a n n u a l r e p o r T 2 0 1 3 - AFFINBANK

Transcription

banking on
growth
a n n u a l
r e p o r t
2 0 1 3
AFFIN BANK BERHAD (25046-T)
our
vision
A Premier Partner for Financial Growth and Innovative Services.
our
mission
To provide innovative financial solutions and services to target customers
in order to generate profits and create value for our shareholders and other
stakeholders.
In so doing, we provide opportunities for employees to contribute and
excel; and be competitive in providing our solutions and services to our
valued customers.
We shall conduct our business with integrity and professionalism in
compliance with good corporate governance, principles and practices.
RELATIONSHIPS
PERFORMANCES
CAPABILITIES
At AFFINBANK, we take tremendous pride in all that we do, paying
attention to detail to ensure quality and value for our customers and
stakeholders alike. Keeping abreast of the changes and continuously
growing - this is the guiding principle behind the way the Bank
operates so that we may deliver beyond expectations.
Growing
Relationships
We understand that life comes with ups and
downs. That’s why, no matter what the issue
is, the customer comes first and we listen and
welcome their feedback. This ensures our
standards improve in measurable ways that
continue to nurture our relationships – which is
the core and backbone of our corporate culture.
our
vision
A Premier Partner for Financial Growth and
Innovative Services.
our
mission
stakeholders.
valued customers.
compliance with good corporate governance principles and practices.
RELATIONSHIPS
excellent teamwork
PERFORMANCES
CAPABILITIES
Growing
performanceS
Our commitment to cultivate performance drives us to place great diligence in developing the Bank’s
business and market presence. We believe in taking a proactive role and making prudent business
decisions when we implement new initiatives, launch fresh marketing campaigns and expand our
branch network. This creates a strong sustainability in our performance.
our
vision
our
mission
stakeholders.
valued customers.
PERFORMANCES
CAPABILITIES
our
vision
our
mission
stakeholders.
valued customers.
Growing
capabilitIES
We believe that our aptitude and expertise grow when we foster a shared corporate vision and value
within our team. This creates coherence in our ability to provide unparalleled service to our customers
and meet their needs above and beyond. We take pride in instilling the power of teamwork within our
corporate culture and this in itself, allows us to craft innovative financial solutions and services.
CAPABILITIES
our
vision
our
mission
stakeholders.
valued customers.
contents
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Corporate Information
Corporate Structure
Board of Directors
Profile of Directors
Management Team
Management Team Profiles
Chairman’s Statement
Performance Review
Financial Highlights
Corporate Diary
Statement on Corporate Governance
Statement on Risk Management & Internal Control
Audit & Examination Committee
Network of Branches
Notice of Annual General Meeting
Financial Statements
Corporate
Information
NAME
BOARD OF DIRECTORS
REGISTERED OFFICE
Affin Bank Berhad (Co. No.: 25046-T)
Chairman
YBhg. Jen Tan Sri Dato’ Seri Ismail
Bin Hj. Omar (Bersara)
DATE OF INCORPORATION
(Non-Independent Non-Executive Director)
17th Floor, Menara AFFIN,
80, Jalan Raja Chulan,
50200 Kuala Lumpur.
Tel.: 03-2055 9000
Fax.: 03-2026 1415
23 October 1975
Directors
YBhg. Tan Sri Dato’ Seri Lodin
Bin Wok Kamaruddin
PRINCIPAL ACTIVITIES
Affin Bank Berhad is principally involved
in the carrying out of banking and
finance related services. The Bank
has twelve (12) subsidiary companies
and three (3) associate companies
which are principally engaged in
property management, nominee/ trustee
management and factoring services.
YM. Dr. Raja Abdul Malek
Bin Raja Jallaludin
(Independent Non-Executive Director)
YBhg. Tan Sri Dato’ Sri Abdul Aziz
Bin Abdul Rahman
AUTHORISED SHARE CAPITAL
No of shares
2,000,000,000
Par value
RM1.00
Total
RM2,000,000,000
Mr. Aubrey Li Kwok-Sing
ISSUED AND PAID-UP
SHARE CAPITAL
No of shares
1,518,336,765
Par value
RM1.00
Total
RM1,518,336,765
YBhg. Tan Sri Dato’ Seri Mohamed
Jawhar
SUBSTANTIAL SHAREHOLDER
Mr. Gary Cheng Shui Hee
(Alternate Director to Mr. Aubrey Li Kwok-Sing)
En. Mohd Suffian Bin Hj. Haron
Managing Director/
Chief Executive Officer
YBhg. Dato’ Zulkiflee Abbas
Bin Abdul Hamid
SECRETARY
Nimma Safira Binti Khalid
10 AFFIN BANK BERHAD (25046-T)
Annual Report 2013
No of shares
Affin Holdings Berhad - 1,518,336,765
EXTERNAL AUDITORS
PricewaterhouseCoopers (AF 1146)
CORPORATE
structure
as at 31 December 2013
58.69%
4
Lembaga Tabung Angkatan Tentera
35.18%
Affin Holdings berhad
OTHERS
Boustead Holdings Berhad
Bank of East Asia Limited
20.69%
23.52%
20.61%
100%
Affin Bank Berhad
100%
Affin Capital Sdn Bhd
100%
30%
KL South Development Sdn Bhd 2
(formerly known as Grand Duplex Sdn Bhd)
(jointly owned by AFFIN Islamic Bank Berhad and Albatha
Bukit Kiara Holdings Sdn Bhd with a 30:70 ownership)
Affin Islamic Bank Berhad
50%
100%
AFFIN-i Nadayu Sdn Bhd 2
(formerly known as AFFIN-i Goodyear Sdn Bhd)
(jointly owned by AFFIN Islamic Bank Berhad and
Jurus Positif Sdn Bhd with a 50 : 50 ownership)
Affin MoneyBrokers Sdn Bhd
100%
Affin-ACF Holdings Sdn Bhd
100%
Affin-ACF Capital Sdn Bhd
100%
100%
ABB Nominee (Tempatan) Sdn Bhd
100%
100%
PAB Property Development Sdn Bhd 3
PAB Properties Sdn Bhd
100%
100%
Affin Investment Bank Berhad
100%
Affin Fund Management Berhad
100%
Merchant Nominees (Tempatan)
Sdn Bhd
67%
Classic Precision Sdn Bhd
100%
Affin Nominees (Tempatan) Sdn
Bhd
100%
Affin Nominees (Asing) Sdn Bhd
51%
Axa Affin Life Insurance Berhad
33.6%
AFFIN-ACF Nominees (Tempatan) Sdn Bhd 3
100%
Affin Recoveries Berhad
BSNC Nominees (Tempatan) Sdn Bhd 3
20%
ABB Trustee Berhad 2
(80% held by Directors of Affin Bank Berhad
in trust for Affin Bank Berhad)
100%
AFFIN Factors Sdn Bhd 1
100%
ABB Nominee (Asing) Sdn Bhd 1
100%
Affin Futures Sdn Bhd 1
100%
ABB IT & Services Sdn Bhd 3
100%
BSNCB Nominees (Tempatan)
Sdn Bhd 3
Axa Affin General Insurance Berhad
1
Dormant - company inactive but currently holding asset.
2Associate.
3
Companies where application to strike-off has been filed by the Bank.
4
58.69% reperesents the shareholding of LTAT in Boustead Holdings Berhad
as at 31 December 2013.
Annual Report 2013
AFFIN BANK BERHAD (25046-T) 11
BOARD OF
DIRECTORS
From left to right:
YBhg. Tan Sri Dato’ Seri Lodin
Bin Wok Kamaruddin
YBhg. Jen. Tan Sri Dato’ Seri Ismail
Bin Haji Omar (Bersara)
Chairman
Non-Independent Non-Executive Director
YM. Dr. Raja Abdul Malek
Bin Raja Jallaludin
Independent Non-Executive Director
From left to right:
Non-Independent Non-Executive
Director
YBhg. Tan Sri Dato’ Sri Abdul
Aziz Bin Abdul Rahman
En. Mohd Suffian Bin
Hj. Haron
YBhg. Tan Sri Dato’ Seri
Mohamed Jawhar
Annual Report 2013
Profile OF
TORS
YBhg. Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara)
Chairman / Non-Independent Non-Executive Director
Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara), aged 72, was appointed as the Director
and Chairman of AFFINBANK on 21 May 2002.
He was formerly the Chief of Defence Force (CDF) of Malaysia from 1995 until his retirement in
1998, after 38 years of military service. He graduated from Royal Military Academy, Sandhurst,
United Kingdom in 1961 and subsequently attended professional and management development
courses at several institutions including The Land Forces Command and Staff College, Canada;
the United Nation International Peace Academy, Vienna; the National Defence College, India and
INTAN Malaysia.
His military service saw Key Command and Staff appointments at all levels of the Armed Forces.
As CDF, his responsibilities included key roles in Malaysia’s Regional and International Defence
Relations.
He was the Chairman of Affin Holdings Berhad and Affin-ACF Finance Berhad from 1999 prior to
joining AFFINBANK. He currently holds directorships in Affin Islamic Bank Berhad, ABB Trustee
Berhad, EP Engineering Sdn Bhd and Global Medical Alliance Sdn Bhd.
Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara) attended all 14 Board Meetings held during
the financial year ended 31 December 2013.
YBhg. Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin, aged 64, was reappointed to the Board of
Directors of AFFINBANK on 4 October 2010. He was appointed as the Managing Director of
Affin Holdings Berhad in February 1991 and redesignated as Deputy Chairman on 1 July 2008.
He has extensive experience in managing a provident fund and in the establishment,
restructuring and management of various business interests ranging from plantation, trading,
financial services, property development to oil and gas, pharmaceuticals and shipbuilding. He
is the Chief Executive of LTAT and the Deputy Chairman / Group Managing Director of Boustead
Holdings Berhad. Prior to joining LTAT, he was the General Manager of Perbadanan Kemajuan
Bukit Fraser for 9 years.
He is also the Chairman of Boustead Heavy Industries Corporation Berhad, Boustead Naval
Shipyard Sdn Bhd, Pharmaniaga Berhad, Boustead Petroleum Marketing Sdn Bhd, Boustead
REIT Managers Sdn Bhd and 1Malaysia Development Berhad. He sits on the Board of The
University of Nottingham in Malaysia Sdn Bhd, Minority Shareholder Watchdog Group, FIDE
Forum, Atlas Hall Sdn Bhd, Affin Islamic Bank Berhad, Affin Investment Bank Berhad, AXA Affin
Life Insurance Berhad and Boustead Plantations Berhad.
He graduated from the University of Toledo, Ohio, USA with a Bachelor of Business Administration
and a Master of Business Administration. Among the many awards Tan Sri Dato’ Seri Lodin
received to-date include the Chevalier De La Legion D’Honneur from the French Government,
the Malaysian Outstanding Entrepreneurship Award, the Degree of Laws honoris causa from
the University of Nottingham, United Kingdom, the UiTM Alumnus of the Year 2010 Award and
The BrandLaureate Most Eminent Brand ICON Leadership Award 2012 by Asia Pacific Brands
Foundation.
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin attended all 14 Board Meetings held during the
financial year ended 31 December 2013.
Annual Report 2013
profile OF DIRECTORS
YM. Dr. Raja Abdul Malek Bin Raja Jallaludin
Dr. Raja Abdul Malek Bin Raja Jallaludin, aged 68, was appointed to the Board of Directors of
AFFINBANK on 29 January 1991.
He graduated as a doctor from the University of Malaya in 1972 and, early in his career, worked
at the General Hospital, Kuala Lumpur and the Faculty of Medicine, UKM. In late 1975, he went
into private medical practice and became a senior partner of Drs. Catterall, Khoo, Raja Malek &
Partners until 2003 when he resigned from the firm. Professionally he is widely experienced and
has served in various peer and academic activities. Amongst others, he had been a clinical tutor
in the Faculty of Medicine, University Malaya; been a member of the Ethical Committee of the
Malaysian Medical Council, MOH; was the Chairman of Council Academy of Family Physicians,
Malaysia.
He also has vast experience in the pharmaceutical world and had actively been involved
since 1984. He had been the Medical Director (Malaysia-Singapore) for Parke Davis-Warner
Lambert from 1984-2000, and had remained briefly so too with Pfizer Malaysia when these two
Incorporations merged in 2001. In 2003, Dr. Raja Abdul Malek joined HOE Pharmaceuticals as
the Director of Medical and Scientific Affairs and holds this position to this day.
Presently he is also on the Board of ABB Trustee Berhad, StemLife Berhad and Boustead
Plantations Berhad.
Dr. Raja Abdul Malek Bin Raja Jallaludin attended all 14 Board Meetings held during the financial
year ended 31 December 2013.
YBhg. Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman
Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman, aged 67, was appointed to the Board of Directors
of AFFINBANK on 28 January 2003.
He graduated with a Bachelor of Commerce from University of New South Wales, Sydney,
Australia. He is a member of the Malaysian Institute of Certified Public Accountants (MICPA) and
the Malaysian Institute of Accountants (MIA).
He has served as Chairman and Board member of several government institutions, agencies and
public listed companies, both in Australia and Malaysia.
At the corporate level he was with PricewaterhouseCoopers, Malaysia Airlines and Managing
Director of Bank Rakyat Bhd before venturing into politics and public service as the Pahang
State Assemblyman, State Executive Councillor and Deputy Chief Minister of Pahang. He was a
Senator of Malaysian Parliament for a maximum period of two (2) terms.
Presently he is a Board member of Affin Islamic Bank Berhad, the International Islamic University
Malaysia and University Malaysia Pahang.
Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman attended all 14 Board Meetings held during the
Annual Report 2013
Mr. Aubrey Li Kwok-Sing, aged 63, was appointed to the Board of Directors of AFFINBANK on
17 March 2008. He is a Director of The Bank of East Asia, Limited and Chairman of MCL Partners
Limited.
He possesses extensive experience in investment banking, merchant banking and capital
markets. Presently he is a Board member of Café de Coral Holdings Limited, China Everbright
International Limited, Kunlun Energy Limited, Kowloon Development Co. Ltd, Pokfulam
Development Company Limited and Tai Ping Carpets International Limited.
Mr. Aubrey Li Kwok-Sing attended 4 out of 14 Board Meetings held during the financial year
ended 31 December 2013.
Mr. Aubrey Li Kwok-Sing’s Alternate Director, Mr. Gary Cheng Shui Hee was appointed on 18
April 2011. He attended 7 out of 14 Board Meetings held during the financial year ended 31
December 2013.
En. Mohd Suffian Bin Haji Haron
En. Mohd Suffian Bin Haji Haron, aged 68, was appointed to the Board of Directors of
AFFINBANK on 15 August 2009.
He graduated with a Bachelor of Economics from University of Malaya (1970) and holds a Master
of Business Administration from University of Oregon (USA) in 1976.
He started his career as a Diplomatic and Administrative Officer, attached to the Prime Minister’s
Department, and after thirteen years, left the Government Service to be the General Manager,
International Business of a Government-Linked Company and after six years left for the Private
Sector. He brings with him vast experience in the financial services sector which include asset
management and insurance-related services, general trading, power/energy the oil and gas
services sectors.
Presently he is a Board member of Affin Islamic Bank Berhad, L.K. & Associates Sdn Bhd and
Pharmaniaga Berhad.
En. Mohd Suffian Bin Haji Haron attended all 14 Board Meetings held during the financial year
ended 31 December 2013.
Annual Report 2013
YBhg. Tan Sri Dato’ Seri Mohamed Jawhar
Tan Sri Dato’ Seri Mohamed Jawhar, aged 69, was appointed to the Board of Directors of
AFFINBANK on 1 November 2011.
His other positions include: Independent Non-Executive Director, Affin Islamic Bank Berhad;
Chairman ISIS Malaysia, Non-Executive Chairman, New Straits Times Press (Malaysia) Berhad;
Member of Securities Commission Malaysia; Member, Advisory Board, Malaysian Anti-Corruption
Commission; Distinguished Fellow, Institute of Diplomacy and Foreign Relations (IDFR); Board
Member, Institute of Advanced Islamic Studies (IAIS); Chairman, Malaysian National Committee
of the Council for Security Cooperation in the Asia Pacific (CSCAP); and Member, International
Advisory Board, East West Center, USA. He is also the Expert and Eminent Person for the ASEAN
Regional Forum (ARF).
He was also the Co-Chair, Network of East Asia Think-tanks (NEAT) 2005-2006; Chairman,
Malaysian National Committee, Pacific Economic Cooperation Council (PECC) 2006-2010; and
Co-Chair, Council for Security Cooperation in the Asia Pacific (CSCSP) 2007-2009.
He served with the government before he joined ISIS Malaysia as Deputy Director-General in
1990. He was appointed Director-General in March 1997 and was subsequently appointed
Chairman and CEO in 2006. He was appointed Chairman ISIS Malaysia on 9 January 2010.
His positions while in government included Director-General, Department of National Unity;
Under-Secretary, Ministry of Home Affairs; Director (Analysis) Research Division, Prime Minister’s
Department; and Principal Assistant Secretary, National Security Council. He also served as
Counselor in the Malaysian Embassies in Indonesia and Thailand.
Tan Sri Dato’ Seri Mohamed Jawhar attended 13 out of 14 Board Meetings held during the
Annual Report 2013
MANAGEMENT
TEAM
YBhg. Dato’ Zulkiflee Abbas
Bin Abdul Hamid
En. Kamarul Ariffin Bin
Mohd Jamil
En. Shariffudin Bin Mohamad
En. Amirudin Bin Abdul Halim
Executive Director, Operations
Managing Director / Chief Executive
Officer
Chief Executive Officer,
Affin Islamic Bank
Director, Business Banking
Mr. Ee Kok Sin
Chief Financial Officer
Mr. Tan Kok Toon
Mr. Kasinathan T.Kasipillai
Pn. Khatimah Binti Mahadi
Director, Treasury
Group Chief Risk Officer
Group Chief Internal Auditor
Pn. Nor Rozita Binti Nordin
En. Nazlee Bin Khalifah
En. Idris Bin Abd Hamid
Chief Human Resource Officer
Chief Corporate Strategist
Director, Consumer Banking
Pn. Nimma Safira Binti Khalid
Mr. Ramanathan Rajoo
Head, Legal & Secretarial
Head, Finance
Annual Report 2013
MANAGEMENT
TEAM profileS
YBhg. Dato’ Zulkiflee Abbas Bin Abdul Hamid
Managing Director / Chief Executive Officer
Dato’ Zulkiflee Abbas Bin Abdul Hamid is the Managing Director/ Chief Executive Officer of Affin
Bank Berhad, a position held since April 2009. Dato’ Zulkiflee also holds the mandate to drive
Affin Banking Group’s strategic and developmental agenda for all entities within the group. Dato’
Zulkiflee joined AFFINBANK on 1 March 2005 as Director of Enterprise Banking. Subsequently in
2008, Dato’ Zulkiflee was appointed as Executive Director of Banking, which encompassed both
Business and Consumer Banking. Dato’ Zulkiflee carries with him more than 30 years of banking
experience, both locally in Malaysia and internationally in London and New York. Dato’ Zulkiflee
has assumed pivotal roles in banking, which include Regional Manager, Chief Credit Officer, and
Global Head of Enterprise Banking, amongst others. Dato’ Zulkiflee holds a Master in Business
Administration (1981) and a Bachelor of Science degree in Marketing (1979), both from Southern
Illinois University.
En. Kamarul Ariffin Bin Mohd Jamil
Chief Executive Officer, Affin Islamic Bank
En. Kamarul Ariffin Bin Mohd Jamil joined Affin Bank Berhad in 2003 as Head, Corporate
Strategy Division. In 2005, Kamarul was appointed as Head, Islamic Banking Division. With the
establishment of Affin Islamic Bank, Kamarul was appointed as its Chief Executive Officer. Prior
to AFFINBANK, Kamarul held various positions at Pengurusan Danaharta Nasional Berhad,
Trenergy Malaysia Berhad and Shell Malaysia Trading Sdn Bhd in various capacities including
business development, and strategic planning. Kamarul graduated from the University of
Cambridge in 1992 with a Bachelor of Arts in Economics.
En. Shariffudin Bin Mohamad
Executive Director, Operations & Strategic Services
En. Shariffudin Bin Mohamad joined Affin Bank Berhad in 2007 as Director of Operations and was
appointed as Executive Director, Operations in 2009. Shariffudin has 25 years local and overseas
experience in banking. His hands-on experience covers Branch Operations, Trade Finance,
Corporate Banking, Corporate Relationship Management, Credit Operations, Cash Management
and Securities Services. His last position was Head, Project Management Services (Technology &
Operations) in a leading foreign bank and its local outsourcing subsidiary. Shariffudin graduated
from Southern illinois University, with a Master in Business Administration (1981) and a Bachelor
of Science degree in Finance (1980).
Annual Report 2013
MANAGEMENT TEAM profileS
En. Amirudin Bin Abdul Halim
Director, Business Banking
En. Amirudin Bin Abdul Halim joined Affin Bank Berhad as Director, Business Banking in July
2009. Prior to AFFINBANK, Amirudin was at a leading local bank for more than 21 years where he
gained extensive banking experience in Branch Operations, Credit Control, Business Banking,
Retail Marketing, Consumer Banking and Corporate Services. He has served in several senior
strategic roles, including Deputy Head of Business Banking Division, Head of Mortgage and
Automobile Financing and as the Deputy Chief Executive Officer of a subsidiary of a leading local
bank. Amirudin graduated with a Bachelor of Arts degree in Finance from St. Louis University in
1986.
Mr. Ee Kok Sin
Chief Financial Officer
Mr. Ee Kok Sin joined Affin Bank Berhad in 2005 as the Chief Financial Officer. Prior to his
appointment at AFFINBANK, Ee was the General Manager of Finance & Services at Pengurusan
Danaharta Nasional Berhad. Ee began his career in 1982 as a Trainee Accountant with a firm of
Chartered Accountants in London. He has extensive experience in auditing, treasury functions,
financial accounting, financial management and information technology. Ee is a fellow Member of
the Association of the Chartered Certified Accountants (ACCA) and a member of The Malaysian
Institute of Certified Public Accountants (MICPA) and Malaysian Institute of Accountants (MIA).
Mr. Tan Kok Toon
Director, Treasury
Mr. Tan Kok Toon joined Affin Bank Berhad as its Head of Treasury in October 2004 and is
responsible for managing all aspects of Treasury Division. He is currently the Honorary Secretary
of Persatuan Pasaran Kewangan Malaysia (Association Cambiste Internationale) and Chair to
the Seminar and Education Committee. Prior to AFFINBANK, Tan was with a leading bank in
Malaysia. Tan has more than 20 years banking experience, particularly in Treasury Operations. He
has served as Treasury Manager with the New York Branch, and was Treasury Business Advisor
to turn around a business project in the Philippines. Tan graduated from University Malaya in
1987 with a Bachelor of Science degree (honours) in Mathematics.
Annual Report 2013
Mr. Kasinathan T.Kasipillai
Group Chief Risk Officer
Mr. Kasinathan T. Kasipillai joined Affin Bank Berhad in 2005 as its Chief Risk Officer. Kasinathan
has more than 35 years of local and overseas banking experience particularly in the areas of Risk
Management. He comes from a foreign bank background working in the risk function serving in a
number of countries including London, Singapore, Hong Kong, Mumbai and Jakarta. Kasinathan
holds a Masters in Business Administration from the University of Bath, UK and is a Certified
Risk Professional awarded by Bank Administration Institute, Chicago, USA. Kasinathan is also an
Associate Fellow of Institute of Bankers Malaysia, and continues to serve as an active member
of CCP Examination Committee.
Pn. Khatimah Binti Mahadi
Group Chief Internal Auditor
Pn. Khatimah Binti Mahadi joined Affin Bank Berhad as Chief internal Auditor in 2004. Khatimah
has more than 30 years of experience in Internal Auditing. She has led the Audit and Compliance
function in a number of large local and foreign financial institutions. Khatimah graduated with a
Diploma in Accountancy from UITM in 1978.
Pn. Nor Rozita Binti Nordin
Chief Human Resource Officer
Pn. Nor Rozita Binti Nordin was appointed as Chief Human Resource Officer of Affin Bank
Berhad in May 2011. Prior to joining AFFINBANK, Rozita was Executive Vice-President and Head
of Group Human Resources at a local banking group. Rozita has more than 30 years’ experience
in Human Resource Development and Customer Relations Strategy, in various industries which
include banking, oil and gas, manufacturing, retail, and shared services. Rozita has taken on
strategic and operational roles, both locally and abroad. Rozita graduated from Southern illinois
University with a Master of Science degree in 1984, a Bachelor of Science in Education and a
Bachelor of Arts degree in Linguistics, both in 1982.
Annual Report 2013
En. Nazlee Bin Khalifah
Chief Corporate Strategist
En. Nazlee Bin Khalifah joined Affin Bank Berhad in February 2009 as Head of Business Strategy
and Support, Business Banking Division. Subsequently, in April 2011, Nazlee was appointed as
Chief Corporate Strategist. Nazlee has more than 20 years’ experience in the banking industry.
Prior to joining AFFINBANK, Nazlee was with a leading local bank for 17 years in various
capacities, mostly in Strategic Management positions. Nazlee graduated from Simon Fraser
University in Vancouver in 1991, with a Bachelor degree in Business Administration, majoring in
Accounting and Finance.
En. Idris Bin Abd Hamid
Director, Consumer Banking
En. Idris Bin Abd Hamid is the Director of Consumer Banking, a position he has held since May
2009. Idris began his career with Affin Bank Berhad in 1994 as General Manager of Affin Finance
Berhad. He was appointed as Deputy Chief Executive Officer for Affin-ACF Finance Berhad from
2000 to 2005. Idris has over 30 years of experience in the banking industry, which includes
exposure as Branch Manager, and in Corporate and Consumer Loans Management. Idris
graduated with a Master in Business Administration from the University of Northern Colorado
in 1984.
Puan Nimma Safira Binti Khalid
Head, Legal & Secretarial
Puan Nimma Safira Binti Khalid is the Head, Legal & Secretarial/Company Secretary of Affin Bank
Berhad, a position she has held since 2005. Nimma joined AFFINBANK in 2001 as Manager, Legal
& Secretarial. She was subsequently assigned to the President/CEO’s office as the Executive
Assistant from 2003 to 2005. Nimma started her career of 20 years as an Advocate & Solicitor of
the High Court of Malaya in 1994. She then moved in-house as Legal Officer/Company Secretary
of a commercial bank from 1995 to 2000. Nimma graduated with Bachelor of Laws in 1992 and
Bachelor of Laws (Shariah) in 1993; both from the International Islamic University, Malaysia.
Mr. Ramanathan Rajoo
Head, Finance
Ramanathan Rajoo began his career in 1988 as an audit trainee with Coopers & Lybrand before
joining Affin Bank Berhad in 1991. He has held various positions within the Finance Division
before being appointed to his current position in 2003. He has more than 25 years of extensive
working experience in auditing, financial accounting and financial management. He holds a
Master degree from University Putra Malaysia, Bachelor of Accounting degree from the National
University of Malaysia and Certified Credit Professional from Institute Bank Bank Malaysia. He
is a member of the Certified Practising Accountants, Australia (CPA) and Malaysian Institute of
Accountants (MIA).
Annual Report 2013
Chairman’s
STATEMENT
“
In 2013, the Bank registered
an 8.4% increase in its profit
before zakat and taxation,
which amounted to
RM762.2 million.
”
Jen. Tan Sri Dato’ Seri Ismail Bin Hj. Omar (Bersara)
Chairman
Annual Report 2013
CHAIRMAN’S STATEMENT
Dear Shareholders,
I am pleased to report that AFFINBANK
registered another year of robust growth
in the financial year 2013. Although
the general consensus was that 2013
proved to be a competitive operating
environment for the banking industry as a
whole, AFFINBANK remained focused in
developing our strengths and continued
to perform well.
For the year under review, AFFINBANK
continued to record a steady increase
in revenues and earnings. In 2013, the
Bank registered an 8.4% increase in its
profit before zakat and taxation, which
amounted to RM762.2 million.
This year, we launched several new
products, services and campaigns that
boosted our revenue. AFFINBANK’s
business
operations
and
market
presence also continued to thrive as a
result of these new initiatives with growth
in deposits by 11.7% while loans and
advances grew by 8.0%.
The Bank continued to place its brand
in the market and enhance accessibility
by expanding our network of branches.
Three new branches were opened in 2013
and as at December 2013, AFFINBANK
has 103 branches nationwide in Malaysia
to serve our customers better.
Social Responsibility (CSR) is something
that we place great importance on and
the Bank reinforced its commitment to
society and their well-being through
various donations, outreach programs
and educational initiatives.
In 2013, two Blood Donation Drives
were organized at AFFINBANK’s Head
Office where over 300 staff volunteered
and donated blood. This CSR initiative
provides a platform for the Bank’s staff
to participate and instills the culture and
spirit of caring within the workplace.
During the various festivities throughout
the year, AFFINBANK reached out to the
community through various activities. In
conjunction with Chinese New Year this
year, AFFINBANK visited the Ampang
Old Folks Home, where residents were
treated to lunch, money packets (“ang
pow”) and donation of a variety of
dry food. During Ramadan, the Bank
organised a scrumptious “Buka Puasa”
dinner for approximately 130 orphans
from selected orphanages and 30 new
Muslim converts from Pertubuhan
Kebajikan Islam Malaysia (PERKIM).
This is an annual event where the Board
of Directors and senior management of
the Bank will attend to host the dinner
and get to know the orphans and other
guests on a more personal level. Besides
dinner, the guests were delighted to
receive “Duit Raya” to add to the festive
celebration mood.
Being a part of the LTAT (Lembaga Tabung
Angkatan Tentera), which is a corporation
with the key objective of providing
maximum returns to non-pensionable
members of the Armed Forces as well
as other welfare benefits to members of
the Armed Forces as a whole, the Bank
channels many of its CSR activities
to the same cause. In 2013, several
contributions were made by the Bank
for the welfare of the Malaysian Armed
Forces, i.e. RM160,000 sponsorship to
the communication activities of Tabung
Hari Pahlawan; RM100,000 worth of Hari
Raya gift packages to the Welfare Fund
of the Malaysian Armed Forces; and our
yearly contribution of RM1 million to the
Risk Management, Operational and IT
improvements continued throughout
the year as these initiatives are crucial
in supporting the business. New Human
Capital Development initiatives were
carried out to ensure the Bank has a
team of professionals with the correct
skill sets and the right experiences to
serve our customers.
The pride of AFFINBANK stems not only
from our fiscal achievements and success
but is also based on what we give back
towards the community. Our Corporate
Contribution of RM100,000 worth of Hari Raya gift packages to the Welfare Fund of the Malaysian
Armed Forces.
Annual Report 2013
Yayasan Warisan Perajurit, a foundation
established with LTAT to raise funds
to provide scholarships and education
assistance to the children of retired
Malaysian Armed Forces and those
currently in service.
Our educational initiatives this year not
only brought about new endeavours but
also continued with existing projects
from previous years. A new CSR initiative
in 2013 was AFFINBANK’s sponsorship
of RM50,000 worth of sports equipment
to selected schools, in support of the
“1Murid 1Sukan” policy, implemented
by the Sports Division in the Ministry of
Education. This program aims to provide
deserving students with the opportunity
to further develop their talent and
potential, and gain higher achievements
in sports.
AFFINBANK
also
continued
to
sponsor the TrEES “Young Voices for
Conservation” Programme for the 3rd
Year, a program that educates the young
on environment conservation. The Bank
also finds this program to be effective
in developing youths to be more “well
rounded” individuals with multiple skills
in the future.
This year, the Bank once again presented
awards to 107 deserving students via
the Affin Education Excellence Award.
Our Affin Education Excellence Award
is in its 10th year, and as of last year, a
total of RM1.5 million in cash awards
had been presented to more than 500
deserving students.
We continued to sponsor and support
BHPetrol’s TV Programme on RTM1
called “Di Celah-Celah Kehidupan” that
features selected Malaysians who are in
need of help and assistance. AFFINBANK
provided a convenient platform for cash
donations sent by the public to the
recipients, who also received RM1,000
each from the Bank.
Annual Report 2013
Sponsorship of sports equipment to selected schools in support of the “1Murid 1Sukan” policy.
During
the
year
under
review,
AFFINBANK and AFFIN ISLAMIC
collaborated to provide RM20,000 worth
of essential items for the flood victims in
Kuantan. The Bank decided to extend a
helping hand to aid these victims who
suffered great losses. With the help of
the Malaysian Armed Forces, the goods
were distributed to the evacuees at all
flood relief centres in Kuantan, Pahang.
The Bank continues to remain optimistic
for the year ahead, as we target to grow in
our core business and remain competitive
in the industry. New products/services
and initiatives will be launched so that we
can enhance our proposition to existing
customers, and acquire new business
relationship. We will reinforce the Bank’s
branding presence by increasing our
network of branches and improving
existing branches. All these will be made
possible with a team focused towards
achieving one common corporate
objective.
Majlis Berbuka Puasa with orphans and new Muslim
converts at Menara Affin.
AFFINBANK sponsors TrEES Programme for the 3rd
consecutive year.
Colouring contest winners at Jom Karnival, Lahad Datu Branch.
8.4%
profit before zakat
& taxation growth
103 Malaysia
branches nationwide in
Chinese New Year visit to Ampang Old Folks Home.
New branch at Danga Bay, Johor.
At this juncture, I would like to extend my deep appreciation to the Board of Directors,
Management team and every staff at AFFINBANK. It is your dedication and hard work
that has produced the results we have achieved thus far. I would also like to urge
the Management team and staff to continue relying on the enduring power of great
teamwork to achieve our corporate goals.
I encourage each staff to always exhibit prudence and professionalism when working
with our customers, and become the embodiment of a responsible banker. The Bank’s
Corporate Values will dictate our actions at work so that we are continually delivering
great service and meeting the needs of our customers by truly providing “Banking
without Barriers”.
Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara)
Chairman
Annual Report 2013
PERFORMANCE
REVIEW
Over the last six years, AFFINBANK
has been reporting steady growth
in revenues and earnings. The Bank
recorded a string of profits and
increased returns in several areas.
In 2013, this trend continued with a
profit before zakat and taxation of
RM762.2 million, which is an 8.4%
increase from the year before.
Our profit after zakat and taxation this
year escalated by 8.5% to RM569.8
million, from RM525.3 million in 2012.
AFFINBANK’s total assets achieved
a growth of 8.3% to RM56.4 billion,
compared to RM52.1 billion in the
previous financial year. Our Return-onEquity (ROE) after tax was recorded at
13.8%, while the Cost-to-Income ratio
improved to 44.5% from 45.2%.
The Bank’s total deposits continued to
flourish in 2013 with an increase of 11.7%
to RM46.1 billion, compared to RM41.3
billion in 2012. Net interest income also
grew to RM813.1 million from RM788.7
million recorded in 2012, while gross
loans and advances added by 8.0%
in 2013. AFFINBANK succeeded in
maintaining asset quality with a lower
net impaired loan ratio of 0.9% in 2013,
compared to 1.1% in 2012. During the
year under review, the Bank continued to
remain vigilant to the economic signals.
The emphasis is on pro-active account
management to ensure that our assets
remain healthy.
Annual Report 2013
Business Initiatives
AFFINBANK started the year with
the Chinese New Year Triple Fortune
Promotion, a deposit campaign that
allowed customers to enjoy higher
interest rates on their deposits and a
chance to win a limited edition gold
plated art.
The AFFIN Junior Saver (a children’s
savings account) was re-launched this
year with a new look and savings contest
for young account holders to win cool
IT gadgets and cash prizes. The fourth
OMG campaign, called “The Invasion of
the OMG”, was launched in April 2013
and generated double-digit growth in
retail deposits, and over 100,000 new
accounts compared to previous years.
AFFINBANK partnered with AXA Affin
Life Insurance to provide a high interest
rate of up to 5.0% for a 12-month
Fixed Deposit placement with AXA’s life
insurance plan, called the Smart Income
Saver (SIS). This FD-SIS Combo Plan
allowed customers to enjoy the benefit
of insurance protection with high interest
rate and guaranteed cash income.
13.8%
return-on-equity
(ROE after tax)
8.0%
gross loans/advances
growth
11.7%
total deposits growth
Re-launch of AFFIN Junior Saver for young
account holders.
PERFORMANCE REVIEW
Another product bundling initiative was
the “Spend, Save & Win” campaign that
was packaged to reward customers
with a combined product holding of
deposit accounts, debit and credit cards.
Customers who maintain a minimum
average balance in their deposit
accounts, as well as those who spend on
their debit and credit card, were rewarded
with monthly prizes and a Grand Prize of
a KIA Rio 1.4SX.
High-end auto financing and mortgage
continued to be key components of our
loan growth this year. During the year
under review, our online banking platform
was successfully upgraded, whilst we
targeted new merchants, implemented a
more efficient cash management service,
and improved our transaction banking
facilities for SME customers.
Grand Prize winners for “The Invasion of the OMG” campaign.
AFFINBANK also jointly organized
the “Experience IBG” road show with
Bank Negara Malaysia, the Association
of Banks in Malaysia (ABM), and the
Association of Islamic Banking Institutions
Malaysia (AIBIM). This 6-month road
show (October 2013 until March 2014)
will cover 12 major towns nationwide and
aims to create awareness among small
businesses about online banking and the
convenience of Interbank GIRO (IBG).
Operational Highlights
As always, IT and Operational Process
initiatives were implemented within
the year to boost our progress and
development. To enhance our loan
capturing and processes across all
businesses, we launched the Phase 2
enhancement to the Loan Origination
System. The Bank also recalibrated the
Consumer Credit Score Card System
to improve our asset quality and the
predictive capability of credit scoring.
We are also proud to announce that
AFFINBANK is one of the premier banks
in the industry to have increased
frequency in the payment processing
of IBG transactions. This will result in
faster IBG payments and also encourage
customers to frequently use this mode of
payment. We are pleased to do our part
to support the BNM’s initiative to promote
electronic fund transfer payments.
Risk Management Initiatives
One of the key tactical moves to enhance
our branding image in 2013 was through
network expansion. Three new branches
were opened in key strategic locations
in Kota Kemuning (Selangor), Danga
Bay (Johor) and Lahad Datu (Sabah)
to enhance our visibility in these vital
locations and to improve accessibility
of the Bank for our customers. We
also relocated our Kuantan branch to
a brand new premise with the intention
of providing better customer service
through a modern interior and enhanced
infrastructure.
During
the
year,
AFFINBANK
implemented a New Statistical Reporting
System (NSRS) with a standardised
reporting framework and infrastructure
for data submission. We moved in
this direction to support Bank Negara
Malaysia’s (BNM) initiative to improve
statistical
reporting
by
financial
institutions and data management. There
is much relevance and benefit to this
new system of reporting as it increases
timeliness and enhances the integrity of
the statistics.
In 2013, we applied several key
measures to facilitate AFFINBANK’s risk
management initiatives. As we adhered
to the BNM’s guideline on Risk-Weighted
Capital Adequacy Framework - Internal
Capital Adequacy Assessment Process
(Pillar 2), the Group maintained a robust
ICAAP Framework to assess capital
adequacy.
Annual Report 2013
PERFORMANCE REVIEW
At the start of the year, the Bank
embarked on Basel III, which introduced
new capital rules that included leverage
ratio and liquidity standards, with
phased-in arrangements. We are enroute
to full compliance by 2019. To date, the
Bank has fulfilled the quarterly reporting
requirement to BNM for the current
Observation Period (starting June 2012),
with regard to our leverage and liquidity
positions.
We have also been conducting periodic
industry studies and portfolio reviews
on the economic and regulatory
environment. In light of this, Group
Risk Management (GRM) closely tracks
unfolding events and adopts appropriate
measures to protect the Bank’s risk
position. To further strengthen our risk
culture, GRM conducted several internal
risk programs in 2013 to enhance the
knowledge and skill sets of our officers.
These included workshops that are
relevant to credit and operational risk
management, credit clinics focusing on
live case studies and assessments for
Internal Certification in all three key areas
of risk - Credit, Operations and Market.
The Bank was steadfast in managing
and monitoring our loan, and credit
portfolios more efficiently in 2013. We
made certain that our focus was on
booking quality assets. AFFINBANK has
adopted prudent underwriting standards,
maintained a proactive approach to
account management, and employed
strict control and monitoring of all
account portfolios.
Human Resources Development
Our Human Resources division also
implemented several key initiatives in
2013 for human capital development.
In May 2013, a Memorandum of
Understanding (MoU) was signed with
Annual Report 2013
the Institute of Bankers Malaysia (IBBM)
to enrol and sponsor our staff into The
Chartered Banker Program. This is a
recognized professional certification
that addresses vital areas of finance and
banking, and will prove to be a significant
advantage for our staff. This initiative
is part of the Bank’s “Upward Mobility
Program: Empowering Employees to
Grow” to equip staff to become leaders
at the forefront of the banking and finance
industry. It will also undoubtedly provide
them with the recognition necessary to
fulfil their role in the Bank.
The Affin Management Programme
(AMP) recruited our 8th batch of AMP
trainees this year. This program is part of
the Bank’s Human Capital Development
Plan and the Young Talent Management
Programme, which aims to develop and
support the banking career of young
talents through engaging activities and
competency programs. To-date, a total
of 118 trainees have participated in this
program.
Throughout 2013, the Bank also
participated in the Skim Latihan 1Malaysia
(SL1M) program, which was established
by the Economic Planning Unit (EPU)
of Prime Minister’s Department in 2011.
One of the reasons that AFFINBANK is
committed to this program is its ability to
increase the employability of Malaysian
graduates, particularly those from rural
areas and low-income families. Through
this initiative, young graduates possess
a higher potential to secure employment
through extensive classroom and on-thejob training. AFFINBANK was recognised
by the Minister in the Prime Minister’s
Department, Dato’ Seri Wahid Omar,
for its exemplary contribution to the
program.
This year, we further extended our
focus on developing strong talents
and leadership among our employees.
Various
training
programs
were
conducted throughout 2013 on sectors
such as branch operations, marketing/
account relationship management and
soft-skills development, including online
learning program covering subjects in
areas on risk management and Islamic
banking.
Outlook and Prospects
Building on 2013 performance, we
have set a few goals for 2014. We are
projecting a loans growth between 8% to
10% and targeting deposits growth of a
minimum of 10%. AFFINBANK has also
set a target for key ratios to be at par or
above the industry average. The Bank
will continue to enhance its customer
touch point by expanding its network
of branches, Business Loans Centres
as well as off-branch ATMs. We are also
continuously exploring potential Merger
& Acquisition (M&A) opportunity, both
domestic and abroad, to expand our
presence.
FINANCIAL
HIGHLIGHTS
Earnings Per Share (EPS)
(Sen)
Profit Before Zakat And
Taxation (RM’million)
425.1521.9613.1703.2762.2
Total Assets
(RM’billion)
22.126.530.635.037.5
35.642.149.252.156.4
0910111213
0910111213
0910111213
AFFINBANK’s EPS for the financial year
ended 31 December 2013 stood at
37.5 sen compared to 35.0 sen the year
before.
AFFINBANK achieved profit before zakat
and taxation of RM762.2 million, an 8.4%
rise for the year ended 31 December
2013, compared to RM703.2 million in
2012. AFFINBANK’s profit after zakat and
taxation also rose by 8.5% to RM569.8
million for the year ended 31 December
2013.
AFFINBANK’s financial position as at
31 December 2013 continued to remain
strong with total assets of RM56.4 billion,
an increase of 8.3% compared with
RM52.1 billion as at 31 December 2012.
Net Loans, Advances &
Financing (RM’billion)
Deposits From Customers
(RM’billion)
Shareholders’ Equity
(RM’billion)
22.026.029.733.536.2
26.431.036.541.346.1
3.03.33.64.14.4
0910111213
0910111213
0910111213
AFFINBANK’s net loans, advances and
financing grew by 8.2% to RM36.2 billion
compared to RM33.5 billion in 2012.
Total deposits increased by 11.7%
year-on-year to RM46.1 billion as at 31
December 2013 compared to RM41.3
billion in the year before.
Total shareholders’ equity of AFFINBANK
is RM4.4 billion as at 31 December 2013
compared to RM4.1 billion in 2012.
Annual Report 2013
CORPORATE
DIARY
8 January 2013
18 February 2013
26 March 2013
The “OMG The Trilogy” Prize Giving
Ceremony
CNY CSR Activity – Visit to Ampang
Old Folks Home
Langkawi International Maritime and
Aerospace Exhibition
The winner of the “OMG The Trilogy”
deposit campaign walked away with gold
worth RM333,888.
AFFINBANK visited and brought cheers
to senior residents at the Ampang Old
Folks Home during the Chinese New
Year celebration.
AFFINBANK sponsored the Langkawi
International Maritime and Aerospace
Exhibition as the Official Bank & Foreign
Exchange Counter.
17 April 2013
30 May 2013
3 June 2013
Personalised Banking Cocktail Event
2013
The Chartered Bankers Programme
MOU Signing Ceremony with IBBM
Affin Education Excellence
Award 2013
Valued customers of the Bank were
rewarded with an evening of great food
and entertainment at this yearly event.
In a bid to develop top notch bankers,
the Bank signed a MOU with IBBM to
sponsor and enroll its employees for the
Chartered Bankers Programme.
The Bank presented cash rewards to 107
students who excel in SPM and PMR
exams.
Annual Report 2013
CORPORATE DIARY
23 June 2013
19 July 2013
20 August 2013
Kuantan Branch Opening officiated
by KDYMM Sultan Pahang
Majlis Berbuka Puasa Bersama AnakAnak Yatim & Saudara-Saudari Baru
AFFIN Banking Group Hari Raya
Open House
Kuantan Branch relocated to a brand new
premise and the new office was officially
opened by KDYMM Sultan Pahang.
160 orphans and new Muslim converts
were treated to a “Buka Puasa” dinner at
the Bank’s head office at Menara Affin.
AFFIN Banking Group management and
staff came together as one entity to host
customers and business partners to a
scrumptious dinner to celebrate the Hari
Raya.
23 September 2013
31 October 2013
12 November 2013
New Branch Opening and Jom
Karnival
Sponsorship of Sports Equipment to
Schools
TREES “Young Voices for
Conservation”
As part of its expansion plans, the Bank
opened three (3) new branches in 2013,
i.e. Kota Kemuning (Selangor), Danga
Bay (Johor) and Lahad Datu (Sabah).
In support of the “1Murid 1Sukan” Policy,
AFFINBANK sponsored RM50,000 worth
of sports equipment to selected schools
in Malaysia.
AFFINBANK sponsors the TREES “Young
Voices for Conservation” Programme
where students are guided to implement
environment protection projects in their
schools. Winning teams are rewarded
with cash prizes at the end of the project.
Annual Report 2013
Statement on
Corporate Governance
The Board of Directors of AFFINBANK (“Board”) and Management seek to embrace high standards and principles of Corporate
Governance in all areas of its business; towards enhancing business prosperity and corporate accountability, having the ultimate
objective of safeguarding shareholder’s value and interests of the stakeholders.
The Board and Management are fully committed and constantly strive in ensuring AFFFINBANK operates in accordance to the
Financial Services Act 2013 and Islamic Financial Services Act 2013 (FSA/IFSA), Malaysian Code of Corporate Governance 2012
(MCCG 2012), Bank Negara Malaysia (BNM) Guidelines on Corporate Governance for Licensed Institutions (Revised BNM/GP1)
and other relevant regulations. The Board and Management place great importance on the safety and soundness of AFFINBANK
as a financial institution; where risks and business prudence are appropriately balanced. Throughout 2013 and to-date, AFFINBANK
continues to conduct its business with integrity and exercises high level of transparency and objectivity.
AFFINBANK specifies standard for fit and proper requirement for Directors as laid out under the FSA/IFSA. The Board and
Management are fully committed in ensuring employees adhere closely to BNM’s Guidelines (BNM/GP7) on Code of Ethics
(“COE”), which aims at instilling the five values namely discipline, integrity, humility, caring and creativity in AFFINBANK. The
Board and Management set high ethical business standards and practices for business conduct and the code of behaviour for
employees to adhere to. The Board believes in leadership by example, thus all Directors are guided by the Directors’ Code of
Ethics. The responsibility for implementation of COE policies and guidelines rests primarily with Management with oversight by
the Audit & Examination Committee.
The following statements set out the commitment of AFFINBANK in applying best principles of Corporate Governance and the
extent of compliance with the recommended practices.
BOARD OF DIRECTORS
The Board is committed in establishing long term sustainable value to the shareholders as well as the stakeholders. The Board
is pleased to report that, AFFINBANK has complied with the principles and recommendations of MCCG 2012 throughout the
financial year under review; save for the recommendation on the tenure of independent director which should not exceed nine (9)
years.
The Board composition of AFFINBANK comprises majority independent directors. It consists of representatives from the private
sector with suitable qualifications fulfilling the fit and proper criteria, a mixture of different skills, competencies, experience and
personalities. Directors’ profiles which appear on page 13 to 16 reflects clearly the depth and diversity in expertise and perspective
to lead AFFINBANK which allow for objective analysis of major issues.
Board Responsibilities
The Board acknowledges its roles and responsibilities for the overall performance of AFFINBANK.
The Board’s responsibilities remain within the framework of FSA/IFSA, BNM Policy Documents and AFFINBANK’s Board Policy
Manual. The Board exercises great care to ensure that high ethical standards are upheld, and that the interests of stakeholders are
not compromised. These include responsibility for determining AFFINBANK’s general policies and strategies for the short, medium
and long term, approving business plans, including targets and budgets, and approving major strategic decisions.
In carrying out its functions, the Board has delegated specific responsibilities to other Board Committees, which operate under
approved terms of reference, to assist the Board in discharging its duties. The Board Committees report the outcome of their
meetings to the Board and any further deliberation is made at the Board level, if required. Reports and deliberations are incorporated
into the Minutes of the Board meetings. The various Board Committees are listed below:-
Annual Report 2013
STATEMENT on CORPORATE GOVERNANCE
Board Remuneration Committee (“BRC”)
The BRC is responsible for providing a formal and transparent procedure for developing the remuneration policy for Directors,
Managing Director/Chief Executive Officer and key responsible persons. BRC is to ensure that compensation is competitive and
consistent with AFFINBANK’s culture and strategic objectives. BRC obtains advice from experts in compensation and benefits,
both internally and externally.
Board Nominating Committee (“BNC”)
The BNC is responsible for providing a formal and transparent procedure for the appointment of Directors and Managing Director/
Chief Executive Officer and key responsible persons. BNC assesses the effectiveness of individual Director, the Board as a whole
and the performance of the Managing Director/Chief Executive Officer as well as key responsible persons.
The BNC also reviews and recommends the process for successions planning for the Board, Managing Director/CEO and key
responsible persons; making recommendations to the Board as appropriate.
