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006 178 196 202 203 208 012 022 065 073 108 143 180 169 1 2 3 Financial Highlights Report of Corporate Governance Key Performance Internal Control and Related Party Transactions Responsibilities of the Board of Directors for Financial Report Attachment 1 Details of the Board of Directors, Executives, Controlling Persons, and Company Secretary Attachment 2 Details of Directors of Subsidiary Companies Attachment 3 Details of the Head of Internal Control and the Head of Compliance of the Company Attachment 4 Details Related to Assets Appraisal Attachment 5 Corporate Governance Policies and Code of Ethics Attachment 6 Reports of Sub-Committees Independent Auditor’s Report Financial Statements and Notes to Financial Statements Message from the Board of Directors Structure and Business Operations of Thanachart Group Risk Management Driving Business for Sustainability Management’s Discussion and Analysis General Information and Other Important Information Corporate Governance Policy and Code of Ethics Corporate Governance Structure and Important Information of the Board of Directors, Sub-committees, Executives, Employees, and Others Business Operations and Performance Corporate Governance Financial Statements Attachments (On Website) 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 3
V i s i o n Being a holding company of the business group which generates appropriate and sustainable returns for all stakeholders. 4
Principles of Business Operations of Thanachart Group 01 02 03 04 To compete in a morally responsible and ethical manner, achieving a good performance while taking into account both short-term and long-term effects. To operate its businesses by respecting and being responsible for its shareholders and stakeholders. To adhere to the business operations which care for the society and develop or reduce the negative impacts on the environment. To be able to make adjustments amidst changes in factors. 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 5
F i n a n c i a l H i g h l i g h t s Profit attributable to the Company Return on Average Assets (ROAA) and Return on Average Equity (1) (ROAE) Debt to Equity Ratio (D/E Ratio) (Million Baht) (Percent) (times) 7,001 6,669 5,287 7,839 10,807 2017 2020 2021 0.93 0.93 2018 2017 2019 2018 2020 2019 2020 2021 2021 (ROAE) 11.80 12.25 15.70 10.47 8.31 (ROAA) 1.45 1.54 1.67 5.24 4.73 6
Consolidated As at or for the year ended 31 December 2021 2020 2019 2018 (Restated) 2017 Operating Performance (Million Baht) Interest Income 4,026 4,213 4,339 4,074 44,681 Interest Expenses 1,355 1,620 1,599 1,515 15,511 Net Interest Income 2,671 2,593 2,740 2,559 29,170 Non-interest Income 8,513 10,317 4,744 5,546 13,402 Net Operating Income 11,184 12,910 7,484 8,105 42,572 Other Operating Expenses 3,143 2,899 3,034 3,019 20,836 Expected credit loss/Impairment Loss of Loans and Debt Securities (Reversal) 483 606 (316) 302 6,236 Profit before Income Tax 7,558 9,405 4,766 4,784 15,500 Income Tax 836 1,557 1,367 927 1,159 Profit for the Year from Continuing Operations 6,722 7,848 3,399 3,857 14,341 Profit for the Year from Discontinued Operations - - 13,361 11,949 - Total Profit for the Year 6,722 7,848 16,760 15,806 14,341 Profit attributable to the Company 5,287 6,669 10,807 7,839 7,001 Profit attributable to Non-controlling Interest 1,435 1,179 5,953 7,967 7,340 Operating Performance Ratios (Percent) Return on Average Assets (ROAA) 4.73 5.24 1.67 1.54 1.45 Return on Average Equity(1) (ROAE) 8.31 10.47 15.70 12.25 11.80 Debt to Equilty Ratio D/E Ratio (times) 0.93 0.93 1.17 6.69 6.88 Financial Position (Million Baht) Loans to Customers and Accrued Interest Receivables - net 55,221 50,251 53,159 731,125 688,844 Total Assets 142,735 140,756 160,927 1,060,929 1,025,525 Total Liabilities 68,594 67,987 86,868 923,011 895,455 Total Equity 74,141 72,769 74,059 137,918 130,070 Equity Attributable to Owners of the Company 65,114 63,311 65,833 65,735 62,020 Common Share Information Information per Share (Baht) Basic Earnings per Share 5.04 6.26 9.43 6.74 6.01 Book Value 62.10 60.38 57.46 57.15 53.23 Dividend(2) 1.20 3.00 7.00 2.60 2.20 Common Shares Outstanding (Million Shares) Average-Basic 1,049 1,066 1,146 1,164 1,165 End of Year 1,049 1,049 1,146 1,150 1,165 Share Price(3) (Baht) Highest 38.25 57.00 59.50 60.25 58.00 Lowest 32.25 27.00 50.25 46.25 43.75 Closing 37.75 34.50 53.50 49.75 56.25 Market Capitalization (Million Baht) 43,984 40,197 62,334 57,965 65,539 Other Information Employees(4) 1,811 1,824 2,062 13,893 13,885 Notes: (1) ROAE is calculated from equity attributable to owners of the Company (2) Dividend per share for 2021 is interim rate (3) Local Board / Highest and Lowest Share Prices During the Year (4) Number of employees in 2019 - 2021 excludes employees of TBANK, TFUND, and TBROKE 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 7
“Thanachart Group stands ready to take you through all crises together in a steady and sustainable manner.” 8
Because every step of yours is important, our goal is to strive to develop, plan, and build on financial future for you with our vision, To create appropriate returns for all the parties concerned in a stable manner. Under operations that take into account impacts on stakeholders in all dimensions-economic, social, and environmental, the purpose is to fulfill ongoing businesses, ensuring that they move forward in a balanced and sustainable manner. Being equipped with expertise and easily accessible modern tools that meet all types of needs in the digital era, we stand ready to take you through all crises or challenges. 9 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited
Important Changes in the Last 2010 - 2011 2013 Merger between TBANK and SCIB Reaching Life Assurance Brokerage Service Agreement with Prudential The Company came up with a merger plan for TBANK to buy a 47.58 percent equity stake in SCIB from the FIDF and to also make a tender to buy remaining ordinary shares from minority shareholders of SCIB in 2010. As a result, the total equity stake held by TBANK in SCIB amounted to 99.95 percent. In this connection, SCIB completed the Entire Business Transfer (EBT) to TBANK on 1 October 2011. This represented a historical merger in Thailand’s commercial banking industry. The merger was also in line with the authorities’ policy aimed at encouraging mergers among commercial banks to form a large bank. The objective of the policy was to strengthen the country’s financial system and overall economy. The merger helped equip TBANK with higher capital and additional channels for giving services to both institutional and individual customers in more diverse business areas. As a result, TBANK was in the position most conducive for ensuring stability of income management as well as future growth. Years The Company allowed TBANK to enter into a cooperation agreement with Prudential, which enabled TBANK to offer life assurance products and services thru its branches. In this connection, TBANK sold its 100 percent equity stake in Thanachart Life Assurance Company Limited to Prudential, the world’s leading financial group which offered insurance and financial services. As a result, TBANK was provided with a great opportunity not only to offer a diverse range of life assurance products to customers of Thanachart Group’s member companies but also to significantly expand TBANK’s life assurance brokerage business. 10
