SCB Announces its First Quarter, 2009 Financial Results Despite Adverse Headwinds, a Beacon of Strength & Resilience

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1 Press Release: 20 April, 2009 SCB Announces its First Quarter, 2009 Financial Results Despite Adverse Headwinds, a Beacon of Strength & Resilience Bangkok: The global economic turmoil shows no signs of abating and is taking its toll on the Thai economy. Despite these adverse headwinds, the Bank through its first quarter results was able to demonstrate the resilience of its business strategies and registered a net profit of Baht 5.5 billion, an increase of 39.3 % from 4Q08 but a fall of 18.3% compared to 1Q08. The main adverse impact to the Bank, as a result of the economic downturn, has been on its net interest margins, which dropped from 3.8% in 4Q08 to 3.6% in 1Q09 mainly from the sharp fall in the interbank rates. On the other hand, the Bank was able to successfully contain expense growth, which fell by 14.1% compared to 4Q08 and was flat when compared to 1Q08. Also, as a result of its adherence to prudent underwriting standards, the quality of the loan book has been maintained with the NPL level at 4.6% slightly better than the 5.1% recorded in 4Q08. Finally, the Bank s Capital Adequacy Ratio stands at a high of 15.6% and provides it with the strength to ride through the current economic downturn. Commenting on the first quarter financial results, Dr. Vichit Suraphongchai, Chairman of the Bank s Executive Committee, noted that these are hard times by any standard, and the banking sector as a whole will, inevitably, suffer from a weakened Thai economy. Yet, given its financial strength, this adversity provides SCB with an unprecedented opportunity to deepen relationships with selected customers and develop new capabilities as a springboard to the new post-crisis landscape. Our aim is not simply to weather the current economic storm relatively unscathed, but to emerge from it as clearly the strongest and best regarded financial services franchise in the country. It is the relentless drive to this value proposition which ultimately differentiates us from the other players in our industry. The Bank reported consolidated net profit of Baht 5.5 billion for the first quarter. This was up 39.3% from the 4Q08, although 18.3% behind the record profit registered in 1Q08. However, if one-time gains from investment income and loan provisions are excluded from the 1Q08 net profit, the comparable pre-tax operating profit for 1Q09 was lower by 10.6%. The profitability level of the current quarter has been impacted by the rapidly changing liquidity and interest rate environment. In particular, the Bank was disproportionately affected by the dramatic fall-off in yields in the money market as a larger volume of net interbank deposits were earning sharply lower interest. (The yield in the interbank markets dropped from 3.8% in 1Q08, to 3.2% in 4Q08, to an average yield of only 1.7% in 1Q09). The Bank plans to 1/17

2 address this situation through growing its loan book by lending to the blue-chip and similarly rated public sector enterprises over the coming months. The reported results have, however, benefited from the effective and on-going drive to manage Non Interest Expenses. At Baht 8.1 billion, these expenses have been kept at the same level as reported in 1Q08, and sharply improved from the seasonally high 4Q08 expenses of Baht 9.5 billion. This significant level of expense control has been achieved without forgoing the continued expansion of the retail franchise and other strategic and transformational initiatives that are underway. The Bank expects to maintain this strong expense control discipline. Despite the economic downturn the Bank has been able to maintain the quality of its loan book, and the level of NPLs actually fell from 5.1% (Baht 50.1 billion) at the end of 2008 to 4.6% (Baht 49.9 billion) at the end of 1Q09. In part, this reflects the robust collection and work-out capabilities that the Bank has developed and, in part, it reflects the stringent underwriting criteria that have been adopted by the Bank since early 2008 to forestall the build-up of new NPLs. Finally, the Bank has seen its rigorous capital conservation practices culminate in the high Capital Adequacy Ratio or CAR (using the BASEL II framework). The ratio has increased from the high of 15.2% at the end of last year to 15.6% at the end of 1Q09. This robust capital strength of the Bank not only positions it to ride the economic downturn but, in addition, to capitalize on market opportunities in this likely prolonged slump. Khun Kannikar Chalitaporn, the Bank President, noted that although there is no end in sight for the current global turmoil, the Bank s first quarter results attest to the soundness of the business strategies that we have adopted in response to these profound economic challenges. She added, we are likely to see further deterioration in the economic conditions and our focus on continuing to support selected customers and building market share gains in the blue-chip and public sector, while at the same time containing expenses, is likely to culminate in well above average profitability and strength, thus justifying a higher market premium for our franchise. Siam Commercial Bank PCL is a leading universal bank in Thailand. It was established by Royal Charter in 1906 as the first Thai Bank and, as at March 31, 2009, had the highest market capitalization among Thai Financial Institutions (Baht 184 billion). It has the largest branch (953), exchange booth (136), and ATM (6,249) network in the country, attesting to its dominant position in the retail financial services marketplace. It has a diverse range of Corporate, SME, Private, and Retail customers nationwide, and has an asset size of Baht 1,315 Billion). Further information is available on the Bank's web site at CONTACT Corporate Communications Division Tel: , corp.communications@scb.co.th 2/17