Board Risk Management Committee (“BRMC”)
The BRMC is responsible for overseeing management’s activities in managing credit, market, liquidity, operational, legal and other
risks so as to ensure that the risk management process is adequately in place and function effectively.
Board Loan Review and Recovery Committee (“BLRRC”)
The BLRRC is responsible in providing critical review of loans and other credit facilities with higher risk implications, after due
process of checking, analysis, review and recommendation by the Credit Risk Management function, and if found necessary,
exercise the power to veto loan applications that have been approved by the Group Management Loan Committee.
Audit & Examination Committee (“AEC”)
The AEC is responsible for providing oversight on reviewing the adequacy and integrity of the internal control systems and
oversees the work of the internal and external auditors.
Board Composition and Balance
During the financial year under review, the Board comprises the following:
Type of Directors
Non-Independent Non-Executive Directors*
Independent Non-Executive Directors
*
Composition
Percentage (%)
3/7
4/7
42.9
57.1
not inclusive of one (1) Alternate Non-Independent Non-Executive Director
The Board composition of AFFINBANK meets the recommendations of the MCCG 2012 which states that the Board must comprise
a majority of Independent Directors where the Chairman of the Board is not an Independent Director. All Directors fulfilled the fit
and proper criteria in accordance with the Standard issued by BNM.
Annual Report 2013
The Board adopts AFFIN Holdings Group policy that the maximum tenure for an Independent Director is 15 years until 2013.
Thereafter, the maximum tenure will be reduced to 12 years. Notwithstanding, the Nominating Committee determines on an annual
basis whether an Independent Director remains objective and is free from relationship or influence that could undermine his ability
to execute independent judgment.
The role of these Independent Non-Executive Directors are particularly important in ensuring that the strategies proposed by the
Management are fully deliberated and evaluated, in line with the long term objectives of AFFINBANK. No individual or small group
of individuals dominate the Board’s decision making process.
Board meetings are presided by a Non-Independent Non-Executive Chairman whose role is clearly separated from the role of the
Managing Director/Chief Executive Officer. The Chairman is responsible for ensuring the effectiveness and smooth functioning
of the Board, the governance structure and the independence of the Board. The Chairman also inculcates positive culture in the
Board.
The Board comprises Directors who, as a group, provides a mixture of core competencies such as finance, accounting, business,
management, marketing, information technology and investment management, which are essential for the effective functioning
in discharging Board’s responsibilities.
The Managing Director/Chief Executive Officer is responsible for the overall day-to-day business affairs of AFFINBANK while
providing strong leadership in the implementation of Board decisions.
Independence and Conflict of Interest
It is the Directors’ responsibility to declare whether they have a potential or actual interest in any transaction of AFFINBANK. Where
issues involve conflict of interest, the interested Directors declared and abstained from discussing or voting on the matter. This is
important to mitigate risk arising from potential conflict of interest situation or undue influence from interested parties.
Appointments and Re-election to the Board
In 2013, BNM approved the re-appointment of one (1) Non-Independent Non-Executive Director. In accordance with the
Company’s Memorandum and Articles of Association, one-third (1/3) of the Directors, or, if their number is not three (3) or a
multiple of three (3), the number nearest to one-third (1/3), shall retire from office at each Annual General Meeting and they may
offer themselves for re-election.
Continuing Education
All newly appointed Non-Executive Directors are furnished by AFFINBANK with copies of the Financial Services Act 2013 (“FSA”),
Islamic Financial Services Act 2013 (“IFSA”) and other relevant legislation governing the banking industry to facilitate their
understanding and requirements of banking business. All Directors have attended various training programmes organised internally
as well as externally by the relevant authorities such as BNM, Securities Commission (“SC”) and Companies Commission of
Malaysia (“CCM”). All Directors are required to complete the Financial Institutions Directors’ Education training (“FIDE”) organised
by BNM within one year from the date of appointment. In addition, the members of the Board keep abreast with the relevant
developments in business, banking and finance industry as well as new regulatory requirements on a continuous basis through
various conferences, seminars and training programmes. The development and training programmes attended by the Directors
during the financial year ended 31 December 2013 are set out below.
Annual Report 2013
YBhg. Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara)
Trainer/Organiser
Course Title
Date
1.MICG
Director Duties, Regulatory Updates, Governance for Directors of PLCs
2013
29 January 2013
2.Asian World Summit
5th Annual Corporate Governance Summit 2013 Conference
19 & 20 March 2013
3. MeLearn Global
Corporate Governance Symposium 2013 - Corporate Governance in
Vogue
9 & 10 April 2013
4.Affin Holdings Berhad
The new FSA 2013 and IFSA 2013
14 May 2013
5.FIDE
Business Talk in conjunction with the 10th Islamic Financial Services
Board Summit
15 May 2013
6.ASLI
The 17th Malaysian Banking Summit 2013 - Future Banking : Driving
Growth, Prosperity and Transformation
23 & 24 July 2013
7.FIDE
FIDE luncheon & Forum : Managing Talent Board and Management Talk
by Professor Dave Ulrich
1 October 2013
Half Day Talk on FSA 2013, Basel III and New Audit Opinion; Accounting
and Other Regulatory Updates
12 November 2013
9.FIDE
Leadership Energy Summit Asia 2013
3 & 4 December
2013
YBhg. Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin
Trainer/Organiser
Course Title
Date
1.ICLIF
Half day Seminar on FIDE Governance in Groups Program
5 April 2013
2. MeLearn Global
Corporate Governance Symposium 2013 - Corporate Governance In
Vogue
9 & 10 April 2013
3.Affin Investment Bank
Berhad
Investors Conference “Standing At The Crossroads - Where To From
Here”
18 April 2013
The New FSA 2013 and IFSA 2013
14 May 2013
5. Bursa Malaysia
Half-Day Briefing on Advocacy Sessions On Corporate Disclosure For
Directors
20 June 2013
Berhad
Conference on Politics and Business - The Malaysian Connection
2 July 2013
7.ASLI
23 & 24 July 2013
8.ICLIF
60-Minute with Mr Pradeep Pant, EVP and President Asia Pacific,
Mondelez International Singapore
3 September 2013
9. Bursa Malaysia
Breakfast at The Kuala Lumpur Golf & Country with Board Chairman
11 September 2013
12 November 2013
11. ICLIF in collaboration
with Bursa Malaysia
Board Chairman Series: The Role of The Board Chairman
14 November 2013
Annual Report 2013
YM. Dr. Raja Abdul Malek Bin Raja Jallaludin
Trainer/Organiser
Course Title
Date
1.MICG
2013
29 January 2013
2. FIDE Forum
Breakfast Talk on Personal Data Protection Act (PDPA) 2010 : Issues and
Implications
11 April 2013
3.MICG
Director Duties, Business Ethics and Governance Seminar for Directors
or PLCs 2013
27 June 2013
4.MICG
Inaugural Asean Corporate Governance Summit 2013 - Asean Economic
Community and Governance Issues
6 & 7 November
2013
12 November 2013
YBhg. Tan Sri Dato‘ Sri Abdul Aziz Bin Abdul Rahman
Trainer/Organiser
Course Title
Date
1.MICG
2013
29 January 2013
2. MeLearn Global
Corporate Governance Symposium 2013 - Corporate Governance in
Vouge
9 & 10 April 2013
The new FSA 2013 and ISFA 2013
14 May 2013
4.FIDE
Breakfast Talk on Successful Corporate Banking - Focus on
Fundamentals : A survey of Corporate Financial Executives
27 June 2013
5.ASLI
23 & 24 July 2013
6. Islamic Financial
Services Board (IFSB)
IFSB-INCIEF Executive Forum : Towards strengthening Corporate and
Shariah Governance in Islamic Banks
26 & 27 August 2013
7.FIDE
Mergers & Acquisition for Financial Institutions
19 & 20 September
2013
12 November 2013
9.FIDE
Human Capital Management in the Boardroom and C Suite - Board,
Committee, Director and CEO Assessment
19 November 2013
Trainer/Organiser
Course Title
Date
12 November 2013
Annual Report 2013
Mr. Aubrey Li Kwok-Sing & Mr. Gary Cheng Shui Hee (Alternate Director to Mr. Aubrey Li Kwok-Sing)
Trainer/Organiser
Course Title
Date
1. HKIoD, Hong Kong
Company Performance Evaluation & Control for Directors
9 January 2013
2. HKIoD, Hong Kong
Internal Control and Risk Management
30 January 2013
3. KPMG, Hong Kong
KPMG Independent Non-Executive Directors Forum; Updated on Global
Audit Committee Survey, Financing Reporting, Corporate Governance
themes and Tax developments
11 March 2013
4. HKIoD, Hong Kong
Perpetuating the Family Business through Succession Planning
24 April 2013
5. Mercer, Hong Kong
Remuneration Committee Forum
26 June 2013
6. Deloitte, Hong Kong
Deloitte Independent Non-Executive Directors Forum on Crisis
Management
12 September 2013
7. KMPG, Hong Kong
KPMG Independent Non-Executive Directors Forum on Fraud and
whistleblower, Tax update and Board effectiveness
16 September 2013
8. HKIoD, Hong Kong
Practical Aspects of Board Supervision for Authorised Institutions
10 October 2013
9. Deloitte, Hong Kong
Deloitte INED Workshop on Accounting & auditing update for a smooth
year-end reporting process
19 November 2013
10. Mercer, Hong Kong
Remuneration Committee Forum on Maintaining confidence and integrity
in the Executive Pay System
20 November 2013
11. HKIoD, Hong Kong
How Boards and Directors can develop better peripheral vision
5 December 2013
12. KPMG, Hong Kong
KPMG Independent Non-Executive Directors Forum on Financial
reporting update, Future Audit reports, Tax update, Digital and
eCommerce and Competition Law
9 December 2013
YBhg. Tan Sri Dato‘ Seri Mohamed Jawhar
Trainer/Organiser
Course Title
Date
1.MICG
2013
29 January 2013
2. Institute of
International and
Strategic Studies,
United Kingdom
The IISS Fullerton Forum
17 to 19 February
2013
3.ISIS
Malaysian Foreign Policy Study Group - Strengthening Delivery
Mechanism
21 February 2013
4.Securities
Commission
ASIC Annual Forum 2013
24 March 2013
5. Media Prima Berhad
Training and Development by MPB - Leadership Series by Dr Pawan
Agrawal, CEO Mumbai Dabbawalas
1 April 2013
Berhad
Investors Conference “Standing At The Crossroads - Where To From
Here”
18 April 2013
7. The Association of
Banks in Malaysia/
FIDE
AML/CFT Conference 2013
25 April 2013
Annual Report 2013
YBhg. Tan Sri Dato‘ Seri Mohamed Jawhar
Trainer/Organiser
Course Title
Date
8.MSWG
Special Dialogue & Presentation Session on ASEAN Corporate
Governance Scorecard 2013
13 June 2013
MPB BOD Training - The Creative Economy - How People Make Money
from Ideas by John Howkin
20 June 2013
10.Affin Investment
Conference on Politics and Business - The Malaysian Connection
2 July 2013
MPB Private Session with Nick Vujicic. Title : “Living Life Without Limits”
20 August 2013
12. Malaysian High
Commissioner,
London
Merdeka Forum 2013 - Speaker “56 Years of Merdeka : Road to 2020;
Aspiration of Malaysian Young Generation”
12 September 2013
13. ISIS and Konrad
Adenauer Stiftung
2nd Germany - Malaysia Security Dialogue Session
8 October 2013
14. ISIS and APRC
Dialogue on Diversity, Peace and Diplomacy
11 November 2013
ERIA Conference - 2nd Workshop of ASEAN Beyond 2015
15.Economic Research
Institute for ASEAN
and East Asia (“ERIA”)
and ISIS
19 November 2013
16.ISIS
ASEAN Australia NZ Dialogue
28 November 2013
17.MIDAS
Midas TALK on “SOSMA 2012 : Its Implications of Defence and Security”
18 December 2013
ASLI
APRC
CSCAP
HKIoD
ISIS
MICG
MIDAS
MSWG
-Asian Strategy & Leadership Institute
-Asian Peace and Reconciliation Council
- Council for Security Cooperation in the Asia Pacific
- Hong Kong Institute of Directors/ Kowloon Development, Hong Kong
- Institute of Strategy & International Studies Malaysia
- Malaysia Institute of Corporate Governance
- Malaysia Institute of Defence Security
- Minority Shareholder Watchdog Group
Meeting and Supply of Information to the Board
Board meetings are scheduled in advance at the beginning of calendar year with additional meetings duly convened as and when
necessary to review progress reports on AFFINBANK’s financial performance, approved strategies, business plans and significant
policies as well as to consider business and other proposals which require the Board’s approval. For the financial year ended 31
December 2013, fourteen (14) Board meetings were held. Meetings are usually held at the Board Room at 19th Floor, Menara Affin,
80, Jalan Raja Chulan, 50200 Kuala Lumpur.
The Board has full and timely access to information with Board papers distributed in advance of meetings to enable the Directors
to obtain further explanation, where necessary, in order to be properly briefed prior to the meetings. The Board papers include the
minutes of previous Board meeting, minutes of meeting of Board Committees and reports relevant to the issues of the meetings
covering all related banking aspects such as financial, investment, information technology, operational, human resource and
regulatory compliance matters. The Managing Director/Chief Executive Officer keeps the Board informed, on timely basis, of all
material matters affecting AFFINBANK’s performance and major developments.
Members of the Senior Management are invited to attend the Board meetings to present and brief the Board on matters/reports
relating to their areas of responsibility as and when required.
Annual Report 2013
All the Board members have unrestricted access to timely and accurate information and access to the advice and services of the
Company Secretary, who is responsible for ensuring that the Board meeting’s procedures are followed and that all applicable rules
and regulations are complied with.
Procedures are in place for Directors to seek independent professional advice at AFFINBANK’s expense. AFFINBANK also
provides the Board full access to necessary materials and relevant information including the services of the Company Secretary
in order for the Board to fulfill their duties and specific responsibilities.
DIRECTORS’ REMUNERATION
AFFINBANK acknowledges the importance of attracting and retaining Directors with high calibre having the necessary skills,
qualifications and experience for effective Board oversight of AFFINBANK’s business activities and affairs.
The make-up of the Managing Director/Chief Executive Officer’s remuneration remained unchanged consisting of salary,
allowances, bonus and other customary benefits as appropriate. Any salary review, takes into account market rates and the
performance of the individual and of AFFINBANK.
Non-executive Directors’ emoluments consist of three components – an annual fee as a Board member, an allowance for
attendance of meetings and a committee fee. A revision of Directors’ Fees was effected in 2013. The Remuneration Committee
is responsible in recommending the remuneration framework of the Directors as well as the remuneration package of Managing
Director/Chief Executive Officer and key responsible persons so as to ensure that AFFINBANK attracts, motivates and retains
the Directors and Senior Management needed to run it successfully. The remuneration of Directors is in line with AFFIN Holdings
Group’s overall practice on compensation and benefits. Managing Director/Chief Executive Officer does not participate in any
way in determining his individual remuneration. The Board as a whole determines the remuneration of Non-Executive Directors.
Directors’ emoluments are disclosed in the relevant note to the financial statements as an aggregate sum, in conformance to the
relevant legislation.
SHAREHOLDER
AFFINBANK is a wholly-owned subsidiary of Affin Holdings Berhad, a company listed on Bursa Malaysia Securities Berhad.
ANNUAL GENERAL MEETING (“AGM”)
The Annual Report and financial statements for the year ended 31 December 2012 were tabled at the 37th AGM on 25 March
2013. Likewise the Annual Report and financial statements for the year ended 31 December 2013 will be tabled at the 38th AGM
on Tuesday, 25 March 2014.
Annual Report 2013
Statement on
risk management &
INTERNAL CONTROL
INTERNAL CONTROL
AFFINBANK has a well-established and fully operational risk management and internal control system. The Statement on internal
Control, which is set out in the Annual Report provides an overview on the risk management process/framework as well as on how
the internal control system has been designed to manage risks and avert failures. AFFINBANK continues to enhance its system of
internal control and risk management, in order to better quantify its compliance with the Code.
The Board has overall responsibility for maintaining the proper management and protection of AFFINBANK’s interests by ensuring
effective implementation of the risk management policy and process, as well as adherence to a sound system of internal control,
and by seeking regular assurance on their effectiveness. The Board also recognizes that risks cannot be eliminated completely. As
such, the inherent system of internal control is designed to provide a reasonable though not absolute assurance against the risk
on material errors, fraud or losses occurring.
The Audit & Examination Committee has an oversight responsibility for the adequacy and integrity of the internal control system.
Reliance is placed on the results of independent audits performed primarily by Group internal auditors, the outcome of statutory
audits on financial statements conducted by external auditors and on representations by Management based on their control selfassessment on all areas of their responsibility.
Minutes of Audit & Examination Committee meetings, which provide a summary of the proceedings, are circulated to Board
members for notation and discussion.
AFFINBANK has an established Group internal Audit Division which reports functionally to the Audit & Examination Committee and
administratively to the Managing Director/ Chief Executive Officer. The division is responsible for conducting independent audits
in accordance with the approved annual Internal Audit Plan.
RELATIONSHIP WITH AUDITORS
A professional and transparent relationship continues to exist between the Board/Audit & Examination Committee and the external
auditors. The Audit Committee is authorized to communicate directly with both the external and Group internal auditors. A full
Audit Committee report outlining its role in relation to the Auditors is also set out in the Annual Report. In addition, the external
auditors meet with the Board at least once a year when the annual audited financial statements are presented to the Board.
ASSURANCE
The Board through the Audit & Examination Committee has satisfactorily performed its oversight role in ensuring there is a sound
internal control system and regular review on the adequacy and integrity of the system. Assurance on the effectiveness of risk
management, control and governance process is obtained from the Management and Auditors (internal and external).
BNM auditors, Group internal auditors and external auditors conduct independent audits on AFFINBANK’s business operations,
support activities and financial records and statements respectively to derive an opinion on the adequacy and integrity of
AFFINBANK’s overall internal control framework.
Finally, with the benefit of the above assurances and the external auditor’s comments incorporated in their audit report to the
financial statements for the financial year ended 31 December 2013, the Board is able to conclude that AFFINBANK conducts its
business prudently and in line with good governance practice.
Annual Report 2013
STATEMENT ON risk management &
INTERNAL CONTROL
Responsibility
The Board acknowledges overall responsibility for AFFINBANK Group’s system of internal controls and its effectiveness. The
system of internal controls encompasses controls relating to financial, operational, risk management and compliance with
applicable laws, regulations, policies and guidelines.
However, the system of internal controls is designed to manage rather than eliminate the risks of failure to achieve the goals and
objectives of the Group. Therefore, it can only provide a reasonable and not absolute assurance against material misstatement of
management and financial information, or against financial losses or fraud.
The Board has an established process for identifying, evaluating, managing and reporting all significant risks that may impact the
achievement of business goals and objectives of the Group. The system of internal controls is dynamic and updated from time
to time to meet the changes in regulatory guidelines and business environment. This process is regularly reviewed by the Board
through its Board Risk Management Committee (BRMC) and Audit and Examination Committee (AEC).
The Board is of the view that the system of internal controls in place for the year under review is sound and sufficient to safeguard
the investment of the shareholders, the interest of the customers and regulators, and the assets of the Group.
The management assists the Board in implementing the policies approved by the Board, implementing risk and control procedures,
and developing, operating and monitoring internal controls to mitigate and control identified risks.
Key Internal Control Processes
The key processes put in place to assist the Board in reviewing the adequacy and integrity of the system of internal controls
include the following:
• Relevant Board committees are established with specific responsibilities delegated by the Board to deliberate on matters within
the respective scope of responsibility. The committees are guided by written terms of reference and their minutes of meetings
are tabled to the Board.
• The BRMC assists the Board in its supervisory role concerning the overall management of risk in the Bank. it has responsibility
for reviewing and approving all risk management policies and risk management methodologies. BRMC also reviews guidelines
and portfolio management reports including risk exposure information.
• The Board Loan Review and Recovery Committee (BLRRC) critically reviews loans and other credit facilities with higher risk
implications, after due process of checking, analysis, review and recommendation by Group Risk Management and if found
necessary, exercise the power to veto loan applications that have been approved by the Group Management Loan Committee
(GMLC). BLRRC also reviews the non performing loan reports presented by the Management.
• Group Management Committee (GMCM), comprising the senior management team, assists the Board in managing day-today operations and ensures its effectiveness. GMCM formulates tactical plans and business strategies, monitors the Bank’s
overall performance and ensures that the activities are in accordance with corporate objectives, strategies, policies and annual
business plan and budget.
Annual Report 2013
STATEMENT ON risk management &
INTERNAL CONTROL
• The Group Management Loan Committee (GMLC) is established within senior management to approve complex and larger loans
and workout recovery proposals beyond the delegated authority of the concerned individual senior management personnel
of the Bank. The other committees comprising senior management include Asset & Liability Management Committee (ALCO)
which manages market and liquidity risks, Liquidity Management Committee (LMC) which is a sub-committee of the ALCO with
specific focus on liquidity matters, Group Operational Risk Management Committee (GORMC) which manages operational risk,
and Early Alert Committee (EAC) which monitors credit quality.
• A detailed budgeting process is in place with annual business plans and budgets prepared by the business divisions, reviewed
by the GMCM and approved by the Board. The actual business performances are monitored against the approved targets and
budgets of each business division by GMCM on a monthly basis.
• The business plan is supported by an annual credit plan, prepared by Group Risk Management and approved by BRMC. The
credit plan sets out the prevailing risk appetite and provides credit strategies and lending guidelines for the development and
management of new and existing customer relationships.
• Policies and procedures for key processes are documented and regularly updated to ensure relevance and compliance with
internal controls, directives, laws and regulations. To enhance risk culture and awareness, road shows are undertaken by Group
Risk Management across the Bank.
• Proper guidelines for the hiring and termination of employees, staff training programs and performance appraisals are established
and other relevant procedures in place to ensure staff are adequately trained and equipped to carry out their responsibilities
competently.
• An integrated risk management framework is in place. The risk management function operates in an independent capacity and
is a part of the Bank’s senior management structure which works closely as a team in managing risks to enhance stakeholders’
value. Its responsibilities extend to cover market, liquidity, credit and operational risks. The risk management function reports
to BRMC.
Annual Report 2013
AUDIT AND EXAMINATION
COMMITTEE
TERMS OF REFERENCE OF THE AUDIT AND EXAMINATION COMMITTEE
Size and Composition
The Committee shall consist of at least three (3) members, appointed by the Board from amongst the independent non-executive
Directors of the Bank.
Meetings
Meetings shall be held at a frequency to be decided by the Audit and Examination Committee. At the request of the Group Chief
Internal Auditor, the Chairman shall convene a meeting to consider any matters that they may wish to bring to the attention of
the Directors or shareholders. A quorum shall consist of at least two (2) members. The Group Chief Internal Auditor shall be the
Secretary to the Audit and Examination Committee.
YBhg. Dato’ Sri Abdul Aziz
Bin Abdul Rahman
YM. Dr. Raja Abdul Malek Bin
Raja Jallaludin
AEC Chairman
Member
YBhg. Tan Sri Dato’ Seri
Mohamed Jawhar
Member
Associate Professor
Dr. Asyraf Wajdi Bin
Dato’ Dusuki
Member
Annual Report 2013
AUDIT AND EXAMINATION COMMITTEE
Authority
The Committee shall have unlimited access to all records, information and documents relevant to its activities, to the Group
Internal Audit and External Auditors and to senior management of the Bank and its subsidiaries. The Group Internal Auditors and
External Auditors shall have free access to the Audit and Examination Committee and be allowed to attend and to be heard at the
Committee meetings. The Committee is authorised by the Board to obtain outside and independent professional advice as and
when it is considered necessary.
Duties and Responsibilities
The duties and responsibilities of the Audit and Examination Committee are:
1. To review AFFINBANK’s financial statements and to ensure compliance with disclosure requirements and any adjustments as
suggested by the External Auditors, prior to submission to the Board.
2. To review the reports of the Group Internal Auditor, the External Auditors, Bank Negara Malaysia examiners or any other
relevant parties and decide on actions to be taken on relevant issues raised in the reports.
3. To review with the External Auditors the scope of their audit plan, the system of internal accounting controls, the audit reports,
the assistance given by the management and its staff to the auditors, and any findings and action to be taken.
4. To make recommendation to the Board on the appointment of External Auditors.
5. To review the effectiveness and performance of the Group Internal Audit functions from time to time.
6. To review and approve the annual audit plan and budget for Group Internal Audit, which sets out the audit objectives, auditable
areas, scope of coverage, frequency of audit and duration of each audit assignment.
7. To ensure that Group Internal Audit has adequate resources and support services to carry out its functions.
8. To review the overall performance of the Group Chief Internal Auditor, including the remuneration package.
9. To review any significant related party transactions that may arise within the Bank’s group or associate companies and report
to the Board any areas of concern.
10. To escalate to the Board via minutes of meetings or special reports on any exception identified.
11. To carry out such other responsibilities as may be delegated by the Board from time to time.
Annual Report 2013
NETWORK OF
BRANCHES
WILAYAH PERSEKUTUAN
1.Bangsar
No. 4 & 6,
Jalan Telawi 3,
Bangsar Baru,
59100 Kuala Lumpur.
Tel : 03-2283 5025
Fax : 03-2283 5028
2.
Bangunan Getah Asli
Tingkat Bawah,
148, Jalan Ampang,
50450 Kuala Lumpur.
Tel : 03-2162 8770
Fax : 03-2162 8587
3. Batu Cantonment
No. 840 & 842,
Batu 4 3/4,
Jalan Ipoh,
51200 Kuala Lumpur.
Tel : 03-6258 7370
Fax : 03-6251 8214
4.Central
Ground & Mezzanine Floor,
80, Menara Affin,
Jalan Raja Chulan,
P.O.Box 12744,
50788 Kuala Lumpur.
Tel : 03-2055 2222
Fax : 03-2070 7592
5. Jalan Bunus
133, Jalan Bunus,
Off Jalan Masjid India,
50100 Kuala Lumpur.
Tel : 03-2693 4686
Fax : 03-2691 3207
6.
Jalan Ipoh
468-11 & 468-11B,
Batu 3, Jalan Ipoh,
51200 Kuala Lumpur.
Tel : 03-4042 5554
Fax : 03-4042 4912
7.LTAT
Ground Floor,
Bangunan LTAT,
Jalan Bukit Bintang,
55100 Kuala Lumpur.
Tel : 03-2142 6311
Fax : 03-2148 0586
14. Wangsa Maju
No. 2 & 4, Jalan 1/27F,
Kuala Lumpur Sub-Urban Centre,
Wangsa Maju,
53300 Kuala Lumpur.
Tel : 03-4143 2814
Fax : 03-4143 3095
8.Selayang
81-85, Jalan 2/3A,
Pusat Bandar Utara,
KM 12, Jalan Ipoh,
68100 Batu Caves,
Kuala Lumpur.
Tel : 03-6137 2053
Fax : 03-6138 7122
15. Wisma Pertahanan
G.05, Tingkat Bawah,
Wisma Pertahanan,
Kementerian Pertahanan Malaysia,
Jalan Padang Tembak,
50634 Kuala Lumpur.
Tel : 03-2698 7912
Fax : 03-2698 6071
9.
WILAYAH PERSEKUTUAN
PUTRAJAYA
Seri Petaling
10-12, Jalan Raden Tengah,
Bandar Baru Seri Petaling,
57000 Kuala Lumpur.
Tel : 03-9058 5600
Fax : 03-9058 8513
10.Setapak
159 & 161, Jalan Genting Kelang,
P.O.Box 202,
53300 Setapak,
Kuala Lumpur.
Tel : 03-4023 0455
Fax : 03-4021 3921
11. Taman Maluri
250 & 252, Jalan Mahkota,
Taman Maluri,
55100 Kuala Lumpur.
Tel : 03-9282 7250
Fax : 03-9283 4380
12. Taman Midah
38 & 40, Jalan Midah 1,
Taman Midah, Cheras,
56000 Kuala Lumpur.
Tel : 03-9130 0366
Fax : 03-9131 7024
13. Taman Tun Dr. Ismail
47 & 49, Jalan Tun Mohd Fuad 3,
Taman Tun Dr. Ismail,
60000 Kuala Lumpur.
Tel : 03-7727 9080
Fax : 03-7727 9543
1.Putrajaya
Jabatan Akauntan Negara,
Kompleks Kementerian Kewangan,
No. 1, Persiaran Perdana,
Presint 2,
62594 Putrajaya,
Wilayah Persekutuan.
Tel : 03-8888 3814
Fax : 03-8889 2082
WILAYAH PERSEKUTUAN LABUAN
(OFFSHORE)
1. Labuan Offshore
Unit 3 (J), Level 3,
Main Office Tower,
Financial Park Labuan,
Jalan Merdeka,
87000 Federal Territory Labuan.
Tel : 087-411 931
Fax : 087-411 973
SELANGOR
1. Ampang Jaya
No. 11 & 11A,
Jalan Mamanda 7/1,
Ampang Point,
68000 Ampang, Selangor.
Tel : 03-4257 6802
Fax : 03-4257 8636
Annual Report 2013
NETWORK OF BRANCHES
2. Ampang New Village
No. 21G & 23G,
Jalan Wawasan 2/2,
Bandar Baru Ampang,
68000 Ampang, Selangor.
Tel : 03-4296 2311
Fax : 03-4296 2206
9.Kinrara
No. 1, Jalan TK1/11A,
Taman Kinrara, Section 1,
Batu 7 1/2, Jalan Puchong,
47100 Puchong, Selangor.
Tel : 03-8075 5682
Fax : 03-8075 8159
3. Ara Damansara
Unit B-G-07 & B-G-08 Block B,
No. 2 Jalan PJU 1A/7A,
Ara Damansara,
47301 Petaling Jaya, Selangor
Tel : 03-7847 3177
Fax : 03-7847 2677
10. Klang Utara
No. 29 & 31,
Jalan Tiara 3,
Bandar Baru Klang,
41150 Klang, Selangor.
Tel : 03-3342 1585
Fax : 03-3342 1719
4. Bandar Bukit Tinggi
No 77 & 79, Jalan Batu Nilam 5,
Bandar Bukit Tinggi,
Tel : 03-3323 2822
Fax : 03-3323 2858
11. Kompleks PKNS
Lot G17-20,
Ground Floor,
Kompleks PKNS,
40000 Shah Alam, Selangor.
Tel : 03-5510 5200
Fax : 03-5510 8200
5.Cyberjaya
P1-13, Shaftsbury Square,
Lot No. 2350, Cyber 6,
Persiaran Multimedia,
63000 Cyberjaya, Selangor.
Tel : 03-8318 1944
Fax : 03-8318 1934
6. Jalan Meru, Klang
No. 40, Pelangi Avenue,
Jalan Kelicap 42A/KU1,
Klang Bandar DiRaja,
Tel : 03-3341 5237
Fax : 03-3341 5427
7.Kajang
2 & 3, Jalan Saga,
Taman Sri Saga,
Off Jalan Sg. Chua,
43000 Kajang, Selangor.
Tel : 03-8737 7435
Fax : 03-8737 7433
8.Kepong
6, Jalan 54, Desa Jaya,
52100 Kepong, Selangor.
Tel : 03-6276 4942
Fax : 03-6276 6375
Annual Report 2013
12. Kota Warisan
No. 48, Jalan Warisan Megah 1/4,
43900 Sepang, Selangor.
Tel : 03-8706 6300
Fax : 03-8706 6599
13. PJ State
No. 38 & 40,
Jalan Yong Shook Lin,
46050 Petaling Jaya, Selangor.
Tel : 03-7955 0032
Fax : 03-7954 0012
14. Port Klang
No. 1, Jalan Berangan,
42000 Port Klang, Selangor.
Tel : 03-3168 8366
Fax : 03-3167 2784 / 6432
15.Puchong
J-03-G, Block J, Setiawalk,
Persiaran Wawasan,
Pusat Bandar Puchong,
47160 Puchong, Selangor.
Tel : 03-5882 2880
Fax : 03-5882 2881
16.Rawang
No. 33G & 35G,
Jln 1B, Fortune Avenue,
48000 Rawang, Selangor.
Tel : 03-6091 3322
Fax : 03-6091 3344
17. Sea Park
20-22, Jalan 21/12, Sea Park,
Tel : 03-7875 6514
Fax : 03-7876 6020
18. Seri Kembangan
36, Jalan PSK 3,
Pusat Perdagangan Seri
Kembangan,
43300 Seri Kembangan, Selangor.
Tel : 03-8945 6429
Fax : 03-8945 6442
03-8943 5306
19. Subang Jaya
7 & 9, Jalan SS 15/8A,
47500 Subang Jaya, Selangor.
Tel : 03-5634 8045
Fax : 03-5634 8040
20. The Curve
Lot K-G32A-D & G32,
Ground Floor,
The Curve Shopping Complex,
Jalan PJU 7/8,
Mutiara Damansara,
Tel : 03-7726 7258
Fax : 03-7727 8912
21.UiTM
Universiti Teknologi MARA,
Tingkat 2,
Menara Sultan Abdul Aziz Shah,
Tel : 03-5519 2377
Fax : 03-5510 5580
22.USJ Taipan
8A & 8B, Jalan USJ 10/1J,
47610 UEP Subang Jaya,
Petaling Jaya, Selangor.
Tel : 03-8023 7271
Fax : 03-8023 9161
NETWORK OF BRANCHES
23. Kota Kemuning
No. 15-1 & 17-1 (GF),
No. 8 Jalan Anggerik Vanilla,
BE 31/BE Kota Kemuning,
Seksyen 31,
Tel : 03-5120 1811
Fax : 03-5120 1588
NEGERI SEMBILAN
1.Gemas
No. 1 & 2, Ground Floor,
Laman Niaga Pernama,
Kem Syed Sirajuddin,
73400 Gemas, Negeri Sembilan.
Tel : 07-948 3622
Fax : 07-948 5022
2.Nilai
5733 & 5734, Jalan TS 2/1,
Taman Semarak Phase II,
71800 Nilai, Negeri Sembilan.
Tel : 06-799 4114
Fax : 06-799 5115
3. Port Dickson
3 & 4, Jalan Mahajaya,
P.D. Centre Point,
71000 Port Dickson,
Negeri Sembilan.
Tel : 06-647 3950
Fax : 06-647 4776
4.Seremban
No. 175, Jalan Dato' Bandar
Tunggal,
70000 Seremban,
Negeri Sembilan.
Tel : 06-762 9651
Fax : 06-763 6125
MELAKA
1. Bukit Baru
No. 7 & 8, Jalan DR1,
Delima Point,
Taman Delima Raya,
75150 Melaka.
Tel : 06-232 1386
Fax : 06-232 1579
2. Melaka Raya
200 & 201,
Taman Melaka Raya,
Off Jalan Parameswara,
75000 Melaka.
Tel : 06-283 5500
Fax : 06-284 6618
JOHOR
1. Ayer Hitam
No. 765, Jalan Batu Pahat,
86100 Ayer Hitam, Johor.
Tel : 07-758 1100
Fax : 07-758 1001
2. Batu Pahat
No. 3 & 4, Jalan Merah,
Taman Bukit Pasir,
83000 Batu Pahat, Johor.
Tel : 07-433 4210
Fax : 07-433 3246
3. Danga Bay
No. 17 & 18 Blok 6,
Danga Bay, Jalan Skudai,
80200 Johor Bahru, Johor.
Tel : 07-234 3842
Fax : 07-234 8852
4. Johor Bahru
No. 24 & 25,
Jalan Kebun Teh 1,
Kebun Teh Commercial City,
Tel : 07-221 2403
Fax : 07-221 2462
5.
Johor Jaya
130 & 132, Jalan Ros Merah 2/17,
Taman Johor Jaya,
Tel : 07-351 8602
Fax : 07-351 4122
7.Kulai
13 & 14, Jalan Raya,
Taman Sri Kulai Baru, Batu 21,
81000 Kulai, Johor.
Tel : 07-663 9799
Fax : 07-663 9800
8.Muar
No. 30A & 30A-1,
Jalan Arab,
84000 Muar, Johor.
Tel : 06-953 2384
Fax : 06-953 3489
9. Mutiara Rini
No. 28 & 30,
Jalan Utama 45,
Taman Mutiara Rini,
81300, Skudai, Johor.
Tel : 07-557 0900
Fax : 07-557 1244
10. Permas Jaya
23 & 25, Jalan Permas 10/2,
Bandar Baru Permas Jaya,
Tel : 07-386 3703
Fax : 07-386 5061
11.Segamat
No. 1, Ground Floor,
Jalan Nagasari 23,
Bandar Segamat Baru,
85000 Segamat, Johor.
Tel : 07-943 1378
Fax : 07-943 1373
12.Tampoi
No. 49 & 51, Jalan Sri Perkasa 2/1,
Taman Tampoi Utara,
81200 Tampoi, Johor Bahru,
Johor.
Tel : 07-241 4946
Fax : 07-241 4953
6.Kluang
503, Jalan Mersing,
86000 Kluang, Johor.
Tel : 07-772 4736
Fax : 07-772 4486
Annual Report 2013
NETWORK OF BRANCHES
PERAK
PULAU PINANG
1.Ipoh
No. 1 & 3,
Ground & First Floor,
Persiaran Greentown 9,
Greentown Business Centre,
30450 Ipoh, Perak.
Tel : 05-255 0980
Fax : 05-255 0976
1.
Bayan Baru
124 & 126, Jalan Mayang Pasir,
Taman Sri Tunas,
11950 Bayan Baru, Pulau Pinang.
Tel : 04-644 7593
Fax : 04-645 2709
2. Ipoh Garden
No. 27A-27A1,
Jalan Sultan Azlan Shah Utara,
31400 Ipoh, Perak.
Tel : 05-549 7277
Fax : 05-549 7299
2.Butterworth
55-57, Jalan Selat,
Taman Selat,
P.O.Box 165,
Off Jalan Bagan Luar,
12000 Butterworth, Pulau Pinang.
Tel : 04-333 1372
Fax : 04-332 3299
3.Lumut
Ground Floor,
Kompleks Mutiara Armada,
Jalan Nakhoda,
Pengkalan TLDM,
32100 Lumut, Perak.
Tel : 05-683 5051
Fax : 05-683 5579
3. Fettes Park
No. 98-G-31 & 32,
Jalan Fettes,
Prima Tanjung Business Centre,
Tanjung Tokong,
11200 Pulau Pinang.
Tel : 04-899 9069
Fax : 04-899 0767
4.Sitiawan
No. 11 & 12, Taman Sitiawan 1,
Jalan Lumut,
32000 Sitiawan, Perak.
Tel : 05-692 8401
Fax : 05-691 7339
4. Jalan Macalister
No. 104C, 104D & 104E,
Jalan Macalister,
10400 Pulau Pinang.
Tel : 04-229 1495
Fax : 04-226 1530
5.Taiping
No. 40 & 42,
Jalan Tupai,
34000 Taiping, Perak.
Tel : 05-806 6816
Fax : 05-808 0432
5. Kepala Batas
Lot 1317 & 1318,
Lorong Malinja, Taman Sepakat,
Off Jalan Butterworth,
13200 Kepala Batas,
Seberang Prai Utara,
Pulau Pinang.
Tel : 04-575 1824
Fax : 04-575 1975
6.
Teluk Intan
11, Medan Sri Intan,
Jalan Sekolah,
36000 Teluk Intan, Perak.
Tel : 05-621 0130
Fax : 05-621 0128
Annual Report 2013
6.Prai
No. 2, Tingkat Kikik 7,
Taman Inderawasih,
13600 Prai, Pulau Pinang.
Tel : 04-397 8543
Fax : 04-397 9243
7. Seberang Jaya
No. 10, Jalan Todak Satu,
Pusat Bandar Seberang Jaya,
13700 Prai, Pulau Pinang.
Tel : 04-399 5881
Fax : 04-399 2881
8.
Wisma Pelaut
1A, Light Street,
Wisma Pelaut,
10200 Pulau Pinang.
Tel : 04-263 6633
Fax : 04-261 9801
KEDAH
1. Alor Setar
No. 147 & 148,
Susuran Sultan Abdul Hamid 8,
Kompleks Sultan Abdul Hamid,
Fasa 2, Persiaran Sultan Abdul
Hamid,
05050 Alor Setar, Kedah.
Tel : 04-772 1477
Fax : 04-771 4796
2.Kulim
No. 13 & 14,
Jalan KLC Satu (1),
Kulim Landmark Central,
09000 Kulim, Kedah.
Tel : 04-495 5566
Fax : 04-490 4717
3.Langkawi
149-151,
Persiaran Bunga Raya,
Langkawi Mall,
07000 Kuah, Langkawi, Kedah.
Tel : 04-966 4426
Fax : 04-966 4717
4. Sungai Petani
No. 55, Jalan Perdana Heights,
2/2, Perdana Heights,
08000 Sungai Petani, Kedah.
Tel : 04-421 1808
Fax : 04-422 6675
NETWORK OF BRANCHES
TERENGGANU
1.Kemaman
K711-713,
Wisma IKY Naga,
Jalan Sulaimani,
24000 Kemaman, Terengganu.
Tel : 09-858 1744
Fax : 09-859 1572
2. Kemaman Supply Base
Ground Floor,
Admin Building Block B,
Kemaman Supply Base,
24007 Kemaman, Terengganu.
Tel : 09-863 1297
Fax : 09-863 1295
KELANTAN
1.Jeli
No. A1 & A2, Blok A,
Bandar Baru Bukit Bunga,
11700 Bukit Bunga,
Tanah Merah, Kelantan.
Tel : 09-946 8955
Fax : 09-946 8954
2.
Kota Bharu
3788H & 3788I,
Seksyen 13,
Jalan Sultan Ibrahim,
15050 Kota Bharu, Kelantan.
Tel : 09-744 5688
Fax : 09-744 2202
PAHANG
1.Jengka
Nadi Kota,
26400 Bandar Jengka, Pahang.
Tel : 09-466 2233
Fax : 09-466 2422
2.Kuantan
G2-Ground Floor G2,
Menara Zenith, Jalan Putra,
Square 6, Putra Square,
25200 Kuantan, Pahang.
Tel : 09-514 8584
Fax : 09-514 8580
3.Mentakab
70, Jalan Temerloh,
28400 Mentakab, Pahang.
Tel : 09-278 4487
Fax : 09-277 6654
4.Temerloh
No. 9, Ground Floor,
Jalan Ahmad Shah,
28000 Temerloh, Pahang.
Tel : 09-296 8811
Fax : 09-296 8800
PERLIS
1.Kangar
A2, Taman Pengkalan Asam,
Jalan Alor Setar-Kangar,
01000 Kangar, Perlis.
Tel : 04-977 8669
Fax : 04-977 8566
SABAH
1. Jalan Gaya, Kota Kinabalu
No. 86, Jalan Gaya,
88000 Kota Kinabalu, Sabah.
Tel : 088-230 213
Fax : 088-265 430
2.
Lahad Datu
Ground Floor, Lot 1 & 2,
Bandar Sri Perdana, Fasa 5 KM4,
Jalan Silam Bandar Sri Perdana,
91100 Lahad Datu, Sabah.
Tel : 089-865 733
Fax : 089-865 735
3.
Kota Kinabalu
Lot 19 & 20, Block K,
Sadong Jaya Complex,
Jalan Ikan Juara 3, Karamunsing,
88300 Kota Kinabalu, Sabah.
Tel : 088-264 410
Fax : 088-261 414
4.Sandakan
Lot No. 163 & 164,
Block 18, Jalan Prima Square,
Batu 4, Jalan Utara,
90000 Sandakan, Sabah.
Tel : 089-212 752
Fax : 089-212 644
5.Tawau
TB. 281, 282 & 283,
Jalan Haji Karim,
Town Extension II,
P.O. Box 630,
91008 Tawau, Sabah.
Tel : 089-778 197
Fax : 089-762 199
SARAWAK
1.Bintulu
Sub Lot 13,
Off Lot 3299,
Parkcity Commerce Square,
97000 Bintulu, Sarawak.
Tel : 086-314 248
Fax : 086-314 206
2.Kuching
Lot 247 & 248,
Section 49, KTLD,
Jalan Tuanku Abdul Rahman,
93100 Kuching, Sarawak.
Tel : 082-245 888
Fax : 082-257 366
3.Miri
Lot 2387 & 2388, 1st Floor,
Block A4, Jalan Boulevard 1A,
Boulevard Commercial Center,
KM 3, Jalan Miri-Pujut,
98000 Miri, Sarawak.
Tel : 085-437 442
Fax : 085-437 297
4.
Prince Commercial Centre
Ground Floor, No. 1 & 2,
Jalan Penrissen Batu 7,
Kota Sentosa,
93250 Kuching, Sarawak.
Tel : 082-613 466
Fax : 082-629 466
5.Sibu
No. 91 & 93,
Jalan Kampung Nyabor,
96000 Sibu, Sarawak.
Tel : 084-325 926
Fax : 084-325 960
Annual Report 2013
NOTICE OF
ANNUAL GENERAL MEETING
NOTICE IS HEREBY GIVEN THAT THE 38TH ANNUAL GENERAL MEETING OF AFFIN BANK BERHAD WILL BE
HELD AT THE BOARD ROOM, 19TH FLOOR, MENARA AFFIN, 80, JALAN RAJA CHULAN, 50200 KUALA LUMPUR
ON TUESDAY, 25 MARCH 2014 AT 9.00 A.M. FOR THE TRANSACTION OF THE FOLLOWING BUSINESS:Agenda:
1. To receive the Statutory Statements of Accounts for the year ended 31 December 2013 together with the Directors’ and
Auditors’ Reports thereon.
2. To declare a final single tier dividend of 6 Sen amounting to RM91,100,205.90 for the financial year ended 31 December
2013.
3 To re-elect the following Directors who retire pursuant to Article 91(a) of the Articles of Association and who, being eligible,
offer themselves for re-election:
(a) YBhg. Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman
(b) YBhg. Tan Sri Dato’ Seri Mohamed Jawhar
4. To consider and if thought fit, to pass the following resolutions in accordance with Section 129(6) of the Companies Act,
1965:
(a) “That pursuant to Section 129(6) of the Companies Act, 1965, YBhg. Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar
(Bersara) be and is hereby re-appointed as Director of the Company to hold office until the next Annual General
Meeting.”
5. To approve Directors’ fees and Committees’ fees for 2013.
6. To re-appoint Messrs PricewaterhouseCoopers as Auditors for the financial year ending 31 December 2014 and to authorise
the Directors to fix their remuneration.
7. To transact any other ordinary business of the Company.
BY ORDER OF THE BOARD
NIMMA SAFIRA Binti KHALID
Secretary
NOTE:
1.A member entitled to attend and vote at the Meeting is entitled to appoint a proxy to attend and vote instead of him and the proxy need not be a member of the
Company.
The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation,
either under the seal or in some other manner approved by Directors.
The instrument appointing a proxy and the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of such power or authority
shall be deposited at the Company’s registered office at the 17th Floor, Menara Affin, 80, Jalan Raja Chulan, 50200 Kuala Lumpur, at least forty-eight (48) hours
before the time appointed for holding the Meeting or adjourned Meeting as the case may be otherwise the person so named shall not be entitled to vote in respect
thereof.
2.Reference is made to Recommendation 3.2 of the Malaysian Code on Corporate Governance 2012 which states that the tenure of an Independent Director should
not exceed a cumulative term of nine (9) years.
Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman has served on the Board as an Independent Non-Executive Director for a period exceeding nine (9) years. He remains
independent as he is free from any business or other relationship, which could interfere with the exercise of independent judgement or the ability to act in the best
interest of the Bank. The Nominating Committee and the Board have determined that Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman remains independent in mind
and character as well as objective in decision making process of the Board.
Annual Report 2013
Financial
Statements
52
68
69
70
71
73
76
94
194
194
195
197
Directors’ Report
Statements of Financial Position
Income Statements
Statements of Comprehensive Income
Statements of Changes in Equity
Statements of Cash Flows
Summary of Significant Accounting Policies
Notes to the Financial Statements
Statement by Directors
Statutory Declaration
Independent Auditors’ Report
Basel II Pillar 3 Disclosures
Annual Report 2013 AFFIN BANK BERHAD (25046-T)
51
DIRECTORS’
REPORT
for the financial year ended 31 December 2013
The Directors hereby submit their report together with the audited financial statements of the Group and the Bank for the financial
year ended 31 December 2013.
PRINCIPAL ACTIVITIES
The principal activities of the Bank during the financial year are banking and related financial services. The principal activities of
the subsidiaries are Islamic banking business, property management services, nominee and trustee services. Islamic banking
business refers generally to the acceptance of deposits and granting of financing under the Shariah principles. There were no
significant changes in the nature of these activities during the financial year.
FINANCIAL RESULTS
The Group RM’000 The Bank
RM’000
Profit before zakat and taxation Zakat 762,212 (8,583) 672,529
-
Profit before taxation Taxation 753,629 (183,807) 672,529
(163,930)
Net profit for the financial year 569,822 508,599
DIVIDENDS
The dividends on ordinary shares paid or declared by the Bank since 31 December 2012 were as follows:
In respect of the financial year ended 31 December 2012 as shown in the Directors’ report for that financial year:
RM’000
Final single-tier dividend of 6 sen per share paid on 30 April 2013
91,100
In respect of the financial year ended 31 December 2013:
Single-tier interim dividend of 10 sen per share paid on 24 December 2013
151,834
The Directors now recommend the payment of a final single-tier dividend of 6 sen per share amounting to RM91,100,206 which
is subject to the approval of members at the forthcoming Annual General Meeting of the Bank.
RESERVES AND PROVISIONS
All material transfers to or from reserves or provisions during the financial year are shown in the financial statements and notes to
the financial statements.
52
AFFIN BANK BERHAD (25046-T) Annual Report 2013
DIRECTORS’ REPORT
BAD AND DOUBTFUL DEBTS AND FINANCING
Before the financial statements of the Group and the Bank were made out, the Directors took reasonable steps to ascertain that
proper action had been taken in relation to the writing off of bad debts and financing and the making of allowance for bad and
doubtful debts and financing, and satisfied themselves that all known bad debts and financing had been written off and adequate
allowances made for doubtful debts and financing.
At the date of this report, the Directors are not aware of any circumstances which would render the amount written off for bad
debts and financing, or the amount of the allowance for doubtful debts and financing, in the financial statements of the Group and
the Bank inadequate to any substantial extent.
CURRENT ASSETS
Before the financial statements of the Group and the Bank were made out, the Directors took reasonable steps to ascertain that
any current assets, other than debts and financing, which were unlikely to realise in the ordinary course of business, their values
as shown in the accounting records of the Group and the Bank, have been written down to an amount which they might expected
so to realise.
At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to the current
assets in the financial statements of the Group and the Bank misleading.
VALUATION METHODS
At the date of this report, the Directors are not aware of any circumstances which have arisen which render adherence to the
existing methods of valuation of assets or liabilities in the Group’s and the Bank’s financial statements misleading or inappropriate.
