand (SET) since 1976 Consolidated (as of June 2020) Assets Loans* Deposits CAR ROE (1H20) ROA (1H20) Number of Branches Number of E-Machine (ATM/RCM) Number of K PLUS Users Number of Employees Bt3,586bn (USD116.1bn) Bt2,127bn (USD64.8bn) Bt2,308bn (USD74.7bn) 18.09% *** 4.72% 0.56% 880 10,989 13.4mn 20,162 Ranked #4 with 15.5% market share** Ranked #3 with 15.7% market share** Ranked #3 with 16.3% market share** MEMBER OF Dow Jones Sustainability Indices In collaboration with ... AM FTSE4Good 1 Share Information SET Symbol Share Capital: Authorized Issued and Paid-up Number of Shares Market Capitalization 2Q20 Avg. Share Price: KBANK KBANK-F EPS (1H20) BVPS Notes: KBANK, KBANK-F Bt30.5bn (USD1.0bn) Bt23.9bn (USD0.8bn) 2.4bn shares Bt221bn (USD7.2bn) Bt93.87 (USD3.04) Bt94.08 (USD3.05) Bt4.02 (USD0.13) Bt169.83 (USD5.50) * Loans Loans to customers less deferred revenue Ranked #2 in Thai banking sector ** Assets, loans and deposits market share is based on C.B.1.1 (Monthly statement of assets and liabilities) of 14 Thai commercial banks as of June 2020 *** Capital Adequacy Ratio (CAR) has been reported in accordance with Basel III Capital Requirement from 1 January 2013 onwards. CAR is based on KASIKORNBANK FINANCIAL CONGLOMERATE. KASIKORNBANK FINANCIAL CONGLOMERATE means the company under the Notification of the Bank of Thailand re: Consolidated Supervision, consisted of KBank, K Companies and subsidiaries operating in supporting KBank, Phethai Asset Management Co., Ltd. and other subsidiaries within the permitted scope from the BOT's to be financial conglomerate Exchange rate at the end of June 2020 (Mid Rate) was Bt30.89 per USD (Source: Bank of Thailand) บริการทุกระดับประทับใจ 2#2K KASIKORNTHAI Table of Contents ■ Operating Environment ■2020 Financial Targets ■The K-Strategy Financial Performance ■Capital and Dividend ■Summary ■ Appendix K KASIKORNTHAI Appendix Topic บริการทุกระดับประทับใจ Topic ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Slide Page 5-6 7-9 10 - 12 13-18 19-20 21 22-182 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Slide Page KBank Strategy Business Highlights Risk and Credit Management Financial Performance 1H20 Highlights 23-41 42-49 50-57 58-84 59-61 • Interest Income - net 62 Non-interest Income 63 ° Net Fee Income 64-65 • Net Premium Earned - net 66 Other Operating Expenses 67 Loan 68-70 • Asset Quality 71-80 Investment in Securities and Funding Structure 81-84 The Wholly-owned Subsidiaries 85-92 Muang Thai Life Assurance (MTL) 93-101 ➤ Other Information 102-111 ■Banking System and Regulations Update ■Government Policy ■Thai Economic Figures ■IR Contact Information and Disclaimer 112-135 136-157 158-180 181-182 บริการทุกระดับประทับใจ 3 4#3K KASIKORNTHAI Operating Environment: Economic Outlook for 2020 % YoY 6.0 3.0 0.0 -3.0 -6.0 -9.0 -12.0 Key GDP Forecasts and Assumptions 4.1 2018 % YoY 2.4 2019 2020F* -10.0 2020F 2020F* (Previous) 2018 2019 Base Case Base case GDP 4.1 2.4 -6.0 -10.0 Private Consumption 4.6 4.5 -2.3 -3.3 Government Consumption 1.8 1.4 2.0 2.3 Total Investment 3.8 2.2 -4.5 -7.9 Private investment 3.9 2.8 -6.6 -12.1 - Public investment 3.3 0.2 3.1 6.0 Gov't Budget Deficit (% of GDP) -3.0 -2.9 -4.1 -5.2 Exports (Customs Basis) 6.9 -2.7 -6.1 -12.0 Imports (Customs Basis) 12.1 -4.7 -10.9 -16.8 Current Account (USD bn) 28.5 37.3 24.8 15.5 Headline Inflation 1.1 0.7 -0.5 -1.2 Policy Interest Rate** 1.75 1.25 0.50 0.50 Notes: MPC's policy rate is at 0.50% (as of August 5, 2020) Key Points: ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Given escalating downside risk from global economy, KResearch revised down the GDP forecast for 2020 to -10.0% from the previous forecast of -6.0%. ■Government spending will be the only growth driver of the Thai economy ■In emergency situations, fiscal and monetary space are available for further execution, but policy effectiveness should be the focus Risk Factors: ■COVID-19 outbreak resurgence and uncertainty in vaccine development ■Thai Baht appreciation ■Trade tensions and geopolitical risks ■ Household and business balance sheet deterioration if the outbreak lasts longer than expected represents a lower base case assumption, comparing with the previous forecast represents a higher base case assumption, comparing with the previous forecast, Source: *KResearch (as of August 28, 2020 vs forecast on June 2, 2020) **KBank Capital Markets Research (as of August 10, 2020) บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Operating Environment: Economic Outlook for 2020 ■Global Economy ■Government Stimulus Plan (App. pages 136-157) ■Inflation (App. pages 160 and 162) ■ Exports and Tourism (App. pages 160, 163-166) ■Fed Policy Normalization (App. pages 172) Outlook ■Global economy: The global economy is projected to contract sharply in 2020 and slowly recover in 2021, given escalating downside risks ■US: The US economy will enter a recession in 2020. Facing a raging second wave outbreak, the US economy will continue to be under great pressure in the second half of this year; a full economic recovery remains distant ■ Eurozone: The Eurozone may enter a deep recession in 2020. Even though economic confidence is slowly picking up, full recovery is still a long way off ■China: With the COVID-19 hitting global demand and continued outbreaks of the virus not ruled out, the economic rebound may prove hard to sustain. China's GDP growth in 2020 could possibly sink to a historic low ASEAN economies: Risks to the ASEAN economies are increasingly tilted to the downside, given the global economic slowdown and rising trade tensions ■Government may roll out additional short-term stimulus packages at a large scale to offset economic pressure caused by the outbreak ■Government investment projects may be delayed due to potential shortage of capital goods amid disrupted global supply chain ■Inflation is expected to fall to -1.2%, given a slump in domestic and external demand as well as a slide in oil prices ■Thai exports could contract deeply amid likely global recession and disrupted supply chains ■Tourist arrivals in 2020 could drop by 82.4% to 7.0mn, from 39.8mn in 2019, leading to tourism revenue loss of around Bt1.6trn this year ■A second wave of COVID-19 in the US will mean a longer recovery for the US economy ■The COVID-19 outbreak, existing US-China tensions, and US election uncertainty are expected to impact US economic growth and pressure the Fed to keep its ultra monetary easing rate of 0.00-0.25% and its quantitative easing throughout the year Possible Impacts to Thai Economy Even though the outbreak situation in Thailand has significantly improved, the Thai economy is still highly vulnerable to global economic malaises and weakened purchasing power at home The global recession, combined with appreciation of the Thai Baht, will continue to pressure Thai export and tourism sectors, further impacting the Thai labor market ■Consumption and investment in Thailand could deteriorate drastically ■Thai economy may contract 10% this year, given escalating downside risks ■Supportive fiscal measures may help sustain domestic activities to some extent ■Monetary policy is expected to remain accommodative to economic growth throughout 2020 ■Thai government may need to implement targeted measures to alleviate the loss in tourism and export sectors BOT may maintain its interest rate at a record low of 0.50% in 2020, from 1.25% in 2019, after 3 rate cuts in 1H20. Thai economy in 2020 has been hit by the COVID-19 outbreak, while government spending remains soft ■Baht (App. pages 159) ■COVID-19 border restrictions impact inbound tourist revenue, but the Thai current account in 2020 will remain in surplus, due to a trade surplus ■ As a deflationary pressure, higher Thai real interest rate will encourage capital inflows to Thai bonds, after more monetary easing by major central banks Source: KResearch and KBank Capital Markets Research (as of August 28, 2020) บริการทุกระดับประทับใจ ■In 2H20, the Baht should strengthen due to the weakening US dollar, expected stability in the BOT rate, and strong Thai economic fundamentals, such as high current account surplus, low inflation, and high global liquidity 5 6#4Note: K KASIKORNTHAI 1H20 Financial Performance Consolidated 2019 Actual ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 1H20 Actual (TFRS9 Compliance) NIM 3.31% 3.34% Loan Growth 4.59% YTD 6.23% YTD 10.01% YoY Net Fee Income Growth** -3.61% YoY -5.48% YoY Cost to Income Ratio*** 45.32% Credit Cost per year (bps) 174 bps 311 bps NPL Ratio (Gross)**** ROE ROA 42.00% 3.65% 3.92% 9.90% 1.20% 4.72% 0.56% Notes 1H20 NIM slightly increased mainly due to yield on loans from EIR (TFRS9), lower FIDF cost and saving rate cut despite negative impact from lower yield on loans due to interest rate cut and asset quality 1H20 YTD loans grew mainly from COVID-19 relief measures (mainly from SME) and corporate business 1H20 decreased YoY mainly from loan related fee and card business 1H20 improved from both higher revenue growth and lower operating expenses; focus on cost management and productivity improvement 1H20 credit cost increased due to set aside expected credit loss for prudent of economic recession from COVID19; NPLs ratio increased. Focus more on restructured asset quality management. COVID-19 significantly impacts asset quality. Relief measures help reduce short-term impact to asset quality. NPL will stay at a moderate level for now. Asset quality is closely monitored and constantly reviewed during the payment holiday. *The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). ** Net Fee Income Fees and Service Income - Fees and Service Expense; KBank has a 38.25% economic interest in MTL; on the consolidated basis, Bancassurance fees are not included in net fee income, due to the elimination of inter-company transactions (the accounting treatment from the Muang Thai Group Holding consolidation); Non-Interest Income = Total Operating Income - net less Interest Income - net *** Cost to Income Ratio = Total Other Operating Expenses to Total Operating Income - net (Total Operating income less Underwriting Expenses) **** NPL Ratio (Gross) = NPL (gross) to total loans; NPL (gross) used in the calculation are loans to general customers and loans to financial institutions that are non-performing loans; total loans used in the calculation are loans to general customers and loans to financial institutions บริการทุกระดับประทับใจ 7 GDP k KASIKORNTHAI Y2020 Financial Targets Consolidated 2019 Actual 1H20 Actual (TFRS9 Compliant) 2.4% 1Q20 -1.8% Original Y2020 Targets (TFRS9 Compliant) Announced on 24 October 2019 (No longer applicable) ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Current Assumptions and Corresponding Trends (TFRS9 compliant) Announced on 20 July 2020 2.7% 4-6% Mid-40s Up to 150 bps 3.6-4.0% GDP expected to shrink by -6% to -10% due mainly to COVID-19 impact and global economic uncertainties; it may take at least three years for the economy to near its pre-COVID-19 level Difficult to predict Y2020 financial impact and targets amid uncertainties NIM pressured from lower interest rates and COVID-19 relief measures, amid positive impact from lower FIDF cost of deposits. NIM still holding above 3% Loan growth may be significantly higher than former target (4-6%) due to loan relief measures (mainly from SME). Normal growth from corporate segment and secured retail lending due to data analytics capability Net Fee Income and Non-Interest Income growth will contract sharply due to COVID-19 and other uncertainties; high volatility from gains (losses) on financial instruments measured at fair value through profit or loss (FVTPL) under TFRS9 COVID-19 impacting revenue; focus on cost management and productivity improvement, with some new investments for future growth. Cost to Income may be higher than former target (mid-40s) Credit Cost: Higher Expected Credit Loss (ECL), based on conservative assumptions related to COVID-19 plus prudent financial policy, pushing Credit Cost higher in 2020. Credit Cost may reach or exceed peak Y2017 level (239bps). Credit Cost may remain high for at least three years to be prudent amid high uncertainties NPL: COVID-19 significantly impacting asset quality. Relief measures help reduce short-term impact to asset quality. NPL will stay at a moderate level for now. Asset quality is closely monitored and constantly reviewed during the payment holiday NIM 3.31% 3.34% 3.1-3.3%* Loan Growth 4.59% YTD Non-Interest Income Growth** 1.51% YoY 6.23% YTD 10.01% YoY -7.00% YoY -5% to -17%* (Net Fee Income Growth) (-3.61% YoY) (-5.48% YoY) Cost to Income Ratio*** 45.32% 42.00% Credit Cost per year (bps) 174 bps 311 bps NPL Ratio (Gross)**** 3.65% 3.92% ROE / ROA Capital / Dividend 9.90% / 1.20% 4.72%/0.56% N/A Capital remains sufficient amid COVID-19 impact; Dividends will follow BOT guidance; Board of Directors will consider current and future situations. Note: Refer to the same note on slide number 7 บริการทุกระดับประทับใจ 8#5k KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Relief Measures to Lessen COVID-19 Impact: Loans by Customers, not Comparable to Loans by Business on Page 13 Relief measures (from government, BOT, and KBank) have been offered to help customers through the COVID-19 pandemic Higher Expected Credit Loss (ECL), based on conservative assumptions related to COVID-19 plus prudent financial policy, pushing Credit Cost higher in 2020. Credit Cost may reach or exceed peak Y2017 level (239bps) ■Credit Cost may remain high for at least three years to be prudent amid high uncertainties Loan Composition (data as of June 2020) Total Loans Bt2.1trn Loans not in Relief Programs Bt1.2trn Loans in Relief Programs Bt828bn Bt828bn Retail Bt82bn Business Bt746bn *Average LTV = 81%; Deposit Growth = 13% YTD Bt746bn* 70% of Bt746bn Or Bt522bn (60% of customers) 30% of Bt746bn Or Bt224bn (40% of customers) Bt224bn Approx. Bt146bn Outlook for Ability to Pay will impact ECL, Credit Cost and Level of NPL Degree of Vulnerability ■ Continue to pay despite Payment Holiday (known locally as Debt Holiday) ■ Likely to pay after relief measures end Likely to pay after relief measures end due to high cash flow to debt ratio ■ Closely monitor Approx. Bt78bn Likely to require further debt restructuring I Key Takeaways ■Customers in relief programs (Bt746bn) have avg. LTV of 81% ■ Higher ECL, based on conservative assumptions related to COVID-19 plus prudent financial policy, pushing Credit Cost higher in 2020 ■Relief measures help limit short-term impact on asset quality ■ Asset quality closely monitored and constantly reviewed during the payment holiday ■ Potentially Vulnerable Group - will lead to additional and higher ECL (net of collateral) but may not all become NPLs ■ As it may take at least three years for the economy to near its pre- COVID-19 potential, Credit Cost may remain high for at least three years to be prudent amid high uncertainties Potentially Vulnerable Group บริการทุกระดับประทับใจ 9 K KASIKORNTHAI KASIKORNBANK Vision and Foundation Vision ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK "KASIKORNBANK aims to be the most innovative, proactive, and customer centric financial institution, delivering world class financial services and sustainable value for all stakeholders by harmoniously combining technology and talent" Guiding Foundation ■ Remain a top tier size with strong brand, distribution, and capital base Acquire enduring customers and ensure excellent customer experience across all segments ■ Be a digital-oriented AEC+3 Bank ■ Be a data-driven bank and ensure data confidentiality ■ Be a cost competitive operator ■ Be a Bank of Sustainability บริการทุกระดับประทับใจ 10 10#6K KASIKORNTHAI The K-Strategy ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Customer Centricity remains our core philosophy with the aim to "Empower Every Customer's Life and Business" Purpose To Empower Every Customer's Life and Business Customer Promise Total Solution K-Culture Strategic Imperatives New Capabilities Attentive & Inclusive Any Time & Any Where A PIONEER FOR THE BETTER, A STEP AHEAD FOREVER Customer at Heart | Agility | Collaboration | Innovativeness Lend successfully using data analytics Trustworthy Embed in select financially relevant ecosystems Ensure cyber security and data confidentiality 8 TRANSFORMATION JOURNEYS บริการทุกระดับประทับใจ 11 K KASIKORNTHAI New Capabilities to Enable K-Strategy ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 8 Transformation Journeys are new capabilities to help "Empower Every Customer's Life and Business" To Empower Every Customer's Life and Business 1 Ecosystem Orchestrator & Harmonized Channel Orchestrating ecosystems with partners and providing an excellent experiences throughout customer journeys New Growth in Regional Market Exploring new growth by - Regional Payment for All "Better Me" Finance. 4 7 8 2 Intelligent Lending Leveraging customer data to offer personalized lending experience and achieve fair risk adjusted return 3 Proactive Risk & Compliance Management Proactively identifying potential risk and establishing loss prevention and detection Purposeful & Practical Leadership Data Analytics 5 Expanding data analytics capability to enhance business opportunity and operational efficiency Cyber Security & IT Resilience Enhancing comprehensive cyber security and IT capabilities Performing Talent and Agile Organization Modern World Class Technology Capability บริการทุกระดับประทับใจ 6 12 12#7K KASIKORNTHAI Composition of Growth: Loans by Business Moderate loan growth momentum in line with full-year target Loan Portfolio Structure ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Original Loan Growth Target (%) Announced on 24 October 2019 (No longer applicable) Loan Portfolio Bt bn 2,400 Consolidated 1,803 1,914 2,002 2,127 1,698 Corporate Amount (Bt bn) Dec 19 1H20 1H20 2020 Jun 20 Loan Growth Yield Range 2,000 - 1,600 36% 34% 36% (%YTD) (%) Loan Growth Target (%) (No longer applicable) ■ SME 30% 35% Corporate Loans 691 777 12.4% 3-5% 2-4% 1,200 SME Loans 672 721 7.3% Retail 5-7% 1-3% 349 800 399 369 35% 34° Retail Loans 556 570 2.6% 5-7% 9-11% Others 400 25% 24% 25% 28% 27% Other Loans 6% 5% 0 4% 4% 3% Total Loans 83 2,002 59 2,127 (29.4%) 6.2% 4.9% 4-6% 2016 2017 2018 2019 1H20 1H20 Note: * From time to time, the Bank has adjusted loan definitions based on loan portfolio management; thus, the latest loan base is not comparable with previous reports. 2020 Outlook Corporate Loans ■ Mainly from Commerce Consumer and Communication Industries SME Loans Retail Loans ■ Loan growth corresponded with slow pace of global and local economies. The bank assisted and supported customers' liquidity needs where appropriate, with a prudent approach ■ Retail loans grew mainly from Home Loans and Personal Loans ■ Credit Card fell due to seasonality amid loan repayments for tax- saving funds purchased last year-end and low spending impact from COVID-19 Loan Definition (more details on loans can be found in App. Page 68-70) ■ Support clients affected by economic slow down due to COVID-19 outbreak ■ Both long-term and short-term loans are still in demand from big corporates ■ Global trade and the geopolitical situation remain uncertain; local government spending and public investment will be the major drivers. Lending should organically grow with prudent consideration while still meeting customers' funding needs and aligning with any further government measures Support customers in need of financial services to cope with rapid economic change ■ Apply data analytics to enhance predictive model and credit process in order to lend intelligently with acceptable risk via traditional and digital channels ■ Organic growth target in-line with industry; lending thru data analytics and offers via assisted and unassisted channels to support financial solutions for all life stages where most relevant to customers' lifestyles and needs; maintain lead market position in key products ▪ Focus on new potential target customers with acceptable risk; predictive monitoring and strict control of loan portfolio quality Corporate Loans: Loans of KBank and KBank's Subsidiaries in Corporate Segments (annual sales turnover > Bt400mn) SME Loans: Loans of KBank and KBank's Subsidiaries in SME Segments (annual sales turnover ≤ Bt400mn) Retail Loans: Loans of KBank and KBank's Subsidiaries in Retail Segments Other Loans: Loans in Enterprise Risk Management Division (NPL + Performing Restructured Loans) and other loan types บริการทุกระดับประทับใจ 13 K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Composition of Growth: Net Fees and Non-interest Income June 2020 (Consolidated) Total Operating Income - net Non-interest Income Ratio and Net Fee Income Ratio (Bt bn) 200153.40 156.86 155.48 160.49 (+4%) (+2%) (-1%) (%) 50 (+3%) 42% 40% 37% 150- 79.23 40 36% 37% 36% 42% 40% 100- 1(+3% YOY) 30 25% 25% 25% 1 30% 23% 21% 30% 20 50 64% 58% 60% 63% I 70% 10 0 0 2016 2017 2018 2019 1H20* 2016 2017 Non-interest Income Ratio 2018 2019 1H20* ■Net Fee Income Ratio Net Interest Income Non-interest Income Non-interest Income Net Fee Income n ០ ៣៩ ៦ ឆ៩ឥ៩ឌខទ – (Bt bn) 70 63.73 (+2%) 62.70 (-2%) Other Operating Income 56.95 57.80 4% (Bt bn) (-9%) (+2%) Fee and Service Income - net 40 38.94 (+4%) 41.31 (+6%) 38.12 (-8%) 36.74 (-4%) Net Premium Earned - net 35 66% 67% 61% 64% 24.06 30 Dividend Income (-7% YoY) 20 16.90 5.48% YoY) 16% 5% Share of Profit from Investments on Equity Method 9% 0.3% 3% 6% 0.1 0.1% 4% 70% 15% 10 9.2% 10 6% 14% 13% 16% 15% -5 2016 2017 2018 2019 0.7% 8% 0.1% 18% 1% 1H20* Gain Investment 0 2016 2017 2018 2019 1H20* -Net Fee Income Ratio = Net Fee Income / Total Operating Income - net ■1H20 non-interest income accounted for 30% of total net operating income and net fee income accounted for 21%; non-interest income decreased 7% YoY, mainly from net fee dropped, and a decrease in insurance business ■Net fee income dropped 5.5% YoY, mainly due to loan-related fee recognition according to TFRS 9 and fee from card business Gain on financial instrument measured at FVTPL (Gain on Trading and FX transactions-Old) Note: Non-interest Income Ratio = Non-interest Income/Total Operating Income - net -Net Premium Earned - net Net Premium Earned less Underwriting Expense * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). ** The Bank restated the 1Q20 financial statements from the reclassification of investment in fund/ REIT to investments in FVOCI to comply with the Federation of Accounting Professions' announcement on 25 June 2020 and reclassification some items which did not impact to total assets, total liabilities and total equity. บริการทุกระดับประทับใจ 14#8K KASIKORNTHAI Asset Quality and Expected credit loss (Provision) June 2020 (Consolidated) Expected credit loss (Provision) During 1997 (Bt bn) Asian Crisis* 54 48 42 36 30 24 16.8 18 12 6 2.3 0 44.1 50.6 14.2 11.7 9.4 6.7 7.3 8.4 0.7 26.4 Coverage Ratio I (%) During 1997 Asian Crisis* 150 I 33.8 34.0 32.5 32.1 100 41.8 48.8 50 34.7 25.4 30.0 34.2 0 141.4 127.1 131.8 134.5 111.0 88.4 91.6. 130.0 130.9 160.6 148.5 148 € 155.7 1996 1997 1998 1999 2000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20191H20"* 1996 1997 1998 1999 2000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20191H20** Note: Provision referred to Impairment Loss on Loans and Debt Securities; from January 1, 2020 onwards based on TFRS9, provision refers to Expected Credit Loss During 1997 Asian Crisis* (%) 42.0 888 5050525050 45 40 723 35 31.7 30 23.5 NPL was peak at 287/42.3% in 1Q99 15 15.9 10 44 5.1 NPL Ratio and Credit Cost INPL ratio Credit Cost (bps) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Asset quality remains manageable NPL ratio in 1H20 was at 3.92%, with a coverage ratio of 155.68% 1H20 credit cost was 311 bps ■Adhere to a prudent financial policy; economic downturn from COVID-19 outbreak ■COVID-19 significantly impacts asset quality; however, relief measures help reduce short-term impact to asset quality. NPL can stay at not too high 900 level for now. The Bank has to 700 prepare for the end of relief measures 500 168 204 239 311 93 102 3.09 3.76 2.91 66 64 66 85 96 175 174 300 NPL Ratio by Business 2.45 14 2.16 2.11 2.24 2.70 3.32 3.30 3.34 3.65 3.92 100 Corporate Business SME Business -10 1996 1997 1998 1999 2000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20** Retail Business*** 2015 2016 2017 2018 2019 1H20 <2% <2% <2% <2% <2% <2% -3% -5% -5% -5% -6% <7% -2% 4% 4% <5% -4% -4% ** The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). *** NPL ratio in retail business, excluding 180 dpd (days past due) of credit card and consumer loans for peer comparison Notes: * Data in 1996-1997 is KBank only K KASIKORNTHAI ROA and ROE June 2020 (Consolidated) ROA บริการทุกระดับประทับใจ ROE ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK (%) (%) 24 2.5 20 2.0 16 1.49 13.23 1.5 1.20 1.27 1.20 12 10.24 10.61 9.9 1.0 8 0.56 4.72 0.5 4 0.0 2016 2017 2018 2019 1H20* 2016 2017 2018 2019 1H20* ROA (%) ROE (%) 115 15 2016 2017 2018 2019 1H19 1H20 1.49 1.20 1.27 1.20 1.25 0.56 0.87 1Q20** 2Q20 0.25 13.23 10.24 10.61 9.90 10.35 4.72 7.26 | 2.15 Note: * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). ** The Bank restated the 1Q20 financial statements from the reclassification of investment in fund/ REIT to investments in FVOCI to comply with the Federation of Accounting Professions' announcement on 25 June 2020 and reclassification some items which did not impact to total assets, total liabilities and total equity. บริการทุกระดับประทับใจ 16#9K KASIKORNTHAI Net Interest Margin June 2020 (Consolidated) (%) NIM 8.00 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Yield on Earnings Assets and Cost of Fund 5 5.73 6.00 5.45 5.29 5.21 4 3.52 5.11 Yield on Loans 3.44 3.39 3.31 3.34 4.55 4.37 4.27 4.19 3 3.98 Yield on Earnings Assets 4.00 2 1 2.00 1.32 1.22 1.19 1.23 Cost of Fund 0.88 0 2016 2017 2018 2019 1H20** Cost of Deposits* 1.18 1.11 1.11 1.14 0.80 0.00 2016 2017 2018 2019 1H20 ■NIM was 3.34% in 1H20, increased YoY mainly due to yield on loans from EIR (TFRS9) and lower FIDF cost of deposit despite negative impact from rate cut and asset quality trend High portion of CASA (80%) helped support low cost of fund 2016 2017 2018 2019 1H19 1H20 1Q20 2Q20 NIM (%) 3.52 3.44 3.39 3.31 3.30 3.34 3.49 3.22 Yield on Earnings Assets (%) 4.55 4.37 4.27 4.19 4.18 3.98 4.20 3.80 Yield on Loans (%) 5.73 5.45 5.29 5.21 5.26 5.11 5.37 4.91 Cost of Fund (%) 1.32 1.22 1.19 1.23 1.21 0.88 0.98 0.79 Cost of Deposits (%), incl DPA 1.18 1.11 1.11 1.14 1.13 0.80 0.87 0.74 Note: Cost of deposits including contributions to the Financial Institutions Development Fund (FIDF) and Deposit Protection Agency (DPA). * The FIDF fee is temporarily reduce from 0.46% to 0.23% for 2 years, according to the BOT announcement in the Royal Gazette, during January 2020 to December 2021. ** The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ K KASIKORNTHAI Cost to Income Ratio June 2020 (Consolidated) Cost to Income Ratio (%) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Cost to Average Assets Ratio (%) 843200 50 41.63 42.31 43.96 45.32 42.00 60 4 2.36 2.31 2.26 2.26 1.93 2 10 2016 2017 2018 2019 1H20* 0 2016 2017 2018 2019 1H20* 1H20 cost to income ratio was 42.00%; improved from both higher revenue growth and lower operating expenses; focus on cost management and productivity improvement Cost to Income Ratio (%) Cost to Average Assets Ratio (%) 2016 2017 2018 2019 1H19 1H20 41.63 2.36 42.31 2.31 43.96 45.32 43.89 42.00 1Q20** 45.94 2Q20 38.36 2.26 2.26 2.11 1.93 2.06 1.79 17 Note: * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). ** The Bank restated the 1Q20 financial statements from the reclassification of investment in fund/ REIT to investments in FVOCI to comply with the Federation of Accounting Professions' announcement on 25 June 2020. บริการทุกระดับประทับใจ 18#10K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Capital (Reported Number: Excluding Net Profit of Each Period) June 2020 (Consolidated) Bank only Basel III KASIKORNBANK FINANCIAL CONGLOMERATE* Basel III (%) 18.17 17.20 18.52 17.26 16.98 18.0 (%) 18.84 19.62 18.09 17.96 18.32 3.58 3.90 2.58 2.51 18.0 3.43 15.0 2.83 3.68 2.30 2.42 2.71 15.0 12.0 12.0 9.0 9.0 14.27 14.62 14.75 14.94 14.15 6.0 15.15 15.66 15.90 16.19 15.38 6.0 3.0 3.0 0.0 0.0 2016 2017 2018 2019 1H20** 2016 2017 2018 2019 1H20* ■Tier1 ■Tier2 ■ Tier1 ■Tier2 Capital adequacy remains sufficient to support business growth; maintained adequate Tier 1 ratio, as required under the Basel III and new requirements Bank only CAR (%), excluding net profit of each period Tier 1 (%), excluding net profit of each period KASIKORNBANK FINANCIAL CONGLOMERATE* CAR (%), excluding net profit of each period Tier 1 (%), excluding net profit of each period Basel III 2015 2016 2017 2018 2019 1H20 17.39 18.17 17.20 17.26 18.52 16.98 13.79 14.27 14.62 14.75 14.94 14.15 18.00 14.53 18.84 15.16 17.96 15.66 18.32 15.90 19.62 16.19 18.09 15.38 * KASIKORNBANK FINANCIAL CONGLOMERATE means the company under the Notification of the Bank of Thailand re: Consolidated Supervision, consisted of KBank, K Companies and subsidiaries operating in supporting KBank, Phethai Asset Management Co., Ltd. and other subsidiaries within the permitted scope from the BOT's to be financial conglomerate. Under Bank of Thailand regulations, net profit in the first half of the year is to be counted as capital after approval by the Board of Directors as per the Bank's regulations. Net profit in the second half of the year is also counted as capital after approval of the General Meeting of Shareholders. However, whenever a net loss occurs, the capital must be immediately reduced accordingly. ** The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). Note: K KASIKORNTHAI Dividend Dividend Per Share บริการทุกระดับประทับใจ ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Dividend Payout Ratio (Bt) 5.0 5.00 (%) 50 42.49 4.00 4.00 4.00 4.00 4.00 4.0 3.50 40 34.43* 31.88 32.14 27.83 29.40 3.00 27.00 3.0 30 26.96 2.50 2.50 2.50| 32.33 22.12 22.32 32.80 2.00 2.00 2.0 20 22.51 1.0 10 110 0.0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Interim Dividend 19 Dividend policy: both operating results and long-term returns to shareholders are taken into consideration in determining dividend payments, in order to ensure a sustainable and adequate capital level through the changing economic environment, the ongoing adoption of Basel III and new requirements Dividend Per Share (Bt) Dividend Payout Ratio (%) Note: 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2.00 31.88 2.00 32.33 2.50 2.50 2.50 3.00 3.50 4.00 4.00 4.00 4.00 4.00 5.00 42.49 32.14 27.00 22.12 22.32 22.51 27.83 26.96 32.80 29.40 34.43 *The Board of Directors' Meeting of KASIKORNBANK PCL. No. 1/2020, held on January 30, 2020 has approved the share repurchase project for financial management purposes with the number of shares to be repurchased not exceeding 23,932,601 shares or equal to the amount of not exceeding 1% of the total paid-up capital of the Bank and the maximum amount not exceeding Bt4,600mn. The share repurchase was conducted through the Stock Exchange of Thailand during February 14, 2020 to February 27, 2020. บริการทุกระดับประทับใจ 20 20#11K KASIKORNTHAI Summary ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■The K-Strategy: Customer Centricity remains our core philosophy with purpose to "Empower Every Customer's Life and Business" Balanced Growth: loans to grow carefully in line with economic conditions and loans relief measures; appropriate liquidity maintained; manageable asset quality supported by strong risk management capabilities; appropriate loan loss reserves; manageable cost to income ratio; appropriate ROE maintained ■ Adequate Capital: maintains adequate Tier 1 ratio, as required under Basel III amid COVID-19 especially after debt moratorium and remain sufficient for new requirements ■ Sustainable Development: conducts business with the foundation of Bank of Sustainability, and appropriate risk management and good corporate governance principles; striving to balance economic, social, and environmental dimensions to achieve goals and create sustainable long-term returns ■ Original Y2020 financial targets are no longer applicable due to uncertainty and high volatility caused by the COVID-19 pandemic; assumptions and corresponding trends are given without numeric financial targets บริการทุกระดับประทับใจ K KASIKORNTHAI Appendix ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 21 24 บริการทุกระดับประทับใจ 22 22#12K KASIKORNTHAI K KBank: Strategy บริการทุกระดับประทับใจ ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 23 23 KASIKORNTHAI Cost and Productivity Improvement Dynamic and flexible resource allocation to align with strategic direction and support new businesses e.g. ecosystem with partners, digital, AEC+3, and data-driven bank "Increasing spending effectiveness aligned with business priorities and desired value ■ Productivity improvement focusing on lean processes and waste management will be addressed and customized to culture in: Channel optimization IT investment and procurement effectiveness ■ Optimize branch & ATM network, including account planning, area planning, and relocation ☐ Improve asset utilization and optimize maintenance service /license costs Enhance digital on-boarding and migration Human resources optimization ■ Focus on lean organization with organizational design, workforce management, and re-training ■ Create organizational infrastructure to drive agile working environment and productivity improvement Develop IT operating model to reduce costs Operational process improvement ■ Drive customer migration to chat bot and self-service on K PLUS ■ Enhance cash handling optimization and centralization model ■ Streamline and digitize back office process บริการทุกระดับประทับใจ 24#13K KASIKORNTHAI Performance ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Success is driven by continuous growth in number of customers and K PLUS users; highest Net Promoter Score among banks in Thailand Number of Customers* (mn) K PLUS Users and Transactions** (mn) 15 10 20 20 16.4 17.1 17.6 250 15 15.4 14.3 255 5,188 8,477 1 10,000 6,960 8,000 6,000 10 12.1 3,644 3,052 10.0 4,000 13.4 1,646 11.1 7.3 711 2,000 5 4.6 2.6 0 0 0 2015 2016 2017 2018 2016 2017 2018 2019 1H20 Total Users 2019 1H19 Number of Transactions (RHS) 1H20 * Customers in Retail Business account for 93%, SME Business 7%, and Corporate Business less than 1% of customer portfolio ** Active users defined as minimum of 1 usage per month; 75% active users as of 1Q20 Net Promoter Score (NPS)*** 30 (#1 among Banks in Thailand) *** NPS Study 2019 surveyed by The Nielsen Company during July and August 2019, measuring the willingness of customers to recommend a company's products or services to others บริการทุกระดับประทับใจ 25 K KASIKORNTHAI New Capabilities to Enable K-Strategy ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 8 Transformation Journeys are new capabilities to help "Empower Every Customer's Life and Business" To Empower Every Customer's Life and Business 1 Ecosystem Orchestrator & Harmonized Channel Orchestrating ecosystems with partners and providing an excellent experiences throughout customer journeys New Growth in Regional Market Exploring new growth by - Regional Payment for All "Better Me" Finance. 