Bank of China (Thai) Public Company Limited 2017 Annual...

Bank of China (Thai) Public Company Limited 2017 Annual Report

Bank of China (Thai) Public Company Limited | Annual Report 2017

Contents

Financial Highlights 2

Message from Chairman of the Board of Directors 3

About BOCT 5

Products and Services 6

Risk Factors and Risk Management 21

Performance Results and Financial Position Analysis 31

Corporate Governance 34

BOCT Activities 43

The Board of Directors and Top Executives 48

Report of the Audit Committee 54

Independent Auditor’s Report 56

Financial Statement 59

Notes to the Financial Statement 67

Capital Structure 112

Organization Chart 113

General Information 114

2 Financial Highlights


Financial Position (Million Baht) 2017 2016 Total assets 45,933 43,949

Loan to customers (Less deferred revenue) 31,014 21,652

Allowance for doubtful accounts 558 488

Total liabilities 35,851 33,947

Deposit 21,204 21,996

Interbank and money market 11,261 10,907

Other liabilities 570 514

Share holder’s equity 10,082 10,002

Performance Results (Million Baht)

Net interest income 629 287

Non-interest income 310 320

Provision of doubtful account (Reversal) 131 (51)

Net profit before tax 96 34

Net profit after tax 76 26

Financial Ratio (%)

Return on average asset (ROA) 0.17 0.05

Return on average equity (ROE) 0.75 0.26

Capital adequacy ratio 33.96 37.78

Basic earnings per share (Baht) 0.08 0.03

Book value per share (Baht) 10.08 10.00

Message from Chairman of the Board of Directors 3


On 9 January 2017, BOCT was formally incorporated into BOC Hong Kong (Holdings)

Limited (BOCHK (Holdings)).The successful completion of the share acquisition is of great

significance to the regional development of BOCHK (Holdings), as well as the long-term stable

operation of BOCT.

Riding on the well-established and solid operating and management experience and

capability of BOCHK (Holdings), and based on the regionalized strategic planning and

requirements of BOCHK (Holdings), BOCT has further explored and improved the management

requirements, business framework, policies and procedures, system support, personnel allocation,

and paid more attention to the foundation work such as risk management, compliance and

internal control and actively integrated with BOCHK (Holdings). By the end of 2017, the total

assets of the Bank amounted toTHB45.93 billion and the total liabilities amounted toTHB35.85

billion, which increased 4.5% and 5.6% from the previous year respectively. With the successful

completion of tier 2 capital increase of USD70 million, the capital adequacy ratio was further

enhanced, which laid a solid foundation for future development.

Thailand has a unique geographical location and a good foundation for economic

development. In recent years, it has developed steadily and continues to attract the attention of

investors from all over the world. The "Eastern Economic Corridor" (EEC) strategy proposed by

the Thai government is highly compatible with the Belt and Road Initiative of China. Further

expansion of economic cooperation between China and Thailand will bring along more room

and even golden opportunity for Thailand's economic development.

BOCT always adheres to promoting the economic and trade exchanges between China and

Thailand. It actively supports high-quality companies of China and Thailand, and provides

financial services to key customers and projects. On 18 May 2017, with the support of BOC and

BOCHK (Holdings), BOCT successfully hosted the “Thailand Cross Border Trade and

Investment Conference” in Bangkok together with the Thailand Board of Investment (BOI) and

the Thai-Chinese Chamber of Commerce to promote industry matching and cross-border

cooperation between SMEs of China and Thailand.

It is believed that with the support of Bank of China Group and BOCHK Holdings, the

leadership of the Board of Directors of BOCT, and the endeavor of all staff, BOCT will

proactively cultivate a sound bank culture and risk culture, continue enhancing our risk

4 Message from Chairman of the Board of Directors


management capabilities, and strive to boost our business performance. We will continue to

provide financial services and support to outstanding companies and key projects of China and

Thailand, and will play a positive role in promoting Thailand’s economic development and

Sino-Thai economic communication and business cooperation.

Mr. Li Jiuzhong Chairman of the Board of Directors

About BOCT 5


BOCT is a wholly owned subsidiary of Bank of China (Hong Kong) Limited (“BOCHK”).

BOCHK is one of the most important commercial bank groups in Hong Kong which has the

largest branch network and ranks at the top in all major businesses with full financial services

channel. Bank of China Group has been operating for more than a century and be the most

international and diversified bank in China.

Significantly, Thailand is considered as an important area of Bank of China in term of

strategic development among ASEAN regions. On 21st February 1994, Bank of China (“BOC”)

established BIBF in Thailand, and was formally upgraded to be Bank of China Limited Bangkok

Branch (“BOCBKK”) on 10th March 1997 where provided full banking services. On August 26,

2014, BOCBKK has been transformed to be a subsidiary as BOCT. On 9th January 2017, BOCT

officially became a member of BOCHK Group as part of the restructuring exercise of the BOC

Group in the ASEAN region.

With a history of business operation of BOCT more than 24 years, BOCT aims to remain

the valued customers and provides full financial services of BOC Group in order to promote the

advantages of our services. Upon the Supporting Oversea Investment of Chinese enterprises

with “going-out” plan, RMB Globalization, and Oversea Chinese businesses, BOCT will

enhance the services provided to the Corporate, Financial institution and Retail Customers, and

will continually follow the missions of BOC Group and BOCHK to uphold the service and strive

for being a best bank in the world.

6 Products and Services


1. Comprehensive RMB Services

1.1 RMB Saving Account

Offering RMB saving account in Thailand with all its flexibility.

Internet/ Mobile Banking service available.

Transfer funds from your account to

o Family or friends’ RMB account with BOCT.

o Your account in another currency with BOCT (funds will be exchanged from RMB into another currency).

1.2 All-in-One RMB Fixed Term Deposit Account

Offering All-in-One Fixed Term Deposit Account with RMB currency in Thailand. You can deposit RMB funds for 1/3/6/12 month(s) and enjoy interest income generated from it.

No account opening fee or account management fee.

Internet/Mobile Banking service available.

Early withdrawal/partial withdrawal before maturity date permitted (Terms and Conditions may apply).

1.3 RMB Currency Exchange

If you hold a saving account in RMB and another saving account with us in another currency, e.g. USD, GBP, EUR, SGD, you can make currency exchanges by simply transferring funds between these two accounts.

Commission free to exchange RMB with us.

Better exchange rate used for transfers between accounts than the cash exchange rates.

Online currency exchange available.

1.4 RMB Pre-settlement Remittance

RMB pre-settlement remittance* is one of the special services provided by BOCT. When the receiver in mainland China would like to receive RMB from the payer in Thailand, BOCT can lock the RMB exchange rate upon remittance, enabling the payee to receive in full amount of RMB at the exchange rate fixed on the day of remittance, eliminating the exchange risk between foreign currency and RMB caused by fluctuations in exchange rate.

Payer can be any individual residing outside mainland China.

Payee** can be any individuals residing within mainland China.

Payer and Payee's name can be expressed in Chinese characters for your convenience.



* Due to the regulation of State Administration of Foreign Exchange in China, an annual limit of USD 50,000 equivalents in RMB is set as the ceiling of individual’s exchange settlement amount. Customers should make sure the payee fulfils the regulation requirement before remittance takes place.

** If the payee is Chinese citizen, 18-digit ID number should be provided, while the payee is a foreigner, nationality and passport number should be provided.

2. Local account service

2.1 Savings Account

An interest-bearing passbook account with its full flexibility of instant funds withdrawal at all times.

A passbook with all transaction records.

Multiple currencies available in THB, USD, CNY, EUR, SGD and GBP.

Funds in THB, USD and RMB can be deposited in cash or transferred to another account, while other currency funds can only be transferred between accounts.

Union Pay debit cards available and can be linked to individual clients' THB and RMB savings accounts. Card holders can withdraw cash through ATMs of Bank of China network without extra charge in mainland China, which is rather suitable for Thai people working or studying in mainland China.

The interest calculation is on a daily base. Interest will be paid twice a year, in June and December at the Bank’s applied rates.

Minimum deposit requirement may vary with different currencies.

2.2 Fixed Term Deposit Account

Fixed term with 1/3/6/12/24 month(s) available. A passbook with all transaction records.

Multiple currencies available in THB, USD, RMB and SGD.

Flexible choice whether to renew both the principal and interest or only to renew the principal on the due date.

Early withdrawal/partial withdrawal before maturity date permitted (Terms and Conditions may apply).

Internet/Mobile Banking available.

3. Money Transfer

3.1 Local payment

Through a variety of service channels, you can easily and conveniently transfer your funds to payees.



Transfers among BOCT accounts are free of charge, whether through the same currency or cross currencies.

Both Baht Net and Bulk payment* are available over the counter or via online banking. * Bulk payment can only be applied to the remittance amount less than 2 million Baht.

3.2 International Payment

Worldwide network of branches/subsidiaries and correspondent banks of Bank of China provides you the safe and secure international payment.

International remittance service available to all account holders of BOCT.

Multiple currencies such as USD, GBP, HKD, JPY, AUD, EUR, SGD, THB and RMB, are available.

Remitter and beneficiary's name can be expressed in Chinese characters for your convenience.

4. Foreign exchange

BOCT provides exchange service of major convertible currencies in THB, USD, GBP, EUR, CHF, SGD, HKD, AUD, JPY, CNY for account holders, whereas only THB, CNY and USD are available for cash exchange.

Competitive Foreign Exchange rates offered.

Spot, forward and swap Foreign Exchange services available.

Multiple currencies in THB, USD, GBP, EUR, CHF, SGD, HKD, AUD, JPY and CNY available for all account holders.

Cash exchange among THB, CNY and USD available for both accounts holders and walk in customers.

5. Bank Cards

5.1 Great Wall International Debit Card

BOCT is the first bank in Thailand offering dual-currency debit card, with Chinese Yuan and Thai Baht in one card. You can enjoy the convenience of withdrawing cash from ATMs and paying for goods/services globally, when seeing the symbol of UnionPay . Also, you will have a peace of mind knowing that you do not need to worry about foreign exchange rate when using your card in mainland China if you are holding RMB deposit with us.

Dual currency (Chinese Yuan and Thai Baht).

Union Pay Brand.

Convenient cash withdrawal or merchant’s payment worldwide with the logo of .

No exchange rate risk for all your transactions in China via your RMB deposit account in Bank of China.



Safe and secure with the personal PIN number required for each transaction, no matter for cash withdrawal or shopping.

5.2 Great Wall International Credit Card

5.2.1 Dual Currency Credit Card

A Dual-Currency Credit Card, with Chinese Yuan and Thai Baht in one card, gives you superior benefits every time when you use this credit card all over the world. With the widespread merchant networks accepting logo of in Thailand and other 100 countries worldwide, you can enjoy the convenience in making purchases with this credit card. You don’t need to worry exchange rate risk when using in China, as long as your repayment is done through your Bank of China’s RMB account or paid in RMB.

Dual currency (Chinese Yuan and Thai Baht).

Union Pay brand.

No exchange rate risk for all your transactions in China as long as your repayment is done through your Bank of China’s RMB account or paid in RMB.

Enjoy installment program.

Enjoy rewards points benefits.

Interest-free period.

Cash advance service through all ATM with the logo of .

Enjoy Union Pay global service.

5.2.2 Single Currency Credit Card

Single currency credit card with Thai Bath can be used to pay for goods/services at any stores worldwide with the logo of , and to withdraw cash at any ATMs with the logo of around world.

Thai Baht currency.

Mastercard brand.

Enjoy installment program.

Enjoy rewards points benefits.

Interest-free period.

Cash advance service through all ATMs with the logo of .

Enjoy MasterCard global service.

6. Mortgage

Offering a variety of mortgage products to you and enabling you to get your own home through buying a new one from developers, purchasing a second-hand from the property market or refinance existing mortgage loan to BOCT.



Competitive interest rate.

For refinancing applicants from other banks, a special-rate to additional loan for renovation, decoration, and furniture purchase will be offered.

Mortgage arrangement for foreign property buyers is available.

7. Trade Finance

7.1 Letter of Guarantee

Letter of Guarantee is a written commitment issued by BOCT at the request of the

applicant to pay the beneficiary a certain sum of money up to a maximum amount

stipulated in the Letter of Guarantee in the event of default or failure to fulfil the

contractual obligations by the applicant under the contract signed between the applicant

and the beneficiary.

Letter of guarantee has a variety of categories and uses, applicable to goods, services,

technology trade, project contracting and construction, goods import-export declaration,

financing from financial institutions, large sets of equipment lease, preservation in

litigation , contractual obligation fulfilment, etc.

7.1.1 Bid Bond

A written document issued by The Bank to compensate the beneficiary within the amount

stipulated in the Letter of Guarantee in the event that the applicant of the guarantee

(Bidder) refuses to conclude a contract with the beneficiary, or withdraws or amend its bid

during the validity of bidding period or fails to present a performance guarantee to the

beneficiary after concluding the contract.



7.1.2 Advance Payment Guarantee

A written documents issued by The Bank to compensate the project owner or the buyer

within the amount stipulated in the Letter of Guarantee due to the failure of Applicant to

fulfil the contractual obligations after the project owner or the buyer makes the advance

payment.

7.1.3 Performance Guarantee

A written document issued by The Bank at the request of applicant to compensate the

beneficiary (the owner of a contracted project or the buyer) within the amount stipulated in

the Letter of Guarantee in the event of default by the applicant in due performance of his

contractual obligations

7.1.4 Quality Assurance Guarantee

A written documents issued by The Bank at the request of the applicant (the contractor /

the supplier) to compensate the beneficiary (the project owner / the buyer) within the

amount stipulated in the Letter of Guarantee in the event of the failure of the applicant to

fulfil the contractual obligation during the warranty period or maintenance period.

7.1.5 Payment Guarantee

A written document issued by The Bank at the request of the applicant (the buyer) to

compensate the beneficiary (the seller) within the amount stipulated in the Letter of

Guarantee in the event of the failure of the applicant to fulfil the payment obligations

under the contract to purchase goods, technology, patent or labour, etc.

7.1.6 Financing Guarantee

A written document issued by The Bank at the request of the applicant to compensate the

beneficiary (the another bank) who provides the loan facility to the applicant or his

subsidiaries/partners within the amount stipulated in the Letter of Guarantee in event of

the failure of the applicant to fulfil the financial obligation.



7.2 Import

7.2.1 Letter of Credit (L/C)

The Letter of Credit (L/C) is an irrevocable payment undertaking issued by BOCT at the request of the buyer/importer (the L/C applicant) in favour of the seller /exporter (the L/C Beneficiary) to fulfil the payment obligation to the L/C Beneficiary under the conditions that the L/C Beneficiary presents all documents as required in the L/C and the terms and conditions under the L/C are complied with.

The Letter of Credit (L/C) can be mainly divided into 2 types as follow;

Sight L/C: Payment will be made after the documents as required in the L/C is presented and the terms and conditions of L/C is complied with.

Usance L/C: Payment will be made at the maturity date after the documents as required in the L/C is presented and the terms and conditions of L/C is complied with.

7.2.2 Inward Collection

Entrusted by a foreign correspondent bank or an affiliated bank (a remitting bank) and according to their collection instructions. BOCT provides the collection and settlement services and delivers the relevant documents to the importer / buyer.

Inward Collection is suitable for the importer /buyer who wish to pay to the exporter/ seller with lower cost and simpler procedures than L/C.

The Inward Collection can be mainly divided into 2 types as follow:

Documents Against Payment (D/P at Sight), the importer/ buyer can receive the documents for disposing the goods after making the payment.

Documents Against Acceptance (D/A), the importer/ buyer can receive the documents for disposing the goods after making the acceptance and effecting the payment on due date as agreed terms with the exporter/ seller.



7.3 Export

7.3.1 L/C Advising

L/C Advising is the notification of the received L/C or its amendments to the beneficiary

by BOCT. This product can help the beneficiary (exporter) under the L/C timely to receive

the L/C or its amendments verified of their genuineness.

7.3.2 L/C Confirmation

L/C Confirmation is the irrevocable payment obligation undertaken independently by BOCT for the L/C Beneficiary (the exporter / the seller), in addition to the irrevocable payment undertaking by L/C issuing bank.

In case the L/C Beneficiary does not feel comfort with the L/C issuing bank’s credit risk or the country’s risk, the L/C Beneficiary can contact BOCT to provide the L/C Confirmation in favour of the L/C Beneficiary. BOCT will guarantee to effect the payment under the condition that the documents as required in the L/C are presented and all terms and conditions of L/C are complied with. L/C Confirmation can provide the double assurance of payment to the L/C Beneficiary.

7.3.3 Transfer L/C to the second beneficiary (beneficiaries)

Transfer L/C is a beneficial service for L/C Beneficiary (the exporter / the seller) who act as a middle man. After the L/C Beneficiary receives the transferable L/C issued by L/C issuing bank. The L/C Beneficiary (the first beneficiary) can request BOCT to transfer L/C to the second beneficiary (beneficiaries) under the conditions that the L/C issuing bank authorizes BOCT to be the transferring bank . The Transfer L/C can be made for the partial or the full amount of the L/C

7.3.4 Bill Negotiation under Letter of Credit

Bill Negotiation under Letter of Credit (L/C) is a service that BOCT provides the documents examination for L/C Beneficiary to ensure that the document presentation is complied with the terms and conditions of L/C and forward the documents to L/C issuing bank for reimbursement. After receipt of payment, BOCT will credit the net proceeds to the L/C Beneficiary’s account as instruction.



7.3.5 Outward Bills for Collection

Outward Bill for Collection is the service which BOCT provides the payment collection service from the importer / the buyer through their collecting bank. This kind of service is suitable for the exporter / seller who understand the credit status of the importer/ the buyer and has the sufficient funds for preparation and delivery of goods.

The payment instruction under Outward Bill for Collection which the exporter / the seller can use is mainly divided into 2 types

Documents Against Payment (D/P) – Under this type of collection , BOCT will provide the collection instruction to the collecting bank to collect the payment from the importer/ the buyer (the drawee) before releasing the documents to them

Document Against Acceptance (D/A) – Under this type of collection, BOCT will provide the collection instruction to the collecting bank to receive the acceptance from the importer / the buyer (the drawee) before releasing the documents to them.

7.3.6 Purchase / Discount the Bills under Letter of Credit & Collections

BOCT can provide the post-shipment finance facilities by purchasing the documents under L/C ( At Sight) or under collections (D/P at sight) or discounting the documents under L/C (Usance) or under collections (D/A) . With this kind of financing will assist the exporter / the seller to accelerate the funding circulation before obtaining the payment from the L/C issuing bank or the importer/ the buyer under collections.

7.3.7 Forfaiting (Discounting of Bills under Usance L/C without Recourse

Forfaiting (Discounting of Bills under Usance L/C without recourse) is the post-shipment financing service which BOCT provides to the L/C Beneficiary (the exporter / the seller) who wants to eliminate the credit risk of L/C issuing bank , the country risk of L/C issuing bank under Usance L/C . BOCT will discount the bills after receiving the acceptance by the L/C issuing bank through authenticated swift, and will credit the proceeds to the L/C Beneficiary’s account after deducting all charges and discounting interest.

7.4 RMB Cross-border Trade Settlement

BOCT’s experienced and professional trade service team provides the customer with suitable and tailor-made RMB trade settlement and financing solutions , including Import Trade Settlement(RMB Import Collection Bills , RMB L/C Issuance ), Import Trade Financing(RMB Trust Receipt Facilities under L/C, T/T, D/P, D/A) , Export Trade Settlement (RMB Export Collection Bills, RMB L/C Advising , RMB L/C Confirmation, RMB L/C Transfer) , Export Trade Financing (RMB Export Bills under L/C Negotiation, RMB Export Bills Advances, RMB Export Bills Discounting , RMB Forfaiting) to meet the customer’s financial needs for business expansion.

