A

A

Executive Summary Management Discussion and Analysis For the Quarter Ended June 30, 2014

During the second quarter of 2014, an easing political situation began to lend some support to

consumer confidence and domestic spending. Looking forward into the second half of the year, although the

economy may show clearer signs of recovery, lingering risks, e.g., slow economic growth within some major

trade partner economies and US allegations of unethical labor practices, may impede the Thai export sector

and thus affect recovery momentum.

Amid opportunities and challenges that may affect KASIKORNBANK (KBank)’s and our customers’

business operations directly or indirectly, KBank and the wholly-owned subsidiaries of KBank are keeping

abreast of the economic environment and adjusting our business targets accordingly. We continue to firmly

adhere to quality business operations and becoming our customers’ “Main Bank”, based on a “Customer-

Centricity” strategy that is intended to deliver an impressive experience to our clients, pursuant to our

dedication to giving them excellent service under the unified KASIKORNBANK brand. With these goals, we

have mapped out strategies to accommodate the diverse needs of each customer segment under effective

and timely risk management, enabling us to secure good business growth, along with sustainable returns over

the long term.

Directed by these strategies, KBank and the wholly-owned subsidiaries of KBank registered net profit

of Baht 11,732 million for the second quarter of 2014. Operating profit before income tax expense totaled Baht

15,987 million – down by Baht 269 million – equivalent to a 1.65-percent decrease from the first quarter of 2014,

but up Baht 655 million, or 4.27 percent, over the second quarter of 2013.

Our financial position as of June 30, 2014, included consolidated assets totaling Baht 2,339,798

million, increasing Baht 30,802 million – 1.33 percent higher compared to the end of the first quarter of 2014 –

due mainly to higher loans of Baht 21,541 million, 1.49 percent higher over-quarter; thus rising to a total of Baht

1,471,922 million. Loan growth was largely reported in international trade finance facilities, commercial credit,

housing and credit card loans. Meanwhile, net investments rose Baht 19,404 million, up 3.79 percent. Net

interbank and money market items (asset side) fell Baht 3,246 million – 1.55 percent lower over-quarter – to a

total of Baht 206,121 million. As of June 30, 2014, consolidated deposits totaled Baht 1,567,499 million, rising

Baht 13,600 million – 0.88 percent higher – the largest increase being seen in savings deposits. In addition, our

gross NPL ratio remained unchanged over-quarter at 2.14 percent; KASIKORNBANK FINANCIAL

CONGLOMERATE’s Capital Adequacy Ratio (CAR) per Basel III capital requirements stood at 16.06 percent,

with a Tier-1 capital ratio of 12.92 percent, indicating continued solid capital strength.

By our determined efforts, along with strict adherence to good corporate governance practices, KBank

and the wholly-owned subsidiaries of KBank have achieved satisfactory business performance, for which we

were recognized by various awards during the second quarter of 2014.

B

Contents

Page

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

Thailand’s Economy in the Second Quarter of 2014 1

Banking Industry and Competition 2

Regulatory Changes 2

1.2 Business Directions of KASIKORNBANK and the wholly-owned subsidiaries of KASIKORNBANK 4

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

2.2 Financial Position Analysis 9

2.3 Loans and Deposits 13

2.4 Treasury Operations 14

2.5 Operating Performance of K Companies and Muang Thai Life Assurance PCL. 15

2.6 Capital Requirements and Credit Ratings 16

3. Operations of Core Businesses 19 3.1 Business Overview 19

3.2 Customer Segments 19

3.3 Product Domains and Sales Channels 22

3.3.1 Product Domains 22

3.3.2 Sales and Service Channels 26

4. Risk Management and Risk Factors 29

4.1 Credit Risk Management 29

4.2 Market Risk Management 33

4.3 Liquidity Risk Management 33

4.4 Capital Management 33

5. Operations of Support Groups 37 Human Resource Management of KASIKORNBANK and the wholly-owned subsidiaries of

KASIKORNBANK

37

IT Management 38

K-Transformation 38

1

1.

ap

on

sti

SM

re

the

an

Th

sp

eff

alo

ec

ec

pe

. Overview

.1 Overview

Thai EconAn im

pproval of ma

n the FY2014

imuli, e.g., pa

MEs via spec

flected in hig

e first quarter

nd ASEAN – p

hailand’s curr

pending and i

forts by Thai

ong with a low

conomy will e

conomy will g

ercent.

w

w of Econo

nomy in Secproving polit

ny projects su

budget and p

ayouts to rice

cialized financ

her private co

r of 2014, sug

plus US allega

rent monetary

nvestment, w

authorities to

w 2013 base

expand at lea

row perhaps

omy, Bank

cond Quarteical situation

ubmitted for i

preparation of

farmers per t

cial institution

onsumption,

gesting that th

ations over hu

y policy stan

ithout leading

o maintain infl

, we at KRes

ast 4.0 percen

2.3 percent, o

1

king Indust

er of 2014 at home du

nvestment pro

f the FY2015

the rice pledg

ns. Such effor

private invest

he Thai econo

uman traffickin

nce remains

g to any appa

lation at a ma

earch expect

nt over-year.

or within 1.8-2

ry and Reg

uring the sec

omotions. Alo

budget, plus

ging program

rts helped res

tment and pu

omy has botto

do

to

on

rec

tra

de

ex

by

ex

ng, child and f

accommodat

rent risk in lon

anageable lev

t that, during

Overall for 20

2.6 percent, a

gulatory Ch

cond quarter

ong with that

implementati

, as well as fi

surrect the d

blic spending

omed out.

Looking a

omestic dema

recover more

, Thai expor

cover in line

ade partner e

espite the fac

port categorie

y sluggish d

port destinati

forced labor i

tive enough

ng-term financ

vel. Given the

the second h

014, we have

and see avera

hanges

of 2014 led

came disburs

on of other ec

nancial assis

omestic econ

g, when comp

ahead, asid

and that is p

e pronounced

rts should g

with improv

economic con

ct that severa

es may be ha

demand from

ions – notabl

n Thailand. H

to support d

cial stability, o

e above asse

half of 2014,

e anticipated

age inflation of

d to the

sements

conomic

tance to

nomy as

pared to

e from

rojected

dly later

gradually

ving key

nditions,

al of our

ampered

m major

y China

However,

domestic

owing to

essment,

the Thai

that the

f 2.4-2.8

2

Banking Industry and Competition

During the second quarter of 2014, Thai commercial banks maintained net profit growth,

both over-quarter and over-year. Higher net profits compared to the prior quarter were attributable to

rising income of core businesses, including net interest income and non-interest income. The

increase in net interest income was consistent with rising net interest margin (NIM) due mainly to

effective funding cost management even though several banks slashed their interest rates at the end

of the first quarter of 2014, following the reduction in the Bank of Thailand’s policy rate. The rising net

interest income was also in line with a higher ratio of loans to deposits, given that loans began to

register some growth. Meanwhile, deposits fell slightly over-quarter as most banks adopted a

cautious stance in the launch of deposit campaigns. As evidenced, net loans at the 14 Thai

commercial banks, as of the end of the second quarter of 2014, grew 0.82 percent over the end of the

previous quarter whereas deposits dropped modestly by 0.57 percent from the prior quarter. The

improving banking performance also stemmed from an increase in non-interest income over-quarter,

due to increasing net fee income and other income as some banks realized their extraordinary

income in this quarter. In terms of asset quality, non-performing loans (NPL) to total loans rose slightly

from the previous quarter. Given stringent policies adopted, however, certain banks continued to set

aside additional loan loss provisions from the prior quarter, making the loan loss reserves in the

banking system rise over-quarter, as a result.

Looking ahead over the remainder of 2014, amid expectations of economic improvement,

which will revive consumer confidence and business sentiment alike, commercial banks are expected

to see brighter performance of their core businesses. Still, challenges seem to await, especially

intense price competition and tightening liquidity in the system, among others, that may emerge with

the economic recovery. In addition, rising household debts could pose some risks to asset quality,

thus being a cause for concern that needs close monitoring. Another issue to take into consideration

would be the impact of the US QE tapering on fund flows and liquidity in the Thai financial system,

which could then pressure commercial bank liquidity and banks’ future plans for deposit and

investment products.

Regulatory Changes Significant regulatory changes that may affect KBank’s and K Companies’ business

operations in the second quarter of 2014 include:

• Foreign Account Tax Compliance Act (FATCA) The Foreign Account Tax Compliance Act is a US federal law that requires foreign financial

institutions to report to the Internal Revenue Service (IRS) about their US clients’ financial accounts,

3

with the purpose of preventing tax evasion by US citizens using international financial transactions.

Non-compliance with this Act will invoke a penalty of a 30-percent withholding tax on such income

from US sources. As Thai commercial banks have decided to cooperate with the IRS, KBank then has

to request more information from our individual customers about their financial transactions via a

questionnaire regarding their US citizenship status prepared by Thai financial institutions. For US

customers or customers having any indication of US citizenship, such persons will have to file an IRS

form to confirm their status. This requirement has been effective since July 1, 2014. With regard to

customers that are juristic person, additional information will be required from them beginning

January 1, 2015.

In preparation for the FATCA compliance, KBank and K Companies have drawn out a related

policy and operational procedures; communications have been made to operating personnel to

ensure their understanding of FATCA requirements.

• Criteria for Personnel in the Capital Market Industry A notification of the Capital Market Supervisory Board, No. Tor.Lor.Thor. 8/2557 Re: Criteria

for Personnel in the Capital Market Industry, was issued on June 3, 2014, and became effective July

1, 2014. This notification extends the scope of personnel in the securities and derivatives businesses

who possess established qualifications and no prohibited characteristics, or as approved by the

notification. Such personnel now include investment-related operators, e.g., members of funds’

investment committees, investment assistants per fund manager notifications, staff who submit bids

and offers, as well as employees engaging in controls of operating business, compliance, internal

audit or risk management units. The purpose of this notification is to allow for direct supervision of

such personnel and effective legal enforcement, which are expected to enhance greater confidence

and trust towards professionals in the securities and derivatives businesses.