4 7 8 2 Intelligent Lending Leveraging customer data to offer personalized lending experience and achieve fair risk adjusted return 3 Proactive Risk & Compliance Management Proactively identifying potential risk and establishing loss prevention and detection Purposeful & Practical Leadership Data Analytics 5 Expanding data analytics capability to enhance business opportunity and operational efficiency Cyber Security & IT Resilience Enhancing comprehensive cyber security and IT capabilities Performing Talent and Agile Organization Modern World Class Technology Capability บริการทุกระดับประทับใจ 6 26#14K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Ecosystem Orchestrator and Harmonized Channels ◉ Orchestrating an ecosystem with partners and providing excellence throughout the customer journey Developing presence where customers are with an excellent customer experience Mobile Payment Platform |支付宝 ALIPAY ELEVEN Partnership SAMYAN WeChatm JCB Amway Joint Venture for Co-Lending through LINE Platform LINE LINE Financial Corporate E-Commerce Platform/ Shopping Platform/ Lifestyle Platform SME Customers LAZ Shopee CENTRAL JUCOTH Thel E-Wallet Digital Workplace University Application Blockchain Technology Retail ptt Grab Microsoft Venture Capital* eventpop конколон OOKB Grab IN Jitta WRIMATE aspire digio Sendo faystay sawaon NIUM Note: * Direct investments via Beacon Venture Capital, a wholly-owned venture capital fund of KBank (total fund size of USD135mn to invest in early to growth-stage technology startups covering not only FinTech but also consumer internet and enterprise technology), aiming to leverage new technology from startups to support KBank's businesses; Beacon Venture Capital also has indirect investment through VC Funds to enable KBank to leapfrog into the world arena and stay abreast of innovative technologies and business models in other regions (e.g. Partnered as an LP with VC funds managed by Dymon Asia Capital, Vertex Ventures, Nyca, Jerusalem Venture Partners and China Renaissance) บริการทุกระดับประทับใจ 27 27 K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Harmonized Channels: Domestic Channels and No. of Transactions Branch E-Machine (ATM/RCM*) 1,026 11,891 11,985 958 886 880 10,973 10,989 11,000 836 2017 2018 2019 1H20 2020 T 2017 2018 2019 1H20 2020T Recycle Cash Machine Mobile Banking Users (mn) 15.0 13.4 12.1 10.0 7.3 2017 2018 2019 1H20 2020T Number of Transactions** 1.2bn K+ 1.5bn 2.0bn 2.7bn 1.7bn 11% 18% 5% 22% 28% Branch E-Machine 37% 48% 59% 58% 68% 76% Mobile Banking 44% 30% 2016 2017 2018 2019 1H20 *Transaction includes only cash deposit, cash withdrawal, payment and transfer บริการทุกระดับประทับใจ 28 28#15K KASIKORNTHAI Sample of Domestic Channels Branch K-Lobby ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Digital Banking www.nraming Branch @Department Stores THE WISDOM Lounge ATM ATM ATM ATM K+ An electronic banking service with multiple functions such as K-ATM, K-CDM (Cash Deposit Machines), and K-PUM (Passbook Update Machine). K-Lobby is available to serve customers both in front of branch offices and as stand-alone machines MADSPACE รู้ใจ ทุกคน มากขึ้น Digital Banking: includes: K PLUS (Mobile Banking Application ) .K PLUS SHOP • K-Cyber Service (K-Cyber, K-Cyber Trade and K-Cyber Invest) K-Payment Gateway • K-PowerP@y (mPOS) Community Branch (K Park) MPDSPACE THE WISDOM @ ICON SIAM An exclusive center providing a full range of services and facilities to High Net Worth Individuals and Affluent segments MADSPACE @ Central World One-stop service for online merchants, providing knowledge and tools for online businesses via KBank solutions and partners บริการทุกระดับประทับใจ K Park @ PTT Station K Park provides meeting space, a kid zone, parcel delivery, and banking services all in one place. It is designed to be welcoming and match the everyday lifestyle of customers in each community area 29 29 K KASIKORNTHAI Intelligent Lending ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Leveraging customer data to offer personalized lending experience and achieve fair risk adjusted return End to End Credit Journey Target Port Lead Generation Reach Marketing & Offering Credit Assessment Monitoring & Collection 0000 0000 Expected Outcome Wider Customer Reach Higher Conversion Optimized Risk Return Faster Time to Market บริการทุกระดับประทับใจ 30#16K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Proactive risk and compliance management helps sustain growth • • • Value Enabler Partner with business and provide effective integrated risk solutions Predictive and integrated customer segment-based credit analytics Effective asset quality management focusing on maximizing recovery Intelligent fraud management in all key business processes Effective risk management execution for business partners and 3rd parties ☐ Key Capabilities Credit risk analytics & integrated credit portfolio planning & monitoring Enhanced fraud analytics & incident management Customer data protection ■ Organization-wide prudent risk culture Value Protector Strengthen & secure our business to be resilient and sustainable Prudent risk-based provision and capital management • • • Early error detection through effective quality assurance and fraud management Effective and proactive compliance management Customer data governance and management Agile way of working and delivering integrated risk solutions บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Growth in Regional Markets: Asset-Light Regional Expansion into AEC+3 ☐ Strategically focusing on AEC+3 markets, KBank pursues an integrated regional operating model: physical footprint, digital platform, and regional partnerships Note: South Korea China Lao PDR. Myanmar Cambodia Japan Vietnam Indonesia - Two subsidiary banks: KASIKORNTHAI BANK (Lao PDR) with two branches in Ponesinuan and Lane Xang, KASIKORNBANK (CHINA) with three branches in Shenzhen, Chengdu, Shanghai and one sub-branch in Long Gang - Three international branches: Cayman Islands, Hong Kong, and Phnom Penh Seven representative offices: Beijing, Kunming, Tokyo, Yangon, Ho Chi Minh, Hanoi, and Jakarta - Two strategic partners: Maspion Bank in Indonesia and Ayeyawaddy Farmers Development Bank (A Bank) in Myanmar - Global partners with 84 banks in 17 countries: 52 Japanese partner banks; 10 Chinese partner banks; 1 Hong Kong bank; 3 Korean partner banks; 13 ASEAN partner banks (in Vietnam, Indonesia, Lao PDR, Cambodia, Philippines, Brunei, Malaysia, Singapore and Myanmar); 4 European regional banks (in Germany, Italy and Russia) and 1 Indian Bank บริการทุกระดับประทับใจ Physical Footprint Lao PDR. Cambodia Myanmar Vietnam Indonesia Japan China Digital Platform X-Border Multi-Currency Settlement X-Border THB Direct Settlement X-Border Retail Payment Partnership AEC CB BANK VietinBanks A sea bank BCA BANK MASPION Hana Bank A+ HACHUN BARK AYA Bank 靜岡銀行 CHUGOKU BANK KEZ BANK •百十四行 Maybank ...and others 31 31 32 32#17K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank's Regional Digital Expansion via 3-Track Strategy To achieve rapid regional digital expansion in AEC+3, KBank will use 3-Track Strategy whereby each track leverages each other to build growth momentum and accelerate customer base & financial return Track III: Industry Solution Objectives Results Mass Customer Acquisition & Engagement Customer Base & 2020 Strategic Actions KV KASIKORN VISION & Ecosystem Track II: Transactional & Digital Banking Track I: Conventional Banking Leverage partnerships to scale by collaborating & investing to provide seamless digital financial services Regional Digital Payment & Settlement Capture fees & attract deposits by becoming main operating bank Establish Footprints Acquire banking license in targeted market and enhance banking service capabilities based on customer & market understanding Behavioral Data Fee, Float & Transaction Data Interest / Fee income & Banking Foundation บริการทุกระดับประทับใจ Accelerate KVision Partnership Build Cross-Border & Host Country Transactional Banking Develop Product Localization Implement Establish Bank Bank Transformation Operation K KASIKORNTHAI Data Analytics ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■ To create trust and transparency and deliver value to customers as a data-driven bank with data & analytics capabilities Increase new revenue or cost saving from Data & Analytics Treat data as valuable asset Adopt data & analytics thinking in day-to-day business decisions Comply with regulatory requirements (PDPA, BOT, etc.) and data security standards Data Analytics Use Governance & Case Data Management Talent & Data Driven DNA Data Driven Bank with Trust and Transparency Data Availability & Enrichment Compliance & Security Data & Analytics Tools Architecture Acquire data & assemble data infrastructure Benefits to key stakeholders, including customers, business partners, internal users, and regulators Build tools for data democratization Modernize data architecture - flexible multi-speed and scalable to meet business demand Note: PDPA Thailand's Personal Data Protection Act; BOT = Bank of Thailand บริการทุกระดับประทับใจ 33 34#18K KASIKORNTHAI Cyber Security and IT Resilience ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Enhancing comprehensive cyber security and IT capabilities; addressing and aligning critical capabilities to fortify cyber security Protect KBank's Cyber Assets & Reputation and Deliver Security, Resilience, & Trustworthiness Vision Statement Customer Promise Protect Customer Assets with KBank Provide secured services Ensure care & timely Strategy Strategic Capabilities INTEGRATED PREVENTION Align and integrate business, IT, and governance functions for prevention programs including people, processes, and technology 1 Effective Risk Identification 2 PROACTIVE DETECTION Real-time data analytics on cyber events with threat intelligence integration to deliver situation awareness & early warning capabilities Advanced Threat Prevention 3 response for any cyber incidents Situation Awareness & CARE & TIMELY RESPONSE Ensure readiness, completeness, timely response and recovery to all stakeholders Threat Detection 4 Effective Incident Response & Recovery 5 Cyber Hygiene Culture บริการทุกระดับประทับใจ 35 55 K KASIKORNTHAI Performing Talent and Agile Organization ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■ People-focused strategy promotes “Performing Talent" and "Agile Organization" "PERFORMING TALENT" TALENT MANAGEMENT Select only the best talent who fit with our culture and business aspirations to continue growing with us LEADERSHIP Create purposeful and practical leadership in all levels of leaders to be a key role model of culture shift Customer at Heart CAPABILITY DEVELOPMENT Everyone is able to develop based on his/her individual needs and business needs PERFORMANCE & REWARD Be in top tier in the market to pay "A Players" at the top point with well-structured performance management system Collaboration PURPOSEFUL & PRACTICAL LEADERSHIP Innovativeness Agility ORGANIZATION DESIGN Promote team structure to work across lines of command with clear rules of engagement among tribes towards agile organization PEOPLE EMPOWERMENT Empower people to manage their lives with accountability, speed, and transparency WORKFORCE PLANNING Plan to motivate sufficient workforce to value creating roles and eliminating waste in their jobs COMMU- NICATION Embed mindset and behavior that lead us to achieve organizational purpose "AGILE ORGANIZATION" บริการทุกระดับประทับใจ 36#19K ธนาคารกสิกรไทย KASIKORNTHAI 开泰银行 KASIKORNBANK KASIKORN BUSINESS - TECHNOLOGY GROUP (KBTG) Aiming to build modern world-class technology, allowing KBank to be the Top Regional Financial Provider Breakthrough Innovation ■ Innovation platform Cognitive banking ■ Deep Tech commercialization Partnership co-creation ■ Innovation runway One KBTG & Human Experience ■ To become Employer of Choice in Southeast Asia To be a process-oriented organization in alignment with technological innovation while developing effectiveness and sustainability from project initiation through operation management Strategic Dynamic Process KBTG KASIKORN BUSINESS-TECHNOLOGY GROUP BEST TECH ORGANIZATION in Southeast Asia BY 2022 A Architecture Modernization Program + Infrastructure Modernization Customer-centric Cognitive analytics Harmonized 020 channels Open banking API Application modernization Solid data foundation ■ Stable, secure, scalable Hybrid multi-cloud Regional infrastructure Faster, more secure, and valuing quality Scaling Agile, DevSecOps, CICD Note: 020 Online to Offline/ Offline to Online; API = Application Programming Interface DevSecOps = Development, Security, and Operation; CICD = Continuous Integration and Continuous Delivery บริการทุกระดับประทับใจ 37 37 K KASIKORNTHAI KBTG Technology Towards a Sustainable Society: Paperless, Cashless and Contactless DESIGN MOBILE PAYMENT PLATFORM BUSINESS UX DESIGN PLATFORM BUSINESS MACHINE LENDING MACHINE LENDING BIOMETRICS KBTG KASIKORN BUSINESS-TECHNOLOGY DROUP MOBILE PAYMENT BLOCKCHAIN OPEN API BIOMETRICS OPEN API BLOCKCHAIN Note: UX = User Experience; API = Application Programming Interface NLP Natural Language Programming MACHINE COMMERCE MACHINE COMMERCE Thai NPL Thai NLP ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Set Up World-Class UX Design Company, Beacon Interface, to develop innovative mobile banking platform for everyone, enabling them to conduct financial transactions with ease and security K PLUS Mobile Banking: platform for easy financial transactions, mobile payments, and lifestyle banking; capable of add-on services from external parties via open API and offering promotions, privileges, and deals for K PLUS customers MAKE by KBank: plans to launch MAKE by KBank - a mobile banking application for a new generation - at the end of 2020 KhunThong: social chatbot with seamless payment experience Machine Commerce: leverage customer data understanding and machine learning techniques to tailor personalized product offerings/recommendations to target groups via K PLUS Platform Eatable: launch a novel platform for food ordering, maximizing flexibility for restaurants and their customers in the 4.0 era Thai NLP: leverage machine learning to enable interactions between computers and human (natural) language with a focus on the Thai language, e.g. chatbot, social listening Blockchain L/G on Hyperledger Platform by KBTG OriginCert: trusted platform to ensure integrity of paperless documents; initially to certify documents on Letters of Guarantee (L/G), including request, issuing, and notice of expiration Open API Access to Support FinTech and Startups: to open connection to create extensive innovative services for customers, e.g. launching API linkage to FlowAccount on K PLUS SME mobile application บริการทุกระดับประทับใจ 38#20K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBTG Technology - Examples of Notable Innovations in 2020 Towards a Sustainable Society: Paperless, Cashless, and Contactless MAKE by KBank* A mobile banking application designed specifically for a new generation increasingly reliant on mobile banking for the freedom it gives to personalize financial management. 20,000.00 My Cloud Pocket 1,000.00 + Росии +1.000.00 12,500.00 35.000.00 make by KBank POP PAY Transfer money via Bluetooth Eatable +1.000.00 CHAT BANKING Keep transaction history in chat format CLOUD POCKET Allocate money to many pockets within one account number KhunThong Social chatbot helping friends settle expenses within a chat for a seamless payment experience. Platform responding to both restaurants and diners, providing options for takeout and food delivery. in Netflix CoM 1,200 טבחים เหรัญญิก พันธุ์ใหม่ในก้น! @KhunThong LINE Official Account 3D Restaurant Eatable รับได้ทุกอย่าง Dine In Dine Out Delivery Note: * MAKE by KBank application trial launched on July 23, 2020; full version will be available to public by the end of 2020. บริการทุกระดับประทับใจ k KASIKORNTHAI KBTG Structure ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Eatable 39 กสิกรเทคโนโลยีกรุ๊ปเซเครเทเรียต ***KASIKORN TECHNOLOGY GROUP SECRETARIAT กสิกร แล็บส์ กสิกร ซอฟต์ 开泰研发 KASIKORN LABS 开票软件 KASIKORN SOFT ■ Idea Creation Create the Future ■ Software Development to Support Innovation and Business Requirements Generate Business Value A Bridge between KBank and KASIKORN BUSINESS - TECHNOLOGY GROUP ■ Group's Control Structure Enable Seamless Integration กสิกร โปร KASIKORN PRO ■ Control Infrastructure Resources for the Change, the Run, and the Gone Ensure Service Continuity กสิกร เซิร์ฟ 开吞服务 KASIKORN SERVE ■ Center of Excellence for Technical Resource Pool and Service* Deliver Service Excellence กสิกร เอก 开都爱码慈有限公司 KASKORN X ■Technology Research and Innovation Labs Technology Research and Innovation Labs Note: - KASIKORN BUSINESS - TECHNOLOGY GROUP established with 5 companies, as a wholly-owned subsidiary of KASIKORNBANK; included in the KASIKORNBANK FINANICIAL CONGLOMERATE, as approved by the BOT in October 2015 - Registered capital in each company at Bt5mn, except for KASIKORN SERVE at Bt10mn - KASIKORN SERVE changed names from PROGRESS SOFTWARE COMPANY LIMITED; established in March 1993 บริการทุกระดับประทับใจ 40 40#21K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBTG: K-Stadium, Innovation Center and K+ Building K KASIKORNTHAI BIG BELL 05 04 ADAS RONG K K+ K-Stadium at KBTG Main Building K+ Building: City-based KBTG office with co-working spaces IK PLUS Innovation Center at KBTG Main Building Creative Box for small meeting at KBTG Main Building K+ Building: City-based KBTG office with co-working spaces บริการทุกระดับประทับใจ KBank: Business Highlights ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 41 บริการทุกระดับประทับใจ 42#22K KASIKORNTHAI Customer Segments Corporate Business Multi-Corporate Business Large Corporate Business Company with annual sales >Bt5,000mn ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Company with annual sales >Bt400mn to Bt5,000mn SME Business Retail Business Medium Business Small & Micro Business High Net Worth Individual Affluent Individual or company with annual sales >Bt50mn to Bt400mn Individual or company with annual sales ≤ Bt50mn, and with commercial credit limit Bt15mn Middle Income Mass Individual wealth with KBank and its wholly-owned subsidiaries* > Bt50mn Individual wealth with KBank and its wholly-owned subsidiaries* ≥ Bt10mn to < Bt50mn Individual wealth with KBank and its wholly-owned subsidiaries* ≥ Bt15,000 to < Bt10mn Individual wealth with KBank and its wholly-owned subsidiaries* < Bt15,000 Customer-centric strategy: offering a full array of financial solutions and a satisfying experience to our customers ➤ Synergistic portfolio management by monitoring eight customer segments ➤ Offer financial solutions from among KBank, its wholly-owned subsidiaries, and the insurance company Make significant progress towards long-term aspirations; performance on track Note: *Wealth with KBank and its wholly-owned subsidiaries is defined as savings and investments, such as deposit products with KBank, mutual funds with KAsset; or the monthly income of an individual customer บริการทุกระดับประทับใจ 43 K KASIKORNTHAI Revenue by Business June 2020 (Consolidated) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Loans Portfolio structure Non-interest Income * Retail Business Corporate Business (27.1%) (38.1%) Average Yield: 5-7% Average Yield: 3-5% Retail Business (51.1%) SME Business (34.9%) Average Yield: 5-7% Corporate Business (30.5%) SME Business (18.4%) * Non-interest income excludes capital market business, treasury business and others Note: Loan portion and loan yield of each customer segment includes loans from the Enterprise Risk Management Division (NPL + Performing Restructured Loans); figures are not comparable with loan data in other pages * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 44#23K KASIKORNTHAI Business Direction ■ Strategic Imperatives Lend successfully using data analytics Embed in select financially relevant ecosystems Ensure cyber security and data confidentiality Corporate Business Trusted partner to enrich customer's businesses with best in class financial services and solutions Best funding solutions SME Business Bank for SME Customers Integrated business solutions, both financial and non-financial Digital banking for SME Best transaction banking and breakthrough initiator ■ Data Analytic Lending World Business Regional Digital Bank through 3-Track Regional Digital Expansion Track I: Conventional Banking - acquire banking license & offer analytic-based lending in CLMVI and China ■ Track II: Transactional and Digital Banking - digitize banking channel/services, become preferred operating bank and develop analytic capabilities Track III: Industry Solution & Ecosystem - provide digital platform for beyond banking solutions and own customers' accessibility Note: CLMVI = Cambodia, Laos, Myanmar, Vietnam, and Indonesia ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Retail Business Best Customer-Centric Bank Ecosystem orchestrator and harmonized channel to deliver anytime, anywhere experience Data-driven offerings, especially consumer finance Private Banking Group International Comprehensive Wealth Management Services Cooperate with Lombard Odier to raise service and product standards to international levels " ■ Provide integrated wealth planning services, advising families on wealth management, continuity, and growth Enhance use of technology to improve client experience Build comprehensive client insights from data-mining บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Corporate Business: Performance and Market Position Multi-Corporate Large Corporate Business Medium Business Small and Micro Business High Net Worth Individual Affluent Business Main Bank Status* Middle Income Mass Corporate Bond Underwriting 34% 30% 30% 23% 24% 25% 26% 26% 27% 22% 25% 20% 17% 16% 17% 17% 20% 19% 14% 20% (#1) (#1) (#1) (#1) (#1) (#1) (#1) (#1) 10% 10% 11% (#3) (#2) (#2) (#3) (#1) (#4) (#2) (#2) (#1) 0% 0% 2012 2013 2014 2015 2016 2017 2018 2019 1H20 2009 2010 2011 2012 2013 2014 2016 2018 Source: KBank Customer Survey Source: The Thai Bond Market Association (ThaiBMA) Performance and Market Position ■Main Bank Status: maintained #1 ranking in 2018 ■ Corporate Bond Underwriting: ranked #1 with 19% market share in 1H20 ■ Transaction Services: top player in transactional banking services Cash Management Services: MB** 24% market share in 2018 (#1) / CB** 24% market share in 2018 (#2) Trade Finance: MB** 27% market share in 2018 (#1) / CB** 32% market share in 2018 (#1) ■Industrial Expertise: leverage capability in Utility, Real Estate, Transportation, Communication, and Commerce Note: *Since 2014, Corporate and SME Business main bank status is reported every two years Main Bank Status = % of customers in the market who use KBank and its wholly-owned subsidiaries as their main operating bank and/or main savings and investment bank and/or main borrowing bank ** MB = Multi-Corporate Business, CB = Large Corporate Business บริการทุกระดับประทับใจ 45 46#24K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK SME Business: Performance and Market Position Multi-Corporate Large Corporate Business Medium Business Small and Micro Business High Net Worth Individual Affluent Middle Income Mass Business #1 in Market Share by Value* #1 in Main Bank Status* 30% 30% 30% 30% 31% 30% 28% 40% 35% 28% 29% 30% 29% 31% 30% 20% (#1) (#1) (#1) (#1) (#1) (#1) (#1) (#1) (#1) (#1) (#1) (#1) 20% 10% 10% 0% 2011 2012 2013 2014 Performance and Market Position 2016 Source: KBank Customer Survey 2018 0% 2011 2012 2013 2014 2016 Source: KBank Customer Survey 2018 ■Main Bank Status: improved main bank status and strengthened #1 position ■Market Share: 31% market share; maintained #1 position ■ Market Position: strengthened #1 position in SME market - "Bank for SMEs"; targeted to be SME market leader in all areas Only bank to offer comprehensive solutions to SMEs through K SME program (launched in 2006, with a total of 24 classes and about 14,000 participants so far and 16 online courses with over 40,000 views in 2019),K SME Knowledge Center (established in 2009) and MADHUB (launched in 2019, providing one-stop services for online sellers: MADCARD, MADFUND, MADDEAL, MADCOURSE, MADSPACE and MADVISOR) Note: SME Business in Thailand accounts for 43.0% of Thailand's GDP, or Bt7.01trn (as of December 2018); supported by the government to become a key factor in economic and social growth (Source: The Office of Small and Medium Enterprises Promotion or OSMEP) - Market Share by Value = share of revenue (derived from both credit and non-credit products) that each bank gains from the market Main Bank Status = % of customers in the market who use KBank and its wholly-owned subsidiaries as their main operating bank and/or main savings and investment bank and/or main borrowing bank * Since 2014, corporate and SME business main bank status and market share are reported every two years ** Market share by value and main bank status in 2018 may not be comparable with those in previous years due to a new SME population base covering more SMEs with better data availability บริการทุกระดับประทับใจ 47 K KASIKORNTHAI Retail Business: Performance and Market Position Multi-Corporate Business Large Corporate Business Medium Business Bancassurance* (New Business, Total and Renewal Premium) Small and Micro High Net Worth Business Individual #1 in Mutual Fund (KAsset) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Affluent Middle Income Mass Mortgage Loan Leader in Renewal and Ranked #2 in (% Market Share) 35% 28.6% 29.7% 28.1% 30% - 27.8% 27.8% 28.5% 24.4% 23.8% 25% 20% 15.8% 15% 10% 5% 0% Total & New Business Premiums (% Market Share) Ranked #1 in Mutual Fund AUM (KAsset) (% Market Share) Maintaining Top 3 with good quality portfolio 30% 24.8% 23.0% 20.1% 10% 7.4% 8.6% 21.4% 21.2% 22.1% 20.2% 20.5% 7.4% 20.1% 7.4% 7.7% 19.3% 20% 15.6% 5% 10% (#1) (#1) (#1) (#1) (#1) (#3) (#3) (#3) (#3) (#3) 2016 2017 2018 2019 1H20 ■New Business Total Premium Renewal Premium Performance and Market Position 0% 0% 2016 2017 2018 2019 1H20 2016 2017 2018 2019 1H20 Strong Growth in Retail Segment: Higher growth than market size in retail customers. KBank's retail customers grew 5% YoY in 1H20 against zero market growth. Bancassurance: MTL ranked #1 in Renewal Premium with 21.4% market share in 1H20, and also ranked #2 in new business and total premiums with 15.6%, and 19.3% market share respectively. A variety of life and non-life products were offered to customers, together with an alternative digital channel via K PLUS. Moreover, free insurance coverage was offered for illness or death from the COVID-19 outbreak during 1Q20 to K PLUS customers who registered to receive the offer via LINE KBank Live. Fund Management Services Mutual Funds: KAsset maintaining #1 position since 2010, with highest market share at 22.1% in 1H20; recognized with three awards from Morning Star (Thailand) Co., Ltd.: Best Fund House - Domestic Equity, Best Retirement Mutual Fund - Equity for K Equity Retirement Mutual Fund (KEQRMF), and Best Long-Term Equity Fund for K 20 Select Long-term Equity Fund (K20SLTF). Mortgage Loans: ranked in top 3, with 8.6% market share in 1H20, supported by expansion into new groups of high potential customers, conservative growth together with building stronger partner relationships, and maintaining good quality portfolio. Credit Cards: ➤ Purchase spending: ranked #1, with 19.0% market share in 1H20. Number of cards: ranked #2, with 12.6% market share in 1H20. ▸ Card-accepting merchant services (online & offline platforms): ranked #1, with approximately 30% market share by sales volume in 1H20. Debit Cards: ➤ #1 in total debit card spending with 43% market share in 5M20; maintaining top position by providing functions, features, security, and benefits to match customer lifestyles ➤ Variety of cards and campaigns offered to promote greater card spending in several categories, such as travelling, online shopping, and food delivery, including attractive cards with privileges for specific groups; i.e. K-Provincial Debit Card (Nakhon Nayok), MADCARD for Kerry Express, JOURNEY Card, and KBank x BLACKPINK Card. Note: * Total Premium = New Business Premium (NBP) + Renewal Premium; New Business Premium = First Year Premium (FYP) + Single Premium (SP) บริการทุกระดับประทับใจ 48#25K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Private Banking Group: Performance and Market Position Multi-Corporate Business Large Corporate Business Medium Business Small and Micro Business High Net Worth Individual* Affluent Market Share (Market Penetration) Middle Income Assets Under Management (AUM) 36% 35% 34% 33% 32% 32% (Bt bn) 35% 750 34% 34% 34% 34% (#1) 700 687 684 677 729 717 31% 30% 2015 2016 2017 2018 2019 1H20 650 2016 2017 2018 2019 1H20 Source: Private Banking Group (market share by number of customers) Performance and Market Position ■ Market Penetration: ranked #1 with 35% market share (11,732 customers) and Bt729bn AUM in 1H20 ■AUM Breakdown: Investment 62% and Deposit 38% ■ Focus Customers (Type of Customer): ➤ Sophisticated customers (over 70% of total customers); Non-Sophisticated customers ■Product Types and Services: Mass Collaborate with Lombard Odier to develop innovative products; build capability via staff trainings and regular workshops; offer advisory services with close CIO collaborations; and offer referral offshore investment services ➤ Key product and services: . . Financial Products and Services: Investment Advisory Non-Financial Products and Services: Family Wealth Planning & Real Estate Others: Financial Event & Privilege Note: * High Net Worth Individual = Individual wealth with KBank and its wholly-owned subsidiaries > Bt50mn บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank: Risk and Credit Management 49 บริการทุกระดับประทับใจ 50#26K KASIKORNTHAI KBank Risk Management Structure ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■The Bank's organization is structured to facilitate all aspects of risk management; each business unit's responsibilities and segregation of duties are clearly identified in accordance with good internal-control practices Board of Directors Risk Oversight Committee Audit Committee Operating Committee Credit Risk Management Sub-committee Credit Process Management Sub-committee Asset and Liabilities Management Sub-committee Market Risk Management Sub-committee Capital Management Sub-committee Operational Risk Sub-committee Business Continuity Management Sub-committee Information Technology Strategy Sub-committee Digital Oriented Risk, Data and Cyber Security - and IT Risk Management Sub-committee ■ Approve risk appetite and all risk management policies and guidelines ■ Oversee effectiveness of consolidated risk management framework ■ Ensure effectiveness of overall risk management of the financial conglomerate ■ Establish risk management policies and risk appetites. Set risk limits for significant aspects of the various risks ■ Formulate strategy for the organization and resources to be used for the risk management operation, in line with the risk management policy. This strategy must enable the effective analysis, assessment, evaluation, and monitoring of the risk management system ■Credit Risk Management Sub-committee and Corporate Governance Committee oversee project financing requests that could have adverse impacts on the environment and society Business Units CBS/DNW/PBG/ CMB/ IBB/ WBG/ STA/TBG/CPD/ TS/KBTG/CSF Risk Management and Control Function ERM Internal Audit ADD ■Business units are responsible for continuous and active management of all relevant risk exposure, to be in line with its returns and risk appetite ■Risk management is responsible for providing independent and objective views on specific risk-bearing activities to safeguard the integrity of the entire risk process. Control units are set to ensure that risk levels are in line with our risk appetite ■Internal Audit is independent and responsible for evaluation to add value and improve the effectiveness of risk management, control, and governance processes of the Bank and its subsidiaries CBS Corporate Business Division, DNW = Distribution Network Division, PBG = Private Banking Group, CMB = Capital Markets Business Division, IBB= Investment Banking Business Division, WBG = World Business Group, STA=Strategy and Analytics Division, TBG = Transaction Banking Division, CPD= Credit Products Division, TS = Central Treasury Department, CSF=Customer Service Fulfillment Division, KTBG = KASIKORN BUSINESS - TECHNOLOGY GROUP, ERM = Enterprise Risk Management Division, ADD=Audit Division บริการทุกระดับประทับใจ 51 K KASIKORNTHAI KBank Credit Risk Management Process ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK The Bank continues to enhance credit risk management processes to promote risk strategies with justified risk-return tradeoff within the rapidly changing economic environment Portfolio Management ■ Determine portfolio-by-design taking into account risk-adjusted return trade-off ■Manage portfolio according to the Bank's risk appetite and concentration risk management (Country, Industry, Large Customer Group) ■ Perform stress testing to identify impacts to portfolio and proactively prepare appropriate management actions Origination Monitoring Collection & Recovery ■ Enhance decision making/support tools for more efficient return and risk evaluation ■ Setup specific prescreening criteria for potential industries ■ Enhance customer income validation process ■ Monitor customer behavior and detect early warning signs ■Leverage National Credit Bureau information for effective credit monitoring ■ Ensure credit condition compliance (e.g. insurance, capital injection, project progress) ■Take prompt action to prevent credit deterioration บริการทุกระดับประทับใจ ■ Efficient collection and follow-up of customers with late payments ■Restructure viable customers to prevent NPLs ■Foreclose pledged assets to recover loan loss 52 52#27Post Approval Approval Process k KASIKORNTHAI KBank Credit Approval Process Corporate Credit Underwriting Dept. Policy Lending ⚫ Sufficiency of cash flow • Growth trends and ability to compete • Management experience and depth • Leverage, Liquidity, and Asset Quality ⚫ Credit Risk Mitigation • Facilities Structure SME (Medium) SME (Small & Micro) Retails (Housing) SME Credit and Housing Loan Approval Dept. Formula Lending Application Score ⚫ FICO Score ⚫ Bureau information/Credit history ⚫ Debt service capacity ⚫ LTV ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Retail (Unsecured Loans) Payment Service Fulfillment Department Formula Lending ⚫ Application Score • FICO Score ⚫ Bureau information/Credit history ⚫ Debt service capacity ⚫ Legal document • Limit set up Credit Service Fulfillment Dept. Bank-wide Risk Asset Review Payment Service Fulfillment Department ⚫ Legal document • Limit set up • Customer Review by Relationship Manager (RM) ⚫ Credit Portfolio Monitoring Unit to facilitate RM in customer monitoring • Credit Clinic Note: FICO Fair Isaac Corporation Asset Quality Management Operation Dept. • Automated collection system • Efficiently utilize available behavior scoring and collection tools i.e. SMS, automated letter generation, phone บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank Credit Risk Management Process: Collection and Recovery Collection & Recovery Flow ■ Efficient collection and follow-up of customers with late payments ■ Restructure viable customers to prevent NPLs ■Foreclose pledged assets to recover loan loss Debt Resolutions Performing Loans Process Non-Performing Loans → Move to Better Status Move to Worsen Status Litigation Process (More information on Page 55) Performing Loans* Debt Collections Rescheduled Loans* (Financial Aid Program) Repayment of Rescheduled/ Loans with DPD > 1 day go to debt collection stage Restructured Loans (Not classified as NPL) Restructured Term NPL** Relapsed NPL Write-off NPL Sales Note: * Rescheduled Loans are loans (no passed due date) that have changed payment conditions and not incurred losses. (Loans in the Financial Aid Program is a part of Rescheduled Loans) * Financial Aid Program helps customers during the bad macro business condition such as the big flood in 2011 and the political unrest in 2014 * Performing loans = Pass Loans (loans passing the due date by less than 1 month) and Special Mention Loans (loans passing the due date by more than 1 month but not over 3 months) ** NPLs = Non-performing Loans loans passing the due date by more than 3 months = Sub-standard Loans, Doubtful Loans, Doubtful of Loss Loans, and restructured loans classified as NPL บริการทุกระดับประทับใจ 54 54 53#28• K KASIKORNTHAI Litigation Process Litigation process in Thailand takes about 2-3 years Litigation Process Under Negotiation ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Period Negotiate, await approval, document preparation & lawyer process Approximately 2 months Pre-court (Notice) Issue notice & court filing Approximately 2 months In Court Trial / wait for court ruling Execution Collect payment ruled by court or foreclose Public Auction Liquidation process บริการทุกระดับประทับใจ Approximately 9-18 months Approximately 3 months Approximately 6-9 months K KASIKORNTHAI KBank Credit Cost Calculation Credit Cost Credit Cost = Provisioning Expense Average Loans Provisioning Expense = (Probability of Default (PD), Loss Given Default (LGD), Exposure at Default (EAD)) Provisioning expense largely depends on PD, which is driven by the stage of the economy ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Probability of Default (PD) Model Calibration ■High historical default rate in bad year higher provision in following year 1) Observe Historical Default Rates: Historical default rates over business cycle are observed 2) Calibrate PD Model The PDs are calibrated based on historical default rates 3) Apply PDs to Calculate Provisioning Expense Provisioning Expense = ƒ (PD, LGD, EAD) PD+= f (Historical Default Rates (DRT-1, DRT-2, ..., DRT-N), Other Factors) % Default Rates 239 bps 204bps 175bps 174bps % Credit Cost 2012 2013 2014 2015 2016 2017 2018 2019 2020F* * Credit cost in 2020F may reach or exceed the peak level in Y2017 Actual Default Rate (LHS) Forecast Default Rate (LHS) Credit Cost (RHS) บริการทุกระดับประทับใจ 56 55 55#29K KASIKORNTHAI Credit Bureau Summary National Credit Bureau (NCB)* Two Types of Credit Reports Offered by NCB: ➤ Consumer credit report for individuals ➤ Commercial credit report for businesses Credit report (monthly reported by members) ➤ Customer information (Name, address, identification number, birth date, occupation, etc.) ➤ Credit information (History of application, approval history, loan payment history, etc.) Data Record of Credit Report Individuals: Credit report remains on file for 3 years ➤ Businesses: Credit report remains on file for 3 years ■Members: Financial institutions including commercial banks, specialized financial institutions (SFIs), non-bank financial institutions, finance companies, securities companies, insurance companies, etc. ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank Practice KBank's customers applying for loans Optional to Sign agreement to allow the Bank (Large companies normally have reliable financial statements) Corporate Business to get credit report from NCB Required to SME Business Multi- Corporate Business Large Corporate Business Medium Business Small & Micro Business Good credit Poor credit KBank's Policy Lending Reject application Required to Retail Business 4 Customer Segments in Retail (HN, AF, MI and MA) Good credit Poor credit KBank's Credit Reject application Scoring Note: * The concept of a credit bureau started in 1961 and central credit registration started in 1964. The Central Information Service was established in 1999 and its name was changed to Central Credit Information Service in 2000 and to the National Credit Bureau in 2005 บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank: Financial Performance 57 บริการทุกระดับประทับใจ 58#30K KASIKORNTHAI 1H20 Performance Highlights ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Consolidated Net Profit (Bt bn) Profitability - NIM - ROE - ROA - YTD Loan growth 2018 2019 1Q20** 2Q20 38.46 38.73 7.38 2.18 1H20* 9.55 3.39% 3.31% 3.49% 3.22% 3.34% 10.61% 9.90% 7.26% 2.15% 4.72% 1.27% 1.20% 0.87% 0.25% 0.56% 6.17% 4.59% 2.05% 6.23% 6.23% YoY Loan growth 6.17% 4.59% 6.70% 10.01% 10.01% - YoY Net fee income growth (7.72%) (3.61%) 1.38% (12.02%) - YoY Non-interest income growth (9.17%) 1.51% (18.55%) 3.36% (5.48%) (7.00%) Cost control - Cost to income 43.96% 45.32% 45.94% 38.36% 42.00% Asset quality 3.34% 1.75% 3.65% 3.86% 1.74% 2.35% 3.92% 3.87% 160.60% 148.60% 138.66% 155.68% 95.94% 96.62% 92.78% 92.15% 15.90% 16.19% 15.17% 15.38% 18.32% 19.62% 18.53% 18.09% 92.15% 15.38% 18.09% - NPL ratio - Credit Cost -Coverage ratio Loans to Deposits Tier 1 Ratio CAR Note: 3.92% 3.11% 155.68% Under Bank of Thailand regulations, net profit in the first half of the year is counted as capital after approval by the Board of Directors as per Bank regulations. Net profit in the second half of the year is counted as capital after approval of the General Meeting of Shareholders. However, when a net loss occurs, the capital must be reduced immediately - Capital Adequacy Ratio (CAR) has been reported in accordance with Basel III Capital Requirement from January 1, 2013 onwards. CAR is based on KASIKORNBANK FINANCIAL CONGLOMERATE. KASIKORNBANK FINANCIAL CONGLOMERATE means the company under the Notification of the Bank of Thailand re: Consolidated Supervision, consisting of KBank, K Companies, and subsidiaries operating in supporting KBank, Phethai Asset Management Co., Ltd., and other subsidiaries within the permitted scope of the BOT's definition to be a financial conglomerate * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards. Some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9) ** The Bank restated the 1Q20 financial statements from the reclassification of investment in fund/ REIT to investments in FVOCI to comply with the Federation of Accounting Professions' announcement on 25 June 2020 and reclassification some items which did not impact to total assets, total liabilities and total equity. บริการทุกระดับประทับใจ ■1H20 net profit decreased 52.18% YoY, due to prudent set aside on expected credit loss during the economic recession resulting from COVID-19 and lower non- interest income, while net interest income increased from EIR (TFRS9) and lower FIDF cost ■Loans grew 6.23% YTD, mainly from COVID-19 relief measures (mainly from SME) and corporate business ■NIM was 3.34% in 1H20; slightly increased YoY mainly due to yield on loans from EIR (TFRS9), lower FIDF cost, and savings rate cut despite negative impact from interest rate cut, asset quality, and high growth in loan relief measures ■Net fee income dropped 5.48% YoY, mainly due to loan-related fee recognition according to TFRS 9 and fee from card business ■1H20 cost to income ratio was at 42.00%; continued focus on cost and productivity improvements under pressure on slower growth in income and new investments ■ NPL ratio at 3.92% in 1H20, with 155.68% coverage ratio ■Capital base remained adequate 59 K KASIKORNTHAI Consolidated Financial Statements ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 2018 2019 2Q19 3Q19 4Q19 1Q20** 2Q20 1H20* Interest income Interest expenses 123,922 130,178 32,622 33,024 32,566 33,779 31,954 65,732 25,384 27,490 6,852 6,928 6,996 5,697 4,872 10,568 Interest income - net 98,538 102,688 25,770 26,096 25,570 28,082 27,082 55,164 Fee and service income 51,187 50,580 12,432 12,973 13,026 12,335 10,930 23,265 Fee and service expenses 13,070 13,840 3,286 3,516 3,619 3,485 2,883 6,368 Fee and service income - net 38,117 36,740 9,146 9,457 9,407 8,850 8,047 16,897 Gain (Loss) on financial instrument measured at FVTPL (300) 4,723 4,423 Gain (Loss) on trading and foreign exchange transactions 9,003 8,362 2,173 1,978 1,979 Gain (Loss) on investments 2,652 8,412 464 2,934 4,753 144 205 350 Total operating income 243,380 241,144 59,211 60,999 63,401 53,650 59,306 112,956 Underwriting expenses 87,897 80,653 19,808 19,131 21,674 15,597 18,132 33,730 Total operating income - net 155,483 160,491 39,403 41,868 41,727 38,053 41,174 79,227 Total other operating expenses 68,348 72,729 17,741 17,802 21,176 17,481 15,796 33,277 Expected Credit Loss 11,872 20,192 32,064 Impairment loss of loans and debt securities 32,532 34,012 7,547 10,060 8,825 Operating profit before income tax expenses 54,603 53,750 14,115 14,006 11,726 8,699 5,186 13,886 Income tax expenses 10,395 10,309 2,690 2,674 2,304 1,349 901 2,250 Net profit attributable: Equity holders of the Bank 38,459 38,727 9,929 9,951 8,802 7,375 2,175 9,550 Non-controlling interest 5,749 4,714 1,496 1,380 620 (25) 2,110 2,085 Statements of Financial Position (Bt mn) Loans to customers (less deferred revenue) Total Assets Deposits Total Liabilities 2018 2019 2Q19 3Q19 4Q19 1Q20** 1,914,072 2,001,956 1,933,232 1,948,492 2,001,956 2,043,093 3,155,091 3,293,889 3,256,294 3,240,134 3,293,889 3,483,527 1,995,001 2,072,049 2,004,953 1,998,886 2,072,049 2,202,112 2,737,269 2,840,174 2,813,769 2,791,551 2,840,174 3,033,814 376,298 406,358 395,840 401,045 406,358 406,789 2Q20 1H20* 2,126,753 2,126,753 3,585,800 3,585,800 2,307,997 2,307,997 3,135,108 3,135,108 402,386 402,386 Total Equity attributable to equity holders of the Bank KBank acquired additional ordinary shares in MTGH, to hold a 51% stake valued at Bt7,529mn; the MTGH Acquisition was completed on November 30, 2009. As the MTGH acquisition was completed on November 30, 2009, the Bank's consolidated financial statements from 2010 include the performance of companies in the MTGH Group for the whole year. Note: ** * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9).. The Bank restated the 1Q20 financial statements from the reclassification of investment in fund/ REIT to investments in FVOCI to comply with the Federation of Accounting Professions' announcement on 25 June 2020 and reclassification some items which did not impact to total assets, total liabilities and total equity. บริการทุกระดับประทับใจ 60#31K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Earnings Before Provision and Tax (EBPT) and Net Profit June 2020 (Consolidated) EBPT Net Profit (Bt bn) (Bt bn) 89.55 90.48 100 87.14 87.76 60 80 40.17 38.46 38.73 60 45.95 40 34.34 40 20 9.55 20 0 0 2016 2017 2018 2019 1H20* 2016 2017 2018 2019 1H20* 1H20 EBPT rose 6.50% YoY, mainly from an increase in net interest income; while, net profit decreased 52.18%, from a prudent increase in expected credit loss from the economic recession resulting from COVID-19 and a decrease in non-interest income 2016 2017 2018 2019 1H19 1H20 1Q20** 2Q20 EBPT (Bt bn) 89.55 90.48 87.14 87.76 43.15 45.95 20.57 25.38 EBPT Growth (% YoY) 10.75% 1.05% (3.70%) 0.72% (7.71%) 6.50% (4.24%) 17.15% Net Profit (Bt bn) Net Profit Growth (% YoY) 40.17 1.77% 34.34 (14.53%) 38.46 12.00% 38.73 0.70% 19.97 (7.88%) 9.55 (52.18%) 7.38 2.18 (26.58%) (78.09%) Note: * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). ** The Bank restated the 1Q20 financial statements from the reclassification of investment in fund/ REIT to investments in FVOCI to comply with the Federation of Accounting Professions' announcement on 25 June 2020 and reclassification some items which did not impact to total assets, total liabilities and total equity. บริการทุกระดับประทับใจ K KASIKORNTHAI Interest Income - net June 2020 (Consolidated) Interest Income and Interest Expenses ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Interest Income - net (Bt bn) 140.00 123.92 130.18 115.87 119.34 (Bt bn) 120.00 102.69 98.54 94.16 100.00 89.68 100.00 80.00 80.00 65.73 55.16 60.00 60.00 40.00 26.20 25.38 40.00 25.18 27.49 20.00 10.57 20.00 0.00 0.00 2016 ■Interest Income 1H20 net interest income grew 8.12% YoY 2017 2018 2019 1H20* Interest Expenses 2016 2017 2018 2019 1H20* Interest Income - net Interest Income (Bt bn) Interest Expenses (Bt bn) Interest Income - net (Bt bn) Interest Income - net (% Growth YoY) 61 2016 2017 2018 2019 1H19 1H20 1Q20 2Q20 115.87 119.34 123.92 130.18 64.59 65.73 I 33.78 31.95 26.20 25.18 25.38 27.49 13.57 10.57 5.70 4.87 89.68 5.49% 94.16 5.00% 98.54 4.65% 102.69 4.21% 51.02 55.16 28.08 27.08 6.16% 8.12% 11.21% 5.09% Note: KBank acquired additional ordinary shares in MTGH, to hold a 51% stake valued at Bt7,529mn; the MTGH Acquisition was completed on November 30, 2009. As the MTGH acquisition was completed on November 30, 2009, the Bank's consolidated financial statements from 2010 include the performance of companies in the MTGH Group for the whole year * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 62 62#32K KASIKORNTHAI Non-interest Income and Structure June 2020 (Consolidated) Non-interest Income to Average Assets ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Non-interest Income Structure (%) 4 3 2.36 2.18 1.88 1.79 2 1.40 (Bt bn) Other Operating Income 63.73 62.70 5 65 (+2%) (-2%) 1 - 4% 56.95 (-9%) 3% 57.80 (+2%) 3% ■Fee and Service Income - net 0 2016 2017 2018 55 2019 1H20* 45 Non-interest Income Ratio 61% Net Premium Eamed - net Dividend Income 66% 24.06 35 67% 64% (%) (-7% YoY) Share of Profit from Investments on Equity Method 60 25 3% 50 42 40 37 36 16% 40 30 9% 5% Gain on Investment 15 3% 3% 6% 4% 0.1% 70% 30 0.2% 0.3% 2% 6% 5% 0.1% 15% 20 6% 5 14% 13% 16% 15% 10 0.7% 0.1% 18% 1% Gain on financial instrument measured at FVTPL (Gain on Trading and FX transactions - old) -0.3% 0 -5 2016 2017 2018 2019 1H20* 2016 2017 2018 2019 1H20* 1H20 non-interest income dropped 7% YoY, mainly from net fee income dropped from loan related fee recognition according to TFRS 9, card business, and a decrease in insurance business 2016 2017 2018 2019 Non-interest Income (Bt bn) 63.73 62.70 56.95 Non-interest Income Growth (%YoY) 1.96% (1.62%) (9.17%) 57.80 1.51% 1H19 25.88 1H20 1Q20** Non-interest Income Ratio (%) 41.54 39.97 36.62 36.02 33.65 24.06 (17.46%) (7.00%) 30.37 9.97 (18.55%) 26.20 2Q20 14.09 3.36% 34.23 Note: - Non-interest Income Ratio = Non-interest Income/Total Operating Income - net Net Premium Earned - net = Net Premium Earned less Underwriting Expense *The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). ** The Bank restated the 1Q20 financial statements from the reclassification of investment in fund/ REIT to investments in FVOCI to comply with the Federation of Accounting Professions' announcement on 25 June 2020 and reclassification some items which did not impact to total assets, total liabilities and total equity. - The Bank and its subsidiaries have adopted TFRIC 13: Customer Loyalty Programmes since January 1, 2014 onwards บริการทุกระดับประทับใจ 63 K KASIKORNTHAI Net Fee Income June 2020 (Consolidated) (Bt bn) Net Fee Income ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Net Fee Income to Net Total Operating Income (%) 30 25% 26% 25% 23% 21% 38.94 41.31 38.12 36.74 40 30 20 20 | 16.90 10 10 0 2016 2017 2018 2019 1H20* 0 2016 2017 2018 2019 1H20* 1H20 net fee income dropped 5.48% YoY, mainly from loan-related fee recognition according to TFRS 9 and fee from card business Net fee income to net total operating income was 21.33% in 1H20 Fee Income (Bt bn) Fee Income-net (Bt bn) Fee Income Growth (%YoY) Net Fee Income Growth (%YoY) Net Fee Income to Net Operating Income Ratio (%) Note: 2016 2017 2018 2019 1H19 1H20 1Q20** 2Q20 48.63 51.76 51.19 50.58 24.58 23.27 38.94 41.31 38.12 36.74 17.88 16.90 12.34 8.85 10.93 8.05 4.78% 6.43% 3.78% 6.07% 25.39 26.33 (1.10%) (1.19%) (7.72%) (3.61%) 24.52 22.89 (5.31%) (5.35%) (9.62%) (5.48%) 23.25 21.33 1.53% (12.08%) 1.38% (12.02%) 23.26 19.54 - On the consolidated basis, Bancassurance fees are not included in net fee income since November 30, 2009, due to the elimination of inter-company transactions (the accounting treatment from the Muang Thail Group Holding consolidation) *The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 64#33K KASIKORNTHAI Net Fee Income Structure June 2020 (Consolidated) Net Fee Income by Product Credit Card Others 17% Business 12% Transaction Services 23% Fund Management Business 23% Trade Finance Commercial 6% Cash Management 3% Credit 16% ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Credit Card Business (mainly from credit card, merchant fees) Transaction Services (such as ATM & debit cards, bill payments, money transfers, etc.) ■Commercial Credit (mainly from commercial credit related fees) Cash Management (such as fees from payroll accounts) Trade Finance Fund Management Business (mainly from mutual fund and securities service fees) Others (such as brokerage fee, capital market business, etc.) Loan Related and Non-loan Related Fees - net Loan- related Non- 13% loan related 87% Note: - On the consolidated basis, Bancassurance fees are not included, due to the elimination of inter-company transactions (the accounting treatment from the Muang Thai Group Holding consolidation) - On the consolidated basis, Net Premium Earned - net (Net Premium Earned Less Underwriting Expenses) from Muang Thai Life Assurance (MTL) is reported as a part of non-Interest Income; KBank has a 38.25% economic interest in MTL - The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9) บริการทุกระดับประทับใจ K KASIKORNTHAI Net Premium Earned - net June 2020 (Consolidated) Net Premium Earned and Underwriting Expenses ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Net Premium Earned - net (Bt bn) 14 10.26 9 5.94 33.8933.73 3.54 4 0.16 -0.16 -1 2016 2017 2018 2019 1 H20* (Bt bn) 120 99.79 94.45 100 93.85 91.43 84.18 87.90 80.49 80.65 80- 60 40 20 0 2016 2017 ■Net Premium Earned 2019 1H20* Underwriting Expenses Net premium earned-net decreased YoY 2018 Net Premium Earned (Bt bn) Underwriting Expenses (Bt bn) Net Premium Earned - net (Bt bn) Net Premium Earned (% Growth YoY) Underwriting Expenses (% Growth YoY) Net Premium Earned - net (% Growth YoY) Note: ■Net Premium Eamed - net Net Premium Earned - net = Net Premium Earned less Underwriting Expense 65 2016 2017 2018 2019 1H19 1H20 1Q20 2Q20 94.45 99.79 91.43 80.49 40.45 33.89 15.80 18.09 84.18 93.85 87.90 80.65 39.85 33.73 15.60 18.13 10.26 5.94 3.54 (0.16) 0.60 0.16 0.20 (0.04) 10.62% 15.26% (16.83%) 5.65% (8.37%) 11.49% (6.34%) (42.17%) (40.41%) (11.97%) (8.24%) (104.63%) (17.75%) (16.21%) (21.32%) (13.97%) (15.35%) ! (22.17%) (79.09%) (73.49%) 458.72% (11.18%) (8.46%) ! (107.19%) KBank acquired additional ordinary shares in MTGH, to hold a 51% stake valued at Bt7,529mn. As the MTGH Acquisition was completed on November 30, 2009. As the MTGH acquisition was completed on November 30, 2009, the Bank's consolidated financial statements from 2010 include the performance of companies in the MTGH Group for the whole year. * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 66#34K KASIKORNTHAI Other Operating Expenses June 2020 (Consolidated) Other Operating Expenses Structure ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK (Bt bn) 72.73 I 75 66.37 68.35 63.85 29% 65 26% 27% 28% Impairment on Application Software & Related Expenses 55 0.2% 0.2% 0.2% Others 0.2% 45 7% 7% 7% 7% ■Directors' remuneration 18% 35 19% 19% 19% 1 33.28 27% Taxes & Duties 25. 8% 0.4% I 18% 15 47% 46% 46% 47% I Premises & Equipment 147% 5 ■Employee's expenses -5 2016 2017 2018 2019 1H20* 1H20 other operating expenses decreased 1.41% YoY, resulting mainly from employee's expenses, advertising and marketing activities expenses; while, debt management expense increased Other Operating Expenses (Bt bn) Other Operating Expenses Growth (%YoY) 2016 63.85 2017 2018 2019 1H19 66.37 68.35 72.73 33.75 1H20 33.28 1Q20 17.48 2Q20 15.80 (4.20%) 3.94% 2.98% 6.41% 9.19% (10.97%) | 3.33% (1.41%) Note: *The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 67 K KASIKORNTHAI Loan Growth June 2020 (Consolidated) 15 (%) Loan Growth (% YoY) 10 10 6.20 6.17 5.45 4.59 5 10.01 0 2016 2017 2018 2019 1H20* ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 1H20 loans grew 10.01% YoY, mainly from COVID-19 relief measures (mainly from SME) and corporate business 2016 2017 2018 2019 1H19 1H20 Loans (Bt bn) 1,698 1,803 1,914 2,002 1,933 2,127 1Q20 2,043 2Q20 2,127 Loan Growth (% YoY) 5.45% 6.20% 6.17% Loan Growth (% YTD) 5.45% 6.20% 6.17% 4.59% 4.59% 5.16% 10.01% 6.70% 10.01% 1.00% 6.23% 2.05% 6.23% Note: * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 88 68#35K KASIKORNTHAI Loan Structure and Loan Growth Targets June 2020 (Consolidated, TFRS 8: Operating Segments*) Loan Portfolio Structure ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Loan Portfolio Bt bn Consolidated Amount (Bt bn) Y2019 1H20 1H20 2020 2,400 1,803 1,914 2,002 2,127 Dec 19 Jun 20 Loan Growth Loan Growth Yield Range Loan Growth Target (%) 1,698 Corporate 2,000 (%) (%YTD) (%) (No longer applicable) 1,600 36% 34% 36% ■SME Corporate Loans 691 777 1.2% 12.4% 3-5% 2-4% 30% 35% SME Loans 672 721 1.7% 7.3% 5-7% 1-3% 1,200 ■Retail 800 39% 35% 349 Retail Loans 556 570 13.9% 2.6% 5-7% 9-11% 34% 36 Other Loans 83 59 1.5% (29.4%) Others. 400 25% 24% 25% 28% 0 6% 2016 5% 2017 4% 4% 2018 2019 27% 3% 1H20 Total Loans 2,002 2,127 4.6% 6.2% 4.9% 4-6% Note: * From time to time, the Bank has adjusted loan definitions based on loan portfolio management; thus, the latest loan base is not comparable with previous reports. Loan Definition (TFRS 8: Operating Segments) Corporate Loans: Loans of KBank and KBank's Subsidiaries in Corporate Segments (Annual sales turnover > Bt400mn) SME Loans: Loans of KBank and KBank's Subsidiaries in SME Segments (Annual sales turnover ≤ Bt400mn) Retail Loans: Loans of KBank and KBank's Subsidiaries in Retail Segments Other Loans: Loans in Enterprise Risk Management Division (NPL + Performing Restructured Loans), and other loan types Note: * Since 1Q13, as per the Bank of Thailand's requirement, the Bank has complied with TFRS 8 (Operating Segments) to present operating results for each key segment in financial reports Y2018 Loan Growth Target (%): Corporate 6-8%; SME 4-6%; Retail 5-7%; Total Loans: 5-7% Y2017 Loan Growth Target (%): Corporate 4-6%; SME 4-6%; Retail 5-7%; Total Loans: 4-6% Y2016 Loan Growth Target (%): Corporate 4-6%; SME 5-7%; Retail 5-7%; Total Loans: 6-7% Y2015 Loan Growth Target (%): Corporate 3-5%; SME 6-8%; Retail 5-7%; Total Loans: around 6% ** The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 69 K KASIKORNTHAI Loan by Retail Products (All Segments) June 2020 (Consolidated, TFRS 8: Operating Segments*) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Loan by Retail Products (Amount in Bt bn) Dec19 Jun 20 Y2019 Loan Growth 1H20 % Portion Loan Growth to Total Loan (%) (%YTD) Housing Loans 326 350 14.4 7.6 16.5 Credit Cards 86 75 8.7 (12.5) 3.5 Consumer Loans KLeasing 78 82 24.9 5.2 3.8 115 113 6.2 (1.9) 5.3 Loan Definition (TFRS 8: Operating Segments) Housing Loans: KBank's housing loans to retail customer segments Credit Cards: KBank's credit card loans to all eight customer segments Consumer Loans: KBank's consumer loans to retail customer segments KLeasing: KLeasing's loans to all eight customer segments Note: * Since 1Q13, as per the Bank of Thailand's requirement, the Bank has complied with TFRS 8 (Operating Segments) to present operating results for each key segment in financial reports ** The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 70 70#36K KASIKORNTHAI Asset Quality June 2020 (Consolidated) NPL Ratio ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Coverage Ratio Classified Loans** (Bt bn) 1H20 (%) (%) Stage 1 Performing 1,808 5 200 Stage 2 Under-performing 230 3.92 160.60 155.68 3.65 4 3.32 3.30 3.34 148.45 148.60 Stage 3 Non-performing 96 150 130.92 3 100 2 50 1 0 0 2016 2017 2018 2019 1H20* 2016 2017 2018 2019 1H20* NPL ratio in 1H20 was at 3.92%, with a coverage ratio of 155.68% COVID-19 significantly impacts asset quality; however, relief measures help reduce short-term impact to asset quality. NPL can stay at not too high level for now. The Bank has to prepare for the end of relief measures 2016 2017 2018 2019 1H19 1H20 NPL Ratio (%) 3.32 Coverage Ratio (%) 130.92 3.30 148.45 3.34 160.60 3.65 148.60 3.40 157.95 3.92 155.68 1Q20 3.86 138.66 2Q20 3.92 155.68 SML to Total Loans Ratio (%)* 2.55 2.59 1.90 2.80 2.50 Loans with significant increase in credit risk (%) 9.43 9.32 9.43 Note: The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). ** Loans to customers and accrued interest receivables: Under TFRS 9, the classified loans are defined by 3 stages based on incremental risks, which cannot directly compare with the previous number these were defined by days past due. บริการทุกระดับประทับใจ K KASIKORNTHAI Expected Credit Loss and Credit Cost ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK June 2020 (Consolidated) Impairment Loss of Loans and Debt Securities Expected Credit Loss Credit Cost (Bt bn) (bps) 50 350 311 41.81 300 239 40 33.75 32.53 34.01 32.06 250 204 30 175 174 200 20 150 100 10 50 0 2016 2017 2018 2019 1H20* 2016 2017 2018 2019 1 H20* 1H20 credit cost was 311bps; increased due to prudent set aside on expected credit loss during the economic recession resulting from COVID-19 71 2016 2017 2018 2019 1H19 1H20 1Q20 2Q20 Expected Credit Loss (Impairment Loss of Loans and Debt Securities) (Bt bn) 33.75 41.81 32.53 34.01 15.13 32.06 11.87 20.19 Credit Cost (bps) 204 239 175 174 157 311 235 387 Note: * The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9)." บริการทุกระดับประทับใจ 72 22#37K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Loan Portfolio Breakdown by Industry, Currencies, and Interest Rate June 2020 (Consolidated) (Bt bn) 2,500 Loan Portfolio by Industry By Currencies (December 2019)** US Dollar*** 3.1% Other Currencies *** 2,127 2,000 1,914 2,002 1,803 13.0% Others 1,698 1,610 14.6% 16.3% 1,527 14.3% 1,500 1,439 1,327 14.5% 14.2% 15.7% 11.6% 14.2% 12.5% 15.5% 14.8% 14.6% 1,000 16.0% 13.0% 6,5% 13.0% 6.7% 12.5% 6.9% 13.2% 14.7% 6.8% 6.6% 14.2% 13.7% 13.5% 8.5% 8.9% 19.6% 14.9% 16.2% 13.4% 12.8% 8.9% 9.3% ■Housing Loans Utilities & Services ■Real Estate & Construction 500 48.9% 48.9% 48.1% 48.1% 49.1% 46.2% 47.3% 0 2.4% 2.3% 2012 2013 2014 2.0% 1.9% 2.1% 2015 2016 46.2% 43.0% 1.9% 1.8% 1.7% 1.7% 2017 2018 2019 1H20 Manufacturing & Commerce ■Agricultural and Mining Definition of Loans 1.2% Thai Baht 95.7% Mainly trade finance products By Maturity of Interest Repricing (June 2020)* 1) by industry Gross loans Loans to customers less deferred revenue 2) by currency = Loans to customers and AIR - net 3) by maturity of interest repricing = Loans to customers less deferred revenue Loans by Bangkok and Metropolitan vs. Upcountry Proportion of KBank's Outstanding Loans 2014 2015 2016 2017 2018 2019 1H20 Bangkok and Metropolitan 64% 64% 63% 64% 62% 59% 60% Upcountry 40% 36% 36% 37% 36% 38% 41% > 6 months 18.7% Others 0.4% <=6 months 10.3% Note: The information on loans breakdown by maturity of interest repricing are disclosed on half year basis **As of June 2020, the information on loans breakdown by currencies has been changed to loans breakdown by residency of borrowers, being domestic 97.2% and foreign 2.8% บริการทุกระดับประทับใจ Immediate repricing 70.7% 73 33 K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank Financial Aid Programs during the COVID-19 Pandemic, and thereafter Proactive financial relief measures to lesson COVID-19 impact while maintaining prudent asset quality management to encounter economic uncertainties along with continuing enhancement of new lending capability Phase 1: Relief ■ Proactive relief measures to customers with adverse impact from COVID-19 outbreak Financial Relief Measures: Phase 1 ■ For Business 6-month payment period (Payment Holiday or known locally as Debt Holiday) Financial aids programs i.e. payment deferral of principal and/or interest Liquidity injection programs such as BOT soft loans, etc. ■ For Individual Phase 2: On-going ■ Data-driven risk-based customer segmentation to better provide appropriate on-going financial relief measures After Phase 1 Financial Relief Measures Can pay DEBT PAY Data-driven risk-based customer Can't pay segmentation • Reduce minimum payment for unsecured products • Payment deferral of principal and/or interest Phase 3: Expansion ■Loan portfolio rebalancing with new lending capability using data analytics New Lending Capability Provide appropriate relief measures / restructuring / NPL Lend successfully using data analytics บริการทุกระดับประทับใจ 74#38K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Proactive risk management to counter economic slowdown and high household debt Continue to deploy proactive credit portfolio/ risk management/ asset quality management to mitigate an adverse impact from prolonged economic recovery and high household debt Corporate Business SME Business Retail Business ■ Focus on high potential industries less impacted by economic slowdown ■Closely monitor customers in high risk industries and supply chains ➤ Actively monitor early warning signs ➤ Promptly respond to adverse events ■Selective on quality of customers ■■ Proactive risk management by visiting customers; raise productivity of sales teams and relationship managers ■ Efficient collection process ■ Focus on high-value customers regarding prevailing BOT regulations ■ Proactive and efficient collection process ■ Analyze behavior regularly to identify weak spots บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank: Financial Aid Programs during the COVID-19 Pandemic ■ Offer financial aid programs to help SME and retail customers during the COVID-19 pandemic Credit Adjustment For Businesses ■ Loan Payments for SMEs: • BOT measures*: 6-month grace period on principal and interest payments for SMEs with credit lines below Bt100mn (Automatic adjustment) Up to 12-month grace period on principal payments for SMEs (program has ended) • "Generous (Business) Owners-Empathetic Creditor" program: a cooperative effort between KBank and business operators to reduce interest rates for 6 months For Individuals ■ Credit Cards: • Reduce minimum installment payment to 5% in 2020-21 and 8% in 2022, returning to 10% in 2023 (Automatic adjustment) • Grace period on principal payments until December 2020; reduce interest rate to 12% from May to September 2020 (as considered by bank)** (program has ended) Xpress Cash: • Grace period on principal payments until December 2020; reduce interest rate to 22% from May to September 2020 (as considered by bank)** (program has ended) ■ Xpress Loan: • 3-month grace period on principal and interest payments** (program has ended) ■ Housing Loans: ■ KLeasing: • Up to 12-month grace period on principal payments or 50% reduction in installment payments for up to 12-months** (program has ended) o 3-month grace period on principal and interest payments** (program has ended) ■ Loans to support liquidity: Loans for SMEs 15 75 • SME Loans with Credit Guarantees by Thai Credit Guarantee Corporation (TCG), with up to 7-year loan repayment period ■ Soft Loans: o BOT measures*: Soft loans for SMEs, with credit limit below Bt500mn, at 2% for 2 years and 6 months interest free 。 GSB soft loans for SMEs, with loan limit of Bt20mn for each SME, at 2% for 2 years of 5-year loan repayment period. (This program has ended, as the total loan limit has been used up) ■ "Zero Interest-rate Loan to Retain SME Staff" program: 0% interest rate with 10-year loan repayment period and 1-year grace period on principal and interest payments for the first year ■ Loans against mutual funds: o Short-term loans for mutual fund holders; mutual fund units can be used as collateral, with a limit from Bt30,000 to 80%-95% of the funds' NAV, at 2% to 5.5% interest Note: According to the Emergency Decree on Financial Assistance to Enterprises affected by Coronavirus 2019 (B.E. 2563), dated April 18, 2020 ** Debtors must register via KBank Live LINE account, K-Contact Center 028888888 and K-BIZ Contact Center 028888822 Source: KBank บริการทุกระดับประทับใจ 76#39K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank: Financial Aid Programs Phase 2 (Continued) ■ Offer financial aid programs to help retail customers during COVID-19 pandemic Credit Adjustment Phase 2: For Individuals For Individuals: Automatic Adjustment* ■ Credit Cards: • Lower interest rate ceiling from 18% to 16% ■ Xpress Cash: • Lower interest rate ceiling from 28% to 25% ■ Xpress Loan: • Lower interest rate ceiling from 28% to 25% ■ KLeasing: • Lower interest rate ceiling from 28% to 24% Registration** ■ Credit Cards: " o Option 1: 6-billing-cycle grace period on principal • Option 2: Change to 48-month term loan, at special interest rate of 12% (card will be closed) Xpress Cash: o Option 1: 6-billing-cycle grace period on principal • Option 2: Change to 48-month term loan, at special interest rate of 22% (card will be closed) Xpress Loan: • Option 1: 6-billing-cycle grace period on principal • Option 2: 30% reduction in installment payments for 6 billing cycles, at special interest rate of 22% ■ Xpress Loan - Long-Term Loan: o Option 1: 3-month grace period on principal o Option 2: 30% reduction in installment payments for 3 months • Option 3: 3-month grace period on principal and interest payments ■ Housing Loans: o Option 1: 3-month grace period on principal and 0.1% reduction in interest rate for 3 months • Option 2: 50% reduction in installment payments for 3 months o Option 3: 3-month grace period on principal and interest payments ■ KLeasing: o Car to cash (Pledge Registration): • 30% reduction in installment payments throughout the contract period with maximum interest rate not higher than 22% p.a. o Others: Hire Purchase and Financial Lease • Option 1: 3-month grace period on principal and interest payments and extension of term loan for another 3 months • Option 2: 50% reduction in installment payments for 6 months and extension of term loan for another 3 months Note: According to the BOT's announcement of the second phase of COVID-19 relief measures, dated June 19, 2020. * Automatic adjustment will be effective from August 1,2020 onwards. ** For affected debtors who are non-NPLs as of Mar 1, 2020. KBank provides alternative options to help alleviate debtors' burdens. They can choose an option depending on their ability to pay. Source: KBank บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Relief Measures for COVID-19 Impact (Press Releases on Talk after Lockdown with KBank President (Mr. Patchara Samalapa), dated 2 July 2020) All Relief Measures (Grace Period, Debt Holidays, etc.)