BOCT has the strong network of RMB Cross-Border Settlement. Until 2017, Bank of China Group is authorized to be the RMB Clearing bank in the following 11 countries and regions: Hong Kong, Macau, Taiwan, Malaysia, Australia, South Africa, Zambia, France, Germany, Hungary, and U.S.A (New York).



8. Treasury & Foreign Exchange Product

8.1 Foreign Exchange Spot Deal

Foreign exchange spot deal means that two parties enter into deals at the spot exchange rate of foreign exchange markets on the very day and complete corresponding foreign exchange deliveries on the second working day following the transaction date (T+2).

Customers entrust the bank with buying one currency and selling another, to achieve the conversion between different foreign currencies.

Trading currencies: all kinds of freely convertible currencies mainly including USD, THB and CNH.

8.2 Outright Forward

8.2.1 Forward Transaction of Foreign Exchange

Forward Transaction of Foreign Exchange refers to the foreign exchange transaction on a foreign exchange rate agreed by the buyer and seller under a foreign exchange contract, and for delivery on an agreed day, which is generally a certain day after the second working day after the transaction.

A customer entrusts one bank with the purchasing of a certain currency and the selling of another currency at a contractual foreign exchange rate on a specified settlement day to achieve the conversion between various foreign currencies.

The forward transaction can lock up the exchange rate and hedge exchange risk: the Client can fix the future FX cost or income exposure of the specific project;

8.2.2 Forward Transaction of Foreign Exchange

Optional forward transaction of foreign exchange refers to the foreign exchange forward deal that enables customers to settle with prescribed foreign exchange rate on any working day within a certain contracted period in the future. Customers can choose the settlement date by themselves.

Customers entrust Bank of China to settle with the contracted foreign exchange rate within a certain designated period, and implement the conversion between different foreign currencies by buying a kind of currency and selling another.

When the settlement date is uncertain, Bank of China can fix the foreign exchange rate of a certain period in the future at a level on the settlement date to fully lock up the exchange rate risk, and to reduce the probability of breach of agreement caused by customers’ failure to normally perform the trade contract.

8.3 Foreign Exchange Swap

The FX swap consisted of the two transactions with the same amount, different starting date and in opposite direction. The FX swap has near and far value dates and two agreed exchange rates.



The combination of foreign exchange spot and forward deals can lock up the exchange rate risk, which enable customers match up, with no need to bear risk of foreign exchange rate changes, the cash flows of assets in two foreign currencies to satisfy corporate demands.

Trading currencies: all kinds of freely convertible currencies mainly including USD, THB and CNH.

9. Corporate Loans

9.1 Export Buyer's Credit

Export buyer's credit is a medium-and-long-term financing facility provided by exporter's bank and supported by exporter's home government to the importer or its banks, with the purpose of promoting the export of capital goods and services such as homebred mechanical and electrical products, complete equipment and overseas contracted engineering projects.

Support from exporter' home country. Export credit, also called "Officially-Supported Export Credit", is a credit provided by the exporter's country for export goods of domestic financial institutions through the preferential policies in order to support the export of homebred capital goods and to strengthen the competitiveness of its home products. As the policy executors, each nation's Export Credit Agencies (abbreviated as ECAs) provide insurance, guarantee or direct preferential loans for the export credit.

Optimize exporters' asset-liability structures. Since export buyer's credit is the financing for importers or their banks. Exporters have safe foreign currencies collection and accelerated capital turnover through it.

BOCT will track and monitor the project developing circumstances, help the exporter and the borrower with business negotiations, define the financing proportion and settlement methods of export buyer's credit. Thus BOCT can endeavour to match the loan payment and settlement methods with the loan terms such as withdrawal time and withdrawal amount. The exporter transports goods, entrusts the international settlement department of the bank to process collection or L/C business according to the settlement method agreed on the contract, submits document to the borrower for its verification and send out a payment instruction. With all the preconditions satisfied, the exporter draws and uses the loan from the bank.

9.2 Project Financing Loan

Project Financing loans are issued to address the financing demand of the enterprises' project assets investment activities. Enterprises' investment activities in fixed assets include: infrastructure construction, technology transformation, new product development and manufacturing and related activities such as property development project, engineering project construction, technology and equipment purchase and installation.

Generally the loan amount is relatively large.



Generally the term is relatively long, most are long or medium term with installment schedule.

On the way of the collateral, except providing the necessary security, generally require taking the new added fixed assets of the project as mortgage.

Regarding the application process, the loans should be applied and approved on case

by case basis.

9.3 Working Capital Loan

Working capital loan is issued to meet customers' short term financing demand during the process of production and operation, thus ensuring the normal running of production and operation activities.

As an efficient and practical means of financing, working capital loan is one of the most popular credit products, characterized by the short loan term, simple procedures, stronger turnover, and lower financing costs.

In terms of the term, it can be divided into short-term working capital loan less than one year and one to three-year medium-term working capital loan.

In terms of the loan form, it can be divided into secured loan, which can be further divided into many forms such as guarantee, mortgage and pledge, and credit loan.

By the using method, it can be divided into the short term working capital loan that is applied and reviewed case by case and the credit line of the working capital loan within which can be easily borrowed, used and repaid during the bank's preset time.

9.4 Mixed Credit Line

Mixed Credit line refers to a flexible, convenient and recyclable product provided by

BOCT to the customers. BOCT may quickly extend the short-term credit to customers

regardless of its accumulated amount and frequency, as long as the balance of credit

extension is not over the standard of corresponding service.

With flexible arrangement, total mixed credit line can be further divided into limits for

different products such as loan, L/C, export bill purchase, letter of guarantee, bank

acceptance draft, acceptance draft discounting and so on. Mixed Credit line is applicable

in all credit extension services with a term within one year (inclusive), which can be

extended to over one year for letter of guarantee of tender, performance, advance payment,

customs and marine under the item of letter of guarantee.

Provide convenience to enterprises' short-term financial arrangement. Since credit line can be recycled, financial plan of enterprises may become more definite and



systematic. Enterprises needn't arrange funds for current operations under the credit line.

Meet the enterprises’ demand for general financing. Mixed Credit line includes varieties of limits for different products such as loan, L/C, letter of guarantee and other credit extension services, which covers key financing demands of customers. With approval of BOCT, such limit can complement and overlap each other, increasing its utilization.

Simplify approval formalities of credit extension of enterprises. After acquiring mixed credit line, the customers are entitled to decide how to use it and when to use it at their own discretion and do not apply the credit extension bank for approval item by item according to the provisions of the contract. Thus customers shall not go through the procedures of single credit extension approval, such as business information survey, guarantee conform and other formalities as required.

9.5 Syndicated Loan

Syndicated loan refers to financing method where two or more lenders provide funds for one or more companies with one loan agreement based on agreed term and conditions. The product mainly serves large group customers and large projects. With syndicated loan, the borrower can obtain large amount of long-term financing under uniform loan conditions. During the raising of syndicated loan, the borrower can boost its market influence and improve market image.

Large amount and long term. It can meet borrowers' demand for funds of long term and large amount.

Less time and effort for financing. It is usually the responsibility of the arranger for doing the preparation work of establishing the syndicate after the borrower and the arranger has agreed on loan terms by negotiation. During implementation of the loans, the borrower does not need to face all members of the syndicate, and relevant withdrawal, repayment of principal with interest and other management work related to the loans shall be fulfilled by the agency bank.

Diversified approaches for syndicated loans. The same loan syndications can include many forms of loans, such as fixed-term loans, revolving loans, standby L/C line on requirements of the borrower. Meanwhile, the borrower can also choose USD, HKD, CNY and other currencies or currency portfolio, if needed.

It can help the borrowers establish a good image in the market. Successful establishment of the syndicate comes from the participants' full recognition of the borrower's financial and operational performance, by which the borrower can build up their reputation.

Bank of China Hong Kong Syndicated Loan Center can offer help with its advantages.

9.6 Overdraft Account

It is one of the corporate loan accounts. With the overdraft account, customers can make cheque deposit and withdrawal, and apply for an overdraft limit to ease the use of fund.

Main currency for this account is THB.



Interest will be accrued for overdraft.

10. Personal Internet/Mobile Banking

10.1 Bank Account

Account overview: it displays all account information linked to online banking by customers, including account number, alias, type, currency, available balance and account balance;

Transaction details: customers can make inquiry about and download the transaction details of linked accounts, including transaction date, transaction brief, currency, cash/exchange, amount received, amount paid, balance and so on; customers can also make inquiry about transactions across various time span.

Term deposit account information: customers can make inquiry about the current status, currency, current balance and available balance of the term deposit account;

Account management: customers can change the alias of the account, cancel accounts

linked to Internet/Mobile banking, and link other account to Internet/Mobile banking.

10.2 Transfer and Remittance

Within Bank transfer: customers can transfer the funds in current account to his/her or other people's account, including: transfer among customers' accounts of the same currency, transfer among customers' accounts of different currencies (currencies exchange), and transfer to other people's current account in BOCT.

Domestic transfer: customers can transfer the funds in current account to other domestic banks’ account, There are two types of domestic transfer;

o Bulk Payment: T+1 and T+2 transfer

o Baht net

Overseas remittance: customers can remit the funds in current account to an overseas account, including: general remittance (remittance directly from a current account of USD or another currency) and RMB advance settlement of foreign exchange remittance.

Term deposit: customers can convert the funds in current account into term deposit, or transfer mature funds to certain current account.

Payee management: customers can store the information of frequently used payees; therefore they can simply find certain payee's information for online remittance without inputting every time.

Scheduled transactions management: by using this function, customers can manage the scheduled transfer and remittance transactions and the system handles the



transactions according to customers' selection (only personal scheduled transfer within bank in single currency is available at present).

Inquiry about online banking transactions: customers can make inquiry about whether the presented online banking transaction is accepted, and inquire about and print the historical transactions.

11. Corporate Online Banking

11.1 Bank Account

Account overview: it displays all account information linked to online banking by customers, including account number, alias, type, currency, available balance and account balance;

Transaction details: customers can make inquiry about and download the transaction details of linked accounts, including transaction date, transaction brief, currency, cash/exchange, amount received, amount paid, balance and so on; customers can also make inquiry about transactions across various time span.

Account management: customers can change the alias of the account, cancel accounts linked to online banking, and link other account to online banking.

11.2 Transfer and Remittance

Single Payment: customers can only do one transaction or payment.

Batch Payment: this function allows customers to create and send many transfers in one time by uploading a batch file.

Modify: in case a maker has created a failed or uncompleted transaction that have not authorized by an authorizer yet, corporate customers or maker can modify the transaction by this function.

Authorization: An authorizer has the right to use this function to authorize transactions that have been created by the maker.



The Bank recognizes that effective risk management is fundamental to good banking

practice. Accordingly, the Bank has established the framework for managing risk in each area of

its business to ensure that it has effective risk management mechanism in place. Over the past

few years, the Bank has been continuously analysing major risk factors which could affect its

financial operations and, where necessary, has adjusted its organizational structure and risk

management processes accordingly. This is to ensure that its risk management system is

effective and in line with international standards and in accordance with the principles of Basel

requirements.

The Board of Executive Directors, the Risk Management Committee, the Assets and

Liabilities Management Committee and the senior management all play significant roles in

setting and reviewing the sufficiency of the risk management policy and system. They also

define the risk management strategy, monitor and control the Bank’s risk to be at an appropriate

level, in compliance with the risk management policy approved by the Board of Directors.

The Bank’s risk management process comprises the identification of significant risks

which may potentially impact the Bank’s business operations, the assessment of each type of

risk, the monitoring and control of risks to an appropriate level, and the reporting of the status of

each type of risk to the relevant parties so as to enable them to manage and/or handle the risks in

a timely manner.

The operating environment and major risks that may affect the operations of the Bank, as

well as the Bank’s management of these risks, are as follows.

1. Credit Risk

Credit risk is the risk that a customer or a counterparty may be unable or unwilling

to meet a repayment obligation. The extension of commercial credit by the Bank includes

loans, advances, overdrafts, trade finance, treasury businesses and commitments, letter of

guarantees, letters of credit, retail loan, housing loan, and credit card etc. the Bank’s credit risk

management process includes: Independent due diligence investigation without any

administrative intervention; Scientific and democratic risk review, taking both business

developments and risk control into considerations; Approval based on strict decision making

discipline; and Accountability system of examination and follow-up evaluation.

1.1 The structure and responsibilities allocation

22 Risk Factors and Risk Management


On the aspect of corporate business, Corporate Business Departments and Branches are

responsible for Credit Rating, Credit Analysis and Credit Proposal case by case; Due Diligence

Team of Risk Management is responsible for Due Diligence Investigation; Credit Review

Committee is responsible for Credit Review; The CEO & Country Head is authorized by the

Board of Directors of the Bank for credit approval no more than THB 2,000 million. Credit

approval over THB 2,000 million shall be submitted to the Board of Directors for approval. For

the post-approval follow-up and monitoring, Corporate Business Departments and Branches are

responsible for annually review; while Risk management Department shall be the counter-

checker. Additionally, Risk Management Department is also responsible for the annual credit

examination.

On the aspect of retail banking, the Credit Card Department and Personal Loan

Department are responsible for expanding customer base of credit card business and mortgaged

housing loan business. Housing loan amount exceeding THB 20 million is subject to the

approval of Credit Review Committee.

1.2 The scope and nature of risk measuring, monitoring, and reporting system

According to Board of Directors’ meeting’s resolution, the Bank stipulated “Credit Risk

Policy (Version 2017)” to perfect credit risk management. The Bank promoted specialized and

differentiated credit risk management practices according to the nature and characteristics of

different businesses, further improved credit risk limit-setting mechanism and adjusted limits

according to market changes.

For new credit cases, Corporate Business Departments and Branches conduct insight credit

analysis to know the customer and understand the market situation of the customer, and also

conduct industry analysis as well as forward-looking analysis; Due Diligence Team, Credit

Review Committee and the Approver strictly implement credit screening process. The

consideration covers customer financial and non-financial information, credit facility

information, borrower’s history repayment record, collateral analysis, risk analysis, conclusion,

and suggestion or decision.

The Bank utilizes the uniform internal rating system developed by Moody’s for overseas

institutions of Bank of China Limited. The results from internal rating system are widely applied

in different areas, including credit approval, risk monitoring, limit setting, credit policy and risk

reporting.



The Bank hedges and mitigates credit risk majorly through the following 4 methods: (1)

Cash collateral, the cash shall be pledged in the Bank, and the Bank will freeze such cash in

bank’s system for the control of collateral; (2) Counter Guarantee from Other Financial

Institutions; (3) Corporate Guarantee, the Bank reviews the overall status and guarantee capacity

of such guarantors when implement review case by case and (4) Mortgage of immovable assets.

The Bank continued to strengthen management over credit approval and credit rating,

adhering to the principles and criteria of credit limits approval in order to ensure the quality of

new credit assets. The management policy of proactive withdrawal from high-risk customers

was reinforced, and the Bank withdrew from customers who posed high risks in terms of

finance, business management, and bank-enterprise cooperation.

The Bank generally measured and managed the quality of credit risk-bearing assets

based on the relevant rules and regulations of Bank of Thailand, which requires to classify loans

into six categories, i.e. normal, special mentioned, substandard, doubtful, doubtful of loss and

loss, among which loans classified in the substandard, doubtful, doubtful of loss and loss

categories are regarded as non-performing loans. In classifying credit assets, consideration was

given to various factors that affect the quality of credit assets but always under the core criteria

of the probability of asset recovery and the extent of loss. To obtain a loan’s final risk

classification, the Bank performs standardized processes according to the “Administrative

Measures for Credit Assets Risk Classification” in terms of classifying, checking, reviewing and

approving.

The Bank strengthened risk monitoring and pre-warning systems, reinforced major risk

event reporting system, and made the rating and inspection of high-risk customers more

frequently. the Bank also conducted credit review and credit examination of credit business

to scrutinize potential risks and actively implemented rectification measures. Loan portfolio

reports are also made to monitor the structure and concentration of credit risk, including country

risk report, loan portfolio, outstanding of industry, outstanding by rating, etc.

For the retail business, on one hand, the Bank has perfected Approval model for pre-loan

investigation; on the other hand, the Bank developed Behaviour Assessment Model in year 2017

in order to strengthen the post loan management in terms of transaction monitoring.

1.3 Credit Concentration Risk



Credit concentration risk is the risk from the Bank making lending, investment and other

contractual commitments to any Group or any sector at very high volumes. If losses occur, this

will affect the status and operations of the Bank.

The Bank manages credit concentration risk by controlling its Group concentration and

industry concentration. Single Group concentration is controlled by limiting the lending,

investment and other contractual commitments to any one borrower or any one project to no

more than 25% of the Bank’s total capital. The Bank also sets a limit on the total sum of lending,

investment and other contractual commitments to total borrowers that exceed 10% of the Bank’s

total capital to three times the total capital. These two limits are required by the Bank of

Thailand.

To control industry concentration, the Bank determines the lending limit to any industry

sector at an acceptable level to limit damages to the Bank’s capital in the event of a serious

incident with major implications on certain sectors.

As of December 31, 2017, groups of borrowers with exposure exceeding 10% of the

Bank’s capital had a combined exposure lower than the regulation. Although the Bank’s lending

to the manufacturing and commercial sectors is considered high as a proportion of total lending,

it is well diversified among various subsectors. Moreover, the Bank regularly monitors its

lending portfolio in order to maintain an appropriate level of diversification.

2. Market Risk

2.1 Risk management processes

Market risk means risk which may cause damage to the financial institution as a result of

the volatility of the price or value of position including assets, liabilities and obligations held by

the financial institution. Market factors which may affect such price or value are change on

interest rate, foreign exchange, equity price and commodity price. For BOCT, market risk arises

from both trading and banking book positions. Trading risk exposures are mainly generated

from customer based FX position. BOCT applies the Standardized Approach for market risk

calculation.

BOCT’s market risk management system is led and supervised by the Board of Directors,

Risk Management Committee and Assets and Liability Committee to ensure market risk taken to

be within a rational scope in accordance with risk-taking ability, monitoring ability, and



management ability; to rationally arrange sources and usages of funds, cut down on passive

mismatches and structural exposures, and strictly manage the structural exposures. According to

the business development requirement, the authorizations to Treasury Departments will be

adjusted if necessary.


The Board of Directors of BOCT takes the responsibility to approve market risk

management policies and procedures and determines market risk limits. Treasury Department is

the market risk limits taking unit which is responsible for monitoring and reporting market risk

related to businesses, and ensuring that the level of market risk is within the risk limits

determined by the Board of Directors. Accounting & IT Department and Risk Management

Department are responsible for implementing market risk management policies, and identifying,

measuring, monitoring, controlling and reporting market risk.


The market risk management tools for different posts are as following:

Treasury Department as front office: Thomson Reuter Eikon System, Murex System;

Risk Management Department as middle-office: Murex system;

Accounting & IT Department as back office: Murex system.

Mark-to-Market is an important tool in daily risk monitor and control. In normal case,

relevant data shall be directly quoted from the market. BOCT also ensures the overall procedure

in collecting data to be independent from the Front Office in order to avoid interest conflicts or

data manipulation.