2014 2019 2020 - 2021 Non-life and Life Insurance Business Operations in Thanachart Group Changing business strategies and policies to respond to COVID-19 pandemic Major restructuring of Thanachart Group’s business operations, turning the Company into a diversified investment holding company that generates stable returns for shareholders in the long term The Company and MBK jointly purchased all the ordinary shares of Siam City Life Assurance Public Company Limited from TBANK and changed the name to MBK Life Assurance Public Company Limited. The acquisition served as a business operations strategy aimed at enabling Thanachart Group to operate both non-life and life insurance businesses again. The Company, as TBANK’s parent company, changed the shareholding structures of Thanachart Group’s member companies. In this connection, it sold all its equity stake in TBANK to TMB for the purpose of the merger between TMB and TBANK. Recognizing the potential and strengths of the two banks, the Company foresaw that the merger would produce a large commercial bank which almost The global COVID-19 pandemic and the government’s measures to suppress virus transmission had severe impacts on the economy. As a result, the Company changed its business strategy and policy to respond properly to the situation. In 2020, it disposed of all its equity stake in Ajinomoto. On the other hand, during the period from 2020 - 2021, the Company increased its shareholdings in its subsidiaries and associated companies as it foresaw their potential growth. It also wanted to support the business operations of all the subsidiaries, ensuring that they had stable financial positions. In addition, in 2021 it started offering asset-based financing services in which it had expertise through its equity stake in T-Plus. The key objective of implementing all such activities was to create a foundation for generating appropriate and sustainable returns for shareholders in the long term. This was in line with its strategy to become a diversified investment holding company which invested in a diverse range of financial service providers. Importantly, the Company had expertise in all these financial services. doubled in size with total assets amounting to almost 2 trillion baht. Importantly, their business structures and expertise would support each other. The new bank which was created from the merger would be a bank whose number of customers increasing to about 10 million. This represented greater market potential, a larger market share as well as more business opportunities as a result of the two banks’ combined competitiveness and expertise. As a result, the Company will earn stable long-term returns on investment. 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 11
Message from the Board of Directors The year 2021 was the second year in which the world was faced the COVID-19 pandemic. As well, Thailand was buffeted by several waves of the COVID-19 infections. As a result, the economic recovery was slow. On the other hand, thanks to spending stimulus measures and easing of containment measures as well as the export which increased in line with the demand recovery in the trading partner countries, the Thai economy registered a growth of 1.6 percent when compared to the year 2020 in which the country suffered a drastic economic contraction of 6.2 percent. However, several businesses and the household section were still hard-hit by the COVID-19 pandemic. The businesses which were most impacted included those related to tourism, hotels, shopping centers and restaurants although the country was opened to foreign tourists in the last quarter of the year. As for Thanachart Group, the year 2021 was also the second year after the Company underwent restructuring whereby it changed from a bank holding company to a diversified investment company. In particular, it used excess cash to continue increasing its equity stakes in the subsidiaries and associated companies as it foresaw future growth potential in these various companies. The excess cash was also used to support the business operations of all the subsidiaries, ensuring that their financial positions were stable. In addition, through its equity stake in T-Plus, the Company offered asset-based financing services in which it had expertise. The purpose of all these investments was to establish a foundation for generating an appropriate and sustainable return to shareholders in the long term. In the past year, the Company and its subsidiaries increased the value of investments and its shareholdings in its key subsidiaries and associated companies, the statuses as at the end of 2021 of which were as follows: • Increase in the equity stake in TTB from 20.11 percent to 23.32 percent with the total value of investments amounting to 45,643 million baht. • Increase in the equity stake in MBK from 22.42 percent to 23.32 percent with the total value of investments amounting to 5,281 million baht. • Increase in the equity stake in THANI from 58.85 percent to 60.16 percent with the total value of investments amounting to 13,695 million baht. • Increase in the equity stake in MBK LIFE from 51.00 percent to 100.00 percent with the total value of investments amounting to 1,081 million baht. As for the performance of the Company and its subsidiaries in 2021, net profit attributable to the Company amounted to 5,287 million baht, representing a decrease of 1,382 million baht or 20.72 percent when compared to the prior year. This was mainly due to the fact that in the first quarter of 2020, the Company recognized a gain from selling its equity stake in AJT, which was a special one-time gain. In case the special gain was excluded, net profit of the Company increased by 1,608 million baht or 43.71 percent. This was mainly due to the stronger performance of the Company and its key subsidiaries. However, the share of profit from investing in the associated companies decreased as they were still impacted by the COVID-19 pandemic. In relation to the asset-based financing services, T-Plus started offering the services since May 2021. Its performance was quite satisfactory with continuous growth. 12