Necessary preparations have been made by KBank and K Companies to align our

operations with these revisions in personnel qualifications operating in the capital market industry.

• Criteria and Methods for Special or Additional Collateral A notification of the Director-General of the Legal Execution Department, Re: Criteria and

Methods of Special or Additional Collateral, was issued on May 22, 2014, and became effective on

May 31, 2014. To comply with the Ministerial Regulation on Criteria, Methods and Conditions for

Public Auctions (No. 3), B.E. 2557 (2014), dated February 13, 2014, this notification sets special

collateral prices for when a new auction is held, if the highest bidder fails to pay the balance of the

amount due. In addition to varied progressive rates that are required on special collateral prices,

such prices shall rise to 10-15 percent of the appraised value. If in a new auction, a bidder is the

4

same person as the former highest bidder who failed to pay the balance of the amount due,

additional collateral is required at double the rate per the public auction announcement.

This notification is aimed at establishing practices for new public auctions after the highest

bidder has defaulted on take-up. The collateral rate is set at 2-3 times the rate at the previous auction,

or double the price required for other bidders on a former highest bidder returning as a new bidder.

These stipulations are expected to solve problems in public auctions and be beneficial to KBank in

such a way that we will acquire debt repayment more rapidly should persons participating in our

auctions fail to abide by payment conditions.

• IFRS Implementation During the first accounting period of 2014, the IFRS conversion project’s focus was placed

on an impact assessment and preparation for related compliance, as well as keeping abreast of

proposals and draft standards disclosed by the International Accounting Standards Board (IASB), to

achieve efficient and consistent management of the project. In 2015, the new standards to be applied

include TFRS 10 Consolidated Financial Statements and TFRS 13 Fair Value Measurement, which will

not produce any significant impacts on KBank’s consolidated financial positions and operating results.

1.2 Business Directions of KASIKORNBANK and the wholly-owned subsidiaries of KASIKORNBANK

During the second quarter of 2014, an improved political climate benefited consumer

confidence and domestic spending. However, economic growth remained soft over the first half of

2014. Looking into the latter half, the economy will probably see rosier growth, although risks are

evident in the export sector that is recovering very slowly, and increased inflationary pressure due to

the conflict in Iraq that may inflate oil prices.

Amid opportunities and risks in banking business and for our customers alike, KBank and K

Companies seeks to monitor our business strategies to ensure that they are aligned with changing

economic conditions based on ground of our adherence to quality service, enabling us to become

customers’ “Main Bank”, per our “Customer-Centricity” strategy. Efforts have been made in three

prime dimensions, i.e., products and solutions, branding and marketing, plus service quality, to

deliver an excellent customer experience under our single KBank brand. We sought to accommodate

varying needs across segments, and to place greater emphasis on urbanization in strategic locations

nationwide by expanding our representation there, supported by marketing communications to the

local population. Meanwhile, for sustainable business growth and returns, KBank adheres to effective

and timely risk management via appropriate policies, using numerous tools and processes.

5

Apart from our business strategies and risk management, we continue to pay particular

attention to internal support, including human resource management and technology-related

operations. These efforts help us to achieve our business goals and ensure that our competitiveness

will be maintained over the long-run, especially per our plans to expand into AEC-Plus-Three

countries and sustain our leadership in digital banking services amid the forthcoming AEC, as well as

towards a digital society.

Our determination in all undertakings has earned KBank domestic and international

recognition. The awards received during the second quarter of 2014 confirm our success. Some of

the more important ones included:

Awards for KBank and other important award

• Three awards from The Asian Banker: Best Retail Bank in Thailand (for the fifth consecutive year), and Best Social Media Project,

presented at the Asian Banker Excellence in Retail Financial Services International Awards 2014; and Best Cash Management Bank in

Thailand (for the fifth consecutive year), presented at The Asian Banker Transaction Banking Awards.

• Thailand Domestic Cash Management Bank of the Year from The Asian Banking Finance, presented at the Asian Banking & Finance

Wholesale Banking Award 2014

• Trade Finance Award for Excellence (for the second consecutive year), from EUROMONEY magazine, presented at their Triple A

Transaction Banking Awards.

• Consumer Protection Thailand Call Center Award for 2014 from the Office of the Consumer Protection Board and Management System

Certification Institute.

• Best Asset Management Company of the Year, 2014 (Thailand) for KAsset, from The Asset magazine, presented at The Asset Triple A

Investor and Fund Management Awards 2014.

KBank has been firm on ensuring that Good Corporate Governance is performed continuously

and sustainably, with a focus on maintaining standard practice, along with establishing the system as

an organizational culture. In the second quarter of 2014, we communicated with the Board members,

executives and employees on a number of issues, specifically, trading halt periods for shares issued

by KBank and derivatives with KBank’s common shares as underlying assets. Other undertakings

include an orientation for new members of the Board, an overhaul of orientation program for employee

via an electronic system, as well as lectures about KBank’s Good Corporate Governance given to

other organizations.

6

2. Operating Performance and Financial Position Analysis

2.1 Operating Performance KBank’s consolidated operating profit for the second quarter of 2014 totaled Baht 11,732

million, falling Baht 207 million – 1.74 percent over-quarter – due largely to an increase of Baht 1,890

million in other operating expenses – 14.26 percent higher – reflecting seasonally higher personnel

and marketing promotional expenses. Non-interest income dropped Baht 89 million, or 0.64 percent,

from the previous quarter, owing in part to gain on trading and foreign exchange transactions, as well

as gain on selling investment. Consequently, the efficiency ratio rose to 44.31 percent, higher than the

previous quarter’s figure and on par with our target. Net interest margin (NIM) stood at 3.75 percent,

also beating the previous quarter’s mark and slightly higher than the target, due to the lower cost of

funds as deposits with higher interest rates gradually met their due dates.

Operating Performance for the Second Quarter of 2014 (Units: Million Baht)

Q2-2014 Q1-2014 Change Q2-2013 Change

Million Baht

Percent (Restated)* Million Baht

Percent

Interest income 27,880 27,777 103 0.37 26,053 1,827 7.01

Interest expenses 7,300 8,283 (983) (11.87) 8,122 (822) (10.11)

Interest income - net 20,580 19,494 1,086 5.57 17,931 2,649 14.77

Fees and service income - net 8,305 7,880 425 5.40 7,388 917 12.42

Other income 21,208 21,992 (784) (3.56) 17,235 3,973 23.05

Total operating income 50,093 49,366 727 1.47 42,554 7,539 17.71

Underwriting expenses 15,933 16,203 (270) (1.67) 11,971 3,962 33.09

Total operating income - net 34,160 33,163 997 3.01 30,583 3,577 11.69

Other operating expenses 15,137 13,247 1,890 14.26 13,051 2,086 15.98

Operating profit

(Before impairment loss on loans and debt

securities, and income tax expense) 19,023 19,916 (893) (4.48) 17,532 1,491 8.50

Impairment loss on loans and debt securities 3,036 3,660 (624) (17.05) 2,200 836 38.01

Operating profit before income tax expense 15,987 16,256 (269) (1.65) 15,332 655 4.27

Income tax expense 3,265 3,237 28 0.87 3,335 (70) (2.10)

Net profit 12,722 13,019 (297) (2.27) 11,997 725 6.04

Net profit attributable to: 1,011128

Equity holders of the Bank 11,732 11,939 (207) (1.74) 10,979 752 6.85 Non-controlling interests 990 1,080 (90) (8.23) 1,018 (27) (2.70)

Net profit 12,722 13,019 (297) (2.27) 11,997 725 6.04

Note: * KBank and its subsidiaries have adopted TFRIC 13: Customer Loyalty Programs since January 1, 2014, and restated in

the comparative financial statements, which have no effect on net profit of KBank and its subsidiaries.

7

Income Structure (Units: Million Baht)

Q2-2014 Q1-2014 Change Q2-2013 Change

Million Baht

Percent (Restated)* Million Baht

Percent

Interest income

Interbank and money market items 808 1,026 (218) (21.25) 1,243 (435) (34.97)

Deposits 298 333 (35) (10.39) 33 265 802.97

Loans without repurchase agreements 70 67 3 3.69 78 (8) (10.40)

Repurchase agreements 440 626 (186) (29.71) 1,132 (692) (61.12) Investments 4,044 3,865 179 4.63 3,190 854 26.78 Trading investments 94 56 38 69.91 115 (21) (18.15)

Available-for-sale investments 1,867 1,939 (72) (3.74) 1,531 336 21.96

Held-to-maturity investments 2,083 1,870 213 11.36 1,544 539 34.91

Loans 21,762 21,626 136 0.63 20,503 1,259 6.14

Finance leases 1,239 1,237 2 0.10 1,113 126 11.33 Others 27 23 4 16.16 4 23 592.20

Total interest income 27,880 27,777 103 0.37 26,053 1,827 7.01

Total interest expenses 7,300 8,283 (983) (11.87) 8,122 (822) (10.11)

Total interest income - net 20,580 19,494 1,086 5.57 17,931 2,649 14.77

Non-interest income

Fees and service income 10,432 9,977 455 4.56 9,255 1,177 12.72

Fees and service expenses 2,127 2,097 30 1.43 1,867 260 13.92

Fees and service income - net 8,305 7,880 425 5.40 7,388 917 12.42

Gain on trading and foreign exchange

transactions 1,429 1,878 (449) (23.90) 1,456 (27) (1.82)

Gain (Loss) on financial liabilities designated

at fair value through profit or loss - (2) 2 100.00 (7) 7 100.00

Gain (Loss) on investments 191 331 (140) (42.24) 275 (84) (30.67)

Share of profit from investments using equity

method 25 23 2 7.30 6 19 286.83

Dividend income 314 326 (12) (3.84) 362 (48) (13.28)

Net premium earned 18,960 19,223 (263) (1.37) 14,816 4,144 27.97

Other operating income 289 213 76 35.92 327 (38) (11.55)

Less Underwriting expenses 15,933 16,203 (270) (1.67) 11,971 3,962 33.09

Total non-interest income 13,580 13,669 (89) (0.64) 12,652 928 7.34

Total operating income - net 34,160 33,163 997 3.01 30,583 3,577 11.69 Note: * KBank and its subsidiaries have adopted TFRIC 13: Customer Loyalty Programs since January 1, 2014, and restated in

the comparative financial statements, which have no effect on net profit of KBank and its subsidiaries.

