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Membina AFFINITY

L A P O R A NTA H U N A N

2 0 1 6

Visi KamiRakan niaga terulung untuk Pertumbuhan Kewangan dan Perkhidmatan Inovatif.

Rasional Muka HadapanMencapai AFFINITY bersama para pelanggan,

rakan niaga, kakitangan dan masyarakat

sebagai langkah maju ke hadapan bagi

AFFINBANK. Ia memacu fasa evolusi yang

baharu di mana kami melangkaui cara

konvensional dalam membentuk semula

portfolio sedia ada dan memperkenalkan

kemungkinan baharu.

IsiKandungan

organisasi

02 Maklumat Korporat

03 Struktur Korporat

04 Lembaga Pengarah

05 Profil Lembaga Pengarah

09 Ahli Pengurusan Kanan

10 Profil Ahli Pengurusan Kanan

ringkasan eksekutif

15 Perbincangan & Analisis Pengurusan

25 Diari Korporat

27 Sorotan Kewangan

taDBir urus korPorat

28 Penyata Tadbir Urus Korporat

41 Penyata Pengurusan Risiko &

Kawalan Dalaman

45 Laporan Jawatankuasa Audit Lembaga

Pengarah

lain-lain maklumat

51 Rangkaian Cawangan

56 Notis Mesyuarat Agung Tahunan

Penyata kewangan

57 Penyata Kewangan

Misi KamiUntuk menyediakan penyelesaian dan perkhidmatan kewangan yang inovatif kepada pelanggan-pelanggan bagi menjana keuntungan dan mewujudkan nilai bagi para pemegang saham dan pemegang berkepentingan lain.

Dengan cara ini, kami menyediakan peluang untuk kakitangan menyumbang dan mencapai kecemerlangan; serta menjadi kompetitif dalam menyediakan penyelesaian dan perkhidmatan kepada pelanggan-pelanggan yang dihargai.

Kami menjalankan perniagaan kami secara berintegriti dan profesional sejajar dengan tadbir urus korporat, prinsip-prinsip dan amalan-amalan yang baik.

Maklumat Korporat

lemBaga Pengarah

Pengerusi

yBhg. Jen tan sri Dato’ seri ismail Bin hj. omar (Bersara)(Pengarah Bukan Bebas Bukan Eksekutif)

Pengarah

mr. aubrey li kwok-sing(Pengarah Bukan Bebas Bukan Eksekutif)

en. mohd suffian Bin haji haron(Pengarah Bukan Bebas Bukan Eksekutif)

(Ditugaskan semula berkuatkuasa 1 Jun 2016)

yBhg. tan sri Dato’ seri mohamed Jawhar(Pengarah Bukan Bebas Bukan Eksekutif)

(Ditugaskan semula berkuatkuasa 1 Jun 2016)

yBhg. tan sri mohd ghazali Bin mohd yusoff(Pengarah Bebas Bukan Eksekutif)

en. abd malik Bin a rahman(Pengarah Bebas Bukan Eksekutif)

mr. tang Peng wah(Pengarah Alternatif kepada

Mr. Aubrey Li Kwok-Sing)

yBhg. tan sri Dato’ seri lodin Bin wok kamaruddin(Pengarah Bukan Bebas Bukan Eksekutif)

(Telah melengkapkan tempoh pegangan jawatan pengarah berkuatkuasa 4 Oktober 2016)

Pengarah urusan/ ketua Pegawai eksekutif

en. kamarul ariffin Bin mohd Jamil

setiausaha

nimma safira Binti khalid

alamat BerDaftar

Tingkat 17, Menara AFFIN80, Jalan Raja Chulan50200 Kuala LumpurTel : 03-2055 9000Faks : 03-2026 1415

moDal saham DiBenarkan

Bilangan saham

2,000,000,000

nilai tara

RM1.00

Jumlah

RM2,000,000,000

nama

Affin Bank Berhad (Co. No.: 25046-T)

tarikh DiPerBaDankan

23 Oktober 1975

aktiviti utama

Affin Bank Berhad terlibat terutamanya dalam menjalankan aktiviti perbankan dan perkhidmatan kewangan yang berkaitan. Anak-anak syarikat lain dan syarikat-syarikat bersekutu terlibat terutamanya dalam perkhidmatan pengurusan harta, perkhidmatan penama, pengurusan pemegang amanah dan perkhidmatan pemfaktoran.

moDal DiterBit Dan DiBayar Penuh

Bilangan saham

1,688,769,616

nilai tara

RM1.00

Jumlah

1,688,769,616

Pemegang saham utama

Bilangan

Affin Holdings Berhad

1,688,769,616

JuruauDit luaran

PricewaterhouseCoopers

(AF 1146)

AFFIN BANK BERHAD (25046-T)

2

AFFIN MoneyBrokers Sdn Bhd

AFFIN-ACF Holdings Sdn Bhd

100%

100%

AFFIN Bank Berhad

AFFIN Islamic Bank Berhad

AXA AFFIN Life Insurance Berhad

AXA AFFIN General Insurance Berhad

AFFIN Hwang Investment Bank Berhad

100%

100%

50%

30%

100%

AFFIN Investment Berhad(sebelum ini dikenali sebagai AFFIN Investment Bank Berhad)

100%

51%

36.9%

AFFIN Hwang Nominees(Tempatan) Sdn Bhd

100%

AFFIN Hwang Nominees (Asing) Sdn Bhd

100%

AFFIN Hwang Futures Sdn Bhd100%

AFFIN Nominees (Tempatan) Sdn Bhd100%

AFFIN Nominees (Asing) Sdn Bhd100%

AFFIN Hwang Asset ManagementBerhad

70%

Asian Islamic InvestmentManagement Sdn Bhd

100%

AFFIN Capital Services Berhad(sebelum ini dikenali sebagai AFFIN Fund Management Berhad)

100%

100%PAB Properties Sdn Bhd

100%

100%AFFIN Futures Sdn Bhd 3

100%ABB IT & Services Sdn Bhd 3

100%BSNCB Nominees (Tempatan) Sdn Bhd 3

100%

100%ABB Nominee (Tempatan) Sdn Bhd

100%AFFIN-ACF Nominees (Tempatan) Sdn Bhd 3

100%AFFIN Factors Sdn Bhd 3

100%ABB Nominee (Asing) Sdn Bhd

100%PAB Property Development Sdn Bhd 3

100%BSNC Nominees (Tempatan) Sdn Bhd 3

AFFIN-i Nadayu Sdn Bhd 2

(dimiliki bersama oleh AFFIN Islamic Bank Berhad dan Jurus Positif Sdn Bhd dengan pemilikan 50:50)

16.7%Raeed Holdings Sdn Bhd 5

ABB Trustee Berhad 2

(80% dipegang oleh Pengarah AFFIN Bank Berhad sebagai pemegang amanah)

AFFIN Recoveries Berhad 4

KL South Development Sdn Bhd 2

(dimiliki bersama oleh AFFIN Islamic Bank Berhad dan Albatha Bukit Kiara Holdings Sdn Bhd dengan pemilikan 30:70)

1 Syarikat syarikat bersekutu.2 Diperoleh oleh Affin Investment Bank Berhad pada 25 Januari 2017.3 Di bawah penggulungan sukarela.4 Syarikat tidak aktif tetapi kini memegang aset.5 Sama-sama dimiliki oleh Affin Islamic Bank Berhad, Bank Kerjasama Rakyat Malaysia Berhad, Bank Islam Malaysia Berhad, Bank Muamalat Malaysia Berhad, Maybank Islamic Berhad dan Bank Simpanan Nasional.

LAIN-LAIN

AFFIN HOLDINGS BERHAD

Lembaga Tabung Angkatan Tentera

Boustead Holdings Berhad Bank of East Asia Limited

35.42%

58.48%

20.69% 23.52% 20.37%

Struktur Korporat setakat 31 Disember 2016

LAPORAN TAHUNAN 2016

3

KIRI KE KANAN:

MR. AUBREY LI KwOK-SINg Pengarah Bukan Bebas Bukan Eksekutif

EN. MOHD SUFFIAN BIN HAJI HARON Pengarah Bukan Bebas Bukan Eksekutif (Dilantik semula berkuatkuasa 1 Jun 2016)

YBHg. TAN SRI DATO’ SERI MOHAMED JAwHAR Pengarah Bukan Bebas Bukan Eksekutif (Dilantik semula berkuatkuasa 1 Jun 2016)

KIRI KE KANAN:

YBHg. TAN SRI MOHD gHAzALI BIN MOHD YUSOFF Pengarah Bebas Bukan Eksekutif

EN. ABD MALIK BIN A RAHMAN Pengarah Bebas Bukan Eksekutif

KIRI KE KANAN:

YBHg. JEN. TAN SRI DATO’ SERI ISMAIL BIN HAJI OMAR (BERSARA)Pengerusi / Pengarah Bukan Bebas Bukan Eksekutif

YBHg. TAN SRI DATO’ SERI LODIN BIN wOK KAMARUDDIN Pengarah Bukan Bebas Bukan Eksekutif (Telah melengkapkan tempoh pegangan jawatan pengarah berkuatkuasa 4 Oktober 2016)

Lembaga Pengarah


4

YBhg. Jen. Tan Sri DaTo’ Seri iSmail Bin haJi omar (BerSara)Pengerusi / Pengarah Bukan Bebas Bukan Eksekutif

Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar, berusia 75 tahun, dilantik sebagai Pengarah dan Pengerusi AFFINBANK pada 21 Mei 2002. Beliau juga merupakan Pengerusi Jawatankuasa Semakan Pinjaman dan Perolehan Semula Lembaga Pengarah.

Beliau sebelum ini merupakan Panglima Angkatan Tentera (PAT) Malaysia dari 1995 sehingga persaraan beliau pada 1998, selepas 38 tahun berkhidmat. Beliau adalah lulusan dari Royal Military Academy, Sandhurst, United Kingdom pada 1961 dan seterusnya menghadiri kursus-kursus pembangunan profesional dan pengurusan di beberapa institusi termasuk Land Forces Command and Staff College, Canada; United Nations International Peace Academy, Vienna; National Defence College, India, dan Institut Tadbir Awam Negara (INTAN), Malaysia.

Sepanjang tempoh perkhidmatan beliau di dalam tentera, beliau telah memegang pelbagai jawatan penting seperti Pegawai Pemerintah dan Ketua Staf di semua peringkat dalam Angkatan Tentera. Sebagai PAT, beliau memainkan peranan yang penting dalam Hubungan Kerjasama Pertahanan Malaysia di peringkat Serantau dan Antarabangsa.

Beliau adalah Pengerusi Affin Holdings Berhad dan Affin-ACF Finance Berhad dari tahun 1999 sebelum menyertai AFFINBANK. Beliau kini memegang jawatan sebagai pengarah di Affin Islamic Bank Berhad, ABB Trustee Berhad, EP Engineering Sdn Bhd dan global Medical Alliance Sdn Bhd.

Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara) telah menghadiri kesemua 10 Mesyuarat Lembaga Pengarah yang dijadualkan setiap bulan dan kesemua 14 Mesyuarat Khas Lembaga Pengarah yang diadakan sepanjang tahun kewangan berakhir 31 Disember 2016.

YBhg. Tan Sri DaTo’ Seri loDin Bin Wok kamaruDDinPengarah Bukan Bebas Bukan Eksekutif (Melengkapkan tempoh pegangan jawatan pengarah Bank berkuatkuasa 4 Oktober 2016)

Tan Sri Dato’ Seri Lodin Bin wok Kamaruddin, berusia 67 tahun, telah dilantik semula ke Lembaga Pengarah AFFINBANK pada 4 Oktober 2010. Beliau dilantik sebagai Pengarah Urusan Affin Holdings Berhad pada Februari 1991 dan dilantik semula sebagai Timbalan Pengerusi pada 1 Julai 2008.

Beliau mempunyai pengalaman yang luas dalam menguruskan kumpulan wang simpanan dan dalam menubuhkan, menstruktur semula dan menguruskan pelbagai kepentingan perniagaan seperti perladangan, dagangan, perkhidmatan kewangan, pembangunan hartanah, minyak dan gas, farmaseutikal dan pembinaan kapal.

Tan Sri Dato’ Seri Lodin adalah Ketua Eksekutif Lembaga Tabung Angkatan Tentera (LTAT) dan Timbalan Pengerusi / Pengarah Urusan Kumpulan Boustead Holdings Berhad. Sebelum menyertai LTAT, beliau merupakan Pengurus Besar Perbadanan Kemajuan Bukit Fraser selama 9 tahun.

Beliau juga merupakan Pengerusi Boustead Heavy Industries Corporation Berhad, Boustead Naval Shipyard Sdn Bhd, Pharmaniaga Berhad dan Boustead Petroleum Marketing Sdn Bhd. Beliau juga menganggotai Lembaga Pengarah University of Nottingham di Malaysia, Kumpulan Pemerhati Pemegang Saham Minoriti, Forum FIDE, AFFIN ISLAMIC, Affin Hwang Investment Bank Berhad, AXA Affin Life Insurance Berhad dan Boustead Plantations Berhad.

Tan Sri Dato’ Seri Lodin adalah lulusan ijazah Sarjana Muda Pentadbiran Perniagaan dan Sarjana Pentadbiran Perniagaan dari University of Toledo, Ohio, AS. Antara anugerah-anugerah yang pernah diterima beliau sehingga kini termasuk Chevalier De La Legion D’Honneur dari Kerajaan Perancis, Anugerah Keusahawanan Cemerlang Malaysia, Degree of Laws honoris causa dari University of Nottingham, United Kingdom, Anugerah Alumnus UiTM Tahun 2010 dan The BrandLaureate Most Eminent Brand ICON Leadership Award 2012 oleh Asia Pacific Brands Foundation. Beliau juga merupakan Banker Bertauliah, AICB.

Tan Sri Dato’ Seri Lodin Bin wok Kamaruddin menghadiri kesemua 8 Mesyuarat Lembaga Pengarah yang dijadualkan setiap bulan dan 6 daripada 11 Mesyuarat Khas Lembaga Pengarah yang diadakan dari Januari 2016 sehingga akhir tempoh pegangan jawatan pengarah beliau berkuatkuasa 4 Oktober 2016.

KIRI KE KANAN:

yBhg. Jen. tan sri Dato’ seri ismail Bin haJi omar (Bersara)

yBhg. tan sri Dato’ seri loDin Bin wok kamaruDDin

Profil Lembaga Pengarah


5

KIRI KE KANAN:

mr. auBrey li kwok-sing

en. mohD suffian Bin haJi haron

mr. auBreY li kWok-SingPengarah Bukan Bebas Bukan Eksekutif

Mr. Aubrey Li Kwok-Sing, seorang warganegara Hong Kong, berusia 66 tahun, dilantik ke Lembaga Pengarah AFFINBANK pada 17 Mac 2008. Beliau juga merupakan Pengarah di The Bank of East Asia, Limited dan Pengerusi IAM Holdings (Hong Kong) Limited (sebelum ini dikenali sebagai MCL Partners Limited).

Beliau mempunyai pengalaman luas dalam perbankan pelaburan, perbankan dagangan dan pasaran modal. Terkini, beliau menganggotai Lembaga Pengarah di Cafe’ de Coral Holdings Limited, China Everbright International Limited, Kunlun Energy Limited, Kowloon Development Co. Ltd, Pokfulam Development Company Limited dan Tai Ping Carpets International Limited, Aurora Technologies Limited, Dragon Sea Investment Limited, IAM Holdings Limited, Argyle Street Management Limited, Pocket Solution Limited, K H Optical Company Limited, w Haking Enterprise Limited, golden Chance Limited, Silver Park Holdings Limited, MCL-AUTH Limited, MCL Holdings Limited Mix Creation Limited, Power House Investment Holding Limited, Delta Link Limited, good Motive Limited, Keen general Limited, Noble Point Limited, Rich Delta Limited, TienShing Limited dan New Dragon Asia Food Limited.

Mr. Aubrey Li Kwok-Sing telah menghadiri 4 daripada 10 Mesyuarat Lembaga Pengarah yang diadakan setiap bulan dan 5 daripada 14 Mesyuarat Khas Lembaga Pengarah yang diadakan sepanjang tahun kewangan berakhir 31 Disember 2016.

Pengarah Alternatif bagi Mr. Aubrey Li Kwok-Sing iaitu Mr. Tang Peng wah dilantik pada 23 Jun 2014.

Mr. Tang Peng wah menghadiri 5 daripada 10 Mesyuarat Lembaga Pengarah yang dijadualkan setiap bulan dan 8 daripada 14 Mesyuarat Khas Lembaga Pengarah yang diadakan sepanjang tahun kewangan berakhir 31 Disember 2016.

en. mohD Suffian Bin haJi haronPengarah Bukan Bebas Bukan Eksekutif

En. Mohd Suffian Bin Haji Haron, warganegara Malaysia, berusia 71 tahun, dilantik ke dalam Lembaga Pengarah AFFINBANK pada 15 Ogos 2009 dan seterusnya dilantik semula sebagai Pengarah Bukan Bebas Bukan Eksekutif berkuatkuasa 1 Jun 2016. Terkini, beliau merupakan ahli Jawatankuasa Penamaan dan Imbuhan Lembaga Pengarah bagi AFFINBANK dan AFFIN ISLAMIC, Jawatankuasa Semakan Pinjaman dan Perolehan Semula Lembaga Pengarah, Jawatankuasa Pengurusan Risiko Lembaga Pengarah dan Jawatankuasa Transformasi Pengawasan Lembaga Pengarah bagi AFFINBANK.

Beliau merupakan lulusan Universiti Malaya (1970) dengan ijazah Sarjana Muda Ekonomi selain memegang ijazah Sarjana Pentadbiran Perniagaan dari University of Oregon (AS) pada 1976.

Beliau memulakan kerjaya sebagai Pegawai Tadbir dan Diplomatik di Jabatan Perdana Menteri dan Kementerian Perusahaan Awam. Ketika berkhidmat di Jabatan Perdana Menteri, beliau juga ditugaskan sebagai Penolong Penasihat Khas Ekonomi bagi Kerajaan. Beliau pernah menganggotai Lembaga Pengarah Perbadanan Kemajuan Bukit Fraser, Perbadanan Kemajuan Negeri bagi Perak, Pahang dan Terengganu serta Bank Pembangunan Malaysia Berhad, Kompleks Kewangan Malaysia Berhad, HICOM dan Majlis Amanah Rakyat (MARA). Selepas berkhidmat selama 13 tahun, beliau meninggalkan Perkhidmatan Kerajaan dan menyertai sebuah gLC yang terlibat dalam perniagaan antarabangsa, dan seterusnya memulakan perniagaan sendiri dan menjadi Pengarah Urusan Syarikat Pembrokeran Insurans. Beliau juga pernah terlibat dalam industri keselamatan dan pengurusan aset. Beliau turut pernah menjadi Pengarah di Hitachi Sales (Malaysia) Sdn Bhd, Meiden Electric Engineering Sdn Bhd, Far East Computers (India) dan Affin Discount Berhad. Beliau juga mempunyai pengalaman meluas dalam dagangan umum, penjanaan dan transmisi kuasa, penyelenggaraan pesawat udara serta sektor perkhidmatan minyak dan gas.

Terkini, beliau merupakan ahli Lembaga Pengarah AFFIN ISLAMIC, ABB Trustee Berhad, L.K & Associates Sdn Bhd dan Pharmaniaga Berhad.

En. Mohd Suffian Bin Haji Haron telah menghadiri kesemua 10 Mesyuarat Lembaga Pengarah yang dijadualkan setiap bulan dan kesemua 14 Mesyuarat Khas Lembaga Pengarah yang diadakan sepanjang tahun kewangan berakhir 31 Disember 2016.



6

yBhg. tan sri Dato’ seri mohameD Jawhar

YBhg. Tan Sri DaTo’ Seri mohameD JaWharPengarah Bukan Bebas Bukan Eksekutif

Tan Sri Dato’ Seri Mohamed Jawhar, warganegara Malaysia, berusia 72 tahun, dilantik ke Lembaga Pengarah AFFINBANK pada 1 November 2011 dan seterusnya dilantik semula menjadi Pengarah Bukan Bebas Bukan Eksekutif berkuatkuasa 1 Jun 2016. Beliau kini merupakan ahli Jawatankuasa Penamaan dan Imbuhan Lembaga Pengarah bagi AFFINBANK dan AFFIN ISLAMIC, Jawatankuasa Audit Lembaga Pengarah, Jawatankuasa Pengurusan Risiko Lembaga Pengarah, dan Jawatankuasa Transformasi Pengawasan Lembaga Pengarah bagi AFFINBANK.

Jawatan-jawatan lain beliau termasuk: Pengarah Bukan Bebas Bukan Eksekutif, AFFIN ISLAMIC; Pengerusi Bukan Eksekutif, New Straits Times Press (Malaysia) Berhad; Ahli Suruhanjaya Sekuriti Malaysia; Ahli, Panel Semakan Operasi, Suruhanjaya Pencegahan Rasuah Malaysia; Felo Kehormat, Institut Hubungan Asing dan Diplomasi (IDFR); Felo Kehormat, Institut Pertahanan dan Keselamatan Malaysia (MiDAS); Felo, Institut Keselamatan Awam Malaysia (IPSOM), Kementerian Hal Ehwal Dalam Negeri; Ahli Lembaga Pengarah, Institut Pengajian Islam Lanjutan (IAIS); dan Ahli, Lembaga Penasihat Laureate, INTI International University and Colleges. Beliau juga merupakan Pakar dan Individu Terkemuka dari Malaysia untuk ASEAN Regional Forum (ARF).

Beliau juga pernah menjadi Pengerusi Bersama, Network of East Asia Think-Tanks (NEAT) 2005-2006; Pengerusi, Malaysian National Committee, Pacific Economic Cooperation Council (PECC) 2006-2010; dan Pengerusi Bersama, Council for Security Cooperation in the Asia Pacific (CSCAP) 2007-2009.

Beliau telah berkhidmat dengan Kerajaan lebih 20 tahun sebelum menyertai Institut Kajian Strategik & Antarabangsa (ISIS) Malaysia sebagai Timbalan Ketua Pengarah pada 1990. Beliau dilantik sebagai Ketua Pengarah pada Mac 1997 dan seterusnya dilantik sebagai Pengerusi dan Ketua Pegawai Eksekutif pada 2006. Beliau dilantik sebagai Pengerusi ISIS Malaysia pada 9 Januari 2010 dan melepaskan jawatan tersebut pada 8 Januari 2015.

Semasa berkhidmat dengan Kerajaan, jawatan beliau termasuk sebagai Ketua Pengarah, Jabatan Perpaduan Negara; Setiausaha Rendah, Kementerian Hal Ehwal Dalam Negeri; Pengarah (Analisis) Bahagian Penyelidikan, Jabatan Perdana Menteri; dan Penolong Setiausaha Utama, Majlis Keselamatan Negara. Beliau juga pernah berkhidmat sebagai Kaunselor di Kedutaan Malaysia di Indonesia dan Thailand.

Terkini, beliau memegang jawatan pengarah di AFFIN ISLAMIC, Sistem Televisyen Malaysia Berhad, Ekuiti Nasional Berhad dan Suruhanjaya Sekuriti.

Tan Sri Dato’ Seri Mohamed Jawhar menghadiri kesemua 10 Mesyuarat Lembaga Pengarah yang dijadualkan setiap bulan dan 13 daripada 14 Mesyuarat Khas Lembaga Pengarah yang diadakan sepanjang tahun kewangan berakhir 31 Disember 2016.



7

YBhg. Tan Sri mohD ghazali Bin mohD YuSoffPengarah Bebas Bukan Eksekutif

Tan Sri Mohd ghazali Bin Mohd Yusoff, warganegara Malaysia, berusia 70 tahun, dilantik ke Lembaga Pengarah AFFINBANK pada 20 Jun 2014. Terkini, beliau merupakan Pengerusi Jawatankuasa Audit Lembaga Pengarah dan ahli Jawatankuasa Penamaan dan Imbuhan Lembaga Pengarah serta Jawatankuasa Pengurusan Risiko Lembaga Pengarah.

Beliau memegang ijazah Sarjana Muda Utter Bar dari Middle Temple, Inns-of-Court, London. Beliau menyertai Perkhidmatan Kehakiman dan Perundangan Malaysia pada 1974. Jawatan kanan yang pernah dipegang beliau termasuk sebagai Timbalan Pendakwa Raya Umum, Penasihat Perundangan Negeri, Pendaftar Syarikat dan Ketua Pendaftar Mahkamah Agung dan Peguam Cara Negara.

Beliau menjadi Hakim Mahkamah Tinggi, Mahkamah Rayuan dan seterusnya Mahkamah Persekutuan. Beliau bersara pada Januari 2012.

Tan Sri Mohd ghazali Bin Mohd Yusoff menghadiri kesemua 10 Mesyuarat Lembaga Pengarah yang dijadualkan setiap bulan dan kesemua 14 Mesyuarat Khas Lembaga Pengarah yang diadakan sepanjang tahun kewangan berakhir 31 Disember 2016.

en. aBD malik Bin a rahmanPengarah Bebas Bukan Eksekutif

En. Abd Malik Bin A Rahman, warganegara Malaysia, berusia 68 tahun, dilantik ke dalam Lembaga Pengarah AFFINBANK pada 3 Mac 2015. Terkini, beliau merupakan Pengerusi Jawatankuasa Penamaan dan Imbuhan Lembaga Pengarah, Jawatankuasa Pengurusan Risiko Lembaga Pengarah dan Jawatankuasa Transformasi Pengawasan Lembaga Pengarah.

En. Malik adalah Pengarah Bebas Bukan Eksekutif di AFFIN Holdings Berhad, Boustead Heavy Industries Corporation Berhad, CYL Corporation Berhad, Lee Swee Kiat group Berhad dan Innity Corporation Berhad serta Pengarah di beberapa syarikat sendirian berhad termasuk Boustead Penang Shipyard Sdn Bhd, world Courier (M) Sdn Bhd, gyrodata Services Sdn Bhd, Modifin Malaysia Sdn Bhd, HTC Malaysia Sdn Bhd, Hilti (M) Sdn Bhd, Lionex (M) Sdn Bhd, BHIC Shipbuilding & Engineering Sdn Bhd. Beliau juga merupakan Pengarah di anak-anak syarikat AFFIN Holdings Berhad iaitu AFFIN Hwang Investment Bank Berhad dan AFFIN Hwang Asset Management Berhad.

Beliau adalah ahli Akauntan Bertauliah di Malaysian Institute of Accountants, ahli Malaysian Institute of Certified Public Accountants, ahli Certified Financial Planners (AS), ahli Chartered Management Institute (UK), ahli Malaysian Institute of Management dan Felo Association of Chartered Certified Accountants (UK).

En. Malik pernah memegang pelbagai jawatan pengurusan kanan di Peat Marwick Mitchell & Company (kini dikenali sebagai KPMg), Esso group of Companies, Colgate-Palmolive (M) Sdn Bhd, Amway (Malaysia) Sdn Bhd, Fima Metal Box Berhad dan guinness Anchor Berhad. Beliau pernah menjadi Pengurus Besar, Khidmat Korporat di Kelang Multi Terminal Sdn Bhd (kini dikenali sebagai westports Malaysia Sdn Bhd) dari 1994 hingga 2003.

En. Abd Malik Bin A Rahman menghadiri kesemua 10 Mesyuarat Lembaga Pengarah yang dijadualkan setiap bulan dan kesemua 14 Mesyuarat Khas Lembaga Pengarah yang diadakan sepanjang tahun kewangan berakhir 31 Disember 2016.

KIRI KE KANAN:

yBhg. tan sri mohD ghazali Bin mohD yusoff

en. aBD malik Bin a rahman



8

Ahli Pengurusan Kanan

11. PN. KHATIMAH BINTI MAHADI Ketua Audit Dalaman Kumpulan

12. PN. NOR ROzITA BINTI NORDIN Ketua Pegawai Sumber Manusia

13. PN. NIMMA SAFIRA BINTI DATO’ KHALID

Ketua Pegawai Perundangan dan Setiausaha Syarikat

14. EN. SHARIFFUDIN BIN MOHAMAD Pengarah Eksekutif, Operasi dan

Perkhidmatan Strategik (Bersara berkuatkuasa 31.10.2016)

15. EN. AMIRUDIN BIN ABDUL HALIM Pengarah Eksekutif, Perbankan Perniagaan (Bersara berkuatkuasa 1.8.2016)

01. EN. KAMARUL ARIFFIN BIN MOHD JAMIL

Ketua Pegawai Eksekutif Kumpulan, Affin Holdings Berhad

Pengarah Urusan / Ketua Pegawai Eksekutif, Affin Bank Berhad

02. EN. NAzLEE BIN KHALIFAH Ketua Pegawai Eksekutif,

Affin Islamic Bank Berhad

03. EN. zULKANAIN BIN KASSIM Ketua Pegawai Operasi (Dilantik berkuatkuasa 1.10.2016)

04. EN. MOHAMMED NIzAR BIN FAISAL Pengarah, Korporat & Perniagaan

Sektor Awam (Dilantik berkuatkuasa 1.10.2016)

05. MR. LIM KEE YEONg Pengarah, Bahagian PKS & Perniagaan

Komersil (Dilantik berkuatkuasa 1.9.2016)

06. EN. IDRIS BIN ABD HAMID Pengarah, Perbankan Pengguna

07. MR. TAN KOK TOON Pengarah, Perbendaharaan Kumpulan

08. MR. RAMANATHAN RAJOO Ketua Pegawai Kewangan

09. MR. wONg KOK LEONg Ketua Pegawai Risiko Kumpulan

10. PN. NORHAzLIzAwATI BINTI MOHD RAzALI

Ketua Pegawai Kredit Kumpulan

01

06

11

04

09

14

02

07

12

03

08

13

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10

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9

en. kamarul ariffin Bin mohD JamilKetua Pegawai Eksekutif Kumpulan, Affin Holdings BerhadPengarah Urusan / Ketua Pegawai Eksekutif, Affin Bank Berhad

En. Kamarul Ariffin Bin Mohd Jamil dilantik sebagai Pengarah Urusan/Ketua Pegawai Eksekutif Affin Bank Berhad pada April 2015 dan juga merupakan Ketua Pegawai Eksekutif AFFIN Holdings Berhad.

Kamarul menyertai Affin Bank Berhad pada 2003 selaku Ketua, Bahagian Strategi Korporat. Pada 2005, Kamarul dilantik sebagai Ketua, Bahagian Perbankan Islam. Dengan penubuhan Affin Islamic Bank, Kamarul dilantik sebagai Ketua Pegawai Eksekutifnya pada 2006.

Sebelum menyertai AFFINBANK, Kamarul pernah memegang pelbagai jawatan di Pengurusan Danaharta Nasional Berhad, Trenergy Malaysia Berhad dan Shell Malaysia Trading Sdn Bhd termasuk dalam pembangunan perniagaan dan perancangan strategik.

Kamarul mempunyai ijazah Sarjana Muda Kesenian dalam bidang Ekonomi dari Cambridge University.

en. nazlee Bin khalifahKetua Pegawai Eksekutif, Affin Islamic Bank Berhad

En. Nazlee bin Khalifah, warganegara Malaysia berusia 49 tahun, dilantik sebagai Ketua Pegawai Eksekutif Affin Islamic Bank Berhad pada Jun 2015.

En. Nazlee memulakan kerjaya dalam industri perbankan bersama Maybank selama 17 tahun dalam pelbagai kapasiti terutamanya dalam pengurusan strategik. Nazlee menyertai Affin Bank Berhad sebagai Ketua, Strategi & Sokongan Perniagaan, Bahagian Perbankan Perniagaan pada Februari 2009. Pada April 2011, Nazlee dilantik sebagai Ketua Strategi Korporat.

En. Nazlee memegang ijazah Sarjana Muda dalam Pentadbiran Perniagaan, dengan pengkhususan dalam Perakaunan & Kewangan dari Simon Fraser University, Kanada.

Terkini, En. Nazlee adalah Pengarah gantian kepada En. Kamarul Ariffin Bin Mohd Jamil bagi IAP Integrated Sdn Bhd dan Raeed Holdings Sdn Bhd serta merupakan Bendahari Kehormat bagi Persatuan Institusi-institusi Perbankan Islam Malaysia (AIBIM). Beliau dilantik ke dalam Charter governing Panel, Chartered Institute of Islamic Finance (CIIF) pada 2016.

en. zulkanain Bin kaSSimKetua Pegawai Operasi (Dilantik berkuatkuasa 1.10.2016)

En. zulkanain Bin Kassim menyertai AFFINBANK pada 1 Oktober 2016 sebagai Ketua Pegawai Eksekutif. Beliau bertanggungjawab merancang, mengatur dan mengawal semua aktiviti operasi Bank termasuk Perkhidmatan IT, Operasi Perbankan, serta Pentadbiran dan Dokumentasi Pinjaman. Sebelum menyertai AFFINBANK, En. zulkanain pernah memegang jawatan sebagai Pengarah Urusan Kumpulan MEPS.

En. zulkanain memegang ijazah Sarjana Muda Sains (Kepujian) dalam Sains Komputer dari Universiti Teknologi Malaysia, dan merupakan penerima Anugerah Kepimpinan – Individu oleh CEPI Asia bagi usaha pemodenan infrastruktur pembayaran Malaysia.

En. zulkanain mempunyai lebih 25 tahun pengalaman dalam industri perkhidmatan kewangan, terutamanya dalam Teknologi Maklumat, Operasi Perbankan, Penyelesaian Pelanggan, dan Pembayaran.

KIRI KE KANAN:

en. kamarul ariffin Bin mohD Jamil

en. nazlee Bin khalifah

en. zulkanain Bin kassim

Profil Ahli Pengurusan Kanan


10

en. mohammeD nizar Bin faiSalPengarah, Korporat & Perniagaan Sektor Awam (Dilantik berkuatkuasa 1.10.2016)

En. Mohammed Nizar Bin Faisal menyertai Affin Bank Berhad pada 1 Oktober 2016 sebagai Pengarah, Perniagaan Korporat & Sektor Awam. Beliau bertanggungjawab membangun dan melaksanakan strategi-strategi bagi memacu pertumbuhan Perniagaan Korporat & Sektor Awam bagi Kumpulan Affin Bank, termasuk antara lainnya, memacu perolehan dan pertumbuhan, merapatkan hubungan perniagaan dengan semua pemegang berkepentingan yang terlibat, melaksanakan strategi-strategi yang sejajar dengan produk-produk, pelanggan dan pasaran baharu, menggunakan alat-alat amalan terbaik bagi mempertingkatkan model sedia ada, memastikan urus tadbir korporat dan amalan-amalan yang baik serta membina usul borong yang mampan dan kohesif dalam Affin Bank Berhad.

En. Nizar memegang ijazah Sarjana Muda Kesenian (Kepujian) dalam Pemasaran dari Middlesex University, United Kingdom. En. Nizar mempunyai pengalaman lebih 19 tahun dalam industri perkhidmatan kewangan, terutamanya dalam Perbankan Borong dan Perbankan Sektor Awam. Kerjaya beliau sejak 17 tahun lepas banyak tertumpu kepada bank-bank asing di Malaysia di bawah Liputan Pelanggan bagi kedua-dua Sektor Awam dan nama-nama Besar Korporat Tempatan yang beroperasi di Malaysia. Sebagai sebahagian daripada usul borong, En. Nizar pernah terlibat dalam pelbagai urusniaga berkaitan Polisi Kredit, Perbankan Korporat, Pasaran Modal Hutang, Pasaran Modal dan Khidmat Nasihat, Pembiayaan ECA dan Projek, Perbankan Islam dan Perbankan Perniagaan.

mr. lim kee YeongPengarah, Bahagian PKS & Perniagaan Komersil(Dilantik berkuatkuasa 1.9.2016)

Mr. Lim Kee Yeong menyertai Affin Bank Berhad pada 1 September 2016 dan bertanggungjawab membangun dan melaksanakan strategi-strategi bagi memacu pertumbuhan Perniagaan Komersil dan Perusahaan Kecil & Sederhana (PKS) bagi Bank.

Mr. Lim mempunyai pengalaman lebih 23 tahun dalam perbankan dan kewangan, terutamanya dalam perniagaan Komersil & PKS di bank-bank tempatan dan asing. Sebelum menyertai Affin Bank, beliau merupakan Naib Presiden Perbankan Komersil & PKS dan ahli Lembaga Pengarah dalam sebuah syarikat Pegangan Kewangan yang berpangkalan di Singapura, yang terlibat dalam perkhidmatan kewangan dan pelaburan di rantau ASEAN.

Mr. Lim juga pernah berkhidmat sebagai Naib Presiden Kanan bagi Perniagaan PKS di sebuah bank tempatan, di mana beliau telah memainkan peranan penting dalam pertumbuhan mengagumkan bagi Perniagaan PKS bank tersebut, yang membawa kepada beberapa penganugerahan di dalam dan luar negara.

Mr. Lim memegang ijazah Sarjana dan Sarjana Muda dalam Pentadbiran Perniagaan dari wichita State University, Kansas, AS.

en. iDriS Bin aBD hamiDPengarah, Perbankan Pengguna

En. Idris Bin Abd Hamid merupakan Pengarah, Perbankan Pengguna, iaitu jawatan yang dipegang beliau sejak Mei 2009.

En. Idris memulakan kerjaya beliau bersama Malayan Finance Corporation (MFC) pada 1978 dan kemudian melanjutkan kerjaya di Arab-Malaysian Finance Corporation selama 10 tahun dalam pelbagai jawatan – yang terakhir sebagai Ketua Perbankan Runcit.

Pada 1994, beliau menyertai AFFINBANK sebagai Pengurus Besar dan seterusnya sebagai Ketua Pegawai Eksekutif Affin Finance Berhad. Beliau dilantik sebagai Timbalan Ketua Pegawai Eksekutif Affin-ACF Finance Berhad dari tahun 2000 hingga 2005.

En. Idris mempunyai pengalaman lebih 30 tahun dalam industri perbankan meliputi perniagaan perbankan Pengguna dan Korporat.

En. Idris memperoleh ijazah Sarjana dalam Pentadbiran Perniagaan dari University of Northern Colorado pada 1984 dan ijazah Sarjana Muda Sains (Kewangan) dari University of Southern Illinois pada 1982.

KIRI KE KANAN:

en. mohammeD nizar Bin faisal

mr. lim kee yeong

en. iDris Bin aBD hamiD



11


mr. Tan kok ToonPengarah, Perbendaharaan Kumpulan

Mr. Tan Kok Toon menyertai Affin Bank Berhad sebagai Ketua Perbendaharaan pada Oktober 2004 dan bertanggungjawab menguruskan semua aspek-aspek Bahagian Perbendaharaan Kumpulan Perbankan. Terkini beliau merupakan Setiausaha Kehormat Persatuan Pasaran Kewangan Malaysia (Association Cambiste Internationale) dan Pengerusi bagi Jawatankuasa Seminar dan Pendidikan.

Sebelum menyertai AFFINBANK, Mr. Tan pernah berkhidmat di sebuah bank utama di Malaysia. Mr. Tan mempunyai pengalaman lebih 20 tahun dalam perbankan terutamanya dalam Operasi Perbendaharaan. Beliau pernah berkhidmat sebagai Pengurus Perbendaharaan di Cawangan New York, serta menjadi Penasihat Perniagaan Perbendaharaan bagi memulihkan satu projek perniagaan di Filipina.

Mr. Tan memperoleh ijazah Sarjana Muda Sains (Kepujian) dalam Matematik dari Universiti Malaya (UM) pada 1987.

mr. ramanaThan raJooKetua Pegawai Kewangan

Mr. Ramanathan Rajoo memulakan kerjaya beliau pada 1988 sebagai pelatih audit di Coopers & Lybrand dan seterusnya memegang jawatan sebagai Audit Kanan sebelum menyertai Affin Bank pada 1991 sebagai Eksekutif di Bahagian Kewangan. Mr. Rama dilantik sebagai Ketua Pegawai Kewangan Kumpulan Affin Bank pada 2014.

Dengan pengalaman meluas selama 26 tahun merangkumi bidang-bidang pengauditan, perakaunan kewangan, pengurusan kewangan, pengurusan modal, pelaporan kawal selia dan perolehan semula, Mr. Rama berkhidmat sebagai Rakan Perniagaan strategik kepada Ketua Pegawai Eksekutif dan Pengurusan Kanan bagi mencapai objektif keseluruhan organisasi. Terkini, beliau mempengerusikan beberapa jawatankuasa di dalam Bank dan menjadi ahli penting dalam beberapa jawatankuasa lain.

Beliau merupakan ahli CPA Australia serta Institut Akauntan Malaysia. Beliau memegang kelayakan Profesional Kredit bertauliah dari Asian Institute of Chartered Bankers. Beliau juga memegang ijazah Perakaunan dari Universiti Malaya dan ijazah Sarjana dalam Pentadbiran Perniagaan dari Universiti Putra Malaysia.

mr. Wong kok leongKetua Pegawai Risiko Kumpulan

Mr. wong Kok Leong menyertai Kumpulan Affin pada tahun 2000 sebagai Ketua, Pengurusan Risiko di Affin Investment Bank. Sebelum perlantikan beliau sebagai Ketua Pegawai Risiko Kumpulan pada 1 Ogos 2015, beliau memegang jawatan sebagai Ketua Pegawai Kredit Kumpulan dan Ketua, Risiko Pasaran Kumpulan.

Kerjaya terdahulu beliau termasuk di firma guaman, badan kawal selia dan bursa saham. Mr. wong memegang ijazah Sarjana Perundangan dari Cambridge University, UK; ijazah Sarjana Muda Perundangan dari Buckingham University, UK; dan ijazah Sarjana Muda Ekonomi (Perakaunan) dari Monash University, Australia. Beliau merupakan seorang Felo di CPA Australia dan Financial Services Institute of Australasia (FINSIA).

Beliau turut memegang pensijilan profesional dalam pengurusan risiko, pengurusan projek, perancangan kewangan, latihan, kejurulatihan dan pementoran.

Mr. wong adalah ahli Jawatankuasa Peperiksaan, Asian Institute of Chartered Bankers.

KIRI KE KANAN:

mr. tan kok toon

mr. ramanathan raJoo

mr. wong kok leong


12


Pn. norhazlizaWaTi BinTi mohD razaliKetua Pegawai Kredit Kumpulan

Pn. Norhazlizawati Binti Mohd Razali menyertai Affin Bank Berhad sebagai Ketua Pegawai Kredit Kumpulan pada 1 Ogos 2015.

Pn. Norhazlizawati mempunyai lebih 24 tahun pengalaman dalam perbankan, terutamanya dalam pengurusan risiko kredit dan peminjaman perniagaan. Beliau telah menjadi ahli pengurusan kanan selama beberapa tahun dan memegang jawatan utama dalam perniagaan, pengurusan risiko dan risiko kredit. Bidang kepakaran beliau adalah dalam Pengurusan Kredit dan Risiko, Peminjaman Runcit, PKS, dan Komersil, Pengurusan Perhubungan dan Pengurusan Projek.

Pn. Norhazlizawati memegang ijazah Sarjana Muda Kesenian (Kepujian) dalam Pengajian Perniagaan dengan pengkhususan dalam Perakaunan dan Statistik dari Leeds Metropolitan University, United Kingdom. Beliau juga memegang kelayakan Profesional Kredit Bertauliah (Perniagaan) dari Asian Institute of Chartered Bankers.

Pn. khaTimah BinTi mahaDiKetua Audit Dalaman Kumpulan

Pn. Khatimah Binti Mahadi menyertai Affin Bank Berhad sebagai Ketua Audit Dalaman pada 2004 dan seterusnya dilantik sebagai Ketua Audit Dalaman Kumpulan pada April 2007. Sebelum menyertai Kumpulan Affin Banking, beliau pernah berkhidmat sebagai Ketua Audit Dalaman Negara & Pengarah Pematuhan di Citibank Malaysia.

Beliau mempunyai lebih 30 tahun pengalaman dalam perbankan terutamanya dalam Pengauditan, Pematuhan, Penyiasatan, Pengurusan Projek dan Jaminan Kualiti. Beliau juga merupakan jurulatih bagi Pematuhan & Kawalan.

Beliau memperoleh latihan kepimpinan dari Harvard University, Boston & Disney Institute, Los Angeles dan merupakan Felo Bersekutu di Institute of Bankers Malaysia.

Pn. Khatimah memperoleh Diploma Perakaunan dari UiTM pada 1978 dan merupakan salah seorang daripada 45 Jurubank Bertauliah di Malaysia.

Pn. nor roziTa BinTi norDinKetua Pegawai Sumber Manusia

Pn. Nor Rozita Binti Nordin dilantik sebagai Ketua Pegawai Sumber Manusia Affin Bank Berhad pada Mei 2011. Sebelum menyertai AFFINBANK, Pn. Rozita merupakan Naib Presiden Eksekutif dan Ketua Sumber Manusia Kumpulan di sebuah kumpulan perbankan tempatan.

Pn. Rozita mempunyai lebih 30 tahun pengalaman dalam Pembangunan Sumber Manusia dan Strategi Perhubungan Pelanggan dalam pelbagai industri termasuk perbankan, minyak dan gas, pengilangan, runcit, dan perkhidmatan perkongsian. Pn. Rozita memegang peranan strategik dan operasi di dalam dan luar negara.

Pn. Rozita memperoleh ijazah Sarjana Sains dari Southern Illinois University pada 1984, serta ijazah Sarjana Muda Sains dalam Pendidikan dan Sarjana Muda Kesenian dalam Linguistik, kedua-duanya pada 1982.

KIRI KE KANAN:

Pn. norhazlizawati Binti mohD razali

Pn. khatimah Binti mahaDi

Pn. nor rozita Binti norDin


13

KIRI KE KANAN:

Pn. nimma safira Binti Dato’ khaliD

en. shariffuDin Bin mohamaD

en. amiruDin Bin aBDul halim

Pn. nimma Safira BinTi DaTo’ khaliDKetua Pegawai Perundangan dan Setiausaha Syarikat

Pn. Nimma Safira Binti Khalid merupakan Ketua Pegawai Perundangan & Setiausaha Syarikat Affin Bank Berhad. Pn. Nimma menyertai AFFINBANK pada tahun 2001 sebagai Pengurus, Perundangan & Kesetiausahaan. Beliau kemudian ditugaskan di pejabat Presiden/Ketua Pegawai Eksekutif sebagai Penolong Eksekutif dari 2003 hingga 2005.

Pn. Nimma memulakan kerjaya beliau sebagai Peguam Bela & Peguam Cara Mahkamah Tinggi Malaya pada 1994. Beliau kemudian berpindah dan berkhidmat sebagai Pegawai Perundangan/Setiausaha Syarikat bagi sebuah bank komersil dari 1995 hingga 2000. Pn. Nimma memegang ijazah Sarjana Muda Perundangan yang diperoleh pada 1992 dan Sarjana Muda Perundangan (Syariah) yang diperoleh pada 1993, kedua-duanya dari Universiti Islam Antarabangsa Malaysia.

en. ShariffuDin Bin mohamaDPengarah Eksekutif, Operasi dan Perkhidmatan Strategik (Bersara berkuatkuasa 31.10.2016)

En. Shariffudin Bin Mohamad menyertai Affin Bank Berhad pada 2007 sebagai Pengarah Operasi dan dilantik sebagai Pengarah Eksekutif, Operasi pada 2009.

En. Shariffudin mempunyai pengalaman lebih 25 tahun dalam perbankan di dalam dan luar negara. Pengalaman langsung beliau merangkumi Operasi Cawangan, Kewangan Dagangan, Perbankan Korporat, Pengurusan Perhubungan Korporat, Operasi Kredit, Pengurusan Tunai dan Perkhidmatan Sekuriti. Jawatan terakhir beliau adalah sebagai Ketua, Perkhidmatan Pengurusan Projek (Teknologi & Operasi) di sebuah bank asing utama dan anak syarikat tempatannya.

En. Shariffudin memperoleh ijazah Sarjana dalam Pentadbiran Perniagaan dari Southern Illinois University pada 1981, dan ijazah Sarjana Muda Sains dalam Kewangan pada 1980.

En. Shariffudin bersara sebagai Pengarah Eksekutif, Operasi dan Perkhidmatan Strategik berkuatkuasa 31 Oktober 2016.

en. amiruDin Bin aBDul halimPengarah Eksekutif, Perbankan (Bersara berkuatkuasa 1.8.2016)

En. Amirudin Bin Abdul Halim menyertai Affin Bank Berhad sebagai Pengarah, Perbankan Perniagaan pada Julai 2009 dan dilantik sebagai Pengarah Eksekutif, Perbankan pada 2014.

Sebelum menyertai AFFINBANK, En. Amirudin berkhidmat di sebuah bank tempatan utama selama lebih 21 tahun di mana beliau memperoleh pengalaman perbankan yang meluas menerusi Operasi Cawangan, Kawalan Kredit, Perbankan Perniagaan, Pemasaran Runcit, Perbankan Pengguna dan Perkhidmatan Korporat.

Beliau pernah memegang beberapa jawatan strategik kanan termasuk Timbalan Ketua Bahagian Perbankan Perniagaan, Ketua gadai Janji dan Pembiayaan Automobil, serta Timbalan Ketua Pegawai Eksekutif bagi sebuah bank tempatan utama.

En. Amirudin memperoleh ijazah Sarjana Muda Kesenian dalam Kewangan dari St. Louis University pada 1986.

En. Amirudin bersara sebagai Pengarah Eksekutif, Perbankan berkuatkuasa 1 Ogos 2016.



14

Perbincangan & Analisis Pengurusan

“AFFINBANK (AFFIN ATAU BANK) TELAH MEMULAKAN PROgRAM TRANSFORMASI AFFINITY (ATP) PADA 2016 DENgAN TUMPUAN KE ATAS SEgMEN PELANggAN, SALURAN-SALURAN PENYAMPAIAN, PRODUK-PRODUK & PENYELESAIAN, OPERASI, TEKNOLOgI, wARgA KERJA, RISIKO & PEMATUHAN SERTA PENgURUSAN PRESTASI. AFFINITY SETAKAT INI MERUPAKAN PROgRAM TRANSFORMASI BANK YANg PALINg KOMPREHENSIF DALAM MEMPERTINgKATKAN NISBAH KOS BERBANDINg PENDAPATAN, PULANgAN EKUITI, KEUNTUNgAN OPERASI, YURAN BERBANDINg JUMLAH PENDAPATAN DAN PENgALAMAN PELANggAN.”


15

tinJauan 2016

Tahun 2016 dipenuhi pelbagai cabaran ekoran beberapa perkembangan ekonomi makro dunia di luar jangkaan seperti keputusan Britain untuk meninggalkan Kesatuan Eropah (Brexit) dan pilihan raya presiden Amerika Syarikat. Perkembangan ini menyebabkan ketidaktentuan dalam harga matawang dan komoditi, yang membawa kepada ketidaktentuan sentimen pasaran dan kelembapan pertumbuhan ekonomi Malaysia.

Berikutan langkah awal telah diambil untuk mengurangkan harga deposit yang tinggi dan pemindahan aset kepada pinjaman dengan hasil yang lebih baik dalam segmen pengguna seperti gadai janji, kad kredit dan pembiayaan amanah saham serta segmen perusahaan kecil dan sederhana (SME); AFFINBANK berada pada kedudukan yang baik untuk mengekalkan pendapatannya pada 2016.

Keuntungan sebelum zakat & cukai (PBzT) meningkat 30.7% kepada RM602.8 juta berbanding RM461.2 juta yang dicatatkan pada 2015. Pinjaman, pendahuluan dan pembiayaan kasar dicatatkan pada RM43.1 bilion dan deposit daripada pelanggan dicatatkan pada RM47.6 bilion.

Perbankan Perniagaan yang kini distruktur semula sebagai dua bahagian baharu iaitu Sektor Korporat dan Perniagaan Sektor Awam (CPSBD) serta Bahagian Perusahaan Kecil dan Sederhana (PKS) dan Perniagaan Komersil (SMECBD), terus menjadi penyumbang utama kepada perolehan Bank, diikuti Perbendaharaan dan Perbankan Pengguna. Bank akan terus mengembangkan aset-aset Perbankan Pengguna bagi mencapai nisbah sumbangan yang seimbang iaitu 50:50 di antara gabungan CPSBD dan SMECBD, dan Perbankan Pengguna.

Pulangan Ekuiti (ROE) meningkat dari 6.79% kepada 8.45%; manakala Nisbah Pinjaman Terjejas Kasar dicatat lebih rendah pada 1.60% berbanding 1.80% pada 2015 walaupun jumlah aset bertumbuh 0.5% kepada RM60.2 bilion. Ini menunjukkan bahawa pertumbuhan pembiayaan baharu bagi tahun kewangan di bawah tinjauan dipacu oleh taja jamin yang berhemah dan peruntukan yang lebih rendah bagi pinjaman terjejas yang membawa kepada peningkatan kualiti aset.


Jumlah Aset

2015 RM59.8 bilion

2016 RM60.2 bilion

+0.7%

Pinjaman, Pendahuluan &Pembiayaan Bersih

2015 RM42.1 bilion

2016 RM42.7 bilion

+1.4%

Ekuiti PemegangSaham

2015 RM5.5 bilion

2016 RM5.8 bilion

+5.5%

KeuntunganSesaham (EPS)

2015 20.5 sen

2016 27.5 sen

+34.1%

Sebagai sebahagian daripada pengurusan modal yang proaktif, Bank telah berjaya meletakkan terbitan sulung bagi hutang subordinatnya berjumlah RM1 bilion yang telah melebihi langganan sebanyak 1.6 kali. Ini merupakan sebahagian daripada terbitan MTN Subordinat (Nota Jangka Sederhana) dan/atau program MTN Senior dengan had gabungan sehingga RM6.0 bilion dalam nilai nominal.

Pendapatan Sesaham (EPS) menyaksikan peningkatan nilai sebanyak 34.1% daripada 20.5 sen pada tahun sebelumnya kepada 27.5 sen pada 2016.

Semasa tahun di bawah tinjauan, AFFINBANK juga telah menerima Anugerah JomPay dengan pemerolehan pengebil tertinggi dalam Kumpulan B mengatasi semua bank-bank tempatan dan asing dalam kategori tersebut. Ini menandakan ukuran kejayaan dalam memacu budaya pembayaran atas talian di kalangan pelanggan kami.

sorotan utama 2016

Tumpuan utama pada 2016 adalah ke atas pelaksanaan dan kemajuan Program Transformasi AFFINITY (ATP). Bagi mencipta impak dan hasil yang sewajarnya dengan kesinambungan jangka panjang, pelan ini menyasarkan perubahan-perubahan besar dan mendalam yang meliputi pandangan hujung-ke-hujung perniagaan, selain menyasarkan untuk menggandakan pendapatan operasi AFFINBANK pada tahun 2020.

KEUNTUNgAN SEBELUM zAKAT DAN CUKAI

+30.7%2015 : RM461.2 JUTA

2016 : rm602.8 JUTA


16


Objektif fasa 1 AFFINITY telah dicapai semasa tahun di bawah tinjauan, yang tertumpu ke atas pelan biru bagi model operasi sasaran baharu yang terdiri daripada Lapan Tonggak – Segmen Pelanggan Sasaran, Saluran Penyampaian, Produk-produk & Penyelesaian, Operasi, Teknologi, warga Kerja & Organisasi, Pengurusan Prestasi dan Tadbir Urus Risiko & Pematuhan.

Sepanjang Fasa 1, perkara-perkara berikut telah dilaksanakan:

• Jelajahjalanan/taklimatATPtelahdiadakandisemuawilayah bagi berkongsi maklumat mengenai Program ini. Surat berita AFFINITY dan Intranet kami telah menerbitkan butiran mengenai program transformasi ini sejak Januari 2016.