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4 SCB Results at a Glance (Consolidated) Unit: Million Baht Q1, 2009 Q1, 2008 % Change yoy Q4, 2008% Change qoq I ncome 16,850 18, % 16, % NII 10,425 10, % 11, % Non NII 6,425 7, % 5, % Non interest expense 8,121 8, % 9, % Operating Profit 8,729 10, % 7, % Provision 1, % 1, % Tax 1,686 2, % 1, % Minority Interest % % Net Profit After Tax 5,547 6, % 3, % Loans 901, , % 916, % Growth (yoy) 43,858 Total Assets 1,314,567 1,196, % 1,241, % Deposit 984, , % 911, % Growth (yoy) 96,672 Loan to Deposit Ratio 91.6% 96.6% 100.6% Loan to Deposit Ratio (Bank only) 89.5% 89.5% 97.7% Loan to Deposit + B/E Ratio (Bank only) 86.4% 88.7% 94.5% Cost to Income Ratio 48.2% 43.9% 57.1% NIM on Earning Assets 3.57% 4.02% 3.82% NPL 49,926 49,573 50,067 NPL% 4.6% 5.2% 5.1% ROE 17.1% 23.7% 12.9% ROA 1.7% 2.3% 1.3% CAR* 15.57% 13.17% 15.24% *CARs for Q1, 2009 and Q4, 2008 are based on Basel II while CAR for Q1, 2008 is based on Basel I. 4/17

5 Management Discussion and Analysis For the first quarter ended March 31, 2009 Siam Commercial Bank PCL announced unreviewed and unaudited operating results for the first quarter of 2009, with a consolidated net profit of Baht 5,547 million, an 18.3% yoy decrease of Baht 1,240 million from Baht 6,787 million recorded in 1Q08. The decline in net profit was mainly attributed to: (1) lower interest income, as the proportion of low-yield interbank lending (as a percentage of earning assets) increased significantly while rates fell; (2) lower dividend income from investments, particularly from the Vayupak Fund; and (3) lower gain on investments mainly as a result of one-time gain on the sale of an equity investment booked in 1Q08. Stripping out the above-mentioned one-time gain on the sale of an equity investment, operating profit (excluding allowance for doubtful accounts, income tax, and minority interest in subsidiaries) declined 10.6% yoy to Baht 8,729 million in 1Q09 from Baht 9,764 million in 1Q08. Alongside net profit and operating profit, earnings per share (EPS) for the quarter dropped from Baht 2.00 in 1Q08 to Baht 1.63 in 1Q09, while return on average equity (ROE) and return on average assets (ROA) decreased from 23.7% and 2.3% in 1Q08 to 17.1% and 1.7% in 1Q09, respectively. Compared to the previous quarter, net profit rose 39.3% qoq from Baht 3,983 million in 4Q08 to Baht 5,547 million in 1Q09, primarily attributable to (1) higher non-interest income, as losses arising from the disposal or mark down of domestic equity investments booked in 4Q08 did not recur; (2) lower personnel expenses, as the Bank paid out less bonuses than anticipated in the midst of a slowing economy, causing a partial reversal of bonus expenses accrued last year; and (3) lower overall noninterest expenses, as a result of seasonal factors and the Bank's continued effort to control costs. Operating profit increased 22.9% qoq from Baht 7,102 million in 4Q08 to Baht 8,729 million in 1Q09, mainly due to the same reasons above. Unit: Million Baht (Consolidated) 1Q09 4Q08 % qoq 1Q08 % yoy Net Interest and Dividend Income 10,425 11, % 10, % Non-Interest Income 6,425 5, % 7, % Non-Interest Expenses 8,121 9, % 8, % Operating Profit* 8,729 7, % 10, % Allowance for Doubtful Accounts 1,462 1, % % Income Tax 1,686 1, % 2, % Minority Interest in Subsidiaries NM % Net Profit 5,547 3, % 6, % EPS (Baht) % % ROE 17.1% 12.9% 23.7% ROA 1.7% 1.3% 2.3% NM = Not meaningful * Operating profit for 1Q08 was Baht 9,764 million if one-time gain on the sale of an equity investment is excluded 5/17

