AmBank (M) Berhad

AmBank (M) Berhad
(Company No. 8515-D)
(incorporated with limited liability in Malaysia)
U.S.$2,000,000,000
Euro Medium Term Note Programme
Under the Euro Medium Term Note Programme described in this Offering Circular (the “Programme”), AmBank (M) Berhad (the
“Issuer” or the “Bank”), subject to compliance with all relevant laws, regulations and directives, may from time to time issue Euro
Medium Term Notes (the “Notes”). The aggregate nominal amount of Notes outstanding will not at any time exceed
U.S.$2,000,000,000 (or the equivalent in other currencies) unless such amount is otherwise increased pursuant to the terms of the
Programme. The Notes may be denominated in any currency agreed between the Issuer and the relevant Dealer (as defined below).
Application has been made to the Singapore Exchange Securities Trading Limited (the “SGX-ST”) for permission to deal in, and for
quotation of, any Notes which are agreed at the time of issue to be so listed on the SGX-ST. Unlisted series of Notes may also be
issued pursuant to the Programme. In respect of any issue of Notes, the applicable Pricing Supplement (as defined herein) will
specify whether or not such Notes will be listed on the SGX-ST, Bursa Malaysia Securities Berhad (“Bursa Malaysia”) under an
Exempt Regime, the Labuan International Financial Exchange Inc. (the “LFX”) or any other stock exchange. There is no assurance
that the application to the SGX-ST will be approved. The approval in-principle from, and the admission of any Notes to the Official
List of the SGX-ST is not to be taken as an indication of the merits of the Issuer, the Programme or the Notes. The SGX-ST takes no
responsibility for the correctness of any statement made or opinions expressed or reports contained herein.
Application may be made to Bursa Malaysia for permission to list any of the Notes under an Exempt Regime at the option of the
Issuer. There is no assurance that any application will be made to Bursa Malaysia for permission to list any of the Notes under an
Exempt Regime and if such an application were to be made, there is no assurance that the application will be approved and there can
be no assurance that such listings will occur at all. If Bursa Malaysia’s approval is obtained, the Notes will be listed under an
Exempt Regime of Bursa Malaysia but will not be quoted for trading and for so long as the Notes are so listed, the Issuer will be
obliged to comply with certain continuing obligations including, but not limited to, the announcement of information pertaining to
each issuance of Notes prior to the issuances, any material information and information or documents as prescribed by Bursa
Malaysia. Bursa Malaysia takes no responsibility for the contents of this Offering Circular, makes no representation as to its
accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon
any part of the contents of this Offering Circular. Investors are advised to read and understand the content of the Offering Circular
before investing. If in doubt, the investors should consult their advisers.
Application may be made to the LFX for the listing of, and permission to deal in, any of the Notes that may be issued under the
Programme at the option of the Issuer. There is no assurance that any application will be made to the LFX and if such an application
were to be made, there is no assurance that the application will be approved and there can be no assurance that such listings will
occur at all. The LFX assumes no responsibility for the correctness of any of the statements made or opinions or reports contained in
this Offering Circular, makes no representations as to its accuracy or completeness and expressly disclaims any liability whatsoever
for any loss howsoever arising from or in reliance upon any part of the contents of this Offering Circular. Investors are advised to
read and understand the contents of this Offering Circular before investing. If in doubt, the investor should consult his or her adviser.
Admission to the Official List of the LFX is not to be taken as an indication of the merits of the Issuer, the Programme or the Notes.
The Notes may be issued in bearer form (the “Bearer Notes”) or in registered form (the “Registered Notes”). Each Tranche (as
defined herein) of Bearer Notes will be represented on issue by a temporary global note in bearer form (each a “temporary Global
Note”) or a permanent global note in bearer form (each a “permanent Global Note” and, together with the temporary Global Note,
the “Global Notes”). Interests in a temporary Global Note will be exchangeable in whole or in part, for interests in a permanent
Global Note on or after the date 40 days after the later of the commencement of the offering and the relevant issue date (the
“Exchange Date”), upon certification as to non-U.S. beneficial ownership. Each Tranche of Registered Notes will be represented by
registered certificates (each a “Certificate”), one Certificate being issued in respect of each Noteholder’s entire holding of
Registered Notes of one Series. Global Notes and Certificates may be deposited on the issue date with a common depositary on
behalf of Euroclear Bank S.A./N.V. (“Euroclear”) and Clearstream Banking, société anonyme (“Clearstream, Luxembourg”) (the
“Common Depositary”) or with a sub-custodian for the Central Moneymarkets Unit Service (“CMU”) operated by the Hong Kong
Monetary Authority (“HKMA”) (such Notes, “CMU Notes”). The provisions governing the exchange of interests in Global Notes
for other Global Notes and definitive Notes are described in “Summary of Provisions Relating to the Notes while in Global Form”.
Notes to be issued under the Programme will be rated or unrated. Where an issue of Notes is rated, such rating will not necessarily be the
same as the ratings assigned to the Programme. A security rating is not a recommendation to buy, sell or hold securities and may be
subject to suspension, reduction or withdrawal at any time by the assigning rating agency. Where a Series (as defined herein) of Notes is
rated, the relevant rating for the Notes shall be specified in the applicable Pricing Supplement.
The Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the “Securities
Act”) or with any securities regulatory authority of any state or other jurisdiction of the United States, and the Notes may include
bearer Notes that are subject to U.S. tax law requirements. Subject to certain exceptions, the Notes may not be offered, sold or, in the
case of bearer Notes, delivered within the United States except in certain transactions exempt from the registration requirements of
the Securities Act. Accordingly, the Notes are being offered and sold only outside the United States in reliance on Regulation S
under the Securities Act.
Prospective investors should have regard to the factors described under the section headed “Investment Considerations” in this
Offering Circular.
The approval of the Securities Commission Malaysia (the “SC”) for the Programme pursuant to applicable Malaysian laws was
obtained on 4 July 2013. The approval of the SC shall not be taken to indicate that the SC recommends the subscription or purchase
of the Notes to be issued under the Programme. The submission to the SC was made by AmInvestment Bank Berhad as the principal
advisor.
This Offering Circular is an advertisement and not a prospectus for the purposes of the EU Directive 2003/71/EC.
Arrangers and Dealers
The Issuer accepts responsibility for the information contained in this Offering Circular. To the best of the
knowledge of the Issuer (having taken all reasonable care to ensure that such is the case) the information
contained in this Offering Circular is in accordance with the facts and does not omit anything likely to affect the
import of such information.
This Offering Circular is to be read in conjunction with all documents which are incorporated herein by reference
(see “Documents Incorporated by Reference”).
No person has been authorised to give any information or to make any representation other than those contained
in this Offering Circular in connection with the issue or sale of the Notes and, if given or made, such information
or representation must not be relied upon as having been authorised by the Issuer or any of the Arrangers or
Dealers (each as defined in “Overview of the Programme”). Neither the delivery of this Offering Circular nor any
sale made in connection herewith shall, under any circumstances, create any implication that there has been no
change in the affairs of the Issuer, or the Issuer and its Subsidiaries (as defined in Condition 10) (collectively, the
“Group”) since the date hereof or the date upon which this Offering Circular has been most recently amended or
supplemented or that there has been no adverse change in the financial position of the Issuer or the Group since
the date hereof or the date upon which this Offering Circular has been most recently amended or supplemented or
that any other information supplied in connection with the Programme is correct as of any time subsequent to the
date on which it is supplied or, if different, the date indicated in the document containing the same.
In the case of any Notes which are to be admitted to trading on a regulated market within the European Economic
Area or offered to the public in a Member State of the European Economic Area in circumstances which require
the publication of a prospectus under the Prospectus Directive (2003/71/EC), the minimum specified
denomination shall be €100,000 (or its equivalent in any other currency as at the date of issue of the Notes).
The distribution of this Offering Circular and the offering or sale of the Notes in certain jurisdictions may be
restricted by law. Persons into whose possession this Offering Circular comes are required by the Issuer, the
Arrangers and the Dealers to inform themselves about and to observe any such restriction. The Notes have not
been and will not be registered under the Securities Act or with any securities regulatory authority of any state or
other jurisdiction of the United States and this includes Notes in bearer form that are subject to U.S. tax law
requirements. Subject to certain exceptions, the Notes may not be offered, sold or (in the case of Notes in bearer
form) delivered within the United States. Accordingly, the Notes are being offered and sold outside the United
States in reliance on Regulation S under the Securities Act. For a description of certain restrictions on offers and
sales of Notes and on distribution of this Offering Circular, see “Subscription and Sale”.
This Offering Circular does not constitute an offer of, or an invitation by or on behalf of the Issuer, the Arrangers
or the Dealers to subscribe for, or purchase, any Notes.
To the fullest extent permitted by law, none of the Arrangers, the Dealers or the Fiscal Agent, Paying Agents,
Calculation Agents, Registrars, Transfer Agents or CMU Lodging and Paying Agent (the “Agents”) accepts any
responsibility for the contents of this Offering Circular or for any other information provided by the Issuer in
connection with the Programme or the issue and offering of the Notes. Each of the Arrangers, the Dealers and the
Agents accordingly disclaims all and any liability whether arising in tort or contract or otherwise (save as
referred to above) which it might otherwise have in respect of this Offering Circular or any such other
information. Neither this Offering Circular nor any other financial statements contained herein or otherwise are
intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation
by any of the Issuer, the Arrangers, the Agents or the Dealers that any recipient of this Offering Circular or any
other financial statements should purchase the Notes. Each potential purchaser of Notes should determine for
itself the relevance of the information contained in this Offering Circular and its purchase of Notes should be
based upon such investigation as it deems necessary. None of the Arrangers, the Dealers or the Agents
undertakes to review the financial condition or affairs of the Issuer during the life of the arrangements
contemplated by this Offering Circular nor to advise any investor or potential investor in the Notes of any
information coming to the attention of any of the Arrangers or Dealers.
In connection with the issue of any Tranche (as defined in “Overview of the Programme — Method of Issue”),
the Dealer or Dealers (if any) named as the stabilising manager(s) (the “Stabilising Manager(s)”) (or any person
acting on behalf of any Stabilising Manager(s)) in the applicable Pricing Supplement may over-allot Notes or
effect transactions with a view to support the market price of the Notes at a level higher than that which might
otherwise prevail. However, there is no assurance that the Stabilising Manager(s) (or any person acting on behalf
of any Stabilising Manager(s)) will undertake stabilisation action. Any stabilisation action may begin on or after
the date on which adequate public disclosure of the terms of the offer of the relevant Tranche is made and, if
begun, may be ended at any time, but it must end no later than the earlier of 30 days after the issue date of the
relevant Tranche and 60 days after the date of the allotment of the relevant Tranche. Any stabilisation action or
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over-allotment must be conducted by the relevant Stabilising Manager(s) (or any person acting on behalf of any
Stabilising Manager(s)) in accordance with all applicable laws and rules.
In this Offering Circular, unless otherwise specified or the context otherwise requires, all references to “RM”,
“Malaysian Ringgit”, “Ringgit” and “sen” are to the lawful currency of Malaysia, all references to “Singapore
dollars” and “S$” are to the lawful currency of Singapore, all references to “U.S. dollars” and “U.S.$” are to the
lawful currency of the United States of America, all references to “euro” and “€” are to the currency introduced
at the start of the third stage of European economic and monetary union pursuant to the Treaty on the
Functioning of the European Union, as amended and all references to “RMB” or “Renminbi” are to the lawful
currency of the People’s Republic of China (“PRC”).
All references in this Offering Circular to the “Government” are to the Government of Malaysia. All references
in this Offering Circular to “BNM” are to Bank Negara Malaysia. All references in this Offering Circular to “SC”
are to the Securities Commission of Malaysia.
Certain figures in this Offering Circular have been subject to rounding adjustments. Accordingly, figures shown
for the same category presented in different tables may vary slightly and figures shown as totals in certain tables
may not be an arithmetic aggregation of the figures which precede them.
In accordance with the Capital Markets and Services Act 2007 of Malaysia (“CMSA”), a copy of this
Offering Circular will be deposited with the SC, which takes no responsibility for its contents. The issue,
offer or invitation in relation to the Notes in this Offering Circular or otherwise are subject to the
fulfilment of various conditions precedent including without limitation the applicable approval from the
SC. The Programme is approved by the SC upon submission of the application letter to the SC pursuant to
the SC’s deemed approval process. Please note that the approval of the SC shall not be taken to indicate
that the SC recommends the subscription or purchase of the Notes. The SC shall not be liable for any nondisclosure on the part of the Issuer and assumes no responsibility for the correctness of any statements
made or opinions or reports expressed in this Offering Circular.
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INDUSTRY AND MARKET DATA
Industry and market data throughout this Offering Circular was obtained from a combination of internal company
surveys, the good faith estimates of management, and data from various research firms or trade associations.
While the Issuer believes that its internal surveys, estimates of management, and data from research firms or
trade associations are reliable, none of the Issuer, the Arrangers, the Dealers or their respective affiliates has
verified this data with independent sources. Accordingly, none of the Issuer, the Arrangers or the Dealers makes
any representations as to the accuracy or completeness of that data. The Issuer is not aware of any misstatements
regarding industry or market data contained in this Offering Circular; however, such data involves risks and
uncertainties and is subject to change based on various factors, including those factors discussed in the
“Investment Considerations” section herein.
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DOCUMENTS INCORPORATED BY REFERENCE
This Offering Circular should be read and construed in conjunction with each relevant Pricing Supplement and
each Supplemental Offering Circular (as defined herein).
This Offering Circular should also be read and construed in conjunction with the most recently published audited
annual financial statements, and any interim financial statements (whether audited or unaudited) published
subsequently to such audited annual financial statements, of the Issuer and the Group from time to time, which
shall be deemed to be incorporated in, and to form part of, this Offering Circular, save that any statement
contained herein or in a document which is deemed to be incorporated by reference herein shall be deemed to be
modified or superseded for the purpose of this Offering Circular to the extent that a statement contained in any
subsequent document which is deemed to be incorporated by reference herein modifies or supersedes such earlier
statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not,
except as so modified or superseded, constitute a part of this Offering Circular.
Any published unaudited interim financial statements which are, from time to time, deemed to be incorporated by
reference in this Offering Circular will not have been audited or subject to review by the auditors of the Issuer or
the Group. Accordingly, there can be no assurance that, had an audit or review been conducted in respect of such
financial statements, the information presented therein would not have been materially different, and investors
should not place undue reliance upon them.
Copies of documents incorporated by reference in this Offering Circular may be obtained without charge from
the registered office of the Issuer and the website of www.ambankgroup.com/en/AboutUs/InvestorRelations/
FinancialResults/QuarterlyResults/Pages/default.aspx 1.
1
Website addresses in this Offering Circular are included for reference only and the contents of any such websites are not incorporated by
reference into, and do not form part of, this Offering Circular.
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SUPPLEMENTAL OFFERING CIRCULAR
The Issuer has given an undertaking to the Arrangers and the Dealers that if at any time during the duration of the
Programme there is a significant change affecting any matter contained in this Offering Circular whose inclusion
would reasonably be required by investors and their professional advisers, and would reasonably be expected by
them to be found in this Offering Circular, for the purpose of making an informed assessment of the assets and
liabilities, financial position, profits and losses and prospects of the Issuer, and the rights attaching to the Notes,
they shall prepare an amendment or supplement to this Offering Circular (each amendment or supplement, a
“Supplemental Offering Circular”) or publish a replacement Offering Circular for use in connection with any
subsequent offering of the Notes and shall supply to each Arranger and the Dealers such number of copies of
such Supplemental Offering Circular or replacement hereto as such Arrangers or Dealers may reasonably request.
References to this “Offering Circular” shall be taken to mean this document and all the documents from time to
time incorporated by reference herein and forming part hereof.
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TABLE OF CONTENTS
Page
OVERVIEW OF THE PROGRAMME . . . . . .
TERMS AND CONDITIONS OF THE
NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUMMARY OF PROVISIONS RELATING
TO THE NOTES WHILE IN GLOBAL
FORM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . .
SUMMARY OF SELECTED FINANCIAL
INFORMATION . . . . . . . . . . . . . . . . . . . . .
CAPITALISATION AND
INDEBTEDNESS . . . . . . . . . . . . . . . . . . . . .
INVESTMENT CONSIDERATIONS . . . . . . .
DESCRIPTION OF THE GROUP . . . . . . . . . .
FUNDING, LIQUIDITY AND CAPITAL
ADEQUACY . . . . . . . . . . . . . . . . . . . . . . . .
Page
1
ASSET QUALITY . . . . . . . . . . . . . . . . . . . . . .
RISK MANAGEMENT . . . . . . . . . . . . . . . . . .
PRINCIPAL SHAREHOLDERS . . . . . . . . . . .
MANAGEMENT AND EMPLOYEES . . . . . .
SUPERVISION AND REGULATION . . . . . .
MALAYSIAN ECONOMY . . . . . . . . . . . . . . .
OVERVIEW OF THE MALAYSIAN
BANKING INDUSTRY . . . . . . . . . . . . . . . .
TAXATION . . . . . . . . . . . . . . . . . . . . . . . . . . .
SUBSCRIPTION AND SALE . . . . . . . . . . . . .
FORM OF PRICING SUPPLEMENT . . . . . . .
CLEARING AND SETTLEMENT . . . . . . . . .
GENERAL INFORMATION . . . . . . . . . . . . . .
INDEX TO FINANCIAL STATEMENTS . . .
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26
31
32
43
44
59
72
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88
97
98
104
109
113
116
119
123
130
132
F-1
OVERVIEW OF THE PROGRAMME
The following overview does not purport to be complete and is qualified in its entirety by the remainder of this
Offering Circular. Words and expressions defined in “Terms and Conditions of the Notes” below or elsewhere in
this Offering Circular have the same meanings in this overview.
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . . AmBank (M) Berhad
Description . . . . . . . . . . . . . . . . . . . . . . . Euro Medium Term Note Programme
Programme Limit . . . . . . . . . . . . . . . . . Up to U.S.$2,000,000,000 (or its equivalent in other currencies at the
date of issue) aggregate nominal amount of Notes outstanding at any
one time. The Issuer may increase this amount in accordance with the
terms of the Dealer Agreement and subject to any regulatory
approvals.
Arrangers . . . . . . . . . . . . . . . . . . . . . . . . Australia and New Zealand
AmInvestment Bank Berhad
Banking
Group
Limited
and
Dealers . . . . . . . . . . . . . . . . . . . . . . . . . . Australia and New Zealand Banking Group Limited and
AmInvestment Bank Berhad. Pursuant to the Dealer Agreement, the
Issuer may from time to time appoint additional dealers either in
respect of one or more Tranches or in respect of the whole
Programme or terminate the appointment of any dealer under the
Programme. References in this Offering Circular to “Permanent
Dealers” are to the persons listed above as Dealers and to such
additional persons that are appointed as dealers in respect of the
whole Programme (and whose appointment has not been terminated)
and references to “Dealers” are to all Permanent Dealers and all
persons appointed as a dealer in respect of one or more Tranches.
The submission to the SC was made by AmInvestment Bank Berhad
as the principal advisor.
Fiscal Agent . . . . . . . . . . . . . . . . . . . . . . The Bank of New York Mellon, London Branch.
CMU Lodging and Paying Agent . . . . . The Bank of New York Mellon, Hong Kong Branch.
Registrar and Transfer Agent in
respect of Registered Notes other
than CMU Notes . . . . . . . . . . . . . . . . The Bank of New York Mellon (Luxembourg) S.A.
Registrar and Transfer Agent in
respect of CMU Notes . . . . . . . . . . . . The Bank of New York Mellon, Hong Kong Branch and, together
with the Fiscal Agent, the CMU Lodging and Paying Agent and the
Registrar, the “Agents”).
Currencies . . . . . . . . . . . . . . . . . . . . . . . Subject to compliance with all relevant laws, regulations and
directives, Notes may be issued in any currency as may be agreed
between the Issuer and the relevant Dealer.
Specified Denomination . . . . . . . . . . . . Notes will be issued in such denominations as may be agreed between
the Issuer and the relevant Dealer save that the minimum
denomination of each Note will be such as may be allowed or
required from time to time by the relevant central bank (or equivalent
body) or any laws or regulations applicable to the relevant Specified
Currency.
The minimum specified denomination of each Note to be admitted to
trading on a regulated market within the European Economic Area or
offered to the public in a Member State of the European Economic
Area in circumstances which require the publication of a prospectus
under Directive 2003/71/EC (the “Prospectus Directive”) shall be
EUR100,000 (or its equivalent in any other currency as at the date of
issue of the relevant Notes).
Form of Notes . . . . . . . . . . . . . . . . . . . . The Notes may be issued in bearer form (“Bearer Notes”) or in
registered form (“Registered Notes”) only. Each Tranche of Bearer
1
Notes will be represented on issue by a temporary Global Note if
(i) definitive Notes are to be made available to Noteholders following
the expiry of 40 days after their issue date or (ii) such Notes have an
initial maturity of more than one year and are being issued in
compliance with the D Rules (as defined in “— Selling Restrictions”
below), otherwise such Tranche will be represented by a permanent
Global Note. Registered Notes will be represented by Certificates,
one Certificate being issued in respect of each Noteholder’s entire
holding of Registered Notes of one Series (as defined below).
Certificates representing Registered Notes that are registered in the
name of a nominee for one or more clearing systems are referred to as
“Global Certificates”.
Clearing Systems . . . . . . . . . . . . . . . . . . Clearstream, Luxembourg, Euroclear, the CMU and, in relation to any
Tranche, such other clearing system as may be agreed between the
Issuer, the Fiscal Agent and the relevant Dealer(s).
Initial Delivery of Notes . . . . . . . . . . . . On or before the issue date for each Tranche, the Global Note
representing Bearer Notes or the Global Certificate representing
Registered Notes may be deposited with the Common Depositary or
with a sub-custodian for the CMU.
Global Notes or Global Certificates may also be deposited with any
other clearing system or may be delivered outside any clearing system
provided that the method of such delivery has been agreed in advance
by the Issuer, the Fiscal Agent, the CMU Lodging and Paying Agent,
the Registrar and the relevant Dealer. Registered Notes that are to be
credited to one or more clearing systems on issue will be registered in
the name of nominees or a common nominee for such clearing
systems.
Maturities . . . . . . . . . . . . . . . . . . . . . . . . Subject to compliance with all relevant laws, regulations and
directives, any maturity of more than 1 year as may be agreed
between the Issuer and the relevant Dealer.
Method of Issue . . . . . . . . . . . . . . . . . . . The Notes may be distributed by way of direct placement or bought
deal or bookrunning basis, and in each case on a syndicated or nonsyndicated basis. The Notes will be issued in series (each a “Series”)
having one or more issue dates and on terms otherwise identical (or
identical other than in respect of the first payment of interest, if any),
the Notes of each Series being intended to be interchangeable with all
other Notes of that Series. Each Series may be issued in tranches
(each a “Tranche”) on the same or different issue dates. The specific
terms of each Tranche of the Notes (which will be supplemented,
where necessary, with supplemental terms and conditions and, save in
respect of the issue date, issue price, first payment of interest and
nominal amount of the Tranche, will be identical to the terms of other
Tranches of the same Series) will be set out in a pricing supplement to
this Offering Circular (a “Pricing Supplement”).
Issue Price . . . . . . . . . . . . . . . . . . . . . . . Notes may be issued at their nominal amount or at a discount or
premium to their nominal amount. Partly Paid Notes may be issued,
the issue price of which will be payable in two or more instalments.
Fixed Rate Notes . . . . . . . . . . . . . . . . . . Fixed Rate Notes will bear interest of the fixed rate per annum
specified in the applicable Pricing Supplement. Fixed interest will be
payable in arrear on such day(s) as may be agreed between the Issuer
and the relevant Dealer (as indicated in the applicable Pricing
Supplement).
Floating Rate Notes . . . . . . . . . . . . . . . . Floating Rate Notes will bear interest determined separately for each
Series as follows:
(i)
on the same basis as the floating rate under a notional interest
rate swap transaction in the relevant Specified Currency
2
governed by an agreement incorporating the 2006 ISDA
Definitions published by the International Swaps and
Derivatives Association, Inc.; or
(ii) by reference to LIBOR, LIBID, LIMEAN, EURIBOR or
HIBOR (or such other benchmark as may be specified in the
relevant Pricing Supplement) as adjusted for any applicable
margin.
Interest periods will be specified in the relevant Pricing Supplement.
Variable Rate Notes . . . . . . . . . . . . . . . Variable Rate Notes may be issued pursuant to the Programme on
terms specified in the relevant Pricing Supplement.
Zero Coupon Notes . . . . . . . . . . . . . . . . Zero Coupon Notes may be issued at their nominal amount or at a
discount to it and will not bear interest.
Other Notes . . . . . . . . . . . . . . . . . . . . . . Terms applicable to any other type of Note which the Issuer and any
relevant Dealer(s) may agree to issue under the Programme will be set
out in the relevant Pricing Supplement.
Interest Periods and Interest Rates . . . The length of the interest periods for the Notes and the applicable
interest rate or its method of calculation may differ from time to time
or be constant for any Series. Notes may have a maximum interest
rate, a minimum interest rate, or both. The use of interest accrual
periods permits the Notes to bear interest at different rates in the same
interest period. All such information will be set out in the relevant
Pricing Supplement.
Redemption . . . . . . . . . . . . . . . . . . . . . . The relevant Pricing Supplement will specify the basis for calculating
the redemption amounts payable.
Redemption by Instalments . . . . . . . . . The Pricing Supplement issued in respect of each issue of Notes that
are redeemable in two or more instalments will set out the dates on
which, and the amounts in which, such Notes may be redeemed.
Optional Redemption . . . . . . . . . . . . . . The Pricing Supplement issued in respect of each issue of Notes will
state whether such Notes may be redeemed prior to their stated
maturity at the option of the Issuer (either in whole or in part) and/or
the holders, and if so, the terms applicable to such redemption.
Withholding Tax . . . . . . . . . . . . . . . . . . All payments of principal and interest by or on behalf of the Issuer in
respect of the Notes, the Receipts and the Coupons shall be made free
and clear of, and without withholding or deduction for, any taxes,
duties, assessments or governmental charges of whatever nature
imposed, levied, collected, withheld or assessed by or within
Malaysia or any authority therein or thereof having power to tax,
unless such withholding or deduction is required by law. In that event,
the Issuer shall pay such additional amounts as shall result in receipt
by the Noteholders, the Receiptholders and the Couponholders of
such amount as would have been received by them had no such
withholding or deduction been required, subject to certain exceptions
as set out in “Terms and Conditions of the Notes — Taxation”.
Status of the Notes . . . . . . . . . . . . . . . . . The Notes and the Receipts and Coupons relating to them will
constitute direct, unsubordinated and (subject to Condition 4
(Negative Pledge)) unsecured obligations of the Issuer and will at all
times rank pari passu and without any preference among themselves.
The payment obligations of the Issuer under the Notes and the
Receipts and Coupons relating to them shall, save for such exceptions
as may be provided by applicable legislation and subject to
Condition 4 (Negative Pledge), at all times rank at least equally with
all other unsecured and unsubordinated indebtedness and monetary
obligations of the Issuer, present and future.
Negative Pledge . . . . . . . . . . . . . . . . . . . See “Terms and Conditions of the Notes — Negative Pledge”.
3
Events of Default (including Cross
Default) . . . . . . . . . . . . . . . . . . . . . . . . See “Terms and Conditions of the Notes — Events of Default”.
Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . The Programme has been rated Baal by Moody’s Investors Service,
Inc. and BBB+ by Standard & Poor’s Rating Services.
Each Tranche of Notes issued under the Programme may be rated or
unrated. When a Tranche of Notes is rated, its rating will be specified
in the relevant Pricing Supplement and its rating will not necessarily
be the same as the rating applicable to the Programme. A rating is not
a recommendation to buy, sell or hold securities and may be subject
to suspension, reduction or withdrawal at any time by the assigning
rating agency.
Early Redemption . . . . . . . . . . . . . . . . . Except as provided in “Optional Redemption” above, Notes may be
redeemable at the option of the Issuer prior to maturity only for tax
reasons. See “Terms and Conditions of the Notes — Redemption,
Purchase and Options”.
Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . Application has been made to the SGX-ST for permission to deal in,
and for quotation of, any Notes which are agreed at the time of issue
to be so listed on the SGX-ST. There is no assurance that the
application to the Official List of the SGX-ST for the listing of the
Notes of any Series will be approved.
For so long as any Notes are listed on the SGX-ST and the rules of
the SGX-ST so require, such Notes will be traded on the SGX-ST in a
minimum board lot size of S$200,000 or its equivalent in other
currencies. Unlisted Series of Notes may also be issued pursuant to
the Programme.
The Notes may also be listed on such other or further stock
exchange(s) as may be agreed between the Issuer and the relevant
Dealer in relation to each Series of Notes.
The Pricing Supplement relating to each Series of Notes will state
whether or not the Notes of such Series will be listed on any stock
exchange(s) and, if so, on which stock exchange(s) the Notes are to be
listed.
Governing Law . . . . . . . . . . . . . . . . . . . English law.
Selling Restrictions . . . . . . . . . . . . . . . . The United States, the Public Offer Selling Restriction under the
Prospectus Directive (in respect of Notes having a specified
denomination of less than EUR100,000 or its equivalent in any other
currency as at the date of issue of the Notes), the United Kingdom,
Malaysia, Japan, Singapore, Hong Kong and other restrictions as may
be required in connection with a particular issue of Notes. See
“Subscription and Sale”.
The Issuer is Category 1 for the purposes of Regulation S under the
Securities Act.
Bearer Notes will be issued in compliance with U.S. Treas. Reg.
§1.163-5(c)(2)(i)(D) (or any successor U.S. Treasury regulation
section including, without limitation, regulations issued in accordance
with U.S. Internal Revenue Service Notice 2012-20 or otherwise in
connection with the U.S. Hiring Incentives to Restore Employment
Act of 2010) (the “D Rules”) unless (i) the relevant Pricing
Supplement states that the Bearer Notes are issued in compliance with
U.S. Treas. Reg. §l.163-5(c)(2)(i)(C) (or any successor U.S. Treasury
regulation section including, without limitation, regulations issued in
accordance with U.S. Internal Revenue Service Notice 2012-20 or
otherwise in connection with the U.S. Hiring Incentives to Restore
Employment Act of 2010) (the “C Rules”) or (ii) the Bearer Notes
4
are issued other than in compliance with the D Rules or the C Rules
but in circumstances in which the Bearer Notes will not constitute
“registration required obligations” under the United States Tax Equity
and Fiscal Responsibility Act of 1982 (“TEFRA”), which
circumstances will be referred to in the relevant Pricing Supplement
as a transaction to which TEFRA is not applicable.
Use of Proceeds . . . . . . . . . . . . . . . . . . . The net proceeds from the issue of each Tranche of Notes will be
applied by the Issuer for its general working capital purposes,
including but not limited to, the provision of advances of such
proceeds or part thereof by the Issuer to any of the subsidiaries of
AMMB Holdings Berhad and repayment of borrowings. If, in respect
of any particular issue, there is a particular identified use of proceeds,
this will be stated in the applicable Pricing Supplement.
5
TERMS AND CONDITIONS OF THE NOTES
The following is the text of the terms and conditions that, subject to completion and amendment and as
supplemented or varied in accordance with the provisions of the relevant Pricing Supplement, shall be
applicable to the Notes in definitive form (if any) issued in exchange for the Global Note(s) or Global
Certificate(s) representing each Series. Either (i) the full text of these terms and conditions together with the
relevant provisions of the Pricing Supplement or (ii) these terms and conditions as so completed, amended,
supplemented or varied (provided that such amendment, supplement or variation is not inconsistent with the
terms and conditions submitted to the Securities Commission Malaysia and subject to simplification by the
deletion of non-applicable provisions), shall be endorsed on such Bearer Notes or on the Certificates relating to
such Registered Notes. All capitalised terms that are not defined in these terms and conditions will have the
meanings given to them in the relevant Pricing Supplement. Those definitions will be endorsed on the definitive
Notes or Certificates, as the case may be. References in these terms and conditions to “Notes” are to the Notes of
one Series only, not to all Notes that may be issued under the Programme.
The Notes are issued pursuant to an Agency Agreement (as amended or supplemented as at the Issue Date, the
“Agency Agreement”) dated 2 August 2013 between the Issuer, The Bank of New York Mellon, London Branch
as initial fiscal agent in relation to each Series of Notes other than Notes to be held in the Central Moneymarkets
Unit Service operated by the Hong Kong Monetary Authority (the “CMU” and such Notes, “CMU Notes”), The
Bank of New York Mellon, Hong Kong Branch as initial CMU lodging and paying agent, transfer agent and
registrar in relation to each Series of CMU Notes, The Bank of New York Mellon (Luxembourg) S.A. as registrar
and transfer agent in relation to each Series of Registered Notes other than CMU Notes and the other agents
named in it and with the benefit of a Deed of Covenant (as amended or supplemented as at the Issue Date, the
“Deed of Covenant”) dated 2 August 2013 executed by the Issuer in relation to the Notes. The fiscal agent, the
CMU lodging and paying agent, the other paying agents, the registrar, the transfer agents and the calculation
agent(s) for the time being (if any) appointed pursuant to the Agency Agreement are referred to below
respectively as the “Fiscal Agent”, the “CMU Lodging and Paying Agent”, the “Paying Agents” (which
expression shall include the Fiscal Agent), the “Registrar”, the “Transfer Agents” and the “Calculation Agent(s)”
(such Fiscal Agent, CMU Lodging and Paying Agent, Paying Agents, Registrars and Transfer Agents being
referred together as the “Agents”). The Noteholders (as defined below), the holders of the interest coupons (the
“Coupons”) relating to interest bearing Notes in bearer form and, where applicable in the case of such Notes,
talons for further Coupons (the “Talons”) (the “Couponholders”) and the holders of the receipts for the payment
of instalments of principal (the “Receipts”) relating to Notes in bearer form of which the principal is payable in
instalments are deemed to have notice of all of the provisions of the Agency Agreement applicable to them. For
the purposes of these terms and conditions (the “Conditions”), all references to the Fiscal Agent shall, with
respect to a Series of Notes to be held in the Central Moneymarkets Unit Service operated by the Hong Kong
Monetary Authority (the “CMU”), be deemed to be a reference to the CMU Lodging and Paying Agent.
As used in these Conditions, “Tranche” means Notes which are identical in all respects and “Series” means a
series of Notes comprising one or more Tranches, whether or not issued on the same date, that (except in respect
of the first payment of interest and their issue price) have identical terms on issue and are expressed to have the
same series number.
Copies of the Agency Agreement and the Deed of Covenant are available for inspection during normal business
hours at the specified offices of each of the Paying Agents.
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Form, Denomination and Title
The Notes are issued in bearer form (“Bearer Notes”) or in registered form (“Registered Notes”) in each
case in the Specified Denomination(s) shown hereon provided that in the case of any Notes which are to be
admitted to trading on a regulated market within the European Economic Area or offered to the public in a
Member State of the European Economic Area in circumstances which require the publication of a
prospectus under the Prospectus Directive (2003/71/EC), the minimum Specified Denomination shall be
€100,000 (or its equivalent in any other currency as at the date of issue of the relevant Notes).
All Registered Notes shall have the same Specified Denomination. Notes which are listed on the Singapore
Exchange Securities Trading Limited (“SGX-ST”) will be traded on the SGX-ST in a minimum board lot
size of S$200,000 (or its equivalent in other currencies) or such other amount as may be allowed or
required from time to time.
This Note is a Fixed Rate Note, a Floating Rate Note, a Variable Rate Note, a Zero Coupon Note, an
Instalment Note or a Partly Paid Note, a combination of any of the foregoing or any other kind of Note,
depending upon the Interest Basis and Redemption/Payment Basis shown hereon. Subject to compliance
with all relevant laws, regulations and directives, Notes will have a maturity of more than one year.
6
Bearer Notes are serially numbered and are issued with Coupons (and, where appropriate, a Talon) attached,
save in the case of Zero Coupon Notes in which case references to interest (other than in relation to interest
due after the Maturity Date), Coupons and Talons in these Conditions are not applicable. Instalment Notes
are issued with one or more Receipts attached.
Registered Notes are represented by registered certificates (“Certificates”) and, save as provided in
Condition 2(c), each Certificate shall represent the entire holding of Registered Notes by the same holder.
Title to the Bearer Notes and the Receipts, Coupons and Talons shall pass by delivery. Title to the
Registered Notes shall pass by registration in the register that the Issuer shall procure to be kept by the
Registrar in accordance with the provisions of the Agency Agreement (the “Register”). Except as ordered by
a court of competent jurisdiction or as required by law, the holder (as defined below) of any Note, Receipt,
Coupon or Talon shall be deemed to be and may be treated as its absolute owner for all purposes, whether or
not it is overdue and regardless of any notice of ownership, trust or an interest in it, any writing on it (or on
the Certificate representing it) or its theft or loss (or that of the related Certificate) and no person shall be
liable for so treating the holder.
In these Conditions, “Noteholder” means the bearer of any Bearer Note and the Receipts relating to it or the
person in whose name a Registered Note is registered (as the case may be), “holder” (in relation to a Note,
Receipt, Coupon or Talon) means the bearer of any Bearer Note, Receipt, Coupon or Talon or the person in
whose name a Registered Note is registered (as the case may be) and capitalised terms have the meanings
given to them hereon, the absence of any such meaning indicating that such term is not applicable to the
Notes.
2
No Exchange of Notes and Transfers of Registered Notes
(a) No Exchange of Notes: Registered Notes may not be exchanged for Bearer Notes. Bearer Notes of one
Specified Denomination may not be exchanged for Bearer Notes of another Specified Denomination.
Bearer Notes may not be exchanged for Registered Notes.
(b) Transfer of Registered Notes: One or more Registered Notes may be transferred upon the surrender
(at the specified office of the Registrar or any Transfer Agent) of the Certificate representing such
Registered Notes to be transferred, together with the form of transfer endorsed on such Certificate (or
another form of transfer substantially in the same form and containing the same representations and
certifications (if any), unless otherwise agreed by the Issuer) duly completed and executed and any
other evidence as the Registrar or Transfer Agent may reasonably require. In the case of a transfer of
part only of a holding of Registered Notes represented by one Certificate, a new Certificate shall be
issued to the transferee in respect of the part transferred and a further new Certificate in respect of the
balance of the holding not transferred shall be issued to the transferor. All transfers of Notes and entries
on the Register will be made subject to the detailed regulations concerning transfers of Notes scheduled
to the Agency Agreement. The regulations may be changed by the Issuer, with the prior written
approval of the Registrar and the Noteholders. A copy of the current regulations will be made available
by the Registrar to any Noteholder upon request.
(c) Exercise of Options or Partial Redemption in Respect of Registered Notes: In the case of an
exercise of an Issuer’s or Noteholders’ option in respect of, or a partial redemption of, a holding of
Registered Notes represented by a single Certificate, a new Certificate shall be issued to the holder to
reflect the exercise of such option or in respect of the balance of the holding not redeemed. In the case
of a partial exercise of an option resulting in Registered Notes of the same holding having different
terms, separate Certificates shall be issued in respect of those Notes of that holding that have the same
terms. New Certificates shall only be issued against surrender of the existing Certificates to the
Registrar or any Transfer Agent. In the case of a transfer of Registered Notes to a person who is
already a holder of Registered Notes, a new Certificate representing the enlarged holding shall only be
issued against surrender of the Certificate representing the existing holding.
(d) Delivery of New Certificates: Each new Certificate to be issued pursuant to Conditions 2 (b) or
(c) shall be available for delivery within seven business days of receipt of the form of transfer or
Exercise Notice (as defined in Condition 6(e)) or Purchase Notice (as defined in Condition 6(f)) and
surrender of the Certificate for exchange. Delivery of the new Certificate(s) shall be made at the
specified office of the Transfer Agent or of the Registrar (as the case may be) to whom delivery or
surrender of such form of transfer, Exercise Notice or Purchase Notice or Certificate shall have been
made or, at the option of the holder making such delivery or surrender as aforesaid and as specified in
the relevant form of transfer, Exercise Notice or Purchase Notice or otherwise in writing, be mailed by
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uninsured post at the risk of the holder entitled to the new Certificate to such address as may be so
specified, unless such holder requests otherwise and pays in advance to the relevant Transfer Agent or
the Registrar (as the case may be) the costs of such other method of delivery and/or such insurance as it
may specify. In this Condition 2(d), “business day” means a day, other than a Saturday or Sunday or a
gazetted public holiday, on which banks are open for general business in the place of the specified
office of the relevant Transfer Agent or the Registrar (as the case may be).
(e) Transfer Free of Charge: Transfers of Notes and Certificates on registration, transfer, partial
redemption or exercise of an option shall be effected without charge by or on behalf of the Issuer, the
Registrar or the Transfer Agents, but upon payment of any tax or other governmental charges that may
be imposed in relation to it (or the giving of such indemnity as the Registrar or the relevant Transfer
Agent may require).
(f)
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Closed Periods: No Noteholder may require the transfer of a Registered Note to be registered
(i) during the period of 15 days ending on the due date for redemption of, or payment of any Instalment
Amount in respect of, that Note, (ii) during the period of 15 days before any date on which Notes may
be called for redemption by the Issuer at its option pursuant to Condition 6(d), (iii) after any such Note
has been called for redemption or (iv) during the period of seven business days ending on (and
including) any Record Date (as defined in Condition 7 (b)).
Status
The Notes and the Receipts and Coupons relating to them constitute direct, unsubordinated and (subject to
Condition 4) unsecured obligations of the Issuer and shall at all times rank pari passu and without any
preference among themselves. The payment obligations of the Issuer under the Notes and the Receipts and
the Coupons relating to them shall, save for such exceptions as may be provided by applicable law and
subject to Condition 4, at all times rank at least equally with all other unsecured and unsubordinated
indebtedness and monetary obligations of the Issuer, present and future.
4
Negative Pledge
So long as any Note, Receipt or Coupon remains outstanding (as defined in the Agency Agreement) the
Issuer will not create, or have outstanding any mortgage, charge, lien, pledge or other security interest, upon
the whole or any part of its present or future undertaking, assets or revenues (including any uncalled capital)
to secure any Relevant Indebtedness, or any guarantee or indemnity in respect of any Relevant Indebtedness
without at the same time or prior thereto according to the Notes, the Receipts and the Coupons the same
security as is created or subsisting to secure any such Relevant Indebtedness, guarantee or indemnity or such
other security or such other arrangement (whether or not it includes giving security) as shall be approved by
an Extraordinary Resolution (as defined in the Agency Agreement) of the Noteholders.
In this Condition:
“Relevant Indebtedness” means any present or future indebtedness which is in the form of, or represented or
evidenced by, bonds, notes, debentures, loan stock or other securities which:
(a) for the time being are, or are intended to be or capable of being, quoted, listed or dealt in or traded on
any stock exchange or over-the-counter or other securities market (provided that “Relevant
Indebtedness” shall not include any such indebtedness which is quoted, listed or dealt in or traded only
on a stock exchange or over the counter or on any other securities market in Malaysia); and
(b) either are by their terms payable, or confer a right to receive payment, in any currency other than
Ringgit or are denominated in Ringgit and more than 50 per cent. of the aggregate principal amount
thereof is initially distributed outside Malaysia by or with the authorisation of the Issuer thereof.
5
Interest and other Calculations
(a) Interest on Fixed Rate Notes: Each Fixed Rate Note bears interest on its outstanding nominal amount
from and including the Interest Commencement Date at the rate per annum (expressed as a percentage)
equal to the Rate of Interest, such interest being payable in arrear on each Interest Payment Date. The
amount of interest payable shall be determined in accordance with Condition 5(h).
(b) Interest on Floating Rate Notes and Variable Rate Notes:
(i)
Interest Payment Dates: Each Floating Rate Note and Variable Rate Note bears interest on its
outstanding nominal amount from and including the Interest Commencement Date at the rate per
8
annum (expressed as a percentage) equal to the Rate of Interest, such interest being payable in
arrear on each Interest Payment Date. The amount of interest payable shall be determined in
accordance with Condition 5(h). Such Interest Payment Date(s) is/are either shown hereon as
Specified Interest Payment Dates or, if no Specified Interest Payment Date(s) is/are shown hereon,
Interest Payment Date shall mean each date which falls the number of months or other period
shown hereon as the Interest Period after the preceding Interest Payment Date or, in the case of the
first Interest Payment Date, after the Interest Commencement Date provided that the Agreed Yield
(as defined in Condition 5(b)(iv)) in respect of any Variable Rate Note for any Interest Period
shall be payable on the first day of that Interest Period.
(ii) Business Day Convention: If any date referred to in these Conditions that is specified to be subject
to adjustment in accordance with a Business Day Convention would otherwise fall on a day that is
not a Business Day, then, if the Business Day Convention specified is (A) the Floating Rate
Business Day Convention, such date shall be postponed to the next day that is a Business Day
unless it would thereby fall into the next calendar month, in which event (x) such date shall be
brought forward to the immediately preceding Business Day and (y) each subsequent such date
shall be the last Business Day of the month in which such date would have fallen had it not been
subject to adjustment, (B) the Following Business Day Convention, such date shall be postponed
to the next day that is a Business Day, (C) the Modified Following Business Day Convention,
such date shall be postponed to the next day that is a Business Day unless it would thereby fall
into the next calendar month, in which event such date shall be brought forward to the
immediately preceding Business Day or (D) the Preceding Business Day Convention, such date
shall be brought forward to the immediately preceding Business Day.
(iii) Rate of Interest for Floating Rate Notes: The Rate of Interest in respect of Floating Rate Notes for
each Interest Accrual Period shall be determined in the manner specified hereon and the
provisions below relating to either ISDA Determination or Screen Rate Determination shall apply,
depending upon which, if any, is specified hereon.
(A) ISDA Determination for Floating Rate Notes
Where ISDA Determination is specified hereon as the manner in which the Rate of Interest is
to be determined, the Rate of Interest for each Interest Accrual Period shall be determined by
the Calculation Agent as a rate equal to the relevant ISDA Rate. For the purposes of this subparagraph (A), “ISDA Rate” for an Interest Accrual Period means a rate equal to the Floating
Rate that would be determined by the Calculation Agent under a Swap Transaction under the
terms of an agreement incorporating the ISDA Definitions and under which:
(x) the Floating Rate Option is as specified hereon;
(y) the Designated Maturity is a period specified hereon; and
(z) the relevant Reset Date is the first day of that Interest Accrual Period unless otherwise
specified hereon.
For the purposes of this sub-paragraph (A), “Floating Rate”, “Calculation Agent”, “Floating
Rate Option”, “Designated Maturity”, “Reset Date” and “Swap Transaction” have the
meanings given to those terms in the ISDA Definitions.
(B) Screen Rate Determination for Floating Rate Notes
(x) Where Screen Rate Determination is specified hereon as the manner in which the Rate
of Interest is to be determined, the Rate of Interest for each Interest Accrual Period will,
subject as provided below, be either:
(1) the offered quotation; or
(2) the arithmetic mean of the offered quotations,
(expressed as a percentage rate per annum) for the Reference Rate which appears or
appear, as the case may be, on the Relevant Screen Page as at either 11.00 a.m. (London
time in the case of LIBOR or Brussels time in the case of EURIBOR or Hong Kong
time in the case of HIBOR) on the Interest Determination Date in question as
determined by the Calculation Agent. If five or more of such offered quotations are
available on the Relevant Screen Page, the highest (or, if there is more than one such
highest quotation, one only of such quotations) and the lowest (or, if there is more than
9
one such lowest quotation, one only of such quotations) shall be disregarded by the
Calculation Agent for the purpose of determining the arithmetic mean of such offered
quotations.
If the Reference Rate from time to time in respect of Floating Rate Notes is specified
hereon as being other than LIBOR, EURIBOR or HIBOR, the Rate of Interest in respect
of such Notes will be determined as provided hereon.
(y) if the Relevant Screen Page is not available or, if sub-paragraph (x)(1) applies and no
such offered quotation appears on the Relevant Screen Page, or, if sub-paragraph (x)(2)
applies and fewer than three such offered quotations appear on the Relevant Screen
Page, in each case as at the time specified above, subject as provided below, the
Calculation Agent shall request, if the Reference Rate is LIBOR, the principal London
office of each of the Reference Banks or, if the Reference Rate is EURIBOR, the
principal Euro-zone office of each of the Reference Banks or, if the Reference Rate is
HIBOR, the principal Hong Kong office of each of the Reference Banks, to provide the
Calculation Agent with its offered quotation (expressed as a percentage rate per annum)
for the Reference Rate if the Reference Rate is LIBOR, at approximately 11.00 a.m.
(London time), or if the Reference Rate is EURIBOR, at approximately 11.00 a.m.
(Brussels time), or if the Reference Rate is HIBOR, at approximately 11.00 a.m. (Hong
Kong time) on the Interest Determination Date in question. If two or more of the
Reference Banks provide the Calculation Agent with such offered quotations, the Rate
of Interest for such Interest Accrual Period shall be the arithmetic mean of such offered
quotations as determined by the Calculation Agent; and
(z) if paragraph (y) above applies and the Calculation Agent determines that fewer than two
Reference Banks are providing offered quotations, subject as provided below, the Rate
of Interest shall be the arithmetic mean of the rates per annum (expressed as a
percentage) as communicated to (and at the request of) the Calculation Agent by the
Reference Banks or any two or more of them, at which such banks were offered, if the
Reference Rate is LIBOR, at approximately 11.00 a.m. (London time) or, if the
Reference Rate is EURIBOR, at approximately 11.00 a.m. (Brussels time) or, if the
Reference Rate is HIBOR, at approximately 11.00 a.m. (Hong Kong time)on the
relevant Interest Determination Date, deposits in the Specified Currency for a period
equal to that which would have been used for the Reference Rate by leading banks in, if
the Reference Rate is LIBOR, the London inter-bank market or, if the Reference Rate is
EURIBOR, the Euro-zone inter-bank market or, if the Reference Rate is HIBOR, the
Hong Kong inter-bank market, as the case may be, or, if fewer than two of the
Reference Banks provide the Calculation Agent with such offered rates, the offered rate
for deposits in the Specified Currency for a period equal to that which would have been
used for the Reference Rate, or the arithmetic mean of the offered rates for deposits in
the Specified Currency for a period equal to that which would have been used for the
Reference Rate, at which, if the Reference Rate is LIBOR, at approximately 11.00 a.m.
(London time) or, if the Reference Rate is EURIBOR, at approximately 11.00 a.m.
(Brussels time) or, if the Reference Rate is HIBOR, at approximately 11.00 a.m. (Hong
Kong time), on the relevant Interest Determination Date, any one or more banks (which
bank or banks is or are in the opinion of the Issuer suitable for such purpose) informs the
Calculation Agent it is quoting to leading banks in, if the Reference Rate is LIBOR, the
London inter-bank market or, if the Reference Rate is EURIBOR, the Euro-zone interbank market or, if the Reference Rate is HIBOR, the Hong Kong inter-bank market, as
the case may be, provided that, if the Rate of Interest cannot be determined in
accordance with the foregoing provisions of this paragraph, the Rate of Interest shall be
determined as at the last preceding Interest Determination Date (though substituting,
where a different Margin or Maximum or Minimum Rate of Interest is to be applied to
the relevant Interest Accrual Period from that which applied to the last preceding
Interest Accrual Period, the Margin or Maximum or Minimum Rate of Interest relating
to the relevant Interest Accrual Period, in place of the Margin or Maximum or Minimum
Rate of Interest relating to that last preceding Interest Accrual Period).
(iv) Rate of Interest for Variable Rate Notes
Each Variable Rate Note bears interest at a variable rate determined in accordance with the
provisions of this paragraph (iv). The interest payable in respect of a Variable Rate Note for each
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Interest Period relating to that Variable Rate Note, which shall be payable on the first day of such
Interest Period, is referred to in this Conditions as the “Agreed Yield” and the rate of interest
payable in respect of a Variable Rate Note on the last day of an Interest Period relating to that
Variable Rate Note is referred to in these Conditions as the “Rate of Interest”.
The Agreed Yield or, as the case may be, the Rate of Interest payable from time to time in respect
of each Variable Rate Note for each Interest Period shall be determined as follows:
(x) not earlier than 9.00 a.m. (Kuala Lumpur time) on the ninth business day nor later than
3.00 p.m. (Kuala Lumpur time) on the fifth business day prior to the commencement of each
Interest Period, the Issuer and the Relevant Dealer (as defined below) shall endeavour to
agree on the following:
(1) whether interest in respect of such Variable Rate Note is to be paid on the first day or
the last day of such Interest Period;
(2) if interest in respect of such Variable Rate Note is agreed between the Issuer and the
Relevant Dealer to be paid on the first day of such Interest Period, an Agreed Yield in
respect of such Variable Rate Note for such Interest Period (and, in the event of the
Issuer and the Relevant Dealer so agreeing on such Agreed Yield, the Rate of Interest
for such Variable Rate Note for such Interest Period shall be zero); and
(3) if interest in respect of such Variable Rate Note is agreed between the Issuer and the
Relevant Dealer to be paid on the last day of such Interest Period, a Rate of Interest in
respect of such Variable Rate Note for such Interest period (an “Agreed Rate”) and, in
the event of the Issuer and the Relevant Dealer so agreeing on an Agreed Rate, such
Agreed Rate shall be the Rate of Interest for such Variable Rate Note for such Interest
Period; and
(y) if the Issuer and the Relevant Dealer do not agree either an Agreed Yield or an Agreed Rate
in respect of such Variable Rate Note for such Interest Period by 3.00 p.m. (Kuala Lumpur
time) on the fifth business day prior to the commencement of the relevant Interest Period, or
if there shall be no Relevant Dealer during the period for agreement referred to in (x) above,
the Rate of Interest for such Variable Rate Note for such Interest Period shall automatically
be the Fall Back Rate (as defined below).
The Issuer has undertaken to the Fiscal Agent and the Calculation Agent (if any) that it will as
soon as possible after the Agreed Yield or, as the case may be, the Agreed Rate in respect of any
Variable Rate Note is determined but not later than 10.30 a.m. (Kuala Lumpur time) on the next
following business day:
(x) notify the Fiscal Agent and the Calculation Agent in writing of the Agreed Yield or, as the
case may be, the Agreed Rate for such Variable Rate Note for such Interest Period; and
(y) cause such Agreed Yield, or as the case may be, the Agreed Rate for such Variable Rate Note
to be notified by the Fiscal Agent to the relevant Noteholder at its request.
For the purposes of paragraph (B) above, the Rate of Interest for each Interest Period for which
there is neither an Agreed Yield nor Agreed Rate in respect of any Variable Rate Note or no
Relevant Dealer during the period for agreement in respect of the Variable Rate Note shall be the
rate (the “Fall Back Rate”) determined by reference to a Reference Rate as specified hereon.
The Fall Back Rate payable from time to time in respect of each Variable Rate Note will be
determined by the Calculation Agent in accordance with the provisions of Condition 5(b)(iii)(B),
as the case may be, above (mutatis mutandis) and references therein to “Rate of Interest” shall
mean Fall Back Rate.
(c) Zero Coupon Notes: Where a Note the Interest Basis of which is specified to be Zero Coupon is
repayable prior to the Maturity Date and is not paid when due, the amount due and payable prior to the
Maturity Date shall be the Early Redemption Amount of such Note. As from the Maturity Date, the
Rate of Interest for any overdue principal of such a Note shall be a rate per annum (expressed as a
percentage) equal to the Amortisation Yield (as described in Condition 6(b)(i)).
(d) Partly Paid Notes: In the case of Partly Paid Notes (other than Partly Paid Notes which are Zero
Coupon Notes), interest will accrue as aforesaid on the paid-up nominal amount of such Notes and
otherwise as specified hereon.
11
(e) Accrual of Interest: Interest shall cease to accrue on each Note on the due date for redemption unless,
upon due presentation, payment is improperly withheld or refused, in which event interest shall
continue to accrue (both before and after judgment) at the Rate of Interest in the manner provided in
this Condition 5 to the Relevant Date (as defined in Condition 8).
(f)
Margin, Maximum/Minimum Rates of Interest, Instalment Amounts and Redemption Amounts
and Rounding:
(i)
If any Margin is specified hereon (either (x) generally, or (y) in relation to one or more Interest
Accrual Periods), an adjustment shall be made to all Rates of Interest, in the case of (x), or the
Rates of Interest for the specified Interest Accrual Periods, in the case of (y), calculated in
accordance with Condition 5(b) above by adding (if a positive number) or subtracting the absolute
value (if a negative number) of such Margin subject always to the next paragraph.
(ii) If any Maximum or Minimum Rate of Interest, Instalment Amount or Redemption Amount is
specified hereon, then any Rate of Interest, Instalment Amount or Redemption Amount shall be
subject to such maximum or minimum, as the case may be.
(iii) For the purposes of any calculations required pursuant to these Conditions (unless otherwise
specified), (x) all percentages resulting from such calculations shall be rounded, if necessary, to
the nearest one hundred-thousandth of a percentage point (with halves being rounded up), (y) all
figures shall be rounded to seven significant figures (with halves being rounded up) and (z) all
currency amounts that fall due and payable shall be rounded to the nearest unit of such currency
(with halves being rounded up), save in the case of yen, which shall be rounded down to the
nearest yen. For these purposes “unit” means the lowest amount of such currency that is available
as legal tender in the country of such currency.
(g) Calculations: The amount of interest payable per Calculation Amount in respect of any Note for any
Interest Accrual Period shall be equal to the product of the Rate of Interest, the Calculation Amount
specified hereon, and the Day Count Fraction for such Interest Accrual Period, unless an Interest
Amount (or a formula for its calculation) is applicable to such Interest Accrual Period, in which case
the amount of interest payable per Calculation Amount in respect of such Note for such Interest
Accrual Period shall equal such Interest Amount (or be calculated in accordance with such formula).
Where any Interest Period comprises two or more Interest Accrual Periods, the amount of interest
payable per Calculation Amount in respect of such Interest Period shall be the sum of the Interest
Amounts payable in respect of each of those Interest Accrual Periods. In respect of any other period for
which interest is required to be calculated, the provisions above shall apply save that the Day Count
Fraction shall be for the period for which interest is required to be calculated.
(h) Determination and Publication of Rates of Interest, Interest Amounts, Final Redemption
Amounts, Early Redemption Amounts, Optional Redemption Amounts and Instalment Amounts:
The Calculation Agent shall, as soon as practicable on each Interest Determination Date, or such other
time on such date as the Calculation Agent may be required to calculate any rate or amount, obtain any
quotation or make any determination or calculation, determine such rate and calculate the Interest
Amounts for the relevant Interest Accrual Period, calculate the Final Redemption Amount, Early
Redemption Amount, Optional Redemption Amount or Instalment Amount, obtain such quotation or
make such determination or calculation, as the case may be, and cause the Rate of Interest and the
Interest Amounts for each Interest Accrual Period and the relevant Interest Payment Date and, if
required to be calculated, the Final Redemption Amount, Early Redemption Amount, Optional
Redemption Amount or any Instalment Amount to be notified to the Fiscal Agent, the Issuer, each of
the Paying Agents, the Registrar, the Noteholders, any other Calculation Agent appointed in respect of
the Notes that is to make a further calculation upon receipt of such information and, if the Notes are
listed on a stock exchange and the rules of such exchange or other relevant authority so require, such
exchange or other relevant authority as soon as possible after their determination but in no event later
than (i) the commencement of the relevant Interest Period, if determined prior to such time, in the case
of notification to such exchange of a Rate of Interest and Interest Amount, or (ii) in all other cases, the
fourth Business Day after such determination. Where any Interest Payment Date or Interest Period Date
is subject to adjustment pursuant to Condition 5(b)(ii), the Interest Amounts and the Interest Payment
Date so published may subsequently be amended (or appropriate alternative arrangements made by
way of adjustment) without notice in the event of an extension or shortening of the Interest Period. If
the Notes become due and payable under Condition 10, the accrued interest and the Rate of Interest
payable in respect of the Notes shall nevertheless continue to be calculated as previously in accordance
with this Condition but no publication of the Rate of Interest or the Interest Amount so calculated need
12
be made. The determination of any rate or amount, the obtaining of each quotation and the making of
each determination or calculation by the Calculation Agent(s) shall (in the absence of manifest error)
be final and binding upon all parties.
(i)
Definitions: In these Conditions, unless the context otherwise requires, the following defined terms
shall have the meanings set out below:
“Business Day” means:
(i)
in the case of a currency other than euro and Renminbi, a day (other than a Saturday or Sunday or
a gazetted public holiday) on which commercial banks and foreign exchange markets settle
payments in the principal financial centre for such currency; and/or
(ii) in the case of euro, a day on which the TARGET System is operating (a “TARGET Business
Day”); and/or
(iii) in the case of Renminbi, a day (other than a Saturday, Sunday or a gazetted public holiday) on
which commercial banks in Hong Kong are generally open for general business and settlement of
Renminbi payments in Hong Kong; and/or
(iv) in the case of a currency and/or one or more Business Centres, a day (other than a Saturday or a
Sunday or a gazetted public holiday) on which commercial banks and foreign exchange markets
settle payments in such currency in the Business Centre(s) or, if no currency is indicated,
generally in each of the Business Centres;
“Day Count Fraction” means, in respect of the calculation of an amount of interest on any Note for any
period of time (from and including the first day of such period to but excluding the last) (whether or
not constituting an Interest Period or an Interest Accrual Period, the “Calculation Period”):
(i)
if “Actual/Actual” or “Actual/Actual (ISDA)” is specified hereon, the actual number of days in the
Calculation Period divided by 365 (or, if any portion of that Calculation Period falls in a leap year,
the sum of (A) the actual number of days in that portion of the Calculation Period falling in a leap
year divided by 366 and (B) the actual number of days in that portion of the Calculation Period
falling in a non-leap year divided by 365);
(ii) if “Actual/365 (Fixed)” is specified hereon, the actual number of days in the Calculation Period
divided by 365;
(iii) if “Actual/360” is specified hereon, the actual number of days in the Calculation Period divided
by 360;
(iv) if “30/360”, “360/360” or “Bond Basis” is specified hereon, the number of days in the Calculation
Period divided by 360, calculated on a formula basis as follows:
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day
included in the Calculation Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation
Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the
last day included in the Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such
number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in
the Calculation Period, unless such number would be 31 and D1 is greater than 29, in which case
D2 will be 30;
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(v) if “30E/360” or “Eurobond Basis” is specified hereon, the number of days in the Calculation
Period divided by 360, calculated on a formula basis as follows:
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day
included in the Calculation Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation
Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the
last day included in the Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless such
number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in
the Calculation Period, unless such number would be 31, in which case D2 will be 30;
(vi) if “30E/360 (ISDA)” is specified hereon, the number of days in the Calculation Period divided by
360, calculated on a formula basis as follows:
where:
“Y1” is the year, expressed as a number, in which the first day of the Calculation Period falls;
“Y2” is the year, expressed as a number, in which the day immediately following the last day
included in the Calculation Period falls;
“M1” is the calendar month, expressed as a number, in which the first day of the Calculation
Period falls;
“M2” is the calendar month, expressed as a number, in which the day immediately following the
last day included in the Calculation Period falls;
“D1” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day
is the last day of February or (ii) such number would be 31, in which case D1 will be 30; and
“D2” is the calendar day, expressed as a number, immediately following the last day included in
the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or
(ii) such number would be 31, in which case D2 will be 30; and
(vii) if “Actual/Actual (ICMA)” is specified hereon:
(a) if the Calculation Period is equal to or shorter than the Determination Period during which it
falls, the number of days in the Calculation Period divided by the product of (x) the number
of days in such Determination Period and (y) the number of Determination Periods normally
ending in any year; and
(b) if the Calculation Period is longer than one Determination Period, the sum of:
(x) the number of days in such Calculation Period falling in the Determination Period in
which it begins divided by the product of (1) the number of days in such Determination
Period and (2) the number of Determination Periods normally ending in any year; and
(y) the number of days in such Calculation Period falling in the next Determination Period
divided by the product of (1) the number of days in such Determination Period and
(2) the number of Determination Periods normally ending in any year
where:
“Determination Period” means the period from and including a Determination Date in any year to
but excluding the next Determination Date;
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“Determination Date” means the date(s) specified as such hereon or, if none is so specified, the
Interest Payment Date(s);
“Euro-zone” means the region comprised of member states of the European Union that adopt the
single currency in accordance with the Treaty establishing the European Community, as amended;
“Interest Accrual Period” means the period beginning on and including the Interest
Commencement Date and ending on but excluding the first Interest Period Date and each
successive period beginning on and including an Interest Period Date and ending on but excluding
the next succeeding Interest Period Date;
“Interest Amount” means:
(i)
in respect of an Interest Accrual Period, the amount of interest payable per Calculation
Amount for that Interest Accrual Period and which, in the case of Fixed Rate Notes, and
unless otherwise specified hereon, shall mean the Fixed Coupon Amount or Broken Amount
specified hereon as being payable on the Interest Payment Date ending the Interest Period of
which such Interest Accrual Period forms part; and
(ii) in respect of any other period, the amount of interest payable per Calculation Amount for that
period;
“Interest Commencement Date” means the Issue Date or such other date as may be specified
hereon;
“Interest Determination Date” means, with respect to a Rate of Interest and Interest Accrual
Period, the date specified as such hereon or, if none is so specified, (i) the first day of such Interest
Accrual Period if the Specified Currency is Sterling or Hong Kong dollars or Renminbi (ii) the
day falling two Business Days in London for the Specified Currency prior to the first day of such
Interest Accrual Period if the Specified Currency is neither Sterling nor euro nor Hong Kong
dollars nor Renminbi or (iii) the day falling two TARGET Business Days prior to the first day of
such Interest Accrual Period if the Specified Currency is euro;
“Interest Period” means the period beginning on and including the Interest Commencement Date
and ending on but excluding the first Interest Payment Date and each successive period beginning
on and including an Interest Payment Date and ending on but excluding the next succeeding
Interest Payment Date;
“Interest Period Date” means each Interest Payment Date unless otherwise specified hereon;
“ISDA Definitions” means the 2006 ISDA Definitions, as published by the International Swaps
and Derivatives Association, Inc., unless otherwise specified hereon;
“Rate of Interest” means the rate of interest payable from time to time in respect of this Note and
that is either specified or calculated in accordance with the provisions hereon;
“Reference Banks” means, (i) in the case of a determination of LIBOR, the principal London
office of four major banks in the London inter-bank market, (ii) in the case of a determination of
EURIBOR, the principal Euro-zone office of four major banks in the Euro-zone inter-bank
market, and (iii) in the case of a determination of HIBOR, the principal Hong Kong office of four
major banks in the Hong Kong inter-bank market, in each case selected by the Calculation Agent
or as specified hereon;
“Reference Rate” means the rate specified as such hereon;
“Relevant Screen Page” means such page, section, caption, column or other part of a particular
information service as may be specified hereon;
“Specified Currency” means the currency specified as such hereon or, if none is specified, the
currency in which the Notes are denominated; and
“TARGET System” means the Trans-European Automated Real-Time Gross Settlement Express
Transfer (known as TARGET2) System which was launched on 19 November 2007 or any
successor thereto.
(j)
Calculation Agent: The Issuer shall procure that there shall at all times be one or more Calculation
Agents if provision is made for them hereon and for so long as any Note is outstanding. Where more
than one Calculation Agent is appointed in respect of the Notes, references in these Conditions to the
15
Calculation Agent shall be construed as each Calculation Agent performing its respective duties under
the Conditions. If the Calculation Agent is unable or unwilling to act as such or if the Calculation
Agent fails duly to establish the Rate of Interest for an Interest Accrual Period or to calculate any
Interest Amount, Instalment Amount, Final Redemption Amount, Early Redemption Amount or
Optional Redemption Amount, as the case may be, or to comply with any other requirement, the Issuer
shall appoint a leading bank or financial institution engaged in the interbank market (or, if appropriate,
money, swap or over-the-counter index options market) that is most closely connected with the
calculation or determination to be made by the Calculation Agent (acting through its principal London
office or any other office actively involved in such market) to act as such in its place. The Calculation
Agent may not resign its duties without a successor having been appointed as aforesaid.
6
Redemption, Purchase and Options
(a) Redemption by Instalments and Final Redemption:
(i)
Unless previously redeemed, purchased and cancelled as provided in this Condition 6, each Note
that provides for Instalment Dates and Instalment Amounts shall be partially redeemed on each
Instalment Date at the related Instalment Amount specified hereon. The outstanding nominal
amount of each such Note shall be reduced by the Instalment Amount (or, if such Instalment
Amount is calculated by reference to a proportion of the nominal amount of such Note, such
proportion) for all purposes with effect from the related Instalment Date, unless payment of the
Instalment Amount is improperly withheld or refused, in which case, such amount shall remain
outstanding until the Relevant Date relating to such Instalment Amount.
(ii) Unless previously redeemed, purchased and cancelled as provided below, each Note shall be
finally redeemed on the Maturity Date specified hereon at its Final Redemption Amount (which,
unless otherwise provided, is its nominal amount) or, in the case of a Note falling within
paragraph (i) above, its final Instalment Amount.
(b) Early Redemption:
(i)
Zero Coupon Notes:
(A) The Early Redemption Amount payable in respect of any Zero Coupon Note, the Early
Redemption Amount of which is not linked to an index and/or a formula, upon redemption of
such Note pursuant to Condition 6(c) or upon it becoming due and payable as provided in
Condition 10 shall be the Amortised Face Amount (calculated as provided below) of such
Note unless otherwise specified hereon.
(B) Subject to the provisions of sub-paragraph (C) below, the Amortised Face Amount of any
such Note shall be the scheduled Final Redemption Amount of such Note on the Maturity
Date discounted at a rate per annum (expressed as a percentage) equal to the Amortisation
Yield (which, if none is shown hereon, shall be such rate as would produce an Amortised
Face Amount equal to the issue price of the Notes if they were discounted back to their issue
price on the Issue Date) compounded annually.
(C) If the Early Redemption Amount payable in respect of any such Note upon its redemption
pursuant to Condition 6(c) or upon it becoming due and payable as provided in Condition 10
is not paid when due, the Early Redemption Amount due and payable in respect of such Note
shall be the Amortised Face Amount of such Note as defined in sub-paragraph (B) above,
except that such sub-paragraph shall have effect as though the date on which the Note
becomes due and payable were the Relevant Date. The calculation of the Amortised Face
Amount in accordance with this sub-paragraph shall continue to be made (both before and
after judgment) until the Relevant Date, unless the Relevant Date falls on or after the
Maturity Date, in which case the amount due and payable shall be the scheduled Final
Redemption Amount of such Note on the Maturity Date together with any interest that may
accrue in accordance with Condition 5(c). Where such calculation is to be made for a period
of less than one year, it shall be made on the basis of the Day Count Fraction shown hereon.
(ii) Other Notes: The Early Redemption Amount payable in respect of any Note (other than Notes
described in (i) above), upon redemption of such Note pursuant to Condition 6(c) or upon it
becoming due and payable as provided in Condition 10, shall be the Final Redemption Amount
unless otherwise specified hereon.
16
(c) Redemption for Taxation Reasons: The Notes may be redeemed at the option of the Issuer in whole,
but not in part, on any Interest Payment Date (if this Note is a Floating Rate Note) or, if so specified
thereon, at any time (if this Note is not a Floating Rate Note) on giving not less than 30 nor more than
60 days’ notice to the Noteholders (which notice shall be irrevocable), at their Early Redemption
Amount (as described in Condition 6(b) above) (together with interest accrued to the date fixed for
redemption), if (i) the Issuer has or will become obliged to pay additional amounts as provided or
referred to in Condition 8 as a result of any change in, or amendment to, the laws or regulations of
Malaysia or, any political subdivision or any authority thereof or therein having power to tax, or any
change in the application or official interpretation of such laws or regulations, which change or
amendment becomes effective on or after the date on which agreement is reached to issue the first
Tranche of the Notes, and (ii) such obligation cannot be avoided by the Issuer taking reasonable
measures available to it, provided that no such notice of redemption shall be given earlier than 90 days
prior to the earliest date on which the Issuer would be obliged to pay such additional amounts were a
payment in respect of the Notes then due. Prior to the publication of any notice of redemption pursuant
to this Condition 6(c), the Issuer shall deliver to the Fiscal Agent a certificate signed by two Directors
of the Issuer stating that the Issuer is entitled to effect such redemption and setting forth a statement of
facts showing that the conditions precedent to the right of the Issuer so to redeem have occurred, and an
opinion of independent legal advisers of recognised standing to the effect that the Issuer has or will
become obliged to pay such additional amounts as a result of such change or amendment.
(d) Redemption at the Option of the Issuer: If Call Option is specified hereon, the Issuer may, on giving
not less than 15 nor more than 30 days’ irrevocable notice to the Noteholders (or such other notice
period as may be specified hereon) redeem, all or, if so provided, some, of the Notes on any Optional
Redemption Date. Any such redemption of Notes shall be at their Optional Redemption Amount
together with interest accrued to the date fixed for redemption. Any such redemption or exercise must
relate to Notes of a nominal amount at least equal to the Minimum Redemption Amount to be
redeemed specified hereon and no greater than the Maximum Redemption Amount to be redeemed
specified hereon.
All Notes in respect of which any such notice is given shall be redeemed on the date specified in such
notice in accordance with this Condition.
In the case of a partial redemption the notice to Noteholders shall also contain the certificate numbers
of the Bearer Notes, or in the case of Registered Notes shall specify the nominal amount of Registered
Notes drawn and the holder(s) of such Registered Notes, to be redeemed, which shall have been drawn
in such place and in such manner as may be fair and reasonable in the circumstances, taking account of
prevailing market practices, subject to compliance with any applicable laws and stock exchange or
other relevant authority requirements.
(e) Redemption at the Option of Noteholders: If Put Option is specified hereon, the Issuer shall, at the
option of the holder of any such Note, upon the holder of such Note giving not less than 15 nor more
than 30 days’ notice to the Issuer (or such other notice period as may be specified hereon) redeem such
Note on the Optional Redemption Date(s) at its Optional Redemption Amount together with interest
accrued to the date fixed for redemption.
To exercise such option the holder must deposit (in the case of Bearer Notes) such Note (together with
all unmatured Receipts and Coupons and unexchanged Talons) with any Paying Agent or (in the case
of Registered Notes) the Certificate representing such Note(s) with the Registrar or any Transfer Agent
at its specified office, together with a duly completed option exercise notice (“Exercise Notice”) in the
form obtainable from any Paying Agent, the Registrar or any Transfer Agent (as applicable) within the
notice period. No Note or Certificate so deposited and option exercised may be withdrawn (except as
provided in the Agency Agreement) without the prior consent of the Issuer.
(f)
Purchase at the option of holders of Variable Rate Notes: If VRN Purchase Option is specified
hereon, each holder of Variable Rate Notes shall have the option to have all or any of his Variable Rate
Notes purchased by the Issuer at their Redemption Amount on any Interest Payment Date and the
Issuer will purchase such Variable Rate Notes accordingly. To exercise such option, the holder must
deposit (in the case of Bearer Notes) such Variable Rate Notes (together with all unmatured Receipts
and Coupons and unexchanged Talons) to be purchased with any Paying Agent or (in the case of
Registered Notes) the Certificate representing such Note(s) with the Registrar or any Transfer Agent at
its specified office, together with a duly completed option purchase notice (“Purchase Notice”) in the
form obtainable from any Paying Agent, the Registrar or any Transfer Agent (as applicable) within the
Noteholders’ VRN Purchase Option Period specified hereon. Any Note or Certificate so deposited may
17
not be withdrawn (except as provided in the Agency Agreement) without the prior consent of the
Issuer.
(g) Partly Paid Notes: Partly Paid Notes will be redeemed, whether at maturity, early redemption or
otherwise, in accordance with the provisions of this Condition and the provisions specified hereon.
(h) Purchases: The Issuer and its Subsidiaries may at any time purchase Notes (provided that all
unmatured Receipts and Coupons and unexchanged Talons relating thereto are attached thereto or
surrendered therewith) in the open market or otherwise at any price. Any Notes so purchased may be
held, reissued or resold by the Issuer and its Subsidiaries.
(i)
7
Cancellation: All Notes purchased by or on behalf of the Issuer or any of its Subsidiaries may be
surrendered for cancellation, in the case of Bearer Notes, by surrendering each such Note together with
all unmatured Receipts and Coupons and all unexchanged Talons to the Fiscal Agent and, in the case of
Registered Notes, by surrendering the Certificate representing such Notes to the Registrar and, in each
case, if so surrendered, shall, together with all Notes redeemed by the Issuer, be cancelled forthwith
(together with all unmatured Receipts and Coupons and unexchanged Talons attached thereto or
surrendered therewith). Any Notes so surrendered for cancellation may not be reissued or resold and
the obligations of the Issuer in respect of any such Notes shall be discharged.
Payments and Talons
(a) Bearer Notes: Payments of principal and interest in respect of Bearer Notes shall, subject as
mentioned below, be made against presentation and surrender of the relevant Receipts (in the case of
payments of Instalment Amounts other than on the due date for redemption and provided that the
Receipt is presented for payment together with its relative Note), Notes (in the case of all other
payments of principal and, in the case of interest, as specified in Condition 7(f)(vi)) or Coupons (in the
case of interest, save as specified in Condition 7(f)(vi)), as the case may be:
(i)
in the case of a currency other than Renminbi, at the specified office of any Paying Agent outside
the United States by a cheque payable in the relevant currency drawn on, or, at the option of the
holder, by transfer to an account denominated in such currency with, a Bank; and
(ii) in the case of Renminbi, by transfer to a Renminbi account maintained by or on behalf of a
Noteholder with a bank in Hong Kong.
In this Condition 7(a) and in Condition 7(b), “Bank” means a bank in the principal financial centre for
such currency or, in the case of euro, in a city in which banks have access to the TARGET System.
(b) Registered Notes:
(i)
Payments of principal (which for the purposes of this Condition 7(b) shall include final Instalment
Amounts but not other Instalment Amounts) in respect of Registered Notes shall be made against
presentation and surrender of the relevant Certificates at the specified office of any of the Transfer
Agents or of the Registrar and in the manner provided in paragraph (ii) below.
(ii) Interest (which for the purpose of this Condition 7(b) shall include all Instalment Amounts other
than final Instalment Amounts) on Registered Notes shall be paid to the person shown on the
Register at the close of business on the fifth (in the case of Renminbi) and on the fifteenth (in the
case of a currency other than Renminbi) day before the due date for payment thereof (the “Record
Date”). Payments of interest on each Registered Note shall be made:
(x) in the case of a currency other than Renminbi, in the relevant currency by cheque drawn on a
Bank and mailed to the holder (or to the first named of joint holders) of such Note at its
address appearing in the Register. Upon application by the holder to the specified office of
the Registrar or any Transfer Agent before the Record Date, such payment of interest may be
made by transfer to an account in the relevant currency maintained by the payee with a Bank;
and
(y) in the case of Renminbi, by transfer to the registered account of the Noteholder.
In this Condition 7(b)(ii), “registered account” means the Renminbi account maintained by or on
behalf of the Noteholder with a bank in Hong Kong, details of which appear on the Register at the
close of business on the fifth business day before the due date for payment.
(c) Payments in the United States: Notwithstanding the foregoing, if any Bearer Notes are denominated
in U.S. dollars, payments in respect thereof may be made at the specified office of any Paying Agent in
18
New York City in the same manner as aforesaid if (i) the Issuer shall have appointed Paying Agents
with specified offices outside the United States with the reasonable expectation that such Paying
Agents would be able to make payment of the amounts on the Notes in the manner provided above
when due, (ii) payment in full of such amounts at all such offices is illegal or effectively precluded by
exchange controls or other similar restrictions on payment or receipt of such amounts and (iii) such
payment is then permitted by United States law, without involving, in the opinion of the Issuer, any
adverse tax consequence to the Issuer.
(d) Payments Subject to Fiscal Laws: All payments are subject in all cases to (i) any applicable fiscal or
other laws, regulations and directives in the place of payment, but without prejudice to the provisions
of Condition 8 and (ii) any withholding or deduction required pursuant to an agreement described in
Section 1471(b) of the U.S. Internal Revenue Code of 1986 (the “Code”) or otherwise imposed
pursuant to Sections 1471 through 1474 of the Code, any regulations or agreements thereunder, any
official interpretations thereof, or (without prejudice to the provisions of Condition 8) any law
implementing an intergovernmental approach thereto). No commission or expenses shall be charged to
the Noteholders or Couponholders in respect of such payments.
(e) Appointment of Agents: The Fiscal Agent, the CMU Lodging and Paying Agent, the Paying Agents,
the Registrars, the Transfer Agents and the Calculation Agent initially appointed by the Issuer and their
respective specified offices are listed below. The Fiscal Agent, the CMU Lodging and Paying Agent,
the Paying Agents, the Registrars, the Transfer Agents and the Calculation Agent(s) act solely as agents
of the Issuer and do not assume any obligation or relationship of agency or trust for or with any
Noteholder or Couponholder. The Issuer reserves the right at any time to vary or terminate the
appointment of the Fiscal Agent, the CMU Lodging and Paying Agent, any other Paying Agent, the
Registrars, any Transfer Agent or the Calculation Agent(s) and to appoint additional or other Paying
Agents or Transfer Agents, provided that the Issuer shall at all times maintain (i) a Fiscal Agent, (ii) a
Registrar in relation to Registered Notes, (iii) a Transfer Agent in relation to Registered Notes, (iv) the
CMU Lodging and Paying Agent in relation to Notes accepted for clearance through the CMU, (v) one
or more Calculation Agent(s) where the Conditions so require, (vi) such other agents as may be
required by any other stock exchange on which the Notes may be listed and (vii) a Paying Agent with a
specified office in a European Union member state that will not be obliged to withhold or deduct tax
pursuant to any law implementing European Council Directive 2003/48/EC or any other directive
implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 in relation to
Notes other than CMU Notes.
In addition, the Issuer shall forthwith appoint a Paying Agent in New York City in respect of any
Bearer Notes denominated in U.S. dollars in the circumstances described in paragraph (c) above.
Notice of any such change or any change of any specified office shall promptly be given to the
Noteholders.
(f)
Unmatured Coupons and Receipts and unexchanged Talons:
(i)
Upon the due date for redemption of Bearer Notes which comprise Fixed Rate Notes, those Notes
should be surrendered for payment together with all unmatured Coupons (if any) relating thereto,
failing which an amount equal to the face value of each missing unmatured Coupon (or, in the
case of payment not being made in full, that proportion of the amount of such missing unmatured
Coupon that the sum of principal so paid bears to the total principal due) shall be deducted from
the Final Redemption Amount, Early Redemption Amount or Optional Redemption Amount, as
the case may be, due for payment. Any amount so deducted shall be paid in the manner mentioned
above against surrender of such missing Coupon within a period of 10 years from the Relevant
Date for the payment of such principal.
(ii) Upon the due date for redemption of any Bearer Note comprising a Floating Rate Note, unmatured
Coupons relating to such Note (whether or not attached) shall become void and no payment shall
be made in respect of them.
(iii) Upon the due date for redemption of any Bearer Note, any unexchanged Talon relating to such
Note (whether or not attached) shall become void and no Coupon shall be delivered in respect of
such Talon.
(iv) Upon the due date for redemption of any Bearer Note that is redeemable in instalments, all
Receipts relating to such Note having an Instalment Date falling on or after such due date
(whether or not attached) shall become void and no payment shall be made in respect of them.
19
(v) Where any Bearer Note that provides that the relative unmatured Coupons are to become void
upon the due date for redemption of those Notes is presented for redemption without all
unmatured Coupons, and where any Bearer Note is presented for redemption without any
unexchanged Talon relating to it, redemption shall be made only against the provision of such
indemnity as the Issuer may require.
(vi) If the due date for redemption of any Note is not a due date for payment of interest, interest
accrued from the preceding due date for payment of interest or the Interest Commencement Date,
as the case may be, shall only be payable against presentation (and surrender if appropriate) of the
relevant Bearer Note or Certificate representing it, as the case may be. Interest accrued on a Note
that only bears interest after its Maturity Date shall be payable on redemption of such Note against
presentation of the relevant Note or Certificate representing it, as the case may be.
(g) Talons: On or after the Interest Payment Date for the final Coupon forming part of a Coupon sheet
issued in respect of any Bearer Note, the Talon forming part of such Coupon sheet may be surrendered
at the specified office of the Fiscal Agent in exchange for a further Coupon sheet (and if necessary
another Talon for a further Coupon sheet) (but excluding any Coupons that may have become void
pursuant to Condition 9).
(h) Non-Business Days: If any date for payment in respect of any Note, Receipt or Coupon is not a
business day, the holder shall not be entitled to payment until the next following business day nor to
any interest or other sum in respect of such postponed payment. In this paragraph, “business day”
means a day (other than a Saturday or a Sunday or a gazetted public holiday) on which banks and
foreign exchange markets are open for general business in the relevant place of presentation, in such
jurisdictions as shall be specified as “Financial Centres” hereon and:
(i)
(in the case of a payment in a currency other than euro and Renminbi) where payment is to be
made by transfer to an account maintained with a bank in the relevant currency, on which foreign
exchange transactions may be carried on in the relevant currency in the principal financial centre
of the country of such currency;
(ii) (in the case of a payment in euro) which is a TARGET Business Day; or
(iii) (in the case of Renminbi) on which banks and foreign exchange markets are open for general
business and settlement of Renminbi payments in Hong Kong).
8
Taxation
All payments of principal and interest by or on behalf of the Issuer in respect of the Notes, the Receipts and
the Coupons shall be made free and clear of, and without withholding or deduction for, any taxes, duties,
assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by
or within Malaysia or any authority therein or thereof having power to tax, unless such withholding or
deduction is required by law. In that event, the Issuer shall pay such additional amounts as shall result in
receipt by the Noteholders and the Couponholders of such amounts as would have been received by them
had no such withholding or deduction been required, except that no such additional amounts shall be
payable with respect to any Note, Receipt or Coupon:
(a) Other connection: to, or to a third party on behalf of, a holder who is liable to such taxes, duties,
assessments or governmental charges in respect of such Note, Receipt or Coupon by reason of his
having some connection with Malaysia other than the mere holding of the Note, Receipt or Coupon or
(b) Presentation more than 30 days after the Relevant Date: presented (or in respect of which the
Certificate representing it is presented) for payment more than 30 days after the Relevant Date except
to the extent that the holder of it would have been entitled to such additional amounts on presenting it
for payment on the thirtieth such day or
(c) Payment to individuals: where such withholding or deduction is imposed on a payment to an individual
and is required to be made pursuant to the European Council Directive 2003/48/EC or any other directive
implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000 or any law
implementing or complying with, or introduced in order to conform to, such directive or
(d) Payment by another Paying Agent: (except in the case of Registered Notes) presented for payment
by or on behalf of a holder who would have been able to avoid such withholding or deduction by
presenting the relevant Note, Receipt or Coupon to another Paying Agent in a Member State of the
European Union.
20
As used in these Conditions, “Relevant Date” in respect of any Note, Receipt or Coupon means the date on
which payment in respect of it first becomes due or (if any amount of the money payable is improperly
withheld or refused) the date on which payment in full of the amount outstanding is made or (if earlier) the
date seven days after that on which notice is duly given to the Noteholders that, upon further presentation of
the Note (or relative Certificate), Receipt or Coupon being made in accordance with the Conditions, such
payment will be made, provided that payment is in fact made upon such presentation. References in these
Conditions to (i) “principal” shall be deemed to include any premium payable in respect of the Notes, all
Instalment Amounts, Final Redemption Amounts, Early Redemption Amounts, Optional Redemption
Amounts, Amortised Face Amounts and all other amounts in the nature of principal payable pursuant to
Condition 6 or any amendment or supplement to it, (ii) “interest” shall be deemed to include all Interest
Amounts and all other amounts payable pursuant to Condition 5 or any amendment or supplement to it and
(iii) “principal” and/or “interest” shall be deemed to include any additional amounts that may be payable
under this Condition.
9
Prescription
Claims against the Issuer for payment in respect of the Notes, Receipts and Coupons (which for this purpose
shall not include Talons) shall be prescribed and become void unless made within 10 years (in the case of
principal) or five years (in the case of interest) from the appropriate Relevant Date in respect of them.
10
Events of Default
If any of the following events (“Events of Default”) occurs, the holder of any Note may give written notice
to the Fiscal Agent at its specified office that such Note is immediately repayable, whereupon the Early
Redemption Amount of such Note together (if applicable) with accrued interest to the date of payment shall
become immediately due and payable:
(a) Non-Payment: default is made in the payment on the due date of interest or principal in respect of any
of the Notes and such default remains unremedied for seven days (in the case of default in payment of
principal) or 14 days (in the case of default in payment of interest); or
(b) Breach of Other Obligations: the Issuer does not perform or comply with any one or more of its other
obligations in the Notes which default is incapable of remedy or where the default is capable of remedy
is not remedied within 30 days after notice of such default shall have been given to the Fiscal Agent at
its specified office by any Noteholder; or
(c) Cross-Default: (A) any other present or future indebtedness of the Issuer or any of its Material
Subsidiaries for or in respect of moneys borrowed or raised becomes due and payable prior to its stated
maturity by reason of any event of default or the like (howsoever described), or (B) any such
indebtedness is not paid when due or, as the case may be, within any originally applicable grace period,
or (C) the Issuer or any of its Material Subsidiaries fails to pay when due any amount payable by it
under any present or future guarantee for, or indemnity in respect of, any moneys borrowed or raised
provided that the aggregate amount of the relevant indebtedness, guarantees and indemnities in respect
of which one or more of the events mentioned above in this paragraph (c) have occurred equals or
exceeds U.S.$25,000,000 or its equivalent (on the basis of the middle spot rate for the relevant
currency against the U.S. dollar as quoted by any leading bank on the day on which this paragraph
operates); or
(d) Enforcement Proceedings: a distress, attachment, execution or other legal process is levied, enforced
or sued out on or against any part of the property, assets or revenues of the Issuer or any of its Material
Subsidiaries and is not discharged or stayed within 60 days; or
(e) Security Enforced: any mortgage, charge, pledge, lien or other encumbrance, present or future,
created or assumed by the Issuer or any of its Material Subsidiaries becomes enforceable and any step
is taken to enforce it (including the taking of possession or the appointment of a receiver,
administrative receiver, administrator manager or other similar person) provided that any such
enforcement or appointment has not been set aside or stayed within 60 days and is not being disputed
in good faith by the Issuer; or
(f)
Insolvency: the Issuer or any of its Material Subsidiaries is (or is, or could be, deemed by law or a
court to be) insolvent or bankrupt or unable to pay its debts, stops, suspends or threatens to stop or
suspend payment of all or a material part of (or of a particular type of) its debts, proposes or makes a
general assignment or an arrangement or composition with or for the benefit of the relevant creditors in
respect of any of such debts or a moratorium is agreed or declared or comes into effect in respect of or
21
affecting all or a material part of (or of a particular type of) the debts of the Issuer or any of its Material
Subsidiaries; or
(g) Winding-up: an administrator is appointed (provided that any such appointment has not been set aside
within 30 days), an order is made for the winding-up or dissolution or administration of the Issuer or
any of its Material Subsidiaries, or an effective resolution is passed for the winding-up or dissolution or
administration of the Issuer, or the Issuer or any of its Material Subsidiaries shall apply or petition for a
winding-up or administration order in respect of itself or ceases or threatens to cease to carry on all or
substantially all of its business or operations save for the purposes of reconstruction, reorganisation or
amalgamation whilst solvent; or
(h) Authorisation and Consents: any action, condition or thing (including the obtaining or effecting of
any necessary consent, approval, authorisation, exemption, filing, licence, order, recording or
registration) at any time required to be taken, fulfilled or done in order (i) to enable the Issuer lawfully
to enter into, exercise its rights and perform and comply with its obligations under the Notes, (ii) to
ensure that those obligations are legally binding and enforceable and (iii) to make the Notes admissible
in evidence in the courts of Malaysia is not taken, fulfilled or done; or
(i)
Illegality: it is or will become unlawful for the Issuer to perform or comply with any one or more of its
obligations under any of the Notes; or
(j)
Analogous Events: any event occurs that under the laws of any relevant jurisdiction has an analogous
effect to any of the events referred to in paragraphs (e) to (g) above.
For this purpose:
“Material Subsidiary” means any Subsidiary:
(i)
whose net profits (consolidated in the case of a Subsidiary which itself has Subsidiaries) or whose total
net assets (consolidated in the case of a Subsidiary which itself has Subsidiaries) represent not less than
10 per cent. of the consolidated net profits, or, as the case may be, the consolidated total net assets of
the Issuer and its Subsidiaries taken as a whole, all as calculated respectively by reference to the latest
financial statements (consolidated or, as the case may be, unconsolidated) of the Subsidiary and the
then latest audited consolidated financial statements of the Issuer; provided that in the case of a
Subsidiary acquired after the end of the financial period to which the then latest audited consolidated
financial statements of the Issuer relate for the purpose of applying each of the foregoing tests, the
reference to the Issuer’s latest audited consolidated financial statements shall be deemed to be a
reference to such financial statements as if such Subsidiary had been shown therein by reference to its
then latest relevant financial statements, adjusted as deemed appropriate by the Auditors for the time
being after consultation with the Issuer; or
(ii) to which is transferred all or substantially all of the business, undertaking and assets of another
Subsidiary which immediately prior to such transfer is a Material Subsidiary, whereupon (a) in the case
of a transfer by a Material Subsidiary, the transferor Material Subsidiary shall immediately cease to be
a Material Subsidiary and (b) the transferee Subsidiary shall immediately become a Material
Subsidiary, provided that on or after the date on which the relevant financial statements for the
financial period current at the date of such transfer are published, whether such transferor Subsidiary or
such transferee Subsidiary is or is not a Material Subsidiary shall be determined pursuant to the
provisions of sub-paragraph (i) above.
A report by two of the directors of the Issuer that in their opinion (making such adjustments (if any) as they
shall deem appropriate) a Subsidiary is or is not or was or was not at any particular time or during any
particular period a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on
the Issuer and the Noteholders.
“Subsidiary” means any entity whose financial statements at any time are required by law or in accordance
with generally accepted accounting principles to be fully consolidated with those of the Issuer.
11
Meeting of Noteholders and Modifications
(a) Meetings of Noteholders: The Agency Agreement contains provisions for convening meetings of
Noteholders to consider any matter affecting their interests, including the sanctioning by Extraordinary
Resolution (as defined in the Agency Agreement) of a modification of any of these Conditions. Such a
meeting may be convened by Noteholders holding not less than 10 per cent. in nominal amount of the
Notes for the time being outstanding. The quorum for any meeting convened to consider an
22
Extraordinary Resolution shall be two or more persons holding or representing a clear majority in
nominal amount of the Notes for the time being outstanding, or at any adjourned meeting two or more
persons being or representing Noteholders whatever the nominal amount of the Notes held or
represented, unless the business of such meeting includes consideration of proposals, inter alia, (i) to
amend the dates of maturity or redemption of the Notes, any Instalment Date or any date for payment
of interest or Interest Amounts on the Notes, (ii) to reduce or cancel the nominal amount of, or any
Instalment Amount of, or any premium payable on redemption of, the Notes, (iii) to reduce the rate or
rates of interest in respect of the Notes or to vary the method or basis of calculating the rate or rates or
amount of interest or the basis for calculating any Interest Amount in respect of the Notes, (iv) if a
Minimum and/or a Maximum Rate of Interest, Instalment Amount or Redemption Amount is shown
hereon, to reduce any such Minimum and/or Maximum, (v) to vary any method of, or basis for,
calculating the Final Redemption Amount, the Early Redemption Amount or the Optional Redemption
Amount, including the method of calculating the Amortised Face Amount, (vi) to vary the currency or
currencies of payment or denomination of the Notes, or (vii) to modify the provisions concerning the
quorum required at any meeting of Noteholders or the majority required to pass the Extraordinary
Resolution, in which case the necessary quorum shall be two or more persons holding or representing
not less than 75 per cent. in nominal amount of the Notes for the time being outstanding or at any
adjourned meeting not less than 25 per cent. in nominal amount of the Notes for the time being
outstanding. Any Extraordinary Resolution duly passed shall be binding on Noteholders (whether or
not they were present at the meeting at which such resolution was passed) and on all Couponholders.
The Agency Agreement provides that a resolution in writing signed by or on behalf of the holders of
not less than 90 per cent. in nominal amount of the Notes outstanding shall for all purposes be as valid
and effective as an Extraordinary Resolution passed at a meeting of Noteholders duly convened and
held. Such a resolution in writing may be contained in one document or several documents in the same
form, each signed by or on behalf of one or more Noteholders.
These Conditions may be amended, modified or varied in relation to any Series of Notes by the terms of
the relevant Pricing Supplement in relation to such Series.
(b) Modification of Agency Agreement: The Issuer and the Fiscal Agent shall only permit any waiver or
authorisation of any breach or proposed breach of or any failure to comply with the Agency
Agreement, without the consent of the Noteholders, if to do so could not reasonably be expected to be
prejudicial to the interests of the Noteholders. The Issuer and the Fiscal Agent shall only permit any
modification of the Agency Agreement without the consent of the Noteholders, if (i) to do so could not
reasonably be expected to be prejudicial to the interests of the Noteholders; or (ii) such modification is
either of a formal, minor or technical nature or made to cure any ambiguity or correct a manifest or
proven error or to comply with mandatory provisions of the law. Any such modification shall be
binding on the Noteholders and any such modification shall be notified to the Noteholders in
accordance with Condition 14 as soon as practicable thereafter.
12
Replacement of Notes, Certificates, Receipts, Coupons and Talons
If a Note, Certificate, Receipt, Coupon or Talon is lost, stolen, mutilated, defaced or destroyed, it may be
replaced, subject to applicable laws, regulations and stock exchange or other relevant authority regulations,
at the specified office of the Fiscal Agent (in the case of Bearer Notes, Receipts, Coupons or Talons) and of
the Registrar (in the case of Certificates) or such other Paying Agent or Transfer Agent, as the case may be,
as may from time to time be designated by the Issuer for the purpose and notice of whose designation is
given to Noteholders, in each case on payment by the claimant of the fees and costs incurred in connection
therewith and on such terms as to evidence, security and indemnity (which may provide, inter alia, that if
the allegedly lost, stolen or destroyed Note, Certificate, Receipt, Coupon or Talon is subsequently presented
for payment or, as the case may be, for exchange for further Coupons, there shall be paid to the Issuer on
demand the amount payable by the Issuer in respect of such Notes, Certificates, Receipts, Coupons or
further Coupons) and otherwise as the Issuer may require. Mutilated or defaced Notes, Certificates,
Receipts, Coupons or Talons must be surrendered before replacements will be issued.
13
Further Issues
The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue
further notes having the same terms and conditions as the Notes (so that, for the avoidance of doubt,
references in these Conditions to “Issue Date” shall be to the first issue date of the Notes) and so that the
same shall be consolidated and form a single series with such Notes, and references in these Conditions to
“Notes” shall be construed accordingly.