• KempenDreamBankpekerjajugadilaksanakanuntukmendapatkan input dan idea daripada kakitangan mengenai transformasi Bank.

• PasukanPerancangtelahmenjalankanpenyelidikandan analisis mengenai isu-isu perniagaan yang melibatkan semua Bahagian dan menghasilkan satu set komprehensif rangkuman isu-isu, cabaran-cabaran dan keperluan-keperluan yang perlu ditangani dalam ATP.

• PasukanPerancangkemudianmewujudkanbeberapamodel transformasi untuk AFFINBANK “masa hadapan” dan mengenalpasti kebolehan-kebolehan yang diperlukan bagi menggerakkan model-model tersebut.

• Padadasartransformasiiniadalahsemakankeataspenyata misi dan visi terkini, termasuk nilai-nilai teras.

Kami sekarang sedang beralih ke Fasa 2 yang tertumpu kepada ‘rekacipta butiran & kemenangan pantas’. Keseluruhan program ini dijangka siap pada 2019.

Bergerak maju ke arah pencapaian baharu dalam penyampaian dan perluasan perkhidmatan, AFFINBANK telah mencatat beberapa peristiwa penting menerusi kerjasamanya dengan The Islamic Corporation for the Development of the Private Sector (ICD) dan Asian Business School (ABS).

Jumlah Aset

2015 RM59.8 bilion

2016 RM60.2 bilion

+0.7%

Pinjaman, Pendahuluan &Pembiayaan Bersih

2015 RM42.1 bilion

2016 RM42.7 bilion

+1.4%

Ekuiti PemegangSaham

2015 RM5.5 bilion

2016 RM5.8 bilion

+5.5%

KeuntunganSesaham (EPS)

2015 20.5 sen

2016 27.5 sen

+34.1%

fasa 1PROGRAM ANALISIS & PERANCANGAN

fasa 2REKACIPTA BUTIRAN & PELAKSANAAN KEMENANGAN PANTAS

fasa 3PEMBINAAN KEUPAYAAN & PELAKSANAAN

Objektif Fasa

•MewujudkanasasyangteguhuntukProgram ini berdasarkan analisis yang diperlukan serta pengesahan sasaran dan parameter yang dikehendaki.

•Menciptasatupelankomprehensifuntuk Program ini termasuk tadbir urus, sumber-sumber dan jadual.

•Butirankeupayaanyangdikenalpasti dan perubahan keupayaan bagi tahap yang diperlukan untuk pembinaan.

•Melaksanakanpembinaankeupayaan dan perancangan pelaksanaan.

•Membina,MengujidanMelaksanakan keupayaan yang dirancang. Pembinaan keupayaan akan dimulakan berdasarkan jadual keutamaan yang telah disediakan.

•Menjejakdanmemantaukemajuan dan pencapaian secara berterusan.

•Menciptadanmelaksanakanpelanrealisasi manfaat.

Durasi Anggaran Januari hingga Jun 2016 Jun 2016 hingga Jun 2019

Program transformasi affinity


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Kerjasama kami dengan ICD adalah sejajar dengan Dasar Priority Islamic AFFINBANK. Priority Islamic adalah satu langkah strategik bagi meningkatkan portfolio pembiayaan Islam kami kepada 40% pada tahun 2020. Hasil pelaksanaan strategi ini menyaksikan kenaikan 14.6% dalam pendapatan daripada perbankan Islam bagi 2016, dengan portfolio pembiayaan Islam bertumbuh 29.1%.

Selain itu, kami merupakan bank pertama yang bekerjasama dengan ABS dalam memperkenalkan Program Kesedaran Budaya Etika, Risiko dan Pematuhan. Objektif program ini adalah untuk memperkasakan kakitangan dalam mengasah kemahiran pembuatan keputusan yang beretika, kritikal dan berasaskan pulangan risiko serta untuk menyelaraskan tatalaku teras bagi menerapkan budaya etika, risiko dan pematuhan yang kukuh dan sihat ke dalam aktiviti-aktiviti dan proses-proses harian perniagaan.

Bank juga telah melaksanakan Sistem Pengurusan Aset & Liabiliti (ALMS) bersepadu yang baharu pada Mei 2016 yang membolehkan Kumpulan AFFINBANK menguruskan risiko kadar faedah, risiko kadar keuntungan, risiko kecairan, modal dan pendedahan kepada risiko besar dengan lebih baik.

Sebagai sebahagian daripada usaha kami untuk meningkatkan pengalaman pelanggan, dan untuk meluaskan jangkauan kami serta mencipta lebih penjimatan kos, kami telah memulakan program digitalisasi pada 2016.

Kami berhasrat untuk melaksanakan program ini sebagai satu strategi canggih bagi menjamin masa hadapan kami di dalam persekitaran yang semakin bergantung kepada digitalisasi. Lebih 50% daripada populasi di Malaysia mempunyai akses kepada internet dan melakukan urusniaga atas talian. Ini mencipta permintaan yang lebih tinggi untuk urusniaga yang menjimatkan kos dan masa, mudah dan menarik untuk segmen milenial yang lebih muda.

tanggungJawaB sosial korPorat

walaupun tanggungjawab utama kami kepada pemegang berkepentingan adalah untuk mencipta kestabilan dalam perniagaan kami dan persekitaran sosial, Bank turut memastikan bahawa dasar-dasar, produk-produk dan

perkhidmatan, prestasi dan tatacaranya memberi impak positif ke atas kesejahteraan kewangan, kemasyarakatan dan persekitaran pemegang berkepentingan kami. Kami melaksanakan perkara ini menerusi tumpuan ke atas empat tonggak iaitu Tempat Kerja, Pasaran, Komuniti dan Persekitaran.

Dengan penerapan gaya hidup sihat dan semangat keprihatinan di kalangan kakitangan, AFFINBANK memberi peluang untuk kakitangan melibatkan diri dalam aktiviti sukan selain mendorong mereka untuk mengambil bahagian dalam acara-acara kemasyarakatan tahunan seperti larian Bursa Bull Charge dan kempen-kempen derma darah.

Untuk tahun ke-13 berturut-turut, Bank terus memberi Anugerah Kecemerlangan Pendidikan kepada anak-anak kakitangan yang mencapai keputusan cemerlang dalam Sijil Pelajaran Malaysia (SPM).

Bagi mempertingkatkan profilnya sebagai warga korporat yang dinamik dan bertanggungjawab di dalam masyarakat, AFFINBANK telah menaja acara Harian Metro Mountain Bike Grand Prix 2016 dan Warriors Challenge 2016 anjuran Persatuan Veteran Angkatan Tentera Malaysia. Sokongan untuk Angkatan Tentera Malaysia diteruskan sempena sambutan Hari Raya dengan sumbangan pakej barangan bernilai RM100,000 kepada Tabung Amal Angkatan Tentera Malaysia.

AFFINBANK menceriakan musim perayaan dengan lawatan ke rumah warga tua sempena Tahun Baru Cina selain menjemput 160 anak-anak yatim menghadiri Majlis Berbuka Puasa Bersama Anak Yatim anjurannya. Bank juga telah menaja Program Tutor Suplemen Utusan Melayu, yang menyediakan bahan-bahan pembelajaran alternatif untuk para pelajar dan guru-guru.

Dengan objektif melindungi alam sekitar, AFFINBANK telah bekerjasama dengan Universiti Sains Pengurusan (MSU) dalam menganjurkan “Eco Marine Youth Expedition 2016” di Pulau Redang, Kuala Terengganu di mana aktiviti-aktiviti hijau dijalankan selama tiga hari merangkumi penanaman pokok dan terumbu karang serta pemuliharaan penyu.



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objektif 2016

Salah satu daripada kandungan yang penting dalam transformasi Perbankan Pengguna pada 2016 merupakan penyelarasan tumpuan cawangan kepada deposit dan pada masa yang sama menyemai budaya khidmat pelanggan dan pematuhan yang kukuh. Hasilnya, deposit kami bertumbuh dan kami telah melancarkan beberapa kempen seperti AFFINBANK Double Reward, Raya Merdeka Bonanza, Kempen CNY FD dan kempen Istimewa CNY FD Combo bagi menyokong inisiatif ini.

Bahagian ini juga telah melaksanakan peralihan secara beransur-ansur ke arah produk-produk Islam sejajar dengan aspirasi Priority Islamic Bank. Komposisi jualan gadai Janji Islam bertumbuh dari 68% kepada 83% manakala komposisi jualan Sewa Beli-i bertumbuh dari 27% kepada 33%. Sementara itu, transformasi Perniagaan Kad akan memperkenalkan Kad Kredit Islam pertama AFFINBANK pada 2017 yang akan melonjakkan Perniagaan Kad ke dalam arena pasaran baharu dan melengkapkan rangkaian tawaran kad kredit sedia ada kami.

Bagi menyokong tumpuan Bank ke atas golongan milenial, strategi digitalisasi dimulakan semasa tahun di bawah tinjauan dengan pelancaran AFFINITY, yang tertumpu kepada pengubahsuaian titik sentuhan hadapan-hujung dan penjuruteraan semula perusahaan digital. AFFINITY bermatlamat mengubah perniagaan pengguna agar tertumpu kepada pelanggan dengan inovasi digital sebagai terasnya, dengan keutamaan ke atas perbankan pengguna dan diperluaskan kepada aspek-aspek perniagaan lain yang akan mencipta usul digital yang lancar dan mudah digunakan di kesemua titik sentuhan pelanggan.

BAHAgIAN PERBANKAN PENggUNA AFFINBANK TELAH MELAKSANAKAN TRANSFORMASI PERBANKAN PENggUNA PADA PENgHUJUNg 2015 BAgI MENgUKUHKAN BUDAYA JUALAN KAMI MENERUSI PENgKHUSUSAN PRODUK. PERUBAHAN PEMACU JUALAN IAITU DARIPADA CAwANgAN KEPADA PAKAR PRODUK TELAH MEMBAwA HASIL DI MANA PERNIAgAAN gADAI JANJI DAN PERNIAgAAN ASNB MASINg-MASINg BERTUMBUH 13% DAN 152% TAHUN KE TAHUN PADA 2016. PERUBAHAN INI TELAH MEMBOLEHKAN CAwANgAN-CAwANgAN MENUMPUKAN PERHATIAN KE ATAS DEPOSIT YANg MENgHASILKAN PERTUMBUHAN DEPOSIT SEBANYAK 6% TAHUN KE TAHUN.

PerBankan Pengguna

AFFINBANK beraspirasi untuk menjadi bank digital terulung di Malaysia. Enam agenda dalam transformasi digital ini adalah:

1. Mobile-1st Untuk mengutamakan pembangunan bertumpukan

mudah alih untuk semua produk dan perkhidmatan.

2. Saluran-omni

Untuk menyediakan pengalaman pelanggan yang konsisten bagi kesemua saluran iaitu start digital end traditional (SDET) atau start traditional end digital (STED).

3. Inovasi Untuk meneroka teknologi hari-berikutnya, bekerjasama

dengan FinTech untuk mempercepatkan inovasi dan mencipta makmal inovasi bagi mencetus pemikiran dan budaya inovatif.

4. Sosial Untuk mengambil kesempatan daripada platfom media

sosial dan usaha pemasaran digital bagi menjangkau dan melibatkan pelanggan-pelanggan baharu dan sedia ada.

5. Keselamatan Untuk menyediakan perbankan yang selamat untuk

semua pelanggan di kesemua titik sentuhan digital.

6. UX/UI dan Analisis Untuk menjadi bank digital dan inovatif dengan

keutamaan ke atas pelanggan, berserta analisis untuk menawarkan produk-produk yang betul pada masa yang betul, menggunakan saluran yang betul.



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Prestasi 2016

sewa Beli: Buat pertama kali dalam enam tahun, Jumlah Volum Industri (TIV) bagi pasaran kereta baharu jatuh 13% pada 2016 kepada 580,124 unit berbanding 666,677 unit pada 2015. Ini berikutan ketidaktentuan yang melanda ekonomi, peningkatan kos sara hidup dan kelemahan sentimen pengguna. walau bagaimanapun, bagi mencapai situasi menang-menang dengan peniaga-peniaga utama kami, kami telah berjaya meningkatkan hasil jualan kami sebanyak 30 mata asas (bps). Ini termasuk kerjasama dengan Cycle & Carriage Bintang Bhd, Kah Motor Bhd dan Naza Kia Malaysia Bhd untuk menawarkan insurans gAP sebagai sebahagian daripada tawaran produk mereka. Oleh kerana jualan bagi tahun 2017 dijangka kekal berada di bawah aras 600,000, kami akan terus memberi tumpuan ke atas pemuliharaan aset dan pelaksanaan strategi-strategi menang pantas AFFINITY bagi mendorong pelanggan untuk kembali.

Perniagaan gaDai JanJi: walaupun pasaran hartanah kurang memberangsangkan, Perniagaan gadai Janji telah mencatat prestasi cemerlang pada tahun lepas. Asas pinjaman bertumbuh 13% dan saham pinjaman meningkat 60% berbanding 2015. Ini terutamanya disebabkan oleh pelaksanaan hab jualan dan pengambilan pakar-pakar produk bagi mengukuhkan keupayaan pasukan jualan kami. Kami berhasrat untuk meneruskan momentum yang dicapai pada 2016 kerana kebolehmampuan akan terus menjadi isu utama pada 2017. Ramai pelanggan menunda pembelian besar seperti pembelian rumah ekoran peningkatan kos sara hidup serta jangkaan kewangan dan pekerjaan yang tidak menentu. Bagi menangani isu ini, kami berhasrat untuk meningkatkan aktiviti jualan silang dan pada masa yang sama terus menyasarkan golongan pembeli rumah pertama dari kalangan profesional muda, pemilik rumah yang ingin menaik taraf rumah, dan golongan yang ingin membeli hartanah perumahan mampu milik dengan harga di antara RM300 ribu dan RM700 ribu.

Perniagaan asnB: AFFINBANK adalah pemain baru dalam segmen pembiayaan ASNB berbanding pemain lama seperti Maybank, CIMB dan RHB. Di sebalik cabaran dari segi persaingan dan sumber yang terhad, Perniagaan ASNB kami bertumbuh 152% tahun ke tahun, dan cawangan kami di USJ Taipan telah menerima Anugerah PNB-ASNB Starz 2015/6 untuk catatan bilangan urusniaga kaunter tertinggi bagi AFFINBANK. Pada 2017, kami akan memperbaiki proses ini, membina pasukan jualan yang lebih stabil dan mampan serta menyemai peluang untuk jualan di dalam Kumpulan, LTAT dan Boustead. Kami menyasarkan untuk mencapai kuota PNB-ASNB yang ditetapkan menjelang pertengahan 2017.

Perniagaan kaD: Perniagaan Kad kami telah melangkaui pertumbuhan industri bagi asas pinjaman dengan pertumbuhan 8.7% tahun ke tahun berbanding pertumbuhan industri sebanyak 2.6% (laporan Visa bagi Tahun Kewangan 2016). Kejayaan ini adalah hasil pelaksanaan tiga Hab Jualan Kad iaitu di Pulau Pinang, Johor dan wilayah Tengah, serta kerjasama mantap dengan cawangan-cawangan dan hab-hab produk lain. Bilangan permohonan bertumbuh 142% manakala bilangan kelulusan kad kredit bertumbuh 238%. Selain itu, Perniagaan Kad juga telah berjaya melaksanakan inisiatif pengkadan semula sejajar dengan perubahan pengesahan menggunakan tandatangan kepada PIN. Kami juga telah melancarkan semula AFFINBANK BHPetrol ‘Touch and Fuel’ MasterCard® Contactless dan melancarkan Program Pembayaran Ansuran Cash-on-Call semasa tahun kewangan di bawah tinjauan.

Sebagai sebahagian daripada inisiatif kami di bawah program AFFINITY, lebih banyak tawaran produk kad sedang dirancang untuk 2017. Ini termasuk kad Elite/Infinite untuk segmen pasaran Amat Mewah, UnionPay untuk para pelanggan yang menjalankan perniagaan di China, dan Kad Kredit Islam yang akan membolehkan kami menembusi segmen yang sedang berkembang ini selain menawarkan pilihan yang lebih baik untuk para pelanggan.

Pengurusan kekayaan: Liberalisasi pasaran telah membantu pertumbuhan dalam industri pengurusan harta dan reformasi ini telah membantu meningkatkan kecairan bagi dagangan ekuiti, bon dan derivatif di Malaysia. Perkara ini menyediakan peluang dan cabaran bagi kami dalam menumpukan perhatian ke atas kepentingan pengurusan portfolio keseluruhan untuk pelanggan bernilai tinggi. Pada 2016, Bahagian ini terus bekerja rapat dengan rakan-rakan niaga kami termasuk AFFIN Hwang Asset Management bagi memperkenalkan lebih banyak produk-produk canggih kepada pelanggan mewah Bank. Peralihan fokus – iaitu dari penjualan produk kepada keperluan pelanggan – telah dilaksanakan bagi memperkukuhkan hubungan kami dengan para pelanggan. Justeru itu, pasukan-pasukan Pengurusan Harta telah ditempatkan di cawangan-cawangan terpilih bagi menyediakan perkhidmatan yang lebih baik; yang mana telah membantu dalam pertumbuhan Aset Di Bawah Pengurusan (AUM) dari RM95 juta kepada RM142 juta pada 2016.

Mengambil kesempatan daripada perkara ini, kami sedang membangunkan satu platfom Perbankan Peribadi bagi menawarkan satu pusat penyelesaian kewangan setempat yang mudah untuk para pelanggan bernilai tinggi sebagai sebahagian daripada usaha kami membentuk usul nilai baharu yang akan membantu kami mencapai pengiktirafan sebagai salah satu penyedia khidmat nasihat pelaburan dan perkhidmatan perbankan yang berkualiti untuk segmen pelanggan mewah.



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PerBankan Perniagaan

Bahagian korPorat & Perniagaan awam (CPsBD)

CPSBD terus menjadi penyumbang utama kepada pertumbuhan aset dan penjanaan pendapatan Bank pada 2016. Bahagian ini telah mencatat prestasi cemerlang, mencapai ambang pulangan ekuiti (ROE) merentasi semua kumpulan pelanggan dan mencatat perolehan membanggakan sebanyak RM1.03 bilion atau peningkatan sebanyak 20% berbanding pada 2015. Pertumbuhan positif ini sebahagian besarnya disebabkan oleh disiplin dan strategi kami dalam ‘wallet sharing’ di mana kami menyediakan pelbagai produk dan perkhidmatan bagi memenuhi keperluan pelanggan.

objektif 2016

• PenstrukturandanpelaksanaanmodelPengurusHubungan Baharu (RM) selain segmentasi pelanggan yang teratur bagi perniagaan di antara CPSBD dan SME & Perbankan Komersil.

• PeningkatanfungsirisikoperniagaandanpematuhanCPSBD menjadi sebuah fungsi jabatan yang bebas dan telus sejajar dengan kehendak-kehendak kawal selia dan Kumpulan.

• PelaksanaankitalatLiputandanmodul-modullatihan untuk Pengurus Hubungan, Pasukan Khidmat Pelanggan (CST – Pejabat Tengah) bagi tempoh 12 bulan seterusnya dengan tumpuan ke atas peningkatan tahap pengetahuan mengenai model RM yang baharu.

• Perubahankomposisipinjamankearahmemenuhiinisiatif integrasi Perbankan Islam di mana akaun Perbankan Islam memegang 80% daripada jumlah portfolio pinjaman Bank berbanding 20% seperti sekarang.

Prestasi 2016

Berikutan ketidaktentuan dan ketidakstabilan harga komoditi sepanjang tahun, CPSBD telah mengalihkan tumpuannya ke atas pertumbuhan aset berkualiti dan penjanaan perolehan daripada portfolionya serta pendapatan berasaskan yuran.

Pelaksanaan ‘kitchen sinking’ bagi membetulkan pulangan portfolio telah dijalankan. Ini melibatkan pendekatan berstruktur ke arah ‘wallet sizing’ dan memenuhi sasaran dalaman ROE serta sasaran yang akan dibiaya sendiri.

PertumBuhan PinJaman: Strategi bagi pertumbuhan pinjaman meliputi tumpuan ke atas kualiti aset bersandarkan keadaan ekonomi global/tempatan yang tidak menentu. Dengan fokus dan tumpuan ke atas kualiti aset, kedudukan terjejas keseluruhan bahagian bagi tahun di bawah tinjauan kekal pada aras sihat iaitu 0.43%. Keutamaan juga diberikan ke atas peningkatan deposit semasa tahun di bawah tinjauan, bagi memperkukuhkan nisbah Pinjaman berbanding Deposit (LD) Bank.

Maju ke hadapan, strategi pertumbuhan pinjaman CPSBD melibatkan tumpuan ke atas segmen-segmen sasaran khusus yang dikenalpasti oleh unit-unit perniagaan masing-masing serta pemantauan kritikal dan proaktif ke atas portfolio pinjaman sedia ada. Kami terus memantau dan menyemak kualiti portfolio kami secara konsisten, dan mengkaji semula cara pengasalan dan pengurusan aset kami agar dapat melakukannya dengan cara yang berbeza terutamanya untuk pelanggan korporat dan SME yang baharu.

Perniagaan Dagangan: Bagi meningkatkan perniagaan dagangan, CPSBD menumpukan perhatian ke atas pembinaan gabungan strategik bersama bank-bank, cawangan-cawangan dan hab-hab yang bersesuaian. Ini diperkuatkan lagi dengan pengukuhan dan pembangunan daya saing produk bagi memacu pendapatan faedah dan yuran yang lebih tinggi. Pada masa yang sama, kami berhasrat mengurangkan kos dan meningkatkan kecekapan dengan memacu tahap automasi yang lebih tinggi dalam proses-proses kami. Maju ke hadapan, kami berhasrat untuk menjalin hubungan yang lebih rapat dengan para pelanggan ke arah membangunkan lebih banyak penyelesaian dagangan yang berkaitan untuk mereka.

PADA SUKU TERAKHIR 2016, HASIL DARIPADA PENYELARASAN SEMULA STRATEgI-STRATEgI PERNIAgAAN DAN SEgMENTASI, PERBANKAN PERNIAgAAN AFFINBANK DISTRUKTUR SEMULA KEPADA DUA BAHAgIAN – BAHAgIAN PERNIAgAAN SEKTOR KORPORAT DAN AwAM SERTA BAHAgIAN SME & KOMERSIL. LANgKAH INI MEMBOLEHKAN TUMPUAN YANg LEBIH BERSEPADU DALAM MENYASARKAN SEgMEN-SEgMEN PELANggAN YANg BERBEzA DENgAN MANFAAT PRODUK DAN PERKHIDMATAN YANg DISELARASKAN MENgIKUT KEPERLUAN KHUSUS MEREKA.



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Pengurusan tunai: Pada 2016, strategi bagi pengurusan tunai termasuk dorongan agresif untuk Kempen AffinAce bagi memacu Akaun Semasa Korporat (CACO); mengambil peluang daripada peningkatan permohonan hasil inisiatif “Pre-approved Inquiry Package”; menjalankan kempen bagi meningkatkan penggunaan dan mendapatkan lebih banyak Pengebil Jom-Pay bagi meningkatkan volum urusniaga.

Bagi memastikan kejayaan inisiatif segmentasi perniagaan, meja CPSBD juga telah ditempatkan secara strategik di pusat-pusat perniagaan utama sepanjang tahun di bawah tinjauan. Langkah utama berterusan bagi CPSBD adalah untuk membina kehadirannya di seluruh negara dan memastikan ia berada di semua lokasi geografi. Ini akan membolehkan koordinasi yang baik untuk semua aktiviti liputan pelanggan dan membantu dalam piawaian atau garis arus penglibatan pematuhan di setiap negeri.

Maju ke hadapan, CPSBD bermatlamat untuk meningkatkan kerjasama dengan semua pemegang berkepentingan di dalam Kumpulan bagi mengoptimakan peluang-peluang yang ada dan memastikan kesinambungan perniagaan.

Bahagian Perusahaan keCil Dan seDerhana (Pks) & Perniagaan komersil (smeCBD)

SMECBD yang baru ditubuhkan bertanggungjawab ke atas pengurusan, pembangunan dan perluasan portfolio perniagaan PKS & Komersil Bank maju ke hadapan. Dengan 16 pusat perniagaan sebagai permulaan, SMECBD akan berusaha meluaskan jangkauan, set-set produk serta kemampuan penyampaiannya dengan matlamat menyediakan satu set penyelesaian kewangan yang komprehensif untuk SME di Malaysia.

objektif 2016

• MenyediakanstrukturBahagianPerniagaanSME& Komersil dan pasukan teras sebagai sebahagian daripada AFFINITY menjelang penghujung 2016.

• MerangkapelanstrategikPKS&Komersilbertempoh5tahun dengan sasaran dan penunjuk perniagaan tahap tinggi untuk dilaksanakan pada 2017 dan tahun-tahun seterusnya.

• Merancangdanmemperkenalkaninisiatif-inisiatifjangkapendek dan jangka panjang bagi mempertingkatkan prestasi perniagaan, termasuk projek-projek untuk warga kerja, proses, produk/penyelesaian dan pemboleh perniagaan.

Prestasi 2016

Pencapaian penting bagi SMECBD semasa tahun di bawah tinjauan adalah penyiapan penyelarasan semula bahagian perniagaan mengikut masa yang ditetapkan yang melibatkan perubahan pegawai, portfolio dan infrastruktur. Penyiapan penyelarasan semula ini telah menghasilkan peralihan yang lancar kepada situasi Business-As-Usual.

Bahagian ini bertanggungjawab ke atas pengurusan semua pusat perniagaan sedia ada dan 150 kakitangan dengan portfolio awal bernilai RM3.3 bilion dalam asas peminjaman dan lebih RM4 bilion dalam baki deposit daripada 30,000 pelanggan.

Satu pelan strategik bertempoh 5-tahun telah disediakan bagi menyediakan fokus dan bimbingan kepada pasukan ini. Secara keseluruhan, Bank berhasrat untuk menjadi “Bank Utama” kepada pelanggan PKS serta kekal relevan sebagai “Bank Pilihan” kepada pelanggan gred Komersil. Pelan ini mempunyai beberapa objektif teras yang dicipta dengan berhemah untuk dicapai. Antaranya termasuk saiz portfolio, perolehan & pulangan serta penunjuk kualiti aset.

Pelbagai inisiatif jangka pendek dan jangka panjang telah disediakan bagi memastikan Bank kekal kompetitif dan terus mengambil bahagian dalam ruang PKS & Komersil. Antara perubahan penting ini termasuk:

1. Pusingan Masa (Turn-Around-Time atau TAT) bagi kelulusan permohonan SME bertambah baik dengan hanya kurang 5 hari bekerja secara purata; dan

2. Rangka kerja pematuhan yang menghasilkan perubahan dalam pendekatan pengurusan proaktif bagi pematuhan dan risiko perniagaan.

Sebagai sebuah bahagian yang baharu dalam Bank dengan tumpuan ke atas segmen yang sangat penting dalam ekonomi Malaysia, Bank akan terus melabur sumber kepada SMECBD. Pelan pembangunan dan perluasan akan dilaksanakan dalam beberapa tahun akan datang di bawah bimbingan program AFFINITY bagi memastikan peranan utama Bank dalam segmen PKS. Tatkala ekonomi dilanda pelbagai cabaran yang pasti pada 2017, SMECBD akan terus bertumbuh dengan berhemah dalam semua aspek kritikal sejajar dengan pelan 5 tahunnya.



22

DALAM MEMBINA gABUNgAN BAgI MEMPERKUKUHKAN KEDUDUKAN KAMI, BAHAgIAN PERBENDAHARAAN AFFINBANK SECARA AKTIF MELIBATKAN DIRI DENgAN PERSATUAN-PERSATUAN DAN MAJLIS-MAJLIS YANg BERKAITAN BAgI MELUASKAN PENgARUHNYA. PADA MASA INI, BAHAgIAN INI MEMEgANg KEDUDUKAN SEBAgAI SETIAUSAHA KEHORMAT BAgI PERSATUAN PASARAN KEwANgAN MALAYSIA DAN PENgERUSI KEPADA JAwATANKUASA SEMINAR DAN PENDIDIKAN. IA JUgA MEMPUNYAI PERwAKILAN DALAM ECONOMIC COUNCIL OF MALAYSIA-CHINA CHAMBER OF COMMERCE.

PerBenDaharaan

objektif 2016

Objektif-objektif utama Bahagian Perbendaharaan Bank adalah:• MenguruskanTukaranAsing(FX)danrisikokadarfaedah

bagi Bank• Memenuhikeperluanpelangganbagiproduk-produkdan

perkhidmatan berkaitan Perbendaharaan • Memenuhikeperluankecairansertafungsiasetdan

liabiliti (ALM) Bank• Memenuhikehendakpematuhankawalseliadan

dalaman• Menjalankanperniagaandagangan/arbitrari/pelaburan

yang menguntungkan

Prestasi 2016

Tahun 2016 merupakan tahun yang mencabar bagi Bahagian Perbendaharaan. Peristiwa-peristiwa geopolitik seperti Brexit dan pemilihan Presiden Amerika Syarikat telah menyebabkan pelbagai ketidaktentuan serta meningkatkan ketidakstabilan pasaran pada 2016. Selain itu, perubahan besar dalam kadar tukaran ASD/MYR yang disebabkan oleh peristiwa-peristiwa domestik dan antarabangsa telah mencipta lebih banyak cabaran dalam pasaran FX dan pasaran kadar faedah yang sememangnya tidak menentu. Kesemua ini berlaku dalam persekitaran persaingan harga yang meruncing.

Dengan perancangan dan fokus yang berhemah ke atas beberapa inisiatif strategik menerusi pembinaan aset dan pemasaran kreatif, Bahagian Perbendaharaan bukan sahaja berjaya mencapai keputusan yang diingini tetapi juga melangkaui sasaran yang ditetapkan.• Pertumbuhan69.5%bagikeuntungansebelumcukai

(PBT) tahun ke tahun• Pencapaiansebenarsebanyak49.7%berbanding

belanjawan PBT yang ditetapkan oleh Pengurusan • KosPembiayaan(COF)bagiAffinIslamicBankBerhad

(AIBB) dan Affin Bank Berhad (ABB) masing-masing meningkat sebanyak 15 bps dan 24 bps

• MarginbersihAIBBdanABBmasing-masingmeningkatsebanyak 7 bps dan 18 bps

• COFdanmarginbersihKumpulanmasing-masingmeningkat sebanyak 22 bps dan 14 bps

Pertumbuhan pendapatan tanpa faedah Bahagian Perbendaharaan bagi tahun kewangan 2016 (FY2016) juga sejajar dengan arah tuju strategik jangka panjang Bank iaitu nisbah 65:35. Pendapatan berasaskan yuran bagi FY2016 juga meningkat 34.5%.

Kami menjangka lebih banyak ketidaktentuan akan berlaku dan ketidakstabilan luar jangka akan terus mencorakkan pasaran di mana kitaran kadar tidak selaras di peringkat global. Pasaran FX juga akan mengalami aliran modal dan dana yang lebih tinggi yang mana akan meningkatkan ketidakstabilan.

Lanskap kawal selia yang kerap berubah juga merupakan satu cabaran besar bukan sahaja untuk Bahagian Perbendaharaan tetapi juga untuk industri perbankan secara keseluruhan.

Berdasarkan latar belakang ini, Bahagian Perbendaharaan perlu mengambil pandangan berhemah berdasarkan data yang tersedia bagi menyediakan dan meletakkan diri kami dalam kedudukan untuk merebut sebarang peluang yang muncul. Kami juga akan berusaha menutup jurang kecekapan teknikal bagi memenuhi lanskap industri yang mencabar, sama ada dari segi produk atau pematuhan.

Satu pendekatan yang lebih strategik akan diambil bagi memenuhi keperluan kecairan dan isu-isu ALM dalam menangani jurang portfolio liabiliti Bank selain bagi mengurangkan COF Bank untuk membolehkan unit-unit perniagaan menetapkan harga ke atas tawaran-tawaran aset mereka secara cekap agar nilai pemegang saham dapat dipertingkatkan.

Kami akan terus menyokong Bank dalam menyampaikan perkhidmatan dan penyelesaian kewangan yang berkualiti dan boleh dipercayai secara konsisten bagi memenuhi dan melangkaui kehendak-kehendak dan jangkaan pelanggan.



23

ramalan: risiko-risiko

Tiga perkembangan besar telah mempengaruhi persekitaran ekonomi dan kewangan global pada 2016:

1. Kejatuhan meruncing harga komoditi terutamanya harga minyak mentah.

2. Peningkatan ketidakstabilan dalam pasaran kewangan yang dipacu oleh aktiviti-aktiviti spekulatif selain perubahan-perubahan dasar dalam ekonomi-ekonomi utama. Amerika Syarikat telah menaikkan kadar faedah buat pertama kalinya sejak Krisis Kewangan global 2008 (gFC) manakala Eurozone dan Jepun telah menggunakan kadar faedah negatif dan meningkatkan rangsangan monetari menerusi program-program pembelian aset masing-masing.

3. Pertumbuhan global menjadi sederhana manakala pertumbuhan dagangan global mengalami kejatuhan mendadak dengan catatan perluasan paling perlahan sejak berlakunya gFC.

Proses penyesuaian masih berterusan dan mungkin mengambil masa lebih lama memandangkan ekonomi global masih berada di bawah prestasi dengan keadaan makroekonomi yang tidak stabil walaupun terdapat tanda-tanda pemulihan di Amerika Syarikat berserta kelemahan ekonomi yang masih jelas di Eropah dan China. Satu tempoh panjang dengan harga minyak global yang rendah dan penyusutan kadar tukaran ringgit dijangka berlaku. Kesemua perkembangan ini berserta ketidakstabilan pasaran yang meruncing telah menyebabkan lebih banyak ketidaktentuan selain menjejaskan sentimen perniagaan dan isi rumah.

Risiko-risiko lazim dalam industri perbankan domestik Malaysia termasuk:

• Permintaanluaryanglemahdibawahkeadaanpasarantidak menentu yang mungkin menyebabkan permintaan domestik yang suram, pertumbuhan pinjaman yang perlahan, tekanan ke atas pendapatan dan kebimbangan mengenai kualiti aset ekoran kemungkinan kenaikan dalam pinjaman terjejas.

• Hutangisirumahyangtinggiekoranperluasanpermintaan yang berterusan dan lanjutan tempoh kadar faedah yang rendah sejak beberapa tahun kebelakangan ini.

• Ketidakseimbangansektorperumahan,yangmanajikatidak ditangani, mungkin menjejaskan pasaran hartanah dengan kesan negatif ke atas bahagian-bahagian lain ekonomi.

• Pengecutanmarginekoranpersaingansengituntukdeposit dalam industri serta syarat-syarat modal dan kecairan yang lebih ketat.

• Peningkatankospematuhankeranapelaburanuntukinfrastruktur Teknologi Maklumat (IT) dan pembangunan modal insan diperlukan bagi mematuhi perkembangan kawal selia selain bagi menguruskan risiko-risiko yang semakin rumit.

• Peningkatanrisikosiber/teknologibersertaancamanperisian hasad yang canggih yang meningkatkan kerentanan maklumat sulit dan wang pelanggan.

Bagi menangani risiko-risiko yang dikenalpasti di atas, Risiko Kumpulan Bank akan terus memperkukuhkan fungsi-fungsi dan amalan-amalan pengurusan risikonya sejajar dengan keutamaan strategik dan struktur Kumpulan. Ini merangkumi aspek-aspek tumpuan berikut:

1. Menyokong pertumbuhan strategik kumpulan menerusi pengurusan risiko yang dipertingkatkan di seluruh syarikat

2. Penyelarasan Julat Risiko di seluruh kumpulan

3. Memperkukuhkan infrastruktur risiko selain mempertingkatkan model-model dan proses-proses pengurusan risiko

4. Mengukuhkan budaya etika, risiko dan pematuhan, pengawasan dan tadbir urus risiko

5. Membina dan meningkatkan kemahiran sumber manusia pengurusan risiko

ramalan: Peluang-Peluang

Ekonomi Malaysia dijangka bertumbuh sebanyak 4.0% - 5.0% pada 2017. Mengambil kesempatan daripada peningkatan momentum ini, AFFINBANK akan mengekalkan tumpuan ke atas pengurusan pertumbuhan dengan tumpuan khusus ke atas pemuliharaan aset, terutamanya dengan pelaksanaan Malaysian Financial Reporting Standard (MFRS) 9 pada 2018.

Objektif Bank pada 2017 adalah untuk mengambil manfaat daripada program AFFINITY untuk beroperasi sebagai rakan niaga yang dipercayai bagi para pelanggan kami; meningkatkan aset kami sasaran pendapatan di dalam rangkuman belanjawan yang ditetapkan oleh bank; dan untuk melaksanakan amalan-amalan industri terbaik dalam mengurus dan bertumbuh bersama pelanggan kami. Segmen-segmen sasaran baharu telah dikenalpasti menurut unjuran impetus pertumbuhan untuk industri tertentu pada 2017. Ini termasuk industri yang terlibat dalam projek-projek berkaitan infrastruktur selain Syarikat-syarikat Berkaitan Kerajaan dan Syarikat-syarikat Pelaburan Berkaitan Kerajaan. Dalam meneroka peluang-peluang berpotensi di dalam sektor-sektor ini, Bank juga beriltizam untuk terus membangunkan AFFINITY bersama kumpulan pelanggan sedia ada dan meningkatkan portfolio produk-produk dan perkhidmatan kami bagi menyampaikan nilai yang berbeza berbanding apa yang ditawarkan oleh pesaing kami.



24

Diari Korporat

24 Jun 2016majlis Berbuka Puasa bersama anak-anak yatim & Pelancaran “Priority islamic”

Sempena bulan Ramadhan, Kumpulan AFFINBANK telah menjamu 160 kanak-kanak dari beberapa rumah anak yatim. Selain itu, Bank juga telah melancarkan kempen “Priority Islamic” semasa majlis berbuka puasa tersebut. “Priority Islamic” adalah langkah proaktif Bank dalam menyokong Rangka Strategik Sektor Kewangan Bank Negara Malaysia yang bertempoh 10 tahun, yang bermatlamat mempertingkatkan portfolio pembiayaan Islam kepada 40% menjelang tahun 2020.

14 aPr 2016Perasmian Cawangan affinBank di Denai alam

22 feB 2016lawatan amal sempena tahun Baru Cina ke rumah warga tua ampang

23 feB, 27 Jul, 01 nov 2016kempen Derma Darah di menara affin

26 Jul 2016tabung haji

AFFINBANK telah menaja penerbitan buku bertajuk “wirid Terpilih Untuk Dhuyufurrahman”. Program amal ini dikenali sebagai “Sahabat Korporat Tabung Haji 1435H” anjuran Lembaga Tabung Haji. Buku-buku ini akan diagihkan kepada jemaah haji yang berada di Tanah Suci tahun ini.

21 Jul 2016sambutan aidilfitri bersama kakitangan affinBank

Sambutan Hari Raya Aidilfitri bersama semua kakitangan Kumpulan AFFINBANK.

03 Jun 2016Perasmian Cawangan affinBank di tabuan Jaya

27 mei 2016majlis makan malam bersama Para Pelanggan

Majlis Makan Malam Penghargaan untuk para pelanggan di Ipoh, Perak.

21 Jun 2016Barangan hari raya untuk angkatan tentera malaysia

Sempena sambutan Hari Raya, AFFINBANK telah menyumbang pakej barangan bernilai RM100,000 kepada Tabung Kebajikan Angkatan Tentera Malaysia.

12 mei 2016anugerah kecemerlangan Pendidikan affin 2016

Bank telah menyampaikan Anugerah Kecemerlangan Pendidikan kepada 44 anak kakitangan dari semua jabatan dan cawangan yang mencapai keputusan cemerlang dalam Sijil Pelajaran Malaysia (SPM) 2015.


25

08 seP 2016larian Bursa Bull Charge 2016

AFFINBANK turut memberi sokongan kepada Larian Bursa Bull Charge menerusi penyertaan staf dan sumbangan wang.

01 ogos 2016kerjasama kumpulan affinBank dan msu untuk program “eco marine youth expedition 2016”

Kumpulan AFFINBANK telah bekerjasama dengan Universiti Sains Pengurusan (MSU) untuk program “Eco Marine Youth Expedition 2016” yang diadakan di Pulau Redang, Kuala Terengganu. Program tiga hari tersebut melibatkan penanaman pokok dan terumbu karang serta pemuliharaan penyu yang menyaksikan penyertaan 60 pelajar MSU dan 20 kakitangan Bank yang berpangkalan di Terengganu.

22 seP 2016kerjasama kumpulan affinBank bersama asian Banking school untuk Program kesedaran Budaya etika, risiko & Pematuhan

Kumpulan AFFINBANK menandatangani perjanjian bersama Asian Banking School (ABS) untuk penganjuran program latihan khusus yang bertujuan memperkasakan kakitangan dalam membentuk kemahiran pembuatan keputusan yang beretika, kritikal dan berasaskan pulangan risiko selain melengkapkan pengurusan kanan dengan alat-alat yang sesuai bagi memastikan keberkesanannya.

10 Dis 2016“warriors Challenge 2016”

Kumpulan AFFINBANK secara rasminya menjadi penaja utama larian berhalangan bertemakan ketenteraan yang pertama di Malaysia iaitu “warriors Challenge 2016” anjuran Persatuan Veteran Angkatan Tentera Malaysia sebagai sebahagian daripada sambutan Hari Pahlawan yang diadakan setiap tahun bagi menerapkan semangat patriotik di kalangan generasi muda selain bagi memperingati pengorbanan angkatan tentera.

13 ogos - wilayah Selatan

03 seP - wilayah Utara

15 okt - wilayah Tengah

oh! syoknya karnival sukan affinity

Karnival sukan telah diadakan di semua wilayah bagi mengukuhkan hubungan di antara semua kakitangan Kumpulan AFFINBANK di semua peringkat.

15 aPr, 10 ogos 2016taklimat

Satu sesi taklimat oleh Pengarah Urusan/Ketua Pegawai Eksekutif, En. Kamarul Ariffin Mohd Jamil kepada kakitangan mengenai program AFFINITY dan hala tuju strategik maju ke hadapan untuk Bank.

28 ogos 2016larian BhPetrol orange 2016

AFFINBANK menyertai Larian BHPetrol Orange 2016, iaitu larian sejauh 12 km bagi mengumpul dana untuk badan-badan amal terpilih.

Diari Korporat


26

Sorotan Kewangan

27.5

60.2

47.6

20.5

59.9

47.8

33.3

59.5

48.0

37.5

56.4

46.1

keuntungan sesahamSen

Jumlah asetRM’bilion

Deposit Daripada PelangganRM’bilion

keuntungan sebelum zakat Dan CukaiRM’milion

Pinjaman, Pendahuluan & Pembiayaan BersihRM’bilion

ekuiti Pemegang sahamRM’bilion

‘13

‘13

‘13 ‘13

‘14

‘14

‘14 ‘14

‘15

‘15

‘15 ‘15

‘16

‘16

‘16

602.8

42.7

5.8

461.2

42.1

5.5

720.1

39.5

5.2

762.2

36.2

4.4

‘13

‘13

‘14

‘14

‘15

‘15

‘16

‘16

‘16


27

Penyata Tadbir Urus Korporat

Lembaga Pengarah (‘Lembaga Pengarah’) Affin Bank Berhad (‘Bank’) dan Pengurusan berusaha mematuhi piawaian dan prinsip-prinsip Tadbir Urus Korporat tertinggi dalam semua aspek industri perbankan ke arah meningkatkan kemakmuran perniagaan dan integriti korporat, dengan objektif utama memelihara nilai pemegang saham dan kepentingan pemegang berkepentingan. Lembaga Pengarah secara berterusan menyemak model tadbir urusnya bagi memastikan keberkaitan, keberkesanan dan keupayaannya dalam menangani cabaran-cabaran di masa hadapan. Lembaga Pengarah menyediakan bimbingan dan pengawasan ke atas agenda strategik dan operasi Bank. Lembaga Pengarah menyedari tanggungjawabnya untuk bertindak secara tekun dan bertanggungjawab menurut undang-undang dan kawal selia dalam memenuhi kepentingan pemegang saham, para pelanggan, kakitangan dan masyarakat umum.

Lembaga Pengarah dan Pengurusan adalah sangat komited dan sentiasa berusaha memastikan bahawa Bank beroperasi sejajar dengan Akta Perkhidmatan Kewangan 2013 (‘FSA’), Kod Tadbir Urus Korporat Malaysia 2012 (‘MCCg’), Dokumen Dasar Tadbir Urus Korporat Bank Negara Malaysia bertarikh 3 Ogos 2016 (‘BNM Cg’) serta lain-lain undang-undang dan kawal selia yang berkaitan. Lembaga Pengarah dan Pengurusan menekankan kepentingan keselamatan dan kewibawaan Bank sebagai sebuah institusi kewangan di mana hemat perniagaan dan risiko diseimbangkan dengan sewajarnya. Sepanjang 2016 sehingga kini, Bank terus menjalankan perniagaannya secara berintegriti dan mempamerkan tahap ketelusan dan objektiviti yang tinggi.

Bank mematuhi kehendak kesesuaian dan kewajaran untuk para pengarah menurut kehendak FSA. Lembaga Pengarah dan Pengurusan tegas dalam memastikan pematuhan kepada Kod Etika bagi Industri Perkhidmatan Kewangan yang dikeluarkan oleh Lembaga Profesional Perkhidmatan Kewangan pada Disember 2015 (‘FSPB-01’), yang bermatlamat menerapkan lima nilai iaitu disiplin, integriti, kerendahan hati, keprihatinan dan kreativiti. Lembaga Pengarah dan Pengurusan telah menetapkan piawaian dan amalan perniagaan beretika tinggi untuk pelaksanaan urusan perniagaan serta kod tatalaku untuk kakitangan. Pelaksanaan dasar-dasar dan garis panduan di dalam rangkuman Kod Tatalaku menjadi tanggungjawab Pengurusan di bawah pengawasan Jawatankuasa Audit Lembaga Pengarah. Selain itu, Bank juga mempunyai Kod Tatalakunya sendiri yang terdiri daripada prinsip-prinsip dan piawaian amalan-amalan terbaik yang mantap yang dipatuhi oleh kakitangan.

Bahagian-bahagian seterusnya membentangkan komitmen Bank dalam melaksanakan prinsip-prinsip terbaik Tadbir Urus Korporat dan tahap pematuhan kepada amalan yang dicadangkan.

lemBaga Pengarah

Lembaga Pengarah komited dalam membina nilai mampan jangka panjang untuk para pemegang saham dan pemegang berkepentingan. Bagi membuktikan komitmen ini, Lembaga Pengarah dengan sukacita melaporkan bahawa Bank telah mematuhi semua prinsip-prinsip dan cadangan-cadangan oleh MCCg. Lembaga Pengarah justeru itu telah menggunakan Dasar Kumpulan berkenaan tempoh perkhidmatan maksimum bagi Pengarah Bebas Bukan Eksekutif (‘INED’) agar sejajar dengan BNM Cg. Sehubungan ini, BNM telah membenarkan tempoh peralihan untuk Bank mematuhi sepenuhnya kesemua kehendak-kehendak lain.

Peranan dan tanggungjawab lembaga Pengarah

Lembaga Pengarah menyedari peranan dan tanggungjawabnya ke atas prestasi keseluruhan Bank.

Tanggungjawab Lembaga Pengarah adalah dalam rangkuman rangka kerja FSA, MCCg, BNM Cg dan Manual Dasar Lembaga Pengarah Bank. Lembaga Pengarah mengamalkan kesungguhan dan ketelitian yang tinggi bagi memastikan piawaian etika tertinggi dipatuhi serta kepentingan pemegang berkepentingan tidak terjejas. Ini termasuk tanggungjawab bagi menentukan dasar-dasar dan strategi-strategi umum Bank dalam meluluskan pelan-pelan perniagaan termasuk sasaran dan belanjawan serta dalam meluluskan keputusan-keputusan strategik yang besar.

Manual Dasar Lembaga Pengarah Bank, yang membentangkan prinsip-prinsip utama tadbir urus korporat Bank, mentakrifkan dengan jelas peranan dan tanggungjawab Lembaga Pengarah, Pengerusi dan Pengarah Urusan/Ketua Pegawai Eksekutif dalam hal penetapan strategi, pengurusan syarikat, integriti kawalan dalaman dan komunikasi, pelan peralihan kuasa dan pengurusan risiko.


28


komposisi dan keseimbangan lembaga Pengarah

Semasa tahun kewangan berakhir 2016, Lembaga Pengarah telah melaksanakan perubahan di peringkat kepimpinan lembaga pengarah sejajar dengan kehendak yang ditetapkan dalam BNM Cg.

Lembaga Pengarah percaya akan kepentingan untuk membina dan mencipta semula dirinya selaku aset strategik dan sumber kelebihan berdaya saing jangka panjang bagi Bank dalam dunia yang sangat kompetitif pada hari ini. Hal ini merangkumi pelan peralihan kuasa jangka panjang bagi Lembaga Pengarah yang mana juga sangat penting.

Lembaga Pengarah sebagai satu pasukan membawa bersama gabungan kemahiran, pengetahuan dan kecekapan yang merangkumi bidang perbankan, perakaunan, kewangan, pengurusan strategik, pentadbiran perniagaan dan pengurusan risiko.

Komposisi Lembaga Pengarah terdiri daripada majoriti pengarah bebas sejak tahun 2011. Lembaga Pengarah kini terdiri daripada tujuh (7) pengarah dengan satu (1) pengarah gantian, dua (2) Pengarah Bebas Bukan Eksekutif (‘INED’) dan lima (5) Pengarah Bukan Bebas Bukan Eksekutif (‘NINED’); Pengerusi Lembaga Pengarah adalah seorang NINED. Profil para pengarah dibentangkan dalam Laporan Tahunan ini.

Komposisi INED dalam Lembaga Pengarah pada mulanya adalah 57.14% sebelum perlantikan semula YBhg. Tan Sri Dato’ Seri Mohamed Jawhar Bin Hassan dan En. Mohd Suffian Bin Haji Haron yang kedua-duanya telah berkhidmat dengan Bank melebihi 9 tahun. Lembaga Pengarah justeru itu telah mengambil langkah-langkah penting untuk memulakan dan menguatkuasakan perubahan pada peringkatnya yang akan meletakkan Bank dalam kedudukan untuk pertumbuhan berterusan selain mencipta nilai berkekalan. Sehubungan ini, Lembaga Pengarah telah melaksanakan usaha bersepadu dan meneruskan fokus bagi memastikan komposisi Lembaga Pengarah berada dalam rangkuman kehendak BNM Cg berkaitan komposisi majoriti INED di dalam jangka masa yang ditetapkan.

Dua (2) INED dalam Lembaga Pengarah pada masa ini tidak mempunyai sebarang hubungan atau keadaan yang mungkin menjejaskan, atau kelihatan seperti menjejaskan penilaian mereka. Mereka membawa bersama perspektif dan sudut pandang luar serta membantu dalam membangunkan usul-usul strategi. Mereka juga meneliti prestasi Pengurusan dalam memenuhi matlamat dan objektif yang diluluskan selain memantau profil risiko perniagaan Bank dan pelaporan prestasi perniagaan bulanan.

Jawatankuasa Penamaan dan Imbuhan Lembaga Pengarah (‘BNRC’) dan Lembaga Pengarah berdasarkan penilaian tahunan mereka telah membuat kesimpulan bahawa dua (2) INED tersebut telah mempamerkan tatacara dan kelakuan yang menjadi penunjuk penting akan kebebasan, dan bahawa setiap seorang terus memenuhi takrif kebebasan menurut BNM Cg.

Peranan INED adalah penting khususnya dalam memastikan bahawa strategi-strategi yang dicadangkan oleh Pengurusan dibincangkan sepenuhnya dan dinilai dengan adil sejajar dengan objektif jangka panjang Bank. Proses pembuatan keputusan Lembaga Pengarah tidak didominasi oleh mana-mana individu atau sekumpulan kecil individu. walaupun begitu, pada setiap tahun BNRC akan menentukan sama ada seorang INED masih kekal objektif dan bebas daripada sebarang hubungan atau pengaruh yang boleh menjejaskan keupayaannya untuk membuat penilaian bebas.

Sungguhpun begitu, pada ketika ini komposisi Lembaga Pengarah terdiri daripada majoriti NINED. Dalam meneruskan usaha untuk mendapatkan komposisi majoriti INED, Lembaga Pengarah komited dan percaya bahawa semua pengarah bertindak demi kepentingan Bank menerusi penggunaan piawaian dan amalan tadbir urus korporat yang mantap.

Jawatankuasa-jawatankuasa lembaga Pengarah

Lembaga Pengarah telah menubuhkan beberapa Jawatankuasa yang mana komposisi dan bidang tugas masing-masing adalah menurut BNM Cg dan konsisten dengan cadangan-cadangan MCCg.

Sehubungan itu, Lembaga Pengarah telah mengagihkan kuasa dan tanggungjawab tertentu kepada Jawatankuasa-jawatankuasa ini, yang beroperasi di bawah bidang kuasa yang diluluskan bagi setiap Jawatankuasa Lembaga Pengarah, terutamanya bagi membantu Lembaga Pengarah dalam pelaksanaan tugas dan tanggungjawabnya. Jawatankuasa-jawatankuasa Lembaga Pengarah ini akan melaporkan keputusan mesyuarat mereka kepada Lembaga Pengarah untuk dibincangkan pada peringkat Lembaga Pengarah, jika perlu. Semua laporan dan perbincangan dirangkumkan ke dalam minit mesyuarat Lembaga Pengarah. Jawatankuasa-jawatankuasa Lembaga Pengarah disenaraikan di bawah:


29


Jawatankuasa Penamaan dan imbuhan lembaga Pengarah (BnrC)

Pada 27 September 2016, Lembaga Pengarah telah meluluskan penggunaan kelulusan Affin Holdings Berhad (‘AHB’) pada mesyuaratnya yang diadakan pada 11 Ogos 2016 mengenai dasar kumpulan untuk menubuhkan gabungan Jawatankuasa Penamaan dan Imbuhan Lembaga Pengarah untuk Bank.

Sebelum ini, Jawatankuasa Penamaan Lembaga Pengarah (BNC) dan Jawatankuasa Imbuhan Lembaga Pengarah (BRC) Bank adalah dua entiti berasingan.