8

When compared to the second quarter of 2013, net profit surged Baht 752 million – 6.85

percent – due to both net interest income, driven by loan growth amid higher NIM than last year, and

non-interest income consisting of fees and net premium earned. The efficiency ratio stood at 44.31

percent, higher than that of the same period of the previous year.

Net Interest Income KBank’s consolidated net interest income for the second quarter of 2014 stood at Baht

20,580 million, up Baht 1,086 million or 5.57 percent over-quarter. Interest expenses decreased over-

quarter, due mainly to a drop in interest expenses from deposits, following expiration of special

deposits and a decline in average interest rate. In addition, interest income from investments and

loans rose over-quarter, due in part to rising average loan volume. However, interest income from

interbank and money market items decreased. As a result, our net interest margin (NIM) for the

second quarter of 2014 equaled 3.75 percent, higher than that of the previous quarter and slightly

higher than our target.

When compared to the second quarter of 2013, net interest income increased Baht 2,649

million or 14.77 percent, due mainly to an increase in interest income from loans, in tandem with rising

average loan volume, as well as higher interest income from investments. Interest expenses dropped

over-year, mostly due to interest expenses from deposits. Therefore, our NIM for this quarter rose

from the same period of the previous year.

Non-Interest Income For the second quarter of 2014, KBank’s consolidated non-interest income totaled Baht

13,580 million, down Baht 89 million or 0.64 percent. The decrease was due mainly to gain on trading

and foreign exchange transactions, as well as gain on selling investments. However, non-interest

income increased Baht 928 million or 7.34 percent over-year, mostly owing to net fees and service

income, and net premiums earned.

Compared to the previous quarter, KBank’s consolidated fees and service income rose Baht

425 million or 5.40 percent, due largely to rising fees from loan-related business and mutual fund

management, as well as fees from securities brokerage. Relative to the second quarter of 2013, net

fees and service income rose Baht 917 million or 12.42 percent, due mainly to higher net fees from

card business, mutual fund management and loan-related business. All of this was the result of our

“Customer Centricity” strategy, leading to continual growth in the number of new customers.

9

Other Operating Expenses For the second quarter of 2014, our other operating expenses increased Baht 1,890 million,

or 14.26 percent over-quarter, to Baht 15,137 million, in line with normal spending pattern, involving

higher personnel and marketing promotional activities. Compared with the same period of last year,

other operating expenses increased Baht 2,086 million or 15.98 percent, due mainly to rising

personnel expenses. As a result, our efficiency ratio for the second quarter of 2014 equaled 44.31

percent, rising over the 39.95 percent of the previous quarter and the 42.68 percent of the previous

year, while being on par with the target.

Impairment Loss on Loans and Debt Securities In the second quarter of 2014, KBank and its subsidiaries set aside allowances for

impairment loss on loans and debt securities at Baht 3,036 million, a decrease of Baht 624 million or

17.05 percent over-quarter, and an increase of Baht 836 million or 38.01 percent over-year.

2.2 Financial Position Analysis

Assets and Liabilities Structure

Assets At the end of the second quarter of 2014, KBank’s consolidated assets totaled Baht

2,339,798 million, up Baht 30,802 million or 1.33 percent from the end of the first quarter. The increase

(Units : Million Baht)

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

DepositsDebts issued and borrowingsInterbank and money market items (liabilities)Life policy reserveOther liabilities

0

400,000

800,000

1,200,000

1,600,000

2,000,000

2,400,000

Jun.30, 2014Mar.31, 2014

63%76%

22%

3%8%

2%9% 5%

4%

8%

63%75%

22%

4%7%

2%9%

5%

4%

9%

10

was mainly due to increases in loans and net investments, while net interbank and money market

items (asset) decreased. In detail:

• Net investments, at the end of the second quarter of 2014, amounted to Baht 531,315

million, rising by Baht 19,404 million or 3.79 percent from the end of the previous quarter.

This was mainly attributable to our increased investments in government bonds.

Net Investments

• Our consolidated loans less deferred revenue, at the end of the second quarter of 2014,

totaled Baht 1,471,922 million, growing by Baht 21,541 million or 1.49 percent from the

end of the previous quarter. This was mostly the result of increases in trade finance,

commercial, home, and credit card loans. Our consolidated loans were the fourth-largest

among Thai commercial banks.

Meanwhile, our gross NPLs to total loans, at the end of the second quarter of 2014, reached

2.14 percent, equal to that at the end of the first quarter of 2014. For our net NPLs to total loans, it

stood at 0.91 percent, falling slightly from the 0.94 percent reported at the end of the previous

quarter.

Financial Ratio

(Units: Percent)

Financial Ratio Jun. 30, 2014 Mar. 31, 2014 Gross NPLs to total loans 2.14 2.14

Net NPLs to total loans 0.91 0.94

413,594 431,649

50,60052,80320,655 17,539

25,361 27,671

050,000

100,000150,000200,000250,000300,000350,000400,000450,000500,000550,000

Mar.31, 2014 Jun.30, 2014

(Units: Baht Million)

Equity Securities Foreign Debt Instruments

Private Enterprise Debt Instruments Government and State Enterprise Securities

11

• Net interbank and money market items (asset), at the end of the second quarter of 2014,

amounted to Baht 206,121 million, decreasing by Baht 3,246 million or 1.55 percent from

the end of the previous quarter. This was mainly attributable to our liquidity management.

Liabilities and Equity Our consolidated liabilities, at the end of the second quarter of 2014, totaled Baht 2,080,975

million, up Baht 22,996 million or 1.12 percent from the end of the first quarter. The increase was

mainly the consequence of higher deposits, life policy reserves, and debts issued and borrowings,

while interbank and money market items (liability) decreased. Consolidated liabilities that had

changed significantly relative to the end of the previous quarter included:

• Deposits, at the end of the second quarter of 2014, totaled Baht 1,567,499 million, rising

by Baht 13,600 million or 0.88 percent from the end of the first quarter. This was largely

the result of increased savings deposits. Our consolidated deposits were the fourth-

largest among Thai commercial banks.

• Life policy reserves, at the end of the second quarter of 2014, equaled Baht 184,342 million,

up Baht 11,728 million or 6.79 percent, in line with growth in the life-insurance business.

• Debt issued and borrowings, at the end of the second quarter of 2014, registered Baht

73,986 million, up Baht 11,076 million or 17.61 percent over-quarter. The increase was

mainly due to an issuance of unsubordinated and unsecured bonds totaling USD350

million.

• Interbank and money market items (liability), at the end of the second quarter of 2014,

amounted to Baht 149,200 million, down Baht 8,912 million or 5.64 percent over-quarter.

This was mostly due to decreased private repurchase transactions.

At the end of the second quarter of 2014, total equity attributable to equity holders of KBank

equaled Baht 237,383 million, up Baht 5,695 million or 2.46 percent from the end of the previous

quarter. This increase was mainly the result of net operating profit for the second quarter of 2014 at

Baht 11,732 million. However, a dividend payment of Baht 7,179 million was made in April 2014 from

the net profit of our 2013 operations.

Relationship between Sources and Uses of Funds

As of June 30, 2014, the funding structure as shown in our consolidated financial statements

comprises Baht 2,080,975 million in liabilities, and Baht 258,823 million in total equity, resulting in a

debt-to-equity ratio of 8.04. The major source of funds on the liabilities side was deposits, which

equaled Baht 1,567,499 million or 66.99 percent of the total. Other sources of funds included

12

interbank and money market items, as well as debt issued and borrowings, which accounted for 6.38

percent and 3.16 percent of the total, respectively.

KBank’s and our subsidiaries’ major use of funds was loans. As of June 30, 2014, loans less

deferred revenue amounted to Baht 1,471,922 million, resulting in a loan-to-deposit ratio of 93.90

percent. Meanwhile, the loan-to-deposit plus bills of exchange ratio was 93.30 percent. As for the

remaining liquidity, KBank invested it in various selections of liquid assets, such as interbank and

money market items, and investments in securities.

KBank and Subsidiaries’ Major Sources and Uses of Funds

(Units: Million Baht)

Deposits Loans

Period Jun. 30, 2014 Percent Dec. 31, 2013 Percent Jun. 30, 2014 Percent Dec. 31, 2013 Percent

< 1 Year 1,534,484 97.89 1,507,690 98.55 685,955 46.60 674,275 46.86

> 1 Year to 5 Years 33,015 2.11 22,145 1.45 362,037 24.60 347,769 24.17

> 5 Years - - - - 423,930 28.80 416,934 28.97

Total 1,567,499 100.00 1,529,835 100.00 1,471,922 100.00 1,438,978 100.00

As of June 30, 2014, deposits with remaining maturities of less than or equal to 1 year were

larger than loans with remaining maturities of less than or equal to 1 year. This is considered normal

for commercial banks in Thailand, as they normally fund their lending or investments in long-term

assets from short-term liabilities. However, since most deposits are renewed upon maturity, it is

considered likely that they will remain with KBank longer than their stated contractual term, thereby

helping to support funding for KBank’s lending.