CONTINGENT AND OTHER LIABILITIES
At the date of this report there does not exist:
(a) any charge on the assets of the Group or the Bank which has arisen since the end of the financial year which secures the
liabilities of any other person; or
(b) any contingent liability in respect of the Group or the Bank that has arisen since the end of the financial year other than in the
ordinary course of banking business or activities of the Group.
No contingent or other liability of the Group or the Bank has become enforceable, or is likely to become enforceable within
the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially
affect the ability of the Group or the Bank to meet their obligation as and when they fall due.
CHANGE OF CIRCUMSTANCES
At the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or the financial
statements of the Group and the Bank that would render any amount stated in the financial statements misleading.
53
DIRECTORS’ REPORT
ITEMS OF AN UNUSUAL NATURE
The results of the operations of the Group and the Bank during the financial year were not, in the opinion of the Directors,
substantially affected by any item, transaction or event of a material and unusual nature.
There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event
of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations of the
Group or the Bank for the current financial year in which this report is made.
SIGNIFICANT EVENT DURING THE FINANCIAL YEAR
There is no significant event during the financial year.
SUBSEQUENT EVENTS
There were no material events subsequent to the reporting date that require disclosure or adjustments to the financial statements.
DIRECTORS
The Directors of the Bank who have held office during the period since the date of the last report are:
Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara)
Chairman / Non-Independent Non-Executive
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin
Dr Raja Abdul Malek Bin Raja Jallaludin
Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman
Tan Sri Dato’ Seri Mohamed Jawhar
Mr Aubrey Li Kwok-Sing
Mr Gary Cheng Shui Hee
Non-Independent Non-Executive Director (Alternate Director to Mr Aubrey Li Kwok-Sing)
54
DIRECTORS’ REPORT
RESPONSIBILITY STATEMENT BY BOARD OF DIRECTORS
In the course of preparing the annual financial statements of the Group and of the Bank, the Directors are collectively responsible in
ensuring that these financial statements are drawn up in accordance with Malaysian Financial Reporting Standards, International
Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.
It is the responsibility of the Directors to ensure that the financial reporting of the Group and of the Bank present a true and fair
view of the state of affairs of the Group and of the Bank as at 31 December 2013 and of the financial results and cash flows of the
Group and of the Bank for the financial year then ended.
The financial statements are prepared on the going concern basis and the Directors have ensured that proper accounting records
are kept, applied the appropriate accounting policies on a consistent basis and made accounting estimates that are reasonable
and fair so as to enable the preparation of the financial statements of the Group and of the Bank with reasonable accuracy.
The Directors have also taken the necessary steps to ensure that appropriate systems are in place for the assets of the Group and
of the Bank to be properly safeguarded for the prevention and detection of fraud and other irregularities. The systems, by their
nature, can only provide reasonable and not absolute assurance against material misstatements, whether due to fraud or error.
The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 194 of the financial statements.
DIRECTORS’ INTERESTS
According to the register of Directors’ shareholdings, the interest of Directors in office at the end of the financial year in shares,
warrants and options of related companies are as follows:
Ordinary shares of RM1 each
AFFIN Holdings Berhad
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin As at
As at
1.1.2013
Bought
Sold31.12.2013
* 808,714 - -
* 808,714
* 2,000,000 - - * 2,000,000
Boustead Petroleum Sdn Berhad
5,916,465 - - 5,916,465
Al-Hadharah Boustead REIT
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin * 250,000 -
-
* 250,000
Boustead Heavy Industries Corporation Berhad
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin *
Shares held in trust by nominee company
55
DIRECTORS’ REPORT
DIRECTORS’ INTERESTS
Ordinary shares of 50 sen each
Pharmaniaga Berhad
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin ^
As at
As at
1.1.2013
Bought
Sold31.12.2013
5,681,886 ^ 6,818,262 - 12,500,148
Share split on the basis of one (1) bonus share for every ten (10) subdivided shares held on 4 June 2013.
Bonus issue on 4 June 2013.
Ordinary shares of RM10 each; RM5 uncalled
ABB Trustee Berhad ***
Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara) Dr Raja Abdul Malek Bin Raja Jallaludin As at
As at
1.1.2013
Bought Transfer31.12.2013
20,000 20,000 -
- - -
20,000
20,000
*** Shares held in trust for the Bank
Ordinary shares of 50 sen each
Boustead Holdings Berhad
As at
1.1.2013
Bought
Sold31.12.2013
28,192,758 - - 28,192,758
Redeemable preference shares of RM1 each
Boustead Petroleum Sdn Berhad
As at
1.1.2013
Bought
Sold31.12.2013
50 - 50 -
Other than the above, the Directors in office at the end of the financial year did not have any other interest in shares, warrants and
options over shares in the Bank or its related corporations during the financial year.
56
DIRECTORS’ REPORT
DIRECTORS’ BENEFITS
During and at the end of the financial year, no other arrangements subsisted to which the Bank or any of its subsidiaries is a party
with the object or objects of enabling Directors of the Bank or any of its subsidiaries to acquire benefits by means of the acquisition
of shares in, or debenture of, the Bank or any other body corporate, except for the share options granted to Directors of the Bank
by AFFIN Holdings Berhad, Boustead Holdings Berhad and Lembaga Tabung Angkatan Tentera.
Since the end of the previous financial year, no Director of the Bank has received or become entitled to receive a benefit (other than
the fees and other emoluments shown in the Note 31 to the financial statements) by reason of a contract made by the Bank or
by a related corporation with the Director or with a firm of which he is a member or with a company in which he has a substantial
financial interest.
CORPORATE GOVERNANCE
The Board of Directors is committed to ensure the highest standards of corporate governance throughout the organisation with
the objectives of safeguarding the interests of all stakeholders and enhancing the shareholders’ value and financial performance
of the Bank. The Board considers that it has applied the Best Practices as set out in the Malaysian Code of Corporate Governance
throughout the financial year. The Bank is also required to comply with BNM’s Guidelines on Directorship in the banking institutions
(‘BNM/GP1’).
(i) Board of Directors Responsibility and Oversight
The Board of Directors
The direction and control of the Bank rest firmly with the Board as it effectively assumes the overall responsibility for corporate
governance, strategic direction, formulation of policies and overseeing the investments and operations of the Bank. The
Board exercises independent oversight on the management and bears the overall accountability for the performance of the
Bank and compliance with the principle of good governance.
There is a clear division of responsibility between the Chairman and the Managing Director/Chief Executive Officer to ensure
that there is a balance of power and authority. The Board is responsible for reviewing and approving the longer-term strategic
plans of the Bank as well as the business strategies. It is also responsible for identifying the principal risks and implementation
of appropriate systems to manage those risks as well as reviewing the adequacy and integrity of the Bank’s internal control
systems, management information systems, including systems for compliance with applicable laws, regulations and
guidelines.
Whilst, the Management Committee, headed by the Managing Director/Chief Executive Officer, is responsible for the
implementation of the strategies and internal control as well as monitoring performance. The Committee is also a forum
to deliberate issues pertaining to the Bank’s business, strategic initiatives, risk management, manpower development,
supporting technology platform and business processes.
The Board Meetings
The Board meets on a monthly basis, to review the Bank’s financial and business performance, to oversee the conduct of the
Bank’s business as well as to ensure that adequate internal control systems are in place. The Board met 14 times during the
financial year.
57
DIRECTORS’ REPORT
(i) Board of Directors Responsibility and Oversight (continued)
Board Balance
The Board of Directors comprises of seven Non-Executive Directors and one alternate Non-Executive Director. There are four
Independent Non-Executive Directors and four Non-Independent Non-Executive Directors. The Board of Directors meetings
are presided by a Non-Independent Non-Executive Chairman whose role is clearly separated from the role of the Managing
Director/Chief Executive Officer.
In 2013, the Bank continues to have a strong and experienced Board, befitting its aspiration to become a mid size Bank of
prominence. It consists of representatives from the private sector with suitable qualifications and experience in relevant areas
particularly in banking.
The composition of the Board and the number of meetings attended by each director are as follows:
Directors
Total Meetings Attended
14 / 14
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin Member / Non-Independent Non-Executive Director
14 / 14
Member / Independent Non-Executive Director
14 / 14
14 / 14
13 / 14
14 / 14
Member / Non-Independent Non-Executive Director
4 / 14
Mr Gary Cheng Shui Hee
7 / 14
Member / Non-Independent Non-Executive Director (Alternate Director to Mr Aubrey Li Kwok-Sing)
58
DIRECTORS’ REPORT
Board Committees
Nomination Committee
Nominating Committee was established to provide a formal and transparent procedure for the appointment of Directors
and Managing Director/Chief Executive Officer. The committee also assesses the effectiveness of the Board as a whole,
contribution of each Director, contribution of the Board’s various committees and the performance of Managing Director/Chief
Executive Officer and key senior management officers.
During the financial year ended 31 December 2013, a total of 6 meetings were held. The Nominating Committee comprises
the following members and the details of attendance of each member at the Nominating Committee meetings held during the
financial year are as follows:
Members Total Meetings Attended
Chairman / Independent Non-Executive Director
6/6
6/6
6/6
6/6
6/6
Remuneration Committee
Remuneration Committee was established to evaluate and recommend a framework of remuneration for Directors, the Chief
Executive Officer and key senior management officers that is competitive and consistent with the Bank’s culture, objectives
and strategy.
During the financial year ended 31 December 2013, a total of 4 meetings were held. The Remuneration Committee comprises
the following members and the details of attendance of each member at the Remuneration Committee meetings held during
the financial year are as follows:
59
DIRECTORS’ REPORT
Board Committees (continued)
Remuneration Committee (continued)
Members Total Meetings Attended
4/4
4/4
4/4
Shariah Committee
AFFIN Islamic Bank Berhad’s business activities are subject to Shariah compliance and conformation by the Shariah
Committee. The Shariah Committee is formed as legislated under the Islamic Financial Services Act 2013 and as per Shariah
Governance Framework for Islamic Financial Institutions.
The duties and responsibilities of the Shariah Committee include the following:
• To advise the Board on Shariah matters in order to ensure that the business operations of the Bank comply with the
Shariah principles at all times;
• To endorse and validate relevant documentations of the Bank’s products to ensure that the products comply with Shariah
principles; and
• To advise the AFFIN Islamic Bank Berhad on matters to be referred to the Shariah Advisory Council.
The Shariah Committee was established in December 1995. During the year, a total of 21 meetings were held. The Shariah
Committee comprises the following members and the details of attendance of each member at the Shariah Committee
meetings held are as follows:
Members
60
Dr. Asyraf Wajdi Bin Dato’ Dusuki
Chairman
21 / 21
Associate Professor Dr. Said Bouheraoua
Member
16 / 21
Assistant Professor Dr. Ahmad Azam Bin Othman
Member
21 / 21
Dr. Yasmin Hanani Binti Mohd Safian
Member
16 / 21
Dr. Zulkifli Bin Hasan
Member
16 / 21
DIRECTORS’ REPORT
(ii) Group Risk Management
The Group Risk Management function, operating in an independent capacity, is part of the Bank’s senior management
structure which works closely as a team in managing risks to enhance stakeholders’ value.
The Group Risk Management function provides support to the Board Risk Management Committee (‘BRMC’). Committees
namely Board Loan Review and Recovery Committee (‘BLRRC’), Management Committee (‘MCM’), Group Management
Loan Committee (‘GMLC’), Asset and Liability Management Committee (‘ALCO’), Liquidity Management Committee (‘LMC’),
Group Operational Risk Management Committee (‘GORMC’) and Early Alert Committee (‘EAC’) assist the BRMC in managing
credit, market, liquidity and operational risks respectively.
Responsibilities of these committees include:
• risk identification
• risk assessment and measurement
• risk control and mitigation
• risk monitoring
Board Risk Management Committee (‘BRMC’)
The main function of Board Risk Management Committee (‘BRMC’) is to assist the Board in its supervisory role in the
management of risk in the Bank. It has responsibility for approving and reviewing all risk management policies and
methodologies of the Bank. BRMC also reviews guidelines and portfolio management reports including risk exposure
information.
BRMC provides oversight and management of all risks in the Bank. The Committee also ensures that the procedures and
framework in relation to identifying, measuring, monitoring and controlling risk are operating effectively. The Bank’s risk
management framework is set out in Note 38 to the financial statements.
The BRMC meeting for the Bank were jointly held with AFFIN Islamic Bank Berhad and during the financial year ended 31
December 2013, a total of 5 meetings were held. The BRMC comprises the following members and details of attendance of
each member at the BRMC meetings held during the financial year are as follows:
Members
5/5
5/5
5/5
5/5
61
DIRECTORS’ REPORT
(ii) Group Risk Management
Board Loan Review and Recovery Committee (‘BLRRC’)
Board Loan Review and Recovery Committee (‘BLRRC’) critically reviews loans and other credit facilities with higher risk
implications, after due process of checking, analysis, review and recommendation by the Credit Risk Management function,
and if found necessary, exercise the power to veto loan applications that have been accepted by the Group Management
Loan Committee (‘GMLC’). The Committee is also responsible to review the impaired loans presented by Management.
The BLRRC meeting for the Bank were jointly held with AFFIN Islamic Bank and during the financial year ended 31 December
2013, a total of 12 meetings were held. The BLRRC comprises the following members and details of attendance of each
member at the BLRRC meetings held during the financial year are as follows:
Members
12 / 12
Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin Member / Non-Independent Non-Executive Director
12 / 12
Laksamana Madya Tan Sri Dato’ Seri Ahmad Ramli Bin Mohd Nor (Bersara)
(Represent AFFIN Islamic Bank Berhad)
12 / 12
12 / 12
Management Committee (‘MCM’)
MCM comprising the senior management team chaired by the MD/CEO, assists the Board in managing the day-to-day
operations and ensure its effectiveness. MCM formulates tactical plans and business strategies, monitors the Bank’s overall
performance, and ensures that the activities are in accordance with corporate objectives, strategies, policies and annual
business plan and budget.
Group Management Loan Committee (‘GMLC’)
Group Management Loan Committee (‘GMLC’) approves complex and larger loans and workout/recovery proposals beyond
the delegated authority of the concerned individual senior management personnel of the Bank.
62
DIRECTORS’ REPORT
(ii) Group Risk Management (continued)
Individual Approvers
Credit authority is delegated based on skills, experience and track record of the officer assuming an approver’s position.
Delegation of credit authority is subject to credit checks to ensure approvers have a clean disciplinary record and not be in a
financially embarrassed position.
Asset and Liability Management Committee (‘ALCO’)
ALCO comprising the senior management team chaired by the MD/CEO, manages the Bank’s asset liability position and
oversees the Bank’s capital management to ensure that the Bank is adequately capitalised on an economic and regulatory
basis.
Liquidity Management Committee (‘LMC’)
LMC is a sub-committee of the ALCO and its role is to augment the functions of the ALCO by directing its focus specifically
to liquidity issues.
Group Operational Risk Management Committee (‘GORMC’)
Responsibilities of the committees include:
•
•
•
•
•
•
•
•
To evaluate operational risks issues of escalating importance/strategic risk exposure;
To review and recommend on broad operational risks management policies/best practices for adoption by the Bank’s
operating units;
To review the effectiveness of broad internal controls and making recommendation/approve on changes, if necessary;
To review/approve recommendation of operational risk management groups set up to address specific area;
To take the lead in inculcating an operational risks awareness culture; To approve operational risk management methodologies/measurements tools;
To review and approve the strategic operational risk management initiatives/plans and to endorse for BRMC’s approval
if necessary; and
To update BRMC on loss events and relevant key issues that may adversely impact core processes, system defects and
any changes to critical business or system related processes.
Early Alert Committee (‘EAC’)
Early Alert Committee (‘EAC’) is established within senior management to monitor credit quality through monthly review of
the Early Alert, Watchlist and Exit Accounts and review the actions taken to address the emerging risks and issues in these
accounts.
63
DIRECTORS’ REPORT
(iii) Internal Audit and Internal Control Activities
In accordance with Bank Negara Malaysia’s GP10 guidelines, the Group Internal Audit Division (‘GIA’) conducts continuous
reviews on auditable areas within the Bank. The continuous reviews by GIA are focused on areas of significant risks and
effectiveness of internal control in accordance to the audit plan approved by the Audit and Examination Committee (‘AEC’).
The risk highlighted on the respective auditable areas as well as recommendation made by the GIA are addressed at AEC and
Management meetings on bi-monthly basis. The AEC also conduct annual reviews on the adequacy of internal audit function,
scope of work, resources and budget of GIA.
At present, GIA consists of Operational Audit, IS Audit, Credit Review, Investigation and Compliance. Audit activities include
these key components:
•
Conduct audit on all auditable entities (Head Office, branches and subsidiaries) processes, services, products, system
and provide an independent assessment to the Board of Directors, AEC and Management that appropriate control
environment is maintained with clear authority and responsibility with sufficient staff and resources to carry out control
responsibilities.
•
Perform risk assessments to identify risk and evaluate actions taken to provide reasonable assurance that procedures
and controls exist to contain those risks.
•
Maintain strong control activities including documented processes and system incorporating adequate controls to
produce accurate financial data and provide for the safeguarding of assets, and a documented review of reported results.
•
Ensure effective information flows and communication, including:
- training and the dissemination of standards and requirements;
- an information system to produce and convey complete, accurate and timely data including financial data;
- the upward communication of trends, developments and emerging issues.
•
Monitor controls, including procedures to verify that controls are in place and functioning, follow up on corrective action
on control finding until its full resolution.
Based on GIA’s review, identification and assessment of risk, testing and evaluation of controls, GIA will provide an opinion on
the effectiveness of internal controls maintained by each entity.
Audit and Examination Committee (‘AEC’)
The AEC comprises members of the Bank’s Board of Directors whose primary function is to assist the Board of Directors in
its supervision over:
64
•
The reliability and integrity of accounting policies and financial reporting and disclosure practices;
•
The provision of advice to the Board with regards to the financial statements and business risks to enable the Board to
fulfill its fiduciary duties and obligations; and
DIRECTORS’ REPORT
(iii) Internal Audit and Internal Control Activities (continued)
Audit and Examination Committee (‘AEC’) (continued)
•
The establishment and maintenance of processes to ensure that they:
- are in compliance with all applicable laws, regulations and company policies; and
- have adequately addressed the risk relating to internal controls and system, management of inherent and business
risks, and ensuring that the assets are properly managed and safeguarded.
The AEC is made up of at least three but not more than five members appointed by the Board of Directors from among its
non-executive directors.
The AEC meeting for the Bank were jointly held with AFFIN Islamic Bank Berhad and during the financial year ended 31
December 2013, a total of 7 meetings were held. The Audit and Examination Committee comprises the following members
and details of attendance of each member at the Audit and Examination Committee meetings held during the financial year
are as follows:
Members
7/7
7/7
7/7
Dr. Asyraf Wajdi Bin Dato’ Dusuki
(Represent AFFIN Islamic Bank Berhad)
6/7
(iv) Management Reports
Before each Board meeting, Directors are provided with a complete set of board papers itemised in the agenda for Board’s
review/approval and/or notation.
The Board monitors the Bank’s performance by reviewing the monthly Management Report, which provides a comprehensive
review and analysis of the Bank’s operations and financial issues. In addition, the minutes of the Board Committees and
Management Committees meetings and other issues are also tabled and considered by the Board.
Procedures are in place for Directors to seek both independent professional advice at the Bank’s expense and the advice and
services of the Company Secretary in order to fulfill their duties and specific responsibilities.
65
DIRECTORS’ REPORT
BUSINESS PLAN AND STRATEGY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2013
2013 was a challenging year for the AFFIN Bank Berhad. To address the issue of household debt level, Bank Negara Malaysia
(‘BNM’) had strengthened the existing measures on responsible lending guidelines by issuing more stringent guidelines in July
2013. These measures contributed to further softening of loans growth for the industry as a whole, and especially in the consumer
segment.
Despite these challenges, the Group remained resilient in the market, registering profit before tax growth of 8.4%, deposits growth
of 11.7% and growth of net loans and advances of 8.2 %.Our key financial ratios are within the industry average.
The Bank managed to register the performance through preservation of asset quality using proactive account management and
effective early detection of potential problematic assets.
Management will continue to remain prudent to ensure business sustainability and profitability growth. The bank is also continuously
seeking out for new growth opportunities.
BUSINESS OUTLOOK FOR 2014
Going into 2014, the Bank will be focusing on controlled loans growth and effective balance sheet management in order to
achieve financial year-ended 2014 business targets. Amid increasing competition, margin continues to come under pressure to the
banking industry due to the impact of potential hike in Overnight Policy Rate (‘OPR’). In view of this scenario, net interest margin
is expected to be dampened further. As such, more emphasis will be given on increasing our fee based income.
Business opportunities from Economic Transformation Plan (‘ETP’) projects are expected to be more significant for the Bank in the
coming year and will give positive impact to our business banking sector as a result of stronger collaboration on secondary project
financing between its major shareholders, the Lembaga Tabung Angkatan Tentera (‘LTAT’) and the Boustead Group of companies
as well as our existing/established customers.
For consumer segments, higher end auto financing and mortgage will remain as our main drivers for loan growth. The ensure
income sustainability, the bank will also emphasis on cross selling of its products such as cards, unit trust, insurance business and
promoting new banking products particularly in treasury, forex and wealth management.
With continued focus on productivity improvement and customer service enhancement from all our staff, we are optimistic in our
outlook for 2014.
66
DIRECTORS’ REPORT
RATING BY EXTERNAL AGENCIES
The Bank has been rated by the following external rating agency:
Name of rating agency: Date of rating: Rating classifications:
- Long term: - Short term: RATING AGENCY MALAYSIA BERHAD (‘RAM’)
23 July 2013
A1
P1
RAM has reaffirmed the Bank’s long-term and short-term financial institution ratings, at A1 and P1, respectively, with a stable outlook.
‘A’ rating is defined by RAM as being able to offer adequate safety for timely payment of interest and principal, and has adequate
credit profile but possess one or more problem areas, giving rise to the possibility of future riskiness. Entities rated in this category
have generally performed at industry average and are considered to be more vulnerable to changes in economic condition than
those rated in the higher categories. The subscript 1 in this category indicates as higher end of its generic rating in the A category.
A P1 rating is defined by RAM as obligations which are supported by superior ability with regards to timely payment of obligations.
ZAKAT
The Bank’s subsidiary, AFFIN Islamic Bank Berhad (‘AFFIN ISLAMIC’) is obliged to pay zakat to comply with the principles of
shariah. AFFIN Islamic does not pay zakat on behalf of its depositors.
HOLDING COMPANY AND ULTIMATE HOLDING CORPORATE BODY
The holding company of the Bank is AFFIN Holdings Berhad, a public listed company incorporated in Malaysia and the ultimate
holding corporate body is Lembaga Tabung Angkatan Tentera, a statutory body incorporated under the Tabung Angkatan Tentera
Act, 1973.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with resolution of the Board of Directors dated 26 February 2014.
Chairman
Director
67
STATEMENTS OF
FINANCIAL
POSITION
as at 31 December 2013
The Group
The Bank
2013201220132012
Note RM’000 RM’000 RM’000 RM’000
ASSETS
Cash and short-term funds
2
Reverse and repurchase agreements with
financial institutions Deposits and placements with banks and
other financial institutions
3
Financial assets held-for-trading
4
Derivative financial assets
5
Financial investments available-for-sale
6
Financial investments held-to-maturity
7
Loans, advances and financing
8
Other assets
9
Amount due from subsidiaries
10 Amount due from jointly controlled entity Tax recoverable Deferred tax assets 11 Statutory deposits with
Bank Negara Malaysia
12 Investment in subsidiaries
13 Investment in jointly controlled entity
14
Property and equipment
15 Intangible assets
16 TOTAL ASSETS LIABILITIES AND EQUITY
Deposits from customers
17 Deposits and placements of banks and
18 Derivative financial liabilities
19
Bills and acceptances payable
Recourse obligation on loans
sold to Cagamas Berhad
20 Other liabilities
21 Amount due to subsidiaries
22
Provision for taxation Deferred tax liabilities
11
Subordinated term loan
23 TOTAL LIABILITIES Share capital
24 Reserves
25 TOTAL EQUITY 9,401,701 7,648,904 4,987,696 3,633,842
-
20,057 -
20,057
482,597 596,452 1,106,756 1,043,825
149,544 165,592 149,544 165,592
56,274 68,872 56,274 68,872
7,614,537 7,640,654 6,331,414 5,658,161
500,336 451,670 415,271 451,670
36,227,785 33,482,626 30,178,910 28,339,269
220,097 293,658 176,555 227,790
-
-
60,723 153,949
4,185 2,745 - 17 16 - 9,945 - 6,985 1,459,350 -
-
158,740 152,005 1,413,300 - 60 171,922 148,452 1,226,350 389,088 -
150,803 154,232 1,211,800
387,389
163,951
149,887
56,437,113 52,104,980 45,390,601 41,676,054
46,088,082 41,263,536 36,800,728 32,224,817
4,065,544 94,522 90,208 4,809,323 59,663 152,400
2,659,535 94,522 90,208 3,728,263
59,663
152,400
397,790 391,977 - 36,402 - 904,964 413,549 306,481 -
63,751 13,365 904,960 397,790 359,837
53,559 34,351 - 904,964 413,549
282,144
48,528
54,177
13,099
904,960
52,069,489 47,987,028 41,395,494 37,881,600
1,518,337 2,849,287 4,367,624 1,518,337 2,599,615 4,117,952 1,518,337 2,476,770 3,995,107 1,518,337
2,276,117
3,794,454
TOTAL LIABILITIES AND EQUITY 56,437,113 52,104,980 45,390,601 41,676,054
COMMITMENTS AND CONTINGENCIES
21,863,606 18,981,323 20,196,417 17,411,381
37 The accounting policies on pages 76 to 93 and the notes on pages 94 to 193 form an integral part of these financial statements.
68
INCOME
STATEMENTS
Note Interest income
Interest expense
26
27
The Group
2013
2012 RM’000 RM’000 The Bank
2013
2012
RM’000 RM’000
2,121,127 1,984,900 2,150,845 2,012,937
(1,308,068) (1,196,228) (1,308,113) (1,196,288)
Net interest income Net Islamic banking income
28 813,059 220,745 788,672 216,772 842,732 - 816,649
-
Other operating income
29
1,033,804 237,366 1,005,444 257,063 842,732 234,862 816,649
255,890
Net income
Other operating expense
30 1,271,170 (565,186)
1,262,507 (571,158) 1,077,594 (461,133) 1,072,539
(473,673)
Operating profit before allowances Allowances for losses on loans, advances and financing
32 Impairment losses on securities 705,984
56,937
(499) 691,349 22,512 (10,402) 616,461 56,567 (499) 598,866
7,091
(10,402)
Share of joint venture’s results
762,422 (210)
703,459 (230) 672,529 - 595,555
-
Profit before zakat and taxation Zakat
762,212
(8,583) 703,229 (6,064) 672,529 - 595,555
-
Profit before taxation Taxation
34 753,629 (183,807)
697,165
(171,899) 672,529 (163,930) 595,555
(145,251)
Net profit after zakat and taxation 569,822 525,266 508,599 450,304
Attributable to:
Equity holders of the Bank 569,822 525,266 508,599 450,304
37.5 35.0 33.5 30.0
Earnings per share (sen):
- Basic/fully diluted 35 The accounting policies on pages 76 to 93 and the notes on pages 94 to 193 form an integral part of these financial statements.
69
STATEMENTS OF
Comprehensive
Income
Note The Group
2013
2012 RM’000 RM’000 The Bank
2013
2012
RM’000 RM’000
Profit after zakat and taxation 569,822 525,266 508,599 450,304
Other comprehensive income:
Items that may be reclassified subsequently to
profit and loss:
Net fair value change in financial investments
available-for-sale Deferred tax on financial investments available-for-sale
11
(102,027) 24,811
733 (418) (86,770)
21,758
1,822
(456)
Other comprehensive income for the financial year,
net of tax
(77,216)
315 (65,012) 1,366
Total comprehensive income for the financial year 492,606 525,581 443,587 451,670
Attributable to equity holders of the Bank:
- Total comprehensive income 492,606 525,581 443,587 451,670
The accounting policies on pages 76 to 93 and the notes on pages 94 to 193 form an integral part of these financial statements.
70
STATEMENTS OF
changes
in
equity
Attributable to Equity Holders of the Bank
AFS Share Share Statutory revaluation Retained capital premium reserves reserves profits The Group
RM’000 RM’000 RM’000 RM’000 RM’000 Total
RM’000
At 1 January 2013 1,518,337 Comprehensive income:
Net profit for the financial year -
-
- - 569,822 569,822
Other comprehensive income (net of tax)
- Financial investments available-for-sale - -
- (77,216) - (77,216)
Total comprehensive income -
-
- (77,216) 569,822 492,606
Dividends paid (Note 36)
Transfer to statutory reserves -
-
-
- -
156,725 -
- (242,934) (156,725) (242,934)
-
At 31 December 2013 1,518,337 529,337 1,317,376 (1,960) 1,004,534 4,367,624
At 1 January 2012 1,439,285 408,389 1,011,044 74,941 Comprehensive income:
- -
- 525,266 525,266
- 315 - 315
-
- 315 525,266 525,581
Issued during the financial year Dividends paid (Note 36) Transfer to statutory reserves 79,052 -
-
120,948 -
- -
- 149,607 -
-
- -
(208,614)
(149,607) 200,000
(208,614)
-
At 31 December 2012 1,518,337 529,337 1,160,651 75,256 529,337 1,160,651 75,256 834,371 4,117,952
667,326 3,600,985
834,371 4,117,952
71
statement of changes in equity
Non-distributable
Distributable
AFS Share Share Statutory revaluation capital premium reserves reserves The Bank
RM’000 RM’000 RM’000 RM’000 Retained profits RM’000 Total
RM’000
At 1 January 2013 1,518,337 Comprehensive income:
-
-
- 508,599 508,599
- Financial investments available-for-sale -
-
- (65,012)
-
(65,012)
Total comprehensive income
- - - (65,012) 508,599 443,587
Dividends paid (Note 36) Transfer to statutory reserves
- - - - - 127,150 - -
(242,934) (127,150) (242,934)
-
At 31 December 2013 1,518,337 529,337 1,144,350 4,965 798,118 3,995,107
At 1 January 2012 1,439,285 408,389 904,624 68,611 530,489 3,351,398
Comprehensive income:
-
-
- 450,304 450,304
- 1,366 - 1,366
-
- 1,366 450,304 451,670
Issued during the financial year Dividends paid (Note 36) Transfer to statutory reserves 79,052 - - 120,948 - - -
-
112,576 -
- - -
(208,614) (112,576) 200,000
(208,614)
-
At 31 December 2012 1,518,337 529,337 1,017,200 69,977 529,337 1,017,200 69,977 The accounting policies on pages 76 to 93 and the notes on pages 94 to 193 form an integral part of these financial statements.
72
659,603 3,794,454
659,603 3,794,454
STATEMENTS OF
cash
flows
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
753,629 697,165
672,529 595,555
(160) (202,084)
(19,984) (789)
(183,906) (23,912) (160)
(201,936) (19,984) (789)
(183,758)
(23,912)
(4,058) (3,204) (4,058) (3,204)
(12,004) (1,024) (9,869) (964) (12,004) (1,024) (9,869)
(964)
(366) (22,369) (6,144) (697) (20,634) (19,011) (366) (18,894) (6,144) (697)
(19,870)
(19,011)
(455) (5,282) 54,118 188 (12,925) (42,325) (455) (5,282) 54,118 188
(12,925)
(42,325)
499 - 16,019 91 - (3,910) 7,989 (11,041) 43,872 15,253
4,583 41,473 8,583 -
210
812 9,590 17,784 179 2,122 (1,098) 8,568 (10,141) 69,497 6,672 7,784 40,453 6,064 - 230 499 - 15,166 91 -
(3,910) 7,197 (11,041) 43,615 15,011 4,509 41,473 - (1,707) - 812
9,590
16,579
178
2,122
(1,093)
7,771
(10,097)
66,845
24,242
7,702
40,453
-
657,438 537,633 567,243 443,523
CASH FLOWS FROM OPERATING ACTIVITIES
Profit before taxation Adjustments for items not involving the movement
of cash and cash equivalents:
Interest income:
- financial assets held-for-trading - financial investments available-for-sale - financial investments held-to-maturity Dividend income:
- financial investments available-for-sale Amortisation of premium less accretion of discount
- financial investments available-for-sale - financial investments held-to-maturity Gain on sale:
- financial assets held-for-trading - financial investments available-for-sale - financial investments held-to-maturity Unrealised (gain)/loss on revaluation
- financial assets held-for-trading - derivatives - foreign exchange Allowance for impairment loss
- financial investments available-for-sale - financial investments held-to-maturity Depreciation of property and equipment Property and equipment written-off Foreclosed properties - diminution in value Gain on sale of property and equipment Amortisation of intangible assets Gain on sale of foreclosed properties Net individual impairment Net collective impairment Bad debt and financing written-off Interest expense - subordinated term loan Zakat Subsidiary - diminution in value Share of joint venture’s results Operating profit before changes in working capital Annual Report 2013 AFFIN BANK BERHAD (25046-T)
73
Statements of cash flows
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES (continued)
Decrease/(increase) in operating assets:
Reverse repurchase agreements with financial institutions
Deposits and placements with banks and other financial institutions Financial assets held-for-trading
Interest income from financial assets held-for-trading Foreign exchange transaction
Loans, advances and financing Other assets Derivative financial instruments Statutory deposits with Bank Negara Malaysia
Amount due from subsidiaries Amount due from jointly controlled entity 20,057 (20,057) 20,057 (20,057)
113,855 (109,758) (62,931) 55,163
16,869 (15,252) 16,869 (15,252)
160
789 160 789
(29,935) (1,463) (30,378)
(161)
(2,808,867) (3,874,313) (1,902,776) (3,119,997)
48,145 (98,483) 27,551 (82,270)
47,457 (56,707) 47,457 (56,707)
(46,050) (144,650) (14,550) (103,150)
-
- 98,257 203,169
(1,440) - - -
Increase/(decrease) in operating liabilities:
Deposits from customers Deposits and placements of banks and other financial institutions
Bills and acceptances payable Recourse obligation on loans sold to Cagamas Berhad
Other liabilities 4,824,546 4,716,092 4,575,911 3,152,393
(743,779) (2,717,589) (1,068,728) (2,315,574)
(62,192) 70,341 (62,192) 70,341
(15,759)
(14,910)
(15,759)
(14,910)
86,746 (21,270) 78,172 (26,869)
Cash generated from/(used in) operations Tax refund Zakat paid Tax paid 2,107,251 (1,749,597) 510 - (7,616) (4,919) (210,386) (128,138) 2,274,363 (1,829,569)
480 - (100)
(182,778)
(113,845)
Net cash generated from/(used in) operating activities
1,889,759 2,092,065 74
(1,882,654) (1,943,514)
statements of cash flows
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiaries Investment in associate Investment in joint controlled entity Interest received:
- financial investments available-for-sale - financial investments held-to-maturity Dividend income:
- financial investments available-for-sale Redemption of financial investments held-to-maturity net of purchase Net purchase of financial investments available-for-sale
Proceeds from disposal of
- property and equipment - foreclosed properties Purchase of property and equipment
Purchase of intangible assets - 30 (150) - -
- 9 30 -
-
202,084 19,984 183,906 23,912 201,936 19,984 183,758
23,912
4,058 (41,497)
(42,036)
3,204
79,820 (911,810)
4,058 43,568
(729,623)
3,204
79,820
(412,881)
7,377 21,961 (17,443)
(1,236) 4,091 21,611 (20,616)
(458) 7,377 21,961 (16,624) (1,236) 3,441
21,371
(19,480)
(458)
153,132 (616,340) (448,560) (117,313)
Proceeds from issuance of shares
Investment in subsidiary
Interest payment on subordinated term loan Increase in subordinated term loan Payment of dividend - - (41,469)
- (242,934) 200,000 - (37,344) 300,000 (208,614)
-
-
(41,469) - (242,934)
200,000
(100,000)
(37,344)
300,000
(208,614)
Net cash (used in)/generated from financing activities (284,403) 254,042 (284,403) 154,042
Net cash generated from/(used in) investing activities CASH FLOWS FROM FINANCING ACTIVITIES
Net increase/(decrease) in cash and cash equivalents Net (decrease)/increase in foreign exchange Cash and cash equivalents at beginning of the financial year 1,758,488 (2,244,952) (5,691) 14,490 7,648,904 9,879,366 1,359,102 (1,906,785)
(5,248) 13,188
3,633,842 5,527,439
CASH AND CASH EQUIVALENTS AT
END OF THE FINANCIAL YEAR (Note 2) 9,401,701 4,987,696 7,648,904 3,633,842
The accounting policies on pages 76 to 93 and the notes on pages 94 to 193 form an integral part of these financial statements.
75
summary of significant
accounting
policies
The following accounting policies have been used consistently in dealing with items which are considered material in relation to the
financial statements. These policies have been consistently applied to all the financial years presented, unless otherwise stated.
(A) BASIS OF PREPARATION
The financial statements of the Group and the Bank have been prepared in accordance with the provisions of the Malaysian
Financial Reporting Standards (‘MFRS’), International Financial Reporting Standards and the requirements of the Companies
Act 1965 in Malaysia. The financial statements incorporate those activities relating to Islamic banking business which have
been undertaken by AFFIN Islamic Bank Berhad, a wholly owned subsidiary of the Bank. Islamic banking business refers
generally to the acceptance of deposits and granting of financing under the Shariah principles.
The financial statements of the Group and the Bank have been prepared under the historical cost convention, unless otherwise
indicated in this summary of significant accounting policies.
The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also
requires Directors to exercise their judgment in the process of applying the Group and Bank’s accounting policies. Although
these estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual results
may differ. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are
significant to the financial statements are disclosed in Note 44.
Standards and amendments to published standards that are effective and applicable to the Group and the Bank
The new accounting standards and amendments to published standards that are effective and applicable to the Group and
the Bank for the financial year beginning 1 January 2013 are as follows:
76
•
MFRS 10 “Consolidated financial statements”
•
MFRS 11 “Joint arrangements”
•
MFRS 12 “Disclosures of interests in other entities”
•
MFRS 13 “Fair value measurement”
•
Revised MFRS 127 “Separate financial statements”
•
Revised MFRS 128 “Investments in associates and joint ventures”
•
MFRS 3 “Business Combinations” (IFRS 3 Business Combinations issued by IASB in March 2004)
•
Amendment to MFRS 7 “Financial instruments: Disclosures – offsetting financial assets and financial liabilities”
•
Amendment to MFRS 101 “Presentations of items of other comprehensive income”
•
Amendment to MFRS 119 “Employee benefits” •
Amendment to MFRS 134 “Interim financial reporting”
•
Amendments to MFRS 10, MFRS 11 and MFRS 12 “Consolidated financial statements, joint arrangements and disclosure
of interests in other entities: Transition Guidance”
summary of significant accounting policies
Standards and amendments to published standards that are effective and applicable to the Group and the Bank
(continued)
•
Annual improvements 2009-2011 Cycle
o MFRS 1 “First-time Adoption of Malaysian Financial Reporting Standards” - Repeated application of MFRS 1 and
borrowing costs
o
MFRS 101 “Presentation of Financial Statements” - Clarification of the requirements for comparative information
o
MFRS 116 “Property, Plant and Equipment” - Classification of servicing equipment
o
MFRS 132 “Financial Instruments: Presentation” - Tax effect of distribution to holders of equity instruments
o
MFRS 134 “Interim Financial Reporting” - Interim financial reporting and segment information for total assets and
liabilities
The adoption of the new accounting standards, amendments and improvements to published standards did not have material
impact on the financial statements of the Group and the Bank.
Standards, amendments to published standards and interpretations to existing standards that are applicable to the
Group and the Bank but not yet effective
The Group and the Bank will apply these standards, amendments to published standards from:
(i) Financial year beginning on/after 1 January 2014
•
Amendment to MFRS 132 “Financial instruments: Presentation” (effective from 1 January 2014) does not change
the current offsetting model in MFRS 132. It clarifies the meaning of ‘currently has a legally enforceable right of setoff’ that the right of set-off must be available today (not contingent on a future event) and legally enforceable for all
counterparties in the normal course of business. It clarifies that some gross settlement mechanisms with features
that are effectively equivalent to net settlement will satisfy the MFRS 132 offsetting criteria.
•
Amendments to MFRS 10, MFRS 12 and MFRS 127 (effective 1 January 2014) introduce an exception to consolidation
of investment entities. Investment entities are entities whose business purpose is to invest funds solely for returns from
capital appreciation, investment income or both and evaluate the performance of its investments on fair value basis.
The amendments require investment entities to measure particular subsidiaries at fair value instead of consolidating
them.
•
Amendment to MFRS 136, ‘Impairment of Assets’ (effective 1 January 2014) clarify that disclosure of recoverable
amount is required for an asset or cash generating unit when an impairment loss has been recognised or reversed
during the period. When the recoverable amount of impaired assets is based on fair value less costs of disposal,
additional information about fair value measurement is required. This amendment removes the unintended
requirement to disclose the recoverable amount for a cash-generating unit (containing goodwill or indefinite lived
intangible assets) when no impairment loss has been recognised or reversed during the period.
77
Standards, amendments to published standards and interpretations to existing standards that are applicable to the
Group and the Bank but not yet effective (continued)
(i) Financial year beginning on/after 1 January 2014 (continued)
•
Amendment to MFRS 139 “Financial Instruments: Recognition and Measurement’ - Novation of Derivatives and
Continuation of Hedge Accounting (effective 1 January 2014) provides relief from discontinuing hedge accounting
in a situation where a derivative (which has been designated as a hedging instrument) is novated to effect clearing
with a central counterparty as a result of laws or regulation, subject to meeting the following criteria - the parties to
the hedging instrument agree that the central counterparty replaces the original counterparty, other changes to the
hedging instrument are limited to those that are necessary to effect replacement of the counterparty.
(ii) Financial year beginning on/after 1 January 2017
•
MFRS 9 “Financial instruments - classification and measurement of financial assets and financial liabilities” (effective
from 1 January 2017) replaces the parts of MFRS 139 that relate to the classification and measurement of financial
instruments. MFRS 9 requires financial assets to be classified into two measurement categories: those measured as
at fair value and those measured at amortised cost. The determination is made at initial recognition. The classification
depends on the entity’s business model for managing its financial instruments and the contractual cash flow
characteristics of the instrument.
For financial liabilities, the standard retains most of the MFRS 139 requirements. The main change is that, in case
where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit
risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting
mismatch.
The financial effect of adoption of MFRS 9 is still being assessed by the Group and the Bank.
The Group and the Bank will apply these standards when effective. The adoption standards, amendments to published
standards and interpretations to existing standards do not have significant impact on the financial statements of the
Group and the Bank except for MFRS 9.
(B)CONSOLIDATION
The consolidated financial statements include the financial statements of the Bank, subsidiaries and a jointly controlled entity,
made up to the end of the financial year.
(i)Subsidiaries
78
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity.
(B)CONSOLIDATION
(i) Subsidiaries (continued)
The Group applies the acquisition method to account for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset
or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
The Group applies predecessor accounting to account for business combinations under common control. Under the
predecessor accounting, assets and liabilities acquired are not restated to their respective fair values but at the carrying
amounts from the consolidated financial statements of the ultimate holding company of the Group and adjusted to ensure
uniform accounting policies of the Group. The difference between any consideration given and the aggregate carrying
amounts of the assets and liabilities (as of the date of the transaction) of the acquired entity is recorded as an adjustment
to retained earnings. No additional goodwill is recognised.
The acquired entity’s results, assets and liabilities are consolidated from the date on which the business combination
between entities under common control occurred. Consequently, the consolidated financial statements do not reflect the
results of the acquired entity for the period before the transaction occurred. The corresponding amounts for the previous
year are not restated.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance
with MFRS 139 either in profit or loss or as a change to other comprehensive income. Contingent consideration that is
classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.
The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiondate fair value of any previous equity interest in the acquiree over the fair value of the identified net assets acquired
is recorded as goodwill. If the total of the consideration, non-controlling interest recognised previously held interest
measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the
difference is recognised directly in the income statement.
Inter-company transactions, balances, income and expenses on transactions between group companies are eliminated.
Profits and losses resulting from intercompany transactions that are recognised in assets are also eliminated. Accounting
policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the
Group.
(ii) Changes in ownership interests in subsidiaries without change of control
Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions –
that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration
paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or
losses on disposals to non-controlling interests are also recorded in equity.
79
(B)CONSOLIDATION
(iii) Disposal of subsidiaries
When the Group ceases to have control any retained interest in the entity is re-measured to its fair value at the date when
control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount
for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In
addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as
if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised
in other comprehensive income are reclassified to profit or loss.
(iv) Jointly controlled entities
The Group’s interest in jointly controlled entities are accounted for in the financial statements by the equity method of
accounting. Under the equity method of accounting, interests in jointly controlled entities are initially recognised at cost
and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses and movements in other
comprehensive income. When the Group’s share of losses in a jointly controlled entities equals or exceeds its interests
in the jointly controlled entities (which includes any long-term interests that, in substance, form part of the Group’s net
investment in the jointly controlled entities), the Group does not recognise further losses, unless it has incurred obligations
or made payments on behalf of the jointly controlled entities.
(C) INVESTMENTS IN SUBSIDIARIES AND JOINTLY CONTROLLED ENTITIES
In the Bank’s separate financial statements, investments in subsidiaries and jointly controlled entities are carried at cost less
accumulated impairment losses. On disposal of investments in subsidiaries and jointly controlled entities, the difference
between disposal proceeds and carrying amounts of the investments are recognised in profit or loss.
(D) INTANGIBLE ASSETS
Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets
at the date of acquisition.
Goodwill on acquisition of subsidiaries are included in the statement of financial position as intangible assets. Goodwill is
tested for impairment annually or more frequently if events or changes in circumstances indicated that the goodwill may be
impaired. The amount retained in the consolidated financial statements is stated at cost less accumulated impairment losses.
Impairment losses on goodwill (inclusive of impairment losses recognised in a previous interim period) are not reversed. Gains
and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units (‘CGU’) for the purpose of impairment testing. The allocation is made to those
CGUs that are expected to benefit from the synergies of the business combination in which goodwill arose identified according
to operating segment.
Computer software
Acquired computer software are capitalised on the basis of the cost incurred to acquire and bring to use the specific software.
These costs are amortised over their estimated useful lives (five years). Computer software classified as intangible asset are
stated at cost less accumulated amortisation and accumulated impairment losses, if any.
80
(E) IMPAIRMENT OF NON-FINANCIAL ASSETS
Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for
impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating
units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment
at each reporting date.
The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged
to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in the income statement unless it
reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.
(F) RECOGNITION OF INTEREST AND FINANCING INCOME AND EXPENSE
Interest and financing income and expense for all interest/profit-bearing financial instruments measured at amortised cost
and interest/profit bearing financial assets as held-for-trading and available-for-sale are recognised within “interest income”,
“interest expense” and “net Islamic banking income” respectively in the income statement using the effective interest/profit
method.
The effective interest/profit method is a method of calculating the amortised cost of a financial asset or a financial liability and
of allocating the interest and financing income or expense over the relevant period. The effective interest/profit rate is the rate
that exactly discounts estimated future cash payments or receipts through the expected life of the financial instruments or,
when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the
effective interest/profit rate, the Group and the Bank take into account all contractual terms of the financial instrument and
includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the effective
interest rate, but not future credit losses.
Interest or income on impaired financial assets is recognised using the rate of interest/profit used to discount the future cash
flows for the purpose of measuring the impairment loss. A financial asset or a group of financial assets is deemed to be
impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the
initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future
cash flows of the financial asset or the group of financial assets that can be reliably estimated.
(G) RECOGNITION OF FEES AND OTHER INCOME
Fees and commissions are recognised as income when all conditions precedent are fulfilled. Commitment fees for loans,
advances and financing that are likely to be drawn down are deferred (together with related direct costs) and income which
forms an integral part of the effective interest rate of a financial instrument is recognised as an adjustment to the effective
interest/profit rate on the financial instrument.
Commitment fees and guarantee fees which are material are recognised as income based on a time apportionment method.
Dividends are recognised when the right to receive payment is established.
81
(H) FINANCIAL ASSETS
All financial assets which include derivative financial instruments have to be recognised in the statement of financial position
and measured in accordance with their assigned category.
The Group and the Bank allocate financial assets in the following MFRS 139 categories:
Loans, advances and financing, financial assets at fair value through profit or loss, financial investments available-for-sale;
and financial investments held-to-maturity. Management determines the classification of its financial instruments at initial
recognition.
Loans, advances and financing are non-derivative financial assets with fixed or determinable payments that are not quoted in
active market.
Loans, advances and financing are initially recognised at fair value which is the cash consideration to originate or purchase the
loan including any transaction costs and measured subsequently at amortised cost using the effective interest rate method,
less impairment allowance.
An uncollectible loan, advance and financing or portion of a loan, advance and financing classified as bad is written off
after taking into consideration the realisable value of collateral, if any, when in the judgment of the management, there is no
prospect of recovery.
At each reporting date, the Group and the Bank assess whether there is objective evidence that a loan or group of loans
is impaired. A loan or a group of loans is impaired and impairment losses are incurred only if there is objective evidence of
impairment as a result of one or more events that occurred after the initial recognition of the loan (a ‘loss event’) and that loss
event (or events) has an impact on the estimated future cash flows of the loan or group of loans that can be reliably estimated.
The criteria that the Group and the Bank use to determine that there is objective evidence of an impairment loss include
among others:
•
•
•
•
past due contractual payments;
significant financial difficulties of borrower;
probability of bankruptcy or other financial re-organisation; and
default of related borrower.
The estimated period between a loss occurring and its identification for credit cards is six months and for all other loans are
twelve months.
The Group and the Bank first assess whether objective evidence of impairment exists individually for loans that are individually
significant, and individually or collectively for loans that are not individually significant. If the Group and the Bank determine
that no objective evidence of impairment exists for an individually assessed loan, whether significant or not, it includes the
loan in a group of loans with similar credit risk characteristics and collectively assesses them for impairment. Loans that are
individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a
collective assessment of impairment. Loans that are individually assessed for impairment and for which no impairment loss is
required (over collateralised loans) are collectively assessed as a separate segment.
The amount of the loss is measured as the difference between the loan’s carrying amount and the present value of estimated
future cash flows (excluding future credit losses that have not been incurred) discounted at the loan’s original effective interest
rate. The carrying amount of the loan is reduced through the use of an allowance account and the amount of the loss is
recognised in the income statement. If a loan has a variable interest rate, the discount rate for measuring any impairment loss
is the current effective interest rate determined under the contract.