23
14
Notices
Notices to the holders of Registered Notes shall be mailed to them at their respective addresses in the
Register and deemed to have been given on the fourth weekday (being a day other than a Saturday or a
Sunday or a gazetted public holiday) after the date of mailing. Notices to the holders of Bearer Notes shall
be valid if published in a daily newspaper of general circulation (which is expected to be the Wall Street
Journal Asia). If any such publication is not practicable, notice shall be validly given if published in another
leading daily English language newspaper with general circulation in Asia. Any such notice shall be deemed
to have been given on the date of such publication or, if published more than once or on different dates, on
the date of the first publication as provided above.
Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the
holders of Bearer Notes in accordance with this Condition.
So long as the Notes are represented by a Global Note or a Global Certificate and such Global Note or
Global Certificate is held (i) on behalf of Euroclear or Clearstream, Luxembourg, or any other clearing
system (except as provided in (ii) below of this paragraph), notices to the holders of Notes of that Series
may be given by delivery of the relevant notice to that clearing system for communication by it to entitled
accountholders in substitution for publication as required by these Conditions or by delivery of the relevant
notice to the holder of the Global Note or Global Certificate or (ii) on behalf of the CMU, notices to the
holders of Notes of that Series may be given by delivery of the relevant notice to the persons shown in a
CMU instrument position report issued by the CMU on the second business day preceding the date of
despatch of such notice as holding interests in the relevant Global Note or Global Certificate.
15
Currency Indemnity
Any amount received or recovered in a currency other than the currency in which payment under the
relevant Note, Coupon or Receipt is due (whether as a result of, or of the enforcement of, a judgment or
order of a court of any jurisdiction, in the insolvency, winding-up or dissolution of the Issuer or otherwise)
by any Noteholder or Couponholder in respect of any sum expressed to be due to it from the Issuer shall
only constitute a discharge to the Issuer to the extent of the amount in the currency of payment under the
relevant Note, Coupon or Receipt that the recipient is able to purchase with the amount so received or
recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make
that purchase on that date, on the first date on which it is practicable to do so). If the amount received or
recovered is less than the amount expressed to be due to the recipient under any Note, Coupon or Receipt,
the Issuer shall indemnify it against any loss sustained by it as a result. In any event, the Issuer shall
indemnify the recipient against the cost of making any such purchase. For the purposes of this Condition, it
shall be sufficient for the Noteholder or Couponholder, as the case may be, to demonstrate that it would
have suffered a loss had an actual purchase been made. These indemnities constitute a separate and
independent obligation from the Issuer’s other obligations, shall give rise to a separate and independent
cause of action, shall apply irrespective of any indulgence granted by any Noteholder or Couponholder and
shall continue in full force and effect despite any other judgment, order, claim or proof for a liquidated
amount in respect of any sum due under any Note, Coupon or Receipt or any other judgment or order.
16
Contracts (Rights of Third Parties) Act 1999
No person shall have any right to enforce any term or condition of the Notes under the Contracts (Rights of
Third Parties) Act 1999 except and to the extent (if any) that the Notes expressly provide for such Act to
apply to any of their terms
17
Governing Law and Jurisdiction
(a) Governing Law: The Notes, the Receipts, the Coupons and the Talons and any non-contractual
obligations arising out of or in connection with them are governed by, and shall be construed in
accordance with, English law.
(b) Jurisdiction: The Courts of England are to have jurisdiction to settle any disputes that may arise out of
or in connection with any Notes, Receipts, Coupons or Talons (including any dispute relating to any
non-contractual obligations arising out of or in connection with any Notes, Receipts, Coupons or
Talons) and accordingly any legal action or proceedings arising out of or in connection with any Notes,
Receipts, Coupons or Talons (including any dispute relating to any non-contractual obligations arising
out of or in connection with any Notes, Receipts, Coupons or Talons) (“Proceedings”) may be brought
in such courts. The Issuer irrevocably submits to the jurisdiction of the courts of England and waives
24
any objection to Proceedings in such courts on the ground of venue or on the ground that the
Proceedings have been brought in an inconvenient forum. This submission is made for the benefit of
each of the holders of the Notes, Receipts, Coupons and Talons and shall not affect the right of any of
them to take Proceedings in any other court of competent jurisdiction nor shall the taking of
Proceedings in one or more jurisdictions preclude the taking of Proceedings in any other jurisdiction
(whether concurrently or not).
(c) Service of Process: The Issuer irrevocably appoints Sui Lai UK Property Services of 135 Cricklewood
Lane, Childs Hill, London NW2 1HS, United Kingdom as its agent in England to receive, for it and on
its behalf, service of process in any Proceedings in England. Such service shall be deemed completed
on delivery to such process agent (whether or not, it is forwarded to and received by the Issuer). If for
any reason such process agent ceases to be able to act as such or no longer has an address in London,
the Issuer irrevocably agrees to appoint a substitute process agent and shall immediately notify
Noteholders of such appointment in accordance with Condition 14. Nothing shall affect the right to
serve process in any manner permitted by law.
25
SUMMARY OF PROVISIONS RELATING TO THE NOTES WHILE IN GLOBAL FORM
1
Initial Issue of Notes
Global Notes and Global Certificates may be delivered on or prior to the original issue date of the Tranche
to the Common Depositary (in the case of Notes other than CMU Notes) or a sub-custodian for the CMU (in
the case of CMU Notes).
Upon the initial deposit of a Global Note with the Common Depositary or a with a sub-custodian for the
CMU or registration of Registered Notes in the name of (i) any nominee for Euroclear and Clearstream,
Luxembourg and/or (ii) the HKMA as operator of the CMU and delivery of the relative Global Certificate to
the Common Depositary or sub-custodian for the CMU (as the case may be), Euroclear or Clearstream,
Luxembourg or the CMU (as the case may be) will credit each subscriber with a nominal amount of Notes
equal to the nominal amount thereof for which it has subscribed and paid.
Notes that are initially deposited with the Common Depositary may also be credited to the accounts of
subscribers with (if indicated in the relevant Pricing Supplement) other clearing systems through direct or
indirect accounts with Euroclear and Clearstream, Luxembourg held by such other clearing systems.
Conversely, Notes that are initially deposited with any other clearing system may similarly be credited to
the accounts of subscribers with Euroclear, Clearstream, Luxembourg or other clearing systems.
2
Relationship of Accountholders with Clearing Systems
Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or any other clearing
system other than CMU (“Alternative Clearing System”) as the holder of a Note represented by a Global
Note or a Global Certificate must look solely to Euroclear, Clearstream, Luxembourg or any such
Alternative Clearing System (as the case may be) for his share of each payment made by the Issuer to the
bearer of such Global Note or the holder of the underlying Registered Notes, as the case may be, and in
relation to all other rights arising under the Global Notes or Global Certificates, subject to and in accordance
with the respective rules and procedures of Euroclear, Clearstream, Luxembourg, or such Alternative
Clearing System (as the case may be). Such persons shall have no claim directly against the Issuer in respect
of payments due on the Notes for so long as the Notes are represented by such Global Note or Global
Certificate and such obligations of the Issuer will be discharged by payment to the bearer of such Global
Note or the holder of the underlying Registered Notes, as the case may be, in respect of each amount so
paid.
If a Global Note or a Global Certificate is lodged with a sub-custodian for or registered with the CMU, the
person(s) for whose account(s) interests in such Global Note or Global Certificate are credited as being held
in the CMU in accordance with the rules of the CMU as notified by the CMU to the CMU Lodging and
Paying Agent in a relevant CMU Instrument Position Report (as defined in the rules of the CMU) or any
other relevant notification by the CMU (which notification, in either case, shall be conclusive evidence of
the records of the CMU save in the case of manifest error) shall be the only person(s) entitled or, in the case
of Registered Notes, directed or deemed by the CMU as entitled to receive payments in respect of Notes
represented by such Global Note or Global Certificate and the payment obligations of the Issuer will be
discharged by payment to, or to the order of, such person(s) for whose account(s) interests in such Global
Note or Global Certificate are credited as being held in the CMU in respect of each amount so paid. Each of
the persons shown in the records of the CMU, as the holder of a particular principal amount of Notes
represented by such Global Note or Global Certificate must look solely to the CMU Lodging and Paying
Agent for his share of each payment so made by the Issuer in respect of such Global Note or Global
Certificate.
3
Exchange
(a) Temporary Global Notes
Each temporary Global Note will be exchangeable, free of charge to the holder, on or after its
Exchange Date:
(i)
if the relevant Pricing Supplement indicates that such Global Note is issued in compliance with
the C Rules or in a transaction to which TEFRA is not applicable (as to which, see “Overview of
the Programme — Selling Restrictions”), in whole, but not in part, for Definitive Notes defined
and described below; and
(ii) otherwise, in whole or in part upon certification as to non-U.S. beneficial ownership in the form
set out in the Agency Agreement for interests in a permanent Global Note or, if so provided in the
relevant Pricing Supplement, for Definitive Notes.
26
The CMU may require that any such exchange for a permanent Global Note is made in whole and not
in part and in such event, no such exchange will be effected until all relevant account holders (as set
out in a CMU Instrument Position Report (as defined in the rules of the CMU) or any other relevant
notification supplied to the CMU Lodging and Paying Agent by the CMU) have so certified.
(b) Permanent Global Notes
Each permanent Global Note will be exchangeable, free of charge to the holder, on or after its
Exchange Date in whole but not, except as provided under paragraph 3.4 below, in part for Definitive
Notes: (i) if the permanent Global Note is held on behalf of Euroclear or Clearstream, Luxembourg, the
CMU or an Alternative Clearing System and any such clearing system is closed for business for a
continuous period of 14 days (other than by reason of holidays, statutory or otherwise) or announces an
intention permanently to cease business or in fact does so; or (ii) if principal in respect of any Notes is
not paid when due, by the holder giving notice to the Fiscal Agent (in the case of Notes other than
CMU Notes) or the CMU Lodging and Paying Agent (in the case of CMU Notes) of its election for
such exchange or (iii) if the Issuer has or will become subject to adverse tax consequences which
would not be suffered were the Notes represented by a permanent Global Note in definitive form.
(c) Global Certificates
If the Pricing Supplement states that the Notes are to be represented by a Global Certificate on issue,
the following will apply in respect of transfers of Notes held in Euroclear or Clearstream, Luxembourg,
the CMU or an Alternative Clearing System. These provisions will not prevent the trading of interests
in the Notes within a clearing system whilst they are held on behalf of such clearing system, but will
limit the circumstances in which the Notes may be withdrawn from the relevant clearing system.
Transfers of the holding of Notes represented by any Global Certificate pursuant to Condition 2(b) may
only be made:
(i)
if the relevant clearing system is closed for business for a continuous period of 14 days (other than
by reason of holidays, statutory or otherwise) or announces an intention permanently to cease
business or does in fact do so; or
(ii) if principal in respect of any Notes is not paid when due; or
(iii) if the Issuer has or will become subject to adverse tax consequences which would not be suffered
were the Notes represented by a permanent Global Note in definitive form,
provided that, in the case of the first transfer of part of a holding pursuant to paragraph 3.3(i) or 3.3(ii)
above, the Registered Holder has given the Registrar not less than 30 days’ notice at its specified office
of the Registered Holder’s intention to effect such transfer.
(d) Partial Exchange of Permanent Global Notes
For so long as a permanent Global Note is held on behalf of a clearing system and the rules of that
clearing system permit, such permanent Global Note will be exchangeable in part on one or more
occasions for Definitive Notes (i) if principal in respect of any Notes is not paid when due or (ii) if so
provided in, and in accordance with, the Conditions relating to Partly Paid Notes.
(e) Delivery of Notes
On or after any Exchange Date (as defined in paragraph 3.6 below) the holder of a Global Note may
surrender such Global Note or, in the case of a partial exchange, present it for endorsement to or to the
order of the Fiscal Agent (in the case of Notes other than CMU Notes) or the CMU Lodging and
Paying Agent (in the case of CMU Notes). In exchange for any Global Note, or the part thereof to be
exchanged, the Issuer will (i) in the case of a temporary Global Note exchangeable for a permanent
Global Note, deliver, or procure the delivery of, a permanent Global Note in an aggregate nominal
amount equal to that of the whole or that part of a temporary Global Note that is being exchanged or, in
the case of a subsequent exchange, endorse, or procure the endorsement of, a permanent Global Note to
reflect such exchange or (ii) in the case of a Global Note exchangeable for Definitive Notes, deliver, or
procure the delivery of, an equal aggregate nominal amount of duly executed and authenticated
Definitive Notes. In this Offering Circular, “Definitive Notes” means, in relation to any Global Note,
the definitive Bearer Notes for which such Global Note may be exchanged (if appropriate, having
attached to them all Coupons and Receipts in respect of interest or Instalment Amounts that have not
already been paid on the Global Note and a Talon). Definitive Notes will be security printed in
accordance with any applicable legal and stock exchange requirements in or substantially in the form
27
set out in the Schedules to the Agency Agreement. On exchange in full of each permanent Global Note,
the Issuer will, if the holder so requests, procure that it is cancelled and returned to the holder together
with the relevant Definitive Notes.
In the event that a Global Note is exchanged for Definitive Notes, such Definitive Notes shall be issued
in Specified Denomination(s) only. A Noteholder who holds a principal amount of less than the
minimum Specified Denomination will not receive a Definitive Note in respect of such holding and
would need to purchase a principal amount of Notes such that it holds an amount equal to one or more
Specified Denominations.
(f)
Exchange Date
“Exchange Date” means, in relation to a temporary Global Note, the day falling after the expiry of
40 days after its issue date and, in relation to a permanent Global Note, a day falling not less than
60 days, or in the case of failure to pay principal in respect of any Notes when due 30 days, after that
on which the notice requiring exchange is given and on which banks are open for general business in
the city in which the specified office of the Fiscal Agent (in the case of Notes other than CMU Notes)
or the CMU Lodging and Paying Agent (in the case of CMU Notes) is located and, except in the cases
of exchange set out at 3.2(i) above, in the city in which the relevant clearing system is located.
4
Amendment to Conditions
The temporary Global Notes, permanent Global Notes and Global Certificates contain provisions that apply
to the Notes that they represent, some of which modify the effect of the terms and conditions of the Notes
set out in this Offering Circular. The following is a summary of certain of those provisions:
(a) Payments
No payment falling due after the Exchange Date will be made on any Global Note unless exchange for
an interest in a permanent Global Note or for Definitive Notes is improperly withheld or refused.
Payments on any temporary Global Note issued in compliance with the D Rules before the Exchange
Date will only be made against presentation of certification as to non-U.S. beneficial ownership in the
form set out in the Agency Agreement. All payments in respect of Notes represented by a Global Note
(except with respect to a Global Note held through the CMU) will be made against presentation for
endorsement and, if no further payment falls to be made in respect of the Notes, surrender of that
Global Note to or to the order of the Fiscal Agent or such other Paying Agent as shall have been
notified to the Noteholders for such purpose. A record of each payment so made will be endorsed on
each Global Note, which endorsement will be prima facie evidence that such payment has been made
in respect of the Notes. Condition 7(e)(vii) and Condition 8(d) will apply to the Definitive Notes only.
For the purpose of any payment made in respect of a Global Note, the relevant place of presentation
shall be disregarded in the definition of “business day” set out in Condition 7(h).
All payments in respect of Notes represented by a Global Certificate (other than a Global Certificate
held through the CMU) will be made to, or to the order of, the person whose name is entered on the
Register at the close of business on the Clearing System Business Day immediately prior to the date for
payment, where “Clearing System Business Day” means Monday to Friday inclusive except
25 December and 1 January.
In respect of a Global Note or Global Certificate held through the CMU, any payments of principal,
interest (if any) or any other amounts shall be made to the person(s) for whose account(s) interests in
the relevant Global Note or Global Certificate are credited (as set out in a CMU Instrument Position
Report (as defined in the rules of the CMU) or any other relevant notification supplied to the CMU
Lodging and Paying Agent by the CMU) and, save in the case of final payment, no presentation of the
relevant Global Note or Global Certificate shall be required for such purpose.
(b) Prescription
Claims against the Issuer in respect of Notes that are represented by a permanent Global Note or Global
Certificate will become void unless it is presented for payment within a period of ten years (in the case
of principal) and five years (in the case of interest) from the appropriate Relevant Date (as defined in
Condition 8).
28
(c) Meetings
The holder of a permanent Global Note or of the Notes represented by a Global Certificate shall (unless
such permanent Global Note or Global Certificate represents only one Note) be treated as being two
persons for the purposes of any quorum requirements of a meeting of Noteholders and, at any such
meeting, the holder of a permanent Global Note shall be treated as having one vote in respect of each
integral currency unit of the Specified Currency of the Notes. (All holders of Registered Notes are
entitled to one vote in respect of each integral currency unit of the Specified Currency of the Notes
comprising such Noteholder’s holding, whether or not represented by a Global Certificate.)
(d) Cancellation
Cancellation of any Note represented by a permanent Global Note or Global Certificate that is required
by the Conditions to be cancelled (other than upon its redemption) will be effected by reduction in the
nominal amount of the relevant permanent Global Note or Global Certificate.
(e) Purchase
Notes represented by a permanent Global Note may only be purchased by the Issuer or any of its
subsidiaries if they are purchased together with the rights to receive all future payments of interest and
Instalment Amounts (if any) thereon.
(f)
Issuer’s Option
Any option of the Issuer provided for in the Conditions of any Notes while such Notes are represented
by a permanent Global Note shall be exercised by the Issuer giving notice to the Noteholders within the
time limits set out in and containing the information required by the Conditions, except that the notice
shall not be required to contain the serial numbers of Notes drawn in the case of a partial exercise of an
option and accordingly no drawing of Notes shall be required. In the event that any option of the Issuer
is exercised in respect of some but not all of the Notes of any Series, the rights of accountholders with a
clearing system in respect of the Notes will be governed by the standard procedures of Euroclear,
Clearstream, Luxembourg, the CMU or the relevant Alternative Clearing System (as the case may be).
(g) Noteholders’ Options
Any option of the Noteholders provided for in the Conditions of any Notes while such Notes are
represented by a permanent Global Note may be exercised by the holder of the permanent Global Note
giving notice to the Fiscal Agent (or, in the case of Notes lodged with the CMU, the CMU Lodging and
Paying Agent) within the time limits relating to the deposit of Notes with a Paying Agent set out in the
Conditions substantially in the form of the notice available from any Paying Agent, except that the
notice shall not be required to contain the serial numbers of the Notes in respect of which the option
has been exercised, and stating the nominal amount of Notes in respect of which the option is exercised
and at the same time presenting the permanent Global Note to the Fiscal Agent (or, in the case of Notes
lodged with the CMU, the CMU Lodging and Paying Agent), or to a Paying Agent acting on behalf of
the Fiscal Agent (or the CMU Lodging and Paying Agent), for notation.
(h) Events of Default
Each Global Note provides that the holder may cause such Global Note, or a portion of it, to become
due and repayable in the circumstances described in Condition 10 by stating in the notice to the Fiscal
Agent (in the case of Notes other than CMU Notes) or the CMU Lodging and Paying Agent (in the
case of CMU Notes) the nominal amount of such Global Note that is becoming due and repayable. If
principal in respect of any Note is not paid when due, the holder of a Global Note or Registered Notes
represented by a Global Certificate may elect for direct enforcement rights against the Issuer under the
terms of a Deed of Covenant executed as a deed by the Issuer to come into effect in relation to the
whole or a part of such Global Note or one or more Registered Notes in favour of the persons entitled
to such part of such Global Note or such Registered Notes, as the case may be, as accountholders with
a clearing system. Following any such acquisition of direct rights, the Global Note or, as the case may
be, the Global Certificate and the corresponding entry in the register kept by the Registrar will become
void as to the specified portion or Registered Notes, as the case may be. However, no such election
may be made in respect of Notes represented by a Global Certificate unless the transfer of the whole or
a part of the holding of Notes represented by that Global Certificate shall have been improperly
withheld or refused.
29
(i)
Notices
So long as any Notes are represented by a Global Note or a Global Certificate and such Global Note or
Global Certificate is held on behalf of (i) Euroclear and/or Clearstream, Luxembourg or any other
Alternative Clearing System (except as provided in (ii) below), notices to the holders of Notes of that
Series may be given by delivery of the relevant notice to that clearing system for communication by it
to entitled accountholders in substitution for publication as required by the Terms and Conditions of
the Notes or by delivery of the relevant notice to the holder of the Global Note or (ii) the CMU, notices
to the holders of Notes of that Series may be given by delivery of the relevant notice to the persons
shown in a CMU Instrument Position Report (as defined in the rules of the CMU) issued by the CMU
on the second business day preceding the date of despatch of such notice as holding interests in the
relevant Global Note or Global Certificate.
5
Partly Paid Notes
The provisions relating to Partly Paid Notes are not set out in this Offering Circular, but will be contained in
the relevant Pricing Supplement and thereby in the Global Notes. While any instalments of the subscription
moneys due from the holder of Partly Paid Notes are overdue, no interest in a Global Note representing such
Partly Paid Notes may be exchanged for an interest in a permanent Global Note or for Definitive Notes (as
the case may be). If any Noteholder fails to pay any instalment due on any Partly Paid Notes within the time
specified, the Issuer may forfeit such Partly Paid Notes and shall have no further obligation to their holder in
respect of them.
30
USE OF PROCEEDS
The net proceeds from the issue of each Tranche of Notes will be applied by the Issuer for its general working
capital purposes, including but not limited to, the provision of advances of such proceeds or part thereof by the
Issuer to any of the subsidiaries of AMMB Holdings Berhad and repayment of borrowings. If, in respect of any
particular issue, there is a particular identified use of proceeds, this will be stated in the applicable Pricing
Supplement.
31
SUMMARY OF SELECTED FINANCIAL INFORMATION
The following tables set out the Group’s and the Issuer’s summary of selected financial information and the
Group’s and the Issuer’s operating data, in each case, for the periods and as at the dates indicated. A prospective
investor should read the following summary of selected financial information in conjunction with the Group’s
and the Issuer’s historical financial statements and their related notes included elsewhere in this Offering Circular
(see “Index to Financial Statements”). The Group’s and the Issuer’s financial statements are reported in Ringgit
Malaysia and presented in accordance with the Malaysian Companies Act, 1965 and Malaysian Accounting
Standards Board (“MASB”) Approved Accounting Standards in Malaysia for Entities Other Than Private
Entities (collectively, known as Generally Accepted Accounting Principles in Malaysia or “Malaysian GAAP”).
On 19 November 2011, the MASB issued a new MASB approved accounting framework, the Malaysian
Financial Reporting Standards (“MFRS”) Framework. The MFRS Framework was introduced by the MASB in
order to fully converge Malaysia’s existing Financial Reporting Standards (“FRS”) framework with the
International Financial Reporting Standards (“IFRS”) framework established by the International Accounting
Standards Board (“IASB”). The MFRS Framework is to be applied by all entities other than private entities for
annual periods beginning on or after 1 January 2012 and requires comparative information to be restated as if the
requirements of MFRSs that were effective for annual periods beginning on or after 1 January 2012 have always
been applied.
The Group’s and the Issuer’s financial statements for the year ended 31 March 2013 have been prepared using
the MFRS Framework. To comply with MFRS 1 First-Time Adoption of Malaysian Financial Reporting
Standards, an entity’s first MFRS financial statements shall include at least three statements of financial position,
two statements of comprehensive income, two separate income statements (if presented), two statements of cash
flows and two statements of changes in equity and related notes, including comparative information. In preparing
its opening MFRS statements of financial position as at 1 April 2011, the Group and the Issuer have adjusted the
amounts previously reported in their financial statements prepared in accordance with FRS to reflect the financial
effects from the adoption of MFRS. All of the adjustments required on transition were made, retrospectively,
against opening retained profits. The restated comparative financial statements as at and for the financial year
ended 31 March 2012 have been audited and also include reclassifications between components in the statements
of financial position that do not have any financial impact on the income statement. Information relating to the
adjustments and other matters relating to the first time adoption of MFRS 1 can be found in note 54 of the
Group’s audited consolidated financial statements for the year ended 31 March 2013 contained elsewhere in this
Offering Circular.
The summary of selected financial information as at 1 April 2011, 31 March 2012 and 31 March 2013 and for the
two years ended 31 March 2012 and 2013, set out below, has been derived from the Group’s audited
consolidated financial statements and the Issuer’s audited unconsolidated financial statements included elsewhere
in this Offering Circular, and is qualified in its entirety by reference to those consolidated and unconsolidated
financial statements and the notes thereto. Investors should note that the Group’s and the Issuer’s audited income
statements and statements of cash flows for the year ended 31 March 2011 have not been presented below as
such financial statements do not reflect the impact of adoption of MFRS and are therefore not directly
comparable. Information regarding the Group’s and the Issuer’s audited income statements and statements of
cash flows for the year ended 31 March 2011 can be found in the Group’s and the Issuer’s consolidated and
unconsolidated financial statements (and notes thereto) included elsewhere in this Offering Circular.
Solely for the convenience of the reader, the Ringgit amounts in the tables below have been translated into
U.S. dollars using the noon buying rate (New York time) on 29 March 2013 of U.S.$1.00 = RM3.0930 for the
amounts as at and for the financial year ended 31 March 2013.
32
The Issuer
Year ended 31 March
2012
2013
2013
(RM million) (RM million) (U.S.$ million)
Unconsolidated Income Statements
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,237.0
(2,253.9)
4,297.9
(2,285.8)
1,389.6
(739.0)
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,983.1
889.4
2,012.1
639.1
650.6
206.6
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,872.5
(1,001.8)
2,651.2
(1,047.0)
857.2
(338.5)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowances for impairment on loans and advances . . . . . . . . . . . . . . . .
Writeback of/(Provision for) commitments and contingencies . . . . . . . .
Impairment (loss)/write-back on:
Doubtful sundry receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries of other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreclosed properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,870.7
(229.1)
(58.8)
1,604.2
(34.3)
68.4
518.7
(11.1)
22.1
1.7
1.7
1.1
(28.3)
—
(1.6)
6.3
(3.1)
(9.1)
1.3
(0.5)
2.0
(1.0)
(2.9)
0.4
Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,559.0
(363.1)
1,632.1
(372.7)
527.7
(120.5)
Profit for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,195.9
1,259.4
407.2
Earnings per share (sen) — Basic/Diluted . . . . . . . . . . . . . . . . . . . . . . . .
160.35
153.52
49.63
1,195.9
1,259.4
407.2
Unconsolidated Statements of Comprehensive Income
Profit for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income/(loss)
Exchange differences on translation of foreign operations . . . . . . . . . . .
Net movement on cash flow hedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss)/gain on financial investments available-for-sale . . . . . . . . . .
Income tax relating to the components of other comprehensive
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income for the financial year, net of tax . . . . .
33
0.3
(60.2)
12.3
(7.6)
(1.2)
(42.5)
(2.5)
(0.4)
(13.7)
11.5
11.1
3.6
(36.1)
(40.2)
(13.0)
1,159.8
1,219.2
394.2
The Group
Year ended 31 March
2012
2013
2013
(RM million) (RM million) (U.S.$ million)
Consolidated Income Statements
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,245.2
(2,252.9)
4,305.6
(2,285.2)
1,392.0
(738.8)
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from Islamic banking business . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share in results of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,992.3
0.2
763.0
0.4
2,020.4
—
621.2
0.2
653.2
—
200.8
0.1
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,755.9
(1,002.6)
2,641.8
(1,047.5)
854.1
(338.7)
Operating profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowances for impairment on loans and advances . . . . . . . . . . . . . . . .
Writeback of/(Provision for) commitments and contingencies . . . . . . . .
Impairment (loss)/write-back on:
Doubtful sundry receivables, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries of other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreclosed properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,753.3
(223.5)
(58.8)
1,594.3
(32.4)
68.4
515.4
(10.5)
22.1
1.8
1.7
2.1
(28.3)
—
(1.6)
6.3
(0.8)
(9.1)
1.3
(0.5)
2.0
(0.2)
(2.9)
0.4
Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,448.3
(360.4)
1,626.4
(375.2)
525.8
(121.3)
Profit for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,087.9
1,251.2
404.5
Earnings per share (sen)- Basic/Diluted . . . . . . . . . . . . . . . . . . . . . . . . .
145.87
152.52
49.31
1,087.9
1,251.2
404.5
Consolidated Statements of Comprehensive Income
Profit for the financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income/(loss)
Exchange differences on translation of foreign operations . . . . . . . . . . .
Net movement on cash flow hedge . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (loss)/gain on financial investments available-for-sale . . . . . . . . . .
Income tax relating to the components of other comprehensive
income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive loss, net of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income for the financial year, net of tax . . . . .
34
2.8
(60.2)
4.2
(7.4)
(1.2)
(44.7)
(2.4)
(0.4)
(14.5)
13.5
11.6
3.8
(39.7)
(41.7)
(13.5)
1,048.2
1,209.5
391.0
The Issuer
As at 1 April
2011
(RM million)
2012
(RM million)
As at 31 March
2013
2013
(RM million) (U.S.$ million)
Unconsolidated Statements of Financial Position
Assets
Cash and short-term funds . . . . . . . . . . . . . . . . . . . . . . . . .
Securities purchased under resale agreements . . . . . . . . . .
Deposits and placements with banks and other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial assets . . . . . . . . . . . . . . . . . . . . . . . . .
Financial assets held-for-trading . . . . . . . . . . . . . . . . . . . .
Financial investments available-for-sale . . . . . . . . . . . . . .
Financial investments held-to-maturity . . . . . . . . . . . . . . .
Loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statutory deposit with Bank Negara Malaysia . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in associates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,375.9
289.7
5,133.0
384.6
7,255.7
—
2,345.8
—
3,702.2
396.7
4,167.0
6,557.7
159.6
55,234.9
143.8
417.4
65.8
0.1
807.6
131.1
137.4
1,091.6
380.0
8,910.9
4,632.0
113.5
56,252.9
2,011.3
158.4
65.8
0.1
1,073.1
117.9
170.2
1,913.4
383.2
4,100.6
3,507.0
4,033.2
59,032.7
2,122.4
120.5
65.8
0.1
1,169.4
125.9
234.7
618.6
123.9
1,325.8
1,133.8
1,304.0
19,085.9
686.2
39.0
21.3
—
378.1
40.7
75.9
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
80,586.9
80,495.3
84,064.6
27,179.0
Liabilities and Equity
Deposits and placements of banks and other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities sold under repurchase agreements . . . . . . . . . .
Recourse obligation on loans sold to Cagamas Berhad . . .
Derivative financial liabilities . . . . . . . . . . . . . . . . . . . . . .
Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . .
Term funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills and acceptances payable . . . . . . . . . . . . . . . . . . . . . .
Debt capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,792.6
30.5
1,018.0
432.9
59,036.1
3,988.5
988.4
3,367.9
2,072.1
4,528.2
41.2
1,176.0
441.7
58,496.3
4,159.8
353.5
3,241.6
2,138.7
2,338.4
—
1,264.3
422.6
62,120.3
4,075.2
1,242.0
3,226.5
3,118.8
756.0
—
408.8
136.6
20,084.2
1,317.6
401.5
1,043.2
1,008.3
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75,727.0
74,577.0
77,808.1
25,156.2
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
670.4
4,189.5
820.4
5,097.9
820.4
5,436.1
265.2
1,757.6
Equity attributable to equity holder of the Bank . . . . .
4,859.9
5,918.3
6,256.5
2,022.8
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . .
80,586.9
80,495.3
84,064.6
27,179.0
Commitments and contingencies . . . . . . . . . . . . . . . . . .
92,220.9
93,234.0
94,261.6
30,475.8
35
The Group
As at 1 April
2011
(RM million)
2012
(RM million)
As at 31 March
2013
2013
(RM million) (U.S.$ million)
Consolidated Statements of Financial Position
Assets
Cash and short-term funds . . . . . . . . . . . . . . . . . . . . . . . . .
Securities purchased under resale agreements . . . . . . . . . .
Deposits and placements with banks and other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial assets . . . . . . . . . . . . . . . . . . . . . . . . .
Financial assets held-for-trading . . . . . . . . . . . . . . . . . . . .
Financial investments available-for-sale . . . . . . . . . . . . . .
Financial investments held-to-maturity . . . . . . . . . . . . . . .
Loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statutory deposit with Bank Negara Malaysia . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment in associates . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,741.0
289.7
5,453.6
384.6
7,324.7
—
2,368.1
—
3,792.9
396.7
4,167.0
6,332.0
165.3
55,515.0
143.8
416.4
1.2
812.2
155.4
137.5
1,122.2
380.0
8,910.9
4,440.7
116.1
56,491.3
2,011.3
159.6
1.6
1,078.8
141.7
170.2
1,913.4
383.2
4,100.6
3,348.6
4,033.5
59,231.8
2,122.4
120.8
0.9
1,174.7
149.2
234.7
618.6
123.9
1,325.8
1,082.6
1,304.1
19,150.3
686.2
39.1
0.3
379.8
48.2
75.9
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81,066.1
80,862.6
84,138.5
27,202.9
Liabilities and Equity
Deposits and placements of banks and other financial
institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities sold under repurchase agreements . . . . . . . . . .
Recourse obligation on loans sold to Cagamas Berhad . . .
Derivative financial liabilities . . . . . . . . . . . . . . . . . . . . . .
Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . .
Term funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills and acceptances payable . . . . . . . . . . . . . . . . . . . . . .
Debt capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,467.9
30.5
1,018.0
432.9
59,664.6
3,988.5
988.4
3,367.9
2,082.7
3,968.3
41.2
1,176.1
441.7
59,359.8
4,159.8
353.5
3,241.6
2,149.2
2,330.5
—
1,264.3
422.6
62,147.8
4,075.2
1,242.0
3,226.5
3,129.6
753.5
—
408.8
136.6
20,093.0
1,317.6
401.5
1,043.2
1,011.8
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
76,041.4
74,891.2
77,838.5
25,166.0
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
670.4
4,354.3
820.4
5,151.0
820.4
5,479.6
265.2
1,771.7
Equity attributable to equity holder of the Bank . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . .
5,024.7
—
5,971.4
—
6,300.0
—
2,036.9
—
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,024.7
5,971.4
6,300.0
2,036.9
Total liabilities and equity . . . . . . . . . . . . . . . . . . . . . . . .
81,066.1
80,862.6
84,138.5
27,202.9
Commitments and contingencies . . . . . . . . . . . . . . . . . .
92,223.3
93,217.7
94,244.1
30,470.1
36
The Issuer
Year ended 31 March
2012
2013
2013
(RM million) (RM million) (U.S.$ million)
Statements of Cash Flows
Cash Flows from operating activities
Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments for:
Accretion of discount less amortisation of premium . . . . . . . . . . . . . . . .
Amortisation of fair value on terminated hedge . . . . . . . . . . . . . . . . . . .
Amortisation of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . .
Gross dividend income from associates . . . . . . . . . . . . . . . . . . . . . . . . .
Gross dividend income from financial assets held-for-trading . . . . . . . .
Gross dividend income from financial investments
available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross dividend income from subsidiary . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss on foreclosed properties . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss/(writeback) on financial investments . . . . . . . . . . . . . .
Impairment writeback of property and equipment . . . . . . . . . . . . . . . . .
Impairment writeback of sundry receivables . . . . . . . . . . . . . . . . . . . . . .
Intangible assets written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loan and advances allowances, net of writeback . . . . . . . . . . . . . . . . . .
Loss/(Gain) on disposal of property and equipment . . . . . . . . . . . . . . . .
Net gain on redemption of financial investments held-to-maturity . . . . .
Net (gain)/loss on revaluation of derivatives . . . . . . . . . . . . . . . . . . . . . .
Net (gain)/loss on revaluation of financial assets held-for-trading . . . . .
Net gain on sale of financial assets held-for-trading . . . . . . . . . . . . . . . .
Net gain on sale of financial investments available-for-sale . . . . . . . . . .
Provision for/(writeback of) commitments and contingencies . . . . . . . .
Scheme shares and options granted under Executives’ Share
Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealised (gain)/loss on foreign exchange contracts . . . . . . . . . . . . . . .
1,559.0
1,632.1
527.7
(108.4)
(10.3)
38.2
1.5
42.7
—
(13.8)
(107.1)
(23.3)
46.0
1.6
41.3
(1.2)
(9.2)
(34.6)
(7.5)
14.9
0.5
13.3
(0.4)
(3.0)
(12.3)
(130.4)
28.3
(1.1)
—
(3.6)
1.0
682.3
(0.5)
(13.7)
19.7
14.8
(170.3)
(97.9)
58.8
(10.5)
(17.4)
9.1
3.1
(1.3)
(4.7)
—
521.3
1.6
(40.8)
(38.1)
(3.8)
(29.1)
(33.9)
(68.4)
(3.4)
(5.6)
2.9
1.0
(0.4)
(1.5)
—
168.5
0.5
(13.2)
(12.3)
(1.2)
(9.4)
(11.0)
(22.1)
32.4
28.1
10.5
9.1
623.3
26.8
(9.9)
Operating profit before working capital changes . . . . . . . . . . . . . . . . . .
1,900.9
1,927.8
(Increase)/Decrease in operating assets:
Securities purchased under resale agreements . . . . . . . . . . . . . . . . . . . . .
Deposits and placements with banks and other financial institutions . . .
Financial assets held-for-trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statutory deposit with Bank Negara Malaysia . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(94.8)
2,610.6
(4,539.9)
(1,700.3)
(1,867.5)
(318.0)
384.6
(821.9)
4,889.1
(3,301.1)
(111.1)
(142.3)
124.3
(265.7)
1,580.7
(1,067.3)
(35.9)
(46.0)
Increase/(Decrease) in operating liabilities:
Deposits and placements of banks and other financial institutions . . . . .
Securities sold under repurchase agreements . . . . . . . . . . . . . . . . . . . . .
Recourse obligation on loans sold to Cagamas Berhad . . . . . . . . . . . . . .
Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills and acceptances payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(264.4)
10.7
158.6
(539.8)
158.4
(634.9)
191.6
(2,189.8)
(41.2)
89.8
3,624.0
(93.9)
888.5
943.6
(708.0)
(13.3)
29.0
1,171.7
(30.4)
287.2
305.1
Cash generated from/(used in) from operations . . . . . . . . . . . . . . . . . . .
Net taxation paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,928.8)
(272.4)
6,046.1
(224.3)
1,954.7
(72.5)
Net cash generated from/(used in) from operating activities . . . . . . . . . .
(5,201.2)
5,821.8
1,882.2
37
Year ended 31 March
2012
2013
2013
(RM million) (RM million) (U.S.$ million)
Cash Flows from investing activities
Net dividend received from financial assets held-for-trading . . . . . . . . .
Net dividend received from financial investments available-for-sale . . .
Net dividend received from subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .
Net dividend received from associate . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (purchase)/redemption of financial investments held-to-maturity . .
Net sale of financial investments available-for-sale . . . . . . . . . . . . . . . .
Proceeds from disposal of property and equipment . . . . . . . . . . . . . . . .
Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.7
12.3
125.6
—
55.8
2,100.8
0.7
(71.9)
(29.6)
8.4
10.5
16.9
0.9
(3,873.2)
1,168.8
1.9
(110.6)
(51.9)
2.7
3.4
5.5
0.3
(1,252.2)
377.9
0.6
(35.8)
(16.8)
Net cash generated from/(used in) investing activities . . . . . . . . . . . . . .
2,206.4
(2,828.3)
(914.4)
(870.8)
(281.5)
Cash Flows from financing activities
Dividends paid, representing net cash used in financing activities . . . . .
(248.0)
Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of financial year . . . . . . . . . . . .
(3,242.8)
8,375.8
2,122.7
5,133.0
686.3
1,659.5
Cash and cash equivalents at end of financial year . . . . . . . . . . . . . . . . .
5,133.0
7,255.7
2,345.8
38
The Group
Year ended 31 March
2012
2013
2013
(RM million) (RM million) (U.S.$ million)
Statements of Cash Flows
Cash Flows from operating activities
Profit before taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments for:
Accretion of discount less amortisation of premium . . . . . . . . . . . . . . . .
Amortisation of fair value on terminated hedge . . . . . . . . . . . . . . . . . . .
Amortisation of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . .
Gross dividend income from financial assets held-for-trading . . . . . . . .
Gross dividend income from financial investments
available-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss on foreclosed properties . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss/(writeback) on financial investments . . . . . . . . . . . . . .
Impairment writeback of property and equipment . . . . . . . . . . . . . . . . .
Impairment writeback of sundry receivables . . . . . . . . . . . . . . . . . . . . . .
Intangible assets written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loan and advances allowances, net of writeback . . . . . . . . . . . . . . . . . .
Loss/(Gain) on disposal of property and equipment . . . . . . . . . . . . . . . .
Net gain on redemption of financial investments held-to-maturity . . . . .
Net loss/(gain) on revaluation of derivatives . . . . . . . . . . . . . . . . . . . . . .
Net loss/(gain) on revaluation of financial assets held-for-trading . . . . .
Net gain on sale of financial assets held-for-trading . . . . . . . . . . . . . . . .
Net gain on sale of financial investments available-for-sale . . . . . . . . . .
Provision for/(writeback of) commitments and contingencies . . . . . . . .
Scheme shares and options granted under Executives’ Share
Scheme . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share in results of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealised (gain)/loss on foreign exchange contracts . . . . . . . . . . . . . . .
1,448.3
1,626.4
525.8
(108.7)
(10.3)
38.2
1.5
43.2
(13.8)
(107.2)
(23.3)
46.0
1.6
41.8
(9.2)
(34.7)
(7.5)
14.9
0.5
13.5
(3.0)
(12.3)
28.3
(2.1)
—
(3.6)
1.0
682.8
(0.6)
(13.7)
19.7
14.8
(170.3)
(97.9)
58.8
(10.5)
9.1
0.8
(1.3)
(4.7)
—
521.8
1.5
(40.8)
(38.1)
(3.8)
(29.1)
(33.9)
(68.4)
(3.4)
2.9
0.3
(0.4)
(1.5)
—
168.7
0.5
(13.2)
(12.3)
(1.2)
(9.4)
(11.0)
(22.1)
26.8
(0.4)
(9.9)
32.5
(0.1)
28.1
10.5
—
9.1
Operating profit before working capital changes . . . . . . . . . . . . . . . . . .
1,919.8
1,939.2
(Increase)/Decrease in operating assets:
Securities purchased under resale agreements . . . . . . . . . . . . . . . . . . . . .
Deposits and placements with banks and other financial institutions . . .
Financial assets held-for-trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statutory deposit with Bank Negara Malaysia . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(94.8)
2,670.7
(4,539.9)
(1,659.0)
(1,867.5)
(319.0)
384.6
(791.2)
4,889.1
(3,262.2)
(111.1)
(142.4)
124.3
(255.8)
1,580.7
(1,054.7)
(35.9)
(46.0)
Increase/(Decrease) in operating liabilities:
Deposits and placements of banks and other financial institutions . . . . .
Securities sold under repurchase agreements . . . . . . . . . . . . . . . . . . . . .
Recourse obligation on loans sold to Cagamas Berhad . . . . . . . . . . . . . .
Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills and acceptances payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(499.6)
10.7
158.6
(304.7)
158.4
(634.9)
193.3
(1,637.8)
(41.2)
89.8
2,787.9
(93.9)
888.5
944.4
(529.5)
(13.3)
29.0
901.4
(30.4)
287.2
305.3
Cash generated from/(used in) operations . . . . . . . . . . . . . . . . . . . . . . . .
Net taxation paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(4,807.9)
(274.1)
5,843.7
(226.2)
1,889.3
(73.1)
Net cash generated from/(used in) from operating activities . . . . . . . . . .
(5,082.0)
5,617.5
1,816.2
39
627.0
Year ended 31 March
2012
2013
2013
(RM million) (RM million) (U.S.$ million)
Cash Flows from investing activities
Net dividend received from financial assets held-for-trading . . . . . . . . .
Net dividend received from financial investments available-for-sale . . .
Net dividend received from associate . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (purchase)/redemption of financial investments held-to-maturity . .
Net sale of financial investments available-for-sale . . . . . . . . . . . . . . . .
Proceeds from disposal of property and equipment . . . . . . . . . . . . . . . .
Purchase of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of property and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.7
12.3
—
60.2
2,058.3
0.7
(72.0)
(29.6)
8.4
10.5
0.9
(3,870.2)
1,135.4
1.9
(110.6)
(51.9)
2.7
3.4
0.3
(1,251.3)
367.1
0.6
(35.8)
(16.8)
Net cash generated from/(used in) investing activities . . . . . . . . . . . . . .
2,042.6
(2,875.6)
(929.8)
(870.8)
(281.5)
Cash Flows from financing activities
Dividends paid, representing net cash used in financing activities . . . . .
(248.0)
Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of financial year . . . . . . . . . . . .
(3,287.4)
8,741.0
1,871.1
5,453.6
604.9
1,763.2
Cash and cash equivalents at end of financial year . . . . . . . . . . . . . . . . .
5,453.6
7,324.7
2,368.1
40
Financial ratios of the Issuer
As at or for the Year Ended
31 March
2012
2013
(%)
(%)
Net Interest Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost to Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Impaired Loans/Gross Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loan Loss Coverage (excluding collateral) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and Advances/ Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Core Capital Ratio (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-Weighted Capital Ratio (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . .
Common Equity Tier 1 (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Tier 1 Capital Ratio (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Capital Ratio (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.6
1.5
22.2
34.9
2.9
102.2
96.2
10.0
14.2
NA
NA
NA
2.5
1.5
20.7
39.5
2.3
116.3
95.0
NA
NA
8.0
10.3
13.7
The Financial Ratios used are defined as:
(a) “Net Interest Margin” means net interest income, as a percentage of the average of beginning and year-end
interest-earning assets (comprising cash and short-term funds, securities purchased under resale agreements,
deposits and placements with banks and other financial institutions, financial assets held-for-trading,
financial investments available-for-sale, financial investments held-to-maturity and loans and advances).
(b) “Return on Assets” means profit after taxation as a percentage of the average of beginning and year-end
total assets.
(c) “Return on Equity” means profit after taxation as a percentage of the average of beginning and year-end
shareholder’s funds.
(d) “Cost to Income” means overhead expenses as a percentage of total Net Income (including net interest
income and other operating income).
(e) “Gross Impaired Loans/Gross Loans” means gross impaired loans and advances as a percentage of gross
loans and advances.
(f) “Loan Loss Coverage (excluding collateral)” means total loan loss allowances as a percentage of gross
impaired loans and advances.
(g) “Loans and Advances/Deposits from customers” means net loans and advances as a percentage of
deposits from customers.
(h) “Core Capital Ratio (after proposed dividends)” means the ratio of Tier 1 capital (net of proposed
dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and Funding”.
(i)
“Risk Weighted Capital Ratio (after proposed dividends)” means the ratio of total capital base (net of
proposed dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and
Funding”.
(j)
“Common Equity Tier 1 (after proposed dividends)” means the ratio of common equity Tier 1 capital
(net of proposed dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and
Funding”.
(k) “Tier 1 Capital ratio (after proposed dividends)” means the ratio of Tier 1 capital (net of proposed
dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and Funding”.
(l)
“Total Capital ratio (after proposed dividends)” means the ratio of total capital (net of proposed
dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and Funding”.
41
Financial ratios of the Group
As at or for the Year Ended
31 March
2012
2013
(%)
(%)
Net Interest Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost to Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross Impaired Loans/Gross Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loan Loss Coverage (excluding collateral) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and Advances/ Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Core Capital Ratio (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-Weighted Capital Ratio (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . .
Common Equity Tier 1 (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Tier 1 Capital Ratio (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Capital Ratio (after proposed dividends) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.6
1.3
19.8
36.4
2.9
102.1
95.2
9.9
14.1
NA
NA
NA
2.6
1.5
20.4
39.7
2.3
116.2
95.3
NA
NA
8.1
10.4
13.7
The Financial Ratios used are defined as:
(a) “Net Interest Margin” means net interest income, including net income from Islamic Banking business, as
a percentage of the average of beginning and year-end interest-earning assets (comprising cash and shortterm funds, securities purchased under resale agreements, deposits and placements with banks and other
financial institutions, financial assets held-for-trading, financial investments available-for-sale, financial
investments held-to-maturity and loans and advances).
(b) “Return on Assets” means profit after taxation as a percentage of the average of beginning and year-end
total assets.
(c) “Return on Equity” means profit after taxation as a percentage of the average of beginning and year-end
shareholder’s funds.
(d) “Cost to Income” means overhead expenses as a percentage of total Net Income (including net interest
income, net income from Islamic Banking business and other operating income).
(e) “Gross Impaired Loans/Gross Loans” means gross impaired loans and advances as a percentage of gross
loans and advances.
(f) “Loan Loss Coverage (excluding collateral)” means total loan loss allowances as a percentage of gross
impaired loans and advances.
(g) “Loans and Advances/Deposits from customers” means net loans and advances as a percentage of
deposits from customers.
(h) “Core Capital Ratio (after proposed dividends)” means the ratio of Tier 1 capital (net of proposed
dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and Funding”.
(i)
“Risk Weighted Capital Ratio (after proposed dividends)” means the ratio of total capital base (net of
proposed dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and
Funding”.
(j)
“Common Equity Tier 1 (after proposed dividends)” means the ratio of common equity Tier 1 capital
(net of proposed dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and
Funding”.
(k) “Tier 1 Capital ratio (after proposed dividends)” means the ratio of Tier 1 capital (net of proposed
dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and Funding”.
(l)
“Total Capital ratio (after proposed dividends)” means the ratio of total capital (net of proposed
dividend) to total risk-weighted assets. For more information, see “Capital Adequacy and Funding”.
42
CAPITALISATION AND INDEBTEDNESS
The following tables set forth the capitalisation and indebtedness of the Group and the Bank as at 31 March
2013. This table is derived from, and should be read in conjunction with, the audited consolidated financial
statements of the Group as at 31 March 2013. See “Index to Financial Statements”.
As at 31 March 2013(1)
Group
(RM million)
(U.S.$ million)(2)
Liabilities
Deposits and placements of banks and other financial institutions . . . . . . . . . . . . . .
Recourse obligation on loans sold to Cagamas Berhad . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills and acceptances payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,330.5
1,264.3
422.6
62,147.8
4,075.2
1,242.0
3,226.5
3,129.6
753.5
408.8
136.6
20,093.0
1,317.6
401.5
1,043.2
1,011.8
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77,838.5
25,166.0
Equity
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
820.4
5,479.6
265.2
1,771.7
Equity attributable to equity holder of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
6,300.0
2,036.9
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,300.0
2,036.9
Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84,138.5
27,202.9
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94,244.1
30,470.1
Notes:
(1) There has been no material change in the capitalisation, indebtedness or contingent liabilities of the Group since 31 March 2013.
(2) The Malaysian Ringgit amounts relating to 31 March 2013 have been translated into U.S. dollars based on the prevailing exchange rate of
RM3.0930 to U.S.$1, being the noon buying rate (New York time) on 29 March 2013.
As at 31 March 2013(1)
(RM million) (U.S.$ million)(2)
Bank
Liabilities
Deposits and placements of banks and other financial institutions . . . . . . . . . . . . . .
Recourse obligation on loans sold to Cagamas Berhad . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits from customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills and acceptances payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,338.4
1,264.3
422.6
62,120.3
4,075.2
1,242.0
3,226.5
3,118.8
756.0
408.8
136.6
20,084.2
1,317.6
401.5
1,043.2
1,008.3
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
77,808.1
25,156.2
Equity
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
820.4
5,436.1
265.2
1,757.6
Equity attributable to equity holder of the Bank . . . . . . . . . . . . . . . . . . . . . . . . . .
6,256.5
2,022.8
Total Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6,256.5
2,022.8
Total Liabilities and Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
84,064.6
27,179.0
Commitments and contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94,261.6
30,475.8
Notes:
(1) There has been no material change in the capitalisation, indebtedness or contingent liabilities of the Bank since 31 March 2013.
(2) The Malaysian Ringgit amounts relating to 31 March 2013 have been translated into U.S. dollars based on the prevailing exchange rate of
RM3.0930 to U.S.$1, being the noon buying rate (New York time) on 29 March 2013.
43
INVESTMENT CONSIDERATIONS
The Issuer believes that the following considerations may affect its ability to fulfil its obligations under the Notes
issued under the Programme. All of these considerations are contingencies which may or may not occur and the
Issuer is not in a position to express a view on the likelihood of any such contingency occurring.
In addition, considerations which are material for the purpose of assessing the market risks associated with Notes
issued under the Programme are also described below.
The Issuer believes that the considerations described below represent the principal risks inherent in investing in
Notes issued under the Programme, but the inability of the Issuer to pay interest, principal or other amounts on or
in connection with any Notes may occur for other reasons which may not be considered significant risks by the
Issuer based on information currently available to it or which it may not currently be able to anticipate.
Prospective investors should also read the detailed information set out elsewhere in this Offering Circular and
reach their own views prior to making any investment decision. Prior to making any decision to invest in the
Notes, prospective investors are also advised to seek professional advice and undertake their own investigations
on the Issuer, and any other parties or matters connected with the Notes as they may consider necessary.
Considerations relating to the Group
A concentration in auto financing loans may adversely affect the Group’s loan portfolio and its business,
financial condition, results of operations or prospects
Auto financing loans have historically accounted for a significant portion of the Group’s loan portfolio,
amounting to approximately RM15.7 billion (U.S.$5.1 billion) (or 25.8%) of the Group’s gross loan portfolio as
at 31 March 2013. Any change in interest rates brought about by factors including domestic economic growth,
volatility of interest rates or the high level of competition within the auto financing industry may cause the
interest rates which the Group can charge, and the Group’s net margin, on such loans to decline in the future.
Furthermore, the future growth of the Group’s auto financing business depends on a number of factors, including
continued growth in the Malaysian economy supporting growth in automobile sales. There can be no assurance
that the Group’s auto financing loan portfolio, or its income from such loans, will continue to grow. In addition,
because of the concentration of such loans, the Group’s non-performing loan position is more exposed than it
otherwise would be due to the inability of its customers to service their auto loans, and the occurrence of any of
the economic risks discussed in this section may require the Group to make additional loan loss provisions.
Interest rate risks arising in connection with the Group’s loan portfolio, holdings of securities and its
interbank deposits and placements could adversely impact the Group
The Bank’s exposure to interest rates arises mainly from its loan portfolio, holdings of securities, its funding
profile and its interbank deposit/placement position. When interest rates rise, the Group’s net interest margin
generally improves, since a significant portion of the Group’s loan portfolio consists of variable-rate loans, while
its liabilities include fixed-rate short term customer deposits. Conversely, when interest rates decline, the
opposite generally occurs. The Group’s fixed-rate auto finance loan portfolio is principally financed by deposits
with maturities of, typically, less than one year that generally move in tandem with short-term interest rates. As
at 31 March 2013, the Group had RM14.2 billion of fixed-rate auto finance loans, which represented 23.3% of its
total gross loans, advances and financing. To mitigate the risk of mismatch of interest rates on fixed rate auto
finance loans, the Group also provides, among other measures, floating rate auto finance loans. As at 31 March
2013, the Group had RM1.5 billion of floating rate auto finance loans, which represented 2.5% of its total gross
loans, advances and financing. As a hedge against these interest rate risks, the Group has also entered into
interest rate swaps, periodically sold portions of its portfolio of housing loans and auto finance loans to Cagamas
Berhad (the National Mortgage Corporation), and undertaken asset securitisations, whereby the loans are sold on
a non-recourse basis to a special purpose vehicle. However, the actual effect on earnings due to a change in
interest rates depends on the direction, degree and timing of such change in interest rates, the behaviour and
contractual repricing dates of the Group’s funding operations, assets and liabilities and its ability to respond to
changes in interest rates. Although the Group believes that it has adopted sound interest rate risk management
strategies, there is no assurance that such strategies will remain effective or adequate in the future.
The Group may experience liquidity problems
The funding requirements of Malaysian banks are primarily met through short-term funding, namely term
deposits from customers and from other financial institutions. The Group’s experience is that a substantial
portion of its customers’ term deposits are rolled over upon maturity. However, no assurance can be given that
this will continue in the future. If a substantial number of depositors, or a small number of large depositors, fail
to roll over deposited funds upon maturity, the Group’s liquidity position could be adversely affected and the
44
Group may be required to seek alternative sources of short-term or long-term funding, which may be more
expensive than deposits, to finance its operations. Furthermore, there can be no guarantee that the Group will be
able to obtain such funds. See “Funding, Liquidity and Capital Adequacy”.
Although the Group’s policy is to adopt prudent liquidity risk management, which includes maintaining a
diversified and stable source of funding, capital and credit markets may be volatile and the availability of funds
may be limited during times of volatility. Volatility in international capital markets may result in the Group
incurring increased financing costs associated with its debt and with the issuance of debt securities. Moreover, it
is possible that the Group’s ability to access the capital and credit markets may be limited by these or other
factors at a time when the Group would like, or need, to do so, and as a result could have an impact on the
Group’s ability to grow its business, refinance maturing debt, maintain credit ratings and/or react to changing
economic and business conditions. The Group may require additional financing to support the future growth of
its business and/or to refinance existing debt obligations. There can be no assurance that additional financing,
either on a short-term or a long-term basis, will be made available or, if available, that such financing will be
obtained on terms favourable to the Group.
A decline in the Group’s asset quality could adversely affect its business, financial condition, results of
operations or prospects if its loan provisions are insufficient to cover its liabilities
Credit risks arising from adverse changes in the credit quality and recoverability of loans, advances and amounts
due from counterparties are inherent in a wide range of the Group’s businesses. Credit risks could arise from a
deterioration in the credit quality of the Group’s specific counterparties, from a general deterioration in local or
global economic and market conditions or from systemic risks within the financial system, all of which could
affect the recoverability and value of the Group’s assets and require an increase in the Group’s provisions for the
impairment of its assets and other credit exposures. As at 31 March 2013, the Group’s gross impaired loans and
advances ratio was 2.3%, which although reduced from its level in earlier years remains marginally above the
average of 2.0% for domestic and foreign banks operating in Malaysia as at March 2013. The Group has a loan
coverage ratio (ratio of provisions to total impaired loans) of approximately 116.2% as of 31 March 2013, which
is higher than the Malaysian banking industry average of 99.2% at March 2013. The Group’s business, financial
condition, results of operations or prospects could be adversely affected if the Group’s provisions are
insufficient, the value of the Group’s collateral declines, a material amount of the Group’s loans becomes
uncollectible, or there is a downturn in the Malaysian economy. A significant amount of the Group’s collateral is
in the form of vehicles, which do not maintain their value due to depreciation. Any significant decline in the
Group’s asset quality could adversely affect its business, financial condition, results of operations or prospects.
The Group adopts prudent credit risk management policies to manage its asset quality. The Group recognises the
need for credit policies to be responsive to the changing environment and diverse market conditions and that
lending rules, policies and guidelines must be consistently applied throughout the Group. Although the Group
believes that it has adopted a sound asset quality management system and intends to maintain it, there is no
assurance that such system will remain effective or adequate in the future. A significant deterioration in the
Group’s asset quality, any material non-compliance with its credit risk management policies or deficiencies in its
asset quality management system may adversely affect the business, financial condition and results of operations
of the Group. See “Risk Management” for a description of the Group’s credit risk management.
Problems arising in connection with further consolidation of the Group’s businesses may have a material
adverse effect on the Group
In 1999, the Malaysian government called for a consolidation of the banking sector in order to further develop
and strengthen the domestic banking system, so that domestic banks could be better positioned to respond to the
new and changing requirements of the economy and to be more efficient and competitive. The Issuer was one of
the 10 anchor banks which participated in the consolidation via its acquisition of MBf Finance. Further
consolidation with other financial institutions is possible and may again, due to taking on non-performing loans
or otherwise, result in the Group’s business, financial condition, results of operations or prospects being
adversely affected. In particular, if the Group makes a decision relating to any merger or acquisition in uncertain
or highly competitive economic or market conditions or for a substantial consideration, such merger or
acquisition may result in an increase to its risk exposure or a depletion of the resources of the Group, which
could have an adverse effect on the business, financial condition and results of operations of the Group.
Furthermore, any merger of entities involves the integration of various systems, processes and cultures which
may require significant resources to be expended. There can be no assurance that such integration processes
would be undertaken effectively or in a timely manner. Any failure or delay by the Group in implementing any
consolidation activities that it pursues, or any successful consolidation efforts by its competitors, may have a
material adverse effect on the Group’s business, financial condition, results of operations or prospects.
45
The Group’s risk management system may be inadequate or ineffective in managing risks
The Group is exposed to a variety of risks, including credit risk, market risk (including interest rate risk), funding
risk and operational risk. The Group has established a risk management framework including a risk committee
with the intention of strengthening its internal risk management framework. There can be no assurance, however,
that the present risk management framework will always be effective or adequate as there may be risks which
cannot be anticipated or identified or which turn out to be greater than was indicated by risk management
strategies based on historical data. Further, whilst the Group believes that it has adopted a sound risk
management framework that is consistently applied across the Group instances of material non-compliance with
the Group’s risk management policies could occur. Any failure in the effectiveness of the Group’s risk
management procedures could have a material adverse effect on the Group’s business, financial condition, results
of operations or prospects.
Major shareholders may influence policies of the Issuer
As of 31 March 2013, Amcorp Group Berhad (“Amcorp”) and Australia and New Zealand Banking Group
Limited (“ANZ”) via its wholly owned subsidiary, ANZ Funds Pty Ltd held 16.4% and 23.8% respectively, of
the issued share capital of AMMB Holdings Berhad (“AMMB Holdings”), which, in turn, holds 100% of the
issued share capital of the Issuer. As of 31 March 2013, Tan Sri Azman Hashim, the Chairman/Non-Independent
Non-Executive Director of the Issuer held indirectly, a 100% controlling interest in Amcorp, which, in turn, is a
substantial shareholder in AMMB Holdings. Based on these shareholding interests in Amcorp, AMMB Holdings
and the Issuer, each of these major shareholders may, to a certain extent, be able to exercise control over matters
which require shareholders’ approval. There can be no assurance that the corporate objectives and strategies of
the Issuer would not be substantially influenced by the policies of the shareholders. In the case of ANZ as major
shareholder, the Issuer and such shareholder also enjoy a strategic relationship which has been and is expected to
continue to be of significant benefit to the Issuer. If for any reason the nature or extent of ANZ’s investment in
the Issuer were to change over time, there can be no assurance that the Issuer would continue to benefit from this
or any similar strategic relationship to the same extent.
The Group may be required to raise additional capital if its capital adequacy ratio deteriorates in the future or
in order to comply with any new regulatory capital framework
On 17 December 2009, the Basel Committee on Banking Supervision (the “BCBS”) proposed a number of
fundamental reforms to the regulatory capital framework. On 16 December 2010, BCBS released two documents
entitled “Basel III: A Global Regulatory Framework for More Resilient Banks and Banking Systems” and “Basel
III: International Framework for Liquidity Risk Management, Standards and Monitoring” and on 13 January
2011 issued a press release entitled “Basel Committee issues final elements of the reforms to raise the quality of
regulatory capital” (collectively “Basel III”).
On 28 November 2012, BNM issued its Capital Adequacy Framework implementing the Basel III reforms. The
capital requirements set out by BNM took effect on 1 January 2013 and require banking institutions, including
the Group, to maintain the following minimum capital ratios for the calendar years detailed below:
(a) a minimum Common Equity Tier 1 (“CET1”) capital ratio of 3.5 per cent. of risk-weighted assets (in 2013),
4.0 per cent. (in 2014) and 4.5 per cent. (from 2015 onwards);
(b) a minimum Tier 1 capital ratio of 4.5 per cent. of risk-weighted assets (in 2013), 5.5 per cent. (in 2014) and
6.0 per cent. (from 2015 onwards); and
(c) a minimum total capital ratio of 8.0 per cent of risk-weighted assets (from 2013 onwards).
In addition, banks are required to maintain additional capital buffers above the minimum CET1, Tier 1 and total
capital ratios set out above in the form of a capital conservation buffer and a countercyclical capital buffer.
The capital conservation buffer is to enable the banking system to withstand future periods of stress and requires
banks to maintain an additional buffer equal to a minimum of 0.625 per cent. of risk-weighted assets (for the
2016 calendar year), 1.25 per cent. (for the 2017 calendar year), 1.875 per cent. (for the 2018 calendar year) and
2.50 per cent. (from 2019 onwards). There will be no capital conservation buffer prior to the 2016 calendar year.
If there is excess credit growth in any given country resulting in a system-wide build-up of risk, a countercyclical
buffer within a range of 0.0 per cent. to 2.5 per cent. of risk-weighted assets will also apply to the minimum
CET1, Tier 1 and total capital ratios (as increased by the capital conservation buffer). The countercyclical buffer
is determined as the weighted-average of the prevailing countercyclical capital buffer requirements applied in the
jurisdictions in which the relevant banking institution has credit exposures and is subject to the following scaling
factors: 0 per cent. (for calendar years prior to 2016), 25 per cent. (for the 2016 calendar year, 50 per cent. for the
2017 calendar year) and 75 per cent. (for the 2018 calendar year).
46
To the extent a bank fails to maintain such a ratio, BNM may impose penalties on such a bank ranging from a
fine to revocation of its banking licence. See “Supervision and Regulation”.
As at 31 March 2013, the Group’s CET1 ratio after proposed dividends was 8.1 per cent., its Tier I capital
adequacy ratio after proposed dividends was 10.4 per cent., and its total capital ratio after proposed dividends
was 13.7 per cent. The Group’s capital base and capital adequacy ratio may deteriorate in the future if its results
of operations or financial condition deteriorate for any reason, including as a result of any deterioration in the
asset quality of its loans, or if the Group is not able to deploy its funding into suitably low-risk assets. If the
Group’s capital adequacy ratio deteriorates, it may be required to obtain additional CET1, Tier I or Tier II capital
in order to remain in compliance with the applicable capital adequacy guidelines. However, the Group may not
be able to obtain additional capital on favourable terms depending on the market conditions and circumstances
prevailing at the time of the intended capital raising, or at all.
Furthermore, there can be no assurance that BCBS will not amend the package of reforms described above or that
BNM will not amend the Capital Adequacy Framework in a manner which imposes additional capital
requirements on, or otherwise affects the capital adequacy requirements relating to, Malaysian banks. The
approach and local implementation of Basel III will depend on BNM’s response which may potentially impact
the Group in various ways depending on the composition of its qualifying capital and risk weighted assets. There
is no assurance that the Group will not face increased pressure on its capital in the future to comply with Basel III
standards and the Capital Adequacy Framework which may have an adverse effect on the Group’s business,
financial condition, results of operations and prospects.
Risk of significant fraud, system failures, calamities or security breaches
Operational risks and losses can result from fraud, error by employees, failure to document transactions properly
or to obtain proper internal authorisation, failure to comply with regulatory requirements and conduct of business
rules, the failure of internal systems, equipment and external systems (such as those of the Group’s counterparties
or vendors) and the occurrence of natural disasters. Although the Group has implemented risk controls and loss
mitigation strategies and substantial resources are devoted to developing efficient procedures, there can be no
assurance that such operational risks and losses can be fully mitigated or avoided.
In addition, the Group seeks to protect its computer systems and network infrastructure from physical break-ins
as well as security breaches and other disruptive problems caused by the Group’s increased use of the internet.
Computer break-ins and power disruptions could affect the security of information stored in, and transmitted
through, these computer systems and network infrastructure. The Group employs security systems, including
firewalls and password encryption, designed to minimise the risk of security breaches. There can be no assurance
that the risks of such security can be fully mitigated or avoided.
Significant fraud, system failure, calamity or failure in security measures could have an adverse effect on the
Group’s business, financial condition, results of operations, prospects and reputation. See “Risk Management” for
a description of the Group’s exposure to operational risks and “Description of the Group — Technology” for a
description of the Group’s IT systems.
If the Group is unable to adapt to rapid technological changes on a timely basis, or is not successful in
integrating new technologies into its existing technology framework, its business could suffer
The Group’s future success and ability to compete with other banks will depend, in part, on its ability to respond
to technological advances and emerging banking industry standards and practices on a cost-effective and timely
basis. Any failure to keep pace with technological advances or to maintain an appropriate level of investment in
information technology may adversely affect the Group’s competitiveness, business, financial condition, results
of operations, prospects and reputation. While the Group has dedicated significant resources to implementing the
latest technological advances to improve the accessibility of its services, for instance through internet and mobile
phone banking, there can be no assurance that the Group will successfully implement new technologies
effectively or adapt its transaction-processing systems to customer requirements or industry standards, which
may, in turn, have a material adverse effect on its business and financial condition. The implementation of new
technology may expose the Group to technical or operational risks or difficulties associated with transitioning or
integrating its existing systems and infrastructure with the introduction of new technologies, systems or other
equipment, which could adversely affect its business, financial condition, results of operations, prospects and
reputation.
The Group depends on the recruitment and retention of qualified personnel and any failure to attract and
retain such personnel could affect the Group’s businesses
The Group’s success depends on the ability and experience of its senior management and other key employees.
Competition for personnel is intense and the Group may not be successful in attracting or retaining qualified
47
personnel. The loss of any senior management members or key employees, the Group’s inability to attract new
qualified employees or adequately trained employees, or the delay in hiring key personnel could affect the
Group’s business, financial condition and results of operations.
Inability to comply with the restrictions and covenants contained in the Group’s debt agreements
If the Group is unable to comply with the restrictions and covenants in its current or future debt agreements, there
could be a default under the terms of those agreements. In the event of a default under those agreements, the
holders of the debt could terminate their commitments to lend to the Group, accelerate the debt and declare all
amounts borrowed due and payable or terminate the agreements, as the case may be. Such actions may result in
an Event of Default under the Terms and Conditions of the Notes issued under the Programme.
The Group’s business is inherently subject to the risk of market fluctuations
The Group’s business is inherently subject to risks in financial markets and in the wider economy, including
changes in, and increased volatility of, exchange rates, interest rates, inflation rates, credit spreads, commodity,
equity, bond and property prices and the risk that its customers act in a manner which is inconsistent with
business, pricing and hedging assumptions.
Market movements may have an impact on the Group in a number of key areas. For example, changes in interest
rate levels, yield curves and spreads affect the interest rate margin realised between lending and borrowing costs.
Historically, there have been periods of high and volatile interbank lending margins over official rates (to the
extent banks have been willing to lend at all), which have exacerbated such risks. Competitive pressures on fixed
rates or product terms in existing loans and deposits sometimes restrict the Group in its ability to change interest
rates applying to customers in response to changes in official and wholesale market rates.
Any failure by the Group to implement, or consistently follow, its risk management asset writing strategies may
adversely affect its financial condition and results of operations, and there can be no assurance that the Group’s
risk management systems will be effective. In addition, the Group’s risk management systems may not be fully
effective in mitigating risk exposure in all market environments or against all types of risks, including risks that
are unidentified or unanticipated. Some methods of managing risk are based upon observed historical market
behaviour. As a result, these methods may not predict future risk exposures, which could be significantly greater
than the historical measures indicated.
The Group’s and the Issuer’s financial statements in this Offering Circular are not comparable from period to
period
The Group and the Issuer maintain their respective financial books and records and prepare their consolidated
and unconsolidated financial statements in Malaysian Ringgit in accordance with MFRS.
Prior to 1 January 2012, the Group and the Issuer maintained their respective financial books and records and
prepared their consolidated and unconsolidated financial statements in Malaysian Ringgit in accordance with
FRS, which differs in certain respects from MFRS. With effect from 1 January 2012, MFRS were introduced and
adopted which implemented all material aspects of, and are equivalent to, IFRS.
The consolidated and unconsolidated financial statements of the Group and the Issuer as of and for the years
ended 31 March 2012 and 31 March 2013 (as presented in the Group’s and the Issuer’s consolidated and
unconsolidated financial statements as of and for the year ended 31 March 2013 included elsewhere in this
Offering Circular) have been prepared in accordance with MFRS.
Potential investors are cautioned that, unless otherwise indicated, the audited consolidated and unconsolidated
financial statements of the Group and the Issuer as of and for the years ended 31 March 2011 and 31 March 2012
(as presented in the Group’s and the Issuer’s consolidated and unconsolidated financial statements as of and for
the year ended 31 March 2012 included elsewhere in this Offering Circular) have been prepared in accordance
with FRS as modified by BNM guidelines. The effects of the adoption of MFRS on the consolidated financial
statements of the Group and the Issuer can be found in the Group’s audited consolidated financial statements as
of and for the year ended 31 March 2013, in particular, note 54 to the audited consolidated financial statements
of the Group as of and for the year ended 31 March 2013.
Considerations relating to Malaysia
The business of the Group is concentrated in Malaysia, which may result in a higher level of risk compared to
some other banks whose businesses are spread over different countries
As at 31 March 2013, 100 per cent. of the operating revenues of the Group were derived from within Malaysia
and 100 per cent. of the assets of the Group were employed within Malaysia. The concentration of revenue
48
streams and asset locations in Malaysia may entail a higher level of risk as compared to some other banks which
have revenue streams and/or assets spread over different countries. As a result, the revenue derived by the Group
and the overall quality of its loan portfolio depends on the continued strength of Malaysia’s economy, which is,
in turn, affected by general economic and business conditions in the Asian region.
Developments in the social, political, regulatory and economic environment in Malaysia may have a material
adverse impact on the Group
The Group’s business, prospects, financial condition and results of operations may be adversely affected by
social, political, regulatory and economic developments in Malaysia. Such political and economic uncertainties
include, but are not limited to, the risks of war, terrorism, nationalism, nullification of contract, changes or
fluctuation in interest rates, imposition of capital controls and methods of taxation. In addition, the Group could
be subject to changes in legal regimes and governmental regulations such as licensing and approvals, taxation
and duties and tariffs.
Negative developments in Malaysia’s socio-political environment may adversely affect the business, financial
condition, results of operations and prospects of the Group. The Malaysian economy registered a strong growth
of 6.5 per cent. in the fourth quarter of 2012, driven by domestic demand amid slowing external demand.
Although the overall Malaysian economic environment (in which the Group predominantly operates) appears to
be positive, there can be no assurance that this will continue to prevail in the future.
Outbreaks of infectious diseases in Asia and elsewhere could adversely affect the business, financial
condition, results of operations or prospects of the Group
The outbreak of an infectious disease such as Influenza A (H1N1, H5N1), avian influenza, or Severe Acute
Respiratory Syndrome in Asia and elsewhere, together with any resulting restrictions on travel and/or imposition
of quarantines, could have a negative impact on the economy, and business activities in Asia and could thereby
adversely impact the Group’s business, financial condition and results of operations. There can be no assurance
that any precautionary measures taken against infectious diseases would be effective.
The Malaysian Ringgit is subject to exchange rate fluctuations which may negatively impact the Group
BNM has, in the past, intervened in the foreign exchange market to stabilise the Malaysian Ringgit, and instituted
a fixed exchange rate of RM3.80 to U.S.$1.00 on 2 September 1998. Subsequently, on 21 July 2005, BNM
adopted a managed float system which benchmarked the Malaysian Ringgit to a currency basket to ensure that
the Malaysian Ringgit remains close to its fair value. As of 29 July 2013, the closing exchange rate was
RM3.2260 to U.S.$1.00. However, there can be no assurance that BNM will, or would be able to intervene in the
foreign exchange market in the future or that any such intervention or fixed exchange rate would be effective in
achieving BNM’s objectives. The Group re-values its foreign currency borrowings and its investments on its
balance sheet to account for changes in currency rates and recognises the resulting gains or losses in its statement
of income. To the extent that the Group is unable to minimise its foreign currency exposure through appropriate
foreign currency hedging transactions, fluctuations in the Malaysian Ringgit’s value against other currencies may
have an adverse effect on the Group’s business, financial condition, results of operations and prospects.
A re-imposition of capital controls may affect investors’ ability to repatriate the proceeds from the sale of
Notes and interest and principal paid on the Notes from Malaysia
As part of the package of policy responses to the 1997 economic crisis in Southeast Asia, the Government
introduced, on 1 September 1998, selective capital control measures. The Government initiated the liberalisation
of the selective capital control measures in 1999 to allow foreign investors to repatriate principal capital and
profits, subject to a system of graduated exit levies based on the duration of investment in Malaysia. On
1 February 2001, the Government revised the levy to apply only to profits made from portfolio investments
retained in Malaysia for less than one year. On 2 May 2001, the Government lifted all such controls in respect of
the repatriation of foreign portfolio funds (largely consisting of proceeds from the sale of stocks listed on Bursa
Malaysia).
There can be no assurance that the Government will not re-impose these or other capital controls in the future. If
the Government re-imposes foreign exchange controls, investors may not be able to repatriate the proceeds of the
sale of the Notes and interest and principal paid on the Notes from Malaysia for a specified period of time or may
only be able to do so after paying a levy.
49
Corporate accounting and disclosure standards in Malaysia may vary from those in other jurisdictions
The quantity and quality of publicly available information in respect of the Group may be of a lower standard
from that which is regularly made available by public companies in other jurisdictions. These differences
include, but are not limited to the timing and content of disclosure of beneficial ownership of equity securities by
officers, directors and significant shareholders; officer certification of disclosure and financial statements in
periodic public reports; and disclosure of off-balance sheet transactions in management’s discussion of results of
operations in periodic public reports. Accordingly, the quantity and quality of information about the Group which
is available to an investor may not be on par with, and may offer less protection to investors than, that of a public
company in another jurisdiction.
Considerations relating to the Malaysian Financial Services Industry
Competition
The Malaysian banking industry operates in a very competitive environment fostered by BNM’s policies
including, inter alia, foreign licensed Islamic banks and domestic Islamic banks which are now allowed to offer/
perform products and perform services that are similar to those of the Group. Further, BNM announced in 2009
further measures to liberalise the Malaysian financial sector, including a framework for the issuance of up to five
new commercial banking licences and two new Islamic banking licences to foreign financial institutions and the
increase of foreign equity limits to 70 per cent. for existing domestic Islamic banks, investment banks, insurance
and takaful companies. The foreign equity limit for existing domestic commercial banks is currently 30 per cent.
There can be no assurance that current foreign equity limits in the Malaysian financial sector will not be
increased in the future. All of the abovementioned new commercial banking licences have been issued to foreign
financial institutions. Although these policies are designed, in part, to encourage development of financial
institutions in Malaysia and to strengthen domestic financial institutions in preparation for foreign competition,
any increased competition could have an adverse effect on the Group’s operations in the form of reduced
margins, smaller market share and reduced income generally. The issuance of new commercial banking licences
to foreign financial institutions has resulted in intensified competition as domestic banks increase their efficiency
to ensure sustainability over the medium to long term. This has created a more challenging business environment
due to aggressive pricing, price offerings and product promotions (resulting in shrinking margins) and increasing
customer demand for more sophisticated products and improved service standards. See “Overview of the
Malaysian Banking Industry”.
In addition, the Group’s future growth will be subject to competition from other service providers in the markets
into which the Group exports its services or in which it operates. As such, there can be no assurance that the
Group will be able to maintain or increase its present market share in the future or that increased competition will
not materially and adversely affect the Group’s business, financial condition, results of operations and prospects.
Regulatory environment
The Group’s principal business activities are regulated by various Government authorities or agencies. The Issuer
is regulated by BNM who has extensive powers to regulate the Malaysian banking industry under the Financial
Services Act, 2013 (“FSA”). BNM has broad investigative and enforcement powers. Accordingly, potential
investors should be aware that BNM could, in the future, set interest rates at levels or restrict credit in a way
which may be adverse to the operations, financial condition or asset quality of banks and financial institutions in
Malaysia, including the Group, and may otherwise significantly restrict the activities of the Group and Malaysian
banks and financial institutions generally.
The regulatory measures presently imposed, and as may be introduced from time to time, by the regulatory
authorities and agencies could affect the Group’s business activities. For example, BNM imposes a maximum
permissible credit exposure to a single customer group, maximum sectorial credit in respect of financing activity,
limits on the interest rates charged by banks on certain types of loans, caps on lending to certain sectors of the
Malaysian economy and has established priority lending guidelines in furtherance of certain social and economic
objectives and a change in credit policies by BNM may restrict certain businesses of the Group and could require
the Group to scale down its operations in a particular business area. On 3 November 2010, BNM announced,
with immediate effect, a maximum loan-to-value ratio of 70 per cent., which is applicable to a loan taken out by
a borrower to finance their third property. On 18 March 2011, BNM placed further restrictions on credit cards
provided to low income individuals, raising the minimum income eligibility requirement to RM24,000 per
annum (from RM 18,000 per annum) and stipulating that persons earning less than RM36,000 per annum may
only hold cards from a maximum of two card issuers and that the maximum credit limit on each card must not
exceed two times the monthly limit of the cardholder. On 18 November 2011, BNM issued new guidelines to
financial institutions aiming to promote prudent, responsible and transparent retail financing practices which took
effect on 1 January 2012. At present, loans with a loan-to value ratio greater than 90 per cent. will now have to
50
carry a risk weighting of 100 per cent. compared with 75 per cent. previously. These regulations place
restrictions on the business of the Group and may cause the Group to scale down operations in the areas of its
business most affected.
Contravention of BNM regulations and guidelines may expose the Group to enquiries from or investigations by
BNM and other Malaysian regulatory authorities and agencies. These enquiries or investigations may result in
sanctions including fines, corrective orders, restriction of business lines and possible loss of licences required for
the Group to operate its businesses and, in addition, may cause the Group’s reputation to be adversely affected.
Contravention of regulations, policies or guidelines of BNM (or any other regulatory authorities and agencies)
therefore carries with it financial and reputational risks that could materially and adversely affect the Group’s
business, financial condition, results of operations and prospects.
Scope and costs of deposits insurance in Malaysia
BNM is not required to act as lender of last resort to meet liquidity needs in the banking system generally or for
specific institutions, although it has, in the past and on a case-by-case basis, provided a safety net for individual
banks with an isolated liquidity crisis. However, there can be no assurance that BNM will provide such assistance
in the future. On 1 September 2005, BNM introduced a deposit insurance system (the “Deposit Insurance
System”). Under the Deposit Insurance System, eligible deposits were originally insured up to a prescribed limit
of RM60,000 (inclusive of principal and interest) per depositor, per member institution. There was also separate
coverage of up to RM60,000 per depositor, per member institution for Islamic deposits (i.e., those accepted under
Shariah principles), accounts held under joint ownership, trust accounts and accounts in the name of sole
proprietorships and partnerships. The Deposit Insurance System is administrated by the Malaysia Deposit
Insurance Corporation (Perbadanan Insurans Deposit Malaysia) (“MDIC”), an independent statutory body, and
all licensed commercial banks (including subsidiaries of foreign banks operating in Malaysia) and Islamic banks
are member institutions of the Deposit Insurance System. On 16 October 2008, the Government moved to
guarantee all bank deposits in an effort to shore up confidence in the Malaysian financial system to curb
potentially damaging capital outflows. BNM announced the guarantee for all local and foreign currency deposits
from 16 October 2008 until 31 December 2010. From 31 December 2010, the Malaysia Deposit Insurance
Corporation Act 2011 (the “2011 Act”) came into effect and replaced the existing legislation. The 2011 Act was
enacted to implement an enhanced financial consumer protection package, whereby, amongst other changes, the
deposit insurance limit was increased to RM250,000 per depositor per member bank with such amount being
inclusive of principal and interest as of 31 December 2010. In addition, under the 2011 Act, foreign currency
deposits will now benefit from deposit insurance protection.
The RM250,000 limit provides for 99 per cent. of existing depositors to be protected in full. A separate coverage
for the same amount is provided for Islamic deposits (i.e. those accepted under Shariah principles), accounts held
under joint ownership and trust accounts, sole proprietorships and partnerships. It is envisaged that the level of
coverage will provide protection for up to 95 per cent. of such depositors.
Notwithstanding the aforesaid, the fact that deposits exceeding the prescribed limits are not insured up to their
full amount could lead to or exacerbate liquidity problems, which, if severe, could have an adverse effect on the
Group’s business, financial condition, results of operations or prospects, or on the Malaysian financial markets
generally. Notes issued under the Programme are not entitled to protection under the 2011 Act.
Considerations relating to the structure of a particular issue of Notes
A wide range of Notes may be issued under the Programme. A number of these Notes may have features which
contain particular risks for potential investors. Set out below is a description of certain such features and the risks
associated with them.
Notes subject to optional redemption by the Issuer
An optional redemption feature is likely to limit the market value of Notes. During any period when the Issuer
may elect to redeem Notes, the market value of those Notes generally will not rise substantially above the price at
which they can be redeemed. This may also be true prior to any redemption period.
The Issuer may be expected to redeem Notes when its cost of borrowing is lower than the interest rate on the
Notes. At those times, an investor generally would not be able to reinvest the redemption proceeds at an effective
interest rate as high as the interest rate on the Notes being redeemed and may only be able to do so at a lower
rate. Potential investors should consider reinvestment risk in light of other investments available at that time.
Partly-Paid Notes
The Issuer may issue Notes where the issue price is payable in more than one instalment. Failure to pay any
subsequent instalment on a Partly-Paid Note could result in an investor losing all of its investment.
51
Variable rate Notes with a multiplier or other leverage factor
Notes with variable interest rates can be volatile investments. If they are structured to include multipliers or other
leverage factors, or caps or floors, or any combination of those features or other similar related features, their
market values may be even more volatile than those for securities that do not include those features.
Fixed/Floating Rate Notes
Fixed/Floating Rate Notes may bear interest at a rate that the Issuer may elect to convert from a fixed rate to a
floating rate, or vice versa. The Issuer’s ability to convert the interest rate will affect the secondary market and
the market value of such Notes since the Issuer may be expected to convert the rate when it is likely to produce a
lower overall cost of borrowing. If the Issuer converts from a fixed rate to a floating rate in such circumstances,
the spread on the Fixed/Floating Rate Notes may be less favourable than the then prevailing spreads on
comparable Floating Rate Notes tied to the same reference rate. In addition, the new floating rate at any time may
be lower than the rates on other Notes. If the Issuer converts from a floating rate to a fixed rate in such
circumstances, the fixed rate may be lower than the then prevailing rates on its Notes.
Notes issued at a substantial discount or premium
The market values of securities issued at a substantial discount or premium to their nominal amount tend to
fluctuate more in relation to general changes in interest rates than do prices for conventional interest-bearing
securities. Generally, the longer the remaining term of the securities, the greater the price volatility as compared
to conventional interest-bearing securities with comparable maturities.
Global financial turmoil has led to volatility in international capital markets which may adversely affect the
market price of the Notes
Global financial turmoil has resulted in substantial and continuing volatility in international capital markets. Any
further deterioration in global financial conditions could have a material adverse effect on worldwide financial
markets, which may adversely affect the market price of the Notes.
Considerations relating to the Notes generally
The Notes may not be a suitable investment for all investors
Each potential investor in the Notes must determine the suitability of that investment in light of its own
circumstances. In particular, each potential investor should:
(i)
have sufficient knowledge and experience to make a meaningful evaluation of the relevant Notes, the merits
and risks of investing in the relevant Notes and the information contained or incorporated by reference in
this Offering Circular or any applicable supplement;
(ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular
financial situation, an investment in the relevant Notes and the impact such investment will have on its
overall investment portfolio;
(iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the relevant
Notes, including where principal or interest is payable in one or more currencies, or where the currency for
principal or interest payments is different from the potential investor’s currency;
(iv) understand thoroughly the terms of the relevant Notes and be familiar with the behaviour of any relevant
indices and financial markets; and
(v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for change in
economic conditions, interest rates and other factors that may affect its investment and its ability to bear the
applicable risks.
Some Notes are complex financial instruments. Sophisticated institutional investors generally do not purchase
complex financial instruments as stand-alone investments. They purchase complex financial instruments as a way
to reduce risk or enhance yield with an understood, measured, appropriate addition of risk to their overall
portfolios. A potential investor should not invest in Notes which are complex financial instruments unless it has
the expertise (either alone or with a the help of a financial adviser) to evaluate how the Notes will perform under
changing conditions, the resulting effects on the value of such Notes and the impact this investment will have on
the potential investor’s overall investment portfolio.
52
Modification
The Conditions of the Notes contain provisions for calling meetings of Noteholders to consider matters affecting
their interests generally. These provisions permit defined majorities to bind all Noteholders, including
Noteholders who did not attend and vote at the relevant meeting and Noteholders who voted in a manner contrary
to the majority.
The Conditions of the Notes also provide that the Agency Agreement may be amended without the consent of the
Noteholders if (i) to do so could not reasonably be expected to be prejudicial to the interests of the Noteholders;
or (ii) such modification is either of a formal, minor or technical nature or made to cure any ambiguity or correct
a manifest or proven error or to comply with mandatory provisions of the law.
EU Savings Directive
Under EC Council Directive 2003/48/EC on the taxation of savings income (the “Savings Directive”), each
Member State is required to provide to the tax authorities of another Member State details of payments of interest
(or similar income) paid by a person within its jurisdiction to an individual or to certain other persons in that
other Member State. However, for a transitional period, Luxembourg and Austria are instead required (unless
during that period they elect otherwise) to operate a withholding system in relation to such payments (the ending
of such transitional period being dependent upon the conclusion of certain other agreements relating to
information exchange with certain other countries). A number of non-EU countries and territories including
Switzerland have adopted similar measures (a withholding system in the case of Switzerland) with effect from
the same date.
The European Commission has proposed certain amendments to the Savings Directive which may, if
implemented, amend or broaden the scope of the requirements described above.
If a payment were to be made or collected through a Member State which has opted for a withholding system and
an amount of, or in respect of, tax were to be withheld from that payment, neither the Issuer nor any Paying
Agent nor any other person would be obliged to pay additional amounts with respect to any Note as a result of
the imposition of such withholding tax. The Issuer is required, to maintain a Paying Agent in a Member State that
is not obliged to withhold or deduct tax pursuant to the Savings Directive.
Malaysian Taxation
Under the present Malaysian law, all interests payable to non-residents in respect of the Notes are exempted from
withholding tax. However, there is no assurance that this present position will continue and in the event that such
exemption is revoked, modified or rendered otherwise inapplicable, such interests shall be subject to withholding
tax at the then prevailing withholding tax rate. However, notwithstanding the foregoing, the Issuer shall be
obliged pursuant to the terms of the Notes, in the event of any such withholding, to pay such additional amounts
to the investors so as to ensure that the investors receive the full amount which they would have received had no
such withholding been imposed.
Foreign Account Tax Compliance Withholding
Whilst the Notes are in global form and held within the clearing systems, in all but the most remote
circumstances, it is not expected that the U.S. “Foreign Account Tax Compliance Act” (or “FATCA”) will affect
the amount of any payment received by the clearing systems (see “Taxation – Foreign Account Tax Compliance
Act”). However, FATCA may affect payments made to custodians or intermediaries in the subsequent payment
chain leading to the ultimate investor if any such custodian or intermediary generally is unable to receive
payments free of FATCA withholding. It also may affect payment to any ultimate investor that is a financial
institution that is not entitled to receive payments free of withholding under FATCA, or an ultimate investor that
fails to provide its broker (or other custodian or intermediary from which it receives payment) with any
information, forms, other documentation or consents that may be necessary for the payments to be made free of
FATCA withholding. Investors should choose the custodians or intermediaries with care (to ensure each is
compliant with FATCA or other laws or agreements related to FATCA) and provide each custodian or
intermediary with any information, forms, other documentation or consents that may be necessary for such
custodian or intermediary to make a payment free of FATCA withholding. Investors should consult their own tax
adviser to obtain a more detailed explanation of FATCA and how FATCA may affect them. The Issuer’s
obligations under the Notes are discharged once it has paid the Common Depositary or the sub-custodian for the
CMU (as bearer or registered holder of the relevant Global Notes or Global Certificates as the case may be) and
the Issuer has therefore no responsibility for any amount thereafter transmitted through hands of the clearing
systems and custodians or intermediaries.
53
The Notes may be represented by Global Notes or Global Certificates and holders of a beneficial interest in a
Global Note must rely on the procedures of the relevant Clearing System(s)
Notes issued under the Programme may be represented by one or more Global Notes or Global Certificates. Such
Global Notes and Global Certificates will be deposited with the Common Depositary or lodged with a subcustodian for the CMU (each of Euroclear, Clearstream, Luxembourg and the CMU a “Clearing System”) and
together, the “Clearing Systems”). Except in the circumstances described in the relevant Global Note or Global
Certificate, investors will not be entitled to receive Definitive Notes. The relevant Clearing System(s) will
maintain records of their direct account holders in relation to the Global Notes and Global Certificates. While the
Notes are represented by one or more Global Notes or Global Certificates, investors will be able to trade their
beneficial interests only through the Clearing Systems.
While the Notes are represented by one or more Global Notes or Global Certificates, the Issuer will discharge its
payment obligations under the Notes by making payments to the common depositary for Euroclear, Clearstream,
Luxembourg or to the CMU, as the case may be, for distribution to their account holders. A holder of a beneficial
interest in a Global Note or Global Certificate must rely on the procedures of the relevant Clearing System(s) to
receive payments under the relevant Notes.
The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial
interests in the Global Notes or Global Certificates. Holders of beneficial interests in the Global Notes and
Global Certificates will not have a direct right to vote in respect of the relevant Notes. Instead, such holders will
be permitted to act only to the extent that they are enabled by the relevant Clearing System(s) to appoint
appropriate proxies.
Bearer Notes where denominations involve integral multiples: definitive bearer Notes
In relation to any issue of Notes in bearer form which have denominations consisting of a minimum Specified
Denomination plus one or more higher integral multiples of another smaller amount, it is possible that such Notes
may be traded in amounts that are not integral multiples of such minimum Specified Denomination. In such a
case, a holder who, as a result of trading such amounts, holds an amount which is less than the minimum
Specified Denomination in his account with the relevant clearing system at the relevant time may not receive a
definitive Note in bearer form in respect of such holding (should Notes be printed) and would need to purchase a
principal amount of Notes such that its holding amounts to a Specified Denomination.
If definitive Notes in bearer form are issued, holders should be aware that definitive Notes which have a
denomination that is not an integral multiple of the minimum Specified Denomination may be illiquid and
difficult to trade.
Noteholders’ ability to enforce claims is uncertain
Substantially all the assets of the Issuer are located in Malaysia. Generally, since England is a reciprocating
country, any final and conclusive judgment for the payment of money (other than a sum of money payable in
respect of taxes or other charges of a like nature or in respect of a fine or other penalty) rendered by the courts in
England or other reciprocating countries (“Reciprocating Countries”) as listed in the Reciprocal Enforcement
of Judgments Act, 1958 of Malaysia (“REJA”) in respect of the Notes which is enforceable in the Reciprocating
Countries will be recognized and enforceable by the Malaysian courts without review of merits, so long as the
judgement:(a)
is not inconsistent with public policy in Malaysia;
(b)
was not given or obtained by fraud or duress or in a manner contrary to natural justice;
(c)
is not directly or indirectly for the payment of taxes or other charges of a like nature or of a fine or other
penalty;
(d)
was of a court of competent jurisdiction of England and the judgment debtor being the Issuer in the
original court having received notice of those proceedings in sufficient time to enable it to defend the
proceedings (notwithstanding that process may have been duly served on him in accordance with the laws
of England);
(e)
has not been wholly satisfied;
(f)
is final and conclusive between the parties;
(g)
could be enforced by execution in England;
(h)
is for a fixed sum;
54
(i)
is not directly or indirectly intended to enforce the penal laws or sanctions imposed by the authorities of
England;
(j)
is not preceded by a final and conclusive judgment by a court having jurisdiction in that matter; and
(k)
is vested in the person by whom the application for registration was made.
As a result, Noteholders with claims against the Issuer, its directors or executive officers, will generally be able
to pursue such claims by registering such judgments obtained in the recognized English courts or those of other
Reciprocating Countries in the High Court of Malaya.
Where the sum payable under a judgment which is to be registered is expressed in a currency other than
Malaysian Ringgit, the judgment shall be registered as if it were a judgment for such sum in Malaysian Ringgit
on the basis of the rate of exchange prevailing at the date of the judgment of the original court is equivalent to the
sum so payable.
Considerations relating to the market generally
Set out below is a brief description of certain market risk, including liquidity risk, exchange rate risk, interest rate
risk and credit risk:
The secondary market generally
There is no existing market for any Notes and there can be no assurances that a secondary market for the Notes
will develop, or if a secondary market for the Notes does develop, that it will provide the Noteholders with
liquidity of investment or that it will continue for the life of the Notes. Therefore, investors may not be able to
sell their Notes easily or at prices that will provide them with a yield comparable to similar investments that have
a developed secondary market. This is particularly the case for Notes that are especially sensitive to interest rate,
currency or market risks, are designed for specific investment objectives or strategies or have been structured to
meet the investment requirements of limited categories of investors. These types of Notes generally would have a
more limited secondary market and more price volatility than conventional debt securities.
The market value of any Notes may fluctuate. Consequently, any sale of Notes by Noteholders in any secondary
market which may develop may be at prices that may be higher or lower than the initial offering price depending
on many factors, including prevailing interest rates, the Issuer’s performance and the market for similar
securities. No assurance can be given as to the liquidity of, or trading market for, any Notes and an investor in
such Notes must be prepared to hold such Notes for an indefinite period of time or until their maturity.
Application may be made for the listing of the Notes on SGX-ST but there can be no assurance that such listing
will occur. Historically, the market for debt securities by South East Asian issuers has been subject to disruptions
that have caused substantial volatility in the prices of such securities. There can be no assurance that the market
for any Notes will not be subject to similar disruptions. Any such disruption may have an adverse effect on
holders of such Notes.
Exchange rate risks and exchange controls
The Issuer will pay principal and interest on the Notes in the currency specified in the applicable Pricing
Supplement (the “Currency”). This presents certain risks relating to currency conversions if an investor’s
financial activities are denominated principally in a currency or currency unit (the “Investor’s Currency”) other
than the Currency. These include the risk that foreign exchange rates may significantly change (including
changes due to devaluation of the Currency or revaluation of the Investor’s Currency) and the risk that authorities
with jurisdiction over the Investor’s Currency may impose or modify exchange controls. An appreciation in the
value of the Investor’s Currency relative to the Currency would decrease (1) the Investor’s Currency-equivalent
interest on the Notes, (2) the Investor’s Currency-equivalent value of the principal payable on the Notes and
(3) the Investor’s Currency-equivalent market value of the Notes.
Government and monetary authorities may impose (as some have done in the past) exchange controls that could
adversely affect an applicable foreign exchange rate. As a result, investors may receive less interest or principal
than expected, or no interest or principal.
Interest rate risks
Noteholders may suffer unforeseen losses due to fluctuations in interest rates. Generally, a rise in interest rates
may cause a fall in the price of the Notes, resulting in a capital loss for the Noteholders. However, the
Noteholders may reinvest the interest payments at higher prevailing interest rates. Conversely, when interest rates
fall, the price of the Notes may rise. The Noteholders may enjoy a capital gain but interest payments received
may be reinvested at lower prevailing interest rates.
55
The market value of the Notes may fluctuate
Trading prices of the Notes are influenced by numerous factors, including the operating results, business and/or
financial condition of the Issuer, political, economic, financial and any other factors that can affect the capital
markets, the industry or the Issuer. Adverse economic developments, acts of war and health hazards in countries
in which the Issuer operates could have a material adverse effect on the Issuer’s operations, operating results,
business, financial position, and performance.
Inflation risk
Noteholders may suffer erosion on the return of their investments due to inflation. Noteholders would have an
anticipated rate of return based on expected inflation rates on the purchase of the Notes. An unexpected increase
in inflation could reduce the actual returns.