To provide more investment alternatives for the public and/or our depositors, we offered “K-B/E

Investment” products to both retail and corporate customers, with their outstanding value totaling

Baht 10,114 million as of June 30, 2014.

13

2.3 Loans and Deposits

Loans Classified by Business and Product Groups

Loans Classified by Business (Units: Million Baht)

Jun. 30, 2014 Mar. 31, 2014

Corporate Business* Retail Business** Corporate Business* Retail Business**

Loans 993,687 387,065 977,285 380,637

Note: * “Corporate Business customers” refers to registered companies, certain private individual business customers,

government agencies, state enterprises, as well as financial institutions, etc. KBank provides a variety of financial

products and services to them, e.g., long-term and working capital loans, letters of indemnity, trade finance solutions,

syndicated loans, cash management solutions and value chain solutions.

**“Retail Business customers” refers to private individual customers using KBank products and services, e.g., deposit

accounts, debit cards, credit cards, personal loans, housing loans, financial advisory services, investment products and

other transactional services.

Regarding our loans classified by business, Corporate Business loans, at the end of the

second quarter of 2014, increased by Baht 16,402 million, or 1.68 percent, over the end of the first

quarter of 2014. Such loan expansion was mainly driven by domestic and foreign-currency loans,

particularly short-term and long-term loans in the trade and commerce, petroleum and petrochemical

product industries, and entertainment and services.

Our Retail Business loans increased by Baht 6,428 million, or 1.69 percent, over the end of

the first quarter of 2014, mainly due to higher housing loans in line with recovering consumer

confidence and promotional activities jointly held with business allies in Bangkok and other provinces.

Growth in consumer loans was reported in K-Express Cash and other retail loans, amid our continued

emphasis upon quality growth, with a focus on selection of quality customers.

Deposits Classified by Type of Deposit Account

Deposits

(Units: Million Baht)

Percent of Total Deposits

Deposits Change Jun. 30, 2014 Mar. 31, 2014 Million

Baht Percent

Total Deposits 100.00 1,567,499 1,553,899 13,600 0.88 Current accounts 5.16 80,833 83,096 (2,263) (2.72)

Savings accounts 62.82 984,674 947,774 36,900 3.89

Fixed-term deposit accounts 32.02 501,992 523,029 (21,037) (4.02)

14

At the end of the second quarter of 2014, total deposits – comprising those of corporate,

SME and retail customers – increased by Baht 13,600 million, or 0.88 percent, over the end of the first

quarter of 2014. This was due mainly to increased savings accounts per customers’ cash

management. Meanwhile, we offered attractive long-term investment alternatives that could generate

high returns within customers’ acceptable risk appetites, to offset parts of fixed-term deposit accounts

that reached maturity.

2.4 Treasury Operations

KBank’s treasury management policy is in conformity with the domestic money market.

During the second quarter of 2014, interbank rates remained stable over the end of the previous

quarter, in line with resolutions of the Monetary Policy Committee (MPC) meetings held on April 23,

2014 and June 18, 2014, which kept their key policy rate unchanged at 2.0 percent per annum.

Meanwhile, the outstanding of interbank transactions was slightly lower than during the preceding

quarter. In other interesting money market developments, the BOT discussed with BIBOR contributors

on matters pertaining to the drafting of Code of Conduct guidelines, to promote the “Bangkok

Interbank Offered Rate” (BIBOR) as a reliable money market reference rate, scheduled for

implementation by during the third quarter of 2014.

Treasury Operations Income (Units: Million Baht)

Income Structure of Treasury Operations (Banking Book)

Percent of Total Income

Q2-2014 Q1-2014 Change Million Baht Percent

Interest income* Interbank and money market items** 24.43 624 797 (173) (21.71)

Investments 75.57 1,930 1,998 (68) (3.40)

Total 100.00 2,554 2,795 (241) (8.62) Notes: * Managerial figures. ** Including loans

As for KBank liquidity and investment portfolios, we manage our liquidity position to

appropriately cope with changing liquidity demand from each business unit, and to generate returns

on our investments within an appropriate risk appetite. During the second quarter of 2014, our

liquidity position was adequate to changes in business conditions, wherein we were able to generate

higher returns on investments. As a result, total interest income from our treasury operations reached

Baht 2,554 million, being 8.62 percent or Baht 241 million lower than the first quarter of 2014, due

mainly to lower liquidity.

15

2.5 Operating Performance of K Companies and Muang Thai Life Assurance PCL.

Operating Performance of K Companies* and Muang Thai Life Assurance PCL

(Units: Million Baht)

Performance Measurement First Half of

2014 First Half of

2013 2013

KASIKORN FACTORY AND

EQUIPMENT Co., Ltd. (KF&E)

Outstanding Loans 10,983 10,421 10,858

KASIKORN LEASING Co., Ltd.

(KLeasing)

Outstanding Loans 88,059 84,940 89,220

KASIKORN ASSET MANAGEMENT

Co., Ltd. (KAsset)

Asset under Management (AUM) 1,046,182 850,301 945,632

Market Share (Percent) 21.51 22.05 22.23

KASIKORN SECURITIES PCL.

(KSecurities)

Trading Volume 481,725 741,870 1,296,410

Market Share (Percent) 6.23 5.64 6.02

Muang Thai Life Assurance PCL.

(MTL)

Net premiums earned 39,440 30,041 60,249

Market Share (Percent) 15.43 14.00 13.62

Note: * KResearch is not included, as the company does not engage in financial business.

During the first half of 2014, K Companies and Muang Thai Life Assurance (MTL) had

impressive quantitative and qualitative operating performance, due to close departmental

cooperation and that between K Companies.

KAsset is considered the first asset management company with over Baht 1 trillion in assets

under management and also the first to be granted a trustee license by the Office of the Securities

and Exchange Commission (SEC). For five years in a row, KAsset has held on to the number-one

position in asset management business, securing a 21.51 percent share of the total net assets under

management during the second quarter of 2014. That achievement is attributable to their

collaboration with KBank, making possible product innovations that respond to customers’ needs,

plus electronic channel expansion and better service quality.

KSecurities has begun cooperation with Macquarie Securities (Thailand) Limited in various

areas, i.e., research, securities trading and investment banking, to heighten their customer service

capacity – particularly in ensuring that they provide customers a sufficient amount of quality analyses.

As for the upcoming AEC, they focus on seeking new business opportunities. In addition to their

efforts towards enhancing collaboration with KBank to develop and offer products that suit customer

needs, more offices have been opened at certain KBank branches, all of which contributed to their

continued leading position with market share of 6.23 percent at the end of the second quarter of

2014.

16

As for KLeasing, they reported satisfactory loan growth at 3.67 percent over-year, plus asset

quality that was kept healthy via good management. This was reflected in their low NPL rate at 1.00

percent.

KF&E loan growth rose 5.39 percent over-year. Business growth was evident in diverse

industries and areas nationwide. Moreover, to deal with customers efficiently and attain their

maximum satisfaction, KF&E worked closely with relationship managers (RMs). They also prepared to

accommodate customers’ business within the approaching AEC in the next year.

MTL remained the leader in life insurance business with a total premium market share of

15.43 percent during the second quarter of 2014, up over 14.00 percent during the second quarter of

2013. Meanwhile, by working closely with KBank, they were able to devise insurance policies more

responsive to the needs of each KBank customer segment and thus logged a 33.46-percent growth

rate over-year in bancassurance total premium during the second quarter of 2014.

2.6 Capital Requirements and Credit Ratings

Capital Funds* As of the end of the second quarter of 2014, KBank, under Basel III capital requirements,

had capital funds of Baht 237,622 million, consisting of Baht 188,798 million in Tier-1 capital, and

Baht 48,824 million in Tier-2 capital. The capital adequacy ratio of KBank was 15.60 percent,

significantly above the BOT’s minimum requirement of 8.50 percent. Details of the capital adequacy

ratio of KBank are shown in the following table:

Capital Adequacy Ratio

• The Bank (Units: Percent)

Capital Adequacy Ratio Basel III

Minimum

Requirements Jun. 30,

2014 Mar. 31,

2014 Dec. 31,

2013 Sep. 30,

2013 Jun. 30,

2013

Tier-1 Capital Ratio *** 6.00 12.40 11.87 12.02 12.50 11.44

Common Equity Tier-1 Ratio 4.50 12.40 11.87 12.02 12.50 11.44

Tier-2 Capital Ratio - 3.20 3.25 3.23 4.22 4.27

Capital Adequacy Ratio 8.50 15.60 15.12 15.25 16.72 15.71

17

• KASIKORNBANK FINANCIAL CONGLOMERATE** (Units: Percent)

Capital Adequacy Ratio Basel III

Minimum Requirements

Jun. 30, 2014

Mar. 31, 2014

Dec. 31, 2013

Sep. 30, 2013

Jun 30, 2013

Tier-1 Capital Ratio *** 6.00 12.92 12.39 12.57 13.13 11.97

Common Equity Tier-1 Ratio 4.50 12.92 12.39 12.57 13.13 11.97

Tier-2 Capital Ratio - 3.14 3.21 3.21 4.18 4.23

Capital Adequacy Ratio 8.50 16.06 15.60 15.78 17.31 16.20

Note: * Excluding net profit of each period, which under the Bank of Thailand’s regulations, net profit in the first period is to be

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

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

capital must be immediately reduced accordingly.

** KASIKORNBANK FINANCIAL CONGLOMERATE means the company under the Notification of the Bank of Thailand Re:

Consolidated Supervision, consisting of KASIKORNBANK, K Companies and subsidiaries operating in support of KBank,

Phethai Asset Management Co., Ltd. and other subsidiaries within the permitted scope from the BOT to be a financial

conglomerate.