6 1Q09 Income Statement (Consolidated basis) 1. Net interest and dividend income Net interest and dividend income declined 5.2% yoy and 5.3% qoq as interest income fell on the back of a sharp increase in the proportion of low-yield interbank lending as a percentage of earning assets, coupled with the reduction of interbank rates. A sharp influx of liquidity together with the Bank adopting a more cautious stance in lending amidst a slowing economy, led the Bank to place such excess liquidity in the low yielding interbank and money markets. Dividend income from investment also fell alongside the weakening market conditions, contributing to the contraction of net interest income. Unit: Million Baht (Consolidated) 1Q09 4Q08 % qoq 1Q08 % yoy Interest and Dividend Income 14,645 16, % 15, % - Loans 11,560 12, % 11, % - Interbank and money markets % 1, % - Hire purchase and financial lease income 1,161 1, % 1, % - Investments 1,334 1, % 1, % Interest Expenses 4,219 5, % 4, % - Deposits 3,247 4, % 3, % - Interbank and money markets % % - Short-term borrowings % % - Long-term borrowings % % Net Interest and Dividend Income 10,425 11, % 10, % Net Interest Margin 3.57% 3.82% 4.02% Yield on earning assets 5.03% 5.63% 5.65% Yield on loans 5.70% 6.28% 5.97% Yield on interbank 1.72% 3.22% 3.83% Yield on investment 3.76% 3.14% 4.99% Cost of funds* 1.58% 1.97% 1.72% Cost of deposit 1.39% 1.80% 1.53% Spread (yield on earning assets cost of funds) 3.45% 3.66% 3.93% Note Profitability ratios are calculated based on monthly average * Cost of funds = interest expenses / interest bearing liability Interest and dividend income in 1Q09 was Baht 14,645 million, a 5.3% yoy decrease of Baht 816 million from Baht 15,461 million in 1Q08. Details include: - Interest income from loans rose 2.6% yoy to Baht 11,560 million in 1Q09, mainly attributable to loan growth of 5.1% yoy which offset the lower yields from the reductions in the Bank s interest rates; 6/17

7 - Interest income from interbank and money markets fell significantly by 52.4% yoy to Baht 589 million in 1Q09, despite an expansion in interbank and money market lending as a result of excess liquidity in 1Q09; - Hire purchase and financial lease income declined 14.7% yoy to Baht 1,161 million in 1Q09, owing mainly to the impact to originations from the adoption of more stringent underwriting criteria in the midst of weakening economic conditions; - Interest and dividend income from investments decreased by 16.4% yoy to Baht 1,334 million in 1Q09, primarily as a result of lower dividend income from Vayupak Fund (Baht 160 million in 1Q09 vs Baht 428 million in 1Q08). Interest expenses fell 5.5% yoy to Baht 4,219 million in 1Q09. Interest expenses on interbank and money market declined 65.4% yoy in 1Q09 mainly due to fallen interbank interest rates, while interest expenses on deposits fell slightly by 1.5% yoy as a result of lower deposit rates, although the deposit base grew by 10.9% yoy. SCB Interest Rates Apr 23, 07 May 24, 07 Jul 20, 07 June 4, 08 Sep 30, 08 Dec 8, 08 Jan 21, 09 Feb 27, 09 Mar 24, 09 Lending Rate MLR 7.25% 7.00% 6.875% 7.25% 7.25% 6.75% 6.50% 6.25% 6.25% Savings Rate 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.50% 0.50% Fixed Deposit Rate 3-month deposits % % % % % % % % 0.75% 6-month deposits % % % % % % 1.25% 1.00% 0.75% 12-month deposits % % 2.375% % % 1.75% 1.50% 1.25% 1.00% Apr 11, 07 May 23, 07 Jul 18, 07 Jul 16, 08 Aug 27, 08 Dec 3, 08 Jan 14, 09 Feb 25, 09 Mar 31, 09 Policy Rate 4.00% 3.50% 3.25% 3.50% 3.75% 2.75% 2.00% 1.50% 1.50% Compared with 4Q08, interest and dividend income declined 9.6% qoq from Baht 16,200 million in 4Q08 to Baht 14,645 million in 1Q09. Details are as follow: - Interest income from loans fell 10.9% qoq due to the reduction in lending rates (50 bps in December 2008 and 50 bps in the first quarter of 2009) and because of expected repayment from seasonal working capital loans; - Interest and dividend income from investments increased 22.7% qoq primarily as a result of dividend income from the Vayupak Fund booked in 1Q09; - Hire purchase and financial lease income rose slightly by 0.8% qoq as the Bank has intentionally reduced its risk appetite in this segment and more recent lending is better priced to reflect this change; - Interest income from interbank and money markets dropped 40.6% qoq alongside a sharp reduction in interbank interest rates. 7/17