* No. of customers: 0.65 million customers Outstanding loans: Bt 828 billion Retail Customers Outstanding loans No. of customers (Bt bn) All Relief Measures* 82 Additional loans 13 Business Customers ('000) Outstanding loans (Bt bn) No. of customers ('000) 356 34 All Relief Measures* 746 Additional loans 293 143** 60 *All Relief Measures include Grace Period, Debt Holidays, etc.; debt holiday in Thai context refers to payment holiday (not debt forgiveness); ** 30% YoY growth Note: All figures above are broken down by customer and are not comparable with loans in this presentation deck which are broken down by business. Business customers: Outstanding loans of Bt746 billion have average loan to value (LTV) around 81% Special Projects "Generous (Business) Owners - Empathetic Creditor" lowered interest rates for business owners to allow them to keep their employees on payroll "Zero Interest-rate Loan to Retain SME Staff” 0% interest rate for 10-year loans, to pay salaries Lending through special projects No. of employees helped via special projects 1,144 49,000 บริการทุกระดับประทับใจ million Baht employees 77 78#40K KASIKORNTHAI Restructured Loans Incurred Losses December 2019 (Consolidated) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Restructured loans that incurred losses determine from the loan that present value of expected future cash flow to be received is less than the outstanding balance, where the present value is discounted by market rates; debt restructuring includes various forms i.e. reduction of principal and interest, transfer of assets, and change of repayment conditions % of Restructured Loans that Incurred Losses to Total Loans Restructured Loans that Incurred Losses Breakdown by NPL and Non-NPL (Bt bn) (% of Restructured Loans). 69.6 67.2 5% 70 4% 3.4% 3.5% 3.6% 60 3.4% 58.3 62.2 96% 93% 96% 98% 50 2.6% 3% 1.9% 2.1% 2.2% 35.1 40 1.9% 1.9% 1.6% 1.8% 27.1 30 24.2 2% 17.6 20- 1% 10 0% 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 85% 89% 15% 11% 1% 2008 2009 2010 22.6 22.9 99% 25.2 23.7 96% 98% 90% 90% 95% 2% 10% 10% 2011 2012 2013 2014 4% 4% 7% 4% 2% 5% 2015 2016 2017 2018 2019 ■ NPL Non NPL Note: The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). ** The Bank and its subsidiaries engage in debt restructuring contracts which were classified as NPL and non-NPL that incurred losses, but not included customers under the Bank of Thailand's relief measures. In 1H20, there were debt restructuring amounting to Bt4, 170mn and incurred losses amounting to Bt619mn. บริการทุกระดับประทับใจ K KASIKORNTHAI Bad Assets Resolution ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK June 2020 (Consolidated) Write-offs (Bt bn) 28 24 20 16 11.6 12 8.7 8 5.5 4.3 4 0 4.3 3.9 5.0 10.3 19.9 26.4 12.6 10.1 10.7 9.6 7.3 التاتش 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20 NPL Portfolio Sales 2007: KBank and Phethai AMC sold NPLs totaling Bt11.4bn to Standard Bank Asia Limited and Morgan Stanley Emerging Markets Inc. at Bt7.6bn and Bt3.8bn, respectively 2008-1Q16: NPLs continued to decline without bulk NPL sales 2016: KBank sold NPLs worth Bt6.4bn (Bt4.9bn in 2Q16 and Bt1.5bn in 4Q16) to JMT Network Services PCL 2017: KBank sold NPLs worth Bt8.4bn in 4Q17 to asset management companies 2018: KBank sold NPLs worth Bt15.4bn (Bt7.3bn in 1Q18, Bt5.4bn in 3Q18, and Bt2.7bn in 4Q18) to asset management companies 2019: KBank sold NPLs worth Bt7.1bn (Bt4.3bn in 1Q19 and B2.8bn in 3Q19) to asset management companies 1Q20: KBank sold NPLs worth Bt4.9bn to asset management companies Note: *On September 11, 2013, the Bank was formally notified of its final loss sharing portion under the asset transfer agreement with TAMC established in October 2001. This amounted to Bt206mn. An amount of Bt1, 159mn relating to the provision for losses recorded in prior years has been reversed through profit or loss in 2013 Outstanding Foreclosed Properties Sales of Foreclosed Properties (Bt bn) 30 15-18.7 17.3 16.1 16.7 15.9 15.1 225050 10- 5 12.5 12.1 13.4 (Bt bn) 10 29.7 27.9 8 24.9 19.6 6 5.4 5.6 5.0 16.1 17.4 4.8 4.1 4.2 4 2.8 3.0 2.9 2.4 3.3 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20191H20 2 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20 บริการทุกระดับประทับใจ 79 80#41K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK TFRS 9: Investment in Securities Portfolio and Structure June 2020(Consolidated) Instrument Type Financial Assets Classification Holding Type (OLD) Asset Type* (Bt bn) 1,000 (Bt bn) 777 867 0.3% 0.2% 850 867 650 663 0.1% 900 777 0.2% 750 0.1% 0.1% 536 0.7% 800 650 663 0.4% 9% 0.2% 0.1% 650 0.2% 700 0.3% 0.3% 14% 16% 0.3% 0.2% 0.7% 51% 536 550 10% 600 15% 0.4% 7% 0.5% 19% 450 500 10% 12% 54% 16% 18% 46% 9% 400 350 56% 15% 63% 300 250 42% 74% 56% 43% 200 66% 53% 52% 64% 150 40% 100 32% 50 0 2% 4% 3% 2% 6% 2016 2017 2018 2019 1H20* -50 2016 2017 2018 2019 Other Investment (Investments in Receivables, Investments in Subsidiaries and Other Investments) Trading Equity Investment Held-to-maturity ■General Foreign Bonds Investment in Receivables ■ Available-for-sales ■ Investments Subsidiaries Corporate Bonds 1H20* Investments Subsidiaries Amortized cost ■Fair value through OCI Fair value through PL ■Government & State Enterprise Bonds ■KBank's guideline for investment portfolio management is to primarily maintain liquidity in order to support a future change in business conditions. In addition, an investment strategy was established in line with changes in economic conditions and the movement of money markets and capital markets both at home and abroad. Investment Portfolio (Bt bn) 2016 650 2017 2018 2019 1H19 1H20 1Q20 2Q20 536 663 777 778 867 788 867 27.66% 11.43% I 11.50% 11.43% I |------| Investment Portfolio (% Growth YoY) 36.10% (17.52%) 23.51% 17.22% Note* The Bank and its subsidiaries have adopted new accounting standards (TFRS 9: Financial Instruments) since January 1, 2020 onwards, some financial statements and financial ratios are not comparable with previous years' financial figures, which were based on the prior accounting standards (non-TFRS9). บริการทุกระดับประทับใจ 81 K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Deposits Growth and Loans to Deposits Ratio June 2020 (Consolidated) Deposits & B/E Loans to Deposits Ratio (Bt bn) 2,700 100% 2,400 | 2,308 2,072 2,100 1,995 1,795 1,879 96.0% 95.9% 96.6% 94.6% 95% 1,800 1,500 LLI 1,200 900 600 300 0 2016 0.3 0 2017 2018 2019 1H20 ■ B/E ■ Deposits Deposits and Loans to Deposits Ratio is in line with peers 90% 92.2% 85% 2016 2017 2018 Loans to Deposits 2019 1H20 2016 2017 2018 2019 1H19 1H20 1Q20 2Q20 Deposits (Bt bn) 1,795 1,879 1,995 2,072 2,005 Deposits (% YoY) 5.2% 4.7% 6.2% 3.9% 2,308 5.4% 15.1% Deposits (% YTD) 5.2% 4.7% 6.2% 3.9% 0.2% I 11.4% 2,202 2,308 11.3% 15.1% 6.3% I 11.4% Loans to Deposits Ratio (%) 94.6% 96.0% 95.9% 96.6% 96.4% 92.2% 92.8% 92.2% ----- บริการทุกระดับประทับใจ 82 62#42K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Funding Structure and Interest Rate Movement June 2020 (Consolidated) Funding Structure Deposit Structure (Bt bn) (Bt bn) 2,800 2,400 | 2,507 2,400 | 2,308 2,194 2,236 5% 2,000 1,879 2,051 2,019 1,795 6% 4% I 1,995 22% 2,072 20% 24% 21% 3% 3% 1,600 23% 2,000 8% 3% 4% 1,600 5% 4% 1,200 74% 71% 1 CASA 72% 1,200 93% 92% = 80% 800 87% 93% 91% 72% 73% 800 400 400 6% 6% 6% 6% 6% 0 0 2016 2017 2018 2019 1H20 2016 2017 2018 2019 1H20 Deposits Term ■Savings Current (%) Interbank and Money Market ST and LT Borrowings KBank Interest Rate Movement (Retail customers) ST and LT Borrowings Deposit rates (%) (May 26, 2020) Savings 0.25 (Bt bn) 96 7 896543210 100 Fixed 3M-12M 0.37-0.45 82 Fixed 24M-36M 0.50-0.70 75 71 71 71 100% 100% 84% 100% Lending rates (%) (May 22, 2020) 50 99% MLR 5.47 25 0.17% 0.04% MOR 5.84 0.40% 0.38% 16% 0.19% 1% 0 MRR 5.97 2016 2017 2018 2019 1H20 2013 2014 2015 2016 2017 2018 2019 1H20 LT Borrowing B/E & Others ■ST Borrowing MLR Savings Fixed 3M บริการทุกระดับประทับใจ K KASIKORNTHAI Long-term Senior/Subordinated Debentures Issue Date Name Long-term Subordinated Debentures ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Туре Feature Amount Maturity Years Interest Rate (Per annum) Interest Payment period Credit Rating 02/10/2019 Tier II Subordinated Notes due 2031* Unsecured 12NC7 USD800mn 12 years (02/10/2031) 3.343% Semi- annually Baa3 by Moody's BB+ by Fitch Ratings 14/07/2016 Subordinated Instruments intended to qualify as Tier 2 Capital of KASIKORNBANK PCL No. 1/2016 due 2027 Unsecured 10.5NC5.5 Bt7,500mn 10.5 years (14/01/2027) 3.50% Quarterly AA- (tha) by Fitch Ratings 09/10/2015 Subordinated Instruments intended to qualify as Tier 2 Capital of KASIKORNBANK PCL No.1/2015 due 2026 Unsecured 10.5NC5.5 Bt6,500mn 10.5 years (09/04/2026) 3.95% Quarterly AA- (tha) by Fitch Ratings Long-term Senior Debentures 07/12/2018 Floating Rate Notes due 2023* Unsecured USD15mn 5 Years (07/12/2023) 3m Libor+0.95% Quarterly 30/10/2018 Floating Rate Notes due 2023* (Sustainability Bond) Unsecured USD100mn 5 Years (30/10/2023) 3m Libor+0.95% Quarterly Baa1 by Moody's 12/01/2018 Senior Unsecured Notes due 2023* Unsecured USD400mn 5.5 Years (12/07/2023) 3.256% Semi- annually BBB+ by S&P BBB by Fitch Ratings 06/10/2016 Senior Unsecured Notes due 2022* Unsecured 26/08/2015 Floating Rate Notes due 2021* Unsecured Baa1 by Moody's USD400mn 5.5 Years (06/04/2022) 2.375% Semi- annually BBB+ by S&P BBB by Fitch Ratings USD10mn 5.5 Years (26/02/2021) 3m Libor+1.00% Quarterly Note: *The issued notes are drawn from the Bank's USD2.5bn Euro Medium Term Note Programme (EMTN) บริการทุกระดับประทับใจ 83 84#43K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank: The wholly-owned subsidiaries, and Muang Thai Life Assurance บริการทุกระดับประทับใจ 85 K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK The wholly-owned subsidiaries of KBank: Business Profile and Aspiration June 2020 Company Name Company Profile KAsset EST. 1992 KASIKORN ASSET MANAGEMENT CO., LTD. A leader in fund management business (i.e. mutual funds, provident funds, and private funds) KResearch EST. 1995 KASIKORN RESEARCH CENTER CO., LTD. Professional in providing knowledge in economics, business, money, and banking Only research house which is an affiliate of a bank KSecurities EST. Jul 2005 KASIKORN SECURITIES PCL Professional in providing a complete range of excellent financial solutions and services, including investment banking, securities underwriting, and securities brokerage KLeasing EST. Aug 2005 KASIKORN LEASING CO., LTD. Professional in providing three core products: hire purchase, financial lease, and floor plan KF&E EST. 1990 KASIKORN FACTORY AND EQUIPMENT CO., LTD. Professional in providing a complete range of machinery and equipment leasing services Asset Size Bt3.02bn Market Share 20% Bt0.14bn N/A Bt27.34bn 4% (#9) Bt111.90bn Bt23.31bn 7%* N/A 2020 Targets Maintain top tier position Top of mind research house for media and for the clients of KBank and its wholly- owned subsidiaries 3-year Aspiration Maintain top tier position Top of mind research house Maintain leading position in securities business under local bank parent Top of mind securities firm Maintain a good asset quality portfolio Provide complete range of financial solutions and maintain good asset quality 5% YoY growth on outstanding loans Maintain leading position in equipment leasing industry *KLeasing Market Share as of 4Q19 บริการทุกระดับประทับใจ 86#44K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK The wholly-owned subsidiaries of KBank: 1H20 Key Operating Performance June 2020 KAsset EST. 1992 KResearch EST. 1995 KSecurities EST. Jul 2005 1H20 Key Operating Performance Assets Under Management Most quoted research (AUM): Bt1.42trn house in the media (+1.84% YoY) Trading volume: Bt575bn - Number of customers grew 27% YoY KLeasing EST. Aug 2005 Outstanding loans: Bt112.64bn (+0.29% YoY) The wholly-owned subsidiaries of KBank: Net Profit (Bt bn) 6 5 5.99 5.39 4.91 4.56 4 3.66 3.85 3.23 3 2.25 1.84 2 1 2.76 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20 KF&E EST. 1990 Outstanding loans: Bt23.08bn (+8.38% YoY) Due to the COVID-19 pandemic, net profit slightly dropped from the same period of 2019. บริการทุกระดับประทับใจ 87 K KASIKORNTHAI KAsset Highlights in 1H20 June 2020 (Bt bn) 8,000 6,000 หลักทรัพย์จัดการกองทุนกสิกรไทย 开泰基金管理 KASIKORN ASSET MANAGEMENT AUM (KAsset vs. Industry) 6,959 7,173 7,737 6,368 7,130 (Bt bn) 2,000 5,534 5,118 4,253 1,500 4,000 3,633 2,576 2,883 3,015 1,090 1,132 1,240 1,303 1,380 1,431 1,416 1,000 2,000 851 946 742 635 509 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H 20 500 Industry Outlook: ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK 1H20 industry AUM at Bt7.13trn, decreasing -5.10% YoY KAsset AUM at Bt1.42trn, increasing +1.84% YoY KAsset Highlights: Ranked #1 in Mutual Fund and #2 in Provident Fund with market share of 22.1% and 15.6%, respectively Ranked #2 in total AUM with market share of 19.9% ■Mutual fund accounts for 75% of KAsset AUM (%) 30.0 19.5 19.2 19.9 20.5 18.7 18.5 15.0 Industry -KAsset *2018-YTD include REITS Market Share by AUM 19.820.721 22.9 0.0 KAsset SCBAM 10.5 11.8 11.6 12.6 12.1 11.6 10.8 10.7 11.3 10.3 6.7 6.5 6.5 5.8 5.5 KTAM MFC 2016 2017 2018 2019 1H20 32.1 32.3 29.9 30.7 29.6 BBLAM Other บริการทุกระดับประทับใจ KAsset AUM Breakdown by Type Private Fund Provident Fund 14% 11% Mutual Fund 75% 88#45K KASIKORNTHAI KResearch Highlights in 1H20 June 2020 ศูนย์วิจัยกสิกรไทย 开微研究中心 KASIKORN RESEARCH CENTER ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 16,000 14,000 Number of News Quotes 12,000 10,000 9,292 8,452 7,672 7,910 8,000 6,000 4,000 2,000 11,500 14,532 9,346 KResearch Highlights: The most quoted private research house in Thailand Top of mind research house for the public, including clients of KBank and its wholly-owned subsidiaries 2014 2015 2016 2017 2018 2019 1H20 Source News Center, isentia, IQnewsClip, etc. The number of quotes from the media newspapers online newspaper and other online news. (excluding magazines, TVs, and Radio) บริการทุกระดับประทับใจ K KASIKORNTHAI KSecurities Highlights in 1H20 June 2020 (Bt bn) 25,000 หลักทรัพย์กสิกรไทย 开泰证券 KASIKORN SECURITIES Trading Volume (KSecurities vs. Industry)* KS CAGR Y2006-2019: 24% (Bt bn) 24,790 22,937 1,600 21,551 22,442 21,899 20,345 1,400 20,000 19,549 1,296 1,200 1,251 15,194 15,000 13,772 860 868 1,000 12,377 12,486 812 739 683 800 10,000 7,967 8,544 8,640 817 7,962 575 600 430 411 400 5,000 207 91 117 200 41 0 0 2006 2007 2008 2009 2010 2011 2012 2013 Total Industry Trading Volume Market Share by Trading Volume* 2014 2015 2016 2017 2018 2019 1H20 KS Trading Volume Industry Outlook: ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK 1H20 industry trading volume* was Bt15.19trn, increasing 46% YoY KS trading volume was Bt575bn KSecurities Highlights: ■KS ranked #9, with 3.79% market share Majority of revenue came from brokerage Number of customers account grew 27% YoY to 186,496 customers in 1H20 KSecurities Revenue by Business 10.0 (%) 5.0 3.8 3.7 3.03.0 3.8 3.6 4.13.7 3.43.5 2.6 2.3 2.1 1.9 0.0 KS SCBS KTZ 2.6 4.64.7 4.6 4.7 4.2 3.8 3.12.9 2.6 4.2 BLS 8.2 6.8 6.16.1 6.5 Investment Banking 15% Brokerage and other TNS MBKET 85% 2016 2017 2018 2019 1H20 Note: *Industry trading volume excluding proprietary trades บริการทุกระดับประทับใจ 89 90#46K KASIKORNTHAI KLeasing Highlights in 1H20 June 2020 ลีสซิ่งกสิกรไทย 开奥租赁 KASIKORN LEASING KLeasing vs. Industry (Bt.bn.) 150 (Thousand Units) 1,500 1,436 1,331 1,042 1,008 872 1,000 882 800 769 112.6 100 114.8 108.1 89.2 89.8 88.7 90.7 97.1 82.9 500 50 329 2012 2013 2014 2015 2016 2017 2018 Total Car Sales in Thailand 2019 Kleasing Outstanding Loans 1H20 Market Share by Total Outstanding Loans (%)* Industry Outlook: ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 1H2020 industry car sales totaled 328,604 units, decreasing 37.3% YoY KLeasing Highlights: 1H2020 KLeasing loans totaled Bt112.62bn, increasing 0.29% YoY 1H2020 KLeasing NPL ratio was 1.74%, lower than the Thai commercial bank average ratio KLeasing Outstanding Loans Breakdown** 50 (%) Floorplan 6% 2930313131 2527272829 Fleet/ Other Car to Used Cash Car 15% 0.3% 25 1412121211 14 14 15 15 15 Finance 10 8 8 7 7 8 8 8 7 7 Lease 24% 0 TBANK AYCAL TISCO SCB KK KLeasing 2016 ■2017 2018 2019 1H20 Hire Purchase 70% New car 85% Note: * Excluding captive and non-bank leasing; Data as of 1H19 ** New car includes HP New car, Fleet finance, Finance lease (FL) and Floorplan Used car includes Car to Cash (K-Car / Car registration loan) and other used cars บริการทุกระดับประทับใจ K KASIKORNTHAI KF&E Highlights in 1H20 June 2020 (Bt.bn) 25.0 20.0 แฟคเตอรี แอนด์ อีควิปเมนท์ กสิกรไทย KASIKORN FACTORY AND EQUIPMENT KF&E Outstanding Loans 22.88 20.38 17.63 14.80 15.0 13.40 10.0 5.0 23.08 0.0 2015 2016 2017 2018 2019 1H20 Industry Outlook: ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Growth in Equipment Leasing (EQL) business forecasted using numerous factors including total import volume of machinery and equipment, direction of government policy, domestic and international business growth opportunities, and Capital Investment Index KF&E Highlights: KF&E outstanding loans were Bt23.08bn, increasing 8.38% YoY KF&E currently ranked #1; maintaining lead position in equipment leasing industry Note: In 2010, KASIKORN FACTORING (KFactoring) was renamed KASIKORN FACTORY AND EQUIPMENT (KF&E) to better reflect their business, focusing on offering leasing services for machinery and equipment; the factoring business operation of KFactoring was transferred to KBank บริการทุกระดับประทับใจ 91 92#47K KASIKORNTHAI Life Insurance Industry in Thailand (%) 20.0 17.5 16.5 15.0 17.9 10.0 5.0 Taiwan Premium per % GDP by Country 6.1 5.8 6.2 6.0 South Korea ☐ Singapore Source: Swiss Reinsurance Y2017 ■Y2018 Y2019 2.1.5 2.7 2.8 3.3 3.4 3.6 3.3 2.32.3 3.6 Australia India Malaysia China Thailand 1.51.4 Indonesia 1.2' 1.3 Philippines 1.2 1.3 1.6 1.4 Vietnam ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■In 2019, low penetration rate of 3.3% in Thailand with a high opportunity for growth Muang Thai Life Assurance (MTL) ranked #3 in life insurance industry in Thailand, in 1H20 #3 in total premium with 12.6% market share Total Premium (Bt bn) 700.0 Size of Market by Premium(%) CAGR'11-19: 8% Market Share by Total Premium in Life Insurance (%) New Business Premium (%) (Bt bn) 30.0 200.0 180.0 25.0 23.1 2018 2019 1H20 600.0 22.8 627.4 601.7 160.0 500.0 568.3 20.0 537.5 610.9 140.0 21.4 503.9 15.1 14.4 13.7 400.0 120.0 15.0 12.6 9.6 442.5 285.9 15.1 10.1 9.8 391.4 100.0 10.0 13.8 7.4 5.3 8.37 $7.9 300.0 328.6 10.7 5.8 5.9 5.3 5.3 2.4 80.0 4.7 200.0 5.0 8.1 4.04.0 60.0 6.5 5.3 4.1 2.5 8.4 2.1 100.0 40.0 AIA TLI MTL SCBLife KTAL BLA AZAY FWD PLT OLIC Others 20.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20 Total Premium New Business Premium Source: The Thai Life Assurance Association * New Business Premium in 1H20=Bt76.2bn Source: The Thai Life Assurance Association Note: Total Premium = New Business Premium + Renewal Premium; New Business Premium = First Year Premium + Single Premium บริการทุกระดับประทับใจ K KASIKORNTHAI Bancassurance Highlights in 1H20 (%) Bancassurance Market Share by Total Premium (%) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 30 23.2 23.0 19.3 20 16.2 23.8 11.5 12.7 2018 ■2019 1H20 8.2 10 6.17.98.4 8.28.3 13.7 98.0 9.2 7.5 8.1 16.4 7.1 2.3 2.6 0 SCBLife MTL KTAL TLI PLT BLA FWD AIA AZAY DLA Others (%) 30 27.9 3.7 4.1 4.1 4.8 4.1 3.5 3.21.4 6.8 3.4 MTL ranked #2 in Bancassurance market #2 in Bancassurance total premium with 19.3% market share #2 in Bancassurance new business premium with 15.6% market share Bancassurance Market Share by New Business Premium (%) 20 20.1 15.5 15.6 14.7 2018 2019 ■1H20 10 15.8 12.9.19.8 7.19.3 12.9 8.4 8.7 6.6 8.5 8.6 8.7 7.7 6.6 4.6 4.3 3.9 5.2 6.4 6.6 5.4 4.3 6.4 3.1 5.3 2.8 7.8 0 SCBLife MTL PLT KTAL TLI AIA FWD SELIC DLA BLA Others Source: Muang Thai Life Assurance (MTL), The Thai Life Assurance Association (TLAA) monthly report (new format) Note: Bancassurance premium include all bank partners' premiums of MTL บริการทุกระดับประทับใจ 93 94#48K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KBank's Strategic Acquisition in Muang Thai Group Holding (MTGH) MTGH MTI MTL MTB FVC AIGEN เมืองไทย ประกันชีวิต MTIB Current KBank Economic Interests Muang Thai Group Holding Co. Ltd 51.0% (MTGH) Muang Thai Life Assurance PCL 38.3% (MTL) Muang Thai Insurance PCL 10.1% (MTI) Muang Thai Broker Co, Ltd 50.98% (MTB) MT Insure Broker Co, Ltd 38.2% (MTIB) Fuchsia Venture Capital Co, Ltd ■Established April 6, 1951 ■First life insurance company to have received the Royal benevolence in granting the appointment as the life insurance company of His Majesty King Bhumibol Adulyadej Joined hands with Ageas in 2004 (formerly known as Fortis Insurance International NV) and joined hands with KBank in 2009 ■Credit Rating: BBB+ from S&P Global A- and AAA (tha) from Fitch Ratings Life Insurance Company with Outstanding Management (1st Place) 2006-2018 (13 consecutive years) from Office of Insurance Commission 38.3% (FVC) ■Life Insurance Company of the Year 2014, 2017 & 2018 from Asia Insurance Industry Awards AIGEN Co, Ltd 51.0% (AIGEN) Note: OIC Office of Insurance Commission Ageas holds 7.83% in MTGH and holds 24.9999% in MTL บริการทุกระดับประทับใจ 95 2018 2019 1H20 Net premiums earned 91.4 80.5 Net investment income 19.0 20.5 Total revenues 110.4 100.9 Life policy reserve increase from the previous period 46.6 35.1 Net benefit payments and insurance claims 37.2 41.4 Commissions and brokerages 9.0 9.1 Other underwriting expenses 0.8 0.7 Operating expenses & Other 5.2 5.0 K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Muang Thai Life Assurance (MTL) Information Summary เมืองไทย daouthe Strong fundamentals and revenue generation, helped by process efficiency and service quality enhancements; platform and synergy alignment between MTL and KBank Risk-Based Capital (RBC) remains strong, sufficient to support business growth and much higher than OIC minimum requirement Statements of Comprehensive Income (Bt bn) Strategy in 2020 To sustainably deliver happiness to customers, employees, and stakeholders, MTL will reinforce its "MTL Everyday Life Partner" strategic direction to offer excellent products, services, and customer experience. We will continue to enhance distribution capabilities to grow market share sustainably as well as exploring new growth in regional markets. MTL plans to enhance connectivity with ecosystem partners. We aim to become a data-driven company with the advanced data analytics capabilities to enhance business opportunities and efficiency. Human development remains our priority while also placing great emphasis on cost management and intelligent automation. MTL ensures effective risk management and is well-prepared for new regulatory standards. 33.9 10.0 43.6 8.0 24.1 4.3 0.3 2.2 Total Expenses 98.9 91.4 38.8 2020 Key Financial Targets Profit before income tax expense 11.5 9.5 4.8 Bt bn 2015 2016 2017 2018 2019 2020 Income tax expense 2.2 1.8 -0.9 Total Premium 87.9 97.0 102.7 94.5 83.8 Net profit (loss) 9.3 7.7 3.9 (after refund) >=Industry growth % Growth 17% 10% 6% -8% -11% Statements of Financial Position (Bt bn) 2018 2019 1H20 2018 2019 1H20 Total Assets 479.6 531.1 536.3 ROE (%) Total Liabilities 421.5 464.5 468.6 Total Equities 58.1 66.6 67.7 ROA (%) 16.6% 2.1% Risk-Based Capital (RBC) 323.7% 12.4% 1.5% 385.7% 10.8% 1.4% 311.1% Source: Muang Thai Life Assurance, data based on book value except for RBC Note: OIC Office of Insurance Commission บริการทุกระดับประทับใจ 96#49k KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK MTL Investment Portfolio and Insurance Premium MTL Investment Portfolio: MTL Total Premium Fixed Income accounted for around 86% (bn) Debenture 26.2% 120 102.7 97.0 94.5 100 83.8 Stock LZM 80 60 Noba 40 33.8 31.1 4.1% Policy Leen 20 Gov & S/E Bond 51.0% 40% Unit Trust 43% 20 Deposit Martyege La3% Total Premium Growth MTL Industry (%YOY) Y2016 10% 6% 35.9 Y2017 6% 6% 26.0 26.3 22.8 Y2018 -8% 4% 9.6 Y2019 -11% -3% 63.2 71.6 71.7 57.9 1H20 -16% -3% 2016 2017 2018 2019 1H20 New Business Premium Renewal Year Premium ■Total Premium Assets Under Management (AUM)* (1H20): Bt509.6 bn Total Premium by Products: Ordinary product accounted for around 86% Source: The Thai Life Assurance Association Total Premium by Channels: Bancassurance accounted for about 63% in 1H20 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 2017 2018 2019 1H20 0% ■Group Personal Accident Industrial ■Ordinary 2016 Other 2017 ■Direct Marketing 2018 2019 1H20 ■Bancassurance ■Agents *Remark: Invested Assets + Investment Property K Source: The Thai Life Assurance Association (TLAA) / 1H20 data from TLAA monthly report (new format) บริการทุกระดับประทับใจ ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK KASIKORNTHAI MTL International Business Expansion MTL Current International Business Project (On-going) Company Name Cambodia Sovannaphum Life Assurance Plc. Lao PDR ST-Muang Thai Insurance Co., Ltd. Vietnam MB Ageas Life Insurance Co., Ltd. Entry Strategy เมืองไทย Joint Venture with Canadia Investment Holding Plc. Ownership by MTL 49% Joint Venture with ST Group Co., Ltd and Muang Thai Insurance Company Limited Joint Venture with Military Bank and Ageas (MTI) 22.5% 10% Myanmar Year of Establishment 2015 2016 2016 2014 Business Operation Life Insurance Composite Insurance Life Insurance Representative Office (Life & Non-Life) บริการทุกระดับประทับใจ 97 98#50K KASIKORNTHAI MTL's Life Insurance Product Profile Four Major Types of Life Insurance Product ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■ Ordinary Life Insurance Products: Provide life protection for a fixed amount to an insured person Can be further classified into four sub-categories; ➤ Endowment Life Insurance: Savings type product; insured person receives an amount at the certain period of time or a designated beneficiary receives death benefits upon the death of the insured person within the insured period (e.g. Pro Saving products) Term Life Insurance: Provides temporary protection with no savings component. Claim can be made upon death within the stated term period (e.g. MRTA products) Whole Life Insurance: Provides life time protection (to the age of 90 or 99) with the death benefit paid to the beneficiary upon the death of the insured (e.g. Pro Life products) Rider: Additional coverage desired by the insured (sample of additional coverage: medical expense, accident) ■Group Life Insurance Products: Term insurance covering a group of people, usually employees of a company or members of a union or association ■Industrial Insurance Products: Life insurance with a modest amount of coverage, low premium, and no health check requirement ■Personal Accident: A limited life insurance designed to cover the insured in case of personal accident บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Sample of K-Bancassurance and MTL Products K BANCASSURANCE K-Bancassurance Products¹ เอ ไทย Muang Thai Life Assurance Products² Endowment Life Insurance Endowment 615 Participating (Global) Pay premium for only 6 years, but the coverage continues for 15 years ความ ครองชีวิต ม 3% ของจำนวนเงินเอาประกันกับ ณ วันเริ่มเมืองคุ้มครองตามกรมธรรม์ หรือมูลค่าเพิ่มขึ้นในระยะนั้น ตามแต่จำนวนใดจะมากกว่า Life coverage is in % of the initial sum insured, or cash surender value at the time, whichever amount is higher 600% Muang Smart Linked 17/7 Pay premium for only 7 years, but the coverage continues for 17 years ชำระเบี้ยประกันภัย 550% 440% 300% Premium payment at the 220% Life Cona beginning of policy year 110% De I En End of policy year 0 1 2 3 4 5 7 8 9 10 11 12 13 14 15 นาย Cash bonus - - - - - รับเงินจ่ายค้น 5%. ณ ในปีกรมธรรม์ ทุกๆ 2 ปีกรมธรรม์ ยกเว้นในปีกรมธรรม์ที่ครบกำหนดสัญญา - - - - - Raging near Cash Receive cash bonus at 5% at the end of policy year for every two polley years. Except at the end of polley maturity Maturity Be 600% Ad Matty dar Term Life Insurance MRTA-Home (Mortgage Reducing Term Assurance) Berk 5% 240th 5 6 596 5% 5% 5% Coverage period 17 Years Premium Payment Period 7 Years 5% Bestanddrage is % of the initial sum insured in case the benefit amount and coverage one statedinoortedly when calculating in 5, the specified 9 shall appl (2) The dividend shell be paid to the insured whole upon contact maturity only. However, the company does not guarantee maturity dividend. (The amount shown only) (3) in the schedule is calculated based on "MaturityDudend the above shouthender value at that time which Term Life Insurance 16 99 5% 700% + Maturity dividend Example, in case the customers choose to insure their loan in full term and full coverage Loan Amount Sum insured amount Premium payment at the beginning of policy year The contract starts Coverage of Pitaksin-Home is equivalent to the reducing sum Insured amount The customers can choose to continue the coverage throughout the contract term or receive cash surrender value Khumkhrong Baep Khongthi Life-Bukkhon Single Premium payment period, but the coverage can be chosen between 1 - 15 years Coverage Period Premium Payment Period 1-15 Years Single Premium 100% (1) Life Coverage Policy Year " a " 4 " Coverage Loan Amount Scenario 1: Death or total and permanent disability Term of installment loan End of Policy Year 10 11 12 13 14 15 Term of insurance Premium Payment Scenariola Early Redemption at the Beginning of Policy Year Remark (1) Is in % of the initial sum insured Remark: the above coverage is based on an assumption that the customer's credit repayment history is normall according to the Bank's loan contract 1) K-Bancassurance products are MTL's life insurance products selling through KBank 2) Muang Thai Life Assurance products are MTL's life insurance products selling through MTL sales agents, and/or other channels บริการทุกระดับประทับใจ Maturity 100#51K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Sample of K-Bancassurance and MTL Products K BANCASSURANCE ASCENTHI K-Bancassurance Products¹ Whole Life Insurance เชียงใหย Muang Thai Life Assurance Products² Whole Life Insurance Khumkhrong Talot Chip 99/5 Life insurance with a premium payment of only 5 years, but the coverage continues to age 99 years ตัวอย่าง Example ชำระเบี้ยประกัน นปีกรมธรรม์ Premium payment at the beginning of policy year ความคุ้มครองชีวิต 100% ของจำนวนเงินเอาประกันภัย หรือมูลค่าเวนคืน หรือจํานวนเบี้ยประกันภัยที่ได้ชำระไว้แล้ว (ตามแต่จํานวนโคจะมากกว่า) Life coverage at 100% of sum insured or surrender value or paid premium (whichever is higher) สิ้นปีกรมธรรม์ 0 1 2 8 End of policy r หยุดชำระเบี้ยประกัน Stop premium payment 6 Muang Thai Happy Return 99/7 Saving plan with whole life coverage: pay premium for only 7 years and get coverage to the age of 99 100%Life Coverage or cash surrender value at that time or 101% of paid premium (whichever is higher) Attaining the Age of 330567 28-29 Years Elite Health Rider ອາຍຸ 97 າຍຸ 98 ຄົນອາຍຸ 99 ປີ Age of 97 Age al 98 Attaining the age of 99 Shawloon 100% Maturity Benef End of Policy ear Premium Payment at the Beginning of Policy Year Cash Bunue Remark 1% annual cash bonus from the end of policy year 1-attaining the age of (1) Is in % of the initial sum insured. 