Credit ratings may not reflect all risks
One or more independent credit rating agencies may assign credit ratings to an issue of Notes. The ratings may
not reflect the potential impact of all risks related to the structure, market, additional factors discussed above, and
other factors that may affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold
securities and may be suspended, reduced or withdrawn by the rating agency at any time.
Legal investment considerations may restrict certain investments
The investment activities of certain investors are subject to legal investment laws and regulations, or review or
regulation by certain authorities. Each potential investor should consult its legal advisers to determine whether
and to what extent (1) Notes are legal investments for it, (2) Notes can be used as collateral for various types of
borrowing and (3) other restrictions apply to its purchase or pledge of any Notes. Financial institutions should
consult their legal advisors or the appropriate regulators to determine the appropriate treatment of Notes under
any applicable risk-based capital or similar rules.
Considerations relating to Renminbi-Denominated Notes
Notes denominated in Renminbi (“RMB Notes”) may be issued under the Programme. RMB Notes contain
particular risks for potential investors.
Renminbi is not freely convertible; there are significant restrictions on remittance of Renminbi into and
outside the PRC
Renminbi is not freely convertible at present. The PRC government continues to regulate conversion between
Renminbi and foreign currencies, including the Hong Kong dollar, despite the significant reduction over the
years by the PRC government of control over routine foreign exchange transactions under current accounts.
Participating banks in the Hong Kong SAR have been permitted to engage in the settlement of RMB trade
transactions under a pilot scheme introduced in July 2009. This represents a current account activity.
The pilot scheme was extended in August 2011 to cover all provinces and cities in the PRC and to make
Renminbi trade and other current account item settlement available in all countries worldwide. Subject to limited
exceptions, there is currently no specific PRC regulation on the remittance of Renminbi into the PRC for
settlement of capital account items. Foreign investors may only remit offshore Renminbi into the PRC for capital
account purposes such as shareholders’ loan or capital contribution upon obtaining specific approvals from the
relevant authorities on a case by case basis. Regulations in the PRC on the remittance of Renminbi into the PRC
for settlement of capital account items is developing gradually.
On 12th October 2011, the Ministry of Commerce of the PRC (“MOFCOM”) promulgated the “Circular on
Certain
Issues
Concerning
Direct
Investment
Involving
Cross
border
Renminbi”
(
) (the “MOFCOM Circular”). Pursuant to the MOFCOM
Circular, the appropriate office of MOFCOM and/or its local counterparts were authorised to approve Renminbi
foreign direct investments (“FDI”) with certain exceptions based on, amongst others, the size and industry of the
investment. The MOFCOM Circular also stipulates that the proceeds of FDI may not be used towards investment
in securities, financial derivatives or entrustment loans in the PRC, except for investments in domestic companies
listed in the PRC through private placements or share transfers by agreement.
On 13th October 2011, the People’s Bank of China (the “PBoC”) promulgated the “Administrative Measures on
) (the “PBoC FDI
Renminbi Settlement of Foreign Direct Investment” (
Measures”) as part of the implementation of the PBoC’s detailed FDI accounts administration system. The system
covers almost all aspects in relation to FDI, including capital injections, payments for the acquisition of PRC domestic
enterprises, repatriation of dividends and other distributions, as well as Renminbi denominated cross-border loans. On
56
14th June 2012, the PBoC further issued the implementing rules for the PBoC FDI Measures. Under the PBoC FDI
Measures, special approval for FDI and shareholder loans from the PBoC, which was previously required, is no longer
necessary. In some cases however, post-event filing with the PBoC is still necessary.
There is no assurance that the PRC government will continue to gradually liberalise the control over cross-border
Renminbi remittances in the future, that the pilot scheme introduced in July 2009 (as amended) will not be
discontinued, or that new PRC regulations will not be promulgated in the future which have the effect of
restricting or eliminating the remittance of Renminbi into or outside the PRC. Further, if any new PRC
regulations are promulgated in the future which have the effect of permitting or restricting (as the case may be)
the remittance of Renminbi for payment of transactions categorised as capital account items, then such
remittances will need to be made subject to the specific requirements or restrictions set out in such rules. In the
event that any regulatory restrictions inhibit the ability of the Issuer to repatriate funds outside the PRC to meet
its obligations under the RMB Notes, the Issuer will need to source Renminbi offshore to finance such
obligations under the RMB Notes, and its ability to do so will be subject to the overall availability of Renminbi
outside the PRC.
Investors may be required to provide certifications and other information (including Renminbi account
information) in order to be allowed to receive payments in Renminbi in accordance with the Renminbi clearing
and settlement system for participating banks in Hong Kong.
For further details in respect of the remittance of Renminbi into and outside the PRC, see “There is only limited
availability of Renminbi outside the PRC, which may affect the liquidity of RMB Notes and the Issuer’s ability
to source Renminbi outside the PRC to service such RMB Notes” below.
There is only limited availability of Renminbi outside the PRC, which may affect the liquidity of RMB Notes
and the Issuer’s ability to source Renminbi outside the PRC to service such RMB Notes
As a result of the restrictions by the PRC government on cross-border Renminbi fund flows, the availability of
Renminbi outside of the PRC is limited. Since February 2004, in accordance with arrangements between the PRC
central government and the Hong Kong government, licensed banks in Hong Kong may offer limited Renminbidenominated banking services to Hong Kong residents and specified business customers. The PBoC, the central
bank of China, has also established a Renminbi clearing and settlement system for participating banks in Hong
Kong. On 19 July 2010, further amendments were made to the Settlement Agreement on the Clearing of RMB
Business (the “Settlement Agreement”) between the PBoC and Bank of China (Hong Kong) Limited (the
“RMB Clearing Bank”) to further expand the scope of RMB business for participating banks in Hong Kong.
Pursuant to the revised arrangements, all corporations are allowed to open RMB accounts in Hong Kong; there is
no longer any limit on the ability of corporations to convert RMB and there will no longer be any restriction on
the transfer of RMB funds between different accounts in Hong Kong.
However, the current size of Renminbi-denominated financial assets outside the PRC is limited. In addition,
participating banks are also required by the HKMA to maintain Renminbi liquidity ratios at no less than 25.0 per
cent. (computed on the same basis as the statutory liquidity ratio), which further limits the availability of
Renminbi that participating banks can utilise for conversion services for their customers. Renminbi business
participating banks do not have direct Renminbi liquidity support from the PBoC. They are only allowed to
square their open positions with the RMB Clearing Bank after consolidating the Renminbi trade position of
banks outside Hong Kong that are in the same bank group as the participating banks concerned with their own
trade position, and the RMB Clearing Bank only has access to onshore liquidity support from the PBoC to square
open positions of participating banks for limited types of transactions, including open positions resulting from
conversion services for corporations relating to cross-border trade settlement and for individual customers of up
to RMB20,000 per person per day and for the designated business customers relating to RMB received in
providing their services. The RMB Clearing Bank is not obliged to square for participating banks any open
positions resulting from other foreign exchange transactions or conversion services and participating banks will
need to source Renminbi from the offshore market to square such open positions.
On 14 June 2012, the HKMA introduced a facility for providing Renminbi liquidity to authorised institutions
participating in Renminbi business (“Participating AIs”) in Hong Kong. The facility will make use of the
currency swap arrangement between the PBoC and the HKMA. With effect from 15 June 2012, the HKMA will,
in response to requests from individual Participating AIs, provide Renminbi term funds to the Participating AIs
against eligible collateral acceptable to the HKMA. The facility is intended to address short-term Renminbi
liquidity tightness which may arise from time to time, for example due to capital market activities or a sudden
need for Renminbi liquidity by the Participating AIs’ overseas bank customers.
Although it is expected that the offshore Renminbi market will continue to grow in depth and size, its growth is
subject to many constraints as a result of PRC laws and regulations on foreign exchange. There is no assurance
57
that new PRC regulations will not be promulgated or the Settlement Agreement will not be terminated or
amended in the future which will have the effect of restricting availability of Renminbi offshore. The limited
availability of Renminbi outside the PRC may affect the liquidity of RMB Notes. To the extent the Issuer is
required to source Renminbi in the offshore market to service its RMB Notes, there is no assurance that the
Issuer will be able to source such Renminbi on satisfactory terms, if at all.
Investment in RMB Notes is subject to exchange rate risks
The value of Renminbi against the U.S. dollar and other foreign currencies fluctuates and is affected by changes
in the PRC and international political and economic conditions and by many other factors. All payments of
interest and principal will be made with respect to RMB Notes in Renminbi. As a result, the value of these
Renminbi payments in U.S. dollar terms may vary with the prevailing exchange rates in the marketplace. If the
value of Renminbi depreciates against the U.S. dollar or other foreign currencies, the value of investment in U.S.
dollar or other applicable foreign currency terms will decline.
Payments in respect of RMB Notes will only be made to investors in the manner specified in such RMB Notes
All payments to investors in respect of RMB Notes will be made solely (i) when RMB Notes are represented by
global certificates, transfer to a Renminbi bank account maintained in Hong Kong in accordance with prevailing
CMU rules and procedures, or (ii) when RMB Notes are in definitive form, transfer to a Renminbi bank account
maintained in Hong Kong in accordance with prevailing rules and regulations. The Issuer cannot be required to
make payment by any other means (including in any other currency or in bank notes, by cheque or draft or by
transfer to a bank account in the PRC).
58
DESCRIPTION OF THE GROUP
Overview
The Group offers a wide range of conventional financial services and banking products in the retail banking,
business banking and transaction management areas.
As at 31 March 2013, the Bank and the Group had:
• RM84,064.6 million (U.S.$27,179.0 million) and RM84,138.5 million (U.S.$27,202.9 million) in total assets,
respectively;
• RM59,032.7 million (U.S.$19,085.9 million) and RM59,231.8 million (U.S.$19,150.3 million) in loans and
advances, respectively;
• RM62,120.3 million (U.S.$20,084.2 million) and RM62,147.8 million (U.S.$20,093.0 million) in customer
deposits, respectively; and
• RM6,256.5 million (U.S.$2,022.8 million) and RM6,300.0 million (U.S.$2,036.9 million) in total equity,
respectively.
The Group’s operations are divided into five business divisions: the Retail Banking Division, the Business
Banking Division, the Corporate and Institutional Banking Division, the Transaction Banking Division and the
Markets Division. The operations of these five business divisions are complemented by the Group Functions
Division which carries out a Group-wide support function. As at 31 March 2013, 38.1 per cent. of the Group’s
net profits are derived from its Retail Banking Division.
AMMB Holdings Berhad (“AMMB Holdings”) controls 100.0 per cent. of the share capital of the Bank. AMMB
Holdings and its subsidiaries taken as a whole (the “AMMB Group”), was the sixth largest financial services
group in Malaysia in terms of consolidated total assets (RM127.0 billion (U.S.$41.1 billion)) (based on the
published financial results of both domestic and foreign financial services groups in Malaysia) as at 31 March
2013. As at 31 March 2013, the consolidated total assets of the Group represented 66.3 per cent. of the
consolidated total assets of the AMMB Group. The AMMB Group’s business operations include investment
banking, business banking, retail banking, Islamic banking, corporate and institutional banking, markets,
insurance, life assurance and other related financial services.
As at 31 March 2013, the Bank had issued and paid-up share capital of RM820,363,762 (U.S.$265,232,383)
divided into 820,363,762 ordinary shares of RM1.00 each.
History
The Group traces its history back to the incorporation of The Malaysia Industrial Finance Corporation Limited
(“MIFCL”) in Malaysia in 1964. MIFCL was renamed Arab-Malaysian Finance Berhad (“AMFB”) in 1977
following the acquisition of a 70.0 per cent. stake in AMFB by AMMB Holdings. In 1982, AMFB became a
wholly-owned subsidiary of AMMB Holdings.
In 1990, AMFB acquired First Malaysia Finance Berhad under a rescue scheme approved by the Ministry of
Finance of Malaysia. AMFB was listed on the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia) in
1992, with AMMB Holdings retaining a 65.0 per cent. shareholding in AMFB.
In December 2001, AMFB acquired the entire share capital of MBf Finance Berhad (“MBf Finance”). MBf
Finance was subsequently renamed AmFinance Berhad (“AmFinance”). AMFB transferred all of its assets and
liabilities to AmFinance on 15 June 2002. Following this transfer, AMFB was transformed into an investment
holding company. This restructuring created Malaysia’s then largest finance company in terms of assets and
branch network, in line with the consolidation objectives of the Financial Sector Master Plan issued by Bank
Negara Malaysia (“BNM”) at that time.
The Banking and Financial Institutions (Amendment) Act 2003 came into effect on 15 January 2004 which
allowed for the creation of a new banking entity through the merger of the commercial banking business and
finance company business within the same banking group (called a “banking and finance company” or
“BAFIN”). To take advantage of this regulatory liberalisation, AMFB was privatised and it became a
wholly-owned subsidiary of AMMB Holdings, and was delisted from Bursa Malaysia in March 2005.
AmFinance acquired all of the shares of its affiliate, AmBank Berhad (“AMBB”), on 1 June 2005. Subsequently,
as part of an internal reorganisation, the commercial banking business and assets and liabilities of AMBB were
merged into AmFinance pursuant to a High Court Vesting Order issued under section 50 of the Banking and
Financial Institutions Act 1989, and AmFinance adopted its present name, AmBank (M) Berhad. Following the
transfer of its commercial banking business into AmFinance, AMBB surrendered its commercial banking
59
licence, and was renamed as AMBB Capital Berhad (“AMBB Capital”). As a result of the merger, the Bank is
licensed as a composite commercial banking and finance company under the Banking and Financial Institutions
Act.
On 1 May 2006, further to the Government’s initiatives to promote Malaysia as an Islamic financial centre, and
the requirement for Malaysian banking groups to undertake Islamic financial services activities through a
separate legal entity, the Islamic banking business activities of the Group were transferred into AMBB Capital,
and AMBB Capital was later renamed AmIslamic Bank Berhad (“AmIslamic Bank”).
On 26 April 2007, AMMB Holdings obtained the approval of its shareholders at an Extraordinary General
Meeting of its proposed partnership with Australia and New Zealand Banking Group (“ANZ”) by way of ANZ’s
equity participation in the AMMB Group. As at 31 March 2013, ANZ had an effective shareholding of
23.8 per cent. in AMMB Holdings and was the single largest shareholder of AMMB Holdings.
On 12 April 2008, as part of an AMMB Group restructuring process, AmInvestment Bank Berhad’s
(“AmInvestment Bank”) fund-based business was transferred to the Bank (with respect to its non-Islamic
banking business) and to AmIslamic Bank (with respect to its Islamic banking business). AmInvestment Bank’s
100.0 per cent. owned offshore bank subsidiary, AmInternational (L) Ltd (“AMIL”) was also transferred to the
Bank by way of share transfer.
On 25 March 2010, the Bank issued RM1.4 billion (U.S.$0.5 billion) Senior Notes under its newly established
30-year RM7 billion (U.S.$2.3 billion) Senior Notes Issuance Programme, the first issue of senior notes by a
financial institution in Malaysia.
Recent Developments
On 3 December 2012, AMMB Holdings acquired MBF Cards (Malaysia) Sdn. Bhd. (“MBF Cards”). The
transaction involved the acquisition of MBF Cards’ card issuing and merchant acquiring businesses under Visa,
MasterCard, Japan Credit Bureau and China Union Pay licences, bill payments and MBF Cards’ ownership of
33.3 per cent. in Bonuskad Loyalty Sdn Bhd. The AMMB Group transferred MBF Cards’ assets to the Group
with effect from 1 July 2013.
The combined customer pool and expanded merchant acquiring business facilitates cross-selling of products and
services. The acquisition places the Group as the top three merchant acquirer in Malaysia and sixth in cards in
circulation and provides full control over the line of credit business model.
Recent Awards
The AMMB Group and the Group consistently receives awards and accolades across its businesses and
operations. Recent examples include:
AMMB Group
• Best of Asia Award (Corporate Governance Asia Recognition Awards 2011)
• Best Service Providers — Risk Management, Malaysia (The Asset Triple A Transaction Banking Awards 2013)
• Best Risk Management Solution, Malaysia — London Biscuits (The Asset Triple A Transaction Banking
Awards 2013)
• Best Investor Relations Companies in Malaysia (AMMB Holdings, Second Consecutive Year) (Corporate
Governance Asia Second Asian Excellence Recognition Awards 2012)
• Best Chief Financial Officer for Investor Relations — Large Cap, awarded to Ashok Ramamurthy, then Deputy
Group Managing Director and Chief Financial Officer, AMMB Group (Inaugural Malaysia Investor Relations
Awards 2011)
Retail Banking (eBusiness)
• Enterprise eBusiness Excellence Award (Share Guide Association Malaysia Information and Communication
Technology Awards 2011)
Retail Banking (Contact Centre)
• 1st Place for Best Contact Centre Team Leader (under 100 seats) (13th Customer Relationship Management
and Contact Centre Association of Malaysia Awards 2012)
• 1st Place for Best Contact Centre Support Professional — Training/Human Resource (under 100 seats) (13th
Customer Relationship Management and Contact Centre Association of Malaysia Awards 2012)
60
• 2nd Place for Corporate Social Responsibility Award (13th Customer Relationship Management and Contact
Centre Association of Malaysia Awards 2012)
Retail Banking (Customer Service)
• AmBank — Best of Malaysia Service to Care Champion 2011 — Best Customer Satisfaction (Conventional
Banking Category) (Service to Care Award 2011)
Markets
• Best FX Bank for Corporates and Financial Institutions, Malaysia (6th Annual Alpha Southeast Asia Best
Financial Institution Awards, 2012)
Simplified AMMB Group Corporate Structure Chart
AMIL, through which the Group carries out offshore banking operations, and AmCSB, which carries out asset
financing and credit card servicing, are the Bank’s only material subsidiaries. The other subsidiaries of the Bank
together contributed less than 1.0 per cent. of the Group’s total net profit for the financial year ended 31 March
2013.
The following chart shows the relationship between AMMB Holdings, the Bank and its subsidiaries as at the date
of this Offering Circular:
AMMB
100%
Amlslamic
100%
AmBank
100%
100%
100%
MBFC
AmCSB
100%
AMFB
100%
AmInvestment
Other
Subsidiaries
AMIL
100%
100%
AIGB
AMAB
100%
AIM
51%
100%
AIS
AmGI
100%
Other
Subsidiaries
AmGH
100%
AmLife
Other
Subsidiaries
100%
AmFamily
LEGEND
AMMB
AmIslamic
AmBank
MBFC
AMFB
AmInvestment
AIGB
AMAB
AIM
AIS
AmGH
AmGI
AmLife
AmFamily
AMIL
AmCSB
AMMB Holdings Berhad
AmIslamic Bank Berhad
AmBank (M) Berhad
MBf Cards (M’sia) Sdn Bhd
AMFB Holdings Berhad
AmInvestment Bank Berhad
AmInvestment Group Berhad
AMAB Holdings Sdn Bhd
AmInvestment Management Sdn Bhd
AmInvestment Services Berhad
AmGeneral Holdings Berhad
(formerly known as AmG Insurance Berhad)
AmGeneral Insurance Berhad
(formerly known as Kumia Insurans (Malaysia) Berhad)
AmLife Insurance Berhad
AmFamily Takaful Berhad
AmInternational (L) Ltd
AmCard Services Berhad
(formerly known as Arab-Malaysian Credit Berhad)
Competitive Strengths
The Group’s principal competitive strengths are as follows:
•
Strategic partnership with an international banking and financial services group
The strategic partnership with ANZ enables the Group to leverage off ANZ’s international banking and
financial services capabilities and experience by collaborating in various enhancement areas including risk
management, retail and small and medium enterprise (“SME”) banking, product innovation, branding, IT
61
infrastructure, training and development of human resources. This has resulted, and continues to result, in
the following benefits:
(i)
Risk Management Framework: improvements of credit risk management systems, knowledge transfer
on the implementation of regulatory capital requirements and enhancement of financial discipline.
(ii) Retail and SME Banking: enhancements in the Group’s credit card business (designed to capture a
larger share of the fast-growing Malaysian credit card market), its deposit-raising strategies, its
mortgages business and its branch services.
(iii) Product Innovation: product enhancement and innovation as well as cross-selling activities via the
Group’s existing franchise and distribution channels.
(iv) Branding: a unique selling point for the Group to position itself as a domestic bank with a significant
foreign shareholding, further strengthening its brand equity.
(v) IT Infrastructure and other Operations: enhancement of the Group’s existing IT infrastructure
(including its internal auditing and reporting systems) and exposure to highly automated banking
processes and centralised back office operations.
(vi) Training and Development: implementation of international service standards through staff secondment
and training to enhance the overall quality of its human resources.
(vii) Regional Presence and Cross-Border Transactions: access to a wider international network for
remittance and trade finance operations.
•
Extensive and diversified distribution network
As at 31 March 2013, the Group operated 183 branches (including one sales & service kiosk) throughout
Malaysia. As at 31 March 2013, the Group had 882 automated teller machines (“ATMs”), 278 cash deposit
machines (“CDMs”), 205 cheque deposit machines (“CQMs”) and 163 self-service Electronic Banking
Centres (“EBCs”) in Malaysia. Besides its network of dedicated nationwide marketing officers and personal
bankers, the Group also leverages the sales agents across the AMMB Group.
In addition, the Group initiated the weekend banking and extended-hour banking concepts in Malaysia, and
offers internet and mobile banking facilities, through its “AmOnline” and “AmGenie” channels, to all of its
customers.
•
Extensive and diversified retail banking business
The Group has a well-established retail franchise and offers a diversified range of retail banking products
and services covering six principal areas: (i) auto finance; (ii) mortgages, margin financing and other
consumer loans; (iii) credit cards and line of credit; (iv) asset financing and small business (including
leasing and equipment financing); (v) transactional banking, bancassurance and wealth management
(including investment products and insurance products); and (vi) deposits (including savings accounts,
demand deposits, fixed term deposits, the “AmBank-ANZ Get Set” product and the “AmBank@Work”
product (a recently launched employer and employee focused banking solution)). This range provides the
Group with an extensive retail customer base. As at 31 March 2013, the Group’s retail assets were RM34.3
billion (U.S.$11.1 billion).
•
Leading market position in key products
The Group is one of the largest providers of auto financing in Malaysia, with a market share of
approximately 17.0 per cent. as at 31 March 2013, and currently has relationships with over 3,000 auto
dealers in Malaysia. These relationships provide an extensive distribution network for the Group’s auto
financing products.
•
Ability to provide and cross-sell a wide range of products and services
As part of the AMMB Group, the Group is able to leverage a groupwide sales force to assist it in offering a
wide range of products and services provided by other members of the AMMB Group, making it a
“one-stop” financial centre for customers. At the Group’s branches, customers can purchase, for example,
unit trust funds (which the Group cross-sells with AmInvestment Group Berhad), insurance products (which
the Group cross-sells with AmLife Insurance Berhad and AmGeneral Insurance Berhad) and securities
trading services offered by other members of the AMMB Group.
62
•
Established and reputable brand name
The Issuer believes that the Group has established a reputable and recognised brand name in Malaysia. In
2012, the Group was selected as one of the Top 30 Most Valuable Brands in Malaysia through a brand
valuation exercise carried out by the Association of Accredited Advertising Agents Malaysia in
collaboration with Interbrand, a global brand consultancy firm. This recognition depicts the strength of the
Group’s brand in Malaysia.
•
Strategic alliances
The Group has strategic alliances in place which give it a competitive advantage in providing financing
services by enabling it to expand its business network. For example, the Group offers co-branded credit
cards with a number of strategic partners (including Cosway pharmacies, Rockwills estate planning group
and Royal Selangor Golf Club). In addition, the Group has mortgage alliances with certain state
governments and housing developers. In the auto finance sector, the Group has strong business alliances
with car manufacturers, car principals, franchise holders and auto dealers. The Group also offers prepaid
credit cards and the “NexG Card” through an alliance with one of its key strategic partners, Telekom
Malaysia Berhad. The Group also has alliances in place with Travelex and Western Union through which it
offers foreign currency, remittances and other related products and services.
Strategy
The Group’s principal strategies, which are aligned with AMMB Group’s key strategic agenda, are as follows:
•
Integrate acquisitions and deliver synergies
The Group aims to increase its income by integrating acquired businesses and assets (such as MBF Cards,
discussed above in “Recent Developments”). The Group’s focus will be on realising operational efficiencies
from the economies of scale resulting from these acquisitions. It also proposes to leverage the expanded
customer base to take advantage of cross-selling opportunities.
•
Simplify its business model and streamline processes
The Group is progressively revising its business model to focus on customers as opposed to products. The
Group has put in place plans to simplify its business structures and processes to better serve its customers by
providing financial solutions which better meet customer requirements. The Group plans to implement this
strategy through strategic investments in human resources and technology, while maintaining an efficient
cost-to-income ratio.
•
Accelerate organic growth
The Group aims to grow organically by focusing on cross-selling initiatives targeting small businesses and
the emerging affluent customer base. The Group plans to increase cross-selling by developing closer
relationships with existing customers and then leveraging those relationships to generate additional income.
The Group is aiming to increase its market share in the small business and emerging affluent customer
market segments.
In the retail market, the Group will be putting in place a refreshed marketing approach which will be
supported by new brand values and enhanced customer analysis.
In the non-retail market, the Group intends to focus on developing its relationships with its existing
Corporate and Institutional Banking Division and Business Banking Division clients by improving
geographical coverage through regional offices. The Group intends to leverage opportunities resulting from
The Economic Transformation Programme, an initiative launched by the Malaysian government in
September 2010 to turn Malaysia into a high income economy by the year 2020. In particular, the Group is
focused on providing comprehensive financial solutions to facilitate domestic private investments generated
by The Economic Transformation Programme. In the Transaction Banking Division, the Group plans to
leverage ANZ’s expertise and invest in systems to improve the delivery, functionality and ease of use of its
foreign currency services. It also aims to ensure that current account and savings account balances are
retained within the Group over the long-term by actively managing accounts through customer reviews to
increase business, particularly with high transaction value clients. The Markets Division is aiming, by
increasing cross-selling efforts to non-retail customers, to progressively increase the use of derivatives and
foreign exchange products among its clients.
63
•
Build scale in specialist businesses
The Group’s intends to leverage the AMMB Group’s strategic partnership with ANZ to further enhance
development of new products and services and to take advantage of cross-border opportunities through its
expanded distribution capabilities. The AMMB Group will consider entering into other strategic
partnerships on an ongoing basis and the Group plans to capitalise on beneficial opportunities as and when
they may arise.
•
Optimise capital
The Group targets optimum returns on capital by proactively managing capital in accordance with evolving
regulatory requirements and AMMB Group policies while simultaneously evaluating business opportunities
on a risk-adjusted basis.
The Group’s Businesses
The Group’s operations are divided into five core business divisions: the Retail Banking Division, the Business
Banking Division, the Corporate and Institutional Banking (“CIB”) Division, the Transaction Banking Division
and the Markets Division (which crosses the Group’s various lines of business, including business and retail
banking). The operations of these five business divisions are complemented by the Group Functions Division
which carries out a Group-wide support function.
The following table sets out the revenue and net profit contributions of the Group’s business divisions as a
percentage of the Group’s consolidated total revenue and consolidated net profit as at 31 March 2013. The
contributions of the Transaction Banking Division are captured within the contributions of the Retail Banking
Division, the Business Banking Division and the CIB Division:
As at 31 March
2013
(RM million)
(U.S.$ million)
(% of
consolidated
Group total)
Operating Revenue:
Retail Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and Institutional Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Functions and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,125.2
606.6
1,229.3
293.3
672.5
687.1
196.1
397.4
94.8
217.4
43.1
12.3
25.0
6.0
13.6
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,926.9
1,592.8
100.0
Net Profit:
Retail Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Business Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate and Institutional Banking . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Functions and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
476.8
228.7
300.5
160.9
84.3
154.1
73.9
97.2
52.0
27.3
38.1
18.3
24.0
12.9
6.7
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,251.2
404.5
100.0
The Group’s principal retail banking activities are the provision of deposit products, consumer loans (such as
auto financing, asset financing, mortgages, lines of credit and margin financing), small business financing and
credit cards.
Currently, the focus of the Business Banking Division is corporate and commercial lending, in particular, to suit
the domestic and international financial requirements of SMEs. The Business Banking Division offers products
and services encompassing corporate and commercial banking, primarily working capital financing and other
commercial loans, deposit taking and transaction banking covering cash management services and trade
facilities.
The CIB Division provides wholesale banking services for large corporate and institutional clients and offers a
wide spectrum of commercial banking and investment banking products and services including lending, deposit
taking, transaction banking covering cash management services and trade facilities, foreign exchange and
derivatives, offshore banking, debt and equity capital markets and advisory and investment products.
The Transaction Banking Division offers a full suite of trade finance and cash management solutions which are
customised for the Group’s business/corporate clients. Trade services include domestic sales and purchase
financing, import and export financing, structured trade and trade advisory services. The cash management
64
services provided by the Group are designed to assist clients in managing their receivables and payables and
include internet banking, web-based payroll, payment, liquidity management, collection and electronic invoice
products.
The Markets Division offers foreign exchange, fixed income, derivative and structured products and services.
These offerings are supported by front-end dealing and risk management systems.
Retail Banking
The Group’s Retail Banking services and products are offered across the following business units:
• auto financing;
• mortgages and other consumer loans;
• credit cards and line of credit;
• transactional banking, bancassurance and wealth management (including investment products and insurance
products);
• deposits (savings accounts, demand deposits, fixed term deposits, “AmBank-ANZ Get Set” and
“AmBank@Work”); and
• asset financing and small business (including leasing and equipment financing).
As at 31 March 2013, the Retail Banking Division accounted for 38.1 per cent. of the Group’s consolidated net
profits and served approximately four million customer accounts through its extensive distribution network of
branches, ATMs, CDMs, CQMs, EBCs, a 24-hour customer contact centre, mobile banking and internet banking
services. The Group’s retail assets (defined as loans to individuals for purchase of transport vehicles, purchase of
residential properties and credit cards receivables) were RM34.3 billion (U.S.$11.1 billion) as at 31 March 2013,
an increase of 1.2 per cent. compared with the previous financial year due to an increase in the size of the loans
portfolio.
During the year ended 31 March 2013, Retail Banking Division revenues totalled RM2,125.2 million
(U.S.$687.1 million), consistent with the previous financial year, primarily as a result of a stable retail asset base.
During the year ended 31 March 2013, net loans and advances provided by the Retail Banking Division totalled
RM33.6 billion (U.S.$10.9 billion), an increase of 1.3 per cent. compared with the previous financial year.
To emphasise its commitment to customers, the Group has adopted a customer service campaign known as
Customer F.I.R.S.T. (which stands for Friendly, Innovative, Responsive, Simple and Trustworthy). Under this
campaign, the Group consistently benchmarks itself against the world’s best banking practices and reviews and
rewards branches that excel in customer service. In addition, the Group has rolled out the sales and service
centres model to integrate its bancassurance and branch network to improve performance and efficiency and to
focus on both sales and service at all branches. Personal banking officers have also been placed at branches to
offer the full range of retail banking products.
In 2012, the Group launched AmSignature Priority Banking, a personalised banking product aimed at the affluent
customer segment. The Group also launched AmBank-ANZ Get Set, a solution primarily aimed at Group
customers with children studying in Australia, which enables customers to open an ANZ account in Australia by
completing most of the formalities at a local Bank branch in Malaysia. As part of the AmBank-ANZ Get Set
solution, Group customers enjoy reduced remittance fees, preferential foreign exchange rates, e-remittance
services and bonus credit card points.
Auto financing
As at 31 March 2013, the Group had RM15.7 billion (U.S.$5.1 billion) in loans outstanding in the purchase of
transport vehicles sector, representing a market share of approximately 17.0 per cent. (according to BNM official
statistics). In addition, the financing of transport vehicles represented approximately 25.8 per cent. of the Group’s
total loan portfolio as at 31 March 2013. The following table sets out the Group’s vehicle financing portfolio as
at the dates indicated.
2011
(RM billion)
Loans for purchase of transport vehicles . . . . . . . . . . . . . . . .
17.3
As at 31 March
2012
2013
(RM billion) (RM billion) (U.S.$ billion)
15.9
15.7
5.1
The Group has historically focused on financing for new cars. Since 31 March 2011, financing for new cars has
represented 68.0 per cent. of the auto financing unit’s total loans. The Group has established relationships with
65
over 3,000 new, used and reconditioned vehicle dealers in Malaysia. The Group also has strategic alliances with
all of the major car manufacturers and car distributors in Malaysia so as to increase growth in, and diversify, its
vehicle financing portfolio, including amongst others, Honda Malaysia Sdn. Bhd., Mercedes-Benz Malaysia,
Naza Group of Companies, Perodua Sales Sdn. Bhd., Proton Edar Sdn. Bhd., the Sime Darby Automotive Group
and UMW Toyota Motor Sdn. Bhd.. In 2012 the Group entered into 18 promotional campaigns with, among
others, Honda Malaysia Sdn. Bhd., Naza Kia Malaysia Sdn. Bhd., Perodua Sales Sdn. Bhd., Proton Edar Sdn.
Bhd., Tan Chong Group and Sime Darby Auto Connexion.
In 2011 the Group also formed a strategic alliance with “MyEG” (the electronic Malaysian government services
portal) to enable customers to renew their road tax at Group branches or over the phone using the Group’s Auto
Express renewal service. The Group is one of two providers of this service within the Malaysian banking
industry and has 37 MyEG kiosks placed in strategically situated branches.
Auto financing can be offered on a fixed or floating rate basis, generally secured by the vehicle being purchased
and typically has a term of three to seven years (with a maximum of nine years).
In June 2004, the Group’s auto financing operations and fulfilment department obtained the ISO 9001
certifications from the Department of Standards Malaysia, the United Kingdom Accreditation Service and the
Comité Francais d’aAccréditation, for auto financing processing, documentation, disbursement and customer
service. In June 2007, the Group won the Excellence in Automobile Lending Award for the Asia Pacific and
Persian Gulf Region at the Sixth Asian Banker Excellence in Retail Financial Services Awards, the highest
accolade ever awarded to a Malaysian vehicle financier. This award recognised the Group’s commitment to
building business franchises that are sustainable, competitive and profitable. In 2008, the Group was selected as
the Frost & Sullivan Malaysian Automotive Finance Company of the Year, recognising the Group’s contribution
and achievement in the Malaysian automotive financing industry.
The Group employs an automated credit scoring system as part of its ongoing efforts to improve credit risk
management. In addition, it aims to continuously improve its risk management scorecards and credit scoring
capabilities to offer customers differential interest rates according to their credit profile.
The Group continues to reinforce its presence in the vehicle financing market through marketing initiatives,
participation in roadshows and sales promotions with vehicle distributors and dealers throughout Malaysia.
As part of the efforts to improve the overall profitability of the auto financing business, in August 2007 the
Group engaged a consulting firm to review the overall business model for its vehicle financing business. The
review was completed in March 2008 and identified profitable and loss-making segments, as a result of which,
action plans were drawn up to strengthen the profitability of the Group’s auto financing business. The key
recommendations included concentrating growth in the profitable segments, exiting the worst loss-making
segments, improving the credit scoring model, restructuring roles and responsibilities and target setting units,
executing cost targets, introducing new pricing models and decision governance structures. As at the date of this
Offering Circular, these key recommendations have largely been implemented.
Mortgages and Other Consumer Loans
In the residential mortgages segment, the Group had an approximate 4.0 per cent. market share as at 31 March
2013 with loan assets of RM12.1 billion (U.S.$3.9 billion), based on figures published by BNM of residential
property purchases. As at 31 March 2013, the financing of residential mortgages represented approximately
19.9 per cent. of the Group’s total loan portfolio. The table below sets out the Group’s residential property
financing portfolio as at the dates indicated.
2011
(RM billion)
Loans for residential property . . . . . . . . . . . . . . . . . . . . . . . .
11.2
As at 31 March
2012
2013
(RM billion) (RM billion) (U.S.$ billion)
11.6
12.1
3.9
The Group’s residential property loans normally have terms of between 15 and 30 years, with a maximum tenor
of 40 years. Residential property loans are typically variable rate for the life of the loan, and are secured by a
registered charge on the property being financed. Interest on residential property loans is calculated either on a
daily or monthly basis.
The Group’s marketing activities in relation to mortgages and other consumer loans include product-bundling
initiatives and active participation in sales launches and major property expositions, such as the Malaysia
Property Expo (MAPEX, which is organised annually by the Real Estate and Housing Developers’ Association in
Malaysia). The Group also has strategic alliances with the state governments of Sabah and Selangor, in Malaysia
for the provision of financing for low-cost housing, as well as partnerships with selected housing developers and
real estate agents.
66
The Group’s strategic priorities in the residential mortgage segment are to (i) focus on property development
aligned with the second phase mass rapid transit-linked project, (ii) leverage on government initiated schemes
(including the “My First Home” scheme and the “PR1MA” affordable home initiative), (iii) develop strategic
alliances with government-linked/publicly-listed companies and (iv) expand developer tie-ups in suburban and
rural areas.
The Group currently has five mortgage business centres in Kuala Lumpur, Penang, Johor Bahru, Kuching and
Kota Kinabalu in Malaysia, as well as 79 relationship desks with personal bankers located in branches throughout
Malaysia.
Credit Cards and Other Line of Credit
As at 31 March 2013, the Group had a total of 283,000 credit cards in circulation. The credit card business’ total
loan receivables as at 31 March 2013 amounted to RM1.4 billion (U.S.$458.3 million).
Revenues from the Group’s credit card business consist principally of income generated by the card-issuing
aspect of its business, including finance charges on outstanding balances, late payment charges, cash advance
fees, interchange fees and annual fees. Besides that, the Group also generates significant fee revenue (in the form
of merchant discount revenue and terminal rental charges) from the full range of card acceptance facilities that it
offers to over 50,000 merchants across Malaysia, covering branded cards issued under the “Mastercard”, “Visa”,
“UnionPay”, “American Express”, “Diners” and “MEPS” brands.
Over the last three years, BNM has imposed restrictive guidelines on the credit card industry, including the
imposing of a two card limit for customers with an annual income of less than RM36,000, imposing a minimum
annual income requirement of RM24,000 for credit card applications and requiring mandatory income documents
for new card issuance. The effect of these guidelines, combined with the RM50-per-card service tax implemented
in Malaysia at the end of 2009, saw the number of the Group’s cards in issue decrease by 6.2 per cent. (from
212,351 to 199,242) during the course of the financial year ended 31 March 2012 and by 4.9 per cent. (from
199,242 to 189,427) during the course of the financial year ended 31 March 2013, which is broadly in line with
the industry-wide decrease over the same time period.
The Group offers co-branded cards with a number of strategic partners. It also enters into strategic tie-ups with
merchants such as Berjaya Starbucks Coffee Company Sdn. Bhd., Cathay Cineplexes Sdn. Bhd. and COSWAY
(M) Sdn. Bhd., for example. The Group also offers the “Signature”, “World” and “Infinite” credit cards which
are designed to cater for the affluent and high net worth customers.
In addition, the Group offers credit cards packaged together with its other retail lending products, such as
residential property loans and auto financing. Recent promotions have included the usage campaigns “20% Cash
Back” and “Spend & Get”, as well as campaigns designed to build loan receivables, such as the “Balance
Transfer Quick Cash” and “Flexi-Pay Plan” campaigns.
The Group also offers prepaid card products, which provide flexibility to the cardholder without having to satisfy
a minimum age or annual income requirement. Products launched by the Group include the “NexG Prepaid
Mastercard”, “Tropicana Prepaid Mastercard” and “Cosway Prepaid Mastercard”. As at 31 March 2013, the
Group had over 27,000 prepaid cards in circulation.
The Group issues “Europay”, “Mastercard” and “Visa” compliant chip-based credit cards. The Group employs a
card management system, called CardPro, to support the card issuance and acquisition businesses.
Transactional Banking, Bancassurance and Wealth Management
In addition to cross-selling deposits and demand deposits under transactional banking and lending products, such
as mortgages, auto financing and micro loans, this business unit within the Retail Banking Division offers
customers with access to investment products such as fixed income and equity unit trusts, insurance products
(such as mortgage reducing term assurance, life, general and auto insurance) and other bancassurance products.
Such investment and insurance products are substantially sourced from within the AMMB Group.
To expand its marketing and distribution of unit trust products in the industry, the Group partners with third party
funds management companies and other leading mutual fund companies which act as sales agents for its unit
trust funds. The Group employs sales representatives at its major branches to strengthen its sales platform and its
focus on promoting the entire range of its consumer sales products.
Deposits
The various deposit products offered by the Retail Banking Division include savings accounts, demand deposits
and fixed term deposits.
67
The Group recently launched it’s the “AmBank-ANZ Get Set” product. “AmBank-ANZ Get Set” is primarily
aimed at Group customers with children studying in Australia, and enables customers to open an ANZ account in
Australia by completing most of the formalities at a local Group branch in Malaysia. Leveraging on the back of
the Group’s “Foreign Currency Current Account” product, the product provides for funds to be available in
Australia prior to leaving Malaysia. As part of the “AmBank-ANZ Get Set” solution, and subject to satisfaction
of certain conditions, Group customers may enjoy reduced remittance fees, preferential foreign exchange rates,
e-remittance services and bonus credit card points.
In July 2011, the Group launched its “AmBank@Work” product which is designed to offer comprehensive
banking solutions to both employer and employee, including payroll and cash management services. Upon the
opening of a salary crediting deposit account, the customer is offered special fee savings, bonus interest and
rewards, plus full access to the Group’s extensive branch network and electronic banking services. In addition,
such customers benefit from special rates for automobile and home financing, investment in equity funds offered
by the AMMB Group fund management division, AmInvest and premiums for the Group’s comprehensive
personal accident policy.
Asset Financing and Small Business
The Group’s Asset Financing and Small Business (“AFSB”) unit primarily provides financial solutions which are
focused on equipment and working capital financing, as well as providing multi-trade facilities to SMEs. These
financial solutions include industrial hire purchase solutions, loans funded by BNM, loans backed by Credit
Guarantee Corporation Malaysia Berhad (“CGC”), block discounting and overdrafts.
In line with Malaysian government policy, the Group also offers its “Small Business Solution” financial
solutions. These solutions provide financing to small businesses by offering SME working capital loans and
financing at all the Group’s branches in Malaysia.
As at 31 March 2013, the Group’s AFSB gross loan portfolio amounted to RM2.0 billion (U.S.$653.7 million).
Besides focusing on direct sales, the Group’s AFSB vendor team focuses on strengthening their relationships
with suppliers and vendors by way of strategic tie-ups in order to generate sales and garner business referrals.
The vendor team focuses on suppliers in the construction and transport industries. In the construction industry,
the vendor team’s suppliers include Tan Chong Industrial Equipment and Sunway Group, both of whom supply
excavators for which the AFSB unit provides financing. In the transport industry, the vendor team’s suppliers
include Volvo and Scania, both of whom supply prime movers for which the AFSB unit provides financing.
The Group’s AFSB unit also provides financial solutions to customers referred by the CIB Division and the
Transaction Banking Division.
Business Banking
The Business Banking Division provides a wide range of banking products and services to corporate and
commercial customers. The Business Banking Division also targets SMEs, which have been identified as having
growth potential. The primary range of products and services offered by the Business Banking Division
comprises working capital financing and other commercial loans (such as overdrafts, revolving credit facilities,
project financing, bridging loans and syndicated loan participation), trade facilities (such as letters of credit, trust
receipts, guarantees, export credit refinancing, bankers’ acceptances and foreign currency trade loans), factoring
and cash management services.
As at 31 March 2013, the Business Banking Division accounted for 18.3 per cent. of the Group’s consolidated
net profits.
During the year ended 31 March 2013, division revenues totalled RM606.6 million (U.S.$196.1 million), an
increase of 6.8 per cent. compared with the previous financial year. The growth of the Business Banking Division
primarily reflects an increase in fee income and a growth in assets.
During the year ended 31 March 2013, loans and advances provided by the Business Banking Division totalled
RM17.5 billion (U.S.$5.7 billion), an increase of 11.1 per cent. compared with the previous financial year.
The division’s products and services are offered through the Bank’s head office in Kuala Lumpur and four
Regional Business Centres (“RBCs”) in Johor Bahru, Kota Kinabalu, Kuching and Penang. The Business
Banking Division’s RBCs are further supported by 13 Commercial Business Centres (“CBCs”) strategically
located throughout the country. The CBCs provide marketing services and serve as document collection centres.
In addition, the Business Banking Division utilises the Group’s branch network to provide support and services
to corporate customers.
68
Corporate and Institutional Banking
The CIB Division provides wholesale banking services for large corporate and institutional customers and offers
a wide spectrum of commercial banking and investment banking products and services.
As at 31 March 2013, the Corporate and Institutional Banking Division accounted for 24.0 per cent. of the
Group’s consolidated net profits.
During the year ended 31 March 2013, division revenues totalled RM1.2 billion (U.S.$397.4 million), an increase
of 9.9 per cent. compared with the previous financial year. The income growth of the Corporate and Institutional
Banking Division was underpinned by strong growth in lending, deposits and transactional banking.
During the year ended 31 March 2013, loans and advances provided by the Corporate and Institutional Banking
Division totalled RM13.7 billion (U.S.$4.4 billion), an increase of 13.0 per cent. compared with the previous
financial year.
The CIB Division focuses on building and developing strong relationships with government-linked corporations,
government and state-owned public entities, foreign and local multi-national companies, financial institutional
groups, privately held conglomerates and publicly listed corporates.
The division also works closely with other divisions within the Group to structure comprehensive financial
solutions, which include lending, deposit taking, liability management solutions, transaction banking covering
cash and trade, foreign exchange and derivatives, offshore banking, debt and equity capital markets, as well as
advisory and investment products.
The division concentrates on niche client groups and targeted industry sectors, such as the construction/
infrastructure and oil and gas industries. The division is further supported by the four RBCs and an offshore
branch in Labuan, ensuring that the Group has a CIB footprint across Malaysia and the Labuan International
Business and Financial Centre.
Financial Institutions Group
FIG, a division within CIB, provides industry-focused strategic coverage of banks and non-bank financial
institutions including credit institutions, stockbrokers, insurers and asset managers.
The products and services offered by the FIG division include treasury and markets solutions, capital and liability
management advisory services, senior debt and capital fundraising products and merger and acquisition advisory
services.
The FIG division also undertakes the origination and active management of domestic and foreign financial
institution counterparty lines to broaden and diversify the Group’s connectivity with global capital markets.
Offshore Banking
The Group’s offshore banking operations in the Labuan International Business and Financial Centre are carried
out by the Bank’s offshore branch in Labuan and by AMIL, a wholly-owned subsidiary of the Bank. This unit
focuses on providing foreign currency financing solutions to Malaysian corporations with activities outside
Malaysia.
Transaction Banking
The Transaction Banking Division offers a full suite of trade finance and cash management solutions which are
customised for the Group’s business and corporate clients. The Group’s trade finance and cash management
solutions are aimed at making business transactions for customers cost effective and efficient. Trade finance
solutions include domestic sales and purchase financing, import and export financing, structured trade and trade
advisory services. The cash management services provided by the Group are designed to assist clients in
managing their receivables and payables and include internet banking, web-based payroll, payment, liquidity
management, collection and electronic invoice products.
The financial results of the Transaction Banking Division are accounted for in the results of the Retail Banking
Division, the Business Banking Division and the CIB Division.
The Transaction Banking Division’s strategy is to focus on its core cash management and trade finance product
lines in order to increase current account balances under management. It also aims to offer tailor-made solutions
for customers’ supply chain requirements to improve working capital cycles and process efficiency.
In mid-2012, the bank rolled-out “AmTrade”, an internet-based trade system, to enhance the service provided by
the Transaction Banking Division to its customer base.
69
Markets
The Markets Division operates as the gateway to the financial markets for the Bank.
As at 31 March 2013, the Markets Division accounted for 12.9 per cent. of the Group’s consolidated net profits.
The division has traditionally focused on the fixed income segment and is leveraging that established track record
in order to expand into the foreign exchange and derivatives business, via its strategic collaboration with ANZ.
The Group’s foreign exchange and derivatives business has seen revenues increase by more than 46 per cent.
over the last three years. As at 31 March 2013, the foreign exchange and derivatives business comprised 40.8 per
cent of the Markets Division’s profit after tax.
The Markets Division’s strategic initiatives include leveraging its strategic partnership with ANZ and shifting its
focus to client solutions, which it aims to achieve through its multi-product sales team.
Technology
The Group has a robust and secure technology infrastructure and there are on-going investments to ensure
technology currency, enhance security controls and support business growth. The Group’s information security
management conforms to industry standards as well as BNM’s policies and guidelines.
The Group carries out comprehensive live disaster recovery readiness tests at least once a year. Recovery
techniques are employed to ensure data integrity and a daily back-up of the Group’s critical data is stored offsite.
The Group’s disaster recovery policies and procedures comply with national standards and BNM requirements.
Network
Branches
The Group has a physical presence in all major towns in Malaysia. As at 31 March 2013, the Group had 183
branches nationwide (including one sales & service kiosk). The table below shows the number of branches the
Group had in the different regions and states of Malaysia as at 31 March 2013.
Region
1
2
3
4
5
6
States
No. of
Branches
Central . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Northern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Southern . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
East Coast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sarawak . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sabah . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65
42
35
14
17
10
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
183
In addition, AmIslamic Bank Berhad has three Islamic banking branches through which conventional banking
products and services are also offered by the Group.
As at 31 December 2012, the Group was ranked sixth among local banks in Malaysia in terms of number of
branches based on the latest report published by The Association of Banks in Malaysia.
e-Channels
In addition to its branches, the Group has established e-channels for its products and services, including ATMs,
CDMs, CQMs and EBCs, internet banking, a 24-hour contact centre and mobile banking. As at 31 March 2013,
the Group had 882 ATMs, 278 CDMs, 205 CQMs and 163 EBCs. EBCs are facilities comprising ATMs and
CDMs or CQMs. In order to reduce its branch transaction costs and to improve services offered to customers, the
Group continues to promote the use of EBCs.
In addition, internet banking (through AmOnline) allows customers to perform selected transactions over the
internet including paying their bills, checking their account balances and transferring funds online. The Group
continues to encourage customers to use its online banking services for improved customer service productivity.
The Group’s award winning contact centre, which operates 24 hours a day, enables customers to access financial
products and services over the telephone with both an automated system and live operators. Customers can check
their account balances and transaction history, transfer funds, obtain insurance services, and make credit card and
loan repayments and subscribe to new services. The contact centre is equipped with automated self-service
support technology, predictive auto dialler, multi-channel integration (which synchronises the contact centre with
other delivery channels) and automated service request tracking.
70
The Group also has a mobile banking service (“AmGenie”) that allows customers to perform certain banking
transactions using their mobile telephones. Current services provide for, amongst other things, reloading prepaid
mobile telephone accounts, making balance enquiries, checking transaction history, managing cheques (including
stopping cheques and requesting cheque books), transferring funds within accounts and to third parties, making
inter-bank Giro transfers, checking rates and paying bills. In addition, the Group currently has partnerships with
117 billers and payee corporations including utilities, clubs and telecommunication providers, which enable the
Group’s customers to transact or pay their bills with those companies through the use of online banking and
mobile banking.
Litigation
The Group may from time to time be involved in a number of legal or arbitration proceedings in the course of its
business. Neither the Issuer nor any member of the Group is involved in any legal or arbitration proceedings
(including any proceedings which are pending or threatened of which the Issuer is aware) which may have or
have had in the 12 months preceding the date of this Offering Circular a significant and material effect on the
financial position of the Issuer or the Group.
71
FUNDING, LIQUIDITY AND CAPITAL ADEQUACY
Introduction
The Group’s funding strategy is to continue to diversify its funding sources, customer base and maturity profile.
The Group’s funding strategy is guided by such factors as the Group’s target net loan-to-deposit ratio, the
maturity profile of its deposit base and the Group’s ratio of retail deposits to corporate deposits. These targets
and parameters are set by and monitored by the Group CEOs Committee and benchmarked against BNM’s
guidelines and targets.
Funding
Most of the Group’s funding is denominated in Malaysian Ringgit and is sourced from retail and business
customer deposits. As at 31 March 2013, customer deposits accounted for 89.0 per cent. of the Group’s total
sources of funds, while deposits and placements of banks and other financial institutions accounted for
3.3 per cent. of the Group’s total sources of funds. Other funding sources include funding obtained from
Cagamas Berhad and funding obtained through the issuance of senior notes, credit linked notes, terms loans,
revolving credit lines and asset securitisation. The Bank is also a contributor to the Kuala Lumpur Interbank
Offer Rate setting process reflecting its access to the interbank markets. See “— Other Funding Sources”.
The Group has shifted emphasis to growing and strengthening its retail deposit base. As at 31 March 2013, retail
customer deposits accounted for 45.3 per cent. of the Group’s total customer deposits, with the balance of
customer deposits originating from business enterprises, the Government of Malaysia, statutory bodies and other
customers.
Customer Deposits
Funding from customer deposits is divided into four categories: demand deposits, savings deposits, term/
investment deposits and negotiable instruments of deposit. As at 31 March 2013, 83.1 per cent. of the total
customer deposits of the Group were in the form of term/investment deposits (deposits with fixed maturities,
with tenures mainly ranging from one month to 12 months), with demand deposits and savings deposits
accounting for 11.4 per cent. and 5.4 per cent., respectively. The Group has concentration and large depositor
limits that are designed to reduce the likelihood of the Group relying on a small number of larger depositors.
Term/investment deposits may be withdrawn by the depositor prior to maturity, subject to prepayment penalties.
However, based on the Group’s historical experience, a substantial portion of term deposits are rolled over upon
maturity thereby providing a stable source of funding. The Group’s customer deposits are mostly denominated in
Malaysian Ringgit.
The following table sets out the profile of customer deposits by type for the Group as at the dates indicated:
As at 1 April
2011
(RM
million)
(%)
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
(%)
Demand deposits . . . . . . . . . . . . . . . . . . . . .
Savings deposits . . . . . . . . . . . . . . . . . . . . . .
Term/Investment deposits . . . . . . . . . . . . . .
Negotiable instruments of deposit . . . . . . . .
5,056.0
2,923.6
51,460.9
224.1
8.5
4.9
86.2
0.4
5,655.7
3,209.9
49,976.8
517.4
9.5
5.4
84.2
0.9
7,098.4
3,327.5
51,658.6
63.3
2,295.0
1,075.8
16,701.8
20.4
11.4
5.4
83.1
0.1
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59,664.6
100.0
59,359.8
100.0
62,147.8
20,093.0
100.0
Profile of term/investment deposits and negotiable instruments of deposit by remaining maturity
The following table sets out the profile of term/investment deposits and negotiable instruments of deposit by
remaining maturity for the Group as at the dates indicated:
As at 1 April
2011
(RM
million)
(%)
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
(%)
Due within six months . . . . . . . . . . . . . . . . .
Over six months to one year . . . . . . . . . . . . .
Over one year to three years . . . . . . . . . . . . .
Over three years to five years . . . . . . . . . . . .
41,698.1
6,471.7
1,783.7
1,731.5
80.7
12.5
3.4
3.4
38,338.0
8,795.1
2,322.7
1,038.4
75.9
17.4
4.6
2.1
37,638.2
11,460.3
2,323.7
299.6
12,168.8
3,705.2
751.3
96.9
72.8
22.1
4.5
0.6
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
51,685.0
100.0
50,494.2
100.0
51,721.8
16,722.2
100.0
72
Profile of customer deposits by type of depositor
The following table sets out the type of depositor for the Group as at the dates indicated:
As at 1 April
2011
(RM
million)
(%)
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
(%)
Government and other statutory bodies . . . .
Business enterprises . . . . . . . . . . . . . . . . . . .
Individuals . . . . . . . . . . . . . . . . . . . . . . . . . .
Others(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,393.2
21,034.2
27,314.8
922.4
17.4
35.3
45.8
1.5
5,314.3
26,111.1
26,809.1
1,125.3
9.0
44.0
45.1
1.9
5,442.6
27,443.0
28,181.3
1,080.9
1,759.6
8,872.6
9,111.3
349.5
8.8
44.2
45.3
1.7
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
59,664.6
100.0
59,359.8
100.0
62,147.8
20,093.0
100.0
Note:
(1) “Others” primarily comprises co-operatives, societies and associations.
Deposits and Placements of Banks and Other Financial Institutions
The Group also obtains funding through deposits and placements of banks and other financial institutions
(including interbank borrowings). The following table sets out the deposits and placements of banks and other
financial institutions held by the Group as at the dates indicated:
As at 1 April
2011
(RM
million)
(%)
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million) million)
(%)
Licensed banks . . . . . . . . . . . . . . . . . . . . . . . . . . .
263.6
Licensed investment banks . . . . . . . . . . . . . . . . . . 1,013.5
Other financial institutions . . . . . . . . . . . . . . . . . .
958.7
Bank Negara Malaysia (BNM) . . . . . . . . . . . . . . . 2,232.1
5.9
22.7
21.4
50.0
2,274.8
844.8
670.5
178.2
57.3
21.3
16.9
4.5
183.4
830.2
488.4
828.5
59.3
268.4
157.9
267.9
7.9
35.6
20.9
35.6
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,467.9
100.0
3,968.3
100.0
2,330.5
753.5
100.0
The Group is an active interbank participant. It also acts as a principal dealer on BNM money market tender
operations. Interbank borrowings may be used to fund short term mismatches in the Group’s maturity profiles or
for on-lending and arbitrage opportunities, where there are opportunities to do so. The Group seeks to maintain
borrowings from the interbank market within manageable levels so as to avoid dependence on the interbank
market for borrowings. As of the date of this Offering Circular and for the previous five years, the Group is, and
has been, a net interbank lender.
The Group also issues negotiable instruments of deposit to raise short term funds.
Other Funding Sources
Sale of credit facilities to Cagamas Berhad
The Group is able to secure longer-term sources of funds of three to seven years tenure by selling consumer loans
to Cagamas Berhad (the Malaysian national mortgage corporation) with recourse to the Group. The Group
continues to service such loans, retaining the fixed or floating interest collected on the loans, and pays a fixed or
floating rate of interest to Cagamas Berhad as selected by the Group at the time of the sale.
Senior notes
The Group has established a domestic Senior Notes Issuance Programme with a programme limit of
RM7.0 billion (U.S.$2.3 billion) which enables it to tap the Malaysian debt capital markets to meet its long-term
funding requirements. The programme also facilitates the Group’s liquidity risk management activities. As at
31 March 2013, the amount of senior notes outstanding under the programme was RM2.7 billion
(U.S.$0.9 billion).
Asset securitisation
The Group may obtain alternative funding by undertaking asset securitisation whereby it sells credit facilities or a
portfolio of loans to a special purpose vehicle, which, in turn, issues securities to fund the acquisition from the
Group. By doing so, the Group is able to realise the value of the assets sold to the special purpose vehicle as well
as diversify external sources of asset funding and to transfer specific risk exposures. As at 31 March 2013, the
Group has undertaken one securitisation, which was an internal Group transaction.
73
Other funding sources
The Group has also diversified its term funding alternatives to include credit-linked notes, term loans and
revolving credit lines in order to reduce its reliance on a single funding source.
Liquidity Management
The Group adopts a conservative, low-risk approach to liquidity management. The Group’s liquidity policy is
aligned with the New Liquidity Framework issued by BNM, whereby sufficient liquidity surplus is to be
maintained for periods of up to seven days and one month under a short-term crisis scenario. The Group also
maintains a portfolio of high-quality liquid assets to mitigate the impact of a sudden increase in its funding
requirements and any period of liquidity stress.
The Group has established various liquidity metrics so that it is able to monitor and manage its liquidity status
effectively. These metrics include:
• calculation and monitoring of an Adjusted Loan Deposit Ratio which compares loans and advances to
customers as a percentage of customer deposit accounts and term funding with an original term of maturity in
excess of three years;
• calculation and monitoring of a Medium Term Funding Ratio, which measures the percentage of the Group’s
medium term assets funded by medium term liabilities. Medium term is defined by the Group as remaining
term to maturity in excess of one year;
• calculation and monitoring of depositor concentration limits; and
• The Group is also putting in place various measurement mechanisms and strategies in order to comply with
Basel III liquidity metrics, including a Liquidity Coverage Ratio and a Net Stable Funding Ratio. Subject to
finalisation of the detailed regulations by BNM, the Group believes it will be able to meet BNM’s requirements
on Basel III liquidity metrics in accordance with its recently proposed timetable for implementation.
Capital Adequacy
The Group employs a capital management strategy that balances and optimises risk tolerance with earnings
capability. The Group continues to rely on retained earnings to enlarge its capital resources to drive its business
and the Group’s policy is to maintain a strong capital base to support the development of its business and to
ensure that shareholders’ returns are optimised. It also seeks to maintain a prudent balance between the different
components of its capital between Common Equity Tier1 (“CET1”), Tier 1 and Tier 2 Capital.
On 28 November 2012, BNM issued its Capital Adequacy Framework – Capital Components, implementing the
Basel III reforms. The capital requirements set out by BNM took effect on 1 January 2013 and require banking
institutions, including the Group, to maintain the following minimum capital ratios for the calendar years detailed
below:
(a) a minimum CET1 capital ratio of 3.5 per cent. of risk-weighted assets (in 2013), 4.0 per cent. (in 2014) and
4.5 per cent. (from 2015 onwards);
(b) a minimum Tier 1 capital ratio of 4.5 per cent. of risk-weighted assets (in 2013), 5.5 per cent. (in 2014) and
6.0 per cent. (from 2015 onwards); and
(c) a minimum Total Capital ratio of 8.0 per cent. of risk-weighted assets (from 2013 onwards).
In addition, banks are required to maintain additional capital buffers above the minimum CET1, Tier 1 and Total
Capital ratios set out above in the form of a capital conservation buffer and a countercyclical capital buffer.
The capital conservation buffer is to enable the banking system to withstand future periods of stress and requires
banks to maintain an additional buffer equal to a minimum of 0.625 per cent. of risk-weighted assets (for the
2016 calendar year), 1.25 per cent. (for the 2017 calendar year), 1.875 per cent. (for the 2018 calendar year) and
2.50 per cent. (from 2019 onwards). There will be no capital conservation buffer prior to the 2016 calendar year.
If there is excess credit growth in any given country resulting in a system-wide build-up of risk, a countercyclical
buffer within a range of 0.0 per cent. to 2.5 per cent. of risk-weighted assets will also apply to the minimum
CET1, Tier 1 and Total Capital ratios (as increased by the capital conservation buffer). The countercyclical
buffer is determined as the weighted-average of the prevailing countercyclical capital buffer requirements
applied in the jurisdictions in which the relevant banking institution has credit exposures and is subject to the
following scaling factors: 0.0 per cent. (for calendar years prior to 2016), 25.0 per cent. (for the 2016 calendar
year), 50.0 per cent. (for the 2017 calendar year) and 75.0 per cent. (for the 2018 calendar year).
74
To the extent a bank fails to maintain such a ratio, BNM may impose penalties on such a bank ranging from a
fine to revocation of its banking licence. See “Supervision and Regulation”.
The capital adequacy ratios of the Group as at 31 March 2012 are computed in accordance with BNM’s
Guidelines on Risk Weighted Capital Adequacy Framework (General Requirements and Capital Components)
and Guidelines on Risk-Weighted Capital Adequacy Framework (Basel II — Risk Weighted Assets
Computation). The Group has adopted the Standardised Approach for Credit Risk and Market Risk and the Basic
Indicator Approach for Operational Risk.
The capital adequacy ratios of the Group as at 31 March 2013 are computed in accordance with BNM’s Capital
Adequacy Framework — Capital Components and Guidelines on Risk-Weighted Capital Adequacy Framework
(Basel II — Risk Weighted Assets Computation). As at 31 March 2013, the Group’s CET1 ratio (after proposed
dividends) was 8.1 per cent., its Tier 1 capital adequacy ratio (after proposed dividends) was 10.4 per cent. and
its Total Capital ratio (after proposed dividends) was 13.7 per cent., which exceed the BNM minimum
requirements detailed above. The following table provides details of the Group’s capital and shows the capital
adequacy ratios of the Group as at the dates indicated:
As at 31 March
2012(1)
(RM million) (U.S.$ million)(2)
Tier 1 Capital:
Paid-up share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Innovative Tier 1 capital(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-innovative Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statutory reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merger reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange fluctuation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-controlling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
820.4
1,111.1
500.0
942.8
981.0
48.5
2.1
3,164.9
—
268.1
363.0
163.4
308.1
320.5
15.8
0.7
1,034.1
—
Less: Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,570.8
(163.2)
2,473.7
(53.3)
Total Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,407.6
2,420.4
Tier 2 Capital:
Innovative Tier 1 capital(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Medium term notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Collective allowance for impaired loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
124.0
1,557.8
1,074.0
40.5
509.0
350.9
Total Tier 2 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,755.8
900.4
Maximum allowable Tier 2 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,755.8
900.4
Total capital
.................................................
Less: Investment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,163.4
(32.8)
(9.4)
3,320.8
(10.7)
(3.1)
Capital base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,121.2
3,307.0
funds(4)
Capital ratios (before deducting proposed dividends):
Core capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.0%
11.0%
Risk weighted capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.1%
15.1%
Core capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.9%
9.9%
Risk weighted capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.1%
14.1%
Capital ratios (after deducting proposed dividends):
Notes:
(1) The comparative ratio for 31 March 2012 is computed based on the previous Basel II accord and is not restated based on Basel III as
Basel III takes effect on a prospective basis starting from 1 January 2013.
(2) The Malaysian Ringgit amounts relating to 31 March 2012 have been translated into U.S. dollars based on the prevailing exchange rate of
RM3.0605 to U.S.$1, being the noon buying rate (New York time) on 30 March 2012.
(3) Under the Basel II regime (applicable prior to 1 January 2013), the maximum amount of Innovative Tier 1 capital that can be recognised
as Tier 1 capital is limited to 15.0 per cent. of Total Tier 1 capital. The balance will be included in Tier 2 capital.
75
(4) All capital instruments included in the capital base have been issued in accordance with the prevailing BNM rules and guidelines at the
time of issuance. The existing Additional Tier 1 and Tier 2 capital instruments of the Group do not meet all qualifying criteria for full
recognition of capital instruments under the Basel III regime, on the requirements for loss absorbency at the point of non-viability, and
write-off or conversion mechanisms for achieving principal loss absorption and/or loss absorbency at the point of non-viability. All of the
Additional Tier 1 and Tier 2 capital instruments qualify for the gradual phase-out treatment under the transitional arrangements of the
Basel III accord. Under this treatment, the amount of capital instruments that can be recognised by the Bank at its consolidated and
unconsolidated level shall be capped at 90.0 per cent. of the base in 2013 (as counted separately for Additional Tier 1 capital and Tier 2
capital respectively), with the cap reducing by 10.0 per cent. in each subsequent year. To the extent that an instrument is redeemed or
derecognized after 1 January 2013, the amount serving as the base is not reduced.
As at 31 March
2013
(RM million) (U.S.$ million)(1)
Common Equity Tier 1 (“CET1”) Capital:
Ordinary shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Proposed dividend — final . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealised losses on financial investments available-for-sale . . . . . . . . . . . . . . . . . .
Foreign exchange translation reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Statutory reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merger reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flow hedging reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Regulatory adjustments applied on CET1 capital
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flow hedging reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
820.4
942.8
3,543.8
(400.3)
(9.2)
(14.8)
981.0
48.5
(12.6)
265.2
304.8
1,145.7
(129.4)
(3.0)
(4.8)
317.2
15.7
(4.1)
(234.7)
(120.8)
12.6
(75.9)
(39.0)
4.1
CET1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,556.7
1,796.5
Additional Tier 1 capital:
Additional Tier 1 capital instruments (subject to gradual phase-out treatment) . . . .
1,561.6
504.9
Total Tier 1 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,118.3
2,301.4
Tier 2 Capital:
Tier 2 capital instruments (subject to gradual phase-out treatment) . . . . . . . . . . . . .
Collective allowance and regulatory reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Regulatory adjustments applied on Tier 2 capital . . . . . . . . . . . . . . . . . . . . . .
1,557.8
747.2
(0.9)
503.7
241.5
(0.3)
Total Tier 2 capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,304.1
744.9
Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,422.4
3,046.3
Capital ratios (before deducting proposed dividends):
CET1 ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.7%
8.7%
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.9%
10.9%
Total capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14.3%
14.3%
CET1 ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1%
8.1%
Tier 1 capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.4%
10.4%
Total capital ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13.7%
13.7%
Capital ratios (after deducting proposed dividends):
Note:
(1) The Malaysian Ringgit amounts relating to 31 March 2013 have been translated into U.S. dollars based on the prevailing exchange rate of
RM3.0930 to U.S.$1, being the noon buying rate (New York time) on 29 March 2013.
76
The following table shows a breakdown of risk weighted assets (“RWA”) of the Group in the various categories
of risk as at the dates indicated:
As at 31 March
2012
2013
(RM
million)
(U.S.$
million)
(RM
million)
(U.S.$
million)
Credit RWA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Market RWA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operational RWA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Large exposure risk RWA for equity holdings . . . . . . . . . . . . . . . . . .
57,292.2
4,494.8
5,401.3
3.3
18,719.9
1,468.6
1,764.8
1.1
59,772.2
3,722.2
5,225.1
0.7
19,325.0
1,203.4
1,689.3
0.2
Total RWA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67,191.6
21,954.4
68,720.2
22,217.9
77
ASSET QUALITY
Loan Portfolio
The Group has a diversified loan portfolio with approximately 56.7 per cent. of its net loans in the retail banking
sector as at 31 March 2013. Currently, the Group’s largest loan exposures by sector are for the purchase of
transport vehicles and the purchase of landed property (including residential and non-residential property). As at
31 March 2013, the Group’s total outstanding gross loans amounted to RM60.9 billion (U.S.$19.7 billion).
Loans and Advances by Type
The following table shows a breakdown of gross loans and advances by type of the Group as at the dates
indicated:
As at 1 April
2011
(RM
million)
(%)
At Amortised cost:
Overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . .
Term loans . . . . . . . . . . . . . . . . . . . . . . . . . .
Housing loan receivables . . . . . . . . . . . . . . .
Hire purchase receivables . . . . . . . . . . . . . . .
Bills receivables . . . . . . . . . . . . . . . . . . . . . .
Trust receipts . . . . . . . . . . . . . . . . . . . . . . . .
Claims on customers under acceptance
credits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Staff loans . . . . . . . . . . . . . . . . . . . . . . . . . . .
Card receivables . . . . . . . . . . . . . . . . . . . . . .
Revolving credits . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
(%)
1,989.0
15,806.8
11,551.5
18,296.0
389.5
569.1
3.4
27.4
20.1
31.8
0.7
1.0
2,297.0
17,558.7
11,868.9
16,851.9
326.7
792.8
3.9
30.2
20.4
29.0
0.5
1.4
2,420.7
19,224.8
12,371.8
16,680.9
534.2
885.6
782.6
6,215.6
3,999.9
5,393.1
172.7
286.3
4.0
31.6
20.3
27.4
0.9
1.4
2,218.0
151.8
1,491.9
5,028.4
106.7
3.8
0.3
2.6
8.7
0.2
2,442.5
147.9
1,446.3
4,326.9
130.8
4.2
0.3
2.5
7.4
0.2
2,534.6
134.3
1,400.1
4,496.8
171.0
819.5
43.4
452.7
1,453.9
55.3
4.2
0.2
2.3
7.4
0.3
Gross loans and advances . . . . . . . . . . . . .
57,598.7
100.0
58,190.4
100.0
60,854.8
19,675.0
100.0
Allowances for impairment on loans and
advances:
— Collective allowance . . . . . . . . . . . . . .
— Individual allowance . . . . . . . . . . . . . .
(1,742.6)
(341.1)
(1,584.7)
(114.4)
(1,454.2)(1) (470.1)
(168.8)
(54.6)
Net loans and advances . . . . . . . . . . . . . . .
55,515.0
56,491.3
59,231.8
19,150.3
Note:
(1) During the current financial year, the Bank entered into a Restricted Profit Sharing Investment Accounts arrangement with
AmIslamic Bank. The Bank records the amount it provides as financing under the arrangement as deposits and placements with banks
and other financial institutions. The financing to external parties made by AmIslamic Bank is recorded by AmIslamic Bank as financing
and advances. As losses from the business venture are borne solely by the Bank, the related collective allowance is recorded by the Bank.
Loans and Advances by Geographical Distribution
The following table shows a breakdown of gross loans and advances by geographical distribution of the Group as
at the dates indicated:
As at 1 April
2011
(RM
million)
(%)
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
(%)
In Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside Malaysia . . . . . . . . . . . . . . . . . . . . .
56,916.1
682.6
98.8
1.2
57,426.1
764.3
98.7
1.3
59,957.3
897.5
19,384.8
290.2
98.5
1.5
Gross loans and advances . . . . . . . . . . . . .
57,598.7
100.0
58,190.4
100.0
60,854.8
19,675.0
100.0
78
Loans and Advances by Sector
The following table shows a breakdown of gross loans and advances by sector of the Group as at the dates
indicated:
As at 1 April
2011
(RM
million)
(%)
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
2,152.4
1,635.2
4,764.5
2,208.3
1,547.0
3.8
2.8
8.3
3.8
2.7
2,100.2
1,466.2
5,363.9
1,413.9
2,015.4
3.6
2.5
9.2
2.4
3.5
2,719.1
1,747.2
5,527.4
555.7
2,173.4
879.1
564.9
1,787.1
179.7
702.7
4.5
2.9
9.1
0.9
3.6
2,987.0
5.2
3,795.9
6.5
4,703.9
1,520.8
7.7
1,781.5
2,413.5
3,822.8
1,565.9
597.3
31,638.4
3.1
4.2
6.6
2.7
1.0
55.0
1,939.0
2,415.3
4,425.6
1,251.7
1,374.0
30,546.8
3.3
4.2
7.6
2.2
2.4
52.5
1,982.2
1,950.2
5,443.2
1,293.2
1,044.6
31,478.8
640.9
630.5
1,759.8
418.1
337.7
10,177.4
3.3
3.2
8.9
2.1
1.7
51.7
11,517.8
20.0
11,987.6
20.6
12,519.3
4,047.6
20.6
16,685.0
3,435.6
29.0
6.0
15,014.4
3,544.8
25.8
6.1
15,277.0
3,682.5
4,939.2
1,190.6
25.1
6.0
Others . . . . . . . . . . . . . . . . . . . . . . . . .
484.9
0.8
82.5
0.1
235.9
76.3
0.4
Gross loans and advances . . . . . . . .
57,598.7
100.0
58,190.4
100.0
60,854.8
19,675.0
100.0
Agriculture . . . . . . . . . . . . . . . . . . . . .
Mining and quarrying . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . .
Electricity, gas and water . . . . . . . . . .
Construction . . . . . . . . . . . . . . . . . . . .
Wholesale and retail trade and hotels
and restaurants . . . . . . . . . . . . . . . .
Transport, storage and
communication . . . . . . . . . . . . . . . .
Finance and insurance . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . .
Business activities . . . . . . . . . . . . . . .
Education and health . . . . . . . . . . . . .
Household of which: . . . . . . . . . . . . .
— Purchase of residential
properties . . . . . . . . . . . . . . . . .
— Purchase of transport
vehicles . . . . . . . . . . . . . . . . . . .
— Others . . . . . . . . . . . . . . . . . . . .
(%)
Loans and Advances by Type of Customer
The following table shows a breakdown of gross loans and advances by type of customer of the Group as at the
dates indicated:
As at 1 April
2011
(RM
million)
(%)
Domestic non-bank financial institutions . . .
2,383.2
Domestic business enterprises:
— Small and medium enterprises . . . . . .
6,038.8
— Others . . . . . . . . . . . . . . . . . . . . . . . . . 16,977.4
Government and statutory bodies . . . . . . . . .
72.8
Individuals . . . . . . . . . . . . . . . . . . . . . . . . . . 31,623.5
Other domestic entities . . . . . . . . . . . . . . . . .
1.9
Foreign entities . . . . . . . . . . . . . . . . . . . . . . .
501.1
Gross loans and advances . . . . . . . . . . . . .
57,598.7
79
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
4.1
2,384.6
4.1
1,925.8
622.6
3.2
10.5
29.5
0.1
54.9
0.0
0.9
6,721.2
18,030.3
3.0
30,514.8
12.7
523.8
11.6
31.0
0.0
52.4
0.0
0.9
7,448.1
19,511.8
36.4
31,421.1
13.0
498.6
2,408.0
6,308.4
11.8
10,158.8
4.2
161.2
12.2
32.1
0.1
51.6
0.0
0.8
100.0
58,190.4
100.0
60,854.8
19,675.0
100.0
(%)
Loans and Advances by Interest Rate Sensitivity
The following table shows a breakdown of gross loans and advances by interest rate sensitivity of the Group as at
the dates indicated:
As at 1 April
2011
(RM
million)
(%)
Fixed rate:
— Housing loans . . . . . . . . . . . . . . . . . . .
— Hire purchase receivables . . . . . . . . . .
— Other fixed rate loans . . . . . . . . . . . . .
Variable rate:
— Base lending rate plus . . . . . . . . . . . . .
— Cost plus . . . . . . . . . . . . . . . . . . . . . . .
— Other variable rates . . . . . . . . . . . . . . .
Gross loans and advances . . . . . . . . . . . . .
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
(%)
1,946.8
17,370.5
5,104.3
3.4
30.2
8.9
1,833.4
14,959.6
5,400.3
3.2
25.7
9.3
1,800.4
14,954.3
5,612.8
582.1
4,834.9
1,814.7
3.0
24.6
9.2
20,076.6
11,767.0
1,333.5
34.8
20.4
2.3
22,061.9
12,701.3
1,233.9
37.9
21.8
2.1
22,072.5
14,985.6
1,429.2
7,136.2
4,845.0
462.1
36.3
24.6
2.3
57,598.7
100.0
58,190.4
100.0
60,854.8
19,675.0
100.0
Loan maturity profile
The following table shows a breakdown of the Group’s gross loans and advances by residual contractual maturity
as at the dates indicated:
As at 1 April
2011
(RM
million)
(%)
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million)
million)
(%)
Maturing within one year . . . . . . . . . . . . . . .
Over one year to three years . . . . . . . . . . . . .
Over three years to five years . . . . . . . . . . . .
Over five years . . . . . . . . . . . . . . . . . . . . . . .
12,048.7
6,864.3
8,767.7
29,918.0
20.9
11.9
15.2
52.0
10,869.7
8,937.6
8,115.9
30,267.2
18.7
15.4
13.9
52.0
13,301.4
6,579.1
9,846.1
31,128.2
4,300.5
2,127.1
3,183.3
10,064.1
21.9
10.8
16.2
51.1
Gross loans and advances . . . . . . . . . . . . .
57,598.7
100.0
58,190.4
100.0
60,854.8
19,675.0
100.0
Twenty Largest Borrowers
As at 31 March 2013, the top 20 largest borrowers of the Group accounted for approximately 18.4 per cent. or
RM11,178.4 million (U.S.$3,614.1 million) of the Group’s gross loans. The following table sets out the 20
largest single borrower groups of the Group as at 31 March 2013:
Industry sector(s)
As at 31 March 2013
As a percentage
of the Group’s
Outstanding
total gross loan
amount
portfolio
(RM
(U.S.$
million) million)
(%)
Borrower 1 . . . . . . . . . . . . . . . . . . . . . . Finance except insurance and
pension funding and production,
collection and distribution of
electricity, gas and steam
1,762.9
570.0
2.9
Borrower 2 . . . . . . . . . . . . . . . . . . . . . . Hotels, camping sites and
accommodation and
telecommunications
1,094.3
353.8
1.8
Borrower 3 . . . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
961.3
310.8
1.6
Borrower 4 . . . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
822.4
265.9
1.3
Borrower 5 . . . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
776.1
250.9
1.3
Borrower 6 . . . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
537.8
173.9
0.9
Borrower 7 . . . . . . . . . . . . . . . . . . . . . . Service activities incidental to crude
oil and natural gas extraction
excluding surveying and other
entertainment activities
494.5
159.9
0.8
80
Industry sector(s)
As at 31 March 2013
As a percentage
of the Group’s
total gross loan
Outstanding amount
portfolio
(RM
(U.S.$
million)
million)
(%)
Borrower 8 . . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
470.1
152.0
0.8
Borrower 9 . . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
415.0
134.2
0.7
Borrower 10 . . . . . . . . . . . . . . . . . . . . Service activities incidental to
crude oil and natural gas extraction
excluding surveying
413.0
133.5
0.7
Borrower 11 . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
403.0
130.3
0.7
Borrower 12 . . . . . . . . . . . . . . . . . . . . Real estate activities and general
contractors including civil
376.7
121.8
0.6
Borrower 13 . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
374.7
121.1
0.6
Borrower 14 . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
368.0
119.0
0.6
Borrower 15 . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
346.0
111.9
0.6
Borrower 16 . . . . . . . . . . . . . . . . . . . . Motor vehicles, used and
manufacture of other fabricated
metal products
322.5
104.3
0.5
Borrower 17 . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
319.2
103.2
0.5
Borrower 18 . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
315.3
101.9
0.5
Borrower 19 . . . . . . . . . . . . . . . . . . . . Diversified conglomerate
303.5
98.1
0.5
Borrower 20 . . . . . . . . . . . . . . . . . . . . Telecommunications
302.1
97.7
0.5
11,178.4
3,614.1
18.4
Total . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit Approval Process
Non-consumer and consumer credits
For non-consumer credits, the relevant relationship manager will prepare a credit proposal for submission, which
will be independently reviewed by the appropriate credit evaluation team within the Group Risk Management
division. This review is designed to ensure that credit risks are identified correctly and appropriately mitigated,
prior to submission for credit approval by either the Individual Delegated Approving Authority or the Credit and
Commitments Committee (“CACC”).
For consumer credits, all credit applications are processed via an automated credit scoring system or loan
origination system or credit proposal paper, based on the Group Risk Appetite Framework and/or asset writing
strategies and other relevant Group policies. Upon verification and/or credit review a final decision will be made
via the automated system or the relevant Individual Delegated Approving Authority. The Individual Delegated
Approving Authorities are individuals, usually selected from senior staff, vested with discretionary authority to
approve the relevant credit.
The CACC is responsible for reviewing and approving credit requests that exceed the limits of the Individual
Delegated Approving Authorities or otherwise require exemptions from the Group’s policies (including the
Group Risk Appetite Framework).
The Executive Committee of the Group has the power to review and endorse or veto the credit approved by the
CACC.
All approved loan applications are sent to the respective relationship management teams for issuance of facility
offers. The Credit Administration Department is responsible for transaction management, for ensuring that all
terms of the transaction are complied with and that external lawyers have correctly reflected the agreed
commercial terms in the relevant documents.
Generally, loan approvals are guided by a Group Risk Appetite Framework. The Group’s Risk Appetite
Framework is refreshed at least annually and with regard to credit risk, provides direction as to portfolio
management strategies and objectives designed to deliver the Group’s optimal portfolio mix.
81
Collateral
As at 31 March 2013, approximately 97.0 per cent. of all loans by book value granted by the Group were secured
by collateral. Approximately 54.2 per cent. of the Group’s collateralised loans were secured with property and
the remainder with motor vehicles, plant and machinery, shares, unit trusts and other security. The value of the
collateral depends on the type of collateral being pledged and is determined, for example, by professional
evaluations or market prices in accordance with the Group’s policy. The Group reviews such policies
periodically. For example, properties offered as collateral are valued by independent professional valuers. The
collateral is revalued periodically in connection with the review of the loan account. The following table sets out
the type of collateral in relation to the Group’s loans as at the dates indicated:
As at 1 April
2011
As at 31 March
2012
As at 31 March
2013
(U.S.$
(RM million)
million)
(RM million)
(RM million)
Loans secured by property . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans secured entirely by other collateral . . . . . . . . . . . . . .
Loans secured entirely by quoted shares . . . . . . . . . . . . . . .
Loans secured entirely by unquoted shares . . . . . . . . . . . . .
Loans secured partly by QS(2), UQS(3), UTF(1) . . . . . . . . . . .
Unsecured loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27,803.8
25,117.2
715.2
178.5
2,179.8
1,604.2
29,539.1
23,501.1
723.5
319.0
2,352.0
1,755.7
32,953.3
23,441.8
830.7
430.2
1,364.2
1,834.6
10,654.1
7,579.0
268.6
139.1
441.1
593.1
Gross loans and advances . . . . . . . . . . . . . . . . . . . . . . . . .
57,598.7
58,190.4
60,854.8
19,675.0
Notes:
(1) UTF means Unit Trust Funds.
(2) QS means Quoted Shares.
(3) UQS means Unquoted Shares.
Single counterparty exposure limit
BNM’s guidelines on single counterparty exposure limits prohibit a bank from lending to any single customer or
related group of customers an amount in excess of 25.0 per cent. of a bank’s capital funds (the sum of Tier 1
Capital and Tier 2 Capital). As at 31 March 2013, the Bank’s largest exposure (inclusive of loan commitments
limit, private debt securities limit and pre-settlement limit only) to a single customer was RM1,938.1 million
(U.S.$626.6 million) or 20.6 per cent. of the Bank’s capital base, which was RM9,386.4 million
(U.S.$3,034.7 million). Parties with 20 per cent. or more equity holding in another customer are treated as a
single customer. Furthermore, the Bank seeks to limit its exposure to any one particular industry sector by the
application of appropriate sector limits and benchmarks for industry sectors.
Loan Collection and Recovery
Non-consumer Credits
Primary responsibility for the management of each performing account lies with the relevant Group business
unit. The relationship manager performs a full review of the account (including a review of the credit rating of
the relevant customers and/or issuers) at least annually. The review is submitted to the appropriate credit
evaluation team in the Group Risk Management division and the relevant approving authorities for review and
approval.
For accounts requiring close monitoring or special attention (prior to impairment), primary accountability lies
with the relevant Group business units, where the relationship manager shall manage such account in accordance
with the Group’s Watchlist Policy. The relationship manager reports the status of the account to the Watchlist
Committee on a monthly basis. In addition, such accounts are subject to “shadow” monitoring by the Group Loan
Rehabilitation division.
Impaired accounts should be transferred immediately to the Group Loan Rehabilitation division to manage in
order to optimise the account recovery in the shortest time possible. Any exceptions are to be approved by the
appropriate approving authority.
Consumer Credits
With regards to consumer credits, all delinquent, impaired and written-off accounts are managed by the Retail
Collection Department. This department is responsible for all collection activities relating to the early care,
remedial, recovery, litigation and foreclosure aspects of the consumer credit management process and is also
responsible for collateral management and sales.
82
Impaired Loans and Advances
Classification of impaired loans
All loans and advances are categorised by the Group as either:
• neither past due nor impaired;
• past due but not impaired; or
• impaired.
An asset is considered to be past due when any payment (whether of principal or interest) due under the
contractual terms is received late or is missed entirely. For credit card facilities, an account is “past due” when
the cardmember fails to settle the minimum monthly repayment on or before the due date.
A loan is classified as impaired under the following circumstances:
(a) the principal or interest or both is past due or the amount outstanding is in excess of an approved limit (for
revolving facilities), each for more than 90 days or 3 months; or
(b) the loan exhibits weaknesses that render a classification appropriate to the Group’s Credit Risk Rating
Framework, which requires it to fall under the “unlikeliness to repay” category under the Group’s Watchlist
Policy; or
(c) for loans with quarterly or longer repayment schedules, as soon as a default (1 day past due plus 30 days)
occurs, unless it does not exhibit any weakness that would render it classified according to the Credit Risk
Rating Framework. Notwithstanding that, such loans will be classified as impaired when the principal or
interest or both is past due for more than 90 days or 3 months; or
(d) for distressed rescheduled and restructured facilities, these loans are categorised as “unlikeliness to repay”
and classified as impaired.
The following table sets forth the classification of the Group’s gross loans and advances portfolio based on the
impairment classification above as at the dates indicated:
As at 1 April
2011
(RM
million)
As at 31 March
2012
(RM
million)
As at 31 March
2013
(RM
(U.S.$
million)
million)
Neither past due nor impaired . . . . . . . . . . . . . . . . . . . . . . . . .
Past due but not impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
44,556.2
10,919.3
2,123.2
46,162.8
10,363.7
1,663.9
49,833.6
9,624.8
1,396.4
16,111.7
3,111.8
451.5
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,598.7
58,190.4
60,854.8
19,675.0
Pursuant to BNM guidelines, the Group must continue to classify any impaired loans that it may restructure as
such, and further classify them within that category as either currently performing or non-performing. For
accounting purposes, the Group classifies a restructured impaired loan as performing if it continues to perform in
accordance with its restructured terms for a period of six months following the restructuring.
The following table sets out the details of the Group’s restructured loans as at 31 March 2013:
Performing loans
(RM
(U.S.$
million)
million)
Restructured loans . . . . . . . . . . . . . . . . . . . . . . . .
546.7
Gross loans and advances . . . . . . . . . . . . . . . . . . . 59,461.4
Ratio of restructured loans to gross loans and
advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.9%
Impaired loans
(RM
(U.S.$
million) million)
Total
(RM
million)
(U.S.$
million)
176.8
19,224.5
174.6
1,393.4
56.4
450.5
721.3
60,854.8
233.2
19,675.0
0.9%
12.5%
12.5%
1.2%
1.2%
Loan loss provisioning policy
The Group assesses at each reporting date whether there is objective evidence that a financial asset or group of
financial assets is impaired. A financial asset or a group of financial assets 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 an
initial recognition of the asset (a ‘loss event’) where the estimated future cash flows of the financial asset or
group of financial assets is lower than the carrying value.
The Group’s provisioning policy is in line with BNM’s regulatory requirements.
83
The following table sets forth the Group’s loan loss provisions as at the dates indicated:
As at 31 March
2012
2013
(RM
(RM
(U.S.$
million)
million) million)
Collective allowance
Balance at beginning of financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,742.6 1,584.7 512.3
Charge to income statement, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
363.8
246.5
79.7
Amount transferred from AmIslamic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
1.8
0.6
Amount written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (521.7) (384.0) (124.2)
Foreign exchange differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
5.2
1.7
Balance at end of financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,584.7
Collective allowance as % of gross loans and advances less individual allowance . . .
2.7%
1,454.2
2.4%
470.1
2.4%
Individual allowance
Balance at beginning of financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charge to income statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
341.1
318.9
(545.5)
114.5
275.2
(220.9)
37.0
89.0
(71.4)
Balance at end of financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
114.5
168.8
54.6
Write-off policy
The Group’s write-off policy sets out the broad principles applying to the writing-off of loans and financings.
Generally, accounts (or portions thereof) which are classified by the Group as impaired or are deemed
uncollectable can be subject to a Stage 1 write-off or a Stage 2 write-off.
A Stage 1 write-off applies where an account (or portion thereof) is impaired. In this instance, a write-off is
permissible up to the amount of impairment provision that has been made in respect of such account.
A Stage 2 write-off applies where the account (or portion thereof) is impaired and either (i) the account is granted
on a “clean” basis (i.e. no partial write-off is allowed in respect thereof) or (ii) a partial write-off is required as a
result of the Bank having lost its legal right to claim in respect of the relevant amounts and there is minimal
prospect of recovery and/ or further recovery is uneconomical. In the case of (i), the write-off must be fully
provided for. In the case of (ii), the write-off is permissible up to the amount of impairment provision that has
been made in respect of such account.
The Board of Directors of the Bank (the “Board”) has delegated the authority to write-off loans and financings to
the Group CEOs Committee. The Group CEOs Committee may further delegate the authority to write-off loans
and financings subject to certain controls. For example, the Business Managing Director and the Head of Finance
may jointly approve Stage 1 write-offs on a case-by-case basis subject to the Group CEOs Committee’s review.
Stage 2 write-off authority has been delegated to the Business Managing Director, provided the write-off has
been vetted by the Risk Management Department’s credit evaluation unit for compliance with principles
approved by the Board.
The total loans and financings written-off on a total portfolio basis (including quarter-to-date and year-to-date
write-off information) are reported on a quarterly basis to the Audit & Examinations Committee (“AEC”) and
the Board. In addition, written-off accounts for large loans and financings are also reported to the Board after the
accounts have been duly reviewed by the AEC.
Profile of impaired loans and advances
The Group’s gross impaired loans were RM1,396.4 million (U.S.$451.4 million) and net impaired loans were
RM1,227.6 million (U.S.$396.8 million) as at 31 March 2013, representing a ratio of gross impaired loan to total
gross loans and advances of 2.3 per cent. and a ratio of net impaired loans to total net loans and advances of
2.0 per cent., respectively. Based on BNM statistics, as at 31 March 2013, the ratio of net impaired loans to net
loans for the industry was 1.3 per cent.. As at 31 March 2013, the top 20 impaired loan exposures represented
27.7 per cent. of the Group’s total gross impaired loans and 0.6 per cent. of the Group’s total gross loans and
advances.
84
The table below shows the Group’s impaired loans as at the dates indicated:
As at 31 March
2012
2013
(RM
(RM
(U.S.$
million)
million) million)
Balance at beginning of financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impaired during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassified as non-impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amount written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repurchase of impaired loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at end of financial year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross impaired loans and advances as % of gross loans and advances . . . . . . . . . . .
Loan loss coverage (excluding collateral values) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,123.2 1,663.9 538.0
1,430.5
953.4 308.2
(254.0) (240.5) (77.8)
(557.4) (374.5) (121.1)
(1,078.4) (608.8) (196.8)
—
2.9
0.9
1,663.9
2.9%
1,396.4
2.3%
451.4
2.3%
102.1% 116.2% 116.2%
Impaired loans and advances by sector
The following table sets out the Group’s gross impaired loan portfolio according to sector as at the dates
indicated herein:
As at 1 April
2011
(RM
million)
(%)
Agriculture . . . . . . . . . . . . . . . . . . . . . . . .
Mining and quarrying . . . . . . . . . . . . . . .
Manufacturing . . . . . . . . . . . . . . . . . . . . .
Electricity, gas and water . . . . . . . . . . . . .
Construction . . . . . . . . . . . . . . . . . . . . . . .
Wholesale and retail trade and hotels and
restaurants . . . . . . . . . . . . . . . . . . . . . .
Transport, storage and
communication . . . . . . . . . . . . . . . . . .
Finance and insurance . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . .
Business activities . . . . . . . . . . . . . . . . . .
Education and health . . . . . . . . . . . . . . . .
Household of which: . . . . . . . . . . . . . . . .
— Purchase of residential
properties . . . . . . . . . . . . . . . . . . . .
— Purchase of transport vehicles . . . .
— Others . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impaired loans and advances . . . . . . . .
As at 31 March
2012
(RM
million)
(%)
As at 31 March
2013
(RM
(U.S.$
million) million)
(%)
38.4
0.3
244.9
288.5
284.0
1.8
0.0
11.5
13.6
13.4
23.9
154.7
184.9
132.1
94.9
1.4
9.3
11.1
7.9
5.7
20.2
17.9
238.1
25.8
49.1
6.5
5.8
77.0
8.3
15.9
1.5
1.3
17.0
1.8
3.5
58.7
2.8
42.4
2.6
42.3
13.7
3.0
19.6
46.9
64.6
5.3
41.3
1,018.4
0.9
2.2
3.0
0.3
1.9
48.0
4.1
37.6
26.2
12.4
44.8
895.5
0.3
2.3
1.6
0.7
2.7
53.8
18.4
28.3
9.1
11.0
43.0
882.2
5.9
9.1
2.9
3.6
13.9
285.2
1.3
2.0
0.7
0.8
3.1
63.2
628.7
282.4
107.3
12.3
29.6
13.3
5.1
0.6
538.0
277.8
79.7
10.4
32.3
16.7
4.8
0.6
515.9
289.7
76.6
11.0
166.8
93.6
24.8
3.6
37.0
20.7
5.5
0.8
2,123.2
100.0
1,663.9
100.0
1,396.4
451.4
100.0
Securities Portfolio
Banking institutions in Malaysia are required to classify their securities portfolio holdings into three categories:
financial assets at fair value through profit or loss, financial investments available-for-sale, financial investments
held-to-maturity. The Group has the following accounting policies in connection with its securities portfolio:
The holdings of the securities portfolio of the Group are classified based on the following categories and
valuation methods:
(a) Financial assets at fair value through profit or loss
This category comprises two sub-categories: financial assets held-for-trading and those designated by
management as at fair value through profit or loss on inception.
Financial assets are classified as held-for-trading if they are acquired principally for the purpose of sale in
the near term.
85
Financial assets may be designated at fair value through profit or loss when the following criteria are met.
Designation is determined on an instrument by instrument basis:
• the application of the fair value option eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise from measuring assets on a different basis; or
• the financial assets are part of a portfolio of financial instruments which is managed and its performance
evaluated on a fair value basis; or
• the assets include embedded derivatives and such derivatives are required to be recognised separately.
Financial assets at fair value through profit or loss are carried at fair value and any gain or loss arising from
a change in their fair values is recognised in the income statements.
(b) Financial investments available-for-sale
Financial investments available-for-sale are financial assets that are not classified as held-for-trading or
held-to-maturity. The financial investments available-for-sale are measured at fair value. Any gain or loss
arising from a change in fair value is recognised directly in equity through the statement of changes in
equity, until the financial asset is derecognised, at which time the cumulative gain or loss previously
recognised in equity will be transferred to the income statements.
(c) Financial investments held-to-maturity
Financial investments held-to-maturity are financial assets with fixed or determinable payments and fixed
maturity that the Group has the positive intent and ability to hold to maturity. The financial investments
held-to-maturity are measured at amortised cost based on the effective yield method, less impairment.
The following tables set out the Group’s securities portfolio as at the dates indicated:
Financial Assets Held-For-Trading
At fair value
Money Market Instruments:
— Malaysian Treasury bills . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Malaysian Islamic Treasury bills . . . . . . . . . . . . . . . . . . . . .
— Malaysian Government Securities . . . . . . . . . . . . . . . . . . . .
— Government Investment Issues . . . . . . . . . . . . . . . . . . . . . .
— Bank Negara Monetary Notes . . . . . . . . . . . . . . . . . . . . . . .
Quoted securities:
In Malaysia
— Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Unit trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Warrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Private debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside Malaysia
— Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unquoted securities:
In Malaysia
— Private debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside Malaysia
— Private debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total securities held-for-trading . . . . . . . . . . . . . . . . . . . . . . . .
86
As at 1 April
2011
(RM
million)
As at 31 March
2012
(RM
million)
As at 31 March
2013
(RM
(U.S.$
million)
million)
49.0
5.3
160.3
221.7
2,270.4
54.8
—
929.5
223.5
5,049.9
—
—
240.3
88.6
438.3
—
—
77.7
28.7
141.7
2,706.7
6,257.7
767.2
248.1
288.4
74.1
2.8
—
247.6
65.0
2.9
—
133.7
88.2
4.7
23.2
43.2
28.5
1.5
7.5
365.3
315.5
249.8
80.7
4.7
—
4.6
1.5
4.7
—
4.6
1.5
1,019.6
1,732.1
2,653.5
857.9
1,019.6
1,732.1
2,653.5
857.9
70.7
605.6
425.5
137.6
70.7
605.6
425.5
137.6
4,167.0
8,910.9
4,100.6
1,325.8
Financial Investments Available-For-Sale
At fair value
Money Market Instruments:
— Negotiable instruments of deposit . . . . . . . . . . . . . . . . . . . .
