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20 Oct 2014

Results Review

Bank of Ayudhya Public Company Limited

Stock Flash: BAY’s 3Q14 results: Earnings decreased YoY but increased QoQ

BAY’s 3Q14 net profit declined 7.4%% YoY but rose 1.4% QoQ to Bt3.5bn, mainly due to a high loan-loss

provision set aside this year. This result fell short of the Bloomberg consensus of Bt3.7bn.

Asset quality deteriorated as NPLs increased to 3.3% of total loans from 2.7% at the end of December 2013.

This increase was driven largely by the SME segment and a major corporate account that was reclassified

as a NPL. Meanwhile, the bank’s CAR and tier 1 ratio jumped to 14.9% and 11.2% from 14.2% and 10.3% in

2Q14, respectively.

Unit: Btmn 3Q13 2Q14 3Q14 %YoY %QoQ

Net-interest income 11,246 11,876 12,207 8.54% 2.79%

Non-interest income 5,261 5,361 5,830 10.82% 8.75%

Net operating income 16,507 17,237 18,037 9.27% 4.64%

Non-interest expense 8,412 8,476 8,559 1.75% 0.98%

Pre-provision profit 8,095 8,761 9,478 17.08% 8.19%

Provision expense 3,148 4,255 4,889 55.29% 14.90%

Pre-tax profit 4,947 4,506 4,589 -7.23% 1.85%

Net Profit 3,787 3,460 3,507 -7.38% 1.36%

EPS (Bt) 0.62 0.57 0.58 -6.45% 1.75%

Loans 907,164 908,298 935,515 3.13% 3.00%

Deposits 764,050 783,779 806,182 5.51% 2.86%

NIM 4.32% 4.31% 4.33%

Source: BAY

A less fulfilling earnings result

BAY reported a 3Q14 net profit of Bt3.5bn, falling 7.4% YoY but improving 1.4% QoQ. This drop in profits YoY is due

predominately to a higher loan loss provision. Provision expense climbed 55.3% YoY and 14.9% QoQ to Bt4.9bn,

dampening the bank’s earnings in 3Q14. Nevertheless, earnings increased QoQ, supported by lending growth, improved

net interest margin, and higher fee and service income. Loan growth expanded 3.1% YoY and 3.0% QoQ. Retail loans

grew by 3.0% YTD while SME and corporate loans achieved 5.9% and 1.9% YTD growth, respectively. Under the retail

segment, housing loans grew the strongest at 8.0% YTD, given improved economic conditions and a more positive

sentiment in the residential housing market. Moreover, corporate loans saw notable growth, driven by an increase in both

working capital requirements and term loans, supported by business seasonality. Net interest income saw significant

improvement, jumping 8.5% YoY and 2.8% QoQ. This was a direct result of a higher yield on earnings assets, coupled

with an increase in loan volume. Non-interest income also showed improvement as net fees and service income grew

7.1% YoY. This can be attributed to a rise in wealth, fund management & securities related fees, and credit card fees.

Despite these positive factors, BAY’s extraordinary gain from Thai Asset Management Corporation (TAMC) reserve

reversal and higher bad debt recoveries realized in 2013 resulted in slightly disappointing results for the bank this quarter.

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20 Oct 2014

Results Review

As of September 30, 2014, the ratio of gross NPLs to total loans was 3.3%, compared to 2.7% at the end of December

2013. The deterioration in asset quality was mainly from the SME segment and a major corporate account, reflecting a

steady but slow economic recovery. Total provisions stood at Bt42.5mn, with an excess provision over the Bank of

Thailand’s minimum requirement of Bt14.1mn, or 149.9% of the Bank of Thailand’s minimum requirement. Meanwhile, the

bank’s coverage ratio was 123.1%, still at an adequate level. In regards to the bank’s capital adequacy, the bank’s CAR

and tier 1 ratio were 14.9% and 11.2%, up from 14.2% and 10.3% in 2Q14, respectively. The current level of capital is

sufficient to provide the bank with the flexibility to continue growing its business as planned.

