(Thai) Annual Report 2005 - United Overseas Bank

Management Discussion and Analysis 2005
Income
Total net interest income rose 8.4% over 2004 to THB 6,476 million, mainly from a decline in interest expense as total
deposits declined by 10.3% to THB 152,576 million. Non-interest income in 2005 was THB 3,059 million, a decline of
9.6% from 2004, 2004 non-interest income was higher from gains from liquidation of two subsidiaries and
other once-off income of THB 233 million.
Non-interest Expenses
Non-interest expense, comprising of staff and other non-interest expenses, declined 10.9% to THB 5,933 million. Personnel
expenses also declined slightly due to lower headcount. The Bank also booked a one-time merger-related expense of
THB 588 million, mainly for integration of systems, alignment of benefits, write-off of systems and assets no longer used
and, branding and promotional expenses.
Capital expenditure for 2005 was amounted to THB 608 million, compared to THB 209 million in 2004. More than half
of the capital expenditure was for integration related projects, which include improvements / enhancements to IT
infrastructure, systems and premise renovations.
Dividend Payment
The Bank, with a retained loss of THB 34,420 million as of end-2005, did not declare any dividends for 2005 (in compliance
with the Public Company Act that prohibits companies with negative retained earnings from declaring dividends).
Likewise, the Bank’s subsidiaries did not declare any dividends in 2005.
Assets
On a pro-forma basis, the total assets of the Bank and its subsidiaries as at 31 December 2005 was THB 196,692
million, a decline of 9.3% from 31 December 2004. The decline was largely from lower holdings in government
securities, which declined 42.9% from 2004 to THB 9,647 million as at end-2005. Outstanding loans declined by 0.7%
to THB 159,601 million which due mainly to THB 4.1 billion reduction in NPLs to THB 16,781 million from THB 20,903
million as at end-2004. NPLs as a percentage of total loans was 10.5% as at end-2005, an improvement from the
13.0% recorded at end-2004.
The Bank’s housing loan portfolio grew from 23.9% of total loan as at end-2004 to 25.2% as at end-2005. Loans to
trading sector accounted for 21.2% of total loans, an increase from 20.8% as of end-2004, and loans to the manufacturing
sector accounted for 18.8%, down from 19.6% as of end-2004.
14 United Overseas Bank (Thai) Public Company Limited