— Malaysian Government Securities . . . . . . . . . . . . . . . . . . . .
— Islamic Negotiable Instruments of Deposit . . . . . . . . . . . . .
— Government Investment Issues . . . . . . . . . . . . . . . . . . . . . .
Quoted securities:
In Malaysia
— Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Unit trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— Private debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside Malaysia
— Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unquoted securities:
In Malaysia
— Private debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside Malaysia
— Private debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At cost
Unquoted securities:
In Malaysia
— Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outside Malaysia
— Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total securities available-for-sale . . . . . . . . . . . . . . . . . . . . . . .
As at 1 April
2011
(RM
million)
As at 31 March
2012
(RM
million)
As at 31 March
2013
(RM
(U.S.$
million)
million)
2,523.2
255.8
785.9
94.7
1,569.4
20.8
823.5
45.4
834.2
—
340.4
15.2
269.7
—
110.1
4.9
3,659.6
2,459.1
1,189.8
384.7
11.9
39.4
55.9
12.0
60.2
27.0
5.4
212.0
5.5
1.8
68.5
1.8
107.2
99.2
222.9
72.1
0.1
0.1
0.1
—
0.1
0.1
0.1
—
2,377.2
1,623.8
1,623.0
524.7
2,377.2
1,623.8
1,623.0
524.7
100.2
170.3
224.5
72.6
100.2
170.3
224.5
72.6
86.8
87.3
87.3
28.2
86.8
87.3
87.3
28.2
0.9
0.9
1.0
0.3
0.9
0.9
1.0
0.3
6,332.0
4,440.7
3,348.6
1,082.6
As at 1 April
2011
(RM
million)
As at 31 March
2012
(RM
million)
Financial Investments Held-To-Maturity
At amortised cost
Unquoted:
Money Market Instruments:
— Bank Negara Monetary Notes . . . . . . . . . . . . . . . . . . . . . . .
In Malaysia
— Private debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Accumulated impairment losses . . . . . . . . . . . . . . . .
373.1
(207.8)
Total securities held-to-maturity . . . . . . . . . . . . . . . . . . . . . . . .
165.3
87
—
—
As at 31 March
2013
(RM
(U.S.$
million)
million)
2,092.6
676.6
318.2
(202.1)
2,134.9
(194.0)
690.2
(62.7)
116.1
4,033.5
1,304.1
RISK MANAGEMENT
The Group’s Risk Management Framework reflects the Board’s Approved Group Risk Appetite Framework
which sets out the risk and reward profile for the Group, together with the related business strategies, limit
framework and policies required to enable successful execution.
The Group Risk Appetite Framework is approved annually by the Board taking into account the Group’s desired
external rating, targeted profitability and return on equity (“ROE”). The Group Risk Appetite Framework is
reviewed periodically throughout the financial year by both the executive management of the Group and the
Board. During these reviews, consideration is given to whether any fine tuning or amendments are required to be
made to the Group Risk Appetite Framework to account for prevailing or expected changes to the operational
environment.
The Group Risk Appetite Framework provides portfolio parameters for credit risk, traded market risk, non-traded
market risk and operational risk incorporating, inter alia, limit structures for countries, industries, single
counterparties, value at risk, capital at risk, earnings at risk, stop loss, stable funding ratio and liquidity. Each
business unit has asset writing strategies which tie into the overall Group Risk Appetite Framework providing
detailed strategies of how those units will execute their business plans in compliance with the Group Risk
Appetite Framework.
Board Approved Risk Appetite Statement
The Group aims to progressively reduce its exposure to risk over the next three years.
The Group aims to improve the credit rating it is given by international rating agencies, supported by continued
improvement in overall asset quality and portfolio diversification, continued growth and diversification of its
funding and treasury and markets businesses and strong management of liquidity, interest rate and rate of return
risk in the balance sheet.
Risk Management Governance
The Board is ultimately responsible for the management of risks within the Group. The Risk Management
Committee of Directors (“RMCD”) is formed to assist the Board in discharging its duties in overseeing the
overall management of all risks covering market risk management, liquidity risk management, credit risk
management and operational risk management.
88
The Board has also established the Group CEOs Committee to assist it in managing the risks and businesses of
the Group. The committee addresses all classes of risk within its Board delegated mandate: balance sheet risk,
credit risk, legal risk, operational risk, market risk, Shariah risk, compliance risk, regulatory compliance risk,
reputational risk, product risk and business and IT project risk. All proposals requiring RMCD and Board
approval or endorsement must first be agreed to by the Group CEOs Committee. The following chart sets out the
organisational structure of the Group CEOs Committee and an overview of the Group CEOs Committee’s roles
and responsibilities:
Credit Risk Management
Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet its payment
obligations. Exposure to credit risk arises from lending, securities and derivative exposures. The identification of
credit risk is done by assessing the potential impact of internal and external factors on the Group’s transactions
and/or positions as well as Shariah compliance risk.
The primary objective of the Group’s credit risk management framework is to maintain accurate risk recognition
(through identification and measurement) to ensure that credit risk exposure is in line with the Group’s Risk
Appetite Framework and related credit policies.
The Group’s credit risk management process is depicted in the table below:
Identification
•
•
Identify/recognise credit risk on transactions and/or positions
Select asset and portfolio mix
Assessment/
Measurement
•
•
•
•
Internal credit rating system
Probability of default (“PD”)
Loss given default (“LGD”)
Exposure at default (“EAD”)
Control/
Mitigation
•
•
Portfolio Limits, Counterparty Limits, Benchmark Returns
Collateral & tailored facility structures
Monitoring/
Review
•
•
•
Monitor and report portfolio mix
Review customer under Watchlist
Undertake post mortem review
89
For non-retail credits, risk recognition begins with an assessment of the financial standing of the borrower or
counterparty using a credit rating model. The model consists of quantitative and qualitative scores that are then
translated into rating grades. The assigned credit rating grade forms a crucial part of the credit analysis
undertaken for each of the Group’s credit exposures.
For retail credits, credit-scoring systems to better differentiate the quality of borrowers are used to complement
the credit assessment and approval processes.
To support credit risk management, the Group’s rating models for major portfolios have been upgraded to
facilitate:
• improvement in the accuracy of individual obligor risk ratings;
• enhancement of pricing models;
• loan loss provision calculation;
• stress-testing; and
• enhancement of portfolio management.
Lending and financing activities are guided by the Group Risk Appetite Framework and internal credit policies
that are approved by the Board. The Group’s Risk Appetite Framework is refreshed at least annually and with
regard to credit risk, provides direction as to portfolio management strategies and objectives designed to deliver
the Group’s optimal portfolio mix. Credit Risk portfolio management strategies include, amongst others:
• concentration threshold and review triggers linked to:
• single counterparty credit;
• industry sector; and
• country;
• asset writing strategies for industry sectors and portfolio composition (by risk grade and security indicator);
• setting loan/financing to value limits for asset backed loans and financings (i.e., property exposures and other
collateral);
• watchlist processes for identifying, monitoring and managing customers exhibiting signs of weakness and
higher risk customers; and
• setting benchmark returns which serve as a guide to the minimum returns the Group requires for the risk
undertaken, taking into account operating expenses and cost of capital.
Individual credit risk exposure is reported to the CACC. In the event such exposure exceeds CACC authority it
will be reported to the Executive Committee of Directors. Portfolio credit risk is reported to the relevant
management and board committees.
The Group CEOs Committee regularly meets to review the quality and diversification of the Group’s loan and
financing portfolio, approve new and amended credit risk policies, review watchlist reports and carry out post
transaction reviews of loans and financings.
The Group Risk Division oversees risk across the various business units within the Group and prepares monthly
Risk Reports which detail important portfolio composition and trend analysis. These reports address asset
growth, asset quality, impairments, flow rates of loan and financing delinquency buckets and exposures by
industry sectors. The reports are provided by the Group Risk Division to executive management and are
presented at all meetings of the Board.
The Group applies the Standardised Approach to determine the regulatory capital charge related to credit risk
exposure.
Capital Risk
The Group monitors its capital adequacy position to ensure compliance with the requirements of BNM and to
take prompt action to address projected or actual capital deficiencies. The Group’s capital position is reviewed on
a monthly basis. Capital risk assessment takes into account the levels and trend of material risks, the assumptions
used in the capital assessment measurement system, sufficiency of capital amount against the various risks and
its compliance with current and future requirements based on the Group’s risk profile.
90
On 28 November 2012, BNM issued its Capital Adequacy Framework — Capital Components implementing the
Basel III reforms. The capital requirements set out by BNM took effect on 1 January 2013 and require banking
institutions, including the Group, to maintain the following minimum capital ratios for the calendar years detailed
below:
(a) a minimum CET1 capital ratio of 3.5 per cent. of risk-weighted assets (in 2013), 4.0 per cent. (in 2014) and
4.5 per cent. (from 2015 onwards);
(b) a minimum Tier 1 capital ratio of 4.5 per cent. of risk-weighted assets (in 2013), 5.5 per cent. (in 2014) and
6.0 per cent. (from 2015 onwards); and
(c) a minimum Total Capital ratio of 8.0 per cent. of risk-weighted assets (from 2013 onwards).
In addition, banks are required to maintain additional capital buffers above the minimum CET1, Tier 1 and Total
Capital ratios set out above in the form of a capital conservation buffer and a countercyclical capital buffer.
The capital conservation buffer is to enable the banking system to withstand future periods of stress and requires
banks to maintain an additional buffer equal to a minimum of 0.625 per cent. of risk-weighted assets (for the
2016 calendar year), 1.25 per cent. (for the 2017 calendar year), 1.875 per cent. (for the 2018 calendar year) and
2.50 per cent. (from 2019 onwards). There will be no capital conservation buffer prior to the 2016 calendar year.
If there is excess credit growth in any given country resulting in a system-wide build-up of risk, a countercyclical
buffer within a range of 0.0 per cent. to 2.5 per cent. of risk-weighted assets will also apply to the minimum
CET1, Tier 1 and Total Capital ratios (as increased by the capital conservation buffer). The countercyclical
buffer is determined as the weighted-average of the prevailing countercyclical capital buffer requirements
applied in the jurisdictions in which the relevant banking institution has credit exposures and is subject to the
following scaling factors: 0.0 per cent. (for calendar years prior to 2016), 25.0 per cent. (for the 2016 calendar
year, 50.0 per cent. for the 2017 calendar year) and 75.0 per cent. (for the 2018 calendar year).
The Group draws up capital plans annually covering three-year horizons which are approved by the Board of
Directors. The plans ensure that adequate levels of capital and an optimum mix of the different capital
components are maintained. The capital plans take into account regulatory capital requirements (as detailed
above) and capital stresses. The Group uses internal models and other quantitative techniques in assessing its
capital needs and uses regulatory formulae to calculate the amount of capital required to address potential future
losses arising from credit, market and other risks. The Group uses stress testing and scenario analysis to ensure
the internal capital assessment considers the impact of extreme but plausible scenarios on its risk and capital
position. This enables the Group to assess the potential impact of significant events and how these might be
mitigated. The Group discusses its capital position with BNM on a regular basis as part of its normal regulatory
liaison activity.
The Group CEOs Committee is responsible for the development of policies related to capital management. A
dedicated team, the Capital and Balance Sheet Management Department, is responsible for the ongoing
assessment of the demand for capital and the preparation of the Group’s capital plans.
Market Risk Management
Market risk is the risk of losses due to adverse changes in the level or volatility of market rates or prices, such as
interest rates, profit rates, credit spreads, equity prices and foreign exchange rates. The Group differentiates
between two types of market risk: Traded Market Risk (“TMR”) and Interest Rate Risk/Rate of Return Risk in
the Banking Book (“IRR/RORBB”). Assessment, control and monitoring of these risks are the responsibility of
the Group Market Risk Division.
91
Traded Market Risk
The TMR management process is depicted in the table below.
Identification
•
•
Identify market risks within existing and new products
Review market-related information such as market trends and economic data
Assessment/
Measurement
•
•
•
•
Value-at-Risk (“VaR”)
Profit-at-Risk (“PaR”)
Capital-at-Risk (“CaR”)
Other Detailed Management Controls
Control/
Mitigation
•
•
•
•
•
•
•
•
•
•
•
•
VaR Limits
PaR Limits
CaR Limits
Loss Limits (Annual/Monthly)
Concentration Limits
Greeks Limits (Delta/Gamma/Delta-Gamma/Vega/Theta)
Present Value of One Basis Point Limits (PV01)
Stealth Limits
Position Size Limits
Maximum Tenure Limits
Maximum Holding Period
Permitted Instruments/Currencies/Countries
Monitoring/
Review
•
•
Monitoring of limits
Periodical review and reporting
TMR arises from transactions in which the Group acts as principal with clients or the market. It involves taking
positions in fixed income, equity, foreign exchange, commodities and/or derivatives. The objectives of TMR
management are to understand, accurately measure and work with the business to ensure exposures are managed
within the Board and executive management approved limit structures. This is done via robust traded market risk
measurement, limit setting, limit monitoring, and collaboration and agreement with the Group’s business units.
VaR, PaR, CaR and other detailed management controls are used to measure, monitor and control TMR
exposures. VaR is a quantitative measure which applies recent historic market conditions to estimate potential
losses in market value, at a certain confidence level and over a specified holding period. PaR comprises VaR and
a loss limit threshold (i.e. annual loss limit). Loss limit thresholds are intended to trigger management discussion
on appropriate mitigation measures to be taken, once certain loss levels are reached.
To complement VaR, CaR is used as a measure of the potential impact on portfolio values due to more extreme,
albeit plausible, market movements. In addition, CaR is used to gauge and ensure that the Group is able to absorb
extreme, unanticipated market movements.
Apart from VaR, PaR and CaR, additional sensitivity controls (e.g. Greek Limits (a set of factor sensitivities used
for measuring risk exposures related to options or derivatives) and PV01) and indicators are used to monitor
changes in portfolio value due to changes in risk factors under different market conditions.
The Group Market Risk Department monitors and reports risk exposures against limits on a daily basis. Portfolio
market risk positions are also reported to the Group CEOs Committee, RMCD and the Board. Furthermore,
policies and procedures are in place to ensure prompt action is taken in the event of non-adherence to limits.
Business units exposed to traded market risk are required to maintain risk exposures within approved risk limits.
Business units are required to provide an action plan to address any non-adherence to limits. The action plan
must be approved by senior management.
The Group adopts the Standardised Approach for market risk capital charge computation. The capital charge
serves as a buffer against losses from potential adverse market movements.
The Group Market Risk Department is committed to on-going improvements in market risk processes and
systems.
92
Non-Traded Market Risk
The IRR/ RORBB risk management process is depicted in the table below:
Identification
•
•
Identify IRR/RORBB within existing and new products.
Review market-related information such as market trend and economic data.
Assessment/
Measurement
•
•
Value-at-Risk
Earnings-at-Risk
Control/
Mitigation
•
•
VaR Limits
EaR Limits
Monitoring/
Review
•
•
Monitoring of limits
Periodical review and reporting
IRR/RORBB arises from changes in market interest or profit rates that impact core net interest or profit income,
future cash flows or fair values of financial instruments. This risk arises from mismatches between repricing
dates of assets and liabilities, changes in yield curves, volatilities in interest or profit margins and implied
volatilities on interest or profit rate options. The provision of retail and wholesale banking products and services
(primarily lending, financing and deposit taking activities) creates interest or profit rate-sensitive positions in the
Group’s statement of financial position.
The principal objectives of balance sheet risk management are to manage interest or profit income sensitivity
while maintaining acceptable levels of IRR/RORBB and funding risk, and to manage the market value of
Group’s capital.
The Board’s oversight of IRR/RORBB is supported by the Group CEOs Committee. The Group CEOs
Committee is responsible for the alignment of Group-wide risk appetite and funding needs, taking into
consideration Group-wide business strategies. The Group CEOs Committee consistently oversees the Group’s
gapping positions, asset growth and liability mix against the interest or profit rate outlook. It also reviews
strategies to ensure a comfortable level of IRR/RORBB is maintained. The Group has successfully engaged
long-term borrowings and written interest or profit rate swaps to manage IRR/RORBB, and maintain an
acceptable gapping profile as a result. In accordance with the Group’s policy, positions are monitored on a daily
basis and hedging strategies are employed to ensure risk exposures are maintained within limits set by the Board.
The Group measures the risk of losses arising from potential adverse movements in market interest or profit rates
and volatilities using VaR. VaR is a quantitative measure of IRR/RORBB which applies recent historic market
conditions to estimate the potential loss in market value, at a certain confidence level and over a specified
holding period.
The Group complements VaR by stress testing IRR/RORBB exposures to highlight potential risk that may arise
from extreme market events that are rare but plausible.
Key assumptions in the gap and sensitivity analysis relate to the behaviour of interest or profit rates and spreads,
changes in loan or financing and deposit product balances due to behavioural characteristics under different
interest or profit rate environments. Material assumptions include the repricing characteristics and the stickiness
of indeterminate or non-maturity deposits.
The rate scenarios may include rapid ramping of interest or profit rates, gradual ramping of interest or profit
rates, and narrowing or widening of spreads. Usually each analysis incorporates what the Group’s management
deems to be the most appropriate assumptions about customer behaviour in an interest or profit rate scenario.
However, in certain cases, assumptions are deliberately changed to test the Group’s exposure to a specified event.
The Group seeks to optimise exposure to IRR/RORBB within limits approved by the Board. This is achieved
through the ability to reposition the interest or profit rate exposure of the statement of financial position of the
Group using dynamic product and funding strategies, supported by FRS 139-compliant interest or profit rate
hedging activities using interest or profit rate swaps and other derivatives. These approaches are governed by
Group’s policies in the areas of product and liquidity management as well as the banking book policy statements
and hedging policies.
IRR/RORBB is calculated daily and reported to the Group CEOs Committee.
93
Liquidity Risk and Funding Management
Liquidity risk is the risk that the organisation either does not have sufficient financial resources available to meet
all its obligations and commitments as they fall due or can only access these financial resources at an
unreasonable cost. Liquidity risk exposure arises mainly as a result of the Group’s deposit-taking and borrowing
activities, market disruption and, to a lesser extent, significant drawing down of funds pursuant to previously
contracted financing and purchase commitments. Funding management is the ongoing ability to raise sufficient
funds to finance actual and proposed business activities at a reasonable cost. Improper funding management may
lead to liquidity problems. Conversely, insufficient liquidity risk management may give rise to funding risk.
The liquidity risk management strategy of the Group is aligned with the New Liquidity Framework issued by
BNM. The primary objective of the Group’s liquidity risk management strategy is to ensure the availability of
sufficient funds at a reasonable cost in order to enable the Group to meet its financial commitments when they
fall due. This objective is partly managed by maintaining a portfolio of high-quality liquid assets to protect
against adverse funding conditions and to support the day-to-day operations of the Group. The secondary
objective is to ensure an optimal funding structure and to balance the key liquidity risk management objectives,
which include diversification of funding sources, customer base and maturity period.
The Group CEOs Committee is responsible for approving the Group’s liquidity management strategies and
policies. It is also responsible for setting liquidity limits, proposing liquidity risk policies and contingency
funding plans and practices in order to ensure compliance with local regulatory requirements. The committee
monitors the Group’s liquidity on an ongoing basis. The Capital and Balance Sheet Management Department and
the Group Risk Management Division propose and oversee the implementation of policies and other controls
relating to the above risks.
The Group has put in place a contingency funding plan to identify early warning signals of possible liquidity
problems. The contingency funding plan also sets out in detail the responsibilities of the relevant departments in
the event of a liquidity crisis occurring. The plan is designed to ensure orderly execution of procedures in such an
event, in order to restore the liquidity position and confidence in the organisation.
Stress testing is undertaken to assess and plan for the impact for various scenarios which may put the Group’s
liquidity at risk. The stress testing output contributes to the development of the liquidity risk limits and the
Group’s contingency funding plan.
The Group stresses the importance of customer deposit accounts as a source of funds to finance lending to
customers. They are monitored using the adjusted loans and financing to deposit ratio, which compares loans,
financing and advances to customers as a percentage of customer deposit accounts and term funding with an
original term of maturity in excess of three years.
Reflecting the conservative liquidity management practice adopted by the Group, part of its medium term asset
base is funded by medium term liabilities. Medium term is defined by the Group as remaining term to maturity in
excess of one year.
In preparation for the impending implementation of Basel III liquidity metrics, the Group is putting in place
measurement mechanisms and strategies to ensure availability of cost effective liquidity. Subject to finalisation
of the detailed regulations, the Group is confident of meeting BNM’s requirements reflecting Basel III liquidity
metrics in accordance with its recently approved timetable for implementation.
Operational Risk Management
The Group’s operational risk management process is depicted in the table below:
Identification
•
Identify and analyse risks in key processes/activities within Line of Business (including new
products)
Assessment/
Measurement
•
•
•
Incident Management and Data Collection
Risk and Control Self Assessment
Key Risk Indicators
Control/
Mitigation
•
•
•
Policies addressing control & governance requirements to mitigate specific operational risk
Advisory on the establishment of internal controls
Contingency planning
Monitoring/
Review
•
•
Monitoring and reporting of loss incidents by Event Type, Portfolio and Line of Business
Periodical review of risk profile within Line of Business
94
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and
systems or from external incidents which include but are not limited to legal risk and Shariah compliance risk. It
excludes strategic, systemic and reputational risk.
The strategy for managing operational risk in the Group is based on the three lines of defence concept which are
as follows:
• the first line of defence is accountable for implementing the operational risk framework and policies,
embedding appropriate internal controls into processes and maintaining business resilience for key activities.
The responsibility for managing day-to-day operational risk rests with each line of business;
• in the second line, the Group Operational Risk department is responsible for exercising governance over
operational risk through the management of the operational risk framework, policy development, quality
assurance of internal controls, operational risk measurement and capital allocation, formulation,
implementation and monitoring of the Group’s fraud strategy and reporting of operational risk issues to the
Group CEOs Committee and the RMCD; and
• the Group Internal Audit Division acts as the third and final line of defence by providing independent
assurance on the effectiveness of internal controls through its periodic audit programme.
The Group Operational Risk department maintains close working relationships with all business lines within the
Group, continually assisting in the identification of operational risks inherent in their respective business
activities, assessing the impact and significance of these risks and ensuring that satisfactory risk mitigation
measures and controls are in place. Various tools and methods are employed to identify, measure, control,
monitor and report operational risk issues within the Group. The Group’s Operational Risk Management System
contains the following modules:
• the Incident Management and Data Collection (“IMDC”) module provides a common platform for reporting
operational risk incidents that fall within one of the seven Event Types as set out in Basel II. IMDC also serves
as a centralised database of operational risk incidents to model the potential operational risk exposure in the
future and to estimate the associated economic capital charge;
• the Risk and Control Self Assessment (“RCSA”) module is a process of continual assessment of risks and the
effectiveness of controls. By using structured questionnaires to assess and measure key risks and the
effectiveness of the corresponding controls, RCSA provides risk profiling across the Group; and
• the Key Risk Indicators module provides early warning of increasing risk and/or control failures by monitoring
the changes of the underlying risk measurements.
As part of its risk transfer strategy, the Group obtains third party insurance to cover major operational risks
where cost-effective premiums can be obtained. In addition, a comprehensive business continuity management
strategy is in place to ensure critical business functions can be maintained or restored in a timely manner, in the
event of material disruption caused by internal or external events.
The ultimate authority for all operational risk management matters is delegated by the Board to the Group CEOs
Committee, which comprises senior management members of various business divisions and support units and
the Group Chief Risk Officer. The RMCD and the Group CEOs Committee are the main reporting and escalation
committees for operational risk matters. These matters include significant operational risk incidences or findings,
deliberations on regulatory and supervisory changes and their impact on operational risk and deliberation and
endorsement of operational risk mitigation measures and risk management strategies.
The Group adopts the basic indicator approach for the operational risk capital charge computation.
Legal and Regulatory Risk Management
Legal risks arise from potential breaches of applicable laws and regulatory requirements, unenforceability of
contracts, lawsuits or adverse judgment which may lead to losses and disruption to the Group’s business or
otherwise adversely affect the reputation of the Group. Legal risk is managed through advice and measures
provided by the Group’s internal legal counsels and the Group CEOs committee and, where necessary, in
consultation with external legal counsel to ensure that its legal risk is minimised.
The Group’s regulatory compliance department ensures that appropriate measures are introduced and applied
accordingly to recognise and address regulatory risk. These measures include, amongst others, a compliance
monitoring and reporting process that requires identification and self-declaration of non-compliance, staff
training and performance of assessments, provision of advice and dissemination of information.
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The Group conducts compliance awareness training and leads co-ordination efforts to ensure that staff are
up-to-date with respect to banking, securities and anti-money laundering laws as well as other regulatory
developments. The training programmes help promote understanding amongst the Group’s staff of applicable
regulations and helps develop their skills to identify compliance issues as well as to cultivate good corporate
ethics.
Reputational Risk
The Group recognises that maintaining its reputation among clients, investors, regulators and the general public
is an important aspect of minimising legal and operational risk. Maintaining the Group’s reputation depends on a
large number of factors, including its selection of clients and business partners and the manner in which it
conducts its business activities. The Group seeks to maintain its reputation by screening potential clients and
business partners and by conducting its business activities in accordance with high ethical standards and
regulatory requirements. The Group also manages reputational risk through requiring its employees to adhere to
specific policies and procedures, such as an “Employee Code of Ethics” and “Anti-Money Laundering and
Sanctions” policy. These policies provide for escalation of potential reputational risks to appropriate management
approval levels whilst all potential material or “high-impact” reputational risks are escalated to the Group CEOs
Committee for decision prior to any further actions taking place.
Hedging Strategy
Financial derivatives
Purpose of engaging in financial derivatives
As part of its risk management strategy, the Group uses financial derivatives instruments to manage the Group’s
market risk exposure. The Group’s involvement in financial derivatives is currently focused on interest rate
derivatives. In relation to foreign exchange risk, the Group has minimal risk exposure as the Group will fund
foreign currency assets with liabilities of the same currency unless circumstances require otherwise.
The principal interest rate contracts used are interest rate swaps. Interest rate swap transactions generally involve
the exchange of fixed and floating interest payment obligations without the exchange of the underlying principal
amounts.
As derivatives are contracts that transfer risks, they expose the Group to the same types of market and credit risk
as other financial instruments and the Group seeks to manage these risks in a consistent manner under the overall
risk management framework.
Interest rate risk
The Group is exposed to interest rate risk due to its fixed rate loan portfolio, its holding of securities and its
interbank deposits and placement position. In order to mitigate such risks, the Group regularly introduces floating
rate loan products, sells loans to Cagamas Berhad and undertakes asset securitisation, amongst others.
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PRINCIPAL SHAREHOLDERS
Share Capital
The authorised and issued and paid-up share capital of the Bank as at 31 March 2013 is as follows:
Type
No. of shares
Authorised:
Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Irredeemable Non-Cumulative Convertible Preference Shares . . . . . . . . .
Issued and paid-up capital:
Ordinary Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Voting Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,386,250,002
2,500,000,000
Par
value
(RM)
Amount
(RM)
1.0
1.0
1,386,250,002
2,500,000,000
820,363,762 1.0
820,363,762
Ordinary Shares of RM1.00 each
Voting rights are granted to holders
of ordinary shares as stated in the
Memorandum and Articles of
Association of the Bank
Shareholders
As at 31 March 2013, AMMB Holdings Berhad holds 100.0 per cent. of the ordinary shares of the Bank.
97
MANAGEMENT AND EMPLOYEES
Board of Directors of the Bank
The Bank’s Board of Directors currently comprises nine directors of whom eight are Non-Executive Directors.
Of the eight Non-Executive Directors, four are independent.
In accordance with the Memorandum and Articles of Association of the Bank, the number of directors shall not
be less than two and shall not be subject to any maximum, unless otherwise determined by its shareholders.
Furthermore, members of the Board retire from office at due intervals by rotation. However, they may offer
themselves for re-election. Directors who have attained the age of 70 years retire at every annual general meeting
and shall be eligible for reappointment to hold office until the next annual general meeting pursuant to the
Malaysian Companies Act 1965. The current directors of the Bank are as follows:
Name
Position
Date of appointment
Y Bhg Tan Sri Azman Hashim . . . . . . . .
Chairman/Non-Independent
Non-Executive Director
20 December 2001
Mr Cheah Tek Kuang . . . . . . . . . . . . . . .
Deputy Chairman/Non-Independent
Non-Executive Director
20 December 2001
Non-Independent Non-Executive
Director
20 December 2001
Y Bhg Tan Sri Datuk Clifford Francis
Herbert . . . . . . . . . . . . . . . . . . . . . . . . .
Independent Non-Executive Director
1 October 2005
Y Bhg Dato’ Larry Gan Nyap Liou @
Gan Nyap Liow . . . . . . . . . . . . . . . . . .
Independent Non-Executive Director
15 June 2006
Mr Chin Yuen Yin . . . . . . . . . . . . . . . . . .
Independent Non-Executive Director
1 November 2010
Mr Loh Chen Peng . . . . . . . . . . . . . . . . .
Independent Non-Executive Director
20 May 2013
Mr Christopher Robin Page . . . . . . . . . . .
Non-Independent Non-Executive
Director
20 June 2012
Mr Ashok Ramamurthy . . . . . . . . . . . . . .
Chief Executive Officer/
Non-Independent Executive Director
18 November 2008
Y A Bhg Tun Mohammed Hanif bin
Omar . . . . . . . . . . . . . . . . . . . . . . . . . .
The Board meets 9 times in a year, with additional meetings scheduled as required, to consider and discuss the
latest financial and operational developments as well as strategic and policy issues, and to ensure that disclosures
are in accordance with accounting standards and regulatory guidelines. The Bank complies with the
recommendation contained in the Malaysian Code on Corporate Governance 2012 (the “Code”) that one-third of
the Board should comprise independent directors.
Profiles of Directors
Y Bhg Tan Sri Azman Hashim
Tan Sri Azman Hashim, a Malaysian, aged 74 was appointed to the Board on 20 December 2001. Tan Sri Azman
has been the Chairman of AMMB Holdings, the holding company of the Bank, since 1991. He is the NonIndependent Non-Executive Chairman of AMMB Holdings.
Tan Sri Azman is also the Chairman of the board of several subsidiaries of AMMB Holdings, namely
AmInvestment Bank, AmIslamic Bank, AmGeneral Insurance Berhad (formerly known as Kurnia Insurans
(Malaysia) Berhad), AmLife Insurance Berhad, AmFamily Takaful Berhad, AmGeneral Holdings Berhad
(formerly known as AmG Insurance Berhad), AmInvestment Group Berhad and AMFB Holdings Berhad.
Tan Sri Azman, a Chartered Accountant (FCPA), a Fellow of the Institute of Chartered Accountants and a Fellow
of the Institute of Chartered Secretaries and Administrators, has been in the banking industry since 1960 when he
joined Bank Negara Malaysia and served there until 1964. He practised as a Chartered Accountant in Azman
Wong Salleh and Co. from 1964 to 1971. He then joined the board of Malayan Banking Berhad from 1966 until
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1980 and was its Executive Director from 1971 until 1980. He was the Executive Chairman of Kwong Yik Bank
Berhad, a subsidiary of Malayan Banking Berhad, from 1980 until April 1982 when he acquired AmInvestment
Bank.
Tan Sri Azman is the Executive Chairman of Amcorp Group Berhad and RCE Capital Berhad, and Chairman of
Malaysian South-South Corporation Berhad. He serves as a member on the board of Pembangunan MasMelayu
Berhad and the Asian Institute of Finance Berhad. Tan Sri Azman is also involved in several charitable
organisations as Chairman and Trustee of AmGroup Foundation, Perdana Leadership Foundation and Trustee for
Yayasan Azman Hashim, Yayasan Perpaduan Nasional, Malaysian Liver Foundation, Yayasan Tuanku Najihah
and Yayasan Canselor Open University Malaysia.
Tan Sri Azman is the Chairman of the Institute of Bankers Malaysia, Malaysian Investment Banking Association
and the Malaysia Productivity Corporation. He is also Chairman Emeritus of Pacific Basin Economic Council
(PBEC) International and Co-Chairman of Malaysia — Singapore Roundtable. He is the President of Malaysia
South-South Association, Malaysia-Japan Economic Association, Malaysian Prison FRIENDS Club, NonAligned Movement’s (NAM) Business Council and Treasurer of Malaysia-Australia Foundation. He is a Member
of the APEC Business Advisory Council, the Trilateral Commission (Asia-Pacific Group), the Malaysian-British
and Malaysia-China Business Councils and East Asia Business Council. He is also the Leader of the ASEANJapanese Business Meeting (Malaysia Committee, Keizai Doyukai) and is on the Board of Advisors of AIM
Centre for Corporate Social Responsibility. He is the Pro-Chancellor of Open University of Malaysia, a member
of the Governing Body of Asian Productivity Organisation and the International Advisory Panel of Bank Negara
Malaysia International Centre for Education in Islamic Finance (INCEIF) and recently, the Asian Banking
School Sdn Bhd.
Mr Cheah Tek Kuang
Mr Cheah Tek Kuang, a Malaysian, aged 66, was appointed to the Board on 20 December 2001. Mr Cheah is
currently the Deputy Chairman of the Bank and AmInvestment Bank.
Mr Cheah joined AmInvestment Bank in 1978 and held various senior positions. In 1994, he was promoted to
Managing Director, and he became the Group Managing Director of AmInvestment Bank from January 2002 to
December 2004 before assuming the office of Group Managing Director in AMMB Holdings from January 2005
until his retirement in April 2012. He remains as a Non-Independent Non-Executive Director of AmInvestment
Bank and AmIslamic Bank.
Mr Cheah is the Chairman of Berjaya Sports Toto Berhad and his directorships in other public companies include
Cagamas Holdings Berhad, IOI Corporation Berhad, UMW Oil & Gas Corporation Bhd., Danajamin Nasional
Berhad and the Malaysian Institute of Art. He is a member of the Investment Panel of Retirement Fund
Incorporated (Kumpulan Wang Persaraan).
Mr Cheah has a Bachelor of Economics (Honours) degree from the University of Malaya and is a Fellow of the
Institute of Bankers Malaysia.
Y A Bhg Tun Mohammed Hanif bin Omar
Tun Mohammed Hanif bin Omar, a Malaysian, aged 74, was appointed to the Board on 20 December 2001.
Tun Mohammed Hanif is also a board member of AMMB Holdings and several of its subsidiaries, namely
AmIslamic Bank, AmInvestment Bank and AMFB Holdings Berhad. He is currently the Deputy Executive
Chairman of Genting Berhad and Genting Malaysia Berhad and a board member of Genting Overseas Holdings
Ltd. He has been the President of the Malaysian Institute of Management since 2001. He is also the President of
the Malaysian Branch of the Royal Asiatic Society. He was the Inspector-General of the Royal Malaysian Police
for 20 years until his retirement in January 1994.
Tun Mohammed Hanif received his Bachelor of Arts from the then University of Malaya, Singapore in 1959,
Bachelor of Laws (Honours) from Buckingham University, United Kingdom in 1986 and Certificate of Legal
Practice (Honours) from the Legal Qualifying Board in 1987.
Y Bhg Tan Sri Datuk Clifford Francis Herbert
Tan Sri Datuk Clifford Francis Herbert, a Malaysian, aged 71, was appointed to the Board on 1 October 2005. He
is a board member of AMMB Holdings and its subsidiaries, namely AmInvestment Bank and AmIslamic Bank.
Tan Sri Datuk Herbert is also currently a board member of Genting Malaysia Berhad, Shell Refining Company
(Federation of Malaya) Berhad, Moet Hennessy Diageo Malaysia Sdn Bhd and FIDE Forum.
99
Tan Sri Datuk Herbert joined the Malaysian Civil Service in 1964 as Assistant Secretary in the Public Services
Department from 1964 to 1968. Subsequently, he served in the Ministry of Finance from 1975 to 1997,
culminating as Secretary General to the Treasury. He retired from the civil service in 1997.
As Secretary General in the Ministry of Finance, he was also appointed as alternate Governor of the World Bank.
From 1994 to 2000, Tan Sri Datuk Herbert was the Chairman of KL International Airport Berhad which built the
Kuala Lumpur International Airport. He had been a board member of numerous statutory bodies and government
related public companies among them being Kumpulan Khazanah Nasional Berhad, Malaysian Airline System
Berhad, Petroliam Nasional Berhad, Bank Negara Malaysia, the Securities Commission and Chairman of
Percetakan Nasional Malaysia Berhad. Additionally, Tan Sri Datuk Herbert is also involved in several nongovernmental organisations.
Tan Sri Datuk Herbert holds a Masters of Public Administration from University of Pittsburgh, USA, and a
Bachelor of Arts (Honours) from the University of Malaya.
Y Bhg Dato’ Larry Gan Nyap Liou @ Gan Nyap Liow
Dato’ Larry Gan Nyap Liou @ Gan Nyap Liow, a Malaysian, aged 58, was appointed to the Board on 15 June
2006. He is also a board member of AMMB Holdings and AmIslamic Bank, a subsidiary of AMMB Holdings.
Dato’ Larry Gan is currently the Chairman of Cuscapi Berhad, Catcha Media Berhad and Diversified Gateway
Solutions Berhad. He sits on the boards of Tanjong Public Limited Company, Formis Resources Berhad, Saujana
Resort (M) Berhad and other private limited companies. Dato’ Larry Gan is also a Director of the Minority
Shareholders Watchdog Group and the Chairman of the British Malaysian Chamber of Commerce.
Dato’ Larry Gan was with Accenture, a global management and technology consulting firm for 26 years until his
retirement in December 2004. He held many global leadership positions including Managing Partner of Asia and
Corporate Development Asia Pacific. He was Chairman of the CEO Advisory Council and a member of the
Global Management Council from 1997 to 2004.
He previously served as Chairman of the Association of Computer Industry Malaysia (PIKOM), and as a member
of the Ministry of Science and Technology Think Tank, Copyright Tribunal and the Labuan International
Financial Exchange Committee.
Dato’ Larry Gan is a Certified Management Consultant and a Chartered Accountant.
Mr Chin Yuen Yin
Mr Chin Yuen Yin, a Malaysian, aged 65, was appointed to the Board on 1 November 2010.
Mr Chin sits on the board of various subsidiaries in the AMMB Group, namely AmGeneral Insurance Berhad
(formerly known as Kurnia Insurans (Malaysia) Berhad), AmLife Insurance Berhad, AmGeneral Holdings
Berhad (formerly known as AmG Insurance Berhad). He is also a director in SBP (Bungalows) Homeowners
Berhad.
Mr Chin has more than 40 years of experience in the banking industry and began his career with Standard
Chartered Bank Malaysia, where he was employed from 1970 to 1992, having held various positions in corporate
banking, branch sales and services and retail banking. Mr Chin moved on to Indonesia as an advisor to a local
bank and returned to Malaysia in early 1994 to join Hong Leong Bank during which he set up the Personal Bank
Division (Retail Banking Division).
Subsequently, Mr Chin joined OCBC Bank as Head, Global Consumer Banking based in Singapore. After
leaving OCBC Bank he had a stint as a Consultant with Texas Pacific Group, an American private equity
company based in Fort Worth, Texas. It was in this connection that he became a Director of BankThai in
Thailand as well as the Chairman of Retail Banking. BankThai was later acquired by CIMB Bank Berhad and he
served as the Acting Chief Executive Officer during the transition period, pending the bank seeking a Thai chief
executive officer.
Mr Chin has a Bachelor of Economics (Honours) degree from the University of Malaya and holds a Masters in
Business Administration from the University of Hull.
Mr Chin is also a Fellow of the Chartered Institute of Marketing.
Mr Loh Chen Peng
Mr Loh Chen Peng, a Malaysian, aged 59, was appointed to the Board on 20 May 2013.
Mr Loh sits on the board of various subsidiaries in the AMMB Group, namely AmFamily Takaful Berhad,
AmInvestment Bank and AmIslamic Bank. He is also a board member of Berjaya Auto Berhad and Berjaya
Media Berhad.
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Mr Loh was previously with the AMMB Group for 13 years. He started his career in AmInvestment Bank in
1980 as a Group Accountant and subsequently held various senior management positions in the areas of
corporate finance and corporate banking.
Prior to joining the AMMB Group, he was with DeloitteKassim Chan for five years where he was initially with
the audit arm. His final position in DeloitteKassim Chan was Head of Insolvency Department.
Subsequently, Mr Loh joined InterPacific Securities Sdn Bhd as its Chief Operation Officer. He was a Founder
Director of Phileo Allied Bank Berhad and was principally responsible for setting up its operations.
Mr Loh is a Member of the Malaysian Institute of Certified Public Accountants (MICPA).
Mr Christopher Robin Page
Mr Christopher Robin Page, a British and Australian national, aged 62, was appointed to the Board on 20 June
2012. He also sits on the boards of AmInvestment Bank and AmIslamic Bank.
Mr Page has been a career banker for almost 40 years with his most recent role being the Chief Risk Officer for
ANZ where he was responsible for the bank’s global risk management infrastructure, overseeing the global
Credit, Market and Operational Risk and Compliance teams and the Portfolio Management units, strategies,
policies and processes.
Following Mr Page’s semi-retirement in December 2011, he established his consultancy business, Earnest Knight
and Company Pty Ltd where he provides specialist industry advice as required. In addition to his consultancy
business, he has also joined the boards of a number of ANZ’s partnership banks in Asia.
Prior to joining ANZ, Mr Page spent 34 years with The Hongkong and Shanghai Banking Corporation Limited
(“HSBC”) in a number of risk management roles based in Asia, Europe and North and South America.
In his role at HSBC as Chief Credit Officer for Asia Pacific, he was responsible for risk management activities
across more than 20 countries, Basel II implementation and providing technical service programmes for HSBC’s
partner banks in China.
From 2005 to 2007, Mr Page was also Chairman of the British Chamber of Commerce in Hong Kong.
Mr Page was educated in the United Kingdom and holds a degree in Chinese Studies from Leeds University.
Mr Ashok Ramamurthy
Mr Ashok Ramamurthy, an Australian, aged 51, was appointed to the Board on 18 November 2008 and is
currently the Chief Executive Officer of the Bank. He is the Group Managing Director and a board member of
AMMB Holdings. He also sits on the board of several subsidiaries of AMMB Holdings, namely AmInvestment
Bank, AmIslamic Bank and AmLife Insurance Berhad. He joined AMMB Holdings as the Chief Financial
Officer in July 2007 and was subsequently appointed the Deputy Group Managing Director and CFO in October
2008.
Prior to his appointment as Group Managing Director of AMMB Holdings, Mr Ramamurthy worked with ANZ
for approximately 23 years, across multiple geographies including New Zealand, Australia, India and Malaysia.
His functional expertise is built around finance at the core, and is blended with risk management, operations and
shared services, and strategy and change management. He has direct experience as the CFO and/or Chief
Operating Officer in a number of ANZ businesses including Commercial Banking, Markets and Treasury, Funds
Management and Insurance, Wealth Management, Banking Products and Transaction Services, and Personal/
Retail Banking. He has been successful in developing and executing transformational agendas in his career.
Mr Ashok Ramamurthy has a Post Graduate Diploma in Business Administration XLRI, India (MBA equivalent)
and Bachelor of Commerce (Accounting), University of Madras. He is a Fellow of the Financial Services
Institute of Australasia – Fellowship from FINSIA.
Committees
Under the Bank’s corporate governance structure, the Board delegates some of its duties to specific committees.
In compliance with statutory requirements, the Board has established the following committees:
Overall Management
The Audit and Examination Committee
The Audit and Examination Committee has been appointed by the Board to assist in discharging its duties of
maintaining a sound system of internal control to safeguard the Bank’s assets and shareholders’ investments. The
101
principal duties and responsibilities of the Audit and Examination Committee include (i) reviewing the financial
statements of the Bank to ensure compliance with appropriate accounting policies and standards; (ii) reviewing
the reports of both the external and internal auditors that highlight accounting, organisational and operating
control weaknesses and to determine that appropriate corrective actions have been taken by the management;
(iii) reviewing the scope and audit programme of the external auditors and evaluating their findings; and
(iv) reviewing the scope and audit programme of the internal auditors and reviewing the performance of the
internal audit team to ensure that they have the standing to exercise independence in discharging their duties.
Currently the Audit and Examination Committee consists of five members, all of whom are Non-Executive
Directors.
The Group Nomination and Remuneration Committee
The Group Nomination and Remuneration Committee is established at AMMB Group level and comprises seven
members, all of whom are Non-Executive Directors of AMMB Holdings. The Group Nomination and
Remuneration Committee is responsible for:
• regularly reviewing the Board structure, size and composition, as well as making recommendations to the
Board with regard to any changes that are deemed necessary;
• recommending the appointment of Directors to the Board and committees of the Board as well as annually
review the mix of skills, experience and competencies that Non-Executive and Executive Directors should
bring to the Board;
• on an annual basis, assessing the effectiveness of the Board as a whole and the committees of the Board as well
as the contribution of the Chairman and each Director to the effectiveness of the Board; and
• recommending to the Board the framework and methodology for the remuneration of the Directors, Chief
Executive Officers and other senior management staff, benchmarked against the industry. Remuneration is
determined at levels which enable the Group to attract and retain Directors, Chief Executive Officers and
senior management staff with the relevant experience and expertise needed to assist in managing the Group
effectively. The services of consultants are utilised to review the methodology for rewarding Executive
Directors and management staff according to the key performance indicators required to be achieved.
The Risk Management Committee
The Risk Management Committee currently comprises five members, all of whom are Non-Executive Directors.
The Risk Management Committee exercises oversight on behalf of the Board to ensure adequate overall
management of credit, market, liquidity, operational, legal and capital risks impacting the Bank. The Risk
Management Committee ensures that the Board’s risk tolerance level is effectively enforced and that the Bank’s
risk management process and procedures are in place and functioning. It also provides a mechanism through
which review of high-level risk exposures can be conducted so as to ensure they are within the overall interests of
the Bank and assesses the Bank’s ability to accommodate risk under normal and stress scenarios.
AMMB Group Internal Audit Department
The AMMB Group Internal Audit team functions under a charter from the AEC that gives it unrestricted access
to review all activities of the Group. The Head of the AMMB Group Internal Audit team reports to the AEC. The
internal auditing function is conducted on a Group-wide basis to ensure consistency in the control environment
and the application of policies and procedures.
The AEC approves the annual audit work plan and a risk-based audit approach is used to ensure that higher risk
activities in each business unit are audited each year. The results of each audit are submitted to the AEC and
significant findings are discussed during AEC meetings. The minutes of AEC meetings are formally tables to the
Board for notation and action, where necessary. The audit plan is reviewed on an annual basis taking into account
the changing financial significance of the business and risk environment faced by the Group.
The audit function covers all major business groups and consists of five main categories of work:
• Planned audits
• Systems development review of major IT infrastructure projects
• Special focus reviews
• Mandatory audits
• Ad-hoc reviews and special assignments
102
Amongst others, the audit plan covers reviews of the adequacy of the following areas:
• Risk management
• Quality of assets
• Operational controls
• Financial controls
• Customer service
• Compliance with laws and regulations
• Management efficiency
• Lending practices
• Information technology
• Data centres and network security
The AMMB Group Internal Audit team plays an active role in ensuring compliance with the requirements of
supervisory regulatory authorities. The AMMB Group Internal Audit team also works collaboratively with the
external auditor to ensure a comprehensive audit scope. The Group Internal Audit team also perform
investigations and special reviews, and participates in major system development initiatives and project
committees to advise on risk management and internal control measures.
Senior Management
The senior management of the Group as at the date of this Offering Circular is set forth below:
Name
Position Description
Mr Ashok Ramamurthy . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Managing Director and Chief Executive
Officer
Datuk Mohamed Azmi Mahmood . . . . . . . . . . . . . . . . . .
Deputy Group Managing Director
Dato’ James Lim Cheng Poh . . . . . . . . . . . . . . . . . . . . . .
Managing Director, Business Banking
Ms Pushpa Rajadurai . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managing Director, Corporate & Institutional
Banking
Mr Paul David Lewis . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Managing Director, Retail Banking
Ms Mandy Simpson . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Chief Finance Officer
Mr Nigel Denby . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Chief Risk Officer
Ms Fauziah Yacob . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Chief Human Resource Officer
Mr Thein Kim Mon . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Chief Internal Auditor
Mr Charles Tan Keng Lock . . . . . . . . . . . . . . . . . . . . . . .
Group Chief Information Officer
Mr Ross Neil Foden . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Operations Officer
Mr Tan Chin Aun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Senior General Manager, Transaction Banking
Employees
As at 31 March 2013, the Group had approximately 8,372 employees.
Related Party Transactions
From time to time, the Group enters into transactions with affiliates or related parties. The Group’s policy is that
such transactions are made on an arm’s-length basis on no less favourable terms than if such transactions were
carried out with unaffiliated third parties. For details of related party transactions see the notes of the financial
statements included in, or incorporated by reference in, this Offering Circular.
103
SUPERVISION AND REGULATION
The Issuer and certain entities within the Group are regulated by BNM, which was established on 26 January
1959 pursuant to the Central Bank of Malaya Ordinance, 1958 (renamed the Central Bank of Malaysia Act, 1958
and repealed by the Central Bank of Malaysia Act, 2009 on 25 November 2009) as the central bank of Malaysia.
BNM is directly involved in the regulation and supervision of Malaysia’s financial system. Its principal functions
are to (i) act as a banker, financial adviser and financial agent to the Government; (ii) issue currency and keep
reserves to safeguard the value of the currency; (iii) promote monetary stability and a sound financial structure;
(iv) influence the credit situation to the advantage of Malaysia; and (v) manage public debt, administer exchange
controls, supervise and regulate banks (including subsidiaries of foreign banks incorporated in Malaysia),
banking and finance companies, investment banks, discount houses and money brokering businesses and deal
with international monetary institutions.
BNM and the Minister of Finance of Malaysia (“MOF”) have extensive powers under the FSA and the Islamic
Financial Services Act 2013 (“IFSA”). The FSA is the principal statute that sets out the laws for the licensing
and regulation of institutions carrying on banking, finance company, investment banking, discount houses and
money-brokering businesses and the IFSA is the principal statute that sets out the laws for the licensing and
regulation of institutions carrying on Islamic banking. In addition to the FSA and the IFSA, Malaysian licensed
institutions are subject to guidelines issued by BNM from time to time.
The following discussion sets out information with respect to the regulations of the banking industry by BNM:
Licensing and Limitation of Business Activities of Banks
Under the FSA, banking business, which is defined to include deposit taking and provision of financing, can only
be conducted by a public company (which includes domestic public limited companies and subsidiaries of
foreign banks incorporated as public limited companies in Malaysia) which has obtained a licence from the MOF
on the recommendation of BNM.
Under the IBA, Islamic banking business, which is defined as banking business whose aims and operations do
not involve any element which is not approved by the religion of Islam, can only be conducted by a company
which has obtained a licence from the MOF on the recommendation of BNM.
Banks are also subject to a number of other restrictions on the operation of their business. In particular, a bank
may not (i) declare or pay any dividend on its shares except with the prior written approval of BNM or where
such permission has been specified by BNM under such terms, rules, directives and regulations as may be
imposed by BNM from time to time; (ii) acquire or hold any shares of another bank except as permitted under the
FSA, the IFSA (as the case may be) or by prescribed regulation.
Statutory Reserves
BNM requires Malaysian banks to maintain a sum equivalent to the Statutory Reserve Requirement ratio
(“SRR”) in the form of non-interest bearing reserves with BNM. The SRR is currently set at 4.0 per cent. of total
eligible liabilities.
Capital Adequacy Requirements
With effect from 1 September 1989, capital adequacy regulations implementing the agreement reached by the
Basel Committee on Banking Supervision Practices (the “Basel Committee”) in July 1988 were introduced into
the Malaysian banking system. These regulations, which were phased in over a two-year period, specify a
minimum Tier I capital to risk weighted assets ratio of 4.0 per cent. and a minimum total capital to risk-weighted
assets ratio of 8.0 per cent. Tier I capital includes paid-up ordinary share capital, share premium, statutory
reserves, general reserves, retained profit/loss, minority interests, innovative and non-innovative Tier I capital
instruments approved by BNM and after deducting goodwill and deferred tax assets. Tier II capital includes
general allowances for loan losses, subordinated debts with an initial maturity of at least five years, any
innovative and non-innovative hybrid Tier I capital instruments in excess of the limits set by BNM to qualify as
Tier I capital which is approved by BNM as Tier II capital and revaluation surpluses.
Under BNM’s Capital Adequacy Framework (Basel II — Risk-weighted Computation), risk-weighted assets are
the sum of (i) the risk-weighted assets for credit risk (ii) the risk weighted assets equivalent for market risk and
(iii) the total risk weighted assets for operational risk. The credit risk weights and the credit conversion factors
are provided in the said BNM guidelines. On 28 November 2012, BNM issued its Capital Adequacy Framework
implementing the Basel III reforms (see “Investment Considerations — Considerations relating to the Group —
The Group may be required to raise additional capital if its capital adequacy ratio deteriorates in the future or in
order to comply with any new regulatory capital framework”, above).
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Single Counterparty Exposure Limit
Banks are prohibited from extending credit facilities to any counterparty in excess of the prescribed percentage in
relation to the capital funds of the bank, subject to certain exemptions (see “Asset Quality — Credit Approval
Procedures” above).
Qualifications of Directors; Power to Remove Directors
Under the FSA and the IFSA (as the case may be), a person cannot be appointed as a director of a bank if, for
example, that person has been declared bankrupt; has suspended payments or has compounded with his creditors
whether within or outside of Malaysia; has been convicted of any offence under the FSA or the IFSA (as the case
may be); if there has been any order of detention, supervision, restricted residence, banishment or deportation
made against him; or if that person has been a director of or directly concerned in the management of any
company which is being or has been wound up by a court or has been a director of a bank whose licence has been
revoked under the FSA. The appointment of directors, the chairman of the Board and the chief executive officer
of a bank is subject to the prior written approval of BNM. The appointment of a director and the chief executive
officer of a bank is subject to renewal every two years upon re-assessment by BNM pursuant to an application
submitted by the bank for the reappointment. BNM’s Guidelines on Corporate Governance for Licensed
Institutions stipulate (as updated 17 March 2011), inter alia, that:
(i)
The Board of a licensed institution must have an appropriate number of directors commensurate with the
complexity, size, scope and operations of the licensed institution.
(ii) The Board should comprise of directors who as a group provide a mixture of core competencies such as
finance, accounting, legal, business management, information technology and investment management.
(iii) At least a third of the Board must be independent directors. However, in cases where BNM has concerns as
to the effective functioning of the Board, a higher proportion of independent directors may be specified by
BNM.
(iv) There should not be more than one executive director on the Board of a licensed institution. However, under
exceptional circumstances, BNM may allow up to a maximum of two executive directors.
(v) Directors who are errant, ineffective or negligent in discharging their responsibilities may be removed from
the Board. All resignation and removal of independent directors from the Board can only take effect after
the Board has cleared the resignation and removal with BNM.
(vi) There shall be clear separation between the roles of chairman and chief executive officer of a licensed
institution.
(vii) Individuals who are active in politics cannot be appointed as a director of a licensed institution.
BNM is also empowered under the FSA and the IFSA (as the case may be) to remove any director of a bank with
the prior concurrence of the MOF if, inter alia, it is satisfied that the bank is carrying on its business in a manner
detrimental to the interests of its depositors, its creditors or the public generally or is insolvent or has become or is
likely to become unable to meet all or any of its obligations or is about to suspend payment of its debts.
Interest Rate Regulation
Effective 26 April 2004, BNM introduced an interest rate framework aimed at enhancing the effectiveness of
monetary policy transmission process and efficiency of the operation of the financial markets as well as pricing
by banking institutions. Under this interest rate framework, banking institutions are allowed to determine their
own lending rates on all credit facilities and loan products, other than credit card loans, and loans where the
lending rates are governed by legislation or prescribed by BNM.
In addition, under this interest rate framework, the Overnight Policy Rate (“OPR”) replaced the three-month
intervention rate as the policy rate. BNM will announce its monetary policy stance through changes in the OPR.
The implementation of monetary policy targets the overnight interbank rate to fluctuate within a corridor around
the OPR. To minimise excessive volatility in the overnight interbank rate, BNM has set a corridor of +/– 25 basis
points around the OPR. BNM will ensure that overnight interbank rates trade within this corridor by providing a
lending facility and a deposit facility at the upper and lower limit of the corridor respectively.
Exchange Control Policy
Malaysia has historically maintained a liberal system of exchange controls. Prior to September 1998, the few
exchange control rules that were in place were aimed at monitoring the settlement of payments and receipts for
compilation of balance of payments statistics and to ensure that funds raised abroad were channelled to finance
productive investments in Malaysia which either directly or indirectly generate foreign exchange.
105
On 1 September 1998, the Government introduced a series of selective exchange control measures. These
measures were designed to eliminate the internationalisation of the Ringgit to contain speculation and to stabilise
short-term capital flows. On 2 September 1998, the exchange rate was fixed at RM3.80 to U.S.$1.00. With effect
from 22 July 2005, the exchange rate had been allowed to operate in a managed float by BNM with its value
being determined by various economic factors. BNM will monitor the exchange rate against a currency basket.
On 23 March 2005, BNM announced the relaxation of the foreign exchange administration rules governing
overseas investments by residents (both individuals and corporations) and the retention of foreign currency in
foreign currency accounts by residents. Limits on foreign currency credit facilities that can be obtained by
residents from non-residents, licensed onshore banks and licensed merchant banks were increased, and the rules
governing domestic borrowings by Non Resident Controlled Companies were removed. These changes in the
foreign exchange administration rules became effective on 1 April 2005.
In 2007, the foreign exchange administration rules were further liberalised as part of the continuous efforts to
increase efficiency and reduce cost of doing business in Malaysia.
In line with the liberalisation, registration requirements for forward foreign exchange contracts by residents;
Ringgit-denominated loans to non-residents for purchase or construction of immovable properties in Malaysia;
investment in foreign currency assets by residents; foreign currency borrowing by residents; and prepayment or
repayment of foreign currency borrowing by residents, were abolished. Monthly reporting on balances of foreign
currency accounts of residents was also abolished.
In May 2008, BNM had further liberalised the rules on borrowing and lending by resident companies. Resident
companies are free to borrow any amount in foreign currency from other resident companies within the same
corporate group basis without prior approval from BNM. Furthermore, in terms of lending in Ringgit, a resident
company or individual is free to lend in Ringgit any amount to non-resident non-bank companies or individuals
to finance activities in the real sector in Malaysia (previously only up to RM10,000).
Pursuant to the FSA, which came into force on 30 June 2013, no person shall undertake or engage in the lending
or borrowing of foreign currency except with the written approval of BNM save that this restriction shall not
apply to any licensed bank under the FSA.
Priority Sector Lending Guidelines
There are currently three priority sector lending guidelines issued by BNM which are applicable to commercial
banks, including the Issuer. These are (i) loans for houses costing up to RM100,000 (for Peninsular Malaysia)
and an additional 20.0 per cent. on the value of houses for the states of Sabah and Sarawak (ii) lending to SMEs
and Bumiputera SMEs; and (iii) agriculture financing. The housing loan lending guideline is to ensure that
financing of home ownership is available to lower income groups. The prescribed interest rate on such loans is
Base Lending Rate (“BLR”) plus 1.75 per cent. The guidelines on lending to SMEs aim to provide financial
assistance to SMEs, including Bumiputera SMEs, to obtain financing for their business operations. The guideline
for Bumiputera SMEs lending is to ensure a minimum level of loans is extended to this community. For this
lending guideline, SME is defined as domestic business enterprises under three sectors, these being
manufacturing (including agro-based and manufacturing related services), primary agriculture and the services
sector (including information and communications technology) where the number of full-time employees must
not be more than 150, 50 and 50 employees, respectively or annual sales turnover must not exceed
RM25 million, RM5 million and RM5 million, respectively. The agriculture financing guideline will ensure the
sector continues to have access to financing at reasonable cost. In this guideline, the agriculture sector refers to
amongst others, agriculture (i.e. growing of crops, market gardening, horticulture, livestock farming, fisheries),
agriculture related services and activities.
Powers of Enforcement
BNM has broad powers to enforce the FSA and the IFSA. In particular, where a bank is insolvent or is likely to
become unable to meet all or any of its obligations or is about to suspend payment, BNM may remove from
office any officer or director of the bank concerned, appoint any person as a director of the bank concerned,
appoint any person to advise the bank in relation to the proper conduct of its business, recommend that the MOF
place the bank under the control of BNM or authorise BNM to make a court application or appoint a receiver or
manager to manage the affairs of the bank or authorise BNM to present a petition for winding-up of the bank
concerned.
In addition, if BNM is of the opinion that a bank is likely to suspend payment to any extent, BNM may provide
liquidity assistance to the bank upon such terms and conditions as BNM deems fit. If BNM is of the opinion that
the bank is likely to become insolvent or is likely to become unable to meet all or any of its obligation, BNM
106
may, with the prior approval of the MOF, provide financial assistance to another bank or any other person to
purchase any shares, or the whole or any part of the business, assets or liabilities of the bank.
Inspections by BNM
BNM is empowered to examine from time to time, without any prior notice, the books or other documents,
accounts and transactions of a bank and may be directed by the MOF to do so in the event the MOF suspects that
the banking institution is carrying on its business in a manner which is, or which is likely to be, detrimental to the
interests of its depositors or creditors or has insufficient assets to cover its liabilities to the public or is
contravening any provisions of the FSA, the IFSA or the Central Bank of Malaysia Act, 2009.
Deposit Insurance
Deposit insurance is a system established by the Government to protect depositors against the loss of their
deposits in the event a member institution is unable to meet its obligations to depositors. As an integral
component of an effective financial safety net, a deposit insurance system enhances consumer protection by
providing explicit protection to depositors.
In Malaysia, the deposit insurance system was brought into effect in September 2005 and is managed by
Perbadanan Insurans Deposit Malaysia (“PIDM”) or Malaysia Deposit Insurance Corporation (“MDIC”) within
the international context. PIDM/MDIC is an independent statutory body established under the Malaysia Deposit
Insurance Corporation Act 2005 (“PIDM Act”).
Benefits to insurance depositors include:
• PIDM insures depositors holding insured deposits with member institutions;
• deposit insurance is automatic;
• there are no direct costs to depositors for deposit insurance protection; and
• should a member institution fail, PIDM will promptly reimburse depositors up to the limit of the deposit
insurance coverage provided under the PIDM Act.
Benefits to the financial system include:
• PIDM promotes public confidence in Malaysia’s financial system by protecting depositors against the loss of
their deposits;
• PIDM reinforces and complements the existing regulatory and supervisory framework by providing incentives
for sound risk management in the financial system;
• PIDM minimises costs to the financial system by finding least cost solutions to resolve failing member
institutions; and
• PIDM contributes to the stability of the financial system by dealing with member institution failures
expeditiously and reimbursing depositors as soon as possible.
With effect from 31 December 2010, the Malaysia Deposit Insurance Corporation Act 2011 (“2011 Act”) came
into effect and replaced the PDIM Act.
The 2011 Act was enacted to implement an enhanced financial consumer protection package, whereby, amongst
others, the deposit insurance limit was increased to RM250,000 per depositor per member bank. In addition,
under the 2011 Act, foreign currency deposits will now benefit from deposit insurance protection.
The enhanced financial consumer protection package also includes the expansion of PIDM’s mandate to include
the administration of the Takaful and Insurance Benefits Protection System (“TIPS”). TIPS is an explicit, limited
Government protection system which covers takaful and insurance benefits and will be administered broadly
along the same approach as provided for in the current deposit insurance system.
Licensed insurance companies and registered takaful operators (“insurer members”) will automatically become
member institutions of PIDM. In addition, the 2011 Act includes powers for PIDM to intervene in or resolve
troubled insurer members and ensure prompt payments to claimants under the policies or takaful certificates
protected under TIPS.
The 2011 Act widens PIDM’s mandate, roles and responsibilities, and provide it with a wider toolkit to fulfil its
mandate to protect depositors in the event of a member institution failure.
Lending to Connected Parties
Effective 1 January 2008, BNM revised the “Guidelines on Credit Transactions and Exposures with Connected
Parties” and “Guidelines on Credit Transactions and Exposures with Connected Parties for Islamic Banks”
107
(collectively as “Connected Parties Guidelines”) to provide greater flexibility for licensed institutions,
including banks, to extend credit and make investments in the ordinary course of business to/in connected parties
which are of good credit standing, while ensuring that connected parties, who by virtue of their positions which
could potentially exert influence over the credit approval process, do not inappropriately derive more favourable
terms and conditions than other loan customers. The Connected Parties Guidelines sets out the broad parameters
and conditions relating to the conduct of such transactions with connected parties to ensure an appropriate level
of prudence. It also outlines the roles and responsibilities of the management and the Board of the licensed
institution.
Competition Act 2010
The Competition Act 2010 (“Competition Act”) which took effect on 1 January 2012, was introduced to
promote economic development by promoting and protecting the process of competition in order to maximise
consumer welfare through the prohibition of anti-competitive practices. The Competition Act applies to all
commercial activities undertaken within Malaysia and those outside Malaysia which have effects on competition
in the Malaysian market. The scope of the Competition Act includes prohibition of anti-competitive agreements
and the abuse of dominant position.
108
MALAYSIAN ECONOMY
The following information regarding Malaysia is included for information purposes only and has not been
independently verified by the Issuer, any of the Arrangers or Dealers or any of their respective affiliates or
advisers. All of the data and information contained below has been obtained from publicly available official
sources in Malaysia and neither the Issuer nor any of the Arrangers or Dealers take any responsibility for the
accuracy of such information.
In 2012, global economic growth slowed amid a more challenging economic environment compared to 2011. In
advanced economies growth was uneven. The U.S. experienced a fragile recovery whilst the eurozone remained
in recession. The weakened economic conditions in advanced economies affected international trade, which in
turn affected domestic economic activity in emerging economies. Weaker global growth prospects, coupled with
the on-going fiscal uncertainties in the advanced economies also contributed to sustained volatility in the
international financial markets. Nonetheless, market sentiments improved towards the latter part of the year
following stronger commitments and important steps taken by the relevant authorities towards resolving the
European sovereign debt crisis.
Despite this weak external environment, the Malaysian economy performed better than expected, delivering
faster and higher growth.
The Malaysian Economy in 2012
The Malaysian economy performed better than expected in 2012, recording a growth of 5.6 per cent. The growth
of the Malaysian economy was driven by an increase in domestic demand. In 2012, domestic demand increased
at the highest rate in the last decade and was underpinned by higher domestic consumption and investment
spending. Despite the uncertainties in the external environment, domestic consumer confidence picked up amidst
positive income growth, a strong labour market, a low inflationary environment and supportive financing
conditions in Malaysia.
Investment activity was a key driver of the domestic economy during the year, with increased capital spending by
both the private and public sectors. Private investment was particularly robust in 2012, recording double-digit
growth of 22 per cent. and rising to 15.5 per cent. of Gross Domestic Product (“GDP”), the highest since 1998.
This was driven by strong capital spending in the consumer-related services sectors, domestic-oriented
manufacturing sectors and the implementation of major infrastructure projects. Public investment also registered
a strong growth of 17.1 per cent., driven by higher capital spending by public enterprises. Strong investment
performance was also attributed to the commencement and progress of several infrastructure projects, including
those under the Economic Transformation Programme (“ETP”), and the steady improvement in the investment
climate.
Private consumption grew by 7.7 per cent. in 2012. This strong performance in private consumption was due to
income growth, Government transfers to low and middle income households and supportive financing conditions.
In the public sector, public consumption recorded moderate growth of 5 per cent. as a result of continued fiscal
consolidation efforts during the year.
On the supply side, all economic sectors continued to expand in 2012. The construction sector benefited from the
strong expansion in investment activity, registering its highest growth rate since 1995. Whilst exports reduced as
a result of the slowdown in external demand, domestic growth, particularly in the services and manufacturing
sectors, was supported by strong domestic demand.
Labour market conditions remained stable in 2012 with a continued rise in employment, observed mostly in the
services and agriculture sectors. However, total retrenchments increased mainly due to higher layoffs in the
manufacturing sector. During the year, the unemployment rate declined marginally to 3 per cent.
Headline inflation, as measured by the annual percentage change in the Consumer Price Index (“CPI”), averaged
1.6 per cent. in 2012 (2011: 3.2 per cent.). Inflation was lower than expected due to the slower rate of price
increases in the food, non-alcoholic beverages and transport sectors. Food items, which have been the main
drivers of inflation in recent years, registered more moderate price increases following modest external price
pressures and significant improvements in domestic food supplies. The adjustments to administered prices was
also lower than in the previous year. Core inflation, an indicator of demand-driven price pressures, dropped to
2.4 per cent. in 2012 (2011: 2.7 per cent.).
Malaysia’s exports remained resilient in 2012 despite the challenging external economic environment. The
overall balance of payments remained strong as the current account surplus was more than adequate to meet the
net outflows in the financial account. Reflecting the cyclical and structural adjustments taking place in both the
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global and domestic economy, the current account surplus was lower at RM60 billion in 2012 (2011: RM97.1 billion)
mainly due to a smaller goods surplus and larger deficits in the services and income accounts. The moderation in the
goods surplus was a result of robust import growth, following the improvement in domestic demand, amid lower
export growth caused by the weak external demand and lower commodity prices. The services account registered a
larger deficit due to higher payments for imported transportation services and lower net travel receipts, while the larger
net income payment reflected the higher income accrued to foreign companies operating in Malaysia.
On the financial account, Malaysia continued to experience two-way capital flows, with foreign inflows attracted
by the resilient growth prospects. Despite significant global uncertainties, foreign direct investment (“FDI”)
inflows were sustained and remained broad-based, with significant inflows into high-growth areas, such as the oil
and gas sector and the communication services sub-sector. Some of the funds were also channelled into projects
under the ETP. Direct investment abroad (“DIA”), was largely undertaken by companies in the services and oil
and gas sectors, and continued to be channelled into the regional economies, reflecting the deepening economic
integration in Asia.
Malaysia’s external debt declined to RM252.8 billion (U.S.$81.7 billion) as at end-2012 (2011: RM257.4 billion),
equivalent to 28 per cent. of GNI (2011: 30 per cent. of GNI). During the year, the medium and long term external
debt of the private sector increased. This was largely offset by the net repayment of public sector medium and long
term external debt and the net repayment of short-term interbank borrowings. The appreciation of the Ringgit
against some of the major currencies during the year also contributed to the lower value of external debt in Ringgit
terms. Overall, Malaysia’s external debt profile continued to be skewed towards a longer maturity structure with
medium and long term debt accounting for 63.2 per cent. of total external debt. External debt continues to be well
supported by Malaysia’s strong economic credentials.
Net international reserves increased by RM3.9 billion to RM427.2 billion (equivalent to U.S.$139.7 billion), as at
31 December 2012. As at 28 February 2013, the reserves level amounted to RM429 billion (equivalent to
U.S.$140.3 billion), which is adequate to finance 9.5 months of retained imports and is 4.6 times the short-term
external debt. The international reserves held by BNM remain usable and unencumbered.
Economic and Monetary Management in 2012
Monetary policy in 2012 was focused on managing the downside risks to growth amid moderating inflation.
Although the Malaysian economy remained on a steady growth path and inflation was on a downward trend, the
high degree of global economic and financial uncertainty remained a risk to the Malaysian economy’s growth
prospects. In balancing the risks to inflation and growth of the economy, the Monetary Policy Committee
(“MPC”) considered the prevailing OPR level to be appropriate, and kept the policy rate unchanged at 3.00 per
cent. throughout 2012.
Strong loan demand throughout the year, while warranting close monitoring, was not a concern as total loan
growth was supported mainly by lending to businesses, with lending primarily supporting the expansion of the
domestic-oriented industries and the ETP-related projects. While there were concerns over the potential risks
related to excessive indebtedness of the household sector, the risk was assessed to be confined to specific
household segments. As such, the MPC was of the view that a change in monetary policy stance was not
appropriate. These trends were also addressed by macroprudential measures and the guidelines issued on
responsible financing practices that was introduced at the beginning of the year to promote prudent and
responsible lending and borrowing behaviour. Nevertheless, the MPC continued to assess developments in
household credit to ensure the risk of household indebtedness becoming excessive remained under control.
The MPC were also confronted with the challenge of sustained large and volatile portfolio flows throughout the
year. There continued to be a large surplus of global liquidity which was attracted to the emerging economies,
including Malaysia, given the relatively stronger fundamentals. Developments in advanced economies and the
rapid changes in sentiments in the global financial markets further contributed to the volatility of portfolio flows.
For the most part, the Malaysian financial system was able to effectively intermediate these flows without
generating substantial distortions in domestic financial markets and monetary conditions. This reflected the
cumulative policy efforts by BNM to deepen and increase the resilience of the Malaysian financial system over
the recent decade.
The performance of the Ringgit during the year was influenced by the global and regional developments amid
periods of heightened volatility in the global financial markets. From January to early March of 2012, the Ringgit
strengthened due to portfolio inflows, supported by the continued underlying strength of the Malaysian economy
amid the positive growth prospects of Asia and the prolonged low interest rate environment in the advanced
economies. The appreciating trend of the Ringgit reversed temporarily between March 2012 and June 2012, as
110
renewed uncertainties over the situation in key economic regions led to concerns over the prospects for global
and regional economic growth and prompted the unwinding of the holdings of financial assets in the region by
some investors. The depreciation trend, however, was brief as portfolio inflows resumed towards the second half
of the year, attracted by the strong performance of the domestic economy. The Ringgit ended the year at
RM3.0583 against the U.S. dollar, thus recording a year-on-year appreciation of 3.9 per cent.
During 2012, the yields of Malaysian Government Securities (“MGS”) were largely influenced by a combination
of external and domestic factors. Despite renewed concerns over the European sovereign debt crisis, firm demand
from non-residents kept yields low. However, strong domestic fundamentals and increased supply of government
bonds exerted some upward pressure on yields. The domestic private debt securities market (“PDS”) registered
high growth as a result of strong demand for financing to support infrastructure-related projects, including those
under the ETP. The FTSE Bursa Malaysia Kuala Lumpur Composite Index (“FBM KLCI”) advanced by
10.3 per cent. to close at 1,689 points in 2012 (2011: 0.8 per cent.). The positive performance was driven mainly
by the favourable outlook for the domestic economy.
Liquidity conditions in the banking system remained favourable throughout 2012. Private sector liquidity
continued to expand, mainly on account of favourable credit conditions and the continued inflows of foreign
funds. Liquidity conditions in the interbank money market were more stable compared to 2011, reflecting more
balanced two-way flows from trade and investment activity. Sterilisation operations by BNM were conducted to
prevent the build-up of liquidity that could give rise to financial imbalances.
Financing conditions remained supportive of economic activity. The strength in financing growth during the year
was attributable mainly to business financing. Demand for loans by households, while still remaining relatively
strong, moderated. Net financing through the banking system and the capital market expanded at an annual rate
of 12.4 per cent. (2011: 12.5 per cent.).
Outlook for the Malaysian Economy in 2013
The Malaysian economy is expected to remain on a steady growth path, with an expansion of 5 per cent. to 6 per
cent. predicted in 2013. Economic activity will be anchored by the continued resilience of domestic demand, and
supported by a gradual improvement in the external sector. Private investment is expected to remain robust, driven
by expansion by domestic-oriented firms and the continued implementation of projects with long gestation periods.
Investments by the external-oriented businesses is also expected to be higher amid the gradual improvement in
external demand, while private consumption is projected to grow at a more moderate rate in the second half of the
year, although it will continue to be well supported by sustained income growth and positive labour market
conditions. Government spending is expected to record a lower growth given the ongoing consolidation of the
Government’s fiscal position and as the role of the private sector gains greater significance. In line with the more
favourable external sector, gross exports are projected to record a higher growth in 2013 particularly in respect of
manufactured products. Gross imports are expected to moderate in tandem with the projected trend in domestic
demand. Overall, this is expected to result in a lower negative contribution to real GDP from net exports. As import
growth continues to outpace export growth amid the continued deficit in the income account and in current
transfers, the current account surplus while still remaining significant is expected to narrow further in 2013.
On the supply side, all major economic sectors are expected to record continued expansion in 2013. The services
and manufacturing sectors are expected to be the key contributors to overall growth, driven by the continued
resilience of domestic demand and supported by higher international trade activity. Growth in the construction
sector is projected to remain strong, supported by the implementation of major infrastructure projects. In the
commodities sector, agricultural growth is expected to improve due to the higher output of crude palm oil and
food commodities whilst the mining sector is expected to strengthen following the higher production of natural
gas, crude oil and condensates.
Headline inflation is expected to average 2 per cent. to 3 per cent. in 2013. This inflation projection takes into
account the expected increase in global prices of selected food commodities and the adjustments to domestic
administered prices. Demand-driven price pressures are expected to be moderate. The wider forecast range
reflects the greater uncertainty in the external and domestic environment.
Overall, the growth prospects of the Malaysian economy will continue to be underpinned by the strength of its
credentials. Labour market conditions will remain favourable, with the unemployment rate projected to remain
low at 3.1 per cent. of the labour force in 2013. In addition, the financial system continues to demonstrate
resilience against the challenging external environment, with financial intermediation expected to continue to
provide strong support to domestic economic activity. The introduction of macroprudential and other policy
measures have helped to manage the risks related to the increase in household indebtedness. Malaysia’s
favourable external position is to remain intact, with international reserves at healthy levels and a low external
debt that is within prudent limits.
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Given the challenging external environment, there remain risks to the economic outlook. The potential
re-emergence of instability in the eurozone and slower growth in Malaysia’s major trading partners could affect
the Malaysian economy. While pressures from global commodity prices have receded, upside risks from
non-fundamental factors, such as adverse weather conditions and geopolitical developments, could push
commodity prices higher and adversely affect the growth prospects of economies that are major trading partners
of Malaysia. However the domestic economy may benefit if the recovery in advanced economies turns out to be
better than expected.
Economic and Monetary Management in 2013
Under this challenging global economic environment, the focus of BNM policies will be on supporting
sustainable growth of the Malaysian economy while mitigating the risks arising from the global environment,
including possible shocks to inflation.
Monetary policy in 2013 will focus on addressing potential risks to inflation and growth. The MPC reviewed the
prevailing level of the OPR and considered the current monetary policy stance to be appropriate for the inflation
and growth outlook. In addition to domestic conditions, the MPC will continue to assess the global economic and
financial developments and their implications on the overall outlook for inflation and growth of the Malaysian
economy.
Fiscal policy in 2013 will continue to focus on sustaining the growth of the domestic economy and facilitating
the long-term transformation of the economy, while ensuring the sustainability of public finances. The 2013
Budget placed emphasis on ensuring the efficient use of fiscal resources, achieving inclusive growth and
strengthening fiscal management, all within the path of a sustained and gradual fiscal consolidation plan.
(Source: Press Release entitled “Bank Negara Malaysia Annual Report 2012” dated 20 March 2013,
http://www.bnm.gov.my)
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OVERVIEW OF THE MALAYSIAN BANKING INDUSTRY
The Banking System in Malaysia
The banking system, comprising commercial banks, investment banks, and Islamic banks, is the primary
mobiliser of funds and the main source of financing which supports economic activities in Malaysia. The nonbank financial intermediaries, comprising development financial institutions, provident and pension funds,
insurance companies, and takaful operators, complement the banking institutions in mobilising savings and
meeting the financial needs of the economy.
The Central Bank
BNM, the Central Bank of Malaysia, is at the apex of the monetary and financial structure of the country. The
principal objective of the BNM is to promote monetary stability and financial stability conducive to the
sustainable growth of the Malaysian economy. Its primary functions as set out in the newly enacted Central Bank
of Malaysia Act 2009 are to:
• formulate and conduct monetary policy in Malaysia;
• issue currency in Malaysia;
• regulate and supervise financial institutions which are subject to the laws enforced by the BNM;
• provide oversight over money and foreign exchange markets;
• exercise oversight over payment systems;
• promote a sound, progressive and inclusive financial system;
• hold and manage the foreign reserves of Malaysia;
• promote an exchange rate regime consistent with the fundamentals of the economy; and
• act as financial adviser, banker and financial agent of the Government.
To achieve its mandates, the BNM is vested with powers under various laws to regulate and supervise the
banking institutions and other non-bank financial intermediaries. The BNM also administers the country’s
foreign exchange regulations.
(Source: The Banking System in Malaysia, http://www.mida.gov.my)
Banking Institutions in Malaysia
The following table provides an overview of the number of licensed banking institutions in Malaysia:
Banking Institution
Commercial Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Islamic Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International Islamic Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Financial Institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
MalaysianControlled
Institutions
ForeignControlled
Institutions
27
16
5
15
2
8
10
—
15
2
19
6
5
—
—
(Source: List of Licensed Banking Institutions in Malaysia, http://www.bnm.gov.my)
Islamic Banking Industry
Islamic banking refers to a system of banking that complies with Islamic law also known as Shariah law. The
underlying principles that govern Islamic banking are mutual risk and profit sharing between parties, the
assurance of fairness for all and that transactions are based on an underlying business activity or asset.
These principles are supported by Islamic banking’s core values whereby activities that cultivate
entrepreneurship, trade and commerce and bring societal development or benefit are encouraged. Activities that
involve interest (riba), gambling (maisir) and speculative trading (gharar) are prohibited.
Malaysia’s Islamic finance industry has been in existence for over 30 years. The enactment of the Islamic
Banking Act 1983 enabled the country’s first Islamic Bank to be established and thereafter, with the
liberalisation of the Islamic financial system, more Islamic financial institutions have been established.
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Malaysia’s long track record of building a successful domestic Islamic financial industry of over 30 years gives
the country a solid foundation — financial bedrock of stability that adds to the richness, diversity and maturity of
the financial system. Presently, Malaysia’s Islamic banking assets reached RM403.2 billion. Today, Malaysia’s
Islamic finance continues to grow rapidly, supported by a conducive environment that is renowned for
continuous product innovation, a diversity of financial institutions from across the world, a broad range of
innovative Islamic investment instruments, a comprehensive financial infrastructure and adopting global
regulatory and legal best practices. Malaysia has also placed a strong emphasis on human capital development
alongside the development of the Islamic financial industry to ensure the availability of Islamic finance talent.
All of these value propositions have transformed Malaysia into one of the most developed Islamic banking
markets in the world.
(Sources: Overview of Islamic finance in Malaysia, http://www.bnm.gov.my and BNM: Monthly Statistical
Bulletin, May 2013)
Developments in the Financial Sector
The Malaysian financial sector has undergone significant transformation since the Asian financial crisis in
1997-1998, following capacity and institutional building efforts, particularly under the Financial Sector
Masterplan (“FSMP”) introduced by BNM in 2001. The 10-year FSMP was implemented in three phases: first, to
enhance domestic capacity of the financial sector; secondly, to increase the competition in the banking sector
through relaxing the restrictions on foreign banks; and thirdly, to set the pace for integration with the
international market. At the end of 2010, more than 90 per cent. of the FSMP recommendations have been
completed or are being implemented. As a result, the financial sector has emerged stronger, more diversified and
resilient to effectively support economic growth. BNM released a new Financial Sector Blueprint (“FSB”) with
the theme “Strengthening our Future” in December 2011. The FSB charts the future direction of the Malaysian
financial system over the next ten years. There are nine focus areas under the FSB to further advance the
financial sector development to drive Malaysia’s transition to a high value-added and high-income economy with
adequate safeguards to preserve financial stability.
Efforts continue to be taken to strengthen Malaysia’s position as an international Islamic financial centre and
contribute towards the internationalisation of Islamic finance by developing Shariah-compliant products and
services as well as tools to facilitate and support cross-border transactions. This includes the establishment of the
International Islamic Liquidity Management Corporation (“IILM”) on 25 October 2010. The IILM is a
collaboration of 12 central banks and regulatory agencies as well as two multi-lateral institutions. IILM seeks to
facilitate cross-border liquidity management among institutions offering Islamic financial services by making
available a variety of Shariah-compliant instruments to suit the varying liquidity needs of these financial
institutions. IILM also seeks to foster regional and international cooperation to build a robust liquidity
management infrastructure at national, regional and international levels.
The presence of an increasing number of foreign banks further complements the existing financial sector as
Malaysia makes progress in its planned economic transformation to become a high-income nation by 2020. Of
the five new commercial banking licences issued in 2010, three banks have commenced operations in April
2011, June 2011 and September 2011, respectively. In June 2011, another international Islamic bank licence was
issued to a foreign bank from Bahrain. Currently, more than half of the 20 foreign commercial banks originate
from the Asian region, signifying Asia’s growing importance in the global economic landscape and Malaysia’s
strengthened linkages within the region.
Building on the progress made over the past decade, the strong financial sector is now well positioned to take
advantage of the opportunities of a more competitive and integrated environment, while serving the more varied
and complex needs of the domestic economy. The new Financial Sector Blueprint 2011-2020 is a strategic plan
that charts the future direction of the financial system as Malaysia transitions towards becoming a high valueadded, high-income economy. To achieve this, and to leverage opportunities going forward, global trends and
domestic economic forces that affect the operating environment of the financial sector are also taken into
consideration. The progress made over the last decade provides a foundation for the future growth and
development of the financial system in the next 10 years.
The finance and insurance subsector is expected to expand 4.2 per cent. in 2012 (2011: 6.5 per cent.) mainly
driven by steady bank lending activities. Total loans outstanding increased 13 per cent. to RM1,073.1 billion as at
the end of July 2012 (end of 2011: 13.6 per cent.; RM1,003.5 billion) largely for the purchase of residential
properties and working capital, accounting for 27 per cent. and 24.7 per cent. (end of 2011: 26.8 per cent.;
25.2 per cent.), respectively. The growth in net interest income of the banking system is expected to be
complemented by higher fee-based income. The subsector is also anticipated to benefit from the growing Islamic
banking market. As at end of July 2012, Islamic financing grew 19.3 per cent. to RM294.2 billion and accounted
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for 26.6 per cent. (end of 2011:23.6 per cent.; RM268.3 billion; 25.9 per cent.) of total loans by the banking
system. Meanwhile, stockbroking activity increased with a higher volume of share transactions at 18.4 per cent.
to 222.2 billion units (January to July 2011: 40.2 per cent.; 187.7 billion units). In the insurance segment, life and
general insurance are anticipated to further contribute to the growth of the subsector supported by an increase in
new life insurance, and motor insurance policies.
(Sources: Economic Report 2012/2013, Ministry of Finance Malaysia and Financial Sector Blueprint
2011-2020, Bank Negara Malaysia)
Monetary and Financial Developments as at May 2013
Price Conditions
Headline inflation, as measured by the annual percentage change in the Consumer Price Index (“CPI”), increased
to 1.8 per cent. in May 2013 (April 2013: 1.7 per cent.). Inflation in the housing, water, electricity, gas, and other
fuels category was higher (May 2013: 2.0 per cent., April 2013: 1.3 per cent.), driven mainly by the rental for
apartment and condominium sub-category. This, however, was partly offset by lower inflation in the food and
non-alcoholic beverages category (May 2013: 3.5 per cent., April 2013: 3.8 per cent.) following the decline in
prices of fresh chicken during the month.
Monetary Conditions
Interbank rates were stable in May 2013. In terms of retail lending rates, the average base lending rate (“BLR”)
of commercial banks remained unchanged at 6.53 per cent. Retail deposit rates were also relatively stable during
the period. The annual growth in broad money (M3) increased to 9.5 per cent. in May 2013. The year-on-year
expansion in M3 was mainly on account of net disbursements of loans to the private sector, net foreign inflows,
and higher net claims on the Government. Net financing to the private sector grew at a slower pace of 10 per
cent. in May 2013 due to a moderation in the growth of both outstanding loans of the banking system and net
issuances of private debt securities (“PDS”). The growth of business loans outstanding moderated during the
month following lower loan disbursements relative to the corresponding period in 2012, when loans disbursed to
businesses were exceptionally high. Nevertheless, loans disbursed to businesses remained strong relative to
previous months with more loans extended mainly to the real estate, finance, insurance and business services,
construction and manufacturing sectors.
Loans outstanding to households continued to grow at a relatively stable pace of 12 per cent. The overall loan
demand remained robust with sustained loan applications from both business and household sectors.
Banking System
The banking system remained well-capitalised under the Basel III Capital Adequacy Framework with Common
Equity Tier 1 Capital Ratio, Tier 1 Capital Ratio and Total Capital Ratio of 11.9 per cent., 12.8 per cent. and
14.1 per cent. respectively. The slight decline in Tier 2 Capital was due to the redemption of subordinated debt
by a bank. The level of net impaired loans remained stable at 1.4 per cent. of net loans, while the loan loss
coverage remained above 90 per cent.
Exchange Rates and International Reserves
In May 2013, the Ringgit exhibited a mixed performance against the currencies of Malaysia’s major trading
partners. The Ringgit depreciated against the Renminbi, euro, and the U.S. dollar, but appreciated against the
Japanese yen and Singapore dollar. The Ringgit initially strengthened against the U.S. dollar as the earlier
uncertainty surrounding the general elections in Malaysia subsided. The Ringgit, together with other regional
currencies, however, depreciated towards the latter part of the month mainly due to the global market
overreaction to uncertainties surrounding the continuity of the monetary accommodation in the U.S., which led to
withdrawal of funds from regional financial markets. In June 2013, the Ringgit broadly depreciated against the
currencies of Malaysia’s major trading partners. The international reserves of Bank Negara Malaysia stood at
RM435.0 billion (equivalent to U.S.$140.8 billion) as at 14 June 2013, sufficient to finance 9.4 months of
retained imports and is 4.3 times the short-term external debt.
(Source: Monetary and Financial Development, May 2013, http://www.bnm.gov.my)
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TAXATION
Malaysian Taxation
The description below is of a general nature and is only a summary of the law and practice currently applicable in
Malaysia or other applicable jurisdiction. Prospective investors should consult their own professional advisers on
the relevant taxation considerations applicable to the acquisition, holding and disposal of the Notes.
Withholding tax
Pursuant to section 109(1) of the Income Tax Act 1967, where any person (the “payer”) is liable to pay interest
derived from Malaysia to any other person not known to the payer to be resident in Malaysia, other than interest
attributable to a business carried on by such other person in Malaysia, the payer shall upon paying or crediting
the interest (other than interest on an approved loan or interest of the kind referred to in paragraphs 33, 33A, 33B,
35 or 35A of Part I, Schedule 6) deduct therefrom tax at the rate applicable to such interest. Accordingly, interest
derived from the Notes payable to non-residents is subject to a withholding tax of 15 per cent. However, since the
Notes are issued by a person carrying on the business of banking in Malaysia and licensed under the FSA,
interest payable under the Notes to any person not resident in Malaysia is tax exempt under paragraph 33 of
Schedule 6 of the Income Tax Act 1967.
Capital gains tax
There is no capital gains tax in Malaysia, except in relation to real property gains tax chargeable on the disposal
of real property or shares of real property companies within specified periods after that date of purchase of the
real property. As the Notes are not considered chargeable assets for real property gains tax purposes, there is no
tax imposed on capital gains derived from disposal of the Notes in Malaysia.
Gift or Inheritance Tax
There is neither gift nor inheritance tax in Malaysia.
Stamp duty
The Stamp Duty (Exemption) (No. 23) Order 2000 provides that all instruments relating to the issue of, offer for
subscription or purchase of, or invitation to subscribe for or purchase, debentures approved by the Securities
Commission under section 32 of the Securities Commission Act 1993 (now section 214 of the Capital Markets
and Services Act 2007) and the redemption or transfer of such debentures, are exempted from stamp duty.
Foreign Account Tax Compliance Act
Sections 1471 through 1474 of the U.S. Internal Revenue Code of 1986 (“FATCA”) impose a new reporting
regime and potentially a 30% withholding tax with respect to certain payments to any non-U.S. financial
institution (a “foreign financial institution”, or “FFI” (as defined by FATCA)) that does not become a
“Participating FFI” by entering into an agreement with the U.S. Internal Revenue Service (“IRS”) to provide
the IRS with certain information in respect of its account holders and investors or is not otherwise exempt from
or in deemed compliance with FATCA. The Issuer is classified as an FFI.
The new withholding regime will be phased in beginning 1 July 2014 for payments from sources within the
United States and will apply to “foreign passthru payments” (a term not yet defined) no earlier than 1 January
2017. This withholding would potentially apply to payments in respect of (i) any Notes characterised as debt (or
which are not otherwise characterised as equity and have a fixed term) for U.S. federal tax purposes that are
issued on or after the “grandfathering date”, which is the later of (a) 1 July 2014 and (b) the date that is six
months after the date on which final U.S. Treasury regulations defining the term foreign passthru payment are
filed with the Federal Register, or which are materially modified on or after the grandfathering date and (ii) any
Notes characterised as equity or which do not have a fixed term for U.S. federal tax purposes, whenever issued. If
Notes are issued before the grandfathering date, and additional Notes of the same series are issued on or after that
date, the additional Notes may not be treated as grandfathered, which may have negative consequences for the
existing Notes, including a negative impact on market price.
The United States and a number of other jurisdictions have announced their intention to negotiate
intergovernmental agreements to facilitate the implementation of FATCA (each, an “IGA”). Pursuant to FATCA
and the “Model 1” and “Model 2” IGAs released by the United States, an FFI in an IGA signatory country could
be treated as a “Reporting FI” not subject to withholding under FATCA on any payments it receives. Further, an
FFI in a Model 1 IGA jurisdiction would generally not be required to withhold under FATCA or an IGA (or any
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law implementing an IGA) (any such withholding being “FATCA Withholding”) from payments it makes. The
Model 2 IGA leaves open the possibility that a Reporting FI might in the future be required to withhold as a
Participating FFI on foreign passthru payments. Under each Model IGA, a Reporting FI would still be required to
report certain information in respect of its account holders and investors to its home government or to the IRS.
The United States has announced an intention to enter into an intergovernmental agreement with Malaysia (a
“US-Malaysia IGA”).
If the Issuer becomes a Participating FFI under FATCA, the Issuer and financial institutions through which
payments on the Notes are made may be required to withhold FATCA Withholding if any FFI through or to
which payment on such Notes is made is not a Participating FFI, a Reporting FI, or otherwise exempt from or in
deemed compliance with FATCA.
Whilst the Notes are in global form and held within the Clearing Systems, it is expected that FATCA will not
affect the amount of any payments made under, or in respect of, the Notes by the Issuer, any paying agent, the
Common Depositary or the sub-custodian for the CMU, given that each of the entities in the payment chain
between the Issuer and the participants in the Clearing Systems is a major financial institution whose business is
dependent on compliance with FATCA and that any alternative approach introduced under an IGA will be
unlikely to affect the Notes. The documentation expressly contemplates the possibility that the Notes may go into
definitive form and therefore that they may be taken out of the Clearing Systems. If this were to happen, then a
non-FATCA compliant holder could be subject to FATCA Withholding. However, definitive notes will only be
printed in remote circumstances.
FATCA is particularly complex and its application is uncertain at this time. The above description is based
in part on regulations, official guidance and model IGAs, all of which are subject to change or may be
implemented in a materially different form. Prospective investors should consult their tax advisers on how
these rules may apply to the Issuer and to payments they may receive in connection with the Notes.
TO ENSURE COMPLIANCE WITH IRS CIRCULAR 230, EACH TAXPAYER IS HEREBY NOTIFIED
THAT: (A) ANY TAX DISCUSSION HEREIN IS NOT INTENDED OR WRITTEN TO BE USED, AND
CANNOT BE USED BY THE TAXPAYER FOR THE PURPOSE OF AVOIDING U.S. FEDERAL
INCOME TAX PENALTIES THAT MAY BE IMPOSED ON THE TAXPAYER; (B) ANY SUCH TAX
DISCUSSION WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE
TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) THE TAXPAYER SHOULD SEEK
ADVICE BASED ON THE TAXPAYER’S PARTICULAR CIRCUMSTANCES FROM AN
INDEPENDENT TAX ADVISER.
EU Directive on the Taxation of Savings Income
Under the Savings Directive, each Member State is required to provide to the tax authorities of another Member
State details of payments of interest (or similar income) paid by a person established within its jurisdiction to, or
for the benefit of, an individual resident or certain other persons of that other Member State; however, for a
transitional period, Austria and Luxembourg are instead required (unless during that period they elect otherwise)
to operate a withholding system in relation to such payments (subject to a procedure whereby, on meeting certain
conditions, the beneficial owner of the interests (or similar income) may request that no tax be withheld.) The
ending of this transitional period is dependent upon the conclusion of certain other agreements relating to
information exchange with certain other countries.
A number of non-EU countries and territories have agreed to adopt similar measures.
Proposed Financial Transaction Tax (“FTT”)
The European Commission has published a proposal for a Directive for a common FTT in Belgium, Germany,
Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “Participating Member
States”).
The proposed FTT has very broad scope and could, if introduced in its current form, apply to certain dealings in
the Notes (including secondary market transactions) in certain circumstances. The issuance and subscription of
Notes should, however, be exempt.
Under current proposals the FTT could apply in certain circumstances to persons both within and outside of the
Participating Member States. Generally, it would apply to certain dealings in the Notes where at least one party is
a financial institution, and at least one party is established in a Participating Member State. A financial institution
may be, or be deemed to be, “established” in a Participating Member State in a broad range of circumstances,
including (a) by transacting with a person established in a Participating Member State or (b) where the financial
instrument which is subject to the dealings is issued in a Participating Member State.
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The FTT proposal remains subject to negotiation between the Participating Member States and is the subject of
legal challenge. It may therefore be altered prior to any implementation, the timing of which remains unclear.
Additional EU Member States may decide to participate. Prospective holders of the Notes are advised to seek
their own professional advice in relation to the FTT.
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SUBSCRIPTION AND SALE
Summary of Dealer Agreement in respect of Notes
Subject to the terms and on the conditions contained in a dealer agreement (the “Dealer Agreement”) between
the Issuer, the Arrangers and the Permanent Dealers, the Notes will be offered on a continuous basis by the Issuer
to the Permanent Dealers. However, the Issuer has reserved the right to sell Notes directly on its own behalf to
Dealers that are not Permanent Dealers. The Notes may be resold at prevailing market prices, or at prices related
thereto, at the time of such resale, as determined by the relevant Dealer. The Notes may also be sold by the Issuer
through the Dealers, acting as agents of the Issuer. The Dealer Agreement also provides for Notes to be issued in
syndicated Tranches that are underwritten by two or more Dealers.
The Issuer will pay each relevant Dealer a commission as agreed between them in respect of Notes subscribed by
it. The Issuer has agreed to reimburse the Arrangers and Dealers for certain of their expenses incurred in
connection with the establishment of the Programme and Dealers for certain of their activities in connection with
the Programme.
The Issuer has agreed to indemnify the Arrangers and Dealers against certain liabilities in connection with the
offer and sale of the Notes. The Dealer Agreement entitles Dealers to terminate any agreement that they make to
subscribe Notes in certain circumstances prior to payment for such Notes being made to the Issuer.