82
Loans, advances and financing (continued)
For the purposes of a collective evaluation of impairment, loans are grouped on the basis of similar credit risk characteristics.
Those characteristics are relevant to the estimation of future cash flows for groups of such loans by being indicative of the
borrowers’ ability to pay all amounts due according to the contractual terms of the loans being evaluated.
Future cash flows in a group of loans that are collectively evaluated for impairment are estimated on the basis of the contractual
cash flows of the loans in the Bank and historical loss experience for loans with credit risk characteristics similar to those in the
Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions
that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the
historical period that do not currently exist.
Estimates of changes in future cash flows for groups of loans should reflect and be directionally consistent with changes
in related observable data from period to period (for example, changes in unemployment rates, property prices, payment
status, or other factors indicative of changes in the probability of losses in the Group and the Bank and their magnitude). The
methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group and the Bank to
reduce any differences between loss estimates and actual loss experience.
Rescheduled and restructured loans
Where a loan shows evidence of credit weaknesses, the Group and the Bank may seek to renegotiate the loan rather than to
take possession of collateral. This may involve an extension of the payment arrangements via rescheduling or the renegotiation
of new loan terms and conditions via restructuring. Management monitors the renegotiated loan to ensure that all the revised
terms are met and that the repayments are made promptly for a continuous period. Where an impaired loan is renegotiated,
the borrower must adhere to the revised and/or restructured repayment terms for a continuous period of six months before the
loan is classified as non-impaired. These loans continue to be subjected to individual or collective impairment assessment.
Financial assets at fair value through profit or loss
This category comprises two sub-categories: financial assets classified as held-for-trading and financial assets designated by
the Group and the Bank as at fair value through profit or loss upon initial recognition.
A financial asset is classified as held-for-trading if it is acquired or incurred principally for the purpose of selling or repurchasing
it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there
is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held-for-trading unless
they are designated and effective as hedging instruments. Derivatives are recognised in the statement of financial position as
‘Derivative financial assets’ when their fair values are positive. Financial assets held-for-trading consist of debt instruments,
including money-market paper, traded corporate and bank loans, and equity instruments, as well as financial assets with
embedded derivatives. They are recognised in the statement of financial position as ‘Financial assets held-for-trading’.
The calculation of the present value of the estimated future cash flows of a collateralised loan reflects the cash flows that may
result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.
83
Financial assets at fair value through profit or loss (continued)
Financial instruments included in this category are recognised initially at fair value; transaction costs are taken directly to the
income statement. Financial assets at fair value through profit or loss are subsequently carried at fair value. Changes in fair
values including the effects of currency translation, interest and dividend income are recognised in the income statement in
the period in which the changes arise.
The Group and the Bank may designate certain financial assets upon initial recognition as at fair value through profit or loss
(fair value option). This designation cannot subsequently be changed. The fair value option is only applied when the following
conditions are met:
•
the application of the fair value option reduces or eliminates an accounting mismatch that would otherwise arise; or
•
the financial assets are part of a portfolio of financial instruments which is risk managed and reported to senior management
on a fair value basis; or
•
the financial assets consists of debt host and an embedded derivatives that must be separated.
Financial assets for which the fair value option is applied are recognised in the statement of financial position as ‘Financial
assets designated at fair value’. Fair value changes relating to financial assets designated at fair value through profit or loss
are recognised in the income statement.
The Group and the Bank may choose to reclassify a non-derivative financial assets held-for-trading out of this category where:
•
in rare circumstances, it is no longer held for the purpose of selling or repurchasing in the near term; or
•
it is no longer held for purpose of trading, it would have met the definition of a loan and receivable on initial classification
and the Group and the Bank have the intention and ability to hold it for the foreseeable future or until maturity.
Financial investments available-for-sale are non-derivative financial assets that are either designated in this category or not
classified as loans and receivables, held-for-trading or held-to-maturity investments.
Financial instruments available-for-sale are initially recognised at fair value plus transaction costs and subsequently measured
at fair value.
Investments in equity instruments where there is no quoted market price in an active market and whose fair value cannot be
reliably measured, will be stated at cost.
Any gains or losses arising from the change in fair value adjustments are recognised directly in statement of comprehensive
income except for impairment losses and foreign exchange gains or losses. When the financial asset is derecognised, the
cumulative gains or loss previously recognised in statement of comprehensive income shall be transferred to the income
statement.
A financial investments available-for-sale that would have met the definition of loans and receivables may only be transferred
from the available-for-sale classification where the Group and the Bank have the intention and the ability to hold the asset for
the foreseeable future or until maturity.
84
Financial investments available-for-sale (continued)
Impairment of financial investments available-for-sale is assessed when there is an objective evidence of impairment.
Cumulative unrealised losses that had been recognised directly in equity shall be removed and recognised in income
statement even though the securities have not been de-recognised. Impairment loss in addition to the above unrealised
losses is also recognised in the income statement. Subsequent reversal of impairment on debt instrument in the income
statement is allowed when the decrease in impairment can be related objectively to an event occurring after the impairment
was recognised.
For debt securities, the Group set the criteria similar to assets carried at amortised cost.
In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the
security below its cost is objective evidence of impairment resulting in the recognition of an impairment loss. Impairment
losses recognised in the income statement on equity instruments shall not be reversed.
Financial investments held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed
maturity that the Group and the Bank have the positive intention and ability to hold to maturity.
Financial investments held-to-maturity are initially recognised at fair value plus transaction costs, and subsequently measured
at amortised cost using the effective interest method.
Financial investments held-to-maturity are measured at amortised cost using the effective interest method. Gains or losses
are recognised in income statement when the securities are derecognised or impaired and through the amortisation process.
If, as a result of a change in intention or ability, it is no longer appropriate to classify a financial investment as held-to-maturity,
the Group and the Bank shall reclassify the investment as available-for-sale and remeasured at fair value, and the difference
between its carrying amount and fair value shall be recognised in other comprehensive income, except for impairment losses
and foreign exchange gains and losses.
Any sale or reclassification of a significant amount of financial investments held-to-maturity before maturity during the
current financial year or last two preceding financial years will “taint” the entire category and result in the remaining financial
investments held-to-maturity being reclassified to available-for-sale except for sales or reclassification that:
•
are so close to maturity or call date that changes in the market rate of interest would not have significant effect on the
financial asset’s fair value; or
•
occur after the Group and the Bank have collected substantially all of the financial asset’s original principal; or
•
are attributable to an isolated event that is beyond the Group and the Bank’s control are non-recurring and could not have
been reasonably anticipated by the Group and the Bank.
Impairment of financial investments held-to-maturity is assessed when there is an objective evidence of impairment. The
impairment loss is measured as the difference between the financial investments’ carrying amount and the present value of
estimated future cash flows discounted at the financial investments’ original effective interest rate. Subsequent reversal of
impairment is allowed in the event of an objective decrease in impairment. Recognition of impairment losses and its reversal
is made through the income statement.
85
Recognition
The Group and the Bank use settlement date accounting for regular way contracts when recording financial asset transactions.
Financial assets that are transferred to a third party but do not qualify for derecognition are presented in the statement of
financial position as ‘Assets pledged as collateral’, if the transferee has the right to sell or repledge them.
De-recognition
Financial assets are de-recognised when the contractual rights to receive the cash flows from these assets have ceased
to exist or the assets have been transferred and substantially all the risks and rewards of ownership of the assets are also
transferred (that is, if substantially all the risks and rewards have not been transferred, the Group and the Bank tests control
to ensure that continuing involvement on the basis of any retained powers of control does not prevent de-recognition).
(I) FINANCIAL LIABILITIES
All financial liabilities which include derivative financial instruments have to be recognised in the statement of financial position
and measured in accordance with their assigned category.
The Group and the Bank’s holding in financial liabilities are in financial liabilities at fair value through profit or loss (including
financial liabilities held-for-trading and those that designated at fair value) and financial liabilities at amortised cost. Financial
liabilities are de-recognised when extinguished.
Financial liabilities at fair value through profit or loss
This category comprises two sub-categories: financial liabilities classified as held-for-trading, and financial liabilities designated
by the Group and the Bank as at fair value through profit or loss upon initial recognition.
A financial liability is classified as held-for-trading if it is acquired or incurred principally for the purpose of selling or repurchasing
it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there
is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held-for-trading unless
they are designated and effective as hedging instruments. Derivatives are recognised in the statement of financial position as
‘Derivative financial liabilities’ when their fair values are negative.
Gains and losses arising from changes in fair value of financial liabilities classified held-for-trading are included in the income
statement.
Other liabilities measured at amortised cost
Financial liabilities that are not classified as at fair value through profit or loss fall into this category and are measured at
amortised cost. All the financial liabilities except for derivative financial liabilities of the Group and the Bank are measured at
amortised cost.
De-recognition
86
Financial liabilities are de-recognised when they have been redeemed or otherwise extinguished.
(J) OFFSETTING FINANCIAL INSTRUMENTS
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is a
legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the assets
and settle the liability simultaneously.
(K) PROPERTY AND EQUIPMENT AND DEPRECIATION
Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is de-recognised. All other repairs and maintenance are charged
to the income statement during the financial period in which they are incurred.
Freehold land is not depreciated as it has an infinite life. Other property and equipment are depreciated on the straight-line
basis to write off the cost of the assets or their revalued amounts, to their residual values over their estimated useful lives,
summarised as follows:
Buildings Leasehold buildings Renovation and leasehold premises Office equipment and furniture Computer equipment and software
Motor vehicles Depreciation on capital work in progress commences when the assets are ready for their intended use.
Residual value and useful lives of assets are reviewed, and adjusted if appropriate, at each reporting date.
Gains and losses on disposal are determined by comparing proceeds with carrying amount and are recognised within other
operating income in the income statement.
50 years
50 years or over the remaining lease period, whichever is shorter
5 years or the period of the lease whichever is greater
10 years
5 years
5 years
At each reporting date, the Group assesses whether there is any indication of impairment. If such indications exist, an analysis
is performed to assess whether the carrying amount of the asset is recoverable. A write down is made if the carrying amount
exceeds the recoverable amount. Any subsequent increase in the recoverable amount is recognised in the income statement
(refer to accounting policy E on impairment of non-financial assets).
(L)LEASES
Accounting by lessee
Finance leases
Leases of property and equipment where the Group assumes substantially all the benefits and risks of ownership are classified
as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased
property and the present value of the minimum lease payments.
87
(L)LEASES
Accounting by lessee (continued)
Finance leases (continued)
Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate on the
finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The
interest element of the finance charge is charged to the income statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. Property and equipment acquired under
finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term.
Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to the carrying amount of
the leased assets and recognised as an expense in income statement over the lease term on the same basis as the lease
expense.
Operating leases
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the
income statement on the straight-line basis over the lease period.
Initial direct costs incurred by the Group in negotiating and arranging operating leases are recognised in income statement
when incurred.
Accounting by lessor
Finance leases
When assets are leased out under a finance lease, the present value of the lease payments is recognised as a receivable. The
difference between the gross receivable and the present value of the receivable is recognised as unearned finance income.
Lease income is recognised over the term of the lease using the net investment method so as to reflect a constant periodic
rate of return.
Operating leases
When assets are leased out under an operating lease, the asset is included in the statement of financial position based on the
nature of the asset. Lease income is recognised over the term of the lease on a straight-line basis.
(M) FOREIGN CURRENCY TRANSLATIONS
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary
economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are
presented in Ringgit Malaysia, which is the Group and the Bank’s functional and presentation currency.
88
(M) FOREIGN CURRENCY TRANSLATIONS
Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchanges rate prevailing at the dates
of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in
the income statement, except when deferred in equity as qualifying cash flow hedges and qualifying net investment hedges.
Changes in the fair value of monetary financial assets denominated in foreign currency classified as available-for-sale are
analysed between translation differences resulting from changes in the amortised cost of the financial asset and other changes
in the carrying amount of the financial asset. Translation differences related to changes in the amortised cost are recognised
in income statement, and other changes in the carrying amount are recognised in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit and
loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as
equities classified as available-for-sale are included in the fair value reserve in other comprehensive income.
(N) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING
Derivatives are initially recognised at fair values on the date on which derivative contracts are entered into and are subsequently
remeasured at their fair values. Fair values are obtained from quoted market prices in active markets, including recent market
transactions, and valuation techniques, including discounted cash flow models and option pricing models, as appropriate. All
derivatives are carried as assets when fair values are positive and as liabilities when fair values are negative.
The best evidence of fair value of a derivative at initial recognition is the transaction price (i.e the fair value of the consideration
given or received) unless fair value of the instrument is evidenced by comparison with other observable current market
transactions in the same instrument (i.e without modification or repackaging) or based on a valuation technique whose
variables include only data from observable markets.
The method of recognising the resulting fair value gain or loss depends on whether the derivative is designated as a hedging
instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either: (1) hedges of
the fair value of recognised assets or liabilities or firm commitments (fair value hedge); or (2) hedges of highly probable future
cash flows attributable to a recognised asset or liability, or a forecasted transaction (cash flow hedge). Hedge accounting is
used for designated derivatives in this way provided certain criterias are met.
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as
well as its risk management objective and strategy for undertaking various hedge transactions. The Group also documents its
assessment, both at hedge inception and an on-going basis, of whether the derivatives that are used in hedging transactions
are highly effective in offsetting changes in fair values or cash flows of hedged items.
Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the income
statement, together with any changes in the fair value of the hedged assets or liabilities that are attributable to the hedged risk.
If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for
which the effective interest method is used, is amortised to income statement over the period to maturity. The adjustment to
the carrying amount of a hedged equity security remains in retained earnings until the disposal of the equity security.
89
(N) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING
Cash flow hedge
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are
recognised in other comprehensive income. The gain and loss relating to the ineffective portion is recognised immediately in
the income statement.
Amounts accumulated in other comprehensive income are recycled to the income statement in the periods in which the
hedged item will affect income statement (for example, when the forecast sale that is hedged take place).
When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative gain or loss existing at that time remains in other comprehensive income and is recognised when the forecast
transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the
cumulative gain or loss that was reported in other comprehensive income is immediately transferred to the income statement.
Derivatives that do not qualify for hedge accounting
Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of any derivative instrument that
does not qualify for hedge accounting are recognised immediately in the income statement.
Gains and losses on interest rate swaps, futures, forward and option contracts that qualify as hedges are deferred and
amortised over the life of hedged assets or liabilities as adjustments to interest income or interest expense. Gains and losses
on interest rate swaps, futures, forward and option contracts that do not qualify as hedges are recognised in the current
financial year using the mark-to-market method and are included in the income statement.
(O) CURRENT AND DEFERRED INCOME TAXES
Current tax
The tax expense for the period comprises current and deferred tax. Tax is recognised in income statement, except to the
extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also
recognised in other comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period where the Group’s subsidiaries and branch operate and generate taxable income.
Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation
is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax
authorities. This liability is measured using the single best estimate of the most likely outcome.
Deferred tax
Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed
to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax is not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that
at the time of the transaction affects neither accounting nor taxable profit or loss.
90
(O) CURRENT AND DEFERRED INCOME TAXES
Deferred tax (continued)
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences or unused tax losses can be utilised.
Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the end of the
reporting date and are expected to apply when the related deferred tax assets is realised or the deferred tax liability is settled.
Deferred tax is recognised on temporary differences arising on investment in subsidiaries and jointly controlled entity except
where the timing of the reversal of the temporary difference can be controlled by the Group and it is possible that the
temporary difference will not reverse in the foreseeable future.
Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets
against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same taxation
authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on net basis.
(P)ZAKAT
Zakat represents business zakat payable by the Group to comply with the principles of Shariah and as approved by the
Shariah Committee. The Bank’s subsidiary, AFFIN Islamic Bank Berhad only pays zakat on its business and does not pay
zakat on behalf of depositors. Zakat provision is calculated based on 2.5775% of the prior year’s net asset method.
(Q) CASH AND CASH EQUIVALENTS
Cash and cash equivalents consists of cash in hand, bank balances and deposits and placements maturing within one month
which are held for the purpose of meeting short term commitments and are readily convertible to cash without significant risk
of changes in value.
(R) FORECLOSED PROPERTIES
Foreclosed properties are stated at the lower of cost and net realisable value.
(S) CONTINGENT LIABILITIES AND CONTINGENT ASSETS
The Group and the Bank do not recognise a contingent liability but disclose its existence in the financial statements. A
contingent liability is possible obligation that arises from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the control of the Group and the Bank or a present obligation
that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A
contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot
be measured reliably. However, contingent liabilities do not include financial guarantee contracts.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or
non-occurrence of one or more uncertain future events beyond the control of the Group and the Bank. The Group and the
Bank does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but
not virtually certain.
91
(T ) BILLS AND ACCEPTANCES PAYABLE
Bills and acceptances payable represent the Bank’s own bills and acceptances rediscounted and outstanding in the market.
(U) OTHER PROVISIONS
Provisions are recognised by the Group and the Bank when all of the following conditions have been met:
•
the Group and the Bank has a present legal or constructive obligation as a result of past events;
•
it is probable that an outflow of resources to settle the obligation will be required; and
•
a reliable estimate of the amount of obligation can be made.
Where the Group and the Bank expect a provision to be reimbursed (for example, under an insurance contract), the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not
recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to
any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a
pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to passage of time is recognised as finance cost expense.
(V) EMPLOYEE BENEFITS
Short-term employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the
associated services are rendered by employees of the Group.
Defined contribution plan
The defined contribution plan is a pension plan under which the Group pays fixed contributions to the National Pension
Scheme, the Employees’ Provident Fund (‘EPF’) and will have no legal or constructive obligations to pay further contributions
if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior
periods.
The Group’s contribution to defined contribution plans are charged to the income statement in the period to which they relate.
Once the contributions have been paid, the Group has no further payment obligations.
Termination benefits
Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or
whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination
benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed
formal plan without any possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage
voluntary redundancy.
92
(W) FINANCIAL GUARANTEE CONTRACTS
Financial guarantee contracts are contracts that require the Group or Bank to make specified payments to reimburse the
holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt
instrument. Such financial guarantees are given to financial institutions and other bodies on behalf of customers to secure
loans, overdrafts and other banking facilities.
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The fair value of a
financial guarantee at the time of signature is zero because all guarantees are agreed on arm’s length terms and the value of
the premium agreed corresponds to the value of the guarantee obligation. No receivable for the future premiums is recognised.
The liability is subsequently recognised at the higher of the amount determined in accordance with MFRS 137 “Provisions,
contingent liabilities and contingent assets” and the amount initially recognised less cumulative amortisation, where
appropriate.
The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the
contractual payments under the debt instrument and the payments that would be required without the guarantee, or the
estimated amount that would be payable to a third party for assuming the obligations.
Where financial guarantees in relation to loans or payables of subsidiaries are provided by the Group for no compensation,
the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries.
(X) SALE AND REPURCHASE AGREEMENTS
Securities purchased under resale agreements are securities which the Group and the Bank have purchased with a commitment
to resell at future dates. The commitment to resell the securities is reflected as an asset on the statements of financial position.
Conversely, obligations on securities sold under repurchase agreements are securities which the Group and the Bank have
sold from its portfolio, with a commitment to repurchase at future dates. Such financing and the obligation to repurchase the
securities is reflected as a liability on the statement of financial position.
The difference between sale and repurchase price as well as purchase and resale price are amortised as interest income and
interest expense respectively on an effective yield method.
(Y) PROFIT EQUALISATION RESERVE (‘PER’)
AFFIN Islamic Bank Berhad (‘AFFIN Islamic’) a wholly owned and subsidiary of the Bank has adopted the revised Guidelines
on PER and has apply in managing the Displaced Commercial Risk (‘DCR’) in accordance with Shariah principles. The PER is
for Mudharabah accounts/deposit products.
Under the PER Guidelines, the release of PER shall be appropriated from both Investment Account Holder (‘IAH’) and AFFIN
Islamic’s portion based on the contractual profit sharing ratio at the point of utilisation. The amount of PER shall be limited to
the maximum of the either PER of the IAH or AFFIN Islamic depending on prevailing profit sharing ratio.
The IAH portion of the existing PER shall be classified as a liability and is recognised at cost. Subsequent apportionments will
be recognised in the income statement. The eventual distribution of PER as profit distributable to the IAH will be treated as
an outflow of funds due to the settlement of the obligation to the IAH.
The PER of the AFFIN Islamic shall be classified as a separate reserve in equity and subsequent apportionments from and
distributions to retained earnings will be treated as a transfer between reserves.
93
notes to the
financial
statements
1
GENERAL INFORMATION
The Bank is principally engaged in all aspects of banking and related financial services. The principal activities of the Bank’s
subsidiaries are Islamic banking business, property management services, nominee and trustee services. There have been
no significant changes in these principal activities during the financial year.
The number of employees in the Group and the Bank as at 31 December 2013 was 3,417 (2012: 3,342) and 3,187 (2012:
3,122) employees respectively.
The holding company of the Bank is AFFIN Holdings Berhad, a public listed company incorporated in Malaysia and the
ultimate holding corporate body is Lembaga Tabung Angkatan Tentera, a statutory body incorporated under the Tabung
Angkatan Tentera Act, 1973.
The Bank is a limited liability company, incorporated and domiciled in Malaysia.
2
CASH AND SHORT-TERM FUNDS
3
94
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Cash and bank balances with banks
and other financial institutions Money at call and deposit placements
maturing within one month 207,501 215,228 202,529 210,501
9,194,200 7,433,676 4,785,167 3,423,341
9,401,701 7,648,904 4,987,696 3,633,842
DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS
The Group 2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Licensed banks Licensed investment banks Bank Negara Malaysia
359,040 123,557 - 286,920 209,524 100,008 983,199 123,557 -
834,301
209,524
-
482,597 596,452 1,106,756 1,043,825
notes to the financial statements
4
5
FINANCIAL ASSETS HELD-FOR-TRADING
2013 2012
RM’000 RM’000
At fair value
Bank Negara Malaysia Monetary Notes Negotiable Instruments of Deposit Private debt securities in Malaysia 149,544 - - - 150,276 15,316 149,544 - - 150,276
15,316
149,544 165,592 149,544 165,592
DERIVATIVE FINANCIAL ASSETS
The Group and The Bank The Group and The Bank
2013 2012
Contract/ Contract/
notional notional
amount Assets amount Assets
RM’000 RM’000 RM’000 RM’000
At fair value
Foreign exchange derivatives:
Currency forwards Cross currency swaps 312,991 1,230,649 6,979 19,660 601,636 1,871,775 9,504
37,661
Interest rate derivatives:
Interest rate swaps 1,920,713 29,635 788,622 21,707
3,464,353 56,274 3,262,033 68,872
By maturity structure of positive fair value
The Group and The Bank
2013 2012
RM’000RM’000
Maturing within one year
One year to three years
Three years to five years Over five years 28,717 7,320 5,597 14,640 43,345
12,848
4,427
8,252 56,274 68,872
95
6
FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE
At fair value
Malaysian Government securities Malaysian Government investment issues Sukuk Perumahan Kerajaan Bank Negara Malaysia Monetary Notes Negotiable Instruments of Deposit and
Islamic Debt Certificates
Bankers’ acceptances and Islamic
accepted bills Khazanah Bonds/Sukuk Quoted securities:
Shares in Malaysia Private debt securities in Malaysia The Group 2013 2012 RM’000 RM’000 1,759,211
337,661
629,674
The Bank
2013 2012
RM’000 RM’000
5,070 1,879,076 120,550 884,069 - 1,142,371 269,361 571,160 5,070
1,004,366
120,550
517,015
882,314 752,059 882,314 752,059
196,522 237,441 163,751 193,746 196,522 207,756 163,751
157,556
4,042,823 3,998,321 3,269,484 2,720,367
13,604 2,167 17,736 4,173 13,122 2,167 12,806
4,173
Unquoted securities:
Shares in Malaysia Private debt securities
- in Malaysia - outside Malaysia 148,155 135,595 148,086 135,526
2,947,839 504,721 3,067,124 465,736 2,438,124 504,721 2,365,334
465,736
7,659,309 7,688,685 6,375,704 5,703,942
(44,772) (48,031) (44,290) (45,781)
7,614,537 7,640,654 6,331,414 5,658,161
At beginning of the financial year
Allowance made during the year
Written-off of allowance for impairment loss
Transfer from financial investments held-to-maturity Transfer to subsidiary 48,031 499 (3,758)
- -
28,335 812
(9,900) 28,784 -
45,781 499 (1,990) -
- 21,591
812
(4,924)
28,784
(482)
At end of the financial year
44,772 48,031 44,290 45,781
Allowance for impairment of securities Movement in allowance for financial investments
available-for-sale
96
7
FINANCIAL INVESTMENTS HELD-TO-MATURITY
2013 2012
RM’000 RM’000
At amortised cost
Quoted securities:
Private debt securities in Malaysia 31,781 31,781 31,781 31,781
Unquoted securities:
Private debt securities in Malaysia 524,919 482,037 439,854 482,037
Allowance for impairment of securities 556,700 (56,364) 513,818 (62,148) 471,635 (56,364) 513,818
(62,148)
500,336 451,670 415,271 451,670
At beginning of the financial year Allowance made during the year Written-off of allowance for impairment loss
Transfer to financial investments available-for-sale 62,148 - (5,784)
-
87,584 9,590 (6,242) (28,784)
62,148 - (5,784) -
87,584
9,590
(6,242)
(28,784)
At end of the financial year 56,364 62,148 56,364 62,148
Movement in allowance for financial investments
held-to-maturity
97
8
LOANS, ADVANCES AND FINANCING
(i)
By type
The Group 2013 2012 RM’000 RM’000 Overdrafts Term loans/financing
- Housing loans/financing
- Hire purchase receivables - Syndicated financing - Business term loans/financing Bills receivables
Trust receipts Claims on customers under
acceptances credits Staff loans/financing (of which
RM Nil to Directors) Credit/charge cards Revolving credits Factoring 1,752,882 5,510,534
10,524,044
1,520,412
12,540,363
318,677
435,591
1,569,936 1,647,184
5,176,283 3,797,843 9,595,286 8,728,354 1,410,697 1,252,340 11,198,302 10,929,608 452,075 286,417 435,425 409,889 3,664,322
8,157,056
1,150,704
9,740,164
451,685
406,979
986,666 138,769
82,137
2,934,652
7,073
1,834,204 The Bank
2013 2012
RM’000 RM’000
1,040,695 919,192 907,118
143,138 85,258 2,640,078 4,186 127,888 82,137 2,523,945 7,073 132,239
85,258
2,455,344
4,186
Gross loans, advances and financing Less:
Allowance for impairment
- Individual
- Collective
36,751,800 34,015,627 30,634,622 28,802,239
Total net loans, advances and financing 36,227,785 33,482,626 30,178,910 28,339,269
(223,701)
(300,314)
(210,372) (322,629)
(189,117) (266,595) (175,277)
(287,693)
- Included in term loans are housing loans sold to Cagamas Berhad with recourse amounting to RM397,790,000 (2012:
RM413,549,000).
- Included in Group’s business term loans/financing as at reporting date is RM47.4 million (2012: RM35.2 million) of term
financing disbursed by AFFIN Islamic Bank Bhd to jointly controlled entity, AFFIN-i Nadayu Sdn Bhd.
98
8
(ii)
By maturity structure
The Group 2013 2012 RM’000 RM’000 7,094,994
3,776,830
7,027,289
16,116,514
The Bank
2013 2012
RM’000 RM’000
Maturing within one year One year to three years Three years to five years Over five years 7,183,104
4,955,354
6,498,822
18,114,520
6,433,997
4,394,607
5,727,883
14,078,135
6,529,283
3,422,247
6,256,576
12,594,133
36,751,800 34,015,627 30,634,622 28,802,239
(iii) By type of customer
2013 2012
RM’000 RM’000
Domestic banking institutions Domestic non-banking institutions
- Stockbroking companies - Others Domestic business enterprises
- Small medium enterprises - Others Government and statutory bodies Individuals Other domestic entities Foreign entities - 1,335 - 1,335
241 1,622,525 253 1,702,223 241 1,449,099 253
1,392,164
5,900,985 5,159,162 5,421,258 4,731,171
13,234,095 12,236,170 11,649,365 10,909,570
162,591 117,523 108,756 95,861
14,939,353 13,980,454 11,475,917 11,064,103
251,166 128,982 8,567 43,256
640,844 689,525 521,419 564,526
36,751,800 34,015,627 30,634,622 28,802,239
(iv) By interest/profit rate sensitivity
2013 2012
RM’000 RM’000
Fixed rate
- Housing loans/financing
- Hire purchase receivables - Other fixed rate loans/financing Variable rate
- BLR plus - Cost plus
14,098,831 13,680,021 11,458,345 11,284,216
7,640,703 6,195,338 6,653,607 5,561,093
36,751,800
309,977 10,524,043 4,178,246 306,969 9,595,286 4,238,013 237,886 8,728,354 3,556,430 223,958
8,157,056
3,575,916
34,015,627 30,634,622 28,802,239
99
8
(v)
By economic sectors
2013 2012
RM’000 RM’000
Primary agriculture Mining and quarrying Manufacturing
Electricity, gas and water supply Construction Real estate Wholesale & retail trade and restaurants & hotels Transport, storage and communication Finance, insurance and business services Education, health and others Household Others
478,281 541,309 470,268 456,231
649,621 473,549 648,488 472,737
2,516,273 2,652,586 2,297,207 2,431,936
290,994 465,812 253,405 442,841
3,277,346 2,996,080 2,772,575 2,565,423
4,623,807 3,710,269 4,192,630 3,300,797
2,140,392 1,772,302 1,993,533 1,635,026
1,965,627 1,684,162 1,858,700 1,667,015
4,360,854 4,198,676 3,837,340 3,711,166
1,358,801 1,326,793 711,807 866,577
15,082,264 14,123,648 11,593,915 11,183,065
7,540 70,441 4,754 69,425
36,751,800 34,015,627 30,634,622 28,802,239
(vi) By economic purpose
2013 2012
RM’000 RM’000
Purchase of securities Purchase of transport vehicles Purchase of landed property of which:
- Residential
- Non-residential Fixed assets other than land and building Personal use Credit card Consumer durable Construction Merger and acquisition Working capital Others
326,463 111,002 11,232,452 10,032,763 36,751,800 34,015,627 30,634,622 28,802,239
100 AFFIN BANK BERHAD (25046-T) Annual Report 2013
5,948,524 5,009,095 238,059 933,727 82,137 868 1,996,832 312,667 9,945,383 725,593 5,170,831 4,738,255 330,383 956,755 85,258 860 2,068,031 419,051 9,537,743 564,695 326,450 9,438,264 110,968
8,594,582
4,219,088 4,161,066 158,411 899,671 82,137 860 1,417,340 312,667 8,928,713 689,955 3,569,346
3,872,481
264,500
916,901
85,258
843
1,853,956
419,051
8,556,715
557,638
8
(vii) By geographical distribution
2013 2012
RM’000 RM’000
Perlis
Kedah Pulau Pinang Perak Selangor Wilayah Persekutuan Negeri Sembilan Melaka Johor Pahang Terengganu Kelantan Sarawak Sabah Labuan Outside Malaysia 85,125 84,463 1,088,305 1,051,167 1,825,875 1,665,271 1,163,213 1,037,353 11,281,264 10,829,556 10,529,110 9,614,422 813,316 754,375 869,233 767,272 3,207,965 2,815,016 755,143 679,379 989,295 844,224 244,022 243,555 1,117,347 995,737 1,692,677 1,533,859 553,770 187,347 536,140 912,631 33,470 754,925 1,698,009 848,478 9,140,199 8,901,544 676,394 782,055 2,946,869 504,854 609,267 49,906 1,088,646 1,604,644 553,682 441,680 75,126
775,217
1,574,914
787,392
8,975,233
8,196,935
656,033
711,588
2,633,855
429,283
490,010
47,809
968,982
1,480,515
187,340
812,007
36,751,800 34,015,627 30,634,622 28,802,239
(viii) Movements of impaired loans
2013 2012
RM’000 RM’000
At beginning of the financial year Classified as impaired Reclassified as non-impaired Amount recovered Amount written-off 753,194 432,629 (298,268)
(130,527)
(50,843) 865,662 535,712 (375,518) (123,546) (149,116)
623,403 363,583 (252,304) (110,745)
(49,382)
693,318
468,672
(295,513)
(102,162)
(140,912)
1.92%
2.21%
1.88%
Ratio of gross impaired loans, advances and
financing to gross loans, advances and financing
2.16%
Annual Report 2013 AFFIN BANK BERHAD (25046-T) 101
8
(ix) Movements in allowance for impairment on loans, advances and financing
2013 2012
RM’000 RM’000
At beginning of the financial year Provision for loan impairment Amount recovered Amount written-off Unwinding of discount of allowance Exchange differences 210,372 47,903 (4,031) (12,974) (17,825) 256 168,257 72,213 (2,716) (13,362) (14,020) - 175,277 47,213 (3,598)
(12,974) (16,780) (21) 133,329
69,391
(2,546)
(13,362)
(11,535)
-
223,701 210,372 189,117 175,277
At beginning of the financial year Provision for loan impairment Amount written-off
322,629 15,253 (37,568) 451,599 6,672 (135,642) 287,693 15,011 (36,109) 390,890
24,242
(127,439)
Individual impairment
Collective impairment
(x)
Impaired loans by economic sectors
2013 2012
RM’000 RM’000
Primary agriculture
Mining and quarrying
Manufacturing Electricity, gas and water supply
Construction Real estate Wholesale & retail trade and restaurants & hotels
Transport, storage and communication Finance, insurance and business services Education, health and others Household Others
6,335 -
40,414 118 193,447 190 31,222 9,542 60,065 1,868 362,984 - 7,482 62 50,795 1,641 180,667 3,797 27,246 7,212 63,880 4,107 399,019 7,286 6,222 - 18,373 118 127,471 190 29,213 9,477 59,483 1,868 322,140 -
7,482
29,916
1,641
114,475
3,797
23,746
7,155
63,114
4,107
360,787
7,183
706,185 753,194 574,555 623,403
8
(xi) Impaired loans by economic purpose
The Group 2013 2012 RM’000 RM’000 Purchase of securities Purchase of transport vehicles Purchase of landed property of which:
- Residential - Non-residential Fixed assets other than land and building Personal use Credit card Consumer durable
Construction Working capital
Others 11,641 75,350 13,678 54,781 272,103 23,707 282 7,937 476 14 65,797 234,766 14,112 329,360
26,575
5,063
6,738
508
29
61,437
243,861
11,164
706,185 The Bank
2013 2012
RM’000 RM’000
11,641 66,780 13,678
48,702
241,357 21,762 282 7,742 476 14 141 210,248 14,112 297,245
26,015
5,063
6,738
508
29
141
214,224
11,060
753,194 574,555 623,403
(xii) Impaired loans by geographical distribution
2013 2012
RM’000 RM’000
Perlis Kedah Pulau Pinang Perak
Selangor Wilayah Persekutuan Negeri Sembilan Melaka Johor Pahang Terengganu Kelantan Sarawak
Sabah Labuan
Outside Malaysia 472 23,005 18,781 14,081 318,270 117,805 28,827 8,368 46,552 12,038 5,465 4,124 6,290 11,298 - 90,809 138 24,622 18,684 20,754 344,927 142,238 31,248 7,452 52,426 10,058 3,681 4,153 5,741 10,460 21 76,591 460
21,182
17,309
11,015
276,443
114,492
26,196
8,011
43,939
8,670
2,985
1,803
5,794
11,100
25,156
138
23,397
17,342
19,270
300,176
136,283
28,873
7,215
50,310
7,097
1,994
1,778
5,154
9,060
21
15,295
706,185 753,194 574,555 623,403
9
OTHER ASSETS
2013 2012
RM’000 RM’000
Other debtors, deposits and prepayments Cheque clearing accounts Foreclosed properties (a) Others 35,131 169,141 15,825 - 33,532
233,351
26,745
30
34,288 127,621 14,646 - 32,057
170,137
25,566
30
220,097 293,658 176,555 227,790
At beginning of the financial year Disposal during the financial year 26,745 (10,920) 40,337 (11,470) 25,566 (10,920)
38,962
(11,274)
Foreclosed properties - diminution in value
15,825 - 28,867 (2,122) 14,646 - 27,688
(2,122)
(a)
10
Foreclosed properties
AMOUNT DUE FROM SUBSIDIARIES
The Bank
2013 2012
RM’000 RM’000
Advances to a subsidiary Other receivables 60,115 608 153,296
653
60,723 153,949
The advances of RM60,115,000 (2012: RM153,296,000) to subsidiary are unsecured, bear interest at 3.00% per annum
(2012: 3.08%) and have no fixed terms of repayment.
11
DEFERRED TAX ASSETS / (LIABILITIES)
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts determined after
appropriate offsetting, are shown in the statement of financial position:
Deferred tax assets:
- to be recovered after more than 12 months - to be recovered within 12 months The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
(5,531) 15,476 - - (5,263) 12,248 -
9,945 - 6,985 -
Deferred tax liabilities:
- to be recovered after more than 12 months - to be recovered within 12 months - - (5,278) (8,087)
- - (4,468)
(8,631)
- (13,365) -
(13,099)
At beginning of the financial year (Charged)/credited to income statement (Note 34) - property and equipment
- intangible assets - provision for other liabilities
(13,365) (1,501) 471
(703) (1,269)
(20,118) 7,171 185 1,920 5,066 (13,099) (1,674) 532 (917) (1,289) (19,211)
6,568
112
1,721
4,735
Charged to equity 24,811 (418) 21,758 (456)
9,945 (13,365) 6,985 (13,099)
11
DEFERRED TAX ASSETS / (LIABILITIES)
The movements in deferred tax assets and liabilities during the financial year are as follows:
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Subject to income tax
Deferred tax assets (before offsetting)
AFS revaluation reserves Provision for other liabilities 2,187 18,543 - 19,813 - 17,062 18,351
Offsetting
20,730 (10,785) 19,813 (19,813) 17,062 (10,077) 18,351
(18,351)
Deferred tax assets (after offsetting) 9,945 - 6,985 -
Deferred tax liabilities (before offsetting)
Property and equipment Intangible assets
AFS revaluation reserves (4,759) (4,458) (1,568) (5,228) (3,756) (24,194) (4,451) (4,058) (1,568)
(4,983)
(3,141)
(23,326)
(10,785)
10,785 (33,178) 19,813 (10,077) 10,077 (31,450)
18,351
-
(13,365) - (13,099)
Offsetting Deferred tax liabilities (after offsetting) The amount of unused tax losses for which no deferred tax asset is recognised in the statement of financial position are as
follows:
Tax losses 12
The Group
2013 2012 RM’000 RM’000 99,209 102,898 The Bank
2013 2012
RM’000 RM’000
- -
STATUTORY DEPOSIT WITH BANK NEGARA MALAYSIA
A non-interest bearing statutory deposit is maintained with Bank Negara Malaysia in compliance with requirements of
Section 26(2)(c) of the Central Bank of Malaysia Act 2009, the amounts of which is determined at a set percentages of total
eligible liabilities.
13
INVESTMENT IN SUBSIDIARIES
The Bank
2013 2012
RM’000 RM’000
Unquoted shares, at cost Less: Allowance for impairment losses 419,549 (30,461) 419,557
(32,168)
389,088 387,389
13
INVESTMENT IN SUBSIDIARIES
The subsidiaries of the Bank, all of which are incorporated in Malaysia, are as follows:
Name
Principal Activities
AFFIN Islamic Bank Bhd
PAB Properties Sdn Bhd
ABB Nominee (Tempatan) Sdn Bhd
ABB Nominee (Asing) Sdn Bhd
ABB Trustee Berhad *
AFFIN Factors Sdn Bhd
AFFIN Futures Sdn Bhd
PAB Property Management Services Sdn Bhd
PAB Property Development Sdn Bhd
ABB Venture Capital Sdn Bhd
ABB IT & Services Sdn Bhd
BSNCB Nominees (Tempatan) Sdn Bhd
BSNC Nominees (Tempatan) Sdn Bhd
AFFIN Recoveries Bhd
BSN Merchant Nominees (Asing) Sdn Bhd
AFFIN-ACF Nominees (Tempatan) Sdn Bhd
BSN Merchant Nominees (Tempatan) Sdn Bhd
ABB Asset Management (M) Bhd
*
Percentage of equity held
2013
2012
%%
Islamic banking business
Property management services
Share nominee services
Share nominee services
Trustee management services
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80% held by Directors of the Bank, in trust for the Bank.
The Bank has received resolution to dissolve the followings:
- BSN Merchant Nominees (Tempatan) Sdn Bhd on 23 March 2012 and
- ABB Asset Management (M) Bhd on 22 November 2013.
14
INVESTMENT IN JOINTLY CONTROLLED ENTITY
Unquoted shares at cost Group’s share of post acquisition retained losses The summarised financial information of jointly controlled entity are as follows:
Revenue Loss after tax Total assets Total liabilities Capital commitment for property and equipment The Group
2013 2012
RM’000 RM’000
650 (650) 500
(440)
- 60
16,781 (3,050) 181,084 183,572 - 8
(460)
46,516
46,396
-
14
INVESTMENT IN JOINTLY CONTROLLED ENTITY
AFFIN-i Nadayu Sdn Bhd
The jointly controlled entity was incorporated on 1 April 2008 and the details are as follows:
Name
Principal activities AFFIN-i Nadayu Sdn Bhd Land development project Issued and paid up share capital RM’000 1,000 Percentage of
equity held
2013 2012
% %
50 50
On 1 April 2008, AFFIN Islamic Bank Berhad and Jurus Positif Sdn Bhd, a subsidiary of Nadayu Properties Berhad (fka
Mutiara Goodyear Development Berhad), entered into a joint venture agreement under the Shariah principles (‘Musharakah
Agreement’) to develop a land into a housing scheme at Bukit Gambir, Pulau Pinang.
The agreement also includes an arrangement where Jurus Positif Sdn Bhd may acquire the Bank’s shares upon the
completion of the project at a mutually agreed price, unless if both shareholders decide to continue the joint venture for
subsequent projects.
Major strategic operation and financial decisions relating to the activities of AFFIN-i Nadayu requires unanimous consent by
both joint venture parties. The Group’s interest in AFFIN-i Nadayu Sdn Bhd has been treated as investment in jointly controlled
entity, which has been accounted for in the consolidated financial statements using the equity method of accounting.
KL South Development Sdn Bhd
On 2 January 2013, AFFIN Islamic Bank Berhad (‘AiBB’) entered into a Musharakah Joint Venture Agreement (‘JV Agreement’)
with Albatha Bukit Kiara Holdings Sdn Bhd (‘Albatha’), a subsidiary of Bukit Kiara Capital Sdn Bhd, to joint develop a
property project namely “VERVE Suites KL South” at Jalan Klang Lama, Kuala Lumpur.
Pursuant to the JV agreement, AiBB acquired 30% stake in the joint venture company namely KL South Development Sdn
Bhd (‘KL South’)(formerly known as Grand Duplex Sdn Bhd) by way of subscription of 150,000 shares of RM1.00 each in KL
South at par. The remaining stake of 70% in KL South is held by Albatha.
Under the Musharakah structure, AiBB would be the sole banker to KL South, providing financing using the Islamic concept
such as Ijarah for the purchase of building and Istisna’ for the bridging financing.
Major strategic operation and financial decisions relating to the activities of KL South requires consent by both joint venture
parties. The Group’s interest in KL South has been treated as investment in jointly controlled entity, which has been accounted
for in the consolidated financial statements using the equity method of accounting.
KL South has commenced operations and the project is scheduled for completion by mid 2016.
15
140 -
-
- 140 19,536 At 31 December 2013
Net book value as at
31 December 2013 19,676 At 31 December 2013 Accumulated depreciation and
impairment losses
At 1 January 2013
Charge for the financial year
Disposal
Write-off 21,126 -
(1,450) - - Cost
At 1 January 2013 Additions Disposals
Write-off Reclassification 10,716 2,146 2,034 112 -
- 12,862 12,862 -
- -
-
3,687 1,693 1,572 121 - -
5,380 5,380 -
-
-
- 14,530 12,273 12,962 442 (1,131) - 26,803 29,950 -
(3,147) -
- 63,909 25,160 23,371 1,789 -
- 15,558 98,526 94,065 6,449 (1,238)
(750) 89,069 114,084 89,069 110,842 - 5,146 - (1,238) -
(755) -
89
18,426 41,001 38,232 3,256 (1)
(486) 59,427 57,561 2,438 (1)
(572) 1 7,523 63,037 59,630
3,407
-
70,560 68,775 1,785 - - -
2,157 3,197 3,085 443 (331) -
5,354 3,609 2,077 (332)
- -
405,913
2,698 158,740
- 247,173
- 235,091
- 16,019
-
(2,701)
-
(1,236)
2,698 7,839 407,013
5,997 17,443
-
(6,168)
-
(1,327)
(11,138) (11,048)
Buildings Buildings Office Computer
<-Leasehold land-> on onequipmentequipment
Capital
Freehold 50 years Less than freehold leasehold
and
and
Motor
work in
The Group
land or more 50 years
land
landRenovation furniture software vehicles progress
Total
2013
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
PROPERTY AND EQUIPMENT
15
- - -
-
140 140 20,986 At 31 December 2012
Net book value as at
impairment losses
At 1 January 2012 Charge for the financial year Disposal Write-off Reclassification 22,811 - (1,685)
- -
Cost
At 1 January 2012
Additions Disposals Write-off
Reclassification 10,828 2,034 1,923 111 -
-
- 12,862 12,862 - - -
-
3,808 1,572 1,452 120 - -
-
5,380 5,380 - -
-
-
16,988 12,962 13,266 498 (802) -
-
29,950 32,013 - (2,063)
-
-
65,698 23,371 21,582 1,789
-
- -
16,777 94,065 88,056 7,417 (607) (801)
-
89,069 110,842 89,069 105,357 -
6,936 - (637) - (814) -
-
19,329 38,232 35,667 3,192 (172)
(455) -
57,561 54,448 3,915 (189) (613) -
9,145 59,630 57,509 4,293 -
(2,172) -
68,775 67,617 3,337 -
(2,179) - 524 3,085 3,100 364
(379) -
-
3,609 3,963 25 (379) - - 7,839 171,922
- 235,091
- 222,555
-
17,784
-
(1,960)
-
(3,428)
- 140
7,839 407,013
1,865 395,385
6,403 20,616
- (4,953)
- (3,606)
(429) (429)
<-Leasehold land-> on on equipment equipment
Capital
and
and
Motor
work in
The Group
land
or more 50 years
land
land Renovation furniture software
vehicles progress
Total
2012
15
- - -
-
-
- 17,168 At 31 December 2013 Net book value as at
impairment losses
At 1 January 2013 Charge for the financial year Disposal Write-off
Reclassification 18,618 -
(1,450) - - Cost
At 1 January 2013 Additions
Disposals Write-off Reclassification 9,069 1,903 1,800
103
-
10,972 10,972 -
-
- -
3,687 1,693 1,572 121 - -
- 5,380 5,380 -
-
-
-
14,023 11,481 12,196 416 (1,131) - -
25,504 28,651 - (3,147) - - 63,540 24,621 22,850 1,771 -
-
-
14,699 95,485 91,329 6,144 (1,238) (750) - 88,161 110,184 88,161 107,089 - 4,999 -
(1,238)
-
(755)
- 89 17,246 40,034 37,456 3,062 (1) (485) 2 57,280 55,482 2,367 (1) (571) 3 6,962 61,082 57,911 3,171 - - - 68,044 66,364 1,680 - -
- 1,711 2,686
2,639 378 (331) - - 4,397 3,148 1,581 (332) - - 389,788
2,698 150,803
- 238,985
- 227,753
- 15,166
- (2,701)
-
(1,235)
-
2
2,698 7,839 391,704
5,997 16,624
-
(6,168)
-
(1,326)
(11,138) (11,046)
<-Leasehold land-> on onequipmentequipment
Capital
and
and
Motor
work in
The Bank
land or more 50 years
land
landRenovation furniture software vehicles progress
Total
2013
15
-
-
- -
- - 18,618 At 31 December 2012 Net book value as at
impairment losses
At 1 January 2012
Charge for the financial year Disposal Write-off Reclassification 19,814 - (1,196)
-
-
Cost
At 1 January 2012 Additions Disposals
Write-off Reclassification 9,172 1,800 1,696
104
-
10,972 10,972 - - - - 3,808 1,572 1,452 120 - - - 5,380 16,455 12,196 12,344 472 (620) - - 28,651 5,380 30,377 - - - (1,726) - - - -
65,311 22,850 21,080 1,770 - -
-
15,760 91,329 85,834 6,903 (607) (801) - 88,161 107,089 88,161 102,094 - 6,447 - (638) - (814) -
- 18,026 37,456 35,069 3,013 (172) (455) 1 55,482 52,800 3,482 (188) (613) 1
8,453 57,911 56,034 3,924 - (2,032)
(15) 66,364 65,324 3,123 -
(2,039) (44) 509 2,639 2,745 273 (379) -
-
3,148 3,501 25 (378) - - 7,839 163,951
- 227,753
- 216,254
- 16,579
- (1,778)
-
(3,288)
- (14)
7,839 391,704
1,865 380,288
6,403 19,480
- (4,126)
-
(3,466)
(429) (472)
<-Leasehold land-> on on equipment equipment
Capital
and
and
Motor
work in
The Bank
land
or more 50 years
land
land Renovation furniture software
vehicles progress
Total
2012
16
INTANGIBLE ASSETS
Computer
Goodwill Software
The Group RM’000 RM’000 Total
RM’000
Cost
Write-off Reclassification from property and equipment (Note 15) Adjustment 133,430 - - - -
120,959 1,236 (9) 11,048 (742) 254,389
1,236
(9)
11,048
(742)
At 31 December 2013 133,430 132,492 265,922
Less: Accumulated amortisation
At 1 January 2013
Amortised during the financial year Write-off - - -
(105,937) (7,989) 9 (105,937)
(7,989)
9
At 31 December 2013 - (113,917) (113,917)
Net book value as at 31 December 2013 133,430 18,575 152,005
Cost
At 1 January 2012 Additions Reclassification from property and equipment (Note 15) 133,430 - - 120,072 458 429 253,502
458
429
At 31 December 2012 133,430 120,959 254,389
At 1 January 2012 Amortised during the financial year -
- (97,369) (8,568)
(97,369)
(8,568)
At 31 December 2012
-
(105,937)
(105,937)
133,430 15,022 148,452
Net book value as at 31 December 2012 Annual Report 2013 AFFIN BANK BERHAD (25046-T) 113
16
INTANGIBLE ASSETS
Computer
Goodwill Software
The Bank RM’000 RM’000 Total
RM’000
Cost
At 1 January 2013 Additions Write-off Reclassification from property and equipment (Note 15)
Adjustment 137,323
-
114,557 1,236 (9) 11,048 (742) 251,880
1,236
(9)
11,048
(742)
At 31 December 2013 137,323 126,090 263,413
At 1 January 2013 Amortised during the financial year Write-off -
- - (101,993) (7,197) 9 (101,993)
(7,197)
9
At 31 December 2013 - (109,181) (109,181)
Net book value as at 31 December 2013 137,323 16,909 154,232
Cost
Reclassification from property and equipment (Note 15) 137,323 - - 113,670 458 429 250,993
458
429
At 31 December 2012 137,323 114,557 251,880
At 1 January 2012 Amortised during the financial year - -
(94,222) (7,771) (94,222)
(7,771)
At 31 December 2012
-
(101,993)
(101,993)
12,564 149,887
Net book value as at 31 December 2012 114 AFFIN BANK BERHAD (25046-T) Annual Report 2013
137,323 notes to the financial statements
16
INTANGIBLE ASSETS
Goodwill
The carrying amount of the Bank’s goodwill has been allocated to the following business segments, which represent the
Bank’s cash-generating units (‘CGUs’):
2013 RM’000 2012
RM’000
Enterprise banking Consumer banking 123,591 13,732 123,591
13,732
137,323 137,323
Goodwill is allocated to the Bank’s CGU which are expected to benefit from the synergies of the acquisitions. For annual
impairment testing purposes, the recoverable amount of the CGUs are determined based on value-in-use calculations using
the cash flow projections based on the 2013 financial budgets approved by the Directors, covering a period of 5 years based
on the historical Gross Domestic Product (‘GDP’) growth rate of Malaysia, revised for current economic conditions. The cash
flow beyond the fifth year are projected based on the assumption that the Year 5 operating cash flow will be generated by
the respective CGUs at a growth rate of 5% (2012: 5%) on perpetual basis.