Kehadiran Ahli-ahli pada mesyuarat-mesyuarat BNC yang diadakan sepanjang 2016 adalah seperti berikut:

Bil. nama Pengarah

Bilangan mesyuarat lembaga Pengarah

kehadiran Bil. mesyuarat

1. En. Abd Malik Bin A RahmanPengerusi / Pengarah Bebas Bukan Eksekutif Dilantik sebagai Pengerusi BNC berkuatkuasa 1 Jun 2016

6 6

2. En. Mohd Suffian Bin Haji Haron Âhli / Pengarah Bukan Bebas Bukan Eksekutif

6 6

3. YBhg. Tan Sri Dato’ Seri Lodin Bin wok KamaruddinAhli / Pengarah Bukan Bebas Bukan Eksekutif (Melengkapkan tempoh jawatan pengarah bersama Bank berkuatkuasa 4 Oktober 2016)

4 4

4. YBhg. Tan Sri Dato’ Seri Mohamed Jawhar ^ Ahli / Pengarah Bukan Bebas Bukan Eksekutif

6 6

5. YBhg. Tan Sri Mohd ghazali Bin Mohd Yusoff Ahli / Pengarah Bebas Bukan Eksekutif

6 6

Nota: ^ Ditugaskan semula sebagai Pengarah Bukan Bebas Bukan Eksekutif berkuatkuasa 1 Jun 2016

Kehadiran Ahli-ahli pada mesyuarat-mesyuarat BRC yang diadakan sepanjang 2016 adalah seperti berikut:

Bil. nama Pengarah



1. En. Abd Malik Bin A Rahman Pengerusi / Pengarah Bebas Bukan Eksekutif Dilantik sebagai Pengerusi BNC berkuatkuasa 1 Jun 2016

1 1


4 4

3. YBhg. Tan Sri Dato’ Seri Lodin Bin wok KamaruddinAhli / Pengarah Bukan Bebas Bukan Eksekutif (Melengkapkan tempoh jawatan pengarah bersama Bank berkuatkuasa 4 Oktober 2016)

4 4


4 4


BNRC bertanggungjawab menyediakan satu prosedur yang formal dan telus untuk perlantikan para Pengarah, Pengarah Urusan /Ketua Pegawai Eksekutif dan Pengurusan Kanan. BNRC menyediakan dasar imbuhan untuk para Pengarah, Pengarah Urusan /Ketua Pegawai Eksekutif, Pengurusan Kanan dan lain-lain pengambil risiko penting, di mana ia menilai keberkesanan setiap Pengarah, Lembaga Pengarah secara keseluruhannya dan prestasi Pengarah Urusan / Ketua Pegawai Eksekutif serta Pengurusan Kanan.


30


BNRC menyemak dan mencadangkan proses-proses untuk pelan peralihan kuasa bagi Lembaga Pengarah, Pengarah Urusan/ Ketua Pegawai Eksekutif dan Pengurusan Kanan; membuat cadangan yang sewajarnya kepada Lembaga Pengarah, memastikan bahawa pelan ganti rugi adalah kompetitif dan konsisten dengan budaya dan objektif strategik Bank. BNRC mendapatkan khidmat nasihat daripada pakar-pakar dalam perihal ganti rugi dan manfaat, dari sumber dalaman dan luar.

Kehadiran Ahli-ahli pada mesyuarat-mesyuarat BNRC yang diadakan sepanjang 2016 adalah seperti berikut:

Bil. nama Pengarah



1. En. Abd Malik Bin A Rahman Pengerusi / Pengarah Bebas Bukan Eksekutif

1 1


1 1

3. YBhg. Tan Sri Dato’ Seri Mohamed Jawhar Âhli / Pengarah Bukan Bebas Bukan Eksekutif

1 1


1 1


Jawatankuasa Pengurusan risiko lembaga Pengarah (BrmC)

BRMC bertanggungjawab menyelia aktiviti-aktiviti Pengurusan dalam menguruskan risiko kredit, risiko pasaran, risiko kecairan, risiko operasi, risiko reputasi perundangan dan risiko-risiko lain bagi memastikan proses pengurusan risiko tersedia dengan secukupnya dan berfungsi dengan berkesan.

Kehadiran Ahli-ahli pada mesyuarat-mesyuarat BRMC yang diadakan sepanjang 2016 adalah seperti berikut:

Bil. nama Pengarah



1. En. Abd Malik Bin A Rahman Pengerusi / Pengarah Bebas Bukan Eksekutif Dilantik sebagai Pengerusi berkuatkuasa 25 Oktober 2016

2 2


8 8


8 8

4. YBhg. Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman ^Âhli / Pengarah Bukan Bebas Bukan Eksekutif(Mewakili AFFIN Islamic Bank Berhad)

8 8


8 8

Nota: ^ Ditugaskan semula sebagai Pengarah Bukan Bebas Bukan Eksekutif berkuatkuasa 1 Jun 2016 ^^ Ditugaskan semula sebagai Pengarah Bukan Bebas Bukan Eksekutif berkuatkuasa 25 Oktober 2016


31

Jawatankuasa semakan dan Perolehan semula Pinjaman lembaga Pengarah (BlrrC)

BLRRC bertanggungjawab menyediakan semakan kritikal ke atas pinjaman dan lain-lain kemudahan kredit dengan implikasi risiko yang lebih tinggi, selepas proses pemeriksaan, analisis, semakan dan cadangan oleh fungsi Pengurusan Risiko Kumpulan, dan jika perlu, melaksanakan kuasa veto ke atas permohonan pinjaman yang telah diluluskan oleh Jawatankuasa Pinjaman Pengurusan Kumpulan.

Kehadiran Ahli-ahli pada mesyuarat-mesyuarat BLRRC yang diadakan sepanjang 2016 adalah seperti berikut:

Bil. nama Pengarah



1. YBhg. Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara)Pengerusi / Pengarah Bukan Bebas Bukan Eksekutif

14 14

2. YBhg. Tan Sri Dato’ Seri Lodin Bin wok Kamaruddin Ahli / Pengarah Bukan Bebas Bukan Eksekutif(Melengkapkan tempoh jawatan pengarah bersama Bank berkuatkuasa 4 Oktober 2016)

11 11


14 14

4. YBhg. Laksamana Madya Tan Sri Dato’ Seri Ahmad Ramli Bin Mohd Nor (Bersara) Ahli / Pengarah Bukan Bebas Bukan Eksekutif(Represent AFFIN Islamic Bank Berhad)

14 14


Jawatankuasa audit lembaga Pengarah (BaC)

BAC bertanggungjawab menyediakan pengawasan ke atas semakan kecukupan dan integriti sistem kawalan dalaman selain menyelia kerja-kerja juruaudit dalaman dan luar.

Kehadiran Ahli-ahli pada mesyuarat-mesyuarat BAC yang diadakan sepanjang 2016 adalah seperti berikut:

Bil. nama Pengarah



1. YBhg. Tan Sri Mohd ghazali Mohd YusoffPengerusi / Pengarah Bebas Bukan Eksekutif(Dilantik sebagai Pengerusi berkuatkuasa 25 Oktober 2016)

9 9


9 9

3. YBhg. Tan Sri Dato’ Sri Abdul Aziz Abdul Rahman ^Âhli / Pengarah Bukan Bebas Bukan Eksekutif (Mewakili AFFIN Islamic Bank Berhad)

9 9

4. Assoc. Prof. Dr. Said BouheraouaAhli / Pengarah Bebas Bukan Eksekutif(Mewakili AFFIN Islamic Bank Berhad)

7 9

Nota: ^ Ditugaskan semula sebagai Pengarah Bukan Bebas Bukan Eksekutif berkuatkuasa 1 Jun 2016 ^^ Ditugaskan semula sebagai Pengarah Bukan Bebas Bukan Eksekutif berkuatkuasa 25 Oktober 2016



32

Jawatankuasa transformasi Pengawasan lembaga Pengarah (BotC)

Lembaga Pengarah telah bermesyuarat pada 26 Julai 2016 dan meluluskan penubuhan BOTC berserta bidang tugasnya.

BOTC bertanggungjawab mengawasi pelan transformasi (Program AFFINITY), memastikan keputusan strategik yang konsisten dan memastikan bahawa pelan transformasi dilaksanakan secara berkesan dan tepat pada masanya.

Kehadiran Ahli-ahli pada mesyuarat-mesyuarat BOTC yang diadakan sepanjang 2016 adalah seperti berikut:

Bil. nama Pengarah



1. En. Abd Malik Bin A Rahman Pengerusi / Pengarah Bebas Bukan Eksekutif

2 2


2 2


2 2

4. Assoc. Prof. Dr. Said BouheraouaAhli / Pengarah Bebas Bukan Eksekutif(Mewakili AFFIN Islamic Bank Berhad)

2 2


kebebasan dan konflik kepentingan

Menjadi tanggungjawab para Pengarah untuk mengisytiharkan sama ada mereka mempunyai kepentingan berpotensi atau nyata dalam mana-mana urusniaga Bank. Apabila timbulnya konflik kepentingan bagi sesuatu isu, Pengarah yang terlibat mengisytiharkan perkara tersebut dan mengecualikan diri daripada membincangkan atau mengundi untuk isu terbabit. Ini adalah penting bagi mengurangkan risiko yang mungkin timbul daripada konflik kepentingan atau pengaruh daripada pihak berkepentingan.

Perlantikan Baharu dan Perlantikan semula ke dalam lembaga Pengarah

Sejajar dengan peruntukan dalam FSA dan dokumen-dokumen dasar serta garis panduan yang dikeluarkan oleh BNM, semua perlantikan dan perlantikan semula para pengarah adalah tertakluk kepada kelulusan BNM, dan kelulusan tersebut adalah untuk satu tempoh perlantikan yang tertentu.

Cadangan perlantikan ahli-ahli Lembaga Pengarah baharu serta perlantikan semula ahli-ahli Lembaga Pengarah dicadangkan oleh BNRC bagi memastikan bahawa tahap dan komposisi ahli-ahlinya merangkumi tahap kredibiliti, integriti dan kaliber yang sewajarnya berserta kemahiran dan pengetahuan yang diperlukan.

Perlantikan semula pengarah adalah tertakluk kepada kriteria kesesuaian dan kewajaran seperti yang diluluskan oleh Lembaga Pengarah dan berdasarkan penilaian rakan pengarah mengenai keberkesanan, sumbangan dan penyertaan pengarah terbabit. Ini adalah sejajar dengan Prinsip 2, Cadangan 2.2 di dalam MCCg.

Pemilihan semula Para Pengarah

Sejajar dengan Seksyen 91(a) Tataurusan Penubuhan Syarikat, sekurang-kurangnya satu pertiga (1/3) daripada para Pengarah terkini, atau, sekiranya bilangan mereka bukan tiga (3) atau dalam gandaan tiga (3), bilangan terdekat kepada satu pertiga (1/3), harus bersara pada setiap Mesyuarat Agung Tahunan dan mereka boleh menawarkan diri untuk pemilihan semula.



33

Pendidikan Berterusan

Lembaga Pengarah menyedari kepentingan pendidikan dan latihan berterusan bagi memastikan mereka sentiasa mengetahui perkembangan terkini dalam bidang yang mereka ceburi. Semua Pengarah Bukan Eksekutif yang baharu dilantik disediakan oleh Bank dengan salinan FSA dan lain-lain dokumen perundangan yang berkaitan dengan industri perbankan bagi membantu mereka memahami kehendak-kehendak dalam perniagaan perbankan. Kesemua Pengarah telah menghadiri pelbagai program latihan dalaman dan luar yang dianjurkan oleh badan-badan berkaitan seperti BNM, Suruhanjaya Sekuriti (SC) dan Bursa Malaysia Berhad (Bursa Malaysia). Kesemua Pengarah diwajibkan mengikuti latihan Pendidikan Pengarah Institusi Kewangan (FIDE) anjuran BNM dalam tempoh setahun dari tarikh perlantikan mereka. Ahli-ahli Lembaga Pengarah menyedari kepentingan menaiktaraf set kemahiran dan kecekapan mereka bagi bersedia menghadapi cabaran persaingan dan inovasi pada masa kini dan di masa hadapan. Ahli-ahli Lembaga Pengarah sentiasa mengemaskini pengetahuan mereka mengenai perkembangan semasa dalam industri perniagaan, perbankan dan kewangan serta kehendak-kehendak kawal selia terkini menerusi pelbagai persidangan, seminar dan program-program latihan. Program-program pembangunan dan latihan yang dihadiri oleh para Pengarah sepanjang tahun kewangan berakhir 31 Disember 2016 adalah seperti berikut:

yBhg. Jen. tan sri Dato’ seri ismail Bin haji omar (Bersara)

Jurulatih/Penganjur Tajuk kursus Tarikh

1. BNM Laporan Tahunan BNM 2015/Laporan Kestabilan Kewangan & Sistem Pembayaran 2015 – Sesi Taklimat

23 Mac 2016

2. MINDA Program Lanjutan Para Pengarah Korporat (CDAP): Pengurusan Risiko Keselamatan Siber untuk Boardroom dan C-Suite

24 Mac 2016

3. AHB Ceramah Separuh Hari untuk Para Pengarah 26 September 2016

yBhg. tan sri Dato’ seri lodin Bin wok kamaruddin (Melengkapkan tempoh jawatan pengarah bersama Bank berkuatkuasa 4 Oktober 2016)


1. FIDE Sektor Perkhidmatan Ekonomi dan Kewangan: Trend dan Cabaran Masa Hadapan untuk Industri Perbankan

3 Mac 2016

2. SEACEN Persidangan SEACEN mengenai Kerjasama Bank Pusat dan Mandat Penghormatan untuk Mantan gabenor Bank of Thailand, Dr. Puey Unghakorn

14 Mac 2016

3. SC Global Emerging Markets Programme 2016 – Risk Vulnerability of Global Markets: Reinforcing Resilience in Emerging Markets

15 Mac 2016

4. ICLIF Program Pengarah Bebas: “The Essence of Independence” 28 Mac 2016

5. BNM Dialog Tahunan Forum BNM-FIDE ke-3 bersama gabenor BNM 29 Mac 2016

6. FIDE Siri Kepimpinan Lembaga Pengarah Terkemuka ke-2 Forum FIDE – “Avoiding Financial Myopia” oleh Profesor Jeffrey L. Sampler

19 April 2016

7. MINDA Siri Sarapan Pagi Cg bersama Para Pengarah: “The Strategy, the Leadership, the Stakeholders and the Board”

6 Mei 2016

8. AHB Bengkel Pengurusan Risiko mengenai Keselamatan dan Penipuan Siber oleh IBM 9 Mei 2016

9. AIBIM global Islamic Finance Forum (gIFF) 5.0 11 Mei 2016

10. FIDE Sesi Taklimat B untuk Para Pengarah: Pelaksanaan Daftar Pengarah Forum FIDE oleh Forum FIDE

2 Jun 2016

11. wIEF Forum Ekonomi Islam Dunia ke-12 oleh world Islamic Economic Foundation 2 Ogos 2016

12. FIDE “FinTech: Business Opportunity or Disruptor?” oleh Mr. Markus gnirck dan Ms. Veiverne Yuen

4 Ogos 2016

13. Bursa Malaysia Sesi Anjuran mengenai Perbincangan & Analisis Pengurusan (“MD&A”) untuk Ketua Pegawai Eksekutif (“CEO”) dan Ketua Pegawai Kewangan (“CFO”) bagi Syarikat-syarikat Tersenarai oleh Bursa Malaysia

8 Ogos 2016

14. Affin Hwang Siri Persidangan Modal Affin Hwang 2016: “Navigating Through Shifting Sands” 11 Ogos 2016

15. BNM & The world Bank

Simposium global 2016 mengenai Rangkuman Kewangan Inovatif: “Harnessing Technology for Inclusive Finance”

21 September 2016



34

16. AHB Ceramah Separuh Hari mengenai:i) Risiko Ketidakpatuhan Syariah dan Impaknya ke atas Bank-bank Islam ii) Piawaian Pelaporan Kewangan Malaysia (MFRS) 9 – Instrumen Kewangan dan

Hal-hal Audit Utamaiii) Proses Penilaian Kecukupan Modal Dalaman (ICAAP)

26 September 2016

mr. aubrey li kwok-sing


1. PwC Program Pengarah Bukan Eksekutif PwC: “Responsible Investment and green Finance – Paving the way for Sustainable Business”

1 Mac 2016

2. KPMg Forum Pengarah Bebas Bukan Eksekutif KPMg- The Year Ahead- The Way Forward in Financial Reporting- Tax in the Boardroom- Capital Markets

8 Mac 2016

3. KPMg Forum Pengarah Bebas Bukan Eksekutif KPMg- The Way Forward- Audit Committee Institute – Global Boardroom Insights- Seeking Value through Internal Audit- The Way Forward on Financial Reporting- Capital Markets- What are the Lessons from the Panama Papers- Disruptive Innovation and Technology

13 Jun 2016

4. PwC Program Pengarah Bukan Eksekutif PwC- The New Insightful Audit Reports

18 Ogos 2016

5. KPMg Forum Pengarah Bebas Bukan Eksekutif KPMg- What’s Around the Corner- Capital Markets Development- Common Reporting Standard – Are You Ready?- Global Profile of the Fraudster- Using Analytics Successfully to Detect Fraud

5 September 2016

6. CSR Asia/BEA “why Corporate Social Responsibility (CSR) is good for the Bottom Line” 24 November 2016

7. KPMg Forum Pengarah Bebas Bukan Eksekutif KPMg- Welcome and Introduction- From Strategy to Results- Capital Markets Spotlight- The Way Forward on Financial Reporting- The Tax Tsunami

5 Disember 2016

8. PwC/Café de Coral

“Transformation to the Engaged Board” 16 Disember 2016

en. mohd suffian Bin haji haron


1. FPLC Seminar Kebangsaan Tahunan mengenai Isu-isu Terkini & Semasa berkaitan Tugas, Tadbir Urus, Kawal Selia para Pengarah 2016

26 – 27 Januari 2016

2. FIDE Taklimat mengenai Daftar Pengarah 17 Februari 2016

3. FIDE Sesi Eksklusif untuk Para Pengarah: Pelaksanaan Daftar Pengarah Forum FIDE 1 Jun 2016

4. FIDE Siri Kepimpinan Lembaga Pengarah Terkemuka ke-3 – “Effective Board Evaluation” oleh Mr. Beverly Behan

25 Julai 2016

5. FIDE “Strategy to Leverage Technology for Business Solutions” 14 November 2016



35

yBhg. tan sri Dato’ seri mohamed Jawhar


1. MINDA Program Lanjutan Para Pengarah Korporat (CDAP): Pengurusan Risiko Keselamatan Siber untuk Boardroom dan C-Suite

24 Mac 2016

2. BNM Dialog Tahunan Forum BNM-FIDE ke-3 bersama gabenor BNM 29 Mac 2016

3. FIDE “Directors’ and Officers’ Liability Insurance: Are Directors Sufficiently Protected for Exercising Their Fiduciary Duty”

5 April 2016

4. AIBIM global Islamic Finance Forum (gIFF) 5.0 10 – 12 Mei 2016

5. FIDE Daftar Pengarah Forum FIDE: “Identify the Right Board Talent” 14 September 2016

6. BNM & The world Bank

Simposium global 2016 mengenai Rangkuman Kewangan Inovatif: “Harnessing Technology for Inclusive Finance”

21 – 22 September 2016

yBhg. tan sri mohd ghazali Bin mohd yusoff


1. FIDE Piawaian Pelaporan Juruaudit yang Baharu dan Disemak: Implikasi ke atas Institusi-institusi Kewangan

20 Januari 2016

2. FIDE Daftar Pengarah: Sesi Taklimat Industri mengenai Pelaksanaan Daftar Pengarah 17 Februari 2016

3. FIDE Sektor Perkhidmatan Ekonomi dan Kewangan: “Trends and Challenges Moving Forward for the Banking Industry”

3 Mac 2016

4. FIDE “Directors’ and Officers’ Liability Insurance: Are Directors Sufficiently Protected for Exercising Their Fiduciary Duty”

5 April 2016

5. FIDE Siri Kepimpinan Lembaga Pengarah Terkemuka ke-2 – “Avoiding Financial Myopia”

19 April 2016


7. PNB International Forum on the World’s Economic Outlook: Challenges & Opportunities for Malaysia Companies

30 Mei 2016


9. FIDE Siri Kepimpinan Lembaga Pengarah Terkemuka ke-3: “Effective Board Evaluation” oleh Ms. Beverly Behan

25 Julai 2016


4 Ogos 2016

11. FIDE Suruhanjaya Sekuriti – Dialog Forum FIDE: “FinTech’s Impact on Financial Institutions”

29 Ogos 2016

12. BNM Simposium global 21 September 2016

13. AHB Ceramah Separuh Hari mengenai:i) Risiko Ketidakpatuhan Syariah dan Impaknya ke atas Bank-bank Islam ii) Piawaian Pelaporan Kewangan Malaysia (MFRS) 9 – Instrumen Kewangan dan

Hal-hal Audit Utamaiii) Proses Penilaian Kecukupan Modal Dalaman (ICAAP)

26 September 2016

14. FIDE “Technology-based Innovations that Count” oleh Steven Lewis, Patrick Menard dan Shankar Kanabiran, Ernst & Young

2 November 2016

15. AHB Topik Ceramah:i. Pindaan Kehendak-kehendak Penyenaraian Bursa Malaysia;ii. Akta Syarikat 2016;iii. Cadangan Kod Tadbir Urus Korporat; daniv. Dokumen Dasar BNM mengenai Tadbir Urus Korporat

10 November 2016

16. FIDE “Strategy to Leverage Technology for Business Solutions” 14 November 2016



36

en. abd malik Bin a rahman


1. FIDE Piawaian Pelaporan Juruaudit yang Baharu dan Disemak: Implikasi ke atas Institusi-institusi Kewangan

20 Januari 2016

2. FIDE/BNM Siri Kepimpinan Lembaga Pengarah – Pengawasan Risiko Siber 16 Mac 2016

3. Bursa Malaysia/PwC

Panduan Pengarah mengenai Risiko Penipuan & Rasuah 5 April 2016

4. FIDE Siri Kepimpinan Lembaga Pengarah Terkemuka ke-2 – “Avoiding Financial Myopia”

19 April 2016



7. FIDE Siri Kepimpinan Lembaga Pengarah Terkemuka ke-3: “Effective Board Evaluation” oleh Ms. Beverly Behan

25 Julai 2016


4 Ogos 2016

9. SC/FIDE Suruhanjaya Sekuriti – Dialog Forum FIDE: “FinTech’s Impact on Financial Institutions”

29 Ogos 2016

10. Tricor Tax Services Sdn Bhd

Seminar Cukai & Korporat Tricor ke-12 2 November 2016

11. AHB/BOARDROOM/ KPMg

Ceramah: Pindaan Kehendak-kehendak Penyenaraian Bursa Malaysia; Akta Syarikat 2016; Cadangan Kod Tadbir Urus Korporat 2016; dan Dokumen Dasar BNM mengenai Tadbir Urus Korporat

10 November 2016

12. AHIB Latihan Pengarah mengenai Akta Pencegahan Pengubahan wang Haram dan Pencegahan Pembiayaan Keganasan

30 November 2016

mr. tang Peng wah (Pengarah Alternatif Mr. Aubrey Li Kwok-Sing)


1. BEASg Compliance Department

Latihan Ulangan AML – Kemaskini Penting ke atas Notis 626 MAS 1 April 2016

2. BEASg Human Resource Department

Pengurusan Prestasi dan Penilaian Kakitangan 21 April 2016

3. BEASg IT Department

Kesedaran Keselamatan Siber 21 April 2016

4. Marsh Singapore

Skim Insurans Pinjaman Tranche 5 6 Mei 2016


Foreign Account Tax Compliance Act (FATCA) Essentials oleh Thomson Reuters 4 Jun 2016


Akta Perlindungan Data Peribadi (Singapura) 4 Jun 2016


Anti-Bribery and Anti-Corruption oleh Thomson Reuters 4 Jun 2016

8. BEASg IT Department

BEA IT Security Awareness oleh Thomson Reuters 4 Jun 2016



37


Insider Trading – Game-Based Assessment oleh Thomson Reuters 6 Jun 2016


Kod Tatalaku BEA (Ulangan) 29 Jun 2016


Kod Tatalaku – BEA (2016) 8 Ogos 2016

12. KPMg Hong Kong

Piawaian Pelaporan Kewangan Antarabangsa (IFRS) 9 21 September 2016

13. Monetary Authority of Singapore

Acara Bertaraf Tinggi untuk Perasmian Forum EU-Asia mengenai Kawal Selia Kewangan

14 Oktober 2016


Market Conduct (Global) oleh Thomson Reuters 15 November 2016


Financial Crime oleh Thomson Reuters 26 November 2016


Global Fraud Prevention oleh Thomson Reuters 26 November 2016

ringkasan

Affin Hwang - Affin Hwang Investment Bank Berhad

AHB - Affin Holdings Berhad

AIBIM - Association of Islamic Banking Institutions Malaysia

BEASg - The Bank of East Asia, Limited Singapore Branch

BNM - Bank Negara Malaysia

BOARDROOM - Boardroom Corporate Services (KL) Sdn Bhd

FIDE - Financial Institutions Directors’ Education

FPLC - Federation of Public Listed Companies Berhad

ICLIF - The Iclif Leadership and governance Centre

MINDA - Malaysian Directors Academy

PNB - Permodalan Nasional Berhad

PwC - Messrs. PricewaterhouseCoopers

SC - Securities Commission

SEACAN - The SEACAN Centre Kuala Lumpur

wIEF - world Islamic Economic Forum Foundation



38

mesyuarat dan Bekalan maklumat untuk lembaga Pengarah

Mesyuarat Lembaga Pengarah dijadualkan lebih awal pada permulaan tahun kalendar dengan mesyuarat-mesyuarat tambahan sekiranya perlu untuk menyemak laporan kemajuan prestasi kewangan Bank, strategi-strategi yang diluluskan, pelan-pelan perniagaan dan dasar-dasar penting selain untuk mempertimbangkan usul-usul perniagaan dan usul-usul lain yang memerlukan kelulusan Lembaga Pengarah. Bagi tahun kewangan berakhir 31 Disember 2016, dua puluh empat (24) mesyuarat Lembaga Pengarah telah diadakan iaitu 10 Mesyuarat Lembaga Pengarah terjadual dan 14 Mesyuarat Khas Lembaga Pengarah. Mesyuarat lazimnya diadakan di Bilik Lembaga Pengarah, Tingkat 19, Menara Affin, 80, Jalan Raja Chulan, 50200 Kuala Lumpur.

Lembaga Pengarah mempunyai akses penuh dan mengikut masa ke atas semua maklumat berkaitan menerusi agihan kertas mesyuarat dari perisian BoardPac yang diedarkan sebelum mesyuarat berlangsung bagi membolehkan para Pengarah mendapatkan penjelasan lanjut, sekiranya perlu, agar mereka mendapat makluman yang sewajarnya sebelum mesyuarat diadakan. Kertas Lembaga Pengarah merangkumi minit-minit mesyuarat Lembaga Pengarah yang lepas, minit-minit mesyuarat Jawatankuasa-jawatankuasa Lembaga Pengarah serta laporan-laporan yang berkaitan dengan isu-isu yang akan dibincangkan merangkumi semua aspek perbankan seperti kewangan, pelaburan, teknologi maklumat, operasi, sumber manusia dan hal-hal berkaitan pematuhan kawal selia. Pengarah Urusan/Ketua Pegawai Eksekutif memaklumkan kepada Lembaga Pengarah, mengikut masa yang sepatutnya, mengenai semua hal-hal penting yang memberi kesan ke atas prestasi Bank selain perkembangan-perkembangan penting lain.

Ahli-ahli Pengurusan Kanan dijemput menghadiri mesyuarat-mesyuarat Lembaga Pengarah untuk membentangkan dan memaklumkan Lembaga Pengarah mengenai hal-hal/laporan-laporan yang berkaitan dengan bidang tanggungjawab mereka jika dan apabila perlu.

Kesemua ahli Lembaga Pengarah mempunyai akses tanpa had ke atas maklumat yang tepat dan mengikut masa selain akses kepada khidmat dan nasihat Setiausaha Syarikat, yang bertanggungjawab memastikan prosedur-prosedur mesyuarat Lembaga Pengarah dan semua peraturan dan kawal selia yang berkaitan dipatuhi.

Prosedur disediakan untuk para Pengarah yang ingin mendapatkan khidmat nasihat ahli profesional bebas di atas perbelanjaan Bank. Bank juga menyediakan akses penuh untuk Lembaga Pengarah mendapatkan bahan-bahan dan maklumat yang diperlukan termasuk khidmat Setiausaha Syarikat bagi membolehkan Lembaga Pengarah memenuhi tugas dan tanggungjawab khusus mereka.

Komitmen Lembaga Pengarah dalam melaksanakan tugas dan tanggungjawab mereka ditegaskan menerusi kehadiran mereka ke mesyuarat-mesyuarat Lembaga Pengarah yang diadakan sepanjang tahun kewangan berakhir 31 Disember 2016 seperti berikut:

Bil. nama Pengarah



1. YBhg. Jen. Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara) Pengerusi/Pengarah Bukan Bebas Bukan Eksekutif

24 24

2. YBhg. Tan Sri Dato’ Seri Lodin Bin wok Kamaruddin (Melengkapkan tempoh pegangan jawatan pengarah bersama Bank berkuatkuasa 4 Oktober 2016)

14 19

3. Mr. Aubrey Li Kwok-Sing Pengarah Bukan Bebas Bukan Eksekutif

9 24

4. Mr. Tang Peng wah Pengarah Bukan Bebas Bukan Eksekutif (Pengarah Alternatif kepada Mr. Aubrey Li Kwok-Sing)

13 24

5. En. Mohd Suffian Bin Haji Haron ^Pengarah Bukan Bebas Bukan Eksekutif

24 24

6. YBhg. Tan Sri Dato’ Seri Mohamed Jawhar ^Pengarah Bukan Bebas Bukan Eksekutif

23 24

7. YBhg. Tan Sri Mohd ghazali Bin Mohd Yusoff Pengarah Bebas Bukan Eksekutif

24 24

8. En. Abd Malik Bin A Rahman Pengarah Bebas Bukan Eksekutif

24 24




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imBuhan Para Pengarah

Bank menyedari kepentingan untuk menarik dan mengekalkan minat para Pengarah yang berkaliber tinggi dengan kemahiran, kelayakan dan pengalaman yang diperlukan untuk pengawasan berkesan oleh Lembaga Pengarah ke atas aktiviti-aktiviti dan hal ehwal perniagaan Bank.

Bank percaya bahawa aspek yang perlu diberi perhatian oleh Lembaga Pengarah agar ia kekal efektif dalam menjalankan tugas-tugas dan tanggungjawabnya adalah penetapan pakej imbuhan yang adil dan komprehensif yang bersesuaian dengan kepakaran, kemahiran, tanggungjawab dan risiko-risiko yang diambil oleh pengarah sebuah institusi kewangan.

Penetapan pakej imbuhan bagi para Pengarah Bukan Eksekutif (NED) termasuk Pengerusi bukan eksekutif adalah ditentukan sepenuhnya oleh Lembaga Pengarah berdasarkan cadangan yang dibuat oleh BRC selepas melakukan tanda aras bebas berbanding rakan-rakan sejawat luar.

Pakej imbuhan bagi para Pengarah Bukan Eksekutif adalah kompetitif dengan industri dan konsisten dengan dasar perniagaan Bank di mana tahap tanggungjawab mereka dihubungkaitkan dengan sumbangan yang mereka berikan terhadap keberkesanan fungsi Lembaga Pengarah. Emolumen untuk para Pengarah bukan eksekutif terdiri daripada tiga (3) komponen – yuran tahunan sebagai ahli Lembaga Pengarah, elaun untuk kehadiran ke mesyuarat, dan yuran jawatankuasa.

Imbuhan untuk Pengarah Urusan/Ketua Pegawai Eksekutif terdiri daripada gaji, elaun, bonus dan lain-lain manfaat lazim yang wajar. Sebarang semakan gaji mengambilkira kadar di pasaran dan prestasi individu tersebut serta Bank. Sebahagian daripada pakej imbuhan Pengarah Urusan/Ketua Pegawai Eksekutif boleh diubah bergantung kepada prestasi Bank semasa tahun kewangan, yang ditentukan berdasarkan Penunjuk Prestasi Utama yang diselaraskan dengan objektif korporat, dan diluluskan oleh Lembaga Pengarah.

Sejajar dengan tadbir urus korporat yang baik, Lembaga Pengarah telah memaklumkan hasratnya untuk menyemak imbuhan para Pengarah secara berkala. Rangka kerja imbuhan yang sedia ada adalah sejajar dengan amalan keseluruhan Kumpulan AFFIN Holdings berhubung pampasan dan manfaat. Pengarah Urusan/Ketua Pegawai Eksekutif tidak mengambil sebarang bahagian dalam penentuan imbuhannya sendiri. Lembaga Pengarah menentukan imbuhan para Pengarah Bukan Eksekutif.

Emolumen para Pengarah dibentangkan dalam nota berkaitan di dalam penyata kewangan sebagai jumlah agregat, bagi mematuhi rang undang-undang berkaitan.

Pemegang saham

Bank adalah anak syarikat milik penuh AFFIN Holdings Berhad, sebuah syarikat yang disenaraikan di dalam Bursa Malaysia Securities Berhad.

mesyuarat agung tahunan (agm)

Laporan Tahunan dan penyata kewangan bagi tahun berakhir 31 Disember 2015 telah dibentangkan di AgM ke-40 pada 22 Mac 2016. Begitu juga, Laporan Tahunan dan penyata kewangan bagi tahun berakhir 31 Disember 2016 akan dibentangkan di AgM ke-41 pada hari Khamis, 30 Mac 2017.



40

1. urus taDBir korPorat & Pemerhatian lemBaga Pengarah

a. Lembaga Pengarah menyedari dan melaksanakan tanggungjawab penuh dalam mempromosikan urus tadbir korporat yang baik dan memastikan kemantapan sistem kawalan dalaman dan amalan-amalan pengurusan risiko dikekalkan dalam Kumpulan AFFINBANK.

b. Lembaga Pengarah berpendapat bahawa sistem kawalan dalaman yang diinstitusikan oleh unit-unit operasi Kumpulan bagi tahun di bawah tinjauan dan sehingga tarikh laporan tahunan adalah mantap dan mencukupi bagi melindungi pelaburan pemegang saham, kepentingan para pelanggan dan aset-aset Kumpulan.

c. walau bagaimanapun, penilaian berterusan tetap dijalankan bagi memastikan keberkesanan, kecukupan dan integriti sistem tersebut. Prosedur-prosedur kawalan direka bagi menguruskan dan bukannya untuk menghapuskan sepenuhnya kesemua risiko-risiko kegagalan dalam mencapai objektif-objektif perniagaan dan ia hanya boleh menyediakan jaminan munasabah dan bukannya mutlak dalam menangani kesilapan penting, kerugian, penipuan atau kejadian-kejadian di luar jangkaan.

d. Lembaga Pengarah bermesyuarat secara kerap bagi membincangkan perkara-perkara berkaitan sistem kawalan dalaman yang merangkumi antara lainnya kewangan, kecairan, modal, perjalanan operasi, kredit, teknologi maklumat, pematuhan, prosedur-prosedur pengurusan risiko dan kawalan.

e. Lembaga Pengarah menambah peranan Jawatankuasa Audit Lembaga Pengarah (BAC) dan Jawatankuasa Pengurusan Risiko Lembaga Pengarah (BRMC) bagi merangkumi tanggungjawab penyeliaan ke atas kawalan dalaman dan strategi-strategi pengurusan risiko, dasar-dasar dan lain-lain perkara berkaitan risiko.

f. BAC dan BRMC terdiri daripada Pengarah Bebas Bukan Eksekutif.

g. Laporan-laporan kerap yang diterima daripada pihak pengurusan Kumpulan mengenai prestasi kewangan, statistik operasi utama, pematuhan perundangan dan kawal selia, ketidakpatuhan undang-undang atau kawalan selia, aktiviti-aktiviti yang tidak dibenarkan serta penipuan akan dinilai oleh Lembaga Pengarah.

2. Pelan Perniagaan Dan moDal termasuk BelanJawan

a. Pelan perniagaan dan belanjawan kewangan tahunan bagi Kumpulan AFFINBANK dibentangkan dan diluluskan oleh Lembaga Pengarah.

b. Satu rangka kerja dan proses berstruktur berkaitan perbelanjaan modal dan perolehan telah disediakan.

c. Sasaran modal dalaman ditetapkan setiap tahun.

d. Varians di antara keputusan sebenar dan keputusan yang disasarkan dibentangkan kepada Lembaga Pengarah secara berkala bagi membolehkan maklumbalas dan langkah-langkah pembetulan yang sewajarnya diambil bagi mengurangkan risiko.

3. Jawatankuasa auDit lemBaga Pengarah Dan auDit Dalaman kumPulan (“gia”)

a. Audit Dalaman Kumpulan menyemak secara kerap proses-proses dan aktiviti-aktiviti perniagaan dan teknologi maklumat bagi menilai keberkesanan kawalan dalaman dan bagi menegaskan risiko-risiko penting yang memberi kesan kepada Kumpulan. BAC menjalankan penilaian tahunan ke atas kecukupan skop kerja dan sumber-sumber Bahagian Audit Dalaman Kumpulan.

b. BAC menilai dan berbincang secara kerap dengan pihak pengurusan mengenai langkah-langkah yang diambil bagi menangani isu-isu kawalan dalaman yang dikenalpasti oleh Audit Dalaman Kumpulan, juruaudit luar dan badan-badan kawal selia.

c. Kesemua penemuan penting oleh gIA, juruaudit luar dan badan-badan kawal selia dilaporkan kepada BAC untuk penilaian dan perbincangan dan kemudian dibawa kepada perhatian Lembaga Pengarah.

d. BAC menerusi gIA akan membuat susulan dan memantau status tindakan-tindakan yang disarankan oleh Audit Dalaman Kumpulan, juruaudit luar dan badan-badan kawal selia. Selain itu, BAC juga boleh mengarahkan siasatan bagi sebarang kejadian atau perkara khusus yang dianggap telah melanggar dasar-dasar dalaman berkaitan kerahsiaan atau kesalahan kewangan yang mempunyai kesan penting ke atas Kumpulan.

e. Penemuan berkaitan hal-hal Syariah dibawa kepada perhatian Jawatankuasa Syariah.

Penyata Pengurusan Risiko & Kawalan Dalaman


41

f. gIA menjalankan program-program kesedaran/latihan secara berterusan berkaitan kawalan dan pematuhan termasuk program-program pensijilan kawalan bagi memperkukuhkan lagi pengetahuan kakitangan (di dalam & antara jabatan) dalam usaha mencipta persekitaran kawalan dan pematuhan yang mantap.

g. Kesemua urusniaga pihak berkaitan dan yuran-yuran berkaitan audit dan bukan audit yang dicadangkan oleh juruaudit luar atau Ketua Pegawai Kewangan (CFO) akan disemak oleh BAC.

4. rangka kerJa Pengurusan risiko

a. Jawatankuasa Pengurusan risiko lembaga Pengarah (BrmC) • GBRMCtelahditubuhkandantanggungjawabnyaantaralainmerangkumipenyeliaankeberkesananpelaksanaan

rangka kerja Pengurusan Risiko Seluruh Perusahaan.

b. Pengurusan risiko • PenilaianRisikodiwujudkanbagimenyediakanprosesmengenalpastirisiko-risikopentingKumpulan,darisegi

pandang impak ke atas kedudukan kewangan dan reputasi Kumpulan. • Kaedah-kaedahpenilaianrisikoyangkonsistendanditerimatelahdiperkenalkanbagimenilaiKecairan,Kedudukan

Modal, Pengurusan Aset dan Liabiliti serta lain-lain ukuran berkaitan.

c. struktur urus tadbir risiko • StrukturUrusTadbirRisikodiselaraskanbagisemuaunit-unitperniagaandananak-anaksyarikatdalamKumpulan.

Penyelarasan ini dilaksanakan menerusi garis arus Rangka Kerja Risiko, Dasar-dasar dan Struktur Organisasi bagi menerap dan mempertingkatkan pengurusan risiko dan budaya risiko.

d. Dasar-dasar dan Prosedur urus tadbir risiko • Dasar-dasardanprosedurPengurusanRisikodisemakdandikemaskinisecarakerapbagimemastikankedua-

duanya kekal relevan kepada keperluan perniagaan terkini serta kehendak-kehendak kawal selia terkini/berkaitan.

e. Dasar Pelaporan salah laku • Dasarinimenyediakansaluranbagikakitanganuntukmelaporkankejadian-kejadiansalahamal,salahlakudan

ketidakpatuhan terhadap dasar-dasar Kumpulan dalam cara yang selamat dan tertutup.

f. Pengurusan risiko operasi • ProsesinidibantuolehRisikoKumpulan. • PenilaianKendiriKawalanRisiko(RCSA)telahdilaksanakanbagimembolehkanpihakpengurusanmengenalpasti

dan menilai risiko-risiko di bawah pengawasan dan kawalannya secara berterusan. • IniberperanansebagaititikpencetusbagimenentukanPenunjukRisikoUtama(KRI)yangakandigunapakaidan

bagi memantau pendedahan risiko operasi.

g. Sebarang kebimbangan dan perlanggaran pematuhan akan dibawa kepada perhatian Ketua Pegawai Eksekutif Kumpulan dan Jawatankuasa Pengurusan Risiko Lembaga Pengarah (BRMC). Perkara yang sama akan dibawa kepada perhatian Lembaga Pengarah.

h. Risiko operasi disemak dan dipantau oleh Pengurusan Risiko Kumpulan. Sebarang kepincangan akan dibawa kepada perhatian Jawatankuasa Pengurusan Risiko Operasi Kumpulan (gORMC), BRMC, BAC dan Jawatankuasa Syariah (SC) bagi hal-hal berkaitan Syariah. Latihan yang berkaitan dengan Risiko Operasi seperti Akta Pencegahan Pengubahan wang Haram (AMLA), Dasar Pelaporan Salah Laku, Pelan Kesinambungan Perniagaan dan sebagainya disediakan oleh Bahagian Pengurusan Risiko Kumpulan (gRMD).

5. rangka kerJa Pematuhan

a. Kumpulan AFFINBANK memiliki Rangka Kerja Pematuhan. Fungsi utama pematuhan adalah untuk membantu dalam khidmat nasihat, memantau dan mendidik unit-unit/entiti-entiti perniagaan dan sokongan agar bertindak menurut undang-undang, kawal selia dan garis panduan. Selaras dengan urus tadbir yang baik, Jabatan Pematuhan bebas membuat laporan kepada Lembaga Pengarah.

• RangkaKerjaPematuhan:Dasar-dasardanProsedur - Dasar-dasar dan prosedur disemak secara berkala atau apabila diperlukan bagi mencerminkan amalan-

amalan terkini dan kehendak-kehendak perundangan/kawal selia yang berkaitan.



42

• Latihan - Latihan berjadual dijalankan secara kerap bagi mencipta kesedaran di kalangan kakitangan.

• MatriksPematuhan - Matriks pematuhan telah diwujudkan. Ia adalah satu dokumen yang merangkumi undang-undang, kawal selia

dan garis panduan berkaitan yang digunapakai untuk unit-unit/entiti-entiti perniagaan dan sokongan.

• PelanPematuhan - Jabatan Pematuhan telah merangka pelan pematuhan yang akan dibentangkan dan diluluskan oleh Lembaga

Pengarah.

• AktaPencegahanPengubahanWangHaram/PencegahanPembiayaanKeganasan(AML/CFT) - Fungsi pejabat AMLA Kumpulan iaitu satu unit dalam Bahagian Pengurusan Risiko Kumpulan bertugas

menguruskan dasar-dasar dan prosedur AML/CFT Kumpulan yang diluluskan oleh BRMC.

6. rangka kerJa urus taDBir syariah

a. Jawatankuasa Syariah bertanggungjawab menyelia semua hal-hal berkaitan Syariah dalam Kumpulan. Jawatankuasa Syariah, antara lainnya, memastikan bahawa peraturan-peraturan Syariah berkaitan perbankan Islam serta produk-produk dan perkhidmatan pasaran modal mematuhi asas-asas Syariah dan resolusi-resolusi oleh badan-badan Syariah yang berkaitan.

b. Jawatankuasa Syariah bertindak sebagai penasihat bagi hal-hal berkaitan Syariah kepada semua unit-unit perniagaan dan sokongan di dalam kumpulan dalam menjalankan aktiviti-aktiviti kewangan Islam mereka.

c. Rangka Kerja Urus Tadbir Syariah (SgF) adalah pelan pengurusan Syariah bagi keseluruhan syarikat yang terdiri daripada mekanisma urus tadbir Syariah yang akan dilaksanakan oleh bahagian-bahagian berkaitan di seluruh Kumpulan. Pelaksanaan SgF adalah selaras dengan kehendak-kehendak BNM yang dilaksanakan menerusi fungsi-fungsi berikut dalam anak-anak syarikat:

• PenyelidikanSyariah - Unit Penyelidikan Syariah terdiri daripada pegawai-pegawai Syariah berkelayakan yang menjalankan proses

pra-pelulusan produk, penyelidikan, pemeriksaan isu-isu untuk penyerahan dan tugas-tugas pentadbiran yang berkaitan dengan Jawatankuasa Syariah.

• SemakanSyariah - Semakan Pematuhan Syariah yang terdiri daripada pegawai-pegawai Syariah berkelayakan,

bertanggungjawab melaksanakan fungsi semakan pematuhan Syariah.

- Semakan Pematuhan Syariah telah mewujudkan Manual Dasar dan Prosedur yang membentangkan fungsi semakan pematuhan Syariah, merangkumi penilaian lazim ke atas pematuhan Syariah dalam aktiviti-aktiviti dan operasi anak-anak syarikat, termasuk memeriksa dan menilai tahap pematuhan Syariah, langkah-langkah pembetulan bagi menyelesaikan ketidakpatuhan serta mekasnisma kawalan bagi mengelak kejadian sama berulang.

• PengurusanRisikoSyariah - Risiko Ketidakpatuhan Syariah (SNC) dikenalpasti sebagai salah satu risiko penting di bawah perniagaan

perbankan Islam. Dalam hal ini, Kumpulan AFFINBANK telah menubuhkan satu pasukan Pengurusan Risiko Syariah bagi membantu pendekatan yang sistematik dan konsisten dalam menguruskan SNC.

• AuditSyariah - Bahagian Audit Dalaman Kumpulan memberi jaminan bebas ke atas kecekapan dan keberkesanan sistem

kawalan dalaman serta dasar-dasar dan prosedur yang dilaksanakan oleh pihak pengurusan yang mengurus tadbir produk-produk dan perkhidmatan Islam. Penemuan berkaitan produk-produk dan perkhidmatan Syariah dilaporkan kepada Jawatankuasa Syariah bagi setiap anak syarikat dan BAC.



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7. Proses Peningkatan

a. Saluran-saluran komunikasi dan prosedur telah diwujudkan bagi membolehkan laporan segera dibuat kepada Lembaga Pengarah dan tahap pengurusan yang sewajarnya mengenai sebarang kegagalan atau kelemahan kawalan yang ketara yang dikenalpasti berserta butiran tindakan pembetulan yang diambil.

b. Penjejak Tindakan Pembetulan berkenaan penyelesaian bagi isu-isu/penemuan yang dibangkitkan oleh audit luar, Audit Dalaman Kumpulan dan badan-badan kawal selia, jika ada, juga telah dibawa kepada perhatian Mesyuarat Jawatankuasa Pengurusan Kumpulan (MCM), BAC dan Lembaga Pengarah.

8. sumBer manusia

a. Kumpulan mengiktiraf bahawa pembangunan insan adalah mustahak dalam memastikan kakitangan mempunyai kecekapan yang sewajarnya dalam menjalankan tugasan mereka serta berkebolehan membuat penilaian yang terbaik dalam memenuhi tanggungjawab tersebut.

b. Dasar-dasar dan Prosedur Sumber Manusia (HRPP)

• HRPPdiwujudkandanmemberikejelasankepadaorganisasidalamsemuaaspekpengurusansumbermanusiadalam Kumpulan.

• Secaraberkala,HRPPdisemakbagimemastikandasar-dasardanprosedurkekalrelevandanbahawakawalanyang sewajarnya wujud bagi menangani risiko-risiko operasi. Sebarang perubahan, jika ada, disampaikan kepada semua kakitangan menerusi intranet.

c. Sumber Manusia mewujudkan pelbagai inisiatif dan program latihan bagi menangani kehendak modal insan, termasuk pengurusan pengetahuan.

d. Satu sistem penilaian berdasarkan prestasi bagi menilai dan memberi ganti rugi/ganjaran sewajarnya kepada kakitangan telah diwujudkan. Penilaian prestasi kakitangan dijalankan setiap tahun.

e. Proses pengambilan termasuk proses saringan diwujudkan.

f. Kemudahan-kemudahan e-pembelajaran dalam anak-anak syarikat memberikan kebebasan kepada kakitangan dari segi masa dan ruang untuk belajar dan mengemaskini pengetahuan mereka dan pada masa yang sama memenuhi kehendak organisasi yang memerlukan kakitangannya di setiap lokasi agar berkecekapan dalam bidang-bidang utama.

9. Dasar-Dasar/ProseDur termasuk Pemerkasaan Dan Pelulusan Dasar-Dasar BaDan Berkuasa

a. Dasar-dasar dan Prosedur-prosedur yang merangkumi semua fungsi telah dibangunkan di keseluruhan Kumpulan dan kelulusan telah diperolehi daripada jawatankuasa-jawatankuasa yang berkaitan serta Lembaga Pengarah. Dasar-dasar dan prosedur-prosedur ini dikemaskini secara kerap bagi merangkumkan perubahan-perubahan yang dibuat ke atas sistem, persekitaran kerja dan garis panduan yang dikeluarkan oleh badan-badan kawal selia.

b. Pemerkasaan dan Pelulusan Dasar-dasar Badan Berkuasa

Terdapat rangka kerja yang jelas dan pemerkasaan yang diluluskan oleh Lembaga Pengarah anak-anak syarikat utama untuk pemerolehan dan pelupusan hartanah, loji dan peralatan, penganugerahan tender, permohonan untuk perbelanjaan modal, hapus kira item-item operasi dan kredit, pelulusan perbelanjaan am termasuk sumbangan derma dan sebagainya.

10. rumusan

a. Penyata Pengurusan Risiko dan Kawalan Dalaman disemak oleh juruaudit luar sejajar dengan Panduan Amalan yang Dicadangkan (RPg) 5 (Disemak) oleh Institut Juruaudit Dalaman Malaysia (MIA).

b. Lembaga Pengarah menerusi BAC, BRMC dan Jawatankuasa Syariah telah menyemak keberkesanan Rangka Kerja Urus Tadbir Syariah (SgF), Rangka Kerja Kawalan Dalaman dan Pengurusan Risiko dan beroperasi secukupnya serta berkesan dalam semua aspek-aspek penting semasa tahun kewangan di bawah tinjauan berdasarkan kehendak-kehendak Syariah, Pengurusan Risiko dan sistem Kawalan Dalaman yang digunapakai oleh Kumpulan.

c. Dengan mengambil kira jaminan daripada pihak pengurusan dan input daripada penyedia-penyedia jaminan yang berkaitan, adalah dirumuskan bahawa Sistem Kawalan Dalaman dan Pengurusan Risiko Kumpulan beroperasi dengan secukupnya dan berkesan dalam melindungi pelaburan pemegang saham dan aset-aset Kumpulan AFFINBANK.



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Lembaga Pengarah berbesar hati membentangkan Laporan Jawatankuasa Audit Lembaga Pengarah (BAC) bagi Tahun Kewangan berakhir 31 Disember 2016.

Jawatankuasa auDit lemBaga Pengarah

BAC terdiri daripada para Pengarah seperti berikut:

terma-terma ruJukan

1. oBJektif

Jawatankuasa Audit Lembaga Pengarah (BAC) ditubuhkan sebagai Jawatankuasa Lembaga Pengarah. Objektif utama BAC adalah untuk:

a. Mewujudkan rangka kerja dan menyelia fungsi audit Kumpulan AFFINBANK;

b. Membantu Lembaga Pengarah memenuhi tanggungjawab berkanun dan fidusiari dalam memastikan bahawa Urus Tadbir Korporat yang baik, sistem kawalan dalaman, kod tatalaku dan pematuhan kepada kehendak-kehendak kawal selia dan berkanun dikekalkan dalam Kumpulan AFFINBANK;

c. Melaksana dan menyokong fungsi Lembaga Pengarah dengan menegaskan kebebasan dan objektiviti Bahagian Audit Dalaman Kumpulan (gIA); dan

d. Memastikan bahawa fungsi-fungsi Audit Dalaman dan Luar dijalankan dengan sebaik-baiknya dan cadangan-cadangan audit dilaksanakan dengan berkesan.

2. komPosisi Dan Perlantikan

a. BAC harus memiliki sekurang-kurangnya tiga (3) ahli yang mana kesemuanya adalah Pengarah Bukan Eksekutif dengan majoriti daripada mereka adalah Pengarah Bebas. Pengerusi Jawatankuasa ini adalah seorang Pengarah Bebas Bukan Eksekutif. Tiada Pengarah gantian akan dilantik oleh BAC.

b. Sekurang-kurangnya satu (1) ahli Jawatankuasa ini adalah seorang akauntan berkelayakan.

c. Ahli-ahli BAC dan Pengerusinya harus dilantik oleh Lembaga Pengarah berdasarkan cadangan Jawatankuasa Pencalonan.

d. Lembaga Pengarah harus menyemak Terma-terma Rujukan dan prestasi BAC serta setiap ahlinya sekurang-kurangnya sekali setiap tiga (3) tahun bagi menentukan sama ada BAC telah melaksanakan tanggungjawabnya menurut Terma-terma Rujukannya.

Laporan Jawatankuasa Audit Lembaga Pengarah

yBhg. tan sri Dato’ sri abdul aziz abdul rahmanPengerusi/Pengarah Bebas Bukan Eksekutif (Ditugaskan semula sebagai Pengarah Bukan Bebas Bukan Eksekutif dan berhenti daripada jawatan Pengerusi berkuatkuasa 25 Oktober 2016)

yBhg. tan sri Dato’ seri mohamed JawharAhli/Pengarah Bukan Bebas Bukan Eksekutif

yBhg. tan sri mohd ghazali mohd yusoffAhli/Pengarah Bebas Bukan Eksekutif (Pengerusi berkuatkuasa 25 Oktober 2016)

Prof. madya Dr. said BouheraouaAhli/Pengarah Bebas Bukan Eksekutif


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e. Jika seorang ahli Jawatankuasa ini meletak jawatan atau untuk sebarang sebab berhenti daripada menjadi ahli dalam BAC yang mana menyebabkan ketidakpatuhan kepada syarat-syaratnya, dalam tempoh tiga (3) bulan daripada peristiwa tersebut, ahli baharu bagi menggantikan bilangan terbabit harus dilantik.

f. BAC tidak mempunyai kuasa eksekutif.

3. kuorum

Korum mesyuarat bagi Jawatankuasa ini adalah dua pertiga (2/3) daripada bilangan ahli Jawatankuasa di mana majoriti yang hadir adalah Pengarah Bebas Bukan Eksekutif. Jika Pengerusi tidak dapat menghadiri mana-mana mesyuarat, mana-mana ahli Bebas Bukan Eksekutif yang hadir akan bertindak sebagai Pengerusi. Kesemua resolusi Jawatankuasa akan digunapakai berdasarkan undian majoriti yang ringkas, di mana setiap ahli mempunyai satu (1) undi. Dalam kes di mana terdapat kesetaraan undi, Pengerusi akan membuat undian kedua atau undian penentu.

4. kehaDiran mesyuarat

a. Notis mesyuarat akan diberikan kepada ahli-ahli BAC sekurang-kurangnya tujuh (7) hari sebelum mesyuarat berlangsung. Agenda dan kertas-kertas BAC akan diedarkan sekurang-kurangnya lima (5) hari sebelum setiap mesyuarat berlangsung.

b. Ketua Audit Dalaman Kumpulan dijemput menghadiri semua mesyuarat Jawatankuasa Audit Lembaga Pengarah.

c. Jawatankuasa ini boleh menjemput ahli-ahli Pengurusan, Juruaudit Luar atau mana-mana kakitangan yang berkenaan untuk mengambil bahagian dalam mesyuarat BAC di mana wajar bagi melaksanakan tanggungjawab Jawatankuasa.

d. Kesemua Minit Mesyuarat BAC yang asli adalah dalam simpanan Setiausaha Syarikat dan akan ditandatangani oleh Pengerusi mesyuarat yang diadakan atau oleh Pengerusi mesyuarat yang seterusnya. Minit-minit yang telah ditandatangani adalah bukti konklusif tanpa memerlukan bukti-bukti lanjut mengenai perkara-perkara yang tertera. Minit-minit bagi setiap mesyuarat akan diedarkan kepada ahli-ahli BAC dan semua ahli-ahli lain dalam Lembaga Pengarah.