BOCT conducts transactions strictly in accordance with the parent bank’s approval of

counterparty credit line, conduct transactions for customers under credit line or collateral.

2.4 Policies for managing and controlling risks

The size and scope of BOCT’s existing market risk are relatively limited, and the market

risk management is strict, reasonable, and reliable, so BOCT’s market risk level is relatively low

and the management is sufficient. Because of limited market risk exposure, BOCT maintains the

current limits, improves the efficiency of position monitoring, controls the scope of derivative



products, carries out new product prudently, adjusts interest rates if necessary, and improves the

efficiency of utilization of funds.

2.5 Guidelines for setting risk controlling limits

Currently, BOCT’s market risk mainly comprises foreign exchange rate risk. In order to

manage market risk, BOCT strictly implements the limit control mechanism that is composed by

following indicators: (1) Credit limit with major counterparties, (2) FX exposure limit at end of

each business day, (3) Profit/loss (P/L) limit and (4) PVBP.

For security investment (Bond), bonds are purchased from Bank of Thailand for regulatory

purposes. Risk indicators including VAR, PVBP and duration are used to monitor the movement

of bond prices. These risk indicators are being monitored on daily basis and reported to parent

bank and the Board of Directors monthly and quarterly, respectively.

2.6 Interest Rate Risk in Banking Book

Interest rate risk in Banking book is the risk or potential loss to earnings and economic

value of the bank due to the change in interest rate. This interest rate risk arises from differences

in the maturity and re-pricing dates of assets and liabilities. These mismatches are actively

monitored and managed as part of the overall interest rate risk management process which is

conducted in accordance with the bank’s risk management policies.

3. Operational Risk

3.1 Risk management processes

Operational risk refers to the risk of loss resulting from inadequate or failed internal

process, people and system, or from external events, includes legal risk but excludes strategic

and reputation risk. Operational risk exposures are managed through management processes that

focus on risk identification, assessment, control and monitoring. Operational Risk Management

framework is stipulated to consistently identifies and assesses specific operational risk points

and ensure that the impact of operational losses could be minimize and controlled via the

following process: identify and understand the business areas to be assessed and the business

process; identify and assess the inherent risks; to identify and assess adequacy and effectiveness

the control of inherent risks; to identify and assess residual risks; to determine whether to accept

the residual risks; to determine the rectification plan for the unacceptable residual risks;



to monitor and report the accepted residual risks.


All Business Units and staffs is responsible to systematically management operational

risk according to the Bank’s Three Lines of Defence and shall follow the rationales of

comprehensive control, timely adjustment, matching cost with benefit, and accountability when

the risk arise from within its internal processes. The Bank’s products and services also enhanced

an effectiveness of operational risk assessment and incorporate strengthened daily monitoring at

departmental and staff level in order to improve self-control capability.

The Risk Management Department is responsible for the overall planning of

operational risk management policies, directing, examining, monitoring and assessing the

work of operational risk management.


The Bank stipulated policy and measures of operational risks and control which cover all

major operational risk points and each department shall monitor its operational risk management

according to its regulation. BOCT also clarified the working process of operational risk

accidents management, all operational risk accidents shall be reported and rectification measures

shall be taken in time.

Operational Risk Management tools such as Risk and Control Assessment, Key Risk

Indicator and Loss Data collection to enhance the capacity to identify, assess and monitor

operational risk, implements clearly defined operational risk management reporting framework

and improves the communication and integration of operational risk management information

throughout the Bank. Reported Loss are recorded and risk that represent significant impact shall

be closely monitored and reported to senior management and Risk Management Committee.

The Bank uses Group Risk Monitoring & Analysis Platform (GMAP) system to conduct

operational risk real-time monitoring, which coverage the major business line’s business

transaction activities, staff behaviors and identify risks by analyzing the event according to the

risk alarm modules.

4. Liquidity Risk



Liquidity Risk is the risk caused by an inability to meet obligations when they come due

because of an inability to obtain sufficient funds to meet funding needs at appropriate costs

within a pre-specified time period, and/or to convert asset into cash, this may cause a

malfunction.

Liquidity risk is continually analyzed and assessed to ensure adequate liquidity for

business operations within an acceptable risk appetite and appropriate management cost. Our

efforts include a liquidity gap analysis covering normal and crisis situations in which impact

analyses are conducted at three scenario cases, i.e., a bank’s specific liquidity crisis, a market-

wide liquidity crisis, and a combination liquidity crisis. The Bank has also adopted a Business

Contingency Plan to mitigate the severity of the impacts that may occur and test the plan at least

once a year. In addition, the bank has managed the risk on liquidity due to the Basel III i.e.

Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR).

With regard to the regulatory requirements on Liquidity Coverage Ratio (LCR) which are

effective from 1 January 2016, the bank is required to maintain a LCR not less than 80% in

2017.

5. Compliance Anti-Money Laundering

5.1 Capital Adequacy

Capital adequacy risk factors cover the type, quantity and quality of the Bank’s risk assets

as well as the Bank’s earnings’ capacity. In times of severe economic and financial difficulties,

the quality of the Bank’s assets, including its investments, may deteriorate. The value of the

Bank’s assets and/or investments and/or collateral may also decline, thereby increasing the

Bank’s risk weighted assets. As a consequence, the Bank’s earnings may also be affected,

resulting in a reduction of capital and leading to a corresponding decline in its capital adequacy

ratio.

The objective of the Bank’s capital management policy is to maintain an adequate level of

capital to support growth strategies within an acceptable risk framework, as well as to meet

regulatory requirements and market expectations.

In compliance with the Bank of Thailand’s supervisory review process guidelines under

Basel II-Pillar 2, the Bank’s capital management process assesses the overall risk and capital

adequacy under the Internal Capital Adequacy Assessment Process (ICAAP). The process



covers assessments of all substantial risks to the Bank’s operations under projected normal and

stressed scenarios, so that the Bank can effectively manage its risks while ascertaining and

ensuring that it has a sound capital base in line with its risk profile.

The Standardized Approach (SA) is currently used to measure credit risk, market risk and

operational risk for computing regulatory capital requirements under Pillar I. The change from

Basel II to Basel III, starting January 2013, has not significantly affected the calculation of

capital adequacy.

5.2 Strategic Risk

Risk associated with strategic initiatives which might negatively impact the Bank’s

revenue, capital, and viability. Strategic risk arises from the inappropriate implementation of

strategy and action plans; or formulation of plans that do not conform to crucial internal

environments and/ or external environments.

The Bank has a strategic risk management policy which consists of strategy formulation,

implementation, evaluation and adjustment.

ACD is responsible for preparing documentation on actual versus budgeted figures, and to

report performance to ALCO on a quarterly basis.

There is a direct interface between Parent Company and the Bank finance systems,

through which Parent Company accesses financial information as and when required. The

business performance of the Bank is also formally reported to the Parent Company on an annual

basis.

The Bank has also commissioned a consultancy to formulate strategic and action plans,

and a HR and organisation framework aligned with the internal and external environment.

5.3 IT Risk/Technology Risk

The bank implements the “Three lines of defence” management system for technology risk

governance. Technology risk exists in all business and operational processes of the Bank. In

order to effectively control and mitigate the technology risk, the Bank clearly defines the

responsibilities of the Board of Directors, senior management, various departments/branches in

the management of technology risk. Pursuant to the Technology Risk Management Policy, the



Bank categorizes technology risk management into several aspects. They are IT governance,

information asset management, use of cryptography, security management, physical and

personnel security, system development and change management, information processing,

communications networks, management of service providers, cyber security controls and others.

The Bank has established the technology risk management system and procedures to identify,

assess, monitor, control and report the technology risk.

5.4 Reputation Risk

“Reputational risk” herein is a derivative risk, referring to the risk of negative impacts or

losses on the Bank’s image, brand and reputation that are caused by media attention to or

negative news coverage on BOC Group’s business operation, management and other behaviors

or external events involving BOC. Risk that the general public (e.g. customers, business

partners, investors, regulatory authorities, etc.) will have a negative image or lose confidence in

the Bank, resulting in an adverse impact to the Bank’s revenue and capital. Sources of reputation

risk include non-conformance with code of conduct, social expectations, service standards,

breach of agreement, poor customer service etc.

The Bank does not engage in business activities that give rise to material levels of

reputation risk.

6. AML

Financial Institutions have a duty under Anti Money Laundering Act B.E. 2542 (1999) of

Kingdom of Thailand to comply with such law. Financial Institutions must have an appropriate

measure to mitigate, detect any client who commits an offense of money laundering, any manner

whatsoever for the purpose of concealing or disguising the true nature of acquisition, source,

location or transfer of the asset connected with the commission of an offense. In additions, the

terrorism financing also posing a high risk on the offense per AML CFT Act, as refers to

activities that provide financing or financial support to individual terrorist or terrorist groups.

BOCT becomes aware of and stipulate the policy/procedure i.e. KYC, CDD etc to scrutiny

mitigate such risk. Besides local regulations, BOCT also derived the stringent approached on

AML from BOCHK policy according to the merger of BOCT as a subsidiary of BOCHK on

January, 9th 2017.



Performance Results

The bank has reported audited net profit of 76 million Baht in 2017, 192.31% increase of 50 million Baht from 26 million Baht recorded in 2016.

Unit: Million Baht Profit & Loss Statements 2017 2016 % Change

Net Interest Income 629 287 119.16

Net Non-Interest Income 310 320 (3.13)

Total Income from Operation 939 607 54.70

Expenses from Operation 712 624 14.10

Operating Profit 227 (17) (1,425.29)

Provision of doubtful account 131 (51) (356.86)

Profit before tax 96 34 182.35

Corporate Income Tax 20 8 150.00

Net Profit after Tax 76 26 192.31

In 2017, the bank’s net interest income increased to 629 million Baht, increased by 119.16%. The major factor of increase was growth in loan outstanding and interest rate spread. The non-interest income amounted to 310 million Baht. The operating profit amounted to 227 million Baht, and the bank reserved the provisions related to bad debt and doubtful account of loans in the amount of 131 million Baht for prudential purpose.

In 2017, the corporate income tax expenses was 20 million Baht, This comprises of yearly income tax and deferred tax by 34 million Baht and (14) million Baht, respectively.

In 2017, net earnings per share for the bank amounted to 0.08 Baht.

32 Performance Results and Financial Position Analysis


Financial Position Unit: Million Baht

Key Balance sheet Items 2017 Balance

2016 Balance

% Change

Total Assets 45,933 43,949 4.51

Loan to customers (Less deferred revenue) 31,014 21,652 43.24

Interbank and money market in asset (Less deferred revenue) 11,315

18,465 (38.72)

Total Liabilities 35,851 33,947 5.61

Deposits 21,204 21,996 (3.60)

Interbank and money market in liabilities 11,261 10,907 3.25

Shareholder’s Equity 10,082 10,002 0.80%

Total assets as of 31 December 2017 were 45,933 million Baht which was increase of 4.51% from the prior year. Loan to customers net of deferred revenue were 31,014 million Baht or increased of 43.24% from the end of 2016. And interbank and money market were 11,315 million Baht or decrease of 38.72% from the end of 2016.

Total liabilities as of 31 December 2017 were 35,851 million Baht which was increase of 5.61% from the prior year. Deposit items were 21,204 million Baht or decrease of 3.60% from the end of 2016. And the interbank and money market were 11,261 million Baht or increase of 3.25% from the end of 2016.

Shareholder’s equity of the bank as of 31 December 2017 was 10,082 million Baht which increase of 0.8% from the end of 2016.

Asset Quality At the end of 2017, the Bank’s non-performing loans (NPLs) amounted to 789 million Baht. The NPLs to total loan ratios before and after allowance were as following:

Percentage (%) Key Asset Quality Ratio 2017 2016

NPLs of total loans before allowance for doubtful account 2.22 3.60

NPLs of total loans after allowance for doubtful account 1.36 2.39

Capital Adequacy Ratio As of 31 December 2017, the Bank had regulated capital fund of 12,275 million Baht consisting of tier-1 capital 9,949 million Baht and tier-2 capital 2,326 respectively. The BIS ratio stood at 33.96% of regulated capital fund per total risk assets.

Percentage (%) Capital Adequacy Ratio 2017 2016

Ratio of tier 1 capital to total risk weighted asset 27.53 37.78

Ratio of tier 2 capital to total risk weighted asset 6.43 -

Ratio of total capital to total risk weighted asset 33.96 37.78



Credit Rating On 21 September 2017, Fitch Ratings (Thailand) has assigned BOCT a National Long-Term

Rating of ‘AAA(tha)’, with a Stable Outlook. The National Short-Term Rating is assigned at

‘F1+(tha)’.

34 Corporate Governance


The Bank recognizes that good corporate governance is a crucial factor forming a basis of business sustainability and building trusts to its customers as well as remaining the reputation of BOC Group. Thus, the Bank endeavours to establish and promotes the culture of good corporate governance in conducting business. The Bank sets up the organization structure, operational guidelines and responsibilities for good corporate governance and its operation strictly comply with the relevant laws and regulations.

In order to sustain BOC Group’s reputation and enhance the Bank’s market position in Thailand banking industry, achieve our strategic objectives, the Bank is committed to conducting its business with integrity and ethics. At the mean time, the Board of Directors that oversees the Bank’s operation recognizes that risk management and internal control is critical to achieve a good corporate governance. Therefore, the Board of Directors has set up committees to monitor and oversee the Bank’s operation by deploying professionals in each committee to screen matters and make proposals to the Board of Directors for efficient performance of the Board of Directors. The committees include the Executive Committee, the Audit Committee, and the Risk Management Committee. These Committees must report their progress to the Board of Directors on a regular basis.

Board of Directors

Objective

The Board is responsible, by law, for governing the Bank’s business conduct, and responsible to all the Bank’s stakeholders: customers, shareholders, employees, service providers and the community.

The Management is responsible for the daily operations of the Bank. The role of the Board is to ensure that management operates in the best interests of the Bank and its stakeholders by working to elevate corporate economic value of the Bank.

Composition & Term of office

The Board of Directors has 8 members by 31st December, 2017 including

Mr. Li Jiuzhong* Chairman

Mr. Zhang Lei* Executive Director

Mr. Li Feng* Executive Director

Mrs. Li Jun Executive Director

Mr. Wu Lin Executive Director

Mrs. Liu Guizhen Executive Director

Mr. Krish Follett Independent Director

Mr. Chatchai Virameteekul Independent Director

Mr. Chaiyuth Sudthitanakorn Independent Director



* Mr. Cheng Jun resigned from the position effective on 29th December, 2016 and replaced by

Mr. Li Jiuzhong by election by the Board of Directors effective on 8th May 2017. Mr. Zhang

Lei resigned from the position of the CEO & Country Head and Director of the Bank effective

on 26th December 2017 and replaced by Mr. Li Feng as a new CEO & Country Head of the

Bank effective on 27th December 2017.

At every annual general meeting, 1/3 (one-third) of the number of Directors shall retire from

office. If the number is not a multiple of 3 (three), then the number nearest to 1/3 (one-third)

must retire from office. The Director who has been in office for the longest term shall retire. A

retiring Director is eligible for re-election.

Duties and Responsibilities

The Board, as the shareholders’ representative, has the role, duty, and responsibility to supervise

and oversee the management and operation of the Bank to ensure that the business and affairs

are conducted with honesty, with avoidance of conflict of interest, and to the best interests of the

Bank. In general the Board has the duty to supervise the Bank in establishing policies, ensuring

appropriate management process and overseeing that the system of monitoring and auditing

complies with the stipulated policies with details as follows:

1. To define overall direction and strategic objectives of the Bank, to consider and

approve policies and direction of the Bank’s operation proposed by management, and to

ensure that they are implemented efficiently and effectively to protect the interests of

the Bank and its shareholders.

2. To ensure the institution of internal business code and ethics, and code of conduct for

Directors, persons with management authority, and employees.

3. To oversee that the Bank’s management establish policies, measures and control over

the management of various risks, which at the minimum must include credit, market

and investment, liquidity, operational, reputational, legal and strategic risks. In this

regard, the Board has the approval authority over such policies. In addition, it must

review the actual operational strategy and the policies of such matters on a regular

basis.

4. To review the Bank’s operations continuously to ensure the executive Directors and

management’s compliance with the laws and approved policies.



5. To ensure competent management of the Bank including ensuring appointment of

qualified persons with management authority.

6. To ensure the institution of effective systems for internal control and audit.

7. To ensure the management refers significant financial issue to the Board and to ensure

that the Board receives sufficient information from the management to discharge its

authorities and duties effectively.

8. To ensure that the Bank has in place the policies concerning granting credits and

investment to persons relating to the Bank.

9. To review and approve all credit proposals over the limits delegated to the Chairman of

Executive Committee.

10. To ensure that there exists appropriate check and balance in the management and/or

major shareholders of the Bank, in particular the proportion or the number of

independent Directors on the Board.

11. To consider appointing other subcommittees, such as the Executive Committee, Risk

Management Committee, Audit Committee and others that as deemed appropriate and

necessary to the Bank in order to ensure that the management system adheres to the

approved policies.

12. To consider and approve duties and responsibilities of sub committees, changes in their

composition as well as changes that materially affect the subcommittee works.

13. To ensure that there is a process for prompt submission of management letters from the

external auditor and management to the Board. The Board should receive these letters

within 4 months after the end of an accounting period. If there is a long delay, the

Board should seek reasons for the delay from the management.

14. To require Directors to attend at least half of the Board Meetings every year.

Executive Committee

Objective

The objective of the Executive Committee is to oversee the transaction & business of routine,

administrative matters that occur between regularly scheduled meetings of the Board of

Directors. The Executive Committee is responsible to the Board of Directors, and shall report to

the Board of Directors at the next Board of Directors’ Meeting on the official actions it has

taken on the substantial matters.



Composition & Term of office

There are four members of Executive Committee which are all executive directors of the Bank.

The term of office of members of Executive Committee is equal to that of their directorship

unless the Board of Directors determines otherwise.


The crucial duties and responsibilities of the Executive Committee are to ensure that the Bank's

operations are in accordance with its strategies and policies and regulations. The Committee is

empowered to administer and manage the Bank's business, and perform tasks assigned by the

Board of Directors, with an aim to accomplish the Bank's vision and be in alignment with the

Bank's mission, as well as to promote management practices that are in compliance with the

Bank's core values.

Audit Committee

Objective

The Audit Committee (the “AC”) is a standing committee of the Board of Directors (the

“Board”). The purpose of the AC is to assist the Board in fulfilling its oversight responsibility

for BOCT relating to：

1. The integrity of financial statements and the financial reporting process; The systems of

internal control;

2. The performance of internal audit functions and internal auditors;

3. The appointment of external auditors and the evaluation of the external auditors’

qualifications, independence and performance;

4. The periodic review, where appropriate, and the annual audit of the Company’s

financial statements;

5. Compliance with applicable accounting standards and legal and regulatory

requirements on financial disclosures; and

6. Enhancing the corporate governance framework of the Company.

The function of the Audit Committee is oversight. The Management is responsible for the

preparation, presentation and integrity of the financial statements. The external auditors are

responsible for planning and carrying out a proper audit of the BOCT’s annual financial



statements, for the review of half-yearly financial statements and (if appropriate) for performing

agreed-upon procedures of quarterly financial results. Both the Management and the external

auditors are ultimately accountable to the Board and the shareholders.

Composition and Term of Office

There are three members, and all of them are independent directors. The Audit Committee

members are fully qualified in accordance with the qualifications prescribed by the Securities

and Exchange Commission, and/or the Capital Market Supervisory Board, and/or the Bank of

Thailand, and have sufficient knowledge and experience in reviewing reliability of financial

statements.