100% (2) In case of being alive until contract maturity, the benefit is 100% of the initial sum insured or 101% of paid premium (whichever is higher). (3) Life coverage is 100% of the initial sum insured or cash surrender value at that time or 101% of paid premium (whichever is higher). Rider D Extra Care Plus Campaign Ja High coverage C from 20-100 million Baht/year Cover critical Illnesses Cover overseas treatment including cancer treatment by Targeted therapy based on coverage area 1) K-Bancassurance products are MTL's life insurance products selling through KBank Daily room benefit of up to 8,000 Baht) Coverage for medical expenses that exceed existing with maximum coverage of 400.000 Bath per any hospitalization) 2) Muang Thai Life Assurance products are MTL's life insurance products selling through MTL sales agents, and/or other channels บริการทุกระดับประทับใจ IPD lump sum coverage with minimum premium of 285 Baht per month K KASIKORNTHAI KBank: Other Information ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 101 บริการทุกระดับประทับใจ 102#52K KASIKORNTHAI Shareholder Structure April 10, 2020 (Record Date) Shareholder Structure Top 10 Shareholders* ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK % 1. THAI NVDR CO., LTD** 18.550 2. STATE STREET EUROPE LIMITED 8.510 3. Thai Shareholders 51% SOUTH EAST ASIA UK (TYPE C) NOMINEES LIMITED 5.936 Foreign Shareholders 49% 4. SOCIAL SECURITY OFFICE 3.589 (NVDR 5. BNY MELLON NOMINEES LIMITED 3.299 = 18.550%**) 6. THE BANK OF NEW YORK MELLON 2.338 7. STATE STREET BANK AND TRUST COMPANY 2.132 8. SOUTH EAST ASIA UK (TYPE A) NOMINEES LIMITED 1.669 Note: 9. NORTRUST NOMINEES LIMITED-NTO SEC LENDING THAILAND CL AC 1.362 Thai Shareholding Limit Foreign Shareholding Limit 51% 49% 10. GIC PRIVATE LIMITED Other Shareholders Total 1.310 51.305 100.000 Note: The Top 10 Shareholders are based on individual accounts ** Thai NVDR Co., Ltd (Thai NVDR) is responsible for issuing and selling Non-Voting Depository Receipts (NVDRS) to investors. The Stock Exchange of Thailand (SET) is the major shareholder, holding 99.99% of the total shares, of Thai NVDR. The NVDR limit for KBank is 25%. *** Thailand Securities Depository Company Limited (TSD), a subsidiary of the Stock Exchange of Thailand, provides three types of securities post trade services: securities depository services, securities registration services, and provident fund registration services; the shareholders booked under TSD are those who are not eligible for dividend payments as their investment is not aligned with their citizenship (i.e. foreign investors buying KBank shares on the local board or Thai investors buying KBank shares on the foreign board) Source: Thailand Securities Depository Company Limited (TSD), the Stock Exchange of Thailand website (www.set.or.th), and KBank บริการทุกระดับประทับใจ K KASIKORNTHAI Credit Ratings As of Aug 24, 2020 Local Currency/ National Long-term Subordinated KBank Foreign Currency Senior Unsecured Subordinated Debts Notes Long-term * Debts Outlook ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Thailand Government Outlook Foreign Local Currency Currency S&P's BBB+ Watch BBB+ N/A N/A N/A BBB+ A- Negative¹) Stable 2) Moody's Baa1 Baa1 Baa3 Baa1 N/A Stable ³) Baa1 Baa1 Stable 4) Fitch BBB5) BBB5) BB+5) AA+ (tha) AA-(tha)5) Stable BBB+ BBB+ Stable 6) Note: * Moody's: Foreign Currency Long-term Deposit Rating; S&P's: Long-term Counterparty Credit Rating; Fitch Ratings: Foreign Currency Long-term Issuer Default Rating 1) August 24, 2020: S&P's changed the outlook on the long-term ratings of two Thai banks, including KBank, to watch negative from stable, following the change in the outlook for the banking industry outlook to negative from stable on August 21, 2020 2) April 13, 2020: S&P's downgraded its outlook on Thailand's sovereign credit rating to 'Stable' from 'Positive'; reflecting its view that the COVID-19-induced economic uncertainty and the state of emergency declaration could delay political transitions expected under the civilian government over the next 12 months 3) April 22, 2020: Moody's changed the outlook on the long-term ratings of ten Thai banks, including KBank, to stable from positive, following the change in the outlook for the sovereign's rating to stable from positive on April 21, 2020 4) April 21, 2020: Moody's changed the outlook on the Government of Thailand's issuer ratings to stable from positive, as the drivers of the outlook change to positive July 2019 have become significantly less likely to materialize, such as delays in policy implementation, ongoing political tensions, and the deep economic shock caused by the COVID-19 outbreak 5) April 2-8, 2020: Fitch downgraded KBank's ratings, including SCB, BBL and BAY, due to the challenging operating environment and the large-scale economic disturbance caused by the COVID-19 pandemic 6) March 17, 2020: Fitch downgraded the outlook of Thailand to stable from positive, reflecting the evolving impact of the global COVID-19 outbreak on Thailand's economy through its tourism sector as well as lingering uncertainty in Thailand's political environment following the country's transition to civilian rule บริการทุกระดับประทับใจ 103 104#53K KASIKORNTHAI Organization Chart ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Auditor Shareholders Corporate Secretary Board of Directors Operating Committee Management Committee Advisory Council to the Board of Directors/ Legal Adviser Independent Directors Committee Corporate Governance Committee Human Resources and Remuneration Committee Audit Committee Risk Oversight Committee Audit Division Corporate Secretariat Division Corporate Business Distribution Network Division Division Private Banking Group Capital Markets Business Division Investment Banking Business Division World Business Group Strategy and Analytics Division Transaction Banking Credit Products Division Division Enterprise Risk Management Division Customer and Enterprise Service Fulfillment Division Finance and Control Division Human Resource Division บริการทุกระดับประทับใจ K KASIKORNTHAI Board of Directors Structure ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■16 board members: 9 Independent Directors, 3 Executive Directors, and 4 Non-Executive Directors ■Director age limit is 72 years old ■Term limit of directorship for Independent directors shall not exceed nine consecutive years Lead Independent Director and Independent Directors Committee were appointed in order to ensure proper checks and balances Executive Directors (3) ⚫ Ms. Kattiya Indaravijaya (Chief Executive Officer) ⚫Mr. Pipit Aneaknithi (President) • Mr. Patchara Samalapa (President) Non-Executive Directors (4) ⚫Ms. Sujitpan Lamsam (Vice Chairperson) ⚫Dr. Abhijai Chandrasen (Legal Adviser) • Mr. Sara Lamsam ⚫ Ms. Chonchanum Soonthornsaratoon Independent Directors (9) ⚫ Ms. Kobkarn Wattanavrangkul (Chairperson of the Board and Lead Independent Director) . Sqn.Ldr. Nalinee Paiboon, M.D. (Chairperson of the Corporate Governance Committee) • Mr. Saravoot Yoovidhya ⚫Dr. Piyasvasti Amranand (Chairman of the Risk Oversight Committee) .Mr. Kalin Sarasin (Chairman of the Audit Committee) • Mr. Wiboon Khusakul ⚫ Ms. Suphajee Suthumpun (Chairperson of the Human Resources and Remuneration Committee) • Mr. Chanin Donavanik ⚫ Ms. Jainnisa Kuvinichkul Chakrabandhu Na Ayudhya Note: More information on the Board of Directors biographies can be found on our website https://www.kasikornbank.com/EN/about/Pages/board-of-directors.aspx บริการทุกระดับประทับใจ 105 106#54K KASIKORNTHAI Sustainable Development KASIKORNBANK conducts business with the foundation of Bank of Sustainability, with appropriate risk management and good corporate governance principles. We strive to balance economic, social, and environmental dimensions to achieve goals and create sustainable long-term returns. The philosophy of sustainable development is instilled in all our operations as part of our Green DNA, ensuring maximum benefit for all stakeholders and paving the way for sustainable growth. Economic Aspect Corporate Governance Customer Centricity Innovation Financial Knowledge • Risk Management BANK OF SUSTAINABILITY CIAL ASPEC Existeyen GREEN burcial ECONOMIC ASPECT INTERNATIONAL Dow Jones Sustainability Indices In collaboration with AM AM Sustainability Award Bronze Class 2020 FTSE4Good MSCI Sambay +CDP GLOSSZUMENTACTI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK PRIDE OF KBank The first and only commercial bank in Thailand and ASEAN selected as a member of the DJSI World Index and DJSI Emerging Markets Index for four consecutive years (2016-present) KBank has been classified in the Bronze Class of the banking industry category by RobecoSAM (2018-present) A member of the FSTE4Good Emerging Index for four consecutive years (2016-present) KBank's Leadership Level rating is at AA for its ESG performance among emerging market banking sector peers The first Bloomberg Gender-Equality Index (GEI) member from Thailand. The Bloomberg Gender-Equality Index (GEI) distinguishes companies committed to transparency in gender reporting and advancing women's equality for two consecutive years (2019-present) The first Thai commercial bank with an A- Management Level rating, assessed by the Carbon Disclosure Program (CDP) • Customer Data Security and Privacy Social Aspect Labor Relations Management and Employee Caring Employee Development Occupational Health and Safety Youth Education Development and Community and Social Development Environmental Aspect Financial support to environmentally- friendly businesses Environmentally friendly and reducing the environmental impacts of our own operations Adaptation and mitigation of the impact of climate change Zero Carbon Society ENVIRONMENTAL ASPECT Protoc Commitment-based Sustainable Finance Initiatives Participating in commitment-based sustainable finance initiatives which are UN Principles for Responsible Banking, TCFD and memorandum of agreement on establishing responsible lending practices. UNEP PRINCIPLES FOR HNANCE RESPONSIBLE NTATIVE BANKING TCFD NATIONAL THSI Included in Thailand Sustainability Investment (THSI) for THAILAND four years (2015, 2017- SUSTAINABILITY INVESTMENT 2019 ESG100 present) ESG 100 certificate 2020 SET SET Sustainability Awards - Outstanding granted by the Stock Exchange of Thailand for two consecutive years (2018-2019) Sustainability Report Award 2019 Sustainability Disclosure Award (Certified by Thaipat) A The first and only carbon commercial bank in Thailand neutral granted Carbon Neutral granted by Thaipat Institute Certification (2018-2019) RANK OF THAILAND อนาคารแห่งประเทศไทย บริการทุกระดับประทับใจ Note: More information on our Sustainable Development can be found on our website and KBank's Sustainability Report 2019 107 K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Example of Economic Aspect: ESG Risk Management ■KBank has integrated ESG considerations into the risk management framework, with particular attention given to risks related to lending, investment, products, and services At the management level Lending activities are structured so as to demonstrate environmental and social responsibility as follows Board of Directors Risk Oversight Committee Corporate Governance Committee Credit Risk Management Sub-committee Business Units Monitoring and Controlling Function Board of Directors Approving risk management policy, frameworks, risk limits and risk appetites ■Risk Oversight Committee Overseeing and ensuring compliance with consolidated risk management policies and strategies and acceptable risk appetite Assessing risk management policies and strategies to cover all risks including emerging risks Corporate Governance Committee Overseeing, monitoring, and undertaking sustainable development ■ Approving credit policy addressing environmental and social impact management in lending and investment activities ■ Ensuring effective practice of environmental and social risk management Business units Screening environmental and social risks of projects to be supported Ensuring and monitoring projects' compliance with regulations/ environmental and social management plans ■Monitoring and Controlling Functions Ensuring credit policy and procedure compliance Reporting project finances and concerning environmental and social issues to the Corporate Governance Committee At the transaction level The Bank ensures that lending transactions violate neither the law nor social ethics Offences relating to narcotics Offences relating to gambling Offences relating to exploitation of natural resources Offences relating to embezzlement Offences relating to terrorism Offences relating to human trafficking Environmental and Social Assessment Classify project finance type and conduct environmental and social impact assessment (ESIA) Request management approval to conduct project feasibility study (If not approved, projects are terminated) Consider all details and initiate negotiations on environmental and social issues as well as on credit possibility Approve/reject application within delegated lending authority along with designating environmental and social impact conditions บริการทุกระดับประทับใจ 108#55K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Examples of Economic Aspect: CG and Anti-Corruption Corporate Governance ■ Reviewing KBank practices under Thai IOD, ASEAN CG Scorecard, and Dow Jones Sustainability Indices (DJSI) criteria, including Sustainable Development Policy in accordance with the Bank's business and Sustainable Development Goals ➤ Human Rights Policy and KBank Tax Policy in compliance with the Bank's business and International Sustainability Standards Implementing a strategic plan for CG activities to enhance compliance by directors, executives, and staff with CG principles, Code of Conduct, and Anti-Corruption Policy through ➤ Organizing training courses ➤ Continually communicating via e-Learning system ➤ Communicating with companies within KASIKORNBANK FINANCIAL CONGLOMERATE to ensure consistency of operations ■ Reviewing Vision, Mission and Core Values, CG Policy, and related Charters; keeping them up-to-date in accordance with Ongoing business operations and Bank Sustainability Compliance with laws, international practices, and best practices as prescribed by regulatory agencies and competent agencies Note: Thai IOD = Thai Institute of Directors; CG = Corporate Governance Anti-Corruption • KBank, KAsset, and KSecurities co-signed a declaration of the "Private Sector Collective Action Coalition Against Corruption (CAC)" project and have been recognized as CAC certified companies since 2013 • BOD approval and annual reviews of Anti-Corruption Policy, including issues such as bribes and inducements, gifts and benefits, charitable contributions and sponsorships, and political participation • Internal Communication on Anti-Corruption Policy to ensure proper practices within the organization by Organizing training courses for executives and employees Communicating with all directors, executives and employees via KBank electronic networks and website • Communicating with suppliers on operational guidelines, including Guidelines for acknowledgement and compliance related to business ethics, human rights, labor, occupational health and safety, and the environment Establishment of guidelines on KBank's Supplier Code of Conduct Communication on business operations in compliance with anti- corruption policy and practices Arrangement of supplier meetings on KBank's procurement procedures Communication with customers and suppliers on No Gift Policy for all occasions and festive seasons บริการทุกระดับประทับใจ K KASIKORNTHAI Examples of Social and Environmental Aspects Social Aspect ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Environmental Aspect 1. Management of Climate-related Risks and Opportunities 1. Financial Inclusion and Financial Literacy • Providing financial knowledge and adding new channels of financial access for all customer categories and underprivileged groups Supporting customers' financial discipline to alleviate household debts 2. Human Resource Management • Embracing equitable treatment for employees regardless of differences Providing various channels for complaints and suggestions 2. Financial Support To Environmentally Friendly Businesses . • . Assessing climate scenario analysis quantitatively and qualitatively Reporting based on the Task Force on Climate-related Financial Disclosures (TCFD) recommendations Offering financial support to renewable energy power and environmental conservation projects Developing employee skills and abilities in alignment with K-Strategy Providing a healthy and safe workplace • Issuing sustainability bonds and investing in green bonds • 3. Human Rights Operations Operating business in line with the United Nations Guiding Principles on Business and Human Rights throughout the value chain 3. Environmental Management in KBank • Appointing CEO to act as Chief Environmental Officer to drive KBank's environmental operations • Committing to transform to a low carbon society . Implementing human rights risk assessment covering all operations of KBank, K Companies, P Companies, suppliers, and joint ventures 4. Social Contributions • Applying the social activity framework based on the London Benchmarking Group (LBG)* since 2015 Supporting various projects by extending budgetary support and donating items to create positive impact for society and communities GREEN DNA 248,180 Volunteer Targeting to reduce GHG emissions by 6.1% by 2023 (base year 2018) TCFD carbon TASK FORCE ONE CLIMATE RELATED FINANCIAL DISCLOSURES The first Thai commercial bank to become a TCFD Supporter. The first Thai and ASEAN bank to launch a Sustainability Bond 109 (Scope 1 & 2) Hours ZERO Human Rights Policy and Due Diligence GHG Emissions Human Rights Process injury 103,997 tons CO2 (15.7% decrease from base year 2012) UILDING CO GREEN BU CUSTAC KBTG-LEED-Platinum Note: *London Benchmarking Group (LBG) standard is used to evaluate the monetary value of corporate spending on social responsibility activities, including donations, hours of volunteer work an proportion of community investment. บริการทุกระดับประทับใจ 110#56K KASIKORNTHAI Public Recognition Highlight: 2019-1H20 1H20 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK AM Sustainability Award Bronze Class 2020 THE DIGITAL EANKER L Dow Jones -The Bronze Class of the banking industry category by RobecoSAM Sustainability indices - Winner: Best Digital Customer Experience in Wealth Management - Winner: Loan Offering of the Year - Winner: Outstanding Customer Experience for Loans - Winner: Best Customer Experience - Debit Card - Highly Acclaimed: Best Digital Customer Experience in Private Banking - Highly Acclaimed: Best Digital Customer Experience - Loan Application - Winner: Best Private Bank- Digitally Empowering RMS - Highly Acclaimed: Outstanding Private Bank Growth Strategy Highly Acclaimed: Best Private Bank- Digital Client Communication - Highly Acclaimed: Best Private Bank for HNWIS Private Banking 2020 IFRASIA AWARDS 2019 - Thailand Bond House of The Year -Thailand Capital Markets Deal of the Year Best Service Provider: Transaction Bank FinanceAsia Best DCM House in Thailand - Best Service Provider: Cash Management Best Private Bank in Thailand - Top Outright Primary Dealer 2019 BANK OF TRALAND a Radio BrandAge - Best FX Bank for Structured Products 2019 An index component of the Dow Jones Sustainability Indices (DJSI) 2019, including the DJSI World Index and the DJSI Emerging Markets Index SAM -The Bronze Class of the banking Sustainability Award industry category by RobecoSAM Bronze Class 2019 WWF - Named the Leading Thai Bank in Sustainable Development - Rating is at AA, leadership Level in its MSCI ESG performance among emerging market banking sector peers. International (Thailand Edition) Business Media - HR Asia Best Companies to Work for in Asia TM 2019 Institutional Investor FTSE4Good A member of the FSTE4Good Emerging Index 2019 CDP-A-score from 2019 Carbon Disclosure Project (CDP) GROUP A member of the 2020 Bloomberg Gender-Equality Index - Gold Award: Best Recruitment Marketing Brandon Hall and Employer Branding Program Bronze Award: Best Learning Program Supporting a Change Transformation Business Strategy ASEAN Most Honored Companies -ASEAN Overall Best ESG/SRI Reporting - Best CFO-Thailand GARANCE - Best Trade Finance Providers The Asset ESG Corporate Awards - Platinum Award EUROMONEY-Asset Management Award THE ASSet-Best Service Provider: Cash Management, Thailand Best Service Provider: E-Solutions Partner α - Best Service Provider: E-Solutions Partner, Thailand Best Cash Management Bank in Thailand Best Bond House in Thailand APAC Best FX Bank for Corporates and Fls in Thailand - Best Corporate Treasury Sales and Structuring Team - Best FX Bank for Retail Clients -2020 Thailand's Most Admired Brand for K-Credit Card products and K PLUS WISESIGHT Best Brand Performance on Social Media in Banking Category - Most Prominent Fund House in Corporate Bond Market Top Underwriting Bank 2019 - Deal of the Year 2019 ThaiBMA MORNINGSTAR Best Fund House Domestic Equity Best Retirement Mutual Fund - Equity - Best Long-Term Equity Fund PшM - Best Private Bank for Portfolio Management Technology - Asia IDC 1 of 20 Asia/Pacific Best Bank for 2020 ASIAMONEY - Thailand - Best for ESG AMEEN Best Private Bank in ASEAN - Best Private Bank in Thailand. Winner: Excellence in Next-Gen Customer Experience Highly Acclaimed: Best Product or Service Innovation - Highly Acclaimed: Best Customer Insight & Feedback Initiative ASIAN PRIVATE BANKER Best Private Bank - Thailand Domestic. - Winner: Best Debit Card Initiative RETAIL BANKER - Highly Commended: Excellence in Service Innovation - Gold Award: The Best Asia Pacific Contact Center Innovation BANKING & FINANCE Domestic Cash Management Bank of the Year - Domestic Retail Bank of the Year-Thailand - Advertising Campaign of the Year-Thailand - Best Repo Primary Dealer BANK OF THAILAND - Highly Commended: Best Staff Training and Development Programme Best Retail Bank in Thailand -Best Private Bank for Digital Culture in Asia TAB. Best Digital Brand Initiative PUM-Best Private Bank for Digitally Empowering Relationship Managers in Asia FinanceAsia SET Best DCM House in Thailand - Best Private Bank in Thailand Highly Commended in Sustainability Awards Best Innovative Company Awards บริการทุกระดับประทับใจ ANIMA - Private Banking Digitalisation MORNINGSTAR - Asset management company champion Granted Carbon Neutral Certification K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Banking System and Regulations Update 111 บริการทุกระดับประทับใจ 112#57K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Thai Commercial Banks and Specialized Financial Institutions (SFIs) Market Share (% of Total Loans) Market Share (% of Total Deposits) 15,651 16,296 16,843 17,707 18,463 19,178 26.2% 26.7% 20,516 26.8% 26.4% 26.8% 27.0% Bt Billion Bt Billion 6 SFIs 24,000 souilu 20,000 16,000 EXIM 29.4% 15,866 16,680 17,004 17,765 18,869 19,358 20,032 29.9% 30.0% 30.4% 30.2% 29.9% 29.9% 24,000 12,000 20,000 16,000 12,000 25.3% 8,000 8,000 14 Commercial Banks Bangkok Bank susns-aine ธนกรไทย 4,000 4,000 70.6% 70.1% 70.1% 70.1% 70.0% 69.6% 69.8% 0 0 2014 2015 2016 2017 2018 2019 2Q20 ■SFIs Commercial Banks 74.7% 73.8% 73.3% 73.2% 73.0% 73.2% 73.6% 2014 2015 2016 2017 2018 2019 2Q20 SFls Commercial Banks Net Loans Deposits Inow SCB Bt Billion 14,000 12,372 Bt Billion 16,000 I 14,129 8 ธนาการรบ CIMB TMB 12,000 10,122 10,470 10,602 11,061 11,633 11,859 22.9% 22.2% 10,000 22.8% 22.1% 22.7% 22.8% 23.5% 8,000 12.9% 10.9% KIATNAKIN BANK 6,000 14.6% 14.4% 18.1% 18.1% 11.3% 12.3% 15.0% 15.0% 16.4% 15.8% 12.5% 15.1% 13.6% 15.4% 15.7% KTB Other BAY 13.3% KBank 14,000 12,099 12,578 13,057 Other 12,000 10,000 11,035 11,196 11,359 21.2% 21.5% 21.5% BAY 21.2% 20.6% 21.5% 8,000 15.7% 15.8% 16.8% BBL 6,000 9.4% 9.7% 9.0% 14.8% 15.3% 15.8% 17.4% 20.6% 10.9% 11.3% 15.5% 17.1% 11.9% 12.0% KBank I 16.3% 15.8% 16.5% 16.2% 15.8% KTB 16.7% 19.1% ■BBL LH BANK ICBC 4,000 19.5% I Standard Chartered S 16.4% 16.1% 15.5% 15.5% SCB 4,000 17.7% 2,000 16.2% 16.4% 16.8% 16.9% 16.8% 17.5% 18.6% 2,000 17.5% 17.4% 16.8% 16.4% 18.1% 18.2% 18.6% 17.1% 16.8% 17.8% 17.3% 17.1% 16.5% 15.9% 18.0% 17.9% SCB 0 0 I 2014 2015 2016 2017 2018 2019 2Q20 2014 2015 2016 2017 2018 2019 2Q20 Note: 6 SFIs include Government Saving Bank (GSB), Government Housing Bank (GHB), Export-Import Bank of Thailand (EXIM Bank), Bank for Agriculture and Agricultural Co-operatives (BAAC), Small and Medium Enterprise Development Bank of Thailand (SME Bank), and Islamic Bank of Thailand (IBank) บริการทุกระดับประทับใจ K KASIKORNTHAI FinTech and TechFin in Thailand Business Tools Product Presentation Al/Machine Learning ACOMPUTERLOGY Fundraising Convolab Albatoz asiola DESAM dreamaker Data Management Cloud Accounting Platform FLOWACCOUNT.COM APEAK plizz TRCLOUD ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Transaction Facilitation Post-Sale Servicing Employee Data Management Financial Simulation bonkerslob MONETTABLE Exive m investree 口 MEE PUND TALAD INVOICE AGENTMETE FairDee direct 0513 frank.co Insurtech ก direct Petinsure masji Grob SILKSPAN Petinsure refinance AGENTMITE direct Fair De in direct Claim Di Gavinsure refinance SILKSPAN Gsavinsure SILKSPAN RM coins.co.th Investment Management ITAXC investor masji OhMyGeorge once Setscope stockmorrow TDAX WEALTHCARE Finnista FINCAST F FINNOMENA Finnista Investor ITAXC Jitta Q WEALTHCARE OnMyGeorge Setscope Stock BIDS coins.colh ITAX rabbiyinance Setscoper TDAX WEALTHCARE coins.cath F FINNOMENA Samant Jitta FINCAST Finnista Setscope TDAX WEALTHCARE Borrow beehive Refinn Grob investree M bee Grob Finnista beehive Cocon PeerPower .com HONEYTABLE Lending PeerPower Refinn Satangare.com SILKSPAN WWEALTHI SILKSPAN WEALTHI Refinn Salangdee.com WEALTHI SILKSPAN WEALTHI Payments & Transactions ChomCHOB Grob 202P coins.co.th ChomCHOB ac AirPay D Lith KHÓA oonsoon ce pay digio Grob 202P digio omise robbit (Pay THEPAY siampay THAEPAY EVEREX ⚫omise Pay Social LAVEY omise TDAX siampay TDAX HOODAY Sources: Thai Fintech Association, PitchBook, Techsauce, and KResearch (as of October 2019) บริการทุกระดับประทับใจ coins.co.th 113 114#58K KASIKORNTHAI Non-Banks in Thailand: Lending Products Credit Card Personal Loans ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Micro/Nano/Pico Loan EON AIRA & AIFUL ascend nano M EASY citi advance The AMERICAN KTC CHOM CARD EXPRESS EON TESCO credit Lotus card krungsri Cam fintech First Choice Kungs Krungsri First Choice CENTRAL OK wsDia The THE 1 PROMISE CREDIT CARD SINGER ngdao AIRA & AIFUL ASIA WEALTH PLUS ascend nano Chayo A.T.LEASING ahm First Choice HENG LEASING Capital MIDA LEASING TESCO credit Lotus card เงินเทอร์โบ ควิก TOYOTA LEASING THAILAND TURBOCASH €3 MIDA LEASING TO A Sources: The Bank of Thailand and KResearch (as of October 2019) บริการทุกระดับประทับใจ Joola B เงินติดล้อ To naudmon THAI ACE CAPITAL เงิน douon SGFCAPITAL Public Company Limbed TURBOCASH gana K KASIKORNTHAI Thailand's Digital Readiness: Number of Users ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK ■ High adoption of digital lifestyle in Thai market; high penetration in smart devices and internet users in preparation toward a cashless society (Mobile Banking & e-Money ) 145.4% Penetration Mobile Internet 1) (Mobile internet numbers) 46.9% Penetration Broadband Internet 2) (No. of households using internet via broadband) Prompt Pay พร้อมเพย์ 54.7 Million 98.1% Penetration 48.6% Penetration PromptPay 4) (Total registration) Mobile Banking 4) (No. of accounts) Internet Banking 4) (No. of accounts) 75.0% Penetration Social Media ³) (No. of Facebook users) 156.3% Penetration e-Money 4) (No. of accounts/ cards) Source: The Bank of Thailand (BOT), National Statistical Office of Thailand (NSO), Thai Banker Association (TBA), Ministry of Interior (MOI), wearesocial and KResearch Notes: Denominator for all penetration ratio is number of population age six and above as of December 2019. Denominator for fixed internet penetration is number of household. 1) As of March 2020, 2) As of December 2019, 3) As of January 2020, 4) As of May 2020 บริการทุกระดับประทับใจ 115 116#59K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Banking Institutions are Main Intermediaries for Transactions in Thailand E-payment Volume E-payment Value Million Transactions Trillion Baht 10,000 8,985.1 (+47.7%) 450 9,000 400 8,000 350 327.7 (+15.8%) 339.4 (+3.6%) 375.0 (+10.5 %) 408.2 (+8.9%) 282.9 7,000 6,084.0 (+44.9%) 300 266.3 (+6.2%) (+5.5%) 6,000 4,743.2 250 4,199.9 5,000 (+43.7%) (+31.0%) 3,205.3 4,000 2,286.1 3,000 (+12.8%) 2,589.8 (+23.8%) (+13.3%) 3,301.8 (+50.1%) 200 188.2 166.1 (+13.3%) (+6.9%) 150 100 2,000 1,000 50 0 0 2014 2015 2016 2017 2018 2019 5M19 5M20 2014 2015 2016 2017 2018 2019 5M19 5M20 Notes: Volume and value of electronic payment transactions reported by e-Payment service providers, including banks and non-banks, under the Royal Decree Regulating on Electronic Payment Services B.E. 2551 (2008). Channels shown in graphs are; 1) BAHTNET 2) Bulk Payment including direct credit, direct credit, and ITMX Bulk Payment (SMART) 3) Interbank Funds Transfer (Online Retail Funds Transfer: ORFT) including ATM, internet/ mobile phone, and counter 4) Inhouse Funds Transfer including ATM and internet/mobile/ telephone 5) Payment cards including debit card and credit card 6) e-Money Sources: BOT บริการทุกระดับประทับใจ 117 K KASIKORNTHAI Regulations Update Capital (Basel III) ■D-SIBS* Buffer: Currently, D-SIBS are required to maintain a D-SIBS Buffer at 1% ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK BCBS has finalized the new requirements on risk weighted asset (RWA) calculations including credit risk, operational risk, and CVA risk. The main objectives of the revision are to reduce variability in RWA across banks and jurisdictions and to balance simplicity and risk sensitivity of capital requirements Financial Sector Master Plan II (FSMP II) Year 2010-2014: BOT's FSMP II consists of three key policies: 1) Reducing system-wide operating costs; 2) Promoting competition and access to financial services; and 3) Strengthening financial infrastructure, including market liberalization, which will increase access by foreign financial institutions via granting licenses in some business areas as well as permission to increase number of branches and ATMs Year 2014-2015: BOT established a licensing framework for new types of business operations for specific underserved markets, i.e. Nano-finance Financial Sector Master Plan III (FSMP III) 22 Mar 2016: Cabinet approved FSMP III (2016-2020), with aims to establish strategic framework for continuous financial sector development and ensure challenges arising from the changing environment will be effectively managed Overall: FSMP III comprises four main initiatives: 1) Promote electronic financial and payment services as well as enhance efficiency of Thai financial system; 2) Support regional trade and investment linkage; 3) Promote financial access; and 4) Develop relevant infrastructure 1Q17: BOT adopted the 'regulatory sandbox' which allowed regulatory flexibilities to be granted to financial institutions and FinTech companies to experiment with FinTech businesses with plans to grant a new license for P2P lending players ➤Impacts on Thai banks: Move toward further liberalization and digitalization, along with enhanced competition from FinTech and non-bank companies ➤Impacts on KBank: Ability to maintain competitiveness over both existing and new players, helped by an effective customer-centric strategy and preparation for a changing environment Thai and International Financial Reporting Standards (TFRSS / IFRSS) Year 2020 onwards: Timeframe was specified by Thailand Federation of Accounting Professions (TFAC); TFRS 9 (Financial Instruments) and TFRS 16 (Leases) became effective in 2020; TFRS 4 (Insurance Contracts) will be changed to TFRS 17 and will be tentatively effective in 2024. ➤ Expected impacts on Thai banks: For TFRS 9, expected credit loss is a significant issue due to economic uncertainty from COVID-19 outbreak. For TFRS 17, it will be more transparent and easier to compare financial performance from insurance business. ➤ Expected impacts on KBank: For TFRS 9, Bank's expected credit loss is still based on prudence basis following both TFRS 9 and BOT guidelines. Impacts resulted from TFRS 17 is still under investigation. *Note: D-SIBS Domestic Systemically Important Banks Source: The Bank of Thailand and KResearch บริการทุกระดับประทับใจ 118#60K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Financial Sector Master Plan (FSMP) Implementation Stages FSMP I (Y2004-2009) ■ Increase efficiency of the financial institutions system - 'One Presence' policy - Expand scope of business: 'Universal Banking' - New licenses for retail banks and foreign bank subsidiaries ■ Promote financial inclusion - Strengthen financial institutions (FIs) by promoting voluntary mergers ■ Protect customers Source: BOT and KResearch FSMP II (Y2010-2014) Looking forward to liberalization Reducing system-wide operating costs " ■ Streamlining regulations ■Tackling remaining NPLs and NPAs Promoting competition and access to financial services ■ Promote competition ■ Promote financial access ☐ Strengthening financial infrastructure ■ Promote development of financial products that help support risk management ■ Enhance information systems for risk management ■ Push for draft/review of necessary financial laws to support risk management and an expedited resolution to NPLs ■ Promote information technology utilization ■ Develop human resources in the financial sector FSMP III (Y2016-2020) competitive, inclusive, connected, and sustainable 1) Promote electronic financial and payment services, as well as enhance efficiency of the financial system ▪ Promote the adoption of digital banking & electronic payment services in the government, business, and retail sectors ▪ Enhance operational efficiency of financial institutions and other service providers ■ Evaluate future financial landscape to promote operational efficiency of financial institutions and other service providers 2) Support regional trade and investment linkages ■ Facilitating and reducing obstacles for banks' international expansion, including ■ The establishment of Qualified ASEAN Bank (QAB) ■ The development of cross-border financial infrastructures ■ The creation of suitable financial environments among neighboring countries to foster international trade and investment in the GMS 3) Promote financial access ■ For households: encouraging development of financial products and services appropriate for changing customer demands ▪ For SMEs: improving necessary SME database within the financial institution system and supporting credit extension to SMEs ▪ For Corporate: promoting and facilitating suitable environment for private sector's raising of capital 4) Develop relevant infrastructure (Enablers) ■ Developing key infrastructures in the financial system ■ Strengthening regulations and supervision in line with international standards to ensure stability of the overall financial system Note: There are four types of Commercial banks in Thailand; Full service banks; Foreign bank branches; Retail banks; and Subsidiaries GMS = Greater Mekong Subregion = Cambodia, China, Lao PDR, Myanmar, Thailand, and Vietnam บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Updates on the Deposit Protection Agency (DPA) DPA Objectives and Missions Enhanced understanding of the deposit protection scheme ■Close cooperation with related authorities to maintain stability of the financial institution system Establishment of an appropriate system for premium collection and sound management of the Deposit Protection Fund ■Development of an effective information system to ensure fairness of the deposit protection scheme, with accurate and rapid reimbursement ■Management according to Good Governance Principles and in compliance with international standards established by the International Association of Deposit Insurers Amount of Insured Deposits ■Insured deposits include deposits and accrued interest denominated in Thai Baht accounts, excluding non- resident Thai Baht accounts Blanket guarantee will be gradually phased-out to a limited coverage of Bt1mn per depositor per institution. Until 2011, Thai banks paid 0.40% per year of the daily average deposit amount (paid in June and December), excluding deposits in foreign currencies and deposits from financial institutions not insured by the DPA Since January 27, 2012, the contribution rate has increased from 0.40% to 0.47%, with 0.46% being the contribution to the FIDF, and 0.01% being paid to the DPA. The FIDF fee will temporarily reduce to 0.23% for 2 years* ■Royal Decree on an extension of deposit protection coverage was announced in the Royal Gazette on September 24, 2012 The Cabinet approved a one-year extension of deposit protection up to a maximum of Bt5mn. From August 11, 2021, the protection will cover deposits up to Bt1mn. Deposit Accounts in Thailand (as of June 2020) 11 August 2012-10 August 2015 Insured Deposit Under the amending the Deposit Protection Agency Act Up to Bt50mn Up to Bt25mn Up to Bt15mn Up to Bt10mn Up to Bt5mn Up to Bt1mn 11 August 2015-10 August 2016 11 August 2016 - 10 August 2018 11 August 2018 - 10 August 2019 11 August 2019 - 10 August 2021 11 August 2021, onwards Deposits Less than Bt1mn More than Bt1mn, but less than Bt10mn More than Bt10mn, but less than Bt25mn More than Bt25mn, but less than Bt50mn # of Accounts % Amount (Bt mn) 101,596,444 98.36 1,553,452 1.50 3,208,282 3,891,783 92,502 0.09 27,054 0.03 More than Bt50mn Total 22,252 0.02 1,367,157 952,000 4,974,120 % 22.29 27.04 9.50 6.61 34.56 103,291,704 100 14,393,342 Source: Deposit Protection Agency (DPA), the Bank of Thailand, KBank and KResearch บริการทุกระดับประทับใจ 100 * According to the BOT announcement in the Royal Gazette, per the authority of the emergency decree dated April 7, 2020, financial institutions are required to pay 0.23% of the average deposit amount, B/Es, debt instrument (excluding the amount counted as capital), borrowings, and securities transactions under repurchase agreements, during January 2020 to December 2021 119 120#61K KASIKORNTHAI Basel III: BOT minimum capital requirement Transitional Arrangement for Capital Requirement All dates are as of 1 January Conservation Buffer* D-SIBS Buffer** CET1: Min. Common Equity Tier 1 Ratio (after conservation buffer and D-SIBS buffer) Tier 1: Min. Tier 1 Ratio (after conservation buffer and D-SIBS buffer) CAR: Min. Total Capital Ratio (after conservation buffer and D-SIBS buffer) Countercyclical Buffer (Subject to the BOT consideration)*** Leverage Ratio (Tier 1/Exposure) ≥ 3% ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 2016 2017 2018 2019 2020 2021 2022 2023 0.625% 1.25% 1.875% 2.5% 2.5% 2.5% 2.5% 2.5% 0.5% 1.0% 1.0% 1.0% 1.0% 5.125% (4.5%+0.625%) 5.75% (4.5%+1.25%) 6.375% 7.5% 8.0% 8.0% 8.0% 8.0% (4.5%+1.875%) (4.5% +2.5% +0.5%) (4.5%+2.5% +1%) (4.5%+2.5% +1%) (4.5%+2.5% +1%) (4.5%+2.5% +1%) 6.625% (6.0%+0.625 %) 7.25% (6.0%+1.25%) 7.875% (6.0%+1.875%) 9.0% (6.0%+2.5% +0.5%) 9.5% (6.0%+2.5% +1%) 9.5% (6.0% +2.5% +1%) 12.0% (8.5%+2.5% +1%) 9.5% (6.0%+2.5% +1%) 12.0% (8.5%+2.5% +1%) 9.5% (6.0%+2.5% +1%) 12.0% (8.5%+2.5% +1%) 9.125% (8.5%+0.625%) 9.75% (8.5%+1.25%) 10.375% 11.5% (8.5% +1.875%) (8.5% +2.5% +0.5%) 12.0% (8.5%+2.5% +1%) Parallel run period 0.0-2.5% 0.0-2.5% 0.0-2.5% Effective in 2023 (Tentative) Liquidity Coverage Ratio (LCR)**** (Liquid Assets/Net Cash Outflows within 30 days) ≥ 100% LCR ≥ 60% LCR ≥ 70% Net Stable Funding Ratio (NSFR) (Available Stable Funding / Required Stable Funding) ≥ 100% Effective (Phase-in) LCR ≥ 80% LCR ≥ 90% Effective in Jul-18 NSFR ≥ NSFR ≥ 100% 100% LCR ≥100% LCR ≥100% LCR ≥ 100% LCR 100% NSFR≥ 100% NSFR ≥ 