Credit Risk Management Credit

Risk Management Policy To achieve sustainable growth, our credit strategy focuses on a balance between portfolio value creation and protection within our risk appetite. Portfolio management, credit policy and related credit procedures must comply with this strategy and must be in line with the Bank of Thailands regulatory requirements, the governments policy adjustment and the plan that focuses on United Nations Sustainable Development Goals (SDGs), including how to cope with climate change, that may affect business operations in terms of risk and business opportunity. KBank reviewed credit risk management policy, both in terms of credit risk and impacts on the environment and society, including the launch of new products and services in different circumstances, to ensure that our business operations are in compliance with relevant standards, accommodating changes in credit quality and sustainable growth of KBank. Such revisions were monitored for their impacts on portfolios, and updated for reference in KBanks database available to relevant users covering criteria for credit granting, management and credit risk management tools.

Credit Risk Management Process A credit risk management process, from portfolio management to recovery and collection, has been established and continuously enhanced to appropriately reflect risk involved, as well as promote business capability.

Portfolio Management KBank emphasized active portfolio management corresponding to prevailing circumstances, particularly economic factors that could affect our customers and our portfolio quality. Via Active Credit Portfolio Management (ACPM) and stress testing, KBank ensured timely portfolio management towards any deviation against our planned targets. Meanwhile, KBank has also focused on portfolio management so as to control credit concentration within the established limits. Close monitoring of customer risk profile across industries was undertaken through the establishment of loan growth target in alignment with prevailing economic conditions, taking into account customer segments, product domains and industry outlooks, to maximize returns from each customer segment portfolio under defined risk appetite. KBank adopted credit risk management mechanisms as follows: Set up Credit Risk Management Sub-committee and Credit Process Management Sub-committee. The committee managed a balance between credit risks and process efficiency to ensure effective risk management and consistency of relevant credit processes, thus allowing KBank to deliver a good customer experience. Revise customer screening criteria on a regular basis to reflect customer risk profile. Credit policy has been tailored for each customer segment. Industry pre-screening criteria, which can be used as a guideline for customer selection, have been established to classify customers based on sector risk levels. Establish risk management mechanism in response to risk events which may affect our customers. Early warning sign monitoring will trigger actions of responsible departments to assess impacts on affected customers and KBank by conducting in-depth analysis and stress testing. Thus, KBank shall be able to proactively prevent and solve any problems which may arise in a timely manner prior to deterioration of customers debt servicing capability and overall credit quality of KBank. Monitor customers credit line utilization and customer status via early warning signs. Guidance has been provided for Relationship Managers (RMs) to contact customers at an early stage when early warning signs are detected. Manage credit concentration risk in terms of borrower group concentration, sectoral concentration and country concentration. Credit exposures are maintained within predetermined limits, per the Bank of Thailands guidelines.

Credit Underwriting and Approval KBank has formulated lending policy to ensure uniformity of good credit underwriting practices and comply with the Bank of Thailands consolidated supervision guidelines. Guidelines for preferable and discouraged practices are also defined to ensure quality of credit extension. KBanks credit risk management is based on current, transparent and qualified data. The credit approval processes and systems are designed to align with customers characteristics. Medium and Large Business customers with sophisticated financial needs are served by Relationship Managers (RMs) with thorough understanding of customers business and financial profiles. RMs are responsible for analyzing and proposing suitable credit products and services to match customer needs, presenting credit proposal to credit underwriters according to the defined approval authorities, and continual monitoring customer status. For retail customers whose main products comprise home loans, credit cards and other types of financing, including loans for small and micro businesses, KBank deploys credit scoring as a credit approval tool, focusing on verification of income and liability information of each customer. KBank has also focused efforts on credit approval process improvement, while ensuring risk levels under a defined risk appetite. Aside from the above practices, KBank realizes the importance of responsibility toward society and the environment in our credit underwriting. Guidelines and policies for environmental and social impacts have been established for project finance requests at home and abroad, including project monitoring throughout the credit term. Post-Credit Approval Operations To achieve standardized and efficient credit operations, KBank has centralized credit operations covering legal and contract-related arrangement, preparation of collateral agreements, credit limit setup, credit disbursement, creditrelated document storage and credit data support. KBank also set up processes to monitor customer credit-utilization behavior, business performance, compliance with contractual conditions as well as their debt servicing ability.

Please analyze credit risk of Kbank. around 300 words thanks