(Mr. Banterng Tantivit) Chairman 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 13
(Mr. Suphadej Poonpipat) Vice Chairman In 2022, the Thai economy is expected to continue recovering. The major supporting factors include the recovery of domestic demand and tourism in line with the state’s promotion measures as well as the public health measures aiming at mitigating the impacts from the COVID-19 pandemic. Other key factors include the export growth and the government’s investments. The Board of Directors is still of the opinion that the current guidelines for conducting business affairs remain appropriate. These include continuing holding shares in various companies as they are now as well as supporting the business operations of every company, ensuring that they have a stable financial position. In this connection, the Company will consider additional new investments and operate the businesses in which it has expertise in a more proactive manner. Furthermore, the Company plans to expand the business networks of the Group’s various member companies, aiming at generating an appropriate return to shareholders in the long term. Thanks to the stable performance and the likelihood of the recovery of the Thai economy, the Board of Directors has adopted a resolution to make an interim dividend payment of 1.20 baht per share and another resolution to propose to shareholders the second round of a dividend payment of 1.80 baht per share. The combined payments will amount to 3.00 baht share, which is equal to the total dividend payment in the prior year. The combined payments account for 59.50 percent of the net profit attributable to the Company. The Board of Directors expects that the performance of Thanachart Group will continue to be at a satisfactory level and will enable the Company to maintain the fairly reasonable level of dividend payments as in the past. Sustainable business operation has been one of the matters to which the Board of Directors always pays great attention. In this connection, it announced and put in place the Corporate Governance Policy and the Handbook of the Code of Ethics, the Anti-Corruption Policy, the Risk Management Policy as well as other policies. As well, it requires the subsidiaries to consider announcing and putting in place their policies in line with those of the Company. Importantly, the Board of Directors not only monitors the implementation of the policies but also implements the activities relate to business operations, which are useful to the society. Moreover, it develops business operations and practices, aiming at waste reduction, energy conservation, as well as reduced use of natural resources, which will have good impacts on the environment. In this connection, Thailand’s Private Sector Collective Action Coalition Against Corruption (CAC) renewed the memberships of the Company and all the member companies of Thanachart Group, which marked the 10th consecutive year of their memberships. 14
• The Company was ranked as the Best Company 2021 in the financial sector for its stable financial position and the ability to make dividend payments to shareholders continuously. The Company also obtained the excellent level recognized for its corporate governance, based on the assessment survey results given in the Corporate Governance Report 2020 of Thai Listed Companies (CGR) issued by the IOD. • TNI received the following: 1) A financial rating of “AA-” with “Stable” outlook by TRIS Rating; 2) 2nd Rank Award at Non-Life Insurance Companies with Outstanding Management Awards 2020, which was organized by the OIC; 3) Best Claims Management Insurance Company Award for two consecutive years; and 4) Best Award at the Product of the Year Awards 2021 under the category of Excellent Group Insurance of the Year for its auto insurance product namely “Thanachart 2+ Complete” for two consecutive years. Another award received was the one from the “Move Forward Community Power” Project, whose objectives were to strengthen local communities and to promote road safety which caused damage. • THANI was selected by the SET as one of the sustainable stocks on the 2021 Thailand Sustainability Investment (THSI) list, which included 147 listed companies. • Ms. Pimpaka Nichgaroon, Managing Director of TNS won the Best Economist Award from Asiamoney Brokers’ Poll 2021. • Mr. Pattadol Bunnak, Securities Analyst of TNS was awarded the 2021 Best Mid-small Capitalization Stocks by Institutional Investor Ranking (II). In 2022, the Company plans to consider establishing the Environmental, Social and Governance (ESG) Policy, which will enable it to implement ESG-related activities with more concrete targets and plans which are suitable to Thanachart Group’s member companies continued to be well recognized by external organizations, as evidenced by the several awards they received as follows: Thanachart Group’s business operations as indicated in this 56-1 One Report - Driving Businesses for Sustainability. The Board of Directors is determined to continue carrying out all its duties to the best of abilities. The purpose is to ensure that the operations of the Company and Thanachart Group’s member companies create a stable performance and generate an appropriate return to shareholders and all the stakeholders concerned under the sustainability management guidelines. As well, we would like to express our thankfulness to all the stakeholders for continuously placing your trust in us. In addition, we would like to thank all the staff for working together well as always. On behalf of the Board of Directors (Mr. Somjate Moosirilert) Chief Executive Officer 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 15
1. Mr. Banterng Tantivit Chairman 3. Ms. Suvarnapha Suvarnaprathip Vice Chairperson of the Executive Committee 2. Mr. Suphadej Poonpipat Vice Chairman and Chairman of the Executive Committee 4. Mr. Somjate Moosirilert Member of the Executive Committee, Member of the Risk Oversight Committee, and Chief Executive Officer 1 3 2 4 Board of Directors 16