The cash flow projections are derived based on a number of key factors including past performance and management’s
expectations of the market developments. The discount rates used are based on the pre-tax weighted average cost of
capital plus an appropriate risk premium where applicable (‘WACC’), at the date of assessment of the CGUs.
Pre-tax discount rate 2013 2013 2012 2012
Enterprise Consumer Enterprise Consumer
banking banking banking banking
% % % %
9.90 9.82 13.39 13.35
No impairment charge was required for goodwill arising from all the business segments. Management views that any
reasonable possible change to the assumptions applied is not likely to cause the recoverable amount of all the business
segments to be lower than its carrying amount.
17
DEPOSITS FROM CUSTOMERS
(i)
(ii)
By type of deposit The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Demand deposits Savings deposits Fixed deposits
Special investment deposits Money market deposits Negotiable instruments of deposit (‘NID’)
8,202,749 7,350,021 5,449,295 4,716,583
2,004,242 1,710,748 1,639,656 1,377,258
27,693,589 25,204,503 22,098,467 19,965,844
574,192 833,132 - 1,050,233 859,141 1,050,233 859,141
6,563,077 5,305,991 6,563,077 5,305,991
46,088,082
Maturity structure of fixed deposits and NID
41,263,536 36,800,728 32,224,817
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Due within six months Six months to one year One year to three years Three years to five years Five years and above 27,809,157 23,936,263 23,574,338 19,583,709
6,287,140 6,318,076 4,929,588 5,443,400
118,705 54,835 116,227 43,608
31,344 201,320 31,071 201,118
10,320 - 10,320 -
34,256,666 30,510,494 28,661,544 25,271,835
(iii) By type of customer
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Government and statutory bodies
Business enterprise
Individuals Others 8,747,406
14,007,892
11,660,423
11,672,361
46,088,082 41,263,536 36,800,728 32,224,817
7,226,690 5,438,276 4,285,101
12,837,106 10,327,724 9,534,502
8,974,563 10,603,679 8,129,294
12,225,177 10,431,049 10,275,920
18
DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS
19
The Group
2013 2012 RM’000 RM’000 Licensed banks Licensed investment banks Bank Negara Malaysia
Other financial institutions 3,042,849
597,792 - 424,903 3,212,031
549,029
612,055
436,208
4,065,544 Maturity structure of deposits
Due within six months Six months to one year The Bank
2013 2012
RM’000 RM’000
1,847,213
567,761
244,561
2,391,811
490,508
612,055
233,889
4,809,323 2,659,535 3,728,263
4,057,599 7,945 4,806,995 2,328 2,651,590 7,945 3,725,935
2,328
4,065,544 4,809,323 2,659,535 3,728,263
DERIVATIVE FINANCIAL LIABILITIES
The Group and the Bank The Group and the Bank
2013 2012
Contract/ Contract/
notional notional
amount Liabilities amount Liabilities
RM’000 RM’000 RM’000 RM’000
At fair value
Currency forwards Cross currency swaps 498,726 2,284,085 5,099 51,018 340,155 1,188,783 2,870
23,725
Interest rate derivatives:
Interest rate swaps 2,033,725 38,405 1,695,980 33,068
4,816,536 94,522 3,224,918 59,663
2013 2012
By maturity structure of negative fair value
Maturing within one year One year to three years Three years to five years Over five years 41,852 19,701 12,361 20,608
23,852
24,779
4,584
6,448
94,522 59,663
20
RECOURSE OBLIGATION ON LOANS SOLD TO CAGAMAS BERHAD
In the normal course of banking operations, the Bank sells loans to Cagamas Berhad with recourse at values equivalent to
the unpaid principal balances of loans and advances due from the borrowers.
The Bank is liable in respect of housing loans and hire purchase portfolio sold directly and indirectly to Cagamas Berhad,
under the condition that the Bank undertakes to administer these loans on behalf of Cagamas Berhad and to buy back
any loans which are regarded as defective based on an agreed prudential criteria. Such financing transactions and the
obligations to buy back the loans are reflected as a liability on the statement of financial position.
21
OTHER LIABILITIES
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Bank Negara Malaysia and Credit
Guarantee Corporation Funding programmes Margin and collateral deposits Other creditors and accruals Defined contribution plan (a) Accrued employee benefits (b) 27,897 108,258 241,775 13,818 229 28,644 82,131 181,884 13,593 229 27,897 103,428 215,199 13,107 206 28,644
79,099
161,318
12,877
206
391,977 306,481 359,837 282,144
(a)
The Group and the Bank contributes to the Employee Provident Fund (‘EPF’), the national defined contribution plan.
Once the contributions have been paid, the Group and the Bank has no further payment obligations.
(b) This refers to the accruals for short-term employee benefits for leave entitlement. Under employment contract,
employees earn their leave entitlement which they are entitled to carry forward and will lapse if not utilised in the
following accounting period. Accruals are made for the estimated liability for unutilised annual leave.
22
AMOUNT DUE TO SUBSIDIARIES
The amount due to subsidiaries is unsecured, interest-free and have no fixed terms of repayment.
23
SUBORDINATED TERM LOAN
On 10 March 2009, the Bank has taken the first 10 year subordinated loan amounting to RM300 million. The first subordinated
loan was constituted by agreement date 6 March 2009 and were issued on 10 March 2009.
On 26 May 2011, the Bank has taken the second 10 year subordinated loan amounting to RM300 million. The second
subordinated loan was constituted by agreement date 20 May 2011 and were issued on 26 May 2011.
On 16 January 2012, the Bank has taken the third 10 year subordinated loan amounting to RM300 million. The third
subordinated loan was constituted by agreement date 3 January 2012 and were issued on 16 January 2012.
All the subordinated loans were taken with the Bank’s Holding Company.
The subordinated loans have a prepayment option on the first prepayment date or any interest payment date subsequent to
the first prepayment date, giving the Bank the right, subject to Bank Negara Malaysia (‘BNM’) approval, to prepay the loans
in whole or in part.
Interest on subordinated loans payable by quarterly.
Subordinated loan I
Value
: RM300 million
Interest rate : Cost of Fund (‘COF’) plus 0.75% per annum for period of thirty six months from the issue date, COF plus
1.75% per annum for the next twenty four months and thereafter COF plus 2.00% for the next 5 years.
The subordinated loan I will be fully prepaid on 10 March 2014.
Subordinated loan II and Subordinated loan III
Value
: RM300 million each
Interest rate : Cost of Fund (‘COF’) plus 1.00% per annum for the 10 years.
COF refers to rate determined by the lender on an interest determination date falling within the interest duration.
24
SHARE CAPITAL
Number of ordinary
shares of RM1 each
2013 2012 2013 2012
‘000 ‘000 RM’000 RM’000
Authorised
At beginning/end of the financial year 2,000,000 2,000,000 2,000,000 2,000,000
Issued and fully paid
At beginning of the financial year Issued during the financial year 1,518,337 - 1,439,285 79,052 1,518,337 - 1,439,285
79,052
At end of the financial year 1,518,337 1,518,337 1,518,337 1,518,337
25RESERVES
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Retained profits Share premium
AFS revaluation reserves Statutory reserves 1,004,534 529,337 (1,960) 1,317,376 834,371 529,337 75,256 1,160,651 798,118
529,337
4,965
1,144,350
659,603
529,337
69,977
1,017,200
2,849,287 2,599,615 2,476,770 2,276,117
Statutory reserves
At beginning of the financial year Transfer from retained profits 1,160,651 156,725 1,011,044 149,607 1,017,200 127,150 904,624
112,576
At end of the financial year 1,317,376 1,160,651 1,144,350 1,017,200
(a)
A single tier company tax was introduced effective 1 January 2008. Under this single tier system, tax on a company’s
profits is a final tax, and dividends distributed to shareholders will be exempted from tax. Companies with Section 108
tax credit balance are given an option to elect to move to a single tier system immediately or allowed to use the Section
108 credit balance for the purpose of dividend distribution during a transitional period of 6 years until 31 December
2013.
The Bank has elected to use its Section 108 credit balance for the purpose of dividend distribution during a transitional
period of 6 years until 31 December 2013. The Section 108 balance of the Bank as at 31 December 2007 will be frozen
and can only be adjusted downwards for any tax discharged, remitted or refunded during the 6 years period.
As at 31 December 2013, the Bank has a tax credit balance of RM2,469,704 (2012: RM2,533,928) under Section 108
of the Income Tax Act, 1967 and tax exempt account balance of RM10,931,988 (2012: 83,016,257) under Section 12
of the Income Tax (Amendment) Act 1999, subject to agreement by the Inland Revenue Board.
(b)
The statutory reserves of the Group and the Bank are maintained in compliance with the provisions of the Financial
Services Act 2013 and Islamic Financial Services Act 2013 and are not distributable as cash dividends.
(c)
AFS revaluation reserves represent the unrealised gains or losses arising from the change in fair value of investments
classified as financial investment available-for-sale. The gains or losses are transferred in the income statement upon
disposal or when the securities become impaired.
26
INTEREST INCOME
The Group 2013 2012 RM’000 RM’000 Loans, advances and financing Money at call and deposit placements
with financial institutions
Financial assets/investments
- Held-for-trading - Available-for-sale
- Held-to-maturity Interest rate derivatives Others
1,612,728 1,523,683 1,612,728 1,523,683
178,906 234 154,737 117
204,769 234 179,411
117
160
202,084
19,984
94,003
-
789 183,906 23,912 86,923 - 160 201,936 19,984 94,003 4,003 789
183,758
23,912
86,923
3,511
Amortisation of premium less
accretion of discount 2,108,099 1,974,067 2,137,817 2,002,104
13,028 10,833 13,028 10,833
2,121,127 1,984,900 2,150,845 2,012,937
10,957 6,838 10,957 6,838
of which:
Interest income earned on impaired loans,
advances and financing 27
INTEREST EXPENSE
The Group 2013 2012 RM’000 RM’000 28
The Bank
2013 2012
RM’000 RM’000
The Bank
2013 2012
RM’000 RM’000
Deposits and placements of banks
and other financial institutions Deposits from customers Subordinated term loan Loan sold to Cagamas Berhad Interest rate derivatives Others 119,487 1,025,610 41,473 19,164 99,226 3,108 145,722 894,694 40,453 19,891 93,208 2,260 119,498 1,025,644 41,473 19,164 99,226 3,108 145,748
894,728
40,453
19,891
93,208
2,260
1,308,068 1,196,228 1,308,113 1,196,288
NET ISLAMIC BANKING INCOME
The Group
2013 2012
RM’000 RM’000
Income derived from investment of depositors’ funds and others Income derived from investment of shareholders’ funds
428,386 29,781 459,994
23,650
Total distributable income
Income attributable to depositors
458,167 (237,422)
483,644
(266,872)
220,745 216,772
29
OTHER OPERATING INCOME
2013 2012
RM’000 RM’000
Fee income
Commission
Service charges and fees Guarantee fees 14,046 62,785 20,615 13,918 63,999 22,567 14,046 62,785 20,615 13,918
63,999
22,567
97,446 100,484 97,446 100,484
Income from financial instruments
Gain arising on financial assets held-for-trading:
- net gain on disposal - unrealised gains/(losses)
366 455 697 (188) 366 455 697
(188)
821 509 821 509
Gains on derivatives:
- realised - unrealised 3,156 5,282 2,711 12,925 3,156 5,282 2,711
12,925
8,438 15,636 8,438 15,636
Gain arising on financial investments available-for-sale:
- net gain on disposal - gross dividend income 22,369 4,058 20,634 3,204 18,894 4,058 19,870
3,204
26,427 23,838 22,952 23,074
Gain arising on financial investments held-to-maturity:
- net gain on redemption 6,144 19,011 6,144 19,011
6,144 19,011 6,144 19,011
121,093 (54,118) 1,673 3,910 11,041 14,491 -
29,901 42,325 1,692 1,098 10,141 12,428 - 121,093 (54,118) 1,631 3,910 11,041 13,797 1,707 29,901
42,325
1,649
1,093
10,097
12,111
-
98,090 97,585 99,061 97,176
237,366 257,063 234,862 255,890
Other income
Foreign exchange gains/(losses):
- realised - unrealised Rental income Gain on sale of property and equipment
Gain on disposal of foreclosed properties
Other non-operating income Subsidiaries - diminution in value written back
30
OTHER OPERATING EXPENSES
2013 2012
RM’000 RM’000
Personnel costs (a) Establishment costs (b)
Marketing expenses (c) Administrative and general expenses (d) 335,200 169,429 16,485 44,072
328,427 176,504 16,392 49,835 269,727 142,300 13,332 35,774 267,089
149,770
14,145
42,669
565,186
571,158 461,133 473,673
(a) Personnel costs
2013 2012
RM’000 RM’000
Wages, salaries and bonuses
Defined contribution plan (‘EPF’) Other personnel costs 259,313 42,198 33,689 254,006 41,433
32,988 208,440 33,929 27,358 206,376
33,675
27,038
335,200 328,427 269,727
267,089
(b) Establishment costs
The Group 2013 2012 RM’000 RM’000 Rental of premises
Equipment rental Repair and maintenance
Depreciation Amortisation of intangible assets IT Consultancy fees Dataline rental Security services Electricity, water and sewerage Insurance and indemnities Other establishment costs The Bank
2013 2012
RM’000 RM’000
21,496 898 26,337 16,019 7,989
61,893
3,890 13,566 9,566 3,853 3,922
20,750 931 32,068 17,784 8,568
60,972 4,324 12,109 9,187 4,789 5,022 17,723 782 21,942
15,166 7,197
53,231 3,372 10,899 7,994 3,731 263 17,249
893
27,318
16,579
7,771
52,931
3,759
9,836
7,688
4,668
1,078
169,429 176,504 142,300 149,770
30
OTHER OPERATING EXPENSES
(c) Marketing expenses
The Group 2013 2012 RM’000 RM’000 Business promotion and advertisement
Entertainment Traveling and accommodation
Other marketing expenses 7,860 2,628 4,494
1,503
16,485
The Bank
2013 2012
RM’000 RM’000
7,837 3,510 3,632 1,413 6,660 2,244 3,328 1,100 7,406
3,067
2,595
1,077
16,392 13,332 14,145
(d) Administration and general expenses
The Group 2013 2012 RM’000 RM’000 Telecommunication expenses Auditors’ remuneration Professional fees Property and equipment written-off
Mail and courier charges
Stationery and consumables Commissions expenses Brokerage expenses Directors’ fees and allowances
Donations Settlement, clearing and bank charges
Stamp duties Other administration and general expenses 5,558 1,433 6,142 91 2,777 8,902 3,215 1,368 1,873 1,706 7,131 198 3,678 44,072
The Bank
2013 2012
RM’000 RM’000
5,118 1,327 5,265 179 4,135 8,975 4,204 1,233 1,675 1,880 5,739
3,102 7,003
4,655 1,036
5,154
91 2,310 6,566
2,996 1,242 1,480
1,619
6,779 196 1,650 4,325
981
4,146
178
3,507
6,820
3,984
1,133
1,332
1,748
5,421
3,098
5,996
49,835 35,774 42,669
The expenditure includes the following statutory disclosure:
The Group 2013 2012 RM’000 RM’000 Directors’ remuneration (Note 31)
Rental of premises Equipment rental Auditors’ remuneration
- statutory audit fees
- under provision prior year - audit related fees - non audit fees Depreciation of property and equipment Amortisation of intangible assets Property and equipment written-off
The Bank
2013 2012
RM’000 RM’000
8,281 21,496 898 7,715 20,750 931 7,888
17,723 782
7,372
17,249
893
847 3
465 118 16,019 7,989
91
847
-
352 128
17,784 8,568 179 682 -
297 57 15,166 7,197
91 669
228
84
16,579
7,771
178
31
CEO AND DIRECTORS’ REMUNERATION
The Directors of the Bank who have held office during the financial year are as follows:
Managing Director/Chief Executive Officer
Dato’ Zulkiflee Abbas Bin Abdul Hamid
Non-Executive Directors
Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara) (Chairman)
Mr Gary Cheng Shui Hee (Alternate Director to Mr Aubrey Li Kwok-Sing)
The aggregate amount of remuneration for the Directors of the Bank for the financial year were as follows:
2013 2012
RM’000 RM’000
Managing Director/Chief Executive Officer
Salaries Bonuses Defined contribution plan (‘EPF’) Other employee benefits
Benefits-in-kind
1,935 3,315 907 99 152
1,825 3,150 811 99 155 1,935 3,315
907 99 152 1,825
3,150
811
99
155
Non-Executive Directors
Fees Benefits-in-kind
1,844 29 1,648 27 1,451
29 1,305
27
Directors’ remuneration (Note 30) 8,281 7,715 7,888
7,372
31
A summary of the total remuneration of the Directors, distinguishing between Executive and Non-Executive Directors.
Directors’
* Other
Benefits-
in-kind
Total
The Bank
Salaries
Bonuses
Fees emoluments 2013
RM’000RM’000RM’000RM’000RM’000RM’000
Managing Director/
Dato’ Zulkiflee Abbas Bin Abdul Hamid 1,935 3,315
-
1,006
152
6,408
Total
1,935
3,315
-
1,006 152 6,408
Non-executive Directors
Jen Tan Sri Dato’ Seri Ismail Bin Haji
Omar (Bersara)
-
-
188 96 29 313
Tan Sri Dato’ Seri Lodin Bin Wok
Kamaruddin -
-
188 -
-
188
Dr. Raja Abdul Malek Bin Raja Jallaludin
-
-
226 -
-
226
Tan Sri Dato’ Sri Abdul Aziz Bin Abdul
Rahman
-
-
212 -
-
212
-
-
208 -
-
208
-
-
214 -
-
214
-
-
112 -
-
112
Mr Gary Cheng Shui Hee (Alternate
Director to Mr Aubrey Li Kwok-Sing)
-
-
7
-
-
7
Total
Grand total
*
-
-
1,355 96 29 1,480
1,935 3,315 1,355 1,102 181 7,888
Executive Director’s other emoluments include allowance and EPF
31
Directors’
* Other
Benefits-
in-kind
Total
The Bank
Salaries
Bonuses
Fees emoluments 2012
RM’000RM’000RM’000RM’000RM’000RM’000
Managing Director/
Dato’ Zulkiflee Abbas Bin Abdul Hamid 1,825 3,150
-
910
155
Total
3,150
-
910 155 Non-executive Directors
-
-
149 116 27 Tan Sri Dato’ Seri Lodin Bin Wok
Kamaruddin -
-
164 -
-
Dr. Raja Abdul Malek Bin Raja Jallaludin
-
-
204 -
-
Tan Sri Dato’ Sri Abdul Aziz Bin Abdul
Rahman
-
-
191 -
-
-
-
187 -
-
-
-
192 -
-
-
-
97 -
-
Mr Gary Cheng Shui Hee (Alternate
Director to Mr Aubrey Li Kwok-Sing)
-
-
5
-
-
Total
Grand total
*
32
1,825
6,040
6,040
292
164
204
191
187
192
97
5
-
-
1,189 116 27 1,332
1,825 3,150 1,189 1,026 182 7,372
Executive Director’s other emoluments include allowance and EPF
ALLOWANCES FOR LOSSES ON LOANS, ADVANCES AND FINANCING
The Group 2013 2012 RM’000 RM’000 Individual impairment
- made in the financial year
- written-back
- made in the financial year
Bad debts and financing
- recovered - written-off The Bank
2013 2012
RM’000 RM’000
47,903 (4,031)
72,213 (2,716) 47,213 (3,598) 69,391
(2,546)
15,253 6,672 15,011 24,242
(120,645) 4,583
(106,465) 7,784 (119,702) 4,509 (105,880)
7,702
(56,937) (22,512) (56,567)
(7,091)
33
SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES
Related parties
Relationships
Lembaga Tabung Angkatan Tentera (‘LTAT’)
Ultimate holding corporate body, which is
Government-Link Investment Company (‘GLIC’) of
the Government of Malaysia
AFFIN Holdings Berhad (‘AHB’)
Holding company
Subsidiaries and associates of LTAT
Subsidiary and associate companies of the ultimate holding
corporate body
Subsidiaries and associates of AHB as disclosed in
its financial statements
Subsidiary and associate companies of the holding company
Subsidiaries of AFFIN Bank Berhad as disclosed in
Note 13
Subsidiary
Joint controlled entity as disclosed in Note 14
Joint controlled entity of subsidiary
Voting shares in body corporate not less than 15%
of votes
Other related companies
Key management personnel
The key management personnel of the Bank consist of:
- Chief Executive Officer
- Members of Senior Management team and the company
secretary
Related parties of key management personnel
(deemed as related to the Bank)
- Close family members and dependents of key management
personnel
- Entities that are controlled, jointly controlled or for which
significant voting power in such entity resides with, directly
or indirectly by key management personnel or its close family
members
Key management personnel are those persons having the authority and responsibility for planning, directing and controlling
the activities of the Group and the Bank either directly or indirectly. Key management personnel includes the Chief Executive
Officer of the Bank in office during the financial year and his remuneration for the financial year are disclosed in Note 33(b).
The Group and the Bank do not have any individually or collectively significant transactions with the Government of Malaysia and government related
entities. In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party
transactions and balances.
Expenditure
Interest on fixed deposits
Interest on negotiable
instruments of deposit
Interest on deposits and
placements of banks
and other financial
institutions
Interest on special
investment account
Interest on money
market deposits
Brokerage fees
Rental
Others Income
Interest on private
debt securities
Interest on loans,
advances and financing
Interest on deposits and
placements with banks
and other financial
institutions
Other income
Group
-
-
-
-
-
-
7,620 -
301 5
-
1
9,911 -
239 -
11,799 -
-
15,599 3,873 5,448 -
-
-
-
-
-
47,555 93 -
-
41,473
-
-
-
5,989 -
-
-
-
-
46,657 61 -
-
40,453 -
-
-
6,143 -
-
-
-
-
42,631 2,004 431 11,426 5,877 1,565 9,165 838 11,325 84,438 8,401 7,590 41,151 27,296 47,918 2,901 532 11,467 4,875 1,759 15,839 13 10,532 87,041 12,254 7,003 42,567 25,217 638 -
-
-
638 -
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
242 -
-
-
-
-
-
-
242 81 -
-
81 -
166
-
-
-
-
166
55
-
55
-
Companies in which certain
Ultimate holding
Holding
Other related
Directors have Key Management
corporate body
company
companies
substantial interest
Personnel
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
(a) Related parties transactions and balances
33
33
(a)
Related parties transactions and balances (continued)
Group
Amount due from
Private debt securities Loans, advances and financing Deposits and placement with banks and
other financial institutions Intercompany balances
Security deposits
Amount due to
Demand and fixed deposits Negotiable instruments of deposit
Deposits and placement of banks and
Special investment account Money market deposits Commitment Ultimate holding Holding Other related
corporate body
company
companies
20132012 2013201220132012
RM’000RM’000 RM’000RM’000RM’000RM’000
-
-
-
-
-
-
- - 782,076 1,334,698 712,519
1,493,059
- -
- -
- - 3,852 -
-
3,791 -
-
213,447 4,185 2,992 501,932
2,745
2,992
- - 3,852
3,791 2,337,398 2,713,247
361,574 - 643,575 -
136,512 -
133,987 -
804,111 120,656 738,807
-
- - 399,838 - - 162,269 904,964 -
300 904,960 - 400 211,042 68,726 129,938
409,437
9,366
75,000
761,412 805,844 1,041,776 1,039,347 1,334,473 1,232,610
-
-
- - 1,668,959 1,858,637
Companies in which certain
Personnel
2013201220132012
GroupRM’000RM’000RM’000RM’000
Amount due from
- - 2,812 2,771
- - 2,812 2,771
Amount due to
Demand and fixed deposits 45 13 17,125
15,061
45 13 17,125 15,061
Commitment
-
- -
-
- Expenditure
Interest on fixed deposits Interest on negotiable
instruments of deposit Interest on deposits and
placements of banks
and other financial
institutions Interest on money
market deposits Brokerage fees Rental Others -
- - -
- - 15,521
9,911
239
-
11,799
7,620 - 301 5
-
-
- -
3,873 5,371 - -
-
47,555 93 - - 41,473 -
- 5,989 -
- -
-
- 46,657 61
40,453
-
- 6,143 - - - -
- 456 -
- 407 -
14 -
35 97,632 576 71,745 -
- 420 386
-
- - 34 92,720 525 68,020 -
- 39,356 2,004 431 11,426 5,738 9,165
838 9,754 78,774 5,552 7,590 38,336 27,296 44,675 2,901
532
11,467
4,637
15,839 13 9,286 81,425 8,441 7,003 40,764 25,217 638 -
-
-
638 -
-
-
- - -
- -
- -
-
- - - -
-
- -
- - -
202 -
- - - -
-
202 81 - - 81 - 151
-
-
-
151
55
-
55
-
----
25,311
24,175------
Income
Interest on special
investment account
Interest on private debt
securities Interest on loans,
advances and financing Interest on deposits and
placements with banks
and other financial
institutions Other income Companies which certain
Ultimate holding
Holding
Other related
corporate body
company
Subsidiaries
companies
Personnel
201320122013201220132012201320122013201220132012
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
(a) Related parties transactions and balances (continued)
Bank
33
33
(a)
Related parties transactions and balances (continued)
Bank
Ultimate holding Holding corporate body
company
Subsidiaries
20132012 2013201220132012
RM’000RM’000RM’000RM’000RM’000RM’000
Amount due from
Special investment account Deposits and placements with banks
and other financial institutions
Intercompany balances
- -
- -
715,807 656,230
- - -
- 3,852 -
3,791 -
93,945 60,723
102,434
153,902
- - 3,852 3,791 870,475 912,566
Amount due to
Demand and fixed deposits Deposits and placement of banks
and other financial institutions Money market deposits Intercompany balances 315,251 642,838 136,517 133,987 3,724 3,542
-
399,838 - - 162,269 - 904,964 300
-
904,960
400 - 26,720
- 53,559 48,481
715,089
805,107 1,041,781 1,039,347
84,003 52,023
-
350
Commitment - - - -
Company which certain
Other related Directors have
Key Management
companies
Personnel
20132012 2013201220132012
Bank
RM’000RM’000RM’000RM’000RM’000RM’000
Amount due from
Private debt securities 782,076 712,519 - -
-
Loans, advances and financing 1,235,568 1,456,936 -
- 2,812 2,221
Deposits and placement of banks
and other financial institutions 213,447 301,439 -
-
-
Security deposits
2,992 2,992 - - -
Amount due to
Demand and fixed deposits Negotiable instruments of deposit Deposits and placement of banks
and other financial institutions Money market deposits 2,234,083 2,473,886 -
- 2,812 2,221
13,967 -
12,760
-
-
-
-
741,369 120,656 655,405 -
- - - -
211,042
129,938 409,437 75,000 -
-
-
-
1,203,005 1,139,842 - - 13,967 12,760
Commitment 1,550,779 1,778,238 - - -
-
33
(b)
Key management personnel compensation
The remuneration of key management personnel of the Group and the Bank during the year are as follows:
2013 2012
RM’000 RM’000
Short-term employment benefits
Salaries Bonuses Defined contribution plan (‘EPF’)
Other employee benefits Benefits-in-kind 7,681
10,852
3,177
1,168 483 7,748 10,768 3,127
1,208 410 7,081 10,072 2,949
1,125 442 7,166
10,013
2,906
1,165
368
23,361 23,261 21,669 21,618
Included in the above table are Directors’ remuneration as disclosed in Note 31.
34TAXATION
2013 2012
RM’000 RM’000
The taxation charge arising in
Malaysia for the financial year
Current tax Under/(over) provision in prior year Deferred tax (Note 11)
180,425 1,881 1,501 179,738 (668) (7,171) 159,936 2,320 1,674 152,556
(737)
(6,568)
Tax expense for the year
183,807 171,899 163,930 145,251
The Group 2013 2012 % % The Bank
2013 %
2012
%
Statutory tax rate in Malaysia
Tax effect in respect of:
Non allowable expenses
Non taxable income Utilisation of previously unrecognised tax losses
Effect of different tax rate Tax savings arising from income exempt from tax for
International Currency Business Unit (‘ICBU’)
Under accrual in prior years
Zakat contribution Change in tax rate 25.00 25.00 25.00 25.00
0.22
(0.18)
(0.12) (0.85)
0.25
(0.15) (0.03) (0.50)
0.23 (0.27) -
(0.97) 0.28
(0.18)
(0.59)
(0.17) 0.25 (0.09) 0.05 (0.04)
(0.10) -
- - 0.34 -
0.05 (0.12)
-
Average effective tax rate 24.11
24.43 24.38 24.39
Tax savings of the Group as a result of utilisation of tax losses brought forward from previous years from which the
related credit is recognised during the financial year amounted to RM922,320 (2012: RM61,226).
35
EARNINGS PER SHARE
The basic and fully diluted earnings per ordinary share for the Group and the Bank have been calculated based on
the net profit attributable to equity holders of the Group and the Bank of RM568,822,000 (2012: RM525,266,000) and
RM508,599,000 (2012: RM450,304,000) respectively. The weighted average number of shares in issue during the financial
year of 1,518,337,000 (2012: 1,499,330,000) is used for the computation.
36DIVIDENDS
Dividends declared or proposed for the financial years are as follows:
20132012
Dividend Amount of Dividend Amount of
per share dividend
per share dividend
sen
RM’000
sen RM’000
Ordinary shares
Interim dividend paid Proposed final dividend (*) 10.00 6.00
151,834 91,100
9.00
6.00 136,650
91,100
Dividends in respect of the financial year
16.00 242,934 15.00 227,750
*
At the forthcoming Annual General Meeting, a single-tier final dividend in respect of the current financial year of 6 sen
per share amounting to RM91,100,206 will be proposed for shareholder’s approval. These financial statements do not
reflect this final dividend which will be accounted for in the shareholder’s equity as an appropriation of retained profits
in the financial year ending 31 December 2014 when approved by the shareholder.
Dividends recognised as distribution to ordinary equity holders of the Bank:
20132012
Dividend Amount of Dividend Amount of
per share dividend
per share dividend
sen
RM’000
sen RM’000
Ordinary shares
Interim dividend Final dividend 10.00 6.00 151,834 91,100 9.00 5.00 136,650
71,964
16.00 242,934 14.00 208,614
37
Direct credit substitutes Transaction-related
contingent items Short-term self-liquidating
trade-related contingencies Irrevocable commitments
to extend credit: - maturity less than one year - maturity more than one year Lending of banks’ securities or
the posting of securities as
collateral by banks,including
instances where these arise out
of repo-style transactions. (i.e.
repurchase / reverse repurchase
and securities lending / borrowing
transactions) Foreign exchange related
contracts (#): - less than one year - one year to less than five years - more than five years Interest rate related contracts (#):
- less than one year - one year to less than five years - more than five years
Unutilised credit card lines 21,863,606 56,274 26,639 24,125 2,514 -
29,635 4,592 10,637 14,406 -
- - - 9,444,689 7,263,403 2,181,286 4,326,451 3,636,267 594,154 96,030 3,954,438 809,068 2,442,222 703,148 179,201 - 573,412
-
- 1,974,804
- - 1,410,611 5,360,227 146,851 73,219 57,307 16,325 121,516 2,271 53,133 66,112 35,840 -
2,543,324 1,452,681 1,090,643 114,683 987,402 1,410,611 4,657,757 58,070 33,250 16,657 8,163 44,879 820 15,745 28,314 26,839 - 2,162,029 1,169,480 992,549 82,976 864,908 1,418,056 18,981,323 4,002,348 3,750,554 251,794 -
2,484,603 107,156 1,834,299 543,148 191,103 19,939 9,236,929 6,364,231 2,872,698
453,772 2,147,100
445,529 68,872 47,165 42,781 4,384 - 21,707 563 12,892 8,252 - - - -
- -
- -
4,583,089 115,075 97,948 17,127 -
90,826 122 39,217 51,487 38,221 19,939 2,709,195 1,272,846 1,436,349 90,754 1,073,550 445,529 3,914,708
35,869
29,439
6,430
33,144
49
11,073
22,022
28,693
-
2,407,626
1,065,707
1,341,919
54,644
924,690
430,042
The Group The Group
2013 2012
Positive
Positive
fair value
Credit
Risk-
fair value Credit
Risk
Principal of derivative
equivalent
weighted
Principal of derivative equivalent
weighted
amount
contractsamount*amount* amount
contractsamount*amount*
RM’000RM’000RM’000RM’000RM’000RM’000RM’000RM’000
The commitments and contingencies consist of:
In the normal course of business, the Group and the Bank make various commitments and incurs certain contingent liabilities with legal recourse to their
customers. No material losses are anticipated as a result of these transactions.
37
-
-
-
-
-
26,639 24,125 2,514 -
29,635 4,592 10,637 14,406 -
353,020 8,131,913 6,285,251 1,846,662 - 4,326,451 3,636,267 594,154 96,030 3,954,438 809,068 2,442,222 703,148 179,201 17,411,381 4,002,348 3,750,554 251,794 -
2,484,603 107,156 1,834,299 543,148 191,103 19,939 8,043,626 5,552,840 2,490,786 216,573 2,017,033 436,156 68,872 47,165 42,781 4,384 - 21,707 563 12,892 8,252 - - -
-
-
-
-
-
4,108,009 115,075 97,948 17,127 -
90,826 122 39,217 51,487 38,221 19,939 2,355,961 1,110,568 1,245,393 43,315 1,008,516 436,156 3,517,008
35,869
29,439
6,430
33,144
49
11,073
22,022
28,693
-
2,092,567
925,939
1,166,628
43,109
861,316
422,310
The fair value of these derivatives have been recognised as “derivative financial assets” and “derivative financial liabilities” in the statement of financial position and
disclosed in Note 5 and 19 to the financial statements.
4,267,841 58,070 33,250 16,657 8,163 44,879 820 15,745 28,314 26,839 - 1,852,810 1,012,054 840,756 69,871 804,191 1,411,181 #
4,881,968 146,851 73,219 57,307 16,325 121,516 2,271 53,133 66,112 35,840 -
2,180,381 1,257,050 923,331 70,604 924,619 1,402,157 The credit equivalent amount and risk-weighted amount is arrived at using the credit conversion factors as per Bank Negara Malaysia’s revised Risk Weighted Capital
Adequacy Framework (“RWCAF”) and Capital Adequacy for Islamic Banks (“CAFIB”) guidelines.
56,274 -
1,849,237 20,196,417 -
1,402,157 *
Direct credit substitutes Transaction-related
contingent items Short-term self-liquidating
trade-relatedcontingencies Irrevocable commitments
to extend credit: - maturity less than one year - maturity more than one year Lending of banks’ securities or
the posting of securities as
collateral by banks,including
instances where these arise out
of repo-style transactions. (i.e.
repurchase / reverse repurchase
and securities lending / borrowing
transactions) Foreign exchange related
contracts (#): - less than one year - one year to less than five years - more than five years Interest rate related contracts (#):
- less than one year - one year to less than five years - more than five years
Unutilised credit card lines The Bank The Bank
2013 2012
Positive
Positive
fair value
Credit
Risk-
fair value Credit
Risk
Principal of derivative
equivalent
weighted
Principal of derivative equivalent
weighted
amount
contractsamount*amount* amount
contractsamount*amount*
37
The table below analyses the contractual or underlying principal amounts of derivative financial instruments held or issued.
In addition, they also set out the corresponding gross positive credit equivalent of the derivative financial instruments.
20132012
Credit Credit
Principal equivalent
Principal equivalent
amount amount amount
amount
RM’000
RM’000
RM’000 RM’000
Foreign exchange contracts
Forward contracts Swaps 811,717
3,514,734 13,829 133,022 941,791 3,060,558 19,016
96,059
Interest rate contracts
Swaps
3,954,438 121,516
2,484,602 90,826
Foreign exchange related contracts and interest rate related contracts are subject to market risk and credit risk.
38
FINANCIAL RISK MANAGEMENT
(i)
Credit risk
Credit risk is the potential financial loss resulting from the failure of the customer or counterparty to settle the
financial and contractual obligations to the Bank. Credit risk emanates mainly from loans, advances and financing,
loan commitments arising from such lending activities, as well as through financial transactions with counterparties
including interbank money market activities, derivative instruments used for hedging and debt securities.
The management of credit risk in the Bank is governed by a set of approved credit policies, guidelines and procedures.
Approval authorities are delegated to Senior Management and Group Management Loan Committee (‘GMLC’) to
implement the credit policies and ensure sound credit granting standards.
An independent Group Risk Management (‘GRM’) function, headed by Group Chief Risk Officer (‘GCRO’), with direct
reporting line to Board Risk Management Committee (‘BRMC’) is in place to ensure adherence to risk standards and
discipline. Portfolio management risk reports are submitted regularly to BRMC.
Lending guidelines and credit strategies are formulated and incorporated in the Annual Credit Plan. New businesses
are governed by the risk acceptance criteria and customer qualifying criteria/fitness standards prescribed in the Annual
Credit Plan. The Annual Credit Plan is reviewed at least annually and approved by the BRMC.
38
(i)
Credit risk (continued)
Credit risk measurement
Credit evaluation is the process of analysing the creditworthiness of the prospective customer against the Bank’s
underwriting criteria and the ability of the Bank to make a return commensurate to the level of risk undertaken. A
critical element in the evaluation process is the assignment of a credit risk grade to the counterparty. This assists in
the risk assessment and decision making process. The Bank has developed internal rating models to support the
assessment and quantification of credit risk.
For consumer mass market products, statistically developed application scorecards are used by the Business to
assess the risks associated with the credit application. The scorecards are used as a decision support tool at loan
origination.
Over-the-Counter (‘OTC’) Derivatives
The OTC Derivatives credit exposure is computed using the Current Exposure Method. Under the Current Exposure
method, computation of credit equivalent exposure for interest rate and exchange rate related contracts is derived
from the summation of the two elements; the replacement costs (obtained by marking-to-market) of all contracts and
the potential future exposure of outstanding contracts (Add On charges depending on the specific remaining tenor to
maturity).
Risk limit control and mitigation policies
The Bank employs various policies and practices to control and mitigate credit risk.
Lending limits
The Bank establishes internal limits and related lending guidelines to manage large exposures and avoid undue
concentration of credit risk in its credit portfolio. The limits include single customer groupings, large exposures,
connected parties, and geographical and industry segments. These risks are monitored regularly and the limits
reviewed annually or sooner depending on changing market and economic conditions.
The credit risk exposure for derivative and loan books is managed as part of the overall lending limits with customers
together with potential exposure from market movements.
38
(i)
Risk limit control and mitigation policies (continued)
Collateral
Credits are established against borrower’s capacity to repay rather than rely solely on security. However, collateral
may be taken to mitigate credit risk. The main collateral types accepted and given value by the Bank are:
-
Documentary and commercial letters of credit are collateralised by the underlying shipments of goods to which they
relate and therefore carry less risk than a direct loan.
Credit related commitments
Commitment to extend credit represents unutilised portion of approved credit in the form of loans, guarantees
or letters of credit. In terms of credit risk, the Bank is potentially exposed to loss in an amount equal to the total
unutilised commitments. However, the potential amount of loss is less than the total unutilised commitments, as most
commitments to extend credit are contingent upon customers maintaining specific minimum credit standards.
The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a
greater degree of credit risk than short-term commitments.
Credit risk monitoring
Retail credits are actively monitored and managed on a portfolio basis by product type. A collection management
system in place to promptly identify, monitor and manage delinquent accounts at early stages of delinquency.
mortgage over residential properties;
charges over commercial real estate or vehicles financed;
charges over business assets such as business premises, inventory and accounts receivable; and
charges over financial instruments such as marketable equities.
38
(i)
Credit risk monitoring (continued)
Corporate credits and large individual accounts are reviewed by the Business Units at least once a year against
updated information. This is to ensure that the credit grades remain appropriate and detect any signs of weaknesses
or deterioration in the credit quality. Remedial action is taken where evidence of deterioration exists.
Early Alert Process is in place as part of a means to pro-actively identify, report and manage deteriorating credit quality.
Watchlist accounts are closely reviewed and monitored with corrective measures initiated to prevent them from turning
impaired. As a rule, watchlist accounts are either worked up or worked out within a period of twelve months.
Active portfolio monitoring enables the Bank to understand the overall risk profile and identify any adverse trends or
areas of risk concentrations affecting asset quality so that appropriate actions are adopted to manage and mitigate
risks.
Credit risk culture
The Bank recognises that learning is a continuous journey and is committed to enhance the knowledge and required
skills set of its staff. It places strong emphasis in creating and enhancing risk awareness in the organisation.
For effective and efficient staff learning, an E–Learning Program is implemented with an online Learning Management
System (‘LMS’). The LMS provides staff with a progressive self-learning alternative at own pace.
Group Risk Management implements an Internal Credit Certification (‘ICC’) Programme for both Business Banking and
Consumer Credit.
The aim of the ICCs is to assist the core credit related group of personnel in the Bank achieve a minimum level of
knowledge and analytical skills required to make sound corporate and commercial loans to customers.
Maximum exposure to credit risk
For financial assets recognised on the statement of financial position, the exposure to credit risk equals their carrying
amount. For financial guarantees granted, the maximum exposure to credit risk is the maximum amount that the Group
and the Bank would have to pay if guarantee were to be called upon. For loan commitments and other commitments,
the maximum exposure to credit risk is the full amount of the undrawn credit facilities granted to customers.
All financial assets of the Group and the Bank are subject to credit risk except for cash in hand, equity securities held
as financial assets held-for-trading or financial investments available-for-sale, as well as non-financial assets.
38
(i)
Maximum exposure to credit risk (continued)
The exposure to credit risk of the Group and the Bank equals their carrying amount in the statement of financial position
as at reporting date, except for the followings:
The Group
The Bank
2013 2013 2013 2013
Maximum Maximum
Carrying Credit Carrying Credit
Value
Exposure Value Exposure
RM’000 RM’000 RM’000 RM’000
Credit risk exposures of on-balance sheet assets:
Cash and short-term funds Financial investments available-for-sale Other assets 9,401,701 * 9,234,368 7,614,537 # 7,495,386 220,097 @ 191,679 4,987,696 * 4,820,362
6,331,414 # 6,212,331
176,555 @ 148,663
Credit risk exposure of off-balance sheet items:
Financial guarantees Loan commitments and other credit related commitments 3,385,415 ^ 2,398,013 3,251,394 ^ 2,326,776
18,478,191 ^ 2,962,214 16,945,023 ^ 2,555,192
Total maximum credit risk exposure 39,099,941 22,281,660 31,692,082 16,063,324
The Group
The Bank
2012 2012 2012 2012
Maximum Maximum
Carrying Credit Carrying Credit
Value
Exposure Value Exposure
RM’000 RM’000 RM’000 RM’000
Credit risk exposures of on-balance sheet assets:
Cash and short-term funds Financial investments available-for-sale Other assets 7,648,904 * 7,477,429 7,640,654 # 7,531,197 293,658 @ 257,706 3,633,842 * 3,462,366
5,658,161 # 5,551,454
227,790 @ 192,354
Credit risk exposure of off-balance sheet items:
Financial guarantees Loan commitments and other credit related commitments 2,592,629 ^ 1,519,079
2,453,189 ^ 1,444,672
16,388,694 ^ 3,064,010 14,958,192 ^ 2,663,337
Total maximum credit risk exposure 34,564,539 19,849,421 26,931,174 13,314,183
The following have been excluded for the purpose of maximum credit risk exposure calculation:
* cash in hand
# investment in quoted and unquoted shares
@prepayment
^ amount stated at notional value
Whilst the Group and the Bank’s maximum exposure to credit risk is the carrying value of the assets, or in the case of offbalance sheet items, the amount guaranteed, committed or accepted, in most cases the likely exposure is far less due to
collateral, credit enhancements and other actions taken to mitigate the credit exposure.
The financial effect of collateral held for loans, advances and financing of the Group and the Bank are 68% (2012: 68%)
and 66% (2012: 66%) respectively. The financial effects of collateral for the other financial assets are insignificant.
Credit risk concentrations
Credit risk is the risk of financial loss from the failure of customers to meet their obligations. Exposure to credit risk is managed through portfolio management.
The credit portfolio’s risk profiles and exposures are reviewed and monitored regularly to ensure that an acceptable level of risk diversification is maintained.
Exposure to credit risk is also managed in part by obtaining collateral security and corporate and personal guarantees.
The credit risk concentrations of the Group and the Bank, by industry concentration, are set out in the following tables:
-
482,597 Not inclusive of collective allowance amounting to RM300 million.
9,234,368 149,544 56,274 7,495,386 Risk concentrations for commitments and contingencies are based on the credit equivalent balances in Note 37.
*
Total assets
500,336 36,528,099 191,679 54,638,283 5,360,227
Agriculture
-
-
-
-
78 -
-
475,721 -
475,799 98,279
Mining and
quarrying
-
-
-
-
-
-
-
649,621 -
649,621 121,024
Manufacturing
-
-
-
-
2,446 130,969 120,058 2,500,348 - 2,753,821 560,016
Electricity, gas
and water supply
-
-
-
-
308 163,109 -
290,994 -
454,411 11,466
Construction
-
-
-
-
-
74,578 195,105 3,144,160 - 3,413,843 1,084,501
Real estate
-
-
-
-
-
41,345 1,525 4,623,807 - 4,666,677 414,212
Transport, storage
and
communication
-
-
-
-
-
55,259 -
1,961,669 - 2,016,928 206,701
Finance, insurance
and business
services
1,274,635 -
482,597 -
53,351 4,243,037 159,741 4,323,226 - 10,536,587 738,753
Government and
government
agencies
7,959,733 -
-
149,544 -
2,741,712 -
117,523 - 10,968,512 158,639
Wholesale & retail
trade and
restaurants
& hotels
-
-
-
-
91 45,377 23,907 2,133,369 - 2,202,744 1,189,593
Others
-
-
-
-
-
-
- 16,307,661 191,679 16,499,340 777,043
Reverse Deposits and
Repurchase placements Financial
agreementswith banks assetsFinancialFinancial Loans,
On
Cash and
with
and other
held- Derivative investments investments advances balance Commitments
short-term financial financial
for-
financial
available-
held-to-
and
Other sheet
and
The Group
funds institutions
institutions
trading
assets
for-sale
maturity financing (*) assets
total Contingencies
2013
RM’000RM’000 RM’000
RM’000
RM’000RM’000RM’000RM’000
RM’000
RM’000 RM’000
(i)
38financial risk management
Credit risk concentrations (continued)
(i)
20,057 596,452 165,592 Not inclusive of collective allowance amounting to RM323 million.
7,477,429 68,872 7,531,197 451,670 33,805,255 257,706 50,374,230 Risk concentrations for commitments and contingencies are based on the credit equivalent balances in Note 37.
*
Total assets
4,583,089
Agriculture
-
-
-
-
13 -
-
539,616 -
539,629 74,359
Mining and
quarrying
-
-
-
-
481 -
-
473,549 -
474,030 30,460
Manufacturing
-
-
-
-
770 14,538 157,579 2,635,371 - 2,808,258 628,604
Electricity, gas
and water supply
-
-
-
-
28 149,613 -
464,233 -
613,874 18,763
Construction
-
-
-
-
-
66,039 200,410 2,876,413 - 3,142,862 1,264,474
Real estate
-
-
-
-
-
9,982 -
3,707,749 - 3,717,731 592,892
Transport, storage
and
communication
-
-
-
-
-
55,178 73,641 1,680,704 - 1,809,523 229,966
Finance, insurance
and business
services
759,536 -
496,444 165,592 67,425 4,236,881 -
4,160,207 520 9,886,605 842,624
Government and
government
agencies
6,717,893 20,057 100,008 -
-
2,904,092 -
117,523 - 9,859,573 137,225
Wholesale & retail
trade and
restaurants &
hotels
-
-
-
-
155 94,874 20,040 1,765,174 - 1,880,243 280,869
Others
-
-
-
-
-
-
- 15,384,716 257,186 15,641,902 482,853
On
Cash and
with
and other
for-
financial
available-
held-to-
and
Other sheet
and
The Group
funds institutions
institutions
trading
assets
for-sale
total Contingencies
2012
RM’000RM’000 RM’000
RM’000
RM’000RM’000RM’000RM’000
RM’000
RM’000 RM’000
38
(i)
-
1,106,756 149,544 Not inclusive of collective allowance amounting to RM267 million.
*
Total assets
4,881,968
Agriculture
-
-
-
-
78 -
-
467,708 -
467,786 93,023
Mining and
quarrying
-
-
-
-
-
-
-
648,488 -
648,488 121,024
Manufacturing
-
-
-
-
2,446 62,502 120,058 2,287,155 - 2,472,161 532,165
Electricity, gas
and water supply
-
-
-
-
308 163,109 -
253,405 -
416,822 11,466
Construction
-
-
-
-
-
74,578 195,105 2,666,179 - 2,935,862 908,297
Real estate
-
-
-
-
-
41,345 1,525 4,192,630 - 4,235,500 384,572
Transport, storage
and
communication
-
-
-
-
-
55,259 -
1,854,742 - 1,910,001 194,400
Finance, insurance
and business
services
1,115,964 -
1,106,756 -
53,351 3,782,377 74,676 3,799,712 - 9,932,836 700,246
Government and
government
agencies
3,704,398 -
-
149,544 -
1,998,057 -
95,861 - 5,947,860 78,011
Wholesale & retail
trade and
restaurants &
hotels
-
-
-
-
91 35,104 23,907 1,988,323 - 2,047,425 1,163,720
Others
-
-
-
-
-
-
- 12,191,301 148,663 12,339,964 695,044
On
Cash and
with
and other
for- financial
available-
held-to-
and
Other sheet
and
The Bank
funds institutions
institutions
trading
assets
for-sale
total Contingencies
2013
RM’000RM’000 RM’000
RM’000
RM’000RM’000RM’000RM’000
RM’000
RM’000 RM’000
38
(i)
20,057 1,043,825 165,592 Not inclusive of collective allowance amounting to RM288 million.