5. kekeraPan mesyuarat

a. BAC akan bermesyuarat sekurang-kurangnya empat (4) kali dalam setiap tahun kewangan dengan objektif untuk menyemak laporan audit dalaman dan laporan kewangan Kumpulan AFFINBANK. BAC melengkapi perkara ini menerusi mesyuarat-mesyuarat yang kerap dengan Pengurusan Kanan serta Juruaudit Dalaman dan Luar bagi menyemak keadaan keseluruhan urus tadbir dan kawalan dalaman Kumpulan AFFINBANK. Bagi memastikan bahawa isu-isu kritikal ditekankan kepada semua ahli Lembaga Pengarah mengikut ketetapan masa, di mana wajar, mesyuarat-mesyuarat BAC akan diadakan sebelum mesyuarat-mesyuarat Lembaga Pengarah. BAC, menerusi Pengerusinya, akan memberi laporan kepada Lembaga Pengarah selepas setiap mesyuarat di mana isu-isu tersebut akan dibincangkan dengan lebih lanjut, jika perlu.

b. Selain bilangan minimum empat (4) mesyuarat BAC dalam setahun, mesyuarat-mesyuarat tambahan akan dijadualkan apabila dianggap perlu oleh Pengerusi BAC atau majoriti ahli-ahli Jawatankuasa ini.

6. kuasa

BAC diberikan kuasa oleh Lembaga Pengarah untuk:

a. Menyiasat sebarang aktiviti atau perkara dalam rangkuman Terma-terma Rujukannya.

b. Mendapatkan khidmat nasihat perundangan luar atau dari badan-badan profesional bebas lain atau sumber-sumber lain yang perlu bagi melaksanakan tanggungjawabnya;

c. Memiliki Akses penuh dan tanpa had kepada sebarang maklumat berkaitan Kumpulan AFFINBANK;

d. Mengekalkan saluran komunikasi langsung dengan Juruaudit Luar, Juruaudit Dalaman dan semua kakitangan Kumpulan AFFINBANK;

e. Mengadakan mesyuarat dengan Juruaudit-juruaudit Luar dan Dalaman tanpa kehadiran ahli-ahli Jawatankuasa Pengurusan sekurang-kurangnya dua kali setahun; dan

f. Melaporkan kepada Badan-badan Kawal Selia mengenai perkara-perkara yang telah dilaporkannya kepada Lembaga Pengarah tetapi belum ditangani dengan memuaskan yang mana menyebabkan perlanggaran kepada peraturan-peraturan kawal selia.



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7. fungsi Dan tugas

Fungsi dan tugas BAC adalah merangkumi, tetapi tidak terhad kepada yang berikut:

a. Menyemak Keputusan Kewangan Suku Tahunan dan Penyata Kewangan Akhir Tahun sebelum mendapatkan kelulusan Lembaga Pengarah dengan memberi tumpuan ke atas perkara-perkara berikut:

• PerubahanataupelaksanaandasarPerakaunanpenting;

• Peristiwa-peristiwapentingdanluarbiasaatausebarangandaianusahaberterusan;

• Pelarasanpentingyangtimbuldaripadaaudit;dan

• PematuhankepadapiawaianPerakaunan,kehendak-kehendakpendedahandanlain-lainkehendakperundangan.

b. Untuk bertindak mengikut permintaan Lembaga Pengarah untuk menyiasat dan melaporkan sebarang isu kebimbangan seperti yang diutarakan kepada pihak Pengurusan Kumpulan.

c. Untuk mendapatkan khidmat nasihat dari badan-badan professional luar dan menjemput pihak luar dengan pengalaman yang berkaitan untuk menghadiri mesyuarat, tertakluk kepada kelulusan badan kawal selia yang berkaitan, di mana perlu.

d. Untuk mencadangkan kepada Lembaga Pengarah mengenai perlantikan Juruaudit Luar dan yuran audit mereka.

e. Untuk menyemak bersama Juruaudit Luar mengenai skop rancangan audit, sistem kawalan dalaman, laporan audit (termasuk surat Pengurusan dan maklumbalas Pengurusan), bantuan yang diberikan oleh Pengurusan dan sebarang penemuan atau tindakan yang diambil.

f. Untuk bermesyuarat dengan Juruaudit Luar tanpa kehadiran ahli-ahli pengurusan sekurang-kurangnya dua kali setahun.

g. Untuk menyemak cadangan bagi khidmat bukan audit yang diberikan oleh Juruaudit Luar atau pihak ketiga. Jika Juruaudit Luar terlibat, BAC bertanggungjawab memastikan bahawa penglibatan tersebut tidak menjejaskan kebebasan Juruaudit Luar dalam peranan mereka sebagai Juruaudit Berkanun bagi Kumpulan AFFINBANK.

h. Untuk menyemak kecukupan dan keberkesanan persekitaran kawalan Kumpulan AFFINBANK.

i. Untuk mempertimbangkan penemuan-penemuan penting hasil siasatan dalaman serta maklumbalas Pengurusan.

j. Untuk menyemak sebarang penemuan hasil pemeriksaan badan-badan kawal selia serta maklumbalas Pengurusan.

k. Untuk menyemak dasar-dasar dan amalan-amalan sedia ada dalam Kumpulan AFFINBANK bagi mengawal selia dan menggaris arus perkara yang sama untuk memastikan keseragaman.

l. Untuk memastikan Akaun-akaun disediakan mengikut masa dan ketepatan yang sepatutnya dengan semakan yang kerap ke atas kecukupan peruntukan untuk menangani hutang lapuk dan ragu serta luar jangka.

m. Untuk menyemak sebarang urusniaga pihak berkaitan yang mungkin timbul dari dalam Kumpulan AFFINBANK.

n. Untuk menyemak kecukupan skop, fungsi-fungsi, kecekapan, sumber-sumber dan prestasi Bahagian Audit Dalaman Kumpulan serta kuasa yang sewajarnya bagi melaksanakan tugasnya. Semakan ini mungkin merangkumi rancangan kerja audit, program-program audit dalaman, keputusan bagi kerja yang telah disiapkan serta pelaksanaan Pengurusan bagi tindakan-tindakan yang telah dipersetujui seperti yang dicadangkan oleh Ketua Audit Dalaman Kumpulan (gIA). Di mana wajar, Jawatankuasa boleh mengarahkan Pengurusan untuk memperbaiki dan mempertingkatkan sistem kawalan dalaman dan prosedur-prosedur berdasarkan cadangan dan saranan Juruaudit Dalaman Kumpulan untuk penambahbaikan.



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8. mesyuarat Jawatankuasa auDit lemBaga Pengarah yang DiaDakan sePanJang tahun kewangan Berakhir 31 DisemBer 2016

Semasa Tahun Kewangan Berakhir 31 Disember 2016, sejumlah sembilan (9) mesyuarat BAC telah diadakan. Ahli-ahli BAC dan butiran kehadiran setiap ahli pada mesyuarat-mesyuarat tersebut adalah seperti berikut:

nama ahli Jawatankuasa kehadiran

YBhg. Tan Sri Mohd ghazali Mohd YusoffAhli/Pengarah Bebas Bukan Eksekutif(Dilantik sebagai Pengerusi berkuatkuasa 25 Oktober 2016)

9/9

YBhg. Tan Sri Dato’ Sri Abdul Aziz Abdul RahmanAhli/Pengarah Bebas Bukan Eksekutif(Ditugaskan semula sebagai Pengarah Bukan Bebas Bukan Eksekutif dan berhenti daripada jawatan Pengerusi berkuatkuasa 25 Oktober 2016)

9/9

YBhg. Tan Sri Dato’ Seri Mohamed JawharAhli/Pengarah Bebas Bukan Eksekutif

9/9

Prof. Madya Dr. Said BouheraouaAhli/Pengarah Bebas Bukan Eksekutif

7/9

BAC mematuhi prinsip-prinsip dan amalan-amalan terbaik yang dinyatakan dalam Kod Urus Tadbir Korporat Malaysia. Ahli-ahli BAC terdiri daripada individu-individu dengan pelbagai kemahiran, pengetahuan dan kaliber dalam menyediakan pemerhatian yang bebas, objektif dan berkesan.

Agenda mesyuarat BAC, kertas-kertas BAC dan laporan-laporan audit yang berkaitan diedarkan kepada ahli-ahli BAC lima (5) hari sebelum tarikh mesyuarat.

Juruaudit Luar Kumpulan AFFINBANK telah menghadiri tiga (3) mesyuarat BAC semasa tempoh dalam tinjauan. Terdapat perbincangan di antara BAC dan Juruaudit Luar mengenai isu-isu penting audit, perubahan dalam pelaksanaan dasar-dasar penting Perakaunan, pematuhan kepada piawaian Perakaunan dan lain-lain kehendak perundangan termasuk kehendak kawal selia dan isu-isu perniagaan yang ditekankan oleh mereka bagi Tahun Kewangan Berakhir 31 Disember 2016. BAC juga telah menyemak Pelan Audit Juruaudit Luar bagi Tahun Kewangan Berakhir 31 Disember 2016.

BAC telah mengadakan dua (2) mesyuarat tertutup bersama Juruaudit Luar tanpa kehadiran Pengurusan dan Juruaudit Dalaman pada 2016. Selain itu, Juruaudit Luar telah dijemput untuk menghadiri mesyuarat agung tahunan bagi menjawab pertanyaan para pemegang saham mengenai isu-isu berkaitan audit. BAC juga diberi Akses langsung dan tanpa had kepada Juruaudit Dalaman dan telah mengadakan perbincangan ad-hoc bersama Juruaudit Dalaman tanpa kehadiran Pengurusan.

Oleh kerana Lembaga Pengarah bertanggungjawab penuh ke atas pelaporan kewangan dan pengurusan keseluruhan Kumpulan AFFINBANK, Pengerusi Jawatankuasa Audit Lembaga Pengarah secara konsisten telah memberi taklimat kepada Lembaga Pengarah mengenai isu-isu yang dibincangkan pada mesyuarat-mesyuarat BAC manakala minit-minit mesyuarat BAC dibentangkan kepada Lembaga Pengarah untuk makluman dan tindakan Lembaga Pengarah di mana wajar.

Ahli-ahli BAC telah menghadiri beberapa latihan sepanjang Tahun Kewangan Berakhir 2016 untuk peningkatan berterusan.

9. rumusan aktiviti Jawatankuasa auDit lemBaga Pengarah

Jawatankuasa Audit Lembaga Pengarah telah menjalankan aktiviti-aktiviti berikut dalam pelaksanaan tugas dan tanggungjawabnya sepanjang Tahun Kewangan Berakhir 31 Disember 2016:

9.1 auDit luar

a. Menyemak Pelan Audit 2016 bagi memastikan skop kerja merangkumi secukupnya aktiviti-aktiviti Kumpulan AFFINBANK;

b. Menyemak penemuan-penemuan penting audit, perakaunan, percukaian dan lain-lain perkara yang dibangkitkan oleh juruaudit luar; dan

c. Menyemak dan menilai prestasi, objektiviti dan kebebasan Audit Luar sepanjang tahun tinjauan sebelum mencadangkan perlantikan semula mereka kepada Lembaga Pengarah.



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9.2 khiDmat Bukan auDit

Menyemak khidmat bukan audit yang diberikan oleh Juruaudit Luar atau pihak ketiga.

9.3 auDit Dalaman kumPulan

a. Menyemak dan meluluskan Pelan Tahunan Audit Dalaman Kumpulan (dicadangkan oleh Ketua Juruaudit Dalaman Kumpulan) dan Belanjawan Latihan bagi Tahun 2015 dalam memastikan bahawa skop yang mencukupi dan liputan yang komprehensif ke atas aktiviti-aktiviti audit dan aspek-aspek risiko yang kritikal telah dikenalpasti dan dirangkumi secukupnya;

b. Menyemak dan menilai kecukupan sumber-sumber dan kecekapan kakitangan Bahagian Audit Dalaman Kumpulan (gIAD) dalam melaksanakan pelan serta program-program audit yang digunakan dalam pelaksanaan tugas Juruaudit Dalaman bagi memastikan prestasi gIAD yang memuaskan;

c. Menyemak isu-isu kawalan dalaman yang dikenalpasti oleh gIAD, Juruaudit Luar dan Juruaudit Kawal Selia serta maklumbalas Pengurusan terhadap cadangan-cadangan audit dan pelaksanaan pelan-pelan tindakan yang dipersetujui dengan memberi perhatian kepada perkara-perkara berikut:

• Persekitarankawalan(integriti,nilai-nilaietikadankecekapanparapegawai)

• Aktiviti-aktivitikawalan(dasar-dasardanprosedur)

• Penilaianrisiko(mengenalpastidanmenilairisiko-risikoberkaitanbersertalangkah-langkahpencegahannya);dan

• Memantaustatustindakan-tindakanpembetulanyangdiambilolehPengurusanbagimembetulkansebarangkekurangan yang dikenalpasti oleh Audit Dalaman serta memastikan bahawa semua isu-isu telah diselesaikan secukupnya mengikut masa yang ditetapkan;

d. Menyemak laporan status aktiviti-aktiviti Audit Dalaman Kumpulan bagi Tahun Kewangan berakhir 31 Disember 2016 bagi memastikan semua aktiviti-aktiviti yang dirancang telah dilaksanakan dengan sempurna;

e. Menyemak rumusan penemuan audit oleh Juruaudit Dalaman entiti-entiti operasi yang utama bagi memastikan penemuan audit penting mereka terutamanya yang berkaitan penyiasatan, penipuan dan ketidakpatuhan terhadap kehendak-kehendak kawal selia dan berkanun telah ditangani dengan sewajarnya; dan

f. Menyemak Terma-terma Rujukan Jawatankuasa Audit Lembaga Pengarah dan Manual Audit Dalaman Kumpulan.

9.4 fungsi auDit Dalaman kumPulan

a. Audit Dalaman Kumpulan dipandu oleh Piagam Audit Dalaman Kumpulannya. Peranan utamanya adalah untuk membantu Jawatankuasa Audit Kumpulan dalam menjalankan tugas-tugas dan tanggungjawabnya dengan menyemak dan melaporkan secara bebas kecukupan dan integriti pengurusan risiko, kawalan dalaman dan proses-proses urus tadbir Kumpulan;

b. Audit Dalaman Kumpulan menggunapakai satu pendekatan berasaskan risiko dalam merancang dan melaksanakan audit, iaitu konsisten dengan rangka kerja Kumpulan dalam merekacipta, melaksana dan memantau sistem kawalan dalamannya;

c. Juruaudit dalaman kumpulan memantau secara dekat pelaksanaan cadangan-cadangan audit bagi mendapatkan jaminan bahawa semua kebimbangan berkaitan risiko dan kawalan telah ditangani dengan sempurna. Laporan audit dibentangkan kepada pihak pengurusan dan Jawatankuasa Audit Kumpulan;

d. Audit Dalaman Kumpulan bekerja rapat dengan juruaudit luar bagi memastikan isu-isu penting ditangani dengan sempurna dan diselesaikan mengikut ketetapan masa; dan

e. Jumlah kos Audit Dalaman Kumpulan bagi 2016 adalah RM4.3 juta.



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9.5 kePutusan kewangan

a. Menyemak bersama Pengurusan kanan keputusan kewangan tidak diaudit bagi suku tahun dan separuh tahun sebelum mencadangkannya kepada Lembaga Pengarah untuk kelulusan.

b. Menyemak bersama Pengurusan kanan dan Juruaudit Luar penyata kewangan tahunan Syarikat yang diaudit sebelum mencadangkannya kepada Lembaga Pengarah untuk kelulusan. Semakan mereka adalah tertumpu kepada perkara-perkara yang dinyatakan dalam Kehendak-kehendak, Akta-akta dan Piawaian-piawaian berikut:

• PeruntukanAktaSyarikat;

• AktaKhidmatKewangandanAktaKhidmatKewanganIslam;

• PiawaianPerakaunanyangberkaitandandiluluskandiMalaysia;dan

• Lain-lainkehendak-kehendakperundangandankawalseliayangberkaitan.

9.6 urusniaga Pihak Berkaitan

Menyemak urusniaga pihak berkaitan dan urusniaga pihak berkaitan yang berulang serta kesesuaian urusniaga-urusniaga tersebut bagi mengelak konflik kepentingan atau potensinya berlaku. Ini juga bagi memastikan bahawa keputusan dibuat untuk kebajikan syarikat dan pemegang sahamnya.

9.7 lain-lain

Menyemak Penyata Kawalan Dalaman dan Laporan Jawatankuasa Audit Lembaga Pengarah untuk rangkuman Laporan Tahunan 2016 sebelum mencadangkannya kepada Lembaga Pengarah untuk kelulusan.



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Rangkaian Cawangan

wilayah Persekutuan

1. Bangsar No. 4 & 6, Jalan Telawi 3, Bangsar Baru, 59100 Kuala Lumpur. Tel : 03-2283 5025 Faks : 03-2283 5028

2. Bangunan getah asli Tingkat Bawah, 148, Jalan Ampang, 50450 Kuala Lumpur. Tel : 03-2162 8770 Faks : 03-2162 8587

3. Batu Cantonment No. 840 & 842, Batu 4 3/4, Jalan Ipoh, 51200 Kuala Lumpur. Tel : 03-6258 7370 Faks : 03-6251 8214

4. Central ground & Mezzanine Floor, 80, Menara Affin, Jalan Raja Chulan, P.O.Box 12744, 50788 Kuala Lumpur. Tel : 03-2055 2222 Faks : 03-2070 7592

5. Jalan Bunus 133, Jalan Bunus, Off Jalan Masjid India, 50100 Kuala Lumpur. Tel : 03-2693 4686 Faks : 03-2691 3207

6. Jalan ipoh 468-11 & 468-11B, Batu 3, Jalan Ipoh, 51200 Kuala Lumpur. Tel : 03-4042 5554 Faks : 03-4042 4912

7. ltat ground Floor, Bangunan LTAT, Jalan Bukit Bintang, 55100 Kuala Lumpur. Tel : 03-2142 6311 Faks : 03-2148 0586

8. selayang 81-85, Jalan 2/3A, Pusat Bandar Utara, KM 12, Jalan Ipoh, 68100 Batu Caves, Kuala Lumpur. Tel : 03-6137 2053 Faks : 03-6138 7122

9. seri Petaling 10-12, Jalan Raden Tengah, Bandar Baru Seri Petaling, 57000 Kuala Lumpur. Tel : 03-9058 5600 Faks : 03-9058 8513

10. setapak 159 & 161, Jalan genting Kelang, P.O.Box 202, 53300 Setapak, Kuala Lumpur. Tel : 03-4023 0455 Faks : 03-4021 3921

11. taman maluri 250 & 252, Jalan Mahkota, Taman Maluri, 55100 Kuala Lumpur. Tel : 03-9282 7250 Faks : 03-9283 4380

12. taman midah 38 & 40, Jalan Midah 1, Taman Midah, Cheras, 56000 Kuala Lumpur. Tel : 03-9130 0366 Faks : 03-9131 7024

13. taman tun Dr. ismail 47 & 49, Jalan Tun Mohd Fuad 3, Taman Tun Dr. Ismail, 60000 Kuala Lumpur. Tel : 03-7727 9080 Faks : 03-7727 9543

14. wangsa maju No. 2 & 4, Jalan 1/27F, Kuala Lumpur Sub-Urban Centre, wangsa Maju, 53300 Kuala Lumpur. Tel : 03-4143 2814 Faks : 03-4143 3095

15. wisma Pertahanan g.05, Tingkat Bawah, wisma Pertahanan, Kementerian Pertahanan Malaysia, Jalan Padang Tembak, 50634 Kuala Lumpur. Tel : 03-2698 7912 Faks : 03-2698 6071

wilayah Persekutuan PutraJaya

1. Putrajaya Bangunan Jabatan Akauntan

Negara, Kompleks Kementerian Kewangan, No. 1, Persiaran Perdana, Presint 2, 62594 Putrajaya, wilayah Persekutuan. Tel : 03-8888 3814 Faks : 03-8889 2082

wilayah Persekutuan laBuan (offshore)

1. labuan offshore Unit 3 (J), Level 3, Main Office Tower, Financial Park Labuan, Jalan Merdeka, 87000 Federal Territory Labuan. Tel : 087-411 931 Faks : 087-411 973

selangor

1. ampang Jaya No. 11 & 11A, Jalan Mamanda 7/1, Ampang Point, 68000 Ampang, Selangor. Tel : 03-4257 6802 Faks : 03-4257 8636

2. ampang new village No. 21g & 23g, Jalan wawasan 2/2, Bandar Baru Ampang, 68000 Ampang, Selangor. Tel : 03-4296 2311 Faks : 03-4296 2206

3. ara Damansara Unit B-g-07 & B-g-08 Block B, No. 2 Jalan PJU 1A/7A, Ara Damansara, 47301 Petaling Jaya, Selangor. Tel : 03-7847 3177 Faks : 03-7847 2677


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4. Bandar Bukit tinggi No. 77 & 79, Jalan Batu Nilam 5, Bandar Bukit Tinggi, 41200 Klang, Selangor. Tel : 03-3323 2822 Faks : 03-3323 2858

5. Cyberjaya P1-13, Shaftsbury Square, Lot No. 2350, Cyber 6, Persiaran Multimedia, 63000 Cyberjaya, Selangor. Tel : 03-8318 1944 Faks : 03-8318 1934

6. Denai alam No. 1, ground Floor, Jalan Elektron U16/J, Seksyen U16, Denai Alam, 40160 Shah Alam, Selangor. Tel : 03-7831 8895 Faks : 03-7831 8859

7. Jalan meru, klang No. 38 & 40, Pelangi Avenue, Jalan Kelicap 42A/KU1, Klang Bandar Di Raja, 41050 Klang, Selangor. Tel : 03-3341 5237 Faks : 03-3341 5427

8. kajang 2 & 3, Jalan Saga, Taman Sri Saga, Off Jalan Sg. Chua, 43000 Kajang, Selangor. Tel : 03-8737 7435 Faks : 03-8737 7433

9. kepong 6, Jalan 54, Desa Jaya, 52100 Kepong, Selangor. Tel : 03-6276 4942 Faks : 03-6276 6375

10. kinrara No. 1, Jalan TK1/11A, Taman Kinrara, Section 1, Batu 7 1/2, Jalan Puchong, 47100 Puchong, Selangor. Tel : 03-8075 5682 Faks : 03-8075 8159

11. klang utara No. 29 & 31, Jalan Tiara 3, Bandar Baru Klang, 41150 Klang, Selangor. Tel : 03-3342 1585 Faks : 03-3342 1719

12. shah alam Vista Alam, F-g-38 & 39, Jalan Ikhtisas 14/1, Off Persiaran Damai, Seksyen 14, 40000 Shah Alam, Selangor. Tel : 03-5524 7780 Faks : 03-5524 7380

13. kota Damansara Nos. B-g-19, 20 & 21 (gF), Dataran Cascades, Jalan PJU 5/1, Kota Damansara PJU 5, 47810 Petaling Jaya, Selangor. Tel : 03-7610 0890 Faks : 03-7610 0889

14. kota kemuning No. 15-1 & 17-1 (gF), No. 8 Jalan Anggerik Vanilla, BE 31/BE Kota Kemuning, Seksyen 31, 40460 Shah Alam, Selangor. Tel : 03-5120 1811 Faks : 03-5120 1588

15. kota warisan No. g-3, ground Floor, Jalan warisan 1, KIP Sentral Kota warisan, 43900 Sepang, Selangor Darul Ehsan. Tel : 03-8705 4899 Faks : 03-8705 1141

16. PJ state No. 38 & 40, Jalan Yong Shook Lin, 46050 Petaling Jaya, Selangor. Tel : 03-7955 0032 Faks : 03-7954 0012

17. Port klang No. 1, Jalan Berangan, 42000 Port Klang, Selangor. Tel : 03-3168 8366 Faks : 03-3167 6432

18. Puchong J-03-g, Block J, Setiawalk, Persiaran wawasan, Pusat Bandar Puchong, 47160 Puchong, Selangor. Tel : 03-5882 2880 Faks : 03-5882 2881

19. rawang No. 33g & 35g, Jln 1B, Fortune Avenue, 48000 Rawang, Selangor. Tel : 03-6091 3322 Faks : 03-6091 3344

20. sea Park 20-22, Jalan 21/12, Sea Park, 46300 Petaling Jaya, Selangor. Tel : 03-7875 6514 Faks : 03-7876 6020

21. seri kembangan No. 36, Jalan PSK 3, Pusat Perdagangan Seri

Kembangan, 43300 Seri Kembangan, Selangor. Tel : 03-8945 6429 Faks : 03-8945 6442 03-8943 5306

22. subang Jaya 7 & 9, Jalan SS 15/8A, 47500 Subang Jaya, Selangor. Tel : 03-5634 8045 Faks : 03-5634 8040

23. taman Demang No. 47, Jalan DD3A/1, BASCO Business Centre, Taman Dato’ Demang, 43300 Seri Kembangan, Selangor. Tel : 03-8959 2588 Faks : 03-8958 5288

24. the Curve Lot K-g32A-D & g32, ground Floor, The Curve Shopping Complex, Jalan PJU 7/8, Mutiara Damansara, 47800 Petaling Jaya, Selangor. Tel : 03-7726 7258 Faks : 03-7727 8912

25. uitm Universiti Teknologi MARA, Tingkat 2, Menara Sultan Abdul Aziz Shah, 40450 Shah Alam, Selangor. Tel : 03-5519 2377 Faks : 03-5510 5580

26. usJ taipan 8A & 8B, Jalan USJ 10/1J, 47610 UEP Subang Jaya, Petaling Jaya, Selangor. Tel : 03-8023 7271 Faks : 03-8023 9161

Rangkaian Cawangan


52

Rangkaian Cawangan

negeri semBilan

1. gemas No. 1 & 2, ground Floor, Laman Niaga Pernama, Kem Syed Sirajuddin, 73400 gemas, Negeri Sembilan. Tel : 07-948 3622 Faks : 07-948 5022

2. nilai 5733 & 5734, Jalan TS 2/1, Taman Semarak Phase II, 71800 Nilai, Negeri Sembilan. Tel : 06-799 4114 Faks : 06-799 5115

3. Port Dickson 3 & 4, Jalan Mahajaya, P.D. Centre Point, 71000 Port Dickson, Negeri Sembilan. Tel : 06-647 3950 Faks : 06-647 4776

4. seremban No. 175, Jalan Dato’ Bandar Tunggal, 70000 Seremban, Negeri Sembilan. Tel : 06-762 9651 Faks : 06-763 6125

melaka

1. Bukit Baru No. 7 & 8, Jalan DR1, Delima Point, Taman Delima Raya, 75150 Melaka. Tel : 06-232 1386 Faks : 06-232 1579

2. melaka raya 200 & 201, Taman Melaka Raya, Off Jalan Parameswara, 75000 Melaka. Tel : 06-283 5500 Faks : 06-284 6618

Johor

1. ayer hitam No. 765, Jalan Batu Pahat, 86100 Ayer Hitam, Johor. Tel : 07-758 1100 Faks : 07-758 1001

2. Batu Pahat No. 3 & 4, Jalan Merah, Taman Bukit Pasir, 83000 Batu Pahat, Johor. Te : 07-433 4210 Faks : 07-433 3246

3. Danga Bay No. 17 & 18 Blok 6, Danga Bay, Jalan Skudai, 80200 Johor Bahru, Johor. Tel : 07-234 3842 Faks : 07-234 8852

4. Johor Bahru No. 24 & 25, Jalan Kebun Teh 1, Kebun Teh Commercial City, 80250 Johor Bahru, Johor. Tel : 07-221 2403 Faks : 07-221 2462

5. Johor Jaya 130 & 132, Jalan Ros Merah 2/17, Taman Johor Jaya, 81100 Johor Bahru, Johor. Tel : 07-351 8602 Faks : 07-351 4122

6. kluang 503, Jalan Mersing, 86000 Kluang, Johor. Tel : 07-772 4736 Faks : 07-772 4486

7. kulai 199 & 200, Jalan Kenanga 29/4, Indahpura, 81000 Kulai, Johor. Tel : 07-660 8495 Faks : 07-660 8363

8. muar No. 30A & 30A-1, Jalan Arab, 84000 Muar, Johor. Tel : 06-953 2384 Faks : 06-953 3489

9. mutiara rini No. 28 & 30, Jalan Utama 45, Taman Mutiara Rini, 81300, Skudai, Johor. Tel : 07-557 0900 Faks : 07-557 1244

10. Permas Jaya 23 & 25, Jalan Permas 10/2, Bandar Baru Permas Jaya, 81750 Johor Bahru, Johor. Tel : 07-386 3703 Faks : 07-386 5061

11. segamat No. 1, g-Floor, Jalan Nagasari 23, Bandar Segamat Baru, 85000 Segamat, Johor. Tel : 07-943 1378 Faks : 07-943 1373

12. tampoi No. 49 & 51, Jalan Sri Perkasa 2/1, Taman Tampoi Utama, 81200 Tampoi, Johor Bahru, Johor. Tel : 07-241 4946 Faks : 07-241 4953


53

Perak

1. ipoh No. 1 & 3, ground & First Floor, Persiaran greentown 9, greentown Business Centre, 30450 Ipoh, Perak. Tel : 05-255 0980 Faks : 05-255 0976

2. ipoh garden No. 27A-27A1, Jalan Sultan Azlan Shah Utara, 31400 Ipoh, Perak. Tel : 05-549 7277 Faks : 05-549 7299

3. lumut ground Floor, Kompleks Mutiara Armada, Jalan Nakhoda, Pengkalan TLDM, 32100 Lumut, Perak. Tel : 05-683 5051 Faks : 05-683 5579

4. sitiawan No. 11 & 12, Taman Sitiawan 1, Jalan Lumut, 32000 Sitiawan, Perak. Tel : 05-692 8401 Faks : 05-691 7339

5. taiping No. 40 & 42, Jalan Tupai, 34000 Taiping, Perak. Tel : 05-806 6816 Faks : 05-808 0432

6. teluk intan 11, Medan Sri Intan, Jalan Sekolah, 36000 Teluk Intan, Perak. Tel : 05-621 0130 Faks : 05-621 0128

Pulau Pinang

1. Bayan Baru 124 & 126, Jalan Mayang Pasir, Taman Sri Tunas, 11950 Bayan Baru, Pulau Pinang. Tel : 04-644 7593 Faks : 04-645 2709

2. Butterworth 55-57, Jalan Selat, Taman Selat, P.O.Box 165, Off Jalan Bagan Luar, 12000 Butterworth, Pulau Pinang. Tel : 04-333 1372 Faks : 04-332 3299

3. fettes Park No. 98-g-31 & 32, Jalan Fettes, Prima Tanjung Business Centre, Tanjung Tokong, 11200 Pulau Pinang. Tel : 04-899 9069 Faks : 04-899 0767

4. Jalan macalister No. 104C, 104D & 104E, Jalan Macalister, 10400 Pulau Pinang. Tel : 04-229 1495 Faks : 04-226 1530

5. kepala Batas Lot 1317 & 1318, Lorong Malinja, Taman Sepakat, Off Jalan Butterworth, 13200 Kepala Batas, Seberang Prai Utara, Pulau Pinang. Tel : 04-575 1824 Faks : 04-575 1975

6. Prai No. 2, Tingkat Kikik 7, Taman Inderawasih, 13600 Prai, Pulau Pinang. Tel : 04-397 8543 Faks : 04-397 9243

7. seberang Jaya No. 10, Jalan Todak Satu, Pusat Bandar Seberang Jaya, 13700 Prai, Pulau Pinang. Tel : 04-399 5881 Faks : 04-399 2881

8. wisma Pelaut 1A, Light Street, wisma Pelaut, 10200 Pulau Pinang. Tel : 04-263 6633 Faks : 04-261 9801

keDah

1. alor setar No. 147 & 148, Susuran Sultan Abdul Hamid 8, Kompleks Sultan Abdul Hamid, Fasa 2, Persiaran Sultan Abdul

Hamid, 05050 Alor Setar, Kedah. Tel : 04-772 1477 Faks : 04-771 4796

2. kulim No. 13 & 14, Jalan KLC Satu (1), Kulim Landmark Central, 09000 Kulim, Kedah. Tel : 04-495 5566 Faks : 04-490 4717

3. langkawi 149-151, Persiaran Bunga Raya, Langkawi Mall, 07000 Kuah, Langkawi, Kedah. Tel : 04-966 4426 Faks : 04-966 4717

4. sungai Petani No. 55, Jalan Perdana Heights, 2/2, Perdana Heights, 08000 Sungai Petani, Kedah. Tel : 04-421 1808 Faks : 04-422 6675

Rangkaian Cawangan


54

terengganu

1. kemaman K711-713, wisma IKY Naga, Jalan Sulaimani, 24000 Kemaman, Terengganu. Tel : 09-858 1744 Faks : 09-859 1572

2. kemaman supply Base ground Floor, Admin Building Block B, Kemaman Supply Base, 24007 Kemaman, Terengganu. Tel : 09-863 1297 Faks : 09-863 1295

kelantan

1. Jeli A1 & A2, Blok A, Bandar Baru Bukit Bunga, 11700 Bukit Bunga, Tanah Merah, Kelantan. Tel : 09-946 8955 Faks : 09-946 8954

2. kota Bharu 3788H & 3788I, Seksyen 13, Jalan Sultan Ibrahim, 15050 Kota Bharu, Kelantan. Tel : 09-744 5688 Faks : 09-744 2202

Pahang

1. Jengka Nadi Kota, 26400 Bandar Jengka, Pahang. Tel : 09-466 2233 Faks : 09-466 2422

2. kuantan g2-ground Floor g2, Menara zenith, Jalan Putra, Square 6, Putra Square, 25200 Kuantan, Pahang. Tel : 09-514 8584 Faks : 09-514 8580

3. mentakab 70, Jalan Temerloh, 28400 Mentakab, Pahang. Tel : 09-278 4487 Faks : 09-277 6654

4. temerloh No. 9, ground Floor, Jalan Ahmad Shah, 28000 Temerloh, Pahang. Tel : 09-296 8811 Faks : 09-296 8800

Perlis

1. kangar No. 25 & 27, Jalan Satu, Taman Pertiwi Indah, Jalan Kangar - Alor Setar, 01000 Kangar, Perlis Tel : 04-977 7200 Faks : 04-977 6100

saBah

1. Jalan gaya, kota kinabalu No. 86, Jalan gaya, 88000 Kota Kinabalu, Sabah. Tel : 088-230 213 Faks : 088-265 430/ 088-212 476

2. kota kinabalu Lot 19 & 20, Block K, Sadong Jaya Complex, Jalan Ikan Juara 3, Karamunsing, 88300 Kota Kinabalu, Sabah. Tel : 088-264 410 Faks : 088-261 414

3. lahad Datu ground Floor, Lot 1 & 2, Bandar Sri Perdana, Fasa 5 KM4, Jalan Silam Bandar Sri Perdana, 91100 Lahad Datu, Sabah. Tel : 089-865 733 Faks : 089-865 735

4. sandakan Lot No. 163 & 164, Block 18, Jalan Prima Square, Batu 4, Jalan Utara, 90000 Sandakan, Sabah. Tel : 089-212 752 Faks : 089-212 644

5. tawau TB. 281, 282 & 283, Jalan Haji Karim, Town Extension II, P.O. Box 630, 91008 Tawau, Sabah. Tel : 089-778 197 Faks : 089-762 199

sarawak

1. Bintulu Sub Lot 13, Off Lot 3299, Parkcity Commerce Square, 97000 Bintulu, Sarawak. Tel : 086-314 248 Faks : 086-314 206

2. kuching Lot 247 & 248, Section 49, KTLD, Jalan Tuanku Abdul Rahman, 93100 Kuching, Sarawak. Tel : 082-245 888 Faks : 082-257 366

3. miri Lot 2387 & 2388, 1st Floor, Block A4, Jalan Boulevard 1A, Boulevard Commercial Center, KM 3, Jalan Miri-Pujut, 98000 Miri, Sarawak. Tel : 085-437 442 Faks : 085-437 297

4. Prince Commercial Centre No. 1 & 2, Jalan Penrissen Batu 7, Kota Sentosa, 93250 Kuching, Sarawak. Tel : 082-613 466 Faks : 082-629 466

5. sibu No. 91 & 93, Jalan Kampung Nyabor, 96000 Sibu, Sarawak. Tel : 084-325 926 Faks : 084-325 960

6. tabuan Jaya Lot No. 77, ground Floor, Tabuan Tranquility, Jalan Canna, Tabuan Jaya, 93350 Kuching, Sarawak Tel : 082-363 385 Faks : 082-363 061

Rangkaian Cawangan


55

AgendA

1. Untuk menerima Penyata Akaun Berkanun bagi tahun berakhir 31 Disember 2016 berserta Laporan-laporan para Pengarah dan Juruaudit-juruaudit.

2. Untuk mengisytiharkan dividen satu peringkat sebanyak 4.52 sen sesaham yang berjumlah RM76,300,000 bagi tahun kewangan berakhir 31 Disember 2016.

3. Untuk melantik semula para Pengarah berikut yang akan bersara menurut Artikel 91(a) Tataurusan Penubuhan Syarikat dan, oleh kerana layak, menawarkan diri mereka untuk dilantik semula:

(a) En. Mohd Suffian bin Haji Haron

(b) YBhg. Tan Sri Mohd Ghazali bin Mohd Yusoff

4. Untuk meluluskan pembayaran yuran para Pengarah dan yuran Jawatankuasa-jawatankuasa bagi tahun kewangan berakhir 31 Disember 2016.

5. Untuk melantik semula Tetuan PricewaterhouseCoopers sebagai Juruaudit bagi tahun kewangan berakhir 31 Disember 2017 dan untuk membenarkan para Pengarah menentukan imbuhan mereka.

6. Untuk menjalankan lain-lain urusan lazim Syarikat.

MenURUT PeRInTAH LeMBAgA PengARAH

nIMMA SAFIRA BInTI KHALId

Setiausaha

nOTA:

1. Seorang ahli yang layak hadir dan mengundi pada Mesyuarat ini adalah layak untuk melantik seorang proksi untuk hadir dan mengundi bagi pihaknya dan proksi tersebut tidak semestinya seorang ahli dalam Syarikat.

Instrumen perlantikan proksi haruslah dalam bentuk bertulis yang ditandatangani oleh ahli yang melantik atau peguamnya yang diberi kuasa untuk berbuat sedemikian, atau sekiranya ahli yang melantik adalah sebuah syarikat, di bawah cop meterainya atau cara lain yang dibenarkan oleh para Pengarah.

Instrumen perlantikan proksi dan kuasa peguam atau kuasa lain, jika ada, yang mana tandatangan telah diturunkan atau dengan salinan sah kuasa yang disaksikan oleh notari awam harus diserahkan di pejabat berdaftar Syarikat di Tingkat 17, Menara Affin, 80, Jalan Raja Chulan, 50200 Kuala Lumpur, sekurang-kurangnya empat puluh lapan (48) jam sebelum masa yang ditetapkan untuk mengadakan Mesyuarat atau menunda Mesyuarat di mana sekiranya gagal berbuat demikian, individu yang dinamakan tidak layak untuk mengundi.

DENGAN INI DIMAKLUMKAN BAHAWA MeSYUARAT AgUng TAHUnAn Ke-41 AFFIn BAnK BeRHAd AKAN DIADAKAN DI BILIK LEMBAGA PENGARAH, TINGKAT 19, MENARA AFFIN, 80, JALAN RAJA CHULAN, 50200 KUALA LUMPUR PADA HARI KHAMIS, 30 MAC 2017 PADA JAM 10.00 PAgI BAGI MENJALANKAN URUSAN-URUSAN BERIKUT:

Notis Mesyuarat Agung Tahunan


56

Notes to the Financial Statementsfor the financial year ended 31 December 2016

58 Directors’ Report

64 Statements of Financial Position

65 Income Statements

66 Statements of Comprehensive Income

67 Statements of Changes in Equity

69 Statements of Cash Flows

72 Summary of Significant Accounting Policies

90 Notes to the Financial Statements

197 Statement by Directors

197 Statutory Declaration

198 Independent Auditors’ Report

201 Basel II Pillar 3 Disclosures

Financial Statements

The Directors hereby submit their report together with the audited financial statements of the Group and the Bank for the financial year ended 31 December 2016.

PRINCIPAL ACTIVITIES

The principal activities of the Bank during the financial year are banking and related financial services. The principal activities of the subsidiaries are Islamic banking business, property management services, nominee and trustee services. Islamic banking business refers generally to the acceptance of deposits and granting of financing under the Shariah principles. There were no significant changes in the nature of these activities during the financial year.

FINANCIAL RESULTS

The Group The Bank RM’000 RM’000

Profit before zakat and taxation 602,758 456,135

Zakat (2,887) -

Profit before taxation 599,871 456,135

Taxation (135,740) (104,819)

Net profit for the financial year 464,131 351,316

DIVIDENDS

The dividends on ordinary shares paid or declared by the Bank since 31 December 2015 were as follows:

In respect of the financial year ended 31 December 2015 as shown in the Directors’ report for that financial year:

RM’000

Final single-tier dividend of 6.18 sen per share paid on 31 March 2016 104,366

In respect of the financial year ended 31 December 2016:

Single-tier interim dividend of 3.80 sen per share paid on 30 November 2016 64,173

The Directors now recommend the payment of a final single-tier dividend of 1.39 sen per share on the Bank’s issued and paid up capital of RM1,688,769,616 comprising of 1,688,769,616 shares amounting to RM23,473,898 for the financial year ended 31 December 2016 which is subject to the approval of member at the forthcoming Annual General Meeting of the Bank.

RESERVES AND PROVISIONS

All material transfers to or from reserves or provisions during the financial year are shown in the financial statements and notes to the financial statements.

BAD AND DOUBTFUL DEBTS AND FINANCING

Before the financial statements of the Group and the Bank were made out, the Directors took reasonable steps to ascertain that proper action had been taken in relation to the writing off of bad debts and financing and the making of allowance for bad and doubtful debts and financing, and satisfied themselves that all known bad debts and financing had been written off and adequate allowances made for doubtful debts and financing.

At the date of this report, the Directors are not aware of any circumstances which would render the amount written off for bad debts and financing, or the amount of the allowance for doubtful debts and financing, in the financial statements of the Group and the Bank inadequate to any substantial extent.

Directors’ Reportfor the financial year ended 31 December 2016


58

CURRENT ASSETS

Before the financial statements of the Group and the Bank were made out, the Directors took reasonable steps to ascertain that any current assets, other than debts and financing, which were unlikely to realise in the ordinary course of business, their values as shown in the accounting records of the Group and the Bank, have been written down to an amount which they might expected so to realise.

At the date of this report, the Directors are not aware of any circumstances which would render the values attributed to the current assets in the financial statements of the Group and the Bank misleading.

VALUATION METHODS

At the date of this report, the Directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets or liabilities in the Group’s and the Bank’s financial statements misleading or inappropriate.

CONTINGENT AND OTHER LIABILITIES

At the date of this report there does not exist:

(a) any charge on the assets of the Group or the Bank which has arisen since the end of the financial year which secures the liabilities of any other person; or

(b) any contingent liability in respect of the Group or the Bank that has arisen since the end of the financial year other than in the ordinary course of banking business or activities of the Group.

No contingent or other liability of the Group or the Bank has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group or the Bank to meet their obligation as and when they fall due.

CHANGE OF CIRCUMSTANCES

At the date of this report, the Directors are not aware of any circumstances, not otherwise dealt with in this report or the financial statements of the Group and the Bank that would render any amount stated in the financial statements misleading.

ITEMS OF AN UNUSUAL NATURE

The results of the operations of the Group and the Bank during the financial year were not, in the opinion of the Directors, substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect substantially the results of the operations of the Group or the Bank for the current financial year in which this report is made.

SIGNIFICANT EVENT DURING THE FINANCIAL YEAR

There is no significant event during the financial year.

SUBSEQUENT EVENTS

There were no material events subsequent to the reporting date that require disclosure or adjustments to the financial statements, other than those disclosed in Note 50 of the financial statements.


59

ANNUAL REPORT 2016

DIRECTORS

The Directors of the Bank who have held office since the date of the last report and at the date of this report are:

Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara)Chairman / Non-Independent Non-Executive Director

Tan Sri Dato’ Seri Lodin Bin Wok KamaruddinNon-Independent Non-Executive Director(Completion of directorship on 4 October 2016)

Mr Aubrey Li Kwok-SingNon-Independent Non-Executive Director

En. Mohd Suffian Bin Haji HaronNon-Independent Non-Executive Director(Redesignated as Non-Independent Non-Executive Director on 1 June 2016)

Tan Sri Dato’ Seri Mohamed JawharNon-Independent Non-Executive Director(Redesignated as Non-Independent Non-Executive Director on 1 June 2016)

Tan Sri Mohd Ghazali Bin Mohd YusoffIndependent Non-Executive Director

En. Abd Malik Bin A RahmanIndependent Non-Executive Director

Mr Tang Peng WahNon-Independent Non-Executive Director (Alternate Director to Mr Aubrey Li Kwok-Sing)

RESPONSIBILITY STATEMENT BY BOARD OF DIRECTORS

In the course of preparing the annual financial statements of the Group and of the Bank, the Directors are collectively responsible in ensuring that these financial statements are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

It is the responsibility of the Directors to ensure that the financial reporting of the Group and of the Bank present a true and fair view of the state of affairs of the Group and of the Bank as at 31 December 2016 and of the financial results and cash flows of the Group and of the Bank for the financial year then ended.

The financial statements are prepared on the going concern basis and the Directors have ensured that proper accounting records are kept, applied the appropriate accounting policies on a consistent basis and made accounting estimates that are reasonable and fair so as to enable the preparation of the financial statements of the Group and of the Bank with reasonable accuracy.

The Directors have also taken the necessary steps to ensure that appropriate systems are in place for the assets of the Group and of the Bank to be properly safeguarded for the prevention and detection of fraud and other irregularities. The systems, by their nature, can only provide reasonable and not absolute assurance against material misstatements, whether due to fraud or error.

The Statement by Directors pursuant to Section 169 of the Companies Act, 1965 is set out on page 197 of the financial statements.



60

DIRECTORS’ INTERESTS

According to the register of Directors’ shareholdings, the interest of Directors in office at the end of the financial year in shares, warrants and options of related companies is as follows:

Ordinary shares of RM10 each; RM5 uncalled

As at As at

1.1.2016 Bought Sold 31.12.2016

ABB Trustee Berhad **

Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara) 20,000 - - 20,000

** Shares held in trust for the Bank

Ordinary shares of RM1 each

As at As at

1.1.2016 Bought Sold 31.12.2016

AFFIN Holdings Berhad

Abd Malik Bin A Rahman - 10,000 - 10,000

Boustead Heavy Industries Corporation Berhad

Abd Malik Bin A Rahman 3,000 - - 3,000

Abd Malik Bin A Rahman* 1,000 - - 1,000

Ordinary shares of 50 sen each

As at As at

1.1.2016 Bought Sold 31.12.2016

Boustead Holdings Berhad

Abd Malik Bin A Rahman - 6,580 - 6,580

Abd Malik Bin A Rahman* 1,000 12,580 - 13,580

Boustead Plantations Berhad

Abd Malik Bin A Rahman 2,000 - - 2,000

Abd Malik Bin A Rahman* 2,000 - - 2,000

* Indirect shares

Other than the above, the Directors in office at the end of the financial year did not have any other interest in shares, warrants and options over shares in the Bank or its related corporations during the financial year.

DIRECTORS’ BENEFITS

During and at the end of the financial year, no other arrangements subsisted to which the Bank or any of its subsidiaries is a party with the object or objects of enabling Directors of the Bank or any of its subsidiaries to acquire benefits by means of the acquisition of shares in, or debenture of, the Bank or any other body corporate.

Since the end of the previous financial year, no Director of the Bank has received or become entitled to receive a benefit (other than the fees and other emoluments shown in the Note 34 to the financial statements) by reason of a contract made by the Bank or by a related corporation with the Director or with a firm of which he is a member or with a company in which he has a substantial financial interest.


61

ANNUAL REPORT 2016

BUSINESS PLAN AND STRATEGY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2016

In 2016, economic prospects in major advanced and many emerging market economies remain challenging, and downside risks have become more dominant. Stemming from the softening of export sector and volatile commodity prices, Malaysia’s economy too has experienced a slow-down. Over the fiscal year, Ringgit depreciated against most major and regional currencies with the shift in investor sentiment. However, due to the strong private investment, positive consumer sentiment and continuation of active investment undertakings; the overall impact was partially absorbed and reduced.

Notwithstanding the challenging year, the Group’s profit before tax and zakat of RM602.8 million accounted for 30.68% of the prior year’s performance. Together with the ROA (before tax) of 1.00% and ROE (before tax) of 10.91%, the Bank recorded a notable improvement from the previous year and against the industry average.

BUSINESS OUTLOOK FOR 2017

As for 2017, despite the economic recovery continues to move at a slow pace; our national real GDP’s growth is expected to edge up moderately between 4.0% - 5.0%. Meanwhile, the export sector is expected to experience positive movement from a higher external demand on Electrical and Electronic sector and likewise, private investment is projected to continue drive economic growth (albeit moderately) at 5.8%.

Bank Negara Malaysia (‘BNM’) maintains its accommodative stance in supporting economic growth with the Overnight Policy Rate (‘OPR’) stable at 3.00% and reduction of Statutory Reserve Rate (‘SRR’) to 3.5%. Nevertheless, the cost-push inflation is projected to be at the 2.0% - 3.0% range.

Although the economy is rebounding, it has been a slow and uneven recovery for businesses and individuals alike. The banking industry in Malaysia is expected to remain operating in challenging environment as the dragging down of asset quality and profitability continues. However, we are optimistic in retaining our competitive edge and business growth by prioritizing on business efficiency, brand visibility and customer experience.

Currently, Affin Bank Group is enhancing our digital banking positioning and innovation to elevate our competitiveness in the industry. It is our aspiration to become the preferred bank for the Small and Medium Enterprises (‘SME’) segment and the millennials. After solidifying our sales and services foundation, we are in the midst of enhancing our processes through system automation to improve productivity and turnaround time. The Bank has embarked on the Group Strategic Transformation Program known as ‘AFFINITY’ that aims for better tangible benefits in the form of lower cost-to-income ratio, robust fee income generation and efficient business operations in the near future.

Moving ahead, the Bank will continue our best efforts in serving our customers’ interest by managing liquidity, safeguarding asset quality, preserving margins and maintain our strong capital levels.



62

RATING BY EXTERNAL AGENCIES

The Bank has been rated by the following external rating agency:

Name of rating agency : RATING AGENCY MALAYSIA BERHAD (‘RAM’)

Date of rating : 2 June 2016

Rating classifications:

- Long term : AA3

- Short term : P1

RAM has reaffirmed the Bank’s long-term and short-term financial institution ratings, at AA3 and P1, respectively, with a stable outlook.

‘AA’ rating is defined by RAM as an entity has a strong capacity to meets its financial obligations and is resilient against adverse changes in circumstances, economic condition and/or operating environments. The subscript 3 in this category indicates as the lower end of its generic rating in the AA category.

A P1 rating is defined by RAM as obligations which are supported by superior ability with regards to timely payment of obligations.

ZAKAT

The Bank’s subsidiary, AFFIN Islamic Bank Berhad (‘AFFIN Islamic’) is obliged to pay zakat to comply with the principles of Shariah. AFFIN Islamic does not pay zakat on behalf of its depositors.

HOLDING COMPANY AND ULTIMATE HOLDING CORPORATE BODY

The holding company of the Bank is AFFIN Holdings Berhad, a public listed company incorporated in Malaysia and the ultimate holding corporate body is Lembaga Tabung Angkatan Tentera, a statutory body incorporated under the Tabung Angkatan Tentera Act, 1973.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.

In accordance with resolution of the Board of Directors dated 21 March 2017.

Mohd Suffian Bin Haji HaronDirector

Tan Sri Mohd Ghazali Bin Mohd YusoffDirector


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ANNUAL REPORT 2016

The Group The Bank 2016 2015 2016 2015 Note RM’000 RM’000 RM’000 RM’000

ASSETSCash and short-term funds 2 4,364,490 4,070,710 3,337,831 2,203,022 Deposits and placements with banks and other financial institutions 3 152,234 351,687 406,075 349,772Investment accounts due from designated financial institution - - 2,110,079 1,331,318Financial assets held-for-trading 4 - 150,121 - 150,121Derivative financial assets 5 167,304 174,037 166,240 174,745Financial investments available-for-sale 6 10,279,997 10,287,350 8,446,589 8,811,977Financial investments held-to-maturity 7 373,524 380,654 301,402 304,372Loans, advances and financing 8 42,668,297 42,104,597 30,753,354 32,902,688Other assets 9 61,932 84,655 53,941 80,403Amount due from subsidiaries 10 - - 196,839 61Amount due from joint ventures 11 46,725 39,936 - -Amount due from associate 12 500 - - -Tax recoverable 15,492 46,206 15,462 46,179Deferred tax assets 13 8,056 3,598 - -Statutory deposits with Bank Negara Malaysia 14 1,482,000 1,604,600 1,150,000 1,345,000Investment in subsidiaries 15 - - 575,224 489,074Investment in joint ventures 16 - - - -Investment in associate 17 750 - - -Property and equipment 18 401,799 407,313 394,717 399,913Intangible assets 19 164,089 153,137 167,982 156,604

TOTAL ASSETS 60,187,189 59,858,601 48,075,735 48,745,249

LIABILITIES AND EQUITYDeposits from customers 20 47,633,056 47,813,213 37,106,463 37,814,118Deposits and placements of banks and other financial institutions 21 3,547,203 2,735,596 2,583,235 1,778,206Obligation on securities sold under repurchase agreements 999,740 1,740,946 999,740 1,740,946Derivative financial liabilities 22 402,772 414,140 409,283 413,944Bills and acceptances payable 37,726 77,114 37,726 77,114Recourse obligation on loans sold to Cagamas Berhad 23 - 134,585 - 134,585Other liabilities 24 439,488 411,575 402,445 365,865Amount due to subsidiaries 25 - - 41,395 422,166Provision for taxation 6,022 10,052 - -Deferred tax liabilities 13 12,884 15,104 12,884 15,104Subordinated term loan 26 1,304,592 1,004,446 1,304,592 1,004,446

TOTAL LIABILITIES 54,383,483 54,356,771 42,897,763 43,766,494

Share capital 27 1,688,770 1,688,770 1,688,770 1,688,770Reserves 28 4,114,936 3,813,060 3,489,202 3,289,985

TOTAL EQUITY 5,803,706 5,501,830 5,177,972 4,978,755

TOTAL LIABILITIES AND EQUITY 60,187,189 59,858,601 48,075,735 48,745,249

COMMITMENTS AND CONTINGENCIES 40 22,483,498 22,301,945 21,185,728 20,192,355

The accounting policies and notes form an integral part of these financial statements.