100% NSFR ≥ 100% NSFR ≥ 100% Note: * Conservation Buffer is to ensure adequate capital to absorb losses during periods of financial and economic stress ** D-SIBS (Domestic Systemically Important Banks) Buffer is to limit negative impact associated with the distress or failure of banks on domestic financial system and economy *** In periods of excess aggregate credit growth, BOT may require banks to set a Countercyclical Buffer up to 2.5% to achieve the broader macro-prudential goal of protecting the banking sector **** KBank's Average Liquidity Coverage Ratio (LCR) are 189%, 194%, 239% and 235% as of December 2019, June 2019, December 2018 and June 2018, respectively; more details can be found on Basel III - Pillar 3 Disclosures Report Remark: Banks with a capital ratio less than the required regulatory buffers will face various degrees of constraint on earning distribution Source: The Bank of Thailand บริการทุกระดับประทับใจ Tier 1 capital Tier 2 capital K KASIKORNTHAI Capital Definition Change (Consolidated) Basel II Tier 1 • • Issued and paid-up share capital Premium on ordinary shares Common Equity Tier 1 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Basel III • Issued and paid-up share capital* . Premium on ordinary shares Legal reserve and Retained earnings • Hybrid Tier 1 (<15% of total Tier 1) • Minority interest, Preferred stock Deduction of Tier 1 • Goodwill, Treasury stock, Deferred tax asset Investment in insurance • (50% Tier 1 and 50% Tier 2) Long-term subordinated debt • Legal reserve and Retained earnings 1 2 3 ⚫ Other comprehensive income (OCI) e.g. surplus on bond and equity FVTOCI (100%), surplus on land & premises (100%) Additional Tier 1 Hybrid Tier 1 with loss absorbency feature** . Minority interest, Preferred stock** Deduction of Common Equity Tier 1 . Goodwill, Deferred tax asset Intangible assets • Investment in insurance (Threshold Deduction) - Amount ≤ 10% of CET1, %RW = 250% (KBank's Case) - Amount > 10% of CET1, deduct CET1 Long-term sub-debt with loss absorbency feature* • General Provision *** • Hybrid Tier 1 (exceeds from Tier 1 limit) • General Provision Net Treasury Stock • Surplus on AFS equity (45%) 1 ** Currently, KBank has no Hybrid Tier 1, Preferred Stock. • Surplus on land & premises (70% and 50%) *** Long-term subordinated debentures must have loss absorbency feature, if issued since 1 January 2013 บริการทุกระดับประทับใจ 122 121#62K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK TFRS 9 Expected Credit Loss and Basel General Provision/ Specific Provision ■ The concept of General Provision (GP) and Specific Provision (SP) for Basel is not changed, but the amount of provision reserve or expected credit loss that can be counted as GP and SP is changed along with new accounting standards under TFRS 9 Loan Classification and Reserve CAR Basel III Current Reserve Requirement Pass 1% GP Special Mention 2% Sub-Standard Doubtful Doubtful of Loss Buffer (Excess Reserve) 100% GP Capital Adequacy Ratio (% CAR) = Tier 1 + Tier 2 (Subordinated Debt / GP) Risk Weighted Assets (Outstanding - SP) x % Risk Weight 2 TFRS 9 (Effective: January 1, 2020) Stage 1 - Performing PD x LGD x EAD 1 Year 3 ECL - Stage 1 GP Stage 2 Under-performing Lifetime ECL - Stage 2 SP (1) GP that can be counted in Tier 2 capital is provision reserve for "Pass" loans and excess reserve, but limited up to 1.25% of credit risk weighted assets (RWA) Lifetime Stage 3 - Non-performing (2) GP ECL Stage 1 + Stage 2 (Limited up to 1.25% of RWA) ECL - Stage 3 (3) SPECL Stage 3+ Stage 2 that is not GP BOT Reserve Requirement = 1% Floor บริการทุกระดับประทับใจ K KASIKORNTHAI TFRS and IFRS Implementation* 2013 2014 2015 2016 2020 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 2024** TAS 21: Effects of Changes in Foreign Exchange Rates Translate 'Functional Currency' to 'Presentation Currency' TFRS 8: Operating Segments Disclose operating results for each key segment TFRIC 13: Customer Loyalty Programmes Deferred portion of income for reward credit granted TFRS 13: Fair value Measurement ➤Clear required factors and disclosure about fair valuation TFRS 4: Insurance Contracts ➤ Measure insurance liability based on cash flow estimation ➤ Additional disclosure regarding risk exposure Note: TAS Thai Accounting Standard; TFRS = Thai Financial Reporting Standard; TFRIC = Thai Financial Reporting Interpretations Committee OCI Other Comprehensive Income *Only financial and disclosure impact to Thai Banks **Tentatively effective TFRS 16 (Leases) There is a single, on-balance sheet accounting model that is similar to current finance lease accounting. TFRS 9 (IAS 39), TFRS 7 & TAS 32: Financial Instruments Thai banks have implemented a new provisioning rule under IAS 39, since December 2006 ➤ Unquoted equities at cost to be faired value and not able to realize capital gain/loss in profit and loss if they are faired valued through OCI ➤Interest revenue of lending portfolio will be recognized per effective interest rate ➤Investment in property fund, REIT, infrastructure fund and infrastructure trust established in Thailand will be classified as equity instrument. (Refer to announcement from TFRC dated 25 June 2020) TFRS 17: Insurance Contracts ➤Insurance revenue will be based on margin, not gross premium received ➤ Expected day one loss is immediately realized while expected gain is deferred over coverage period บริการทุกระดับประทับใจ 123 124#63K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK TFRS 9: Implications for Thai Banking business (Effective: January 1, 2020) Financial Impacts High Moderate ΜΟΤ Impacts on Thai banking business can be classified into four key areas, each with its own financial impacts to net profit (high, moderate, and low) Key Areas Expected Credit Loss & Modification New definition of SICR and modified loans Changes in provision: from "1-year Expected Credit Loss" per BOT guidelines to "Lifetime Expected Credit Loss"; also, additional base of unused credit line and guarantee Assets Classification ■ Instrument at cost -> fair value: investment in non-listed equities will turn from "at cost" to "at fair value through PL" or "at fair value through OCI" depending on business model ■ AFS instrument -> fair value through PL: Generally, AFS instrument will be fair value through OCI, only for some product features will be "fair value through PL" Effective Interest Rate " Upfront fee -> interest accrual: credit fee income will turn from "Cash basis" to "Interest income on amortization basis" ■ Future step rate: averaged over behavioral lifetime and recognized upfront as fixed rate Hedge Accounting - Optional ■ Derivative at accrual -> fair value: banking book derivatives will turn from "accrual basis" per TFAC guideline to "Mark to Market" per risk offsetting basis Key Impacts Additional TFRS9 Expected Credit Loss ■ TFRS9 and current number are non-comparable ■ Non-interest income and OCI: volatile from unrealized market move Fee income and non-interest income: lower ■ Bottom line: neutral over the contractual life ■NIM: higher but more volatile PL on trading business: more volatile if derivatives are unqualified for hedge accounting and/or carry basis risk Note: SICR = Significant Increase in Credit Risk; PL = Profit and Loss; OCI = Other Comprehensive Income as part of equity; AFS = Available for Sale; TFAC = Thailand Federation of Accounting Professions who governs accounting professionals in Thailand บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Expected Credit Loss: Key Changes in Loan Classification Apart from days past due (DPD), risk information is used to capture credit quality. Hence, cannot directly compare with the current basis. Current: defined by days past due Pass DPD 0-30 days Special Mention DPD 31 90 days Sub-Standard Doubtful Doubtful of Loss DPD > 90 days New: TFRS 9 - defined by incremental risks (Effective: January 1, 2020) TFRS 9 Asset Class: New definition of SICR and Modified Loans ■ SICR reflects higher risk than origination, but not yet bad quality ■ Modified loans are loans with changing terms and conditions, either good or bad; thus, it can be at any stage Stage 1: Perform New or good assets Stage 2: Underperforming Assets with "> 30 days DPD" or higher credit risk than origination capturing via risk information eg. Credit scoring, PD change etc. Note: SICR = Significant Increase in Credit Risk; DPD = Days Past Due บริการทุกระดับประทับใจ Stage 3: Non-performing Defaulted assets 125 126#64K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Expected Credit Loss: Provision Reserve (PD x LGD x EAD) Existing building blocks of both provision and credit cost are unchanged. TFRS 9 changes only the definition and methodology of provision calculation. TFRS 9 (Effective: January 1, 2020) Probability of Default (PD) Stage 1: Performing 1 Year Stage 2: Under-performing Lifetime Stage 3: Non-performing Lifetime Loss Given Incorporate forward looking over lifetime ■ Macro-factor is captured through PD point-in-time Define relevant economic factors & scenario Incorporate through PD point-in-time ■ Term structure PD is derived over behavioral life Derive term structure PD & ECL by scenario Weight with probability for final ECL Multi-scenario is weighted to come up with final Expected Credit Loss (ECL) Incorporate recovery from both collateral and cash payment Default (LGD) Exposure at Default (EAD) Combination of drawn and undrawn as credit exposure ■ It is an accounting complication to treat drawn ECL as assets contra and undrawn ECL as liabilities, while to risk, both are "credit exposure" ■ Drawn is "outstanding amount + EIR adjustment" ■ Undrawn is "outstanding amount x conversion factor" "Drawn" Principal + Accrued Interest +EIR adjustment "Undrawn" Notional x CCF 1) Contingent products: LI, LC 2) Committed unused facilities CCF could be regulatory CCF or behavioral CCF Note: Drawn = Loan amount that customer has already drawn down, which is booked under loans to customers or part of "Interbank and money market items" Undrawn Credit facilities that are not utilized yet or credit facilities that are utilized but are booked as contingent liabilities, excluding derivatives EIR = Effective Interest Rate; LI = Letter of Indemnity; LC = Letter of Credit; CCF = Conversion Credit Factor บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Expected Credit Loss: Day 1 Adoption (Effective: January 1, 2020) Even without excess allowance, prudence on TFRS 9 can be achieved through conservatism in the model assumption TFRS 9 Case 1: Banks with Excess Allowance Stage 1 Stage 2 Model Output Management overlay + Current Stage 3 Excess Reserve Required Reserve Release to P&L over Five Years or subject to BOT change (Requirement) "BOT 1% Floor" 1% x Stage 1 +2 of EAD of Customers Definition: Model Output and Management Overlay Model Output: Results generated from pure model base and stable assumptions where key driving factors on its value are: ■ Shift of asset structure from Stage 1 to Stage 2 " Change of economic outlook ■ Move between drawn & undrawn ECL Excess Provision Case 2: Banks with Provision Shortfall Stage 1 1) Provision shortfall (Current <T9) Stage 2 Model Output + Management overlay (Requirement) "BOT 1% Floor" 1% x Stage 1+2 of EAD of Customers Stage 3 Deduct from Retained Earnings Floor Outcome Management Overlay: ECL estimation to cover emerging issues and uncertain future events not captured in the model 2) Provision Shortfall (T9 BOT floor) Note: EAD = Exposures At Default →Deduct from Tier 1 for Three Years * The BOT Reserve Requirement 1% Floor = 1% of stage1 + stage 2 of EAD of customers. It is used to maintain financial stability, both prudential and countercyclical; the BOT will enforce it through capital requirements บริการทุกระดับประทับใจ 128 127#65K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Expected Credit Loss: Going Forward (Effective: January 1, 2020) TFRS 9 requires ECL estimation to be based on past events, current conditions, and forecasts of future economic conditions where judgement should be used for emerging issues and uncertain future events. On-going Key Driving Factors Observed Evolution Prudent Management Expected Credit Loss (ECL) should not be too volatile, as risks in each loan stage are clearly identified and there is management overlay, unless economic view changes, loans shift from Stage 1 to Stage 2, and exposure moves between on- and off-balance sheet Changing economic view ■ Shift between Stage 1 and Stage 2 ■ Movement between on- and off-balance sheet ■ Bank size Non- comparable ■ Portfolio mix ■ Risk appetite Apply %ECL by stage Apply "total ECL" for ECL adequacy analysis, e.g. NPL coverage (Coverage Ratio) ■ Focus on trend and derive own normalized level ■ Monitor detailed disclosure of ECL movement analysis and basis of assumption บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK TFRS9 Impacts to Financial Numbers and Ratios (Effective: January 1, 2020) TFRS 9 reflects the true economic value of financial instruments at a point in time where financial impacts to net profit (high, moderate, and low) vary for each area TFRS 9: Changes in definition and calculation method Impacts to Financial Numbers: Non-comparable between TFRS 9 and current numbers Interest Income Fee Income Non-Interest Income Provisioning Expense . Higher from credit fee / ⚫ Lower from Volatile from Higher underperforming loan • future interest; • Volatility is expected transforming into interest income on an amortized basis from behavioral lives assumption unrealized gain/loss of treasury products' marking to market & required reserve from more stringent requirement Volatile from change in economic outlook and shift of stage 1 to stage 2 Modified Loans Higher modified loan than current restructured loan from different definition Impacts to Financial Ratios: Non-comparable between TFRS 9 and current numbers Net Interest Margin (NIM) Higher but more volatile Non-Interest Income Growth Lower and more volatile Credit Cost Potentially volatile Coverage Ratio Insignificant impact, considering total ECL New Stage 2 Ratio Higher than the current Special Mention Loan * Financial instruments where main products of banks are lending, investment, financial guarantee, derivatives, deposits, and borrowings Note: ECL = Expected Credit Loss will drive more accurate economic valuations of loan portfolios and promote earlier recognition of credit losses avoiding the delays observed during the credit crisis. บริการทุกระดับประทับใจ 129 130#66K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK TFRS9: Key Changes (Effective: January 1, 2020) Before Outstanding loan 1. Expected Credit Loss of Financial Scope Stage Instruments (Provision) • 5 grades based on aging Model 2. Classification Classes and Measurements 3. Hedge Accounting (Optional) Income approach Non-quoted equity value Derivatives value • %PD given by the BoT • 4 classes based on business model or type of investments i.e. Trading, Available for sales, Held to maturity and General investment Credit fee income = Cash basis Interest income = Contractual basis General investment = Cost basis •. Derivatives value = Accrual basis . After Outstanding loan, contingent and unused limit • 3 grades based on aging and credit risk information • %PD, LGD, EAD by behavioral model over 12-month or lifetime depends on stage • 3 classes based on business model & cash flow characteristics i.e. Fair value through PL, Fair value through OCI & Amortized cost Credit fee income & Interest income amortizing per EIR = • General investment = FVTPL or FVTOCI where no PL recycling for FVTOCI of equity instruments Derivatives value = Fair value บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK TFRS 9: Key Changes in Financial Statement Presentation of Thai Banks Assets Cash As is Interbank and money market items - net Statements of Financial Position: Assets To be (TFRS 9) Assets Cash Interbank and money market items - net 131 Derivative assets Investments - net Investments in subsidiaries, associates and joint venture - net Loans to customers and accrued interest receivables - net Loans to customers Accrued interest receivables Total Loans to customers and accrued interest receivables Less Deferred revenue Less Allowance for doubtful accounts Less Revaluation allowance for debt restructuring Total Loans to customers and accrued interest receivables - net Properties foreclosed - net Premises and equipment - net Goodwill and other intangible assets - net Deferred tax assets Financial assets measured at fair value through profit or loss (new) Derivative assets Investments - net Investments in subsidiaries, associates and joint venture - net Loans to customers and accrued interest receivables - net Properties foreclosed - net Premises and equipment - net Goodwill and other intangible assets - net Deferred tax assets Other assets - net Other assets - net บริการทุกระดับประทับใจ 132#67K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK TFRS 9: Key Changes in Financial Statement Presentation of Thai Banks Statements of Financial Position: Liabilities and Equity As is Liabilities Deposits Interbank and money market items Liabilities payable on demand Derivative liabilities Debts issued and borrowings Provisions Deferred tax liabilities Insurance contract liabilities Other liabilities Equity No changes Liabilities Deposits To be (TFRS 9) Interbank and money market items Liabilities payable on demand Financial liabilities measured at fair value through profit or loss (new) Derivative liabilities Debts issued and borrowings Provisions Deferred tax liabilities Insurance contract liabilities Other liabilities Equity No changes บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK TFRS 9: Key Changes in Financial Statement Presentation of Thai Banks Statement of Profit or Loss and Other Comprehensive Income As is To be (TFRS 9) 133 Interest income Interest expenses Interest income - net Fees and service income Fees and service expenses Fees and service income - net Gain (loss) on trading and foreign exchange transactions Gain (loss) on investments Share of profit (loss) from investments using equity method Dividend income Net premiums earned Other operating income Total operating income Underwriting expenses Total operating income - net Other operating expenses Employee expenses Directors' remuneration Premises and equipment expenses Taxes and duties Other Total other operating expenses Impairment loss on loans and debt securities Operating profit before income tax expense Income tax expense Net profit Interest income Interest expenses Interest income - net Fees and service income Fees and service expenses Fees and service income - net Gain (loss) on financial instrument measured at fair value through profit or loss (new) Gain (loss) on investments Share of profit (loss) from investments using equity method Dividend income Net premiums earned Other operating income Total operating income Underwriting expenses Total operating income - net Other operating expenses Employee expenses Directors' remuneration Premises and equipment expenses Taxes and duties Other Total other operating expenses Expected credit loss (rename) Operating profit before income tax expense Income tax expense Net profit บริการทุกระดับประทับใจ 134#68K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK TFRS 9: Key Changes in Financial Statement Presentation of Thai Banks Statement of Profit or Loss and Other Comprehensive Income As is To be (TFRS 9) Other comprehensive income Items that will be reclassified subsequently to profit or loss Gain (loss) on remeasurement of available-for-sale investments Gain (loss) arising from translating the financial statements of a foreign operation Income taxes relating to components of other comprehensive income Items that will not be reclassified subsequently to profit or loss Changes in revaluation surplus Actuarial gain (loss) on defined benefit plans Income taxes relating to components of other comprehensive income Total other comprehensive income K KASIKORNTHAI Other comprehensive income Items that will be reclassified subsequently to profit or loss Gains (losses) on investments in debt instruments at fair value through other comprehensive income (new) Gains (losses) on cash flow hedges Gains (losses) arising from translating the financial statements of a foreign operation Share of other comprehensive income of associates and joint venture Income taxes relating to components of other comprehensive income Items that will not be reclassified subsequently to profit or loss Changes in revaluation surplus Gains (losses) on investment in equity instruments designated at fair value through other comprehensive income (new) Gains (losses) on financial liabilities designated at fair value through profit or loss from credit risk (new) Actuarial gains (losses) on defined benefit plans Share of other comprehensive income of associates and joint venture Income taxes relating to components of other comprehensive income Total other comprehensive income บริการทุกระดับประทับใจ ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 135 Government Policy บริการทุกระดับประทับใจ 136#69K KASIKORNTHAI Sources and Uses of Public Funds FY2020 Budget ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Implementation of FY2020 budget is experiencing delays from October 1, 2019 to 1Q20, due to political reasons. FY2020 budget act was approved in January and was published in the Royal Gazette on February 24. Budget Planning Tax Revenue + Non-Tax Revenue (Bt2.73trn) + Borrowing under FY2019 Budget Act (Bt469bn) FY2020 Budget (Bt3.20trn) = General Budget (Bt2.46trn or 77%) + Investment Budget (Bt0.66trn or 20%) + Principal Repayments (Bt0.09trn or 3%) Budget Execution Budget Disbursement (100% target disbursement rate + carry-over) General Administration (Bt1.18trn or 37%) ■ Defense ■Homeland security Economic Affairs (Bt678bn or 21%) Development of the country's competiveness ■ Subsidize SOES (e.g. Infrastructure project, free bus and train service policy) ■Infrastructure/Agricultural Development Social and Community Services (Bt1.34trn or 42%) ■ Education ■ Universal Healthcare Extra-Budget Borrowing under Extra-Budget Borrowing Special Act/Decree To relieve the impact of the COVID-19 outbreak, the government approved emergency decree that allows the Finance Ministry to borrow up to Bt1.0trn Notes: Thai government's fiscal year (FY) begins on 1 October and ends on 30 September of the following year. IFF = Infrastructure Fund, PPP = Public-Private Partnership, SFIs = Specialized Financial Institutions Quasi-Fiscal Instrument SFIs taking deposits, borrowing, as well as government subsidy Quasi-fiscal activities (e.g Soft Loan Program) บริการทุกระดับประทับใจ 137 K KASIKORNTHAI Government Fiscal Budget Billion Baht 1200 1000 600 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ◉ Thai parliament approved FY2020 budget worth Bt3.2trn, with a deficit of Bt469bn 800 600 163 100 400 200 450 390 450 469 390 ■ 0 FY2016 ■Budget Deficit FY2017 FY2018 FY2019 FY2020F Extra-Budget Borrowing Key Points Economic Implementation of FY2020 budget effective February 2020 To relieve the impact of the COVID-19 outbreak, the government approved an emergency decree allowing the Finance Ministry to borrow up to Bt1trn (Bt600bn for FY2020 and Bt400bn for FY2021), of which Bt600bn will be used for relief measures and public health and Bt400bn will be spent on economic recovery measures In addition to growth in commercial bank loans, government funding activities may affect system liquidity Policies ■2019 Budget Act ■2020 Budget Act ■FY2019 budget at Bt3trn with a deficit of Bt450bn ■FY2020 budget at Bt3.2trn with a deficit of Bt469b Implementation Process FY2019 ■ Effective date: October 1, 2018 FY2020 ■■Effective date: February 24, 2020 Possible Impacts/ Expected Budget ■Government spending will help maintain economic momentum ■Fiscal sustainability to remain manageable in near-term; however, continued debt creation, both from budget deficit and other borrowings, may impact long-term fiscal sustainability Note: FY2016, FY2017, FY2018, and FY2019 budget deficits are based on budget documentation, whereas extra-budget borrowing is projected by KResearch - Thai government's fiscal year (FY) begins on October 1 and ends on September 30 of following year - NLA National Legislative Assembly; PPP = Public-Private Partnership Sources: The Ministry of Finance and KResearch (as of May 2020) บริการทุกระดับประทับใจ 138#70Billion Baht K KASIKORNTHAI Public Debt to GDP and Fiscal Budget Public Debt 7,500 Public Debt % to GDP 44.8% 7,000 6,500 42 44 40 46 % to GDP % Cumulative Budget Disbursement Rate (%) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Budget Disbursement Rate 100 FY 2020 FY 2019 FY 2018 80 BORONGONO 40 30 20 Oct 15.7 10.9 Nov Dec 22.8 28.8 70.4 63.8 58.3 48.1 34.1 Apr Sep 6,000 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 40 ■Public debt to GDP ratio rose significantly to 44.8%, as of June 2020. However, it is still under the 60% limit set under the fiscal sustainability framework ■Thai government is committed to keep the ratio of public debt to GDP not exceed 60%. The public debt to GDP is expected to rise to 57% in 2021 Source: Ministry of Finance (MOF), Fiscal Policy Office (FPO), and Public Debt Management Office (PDMO) FY20 Budget Total Budget Bt3.20trn - General Budget Bt2.56trn - Investment Budget Bt0.64trn FY20 target 10M FY2020 actual Unused FY20 Budget Bt3.20trn (100%) Bt2.56trn (100%) Bt0.64trn (100%) Bt2.48trn (77%) Bt2.24trn Bt0.72trn (23%) (88%) Bt0.24trn (37%) Bt0.32trn (12%) Bt0.40trn (63%) ■Government budget disbursement rate for 10M FY2020 is 77.4%, slightly declined by 1.6% from the 79.0% in 10M FY2019. The disbursement started to catch up after the budget enactment ■Government investment projects could be further delayed as the government needs to impose emergency stimulus measures to counter the virus threats บริการทุกระดับประทับใจ K KASIKORNTHAI Relief Measures for COVID-19 Impacts Phase 1 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK MOF Measures Package Size BOT Measures Package Size Bt400 billion Government bond purchase Bt100 billion - Soft loans worth Bt150 billion - Interest cuts and delayed debt payments (SFIs) - Reducing electricity and water bills Phase 2 - Cash handouts - Emergency loans - Tax benefits Phase 3 - Implementing health-related plans and giving financial aid to affected people - Economic and social rehabilitation Bt 1.5 trillion or 9% of GDP Note: SFIs Specialized Financial Institutions Source: MOF, BOT and KResearch, as of May 2020 Provide liquidity for bond Bt1.0 triillion Bt 120 billion mutual funds Soft loans Bt1.0 trillion Corporate Bond Liquidity Stabilization Fund (BSF) บริการทุกระดับประทับใจ Bt2.0 trillion or 12% of GDP Bt500 billion Bt400 billion 140 139#71K KAŞIKORNTHAI Relief Measures for COVID-19 Impacts ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Measures from Government, BOT, and SEC for Businesses and Individuals Market Stability and Liquidity (Government, BOT, and SEC) For Businesses ■ Financial Markets: BOT, MOF, & SEC o Bt1trn Fixed Income Fund: BOT set up a special facility to provide liquidity for mutual funds. Commercial banks purchasing investment units can use the eligible underlying unit trust as collateral for liquidity support from the facility • Bond Markets: BOT will purchase bonds to provide liquidity and lessen volatility in the bond market ■ Corporate Bond Stabilization Fund (BSF): BOT • Bt400bn of bridge financing to high-quality firms with bonds maturing during 2020-2021 at higher-than- market 'penalty' rates. (Issuers must raise the majority of their funding needs through other means such as bank loans or capital increase) ■ Reduce FIDF Fee: BOT • FIDF fee cut from 0.46% of deposit base to 0.23% for 2 years, supporting lower reference lending rates ■ Tax Relief: Government o Deduct 1.5 times for interest expenses (Apr-Dec 2020) for SMEs receiving Bt150bn in soft loans • Deduct 3 times for salary costs for SMEs that maintain their employees • Reduce withholding tax for domestic businesses to 1.5% (Apr-Sep 2020) • Speed up VAT refunds to exporters of domestic goods to 15 days (online) or 45 days (filing manually) • Extend corporate income tax filing to Aug 2020 Soft Loans (Government and BOT) For Businesses (Bt680bn) ■ Soft Loans for SMEs: Government and BOT • Gov't: Bt150bn worth of soft loans for SMEs, via GSB, at 2% for 2 years o BOT: Bt500bn worth of soft loans for SMEs with credit lines not over Bt500mn, at 2% for 2 years and 6-months interest free* ■ Soft Loans for Entrepreneurs Registered with the Social Security Office: Government • Bt30bn worth of soft loans at 3% for 3 years For Individuals (Bt60bn) ■ Soft Loans for Individuals: Government o Bt40bn worth of soft loans at Bt10,000 per person at 0.1% (no collateral) via GSB & BAAC o Bt20bn worth of soft loans at Bt50,000 per person at 0.35% (with collateral) via BAAC For Individuals ■ Household: Others (Government) • Reduce water and electricity bills and refund meter fees o Extend deadline for personal income tax filing to Aug 2020, and increase health insurance premium deductions ■ Work Force: o 3-month payment of 62% of wages to people under the SSF, if their employer closed their business or if the government ordered business operations suspended o Reduce SSF contribution to 1% o 3-month Bt5,000 monthly payments to workers not covered by the SSF ■ Economy and Health: o Bt45bn for health-related plans • Bt555bn for relief measures, including workforce o Bt400bn for economic recovery plans o Tax exemption on risk payments for medical workers o Bt80-100bn from ministries to use as stimulus funds ■ Support Stock Markets: o Add Bt200,000 of tax-deductible Super Saving Funds bought in Apr-Jun 2020 Notes: BOT = Bank of Thailand; SSF=Social Security Fund; GSB = Government Saving Bank; BAAC = Bank for Agriculture and Agricultural Cooperatives; SFIs = Specialized Financial Institutions The BOT provides soft loans at 0.01% to banks to lend to SMEs; amount to not be over 20% of each SME's outstanding loans; government pays for first 6-months interest; in case of NPLs, the government will support 60-70% of additional reserves for loans Source: MOF, BOT and KResearch บริการทุกระดับประทับใจ K KASIKORNTHAI Relief Measures for COVID-19 Impacts (Continued) Measures from BOT Credit Adjustment ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK For Businesses ■ Loan Payments for SMEs: • 6-month debt holiday on principal and interest payments for SMEs having credit lines not over Bt100mn For Individuals ■ Credit Card and Revolving Loans: • Reduce minimum installment payment to 5% in 2020-21 and 8% in 2022, returning to 10% in 2023; refinancing into long-term loans with lower interest rates ■ Personal Loans with Installment Payments and Auto Title Loans: o (Banks and SFIs), 3-month grace period on principal and interest payments o (Other lenders), 3-month grace period on principal and interest payments, or pay up to 70% of installments for 6 months ■ Hire Purchase: o 3-month grace period on principal and interest payments, or 6-month grace period on principal payments for motorcycles (<=Bt35,000), automobiles (<=250,000), and leasing (<=Bt3mn) ■ Housing Loans and Micro and Nano Finance: • 3-month grace period on principal payments and case-by-case interest rate cuts for housing (<=Bt3mn) and micro and nano finance (<=Bt20mn) ■ Ease Commercial Bank Loan Rules for Easier Access Phase 2: For Individuals ■ Reduce the interest rate ceiling for credit cards and personal loans by 2% to 4% p.a., effective from August 1,2020 onwards. ■ Increase credit limit from 1.5x to 2x of monthly income for good debtors with a monthly income of less than Bt30,000, from August 2020 to December 2021 ■ Provide alternative measures to help debtors hit by COVID-19 who do not have NPLs ■ Restructure debt: Fls must focus on debtor's ability to pay debt in order to relieve their burden Debt Consolidation Program for Individuals ■ Consolidate unsecured loans, hire purchase and housing loan from same creditor to utilize the collateral. For the combined unsecured loan, interest rate is capped not higher than the Minimum Retail Rate (MRR), while loan repayment period can be extended according to the debt service ability of debtor "DR BIZ" Project for Businesses who have multiple financial institution creditors with a total loan of Bt50-500mn ■ Receive relief measures with all financial institutions in an integrated manner ■ Have main creditors to take care debtors and coordinate with other creditors ■ Around 8,400 debtors with a total loan of Bt1.2trn have qualifications to join the project Loans Classification Non-NPL (Pre-Emptive): 1) Can immediately classify Non-NPL debtors as stage 1 (stage 1 or stage 2 >> stage 1) 2) Not to be deemed as TDR and not to be reported to National Credit Bureau NPL: Classify as stage 1, under a 3 consecutive-month payment period (from the previous 12 months) Additional Working Capital: Can be classified as stage 1, provided that the debtors have sufficient cash flow for repayment Regulation Relaxation No additional provision for unused credit line Easing liquidity-related regulations, including NSFR and LCR Reducing the FIDF fee from 0.46% of deposit base to 0.23% per annum for a period of two years Source: BOT Report to the BOT Financial institutions are required to submit reports to the BOT detailing target loans and outstanding debts of the debtors who are subject to these measures บริการทุกระดับประทับใจ Other measures Relaxing credit line for emergency cases 141 142#72K KASIKORNTHAI 20-Year National Strategy (2017-2036) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK (As defined in Section 65 of the Constitution of the Kingdom of Thailand and passed by the NLA in June 2017) ■To achieve the vision "Security, Prosperity, Sustainability", to become a high-income country, to improve quality of life, to generate high income, to escape the middle income trap, and to ensure well-being for all Thais "Security" Key Strategies "Prosperity" 2 Competitiveness enhancement Development and Empowerment Human Capital 4 Broadening Opportunity and Equality in Society 6 3 5 Reforming Government Administration Environmentally Friendly growth Security "Sustainability" " The Goals High income country: 15,000 USD per capita by 2036 (2016 income per capita = 5,901 USD) Economic growth around 5% per year (4-5% under 12th NESDB Social and Economic Development Plan and 5% for the next three NESDB 5-Year Plans) People of all ages healthy and with lifelong learning opportunities Target Gini: <= 0.36 (inequality measurement: lower figure indicates better income distribution) Forest area as percentage of total land area more than 40% Fully implement Digital Government Services Enhance Corruption Perceptions Index beyond 50Plus (the lower tier of least corrupt countries) National Strategy Committee: Chairman is the Prime Minister; Secretary is NESDB Secretary-General 34 committee members First 17 committee members are high-ranking state officials and leading industry experts such as the Prime Minister, members of the top brass, National Police Chief, Permanent Secretary for Defense, President of the House of Representatives, Chairman of the Federation of Thai Industries, President of the National Farmers Council, President of the Thai Bankers' Association, Chairman of the Thai Chamber