*** According to Basel III Capital Requirements, Tier 1 Capital is required to include phase-in or phase-out items at 20

percent p.a. since January 1, 2014, until reaching 100 percent in 2018.

Maintenance of Ratios KBank maintains liquid assets, on average, of at least 6.00 percent of deposits and some

kinds of borrowing, in compliance with the BOT’s regulations. As of June 30, 2014, KBank had cash

in hand, cash at central cash centers, deposits with the BOT and eligible securities, totaling Baht

411,236 million.

Credit Ratings At the end of June 2014, KBank’s credit rating given by Moody’s Investors Service, Standard

& Poor’s, and Fitch Ratings remained unchanged from the end of March 2014. Details are shown in

the following table:

KASIKORNBANK’s Credit Ratings

Credit Ratings Agency Jun. 30, 2014 Moody’s Investors Service *

Foreign Currency

Outlook Stable

Long-term - Senior Unsecured Notes A3

- Deposit Baa1

Short-term - Debt/Deposit P-2

18

Credit Ratings Agency Jun. 30, 2014

Subordinated Debt Baa3

Bank Financial Strength Rating (BFSR) C-

Outlook for BFSR Stable

Baseline Credit Assessment Baa2

Domestic Currency

Outlook Stable

Long-term - Deposit A3

Short-term - Debt/Deposit P-2

Standard & Poor’s *

Global Scale Ratings

Outlook Stable

Long-term Counterparty Credit Rating BBB+

Long-term Certificate of Deposit BBB+

Short-term Counterparty Credit Rating A-2

Short-term Certificate of Deposit A-2

Senior Unsecured Notes (Foreign Currency) BBB+

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

Short-term axA-1

Subordinated Debt axA

Fitch Ratings *

International Credit Ratings (Foreign Currency)

Outlook Stable

Long-term Issuer Default Rating BBB+

Short-term Issuer Default Rating F2

Senior Unsecured Notes BBB+

Viability bbb+

Support 2

Support Rating Floor BBB-

National Credit Ratings

Outlook Stable

Long-term AA(tha)

Short-term F1+(tha)

Subordinated Debt AA-(tha)

Note: * The base levels for investment grade on long-term credit ratings for Moody’s Investors Service,

Standard & Poor’s, and Fitch Ratings are Baa3, BBB- and BBB-, respectively. For short-term credit ratings,

the base levels for investment grade as viewed by these three agencies are P-3, A-3, and F3, respectively.

19

3. Operations of Core Businesses

3.1 Business Overview During the second quarter of 2014, KBank and K Companies pursued the corporate

“Customer-Centric” strategy. Being fully aware of adverse impacts from economic and domestic

political uncertainties, KBank underscored the importance of asset quality management. We also took

steps to provide assistance to customers who were affected by political crisis, hoping to support their

businesses and shore up their financial status. Along with that, we paid additional attention to

business development of various sorts – in customer segments, product domains and service

channels – to make sure that customers were given the opportunity to explore business expansion,

which we efficiently responded to their financial needs. These tactics helped us to achieve our

business goals while also successfully maintaining the quality of our portfolio.

3.2 Customer Segments

We pursue our strategy to offer excellent services for all retail and business customers in

eight segments, which would enable us to reach our goal of becoming their main bank. Focus has

been placed on development of more complete products and services as “Total Solutions”, covering

financial and non-financial support, to serve customers throughout their business stages and within

every supply chain component – upstream to downstream – to help them achieve sustainable growth.

Our assistance includes provision of “Knowledge and Networking” via our role as the “Trusted

Advisor”.

For our retail customers, we adhere to a top-of-mind awareness strategy to sustain KBank’s

position as their main operating bank. In order to reach those objectives, KBank seeks to maintain our

existing customer base while also acquiring new customers, especially in large provinces across the

country – to include foreign national expatriates working or staying in Thailand. During the second

quarter of 2014, KBank’s major initiatives within each customer segment are summarized below:

Multi-Corporate Business KBank has closely monitored political changes while dynamically supporting customer

needs throughout the quarter. We also made preparations to address the needs of public and private

clients as we anticipate an increase of investment projects, both in size and number, which is likely to

happen in the second half of 2014. Moreover, KBank has contributed to significant development of

the telecommunication landscape, in the area of digital TV. We have supported participants of

related industries across stages of development; e.g., license bidding and system transition.

20

At the same time, KBank has continued to emphasize facilitation of customer financial

transactions, domestically and overseas, through Transaction Banking solutions and

services. Moreover, we have introduced financial innovation by launching corporate bond funds.

Such a funding option not only offers our corporate clients an additional fund mobilization alternative,

but also broadens investment opportunities for both institutional and individual investors.

Large Corporate Business Economic revival initiatives implemented by the NCPO, along with accelerated preparation of

the FY2015 budget, have contributed to reactivating public spending and some infrastructural

investment. Since construction contractors are expected to benefit from these changes, we are

preparing credit limit allocations for that industry and have enhanced our efficiency in L/C issuance to

support this customer group.

International trade finance remains one of our key services, especially exports that will likely

trend upward in line with recovering trade partner economies. Industries expected to benefit from that

include petrochemical products, electrical appliances and metal products, all of which would help

promote growth in our transaction banking services, in line with higher international trade volume.

Moreover, a transition to digital television era has induced ample opportunities for long-term

growth in related businesses, e.g., digital channel providers, content providers, advertising firms,

producers and distributors of television sets and digital signal reception appliances. To be fully

responsive to this, KBank has investigated possible opportunities to devise worthwhile financial and

non-financial products that could satisfy such customer needs.

Medium Business KBank pursues a policy of “K SME Full Support for SMEs” that caters to their needs and

enhances their business sustainability, amid uncertain economic and political environments. Some

initiatives, e.g., suspension of principal repayments, have been introduced to assist businesses hurt

by a slowing economy and heightened production costs, as well as by unruly political rallies. We

utilize our understanding of Medium Business customers’ business cycles to develop ‘Total Solution’

products and services, emphasizing loans and account transaction products to meet specific

requirements of each industry types. A number of activities have been designed to fortify customers’

businesses and their networks, while the quality of relationship manager (RM) teams has been

improved to be constantly responsive, particularly for urgent needs.

Small and Micro Business As a part of our “K SME Full Support for SMEs” program, assistance has been provided not

only to Medium Business, but also Small and Micro Business customers affected by political unrest,

21

including those in the tourism, construction contractor and rice-related industries These special

accommodations included a 3-percent reduction in their O/D interest rate for three months and a 6-

month grace period on long-term loans.

For existing customers with good repayment histories, we offer additional credit lines with

preferential conditions. Regarding new customers seeking loans, we offer them flexible collateral

conditions to support their liquidity, which in turn helps their business expansion and

competitiveness.

High Net Worth Individual We are determined to enhance the potential of our “KBank Private Banker” teams through

testing of their theoretical knowledge and practical skills, particularly in their problem-solving skills

and selections of the most responsive services for varying customer needs. Team members are also

assessed on their personality to ensure effective communications and reliable recommendations.

These efforts are aimed at upgrading KBank Private Banker advisory services. Team members’

fundamental knowledge of asset allocations, as well as in-depth know-how towards investment

products and other financial services, have been enhanced to achieve maximum customer

satisfaction, thus leading to more customers using KBank as their main bank for their deposits,

investments and financial transactions, and further fortifying the KBank Private Banking brand in the

market.

Affluent Along with retaining our existing customer base, KBank has focused on upgrading our

quality measured by indicators on the number of customers using KBank as their main bank and the

number of their product holdings. We also pursue new customers in key provinces in all regions,

including foreign clientele, while our THE WISDOM customer grade has been reinforced to remain the

top brand in this customer segment.

During the second quarter of 2014, KBank and K Companies worked in harmony to fully

utilize customer referrals and upgrading; we also paid particular attention to potential customers in

key provinces, as well as expat customers. Our objective has been to offer investment solutions with

proper returns within appropriate risk appetites that respond to specific individual customer needs. At

the newly launched THE WISDOM Lounge @ Central Embassy, preferential privileges are offered to

customers. This flagship lounge is equipped with the most comprehensive facilities and, notably, a

Robot Safe Deposit Box that comes with a world-class security guarantee. To forge cordial

relationships with our customers, a variety of exclusive trips have been arranged to enjoy food, art &

culture, entertainment and visits to interesting locations, some of which were officially opened the first

time to visitors.

22

Middle Income Our policy has been to obtain a firmer foothold in strategic provinces, which has been

carried out via branch expansion and the use of marketing activities that fit the nature of each locale.

Specific patterns have been employed to gain greater accessibility to potential customers with

differing lifestyles. Middle Income customers holding Baht 2 million or more in investments with KBank

can enjoy our THE PREMIER service, which, during the second quarter of 2014, presented “Super

Saving Life Insurance” – a new insurance product with a very-attractive-return savings component as

a good investment option for customers.

Our introduction of “Tomorrow Comes Today with K-Digital Experience” is characterized by

our development of advanced electronic access channels and the creation of digital engagement via

social media platforms. The implementation of this concept has helped us towards offering more

responsive products and services for enhanced customers’ convenience, which reiterates KBank’s

leadership in the digital banking society.

Mass To sustain our “Main Bank” status with this customer segment, we have begun a policy of

customer base expansion in the provinces, increased product holding ratios through marketing

activities, and introduced innovative new products and services, as well as greater access to

electronic channels to be better in sync with customers’ lifestyles. During the second quarter of 2014,

special deposit and lending rates were offered with the “K-Payroll Benefit” program for customers

using “KBank Payroll” service. Our “SMS Transaction Alert” service has been reemphasized to build

customer confidence towards their financial transactions. With the ongoing “Joyful Festival with 3 Cha

Carniwow!” program, KBank has made a deeper foray into provincial markets to expand our customer

base in all 49 targeted provinces. Other marketing activities included our “University Project” to foster

relationships with universities and their staff who regularly conduct transactions with KBank.