8 Interest expenses fell 18.8% qoq from Baht 5,194 million in 4Q08 to Baht 4,219 million in 1Q09 as a result of the declining cost of deposits, which fell 21.1% qoq on the back of deposit rate cuts. Interest expenses on borrowings fell 6.3% qoq mainly owing to the reduction in interest rates. With interest income declining by a larger amount than interest expenses, net interest and dividend income dropped 5.2% yoy and 5.3% qoq to Baht 10,425 million in 1Q09. Net interest margin (NIM) fell to 3.57% in 1Q09 from 3.82% in 4Q08 and 4.02% in 1Q08, primarily as a result of increased proportion of low-yield interbank and money market lending as a percentage of earning assets, and the effect of the reduction in interest rates. The Bank s management is in the process of taking actions to mitigate the pressure on net interest income and margins. The Bank aims to channel some of the increased liquidity to loans to blue-chip corporates and the public sector, in order to become less reliant on the low-yielding interbank lending. 2. Non-interest income Non-interest income dropped 14.1% yoy to Baht 6,425 million in 1Q09, principally the result of a onetime gain on the sale of an equity investment booked in 1Q08. Additional details of non-interest income yoy are listed below: - Fee & service income dropped slightly by 0.9% yoy in 1Q09, mainly owing to a decline in brokerage fee as a result of dramatically lower volume in the stock market. Nonetheless, the fees from the card business and bancassurance have continued to grow; 8/17

9 - Gain on exchange rose 29.3% yoy in 1Q09 on the back of increased business transactions amid volatile foreign exchange markets; - Income from the equity interest in associated companies fell 53.4% yoy in 1Q09 in line with the performance of associated companies; - Gross underwriting income declined 16.9% yoy in 1Q09, in line with the lower business volume of the Bank's non-life insurance subsidiary; - Other income fell 46.6% yoy in 1Q09 as a result of lower gain from the sale of foreclosed properties; - Gain on investment fell significantly by 88.9% yoy, mainly a result of a one-time gain on the sale of an equity investment booked in 1Q08. Unit: Million Baht (Consolidated) 1Q09 4Q08 % qoq 1Q08 % yoy Fee and service income 4,387 4, % 4, % - Acceptances, aval, and guarantees % % - Others 4,133 3, % 4, % Gain on exchange 1,004 1, % % Income from equity interest in affiliated companies % % Underwritings income % % Other income % % Non-Interest Income excluding Gain on Investments 6,335 6, % 6, % Gain on investments NM % Total Non-Interest Income 6,425 5, % 7, % NM = Not meaningful Compared with the previous quarter, non-interest income rose 15.7% qoq from Baht 5,551 million in 4Q08 to Baht 6,425 million in 1Q09. Details include: - Fee and service income rose 8.9% qoq, driven mainly from fee income growth in the bancassurance and fund management business; 9/17

