2007 was a challenging year for the bank, our customers, and the general public, due to conditions in the Thai economy and the worsening global outlook.

Oil prices rose steadily throughout the year, pushing up the cost of living, and undermining consumer confidence. Meanwhile, the fallout from the subprime mortgage crisis, which began in the United States, affected the stability of several large financial institutions in America and Europe, leading to a worldwide credit crunch as banks tightened their loan extensions for fear of insufficient liquidity.

Spending and investment fell in major economies, including the United States, the European Union and Japan, fueling a global economic slowdown. The International Monetary Fund (IMF) estimated that world economic growth in 2007 would be 4.9 percent and would decline further to 4.1 percent in 2008. Global trade volume is expected to grow by a mere 6.6 percent in 2007, compared to 9.3 percent in 2006.

Thailand’s economy was affected not only by these unfavorable external factors, but also by a lack of consumer and business confidence following a period of political uncertainty.

Private consumption and investment within Thailand grew slowly in 2007. Exports were the main economic driver, due to increases in commodity prices, particularly agricultural products used for alternative fuels which in turn pushed up the prices of farm products and other processed food products. Thailand is also a manufacturing hub for auto exports, computers and accessories and this sector experienced solid growth. A further factor which supported the growth in exports was the establishment of bilateral free trade agreements with several countries, including China, Australia, and Japan. Imports grew at a minimal rate due to the slowdown in consumption and investment which meant Thailand experienced record surpluses in its trade and current accounts.

In other changes to the regulatory environment, the Financial Institutions Business Act and the Deposit Protection Agency Act, passed through the National Legislative Assembly and will come into effect in the second half of the year. These changes have long been anticipated and the bank is well prepared for them.

Looking ahead, the subprime mortgage crisis is unlikely to be resolved quickly. As its effects are increasingly felt beyond the banking and financial sector, there will be broader challenges to the United States economy which is expected to slow or contract in the first half of 2008, which will impact negatively on the global economy.

In Thailand, if the government can successfully restore confidence among consumers and investors and re-start investment in mega-projects, then steady economic growth is expected to resume. As the largest corporate lender among the Thai commercial banks, Bangkok Bank should benefit from these improved operating conditions.

Recent initiatives by Bangkok Bank across a broad range of areas are therefore timely and will help the bank to deal with potential market volatility and emerging opportunities. The bank has continued to enhance its customer information and Customer Relationship Management systems, and has launched new financial products to suit the lifestyles of younger customers, such as the Be1st BTS card – a combined debit, ATM and travel card. Online channels including Bualuang iBanking, BIZ iBanking and a range of other web-based services, such as cash management, fund management and trade services will improve convenience and support the business efficiency of our customers.

The bank continues to focus on human resources in order to improve performance as well as staff satisfaction, with a shared goal for each business unit to lead in service excellence. Bangkok Bank is committed to providing a complete range of services to our customers, delivering sustainable returns to our shareholders, and being the partner of choice for all of our customer groups.

Over sixty years ago Bangkok Bank was born out of the opportunity to provide services to local businesses whose needs were not being met by existing banks. While banking has become more sophisticated and economic and trading dynamics have become more complex, the principles remain the same today, as Bangkok Bank pursues growth by creating opportunities for its customers in Thailand and around the region.