7. Dr. Thanachart Numnonda Chairman of the Risk Oversight Committee 5. Mrs. Siripen Sitasuwan Chairperson of the Audit Committee and Member of the Nomination, Remuneration, and Corporate Governance Committee 8. Mrs. Salinee Wangtal 9. Mr. Vichit Yanamorn Member of the Audit Committee and Member of the Risk Oversight Committee Member of the Nomination, Remuneration, and Corporate Governance Committee and Member of the Risk Oversight Committee 6. Mr. Tiraphot Vajrabhaya Chairman of the Nomination, Remuneration, and Corporate Governance Committee and Member of the Audit Committee 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 17
1 Business Operations and Performance • Structure and Business Operations of Thanachart Group • Risk Management • Driving Business for Sustainability • Management’s Discussion and Analysis • General Information and Other Important Information 18
56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 19
Section 1 Business Operations and Performance 1.1 Structure and operation of the Group Companies Company History Thanachart Finance and Securities Company Limited was established in 1980. It gradually evolved and expanded into various financial businesses until it covered all types of financial businesses. It advanced further and became the country’s leading financial business group which was widely accepted. Thanachart Group’s Shareholding Structure As of 31 December 2021 Currently, the Company operates an investment business and is the parent company (holding company) of Thanachart Group. It operates a wide range of financial businesses, including hire purchase, non-life and life insurance, securities brokerage, asset-based financing, non-performing asset management, and investment. TCAP NFS-AMC MAX-AMC TS-AMC T-Plus SPV2 TNS Remark : TCAP = Thanachart Capital PCL., ttb = TMBThanachart Bank PCL., MBK = MBK PCL, SPV 1 = Thanachart Special Purpose Vehicle 1 Co., Ltd., THANI = Ratchthani Leasing PCL., TNI = Thanachart Insurance PCL., MBK LIFE = MBK Life Assurance PCL., TM Broker = TM Broker Co., Ltd., MTS = MT Service 2016 Co., Ltd., NFS-AMC = NFS Asset Management Co., Ltd., MAX-AMC = MAX Asset Management Co., Ltd., TS-AMC = TS Asset Management Co., Ltd., TNS = Thanachart Securities PCL., SPV2 = Thanachart Special Purpose Vehicle 2 Co., Ltd., TGL = Thanachart Group leasing Co., Ltd., TTD = Thanachart Training & Development Co., Ltd., SSV = Security Scib Services Co., Ltd., TMS = Thanachart Management and Service Co., Ltd., T-Plus = Thanachart Plus Co., Ltd. TMS TGL SPV1 TNI MBK LIFE THANI MBK TM Broker MTS TTD SSV Associated Companies Hire Purchase and Leasing Business Insurance Business Distressed Assets Management Securities Business Other Businesses Asset-based Financing 20
56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 1.1.1 Policies and Overview of Business Operations The Company operates an investment business and is the parent company (or holding company) of Thanachart Group which its vision is to “be the parent company of a financial conglomerate which gives appropriate returns to all groups of stakeholders in a sustainable manner”. On the other hand, its subsidiaries continue to espouse the philosophy of the customer-centric strategy in order to develop the products and services that meet the needs of each customer group and to deliver good experience to customers through the use of the products and services offered by the Group’s member companies. Moreover, the Company still has investment in commercial banking business. In particular, it has an equity stake in TMB which was merged with TBANK at a level which allows the Company to participate in the conduct of their business affairs. The Company will also continue implementing the policy which covers all aspects of auto hire purchases through TTB-the leader in auto hire purchase business which places emphasis on hire purchases for both new and used cars as well as cash your car loans. The Company also has an equity stake in THANI which places emphasis on hire purchases for trucks. As regards the overall business operations in 2021, operating results of Thanachart Group declined, primarily due to the fact that in the first quarter of 2020, the Company recognized a gain of about 3 billion baht from selling its investment in AJT, which was a special one-time gain. As well, the performances of the associate companies including TTB and MBK which were in the commercial banking business as well as shopping center and hotel businesses continued to be adversely impacted directly by the state’s restrictive infection containment measures. In case the special gain was excluded, performance of the Company and its subsidiaries registered a growth. This was mainly due to the performances of all the Company’s subsidiaries which were relatively strong. Furthermore, in 2021 the Company started using the excess cash of about 10 billion baht from business restructuring to make investments for the purpose of generating additional return to the Company. Among others, these investments included the establishment of T-Plus which offered asset-based financing services as well as additional investments in TTB, THANI, MBK, and MBK LIFE. As for the direction of business operations in 2022, the Company continues to maintain its current shareholdings in the various companies and support the business operations of all the subsidiaries, ensuring that their financial positions are stable. As well, the Company will consider making new investments in a proactive manner, not only in the expansion of business networks of the Group’s member companies but also in the conduct of businesses in which it has expertise. The purpose is to generate an appropriate return to shareholders further in the long term. In 2022, Thanachart Group will adhere to the above policies and business strategies. It aims to achieve the objectives of growing in a sustainable and stable manner and producing appropriate returns for all the stakeholders concerned. On the other hand, in order to achieve such objectives, good corporate governance is required and it is also necessary to implement in parallel the activities related to sustainable development and corporate social responsibility. As a result, it has put in place the following practice framework for the conduct of business affairs under the principles of good corporate governance, sustainable development and corporate social responsibility. 1. To compete in a morally responsible and ethical manner, achieving a good performance while taking into account both short-term and long-term effects. 2. To operate its businesses by respecting and being responsible for its shareholders and stakeholders. 3. To adhere to the business operations which care for the society and development or reduced the negative impacts on the environment. 4. To be able to make adjustments amidst changes in factors. Overview of Business Operations On 3 December 2019, the Company implemented the following: 1) purchased the shares of certain companies in the Group from TBANK in line with the business restructuring plan, 2) sold all its ordinary shares of TBANK to TMB, and 21