The term of office of each member of the Audit Committee shall be determined by the Board of

Directors.


1. To review and monitor the effectiveness of the financial reporting processes.

2. To review and evaluate whether the Management is setting the internal control to

make all employees understand their roles and responsibilities.

3. To review the reports submitted by internal audit and external audit, together with the

Management’s response to any identified weaknesses on internal control.

4. To review significant accounting and financial reporting issues raised by internal and

external auditors.

5. To review reports from regulators regarding legal and compliance matters that may

have a significant impact on the financial standing and reputation, and ensure that the

matters have been properly addressed and any significant impact of these issues is

reflected in the financial statements.

6. To report conflict of interest transactions, fraud, corruption, internal control failure,

and non-compliance with related laws that have material effects on the financial

position or performance as required by the Bank of Thailand and other regulators to

the Board for further corrective actions.



7. To report to the Board to update the Board about the AC’s activities and consider

other topics as defined by the Board, ensure that the Board is aware of matters which

may significantly impact the Company’s financial condition or business affairs of the

business and make appropriate recommendations.

8. To review and assess the adequacy of the corporate governance framework (including

the roles and responsibilities of other Board Committees, where appropriate) to ensure

financial reporting, risk management and internal control meet governance standards.

9. To consider, select and propose the appointment of the Bank’s auditors, including

their remunerations.

Risk Management Committee

Objective

In performing its duties, the Committee shall maintain effective working relationship with the

Board of Directors to ensure efficient and effective risk management operation by the Bank.

Each committee member must fully appreciate his or her responsibilities, as detailed in the

relevant regulation/laws. He or she must be knowledgeable in banking and financial business as

well as the risk management operation and control process of the Bank.

Composition and Term of Office

The Committee comprises of not less than 6 members consisting of the executive directors,

Head of following department include Risk Management Department and Accounting & IT

Department, which are appointed by the Board of Directors, being the combination that can

ensure effective coverage of the overall major business and risk management operation of the

Bank.


1. Determine the risk management policy to present to the Board of Directors for the

consideration of overall risk management. This must cover the various types of risk,

i.e. strategy, liquidity, credit, market, operational or other significant risks to the Bank.

2. Determine strategies in consistency with risk management policy, which can measure,

monitor, and maintain acceptable risk levels of the Bank.

3. Approve Risk Models.



4. Control, monitor, measure risk exposure of the Bank and ensure that Bank including its

branches strictly follow the Bank’s Risk Management Policy and BOT regulations.

5. Review the adequacy of the Bank’s risk policy and management, which includes the

system’s effectiveness as well as the implementation of the prescribed policy.

6. Regularly report to Audit Committee regarding areas to be improved in accordance

with the prescribed policy and strategies.

Summarizations of Meetings hold by Board of Directors and Committees in 2017

Meeting in 2017 Board of Directors

Executive Committee

Risk Management Committee

Audit Committee

Numbers of the Meetings 5 13 6 7

Mr. Cheng Jun 0 -

Mr. Li Jiuzhong 2 - - -

Mr. Zhang Lei* 5 13 3 -

Ms. Li Jun 4 13 6 -

Mr. Wu Lin 5 13 3 -

Ms. Liu Guizhen 3 13 3

Mr. Krish Follett 5 - - 7

Mr. Chatchai Virameteekul 5 - - 7

Mr. Chaiyuth Sudthitanakorn 5 - - 7



Directors' remuneration for year 2017

Independent Directors: Each independent director shall receive committee fee at THB 80,000

(Eighty Thousand) per month together with the annual payment of the meeting attendance fee at

the end of each calendar year according to the following formula:

The chairman of the Audit Committee shall receive the extra payment of THB 100,000 (One

Hundred Thousand) per year, to be paid at the end of each calendar pro rata.

1 Mr. Li Jiuzhong Chairman

2 Mr. Zhang Lei Director

3 Mrs. Li Jun Director

4 Mrs. Liu Guizhen Director

5 Mr. Wu Lin Director

6 Mr. Krish Follett Independent Director 240,000.00 960,000.00 100,000.00 1,300,000.00

7 Mr. Chatchai Virameteekul Independent Director 240,000.00 960,000.00 - 1,200,000.00

8 Mr. Chaiyuth Sudthitanakorn Independent Director 240,000.00 960,000.00 - 1,200,000.00

Directors' remuneration has been included in their compensation & benefit from BOC (T)

No. Director's Name Meeting

Attendance Fee (12 times)*

Total remuneration /Person/Year

Committee FeePositionChairman of

the Audit Committee



External Auditors

Engaged Office

EY Office Limited

33rd Floor, Lake Rajada Office Complex 193/136-137 Rajadapisek Road, Klongtoey, Bangkok

10110 Thailand

Name of statutory auditors

1. Ms. SomJai Khunpasut Certified Public Accountant (Thailand) No. 4499

2. Ms. Ratana Jala Certified Public Accountant (Thailand) No. 3734

3. Ms. Ratchada Yongsawatwanit Certified Public Accountant (Thailand) No. 4951

Remuneration of Auditors

The audit fee of the Bank for the year ended 31 December 2017 was 3,000,000 plus out-of-

pocket expenses.

Items Baht

1) For the six-month period ending 30 June 2017 1,500,000

2) For the year ending 31 December 2017 1,500,000

BOCT Activities 43


Thailand Cross-Border Trade and Investment Conference

On 9th December, 2016, Mr. Somkid Jatusripitak, the Deputy Prime Minister of Thailand visited

Bank of China (Head Office) in Beijing. The Deputy Prime Minister and Bank of China have a

covenant to organized the “Thailand Cross-

Border Trade and Investment Conference” to

develop SME’s cooperation between the two

countries, support the One Belt One Road

Initiative and Thailand 4.0 policy. BOCT has

collaborated with Thailand Board of Investment

(BOI) to organize the “Thailand Cross-

Border Trade and Investment Conference” on

May 18, 2017 at Grand Hall, BITEC Bangna. The

opening speech was made by the Deputy

Prime Minister Mr. Somkid Jatusripitak,

then the MOU signing cooperation

ceremony and business matching event

followed by. There were more than 400

Chinese and Thai entrepreneurs attend the

conference.

Mr. Somkid Jatusripitak, Duputy Prime Minister of Thailand and Mr. Liu Qiang, Executive Vice President from Bank of China (Head Office Beijing).



RMB Investment Forum

Year 2016 marked the 7th anniversary of

China’s initiation cross-border execution

of RMB. With the addition of the RMB

joining the International Monetary

Fund’s Special Drawing Right (SDR)

basket, the pace of RMB

internationalization has become even

further accelerated. Bank of China

(Hong Kong) together with Bank of

China (Thai) has organized the RMB

Investment Forum on January 12, 2017 at

W Bangkok Hotel to promote the use of

RMB offshore exchanges and outward

investment of Mainland China funds in

overseas capital markets by inviting the

industry experts from exchanges, fund

management companies and financial

institutions in China, Hong Kong and

Thailand to attend the forum.

Dr. Vachira Aromdee, Asistant Governor, Financial Markets Operation Group, Bank of Thailand (Third from the left), Mr. Lin Jingzhen, Deputy Chief Executive BOCHK (fourth from the left) and other guests and speakers.

BOCT Activities 45


Road Show for Bank of China SME Cross-Border Trade and Investment Conference

To further promote the SME’s Cross-Border Match Making Services between Thai SMEs and

other companies in other countries, Bank of China (Thai) hosted the “Road Show for Bank of

China SME Cross-Border Trade and Investment Conference” on February 14, 2017 at Anantara

Siam Bangkok. We invited

related experts and guests

speakers from BOC

Headquarter to Bangkok in

making keynote speeches

and shared their

experiences in order to

absorb more Thai SMEs to

participate in BOC Global

SME Cross-Border

Matchmaking Event.

Mr. Wang Jian, General Manger of SME Department from BOC (Head Office Beijing), gave key note speech in the Conference.

46 BOCT Activities


Corporate Social Responsibility

BOCT distributed for long-term development of our community and create values and superior

returns to our shareholders. While expanding our business and strengthening our operation and

service, we also initiated various corporate social responsibility (CSR) activities which were

beneficial to our society and people.

Caring for Community

In June 2017, “BOCT care and share day”

were arranged at Sirindhorn International

Environmental Park, in Petchaburi Province,

which allow participants to release fish into

the sea for environmental sustainability. The

activity received great success with 281

employees from both BOCT and BOCHK

joining.

Caring for Our People

BOCT has always regarded our employees as our great assets. To promote our Core Values of

“Integrity, Performance, Responsibility, Innovation, and Harmony”, we managed our human

resources and put great care in our employees to continuously attract, retain, and develop our

talents.

Employee Development

We realized the importance of employee development and worked to create development

opportunities for employees. In 2017, variety trainings of 3,407.5 hrs were provided; not only

compulsory training courses such as compliance and risk management, we also support our staff

to grow professionally by arranging functional and competency trainings for staff from different

levels.

With support from both Head Office and Bank of China (Hong Kong) Limited, we received

great assistance upon employee development; 1,312.5 hrs trainings in both Thailand and

overseas were arranged by both organizations, and diversified training programmes and

We promoted nature protection for environmental sustainability.

BOCT Activities 47


We appreciated our employees’ devotion and loyalty.

methods were provided to suit staff’s capability and preference. Also, as multi-cultural

organization, we had continuously supported our employees with language training.

Employee Engagement

The Bank had put great effort in intellectual commitment with our people, as an individual or

group, to build and sustain strong business performance, as well as to create pleasant and caring

work environment. We initiated engagement activities such as Team building and New Year

Party, to harmonize our employees, and to create communication channel to convey message

from top managements and guide the direction of our organization. In addition, VIP customers

were invited to the Bank’s New Year Party to show our gratitude for their continuous support.

Award and Recognition

We respected our employee and valued our staff’s performance and contribution. “Long Service

Certificate” had been annually held for 5 years consecutively as to show our appreciation upon

loyalty of our people and their continuous

support to the Bank. Employees who served the

Bank for 5, 10, 15, and 20 years would be

granted with Long Service Certificate by top

managements in front of other staff during New

Year Party. We complimented our people

publicly by posting announcement of their

outstanding performance and devoting on our

internal announcement board, and announced

it via e-mail to all employees.

48 The Board of Directors and Top Executives


1. Mr. Li Juizhong

Chairman of the Board of Directors

Aged 55, is the Chairman of the Board of Directors of BOCT, and also

holds a position of Executive Director of BOC Hong Kong (Holdings)

and Bank of China (Hong Kong) Limited. He has been the Chief Risk

Officer of the BOCHK group since March 2010, and in charge of the

Group’s overall risk management function, overseeing the BOCHK’s

Risk Management Department, Legal & Compliance and Operational

Risk Management Department, and Financial Crime Compliance

Department. He is also a Director of Bank of China Credit Card

(International) Limited (“BOCCC”) and Bank of China Life. He was a

Director of Nanyang Commercial Bank Limited (“NCB”) and Nanyang

Commercial Bank (China) Limited (“NCB (China)”). Mr. LI has over

30 years of experience in the banking industry. Since joining BOC in

1983, Mr. LI has assumed various positions at Bank of China Head

Office and overseas branch. He served as Assistant General Manager

and became Deputy General Manager of BOC London Branch from

1996 to 2002, Deputy General Manager of Corporate Banking

Department of BOC Head Office from 2002 to 2004, and also General

Manager of Corporate Banking Department, Risk Management

Department, and Global Markets Department of BOC Head Office

from 2004 to 2009. Mr. LI graduated from Northeast Petroleum

University in 1983 with a Bachelor’s Degree in Science in Oilfield

Development and Management, and obtained a Master’s Degree in

Science in International Banking and Financial Studies from Heriot-

Watt University (UK) in 1993.



2. Mr. Zhang Lei CEO & Country Head, Director (Former)

Aged 53, was appointed as the Executive Director and CEO & Country

Head of BOCT since August 2014 until December 2017. Mr. ZHANG has

joined Bank of China since 1987, and worked at International Clearing

Department of BOC Head Office for 10 years. He was appointed as

Division Director of No.1 International Clearing Division of International

Clearing Department from June 1997 to November 1998, and as the Vice

General Manager of Clearing Payment Centre from 1998 to 2004, before

being designated as the General Manager at BOC Jakarta Branch from

2004 to 2011. He then was repatriated back to BOC Head Office as the

General Manager of Operation Service Unit in February 2011, and was

appointed as CEO & Country Head of BOCT in April 2014. He obtained a

Bachelor’s Degree in Economic Management from Nankai University in

1987, and Master’s Degree in Business Administration from Renmin

University in 2003.



3. Mr. Li Feng

CEO & Country Head, Director (Appointment effective from 27 December 2017)

Aged 44, has been appointed as the Executive Director and CEO &

Country Head of BOCT in December 2017. Prior to the appointment, Mr.

LI was the Chief Representative of the BOC Tanzania Representative

Office since April 2017. He possesses a strong professional track record

with extensive years in financial business, especially in-depth experiences

in Risk Management and Internal Control, as well as overseas branch

management, for over 22 years. Joining BOC since 1995, he started his

first career at Fuyang Branch before being promoted as the Head (Rules

and Regulations) of Risk Management Department of BOC Anhui

Branch in 2005. He was in charge of Risk Management Department at

BOC Bangkok Branch from October 2005 to December 2011, before

being repatriated to BOC Johannesburg Branch and designated as

Executive Vice President from December 2011 to June 2016. During

June 2016 to April 2017, he had been serving as the Chief of Preparatory

Team for BOC Tanzania Representative Office, and Executive Vice

President of BOC Johannesburg Branch. Mr. LI graduated from Shaanxi

Economics and Trade Institute in 1995 with Bachelor’s Degree in

Industrial Economics; then obtained Master’s Degree in Business

Administration, and Doctorate’s Degree in Development Economics

from Northwestern University in 2006 and 2010 respectively.



4. Mrs. Li Jun

Executive Vice President, Director

Aged 51, is a Director and Executive Vice President of BOCT since

August 2014. Mrs. LI started her career with BOC since 1989 at Shanxi

Branch and had gained great experiences in Credit Management and Risk

Management for 25 years. She was appointed as Deputy General

Manager, Risk Management Department, at BOC Qinghai Branch in 2002,

and at BOC Shanxi Branch in 2004. She held a position of Head of Risk

Management Department at BOC Singapore Branch in 2007 to 2012,

before being designated as Assistant General Manager at BOC Bangkok

Branch in September 2012. Mrs. LI obtained her Bachelor’s Degree in

Economics from Fudan University, and graduated from Shanxi University

of Finance and Economics with Master’s Degree in Economics in

Industrial Economics in 1993.

5. Mrs. Liu Guizhen


Aged 47. She is a Director and Executive Vice President of BOCT since

November 2016. Mrs LIU is a seasoned banker with 24 years of

experience in personal banking business. In 1994, she joined Bank of

China Head Office in Beijing and worked in Banking Department until

2003. She was appointed as Deputy Manager of Bank of China Internal

Audit Centre (Europe & Africa) from 2003 to 2004. Then she was

designated to work at Bank of China London Branch and became the

Head of Retail Banking Department in 2006. In 2007 she became the

General Manager of Personal Banking Department of Bank of China (UK)

Limited, and served in this position until November 2016. She was

graduated from Nankai University in 1992 with Bachelor’s Degree in

Economics in Auditing in Department of Accountancy, and graduated

from Tsinghua University in 2004 Master’s Degree in Business

Administration.



6. Mr. Wu Lin


Aged 45, is a Director and Executive Vice President of BOCT, overseeing

Corporate Business since 2016. Joining BOC since 1994, he had been

working for BOC Shandong Branch for 22 years. He was a Deputy

General Manager of Financial Institution Department of BOC Shandong

Branch from 2005 to 2012, and was appointed as Branch Manager of

Shandong Dezhou Branch in 2012. Mr. WU obtained Bachelor’s Degree in

Economics in Enterprise Management from Nanjing University in 1994

and Master’s Degree in Business Administration in Finance from City

University of London (UK) in 2015.

7. Mr. Krish Follett

Independent Director

Aged 68, is an Independent Director of the BOCT since 2014 without

shareholding in the Bank. From 1971 to 2009, Mr. Krish had held various

positions in the Bank of Thailand i.e. Assistant Governor, Senior Director

of IAD, Senior Director of On-site Examination 1 Department, Director of

Modernization Program Office, Director of North-eastern Region Office,

Assistant Director of Payment System Department, and Division Chief of

Special Investigation Team. Mr. Krish obtained his Bachelor’s Degree in

Economics, and Master’s Degree in Business Administration in Finance

from Thammasat University. He also obtained Certificate in Advanced

Management Program from Business School of Harvard University.



8. Mr. Chatchai Virameteekul



shareholding in the Bank. He also serves as Vice Chairman of Siam

Bangna Land Co., Ltd, and Director of M.Thai Group Ltd., and M. Thai

Expo City Co., Ltd. He is also a Advisor of Thai Institute of Directors

(IOD).

Mr. Chatchai had held various positions in Government Housing Bank i.e.

Director, Chairman of Audit Committee, Chairman of Risk Management

Committee, Chairman of Nomination and Remuneration Committee, and

Vice Chairman of the Executive Board. Mr. Chatchai graduated with

Bachelor of Arts from University of Washington, USA, and obtained his

Master’s Degree in Business Administration from Thammasat University.

9. Mr. Chaiyuth SUDTHITANAKORN



shareholding in the Bank. Currently, Mr. Chaiyuth serves as Senior

Advisor of TEAM Consulting Engineering and Management Co., Ltd since 2014. From 1977 to 2010, Mr. Chaiyuth held various positions in the

Ministry of Finance i.e. Director of Bureaus of Tax Policy, Financial

System Policy, and International Economic Policy. He was also the

Executive Director of the Board of Directors, the Chairman of Board of

Ethics Committee, member of Board of Audit Committee, member of

Board of Compliance and Review Committee, and member of Pension Committee of the Asian

Development Bank, Manila, Philippines from 2009 to 2012. He was also a representative of Ministry

of Finance in Board of Directors of SOEs i.e. Forest Industry Organization, Marketing Organization

for Farmers, Agricultural Futures Exchange of Thailand during1997 to 2003, and a member of Board

of Directors of Government Housing Bank from 2006 to 2009. Mr. Chaiyuth obtained certificates in

Financial Statements for Directors and Director Certification Program from Thai Institute of

Directors (IOD). Also, Mr. Chaiyuth graduated with Master Degree of Public Administration

(Management Program) from National Institute of Development Administrative and Bachelor of

Science in Agricultural Economics from Kasetsart University.

54 Report of the Audit Committee


Audit Committee Report for the year 2017

The Audit Committee of Bank of China (Thai) Public Company Limited comprises three members of the Board of Directors are:

1) Mr. Krish Follett Chairman of the Audit Committee

2) Mr. Chaiyuth Sudthitanakorn Member of the Audit Committee

3) Mr. Chatchai Virameteekul Member of the Audit Committee

All of them are independent directors, and they are knowledgeable in various fields, namely accounting and finance, law and organizational management.

Responsibilities

The Audit Committee’s charter, which was required under the scope of duties and responsibilities following the principles of good corporate governance, was approved by the Board of Directors in accordance with the Securities and Exchange Commission Thailand (SEC) and the Bank of Thailand (BOT). The Audit Committee oversees the Bank’s operations in order to assure that transparency and fairness can be achieved for the confidence of shareholders, investors, and all stakeholders.