Each of the Arrangers and the Dealers and their respective affiliates may engage in transactions with, and
perform services for, the Issuer or its group companies or affiliates in the ordinary course of business and have
engaged, or may in the future engage, in commercial banking and investment banking transactions with the
Issuer or its group companies or affiliates, for which they have received, and may in the future receive,
compensation. The Arrangers and Dealers or certain of their respective affiliates may purchase Notes and be
allocated Notes for asset management and/or proprietary purposes but not with a view to distribution.
The Arrangers, the Dealers or any of their respective affiliates may purchase Notes for its or their own account
and enter into transactions, including credit derivatives, such as asset swaps, repackaging and credit default
swaps relating to Notes issued under the Programme and/or other securities of the Issuer or its group companies
or affiliates at the same time as the offer and sale of Notes issued under the Programme or in secondary market
transactions. Such transactions would be carried out as bilateral trades with selected counterparties and separately
from any existing sale or resale of Notes to which this Offering Circular relates (notwithstanding that such
selected counterparties may also be purchasers of Notes issued under the Programme).
Selling Restrictions
United States of America
The Notes have not been and will not be registered under the Securities Act and the Notes may not be offered or
sold within the United States except pursuant to an exemption from, or a transaction not subject to, the
registration requirements of the Securities Act. Each Dealer has represented that it has not offered or sold the
Notes, and has agreed that it will not offer or sell, any Notes constituting part of its allotment in the United States
except in accordance with Rule 903 of Regulation S under the Securities Act (“Regulation S”). Accordingly,
neither it, its affiliates nor any persons acting on its or their behalf have engaged or will engage in any directed
selling efforts with respect to the Notes. Terms used in this paragraph have the meaning given to them by
Regulation S.
Unless the Pricing Supplement or the Subscription Agreement relating to one or more Tranches specifies that the
applicable TEFRA exemption is either “C Rules” or “not applicable”, the following language applies:
(i)
In addition, except to the extent permitted under U.S. Treas. Reg. §1.163-5(c)(2)(i)(D) (or any successor
U.S. Treasury regulation section including, without limitation, regulations issued in accordance with U.S.
Internal Revenue Service Notice 2012-20 or otherwise in connection with the U.S. Hiring Incentives to
Restore Employment Act of 2010) (the “D Rules”):
(a) each Dealer has represented that it has not offered or sold, and agrees that during a 40 day restricted
period it will not offer or sell, Notes to a person who is within the United States or its possessions or to
a United States person; and
(b) each Dealer has represented that it has not delivered and has agreed that it will not deliver within the
United States or its possessions definitive Notes that are sold during the restricted period;
(ii) each Dealer has represented that it has, and has agreed that throughout the restricted period it will have in
effect procedures reasonably designed to ensure that its employees or agents who are directly engaged in
selling Notes are aware that such Notes may not be offered or sold during the restricted period to a person who
is within the United States or its possessions or to a United States person, except as permitted by the D Rules;
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(iii) if it is a United States person, each Dealer has represented that it is acquiring the Notes for the purposes of
resale in connection with their original issue and if it retains Notes for its own account, it will only do so
only in accordance with the requirements of U.S. Treas. Reg. §1.163-5(c)(2)(i)(D)(6) (or any successor
U.S. Treasury regulation section including, without limitation, regulations issued in accordance with
U.S. Internal Revenue Service Notice 2012-20 or otherwise in connection with the U.S. Hiring Incentives to
Restore Employment Act of 2010); and
(iv) with respect to each affiliate that acquires from it Notes in bearer form for the purpose of offering or selling
such Notes during the restricted period, each Dealer has either (i) repeated and confirmed the
representations and agreements contained in Clauses 6.2.1, 6.2.2 and 6.2.3 of Schedule B of the Dealer
Agreement on its behalf or (ii) agreed that it shall obtain from such affiliate for the benefit of the Issuer the
representations and agreements contained in Clauses 6.2.1, 6.2.2 and 6.2.3 of Schedule B of the Dealer
Agreement.
Terms used in clauses 6.2.1, 6.2.2, 6.2.3 and 6.2.4 of Schedule B of the Dealer Agreement have the meanings
given to them by the U.S. Internal Revenue Code of 1986 and regulations thereunder, including the D Rules.
In addition, to the extent that the Pricing Supplement or the Subscription Agreement relating to one or more
Tranches of Bearer Notes specifies that the applicable TEFRA exemption is “C Rules”, the following paragraph
applies:
Under U.S. Treas. Reg. §1.163-5(c)(2)(i)(C) (or any successor U.S. Treasury regulation section including,
without limitation, regulations issued in accordance with U.S. Internal Revenue Service Notice 2012-20 or
otherwise in connection with the U.S. Hiring Incentives to Restore Employment Act of 2010) (or any successor
U.S. Treasury regulation section including, without limitation, regulations issued in accordance with
U.S. Internal Revenue Service Notice 2012-20 or otherwise in connection with the U.S. Hiring Incentives to
Restore Employment Act of 2010) (the “C Rules”) and the regulations expected to be promulgated under
Section 401(b)(1)(B) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) to set out the criteria
for “foreign targeted obligations” that are exempt from the excise tax under Section 4701(b)(1)(B) of the Code,
Notes in bearer form must be issued and delivered outside the United States and its possessions in connection
with their original issuance. In relation to each such Tranche, each Dealer has represented and agreed that it has
not offered, sold or delivered, and shall not offer, sell or deliver, directly or indirectly, Notes in bearer form
within the United States or its possessions in connection with their original issuance. Further, in connection with
their original issuance of Notes in bearer form, each Dealer has represented that it has not communicated, and
will not communicate, directly or indirectly, with a prospective purchaser if either such purchaser or it is within
the United States or its possessions and will not otherwise involve its U.S. office in the offer or sale of Notes in
bearer form. Terms used in this paragraph have the meanings given to them by the U.S. Internal Revenue Code
of 1986 and regulations thereunder, including the C Rules and the D Rules.
European Economic Area
Each Dealer has represented and agreed that:
In relation to each Member State of the European Economic Area which has implemented the Prospectus
Directive (each, a “Relevant Member State”), each Dealer has represented and agreed, that with effect from and
including the date on which the Prospectus Directive is implemented in that Relevant Member State (the
“Relevant Implementation Date”) it has not made and will not make an offer of Notes which are the subject of
the offering contemplated by this Offering Circular as completed by the final terms in relation thereto to the
public in that Relevant Member State except that it may, with effect from and including the Relevant
Implementation Date, make an offer of such Notes to the public in that Relevant Member State:
(i)
if the final terms in relation to the Notes specify that an offer of those Notes may be made other than
pursuant to Article 3(2) of the Prospectus Directive in that Relevant Member State (a “Non-exempt
Offer”), following the date of publication of a prospectus in relation to such Notes which has been approved
by the competent authority in that Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in that Relevant Member State, provided
that any such prospectus has subsequently been completed by the final terms contemplating such Nonexempt Offer, in accordance with the Prospectus Directive, in the period beginning and ending on the dates
specified in such prospectus or final terms, as applicable and the Issuer has consented in writing to its use
for the purpose of that Non-exempt Offer;
(ii) at any time to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(iii) at any time to fewer than 100, or, if the Relevant Member State has implemented the relevant provision of
the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in
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the Prospectus Directive) subject to obtaining the prior consent of the relevant Dealer or Dealers nominated
by the Issuer for any such offer; or
(iv) at any time in any other circumstances falling within Article 3(2) of the Prospectus Directive,
provided that no such offer of Notes referred to in (i) to (iii) above shall require the Issuer or any Dealer to
publish a prospectus pursuant to Article 3 of the Prospectus Directive or supplement a prospectus pursuant to
Article 16 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer of Notes to the public” in relation to any Notes in
any Relevant Member State means the communication in any form and by any means of sufficient information
on the terms of the offer and the Notes to be offered so as to enable an investor to decide to purchase or subscribe
the Notes, as the same may be varied in that Member State by any measure implementing the Prospectus
Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and
amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the relevant
Member State), and includes any relevant implementing measure in each Relevant Member State and the
expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United Kingdom
Each Dealer has represented and agreed that:
(i)
it has only communicated or caused to be communicated and will only communicate or cause to be
communicated an invitation or inducement to engage in investment activity (within the meaning of
Section 21 of the Financial Services and Markets Act 2000 (“FSMA”) received by it in connection with the
issue or sale of any Notes in circumstances in which Section 21(1) of the FSMA does not apply to the
Issuer; and
(ii) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done
by it in relation to any Notes in, from or otherwise involving the United Kingdom.
Malaysia
Each Dealer represents and agreed that, the Notes may only be offered, sold, transferred or otherwise disposed
directly or indirectly, to a person to whom an offer or invitation to subscribe for the Notes and to whom the Notes
are issued would fall within Schedule 6 (or Section 229(1)(b)) or Schedule 7 (or Section 230(1)(b)) read together
with Schedule 8 (or Section 257(1)) of the Capital Markets and Services Act (CMSA), 2007, as amended from
time to time.
Singapore
Each Dealer has acknowledged that this Offering Circular has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, each Dealer has represented and agreed that it has not offered or
sold any Notes or caused such Notes to be made the subject of an invitation for subscription or purchase and will
not offer or sell such Notes or cause such Notes to be made the subject of an invitation for subscription or
purchase, and has not circulated or distributed, nor will it circulate or distribute, this Offering Circular or any
other document or material in connection with the offer or sale, or invitation for subscription or purchase, of such
Notes, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under
Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person
pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions
specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any
other applicable provision of the SFA.
Where Notes are subscribed or purchased under Section 275 of the SFA by a relevant person which is:
(i)
a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business
of which is to hold investments and the entire share capital of which is owned by one or more individuals,
each of whom is an accredited investor; or
(ii) a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each
beneficiary of the trust is an individual who is an accredited investor,
securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest
(howsoever described) in that trust shall not be transferred within six months after that corporation or that trust
has acquired the Notes pursuant to an offer made under Section 275 of the SFA except:
(i)
to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person
arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;
121
(ii) where no consideration is or will be given for the transfer;
(iii) where the transfer is by operation of law;
(iv) as specified in Section 276(7) of the SFA; or
(v) as specified in Regulation 32 of the Securities and Futures (Offer of Investments) (Shares and Debentures)
Regulations 2005 of Singapore.
Hong Kong
In relation to each Tranche of Notes issued by the Issuer, each Dealer has represented and agreed, that
(i)
it has not offered or sold and will not offer or sell in Hong Kong, by means of any document, any Notes
other than (a) to “professional investors” as defined in the Securities and Futures Ordinance (Cap. 571) of
Hong Kong and any rules made under that Ordinance; or (b) in other circumstances which do not result in
the document being a “prospectus” as defined in the Companies Ordinance (Cap. 32) of Hong Kong or
which do not constitute an offer to the public within the meaning of that Ordinance; and
(ii) it has not issued or had in its possession for the purposes of issue, and will not issue or have in its possession for
the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to
the Notes, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong
Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to the Notes
which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors”
as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.
Japan
Each Dealer has represented and agreed that:
The Notes have not been and will not be registered under the Financial Instruments and Exchange Act of Japan
(the “Financial Instruments and Exchange Act”). Accordingly, each Dealer has represented and agreed, that it
has not, directly or indirectly, offered or sold and will not, directly or indirectly, offer or sell any Notes in Japan
or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident of Japan,
including any corporation or other entity organised under the laws of Japan) or to others for re-offering or re-sale,
directly or indirectly, in Japan or to, or for the benefit of, any resident in Japan except pursuant to an exemption
from the registration requirements of, and otherwise in compliance with, the Financial Instruments and Exchange
Act and other relevant laws and regulations of Japan.
PRC
Each Dealer has represented and agreed that the Notes are not being offered or sold and may not be offered or
sold, directly or indirectly, in the PRC (for such purposes, not including the Hong Kong and Macau Special
Administrative Regions or Taiwan), except as permitted by the securities laws of the PRC.
General
These selling restrictions may be supplemented or modified by the agreement of the Issuer and any Dealers
following a change in a relevant law, regulation or directive. Any such modification will be set out in the Pricing
Supplement issued in respect of the issue of Notes to which it relates or in a supplement to this Offering Circular.
No representation is made that any action has been taken in any jurisdiction that would permit a public offering
of any of the Notes, or possession or distribution of this Offering Circular or any other offering material or any
Pricing Supplement, in any country or jurisdiction where action for that purpose is required.
Each Dealer will be required to agree that, it shall, to the best of its knowledge, comply with all relevant laws,
regulations and directives in each jurisdiction in which it purchases, offers, sells or delivers Notes or has in its
possession or distributes this Offering Circular, any other offering material or any Pricing Supplement therefore
in all cases at its own expense.
122
FORM OF PRICING SUPPLEMENT
Pricing Supplement dated [Š]
AmBank (M) Berhad
Issue of [Aggregate Nominal Amount of Tranche][Title of Notes]
under the U.S.$2,000,000,000 Euro Medium Term Note Programme
This document constitutes the Pricing Supplement relating to the issue of Notes described herein.
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions set forth in the
Offering Circular dated 2 August 2013 [and the supplemental [Offering Circular] dated [Š]]]. This Pricing
Supplement contains the final terms of the Notes and must be read in conjunction with such Offering Circular [as
so supplemented].
[The following alternative language applies if the first tranche of an issue which is being increased was issued
under an Offering Circular with an earlier date.
Terms used herein shall be deemed to be defined as such for the purposes of the Conditions (the “Conditions”)
set forth in the Offering Circular dated 2 August 2013. This Pricing Supplement contains the final terms of the
Notes and must be read in conjunction with the Offering Circular dated [current date] [and the supplemental
Offering Circular dated [Š]], save in respect of the Conditions which are extracted from the Offering Circular
dated 2 August 2013 and are attached hereto.]
[Include whichever of the following apply or specify as “Not Applicable” (N/A). Note that the numbering should
remain as set out below, even if “Not Applicable” is indicated for individual paragraphs or sub-paragraphs.
Italics denote directions for completing the Pricing Supplement.]
1
Issuer:
AmBank (M) Berhad
(i)
Series Number:
[Š]
(ii)
[Tranche Number:
[Š]
(If fungible with an existing Series, details of that
Series, including the date on which the Notes
become fungible).]
2
Specified Currency or Currencies:
[Š]
3
Aggregate Nominal Amount:
[Š]
(i)
Series:
[Š]
(ii)
[Tranche:
[Š]]
(i)
Issue Price:
[Š]% of the Aggregate Nominal Amount [plus
accrued interest from [insert date] (in the case of
fungible issues only, if applicable)]
(ii)
[Net proceeds:
[Š] (Required only for listed issues)]
(i)
Specified Denominations:
[Š]
4
5
If the specified denomination is expressed to be
€100,000 or its equivalent and multiples of a lower
integral amount (for example €1,000), insert the
following:
“€100,000 and integral multiples of [€1,000] in
excess thereof up to and including [€199,000]. No
notes in definitive form will be issued with a
denomination above [€199,000]”.
6
(ii)
Calculation Amount:
[Š]
(i)
Issue Date:
[Š]
(ii)
Interest Commencement Date:
[Specify/Issue date/Not Applicable]
123
7
Maturity Date:
[Specify date or (for Floating Rate Notes) Interest
Payment Date falling in or nearest to the relevant
month and year/None]
Note that for Renminbi or Hong Kong dollar
denominated Fixed Rate Notes where the Interest
Payment Dates are subject to modification it will be
necessary to specify the Interest Payment Date
falling in or nearest to the relevant month and year.
The Maturity Date for the Notes must be not less
than one year from the Issue Date.
8
Interest Basis:
[[Š]% Fixed Rate [from [Š] to [Š]]
[[specify reference rate] +/- [Š]% Floating Rate
[from [Š] to [Š]]
[Zero Coupon]
[Other (specify)]
(further particulars specified below)
9
Redemption/Payment Basis:
[Redemption at par]
[Partly Paid]
[Instalment]
[Other (specify)]
10
Change of Interest or Redemption/Payment Basis:
[Specify details of any provision for convertibility of
Notes into another interest or redemption/ payment
basis]
11
Put/Call Options:
[Investor Put]
[Issuer Call]
[(further particulars specified below)]
12
Status of the Notes:
Senior
13
Listing:
[SGX-ST/LFX/Bursa Malaysia (under the Exempt
Regime)/(specify)/None]
14
Method of distribution:
[Syndicated/Non-syndicated]
PROVISIONS RELATING TO INTEREST (IF ANY) PAYABLE
15
Fixed Rate Note Provisions:
[Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs of this paragraph)
(i)
Rate[(s)] of Interest:
[Š]% per annum [payable [annually/semi-annually/
quarterly/monthly] in arrear]
(ii)
Interest Payment Date(s):
[Š] in each year [adjusted in accordance with
[specify Business Day Convention and any
applicable Business Centre(s) for the definition of
“Business Day”]/not adjusted]
124
(iii)
Fixed Coupon Amount[(s)]:
[Š] per Calculation Amount
For Renminbi or Hong Kong dollar denominated
Fixed Rate Notes where the Interest Payment Dates
are subject to modification the following alternative
wording is appropriate: “Each Fixed Coupon
Amount shall be calculated by multiplying the
product of the Rate of Interest and the Calculation
Amount by the Day Count Fraction and rounding
the resultant figure, in the case of Renminbi
denominated Fixed Rate Notes, to the nearest
CNY0.01, CNY0.005 being rounded upwards or, in
the case of Hong Kong dollar denominated Fixed
Rate Notes, to the nearest HK$0.01, HK$0.005
being rounded upwards.”
16
(iv)
Broken Amount(s):
[Š] per Calculation Amount, payable on the Interest
Payment Date falling [in/on] [Š]
(v)
Day Count Fraction:
[30/360 / Actual/Actual (ICMA/ISDA)/other]
(vi)
[Determination Dates:
[Š] in each year (insert regular interest payment
dates, ignoring issue date or maturity date in the
case of a long or short first or last coupon. N.B.
only relevant where Day Count Fraction is Actual/
Actual (ICMA))]
(vii)
Other terms relating to the method of
calculating interest for Fixed Rate Notes:
[Not Applicable/give details]
Floating Rate Note Provisions:
[Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs of this paragraph.)
(i)
Interest Period(s):
[Š]
(ii)
Specified Interest Payment Dates:
[Š]
(iii)
Interest Period Date:
[Š]
(Not applicable unless different from Interest
Payment Date)
(iv)
Business Day Convention:
[Floating Rate Convention/Following Business Day
Convention/Modified Following Business Day
Convention/Preceding Business Day Convention/
other (give details)]
(v)
Business Centre(s):
[Š]
(vi)
Manner in which the Rate(s) of Interest is/
are to be determined:
[Screen Rate Determination/ISDA Determination/
other (give details)]
(vii)
Party responsible for calculating the Rate(s)
of Interest and Interest Amount(s) (if not the
[Calculation Agent]):
[Š]
(viii)
Screen Rate Determination:
(ix)
—
Reference Rate:
[Š]
—
Interest Determination Date(s):
[Š]
—
Relevant Screen Page :
[Š]
ISDA Determination:
—
Floating Rate Option:
[Š]
125
17
—
Designated Maturity:
[Š]
—
Reset Date:
[Š]
(x)
Margin(s):
[+/-][Š]% per annum
(xi)
Minimum Rate of Interest:
[Š]% per annum
(xii)
Maximum Rate of Interest:
[Š]% per annum
(xiii)
Day Count Fraction:
[Š]
(xiv)
Fall back provisions, rounding provisions, [Š]
denominator and any other terms relating to
the method of calculating interest on
Floating Rate Notes, if different from those
set out in the Conditions:
Variable Rate Note Provisions:
[Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs of this paragraph.)
(i)
Interest Period(s):
[Š]
(ii)
Specified Interest Payment Dates:
[Š]
(iii)
Interest Period Date:
[Š]
(Not applicable unless different from Interest
Payment Date)
(iv)
Business Day Convention:
[Floating Rate Convention/Following Business Day
Convention/Modified Following Business Day
Convention/ Preceding Business Day Convention/
other (give details)]
(v)
Business Centre(s):
[Š]
(vi)
Manner in which the Rate(s) of Interest is/
are to be determined:
[Screen Rate Determination/ISDA Determination/
other (give details)]
(vii)
Party responsible for calculating the Rate(s)
of Interest and Interest Amount(s) (if not the
[Calculation Agent]):
[Š]
(viii)
Screen Rate Determination:
(ix)
—
Reference Rate:
[Š]
—
Interest Determination Date(s):
[Š]
—
Relevant Screen Page:
[Š]
ISDA Determination:
—
Floating Rate Option:
[Š]
—
Designated Maturity:
[Š]
—
Variable Rate Date:
[Š]
(x)
Margin(s):
[+/-][Š] per cent. per annum
(xi)
Minimum Rate of Interest:
[Š] per cent. per annum
(xii)
Maximum Rate of Interest:
[Š] per cent. per annum
(xiii)
Day Count Fraction:
[Š]
(xiv)
Fall back provisions, rounding provisions,
denominator and any other terms relating to
the method of calculating the Fall Back Rate
on Variable Rate Notes, if different from
those set out in the Conditions:
[Š]
126
18
Zero Coupon Note Provisions:
[Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs of this paragraph)
(i)
Amortisation Yield:
[Š]% per annum
(ii)
Any other formula/basis of determining
amount payable:
[Š]
PROVISIONS RELATING TO REDEMPTION
19
Call Option:
[Applicable/Not Applicable]
(i)
Optional Redemption Date(s):
(If not applicable, delete the remaining subparagraphs of this paragraph)
[Š]
(ii)
Optional Redemption Amount(s) of each
Note and specified denomination method, if
any, of calculation of such amount(s):
(iii)
If redeemable in part:
(iv)
20
[Š] per Calculation Amount
—
Minimum Redemption Amount:
[Š] per Calculation Amount
—
Maximum Redemption Amount:
[Š] per Calculation Amount
Notice period:
[Š]
Put Option:
[Applicable/Not Applicable]
(If not applicable, delete the remaining subparagraphs of this paragraph)
(i)
Optional Redemption Date(s):
[Š]
(ii)
Optional Redemption Amount(s) of each
Note and method, if any, of calculation of
such amount(s):
[Š] per Calculation Amount
(iii)
Notice period:
[Š]
21
Final Redemption Amount of each Note:
22
Early Redemption Amount:
[Š] per Calculation Amount
Early Redemption Amount(s) per Calculation
Amount payable on redemption for taxation reasons
or on event of default and/or the method of
calculating the same (if required or if different from
that set out in the Conditions):
[Š]
GENERAL PROVISIONS APPLICABLE TO THE NOTES
23
Form of Notes:
Bearer Notes:
[Temporary Global Note exchangeable for a
Permanent Global Note which is exchangeable for
Definitive Notes in the limited circumstances
specified in the Permanent Global Note]
[Temporary Global Note exchangeable
Definitive Notes on [Š] days’ notice]
for
[Permanent Global Note exchangeable for
Definitive Notes in the limited circumstances
specified in the Permanent Global Note]
127
(N.B. The exchange upon notice/at any time options
should not be expressed to be applicable if the
Specified Denomination of the Notes in paragraph 6
includes language substantially to the following effect:
“€100,000 and integral multiples of €1,000 in excess
thereof up to and including €199,000.” Furthermore,
such Specified Denomination construction is not
permitted in relation to any issue of Notes which is to
be represented on issue by a Temporary Global Note
exchangeable for Definitive Notes.)
Registered Notes:
[Global Certificate ([Currency] [Š] nominal
amount) registered in the name of a nominee for
Euroclear and Clearstream, Luxembourg] (in the
case of Notes other than CMU Notes) / the HKMA
as operator of the CMU (in the case of CMU
Notes]]
24
Financial Centre(s) or other special provisions
relating to Payment Dates:
[Not Applicable/give details. Note that this
paragraph relates to the date and place of payment,
and not interest period end dates, to which subparagraphs 15(ii), 16(v) and 17(v) relate]
25
Talons for future Coupons or Receipts to be
attached to Definitive Notes (and dates on which
such Talons mature):
[Yes/No. If yes, give details]
26
Details relating to Partly Paid Notes: amount of
each payment comprising the Issue Price and date
on which each payment is to be made and
consequences (if any) of failure to pay, including
any right of the Issuer to forfeit the Notes and
interest due on late payment:
[Not Applicable/give details]
27
Details relating to Instalment Notes: amount of each
instalment (“Instalment Amount”), date on which
each payment is to be made (“Instalment Date”):
[Not Applicable/give details]
28
Redenomination,
renominalisation
reconventioning provisions:
[Not Applicable/The provisions [annexed to this
Pricing Supplement] apply]
29
Consolidation provisions:
[Not Applicable/The provisions [annexed to this
Pricing Supplement] apply]
30
Other terms or special conditions:
[Not Applicable/give details]
and
DISTRIBUTION
31
(i)
If syndicated, names of Managers:
[Not Applicable/give names]
(ii)
Stabilising Manager (if any):
[Not Applicable/give name]
32
If non-syndicated, name of Dealer:
[Not Applicable/give name]
33
Additional selling restrictions:
[Not Applicable/give details]
OPERATIONAL INFORMATION
34
ISIN Code:
[Š]
35
Common Code:
[Š]
36
CMU Instrument Number:
[Š]
128
37
Any clearing system(s) other than Euroclear Bank [Not Applicable/give name(s) and number(s)]
S.A./N.V., Clearstream Banking, société anonyme,
the CMU and the relevant identification number(s):
38
Delivery:
Delivery [against/free of] payment
39
Additional Paying Agent(s) (if any):
[Š]
GENERAL
40
Governing Law:
English
[PURPOSE OF PRICING SUPPLEMENT
This Pricing Supplement comprises the final terms required to list the issue of the Notes described herein
pursuant to the U.S.$2,000,000,000 Euro Medium Term Note Programme of AmBank (M) Berhad.]
RESPONSIBILITY
The Issuer accepts responsibility for the information contained in this Pricing Supplement.
The Singapore Exchange Securities Trading Limited (the “SGX-ST”) assumes no responsibility for the
correctness of any of the statements made or opinions expressed or reports contained in this Pricing Supplement.
The approval in-principle from, and the admission of the Notes to the Official List of, the SGX-ST are not to be
taken as indications of the merits of the Issuer, the Programme or the Notes.
[Neither the Labuan International Financial Exchange Inc. (the “LFX”) nor the Bursa Malaysia Securities Berhad
(“Bursa Malaysia”) assumes responsibility for the correctness of any of the statements made or opinions or
reports contained in this Pricing Supplement, and neither the LFX nor Bursa Malaysia makes any representation
as to its accuracy or completeness and each of the LFX and Bursa Malaysia expressly disclaims any liability
whatsoever for any loss howsoever arising from or in reliance upon any part of the contents of this Pricing
Supplement. Investors are advised to read and understand the contents of the Offering Circular and this Pricing
Supplement before investing. If in doubt, the investor should consult his or her adviser. Neither admission to the
Official List of the LFX nor listing on Bursa Malaysia under the Bursa Malaysia (Exempt Regime) is to be taken
as an indication of the merits of the Issuer, the Programme or the Notes.]
Signed on behalf of the Issuer
AmBank (M) Berhad
By:
Duly authorised
129
CLEARING AND SETTLEMENT
The information set out below is subject to any change in or reinterpretation of the rules, regulations and
procedures of the Clearing Systems currently in effect. The information in this section concerning the Clearing
Systems has been obtained from sources that the Issuer believes to be reliable, but none of the Issuer, Arrangers
or Dealers takes any responsibility for the accuracy thereof. Investors wishing to use the facilities of any of the
Clearing Systems are advised to confirm the continued applicability of the rules, regulations and procedures of
the relevant Clearing System. None of the Issuer, Arrangers or Dealers will have any responsibility or liability
for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the
Notes held through the facilities of any Clearing System or for maintaining, supervising or reviewing any records
relating to, or payments made on account of, such beneficial ownership interests.
The relevant Pricing Supplement will specify the Clearing System(s) applicable for each Series.
The Clearing Systems
Euroclear and Clearstream, Luxembourg
Euroclear and Clearstream, Luxembourg each holds securities for participating organisations and facilitates the
clearance and settlement of securities transactions between their respective participants through electronic bookentry changes in accounts of such participants. Euroclear and Clearstream, Luxembourg provide to their
respective participants, among other things, services for safekeeping, administration, clearance and settlement of
internationally-traded securities and securities lending and borrowing. Euroclear and Clearstream, Luxembourg
participants are financial institutions throughout the world, including underwriters, securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organisations. Indirect access to Euroclear and
Clearstream, Luxembourg is also available to others, such as banks, brokers, dealers and trust companies which
clear through or maintain a custodial relationship with a Euroclear or Clearstream, Luxembourg participant,
either directly or indirectly.
Distributions of principal with respect to book-entry interests in the Notes held through Euroclear or Clearstream,
Luxembourg will be credited, to the extent received by the relevant Paying Agent, to the cash accounts of
Euroclear or Clearstream, Luxembourg participants in accordance with the relevant system’s rules and
procedures.
Each of the persons shown in the records of Euroclear, Clearstream, Luxembourg or an Alternative Clearing
System as the holder of a Note represented by a Global Note or a Global Certificate must look solely to
Euroclear, Clearstream, Luxembourg or any such Alternative Clearing System (as the case may be) for his share
of each payment made by the Issuer to the bearer of such Global Note or the holder of the underlying Registered
Notes, as the case may be, and in relation to all other rights arising under the Global Notes or Global Certificates,
subject to and in accordance with the respective rules and procedures of Euroclear, Clearstream, Luxembourg, or
such Alternative Clearing System (as the case may be). Such persons shall have no claim directly against the
Issuer in respect of payments due on the Notes for so long as the Notes are represented by such Global Note or
Global Certificate and such obligations of the Issuer will be discharged by payment to the bearer of such Global
Note or the holder of the underlying Registered Notes, as the case may be, in respect of each amount so paid.
Beneficial ownership in Notes will be held through financial institutions as direct and indirect participants in
Euroclear and Clearstream, Luxembourg.
The aggregate holdings of book-entry interests in the Notes in Euroclear and Clearstream, Luxembourg will be
reflected in the book-entry accounts of each such institution. Euroclear and Clearstream, Luxembourg, as the case
may be, and every other intermediate holder in the chain to the beneficial owner of book-entry interests in the
Notes, will be responsible for establishing and maintaining accounts for their participants and customers having
interests in the book-entry interest in the Notes. The relevant Paying Agent will be responsible for ensuring that
payments received by it from the Issuer for holders of interests in the Notes holding through Euroclear and
Clearstream, Luxembourg are credited to Euroclear or Clearstream, Luxembourg, as the case may be.
The Issuer will not impose any fees in respect of the Notes, however, holders of book entry interests in the Notes
may incur fees normally payable in respect of the maintenance and operation of accounts in Euroclear and
Clearstream, Luxembourg.
The CMU
The CMU is a central depositary service provided by the Central Moneymarkets Unit of the HKMA for the safe
custody and electronic trading between the members of this service (“CMU Members”) of capital markets
instruments (“CMU Instruments”) which are specified in the CMU Reference Manual as capable of being held
within the CMU.
130
The CMU is only available to CMU Instruments issued by a CMU Member or by a person for whom a CMU
Member acts as agent for the purposes of lodging instruments issued by such persons. Membership of the
services is open to all members of the Hong Kong Capital Markets Association, “authorised institutions” under
the Banking Ordinance of Hong Kong and other domestic and overseas financial institutions at the discretion of
the HKMA.
Compared to clearing services provided by Euroclear and Clearstream, Luxembourg, the standard custody and
clearing service provided by the CMU is limited. In particular (and unlike the European clearing systems), the
HKMA does not as part of this service provide any facilities for the dissemination to the relevant CMU Members
of payments (of interest or principal) under, or notices pursuant to the notice provisions of, the CMU
Instruments. Instead, the HKMA advises the lodging CMU Member (or a designated paying agent) of the
identities of the CMU Members to whose accounts payments in respect of the relevant CMU Instruments are
credited, whereupon the lodging CMU Member (or the designated paying agent) will make the necessary
payments of interest or principal or send notices directly to the relevant CMU Members. Similarly, the HKMA
will not obtain certificates of non-U.S. beneficial ownership from CMU Members or provide any such
certificates on behalf of CMU Members. The CMU Lodging and Paying Agent will collect such certificates from
the relevant CMU Members identified from an instrument position report obtained by request from the HKMA
for this purpose.
An investor holding an interest in the Notes through an account with either Euroclear or Clearstream,
Luxembourg will hold that interest through the respective accounts which Euroclear and Clearstream,
Luxembourg each have with the CMU.
Book-Entry Ownership
Bearer Notes
The Issuer may make applications to Euroclear and Clearstream, Luxembourg for acceptance in their respective
book-entry systems in respect of any Series of Bearer Notes. The Issuer may also apply to have Bearer Notes
accepted for clearance through the CMU. In respect of Bearer Notes, a temporary Global Note and/or a
permanent Global Note will be deposited with the Common Depositary or a sub-custodian for the CMU or an
Alternative Clearing System as agreed between the Issuer and the relevant Dealer(s). Transfers of interests in a
temporary Global Note or a permanent Global Note will be made in accordance with the normal market debt
securities operating procedures of Euroclear and Clearstream, Luxembourg, the CMU or the relevant Alternative
Clearing System, as the case may be. Each Global Note deposited with the Common Depositary will, where
applicable, have an ISIN and/or a Common Code or, if lodged with a sub-custodian for the CMU, will have a
CMU Instrument Number.
Registered Notes
The Issuer may make applications to Euroclear and Clearstream, Luxembourg, the CMU or an Alternative
Clearing System for acceptance in their respective book-entry systems in respect of the Notes to be represented
by a Global Certificate. Each Global Certificate deposited with a common depositary for, and registered in the
name of, a nominee of Euroclear and/or Clearstream, Luxembourg will, where applicable, have an ISIN and/or a
Common Code or, if lodged with a sub-custodian for the CMU, will have a CMU Instrument Number.
All Registered Notes will initially be in the form of a Global Certificate. Definitive Certificates will only be
available, in the case of Notes initially represented by a Global Certificate, in amounts specified in the relevant
Pricing Supplement.
Transfers of Registered Notes
Transfers of interests in Global Certificates within Euroclear and Clearstream, Luxembourg and/or the CMU and/
or an Alternative Clearing System will be in accordance with the usual rules and operating procedures of the
relevant clearing system.
In the case of Registered Notes to be cleared through Euroclear and Clearstream, Luxembourg and/or the CMU
and/or an Alternative Clearing System transfers may be made at any time by a holder of an interest in a Global
Certificate in accordance with the relevant rules and regulations of the applicable clearing systems.
131
GENERAL INFORMATION
1.
Application has been made to the SGX-ST for permission to deal in, and for quotation of, any Notes which
are agreed at the time of issue thereof to be so listed on the SGX-ST. There can be no assurance that the
application to the Official List of the SGX-ST for the listing of the Notes of any Series will be approved.
The approval in-principle from, and the admission of any Notes to the Official List of the SGX-ST is not to
be taken as an indication of the merits of the Issuer, the Programme or such Notes. The SGX-ST assumes no
responsibility for the correctness of any of the statements made, opinions expressed or reports contained
herein.
The Notes will trade on the SGX-ST in a minimum board lot size of S$200,000 or its equivalent in other
currencies so long as any of the Notes remain listed on the SGX-ST. For so long as any Notes are listed on
the SGX-ST and the rules of SGX-ST so require, the Issuer shall appoint and maintain a paying agent in
Singapore where such Notes (or Certificates in respect thereof) may be presented or surrendered for
payment or redemption, in the event that any of the Global Notes or Global Certificates representing such
Notes is exchanged for definitive Notes or definitive Certificates. In addition, in the event that any of the
Global Notes or Global Certificates representing such Notes is exchanged for definitive Notes or definitive
Certificates, an announcement of such exchange shall be made by or on behalf of the Issuer through the
SGX-ST and such announcement will include all material information with respect to the delivery of the
definitive Notes or Certificates, including details of the paying agent in Singapore.
2.
The Issuer has obtained all necessary consents, approvals and authorisations in Malaysia in connection with
the establishment of the Programme. The establishment of the Programme was authorised by the Board and
passed on 26 March 2013.
3.
There has been no significant change in the financial or trading position of the Issuer or of the Group since
31 March 2013 and no material adverse change in the prospects of the Issuer or of the Group since
31 March 2013.
4.
The Group may from time to time be involved in a number of legal or arbitration proceedings in the course
of its business. Neither the Issuer nor any member of the Group is involved in any legal or arbitration
proceedings (including any proceedings which are pending or threatened of which the Issuer is aware)
which may have or have had in the 12 months preceding the date of this Offering Circular a significant and
material effect on the financial position of the Issuer or the Group.
5.
Each Bearer Note having a maturity of more than one year, Receipt, Coupon and Talon will bear the
following legend: “Any United States person who holds this obligation will be subject to limitations under
the United States income tax laws, including the limitations provided in Sections 165(j) and 1287(a) of the
Internal Revenue Code”.
6.
Notes have been accepted for clearance through the Euroclear and Clearstream, Luxembourg systems
(which are the entities in charge of keeping the records). The Issuer may also apply to have Notes accepted
for clearance through the CMU. The CMU instrument number will be set out in the relevant Pricing
Supplement. The Common Code, the International Securities Identification Number (ISIN) and (where
applicable) the identification number for any other Alternative Clearing System for each Series of Notes
will be set out in the relevant Pricing Supplement.
The address of Euroclear is 1 Boulevard du Roi Albert II, B-1210 Brussels, Belgium and the address of
Clearstream, Luxembourg is 42 Avenue JF Kennedy, L-1855 Luxembourg. The address of any Alternative
Clearing System will be specified in the applicable Pricing Supplement.
7.
There are no material contracts entered into other than in the ordinary course of the Issuer’s business, which
could result in any member of the Group being under an obligation or entitlement that is material to the
Issuer’s ability to meet its obligations to Noteholders in respect of the Notes.
8.
The issue price and the amount of each Tranche will be determined, before filing of the relevant Pricing
Supplement of each Tranche, based on the prevailing market conditions.
The Issuer does not intend to provide any post-issuance information in relation to any issues of Notes.
9.
For so long as Notes may be issued pursuant to this Offering Circular, the following documents will be
available, during usual business hours on any weekday (Saturdays and public holidays excepted), for
inspection at the office of the Fiscal Agent or the registered office of the Issuer:
(A) the Agency Agreement (which includes the form of the Global Notes, the Global Certificate, the
definitive Bearer Notes, the Certificates, the Coupons, the Receipts and the Talons);
(B) the Deed of Covenant;
132
(C) the Memorandum and Articles of Association of the Issuer;
(D) the latest published annual report and audited consolidated and unconsolidated accounts of the Issuer
and the Group and the latest interim unaudited consolidated and unconsolidated accounts of the Issuer
and the Group;
(E) each Pricing Supplement (save that Pricing Supplement relating to an unlisted Series of Notes will only
be available for inspection by a holder of such Notes and such holder must produce evidence
satisfactory to the Issuer and the relevant Paying Agent as to its holding of Notes and identity); and
(F) a copy of this Offering Circular together with any Supplemental Offering Circular or further Offering
Circular.
10. Ernst & Young have audited, and rendered unqualified audit reports on, the financial statements of the
Issuer for the three years ended 31 March 2011, 2012 and 2013.
133
[THIS PAGE INTENTIONALLY LEFT BLANK]
INDEX TO FINANCIAL STATEMENTS
Page
Audited Consolidated and Unconsolidated Financial Statements for the Financial Year Ended
31 March 2013
Directors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-4
Statement by Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-15
Statutory declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-16
Independent auditors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-17
Statements of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-19
Income statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-21
Statements of comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-22
Statements of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-23
Statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-25
Notes to the financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-28
Audited Consolidated and Unconsolidated Financial Statements for the Financial Year Ended
31 March 2012
Directors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-181
Statement by directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-192
Statutory declaration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-193
Independent auditors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-194
Statements of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-196
Income statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-198
Statements of comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-199
Statements of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-200
Statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-202
Notes to the financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-205
F-1
F-2
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
CONTENTS
PAGE(S)
Directors' report
1
Statement by Directors
12
Statutory declaration
13
Independent auditors' report
14
Statements of financial position
16
Income statements
18
Statements of comprehensive income
19
Statements of changes in equity
20
Statements of cash flows
22
Notes to the financial statements
25
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-3
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
DIRECTORS' REPORT
The Directors have pleasure in presenting their report and the audited financial statements of the Group and of the Bank for the financial year
ended 31 March 2013.
PRINCIPAL ACTIVITIES
The principal activity of the Bank is to carry on the business of a licensed commercial bank and finance company.
The principal activities of its subsidiaries are disclosed in Note 15 to the financial statements.
There have been no significant changes in the nature of the activities of the Bank and its subsidiaries during the financial year.
SIGNIFICANT EVENT
The significant event during the financial year is as disclosed in Note 52 to the financial statements.
SUBSEQUENT EVENT
The subsequent event during the financial year is as disclosed in Note 53 to the financial statements.
FINANCIAL RESULTS
Profit for the financial year
Attributable to:
Equity holder of the Bank
Non-controlling interests
Group
RM'000
Bank
RM'000
1,251,235
1,259,439
1,251,222
13
1,251,235
1,259,439
1,259,439
There were no material transfers to or from reserves, allowances or provisions during the financial year other than those disclosed in the
financial statements.
In the opinion of the Directors, the results of the operations of the Group and of the Bank during the financial year have not been substantially
affected by any item, transaction or event of a material and unusual nature other than the changes in accounting policies as disclosed in Note 2
of the financial statements.
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 and of the Bank for the
current financial year in which this report is made.
1
F-4
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
DIVIDENDS
During the financial year, the Bank paid the final single-tier cash dividend of 80.15 sen per ordinary share on 820,363,762 ordinary shares
amounting to RM657,521,556 in respect of the financial year ended 31 March 2012.
An interim single-tier cash dividend of 26.00 sen per ordinary share on 820,363,762 ordinary shares amounting to RM213,294,578 in respect of
the current financial year was paid on 21 November 2012.
In respect of the current financial year, the Directors recommend a final single-tier cash dividend of 48.80 sen per ordinary share on
820,363,762 ordinary shares amounting to approximately RM400,337,516. The financial statements for the current financial year do not reflect
this dividend. Such dividend, upon approval of the shareholder, will be accounted for in equity as an appropriation of retained earnings in the
financial year ending 31 March 2014.
BUSINESS PLAN AND STRATEGY
For financial year 2014, the AMMB Holdings and its subsidiary companies ("the AMMB Group") will be guided by five strategic themes to
achieve our Vision - As Malaysia’s preferred diversified, internationally connected financial solutions group, we take pride in growing your future
with us.
Firstly, integrate acquisitions and deliver synergies. With the acquisitions of Kurnia in General Insurance and MBF Cards in Retail Banking, the
AMMB Group is now the leading general insurer in Malaysia and Top 3 in merchant acquiring business. Our focus will be on realising
operational efficiencies from economies of scale and capitalising on the expanded customer base for cross-selling opportunities to grow noninterest income.
Secondly, simplify business model and streamline processes. The AMMB Group has reorganised its business model to be around customers, a
move away from the traditional product silos. Plans are in place to simplify business structures and processes to enhance customer experience
(for example, consistent and seamless experience) as well as to better provide financial solutions that matches customers' lifestyle and lifecycle
needs. To achieve this, the AMMB Group will continue to strategically invest in human capital and technology uplift while maintaining top tier
cost-to-income ratio.
Thirdly, accelerate organic growth with focus on cross-sell, flow business, small business, and emerging affluent customers.
The AMMB Group plans to leverage closer partnerships with existing customers to increase share-of-wallet through cross-selling while
increasing market share in targeted segments through attracting new customers.
In retail, a refreshed marketing approach will be supported by enhanced analytical capabilities to partner customers in meeting their financial
goals. The AMMB Group’s focus is on building long lasting main bank relationships in preferred customer segments.
In non-retail, we will deepen existing relationships with our Corporate and Institutional, Business and Investment Banking customers by
improving our coverage and providing comprehensive financial solutions leveraging opportunities in domestic private investments. We will
support small businesses by providing them capital to invest and expand their businesses. In Transaction Banking, we will improve our foreign
currency service proposition and encourage CASA stickiness by expanding business with high transaction value clients. In Markets, we will
speed up product rollout, increase flow volumes and increase utilisation of derivatives across clients.
Fourthly, build scale in specialist businesses with strategic partners. Our strategic partnership with Australia and New Zealand Banking Group
Limited ("ANZ") in banking will continue to enhance development of new products as well as cross-border opportunities through expanded
distribution capabilities. In general insurance, our partnership with Insurance Australia Group ("IAG") will support in driving the integration of
Kurnia and continue to support the implementation of international best practices. We are in the midst of finding a new strategic partner for the
Life Assurance and Family Takaful businesses. The new partnership is expected to bring scale and technical expertise, while the AMMB Group
provides a universal banking platform for the businesses to leverage.
Fifthly, optimise capital and holding company structures. The AMMB Group remains proactive in managing capital according to evolving
regulatory requirements and evaluating business opportunities on a risk adjusted basis for optimal returns on capital.
2
F-5
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
OUTLOOK FOR NEXT FINANCIAL YEAR
Malaysia’s economic growth in 2013 is expected to be sustained by private consumption and expansion in investments. The external
environment remains challenging as the economic recovery of major trading partners remain uncertain.
Domestic private investment is expected to play a significant role as the government consolidates its fiscal position. With a smooth transition
post elections, the government is expected to maintain its focus on sustaining growth momentum and facilitating long-term economic
transformation plans. Monetary policy is expected to be accommodative, ensuring sustainable economic growth in 2013.
ISSUANCE OF SHARES AND DEBENTURES
There were no issuance of shares or debentures during the financial year.
SHARE OPTIONS
No options have been granted by the Bank to any parties during the financial year to take up unissued shares of the Bank.
No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Bank. As at the
end of the financial year, there were no unissued shares of the Bank under options.
BAD AND DOUBTFUL DEBTS
Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the Bank were
made out, the Directors took reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts and the making
of allowances for doubtful debts, and have satisfied themselves that all known bad debts had been written off and adequate allowances had
been made for doubtful debts.
At the date of this report, the Directors are not aware of any circumstances which would render the amount written off for bad debts, or the
amount of the allowance for doubtful debts, in the financial statements of the Group and of the Bank inadequate to any substantial extent.
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 of the Group and of the Bank misleading or inappropriate.
3
F-6
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
CONTINGENT AND OTHER LIABILITIES
At the date of this report, there does not exist:
(a) any charge on the assets of the Group and of the Bank which has arisen since the end of the financial year which secures the liability of any
other person; or
(b) any contingent liability in respect of the Group and of the Bank that has arisen since the end of the financial year, other than those incurred
in the normal course of business of the Group and of the Bank.
No contingent or other liability of the Group and of 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 and
of the Bank to meet their obligations 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 of the Bank that would render any amount stated in the financial statements misleading.
CURRENT ASSETS
Before the income statements, statements of comprehensive income and statements of financial position of the Group and of the Bank were
made out, the Directors took reasonable steps to ascertain that any current assets, which were unlikely to be realised in the ordinary course of
business, their values as shown in the accounting records of the Group and of the Bank have been written down to their estimated realisable
values.
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 of the Bank misleading.
DIRECTORS
The Directors of the Bank who served on the Board since the date of the last report and at the date of this report are:
Tan Sri Azman Hashim
Cheah Tek Kuang
Tun Mohammed Hanif bin Omar
Tan Sri Datuk Clifford Francis Herbert
Dato' Gan Nyap Liou @ Gan Nyap Liow
Chin Yuen Yin
Christopher Robin Page (appointed on 20.06.2012)
Ashok Ramamurthy
4
F-7
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
DIRECTORS' INTERESTS
Under the Bank's Articles of Association, the Directors are not required to hold shares in the Bank.
The interests in shares and options in the holding company of those who were Directors at the end of the financial year as recorded in the
Register of Directors’ Shareholdings kept by the Bank under Section 134 of the Companies Act, 1965, are as follows:
DIRECT INTERESTS
In the holding company,
AMMB Holdings Berhad ("AMMB")
No. of ordinary shares of RM1.00 each ("shares")
Balance at
Balance at
Bought/ Vested/
1.4.2012
Sold
31.3.2013
Exercised
Shares
Cheah Tek Kuang
Ashok Ramamurthy
Scheme Shares*
Cheah Tek Kuang
Ashok Ramamurthy
Shares under Options*
Cheah Tek Kuang
Ashok Ramamurthy
136,000
100,000
564,800
198,250
572,000
-
No. of shares pursuant to AMMB Executives' Share Scheme
Balance at
1.4.2012
Granted
Vested
Forfeited^
492,400
344,400
223,400
135,000
283,500
198,250
8,300
6,600
No. of shares pursuant to AMMB Executives' Share Scheme
Balance at
1.4.2012
Granted
Vested
Forfeited^
558,200
446,700
-
281,300
225,100
49,600
39,700
128,800
298,250
Balance at
31.3.2013
424,000
274,550
Balance at
31.3.2013
227,300
181,900
No. of shares pursuant to AMMB Executives' Share Scheme
Balance at
Balance at
Vested
Exercised
31.3.2013
1.4.2012
Shares under Options*
(In vested account)
Cheah Tek Kuang
Ashok Ramamurthy
-
281,300
225,100
281,300
-
225,100
*
The vesting of the Scheme Shares and/or the entitlement to exercise the Options are conditional upon the satisfaction of service condition
and the performance targets of the Group, and all other conditions as set out in the By-Laws of AMMB Executives' Share Scheme.
^
Forfeited due to non-vesting of Long Term Incentive award pursuant to the By-Laws of AMMB Executives' Share Scheme.
5
F-8
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
INDIRECT INTERESTS
In the holding company,
AMMB Holdings Berhad
Shares
Tan Sri Azman Hashim
No. of ordinary shares of RM1.00 each
Balance at
1.4.2012
Bought
Sold
Name of
Company
Amcorp Group
Berhad
505,780,554
1,839,701
13,500,000
Balance at
31.3.2013
494,120,255
By virtue of Tan Sri Azman Hashim's shareholding in the holding company, AMMB Holdings Berhad, he is deemed to have interests in the
shares of the Bank and its related corporations, to the extent the holding company has an interest.
None of the other Directors in office at the end of the financial year had any interest in shares in the Bank or its related corporations during the
financial year.
DIRECTORS’ BENEFITS
Since the end of the previous financial year, no Director of the Bank has received or become entitled to receive a benefit (other than benefits
included in the aggregate amount of emoluments received or due and receivable by Directors as shown in Note 35 to the financial statements)
by reason of a contract made by the Bank or a related corporation with the Director or with a firm in which the Director is a member, or with a
company in which the Director has a substantial financial interest, other than for the related party transactions as shown in Note 42 to the
financial statements.
Neither during nor at the end of the financial year, did there subsist any arrangements to which the Bank is a party to whose object is to enable
the Directors to acquire benefits by means of the acquisition of shares in, or debentures of, the Bank or any other body corporate, other than
those arising from the scheme shares and options granted pursuant to the Executives' Share Scheme of AMMB, the holding company.
CORPORATE GOVERNANCE
(a) Board Responsibility and Oversight
The Board of Directors (the “Board”) remains fully committed in ensuring that the principles and recomendations in corporate governance
are applied consistently in the Bank and its subsidiaries. The Board complies with the recomendations in corporate governance as set out
in the Malaysian Code on Corporate Governance 2012.
The Board supervises the management of the Bank’s businesses, policies and affairs with the goal of enhancing shareholder's value. The
Board meets nine (9) times in the year to carry out its duties and responsibilities, with additional Board meetings being convened, whenever
required.
The Board addresses key matters concerning strategy, finance, organisation structure, business developments, human resource (subject to
matters reserved for shareholders’ meetings by law), and establishes guidelines for overall business, risk and control policies, capital
allocation and approves all key business developments.
The Board currently comprises eight (8) Directors with wide skills and experience, three (3) of whom are Independent Non-Executive
Directors. The Directors participate fully in decision making on key issues regarding the Bank and its subsidiaries. The Independent NonExecutive Directors ensure strategies proposed by the Management are fully discussed and examined, as well as taking into account the
long term interests of various stakeholders.
There is a clear division between the roles of Chairman and the Chief Executive Officer of the Bank. The Senior Management team of the
Bank are invited to attend Board Meetings to provide presentations and detailed explanations on matters that have been tabled. The
Company Secretary has been empowered by the Board to assist the Board in matters of governance and in complying with statutory duties.
6
F-9
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
CORPORATE GOVERNANCE (CONTD.)
(b) Committees of the Board
The Board delegates certain responsibilities to the Board Committees. The Committees together with the Committees established at Group
level (AMMB Holdings Berhad), which were created to assist the Board in certain areas of deliberations, are:
1.
2.
3.
4.
5.
Group Nomination Committee (at Group level) *
Group Remuneration Committee (at Group level) *
Group Nomination and Remuneration Committee (at Group level)
Audit and Examination Committee
Risk Management Committee
*
Consolidated into a single committee known as Group Nomination and Remuneration Committee (at Group level) on 4 March 2013.
The roles and responsibilities of each Committee are set out under their respective terms of reference, which have been approved by the
Board. The minutes of the Committee meetings are tabled at the subsequent Board meetings for comment and notation.
The attendance of Board members at the meetings of the Board and the various Board Committees is set out below:
Number of meetings attended in Financial Year 2013 ("FY2013")
Group
Nomination
Committee
Group
Remuneration
Committee
Group
Nomination
and
Remuneration
Committee
Audit and
Examination
Committee
Risk
Management
Committee
5
5
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
8
5
N/A
1
N/A
N/A
7
5
(Chairman)
2
0
(Chairman)
9
8
(Chairman)
8
N/A
N/A
8
(Chairman)
8
9
N/A
N/A
N/A
7
7
7
N/A
N/A
N/A
N/A
N/A
9
N/A
N/A
N/A
N/A
N/A
9
5
5
1
9
9
Board of
Directors
Tan Sri Azman
Hashim
Cheah Tek Kuang
Tun Mohammed bin
Hanif Omar
Tan Sri Datuk
Clifford Francis
Herbert
Dato' Gan
Nyap Liou @
Gan Nyap Liow
Chin Yuen Yin
Christopher Robin Page
(appointed on 20.06.2012)
Ashok Ramamurthy
Number of meetings
held in FY2013
a.
9
(Chairman)
9
(Deputy Chairman)
-
a
Appointed as member on 19.03.2013
Notes:
1. All attendances reflect the number of meetings attended during the Directors’ tenure of service.
2. N/A represents non-committee member.
7
F-10
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
CORPORATE GOVERNANCE (CONTD.)
(b) Committees of the Board (contd.)
Group Nomination and Remuneration Committee
The Committee was established at Group level (AMMB) following the consolidation of the Group Nomination and Group Remuneration
Committees. The Committee comprises seven (7) members, all of whom are Non-Executive Directors. The Committee continues with the
roles of the previous Group Nomination and Group Remuneration Committees and is responsible for:
-
regularly reviewing the board structure, size and composition, as well as making recommendation to the Board of the Bank with regard
to any changes that are deemed necessary.
-
recommending the appointment of Directors to the Board and Committees of the Board as well as annually review the mix of skills,
experience and competencies that Non-Executive and Executive Directors should bring to the Board.
-
on an annual basis, assessing the effectiveness of the Board as a whole and the Committee as well as the contribution of the
Chairman and each Director to the effectiveness of the Board.
-
recommending to the Board the framework/methodology for the remuneration of the Directors, Chief Executive Officers and other
Senior Management staff, benchmarked against the industry. Remuneration is determined at levels, which enable the Group to attract
and retain the Directors, Chief Executive Officers and Senior Management staff with the relevant experience and expertise needed to
assist in managing the Group effectively. The services of consultants are utilised to review the methodology for rewarding Executive
Directors and Management staff according to the Key Performance Indicators required to be achieved.
Group Nomination and Group Remuneration Committees met five (5) times respectively during the financial year 2013. The Committee
met once since its establishment during the financial year 2013.
Audit and Examination Committee
The Committee comprises three (3) members, all of whom are Independent Non-Executive Directors. The Board has appointed the Audit
and Examination Committee (“AEC”) to assist in discharging its duties of maintaining a sound system of internal controls to safeguard the
Bank’s assets and shareholder’s investments.
The AEC met nine (9) times during the financial year 2013 to review the scope of work of both the internal audit function and the statutory
auditors, the results arising thereafter as well as their evaluation of the system of internal controls. The AEC also followed up on the
resolution of major issues raised by the internal auditors, statutory auditors as well as the regulatory authorities in the examination reports.
The financial statements were reviewed by the AEC prior to their submission to the Board of the Bank for adoption.
In addition, the AEC has reviewed the procedures set up by the Bank to identify and report, and where necessary, seeks approval for
related party transactions and, with the assistance of the internal auditors, reviewed related party transactions.
8
F-11
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
CORPORATE GOVERNANCE (CONTD.)
(b) Committees of the Board (contd.)
Risk Management Committee
Risk management is an integral part of the Bank’s strategic decision-making process which ensures that the corporate objectives are
consistent with the appropriate risk-return trade-off. The Board approves the risk management strategy and sets the broad risk tolerance
level and also approves the engagement of new products or activities after considering the risk bearing capacity and readiness of the Bank.
The Risk Management Committee exercises oversight on behalf of the Board to ensure adequate overall management of credit, market,
liquidity, operational, legal and capital risks impacting the Bank.
The Committee is independent from Management and comprises three (3) members, all of whom are Independent Non-Executive
Directors. The Committee ensures that the Board’s risk tolerance level is effectively enforced, the risk management process is in place and
functioning and reviews high-level risk exposures to ensure that they are within the overall interests of the Bank. It also assesses the
Bank’s ability to accommodate risks under normal and stress scenarios.
The Risk Management Department is independent of the various business units and acts as the catalyst for the development and
maintenance of comprehensive and sound risk management policies, strategies and procedures within the Bank. The functions encompass
research and analysis, portfolio risk exposure reporting, compliance monitoring, formulation of policies and risk assessment methodology
and formulation of risk strategies.
The Committee met nine (9) times during the financial year 2013.
Internal Audit and Internal Control Activities
The Head of the Group Internal Audit Department reports to the AEC. Group Internal Audit assists the AEC in assessing and reporting on
business risks and internal controls and operates within the framework defined in the Audit Charter.
The AEC approves Group Internal Audit’s annual audit plan, which covers the audit of all major business units and operations within the
Bank. The results of each audit are submitted to the AEC and significant findings are discussed during the AEC meetings. The minutes of
the AEC meetings are formally tabled to the Board for notation and action, where necessary. The Chief Internal Auditor and the external
auditors also attend the AEC meetings by invitation and the AEC holds separate meetings with the Chief Internal Auditor and external
auditors whenever necessary.
The scope of internal audit covers review of adequacy of the risk management processes, operational controls, financial controls,
compliance with laws and regulations, lending practices and information technology, including the various application systems in
production, data centres and network security.
Group Internal Audit focuses its efforts on performing audits in accordance with the audit plan, which is prioritised based on a
comprehensive risk assessment of all significant areas of audit identified in the Bank. The structured risk assessment approach ensures
that all risk-rated areas are kept in view to ensure appropriate audit coverage and audit frequency. The risk-based audit plan is reviewed
annually taking into account the changing financial significance of the business and risk environment.
Group Internal Audit also performs investigations and special reviews, and participates actively in major system development activities and
project committees to advise on risk management and internal control measures.
9
F-12
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
CORPORATE GOVERNANCE (CONTD.)
MANAGEMENT INFORMATION
The Directors review Board papers and reports prior to the Board meeting. Information and materials, relating to the operations of the Bank and
its subsidiaries that are important to the Directors’ understanding of the items in the agenda and related topics, are distributed in advance of the
meeting. The Board reports include among others, minutes of meetings of all Committees of the Board, monthly performance of the Bank, credit
risk management, asset liability and market risk management and industry benchmarking as well as prevailing regulatory developments and the
economic and business environment.
These reports are issued in sufficient time to enable the Directors to obtain further explanations, where necessary, in order to be briefed
properly before the meeting. The Board provides input on Group policies.
HOLDING COMPANY
Upon approval of the Minister of Finance and Bank Negara Malaysia, AMMB Holdings Berhad ("AMMB") has, on 14 September 2012, entered
into an agreement with its wholly-owned subsidiary, AMFB Holdings Berhad ("AMFB") to transfer 100% equity interest held by AMFB in the Bank
to AMMB (the "Internal Transfer").
The Internal Transfer is a shareholding reorganisation exercise to make the Bank a direct 100% held subsidiary of AMMB in line with AMMB's
current direct 100% shareholding in AmIslamic Bank Berhad and AmInvestment Bank Berhad.
The Internal Transfer was completed on 4 October 2012.
RATING BY EXTERNAL AGENCIES
During the financial year, Moody’s Investors Service upgraded the foreign currency deposit ratings of the Bank to Baa1/P-2 from Baa2/P-3.
More recently, RAM Rating Services revised the Bank's outlook to positive from stable whilst Fitch Ratings and Standard & Poor’s ratings were
all reaffirmed.
Details of the Bank’s ratings are as follows:
Rating agency
Date accorded
Rating Classification
Ratings
Moody’s Investor Service
December 2012
Long-term foreign currency deposit rating
Short-term foreign currency deposit rating
Bank financial strength rating
Baa1/Stable
P-2/Stable
D+
Standard & Poor’s
Ratings Services
December 2012
Foreign long-term issuer credit rating
Foreign short-term issuer credit rating
BBB+/Stable
A-2
Fitch Ratings
February 2013
Long-term foreign currency issuer default rating
Short-term foreign currency issuer default rating
BBB/Stable
F3
RAM Rating Services
January 2013
Long-term financial institution rating
Short-term financial institution rating
AA3/Positive
P1
COMPLIANCE WITH BANK NEGARA MALAYSIA'S EXPECTATIONS ON FINANCIAL REPORTING
In the preparation of the financial statements, the Directors have taken reasonable steps to ensure that Bank Negara Malaysia's expectations
on financial reporting have been complied with, including those as set out in the Guidelines on Financial Reporting for Financial Institutions and
the Guidelines on Classification and Impairment Provisions for Loans/Financing.
10
F-13
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-14
F-15
F-16
F-17
F-18
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2013
Note
ASSETS
Cash and short-term funds
Securities purchased under
resale agreements
Deposits and placements
with banks and other
financial institutions
Derivative financial assets
Financial assets
held-for-trading
Financial investments
available-for-sale
Financial investments
held-to-maturity
Loans and advances
Statutory deposit with
Bank Negara Malaysia
Deferred tax assets
Investment in subsidiaries
Investment in associates
Other assets
Property and equipment
Intangible assets
TOTAL ASSETS
31 March
2013
RM’000
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
5
7,324,650
5,453,638
8,740,986
7,255,748
5,133,039
8,375,879
6
-
384,570
289,731
-
384,570
289,731
7
8
1,913,422
383,243
1,122,194
380,035
3,792,922
396,673
1,913,422
383,243
1,091,549
380,035
3,702,163
396,673
9
4,100,623
8,910,943
4,167,002
4,100,623
8,910,943
4,167,002
10
3,348,641
4,440,721
6,331,969
3,507,031
4,631,972
6,557,696
11
12
4,033,535
59,231,752
116,155
56,491,272
165,331
55,514,989
4,033,164
59,032,684
113,501
56,252,935
159,589
55,234,910
13
14
15
16
17
18
19
2,122,386
120,781
892
1,174,721
149,150
234,687
2,011,288
159,570
1,611
1,078,760
141,678
170,213
143,811
416,439
1,243
812,194
155,322
137,454
2,122,386
120,523
65,800
122
1,169,340
125,859
234,676
2,011,288
158,391
65,800
127
1,073,126
117,888
170,198
143,811
417,364
65,800
142
807,582
131,078
137,436
84,138,483
80,862,648
81,066,066
84,064,621
80,495,362
80,586,856
16
F-19
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
STATEMENTS OF FINANCIAL POSITION AS AT 31 MARCH 2013 (CONTD.)
Note
LIABILITIES AND EQUITY
Deposits and placements
of banks and other
financial institutions
Securities sold under
repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Derivative financial
liabilities
Deposits from customers
Term funding
Bills and acceptances
payable
Debt capital
Other liabilities
31 March
2013
RM’000
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
20
2,330,512
3,968,264
4,467,908
2,338,370
4,528,215
4,792,644
6
-
41,195
30,465
-
41,195
30,465
21
1,264,251
1,176,054
1,018,043
1,264,251
1,176,054
1,018,043
8
22
23
422,675
62,147,776
4,075,158
441,704
59,359,849
4,159,813
432,932
59,664,604
3,988,475
422,675
62,120,335
4,075,158
441,704
58,496,288
4,159,813
432,932
59,036,112
3,988,475
24
25
26
1,241,980
3,226,507
3,129,646
353,526
3,241,592
2,149,210
988,389
3,367,860
2,082,720
1,241,980
3,226,507
3,118,784
353,526
3,241,592
2,138,688
988,389
3,367,860
2,072,071
77,838,505
74,891,207
76,041,396
77,808,060
74,577,075
75,726,991
TOTAL LIABILITIES
Share capital
Reserves
27
28
820,364
5,479,555
820,364
5,151,031
670,364
4,354,260
820,364
5,436,197
820,364
5,097,923
670,364
4,189,501
Equity attributable to equity
holder of the Bank
Non-controlling interests
29
6,299,919
59
5,971,395
46
5,024,624
46
6,256,561
-
5,918,287
-
4,859,865
-
6,299,978
5,971,441
5,024,670
6,256,561
5,918,287
4,859,865
84,138,483
80,862,648
81,066,066
84,064,621
80,495,362
80,586,856
94,244,139
93,217,715
92,223,251
94,261,611
93,233,992
92,220,904
7.68
7.28
7.50
7.63
7.21
7.25
TOTAL EQUITY
TOTAL LIABILITIES
AND EQUITY
COMMITMENTS AND
CONTINGENCIES
NET ASSETS PER
SHARE (RM)
46
The accompanying notes form an integral part of the financial statements.
17
F-20
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
INCOME STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013
Group
31 March
2013
RM’000
Note
Operating revenue
Interest income
Interest expense
Net interest income
Net income from Islamic
banking business
Other operating income
Share in results of associates
Net income
Other operating expenses
Operating profit
Allowance for impairment
on loans and advances
Writeback of/(Provision for)
commitments and contingencies
Impairment (loss)/writeback on:
Associates
Doubtful sundry receivables, net
Recoveries of other receivables
Financial investments
Foreclosed properties
Property and equipment
Profit before taxation
Taxation
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
4,926,915
5,008,476
4,936,936
5,126,456
4,305,644
(2,285,168)
4,245,204
(2,252,922)
4,297,874
(2,285,813)
4,237,059
(2,253,910)
2,020,476
1,992,282
2,012,061
1,983,149
9
621,242
151
2,641,878
(1,047,568)
1,594,310
238
763,002
368
2,755,890
(1,002,642)
1,753,248
639,062
2,651,123
(1,046,978)
1,604,145
889,397
2,872,546
(1,001,849)
1,870,697
36
(32,468)
(223,492)
(34,323)
(229,114)
26(a)
68,374
(58,844)
68,363
(58,842)
30
31
32
33
34
16
17(a)
37
17(c)
(1,563)
6,267
(768)
(9,086)
1,350
1,626,416
1,809
1,785
2,135
(28,345)
1,448,296
(5)
(1,563)
6,267
(3,070)
(9,086)
1,350
1,632,078
(15)
1,789
1,785
1,075
(28,345)
1,559,030
(375,181)
(360,443)
(372,639)
(363,148)
38
Profit for the financial year
1,251,235
1,087,853
1,259,439
1,195,882
Attributable to:
Equity holder of the Bank
Non-controlling interests
Profit for the financial year
1,251,222
13
1,251,235
1,087,853
1,087,853
1,259,439
1,259,439
1,195,882
1,195,882
152.52
145.87
153.52
160.35
Earnings per share (sen)
Basic/Diluted
40
The accompanying notes form an integral part of the financial statements.
18
F-21
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
STATEMENTS OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013
Group
31 March
2013
RM’000
Note
Profit for the financial year
1,251,235
31 March
2012
RM’000
1,087,853
Bank
31 March
2013
RM’000
1,259,439
31 March
2012
RM’000
1,195,882
Other comprehensive income/(loss)
Exchange differences on
translation of foreign operations
Net movement on cash flow hedge
Net (loss)/gain on financial investments
available-for-sale
Income tax relating to the components
of other comprehensive income
14
Other comprehensive loss net of tax
Total comprehensive income
for the financial year, net of tax
Attributable to:
Equity holder of the Bank
Non-controlling interests
(7,435)
(1,178)
2,794
(60,202)
(7,642)
(1,178)
278
(60,202)
(44,716)
4,215
(42,470)
12,359
11,607
13,509
11,050
11,481
(41,722)
(39,684)
(40,240)
(36,084)
1,209,513
1,048,169
1,219,199
1,159,798
1,209,500
13
1,209,513
1,048,169
1,048,169
1,219,199
1,219,199
1,159,798
1,159,798
The accompanying notes form an integral part of the financial statements.
19
F-22
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-23
41
The accompanying notes form an integral part of the financial statements.
Transfer of AMMB ESS shares recharged difference on purchase price for shares vested
Dividends on ordinary shares:
- final, financial year ended 31 March 2012
- interim, financial year ended 31 March 2013
At 31 March 2013
Profit for the financial year
Other comprehensive loss
Total comprehensive income/(loss) for the financial year
820,364
-
-
820,364
At 1 April 2012
27
150,000
-
-
670,364
Share
capital
RM'000
820,364
41
Note
Dividends on ordinary shares:
- final, financial year ended 31 March 2011
Conversion of INCPS
Transfer to statutory reserve
Transfer of AMMB ESS shares recharged difference on purchase price for shares vested
At 31 March 2012
Profit for the financial year
Other comprehensive loss
Total comprehensive income/(loss) for the financial year
At 1 April 2011
Group
STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
Company No. 8515-D
20
942,844
-
-
942,844
942,844
-
-
942,844
Share
premium
RM'000
992,907
-
(41,722)
(41,722)
1,034,629
1,034,629
300,510
(39,684)
(39,684)
773,803
Other
reserves
RM'000
(657,522)
(213,295)
3,543,804
(10,159)
1,251,222
1,251,222
3,173,558
(3,364)
3,173,558
(248,034)
(300,510)
1,087,853
1,087,853
2,637,613
Retained
earnings
RM'000
Attributable to equity holder of the Bank
Non-distributable
Distributable
59
-
13
13
46
46
-
-
46
Non-controlling
interests
RM'000
(657,522)
(213,295)
6,299,978
(10,159)
1,251,235
(41,722)
1,209,513
5,971,441
(3,364)
5,971,441
(248,034)
150,000
-
1,087,853
(39,684)
1,048,169
5,024,670
Total
equity
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
(657,522)
(213,295)
6,299,919
(10,159)
1,251,222
(41,722)
1,209,500
5,971,395
(3,364)
5,971,395
(248,034)
150,000
-
1,087,853
(39,684)
1,048,169
5,024,624
Total attributable
to equity holder
RM'000
F-24
The accompanying notes form an integral part of the financial statements.
Transfer of AMMB ESS shares recharged difference on purchase price for shares vested
Dividends on ordinary shares:
- final, financial year ended 31 March 2012
- interim, financial year ended 31 March 2013
At 31 March 2013
Profit for the financial year
Other comprehensive loss
Total comprehensive income/(loss) for the financial year
41
21
820,364
-
-
820,364
At 1 April 2012
942,844
-
-
942,844
942,844
27
820,364
-
942,844
Share
premium
RM'000
-
-
670,364
Share
capital
RM'000
150,000
-
41
Note
952,231
-
(40,240)
(40,240)
992,471
992,471
300,510
(36,084)
(36,084)
728,045
Other
reserves
RM'000
(657,522)
(213,295)
6,256,561
(10,108)
1,259,439
(40,240)
1,219,199
5,918,287
(3,342)
5,918,287
(248,034)
150,000
-
1,195,882
(36,084)
1,159,798
4,859,865
Total
equity
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
(657,522)
(213,295)
3,541,122
(10,108)
1,259,439
1,259,439
3,162,608
(3,342)
3,162,608
(248,034)
(300,510)
1,195,882
1,195,882
2,518,612
Retained
earnings
RM'000
Attributable to equity holder of the Bank
Non-distributable
Distributable
Dividends on ordinary shares:
- final, financial year ended 31 March 2011
Conversion of INCPS
Transfer to statutory reserve
Transfer of AMMB ESS shares recharged difference on purchase price for shares vested
At 31 March 2012
Profit for the financial year
Other comprehensive loss
Total comprehensive income/(loss) for the financial year
At 1 April 2011
Bank
STATEMENTS OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
Company No. 8515-D
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013
Group
31 March
2013
RM’000
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
CASH FLOWS FROM OPERATING
ACTIVITIES
Profit before taxation
1,626,416
Adjustments for:
Amortisation of fair value on
terminated hedge
Amortisation of intangible assets
Amortisation of issuance costs
Amortisation of premium less
accretion of discount
Depreciation of property and equipment
Gain on disposal of foreclosed properties
Gross dividend income from financial
assets held-for-trading
Gross dividend income from financial
investments available-for-sale
Gross dividend income from associates
Gross dividend income from subsidiary
Impairment loss of associates
Impairment writeback of
sundry receivables
Impairment writeback of property and equipment
Impairment loss/(writeback)
on financial investments
Impairment loss on foreclosed properties
Intangible assets written off
Loan and advances
allowances, net of writeback
Loss/(Gain) on disposal of property
and equipment
Net gain on redemption of financial
investments held-to-maturity
Net (gain)/loss on revaluation of derivatives
Net (gain)/loss on revaluation of financial
assets held-for-trading
Net gain on sale of financial assets
held-for-trading
Net gain on sale of financial investments
available-for-sale
Property and equipment written off
Provision for commitments and
contingencies
Scheme shares and options granted
under Executive Share Scheme
1,632,078
1,559,030
(23,317)
45,985
1,592
(10,348)
38,223
1,527
(23,317)
45,981
1,592
(10,348)
38,219
1,527
(107,159)
41,798
(25)
(108,697)
43,162
(4)
(107,080)
41,289
(25)
(108,376)
42,649
(4)
(9,178)
(13,847)
(9,178)
(13,847)
(10,507)
-
(12,334)
-
(10,507)
(1,160)
(17,393)
5
(12,334)
(130,406)
15
(4,704)
(1,350)
(3,594)
-
(4,704)
(1,350)
(3,574)
-
768
9,086
-
(2,135)
28,345
983
3,070
9,086
-
(1,075)
28,345
983
521,754
1,541
22
F-25
1,448,296
682,767
(623)
521,314
1,541
682,297
(553)
(40,766)
(38,081)
(13,714)
19,755
(40,766)
(38,081)
(13,714)
19,755
(3,805)
14,829
(3,805)
14,829
(29,072)
(170,253)
(29,072)
(170,253)
(33,905)
12
(97,940)
10
(33,905)
12
(97,940)
10
(68,374)
58,844
(68,363)
58,842
32,506
26,857
32,434
26,753
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013 (CONTD.)
Group
31 March
2013
RM’000
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
CASH FLOWS FROM OPERATING
ACTIVITIES (CONTD.)
Share in results of associates
Unrealised gain on
foreign exchange contracts
Operating profit before working
capital changes
Decrease/(Increase) in operating
assets:
Securities purchased under
resale agreements
Deposits and placements with
banks and other financial institutions
Financial assets held-for-trading
Loans and advances
Statutory deposit with Bank Negara Malaysia
Other assets
(Decrease)/Increase in operating
liabilities:
Deposits and placements of banks
and other financial institutions
Securities sold under
repurchase agreements
Recourse obligation of loans sold to
Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Other liabilities
Cash generated from/(used in)
operations
Net taxation paid
Net cash generated from/
(used in) operating activities
(151)
28,105
1,939,169
384,570
(368)
-
(9,899)
28,105
1,919,842
(94,839)
1,927,801
384,570
(9,899)
1,900,931
(94,839)
(791,228)
4,889,108
(3,262,234)
(111,098)
(142,376)
2,670,728
(4,539,934)
(1,659,038)
(1,867,477)
(318,965)
(821,873)
4,889,108
(3,301,063)
(111,098)
(142,346)
2,610,614
(4,539,934)
(1,700,322)
(1,867,477)
(317,993)
(1,637,752)
(499,644)
(2,189,845)
(264,429)
(41,195)
89,813
2,787,927
(93,909)
888,454
944,442
5,843,691
(226,268)
5,617,423
23
F-26
10,730
158,618
(304,755)
158,396
(634,863)
193,305
(4,807,896)
(274,053)
(5,081,949)
(41,195)
89,813
3,624,047
(93,909)
888,454
943,588
6,046,052
(224,257)
5,821,795
10,730
158,618
(539,824)
158,396
(634,863)
191,627
(4,928,765)
(272,451)
(5,201,216)
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
STATEMENTS OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2013 (CONTD.)
Group
31 March
2013
RM’000
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
CASH FLOWS FROM
INVESTING ACTIVITIES
Net dividend received from financial
assets held-for-trading
Net dividend received from financial
investments available-for-sale
Net dividend received from
subsidiaries
Net dividend received from
associate
Net redemption of financial
investments held-to-maturity
Net sale of financial
investments available-for-sale
Proceeds from disposal of
property and equipment
Purchase of intangible assets
Purchase of property
and equipment
Net cash (used in)/generated from
investing activities
8,462
12,665
8,462
12,665
10,459
12,292
10,459
12,292
-
-
16,875
125,639
870
-
870
-
(3,870,243)
1,135,378
60,205
2,058,337
(3,873,220)
1,168,798
55,806
2,100,888
1,985
(110,582)
743
(71,965)
1,985
(110,582)
673
(71,964)
(51,923)
(29,642)
(51,916)
(29,589)
(2,875,594)
2,042,635
(2,828,269)
2,206,410
CASH FLOWS FROM FINANCING
ACTIVITIES
Dividends paid, representing
net cash used in financing activities
Net increase/(decrease) in cash
and cash equivalents
Cash and cash equivalents
at beginning of financial year
Cash and cash equivalents
at end of financial year (Note 5)
(870,817)
(248,034)
(870,817)
(248,034)
1,871,012
(3,287,348)
2,122,709
(3,242,840)
5,453,638
8,740,986
5,133,039
8,375,879
7,324,650
5,453,638
7,255,748
5,133,039
The accompanying notes form an integral part of the financial statements.
24
F-27
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
AMBANK (M) BERHAD
(Incorporated in Malaysia)
AND ITS SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2013
1. CORPORATE INFORMATION
The principal activity of the Bank is to carry on the business of a licensed commercial bank and finance company.
The principal activities of its subsidiaries are disclosed in Note 15.
There have been no significant changes in the nature of the activities of the Bank and its subsidiaries during the financial year.
The Bank is a public limited liability company, incorporated and domiciled in Malaysia. The registered office of the Bank is located at 22nd
Floor, Bangunan AmBank Group, No. 55 Jalan Raja Chulan, 50200 Kuala Lumpur. The principal place of business for the Retail and
Business Banking Divisions are located at Menara AmBank, Jalan Yap Kwan Seng, 50450 Kuala Lumpur and Menara Dion, Jalan Sultan
Ismail, 50250 Kuala Lumpur, respectively.
The financial statements of the Group and of the Bank have been approved and authorised for issue by the Board of Directors on 30 April
2013.
2. CHANGES IN ACCOUNTING POLICIES
2.1 Transition to Malaysian Financial Reporting Standards Framework
The Group has adopted the Malaysian Financial Reporting Standards ("MFRS") framework issued by the Malaysian Accounting
Standards Board ("MASB") with effect from 1 April 2012. For all periods up to and including the financial year ended 31 March 2012,
the Group prepared its financial statements in accordance with Financial Reporting Standards (“FRS”) issued by the MASB as modified
by Bank Negara Malaysia’s (“BNM”) Guidelines.
The MFRS Framework has converged with the International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”) except that, in the former; (a) FRS 2012004 Property Development Activities will continue to be the
extant standard for accounting for property development activities and not IC 15 Agreements for the Construction of Real Estate; and
(b) there is no equivalent standard to MFRS 141 Agriculture.
The Group has applied MFRS 1, First-time Adoption of Malaysian Financial Reporting Standards in its transition to the MFRS
Framework.
In preparing its opening MFRS statements of financial position as at 1 April 2011, the Group has adjusted the amounts previously
reported in the financial statements prepared in accordance with FRS to reflect the financial effects from the adoption of MFRS.
Up until the financial year ended 31 March 2012, the Group’s collective assessment allowance for loans and advances was determined
based on the transitional provision prescribed in Bank Negara Malaysia’s (“BNM”) Guidelines on Classification and Impairment
Provisions for Loans/Financing, modified to reflect the Group’s historical loss experience.
This transitional provision has since been removed so as to align to the requirements of MFRS 139, Financial Instruments: Recognition
and Measurement.
Computation of the collective allowance for loans and advances based on MFRS 139 is as described in Note 3.5m(i). This change in
accounting policy has been applied retrospectively and the effects on the Group's financial position, financial performance and cash
flows are set out in Note 54.
25
F-28
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
2. CHANGES IN ACCOUNTING POLICIES (CONTD.)
2.2 New and amended standards and interpretations
2.2a
Standards issued but not yet effective
The following are MFRSs and IC Interpretations issued by MASB that will be effective for the Group in future years. The Group
intends to adopt the relevant standards when they become effective.
(i)
Standards effective for financial year ending 31 March 2014:
-
(ii)
Standards effective for financial year ending 31 March 2015:
-
(iii)
Amendments to MFRS 10, MFRS 12 and MFRS 127: Investment Entities
Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities
Standards effective for financial year ending 31 March 2016:
-
(iv)
MFRS 3, Business Combinations (IFRS 3, Business Combinations issued by IASB in March 2004)
MFRS 10, Consolidated Financial Statements
MFRS 12, Disclosure of Interests in Other Entities
MFRS 13, Fair Value Measurement
MFRS 127, Separate Financial Statements
MFRS 128, Investments in Associates and Joint Ventures
Amendments to MFRS 7, Disclosures: Offsetting Financial Assets and Financial Liabilities
Amendments to MFRS 10, MFRS 11 and MFRS 12: Consolidated Financial Statements, Joint Arrangements
and Disclosure of Interests in Other Entities: Transition Guidance
Amendments to MFRS 101, Presentation of Items of Other Comprehensive Income
Amendments to MFRSs and IC Interpretations contained in the document entitled “Annual Improvements
2009–2011 Cycle"
MFRS 9, Financial Instruments
Effect of adoption of standards issued but not yet effective
A discussion of the significant MFRSs that have been issued but not yet effective is set out below. The Group is
assessing the financial effects of their adoption.
(a)
MFRS 3, Business Combinations - The standard was issued as a consequence to the amendments to MFRS
10, MFRS 11 and MFRS 12: Consolidated Financial Statements, Joint Arrangements and Disclosure of
Interests in Other Entities: Transition Guidance to allow eligible entities to apply the earlier version of MFRS 3.
(b)
MFRS 10, Consolidated Financial Statements - Upon adoption, MFRS 10 supersedes MFRS 127, Consolidated
and Separate Financial Statements. MFRS 10 converges the financial reporting requirements in MFRS 127
and SIC-12, which interprets the requirements of MFRS 10 in relation to special purpose entities. A major
feature of MFRS 10 is where it sets out the requirements on how the application of the control principle is
applied in the preparation of consolidated financial statements, especially in circumstances where the investor
holds less than the majority of voting power, or where the investee entity is designed in such a manner where
voting rights are not the dominant factor in determining control, or in circumstances involving agency
relationships, or where the investor has control over specific assets of the entity.
(c)
MFRS 12, Disclosure of Interests in Other Entities - MFRS 12 prescribes the disclosure requirements for
interests in subsidiary companies, joint ventures, associated companies and unconsolidated structured entities.
MFRS 12 aims at providing standardised and comparable information that enable users of financial statements
to evaluate the nature of and risks associated with, the entity’s interests in other entities and the effects of those
interests on its financial position, financial performance and cash flows.
26
F-29
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
2. CHANGES IN ACCOUNTING POLICIES (CONTD.)
2.2 New and amended standards and interpretations (contd.)
2.2a
Standards issued but not yet effective (contd.)
(iv)
Effect of adoption of standards issued but not yet effective (contd.)
(d)
MFRS 10, MFRS 11 and MFRS 12, Transition Guidance - Entities are required to apply the amendments for
annual periods beginning on or after 1 January 2013, which is aligned with the effective date of MFRS 10,
Consolidated Financial Statements, MFRS 11, Joint Arrangements and MFRS 12, Disclosure of Interests in
Other Entities. The amendment clarifies that the “date of initial application” in MFRS 10 means “the beginning
of the annual reporting period in which MFRS 10 is applied for the first time”.
Consequently, an entity is not required to adjust its previous accounting if:
(i)
(ii)
the consolidation conclusion reached upon the application of MFRS 10 is the same as previous
accounting; or
the entity had disposed of its interests in investees during a comparative period.
If an entity has to consolidate an investee that was not previously consolidated when applying MFRS 10 or
concludes that it will no longer consolidate an investee that was previously consolidated, the amendments limit
the requirement to present adjusted comparative information to the period immediately preceding the date of
initial application. However, the entity is not prohibited from presenting adjusted comparative information for
earlier periods.
A similar relief is also provided in MFRS 11 and MFRS 12. Additionally, entities would no longer be required to
provide disclosures for unconsolidated structured entities in periods prior to the first annual period that MFRS
12 is applied.
If, upon applying MFRS 10, an entity concludes that it shall consolidate an investee that was not previously
consolidated and that control was obtained before the effective date of MFRS 3, Business Combinations and
MFRS 127, Consolidated and Separate Financial Statements issued by the MASB in November 2011, the
amendments clarify that the entity can apply the earlier versions of MFRS 3 and MFRS 127. Therefore the
MASB has issued MFRS 3 (IFRS 3 issued by IASB in 2004) and MFRS 127 (IAS 27 as revised by IASB in
2003) in this regard.
(e)
MFRS 13, Fair Value Measurement - MFRS 13 sets out a framework for measuring fair value and the
disclosure requirements about fair value to address the inconsistencies in the requirements for measuring fair
value across different accounting standards. MFRS 13 defines fair value as a market-based measurement, not
an entity specific measurement.
(f)
MFRS 127, Separate Financial Statements - As MFRS 10 prescribes the accounting requirements relating to
the preparation of consolidated financial statements that were previously covered under MFRS 127, MFRS 127
has now been reissued to only cover the requirements relating to the accounting for investments in subsidiary
companies, associated companies and joint ventures in the separate financial statements of the entity. In such
cases, the entity should account for such investments either at cost or in accordance with MFRS 9.
(g)
MFRS 128, Investments in Associates and Joint Ventures - MFRS 128 incorporates the requirements for
accounting for joint ventures into the same accounting standard as that for accounting for investments in
associated companies, as the IASB was of the view that the equity method was applicable for both investments
in joint ventures and associated companies. However, the revised MFRS 128 exempts the investor from
applying equity accounting where the investment in the associated company or joint venture is held indirectly
via venture capital organisations or mutual funds and similar entities. In such cases, the entity shall measure
the investment at fair value through profit or loss, in accordance with MFRS 9.
27
F-30
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
2. CHANGES IN ACCOUNTING POLICIES (CONTD.)
2.2 New and amended standards and interpretations (contd.)
2.2a
Standards issued but not yet effective (contd.)
(iv)
Effect of adoption of standards issued but not yet effective (contd.)
(h)
MFRS 132 and MFRS 7, Offsetting Financial Assets and Financial Liabilities - The amendments to MFRS 132
clarify the meaning of “currently has a legally enforceable right to set-off”. The amendments to MFRS 7 require
the disclosure of information about rights to set-off and related arrangements (for example, collateral
agreements). The disclosures would provide users with information that is useful in evaluating the effect of
netting arrangements on an entity’s financial position. The new disclosures are required for all recognised
financial instruments that are set off in accordance with MFRS 132.42 and for financial assets that are subject
to an enforceable master netting arrangement or similar arrangement regardless whether they are set off.
(i)
MFRS 101, Presentation of Items of Other Comprehensive Income - The amendments change the grouping of
items presented in Other Comprehensive Income. Items that could be reclassified (or “recycled”) to profit or
loss at a future point in time (for example, upon derecognition or settlement) would be presented separately
from items that will never be reclassified. The amendment affects presentation only and has no impact on the
Group’s financial position or performance.
(j)
Annual Improvements 2009-2011 Cycle - These improvements will not have an impact on the Group, but
include:
MFRS 1, First-time Adoption of International Financial Reporting Standards: This improvement clarifies that an
entity that stopped applying MFRS in the past and chooses or is required to apply MFRS, has the option to reapply MFRS 1. If MFRS 1 is not re-applied, an entity must retrospectively restate its financial statements as if it
had never stopped applying MFRS.
MFRS 101, Presentation of Financial Statements: This improvement clarifies the difference between voluntary
additional comparative information and the minimum required comparative information. Generally, the
minimum required comparative information is the previous period.
MFRS 116, Property Plant and Equipment: This improvement clarifies that major spare parts and servicing
equipment that meet the definition of property, plant and equipment are not inventory.
MFRS 132, Financial Instruments, Presentation: This improvement clarifies that income taxes arising from
distributions to equity holders are accounted for in accordance with MFRS 112 Income Taxes.
MFRS 134 Interim Financial Reporting: The amendment aligns the disclosure requirements for total segment
assets with total segment liabilities in interim financial statements. This clarification also ensures that interim
disclosures are aligned with annual disclosures.
(k)
MFRS 9, Financial Instruments - MFRS 9 as issued reflects the first phase of the IASB’s work on the
replacement of IAS 39 (equivalent to MFRS 139) and applies to classification and measurement of financial
assets and liabilities as defined in IAS 39. In subsequent phases, the IASB will address impairment and hedge
accounting. The adoption of the first phase of MFRS 9 will primarily have an effect on the classification and
measurement of the Group’s financial assets.
28
F-31
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES
3.1 Basis of preparation
The financial statements have been prepared on a historical cost basis, except for financial assets held-for-trading, financial
investments available-for-sale and derivative financial instruments that have been measured at fair value.
3.2 Statement of compliance
The financial statements of the Group and of the Bank have been prepared in accordance with MFRS, IFRS and the requirements of
the Companies Act, 1965 in Malaysia.
3.3 Presentation of financial statements
The financial statements are presented in Ringgit Malaysia (“RM”) and all values are rounded to the nearest thousand (“RM’000”)
except when otherwise indicated.
The statements of financial position are presented in order of liquidity. An analysis regarding recovery or settlement within 12 months
after the reporting date (“current”) and more than 12 months after the reporting date (“non-current”) is presented in Note 47.
3.4 Basis of consolidation
The consolidated financial statements comprise the financial statements of the Group and its subsidiaries (“Group entities”) for the year
ended 31 March 2013.
Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be
consolidated until the date when such control ceases. Control is achieved where the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. The financial statements of the subsidiaries are prepared for
the same reporting period as the parent company, using consistent accounting policies. All intra-group balances, transactions,
unrealised gains and losses arising from intra-group transactions and dividends are eliminated in full.
Total comprehensive income within a subsidiary is attributed to the non-controlling interest even if that results in a deficit balance.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group
loses control over a subsidiary, it:
-
derecognises the assets (including goodwill) and liabilities of the subsidiary
derecognises the carrying amount of any non-controlling interest
derecognises the cumulative translation differences recorded in equity
recognises the fair value of the consideration received
recognises the fair value of any investment retained
recognises any surplus or deficit in profit or loss
reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained
earnings, as appropriate.
29
F-32
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies
3.5a
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the
aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling
interest in the acquiree. For each business combination, the Group elects whether it measures the non-controlling interest in
the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.
Acquisition-related costs are expensed as incurred expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition
date. This includes the separation of embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity
interest in the acquiree is remeasured to fair value at the acquisition date; any gains or losses arising from such remeasurement
are recognised in profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.
Subsequent changes in the fair value of the contingent consideration that is deemed to be an asset or liability will be 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. In instances where
the contingent consideration does not fall within the scope of MFRS 139, it is measured in accordance with the appropriate
MFRS.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the amount recognised for noncontrolling interest over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair
value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cashgenerating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the
acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss
on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the
operation disposed of and the portion of the cash-generating unit retained.
3.5b
Investment in subsidiaries
Subsidiaries are entities over which the Group has the power to govern the financial and operating policies so as to obtain
benefits from their activities.
In the Bank’s separate financial statements, investment in subsidiaries is accounted for at cost less accumulated impairment
losses. On disposal of such investments, the difference between the net disposal proceeds and its carrying amount is included
in profit or loss.
3.5c
Investment in an associate
An associate is an entity in which the Group has significant influence.
Investment in associate is accounted for using the equity method of accounting.
Under the equity method, the investment is initially recognised at cost and the carrying amount is increased or decreased to
recognise the Group’s share of the profit or loss of the associate after the date of acquisition.
30
F-33
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5c
Investment in an associate (contd.)
The Group’s share of post-acquisition profit or loss is recognised in the income statement and its share of post-acquisition
movements in other comprehensive income is recognised in other comprehensive income with a corresponding adjustment to
the carrying amount of the investment. When the Group’s share of losses in an associate equals or exceeds its interest in the
associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred legal
or constructive obligations or made payments on behalf of the associate.
Profits and losses resulting from upstream and downstream transactions between the Group and its associate are recognised in
the Group’s financial statements only to the extent of unrelated investor’s interests in the associates. Unrealised losses are
eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of
associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Goodwill relating to an associate is included in the carrying amount of the investment and is neither amortised nor individually
tested for impairment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and
contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead
included as income in the determination of the Group’s share of an associate’s profit or loss in the period in which the
investment is acquired.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is
impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount
of the associate and its carrying value and recognises the amount in “Impairment (loss)/writeback on associate” in the income
statement.
Upon loss of significant influence over the associate, the Group measures and recognises any retaining investment at its fair
value. Any difference between the carrying amount of the associate upon loss of significant influence and the fair value of the
retained investment and proceeds from disposal is recognised in profit or loss.
In the Bank’s separate financial statements, investment in associate is stated at cost less accumulated impairment losses. On
disposal of such investment, the difference between the net disposal proceeds and its carrying amount is included in profit or
loss.
3.5d
Transactions with non-controlling interests
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held directly or indirectly by the
Group.
Non-controlling interests are presented separately in the consolidated income statement and within equity in the consolidated
statement of financial position, separately from the parent shareholders' equity. Any losses applicable to the non-controlling
interests in excess of the non-controlling interests are allocated against the interests of the non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
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 the fair value of any consideration paid and
the relevant fair value of the share of net assets of the subsidiary is recorded in equity.
3.5e
Foreign currency translation
(i)
Functional and presentation currency
The Group’s consolidated financial statements are presented in Ringgit Malaysia, which is also the Bank’s functional
currency. Each entity in the Group determines its own functional currency and items included in the financial
statements of each Group entity are measured using that functional currency.
31
F-34
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5e
Foreign currency translation (cont.)
(ii)
Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency
spot rates at the date the transaction first qualifies for recognition.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the functional currency spot rate
at the reporting date.
All differences arising on settlement or translation of monetary items are recognised in the income statement with the
exception of monetary items that are designated as part of the hedge of the Group’s net investment of a foreign
operation. These are recognised in other comprehensive income until the net investment is disposed, at which time,
the cumulative amount is reclassified to the income statement. Tax charges and credits attributable to exchange
differences on those monetary items are also recorded in other comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss
arising on retranslation of non-monetary items is treated in line with the recognition of gain or loss on changes in fair
value of the item (that is, translation differences on items whose fair value gain or loss is recognised in other
comprehensive income or profit or loss is also recognised in other comprehensive income or profit or loss,
respectively).
(iii)
Group entities
On consolidation, the assets and liabilities of foreign subsidiaries and operations are translated into Ringgit Malaysia
at the rate of exchange prevailing at the reporting date and their income statements are translated at the average
exchange rates for the year. The exchange differences arising on translation for consolidation are recognised in other
comprehensive income. On disposal of a foreign subsidiary and operation, the component of other comprehensive
income relating to that particular foreign subsidiary and operation is recognised in the income statement.
3.5f
Property and equipment
Property and equipment is stated at cost, net of accumulated depreciation and/or accumulated impairment losses, if any. Such
cost includes the cost of replacing part of the property and equipment and borrowing costs for long-term construction projects if
the recognition criteria are met. When significant parts of property and equipment are required to be replaced at intervals, the
Group recognises such parts as individual assets with specific useful lives and depreciates them accordingly. Likewise, when a
major inspection is performed, its cost is recognised in the carrying amount of the equipment as a replacement if the
recognition criteria are satisfied. All other repair and maintenance costs are recognised in the income statement as incurred.
The present value of the expected cost for the decommissioning of an asset after its use is included in the cost of the respective
asset if the recognition criteria for a provision are met.
Purchased computer software that is integral to the functionality of the related equipment is capitalised as part of that
equipment.
Freehold land has an unlimited life and therefore, is not depreciated. Leasehold building is amortised on a straight-line basis
over the shorter of the lease period or fifty years.
32
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AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5f
Property and equipment (contd.)
Depreciation of other property and equipment is calculated on a straight-line basis over the estimated useful lives of the assets.
The annual depreciation rates for the various classes of property and equipment are as follows:
Leasehold land
2% or remaining lease period
(whichever is shorter)
2% or over the term of short term lease
20%
20%
20%
20% - 50%
Buildings
Leasehold improvements
Motor vehicles
Computer equipment
Office equipment, furniture and fittings
An item of property and equipment and any significant part initially recognised is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as
the difference between the net disposal proceeds and the carrying amount of the asset) is included in the income statement
when the asset is derecognised.
The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end and adjusted
prospectively, if appropriate.
3.5g
Leases
The determination of whether an arrangement is or contains, a lease is based on the substance of the arrangement at inception
date, whether fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a
right to use the asset, even if that right is not explicitly specified in an arrangement.
(i)
Group as a lessee
Finance leases that transfer to the Group substantially all the risks and benefits incidental to ownership of the leased
item, are capitalised at the commencement of the lease at the fair value of the leased property or, if lower, at the
present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised.
Lease payments are apportioned between finance charges and reduction of the lease liability so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance charges are recognised in "interest
expense" in the income statement.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated
useful life of the asset and the lease term.
Operating lease payments are recognised as an operating expense in profit or loss on a straight-line basis over the
lease term.
(ii)
Group as a lessor
Leases in which the Group does not transfer substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying
amount of the leased asset and recognised over the lease term on the same basis as rental income. Contingent rents
are recognised as revenue in the period in which they are earned.
3.5h
Intangible assets, other than goodwill arising from business combination
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible asset acquired in a
business combination is their fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangible assets, excluding
capitalised development costs, are not capitalised and expenditure is reflected in the income statement in the year in which the
expenditure is incurred.
33
F-36
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5h
Intangible assets, other than goodwill arising from business combination (contd.)
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic lives and assessed for impairment whenever there is
an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible
asset with a finite useful life is reviewed at least at the end of each reporting period. Changes in the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the
amortisation period or method, as appropriate and are treated as changes in accounting estimates. The amortisation expense
on intangible assets with finite lives is recognised in the income statement in the expense category consistent with the function
of the intangible assets.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in the income statement when the asset is derecognised.