*
Total assets
4,108,009
Agriculture
-
- -
-
13 -
-
454,538 -
454,551 71,742
Mining and
quarrying
-
- -
-
481 -
-
472,737 -
473,218 30,460
Manufacturing
-
- -
-
770 14,538 157,579 2,421,160 - 2,594,047 592,157
Electricity, gas
and water supply
-
- -
-
28 149,613 -
441,262 -
590,903 18,763
Construction
-
- -
-
-
50,642 200,410 2,472,518 - 2,723,570 1,082,510
Real estate
-
- -
-
-
9,982 -
3,298,277 - 3,308,259 580,265
Transport, storage
and
communication
-
- -
-
-
55,178 73,641 1,663,557 - 1,792,376 223,856
Finance, insurance
and business
services
435,596 - 1,043,825 165,592 67,425 3,524,648 -
3,672,697 - 8,909,783 792,322
Government and
government
agencies
3,026,770 20,057 -
-
-
1,662,329 -
95,861 - 4,805,017 54,670
Wholesale & retail
trade and
restaurants &
hotels
-
- -
-
155 84,524 20,040 1,629,756 - 1,734,475 260,197
Others
-
- -
-
-
-
- 12,004,599 192,354 12,196,953 401,067
On
Cash and
with
and other
for-
financial
available-
held-to-
and
Other sheet
and
The Bank
funds institutions
institutions
trading
assets
for-sale
total Contingencies
2012 RM’000RM’000 RM’000
RM’000
RM’000RM’000RM’000RM’000
RM’000
RM’000 RM’000
38
38
(i)
Collaterals
The main types of collateral obtained by the Group and the Bank are as follows:
- for personal housing loans, mortgages over residential properties;
- for commercial property loans, charges over the properties being financed;
- for hire purchase, charges over the vehicles or plant and machineries financed; and
- for other loans, charges over business assets such as premises, inventories, trade receivables or deposits.
Total loans, advances and financing - credit quality
All loans, advances and financing are categorised into “neither past due nor impaired”, “past due but not impaired”
and “impaired”. Past due loans refer to loans that are overdue by one day or more. Impaired loans are loans with
months-in-arrears more than 3 months (i.e. 90 days) or with impairment allowances.
Distribution of loans, advances and financing by credit quality
2013 2012
RM’000 RM’000
Neither past due nor impaired (a) Past due but not impaired (b) Impaired (c)
33,612,968 30,688,227 28,026,769 26,047,661
2,432,647 2,574,206 2,033,298 2,131,175
706,185 753,194 574,555
623,403
Gross loans, advances and financing
less: Allowance for impairment
- Individual - Collective 36,751,800 34,015,627 30,634,622 28,802,239
Net loans, advances and financing 36,227,785 33,482,626 30,178,910 28,339,269
Past due but not impaired includes accounts within grace period of the Group and the Bank amounting to RM1.0
billion (2012: RM1.0 billion) and RM0.9 billion (2012: RM0.9 billion) respectively.
(223,701)
(300,314) (210,372)
(322,629)
(189,117)
(266,595) (175,277)
(287,693)
38
(i)
Total loans, advances and financing - credit quality (continued)
(a)
Loans neither past due nor impaired
Analysis of loans, advances and financing that are neither past due nor impaired analysed based on the Group
and the Bank’s internal credit grading system is as follows:
The Group 2013 2012 RM’000 RM’000 Quality classification
Satisfactory Special mention
The Bank
2013 2012
RM’000 RM’000
30,400,612 27,497,521 25,143,738 23,278,395
3,212,356 3,190,706 2,883,031 2,769,266
33,612,968
30,688,227
28,026,769
26,047,661
Quality classification definitions
Satisfactory: Exposures demonstrate a strong capacity to meet financial commitments, with negligible or low
probability of default and/or levels of expected loss.
Special mention: Exposures require varying degrees of special attention and default risk is of greater concern.
(b)
Loans past due but not impaired
Certain loans, advances and financing are past due but not impaired as the collateral values of these loans are in
excess of the principal and profit outstanding. Allowances for these loans may have been set aside on a portfolio
basis. The Bank’s loans, advances and financing which are past due but not impaired are as follows:
The Group 2013 2012 RM’000 RM’000 Past due up to 30 days Past due 30-60 days Past due 60-90 days The Bank
2013 2012
RM’000 RM’000
1,312,337 767,638 352,672 1,390,570 813,727 369,909 1,165,696 595,137 272,465 1,188,938
653,476
288,761
2,432,647 2,574,206 2,033,298 2,131,175
38
(i)
Total loans, advances and financing - credit quality (continued)
(c)
Loans impaired
2013 2012
RM’000 RM’000
Analysis of impaired assets:
Gross impaired loans
706,185 753,194 574,555 623,403
Individually impaired loans
122,532
127,376 50,399 56,521
Collateral and other credit enhancements obtained
During the year, the Bank has not obtained any assets by taking possession of collateral held as security or
calling upon other credit enhancements.
Private debt securities, treasury bills and derivatives
Private debt securities, treasury bills and other eligible bills included in financial assets held-for-trading and
financial investments available-for-sale are measured on a fair value basis. The fair value will reflect the credit risk
of the issuer.
Most listed and some unlisted securities are rated by external rating agencies. The Group and the Bank mainly
uses external credit ratings provided by RAM, MARC, Standard & Poors’ or Moody’s.
The table below presents an analysis of debt securities, treasury bills and other eligible bills by rating agency.
38
AA- to AA+
RM’000
A- to A+
RM’000
Lower than A-
RM’000
Unrated
RM’000 * Impaired RM’000 AAA
RM’000
2,581,140 AA- to AA+
RM’000
697,306 A- to A+
RM’000
404,425 Lower than A-
RM’000
59,070 Unrated
RM’000 4,335,416 * Impaired RM’000 67,907 Net of allowance for impairment
2,768,599 483,237 302,619 80,742 4,427,697 85,566 8,148,460
451,670
5,070
1,879,076
884,069
120,550
1,109,556
3,532,877
150,276
15,316
Total
RM’000
8,145,264
500,336
1,759,211
629,674
337,661
1,316,277
3,452,561
149,544
Total
RM’000
Collateral is not generally obtained directly from the issuers of debt securities. Certain debt securities may be collateralised by specifically identified assets that would
be obtainable in the event of default.
*
Financial assets held-for-trading Negotiable Instruments of Deposit -
-
-
-
150,276 -
Private debt securities -
-
-
15,316 -
-
Financial investments available-for-sale Malaysian Government securities -
-
-
-
5,070 -
Malaysian Government investment issues -
-
-
-
1,879,076 -
Bank Negara Malaysia Monetary Notes -
-
-
-
884,069 -
Sukuk Perumahan Kerajaan 120,550 -
-
-
-
-
Others -
-
-
-
1,109,556 -
Private debt securities 2,648,049 483,237 302,619 65,426 33,530 16 Financial investments held-to-maturity Private debt securities -
-
-
-
366,120 85,550 The Group
2012
Financial assets held-for-trading Bank Negara Malaysia Monetary Notes -
-
-
-
149,544 -
Financial investments available-for-sale Malaysian Government investment issues -
-
-
-
1,759,211 -
-
-
-
629,674 -
-
-
-
-
Others -
-
-
-
1,316,277 -
Private debt securities 2,243,479 697,306 404,425 59,070 48,281 -
Financial investments held-to-maturity Private debt securities -
-
-
-
432,429 67,907 AAA
RM’000
Private debt securities, treasury bills and derivatives (continued)
The Group
2013
(i)
38
AA- to AA+
RM’000
A- to A+
RM’000
Lower than A-
RM’000
Unrated
RM’000 * Impaired RM’000 AAA
RM’000
2,013,398 AA- to AA+
RM’000
687,033 A- to A+
RM’000
404,425 Lower than A-
RM’000
59,070 Unrated
RM’000 3,545,312 * Impaired RM’000 67,907 Net of allowance for impairment
2,077,159 472,886 302,619 80,742 3,149,743 85,566 6,618,715
451,670
5,070
1,004,366
517,015
120,550
1,073,366
2,831,086
150,276
15,316
Total
RM’000
6,777,145
415,271
1,142,371
571,160
269,361
1,286,592
2,942,846
149,544
Total
RM’000
Collateral is not generally obtained directly from the issuers of debt securities. Certain debt securities may be collateralised by specifically identified assets that would
be obtainable in the event of default.
*
Financial assets held-for-trading Negotiable Instruments of Deposit -
-
-
-
150,276 -
Private debt securities -
-
-
15,316 -
-
Financial investments available-for-sale Malaysian Government securities -
-
-
-
5,070 -
Malaysian Government investment issues -
-
-
-
1,004,366 -
-
-
-
517,015 -
-
-
-
-
Others -
-
-
-
1,073,366 -
Private debt securities 1,956,609 472,886 302,619 65,426 33,530 16 Financial investments held-to-maturity Private debt securities -
-
-
-
366,120 85,550 The Bank
2012
Financial assets held-for-trading Bank Negara Malaysia Monetary Notes -
-
-
-
149,544 -
Financial investments available-for-sale Malaysian Government investment issues -
-
-
-
1,142,371 -
-
-
-
571,160 -
-
-
-
-
Others -
-
-
-
1,286,592 -
Private debt securities 1,744,037 687,033 404,425 59,070 48,281 -
Financial investments held-to-maturity Private debt securities -
-
-
-
347,364 67,907 AAA
RM’000
Private debt securities, treasury bills and derivatives (continued)
The Bank
2013
(i)
38
(ii)
Market risk
Market risk is defined as the risk of losses to the Bank’s portfolio positions arising from movements in market factors
such as interest rates, foreign exchange rates and changes in volatility. The Bank is exposed to market risks from
its trading and investment activities. The Bank’s market risk management objective is to ensure that market risk is
appropriately identified, measured, controlled, managed and reported.
The Bank’s exposure to market risk stems primarily from interest rate risk and foreign exchange rate risk. Interest rate
risk arises mainly from differences in timing between the maturities or repricing of assets, liabilities and derivatives. The
Bank is also exposed to basis risk when there is a mismatch between the change in price of a hedge and the change
in price of the assets it hedges. Foreign exchange rate risk arises from unhedged positions of customers’ requirements
and proprietary positions.
The Bank’s market risk management control strategy is established based on its risk appetite, market liquidity and
business strategies as well as macroeconomic conditions. These limits are reviewed at least on an annual basis.
Market risk arising from the Bank’s trading book is primarily controlled through the imposition of Cut-loss and Value-atRisk (‘VaR’) Limits.
The Bank quantifies interest rate risk by analysing the repricing mismatch between the rate sensitive assets and rate
sensitive liabilities. It also conducts Net Interest Income simulations to assess the variation in earnings under various
rates scenarios. The potential long term effects of the Bank’s overall exposure is also tracked by assessing the impact
on economic value of equity (‘EVE’).
The Bank’s interest rate risk is managed through Earnings-at-Risk (‘EaR’) and Economic Value-at-Risk (‘EVaR’) limits.
In addition, the Bank conducts periodic stress test of its respective business portfolios to ascertain market risk under
abnormal market conditions.
The Bank’s Management, ALCO and BRMC are regularly kept informed of its risk profile and positions.
38
(ii)
Market risk (continued)
Value-at-Risk (‘VaR’)
Value-at-Risk (‘VaR’) is used to compute the maximum potential loss amount over a specified holding period of a
trading portfolio. It measures the risk of losses arising from potential adverse movements in interest rates and foreign
exchange rates that could affect values of financial instruments.
The Variance-Covariance Parametric methodology is adopted to compute the potential loss amount. This is a
statistically defined, probability-based approach that uses volatilities and correlations to quantify price risks. Under
this methodology, a matrix of historical volatilities and correlations is computed from the past 100 business days’
market data. VaR is then computed by applying these volatilities and correlations to the outstanding trading portfolio.
The table below sets out a summary of the Bank’s VaR profile by financial instrument types for the trading portfolio:
Average
for the
Balance fi
nancial year Minimum Maximum
2013
RM’000 RM’000 RM’000 RM’000
Instruments
FX swap FX spot (Metro Desk) Government securities
Private debt securities 713
88
2
-
607 150 -
-
252 6 -
- 1,375
678
2
60
Average
for the
Balance financial year Minimum Maximum
2012
RM’000 RM’000 RM’000 RM’000
Instruments
FX swap
FX spot (Metro Desk)
Government securities Private debt securities 152 AFFIN BANK BERHAD (25046-T) Annual Report 2013
634 34 - 60
906
144 - 48 604 9 -
-
1,468
672
4
329
38
(ii)
Other risk measures
•
Mark-to-market
Mark-to-market valuation tracks the current market value of the outstanding financial instruments.
•
Stress testing
Stress tests are conducted to attempt to quantify market risk arising from low probability, abnormal market
movements. Stress tests measure the changes in values arising from extreme movements in interest rates and
foreign exchange rates based on past experience and simulated stress scenarios.
•
Sensitivity/Dollar Duration
Sensitivity/Dollar Duration measures the change in value of a portfolio resulting from a 0.001% increase in interest
rates. This measure identifies the Bank’s interest rate exposures that are most vulnerable to interest rate changes
and facilitates the implementation of hedging strategies.
Net interest income sensitivity
The table below shows the pre-tax net interest income sensitivity for the financial assets and financial liabilities held
at reporting date. The sensitivity has been measured using the Repricing Gap Simulation methodology based on 100
basis points parallel shifts in the interest rate.
The Group The Bank
2013 2013 2013 2013
+100 -100
+100 -100
basis point basis point basis point basis point
RM million RM million RM million RM million
Impact on net interest income As percentage of net interest income
(18.5) -1.8%
18.5 1.8%
(21.5) -2.6%
21.5
2.6%
The Group The Bank
2012 2012 2012 2012
+100 -100
+100 -100
basis point basis point basis point basis point
RM million RM million RM million RM million
Impact on net interest income As percentage of net interest income
(3.8) -0.4%
3.8 0.4%
(16.8) -2.1%
16.8
2.1%
38
(ii)
Foreign exchange risk sensitivity analysis
Open position
Ringgit Impact of
Malaysia 1% fall in
US Ringgit equivalent US
Dollar Malaysia amount for Dollar
equivalent equivalent 1 % fall in exchange
The Group
amount amount US Dollar rate
2013
‘000 ‘000 ‘000 ‘000
US Dollar Others (304) (4,217) (997) (13,821)
(987) (13,683) 10
138
The impact on the outstanding foreign exchange position as at 31 December 2013 for a one percent change in USD
exchange rate from 3.2775 to 3.2447 was an increase of RM148,185.
Open position
Ringgit Malaysia US Ringgit equivalent Dollar Malaysia amount for equivalent equivalent 1 % fall in
The Group
amount amount US Dollar 2012
‘000 ‘000 ‘000 US Dollar
Others 769
(4,384) 2,352 (13,409)
2,329 (13,275)
Impact of
1% fall in
US
Dollar
exchange
rate
‘000
(24)
134
38
(ii)
Foreign exchange risk sensitivity analysis (continued)
Open position
Ringgit Impact of
Malaysia 1% fall in
US Ringgit equivalent US
Dollar Malaysia amount for Dollar
equivalent equivalent 1 % fall in exchange
The Bank
amount amount US Dollar rate
2013
‘000 ‘000 ‘000 ‘000
US Dollar Others
(1,394) (3,197) (4,568) (10,480)
(4,522)
(10,375) 46
105
Open position
Ringgit Malaysia US Ringgit equivalent Dollar Malaysia amount for equivalent equivalent 1 % fall in
The Bank
amount amount US Dollar 2012
‘000 ‘000 ‘000 US Dollar Others
186 (3,967)
570 (12,134)
564 (12,013) Impact of
1% fall in
US
Dollar
exchange
rate
‘000
(6)
121
Foreign exchange risk
The Bank is exposed to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial
position and cash flows. Limits are set on the level of exposure by currency and in aggregate for both overnight
and intra-day positions, which are monitored daily. The table summarises the Bank’s exposure to foreign currency
exchange rate risk at reporting date. Included in the table are the Bank’s financial instruments at carrying amounts,
categorised by currency.
38
Foreign exchange risk (continued)
54,353 Total financial assets Net on-balance sheet financial position Off balance sheet credit commitments Total financial liabilities Liabilities
and other financial institutions Derivative financial liabilities
Other liabilities 67,299 1,121 254,631 1,294,883 892 -
- 46,552 207 - (23,209)
285,323 1,635,106 3,679,237 228,979 -
4,597 2,904 -
- - 77,562 221,478 77,562 1,864,085 245,259 7,594 Assets
Cash and short-term funds Deposits and placements with banks
and other financial institutions Derivative financial assets Financial investments available-for-sale Loans, advances and financing Other assets 97,535 57,795 14,962 - -
-
14,962
112,497 - -
-
107,860 - 4,637 68,426 87,955 17,329 11,319 - -
6,010 85,755 29,289 - 56,450 - -
16 (8,018) 9,932 9,839 -
- -
9,839 1,821 -
-
- 422 - 1,399 453,218 54,566 17,642
45 1,077 -
16,520 470,860 26,969 213 147,088 264,128 928 31,534 2,223,058
4,174,808
366,313
11,364
5,674
2,904
346,371
2,589,371
123,557
1,334
504,721
1,667,500
1,820
290,439
United Great
States
BritainAustralian Japanese
The Group
EuroDollarPoundDollar YenOthers Total
2013
RM’000RM’000RM’000RM’000RM’000RM’000RM’000
(ii)
38
110,212 (103,303) 689,007 Net on-balance sheet financial position Off balance sheet credit commitments
- -
- 110,212 1,301,084 1,927,908 798,587 612,055 6,940 6,583 173,009 2,099,671 129,692 15,316
1,811 220,664 1,598,937 487 -
- - - 185 - 6,909 132,764 6,724 Total financial liabilities
Liabilities
Deposits from customers Deposits and placements of banks
Other liabilities Total financial assets
Assets
Deposits and placements with banks
Derivative financial assets Financial investments available-for-sale Loans, advances and financing
Other assets 93,347
39,134 7,337 - - - 7,337 100,684 -
-
-
- 98,514 - 2,170 207,141 131,679 18,730 8,873 596 265 8,996 225,871 79,833
-
1,155 144,654 - -
229 1,916 47,591 170 - -
- 170 2,086 -
- - -
1,114 - 972 119,671 455,321
8,610 - 2,457 - 6,153 128,281 - -
231 100,418 1,871 -
25,761 1,619,856
3,290,640
943,646
620,928
9,993
6,848
305,877
2,563,502
209,525
15,316
3,197
465,736
1,700,621
487
168,620
United
Great
States
BritainAustralianJapanese
The Group
2012
RM’000RM’000RM’000RM’000RM’000RM’000RM’000
(ii)
38
Total financial liabilities
77,544 255,183 14,955 18,049 9,835 17,641 393,207
Net on-balance sheet financial position
(24,696) 1,566,106 97,286 67,706 (8,058)
452,377 2,150,721
Off balance sheet credit commitments
231,559 3,521,399 56,676 87,955 10,195 54,258 3,962,042
Total financial assets
52,848 1,821,289 112,241 85,755 1,777 470,018 2,543,928
Liabilities
77,544 220,879 14,955 6,003 9,835 16,519 345,735
-
26,720 -
12,046 -
45 38,811
Derivative financial liabilities
-
4,597 -
-
-
1,077 5,674
Other liabilities
-
2,987 -
-
-
-
2,987
Assets
6,089 310,064 4,381 16 1,355 30,691 352,596
-
95,667 -
29,289 -
26,969 151,925
-
1,121 -
-
-
213 1,334
46,552 254,631 -
56,450 -
147,088 504,721
207 1,158,914 107,860 -
422 264,129 1,531,532
Other assets
-
892 -
-
-
928 1,820
United Great
States
BritainAustralian Japanese
The Bank
2013
RM’000RM’000RM’000RM’000RM’000RM’000RM’000
(ii)
38
Total financial liabilities
109,047 798,421 7,330 18,730 167 8,610 942,305
Net on-balance sheet financial position
(103,497) 1,237,186 92,975 206,929 1,689 119,402 1,554,684
525,244 1,870,422 36,464 131,679 47,591 445,785 3,057,185
Total financial assets
5,550 2,035,607 100,305 225,659 1,856 128,012 2,496,989
Liabilities
109,047 172,765 7,330 8,996 167 6,153 304,458
-
612,055 -
8,873 -
-
620,928
-
6,940 -
596 -
2,457 9,993
Other liabilities
-
6,661 -
265 -
-
6,926
Assets
5,365 191,827 1,791 17 742 25,492 225,234
-
170,921 -
79,833 -
-
250,754
-
15,316 -
-
-
-
15,316
-
1,811 -
1,155 -
231 3,197
-
220,664 -
144,654 -
100,418 465,736
185 1,434,581 98,514 -
1,114 1,871 1,536,265
Other assets
-
487 -
-
-
-
487
United
Great
States
BritainAustralianJapanese
The Bank
2012
RM’000RM’000RM’000RM’000RM’000RM’000RM’000
(ii)
38
Sensitivity to interest rates arises from mismatches in the interest rate characteristics of the assets and their corresponding liability funding. One of
the major causes of these mismatches is timing differences in the repricing of the assets and liabilities. These mismatches are actively managed
as part of the overall interest rate risk management process which is conducted in accordance with Group policy guidelines.
The following table represents the Group’s and the Bank’s assets and liabilities at carrying amounts, categorised by the earlier of contractual
repricing or maturity dates as at reporting date.
*
#
(1)
- -
482,597 149,544 56,274
7,614,537 500,336 9,401,701 5.37
3.82
4.69
4.20
2.94
2.99
The negative balance represents collective allowance for loans, advances and financing.
Net of individual allowance.
Others include property and equipment, intangible assets, statutory deposits with BNM, tax recoverable, deferred tax assets, other assets and amount due from
jointly controlled entity.
56,437,113
- 35,745,301
- 482,484
- 2,004,339
4,419 - - 149,544 26,639 29,635 174,085 - 72,051 -
223,069
28,911,160 3,436,710 5,023,350 11,778,938 4,421,004 2,686,772 179,179 -
Total assets -
286,741 101,437 - - -
- -
-
-
-
- - 767,998 1,318,762 3,056,311 2,087,340 268,102 85,000 73,658
-
-
19,430,962 2,113,869 3,518,151 8,648,969 2,333,664 (300,314) * - -
- - - 482,484 #
-
-
-
-
- 2,004,339 90,000 - -
210,041 1,525 9,178,632 Assets
Cash and short-term funds Deposits and placements with bank
Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale Financial investment held-to-maturity Loans, advances and financing
- non-impaired - impaired Others (1)
Non
interest /
Effective
Up to 1
>1-3
>3-12 >1-5
Over 5
profit Trading interest
The Group
monthmonthsmonths years years
sensitive book
Total rate
2013
RM’000RM’000RM’000 RM’000RM’000RM’000
RM’000 RM’000 %
Non-trading book
Interest/profit rate risk
(ii)
38
Interest/profit rate risk (continued)
Non-trading book
- - -
- - -
274,925 - -
-
-
3,082 4,964 428,379 - 397,790 - 904,964 - 428,379
9,590 - 4,065,544 56,116 38,406 94,522
90,208 - 90,208
- 4
6,088,082
- 4,367,624
(2)
(3)
Other liabilities include provision for taxation and other liabilities.
The off-balance sheet gap represents the net notional amounts of all interest rate sensitive derivative financial instruments.
7,674,092 (6,439,562) (10,393,660) 9,762,180 4,715,092 (5,458,915) 140,773
Total interest sensitivity gap
- 8,145,687 38,406 56,437,113
- 4,367,624 - 3,778,063 38,406 5
2,069,489
-
- - - - - - 3,185,724 (9,751,165) 11,264,718 4,421,004 (5,458,915) 140,773
(642,495) (1,502,538) 294,088 - -
514,220 -
514,220 394,708 -
- - - -
119,512 7,399,887 (8,016,302) 274,205 1,576,740 21,511,273 11,453,012 14,774,515 -
21,511,273 11,453,012 14,774,515 - 900,000 -
2,263,614 1,517,415 - -
- - 18,347,659 9,935,597 14,499,590 On-balance sheet interest sensitivity gap
Off-balance sheet interest sensitivity gap (3) Total liabilities and equity Equity
Total liabilities Liabilities
and other financial institutions Derivative financial liabilities Bills and acceptances payable Recourse obligation on loans sold
to Cagamas Berhad Subordinated term loan Other liabilities (2) 4.77
4.59
3.18
3.20
Non
interest /
Effective
Up to 1
>1-3
>3-12 >1-5
Over 5
profit Trading interest
The Group
month
months
months
years
years sensitive
book
Total
rate
2013RM’000
RM’000
RM’000
RM’000
RM’000 RM’000
RM’000 RM’000
%
(ii)
38
*
#
(1)
-
20,057 25,762,091 4,025,732 3,467,462 11,402,614 4,490,615 2,769,167 187,299 5
2,104,980
118 - 7,648,904 5.48
3.61
4.27
3.76
3.09
3.07
2.95
Others include property and equipment, intangible assets, statutory deposits with BNM, tax recoverable, other assets, investment in jointly controlled entity
and amount due from jointly controlled entity.
- 32,939,804 - 542,822
- 2,030,153
2,521 - 596,452 - 165,592 165,592 47,165 21,707 68,872
157,847 - 7,640,654 89,699 - 451,670 -
- 221,471 Total assets
- - 17,571,338 2,625,107 2,746,329 8,123,871 2,195,788 (322,629)* -
-
- - - 542,822 # - - -
-
- 2,030,153 19,939 - 513,931 - -
-
-
- -
- - 794,694 701,194 3,206,109 2,294,827
92,000 - 72,634 -
- - 80,000
485,983
197,337
- 7,427,433 Assets
Reverse repurchase agreements with
financial institutions
and other financial institutions Financial assets held-for-trading
Derivative financial assets Financial investments available-for-sale Financial investment held-to-maturity Loans, advances and financing
- non-impaired - impaired Others (1) Non-trading book
Non
interest /
Effective
Up to 1
>1-3
>3-12 >1-5
Over 5
profit
Trading
interest
The Group
sensitive book Total
rate
2012
%
(ii)
38
Non-trading book
-
- - - -
- - 410,345 - - -
- 11,489 - -
- -
-
13,229 26,595 152,400 (2) Other liabilities include provision for taxation, deferred tax liabilities and other liabilities.
(3) The off-balance sheet gap represents the net notional amounts of all interest rate sensitive derivative financial instruments.
6,908,186 (7,918,509) (8,506,318) 9,588,236 4,625,589 (4,851,415) 154,231
33,068 5
2,104,980
- 4,117,952
33,068 4
7,987,028
- 413,549 - 904,960 - 383,597
- 4,809,323 33,068 59,663
- 152,400
- 41,263,536 Total interest sensitivity gap - 7,620,582 - 4,117,952 - 3,502,630 - 3,204 -
4,960 - 383,597 -
-
-
- 2,918,645 6,405,832 (8,521,299) (8,414,513) 1
0,736,549 4,490,615 (4,851,415) 154,231
502,354 602,790 (91,805) (1,148,313) 134,974 -
-
19,356,259 12,547,031 11,881,975 666,065 - 19,356,259 12,547,031 11,881,975 666,065 -
900,000 - 2,318,559 2,466,046 - -
- - 16,137,700 10,080,985 11,870,486 255,720 On-balance sheet interest sensitivity gap Off-balance sheet interest sensitivity gap (3) Total liabilities and equity Equity Total liabilities Liabilities
and other financial institutions Derivative financial liabilities Bills and acceptances payable Recourse obligation on loans sold
to Cagamas Berhad
Subordinated term loan Other liabilities (2)
4.77
4.52
2.74
3.16
Non
interest /
Effective
Up to 1
>1-3
>3-12 >1-5
Over 5
profit
Trading
interest
The Group
rate
2012
%
(ii)
38
Non-trading book
21,282,405 3,395,764 4,072,250 10,050,539 3,679,176 2,731,288 179,179 4
5,390,601
Total assets
*
#
(1) 16,143,542 1,904,549 3,003,968 7,313,314 1,694,694 (266,595)* - -
- - - 385,438 # -
-
-
-
- 2,104,013 60,115
- -
- -
608
- 210,514 3.00
5.41
Others include property and equipment, intangible assets, statutory deposits with Bank Negara Malaysia, deferred tax assets, investment in subsidiaries and
other assets.
- 29,793,472 - 385,438
- 2,104,013
- 60,723 3.82
4.16
4.20
2.94
- 90,000 520,155 163,679 197,210 100,000 35,712 -
1,106,756 -
- -
- - - 149,544 149,544 - -
- -
-
26,639 29,635 56,274
210,041 702,959 904,603 2,466,357 1,884,482 162,972 - 6,331,414 1,525 268,101 -
73,658
-
71,987 - 415,271 -
2.88
-
- 4,987,696 4,777,182 Assets
Cash and short-term funds Deposits and placements with banks
and other financial institutions Financial assets held-for-trading Derivative financial assets Financial investments available-for-sale Financial investment held-to-maturity
- non-impaired - impaired
Others (1)
Non
interest /
Effective
Up to 1
>1-3
>3-12 >1-5
Over 5
profit
Trading interest
The Bank
rate
2013
%
(ii)
38
Non-trading book
-
- - -
- -
- 511,479 6,966 56,116 90,208 (2) Other liabilities include provision for taxation and other liabilities.
6,657,532 (5,124,730) (8,690,460) 8,036,522 3,973,264 (4,992,901) 140,773
38,406 4
5,390,601
- 3,995,107
38,406 4
1,395,494
- 397,790 - 904,964 - 394,188
-
53,559
- 2,659,535 38,406 94,522
-
90,208 - 36,800,728 Total interest sensitivity gap - 7,724,189 - 3,995,107 - 3,729,082 - 3,082 - 4,964 - 394,188 -
53,559 -
-
- - 3,119,999 6,383,327 (6,701,470) (8,047,965) 9,539,060 3,679,176 (4,992,901) 140,773
274,205 1,576,740 (642,495) (1,502,538) 294,088 - -
14,899,078 10,097,234 12,120,215 511,479
-
-
- -
- 394,708 -
-
-
- - -
14,899,078 10,097,234 12,120,215
-
900,000 - - 955,762 1,517,415 179,392 - - -
- -
- 13,043,316 8,579,819 11,940,823 116,771 On-balance sheet interest sensitivity gap Off-balance sheet interest sensitivity gap (3) Total liabilities and equity Equity Total liabilities Liabilities
Bills and acceptances payable Recourse obligation on loans sold
to Cagamas Berhad
Subordinated term loan Other liabilities (2) Amount due to subsidiaries 4.77
4.59
-
3.19
3.33
Non
interest /
Effective
Up to 1
>1-3
>3-12 >1-5
Over 5
profit
Trading interest
The Bank
rate
2013
%
(ii)
38
Non-trading book
118 - 20,057 18,987,359 3,790,439 2,724,211 9,633,305 3,536,387 2,817,054 187,299 4
1,676,054
-
- 3,633,842 *
#
(1) Others include property and equipment, intangible assets, statutory deposits with Bank Negara Malaysia, investment in subsidiaries and other assets.
- 27,891,143 - 448,126
- 2,140,817
- 153,949 46,627 24,751 - 1,043,825 - - 165,592 165,592 -
47,165 21,707 68,872
1,911,552 140,191 - 5,658,161 - 89,699 - 451,670 - - 213,227 Total assets 19,939 -
14,782,179 2,466,733 2,334,730 7,016,986 1,578,208 (287,693)* -
-
-
-
- 448,126 # - -
-
-
- 2,140,817 153,296 -
- -
-
653 - - -
80,000 646,200
49,037 197,210
-
-
-
- - -
353,932 585,506 320,505 2,346,475
197,337 92,000 -
72,634
- 3,420,615 Assets
Cash and short-term funds Reverse repurchase agreements with
financial institutions Deposits and placements with banks
Financial assets held-for-trading Derivative financial assets
Financial investments available-for-sale Financial investment held-to-maturity Loans, advances and financing
- non-impaired - impaired
Others (1) Amount due from subsidiaries 3.08
5.50
3.67
4.27
3.76
3.09
3.07
2.89
Non
interest /
Effective
Up to 1
>1-3
>3-12 >1-5
Over 5
profit
Trading
interest
The Bank
rate
2012
%
(ii)
38
Non-trading book
-
- - -
- -
-
- 410,345 - - - - -
- 11,489 - -
-
-
-
(2) Other liabilities include provision for taxation, other liabilities and deferred tax liabilities.
6,451,645 (6,407,379) (7,273,535) 7,830,292 3,671,361 (4,426,615) 154,231
33,068 41,676,054
- 3,794,454
33,068 3
7,881,600
- 413,549 - 904,960 - 349,420
- 48,528
- 3,728,263 33,068 59,663
- 152,400 - 32,224,817 Total interest sensitivity gap
- 7,243,669 - 3,794,454 - 3,449,215 - 3,204 -
4,960 - 349,420 - 48,528
-
12,707 - 26,595 - 152,400 - 2,851,401 5,949,291 (7,010,169) (7,181,730) 8,978,605 3,536,387 (4,426,615) 154,231
502,354 602,790 (91,805) (1,148,313) 134,974 - -
13,038,068 10,800,608 9,905,941 654,700
-
13,038,068 10,800,608 9,905,941 654,700 -
900,000 - -
1,252,267 2,451,800 - - - -
10,885,801 8,348,808 9,894,452 244,355 On-balance sheet interest sensitivity gap Off-balance sheet interest sensitivity gap (3) Total liabilities and equity Equity Total liabilities Liabilities
and other financial institutions Derivative financial liabilities Bills and acceptances payable
Recourse obligation on loans sold
to Cagamas Berhad
Subordinated term loan Other liabilities (2) Amount due to subsidiaries 4.77
4.52
-
2.74
3.29
Non
interest /
Effective
Up to 1
>1-3
>3-12 >1-5
Over 5
profit
Trading
interest
The Bank
rate
2012
%
(ii)
38
(iii) Liquidity risk
Liquidity risk is the current and prospective risk to earnings or capital arising from a bank’s inability to meet its
obligations when they fall due. Liquidity risk includes the inability to manage sudden decreases or changes in funding
sources. Liquidity risk also arises from the failure to recognise changes in market conditions that affect the ability to
liquidate assets quickly and with minimal loss in value.
To measure and manage net funding requirements, the Bank adopts BNM’s New Liquidity Framework (‘NLF’).
The NLF ascertains the liquidity condition based on the contractual and behavioral cash-flow of assets, liabilities and
off-balance sheet commitments, taking into consideration the realisable cash value of the eligible liquefiable assets.
The NLF is also supported by indicative ratios on the Bank’s funding structure to monitor the reliance on particular
funding sources.
The Bank employs liquidity risk indicators as an early alert of any structural change for liquidity risk management.
Liquidity risk is tracked using internal and external qualitative and quantitative indicators. The Bank also conducts
liquidity stress tests to gauge the Bank’s resilience in the event of a liquidity crisis. In addition, the Bank has in place
the Contingency Funding Plan, which provides a systematic approach in handling liquidity disruption. The document
encompasses strategies, decision-making authorities, and courses of action to be taken in the event of liquidity crisis
and emergencies.
The liquidity positions in the major currencies are being closely monitored by tracking the availability of medium to long
term foreign currency funding and adhering to the guiding principles for foreign currency assets creations.
Basel III Liquidity Standards
The Basel Committee developed the Liquidity Coverage Ratio (‘LCR’) and Net Stable Funding Ratio (‘NSFR’) with the
goal of strengthening the resilience of the banking systems. The LCR and NSFR are tracked monthly to assess the
short term and long term liquidity risk profile of the Bank.
The BRMC is responsible for the Bank’s liquidity policy although the strategic management of liquidity has been
delegated to the ALCO. The BRMC is informed regularly of the liquidity situation in the Bank.
38
(iii) Liquidity risk (continued)
Liquidity risk disclosure table which is based on contractual undiscounted cash flow
The table below provides analysis of cash flow payables for financial liabilities based on remaining contractual
maturities on undiscounted basis. The balances in the table below do not agree directly to the balances reported in the
statement of financial position as the table incorporates all contractual cash flows, on an undiscounted basis, relating
to both principal and interest payments.
The Group
2013
Up to 1
>1-3
>3-12 >1-5
Over 5
monthmonthsmonths years years Total
RM’000RM’000RM’000RM’000RM’000RM’000
Recourse obligation on loans sold to
Cagamas Berhad Other liabilities Subordinated term loan 21,271,311 10,109,260 14,896,910 167,547 11,033 46,456,061
279,061
- -
- - 4,167,938
-
90,208
263,436 -
19,777 150,442
- 105,072 -
421,981
- 391,977
671,474 1,105,684
24,121,389 11,947,708 15,459,184 423,061 682,507 52,633,849
2,361,576 1,527,301 90,208 -
2,791 391,977 3,526 5,312 -
305,835 Up to 1
>1-3
>3-12
>1-5
Over 5
The Group
2012
RM’000RM’000RM’000RM’000RM’000RM’000
18,859,710 10,235,637 12,239,649 281,525 - 41,616,521
2,325,773 2,483,628 11,972 -
- 4,821,373
152,400 -
-
-
-
152,400
Cagamas Berhad
3,165 5,525 26,109 422,077 -
456,876
Other liabilities
306,481 -
-
-
-
306,481
3,509 6,678 31,124 168,215 1,016,039 1,225,565
21,651,038 12,731,468 12,308,854 871,817 1,016,039 48,579,216
38
Liquidity risk disclosure table which is based on contractual undiscounted cash flow (continued)
The Bank
2013
Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
15,956,114 8,722,130 12,255,551 164,593 11,033 37,109,421
958,535 1,527,301 182,527 -
- 2,668,363
90,208 -
-
-
-
90,208
Cagamas Berhad
2,791 5,312 263,436 150,442 -
421,981
Other liabilities
359,836 -
-
-
-
359,836
Amount due to subsidiaries
53,559 -
-
-
-
53,559
3,526 305,835 19,777 105,072 671,474 1,105,684
17,424,569 10,560,578 12,721,291 420,107 682,507 41,809,052
Up to 1
>1-3
>3-12
>1-5
Over 5
The Bank
2012
RM’000RM’000RM’000RM’000RM’000RM’000
13,589,500 8,468,130 10,199,495 269,592 - 32,526,717
1,258,789 2,469,056 11,794 -
- 3,739,639
152,400 -
-
-
-
152,400
Cagamas Berhad
3,165 5,525 26,109 422,077 -
456,876
Other liabilities
282,144 -
-
-
-
282,144
48,528 -
-
-
-
48,528
3,509 6,678 31,124 168,215 1,016,039 1,225,565
15,338,035 10,949,389 10,268,522 859,884 1,016,039 38,431,869
38
Derivative financial liabilities based on contractual undiscounted cash flow:
2013
Up to 1
>1-3
>3-12 >1-5
Over 5
month
months
months
years
years
Total
RM’000RM’000RM’000RM’000RM’000RM’000
Derivatives settled on net basis
Interest rate derivatives
(1,204)
(1,472)
(3,275)
2,242 6,142 2,433
Derivatives settled on gross basis
Outflow
(509,833) (674,028) (911,963) (594,154)
(96,030) (2,786,008)
Inflow
509,931 673,695 909,002 594,154 96,030 2,782,812
98 (333)
(2,961)
- -
(3,196)
Up to 1
>1-3
>3-12
>1-5
Over 5
month
months
months
years
years
Total
2012
RM’000RM’000RM’000RM’000RM’000RM’000
Derivatives settled on net basis
Interest rate derivatives
(1,374)
(1,986)
(5,662)
(13,565)
2,062 (20,525)
Derivatives settled on gross basis
Outflow
(523,356) (648,351) (352,435) (126,927)
- (1,651,069)
Inflow
522,534 643,932 347,851 124,546 - 1,638,863
(822)
(4,419)
(4,584)
(2,381)
-
(12,206)
38
Liquidity risk for assets and liabilities based on remaining contractual maturities
The maturities of on-balance sheet assets and liabilities as well as other off-balance sheet assets and liabilities,
commitments and counter-guarantees are important factors in assessing the liquidity of the Group and the Bank.
The table below provides analysis of assets and liabilities into relevant maturity tenures based on remaining contractual
maturities.
Maturities of assets and liabilities of the Group and the Bank by remaining contractual maturities profile are as follows:
The Group
2013
Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
Assets
Cash and short-term funds 9,401,701 -
-
-
- 9,401,701
and other financial institutions - 201,906 41,668 197,738 41,285 482,597
Financial assets held-for-trading 149,544 - - -
- 149,544
8,965 22,884 8,136 4,566 11,723 56,274
Financial investments available-for-sale 190,150 797,941 1,450,706 3,088,400 2,087,340 7,614,537
Financial investments held-to-maturity 70,913 1,075 16,064 149,826 262,458 500,336
Loans, advances and financing 1,631,991 1,489,733 1,994,497 7,855,233 23,256,331 36,227,785
Other assets 186,368 - 12,277 5,341 16,111 220,097
Amount due from jointly
controlled entity 4,185 -
-
-
- 4,185
Other non-financial assets (1) 1,469,294 -
17 - 310,746 1,780,057
(1)
13,113,111 2,513,539 3,523,365 11,301,104 25,985,994 56,437,113
Other non-financial assets include deferred tax assets, tax recoverable, statutory deposits with BNM, property
and equipment and intangible assets.
38
Liquidity risk for assets and liabilities based on remaining contractual maturities (continued)
The Group
2013
Liabilities
and other financial institutions Derivative financial liabilities Bills and acceptances payable
sold to Cagamas Berhad Subordinated term loan Other liabilities Other non-financial liabilities (2) Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
21,256,343 10,056,459 14,615,566 2,268,127 1,521,311 9,234 22,725 90,208 -
123,243
36,402
- 23,847 - - 4,065,544
17,930 94,522
- 90,208
271,464 -
- -
- 600,000 - -
24,019,942 11,904,489 15,072,103 445,025 627,930 52,069,489
On balance sheet gap
Off balance sheet credit
commitments Derivatives (10,906,831) (9,390,950) (11,548,738) 10,856,079 25,358,064 4,367,624
Net maturity mismatch (12,100,713) (8,489,785)(22,748,714) 11,546,263 25,358,064 (6,434,885)
(1,420,166) 226,284 1,786 302,208 - - 10,000 46,088,082
(2)
1,297
2,756
391,977
-
276,106 20,786 -
149,714 - (11,589,139) 901,165 389,163 - 690,184 397,790
904,964
391,977
36,402
- (13,009,305)
- 2,206,796
Other non-financial liabilities include provision for taxation.
38
The Group
2012
Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
Assets
7,648,904 -
-
-
- 7,648,904
-
-
20,057 -
-
20,057
-
440,905 18,705 61,186 75,656 596,452
165,592 -
-
-
-
165,592
11,209 26,370 18,534 6,693 6,066 68,872
461,116 711,629 796,643 3,350,026 2,321,240 7,640,654
88,623 1,076 16,000 148,634 197,337 451,670
1,872,459 1,673,483 1,586,057 10,804,209 17,546,418 33,482,626
Other assets
251,776 -
9,622 5,215 27,045 293,658
Amount due from jointly
controlled entity
2,745 -
-
-
-
2,745
Other non-financial assets (1)
1,413,300 -
16 -
320,434 1,733,750
11,915,724 2,853,463 2,465,634 14,375,963 20,494,196 52,104,980
(1) Other non-financial assets include tax recoverable, statutory deposits with BNM, investment in jointly controlled
entity, p
roperty and equipment and intangible assets.
38
The Group
2012
Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
Liabilities
18,846,259 10,175,444 11,985,784 256,049 - 41,263,536
2,324,410 2,473,276 11,637 -
- 4,809,323
9,769 19,817 8,655 17,247 4,175 59,663
152,400 -
-
-
-
152,400
Cagamas Berhad
1,364 1,840 -
410,345 -
413,549
2,755 2,205 -
-
900,000 904,960
Other liabilities
306,481 -
-
-
-
306,481
Other non-financial liabilities (2)
-
-
63,751 -
13,365 77,116
21,643,438 12,672,582 12,069,827 683,641 917,540 47,987,028
(9,727,714) (9,819,119) (9,604,193) 13,692,322 19,576,656 4,117,952
commitments
-
- (12,020,705)
-
- (12,020,705)
Derivatives
143,621 331,915 1,041,996 126,594 - 1,644,126
Net maturity mismatch
(2)
(9,584,093) (9,487,204)(20,582,902) 13,818,916 19,576,656 (6,258,627)
Other non-financial liabilities include provision for taxation and deferred tax liabilities.
38
The Bank
2013
Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
Assets
4,987,696 -
-
-
- 4,987,696
-
441,606 104,090 417,622 143,438 1,106,756
149,544 -
-
-
-
149,544
8,965 22,884 8,136 4,566 11,723 56,274
189,331 724,763 1,034,393 2,498,445 1,884,482 6,331,414
70,912 1,075 16,000 133,658 193,626 415,271
1,444,624 1,366,165 1,754,008 6,437,263 19,176,850 30,178,910
Other assets
143,359 -
12,166 5,341 15,689 176,555
60,723 -
-
-
-
60,723
1,233,335 -
-
-
694,123 1,927,458
8,288,489 2,556,493 2,928,793 9,496,895 22,119,931 45,390,601
(1) Other non-financial assets include statutory deposits with BNM, investment in subsidiaries, deferred tax assets,
property and equipment and intangible assets.
38
The Bank
2013
Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
Liabilities
15,944,196 8,676,352 12,023,218 146,962 10,000 36,800,728
957,882 1,521,311 180,342 -
- 2,659,535
Derivative financial liabilities 9,234 22,725 20,786 23,847 17,930 94,522
90,208 -
-
-
-
90,208
Cagamas Berhad
1,297 1,786 123,243 271,464 -
397,790
2,756 302,208 -
-
600,000 904,964
Other liabilities
359,837 -
-
-
-
359,837
53,559 -
-
-
-
53,559
-
-
34,351 -
-
34,351
17,418,969 10,524,382 12,381,940 442,273 627,930 41,395,494
(9,130,480) (7,967,889) (9,453,147) 9,054,622 21,492,001 3,995,107
commitments
(1,259,138)
- (10,303,371)
-
- (11,562,509)
Derivatives
226,284 901,165 389,163 690,184 - 2,206,796
(2)
(10,163,334) (7,066,724)(19,367,355) 9,744,806 21,492,001 (5,360,606)
Other non-financial liabilities include provision for taxation.
38
The Bank
2012
Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
Assets
3,633,842 -
-
-
- 3,633,842
-
-
20,057 -
-
20,057
-
579,475 67,851 272,166 124,333 1,043,825
165,592 -
-
-
-
165,592
11,209 26,370 18,534 6,693 6,066 68,872
Financial investments available-for-sale 328,225 490,350 411,229 2,490,392 1,937,965 5,658,161
88,623 1,076 16,000 148,634 197,337 451,670
1,784,693 1,581,005 1,397,768 9,756,008 13,819,795 28,339,269
Other assets
186,437 -
9,514 5,215 26,624 227,790
153,949 -
-
-
-
153,949
1,211,800 -
-
-
701,227 1,913,027
7,564,370 2,678,276 1,940,953 12,679,108 16,813,347 41,676,054
(1) Other non-financial assets include statutory deposits with BNM, investment in subsidiaries, property and
equipment and intangible assets.
38
The Bank
2012
Up to 1
>1-3
>3-12 >1-5
Over 5
RM’000RM’000RM’000RM’000RM’000RM’000
Liabilities
13,579,032 8,419,079 9,982,086 244,620 - 32,224,817
1,257,846 2,458,780 11,637 -
- 3,728,263
Derivative financial liabilities 9,769 19,817 8,655 17,247 4,175 59,663
152,400 -
-
-
-
152,400
Cagamas Berhad
1,364 1,840 -
410,345 -
413,549
2,755 2,205 -
-
900,000 904,960
Other liabilities
282,144 -
-
-
-
282,144
48,528 -
-
-
-
48,528
-
-
54,177 -
13,099 67,276
15,333,838 10,901,721 10,056,555 672,212 917,274 37,881,600
(7,769,468) (8,223,445) (8,115,602) 12,006,896 15,896,073 3,794,454
-
- (10,687,961)
-
- (10,687,961)
Derivatives
143,621 331,915 1,041,996 126,594 - 1,644,126
(2)
(7,625,847) (7,891,530)(17,761,567) 12,133,490 15,896,073 (5,249,381)
Other non-financial liabilities include provision for taxation and deferred tax liabilities.
38
(iv) Operational risk management
Operational risk is the risk of loss arising from inadequate or failed internal processes, action on or by people,
infrastructure or technology or events which are beyond the bank’s immediate control which have an operational
impact, including natural disaster, fraudulent activities and money laundering/financing of terrorism.
The Bank manages operational risk through a control based environment in which policies and procedures are
formulated after taking into account individual unit’s business activities, the market in which it is operating and
regulatory requirement in force.
The Bank adopts the Basic Indicator Approach for the purpose of calculating the capital requirement for operational
risk. The capital requirement is calculated by taking 15% of the Bank’s average annual gross income over the previous
three years.
Risk is identified through the use of assessment tools and measured using threshold/limits mapped against risk matrix.
Monitoring and control procedures include the use of key control standards, independent tracking of risk, back-up
procedures and contingency plans, including disaster recovery and business continuity plans. This is supported by
periodic reviews undertaken by Group Internal Audit to ensure adequacy and effectiveness of the Group Operational
Risk Management process.
The Bank gathers, analyses and reports operational risk loss and ‘near miss’ events to Group Operational Risk
Management Committee and Board Risk Management Committee. Appropriate preventive and remedial actions are
reviewed for effectiveness and implemented to minimize the recurrence of such events.
As a matter of requirement, all Operational Risk Coordinators must satisfy an Internal Operational Risk (including
anti-money laundering/counter financing of terrorism and business continuity management) Certification Program.
These coordinators will first go through an on-line self learning exercise before attempting on-line assessments to
measure their skills and knowledge level. This will enable Group Risk Management to prescribe appropriate training
and development activities for the coordinators.