10 - Gain on exchange dropped slightly by 3.5% qoq in line with business transaction volume amid less volatile foreign exchange markets compared to the previous quarter; - Income from equity interests in associated companies dropped 37.0% qoq in line with the performance of associated companies; - Gross underwriting income dropped 4.5% qoq in line with the business volume of the Bank's non-life insurance subsidiary; - Other income fell 41.7% qoq as a result of lower gain from the sale of foreclosed properties; - The Bank booked a gain on investment of Baht 90 million in 1Q09, a sharp recovery from Baht 792 million losses recorded in 4Q08, primarily the result of disposal or mark down of domestic equity investments in the previous quarter. 3. Non-interest expenses Non-interest expenses remained relatively flat at Baht 8,121 million in 1Q09, compared to Baht 8,112 million recorded in 1Q08 reflecting the Bank s strong drive to contain expense growth in the current economic climate. Key items are explained as follows: - Personnel expenses remained relatively unchanged yoy at Baht 2,756 million; - Premises and equipment expenses rose slightly by 4.4% yoy mainly as a result of continued network expansion and systems enhancement initiatives; - Taxes and duties fell 16.5% yoy owing to the reduction in special business tax rates for income from interbank transactions, debt investments and derivatives from 3.3% to 0.01%; - Fee and service expenses increased 9.4% yoy; - Contribution to the FIDF rose 4.8% yoy alongside the expansion of the Bank's deposit base; - Underwriting expenses declined 31.6% yoy in line with business volume of the Bank's non-life insurance subsidiary; - Other expenses rose 4.0% yoy. Unit: Million Baht (Consolidated) 1Q09 4Q08 % qoq 1Q08 % yoy Personnel expenses 2,756 2, % 2, % Premises and equipment expenses 1,948 2, % 1, % Tax and duties % % Fee and service expenses % % Director remuneration % % Contribution to the FIDF % % Underwritings expenses % % Other expenses 916 1, % % Total Non-Interest Expenses 8,121 9, % 8, % Cost to Income Ratio 48.2% 57.1% 43.9% Cost to Income Ratio excluding SCB Samaggi Insurance 47.1% 54.3% 42.6% 10/17

11 Compared to the previous quarter, non-interest expenses fell 14.1% qoq due partly to the decline in personnel expenses as the actual bonus payment was lower than originally anticipated, leading to the partial reversal of bonus expenses accrued in A fall in non-interest expenses was also attributable to seasonal factors and the Bank s continued effort to control costs. Premises and equipment expenses declined 13.9% qoq while underwriting expenses dropped by Baht 38 million (-13.5% qoq). On the other hand, contribution to the FIDF rose slightly by 2.3% qoq as a result of the Bank's larger deposit base. Due mainly to the lower interest and dividend income and the significantly smaller gain on investment, the cost to income ratio rose from 43.9% in 1Q08 to 48.2% in 1Q09, although the figure was well within the Bank s full year target of 49%. Compared to the previous quarter, cost to income ratio dropped significantly from 57.1% in 4Q08 as operating expenses fell more steeply than total income. It should be noted that the consolidated cost to income ratio is distorted by the consolidation of the results of the Bank's non-life insurance subsidiary, SCB Samaggi Insurance. If the non-life insurance subsidiary is excluded, this ratio would further reduce to 47.1% in 1Q Loan loss provision On a bank only basis, the Bank set aside Baht 1,500 million for loan loss provision in 1Q09. The Bank increased the provisioning level from Baht 900 million per quarter for the first three quarters of 2008, to Baht 1,500 million per quarter in 4Q08 to reflect the potential increase in NPL given a rapidly slowing economy. The new provisioning policy was continued in 1Q09. On a consolidated basis, the provision was Baht 1,462 million in 1Q09. Total allowance for doubtful accounts as at the end of March 2009 stood at Baht 40,798 million, a reduction from Baht 41,711 million at the end of December 2008, reflecting the corresponding drop in NPLs from Baht 50,067 million to Baht 49,926 million. 11/17