3.3 Product Domains and Sales Channels

3.3.1 Product Domains

To satisfy the demands of our eight customer segments, KBank has developed products

and services, categorized into four key product domains, i.e., Operation & Transaction, Saving &

Investing, Funding & Borrowing, and Protection & Information. Notable initiatives during the second

quarter of 2014 included:

23

Operation & Transaction

Products and Services Details

Financial Transaction

Services for Business

Customers

• K-Cash Connect Plus has been upgraded from K-Cash Connect to more efficiently

respond to the financial transaction demands of our business customers. This new system

can accommodate mobile devices, in addition to personal computers and laptops. More

user-friendly functions have been added to provide greater convenience for our

customers, such as connectivity to the log-in page of K-Trade Connect, inquiry for

historical transactions covering a longer period, and revision of all types of payment

transactions that can be conducted in a single screen, or a “payment center”, as well as

the setting of automatic payment, etc.

• PTT Fill & Go: A smart refueling innovation specifically designed for better control and

verification of fueling accuracy at PTT stations. The use of a Radio Frequency

Identification (RFID) ring-shaped device for each individual vehicle can prevent refueling

errors while also recording the fuel consumption rate, thus enhancing efficiency in

business cost analysis for our customers. KBank plans to expand the PTT Fill & Go

service to 200 PTT stations within 2014.

International Trade

Services for Business

Customers

• Discounted Export L/C without recourse, issued by banks in China, which has been

tailored to certain customers to help them estimate cash flow from their trade partners,

enabling them to eliminate account receivable (A/R) burdens for enhanced efficiency in

liquidity management.

Card-Accepting

Merchant Business

• Self-served customers at PTT service stations are offered the Digital Signature via Sign

Pad in lieu of a sales slip, which not only reduces the expenses of all parties concerned,

but also facilitates merchants’ searches for sales slips.

Debit and ATM Cards • Co-branded debit cards were issued with various universities to facilitate financial

transactions of students and university employees.

• Special campaigns were jointly organized with the allies of Hello Kitty Character Debit

Card to celebrate the character’s 40th anniversary, in order to increase consumers’

awareness and stimulate card spending. A “Travel Anywhere and Enjoy Double Bonuses

with K-Debit Card” campaign was introduced to shore up card spending and cash

withdrawal in foreign countries.

Funds Transfer and Bill

Payment

• Overdue Electricity Bill Payments for the Metropolitan Electricity Authority are now

accepted through K-ATMs, K-Cyber Banking and K-MOBILE BANKING PLUS. Payments

for regional water and electricity bills can also be made at K-ATMs and KBank branches,

with eligibility for the “Come Pay Your Bill Quickly: Doraemon Magic Gift 2014” program.

Under this program available throughout 2014, customers can collect stamps, which can

24

Products and Services Details

be redeemed for exclusive rewards.

• 24-hour funds transfers and bill payments, as well as Easy Pass top-ups, were promoted

to stimulate customers’ financial transactions with KBank.

• Promotional campaigns were arranged for SMS Transaction Alert with offered annual fee.

Promotional media was disseminated via various channels and applications were made

easy for all target customer groups.

Saving & Investing

Products and Services Details

New Mutual Funds • KBank joined hands with KAsset to offer 51 fixed-income funds with various tenors and

better returns than fixed-term deposits, amid a low-interest situation. The open-ended K

Global Bond Fund (K-GB) was set up for customers seeking returns from government

bonds worldwide. K-GB is invested through a master fund – “Templeton Global Bond

Fund”, one of the largest fixed-income funds in the world.

Deposits • Savings products were tailored to different behaviors of each customer segment, e.g.,

high-interest 5- and 8-month fixed deposits for our High Net Worth Individual and Affluent

segments seeking a low-risk product, or “Super Taweesup” deposit for the Middle

Income segment preferring regular monthly, tax-free savings with an attractive interest

rate.

Funding & Borrowing

Products and Services Details

Loan products for

Business Customers • Development of products for customers seeking liquidity and structured finance. These

include multiple forms of products for purchase of both domestic and foreign A/R to

accommodate the varied needs of our customers, such as purchase of A/R with recourse,

purchase of A/R without recourse and guarantee on commercial loan payment for other

financial institutions which purchase A/R or guarantee on debt payment of A/R (without

purchase of A/R).

Loan Products for

SMEs • Development of loan products for SMEs, both existing and new specific customers to

support their working capital. Our initiatives include:

- Launch of new loan products under the “Loan for SMEs with Strong Relationship”

program, wherein additional credit lines are granted to our long-standing clients with

preferential conditions.

25

Products and Services Details

- Assistance for SME start-up customers seeking loans and flexible collateral

requirement: Customers with qualified collateral are allowed to apply for long-term loan,

O/D loan and loan with limit exceeding collateral value with KBank.

- Criteria for collateral approval have been revised to better match the demands of

customers, which will also improve their competitiveness. Additional potential areas for

collateral acceptance have been accepted for the apartment business, in response to

expansion of industrial estates and university campuses. In addition, collateral criteria

have been adjusted for customers running a cash business.

• Marketing promotions for K-SME Credit through interest rate reduction and gift giveaways

for new customers applying for loans in special events that have been organized to

promote increased loan transactions, as well as for existing customers who introduced

new customers for us. During the second quarter of 2014, such special activities were

held for specific customer groups, such as trade finance customers, those in the

construction industry and wholesalers/retailers.

Retail Loan

• Assistance measures for retail customers affected by the Chiang Rai earthquake,

involving reduction of monthly installments, grace period for principal repayments and/or

lower interest rates for borrowers of home loans, credit card loans and personal loans.

Additional credit limits were also available for rehabilitation of damaged properties.

• A new K-Express Credit Center was opened at The Walk Ratchaphruek. With a fast

turnaround time, four main types of retail loan are available. Other services include

financial advice and credit planning assistance.

Home Loan • KBank and the Secondary Mortgage Corporation (SMC) held marketing activities to

support the development of the secondary market for housing loans and growth of the

housing loan market, through offering of long-term loans with fixed-term interest rates, and

other special gifts.

• Marketing activities were organized to promote K-Home Loan’s brand image, with the

cooperation of allied property developers and merchants in Bangkok and other provinces.

Preferential interest rates were offered, as well as other privileges for those who have

used their K Home Smiles Club Card per the established conditions. The “Cycling and

Smiling” program was carried on, wherein bicycles are made available at our allied

housing projects to provide convenience to residents.

Credit Card Loan

• New co-branded credit cards, including the Muang Thai Smile Credit Card for the

members of Muang Thai Smile Club, and the KBank-Thai Chamber of Commerce Card,

offer special privileges to exclusive customer groups.

26

Products and Services Details

• A 2014 mega-campaign, “Fly Exclusive Flight with K-Credit Card”, has been continually

implemented. Customers can redeem their KBank reward points for air tickets to domestic

and international destinations, plus cash per the established conditions.

Consumer Loan • For the Robinson-KBank Express Cash Card – the first cash card that is a co-branded

product, applications can be made via Robinson branches across the country. This move

is consistent with KBank’s strategy to increase our presence in provincial markets.

• The campaign for “LINE FRIENDS Gifts for the Whole Gang!” has been extended. This

campaign has been aimed at promoting customers’ financial discipline via our provided

conditions of auto account debit service for K-Express Cash.

Protection & Information

Products and Services Details

Bancassurance • “Super Saving Life Insurance or Pro Saving 510” was developed for the Middle Income

segment. This new insurance product, plus savings, offers high returns, with a low

premium rate and short premium payment period, and is tax-deductible.

3.3.2 Sales and Service Channels KASIKORNBANK has been committed to enhancing sales and service channels,

strengthening our connection with customers and delivering a satisfactory service experience.

Below is a summary of our products and services introduced in the second quarter of 2014. Branches and Financial Service Offices/Centers

Number of Locations Key Implementations in the Second Quarter of 2014 Jun. 30,

2014 Mar. 31,

2014

Branch Network and Sub

Branch

1,054 992 • Differentiation and brand awareness of being a financial

advisor were reinforced with more than 3,000 K-Expert team

members deployed nationwide, while also offering financial

consultancy via alternative channels 24 hours a day.

Meanwhile, “K-Expert Insurance Solution”, an assistance tool

that suggests the most appropriate insurance policy to match

each customer’s lifestyle, was also provided. Another

outstanding service made available was “K-Expert Tax Buddy

(Doctor)” which is an easy and user-friendly tax calculation

27

Number of Locations Key Implementations in the Second Quarter of 2014 Jun. 30,

2014 Mar. 31,

2014

tool designed especially for doctors. It can be downloaded via

www.askkbank.com/k-expert.

• A special branch platform, “Thematic Lifestyle Branch”, was

opened at Central Embassy. It is exclusively designed to serve

customers’ lifestyles with a focus on modern and luxurious

facilities, as well as privacy, in financial advisory services. At

the branch, “THE WISDOM Lounge @” is available, along with

Thailand’s first “Robot Safe Deposit Box” for our Affluent

Customer segment.

Foreign Exchange Booths 142 145 • In opening new foreign exchange booths, we continue to

place an emphasis on potential locations at popular tourist

destinations. However, the number of new booths opened in

the second quarter of 2014 was lower than those that were

closed due to the termination of rental agreements and were

seeking other potential areas.

Corporate Business Center 8 8

SME Business Center* 120 127

Corporate & SME Service

Centers

62 63

Cheque Direct Service 34 34 Note: * Excluding Corporate & SME Service Centers. More than one SME Business Center may be located in a branch.