3) subscribed the newly issued ordinary shares of TMB in line with the plan related to the merger between TBANK and TMB. As a result, the Company was no longer the parent company of TBANK and Thanachart Financial Conglomerate. Therefore, as from 3 December 2019, the Company became one of TMB’s major shareholders together with two other major shareholders, namely ING and the Ministry of Finance. All the three major shareholders assigned their representatives to sit on TMB’s Board of Directors. The objective was to jointly manage TMB’s business operations. The Company’s main income would be from its investment in TMB. Moreover, the Company remained a company listed on the SET as before. In this connection, the Company became a holding company, with the sizes of its core business and other subsidiaries being in compliance with the related requirements imposed by the Capital Market Supervisory Board as well as the related regulations of the SET. In this connection, the Company designated MAX Asset Management Company Limited as a subsidiary which operated core businesses in line with the definition given in the relevant regulations of the SET. The member companies of Thanachart Group operate the following businesses: Hire Purchase and Leasing Business 1. Ratchthani Leasing Public Company Limited provides auto hire purchase and financial lease services with the focus on auto market for new and used car markets for passenger cars as well as vehicles for commercial purposes, such as pick-ups, taxis, truck tractors and lorries, etc. It also offers other services related to hire purchases and financial lease, which were THANI’s main businesses. In this connection, the Company holds the shares of THANI through SPV1. 2. RTN Insurance Broker Company Limited provides insurance brokerage services which cover non-life and life insurance as well as other related businesses in line with the established regulations. Currently, it gives services mainly to customers of THANI. Insurance Business Group 1. Thanachart Insurance Public Company Limited offers insurance services which cover non-life insurance services such as fire insurance, auto insurance, marine and transportation insurance, miscellaneous insurance, and investment business. 2. MBK Life Assurance Public Company Limited operates a life insurance business. MBK LIFE provides individual and group life insurance to assure savings. Life and health protection are also offered to individuals, institutions and organizations. 3. TM Broker Company Limited operates the business of customer referral and serves as an intermediary for supplying non-life and life insurance products and introducing financial products such as loans. It also organizes trainings and seminars for license applicants who are required to take non-life and life insurance agent license examinations. In addition, in meeting the needs of individuals and juristic persons through its affiliated business channels and agents who have direct access to customers, it seeks courses for enhancing the potential of personnel in the organizations. 4. MT Service 2016 Company Limited operates back office and business support services for MBK LIFE and TM Broker. Securities Business Group Thanachart Securities Public Company Limited was granted Full-Services License Type Gor to operate securities businesses and other related businesses such as securities brokerage, securities underwriting, investment advisory services, securities borrowing and lending, financial advisory services, unit trust underwriting and repurchasing, securities registrar, issuer and offerer of derivative warrants for sale as well as investment portfolio advisory services. It was also granted Derivatives Business License Type Sor-1 to operate derivatives business and other related businesses such as derivatives brokerages and proprietary trading, derivatives trader as well as issuer and offerer of structured debentures for sale. 22
56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited Asset-based financing business Thanachart Plus Company Limited is an asset-based financing service provider. The service is given in the form of term loan facility and working capital facility. The security to be used as collateral includes real estates in good location, with potential for commercial development, or securities listed on the SET, which have high liquidity and good fundamentals. On the other hand, the target groups for the service include medium and large-sized enterprises. With Thanachart Group’s experiences, the company has good understanding of customers. It is able to process loan applications in an efficient manner and offer flexible terms and conditions in line with customer needs. Asset Management Business Group 1. NFS Asset Management Company Limited operates asset management business. In this connection, it purchases or takes transfers of non-performing assets from financial institutions of Thanachart Group and other financial institutions. 2. MAX Asset Management Company Limited operates asset management business. In this connection, it purchases or takes transfers of non-performing assets from other financial institutions. 3. TS Asset Management Company Limited operates asset management business. In this connection, it takes transfers and managed non-performing assets, which include non-performing loans as well as property foreclosed, from SCIB and TBANK. Investments Business 1. Thanachart SPV1 Company Limited operates investment business. It was established for the purpose of buying shares of THANI from TBANK, as part of the business restructuring plan. 2. Thanachart SPV2 Company Limited operates investment business. It was established for the purpose of buying shares of 1) Seacon, 2) Ajinomoto, 3) TGL, 4) TTD, 5) SSV, and 6) TMS from TBANK, as part of the business restructuring plan. Other businesses include: 1) Thanachart Group Leasing Company Limited, 2) Thanachart Training and Development Company Limited, 3) Security SCIB Services Company Limited, and 4) Thanachart Management and Service Company Limited, These companies were transferred by TBANK to the Company. They do not operate new businesses. Eventually, they will be dissolved and liquidated. In this connection, the Company holds the shares of these companies through SPV2. Important Changes and Development in the Past 3 Years 