12 Balance sheet as at March 31, 2009 (Consolidated basis) As at March 31, 2009, the Bank reported total assets of Baht 1,314,567 million, an increase of Baht 118,551 million (9.9%) yoy from Baht 1,196,016 million at the end of March 2008, and an increase of Baht 72,927 million (5.9%) qoq from Baht 1,241,640 million at the end of Details of the consolidated balance sheet are as follows: 1. Loans and Deposits As at March 31, 2009, total outstanding loans stood at Baht 901,885 million, an increase of Baht 43,858 million (5.1%) yoy from Baht 858,027 million at the end of March 2008, and a decrease of Baht 15,035 million (-1.6%) year to date from Baht 916,920 million at the end of Negative loan growth year to date was primarily attributable to expected loan repayments and lower originations following the Bank's adoption of more stringent underwriting criteria in the weakening market environment, as well as loans written-off of Baht 870 million during 1Q09. Good loans grew 5.0% yoy from Baht 817,348 million at the end of March 2008 to Baht 858,328 million at the end of March 2009, while loans under the Special Assets Group increased 7.1% from Baht 40,679 million to Baht 43,557 million. On a year-to-date basis good loans fell slightly by 1.9% from Baht 874,677 million at the end of 2008 to Baht 858,328 million at the end of March 2009, while loans under the Special Assets Group rose 3.1% from Baht 42,243 million at the end of 2008 to Baht 43,557 million. In 1Q09, loan under the Special Asset Group increased while non-performing loan (NPLs) declined year to date primarily because part of the NPLs under the Business Banking Group were transferred to the Special Assets Group in 1Q09. Additional details of loan breakdown by business units and loan types are as follows: - Corporate Banking loans increased 10.3% yoy while they were flat year to date; - Business Banking loans, or loans to SMEs, were flat yoy and fell by 5.6% year to date mainly as a result of loan repayment and the Bank's adoption of more stringent underwriting criteria for new lending; - Retail banking loans increased 3.7% yoy and decreased 1.1% year to date. Housing loans rose 7.6% yoy and increased 0.5% year to date, partly as the result of the Government's tax incentives for the purchase of new homes; Hire purchasing loans dropped 14.2% yoy and 2.8% year to date due to the Bank s adoption of more stringent underwriting criteria given the deteriorating market conditions in this segment; Other loans (largely personal and credit card loans) increased 16.7% yoy, but slid 4.8% year to date. 12/17

13 Unit: Million Baht Loans Mar 31, 09 Dec 31, 08 % ytd Mar 31, 08 % yoy Good Bank 858, , % 817, % Corporate 310, , % 281, % SME 209, , % 209, % Retail 337, , % 325, % - Housing Loans 209, , % 195, % - Hire Purchase 68,478 70, % 79, % - Others Loans 59,352 62, % 50, % Special Assets Group 43,557 42, % 40, % Total Loans 901, , % 858, % As of March 31, 2009, deposits stood at Baht 984,582 million, up 10.9% yoy from Baht 887,910 million at the end of March 2008, and up 8.0% year to date from Baht 911,482 million at the end of The increase in deposit base was partly attributable to the Bank's special deposit campaign and the flight to safe havens in the midst of the global financial turmoil. Demand deposits, savings deposits and fixed deposits increased by 1.2%, 9.7% and 7.1% respectively year to date. The proportion of savings and demand deposits as a percentage of total deposit base rose slightly to 48.4% at the end of 1Q09 from 47.9% at the end of /17

14 Unit: Million Baht Deposits Mar 31, 09 Dec 31, 08 % ytd Mar 31, 08 % yoy Demand 37,888 37, % 41, % Savings 438, , % 399, % Fixed 508, , % 446, % - Less than 6 months 271, , % 255, % - 6 months and up to 1 year 56,954 50, % 70, % - Over 1 year 180, , % 120, % Total Deposits 984, , % 887, % Bill of Exchange (B/E) (Bank only) 35,489 31, % 8, % Gross Loans to Deposits Ratio (Consolidated) 91.6% 100.6% 96.6% Gross Loans to Deposits Ratio (Bank only) 89.5% 97.7% 89.5% Gross Loans to Deposits and B/E (Bank only) 86.4% 94.4% 88.7% As of March 31, 2009, loan to deposit ratio on a consolidated basis stood at 91.6%, a sharp decrease from 100.6% at the end of On a Bank-only basis, the ratio was 89.5% at the end of 1Q09, a decrease from 97.7% at the end of Loan to deposit and B/E ratio was at 86.4% in 1Q09, falling from 94.4% at the end of These changes underscore the sharp increase in liquidity in 1Q09. As at March 31,2009, interbank and money market items on the asset side stood at Baht 202,951 million, a 49.6% increase from Baht 135,666 million at the end of March 2008, and a 131.4% increase from Baht 87,707 million at the end of A significant rise in the interbank and money market items reflected a sharp influx of liquidity and the Bank adopting a more cautious stance in lending amidst a slowing economy, which led the Bank to place such excess liquidity in the low-yielding interbank and money markets. 2. Investments Investments rose 18.2% yoy to Baht 150,083 million at the end of 1Q09 mainly due to an increase in investment in bonds issued by the Bank of Thailand (BOT). Nonetheless, investments dropped when compared with 4Q08 as the Bank reduced its portfolio in the BOT bonds during 1Q09. 14/17