(i)
Research and development costs
Research costs are expensed as incurred. Development expenditure on an individual software project are recognised
as an intangible asset when the Group can demonstrate:
-
the technical feasibility of completing the intangible asset so that it will be available for use or sale
its intention to complete and its ability to use or sell the asset
how the asset will generate future economic benefits
the availability of resources to complete the asset
the ability to measure reliably the expenditure during development
Following initial recognition of the software development expenditure as an asset, the asset is carried at cost less any
accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development
is complete and the asset is available for use. It is amortised on a straight-line basis over the period of expected
benefit of 3 to 7 years. During the period of development, the asset is tested for impairment annually.
3.5i
Financial instruments - initial recognition and subsequent measurement
(i)
Date of recognition
All financial assets and liabilities are initially recognised on the trade date, that is the date that the Group becomes a
party to the contractual provisions of the instrument. This includes “regular way trades”: purchases or sales of
financial assets that require delivery of assets within the time frame generally established by regulation or convention
in the market place.
(ii)
Initial measurement of financial instruments
The classification of financial instruments at initial recognition depends on the purpose and the management’s
intention for which the financial instruments were acquired and their characteristics. All financial instruments are
measured initially at their fair value plus transaction costs, except in the case of financial assets and financial liabilities
recorded at fair value through profit or loss.
(iii)
Subsequent measurement
The subsequent measurement of financial instruments depends on their classification as described below:
a.
Financial assets and financial liabilities at fair value through profit or loss: held-for-trading
Financial assets or financial liabilities held-for-trading are recorded in the statement of financial position at fair
value. Changes in fair value and dividend income are recognised in “Investment and trading income”. Interest
income or expense is recorded in “Interest income” or “Interest expense”, as appropriate and based on effective
yield.
Included in this classification are debt securities, equities and short positions.
34
F-37
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5i
Financial instruments - initial recognition and subsequent measurement (contd.)
(iii)
Subsequent measurement (contd.)
b.
Financial assets and financial liabilities at fair value through profit or loss: fair value option
Financial assets and financial liabilities classified in this category are those that have been designated by
management on initial recognition. Management may only designate an instrument at fair value through profit
or loss upon initial recognition when the following criteria are met and designation is determined on an
instrument by instrument basis:
-
-
the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise
from measuring the assets or liabilities or recognising gains or losses on them on a different basis
the assets and liabilities are part of a group of financial assets, financial liabilities or both which are
managed and their performance evaluated on a fair value basis, in accordance with a documented risk
management or investment strategy
the financial instrument contains one or more embedded derivatives which significantly modify the cash
flows that otherwise would be required by the contract.
Financial assets and financial liabilities designated at fair value through profit or loss are recorded in the
statement of financial position at fair value. Changes in fair value are recognised in “Investment and trading
income”. Interest is earned or accrued in “Interest income” or “Interest expense”, respectively, using the
effective interest rate (“EIR”), while dividend income is recorded in “Investment and trading income” when the
right to the payment has been established.
c.
Financial investments available-for-sale
Financial investments available-for-sale include equity investments and debt securities. Equity investments
classified as available-for-sale are those which are neither classified as held-for-trading nor designated at fair
value through profit or loss. Debt securities in this category are those which are intended to be held for an
indefinite period of time and which may be sold in response to needs for liquidity or in response to changes in
the market conditions.
The Group has not designated any loans and advances as available-for-sale.
After initial measurement, financial investments available-for-sale are subsequently measured at fair value with
unrealised gains or losses recognised as other comprehensive income in the “Available-for-sale reserve” until
the investment is derecognised, at which time the cumulative gain or loss is recognised in “Other operating
income” or the investment is determined to be impaired, when the cumulative loss is reclassified from the
“Available-for-sale reserve” to the income statement in “Impairment losses on financial investments". Interest
earned whilst holding financial investments available-for-sale is reported as interest income using the EIR
method. Dividends earned whilst holding available-for-sale financial investments are recognised in the income
statement as “Other operating income” when the right to the payment has been established.
The Group evaluates whether the ability and intention to sell its available-for-sale financial assets in the near
term is still appropriate. When, in rare circumstances, the Group is unable to trade these financial assets due
to inactive markets and management’s intention to do so significantly changes in the foreseeable future, the
Group may elect to reclassify these financial assets. Reclassification to loans and receivables is permitted
when the financial assets meet the definition of loans and receivables and the Group has the intent and ability
to hold these assets for the foreseeable future or until maturity. Reclassification to the held-to-maturity category
is permitted only when the entity has the ability and intention to hold the financial asset accordingly.
35
F-38
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5i
Financial instruments - initial recognition and subsequent measurement (contd.)
(iii)
Subsequent measurement (contd.)
c.
Financial investments available-for-sale (contd.)
For a financial asset reclassified from the available-for-sale category, the fair value carrying amount at the date
of reclassification becomes its new amortised cost and any previous gain or loss on the asset that has been
recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any
difference between the new amortised cost and the maturity amount is also amortised over the remaining life of
the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in
equity is reclassified to the income statement.
Unquoted shares in organisations which are set up for specific socio-economic reasons and equity instruments
received as a result of loan restructuring or loan conversion which do not have a quoted market price in an
active market and whose fair value cannot be reliably measured are also classified as financial investments
available-for-sale.
d.
Financial investments held-to-maturity
Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as heldto-maturity financial investments when the Group has the positive intention and ability to hold them to maturity.
After initial measurement, financial investments held-to-maturity are measured at amortised cost using the EIR
method, less impairment. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in “Interest
income” in the income statement. The losses arising from impairment are recognised in the income statement
in “Impairment losses on financial investments”.
If the Group were to sell or reclassify more than an insignificant amount of held-to-maturity financial investments
before maturity (other than in certain specific circumstances), the entire category would be tainted and would
have to be reclassified as available-for-sale. Furthermore, the Group would be prohibited from classifying any
financial asset as held-to-maturity during the following two years.
e.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market.
After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR
method, less allowance for impairment. Amortised cost is calculated by taking into account any discount or
premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included
in “Interest income” in the income statement. The losses arising from impairment are recognised in the income
statement in “Impairment losses on loans and advances" for loans or “Impairment losses on other assets” for
receivables.
36
F-39
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5i
Financial instruments - initial recognition and subsequent measurement (contd.)
(iii)
Subsequent measurement (contd.)
f.
Financial liabilities at amortised cost
Financial liabilities issued by the Group, that are not designated at fair value through profit or loss, are classified
as financial liabilities at amortised cost, where the substance of the contractual arrangement results in the
Group having an obligation either to deliver cash or another financial asset to the holder or to satisfy the
obligation other than by the exchange of a fixed amount of cash or another financial asset for a fixed number of
own equity shares.
After initial measurement, term funding, debt capital and other borrowings are subsequently measured at
amortised cost using the EIR. Amortised cost is calculated by taking into account any discount or premium on
the issue and costs that are an integral part of the EIR.
A compound financial instrument which contains both a liability and an equity component is separated at the
issue date. A portion of the net proceeds of the instrument is allocated to the debt component on the date of
issue based on its fair value (which is generally determined based on the quoted market prices for similar debt
instruments). The equity component is assigned the residual amount after deducting from the fair value of the
instrument as a whole the amount separately determined for the debt component. The value of any derivative
features (such as a call option) embedded in the compound financial instrument other than the equity
component is included in the debt component.
(iv)
“Day 1” profit or loss
When the transaction price differs from the fair value of other observable current market transactions in the same
instrument or based on a valuation technique whose variables include only data from observable markets, the Group
immediately recognises the difference between the transaction price and fair value (a “Day 1” profit or loss) in
“Investment and trading income”. In cases where fair value is determined using data which is not observable, the
difference between the transaction price and model value is only recognised in the income statement when the inputs
become observable or when the instrument is derecognised.
(v)
Reclassification of financial assets
The Group may reclassify a non-derivative trading asset out of the “Held-for-trading” category and “Available-for-sale”
category under rare circumstances and into the “Loans and advances” category if it meets the definition of loans and
receivables and the Group has the intention and ability to hold the financial asset for the foreseeable future or until
maturity. Reclassifications are recorded at fair value at the date of reclassification, which becomes the new amortised
cost. If a financial asset is reclassified and if the Group subsequently increases its estimates of future cash receipts
as a result of increased recoverability of those cash receipts, the effect of that increase is recognised as an
adjustment to the EIR from the date of the change in estimate.
For a financial asset reclassified out of the “Available-for-sale” category, any previous gain or loss on that asset that
has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR.
Any difference between the new amortised cost and the expected cash flows is also amortised over the remaining life
of the asset using the EIR. If the asset is subsequently determined to be impaired then the amount recorded in equity
is recycled to the income statement.
Reclassification, where permitted, is at the election of management and is determined on an instrument by instrument
basis. The Group does not reclassify any financial instrument into the fair value through profit or loss category after
initial recognition.
37
F-40
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5i
Financial instruments - initial recognition and subsequent measurement (contd.)
(vi)
Derecognition of financial assets and financial liabilities
a.
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is
derecognised when:
-
the rights to receive cash flows from the asset have expired.
the Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a “pass-through”
arrangement; and either:
the Group has transferred substantially all the risks and rewards of the asset, or
•
the Group has neither transferred nor retained substantially all the risks and rewards of the asset,
•
but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has entered into a passthrough arrangement and has neither transferred nor retained substantially all the risks and rewards of the
asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing
involvement in the asset. In that case, the Group also recognises an associated liability. The transferred asset
and the associated liability are measured on a basis that reflects the rights and obligations that the Group has
retained.
b.
Financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expired.
Where an existing financial liability is replaced by another from the same lender on substantially different terms
or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability. The difference between the carrying
value of the original financial liability and new financial liabilities is recognised in profit or loss.
3.5j
Repurchase and reverse repurchase agreements
Securities sold under repurchase agreements at a specified future date are not derecognised from the statement of financial
position as the Group retains substantially all the risks and rewards of ownership. The corresponding cash received is
recognised in the statement of financial position as an asset with a corresponding obligation to return it, including accrued
interest, as a liability within “Securities sold under repurchase agreements”, reflecting the transaction’s economic substance as
a loan to the Group. The difference between the sale and repurchase prices is treated as interest expense and is accrued over
the life of the agreement using the EIR. When the counterparty has the right to sell or re-pledge the securities, the Group
reclassifies those securities in its statement of financial position to “Financial assets held-for-trading pledged as collateral” or to
“Financial investments available-for-sale pledged as collateral”, as appropriate.
Conversely, securities purchased under resale agreements at a specified future date are not recognised in the statement of
financial position. The consideration paid is recorded in the statement of financial position, within “Securities purchased under
reverse repurchase agreements”, reflecting the transaction’s economic substance as a loan by the Group. The difference
between the purchase and resale prices is recorded in “Net interest income” and is accrued over the life of the agreement using
the EIR.
If securities purchased under agreement to resell are subsequently sold to third parties, the obligation to return the securities is
recorded as a short sale within “Financial liabilities held-for-trading” and measured at fair value with any gains or losses included
in “Investment and trading income”.
38
F-41
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5k
Securities lending and borrowing
Securities lending and borrowing transactions are usually collateralised by securities or cash. The transfer of the securities to
counterparties is only reflected on the statement of financial position if the risks and rewards of ownership are also transferred.
Cash advanced or received as collateral is recorded as an asset or liability.
Securities borrowed are not recognised on the statement of financial position, unless they are then sold to third parties, in which
case the obligation to return the securities is recorded as a trading liability and measured at fair value with any gains or losses
included in “Investment and trading income”.
3.5l
Determination of fair value
The fair value for financial instruments traded in active markets at the reporting date is based on their quoted market price or
dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction
costs.
For financial instruments not traded in an active market, the fair value is determined by using appropriate valuation techniques.
Valuation techniques include the discounted cash flow method, comparison to similar instruments for which market observable
prices exist, option pricing models, credit models and other relevant valuation models.
An analysis of fair values of financial instruments and further details as to how they are measured are provided in Note 50.
3.5m
Impairment of financial assets
The Group assesses at each reporting date whether there is any objective evidence that a financial asset or a group of financial
assets is impaired. 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.
Evidence of impairment may include indications that the borrower or a group of borrowers is experiencing significant financial
difficulty, the probability that they will enter bankruptcy or other financial reorganisation, default or delinquency in interest or
principal payments and where observable data indicates that there is a measurable decrease in the estimated future cash flows,
such as changes in arrears or economic conditions that correlate with defaults.
(i)
Financial assets carried at amortised cost
For financial assets carried at amortised cost (such as amounts due from banks, loans and advances to customers as
well as financial investments held-to-maturity), the Group first assesses individually whether objective evidence of
impairment exists for financial assets that are individually significant or collectively for financial assets that are not
individually significant. If the Group determines that no objective evidence of impairment exists for an individually
assessed financial asset, it includes the asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment. Assets 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.
If there is objective evidence that an impairment loss has been incurred, the amount of the loss is measured as the
difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future
expected credit losses that have not yet been incurred). The carrying amount of the asset is reduced through the use
of an allowance account and the amount of the loss is recognised in the income statement. Interest income continues
to be accrued on the reduced carrying amount and is accrued using the rate of interest used to discount the future
cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of “Interest
income”. Loans together with the associated allowance are written off when there is no realistic prospect of future
recovery and all collateral has been realised or has been transferred to the Group. If, in a subsequent year, the
amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment
was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance
account. If a future write-off is later recovered, the recovery is credited to the “Allowance for impairment on loans and
advances” to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date.
39
F-42
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5m
Impairment of financial assets (contd.)
(i)
Financial assets carried at amortised cost (contd.)
The present value of the estimated future cash flows is discounted at the financial asset’s original EIR. If a loan has a
variable interest rate, the discount rate for measuring any impairment loss is the current EIR. If the Group has
reclassified trading assets to loans and advances, the discount rate for measuring any impairment loss is the new EIR
determined at the reclassification date. The calculation of the present value of the estimated future cash flows of a
collateralised financial asset reflects the cash flows that may result from foreclosure less costs for obtaining and
selling the collateral, whether or not foreclosure is probable.
For the purpose of a collective evaluation of impairment, financial assets are grouped on the basis of the Group’s
internal credit grading system, that considers credit risk characteristics such as asset type, industry, geographical
location, collateral type, past-due status and other relevant factors.
Future cash flows on a group of financial assets that are collectively evaluated for impairment are estimated on the
basis of historical loss experience for assets with credit risk characteristics similar to those in the group. Historical
loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions on which
the historical loss experience is based and to remove the effects of conditions in the historical period that do not exist
currently. Estimates of changes in future cash flows reflect and are directionally consistent with, changes in related
observable data from year to year. The methodology and assumptions used for estimating future cash flows are
reviewed regularly to reduce any differences between loss estimates and actual loss experience.
(ii)
Financial investments available-for-sale
For financial investments available-for-sale, the Group assesses at each reporting date whether there is objective
evidence that an investment is impaired.
In the case of debt instruments classified as available-for-sale, the Group assesses individually whether there is
objective evidence of impairment based on the same criteria as financial assets carried at amortised cost. However,
the amount recorded for impairment is the cumulative loss measured as the difference between the amortised cost
and the current fair value, less any impairment loss on that investment previously recognised in the income statement.
Future interest income is based on the reduced carrying amount and is accrued using the rate of interest used to
discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as
part of “Interest income”. If, in a subsequent period, the fair value of a debt instrument increases and the increase
can be objectively related to a credit event occurring after the impairment loss was recognised in the income
statement, the impairment loss is reversed through the income statement.
In the case of equity investments classified as available-for-sale, objective evidence would also include a “significant”
or “prolonged” decline in the fair value of the investment below its cost. The Group treats “significant” generally as
20% and “prolonged” generally as greater than six months. Where there is evidence of impairment, the cumulative
loss measured as the difference between the acquisition cost and the current fair value, less any impairment loss on
that investment previously recognised in the income statement - is removed from equity and recognised in the income
statement. Impairment losses on equity investments are not reversed through the income statement; increases in the
fair value after impairment are recognised in other comprehensive income.
(iii)
Renegotiated loans
Where possible, the Group seeks to restructure loans rather than to take possession of collateral. This may involve
extending the payment arrangements and the agreement of new loan conditions. Once the terms have been
renegotiated, any impairment is measured using the original EIR as calculated before the modification of terms and
the loan is no longer considered past due. Management continually reviews renegotiated loans to ensure that all
criteria are met and that future payments are likely to occur. The loans continue to be subject to an individual or
collective impairment assessment, calculated using the loan’s original EIR.
40
F-43
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5m
Impairment of financial assets (contd.)
(iv)
Collateral valuation
The Group seeks to use collateral, where possible, to mitigate its risks on financial assets. The collateral comes in
various forms such as cash, securities, letters of credit/guarantees, real estate, receivables, inventories, other nonfinancial assets and credit enhancements such as netting agreements. The fair value of collateral is generally
assessed, at a minimum, at inception and based on the Group’s quarterly reporting schedule, however, some
collateral, for example, cash or securities relating to margining requirements, is valued daily.
To the extent possible, the Group uses active market data for valuing financial assets, held as collateral. Other
financial assets which do not have a readily determinable market value are valued using models. Non-financial
collateral, such as real estate, is valued based on data provided by third parties such as mortgage brokers, housing
price indices, audited financial statements and other independent sources (see Note 49.2 for further analysis of
collateral).
(v)
Collateral repossessed
The Group’s policy is to determine whether a repossessed asset is best used for its internal operations or should be
sold. Assets determined to be useful for the internal operations are transferred to their relevant asset category at the
lower of their repossessed value or the carrying value of the original secured asset. Assets that are determined better
to be sold are immediately transferred to assets held for sale at their fair value at the repossession date in line with the
Group’s policy.
3.5n
Hedge accounting
The Group makes use of derivative instruments to manage exposures to interest rate, foreign currency and credit risks,
including exposures arising from forecast transactions and firm commitments. In order to manage particular risks, the Group
applies hedge accounting for transactions which meet specified criteria.
At inception of the hedge relationship, the Group formally documents the relationship between the hedged item and the hedging
instrument, including the nature of the risk, the objective and strategy for undertaking the hedge and the method that will be
used to assess the effectiveness of the hedging relationship.
Also at the inception of the hedge relationship, a formal assessment is undertaken to ensure the hedging instrument is expected
to be highly effective in offsetting the designated risk in the hedged item. Hedges are formally assessed each quarter. A hedge
is expected to be highly effective if the changes in fair value or cash flows attributable to the hedged risk during the period for
which the hedge is designated are expected to offset in a range of 80% to 125%. For situations where that hedged item is a
forecast transaction, the Group assesses whether the transaction is highly probable and presents an exposure to variations in
cash flows that could ultimately affect the income statement.
(i)
Fair value hedges
For designated and qualifying fair value hedges, the change in the fair value of a hedging derivative is recognised in
“Investment and trading income” in the income statement. The change in the fair value of the hedged item is also
recognised in “Investment and trading income” in the income statement.
If the hedging instrument expires or is sold, terminated or exercised or where the hedge no longer meets the criteria
for hedge accounting, the hedge relationship is terminated. For hedged items recorded at amortised cost, the
difference between the carrying value of the hedged item on termination and the face value is amortised over the
remaining term of the original hedge using the EIR. If the hedged item is derecognised, the unamortised fair value
adjustment is recognised immediately in the income statement.
41
F-44
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5n
Hedge accounting (contd.)
(ii)
Cash flow hedges
For designated and qualifying cash flow hedges, the effective portion of the gain or loss on the hedging instrument is
initially recognised directly in equity in the “Cash flow hedge reserve". The ineffective portion of the gain or loss on the
hedging instrument is recognised immediately in "Investment and trading income” in the income statement.
When the hedged cash flow affects the income statement, the gain or loss on the hedging instrument is recorded in
the corresponding income or expense line of the income statement. When a hedging instrument expires or is sold,
terminated, exercised or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss
existing in other comprehensive income at that time remains in other comprehensive income and is recognised when
the hedged 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.
(iii)
Hedge of a net investment
Hedges of net investments in a foreign operation, including a hedge of a monetary item that is accounted for as part of
the net investment, are accounted for in a way similar to cash flow hedges. Gains or losses on the hedging
instrument relating to the effective portion of the hedge are recognised in other comprehensive income while gains or
losses relating to the ineffective portion are recognised in the income statement. On disposal of the foreign operation,
the cumulative value of any such gains or losses recognised in other comprehensive income is transferred to the
income statement.
3.5o
Offsetting financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only
if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis
or to realise the asset and settle the liability simultaneously. This is generally not the case with master netting agreements,
therefore, the related assets and liabilities are presented gross in the statement of financial position.
3.5p
Impairment of non-financial assets
The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication
exists or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An
asset’s recoverable amount is the higher of an asset’s or cash-generating unit’s (“CGU”) fair value less costs to sell and its
value in use. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired
and is written down to its recoverable amount. In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset. In determining fair value less costs to sell, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators.
For assets excluding goodwill, an assessment is made at each reporting date as to whether there is any indication that
previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group
estimates the asset’s or CGU’s recoverable amount. A previously recognised impairment loss is reversed only if there has been
a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognised.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceeds the
carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in
prior years. Such reversal is recognised in the income statement.
42
F-45
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5p
Impairment of non-financial assets (contd.)
The following assets have specific characteristics for impairment testing:
(i)
Goodwill
Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount of each CGU (or group of CGUs) to which
the goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is
recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
(ii)
Intangible assets
Intangible assets with finite useful lives are tested for impairment annually either individually or at the CGU level, as
appropriate and when circumstances indicate that the carrying value may be impaired.
3.5q
Foreclosed properties
Foreclosed properties are those acquired in full or partial satisfaction of debts and are stated at cost less impairment losses.
The policy for the measurement of foreclosed properties is in accordance with Note 3.5m(v) on collateral repossessed.
3.5r
Cash and cash equivalents
Cash and short-term funds in the statement of financial position comprise cash and bank balances with banks and other
financial institutions and short-term deposits maturing within one month.
For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term funds as defined
above, excluding deposits and monies held in trust and net of outstanding bank overdrafts.
3.5s
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be
estimated reliably.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that
an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time
value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks
specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a
finance cost.
3.5t
Contingent liabilities and contingent assets
A contingent liability is a possible obligation that arises from past events whose existence will be confirmed only by the
occurrence or non-occurrence of uncertain future events not wholly within the control of the Group 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. The Group does not recognise a contingent liability but discloses its existence in the financial statements.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed only by the occurrence or
non-occurrence of uncertain future events not wholly within the control of the Group. The Group does not recognise contingent
assets in the statement of financial position but discloses its existence where inflows of economic benefits are probable, but not
virtually certain.
43
F-46
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5u
Financial guarantees
In the ordinary course of business, the Group gives financial guarantees, consisting of letters of credit, guarantees and
acceptances. Financial guarantees are initially recognised in the statement of financial position (within "Other liabilities") at fair
value, being the premium received. Subsequent to initial recognition, the Group's liability under each guarantee is measured at
the higher of the amount initially recognised less cumulative amortisation recognised in profit or loss and the best estimate of
expenditure required to settle any financial obligation arising as a result of the guarantee.
Any increase in the liability relating to financial guarantees is recorded in the income statement. The premium received is
recognised in the income statement in “Guarantee fees” on a straight-line basis over the life of the guarantee.
3.5v
Recognition of income and expenses
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be
reliably measured. The following specific recognition criteria must also be met before revenue is recognised.
(i)
Interest income and similar income and expense
For all financial instruments measured at amortised cost, interest-bearing financial assets classified as available-forsale and financial instruments designated at fair value through profit or loss, interest income or expense is recorded
using the EIR, which is the rate that exactly discounts estimated future cash payments or receipts through the
expected life of the financial instrument or a shorter period, where appropriate, to the net carrying amount of the
financial asset or financial liability. The calculation takes into account all contractual terms of the financial instrument
(for example, prepayment options) and includes any fees or incremental costs that are directly attributable to the
instrument and are an integral part of the EIR, but not future credit losses.
The carrying amount of the financial asset or financial liability is adjusted if the Group revises its estimates of
payments or receipts. The adjusted carrying amount is calculated based on the original EIR and the change in
carrying amount is recorded in profit or loss. However, for a reclassified financial asset for which the Group
subsequently increases its estimates of future cash receipts as a result of increased recoverability of those cash
receipts, the effect of that increase is recognised as an adjustment to the EIR from the date of the change in estimate.
Once the recorded value of a financial asset or a group of similar financial assets has been reduced due to an
impairment loss, interest income continues to be recognised using the rate of interest used to discount the future cash
flows for the purpose of measuring the impairment loss.
(ii)
Fee and commission income
The Group earns fee and commission income from a diverse range of services it provides to its customers. Fee
income can be divided into the following two categories:
a.
Fee income earned from services that are provided over a certain period of time
Fees earned for the provision of services over a period of time are accrued over that period. These fees
include commission income and asset management, custody and other management and advisory fees.
Loan commitment fees for loans that are likely to be drawn down and other credit related fees are deferred
(together with any incremental costs) and recognised as an adjustment to the EIR on the loan. When it is
unlikely that a loan will be drawn down, the loan commitment fees are recognised over the commitment period
on a straight-line basis.
44
F-47
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5v
Recognition of income and expenses (contd.)
(ii)
Fee and commission income (contd.)
b.
Fee income from providing transaction services
Fees arising from negotiating or participating in the negotiation of a transaction for a third party, such as the
arrangement of the acquisition of shares or other securities or the purchase or sale of businesses, are
recognised on completion of the underlying transaction. Fees or components of fees that are linked to a certain
performance are recognised after fulfilling the corresponding criteria, such as brokerage fees.
(iii)
Dividend income
Dividend income is recognised when the Group’s right to receive the payment is established.
(iv)
Net investment and trading income
Results arising from trading activities include all gains and losses from changes in fair value and dividends for
financial assets and financial liabilities “held-for-trading”. This includes any ineffectiveness recorded in hedging
transactions.
(v)
Rental income
Rental income arising from operating leases on properties is accounted for on a straight-line basis over the lease
terms.
(vi)
Customer loyalty programmes
Award credits under customer loyalty programmes are accounted for as a separately identifiable component of the
transaction in which they are granted. The fair value of the consideration received in respect of the initial sale is
allocated between the award credits and the other components of the sale. Income generated from customer loyalty
programmes is recognised in profit or loss.
3.5w
Employee benefits
(i)
Short-term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the
associated services are rendered by employees of the Group. Short-term accumulating compensated absences such
as paid annual leave are recognised when services are rendered by employees that increase their entitlement to
future compensated absences and short-term non-accumulating compensated absences such as sick leave are
recognised when the absences occur.
(ii)
Defined contribution pension plan
As required by law, the Group makes contributions to the Employee Provident Fund in Malaysia. Such contributions
are recognised as an expense in profit or loss as incurred. Once the contributions have been paid, the Group has no
further payment obligations.
(iii)
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 possibility of withdrawal or to provide termination benefits as a result of an
offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the reporting date are
discounted to present value.
45
F-48
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5w
Employee benefits (contd.)
(iv)
Share-based payment transactions
The holding company, AMMB Holdings Berhad ("AMMB") operates an equity-settled share-based compensation
scheme wherein shares or options to subscribe for shares of AMMB are granted to eligible directors and employees of
the Group based on certain financial and performance criteria and such conditions as it may deem fit.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award (“the vesting date”). The cumulative expense recognised for equity-settled
transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired
and the Group’s best estimate of the number of equity instruments that will ultimately vest. The income statement
expense or credit for a period is recorded in “Personnel costs” and represents the movement in cumulative expense
recognised as at the beginning and end of that period.
Where the terms of an equity-settled award are modified, the minimum expense recognised in “Personnel costs” is the
expense as if the terms had not been modified. An additional expense is recognised for any modification which
increases the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee as
measured at the date of modification.
Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation and any
expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting
conditions within the control of either the entity or the counterparty are not met. However, if a new award is
substituted for the cancelled award and designated as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification of the original award, as described in the previous
paragraph.
3.5x
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial
period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. Capitalisation of
borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the
expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for
its intended use or sale. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest
and other costs that an entity incurs in connection with the borrowing of funds.
3.5y
Dividends on ordinary shares
Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Group's and
the Bank’s shareholders. Interim dividends are deducted from equity when they are declared and no longer at the discretion of
the Group or the Bank.
Dividends for the year that are approved after the reporting date are disclosed as an event after the reporting date.
3.5z
Income taxes
(i)
Current tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates
taxable income.
Current income tax relating to items recognised directly in equity is recognised in equity.
46
F-49
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5z
Income taxes (contd.)
(ii)
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
a.
when the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction
that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
b.
in respect of taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it
is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits
and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will
be available against which the deductible temporary differences and the carry forward of unused tax credits and
unused tax losses can be utilised, except:
a.
when the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of
an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and
b.
in respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted,
at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised in correlation to the underlying transaction
either in other comprehensive income or directly in equity and deferred tax arising from a business combination is
adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation
authority.
Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that
date, would be recognised subsequently if new information about facts and circumstances changed. The adjustment
would either be treated as a reduction to goodwill (as long as it does not exceed goodwill) if it was incurred during the
measurement period or in profit or loss.
3.5aa Segment reporting
The Group’s segmental reporting is based on the following operating segments: retail banking, business banking, corporate and
institutional banking, markets with minor segments aggregated under group functions and others.
47
F-50
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
3. ACCOUNTING POLICIES (CONTD.)
3.5 Summary of significant accounting policies (contd.)
3.5ab Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and of the Bank after
deducting all the liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs.
4. SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS
In the process of applying the Group’s accounting policies, management has exercised judgment and estimates in determining the amounts
recognised in the financial statements. The most significant uses of judgment and estimates are as follows:
4.1 Impairment losses on loans and advances (Note 12 and 36)
The Group reviews its individually significant loans and advances at each reporting date to assess whether an impairment loss should
be recorded in the income statement. In particular, management's judgment is required in the estimation of the amount and timing of
future cash flows when determining the impairment loss. These estimates are based on assumptions about a number of factors and
actual results may differ, resulting in future changes to the allowance.
Loans and advances that have been assessed individually and found not to be impaired and all individually insignificant loans and
advances are then assessed collectively, in groups of assets with similar risk characteristics, to determine whether allowance should be
made due to incurred loss events for which there is objective evidence but whose effects are not yet evident. The collective
assessment takes account of data from the loan portfolio (such as levels of arrears, credit utilisation, loan to collateral ratios) and
judgments to cover model risks (for example, error for design/development process, data quality, data extraction and transformation)
and macro risks (for example, covering economic, portfolio and procedural issues).
4.2 Impairment losses on financial investments available-for-sale (Note 37)
The Group reviews its debt securities classified as financial investments available-for-sale at each reporting date to assess whether
they are impaired.
The Group also records impairment loss on available-for-sale equity investments when there has been a significant or prolonged
decline in the fair value below their cost. The determination of what is “significant” or “prolonged” requires judgment. In making this
judgment, the Group evaluates, among other factors, historical share price movements and duration and extent to which the fair value
of an investment is less than its cost.
4.3 Deferred tax assets (Note 14 and 38)
Deferred tax assets are recognised in respect of tax losses to the extent that it is probable that taxable profit will be available against
which the losses can be utilised. Judgment is required to determine the amount of deferred tax assets that can be recognised, based
upon the likely timing and level of future taxable profits, together with future tax planning strategies.
4.4 Consolidation of SPV (Note 15)
The Group sponsors the formation of SPVs, which may or may not be directly or indirectly owned subsidiaries. The Group consolidates
those SPVs that it controls. In assessing and determining if the Group has control over the SPVs, judgment is exercised to determine
whether the activities of the SPVs are being conducted on behalf of the Group to obtain benefits from the SPVs’ operations; whether
the Group has the decision-making powers to control or to obtain control of the SPVs or their assets; whether the Group has rights to
obtain the majority of the benefits of the SPVs’ activities; and whether the Group retains the majority of the risks related to the SPVs or
its assets in order to obtain benefits from its activities.
4.5 Fair value of financial instruments (Note 50)
Where the fair values of financial assets and financial liabilities recorded on the statements of financial position cannot be derived from
active markets, they are determined using a variety of valuation techniques that include the use of financial models. The inputs to
these models are derived from observable market data where possible, but where observable market data are not available, judgment
is required to establish fair values. The judgments include considerations of liquidity and model inputs such as volatility for longerdated derivatives and discount rates, prepayment rates and default rate assumptions for asset-backed securities. The valuation of
financial instruments is described in more detail in Note 50.
48
F-51
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
5.
CASH AND SHORT-TERM FUNDS
Cash and bank balances
Deposit placements maturing
within one month:
Licensed banks
Bank Negara Malaysia
6.
31 March
2013
RM’000
Group
31 March
2012
RM’000
813,328
622,790
981,322
5,530,000
7,324,650
990,848
3,840,000
5,453,638
Bank
31 March
2012
RM’000
533,539
812,703
618,456
529,870
2,094,447
6,113,000
8,740,986
913,045
5,530,000
7,255,748
674,583
3,840,000
5,133,039
1,733,009
6,113,000
8,375,879
1 April
2011
RM’000
SECURITIES PURCHASED UNDER RESALE AGREEMENTS AND SOLD UNDER REPURCHASE AGREEMENTS
31 March
2013
RM’000
7.
31 March
2013
RM’000
1 April
2011
RM’000
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
Assets
Licensed banks
-
384,570
289,731
-
384,570
289,731
Liabilities
Licensed banks
-
41,195
30,465
-
41,195
30,465
DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS
31 March
2013
RM’000
Licensed banks
Licensed investment banks
Bank Negara Malaysia
902,552
1,010,870
1,913,422
Group
31 March
2012
RM’000
398,385
723,809
1,122,194
1 April
2011
RM’000
1,187,036
605,886
2,000,000
3,792,922
31 March
2013
RM’000
902,552
1,010,870
1,913,422
Bank
31 March
2012
RM’000
367,740
723,809
1,091,549
1 April
2011
RM’000
1,096,277
605,886
2,000,000
3,702,163
Included in deposits and placements with banks and other financial institutions is deposit received from AmIslamic Bank Berhad
("AmIslamic") under the Restricted Profit Sharing Investment Accounts ("RPSIA") arrangement of RM500,866,000 (31 March 2012: Nil, 1
April 2011: Nil). The RPSIA is a contract based on the Shariah concept of Mudharabah between two parties, that is the, investor (Bank)
and entrepreneur (AmIslamic) to finance a business venture where the investor provides capital and the business venture is managed
solely by the entrepreneur. The profit of the business venture is shared between both parties based on pre-agreed ratios. Losses from the
business venture shall be borne solely by the investor.
49
F-52
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-53
8.
383,243
64,938,016
Total
533
-
2,025,000
-
Hedging Derivatives
Interest rate related contracts
- Interest rate swaps
Cash flow hedge
Fair value hedge
1,521
4,661
-
322,791
547,989
-
Equity related contracts
- One year or less
- Over one year to three years
- Over three years
12,930
77,447
18,009
53,668
267,510
596,026
22,584,554
1,615,737
2,662,212
Foreign exchange related contracts
- One year or less
- Over one year to three years
- Over three years
5,343
36,958
172,173
Fair Value
Assets
RM'000
31 March 2013
Credit related contracts
- One year or less
- Over one year to three years
- Over three years
4,103,404
8,643,427
21,569,366
Contract/
Notional
Amount
RM'000
Trading Derivatives
Interest rate related contracts
- One year or less
- Over one year to three years
- Over three years
Group and Bank
DERIVATIVE FINANCIAL ASSETS/LIABILITIES
Company No. 8515-D
422,675
16,632
-
20,210
9,375
-
2,140
3,973
64,908
20,965
55,256
6,297
55,506
167,413
Fair Value
Liabilities
RM'000
50
66,359,376
8,190,000
-
484,281
348,919
13,450
61,290
255,704
586,502
20,064,852
751,968
2,452,218
8,753,655
6,434,399
17,962,138
Contract/
Notional
Amount
RM'000
380,035
9,332
-
2,046
10,423
41
140
10,966
10,193
112,201
9,695
16,306
12,219
34,513
151,960
Fair Value
Assets
RM'000
31 March 2012
441,704
27,597
-
43,107
8,970
5,301
98
2,848
2,285
88,562
4,479
50,374
14,387
30,483
163,213
Fair Value
Liabilities
RM'000
396,673
52,290
69,871
26,137
3,775
4,951
132
5,364
-
83,225
10,277
13,554
6,133
55,699
65,265
Fair Value
Assets
RM'000
1 April 2011
432,932
16,830
620
110,934
3,771
9,239
132
5,364
-
89,973
9,635
45,443
11,615
46,517
82,859
Fair Value
Liabilities
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
68,145,085
8,710,000
905,060
601,986
312,356
208,716
76,473
252,433
-
28,584,266
344,632
736,482
5,800,000
11,050,922
10,561,759
Contract/
Notional
Amount
RM'000
Company No. 8515-D
8.
DERIVATIVE FINANCIAL ASSETS/LIABILITIES (CONTD.)
Derivative financial instruments and hedge accounting
(i)
Fair value hedge
The Group's and the Bank's fair value hedges principally consist of interest rate swaps that are used to protect against changes in the
fair value of fixed-rate long-term financial instruments due to movements in market interest rates. The financial instruments hedged for
interest rate risk consist of the subordinated term loan and loans sold to Cagamas Berhad.
The gain/(loss) arising from fair value hedges is as follows:
31 March
2013
RM’000
31 March
2012
RM’000
1 April
2011
RM’000
(35,785)
36,245
460
(9,185)
11,490
2,305
Group and Bank
Gain/(Loss) arising from fair value hedges:
Hedged item (attributable to hedged risk only)
Hedging instruments
-
During the financial year ended 31 March 2012, the Bank has terminated the fair value hedge on the interest rate risk of the
subordinated term loan and loans sold to Cagamas Berhad. The unamortised fair values are amortised to profit or loss over the
remaining term to maturity of the subordinated term loan and loans sold to Cagamas Berhad using effective interest rate method. As
at 31 March 2013, amortisation of the fair value of the subordinated term loan and loans sold to Cagamas Berhad for the Group and
the Bank amounted to RM21,701,000 (31 March 2012: RM9,741,000, 1 April 2011: Nil) and RM1,616,000 (31 March 2012:
RM607,000, 1 April 2011: Nil) respectively.
(ii)
Cash flow hedge
The Group's and the Bank's cash flow hedges principally consist of interest rate swaps that are used to protect against exposures to
variability in future interest cash flows on variable rate interest incurring liabilities. This hedging strategy is applied towards treasury
fixed deposits and short-term treasury deposits. The amounts and timing of future cash flows, representing both principal and interest
flows, are projected for each portfolio on the basis of their contractual terms and other relevant factors, including estimates of early
withdrawal. The aggregate principal balances and interest cash flows over time form the basis for identifying gains and losses on the
effective portions of derivatives designated as cash flow hedges of forecast transactions. Gains and losses are initially recognised
directly in equity in the cash flow hedge reserve and are transferred to profit or loss when the forecast cash flows affect the profit or
loss.
All underlying hedged cash flows are expected to be recognised in profit or loss in the period in which they occur which is anticipated
to take place over the next 4 years (31 March 2012 and 1 April 2011: 5 years).
All gains and losses associated with the ineffective portion of the hedging derivatives are recognised immediately in profit or loss.
Ineffectiveness recognised in profit or loss in respect of cash flow hedges amounted to a gain of RM1,403,000 (31 March 2012: gain
of RM4,182,000, 1 April 2011: gain of RM22,253,000) for the Group and the Bank. During the financial year ended 31 March 2011,
the Group and the Bank recognised a loss of RM20,244,000 arising from unwinding of hedges beyond 5 years' duration in order to
align with the Group's macro cash flow hedging strategy.
51
F-54
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
9.
FINANCIAL ASSETS HELD-FOR-TRADING
31 March
2013
RM’000
Group and Bank
31 March
2012
RM’000
1 April
2011
RM’000
At fair value
Money Market Instruments:
Malaysian Treasury Bills
Malaysian Islamic Treasury Bills
Malaysian Government Securities
Government Investment Issues
Bank Negara Monetary Notes
Quoted securities:
In Malaysia:
Shares
Unit trusts
Warrants
Private debt securities
Outside Malaysia:
Shares
Unquoted securities:
In Malaysia:
Private debt securities
Outside Malaysia:
Private debt securities
240,252
88,625
438,302
767,179
54,784
929,544
223,512
5,049,904
6,257,744
49,046
5,358
160,285
221,650
2,270,387
2,706,726
133,740
88,238
4,651
23,178
249,807
247,555
65,033
2,864
315,452
288,337
74,137
2,835
365,309
4,590
4,590
-
4,744
4,744
2,653,570
2,653,570
1,732,100
1,732,100
1,019,549
1,019,549
425,477
425,477
605,647
605,647
70,674
70,674
4,100,623
8,910,943
4,167,002
Malaysian Government Securities with a carrying value of RM41,604,000 as at 31 March 2012 (1 April 2011: RM30,258,000) have been
sold under repurchase agreements (Note 6).
52
F-55
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
10. FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE
At fair value
Money Market Instruments:
Negotiable instruments
of deposit
Malaysian Government Securities
Islamic Negotiable Instruments
of Deposit
Government Investment Issues
Quoted securities:
In Malaysia:
Shares
Unit trusts
Private debt securities
Outside Malaysia
Shares
Unquoted securities:
In Malaysia:
Private debt securities
Outside Malaysia:
Private debt securities
At cost
Unquoted securities:
In Malaysia:
Shares
Outside Malaysia:
Shares
31 March
2013
RM’000
Group
31 March
2012
RM’000
834,227
-
1,569,355
20,782
2,523,145
255,789
834,227
-
1,569,355
20,782
2,523,145
255,789
340,360
15,173
1,189,760
823,480
45,425
2,459,042
785,855
94,734
3,659,523
340,360
15,173
1,189,760
823,480
45,425
2,459,042
785,855
94,734
3,659,523
5,430
212,035
5,455
222,920
11,990
60,160
27,050
99,200
11,926
39,400
55,881
107,207
5,430
212,035
5,455
222,920
11,858
60,160
27,050
99,068
11,809
39,400
55,881
107,090
80
80
83
83
93
93
42
42
41
41
40
40
1,623,034
1,623,034
1,623,836
1,623,836
2,377,211
2,377,211
1,782,331
1,782,331
1,816,122
1,816,122
2,603,959
2,603,959
224,492
224,492
170,289
170,289
100,196
100,196
224,492
224,492
170,289
170,289
100,196
100,196
87,330
87,330
87,330
87,330
86,804
86,804
87,330
87,330
87,330
87,330
86,804
86,804
1,025
1,025
941
941
935
935
156
156
80
80
84
84
3,348,641
4,440,721
6,331,969
3,507,031
4,631,972
6,557,696
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
The Bank was appointed Principal Dealer ("PD") by Bank Negara Malaysia ("BNM") for Government and BNM issuances with effect from 1
July 2009 until 31 December 2012.
As PD, the Bank is required to undertake certain obligations as well as accorded certain incentives during the appointment period. One of
the incentives accorded is the eligibility to maintain Statutory Reserve Requirement ("SRR") in the form of Malaysian Government
Securities ("MGS") and/or Malaysian Government Investment Issues ("GII") holdings instead of cash. As at 31 March 2013 and 31 March
2012, there were no MGS and GII holdings maintained for SRR purposes by the Group and the Bank (1 April 2011: RM350,000,000
maintained by the Group and the Bank).
53
F-56
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
11. FINANCIAL INVESTMENTS HELD-TO-MATURITY
31 March
2013
RM’000
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
At amortised cost
Unquoted:
Money Market Instruments:
Bank Negara Monetary Notes
In Malaysia:
Private debt securities
Less: Accumulated impairment
losses
2,092,645
-
-
2,092,645
-
-
2,134,898
318,210
373,106
2,133,336
313,768
364,608
(202,055)
(207,775)
(200,267)
(205,019)
116,155
165,331
113,501
159,589
(194,008)
4,033,535
(192,817)
4,033,164
Impairment allowance
A reconciliation of the allowance for impairment losses is as follows:
Group
31 March
31 March
2013
2012
RM’000
RM’000
Balance at beginning of financial year
Charge for the year, net (Note 37)
Recoveries/reversal
Exchange differences
Balance at end of financial year
202,055
5,722
(13,787)
18
194,008
54
F-57
207,775
3,020
(8,762)
22
202,055
Bank
31 March
2013
RM’000
200,267
6,337
(13,787)
192,817
31 March
2012
RM’000
205,019
4,010
(8,762)
200,267
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
12. LOANS AND ADVANCES
31 March
2013
RM’000
At amortised cost:
Overdraft
Term loans
Housing loan receivables
Hire purchase receivables
Bills receivables
Trust receipts
Claims on customers under
acceptance credits
Staff loans
Card receivables
Revolving credits
Others
Gross loans and advances
Allowance for impairment on
loans and advances:
- Collective allowance
- Individual allowance
Net loans and advances
Note 12 (i)
Note 12 (i)
The Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
The Bank
31 March
2012
RM’000
1 April
2011
RM’000
2,420,734
19,224,764
12,371,805
16,680,923
534,258
885,571
2,297,029
17,558,672
11,868,932
16,851,911
326,656
792,784
1,988,963
15,806,820
11,551,536
18,296,017
389,482
569,084
2,420,734
19,224,764
12,116,379
16,680,923
534,258
885,571
2,297,029
17,557,035
11,583,554
16,851,911
326,656
792,784
1,988,963
15,801,712
11,231,830
18,296,017
389,482
569,084
2,534,569
134,260
1,400,140
4,496,793
171,014
2,442,453
147,894
1,446,318
4,326,943
130,844
2,217,959
151,830
1,491,939
5,028,403
106,636
2,534,569
134,173
1,400,140
4,552,923
171,014
2,442,453
147,446
1,446,318
4,376,193
130,844
2,217,959
151,337
1,491,939
5,074,217
106,636
60,854,831
58,190,436
57,598,669
60,655,448
57,952,223
57,319,176
(1,454,239)
(168,840)
59,231,752
(1,584,690)
(114,474)
56,491,272
(1,742,609)
(341,071)
55,514,989
(1,453,924)
(168,840)
59,032,684
(1,584,814)
(114,474)
56,252,935
(1,743,195)
(341,071)
55,234,910
During the current financial year, the Bank entered into Restricted Profit Sharing Investment Accounts ("RPSIA") arrangement with
AmIslamic. The Bank records the amount it provides as financing under the arrangement as deposits and placements with banks and other
financial institutions (see Note 7). The financing to external parties made by AmIslamic is recorded by AmIslamic as financing and
advances. As losses from the business venture is borne solely by the Bank, the related collective allowance is recorded by the Bank.
(a)
Gross loans and advances analysed by type of customer are as follows:
31 March
2013
RM’000
Domestic non-bank financial
institutions
Domestic business enterprises
- Small and medium enterprises
- Others
Government and statutory
bodies
Individuals
Other domestic entities
Foreign entities
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
1,925,829
2,384,610
2,383,193
2,006,335
2,464,527
2,459,268
7,448,088
19,511,811
6,721,159
18,030,268
6,038,799
16,977,426
7,448,088
19,511,811
6,721,159
18,028,631
6,038,799
16,972,319
36,377
31,421,060
13,009
498,657
60,854,831
3,032
30,514,820
12,715
523,832
58,190,436
72,789
31,623,468
1,862
501,132
57,598,669
36,377
31,165,547
13,009
474,281
60,655,448
3,032
30,228,993
12,715
493,166
57,952,223
72,789
31,303,271
1,862
470,868
57,319,176
55
F-58
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
12. LOANS AND ADVANCES (CONTD.)
(b)
Gross loans and advances analysed by geographical distribution are as follows:
31 March
2013
RM’000
In Malaysia
Outside Malaysia
(c)
59,957,307
897,524
60,854,831
57,426,097
764,339
58,190,436
1 April
2011
RM’000
56,916,037
682,632
57,598,669
31 March
2013
RM’000
59,782,299
873,149
60,655,448
Bank
31 March
2012
RM’000
57,218,550
733,673
57,952,223
1 April
2011
RM’000
56,666,808
652,368
57,319,176
Gross loans and advances analysed by interest rate sensitivity are as follows:
31 March
2013
RM’000
Fixed rate
- Housing loans
- Hire purchase receivables
- Other fixed rate loans
Variable rate
- Base lending rate plus
- Cost plus
- Other variable rates
(d)
Group
31 March
2012
RM’000
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
1,800,358
14,954,294
5,612,833
1,833,433
14,959,579
5,400,261
1,946,773
17,370,545
5,104,309
1,544,866
14,954,273
5,612,833
1,547,694
14,959,491
5,400,261
1,626,688
17,370,433
5,104,309
22,072,533
14,985,617
1,429,196
60,854,831
22,061,917
12,701,345
1,233,901
58,190,436
20,076,576
11,767,017
1,333,449
57,598,669
22,072,533
15,041,747
1,429,196
60,655,448
22,061,917
12,750,596
1,232,264
57,952,223
20,076,576
11,812,828
1,328,342
57,319,176
Gross loans and advances analysed by sector are as follows:
31 March
2013
RM’000
Agriculture
Mining and quarrying
Manufacturing
Electricity, gas and water
Construction
Wholesale and retail trade and
hotels and restaurants
Transport, storage and
communication
Finance and insurance
Real estate
Business activities
Education and health
Household of which:
- Purchase of residential
properties
- Purchase of transport vehicles
- Others
Others
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
2,719,051
1,747,207
5,527,439
555,701
2,173,359
2,100,167
1,466,216
5,363,907
1,413,859
2,015,392
2,152,426
1,635,221
4,764,496
2,208,251
1,547,042
2,719,051
1,747,207
5,527,439
555,701
2,173,359
2,100,167
1,466,216
5,362,270
1,413,859
2,015,392
2,152,426
1,635,221
4,759,389
2,208,251
1,547,042
4,703,894
3,795,913
2,987,022
4,703,894
3,795,913
2,987,022
1,982,218
1,950,205
5,443,212
1,293,249
1,044,614
31,478,778
1,939,008
2,415,276
4,425,647
1,251,729
1,374,018
30,546,783
1,781,495
2,413,465
3,822,791
1,565,936
597,289
31,638,379
1,982,218
2,006,335
5,443,212
1,293,249
1,044,614
31,223,265
1,939,008
2,464,527
4,425,647
1,251,729
1,374,018
30,260,956
1,781,495
2,459,277
3,822,791
1,565,936
597,289
31,318,181
12,519,273
15,276,980
3,682,525
235,904
60,854,831
11,987,637
15,014,404
3,544,742
82,521
58,190,436
11,517,804
16,684,955
3,435,620
484,856
57,598,669
12,263,781
15,276,959
3,682,525
235,904
60,655,448
11,701,898
15,014,316
3,544,742
82,521
57,952,223
11,197,718
16,684,843
3,435,620
484,856
57,319,176
56
F-59
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
12. LOANS AND ADVANCES (CONTD.)
(e)
Gross loans and advances analysed by residual contractual maturity are as follows:
31 March
2013
RM’000
Maturing within one year
Over one year to three years
Over three years to five years
Over five years
(f)
13,301,411
6,579,129
9,846,130
31,128,161
60,854,831
Group
31 March
2012
RM’000
10,869,709
8,937,606
8,115,921
30,267,200
58,190,436
1 April
2011
RM’000
12,048,701
6,864,279
8,767,663
29,918,026
57,598,669
31 March
2013
RM’000
13,357,541
6,566,200
9,830,189
30,901,518
60,655,448
10,915,860
8,924,201
8,096,586
30,015,576
57,952,223
1 April
2011
RM’000
12,093,193
6,846,265
8,743,674
29,636,044
57,319,176
Movements in impaired loans and advances are as follows:
Group
31 March
31 March
2013
2012
RM’000
RM’000
Balance at beginning of financial year
Impaired during the year
Reclassified as non-impaired
Recoveries
Amount written off
Repurchase of impaired loans
Balance at end of financial year
Gross impaired loans and advances as % of
gross loans and advances
Loan loss coverage (excluding
collateral values)
(g)
Bank
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
1,663,897
953,387
(240,481)
(374,505)
(608,808)
2,888
1,396,378
2,123,247
1,430,503
(253,979)
(557,407)
(1,078,467)
1,663,897
1,663,202
952,735
(240,146)
(374,470)
(608,808)
2,888
1,395,401
2,122,976
1,429,951
(253,867)
(557,391)
(1,078,467)
1,663,202
2.3%
2.9%
2.3%
2.9%
116.2%
102.1%
116.3%
102.2%
All impaired loans and advances reside in Malaysia.
57
F-60
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
12. LOANS AND ADVANCES (CONTD.)
(h)
Impaired loans and advances analysed by sector are as follows:
Agriculture
Mining and quarrying
Manufacturing
Electricity, gas and water
Construction
Wholesale and retail trade and
hotels and restaurants
Transport, storage and
communication
Finance and insurance
Real estate
Business activities
Education and health
Household of which:
- Purchase of residential
properties
- Purchase of transport vehicles
- Others
Others
(i)
31 March
2013
RM’000
Group
31 March
2012
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
20,239
17,866
238,061
25,800
49,114
23,935
154,677
184,869
132,130
94,839
38,356
355
244,898
288,508
284,056
20,239
17,866
238,061
25,800
49,114
23,935
154,677
184,869
132,130
94,839
38,356
355
244,898
288,508
284,056
42,309
42,430
58,724
42,309
42,430
58,724
18,382
28,287
9,120
11,023
43,049
882,165
4,089
37,628
26,200
12,369
44,805
895,513
19,562
46,865
64,638
5,253
41,337
1,018,435
18,382
28,287
9,120
11,023
43,049
881,188
4,089
37,628
26,200
12,369
44,805
894,818
19,562
46,865
64,638
5,253
41,337
1,018,164
515,943
289,662
76,560
10,963
1,396,378
537,997
277,835
79,681
10,413
1,663,897
628,715
282,368
107,352
12,260
2,123,247
514,966
289,662
76,560
10,963
1,395,401
537,302
277,835
79,681
10,413
1,663,202
628,444
282,368
107,352
12,260
2,122,976
1 April
2011
RM’000
1 April
2011
RM’000
Movements in allowances for impaired loans and advances are as follows:
Group
31 March
31 March
2013
2012
RM’000
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
Collective allowance
Balance at beginning of financial year
Charge to income statement, net (Note 36)
Amount transferred from AmIslamic *
Amount written off
Foreign exchange differences
Balance at end of financial year
Collective allowances as % of gross loans
and advances less individual allowance
*
1,584,690
246,478
1,871
(384,011)
5,211
1,454,239
1,742,609
363,822
(521,758)
17
1,584,690
1,584,814
246,038
1,871
(384,011)
5,212
1,453,924
1,743,195
363,352
(521,758)
25
1,584,814
2.4%
2.7%
2.4%
2.7%
As at 31 March 2013, the gross exposure and collective allowance relating to the RPSIA financing are RM500.9 million and
RM2.1 million respectively.
There was no individual allowance provided for the RPSIA financing.
58
F-61
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
12. LOANS AND ADVANCES (CONTD.)
(i)
Movements in allowances for impaired loans and advances are as follows (contd.):
Group
31 March
31 March
2013
2012
RM’000
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
114,474
275,276
(220,910)
168,840
114,474
275,276
(220,910)
168,840
341,071
318,945
(545,542)
114,474
Individual allowance
Balance at beginning of financial year
Charge to income statement, net (Note 36)
Amount written off
Balance at end of financial year
341,071
318,945
(545,542)
114,474
13. STATUTORY DEPOSIT WITH BANK NEGARA MALAYSIA
The non-interest bearing statutory deposit is maintained with Bank Negara Malaysia in compliance with Section 37(1)(c) of the Central
Bank of Malaysia Act, 1958 (revised 1994), the amounts of which are determined as a set percentage of total eligible liabilities.
14. DEFERRED TAX ASSETS
Group
31 March
31 March
2013
2012
RM’000
RM’000
Balance at beginning of financial year
Recognised in profit or loss (Note 38)
Recognised in other comprehensive income (Note 39)
Balance at end of financial year
159,570
(50,396)
11,607
120,781
59
F-62
416,439
(270,378)
13,509
159,570
Bank
31 March
2013
RM’000
158,391
(48,918)
11,050
120,523
31 March
2012
RM’000
417,364
(270,454)
11,481
158,391
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
14. DEFERRED TAX ASSETS (CONTD.)
The components and movements of deferred tax assets/(liabilities) during the financial year prior to offsetting are as follows:
Balance at
beginning of
financial year
RM’000
Recognised
in other
Recognised
in profit comprehenor loss -sive income
RM’000
RM’000
Balance
at end of
financial year
RM’000
Group
31 March 2013
Collective allowance for impaired loans and advances
Deferred charges
Excess of capital allowance over depreciation
Allowance for impairment of foreclosed properties
Provision for expenses
Other temporary differences
Available-for-sale reserve
Cash flow hedging reserve
92,316
(32,160)
(40,377)
41,286
88,895
13,325
(7,636)
3,921
159,570
(92,316)
2,606
(6,452)
1,934
(503)
44,335
(50,396)
11,312
295
11,607
(29,554)
(46,829)
43,220
88,392
57,660
3,676
4,216
120,781
508,617
(38,755)
(38,416)
36,184
88,849
(122,816)
(6,095)
(11,129)
416,439
(416,301)
6,595
(1,961)
5,102
46
136,141
(270,378)
(1,541)
15,050
13,509
92,316
(32,160)
(40,377)
41,286
88,895
13,325
(7,636)
3,921
159,570
90,838
(32,160)
(40,377)
41,286
88,895
13,325
(7,337)
3,921
158,391
(90,838)
2,606
(6,452)
1,934
(503)
44,335
(48,918)
10,755
295
11,050
(29,554)
(46,829)
43,220
88,392
57,660
3,418
4,216
120,523
507,215
(38,755)
(38,416)
36,184
88,849
(122,816)
(3,768)
(11,129)
417,364
(416,377)
6,595
(1,961)
5,102
46
136,141
(270,454)
(3,569)
15,050
11,481
90,838
(32,160)
(40,377)
41,286
88,895
13,325
(7,337)
3,921
158,391
31 March 2012
Collective allowance for impaired loans and advances
Deferred charges
Excess of capital allowance over depreciation
Allowance for impairment of foreclosed properties
Provision for expenses
Other temporary differences
Available-for-sale reserve
Cash flow hedging reserve
Bank
31 March 2013
Collective allowance for impaired loans and advances
Deferred charges
Excess of capital allowance over depreciation
Allowance for impairment of foreclosed properties
Provision for expenses
Other temporary differences
Available-for-sale reserve
Cash flow hedging reserve
31 March 2012
Collective allowance for impaired loans and advances
Deferred charges
Excess of capital allowance over depreciation
Allowance for impairment of foreclosed properties
Provision for expenses
Other temporary differences
Available-for-sale reserve
Cash flow hedging reserve
As at 31 March 2013, the Bank has unutilised capital allowances of approximately RM181,008,000 (31 March 2012: RM183,025,000; 1
April 2011: RM184,288,000) that is available for offset against future taxable profit of the leasing business. Deferred tax assets is not
recognised due to uncertainty in timing of its recoverability.
60
F-63
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
15. INVESTMENT IN SUBSIDIARIES
Unquoted shares, at cost
Less: Impairment loss
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
93,711
(27,911)
65,800
93,711
(27,911)
65,800
93,711
(27,911)
65,800
The subsidiaries are all incorporated in Malaysia except for AmTrade Services Limited which is incorporated in Hong Kong.
Details of the subsidiaries are as follows:
Name of subsidiary
Principal activities
AmPremier Capital Berhad
Issue of subordinated
securities
Securitisation of
mortgage loans
Property investment
Property investment
Property investment
AmMortgage One Berhad
AmProperty Holdings Sdn. Bhd.
Bougainvillaea Development
Sdn. Bhd.
MBf Information Services
Sdn. Bhd.
MBf Trustees Berhad
MBf Nominees (Tempatan)
Sdn. Bhd.
Teras Oak Pembangunan
Sendirian Berhad
Komuda Credit & Leasing
Sdn. Bhd.
Everflow Credit & Leasing
Corporation Sdn. Bhd.
AmCredit & Leasing Sdn. Bhd.
Malco Properties Sdn. Bhd.
Economical Enterprises
Sendirian Berhad
Effective equity interest
31 March
31 March
1 April
2013
2012
2011
%
%
%
-*
-*
-*
100.0
100.0
100.0
1
1
1
100.0
100.0
100.0
500
11,000
500
11,000
500
11,000
100.0
100.0
100.0
100.0
100.0
100.0
27,500
27,500
27,500
100.0
100.0
100.0
250
10
250
10
250
10
60.0
100.0
60.0
100.0
60.0
100.0
Dormant
4,700
4,700
4,700
100.0
100.0
100.0
Dormant
14,259
14,259
14,259
100.0
100.0
100.0
Dormant
684
684
684
100.0
100.0
100.0
Dormant
Dormant
Dormant
3,892
417
535
3,892
417
535
3,892
417
535
100.0
81.5
100.0
100.0
81.5
100.0
100.0
81.5
100.0
Trustee services
Nominee services
AmInternational (L) Ltd
AmCapital (L) Inc
AMBB Capital (L) Ltd
Labuan banking
Dormant
Issue of Hybrid
Capital securities
AmTrade Services Limited ^
Trade finance services
^
*
**
***
Issued and paid-up ordinary
share capital in RM
31 March
31 March
1 April
2013
2012
2011
RM'000
RM'000
RM'000
USD'000
10,000
-**
-**
USD'000
10,000
-**
-**
USD'000
10,000
-**
-**
%
100.0
100.0
100.0
%
100.0
100.0
100.0
%
100.0
100.0
100.0
HKD'000
-***
HKD'000
-***
HKD'000
-***
%
100.0
%
100.0
%
100.0
Audited by an affiliate of Ernst & Young.
Subsidiary with issued and paid-up ordinary share capital of RM2.00.
Subsidiaries with issued and paid-up ordinary share capital of USD3.00.
Subsidiary with issued and paid-up ordinary capital of HKD$2.00.
61
F-64
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
16. INVESTMENT IN ASSOCIATES
31 March
2013
RM’000
Unquoted shares, at cost
Less: Impairment loss
Group's share of post-acquisition
reserve
Group
31 March
2012
RM’000
1 April
2011
RM’000
100
100
100
100
100
100
792
892
1,511
1,611
1,143
1,243
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
150
(28)
122
150
(23)
127
150
(8)
142
122
127
142
Details of the associates, which are both incorporated in Malaysia, are as follows:
Principal activity
AmTrustee Berhad
MBf Trustees Berhad
Trustee Services
Trustee Services
Issued and paid-up ordinary capital
31 March
31 March
1 April
2013
2012
2011
RM’000
RM’000
RM’000
500
250
500
250
500
250
The effective equity interests are as follows:
Group
Effective equity interest
31 March
31 March
2013
2012
AmTrustee Berhad
MBf Trustees Berhad
20%
60%
20%
60%
1 April
2011
20%
60%
Bank
Effective equity interest
31 March
31 March
2013
2012
20%
20%
20%
20%
1 April
2011
20%
20%
The investment in MBf Trustees Berhad is classified as investment in subsidiary at Group level through additional equity interests held by
two other subsidiaries of the Bank.
The summarised financial information of the associate is as follows:
31 March
2013
RM’000
Total assets
Total liabilities
Operating revenue
Profit for the year
15,637
9,601
7,800
755
62
F-65
Group
31 March
2012
RM’000
17,413
7,700
7,319
1,842
1 April
2011
RM’000
22,160
14,238
5,676
1,286
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
17. OTHER ASSETS
Other receivables, deposits
and prepayments, net
of allowance for impairment
Interest receivable, net
of allowance for impairment
Amount due from originators
Foreclosed properties, net
of allowance for impairment
Deferred charges
Deferred assets
(a)
Note
31 March
2013
RM’000
Group
31 March
2012
RM’000
(a)
550,979
540,239
(a)
(b)
153,322
256,047
(c)
72,682
141,691
1,174,721
(d)
31 March
2013
RM’000
Bank
31 March
2012
RM’000
352,537
545,541
534,562
347,919
141,534
166,238
122,740
19,583
153,379
256,047
141,577
166,238
122,746
19,583
82,607
148,142
1,078,760
110,993
171,597
34,744
812,194
72,682
141,691
1,169,340
82,607
148,142
1,073,126
110,993
171,597
34,744
807,582
1 April
2011
RM’000
1 April
2011
RM’000
Included in other receivables, deposits and prepayments of the Group and the Bank are amounts due from related companies of
RM21,311,000 (31 March 2012: RM19,250,000, 1 April 2011: RM16,996,000) and RM16,882,000 (31 March 2012: RM14,903,000, 1
April 2011: RM14,184,000) respectively.
Other receivables, deposits and prepayments of the Group and the Bank are shown net of impairment of RM37,271,000 (31 March
2012: RM21,383,000, 1 April 2011: RM19,982,000) and RM24,876,000 (31 March 2012: RM8,988,000, 1 April 2011: RM7,567,000)
respectively.
Interest receivable of the Group and the Bank are shown net of impairment of RM727,000 (31 March 2012: RM139,000, 1 April 2011:
RM4,008,000).
The movement in allowance for impairment of interest receivable and other receivables, deposits and prepayments is as follows:
Group
31 March
31 March
2013
2012
RM’000
RM’000
Balance at beginning of financial year
Allowance made/(writeback) during the year, net
Amount reversed/written-off
Transferred from financial assets held-for-trading
Balance at end of financial year
(b)
21,522
1,563
(87)
15,000
37,998
23,990
(1,809)
(659)
21,522
Bank
31 March
2013
RM’000
9,127
1,563
(87)
15,000
25,603
31 March
2012
RM’000
11,575
(1,789)
(659)
9,127
Amount due from originators represents personal and housing loans acquired from originators for onward sale to Cagamas Berhad as
mentioned in Note 21.
63
F-66
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
17. OTHER ASSETS (CONTD.)
(c)
The movement in allowance for impairment of foreclosed properties is as follows:
Group
31 March
31 March
2013
2012
RM’000
RM’000
Balance at beginning of financial year
Allowance made during the year, net
Amount reversed
Balance at end of financial year
(d)
165,145
9,086
(1,151)
173,080
136,800
28,345
165,145
Bank
31 March
2013
RM’000
165,145
9,086
(1,151)
173,080
31 March
2012
RM’000
136,800
28,345
165,145
Deferred assets
31 March
2013
RM’000
Arising from takeover of Kewangan Usahasama
Makmur Berhad
-
Group and Bank
31 March
2012
RM’000
-
1 April
2011
RM’000
34,744
In 1988, the Bank took over the operations of Kewangan Usahasama Makmur Berhad (“KUMB”), a deposit taking co-operative in
Malaysia. The Government of Malaysia granted KUMB a future tax benefit amounting to RM434 million; subsequently adjusted to
RM426.69 million upon finalisation of KUMB’s tax credit in consideration of the deficit in assets taken over from deposit taking cooperatives. The tax benefit is a fixed monetary sum and is not dependent on any changes in tax rates.
The net tax benefit is shown as a deferred asset and the utilisation of the deferred tax benefit is based on the receipt of notices of
assessment and subsequent remission of tax liabilities by the relevant authority net of the amount payable to the tax authorities for
purposes of Section 108 tax credit.
During the financial year ended 31 March 2012, upon approval by the Ministry of Finance, the deferred assets were fully utilised for
remission of the Bank's tax liabilities.
64
F-67
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-68
Carrying Amount
At 31 March 2013
Analysed as:
Accumulated depreciation
Accumulated impairment losses
Balance at beginning of financial year
Depreciation charge for the year
Disposals
Foreign exchange differences
Reclassification/Adjustments
Written off
Balance at end of financial year
Accumulated depreciation and
impairment losses
Balance at beginning of financial year
Additions
Transfer from/(to) related companies, net
Disposals
Reclassification/Adjustments
Foreign exchange differences
Written off
Balance at end of financial year
Cost
31 March 2013
Group
18. PROPERTY AND EQUIPMENT
Company No. 8515-D
8,989
-
1,350
(1,350)
-
12,481
(3,492)
8,989
Freehold
land
RM’000
3,315
1,408
254
1,662
1,571
91
1,662
4,977
4,977
Long term
leasehold
land
RM’000
262
272
272
264
8
272
534
534
Short term
leasehold
land
RM’000
65
23,989
14,289
886
15,175
14,404
770
1
15,175
39,161
3
39,164
Buildings
RM’000
18,126
96,136
96,136
88,488
7,752
(103)
(1)
96,136
104,608
8,965
12
678
(1)
114,262
Leasehold
improvements
RM’000
13,014
88,493
88,493
84,487
5,217
(137)
12
(1,086)
88,493
96,827
5,907
1
(141)
(2)
13
(1,098)
101,507
Office
equipment,
furniture
and
fittings
RM’000
57,520
250,560
250,560
228,536
27,279
(5,210)
3
(48)
250,560
289,825
12,840
2,047
(5,241)
8,654
3
(48)
308,080
Computer
equipment
RM’000
20,579
-
-
8,793
21,724
(37)
(9,901)
20,579
Work-inprogress
RM’000
149,150
454,941
1,140
456,081
422,854
41,798
(7,350)
17
(103)
(1,135)
456,081
564,532
49,900
2,023
(9,526)
(571)
20
(1,147)
605,231
Total
RM’000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
3,356
3,783
3,783
3,754
681
(653)
1
3,783
7,326
464
(652)
1
7,139
Motor
vehicles
RM’000
F-69
Carrying amount
At beginning of financial year
At end of financial year
Analysed as:
Accumulated depreciation
Accumulated impairment losses
Balance at beginning of financial year
Depreciation charge for the year
Transfer from/(to) related companies, net
Disposals
Foreign exchange differences
Reclassification
Written off
Balance at end of financial year
Accumulated depreciation and
impairment losses
Balance at beginning of financial year
Additions
Transfer from/(to) related companies, net
Disposals
Reclassification
Foreign exchange differences
Written off
Balance at end of financial year
Cost
31 March 2012
Group
18. PROPERTY AND EQUIPMENT (CONTD.)
Company No. 8515-D
11,273
11,131
1,350
1,350
1,350
1,350
12,623
(142)
12,481
Freehold
land
RM’000
3,436
3,406
1,317
254
1,571
1,470
91
10
1,571
4,906
71
4,977
Long term
leasehold
land
RM’000
267
270
264
264
267
7
(10)
264
534
534
Short term
leasehold
land
RM’000
66
25,545
24,757
13,518
886
14,404
13,710
773
(80)
1
14,404
39,255
(170)
71
5
39,161
Buildings
RM’000
21,164
16,120
88,488
88,488
79,209
9,247
36
(1)
(3)
88,488
100,373
3,901
95
(1)
245
(5)
104,608
Leasehold
improvements
RM’000
13,568
12,340
84,487
84,487
81,812
5,762
(2,350)
(345)
16
(408)
84,487
95,380
4,479
(2,288)
(346)
(6)
17
(409)
96,827
Office
equipment,
furniture
and
fittings
RM’000
71,834
61,289
228,536
228,536
235,351
26,680
25
(14,901)
3
(18,622)
228,536
307,185
10,152
39
(14,930)
6,004
4
(18,629)
289,825
Computer
equipment
RM’000
5,033
8,793
-
-
5,033
10,003
(6,243)
8,793
Work-inprogress
RM’000
155,322
141,678
420,364
2,490
422,854
417,122
43,162
(2,356)
(16,064)
23
(19,033)
422,854
572,444
29,585
(2,299)
(16,184)
29
(19,043)
564,532
Total
RM’000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
3,202
3,572
3,754
3,754
3,953
602
(67)
(737)
3
3,754
7,155
1,050
(145)
(737)
3
7,326
Motor
vehicles
RM’000
F-70
Carrying amount
At end of financial year
Analysed as:
Accumulated depreciation
Accumulated impairment losses
Balance at beginning of financial year
Depreciation charge for the year
Disposals
Reclassification/Adjustments
Written off
Balance at end of financial year
Accumulated depreciation and
impairment losses
Balance at beginning of financial year
Additions
Transfer from/(to) related companies, net
Disposals
Reclassification/Adjustments
Written off
Balance at end of financial year
Cost
31 March 2013
Bank
18. PROPERTY AND EQUIPMENT (CONTD.)
Company No. 8515-D
90
-
1,350
(1,350)
-
3,582
(3,492)
90
Freehold
land
RM’000
2,413
1,139
254
1,393
1,317
76
1,393
3,806
3,806
Long term
leasehold
land
RM’000
131
172
172
169
3
172
303
303
Short term
leasehold
land
RM’000
67
10,759
5,018
886
5,904
5,574
330
5,904
16,663
16,663
Buildings
RM’000
18,127
96,102
96,102
88,454
7,752
(103)
(1)
96,102
104,575
8,965
12
678
(1)
114,229
Leasehold
improvements
RM’000
12,903
87,181
87,181
83,227
5,177
(137)
(1,086)
87,181
95,424
5,900
1
(141)
(2)
(1,098)
100,084
Office
equipment,
furniture
and
fittings
RM’000
57,500
250,269
250,269
228,257
27,270
(5,210)
(48)
250,269
289,517
12,840
2,047
(5,241)
8,654
(48)
307,769
Computer
equipment
RM’000
20,579
-
-
8,793
21,724
(37)
(9,901)
20,579
Work-inprogress
RM’000
125,859
443,540
1,140
444,680
411,979
41,289
(7,350)
(103)
(1,135)
444,680
529,867
49,893
2,023
(9,526)
(571)
(1,147)
570,539
Total
RM’000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
3,357
3,659
3,659
3,631
681
(653)
3,659
7,204
464
(652)
7,016
Motor
vehicles
RM’000
F-71
Carrying amount
At beginning of financial year
At end of financial year
Analysed as:
Accumulated depreciation
Accumulated impairment losses
Balance at beginning of financial year
Depreciation charge for the year
Transfer from/(to) related companies, net
Disposals
Reclassification
Written off
Balance at end of financial year
Accumulated depreciation and
impairment losses
Balance at beginning of financial year
Additions
Transfer from/(to) related companies, net
Disposals
Reclassification
Written off
Balance at end of financial year
Cost
31 March 2012
Bank
18. PROPERTY AND EQUIPMENT (CONTD.)
Company No. 8515-D
2,232
2,232
1,350
1,350
1,350
1,350
3,582
3,582
Freehold
land
RM’000
2,575
2,489
1,063
254
1,317
1,231
76
10
1,317
3,806
3,806
Long term
leasehold
land
RM’000
127
134
169
169
176
3
(10)
169
303
303
Short term
leasehold
land
RM’000
68
11,512
11,089
4,688
886
5,574
5,321
333
(80)
5,574
16,833
(170)
16,663
Buildings
RM’000
21,165
16,121
88,454
88,454
79,175
9,247
36
(1)
(3)
88,454
100,340
3,901
95
(1)
245
(5)
104,575
Leasehold
improvements
RM’000
13,430
12,197
83,227
83,227
80,560
5,723
(2,350)
(345)
(361)
83,227
93,990
4,436
(2,288)
(346)
(6)
(362)
95,424
Office
equipment,
furniture
and
fittings
RM’000
71,806
61,260
228,257
228,257
235,067
26,670
25
(14,901)
(18,604)
228,257
306,873
10,142
39
(14,930)
6,004
(18,611)
289,517
Computer
equipment
RM’000
5,033
8,793
-
-
5,033
10,003
(6,243)
8,793
Work-inprogress
RM’000
131,078
117,888
409,489
2,490
411,979
406,583
42,649
(2,356)
(15,929)
(18,968)
411,979
537,661
29,532
(2,299)
(16,049)
(18,978)
529,867
Total
RM’000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
3,198
3,573
3,631
3,631
3,703
597
(67)
(602)
3,631
6,901
1,050
(145)
(602)
7,204
Motor
vehicles
RM’000
F-72
363,932
45,985
409,917
137,487
Accumulated depreciation
Balance at beginning of financial year
Depreciation charge for the year
Balance at end of financial year
Carrying amount
At end of financial year
418,741
16,446
13
37,919
(2,358)
470,761
327,077
38,223
7
(1,375)
363,932
91,664
106,829
Cost
Balance at beginning of financial year
Additions
Transfer from related companies
Reclassification
Written off
Balance at end of financial year
Accumulated depreciation
Balance at beginning of financial year
Depreciation charge for the year
Transfer from related companies
Written off
Balance at end of financial year
Carrying amount
At beginning of financial year
At end of financial year
31 March 2012
470,761
18,093
8,914
49,636
547,404
Computer
software
RM’000
Cost
Balance at beginning of financial year
Additions
Transfer from related companies, net
Reclassification/Adjustments
Balance at end of financial year
31 March 2013
19. INTANGIBLE ASSETS
Company No. 8515-D
69
45,790
63,384
-
45,790
55,513
(37,919)
63,384
97,200
-
63,384
83,575
(49,759)
97,200
Group
Work-inprogress
RM’000
137,454
170,213
327,077
38,223
7
(1,375)
363,932
464,531
71,959
13
(2,358)
534,145
234,687
363,932
45,985
409,917
534,145
101,668
8,914
(123)
644,604
Total
RM’000
91,646
106,814
327,054
38,219
7
(1,374)
363,906
418,700
16,445
13
37,919
(2,357)
470,720
137,476
363,906
45,981
409,887
470,720
18,093
8,914
49,636
547,363
Computer
software
RM’000
137,436
170,198
327,054
38,219
7
(1,374)
363,906
464,490
71,958
13
(2,357)
534,104
234,676
363,906
45,981
409,887
534,104
101,668
8,914
(123)
644,563
Total
RM’000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
45,790
63,384
-
45,790
55,513
(37,919)
63,384
97,200
-
63,384
83,575
(49,759)
97,200
Bank
Work-inprogress
RM’000
Company No. 8515-D
20. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS
31 March
2013
RM’000
Licensed banks
Licensed investment banks
Other financial institutions
Bank Negara Malaysia
183,403
830,143
488,436
828,530
2,330,512
Group
31 March
2012
RM’000
2,274,788
844,829
670,443
178,204
3,968,264
1 April
2011
RM’000
263,639
1,013,511
958,697
2,232,061
4,467,908
31 March
2013
RM’000
185,624
830,143
494,073
828,530
2,338,370
Bank
31 March
2012
RM’000
2,842,893
844,829
662,289
178,204
4,528,215
1 April
2011
RM’000
596,413
1,013,511
950,659
2,232,061
4,792,644
Included in deposits from BNM as at 1 April 2011 were deposits (RM135,000,000 with interest of 1% per annum) and non-interest bearing
loans (RM493,000,000) placed with the Group and the Bank in connection with the transfer of assets and liabilities of KUMB to the Bank as
mentioned in Note 17(d).
As at 31 March 2012, the deposit and non-interest bearing loans from BNM were repaid upon full utilisation of the deferred assets relating
to KUMB as mentioned in Note 17(d).
21. RECOURSE OBLIGATION ON LOANS SOLD TO CAGAMAS BERHAD
Recourse obligation on loans sold to Cagamas Berhad represents the proceeds received from the sale of loans directly from the Bank or
acquired from the originators (as disclosed in Note 17(b)) to Cagamas Berhad with recourse. Under this arrangement, the Bank undertakes
to administer the loans on behalf of Cagamas Berhad and to buy back any loans, which are regarded as defective based on prudential
criteria with recourse to the Bank. Under the back-to-back arrangement with the originators, the Bank acts as the intermediary financial
institution and undertakes to administer the receivables on behalf of Cagamas Berhad and to buy back any receivables which are regarded
as defective based on prudential criteria with recourse against the originators.
During the financial year ended 31 March 2012, the Bank has terminated the fair value hedge on the interest rate risk of the loans sold to
Cagamas Berhad. The unamortised fair value is amortised to profit or loss over the remaining term to maturity of the loans sold to
Cagamas Berhad using the effective interest rate method. As at 31 March 2013, amortisation of the fair value of the loans sold to Cagamas
Berhad amounted to RM1,616,000 (31 March 2012: RM607,000, 1 April 2011: NIL).
70
F-73
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
22. DEPOSITS FROM CUSTOMERS
31 March
2013
RM’000
Demand deposits
Savings deposits
Term/Investment deposits
Negotiable instruments
of deposits
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
7,098,444
3,327,501
51,658,578
5,655,715
3,209,941
49,976,753
5,055,998
2,923,609
51,460,867
7,099,779
3,327,501
51,629,802
5,656,951
3,209,941
49,111,956
5,056,308
2,923,609
50,832,065
63,253
62,147,776
517,440
59,359,849
224,130
59,664,604
63,253
62,120,335
517,440
58,496,288
224,130
59,036,112
Included in deposits from customers of the Group and the Bank are deposits of RM1,783,000,000 and RM1,780,000,000 (31 March 2012:
RM1,581,000,000 for the Group and the Bank; 1 April 2011: RM1,308,000,000 and RM1,304,000,000 for the Group and the Bank
respectively) held as collateral for loans and advances.
31 March
2013
RM’000
(i)
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
The deposits are sourced from the following types of customers:
Government and other
statutory bodies
Business enterprises
Individuals
Others
(ii)
Group
31 March
2012
RM’000
5,442,649
27,442,980
28,181,271
1,080,876
62,147,776
5,314,300
26,111,157
26,809,139
1,125,253
59,359,849
10,393,190
21,034,247
27,314,789
922,378
59,664,604
5,442,649
27,416,240
28,180,581
1,080,865
62,120,335
5,314,300
25,247,634
26,809,139
1,125,215
58,496,288
10,393,190
20,406,728
27,314,053
922,141
59,036,112
37,473,239
8,795,115
2,322,715
1,038,327
49,629,396
41,069,261
6,471,725
1,783,750
1,731,459
51,056,195
The maturity structure of term/investment deposits and negotiable instruments of deposits is as follows:
Due within six months
Over six months to one year
Over one year to three years
Over three years to five years
37,638,164
11,460,281
2,323,726
299,660
51,721,831
38,338,036
8,795,115
2,322,715
1,038,327
50,494,193
71
F-74
41,698,063
6,471,725
1,783,750
1,731,459
51,684,997
37,609,386
11,460,281
2,323,727
299,661
51,693,055
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
23. TERM FUNDING
Note
Term loans and revolving credits
(net of unamortised issuance
expense of RM1,642,000;
31 March 2012: RM3,234,000,
1 April 2011: RM4,761,000)
Senior Notes
Credit-Linked Notes
(a)
(b)
31 March
2013
RM’000
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
(a)
1,003,745
824,181
902,829
1,003,745
824,181
902,829
(b)
(c)
2,658,771
412,642
4,075,158
2,891,852
443,780
4,159,813
2,910,527
175,119
3,988,475
2,658,771
412,642
4,075,158
2,891,852
443,780
4,159,813
2,910,527
175,119
3,988,475
The salient terms of the term loans and revolving credits drawn by the Bank's Labuan offshore branch are as follows:
(i)
USD30 million unsecured term loan which bears interest at 0.75% per annum above the lender's cost of funds, was obtained for
working capital purposes. This term loan was initially repayable in full on 26 March 2011, but was subsequently extended to and
repaid on 26 March 2012.
(ii)
USD30 million unsecured term loan was obtained from the Singapore branch of Australia and New Zealand Banking Group
("ANZ") in the financial year ended 31 March 2011 for working capital purposes. This term loan bears interest at 0.75% per
annum above LIBOR. It was repaid in full on 15 April 2011 and a new revolving credit facility of USD30 million was obtained from
ANZ on 16 April 2011. This new revolving credit facility bears interest at 0.75% per annum above LIBOR and matured on 16
April 2012. On the maturity date, the Labuan branch of ANZ had offered to extend the facility for another year, with the terms
and conditions remaining unchanged.
(iii)
USD30 million term loan was drawn on 10 June 2010 for working capital purposes. This term loan bears interest at 1.10% per
annum above LIBOR. This term loan shall be due and payable in full 2 years after the drawdown date. The term loan was repaid
on maturity date. A new USD50 million term loan was drawn on 7 January 2013 for working capital purposes. This term loan
bears interest at 1.10% per annum above LIBOR. The term loan shall be due and payable in full two years from the date of
disbursement.
(iv)
USD210 million syndicated transferable term loan was drawn on 31 March 2011 for working capital purposes. This term loan
was obtained from five banking institutions out of which USD50 million was from ANZ. This term loan which bears interest at
0.9% per annum above LIBOR, is transferable without the consent of the Bank and is due and payable in full 3 years after the
drawdown date.
(v)
USD35 million term loan was drawn on 13 June 2012 for working capital purposes. This term loan bears interest at 0.65% per
annum above the lender's cost of funds. This term loan shall be due and payable in full one year after the drawdown date.
The Senior Notes issued by the Bank is under a Senior Notes Programme ("SNP") of up to RM7.0 billion nominal value. The proceeds
from the issuance of the Senior Notes is to be utilised for the Bank's general working capital requirements.
The SNP has a tenor of up to thirty (30) years from the date of first issuance under the programme. Under the SNP, the Bank may
issue Senior Notes with a tenor of more than one (1) year and up to ten (10) years provided that the Senior Notes mature prior to the
expiry of the SNP. Unless previously redeemed or purchased and cancelled, the Senior Notes shall be fully redeemed on the
respective maturity date(s) at 100% of their nominal value.
The Senior Notes rank pari-passu with all other present and future unsecured and unsubordinated obligations (excluding deposits) of
the Bank. RAM Ratings has assigned a long-term rating of AA3/Stable to the SNP. The Senior Notes issued which remains
outstanding as at reporting date has a fixed interest rate ranging from 3.8% to 5.25% (31 March 2012 and 1 April 2011: 3.5% to
5.25%) per annum and is payable semi-annually. The Senior Notes issued are repayable between 2 to 7 years.
(c)
The Credit-Linked Notes ("CLN") is a structured investment product issued by the Bank and subscribed at nominal value.
The nominal value of CLN issued and outstanding at reporting date amounted to RM438.4 million (31 March 2012: RM468.6 million, 1
April 2011: RM178.4 million). The CLN carries a fixed interest rate ranging from 4.0% to 6.0% per annum (31 March 2012: 4.0% to
6.0%, 1 April 2011: 4.1% to 6.0%) and will mature between 3 months to 8 years (31 March 2012: 3 months to 9 years, 1 April 2011: 1
year to 3 years).
72
F-75
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
24. BILLS AND ACCEPTANCES PAYABLE
Bills and acceptances payable represents the Bank's own bills and acceptances rediscounted and outstanding in the market.
25. DEBT CAPITAL
Note
Subordinated Term Loan
Non-Cumulative NonVoting Guaranteed
Preference Shares
Medium Term Notes
Non-Innovative Tier 1
Capital Securities
Innovative Tier 1
Capital Securities
Irredeemable
Non-Cumulative
Convertible Preference
Shares
(a)
Group
31 March
2012
RM’000
31 March
2013
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
(a)
-
-
-
683,707
698,792
675,060
(b)
(c)
683,707
1,557,800
698,792
1,557,800
675,060
1,557,800
1,557,800
1,557,800
1,557,800
(d)
500,000
500,000
500,000
500,000
500,000
500,000
(e)
485,000
485,000
485,000
485,000
485,000
485,000
(f)
3,226,507
3,241,592
150,000
3,367,860
3,226,507
3,241,592
150,000
3,367,860
Subordinated term loan
The subordinated term loan (USD200 million) which was on-lent from a wholly-owned subsidiary of the Bank, AMBB Capital (L) Ltd,
from the proceeds of the issue of the Hybrid Securities as explained in Note 25(b), is for a period of 50 years to mature on 27 January
2056 with an option to make a first call on 27 January 2016.
The interest rate of the subordinated term loan has been fixed at 6.77% per annum from the date of issue to the date of the first call
on 27 January 2016. Thereafter, a floating rate per annum of 3 month US Dollar LIBOR plus 2.90% will be charged till 27 January
2056.
During the financial year ended 31 March 2012, the Bank terminated the fair value hedge on the interest rate risk of the subordinated
term loan. The unamortised fair value is amortised through profit or loss over the remaining term to maturity of the subordinated term
loan using effective interest rate method. As at 31 March 2013, the amortisation of the fair value of the subordinated term loan
amounted to RM21,701,000 (31 March 2012: RM9,741,000, 1 April 2011: Nil).
(b)
Non-Cumulative Non-Voting Guaranteed Preference Shares
On 27 January 2006, AMBB Capital (L) Ltd, a wholly-owned subsidiary of the Bank issued USD200,000,000 Hybrid Capital
comprising 2,000 preference shares of USD100,000 each (“Hybrid Securities”). The Hybrid Securities are guaranteed by the Bank on
a subordinated basis. The gross proceeds of USD200,000,000 from the issue of Hybrid Securities were on-lent to the Bank in the form
of a subordinated term loan on 27 January 2006 for the purpose of supplementing the Bank’s working capital requirements.
The salient features of the Hybrid Securities are as follows:
(i)
The Hybrid Securities bear non-cumulative dividends from the issue date to (but excluding) 27 January 2016 at 6.77% per
annum and thereafter, at a floating rate equal to three (3) months US dollar LIBOR plus 2.90% if not redeemed on 27 January
2016. The non-cumulative dividends are payable on semi-annual basis.
(ii)
The Hybrid Securities are perpetual securities and have no fixed final redemption date. The Hybrid Securities may be redeemed
in whole but not in part at the option of the issuer (but not the holders) under certain circumstances.
The Hybrid Securities are listed on both the Labuan International Financial Exchange Inc. and the Singapore Exchange Securities
Trading Limited and are offered to international institutional investors outside Malaysia.
The Hybrid Securities qualify as Tier 1 Capital under BNM's capital adequacy framework up to 31 December 2012. Effective 1
January 2013, the Hybrid Securities qualify as Additional Tier 1 Capital as a capital instrument eligible for gradual phase-out treatment
under the transitional arrangements of the Basel III accord.
73
F-76
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
25. DEBT CAPITAL (CONTD.)
(c)
Medium Term Notes
In the financial year 2008, the Bank implemented a RM2.0 billion nominal value Medium Term Notes Programme ("MTN Programme")
whereby the proceeds raised from the MTN Programme had been and will be utilised for the refinancing of existing subordinated debts
and for general working capital requirements.
The MTN Programme has a tenor of up to 20 years from the date of the first issuance under the MTN Programme. The MTNs shall be
issued for a maturity of up to 20 years as the Issuer may select at the point of issuance provided that no MTN shall mature after
expiration of the MTN Programme.
The MTNs issued under the MTN Programme was included as Tier 2 Capital under BNM's capital adequacy framework. Effective 1
January 2013, the MTNs are recognised as a capital instrument under Tier 2 Capital and eligible for gradual phased-out treatment
under the transitional arrangements of the Basel III accord.
The salient features of the MTN issued are as follows:
(i)
Tranche 1 amounting to RM500 million was issued on 4 February 2008 and is for a tenor of 10 years Non-Callable 5 years and
bears interest at 5.23% per annum. RM300 million was early redeemed on 8 October 2012. The remaining RM200 million of
Tranche 1 was called and cancelled on its first call date of 4 February 2013.
(ii)
Tranche 2 and 3 totalling RM240 million was issued on 14 March 2008 as follows:
(iii)
-
Tranche 2 amounting to RM165 million is for a tenor of 10 years Non-Callable 5 years and bears interest at 5.2% per
annum. This tranche was fully called and cancelled on its first call date of 14 March 2013.
-
Tranche 3 amounting to RM75 million is for a tenor of 12 years Non-Callable 7 years and bears interest at 5.4% per
annum.
Tranche 4 and 5 totalling RM120 million was issued on 28 March 2008 as follows:
-
Tranche 4 amounting to RM45 million is for a tenor of 10 years Non-Callable 5 years and bears interest at 5.2% per
annum. This tranche was fully called and cancelled on its first call date of 28 March 2013.
-
Tranche 5 amounting to RM75 million is for a tenor of 12 years Non-Callable 7 years and bears interest at 5.4% per
annum.
(iv)
Tranche 6 amounting to RM600 million issued on 9 April 2008 is for a tenor of 15 years Non-Callable 10 years and bears interest
at 6.25% per annum.
(v)
Tranche 7 amounting to RM97.8 million issued on 10 December 2009 is for a tenor of 10 years Non-Callable 5 years and bears
interest at 5.75% per annum.
(vi)
Tranche 8 amounting to RM710 million issued on 16 October 2012 is for a tenor of 10 years Non-Callable 5 years and bears
interest at 4.45% per annum.
The interest rate of the MTN will step up by 0.5% per annum as follows:
-
at the beginning of the 6th year for Tranche 1
at the beginning of the 6th year for Tranche 2
at the beginning of the 8th year for Tranche 3
at the beginning of the 6th year for Tranche 4
at the beginning of the 8th year for Tranche 5
at the beginning of the 11th year for Tranche 6
at the beginning of the 6th year for Tranche 7
and every anniversary thereafter, preceding the maturity date of the MTN. The step up feature does not apply to Tranche 8.
74
F-77
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
25. DEBT CAPITAL (CONTD.)
(d)
Non-Innovative Tier 1 Capital Securities
In financial year 2009, the Bank issued up to RM500 million Non-Innovative Tier 1 Capital ("NIT1") under its programme of up to
RM500 million in nominal value comprising:
(i)
Non-Cumulative Perpetual Capital Securities ("NCPCS"), which are issued by the Bank and stapled to the Subordinated Notes
described below; and
(ii)
Subordinated Notes ("SubNotes"), which are issued by AmPremier Capital Berhad ("AmPremier"), a wholly-owned subsidiary of
the Bank.
(collectively known as "Stapled Capital Securities")
The SubNotes has a fixed interest rate of 9.0% per annum. However, the NCPCS distribution will not begin to accrue until the
SubNotes are re-assigned to the Bank.
The NCPCS are issued in perpetuity unless redeemed under the terms of the NCPCS. The NCPCS are redeemable at the option of
the Bank on the 20th interest payment date or 10 years from the issuance date of the SubNotes, or any NCPCS distribution date
thereafter, subject to redemption conditions being satisfied. The SubNotes have a tenor of 30 years unless redeemed earlier under
the terms of the SubNotes. The SubNotes are redeemable at the option of AmPremier on any interest payment date, which cannot be
earlier than the occurrence of Assignment Events as stipulated under the terms of the Stapled Capital Securities.
The Stapled Capital Securities comply with BNM's Guidelines on Non-Innovative Tier 1 capital instruments. Effective 1 January 2013,
the Stapled Capital Securities qualify as Additional Tier 1 Capital as a capital instrument eligible for gradual phased-out treatment
under the transitional arrangements of the Basel III accord.
(e)
Innovative Tier 1 Capital Securities
On 18 August 2009, the Bank issued up to RM485 million Innovative Tier 1 Capital Securities under its RM500 million Innovative Tier
1 Capital Securities ("ITICS") Programme. The ITICS bears a fixed interest (non-cumulative) rate at issuance date (interest rate is
8.25% per annum) and step up 100 basis points after the First Call Date (10 years after issuance date) and interest is payable semiannually in arrears. The maturity date is 30 years from the issue date. The ITICS facility is for a tenor of 60 years from the First Issue
date and has a principal stock settlement mechanism to redeem the ITICS via the issuance of the Bank's ordinary shares. Upon
BNM's approval, the Bank may redeem in whole but not in part the relevant tranche of the ITICS at any time on the 10th anniversary
of the issue date of that tranche or on any interest payment date thereafter.
Effective 1 January 2013, the ITICS qualify as Additional Tier 1 Capital as a capital instrument eligible for gradual phased-out
treatment under the transitional arrangements of the Basel III accord.
(f)
Irredeemable Non-Cumulative Convertible Preference Shares
In the financial year 2008, the Bank issued RM150 million Irredeemable Non-Cumulative Convertible Preference Shares ("INCPS") to
the holding company, AMFB Holdings Berhad ("AMFB"). The INCPS are perpetual securities and do not have a fixed maturity date.
The dividend rate will be 6% per annum. The INCPS are convertible into new ordinary shares of the Bank on the basis of one (1) new
ordinary share for every one (1) INCPS held. BNM has approved the INCPS as Tier 1 Capital of the Bank under the capital adequacy
framework.
On 30 September 2011, AMFB had exercised its conversion right to convert the entire RM150 million into fully paid ordinary shares of
RM1.00 each. With the conversion, the issued and fully paid-up ordinary share capital of the Bank increased to 820,363,762 ordinary
shares of RM1.00 each.
75
F-78
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
26. OTHER LIABILITIES
Note
Other payables and accruals
Interest payable
Lease deposits and
advance rentals
Provision for commitments
and contingencies
Provision for taxation
(a)
31 March
2013
RM’000
Group
31 March
2012
RM’000
1 April
2011
RM’000
31 March
2013
RM’000
Bank
31 March
2012
RM’000
1 April
2011
RM’000
2,298,571
561,931
1,384,452
513,655
1,256,717
435,565
2,289,247
561,926
1,375,836
513,594
1,248,203
434,892
19,724
31,506
45,736
19,724
31,506
45,736
148,307
101,113
3,129,646
216,837
2,760
2,149,210
158,988
185,714
2,082,720
148,317
99,570
3,118,784
216,835
917
2,138,688
158,988
184,252
2,072,071
Included under other payables and accruals of the Group and of the Bank are outstanding balances owing to other related companies
totalling RM28,938,000 and RM28,946,000 respectively (31 March 2012: RM193,272,000 for the Group and the Bank; 1 April 2011:
RM70,482,000 and RM70,479,000 for the Group and the Bank respectively).
(a)
The movement in provision for commitments and contingencies is follows:
Group
31 March
31 March
2013
2012
RM’000
RM’000
Balance at beginning of financial year
Provision made during the year, net
Amount reversed
Foreign exchange differences
Balance at end of financial year
216,837
(68,374)
(156)
148,307
76
F-79
158,988
58,844
(995)
216,837
Bank
31 March
2013
RM’000
216,835
(68,363)
(155)
148,317
31 March
2012
RM’000
158,988
58,842
(995)
216,835
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
27. SHARE CAPITAL
Group
31 March
31 March
2013
2012
'000
'000
Bank
31 March
2013
'000
31 March
2012
'000
Authorised
Balance at beginning of financial year
Ordinary shares of RM1.00 each
6% Irredeemable Non-Cumulative
Convertible Preference Shares
of RM1.00 each (Note 25(f))
Balance at end of financial year
1,386,250
1,386,250
1,386,250
1,386,250
2,500,000
3,886,250
2,500,000
3,886,250
2,500,000
3,886,250
2,500,000
3,886,250
RM’000
RM’000
RM’000
RM’000
Issued and fully paid
Ordinary shares of RM1.00 each:
Balance at beginning of financial year
Shares issued pursuant to conversion
of 6% Irredeemable Non-Cumulative
Convertible Preference Share
of RM1.00 each (Note 25(f))
Balance at end of financial year
6% Irredeemable Non-Cumulative
Convertible Preference Shares
of RM1.00 each (Note 25(f)):
Balance at beginning of financial year
Conversion to ordinary shares of
RM1.00 each (Note 25(f))
Balance at end of financial year
820,364
670,364
820,364
670,364
820,364
150,000
820,364
820,364
150,000
820,364
-
150,000
-
150,000
-
(150,000)
-
-
(150,000)
-
28. RESERVES
Note
Share premium
Other reserves
Retained earnings
(a)
(b)
31 March
2013
RM’000
942,844
992,907
3,543,804
5,479,555
Group
31 March
2012
RM’000
942,844
1,034,629
3,173,558
5,151,031
77
F-80
1 April
2011
RM’000
942,844
773,803
2,637,613
4,354,260
31 March
2013
RM’000
942,844
952,231
3,541,122
5,436,197
Bank
31 March
2012
RM’000
942,844
992,471
3,162,608
5,097,923
1 April
2011
RM’000
942,844
728,045
2,518,612
4,189,501
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-81
-
-
78
-
-
At 31 March 2013
48,516
980,969
980,969
Other comprehensive income:
Net unrealised loss on changes in fair value of
financial investments available-for-sale
Net gain on financial investments available-for-sale
reclassified to profit or loss
Net unrealised gain on changes in fair value of
derivatives designated as cash flow hedge
Net gain on cash flow hedge reclassified to
profit or loss
Exchange differences on translation of foreign operations
Income tax relating to components
of other comprehensive income
-
48,516
980,969
At 1 April 2012
48,516
300,510
At 31 March 2012
-
-
-
-
-
48,516
Merger
reserve
RM'000
-
680,459
Statutory
reserve
RM'000
Transaction with owner:
Transfer to statutory reserve
Other comprehensive income:
Net unrealised gain on changes in fair value of
financial investments available-for-sale
Net gain on financial investments available-for-sale
reclassified to profit or loss
Net unrealised loss on changes in fair value of
derivatives designated as cash flow hedge
Net gain on cash flow hedge reclassified to
profit or loss
Exchange differences on translation of foreign operations
Income tax relating to components
of other comprehensive income
At 1 April 2011
Group
(a) The other reserves and their movements are analysed as follows:
Movement in reserves are shown in the statements of changes in equity.