2019 Major restructuring of Thanachart Group’s business operations, turning theCompany into a diversified investment holding company that generates stable returns for shareholders in the long term The Company, as TBANK’s parent company, changed the shareholding structure of Thanachart Group’s member companies. In this connection, it sold all its equity stake in TBANK to TMB for the purpose of the merger between TMB and TBANK. Recognizing the potential and strengths of two banks, the Company foresaw that the merger would produce a large commercial bank which almost doubled in size with total assets amounting to almost 2 trillion baht. Importantly, their business structures and expertise would support each other. The new bank which was created from the merger would be a bank whose number of customers increasing to about 10 million. This represented greater market opportunities as a result of the two banks’ combined competitiveness and expertise. In this connection, the Company will become a diversified investment holding company. It invests in companies operating a variety of financial services businesses in which Thanachart Group has expertise. The Company is also a major shareholder of the new bank which is created from the merger. As a result, the Company will earn stable long-term returns on investment. 23
2020 • On 21 January 2020, the Board of Directors adopted a resolution approving a share repurchase program for financial management, with a spending limit of 6 billion baht. In this connection, no more than 97,045,970 shares would be repurchased. On 27 April 2020, the Company announced the closure of the share repurchase program. The repurchased shares were worth 4,863 million baht while the total number of the repurchased shares amounted to 97,045,970 shares. • On 31 January 2020, the Company signed an agreement to sell shares of AJT. In particular, it agreed to sell all the shares it held through SPV2, which accounted for 6 percent of the total shares of AJT, to Ajinomoto Co. Inc. in Japan. The total transaction value amounted to about 7,167 million baht. The payment was made and the shares were transferred in February 2020. 2021 • On 29 March 2021, the Board of Directors adopted a resolution to establish T-Plus for the purpose of operating asset-based financing services, in which Thanachart Group had expertise. The objective was to generate additional return to the Company further. In this connection, the Company established T-Plus on 26 April 2021. • On 7 July 2021, the Board of Directors adopted a resolution to buy all the shares of MBK LIFE, TM Broker, and MTS, which were held and owned by MBK. As a result, the Company’s shareholdings in the three subsidiaries increased to 100 percent. The transactions were executed in August 2021. • During the year 2021, the Company and its subsidiary purchased additional ordinary shares of THANI, resulting in the increase of the combined shareholdings to 60.16 percent. In addition, the Company was granted from the BOT to hold additional shares of TTB in the amount not exceeding 24.99 percent. In this regard, the Company and its subisidiary purchased additional ordinary shares of TTB, resulting in the increase in the combined shareholdings to 23.32 percent. As well, the Company’s subsidiary purchased additional ordinary shares of MBK, resulting in the increase in the combined shareholdings of the Company and its subsidiary to 23.32 percent. Awards Received in 2021 • The Company was ranked as the Best Company 2021 in the financial sector. This was organized by Money & Banking Magazine which was a content leader in the fields of economy, finance, and investment. In this connection, the Company was given the award for its stable financial position and the ability to make dividend payments to shareholders continuously. • The Company achieved the excellent level recognized for its corporate governance, based on the assessment survey results given in the Corporate Governance Report 2020 of Thai Listed Companies (CGR) issued by the IOD. • TNI had a financial rating of “AA-“ with “Stable” outlook assigned by TRIS Rating Company Limited. This reflected the fact that TNI was a leading insurance company with business operations and management systems at a good level. In terms of marketing position, TNI with its expertise in automobile insurance was among the country’s top ten non-life insurance companies. In addition, thanks to its comprehensive risk management and corporate governance framework supported by the oversight units concerned, TNI’s financial position was strong with a high level of liquidity. • TNI received the Best Claims Management Insurance Company Award for two consecutive years. This was organized by the UK-based International Finance Magazine (IFM), which was the magazine devoted to presentations on analyses about international business and market development. Awards were given in honor of organizations with excellent business development. In this connection, TNI was awarded for the determination 24
56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited to gain a competitive edge in providing customers with the best services possible by paying attention to details. In particular, TNI stood ready at every touch point to help customers deal with all their pain points. This was considered the master key to delivering the best and most satisfactory experiences possible to customers. • TNI received the Product of the Year Award 2021 under the category of the Best Insurance Group of the Year for the automobile insurance namely “Thanachart 2+ Complete”. This award was given for the second consecutive year. The awarding activity was jointly organized by the College of Management of Mahidol University and Business Plus magazine. The award was based not only on the marketing survey and research which was conducted in line with the academic principles of experts but also on the votes cast by over 10,000 consumers. The survey results showed that TNI’s product was in line with and met customer needs most. The product served as a success model for developing products or services with the innovation which was capable of meeting customer needs. • TNI received the CSR of the Year Award 2021. The awarding activity was jointly organized by the College of Management of Mahidol University and Business Plus magazine. The award was given in honor of the organization which recognized the importance of continuous participation in the “Move Forward Community Power” Project, whose objectives were to strengthen local communities and to promote road safety with an aim to reduce traffic accidents in