Statements of Financial Positionas at 31 December 2016


64



Interest income 29 2,327,761 2,326,816 2,325,217 2,325,444

Interest expense 30 (1,495,679) (1,495,771) (1,495,688) (1,495,791)

Net interest income 832,082 831,045 829,529 829,653

Income from Islamic banking business 31 272,806 238,921 - -

1,104,888 1,069,966 829,529 829,653

Other operating income 32 219,542 184,577 219,323 185,068

Net income 1,324,430 1,254,543 1,048,852 1,014,721

Other operating expenses 33 (694,116) (628,358) (561,401) (514,054)

Operating profit before allowances 630,314 626,185 487,451 500,667

Allowances for impairment losses on loans, advances and financing 35 (23,701) (186,987) (27,461) (178,475)

(Allowances for)/write-back of impairment losses on securities (3,855) 22,037 (3,855) 22,037

Profit before zakat and taxation 602,758 461,235 456,135 344,229

Zakat (2,887) (3,779) - -

Profit before taxation 599,871 457,456 456,135 344,229

Taxation 37 (135,740) (111,874) (104,819) (82,939)

Net profit after zakat and taxation 464,131 345,582 351,316 261,290

Attributable to:

Equity holder of the Bank 464,131 345,582 351,316 261,290

Earnings per share (sen):

- Basic 38 27.5 20.5 20.8 15.5

Income Statementsfor the financial year ended 31 December 2016

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ANNUAL REPORT 2016



Profit after zakat and taxation 464,131 345,582 351,316 261,290

Other comprehensive income:

Items that may be reclassified subsequently to profit and loss:

Net fair value change in financial investments available-for-sale 8,002 67,820 21,365 70,495

Deferred tax on financial investments available-for-sale 13 (1,718) (16,479) (4,925) (17,121)

Other comprehensive income for the financial year, net of tax 6,284 51,341 16,440 53,374

Total comprehensive income for the financial year 470,415 396,923 367,756 314,664

Attributable to equity holder of the Bank:

- Total comprehensive income 470,415 396,923 367,756 314,664

Statements of Comprehensive Incomefor the financial year ended 31 December 2016


66

Attributable to Equity Holder of the Bank

AFS Share Share Statutory revaluation Regulatory Retained capital premium reserves reserves reserves profits Total The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2016 1,688,770 858,904 1,577,509 68,945 278,547 1,029,155 5,501,830

Net profit for the financial year - - - - - 464,131 464,131

Other comprehensive income (net of tax)

- Financial investments available-for-sale - - - 6,284 - - 6,284

Total comprehensive income - - - 6,284 - 464,131 470,415

Dividends paid (Note 39) - - - - - (168,539) (168,539)

Transfer to statutory reserves / regulatory reserves - - 144,128 - 1,657 (145,785) -

At 31 December 2016 1,688,770 858,904 1,721,637 75,229 280,204 1,178,962 5,803,706

At 1 January 2015 1,688,770 858,904 1,469,794 17,604 184,366 951,500 5,170,938







At 31 December 2015 1,688,770 858,904 1,577,509 68,945 278,547 1,029,155 5,501,830

Statements of Changes in Equityfor the financial year ended 31 December 2016

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ANNUAL REPORT 2016

Non-distributable Distributable

AFS Share Share Statutory revaluation Regulatory Retained capital premium reserves reserves reserves profits Total The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2016 1,688,770 858,904 1,328,792 76,852 220,148 805,289 4,978,755






Transfer to statutory reserves / regulatory reserves - - 87,829 - (13,122) (74,707) -

At 31 December 2016 1,688,770 858,904 1,416,621 93,292 207,026 913,359 5,177,972

At 1 January 2015 1,688,770 858,904 1,263,470 23,478 135,347 760,153 4,730,122







At 31 December 2015 1,688,770 858,904 1,328,792 76,852 220,148 805,289 4,978,755


Statements of Changes in Equityfor the financial year ended 31 December 2016


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The Group The Bank 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 599,871 457,456 456,135 344,229

Adjustments for items not involving the movement of cash and cash equivalents:

Interest income:

- financial assets held-for-trading (240) (123) (240) (123)

- financial investments available-for-sale (301,744) (293,991) (301,744) (293,991)

- financial investments held-to-maturity (17,776) (17,267) (17,776) (17,267)

Dividend income:


Gain on sale:

- financial assets held-for-trading (432) (498) (432) (498)


Unrealised (gain)/loss on revaluation:

- financial assets held-for-trading (2) 232 (2) 232

- derivatives (4,965) 3,750 (4,965) 3,750

- foreign exchange (30,226) (45,358) (30,226) (45,358)

Allowance/(write-back) for impairment loss:

- financial investments available-for-sale 318 - 318 -

- financial investments held-to-maturity 3,537 (22,037) 3,537 (22,037)

Depreciation of property and equipment 14,724 15,044 13,688 13,960

Property and equipment written-off 57 84 55 76

Foreclosed properties - impairment made 59 - 59 -

Loss/(gain) on sale of property and equipment 94 (1) 94 (1)

Amortisation of intangible assets 9,681 6,200 9,255 5,735

Gain on sale of foreclosed properties (153) (684) (153) (684)

Net individual impairment 21,918 250,352 38,441 246,840

Net collective impairment 49,832 17,224 35,935 11,265

Bad debt and financing written-off 2,838 3,603 2,816 3,596

Interest expense - subordinated term loan 46,616 28,189 46,616 28,189

Zakat 2,887 3,779 - -

Operating profit before changes in working capital 361,228 392,641 215,745 264,600

Statements of Cash Flowsfor the financial year ended 31 December 2016

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ANNUAL REPORT 2016


CASH FLOWS FROM OPERATING ACTIVITIES

Decrease/(increase) in operating assets:

Deposits and placements with banks and other financial institutions 199,453 (113,465) (56,303) 97,199

Investment accounts due from designated financial institutions - - (778,761) (816,239)

Financial assets held-for-trading 150,795 172 150,795 172

Loans, advances and financing (638,288) (2,919,604) 2,072,142 (871,838)

Other assets 589,059 (318,117) 590,289 (361,174)

Derivative financial instruments (4,635) 91,335 3,844 90,452

Statutory deposits with Bank Negara Malaysia 122,600 91,950 195,000 53,550

Amount due from subsidiaries - - (563,699) 125,762

Amount due from joint ventures (6,789) (25,081) - -

Amount due from associate (500) - - -

(Decrease)/increase in operating liabilities:

Deposits from customers (180,157) (234,011) (707,655) (366,094)

Deposits and placements of banks and other financial institutions 811,607 (2,114,080) 805,029 (1,921,180)

Obligation on securities sold under repurchase agreements (741,206) 1,740,946 (741,206) 1,740,946

Bills and acceptances payable (39,388) (17,194) (39,388) (17,194)

Recourse obligation on loans sold to Cagamas Berhad (134,585) (4,562) (134,585) (4,562)

Other liabilities 39,745 41,808 48,437 25,944

Cash generated from/(used in) operations 528,939 (3,387,262) 1,059,684 (1,959,656)

Zakat paid (2,862) (5,511) - -

Tax refund 5,459 1,364 5,440 1,350

Tax paid (122,913) (179,258) (86,687) (156,206)

Net cash generated from/(used in) operating activities 408,623 (3,570,667) 978,437 (2,114,512)



70


CASH FLOWS FROM INVESTING ACTIVITIES

Investment in associate (250) - - -

Interest received:

- financial investments available-for-sale 301,744 293,991 301,744 293,991

- financial investments held-to-maturity 17,776 17,267 17,776 17,267

Dividend income:

- financial investments available-for-sale 2,673 2,635 2,673 2,635

Redemption of financial investments held-to-maturity net of purchase 3,594 117,538 (567) 111,066

Net purchase/(sale) of financial investments available-for-sale 47,530 (260,940) 419,428 (315,392)

Proceeds from disposal of

- property and equipment 230 2 230 2

- foreclosed properties 588 4,877 588 4,877

Purchase of property and equipment (27,544) (285,117) (26,991) (284,710)

Purchase of intangible assets (2,680) (5) (2,680) (5)

Net cash generated from/(used in) investing activities 343,661 (109,752) 712,201 (170,269)

CASH FLOWS FROM FINANCING ACTIVITIES

Investment in subsidiary - - (100,000) (100,000)

Interest payment on subordinated term loan (46,469) (28,053) (46,469) (28,053)

Drawdown of subordinated term loan 300,000 400,000 300,000 400,000

Payment of dividend (168,539) (66,031) (168,539) (66,031)

Net cash generated from/(used in) financing activities 84,992 305,916 (15,008) 205,916

Net increase/(decrease) in cash and cash equivalents 837,276 (3,374,503) 1,675,630 (2,078,865)

Net (decrease)/increase in foreign exchange (543,496) 506,301 (540,821) 504,845

Cash and cash equivalents at beginning of the financial year 4,070,710 6,938,912 2,203,022 3,777,042

CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR (Note 2) 4,364,490 4,070,710 3,337,831 2,203,022



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ANNUAL REPORT 2016

The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements. These policies have been consistently applied to all the financial years presented, unless otherwise stated.

(A) BASIS OF PREPARATION

The financial statements of the Group and the Bank have been prepared in accordance with Malaysian Financial Reporting Standards (‘MFRS’), International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The financial statements incorporate those activities relating to Islamic banking business which have been undertaken by AFFIN Islamic Bank Berhad, a wholly owned subsidiary of the Bank. Islamic banking business refers generally to the acceptance of deposits and granting of financing under the Shariah principles.

The financial statements of the Group and the Bank have been prepared under the historical cost convention, unless otherwise indicated in this summary of significant accounting policies.

The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgment in the process of applying the Group and Bank’s accounting policies. Although these estimates and judgment are based on the Directors’ best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 48.

Standards, amendments to published standards and interpretations that are effective

The Group and the Bank have applied the following amendments for the first time for the financial year beginning on 1 January 2016:

• AmendmentstoMFRS11‘Jointarrangements’-Accountingforacquisitionofinterestsinjointoperations

• AmendmentstoMFRS101‘Presentationoffinancialstatements’-Disclosureinitiative

• AmendmentstoMFRS127“Equitymethodinseparatefinancialstatements”

• AnnualImprovementstoMFRSs2012-2014Cycle

The adoption of these amendments did not have any impact on the current or any prior year and are not likely to affect future periods.

Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Bank but not yet effective

A number of new standards and amendments to standards and interpretations are effective for financial year beginning on or after 1 January 2017. None of these is expected to have a significant effect on the financial statements of the Group and the Bank, except the following:

• AmendmentstoMFRS107‘StatementofCashFlows–DisclosureInitiative’(effectivefrom1January2017)introduceanadditional disclosure on changes in liabilities arising from financing activities.

• AmendmentstoMFRS112‘IncomeTaxes-RecognitionofDeferredTaxAssetsforUnrealisedLosses’(effectivefrom1January 2017) clarify the requirements for recognising deferred tax assets on unrealised losses arising from deductible temporary difference on asset carried at fair value.

In addition, in evaluating whether an entity will have sufficient taxable profits in future periods against which deductible temporary differences can be utilised, the amendments require an entity to compare the deductible temporary differences with future taxable profits that excludes tax deductions resulting from the reversal of those temporary differences.

The amendments shall be applied retrospectively.

Summary of Significant Accounting Policiesfor the financial year ended 31 December 2016


72


Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Bank but not yet effective (continued)

• MFRS9‘FinancialInstruments’(effectivefrom1January2018)willreplaceMFRS139“FinancialInstruments:RecognitionandMeasurement”.

MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income(“OCI”).Thebasisofclassificationdependsontheentity’sbusinessmodelandthecashflowcharacteristicsofthe financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.

For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity’s own credit risk is recorded in other comprehensive income rather than the income statement, unless this creates an accounting mismatch.

MFRS 9 introduces an expected credit loss model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised.

• MFRS15‘Revenuefromcontractswithcustomers’(effectivefrom1January2018)replacesMFRS118‘Revenue’andMFRS 111 ‘Construction contracts’ and related interpretations. The core principle in MFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is recognised when a customer obtains control of goods or services, i.e. when the customer has the ability to direct the use of and obtain the benefits from the goods or services.

A new five-step process is applied before revenue can be recognised:

• Identifycontractswithcustomers;

• Identifytheseparateperformanceobligations;

• Determinethetransactionpriceofthecontract;

• Allocatethetransactionpricetoeachoftheseparateperformanceobligations;and

• Recognisetherevenueaseachperformanceobligationissatisfied.

Key provisions of the new standard are as follows:

• Anybundledgoodsorservices thataredistinctmustbeseparately recognised,andanydiscountsor rebateson thecontract price must generally be allocated to the separate elements.

• If the consideration varies (such as for incentives, rebates, performance fees, royalties, success of an outcomeetc),minimum amounts of revenue must be recognised if they are not at significant risk of reversal.

• Thepointatwhichrevenueisabletoberecognisedmayshift:somerevenuewhichiscurrentlyrecognisedatapointintime at the end of a contract may have to be recognised over the contract term and vice versa.

• Therearenewspecific ruleson licenses,warranties,non-refundableupfront fees,andconsignmentarrangements, toname a few.

• Aswithanynewstandard,therearealsoincreaseddisclosures.


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ANNUAL REPORT 2016


Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Bank but not yet effective (continued)

• MFRS16‘Leases’(effectivefrom1January2019)supersedesMFRS117‘Leases’andtherelatedinterpretations.

Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

MFRS 16 eliminates the classification of leases by the lessee as either finance leases (on balance sheet) or operating leases(offbalancesheet).MFRS16requiresalesseetorecognisea“right-of-use”oftheunderlyingassetandaleaseliability reflecting future lease payments for most leases.

The right-of-use asset is depreciated in accordance with the principle in MFRS 116 ‘Property, Plant and Equipment’ and the lease liability is accreted over time with interest expense recognised in the income statement.

For lessors, MFRS 16 retains most of the requirements in MFRS 117. Lessors continue to classify all leases as either operating leases or finance leases and account for them differently.

The Group and the Bank will apply these standards when effective. The adoption of the above standards, amendments to published standards and interpretations to existing standards are not expected to have any significant impact on the financial statements of the Group and the Bank except for MFRS 9. The financial effect of adoption of MFRS 9 is still being assessed by the Group and the Bank.

(B) CONSOLIDATION

The consolidated financial statements include the financial statements of the Bank, subsidiaries and a joint venture, made up to the end of the financial year.

(i) Subsidiaries

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct relevant activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement and fair value of any pre-existing equity interest in the subsidiary. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on the acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recognised as goodwill. If the total of the consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the income statement.

Acquisition related costs are expensed as incurred.

If the business combination is achieved in stages, the 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 re-measurement are recognised in profit or loss.



74

(B) CONSOLIDATION

(i) Subsidiaries (continued)

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 139 in profit or loss. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity.

The Group applies predecessor accounting to account for business combinations under common control. Under the predecessor accounting, assets and liabilities acquired are not restated to their respective fair values but at the carrying amounts from the consolidated financial statements of the ultimate holding company of the Group and adjusted to ensure uniform accounting policies of the Group. The difference between any consideration given and the aggregate carrying amounts of the assets and liabilities (as of the date of the transaction) of the acquired entity is recognised as an adjustment to equity. No additional goodwill is recognised.

The acquired entity’s results, assets and liabilities are consolidated from the date on which the business combination between entities under common control occurred. Consequently, the consolidated financial statements do not reflect the results of the acquired entity for the period before the transaction occurred. The corresponding amounts for the previous year are not restated.

Inter-company transactions, balances, unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

(ii) Changes in ownership interests in subsidiaries without change of control

Transactions with non-controlling interests that do not result in loss of control are accounted for as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in equity attributable to owners of the Group.

(iii) Disposal of subsidiaries

When the Group ceases to consolidate because of a loss of control, any retained interest in the entity is re-measured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

Gains or losses on the disposal of subsidiaries include the carrying amount of goodwill relating to the subsidiaries sold.

(iv) Joint arrangements

A joint arrangement is an arrangement of which there is contractually agreed sharing of control by the Group with one or more parties, where decisions about the relevant activities relating to the joint arrangement require unanimous consent of the parties sharing control. The classification of a joint arrangement as a joint operation or a joint venture depends upon the rights and obligations of the parties to the arrangement. A joint venture is a joint arrangement whereby the joint venturers have rights to the net assets of the arrangement. A joint operation is a joint arrangement whereby the joint operators have rights to the assets and obligations for the liabilities, relating to the arrangement.


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ANNUAL REPORT 2016

(B) CONSOLIDATION

(iv) Joint arrangements (continued)

Interests in joint ventures are accounted for using the equity method, after initially being recognised at cost in the consolidated statement of financial position. Under the equity method, the investment in a joint venture is initially recognised at cost, and adjusted thereafter to recognise the Group’s share of the post-acquisition profits or losses of the joint venture in profit or loss, and the Group’s share of movements in other comprehensive income of the joint venture in other comprehensive income. Dividends received or receivable from a joint venture are recognised as a reduction in the carrying amount of the investment. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint venture, including any long-term interests that, in substance, form part of the Group’s net investment in the joint venture, the Group does not recognise further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint venture.

The Group determines at each reporting date whether there is any objective evidence that the investment in the joint venture is impaired. An impairment loss is recognised for the amount by which the carrying amount of the joint venture exceeds its recoverable amount.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interests in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

When the Group ceases to equity account its joint venture because of a loss of joint control, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit or loss. This fair value becomes the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate or financial asset. In addition, any amount previously recognised in other comprehensive income in respect of the entity is accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in a joint venture is reduced but joint control is retained, only a proportionate share of the amounts previously recognised in other comprehensive income is reclassified to profit or loss where appropriate.

(C) INVESTMENTS IN SUBSIDIARIES AND JOINT VENTURES IN SEPARATE FINANCIAL STATEMENTS

In the Bank’s separate financial statements, investments in subsidiaries and joint ventures are carried at cost less accumulated impairment losses. On disposal of investments in subsidiaries and joint ventures, the difference between disposal proceeds and carrying amounts of the investments are recognised in profit or loss.

(D) INTANGIBLE ASSETS

Goodwill

Goodwill arises from a business combination and represents the excess of the aggregate of fair value of consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previous equity interest in the acquiree over the fair value of the net identifiable assets acquired and liabilities assumed on the acquisition date. If the fair value of consideration transferred, the amount of non-controlling interest and the fair value of previously held interest in the acquiree are less than the fair value of the net identifiable assets of the acquiree, the resulting gain is recognised in the profit or loss.

Goodwill is not amortised but it is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired, and carried at cost less accumulated impairment losses. For the purpose of impairment testing,goodwillacquiredinabusinesscombinationisallocatedtoeachofthecashgeneratingunits(“CGUs”),orgroupsofCGUs, that are expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level.

The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.



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(D) INTANGIBLE ASSETS

Computer software

Costs associated with maintaining computer software programmes are recognized as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group and the Bank are recognised as intangible assets when the following criteria are met:

(i) it is technically feasible to complete the software product so that it will be available for use;

(ii) management intends to complete the software product and use or sell it;

(iii) there is an ability to use or sell the software product;

(iv) it can be demonstrated how the software product will generate probable future economic benefits;

(v) adequate technical, financial and other resources to complete the development and to use or sell the software product are available; and

(vi) the expenditure attributable to the software product during its development can be reliably measured.

Directly attributable costs that are capitalised as part of the software product include the software development employee costs and an appropriate portion of relevant overheads.

Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Computer software development costs recognised as assets are amortised from the point at which the asset is ready for use over their estimated useful lives of five years.

(E) IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to the revaluation surplus. Impairment losses on goodwill are not reversed. In respect of other assets, any subsequent increase in recoverable amount is recognised in the income statement unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus reserve.


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(F) RECOGNITION OF INTEREST AND FINANCING INCOME AND EXPENSE

Interestandfinancingincomeandexpenseforall interest/profit-bearingfinancial instrumentsarerecognisedwithin“interestincome”, “interest expense” and “income from Islamic banking business” respectively in the income statement using theeffective interest/profit method.

The effective interest/profit method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest and financing income or expense over the relevant period. The effective interest/profit rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instruments or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest/profit rate, the Group and the Bank take into account all contractual terms of the financial instrument and includes any fees or incremental costs that are directly attributable to the instrument and are an integral part of the effective interest rate, but not future credit losses.

Interest/profit income on impaired financial assets is recognised using the rate of interest/profit used to discount the future cash flows for the purpose of measuring the impairment loss. A financial asset or a group of financial assets is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably estimated.

When a loan/financing receivable is impaired, the Group and the Bank reduce the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest/profit rate of the instrument, and continues unwinding the discount as interest/profit income. Interest/profit income on impaired loans/financing and receivables are recognised using the original effective interest/profit rate.

(G) RECOGNITION OF FEES AND OTHER INCOME

Fees and commissions are recognised as income when all conditions precedent are fulfilled. Commitment fees for loans, advances and financing that are likely to be drawn down are deferred (together with related direct costs) and income which forms an integral part of the effective interest/profit rate of a financial instrument is recognised as an adjustment to the effective interest/profit rate on the financial instrument.

Commitment fees and guarantee fees which are material are recognised as income based on a time apportionment method.

Dividends are recognised when the right to receive payment is established. This applies even if they are paid out of pre-acquisition profits. However, the investment may need to be tested for impairment as a consequence.

Net profit from financial assets held at fair value through profit or loss and financial investments available-for-sale are recognised upon disposal of the assets, as the difference between net disposal proceeds and the carrying amount of the assets.

(H) FINANCIAL ASSETS

Classification

The Group and the Bank classify its financial assets in the following categories: at fair value through profit or loss, loans and receivables, available-for-sale and held-to-maturity. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification at initial recognition and, in the case of assets classified as held-to-maturity, re-evaluate this designation at the end of each reporting period.



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Classification (continued)

(i) Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss are financial assets held-for-trading. A financial asset is classified in this category if it is acquired or incurred principally for the purpose of selling it in the short term. Derivatives are also categorised as held for trading unless they are designated as hedges (Note O).

The Group and the Bank have not elected to designate any financial assets at fair value through profit or loss.

(ii) Loans/financing and receivables

Loans/financing and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

(iii) Financial investments available-for-sale

Financial investments available-for-sale are non-derivatives that are either designated in this category or not classified in any of the other categories.

(iv) Financial investments held-to-maturity

Financial investments held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s and the Bank’s management have the positive intention and ability to hold to maturity. If the Group and the Bank were to sell other than an insignificant amount of held-to-maturity financial assets, the whole category would be tainted and reclassified as available-for-sale.

Recognition and initial measurement

Regular purchases and sales of financial assets are recognised on the settlement date, the date that an asset is delivered to or by the Group and the Bank.

Financial assets are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition of the financial asset for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in profit or loss.

Subsequent measurement – gains and losses

Financial investments available-for-sale and financial assets at fair value through profit or loss are subsequently carried at fair value. Loans/financing and receivables and held-to-maturity financial assets are subsequently carried at amortised cost using the effective interest/profit method.

Changes in the fair values of financial assets at fair value through profit or loss, including the effects of currency translation, interest/profit and dividend income are recognised in income statement in the period in which the changes arise.

Changes in the fair value financial investments available-for-sale are recognised in other comprehensive income, except for impairment losses (Note I) and foreign exchange gains and losses on monetary assets (Note N).

Interest/profit and dividend income on financial investments available-for-sale are recognised separately in income statements. Interest/profit on financial investments available-for-sale calculated using the effective interest/profit method is recognised in income statements. Dividend income on available-for-sale equity instruments are recognised in income statements when the Group’s right to receive payments is established.


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De-recognition

Financial assets are de-recognised when the rights to receive cash flows from the investments have expired or have been transferred and the Group and the Bank have transferred substantially all risks and rewards of ownership.

Loans/financing and receivables that are factored out to banks and other financial institutions with recourse to the Group and the Bank are not derecognised until the recourse period has expired and the risks and rewards of the receivables have been fully transferred. The corresponding cash received from the financial institutions is recorded as borrowings.

When financial investments available-for-sale are sold, the accumulated fair value adjustments recognised in other comprehensive income are reclassified to profit or loss.

Reclassification of financial assets

The Group and the Bank may choose to reclassify a non-derivative trading financial asset out of the held-for-trading category if the financial asset is no longer held for the purpose of selling it in the near term. Financial assets other than loans/financing and receivables are permitted to be reclassified out of the held-for-trading category only in rare circumstances arising from a single event that is unusual and highly unlikely to recur in the near term. In addition, the Group and the Bank may choose to reclassify financial assets that would meet the definition of loans/financing and receivables out of the held-for-trading or available-for-sale categories if the Group and the Bank have the intention and ability to hold these financial assets for the foreseeable future or until maturity at the date of reclassification.

Reclassifications are made at fair value as of the reclassification date. Fair value becomes the new cost or amortised cost as applicable, and no reversals of fair value gains or losses recorded before reclassification date are subsequently made. Effective interest/profit rates for financial assets reclassified to loans/financing and receivables and held-to-maturity categories are determined at the reclassification date. Further increases in estimates of cash flows adjust the effective interest/profit rates prospectively.

(I) IMPAIRMENT OF FINANCIAL ASSETS

Assets carried at amortised cost

The Group and the Bank assess at the end of the reporting period 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 the initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.

The criteria that the Group and the Bank use to determine that there is objective evidence of an impairment loss include among others:

• pastduecontractualpayments;

• significantfinancialdifficultiesoftheborrower;

• probabilityofbankruptcyorotherfinancialre-organisation;

• defaultofrelatedborrower;

• measurabledecreaseinestimatedfuturecashflowthanwasoriginallyenvisaged;and

• significantdeteriorationinissuer’screditrating.



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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 credit losses that have not been incurred) discounted at the financial asset’s original effective interest/profit rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognised in income statements. If ‘loans/financing and receivables’ or a ‘held-to-maturity investment’ has a variable interest/profit rate, the discount rate for measuring any impairment loss is the current effective interest/profit rate determined under the contract.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor’s credit rating), the reversal of the previously recognised impairment loss is recognised in income statements.

When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined.

For loans, advances and financing, the Group and the Bank first assess whether objective evidence of impairment exists individually for loans, advances and financing that are individually significant, and individually or collectively for loans, advances and financing that are not individually significant. If the Group and the Bank determine that no objective evidence of impairment exists for individually assessed loans, advances and financing, whether significant or not, it includes the asset in a group of loans, advances and financing with similar credit risk characteristics and collectively assesses them for impairment.

(i) Individual impairment allowance

Loans, advances and financing that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. Loans/financings that are individually assessed for impairment and for which no impairment loss is required (over-collateralised loans/financing) are collectively assessed as a separate segment.

The amount of the loss is measured as the difference between the loan/financing’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the loan/financing’s original effective interest/profit rate. The carrying amount of the loan/financing is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. If a loan/financing has a variable interest/profit rate, the discount rate for measuring any impairment loss is the current effective interest/profit rate determined under the contract.

The calculation of the present value of the estimated future cash flows of a collateralised loan/financing reflects the cash flows that may result from foreclosure less costs for obtaining and selling the collateral, whether or not foreclosure is probable.

(ii) Collective impairment allowance

For the purposes of a collective evaluation of impairment, loans, advances and financing are grouped on the basis of similar credit risk characteristics. Those characteristics are relevant to the estimation of future cash flows for groups of such loans, advances and financing by being indicative of the borrowers’ ability to pay all amounts due according to the contractual terms of the loans/financing being evaluated.

Future cash flows in a group of loans/financing that are collectively evaluated for impairment are estimated on the basis of the contractual cash flows of the loans/financing in the Bank and historical loss experience for loans/financing with credit risk characteristics similar to those in the Bank. Historical loss experience is adjusted on the basis of current observable data to reflect the effects of current conditions that did not affect the period on which the historical loss experience is based and to remove the effects of conditions in the historical period that do not currently exist.

Estimates of changes in future cash flows for groups of loans/financing should reflect and be directionally consistent with changes in related observable data from period to period (for example, changes in unemployment rates, property prices, payment status, or other factors indicative of changes in the probability of losses in the Group and the Bank and their magnitude). The methodology and assumptions used for estimating future cash flows are reviewed regularly by the Group and the Bank to reduce any differences between loss estimates and actual loss experience.


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(ii) Collective impairment allowance (continued)

Based on the Guideline on Classification and Impairment Provisions for Loans/Financing, banking institutions are required to maintain, in aggregate, collective impairment provisions and regulatory reserves of no less than 1.2% of total outstanding loans/financing (excluding loans/financing with an explicit guarantee from the Federal Government of Malaysia), net of individual impairment provisions. Banking institutions are required to comply with the requirement by 31 December 2015.

As at reporting date, the Group and the Bank have maintained the collective impairment provisions and regulatory reserves of no less than 1.2% in the books.

Assets classified as available-for-sale

The Group and the Bank assess at the end of the reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired.

For debt securities, the Group and the Bank assess at each date of the statement of financial position whether there is any objective evidence that a financial investment or group of financial investments is impaired. The criteria the Group and the Bank use to determine whether there is objective evidence of impairment include non-payment of coupon or principal redemption, significant financial difficulty of issuer or obligor and significant drop in rating.

In the case of equity securities classified as available-for-sale, in addition to the criteria above, a significant or prolonged decline in the fair value of the security below its cost is also considered as an indicator that the assets are impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss that had been recognised directly in equity is removed from equity and recognised in income statements. The amount of cumulative loss reclassified to profit or loss is the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in income statements. Impairment losses recognised in income statements on equity instruments classified as available-for-sale are not reversed through income statements.

If, in a subsequent period, the fair value of a debt instrument classified as available-for-sale increases and the increase can be objectively related to an event occurring after the impairment loss was recognised in income statements, the impairment loss is reversed through income statements in subsequent periods.

(J) FINANCIAL LIABILITIES

All financial liabilities which include derivative financial instruments have to be recognised in the statement of financial position and measured in accordance with their assigned category.

The Group and the Bank’s holding in financial liabilities are in financial liabilities at fair value through profit or loss (including financial liabilities held-for-trading and those that designated at fair value) and financial liabilities at amortised cost. Financial liabilities are initially recognised at fair value plus transaction costs for all financial liabilities not carried at fair value through profit or loss.

Financial liabilities at fair value through profit or loss

This category comprises two sub-categories: financial liabilities classified as held-for-trading, and financial liabilities designated by the Group and the Bank as at fair value through profit or loss upon initial recognition. The Group and the Bank do not have any non-derivative financial liabilities designated at fair value through profit or loss.

A financial liability is classified as held-for-trading if it is acquired or incurred principally for the purpose of selling or repurchasing it in the near term or if it is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking. Derivatives are also categorised as held-for-trading unless they are designated and effective as hedging instruments.

Financial liabilities classified as held-for-trading are initially recognised at fair value, and transaction costs are expensed in profit or loss. Gains and losses arising from changes in fair value of financial liabilities classified held-for-trading are included in the income statement.



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(J) FINANCIAL LIABILITIES

Other liabilities measured at amortised cost

Financial liabilities that are not classified as at fair value through profit or loss fall into this category and are measured at amortised cost.

De-recognition

Financial liabilities are de-recognised when they have been redeemed or otherwise extinguished.

(K) OFFSETTING FINANCIAL INSTRUMENTS

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the assets and settle the liability simultaneously.

The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy.

(L) PROPERTY AND EQUIPMENT AND DEPRECIATION

Property and equipment are initially stated at cost, net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the government. When the amount of GST incurred is not recoverable from the government, the GST is recognised as part of the cost of acquisition of the property and equipment.

Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any. The cost of an item of property and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Cost also include borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is de-recognised. All other repairs and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.

Freehold land is not depreciated as it has an infinite life. Other property and equipment are depreciated on the straight-line basis to allocate the cost, to their residual values over their estimated useful lives, summarised as follows:

Buildings 50 years Leasehold buildings 50 years or over the remaining lease period, whichever is shorter Renovation and leasehold premises 5 years or the period of the lease whichever is greater Office equipment and furniture 10 years Computer equipment and software 5 years Motor vehicles 5 years

Depreciation on capital work in progress commences when the assets are ready for their intended use.

Residual value and useful lives of assets are reviewed, and adjusted if appropriate, at the end of each reporting period.

At the end of the reporting period, the Group assesses whether there is any indication of impairment or whenever events or changes in circumstances indicate the carrying amount may not be recoverable. A write down is made if the carrying amount exceeds the recoverable amount.

Gains and losses on disposal are determined by comparing proceeds with carrying amount and are recognised within other operating income in the income statement.


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(M) LEASES

Accounting by lessee

Finance leases

Leases of property and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property and the present value of the minimum lease payments.

Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate on the finance balance outstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. The interest element of the finance charge is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. Property and equipment acquired under finance leases are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.

Initial direct costs incurred by the Group in negotiating and arranging finance leases are added to the carrying amount of the leased assets and recognised as an expense in income statement over the lease term on the same basis as the lease expense.

Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on the straight-line basis over the lease period.

Initial direct costs incurred by the Group in negotiating and arranging operating leases are recognised in income statement when incurred.

(N) FOREIGN CURRENCY TRANSLATIONS

Functional and presentation currency

Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The financial statements are presented in Ringgit Malaysia, which is the Bank’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchanges rate prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement. However, exchange differences are deferred in other comprehensive income when they arose from qualifying cashflow or net investment hedge or are attributable to items that form part of the net investment in a foreign operation.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the security and other changes in the carrying amount of the security. Translation differences related to changes in the amortised cost are recognised in income statement, and other changes in the carrying amount are recognised in other comprehensive income.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit and loss, are reported as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in other comprehensive income.



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(O) DERIVATIVE FINANCIAL INSTRUMENTS

Derivatives are initially recognised at fair values on the date on which derivative contracts are entered into and are subsequently remeasured at their fair values at the end of each reporting period. Fair values are obtained from quoted market prices in active markets, including recent market transactions, and valuation techniques, including discounted cash flow models and option pricing models, as appropriate. All derivatives are carried as assets when fair values are positive and as liabilities when fair values are negative.

The best evidence of fair value of a derivative at initial recognition is the transaction price (i.e the fair value of the consideration given or received) unless fair value of the instrument is evidenced by comparison with other observable current market transactions in the same instrument (i.e without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets.

The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged.

As at reporting date, the Group and the Bank have not designated any derivative as hedging instruments.

Changes in the fair value of any derivative instrument that does not qualify for hedge accounting are recognised immediately in the income statement.

(P) CURRENT AND DEFERRED INCOME TAXES

Current tax

Tax expense for the period comprises current and deferred income tax. The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Tax is recognised in income statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case the tax is also recognised in other comprehensive income or directly in equity, respectively.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Group’s subsidiaries and branch operate and generate taxable income.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. This liability is measured using the single best estimate of the most likely outcome.

Deferred tax

Deferred tax is provided in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses or unused tax credits can be utilised.

Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax assets is realised or the deferred tax liability is settled.


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(P) CURRENT AND DEFERRED INCOME TAXES

Deferred tax (continued)

Deferred tax liability is recognised for all temporary differences associated with investment in subsidiaries and joint venture except where the timing of the reversal of the temporary difference can be controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Generally, the joint venturer is unable to control the reversal of the temporary difference for joint ventures. Only where there is an agreement in place that gives the joint venturer the ability to control the reversal of the temporary difference, a deferred tax liability is not recognised.

Deferred income tax assets are recognised on deductible temporary differences arising from investment in subsidiaries and joint arrangements only to the extent that it is probable the temporary difference will reverse in future and there is sufficient taxable profit available against which the deductible temporary difference can be utilised.

Deferred and income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on net basis.

(Q) ZAKAT

Zakat represents business zakat payable by the Group to comply with the principles of Shariah and as approved by the Shariah Committee. The Bank’s subsidiary, AFFIN Islamic Bank Berhad only pays zakat on its business and does not pay zakat on behalf of depositors. Zakat provision is calculated based on 2.5775% of the prior year’s net asset method.

(R) CASH AND CASH EQUIVALENTS

Cash and cash equivalents consists of cash in hand, bank balances and deposits and placements maturing within one month which are held for the purpose of meeting short term commitments and are readily convertible to known amount of cash without significant risk of changes in value.

(S) FORECLOSED PROPERTIES

Foreclosed properties are stated at the lower of their carrying amount and fair value less cost to sell.

(T) CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The Group and the Bank do not recognise contingent assets and liabilities other than those arising from business combination, but disclose its existence in the financial statements. A contingent liability is possible obligation that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group and the Bank or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare case where there is a liability that cannot be recognised because it cannot be measured reliably. However, contingent liabilities do not include financial guarantee contracts.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by the occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group and the Bank. The Group and the Bank do not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.



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(U) BILLS AND ACCEPTANCES PAYABLE

Bills and acceptances payable, which are financial liabilities, represent the Bank’s own bills and acceptances rediscounted and outstanding in the market (Note J).

(V) PROVISIONS

Provisions are recognised by the Group and the Bank when all of the following conditions have been met:

• theGroupandtheBankhaveapresentlegalorconstructiveobligationasaresultofpastevents;

• itisprobablethatanoutflowofresourcestosettletheobligationwillberequired;and

• areliableestimateoftheamountofobligationcanbemade.

Where the Group and the Bank expect a provision to be reimbursed (for example, under an insurance contract), the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Provisions are not recognised for future operating losses.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best estimate of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as finance cost expense.

(W) EMPLOYEE BENEFITS

Short-term employee benefits

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled.

Defined contribution plan

The defined contribution plan is a pension plan under which the Group pays fixed contributions to the National Pension Scheme, the Employees’ Provident Fund (‘EPF’) and will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.

The Group’s contribution to defined contribution plans are charged to the income statement in the period to which they relate. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

Termination benefits

Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without any possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.


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ANNUAL REPORT 2016

(X) FINANCIAL GUARANTEE CONTRACTS

Financial guarantee contracts are contracts that require the Group or Bank to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due, in accordance with the terms of a debt instrument. Such financial guarantees are given to financial institutions and other bodies on behalf of customers to secure loans, overdrafts and other banking facilities.

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measuredatfairvalueandsubsequentlyatthehigheroftheamountdeterminedinaccordancewithMFRS137“Provisions,contingentliabilitiesandcontingentassets”andtheamountinitiallyrecognisedlesscumulativeamortisation,whereappropriate.

The fair value of financial guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where financial guarantees in relation to loans/financing or payables of subsidiaries are provided by the Bank for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of investment in subsidiaries.

(Y) SALE AND REPURCHASE AGREEMENTS

Securities purchased under resale agreements are securities which the Group and the Bank have purchased with a commitment to resell at future dates. The commitment to resell the securities is reflected as an asset on the statements of financial position.

Conversely, obligations on securities sold under repurchase agreements are securities which the Group and the Bank have sold from its portfolio, with a commitment to repurchase at future dates. Such financing and the obligation to repurchase the securities is reflected as a liability on the statement of financial position.

The difference between sale and repurchase price as well as purchase and resale price are amortised as interest income and interest expense respectively on an effective yield method.

(Z) RESTRICTED INVESTMENT ACCOUNTS (‘RIA’)

These deposits are used to fund specific financing. The RIA is a contract based on the Shariah concept of Mudharabah between two parties, i.e. investor and entrepreneur 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 will be shared based on pre-agreed ratios with the Bank as Mudarib (manager or manager of funds), and losses shall be borne solely by capital provider.

(AA) SHARE CAPITAL

Classification

Ordinary shares are classified as equity. Other shares are classified as equity and/or liability according to the economic substance of the particular instrument.

Share issue costs

Incremental costs directly attributable to the issue of new shares or options are deducted against share premium account.

Dividend distribution

Liability is recognised for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of the Group, on or before the end of the reporting period but not distributed at the end of the reporting period.

Distributions to holders of an equity instrument are recognised directly in equity.



88

(AA) SHARE CAPITAL

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing:

• theprofitattributabletoownersoftheBank,excludinganycostsofservicingequityotherthanordinaryshares;and

• bytheweightedaveragenumberofordinarysharesoutstandingduringthefinancialyear,adjustedforbonuselementsinordinary shares issued during the year and excluding treasury shares.

Diluted earnings per share

Diluted earnings per share adjusts the figures in the determination of basic earnings per share to take into account:

• theafterincometaxeffectofinterestandotherfinancingcostsassociatedwithdilutivepotentialordinaryshares,and

• theweightedaveragenumberofadditionalordinarysharesthatwouldhavebeenoutstandingassumingtheconversionofall dilutive potential ordinary shares.

(AB) BORROWINGS

Borrowings are recognised initially at fair value, net of transaction costs incurred.

Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the redemption value is recognised in profit or loss over the period of the borrowings using the effective interest/profit method.

All borrowing costs are recognised in profit or loss in the period in which they are incurred.


89

ANNUAL REPORT 2016


1 GENERAL INFORMATION

The Bank is principally engaged in all aspects of banking and related financial services. The principal activities of the Bank’s subsidiaries are Islamic banking business, property management services, nominee and trustee services. There have been no significant changes in the nature of these activities during the financial year.

The holding company of the Bank is AFFIN Holdings Berhad, a public listed company incorporated in Malaysia and the ultimate holding corporate body is Lembaga Tabung Angkatan Tentera, a statutory body incorporated under the Tabung Angkatan Tentera Act, 1973.

The Bank is a limited liability company, incorporated and domiciled in Malaysia.

2 CASH AND SHORT-TERM FUNDS


Cash and bank balances with banks and other financial institutions 289,669 837,705 282,862 830,099

Money at call and deposit placements maturing within one month 4,074,821 3,233,005 3,054,969 1,372,923

4,364,490 4,070,710 3,337,831 2,203,022

3 DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS


Licensed banks 152,234 316,653 406,075 349,772

Other financial institutions - 35,034 - -

152,234 351,687 406,075 349,772

4 FINANCIAL ASSETS HELD-FOR-TRADING


At fair value

Negotiable Instruments of Deposit - 150,121 - 150,121

- 150,121 - 150,121


90


5 DERIVATIVE FINANCIAL ASSETS

The Group The Group 2016 2015 Contract/ Contract/ notional notional amount Assets amount Assets RM’000 RM’000 RM’000 RM’000

At fair value

Foreign exchange derivatives:

Currency forwards 1,764,528 113,263 966,652 76,445

Cross currency swaps 1,963,860 36,441 2,571,803 81,272

Currency options - - 39,130 (12)

Interest rate derivatives:

Interest rate swaps 1,013,500 17,600 1,610,148 16,332

4,741,888 167,304 5,187,733 174,037

The Bank The Bank 2016 2015 Contract/ Contract/ notional notional amount Assets amount Assets RM’000 RM’000 RM’000 RM’000

At fair value


Currency forwards 1,738,521 111,513 1,099,793 77,153


Currency options - - 39,130 (12)



4,812,625 166,240 5,320,874 174,745

91

ANNUAL REPORT 2016


6 FINANCIAL INVESTMENTS AVAILABLE-FOR-SALE


At fair value

Money market instruments:

Malaysian Government securities 90,237 39,997 90,237 39,997

Malaysian Government investment issues 1,527,767 1,863,822 898,982 1,249,964

Sukuk Perumahan Kerajaan 406,288 655,690 276,858 468,472

Negotiable Instruments of Deposit and Islamic Debt Certificates 2,514,468 2,134,612 2,514,468 2,134,612

Khazanah Bonds/Sukuk 439,219 437,819 265,931 272,538

4,977,979 5,131,940 4,046,476 4,165,583

Unquoted securities:

Shares in Malaysia 216,948 206,724 216,948 205,167

Corporate bonds/Sukuk

- in Malaysia 4,663,751 4,446,167 3,761,846 3,937,676

- outside Malaysia 421,675 503,820 421,675 503,820

10,280,353 10,288,651 8,446,945 8,812,246

Allowance for impairment losses (356) (1,301) (356) (269)

10,279,997 10,287,350 8,446,589 8,811,977


Movement in allowance for impairment losses

At beginning of the financial year 1,301 45,322 269 44,290

Allowance made during the financial year 318 - 318 -

Amount written-off (1,263) (44,021) (231) (44,021)

At end of the financial year 356 1,301 356 269

Included in the Group and the Bank’s financial investments available-for-sale are corporate bonds amounting to RM1,057.7 million (2015: RM1,864.9 million) which are pledged as collateral for obligation on the securities sold under repurchase agreements.


92


7 FINANCIAL INVESTMENTS HELD-TO-MATURITY


At amortised cost

Unquoted securities:

Corporate bonds/Sukuk in Malaysia 377,061 380,832 304,939 304,550

Allowance for impairment losses (3,537) (178) (3,537) (178)

373,524 380,654 301,402 304,372



At beginning of the financial year 178 44,278 178 44,278

Allowance made during the financial year 3,537 - 3,537 -

Amount write-back - (22,037) - (22,037)

Amount written-off (178) (22,063) (178) (22,063)

At end of the financial year 3,537 178 3,537 178

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ANNUAL REPORT 2016


8 LOANS, ADVANCES AND FINANCING

(i) By type


Overdrafts 1,919,668 1,960,022 1,640,789 1,645,595

Term loans/financing

- Housing loans/financing 6,964,223 6,172,180 4,106,693 4,075,922

- Hire purchase receivables 11,920,683 12,000,990 8,739,325 9,290,597

- Syndicated financing 2,079,384 1,810,209 1,496,645 1,319,486

- Business term loans/financing 13,440,419 13,416,080 9,898,640 10,555,927

Bills receivables 30,113 321,091 8,738 284,455

Trust receipts 297,955 298,417 291,017 285,817

Claims on customers under acceptances credits 1,082,209 1,016,613 907,586 892,716

Staff loans/financing (of which RM Nil to Directors) 155,172 146,494 142,063 136,958

Credit cards 91,091 83,769 91,091 83,769

Revolving credits 5,069,950 5,373,961 3,750,341 4,751,488

Factoring 1,560 4,369 1,560 4,369

Gross loans, advances and financing 43,052,427 42,604,195 31,074,488 33,327,099

Less:

Allowance for impairment losses

- Individual (149,499) (270,137) (131,497) (231,621)

- Collective (234,631) (229,461) (189,637) (192,790)

Total net loans, advances and financing 42,668,297 42,104,597 30,753,354 32,902,688

Included in the Group and the Bank’s term loans are housing loans sold to Cagamas Berhad with recourse amounting to RM Nil (2015: RM134.6 million).

Included in the Group’s business term loans/financing as at reporting date is RM53.7 million (2015: RM53.7 million) and RM78.0 million (2015: RM63.9 million) of term financing disbursed by AFFIN Islamic Bank Berhad to joint ventures AFFIN-i Nadayu Sdn Bhd and KL South Development Sdn Bhd respectively.

(ii) By maturity structure


Maturing within one year 8,828,952 9,755,365 6,790,065 8,329,031

One year to three years 4,700,048 4,455,462 3,690,330 3,913,159

Three years to five years 7,072,074 6,700,288 5,696,213 5,772,922

Over five years 22,451,353 21,693,080 14,897,880 15,311,987

43,052,427 42,604,195 31,074,488 33,327,099


94



(iii) By type of customer


Domestic banking institutions 3,033 - 3,033 -

Domestic non-banking institutions

- Stockbroking companies - 221 - 221

- Others 814,693 1,575,279 605,194 1,447,078

Domestic business enterprises

- Small medium enterprises 12,504,565 9,069,401 10,729,868 8,060,187

- Others 10,225,035 13,078,516 7,708,023 10,448,275

Government and statutory bodies 1,467,488 1,137,674 85,570 534,604

Individuals 17,663,433 16,799,087 11,696,882 12,067,560

Other domestic entities 88,036 109,263 78,346 83,478

Foreign entities 286,144 834,754 167,572 685,696

43,052,427 42,604,195 31,074,488 33,327,099

(iv) By interest/profit rate sensitivity


Fixed rate

- Housing loans/financing 403,899 400,386 357,962 347,831

- Hire purchase receivables 11,920,683 12,000,990 8,739,326 9,290,597

- Other fixed rate loans/financing 3,434,446 3,986,107 2,079,862 2,670,561

Variable rate

- BLR plus 16,749,266 16,014,700 11,359,696 12,228,698

- Cost plus 10,544,133 10,202,012 8,537,642 8,789,412

43,052,427 42,604,195 31,074,488 33,327,099

95

ANNUAL REPORT 2016



(v) By economic sectors


Primary agriculture 896,922 692,126 494,803 413,218

Mining and quarrying 861,542 723,167 850,194 710,130

Manufacturing 2,102,831 2,254,941 1,768,086 2,029,121

Electricity, gas and water supply 182,805 173,888 118,436 116,517

Construction 2,509,215 3,521,131 1,986,124 2,966,971

Real estate 7,845,338 6,885,709 6,389,929 5,715,112

Wholesale & retail trade and restaurants & hotels 2,791,557 2,437,432 2,383,908 2,218,930

Transport, storage and communication 2,082,979 2,072,151 1,798,763 1,866,149

Finance, insurance and business services 2,835,367 4,285,232 2,374,384 3,718,355

Education, health and others 3,077,832 2,590,004 1,046,112 1,388,887

Household 17,795,793 16,925,393 11,793,554 12,164,391

Others 70,246 43,021 70,195 19,318

43,052,427 42,604,195 31,074,488 33,327,099

(vi) By economic purpose


Purchase of securities 664,778 299,011 389,262 296,578

Purchase of transport vehicles 12,281,400 12,438,031 9,030,869 9,702,193

Purchase of landed property of which:

- Residential 7,078,070 6,404,657 4,134,200 4,229,105

- Non-residential 5,991,465 5,891,022 4,879,275 4,911,687

Fixed assets other than land and building 325,485 240,609 253,064 164,273

Personal use 691,241 745,510 637,648 709,015

Credit card 91,091 83,769 91,091 83,769

Consumer durable 879 852 879 852

Construction 3,215,672 3,127,244 2,319,987 2,325,499

Merger and acquisition 97,992 247,706 97,992 247,706

Working capital 12,251,552 12,777,233 9,114,083 10,440,927

Others 362,802 348,551 126,138 215,495

43,052,427 42,604,195 31,074,488 33,327,099


96



(vii) By geographical distribution


Perlis 195,079 155,914 47,641 34,185

Kedah 1,434,211 1,362,515 772,318 803,114

Pulau Pinang 2,369,676 2,142,594 2,007,416 1,911,468

Perak 1,416,128 1,302,338 973,397 914,655

Selangor 12,411,054 12,878,079 8,950,162 9,800,065

Wilayah Persekutuan 12,986,958 13,155,004 8,752,844 10,272,358

Negeri Sembilan 1,216,093 994,321 767,492 663,569

Melaka 1,030,455 1,003,701 831,300 854,858

Johor 4,046,707 3,449,496 3,212,336 3,004,105

Pahang 897,686 845,284 595,356 551,457

Terengganu 743,413 803,862 347,503 385,226

Kelantan 216,290 229,607 63,115 67,998

Sarawak 1,710,795 1,577,489 1,578,664 1,508,223

Sabah 1,626,472 1,621,746 1,570,576 1,593,194

Labuan 664,510 684,220 600,536 684,164

Outside Malaysia 86,900 398,025 3,832 278,460

43,052,427 42,604,195 31,074,488 33,327,099

(viii) Movements of impaired loans


At beginning of the financial year 767,847 713,648 626,139 584,491

Classified as impaired 679,669 872,231 515,330 763,856

Reclassified as non-impaired (383,917) (394,738) (272,326) (326,841)

Amount recovered (197,704) (149,944) (110,492) (131,082)

Amount written-off (177,949) (273,350) (168,204) (264,285)

At end of the financial year 687,946 767,847 590,447 626,139

Ratio of gross impaired loans, advances and financing to gross loans, advances and financing 1.60% 1.80% 1.90% 1.88%

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ANNUAL REPORT 2016



(ix) Movements in allowance for impairment on loans, advances and financing


Individual impairment


Allowance made during the financial year 81,349 257,645 62,010 254,086

Amount recovered (59,431) (7,293) (23,569) (7,246)


Unwinding of income (10,324) (33,004) (10,125) (32,376)

Exchange differences 357 6,495 - -



Collective impairment


Net allowance made during the financial year 49,832 17,224 35,935 11,265



(x) Impaired loans by economic sectors



Mining and quarrying 120 15 63 15

Manufacturing 20,434 35,535 19,406 35,187

Electricity, gas and water supply 207 148 96 148

Construction 102,416 81,302 97,335 80,914

Real estate 56,931 89,268 23,296 3,401

Wholesale & retail trade and restaurants & hotels 46,878 37,463 46,289 35,563

Transport, storage and communication 2,106 3,314 1,799 3,013

Finance, insurance and business services 128,829 216,444 128,337 216,333

Education, health and others 732 2,602 570 2,460

Household 314,962 287,368 258,968 234,717

687,946 767,847 590,447 626,139


98



(xi) Impaired loans by economic purpose


Purchase of securities 158 804 158 804

Purchase of transport vehicles 86,062 82,026 69,732 69,400

Purchase of landed property of which:

- Residential 203,075 180,137 161,680 140,674

- Non-residential 54,715 24,010 48,562 22,634

Fixed assets other than land and building 878 164 651 164

Personal use 28,441 20,539 27,616 20,044

Credit card 408 389 408 389

Consumer durable 17 16 17 16

Construction 39,998 98,031 39,998 12,164

Working capital 267,187 338,087 234,618 336,206

Others 7,007 23,644 7,007 23,644

687,946 767,847 590,447 626,139

(xii) Impaired loans by geographical distribution


Perlis 5,245 680 443 639

Kedah 48,834 19,972 45,818 18,964

Pulau Pinang 41,022 42,525 38,916 41,000

Perak 18,490 18,793 14,165 14,871

Selangor 264,698 417,971 233,730 389,349

Wilayah Persekutuan 79,564 89,094 76,894 83,164

Negeri Sembilan 79,423 13,949 74,573 11,230

Melaka 16,091 7,231 15,153 6,749

Johor 27,974 25,596 26,457 23,518

Pahang 9,574 8,262 7,880 6,917

Terengganu 6,245 5,307 1,229 1,389

Kelantan 5,337 5,068 1,694 1,435

Sarawak 7,951 6,918 7,753 6,666

Sabah 45,914 20,614 45,742 20,248

Outside Malaysia 31,584 85,867 - -

687,946 767,847 590,447 626,139

99

ANNUAL REPORT 2016


9 OTHER ASSETS


Other debtors 21,343 49,586 19,424 46,847

Prepayments and deposits 21,898 23,360 21,429 22,740

Cheque clearing accounts 10,721 6,803 7,759 6,501

Foreclosed properties (a) 7,970 4,906 5,329 4,315

61,932 84,655 53,941 80,403

(a) Foreclosed properties


Purchased during the financial year 3,558 - 1,508 -

Disposal during the financial year (435) (4,193) (435) (4,193)

8,029 4,906 5,388 4,315

Foreclosed properties - impairment made (59) - (59) -


10 AMOUNT DUE FROM SUBSIDIARIES

The Bank 2016 2015 RM’000 RM’000

Advances to AFFIN Islamic Bank Berhad 196,828 -

Advances to other subsidiaries 11 61

196,839 61

The advances to subsidiaries are unsecured, bear no interest rate (2015: Nil) and repayable on demand.

11 AMOUNT DUE FROM JOINT VENTURES

The Group 2016 2015 RM’000 RM’000

Advances to joint ventures 46,725 39,936

46,725 39,936

The advances to joint ventures are unsecured, bear average profit rate 7.72% (2015: 7.85%) and repayable on demand.

12 AMOUNT DUE FROM ASSOCIATE

The Group 2016 2015 RM’000 RM’000

Advances to associate 500 -

500 -

The advances to associates are unsecured, bear no profit rate and payable on demand.