In 2017, the Audit Committee held seven meetings and made the recommendations to Board of Directors as follows;

1. Financial Report

The Audit Committee has reviewed and discussed with the external auditor on the unaudited and audited financial statement for six month period and annual as well as considered the quarterly financial status and analysis on important issues of the financial status with the management to ensure that the preparation of financial statements and disclosure of important information were accurate, complete and reliable in accordance with generally accepted by Thai Accounting Standards and Thai Financial Reporting Standards.

Furthermore, the Audit Committee held two meetings with the external auditors without the participation of the Bank’s management to discuss the independence of the auditors and restrictions or limitations in performing their duties and expressing opinions and any points of concern arising from their audits.

2. Internal Control, good governance and risk management

The Audit Committee has approved the annual audit plan which has been developed and improved so that it is efficient, covers important operations and units exposed to high levels of risk. The Audit Committee has reviewed the audit reports done by the internal audit as well as reports done by external auditor and the Bank’s supervisory authorities, and reviewed the Internal Capital Adequacy Assessment Process (ICAAP) is provided by risk management department.

Moreover, the Audit Committee also considered the report of risk assessment and mitigation plan, the report on operating risk incident and the structure of risk management committee that needed an improvement on risk management to ensure that comprehensive internal control system could control the operation.

Report of the Audit Committee 55


The Audit Committee opined that the Bank needed to improve the supervision, evaluation and examination to ascertain that all business units and branches properly operated and complied with relevant regulations and requirements.

3. Regulatory Compliance

The Audit Committee has reviewed the Bank’s operation to ascertain compliance with requirements and laws relevant to the banking business, such as the Public Limited Companies Act B.E.2535 (1992), the Securities and Exchange Act B.E.2535 (1992), and other requirements of supervisory authorities.

The Audit Committee closely considered and monitored the latest examination reports from of the Bank of Thailand, independent auditor and the group audit of Bank of China (Hong Kong) Limited as well as the audit rectifications of above examination reports in order to ensure accurate compliance of all business units and comprehensive internal control system.

4. The potential conflict of interest

The Audit Committee will consider connected transactions or potential conflicts of interests by adhering to principles of rationality, transparency, and sufficient information disclosure, which represents normal business practice and benefit maximization for the Bank.

The Audit Committee has performed its duties carefully and independently and has been forthcoming in expressing its opinions for the maximum benefit of the Bank. It has not encountered any difficulty in obtaining information, resources or cooperation from the Bank. The Audit Committee has assessed its performance in 2017 in order to ascertain that it has been efficient and effective and has achieved its objectives as assigned by the Board of Directors.

For and on behalf of the Audit Committee of Bank of China (Thai) Public Company Limited

(Mr. Krish Follett) Chairman of the Audit Committee 30 January 2018

56 Independent Auditor’s Report


Independent Auditor's Report

To the Shareholders of Bank of China (Thai) Public Company Limited

Opinion

I have audited the accompanying financial statements of Bank of China (Thai) Public Company

Limited (“the Bank”), which comprise the statement of financial position as at 31 December

2017, and the related statements of comprehensive income, changes in equity and cash flows for

the year then ended, and notes to the financial statements, including a summary of significant

accounting policies.

In my opinion, the financial statements referred to above present fairly, in all material respects,

the financial position of Bank of China (Thai) Public Company Limited as at 31 December

2017, its financial performance and cash flows for the year then ended in accordance with

Thai Financial Reporting Standards.

Basis for Opinion

I conducted my audit in accordance with Thai Standards on Auditing. My responsibilities

under those standards are further described in the Auditor’s Responsibilities for the Audit of

the Financial Statements section of my report. I am independent of the Bank in accordance with

the Code of Ethics for Professional Accountants as issued by the Federation of Accounting

Professions as relevant to my audit of the financial statements, and I have fulfilled my other

ethical responsibilities in accordance with the Code. I believe that the audit evidence I have

obtained is sufficient and appropriate to provide a basis for my opinion.

Other Matter

The financial statements of Bank of China (Thai) Public Company Limited for the year ended

31 December 2016 were audited by other auditor who, under her report dated 24 March 2017,

expressed an unqualified opinion on those financial statements.

Independent Auditor’s Report 57


Responsibilities of Management and Those Charged with Governance for the Financial

Statements

Management is responsible for the preparation and fair presentation of the financial statements

in accordance with Thai Financial Reporting Standards, and for such internal control as

management determines is necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Bank’s ability

to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting unless management either intends to liquidate the

Bank or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Bank’s financial reporting

process.

Auditor’s Responsibilities for the Audit of the Financial Statements

My objectives are to obtain reasonable assurance about whether the financial statements as

a whole are free from material misstatement, whether due to fraud or error, and to issue an

auditor’s report that includes my opinion. Reasonable assurance is a high level of assurance, but

is not a guarantee that an audit conducted in accordance with Thai Standards on Auditing will

always detect a material misstatement when it exists. Misstatements can arise from fraud or error

and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these financial

statements.

As part of an audit in accordance with Thai Standards on Auditing, I exercise professional

judgment and maintain professional skepticism throughout the audit. I also:

Identify and assess the risks of material misstatement of the financial statements, whether

due to fraud or error, design and perform audit procedures responsive to those risks, and

obtain audit evidence that is sufficient and appropriate to provide a basis for my opinion.

The risk of not detecting a material misstatement resulting from fraud is higher than for

one resulting from error, as fraud may involve collusion, forgery, intentional omissions,

misrepresentations, or the override of internal control.

58 Independent Auditor’s Report


Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the Bank’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists

related to events or conditions that may cast significant doubt on the Bank’s ability to

continue as a going concern. If I conclude that a material uncertainty exists, I am required

to draw attention in my auditor’s report to the related disclosures in the financial

statements or, if such disclosures are inadequate, to modify my opinion. My conclusions

are based on the audit evidence obtained up to the date of my auditor’s report. However,

future events or conditions may cause the Bank to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements,

including the disclosures, and whether the financial statements represent the underlying

transactions and events in a manner that achieves fair presentation.

I communicate with those charged with governance regarding, among other matters, the planned

scope and timing of the audit and significant audit findings, including any significant

deficiencies in internal control that I identify during my audit.

I am responsible for the audit resulting in this independent auditor’s report.

Ratana Jala

Certified Public Accountant (Thailand) No. 3734

EY Office Limited

Bangkok: 16 March 2018



Bank of China (Thai) Public Company Limited Statements of financial position As at 31 December 2017

(Unit: Baht) Note 2017 2016

Assets Cash 182,441,502 141,646,391 Interbank and money market items - net 6 11,260,764,398 18,453,771,331 Derivative assets 7 11,986,877 76,610 Investments - net 8 3,506,615,100 3,706,038,450 Loans to customers and accrued interest receivables 9 Loans to customers 31,015,220,931 21,652,952,139 Accrued interest receivables 125,342,449 102,905,215 Total loans to customers and accrued interest receivables 31,140,563,380 21,755,857,354 Less: Deferred revenue (1,534,803) (1,105,800) Allowance for doubtful accounts 10 (558,197,308) (487,504,521)

Loans to customers and accrued interest receivables - net

30,580,831,269

21,267,247,033

Premises and equipment - net 11 274,785,702 254,479,317 Intangible assets - net 12 25,573,809 29,111,409 Leasehold right - net 13 2,617,824 13,127,511 Deferred tax assets - net 28 31,524,012 18,858,137 Other assets 14 55,642,489 64,152,128 Total assets 45,932,782,982 43,948,508,317

The accompanying notes are an integral part of the financial statements.

60 Financial Statement


Bank of China (Thai) Public Company Limited Statements of financial position (continued) As at 31 December 2017


Liabilities and equity Liabilities Deposits 15 21,204,483,253 21,995,917,904 Interbank and money market items 16 11,261,468,040 10,906,646,956 Liabilities payable on demand 352,991,969 279,351,322 Derivative liabilities 7 10,257,015 1,198,917 Debts issued and borrowings 17, 30 2,287,663,000 - Provisions 18 70,243,704 25,928,427 Accrued interest payable 93,519,993 223,910,562 Other liabilities 19 570,223,247 513,585,357 Total liabilities 35,850,850,221 33,946,539,445 Equity Share capital Registered, issued and fully paid-up 1,000,000,000 ordinary shares of Baht 10 each 10,000,000,000 10,000,000,000 Other components of equity 20 2,943,942 (216,188) Retained earnings Appropriate - statutory reserve 21 109,253 - Unappropriate 78,879,566 2,185,060 Total equity 10,081,932,761 10,001,968,872 Total liabilities and equity 45,932,782,982 43,948,508,317


(Mr. Li Feng) Chief Executive Officer, Country Head



Bank of China (Thai) Public Company Limited Statements of comprehensive income For the year ended 31 December 2017


Interest income 23 1,193,002,545 1,153,999,487 Interest expenses 24 (564,566,969) (867,016,551) Net interest income 628,435,576 286,982,936 Fees and service income 208,538,727 170,936,751 Fees and service expenses (21,046,905) (22,141,975) Net fees and service income 25 187,491,822 148,794,776 Net gains on trading and foreign exchange transactions 26 117,773,517 164,184,200 Other operating income 5,107,568 6,639,780 Total operating income 938,808,483 606,601,692 Operating expenses Employee's expenses 387,998,486 344,741,566 Directors' remunerations 3,986,667 3,620,000 Premises and equipment expenses 183,466,502 150,837,585 Taxes and duties 38,717,518 30,574,692 Other operating expenses 98,400,695 93,817,971 Total operating expenses 712,569,868 623,591,814 Bad debts, doubtful accounts and impairment losses (reversal)

27

130,763,577

(50,905,634)

Profit from operation before income tax 95,475,038 33,915,512 Income tax expenses 28 (19,911,255) (7,904,167) Profit for the years 75,563,783 26,011,345




Bank of China (Thai) Public Company Limited Statements of comprehensive income (continued) For the year ended 31 December 2017


Other comprehensive income Items to be recognised subsequently in profit or loss Gains (losses) on revaluation of available-for-sale investments 3,947,653 (9,022,568) Income tax effect 28 (787,523) 1,804,514 Items to be recognised subsequently in profit or loss - net of income tax 3,160,130 (7,218,054) Items not to be recognised subsequently in profit or loss Actuarial gains (losses) on defined benefit plan 1,516,357 (45,006) Income tax effect 28 (276,381) 8,165 Items not to be recognised subsequently in profit or loss - net of income tax 1,239,976 (36,841) Other comprehensive income (loss) for the years 4,400,106 (7,254,895) Total comprehensive income for the years 79,963,889 18,756,450

Earnings per share Basic earnings per share (Baht per share) 31 0.08 0.03



Ban

k o

f C

hin

a (T

hai

) P

ubli

c C

ompa

ny L

imit

ed

Sta

tem

ents

of

chan

ges

in e

qu

ity

F

or t

he

year

en

ded

31

Dec

emb

er 2

017

(U

nit:

Bah

t)

Iss

ued

and

fully

O

ther

com

pone

nts

R

etai

n ea

rnin

gs (

defi

cits

)

pai

d-up

sha

re c

apita

l o

f eq

uity

A

ppro

pria

te

Una

ppro

pria

te

Tot

al

Beg

inn

ing

bal

ance

as

of 1

Jan

uar

y 20

16

10,0

00,0

00,0

00

7,00

1,86

6

- (

23,7

89,4

44)

9

,983

,212

,422

P

rofi

t for

the

year

-

- -

2

6,01

1,34

5 2

6,01

1,34

5

Oth

er c

ompr

ehen

sive

loss

for

the

year

-

(7

,218

,054

)

-

(3

6,84

1)

(7

,254

,895

) T

otal

com

preh

ensi

ve in

com

e (l

oss)

for

the

year

-

(7

,218

,054

) -

25

,974

,504

18

,756

,450

E

nd

ing

bal

ance

as

of 3

1 D

ecem

ber

201

6 10

,000

,000

,000

(

216,

188)

-

2,18

5,06

0 10

,001

,968

,872

Beg

inn

ing

bal

ance

as

of 1

Jan

uar

y 20

17

10,0

00,0

00,0

00

(21

6,18

8)

-

2,

185,

060

10,0

01,9

68,8

72

Pro

fit f

or th

e ye

ar

-

-

-

75,5

63,7

83

75,

563,

783

O

ther

com

preh

ensi

ve in

com

e fo

r th

e ye

ar

- 3,

160,

130

-

1,23

9,97

6

4,40

0,10

6

Tot

al c

ompr

ehen

sive

inco

me

for

the

year

-

3,

160,

130

-

76

,803

,759

7

9,96

3,88

9

Tra

nsfe

rred

una

ppro

pria

ted

ret

aine

d ea

rnin

gs

to

sta

tuto

ry r

eser

ve

-

-

10

9,25

3 (

109,

253)

-

E

nd

ing

bal

ance

as

of 3

1 D

ecem

ber

201

7 1

0,00

0,00

0,00

0 2,

943,

942

109,

253

78,

879,

566

10,

081,

932,

761

The

acc

ompa

nyin

g no

tes

are

an in

tegr

al p

art o

f th

e fi

nanc

ial s

tate

men

ts.

(M

r. L

i Fen

g)

Chi

ef E

xecu

tive

Off

icer

, Cou

ntry

Hea

d

63Financial Statement



Bank of China (Thai) Public Company Limited Statements of cash flows For the year ended 31 December 2017

(Unit: Baht) 2017 2016

Cash flows from operating activities Profits from operation before income tax 95,475,038 33,915,512 Adjustments to reconcile profit from operation before income tax to net cash received (paid) from operating activities: Depreciation and amortisation 73,675,924 63,422,568 Bad debts, doubtful accounts and impairment losses (reversal) 138,239,171 (50,905,634) Amortisation of premium on debt instruments 7,726,652 16,620,773 Reversal loss on impairment of other assets (121,975) (1,266,632) Unrealised (gains) losses on change in fair value of financial derivative instruments (2,852,169) 4,362,292 Unrealised gains on exchange rate of debts issued and borrowings (38,066,000) - Gain on disposal of equipment - (862,832) Losses on assets written-off 8,084,304 64,013 Provisions for long-term employee benefits 3,112,184 2,373,840 Net interest income (628,435,576) (286,982,936) Cash received on interest income 1,170,218,392 1,225,615,641 Cash paid on interest expenses (713,585,953) (836,540,886) Cash paid on income taxes (11,815,191) (2,558,316) Profits from operating activities before changes in operating assets and liabilities 101,654,801 167,257,403




Bank of China (Thai) Public Company Limited Statements of cash flows (continued) For the year ended 31 December 2017

(Unit: Baht) 2017 2016

(Increase) decrease in operating assets Interbank and money market items 7,150,008,858 (5,244,427,395) Loans to customers (9,381,684,921) 20,224,171,385 Other assets (1,206,175) (3,854,560) Increase (decrease) in operating liabilities Deposits (791,434,651) (2,994,010,731) Interbank and money market items 354,821,084 (11,435,538,897) Liabilities payable on demand 73,640,647 96,281,793 Provisions 1,335,370 516,916 Other liabilities 84,846,532 8,897,266 Net cash from (used in) operating activities (2,408,018,455) 819,293,180 Cash flows from investing activities Proceeds from redemption of investments 3,200,000,000 1,340,000,000 Cash paid for investments (3,004,355,650) (2,010,401,300) Proceeds from disposal of equipment - 870,000 Purchases of premises and equipment (70,855,778) (106,975,201)

Purchases of intangible assets (1,704,006) (8,939,363)

Net cash from (used in) investing activities 123,084,566 (785,445,864) Cash flows from financing activities Cash received from debts issued and borrowings 2,325,729,000 - Net cash from financing activities 2,325,729,000 - Net increase in cash and cash equivalents 40,795,111 33,847,316 Cash and cash equivalents as at 1 January 141,646,391 107,799,075 Cash and cash equivalents as at 31 December 182,441,502 141,646,391




Bank of China (Thai) Public Company Limited Statements of cash flows (continued) For the year ended 31 December 2017

(Unit: Baht) 2017 2016

Supplemental disclosures of cash flows information Non-cash items: Account payables from purchase of premises and equipment 4,590,269 24,410,866 Provision for restoration and demolition cost 41,384,080 1,218,195



Notes to Financial Statement 67


Bank of China (Thai) Public Company Limited

Notes to the financial statements

For the year ended 31 December 2017

1. General information

Bank of China (Thai) Public Company Limited (“the Bank”) was public company incorporated

under Thai law and domiciled in Thailand. The Bank has been operated mainly commercial

banking business and its registered office is located at No.179/4 Bangkok City Tower, South

Sathorn Road, Tungmahamek Sub District, Sathorn District, Bangkok. As at 31 December 2017,

the Bank conducts its business through a network of 8 branches throughout all regions in Thailand

(2016: 8 branches). Its major shareholder is Bank of China (Hong Kong) Limited, a company

registered in Hong Kong.

On 9 January 2017, The Bank’s major shareholder has been officially changed from Bank of China

Limited to Bank of China (Hong Kong) Limited upon the approval of Ministry of Finance.

2. Basis of preparation of financial statements

The financial statements have been prepared in accordance with Thai Financial Reporting

Standards enunciated under the Accounting Professions Act B.E. 2547 and their presentation of the

financial statements has been made in compliance with the Bank of Thailand (“BOT”)’s

Notification regarding “Preparation and Announcement of Financial Statements of Commercial

Banks and Parent Companies of Financial Holding Groups”, dated 4 December 2015.

The financial statements in Thai language are the official statutory financial statements of the

Bank. The financial statements in English language have been translated from such financial

statements in Thai language.

The financial statements have been prepared on a historical cost basis except otherwise disclosed in

Note 4 to the financial statements regarding a summary of significant accounting policies.

3. New financial reporting standards

(a) Financial reporting standards that became effective in the current year

During the year, the Bank has adopted the revised financial reporting standards and

interpretations (revised 2016) and new accounting treatment guidance which are effective for

fiscal years beginning on or after 1 January 2017. These financial reporting standards were

aimed at alignment with the corresponding International Financial Reporting Standards with

most of the changes directed towards revision of wording and terminology, and provision of

interpretations and accounting guidance to users of standards. The adoption of these financial

reporting standards does not have any significant impact on the Bank’s financial statements.

(b) Financial reporting standards that will become effective in the future

68 Notes to Financial Statement


During the current year, the Federation of Accounting Professions issued a number of

revised financial reporting standards and interpretations (revised 2017) which are effective

for fiscal years beginning on or after 1 January 2018. These financial reporting standards

were aimed at alignment with the corresponding International Financial Reporting Standards

with most of the changes and clarifications directed towards disclosures in the notes to

financial statements.

The management of the Bank believe that the revised financial reporting standards will not

have any significant impact on the financial statements when they are initially applied.

4. Significant accounting policies

4.1 Revenue recognition

a) Interest and discount on loans

The Bank recognises interest on loans as revenue on an accrual basis and will stop accrual of

interest when the debtor has defaulted for more than three months regardless of whether the

loans are fully collateralised and recognises interest on such loans on a cash basis, which is

in accordance with the BOT’s regulations. In addition, interest accrued in arrears for three

months is reversed against interest income.

Discount received on purchase of bills are recognised based on the effective interest rate over

the period to maturity.

b) Interest on investments

Interest on investments is recognised as revenue on an accrual basis based on the effective

interest rate.

c) Fees and other service fees are recognised as revenue on an accrual basis.

4.2 Expenses recognition

The Bank recognises expenses on an accrual basis.

4.3 Cash

Cash represents cash on hand and cash items in process of the collection.

