The world economy in 2008 suffered from unprecedented volatility, triggered by the bursting of the US housing bubble and a subsequent widespread financial meltdown.

Economic activity in both developed and developing countries shrank drastically, prompting most governments to introduce special stimulus measures to prevent their economies from sliding further into recession. Massive funding was pumped into financial systems to boost liquidity, encourage consumer spending and jump-start economies. Interest rates have been cut to near zero in most developed countries.

While Thailand is far from the epicenter of the financial meltdown, and its financial sector is resilient, the Thai economy has nonetheless received a battering from the slowdown in the world’s export markets, particularly in the US, the EU, China and Japan, which receive approximately one-half of Thailand’s exports. This affected 2008 GDP growth, which fell to 2.6 percent from 4.8 percent in 2007.

For 2009 we are expecting growth of between -2.0 percent and 0 percent. This is assuming that the global economic situation can be contained and that the Thai government’s fiscal stimulus packages will be effective.

The global recession presents enormous challenges for Bangkok Bank but it also presents opportunities. Effective risk management will be more important than ever. This has been a high priority for us for many years and we have good systems in place including full compliance with the Bank of Thailand’s Basel II requirements.

Reassuringly, Bangkok Bank enters 2009 in sound financial health. Our profit in 2008 was 4.9 percent higher than the previous year at Baht 20.043 billion (representing earnings per share of Baht 10.50) which was largely driven by strong lending growth backed by a solid deposit base. We will seek to protect and grow our deposit base further to maintain liquidity, manage our risks efficiently, and grow quality businesses. Our capital adequacy ratio and core Tier 1 capital remain strong at approximately 14.6 percent and 11.9 percent, respectively, while our ratio of non-performing loans is a comparatively low 4.6 percent.

Bangkok Bank is committed to its vital role in the development of the Thai economy, and we shall spare no efforts to support and assist our customers and the business community. This will also help ensure the country’s economic stability during this difficult time.

Internationally, Bangkok Bank is aiming to establish a locally-incorporated bank in China in 2009, which would be a landmark achievement for us. We already have four branches in China– in Beijing, Shanghai, Xiamen and Shenzen – and we believe that given the dynamics of the Chinese economy, the growth potential is significant. We have major customers in Hong Kong, Singapore, Taiwan and Thailand, many of which invest and trade across the region. Local incorporation would allow us to serve them better, especially as economic integration across Asia becomes a reality.

Finally, on behalf of the Board of Directors, I would like to thank all our shareholders, customers and business partners for their steadfast support. Special thanks go to the management team and staff for their selfless dedication, loyalty and hard work in carrying out their duties and responsibility during this most difficult period. Without them, our Bank would not be where it is today.