100


13 DEFERRED TAX ASSETS / (LIABILITIES)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts determined after appropriate offsetting, are shown in the statement of financial position:


Deferred tax assets 8,056 3,598 - -

Deferred tax liabilities (12,884) (15,104) (12,884) (15,104)

(4,828) (11,506) (12,884) (15,104)

Deferred tax assets:

- settled more than 12 months - - - -

- settled within 12 months 35,380 20,517 27,071 16,549

Deferred tax liabilities:

- settled more than 12 months (6,705) (4,219) (6,685) (4,012)

- settled within 12 months (33,503) (27,804) (33,270) (27,641)

Deferred tax (liabilities)/assets (4,828) (11,506) (12,884) (15,104)

At beginning of the financial year (11,506) 3,118 (15,104) 218

Credited/(charged) to income statement (Note 37) 8,396 1,855 7,145 1,799

Charged to equity (1,718) (16,479) (4,925) (17,121)

At end of the financial year (4,828) (11,506) (12,884) (15,104)

The movement in deferred tax assets and liabilities during the financial year are as follows (RM’000):

Provision Financial The Group Property and Intangible for other investment 2016 equipment assets liabilities AFS Total

At beginning of the financial year (3,285) (4,204) 18,021 (22,038) (11,506)

(Charged)/credited to income statements (343) (2,916) 11,655 - 8,396

Charged to equity - - - (1,718) (1,718)

At end of the financial year (3,628) (7,120) 29,676 (23,756) (4,828)

Provision Financial The Group Property and Intangible for other investment 2015 equipment assets liabilities AFS Total

At beginning of the financial year (3,950) (3,422) 16,049 (5,559) 3,118

Credited/(charged) to income statements 665 (782) 1,972 - 1,855



101

ANNUAL REPORT 2016


13 DEFERRED TAX ASSETS / (LIABILITIES)

Provision Financial The Bank Property and Intangible for other investment 2016 equipment assets liabilities AFS Total

At beginning of the financial year (3,018) (4,101) 16,551 (24,536) (15,104)

(Charged)/credited to income statements (358) (3,019) 10,522 - 7,145



Provision Financial The Bank Property and Intangible for other investment 2015 equipment assets liabilities AFS Total

At beginning of the financial year (3,638) (3,208) 14,479 (7,415) 218

Credited/(charged) to income statements 620 (893) 2,072 - 1,799



The amount of unused tax losses for which no deferred tax asset is recognised in the statement of financial position are as follows:


Tax losses 98,867 98,865 - -

14 STATUTORY DEPOSITS WITH BANK NEGARA MALAYSIA

A non-interest bearing statutory deposit is maintained with Bank Negara Malaysia in compliance with requirements of Section 26(2)(c) of the Central Bank of Malaysia Act 2009, the amounts of which is determined at a set percentage of total eligible liabilities.

15 INVESTMENT IN SUBSIDIARIES

The Bank 2016 2015 RM’000 RM’000

Unquoted shares, at cost 578,103 519,509

Less: Allowance for impairment losses (2,879) (30,435)

575,224 489,074


102


15 INVESTMENT IN SUBSIDIARIES

The Bank 2016 2015 RM’000 RM’000


At beginning of the financial year 30,435 30,435

Amount written off (27,556) -

At end of the financial year 2,879 30,435

The subsidiaries of the Bank, all of which are incorporated in Malaysia, are as follows:

Percentage of equity held Name Principal Activities 2016 2015 % %

AFFIN Islamic Bank Bhd Islamic banking business 100 100

PAB Properties Sdn Bhd Property management services 100 100

ABB Nominee (Tempatan) Sdn Bhd Share nominee services 100 100

ABB Trustee Berhad * Trustee management services 100 100

AFFIN Recoveries Bhd Dormant 100 100

ABB Nominee (Asing) Sdn Bhd Dormant 100 100

AFFIN Factors Sdn Bhd (#) Dormant - 100

AFFIN Futures Sdn Bhd (#) Dormant - 100

ABB IT & Services Sdn Bhd (#) Dormant - 100

BSNCB Nominees (Tempatan) Sdn Bhd (#) Dormant - 100

BSNC Nominees (Tempatan) Sdn Bhd (#) Dormant - 100

PAB Property Development Sdn Bhd (#) Dormant - 100

AFFIN-ACF Nominees (Tempatan) Sdn Bhd (#) Dormant - 100

* 80% held by Directors of the Bank, in trust for the Bank.

# Voluntary winding up.

16 INVESTMENT IN JOINT VENTURES

The Group and The Bank 2016 2015 RM’000 RM’000

Unquoted shares at cost 650 650

Group’s share of post acquisition retained losses (650) (650)

- -

The summarised financial information of joint ventures are as follows:

Revenue 60,158 14,268

Loss after tax (3,777) (268)

Total assets 286,991 269,037

Total liabilities 297,038 275,307

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ANNUAL REPORT 2016


16 INVESTMENT IN JOINT VENTURES

AFFIN-i KLSD 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

Net liabilities

At beginning of the financial year (4,155) (2,714) (3,559) (4,732)

Loss for the financial year (328) (1,441) (3,449) 1,173

At end of the financial year (4,483) (4,155) (7,008) (3,559)

Issued and paid up share capital 1,000 1,000 500 500

Interest in joint venture (%) 50 50 30 30

Loss in joint venture (RM’000) (2,242) (2,078) (2,102) (1,068)

Both the joint ventures’ principal activities are property developments.

As the Group’s share of cumulative losses of RM3.7 million (2015: RM2.5 million) as at 31 December 2016 exceeded its profit in the joint ventures, the Group does not recognise further losses in its financial statements.

AFFIN-i Nadayu Sdn Bhd (‘AFFIN-i’)

On 1 April 2008, AFFIN Islamic Bank Berhad (‘AiBB’) and Jurus Positif Sdn Bhd, a subsidiary of Nadayu Properties Berhad entered into a Musharakah Joint Venture Agreement under the Shariah principles (‘Musharakah Agreement’) to joint develop a land into a housing scheme at Bukit Gambir, Pulau Pinang.

The Musharakah Agreement also includes an arrangement whereby Jurus Positif Sdn Bhd may acquire the AiBB’s shares upon the completion of the project at a mutually agreed price, unless if both shareholders decide to continue the joint venture for subsequent projects.

Major strategic operation and financial decisions relating to the activities of AFFIN-i Nadayu requires unanimous consent by both joint venture parties. The Group’s interest in AFFIN-i Nadayu Sdn Bhd has been treated as investment in joint venture, which has been accounted for in the consolidated financial statements using the equity method of accounting.

KL South Development Sdn Bhd (‘KLSD’)

On 2 January 2013, AiBB entered into a Musharakah Joint Venture Agreement (‘Musharakah Agreement’) with Albatha Bukit Kiara Holdings Sdn Bhd (‘Albatha’), a subsidiary of Bukit Kiara Capital Sdn Bhd, to joint develop a property project namely “VERVESuitesKLSouth”atJalanKlangLama,KualaLumpur.

Pursuant to the Musharakah Agreement, AiBB acquired 30% stake in the joint venture company namely KL South Development Sdn Bhd (‘KL South’) by way of subscription of 150,000 shares of RM1.00 each in KL South at par. The remaining stake of 70% in KL South is held by Albatha.

Under the Musharakah structure, AiBB would be the sole banker to KL South, providing financing using the Islamic concept such as Ijarah for the purchase of building and Istisna’ for the bridging financing.

Major strategic operation and financial decisions relating to the activities of KL South requires consent by both joint venture parties. The Group’s interest in KL South has been treated as investment in joint venture, which has been accounted for in the consolidated financial statements using the equity method of accounting.

Block B was launched on 1st July 2013 and its construction was completed with Certificate of Completion and Compliance (CCC) duly issued on 30th August 2016.

Construction of Block A shall complete by April 2017.


104


17 INVESTMENT IN ASSOCIATE

Raeed Holdings Sdn Bhd

Raeed Holdings Sdn Bhd (‘Raeed’) is a consortium formed by six Islamic banking institutions in Malaysia namely Affin Islamic Bank Berhad, Bank Islam Malaysia Berhad, Bank Muamalat Malaysia Berhad, Maybank Islamic Berhad, Bank Kerjasama Rakyat Malaysia and Bank Simpanan Nasional. Raeed has set up a wholly-owned subsidiary, IAP Integrated Sdn Bhd to develop and operate a multi-bank platform known as the Investment Account Platform (‘IAP’).

IAP Integrated started its business in 2015 as an internet based multibank investment portal. The portal will facilitate efficient intermediation by the Sponsoring Banks to match financing requirement of ventures with investment from retail and institutional investors via Investment Account (IA). IAP Integrated aims to be the leading multibank platform for Shariah compliant capital mobilisation, supported by a conducive ecosystem.

The Group and The Bank 2016 2015 RM’000 RM’000

Unquoted share at cost 750 -

The summarised financial information of associate is as follows:

Revenue - -

Loss after tax (1,754) -

Total assets 8,632 -

Total liabilities 6,431 -

As the Group’s share of cumulative losses of RM0.4 million as at 31 December 2016 exceeded its interest in the associate, the Group does not recognise losses in its current financial statements.

105

ANNUAL REPORT 2016

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

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016

18

PR

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AN

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QU

IPM

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s

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men

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ld

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ss t

han

free

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aseh

old

and

C

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put

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Mo

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T

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la

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ears

la

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eq

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men

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5,9

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368

8

0,98

2

113

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5

9,60

7

75,

455

3

,649

1

5,16

1

670

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A

dditi

ons

-

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-

-

-

4

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1

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7

,382

3

32

14,

129

2

7,54

4

D

ispo

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-

-

-

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(1

6)

-

(867

) -

(8

83)

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rite-

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-

-

-

-

-

(3

67)

(624

) (5

21)

-

-

(1,5

12)

R

ecla

ssifi

catio

n

-

-

-

-

-

24

(2

3)

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(1

8,92

7)

(17,

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t en

d o

f th

e fi

nanc

ial y

ear

2

78,9

05

11,

822

5

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2

6,36

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982

1

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86

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3

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1

0,36

3

678

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2

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2,

078

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1

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6

9,19

3

2,5

79

-

263

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harg

e fo

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e fin

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al y

ear

-

9

8

128

4

38

1,6

26

4,8

90

3,4

68

3,7

38

338

-

1

4,72

4

D

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-

-

-

-

-

(1

6)

-

(543

) -

(5

59)

W

rite-

off

-

-

-

-

-

(3

60)

(574

) (5

21)

-

-

(1,4

55)

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ecla

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catio

n

-

-

-

-

-

1

(1)

-

-

-

-

A

t en

d o

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nanc

ial y

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1

40

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2,2

06

13,

262

2

7,53

6

108

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4

7,93

2

72,

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2

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-

2

76,2

66

N

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3,10

6

53,

446

8

,480

1

2,70

4

10,

879

7

40

10,

363

4

01,7

99


106

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

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1 D

ecem

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016

18

PR

OP

ER

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AN

D E

QU

IPM

EN

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B

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eq

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yea

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than

fre

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and

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land

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5,3

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9,03

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2

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(3

) (9

4)

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(104

)

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(1

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) (9

35)

(106

) -

-

(2

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)

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(520

) 5

20

-

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-

-

-

-

R

ecla

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catio

n to

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er a

sset

s

(1

62)

-

-

-

-

-

-

-

-

-

(162

)

R

ecla

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(N

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19)

259,

831

-

-

-

-

4

39

141

5

6

-

(272

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) (1

1,64

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27

8,90

5

11,

822

5

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2

6,36

8

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982

1

13,0

20

59,

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7

5,45

5

3,6

49

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6

70,8

69

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and

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t beg

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140

2

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1

,813

1

2,38

5

24,

282

9

9,94

2

42,

558

6

6,14

3

2,0

77

-

251

,482

C

harg

e fo

r th

e fin

anci

al y

ear

-

9

7

128

4

39

1,6

28

5,6

46

3,4

41

3,1

56

509

-

1

5,04

4

D

ispo

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-

-

-

-

-

(3

) (9

3)

-

(7)

-

(103

)

W

rite-

off

-

-

-

-

-

(1

,910

) (8

51)

(106

) -

-

(2

,867

)

R

ecla

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-

(137

) 1

37

-

-

-

-

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-

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of t

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1

40

2,1

02

2,0

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0

103

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4

5,05

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2

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-

2

63,5

56

N

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end

of t

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finan

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yea

r

27

8,76

5

9,7

20

3,8

22

13,

544

5

5,07

2

9,3

45

14,

552

6

,262

1

,070

1

5,16

1

407

,313

107

ANNUAL REPORT 2016

18

PR

OP

ER

TY

AN

D E

QU

IPM

EN

T

B

uild

ing

s

Bui

ldin

gs

Offi

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<--

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eq

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apit

al

Fr

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ld

50 y

ears

Le

ss t

han

free

hold

le

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old

and

C

om

put

er

Mo

tor

wo

rk in

T

he B

ank

land

o

r m

ore

50

yea

rs

land

la

nd R

eno

vatio

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rnitu

re

equi

pm

ent

vehi

cles

p

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To

tal

20

16

R

M’0

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,900

2

5,06

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80,

074

1

08,4

74

57,

126

7

2,56

4

3,1

49

15,

161

6

53,8

46

A

dditi

ons

-

-

-

-

-

3

,977

1

,652

6

,901

3

32

14,

129

2

6,99

1

D

ispo

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-

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-

-

-

-

(1

6)

-

(867

) -

(8

83)

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rite-

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-

-

-

-

-

(3

62)

(584

) (1

30)

-

-

(1,0

76)

R

ecla

ssifi

catio

n

-

-

-

-

-

22

(2

8)

1,1

36

-

(18,

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7,79

7)

A

t en

d o

f th

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nanc

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ear

2

76,3

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32

5,9

00

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069

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112

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8,15

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2

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1

0,36

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pai

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1,8

43

2,0

78

11,

980

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99,

847

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3,65

5

66,

868

2

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-

2

53,9

33

C

harg

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e fin

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9

0

128

4

12

1,6

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4,5

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34

3,41

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239

-

1

3,68

8

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6)

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) -

(5

59)

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55)

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) (1

30)

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21)

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23

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104

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31

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5

91

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17

Not

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fina

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1 D

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016


108

18

PR

OP

ER

TY

AN

D E

QU

IPM

EN

T

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Cap

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50

yea

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Less

than

fre

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d

and

Com

pute

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The

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k

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1,8

13

11,

567

2

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96,

525

4

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2

63,

939

1

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3,96

0

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45)

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163

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1

63

A

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1

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2

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1

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9

9,84

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43,

655

6

6,86

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2,3

27

-

253

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N

et b

ook

valu

e at

end

of t

he

finan

cial

yea

r

276

,397

8

,089

3

,822

1

3,08

9

54,

739

8

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1

3,47

1

5,6

96

822

1

5,16

1

399

,913

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

109

ANNUAL REPORT 2016


19 INTANGIBLE ASSETS

Computer The Group Goodwill Software Total 2016 RM’000 RM’000 RM’000

Cost

At beginning of the financial year 133,430 146,107 279,537

Additions - 2,680 2,680

Write-off - (13) (13)

Reclassification from property and equipment (Note 18) - 17,953 17,953

At end of the financial year 133,430 166,727 300,157

Less: Accumulated amortisation

At beginning of the financial year - (126,400) (126,400)

Amortised during the financial year - (9,681) (9,681)

Write-off - 13 13

At end of the financial year - (136,068) (136,068)

Net book value at end of the financial year 133,430 30,659 164,089

2015

Cost


Additions - 5 5

Write-off - (21) (21)






Write-off - 21 21




110



Computer The Bank Goodwill Software Total 2016 RM’000 RM’000 RM’000

Cost


Additions - 2,680 2,680

Write-off - (13) (13)






Write-off - 13 13



2015

Cost


Additions - 5 5

Write-off - (21) (21)






Write-off - 21 21



111

ANNUAL REPORT 2016



Goodwill

The carrying amount of the Group’s and the Bank’s goodwill has been allocated to the following business segments, which represent the Bank’s cash-generating units (‘CGUs’):


Business banking 119,698 119,698 123,591 123,591

Consumer banking 13,732 13,732 13,732 13,732

133,430 133,430 137,323 137,323

Goodwill is allocated to the Bank’s CGU which are expected to benefit from the synergies of the acquisitions. For annual impairment testing purposes, the recoverable amount of the CGUs are determined based on value-in-use calculations using the cash flow projections based on the 2017 financial budgets approved by the Directors, covering a period of 5 years based on the historical internal growth rate, revised for current economic conditions. The cash flow beyond the fifth year are projected based on the assumption that the Year 5 operating cash flow are assumed to grow on perpetual basis at a growth rate of 4.5% (2015: 4.0%), based on forecasted Gross Domestic Product (‘GDP’) growth rate of Malaysia adjusted for specific risk of the CGUs.

The cash flow projections are derived based on a number of key factors including past performance and management’s expectations of the market developments. The discount rates used are based on the pre-tax weighted average cost of capital plus an appropriate risk premium where applicable, at the date of assessment of the CGUs.

2016 2016 2015 2015 Business Consumer Business Consumer banking banking banking banking % % % %

Pre-tax discount rate 11.67 11.57 8.91 8.91

No impairment charge was required for goodwill arising from all the business segments. Management views that any reasonable possible change to the assumptions applied is not likely to cause the recoverable amount of all the business segments to be lower than its carrying amount.

20 DEPOSITS FROM CUSTOMERS

The Group The Bank (i) By type of deposit 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

Demand deposits 7,608,648 7,740,305 5,037,616 5,306,347

Savings deposits 2,043,157 1,951,353 1,565,872 1,538,959

Fixed deposits 26,549,515 28,952,441 19,839,651 22,429,816

Commodity Murabahah 768,412 630,118 - -

Money market deposits 518,016 1,637,103 518,016 1,637,103

Negotiable instruments of deposit (‘NID’) 10,145,308 6,901,893 10,145,308 6,901,893

47,633,056 47,813,213 37,106,463 37,814,118


112


20 DEPOSITS FROM CUSTOMERS

The Group The Bank (ii) Maturity structure of fixed deposits and NID 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

Due within six months 29,695,766 29,025,361 24,967,259 24,244,323

Six months to one year 6,283,803 5,640,983 4,490,502 4,010,758

One year to three years 544,151 1,172,330 512,720 1,061,114

Three years to five years 171,103 15,660 14,478 15,514

36,694,823 35,854,334 29,984,959 29,331,709

The Group The Bank (iii) By type of customer 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

Government and statutory bodies 6,970,831 8,103,704 3,766,293 5,158,224

Business enterprise 12,855,326 14,538,898 8,536,353 10,534,733

Individuals 12,922,185 12,209,520 11,601,961 10,931,299

Domestic banking institutions 7,399,892 6,944,295 7,399,775 6,943,481

Domestic non-banking financial institutions 6,332,943 4,609,745 5,052,773 3,296,595

Foreign entities 499,655 425,725 425,962 361,141

Other entities 652,224 981,326 323,346 588,645

47,633,056 47,813,213 37,106,463 37,814,118

21 DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS


Licensed banks 2,211,825 1,583,912 1,611,023 1,031,696

Licensed investment banks 165,173 103,689 165,172 103,689

Bank Negara Malaysia 63,235 - 63,235 -

Other financial institutions 1,106,970 1,047,995 743,805 642,821

3,547,203 2,735,596 2,583,235 1,778,206

Maturity structure of deposits

Due within six months 3,499,664 2,735,596 2,583,235 1,778,206

Six months to one year 47,539 - - -

3,547,203 2,735,596 2,583,235 1,778,206

113

ANNUAL REPORT 2016


22 DERIVATIVE FINANCIAL LIABILITIES

The Group The Group 2016 2015 Contract/ Contract/ notional notional amount Liabilities amount Liabilities RM’000 RM’000 RM’000 RM’000

At fair value


Currency forwards 411,616 15,223 711,091 13,821




4,961,062 402,772 4,592,245 414,140

The Bank The Bank 2016 2015 Contract/ Contract/ notional notional amount Liabilities amount Liabilities RM’000 RM’000 RM’000 RM’000

At fair value


Currency forwards 404,467 14,510 745,337 13,625




5,860,161 409,283 4,626,491 413,944

23 RECOURSE OBLIGATION ON LOANS SOLD TO CAGAMAS BERHAD

In the normal course of banking operations, the Bank sells loans to Cagamas Berhad with recourse at values equivalent to the unpaid principal balances of loans and advances due from the borrowers.

The Bank is liable in respect of housing loans and hire purchase portfolio sold directly and indirectly to Cagamas Berhad, under the condition that the Bank undertakes to administer these loans on behalf of Cagamas Berhad and to buy back any loans which are regarded as defective based on an agreed prudential criteria. Such financing transactions and the obligations to buy back the loans are reflected as a liability on the statement of financial position.


114


24 OTHER LIABILITIES


Bank Negara Malaysia and Credit Guarantee Corporation Funding programmes 38,563 38,536 38,563 38,536

Margin and collateral deposits 149,616 131,678 141,203 118,678

Other creditors and accruals 52,647 54,090 49,165 50,190

Sundry creditors 128,000 98,002 108,502 87,783

Cheque clearing accounts 19,272 50,363 19,272 36,742

Provision for zakat 2,332 2,307 - -

Defined contribution plan (a) 15,437 16,528 14,380 15,385

Accrued employee benefits 33,621 20,071 31,360 18,551

439,488 411,575 402,445 365,865

(a) The Group and the Bank contributes to the Employee Provident Fund (‘EPF’), the national defined contribution plan. Once the contributions have been paid, the Group and the Bank has no further payment obligations.

25 AMOUNT DUE TO SUBSIDIARIES

The amount due to subsidiaries is unsecured, interest-free and repayable on demand.

26 SUBORDINATED TERM LOAN

The Bank has taken subordinated loans as follows:

No Amount Issued (RM’m)

Description Basel Issue Date Maturity Date

Call Date Coupon

1 300 Tier 2 Basel II Subordinated Term Loan 3

Basel II 16/01/2012 16/01/2022 16/01/2017 COF plus 1.00% p.a.

2 400 Tier 2 Basel III Subordinated Term Loan 1

Basel III 30/12/2015 30/12/2025 30/12/2020 COF plus 1.00% p.a.





All the subordinated loans were taken with the Bank’s holding company.

The subordinated loans have a prepayment option on the first prepayment date or any interest payment date subsequent to the first prepayment date, giving the Bank the right, subject to Bank Negara Malaysia (‘BNM’) approval, to prepay the loans in whole or in part.

Interest on Tier 2 Basel II Subordinated Term Loan 3 is payable by quarterly and Tier 2 Basel III Subordinated Term Loans 1, 2 and 3 are payable by monthly.

COF refers to rate determined by the lender on an interest determination date falling within the interest duration.

All subordinated loans are unsecured and also qualify for Tier 2 capital for the purpose of determining the capital ratio of the Bank.

Tier 2 Basel II Subordinated Term Loans 3 is subject to gradual phase-out treatment under Basel III.

The Tier 2 Basel III Subordinated Term Loans 1, 2 and 3 may be written-off, either fully or partially, at the discretion of BNM, at the point of non-viability as determined by BNM.

115

ANNUAL REPORT 2016


27 SHARE CAPITAL

Number of ordinary shares of RM1 each The Group and The Bank 2016 2015 2016 2015 ‘000 ’000 RM’000 RM’000

Authorised

At beginning/end of the financial year 2,000,000 2,000,000 2,000,000 2,000,000

Issued and fully paid

At beginning/end of the financial year 1,688,770 1,688,770 1,688,770 1,688,770

28 RESERVES


Retained profits 1,178,962 1,029,155 913,359 805,289

Share premium 858,904 858,904 858,904 858,904

AFS revaluation reserves (b) 75,229 68,945 93,292 76,852

Statutory reserves (c) 1,721,637 1,577,509 1,416,621 1,328,792

Regulatory reserves (d) 280,204 278,547 207,026 220,148

4,114,936 3,813,060 3,489,202 3,289,985

(a) As at 31 December 2016, the Bank has a tax exempt account balance of RM10,931,988 (2015: RM10,931,988) under Section 12 of the Income Tax (Amendment) Act 1999, subject to agreement by the Inland Revenue Board.

(b) AFS revaluation reserves represent the unrealised gains or losses arising from the change in fair value of investments classified as financial investment available-for-sale. The gains or losses are transferred in the income statement upon disposal or when the securities become impaired.

(c) The statutory reserves of the Group and the Bank are maintained in compliance with Section 47(2)(f) of the Financial Services Act 2013 and Section 57(2)(f) of the Islamic Financial Services Act 2013 and is not distributable as cash dividends.

(d) The Group and the Bank are required to maintain in aggregate collective impairment allowances and regulatory reserves of no less than 1.2% of total outstanding loans, advances and financing, net of individual impairment allowances.


116


29 INTEREST INCOME


Loans, advances and financing 1,807,744 1,809,124 1,714,508 1,758,650

Money at call and deposit placements with financial institutions 84,450 68,237 175,142 117,339

Financial assets held-for-trading 240 123 240 123

Financial investments:

- Available-for-sale 301,744 293,991 301,744 293,991

- Held-to-maturity 17,776 17,267 17,776 17,267

Interest rate derivatives 115,807 138,074 115,807 138,074

2,327,761 2,326,816 2,325,217 2,325,444

of which:

Interest income earned on impaired loans, advances and financing 8,070 16,358 8,070 16,358

30 INTEREST EXPENSE


Deposits from customers 1,188,329 1,215,168 1,188,338 1,215,188

Deposits and placements of banks and other financial institutions 113,284 86,344 113,284 86,344

Securities sold under repurchase agreements 33,193 32,485 33,193 32,485

Interest rate derivatives 108,712 127,033 108,712 127,033

Loan sold to Cagamas Berhad 4,931 5,917 4,931 5,917

Subordinated term loan 46,616 28,189 46,616 28,189

Others 614 635 614 635

1,495,679 1,495,771 1,495,688 1,495,791

31 INCOME FROM ISLAMIC BANKING BUSINESS

The Group 2016 2015 RM’000 RM’000

Income derived from investment of depositors’ funds and others 486,809 448,464

Income derived from investment of investment account funds 90,061 60,970

Income derived from investment of shareholders’ funds 44,186 36,402

Total distributable income 621,056 545,836

Income attributable to depositors (348,250) (306,915)

272,806 238,921

of which:

Financing income earned on impaired financing, advances and other financing 409 310

117

ANNUAL REPORT 2016


32 OTHER OPERATING INCOME


Fee income

Commission 17,695 16,299 17,695 16,299

Service charges and fees 64,324 57,168 64,324 57,168

Guarantee fees 24,355 23,292 24,355 23,292

106,374 96,759 106,374 96,759

Income from financial instruments

Gain/(loss) arising on financial assets held-for-trading:

- net gain on disposal 432 498 432 498

- unrealised gains/(losses) 2 (232) 2 (232)

434 266 434 266

Gain/(loss) on derivatives:

- realised 2,452 4,576 2,452 4,576

- unrealised 4,965 (3,750) 4,965 (3,750)

7,417 826 7,417 826

Gain arising on financial investments available-for-sale:

- net gain on disposal 32,993 10,678 32,993 10,678

- gross dividend income 2,673 2,635 2,673 2,635

35,666 13,313 35,666 13,313

Other income

Foreign exchange gain/(loss):

- realised 30,665 17,053 30,665 17,053

- unrealised 30,226 45,358 30,226 45,358

Rental income 1,556 1,726 1,556 1,726

(Loss)/gain on sale of property and equipment (94) 1 (94) 1

Gain on disposal of foreclosed properties 153 684 153 684

Other non-operating income 7,145 8,591 6,926 8,282

Dividend from subsidiary - - - 800

69,651 73,413 69,432 73,904

219,542 184,577 219,323 185,068


118


33 OTHER OPERATING EXPENSES


Personnel costs (a) 390,037 357,009 308,736 285,942

Establishment costs (b) 216,274 201,336 180,883 170,535

Marketing expenses (c) 18,583 14,418 16,148 12,128

Administrative and general expenses (d) 69,222 55,595 55,634 45,449

694,116 628,358 561,401 514,054

(a) Personnel costs


Wages, salaries and bonuses 295,171 272,500 233,311 218,043

Defined contribution plan (‘EPF’) 49,145 45,041 38,754 35,925

Other personnel costs 45,721 39,468 36,671 31,974

390,037 357,009 308,736 285,942

(b) Establishment costs


Rental of premises 24,977 24,183 20,171 19,986

Equipment rental 682 1,305 563 1,191

Repair and maintenance 34,463 36,007 27,418 30,478

Depreciation of property and equipment 14,724 15,044 13,688 13,960

Amortisation of intangible assets 9,681 6,200 9,255 5,735

IT Consultancy fees 65,111 64,245 54,940 55,292

Dataline rental 7,732 6,380 6,591 5,431

Security services 17,450 16,293 13,653 13,142

Electricity, water and sewerage 11,532 10,558 9,758 8,980

Insurance/Takaful and indemnities 24,970 16,198 24,187 14,738

Other establishment costs 4,952 4,923 659 1,602

216,274 201,336 180,883 170,535

119

ANNUAL REPORT 2016


33 OTHER OPERATING EXPENSES

(c) Marketing expenses


Business promotion and advertisement 10,312 6,736 9,524 5,967

Entertainment 2,359 2,193 2,040 1,908

Traveling and accommodation 4,017 3,646 3,190 2,873

Other marketing expenses 1,895 1,843 1,394 1,380

18,583 14,418 16,148 12,128

(d) Administration and general expenses


Telecommunication expenses 5,181 4,587 4,223 3,741

Auditors’ remuneration 1,695 1,440 1,241 1,148

Professional fees 10,751 7,008 9,572 5,918

Property and equipment written-off 57 84 55 76

Mail and courier charges 4,042 3,246 3,342 2,744

Stationery and consumables 10,011 9,247 7,477 6,951

Commissions expenses 7,998 4,306 6,952 3,769

Brokerage expenses 1,981 2,160 831 955

Directors’ fees and allowances 2,097 1,573 2,041 1,445

Donations 2,027 1,586 1,464 1,473

Settlement, clearing and bank charges 10,462 8,751 9,455 7,938

Stamp duties 763 383 763 380

Operational and litigation write-off expenses 1,876 4,922 1,615 4,902

GST input tax-non recoverable 6,268 3,474 4,440 2,444

Other administration and general expenses 4,013 2,828 2,163 1,565

69,222 55,595 55,634 45,449

The expenditure includes the following statutory disclosure:


Directors’ remuneration (Note 34) 4,290 7,391 4,234 7,263

Auditors’ remuneration:

- statutory audit fees 1,108 925 834 728

- over provision in prior year (30) (33) (17) (22)

- regulatory related fees 411 391 258 245

- tax fees 67 26 27 66

- non audit fees 139 131 139 131


120


34 CEO AND DIRECTORS’ REMUNERATION

The MD/CEO and Directors of the Bank who have held office during the financial year are as follows:

Managing Director/Chief Executive Officer

Kamarul Ariffin Bin Mohd Jamil

Non-Executive Directors

Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara) (Chairman)

Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin (Completion of directorship on 4 October 2016)

Mr Aubrey Li Kwok-Sing

En. Mohd Suffian Bin Haji Haron

Tan Sri Dato’ Seri Mohamed Jawhar

Tan Sri Mohd Ghazali bin Mohd Yusoff

En. Abd Malik Bin A Rahman

Mr Tang Peng Wah (Alternate Director to Mr Aubrey Li Kwok-Sing)

The aggregate amount of remuneration for the Directors of the Bank for the financial year was as follows:



Salaries 960 1,215 960 1,215

Bonuses 800 3,498 800 3,498

Defined contribution plan (‘EPF’) 291 883 291 883

Other employee benefits 61 70 61 70

Benefits-in-kind 81 152 81 152

Non-Executive Directors

Fees 2,073 1,547 2,017 1,419


Directors’ remuneration (Note 33) 4,290 7,391 4,234 7,263

121

ANNUAL REPORT 2016



A summary of the total remuneration of the MD/CEO and Directors, distinguishing between Executive and Non-Executive Directors:

Directors’ * Other Benefits- The Group Salaries Bonuses Fees emoluments in-kind Total 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000


Kamarul Ariffin Bin Mohd Jamil 960 800 - 352 81 2,193

Total 960 800 - 352 81 2,193

Non-executive Directors

Jen Tan Sri Dato’ Seri Ismail Bin Haji Omar (Bersara) - - 516 96 24 636

Tan Sri Dato’ Seri Lodin Bin Wok Kamaruddin - - 387 - - 387

En. Mohd Suffian Bin Haji Haron - - 540 - - 540

Tan Sri Dato’ Seri Mohamed Jawhar - - 534 - - 534

Total - - 1,977 96 24 2,097

Grand total 960 800 1,977 448 105 4,290

* Executive Director’s other emoluments include allowance and EPF


122



A summary of the total remuneration of the MD/CEO and Directors, distinguishing between Executive and Non-Executive Directors: (continued)

Directors’ * Other Benefits- The Group Salaries Bonuses Fees emoluments in-kind Total 2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000



Dato’ Zulkiflee Abbas Bin Abdul Hamid 495 3,418 - 772 95 4,780

Total 1,215 3,498 - 953 152 5,818






Total - - 1,451 96 26 1,573

Grand total 1,215 3,498 1,451 1,049 178 7,391


123

ANNUAL REPORT 2016



Directors’ * Other Benefits- The Bank Salaries Bonuses Fees emoluments in-kind Total 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000



Total 960 800 - 352 81 2,193




Mr Aubrey Li Kwok-Sing - - 148 - - 148



Tan Sri Mohd Ghazali bin Mohd Yusoff - - 330 - - 330

En. Abd Malik Bin A Rahman - - 241 - - 241

Mr Tang Peng Wah (Alternate Director to Mr Aubrey Li Kwok-Sing) - - 26 - - 26

Total - - 1,921 96 24 2,041

Grand total 960 800 1,921 448 105 4,234



124



A summary of the total remuneration of the MD/CEO and Directors, distinguishing between Executive and Non-Executive Directors: (continued)

Directors’ * Other Benefits- The Bank Salaries Bonuses Fees emoluments in-kind Total 2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000



Dato’ Zulkiflee Abbas Bin Abdul Hamid 495 3,418 - 772 95 4,780

Total 1,215 3,498 - 953 152 5,818




Tan Sri Dato’ Sri Abdul Aziz Bin Abdul Rahman - - 10 - - 10

Mr Aubrey Li Kwok-Sing - - 113 - - 113



Tan Sri Mohd Ghazali bin Mohd Yusoff - - 236 - - 236

En. Abd Malik Bin A Rahman - - 116 - - 116

Mr Tang Peng Wah (Alternate Director to Mr Aubrey Li Kwok-Sing) - - 9 - - 9

Total - - 1,323 96 26 1,445

Grand total 1,215 3,498 1,323 1,049 178 7,263


125

ANNUAL REPORT 2016


35 ALLOWANCES FOR IMPAIRMENT LOSSES ON LOANS, ADVANCES AND FINANCING


Individual impairment

- made during the financial year 81,349 257,645 62,010 254,086

- written-back (59,431) (7,293) (23,569) (7,246)

Collective impairment

- net allowance made during the financial year 49,832 17,224 35,935 11,265

Bad debts and financing

- recovered (50,887) (84,192) (49,731) (83,226)

- written-off 2,838 3,603 2,816 3,596

23,701 186,987 27,461 178,475

36 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

Related parties that have transactions and their relationship with the Bank are as follows:

Related parties Relationship

Lembaga Tabung Angkatan Tentera (‘LTAT’) Ultimate holding corporate body, which is Government-Linked Investment Company (‘GLIC’) of the Government of Malaysia

AFFIN Holdings Berhad (‘AHB’) Holding company

Subsidiaries and associates of LTAT Subsidiary and associate companies of the ultimate holding corporate body

Subsidiaries and associates of AHB as disclosed in its financial statements

Subsidiary and associate companies of the holding company

Subsidiaries of AFFIN Bank Berhad as disclosed in Note 15

Subsidiaries

Joint ventures as disclosed in Note 16 Joint ventures

Associate as disclosed in Note 17 Associate

Key management personnel The key management personnel of the Group and the Bank consist of:- Directors- Managing Director/Chief Executive Officer- Members of Senior Management team and the company secretary

Related parties of key management personnel (deemed as related to the Bank)

- Close family members and dependents of key management personnel

- Entities that are controlled, jointly controlled or for which significant voting power in such entity resides with, directly or indirectly by key management personnel or its close family members

Key management personnel are those persons having the authority and responsibility for planning, directing and controlling the activities of the Group and the Bank either directly or indirectly. Key management personnel include the Managing Director/Chief Executive Officer of the Bank in office during the financial year and his remuneration for the financial year are disclosed in Note 34.


126

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127

ANNUAL REPORT 2016



(a) Related parties transactions and balances (continued)

Ultimate holding Holding Other related corporate body company companies 2016 2015 2016 2015 2016 2015 The Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from

Corporate bonds/sukuk - - - - 1,009,192 1,089,870

Loans, advances and financing - - - - 1,650,773 1,728,517

Deposits and placements with banks and other financial institutions - - - - 58,310 -

Intercompany balances - - 9 9 47,225 39,936

Security deposits - - - - 3,206 2,997

- - 9 9 2,768,706 2,861,320

Amount due to

Demand and savings deposits 107,492 94,668 997 1,003 957,624 533,117

Fixed deposits - - 27,968 44,856 432,010 876,379

Negotiable instruments of deposit - - - - 419,882 421,482

Deposits and placements of banks and other financial institutions - - - - 65,011 38,818

Commodity Murabahah 7,507 - - - 251,018 99,544

Money market deposits 114,597 43,506 4,136 470 193,241 115,315

Subordinated term loan - - 1,304,592 1,004,446 - -

229,596 138,174 1,337,693 1,050,775 2,318,786 2,084,655

Commitments and contingencies - - - - 1,705,295 1,844,587

Companies in which certain Directors have Key management substantial interest personnel 2016 2015 2016 2015 The Group RM’000 RM’000 RM’000 RM’000

Amount due from

Loans, advances and financing 99,624 - 5,675 2,586

Security deposits - - 29 -

99,624 - 5,704 2,586

Amount due to

Demand and savings deposits 3,493 596 9,210 6,780

Fixed deposits 19,149 - 7,980 7,849

22,642 596 17,190 14,629

Commitments and contingencies 7 - - -


128

36

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129

ANNUAL REPORT 2016



(a) Related parties transactions and balances (continued)

Ultimate holding Holding corporate body company Subsidiaries 2016 2015 2016 2015 2016 2015 The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from Restricted investment accounts (RIA) - - - - 2,110,079 1,331,318 Deposits and placements with banks and other financial institutions - - - - 285,026 84,001 Intercompany balances - - 9 9 196,839 62

- - 9 9 2,591,944 1,415,381

Amount due to Demand and savings deposits 102,996 93,496 997 1,003 609 923 Fixed deposits - - 27,968 44,856 416 403 Money market deposits 114,597 43,506 4,136 470 - - Intercompany balances - - - - 41,395 422,166 Subordinated term loan - - 1,304,592 1,004,446 - -

217,593 137,002 1,337,693 1,050,775 42,420 423,492

Commitments and contingencies - - - - - -

Companies which Other related certain Directors have Key management companies substantial interest personnel 2016 2015 2016 2015 2016 2015 The Bank RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Amount due from Corporate bonds/sukuk 1,009,192 1,089,870 - - - - Loans, advances and financing 1,051,172 1,279,775 - - 5,045 2,212 Deposits and placements with banks and other financial institutions 58,310 - - - - - Security deposits 3,206 2,997 - - 29 -

2,121,880 2,372,642 - - 5,074 2,212

Amount due to Demand and savings deposits 578,717 510,506 482 - 6,039 4,153 Fixed deposits 284,090 671,636 19,149 - 5,595 2,524 Negotiable instruments of deposit 419,882 421,482 - - - - Deposits and placements of banks and other financial institutions 65,011 38,818 - - - - Money market deposits 193,241 115,315 - - - -

1,540,941 1,757,757 19,631 - 11,634 6,677

Commitments and contingencies 1,541,228 1,797,375 7 - - -


130



(b) Key management personnel compensation

The remuneration of key management personnel of the Group and the Bank during the year are as follows:


Directors’ fees and allowances

Fees 2,073 1,547 2,017 1,419


2,097 1,573 2,041 1,445

Short-term employment benefits

Salaries 7,567 7,441 6,769 6,810

Bonuses 3,601 9,859 3,191 9,120

Defined contribution plan (‘EPF’) 1,962 3,038 1,742 2,801

Other employee benefits 1,304 1,176 1,097 1,043


14,809 21,955 13,117 20,202

Included in the above table is the CEO and directors’ remuneration as disclosed in Note 34.

37 TAXATION


The taxation charge arising in Malaysia for the financial year

Current tax 143,516 106,824 111,560 78,335

Under provision in prior year 620 6,905 404 6,403

Deferred tax (Note 13) (8,396) (1,855) (7,145) (1,799)

Tax expense for the year 135,740 111,874 104,819 82,939

131

ANNUAL REPORT 2016


37 TAXATION

The Group The Bank 2016 2015 2016 2015 % % % %

Statutory tax rate in Malaysia 24.00 25.00 24.00 25.00

Tax effect in respect of:

Non allowable expenses 0.37 0.42 0.43 0.47

Non taxable income (0.14) (0.29) (0.14) (0.27)

Effect of different tax rate (1.06) (1.22) (1.40) (1.64)

Tax savings arising from income exempt from tax for International Currency Business Unit (‘ICBU’) (0.75) (0.10) - -

Under provision in prior year 0.10 1.50 0.09 1.86

Other temporary differences not recognised in prior years - (1.07) - (1.35)

Change in tax rate - 0.02 - 0.02

Average effective tax rate 22.52 24.26 22.98 24.09

38 EARNINGS PER SHARE

The basic earnings per ordinary share for the Group and the Bank have been calculated based on the net profit attributable to equity holders of the Group and the Bank of RM464,131,000 (2015: RM345,582,000) and RM351,316,000 (2015: RM261,290,000) respectively. The weighted average number of shares in issue during the financial year of 1,688,770,000 (2015: 1,688,770,000) is used for the computation.

39 DIVIDENDS

Dividends recognised as distribution to ordinary equity holders of the Bank:

The Group and The Bank The Group and The Bank 2016 2015 Dividend Amount of Dividend Amount of per share Dividend per share Dividend sen RM’000 sen RM’000

Ordinary shares

Single tier dividend:

- Interim dividend 3.80 64,173 - -

- Final dividend 6.18 104,366 3.91 66,031

9.98 168,539 3.91 66,031

At the forthcoming Annual General Meeting, a single-tier final dividend in respect of the current financial year of 1.39 sen per share amounting to RM23,473,898 will be proposed for shareholders’ approval. These financial statements do not reflect this final dividend which will be accounted for in the shareholder’s equity as an appropriation of retained profits in the financial year ending 31 December 2017 when approved by the shareholder.


132


40 COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Group and the Bank make various commitments and incurs certain contingent liabilities with legal recourse to their customers. No material losses are anticipated as a result of these transactions. These commitment and contingencies are not secured over the assets of the Group and the Bank.

The commitments and contingencies consist of:

The Group The Bank 2016 2015 2016 2015 Principal Principal Principal Principal amount amount amount amount RM’000 RM’000 RM’000 RM’000

Direct credit substitutes (*) 423,565 408,318 390,178 398,935

Transaction-related contingent items 2,252,924 2,027,954 1,970,056 1,879,994

Short-term self-liquidating trade-related contingencies 496,339 470,476 183,789 101,909

Irrevocable commitments to extend credit: 9,178,584 9,211,778 7,579,320 7,476,032

- maturity less than one year 7,663,856 7,494,453 6,534,578 6,107,115

- maturity more than one year 1,514,728 1,717,325 1,044,742 1,368,917

Foreign exchange related contracts (#): 7,092,677 6,918,839 8,062,513 7,086,226

- less than one year 6,667,157 6,497,779 7,636,993 6,665,166

- one year to less than five years 383,035 421,060 383,035 421,060

- more than five years 42,485 - 42,485 -

Interest rate related contracts (#): 2,610,273 2,861,139 2,610,273 2,861,139

- less than one year 593,125 652,116 593,125 652,116

- one year to less than five years 1,187,148 1,612,023 1,187,148 1,612,023

- more than five years 830,000 597,000 830,000 597,000

Any commitments that are unconditionally cancelled at any time by the bank without prior notice or that effectively provide for automatic cancellation due to deterioration in a borrower’s creditworthiness 198,586 215,113 159,049 199,792

Unutilised credit card lines 230,550 188,328 230,550 188,328

22,483,498 22,301,945 21,185,728 20,192,355

* Included in direct credit substitutes as above are financial guarantee contracts of RM423.4 million and RM390.0 million at the Group and the Bank, respectively (2015: RM408.2 million and RM398.8 million at the Group and the Bank, respectively), of which fair value at the time of issuance is zero.

# Thefairvalueofthesederivativeshavebeenrecognisedas“derivativefinancialassets”and“derivativefinancialliabilities”inthe statement of financial position and disclosed in Note 5 and 22 to the financial statements.

133

ANNUAL REPORT 2016


41 FINANCIAL RISK MANAGEMENT

(i) Credit risk

Credit risk is the potential financial loss resulting from the failure of the customer to settle financial and contractual obligations through lending/financing, hedging, trading and investing activities. It includes both pre-settlement and settlement risks of trading counterparties. Credit risk emanates mainly from loans, advances and financing, loan/financing commitments arising from such lending activities, as well as through financial transaction with counterparties including interbank money market activities as well as derivative instruments used for hedging and debt securities.

The management of credit risk in the Bank is governed by the Credit Risk Management Framework which is supported by a set of approved credit policies, guidelines and procedures. Approval authorities are delegated to Senior Management and Group Management Loan Committee (‘GMLC’) to implement the credit policies and ensure sound credit granting standards. Board Loan Review and Recovery Committee (‘BLRRC’) has review/veto power.

An independent Group Credit Management function is headed by Group Chief Credit Officer (‘GCCO’) with direct reporting line to MD/CEO to ensure sound credit appraisal and approval process. Group Risk Management (‘GRM’) with direct reporting line to Board Risk Management Committee (‘BRMC’) has functional responsibilities for the management of credit risk, to ensure adherence to risk standards and discipline.

Credit guidelines and procedures are incorporated within the Credit Policy. The Credit Authority Framework facilitates the approval of all new, restructured and continuing credit facilities. New and existing businesses are governed by Credit Plan which is developed as part of the annual business planning and budgeting process. The Credit Plan is reviewed at least annually to ensure the guidelines and criteria reflect portfolio strategy and market environment.

Credit risk measurement

Loans, advances and financing

Credit evaluation is the process of analysing the creditworthiness of the prospective customer against the Bank’s underwriting criteria and the ability of the Bank to make a return commensurate with the level of risk undertaken. Assessment and quantification of credit risk are supported by the use of internal rating models, scorecards and decision support tools.

The Bank adopts a credit risk grading methodology encompassing probability of default (‘PD’) driven scorecards for business loans, advances and financing. Separate scorecards have been developed for two categories of business borrowers, Large Corporate (‘LC’) and Small Medium Enterprise (‘SME’).

For consumer mass market products, statistically developed application scorecards are used to assess the risks associated with the credit application as a decision support tool at loans, advances and financing origination.

Stress Testing supplements the overall assessment of credit risk across the Bank.

Over-the-Counter (‘OTC’) Derivatives

The OTC Derivatives credit exposure is computed using the Current Exposure Method. Under the Current Exposure Method, computation of credit equivalent exposure for interest rate and exchange rate related contracts is derived from the summation of the two elements; the replacement costs (obtained by marking-to-market) of all contracts and the potential future exposure of outstanding contracts (Add On charges depending on the specific remaining tenor to maturity).


134



(i) Credit risk (continued)

Risk limit control and mitigation policies

The Bank employs various policies and practices to control and mitigate credit risk.

Lending limits

The Bank establishes internal limits and related lending guidelines to manage large exposures and avoid undue concentration of credit risk in its credit portfolio. The limits include single customer groupings, connected parties, geographical and industry segments. These risks are monitored regularly and the limits reviewed annually or sooner depending on changing market and economic conditions.

The credit risk exposure for derivative and loans, advances and financing books is managed as part of the overall lending limits with customers together with potential exposure from market movements.

Collateral

Credits are established against borrower’s capacity to repay rather than rely solely on security. However, collateral may be taken to mitigate credit risk. The main collateral types accepted and given value by the Bank are:

- mortgage over residential properties;

- charges over commercial real estate or vehicles financed;

- charges over business assets such as business premises, inventory and accounts receivable; and

- charges over financial instruments such as marketable securities.

Documentary and commercial letters of credit are collateralised by the underlying shipments of goods to which they relate and therefore carry less risk than a direct loan.

Credit related commitments

Commitment to extend credit represents unutilised portion of approved credit in the form of loans/financing, guarantees or letters of credit. In terms of credit risk, the Bank is potentially exposed to loss in an amount equal to the total unutilised commitments. However, the potential amount of loss is less than the total unutilised commitments, as most commitments to extend credit are contingent upon customers maintaining specific minimum credit standards.

The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than short-term commitments.

Credit risk monitoring

Corporate credits and large individual accounts are reviewed by the Business Units at least once a year using updated financial and other relevant information. This is to ensure that the credit grades remain appropriate and any signs of weaknesses or deterioration in the credit quality are detected. Remedial action is taken where evidence of deterioration emanates.

Retail credits are actively monitored and managed on a portfolio basis by product type. A collection management system is in place to promptly identify, monitor and manage delinquent accounts at early stages of delinquency.

An Early Alert Process is adopted to pro-actively identify, report, and manage warning signs of potential credit deterioration. Watchlist accounts are closely reviewed and monitored with corrective measures initiated to prevent them from turning impaired. As a rule, watchlist accounts are either worked up or worked out within a period of twelve months.

Active portfolio monitoring as well as exceptions reporting is in place to manage the overall risk profile, identify, analyse and mitigate adverse trends or specific areas of risk concerns.

135

ANNUAL REPORT 2016




Maximum exposure to credit risk

For financial assets recognised on the statement of financial position, the exposure to credit risk equals their carrying amount. For financial guarantees granted, the maximum exposure to credit risk is the maximum amount that the Group and the Bank would have to pay if the guarantee was to be called upon. For loan commitments and other commitments, the maximum exposure to credit risk is the full amount of the undrawn credit facilities granted to customers.

All financial assets of the Group and the Bank are subject to credit risk except for cash in hand, equity securities held as financial assets held-for-trading or financial investments available-for-sale, as well as non-financial assets.

The exposure to credit risk of the Group and the Bank equals their carrying amount in the statement of financial position as at reporting date, except for the followings:

The Group The Bank 2016 2015 2016 2015 Maximum Maximum Maximum Maximum Credit Credit Credit Credit Exposure Exposure Exposure Exposure RM’000 RM’000 RM’000 RM’000

Credit risk exposures of on-balance sheet assets:

Short-term funds (*) 4,151,994 3,866,154 3,125,334 1,998,466

Financial investments available-for-sale (#) 10,063,405 10,081,927 8,229,997 8,607,079

Other assets (@) 39,212 62,990 33,910 59,649

Credit risk exposure of off-balance sheet items:

Financial guarantees 423,415 408,168 390,028 398,785

Loan commitments and other credit related commitments 12,357,133 12,113,799 10,122,914 9,846,205

Total maximum credit risk exposure 27,035,159 26,533,038 21,902,183 20,910,184

The following have been excluded for the purpose of maximum credit risk exposure calculation:

* cash in hand

# investment in unquoted shares

@ prepayment

Whilst the Group and the Bank’s maximum exposure to credit risk is the carrying value of the assets, or in the case of off-balance sheet items, the amount guaranteed, committed or accepted, in most cases the likely exposure is far less due to collateral, credit enhancements and other actions taken to mitigate the credit exposure.

The financial effect of collateral held for loans, advances and financing of the Group and the Bank are 74% (2015: 69%) and 73% (2015: 67%) respectively. The financial effects of collateral for the other financial assets are insignificant.