4.4 Investments

Available-for-sale investments are stated at fair value. Change in the fair value of these

investments are recorded in other comprehensive income and will then be recognised in profit or

loss when the investments are sold.

For government and state enterprises bonds, fair value is calculated based on yield rates quoted by

the Thai Bond Market Association or other financial institutions, as the case may be.



Purchases and sales of investments in debt securities are recorded on settlement date.

Realised gains or losses on disposals of investments are recognised in profit or loss when they are

disposed of, using the weighted average method in determining costs of the disposed investments.

Interest on investments in debt securities is recognised as revenue on an accrual basis. Premiums

and discounts arising on the acquisition of investments are amortised against interest income in

profit or loss based on the effective yield rate over the term of the investments.

In the event that the Bank reclassifies investments from one type to another, such investments are

readjusted to their fair value on the date of reclassification. The difference between the carrying

value and the fair value on the date of reclassification is recorded as gain or loss in profit or loss or

recorded as other comprehensive income, depending on the type of investment which is

reclassified.

4.5 Loans to customers

Loans to customers are presented at the principal balances. Unrecognised discounts received in

advances on loans to customers are deducted from loans to customers. Accrued interest receivables

on all items categorised under loans to customers are presented separately as a single line item in

the statements of financial position.

Overdrafts are stated at the drawn amounts together with any accrued interest receivables.

Discounts received in advance in respect of bills purchased and other unearned interest income are

recognised as revenue on an accrual basis over the terms of the bills.

4.6 Allowance for doubtful accounts

The Bank provides allowance for doubtful accounts on loans to customers in accordance with

BOT’s regulations based on an analysis and evaluation of the current status of the debtors, taking

into consideration the credit risk and the value of collateral. Additional allowances (reversals of

allowances) are recognised as expenses during the year.

For loans to customers classified as pass and special mention, the Bank records provision at a rate

of not less than 1% and 2%, respectively of the loan balances (excluding accrued interest

receivables) net of collateral value, in accordance with the BOT’s regulations.

For non-performing loans, the Bank records allowance for doubtful accounts at a rate of 100% of

the loan balances after deducting the present value of expected future cash inflows from debt

collection or from collateral disposal, with the discount interest rate and the expected period of

collateral disposal being set with reference to the BOT’s regulations.

4.7 Premises and equipment and depreciation



Premises and equipment are stated at cost less accumulated depreciation and allowance for

impairment loss (if any).

Depreciation is calculated by reference to their cost on a straight-line basis over the following

estimated useful lives for each type of assets:

Buildings and building improvement - 20 years

Computer equipment - 3 - 5 years

Furniture and office equipment - 5 years

Motor vehicles - 5 years

Depreciation is included in determining income.

No depreciation is determined for land and assets under construction/installation.

The Bank includes costs of dismantling, relocating and restoring the site on which it is located,

when the Bank has obligation to do, with building improvement. The Bank calculates the

depreciation using straight-line method over the residual life of rental contract.

An item of premises and equipment is derecognised upon disposal or when no future economic

benefits are expected from its use or disposal. Any gain or loss arising on disposal of an asset

(calculated as the difference between the net disposal proceeds and the carrying amount of the

asset) is included in profit or loss when the asset is derecognised.

4.8 Intangible assets and amortisation

Intangible assets are carried at cost less accumulated amortisation and allowance for impairment

loss (if any).

Intangible assets with finite useful lives are amortised on a systematic basis over the economic

useful life and tested for impairment whenever there is an indication that the intangible asset may

be impaired. The amortisation period and the amortisation method of such intangible assets are

reviewed at least at each financial year-end. The amortisation expense is charged to profit or loss.

Useful lives of intangible assets with finite useful lives are 3 - 10 years.

4.9 Leasehold

Leasehold is stated at cost less accumulated amortisation. Leasehold is amortised on a straight-line

basis over the lease period of 20 years and the amortisation amount is recognised as expenses in

profit or loss.

4.10 Impairment of assets

At the end of each reporting date, the Bank assesses whether there is an indication that an asset

may be impaired. An impairment loss is recognised when the recoverable amount of an asset,



which is the higher of the asset’s fair value less costs to sell and its value in use, is less than the

carrying amount of the asset. In determining value in use, the estimated future cash flows are

discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset. In determining fair value

less costs to sell, an appropriate valuation model is used. These calculations are corroborated by a

valuation model that, based on available information, reflects the amount that the Bank could

obtain from the disposal of the asset in an arm’s length transaction between knowledgeable, willing

parties, after deducting the costs of disposal.

An impairment loss is recognised in profit or loss.

In the assessment of asset impairment, if there is any indication that previously recognised

impairment loss may no longer exist or may have decreased, the Bank estimates the asset’s

recoverable amount. A previously recognised impairment loss is reversed only if there has been a

change in the assumptions used to determine the asset’s recoverable amount since the last

impairment loss was recognised. The increased carrying value of the asset attributable to a reversal

of an impairment loss shall not exceed the carrying value that would have been determined in case

that no impairment loss has been recognised for the asset in prior periods. Such reversal is

recognised in profit or loss.

4.11 Employee benefits

Short-term employee benefits

Salaries, wages, bonuses and contributions to the social security fund are recognised as expenses

when incurred.

Post-employment benefits

Defined contribution plans

The Bank and its employees have jointly established a provident fund. The employees contribute

to the fund at the rate of 3% of their basic salary and the Bank contributes to the fund at the rate of

3% - 7% of their basic salary. The fund’s assets are held in a separate trust fund and the Bank’s

contributions are recognised as expenses when incurred.

Defined benefit plans

The Bank has obligations in respect of the severance payments it must make to employees upon

retirement under labor law. The Bank treats these severance payment obligations as a defined

benefit plan.

The obligation under the defined benefit plan is determined by a professionally qualified

independent actuary based on actuarial techniques, using the projected unit credit method.



Actuarial gains or losses arising from defined benefit plans are recognised immediately in other

comprehensive income.

4.12 Provisions

Provisions are recognised when the Bank has a present obligation as a result of a past event and it

is probable that an outflow of resources embodying economic benefits will be required to settle the

obligation and a reliable estimate can be made of the obligation amount.

4.13 Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by

the lessor are classified as operating leases. Operating lease payments are recognised as an

expense in profit or loss on a straight-line basis over the lease terms.

When an operating lease is terminated before the lease period has expired, any payment required

to be made to the lessor by way of penalty is recognised as an expense in the period in which

termination takes place.

4.14 Income tax

Income tax represents the sum of current income tax payable and deferred tax.

Current income tax

Current income tax is provided in the accounts at the amount expected to be paid to the taxation

authorities, based on taxable profits determined in accordance with tax legislation.

Deferred tax

Deferred tax is provided on temporary differences between the tax bases of assets and liabilities

and their carrying amounts at the end of each reporting period, using the tax rates enacted at the

end of the reporting period.

The Bank recognises deferred tax liabilities for all taxable temporary differences while it

recognises deferred tax assets for all deductible temporary differences and unused tax losses to the

extent that it is probable that future taxable profit will be available against which such deductible

temporary differences and unused tax losses can be utilised.

At each reporting date, the Bank reviews and reduces the carrying amount of deferred tax assets to

the extent that it is no longer probable that sufficient taxable profit will be available to allow all or

part of the deferred tax asset to be utilised.

The Bank records deferred tax directly to equity if the tax relates to items that are recorded directly

to equity.

4.15 Foreign currencies



The financial statements is presented in Baht, which is also the Bank’s functional currency.

Transactions in foreign currencies are translated into Baht at the exchange rates ruling at

transaction dates. Monetary assets and liabilities denominated in foreign currencies and

commitments, which are limited to forward exchange contracts and currency swap contracts,

outstanding at the end of reporting date are translated into Baht at the exchange rates ruling by the

BOT at the end of reporting date.

Gains and losses on exchange rate are recognised in profit or loss.

4.16 Financial derivatives

Financial derivative instruments are recognised on trade date.

Financial derivative contracts are recorded as commitments. At the end of the reporting period,

outstanding financial derivative contracts are valued at fair value while the changes in their fair

value are recognised in profit or loss. Unrealised gains or losses on outstanding financial

derivative contracts are presented as derivative assets or liabilities in the statements of financial

position.

4.17 Interbank and money market items (assets/liabilities)

The Bank recognises and derecognises interbank and money market items on settlement date.

4.18 Fair value measurement

Fair value is the price that is expected to be received from selling an asset or to pay to transfer a

liability in an orderly transaction between buyer and seller (market participants) at the

measurement date. The Bank applies a quoted market price in an active market to measure their

assets and liabilities that are required to be measured at fair value by relevant financial reporting

standards. Except in case of no active market of an identical asset or liability or when a quoted

market price is not available, the Bank measures fair value using valuation technique that is

appropriate in the circumstances and maximises the use of relevant observable inputs related to

assets and liabilities that are required to be measured at fair value.

All assets and liabilities for which fair value is measured or disclosed in the financial statements

are categorised within the fair value hierarchy into three levels based on category of input to be

used in fair value measurement as follows.

Level 1 - Use of quoted market prices for the same assets or liabilities in an observable active

market

Level 2 - Use of other observable inputs for such assets or liabilities, whether directly or

indirectly



Level 3 - Use of unobservable inputs such as estimates of future cash flows

At the end of each reporting period, the Bank determines whether transfers have occurred between

levels within the fair value hierarchy for assets and liabilities held at the end of the reporting

period that are measured at fair value on a recurring basis.

5. Significant accounting judgements and estimates

The preparation of financial statements in conformity with Thai Financial Reporting Standards at

times requires management to make subjective judgements and estimates regarding matters that are

inherently uncertain. These judgements and estimates affect reported amounts and disclosures; and

actual results could differ from these estimates. Significant judgements and estimates are as

follows.

5.1 Recognition and derecognition of assets and liabilities

In considering whether to recognise or to derecognise assets and liabilities, the management is

required to make judgement on whether significant risks and rewards of those assets and liaiblities

have been transferred, based on their best knowledge of the current events and arrangements.

5.2 Allowance for doubtful accounts on loans to customers

Allowance for doubtful accounts on loans to customers is intended to adjust the value of loans to

customers for probable credit losses. The management exercises judgement to establish reserve for

estimated losses that may be incurred on outstanding loans to customers when there is any doubt

about the debtor’s ability to repay the principal and/or the interest. The allowance for doubtful

accounts is determined through a combination of specific debtor reviews, probability of default and

estimation based on historical experiences, taking into accounts change in the value of collateral

and current economic conditions, in accordance with the BOT’s regulations.

5.3 Fair value of financial instruments

In determining the fair value of financial instruments recognised in the statement of financial

position that are not actively traded and for which quoted market prices are not readily available,

the management exercises judgement, using a variety of valuation techniques and models. The

input to these models is taken from observable markets, and includes consideration of credit risk

(both the Bank and its counterparty), liquidity, correlation and long-term volatility of financial

instruments. Change in assumptions about these factors could affect the fair value recognised in the

statement of financial position and disclosure of fair value hierarchy.

5.4 Premises and equipment and depreciation



In determining depreciation of premises and equipment, the management is required to make

estimates of the useful lives and residual values of premises and equipment, and to review

estimated useful lives and residual values when there is any change.

In addition, the management is required to review premises and equipment for impairment on a

periodical basis and record impairment losses when it is determined that their recoverable amount

is lower than the carrying amount. This requires judgement regarding forecast of future revenues

and expenses relating to the assets subject to the review.

5.5 Intangible assets

The initial recognition and measurement of intangible assets, and subsequent impairment testing,

require management to exercise judgement as to the recoverable amount to be generated by the

asset or the cash generating units, and to select a suitable discount rate in order to determine the

present value of that cash flow.

5.6 Deferred tax assets

Deferred tax assets are recognised for deductible temporary differences and unused tax losses to

the extent that it is probable that future taxable profit will be available against which the temporary

differences and unused tax losses can be utilised. Significant management judgement is required to

determine the amount of deferred tax assets that can be recognised, based upon the likely timing

and level of estimated future taxable profits.

5.7 Post-employment benefits under the defined benefit plan

Obligations under the defined benefit plan are determined based on actuarial techniques which

involves various assumptions including discount rate, future salary incremental rate, staff turnover

rate and mortality rate.

5.8 Leases

In determining whether a lease is to be classified as an operating lease or financial lease, the

management is required to use judgement regarding whether significant risks and rewards of

ownership of the lease asset has been transferred, taking into consideration terms and conditions of

the arrangement.



6. Interbank and money market items (assets)

(Unit: Thousand Baht)

As at 31 December

2017 2016

At call Term Total At call Term Total

Domestic

Bank of Thailand and

Financial Institutions

Development Fund 411,646 4,913,000 5,324,646 345,201 15,100,000 15,445,201

Commercial banks 62,040 1,650,000 1,712,040 110,812 - 110,812

Total 473,686 6,563,000 7,036,686 456,013 15,100,000 15,556,013

Add: Accrued interest

receivables 12 603 615 - 838 838

Less: Allowance for doubtful

accounts - (16,500) (16,500) - - -

Total domestic items 473,698 6,547,103 7,020,801 456,013 15,100,838 15,556,851

Foreign

US Dollar 262,803 1,756,598 2,019,401 659,987 960,263 1,620,250

Chinese Yuan 92,806 1,253,625 1,346,431 734,015 14,419 748,434

Hong Kong Dollar 8,284 873,683 881,967 35,529 360,493 396,022

Euro 25,117 - 25,117 138,381 - 138,381

Other currencies 5,324 - 5,324 5,835 - 5,835

Total 394,334 3,883,906 4,278,240 1,573,747 1,335,175 2,908,922

Add: Accrued interest

receivables 11 6,694 6,705 - 1,350 1,350

Less: Allowance for doubtful

accounts (15,670) (29,312) (44,982) - (13,352) (13,352)

Total foreign items 378,675 3,861,288 4,239,963 1,573,747 1,323,173 2,896,920

Total domestic and foreign items 852,373 10,408,391 11,260,764 2,029,760 16,424,011 18,453,771



7. Derivatives

As at 31 December 2017 and 2016, the Bank has notional amount and fair value of derivatives held

for trading classified by type of risk as follows.


As at 31 December

2017 2016

Fair Value Notional Fair Value Notional

Type of risk Assets Liabilities amount Assets Liabilities amount

Foreign exchange rate 11,987 10,257 1,073,186 77 1,199 1,307,204

The proportions of derivative transactions classified by counterparty, determined based on the

notional amount, as at 31 December 2017 and 2016 are as follows.

(Unit: Percentage)

As at 31 December

Counterparty 2017 2016

Financial institutions 54.86 99.19

Companies in the group* 0.17 0.81

Third parties 44.97 -

Total 100.00 100.00

* Companies in the group represent companies in the Bank of China Group.

8. Investments

8.1 Classified by type of investment


As at 31 December

2017 2016

Available-for-sale investments - fair value

Government and state enterprises securities 3,506,610 3,706,033

Total available-for-sale investments 3,506,610 3,706,033

General investments - cost

Domestic non-marketable equity securities 5 5

Total general investments 5 5

Total investments - net 3,506,615 3,706,038



As at 31 December 2017, Government bonds amounting to Baht 3,491 million (2016: Baht 3,706

million) are used as collateral for credit balance on clearing position with the Bank of Thailand.

8.2 Classified by remaining period to maturity of debt securities

Investments in debt securities are classified by remaining period to maturity as follows.


As at 31 December 2017

Due within

1 year 1 - 5 years Over 5 years Total

Available-for-sale securities

Government and state enterprises

securities 2,500,360 1,002,573 - 3,502,933

Add: Allowance for revaluation 2,230 1,447 - 3,677

Total 2,502,590 1,004,020 - 3,506,610



Due within

1 year 1 - 5 years Over 5 years Total

Available-for-sale securities

Government and state enterprises

securities 3,206,942 499,361 - 3,706,303

Less: Allowance for revaluation (269) (1) - (270)

Total 3,206,673 499,360 - 3,706,033



9. Loans to customers and accrued interest receivables

9.1 Classified by loan type


As at 31 December

2017 2016

Overdrafts 75,643 43,564

Loans 30,633,031 21,336,622

Trade bills 306,547 272,766

Less: Deferred revenue (1,535) (1,106)

Loans to customers - net of deferred revenue 31,013,686 21,651,846

Add: Accrued interest receivables 125,342 102,905

Loans to customers - net of deferred revenue and

accrued interest receivables 31,139,028 21,754,751

Less: Allowance for doubtful accounts (558,197) (487,504)

Loans to customers and accrued interest

receivables - net 30,580,831 21,267,247

9.2 Classified by currency and residency of debtors


As at 31 December

2017 2016

Domestic Foreign Total Domestic Foreign Total

Baht 15,620,898 - 15,620,898 7,572,244 - 7,572,244

US Dollar 7,148,001 6,015,905 13,163,906 6,147,602 2,686,382 8,833,984

Chinese Yuan 1,979 972,813 974,792 8,088 3,851,020 3,859,108

Other currencies - 1,254,090 1,254,090 - 1,386,510 1,386,510

Loans to customers - net

of deferred revenue 22,770,878 8,242,808 31,013,686 13,727,934 7,923,912 21,651,846



9.3 Classified by type of business and loan classification



Special Sub- Doubtful

Pass mention standard Doubtful of loss Total

Manufacturing and

commerce 15,381,005 1,978,249 - 290,283 460,104 18,109,641

Real estate and

construction 3,671,672 - - - - 3,671,672

Public utilities and services 7,331,973 - - - - 7,331,973

Housing loans 1,768,691 - - - 17,581 1,786,272

Credit card 104,450 3,949 4,521 1,208 - 114,128


of deferred revenue 28,257,791 1,982,198 4,521 291,491 477,685 31,013,686



Special Sub- Doubtful

Pass mention standard Doubtful of loss Total

Manufacturing and

commerce 7,742,348 2,125,789 353,574 - 447,922 10,669,633

Real estate and

construction 3,143,814 - - - - 3,143,814

Public utilities and services 6,535,218 - - - - 6,535,218

Housing loans 1,153,639 - - 17,581 - 1,171,220

Credit card 117,066 7,092 5,806 1,986 - 131,950

Others 11 - - - - 11


of deferred revenue 18,692,096 2,132,881 359,380 19,567 447,922 21,651,846



9.4 Classified by loan classification



Loans to

customers and

accrued interest

receivables

Net balance

used in setting

allowance for

doubtful

accounts

Loan loss

provisioning

rates

Allowance for

doubtful

accounts

(Percentage)

The BOT’s minimum required

provision

Pass 28,358,033 22,503,428 1 225,034

Special mention 2,007,298 1,982,207 2 39,644

Sub-standard 4,521 4,527 100 4,527

Doubtful 291,491 1,230 100 1,230

Doubtful of loss 477,685 287,762 100 287,762

Total 31,139,028 24,779,154 558,197



Loans to

customers and

accrued interest

receivables

Net balance

used in setting

allowance for

doubtful

accounts

Loan loss

provisioning

rates

Allowance for

doubtful

accounts

(Percentage)

The BOT’s minimum required

provision

Pass 18,764,246 16,094,987 1 160,950

Special mention 2,162,317 2,132,907 2 42,658

Sub-standard 360,538 72,321 100 72,321

Doubtful 19,728 4,690 100 4,690

Doubtful of loss 447,922 206,885 100 206,885

Total 21,754,751 18,511,790 487,504



As at 31 December 2017, there were defaulted loans amounting to Baht 774 million (2016: Baht

476 million) for which the Bank has ceased accrual of interest income on accrual basis according

to the Bank of Thailand’s notification.