Electronic Banking Services

(Units: machines)

Number of Units Jun. 30, 2014 Mar. 31, 2014

K-ATMs 9,460 9,007

K-CDMs (Cash Deposit Machines) 2,709 2,195

K-PUMs (Passbook Update Machines) 1,228 1,163

28

Key Implementations in the Second Quarter of 2014

K-Cyber Banking

• Service was enhanced with more convenience offered to K-Credit Card customers who

wish to sign up for K-Cyber Banking via www.kasikornbank.com, wherein customers can

also verify their card spending anywhere, anytime.

• Services for K-Cyber Invest customers were improved, enabling KAsset mutual fund

customers to subscribe for an IPO of “K Enhanced Foreign Fixed Income Fund” by switching

from their existing KAsset investment units, in compliance with the established terms and

conditions.

K-Mobile Banking

K-Speed Top Up

• Promotional campaigns were offered, including “Best Value – Get Baht 750 Additional

Airtime”, being incorporated to boost applications and top-up transaction numbers among

new customers of K-Speed Top Up and K-Mobile Banking PLUS in stipulated mobile service

networks and periods. Their airtime will be increased by 10 percent or up to Baht 750 for the

first five top-ups.

K-MOBILE BANKING PLUS

• The promotional activity “Click to Satisfy Your Appetite” with K-Cyber Banking and K-

MOBILE BANKING PLUS was extended from June 15, 2014, to July 31, 2014, in order to

increase applications and first-time use among customers opening new accounts at KBank

branches.

K-Payment Gateway • Essential work has been done to provide AMEX card acceptance service. KBank became

the first bank in Thailand to offer enhanced convenience for AMEX holders in their online

shopping at home and abroad. This reinforced KBank’s leadership in credit/debit card

payment service via e-commerce channels for all types of cards, including VISA,

MasterCard, JBC and UnionPay.

29

4. Risk Management and Risk Factors1

4.1 Credit Risk Management KASIKORNBANK’s credit risk management has been undertaken with a focus on continued

improvements in credit management that conform to KBank strategies better, making us ready for any

domestic or international risks. Some notable operations during the first half of 2014 are summarized

below.

• Lending targets were set, focusing on industries with growth potential that can generate

satisfactory income to KBank, based on analyses and assessments of customer needs that allow

us to map out their lending plans to reach achievable business targets, as well as to undertake

improvements in service process efficiency.

• Consistent credit risk assessments were conducted via stress tests on a number of scenarios to

quantify the probability of risks incurred from future events, particularly domestic political

uncertainties, with trigger levels determined for incidents that could affect customer liquidity.

During the first half of 2014, KBank offered a short-term liquidity assistance program for customers

affected by political instability. Since political uncertainty should subside during the second half of

the year, we are planning to review our lending targets and product development to provide

customer support over the short and long terms within an acceptable risk appetite.

• Customer statuses are regularly reviewed vis-à-vis credit limit renewals and Credit Bureau data

verification. In addition, R&D on an early warning mechanism was undertaken with a wider

perspective to cover customer characteristics or behaviors that may affect their debt servicing

ability to ensure timely customer assistance.

• Enhancement for more efficient debt collection procedure was carried out to reduce potential

losses by using tools that analyze customers’ debt servicing ability, along with assessments of

their behavior to establish debt collection strategies and priorities. Such an approach was also

extended to cover medium-sized business customers with high risk.

Credit Risk Position

− Outstanding loans As of June 30, 2014, KBank’s consolidated outstanding loans stood at Baht 1,471,922

million, increasing by Baht 21,541 million, or 1.49 percent, compared to Baht 1,450,381 million at the

end of the first quarter of 2014.

1 Details of our overall risk management, management of each type of risks and capital management can be viewed in our MD&A

report for the year ended December 31, 2013.

30

As of June 30, 2014, 56.71 percent of KBank’s outstanding loans were made to juristic

persons or registered businesses. Loan accounts exceeding Baht 20 million totaled Baht 806,305

million, some 55.41 percent of the total; 44.59 percent were loans under Baht 20 million. As for

maturities, credit with maturities of less than or equal to one year accounted for 46.34 percent of our

total loans. KBank’s Lending Portfolio - Profile

KBank’s Consolidated Lending Portfolio

.

0%

Type of Customer

Credit Maturity

Credit Amount

Less than Baht 20 million Over Baht 20 million

Business entities Individual

Less than or equal to 1 year Over 1 year

As of Jun. 30, 2014

.

20%

.

40%

.

60%

.

80%

.

100%

44.59% 55.41%

44.48% 55.52%

56.71% 43.29%

56.93% 43.07%

46.34% 53.66%

46.58% 53.42%

As of Mar. 31, 2014

As of Mar. 31, 2014

As of Mar. 31, 2014

As of Jun. 30, 2014

As of Jun. 30, 2014

As of Jun. 30, 2014• Agriculture & Mining

• Manufacturing & Commerce

• Real Estate & Construction

• Utilities & Services

• Housing Loans

• Others

• Agriculture & Mining

• Manufacturing & Commerce

• Real Estate & Construction

• Utilities & Services

• Housing Loans

• Others

1.94%

15.24%

14.89%

12.62%

6.69%

48.62% 49.33%

6.89%

12.95%

15.48%

13.09%2.26%

As of Mar. 31, 2014

loa

sh

loa

–

of

32

sli

BUnit: M

Within

ans. When su

hare of total c

ans.

Non-PerforNon-PAs of J

the total out

2,590 million,

ght increase

Consolidated

Percent of to

Bank-only ne

Percent of to

ConsoBy Type of BMillion Baht

Man

ufac

turin

g &

Com

mer

ce

A gric

ultur

al &

Mini

ng

Normal

KBank’s co

ub-divided by

onsolidated le

rming Loans aPerforming LoaJune 30, 2014

tstanding cre

2.05 percent

from the end

d net NPLs

tal outstanding

et NPLs

tal outstanding

olidated Loansusiness and L

Utilit

ies &

Ser

vices

Real

Esta

te &

Cons

truct

ion

Special

A

nsolidated le

y type of bus

ending at 48.

and Debt Resans 4, KBank’s co

edit, including

of the total

of the first qu

N

Quarter Ending

credit, including

credit, including

s Classified Loan Classific

Hous

ing L

oans

Othe

rs

Mention

31

As of June 30

ending portfo

siness, Manu

62 percent; o

structuring

onsolidated N

g that of finan

outstanding c

arter of 2014.

on-Performing

g

g that of financia

g that of financia

cation

Othe

rs

Sub-standa

0, 2014

olio, 96.49 pe

facturing & C

of that, 96.48

NPLs stood at

ncial institutio

credit, includ

NPL data is s

g Loans

al institutions

al institutions

Percent of CB

ard

Man

ufac

turin

g &

Agric

ultur

al &

Mini

ng

rcent are cla

Commerce re

percent are c

t Baht 34,189

ons. Bank-onl

ing that of fin

shown in the t

Jun. 30, 2014

34,189

2.14

32,590

2.05

Consolidated Business and

Doubtful

Man

ufac

turin

g &

Com

mer

ce

Real

Esta

te &

Cons

truct

ion

assified as “

epresents the

classified as “

million, 2.14

ly NPLs total

nancial institu

table below:

(Units: Million B

Mar. 31, 20

33,853

2.14

32,348

2.05

Loans ClassLoan Classific

Doubtful of

Hous

ing L

oans

Utilit

ies &

Ser

vices

Normal”

highest

Normal”

percent

ed Baht

utions, a

Baht)

014

ified by Type cation

f Loss

Othe

rs

of

32

Net Non-Performing Loans As of June 30, 2014, KBank’s consolidated net NPLs stood at Baht 14,375 million – 0.91

percent of the total outstanding credit, including that of financial institutions. Bank-only net NPLs

totaled Baht 13,647 million – 0.87 percent of the total outstanding credit, including that of financial

institutions, a slight decrease from the end of the first quarter of 2014. The net NPL data is shown in

the table below:

Net Non-Performing Loans (Units: Million Baht)

Quarter Ending Jun. 30, 2014 Mar. 31, 2014

Consolidated net NPLs 14,375 14,650

Percent of total outstanding credit, including that of financial institutions 0.91 0.94

Bank-only net NPLs 13,647 13,986

Percent of total outstanding credit, including that of financial institutions 0.87 0.90

Debt Restructuring During the second quarter of 2014, KBank’s consolidated pre-written off, restructured debts

totaled Baht 31,234 million, decreasing by Baht 4,903 million when compared to the second quarter

of 2013. Losses from debt restructuring stood at Baht 894 million, or 2.86 percent of total restructured

debts, which was equivalent to a decrease of Baht 482 million, compared to Baht 1,376 million in the

second quarter of 2013, or 1.33 percent of total restructured debts. Foreclosed Properties As of June 30, 2014, our consolidated foreclosed properties had a book value of Baht 12,698

million, thus being 0.54 percent of total assets.

As of June 30, 2014, our consolidated allowance for impairment on foreclosed properties

stood at Baht 1,360 million, equivalent to 10.71 percent of the cost value of those foreclosed

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

as well as losses on liquidations.

Allowance for Doubtful Accounts and Allowance for Impairment of Assets

As of June 30, 2014, KBank’s consolidated allowance for doubtful accounts and revaluation

allowance for debt restructuring totaled Baht 48,149 million. This amount was equivalent to 166.51

percent of the level required by the BOT.