Looking forward to 4Q14, we foresee the bank continuing making progress in lending as management eyes a FY14 loan

growth of 7% given improving business confidence and a rebound of private and public spending, albeit at a slower rate

than anticipated. The seasonal rise in business volume in 4Q14 for both retail and commercial lending should help bolster

lending as well. BAY showed great ability in lowering its costs, significantly improving its cost to income ratio from 49.2% in

2Q14 to 47.5% in 3Q14. Nonetheless, we believe that its high loan loss provisions will continue to hamper its bottom line.

Thailand Research Department

Mr. Warut Siwasariyanon (No.017923) Tel: 02 680 5041

Mr. Alex Manoonpol (Assistant Analyst)

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20 Oct 2014

Results Review

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Corporate Governance Report disclaimer

The disclosure of the survey result of the Thai Institute of Directors

Association (“IOD”) regarding corporate governance is made pursuant

to the policy of the Office of the Securities and Exchange Commission.

The survey of the IOD is based on the information of a company listed

on the Stock Exchange of Thailand and the Market for Alternative

Investment disclosed to the public and able to be accessed by a

general public investor. The result, therefore, is from the perspective of

a third party. It is not an evaluation of operation and is not based on

inside information.

The survey result is as of the date appearing in the Corporate

Governance Report of Thai Listed Companies. As a result, the survey

result may be changed after that date, Asia wealth Securities Company

Limited does not conform nor certify the accuracy of such survey result.

Score Range Number of Logo Description

90 - 100 Excellent

80 - 89 Very Good

70 - 79 Good

60 - 69 Satisfactory

50 - 59 Pass

Below 50 No logo given N/A

รายงานการประเมนิการก ากบัดแูลกจิการ (CGR) โดยสมาคมสง่เสรมิสถาบนักรรมการบรษิทัไทย 2556 Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2013.

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20 Oct 2014

Results Review

Branch Address Phone Fax

Head Office 540 Floor 7,14,17 , Mercury Tower, Ploenchit Road, Lumphini,

Pathumwan Bangkok 10330

02-680-5000 02-680-5111

Silom 191 Silom Complex Building,21st Floor Room 2,3-1 Silom Rd., Silom,

Bangrak, Bangkok, 10500 Thailand

02-630-3500 02-630-3530-1

Asok 159 Sermmitr Tower, 17th FL. Room No.1703, Sukhumvit 21 Road,

Klong Toey Nua, Wattana, Bangkok 10110

02-261-1314-21 02-261-1328

Pinklao

7/3 Central Plaza Pinklao Office Building Tower B, 16th Flr., Room

No.1605-1606 Baromrajachonnanee Road, Arunamarin,

Bangkoknoi, Bangkok 10700

02-884-7333 02-884-7357,

02-884-7367

Chaengwattana

99/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd Flr.,

Room 2204 Chaengwattana Road, Bang Talad, Pakkred, Nonthaburi

11120

02-119-2300 02-8353006

Chaengwattana 2

9/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd Flr.,

Room 2203 Chaengwattana Road, Bang Talad, Pakkred,

Nonthaburi 11120

02-119-2388 02-119-2399

Mega Bangna 39 Moo6 Megabangna, 1st Flr., Room 1632/7 Bangna-Trad Road,

Bangkaew Bangplee, Samutprakarn 10540

02-106-7345 02-105-2070

Rayong 356/18 Sukhumvit Road, Nuen-Phra Sub District, Muang District,

Rayong Province 21000

038-808200 038-807200

Khonkaen 26/9 Srijanmai Road, Tamboonnaimuang, Khon Khaen

40000

043-334-700 043-334-799

Chonburi 44 Vachiraprakarn Road, Bangplasoi, Muang Chonburi, Chonburi

20000

038-274-533 038-275-168

Chaseongsao

233-233/2 Moo2 1st Flr., Sukprayoon Road, Na Meung Sub-District,

Meung District, Chachoengsao 24000

038-981-587 038-981-591