28. RESERVES (CONTD.)
Company No. 8515-D
(9,174)
11,312
(33,404)
-
-
(33,905)
(10,811)
24,230
24,230
-
(1,541)
2,674
-
-
(97,940)
102,155
21,556
Available-forsale reserve
RM'000
(12,644)
295
(883)
(1,403)
-
225
-
-
(11,761)
(11,761)
-
15,050
(45,152)
(4,182)
-
(56,020)
-
-
33,391
Cash flow
hedging
reserve
RM'000
992,907
11,607
(41,722)
(1,403)
(7,435)
225
(33,905)
(10,811)
1,034,629
1,034,629
300,510
13,509
(39,684)
(4,182)
2,794
(56,020)
(97,940)
102,155
773,803
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
(14,760)
(7,435)
(7,435)
-
-
-
(7,325)
(7,325)
-
2,794
2,794
-
-
-
(10,119)
Foreign
currency
translation
reserve
RM'000
F-82
(3,569)
8,790
79
15,050
(45,152)
-
-
At 31 March 2013
(8,565)
(33,905)
10,755
(31,715)
(8,398)
980,969
23,317
980,969
Other comprehensive income:
Net unrealised loss on changes in fair value of
financial investments available-for-sale
Net gain on financial investments available-for-sale
reclassified to profit or loss
Net unrealised gain on changes in fair value of
derivatives designated as cash flow hedge
Net gain on cash flow hedge reclassified to
profit or loss
Exchange differences on translation of foreign operations
Income tax relating to components
of other comprehensive income
-
23,317
980,969
At 31 March 2012
At 1 April 2012
-
300,510
-
(4,182)
-
-
-
(12,644)
295
(883)
(1,403)
-
225
-
-
(11,761)
(11,761)
-
(56,020)
-
(97,940)
-
-
33,391
110,299
14,527
Available-forsale reserve
RM'000
Cash flow
hedging
reserve
RM'000
-
680,459
Statutory
reserve
RM'000
Transaction with owner:
Transfer to statutory reserve
Other comprehensive income:
Net unrealised gain on changes in fair value of
financial investments available-for-sale
Net gain on financial investments available-for-sale
reclassified to profit or loss
Net unrealised loss on changes in fair value of
derivatives designated as cash flow hedge
Net gain on cash flow hedge reclassified to
profit or loss
Exchange differences on translation of foreign operations
Income tax relating to components
of other comprehensive income
At 1 April 2011
Bank
(a) The other reserves and their movements are analysed as follows (contd.):
28. RESERVES (CONTD.)
Company No. 8515-D
952,231
11,050
(40,240)
(1,403)
(7,642)
225
(33,905)
(8,565)
992,471
992,471
300,510
11,481
(36,084)
(4,182)
278
(56,020)
(97,940)
110,299
728,045
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
(7,696)
(7,642)
(7,642)
-
-
-
(54)
(54)
-
278
278
-
-
-
(332)
Foreign
currency
translation
reserve
RM'000
Company No. 8515-D
28. RESERVES (CONTD.)
(a)
The other reserves and their movements are analysed as follows (contd.):
Notes:
a)
Share premium is used to record premium arising from new shares issued in the Bank.
b)
Statutory reserve is maintained in compliance with the provisions of the Banking and Financial Institutions Act, 1989. The
statutory reserve is not distributable as cash dividends.
c)
Available-for-sale reserve comprises the unrealised fair value gains and losses on financial investments available-for-sale.
d)
Cash flow hedging reserve comprises the portion of the gains or losses on a hedging instrument in a cash flow hedge that is
determined to be an effective hedge.
e)
Foreign currency translation reserve represents foreign exchange differences arising from the translation of the financial
statements of foreign operations whose functional currencies are different from that of the Bank's and the Group's financial
currency.
f)
The merger reserve of the Group represents reserve arising from the acquisition of AmInternational (L) Ltd. which is accounted
for using the merger accounting method.
The Bank has elected for the irrevocable option to disregard its Section 108 balance. Hence, the Bank will be able to distribute
dividends out of its entire retained earnings under the single tier system.
29. NON-CONTROLLING INTERESTS
Group
31 March
31 March
2013
2012
RM’000
RM’000
Balance at beginning of financial year
Share in net results of subsidiaries
Balance at end of financial year
46
13
59
46
46
30. INTEREST INCOME
Group
31 March
31 March
2013
2012
RM’000
RM’000
Short-term funds and deposits
with financial institutions
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loans and advances
Impaired loans and advances
Others
234,397
218,144
170,874
54,605
3,609,607
4,803
13,214
4,305,644
80
F-83
266,040
201,860
199,431
4,439
3,552,599
10,040
10,795
4,245,204
Bank
31 March
2013
RM’000
234,134
218,144
179,849
54,526
3,593,204
4,803
13,214
4,297,874
31 March
2012
RM’000
265,183
201,860
210,452
4,118
3,534,611
10,040
10,795
4,237,059
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
31. INTEREST EXPENSE
Group
31 March
2013
RM’000
Deposits from customers
Deposits and placements
of banks and other financial
institutions
Recourse obligation on loans
sold to Cagamas Berhad
Term funding
Debt capital
Others
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
1,774,243
1,728,379
1,773,894
1,726,373
72,855
88,895
73,853
91,869
40,872
170,115
200,172
26,911
2,285,168
41,906
171,350
205,510
16,882
2,252,922
40,872
170,115
200,164
26,915
2,285,813
41,906
171,350
205,501
16,911
2,253,910
32. NET INCOME FROM ISLAMIC BANKING BUSINESS
Group
31 March
2013
RM’000
Income derived from investment
of depositors' funds and others
Income derived from investment
of shareholders' funds
Income attributable to
the depositors
81
F-84
31 March
2012
RM’000
25
42
4
228
(20)
9
(32)
238
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
33. OTHER OPERATING INCOME
Group
31 March
2013
RM’000
Fee and commission income:
Bancassurance commission
Brokerage fees, commission and rebates
Corporate advisory
Fees on loans, advances and securities
Guarantee fees
Underwriting commission
Remittances
Service charges fee
Other fee and commission income
Investment and trading income:
Foreign exchange1
Gross dividend income from:
Associate
Financial assets held-for-trading
Financial investments available-for-sale
Subsidiaries
Net gain on sale/redemption of:
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Net gain/(loss) on revaluation of
financial assets held-for-trading
Net gain on derivatives:
Fair value hedge2
Others
Others
31 March
2012
RM’000
29,111
1,647
46
180,101
37,772
37
22,567
21,200
11,180
303,661
36,326
1,750
204,668
41,235
5,500
21,269
23,662
4,111
338,521
29,111
1,647
180,088
37,160
37
22,567
22,549
11,051
304,210
91,324
106,869
91,324
106,869
9,178
10,507
-
13,847
12,334
-
1,160
9,178
10,507
17,393
13,847
12,334
130,406
29,067
33,905
40,766
170,253
97,940
13,714
29,072
33,905
40,766
170,253
97,940
13,714
3,805
(14,829)
3,805
(14,829)
56,658
(5,720)
269,490
460
76,700
(36,188)
441,100
56,658
(5,720)
288,048
460
76,700
(36,188)
571,506
(1,541)
1,582
4,155
9,658
13,854
623
4,245
3,305
10,068
18,241
(1,541)
1,523
3,395
9,116
12,493
553
861
2,687
9,580
13,681
621,242
2
Bank
31 March
2013
RM’000
36,326
1,750
204,704
41,647
5,500
21,269
22,541
4,161
337,898
Other income:
Net (loss)/gain on disposal of
property and equipment
Net non-trading foreign exchange gain
Rental income
Others
1
31 March
2012
RM’000
763,002
639,062
889,397
Foreign exchange gain includes gains and losses from spot and forward contracts and other currency derivatives.
Arising from changes in fair value of interest rate swaps (hedging instrument) and subordinated term loan and loans sold to Cagamas
Berhad (hedged items) relating to the hedged risk. The fair value hedge for the above hedged items was terminated as at 31 March
2012.
82
F-85
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
34. OTHER OPERATING EXPENSES
Group
31 March
2013
RM’000
Personnel costs:
Salaries, allowances and bonuses
Shares and options granted under ESS
Pension costs - defined contribution plan
Social security cost
Others
Establishment costs:
Amortisation of intangible
assets (Note 19)
Cleaning, maintenance and security
Computerisation cost
Depreciation of property
and equipment (Note 18)
Rental
Others
Service transfer pricing recovery, net
633,566
32,434
94,096
4,797
63,775
828,668
576,784
26,753
91,593
4,648
76,632
776,410
45,985
21,283
159,432
38,223
22,988
116,746
45,981
20,460
159,430
38,219
22,342
116,775
41,794
70,503
28,211
367,208
43,162
67,296
27,257
315,672
41,285
72,353
27,437
366,946
42,649
69,093
26,498
315,576
42,165
2,019
44,606
10,422
99,212
32,259
1,999
44,002
10,051
88,311
42,165
2,019
44,558
10,401
99,143
32,258
1,999
43,954
10,040
88,251
69,191
35,725
104,916
67,850
28,175
96,025
69,119
35,302
104,421
67,783
27,754
95,537
(336,074)
(270,939)
(334,060)
(269,193)
(26,562)
(4,732)
(26,562)
(4,732)
8,422
1,047,568
83
F-86
31 March
2012
RM’000
578,242
26,857
91,823
4,656
76,727
778,305
Expenses capitalised
Acquisition and business efficiency costs
(included for the Group and the Bank
depreciation charge amounting
to RM4,000, 31 March 2012: Nil)
Bank
31 March
2013
RM’000
634,955
32,506
94,319
4,814
63,852
830,446
Marketing and communication expenses:
Advertising and marketing
Commission
Communication
Others
Administration and general expenses:
Professional services
Others
31 March
2012
RM’000
1,002,642
8,422
1,046,978
1,001,849
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
34. OTHER OPERATING EXPENSES (CONTD.)
The above expenditure includes the following statutory disclosure:
Group
31 March
2013
RM’000
Auditors' remuneration:
Parent company auditor
Audit
Assurance related
Others
Firm affiliated with parent auditor
Audit
Hire of office equipment
Intangible assets written off (Note 19)
Operating lease
Property and equipment written off (Note 18)
Rental of premises
- subsidiaries
- others
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
999
1,268
34
961
577
57
930
1,205
34
895
577
57
19
7,220
41,346
12
19
7,043
983
28,227
10
7,220
41,346
12
7,043
983
28,227
10
70,497
67,236
2,072
70,281
2,072
67,021
Personnel costs include salaries, bonuses, contribution to Employees' Provident Fund ("EPF") (a substantial shareholder of the holding
company) and all other staff related expenses.
84
F-87
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-88
205
60
60
60
25
205
-
240
60
60
60
60
240
-
*
*
*
*
2,940
1,200
1,200
1,740
1,740
2,991
1,335
1,335
1,656
1,656
Salaries
RM'000
85
3,177
1,260
1,260
1,917
1,917
2,518
1,573
1,573
945
945
Bonus
RM'000
Note :
*
Directors' fees for executive directors of the subsidiaries of AMMB Holdings Berhad are paid to their respective companies.
** Paid to ANZ
Total Directors' remuneration (Note 42(d))
Non-Executive Directors:
Tan Sri Azman Hashim
Tun Mohammed Hanif Omar
Tan Sri Datuk Clifford Francis Herbert
Dato' Gan Nyap Liou @ Gan Nyap Liow
Chin Yuen Yin
Ashok Ramamurthy
Executive Director:
Cheah Tek Kuang
31 March 2012
Total Directors' remuneration (Note 42(d))
Non-Executive Directors:
Tan Sri Azman Hashim
Cheah Tek Kuang
Tun Mohammed Hanif Omar
Tan Sri Datuk Clifford Francis Herbert
Dato' Gan Nyap Liou @ Gan Nyap Liow
Chin Yuen Yin
Christopher Robin Page
Executive Director:
Ashok Ramamurthy
31 March 2013
Fees
RM'000
The total remuneration (including benefits-in-kind) of the Directors of the Group are as follows:
35. DIRECTORS’ REMUNERATION
Company No. 8515-D
3,460
394
50
46
33
22
672
1,217
2,243
2,243
2,094
393
754
45
52
48
46
1,338
756
756
Other
emoluments
RM'000
**
10,002
394
110
106
93
47
3,201
3,951
6,051
6,051
8,040
393
3,753
105
112
108
106
4,577
3,463
3,463
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
220
69
69
151
151
197
91
91
106
106
Benefits-in-kind
RM'000
Company No. 8515-D
36. ALLOWANCE FOR IMPAIRMENT ON LOANS AND ADVANCES
Group
31 March
2013
RM’000
Allowance for impaired loans
and advances:
Individual allowance (Note 12 (i))
Collective allowance (Note 12 (i))
Impaired loans and advances
recovered, net
Recovery from loans sold to Danaharta
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
275,276
246,478
318,945
363,822
275,276
246,038
318,945
363,352
(485,406)
(3,880)
32,468
(455,544)
(3,731)
223,492
(483,111)
(3,880)
34,323
(449,452)
(3,731)
229,114
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
37. IMPAIRMENT LOSS/(WRITEBACK) ON FINANCIAL INVESTMENTS
Group
31 March
2013
RM’000
Financial investments available-for-sale
Financial investments held-to-maturity (Note 11)
(4,954)
5,722
768
(5,155)
3,020
(2,135)
(3,267)
6,337
3,070
(5,085)
4,010
(1,075)
38. TAXATION
Group
31 March
2013
RM’000
Current tax:
Estimated tax payable
Overprovision in prior financial years
Bank
31 March
2013
RM’000
31 March
2012
RM’000
389,892
(65,107)
324,785
464,070
(374,005)
90,065
388,369
(64,648)
323,721
466,632
(373,938)
92,694
5,038
45,358
50,396
(110,271)
380,649
270,378
5,038
43,880
48,918
(110,195)
380,649
270,454
375,181
360,443
372,639
363,148
Deferred tax (Note 14):
- Origination and reversal of
temporary differences
- Underprovision in prior financial years
Taxation
31 March
2012
RM’000
Domestic income tax is calculated at the statutory tax rate of 25% (2012: 25%) on the estimated chargeable profit for the financial year.
Taxation in foreign jurisdictions is calculated at the rates prevailing in the respective jurisdictions.
86
F-89
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
38. TAXATION (CONTD.)
A reconciliation of taxation applicable to profit before taxation at the statutory tax rate to taxation at the effective tax rate of the Group and
of the Bank is as follows:
Group
31 March
2013
RM’000
Profit before taxation
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
1,626,416
1,448,296
1,632,078
1,559,030
406,604
362,074
408,020
389,757
Taxation at Malaysian statutory tax rate of 25%
(31 March 2012: 25%)
Deferred tax asset recognised on income
subject to tax remission
Effect of different tax rates in Labuan
Expenses not deductible
for tax purposes
Income not subject to tax
Underprovision of deferred tax assets
in prior financial years
Overprovision of current tax
in prior financial years
Total taxation
(6,461)
(9,954)
(9,920)
(6,461)
(8,655)
(7,683)
13,337
(8,596)
11,368
(9,723)
12,793
(12,290)
10,977
(36,614)
45,358
380,649
43,880
380,649
(65,107)
375,181
(374,005)
360,443
(64,648)
372,639
(373,938)
363,148
39. OTHER COMPREHENSIVE INCOME/(LOSS)
Group
31 March
2013
RM’000
Exchange differences on translation of the
financial statements of foreign operations
(7,435)
Cash flow hedge:
Gains/(Losses) arising during the financial year
Less: Reclassification adjustments for
gains included in the
income statement
225
Financial investments available-for-sale:
(Losses)/Gains arising during the financial year
Less: Reclassification adjustments for
gains included in the income
statement (Note 33)
Total other comprehensive loss
Income tax relating to other comprehensive
loss (Note 14 and Note 39(a))
87
F-90
31 March
2012
RM’000
2,794
(56,020)
Bank
31 March
2013
RM’000
(7,642)
225
31 March
2012
RM’000
278
(56,020)
(1,403)
(1,178)
(4,182)
(60,202)
(1,403)
(1,178)
(4,182)
(60,202)
(10,811)
102,155
(8,565)
110,299
(33,905)
(44,716)
(97,940)
4,215
(33,905)
(42,470)
(97,940)
12,359
(53,329)
(53,193)
(51,290)
(47,565)
11,607
(41,722)
13,509
(39,684)
11,050
(40,240)
11,481
(36,084)
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
39. OTHER COMPREHENSIVE INCOME/(LOSS) (CONTD.)
(a)
Income tax effects relating to other comprehensive income/(loss).
Before tax
RM’000
Group
31 March 2013
Cash flow hedge
Financial investments available-for-sale
31 March 2012
Cash flow hedge
Financial investments available-for-sale
Bank
31 March 2013
Cash flow hedge
Financial investments available-for-sale
31 March 2012
Cash flow hedge
Financial investments available-for-sale
Tax expense
RM’000
Net of tax
RM’000
(1,178)
(44,716)
(45,894)
295
11,312
11,607
(883)
(33,404)
(34,287)
(60,202)
4,215
(55,987)
15,050
(1,541)
13,509
(45,152)
2,674
(42,478)
(1,178)
(42,470)
(43,648)
295
10,755
11,050
(883)
(31,715)
(32,598)
(60,202)
12,359
(47,843)
15,050
(3,569)
11,481
(45,152)
8,790
(36,362)
40. EARNINGS PER SHARE
Basic/Diluted
Basic earnings per share is calculated by dividing the net profit attributable to the equity holder of the Bank by the weighted average
number of ordinary shares in issue during the financial year.
Diluted earnings per share is calculated by dividing the net profit attributable to the equity holder of the Bank by the adjusted weighted
average number of ordinary shares in issue and issuable during the financial year. The Bank does not have any dilutive potential ordinary
shares.
Group
31 March
2013
Net profit attributable to
equity holder of the Bank (RM'000)
31 March
2012
Bank
31 March
2013
31 March
2012
1,251,222
1,087,853
1,259,439
1,195,882
820,364
670,364
820,364
670,364
-
75,410
-
75,410
820,364
745,774
820,364
745,774
152.52
145.87
153.52
160.35
Number of ordinary shares at
beginning of financial year ('000)
Effect of conversion of INCPS
to shares ('000)
Weighted average number of
ordinary shares in issue ('000)
Basic/Diluted earnings per share (sen)
88
F-91
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
41. DIVIDENDS
31 March
2013
RM’000
Group and Bank
31 March
2012
RM’000
Recognised during the financial year:
Final single-tier cash dividend of 80.15 sen per
ordinary share in respect of financial year ended 31 March 2012
(2012: approximately 37.00 sen per ordinary share
in respect of the financial year 31 March 2011)
First interim single-tier cash dividend of 26.00 sen per
ordinary share in respect of financial year ended 31 March 2013
657,522
248,034
213,295
-
870,817
248,034
400,338
657,522
Proposed but not recognised as a liability:
Final single-tier cash dividend of 48.80 sen per
ordinary share in respect of financial year ended 31 March 2013
(2012: 80.15 sen per ordinary shares)
In respect of the current financial year, the Directors recommend a final single-tier cash dividend of 48.80 sen per ordinary share on
820,363,762 ordinary shares amounting to approximately RM400,337,516. The financial statements for the current financial year do not
reflect this dividend. Such dividend, if approved by the shareholder, will be accounted for in equity as an appropriation of retained earnings
in the financial year ending 31 March 2014.
42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES
Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other
party in making financial or operational decisions or if one party controls both parties.
The related parties of the Group and the Bank are:
(a)
Subsidiaries
Details of subsidiaries are disclosed in Note 15.
(b)
Related companies
These are subsidiaries of the holding company.
(c)
Associates
Details of associates are disclosed in Note 16.
(d)
Key management personnel
Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling
the activities of the Group and the Bank, either directly or indirectly. The key management personnel of the Group and the Bank
includes Executive and Non-Executive directors of the Bank and certain members of the senior management of the Group (including
close members of their families).
(e)
Companies in which certain directors have substantial financial interest
These are entities in which significant voting power in such entities, either directly or indirectly, resides with certain directors of the
Bank.
(f)
Companies which have significant influence over the Group
These are entities who are substantial shareholders (including its related parties) of the holding company of the Bank.
89
F-92
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-93
Expenses
Airline ticketing service
Computer maintenance and consultancy services
Europay, Mastercard, Visa card
personalization, fulfilment services
and card embossment
Food and beverage
Information service provider
Insurance premium
Interbank GIRO expenses
Interest on deposits
Professional fees
Profit sharing arrangement expense
Purchase of computer hardware, software
and related consultancy services
Rental of premises/car park/booth,
management fee and maintenance
Service transfer pricing expense
Training and consultancy
Interest on deposits
Interest on financial investments
available-for-sale
Interest on loans and advances
Investment and trading income
Service transfer pricing income
Income
Group
-
22,913
3,214
38,056
43,449
107,632
26,646
3,166
5,448
45,181
80,441
36,696
634
313,957
378,005
30,119
2,606
13,085
376,044
458,167
-
26,718
36,313
Related companies
31 March
31 March
2013
2012
RM'000
RM'000
90
-
-
-
-
468
468
-
31 March
2013
RM'000
-
-
-
-
428
428
-
Associates
31 March
2012
RM'000
125
1,696
-
683
115
773
-
-
32
32
-
92
1,091
-
611
385
3
-
-
42
42
-
Key management
personnel
31 March
31 March
2013
2012
RM'000
RM'000
41,266
262
70,903
8,628
382
209
16,299
-
3,430
427
-
-
-
-
-
-
-
-
1,625
-
1,625
-
-
-
-
Companies which have
significant influence
over the Group
31 March
31 March
2013
2012
RM'000
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
40,475
279
60,994
8,128
613
77
7,932
-
3,132
358
-
-
Companies in which
certain Directors have
substantial financial
interest
31 March
31 March
2013
2012
RM'000
RM'000
(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Bank had the following transactions with related parties during the financial year:
42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTD.)
Company No. 8515-D
F-94
Expenses
Airline ticketing service
Computer maintenance
and consultancy services
Europay, Mastercard, Visa card
personalization, fulfilment services
and card embossment
Food and beverage
Information service provider
Insurance premium
Interbank GIRO expenses
Interest on debt capital and term funding
Interest on deposits
Management fees
Professional fees
Profit sharing arrangement expense
Purchase of computer hardware, software
and related consultancy services
Rental of premises/car park/booth,
management fee and maintenance
Service transfer pricing expense
Training and consultancy
Income
Fee income
Interest on deposits
Interest on financial investments
available-for-sale
Interest on loans and advances
Investment and trading income
Service fee
Service transfer pricing income
Bank
-
86,585
3,992
2,022
92,599
-
86,879
1,889
2,326
91,094
11,028
4,139
1,259
280
16,943
8,948
4,305
1,160
314
14,998
-
20
217
Subsidiaries
31 March
2012
RM'000
14
257
31 March
2013
RM'000
45,181
80,436
-
26,641
3,166
5,448
-
-
30,119
2,095
13,085
376,044
457,537
36,194
43,450
107,630
-
22,909
3,214
38,057
-
-
36,696
38
313,957
377,286
26,595
Related companies
31 March
31 March
2013
2012
RM'000
RM'000
91
3
-
3
-
-
-
468
468
-
31 March
2013
RM'000
3
-
3
-
-
-
428
428
-
Associates
31 March
2012
RM'000
125
1,696
-
683
115
773
-
-
-
32
32
-
92
1,091
-
611
385
3
-
-
-
42
42
-
Key management
personnel
31 March
31 March
2013
2012
RM'000
RM'000
40,475
279
60,994
8,128
613
77
7,932
-
358
3,132
-
-
-
-
-
-
-
-
-
1,625
-
1,625
-
-
-
-
-
Companies which have
significant influence
over the Group
31 March
31 March
2013
2012
RM'000
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
41,239
262
70,798
8,628
382
209
16,221
-
427
3,430
-
-
Companies in which
certain Directors have
substantial financial
interest
31 March
31 March
2013
2012
RM'000
RM'000
(a) In addition to the transactions detailed elsewhere in the financial statements, the Group and the Bank had the following transactions with related parties during the financial year (contd.):
42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTD.)
Company No. 8515-D
F-95
Commitments and contingencies:
Contingent liabilities
Commitments
Contract/Notional amount for derivatives
Amount due to:
Deposits and placements
Derivative financial liabilities
Interest payable
Other liabilities
Amount due from:
Cash and short-term funds
Deposits and placements
Derivative financial assets
Financial investments available-for-sale
Loans and advances
Interest receivable
Group
(b) The significant outstanding balances of the Group and the Bank with its related parties are as follows:
42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTD.)
Company No. 8515-D
92
36,963
609,776
539,690
1,186,429
827,474
7,310
2,015
836,799
459,918
1,511,267
609
411,234
177,449
6,503
2,566,980
34,451
529,131
270,047
833,629
671,141
10,914
890
682,945
156,005
723,809
5
806,434
30,209
6,284
1,722,746
Related companies
31 March
31 March
2013
2012
RM'000
RM'000
-
100
3
103
-
31 March
2013
RM'000
-
100
3
103
-
Associates
31 March
2012
RM'000
-
34,861
34,861
698
698
122,113
517,887
640,000
-
-
121,223
328,777
450,000
1,625
1,625
-
Companies which have
significant influence
over the Group
31 March
31 March
2013
2012
RM'000
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
52,535
52,535
614
614
Key management
personnel
31 March
31 March
2013
2012
RM'000
RM'000
F-96
Commitments and contingencies:
Contingent liabilities
Commitments
Contract/Notional amount for derivatives
Amount due to:
Deposits and placements
Debt capital
Derivative financial liabilities
Interest payable
Other liabilities
Amount due from:
Cash and short-term funds
Deposits and placements
Derivative financial assets
Financial investments available-for-sale
Loans and advances
Interest receivable
Bank
15,468
39,912
47
55,427
35,999
1,118,700
10,998
1,165,697
31,554
158,267
80,506
1
270,328
31 March
2013
RM'000
15,323
40,717
56,040
600,543
1,198,792
10,977
1,810,312
193,483
79,917
273,400
Subsidiaries
31 March
2012
RM'000
93
36,963
609,776
569,690
1,216,429
826,827
7,310
2,014
836,151
455,402
1,511,267
609
411,234
153,146
6,502
2,538,160
34,451
529,131
270,047
833,629
671,141
10,914
888
682,943
154,888
723,809
5
806,434
3
6,284
1,691,423
Related companies
31 March
31 March
2013
2012
RM'000
RM'000
(b) The significant outstanding balances of the Group and the Bank with its related parties are as follows (contd.):
42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTD.)
Company No. 8515-D
-
100
3
103
-
31 March
2013
RM'000
-
100
3
103
-
Associates
31 March
2012
RM'000
-
34,861
34,861
698
698
122,113
517,887
640,000
-
-
121,223
328,777
450,000
1,625
1,625
-
Companies which have
significant influence
over the Group
31 March
31 March
2013
2012
RM'000
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
52,535
52,535
614
614
Key management
personnel
31 March
31 March
2013
2012
RM'000
RM'000
Company No. 8515-D
42. SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (CONTD.)
(c)
The transactions between the Bank and related parties were executed at terms agreed between the parties during the year.
(d)
Key management personnel compensation
The remuneration of directors and other key management personnel during the year are as follows:
Group
31 March
2013
RM’000
Directors:
Fees
Salaries and other remuneration
Other short-term employee benefits
(including estimated monetary value
of benefits-in-kind)
Other key management personnel:
Salaries and other remuneration
Other short-term employee benefits
(including estimated monetary value
of benefits-in-kind)
31 March
2012
RM’000
Bank
31 March
2013
RM’000
31 March
2012
RM’000
240
5,509
205
6,117
240
5,509
205
6,117
2,291
8,040
3,680
10,002
2,291
8,040
3,680
10,002
9,870
11,641
9,870
11,641
5,379
15,249
5,816
17,457
5,379
15,249
5,816
17,457
43. CREDIT TRANSACTIONS AND EXPOSURE WITH CONNECTED PARTIES
Group
31 March
2013
31 March
2012
Bank
31 March
2013
31 March
2012
Outstanding credit exposures with connected
parties (RM'000)
3,001,525
1,391,202
3,256,015
1,680,407
Percentage of outstanding credit exposures
to connected parties as a proportion of total
credit exposures (%)
4.22
2.06
4.59
2.50
Percentage of outstanding credit exposures
to connected parties which is impaired or in
default (%)
0.19
0.03
0.17
0.03
The disclosure on credit transactions and exposure with connected parties above is presented in accordance with Para 9.1 of Bank Negara
Malaysia's revised Guidelines on Credit Transactions and Exposures with Connected Parties. Based on these guidelines, a connected
party refers to the following:
(a)
directors of the Bank and their close relatives;
(b)
controlling shareholder and his close relatives;
(c)
executive officer being a member of management having authority and responsibility for planning, directing and/or controlling the
activities of the Banks and his close relatives;
(d)
officers and his close relatives; officer refers to those responsible for or have the authority to appraise and/or approve credit
transactions or review the status of existing credit transactions, either as a member of a committee or individually;
94
F-97
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
43. CREDIT TRANSACTIONS AND EXPOSURE WITH CONNECTED PARTIES (CONTD.)
(e)
firms, partnerships, companies or any legal entities which control, or are controlled by, any person listed in (a) to (d) above, or in
which they have interest as a director, partner, executive officer, agent or guarantor, and their subsidiaries or entities controlled by
them;
(f)
any person for whom the persons listed in (a) to (d) above is a guarantor; and
(g)
subsidiary of or an entity controlled by the Bank and its connected parties.
Credit transactions and exposures to connected parties as disclosed include the extension of credit facility and/or commitments and
contingencies transactions that give rise to credit/counterparty risk, the underwriting and acquisition of equities and private debt securities
issued by the connected parties.
The credit transactions with connected parties are all transacted on an arm's length basis and on terms and conditions not more favourable
than those entered with other counterparties with similar circumtances and credit worthiness. Due care has been taken to ensure that the
credit worthiness of the connected party is not less than that normally required of other persons.
44. CAPITAL COMMITMENTS
Group and Bank
31 March
31 March
2013
2012
RM’000
RM’000
Authorised and contracted for:
Purchase of computer equipment and software
Leasehold improvements
Authorised but not contracted for:
Purchase of computer equipment and software
48,864
7,231
56,095
80,120
5,296
85,416
128,059
184,154
145,435
230,851
45. OPERATING LEASE COMMITMENTS
The Group and the Bank have lease commitments in respect of rented premises and equipment on hire, all of which are classified as
operating lease. The future minimum lease payments under the non-cancellable operating lease, net of sub-leases are as follows:
Group
31 March
2013
RM’000
One year or less
Over one year to five years
Over five years
105,730
149,839
8,851
264,420
31 March
2012
RM’000
93,685
82,668
16,556
192,909
Bank
31 March
2013
RM’000
105,542
149,619
8,851
264,012
31 March
2012
RM’000
93,497
82,636
16,556
192,689
The minimum lease rentals are not adjusted for operating expenses which the Group and the Bank are obligated to pay. These amounts
are insignificant in relation to the minimum lease obligations. In the normal course of business, leases that expire will be renewed or
replaced by leases on other properties, thus it is anticipated that future annual minimum lease commitments will not be less than rental
expenses for the financial year.
95
F-98
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
46. COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Group and the Bank make various commitments and incur certain contingent liabilities with legal
recourse to their customers. No material losses are anticipated as a result of these transactions. The commitments and contingencies
are not secured against the Group’s and the Bank’s assets.
The notional amounts of the commitments and contingencies of the Group and the Bank are as follows:
Contingent Liabilities
Direct credit substitutes
Transaction related contingent items
Short term self liquidating
trade related contingencies
Obligations under on-going
underwriting agreements
Others
Commitments
Other commitments, such as formal
standby facilities and credit lines, with
an original maturity of up to one year
Other commitments, such as formal
standby facilities and credit lines, with
an original maturity of over one year
Unutilised credit card lines
Forward asset purchases
Derivative Financial Instruments
Foreign exchange related contracts
- One year or less
- Over one year to five years
- Over five years
Interest rate related contracts
- One year or less
- Over one year to five years
- Over five years
Credit related contracts
- One year or less
- Over one year to five years
- Over five years
Equity related contracts
- One year or less
- Over one year to five years
Total
31 March
2013
RM'000
Group
31 March
2,012
RM'000
1 April
2011
RM’000
31 March
2013
RM'000
Bank
31 March
2,012
RM'000
1 April
2011
RM’000
1,253,726
3,812,587
1,608,754
3,120,757
2,259,750
1,869,799
1,253,726
3,812,587
1,608,754
3,120,757
2,259,750
1,869,799
617,806
615,243
615,999
617,689
613,825
615,999
250,000
100
5,934,219
265,000
100
5,609,854
260,000
31,506
5,037,054
250,000
150
5,934,152
265,000
150
5,608,486
260,000
31,406
5,036,954
14,674,911
13,251,953
10,796,440
14,715,741
13,292,670
10,840,686
5,859,056
2,729,671
108,266
23,371,904
4,682,068
2,953,565
360,899
21,248,485
4,498,060
3,322,322
424,290
19,041,112
5,859,056
2,729,671
108,266
23,412,734
4,682,068
2,953,565
360,899
21,289,202
4,498,060
3,322,322
424,290
19,085,358
22,584,554
3,440,503
837,446
20,064,852
3,145,654
58,532
28,584,266
929,849
151,265
22,584,554
3,440,503
837,446
20,064,852
3,145,654
58,532
28,584,266
929,849
151,265
4,548,404
22,110,386
9,682,407
14,448,655
18,849,399
8,042,138
5,870,000
27,256,982
3,900,759
4,548,404
22,110,386
9,682,407
14,448,655
18,849,399
8,042,138
5,870,000
27,256,982
3,900,759
267,510
298,274
297,752
61,290
549,473
292,733
76,473
252,433
-
267,510
298,274
297,752
61,290
549,473
292,733
76,473
252,433
-
322,791
547,989
64,938,016
484,281
362,369
66,359,376
601,986
521,072
68,145,085
322,791
547,989
64,938,016
484,281
362,369
66,359,376
601,986
521,072
68,145,085
94,244,139
93,217,715
92,223,251
94,284,902
93,257,064
92,267,397
31 March
2013
RM'000
94,261,611
23,291
94,284,902
31 March
2012
RM'000
93,233,992
23,072
93,257,064
1 April
2011
RM’000
92,220,904
46,493
92,267,397
The breakdown of the commitment and contingencies of the Bank is as follows:
Relating to AmBank (M) Berhad
Relating to AMIL with external parties*
* The Bank has given a continuing guarantee to Labuan Financial Services Authority ("LFSA") to meet all the liabilities and financial
obligations of its subsidiary, AmInternational (L) Ltd ("AMIL").
96
F-99
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
47.
MATURITY ANALYSIS OF ASSETS AND LIABILITIES
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled.
Less than
12 months
RM'000
Over
12 months
RM'000
Total
RM'000
7,324,650
-
7,324,650
1,413,025
84,310
4,100,623
1,329,833
2,096,770
12,946,645
673,872
29,969,728
500,397
298,933
2,018,808
1,936,765
46,285,107
2,122,386
120,781
892
500,849
149,150
234,687
54,168,755
1,913,422
383,243
4,100,623
3,348,641
4,033,535
59,231,752
2,122,386
120,781
892
1,174,721
149,150
234,687
84,138,483
2,110,093
220,419
2,330,512
94,945
59,524,390
1,182,244
1,241,980
3,032,564
67,186,216
1,264,251
327,730
2,623,386
2,892,914
3,226,507
97,082
10,652,289
1,264,251
422,675
62,147,776
4,075,158
1,241,980
3,226,507
3,129,646
77,838,505
Group
31 March 2013
ASSETS
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loans and advances
Statutory deposit with Bank Negara Malaysia
Deferred tax assets
Investment in associates
Other assets
Property and equipment
Intangible assets
TOTAL ASSETS
LIABILITIES
Deposits and placements of banks
and other financial institutions
Recourse obligation on loans
sold to Cagamas Berhad
Derivative financial liabilities
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Other liabilities
TOTAL LIABILITIES
97
F-100
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
47.
MATURITY ANALYSIS OF ASSETS AND LIABILITIES (CONTD.)
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled
(contd.).
Less than
12 months
RM'000
Over
12 months
RM'000
Total
RM'000
5,453,638
384,570
-
5,453,638
384,570
1,122,194
134,318
8,910,943
1,692,487
91,534
10,552,313
921,942
29,263,939
245,717
2,748,234
24,621
45,938,959
2,011,288
159,570
1,611
156,818
141,678
170,213
51,598,709
1,122,194
380,035
8,910,943
4,440,721
116,155
56,491,272
2,011,288
159,570
1,611
1,078,760
141,678
170,213
80,862,648
3,143,166
41,195
825,098
-
3,968,264
41,195
146,760
55,998,807
449,365
353,526
2,041,413
62,174,232
1,176,054
294,944
3,361,042
3,710,448
3,241,592
107,797
12,716,975
1,176,054
441,704
59,359,849
4,159,813
353,526
3,241,592
2,149,210
74,891,207
Group
31 March 2012
ASSETS
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loans and advances
Statutory deposit with Bank Negara Malaysia
Deferred tax assets
Investment in associates
Other assets
Property and equipment
Intangible assets
TOTAL ASSETS
LIABILITIES
Deposits and placements of banks
and other financial institutions
Securities sold under repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Derivative financial liabilities
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Other liabilities
TOTAL LIABILITIES
98
F-101
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
47.
MATURITY ANALYSIS OF ASSETS AND LIABILITIES (CONTD.)
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled
(contd.).
Less than
12 months
RM'000
Over
12 months
RM'000
Total
RM'000
8,740,986
289,731
-
8,740,986
289,731
3,792,922
115,664
4,167,002
2,947,674
17,929
11,612,829
539,715
32,224,452
281,009
3,384,295
147,402
43,902,160
143,811
416,439
1,243
272,479
155,322
137,454
48,841,614
3,792,922
396,673
4,167,002
6,331,969
165,331
55,514,989
143,811
416,439
1,243
812,194
155,322
137,454
81,066,066
3,495,035
30,465
972,873
-
4,467,908
30,465
18,197
212,743
56,149,395
242,268
988,389
1,973,521
63,110,013
999,846
220,189
3,515,209
3,746,207
3,367,860
109,199
12,931,383
1,018,043
432,932
59,664,604
3,988,475
988,389
3,367,860
2,082,720
76,041,396
Group
1 April 2011
ASSETS
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loans and advances
Statutory deposit with Bank Negara Malaysia
Deferred tax assets
Investment in associates
Other assets
Property and equipment
Intangible assets
TOTAL ASSETS
LIABILITIES
Deposits and placements of banks
and other financial institutions
Securities sold under repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Derivative financial liabilities
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Other liabilities
TOTAL LIABILITIES
99
F-102
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
47.
MATURITY ANALYSIS OF ASSETS AND LIABILITIES (CONTD.)
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled
(contd.).
Less than
12 months
RM'000
Over
12 months
RM'000
Total
RM'000
7,255,748
-
7,255,748
1,413,025
84,310
4,100,623
1,329,833
2,096,399
13,000,176
668,552
29,948,666
500,397
298,933
2,177,198
1,936,765
46,032,508
2,122,386
120,523
65,800
122
500,788
125,859
234,676
54,115,955
1,913,422
383,243
4,100,623
3,507,031
4,033,164
59,032,684
2,122,386
120,523
65,800
122
1,169,340
125,859
234,676
84,064,621
2,117,952
220,418
2,338,370
94,945
59,496,947
1,182,244
1,241,980
3,030,120
67,164,188
1,264,251
327,730
2,623,388
2,892,914
3,226,507
88,664
10,643,872
1,264,251
422,675
62,120,335
4,075,158
1,241,980
3,226,507
3,118,784
77,808,060
Bank
31 March 2013
ASSETS
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loans and advances
Statutory deposit with Bank Negara Malaysia
Deferred tax assets
Investment in subsidiaries
Investment in associates
Other assets
Property and equipment
Intangible assets
TOTAL ASSETS
LIABILITIES
Deposits and placements of banks
and other financial institutions
Recourse obligation on loans
sold to Cagamas Berhad
Derivative financial liabilities
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Other liabilities
TOTAL LIABILITIES
100
F-103
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
47.
MATURITY ANALYSIS OF ASSETS AND LIABILITIES (CONTD.)
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled
(contd.).
Less than
12 months
RM'000
Over
12 months
RM'000
Total
RM'000
5,133,039
384,570
-
5,133,039
384,570
1,091,549
134,318
8,910,943
1,691,584
88,880
10,595,783
916,404
28,947,070
245,717
2,940,388
24,621
45,657,152
2,011,288
158,391
65,800
127
156,722
117,888
170,198
51,548,292
1,091,549
380,035
8,910,943
4,631,972
113,501
56,252,935
2,011,288
158,391
65,800
127
1,073,126
117,888
170,198
80,495,362
3,703,117
41,195
825,098
-
4,528,215
41,195
146,760
55,135,246
449,365
353,526
2,032,240
61,861,449
1,176,054
294,944
3,361,042
3,710,448
3,241,592
106,448
12,715,626
1,176,054
441,704
58,496,288
4,159,813
353,526
3,241,592
2,138,688
74,577,075
Bank
31 March 2012
ASSETS
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loans and advances
Statutory deposit with Bank Negara Malaysia
Deferred tax assets
Investment in subsidiaries
Investment in associates
Other assets
Property and equipment
Intangible assets
TOTAL ASSETS
LIABILITIES
Deposits and placements of banks
and other financial institutions
Securities sold under repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Derivative financial liabilities
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Other liabilities
TOTAL LIABILITIES
101
F-104
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
47.
MATURITY ANALYSIS OF ASSETS AND LIABILITIES (CONTD.)
The table below shows an analysis of assets and liabilities analysed according to when they are expected to be recovered or settled
(contd.).
Less than
12 months
RM'000
Over
12 months
RM'000
Total
RM'000
8,375,879
289,731
-
8,375,879
289,731
3,702,163
115,664
4,167,002
2,947,674
12,187
11,653,455
535,988
31,799,743
281,009
3,610,022
147,402
43,581,455
143,811
417,364
65,800
142
271,594
131,078
137,436
48,787,113
3,702,163
396,673
4,167,002
6,557,696
159,589
55,234,910
143,811
417,364
65,800
142
807,582
131,078
137,436
80,586,856
3,819,770
30,465
972,874
-
4,792,644
30,465
18,197
212,743
55,520,902
242,268
988,389
1,963,715
62,796,449
999,846
220,189
3,515,210
3,746,207
3,367,860
108,356
12,930,542
1,018,043
432,932
59,036,112
3,988,475
988,389
3,367,860
2,072,071
75,726,991
Bank
1 April 2011
ASSETS
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loans and advances
Statutory deposit with Bank Negara Malaysia
Deferred tax assets
Investment in subsidiaries
Investment in associates
Other assets
Property and equipment
Intangible assets
TOTAL ASSETS
LIABILITIES
Deposits and placements of banks
and other financial institutions
Securities sold under repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Derivative financial liabilities
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Other liabilities
TOTAL LIABILITIES
102
F-105
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
48. CAPITAL MANAGEMENT
The capital and risk management of the banking subsidiaries of AMMB Holdings Berhad (“AMMB”) are managed collectively at Group level.
The Group’s capital management approach is driven by its desire to maintain a strong capital base to support the development of its
businesses, to meet regulatory capital requirements at all times and to maintain good credit ratings.
Strategic, business and capital plans are drawn up annually covering a 3 year horizon and approved by the Board of Directors. The capital
plan ensures that adequate levels of capital and an optimum mix of the different components of capital are maintained by the Group to
support its strategy.
The capital plan takes the following into account:
(a)
Regulatory capital requirements:
•
•
(b)
forecast demand for capital to support the credit ratings; and
increases in demand for capital due to business growth and market shocks.
Or stresses:
•
•
available supply of capital and capital raising options; and
internal controls and governance for managing the Group’s risk, performance and capital.
The Group uses internal models and other quantitative techniques in its internal risk and capital assessment. The models help to estimate
potential future losses arising from credit, market and other risks, and using regulatory formulae to stimulate the amount of capital required
to support them. In addition, the models enable the Group to gain a deeper understanding of its risk profile, for example, by identifying
potential concentrations, assessing the impact of portfolio management actions and performing what-if analysis.
Stress testing and scenario analysis are used to ensure that the Group’s internal capital assessment considers the impact of extreme but
plausible scenarios on its risk profile and capital position. They provide an insight into the potential impact of significant adverse events on
the Group and how these events could be mitigated. The Group’s target capital levels are set taking into account its risk appetite and its
risk profile under future expected and stressed economic scenarios.
The Group’s assessment of risk appetite is closely integrated with the Group’s strategy, business planning and capital assessment
processes, and is used to inform senior management’s views on the level of capital required to support the Group’s business activities.
The Group uses a capital model to assess the capital demand for material risks, and support its internal capital adequacy assessment.
Each material risk is assessed, relevant mitigants considered, and appropriate levels of capital determined. The capital modelling process
is a key part of the Group’s management disciplines.
The capital that the Group is required to hold is determined by its statement of financial position, commitments and contingencies,
counterparty and other risk exposures after applying collateral and other mitigants, based on the Group’s risk rating methodologies and
systems. We discuss these outcomes with BNM on a regular basis as part of our normal regulatory liaison activities. BNM has the right to
impose further capital requirements on Malaysian Financial Institutions via its Financial Market Supervision remit.
The Group operates processes and controls to monitor and manage capital adequacy across the organisation. Where we operate in other
jurisdictions, capital is maintained on the basis of the local regulator’s requirements. It is overseen by the Group Assets and Liabilities
Committee (“GALCO”), which is responsible for managing the Group’s statement of financial position, capital and liquidity.
A strong governance and process framework is embedded in the capital planning and assessment methodology. Overall responsibility for
the effective management of risk rests with the Board of Directors. The Risk Management Committee of Directors (“RMCD”) is specifically
delegated the task of reviewing all risk management issues including oversight of the Group’s capital position and any actions impacting
the capital levels. The Audit and Examination Committee (“AEC”) reviews specific risk areas and the issues discussed at the key capital
management committees.
GALCO proposes internal triggers and target ranges for capital management and operationally oversees adherence with these. For the
current financial year ended 31 March 2013 ("FY13"), these ranges are 7.5 per cent to 9.5 per cent for the common equity Tier 1 ratio, 9.5
per cent to 11.5 per cent for the Tier 1 capital ratio and 13.5 per cent to 15.5 per cent for the total capital ratio. The Group has been
(knowingly) operating in excess of these ranges as the Group remains conservatively positioned for any repercussions from the Global
Financial Crisis.
103
F-106
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
48. CAPITAL MANAGEMENT (CONTD.)
A dedicated team, the Capital and Balance Sheet Management Department, is responsible for the ongoing assessment of the demand for
capital and the updating of the Group’s capital plan.
Appropriate policies are also in place governing the transfer of capital within the Group. These ensure that capital is remitted as
appropriate, subject to complying with regulatory requirements and statutory and contractual restrictions.
There are no current material, practical or legal impediments to the prompt transfer of capital resources in excess of those required for
regulatory purposes or repayment of liabilities between the parent company, AMMB, and its group entities when due.
(a)
Capital adequacy ratios
The capital adequacy ratios of the Group and the Bank as at 31 March 2013 are as follows:
Group
31 March
2013
Bank
31 March
2013
Before deducting proposed dividends
Common equity tier 1
Tier 1 capital ratio
Total capital ratio
8.7%
10.9%
14.3%
8.6%
10.9%
14.3%
After deducting proposed dividends
Common equity tier 1
Tier 1 capital ratio
Total capital ratio
8.1%
10.4%
13.7%
8.0%
10.3%
13.7%
The capital adequacy ratios on a consolidated basis of the banking institution include the financial related services within the Group.
The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach
for Operational Risk. With effect from 1 January 2013, the capital adequacy ratios are computed in accordance with BNM's guidelines
on Capital Adequacy Framework (Capital Components) issued on 28 November 2012, which is based on the Basel III capital accord.
The minimum regulatory capital adequacy requirements for 2013 are as follows:
3.5%
4.5%
8.0%
Common Equity tier 1 ("CET 1")
Tier 1 Capital Ratio
Total Capital Ratio
For 2012, the capital adequacy ratios below are computed in accordance with Bank Negara Malaysia's revised Risk Weighted Capital
Adequacy Framework (RWCAF - Basel II). The comparative capital adequacy ratios are based on the Basel II accord and have not
been restated based on Basel III accord as Basel III is implemented on a prospective basis with effect from 1 January 2013. The
minimum regulatory capital adequacy requirement is 8% for the risk weighted capital ratio.
Group
31 March
2012
Bank
31 March
2012
11.0%
15.1%
11.1%
15.2%
9.9%
14.1%
10.0%
14.2%
Before deducting proposed dividends
Core capital ratio
Risk weighted capital ratio
After deducting proposed dividends
Core capital ratio
Risk weighted capital ratio
The capital adequacy ratios of the Bank refers to the combined capital base as a ratio of the combined risk weighted assets ("RWA")
of the Bank and its wholly-owned offshore banking subsidiary, AMIL.
104
F-107
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
48. CAPITAL MANAGEMENT (CONTD.)
(b)
The capital adequacy ratios of AMIL are as follows:
AMIL
31 March
2013
Basel III
Common equity tier 1
Tier 1 capital ratio
Total capital ratio
Basel II
Core capital ratio
Risk weighted capital ratio
31 March
2012
51.1%
51.1%
51.2%
N/A
N/A
N/A
N/A
N/A
30.1%
30.2%
The capital adequacy ratios of AMIL for capital compliance on a standalone basis are computed in accordance with the BNM
guidelines of RWCAF based on the Basel III (2012: Basel II) capital accord.
(c)
The components of Common Equity Tier 1, Additional Tier 1, Tier 2, Total Capital and RWA of the Group and the Bank as at 31
March 2013 are as follows:
Group
31 March
2013
RM'000
Bank
31 March
2013
RM'000
820,364
942,844
3,543,804
(400,338)
820,364
942,844
3,501,590
(400,338)
(9,174)
(14,760)
980,969
48,516
(12,644)
(8,402)
(14,760)
980,969
48,516
(12,644)
(234,687)
(120,781)
12,644
5,556,757
(234,687)
(120,523)
12,644
5,515,573
1,561,590
7,118,347
1,561,590
7,077,163
Tier 2 capital instruments (subject to gradual phase-out treatment)
Collective allowance and regulatory reserves
Less : Regulatory adjustments applied on Tier 2 capital
Total Tier 2 capital
1,557,800
747,153
(892)
2,304,061
1,557,800
751,584
(133)
2,309,251
Total capital
9,422,408
9,386,414
59,772,241
3,722,181
5,225,079
713
68,720,214
60,126,718
3,722,181
4,816,169
713
68,665,781
Common Equity Tier 1 ("CET1") Capital
Ordinary shares
Share premium
Retained earnings
Less: Proposed dividend - final
Unrealised losses on financial
investments available-for-sale
Foreign exchange translation reserve
Statutory reserve
Merger reserve
Cash flow hedging reserve
Less : Regulatory adjustments applied on CET1 capital
Intangible assets
Deferred tax assets
Cash flow hedging reserve
Total CET1 capital
Additional Tier 1 capital
Additional Tier 1 capital instruments
(subject to gradual phase-out treatment)
Total Tier 1 capital
Tier 2 capital
Credit RWA
Market RWA
Operational RWA
Large exposure risk RWA for equity holdings
Total risk weighted assets
105
F-108
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
48. CAPITAL MANAGEMENT (CONTD.)
(c)
The components of Tier 1, Tier 2 capital and RWA of the Group and the Bank as at 31 March 2012 (incorporating restatement arising
from adoption of MFRS) are as follows:
Group
31 March
2012
RM'000
Bank
31 March
2012
RM'000
Less: Deferred tax assets
820,364
1,111,133
500,000
942,844
980,969
48,516
2,077
3,164,886
50
7,570,839
(163,284)
820,364
1,105,762
500,000
942,844
980,969
48,516
2,077
3,133,023
7,533,555
(161,806)
Total Tier 1 capital
7,407,555
7,371,749
Innovative Tier 1 capital
Medium term notes
Collective allowance for impaired loans *
Total Tier 2 capital
123,967
1,557,800
1,074,075
2,755,842
129,338
1,557,800
1,074,356
2,761,494
Maximum allowable Tier 2 capital
2,755,842
2,761,494
Total capital funds
10,163,397
10,133,243
Less:
Investment in subsidiaries
Other deduction
Capital base
(32,769)
(9,446)
10,121,182
(32,780)
(9,446)
10,091,017
Tier 1 capital
Paid-up share capital
Innovative Tier 1 capital
Non-innovative Tier 1 capital
Share premium
Statutory reserve
Merger reserve
Exchange fluctuation reserve
Retained earnings
Non-controlling interests
Tier 2 capital
*
Excludes collective allowance on impaired loans restricted from Tier 2 capital of the Group and the Bank as at 31 March
2012 of RM510,615,000 and RM510,516,000 respectively.
Group
31 March
2012
RM'000
Credit risk
Market risk
Operational risk
Large exposure risk requirement for equity holdings
Total risk weighted assets
57,292,202
4,494,813
5,401,295
3,298
67,191,608
106
F-109
Bank
31 March
2012
RM'000
57,235,055
4,494,813
4,570,067
3,298
66,303,233
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT
49.1
GENERAL RISK MANAGEMENT DISCLOSURE
Risk Management Framework
The Risk Management Framework takes its lead from the Board's Approved Risk Appetite Framework which provides the catalyst to
setting the risk/reward profile required by the Board, together with the related business strategies, limit framework and policies required
to enable successful execution.
The Risk Appetite Framework is approved annually by the Board taking into account the Group's desired external rating and targeted
profitability/return on equity (“ROE”) and is reviewed periodically throughout the financial year by both the executive management and
the Board to consider any fine tuning/amendments taking into account prevailing or expected changes to the operational environment.
The Risk Appetite Framework provides portfolio parameters for Credit Risk, Traded Market Risk, Non-Traded Market Risk and
Operational Risk incorporating, inter alia, limit structures for countries, industries, single counterparty, value at risk, capital at risk,
earnings at risk, stop loss, stable funding ratio and liquidity. Each Business Unit has asset writing strategies which tie into the overall
Risk Appetite Framework providing detailed strategies of how the Business Units will execute their business plans in compliance with
the Risk Appetite Framework.
Board Approved Risk Appetite Statement
The Group’s strategic goals are for top quartile shareholder returns and target ROE which will be progressively improved over a three
year period wherein the growth will come via, further diversification of the loan portfolio into less volatile earnings streams.
The Group targets to maintain credit rating of BBB+ (from international rating agencies), supported by continued improvement in
overall asset quality and portfolio diversification, and through prudent management of our capital, funding, liquidity and interest rate
risk in the statement of financial position.
The Group intends to maintain sufficient quantity and quality of capital in excess of Basel III requirement for Common Equity Tier 1,
Tier 1 Capital and Total Regulatory Capital. Our capital requirements are robustly tested over a three year period.
We enforce conservative approach to liquidity management, maintaining stable and diversified funding base consistent with Basel III
liquidity matrix (Net Stable Funds Ratio and Liquidity Coverage Ratios). Our targeted Adjusted Loan Deposit Ratio is within 90 per
cent range with continually improving current account and savings account (“CASA”) deposit composition and market share.
Risk Management Governance
The Board is ultimately responsible for the management of risks within the Group. The Risk Management Committee of Directors is
formed to assist the Board in discharging its duties in overseeing the overall management of all risks covering market risk
management, liquidity risk management, credit risk management and operational risk management.
The Board has also established various Management Committees to assist it in managing the risks and businesses of the Group. The
following chart sets out the organisational structure of the risk management committees and an overview of the respective committee’s
roles and responsibilities up to end of March 2013 that is for FYE 2013:
Audit & Examination
Committee of Directors
Risk Management *
Committee of Directors
Board of Directors *
Executive Committee of
Directors *
Shariah Committee
Chief Executive Officer
Committee
Group Assets
and Liabilities
Committee
Islamic Assets
and Liabilities
Committee
Group Traded
Market Risk
Committee
Group Portfolio
Management and
Credit Policy
Committee
Group
Impairment
Provision
Committee
Group
Operational
and Legal Risk
Committee
Group Product
Committee
Business and
IT Project
Committee
* At entity level
107
F-110
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.1
GENERAL RISK MANAGEMENT DISCLOSURE (CONTD.)
Risk Management Governance (contd.)
Roles and Responsibilities
Committee
Risk Management Committee of Directors
(“RMCD”)
-
Oversee senior management activities in managing risk (covering credit, market,
funding, operational, legal, regulatory capital and strategic risk) and to ensure that the
risk management process is in place and functioning.
-
Report and advise the Board on risk issues.
Audit & Examination Committee of Directors (“AEC”)
-
Provide assistance to the Board in relation to fulfilling fiduciary responsibilities and
monitoring of the accounting and financial reporting practices of the Group.
Provide assistance to the Board in ensuring the Islamic Banking operations of the
Group are Shariah compliant.
Shariah Committee
-
Responsible and accountable on matters related to Shariah, which includes advising
the Board and management on Shariah matters and endorsing and validating
products and services, and the relevant documentation in relation to Islamic Banking
operations of the Group.
Executive Committee of Directors (“EXCO”) ("EXCO")
Responsible to consider and approve credit facilities and commitment that are not in
accordance with the policies approved by the Board for which EXCO has been
granted powers to exempt.
Chief Executive Officer Committee (“CEO
Committee”)
Group Assets and Liabilities Committee
(Conventional and Islamic) (“GALCO”)
-
Review credit facilities and commitment that exceeds certain thresholds.
-
Responsible for overall day to day operations of the Group such as oversee
management’s activities in managing risk, review high level risk exposures, portfolio
composition and risk strategies; and evaluate the existence and effectiveness of the
control and risk management infrastructure.
-
Report and advise the Board on risk issues.
Responsible for the development of capital and balance sheet management policy,
approve and oversee non-traded interest/profit rate risk exposures, liquidity and
funding framework and hedging and management of structural foreign exposure.
Ensure fund transfer pricing is effective and fair and capital is managed.
Islamic Assets and Liabilities Committee
-
Responsible for the development of Islamic capital and balance sheet management
policy, approve and oversee rate of return risk exposures, liquidity and funding
framework and hedging and management of structural foreign exposure. Ensure fund
transfer pricing is effective and fair and capital is managed.
Group Traded Market Risk Committee
(“GTMRC”)
-
Responsible for development of traded market risk policy framework, oversee the
trading book portfolio, approve new trading products and ensure compliance with the
internal and regulatory requirements throughout the Group.
Group Portfolio Management and Credit
Policy Committee (“GPMCP”)
-
Responsible for development for credit policy framework, oversee credit portfolio,
endorse asset writing strategies, review credit provisioning policies and process and
ensure compliance with the internal and regulatory requirements throughout the
Group.
Group Impairment Provision Committee
("GIPC")
-
Responsible for the development of key policies relating to impairment provisions,
ensure provisions are assessed and made in accordance with the Board's approved
policies and MFRS 139 and 137 standards and establish adequate management
governance for the determination of provisions.
Group Operational and Legal Risk
Committee (“GOLRC”)
-
Responsible for endorsing operational risk, legal risk and regulatory compliance
framework, oversee operational risk and legal risk management and reviews
regulatory actions or any incidences that may give rise to operational and legal risk
along with the actions taken to mitigate such risks.
108
F-111
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.1
GENERAL RISK MANAGEMENT DISCLOSURE (CONTD.)
Risk Management Governance (contd.)
Committee
Roles and Responsibilities
Group Product Committee (“GPC”)
-
Responsible for ensuring adequate infrastructure and resources are in place for
product management, endorse proposal for new product and product launching
strategies, approve proposal for product variation and reactivation of dormant product
and review post implementation activities and product performance.
Business and IT Project Committee
(“BITPC”)
-
Responsible to review and approve (or where required recommend for approval)
requests relating to the Group's major Business and Information Technology ("IT")
investments.
-
To ensure all projects are aligned to the Business and IT plans, appropriate
prioritisation of Business and IT projects and the allocation of resources.
-
Responsible to optimise the allocation of shared resources and change capacity to
programmes, projects and initiatives across the Group.
Effective April 2013, the Board approved the consolidation of the Executive Risk Management Committees (ERMCs) into one single
committee namely, Group CEOs Committee. This centralisation will assist the Board with the following:
Strategic Risk
Strategic risk is the risk of not achieving the Group’s corporate strategic goals. The Group’s overall strategic planning reflects the
Group’s vision and mission, taking into consideration the Group’s internal capabilities and external factors.
The Board is actively involved in setting of strategic goals, and is regularly updated on matters affecting corporate strategy
implementation and corporate projects/initiatives.
Reputational Risk
The Group recognises that maintaining its reputation among clients, investors, regulators and the general public is an important aspect
of minimizing legal and operational risk. Maintaining our reputation depends on a large number of factors, including the selection of our
clients and business partners and the conduct of our business activities.
The Group seeks to maintain its reputation by screening potential clients and business partners and by conducting our business
activities in accordance with high ethical standards and regulatory requirements.
49.2
CREDIT RISK MANAGEMENT
The credit risk management process is depicted in the table below:
Identification
• Identify/recognise credit risk on transactions and/or positions
• Select asset and portfolio mix
Assessment/
Measurement
•
•
•
•
Control/
Mitigation
• Portfolio Limits, Counterparty Limits, Benchmark Returns
• Collateral and tailored facility structures
Monitoring/
Review
• Monitor and report portfolio mix
• Review customer under Watchlist
• Undertake post mortem review
Internal credit rating system
Probability of default (“PD”)
Loss given default (“LGD”)
Exposure at default (“EAD”)
Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet its payment obligations. Exposure to credit
risk arises from lending, securities and derivative exposures. The identification of credit risk is done by assessing the potential impact
of internal and external factors on the Group's transactions and/or positions.
The primary objective of credit risk management is to maintain accurate risk recognition - identification and measurement, to ensure
that credit risk exposure is in line with the Group’s Risk Appetite Framework and related credit policies.
109
F-112
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
For non-retail credits, risk recognition begins with an assessment of the financial standing of the borrower or counterparty using credit
rating model. The model consists of quantitative and qualitative scores that are then translated into rating grades. The assigned credit
rating grade forms a crucial part of the credit analysis undertaken for each of the Group’s credit exposures.
For retail credits, credit-scoring systems to better differentiate the quality of borrowers are being used to complement the credit
assessment and approval processes.
To support credit risk management, our rating models for major portfolios have been upgraded to facilitate:
•
•
•
•
•
improvement in the accuracy of individual obligor risk ratings;
enhancement to pricing models;
loan loss provision calculation;
stress-testing; and
enhancement to portfolio management.
Lending activities are guided by internal credit policies and Risk Appetite Framework that are approved by the Board. The Group’s Risk
Appetite Framework is refreshed at least annually and with regard to credit risk, provides direction as to portfolio management
strategies and objectives designed to deliver the Group’s optimal portfolio mix. Credit Risk portfolio management strategies include,
amongst others:
•
•
•
•
•
concentration threshold/review trigger:
single counterparty credit;
industry sector; and
country.
asset writing strategies for industry sectors and portfolio composition (by Risk Grade and Security Indicator);
setting Loan to Value limits for asset backed loans (that is, property exposures and other collateral);
watchlist processes for identifying, monitoring and managing customers exhibiting signs of weakness and higher risk
customers; and
setting Benchmark Returns which serve as a guide to the minimum returns the Group requires for the risk undertaken, taking
into account operating expenses and cost of capital.
Individual credit risk exposure is reported to Credit and Commitment Committee (“CACC”). In the event such exposure exceeds CACC
authority, it will be reported to EXCO. Portfolio credit risk is reported to the relevant management and Board committees.
The GPMCP/Group CEOs Committee regularly meet to review the quality and diversification of the Group’s loan portfolio, approve new
and amended credit risk policy, review watchlist reports and post mortem review of loans/financing (to extract lessons learned for
facilitating credit training and refinement of credit policies or guidelines, towards enhancing risk identification and control).
Monthly Risk Reports which detail important portfolio composition and trend analysis incorporating asset growth, asset quality,
impairment, flow rates of loan delinquency buckets and exposures by industry sectors are reported monthly by Group Risk to executive
management and to all meetings of the Board.
The Group applies the Standardised Approach to determine the regulatory capital charge related to credit risk exposure.
Credit Risk Exposure and Concentration
The Group’s concentration of risk is managed by industry sector, risk grade asset quality and single customer limit ("SCL"). The Group
applies SCL to monitor the large exposures to single counterparty risk.
For financial assets recognised in the statement of financial position, the maximum exposure to credit risk before taking account of any
collateral held or other credit enhancements equals the carrying amount. For contingent exposures, the maximum exposure to credit
risk is the maximum amount the Group would have to pay if the instrument is called upon. For committed facilities which are undrawn,
the maximum exposure to credit risk is the full amount of the committed facilities.
The following tables show the maximum exposure to credit risk from financial instruments, including derivatives, by industry and by
geography, before taking account of any collateral held or other credit enhancements.
110
F-113
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
49.2
82,817
82,817
Financial investments available-for-sale
Money Market Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
944,764
30,442
975,206
359,517
217,667
577,184
-
1,155,668
524,760
5,967
6,271
1,732,522
1,609,488
583,746
77,581
161,505
2,713,879
-
1,247
3,567
35,042
-
258,265
258,265
12,363
18,486
250,710
-
89,976
89,976
Financial assets held-for-trading
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Financial investments held-to-maturity
Money Market Securities
Unquoted Private Debt Securities
Total financial investments held-to-maturity
1,934
760
49,300
49,300
-
-
Agriculture
RM'000
Mining and
quarrying
RM'000
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Derivative financial assets
31 March 2013
Group
(i) Industry Analysis
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-114
111
5,314,054
1,107,934
6,421,988
-
1,782,845
994,832
339,744
1,818,693
4,041
5,434,981
23,186
77,599
394,041
371
371
25,295
25,295
84,896
84,896
10,698
-
Manufacturing
RM'000
602,241
91,147
693,388
-
510,261
1,507
1,965
4,461
531,212
3,768
3,558
5,692
-
237,156
237,156
243,868
243,868
-
-
Electricity,
gas and water
RM'000
2,457,622
2,289,873
4,747,495
-
872,439
307,187
275,349
170,004
91,334
2,159,067
58,277
107,245
277,232
537,852
537,852
483,322
483,322
649,931
649,931
642
-
Construction
RM'000
2,226,146
620,470
2,846,616
-
1,961,018
257,624
486,905
1,293,409
10,183
4,702,196
104,330
160,283
428,444
-
-
-
11,605
-
Wholesale and
retail trade and
hotel and
restaurants
RM'000
12,322,212
4,665,315
16,987,527
-
9,093,301
3,037,983
1,235,993
3,635,409
105,680
19,249,990
218,923
379,325
1,543,376
538,223
538,223
1,151,050
1,151,050
1,349,942
1,349,942
40,026
-
Subtotal
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
417,868
307,782
725,650
-
1,201,582
368,327
48,482
181,066
122
1,976,133
15,752
8,587
152,215
-
64,195
64,195
231,971
231,971
14,387
-
Transport,
storage and
communication
RM'000
49.2
1,349,942
1,349,942
1,151,050
1,151,050
538,223
538,223
Financial assets held-for-trading
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Financial investments available-for-sale
Money Market Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial investments held-to-maturity
Money Market Securities
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
1,913,422
326,108
40,026
12,322,212
4,665,315
16,987,527
1,484,349
502,808
1,987,157
-
1,618,432
358,535
2,030,711
9,093,301
3,037,983
1,235,993
3,635,409
105,680
19,249,990
-
28
161
53,555
218,923
379,325
1,543,376
8,047
8,047
1,174,587
495,053
1,669,640
23,178
1,156,946
1,180,124
1,786,235
Finance and
insurance
RM'000
-
Subtotal from
previous page
RM'000
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Derivative financial assets
31 March 2013
Group
(i) Industry Analysis
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-115
112
75,983
75,983
2,122,386
-
-
2,092,645
1,139,620
3,232,265
15,173
15,173
767,179
767,179
-
5,538,415
Government
and central
banks
RM'000
2,366,471
461,980
2,828,451
-
4,183,949
771,113
271,953
49,466
2,580
5,443,163
138,277
25,825
-
41,387
41,387
166,851
166,851
111
-
Real estate
RM'000
542,981
92,690
635,671
-
543,089
210,029
337,491
21,627
2,228
1,291,746
9,489
66,935
100,858
-
11,341
11,341
166,107
166,107
5,116
-
Business
activities
RM'000
227,607
41,549
269,156
-
340,881
29,346
41,340
181
1,044,224
183,131
186,864
262,481
-
-
-
1
-
Education
and health
RM'000
80,951
159,037
239,988
-
150,370
22,121
23,868
26,749
230,134
493
573
5,960
255,000
255,000
148,695
148,695
239,201
239,201
11,881
-
Others
RM'000
23,371,904
5,934,219
29,306,123
2,122,386
16,086,420
4,465,516
1,990,293
3,814,091
110,669
(1,454,239)
59,231,752
15,679,489
15,032,576
1,417,417
2,089,520
2,092,645
1,940,890
4,033,535
1,189,760
1,847,526
3,037,286
767,179
23,178
3,079,047
3,869,404
1,913,422
383,243
7,324,650
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
6,271,350
10,840
6,282,190
-
156,398
36,389
79,648
80,840
31,396,023
15,267,425
14,260,441
1,417,417
97,465
-
-
-
-
-
Household
RM'000
49.2
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
635,783
36,745
672,528
266,225
143,752
409,977
-
807,907
603,946
3,744
13,196
1,466,215
1,276,472
345,624
39,574
168,087
2,088,640
-
2,512
2,972
31,938
-
323,311
323,311
18,277
18,211
222,395
-
60,776
60,776
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
-
2,647
1,658
44,920
44,920
-
Mining and
quarrying
RM'000
-
Agriculture
RM'000
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
31 March 2012
Group
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-116
113
4,650,971
970,296
5,621,267
-
1,607,851
1,209,043
360,016
1,658,603
1,594
5,350,890
37,308
87,468
389,007
-
49,369
49,369
49,563
49,563
10,757
-
Manufacturing
RM'000
255,468
144,796
400,264
-
906,182
455,702
1,612
3,989
1,384,428
5,688
3,428
7,827
-
474,319
474,319
323,195
323,195
1,376
-
Electricity,
gas and water
RM'000
2,790,908
2,419,032
5,209,940
-
726,431
295,248
240,005
189,135
61,198
1,983,495
87,983
89,686
293,809
5,015
5,015
435,416
435,416
296,172
296,172
622
-
Construction
RM'000
2,241,451
533,156
2,774,607
-
1,205,828
108,062
512,442
1,239,389
8,128
3,792,978
141,742
165,962
411,425
-
-
-
23,016
-
Wholesale and
retail trade and
hotel and
restaurants
RM'000
11,365,429
4,640,846
16,006,275
-
8,032,580
3,143,736
1,209,284
3,362,669
76,635
18,004,560
315,082
376,294
1,488,280
14,224
14,224
1,413,386
1,413,386
759,638
759,638
47,513
-
Subtotal
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
524,623
393,069
917,692
-
1,501,909
126,111
51,891
90,270
5,715
1,937,914
21,572
8,567
131,879
9,209
9,209
70,195
70,195
45,788
45,788
7,437
-
Transport,
storage and
communication
RM'000
49.2
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
31 March 2012
Group
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-117
11,365,429
4,640,846
16,006,275
1,204,385
605,021
1,809,406
-
2,212,155
158,544
2,415,231
8,032,580
3,143,736
1,209,284
3,362,669
76,635
18,004,560
-
68
176
44,288
54,625
54,625
2,392,835
214,415
2,607,250
315,082
376,294
1,488,280
14,224
14,224
1,413,386
1,413,386
1,295,616
1,295,616
1,122,194
315,693
47,513
759,638
759,638
1,605,028
384,570
Finance and
insurance
RM'000
-
Subtotal from
previous page
RM'000
114
-
2,011,288
-
-
-
66,207
66,207
6,257,744
6,257,744
-
3,848,610
-
Government
and central
banks
RM'000
1,455,868
243,436
1,699,304
-
3,286,987
729,746
186,624
56,151
4,412,225
1
129,261
23,455
44,652
44,652
27,050
46,259
73,309
72,616
72,616
-
-
Real estate
RM'000
1,020,207
76,338
1,096,545
-
446,159
165,024
348,358
101,494
1,250,202
13,677
66,116
109,374
2,654
2,654
11,084
11,084
-
52
-
Business
activities
RM'000
243,599
34,393
277,992
-
295,115
26,783
32,614
1,373,435
535,636
179,153
304,134
-
-
-
-
-
Education
and health
RM'000
2,839,225
4,280
2,843,505
-
14,301
25,894
28,875
832
77,549
687
638
6,322
-
108,981
108,981
209,877
209,877
16,777
-
Others
RM'000
21,248,485
5,609,854
26,858,339
2,011,288
14,501,614
4,249,727
1,873,613
3,557,460
76,635
(1,584,690)
56,491,272
15,868,476
14,420,392
1,451,791
2,076,254
116,155
116,155
2,459,042
27,050
1,794,125
4,280,217
6,257,744
2,337,747
8,595,491
1,122,194
380,035
5,453,638
384,570
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
3,119,772
5,540
3,125,312
-
214,317
67,858
36,314
30,542,760
15,003,325
13,668,754
1,451,791
100,401
-
-
-
-
-
Household
RM'000
49.2
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
645,462
5,771
651,233
316,268
53,443
369,711
-
821,642
632,138
2,569
144,720
1,635,221
1,106,049
598,342
44,099
152,605
2,127,187
-
4,183
1,953
28,016
-
395,781
395,781
27,178
19,746
179,168
-
77,502
77,502
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
-
667
24
70,035
70,035
-
Mining and
quarrying
RM'000
-
Agriculture
RM'000
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
1 April 2011
Group
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-118
115
2,360,978
478,100
2,839,078
-
1,371,947
906,134
383,632
1,393,123
8,014
4,717,140
69,726
84,099
500,465
-
116,881
116,881
29,994
29,994
2,818
-
Manufacturing
RM'000
420,300
199,267
619,567
-
913,437
1,098,349
904
5,038
2,038,061
7,459
3,483
9,391
-
564,797
564,797
100,409
100,409
231
-
Electricity,
gas and water
RM'000
2,329,780
1,510,970
3,840,750
-
309,052
314,409
194,120
118,957
32,802
1,477,464
123,825
88,085
296,214
9,411
9,411
155
274,559
274,714
207,197
207,197
31
-
Construction
RM'000
1,739,581
249,286
1,988,867
-
788,708
175,067
448,030
819,015
6,365
2,986,124
167,202
138,794
442,943
-
-
-
3,120
-
Wholesale and
retail trade and
hotel and
restaurants
RM'000
8,398,226
2,854,172
11,252,398
-
6,430,831
3,822,021
1,113,836
2,720,320
47,181
16,753,822
645,074
344,779
1,629,780
36,106
36,106
155
1,593,654
1,593,809
439,300
439,300
13,398
-
Subtotal
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
585,857
357,335
943,192
-
1,119,996
97,582
40,482
86,862
1,772,625
245,501
8,619
173,583
26,695
26,695
164,134
164,134
31,665
31,665
6,507
-
Transport,
storage and
communication
RM'000
49.2
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
1 April 2011
Group
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-119
8,398,226
2,854,172
11,252,398
875,147
424,266
1,299,413
-
2,224,262
123,685
2,411,123
6,430,831
3,822,021
1,113,836
2,720,320
47,181
16,753,822
-
88
226
62,862
24,414
24,414
3,309,000
412,492
3,721,492
645,074
344,779
1,629,780
36,106
36,106
155
1,593,654
1,593,809
439,989
439,989
1,792,922
339,803
13,398
439,300
439,300
2,619,778
289,731
Finance and
insurance
RM'000
-
Subtotal from
previous page
RM'000
116
-
143,811
-
-
-
350,523
350,523
2,706,726
2,706,726
2,000,000
-
6,121,208
-
Government
and central
banks
RM'000
594,578
133,843
728,421
-
2,804,239
618,421
244,955
2,312
3,438
3,816,062
109,943
32,754
103,952
103,952
55,726
188,382
244,108
24,960
24,960
-
-
Real estate
RM'000
2,706,145
1,196,582
3,902,727
-
598,217
222,737
251,738
71,159
252
1,565,936
167,648
60,174
194,011
859
859
16,135
16,135
5,347
5,347
-
-
Business
activities
RM'000
120,347
23,501
143,848
-
115,243
70,665
15,363
4,742
125
594,608
105,711
156,024
126,735
-
-
-
-
-
Education
and health
RM'000
2,869,264
401,690
3,270,954
-
33,456
62,118
7,095
363,321
478,555
600
712
11,253
-
266,745
266,745
180,627
180,627
43,472
-
Others
RM'000
19,041,112
5,037,054
24,078,166
143,811
12,590,268
4,924,430
1,687,961
3,161,854
50,996
(1,742,609)
55,514,989
17,348,089
13,833,854
1,491,939
2,168,207
165,331
165,331
3,659,523
55,881
2,477,408
6,192,812
2,706,726
1,090,223
3,796,949
3,792,922
396,673
8,740,986
289,731
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
3,477,405
3,000
3,480,405
-
384,020
4,783
54,974
31,637,492
16,428,968
13,161,996
1,491,939
110,812
-
-
-
-
-
Household
RM'000
49.2
82,817
82,817
Financial investments available-for-sale
Money Market Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
944,764
30,442
975,206
359,517
217,667
577,184
-
1,155,668
524,760
5,967
6,271
1,732,522
1,609,488
583,746
77,581
161,505
2,713,879
-
1,247
3,567
35,042
-
258,265
258,265
12,363
18,486
250,710
-
89,976
89,976
Financial assets held-for-trading
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Financial investments held-to-maturity
Money Market Securities
Unquoted Private Debt Securities
Total financial investments held-to-maturity
1,934
760
49,300
49,300
-
-
Agriculture
RM'000
Mining and
quarrying
RM'000
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Derivative financial assets
31 March 2013
Bank
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-120
117
5,314,054
1,107,934
6,421,988
-
1,782,845
994,832
339,744
1,818,693
4,041
5,434,981
23,186
77,599
394,041
-
25,295
25,295
84,896
84,896
10,698
-
Manufacturing
RM'000
602,241
91,147
693,388
-
510,261
1,507
1,965
4,461
531,212
3,768
3,558
5,692
-
237,156
237,156
243,868
243,868
-
-
Electricity,
gas and water
RM'000
2,457,622
2,266,582
4,724,204
-
872,439
307,187
275,349
170,004
91,334
2,159,067
58,277
107,245
277,232
537,852
537,852
483,322
483,322
649,931
649,931
642
-
Construction
RM'000
2,226,146
620,470
2,846,616
-
1,961,018
257,624
486,905
1,293,409
10,183
4,702,196
104,330
160,283
428,444
-
-
-
11,605
-
Wholesale and
retail trade and
hotel and
restaurants
RM'000
12,322,212
4,642,024
16,964,236
-
9,093,301
3,037,983
1,235,993
3,635,409
105,680
19,249,990
218,923
379,325
1,543,376
537,852
537,852
1,151,050
1,151,050
1,349,942
1,349,942
40,026
-
Subtotal
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
417,868
307,782
725,650
-
1,201,582
368,327
48,482
181,066
122
1,976,133
15,752
8,587
152,215
-
64,195
64,195
231,971
231,971
14,387
-
Transport,
storage and
communication
RM'000
49.2
1,349,942
1,349,942
1,151,050
1,151,050
537,852
537,852
Financial assets held-for-trading
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Financial investments available-for-sale
Money Market Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial investments held-to-maturity
Money Market Securities
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
1,913,422
326,108
40,026
12,322,212
4,642,024
16,964,236
1,518,595
502,741
2,021,336
-
1,618,432
334,159
2,006,335
9,093,301
3,037,983
1,235,993
3,635,409
105,680
19,249,990
-
28
161
53,555
218,923
379,325
1,543,376
8,047
8,047
1,174,587
654,350
1,828,937
23,178
1,156,946
1,180,124
1,717,333
Finance and
insurance
RM'000
-
Subtotal from
previous page
RM'000
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Derivative financial assets
31 March 2013
Bank
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-121
118
75,983
75,983
2,122,386
-
-
2,092,645
1,139,620
3,232,265
15,173
15,173
767,179
767,179
-
5,538,415
Government
and central
banks
RM'000
2,366,471
461,980
2,828,451
-
4,183,949
771,113
271,953
49,466
2,580
5,443,163
138,277
25,825
-
41,387
41,387
166,851
166,851
111
-
Real estate
RM'000
542,981
92,690
635,671
-
543,089
210,029
337,491
21,627
2,228
1,291,746
9,489
66,935
100,858
-
11,341
11,341
166,107
166,107
5,116
-
Business
activities
RM'000
227,607
41,549
269,156
-
340,881
29,346
41,340
181
1,044,224
183,131
186,864
262,481
-
-
-
1
-
Education
and health
RM'000
80,951
159,037
239,988
-
150,370
22,121
23,868
26,749
230,134
493
573
5,960
255,000
255,000
148,695
148,695
239,201
239,201
11,881
-
Others
RM'000
23,406,150
5,910,861
29,317,011
2,122,386
16,086,420
4,441,140
1,990,293
3,814,091
110,669
(1,453,924)
59,032,684
15,679,467
14,857,591
1,417,417
2,089,520
2,092,645
1,940,519
4,033,164
1,189,760
2,006,823
3,196,583
767,179
23,178
3,079,047
3,869,404
1,913,422
383,243
7,255,748
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
6,271,350
10,840
6,282,190
-
156,398
36,389
79,648
80,840
31,221,016
15,267,403
14,085,456
1,417,417
97,465
-
-
-
-
-
Household
RM'000
49.2
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
635,783
36,745
672,528
266,225
143,752
409,977
-
807,907
603,946
3,744
13,196
1,466,215
1,276,472
345,624
39,574
168,087
2,088,640
-
2,512
2,972
31,938
-
323,311
323,311
18,277
18,211
222,395
-
60,776
60,776
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
-
2,647
1,658
44,920
44,920
-
Mining and
quarrying
RM'000
-
Agriculture
RM'000
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
31 March 2012
Bank
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-122
119
4,650,971
970,296
5,621,267
-
1,606,203
1,209,043
360,016
1,658,162
1,594
5,348,801
37,308
87,468
389,007
-
49,369
49,369
49,563
49,563
10,757
-
Manufacturing
RM'000
255,468
121,724
377,192
-
906,182
455,702
1,612
3,989
1,384,428
5,688
3,428
7,827
-
474,319
474,319
323,195
323,195
1,376
-
Electricity,
gas and water
RM'000
2,790,908
2,419,032
5,209,940
-
726,431
295,248
240,005
189,135
61,198
1,983,495
87,983
89,686
293,809
5,015
5,015
435,416
435,416
296,172
296,172
622
-
Construction
RM'000
2,241,451
533,156
2,774,607
-
1,205,828
108,062
512,442
1,239,389
8,128
3,792,978
141,742
165,962
411,425
-
-
-
23,016
-
Wholesale and
retail trade and
hotel and
restaurants
RM'000
11,365,429
4,617,774
15,983,203
-
8,030,932
3,143,736
1,209,284
3,362,228
76,635
18,002,471
315,082
376,294
1,488,280
14,224
14,224
1,413,386
1,413,386
759,638
759,638
47,513
-
Subtotal
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
524,623
393,069
917,692
-
1,501,909
126,111
51,891
90,270
5,715
1,937,914
21,572
8,567
131,879
9,209
9,209
70,195
70,195
45,788
45,788
7,437
-
Transport,
storage and
communication
RM'000
49.2
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
31 March 2012
Bank
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-123
11,365,429
4,617,774
15,983,203
1,245,102
603,603
1,848,705
-
2,212,155
207,799
2,464,486
8,030,932
3,143,736
1,209,284
3,362,228
76,635
18,002,471
-
68
176
44,288
54,625
54,625
2,392,835
406,701
2,799,536
315,082
376,294
1,488,280
14,224
14,224
1,413,386
1,413,386
1,295,616
1,295,616
1,091,549
315,693
47,513
759,638
759,638
1,284,429
384,570
Finance and
insurance
RM'000
-
Subtotal from
previous page
RM'000
120
-
2,011,288
-
-
-
66,207
66,207
6,257,744
6,257,744
-
3,848,610
-
Government
and central
banks
RM'000
1,455,868
243,436
1,699,304
-
3,286,987
729,746
186,624
56,151
4,412,225
1
129,261
23,455
44,652
44,652
27,050
46,259
73,309
72,616
72,616
-
-
Real estate
RM'000
1,020,207
76,388
1,096,595
-
446,165
165,024
348,358
101,488
1,250,202
13,677
66,116
109,374
-
11,084
11,084
-
52
-
Business
activities
RM'000
243,599
34,393
277,992
-
295,564
26,325
32,614
9
1,373,435
535,636
179,153
304,134
-
-
-
-
-
Education
and health
RM'000
2,839,225
4,280
2,843,505
-
14,301
25,894
28,875
832
77,549
687
638
6,322
-
108,981
108,981
209,877
209,877
16,777
-
Others
RM'000
21,289,202
5,585,414
26,874,616
2,011,288
14,500,421
4,298,524
1,873,613
3,557,022
76,635
(1,584,814)
56,252,935
15,868,476
14,135,013
1,451,791
2,076,254
113,501
113,501
2,459,042
27,050
1,986,411
4,472,503
6,257,744
2,337,747
8,595,491
1,091,549
380,035
5,133,039
384,570
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
3,119,772
5,540
3,125,312
-
214,317
67,858
36,314
30,257,381
15,003,325
13,383,375
1,451,791
100,401
-
-
-
-
-
Household
RM'000
49.2
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
645,462
5,771
651,233
316,268
53,443
369,711
-
821,642
632,138
2,569
144,720
1,635,221
1,106,049
598,342
44,099
152,605
2,127,187
-
4,183
1,953
28,016
-
395,781
395,781
27,178
19,746
179,168
-
77,502
77,502
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
-
667
24
70,035
70,035
-
Mining and
quarrying
RM'000
-
Agriculture
RM'000
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
1 April 2011
Bank
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-124
121
2,360,978
478,100
2,839,078
-
1,366,840
906,134
383,632
1,393,123
8,014
4,712,033
69,726
84,099
500,465
-
116,881
116,881
29,994
29,994
2,818
-
Manufacturing
RM'000
420,300
153,713
574,013
-
913,437
1,098,349
904
5,038
2,038,061
7,459
3,483
9,391
-
564,797
564,797
100,409
100,409
231
-
Electricity,
gas and water
RM'000
2,329,780
1,510,970
3,840,750
-
309,052
314,409
194,120
118,957
32,802
1,477,464
123,825
88,085
296,214
9,411
9,411
155
274,559
274,714
207,197
207,197
31
-
Construction
RM'000
1,739,581
249,286
1,988,867
-
788,708
175,067
448,030
819,015
6,365
2,986,124
167,202
138,794
442,943
-
-
-
3,120
-
Wholesale and
retail trade and
hotel and
restaurants
RM'000
8,398,226
2,807,680
11,205,906
-
6,425,724
3,822,021
1,113,836
2,720,320
47,181
16,748,715
645,074
344,779
1,629,780
36,106
36,106
155
1,593,654
1,593,809
439,300
439,300
13,398
-
Subtotal
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
585,857
356,397
942,254
-
1,119,996
97,582
40,482
86,862
1,772,625
245,501
8,619
173,583
26,695
26,695
164,134
164,134
31,665
31,665
6,507
-
Transport,
storage and
communication
RM'000
49.2
Commitments
Contingent liabilities
Total commitments and contingent liabilities
Statutory deposit with Bank Negara Malaysia
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
1 April 2011
Bank
(i) Industry Analysis (Contd.)
CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-125
8,398,226
2,807,680
11,205,906
919,393
424,267
1,343,660
-
2,224,262
169,497
2,456,935
6,425,724
3,822,021
1,113,836
2,720,320
47,181
16,748,715
-
88
226
62,862
18,672
18,672
3,309,000
639,239
3,948,239
645,074
344,779
1,629,780
36,106
36,106
155
1,593,654
1,593,809
439,989
439,989
1,702,163
339,803
13,398
439,300
439,300
2,254,671
289,731
Finance and
insurance
RM'000
-
Subtotal from
previous page
RM'000
122
-
143,811
-
-
-
350,523
350,523
2,706,726
2,706,726
2,000,000
-
6,121,208
-
Government
and central
banks
RM'000
594,578
133,843
728,421
-
2,804,239
618,421
244,955
2,312
3,438
3,816,062
109,943
32,754
103,952
103,952
55,726
188,382
244,108
24,960
24,960
-
-
Real estate
RM'000
2,706,145
1,196,582
3,902,727
-
598,217
222,737
251,738
71,159
252
1,565,936
167,648
60,174
194,011
859
859
16,135
16,135
5,347
5,347
-
-
Business
activities
RM'000
120,347
23,501
143,848
-
115,243
70,665
15,363
4,742
125
594,608
105,711
156,024
126,735
-
-
-
-
-
Education
and health
RM'000
2,869,264
401,588
3,270,852
-
33,456
62,118
7,095
363,321
478,555
600
712
11,253
-
266,745
266,745
180,627
180,627
43,472
-
Others
RM'000
19,085,358
4,990,461
24,075,819
143,811
12,585,161
4,970,242
1,687,961
3,161,854
50,996
(1,743,195)
55,234,910
17,347,976
13,513,769
1,491,939
2,168,207
159,589
159,589
3,659,523
55,881
2,704,155
6,419,559
2,706,726
1,090,223
3,796,949
3,702,163
396,673
8,375,879
289,731
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
3,477,405
3,000
3,480,405
-
384,020
4,783
54,974
31,317,294
16,428,855
12,841,911
1,491,939
110,812
-
-
-
-
-
Household
RM'000
Company No. 8515-D
49.
RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Maximum Credit Exposure by Geographical Location
In
Malaysia
RM'000
Outside
Malaysia
RM'000
Total
RM'000
7,041,313
283,337
7,324,650
1,819,346
297,252
94,076
85,991
1,913,422
383,243
Financial assets held-for-trading
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
767,179
23,178
2,653,570
3,443,927
425,477
425,477
767,179
23,178
3,079,047
3,869,404
Financial investments available-for-sale
Money Market Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
1,189,760
1,623,034
2,812,794
224,492
224,492
1,189,760
1,847,526
3,037,286
Financial investments held-to-maturity
Money Market Securities
Unquoted Private Debt Securities
Total financial investments held-to-maturity
2,092,645
1,940,890
4,033,535
-
2,092,645
1,940,890
4,033,535
15,679,489
15,032,576
1,417,417
2,089,520
-
15,679,489
15,032,576
1,417,417
2,089,520
31 March 2013
Group
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
15,352,035
4,302,378
1,990,293
3,814,091
110,669
(1,440,403)
58,348,065
734,385
163,138
(13,836)
883,687
16,086,420
4,465,516
1,990,293
3,814,091
110,669
(1,454,239)
59,231,752
Statutory deposit with Bank Negara Malaysia
2,122,386
-
2,122,386
Commitments
Contingent liabilities
Total commitments and contingent liabilities
23,179,562
5,763,272
28,942,834
192,342
170,947
363,289
23,371,904
5,934,219
29,306,123
123
F-126
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49.
RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Maximum Credit Exposure by Geographical Location (Contd.)
In
Malaysia
RM'000
Outside
Malaysia
RM'000
Total
RM'000
4,767,663
685,975
5,453,638
384,570
-
384,570
723,809
312,570
398,385
67,465
1,122,194
380,035
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
6,257,744
1,747,219
8,004,963
590,528
590,528
6,257,744
2,337,747
8,595,491
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
2,459,042
27,050
1,617,753
4,103,845
176,372
176,372
2,459,042
27,050
1,794,125
4,280,217
113,502
113,502
2,653
2,653
116,155
116,155
15,868,476
14,420,392
1,451,791
2,076,254
-
15,868,476
14,420,392
1,451,791
2,076,254
31 March 2012
Group
Cash and short-term funds
Securities purchased under
resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
13,878,735
4,108,265
1,873,613
3,557,460
76,635
(1,579,754)
55,731,867
622,879
141,462
(4,936)
759,405
14,501,614
4,249,727
1,873,613
3,557,460
76,635
(1,584,690)
56,491,272
Statutory deposit with Bank Negara Malaysia
2,011,288
-
2,011,288
Commitments
Contingent liabilities
Total commitments and contingent liabilities
21,071,743
5,550,801
26,622,544
176,742
59,053
235,795
21,248,485
5,609,854
26,858,339
124
F-127
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49.
RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Maximum Credit Exposure by Geographical Location (Contd.)
1 April 2011
Group
In
Malaysia
RM'000
Outside
Malaysia
RM'000
Total
RM'000
7,757,026
983,960
8,740,986
Cash and short-term funds
Securities purchased under
resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
289,731
-
289,731
3,429,886
295,619
363,036
101,054
3,792,922
396,673
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
2,706,726
1,090,223
3,796,949
-
2,706,726
1,090,223
3,796,949
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
3,659,523
55,881
2,446,239
6,161,643
31,169
31,169
3,659,523
55,881
2,477,408
6,192,812
159,589
159,589
5,742
5,742
165,331
165,331
17,348,089
13,833,854
1,491,939
2,168,207
-
17,348,089
13,833,854
1,491,939
2,168,207
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
12,026,864
4,805,202
1,687,961
3,161,854
50,996
(1,737,061)
54,837,905
Statutory deposit with Bank Negara Malaysia
Commitments
Contingent liabilities
Total commitments and contingent liabilities
125
F-128
563,404
119,228
(5,548)
677,084
12,590,268
4,924,430
1,687,961
3,161,854
50,996
(1,742,609)
55,514,989
143,811
-
143,811
18,853,171
5,009,304
23,862,475
187,941
27,750
215,691
19,041,112
5,037,054
24,078,166
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49.
RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Maximum Credit Exposure by Geographical Location (Contd.)
In
Malaysia
RM'000
Outside
Malaysia
RM'000
Total
RM'000
6,972,789
282,959
7,255,748
1,819,346
297,252
94,076
85,991
1,913,422
383,243
Financial assets held-for-trading
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
767,179
23,178
2,653,570
3,443,927
425,477
425,477
767,179
23,178
3,079,047
3,869,404
Financial investments available-for-sale
Money Market Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
1,189,760
1,782,331
2,972,091
224,492
224,492
1,189,760
2,006,823
3,196,583
Financial investments held-to-maturity
Money Market Securities
Unquoted Private Debt Securities
Total financial investments held-to-maturity
2,092,645
1,940,519
4,033,164
-
2,092,645
1,940,519
4,033,164
15,679,467
14,857,591
1,417,417
2,089,520
-
15,679,467
14,857,591
1,417,417
2,089,520
31 March 2013
Bank
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
15,352,035
4,302,378
1,990,293
3,814,091
110,669
(1,440,161)
58,173,300
734,385
138,762
(13,763)
859,384
16,086,420
4,441,140
1,990,293
3,814,091
110,669
(1,453,924)
59,032,684
Statutory deposit with Bank Negara Malaysia
2,122,386
-
2,122,386
Commitments
Contingent liabilities
Total commitments and contingent liabilities
23,220,392
5,739,914
28,960,306
185,758
170,947
356,705
23,406,150
5,910,861
29,317,011
126
F-129
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49.
RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Maximum Credit Exposure by Geographical Location (Contd.)
In
Malaysia
RM'000
Outside
Malaysia
RM'000
Total
RM'000
4,762,405
370,634
5,133,039
384,570
-
384,570
723,809
312,570
367,740
67,465
1,091,549
380,035
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
6,257,744
1,747,219
8,004,963
590,528
590,528
6,257,744
2,337,747
8,595,491
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
2,459,042
27,050
1,810,040
4,296,132
176,371
176,371
2,459,042
27,050
1,986,411
4,472,503
113,501
113,501
-
113,501
113,501
15,868,476
14,135,013
1,451,791
2,076,254
-
15,868,476
14,135,013
1,451,791
2,076,254
31 March 2012
Bank
Cash and short-term funds
Securities purchased under
resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
13,877,543
4,187,729
1,873,613
3,557,022
76,635
(1,580,337)
55,523,739
622,878
110,795
(4,477)
729,196
14,500,421
4,298,524
1,873,613
3,557,022
76,635
(1,584,814)
56,252,935
Statutory deposit with Bank Negara Malaysia
2,011,288
-
2,011,288
Commitments
Contingent liabilities
Total commitments and contingent liabilities
21,112,460
5,526,361
26,638,821
176,742
59,053
235,795
21,289,202
5,585,414
26,874,616
127
F-130
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49.
RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Maximum Credit Exposure by Geographical Location (Contd.)