38
(v)
Fair value of financial instruments
Financial instruments comprise financial assets, financial liabilities and also off balance sheet financial instruments.
The fair value of a financial instrument is the amount at which the instruments could be exchanged or settled between
knowledgeable and willing parties in an arm’s length transaction. The information presented herein represents estimates
of fair values as at reporting date.
Fair value information for non-financial assets and liabilities are excluded as they do not fall within the scope of MFRS
132 which requires fair values to be disclosed. This includes property and equipment, statutory deposits with Bank
Negara Malaysia, investment in subsidiaries, other assets, tax recoverable, deferred tax and intangible assets.
The fair values of the financial assets and financial liabilities of the Group and the Bank approximated to their respective
carrying value as at reporting date, except for the following:
The Group The Bank
20132013
Carrying
FairCarrying
Fair
valuevaluevaluevalue
RM’000 RM’000 RM’000 RM’000
Financial assets
Deposits and placement with bank and
other financial institutions Financial investments held-to-maturity Loans, advances and financing 482,597 509,644 1,106,756 1,142,272
500,336 491,129 415,271 409,049
36,227,785 35,935,141 30,178,910 29,916,913
37,210,718 36,935,914 31,700,937 31,468,234
Financial liabilities
Deposits from customers Deposit and placement of bank and
other financial institutions Recourse obligation on loans sold to Cagamas Berhad 46,088,082 46,080,076 36,800,728 36,795,136
4,065,544 397,790 4,066,031
406,113 2,659,535 397,790 2,660,006
406,113
50,551,416 50,552,220 39,858,053 39,861,255
38
(v)
Fair value of financial instruments (continued)
The Group The Bank
20122012
Carrying
FairCarrying
Fair
valuevaluevaluevalue
RM’000 RM’000 RM’000 RM’000
Financial assets
Deposits and placements with banks and
other financial institutions Financial investments held-to-maturity Loans, advances and financing 596,452
626,914 1,043,825 1,085,003
451,670 441,716 451,670 441,716
33,482,626 33,185,614 28,339,269 28,087,568
34,530,748 34,254,244 29,834,764 29,614,287
Financial liabilities
Deposits from customers Deposit and placement of banks and
financial institutions Recourse obligation on loans sold to Cagamas Berhad 41,263,536 41,261,007 32,224,817 32,222,524
4,809,323 413,549 4,816,360 426,331 3,728,263 413,549 3,735,300
426,331
46,486,408 46,503,698 36,366,629 36,384,155
The fair values of derivative financial instruments at the reporting date are as follows:
The Group and the Bank
The Group and the Bank
2013
2012
Underlying
Underlying
notional AssetLiability notional AssetLiability
RM’000RM’000RM’000RM’000RM’000RM’000
Foreign exchange contracts
- forward contracts - swaps 811,717
3,514,734 6,979 19,660 5,099 51,018 941,791 3,060,558 9,504 37,661 2,870
23,725
Interest rate contracts
- swaps
3,954,438
29,635 38,405 2,484,602 21,707 33,068
38
(v)
The derivative financial instruments become favorable (assets) or unfavorable (liabilities) as a result of fluctuation in
market interest rates or foreign exchange rates relative to their terms. The extent to which instruments are favorable
or unfavorable and the aggregate fair values of derivative financial assets and liabilities can fluctuate significantly from
time to time.
The following tables analyse within the fair value hierarchy the Group’s and the Bank’s assets and liabilities not
measured at fair value at 31 December 2013 but for which fair value is disclosed:
The Group
2013
Financial Assets
other financial institutions Financial investments held-to-maturity
Financial Liabilities
Deposits and placements of banks and
other financial institutions Recourse obligation on loans
sold to Cagamas Berhad The Group
2012
Financial Assets
other financial institutions Financial investments held-to-maturity Loans, advances and financing Financial Liabilities
Deposits from customers Deposits and placements of banks and
sold to Cagamas Berhad Level 1 Level 2 Level 3 Total
RM’000RM’000RM’000RM’000
-
509,644 -
491,129 - 35,935,141
- 509,644
- 491,129
- 35,935,141
- 46,080,076 - 46,080,076
-
4,066,031 -
4,066,031
-
406,113 - 406,113
Level 1 Level 2 Level 3 Total
RM’000RM’000RM’000RM’000
-
626,914 -
441,716 - 33,185,614 -
626,914
-
441,716
- 33,185,614
- 41,261,007 - 41,261,007
-
4,816,360 -
4,816,360
- 426,331 - 426,331
38
(v)
The Bank
2013
Financial Assets
other financial institutions Financial investments held-to-maturity Loans, advances and financing Financial Liabilities
Deposits from customers Deposits and placements of banks and
The Bank
2012
Financial Assets
other financial institutions Financial investments held-to-maturity
Loans, advances and financing Financial Liabilities
Deposits and placements of banks and
Level 1
Level 2 Level 3 Total
RM’000RM’000RM’000RM’000
- 1,142,272 - 409,049
- 29,916,913 - 1,142,272
-
409,049
- 29,916,913
- 36,795,136 - 36,795,136
- 2,660,006 - 2,660,006
-
406,113 - 406,113
Level 1
Level 2 Level 3
Total
RM’000RM’000RM’000RM’000
- 1,085,003
- 441,716 - 28,087,568 - 1,085,003
-
441,716
- 28,087,568
- 32,222,524 - 32,222,524
- 3,735,300 -
3,735,300
- 426,331 - 426,331
The fair value estimates were determined by application of the methodologies and assumptions described below.
Short-term funds and placements with banks and other financial institutions
For short-term funds and placements with banks and other financial institutions with maturity of less than six months,
the carrying amount is a reasonable estimate of fair value.
For amounts with maturities of six months or more, fair values have been estimated by reference to current rates at
which similar deposits and placements would be made to banks with similar credit ratings and maturities.
38
(v)
Financial assets held-for-trading, financial investments available-for-sale and held-to-maturity
The fair values of financial assets held-for-trading, financial investments available-for-sale and financial investments
held-to-maturity are reasonable estimates based on quoted market prices. In the absence of such quoted prices, the
fair values are based on the expected cash flows of the instruments discounted by indicative market yields for the
similar instruments as at reporting date or the audited net tangible asset of the invested company.
Loans, advances and financing of the Group comprise of floating rate loans and fixed rate loans. For performing
floating rate loans, the carrying amount is a reasonable estimate of their fair values.
The fair values of performing fixed rate loans are arrived at using the discounted cash flows based on the prevailing
market rates of loans and advances with similar credit ratings and maturities.
The fair values of impaired loans and advances, whether fixed or floating are represented by their carrying values, net
of individual and collective allowances, being the reasonable estimate of recoverable amount.
Other assets and liabilities
The carrying value less any estimated allowance for financial assets and liabilities included in other assets and other
liabilities are assumed to approximate their fair values as these items are not materially sensitive to the shift in market
interest rates.
Deposits from customers, banks and other financial institutions, bills and acceptances payable
The carrying values of deposits and liabilities with maturities of six months or less are assumed to be reasonable
estimates of their fair values. Where the remaining maturities of deposits and liabilities are above six months, their
estimated fair values are arrived at using the discounted cash flows based on prevailing market rates currently offered
for similar remaining maturities.
The estimated fair value of deposits with no stated maturity, which include non-interest bearing deposits, approximates
carrying amount which represents the amount repayable on demand.
Recourse obligation on loans sold to Cagamas Berhad
For floating rate loans sold to Cagamas Berhad, the carrying value is generally a reasonable estimate of their fair
values.
The fair values of fixed rate loans sold to Cagamas Berhad are arrived at using the discounted cash flow methodology
at prevailing market rates of similarly profiled loans.
For fixed rate borrowings, the estimate of fair value is based on discounted cash flow model using prevailing lending
rates for borrowings with similar risks and remaining term to maturity.
For floating rate borrowings, the carrying value is generally a reasonable estimate of their fair values.
38
(v)
Derivative financial instruments
The fair value of exchange rate and interest rate contracts is the estimated amount the Group would receive or pay to
terminate the contracts at the reporting date.
Fair value measurements
The following table presents assets and liabilities measured at fair value and classified by level of the following fair
value measurement hierarchy:
(a)
Level 1 - quoted price (unadjusted) in active markets for identical assets and liabilities;
(b)
Level 2 - inputs other than quoted price included within level 1 that are observable for the assets or liability, either
directly (i.e. as prices) or indirectly (i.e.derived from prices); and
(c)
Level 3 - inputs for the asset and liability that are not based on observable market data (unobservable inputs).
The Group
2013
Assets
Financial investments available-for-sale *
- Private debt securities - Equity securities - Other financial assets
Derivative financial assets Liabilities
Derivative financial liabilities The Group
2012
Assets
- Private debt securities - Equity securities - Other financial assets
Liabilities
Derivative financial liabilities 186 AFFIN BANK BERHAD (25046-T) Annual Report 2013
Level 1 Level 2 Level 3 (#) Total
RM’000RM’000RM’000RM’000
- 150
-
149,544 3,452,561 - 4,042,823
56,274 -
94,522 - 119,003
-
149,544
3,452,561
119,153
4,042,823
56,274
- 94,522
RM’000RM’000RM’000RM’000
- 165,592 - 165,592
- 3,030 -
- 3,532,861 - 3,998,319 68,872 -
106,444 - - 3,532,861
109,474
3,998,319
68,872
- 59,663 - 59,663
38
(v)
Fair value measurements (continued)
The Bank
2013
Assets
- Private debt securities - Equity securities - Other financial assets Derivative financial assets
Liabilities
Derivative financial liabilities The Bank
2012
Assets
Financial assets held-for-trading Financial investments available-for-sale *
- Private debt securities
- Equity securities
- Other financial assets Derivative financial assets
Liabilities
RM’000RM’000RM’000RM’000
- 149,544 - 149,544
-
150 - - 2,942,846 - 3,269,484 56,274 -
118,934 -
- 2,942,846
119,084
3,269,484
56,274
-
94,522 - 94,522
RM’000RM’000RM’000RM’000
- 165,592 - 165,592
- 349 -
- 2,831,071 - 2,720,366 68,872 -
106,375 -
-
2,831,071
106,724
2,720,366
68,872
- 59,663 -
59,663
*
Net of allowance for impairment.
#
The Bank has determined that the net asset value of unquoted equity securities represents fair value at the
financial year ended 31 December 2013, therefore there is no unobservable input used for these financial
investments classified as Level 3.
38
(v)
Fair value measurements (continued)
Financial instruments that are valued using quoted prices in active market are classified as Level 1 of the valuation
hierarchy. These would include listed equities which are actively traded.
Where fair value is determined using quoted prices in less active markets or quoted prices for similar assets and
liabilities, such instruments are generally classified as Level 2. In cases where quoted prices are generally not available,
the Group and the Bank then determine fair value based upon valuation techniques that use as inputs, market
parameters including but not limited to yield curves, volatilities and foreign exchange rates. The majority of valuation
techniques employ only observable market data and so reliability of the fair value measurement is high. These would
include corporate private debt securities, corporate notes and most of the Group’s OTC derivatives.
The Group and the Bank classify financial instruments as Level 3 when there is reliance on unobservable inputs
to the valuation model attributing to a significant contribution to the instrument value. Valuation reserves or pricing
adjustments where applicable will be used to converge to fair value.
The Group and the Bank may also use valuation models or discounted cash flow technique to determine the fair value.
Most of the OTC derivatives are priced using valuation models. Where derivative products have been established in
the markets for some time, the Group and the Bank use models that are widely accepted by the industry.
The valuation techniques and inputs used generally depend on the contractual terms and the risks inherent in the
instrument as well as the availability of pricing information in the market. Principal techniques used include discounted
cash flows, and other appropriate valuation models. OTC derivatives which are valued using unobservable inputs that
are supported by little or no market activity which are significant to the fair value of the assets or liabilities are classified
as Level 3.
The following table present the changes in Level 3 instruments for the financial year ended:
2013 2012
RM’000 RM’000
Opening New AFS revaluation reserves 106,444 -
12,559 105,864
527 53 106,375
- 12,559
105,795
527
53
Closing 119,003 106,444 118,934 106,375
Effect of changes in significant unobservable assumptions to reasonably possible alternatives
As at reporting date, financial instruments measured with valuation techniques using significant unobservable inputs
(Level 3) mainly include unquoted shares held for socio economic purposes.
In estimating its significance, the Group and the Bank used an approach that is currently based on methodologies
used for fair value adjustments. These adjustments reflects the values that the Group and the Bank estimate are
appropriate to adjust from the valuations produced to reflect for uncertainties in the inputs used. The methodologies
used can be a statistical or other relevant approved techniques.
39
LEASE COMMITMENTS
The Bank has lease commitments in respect of rented premises and hired equipment, all of which are classified as operating
leases. A summary of the non-cancelable long-term commitments, net of sub-leases are as follows:
Within one year One year to five years 40
2013 2012
RM’000 RM’000
10,612 7,224 19,931
8,310
CAPITAL AND OPERATING COMMITMENTS
Capital commitments
Capital expenditure approved by the Directors but not provided for int the financial statements amounted to approximately:
2013 2012
RM’000 RM’000
Authorised and contracted for
7,541 2,864
7,541 2,864
Analysed as follows:
Property and equipment 7,541 2,864
Operating commitments
Operating expenditure approved by the Directors but not provided for int the financial statements amounted to approximately:
2013 2012
RM’000 RM’000
Authorised and contracted for 201,823 266,106
41
CAPITAL MANAGEMENT
With effect from 1 January 2013, the total capital and capital adequacy ratios of the Group and the Bank are computed in
accordance with Bank Negara Malaysia’s Capital Adequacy Framework (Capital Components) dated 28 November 2012.
The Group and the Bank are currently adopting Standardised Approach for Credit Risk and Market Risk, the Basic Indicator
Approach for Operational Risk. In line with the transitional arrangements under the Bank Negara Malaysia’s Capital Adequacy
Framework (Capital Components), the minimum capital adequacy requirement for Common Equity Tier 1 Capital Ratio
(‘CET 1’) and Tier 1 Capital Ratio are 3.5% and 4.5% respectively for year 2013. The minimum regulatory capital adequacy
requirement remains at 8.0% (2012: 8.0%) for total capital ratio.
The Group and the Bank’s objectives when managing capital are:
•
To comply with the capital requirements set by the regulators of the banking markets where the entities within the
Group and the Bank operates;
•
To safeguard the Group and the Bank’s ability to continue as a going concern so that it can continue to provide returns
for shareholders and benefits for other stakeholders; and
•
To maintain a strong capital base to support the development of its business.
The Group and the Bank maintain a ratio of total regulatory capital to its risk-weighted assets above a minimum level agreed
with the management which takes into account the risk profile of the Group and the Bank.
The table in Note 42 below summarises the composition of regulatory capital and the ratios of the Group and the Bank for
the financial year ended 31 December 2013.
42
CAPITAL ADEQUACY
The capital adequacy ratios are as follows:
The Group
Basel II Basel II 2013 ## 2012 # RM’000 RM’000 The Bank
Basel II Basel II
2013 2012
RM’000 RM’000
Paid-up share capital Share premium Statutory reserves Retained profits
Unrealised gains and losses on AFS
1,518,337 529,337 1,317,376 1,004,534
(2,579)
1,518,337 1,518,337 529,337 529,337 1,160,651 1,144,350 808,553 798,118 - 6,533 1,518,337
529,337
1,017,200
659,603
-
Less:
Goodwill Deferred tax assets * 55% of cumulative unrealised gains of AFS
4,367,005 4,016,878 3,996,675 3,724,477
(133,430) (9,326) - (137,323) (10,827) - (137,323) (8,553) (3,593) (137,323)
(10,227)
-
CET1 capital 4,224,249 3,868,728 3,847,206 3,576,927
Tier I capital 4,224,249 3,868,728 3,847,206 3,576,927
42
CAPITAL ADEQUACY
The capital adequacy ratios are as follows:
The Group
Basel II Basel II 2013 ## 2012 #
RM’000 RM’000 The Bank
Basel II Basel II
2013 2012
RM’000 RM’000
Subordinated term loan Collective impairment @ Less:
Investment in subsidiaries/associates/
jointly controlled entity 810,000 143,572 900,000 152,350 810,000 123,103 900,000
128,568
(650)
-
(389,088) -
Tier II capital Less:
Investment in capital instruments
of other banking institutions
Investment in subsidiaries 952,922
1,052,350 544,015 1,028,568
- - (10,034) (27,389) - -
(10,034)
(387,389)
5,177,171 4,883,655 4,391,221 4,208,072
Total capital/Capital base CET1 capital ratio
Tier 1 capital ratio/Core capital ratio
Total capital ratio/Risk-weighted capital ratio
10.811%
10.811%
13.250%
- 11.020%
13.910%
11.279% 11.279%
12.874%
11.590%
13.640%
CET1 capital ratio (net of proposed dividends) ^
(net of proposed dividends) ^
(net of proposed dividends) ^
10.578% - 11.012% -
10.578%
10.760%
11.012%
11.300%
13.017%
13.650%
12.607%
13.340%
Risk-weighted assets for:
Credit risk Market risk Operational risk 36,529,227 32,659,779 31,911,266 28,731,138
299,677 260,620 296,107 258,838
2,243,503 2,187,846 1,902,412 1,864,563
Total risk-weighted assets 39,072,407 35,108,245 34,109,785 30,854,539
*
@
#
##
^
Deferred tax assets exclude deferred tax arising from AFS revaluation reserves.
Qualifying collective impairment is restricted to allowances on unimpaired portion of the loans, advances and financing.
The Group comprises the Bank and the Bank’s subsidiary, AFFIN Islamic Bank Berhad.
The Group comprises the Bank and all the Bank’s financial and non-financial subsidiaries.
Net proposed dividends of RM91,100,000 (2012: RM91,100,000).
43
LITIGATIONS AGAINST THE BANK
(a)
A syndicate of lenders, including AFFIN Bank Berhad (the ‘Bank’), had granted facilities of RM62.5 million (the ‘Facilities’)
to a borrower to, inter alia, finance a development project. At borrower’s request, the Facilities were restructured in
1999 but in July 2000, continued drawdown under the restructured Facilities was refused as borrower had failed to
comply with conditions precedent for such drawdown. The lenders and borrower negotiated to resolve the default
and the Facilities were restructured again in 2003. Further financing was also granted in 2004 and the Project was
completed with certificate of fitness in January 2005.
Subsequent to the completion of the project, borrower brought a claim against the lead banker, as the agent of the
syndicate lenders, for loss and damage arising from alleged breach of duty and obligations owed by the lead banker
to the borrower in relation to various actions taken or omitted to be taken in disbursements and transactions under the
Facilities. The lead banker filed an action against the borrower and its guarantor of the Facilities, for recovery of the
amounts outstanding under the Facilities.
The 2 actions were consolidated and heard together at full trial. On 6 May 2009, the High Court granted judgment in
favour of borrower against the lead banker, as an agent of the lenders, and dismissed the lenders’ action for recovery
of the Facilities. The judgment against the lead banker included a sum of RM115.5 million to be paid, as well as further
damages to be assessed and an immediate release of all security granted by the borrower and its guarantors for the
Facilities. The award of damages of RM115.5 million was made despite parties’ agreement that the trial proceed only
on issue of liability and no evidence of damage/loss was produced. If the judgment of 6 May 2009 is maintained, lead
banker will seek contribution from the lenders, including the Bank. The Bank’s share is about RM34.65 million.
The lead banker and agent appealed to the Court of Appeal against the High Court decision. An effort at mediation on
9 March 2012 failed as the parties could not come to a settlement. Hearing dates were then fixed for the appeal. The
appeal has been argued twice before the Court of Appeal i.e. on 3 August 2012 and 9 November 2012. The hearing
was continued on 23 January 2013 and 31 January 2013 and decision was given on 27 September 2013 wherein
the Court of Appeal allowed the appeal and set aside the High Court Judgment. The Court of Appeal also entered
judgment against the borrower for the amount outstanding under the Facilities. The borrower applied for leave to the
Federal Court.
The borrower obtained a limited order of stay from the Court the Appeal on 22 November 2013 whereby the enforcement
of money judgment obtained by the lenders under Court of Appeal decision was stayed pending disposal of the
Federal Court appeal application. However the right of the Receiver & Manager to enter into the premises was not
stayed but the borrower continued to resist the Receiver & Manager (R & M) appointed by the lenders.
The borrower filed an application to stay the R & M from doing their job but the lenders counterclaimed to restrain the
borrower’s directors, officers and solicitors from dealing with the charged assets and the right to continue with the R &
M. Hearing proceeded on 13 January 2014.
Decision will be given on 29 January 2014.
The solicitors for the lead banker and the lenders have expressed the view that the lead banker and the lenders have
a more than even chance of success in defending the leave application.
(b)
Other than above, there are various legal suits against the Bank in respect of claims and counter claims of approximately
RM117.6 million (2012: RM73.8 million). Based on legal advice, the Directors are of the opinion that no provision for
damages need to be made in the financial statements, as the probability of adverse adjudication against the Bank is
remote.
44
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
The Group and the Bank make estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. To enhance the information content of the estimates, certain variables that
are anticipated to have material impact to the Group’s and the Bank’s results and financial position are tested for sensitivity
to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.
Allowance for losses on loans, advances and financing
The accounting estimates and judgments related to the impairment of loans and provision for off-balance sheet positions is a
critical accounting estimate for because the underlying assumptions used for both the individually and collectively assessed
impairment can change from period to period and may significantly affect the Group and the Bank’s results of operations.
In assessing assets for impairment, management judgment is required. The determination of the impairment allowance
required for loans which are deemed to be individually significant often requires the use of considerable management
judgment concerning such matters as local economic conditions, the financial performance of the counterparty and the
value of any collateral held, for which there may not be a readily accessible market. The actual amount of the future cash
flows and their timing may differ from the estimates used by management and consequently may cause actual losses to
differ from the reported allowances.
The impairment allowance for portfolios of smaller-balance homogenous loans, such as those to individuals and small
business customers of the private and retail business, and for those loans which are individually significant but for which
no objective evidence of impairment exists, is determined on a collective basis. The collective impairment allowance is
calculated on a portfolio basis using statistical models which incorporate numerous estimates and judgments, and therefore
is subject to estimation uncertainty. The Group and the Bank perform a regular review of the models and underlying data and
assumptions as far as possible to reflect the current economic circumstances. The probability of default, loss given defaults,
and loss identification period, amongst other things, are all taken into account during this review.
Estimated impairment of goodwill
The Group performs an impairment review on an annual basis to ensure that the carrying value of the goodwill does not
exceed its recoverable amounts from cash generating units to which the goodwill is allocated. The recoverable amount
represents the present value of the estimated future cash flows expected to arise from continuing operations. Therefore,
in arriving at the recoverable amount, management exercise judgment in estimating the future cash flows, growth rate and
discount rate.
45
CREDIT EXPOSURES ARISING FROM TRANSACTIONS WITH CONNECTED PARTIES
The following credit exposures are based on Bank Negara Malaysia’s revised Guidelines on Credit Transaction and Exposures
with Connected Parties, which are effective 1 January 2008.
(i)
(ii)
(iii)
46
The aggregate value of outstanding credit exposures with connected parties (RM’000)
The percentage of outstanding credit exposures to connected parties as a proportion of total
credit exposures
The percentage of outstanding credit exposures with connected parties which is impaired or in default
3,013,895
6%
Nil
APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 26
February 2014.
STATEMENT BY
DIRECTORS
PURSUANT TO SECTION 169 (15) OF THE COMPANIES ACT, 1965
We, JEN TAN SRI DATO’ SERI ISMAIL BIN HAJI OMAR (BERSARA) and EN. MOHD SUFFIAN BIN HAJI HARON, two of the
Directors of AFFIN BANK BERHAD, state that, in the opinion of the Directors, the accompanying financial statements set out on
pages 68 to 193 are drawn up so as to give a true and fair view of the state of affairs of the Group and the Bank as at 31 December
2013 and of the results and cash flows of the Group and the Bank for the financial year ended on the date in accordance with
Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies
Act, 1965 in Malaysia.
In accordance with a resolution of the Board of Directors dated 26 February 2014.
JEN TAN SRI DATO’ SERI ISMAIL BIN HAJI OMAR (BERSARA)
Chairman
EN. MOHD SUFFIAN BIN HAJI HARON
Director
STATutory
Declaration
PURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965
I, EE KOK SIN, the officer of AFFIN BANK BERHAD primarily responsible for the financial management of the Group and the
Bank, do solemnly and sincerely declare that, in my opinion, the accompanying financial statements set out on pages 68 to 193,
are correct and I make this solemn declaration conscientiously believing the same to be true, by virtue of the provisions of the
Statutory Declarations Act, 1960.
EE KOK SIN
Subscribed and solemnly declared by the abovenamed EE KOK SIN at Kuala Lumpur in Malaysia on 26 February 2014, before me.
Commissioner for Oaths
INDEPENDENT
AUDITORS’
REPORT
TO THE MEMBERS OF AFFIN BANK BERHAD
(Incorporated in Malaysia)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of AFFIN Bank Berhad on pages 68 to 193 which comprise the statements of financial
position as at 31 December 2013 of the Group and of the Bank, and the statements of income, comprehensive income, changes
in equity and cash flows of the Group and of the Bank for the year then ended, and a summary of significant accounting policies
and other explanatory notes, as set out on Notes 1 to 45.
Directors’ Responsibility for the Financial Statements
The directors of the Bank are responsible for the preparation of financial statements that give a true and fair view in accordance
with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the Companies Act, 1965, and for
such internal control as the directors determine are necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance
with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements.
The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s
preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
directors, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with Malaysian Financial Reporting Standards,
International Financial Reporting Standards and the Companies Act, 1965 so as to give a true and fair view of the financial position
of the Group and of the Bank as of 31 December 2013 and of their financial performance and cash flows for the year then ended.
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF AFFIN BANK BERHAD
(Incorporated in Malaysia)
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)
In our opinion, the accounting and other records and the registers required by the Act to be kept by the Bank and its
subsidiaries have been properly kept in accordance with the provisions of the Act.
(b)
We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Bank’s financial
statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of
the Group and we have received satisfactory information and explanations required by us for those purposes.
(c)
The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment
made under Section 174(3) of the Act.
OTHER MATTERS
This report is made solely to the members of the Bank, as a body, in accordance with Section 174 of the Companies Act, 1965 in
Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.
PRICEWATERHOUSECOOPERS
(No. AF : 1146)
Chartered Accountants
Kuala Lumpur, Malaysia
26 February 2014
SOO HOO KHOON YEAN
(No. 2682/10/15 (J))
Chartered Accountant
BASEL II
Pillar 3 Disclosures
198
198
198
1.Introduction
1.1Background
1.2 Scope of Application
198
198
199
200
202
202
2. Risk Governance Structure
2.1 Overview
2.2 Board Committees
2.3 Management Committees
2.4 Group Risk Management Function
2.5 Internal Audit and Internal Control Activities
202
202
202
204
3. Capital
3.1 Internal Capital Adequacy Assessment Process (‘ICAAP’)
3.2 Capital Structure
3.3 Capital Adequacy
204
4. Risk Management Objectives and Policies
204
204
205
205
206
207
207
213
5. Credit Risk
5.1 Credit Risk Management Objectives and Policies
5.2 Application of Standardised Approach for Credit Risk
5.3 Credit Risk Measurement
5.4 Risk Limit Control and Mitigation Policies
5.5 Credit Risk Monitoring
5.6 Impairment Provisioning
5.7 Credit Risk Culture
213
213
213
214
214
215
6. Market Risk
6.1 Market Risk Management Objectives and Policies
6.2 Application of Standardised Approach for Market Risk
6.3 Market Risk Measurement, Control and Monitoring
6.4 Value-at-Risk (‘VaR’)
6.5 Foreign Exchange Risk
215
215
215
7. Liquidity Risk
7.1 Liquidity Risk Management Objectives and Policies
7.2 Liquidity Risk Measurement, Control and Monitoring
216
216
216
216
216
8. Operational Risk
8.1 Operational Risk Management Objectives and Policies
8.2 Application of Basic Indicator Approach for Operational Risk
8.3 Operational Risk Measurement, Control and Monitoring
8.4 Operational Risk Culture
217
9. Shariah Compliance
218
Appendices
BASEL II
PILLAR
3
DISCLOSURES
1Introduction
1.1Background
AFFIN Bank Berhad (‘the Bank’) adopted Basel II in January 2008 in line with the directive from Bank Negara Malaysia
(‘BNM’). The Basel II framework is structured around three fundamental Pillars.
- Pillar 1 defines the minimum capital requirement to ensure that financial institutions hold sufficient capital to cover their
exposure to credit, market and operational risks.
- Pillar 2 requires financial institutions to have a process for assessing their overall capital adequacy in relation to their risk
profile and a strategy for maintaining their capital levels.
-Pillar 3 requires financial institutions to establish and implement an appropriate disclosure policy that promotes
transparency regarding their risk management practices and capital adequacy positions.
The Bank elected to adopt the following approaches under Pillar 1 requirements:
- Standardised Approach for Credit Risk
- Basic Indicator Approach for Operational Risk
- Standardised Approach for Market Risk
1.2 Scope of Application
2
This document contains the disclosure requirements under Pillar 3 for the Bank for the year ended 31 December 2013. The
disclosures are made in line with the Pillar 3 disclosure requirements under the Basel II framework as laid out by BNM.
The disclosures should be read in conjunction with the Bank’s 2013 Annual Report for the year ended 31 December 2013.
The Group’s capital requirements are generally based on the principles of consolidation adopted in the preparation of its
financial statements. The Group’s consolidated entities comprises the Bank and the Bank’s subsidiary, AFFIN Islamic Bank
Berhad.
Risk Governance Structure
2.1 Overview
The Board of Directors of the Bank is ultimately responsible for the overall performance of the Bank. The Board’s
responsibilities remain within the framework of BNM Guidelines. The Board also exercises great care to ensure that high
ethical standards are upheld, and that the interests of stakeholders are not compromised. These include responsibility
for determining the Bank’s general policies and strategies for the short, medium and long term, approving business plans,
including targets and budgets, and approving major strategic decisions.
The Board has overall responsibility for maintaining the proper management and protection of the Bank’s interests by
ensuring effective implementation of the risk management policy and process, as well as adherence to a sound system
of internal control, and by seeking regular assurance on their effectiveness. The Board also recognises that risks cannot
be eliminated completely. As such, the inherent system of internal control is designed to provide a reasonable though
not absolute assurance against the risk of material errors, fraud or losses occurring. The system of internal controls
encompasses controls relating to financial, operational, risk management and compliance with applicable laws, regulations,
policies and guidelines.
BASEL II Pillar 3 Disclosures
2
2.1 Overview (continued)
The terms of reference of the Board Committees as disclosed in the Annual Report provide an outline of its role and
functions. In carrying out its functions, the Board has delegated specific responsibilities to other Board Committees,
which operate under approved terms of reference, to assist the Board in discharging their duties. The Chairmen of
the various Committees report on the outcome of their Committee meetings to the Board and any further deliberation
is made at Board level, if required. These reports and deliberations are incorporated into the Minutes of the Board
meetings. The Board meets on a monthly basis.
The Board of the Bank has a balance composition with a strong independent element. It consists of representatives
from the private sector with suitable qualifications fulfilling the fit and proper criteria as required by BNM/GP1, a
mixture of different skills, competencies, experience and personalities.
2.2 Board Committees
Board Remuneration Committee (‘BRC’)
The BRC is responsible for providing a formal and transparent procedure for developing the remuneration policy
for Directors, Managing Director/Chief Executive Officer and key senior management officers and ensuring that
compensation is competitive and consistent with the Bank’s culture, objectives and strategy.
The Committee obtains advice from experts in compensation and benefits, both internally and externally.
Board Nominating Committee (‘BNC’)
The BNC is responsible for providing a formal and transparent procedure for the appointment of Directors and
Managing Director/Chief Executive Officer, assessing the effectiveness of individual Directors, the Board as a whole
and the performance of the Managing Director/Chief Executive Officer and key senior management personnel.
Board Risk Management Committee (‘BRMC’)
The BRMC is responsible for overseeing management’s activities in managing credit, market, liquidity, operational,
legal and other risks and to ensure that the risk management process is in place and functioning.
It has responsibility for reviewing and approving all risk management policies and risk management methodologies.
BRMC also reviews guidelines and portfolio management reports including risk exposure information.
The Committee also ensures that the procedures and framework in relation to identifying, measuring, monitoring and
controlling risk are operating effectively.
Board Loan Review and Recovery Committee (‘BLRRC’)
The BLRRC is responsible in providing critical review of loans and other credit facilities with higher risk implications,
after due process of checking, analysis, review and recommendation by the Credit Risk Management function, and if
found necessary, exercise the power to veto loan applications that have been approved by the Group Management
Loan Committee (‘GMLC’). BLRRC also reviews the impaired loans reports presented by the Management.
2
2.2 Board Committees (continued)
Audit and Examination Committee (‘AEC’)
The AEC is responsible for providing oversight on reviewing the adequacy and integrity of the internal control systems
and oversees the work of the internal and external auditors.
Reliance is placed on the results of independent audits performed primarily by internal auditors, the outcome of
statutory audits on financial statements conducted by external auditors and on representations by Management based
on their control self-assessment of all areas of their responsibility.
Minutes of Audit & Examination Committee meetings, which provide a summary of the proceedings, are circulated to
Board members for notation and discussion. The Bank has an established Group Internal Audit Division (GIA) which
reports functionally to the Audit Committee and administratively to the Managing Director/Chief Executive Officer.
Shariah Committee
AFFIN Islamic Bank Berhad’s business activities are subject to Shariah compliance and conformation by the Shariah
Committee. The Shariah Committee is formed as legislated under the Islamic Financial Services Act 2013 and as per
Shariah Governance Framework for Islamic Financial Institutions.
The duties and responsibility of the Shariah Committee are as follows:
(i)
To advise the Board on Shariah matters in order to ensure that the business operations of the Bank comply with
the Shariah principles at all times;
(ii)
To endorse and validate relevant documentations of the Bank’s products to ensure that the products comply with
Shariah principles; and
(iii)
To advise the AFFIN Islamic Bank Berhad on matters to be referred to the Shariah Advisory Council.
2.3 Management Committees
Management Committee (‘MCM’)
MCM comprising the senior management team chaired by the MD/CEO, assists the Board in managing the day-to-day
operations and ensures its effectiveness. MCM formulates tactical plans and business strategies, monitors the Bank’s
overall performance, and ensures that the activities are in accordance with corporate objectives, strategies, policies
and annual business plan and budget.
Group Management Loan Committee (‘GMLC’)
GMLC is established within senior management chaired by the MD/CEO to approve complex and larger loans and
workout/recovery proposals beyond the delegated authority of the concerned individual senior management personnel
of the Bank.
2
2.3 Management Committees (continued)
Asset and Liability Management Committee (‘ALCO’)
ALCO comprising the senior management team chaired by the MD/CEO, manages the Bank’s asset liability position
and oversees the Bank’s capital management to ensure that the Bank is adequately capitalised on an economic and
regulatory basis.
Liquidity Management Committee (‘LMC’)
LMC is a sub-committee of the ALCO and its role is to augment the functions of the ALCO by directing its focus
specifically to liquidity issues.
Group Operational Risk Management Committee (‘GORMC’)
GORMC is established within senior management chaired by MD/CEO to deliberate and manage operational risks. Its
responsibilities include:
(i)
To evaluate operational risks issues of escalating importance/strategic risk exposure;
(ii)
To review and recommend on broad operational risks management policies/best practices for adoption by the
Bank’s operating units;
(iii) To review the effectiveness of broad internal controls and making recommendation/approve on changes, if
necessary;
(iv)
To review/approve recommendation of operational risk management groups set up to address specific area;
(v)
To take the lead in inculcating an operational risks awareness culture;
(vi)
To approve operational risk management methodologies/measurements tools;
(vii) To review and approve the strategic operational risk management initiatives/plans and to endorse for BRMC’s
approval if necessary; and
(viii) To update BRMC on loss events and relevant key issues that may adversely impact core processes, system
defects and any changes to critical business or system related processes.
Early Alert Committee (‘EAC’)
EAC is established within senior management to monitor credit quality through monthly review of the Early Alert,
Watchlist and Exit Accounts and review the actions taken to address the emerging risks and issues in these accounts.
2
2.4 Group Risk Management Function
An integrated risk management framework is in place. The Group Risk Management (‘GRM’) function, headed by
Group Chief Risk Officer (‘GCRO’) and operating in an independent capacity, is part of the Bank’s senior management
structure which works closely as a team in managing risks to enhance stakeholders’ value.
GRM reports to BRMC. Committees namely BLRRC, MCM, GMLC, ALCO, LMC, GORMC and EAC assist BRMC
in managing credit, market, liquidity and operational risks. The responsibilities of these Committees include risk
identification, risk assessment and measurement, risk control and mitigation; and risk monitoring.
2.5 Internal Audit and Internal Control Activities
3
In accordance with BNM’s GP10 guidelines, GIA conducts continuous reviews on auditable areas within the Bank. The
continuous reviews by GIA are focused on areas of significant risks and effectiveness of internal control in accordance
to the audit plan approved by the AEC.
Based on GIA’s review, identification and assessment of risk, testing and evaluation of controls, GIA will provide an
opinion on the effectiveness of internal controls maintained by each entity. The risks highlighted on the respective
auditable areas as well as recommendation made by the GIA are addressed at AEC and Management meetings on
bi-monthly basis. The AEC also conduct annual reviews on the adequacy of internal audit function, scope of work,
resources and budget of GIA.
Capital Management
3.1 Internal Capital Adequacy Assessment Process (‘ICAAP’)
In line with the BNM guideline on Risk-Weighted Capital Adequacy Framework - Internal Capital Adequacy Assessment
Process (Pillar 2), the Bank has put in place the ICAAP Framework to assess the capital adequacy to ensure the level of
capital maintained by the Bank is adequate at all times, taking into consideration the Bank’s risk profile and business
strategies.
The Bank’s capital management approach is focused on maintaining an appropriate level of capital to meet its business
needs and regulatory requirements as capital adequacy and risk management are closely aligned. The Bank operates
within an agreed risk appetite whilst optimising the use of shareholders’ funds to deliver sustainable returns.
3.2 Capital Structure
With effect from 1 January 2013, the total capital and capital adequacy ratios of the Group and the Bank are computed
in accordance with Bank Negara Malaysia’s Capital Adequacy Framework (Capital Components) dated 28 November
2012.
The Group and the Bank are currently adopting Standardised Approach for Credit Risk and Market Risk, the Basic
Indicator Approach for Operational Risk. In line with the transitional arrangements under the Bank Negara Malaysia’s
Capital Adequacy Framework (Capital Components), the minimum capital adequacy requirement for Common Equity
Tier 1 Capital Ratio (‘CET 1’) and Tier 1 Capital Ratio are 3.5% and 4.5% respectively for year 2013. The minimum
regulatory capital adequacy requirement remains at 8.0% (2012: 8.0%) for total capital ratio.
The following table sets forth details on the capital resources and capital adequacy ratios for the Group and the Bank
as at 31 December 2013.
3
Capital Management
3.2 Capital Structure (continued)
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Paid-up share capital Share premium
Statutory reserves Retained profits Unrealised gains and losses on AFS
1,518,337 529,337 1,317,376 1,004,534 (2,579) 1,518,337
529,337
1,160,651
808,553
-
1,518,337 529,337 1,144,350 798,118 6,533 1,518,337
529,337
1,017,200
659,603
-
Less:
Goodwill Deferred tax assets 55% of cumulative unrealised gains of AFS 4,367,005 4,016,878 3,996,675 3,724,477
(133,430) (9,326) -
(137,323) (10,827) -
(137,323)
(8,553) (3,593) (137,323)
(10,227)
-
CET1 capital
4,224,249 3,868,728 3,847,206 3,576,927
Tier I capital 4,224,249 3,868,728 3,847,206 3,576,927
Subordinated term loan Collective impairment Less:
Investment in subsidiaries/associates/
jointly controlled entity 810,000 143,572 900,000 152,350 810,000 123,103 900,000
128,568
(650)
- (389,088) -
Tier II capital Less:
Investment in capital instruments
of other banking institutions Investment in subsidiaries
952,922 1,052,350 544,015 1,028,568
- - (10,034)
(27,389)
-
-
(10,034)
(387,389)
Total capital/Capital base 5,177,171 4,883,655 4,391,221 4,208,072
CET1 capital ratio
10.811% 10.811%
13.250%
-
11.020%
13.910%
11.279% 11.279%
12.874%
11.590%
13.640%
CET1 capital ratio
(net of proposed dividends)
10.578%
-
11.012% -
10.578%
10.760%
11.012%
11.300%
13.017%
13.650%
12.607%
13.340%
Risk-weighted assets for:
Credit risk Market risk Operational risk 36,529,227 32,659,779 31,911,266 28,731,138
299,677 260,620 296,107 258,838
2,243,503 2,187,846 1,902,412 1,864,563
Total risk-weighted assets 39,072,407 35,108,245 34,109,785
30,854,539
3
Capital Management
3.3 Capital Adequacy
The Group and the Bank have in place an internal limit for its CET1 capital ratio, Tier I capital ratio and Total capital ratio,
which is guided by the need to maintain a prudent relationship between available capital and the risks of its underlying
businesses. The capital management process is monitored by senior management through periodic reviews.
Refer to Appendix I.
4
Risk Management Objectives and Policies
The Bank is principally engaged in all aspects of banking and related financial services. The principal activities of the Bank’s
subsidiaries are Islamic banking business, property management services, nominee and trustee services. There have been
no significant changes in these principal activities during the financial year.
The Bank’s business activities involve the analysis, measurement, acceptance, and management of risks but it operates
within well defined risk acceptance criteria covering customer segments, industries and products. The Bank does not enter
into risk it cannot administer, book, monitor or value, or deal with persons of questionable integrity.
The Bank’s risk management policies are established to identify all the key risks, assess and measure these risks, control
and mitigate these risks, and manage and monitor the risk positions.
The Bank regularly reviews its risk management policies and systems to reflect changes in markets, products and best
practice in risk management processes. The Bank’s aim is to achieve an appropriate balance between risk and return and
minimise any potential adverse effects.
The key business risks to which the Bank is exposed are credit risk, liquidity risk, market risk and operational risk.
5
Credit Risk
5.1 Credit Risk Management Objectives and Policies
Credit risk is the potential financial loss resulting from the failure of the customer or counterparty to settle the financial
and contractual obligations to the Bank. Credit risk emanates mainly from loans and advances, loan commitments
arising from such lending activities, as well as through financial transactions with counterparties including interbank
money market activities, derivative instruments used for hedging and debt securities.
The management of credit risk in the Bank is governed by a set of approved credit policies, guidelines and procedures.
Approval authorities are delegated to Senior Management and GMLC to implement the credit policies and ensure
sound credit granting standards.
An independent GRM function, headed by Group Chief Risk Officer (‘GCRO’) with direct reporting line to BRMC is in
place to ensure adherence to risk standards and discipline.
Lending guidelines and credit strategies are formulated and incorporated in the Annual Credit Plan. New businesses
are governed by the risk acceptance criteria and customer qualifying criteria/fitness standards prescribed in the Annual
Credit Plan. The Annual Credit Plan is reviewed at least annually and approved by the BRMC.
5
Credit Risk
5.2 Application of Standardised Approach for Credit Risk
The Bank uses the following External Credit Assessment Institutions (‘ECAIs’) to determine the risk weights for the
rated credit exposures:•
•
•
•
•
RAM Rating Services Berhad
Malaysian Rating Corporation Berhad
Standard & Poor’s Rating Services
Moody’s Investors Service
Fitch Ratings
The external ratings of the ECAIs are used to determine the risk weights of the following types of exposure: sovereigns,
banks, public sector entities and corporates.
The mapping of the rating categories of different ECAIs to the risk weights is in accordance with the guidelines provided
by BNM. In cases where there is no issuer or issue rating, the exposures are treated as unrated and accorded a risk
weight appropriate for unrated exposure in the respective category.
The external ratings are updated in the core banking system, and extracted and matched by the risk system according
to the above rules to determine the appropriate risk weights.
Refer to Appendix II and Appendices III (i) to III (ii).
5.3 Credit Risk Measurement
Credit evaluation is the process of analysing the creditworthiness of the prospective customer against the Bank’s
underwriting criteria and the ability of the Bank to make a return commensurate to the level of risk undertaken. A
critical element in the evaluation process is the assignment of a credit risk grade to the counterparty. This assists in
the risk assessment and decision making process. The Bank has developed internal rating models to support the
assessment and quantification of credit risk.
For consumer mass market products, statistically developed application scorecards are used by the Business to
assess the risks associated with the credit application. The scorecards are used as a decision support tool at loan
origination.
Over-the-Counter (‘OTC’) Derivatives
The OTC Derivatives credit exposure is computed using the Current Exposure Method. Under the Current Exposure
Method, computation of credit equivalent exposure for interest rate and exchange rate related contracts is derived
from the summation of the two elements; the replacement costs (obtained by marking-to-market) of all contracts and
the potential future exposure of outstanding contracts (Add On charges depending on the specific remaining tenor to
maturity).
5
Credit Risk
5.4 Risk Limit Control and Mitigation Policies
The Bank employs various policies and practices to control and mitigate credit risk.
Lending limits
The Bank establishes internal limits and related lending guidelines to manage large exposures and avoid undue
concentration of credit risk in its credit portfolio. The limits include single customer groupings, connected parties, and
geographical and industry segments. These risks are monitored regularly and the limits reviewed annually or sooner
depending on changing market and economic conditions.
The credit risk exposure for derivative and loan books is managed as part of the overall lending limits with customers
together with potential exposure from market movements.
Collateral
Credits are established against borrower’s capacity to repay rather than rely solely on security. However, collateral
may be taken to mitigate credit risk. The main collateral types accepted and given value by the Bank are:
•
•
•
•
Mortgages over residential properties;
Charges over commercial real estate or vehicles financed;
Charges over business assets such as business premises, inventory and account receivables; and
Charges over financial instruments such as marketable securities
In order to be recognised as security, all items pledged must have value and the Bank must have physical control and/
or legal title thereto, together with the necessary documentation to enable the Bank to realise the asset without the
co-operation of the asset owner. Other items, such as personal or corporate guarantees, may be taken for comfort
but will not be treated as security for approval purposes. Valuations are updated on a regular basis.
Prior to acceptance of any item as security, verification must be done to ensure that the security exists and an accurate
and up-to-date valuation can be placed upon it. A pre-facility disbursement site visit must be undertaken in respect of
landed security of significant value. Where third parties are used to undertake a valuation they must be taken from a
list of approved valuers.
All assets which provide security to the Bank must be adequately insured with an insurer from the list of approved
insurers.
The security documentation process is centralised in an independent Security Documentation Section at Head Office.
The Bank adopts standardised Letter of Offer and Legal Documents. Variations/amendments require the approval from
the relevant approving authority in the Bank.
Documentary and commercial letters of credit are collateralised by the underlying shipments of goods to which they
relate and therefore carry less risk than a direct loan.
5
Credit Risk
5.4 Risk Limit Control and Mitigation Policies (continued)
Credit related commitments
Commitment to extend credit represents unutilised portion of approved credit in the form of loans, guarantees or
letters of credit. In terms of credit risk, the Bank is potentially exposed to loss in an amount equal to the total
unutilised commitments. However, the potential amount of loss is less than the total unutilised commitments, as most
commitments to extend credit are contingent upon customers maintaining specific minimum credit standards.
The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a
greater degree of credit risk than short-term commitments.
Refer to Appendix IV (a) to (b).
5.5 Credit Risk Monitoring
Retail credits are actively monitored and managed on a portfolio basis by product type. A new collection management
system has been implemented with a dedicated team in place to promptly identify, monitor and manage delinquent
accounts at early stages of delinquency.
Corporate credits and large individual accounts are reviewed by the Business Units at least once a year against
updated information. This is to ensure that the credit grades remain appropriate and detect any signs of weaknesses
or deterioration in the credit quality. Remedial action is taken where evidence of deterioration exists.
Early Alert Process is in place as part of a means to pro-actively identify, report and manage deteriorating credit quality.
Watchlist accounts are closely reviewed and monitored with corrective measures initiated to prevent them from turning
impaired. As a rule, watchlist accounts are either worked up or worked out within a period of twelve months.
Active portfolio monitoring enables the Bank to understand the overall risk profile and identify any adverse trends or
areas of risk concentrations affecting asset quality so that appropriate actions are adopted to manage and mitigate
risks.
5.6 Impairment Provisioning
Individual impairment provisioning
Significant loans, with or without past due status, are subject to individual assessment for impairment when an
evidence of impairment surfaces or at the very least once annually during the annual review process.
If impaired, the amount of loss is measured as the difference between the asset’s carrying value and the present value
of estimated future cash flows discounted at the financial assets original effective interest rate. The level of impairment
allowance on significant loans is reviewed regularly, at least quarterly or more often when circumstances require.
Significant loans that are deemed not impaired after individual assessment are included in a group of loans with similar
characteristics and collectively assessed for impairment.
5
Credit Risk
5.6 Impairment Provisioning (continued)
Collective impairment provisioning
All loans are grouped in respective business segments according to similar credit risk characteristics and is generally
based on industry, asset or collateral type, credit grade and past due status grouped based on business segments.
Portfolio provisioning is determined for each segment based on its respective loss probabilities and other information
relevant to estimation of the future cash flows of each segment.
Collective provisioning is applicable to all loans not covered under individual assessment as well as significant loans
that are deemed not impaired after individual assessment.
Total loans, advances and financing - credit quality
All loans, advances and financing are categorised into “neither past due nor impaired”, “past due but not impaired”
and “impaired”. Past due loans refer to loans that are overdue by one day or more. Impaired loans are loans with
months-in-arrears more than 90 days or with impaired allowances.