10. Allowance for doubtful accounts



Pass

Special

mention

Sub-

standard Doubtful

Doubtful

of loss Total

Balance - beginning of the year 160,950 42,658 72,321 4,690 206,885 487,504

Increase (decrease) during the

year 64,084 (3,014) (67,794) (3,460) 92,818 82,634

Bad debt recovery - - - - 7,475 7,475

Bad debt written-off - - - - (19,416) (19,416)

Balance - end of the year 225,034 39,644 4,527 1,230 287,762 558,197



Pass

Special

mention

Sub-

standard Doubtful

Doubtful

of loss Total

Balance - beginning of the year 342,449 3,448 170,636 13,509 - 530,042

Increase (decrease) during the

year (181,499) 39,210 (98,315) (8,819) 223,158 (26,265)

Bad debt recovery - - - - 3,296 3,296

Bad debt written-off - - - - (19,569) (19,569)

Balance - end of the year 160,950 42,658 72,321 4,690 206,885 487,504



11. Premises and equipment


Building and

building

improvemen

ts

Computer

equipment

Furniture

and office

equipment Vehicles

Asset

under

constructio

n Total

Cost

As at 1 January 2016 204,292 45,338 87,975 40,621 5,504 383,730

Acquisitions 73,217 11,010 35,800 3,008 9,568 132,603

Transfer in (out) 34 2,522 601 - (3,157) -

Disposal - - - (7,169) - (7,169)

Write-off - (266) (297) - - (563)

As at 31 December 2016 277,543 58,604 124,079 36,460 11,915 508,601

Acquisitions 64,675 13,709 10,966 5 68 89,423

Transfer in (out) - 4,182 7,733 - (11,915) -

Write-off (9,261) (4,693) (9,896) - - (23,850)

As at 31 December 2017 332,957 71,802 132,882 36,465 68 574,174

Accumulated depreciation

As at 1 January 2016 111,682 28,718 43,983 29,822 - 214,205

Depreciation for the year 15,284 9,770 16,775 5,750 - 47,579

Disposal - - - (7,162) - (7,162)

Write-off - (238) (262) - - (500)

As at 31 December 2016 126,966 38,250 60,496 28,410 - 254,122

Depreciation for the year 24,000 11,381 19,203 3,340 - 57,924

Write-off (914) (4,676) (7,068) - - (12,658)

As at 31 December 2017 150,052 44,955 72,631 31,750 - 299,388

Net book value

As at 31 December 2016 150,577 20,354 63,583 8,050 11,915 254,479

As at 31 December 2017 182,905 26,847 60,251 4,715 68 274,786

Depreciation included in profit or loss for the years ended 31 December

2016 47,579

2017 57,924



12. Intangible assets


License fee

Computer

software

Computer

software

under

developmen

t Total

Cost

As at 1 January 2016 35,872 12,052 2,181 50,105

Acquisitions 155 3,338 - 3,493

Transfer in (out) - 2,181 (2,181) -

As at 31 December 2016 36,027 17,571 - 53,598

Acquisitions - 1,398 306 1,704

As at 31 December 2017 36,027 18,969 306 55,302

Accumulated amortisation

As at 1 January 2016 15,786 3,367 - 19,153

Amortisation for the year 3,592 1,742 - 5,334

As at 31 December 2016 19,378 5,109 - 24,487

Amortisation for the year 3,603 1,638 - 5,241

As at 31 December 2017 22,981 6,747 - 29,728

Net book value

As at 31 December 2016 16,649 12,462 - 29,111

As at 31 December 2017 13,046 12,222 306 25,574

Amortisation included in profit or loss for the years ended 31 December

2016 5,334

2017 5,241



13. Leasehold right


Leasehold right

Cost

As at 1 January 2016 210,194

Additions during the year -

As at 31 December 2016 210,194

Additions during the year -


Accumulated amortisation

As at 1 January 2016 186,557

Amortisation for the year 10,509


Amortisation for the year 10,510


Net book value



Amortisation included in profit or loss for the years ended 31 December

2016 10,509

2017 10,510

14. Other assets


As at 31 December

2017 2016

Accrued interest receivables from investments 20,917 30,755

Deposits 13,029 10,758

Prepaid expenses 12,500 10,348

Others 9,196 12,291

Total other assets 55,642 64,152



15. Deposit

15.1 Classified by type of deposits

15.2 Classified by currency and residency of deposits


As at 31 December

2017 2016


Baht 15,386,960 24,256 15,411,216 17,379,264 7,253 17,386,517

US Dollar 3,970,644 530,344 4,500,988 3,520,903 319,025 3,839,928

Chinese Yuan 1,268,654 2 1,268,656 651,093 2 651,095

Others 22,932 691 23,623 117,817 561 118,378

Total 20,649,190 555,293 21,204,483 21,669,077 326,841 21,995,918

(Unit: Thousand

Baht)

As at 31 December

2017 2016

Current accounts 360,042 146,710

Saving accounts 9,475,746 7,882,172

Fixed accounts

- not over 6 months 5,456,145 1,656,229

- 6 months and up to 1 year 5,595,437 11,991,921

- over 1 year 317,113 318,886

Total 21,204,483 21,995,918



16. Interbank and money market items (liabilities)


As at 31 December

2017 2016

At call Term Total At call Term Total

Domestic

Commercial banks 8,120 - 8,120 1,858 - 1,858

Total domestic items 8,120 - 8,120 1,858 - 1,858

Foreign

Baht 232,351 - 232,351 307,951 - 307,951

US Dollar - 7,932,962 7,932,962 - 5,013,234 5,013,234

Chinese Yuan - 997,885 997,885 - 3,836,601 3,836,601

Hong Kong Dollar - 2,090,150 2,090,150 - 1,747,003 1,747,003

Total foreign items 232,351 11,020,997 11,253,348 307,951 10,596,838 10,904,789

Total domestic and foreign items 240,471 11,020,997 11,261,468 309,809 10,596,838 10,906,647

17. Debts issued and borrowings

As at 31 December 2017, debts issued and borrowings classified by type of securities, maturity

and interest rate are as follows:



Maturity Interest rate per annum

Currenc

y

Amount

Type Domestic Foreign Total

(%)

Subordinated debentures 21 August 2027 Floating rate of 3-month

LIBOR + 0.3

USD

- 2,287,663 2,287,663

Total - 2,287,663 2,287,663

On 21 August 2017, the Bank issued USD 70 million of name-registered, unsecured, subordinated

debentures with no debenture holders’ representative through Bank of China (Hong Kong)

Limited. The debentures have a 10-year tenor and bear interest at a floating rate of 3-month

LIBOR + 0.3% per annum, payable quarterly. The Bank has the right to early redeem all

subordinated debentures from the fifth anniversary of the issuance date. The debentures have loss

absorption features that will come into effect at the point of non-viability, in accordance with the

BOT’s guidelines with reference to Basel lll framework.



On 5 September 2017, BOT granted an approval for the Bank to count proceeds received from the

issuance of the above subordinated debentures for an amount of Baht 2,326 million as a part of its

Tier II capital, in accordance with the conditions specified in the BOT’s notifications regarding the

Basel III framework.

18. Provisions


As at 31 December

2017 2016

Provision for restoration and dismantling cost 51,983 10,599

Provision for long-term employee benefits 11,574 9,978

Other provisions 6,687 5,351

Total provisions 70,244 25,928

Provisions for long-term employee benefits

Changes in provisions for long-term employee benefits for the years ended 31 December 2017 and

2016 can be summarised as follows.


For the years ended 31 December

2017 2016

Provisions for long-term employee benefits at the beginning of the years 9,978 10,437

Recognised in profit or loss:

Current service cost 2,831 2,108

Interest cost 281 266

Total benefits recognised in profit or loss 3,112 2,374

Recognised in other comprehensive income:

Actuarial (gains) losses arising from

Demographic assumption changes (2,109) (470)

Financial assumption changes (308) 531

Experience adjustments 901 (16)

Total benefits recognised in other comprehensive income (1,516) 45

Benefits paid during the years - (2,878)

Provisions for long-term employee benefits at the end of the years 11,574 9,978

The Bank expects to pay long-term employee benefits during the next one year amounting to Baht

1 million (2016: Baht 1 million).



As at 31 December 2017 and 2016, the weighted average duration of the Bank’s long-term

employee benefit obligation is 14 years.

The principal assumptions used in determining employee benefits under retirement plans can be

summarised as follows.

(Unit: Percentage per year)

As at 31 December

2017 2016

Average salary incremental rate 5.00 5.00

Average staff turnover rate 0.00 - 30.00 0.00 - 30.00

Discount rate 3.24 2.82

Sensitivity analysis for principal assumptions that affects provisions for long-term employee

benefits as at 31 December 2017 and 2016 are summarised below.


As at 31 December

2017 2016

Increased by 1% Decreased by 1% Increased by 1% Decreased by 1%

Average salary incremental

rate 949 (853) 913 (819)

Average staff turnover rate (532) 587 (529) 584

Discount rate (859) 977 (828) 943

19. Other liabilities


As at 31 December

2017 2016

Accrued expenses 189,546 205,288

Cash subscription payable 203,013 203,013

Deferred fees income 95,174 43,417

Corporate income tax payable 24,819 2,993

Other liabilities payable on behalf of

Bank of China Limited, Bangkok branch 10,789 10,789

Others 46,882 48,085

Total other liabilities 570,223 513,585



20. Other components of equity


As at 31 December

2017 2016

Revaluation surplus (deficit) on available-for-sale investments

Revaluation surplus on available-for-sale investments

Debt instruments 3,684 73

Revaluation deficit on available-for-sale investments

Debt instruments (6) (343)

Total revaluation surplus (deficit) on available-for-sale investments 3,678 (270)

Add (less): Income tax effects (734) 54

Other components of equity - net of income tax 2,944 (216)

21. Statutory reserve

Pursuant to Section 116 of the Public Limited Companies Act B.E. 2535, the Bank is required to

set aside to a statutory reserve at least 5 percent of its net profit after deducting accumulated deficit

brought forward (if any), until the reserve reaches 10 percent of the registered capital. The statutory

reserve is not available for dividend distribution.

22. Capital funds

The primary objectives of the Bank’s capital management are to maintain the Bank’s ability to

continue as a going concern and to maintain a capital adequacy ratio in accordance with the Act on

Undertaking of Banking business B.E. 2551.

As at 31 December 2017 and 2016, capital funds of the Bank calculated in accordance with the

BOT’s requirements with reference to Basel III framework consist of the following:


As at 31 December

2017 2016

Tier I capital

Common Equity Tier I capital

Issued and fully paid-up share capital 10,000,000 10,000,000

Statutory reserve 109 -

Other components of equity 2,355 (130)

Less: Deduction items from Common Equity Tier I (52,717) (36,271)

Total Tier I capital 9,949,747 9,963,599

Tier II capital

Subordinated debentures 2,325,729 -

Total Tier II capital 2,325,729 -

Total capital funds 12,275,476 9,963,599



(Unit: Percentage)

As at 31 December

2017 2016

Capital Adequacy Ratio

Minimum

requirement

by BOT The Bank

Minimum

requirement

by BOT The Bank

Common Equity Tier I to risk-weighted assets 5.75 27.53 5.125 37.78

Tier I capital funds to risk-weighted assets 7.25 27.53 6.625 37.78

Total capital funds to risk-weighted assets 9.75 33.96 9.125 37.78

In accordance with the Notification of the Bank of Thailand No. Sor Nor Sor. 4/2556 regarding the

disclosure of capital maintenance for commercial banks, the Bank will disclose capital

maintenance information as at 31 December 2017 on its website (www.bankofchina.com/th) by

April 2017.

23. Interest income



2017 2016

Interbank and money market items 140,603 211,848

Investments in debt securities 57,514 72,625

Loans 994,886 869,526

Total interest income 1,193,003 1,153,999

24. Interest expenses



2017 2016

Deposits 225,768 445,933

Interbank and money market items 251,596 306,955

Debts issued and borrowings 14,135 -

Contributions to Deposit Protection Agency and

Financial Institutions Development Fund 73,068 114,129

Total interest expenses 564,567 867,017



25. Fees and service income



2017 2016

Fees and service income

- Acceptances, aval and guarantees 93,481 72,304

- Others 115,058 98,633

Total fees and service income 208,539 170,937

Fees and service expenses (21,047) (22,142)

Net fees and service income 187,492 148,795

26. Net gains on trading and foreign exchange transactions



2017 2016

Gains on trading and foreign exchange transactions

- Foreign currencies and derivatives on foreign

exchange 117,774 164,184

Net gains on trading and foreign exchange

transactions 117,774 164,184

27. Bad debts, doubtful accounts and impairment losses



2017 2016

Bad debts and doubtful accounts (reversal):

Interbank and money market items 48,130 (24,641)

Loans to customers 82,634 (26,265)

Total bad debts, doubtful accounts and impairment

losses (reversal) 130,764 (50,906)



28. Income tax expenses

Income tax expenses of the Bank for the years ended 31 December 2017 and 2016 are as follows.



2017 2016

Current income tax:

Income tax for the years 35,258 5,389

Adjustments in respect of corporate income tax

of previous years (1,617) 7

Deferred tax:

Deferred tax on temporary differences and reversion

of temporary differences (13,730) 2,508

Income tax expenses reported in the statement of

comprehensive income 19,911 7,904

The amount of income tax relating to each component of other comprehensive income for the years

ended 31 December 2017 and 2016 are as follows.



2017 2016

(Gains) losses on valuation in available-for-sale

investments (788) 1,805

Actuarial (gains) losses on defined benefit plan (276) 8

Income tax recorded directly to other comprehensive

income (1,064) 1,813



A reconciliation between income tax expenses and the product of accounting profit multiplied by

the applicable tax rates for the years ended 31 December 2017 and 2016 are as follows.



2017 2016

Accounting profit before tax 95,475 33,916

Applicable tax rate 10% and 20% 10% and 20%

Accounting profit before tax multiplied by applicable tax

rate 21,885 4,254

Adjustments in respect of corporate income tax of previous

years (1,617) 7

Tax effect of non-taxable income and non-deductible

expenses (357) 3,643

Income tax expenses reported in the statement of

comprehensive income 19,911 7,904

The components of deferred tax assets are as follows.


Change in deferred tax

assets/liabilities

reported in profit or loss for

the

As at 31 December years ended 31 December

2017 2016 2017 2016

Revaluation (surplus) deficit

on investments (734) 54 - -

Provisions 20,646 16,820 4,102 7,167

Deferred fees income 8,183 - 8,183 -

Unused tax losses - - - (11,659)

Others 3,429 1,984 1,445 1,984

Deferred tax assets 31,524 18,858 13,730 (2,508)



29. Commitments and contingent liabilities

29.1 Commitments


As at 31 December

2017 2016

Letters of credit 551,846 789,970

Other commitments

- Undrawn overdraft amount 12,274,115 11,238,845

- Other guarantees 17,425,355 15,045,222

Total 30,251,316 27,074,037

29.2 Operating lease commitments

The Bank has entered into several lease agreements in respect of the lease of office buildings and

branch offices. The terms of the agreements are generally 3 - 20 years.

As at 31 December 2017 and 2016, the Bank has future minimum lease payments required under

these non-cancellable operating leases contracts as follows.


As at 31 December

2017 2016

Payment terms

Within 1 year 36,903 24,572

1 - 5 years 72,440 26,010

More than 5 years 35,367 39,063

Total 144,710 89,645

30. Related party transactions

Related parties comprise individuals or enterprises that control or are controlled by the Bank,

whether directly or indirectly, or which are under common control with the Bank.

They also include associated companies, and individuals or enterprises which directly or indirectly

own a voting interest in the Bank that gives them significant influence over the Bank, key

management personnel, directors and officers with authority in the plan and the direction of the

Bank’s operations, together with close family members of such persons and companies which are

controlled and influenced by them, whether directly or indirectly.



During the year, the Bank had significant business transactions with its related companies and

related persons. These transactions have been concluded on commercial terms and based agreed

upon in the ordinary course of business between the Bank and those parties are summarised below.

(Unit Thousand Baht)


2017 2016

Terms and pricing

policy

Parent company:

Interest income

- Bank of China Limited - 9 At market price

- Bank of China (Hong Kong)

Limited 47,180 -

At market price

Interest expenses

- Bank of China Limited - 15,802 At market price


Limited 47,637 -

At market price

Premises and equipment expenses

- Bank of China Limited - 10,614 At the rate agreed under

the service contract


Limited

1,769 - At the rate agreed under


Fee income


Limited

28 - At the rate agreed under


Companies in the Bank of China

Group:

Interest income 8,412 86,858 At market price

Interest expenses 214,779 291,036 At market price

Premises and equipment expenses 11,823 2,312 At the rate agreed under


Fee income 11,158 - At the rate agreed under




As at 31 December 2017 and 2016, the balance of the accounts between the Bank and related

companies are as follows.


As at 31 December

2017 2016

Outstanding balance

Parent company

Interbank and money market items (assets)

- Bank of China Limited - 36,416

- Bank of China (Hong Kong) Limited 3,138,400 -

Accrued interest receivables

- Bank of China (Hong Kong) Limited 1,319 -

Interbank and money market items (liabilities)



Debts issued and borrowings


Accrued interest payables

- Bank of China (Hong Kong) Limited 15,660 -

Cash subscription payable


Other liabilities on behalf of Bank of China

Limited, Bangkok branch


Accrued expenses


- Bank of China (Hong Kong) Limited 321 -

Other liabilities


- Bank of China (Hong Kong) Limited - -




As at 31 December

2017 2016

Companies in the Bank of China Group:

Interbank and money market items (assets) 1,087,550 2,866,290

Accrued interest receivables 5,387 1,350

Interbank and money market items (liabilities) 6,312,017 10,661,364

Deposits 123,952 81,864

Accrued interest payables 11,321 69,757

Cash subscription payable 203,013 -

Other liabilities on behalf of Bank of China

Limited, Bangkok branch 10,789 -

Accrued expenses 12,711 -

Other liabilities 7,316 2,258

Liabilities payable to directors and key management personnel


As at 31 December

2017 2016

Deposits 20,348 20,038

Directors and management’s benefits

During the years ended 31 December 2017 and 2016, the Bank had short-term benefit expenses

paid to their directors and key management during the years and other employee benefit expenses

payable to their directors and management as follows.



2017 2016

Short-term benefits(1) 60,366 44,458

Total 60,366 44,458

(1) Short-term benefits include directors’ remuneration amounting to Baht 4 million (2016: Baht 4

million).



31. Earnings per share

Basic earnings per share is calculated by dividing profit for the years attributable to equity holders

of the Bank (excluding other comprehensive income) by the weighted average number of ordinary

shares in issue during the years.


2017 2016

Profits for the years (Thousand Baht) 75,564 26,011

Basic earnings per share (Baht/share) 0.08 0.03

Weighted average number of shares (shares) 1,000,000,000 1,000,000,000

32. Financial position and results of operations classified by business activity

As at 31 December 2017 and 2016, financial positions of the Bank classified by geographic

locations are as follows.