of Commerce, etc. Second 17 Committee members are experts from various fields 2017 2022 I T Aug17: Cabinet appointed committees Jun17: NLA passed the law Jun18: Cabinet endorsed the plan Jul18: NLA approved the plan 2027 2032 The National Economic and Social Development Plan (5-year plan) aligned with the 20-year National Strategy The 12th National Economic and Social Development Plan (2017-2021) The 13th National Economic and Social The 14th National Economic and Social Development Plan (2022-2026) Development Plan (2027-2031) บริการทุกระดับประทับใจ 2036 The 15th National Economic and Social Development Plan (2032-2036) 143 K KASIKORNTHAI Government Policies Twelve Main Policies ■ National Security Protecting and upholding the monarchy Maintaining security, safety and peace ➤ Preserving religion and culture ■ Enhancing Economic Development Promoting Thailand's role on the global stage Boosting competitiveness Developing economic areas and distributing wealth to all regions ■ Supporting Sustainable Social Development Building the country's strength through a bottom-up approach ➤ Reforming learning processes and helping Thais reach their potential ➤ Improving the public health system and social security ➤ Reforming management in the state sector Prevention and suppression of corruption ■ Enviromental Issues Replenishing natural resources Sources: Bangkok Post newspaper and KResearch (as of July 24, 2019) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Twelve Urgent Policies ■ Economic Issues ➤ Solving bread-and-butter concerns and reforming the tax system Economic measures to cope with volatility in the global economy Helping farmers develop innovations Upgrading worker capabilities Laying foundations for the country's growth ➤ Devising measures to deal with drought and floods ■ Social Issues ➤ Improving the welfare system and the people's quality of life ➤ Preparing Thais for the 21st century Solving corruption among politicians and government officials Tackling drug problems and restoring peace in the Deep South Improving public services ■ Other Issues Supporting efforts to study constitutional amendments and gathering public opinion บริการทุกระดับประทับใจ 144#73K KASIKORNTHAI Government Policy: Long-term and Short-term Policies Long-term Policies ■Transport Infrastructure Development Plan: ➤ Project will reduce logistical costs, increase transportation speed of goods and people, as well as connect Thailand to neighbors along the East-West and North-South Economic Corridors ➤ Transport Action Plan Year 2016, worth Bt1.796trn, approved by Cabinet in November 2015; Transport Action Plan Year 2017, worth Bt1.318trn, approved by Cabinet in December 2016 ■Digital Economy: ➤ NBTC plans to award mobile licenses in various spectrums and launch 5G in near future Government plans to adapt National Digital ID to speed up the process towards digital economy ■ BOI Measures for Supporting Private Investment: Cabinet approved tax and non-tax incentive measures to support private investment, such as Special Economic Zones (SEZS) and ten targeted industries as new engines of growth ■ Eastern Economic Corridor (EEC): Area for facilitating and attracting investment in 10 innovative target industries to transform Thailand into Thailand 4.0 ■ Promote Establishment of International Headquarters (IHQ) and an International Trading Center (ITC) in Thailand: Help Thailand become a key trading nation in the region ■ Join the Regional Comprehensive Economic Partnership (RCEP): Deepen economic cooperation among sixteen countries and promote export sector ■ Energy Policy: Reform petroleum concessions and energy price structures, including an LPG subsidy ■Tax Reform: Reform tax collection, generate sufficient revenue for the government, and boost competitiveness for local businesses, especially SMEs Note: NBTC National Broadcasting and Telecommunications Commission; SOE = State Owned Enterprise; GSB = Gvernment Saving Bank SSF Super Saving Fund Sources: Newspaper and KResearch (as of January 2020) ■Government Budget: ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Short-term Policies ➤ Fiscal budget deficit in FY2020: plans for Bt469bn deficit to provide additional supports to Thai economy amid global uncertainties ■ Short-term Stimuli: ➤ Mid-2019 stimulus plan (Bt21.8bn): Give Bt13.2bn directly to people with disabilities, farmers, and other holders of welfare cards to help people with low incomes; tax measures worth Bt8.6bn, supporting property markets, tourism, education, etc ➤ Thailand Plus Package: attract foreign investment, especially to expedite investments from companies seeking to relocate as a result of ongoing trade war ➤ Cash handout for workers not covered by the SSF: 3-month Bt5,000 monthly payments to informal workers affected by COVID-19 ➤ Measures to help farmers: 2019/2020 rice and palm oil price insurance scheme, drought-afflicted relief program, and easing production costs; 3-month Bt5,000 monthly payments to farmers (May-July 2020) ➤ Supporting tourism: Subsidies for domestic tourists (Moral Support & We Travel Together campaigns) ➤ Property stimulus package: Offer Bt50,000 cash-back per buyer on down payment; reduce property transfer and mortgage fees ➤ 2020 SMEs aid program: Offer credit guarantee facility, liquidity aids, soft loans, and assistance in debt restructuring processes for SMES บริการทุกระดับประทับใจ 145 K ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KASIKORNTHAI Transport Infrastructure Development Plan ■The Transport Infrastructure Development Plan is aimed at facilitating social stability and economic growth Transport Action Plan Year 2016, worth Bt1.796trn*, approved by the Cabinet in 2015 ➤ Transport Action Plan Year 2017, worth Bt1.318trn, approved by the Cabinet in 2016 Transport Action Plan Year 2016 (Bt1.796trn) Transport Action Plan Year 2017 (Bt1.318trn) Source of Fund Type of Projects Project Details Motorway Fund, Regular Investment 0.8% Budget, 4.7% SOE, 3.1% PPP, 21.0% Dual-Track Trains, 6.6% Marine Transport, 0.3% Air Transport, 2.7% Motorway, 8.9% 1. Bangkok and Vicinity Mass-Transit System (Bt368bn) 4. Rail Transportation Cooperation (Bt1,096bn) Transportation Cooperation Plan 61% Government Borrowing, 70.5% Bangkok and Vicinity Mass-Transit System 20.5% 2 Motorway (Bt160bn) 5. Air Transport (Bt49bn) Source of Fund Type of Projects Others 1.9% Bangkok and Vicinity mass 3. Dual-Track Trains (Bt118bn) 6. Marine Transport (Bt5bn) Project Details Government Marine Transport Transit system 1. Bangkok and Vicinity Mass-Transit System (Bt248bn) 12.8% PPP 54.1% Borrowing 33.9% Air Transport 22.8% Regular Investment Budget 5.6% SOE's Revenue 3.0% TFFIF,3.4% Dual-Track Trains 31% 18.8% Motorway & Expressway 12.7% 2 Motorway & Expressway (Bt167bn) 3. Dual-Track Trains (Bt409bn) 4. Air Transport (Bt301bn) 5. Marine Transport (Bt168bn) 7. Others (Bt25bn) * Total investment may be reduced due to cutting the scope of work, especially the Rail Transportation Cooperation projects Notes: PPP = Public-Private Partnership; SOE = State of Enterprise; MRTA = Mass Rapid Transit Authority of Thailand; SRT State Railway of Thailand; TFFIF = Thailand Future Fund First round of Thailand Future Fund IPO (amount Bt45bn) to invest in the right to 45% of toll revenue of the Expressway Authority of Thailand on the Chalong Rat (Ram Intra - At Narong) Expressway and the Burapha Withi (Bang Na) Expressway Source: Office of Transport and Traffic Policy and Planning, Newspaper, KResearch (as of October, 2019) บริการทุกระดับประทับใจ 146#74K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Transport Infrastructure Development Budget Disbursement ■In 2016-2019, budget disbursement was only 10.0% of total investment value, but it will gradually increase as construction on many projects is expected to start in 2021 Budget Disbursement Schedule (FY2016-2034)* Billion Baht Notes: 200 180 80 60 20 ༄ ༅ ą ཋ ą ཤྐ 。 160 140 120 100 36.8 40 24.5 19.1 2016 2017 2018 65.1 125 97.8 180 178 170 165 158 155 155 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e - Thai government's fiscal year (FY) begins on 1 October and ends on 30 September of the following year - Included four high speed train lines Source: Office of Transport and Traffic Policy and Planning * KResearch Projected (as of August 2020) บริการทุกระดับประทับใจ K KASIKORNTHAI Projects under construction Intermodal Facility Chiang Khong Mae Sot Airport Lop Buri Pak Nam Pho Bang Yai Kanchanaburi Motorway Đang Sue - Rangsit Lad Prao - Samrang Nakhon Pathom-Hua Hin Hua Hin - Prachuap Khiri Khan Prachuap Khiri Khan Chumphon Betong Airport Jira Junction-Khon Kaen Mabkabao Jira Junction Bang-Pa-In-Nakhon Ratchasima Motorway. Bangkok-Nakhon Ratchasima TIY Pattaya Map Ta Phul Motorway Suvarnabhumi Aaport (Phase I) Thaand Cultural Center- Min Buri Khae Rai-Min Buri Single Rail Transfer Operator (Laem Chabang Port) Dual-Track Train Mass Transit System and Commuter Train High Speed Train Airport Motorway Single Rail Transfer Operator Intermodal Facility Projects under construction Motorways: Pattaya-Map Ta Phut Bang Pa-In-Nakhon Ratchasima Bang Yai-Kanchanaburi Projects under construction Dual-Track Railways: Prachuap Khiri Khan-Chumphon Nakhon Pathom-HuaHin Hua Hin-Prachuap Khiri Khan Lop Buri-Pak Nam Pho Mab Kabao-Jira Junction ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Projects under construction High Speed Railway: Thailand-Chinese (Bangkok-Nakhon Ratchasima-Nong Khai) Projects under construction Expected completion year 2020 2020 / 2021 2021 / 2022 Expected completion year 2021 2021 2021 2022 2023 Expected completion year 2023 Projects under construction Air Transport: Suvarnabhumi Airport Phase 2 and Mae Sot Airport (Tak) Others: Intermodal Facility - Chiang Khong (Chiang Rai) Source: Ministry of Transport and KResearch (August 2020) Expected completion Expected completion year year 2020 Mass-Transit System and Commuter Rail Lines: Orange Line (Thailand Cultural Centre-Min Buri) Pink Line (Khae Rai-Min Buri) 2022 2021 Yellow Line (Lad Prao-Samrong) Red Line (Bang Sue-Rangsit) 2021 2020 2019/2020 บริการทุกระดับประทับใจ 147 148#75K KASIKORNTHAI Upcoming Infrastructure Projects Upcoming Infrastructure Projects by Status Expected to start construction Preparing for construction High Speed Train: High-Speed Rail Linked 3 Airports 2021 Marine Transport: Map Ta Phut Industrial Port Phase 3 2020 Laem Chabang Phase 3 2021 Air Transport: U-Tapao Airport TOR/Bidding Process Mass-Transit System and Commuter Rail Lines: Orange Line (West Section) 2021 Expected to start construction 2021 2021 Purple Line (South Section) Dual-Track Railways: Northern line (Double-Track Railway: Den Chai-Chiang 2021 Rai-Chiang Khong) Northeast line (Double-Track Railway: Ban Phai - Maha 2021 Sarakham-Roi Et - Mukdahan Nakhon Phanom) Projects pending for approval Dual-Track Railways: Dual-Track Railway 2nd phase Motorways: Nakhon Pathom-Cha-am Source: Ministry of Transport and KResearch (August 2020) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Upcoming Infrastructure Projects by Areas | | Danchai-Chiang Rai Chiang Không High speed train Bangkok to Chiang Mai Light rail in Chiang Mai Regional airport development (Chiang Mai) Denchai to Chiang Mai Pak Nam Photo Denchai Orange Line (Bang Khun Non to Thailand Cultural Center) Purple Line (Tao Poon to Rat Burani Khon Kaen to Nong Khai Banpal-Mukdahan-Nakhon Panom Light rail in Khon Kaen Regional airport development (Khon Kaen) Jira to Ubon Ratchathani Light rail in Nakhon Ratchasima Dark Red Line (Rangsit to Thammasat University) Khi Rangsit to Bang Pain an Red Line (Hang Sue to Hua Mak and Bang Sue to Hua Lamphong Bangkok to Mahachai Nakhon Pathom to Cha-am High speed train Bangkok to Hua Hin Red Line (Taling Chan to Siniraj and Taling Chan to Salaya) Donmuang Airport Development Phase 3 and Suvarnabhumi Airport U-Tapão International airport Laem Chabang deep sea port development phase 3 Map Ta Phut deep sea port phase 3 Chumphon to Surat Thani Regional airport development (Krab) Regional Airport (Nakom Srithammarat Surat Thani-Hat Yai Songkhla Katu to Patong in Phuket Light rail in Phuket Hat Yai to Padang Besar Regional airport development (Trang) Hat Yai to Malaysian border Dual Track Railway Mass Transit System and Light Rails High Speed Train Airport Motorway/Expressway Port Projects Preparation/ PPP Process /EIA Process For example: Motorways; Hat Yai to Malaysia Border, Bangkok to Mahachai High Speed Train; Bangkok to Hua Hin Light Rail in Phuket, Khon Kaen, Chiang Mai บริการทุกระดับประทับใจ 149 k KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Eastern Economic Corridor (EEC): Three eastern provinces: Chachoengsao, Chon Buri, and Rayong ■Objectives: To facilitate and attract investment in 10 innovative target industries aimed at achieving "Thailand 4.0", an innovation driven society (the 10 industries are Next-Generation Automotive, Smart Electronics, Medical and Wellness Tourism, Food for the Future, Robotics, Aviation, Agriculture & Biotechnology, Biofuels & Bio Chemicals, Digital, and Medical Hub) ■ Key Development Plan: An expansion of existing transportation facilities, plus new investment in logistics systems to transform the EEC area (13,266 square kilometer) into a regional center for trade, investment, and tourism ■Investment Amount: Bt1.7trn in the first five years (starting from 2019 onwards) from the government and private businesses (around 2/3 from private sector); high-priority projects to start in 2019 are U-Tapao Airport, high speed railways from Bangkok to Rayong, the third phase of Laem Chabang Port and Map Ta Phut Port, and the maintenance repair and overhaul (MRO) campus. ■Investment Incentives: EEC privileges corporate income tax (CIT) exemption of up to 13 years and additional 50% CIT reduction for up to five years for some projects; 15-year CIT exemption for qualified projects under Thailand Competitive Fund (R&D investment); a flat tax rate of 17% personal income tax (PIT) for experts/specialists; long-term land leases (up to 99 Years) Four Core Areas - 15 Crucial Investment Projects* 'A' Chachoengsao A Chonburi 1 U-Tapao airport and aircraft maintenance 2Sattahip commercial seaport Laem Chabang port phase #3 Map Ta Phut port phase#3 5 High-speed rail-east route 6 Double-track railway ++++ 8 Highways and motorway Next-generation automotive (EWAV) 9 Aviation industry, Robotics, Smart electronics 10 Advanced petrochemical and Bioeconomy Investment Amount as Planned by EECO (Bt1.7trn in the first five years) Bt bn 752.2 947.8 11 Rayong Medical hub A 呔 12 Tourism 13 Global Business Hub / Free Economic Zone 14 New Cities, Inclusive growth 15 Public Utilities Infrastructure Industries and others (Private) Source: The Board of Investment of Thailand (BOI), and The Eastern Economic Corridor Office of Thailand (EECO) presentation and KResearch projected (as of October 2019) บริการทุกระดับประทับใจ 150#76K KASIKORNTHAI EEC Progress Expected disbursement of infrastructure project (FY2019-2027)* 250,000 200,000 150,000 100,000 50,000 0 2019 2020 2021 2022 2023 2024 2025 2026 2027 Bt mn 300,000 250,000 200,000 150,000 100,000 50,000 0 Expected private investment (FY2019-2027)* III 2019 2020 2021 2022 2023 2024 2025 2026 2027 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Private Investment Breakdown by Business type (during the first 5 years) 8.8% 91.2% Infrastructure-related investment ■Target and non-targer industries Expected project Name of the Projects Amount Owner TOR period Progress selected JV The High-Speed Rail Linked 3 Airport Project (Don Muang-Suvarnbhumi-U-tapao) U-tapao airport and aviation city 2) Maintenance, repair and overhaul (MRO) centre* Bt224.5bn State Railway of Thailand PPP Contract signed Jun 18 CPH1) Bt290bn Royal Thai Navy Oct 18 in Oct 2019 Final stage of bid selection process BBS³) completion 2027 2026 Bt10.6bn Thai Airways Oct 18 Pending after Airbus withdrew Finding new JV N.A. Third phase of the Laem Chabang seaport* Bt155.8bn Third phase of the Map Ta Phut seaport* Bt47.9bn Port Authority of Thailand Industrial Estate Authority of Thailand Oct 18 Under Negotiation GPC4) (Tentative) 2026 Oct 18 PPP Contract signed in Oct 2019 GPC4) 2024 Source: Newspaper, KResearch (as of August 2020) Note: *Projects are under Transport Action Plan Year 2017 1) CPH = A consortium joint venture led by Charoen Pokphand Group, 2) Most of Aviation City development comes from private sector, 3) BBS (BA 45% + BTS 35%+ STEC 20%), 4) GPC = Gulf Energy Development Pcl + PTT Tank Terminal Company + China Harbour Engineering Company บริการทุกระดับประทับใจ K KASIKORNTHAI BOI Measures for Supporting Private Investment ■Cabinet approved measures for supporting private investment Special economic zones (SEZs) (January 19, 2015) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Targeted provinces ■ Launched a pilot project to set up 6 special economic zones in 5 provinces, namely Tak, Mukdahan, Sa Kaeo, Songkhla, and Trat ■ Second phase of special economic zones to be established in 5 additional provinces - Chiang Rai, Kanchanaburi, Nong Khai, Nakhon Phanom, and Narathiwat Incentives ■ Projects in special economic zones: tax exemption for first 8 years and 50% tax reduction in following 5 years 10 targeted industries for new engines of growth (November 17, 2015) 10 targeted industries Incentives ■ First S-Curve (to enhance efficiency of existing production, boosting short and medium-term economic growth) consists of Next Generation Automotive, Smart Electronics, Affluent Medical and Wellness Tourism, Agriculture and Biotechnology, and Food for the Future ■ New S-Curve (for new growth) consists of Robotics, Aviation and Logistics, Biofuels and Biochemicals, Digital, and Medical Hub ■ Up to 15 years for tax exemption; personal income tax exemption for international qualified expertise Tax deduction will be granted up to 3 times for expenses relating to technology R&D from 2015-2019 Additional Incentives under Revised Investment Promotion Act (February 14, 2017) Competitiveness Enhancement Act Incentives ■ Promote investment in line with Thailand 4.0, especially new technology and high-impact investment ■ Targeted Core Technologies consist of Biotechnology, Nanotechnology, Advanced Materials Technology, and Digital Technology Corporate income tax exemption for up to 13 years for businesses using advanced technology and R&D ■ 50% corporate income tax reduction for up to 10 years " Import duty exemption for machinery and raw materials for exports ■ Non-tax incentives such as up to 99 years ownership of land and imports of skilled-labor and foreigner specialists ▪ Bt10bn grants for investment projects engaged in R&D, innovation, or human resource development in specific areas Source: Newspaper, KResearch (as of August 2017) บริการทุกระดับประทับใจ 152 151#77K KASIKORNTHAI BOI Measures for Supporting Private Investment Special incentives to attract relocating industries (September 6, 2019) Thailand Plus Package Incentives ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■ To attract foreign investment, especially to expedite investments from companies seeking to relocate as a result of the ongoing trade war ■ Additional 5 years of 50% reduction of corporate income tax when at least Bt1bn of actual investment is put in place by December 2021 and the application is submitted by December 2020 ▪ Special deduction of training expenses related to advanced technology ■ Investments in automation systems will be entitled to double deduction ■ Set up an investment steering committee (One-Stop Service) to coordinate the consideration and facilitation of the investment projects, especially those involving large investments Broad Investment Measures to Boost Economy (February 6, 2020) Thailand Plus Package Incentives ■ To attract foreign investment, especially to expedite investments from companies seeking to relocate as a result of the ongoing trade war ■ Extension and improvement of promotional measures allowing companies to enjoy tax benefits when they invest in projects supporting grassroots economies by enhancing the competitiveness of co-operatives and village enterprises. Special deduction of training expenses related to advanced technology endorsed by the Ministry of Higher Education, Science, Research, and Innovation Steps to Ease COVID-19 Impact, Accelerate Investment in Medical Sector (13 April 2020) Thailand Plus Package Incentives To mitigate the impact of the COVID-19 outbreak on business ■ To encourage rapid investment in the manufacturing of medical equipment Accelerate investments in the medical sector ■ A 50% reduction in corporate income tax for an additional 3 years to qualified investments in the medical sector ■ Applications to be submitted between January - June 2020, with production begun and income generated by December 2020 Temporary relaxation of investment conditions ■ Deadlines relaxed in cases such as duty-free importation of machinery and full operation start-up, as well as waivers for applications for temporary cessation of operations for a period of more than two months Source: Newspaper, KResearch (as of August 2020) บริการทุกระดับประทับใจ K KASIKORNTHAI Short-term Stimuli ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Cabinet approved economic packages to stimulate economy: village / district levels, SMEs, and property Measures to support economy (August 2018, January 2019, August 2019) Welfare Card (Phase 1, 2) Add-ons under Welfare Card (Phase 3) ■ Individuals earning less than Bt30,000 annually will receive government transfers of Bt200-300 a month to each welfare smart card (Bt100 for purchase of necessary goods and up to Bt200 for E-money) until January 2020 ■ Welfare cardholders will also receive a monthly subsidy for transportation expenses for inter-provincial public buses, third-class trains, and local public buses and electric trains ■ Up to Bt500 per month e-wallet top-up allowance until January 2020 ■ Bt500 per month elderly allowance until January 2020 ■ Bt300 per month allowance for taking care of children aged up to six until September 2019 Measures to support domestic tourism and spending in upcountry area (August 2019) Tourism Cash handouts for domestic tourists Eat Shop Travel (Bt19bn) ■ Extension of fee-waiver for tourist visas until September 2020 ■ Offer a Bt1,000 freebie to Thai travelers, up to 10 million persons, visiting tourism destinations outside their home province ■ 15% cash rebate, up to Bt30,000, on tourism spending for food and beverages, local products, and accommodation expenses Measures to support domestic tourism (June 2020) Tourism Subsidies for domestic tourists Moral Support & We Travel Together (Bt22.4bn) ■ 4-month tourism campaigns (July to October 2020) ■ Moral Support: support domestic trips for more than 1 million healthcare workers and volunteers from sub-district hospitals (Bt2,000 subsidy per person for two days, one night trips) ■ We Travel together: - Subsidize 40% of normal room rates, capped at Bt3,000 per night (up to five nights) Subsidize 40% of other services such as food, capped at Bt600 per room per night - Subsidize 40% of airline ticket price Source: Newspaper, KResearch (as of August 2020) บริการทุกระดับประทับใจ 153 154#78K KASIKORNTHAI Short-term Stimuli (Con't). ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Cabinet approved economic packages to stimulate economy: village / district levels, SMEs, and property Measures to help Farmers (August 20,2019, and August 27, 2019) Drought-afflicted relief program Easing production cost 2019/20 Rice and Palm Oil Price Insurance Scheme (Bt34bn) Measures to help SMEs (September 2020 Loans guaranteed by Thai Credit Guarantee (TCG) 2020 Debt restructuring program Loans guaranteed by TCG (Bt100bn) Venture capital fund for SMEs ■ Low-interest loans will be offered to support farmers affected by the drought ■ An extension of debt repayment for BAAC borrowers " " Emergency loans capped at 50,000 Baht, with no interest charged in the first year Drought rehabilitation loans up to 500,000 Baht, each with a special interest rate of MRR-2% • Bt500 per rai grant for easing crop expenses during 2019/2020 crop cycle (capped at 20 rai per farmer household) ■ Price guarantee of Bt4 per kilogram for palm oil, up to 25 rai per farmer household Up to Bt15,000 per tonne risch price guarantee, up to 40 rai per farmer household 8, 2015, July 25, 2017, August 1, 2017, and August 20, 2019, January 7,2020) ■ TCG will offer Bt60bn credit guarantee facility to the first group of up to 50,000 SMEs and enlarge credit guarantee coverage to 40% from 30% ■ TCG will delay bankruptcy process for SMEs and help SME debt restructuring process ■ TCG will absorb first 30% of NPLs as loss ■ Guarantee fee will drop to 0% in 1st year, 0.5% in 2nd year, 1.5% in 3rd, and 1.75% in remaining years ■GSB, KTB, and SME banks will provide Bt6bn in venture capital funding for start-up SMEs with insufficient capital SME Transformation Loan programme by Government Saving Bank and Krung Thai Bank (January 7, 2020) 2020 Liquidity aid (Bt60bn) ■ GSB and KTB will offer Bt60bn loans to boost SMEs' liquidity Source: Newspaper, KResearch (as of January 2020) บริการทุกระดับประทับใจ K KASIKORNTHAI Short-term Stimuli (Con't) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK ■Cabinet approved economic packages to stimulate economy: village / district levels, SMEs, and property Measures to support small SMEs (August 20,2019, January 7,2020) Special Credit Program to ■ Grant soft loans, up to Bt1mn per entrepreneur, with interest rate of only 1% per annum and seven-year grace period support small SMEs (Bt5bn) Measures to support property market (October 29, 2019, November 26, 2019) Property transfer fee reduction Baan Dee Mee Down Program (Cash Rebate on down payment) " Property transfer fees reduced from 2 percent to 0.01 percent ■ Mortgage fees reduced from 1.0 percent to 0.01 percent for buying condominium units priced at not over Bt3 million ■ Bt50,000 cash-back per buyer on down payment for buyers earning less than Bt100,000 per month (Nov 19 - Mar 20) Source: Newspaper, KResearch (as of January 2020) 155 บริการทุกระดับประทับใจ 156#79K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Ongoing Government Measures to Assist Cost of Living Household Assistance Energy Prices Measures Elimination of some Oil Fund levies (effective Diesel Price 35 33 31 29 27 25 23 21 Price moves in accordance with global oil prices 19 29.99 Details Train and Bus Fares: Bt500 monthly allowance for welfare card holders to use for bus and train service Necessity Goods: A Bt100* grant per month in welfare card to purchase necessity goods, products intended for education and farming materials from all Blue Flag shops Cooking Gas: A Bt45 discount each quarter in welfare card for purchasing cooking gas Allowances (e-Money): Up to Bt 200** for e-Money in welfare card, which can be withdrawed from an ATM Water and electricity price: Reduce water and electricity bills and refund meter fees Diesel Fuel: Government intends to restructure diesel fuel prices to reflect global prices NGV and LPG Price: Government lowered the NGV and LPG subsidy, allowing retail selling prices to reflect global market prices ■ NGV price rose to Bt15.31/kg since April 2019, align with global price LPG prices are as follows: ➤ Household sector: Current household LPG prices are Bt18.87/kg and Bt16.37/kg for low income household. ➤ Transport sector: adjusted to market price at Bt18.87/kg ➤ Industrial sector: adjusted in line with relevant production costs, currently at Bt18.87/kg FT Rate: Fuel Adjustment Tariff (FT) Rate for electricity is set to increase by less than the actual cost (from September-December 2020, FT rate at Bt-0.1243/unit) Baht/Litre Jan- Jan- Jan- Jan- Jan- 11 12 13 14 15 --- Retail Price Value-added-tax (VAT) Rate Jan- 16 Jan- Jan- 17 18 Jan- Jan- 19 20 Price without Subsidy Note: *Effective period July- October 2019 ** Household income exceed Bt30,000 per annum will get Bt 100 for e-Money Source: KResearch K KASIKORNTHAI On September 10, 2019, the Government announced the following VAT Rates: Maintain the 7% value-added-tax (VAT) rate until September 30, 2020 ■On October 1, 2020, the VAT rate will be increased to 10% บริการทุกระดับประทับใจ Thailand Economic Figures ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK บริการทุกระดับประทับใจ 158 157#80K KASIKORNTHAI Currency and Interest Rate Outlook USD/THB: End Period ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Interest Rate Trend 3.25 Fed Funds rate BOT's 1-Day Repurchase rate 4.00 2.75 2.25 Bt 2.00 35.97 1.50 1.50 1.50 1.75 37 32.68 32.91 35.84 32.66 32.55 2.00 32 33 31.54 30.60 29.98 30.50 29 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 4Q20F ――USD/THB ■ USD/THB depreciated to around 30.90 in 1H20, due to a risk-off sentiment from fear of the COVID-19 outbreak and BOT rate cuts ■ However, USD/THB to drop back to 30.50 by the end of this year, due to the tendency toward US dollar weakness, expected stability in the BOT rate, and strong Thai economic fundamentals, such as high current account surplus, low inflation, and high global liquidity 0.00 1.25 0.50 0-0.25 0-0.25 0-0.25 0-0.25 0-0.25 0.25-0.50 0.50-0.75 1.25-1.50 1.50-1.75 0.00-0.25 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20F ■Fed would keep its ultra-monetary easing with Fed Funds rate of 0.00-0.25% and its quantitative easing throughout the year, from 1.50-1.75% in 2019, as the COVID-19 outbreak, existing US-China tensions, and US election uncertainty are expected to impact US economic growth ■ BOT may maintain its interest rate at 0.50% in 2020, from 1.25% in 2019, due to impacts of the COVID-19 outbreak globally on Thai economic growth Note: F is estimated by KBank Capital Markets Research (as of August 10, 2020) บริการทุกระดับประทับใจ K KASIKORNTHAI Monthly Economic Conditions: June 2020 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 2018 2019 2020 YTD Units: YoY %, or indicated otherwise 1Q-20 2Q-20 Mar-20 Apr-20 May-20 Jun-20 2020 Private Consumption Index (PCI) 4.5 2.5 1.7 -10.3 -0.8 -14.3 -11.5 -4.7 -4.4 Non-durables Index Durables Index Service Index 1.4 2.3 1.1 -7.0 1.2 -11.2 -6.4 -3.2 -2.8 8.0 -2.0 -12.00 -29.1 -22.0 -37.5 -32.0 -18.9 -20.4 5.3 Passenger Car Sales 19.1 -2.4 -22.6 Motorcycle Sales -2.8 Private Investment Index (PII) 3.5 Construction Material Sales Index 4.4 Domestic Machinery Sales at constant prices 6.1 Imports of Capital Goods at constant prices 3.6 -0.9 Newly Registered Motor Vehicles for Investment 5.7 2.8 -9.9 -28.2 -21.9 -31.1 -28.6 -24.3 -58.7 -44.6 -72.9 -61.4 -40.3 -40.2 -3.3 -5.7 -28.8 -11.2 -34.4 -37.1 -12.8 -16.9 -2.6 -6.5 -13.5 -7.9 -9.9 -18.2 -12.1 -10.0 -0.7 -0.3 2.7 -1.0 16.3 -2.5 -3.3 1.1 -5.4 0.6 -22.5 -1.7 -15.5 -28.5 -22.6 -10.8 -9.2 -19.6 -11.0 -17.5 -26.8 -13.7 -14.5 -3.0 -11.7 -24.5 -8.0 -25.4 -34.7 -12.6 -17.8 -19.0 Manufacturing Production Index 3.7 -3.6 -6.4 -20.0 Capacity Utilization 69.2 Agriculture Production Index 7.4 -0.4 -13.8 Agriculture Price Index -5.4 Tourist arrival growth 7.3 66.0 66.9 52.9 -4.7 1.8 8.8 -1.4 4.2 -38.0 -100.0 -76.4 Exports (Custom basis) 6.9 -2.6 0.9 -15.2 Price 3.4 0.3 -0.4 -2.0 Volume 3.9 -3.7 Imports (Custom basis) 12.0 Price Volume Trade Balance ($ millions) (Custom basis) Current Account ($ millions) Headline CPI Core CPI 0.71 -18.2 -23.8 -17.7 -12.9 51.3 52.3 55.2 59.9 -15.4 -0.3 2.7 -10.0 3.6 -2.9 -4.5 3.6 -100.0 -100.0 -100.0 -66.2 2.1 -22.5 -23.2 -7.1 -2.4 -2.3 -1.5 -1.2 1.8 -16.1 -0.8 -1.0 -21.9 -23.5 -7.1 -4.8 -1.9 -23.5 7.2 -17.2 -34.4 -18.1 -12.6 5.6 0.2 -0.9 -5.1 -4.2 -7.3 -5.1 -2.8 -3.0 7.7 -5.7 -0.1 -19.3 8.7 -10.5 -30.6 -15.8 -9.7 4,756 10,009 3,934 6,767 1,592 2,462 2,695 1,610 10,701 28,457 38,358 8,917 -837 544 -654 64 -247 8,080 1.06 0.71 0.41 -2.67 -0.54 -2.99 -3.44 -1.57 -1.13 0.52 0.53 0.12 0.54 0.41 0.01 -0.05 0.32 -10.5 67.8 -25.1 8.7 4.2 -1.6 ■June indicators suggested the Thai economy improved from the previous month, due to the gradual relaxation of lockdown measures ■ June private consumption indicators contracted at a lower rate, compared with the previous month ■ June exports continued to contract drastically, especially exports of automotive and parts, machinery and equipment, and petroleum- related products ■June current accounts registered a deficit from tourist revenue ■June headline inflation remained negative for 4 consecutive months but dropped at a lower rate than previous months. Meanwhile, core inflation turned negative for the first time in more than a decade Sources: Bank of Thailand (BOT), Ministry of Commerce (MOC), Office of Industrial Economics (OIE), and Office of Agricultural Economics (OAE) บริการทุกระดับประทับใจ 159 160#81WOW% % YoY, of MPI K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KR Household Economic Condition Index (KR-ECI) ■The 3-month Expected KR-ECI in June 2020 stayed at 37.4, showing signs of improvement from 35.9 recorded in May 2020. For the first time in 7 months, the KR-ECI for the next three months is found to be higher than the current economic condition index. This turnaround suggests the perception of households towards economic conditions in, which will continue to improve in the future. KR Household Economic Condition Index (KR-ECI) KR-ECI Components of 3-month Expected KR-ECI 3-month Expected KR-ECI 50.0 48.0 46.0 44.0 42.0 40.0 38.0 36.0 34.0 32.0 Source: KResearch 30.0 Jan-18 Feb- Mar-18 Apr-18 May-18 Jun-18 81 ՈՐ Aug-18 Sep-1 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 30.5 Household savings 29.2 ■Jun-20 ■May-20 Household income 41.3 39.3 48.0 Household debt 37.4 36.0 Household expenses excluding debt 47.1 33.2 30.0 Prices of consumer goods Source: KResearch 37.1 37.0 T T T T 0 5 10 15 20 25 30 35 40 45 50 55 -Current KR-ECI ---3-month Expected KR-ECI Notes: The KR Household Economic Condition Index (KR-ECI) has been devised by KResearch to monitor household sentiment towards economic conditions at the current level and over the next three months. Any reading above 50 reflects positive sentiment and below 50 negative sentiment. - Research sample includes households in Bangkok and Metropolitan Area (BMA). KR-ECI consists of household savings, household income, household debt, household expenses excluding debt and prices of consumer goods. บริการทุกระดับประทับใจ K KASIKORNTHAI Economic Condition Highlights: June 2020 Jun20 MPI contracted at a lower rate than previous months, while CapU slightly picked up ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Activities in real estate market, except new housing registrations, expanded in 1Q20 10 5 85 75 65 55.2 55 -20 -25 -17.7 -30 45 35 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 MPI (Ihs) % Capacity Utilization (rhs) 1.0 0.5 0.0 -0.5 % Capacity Utilization Rate % YoY 400% 300% 200% 100% 0% -100% Jun20 Headline inflation stood at -1.57% YoY, while core inflation fell to -0.05% YoY Property prices continued to improve in 1Q20, given government stimulus measures for the housing sector New Housing registered in BKK and Vicinity 1Q09 1Q10 1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19 1Q20 Construction areas permitted Nationwide Condominium Registration Nationwide 3.00 20.0 -0.05% YoY 2.00 15.0 1.00 0.00 10.0 -1.00 5.0 -2.00 -3.00 0.0 MITTTTTT 4.00 -1.57% YoY -5.0 20 -10.0 Jan- May Sep- Jan- May- Sep- Jan-1 May- Sep- Jan- May- 17 17 17 18 18 18 9 19 19 20 20 Headline CPI (MOM-Ihs) Headline CPI (YoY-rhs) Sources: BOT, MOC, OIE, and REIC (Real Estate Information Center) Core CPI (MoM-Ihs) Core CPI (YoY-rhs) บริการทุกระดับประทับใจ Single House (With Land) 1Q09 2Q10 3Q11 4Q12 1Q14 2Q15 3Q16 4Q17 1Q19 Townhouse (With Land) Land 5.1 4.9 3.7 162 48% 2% -12% 161#82Million Person K KASIKORNTHAI Economic Condition Highlights: June 2020 Jun20 CCI and Jul20 BSI improved, due to the relaxation of lockdown measures ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Jun20 Private investment and private consumption contracted at a lower rate than previous months 10% 90 60 ■1Q20 2Q20 May-20 Jun-20 85 0% 55 80 75 50 % YoY -10% -4.7% -3.3% -3.2% 70 42.945 -20% -12.1% -12.6% -18.7% -18.9% 65 40 -30% -24.3% 55 35 -40% 50 45 49.2 230 PCI PII Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Consumer Confidence Index (CCI) Registered Construction Imports of Consumer's Consumer's Consumer's Motor Materials Capital Non Durable Durable. Service Vehicles Goods Business Sentiment Index (BSI) There were no tourist arrivals in 2Q20, due to inbound travel restrictions Jun20 exports continued to contract drastically, due to the pandemic and resulting lockdowns around the world Export Value 45.0 40.0 20.4% 4.2% 8.9% 9.4% 7.3% 40% (USD Million) 20% 35.0 28,000 0% 30.0 25.0 -6.5% -20% 24,000 20.0 -66.2% -100.0% -40% 20,000 15.0 10.0 24.8 29.9 32.5 35.6 38.2 39.8 0.0 -60% 16,000 -80% 12,000 5.0 -100% 0.0 -120% 8,000 2014 2015 2016 2017 2018 2019 1 6M20 Jun-20 4,000 0 No of Foreign Tourist Arrival --% Tourist Arrival YoY (RHS) % YoY 30 -23.2 20 10 0 -17.3 NOTT -10 -20 -30 -40 Exports excluding gold % YoY Sources: Bank of Thailand (BOT), Ministry of Commerce (MOC), University of the Thai Chamber of Commerce (UTCC), and Office of Industrial Economics (OIE) Jan-16 Sep-16 May-17 Jan-18 Sep-18 May-19 Jan-20 Exports บริการทุกระดับประทับใจ Exports excluding gold Exports % YoY K KASIKORNTHAI Exports and Imports: 1H20 Exports by Country ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK Imports by Country Middle East 3.2% Others 21.1% CLMV 10.6% Others 21.0% ASEAN 24.9% Middle East 6.7% China 23.1% Hong Kong 5.1% U.S.A. 14.3% EU 8.4% EU Japan 8.8% 9.8% China 12.8% U.S.A. 8.9% ASEAN CLMV 5.9% Japan 18.6% 13.3% Top 10 Exports by Product (Customs Basis) Top 10 Imports by Product (Customs Basis) 1H2020 1H2020 Total Exports, Custom Basis Import, Custom Basis USD Millions Weight % YoY USD Millions Weight % YoY Total Exports, 114,343 100.0% -7.1% Total Imports, 103,642 100.0% -12.6% Electronic machines 17,226 15.1% 0.2% Crude oil 9,500 9.2% -18.0% Electrical equipment 10,988 9.6% -11.2% Machinery and parts 8,986 8.7% -13.5% Precious stones and jewellery 10,078 8.8% 39.1% Electrical machinery and parts 8,071 7.8% -5.5% Motor cars, motor vehicles, parts and accessories 9,312 8.1% -32.6% Electrical, electronic equipment and parts thereof 7,713 7.4% 3.9% Chemicals 7,460 7.2% -5.1% Polymers of ethylene in primary forms 3,799 3.3% -18.7% Chemical products 3,276 2.9% -17.3% Iron, steel and products 5,158 5.0% -22.0% Parts and accessories of vehicles 4,448 4.3% -22.6% Machinery and parts thereof 3,075 2.7% -14.8% Other metal ores, metal waste scrap, and products 4,114 4.0% -9.3% Textiles 2,857 2.5% -16.9% Refine fuels 2,856 2.5% -23.2% Computers, parts and accessories 3,892 3.8% -5.4% Iron and steel and their products 2,564 2.2% -10.9% Vegetables and vegetable products 3,655 3.5% 3.6% Source: Ministry of Commerce บริการทุกระดับประทับใจ 164 163#83% YoY K KASIKORNTHAI Export and Import Data: 2015 - 2019 Exports by Country 300 250 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Imports by Country 22.7% 21.2% USD Billion 250 21.7% 22.9% 22.2% 200 22.0% 22.8% 3.8% 3.4% 3.4% 5.0% 4.8% 4.2% 5.2% 11.1% 4.8% 150 5.4% 11.2% 5.3% 11.2% 11.4% 9.9% 12.7% USD Billion 200 22.6% 20.4% 9.9% 8.3% 20.6% 8.2% 6.1% 9.1% 7.3% 150 7.7% 6.8% 6.7% 6.2% 14.1% 15.4% 14.5% 14.0% 15.8% 9.3% 10.0% 100 9.4% 9.5% 12.0% 20.3% 20.0% 20.0% 21.3% 100 11.1% 11.0% 12.5% 11.8% 21.6% 10.3% 10.2% 10.1% 9.9% 9.6% 50 8.9% 9.3% 9.5% 8.9% 8.8% 11.6% 50 10.4% 10.3% 10.6% 11.2% 19.0% 4.9% 4.8% 4.9% 5.7% 15.3% 15.1% 14.6% 15.5% 14.4% 13.9% 13.8% 13.4% 13.3% 0 0 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 " ASEAN-5 = CLMV BEU = China Japan = USA Hong Kong Middle East Others " ASEAN-5 = CLM "EU = China Japan USA Middle East Others 2019 Exports, Custom Basis Imports, Custom Basis 2019 USD Millions Weight % YoY USD Millions Weight % YoY Total Exports, 246,245 100.0% -2.7% Total Imports, 236,640 100.0% -4.7% Electronic machines 35,598 14.5% -7.2% Crude oil 21,543 9.1% -19.9% Motor cars, motor vehicles, parts and accessories 27,271 11.1% -5.8% Machinery and parts 20,945 8.9% 1.3% Electrical equipment 24,324 9.9% 0.1% Electrical machinery and parts 17,564 7.4% -8.3% Precious stones and jewellery 15,691 6.4% 30.9% Electrical, electronic equipment and parts thereof 15,451 6.5% -2.9% Polymers of ethylene in primary forms 9,172 3.7% -11.0% Chemicals 15,314 6.5% -8.2% Chemical products 7,590 Refine fuels 7,341 Machinery and parts thereof Textiles Other industrial products Source: Ministry of Commerce 7,309 6,910 2.8% 3.1% -17.3% 3.0% -21.2% 3.0% -10.9% -3.3% Iron, steel and products 12,917 5.5% -3.9% Parts and accessories of vehicles 11,505 4.9% -4.0% Jewellery including silver bars and gold 11,036 4.7% -25.9% Other metal ores, metal waste scrap, and products 8,936 3.8% -9.7% 6,307 2.6% -0.5% Computers, parts and accessories 8,191 3.5% -8.5% บริการทุกระดับประทับใจ K KASIKORNTHAI Export and Import Growth by Key Destinations Export growth by key destinations ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Import growth by key destinations 30% ■ 2016 ■ 2017 ■ 2018 ■ 2019 30% ■ 2016 ■ 2017 ■2018 ■2019 25% 25% 20% 20% 15.6% 15% 11.8% 15% 11.8% 10% 5% % YoY 10% 5% 0.9% 0% 0% -5% -3.8% -1.5% -2.7% -5% -5.0% -4.7% -10% -9.6% ASEAN-5 -6.3% CLMV -5.9% -10% EU China Japan USA Total ASEAN-5 CLMV -6.0% EU -5.8% China Japan USA Exports Total Imports 2018 2019 2018 2019 Exports ASEAN-5 Value (Million USD) Value Share (Million USD) Share 39,212 15.5% 35,432 14.4% CLMV 29,334 11.6% 27,472 11.2% Imports ASEAN-5 CLMV Value (Million USD) Share Value (Million USD) Share 33,158 13.4% 31,512 13.3% 12,089 4.9% 13,512 5.7% EU 25,042 9.9% 23,553 9.6% EU 22,249 9.0% 20,903 8.8% China 30,317 12.0% 29,172 11.8% China 49,903 20.1% 50,328 21.3% Japan 24,937 9.9% 24,558 10.0% Japan 35,256 14.2% 33,222 14.0% USA 28,041 11.1% 31,343 12.7% USA 14,969 6.0% 17,307 7.3% Total 252,957 100.0% 246,245 100.0% Total 248,201 100.0% 236,640 100.0% Source: Ministry of Commerce บริการทุกระดับประทับใจ 166 165#84K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Economic Condition Highlights: CAPEX and Investment Cycle Capacity Utilization by Key Industries Integrated Circuits & Parts 74.4 Investment value of BOI-approved applications (Total)* Motor Vehicles 48 7 Basic Metal 46.4 Rubber & Plastic Products 46 Chemical & Chemical Products 77.2 Investment Value (Bt bn) 1 809.4 867.5 900 (+12%) (+7%) 631.1 549.5 700 (-27%) (-13%) 447.4 (-19%) 500 300 100 -100 89.4 (-34%) 2015 2016 2017 2018 2019 1Q20 Investment value of BOI-approved applications (by Industry)* Paper and Paper Products Textiles 415 Tobacco Food Baverages 75.1 58.6 2017 2018 56.6 ■2019 56.0 ■1H20 T 0 20 40 60 80 100 ■Avg 16-18 Source: The Bank of Thailand (BOT), The Ministry of Commerce (MOC), and Office of Industrial Economics (OIE) (Data as of March 2020) Investment Value (Bt bn) 500 400 300 200 100 0 12.39 0 Agriculture Minerals&Ceramics Light Industry ■ 2015 2016 Metal Processing Electronics & Electrical Chemical Plastic Paper W Service & Infrastructure Technology and Innovation 2017 2018 ■2019 1Q20 Note: *Figures above indicate investments of approved projects requesting investment promotion benefits from BOI บริการทุกระดับประทับใจ 167 K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Property Market: Market still cautious, weak supply on the 1st quarter could be expected Supply Side: New Housing Completions and New Projects Launched in BMR* Outstanding Mortgage Loans to Individuals and Property Developers to GDP 170 1,000 Units 150 130 125 110 90 70 50 44 431 30 10 -10 1997 1998 1999 2000 2001 1314 2002 68 49 46 5150 2003 2004 ■New Housing Completions 117 102 132 1314 131 124 127 115 108 11 114 125112112 101 86 81 68 75 66 2005 2006 2007 2008 2009 2010 2011 2012 2013 New Projects Launched 2014 2015 2016 2017 2018 2019 2M19 2M20 Demand Side: Transferred Properties in BMR* 1,000 Units 250 200 178 146 161 151 159 182 174 196 197 198 175 163 150 100 50 0 2008 2009 2010 2011 2012 2013 % (YoY) Single House 6.3%; Townhouse 6.3% 25.0 20.0 15.0 10.0 5.0 0.0 -5.01992 -10.0 -15.0 2014 2015 2016 2017 2018 Price Growth of Properties Avg. 5-year price growth before the crisis (1992-1996): Land 9.4%; 1993 1994 1995 1996 1997 199 1099 -Land 2019 Avg. price growth in last 5-years (2015-2019): Land 4.2%; Single House 2.8%; Townhouse 3.9% 26 26 - 2M19 2M20 2.6 5.5 5.3 000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010r 2011 2012 2013 2014 2015 2016 2017 2018 2019 2M19 2M20 -Single House Townhouse % of GDP 30 20 16.8 16 16 10.4 10 -4.6 0 1993 1996 1999 2002 2005 2008 2011 Loans to Property Developers 2014 2017 2Q20 Housing Loans ■Mortgage loans to GDP are higher than pre-crisis level, due to factors such as changes in consumer behavior, intense competition among banks, and a more accessible credit market ■Outstanding loans granted to property developers (including contractors) to GDP was 4.8% in 2Q20, still lower than pre-crisis level ■Supply Side: Overall new housing projects launched in 2M20 sharply decreased 30.1% YoY, due to high accumulated stocks of property developers and unfavorable of economic situation ■Demand Side: Number of property transactions in 2M20 rose only 0.4% YoY, despite government stimulus measure of cash back for down payment and reducing home ownership transfer fee, as buyers still cautious ■Prices: single house and townhouse prices in 2M20 (pre Covid-19) rose as developers and consumers shifted to favor low-rise projects, while land prices increased slightly Sources: National Economic and Social Development Council (NESDC), BOT, Real Estate Information Center (REIC), Agency for Real Estate Affairs (AREA), and KResearch Note: *Including Condominium, Single House, and Townhouse; BMR = Bangkok and Metropolitan Area ** Measures to support Property sector during October 2015 - April 2016, such as cutting transfer fees and mortgage fees and tax deduction for the first five years ■Mortgage NPLs among Thai commercial banks rose to 4.04% in 2Q20, from 3.71% in 4Q19 บริการทุกระดับประทับใจ 168#85k KASIKORNTHAI Household Borrowing Household Borrowing to GDP ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK % NPL for Consumption Loans of Thai Commercial Banks Old Definition New Definition % of GDP 100 80 71.8 66.2 59.3 60 76.6 79.7 81.2 79.4 78.1 78.4 79.9 80.1 8.5 8.8 8.3 7.5 10.0 10.6 11.3 12.0 12.6 12.7 12.5 12.3 12.2 12.3 % of Loans 25 20 15 8.2 8.3 10 40 24.4 28.9 22.3 21.5 22.4 23.1 23.4 23.1 22.6 22.3 22.3 22.5 19.6 18.9 20 7.7 11.2 15.1 11.9 13.2 13.9 24.5 26.8 29.5 32.3 33.5 34.5 33.7 33.1 33.5 34.3 34.3 5050 3.23 0 2001 2005 2009 2013 2017 1Q20 1994 1996 1997 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 Commercial Banks. SFIs Saving Cooperatives Non-Bank Fls Others Total ■ Household debt to GDP edged up to 80.1% in 1Q20, and is expected to rise further in 2020 Old Definition: Data from 1991 - 1997: lending from commercial banks and SFIs to individual persons for consumption only New Definition: Data from 2010 onwards: takes into account individual persons' outstanding loans from all types of financial institutions, including savings Co-ops and non-banks Cross-Country Comparison of Household Debt (as of 2018)* Debt Service Ratio of Thai households** % of GDP 40% 140 128.6 30% 27.9% 28.1% 27.2% 28.4% 29.1% 120 100.4 100 83.0 78.6 20% 80 67.3 66.0 53.2 60 10% 40 20 0% 2009 2011 2013 2015 2017 0 Australia South Korea Malaysia Thailand Singapore United States China ■Household borrowing to GDP is higher than pre-crisis level, due to factors such as changes in consumer behavior, intense competition among banks, and a more accessible credit market ■Thailand's household debt to GDP is comparable to other countries*; debt service ratio of Thai households is still well below 40%**, indicating the household debt situation is unlikely to trigger any problems in the foreseeable future ■NPL ratio for consumption loans of commercial banks was at 3.23% in 1Q20, vs. 2.90% in 4Q19 Source: BOT, Bank for International Settlements (BIS), National Statistical Office (NSO), CEIC and KResearch บริการทุกระดับประทับใจ K ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 169 KASIKORNTHAI BOT Macro Prudential Policy ■New frameworks on retail lending announced by BOT to closely monitor systematic risk and implement preventive actions LTV Criteria for Mortgage Loans (Effective: January 20, 2020) New (Including Top-up loans) Criteria for Credit Card / Personal Loans (Effective: September 1, 2017) Credit Cards Price and Type of Properties 1st Contract NEW LTV Limit OLD (Apr-19) LTV Threshold 2nd Contract 3rd Contract Onwards Lending Criteria New Min.Monthly Income Bt15,000 Old Bt15,000 Personal Loans New Old House ≤ 100%* < Bt10mn Condo. ≤ 100%* ≤ 95% ≤ 90% LTV Limit 80-90% 80-90% LTV Limit 70% 70% Credit Line (times of average monthly income) Income Credit Line Credit Line <Bt30,000 ≤1.5 times Income < Bt30,000 < Bt50,000 ≤3 times ≤ 5 times Credit Line ≤ 1.5 times <3 institutions Credit Line ≤ 5 times > Bt10mn House & Condo. ≤ 90% 80% (LTV Limit) 80% 70% >Bt30,000 ≤ 5 times 1) Under the new framework, LTV limit will be capped at 100% for the first contract of housing loans, and * loans for furniture and decorations can be added up to 10% of collaterals (old - no these conditions) 2) For the second contact, LTV limit is 80% if the first contract's installment payments are less than two years (old - three years); otherwise, LTV limit is 90% 3) Risk weight is 35% if LTV does not exceed its LTV limit; while the risk weight will increase to 75% for the loans for furniture and decorations of the first contract Notes: > Bt50,000 ≤ 5 times For credit card loans, credit line will be raised to 2 times for customers who have monthly income below 30,000 Baht per month, effective until December 2021. Criteria for Car Loans ■ Auto Registration Loans (Effective: February 1, 2019): Auto registration loan providers to be approved by Bank of Thailand and Ministry of Finance Regulated by Fiscal Policy Office Picofinance* Regulated by the BOT August 15, 2019: BOT relaxed the LTV rules for co-signers that have no ownership interest in the home being purchased April 2019: BOT tightened LTV criteria for mortgage loans, and raised down payment for the second contract onwards. Year 2009: BOT announced revised criteria in 2009-2010 on mortgage loan risk weights with a different effective date Year 2008: Risk weights for mortgage loans dropped from 50% to 35% under Basel II Credit Line Pico Plus* Capital Fund Interest Rate Ceiling > Bt5mn Bt50,000 ≤ 36% > Bt10 mn < Bt100,00 <36% for first Bt50,000 > Bt50 mn Depends on debt-servicing ability <28% for the amount in excess of Bt50,000 ≤24% <24% Note: * Picofinance and Pico Plus are allowed to provide loans only in the registered province บริการทุกระดับประทับใจ 170#86K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Thailand's external balances remain relatively strong compared to peers High international reserve / Imports (Import Coverage) Low foreign holding ratio in Thai government bonds Number of Month 16.0 13.8 14.0 12.0 50% 42.0% 12.5 40% 11.2 10.5 9.4 10.9 30.1% 30% 10.0 8.0 6.0 6.8 20% 22.7% 12.3% 17.0% 10% 4.0 2.0 0% Indonesia South Korea Malaysia U.S. Thailand 0.0 India Indonesia Phillippines South Korea Malaysia Thailand Singapore Source: CEIC, KResearch (data as of June 2020) Note: Retrieved from Asia Bond Online, based on latest available data Source: Asian Development Bank, US Department of Treasury High international reserve ratio / External debts 150% 100% 83.4% 50% 0% India 32.0% 102.6% 82.1% 42.3% Indonesia Phillippines South Korea Malaysia Source: CEIC, KResearch (data as of June 2020) 139.2% 18.2% Thailand Singapore ■Thailand's economy and financial markets are able to withstand impacts from QE tapering and its aftermath due to: ■High import coverage (international reserves/monthly imports) compared with the IMF's three month import coverage guideline ■More than 100% of external debt covered by international reserves ■Low portion of foreign holdings in Thai government bonds compared with other countries บริการทุกระดับประทับใจ K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Monetary and fiscal expansion raises financial stability concerns 3.0 In consistent with the Fed, the BOT cut interest rate to support the economy amid COVID-19 outbreak Thailand has enough FX reserves to meet all internal and external obligations Percent 2.5 2.0 1.5 1.0 0.5 5 Federal Funds Target Rate Upper Bound Federal Funds Target Rate Lower Bound BOT Policy Rate 3 months of imports $ Billion $ Billion FX Reserves 300 300 Reserves backing banknotes ■ST external debt Net Forward Position 250 250 200 200 150 250.4 150 55.3 $274.5 Billion $177.28 Billion 100 100 62.4 50 50 59.6 24.1 0 Source: BOT, KResearch Last Update: July 31, 2020 0.0 Jan-15 May-15 Sep-15- Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19- Sep-19- Jan-20 May-20 Excess liquid assets in Thai commercial banks slightly decreased ■Due to a deteriorating economy, the Fed decided to cut its policy 4,000,000 rate by 1.50% in 2020 to 0.00-0.25% ■Monetary easing leads to a massive exodus of capital from emerging markets and worsens exchange rate depreciation. However, Thailand's external stability will likely be maintained ■The Thai banking system excess liquidity decreased due to the impacts of the COVID-19 outbreak. However, CAR and NPL ratios were rather manageable (18.41% and 3.21% as of 1Q20, respectively), with net profits of Bt64.17bn in 1Q20 Source: Kresearch (as of August 2020) Million Baht 5,000,000 %LCR 184.74 186.2 183.5 182.23 190 176.9 173.8 180 170 2,000,000 160 2016 2017 2018 Liquid Assets 2019 -LCR (%) 1Q20 2Q20 3,000,000 Note: BOT has imposed the Liquidity Coverage Ratio (LCR) Framework which replaces the maintenance 6% reserve requirement. Regarding the LCR framework, all banks shall maintain high-quality liquid assets not less than net expected cash outflow over the next 30 days. The LCR was implemented on January 1, 2016, with the minimum requirement set at 60%, rising in equal annual steps of 10 percentage points to reach 100% on January 1, 2020 บริการทุกระดับประทับใจ 172 171#87K ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK KASIKORNTHAI Challenges: Exports Export is expected to mediocre in 2020 amid global trade uncertainties and transitions to structural changes Short-term Challenges Key Structural Problems Key Affected Products Short-term Measures from Authorities and Related Parties Long-term Measures from Authorities and Related Parties ■Faltering global demand ■THB appreciation Exports ■ US trade policy, e.g. measures to reduce trade deficit from 16 major countries ■Trade uncertainties ■High dependence on China's market ■Changing demand in electronic products and loss of competitiveness in some areas (e.g., HDD) ■High crop surplus among competitors ■Electronics and Electrical Appliances (Structural Challenge) ■Fishery and Agriculture Products (US SIMP) ■Steel and Aluminum, Washing machine (US tariffs) ■Plastic, ICs, Machinery and Electrical Equipment (US-China's trade dispute) ■ Extending products to catch up with changing consumer trends ■ Enhancing practices to comply with international standards ■Setting up export promotion board ■ Providing supports to help individuals gain skills and qualifications relevant to the needs of the labour market ■Negotiating FTA and regional trade agreements ■Relocating factories to GSP eligible countries ■Promoting BOI's privileges which grant merit based on competitiveness enhancements ■ Enhancing productivity Note: HDD Hard Disk Drive; IUU fishing = Illegal Unreported and Unregulated fishing; FTA = Free Trade Area; GSP = Generalized System of Preferences; BOI = the Board of Investment of Thailand Source: KResearch (as of April 2019) บริการทุกระดับประทับใจ 173 K KASIKORNTHAI Impacts of US-China trade dispute China's exports to US subject to tariffs ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK USD 50 bn US imposes tariffs on Chinese goods % tariff rates on Chinese 25% (List 1,2) goods to US Postponed until further notice USD 200 bn 25% (List 3) USD 120 bn USD 160 bn 7.5% (List 4A) (Feb 2020) Thai exports lost USD1.1bn during 2018-2019 or 0.1% of annual GDP Thai exports to US to Thai exports to China + + to replace US goods replace Chinese goods Thai exports to US (USDbn) Thai exports to China China to dominate CLMV as Thailand set to lose out (USDbn) % Share of Thai goods to CLMV's import List 1: 5.8 5.0 +5.4% List 1: 1.2 +92% 2.3 Electrical appliance 3.8% 3.0% +10% List 2: 1.9 Electronic -26% 1.4 equipment 14.5 16 +10% List 3: 4.5 +73% Iron/ Aluminum List 2: 1.9 2.1 List 3: China exports to US (USDbn) List 1: 32.2 23.3 List 2: 13.9 8.9 List 3: US exports to China (USDbn) -28% List 1: 30 2.7 -36% List 2: 9.1 28 List 3: 146.5 -23% 9.9% 8.4% 5.6%) 4.8% % Share of Chinese. goods to CLMV's import Electrical -10% appliance Electronic -69% equipment Iron/ 20.0 18.5 -7% 3.3% 40% 38% 44% 42% 45% CLMV CLMV The two-year US-China trade war shaved Thai exports by USD1.1bn, although some Thai products benefited as replacements for Chinese/US products, both directly and indirectly. Volume is still not enough to cover the drop in exports to countries within China's supply chain. Moreover, Thailand lost its foothold in the markets of neighboring countries However, the trade war has eased since the 'Phase 1' US-China trade deal was signed on January 15, 2020. At present, the COVID- 19 outbreak is putting international trade in greater jeopardy The US presidential election in November has complicated the trade war situation, which is likely to be protracted. A 'Phase 2' trade deal is unlikely to materialize anytime soon. Meanwhile, the geopolitical tension is set to continue Source: USITC, Trademap.org, Ministry of Commerce 2017 Aluminum บริการทุกระดับประทับใจ 174#88Billion Baht K KASIKORNTHAI Other Figures 16,000 14,000 Thai Bond Market Size (Gov't and Private bonds) Billion Baht 12,000 57% 56% 63% 64% 65% 69% 70% 71% 74% 76% 79% 78% 79% 83% 90% % 80% 3.0 70% 60% 10,000 8,000 6,000 50% 40% % to GDP 2.0 30% 4,000 2,000 0 10,341 1.0 20% 10% 0% ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Bond Yields * 1.5 0.9 1.0 1.1 1.2 1.3 0.7 0.8 0.0 0.5 0.5 0.4 0.5 6M 1Y 2Y 3Y 4Y 5Y 6Y 7Y 8Y 9Y 10Y 15Y -Dec-17 -Dec-18 ⚫Dec-19 -*04 Aug 20 Current Account and FX Reserve 1200 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20 Thai Bond Outstanding (LHS) --Bond Market Size to GDP (RHS) Foreign Holdings of Thai Bonds 8% 8% 8% 8% 7% 7% 6% 6% 6% 9% 8% 1000 800 600 400 1% 2% 1% 200 0 6% 4% 843 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 1H20 -וו-זזז 1% ៩៩ង៩៖៖៖ សំ៖ 6% 5% 4% 3% 2% 0% Foreign Holding Outstanding (LHS) ―% of Thai Bond Market (RHS) % of Total Bond Outstanding -20 -10 USD Billion NON + g 0 1995 บริการทุกระดับประทับใจ USD242bn (Jun20) 300 250 200 150 100 (+)USD80.8bn (Jun20) 50 0 1997 1999 2001 Current Account (LHS) 2003 2005 2007 2009 2011 2013 2015 FX Reserves (RHS) 2017 2019 USD Billion K KASIKORNTHAI Other Figures Million Baht 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 Housing Loans / GDP 17.7 17.4 18.0 18.3 1,709,897 1,885,139 2,034,137 19.4 ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Credit Card Loans/GDP 2.5 2.5 2.6 Million Baht 500,000 2.4 2.4 400,000 2.2 2.0 % to GDP 2.0 2.0 2.1 300,000 30 200,000 21.0 22.0 22.3 22.3 22.6 23.2 23.9 20 25 20 25 100,000 196,599 0 216,427 228,903 261,553 290,425 318,141 333,493 360,096 394,123 418,747 457,090 2009 2,263,552 2,510,012 2,783,129 3.021,811 3.251.488 3.448,852 3.706.397 3,918,565 4020913 15 10 10 % to GDP 2.7 3.0 2.3 2.5 2.0 1.5 393,506 1.0 0.5 0.0 1H20 2012 Credit Card Loan Outstanding (LHS) 2015 2018 Credit Card Loan to GDP (RHS) Note 1) Credit card loans represent outstanding credit card loans from commercial banks and non-banks, excluding SFIs, saving cooperatives and others financial Institutions Personal Loans/GDP 0 2009 2012 2015 2018 1H20 Housing Loans for Personal Consumption (LHS) % Housing Loans to GDP (RHS) Note Housing loans represent outstanding housing loans for personal consumption granted to individuals of householders by financial institutions (including Commercial banks, Finance companies, Credit financiers, SFIs, and Insurance companies but excluding Saving Cooperatives and others financial Institution) Source: BOT, NESDB 5 0 Million Baht 800,000 600,000 2.2 2.3 2.4 2.3 2.1 1.9 400,000 1.7 45 200,000 0 + 2009 % to GDP 4.0 3.4 3.4 3.5 3.0 2.3 2.3 2.3 2.5 2.0 332,996 354,243 383,303 579,911 1.5 564,461 1.0 0.5 0.0 T 2015 2018 1H20 % Personal Loans to GDP (RHS) 2012 Personal Loan Outstanding (LHS) Note: 1) Personal Loans represent outstanding personal loans under supervision (including commercial banks and non-banks, excluding SFIs, saving cooperatives and others financial Institution) บริการทุกระดับประทับใจ 176 175#89K KASIKORNTHAI Other Figures Loans to GDP as of 2019 United States Thailand S.Korea Japan Malaysia Singapore China 0 50 47.1 80.0 88.5 92.8 100 117.3 % YoY ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Thai Banks' Net Loan Growth and NPL Ratio % to Total Loans 15 5.2 6 12 5 3.9 9 2.9 3.0 3.1 3.1 3.1 3.2 4 6 2.4 2.3 2.7 2.3 3 3 2 136.4 12.5 15.1 14.0 10.5 4.2 3.4 1.3 4.3 5.2 1.9 4.2 5.3 % of GDP 0 1 160.1 -0.5 -3 0 2009 2012 150 200 % YoY Net Loan Growth 2015 --% Gross NPL Ratio 2018 1H20 Note: Data on China, Korea and Japan include loans from commercial banks as well as financial institutions, the rest include loans only from commercial banks Note: % YoY Net loans represent growth of net loans in 14 Thai commercial banks from C.B.1.1 Latest % Gross NPL is as of 1Q20 Credit Card Statistics % YoY Baht 25 19.9 250,000 20 15.7 11.3 12.8 15 11.1 9.7 10.2 200,000 8.7 10- 6.3 6.7 7.2 6.0 4.0 G 5 150,000 -1.1 3.9 10.1 5.8 14.3 11.0 9.5 4.8 8.0 9.4 6.2 9.2 0 -0.7 100,000 -5 Credit Card Loan Growth Spending Growth -10 50,000 -15 2009 2012 2015 -13.3 2018 1H20 147,364 163,956 GDP Per Capita 8.6 3.9 1.8 3.2 5.7 5.4 5.2 % YoY 20 20 10 2.8 0 170,467 185,159 192,327 195,807 202,151 213,586 225,095 236,815 243,467 Note: The credit card statistics number includes foreign bank and non-bank credit cards. Source: The Bank of Thailand, National Statistical Office (NSO), CEIC Data, and KResearch 0 2009 2011 บริการทุกระดับประทับใจ K KASIKORNTHAI Other Figures Population and Labor force 2013 GDP Per Capita -10 -20 2015 2017 2019 % YoY ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Unemployment Rate Million Person % of Labour Force 60 54.0 54.5 55.0 54.8 55.2 55.6 56.0 56.3 56.6 56.7 1.5 1.2 50 1.0 1.1 1.0 1.0 39.4 38.9 39.4 38.6 38.5 38.3 38.1 38.4 38.2 38.2 0.9 40 1.0 0.8 0.9 0.7 0.7 0.7 0.7 30 0.5 20 10 O 0.0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 ■Population (Age>= 15 years) Labour Force Foreign Direct Investment 2011 2013 2017 2019 1Q20 2009 2015 Source: NESDB, National Statistical Office (NSO), and KResearch Foreign Direct Investment Position by Countries Trillion Baht % YoY 10 25 15.2 8 7.5 6 13.9 28 117 8.6 -1.3 100% 80% 15 7.9 60% 23.2 22.1 22.2 21.8 22.9 23.6 24.5 24.1 24.6 23.3 9.3 9.6 8.2 7.9 8.1 7.5 6.6 6.8 6.9 7.3 35.3 -1.8 5 40% 4 -4.4 -5 20% 2 4.9 5.6 5.8 6.6 6.5 7.0 7.9 7.7 8.3 7.5 0% 0 -15 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 FDI Position (LHS) -% YoY (RHS) 30.0 31.7 34.6 35.0 35.1 1.2 1.4 1.9 1.6 16.5 14.9 19.8 18.2 17.1 17.6 16.3 16.2 16.8 15.5 17.7 17.5 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 36.4 35.3 36.4 34.5 17.0 16.1 16.0 16.0 4.0 42.3 27 26 ■ ASEAN EU ■China ■ Japan ■ US Others Note: - FDI refers to equity investment, lending to affiliates, and reinvested earnings; investment in equity is treated as a direct investment when the direct investors own 10% or more of ordinary shares - FDI position by countries is an investment outstanding that nonresident investors have with resident enterprises as stock concept - Converted FDI US Dollar to Thai Baht by reference rate from the Bank of Thailand บริการทุกระดับประทับใจ 178 177#90K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK Members of ASEAN Economic Community (AEC) ■Since December 31, 2015, ASEAN has transformed into the "ASEAN Economic Community," with free movement of goods, services, investment, and skilled labour, and a freer flow of capital ■Strategic measures under the five characteristics in the AEC Blueprint 2025 will be operationalised through sectoral work plans and their implementation and monitored through the AEC 2025 Monitoring and Evaluation Framework LAND 23 SINGAPORE PHILIPPINES BRUNEI MALAYSIA MYANMAR LAOS AMBODIA INDONESIA A highly integrated and cohesive economy AEC Blue print 2025 (2016-2025) A competitive, Innovative, and dynamic ASEAN Enhanced connectivity and sectoral cooperation A resilient, inclusive, and people-oriented, people-centred ASEAN A global Source: The Association of Southeast Asian Nations and KResearch Size of ASEAN Economy (USD Trillion) 3.6 3.8 2.5 2.5 2.6 2.8 2.9 3.1 3.0 3.1 3.3 Average Projected GDP Growth around 4.0-4.5% L L L L L L I 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F GDP Thailand ASEAN Size of Economy (GDP) in USD Trillion for 2020 2020 Real GDP Growth Forecast 0.5 -6.0% 3.1 -2.5% ASEAN Note: - Size of economy from IMF and compiled by KResearch - 2020 GDP forecast is projected by KResearch Source: IMF and KResearch (June 2020) บริการทุกระดับประทับใจ K KASIKORNTHAI AEC as a Growth Driver to Thailand 1) Regional Connectivity 2) The Pluralism of Economic Integration GREATER MEKONG SUBREGION China-EUFTA TTIP EU US Trans-Atlantic Trade and I Investment Partnership) TPP (Trans-Pacific Partnership) *PPmembers RCEP members TPP& RCEP members FTA with Thailand CJKFTA (China Japan South Korea FTA) ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK 179 3) High Growth Environment • ⚫ Strategically located, Thailand is the most essential area for GMS connectivity Physical connectivity and ease • of customs formalities will spur regional trade and promote regional supply chain ⚫ The emergence of AEC and RCEP, as well as other FTAs, will attract even more FDIs into the region, especially from the +3 countries ⚫ 2015 marks the completion of ASEAN Free Trade Zone amidst CLMV lowering their import tariffs close to zero • Thailand will constitute the center of production in Mainland South East Asia, while low-value, labor-intensive processes will be moved to CLMV • The materialization of regional supply chain will help maintain the region's competitiveness through labor division • The establishment of Thailand's SEZs along the border is to tap into plentiful resources of CLM • Consumer markets in CLMV will grow along with GDP increase and urbanization Note: CLMV = Cambodia, Laos, Myanmar and Vietnam; GMS = Greater Mekong Subregion; SEZS = Special Economic Zones; RCEP = Regional Comprehensive Economic Partnership บริการทุกระดับประทับใจ 180#91K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK For Further Enquiries, Contact KASIKORNBANK Investor Relations: Chief Investor Relations Officer Tel (66) 2470 2673 to 4 Investor Relations Team IR Website Fax (66) 2470 2680 Tel (66) 2470 6900 to 1 Tel (66) 2470 2660 to 1 Fax (66) 2470 2690 Email: [email protected] www.kasikornbank.com Investor Relations Disclosure Practice: ■Unreviewed/unaudited quarterly financial reports are released within 21 days from the end of each period ■Reviewed financial reports are released within 45 days from the end of the period for 1Q and 3Q; Audited financial reports are released within 2 months from the end of the period for 2Q and 4Q ■Following KASIKORNBANK's Disclosure Policy and good governance practice, KBank maintains a "silent period" for 7 days prior to the unreviewed/unaudited earnings announcement. During this period, the Bank refrains from replying to questions or commenting on the earnings announcement and arranging one-on-one or group meetings with analysts and investors บริการทุกระดับประทับใจ 181 K KASIKORNTHAI DISCLAIMER: 970 ธนาคารกสิกรไทย 开泰银行 KASIKORN BANK This document is intended to provide material information relating to investments or products in discussion and as a reference during the discussion, presentation, or seminar only. It does not represent or constitute any advice, offer, contract, recommendation, or solicitation and should not be relied upon as such. In preparation of this document, KASIKORNBANK PUBLIC COMPANY LIMITED ("KBank") has made several crucial assumptions and relied on financial and other information available from public sources as of the date of this document. Therefore, KBank assumes no responsibility or liability and makes no representations or warrants with respect to the accuracy and/or completeness of the information described herein. Before making their own independent decision to make any investment or enter into any transaction, the recipient of this information ("Recipient") shall carefully review information relating to services or products of KBank, including but not limited to economic and market situations and other factors pertaining to the transaction as posted on KBank's website at URL www.kasikornbank.com and in other sources, and make their own investigation on all other information, documents prepared by other institutions, as well as consult with Recipients' financial, legal, or tax advisors on each decision. The Recipient understands and acknowledges that the investment or execution of the transaction may be a transaction with low liquidity and KBank shall assume no liability for any loss, damage, or expense of any nature incurred by the Recipient arising out of such investment or execution of the transaction. The Recipient also understands and acknowledges that the information so provided by KBank does not represent the expected yield or consideration to be received by the Recipient arising out of the investment or the execution of the transaction. Further, the Recipient should be aware that the transaction can be highly risky as markets are unpredictable and uncertain, and there may be inadequate regulations and safeguards available to the Recipient. KBank reserves the right to amend, either in whole or in part, the information so provided herein at any time as it deems fit, and the Recipient acknowledges and agrees with such amendments, accordingly. For any inquiry, or in the case of making a complaint, the Recipient may seek further information from KBank at [email protected], +(662) 470 6900 to 01, +(662) 470 2660 to 61, or +(662) 470 2673 to 74. * The information herewith represents data in the Bank's consolidated financial statements, some of the numbers and ratios are calculated before netting with KBank's non-controlling interest. บริการทุกระดับประทับใจ 182#92K KASIKORNTHAI ธนาคารกสิกรไทย 开泰银行 KASIKORNBANK With concern and care from KBank, let's protect ourselves from COVID-19 Wearing hygienic mask Clean your hands with alcohol-based gel Keep away from each other at least 1 meter บริการทุกระดับประทับใจ K KASIKORNTHAI บริการทุกระดับประทับใจ 183