1 April 2011
Bank
In
Malaysia
RM'000
Outside
Malaysia
RM'000
Total
RM'000
7,567,073
808,806
8,375,879
Cash and short-term funds
Securities purchased under
resale agreements
Deposits and placements with banks
and other financial institutions
Derivative financial assets
289,731
-
289,731
3,369,380
295,619
332,783
101,054
3,702,163
396,673
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
2,706,726
1,090,223
3,796,949
-
2,706,726
1,090,223
3,796,949
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
3,659,523
55,881
2,672,986
6,388,390
31,169
31,169
3,659,523
55,881
2,704,155
6,419,559
159,589
159,589
-
159,589
159,589
17,347,976
13,513,769
1,491,939
2,168,207
-
17,347,976
13,513,769
1,491,939
2,168,207
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
Loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Collective Allowance
Total loans and advances
12,021,757
4,881,278
1,687,961
3,161,854
50,996
(1,738,097)
54,587,640
Statutory deposit with Bank Negara Malaysia
Commitments
Contingent liabilities
Total commitments and contingent liabilities
128
F-131
563,404
88,964
(5,098)
647,270
12,585,161
4,970,242
1,687,961
3,161,854
50,996
(1,743,195)
55,234,910
143,811
-
143,811
18,897,417
4,962,711
23,860,128
187,941
27,750
215,691
19,085,358
4,990,461
24,075,819
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Main Types of Collateral Taken by the Group
Collateral is generally taken as security for credit exposures as a secondary source of repayment in case the counterparty cannot meet
its contractual repayment obligations from cash flow generation. Types of collateral typically taken by the Group include:
•
•
•
•
•
•
•
•
•
cash and term deposits;
exchange traded shares, bonds, sukuk, convertible bonds and marketable securities;
non-exchange traded debt securities/sukuk;
unit trusts (including Amanah Saham Nasional, Amanah Saham Bumiputera and mutual funds);
non-exchange traded shares;
residential and non-residential property;
plantation land, mining land, quarry land and vacant land;
passenger vehicle, commercial vehicle, construction vehicle and vessel; and
plant and machineries.
Where the customer risk profile is considered very sound (or by nature of the product, for instance small limit products such as credit
cards), a transaction may be provided on an “unsecured” basis, that is, not be supported by collateral.
In addition to rating customer’s probability of default via an internal risk rating system, the Group uses Security Indicators (“SIs”) in its
non-retail portfolio to assess the strength of collateral supporting its exposures.
Processes for Collateral Management
To support the development of processes around collateral valuation and management, the concept of legal enforceability and
certainty are central to collateral management. In order to achieve legal enforceability and certainty, the Group has standard collateral
instruments, and where applicable, security interests are registered.
Guarantee Support
Guarantee support for lending proposals are an integral component in transaction structuring for the Group. The guarantee of a
financially strong party can help improve the risk grade of a transaction through its explicit support of the borrower, where borrower’s
risk grade will be enhanced with guarantor’s risk grade.
Guarantees that are recognised for risk grading purposes may be provided by parties that include associated entities, banks or
sovereigns. Credit policy provides threshold parameters to determine acceptable counterparties in achieving risk grade enhancement
of the transaction. Guarantee by a counterparty with lower rating than the borrower is not recognised as part of the risk grade
enhancement.
Use of Credit Derivatives and Netting for Risk Mitigation
Currently, the Group does not use credit derivatives and netting for risk mitigation.
Transaction Structuring to Mitigate Credit Risk
Besides tangible security and guarantee support described above, credit risk mitigation techniques are used in structuring
transactions. These include duration limits managing the number of years the loan is extended, amortisation schedules and loan
covenants. These assist in managing credit risk and in providing early warning signals, whereby should loan covenants be breached,
the Group and the customer can work together to address the underlying causes and as appropriate, restructure facilities.
The main types of collateral undertaken by the Group are properties, motor vehicles and exchange traded shares.
129
F-132
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Credit Quality
The credit quality of financial assets are analysed based on broad categories. Internal credit rating grades assigned to corporate and
retail lending business are mapped to the following categories based on the descriptions appended below.
Description of the categories
Credit Quality Classification
Description
Very Strong
Counterparty‘s profile reflects very strong capacity to meet its financial commitments and
exhibits a high degree of resilience to adverse domestic and external development.
These companies/business entities have very strong business fundamentals such as:
i. in good industries with stable revenues with long term growth potential;
ii. exhibits very strong financial position such as very low leverage ratio and superior
cash flows position;
iii. very low risk business franchise with dominant market position, and
iv. very strong management capability
Strong
Counterparty has strong capacity to meet its financial commitments and is generally in a
position to withstand adverse domestic and external developments. These
companies/business entities have strong business fundamentals such as good business
track records, strong financials, sustained market position, and strong management
capability.
Satisfactory
Counterparty has adequate capacity to meet its financial commitments as the business
entity is generally in a position to resolve any apparent shortcoming within an acceptable
timeframe. While adverse domestic or external developments are likely to weaken its
capacity to meet its financial commitments, these companies/ business entities exhibits
satisfactory business fundamentals such as acceptable business track records,
satisfactory overall financials, reasonable market position, and satisfactory management
capability.
Substandard
Counterparty exhibits some weaknesses in its business fundamentals, financials and
management capacity. While currently able to meets its financial commitments, the
counterparty’s financial capacity over the medium and longer terms may be vulnerable to
adverse domestic or external developments.
Impaired
Counterparty has been classified as “impaired” as per the Policy on Definition of
Default/Impaired for Credit Facility.
The table below provides the External Credit Assessment Institutions (ECAIs) ratings that broadly corresponds to the broad internal
credit quality categories.
Credit Quality
Classification
Moody's
S&P
Fitch
RAM
MARC
AAA to Baa3
AAA to BBB-
AAA to BBB-
AAA to AA3
AAA to AA
Ba1 to Ba3
BB+ to BB-
BB+ to BB-
A1 to BBB3
AA- to A+
Satisfactory
B1 to B3
B+ to B-
B+ to B-
BB1 to B1
A to BBB-
Substandard
Caa1 to C
CCC+ to C
CCC to C
B2 to C3
BB+ to C
D
D
D
D
D
Very strong
Strong
Impaired
The above ECAIs used by the Group are:
•
•
•
•
•
Standard & Poor’s Rating Services ("S&P")
Moody’s Investors Service ("Moody's")
Fitch Rating ("Fitch")
Rating Agency Malaysia ("RAM")
Malaysian Rating Corporation Berhad ("MARC")
130
F-133
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
CREDIT RISK MANAGEMENT (CONTD.)
49.2
Impairment
Definition of past due and impaired loans
All loans and advances are categorised as either:
•
•
•
Neither past due nor impaired;
Past due but not impaired; or
Impaired
An asset is considered past due when any payment (whether principal and/or interest) due under the contractual terms are received
late or missed.
A loan is classified as impaired under the following circumstances:
1
(a)
where the principal or interest or both1 is past due or the amount outstanding is in excess of approved limit (for revolving
facilities), each for more than 90 days or 3 months; or
(b)
the loan exhibits weaknesses that render a classification appropriate to the Group’s Credit Risk Rating Framework, which
requires it to fall under the “unlikeliness to repay” category under the Group’s Watchlist Policy.
(c)
for loans with repayment schedules on quarterly basis or longer intervals to be classified as impaired as soon as default
occurs, unless it does not exhibit any weakness that would render it classified according to the Group’s Credit Risk Rating
Framework. Notwithstanding that, these loans shall be classified as impaired when the principal or interest or both is past due
for more than 90 days or 3 months.
(d)
for distressed rescheduled and restructured (“R/R”) facilities, these loans are categorised as “unlikeliness to repay” and
classified as impaired. Non-performing R/R facilities remain impaired until re-aged.
For credit card facilities, an account is “past due” when the cardmember fails to settle the minimum monthly repayment due before the next billing
date.
131
F-134
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
2,122,386
Statutory deposit with Bank Negara Malaysia
* The amounts presented above are gross of impairment allowances.
6,792,322
1,661,518
621,879
1,671,966
47,221
25,684,087
3,183,263
1,498,070
179,811
1,043,813
1
8,935,299
-
4,841,239
8,453,561
970,296
624,085
2,092,645
1,932,472
4,025,117
Financial investments held-to-maturity *
Money Market Securities
Unquoted Private Debt Securities
Total financial investments held-to-maturity
334,227
228,472
562,699
974,099
1,939,058
117,184
855,533
1,463,844
2,319,377
Financial investments available-for-sale
Money Market Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
286,129
286,129
83,761
Strong credit
profile
RM'000
Gross loans and advances *
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
767,179
23,178
2,792,918
3,583,275
279,687
Financial assets held-for-trading
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Derivative financial assets
31 March 2013
Group
Very strong
credit profile
RM'000
-
4,859,615
1,153,270
1,007,158
890,491
63,015
13,390,408
2,900,732
1,551,858
166,990
797,279
-
154,775
154,775
-
12,871
Satisfactory
risk
RM'000
195,362
158,503
33,748
150,934
-
-
-
661
Substandard
RM'000
132
-
880,108
100,946
121,580
182,630
1,823,811
Neither past due nor impaired
-
-
-
980
980
-
-
6,263
Unrated
RM'000
-
212,297
4,025
44,829
8,323
432
9,624,848
6,463,095
2,369,838
210,925
311,084
-
-
-
-
Past due but
not impaired
RM'000
-
220,128
88,806
21,734
76,188
1,396,378
304,962
559,758
35,458
89,344
201,446
201,446
435
435
-
-
Impaired
RM'000
2,122,386
16,147,733
4,506,635
1,996,991
3,873,411
110,669
60,854,831
15,679,489
15,032,576
1,417,417
2,089,910
2,092,645
2,134,898
4,227,543
1,189,760
1,847,526
3,037,286
767,179
23,178
3,079,047
3,869,404
383,243
Total
RM'000
-
(61,313)
(41,119)
(6,698)
(59,320)
(168,840)
(390)
(194,008)
(194,008)
(2,711)
(2,711)
-
-
Individual
allowance
RM'000
-
15,351,842
3,742,875
2,624,303
3,038,287
5,096
77,715,398
20,853,418
29,994,116
15,120
2,090,341
-
-
-
-
Fair value of
collateral
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
216,734
86,606
15,158
76,302
395,593
793
201,446
201,446
3,146
3,146
-
-
Gross amount
individually
impaired
RM'000
The credit quality of financial assets is managed by the Group using internal credit ratings. The table below shows the credit quality by class of asset for all financial assets exposed to credit risk, based on the Group's internal credit rating system.
Credit Quality By Class of Financial Assets
49.2 CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-135
6,633,381
2,410,610
388,620
1,395,675
13,676
25,748,944
-
339,288
395,569
1
1,863
3,088,962
2,011,288
Statutory deposit with Bank Negara Malaysia
* The amounts presented above are gross of impairment allowances.
5,556,325
7,932,022
1,139,632
279,003
732,748
1,584,486
35,007
-
339,430
404,393
743,823
149,462
149,462
5,912
Strong credit
profile
RM'000
-
5,860,609
1,296,187
1,344,537
1,939,460
57,149
15,595,501
2,168,923
1,572,451
59,487
1,296,698
-
150,654
150,654
-
4,382
Satisfactory
risk
RM'000
168,951
203,060
9,994
110,578
-
-
-
82
Substandard
RM'000
133
-
963,383
54,112
89,577
126,763
2,974
1,729,392
Neither past due nor impaired
Gross loans and advances *
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
-
2,119,612
1,206,438
3,326,050
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial investments held-to-maturity *
Unquoted Private Debt Securities
Total financial investments held-to-maturity
6,257,544
2,188,279
8,445,823
384,570
369,370
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Securities purchased under
resale agreements
Derivative financial assets
31 March 2012
Group
Very strong
credit profile
RM'000
Credit Quality By Class of Financial Assets (Contd.)
49.2 CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-136
-
-
-
51,065
51,065
25,249
2,587
27,836
-
289
Unrated
RM'000
-
271,288
38,046
13,439
2,836
10,363,740
6,944,552
2,544,396
206,234
342,949
11,848
11,848
-
6
6
-
Past due but
not impaired
RM'000
-
528,182
93,407
13,822
26,243
1,663,897
296,978
583,979
36,444
84,842
255,297
255,297
1,801
30,053
31,854
-
-
Impaired
RM'000
2,011,288
14,596,131
4,249,885
1,874,603
3,503,443
76,635
58,190,436
15,868,477
14,420,394
1,451,791
2,149,077
318,210
318,210
2,459,042
27,050
1,794,125
4,280,217
6,257,544
2,337,747
8,595,291
384,570
380,035
Total
RM'000
-
(91,505)
(3,169)
(991)
(10,139)
(114,474)
(8,670)
(202,055)
(202,055)
(444)
(33,544)
(33,988)
-
-
Individual
allowance
RM'000
-
16,370,551
2,947,814
2,477,101
3,050,319
6,323
77,909,589
20,093,557
28,544,317
24,916
4,394,691
-
-
-
-
Fair value of
collateral
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
480,101
89,989
7,673
16,771
606,587
12,053
255,297
255,297
2,245
63,597
65,842
-
-
Gross amount
individually
impaired
RM'000
6,977,162
3,521,240
1,227,281
306,167
4,936,216
2,078,666
350,833
1,309,641
3,501
20,710,707
-
441,380
689,832
7,267,164
143,811
-
323,385
665,251
988,636
-
300,579
Strong credit
profile
RM'000
-
5,505,213
1,833,354
1,104,569
1,758,748
45,613
14,283,670
1,844,617
916,598
10,577
1,264,381
-
210,531
210,531
29,994
29,994
1,578
Satisfactory
risk
RM'000
167,336
514,230
1,719
127,811
-
-
-
23
Substandard
RM'000
134
-
1,038,100
182,653
204,453
57,705
113
2,294,120
Neither past due nor impaired
604,721
5,495,521
35,710
* The amounts presented above are gross of impairment allowances.
Statutory deposit with Bank Negara Malaysia
Gross loans and advances *
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
-
3,336,138
1,515,671
4,851,809
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial investments held-to-maturity *
Unquoted Private Debt Securities
Total financial investments held-to-maturity
2,706,726
1,060,229
3,766,955
289,731
92,193
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Securities purchased under
resale agreements
Derivative financial assets
1 April 2011
Group
Very strong
credit profile
RM'000
Credit Quality By Class of Financial Assets (Contd.)
49.2 CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-137
-
493
113
380
-
94,267
94,267
47,431
37,608
85,039
-
2,300
Unrated
RM'000
-
166,777
26,437
11,660
10,641
1,769
10,919,268
7,447,291
2,704,772
201,442
348,479
-
-
-
-
Past due but
not impaired
RM'000
-
807,464
127,957
25,476
27,077
2,123,247
306,849
681,113
50,920
96,391
278,839
278,839
8,450
48,346
56,796
-
-
Impaired
RM'000
143,811
12,895,150
4,938,899
1,696,991
3,163,812
50,996
57,598,669
17,348,089
13,833,854
1,491,939
2,178,939
373,106
373,106
3,659,523
55,881
2,477,407
6,192,811
2,706,726
1,090,223
3,796,949
289,731
396,673
Total
RM'000
-
(304,881)
(14,468)
(9,031)
(1,958)
(341,071)
(10,733)
(207,775)
(207,775)
(1,133)
(81,555)
(82,688)
-
-
Individual
allowance
RM'000
-
15,420,031
3,646,937
2,414,291
4,188,360
4,452
83,377,158
26,431,085
26,757,340
18,734
4,495,928
-
-
-
-
Fair value of
collateral
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
668,256
83,980
12,352
1,976
780,012
13,448
278,839
278,839
9,583
129,901
139,484
-
-
Gross amount
individually
impaired
RM'000
-
2,122,386
Statutory deposit with Bank Negara Malaysia
* The amounts presented above are gross of impairment allowances.
6,792,322
1,637,142
621,879
1,671,966
47,221
25,486,818
3,183,263
1,498,070
179,811
1,043,813
1
8,935,299
-
4,841,239
8,280,668
970,296
624,085
2,092,645
1,932,472
4,025,117
Financial investments held-to-maturity *
Money Market Securities
Unquoted Private Debt Securities
Total financial investments held-to-maturity
334,227
228,472
562,699
974,099
1,939,058
117,184
855,533
1,623,141
2,478,674
Financial investments available-for-sale
Money Market Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
286,129
286,129
83,761
Strong credit
profile
RM'000
-
4,859,615
1,153,270
1,007,158
890,491
63,015
13,390,408
2,900,732
1,551,858
166,990
797,279
-
154,775
154,775
-
12,871
Satisfactory
risk
RM'000
195,340
158,438
33,748
150,934
-
-
-
661
Substandard
RM'000
135
-
880,108
100,946
121,580
182,630
1,823,724
Neither past due nor impaired
Gross loans and advances *
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
767,179
23,178
2,792,918
3,583,275
279,687
Financial assets held-for-trading
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Derivative financial assets
31 March 2013
Bank
Very strong
credit profile
RM'000
Credit Quality By Class of Financial Assets (Contd.)
49.2 CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-138
-
-
-
980
980
-
-
6,263
Unrated
RM'000
-
212,297
4,025
44,829
8,323
432
9,623,798
6,463,095
2,368,788
210,925
311,084
-
-
-
-
Past due but
not impaired
RM'000
-
220,128
88,806
21,734
76,188
1,395,401
304,962
558,781
35,458
89,344
199,884
199,884
435
435
-
-
Impaired
RM'000
2,122,386
16,147,733
4,482,259
1,996,991
3,873,411
110,669
60,655,448
15,679,467
14,857,591
1,417,417
2,089,910
2,092,645
2,133,336
4,225,981
1,189,760
2,006,823
3,196,583
767,179
23,178
3,079,047
3,869,404
383,243
Total
RM'000
-
(61,313)
(41,119)
(6,698)
(59,320)
(168,840)
(390)
(192,817)
(192,817)
(2,711)
(2,711)
-
-
Individual
allowance
RM'000
-
15,351,842
3,742,875
2,624,303
3,038,287
5,096
77,177,908
20,853,418
29,456,626
15,120
2,090,341
-
-
-
-
Fair value of
collateral
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
216,734
86,606
15,158
76,302
395,593
793
199,884
199,984
3,146
3,146
-
-
Gross amount
individually
impaired
RM'000
6,630,091
2,462,866
388,620
1,395,236
13,676
25,777,876
-
338,372
395,569
1
1,863
3,088,046
2,011,288
Statutory deposit with Bank Negara Malaysia
* The amounts presented above are gross of impairment allowances.
5,556,325
7,912,426
1,139,632
279,004
732,748
1,584,486
35,007
-
339,430
404,393
743,823
149,462
149,462
5,912
Strong credit
profile
RM'000
-
5,860,609
1,296,187
1,344,537
1,939,460
57,149
15,423,364
2,168,923
1,400,314
59,487
1,296,698
-
150,654
150,654
-
4,382
Satisfactory
risk
RM'000
168,951
112,028
9,994
110,578
-
-
-
82
Substandard
RM'000
136
-
963,383
53,664
89,577
126,764
2,974
1,637,913
Neither past due nor impaired
Gross loans and advances *
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
-
2,119,612
1,398,724
3,518,336
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial investments held-to-maturity *
Unquoted Private Debt Securities
Total financial investments held-to-maturity
6,257,744
2,188,279
8,446,023
384,570
369,370
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Securities purchased under
resale agreements
Derivative financial assets
31 March 2012
Bank
Very strong
credit profile
RM'000
Credit Quality By Class of Financial Assets (Contd.)
49.2 CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-139
-
-
-
51,065
51,065
25,249
2,587
27,836
-
289
Unrated
RM'000
-
271,288
38,046
13,439
2,836
10,361,822
6,944,552
2,542,478
206,234
342,949
11,848
11,848
-
6
6
-
Past due but
not impaired
RM'000
-
528,182
93,407
13,822
26,243
1,663,202
296,978
583,284
36,444
84,842
250,855
250,855
1,801
30,053
31,854
-
-
Impaired
RM'000
2,011,288
14,591,925
4,301,693
1,874,603
3,503,005
76,635
57,952,223
15,868,477
14,135,016
1,451,791
2,149,078
313,768
313,768
2,459,042
27,050
1,986,411
4,472,503
6,257,744
2,337,747
8,595,491
384,570
380,035
Total
RM'000
-
(91,505)
(3,169)
(991)
(10,139)
(114,474)
(8,670)
(200,267)
(200,267)
(444)
(31,865)
(32,309)
-
-
Individual
allowance
RM'000
-
16,370,551
2,947,814
2,477,101
2,980,411
6,323
77,316,526
20,093,557
27,951,254
24,916
4,464,599
-
-
-
-
Fair value of
collateral
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
480,101
89,989
7,673
16,771
606,587
12,053
250,855
250,854
2,245
61,918
64,163
-
-
Gross amount
individually
impaired
RM'000
6,977,162
3,203,407
1,227,281
306,167
4,931,109
2,078,666
350,833
1,309,641
3,501
20,387,767
-
441,380
689,832
7,267,164
143,811
-
323,385
665,251
988,636
29,994
29,994
300,579
Strong credit
profile
RM'000
-
5,505,213
1,803,090
1,104,569
1,758,748
45,613
14,253,406
1,844,617
916,598
10,577
1,264,381
-
210,531
210,531
-
1,578
Satisfactory
risk
RM'000
167,336
514,230
1,719
127,801
-
-
-
23
Substandard
RM'000
137
-
1,038,100
258,729
204,453
57,705
113
2,370,186
Neither past due nor impaired
604,721
5,495,521
35,710
* The amounts presented above are gross of impairment allowances.
Statutory deposit with Bank Negara Malaysia
Gross loans and advances *
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
-
3,336,138
1,742,419
5,078,557
Financial investments available-for-sale
Money Market Securities
Quoted Private Debt Securities
Unquoted Private Debt Securities
Total financial investments available-for-sale
Financial investments held-to-maturity *
Unquoted Private Debt Securities
Total financial investments held-to-maturity
2,706,726
1,060,229
3,766,955
289,731
92,193
Financial assets held-for-trading
Money Market Securities
Unquoted Private Debt Securities
Total financial assets held-for-trading
Securities purchased under
resale agreements
Derivative financial assets
1 April 2011
Bank
Very strong
credit profile
RM'000
Credit Quality By Class of Financial Assets (Contd.)
49.2 CREDIT RISK MANAGEMENT (CONTD.)
49. RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-140
-
-
-
94,267
94,267
47,431
37,608
85,039
-
2,300
Unrated
RM'000
-
166,777
26,437
11,660
10,641
1,769
10,917,667
7,447,291
2,703,171
201,442
348,479
-
-
-
-
Past due but
not impaired
RM'000
-
807,464
127,957
25,476
27,077
2,122,976
306,849
680,842
50,920
96,391
270,341
270,341
8,450
48,346
56,796
-
-
Impaired
RM'000
143,811
12,890,043
4,984,711
1,696,991
3,163,812
50,996
57,319,166
17,347,976
13,513,769
1,491,939
2,178,929
364,608
364,608
3,659,523
55,881
2,704,155
6,419,559
2,706,726
1,090,223
3,796,949
289,731
396,673
Total
RM'000
-
(304,881)
(14,468)
(9,031)
(1,958)
(341,071)
(10,733)
(205,019)
(205,019)
(1,133)
(81,555)
(82,688)
-
-
Individual
allowance
RM'000
-
15,966,331
3,782,496
2,414,291
4,188,360
4,452
83,425,134
26,430,935
26,123,607
18,734
4,495,928
-
-
-
-
Fair value of
collateral
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
-
668,256
83,980
12,352
1,976
780,012
13,448
270,341
270,341
9,583
129,901
139,484
-
-
Gross amount
individually
impaired
RM'000
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.2 CREDIT RISK MANAGEMENT (CONTD.)
Aging Analysis of Past Due But Not Impaired Financial Assets
Up to 1
month
RM'000
>1 month to
3 months
RM'000
Total
RM'000
3,472,334
1,390,284
132,718
205,073
2,990,761
979,554
78,207
106,011
6,463,095
2,369,838
210,925
311,084
188,173
4,025
8,312
3,706
432
5,405,057
24,124
36,517
4,617
4,219,791
212,297
4,025
44,829
8,323
432
9,624,848
Financial investments held-for-trading
Unquoted Private Debt Securities
Total financial investments held-for-trading
-
6
6
6
6
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
-
11,848
11,848
11,848
11,848
3,808,950
1,426,186
129,788
242,866
3,135,602
1,118,210
76,446
100,083
6,944,552
2,544,396
206,234
342,949
249,734
33,494
2,504
76
5,893,598
21,554
4,552
10,935
2,760
4,470,142
271,288
38,046
13,439
2,836
10,363,740
4,164,883
1,444,957
126,128
243,768
3,282,408
1,259,815
75,314
104,711
7,447,291
2,704,772
201,442
348,479
100,498
24,083
11,660
6,190
108
6,122,275
66,279
2,354
4,451
1,661
4,796,993
166,777
26,437
11,660
10,641
1,769
10,919,268
Group
31 March 2013
Gross loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
31 March 2012
Gross loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Overdrafts
Trade
Factoring
Total gross loans and advances
1 April 2011
Gross loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
138
F-141
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.2 CREDIT RISK MANAGEMENT (CONTD.)
Aging Analysis of Past Due But Not Impaired Financial Assets (Contd.)
Up to 1
month
RM'000
>1 month to
3 months
RM'000
Total
RM'000
3,472,334
1,389,881
132,718
205,073
2,990,761
978,907
78,207
106,011
6,463,095
2,368,788
210,925
311,084
188,173
4,025
8,312
3,706
432
5,404,654
24,124
36,517
4,617
4,219,144
212,297
4,025
44,829
8,323
432
9,623,798
Financial investments held-for-trading
Unquoted Private Debt Securities
Total financial investments held-for-trading
-
6
6
6
6
Financial investments held-to-maturity
Unquoted Private Debt Securities
Total financial investments held-to-maturity
-
11,848
11,848
11,848
11,848
3,808,950
1,425,410
129,788
242,866
3,135,602
1,117,068
76,446
100,083
6,944,552
2,542,478
206,234
342,949
249,734
33,494
2,504
76
5,892,822
21,554
4,552
10,935
2,760
4,469,000
271,288
38,046
13,439
2,836
10,361,822
4,164,883
1,443,867
126,128
243,768
3,282,408
1,259,304
75,314
104,711
7,447,291
2,703,171
201,442
348,479
100,498
24,083
11,660
6,190
108
6,121,185
66,279
2,354
4,451
1,661
4,796,482
166,777
26,437
11,660
10,641
1,769
10,917,667
Bank
31 March 2013
Gross loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
31 March 2012
Gross loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Overdrafts
Trade
Factoring
Total gross loans and advances
1 April 2011
Gross loans and advances
Hire purchase
Mortgage
Credit card
Others
Corporate loans and advances:
Term loans and bridging loans
Revolving credits
Overdrafts
Trade
Factoring
Total gross loans and advances
139
F-142
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.2
CREDIT RISK MANAGEMENT (CONTD.)
Collateral Repossessed
As at the end of the financial year, assets held as collateral for loans and advances obtained are as follows:
Group and Bank
31 March 2013
31 March 2012
RM'000
RM'000
Properties:
Residential
Non-residential
343
72,339
72,682
1,370
81,237
82,607
The above assets are accounted for as foreclosed properties under other assets (Note 17). There were no new assets obtained for the
financial year ended 2013 and 2012.
Methodology for Determination of Individual and Collective Allowances
An assessment is performed to determine whether objective evidence of impairment exists individually for financial assets that are
individually significant, and collectively for financial assets that are not individually significant or not individually impaired.
Individual Assessment
Individual assessment is divided into 2 main processes – detection of an event(s) and an assessment of impairment:
(a)
Trigger management
In trigger management, financial assets which are above the pre-set individual assessment threshold are assessed using the
relevant impairment triggers for objective evidence of impairment.
(b)
Valuation of assets
Financial assets which are triggered by the impairment triggers will be measured for evidence of high likelihood of impairment
that is, estimated recoveries (based on the discounted cash flow projection method and taking into account economic
conditions) is less than carrying value or fair value is less than the carrying value.
Collective Assessment
Loans and advances, and commitments and contingencies below the significant threshold and those not assessed to be individually
impaired, will be subject to collective assessment and a collective allowance will be computed accordingly. The collective impairment
assessment and provisioning methodology uses historical loss data to derive the level of provisions. The collective provisions is
computed after making the necessary adjustments to reflect current economic conditions.
140
F-143
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.3
LIQUIDITY RISK AND FUNDING MANAGEMENT
Liquidity risk is the risk that the organisation either does not have sufficient financial resources available to meet all its obligations and
commitments as they fall due, or can only access these financial resources at an unreasonable cost. Liquidity risk exposure arises
mainly from the deposit taking and borrowing activities and market disruption, and to a lesser extent, significant drawdown of funds
from previously contracted financing and purchase commitments. Funding management is the ongoing ability to raise sufficient funds
to finance actual and proposed business activities at a reasonable cost. Improper funding management may lead to liquidity problem.
On the other hand, insufficient liquidity risk management may also give rise to funding risk.
The liquidity risk management of the Group is aligned with the New Liquidity Framework issued by Bank Negara Malaysia. The
primary objective of the Group’s liquidity risk management is to ensure the availability of sufficient funds at a reasonable cost to honor
all financial commitments when they fall due. This objective is partly managed through maintenance of a portfolio of high-quality liquid
assets to protect against adverse funding conditions and support day-to-day operations. The secondary objective is to ensure an
optimal funding structure and to balance the key liquidity risk management objectives, which includes diversification of funding
sources, customer base and maturity period.
The GALCO/Group CEOs Committee is the responsible governing body that approves the Group’s liquidity management and
strategies policies, and is responsible for setting liquidity limits, proposing liquidity risk policies and contingency funding plan, and
practices to be in compliance with local regulatory requirements, and monitor liquidity on an ongoing basis. The Capital and Balance
Sheet Management division and Group Risk Management propose and oversee the implementation of policies and other controls
relating to the above risks.
The Group has put in place a Contingency Funding Plan to identify early warning signals of possible liquidity problem. The
Contingency Funding Plan also sets out the detailed responsibilities among the relevant departments in the event of actual liquidity
crises occurring to ensure orderly execution of procedures to restore the liquidity position and confidence in the organisation.
Stress testing is undertaken to assess and plan for the impact for various scenarios which may put the Group’s liquidity at risk. The
stress testing output contributes to the development of the liquidity risk limits and the Group’s Contingency Funding Plan.
The Group stresses the importance of customer deposit accounts as a source of funds to finance lending to customers. They are
monitored using the adjusted loan/financing to deposit ratio, which compares loan/financing and advances to customers as a
percentage of customer deposit accounts, together with term funding with original term of maturity of three years and above.
As conservative liquidity management practice, part of the Group’s medium term assets is funded by medium term liabilities. Medium
term is defined by the Group as remaining term to maturity in excess of one year.
In preparation to the impending implementation of Basel III liquidity metrics, the Group is putting in place the measurement mechanism
and strategizing for ensuring availability of cost effective liquidity. Subject to finalisation of the detailed regulations, the Group is
confident of meeting Bank Negara Malaysia’s requirements on Basel III liquidity metrics in accordance with its recently approved
timetable for implementation.
141
F-144
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.3
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
Liquidity Metrics
The Group monitors key liquidity metrics on a regular basis. Liquidity is managed on an entity basis and in aggregate across the
Group. The key metrics are:
a)
Adjusted Customer Loans to Deposits Ratio ("LDR")
This is defined as the ratio of total outstanding loans and advances to customers, net of allowance for impairment on loans and
advances, relative to total customer deposits (inclusive of recourse obligation on loans sold to Cagamas Berhad and term
funding with original term of maturity of 3 years and above). This ratio reflects the percentage of customer loans and advances
that are funded by customer deposits. A ratio below 100% indicates that our loans portfolio is completely funded by customer
deposits. A low LDR demonstrates that customer deposits exceed customer loans resulting from emphasis placed on
generating a high level of stable funding from customers.
b)
31 March 2013
Group
31 March 2012
1 April 2011
Year-end
Maximum
Minimum
Average
88.6%
88.6%
84.4%
86.9%
88.1%
89.6%
85.7%
87.5%
86.5%
92.7%
86.5%
89.9%
Year-end
Maximum
Minimum
Average
31 March 2013
88.3%
89.1%
84.2%
86.9%
Bank
31 March 2012
88.9%
89.8%
85.9%
87.8%
1 April 2011
86.9%
93.0%
86.9%
89.6%
Medium Term Funding Ratio
This is defined as the extent of medium term assets with remaining term to maturity in excess of one year funded by medium
term liabilities with similar term to maturity. The Group balances the additional funding cost with the more stable nature of
medium term liabilities to achieve its optimal funding structure.
142
F-145
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
49.
49.3
9,463,593
797,296
620,249
2,804
11,653,195
21,250
30,157,095
387,802
438,246
34,453
32,006,739
(20,085,764)
Net Undiscounted Financial Assets/(Liabilities)
(4,796,157)
769,253
709,431
329,924
94,200
1,225,434
4,498,049
6,857,038
183,056
834,439
879,758
2,687,240
11,920,975
967,893
-
>1 month
to 3 months
RM'000
7,336,482
Up to 1
month
RM'000
Financial Liabilities
Deposits and placements of banks
and other financial institutions
Recourse obligation on loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Total Undiscounted Financial Liabilities
Financial Assets
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loan and advances
Amount due from originators
Statutory deposit with Bank Negara Malaysia
Total Undiscounted Financial Assets
Group
31 March 2013
143
(2,513,374)
9,270,538
140,930
175,675
67,812
10,019,485
364,530
414,675
72,757
123,743
20,636
6,874,300
7,506,111
-
>3 months
to 6 months
RM'000
(4,475,691)
21,132
11,657,740
156,498
104,278
11,985,069
45,421
305,943
149,672
61,956
26,162
6,965,645
7,509,378
-
>6 months
to 12 months
RM'000
29,324,185
1,425,936
2,671,488
2,819,047
2,291,248
9,432,104
224,385
531,382
2,067,298
1,182,248
701,444
34,017,870
256,047
38,756,289
-
>1 year
to 5 years
RM'000
537,119
-
-
231,219
305,900
537,119
-
No maturity
specified
RM'000
34,167,540
1,468,318
63,220,454
4,475,524
1,234,170
4,211,010
76,980,958
2,371,482
1,961,431
5,074,726
4,526,892
5,341,801
84,528,733
256,047
2,122,386
111,148,498
7,336,482
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
36,177,222
173,951
1,710,415
1,884,366
-
2,040,800
1,924,406
2,488,367
29,485,629
2,122,386
38,061,588
-
Over
5 years
RM'000
Repayment which are subject to notice are treated as if notice were to be given immediately. However, the Group expects that many customers will not request repayment on the earliest date the Group could be required to pay and the table does
not reflect the expected cash flows indicated by the Group's deposit retention history.
The table below summarises the maturity profile of the Group's financial assets and liabilities.
Analysis of Financial Assets and Liabilities By Remaining Contractual Maturities
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-146
49.
49.3
Contingent Liabilities
Direct credit substitutes
Certain transaction-related contingent items
Short-term self liquidating trade-related
contingencies
Obligations under underwriting agreements
Others
Total commitments and contingent liabilities
Commitments
Irrevocable commitments to extend credit
Unutilised credit card lines
Forward asset purchase
Group
31 March 2013
186,068
170,274
165,116
2,091,237
271,160
7,170,173
1,569,779
-
>1 month
to 3 months
RM'000
100,269
129,724
3,831,083
2,729,671
108,266
Up to 1
month
RM'000
The table below shows the contractual expiry by maturity of the Group's commitments and contingent liabilities.
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-147
144
32,512
3,848,188
133,120
566,667
3,115,889
-
>3 months
to 6 months
RM'000
115,193
5,984,157
335,705
772,755
4,760,504
-
>6 months
to 12 months
RM'000
33,825
250,000
4,764,784
441,164
1,748,937
2,290,858
-
>1 year
to 5 years
RM'000
-
-
No maturity
specified
RM'000
617,806
250,000
100
29,306,123
1,253,726
3,812,587
20,533,967
2,729,671
108,266
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
100
5,447,584
57,400
424,230
4,965,854
-
Over
5 years
RM'000
49.
49.3
11,004,927
776,660
207,967
2,819
12,391,384
21,250
28,723,535
307,546
25,001
18,801
31,796,228
(22,545,754)
Net Undiscounted Financial Assets/(Liabilities)
(4,751,037)
399,011
-
767,584
1,226,826
995,160
196
4,650,581
7,640,347
145,616
645,017
5,167
2,601,640
9,250,474
2,660,095
40,000
-
>1 month
to 3 months
RM'000
5,468,072
384,962
Up to 1
month
RM'000
Financial Liabilities
Deposits and placements of banks
and other financial institutions
Securities sold under repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Total Undiscounted Financial Liabilities
Financial Assets
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loan and advances
Amount due from originators
Statutory deposit with Bank Negara Malaysia
Total Undiscounted Financial Assets
Group
31 March 2012
145
405,861
8,305,648
44,268
109,934
86,047
8,677,974
132,077
-
366,853
3,552,253
37,593
83,453
5,043,683
9,083,835
-
>3 months
to 6 months
RM'000
(2,258,120)
21,486
8,953,268
128,760
809,098
9,934,568
21,956
-
948,299
79,680
5,428
6,643,041
7,676,448
-
>6 months
to 12 months
RM'000
28,583,108
336,428
3,427,616
3,056,128
1,413,057
9,074,908
841,679
-
1,747,254
1,748,231
195,324
33,800,543
166,664
37,658,016
-
>1 year
to 5 years
RM'000
475,956
-
-
315,452
160,504
475,956
-
No maturity
specified
RM'000
30,354,160
1,421,666
60,414,994
4,724,186
342,902
4,258,716
75,257,282
4,054,818
40,000
1,134,437
9,834,199
5,717,858
320,611
80,573,351
166,664
2,011,288
105,611,442
5,468,072
384,962
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
30,444,146
1,042,502
410,824
1,928,894
3,382,220
-
1,898,499
2,051,673
31,043
27,833,863
2,011,288
33,826,366
-
Over
5 years
RM'000
Repayment which are subject to notice are treated as if notice were to be given immediately. However, the Group expects that many customers will not request repayment on the earliest date the Group could be required to pay and the table does
not reflect the expected cash flows indicated by the Group's deposit retention history.
The table below summarises the maturity profile of the Group's financial assets and liabilities.
Analysis of Financial Assets and Liabilities By Remaining Contractual Maturities (Contd.)
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-148
49.
49.3
Contingent Liabilities
Direct credit substitutes
Certain transaction-related contingent items
Short-term self liquidating trade-related
contingencies
Obligations under underwriting agreements
Others
Total commitments and contingent liabilities
Commitments
Irrevocable commitments to extend credit
Unutilised credit card lines
Forward asset purchase
Group
31 March 2012
70,413
199,134
275,137
1,600,196
187,246
15,000
5,477,131
1,055,512
-
>1 month
to 3 months
RM'000
143,151
380,426
1,436,844
2,953,565
360,899
Up to 1
month
RM'000
The table below shows the contractual expiry by maturity of the Group's commitments and contingent liabilities.
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-149
146
17,923
2,894,581
252,693
504,707
2,119,258
-
>3 months
to 6 months
RM'000
128,163
6,158,709
540,431
529,979
4,960,136
-
>6 months
to 12 months
RM'000
6,517
250,000
3,370,445
544,666
1,242,103
1,327,159
-
>1 year
to 5 years
RM'000
-
-
No maturity
specified
RM'000
615,243
265,000
100
26,858,339
1,608,754
3,120,757
17,934,021
2,953,565
360,899
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
257
100
7,357,277
57,400
264,408
7,035,112
-
Over
5 years
RM'000
49.
49.3
10,004,919
2,600
587,353
11,804
10,924,172
21,250
30,482,604
122,290
237,361
18,699
33,401,722
(20,220,896)
Net Undiscounted Financial Assets/(Liabilities)
11,639
317,496
-
3,519,642
1,387,959
1,298,824
472
4,728,914
10,935,811
99,117
1,502,880
1,232
2,528,208
13,180,826
2,489,518
30,000
-
>1 month
to 3 months
RM'000
8,759,154
290,235
Up to 1
month
RM'000
Financial Liabilities
Deposits and placements of banks
and other financial institutions
Securities sold under repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Total Undiscounted Financial Liabilities
Financial Assets
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loan and advances
Amount due from originators
Statutory deposit with Bank Negara Malaysia
Total Undiscounted Financial Assets
Group
1 April 2011
147
(3,786,231)
10,016,065
81,326
160,765
85,661
10,419,111
75,294
-
294,572
786,731
89,190
640
5,443,027
18,720
6,632,880
-
>3 months
to 6 months
RM'000
(381,703)
21,250
6,581,719
275,520
18
262,738
7,823,128
681,883
-
461,199
203,662
24,598
6,751,966
7,441,425
-
>6 months
to 12 months
RM'000
25,736,645
170,000
3,582,617
3,518,236
2,294,783
10,524,571
958,935
-
834,521
2,572,629
365,295
32,487,345
1,426
36,261,216
-
>1 year
to 5 years
RM'000
509,211
-
-
370,053
139,158
509,211
-
No maturity
specified
RM'000
27,630,275
1,317,083
60,667,924
4,576,017
985,497
4,627,996
76,762,545
4,558,028
30,000
3,814,214
4,432,665
7,859,464
450,924
78,622,207
20,146
143,811
104,392,820
8,759,154
290,235
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
25,761,610
1,104,583
576,045
1,954,311
3,669,841
34,902
-
493,085
2,053,121
58,687
26,682,747
143,811
29,431,451
-
Over
5 years
RM'000
Repayment which are subject to notice are treated as if notice were to be given immediately. However, the Group expects that many customers will not request repayment on the earliest date the Group could be required to pay and the table does
not reflect the expected cash flows indicated by the Group's deposit retention history.
The table below summarises the maturity profile of the Group's financial assets and liabilities.
Analysis of Financial Assets and Liabilities By Remaining Contractual Maturities (Contd.)
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-150
49.
49.3
Contingent Liabilities
Direct credit substitutes
Certain transaction-related contingent items
Short-term self liquidating trade-related
contingencies
Obligations under underwriting agreements
Others
Total commitments and contingent liabilities
Commitments
Irrevocable commitments to extend credit
Unutilised credit card lines
Forward asset purchase
Group
1 April 2011
473,177
132,320
307,400
8,000
2,465,710
238,275
22,558
7,520,610
1,544,813
-
>1 month
to 3 months
RM'000
292,357
115,701
3,105,107
3,322,322
424,290
Up to 1
month
RM'000
The table below shows the contractual expiry by maturity of the Group's commitments and contingent liabilities.
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-151
148
39,145
375
2,323,486
389,392
192,413
1,702,161
-
>3 months
to 6 months
RM'000
18,831
323
5,391,177
452,170
358,499
4,561,354
-
>6 months
to 12 months
RM'000
12,348
260,000
2,542,350
542,849
940,018
787,135
-
>1 year
to 5 years
RM'000
-
-
No maturity
specified
RM'000
615,999
260,000
31,506
24,078,166
2,259,750
1,869,799
15,294,500
3,322,322
424,290
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
250
3,834,833
109,805
130,848
3,593,930
-
Over
5 years
RM'000
49.
49.3
9,449,934
797,296
620,249
2,804
11,639,536
21,250
30,143,530
387,802
438,246
34,453
32,001,032
(20,073,128)
Net Undiscounted Financial Assets/(Liabilities)
(4,788,594)
769,253
709,431
329,924
94,200
1,225,434
4,491,953
6,850,942
183,056
834,439
878,197
2,764,657
11,927,904
975,751
-
>1 month
to 3 months
RM'000
7,267,555
Up to 1
month
RM'000
Financial Liabilities
Deposits and placements of banks
and other financial institutions
Recourse obligation on loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Total Undiscounted Financial Liabilities
Financial Assets
Cash and short-term funds
Deposits and placements with banks
and other financial institutions
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loan and advances
Amount due from originators
Statutory deposit with Bank Negara Malaysia
Total Undiscounted Financial Assets
Bank
31 March 2013
149
(2,546,577)
9,269,983
140,930
175,675
67,812
10,018,930
364,530
414,675
72,757
123,743
20,636
6,840,542
7,472,353
-
>3 months
to 6 months
RM'000
(4,493,210)
21,132
11,657,840
156,498
104,278
11,985,169
45,421
305,943
149,672
61,956
26,162
6,948,226
7,491,959
-
>6 months
to 12 months
RM'000
29,211,977
1,425,936
2,671,488
2,819,047
2,291,248
9,432,104
224,385
531,382
2,067,298
1,182,248
701,444
33,905,662
256,047
38,644,081
-
>1 year
to 5 years
RM'000
536,212
-
-
231,219
304,993
536,212
-
No maturity
specified
RM'000
33,998,852
1,468,318
63,192,775
4,475,524
1,234,170
4,211,010
76,961,137
2,379,340
1,961,431
5,074,726
4,685,282
5,340,240
84,252,322
256,047
2,122,386
110,959,989
7,267,555
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
36,152,172
173,951
1,710,415
1,884,366
-
2,040,800
2,083,703
2,488,367
29,301,282
2,122,386
38,036,538
-
Over
5 years
RM'000
Repayment which are subject to notice are treated as if notice were to be given immediately. However, the Bank expects that many customers will not request repayment on the earliest date the Bank could be required to pay and the table does
not reflect the expected cash flows indicated by the Bank's deposit retention history.
The table below summarises the maturity profile of the Bank's financial assets and liabilities.
Analysis of Financial Assets and Liabilities By Remaining Contractual Maturities (Contd.)
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-152
49.
49.3
Contingent Liabilities
Direct credit substitutes
Certain transaction-related contingent items
Short-term self liquidating trade-related
contingencies
Obligations under underwriting agreements
Others
Total commitments and contingent liabilities
Commitments
Irrevocable commitments to extend credit
Unutilised credit card lines
Forward asset purchase
Bank
31 March 2013
186,068
170,274
165,116
2,091,237
271,043
7,164,442
1,569,779
-
>1 month
to 3 months
RM'000
100,269
129,724
3,825,469
2,729,671
108,266
Up to 1
month
RM'000
The table below shows the contractual expiry by maturity of the Bank's commitments and contingent liabilities.
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-153
150
32,512
3,848,188
133,120
566,667
3,115,889
-
>3 months
to 6 months
RM'000
115,193
6,000,726
335,705
749,464
4,800,364
-
>6 months
to 12 months
RM'000
33,825
250,000
4,764,784
441,164
1,748,937
2,290,858
-
>1 year
to 5 years
RM'000
-
-
-
No maturity
specified
RM'000
617,689
250,000
150
29,317,011
1,253,726
3,789,296
20,568,213
2,729,671
108,266
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
150
5,447,634
57,400
424,230
4,965,854
-
Over
5 years
RM'000
49.
49.3
10,387,170
776,660
207,967
2,819
11,773,627
21,250
28,477,688
307,546
25,000
18,801
32,110,236
(23,184,836)
Net Undiscounted Financial Assets/(Liabilities)
(4,170,649)
399,011
-
736,929
1,226,826
995,160
196
4,643,867
7,602,978
145,616
645,017
5,167
2,597,574
8,925,400
3,219,951
40,000
-
>1 month
to 3 months
RM'000
5,147,064
384,962
Up to 1
month
RM'000
Financial Liabilities
Deposits and placements of banks
and other financial institutions
Securities sold under repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Total Undiscounted Financial Liabilities
Financial Assets
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loan and advances
Amount due from originators
Statutory deposit with Bank Negara Malaysia
Total Undiscounted Financial Assets
Bank
31 March 2012
151
364,039
8,305,096
44,268
109,934
86,047
8,677,422
132,077
-
366,853
3,552,253
37,593
83,453
5,001,309
9,041,461
-
>3 months
to 6 months
RM'000
(2,281,855)
21,486
8,953,268
128,760
809,098
9,934,568
21,956
-
948,299
79,680
985
6,623,749
7,652,713
-
>6 months
to 12 months
RM'000
28,537,449
336,428
3,427,617
3,056,128
1,413,057
9,074,910
841,680
-
1,747,254
1,748,231
195,324
33,754,886
166,664
37,612,359
-
>1 year
to 5 years
RM'000
474,921
-
-
315,452
159,469
474,921
-
No maturity
specified
RM'000
30,166,410
1,421,666
59,550,839
4,724,186
342,901
4,258,716
74,952,983
4,614,675
40,000
1,103,782
9,834,199
5,910,306
316,169
80,244,959
166,664
2,011,288
105,119,393
5,147,064
384,962
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
30,427,341
1,042,502
410,824
1,928,894
3,382,220
-
1,898,499
2,245,156
31,044
27,623,574
2,011,288
33,809,561
-
Over
5 years
RM'000
Repayment which are subject to notice are treated as if notice were to be given immediately. However, the Bank expects that many customers will not request repayment on the earliest date the Bank could be required to pay and the table does
not reflect the expected cash flows indicated by the Bank's deposit retention history.
The table below summarises the maturity profile of the Bank's financial assets and liabilities.
Analysis of Financial Assets and Liabilities By Remaining Contractual Maturities (Contd.)
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-154
49.
49.3
Contingent Liabilities
Direct credit substitutes
Certain transaction-related contingent items
Short-term self liquidating trade-related
contingencies
Obligations under underwriting agreements
Others
Total commitments and contingent liabilities
Commitments
Irrevocable commitments to extend credit
Unutilised credit card lines
Forward asset purchase
Bank
31 March 2012
70,413
199,134
275,137
1,600,196
185,828
15,000
5,475,783
1,055,512
-
>1 month
to 3 months
RM'000
143,151
380,426
1,436,914
2,953,565
360,899
Up to 1
month
RM'000
The table below shows the contractual expiry by maturity of the Bank's commitments and contingent liabilities.
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-155
152
17,923
2,894,581
252,693
504,707
2,119,258
-
>3 months
to 6 months
RM'000
128,163
6,199,159
540,431
529,979
5,000,586
-
>6 months
to 12 months
RM'000
6,517
250,000
3,347,373
544,666
1,219,031
1,327,159
-
>1 year
to 5 years
RM'000
-
-
-
No maturity
specified
RM'000
613,825
265,000
150
26,874,616
1,608,754
3,097,685
17,974,738
2,953,565
360,899
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
257
150
7,357,524
57,400
264,408
7,035,309
-
Over
5 years
RM'000
49.
49.3
9,808,522
2,600
587,353
11,804
10,727,775
21,250
30,369,429
122,290
237,360
18,699
33,613,009
(20,802,365)
Net Undiscounted Financial Assets/(Liabilities)
79,242
317,496
-
3,428,557
1,387,959
1,298,824
472
4,691,205
10,807,017
99,117
1,502,880
173
2,524,483
12,810,644
2,813,981
30,000
-
>1 month
to 3 months
RM'000
8,393,756
290,235
Up to 1
month
RM'000
Financial Liabilities
Deposits and placements of banks
and other financial institutions
Securities sold under repurchase agreements
Recourse obligation on loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
Total Undiscounted Financial Liabilities
Financial Assets
Cash and short-term funds
Securities purchased under resale agreements
Deposits and placements with banks
and other financial institutions
Financial assets held-for-trading
Financial investments available-for-sale
Financial investments held-to-maturity
Loan and advances
Amount due from originators
Statutory deposit with Bank Negara Malaysia
Total Undiscounted Financial Assets
Bank
1 April 2011
153
(3,478,207)
9,695,420
81,326
160,765
85,661
10,098,466
75,294
-
294,572
786,731
89,190
640
5,430,406
18,720
6,620,259
-
>3 months
to 6 months
RM'000
(407,746)
21,250
6,581,719
275,520
18
262,738
7,823,128
681,883
-
461,199
203,662
19,915
6,730,606
7,415,382
-
>6 months
to 12 months
RM'000
25,906,160
170,000
3,582,618
3,518,236
2,294,783
10,524,572
958,935
-
834,521
2,808,688
365,295
32,420,802
1,426
36,430,732
-
>1 year
to 5 years
RM'000
508,190
-
-
370,053
138,137
508,190
-
No maturity
specified
RM'000
27,328,829
1,317,083
60,037,708
4,576,017
985,496
4,627,996
76,456,791
4,882,491
30,000
3,723,129
4,432,665
8,094,502
445,182
78,242,194
20,146
143,811
103,785,620
8,393,756
290,235
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
25,523,555
1,104,583
576,045
1,954,311
3,669,841
34,902
-
493,085
2,053,121
58,687
26,444,692
143,811
29,193,396
-
Over
5 years
RM'000
Repayment which are subject to notice are treated as if notice were to be given immediately. However, the Bank expects that many customers will not request repayment on the earliest date the Bank could be required to pay and the table does
not reflect the expected cash flows indicated by the Bank's deposit retention history.
The table below summarises the maturity profile of the Bank's financial assets and liabilities.
Analysis of Financial Assets and Liabilities By Remaining Contractual Maturities (Contd.)
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-156
49.
49.3
Contingent Liabilities
Direct credit substitutes
Certain transaction-related contingent items
Short-term self liquidating trade-related
contingencies
Obligations under underwriting agreements
Others
Total commitments and contingent liabilities
Commitments
Irrevocable commitments to extend credit
Unutilised credit card lines
Forward asset purchase
Bank
1 April 2011
473,177
132,320
307,400
8,000
2,465,710
238,275
22,558
7,520,610
1,544,813
-
>1 month
to 3 months
RM'000
292,357
115,701
3,105,107
3,322,322
424,290
Up to 1
month
RM'000
The table below shows the contractual expiry by maturity of the Bank's commitments and contingent liabilities.
LIQUIDITY RISK AND FUNDING MANAGEMENT (CONTD.)
RISK MANAGEMENT (CONTD.)
Company No. 8515-D
F-157
154
39,145
375
2,323,486
389,392
192,413
1,702,161
-
>3 months
to 6 months
RM'000
18,831
323
5,391,177
452,170
358,499
4,561,354
-
>6 months
to 12 months
RM'000
12,348
260,000
2,519,573
520,072
940,018
787,135
-
>1 year
to 5 years
RM'000
-
-
-
No maturity
specified
RM'000
615,999
260,000
31,406
24,075,819
2,213,257
1,869,799
15,338,746
3,322,322
424,290
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
150
3,855,263
86,089
130,848
3,638,176
-
Over
5 years
RM'000
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.4
MARKET RISK MANAGEMENT
Market risk is the risk of losses due to adverse changes in the level or volatility of market rates or prices, such as interest/profit rates,
credit spreads, equity prices and foreign exchange rates. The Group differentiates between two types of market risk: Traded Market
Risk and Interest Rate Risk/Rate of Return Risk in Banking Book. Assessment, control and monitoring of these risks are the
responsibility of the Group Market Risk (“GMR”).
Traded Market Risk
The Traded Market Risk (“TMR”) management process is depicted in the table below.
Identification
• Identify market risks within existing and new products.
• Review market-related information such as market trends and economic data.
Assessment/
Measurement
•
•
•
•
Value-at-Risk ("VaR")
Profit-at-Risk ("PaR")
Capital-at-Risk ("CaR")
Other Detailed Management Controls
Control/
Mitigation
•
•
•
•
•
•
•
•
•
•
•
•
VaR Limits
PaR Limits
CaR Limits
Loss Limits (Annual/Monthly/Daily)
Concentration Limits
Greeks Limits (Delta/Gamma/Delta-Gamma/Vega/Theta)
Present Value of One Basis Point Limits ("PV01")
Stealth Limits
Position Size Limits
Maximum Tenure Limits
Maximum Holding Period Limit
Permitted Instruments/Currencies/Countries
Monitoring/
Review
• Monitoring of limits
• Periodical review and reporting
TMR arises from transactions in which the Group acts as principal with clients or the market. It involves taking positions in fixed
income, equity, foreign exchange, commodities and/or derivatives. The objectives of TMR management are to understand, accurately
measure and work with the business to ensure exposures are managed within the Board and Executive Management approved limit
structures. This is done via robust traded market risk measurement, limit setting, limit monitoring and collaboration and agreement with
Business Units.
VaR, PaR, CaR and other detailed management controls are used to measure, monitor and control TMR exposures. VaR is a
quantitative measure which applies recent historic market conditions to estimate potential losses in market value, at a certain
confidence level and over a specified holding period. PaR comprises VaR and a loss limit threshold (that is Annual Loss Limit). Loss
limit thresholds are intended to trigger management discussion on appropriate mitigation measures to be taken, once certain loss
levels are reached.
To complement VaR, CaR is used as a measure of the potential impact on portfolio values due to more extreme, albeit plausible,
market movements. In addition, CaR is used to gauge and ensure that the Group is able to absorb extreme, unanticipated market
movements.
Apart from VaR, PaR and CaR, additional sensitivity controls (for example Greeks Limits/PV01) and indicators are used to monitor
changes in portfolio value due to changes in risk factors under different market conditions.
GMR monitors and reports risk exposures against limits on a daily basis. Portfolio market risk positions are also reported to
GTMRC/Group CEOs Committee, RMCD and the Board. Furthermore, policies and procedures are in place to ensure prompt action is
taken in the event of non-adherence to limits. Business Units exposed to traded market risk are required to maintain risk exposures
within approved risk limits. Business Units are required to provide an action plan to address any non-adherence to limits. The action
plan must be approved by Senior Management.
155
F-158
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.4
MARKET RISK MANAGEMENT (CONTD.)
The Group adopts the Standardised Approach for market risk capital charge computation. The capital charge serves as a buffer
against losses from potential adverse market movements.
GMR is committed to on-going improvements in market risk processes and systems, and allocates substantial resources to this
endeavour.
Non-Traded Market Risk
Interest Rate Risk/Rate of Return Risk in Banking Book
The Interest Rate Risk/Rate of Return Risk in Banking Book (“IRR/RORBB”) risk management process is depicted in the table below:
Identification
• Identify IRR/RORBB within existing and new products
• Review market-related information such as market trend and economic data
Assessment/
Measurement
• VaR
• Earnings-at-Risk ("EaR")
Control/
Mitigation
• VaR limits
• EaR limits
Monitoring/
Review
• Monitor limits
• Periodical review and reporting
IRR/RORBB arises from changes in market interest/profit rates that impact core net interest/profit income, future cash flows or fair
values of financial instruments. This risk arises from mismatches between repricing dates of assets and liabilities, changes in yield
curves, volatilities in interest/profit margins and implied volatilities on interest/profit rate options. The provision of retail and wholesale
banking products and services (primarily lending and deposit taking activities) creates interest/profit rate-sensitive positions in the
Group's statement of financial position.
The principal objectives of balance sheet risk management are to manage interest/profit income sensitivity while maintaining
acceptable levels of IRR/RORBB and funding risk, and to manage the market value of the Group's capital.
The Board’s oversight of IRR/RORBB is supported by the GALCO/Group CEOs Committee. GALCO/Group CEOs Committee is
responsible for the alignment of the Group-wide risk appetite and funding needs, taking into consideration the Group's business
strategies. GALCO/Group CEOs Committee consistently oversees the Group's gapping positions, asset growth and liability mix
against the interest/profit rate outlook. It also reviews strategies to ensure a comfortable level of IRR/RORBB is maintained. The
Group has successfully engaged long-term borrowings and written interest/profit rate swaps to manage IRR/RORBB and maintained
an acceptable gapping profile as a result. In accordance with Group’s policy, positions are monitored on a daily basis and hedging
strategies are employed to ensure risk exposures are maintained within Board-established limits.
The Group measures the risk of losses arising from potential adverse movements in market interest/profit rates and volatilities using
VaR. VaR is a quantitative measure of IRR/RORBB which applies recent historic market conditions to estimate the potential loss in
market value, at a certain confidence level and over a specified holding period.
The Group complements VaR by stress testing IRR/RORBB exposures to highlight potential risk that may arise from extreme market
events that are rare but plausible.
Key assumptions in the gap and sensitivity analysis relate to the behaviour of interest/profit rates and spreads, changes in loan and
deposit product balances due to behavioural characteristics under different interest/profit rate environments. Material assumptions
include the repricing characteristics and the stickiness of indeterminate or non-maturity deposits.
156
F-159
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.4
MARKET RISK MANAGEMENT (CONTD.)
The rate scenarios may include rapid ramping of interest/profit rates, gradual ramping of interest/profit rates, and narrowing or
widening of spreads. Usually each analysis incorporates what management deems the most appropriate assumptions about customer
behaviour in an interest/profit rate scenario. However, in certain cases, assumptions are deliberately changed to test the Group’s
exposure to a specified event.
The Group’s strategy seeks to optimise exposure to IRR/RORBB within Board-approved limits. This is achieved through the ability to
reposition the interest/profit rate exposure of the statement of financial position using dynamic product and funding strategies,
supported by MFRS 139 - compliant interest/profit rate hedging activities using interest/profit rate swaps and other derivatives. These
approaches are governed by the Group’s policies in the areas of product and liquidity management as well as the banking book policy
statements and hedging policies.
IRR/RORBB is calculated daily and reported to GALCO.
Market Risk Sensitivity
(i)
Interest Rate Risk/Rate of Return Risk
Interest Rate Risk/Rate of Return Risk ("IRR/ROR") is the risk that the value of a financial instrument will fluctuate due to
changes in market interest/profit rate and is managed through gap and sensitivity analysis. Interest/profit rate movements also
affect the Group’s income and expense from assets and liabilities as well as capital fund. The Group has adopted IRR/ROR
hedging measures to cushion the interest/profit rate volatility.
The following table demonstrates the sensitivity of the Group's and the Bank's profit before taxation and equity to a reasonable
possible change in interest/profit rates with all other variables remaining constant.
Traded Market Risk:
31 March 2013
Interest rate
Interest rate
+ 100 bps
- 100 bps
(RM'000)
(RM'000)
Group and Bank
Impact on profit before taxation
Impact on equity
(149,862)
-
31 March 2012
Interest rate
Interest rate
+ 100 bps
- 100 bps
(RM'000)
(RM'000)
166,293
-
(165,534)
-
190,999
-
Non-Traded Market Risk:
31 March 2013
Interest rate
Interest rate
+ 100 bps
- 100 bps
(RM'000)
(RM'000)
31 March 2012
Interest rate
Interest rate
+ 100 bps
- 100 bps
(RM'000)
(RM'000)
Group
Impact on profit before taxation
Impact on equity
368,124
(97,389)
(368,124)
106,818
384,016
(114,927)
(384,016)
125,209
Bank
Impact on profit before taxation
Impact on equity
368,641
(106,632)
(368,641)
117,074
384,384
(125,919)
(384,384)
137,402
157
F-160
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.4
MARKET RISK MANAGEMENT (CONTD.)
(ii)
Foreign Exchange Risk
Foreign exchange risk arises from changes in foreign exchange rates to exposure on the Group’s financial instruments
denominated in currencies other than the functional currency of the transacting entity. Position limits are imposed to prevent
the Group from exposure to excessive foreign exchange risk.
The following table demonstrates the sensitivity of the Group's and the Bank's profit before taxation and equity to a reasonable
possible change in foreign exchange rates with all other variables remaining constant.
Impact on profit before taxation
Currency
31 March 2013
Foreign exchange Foreign exchange
rate
rate
+ 10 %
- 10 %
(RM'000)
(RM'000)
31 March 2012
Foreign exchange Foreign exchange
rate
rate
+ 10 %
- 10 %
(RM'000)
(RM'000)
Group
USD
SGD
EUR
JPY
Others
10,323
(3,916)
126
(681)
(33)
(10,323)
3,916
(126)
681
33
10,663
(2,069)
(580)
(296)
(1,418)
(10,663)
2,069
580
296
1,418
Bank
USD
SGD
EUR
JPY
Others
10,323
(3,916)
126
(681)
(33)
(10,323)
3,916
(126)
681
33
10,663
(2,069)
(580)
(296)
(1,418)
(10,663)
2,069
580
296
1,418
Impact on Equity:
Currency
31 March 2013
Foreign exchange Foreign exchange
rate
rate
+ 10 %
- 10 %
(RM'000)
(RM'000)
31 March 2012
Foreign exchange Foreign exchange
rate
rate
+ 10 %
- 10 %
(RM'000)
(RM'000)
Group
USD
EUR
23,590
15
(23,590)
(15)
3,971
9
(3,971)
(9)
Bank
USD
EUR
20,313
15
(20,313)
(15)
3,088
11
(3,088)
(11)
158
F-161
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.4
MARKET RISK MANAGEMENT (CONTD.)
(iii)
Price Risk
Price risk arises from the adverse movements in the prices of equity and other quoted instruments. Price risk is controlled via
position size, loss limit and VaR limits.
The following table demonstrates the sensitivity of the Group and the Bank's profit before taxation and equity to a reasonable
possible change in prices with all other variables remaining constant.
31 March 2013
Prices
Prices
+ 10 %
- 10 %
(RM'000)
(RM'000)
49.5
31 March 2012
Prices
Prices
+ 10 %
- 10 %
(RM'000)
(RM'000)
Group
Impact on profit before taxation
Impact on equity
12,316
22,300
(12,315)
(22,300)
22,687
7,223
(22,677)
(7,223)
Bank
Impact on profit before taxation
Impact on equity
12,316
22,296
(12,315)
(22,296)
22,687
7,206
(22,677)
(7,206)
OPERATIONAL RISK MANAGEMENT
Operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems or from
external incidents which includes but is not limited to legal risk and Shariah compliance risk. It excludes strategic, systemic and
reputational risk. It is increasingly recognised that operational risk is the most widespread risk facing financial institutions today.
Operational Risk Management (“ORM”) is the discipline of continual and systematic process which includes risk identification,
assessment, monitoring and reporting of risk for decision making and implementation of risk controls, which results in acceptance,
mitigation or avoidance of risk. ORM provides the oversight of operational risk, including the risk of loss resulting from inadequate or
failed internal processes, people and systems or from external incidents.
The Group minimises operational risk by putting in place appropriate policies, internal controls and procedures as well as maintaining
back-up procedures for key activities and undertaking business continuity planning. These are supported by independent reviews by
the Group’s Internal Audit team.
(i)
Business Continuity Management (“BCM”)
The BCM function forms an integral part of Operational Risk Management. It places the importance of maintaining a BCM
framework and policies to identify events that could potentially threaten the Group’s operations and establishment of critical
functions recovery against downtimes. BCM builds the resilience and recovery capability to safeguard the interest of the
Group’s stakeholders by protecting our brand and reputation.
The Group is continuously reviewing the level of business operations resiliency to enhance the BCM capability throughout all
critical departments and branches across the region. Training is an on-going agenda to heighten the BCM awareness and
inculcate a business resilience culture.
159
F-162
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
49. RISK MANAGEMENT (CONTD.)
49.6
LEGAL AND REGULATORY RISK
The Group manages legal and regulatory risks to its business. Legal risk arises from the potential that breaches of applicable laws and
regulatory requirements, unenforceability of contracts, lawsuits, or adverse judgement, may lead to the incurrence of losses, disrupt or
otherwise resulting in financial and reputational risk.
Legal risk is overseen by the GOLRC/Group CEOs Committee, upon advice by internal legal counsel and, where necessary, in
consultation with external legal counsel to ensure that such risk is minimised.
A proactive regulatory risk monitoring and control process is essential for any financial group to provide assurance that its products
and services are offered in a manner consistent with regulatory requirements and industry best practice. Regulatory Compliance
undertakes the task by ensuring that appropriate measures are introduced and applied accordingly, whilst inculcating a compliance
culture across all levels of staff. Amongst the measures introduced are monitoring and reporting, training, providing advice and
disseminating information. A process is in place to standardise compliance practices across the Group.
The compliance monitoring and reporting system is essentially a mechanism through which businesses monitor their compliance to
rules and regulations as well as provide monthly, quarterly and exception reporting that is carried out online. This reaffirms our
commitment to a centralised compliance infrastructure that embraces regular self-assessment by staff, thus providing management
the assurance that staff are aware and comply with internal and external requirements.
Compliance awareness is performed on a regular basis to ensure staff keeps abreast of banking, insurance, securities and anti-money
laundering law as well as other regulatory developments. The awareness helps staff develop their skills to identify compliance issues
as well as cultivate good corporate ethics. In addition to the training provided, the Compliance Repository, an online resource tool,
continues to provide staff with easy access to rules and regulations to various search modes.
Regulatory Compliance also provides advice on regulatory matters and measures to be implemented by the Group to facilitate
compliance with rules and regulations. To further promote understanding, the department facilitates briefings, disseminates information
and leads coordination efforts.
160
F-163
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
50. FAIR VALUES OF FINANCIAL INSTRUMENTS
Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financial liability or equity instrument of
another enterprise. The fair value of a financial instrument is the amount at which the instrument could be exchanged or settled between
knowledgeable and willing parties in an arm’s length transaction, other than a forced or liquidated sale. The information presented herein
represents best estimates of fair values of financial instruments at the reporting date.
Where available, quoted and observable market prices are used as the measure of fair values. Where such quoted and observable market
prices are not available, fair values are estimated based on a number of methodologies and assumptions regarding risk characteristics of
various financial instruments, discount rates, estimates of future cash flows and other factors. Changes in the assumptions could materially
affect these estimates and the corresponding fair values.
In addition, fair value information for non-financial assets and liabilities such as investments in subsidiaries and deferred taxation are
excluded, as they do not fall within the scope of MFRS 7 Financial Instruments: Disclosure and Presentation, which requires the fair value
information to be disclosed.
The estimated fair values of the Group's and the Bank's financial instruments are as follows:
a)
Financial instruments not measured at fair value
Group
Carrying
value
RM'000
Fair
value
RM'000
Bank
Carrying
value
RM'000
Fair
value
RM'000
31 March 2013
Financial Assets
Cash and short-term funds
Deposits and placements
with banks and other
financial institutions
Financial investments
available-for-sale
Financial investments
held-to-maturity
Loans and advances
Statutory deposit with
Bank Negara Malaysia
Financial Liabilities
Deposits and placements of banks
and other financial institutions
Recourse obligation of loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
7,324,650
7,324,650
7,255,748
7,255,748
1,913,422
1,930,718
1,913,422
1,930,718
88,355
88,355
87,486
87,486
4,033,535
59,231,752
4,023,914
59,789,037
4,033,164
59,032,684
4,023,543
59,631,472
2,122,386
74,714,100
2,122,386
75,279,060
2,122,386
74,444,890
2,122,386
75,051,353
2,330,512
2,336,072
2,338,370
2,343,930
1,264,251
62,147,776
4,075,158
1,241,980
3,226,507
74,286,184
1,228,125
62,089,184
4,188,293
1,241,980
4,068,736
75,152,390
1,264,251
62,120,335
4,075,158
1,241,980
3,226,507
74,266,601
1,228,125
62,061,743
4,188,293
1,241,980
4,068,736
75,132,807
161
F-164
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTD.)
a)
Financial instruments not measured at fair value (contd.)
Group
Carrying
value
RM'000
Fair
value
RM'000
Bank
Carrying
value
RM'000
Fair
value
RM'000
31 March 2012
Financial Assets
Cash and short-term funds
Securities purchased under resale
agreements
Deposits and placements
with banks and other
financial institutions
Financial investments
available-for-sale
Financial investments
held-to-maturity
Loans and advances
Statutory deposit with
Bank Negara Malaysia
Financial Liabilities
Deposits and placements
of banks and other
financial institutions
Securities sold under repurchase
agreements
Recourse obligation of loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
5,453,638
5,453,638
5,133,039
5,133,039
384,570
384,570
384,570
384,570
1,122,194
1,122,194
1,091,549
1,091,549
88,271
88,271
87,410
87,410
116,155
56,491,272
116,155
56,568,411
113,501
56,252,935
113,501
56,323,768
2,011,288
65,667,388
2,011,288
65,744,527
2,011,288
65,074,292
2,011,288
65,145,125
3,968,264
3,928,043
4,528,215
4,487,993
41,195
41,195
41,195
41,195
1,176,054
59,359,849
4,159,813
353,526
3,241,592
72,300,293
1,060,697
59,297,586
4,227,164
353,526
4,028,031
72,936,242
1,176,054
58,496,288
4,159,813
353,526
3,241,592
71,996,683
1,060,697
58,434,026
4,227,164
353,526
4,028,031
72,632,632
162
F-165
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTD.)
a)
Financial instruments not measured at fair value (contd.)
Group
Carrying
value
RM'000
Fair
value
RM'000
Bank
Carrying
value
RM'000
Fair
value
RM'000
1 April 2011
Financial Assets
Cash and short-term funds
Securities purchased under resale
agreements
Deposits and placements
with banks and other
financial institutions
Financial investments
available-for-sale
Financial investments
held-to-maturity
Loans and advances
Statutory deposit with
Bank Negara Malaysia
Financial Liabilities
Deposits and placements
of banks and other
financial institutions
Securities sold under repurchase
agreements
Recourse obligation of loans
sold to Cagamas Berhad
Deposits from customers
Term funding
Bills and acceptances payable
Debt capital
8,740,986
8,740,986
8,375,879
8,375,879
289,731
289,731
289,731
289,731
3,792,922
3,792,922
3,702,163
3,702,163
87,739
87,739
86,888
86,888
165,331
55,514,989
163,837
56,121,006
159,589
55,234,910
159,589
55,891,150
143,811
68,735,509
143,811
69,340,032
143,811
67,992,971
143,811
68,649,211
4,467,908
4,299,940
4,792,644
4,624,925
30,465
30,465
30,465
30,465
19,583
59,664,604
3,988,475
988,389
2,692,800
71,852,224
19,592
59,545,871
4,068,265
988,389
3,326,446
72,278,968
19,583
59,036,112
3,988,475
988,389
2,692,800
71,548,468
19,592
58,917,378
4,068,265
988,389
3,326,446
71,975,460
163
F-166
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-167
Financial Liabilities
Derivative financial liabilities
Financial Assets
Derivative financial assets
Financial assets held-for-trading
- Money market securities
- Equities
- Quoted private debt securities
- Unquoted private debt securities
Financial investments available-for-sale
- Money market securities
- Equities
- Quoted private debt securities
- Unquoted private debt securities
31 March 2013
(b) Financial instruments measured at fair value
50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTD.)
Company No. 8515-D
164
1,189,760
5,455
1,847,091
7,271,612
217,545
472,105
412,683
412,683
3,079,047
9,992
9,992
-
767,179
-
231,219
23,178
-
-
435
435
-
383,080
163
-
422,675
422,675
1,189,760
217,545
5,455
1,847,526
7,744,152
767,179
231,219
23,178
3,079,047
383,243
<------------------------------- Group ---------------------------->
Level 1
Level 2
Level 3
Total
RM'000
RM'000
RM'000
RM'000
9,992
9,992
217,507
472,067
231,219
23,178
-
163
-
159,732
159,732
-
-
-
422,675
422,675
1,189,760
217,507
5,455
2,006,823
7,903,411
767,179
231,219
23,178
3,079,047
383,243
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
412,683
412,683
1,189,760
5,455
1,847,091
7,271,612
3,079,047
767,179
-
383,080
<------------------------------- Bank ---------------------------->
Level 1
Level 2
Level 3
RM'000
RM'000
RM'000
F-168
Financial Liabilities
Derivative financial liabilities
Financial Assets
Derivative financial assets
Financial assets held-for-trading
- Money market securities
- Equities
- Unquoted private debt securities
Financial investments available-for-sale
- Money market securities
- Equities
- Quoted private debt securities
- Unquoted private debt securities
31 March 2012
(b) Financial instruments measured at fair value (contd.)
50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTD.)
Company No. 8515-D
2,459,042
8,202
1,789,133
13,231,635
72,233
387,953
413,930
413,930
6,257,744
2,337,747
315,452
-
27,774
27,774
379,767
268
165
-
18,848
4,992
23,840
-
-
441,704
441,704
2,459,042
72,233
27,050
1,794,125
13,643,428
6,257,744
315,452
2,337,747
380,035
<------------------------------- Group ---------------------------->
Level 1
Level 2
Level 3
Total
RM'000
RM'000
RM'000
RM'000
27,774
27,774
72,059
387,779
315,452
-
268
-
18,848
197,278
216,126
-
-
441,704
441,704
2,459,042
72,059
27,050
1,986,411
13,835,540
6,257,744
315,452
2,337,747
380,035
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
413,930
413,930
2,459,042
8,202
1,789,133
13,231,635
6,257,744
2,337,747
379,767
<------------------------------- Bank ---------------------------->
Level 1
Level 2
Level 3
RM'000
RM'000
RM'000
F-169
Financial Liabilities
Recourse obligation on loans sold to Cagamas Berhad
Derivative financial liabilities
Debt capital
Financial Assets
Derivative financial assets
Financial assets held-for-trading
- Money market securities
- Equities
- Unquoted private debt securities
Financial investments available-for-sale
- Money market securities
- Equities
- Quoted private debt securities
- Unquoted private debt securities
1 April 2011
(b) Financial instruments measured at fair value (contd.)
50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTD.)
Company No. 8515-D
3,659,523
22,115
2,418,845
10,281,679
51,419
155
434,053
998,460
331,676
675,060
2,005,196
2,706,726
1,090,223
370,053
-
101,256
101,256
384,247
12,426
166
-
33,611
58,562
92,173
-
-
998,460
432,932
675,060
2,106,452
3,659,523
51,419
55,881
2,477,407
10,807,905
2,706,726
370,053
1,090,223
396,673
<------------------------------- Group ---------------------------->
Level 1
Level 2
Level 3
Total
RM'000
RM'000
RM'000
RM'000
101,256
101,256
51,249
155
433,883
370,053
-
12,426
-
33,611
285,310
318,921
-
-
998,460
432,932
675,060
2,106,452
3,659,523
51,249
55,881
2,704,155
11,034,483
2,706,726
370,053
1,090,223
396,673
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
998,460
331,676
675,060
2,005,196
3,659,523
22,115
2,418,845
10,281,679
2,706,726
1,090,223
384,247
<------------------------------- Bank ---------------------------->
Level 1
Level 2
Level 3
RM'000
RM'000
RM'000
Company No. 8515-D
50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTD.)
Determination of fair value
The following describes the methodologies and assumptions used to determine fair values for those financial instruments which are not
already recorded at fair value in the financial statements.
(a)
Assets for which fair value approximates carrying value
For financial assets and financial liabilities that have a short-term maturity (less than six months), demand deposits and savings
accounts without a specific maturity, the carrying amounts approximate to their fair value. For other variable rate instruments, an
adjustment is also made to reflect the change in required credit spread since the instrument was initially recognised.
(b)
Fixed rate financial instruments
The fair value of fixed rate financial assets and liabilities carried at amortised cost are estimated by comparing market interest rates
when they were initially recognised with current market rates for similar financial instruments. The estimated fair value of fixed
interest bearing deposits is based on discounted cash flows using prevailing money-market interest rates for debts with similar credit
risk and maturity. For quoted debt issued, the fair values are determined based on quoted market prices. For those notes issued
where quoted market prices are not available, a discounted cash flow model is used based on a current interest rate yield curve
appropriate for the remaining term to maturity and credit spreads.
(c)
Contingent liabilities and undrawn credit facilities
The fair value of contingent liabilities and undrawn credit facilities are not readily ascertainable. These financial instruments are
presently not sold or traded. They generate fees that are in line with market prices for similar arrangements. The estimated fair
value may be represented by the present value of the fees expected to be received, less associated costs and potential loss that
may arise should these commitments crystallise. The Group and the Bank assess that their respective fair values are unlikely to be
significant given that the overall level of fees involved is not significant and no provision is necessary to be made.
(d)
Securities purchased under resale agreements
The fair values of securities purchased under resale agreements with remaining maturities of less than six months are estimated to
approximate their carrying values. For securities purchased under resale agreements with maturities of more than six months, the
fair values are estimated based on discounted cash flows using the prevailing KLIBOR rates and interest rate swap rates.
(e)
Financial investments available-for-sale
Financial investments available-for-sale valued using valuation techniques or pricing models primarily consist of unquoted equities
and debt securities.
(f)
Recourse obligation on loans sold to Cagamas Berhad
The fair values for recourse obligation on loans sold to Cagamas Berhad are determined based on discounted cash flows of future
instalments payments at prevailing rates quoted by Cagamas Berhad as at reporting date.
Determination of fair value hierarchy
The Group and the Bank use the following hierarchy for determining and disclosing the fair value of financial instruments by valuation
technique:
Level 1 :
quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 :
other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly
or indirectly;
Level 3 :
techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable
market data.
167
F-170
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
50. FAIR VALUES OF FINANCIAL INSTRUMENTS (CONTD.)
Financial assets and liabilities measured using a valuation technique based on assumptions that are supported by prices from observable
current market transactions are assets and liabilities for which pricing is obtained via pricing services, but where prices have not been
determined in an active market, financial assets with fair values based on broker quotes, investments in private equity funds with fair values
obtained via fund managers and assets that are valued using the Group’s own models whereby the majority of assumptions are market
observable.
Non market observable inputs means that fair values are determined, in whole or in part, using a valuation technique (model) based on
assumptions that are neither supported by prices from observable current market transactions in the same instrument, nor are they based
on available market data. The main asset classes in this category are unlisted equity investments and debt instruments. Valuation
techniques are used to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any,
market activity for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is,
an exit price from the perspective of the Group or Bank. Therefore, unobservable inputs reflect the Group’s and the Bank's own
assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk).
These inputs are developed based on the best information available, which might include the Group’s and the Bank's own data.
About 2.0% (2012: 1.6%) of the total financial assets recorded at fair value, are based on estimates and recorded as Level 3 investments.
Where estimates are used, these are based on a combination of independent third-party evidence and internally developed models,
calibrated to market observable data where possible. While such valuations are sensitive to estimates, it is believed that changing one or
more of the assumptions to reasonably possible alternative assumptions would not change the fair value significantly.
Movements In Level 3 financial instruments measured at fair value
The level of the fair value hierarchy of financial instruments is determined at the beginning of each reporting period. The following table
shows a reconciliation of the opening and closing amounts of level 3 financial assets and liabilities which are recorded at fair value:
Group
31 March
2013
RM'000
31 March
2012
RM'000
Bank
31 March
2013
RM'000
31 March
2012
RM'000
Financial investment available-for-sale:
Balance at beginning of financial year
Total gains/(losses) recognised in:
- profit or loss:
- other operating income
- impairment loss
- other comprehensive income
Settlements
Balance at end of financial year
23,840
92,173
216,126
318,921
10,710
83
(34,198)
435
34,575
(418)
(102,490)
23,840
10,710
83
2,227
(69,414)
159,732
34,575
(418)
8,115
(145,067)
216,126
Total gains or losses included in profit or loss for financial instruments held at the end of the reporting period:
Group
31 March
2013
RM'000
31 March
2012
RM'000
Bank
31 March
2013
RM'000
31 March
2012
RM'000
Financial investment available-for-sale:
Total gains/(losses) included in:
- impairment loss on financial investments
- other comprehensive income
14
-
(519)
-
14
2,227
(519)
7,120
There are no transfers between Level 2 and Level 3 during the current and previous financial year for the Group and the Bank.
Impact on fair value of level 3 financial instruments measured at fair value arising from changes to key assumptions
Changing one or more of the inputs to reasonable alternative assumptions would not change the value significantly for the financial assets
in Level 3 of the fair value hierarchy.
168
F-171
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
51. BUSINESS SEGMENT ANALYSIS
Segment information is presented in respect of the Group’s business segments. The business segment information is prepared based on
internal management reports, which are regularly reviewed by the chief operating decision-maker in order to allocate resources to a
segment and to assess its performance.
The Group comprises the following main business segments:
(a)
Retail Banking
Retail banking focuses on providing products and services to individual customers and small and medium enterprises. The products
and services offered to the customers include credit facilities such as auto financing, mortgages and other consumer loans, credit
cards and line of credit, asset financing and small business, personal financing, retail distribution, transactional banking services and
deposits.
(b)
Business Banking
Business banking operations consist of provision of trade services, cash management and transactional banking services.
(c)
Corporate and Institutional Banking
Corporate and institutional banking focuses on deepening and expanding corporate and institutional banking relationships with the
Group’s corporate clients, as well as offering of a wider spectrum of the Group’s commercial, investment and transactional banking
products and services through the overseas business operations and providing real estate management services.
(d)
Markets
The markets operations focus on activities and services which include foreign exchange, money market, derivatives and trading of
capital market instruments.
(e)
Group Functions and Others
Group functions and others comprise activities which complement and support the operations of the main business unit, and noncore operations of the Group.
Measurement of segment performance
The segment performance is measured on income, expenses and profit basis. These are shown after allocation of certain centralised cost,
funding income and expenses and expenses directly associated with each segment. Transactions between segments are recorded within
the segment as if they are third party transactions and are eliminated on consolidation.
Operating Revenue
Operating revenue of the Group comprises all types of revenue derived from the business segments but after elimination of all related
companies' transactions.
Major customers
No revenue from one single customer amounted to greater than 10% of the Group’s revenue for the current and previous financial year.
169
F-172
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-173
Cost to income ratio
Gross loans and advances
Net loans and advances
Impaired loans and advances
Deposits
43.4%
34,336,552
33,574,920
989,522
30,582,110
1,310,032
(568,129)
741,903
(106,170)
635,733
(158,933)
476,800
Income
Other operating expenses
Profit before provision
Provision
Profit before taxation
Taxation
Profit for the year
Other information
2,125,215
Retail
banking
RM'000
Operating revenue
Group
31 March 2013
51. BUSINESS SEGMENT ANALYSIS
Company No. 8515-D
15.9%
12,547,937
12,318,977
178,622
6,139,159
468,614
(74,552)
394,062
(91,193)
302,869
(74,197)
228,672
606,585
Business
banking
RM'000
170
15.3%
13,722,866
13,626,510
25,576,454
397,828
(60,795)
337,033
52,339
389,372
(88,868)
300,504
1,229,345
Corporate
and institutional
banking
RM'000
24.4%
71,506
271,628
(66,376)
205,252
8,993
214,245
(53,337)
160,908
293,291
Markets
RM'000
39.7%
60,854,831
59,231,752
1,396,378
64,478,288
2,641,878
(1,047,568)
1,594,310
32,106
1,626,416
(375,181)
1,251,235
4,926,915
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
143.3%
247,476
(288,655)
228,234
2,109,059
193,776
(277,716)
(83,940)
168,137
84,197
154
84,351
672,479
Group functions
and others
RM'000
F-174
17.8%
11,632,744
11,354,752
259,116
5,108,636
442,193
(78,549)
363,644
(104,526)
259,118
(63,450)
195,668
568,188
Business
banking
RM'000
16.9%
12,145,374
12,013,033
26,011,346
311,604
(52,816)
258,788
(19,008)
239,780
(49,104)
190,676
1,119,034
Corporate
and institutional
banking
RM'000
171
Note:
1 The financial information by geographical segment is not presented as the Group's activities are principally conducted in Malaysia.
2 Certain comparative figures have been restated to conform with current year's presentation.
Cost to income ratio
Gross loans and advances
Net loans and advances
Impaired loans and advances
Deposits
41.4%
33,917,800
33,148,723
1,002,243
28,815,729
1,334,463
(552,096)
782,367
(207,504)
574,863
(143,770)
431,093
Income
Other operating expenses
Profit before provision
Provision
Profit before taxation
Taxation
Profit for the year
Other information
2,145,522
Retail
banking
RM'000
Operating revenue
Group
31 March 2012
51. BUSINESS SEGMENT ANALYSIS (CONTD.)
Company No. 8515-D
17.5%
(533,601)
408,721
(71,414)
337,307
5,982
343,289
(85,560)
257,729
440,033
Markets
RM'000
36.4%
58,190,436
56,491,272
1,663,897
63,328,113
2,755,890
(1,002,642)
1,753,248
(304,952)
1,448,296
(360,443)
1,087,853
5,008,476
Total
RM'000
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
95.7%
494,518
(25,236)
402,538
3,926,003
258,909
(247,767)
11,142
20,104
31,246
(18,559)
12,687
735,699
Group functions
and others
RM'000
Company No. 8515-D
52. SIGNIFICANT EVENT
Internal transfer of the 100% equity interest held by AMFB Holdings Berhad in AmBank (M) Berhad to AMMB Holdings Berhad
Upon approval of the Minister of Finance and BNM, AMMB Holdings Berhad ("AMMB") has, on 14 September 2012, entered into an
agreement with its wholly-owned subsidiary, AMFB Holdings Berhad ("AMFB") to transfer 100% equity interest held by AMFB in the Bank to
AMMB (the "Internal Transfer").
The internal transfer is a shareholding reorganisation exercise to make the Bank a direct 100% held subsidiary of AMMB in line with
AMMB's current direct 100% shareholding in AmIslamic Bank Berhad and AmInvestment Bank Berhad.
The Internal Transfer was completed in 4 October 2012.
53. SUBSEQUENT EVENTS
On 26 April 2013, the holding company received approval from Bank Negara Malaysia on the proposed reorganisation of the Group's card
business comprising:
a.
the consolidation of card business of MBF Cards (M) Sdn Bhd, a wholly-owned subsidiary of AMMB to the Bank.
b.
acquisition of 100% equity interest in Arab-Malaysian Credit Berhad, a wholly-owned subsidiary of AMFB by the Bank.
54. CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES
a.
Transition to MFRSs
These financial statements, for the year ended 31 March 2013, are the first the Bank has prepared in accordance with MFRS. For
periods up to and including the year ended 31 March 2012, the Bank prepared its financial statements in accordance with FRS.
Accordingly, the Bank has prepared financial statements which comply with MFRS applicable for periods ending on or after 31 March
2013, together with the comparative period data as at and for the year ended 31 March 2012, as described in the transition to MFRS
Framework note. In preparing these financial statements, the Bank’s opening statement of financial position was prepared as at 1
April 2011, the Bank’s date of transition to MFRS.
The Bank’s reconciliations of statement of financial position as at 1 April 2011 and 31 March 2012, reconciliations of income
statement and statement of comprehensive income for the year ended 31 March 2012 and reconciliation of statements of cash flows
for the year ended 31 March 2012 are provided below to show the principal adjustments made by the Bank in restating its FRS
financial statements.
b.
Other restatements
During the period, the Bank had reviewed and changed the presentation of:
(i)
interest receivable and payable for certain derivative product for the same counterparty for the financial year ended 31
March 2012 and 1 April 2011. The interest receivable and payable which were presented on a gross basis is now set off and
presented on a net basis in either other assets (net interest receivable) or other liabilities (net interest payable).
(ii)
work in progress ("WIP") for intangible assets for the financial year ended 31 March 2012 and 1 April 2011. The WIP
balance which was previously included under WIP Property and Equipment is now presented under Intangible Assets.
(iii)
deposit and placements of banks and other financial institutions and deposit from customers for the financial year ended 31
March 2012 and 1 April 2011. The deposits and placements of banks and other financial institutions previously included
certain monies which the other financial institution holds in trust ("trust monies") on behalf of its remisiers and clients. With
the appllication of FRSIC Consensus 18, Monies Held in Trust by Participating Organisations of Bursa Malaysia Securities
Berhad, the other financial institution has derecognised the deposits and placements from its books. The Bank has
correspondingly reclassified the trust monies from deposits and placements of banks and other financial institution to
deposits from customers.
The above classifications are to conform with current period presentation which better reflect the nature of the items.
172
F-175
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
54. CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTD.)
c.
Reconciliations of statements of financial position
Effect of
transition to
MFRSs
RM'000
Other
restatements
RM'000
55,610,208
1,034,503
201,112
91,664
(95,219)
-
(222,309)
(45,790)
45,790
55,514,989
812,194
155,322
137,454
4,625,853
59,506,659
2,308,014
4,446,494
(2,985)
(92,234)
(157,945)
157,945
(222,309)
-
4,467,908
59,664,604
2,082,720
4,354,260
56,537,197
157,077
1,333,754
205,062
106,829
(45,925)
2,493
-
(254,994)
(63,384)
63,384
56,491,272
159,570
1,078,760
141,678
170,213
4,133,216
59,194,897
2,347,827
5,250,840
56,377
(99,809)
(164,952)
164,952
(254,994)
-
3,968,264
59,359,849
2,149,210
5,151,031
55,336,273
1,029,891
176,868
91,646
(101,363)
-
(222,309)
(45,790)
45,790
55,234,910
807,582
131,078
137,436
4,950,589
58,878,167
2,298,767
4,286,477
(4,387)
(96,976)
(157,945)
157,945
(222,309)
-
4,792,644
59,036,112
2,072,071
4,189,501
56,303,147
156,339
1,328,120
181,272
106,814
(50,212)
2,052
-
(254,994)
(63,384)
63,384
56,252,935
158,391
1,073,126
117,888
170,198
4,693,167
58,331,336
2,338,711
5,201,054
54,971
(103,131)
(164,952)
164,952
(254,994)
-
4,528,215
58,496,288
2,138,688
5,097,923
As previously
reported
RM'000
As restated
RM'000
Group
As at 1 April 2011
Loans and advances
Other assets
Property and equipment
Intangible assets
Deposits and placements of banks
and other financial institutions
Deposits from customers
Other liabilities
Reserves
As at 31 March 2012
Loans and advances
Deferred tax asset
Other assets
Property and equipment
Intangible assets
Deposits and placements of banks
and other financial institutions
Deposits from customers
Other liabilities
Reserves
Bank
As at 1 April 2011
Loans and advances
Other assets
Property and equipment
Intangible assets
Deposits and placements of banks
and other financial institutions
Deposits from customers
Other liabilities
Reserves
As at 31 March 2012
Loans and advances
Deferred tax asset
Other assets
Property and equipment
Intangible assets
Deposits and placements of banks
and other financial institutions
Deposits from customers
Other liabilities
Reserves
173
F-176
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
54. CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTD.)
d.
Reconciliation of income statement and statement of comprehensive income
As previously
reported
RM'000
Effect of
transition to
MFRSs
RM'000
As restated
RM'000
Group
Consolidated Income Statement for the
financial year ended 31 March 2012
Allowance for impairment
on loans and advances
Provision for commitments
and contingencies
Taxation
(272,774)
49,282
(223,492)
516
(362,936)
(59,360)
2,493
(58,844)
(360,443)
(280,265)
51,151
(229,114)
516
(365,200)
(59,358)
2,052
(58,842)
(363,148)
Effect of
transition to
MFRSs
RM'000
Other
restatements
RM'000
As restated
RM'000
Bank
Income Statement for the financial
year ended 31 March 2012
Allowance for impairment
on loans and advances
Provision for commitments
and contingencies
Taxation
e.
Reconciliation of statements of cash flows
As previously
reported
RM'000
31 March 2012
Group
Profit before taxation
1,458,374
(10,078)
-
1,448,296
732,049
(49,282)
-
682,767
59,360
-
58,844
Adjustments for:
Loan and advances
allowances, net of writeback
Provision for commitments and
contingencies
(516)
Decrease/(Increase) in operating
assets:
Other assets
(351,650)
-
32,685
(318,965)
(Decrease)/Increase in operating
liabilities:
Deposits and placements of banks
and other financial institutions
Deposits from customers
Other liabilities
(492,637)
(311,762)
225,990
-
(7,007)
7,007
(32,685)
(499,644)
(304,755)
193,305
(16,452)
-
(55,513)
(71,965)
(85,155)
-
55,513
(29,642)
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of intangible assets
Purchase of property
and equipment
174
F-177
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
Company No. 8515-D
54. CHANGE IN ACCOUNTING POLICIES AND COMPARATIVES (CONTD.)
e.
Reconciliation of statements of cash flows (contd.)
As previously
reported
RM'000
Effect of
transition to
MFRSs
RM'000
Other
restatements
RM'000
As restated
RM'000
31 March 2012
Bank
Profit before taxation
1,567,237
(8,207)
-
1,559,030
733,448
(51,151)
-
682,297
59,358
-
58,842
Adjustments for:
Loan and advances
allowances, net of writeback
Provision for commitments and
contingencies
(516)
Decrease/(Increase) in operating
assets:
Other assets
(350,678)
-
32,685
(317,993)
(Decrease)/Increase in operating
liabilities:
Deposits and placements of banks
and other financial institutions
Deposits from customers
Other liabilities
(257,422)
(546,831)
224,312
-
(7,007)
7,007
(32,685)
(264,429)
(539,824)
191,627
(16,451)
-
(55,513)
(71,964)
(85,102)
-
55,513
(29,589)
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of intangible assets
Purchase of property
and equipment
175
F-178
AmBank (M) Berhad
Financial Statements For The Year Ended 31 March 2013
F-179
F-180
F-181
F-182
F-183
F-184
F-185
F-186
F-187
F-188
F-189
F-190
F-191
F-192
F-193
F-194
F-195
F-196
F-197
F-198
F-199
F-200
F-201
F-202
F-203
F-204
F-205
F-206
F-207
F-208
F-209
F-210
F-211
F-212
F-213
F-214
F-215
F-216
F-217
F-218
F-219
F-220
F-221
F-222
F-223
F-224
F-225
F-226
F-227
F-228
F-229
F-230
F-231
F-232
F-233
F-234
F-235
F-236
F-237
F-238
F-239
F-240
F-241
F-242
F-243
F-244
F-245
F-246
F-247
F-248
F-249
F-250
F-251
F-252
F-253
F-254
F-255
F-256
F-257
F-258
F-259
F-260
F-261
F-262
F-263
F-264
F-265
F-266
F-267
F-268
F-269
F-270
F-271
F-272
F-273
F-274
F-275
F-276
F-277
F-278
F-279
F-280
F-281
F-282
F-283
F-284
F-285
F-286
F-287
F-288
F-289
F-290
F-291
F-292
F-293
F-294
F-295
F-296
F-297
F-298
F-299
F-300
F-301
F-302
F-303
F-304
F-305
F-306
F-307
F-308
F-309
F-310
F-311
F-312
F-313
F-314
F-315
F-316
F-317
F-318
F-319
F-320
F-321
F-322
F-323
F-324
F-325
F-326
F-327
F-328
F-329
F-330
F-331
F-332
F-333
F-334
F-335
F-336
F-337
F-338
F-339
F-340
F-341
F-342
F-343
F-344
F-345
F-346
F-347
F-348
REGISTERED OFFICE OF AmBank (M) Berhad
Bangunan AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Malaysia
FISCAL AGENT, PAYING AGENT AND
CALCULATION AGENT IN
RESPECT OF NOTES OTHER THAN CMU
NOTES
REGISTRAR AND TRANSFER AGENT IN
RESPECT OF REGISTERED NOTES OTHER
THAN CMU NOTES
The Bank of New York Mellon, London Branch
40th Floor
One Canada Square
London E14 5AL
United Kingdom
The Bank of New York Mellon
(Luxembourg) S.A.
Vertigo Building-Polaris
2-4 rue Eugène Ruppert
L-2453 Luxembourg
CMU LODGING AND PAYING AGENT, REGISTRAR, CALCULATION AGENT AND
TRANSFER AGENT IN RESPECT OF CMU NOTES
The Bank of New York Mellon, Hong Kong Branch
Level 24 Three Pacific Place
Queen’s Road East
Hong Kong
DEALERS
Australia and New Zealand Banking Group Limited
10 Collyer Quay
#21-00 Ocean Financial Centre
Singapore 049315
AmInvestment Bank Berhad
Bangunan AmBank Group
55 Jalan Raja Chulan
50200 Kuala Lumpur
Malaysia
LEGAL ADVISERS
To the Issuer
as to English Law
To the Issuer
as to Malaysian law
To the Arrangers and Dealers
as to English Law
Allen & Overy LLP
50 Collyer Quay
#09-01 OUE Bayfront
Singapore 049321
Adnan Sundra & Low
Level 11, Menara Olympia
No. 8 Jalan Raja Chulun
50200 Kuala Lumpur
Malaysia
Linklaters Singapore Pte Ltd
One George Street, #17-01,
Singapore 049145
AUDITORS
Ernst & Young
Level 23A, Menara Milenium
Jalan Damanlela
Pusat Bandar Damansara
50490, Kuala Lumpur
Malaysia
LISTING AGENT
Allen & Overy LLP
50 Collyer Quay
#09-01 OUE Bayfront
Singapore 049321
505506