As at 31 December

2017 2016


Total assets 36,580,091 9,352,692 45,932,783 35,762,376 8,186,132 43,948,508

Interbank and money market

items - net (assets) 10,104,249 1,156,515 11,260,764 18,269,285 184,486 18,453,771

Investments - net 3,506,615 - 3,506,615 3,706,038 - 3,706,038

Loans to customers and

accrued interest receivables

- net 22,387,372 8,193,459 30,580,831 13,265,601 8,001,646 21,267,247

Deposits 21,204,405 78 21,204,483 21,995,833 85 21,995,918


items (liabilities) 2,062,993 9,198,475 11,261,468 2,820,144 8,086,503 10,906,647

Liabilities payable on demand 352,992 - 352,992 279,351 - 279,351

Debts issued and borrowings - 2,287,663 2,287,663 - - -



The operating results of the Bank for the years ended 31 December 2017 and 2016 classified by

geographic locations are as follows.



2017 2016


Interest income 882,778 310,225 1,193,003 781,284 372,716 1,154,000

Less: Interest expenses (324,533) (240,034) (564,567) (603,414) (263,603) (867,017)

Net interest income 558,245 70,191 628,436 177,870 109,113 286,983

Net fees and service income 171,817 15,675 187,492 131,973 16,822 148,795

Other operating income 127,648 (4,767) 122,881 182,848 (12,024) 170,824

Less: Other operating expenses (712,522) (48) (712,570) (518,379) (105,213) (623,592)

Less: Bad debt, doubtful

accounts and impairment

loss (141,078) 10,314 (130,764) 34,314 16,592 50,906

Profit from operation before

income tax 4,110 91,365 95,475 8,626 25,290 33,916

33. Fair value of assets and liabilities

As at 31 December 2017 and 2016, the Bank had the assets and liabilities that were measured at fair

value or disclosed at fair value using different levels of inputs as follows.



Carrying Fair value

value Level 1 Level 2 Level 3 Total

Financial assets measured at fair value

Derivative assets 11,987 - 11,987 - 11,987

Available-for-sale-investments

Debt instruments 3,506,610 - 3,506,610 - 3,506,610

Financial liabilities measured at fair value

Derivative liabilities 10,257 - 10,257 - 10,257

Financial assets for which fair value are

disclosed

Cash 182,442 182,442 - - 182,442

Interbank and money market items - net 11,260,764 - 11,260,764 - 11,260,764

Loan to customers and accrued interest

receivables - net 30,580,831 - 30,580,831 - 30,580,831

Financial liabilities for which fair value are

disclosed

Deposits 21,204,483 9,835,788 11,371,185 - 21,206,973





Carrying Fair value


Interbank and money market items 11,261,468 - 11,261,468 - 11,261,468

Liabilities payable on demand 352,992 - 352,992 - 352,992

Debts issued and borrowings 2,287,663 - 1,959,626 - 1,959,626



Carrying Fair value


Financial assets measured at fair value

Derivative assets 77 - 77 - 77

Available-for-sale-investments

Debt instruments 3,706,033 - 3,706,033 - 3,706,033

Financial liabilities measured at fair value

Derivative liabilities 1,199 - 1,199 - 1,199

Financial assets for which fair value are

disclosed

Cash 141,646 141,646 - - 141,646

Interbank and money market items - net 18,453,771 - 18,453,771 - 18,453,771

Loan to customers and accrued interest

receivables - net 21,267,247 - 21,267,247 - 21,267,247

Financial liabilities for which fair value are

disclosed

Deposits

21,995,918 8,028,882 13,979,57

0

- 22,008,452

Interbank and money market items 10,906,647 - 10,906,647 - 10,906,647

Liabilities payable on demand 279,351 - 279,351 - 279,351

During the current year, there were no transfers within the fair value hierarchy levels.

Fair value of assets and liabilities

Fair value of each item of assets and liabilities is estimated using the following methods and

assumptions.

(a) Cash

The fair value is assumed to approximate its book value in the statement of financial position.

(b) Interbank and money market items (asset)



The fair value is assumed to approximate their book value in the statement of financial

position due to their short-term maturity.

(c) Derivatives

For derivatives, their fair value has been determined by using a discounted future cash flow

model and a valuation model technique. Most of the inputs used for the valuation are

observable in the relevant market such as spot rates, forward rates of foreign currencies and

interest rate yield curves. The Bank had considered an effect of counterparty’s credit risk

when determining the fair value of derivatives.

(d) Investments

For debts securities, their fair value is generally derived from quoted market prices or

determined by using the yield curve as announced by the Thai Bond Market Association.

(e) Loans to customers

The fair values of the floating rate loans that are scheduled to be re-priced regularly and have

no significant change in credit risk or of the fixed rate loans that are re-priced within 1 year as

from the financial reporting date are estimated to approximate their carrying values. The fair

values of fixed rate loans that are scheduled to be re-priced longer than 1 year as from the

financial reporting date are estimated using the discounted cash flow techniques and applying

an average interest rates currently being offered to other borrowers with similar credit quality

and similar loan terms and conditions, except that such loans, upon which fair value

calculation under such techniques, provide the fair values which do not materially different

from their carrying values, the fair values are therefore approximated their carrying values.

(f) Deposits

The fair values of demand deposits, floating rate deposits and deposits that are re-

priced within 1 year as from the financial reporting date are estimated to approximate their

carrying values. The fair values for other fixed rate deposits are estimated using the

discounted cash flow techniques by discounting the expected future cash flows at the Bank’s

interest rate for similar deposits.

(g) Interbank and money market items (liabilities)

The fair value of interbank and money market items payable on demand, floating rate

deposits or fixed rate deposits with no more than 1 year from the statement of financial

position date remaining to maturity is assumed to approximate their book value.



(h) Debts issued and borrowings

The fair values of floating rate debts issued and borrowings with a remaining maturity period

of longer than 1 year as from the financial reporting date are estimated using the discounted

cash flow techniques and applying an average rate of interest currently charged on

borrowings with similar arrangements.

34. Financial instruments

34.1 Credit risk

Credit risk is the risk that the counterparty to a financial instrument will fail to fulfill an obligation,

causing the Bank to incur a financial loss. The amount of maximum credit risk exposure is the

carrying amount of the financial instrument less provision for losses as stated in the statements of

financial position and the risk of commitments from avals, guarantees of loans and other

guarantees.

In addition, the Bank manages credit risk by the means of careful consideration of credit approval

process, analysis of risk factors and the ability of customers to service debt, and a credit review

process, which examines and reviews the quality of the loan portfolio so as to prevent and provide

a remedy for problem loans in the future.

34.2 Interest rate risk

Interest rate risk in banking book is the risk or potential loss to earnings and economic value of the

Bank due to the change in interest rates. This interest rate risk arises from differences in the

maturity and repricing dates of assets and liabilities.

These mismatches are actively monitored and managed as part of the overall interest rate risk

management process which is conducted in accordance with the Bank’s risk management policies.



However, financial assets and liabilities represented their carrying values in statements of financial

position, which are classified by types of interest rates and repricing periods as follows.



Average

Fixed rate Non- return rate

Floating Within 3 - 12 1 - 5 More than interest (% per

rate 3 months months years 5 years bearing Total annum)

Financial assets

Cash - - - - - 182,442 182,442 -


items 391,684 9,610,846 - 836,060 - 476,336 11,314,926 1.83

Derivative assets - - - - - 11,987 11,987 -

Investments - net - - 2,502,590 1,004,020 - 5 3,506,615 1.60

Loans to customers 25,752,861 864,344 2,446,827 1,080,824 - 868,830 31,013,686 3.51

Total financial assets 26,144,545 10,475,190 4,949,417 2,920,904 - 1,539,600 46,029,656

Financial liabilities

Deposits 9,440,534 8,097,929 3,219,374 51,393 - 395,253 21,204,483 1.64


items 8,120 11,020,997 - - - 232,351 11,261,468 2.19

Liabilities payable on demand - - - - - 352,992 352,992 -

Derivative liabilities - - - - - 10,257 10,257 -

Debts issued and borrowings 2,287,663 - - - - - 2,287,663 1.74

Total financial liabilities 11,736,317 19,118,926 3,219,374 51,393 - 990,853 35,116,863

Net position 14,408,228 (8,643,736) 1,730,043 2,869,511 - 548,747 10,912,793



Average

Fixed rate Non- return rate

Floating Within 3 - 12 1 - 5 More than interest (% per

rate 3 months months years 5 years bearing Total annum)

Financial assets

Cash - - - - - 141,646 141,646 -


items 1,469,846 16,435,175 - - - 559,914 18,464,935 1.01

Derivative assets - - - - - 77 77 -

Investments - net - 1,200,772 2,005,901 499,360 - 5 3,706,038 2.04

Loans to customers 14,733,541 1,117,474 3,065,586 1,801,590 - 933,655 21,651,846 3.69

Total financial assets 16,203,387 18,753,421 5,071,487 2,300,950 - 1,635,297 43,964,542


Deposits 7,756,605 8,093,795 5,561,900 311,342 - 272,276 21,995,918 1.90


items 1,858 10,596,838 - - - 307,951 10,906,647 3.09

Liabilities payable on demand - - - - - 279,351 279,351 -

Derivative liabilities - - - - - 1,199 1,199 -

Total financial liabilities 7,758,463 18,690,633 5,561,900 311,342 - 860,777 33,183,115

Net position 8,444,924 62,788 (490,413) 1,989,608 - 774,520 10,781,427



34.3 Foreign exchange

Foreign exchange risk is the risk that changes in foreign exchange rates may result in fluctuations

in revenues or the values of financial assets and liabilities, and changes in the value of financial

instruments.

Since the Bank has foreign exchange transactions, it may be exposed to foreign exchange risk.

However, the Bank has a policy to mitigate this foreign exchange exposure through management of

its net foreign exchange position and operation in accordance with a risk management policy which

has been approved by its Board of Directors and is in strict accordance with BOT’s guidelines.

The foreign currency position of the Bank as at 31 December 2017 and 2016 can be summarised as

follows.



Baht US Dollar

Chinese

Yuan

Hong Kong

Dollar Others Total

Financial assets

Cash 111,650 17,238 53,554 - - 182,442

Interbank and money market items 7,037,301 2,019,746 1,352,005 882,753 30,441 11,322,246

Investments - net 3,506,615 - - - - 3,506,615

Loans to customers 15,620,898 13,163,906 974,792 1,254,090 - 31,013,686

Total financial assets 26,276,464 15,200,890 2,380,351 2,136,843 30,441 46,024,989


Deposits 15,411,216 4,500,988 1,268,656 - 23,623 21,204,483

Interbank and money market items 234,579 7,932,962 1,003,777 2,090,150 - 11,261,468

Liabilities payable on demand 17,840 316,096 15,159 459 3,438 352,992

Debts issued and borrowings - 2,287,663 - - - 2,287,663

Total financial liabilities 15,663,635 15,037,709 2,287,592 2,090,609 27,061 35,106,606

Net position 10,612,829 163,181 92,759 46,234 3,380 10,918,383

Commitments

Letters of credit - 534,660 170 - 17,016 551,846

Other commitments

Undrawn overdraft amount 9,292,594 2,813,564 167,957 - - 12,274,115

Other guarantees 8,866,333 7,393,194 785,004 - 380,824 17,425,355





Baht US Dollar

Chinese

Yuan

Hong Kong

Dollar Others Total

Financial assets

Cash 107,983 6,366 27,297 - - 141,646

Interbank and money market items 15,556,851 1,621,244 748,455 396,358 144,215 18,467,123

Investments - net 3,706,038 - - - - 3,706,038

Loans to customers 7,572,244 8,833,983 3,859,109 1,386,510 - 21,651,846

Total financial assets 26,943,116 10,461,593 4,634,861 1,782,868 144,215 43,966,653


Deposits 17,386,517 3,839,928 651,095 - 118,378 21,995,918

Interbank and money market items 309,026 5,013,234 3,837,384 1,747,003 - 10,906,647

Liabilities payable on demand 31,256 233,601 9,671 - 4,823 279,351

Total financial liabilities 17,726,799 9,086,763 4,498,150 1,747,003 123,201 33,181,916

Net position 9,216,317 1,374,830 136,711 35,865 21,014 10,784,737

Commitments

Letters of credit - 656,373 - - 133,597 789,970

Other commitments

Undrawn overdraft amount 7,591,394 3,520,397 127,054 - - 11,238,845

Other guarantees 6,623,882 7,218,623 917,910 - 284,807 15,045,222

In addition, the Bank has commitments from foreign currency exchange contracts made for trading

transactions as follows.



Baht US Dollar

Chinese

Yuan

Hong Kong

Dollar Others Total

Foreign exchange contracts

- Bought 524,650 550,011 - - 255 1,074,916

- Sold 558,779 514,407 - - - 1,073,186



Baht US Dollar

Chinese

Yuan

Hong Kong

Dollar Others Total

Foreign exchange contracts

- Bought 1,239,010 58,964 8,972 - - 1,306,946

- Sold 59,111 1,245,117 - - 2,976 1,307,204



34.4 Liquidity risk

Liquidity risk is uncertainty that the Bank is unable to meet repayment obligations when they fall

due. This could arise from a failure in asset conversion or to raise adequate fund for timely

fulfillment of obligations.

Prudent liquidity risk management implies maintaining sufficient cash and marketable securities.

Major source of fund is from share capital.

The maturity analysis of financial assets and liabilities presented at their carrying values in

statements of financial position and commitments presented at notional amount, which are

computed from the remaining maturity to repayment date is as follows.



At call

Within

3 months

3 - 12

months

1 - 5

years

More

than

5 years

No

specific

Maturity

date Total

Financial assets

Cash - - - - - 182,442 182,442


items 868,042 9,617,362 - 836,842 - - 11,322,246

Derivative assets - 11,987 - - - - 11,987

Investments - net 5 - 2,502,590 1,004,020 - - 3,506,615

Loans to customers 995,189 3,223,616 9,480,678 13,124,661 4,189,542 - 31,013,686

Total financial assets 1,863,236 12,852,965 11,983,268 14,965,523 4,189,542 182,442 46,036,976


Deposits 9,835,787 8,097,929 3,219,374 51,393 - - 21,204,483


items 240,471 10,519,361 501,636 - - - 11,261,468

Liabilities payable on demand 352,992 - - - - - 352,992

Derivative liabilities - 10,257 - - - - 10,257

Debts issued and borrowings - - - - 2,287,663 - 2,287,663

Total financial liabilities 10,429,250 18,627,547 3,721,010 51,393 2,287,663 - 35,116,863

Net position (8,566,014) (5,774,582) 8,262,258 14,914,130 1,901,879 182,442 10,920,113

Commitments

Letters of credit 17,048 525,778 9,020 - - - 551,846

Other commitments

Undrawn overdraft amount - 2,586,684 5,136,742 1,768,917 - 2,781,772 12,274,115

Other guarantees 831,110 852,932 260,107 919,912 343,954 14,217,340 17,425,355





At call

Within

3 months

3 - 12

months

1 - 5

years

More

than

5 years

No

specific

Maturity

date Total

Financial assets

Cash - - - - - 141,646 141,646


items 2,029,760 16,437,352 11 - - - 18,467,123

Derivative assets - 77 - - - - 77

Investments - net 5 1,200,772 2,005,901 499,360 - - 3,706,038

Loans to customers 887,749 4,192,403 7,473,730 7,241,266 1,856,698 - 21,651,846

Total financial assets 2,917,514 21,830,604 9,479,642 7,740,626 1,856,698 141,646 43,966,730


Deposits 8,028,881 8,093,795 5,561,900 311,342 - - 21,995,918


items 309,809 10,596,838 - - - - 10,906,647

Liabilities payable on demand 279,351 - - - - - 279,351

Derivative liabilities - 1,199 - - - - 1,199

Total financial liabilities 8,618,041 18,691,832 5,561,900 311,342 - - 33,183,115

Net position (5,700,527) 3,138,772 3,917,742 7,429,284 1,856,698 141,646 10,783,615

Commitments

Letters of credit 2,941 90,185 695,684 1,160 - - 789,970

Other commitments

Undrawn overdraft amount 107 2,280,117 5,626,637 629,731 - 2,702,253 11,238,845

Other guarantees 2,032,550 374,694 1,363,149 2,467,567 282,575 8,524,687 15,045,222

35. Approval of financial statements

These financial statements were authorised for issue by the Bank’s Board of Directors on 16

March 2018.



As of the end 2017, the Bank had a registered capital of 10,000,000,000 Baht, issued and fully paid-up capital 10,000,000,000 Baht. Totally were 1,000,000,000 ordinary shares, par value 10 Baht. Shareholder Structure The shareholding chart of the bank as of 31 December 2017 as following

The organization chart as at 31 D

ecember 2017 is as follow

s:

110 Organization Chart



BANK OF CHINA (THAI) PUBLIC COMPANY LIMITED

Register Address 1st- 4th Floor Bangkok City Tower, 179/4 South Sathorn Road, Tungmahamek, Sathorn, Bangkok 10120 Thailand

Registration No. 0107557000098

Date of first registration 1 April 2014

Registered capital 10,000,000,000 Baht (As of 31 December 2017)

Paid-up capital 10,000,000,000 Baht (As of 31 December 2017)

Par value 10 Baht

Website www.bankofchina.com/th

Telephone (66)2-286-1010

Facsimile (66)2-286-1020

Customer Service Centre (66)2-679-5566 (24 hours)

Auditor EY Office Limited

33rd Floor, Lake Rajada Office Complex

193/136-137 Rajadapisek Road, Klongtoey, Bangkok 10110

Thailand

Branch Office

Bangkok and Metropolitan

Head office Branch 1st- 4th Floor Bangkok City Tower, 179/4 South Sathorn Road

Tungmahamek, Sathorn, Bangkok 10120 Thailand

Tel: (66)2-286-1010

Fax: (66)2-286-1020

Ratchada Branch 1st Floor Paking Building, 9 Ratchadaphisek Road

Dendaeng, Bangkok 10400 Thailand

Tel: (66)2-203-7333

Fax: (66)2-203-7340

112 General Information


Talad Thai Branch 55/28-29 Moo 9 Tambol Klongsong

Amphoe Klongluang, Prathumthani 12120 Thailand

Tel: (66)2-150-2459

Fax: (66)2-150-2460

Bangna Branch 1st Floor Mega Bangna Plaza, Bangna-Trad Road, Bangkaew

Bangphli, Samutprakarn 10540 Thailand

Tel: (66)2-105-2102

Fax: (66)2-105-2101

Eastern

Rayong Branch Amata City Industrial Estate, 9/21, Moo 4 Mabyangporn District

Pluakdaeng, Rayong 21140 Thailand

Tel: (66)3-802-5837

Fax: (66)3-802-5830

North Eastern

Khon Kaen Branch Jompol Market Unit A1-3, 555 Moo 13, Kasikorn Thungsang Road

Nai Muang, Muang Khon Kaen, Khon Kaen 40000 Thailand

Tel: (66)4-324-6710

Fax: (66)4-324-6711

Nakhonratchasima Branch 440/9–11, Mittraparb-Nongkai Road, Tumbol Naimuang

Amphoe Muang Nakhon Ratchasima, Nakhon Ratchasima Province

30000

Tel: (66)4-424-8909

Fax: (66)4-424-8901



North

Chiangmai Branch 161, 161/1, Moo 4, Tumbol Nongpakrang

Amphoe Muang Chiang Mai, Chiang Mai Province, 50000

Tel: (66)5-326-1880

Fax: (66)5-326-1875

South

Hat Yai Branch Unit 1468/7-8, 1st Floor, Asean Plaza Hatyai

Kanchanavanit Road, Hat Yai, Songkhla, 90110

Tel: (66)7-455-9579

Fax: (66)7-455-9580

Bank of China (Thai) Public Company Limited 2017 Annual...

Documents

Transcript of Bank of China (Thai) Public Company Limited 2017 Annual...