a sustainable manner. Thailand was one of the leading countries in the world with the highest rate of traffic-incident related fatalities. • TNI received the Prime Minister Road Safety Award under the private sector category in honor of TNI’s participation in the “Move Forward Community Power” Project, which put in place a clear and continuous management mechanism whose practice guidelines placed emphasis on prevention and fixing problems in relation to crash-prone points on the road. The purpose was to ensure road safety for people living in communities and road users in a sustainable manner. • TNI received the 2nd Rank Award at the Non-Life Insurance Companies with Outstanding Performance Awards 2020, which was organized by the OIC. Awards were given to organizations with efficient management under good corporate governance, strong financial position, adherence to the good principles of corporate governance, standard quality in development of insurance products and services, as well as introduction of new insurance innovations that met all customer needs, apart from the conduct of business affairs in a socially responsible manner. • THANI was selected by the SET as one of the sustainable stocks on the 2021 Thailand Sustainability Investment (THSI) list, which included 147 listed companies. • Ms. Pimpaka Nichgaroon, Managing Director, TNS, was granted 2021 Best Economist from Asiamoney Brokers, arranged by Asiamoney magazine, a leading financial magazine in Asia-Pacific region, which conducted survey assessment from financial analysts and institutional investors from around the world. • Mr. Pattadol Bunnak, Securities Analyst, TNS, was granted 2021 Best Mid-small Capitalization Stocks from Institutional Investor (II), arranged by Institutional Investor based on 154 financial analysts from 107 companies. Purposes of Fund Mobilization The Company used the proceeds from issuing and offering for sale the debentures and bills of exchange in line with the purposes already specified in the debenture registration statements. The details related to the Company’s debentures and bills of exchange are given in Section 1.1.5 on the Other Securities Issuance in this 56-1 One Report. Obligations Given by the Company in Securities Registration Statements - None - 25
1.1.2 Nature of Business Operation Income Structure of the Company and Its Subsidiaries Income structure of the Company and its important subsidiaries based on the consolidated financial statements as at 31 December 2021, 2020 and 2019 was as follows: For the year ended 31 December 2021 2020 2019 Amount Percent Amount Percent Amount Percent Interest Income Interbank and Money Market Items - Deposit at Financial Institutions 81 0.72 150 1.16 148 1.98 Financial Assets Measured at Fair Value through Profit or Loss 27 0.24 83 0.64 - - Investments and Trading Transactions - - - - 121 1.62 Investments in Debt Securities Measured at Amortized Cost 1 0.01 2 0.02 - - Investments in Debt Securities Measured at Fair Value through Other Comprehensive Income 115 1.03 234 1.81 - - Investments in Debt Securities - - - - 281 3.75 Loans to Customers 372 3.33 228 1.77 250 3.34 Hire Purchase and Financial Lease 3,430 30.67 3,516 27.24 3,539 47.29 Total Interest Income 4,026 36.00 4,213 32.64 4,339 57.98 Interest Expenses 1,355 12.12 1,620 12.55 1,599 21.37 Net Interest Income 2,671 23.88 2,593 20.09 2,740 36.61 Non-interest Income Net Fees and Service Income 1,454 13.00 1,249 9.67 1,084 14.49 Gains on Financial Instruments Measured at Fair Value through Profit or Loss/Gain on Trading and Foreign Exchange Transactions 527 4.71 151 1.17 146 1.95 Gain (Loss) on Investments (3) (0.03) 3,757 29.10 514 6.87 Share of Profit from Investments Accounted for under Equity Method - Associated Companies and Joint Venture 1,986 17.76 2,154 16.69 367 4.90 Gain on Property Foreclosed and Other Assets 850 7.60 225 1.74 222 2.97 Net Non-life insurance/Life Insurance Income 2,411 21.56 1,888 14.62 1,408 18.81 Dividend Income 145 1.30 308 2.39 181 2.42 Other Operating Income 1,143 10.22 585 4.53 822 10.98 Total Non-interest Income 8,513 76.12 10,317 79.91 4,744 63.39 Net Operating Income 11,184 100.00 12,910 100.00 7,484 100.00 (Unit: Million Baht) 26
Hire Purchase and Leasing Business Ratchthani Leasing Public Company Limited “In 2021, the world continued to be affected by the COVID-19 pandemic. The situation inevitably had impacts on the economic system and people’s ways of living, resulting in a new normal for the Thai society as well as the world society. However, there started to be positive signs from the testings of the efficacy and safety of new vaccines, easing virus containment measures and eonomic stimulus through the state’s various policies. In this connection, THANI closely monitored and assessed the situation to adapt in order to be able to operate businesses in line with the constantly changing economic conditions, bearing in mind the best interests of THANI and stakeholders.” Mr. Kovit Rongwattanasophon Managing Director The Structure of the Board Company and Sub-committees List of Directors Position 1. Mr. Virat Chinprapinporn Chairman of the Board of Director, Member of the Executive Committee, Member of the Risk Management Committee, and Chairman of the Corporate Governance Committee 2. Mr. Kovit Rongwattanasophon Chairman of the Executive Committee, Chairman of the Risk Management Committee, Member of the Corporate Governance Committee, and Managing Director 3. Mr. Charoensuk Kijitti Member of the Corporate Governance Committee 4. Mr. Somjate Moosirilert Member of the Executive Committee, Member of the Risk Management Committee, Member of the Nomination and Remuneration Committee, and Member of the Corporate Governance Committee 5. Ms. Suvarnapha Suvarnaprathip Member of the Corporate Governance Committee 6. Mr. Kamtorn Tantisirivat Member of the Executive Committee, Member of the Risk Management Committee, and Member of the Corporate Governance Committee 7. Mr. Sorasak Chayaraks Member of the Corporate Governance Committee 8. Dr. Thakol Nanthirapakorn Chairman of the Audit Committee, and Member of the Corporate Governance Committee 9. Mr. Suvit Arunanondchai Chairman of the Nomination and Remuneration Committee, Member of the Audit Committee, and Member of the Corporate Governance Committee 10. Mr. Varavudh Varaporn Member of the Audit Committee, Member of the Nomination and Remuneration Committee, and Member of the Corporate Governance Committee 11. Dr. Naree Boontherawara Member of the Audit Committee, and Member of the Corporate Governance Committee 12. Mr. Surapon Satimanont Member of the Audit Committee, and Member of the Corporate Governance Committee 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 27