5
Credit Risk
Analysed by economic sectors
Past due loans
Primary agriculture Mining and quarrying
Manufacturing Electricity, gas and water supply
Construction Real estate Wholesale & retail trade and restaurants & hotels Transport, storage and communication Finance, insurance and business services Education, health and others Household 23,698 3,005 26,317 606
108,384 205,295 70,751 51,635 131,672 18,530 1,792,753 17,525 1,467 38,863 1,094 180,112 48,489 109,314 36,623 113,557 14,714 2,012,448 23,032 2,838 24,935
476 100,862 202,051 65,734 49,356
129,518 16,543 1,417,953 16,932
1,380
36,083
814
171,863
48,152
105,261
33,732
54,880
13,702
1,648,376
2,432,646 2,574,206 2,033,298 2,131,175
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Primary agriculture Manufacturing Electricity, gas and water supply Construction Real estate Wholesale & retail trade and restaurants & hotels Transport, storage and communication
Finance, insurance and business services Education, health and others
Household 2,560 15,925 - 133,186 - 7,023 3,958 37,628 - 23,421 1,693 17,215 1,579 119,668 2,520 7,128 3,458 38,469 1,961 16,681 2,560 10,052 -
106,396 - 5,210
3,958
37,628 - 23,313 1,693
10,776
1,579
92,906
2,520
5,270
3,458
38,469
1,961
16,645
223,701
210,372 189,117 175,277
5
Credit Risk
Analysed by economic sectors (continued)
Individual impairment charged
Primary agriculture Manufacturing Electricity, gas and water supply Construction Real estate Wholesale & retail trade and restaurants & hotels Transport, storage and communication Finance, insurance and business services Education, health and others
Household 1,116 7,892 4
19,610 555 3,656 797 1,163 - 13,110 148 9,834 566 14,852 1,184 7,221 3,459 12,484 1,934 20,531 1,116 7,708 4 19,447 555 3,463 797 1,163 -
12,960 148
9,080
566
14,548
1,184
5,810
3,459
12,445
1,934
20,217
47,903 72,213 47,213 69,391
The Group
2013 2012 RM’000 RM’000 Individual impairment written-off
Manufacturing Electricity, gas and water supply Construction Wholesale & retail trade and restaurants & hotels Finance, insurance and business services
Household
3,620 1,119 2,582 1,005
4,648
-
1,267 - 11,708 - -
387 3,620 1,119 2,582 1,005 4,648 -
1,267
11,708
387
12,974 13,362 12,974 13,362
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
The Bank
2013 2012
RM’000 RM’000
5
Credit Risk
Analysed by economic sectors (continued)
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Primary agriculture Mining and quarrying Manufacturing Electricity, gas and water supply Construction Real estate Wholesale & retail trade and restaurants & hotels
Transport, storage and communication
Finance, insurance and business services Education, health and others Household 2,809 1,345 15,100 594 31,761 14,164 14,151 7,762 14,564 5,269 192,795 2,023 1,212 20,703 1,079 26,823 13,642 12,963 7,752 20,117 6,512 209,803 2,686 1,340 13,886 485 29,800 13,161 13,419 7,499 13,172 3,802
167,345 1,770
1,145
19,199
989
22,067
12,956
12,289
7,635
18,407
4,882
186,354
300,314 322,629 266,595 287,693
Analysed by geographical area
Past due loans
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Perlis Kedah Pulau Pinang Perak Selangor
Wilayah Persekutuan Negeri Sembilan Melaka Johor
Pahang Terengganu Kelantan Sarawak Sabah
Labuan Outside Malaysia
4,680 101,606 93,554 115,654 585,105 389,532 98,615 106,888 353,076 65,105 59,488 40,919 142,309 275,810 59 246 2,796 92,913 95,871 123,800 763,976 412,547 101,629 108,788 298,352 66,331 58,771 46,197 142,183 260,000 52 -
4,143 86,965 81,663 67,837 454,868 352,379 84,127 101,945 333,469 43,859 8,303
4,535
139,579 269,326
54 246 2,444
80,764
86,512
80,204
626,238
327,428
90,454
105,254
278,385
43,867
8,890
4,898
139,396
256,395
46
-
2,574,206 2,033,298 2,131,175
2,432,646
5
Credit Risk
Analysed by geographical area (continued)
The Group
2013 2012 RM’000 RM’000 The Bank
2013 2012
RM’000 RM’000
Kedah
Pulau Pinang Perak Selangor Wilayah Persekutuan Negeri Sembilan Johor Pahang Terengganu Kelantan Sabah Outside Malaysia 6,114 1,332
-
114,281 39,442 2,560 15,051 3,396
1,733 18 82 39,692 7,048 138 3,466 103,321 42,631 1,693
8,014 9,602
-
18 279 34,162 6,114 1,332 -
107,167 38,762 2,560 15,051 3,396
1,733 18 -
12,984 7,048
138
3,466
102,058
41,949
1,693
8,014
3,163
18
7,730
223,701 210,372 189,117 175,277
The Group
2013 2012 RM’000 RM’000 Perlis Kedah Pulau Pinang Perak Selangor Wilayah Persekutuan Negeri Sembilan Melaka
Johor Pahang Terengganu Kelantan Sarawak Sabah Labuan 487 12,289 11,565 12,545 111,368 51,989 14,345 8,337 28,347 6,729 14,818 3,517 8,236
14,598 1,144 570
12,605 14,554 10,935
132,888 64,974 14,804 7,163 29,309 5,442 5,564 3,298 7,167 12,631 725 320 11,140
10,744 9,562
99,103 46,335
12,942 8,006
26,828
5,425 12,094 898 7,928
14,126 1,144
532
11,577
13,868
9,168
119,064
56,720
13,715
6,851
27,847
4,213
3,514
844
6,753
12,302
725
300,314 322,629 266,595 287,693
The Bank
2013 2012
RM’000 RM’000
5
Credit Risk
5.7 Credit Risk Culture
6
The Bank recognises that learning is a continuous journey and is committed to enhance the knowledge and required
skills set of its staff. It places strong emphasis in creating and enhancing risk awareness in the organisation.
For effective and efficient staff learning, the Bank has implemented an E–Learning Program with an online Learning
Management System (‘LMS’). The LMS provides staff with a progressive self-learning alternative at own pace.
GRM implements an Internal Credit Certification (‘ICC’) Programme for both Business Banking and Consumer Credit.
The aim of the ICCs is to assist the core credit related group of personnel in the Bank achieve a minimum level of
knowledge and analytical skills required to make sound corporate and commercial loans to customers.
Market Risk
6.1 Market Risk Management Objectives and Policies
Market risk is defined as the risk of losses to the Bank’s portfolio positions arising from movements in market factors
such as interest rates, foreign exchange rates and changes in volatility. The Bank is exposed to market risks from
its trading and investment activities. The Bank’s market risk management objective is to ensure that market risk is
appropriately identified, measured, controlled, managed and reported.
The Bank’s exposure to market risk stems primarily from interest rate risk and foreign exchange rate risk. Interest rate
risk arises mainly from differences in timing between the maturities or repricing of assets, liabilities and derivatives.
The Bank is also exposed to basis risk when there is a mismatch between the change in price of a hedge and the
change in price of the assets it hedges. Foreign exchange rate risk arises from unhedged positions of customers’
requirements and proprietary positions.
6.2 Application of Standardised Approach for Market Risk
The Bank adopts the Standardised Approach for the purpose of calculating the capital requirement for market risk.
Refer to Appendix I.
6
Market Risk
6.3 Market Risk Measurement, Control and Monitoring
The Bank’s market risk management control strategy is established based on its risk appetite, market liquidity and
business strategies as well as macroeconomic conditions. These limits are reviewed at least on an annual basis.
Market risk arising from the Bank’s trading book is primarily controlled through the imposition of Cut-loss and Valueat-Risk (‘VaR’) Limits.
The Bank quantifies interest rate risk by analysing the repricing mismatch between the rate sensitive assets and rate
sensitive liabilities. It also conducts Net Interest Income simulations to assess the variation in earnings under various
rates scenarios. The potential long term effects of the Bank’s overall exposure is also tracked by assessing the impact
on economic value of equity (‘EVE’).
The Bank’s interest rate risk is managed through Earnings-at-Risk (‘EaR’) and Economic Value-at-Risk (‘EVaR’) limits.
In addition, the Bank conducts periodic stress test of its respective business portfolios to ascertain market risk under
abnormal market conditions.
The Bank’s Management, ALCO and BRMC are regularly kept informed of its risk profile and positions.
6.4 Value-at-Risk (‘VaR’)
Value-at-Risk (‘VaR’) is used to compute the maximum potential loss amount over a specified holding period of a
Trading portfolio. It measures the risk of losses arising from potential adverse movements in interest rates and foreign
exchange rates that could affect values of financial instruments.
The Variance-Covariance Parametric methodology is adopted to compute the potential loss amount. This is a
statistically defined, probability-based approach that uses volatilities and correlations to quantify price risks. Under
this methodology, a matrix of historical volatilities and correlations is computed from the past 100 business days’
market data. VaR is then computed by applying these volatilities and correlations to the outstanding trading portfolio.
Other risk measures include the following:
(i)
Mark-to-Market valuation tracks the current market value of the outstanding financial instruments.
(ii)
Stress tests are conducted to attempt to quantify market risk arising from low probability, abnormal market
movements. Stress tests measure the changes in values arising from extreme movements in interest rates and
foreign exchange rates based on past experience and simulated stress scenarios.
(iii)
Sensitivity/Dollar Duration is an additional measure of interest rate risk that is computed on a daily basis. It
measures the change in value of a portfolio resulting from a 0.01% increase in interest rates. This measure
identifies the Bank interest rate exposures that are most vulnerable to interest rate changes and it facilitates the
implementation of hedging strategies.
6
Market Risk
6.5 Foreign Exchange Risk
7
The Bank takes on exposure to the effects of fluctuations in the prevailing foreign currency exchange rates on its
financial position and cash flows. The Board sets limits on the level of exposure by currency and in aggregate for both
overnight and intra-day positions, which are monitored daily.
Liquidity Risk
7.1 Liquidity Risk Management Objectives and Policies
Liquidity risk is the current and prospective risk to earnings or capital arising from a bank’s inability to meet its
obligations when they fall due. Liquidity risk includes the inability to manage sudden decreases or changes in funding
sources. Liquidity risk also arises from the failure to recognise changes in market conditions that affect the ability to
liquidate assets quickly and with minimal loss in value.
7.2 Liquidity Risk Measurement, Control and Monitoring
To measure and manage net funding requirements, the Bank adopts BNM’s New Liquidity Framework (‘NLF’). The
NLF ascertains the liquidity condition based on the contractual and behavioural cash-flow of assets, liabilities and offbalance sheet commitments, taking into consideration the realisable cash value of the eligible liquefiable assets. The
NLF is also supported by indicative ratios on the Bank’s funding structure to monitor the reliance on particular funding
sources.
The Bank employs liquidity risk indicators as an early alert of any structural change for liquidity risk management. The
risk is measured monthly using internal and external qualitative and quantitative liquidity risk indicators. The Bank
also conducts liquidity stress tests to gauge ABB’s resilience in the event of a funding crisis. In addition, the Bank has
in place the Contingency Funding Plan, which provides a systematic approach in handling liquidity disruption. The
document encompasses strategies, decision-making authorities, and courses of action to be taken in the event of
liquidity crisis and emergencies.
The liquidity positions in the major currencies are being closely monitored by tracking the availability of medium to long
term foreign currency funding and adhering to the guiding principles for foreign currency assets creations.
Basel III Liquidity Standards
The Basel Committee developed the Liquidity Coverage Ratio (‘LCR’) and Net Stable Funding Ratio (‘NSFR’) with the
goal of strengthening the resilience of the banking systems. The LCR and NSFR are tracked monthly to assess the
short term and long term liquidity risk profile of the Bank.
BRMC is responsible for the Bank’s liquidity policy although the strategic management of liquidity has been delegated
to ALCO. The BRMC is informed regularly of the liquidity situation in the Bank.
8
Operational Risk
8.1 Operational Risk Management Objectives and Policies
Operational risk is the risk of loss arising from inadequate or failed internal processes, action on or by people,
infrastructure or technology or events which are beyond the bank’s immediate control which have an operational
impact, including natural disaster, fraudulent activities and money laundering/financing of terrorism.
The Bank manages operational risk through a control based environment in which policies and procedures are
formulated after taking into account individual unit’s business activities, the market in which it is operating and
regulatory requirement in force.
8.2 Application of Basic Indicator Approach for Operational Risk
The Bank adopts the Basic Indicator Approach for the purpose of calculating the capital requirement for operational
risk. The capital requirement is calculated by taking 15% of the Bank’s average annual gross income over the previous
three years.
8.3 Operational Risk Measurement, Control and Monitoring
Risk is identified through the use of assessment tools and measured using threshold/limits mapped against risk matrix.
Monitoring and control procedures include the use of key control standards, independent tracking of risk, back-up
procedures and contingency plans, including disaster recovery and business continuity plans. This is supported by
periodic reviews undertaken by Group Internal Audit to ensure adequacy and effectiveness of the Group Operational
Risk Management process.
The Bank gathers, analyses and reports operational risk loss and ‘near miss’ events to Group Operational Risk
Management Committee and Board Risk Management Committee. Appropriate preventive and remedial actions are
reviewed for effectiveness and implemented to minimize the recurrence of such events.
8.4 Operational Risk Culture
As a matter of requirement, all Operational Risk Coordinators must satisfy an Internal Operational Risk (including
anti-money laundering/counter financing of terrorism and business continuity management) Certification Program.
These coordinators will first go through an on-line self learning exercise before attempting on-line assessments to
measure their skills and knowledge level. This will enable Group Risk Management to prescribe appropriate training
and development activities for the coordinators.
9
Shariah Compliance
Shariah compliance is the fundamental of Islamic banking and finance. It gives legitimacy to the practices and business
operations of the Islamic financial institutions (‘IFIs’) concerned. Comprehensive compliance with Shariah principles would
also boosts confidence of shareholders and public that all the practices and activities by the IFIs are in compliance with the
Shariah principles at all times.
Shariah Governance Framework for Islamic Financial Institutions (the ‘Framework’) issued by Bank Negara Malaysia becomes
the main reference to oversee the Shariah governance process within AFFIN Islamic Bank Berhad. In order to comply with
all the requirements in the Framework, Board of Directors of the Bank are very committed to ensure among others all the
required Shariah compliance and research functions include Shariah Risk Management, Shariah Review, Shariah Research
and Shariah Audit are properly established to effectively perform its respective functions.
Continuous training programs are provided to Shariah Committee members to equip them with better understanding and
exposure on banking operations and to Board of Directors, management members and staff for fundamental and advanced
knowledge on Shariah and Islamic commercial law matters.
Appendix I
Total RWA and Capital Requirements
MARKET RISK
Interest Rate Risk
Foreign Currency Risk
OPERATIONAL RISK
Operational Risk
Long Position
5,236,771
16,556
Short Position
4,512,369
17,404
61,910,259
5,235,993
123,834
5,359,827
Off Balance Sheet Exposures
Off Balance Sheet Exposures other than OTC derivatives or
credit derivatives
Defaulted Exposures
Total for Off-Balance Sheet Exposures
Total for On and Off-Balance Sheet Exposures
21,462,063
11,713,244
2,317,711
10,907,154
34,424
3,591,180
504,303
4,428,276
294,509
24,057
1,273,511
56,550,432
724,402
(848)
60,722,173
5,044,178
121,935
5,166,113
20,621,684
11,609,274
2,317,711
10,907,154
30,344
3,591,180
504,303
4,412,291
294,122
24,057
1,243,940
55,556,060
Gross
Net
Exposures /EAD
Exposures /
before CRM EAD after CRM
Exposure Class
CREDIT RISK
On Balance Sheet Exposures
Corporates
Regulatory Retail
Other Assets
Sovereigns/Central Banks
Public Sector Entities
Banks, Development Financial Institutions & MDBs
Insurance Companies, Securities Firms & Fund Managers
Residential Mortgages
Higher Risk Assets
Equity Exposure
Defaulted Exposures
Total for On-Balance Sheet Exposures
OTC “Over The Counter”
PSIA “Profit Sharing Investment Account”
3
2
1
Group
2013
Disclosure on Capital Adequacy under the Standardised Approach (RM’000)
39,072,407
2,243,503
278,703
20,974
36,529,227
4,474,930
182,827
4,657,757
17,186,171
8,710,981
434,250
6,069
1,107,499
465,598
1,778,721
441,183
24,057
1,716,941
31,871,470
36,529,227
-
36,529,227
4,474,930
182,827
4,657,757
17,186,171
8,710,981
434,250
6,069
1,107,499
465,598
1,778,721
441,183
24,057
1,716,941
31,871,470
Total Risk
Weighted
Risk Weighted
Assets after
Assets Effects of PSIA
3,125,792
179,480
22,296
1,678
2,922,338
357,994
14,626
372,620
1,374,894
696,877
34,740
486
88,600
37,248
142,298
35,294
1,925
137,356
2,549,718
Minimum
Capital
Requirements
at 8%
The following information concerning the Group and the Bank’s risk exposures are disclosed as accompanying information to the annual report, and does not form part of the
audited accounts.
The Group and the Bank have adopted Basel II - Risk Weighted Assets computation under the BNM’s Risk-Weighted Capital Adequacy Framework with effect from 1 January
2008. The Group and the Bank have adopted the Standardised Approach for credit risk and market risk, and Basic Indicator Approach for operation risk computation.
MARKET RISK
Interest Rate Risk
OPERATIONAL RISK
Operational Risk
Long Position
4,321,601
14,534
Short Position
4,169,823
12,098
56,718,503
4,500,860
82,230
4,583,090
credit derivatives
Defaulted Exposures
19,752,745
11,063,690
2,116,942
9,718,232
3,986,505
474,785
3,772,100
399,250
20,388
830,776
52,135,413
151,778
2,436
54,235,855
4,326,152
81,763
4,407,915
17,713,218
10,967,217
2,116,942
9,718,232
3,850,682
459,648
3,764,366
398,479
20,388
818,768
49,827,940
Gross
Net
Exposures /EAD Exposures /EAD
before CRM
after CRM
Exposure Class
CREDIT RISK
Corporates
Regulatory Retail
Other Assets
Higher Risk Assets
Equity Exposure
Defaulted Exposures
3
2
1
Group
2012
35,108,245
2,187,846
246,086
14,534
32,659,779
3,792,166
122,534
3,914,700
15,286,599
8,230,560
224,483
1,311,600
459,648
1,567,219
597,718
20,388
1,046,864
28,745,079
Risk Weighted
Assets
32,659,779
-
32,659,779
3,792,166
122,534
3,914,700
15,286,599
8,230,560
224,483
1,311,600
459,648
1,567,219
597,718
20,388
1,046,864
28,745,079
Total Risk
Weighted
Assets after
Effects of PSIA
2,808,660
175,028
19,687
1,163
2,612,782
303,373
9,803
313,176
1,222,928
658,445
17,958
104,928
36,772
125,378
47,817
1,631
83,749
2,299,606
Minimum
Capital
Requirements
at 8%
Appendix I
MARKET RISK
Interest Rate Risk
OPERATIONAL RISK
Operational Risk
Long Position
5,236,771
12,986
Short Position
4,512,369
17,404
49,827,223
4,758,428
123,140
4,881,568
credit derivatives
Defaulted Exposures
19,071,729
9,765,977
2,063,713
5,891,212
34,424
3,381,310
394,054
2,849,626
273,390
24,057
1,196,163
44,945,655
724,402
(4,418)
48,742,842
4,582,963
121,241
4,704,204
18,305,396
9,667,736
2,063,713
5,891,212
30,344
3,381,310
394,054
2,841,197
273,016
24,057
1,166,603
44,038,638
Gross
Net
Exposures /EAD
Exposures /
before CRM EAD after CRM
Exposure Class
CREDIT RISK
Corporates
Regulatory Retail
Other Assets
Higher Risk Assets
Equity Exposure
Defaulted Exposures
3
2
1
Bank
2013
34,109,785
1,902,412
278,703
17,404
31,911,266
4,086,054
181,787
4,267,841
15,317,142
7,254,620
411,610
6,069
1,122,157
370,388
1,101,714
409,524
24,057
1,626,144
27,643,425
31,911,266
-
31,911,266
4,086,054
181,787
4,267,841
15,317,142
7,254,620
411,610
6,069
1,122,157
370,388
1,101,714
409,524
24,057
1,626,144
27,643,425
Total Risk
Weighted
Risk Weighted
Assets after
Assets Effects of PSIA
2,728,782
152,193
22,296
1,392
2,552,901
326,884
14,543
341,427
1,225,371
580,369
32,929
486
89,772
29,631
88,137
32,762
1,925
130,092
2,211,474
Minimum
Capital
Requirements
at 8%
Appendix I
MARKET RISK
Interest Rate Risk
OPERATIONAL RISK
Operational Risk
Long Position
4,321,601
12,752
Short Position
4,169,823
12,098
45,284,263
4,026,461
81,548
4,108,009
credit derivatives
Defaulted Exposures
17,509,673
9,264,210
2,148,363
4,696,832
3,411,784
364,499
2,656,967
367,791
20,388
735,747
41,176,254
151,778
654
43,154,904
3,861,516
81,081
3,942,597
15,769,100
9,174,953
2,148,363
4,696,832
3,295,677
364,499
2,651,702
367,036
20,388
723,757
39,212,307
Gross
Net
Exposures /EAD Exposures /EAD
before CRM
after CRM
Exposure Class
CREDIT RISK
Corporates
Regulatory Retail
Other Assets
Higher Risk Assets
Equity Exposure
Defaulted Exposures
3
2
1
Bank
2012
30,854,539
1,864,563
246,086
12,752
28,731,138
3,395,489
121,510
3,516,999
13,750,174
6,883,763
401,300
1,200,599
364,499
1,109,732
550,554
20,388
933,130
25,214,139
Risk Weighted
Assets
28,731,138
-
28,731,138
3,395,489
121,510
3,516,999
13,750,174
6,883,763
401,300
1,200,599
364,499
1,109,732
550,554
20,388
933,130
25,214,139
Total Risk
Weighted
Assets after
Effects of PSIA
2,468,363
149,165
19,687
1,020
2,298,491
271,639
9,721
281,360
1,100,014
550,701
32,104
96,048
29,160
88,779
44,044
1,631
74,650
2,017,131
Minimum
Capital
Requirements
at 8%
Appendix I
Appendix I
Disclosure on Capital Adequacy under the Standardised Approach
Market risk is defined as the risk of losses in on and off-balance sheet positions arising from movements in market prices. The
Bank’s Capital-at-Risk (‘CaR’) is defined as the amount of the Bank’s capital that is exposed to the risk of unexpected losses
arising particularly from movements in interest and foreign exchange rates. A CaR Limit is set as a management trigger to ensure
that the Bank’s exposure to such movements do not compromise the Bank’s capital adequacy. The Bank is currently adopting
BNM’s Standardised Approach for the computation of market risk capital charges. The market risk capital charges addresses
among others, capital requirement for market risk which includes the interest rate risk pertaining to the Bank’s exposure in the
trading book as well as foreign exchange risk in the trading and banking books.
The computation of market risk capital charge covers the following outstanding financial instruments:
a)
b)
c)
d)
Foreign Exchange
Interest Rate Swap (‘IRS’)
Cross Currency Swap (‘CCS’)
Fixed Income Instruments (i.e. Private Debt and Government Securities)
-
-
PSE “Public Sector Entities”
MDB “Multilateral Development Banks”
FDI “Financial Development Institutions”
Deduction
from
Capital
Base
Average
Risk Weight
-
-
-
-
938%
-
-
-
-
400%
625%
1250%
-
-
-
-
270%
350%
-
-
-
-
135%
150%
-
-
-
-
110%
125%
-
-
-
-
50%
75%
-
-
-
-
-
-
38,677
20%
35%
90%
31,954
-
100%
-
-
10,973,025
PSEs
0%
Sovereigns
& Central
Banks
10%
Risk
Weights
Group
2013
-
-
-
-
-
-
-
-
-
-
-
15,819
-
-
1,531,449
-
2,508,494
-
34,314
Banks,
MDBs and
FDIs
-
-
-
-
-
-
-
-
-
-
-
498,017
-
-
-
-
29,583
-
15,039
Insurance
Companies,
Securities
Firms & Fund
Managers
-
-
-
-
-
-
-
791,707
-
-
-
20,335,468
-
-
641,063
-
2,531,860
-
1,135,377
Corporates
-
-
-
-
-
-
-
216,164
-
-
-
50,336
-
12,027,148
757
-
1,715
-
-
Regulatory
Retail
-
-
-
-
-
-
-
74,565
-
-
-
406,723
-
26,692
481,539
3,676,431
-
-
-
Residential
Mortgages
-
-
-
-
-
-
-
-
-
-
-
-
-
-
302,847
-
-
-
3,640
Higher
Risk
Assets
Exposures after Netting and Credit Risk Mitigation
Disclosure on Credit Risk: Disclosures on Risk Weights under the Standardised Approach (RM’000)
-
-
-
-
-
-
-
-
-
-
-
416,100
-
-
-
-
90,753
-
1,810,859
Other
Assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Specialised
Financing /
Investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Securitisation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,057
Equity
-
-
-
-
-
-
-
-
1,385,283
-
-
-
21,750,160
-
12,053,840
2,654,808
3,676,431
5,233,036
-
13,968,614
Total
Exposure
after Netting
& Credit Risk
Mitigation
-
-
-
-
-
-
-
-
2,077,925
-
-
-
21,750,160
-
9,040,380
1,327,404
1,286,751
1,046,607
Total Risk
Weighted
Assets
Appendix II
-
-
-
-
Deduction
from
Capital
Base
-
-
-
-
938%
1250%
Average
Risk Weight
-
-
-
400%
625%
-
-
-
-
270%
32,547
-
-
-
-
-
-
1,600
350%
-
-
135%
150%
-
-
110%
125%
-
-
-
-
50%
75%
90%
-
100%
-
44,881
20%
35%
-
-
-
9,769,753
PSEs
0%
Sovereigns
& Central
Banks
10%
Risk
Weights
Group
2012
-
-
10.034
-
-
-
-
-
-
-
-
-
-
1,262
-
-
1,943,852
-
2,332,100
Banks,
MDBs and
FDIs
-
-
-
-
-
-
-
-
-
-
-
524,232
-
-
-
-
-
-
-
Insurance
Companies,
Securities
Firms & Fund
Managers
-
-
-
-
-
-
-
239,701
-
-
-
17,559,379
-
-
1,005,918
-
2,455,663
-
-
Corporates
-
-
-
-
-
-
-
208,830
-
-
-
44,563
-
11,431,933
1,482
-
1,961
-
-
Regulatory
Retail
-
-
-
-
-
-
-
72,699
-
-
-
442,946
-
45,277
631,643
2,880,566
-
-
-
Residential
Mortgages
-
-
-
-
-
-
-
-
-
-
-
-
-
-
422,658
-
-
-
3,078
Higher
Risk
Assets
-
-
-
-
-
-
-
3,245
-
-
-
204,574
-
-
-
-
75,210
-
1,833,914
Other
Assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Specialised
Financing /
Investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Securitisation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,388
Equity
10,034
-
-
-
-
-
-
-
979,680
-
-
-
18,800,422
-
11,477,210
3,582,895
2,880,566
4,911,415
-
11,603,667
Total
Exposure
after Netting
& Credit Risk
Mitigation
-
-
-
-
-
-
-
-
1,469,520
-
-
-
18,800,422
-
8,607,908
1,791,448
1,008,198
982,283
Total Risk
Weighted
Assets
Appendix II
-
-
Deduction
from
Capital
Base
Average
Risk Weight
-
-
-
-
938%
-
-
-
-
400%
625%
1250%
-
-
-
-
270%
350%
-
-
-
-
135%
150%
-
-
-
-
110%
125%
-
-
-
-
-
-
-
-
50%
75%
90%
-
100%
31,954
-
-
20%
-
35%
-
-
5,952,212
PSEs
0%
Sovereigns
& Central
Banks
10%
Risk
Weights
Bank
2013
-
-
-
-
-
-
-
-
-
-
-
15,819
-
-
1,705,649
-
2,138,299
-
15,152
Banks,
MDBs and
FDIs
-
-
-
-
-
-
-
-
-
-
-
382,880
-
-
-
-
29,583
-
-
Insurance
Companies,
Securities
Firms & Fund
Managers
-
-
-
-
-
-
-
790,105
-
-
-
18,209,564
-
-
625,906
-
2,201,186
-
941,848
Corporates
-
-
-
-
-
-
-
198,396
-
-
-
47,448
-
10,027,146
757
-
1,715
-
-
Regulatory
Retail
-
-
-
-
-
-
-
62,192
-
-
-
237,959
-
20,574
277,171
2,457,225
-
-
-
Residential
Mortgages
-
-
-
-
-
-
-
-
-
-
-
-
-
-
280,897
-
-
-
3,435
Higher
Risk
Assets
-
-
-
-
-
-
-
-
-
-
-
382,267
-
-
-
-
146,721
-
1,534,725
Other
Assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Specialised
Financing /
Investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Securitisation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
24,057
Equity
-
-
-
-
-
-
-
1,331,590
-
-
-
19,303,429
-
10,047,720
2,609,483
2,457,225
4,549,458
-
8,443,937
Total
Exposure
after Netting
& Credit Risk
Mitigation
-
-
-
-
-
-
-
1,997,385
-
-
-
19,303,429
-
7,535,790
1,304,741
860,029
909,892
Total Risk
Weighted
Assets
Appendix II
-
-
-
-
-
Deduction
from
Capital
Base
-
-
-
-
938%
1250%
Average
Risk Weight
-
-
-
400%
625%
-
-
-
-
270%
32,547
-
-
-
-
-
350%
-
-
135%
150%
-
-
110%
125%
-
-
90%
100%
-
-
-
50%
75%
-
1,600
-
-
-
20%
-
PSEs
35%
4,745,271
0%
Sovereigns
& Central
Banks
10%
Risk
Weights
Bank
2012
-
-
10.034
-
-
-
-
-
-
-
-
-
-
1,262
-
-
1,943,852
-
1,773,982
Banks,
MDBs and
FDIs
-
-
-
-
-
-
-
-
-
-
-
390,150
-
-
-
-
-
-
-
Insurance
Companies,
Securities
Firms & Fund
Managers
-
-
-
-
-
-
-
239,134
-
-
-
15,841,238
-
-
930,185
-
1,979,904
-
-
Corporates
-
-
-
-
-
-
-
188,171
-
-
-
39,046
-
9,579,545
1,482
-
1,961
-
-
Regulatory
Retail
-
-
-
-
-
-
-
62,522
-
-
-
362,219
-
33,810
416,596
2,040,579
-
-
-
Residential
Mortgages
-
-
-
-
-
-
-
-
-
-
-
-
-
-
378,223
-
-
-
2,874
Higher
Risk
Assets
-
-
-
-
-
-
-
-
-
-
-
356,517
-
-
-
-
223,915
-
1,567,931
Other
Assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Specialised
Financing /
Investment
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Securitisation
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20,388
Equity
10,034
-
-
-
-
-
-
900,597
-
-
-
17,013,694
-
9,613,355
3,292,115
2,040,579
3,981,362
-
6,313,202
Total
Exposure
after Netting
& Credit Risk
Mitigation
-
-
-
-
-
-
-
1,350,895
-
-
-
17,013,694
-
7,210,017
1,646,057
714,203
796,272
Total Risk
Weighted
Assets
Appendix II
Insurance Cos, Securities Firms & Fund Managers
Corporates
Total
Credit Exposures (using Corporate Risk Weights)
Public Sector Entities (applicable for entities
risk weighted based on their external ratings as
corporates)
On and Off-Balance-Sheet Exposures
Exposure Class
Moodys
S&P
Fitch
RAM
MARC
Rating &
Investment Inc
636,022
636,022
B+ to D
549,081
549,081
250
250
BBB+ to BB-
AAA to AA-
A+ to A-
B1 to C
B+ to D
B+ to D
B to D
B+ to D
Ratings of Corporate by Approved ECAIs
Aaa to Aa3
A1 to A3
Baa1 to Ba3
AAA to AAA+ to ABBB+ to BBAAA to AAA+ to ABBB+ to BBAAA to AA3
A to A3
BBB1 to BB3
AAA to AAA+ to ABBB+ to BB-
(i)
Disclosures on Rated Exposures according to Ratings by ECAIs (RM’000)
Group
2013
-
36,049
543,311
25,280,661
25,860,021
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Appendix III
Corporates
Total
corporates)
Exposure Class
Moodys
S&P
Fitch
RAM
MARC
Rating &
Investment Inc
(i)
Group
2012
835,800
835,800
A+ to A-
BBB+ to BB-
-
A1 to A3
Baa1 to Ba3
A+ to ABBB+ to BBA+ to ABBB+ to BBA to A3
BBB1 to BB3
A+ to ABBB+ to BB-
566,555
566,555
AAA to AA-
Aaa to Aa3
AAA to AAAAA to AAAAA to AA3
AAA to AAB+ to D
B1 to C
B+ to D
B+ to D
B to D
B+ to D
-
39,656
540,221
22,048,962
22,628,839
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Appendix III
Corporates
Total
corporates)
Exposure Class
Moodys
S&P
Fitch
RAM
MARC
Rating &
Investment Inc
613,923
613,923
B+ to D
534,081
534,081
250
250
BBB+ to BB-
AAA to AA-
A+ to A-
B1 to C
B+ to D
B+ to D
B to D
B+ to D
Aaa to Aa3
A1 to A3
Baa1 to Ba3
AAA to AAA+ to ABBB+ to BBAAA to AAA+ to ABBB+ to BBAAA to AA3
A to A3
BBB1 to BB3
AAA to AAA+ to ABBB+ to BB-
(i)
Bank
2013
-
36,049
412,462
22,563,126
23,011,637
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Appendix III
Corporates
Total
corporates)
Exposure Class
Moodys
S&P
Fitch
RAM
MARC
Rating &
Investment Inc
(i)
Bank
2012
794,811
794,811
A+ to A-
BBB+ to BB-
-
A1 to A3
Baa1 to Ba3
A+ to ABBB+ to BBA+ to ABBB+ to BBA to A3
BBB1 to BB3
A+ to ABBB+ to BB-
544,539
544,539
AAA to AA-
Aaa to Aa3
AAA to AAAAA to AAAAA to AA3
AAA to AAB+ to D
B1 to C
B+ to D
B+ to D
B to D
B+ to D
-
39,656
390,337
19,535,243
19,965,236
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Appendix III
AAA to AA-
Fitch
1,563,194
Total
AAA to AA1,563,194
A+ to A-
AAA to AA-
MARC
Rating &
Investment Inc
163,635
163,635
A+ to A-
A1 to A3
A+ to A-
A+ to A-
A1 to A3
AAA to AA3-
RAM
AAA to AA-
S&P
11,011,702
11,011,702
A+ to A-
A+ to A-
A+ to A-
A1 to A3
Baa1 to Baa3
-
-
BBB+ to BBB-
BBB+ to BBB-
BBB+ to BBB-
Ba1 to B3
BB+ to B-
BB+ to B-
BB+ to B-
-
-
35,795
35,795
BBB+ to BBB-
BBB+ to BBB-
BBB1+ to
BBB3
BBB+ to BBB-
BBB+ to BBB-
Baa1 to Baa3
21,739
21,739
BB+ to B-
BB+ to B-
BB1 to B3
BB+ to B-
BB+ to B-
Ba1 to B3
Ratings of Banking Institutions by Approved ECAIs
Banks, MDBs and FDIs
Exposure Class
Aaa to Aa3
Moodys
-
Total
AAA to AA-
AAA to AA-
Fitch
Rating &
Investment Inc
AAA to AA-
S&P
Sovereigns and Central Banks
Exposure Class
Aaa to Aa3
Moodys
CCC+ to C
C+ to D
C1+ to D
CCC+ to D
CCC+ to D
Caa1 to C
CCC+ to C
CCC+ to D
CCC+ to D
Caa1 to C
Ratings of Sovereigns and Central Banks by Approved ECAIs
(ii) Disclosures on Rated Exposures according to Ratings by ECAIs (RM’000)
Group
2013
-
-
-
-
-
-
2,481,713
2,481,713
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Appendix III
AAA to AA-
AAA to AA-
856,257
A+ to A-
AAA to AA-
MARC
Rating &
Investment Inc
Total
A1 to A3
AAA to AA3-
RAM
856,257
A+ to A-
AAA to AA-
146,818
146,818
A+ to A-
A+ to A-
AAA to AA-
S&P
Fitch
Exposure Class
Baa1 to Baa3
-
-
BBB+ to BBB-
BBB+ to BBB-
BBB+ to BBB-
Ba1 to B3
BB+ to B-
BB+ to B-
BB+ to B-
23,125
23,125
BBB+ to BBB-
BBB+ to BBB-
BBB1+ to BBB3
BBB+ to BBB-
BBB+ to BBB-
Baa1 to Baa3
-
-
16,428
16,428
BB+ to B-
BB+ to B-
BB1 to B3
BB+ to B-
BB+ to B-
Ba1 to B3
9,814,633
A1 to A3
-
Total
9,814,633
A+ to A-
A+ to A-
A+ to A-
A1 to A3
Aaa to Aa3
-
Moodys
AAA to AA-
Fitch
Rating &
Investment Inc
AAA to AA-
S&P
Exposure Class
Aaa to Aa3
Moodys
Caa1 to C
CCC+ to C
C+ to D
C1+ to D
CCC+ to D
CCC+ to D
Caa1 to C
CCC+ to C
CCC+ to D
CCC+ to D
Group
2012
-
-
-
-
-
-
3,370,408
3,370,408
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Appendix III
AAA to AA-
Fitch
1,499,708
Total
AAA to AA1,499,708
A+ to A-
AAA to AA-
MARC
Rating &
Investment Inc
136,926
136,926
A+ to A-
A1 to A3
A+ to A-
A+ to A-
A1 to A3
AAA to AA3-
RAM
AAA to AA-
S&P
5,952,212
5,952,212
A+ to A-
A+ to A-
A+ to A-
A1 to A3
Baa1 to Baa3
-
-
BBB+ to BBB-
BBB+ to BBB-
BBB+ to BBB-
Ba1 to B3
BB+ to B-
BB+ to B-
BB+ to B-
-
-
35,795
35,795
BBB+ to BBB-
BBB+ to BBB-
BBB1+ to
BBB3
BBB+ to BBB-
BBB+ to BBB-
Baa1 to Baa3
21,739
21,739
BB+ to B-
BB+ to B-
BB1 to B3
BB+ to B-
BB+ to B-
Ba1 to B3
Exposure Class
Aaa to Aa3
Moodys
-
Total
AAA to AA-
AAA to AA-
Fitch
Rating &
Investment Inc
AAA to AA-
S&P
Exposure Class
Aaa to Aa3
Moodys
CCC+ to C
C+ to D
C1+ to D
CCC+ to D
CCC+ to D
Caa1 to C
CCC+ to C
CCC+ to D
CCC+ to D
Caa1 to C
Bank
2013
-
-
-
-
-
-
2,180,752
2,180,752
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Appendix III
AAA to AA-
AAA to AA-
853,143
A+ to A-
AAA to AA-
MARC
Rating &
Investment Inc
Total
A1 to A3
AAA to AA3-
RAM
853,143
A+ to A-
AAA to AA-
146,818
146,818
A+ to A-
A+ to A-
AAA to AA-
S&P
Fitch
Exposure Class
Baa1 to Baa3
-
-
BBB+ to BBB-
BBB+ to BBB-
BBB+ to BBB-
Ba1 to B3
BB+ to B-
BB+ to B-
BB+ to B-
23,125
23,125
BBB+ to BBB-
BBB+ to BBB-
BBB1+ to BBB3
BBB+ to BBB-
BBB+ to BBB-
Baa1 to Baa3
-
-
16,428
16,428
BB+ to B-
BB+ to B-
BB1 to B3
BB+ to B-
BB+ to B-
Ba1 to B3
4,745,271
A1 to A3
-
Total
4,745,271
A+ to A-
A+ to A-
A+ to A-
A1 to A3
Aaa to Aa3
-
Moodys
AAA to AA-
Fitch
Rating &
Investment Inc
AAA to AA-
S&P
Exposure Class
Aaa to Aa3
Moodys
Caa1 to C
CCC+ to C
C+ to D
C1+ to D
CCC+ to D
CCC+ to D
Caa1 to C
CCC+ to C
CCC+ to D
CCC+ to D
Bank
2012
-
-
-
-
-
-
2,795,688
2,795,688
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Unrated
Appendix III
Total On and Off-Balance Sheet Exposures
Defaulted Exposures
Off-Balance Sheet exposures other than OTC derivatives or credit derivatives
Off-Balance Sheet Exposures
Defaulted Exposures
Equity Exposure
Other Assets
Higher Risk Assets
149
1,273,511
-
5,359,827
133,468
123,834
61,910,259
-
5,235,993
133,468
24,057
56,550,432
-
2,317,711
-
1,567
21,462,063
11,713,244
Corporates
Regulatory Retail
-
131,752
504,303
294,509
-
3,591,180
4,428,276
-
34,424
Exposures
before
CRM
Exposures
Covered by
Guarantees
/Credit
Derivatives
10,907,154
On-Balance Sheet Exposures
Credit Risk
Exposure Class
a)
Disclosures on Credit Risk Mitigation (RM’000)
Group
2013
1,187,686
-
-
-
1,187,686
31,470
-
-
387
15,988
136,127
998,947
673
-
4,094
-
Exposures
Covered by
Eligible
Financial
Collateral
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exposures
Covered by
Other
Eligible
Collateral
Appendix IV
Defaulted Exposures
Defaulted Exposures
Equity Exposure
Other Assets
Higher Risk Assets
238,828
-
56,718,503
4,583,090
-
82,230
4,500,860
238,828
574
52,135,413
830,776
-
2,116,942
20,388
-
-
1,454
236,800
-
-
-
Exposures
Covered by
Guarantees
/Credit
Derivatives
399,250
3,772,100
11,063,690
Regulatory Retail
474,785
19,752,745
Corporates
9,718,232
3,986,505
Exposures
before
CRM
Credit Risk
Exposure Class
a)
Group
2012
1,235,402
-
-
-
1,235,402
12,475
-
-
774
7,734
125,480
1,088,080
859
-
-
Exposures
Covered by
Eligible
Financial
Collateral
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exposures
Covered by
Other
Eligible
Collateral
Appendix IV
-
3,381,310
394,054
Other Assets
Defaulted Exposures
Defaulted Exposures
Equity Exposure
149
1,196,163
49,827,223
130,268
-
123,140
4,881,568
-
4,758,428
130,268
24,057
44,945,655
-
2,063,713
-
Higher Risk Assets
273,390
1,567
9,765,977
2,849,626
128,552
19,071,729
Corporates
Regulatory Retail
34,424
Exposures
before
CRM
Exposures
Covered by
Guarantees
/Credit
Derivatives
5,891,212
Credit Risk
Exposure Class
a)
Bank
2013
1,083,980
-
-
-
1,083,980
31,459
-
-
375
8,430
128,442
911,180
-
-
4,094
-
Exposures
Covered by
Eligible
Financial
Collateral
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exposures
Covered by
Other
Eligible
Collateral
Appendix IV
233,600
17,509,673
Other Assets
Defaulted Exposures
Defaulted Exposures
Equity Exposure
235,628
-
45,284,263
4,108,009
-
81,548
4,026,461
235,628
574
41,176,254
735,747
-
2,148,363
20,388
-
-
1,454
367,791
2,656,967
Higher Risk Assets
9,264,210
Regulatory Retail
Corporates
364,499
-
3,411,784
-
4,696,832
Exposures
before
CRM
Exposures
Covered by
Guarantees
/Credit
Derivatives
Credit Risk
Exposure Class
a)
Bank
2012
1,129,262
-
-
-
1,129,262
12,457
-
-
757
5,266
116,735
993,861
186
-
-
Exposures
Covered by
Eligible
Financial
Collateral
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Exposures
Covered by
Other
Eligible
Collateral
Appendix IV
Direct Credit Substitutes
Transaction related contingent Items
Short Term Self Liquidating trade related contingencies
Foreign exchange related contracts
One year or less
Over one year to five years
Over five years
Interest/Profit rate related contracts
One year or less
Over five years
Other commitments, such as formal standby facilities and credit lines, with an original
maturity of over one year
maturity of up to one year
Unutilised credit card lines
Total
Description
56,274
1,452,681
35,840
5,360,227
7,263,403
179,201
21,863,606
2,271
53,133
66,112
1,090,643
4,592
10,637
14,406
2,181,286
809,068
2,442,222
703,148
73,219
57,307
16,325
3,636,267
594,154
96,030
24,125
2,514
-
1,410,611
987,402
114,683
1,410,611
1,974,804
573,412
Credit
Equivalent
Amount
1,169,480
26,839
4,657,757
992,549
820
15,745
28,314
33,250
16,657
8,163
1,418,056
864,908
82,976
Risk Weighted
Amount
In respect of off-balance sheet items, the credit risk inherent in each off-balance sheet instrument is translated into an on-balance sheet exposure equivalent (credit
equivalent) by multiplying the nominal principal amount with a credit conversion factor (‘CCF’) as prescribed by the Standardised Approach under the Risk Weighted Capital
Adequacy Framework. The resulting amount is then weighted against the risk weight of the counterparty. In addition, counterparty risk weights for over-the-counter (‘OTC’)
derivative transactions will be determined based on the external rating of the counterparty and will not be subject to any specific ceiling.
Positive Fair
Value of
Derivative
Contracts
In contrast to the exposure to credit risk through a loan, where the exposure to credit risk is unilateral and only the lending bank faces the risk of loss, Counterparty Credit
Risk creates a bilateral risk of loss where the market value for many types of transactions can be positive or negative to either counterparty.
Principle
Amount
Counterparty Credit Risk is the risk that the counterparty to a transaction could default before the final settlement of the transaction’s cashflows. An economic loss could
occur if the transactions with the counterparty has a positive economic value for the Bank at the time of default.
Group
2013
Disclosure on Off-Balance Sheet and Counterparty Credit Risk (RM’000)
Appendix IV
b)
b)
Lending of banks’ securities or the posting of securities as collateral by banks, including
instances where these arise out of repo-style transactions. (i.e. repurchase / reverse
repurchase and securities lending / borrowing transactions.
One year or less
One year or less
Over five years
Total
Description
Group
2012
563
12,892
8,252
107,156
1,834,299
543,148
1,436,349
1,272,846
38,221
4,583,089
6,364,231
191,103
18,981,323
122
39,217
51,487
2,872,698
68,872
42,781
4,384
3,750,554
251,794
97,948
17,127
19,939
-
19,939
Credit Equivalent
Amount
445,529
1,073,550
90,754
Positive Fair
Value of
Derivative
Contracts
445,529
2,147,100
453,772
Principle Amount
1,065,707
28,693
3,914,708
1,341,919
49
11,073
22,022
29,439
6,430
-
430,042
924,690
54,644
Risk Weighted
Amount
Appendix IV
b)
One year or less
Over five years
One year or less
Over five years
Total
Description
Bank
2013
73,219
57,307
16,325
24,125
2,514
4,592
10,637
14,406
3,636,267
594,154
96,030
809,068
2,442,222
703,148
923,331
1,257,050
35,840
4,881,968
1,846,662
6,285,251
179,201
20,196,417
56,274
924,619
70,604
2,271
53,133
66,112
1,402,157
Credit
Equivalent
Amount
1,849,237
353,020
Positive Fair
Value of
Derivative
Contracts
1,402,157
Principle
Amount
1,012,054
26,839
4,267,841
840,756
820
15,745
28,314
33,250
16,657
8,163
804,191
69,871
1,411,181
Risk Weighted
Amount
Appendix IV
b)
Lending of banks’ securities or the posting of securities as collateral by banks, including
instances where these arise out of repo-style transactions. (i.e. repurchase / reverse
repurchase and securities lending / borrowing transactions.
One year or less
One year or less
Over five years
Total
Description
Bank
2012
563
12,892
8,252
107,156
1,834,299
543,148
1,245,393
1,110,568
38,221
4,108,009
5,552,840
191,103
17,411,381
122
39,217
51,487
2,490,786
68,872
42,781
4,384
3,750,554
251,794
97,948
17,127
19,939
-
19,939
Credit Equivalent
Amount
436,156
1,008,516
43,315
Positive Fair
Value of
Derivative
Contracts
436,156
2,017,033
216,573
Principle Amount
925,939
28,693
3,517,008
1,166,628
49
11,073
22,022
29,439
6,430
-
422,310
861,316
43,109
Risk Weighted
Amount
Appendix IV
0.2
2.4
0.8
1.5
(0.4)
0.8
0.1
0.5
(0.1)
1.0
Euro
Great Britain Pound
Australian Dollar
Singapore Dollar
#
Total
(21.5)
1.1
(0.1)
0.5
0.1
0.8
(0.4)
12.7
(36.2)
Increase/(Decline)
in Earnings
Others comprise of CNH, NZD, HKD and AED currencies where the amount of each currency is relatively small.
Others (#)
Japanese Yen
503.6
10.7
(18.5)
488.0
Ringgit Malaysia
12.3
Increase/(Decline)
in Economic Value
(32.7)
Increase/(Decline)
in Earnings
US Dollar
Type of Currency (RM million)
402.0
1.5
-
0.8
2.4
0.2
-
10.7
386.4
Increase/(Decline)
in Economic Value
Bank
The above calculations do not take into account loan prepayments.
Impact on Positions
(100 basis points) Parallel Shift
(2) Economic Value - Measuring the change in the economic value of equity is an assessment of the long term impact to the earnings potential. This is assessed through
the application of relevant duration factors to capture the net economic value impact over the long term or total life of all balance sheet assets and liabilities to adverse
changes in interest rates.
Group
(1) Next 12 months’ Earnings - Interest rate risk from the earnings perspective is the impact based on changes to the net interest income over the next 12 months.
This risk is measured monthly through sensitivity analysis including the application of an instantaneous 100 basis point parallel shock in interest rates across the yield
curve. The prospective change to the net interest income is measured using an Asset Liability Management simulation model which incorporates the assessment of
both existing and new business.
Impact on Positions
Interest rate risk is the current and prospective impact to the Bank’s financial condition due to adverse changes in the interest rates to which the balance sheet is
exposed. The objective is to manage interest rate risk to achieve stable and sustainable net interest income in the long term which impact can be viewed from the
perspectives of (1) earnings in the next 12 months, and (2) economic value.
2013
Disclosures on Market Risk - Interest Rate Risk/Rate of Return Risk in the Banking Book
Appendix IV
c)
0.7
Singapore Dollar
#
Total
446.8
-
0.6
0.3
0.1
-
6.4
439.4
Increase/(Decline)
in Economic Value
Others comprise of NZD, HKD and AED currencies where the amount of each currency is relatively small.
(3.8)
-
1.8
Australian Dollar
Others (#)
0.8
(1.0)
8.8
(14.9)
Increase/(Decline)
in Earnings
Great Britain Pound
Euro
US Dollar
Ringgit Malaysia
Type of Currency (RM million)
(16.8)
0.1
0.7
1.8
0.8
(1.1)
9.3
(28.4)
Increase/(Decline)
in Earnings
360.2
-
0.7
0.3
0.1
-
6.5
352.6
Increase/(Decline)
in Economic Value
Bank
Impact on Positions
Group
Appendix IV
Impact on Positions
Disclosures on Market Risk - Interest Rate Risk/Rate of Return Risk in the Banking Book
2012
c)
17th Floor, Menara AFFIN,
80, Jalan Raja Chulan,
50200 Kuala Lumpur
T : 03 2055 9000
F : 03 2026 1415
www.affinbank.com.my

a n n u a l r e p o r T 2 0 1 3 - AFFINBANK

Transcription

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