The Thai economy which had been severely affected by global financial crisis since 2008 began to get back on track in the latter half of 2009, driven mainly by the positive signs of economic recovery in major countries together with the expansionary monetary policy and the Government’s economic stimulus measures under the Thai Khem Kaeng (Strong Thailand) scheme. Supported by a strong economic foundation, the structure of exports and imports improved significantly and expansion of output was seen in almost all industrial sectors. After registering a negative growth rate of 7.1% in the first quarter of 2009, the country’s GDP managed to grow at the rate of 5.8% in the final quarter, bringing down the negative growth rate for the whole year of 2009 to 2.3% from 3.0% forecasted earlier.

  Although Thai commercial banks were challenged by a number of adverse factors in 2009, they did not feel significant impact from the prevailing crisis. On the other hand, they remained financially strong and continued to attain favorable operating results. This was the outcome of the lessons they learned in the 1997 financial institutions crisis which had caused them to place top priority on risk management and prepare themselves to cope with any unexpected circumstances including provision of sufficient reserves and strengthening of capital base.

  The Siam City Bank achieved another year of successful operations in 2009 despite unfavorable business environment, contributed by its strong commitments to attain operational targets in accordance with the 3-year strategic plans. Over the past three years, the Bank has continuously reviewed and adjusted its strategies to correspond with the prevailing economic conditions. The year 2007 was designated as “Year of Preparation” to improve the Bank’s infrastructure in three main areas, namely, human resources, business process, and marketing strategy. This was followed by the year 2008 which was the “Year of Improvement”, aimed to continually pursue the infrastructure improvement projects initiated in the prior year to enhance the competitive potential and generate higher income for the Bank. Many achievements included human resources development, credit management redesign, corporate image building and asset quality management through NPL management and Pre-NPL management approaches. Envisaging a worsening global business environment and a further slowdown of domestic economy, the Bank designated 2009 as “Year of Confidence and Trust”, placing importance on growing cautiously in line with the economic conditions and strengthening of capital structure, as well as generating appropriate returns on investment to related parties.

  The successful implementation of the above-mentioned strategies has contributed to the Bank’s satisfactory operational results. Although loans decreased marginally by 0.3% to Baht 278,959 million at the end of 2009, the loan portfolio structure improved favorably. The decrease of loans was due mainly to those in the Government and state enterprise sectors, which dropped by Baht 7,839 million over the previous year. Taking into consideration only loans extended to the private sector, the Bank still had a 2.65% growth. Retail loans grew much higher than expected, especially housing loans, which enjoyed a high growth rate of 64%. As a result, the proportion of retails loan surged to 28% of total loans compared with 20% in 2008. Meanwhile, NPLs accounted for 8.11% of total loans. The Bank’s deposit structure also improved, with the ratio of current and savings account deposits rising from 28.3% of total deposits in 2008 to 33.4%.

  The Bank earned a stable net interest income of Baht 12,841 million in 2009 whereas its non interest income rose impressively by 23% from the prior year to Baht 7,687 million. Major items enjoying high growth are gains on investment and net premiums written on life insurance, which were 101.70% and 60.64% higher than the amounts of 2008, respectively. This was a result of successful cooperation with companies in the SCIB Family. Fee income of the Bank amounted to Baht 2,617 million, declining by 4.24% from 2008, due mainly to lower fee income from transactions related to lending. Meanwhile, operational expenses totaled Baht 12,775 million in 2009, 12.27% higher than the corresponding amount of last year. The higher operational expenses were mostly consistent with increase in business volume such as insurance underwriting expenses and service fees and charges. In 2009, the Bank pursued its business prudently and was well prepared by providing sufficient reserves to cushion the risks that might arise from deteriorating asset quality during the economic slowdown. In this respect, Baht 2,254 million of reserves was set aside. After deduction of tax and net profit of minority shareholders, the Bank posted a net profit of Baht 4,147 million, yielding a rate of return on equity (ROE) of 9.81% and a rate of return on assets (ROA) of 0.98%. Book value of the Bank stood at Baht 20.48 per share and capital to risk assets ratio increased from 10.38% in 2008 to 14.55% in 2009.

  The Thai economy is expected to rebound and grow consistently in 2010 thanks to healthier domestic demand and the bullish export sector. As a consequence, financial institutions are induced to extend more loans to facilitate business expansion, especially small and medium enterprises and retail customers. To maximize this promising opportunity, the Bank has designated 2010 as “Year of Penetration”, aiming to enlarge the base of its target customers, in particular retail customers and the young generation. In the mean time, major efforts are put to accelerate the sustainable growth of quality loans in line with the economic conditions, as well as to maintain the continuing growth of fee income generated from retail customers.

  The successful performances of the Bank during the last year were attributed not only to the dedication, cooperation, and perseverance of its management and employees, but also the confidence and supports of all shareholders, customers, investors, business partners and alliances, the press, and the general public. The Board of Directors would like to take this occasion to offer our sincere appreciation to each and every one of you and look forward to your continued support in the future.