136

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88

-

-

5,0

20,8

39

-

1,4

67,4

88

-

10,2

53,7

15

1,32

9,53

7

Who

lesa

le &

reta

il tra

de a

nd re

stau

rant

s &

hot

els

-

-

2

,975

3

5,80

1

19,

902

2

,757

,124

-

2

,815

,802

1,

676,

223

Oth

ers

-

-

1

6,10

2

-

-

19,3

19,2

88

39,

212

19,

374,

602

1,

540,

029

Tota

l ass

ets

4,1

51,9

94

152

,234

1

67,3

04

10,

063,

405

3

73,5

24

42,6

68,2

97

39,

212

57,

615,

970

1

2,78

0,54

8

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

137

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(i)

C

red

it r

isk

(co

ntin

ued

)

Cre

dit

ris

k co

ncen

trat

ions

(co

ntin

ued

)

D

epos

its a

nd

plac

emen

ts

with

ban

ks

Fina

ncia

l

Fina

ncia

l Fi

nanc

ial

Loan

s,

O

n

and

othe

r as

sets

D

eriv

ativ

e in

vest

men

ts

inve

stm

ents

ad

vanc

es

ba

lanc

e C

omm

itmen

ts

S

hort

-ter

m

fina

ncia

l he

ld-f

or-

finan

cial

av

aila

ble-

he

ld-t

o-

and

Oth

er

shee

t an

d

Th

e G

roup

fund

s in

stitu

tions

tr

adin

g as

sets

fo

r-sa

le

mat

urity

fin

anci

ng

asse

ts

tota

l co

ntin

genc

ies

2015

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

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icul

ture

-

-

-

12

-

-

6

89,2

96

-

689

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2

44,6

63

Min

ing

and

quar

ryin

g

-

-

-

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721

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-

7

21,7

13

280

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Man

ufac

turin

g

-

-

-

1,6

82

220

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4

3,76

9

2,2

31,7

14

-

2,4

98,0

14

2,42

8,38

1

Elec

tric

ity, g

as a

nd w

ater

sup

ply

-

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2

9

172

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1

73,3

43

-

345

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4

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Con

stru

ctio

n

-

-

-

-

44,

844

1

85,0

32

3,4

52,2

89

-

3,6

82,1

65

3,18

4,72

6

Rea

l est

ate

-

-

-

-

-

-

6

,830

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-

6

,830

,513

1,

159,

430

Tran

spor

t, st

orag

e an

d

co

mm

unic

atio

n

-

-

-

46

2

31,0

27

-

2,0

63,9

19

-

2,2

94,9

92

697,

346

Fina

nce,

insu

ranc

e an

d bu

sine

ss

se

rvic

es

8

84,5

27

351

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1

50,1

21

120

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4

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1

28,4

14

4,1

23,4

39

-

9,9

44,3

18

1,0

35,3

36

Gov

ernm

ent a

nd g

over

nmen

t

agen

cies

2,9

81,6

27

-

-

-

5,2

27,6

79

-

1,1

37,6

74

-

9,3

46,9

80

812

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Who

lesa

le &

reta

il tr

ade

and

rest

aura

nts

& h

otel

s

-

-

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170

-

2

3,43

9

2,4

11,8

00

-

2,4

35,4

09

1,72

6,00

5

Oth

ers

-

-

-

51,

406

-

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18

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6

2,99

0 1

8,38

3,29

3

948,

295

Tota

l ass

ets

3

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3

51,6

87

150

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1

74,0

37

10,

081,

927

3

80,6

54

42,1

04,5

97

62,

990

57,

172,

167

12

,521

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Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016


138

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(i)

C

red

it r

isk

(co

ntin

ued

)

Cre

dit

ris

k co

ncen

trat

ions

(co

ntin

ued

)

Dep

osi

ts a

nd I

nves

tmen

ts

pla

cem

ents

ac

coun

ts

wit

h b

anks

d

ue f

rom

Fina

ncia

l Fi

nanc

ial

Loan

s,

O

n

and

oth

er

des

igna

ted

D

eriv

ativ

e in

vest

men

ts i

nves

tmen

ts

adva

nces

bal

ance

Co

mm

itm

ents

S

hort

-ter

m

fina

ncia

l fi

nanc

ial

fina

ncia

l av

aila

ble

- he

ld-t

o-

and

O

ther

sh

eet

and

The

Ban

k

fund

s in

stit

utio

ns

inst

itut

ions

as

sets

fo

r-sa

le

mat

urit

y fi

nanc

ing

as

sets

to

tal

cont

ing

enci

es

20

16

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

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R

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icul

ture

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647

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-

4

92,6

98

-

493

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1

24,4

87

Min

ing

and

quar

ryin

g

-

-

-

-

-

-

849

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-

8

49,0

15

331,

554

Man

ufac

turin

g

-

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-

8,2

61

165

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-

1

,751

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-

1

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1,

880,

678

Elec

tric

ity, g

as a

nd w

ater

sup

ply

-

-

-

5

8

264

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1

18,1

11

-

382

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8,

403

Con

stru

ctio

n

-

-

-

10

-

1

80,8

86

1,9

41,5

76

-

2,1

22,4

72

2,11

3,27

9

Rea

l est

ate

-

-

-

-

2

0,39

0

-

6,3

68,3

56

-

6,3

88,7

46

948,

879

Tran

spor

t, st

orag

e an

d

co

mm

unic

atio

n

-

-

-

-

140

,973

-

1

,791

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-

1

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,071

58

9,91

6

Fina

nce,

insu

ranc

e an

d

bu

sine

ss s

ervi

ces

4

12,9

65

406

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2

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1

38,1

87

4,0

02,0

28

100

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2

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-

9

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77

4,16

6

Gov

ernm

ent a

nd g

over

nmen

t

agen

cies

2,7

12,3

69

-

-

-

3,6

00,9

35

-

85,

570

-

6

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86

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8

Who

lesa

le &

reta

il tr

ade

and

rest

aura

nts

& h

otel

s

-

-

-

2,9

75

35,

801

1

9,90

2

2,3

51,0

04

-

2,4

09,6

82

1,63

0,45

3

Oth

ers

-

-

-

16,

102

-

-

12

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3

3,91

0 1

2,75

2,27

8 1,

246,

429

Tota

l ass

ets

3

,125

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4

06,0

75

2,1

10,0

79

166

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8

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3

01,4

02

30,7

53,3

54

33,

910

45,

126,

391

10,5

12,9

42

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

139

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(i)

C

red

it r

isk

(co

ntin

ued

)

Cre

dit

ris

k co

ncen

trat

ions

(co

ntin

ued

)

Dep

osits

and

In

vest

men

ts

pl

acem

ents

ac

coun

ts

w

ith b

anks

du

e fro

m

Fina

ncia

l

Fina

ncia

l Fi

nanc

ial

Loan

s,

O

n

an

d ot

her

desi

gnat

ed

inve

stm

ents

D

eriv

ativ

e in

vest

men

ts

inve

stm

ents

ad

vanc

es

ba

lanc

e C

omm

itmen

ts

Sho

rt-t

erm

fi

nanc

ial

finan

cial

he

ld-f

or-

finan

cial

av

aila

ble-

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ld-t

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and

Oth

er

shee

t an

d

Th

e B

ank

fu

nds

inst

itutio

ns

inst

itutio

ns

trad

ing

asse

ts

for-

sale

m

atur

ity

finan

cing

as

sets

to

tal

cont

inge

ncie

s

20

15

R

M’0

00

RM

’000

R

M’0

00

RM

’000

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00

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R

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00

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R

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icul

ture

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2

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410

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4

10,7

03

215,

236

Min

ing

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ryin

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-

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7

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Man

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g -

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1

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1

40,2

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2,

107,

601

Elec

tric

ity, g

as a

nd

w

ater

sup

ply

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-

-

29

1

72,0

90

-

116

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2

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57

3,23

2

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stru

ctio

n -

-

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-

4

4,84

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185

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2,

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Rea

l est

ate

-

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-

-

-

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5,6

96,5

45

-

5,6

96,5

45

1,05

5,52

8

Tran

spor

t, st

orag

e

and

com

mun

icat

ion

-

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-

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46

1

85,3

58

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nce,

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ranc

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busi

ness

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vice

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09

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ent a

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41,3

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837

Who

lesa

le &

reta

il tr

ade

and

rest

aura

nts

& h

otel

s -

-

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-

1

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Oth

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5

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97

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752

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l ass

ets

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02,6

88

59,

649

45,

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210

10

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Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016


140




Collaterals

The main collateral types accepted and given value by the Bank are:

• Mortgagesoverresidentialproperties;

• Chargesovercommercialrealestateorvehiclesfinanced;

• Chargesoverbusinessassetssuchasbusinesspremises,inventoryandaccountreceivables;and

• Chargesoverfinancialinstrumentssuchasmarketablesecurities

Total loans, advances and financing - credit quality

Allloans,advancesandfinancingarecategorisedinto“neitherpastduenorimpaired”,“pastduebutnotimpaired”and“impaired”.

Past due loans/financing refer to loans, advances and financing that are overdue by one day or more.

Loans, advances and financing are classified impaired when they fulfill any of the following criteria:

i) the principal or interest/profit or both is past due more than 90 days or 3 months from the first day of default

ii) where the account is in arrears for less than 90 days or 3 months, there is evidence of impairment to indicate that the borrower/customeris“unlikelytorepay”itscreditobligations

iii) the loan/financing is classified as rescheduled and restructured in Central Credit Reference Information System (CCRIS).

Distribution of loans, advances and financing by credit quality


Neither past due nor impaired (a) 39,828,268 39,181,976 28,593,953 30,574,217

Past due but not impaired (b) 2,536,213 2,654,372 1,890,088 2,126,743

Impaired (c) 687,946 767,847 590,447 626,139

Gross loans, advances and financing 43,052,427 42,604,195 31,074,488 33,327,099

less: Allowance for impairment

- Individual (149,499) (270,137) (131,497) (231,621)

- Collective (234,631) (229,461) (189,637) (192,790)

Net loans, advances and financing 42,668,297 42,104,597 30,753,354 32,902,688

141

ANNUAL REPORT 2016




Total loans, advances and financing - credit quality (continued)

(a) Loans/financing neither past due nor impaired

Analysis of loans, advances and financing that are neither past due nor impaired analysed based on the Group and the Bank’s internal credit grading system is as follows:


Quality classification

Satisfactory 38,177,186 38,594,431 27,220,848 30,022,816

Special mention 1,651,082 587,545 1,373,105 551,401

39,828,268 39,181,976 28,593,953 30,574,217

Quality classification definitions

Satisfactory: Exposures demonstrate a strong capacity to meet financial commitments, with negligible or low probability of default and/or levels of expected loss.

Special mention: Exposures require varying degrees of special attention and default risk is of greater concern which are under the monitoring of Group Early Alert Committee (‘GEAC’).

(b) Loans/financing past due but not impaired

Certain loans, advances and financing are past due but not impaired as the collateral values of these loans/financing are in excess of the principal and profit outstanding. Allowances for these loans/financing may have been set aside on a portfolio basis. The Bank’s loans, advances and financing which are past due but not impaired are as follows:


Past due up to 30 days 1,208,874 1,498,813 1,016,374 1,257,382

Past due 31-60 days 953,657 819,181 588,648 606,202

Past due 61-90 days 373,682 336,378 285,066 263,159

2,536,213 2,654,372 1,890,088 2,126,743


142




Total loans, advances and financing - credit quality (continued)

(c) Loans/financing impaired


Analysis of impaired assets:

Gross impaired loans/financing 687,946 767,847 590,447 626,139

Individually impaired loans/financing 426,348 527,128 381,384 424,929

Collateral and other credit enhancements obtained

The Group and the Bank obtained assets by taking possession of collateral held as security or calling upon other credit enhancements.


Nature of assets

Industrial and residential properties 7,970 4,906 5,329 4,315

Foreclosed properties are sold as soon as practicable, with the proceeds used to reduce the outstanding indebtedness. The carrying amount of foreclosed properties held by the Group and the Bank as at reporting date has been classified as Other assets as disclosed in Note 9.

Deposits and short-term funds, corporate bonds/sukuk, treasury bills and derivatives - credit quality

Corporate bonds/sukuk, treasury bills and other eligible bills included in financial assets held-for-trading and financial investments available-for-sale are measured on a fair value basis. The fair value will reflect the credit risk of the issuer.

Most listed and some unlisted securities are rated by external rating agencies. The Group and the Bank mainly uses external credit ratings provided by RAM, MARC, Standard & Poors’ or Moody’s.

143

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

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-

-

3

67,2

84

6,2

40

373

,524

8

,786

,226

1

,371

,297

3

,264

,359

6

94,1

57

155

,941

6

30,2

41

6,2

40

14,9

08,4

61

* N

et o

f allo

wan

ce fo

r im

pairm

ent.

C

olla

tera

l is

not

gene

rally

obt

aine

d di

rect

ly fr

om t

he is

suer

s of

deb

t se

curit

ies.

Cer

tain

deb

t se

curit

ies

may

be

colla

tera

lised

by

spec

ifica

lly id

entifi

ed a

sset

s by

tha

t w

ould

be

obta

inab

le in

the

even

t of d

efau

lt.

D

epos

its a

nd s

hort

-ter

m fu

nds,

cor

pora

te b

onds

/suk

uk, t

reas

ury

bills

and

der

ivat

ives

whi

ch a

re p

ast d

ue b

ut n

ot im

paire

d is

not

sig

nific

ant.

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016


144

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(i)

C

red

it r

isk

(co

ntin

ued

)

A

A-

Lo

wer

The

Gro

up

Sov

erei

gns

AA

A

to A

A+

A

- to

A+

th

an A

- U

nrat

ed

* Im

paire

d

Tota

l

2015

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

Sho

rt-t

erm

fund

s

2

,981

,627

9

5,79

5

761

,577

2

3,84

8

3,3

01

6

-

3,8

66,1

54

Dep

osits

and

pla

cem

ents

with

ban

ks a

nd o

ther

fina

ncia

l ins

titut

ions

-

115

,459

2

36,2

28

-

-

-

-

351

,687

Fina

ncia

l ass

ets

held

-for

-tra

ding

N

egot

iabl

e In

stru

men

ts o

f Dep

osit

-

-

-

150

,121

-

-

-

1

50,1

21

Der

ivat

ive

finan

cial

ass

ets

-

3

4,17

5

32,

539

(6

) 1

,647

1

05,6

82

-

174

,037

Fina

ncia

l inv

estm

ents

ava

ilabl

e-fo

r-sa

le

M

alay

sian

Gov

ernm

ent s

ecur

ities

39,9

97

-

-

-

-

-

-

39,

997

M

alay

sian

Gov

ernm

ent i

nves

tmen

t iss

ues

1,

863,

822

-

-

-

-

-

-

1

,863

,822

S

ukuk

Per

umah

an K

eraj

aan

655

,690

-

-

-

-

-

-

6

55,6

90

N

egot

iabl

e In

stru

men

ts o

f Dep

osit

and

Isla

mic

Deb

t Cer

tifica

tes

-

-

2,0

84,5

72

50,

040

-

-

-

2

,134

,612

K

haza

nah

Bon

ds/S

ukuk

43

7,81

9

- -

- -

- -

437

,819

C

orpo

rate

bon

ds/s

ukuk

2,

230,

351

1

,107

,456

1

,132

,880

3

81,7

13

67,

542

3

0,04

5

-

4,9

49,9

87

Fina

ncia

l inv

estm

ents

hel

d-to

-mat

urity

C

orpo

rate

bon

ds/s

ukuk

-

-

-

-

-

3

57,2

15

23,

439

3

80,6

54

8

,209

,306

1

,352

,885

4

,247

,796

6

05,7

16

72,

490

4

92,9

48

23,

439

15,

004,

580

* N

et o

f allo

wan

ce fo

r im

pairm

ent.

C

olla

tera

l is

not

gene

rally

obt

aine

d di

rect

ly fr

om t

he is

suer

s of

deb

t se

curit

ies.

Cer

tain

deb

t se

curit

ies

may

be

colla

tera

lised

by

spec

ifica

lly id

entifi

ed a

sset

s by

tha

t w

ould

be

obta

inab

le in

the

even

t of d

efau

lt.

D

epos

its a

nd s

hort

-ter

m fu

nds,

cor

pora

te b

onds

/suk

uk, t

reas

ury

bills

and

der

ivat

ives

whi

ch a

re p

ast d

ue b

ut n

ot im

paire

d is

not

sig

nific

ant.

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

145

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(i)

C

red

it r

isk

(co

ntin

ued

)

A

A-

Lo

wer

The

Ban

k

So

vere

igns

A

AA

t

o A

A+

A

- to

A+

th

an A

- U

nrat

ed

* Im

pai

red

To

tal

2016

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

Sho

rt-t

erm

fund

s

2

,712

,369

1

97,6

88

173

,816

-

4

1,46

1

-

-

3,1

25,3

34

Dep

osits

and

pla

cem

ents

with

ban

ks a

nd o

ther

fina

ncia

l ins

titut

ions

-

41,

289

1

10,9

45

-

253

,841

-

-

4

06,0

75

Inve

stm

ent a

ccou

nts

due

from

des

igna

ted

finan

cial

inst

itutio

ns

-

-

-

-

-

2

,110

,079

-

2

,110

,079

Der

ivat

ive

finan

cial

ass

ets

-

1

2,21

6

6,4

52

621

2

,877

1

44,0

74

-

166

,240

Fina

ncia

l inv

estm

ents

ava

ilabl

e-fo

r-sa

le

M

alay

sian

Gov

ernm

ent s

ecur

ities

90,2

37

-

-

-

-

-

-

90,

237

M

alay

sian

Gov

ernm

ent i

nves

tmen

t iss

ues

8

98,9

82

-

-

-

-

-

-

898

,982

S

ukuk

Per

umah

an K

eraj

aan

276

,858

-

-

-

-

-

-

2

76,8

58

N

egot

iabl

e In

stru

men

ts o

f Dep

osit

and

Isla

mic

Deb

t Cer

tifica

tes

-

-

2,0

14,2

00

500

,268

-

-

-

2,5

14,4

68

K

haza

nah

Bon

ds/S

ukuk

2

65,9

31

- -

- -

- -

265

,931

C

orpo

rate

bon

ds/s

ukuk

2

,068

,928

79

7,99

0 8

64,8

83

189

,362

1

43,4

75

118

,883

-

4

,183

,521

Fina

ncia

l inv

estm

ents

hel

d-to

-mat

urity

C

orpo

rate

bon

ds/s

ukuk

-

-

-

-

-

2

95,1

62

6,2

40

301

,402

6

,313

,305

1

,049

,183

3

,170

,296

6

90,2

51

441

,654

2

,668

,198

6

,240

14

,339

,127

* N

et o

f allo

wan

ce fo

r im

pairm

ent.

C

olla

tera

l is

not

gene

rally

obt

aine

d di

rect

ly f

rom

the

issu

ers

of d

ebt

secu

ritie

s. C

erta

in d

ebt

secu

ritie

s m

ay b

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llate

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cally

iden

tified

ass

ets

that

wou

ld b

e ob

tain

able

in th

e ev

ent o

f def

ault.

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epos

its a

nd s

hort

-ter

m fu

nds,

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pora

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onds

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reas

ury

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and

der

ivat

ives

whi

ch a

re p

ast d

ue b

ut n

ot im

paire

d is

not

sig

nific

ant.

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016


146

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(i)

C

red

it r

isk

(co

ntin

ued

)

A

A-

Lo

wer

The

Ban

k

Sov

erei

gns

AA

A

to A

A+

A

- to

A+

th

an A

- U

nrat

ed

* Im

paire

d

Tota

l

2015

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

Sho

rt-t

erm

fund

s

1

,070

,558

9

5,80

1

761

,315

1

6,60

8

54,

184

-

-

1

,998

,466

Dep

osits

and

pla

cem

ents

with

ban

ks a

nd o

ther

fina

ncia

l ins

titut

ions

-

115

,460

2

01,1

94

-

33,

118

-

-

3

49,7

72

Inve

stm

ent a

ccou

nts

due

from

des

igna

ted

finan

cial

inst

itutio

ns

-

-

-

-

-

1

,331

,318

-

1

,331

,318

Fina

ncia

l ass

ets

held

-for

-tra

ding

N

egot

iabl

e In

stru

men

ts o

f Dep

osit

-

-

-

150

,121

-

-

-

1

50,1

21

Der

ivat

ive

finan

cial

ass

ets

-

3

4,17

5

32,

533

(6

) 2

,361

1

05,6

82

-

174

,745

Fina

ncia

l inv

estm

ents

ava

ilabl

e-fo

r-sa

le

M

alay

sian

Gov

ernm

ent s

ecur

ities

39,

997

-

-

-

-

-

-

3

9,99

7

M

alay

sian

Gov

ernm

ent i

nves

tmen

t iss

ues

1

,249

,964

-

-

-

-

-

-

1

,249

,964

S

ukuk

Per

umah

an K

eraj

aan

468,

472

-

-

-

-

-

-

4

68,4

72

N

egot

iabl

e In

stru

men

ts o

f Dep

osit

and

Isla

mic

Deb

t Cer

tifica

tes

-

-

2,0

84,5

72

50,

040

-

-

-

2,1

34,6

12

K

haza

nah

Bon

ds/S

ukuk

27

2,53

8

- -

- -

- -

272

,538

C

orpo

rate

bon

ds/s

ukuk

2,

105,

220

7

95,4

56

1,0

61,5

20

381

,713

6

7,54

2

30,

045

-

4

,441

,496

Fina

ncia

l inv

estm

ents

hel

d-to

-mat

urity

C

orpo

rate

bon

ds/s

ukuk

-

-

-

-

-

2

80,9

33

23,

439

3

04,3

72

5

,206

,749

1

,040

,892

4

,141

,134

5

98,4

76

157

,205

1

,747

,978

2

3,43

9 1

2,91

5,87

3

* N

et o

f allo

wan

ce fo

r im

pairm

ent.

C

olla

tera

l is

not

gene

rally

obt

aine

d di

rect

ly f

rom

the

issu

ers

of d

ebt

secu

ritie

s. C

erta

in d

ebt

secu

ritie

s m

ay b

e co

llate

ralis

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y sp

ecifi

cally

iden

tified

ass

ets

that

wou

ld b

e ob

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in th

e ev

ent o

f def

ault.

D

epos

its a

nd s

hort

-ter

m fu

nds,

cor

pora

te b

onds

/suk

uk, t

reas

ury

bills

and

der

ivat

ives

whi

ch a

re p

ast d

ue b

ut n

ot im

paire

d is

not

sig

nific

ant.

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

147

ANNUAL REPORT 2016




Other financial assets - credit quality

Other financial assets of the Group and the Bank are neither past due nor impaired are summarised as below:


Other assets 39,212 62,990 33,910 59,649

Amount due from subsidiaries - - 196,839 61

Amount due from joint ventures 46,725 39,936 - -

Amount due from associate 500 - - -

Other financial assets that are past due but not impaired or impaired are not significant.

(ii) Market risk

Market risk is the risk of losses in on and off-balance-sheet positions arising from movements in market prices. The Bank’s exposure to market risk results largely from interest rate and foreign exchange rate risks.

The Market Risk Management Framework governs the market risk activities of the Bank which is supported by a set of approved market risk management policies, guidelines and procedures.

Risk control parameters are established based on risk appetite, market liquidity and business strategies as well as macroeconomic conditions. These parameters are reviewed at least annually.

Market risk arising from the Trading Book is primarily controlled through the imposition of Stop-loss and Value-at-Risk (‘VaR’) risk control parameters.

Interest rate risk is quantified by analysing the mismatches in timing repricing of the rate sensitive assets and rate sensitive liabilities. Earnings-at-Risk (‘EaR’) or Net Interest Income simulation is conducted to assess the variation in short term earnings under various rates scenarios. The potential long term effect of the overall exposure is tracked by assessing the impact on Economic Value of Equity (‘EVE’), also known as Economic Value-at-Risk (‘EVaR’). Thresholds are set for EaR and EVaR as management triggers.

Periodic stress tests are conducted to quantify market risk arising from probability of abnormal market movements.

Value-at-risk (‘VaR’)

Value-at-Risk (‘VaR’) is used to compute the maximum potential loss amount over a specified holding period of the Trading portfolio.

It measures the risk of losses arising from potential adverse movements in interest rates and foreign exchange rates that could affect values of financial instruments.

The Bank adopts Historical Pricing Simulation Method (‘HPS’) to compute potential loss or Value-at-Risk (‘VaR’) amount. The HPS Method uses the relative change of historical prices to estimate future potential changes in the market value of outstanding positions. The Bank currently adopts 250 simulated business days for its HPS VaR computation. After applying these price changes to the outstanding portfolios, 250 simulated market values for the portfolio are generated and the change in the day-to-day market value is taken as simulated Profit & Loss (‘P&L’) for the portfolio. As VaR calculates the worst expected loss over a given day horizon and confidence level under normal market condition, the 250 values are sorted from the lowest to the highest simulated P&L. The VaR focuses on the tail of the distribution (i.e. the loss figures) at the 99th percentile.

Backtesting of the VaR computation system is conducted regularly to gauge the accuracy of the risk measurement system.


148



(ii) Market risk (continued)

Value-at-risk (‘VaR’) (continued)

Average for the The Group and The Bank Balance financial year Minimum Maximum 2016 RM’000 RM’000 RM’000 RM’000

Instruments

FX swap 369 820 162 3,353

FX spot (Metro Desk) 214 402 40 1,285

FX option 2 175 2 1,474

Government securities, Corporate bonds/sukuk - 16 - 278

Average for the The Group and The Bank Balance financial year Minimum Maximum 2015 RM’000 RM’000 RM’000 RM’000

Instruments

FX swap 472 605 253 3,128

FX spot (Metro Desk) 466 330 48 3,240

Fix option 77 362 5 932

Government securities, Corporate bonds/sukuk 1 - - 17

Other risk measures

• Mark-to-market

Mark-to-market valuation tracks the current market value of the outstanding financial instruments.

• Stresstesting

Stress tests are conducted to attempt to quantify market risk arising from abnormal market movements. Stress tests measure the changes in values arising from extreme movements in interest rates and foreign exchange rates based on past experiences and simulated stress scenarios.

Interest/profit rate sensitivity

The table below shows the sensitivity for the financial assets and financial liabilities held as at reporting date.

Impact on profit after tax is measured using Repricing Gap Simulation methodology based on 100 basis point parallel shifts in interest rate.

Impact on equity represents the changes in fair value of fixed income instruments held in available-for-sale portfolio arising from the shifts in interest/profit rate.

149

ANNUAL REPORT 2016




Interest/profit rate sensitivity (continued)

The Group The Bank 2016 2016 2016 2016 +100 -100 +100 -100 basis point basis point basis point basis point RM million RM million RM million RM million

Impact on profit after tax (28.3) 28.3 (15.0) 15.0

Impact on equity (248.6) 265.4 (182.1) 194.0

The Group The Bank 2015 2015 2015 2015 +100 -100 +100 -100 basis point basis point basis point basis point RM million RM million RM million RM million

Impact on profit after tax (49.9) 49.9 (36.1) 36.1

Impact on equity (261.0) 261.2 (215.8) 213.1

Foreign exchange risk sensitivity analysis

An analysis of the exposure to assess the impact of a one per cent change in exchange rate to the profit after tax are as follows:


+1%

Euro 2,877 1,512 4,967 1,143

United States Dollar 44,218 39,731 46,368 37,697

Great Britain Pound 1,571 2,347 1,585 2,215

Australian Dollar 41 (56) 39 3

Japanese Yen 480 184 479 178

Others 2,309 4,600 2,300 3,577

51,496 48,318 55,738 44,813

-1%

Euro (2,877) (1,512) (4,967) (1,143)

United States Dollar (44,218) (39,731) (46,368) (37,697)

Great Britain Pound (1,571) (2,347) (1,585) (2,215)

Australian Dollar (41) 56 (39) (3)

Japanese Yen (480) (184) (479) (178)

Others (2,309) (4,600) (2,300) (3,577)

(51,496) (48,318) (55,738) (44,813)


150

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

) M

arke

t ri

sk (c

ont

inue

d)

Fore

ign

exch

ang

e ri

sk

The

Ban

k is

exp

osed

to th

e ef

fect

s of

fluc

tuat

ions

in th

e pr

evai

ling

fore

ign

curr

ency

exc

hang

e ra

tes

on it

s fin

anci

al p

ositi

on a

nd c

ash

flow

s. T

he ri

sk o

f fluc

tuat

ions

in fo

reig

n cu

rren

cy

exch

ange

rat

es is

man

aged

via

set

ting

of th

resh

olds

on

the

leve

l of e

xpos

ure

by c

urre

ncy

and

in a

ggre

gate

for

both

ove

rnig

ht a

nd in

tra-

day

posi

tions

, whi

ch a

re m

onito

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daily

.

The

follo

win

g ta

ble

sum

mar

ises

the

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k’s

expo

sure

to fo

reig

n cu

rren

cy e

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nge

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ris

k at

repo

rtin

g da

te. I

nclu

ded

in th

e ta

ble

are

the

Ban

k’s

finan

cial

inst

rum

ents

at c

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Gre

at

Sta

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ustr

alia

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pan

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Gro

up

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olla

r P

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d

Do

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Tota

l

20

16

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

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’000

Ass

ets

Cas

h an

d sh

ort-

term

fund

s

395

186

,378

1

,483

1

,385

1

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8

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19

9,08

1

D

eriv

ativ

e fin

anci

al a

sset

s

5,27

2

136

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2

,260

1

8

3

2,1

09

146

,273

Fi

nanc

ial i

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tmen

ts a

vaila

ble-

for-

sale

4

7,49

0

226

,021

-

-

-

1

48,1

64

421

,675

Lo

ans,

adv

ance

s an

d fin

anci

ng

-

1,1

71,2

84

-

-

-

-

1,1

71,2

84

Oth

er a

sset

s

-

1,7

39

-

-

-

-

1,7

39

Tota

l fina

ncia

l ass

ets

53

,157

1

,722

,033

3

,743

1

,403

1

,058

1

58,6

58

1,9

40,0

52

Liab

iliti

es

D

epos

its fr

om c

usto

mer

s

602,

713

2

28,6

30

7,1

78

6,1

40

803

4

1,38

2

886

,846

D

epos

its a

nd p

lace

men

ts o

f ban

ks a

nd o

ther

fina

ncia

l ins

titut

ions

-

1

7,24

3

-

-

-

-

17,

243

Der

ivat

ive

finan

cial

liab

ilitie

s

4,41

3

2,8

56

11,

116

3

93

156

1

,437

2

0,37

1

O

ther

liab

ilitie

s

1

6

5,79

9 -

-

-

-

5,

815

Tota

l fina

ncia

l lia

bili

ties

607,

142

25

4,52

8 1

8,29

4

6,5

33

959

4

2,81

9

930

,275

Net

on-

bala

nce

shee

t fina

ncia

l pos

ition

(5

53,9

85)

1,4

67,5

05

(14,

551)

(5

,130

) 9

9

115,

839

1,0

09,7

77

O

ff ba

lanc

e sh

eet c

omm

itmen

ts

932,

581

4

,350

,680

2

21,2

96

10,

560

6

3,02

6

187,

936

5,7

66,0

79

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

151

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

) M

arke

t ri

sk (c

ont

inue

d)

Fore

ign

exch

ang

e ri

sk (c

ont

inue

d)

U

nite

d

Gre

at

Sta

tes

Brit

ain

Aus

tral

ian

Japa

nese

The

Gro

up

E

uro

Dol

lar

Pou

nd

Dol

lar

Yen

Oth

ers

Tota

l

20

15

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

Ass

ets

Cas

h an

d sh

ort-

term

fund

s

1,7

94

840

,080

4

,186

1

,293

5

72

10,

152

8

58,0

77

Dep

osits

and

pla

cem

ents

with

ban

ks a

nd o

ther

fina

ncia

l ins

titut

ions

-

3

3,11

8

-

-

-

-

33,

118

Der

ivat

ive

finan

cial

ass

ets

49

2

113

,475

3

1,53

7

39

9

3

747

1

46,3

83

Fina

ncia

l inv

estm

ents

ava

ilabl

e-fo

r-sa

le

46,9

55

297

,472

-

-

-

1

59,3

93

503

,820

Loan

s, a

dvan

ces

and

finan

cing

-

1

,131

,490

-

-

-

2

22,7

25

1,3

54,2

15

Oth

er a

sset

s

-

1,6

72

-

-

-

-

1,6

72

Tota

l fina

ncia

l ass

ets

4

9,24

1

2,4

17,3

07

35,

723

1

,332

6

65

393

,017

2

,897

,285

Liab

ilitie

s

Dep

osits

from

cus

tom

ers

52

6,84

1

373

,221

1

0,37

7

7,9

56

603

1

0,88

9

929

,887

Dep

osits

and

pla

cem

ents

of b

anks

and

oth

er fi

nanc

ial i

nstit

utio

ns

-

200

,617

-

8

14

-

-

201

,431

Der

ivat

ive

finan

cial

liab

ilitie

s

2,11

7

14,

080

1

17

-

-

495

1

6,80

9

Oth

er li

abilit

ies

16

7

8

-

-

-

-

94

Tota

l fina

ncia

l lia

bilit

ies

52

8,97

4

587

,996

1

0,49

4

8,7

70

603

1

1,38

4

1,1

48,2

21

Net

on-

bala

nce

shee

t fina

ncia

l pos

ition

(4

79,7

33)

1,8

29,3

11

25,

229

(7

,438

) 6

2

381

,633

1

,749

,065

Off

bala

nce

shee

t com

mitm

ents

68

1,38

3

3,4

68,1

59

287

,647

-

2

4,47

3

231

,704

4

,693

,366

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016


152

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

) M

arke

t ri

sk (c

ont

inue

d)

Fore

ign

exch

ang

e ri

sk (c

ont

inue

d)

U

nite

d

Gre

at

Sta

tes

Bri

tain

A

ustr

alia

n Ja

pan

ese

The

Ban

k

Eur

o

Do

llar

Po

und

D

olla

r Ye

n O

ther

s To

tal

2016

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

Ass

ets

Cas

h an

d sh

ort-

term

fund

s

- 2

14,6

19

1,0

85

1,0

67

890

7

,779

2

25,4

40

Dep

osits

and

pla

cem

ents

with

ban

ks a

nd o

ther

fina

ncia

l ins

titut

ions

-

5

3,20

7

-

-

-

-

53,

207

Der

ivat

ive

finan

cial

ass

ets

5

,684

1

35,1

26

2,2

67

18

3

2

,109

1

45,2

07

Fina

ncia

l inv

estm

ents

ava

ilabl

e-fo

r-sa

le

47,4

90

226,

021

-

-

-

148

,164

4

21,6

75

Loan

s, a

dvan

ces

and

finan

cing

-

1

,105

,742

-

-

-

-

1

,105

,742

Oth

er a

sset

s

-

1,7

39

-

-

-

-

1,7

39

Tota

l fina

ncia

l ass

ets

53

,174

1

,736

,454

3

,352

1

,085

8

93

158

,052

1

,953

,010

Liab

iliti

es

Dep

osits

from

cus

tom

ers

24

4,25

5

206

,078

6

,929

6

,121

7

98

41,

382

5

05,5

63

Dep

osits

and

pla

cem

ents

of b

anks

and

oth

er fi

nanc

ial i

nstit

utio

ns

-

17,

243

-

-

-

-

1

7,24

3

Der

ivat

ive

finan

cial

liab

ilitie

s

4,52

4

6,2

71

11,

116

3

93

156

1

,437

2

3,89

7

Oth

er li

abilit

ies

16

5,

799

-

-

-

-

5,81

5

Tota

l fina

ncia

l lia

bili

ties

248,

795

2

35,3

91

18,

045

6

,514

9

54

42,

819

5

52,5

18

Net

on-

bala

nce

shee

t fina

ncia

l pos

ition

(1

95,6

21)

1,5

01,0

63

(14,

693)

(5

,429

) (6

1)

115,

233

1,40

0,49

2

Off

bala

nce

shee

t com

mitm

ents

84

9,15

5

4,5

99,9

47

223

,221

1

0,56

0

63,

026

1

87,3

54

5,93

3,26

3

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

153

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

) M

arke

t ri

sk (c

ont

inue

d)

Fore

ign

exch

ang

e ri

sk (c

ont

inue

d)

U

nite

d

Gre

at

Sta

tes

Brit

ain

Aus

tral

ian

Japa

nese

The

Ban

k

E

uro

Dol

lar

Pou

nd

Dol

lar

Yen

Oth

ers

Tota

l

20

15

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

Ass

ets

Cas

h an

d sh

ort-

term

fund

s

561

8

37,2

52

2,3

03

1,0

32

749

8

,680

8

50,5

77

Dep

osits

and

pla

cem

ents

with

ban

ks a

nd o

ther

fina

ncia

l ins

titut

ions

-

3

3,11

8

-

-

-

-

33,

118

Der

ivat

ive

finan

cial

ass

ets

4

92

113

,354

3

1,53

7

38

9

3

746

1

46,2

60

Fina

ncia

l inv

estm

ents

ava

ilabl

e-fo

r-sa

le

46,9

55

297

,472

-

-

-

1

59,3

93

503

,820

Loan

s, a

dvan

ces

and

finan

cing

-

1

,047

,046

-

-

-

2

22,7

25

1,2

69,7

71

Oth

er a

sset

s

-

1,6

72

-

-

-

-

1,6

72

Tota

l fina

ncia

l ass

ets

48

,008

2

,329

,914

3

3,84

0

1,0

70

842

3

91,5

44

2,8

05,2

18

Liab

ilitie

s

Dep

osits

from

cus

tom

ers

51

7,48

1

360

,437

1

0,37

0

7,9

52

598

8

,297

9

05,1

35

Dep

osits

and

pla

cem

ents

of b

anks

and

oth

er fi

nanc

ial i

nstit

utio

ns

-

116

,616

-

8

14

-

-

117

,430

Der

ivat

ive

finan

cial

liab

ilitie

s

2,0

89

13,

504

7

3

-

-

495

1

6,16

1

Oth

er li

abilit

ies

16

7

8

-

-

-

-

94

Tota

l fina

ncia

l lia

bilit

ies

51

9,58

6

490

,635

1

0,44

3

8,7

66

598

8

,792

1

,038

,820

Net

on-

bala

nce

shee

t fina

ncia

l pos

ition

(4

71,5

78)

1,8

39,2

79

23,

397

(7

,696

) 2

44

382

,752

1

,766

,398

Off

bala

nce

shee

t com

mitm

ents

6

23,9

50

3,1

86,9

71

271

,994

8

,112

2

3,53

9

94,

121

4

,208

,687

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016


154




Interest/profit rate risk

Interest rate risk is the risk to earnings and capital arising from exposure to adverse movements in interest rates mainly due to mismatches in timing repricing of assets and liabilities. These mismatches are actively managed from an earnings and economic value perspective.

The objective of interest rate risk management is to achieve a stable and sustainable net interest income from the following perspectives:

(1) Next 12 months’ Earnings - Interest rate risk from the earnings perspective is the impact based on changes to the net interest (‘NII’) over the next 12 months. This risk is measured through sensitivity analysis including the application of an instantaneous 100 basis point parallel shock in interest rates across the yield curve.

(2) Economic Value - Measuring the change in the economic value of equity (‘EVE’) is an assessment of the long term impact to the Bank’s capital. This is assessed through the application of relevant duration factors to capture the net economic value impact over the long term or total life of all balance sheet assets and liabilities to adverse changes in interest rates.

Interest rate risk thresholds are established in line with the Group’s strategy and risk appetite. These thresholds are reviewed regularly to ensure relevance in the context of prevailing market conditions.

The following table represents the Group’s and the Bank’s assets and liabilities at carrying amounts, categorised by the earlier of contractual repricing or maturity dates as at reporting date.

155

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

) M

arke

t ri

sk (c

ont

inue

d)

Inte

rest

/pro

fit

rate

ris

k (c

ont

inue

d)

N

on-

trad

ing

bo

ok

No

n-

in

tere

st /

U

p t

o 1

>

1-3

>3-

12

>1-

5 O

ver

5 p

rofi

t Tr

adin

g

T

he G

roup

m

ont

h m

ont

hs

mo

nths

ye

ars

year

s se

nsit

ive

bo

ok

Tota

l

20

16

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

Ass

ets

Cas

h an

d sh

ort-

term

fund

s

4,

069,

728

-

-

-

-

294

,762

-

4

,364

,490

Dep

osits

and

pla

cem

ents

with

ban

ks a

nd o

ther

fina

ncia

l ins

titut

ions

40,0

00

50,

000

6

0,00

0

-

-

2,2

34

-

152

,234

Der

ivat

ive

finan

cial

ass

ets

-

-

-

-

-

-

167

,304

1

67,3

04

Fina

ncia

l inv

estm

ents

ava

ilabl

e-fo

r-sa

le

8

54,9

65

1,4

65,9

59

871,

412

2,5

55,6

69

4,2

27,9

49

304

,043

-

10

,279

,997

Fina

ncia

l inv

estm

ent h

eld-

to-m

atur

ity

1

78,1

44

-

72,

065

5

0,00

0

50,

000

2

3,31

5 -

3

73,5

24

Loan

s, a

dvan

ces

and

finan

cing

- no

n-im

paire

d

24

,537

,597

2

,723

,113

3

,129

,917

8

,950

,311

2

,788

,912

-

-

42

,129

,850

- im

paire

d

-

-

-

-

-

5

38,4

47 #

-

5

38,4

47

Oth

ers

(1)

-

-

26,

931

-

-

7

4,25

6

-

101

,187

Sta

tuto

ry d

epos

its w

ith B

ank

Neg

ara

Mal

aysi

a

-

-

-

-

-

1

,482

,000

-

1

,482

,000

Tota

l ass

ets

29,6

80,4

34

4,2

39,0

72

4,1

60,3

25

11,5

55,9

80

7,0

66,8

61

2,7

19,0

57

167

,304

59

,589

,033

# N

et o

f ind

ivid

ual i

mpa

irmen

t allo

wan

ce.

(1)

Oth

ers

incl

ude

othe

r as

sets

and

am

ount

due

from

join

t ven

ture

s an

d as

soci

ate.

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016


156

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

) M

arke

t ri

sk (c

ont

inue

d)

Inte

rest

/pro

fit

rate

ris

k (c

ont

inue

d)

N

on-

trad

ing

bo

ok

No

n-

in

tere

st /

U

p t

o 1

>

1-3

>3-

12

>1-

5 O

ver

5 p

rofi

t Tr

adin

g

T

he G

roup

m

ont

h m

ont

hs

mo

nths

ye

ars

year

s se

nsit

ive

bo

ok

Tota

l

20

16

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

Liab

iliti

es

Dep

osits

from

cus

tom

ers

17,4

19,2

87

11,6

85,7

08

14,3

56,7

36

702

,512

-

3,

468,

813

-

47,6

33,0

56

Dep

osits

and

pla

cem

ents

of b

anks

and

oth

er fi

nanc

ial i

nstit

utio

ns

1

,963

,246

1

,299

,470

2

66,6

25

-

-

17,

862

-

3

,547

,203

Obl

igat

ion

on s

ecur

ities

sol

d un

der

repu

rcha

se a

gree

men

ts

87

6,30

9 12

0,63

7 -

-

-

2

,794

-

9

99,7

40

Der

ivat

ive

finan

cial

liab

ilitie

s

-

-

-

-

-

-

4

02,7

72

402

,772

Bills

and

acc

epta

nces

pay

able

-

-

-

-

-

37,

726

-

3

7,72

6

Sub

ordi

nate

d te

rm lo

an

1,3

00,0

00

-

-

-

-

4,5

92

-

1,3

04,5

92

Oth

er li

abilit

ies

-

-

-

-

-

4

39,4

88

-

439

,488

Tota

l lia

bili

ties

21

,558

,842

13

,105

,815

14

,623

,361

7

02,5

12

-

3,97

1,27

5 40

2,77

2 5

4,36

4,57

7

Net

inte

rest

/pro

fit

sens

itiv

ity

gap

8,12

1,59

2 (8

,866

,743

) (10

,463

,036

) 10,

853,

468

7,

066,

861

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

157

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

) M

arke

t ri

sk (c

ont

inue

d)

Inte

rest

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fina

ncia

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016


158

41

FIN

AN

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L R

ISK

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onth

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onth

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year

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book

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tal

2015

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Liab

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Dep

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11,8

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60

14,4

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Dep

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1 D

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016

159

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

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GE

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t ri

sk (c

ont

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12

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T

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ank

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tal

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Dep

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2

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481

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947

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Der

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-

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166

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1

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Fina

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49,9

66

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60

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33,0

99

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99,0

53

3,40

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5 8

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429,

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2,45

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l yea

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1 D

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016


160

41

FIN

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CIA

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tal

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Liab

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12,9

43,3

91

9,9

59,7

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53

514

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3

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37

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Dep

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1

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49,4

70

219

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Obl

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Der

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Sub

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Oth

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Am

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5

Tota

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79

Net

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5,65

1 (7

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Not

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1 D

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016

161

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

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MA

NA

GE

ME

NT

(ii

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t ri

sk (c

ont

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Non

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g

Th

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ank

m

onth

m

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s m

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ars

year

s se

nsiti

ve

book

To

tal

2015

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M’0

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00

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Ass

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8

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22

Dep

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140

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1

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72

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Fina

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150

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77

Fina

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1

85,0

32

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741

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Loan

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Am

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Tota

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20,9

52,7

16

2,90

3,14

0 4

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10

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5

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2

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3

24,8

66

47,6

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64

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tate

men

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fina

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l yea

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1 D

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016


162

41

FIN

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CIA

L R

ISK

MA

NA

GE

ME

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(ii

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ont

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year

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book

To

tal

2015

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M’0

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00

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Liab

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Dep

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11,6

28,4

40

10,1

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75

11,4

85,2

69

1,0

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99

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3,5

61,3

35

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14,1

18

Dep

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pla

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nanc

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nstit

utio

ns

1

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1

58,7

63

262

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2

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-

1

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Obl

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Der

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Bills

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Rec

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Oth

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365

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Am

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422

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Tota

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14,0

77,4

54

11,9

18,1

68

11,7

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01

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78

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45

413

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43

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Net

inte

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17

Not

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r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016

163

ANNUAL REPORT 2016



(iii) Liquidity risk

Liquidity risk is the risk of inability of a bank to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses. Liquidity risk includes the inability to manage sudden decreases or changes in funding sources. Liquidity risk also arises from the failure to recognise changes in market conditions that affect the ability to liquidate assets quickly and with minimal loss in value.

The Liquidity Risk Management Framework governs the liquidity risk management activities of the Group. The objective of liquidity risk management is to ensure that there are sufficient funds to meet contractual and regulatory obligations without incurring unacceptable losses as well as to undertake new transactions. The Group’s liquidity management process involves establishing liquidity risk management policies and prudential thresholds, liquidity risk threshold monitoring, stress testing and establishing contingency funding plans. These building blocks of liquidity risk management are subject to regular reviews to ensure relevance in the context of prevailing market conditions.

The Group’s short term liquidity risk management is premised on BNM’s Liquidity Coverage Ratio (‘LCR’) final standards. The LCR is a quantitative requirement which seeks to ensure that the Bank holds sufficient high-quality liquid assets (‘HQLA’) to withstand a significant liquidity stress scenario over a 30-day horizon.

Long term liquidity risk profile is assessed via the Net Stable Funding Ratio (‘NSFR’) which promotes resilience over a longer time horizon for the Bank to fund its activities with more stable sources of funding on an ongoing basis.

The LCR and NSFR are tracked to assess the short term and long term liquidity risk profile of the Bank, in line with BNM’s Liquidity Coverage Ratio (‘LCR’) final standards re-issued on 25th August 2016 as well as BNM’s revised Basel III Observation Period reporting for Net Stable Funding Ratio (‘NSFR’) and Leverage Ratio (‘LR’) issued on 7 August 2015.

The Group also employs a set of liquidity risk indicators as an early alert of any structural change for liquidity risk management. The liquidity risk indicators include internal and external qualitative as well as quantitative indicators.

Liquidity stress tests are conducted periodically and on ad-hoc basis to gauge the Group’s resilience in the event of a liquidity disruption.

The Contingency Funding Plan provides a systematic approach in handling liquidity disruption. The document encompasses strategies, decision-making authorities, and courses of action to be taken in the event of liquidity crisis and emergencies, enabling the Group to respond to an unexpected liquidity disruption in an effective and efficient manner.

The Board Risk Management Committee (‘BRMC’) is responsible for the Bank’s liquidity policy and the strategic management of liquidity has been delegated to the Group Asset Liability Management Committee (‘GALCO’). The Liquidity Management Committee (‘LMC’), which is a sub-committee of GALCO, augments the functions of GALCO by directing its focus specifically to liquidity issues. The BRMC is informed regularly on the liquidity position of the Bank.


164



(iii) Liquidity risk (continued)

Liquidity risk disclosure table which is based on contractual undiscounted cash flow

The table below provides analysis of cash flow payables for financial liabilities based on remaining contractual maturities on undiscounted basis. The balances in the table below do not agree directly to the balances reported in the statement of financial position as the table incorporates all contractual cash flows, on an undiscounted basis, relating to both principal and interest payments.

Up to 1 >1-3 >3-12 >1-5 Over 5 The Group month months months years years Total 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Deposits from customers 20,555,858 11,923,838 14,822,567 780,116 - 48,082,379

Deposits and placements of banks and other financial institutions 1,973,803 1,315,056 271,519 - - 3,560,378

Obligation on securities sold under repurchase agreements 879,770 121,323 - - - 1,001,093

Bills and acceptances payable 37,726 - - - - 37,726

Other liabilities 439,488 - - - - 439,488

Subordinated term loan 304,292 7,139 33,275 176,781 1,202,145 1,723,632

24,190,937 13,367,356 15,127,361 956,897 1,202,145 54,844,696


Deposits from customers 20,067,223 12,061,467 14,898,900 1,249,343 - 48,276,933

Deposits and placements of banks

and other financial institutions 1,577,348 901,469 265,323 - - 2,744,140

Obligation on securities sold under repurchase agreements 95,424 1,652,019 - - - 1,747,443


Recourse obligation on loans sold to Cagamas Berhad - 2,560 136,965 - - 139,525



22,231,554 14,622,973 15,336,719 1,438,312 1,119,574 54,749,132

165

ANNUAL REPORT 2016




Liquidity risk disclosure table which is based on contractual undiscounted cash flow (continued)

Up to 1 >1-3 >3-12 >1-5 Over 5 The Bank month months months years years Total 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Deposits from customers 16,072,622 10,159,568 10,634,918 555,578 - 37,422,686

Deposits and placements of banks and other financial institutions 1,507,183 862,296 222,697 - - 2,592,176

Obligation on securities sold under repurchase agreements 879,770 121,323 - - - 1,001,093



Amount due to subsidiaries 41,395 - - - - 41,395


19,245,433 11,150,326 10,890,890 732,359 1,202,145 43,221,153


Deposits from customers 14,972,708 10,267,337 11,806,369 1,131,899 - 38,178,313

Deposits and placements of banks and other financial institutions 1,357,452 160,221 265,323 - - 1,782,996

Obligation on securities sold under repurchase agreements 95,424 1,652,019 - - - 1,747,443


Recourse obligation on loans sold to Cagamas Berhad - 2,560 136,965 - - 139,525


Amount due to subsidiaries 422,166 - - - - 422,166


17,293,599 12,087,595 12,244,188 1,320,868 1,119,574 44,065,824


166




Derivative financial liabilities

Derivative financial liabilities based on contractual undiscounted cash flow:


Derivatives settled on net basis

Interest rate derivatives (424) (1,194) (3,930) (8,461) (2,685) (16,694)

Derivatives settled on gross basis


Outflow (1,969,654) (280,116) (1,935,333) (274,066) - (4,459,169)

Inflow 1,969,768 280,403 1,937,099 201,077 - 4,388,347

114 287 1,766 (72,989) - (70,822)



Interest rate derivatives (424) (1,194) (3,930) (8,461) (2,685) (16,694)



Outflow (1,859,028) (280,116) (1,935,333) (274,066) - (4,348,543)

Inflow 1,859,129 280,403 1,937,099 201,077 - 4,277,708

101 287 1,766 (72,989) - (70,835)

167

ANNUAL REPORT 2016




Derivative financial liabilities (continued)

Derivative financial liabilities based on contractual undiscounted cash flow:



Interest rate derivatives (200) (63) (663) (364) 948 (342)



Outflow (842,774) (764,282) (1,913,243) (538,917) - (4,059,216)

Inflow 842,714 765,846 1,919,957 429,666 - 3,958,183

(60) 1,564 6,714 (109,251) - (101,033)



Interest rate derivatives (200) (63) (663) (364) 948 (342)



Outflow (705,298) (763,215) (1,890,916) (538,917) - (3,898,346)

Inflow 705,298 764,779 1,897,630 429,666 - 3,797,373

- 1,564 6,714 (109,251) - (100,973)


168

41

FIN

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CIA

L R

ISK

MA

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Liq

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mo

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ye

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year

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Dep

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2

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836

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1

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8

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49

246

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10

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-

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6

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256

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Loan

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3

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-

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Oth

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48,3

63

3,7

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tate

men

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fina

ncia

l yea

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ed 3

1 D

ecem

ber 2

016

169

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

i) Li

qui

dit

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sk (c

ont

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Liq

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mo

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2016

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00

mat

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20

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11

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14

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7

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31

-

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56

Dep

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1,9

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29

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268

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-

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3

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liab

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44,

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2

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164

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1

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3

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4

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439

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3

Net

liq

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016


170

Not

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016

41

FIN

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351

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5

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54,

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ount

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6

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04,6

00

-

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00

Oth

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nanc

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54

610

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66,5

19

2,6

09,9

04

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38

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874

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t and

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ngib

le a

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s.

171

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

ME

NT

(ii

i) Li

qui

dit

y ri

sk (c

ont

inue

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Liq

uid

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ual m

atur

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ont

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Up

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>

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12

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ver

5 N

o

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Gro

up

m

onth

m

onth

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onth

s ye

ars

year

s sp

ecifi

c To

tal

2015

R

M’0

00

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’000

R

M’0

00

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’000

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00

mat

urity

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s

Dep

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20

,053

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11

,973

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14

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1

,187

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-

-

47

,813

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Dep

osits

and

pla

cem

ents

of b

anks

and

oth

er fi

nanc

ial i

nstit

utio

ns

1,5

75,9

70

897

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2

62,5

38

-

-

-

2,7

35,5

96

Obl

igat

ion

on s

ecur

ities

sol

d un

der

repu

rcha

se a

gree

men

ts

95,

370

1

,645

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-

-

-

-

1

,740

,946

Der

ivat

ive

finan

cial

liab

ilitie

s

57,8

60

87,

441

1

25,1

10

138

,835

4

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-

4

14,1

40

Bills

and

acc

epta

nces

pay

able

7

7,11

4

-

-

-

-

-

77,

114

Rec

ours

e ob

ligat

ion

on lo

ans

sold

to C

agam

as B

erha

d

-

806

-

1

33,7

79

-

-

134

,585

Oth

er li

abilit

ies

4

11,5

75

-

-

-

-

-

411

,575

Sub

ordi

nate

d te

rm lo

an

3

,065

1

,381

-

-

1

,000

,000

-

1

,004

,446

Oth

er n

on-fi

nanc

ial l

iabi

litie

s (2

)

-

-

-

-

-

2

5,15

6

25,

156

22,2

74,1

23

14,6

06,0

38

14,9

85,9

56

1,4

60,6

04

1,0

04,8

94

25,

156

54,

356,

771

Net

liqu

idity

gap

(

12,6

07,6

04) (

11,9

96,1

34) (

11,7

53,0

18) 1

3,93

7,37

7 2

7,07

2,34

4

848

,865

(2)

Oth

er n

on-fi

nanc

ial l

iabi

litie

s in

clud

e de

ferr

ed ta

x lia

bilit

ies

and

prov

isio

n fo

r ta

xatio

n.

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

r end

ed 3

1 D

ecem

ber 2

016


172

41

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1 D

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016

173

ANNUAL REPORT 2016

Not

es t

o th

e Fi

nanc

ial S

tate

men

tsfo

r the

fina

ncia

l yea

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ed 3

1 D

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016

41

FIN

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Dep

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174

Not

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fina

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016

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FIN

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175

ANNUAL REPORT 2016

41

FIN

AN

CIA

L R

ISK

MA

NA

GE

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qui

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134

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1 D

ecem

ber 2

016


176



(iv) Operational risk management

Operational risk is defined as the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or external events. The definition includes legal risk, and exposure to litigation from all aspects of the Bank’s activities, but excludes strategic business, reputational and systemic risks.

The Group Operational Risk Management Framework governs the management of operational risk across the Group.

BRMC approves all policies/policy changes relating to operational risk. GORMC supports BRMC in the review and monitoring of operational risk and provides the forum to discuss and manage all aspects of operational risk including control lapses.

The operational risk management (‘ORM’) function within GRM operates in independent capacity to manage the risks in activities associated with the operational function of the Bank.

The Bank adopts the Basic Indicator Approach for the purpose of calculating the capital requirement for operational risk. The capital requirement is calculated by taking 15% of the Bank’s average annual gross income over the previous three years.

Operational risks are managed daily through established systems and processes to ensure compliance with policies, guidelines and control procedures.

To identify and assess operational risk issues and exposure, the following tools are employed:

• RiskControlSelfAssessment(‘RCSA’)

• KeyControlStandards(‘KCS’)

• KeyRiskIndicator(‘KRI’)

• LossEventDatabase(‘LED’)

Information Technology (‘IT’) and cyber risks are managed as part of the operational risk activities. The IT systems and processes are assessed and tested regularly for resilience and continuity, and that they are secure from internal and external threats.

Introduction of new products or services are evaluated to assess suitability, potential risks and operational readiness.

Operational Risk Coordinators (ORC) are appointed at business and support units as champions of ORM activities within respective units. The ORC is responsible for the reporting of ORM activities and to liaise with Group Operational Risk Management on all operational defects and results. As an internal requirement, all Operational Risk Coordinators must satisfy an Internal Operational Risk (including business continuity management) Certification Program. These coordinators will first go through an on-line self learning exercise before attempting on-line assessments to measure their skills and knowledge level. This will enable Group Risk Management to prescribe appropriate training and development activities for the coordinators.

177

ANNUAL REPORT 2016



(v) Shariah Non-Compliance Risk

Shariah non-compliance is the risk of failure to comply with the Shariah rules and principles as determined by SC and/or any other relevant bodies, such as BNM Shariah Advisory Council.

The Shariah Governance Framework for Islamic Financial Institutions issued by BNM is the main reference for the Shariah governance process and oversight within AiBB.

Shariah Committee (‘SC’) is established to deliberate on Shariah issues and provide resolution as well as guidance. GORMC together with BRMC and GBRMC assist in the overall oversight of Shariah risk management of the Group.

Shariah Risk Management is part of an integrated risk management control function to identify all possible risks of Shariah non-compliance and where appropriate, to provide mitigating measures that need to be taken to reduce the risk. The scope covers overall business activities and operations, commencing from Islamic product origination until maturity.

Each business and support unit is responsible to identify and assess potential Shariah Non-Compliance Risk using the RCSA process. Half yearly RCSA checklist is performed to gauge the level of Shariah compliance.