15 Unit: Million Baht Mar 31, 09 Dec 31, 08 % ytd Mar 31, 08 % yoy - Short-term investment-net 34,055 51, % 37, % - Long-term investment-net 111,711 99, % 85, % - Investment in associated companies-net 4,316 4, % 3, % Total Investments-net 150, , % 126, % 3. Borrowings Borrowings rose 61.5% yoy to Baht 84,897 million at the end of 1Q09 mainly from the increase in B/Es over the past four quarters and the issuance of subordinated debentures in May Borrowings also increased 3.0% year to date mainly due to the increase in B/Es during 1Q09. (The B/Es or Bill of Exchange are essentially akin to an uninsured deposit which has gained some popularity over the past few years.) 4. Shareholders equity As of March 31, 2009, shareholders equity stood at Baht 131,631 million, an 11.3% yoy increase of Baht 13,408 million, mainly from the net profit of 21,414 million in This was reduced by dividend payment of Baht 6,798 million (Baht 2 per share or dividend payout ratio of 39%) in accordance with Shareholder's Meeting Resolution in April Shareholders' equity increased 3.5% year to date or by Baht 4,427 million from the end of 2008, primarily attributable to the 1Q09 net profit of Baht 5,547 million more than offsetting the reduction of unrealized gain on investment of Baht 1,152 million. Book value per share as of March 31, 2009 was Baht (3,399 million ordinary and preferred shares at the end of March 2009), up from Baht at the end of Statutory Capital (Bank only) Total capital funds (Tier 1 and Tier 2) as of March 31, 2009 were solid at 15.57% of total risk-weighted assets, representing Tier-1-capital of 11.28% and Tier-2-capital of 4.29%. 15/17

16 Non Performing Assets Gross NPLs on a consolidated basis continued to fall from Baht 50,067 million (5.1% of total loans) at the end of 2008 to Baht 49,926 million (4.6% of total loans) at the end of March Net NPLs also fell from Baht 26,453 million (2.8%) at the end of 2008 to Baht 25,431 million (2.4%) at the end of March The continued improvement in the group's asset quality in 1Q09 was mainly attributable to bad loan write-offs, the Bank's continued debt restructuring effort, as well as strengthened collection capability at the Bank s auto hire purchase subsidiary, SCBL. Allowance for doubtful accounts as of March 31, 2009 stood at Baht 40,798 million, a decrease of Baht 913 million from the end of 2008, mainly from bad debt write-offs. The coverage ratio (total allowance to non-performing loans) remained strong at 81.7% Gross NPLs on a bank basis were Baht 45,142 million (4.3%), an increase of Baht 546 million from the end of Net non-performing loans (net NPLs) were Baht 23,369 million or 2.3% of total loans, a decrease of Baht 366 million from Baht 23,735 million (2.6%) at the end of /17

17 (Bank only) Classified loans and Allowance for Doubtful Accounts Unit: Million Baht Mar 31, 09 Dec 31, 08 Mar 31, 08 Allowance Allowance Amount Allowance Amount for for for Amount Classified classified classified loans loans loans Normal 981,457 11, ,815 10, ,790 9,358 Special Mention 24,311 1,111 24,462 1,149 11, Substandard 5,589 2,619 6,984 2,974 8,741 3,315 Doubtful 6,635 1,856 6,709 1,951 6,555 2,785 Doubtful Loss 32,917 15,490 30,903 14,763 28,508 11,319 Total 1,050,910 32, ,873 30, ,120 27,690 General and Specific Allowance 7,830 8,430 11,092 Total Allowance 40,165 39,309 38,782 Non-performing Loans (net) (Substandard and lower) 23,368 23,735 22,709 % of Total Classified Loans (including loans to financial institutions) 2.3% 2.6% 2.6% As at March 2009, the Bank and its subsidiaries which are financial institutions have outstanding loans to the restructured debtors including accrued interest receivables of Baht 39,718 million in the consolidated financial statements and Baht 39,718 million for the Bank only (December 31, 2008: Baht 40,643 million and Baht 40,642 million, respectively.) The Bank's foreclosed properties in 1Q09 amounted to Baht 11,673 million, a decrease of Baht 314 million (-2.6% year to date) mainly achieved through the sale of these assets. 17/17