2005 - Asianbanks.net

30.2 Results of operations classified by business activity
(Unit : Million Baht)
The Bank only
For the years ended 31 December
2005 2004
Domestic Foreign Domestic Foreign
operations operations Total operations operations Total
Interest and dividend income 17,586 247 17,833 14,959 720 15,679
Interest expenses 6,305 106 6,411 5,720 47 5,767
Doubtful debt and present value loss from
debt restructuring 265 - 265 486 - 486
Net interest income 11,016 141 11,157 8,753 673 9,426
Non-interest income 3,173 2 3,175 4,067 104 4,171
Non-interest expenses 8,057 6 8,063 7,219 6 7,225
Earnings before income tax 6,132 137 6,269 5,601 771 6,372
31. FINANCIAL INSTRUMENTS
Financial instruments are any contracts which give rise to both a financial asset of one enterprise and a financial liability or equity security of
another enterprise. The Bank treats financial instruments in accordance with Accounting Standard No. 48 concerning presentation and disclosure of
financial instruments.
31.1 Credit risk
Credit risk is the risk that the counterparty to a financial instrument or a borrower will be unable to comply or will intentionally fail to
comply with the conditions or provisions stipulated in the financial instrument, resulting in a loss to the Bank.
The Bank has implemented credit risk management processes, to both measure and control credit risk. The Bank uses credit risk rating
tools to measure credit risk, taking into account the quality of the borrower, which is determined based on the probability of default and the
value of the expected loss if such default occurs. The application of credit risk rating tools helps support the quality of the Bank’s credit
approval process, to increase the efficiency of credit control and monitoring, and in the future will facilitate the determination of an appropriate
return or interest rate for the level of credit risk determined.
The Bank has a Risk Management Committee, which is responsible for designing risk management strategies and ensuring that risk
management operations are carried out within the framework of the Board of Directors’ policies. Furthermore, the Bank has two departments
under Risk Management Group responsible for credit risk, which are the Credit Risk Management Department and the Credit Review
Department. The Credit Risk Management Department is responsible for (a) providing suggestions and recommendations on the
improvement of credit policies, working regulations, the authorization structure and risk management, (b) developing systems and tools for
risk evaluation as well as procedures for auditing, reporting and monitoring risks, and (c) reviewing and rendering opinions on credit risks as
analyzed by credit officers prior to submission to the Bank’s executives or Credit Committee for further consideration and approval. The
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