33

4.2 Market Risk Management Financial markets worldwide were quite volatile during the second quarter of 2014, with the

focus being on key economies’ monetary policies. For instance, the US Federal Reserve signaled that

any hike in their Fed Funds rate would not be implemented in the near term, while the European

Central Bank pursued easing measures to stimulate their economies and avoid deflation. As a

consequence, the Thai Baht’s value early in the quarter moved upward, and government bond yields

fell, on account of the return of foreign fund flows. At the end of May, following a political transition,

the Thai Baht depreciated rapidly against rising government bond yields after overseas investors sold

off their assets in the stock and bond markets. However, the Thai Baht’s appreciation resumed by the

end of the quarter, given promising signals of the domestic economy.

In preparation for economic and political developments – both at home and abroad – as well

as swiftly changing capital flow movements, KBank has stayed abreast of the prevailing

circumstances, while also analyzing and evaluating all of the potential impacts. Emphasis has been

given to efficient risk management under close supervision of the Enterprise Risk Management

Division, the Market Risk Management Subcommittee and the Risk Management Committee, with the

purpose of maintaining risk levels within the established limits.

4.3 Liquidity Risk Management Liquidity in the Thai financial system was relatively volatile during the second quarter of 2014,

owing to both domestic and international factors. At the beginning of the quarter, an outflow of foreign

funds occurred, before they flowed back at the end of the quarter. Such movements affected USD

liquidity and KBank’s liquidity in various dimensions.

KBank has undertaken close monitoring, analysis and impact assessment of the liquidity

situation. We have also reviewed and improved our internal liquidity risk management and monitoring

processes for KBank and subsidiaries to remain alert to economic conditions and rapid changes in

financial asset prices. Assessments have been conducted regarding potential short- and long-term

impacts to our deposit and liquidity positions; thorough reviews have been made of our funding

strategies to prepare for such impacts.

4.4 Capital Management As of June 30, 2014, our total capital amounted to Baht 237,622 million, consisting of

Common Equity Tier-1 capital of Baht 188,798 million, and Tier-2 capital of Baht 48,824 million.

34

Capital Structure (Bank-Only) As of Jun. 30, 2014

(Units: Million Baht)

Period Ending Jun. 30, 2014 Dec. 31, 2013

Tier-1 Capital 188,798 181,210

Common Equity Tier-1 Capital 188,798 181,210

Tier-2 Capital 48,824 48,755

Total Capital 237,622 229,965

The minimum capital required for all risk types under Basel III amounted to Baht 129,442

million, equivalent to the risk-weighted assets value of Baht 1,522,846 million. Credit risk constitutes

the principal risk of KBank, or 88.72 percent of total minimum capital requirement.

Basel III Minimum Capital Requirement (Bank-Only) As of Jun. 30, 2014

237,622

million Baht

Tier-2 Capital

48,824 million Baht

Common Equity

Tier-1 Capital

188,798 million

Baht

Credit Risk

114,841 million Baht

(88.72%)

Operational Risk

12,048 million Baht

(9.31%)

Market Risk

2,553 million Baht

(1.97%)129,442

million Baht

35

(Units: Million)

Period Ending Jun. 30, 2014 Dec. 31, 2013

Credit Risk 114,841 114,375

Market Risk 2,553 2,309

Operational Risk 12,048 11,504

Total Minimum Capital Required under Basel III 129,442 128,188

Total Risk-Weighted Assets 1,522,846 1,508,096

The difference between KBank’s minimum capital requirement under the Basel III

requirement, totaling Baht 129,442 million, and our current available capital of Baht 237,622 million,

indicates that we have Baht 108,180 million above the minimum requirement. Being beyond

regulatory requirements ensures we have adequate assets for future business growth whether in

normal and/or stressed conditions, thus reflecting our capability to maximize returns to shareholders.

Capital Adequacy (Bank-Only) As of Jun. 30, 2014

KBank’s 15.60-percent Capital Adequacy Ratio (CAR) and 12.40-percent Tier-1 Capital Ratio,

plus a Common Equity Tier-1 Capital Ratio, along with the Conglomerate’s 16.06-percent CAR and

12.92-percent Tier-1 Capital Ratio and Common Equity Tier-1 Capital Ratio remain higher than the

BOT minimum requirement of 8.50 percent. Our capital thus remains within the effective capital

management framework of KBank and the Conglomerate.

0 20 40 60 80 100 120 140 160 180 200 220 240 260

เงินกองทุนขั้นตํ่าท่ีตองดํารง

เงินกองทุนทัง้สิน้ของธนาคาร

(Units: Billion Baht)

Minimum Capital Requirement

Total Capital Base

129

238

Credit Risk Market Risk Operational Risk

Capital above

BOT Requirement

36

Capital Adequacy Ratio (Units: Percent of Risk-Weighted Assets)

Period Ending Bank Financial Conglomerate Jun. 30, 2014 Dec. 31, 2013 Jun. 30, 2014 Dec. 31, 2013

Total Capital (CAR) 15.60 15.25 16.06 15.78 Tier-1 Capital 12.40 12.02 12.92 12.57

Common Equity Tier-1 Capital 12.40 12.02 12.92 12.57

Tier-2 Capital 3.20 3.23 3.14 3.21

37

5. Operations of Support Groups

Human Resource Management of KASIKORNBANK and the wholly-owned subsidiaries of KASIKORNBANK

To support KBank’s operations per strategic goals and be ready for the forthcoming AEC, we

focused our attention on staff leadership development and enhancement of K-Culture activities during

the second quarter of 2014. We are also concerned about readying our staff in various fields, e.g.,

language, culture and relevant business knowledge. Our workforce has been increased and their

skills have been upgraded to facilitate expansion domestically and internationally. Notable steps

taken during the second quarter of 2014 are detailed below.

• Recruitment and Allocation of Staff: KBank has hired many new employees via several

recruitment programs, e.g., our “KASIKORNBANK’s Career Day for Sales Executives in

Southern Isan”, an internship program that offered students work experience with KBank,

plus the opportunity to apply for job positions afterward. Moreover, we have paid

considerable attention towards connecting with international educational institutions and UK

alumni organizations with an intention to further recruitments prior to the upcoming AEC.

• Remuneration Management: The salary structure for support service providers to

KASIKORNBANK was adjusted to make it more competitive and attractive to skilled and

competent applicants. This will help business expansion and increase customer service

efficiency.

• Staff Potential Development: We continue to prepare staff for the AEC by adding over 20

language courses (e.g., English, Chinese and other AEC languages). KBank has also

launched a “Young CA Executive Program” involving integrated study for credit analysts who

are learning in classrooms and actual workplaces. Education is also one of our major

concerns. We provide scholarships for both domestic and overseas study to qualified

employees.

• Staff Retention: To gain staff feedback on various issues, an Employee Engagement Survey

was carried out. Results are to be used as guidelines for improvements to make KBank a

center of workplace excellence.

• Labor Relations and Welfare Management: KBank organized the second annual 2014

meeting of KBank’s Employee Committee for discussion and input that could benefit joint

operations between KBank and the Committee. A “Health Care Program” was organized to

encourage staff to care for their health, while an Employee Relation Center is working to

advise and assist staff, inducing greater understanding.

38

• Corporate Activities and Relations: An array of activities was organized to foster good

relationships between employees and KBank. Activities worthy of note were “Smile at

KBank”, “You are K Heroes 2014”, whereby employees performing outstandingly were

bestowed with an award; there was also a “Tomorrow Comes Today with K-Digital Banking

Experience” – a program aimed at raising employees’ awareness of KBank’s conceptual

ideas towards becoming an innovative banking service provider, highlighting KBank’s

number one position in the digital banking market. Moreover, social responsibility activities

were initiated, namely, “Pharakit Phichit Kha Fai Year 2” which campaigned for saving on

energy consumption, a “Walk, Run and Ride” activity on the occasion of KBank’s 69th

anniversary, and our “Green at Heart” program aimed at achieving a sustainable economy,

society and environment. Other than that, we emphasized proper communications on

business continuity management with staff to ensure that they receive enough information

and stay alert towards ever-changing situations. With this strategy, we are thus able to

perform effectively, even in stressed situations.

IT Management

• IT Security Management A system to prevent online financial transactions from falling victim to possible attacks – e.g.,

Distributed Denial of Service (DDoS) attempts – was installed at the IT Center, Rat Burana Building,

and at the Chaeng Watthana Building alternate IT Center to mitigate risks and impacts to customers.

• IT Development to Support Business Units Our Merchant Reporting system has been enhanced vis-à-vis preparation of credit card

transaction reports, wherein merchants can now retrieve and verify data online, therefore reducing the

resources needed for report printing; this also streamlines operational processing and is an

enhancement in accordance with credit card security parameters per the Payment Card Industry

Data Security Standard (PSI-DSS).

In addition, we have installed a Unit Dealing and Registrar system to centralize the

management of investment unit trading and fund registration. The new system facilitates more varied

sales channels via branches and tele-service operations, etc.

K-Transformation

The K-Transformation project represents a key strategy for KBank and the wholly-owned

subsidiaries of KBank towards achieving our business goals and differentiating ourselves from our

peers. During the second quarter of 2014, the IT Capital (ITC) program under the Core Banking

system was undergoing deposit system development and testing. The completion of all development

39

plans is scheduled within 2015. As for the new loan system installation that started in the previous

quarter, the result was satisfactory.

40

Disclaimer

Certain statements shown in this document are forward-looking statements in respect of financial position or

performance of KASIKORNBANK Public Company Limited (“KBank”). KBank has prepared such statements based on

several assumptions, and has relied on the financial and other information made available from public sources as of

the date these statements were made. Statements with words such as “expect”, “believe”, “estimate”, etc., are types of

forward-looking statements involving uncertainties and subject to change at any time due to future events, including

but not limited to, changes in the global/national economic, political and regulatory environment. KBank is under no

obligation to update these forward-looking statements to correspond to the current situation. Thus, recipients shall

carefully review these statements and make an independent decision prior to investing or entering into any transaction.

41