Vision To be the leader in the loan services for commercial cars, vehicles, other assets and one-stop services that can satisfy customer’s needs covering all provinces nationwide. Missions Mission to Shareholders THANI will conduct business with transparency, efficiency and sustainable growth in order to continuously gain good performance and business result for shareholders. Mission to Employees THANI will develop human resources to occupy capabilities, expertise, skills, professionalism while sustaining honesty and professional code of conduct. THANI will provide the proper remuneration to sustain the qualified employees with the Company. Mission to Trade Partner THANI will create confidence, good relationship, fast services and fair return on business to trade partners for the efficient long-term business partnership. Mission to Customers THANI will develop products and services to the excellence to meet targeted customer’s needs and create highest customer satisfaction. Mission to the Society THANI will conduct business in accordance with good corporate governance with honesty and resistance to all forms of corruption in order to give back to society and to cooperate in the country’s economy development. Mission to the Environment THANI will conduct business with responsibility to the resources and environment and involving in the conservation, rehabilitation and balance of the ecosystem. Income Structure Income structure of THANI according to consolidated financial statements for the year ended 31 December 2021, 2020, and 2019 are as follows: Income 2021 2020 2019 Million Baht Percent Million Baht Percent Million Baht Percent Hire Purchase Interest Income Passenger Cars 1,011.71 23.94 1,012.18 23.74 946.05 22.32 Commercial Cars 2,373.21 56.15 2,454.75 57.59 2,552.08 60.22 Total Hire Purchase Interest Income 3,384.92 80.09 3,466.93 81.33 3,498.13 82.54 Financial Leases Interest Income 45.33 1.08 48.82 1.15 40.52 0.96 Other Income Fees and Service Income 201.91 4.78 161.94 3.80 175.33 4.14 Income from Late Payment 165.22 3.91 159.12 3.73 133.78 3.16 Bad Debts Recovery 90.63 2.14 37.62 0.88 28.86 0.68 Insurance Premium Income 177.63 4.20 154.23 3.62 152.83 3.60 Others* 160.85 3.80 234.07 5.49 208.70 4.92 Total Other Income 796.24 18.83 746.98 17.52 699.50 16.50 Total Income 4,226.49 100.00 4,262.73 100.00 4,238.15 100.00 Note: * Others mostly included income awarded for winning the cases in which borrowers were sued for damage, miscellaneous income, interest income from deposits with banks and receivable dividends. 28
Characteristics of Product and Service THANI offers auto hire purchase and financial lease services with focus on auto hire purchase market in which it had special expertise. This included the market for both used and new commercial vehicles such as pick-ups, taxis, truck tractors and lorries, as well as the market for used sedans (secondhand). As of 31 December 2021, THANI’s loans for new cars accounted for 69 percent of total loan portfolio with used cars accounting for the remaining 31 percent. In addition, in 2020, emphasis was still placed on the market for commercial vehicles, both new and secondhand. In this connection, the commercial vehicles accounted for 65 percent while other vehicles accounted for the remaining 35 percent. Once a customer paid off an installment plan, the ownership of the car would be transferred to the customer. Used car hire purchase is relatively more risky than new car. In addition, the risk is mainly from car for commercial transportation which is sensitive to the domestic economy. THANI has taken into consideration various factors in loan approval, such as car condition, market price, substantial documentation, car registration, etc. The team has high experience and specific expertise on the condition evaluation and used car market price, checking of car registration documents, and among others. As a result, it was necessary to put in place a work team consisting of staff with experience in checking the condition and market prices of used cars. Moreover, THANI offers after-sales services which are connected to its main businesses consisting of hire purchase and financial lease. Among others, the services include annual tax registration renewal, coordination on renewal of insurance policies, as well as technical check of car prior to tax registration renewal. The services not only provide customers with convenience, but also help earn supplemental income for THANI. Moreover, the services are beneficial in the form of asset protection for customers and damage protection for THANI. Market and Competition The year 2021 was the second consecutive year in which the COVID-19 pandemic remained severe. As a result, the state reinstated a countrywide lockdown. The Thai economic sector was considerably affected by the disruptions in economic activities. As well household income dropped while the private sector’s spending and investment slowed down. Under the situation whereby the COVID-19 pandemic still had impacts not only on the economy throughout 2021 but also on the business sector’s operations, particularly in lending business, lenders had to implement the cautious lending policy in their business operations by placing emphasis on quality loans. Furthermore, the state’s tighter oversight of retail loans gave rise to captive financing services whose providers competed in the market and played a more active role in the industry. As a result, THANI had to take steps to speed up the development of various strategies, aiming at expanding the market, particularly through digital platforms which would enable THANI to reach a diverse range of potential customer groups. This would serve as an important factor in maintaining business competitiveness in the future. However, THANI planned to maintain its commercial vehicles hire purchase lending in the next 3-5 years at 65 - 70 percent of THANI’s hire purchase portfolio. The reason was that this customer group was expected to grow continuously and to generate high profitability. In addition, THANI’s extensive experience and business expertise proved to be advantageous for competitiveness, customer retention, high return paid to used car dealers, fast services, market share retention, and extending relationship with used car dealers, in order to increase business opportunities and business channels. 56-1 One Report / Annual Report 2021 Thanachart Capital Publ ic Company Limited 29
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