All Islamic products, services and strategies related matters must be approved by the SC.

Shariah Resolutions/Circulars are issued and training on Shariah Compliance is conducted by the Shariah Review Team on a regular basis.

Shariah non-compliance reports are regularly submitted for further deliberation, decision and remedial action.

(vi) Business Continuity Risk

Business continuity risk is the risk of losses in assets, revenue, reputation and stakeholder/customer confidence due to the discontinuation of services in both business and technology operations.

The Business Continuity Management Framework governs the management of business continuity issues, in line with BNM Guidelines on Business Continuity Management (‘BCM’).

BRMC approves all policies and its changes relating to business continuity management. It also reviews, monitors and discusses business continuity management reports tabled at its meetings. GORMC supports BRMC in the review and monitoring of Business Continuity Risk and provides the forum to discuss and manage all aspects of operational risk including control lapses.

The BCM function is an independent body overseeing the management of the overall business continuity risk.

Annual Risk Assessment and Business Impact Analysis are made compulsory for each business and support unit in the Bank to undertake. The outcome of this assessment will translate into a risks listing that require business and support units to derive action plans to address the risks.

Risk control is established through adherence with established BCM guidelines and standards throughout the implementation of BCM programs. Rigorous testing on business continuity and disaster recovery plans are diligently performed to ensure effective and smooth execution of the plan for resumption and recovery of disrupted business.

Policies and processes are in place to support the monitoring and reporting of business continuity risks.


178



(vii) Fair value of financial instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Group and the Bank measure fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: Quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 3: Valuations derived from valuation techniques in which one or more significant inputs are not based on observable market data.

Financial instruments are classified as Level 1 if their value is observable in an active market. Such instruments are valued by reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted prices is readily available, and the price represents actual and regularly occurring market transactions. An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an on-going basis. These would include actively traded listed equities and actively exchange-traded derivatives.

Where fair value is determined using unquoted market prices in less active markets or quoted prices for similar assets and liabilities, such instruments are generally classified as Level 2. In cases where quoted prices are generally not available, the Group and the Bank then determine fair value based upon valuation techniques that use as inputs, market parameters including but not limited to yield curves, volatilities and foreign exchange rates. The majority of valuation techniques employ only observable market data and so reliability of the fair value measurement is high.

Financial instruments are classified as Level 3 if their valuation incorporates significant inputs that are not based on observable market data (unobservable inputs). Such inputs are generally determined based on observable inputs of a similar nature, historical observations on the level of the input or other analytical techniques.

This category includes unquoted shares held for socio economic reasons. Fair values for shares held for socio economic reasons are based on the net tangible assets of the affected companies. The Group’s and the Bank’s exposure to financial instruments classified as Level 3 comprised a small number of financial instruments which constitute an insignificant component of the Group’s and the Bank’s portfolio of financial instruments. Hence, 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.

The Group and the Bank recognise transfers between levels of the fair value hierarchy at the end of the reporting period during which the transfer has occurred. Transfers between fair value hierarchy primarily due to change in the level of trading activity, change in observable market activity related to an input, reassessment of available pricing information and change in the significance of the unobservable input. There were no transfers between Level 1, 2 and 3 of the fair value hierarchy during the financial year (2015: Nil).

179

ANNUAL REPORT 2016



(vii) Fair value of financial instruments (continued)

The following table presents assets and liabilities measured at fair value and classified by level of the following fair value measurement hierarchy:

The Group Level 1 Level 2 Level 3 Total

2016 RM’000 RM’000 RM’000 RM’000

Assets

Derivative financial assets - 167,304 - 167,304

Financial investments available-for-sale *

- Money market instruments - 4,977,979 - 4,977,979

- Equity securities - - 216,592 216,592

- Corporate bonds/Sukuk - 5,055,381 30,045 5,085,426

Total - 10,200,664 246,637 10,447,301

Liabilities

Derivative financial liabilities - 402,772 - 402,772

Total - 402,772 - 402,772

The Group Level 1 Level 2 Level 3 Total

2015 RM’000 RM’000 RM’000 RM’000

Assets

Financial assets held-for-trading - 150,121 - 150,121





- Corporate bonds/Sukuk - 4,949,987 - 4,949,987

Total - 10,406,085 205,423 10,611,508

Liabilities


Total - 414,140 - 414,140

* Net of allowance for impairment.


180




The Bank Level 1 Level 2 Level 3 Total

2016 RM’000 RM’000 RM’000 RM’000

Assets





- Corporate bonds/Sukuk - 4,153,476 30,045 4,183,521

Total - 8,366,192 246,637 8,612,829

Liabilities


Total - 409,283 - 409,283

The Bank Level 1 Level 2 Level 3 Total

2015 RM’000 RM’000 RM’000 RM’000

Assets

Financial assets held-for-trading - 150,121 - 150,121





- Corporate bonds/Sukuk - 4,441,496 - 4,441,496

Total - 8,931,945 204,898 9,136,843

Liabilities


Total - 413,944 - 413,944

* Net of allowance for impairment.

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The following table present the changes in Level 3 instruments for the financial year ended:



Purchases 30,045 500 30,045 -

Sales (25) - - -

Reclassify to investment in associate (500) - - -

Total gains recognised in other comprehensive income 12,012 74,245 12,012 74,246

Allowance for impairment losses (318) - (318) -


Effect of changes in significant unobservable assumptions to reasonably possible alternatives

As at reporting date, financial instruments measured with valuation techniques using significant unobservable inputs (Level 3) mainly include unquoted shares held for socio economic purposes.

Qualitative information about the fair value measurements using significant unobservable inputs (Level 3):

Inter-relationship Fair value assets between significant 2016 2015 Valuation Unobservable unobservable inputs and Description RM’000 RM’000 techniques inputs fair value measurement

Financial investments available-for-sale

The Group Net tangible Net tangible Higher net tangible assets

Unquoted shares 216,592 205,423 assets assets results in higher fair value

The Bank Net tangible Net tangible Higher net tangible assets

Unquoted shares 216,592 204,898 assets assets results in higher fair value

In estimating its significance, the Group and the Bank used an approach that is currently based on methodologies used for fair value adjustments. These adjustments reflects the values that the Group and the Bank estimate are appropriate to adjust from the valuations produced to reflect for uncertainties in the inputs used. The methodologies used can be a statistical or other relevant approved techniques.


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The following tables analyse within the fair value hierarchy of the Group’s and the Bank’s assets and liabilities not measured at fair value as at reporting date but for which fair value is disclosed:

Carrying Fair value The Group value Level 1 Level 2 Level 3 Total 2016 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets

Financial investments held-to-maturity 373,524 - 373,524 - 373,524

Loans, advances and financing 42,668,297 - 41,856,606 - 41,856,606

43,041,821 - 42,126,879 - 42,126,879

Financial liabilities

Deposits from customers 47,633,056 - 47,644,913 - 47,644,913

47,633,056 - 47,644,913 - 47,644,913

Carrying Fair value The Group value Level 1 Level 2 Level 3 Total 2015 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets



42,485,251 - 42,185,567 - 42,185,567



Recourse obligation on loans sold to Cagamas Berhad 134,585 - 136,065 - 136,065

47,947,798 - 47,968,551 - 47,968,551

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ANNUAL REPORT 2016




Carrying Fair value The Bank value Level 1 Level 2 Level 3 Total 2016 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets



31,054,756 - 30,443,469 - 30,443,469



37,106,463 - 37,113,009 - 37,113,009

Carrying Fair value The Bank value Level 1 Level 2 Level 3 Total 2015 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets

Deposits and placements with banks and other financial institutions 1,310,764 - 1,336,046 - 1,336,046



34,517,824 - 34,283,615 - 34,283,615



Recourse obligation on loans sold to Cagamas Berhad 134,585 - 136,065 - 136,065

37,948,703 - 37,964,156 - 37,964,156

Other than as disclosed above, the total fair value of each financial assets and liabilities presented on the statements of financial position as at reporting date of the Group and the Bank approximates the total carrying amount.

The fair value estimates were determined by application of the methodologies and assumptions described below.

Short-term funds and placements with banks and other financial institutions

For short-term funds and placements with banks and other financial institutions with maturity of less than six months, the carrying amount is a reasonable estimate of fair value.

For amounts with maturities of six months or more, fair values have been estimated by reference to current rates at which similar deposits and placements would be made to banks with similar credit ratings and maturities.


184




Financial investments held-to-maturity

The fair values of financial investments held-to-maturity are reasonable estimates based on quoted market prices. In the absence of such quoted prices, the fair values are based on the expected cash flows of the instruments discounted by indicative market yields for the similar instruments as at reporting date or the audited net tangible asset of the invested company.


Loans, advances and financing of the Group comprise of floating rate loans/financing and fixed rate loans/financing. For performing floating rate loans/financing, the carrying amount is a reasonable estimate of their fair values.

The fair values of performing fixed rate loans/financing are arrived at using the discounted cash flows based on the prevailing market rates of loans, advances and financing with similar credit ratings and maturities.

The fair values of impaired loans, advances and financing, whether fixed or floating are represented by their carrying values, net of individual and collective allowances, being the reasonable estimate of recoverable amount.

Other assets and liabilities

The carrying value less any estimated allowance for financial assets and liabilities included in other assets and other liabilities are assumed to approximate their fair values.

Deposits from customers, banks and other financial institutions, bills and acceptances payable

The carrying values of deposits and liabilities with maturities of six months or less are assumed to be reasonable estimates of their fair values. Where the remaining maturities of deposits and liabilities are above six months, their estimated fair values are arrived at using the discounted cash flows based on prevailing market rates currently offered for similar remaining maturities.

The estimated fair value of deposits with no stated maturity, which include non-interest bearing deposits, approximates carrying amount which represents the amount repayable on demand.

Recourse obligation on loans sold to Cagamas Berhad

For floating rate loans sold to Cagamas Berhad, the carrying value is generally a reasonable estimate of their fair values.

The fair values of fixed rate loans sold to Cagamas Berhad are arrived at using the discounted cash flow methodology at prevailing market rates of similarly profiled loans.

Subordinated term loan

For fixed rate borrowings, the estimate of fair value is based on discounted cash flow model using prevailing lending rates for borrowings with similar risks and remaining term to maturity.

For floating rate borrowings, the carrying value is generally a reasonable estimate of their fair values.

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ANNUAL REPORT 2016


42 OFFSETTING FINANCIAL ASSETS AND FINANCIAL LIABILITIES

In accordancewithMFRS132 “Financial Instruments: Presentation”, theGroup and theBank report financial assets andfinancial liabilities on a net basis on the statements of financial position only if there is a legally enforceable right to set off the recognised amounts and there is intention to settle on a net basis, or to realise the asset and settle the liability simultaneously. The following table shows the impact of netting arrangement on:

• Allfinancialassetsandliabilitiesthatarereportednetonstatementsoffinancialposition;and

• Allderivativefinancialinstrumentsandreverserepurchaseandrepurchasedagreementsandothersimilarsecuredlendingand borrowing agreements that are subject to enforceable master netting arrangements or similar agreements, but do not qualify for statements of financial position netting.

The table identifies the amounts that have been offset in the statements of financial position and also those amounts that are covered by enforceable netting arrangements (offsetting arrangements and financial collateral) but do not qualify for netting under the requirements of MFRS 132 described above.

The“Netamounts”presentedbelowarenotintendedtorepresenttheGroup’sandtheBank’sactualexposuretocreditrisk,as a variety of credit mitigation strategies are employed in addition to netting and collateral arrangements.

Related amount not offset

Derivative financial assets and liabilities

The ‘Financial instruments’ column identifies financial assets and liabilities that are subject to set off under netting agreements, such as the ISDA Master Agreement or derivative exchange or clearing counterparty agreements, whereby all outstanding transactions with the same counterparty can be offset and close-out netting applied across all outstanding transaction covered by the agreements if an event of default or other predetermined events occur.

Financial collateral refers to cash and non-cash collateral obtained, typically daily or weekly, to cover the net exposure between counterparties by enabling the collateral to be realised in an event of default or if other predetermined events occur.

Obligation on securities sold under repurchase agreements

The ‘Financial instruments’ column identifies financial assets and liabilities that are subject to set-off under netting agreements, such as global master repurchase agreements, whereby all outstanding transactions with the same counterparty can be offset and close-out netting applied across all outstanding transaction covered by the agreements if an event of default or other predetermined events occur.


186



Effects of offsetting on the statements of financial position Related amounts not offset

Net amount reported on statement Gross Amount of financial Financial Financial Net The Group amount offset position instruments collateral amount 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets

Derivative financial assets 167,304 - 167,304 (38,960) - 128,344

Total assets 167,304 - 167,304 (38,960) - 128,344


Obligation on securities sold under repurchase agreements 999,740 - 999,740 (999,740) - -

Derivative financial liabilities 402,772 - 402,772 (38,960) - 363,812

Total liabilities 1,402,512 - 1,402,512 (1,038,700) - 363,812


Net amount reported on statement Gross Amount of financial Financial Financial Net The Group amount offset position instruments collateral amount 2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets


Total assets 174,037 - 174,037 (74,365) - 99,672


Obligation on securities sold under repurchase agreements 1,740,946 - 1,740,946 (1,740,946) - -



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ANNUAL REPORT 2016




Net amount reported on statement Gross Amount of financial Financial Financial Net The Bank amount offset position instruments collateral amount 2016 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets


Total assets 166,240 - 166,240 (39,647) - 126,593


Obligation on securities sold under repurchase agreements 999,740 - 999,740 (999,740) - -




Net amount reported on statement Gross Amount of financial Financial Financial Net The Bank amount offset position instruments collateral amount 2015 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Financial assets


Total assets 174,745 - 174,745 (74,491) - 100,254


Obligation on securities sold under repurchase agreements 1,740,946 - 1,740,946 (1,740,946) - -




188


43 LEASE COMMITMENTS

The Group and the Bank have lease commitments in respect of rented premises and hired equipment, all of which are classified as operating leases. A summary of the future minimum lease payments under non-cancellable operating leases commitments are as follows:


Within one year 22,844 22,745 22,153 22,056

One year to five years 22,986 33,468 22,304 33,219

44 CAPITAL AND OPERATING COMMITMENTS

Capital commitments

Capital expenditure for property and equipment approved by the Directors but not provided for in the financial statements amounted to approximately:

The Bank 2016 2015 RM’000 RM’000

Authorised and contracted for 13,384 13,058

Operating commitment

Operating expenditure approved by the Directors but not provided for in the financial statements amounted to approximately:

The Bank 2016 2015 RM’000 RM’000

Authorised and contracted for 47,518 79,263

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ANNUAL REPORT 2016


45 CAPITAL MANAGEMENT

The total capital and capital adequacy ratios of the Group and the Bank are computed in accordance with BNM’s Capital Adequacy Framework (Capital Components).

The Group and the Bank are currently adopting the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach for Operational Risk. In line with the transitional arrangements under the BNM Capital Adequacy Framework (Capital Components), the minimum capital adequacy requirement for Common Equity Tier 1 Capital Ratio (‘CET 1’) and Tier 1 Capital Ratio are 5.125% (2015: 4.5%) and 6.625% (2015: 6.0%) respectively for year 2016. The minimum regulatory capital adequacy requirement is 8.625% (2015: 8.0%) for total capital ratio.

The Group and the Bank’s objectives when managing capital are:

• TocomplywiththecapitalrequirementssetbytheregulatorsofthebankingmarketswheretheentitieswithintheGroupand the Bank operates;

• TosafeguardtheGroupandtheBank’sabilitytocontinueasagoingconcernsothatitcancontinuetoprovidereturnsfor shareholders and benefits for other stakeholders; and

• Tomaintainastrongcapitalbasetosupportthedevelopmentofitsbusiness.

The Group and the Bank maintain a ratio of total regulatory capital to its risk-weighted assets above a minimum level agreed with the management which takes into account the risk profile of the Group and the Bank.

The table in Note 46 below summarises the composition of regulatory capital and the ratios of the Group and the Bank for the financial year ended 31 December 2016.

46 CAPITAL ADEQUACY

The capital adequacy ratios are as follows:

The Group (#) The Bank 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

Paid-up share capital 1,688,770 1,688,770 1,688,770 1,688,770

Share premium 858,904 858,904 858,904 858,904

Statutory reserves 1,721,637 1,577,509 1,416,621 1,328,792


Unrealised gains and losses on AFS 98,985 90,983 122,753 101,388

5,547,258 5,245,321 5,000,407 4,783,143

Less:

Goodwill and other intangibles (164,089) (153,137) (167,982) (156,604)

55% of cumulative unrealised gains of AFS (54,442) (50,041) (67,514) (55,763)

Investment in associate/subsidiaries (450) - (345,134) (195,630)

CET1 capital 5,328,277 5,042,143 4,419,777 4,375,146

Tier I capital 5,328,277 5,042,143 4,419,777 4,375,146


190


46 CAPITAL ADEQUACY

The Group (#) The Bank 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

Subordinated term loan 1,180,000 820,000 1,180,000 820,000

Collective impairment @ 137,903 133,809 109,362 110,058

Regulatory adjustments 280,204 278,547 207,026 220,148

Less:


Tier II capital 1,597,807 1,232,356 1,266,298 856,762

Total capital 6,926,084 6,274,499 5,686,075 5,231,908

CET1 capital ratio 12.201% 11.878% 12.595% 12.230%

Tier 1 capital ratio 12.201% 11.878% 12.595% 12.230%

Total capital ratio 15.860% 14.781% 16.204% 14.625%

CET1 capital ratio (net of proposed dividends)^ 12.147% 11.632% 12.528% 11.938%

Tier 1 capital ratio (net of proposed dividends)^ 12.147% 11.632% 12.528% 11.938%

Total capital ratio (net of proposed dividends)^ 15.806% 14.535% 16.137% 14.333%

Risk-weighted assets for:

Credit risk 40,928,681 39,766,072 32,838,523 33,498,227

Market risk 333,445 327,504 296,191 323,855

Operational risk 2,408,896 2,355,261 1,956,481 1,951,219

Total risk-weighted assets 43,671,022 42,448,837 35,091,195 35,773,301

@ Qualifying collective impairment is restricted to allowances on unimpaired portion of the loans, advances and financing.

# The Group comprises the banking and non-banking subsidiaries.

^ Net proposed dividends of RM23,473,898 (2015: RM104,366,000).

In accordance with BNM’s Guidelines on Investment Account, the credit and market risk weighted on the assets funded by the RIA are included in calculation of capital adequacy for the Bank. As at 31 December 2016, RIA assets included in the Total Capital Ratio calculation amounted to RM2,112,242,742 (2015: RM1,316,026,354).

The capital adequacy ratios of the AFFIN Islamic Bank Berhad is as follows:

Economic Entity The Bank 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000

(Before and after deducting proposed dividend)




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ANNUAL REPORT 2016


47 LITIGATION AGAINST THE BANK

(a) AclaimbythePlaintiffagainsttheBankvideWritofSummonsandStatementofClaimdated22January2016(“Writ”)forthe following:

i) RM56,885,317.82 together with interest at 5% per annum from 1999 till full settlement as alleged damages;

ii) SGD9,928,473.75 together with interest at 5% per annum from 2013 till full settlement as alleged losses;

iii) RM776,331.00 being alleged losses of Plaintiffs’ shares in Berlian Ferries Pte. Ltd which was transferred out as a result of his bankruptcy in 2013 with interest at 5% per annum from 2013 till full settlement as alleged losses; and

iv) RM500,000 as cost in respect of legal proceedings in Singapore.

TheBankhadon25January1996givenSuriaBarisan(M)SdnBhd(“Suria”)acreditfacilityofRM21.6million(“Facility”)against security of unquoted shares belongs to Naval Dockyard Sdn Bhd and guarateed by the Plaintiff and Puan NorashikinBintiAbdulLatiff(“Guarantor”).

Suria,thePlaintiffandGuarantor(“All”)defaultedintheFacilitywhichledtotheBankfilingadebtrecoveryactionagainstAll of them in 1999. Judgement was obtained against All on 8 July 2004.

The Plaintiff was made bankrupt on 17 January 2013. The bankruptcy was set aside in September 2015 on the grounds that hewas solventdue to a thirdparty,Chenet FinanceLtd (“Chenet”) beingorderedby aSingaporeCourt topaydamagestotheDirectorGeneralofInsolvencyMalaysia(“DGI”)asreceiverofPlaintiff’sEstate.TheBankhasappealedandCaseManagement(“CM”)hasbeenfixedon24June2016.

ThePlaintiff’sclaim(“Claim”)ispremisedonallegedwrongfulactsbyABBasfollows:

• failuretosell7.2millionsharesinNavalDockyardSdnBhd(“NDSBshares”)whichwaspledgedbySuriatotheBankas security for the Facility on a timely basis. On this claim, Plantiff claims damages under (i) above;

• allowedthereleaseoftheGuarantor fromher liabilityuponpaymentofacertainsumpursuanttoherGuaranteewithout giving the same opportunity to the Plaintiff;

• theBankhadcorrespondedwiththeopponentofPlantiffinSingaporetopreventthePlaintifffromclaiminghisassetsin Singapore.

Plantiff has alleged conspiracy between the Bank and the opponent of the Plantiff in Singapore. On this claim, Plantiff claims losses under (ii) above;

• theBankhadwrongfullymadePlantiffabankruptin2013whichbankruptcywassetasidein2015.Onthisclaim,Plantiff claims losses under (iii) above;

• ThePlantiffisalsoclaimingtheamountof(iv)abovebeingcostofproceedingsincurredbyhiminSingapore.

TheBankhasagooddefence(“Defence”)onthemeritswithregardtoeachoftheallegedwrongfulactasfollows:

• thesaleofNDSBShareswassubjecttotheapprovalfromtherelevantauthoritiesasperthetermsoftheFacilityAgreement and the price has to be based on the offer from the approved prospective buyer;

• thereleaseoftheGuarantoristheprerogativeoftheBankpursuanttothetermsoftheGuaranteeAgreement;

• thePlantiff’sbankruptcyisbasedonajudgementofCourt;

• theBank’slegalfirmhadcorrespondedwiththelegalfirmofthePlantiff’sopponentinSingaporeonlytoinformthestatus of the Plantiff proceedings in Malaysia and any alleged conspiracy is denied; and

• theclaimforcostisunreasonableastheBankwasnotinanywayinvolvedintheSingaporeproceedings.


192


47 LITIGATION AGAINST THE BANK

(a) AclaimbythePlaintiffagainsttheBankvideWritofSummonsandStatementofClaimdated22January2016(“Writ”)forthe following (continued):

The above Claim against the Bank by the Plaintiff is a result of the Debt Recovery Action against the Plaintiff which was commenced in the ordinary course of business.

On 15 August 2016, the matter came up for hearing for the Plaintiff’s Application for Discovery of Documents whereby the Court fixed the said matter for decision on 1 November 2016. The Court has also fixed the full trial dates on 13 February to 16 February 2017.

The Plaintiff’s Stay Application was dismissed by the Court on 20 September 2016 with a cost of RM5,000.00. The hearing for the Bank’s appeal against the annulment of the Adjudicting Order Receiving Order (‘AORO’) has been fixed on 10 November 2016.

The Board of Directors of the Bank are of the view that save for the orders, cost and other relief sought by the Plaintiff, which will materialize only if the Court rules in the Plaintiff’s favour, the Writ and Statement of Claim is not expected to result in any immediate losses, material, financial and operational impact on the Bank for the current financial year ended 31 December 2016.

(b) Other than the above, there are various legal suits against the Bank in respect of claims and counter claims of approximately RM71.8 million (31 December 2015: RM68.1 million). Based on legal advice, the Directors of the Bank are of the opinion that no provision for damages need to be made in the financial statements, as the probability of adverse adjudication against the Bank is remote.

48 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The Group and the Bank make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. To enhance the information content of the estimates, certain variables that are anticipated to have material impact to the Group’s and the Bank’s results and financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year are discussed below.

Allowance for impairment losses on loans, advances and financing

The accounting estimates and judgments related to the impairment of loans and provision for off-balance sheet positions are critical accounting estimate because the underlying assumptions used for both the individually and collectively assessed impairment can change from period to period and may significantly affect the Group and the Bank’s results of operations.

In assessing assets for impairment, management judgment is required. The determination of the impairment allowance required for loans which are deemed to be individually significant often requires the use of considerable management judgment concerning such matters as local economic conditions, the financial performance of the counterparty and the value of any collateral held, for which there may not be a readily accessible market. The actual amount of the future cash flows and their timing may differ from the estimates used by management and consequently may cause actual losses to differ from the reported allowances.

The impairment allowance for portfolios of smaller-balance homogenous loans/financing, such as those to individuals and small business customers of the private and retail business, and for those loans/financing which are individually significant but for which no objective evidence of impairment exists, is determined on a collective basis. The collective impairment allowance is calculated on a portfolio basis using statistical models which incorporate numerous estimates and judgments, and therefore is subject to estimation uncertainty. The Group and the Bank perform a regular review of the models and underlying data and assumptions as far as possible to reflect the current economic circumstances. The probability of default, loss given defaults, and loss identification period, amongst other things, are all taken into account during this review.

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ANNUAL REPORT 2016


49 CREDIT EXPOSURES ARISING FROM TRANSACTIONS WITH CONNECTED PARTIES

The following credit exposures are based on Bank Negara Malaysia’s revised Guidelines on Credit Transaction and Exposures with Connected Parties, which are effective 1 January 2008.

The Bank 2016 2015 RM’000 RM’000

(i) The aggregate value of outstanding credit exposures with connected parties (RM’000) 2,990,808 2,319,413

(ii) The percentage of outstanding credit exposures to connected parties as a proportion of total credit exposures 6% 5%

(iii) The percentage of outstanding credit exposures with connected parties which is impaired or in default Nil Nil

50 SIGNIFICANT EVENT AFTER YEAR END

(a) The Bank has disposed the entire share capital of ABB Trustee Berhad (‘ABBT’) comprising 100,000 ordinary shares of RM10 each (of which RM5 is uncalled) for a total consideration of RM662,208. The entire share capital of ABBT is acquired by five shareholders in equal proportion, namely AFFIN Hwang Investment Bank Berhad, AFFIN Hwang Nominees (Tempatan) Sdn Bhd, AFFIN Hwang Nominess (Asing) Sdn Bhd, AHC Global Sdn Bhd and AHC Associates Sdn Bhd, each holding 20% equity interest in ABBT. The disposal was completed on 9 January 2017.

(b) The Bank has obtained approval from Bank Negara Malaysia to prepay the Tier 2 Basel II Subordinated Term Loan 3 amounting to RM300 million on 16 January 2017.

(c) On 16 February 2017, AFFIN Hwang Investment Bank Berhad (‘AHIB’) had on behalf of the Board of Directors of AFFIN Holdings Berhad (‘AHB’) announced that AHB and the Bank intend to undertake the Proposed Reorganisation of the AHB Group of companies as follows:

(i) Proposed transfer by AHB of the following identified companies to the Bank:

• AHIB,awholly-ownedsubsidiaryofAHB;

• AFFINMoneybrokersSdnBhd,awholly-ownedsubsidiaryofAHB(‘AMB’);

• AXAAFFINLifeInsuranceBerhad,a51.00%-ownedjointventurecompanyofAHB(‘AALI’);and

• AXAAFFINGeneralInsuranceBerhad,a37.07%-ownedassociatecompanyofAHB(‘AAGI’),

(AHIB, AMB, AALI and AAGI shall collectively be referred to as the ‘’Identified Companies’’ and item (i) above shall be referredtoasthe“ProposedReorganisation”);

(ii) Proposed distribution of the entire shareholdings in the Bank held by AHB to the entitled shareholders of AHB whose names appear in AHB’s Record of Depositors on an entitlement date to be determined and announced by the Board at a later date (‘Entitlement Date’) (‘Entitled Shareholders’), after the completion of the Proposed Reorganisation, on the Entitlement Date by way of a distribution-in-specie via a reduction of the following:

• theentireconsolidatedcapitalofAHB(whichincludestheentireissuedandpaid-upsharecapitalofAHBandthe entire share premium account of AHB); and

• theretainedprofitsofAHB,

(item(ii)aboveshallbereferredtoasthe“ProposedDistribution”);


194



(iii) Proposed subscription by the Bank of 2 new ordinary shares in AHB (‘AHB Shares’) which will be undertaken simultaneouslywiththeProposedDistribution(“ProposedSubscription”);

(iv) Proposed amendments of the Memorandum and Articles of Association (‘M&A’) of AHB and the Bank to facilitate the ProposedTransferofListingStatus(“ProposedAmendments”);

(v) Proposed transfer of the listing status from AHB to the Bank on the Main Market of Bursa Malaysia Securities Berhad (‘Bursa Securities’) (‘’Proposed Transfer of Listing Status’’); and

(vi) Proposed members’ voluntary winding-up of AHB in accordance with the Companies Act, 2016 (‘Act’) (‘’Proposed Winding-up’’)

(theaboveshallcollectivelybereferredtoasthe“Proposals”).

(1) Details of the Proposed Reorganisation

AHB will enter into a conditional share sale agreement (‘SSA’) with the Bank to undertake the Proposed Reorganisation where the entire shareholdings held by AHB in the Identified Companies at a cut-off date to be determined later (‘Cut-Off Date’) will be transferred from AHB to the Bank. The SSA will be entered into between the transacting parties after the approval of Bank Negara Malaysia (‘BNM’) has been obtained.

The Cut-Off Date shall be the last day of the calendar month immediately prior to the calendar month in which the conditions precedents are fulfilled in accordance with the terms of the SSA.

(2) Transfer consideration and mode of satisfaction

The transfer consideration for each of the Identified Companies shall be based on their respective carrying value recorded by AHB in its management accounts as at the Cut-Off Date (‘Transfer Consideration’). Carrying value comprised AHB’s cost of investment in the said Identified Companies and its share of post-acquisition profits recorded by the respective Identified Companies.

The mode of satisfaction for the Transfer Consideration are proposed to be as follows:

• forAHIB,AMB,andAALI-issuanceof254,178,931newordinarysharesintheBank(‘BankShares’);and

• forAAGI-tobefullysatisfiedincashtobepaidbytheBanktoAHB

AHB and the Bank have decided to fix the number of new Bank Shares the Bank will issue to AHB to satisfy part of the Transfer Consideration to facilitate the exchange ratio for the Proposed Distribution. As at the date of announcement, the Bank has 1,688,769,616 Bank Shares in issue whilst AHB has 1,942,948,547 AHB Shares in issue. The Bank intends to issue 254,178,931 new Bank Shares for the Transfer Consideration of AHIB, AMB and AALI. This will result in both AHB and the Bank having the same resultant number of shares in issue, being 1,942,948,547 shares.

With the equal amount number of shares in issue, AHB will be able to undertake a distribution-in-specie of 1 Bank Share for each existing AHB Share held pursuant to the Proposed Distribution, minimising the incidence of odd lots for its shareholders when undertaking the Proposed Distribution.

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ANNUAL REPORT 2016



(3) Approvals required

The Proposals are subject to the following approvals being obtained:

(a) BNM and the Ministry of Finance, Malaysia (on recommendation of BNM) for the Proposed Reorganisation, Proposed Distribution and Proposed Subscription.

(b) SC for the following:

(i) change in controller of AHIB, AFFIN Hwang Asset Management Berhad (‘AHAM’) and AIIMAN Asset Management Sdn Bhd (‘AIIMAN’), being holders of the Capital Markets and Services License issued by the SC, pursuant to the proposed transfer of AHIB under the Proposed Reorganisation; and

(ii) exemption to LTAT and its persons acting in concert under Paragraph 4.13(1)(c) of the Rules from the obligation to make a mandatory take-over offer to acquire all the Bank Shares not held by LTAT and its persons acting in concert upon completion of the Proposed Distribution.

(c) Bursa Malaysia Securites Berhad (‘Bursa Securities’) for the following:

(i) the withdrawal of AHB’s listing status from the Main Market of Bursa Securities, pursuant to the Proposed Transfer of Listing Status; and

(ii) admission to the Official List and the listing of and quotation for the entire enlarged issued and paid-up share capital of the Bank on the Main Market of Bursa Securities, pursuant to the Proposed Transfer of Listing Status.

(d) sanction of the High Court of Malaya under Section 116(4) of the Act for the Proposed Distribution;

(e) shareholders of AHB at an EGM to be convened for the Proposed Distribution, Proposed Subscription, Proposed Amendments and Proposed Transfer of Listing Status;

(f) shareholder of the Bank for the Proposed Reorganisation, proposed issuance of new Bank Shares to settle the transfer consideration for AHIB, AMB and AALI under the Proposed Reorganisation, Proposed Subscription, Proposed Amendments and Proposed Winding-Up;

(g) approvals of the lenders of AHB Group and the Identified Companies, if required; and

(h) approval, waiver and/or consent of any other relevant authority or party, if required.

(4) Inter-conditionality of the Proposals

The Proposed Reorganisation is not conditional upon any of the other Proposals.

The Proposed Distribution, Proposed Subscription, Proposed Amendments and Proposed Transfer of Listing Status are inter-conditional upon each other and are also conditional upon the Proposed Reorganisation.

Save as disclosed above, the Proposals are not conditional upon any other proposal undertaken or to be undertaken by AHB or the Bank.

On 20 February 2017, AHB had submitted an application to Bank Negara Malaysia (‘BNM’) to seek the approval of BNM and/or its recommendations to Ministry of Finance, Malaysia for approval for the Proposed Reorganisation, Proposed Distribution and Proposed Subscription. AHB had on the same day submitted an application to the Securities Commission Malaysia (‘SC’) to seek the approval of the SC for the change in controller of AHIB, AHAM and AIIMAN pursuant to the Proposed Reorganisation.

51 APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 21 March 2017.


196

Statement by DirectorsPursuant to Section 169 (15) of the Companies Act, 1965

Statutory DeclarationPursuant to Section 169 (16) of the Companies Act, 1965

We, MOHD SUFFIAN BIN HAJI HARON and TAN SRI MOHD GHAZALI BIN MOHD YUSOFF, two of the Directors of AFFIN BANK BERHAD, state that, in the opinion of the Directors, the accompanying financial statements set out on pages 64 to 196 are drawn up so as to give a true and fair view of the state of affairs of the Group and the Bank as at 31 December 2016 and of the results and cash flows of the Group and the Bank for the financial year ended on the date in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

In accordance with a resolution of the Board of Directors dated 21 March 2017.

MOHD SUFFIAN BIN HAJI HARON

Director

TAN SRI MOHD GHAZALI BIN MOHD YUSOFF

Director

I, RAMANATHAN RAJOO, the officer of AFFIN BANK BERHAD primarily responsible for the financial management of the Group and the Bank, do solemnly and sincerely declare that, in my opinion, the accompanying financial statements set out on pages 64 to 196, are correct and I make this solemn declaration conscientiously believing the same to be true, by virtue of the provisions of the Statutory Declarations Act, 1960.

RAMANATHAN RAJOO

Subscribed and solemnly declared by the above named RAMANATHAN RAJOO at Kuala Lumpur in Malaysia on 21 March 2017, before me.

Commissioner for Oaths

197

ANNUAL REPORT 2016

Independent Auditors’ Reportto the Member of AFFIN Bank Berhad (Incorporated in Malaysia)

REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Our opinion

Inouropinion,thefinancialstatementsofAFFINBankBerhad(“theBank”)anditssubsidiaries(“theGroup”)giveatrueandfairview of the financial position of the Group and of the Bank as at 31 December 2016, and of their financial performance and their cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

What we have audited

We have audited the financial statements of the Group and of the Bank, which comprise the statements of financial position as at 31 December 2016 of the Group and of the Bank, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Bank for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 64 to 196.

Basis for opinion

We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financialstatements”sectionofourreport.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and other ethical responsibilities

We are independent of the Group and of the Bank in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) oftheMalaysianInstituteofAccountants(“By-Laws”)andtheInternationalEthicsStandardsBoardforAccountants’CodeofEthicsforProfessionalAccountants(“IESBACode”),andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeBy-Lawsand the IESBA Code.

Information other than the financial statements and auditors’ report thereon

The directors of the Bank are responsible for the other information. The other information comprises

• ManagementDiscussionandAnalysis,

• FinancialHighlights,

• StatementonCorporateGovernance,

• StatementonRiskManagementandInternalControl,

• BoardAuditCommitteeReport,

• Directors’Report

• BaselIIPillar3Disclosures

but does not include the financial statements of the Group and of the Bank and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Bank does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Bank, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Bank or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


198


REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS

Responsibilities of the directors for the financial statements

The directors of the Bank are responsible for the preparation of the financial statements of the Group and of the Bank that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements of the Group and of the Bank that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Bank, the directors are responsible for assessing the Group’s and the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Bank or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Bank as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Bank, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and Bank’s internal control.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

(d) Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Bank or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or Bank to cease to continue as a going concern.

(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Bank, including the disclosures, and whether the financial statements of the Group and of the Bank represent the underlying transactions and events in a manner that achieves fair presentation.

(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Bank and its subsidiaries have been properly kept in accordance with the provisions of the Act.

(b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Bank’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.

(c) Our auditors’ reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.

OTHER MATTERS

This report is made solely to the members of the Bank, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS NG YEE LING (No. AF: 1146) 03032/01/2019 JChartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia21 March 2017


200


202 1. Introduction202 1.1 Background

202 1.2 Scope of Application

202 2. Risk Governance Structure202 2.1 Overview

203 2.2 Board Committees

204 2.3 Management Committees

205 2.4 Group Risk Management Function

205 2.5 Internal Audit and Internal Control Activities

205 3. Capital Management205 3.1 Internal Capital Adequacy Assessment

Process (‘ICAAP’)

205 3.2 Capital Structure

207 3.3 Capital Adequacy

207 4. Risk Management Objectives and Policies

207 5. Credit Risk207 5.1 Credit Risk Management Objectives and

Policies

208 5.2 Application of Standardised Approach for Credit Risk

208 5.3 Credit Risk Measurement

209 5.4 Risk Limit Control and Mitigation Policies

209 5.5 Credit Risk Monitoring

210 5.6 Impairment Provisioning

215 6. Market Risk215 6.1 Market Risk Management Objectives

and Policies

215 6.2 Application of Standardised Approach for Market Risk

215 6.3 Market Risk Measurement, Control and Monitoring

216 6.4 Value-at-Risk (‘VaR’)

216 6.5 Foreign Exchange Risk

216 7. Liquidity Risk216 7.1 Liquidity Risk Management Objectives

and Policies

217 7.2 Liquidity Risk Measurement, Control and Monitoring

217 8. Operational Risk217 8.1 Operational Risk Management

Objectives and Policies

217 8.2 Application of Basic Indicator Approach for Operational Risk

218 8.3 Operational Risk Measurement, Control and Monitoring

218 8.4 Certification

218 9. Shariah Non-Compliance Risk218 9.1 Shariah Non-Compliance Risk


218 9.2 Shariah Non-Compliance Risk Measurement, Control and Monitoring

219 10. Business Continuity Risk219 10.1 Business Continuity Risk Management


219 10.2 Business Continuity Risk Measurement, Control and Monitoring

220 Appendices

Basel II Pillar 3 Disclosures

Basel II Pillar 3 Disclosuresas at 31 December 2016

1 INTRODUCTION

1.1 Background

TheCapitalAdequacyFramework(BaselII–Risk-WeightedAssets)issuedbyBankNegaraMalaysia(‘BNM’),whichistheequivalant of the Basel II issued by the Basel Committee of Banking Supervision and the Islamic Financial Services Board is structured around three fundamental pillars:

- Pillar 1 defines the minimum capital requirement to ensure that financial institutions hold sufficient to cover their exposure to credit, market and operational risks.

- Pillar 2 requires financial institutions to have a process for assessing their overall capital adequacy relation to their risk profile and a strategy for maintaining their capital levels.

- Pillar 3 requires financial institutions to establish and implement an appropriate disclosure promotes transparency regarding their risk management practices and capital adequacy positions.

Pillar 3 disclosure is required under the BNM Risk Weighted Capital Adequacy Framework (Basel II) – DisclosureRequirements (Pillar 3).

AffinBankBerhad(‘theBank”)adoptsthefollowingapproachesunderPillar1requirements:

- Standardised Approach for Credit Risk

- Basic Indicator Approach for Operational Risk

- Standardised Approach for Market Risk

1.2 Scope of Application

This document contains the disclosure requirements under Pillar 3 for the Bank for the year ended 31 December 2016. The disclosures are made in line with the Pillar 3 disclosure requirements under the Basel II framework as laid out by BNM.

The disclosures should be read in conjunction with the Bank’s 2016 Annual Report for the year ended 31 December 2016.

The Group’s capital requirements are generally based on the principles of consolidation adopted in the preparation of its financial statements. The Group’s consolidated entities comprise the Bank and the Bank’s subsidiary, AFFIN Islamic Bank Berhad (‘AiBB’).

2 RISK GOVERNANCE STRUCTURE

2.1 Overview

The Board of Directors of the Bank is ultimately responsible for the overall performance of the Bank. The Board’s responsibilities are congruent with the framework of BNM Guidelines. The Board also exercises great care to ensure that high ethical standards are upheld, and that the interests of stakeholders are not compromised. These include responsibility for determining the Bank’s general policies and strategies for the short, medium and long term, approving business plans, including targets and budgets, and approving major strategic decisions.

The Board has overall responsibility for maintaining the proper management and protection of the Bank’s interests by ensuring effective implementation of the risk management policy and process, as well as adherence to a sound system of internal control. The Board also recognises that risks cannot be eliminated completely. As such, the inherent system of internal control is designed to provide a reasonable though not absolute assurance against the risk of material errors, fraud or losses occurring. The system of internal controls encompasses controls relating to financial, operational, risk management and compliance with applicable laws, regulations, policies and guidelines.


202



2.1 Overview (continued)

The terms of reference of the Board Committees as disclosed in the Annual Report provide an outline of respective roles and functions. In carrying out its functions, the Board has delegated specific responsibilities to other Board Committees, which operate under approved terms of reference, to assist the Board in discharging their duties. The Chairmen of the various Committees report on the outcome of their Committee meetings to the Board and any further deliberation is made at Board level, if required. These reports and deliberations are incorporated into the Minutes of the Board meetings. The Board meets on a monthly basis.

2.2 Board Committees

Board Remuneration Committee (‘BRC’)

The BRC is responsible for providing a formal and transparent procedure for developing the remuneration policy for Directors, Managing Director/Chief Executive Officer and key senior management officers and ensuring that compensation is competitive and consistent with the Bank’s culture, objectives and strategy.

The Committee obtains advice from experts in compensation and benefits, both internally and externally.

Board Nominating Committee (‘BNC’)

The BNC is responsible for providing a formal and transparent procedure for the appointment of Directors and Managing Director/Chief Executive Officer, assessing the effectiveness of individual Directors, the Board as a whole and the performance of the Managing Director/Chief Executive Officer as well as key senior management personnel.

Board Risk Management Committee (‘BRMC’)

BRMC is responsible for overseeing management activities in managing credit, market, liquidity, operational, legal, reputational and other material risks as well as ensuring that the risk management process is in place and functioning effectively.

It is responsible for setting the overall tone of the Bank’s strategy and ensuring effective communication and integration of risk appetite within the business strategy, operations and culture.

The Committee also assists the Board in oversight responsibilities on internal controls, and risk management strategies, policies, processes, frameworks and other risk related matters. It has the responsibility of reviewing and/or approving risk management policies, guidelines and reports.

Board Loan Review and Recovery Committee (‘BLRRC’)

The BLRRC is responsible for providing critical review of loans and other credit facilities with high risk implications and vetoing loan/financing applications that have been approved by the Group Management Loan Committee as appropriate.

Board Audit Committee (‘BAC’)

The BAC is responsible for providing oversight and reviewing the adequacy and integrity of the internal control systems as well as oversees the work of the internal and external auditors.

Reliance is placed on the results of independent audits performed primarily by internal auditors, the outcome of statutory audits on financial statements conducted by external auditors and on representations by Management based on their control self-assessment of all areas of their responsibility.

Minutes of Audit & Examination Committee meetings, which provide a summary of the proceedings, are circulated to Board members for notation and discussion. The Bank has an established Group Internal Audit Division (GIA) which reports functionally to the Audit Committee and administratively to the Managing Director/Chief Executive Officer.

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2.2 Board Committees (continued)

Shariah Committee

The Shariah Committee is formed as legislated under the Islamic Financial Services Act 2013 and as per the Shariah Governance Framework for Islamic Financial Institutions.

The roles and responsibilities of the Shariah Committee include advising the Board on Shariah matters to ensure that the business operations of the Bank comply with Shariah principles at all times. SC is also responsible for endorsing and validating relevant documentations of the Bank’s products to ensure that the products comply with Shariah principles, and advising the Bank on matters to be referred to the Shariah Advisory Council.

2.3 Management Committees

Management Committee (‘MCM’)

MCM comprises the senior management team chaired by Group Managing Director/Chief Executive Officer (Group MD/CEO). MCM is responsible for assisting the Board in managing the day-to-day operations, formulating tactical plans and business strategies while monitoring the banking entities’ overall performance, and ensuring all business activities conducted are in accordance with the Bank’s corporate objectives, strategies, policies as well as Annual Business Plan and Budget.

Group Management Loan Committee (‘GMLC’)

GMLC is established within senior management to approve complex and large loans/financing and workout/recovery proposals beyond the delegated authority of the individual approvers.

Group Asset and Liability Management Committee (‘GALCO’)

GALCO comprising the senior management team chaired by the MD/CEO, manages the Bank’s asset and liability position by identifying, managing and controlling balance sheet risks and capital management in the execution of the business strategy, while implementing asset liability strategy and policy for the balance sheet of the respective subsidiary.

Liquidity Management Committee (‘LMC’)

The LMC is a sub-committee of the GALCO. The role of LMC is to augment the functions of GALCO by directing its focus specifically to liquidity issues.

Group Operational Risk Management Committee (‘GORMC’)

GORMC is a senior management committee chaired by the Group Chief Risk Officer, established to oversee the management of operational risks issues and control lapses while supporting BRMC in its review and monitoring of operational risk. It is also responsible for reviewing and ensuring that the operational risk programme, process and framework are implemented in accordance with regulatory requirement and manage loss incidents to an acceptable level.

Group Early Alert Committee (‘GEAC’)

GEAC is a senior management committee, established to monitor credit quality through monthly reviews of the Early Alert, Watchlist and Exit Accounts as well as to review the actions taken to address the emerging risks and issues in these accounts.


204



2.4 Group Risk Management Function

Group Risk Management (‘GRM’), headed by the Group Chief Risk Officer (‘GCRO’) is segregated from the lines of business, with direct reporting line to BRMC to ensure independence of risk management function.

The independence of risk function is critical towards controlling and managing the Bank’s risk taking activities to achieve an optimum return in line with the subsidiaries’ risk appetite, with consideration to variations required due to differences in each subsidiary’s business model.

Committees namely BLRRC, SC, MCM, GMLC, GALCO, LMC, GORMC and GEAC assist BRMC in managing credit, market, liquidity, operational and other material risks in the Bank. The responsibilities of these Committees include risk identification, risk assessment and measurement, risk control and mitigation and risk monitoring and reporting.

2.5 Internal Audit and Internal Control Activities

In accordance with BNM’s guidelines on Corporate Governance for Licensed Institutions, GIA conducts continuous reviews on auditable areas within the Bank. The reviews by GIA are focused on areas of significant risks and effectiveness of internal control in accordance with the audit plan approved by the BAC.

Based on GIA’s review, identification and assessment of risk, testing and evaluation of controls, GIA will provide an opinion on the effectiveness of internal controls maintained by each entity. The risks highlighted on the respective auditable areas as well as recommendation made by the GIA are addressed at BAC and Management meetings on bi-monthly basis. The BAC also conducts annual reviews on the adequacy of internal audit function, scope of work, resources and budget of GIA.


3.1 Internal Capital Adequacy Assessment Process (‘ICAAP’)

In line with the BNM guidelines on Risk-Weighted Capital Adequacy Framework - Internal Capital Adequacy Assessment Process (Pillar 2), the Bank has put in place the ICAAP Framework to assess the capital adequacy to ensure that the level of capital maintained by the Bank is adequate at all times, taking into consideration the Bank’s risk profile and business strategies.

The Bank’s capital management approach is focused on maintaining an appropriate level of capital to meet its business needs and regulatory requirements as capital adequacy and risk management are closely aligned. The Bank operates within an agreed risk appetite whilst optimising the use of shareholders’ funds to deliver sustainable returns.

3.2 Capital structure

The total capital and capital adequacy ratios of the Group and the Bank are computed in accordance with BNM’s Capital Adequacy Framework (Capital Components).

The Group and the Bank are currently adopting the Standardised Approach for Credit Risk and Market Risk and the Basic Indicator Approach for Operational Risk. In line with the transitional arrangements under the BNM Capital Adequacy Framework (Capital Components), the minimum capital adequacy requirement for Common Equity Tier 1 Capital Ratio (‘CET 1’) and Tier 1 Capital Ratio are 5.125% (2015: 4.5%) and 6.625% (2015: 6.0%) respectively for year 2016. The minimum regulatory capital adequacy requirement is 8.625% (2015: 8.0%) for total capital ratio.

The following table sets forth further details on the capital resources and capital adequacy ratios for the Group and the Bank as at 31 December 2016.

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3.2 Capital structure (continued)


Paid-up share capital 1,688,770 1,688,770 1,688,770 1,688,770

Share premium 858,904 858,904 858,904 858,904

Statutory reserves 1,721,637 1,577,509 1,416,621 1,328,792


Unrealised gains and losses on AFS 98,985 90,983 122,753 101,388

5,547,258 5,245,321 5,000,407 4,783,143

Less:

Goodwill (164,089) (153,137) (167,982) (156,604)

55% of cumulative unrealised gains of AFS (54,442) (50,041) (67,514) (55,763)


CET1 capital 5,328,277 5,042,143 4,419,777 4,375,146

Tier I capital 5,328,277 5,042,143 4,419,777 4,375,146

Subordinated term loan 1,180,000 820,000 1,180,000 820,000

Collective impairment 137,903 133,809 109,362 110,058

Regulatory adjustments 280,204 278,547 207,026 220,148

Less:


Tier II capital 1,597,807 1,232,356 1,266,298 856,762

Total capital 6,926,084 6,274,499 5,686,075 5,231,908




CET1 capital ratio (net of proposed dividends) 12.147% 11.632% 12.528% 11.938%

Tier 1 capital ratio (net of proposed dividends) 12.147% 11.632% 12.528% 11.938%

Total capital ratio (net of proposed dividends) 15.806% 14.535% 16.137% 14.333%

Risk-weighted assets for:

Credit risk 40,928,681 39,766,072 32,838,523 33,498,227

Market risk 333,445 327,504 296,191 323,855

Operational risk 2,408,896 2,355,261 1,956,481 1,951,219

Total risk-weighted assets 43,671,022 42,448,837 35,091,195 35,773,301


206



3.3 Capital adequacy

The Group and the Bank have in place an internal limit for its CET1 capital ratio, Tier I capital ratio and Total capital ratio, which is guided by the need to maintain a prudent relationship between available capital and the risks of its underlying businesses. The capital management process is monitored by senior management through periodic reviews.

Refer to Appendix I.

4 RISK MANAGEMENT OBJECTIVES AND POLICIES

The Bank is principally engaged in all aspects of banking and related financial services. The principal activities of the Bank’s subsidiaries are Islamic banking business, property management services, nominee and trustee services. There have been no significant changes in these principal activities during the financial year.

The Bank’s business activities involve the analysis, measurement, acceptance, and management of risks and which operates within well defined risk acceptance criteria covering customer segments, industries and products. The Bank does not enter into risk it cannot administer, book, monitor or value, or deal with persons of questionable integrity.

The Bank’s risk management policies are established to identify, assess, measure, control and mitigate all key risks as well as manage and monitor the risk positions.

The Bank regularly reviews its risk management policies and systems to reflect changes in markets, products and best practice in risk management processes. The Bank’s aim is to achieve an appropriate balance between risk and return as well as minimise any potential adverse effects.

5 CREDIT RISK

5.1 Credit risk management objectives and policies

Credit risk is the potential financial loss resulting from the failure of the customer to settle financial and contractual obligations through lending/financing, hedging, trading and investing activities. It includes both pre-settlement and settlement risks of trading counterparties. Credit risk emanates mainly from loans/financing and advances, loan/financing commitments arising from such lending activities, as well as through financial transaction with counterparties including interbank money market activities as well as derivative instruments used for hedging and debt securities.

The management of credit risk in the Bank is governed by the Credit Risk Management Framework which is supported by a set of approved credit policies, guidelines and procedures. Approval authorities are delegated to Senior Management and GMLC to implement the credit policies and ensure sound credit granting standards. BLRRC has review/veto power.

An independent Group Credit Management function is headed by Group Chief Credit Officer (‘GCCO’) with direct reporting line to MD/CEO to ensure sound credit appraisal and approval process. GRM with direct reporting line to BRMC has functional responsibilities for the management of credit risk, to ensure adherence to risk standards and discipline.

Credit guidelines and procedures are incorporated within the Credit Policy. The Credit Authority Framework facilitates the approval of all new, restructured and continuing credit facilities. New and existing businesses are governed by Credit Plan which is developed as part of the annual business planning and budgeting process. The Credit Plan is reviewed at least annually to ensure the guidelines and criteria reflect portfolio strategy and market environment.

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5 CREDIT RISK

5.2 Application of Standardised Approach for credit risk

The Bank uses the following External Credit Assessment Institutions (‘ECAIs’) to determine the risk weights for the rated credit exposures:-

• RAMRatingServicesBerhad

• MalaysianRatingCorporationBerhad

• Standard&Poor’sRatingServices

• Moody’sInvestorsService

• FitchRatings

The external ratings of the ECAIs are used to determine the risk weights of the following types of exposure: sovereigns, banks, public sector entities and corporates.

The mapping of the rating categories of different ECAIs to the risk weights is in accordance with BNM guidelines. In cases where there is no issuer or issue rating, the exposures are treated as unrated and accorded a risk weight appropriate for unrated exposure in the respective category.

Refer to Appendix II and Appendices III (i) to III (ii).

5.3 Credit risk measurement


Credit evaluation is the process of analysing the creditworthiness of the prospective customer against the Bank’s underwriting criteria and the ability of the Bank to make a return commensurate with the level of risk undertaken. Assessment and quantification of credit risk are supported by the use of internal rating models, scorecards and decision support tools.

The Bank adopts a credit risk grading methodology encompassing probability of default (‘PD’) driven scorecards for business lo loans, advances and financing. Separate scorecards have been developed for two categories of business borrowers, Large Corporate (‘LC’) and Small Medium Enterprise (‘SME’).

For consumer mass market products, statistically developed application scorecards are used to assess the risks associated with the credit application as a decision support tool at loans, advances and financing origination.

Stress Testing supplements the overall assessment of credit risk across the Bank.

Over-the-Counter (‘OTC’) Derivatives

The OTC Derivatives credit exposure is computed using the Current Exposure Method. Under the Current Exposure Method, computation of credit equivalent exposure for interest rate and exchange rate related contracts is derived from the summation of the two elements; the replacement costs (obtained by marking-to-market) of all contracts and the potential future exposure of outstanding contracts (Add On charges depending on the specific remaining tenor to maturity).


208


5 CREDIT RISK

5.4 Risk limit control and mitigation policies

The Bank employs various policies and practices to control and mitigate credit risk.

Lending limits

The Bank establishes internal limits and related lending guidelines to manage large exposures and avoid undue concentration of credit risk in its credit portfolio. The limits include single customer groupings, connected parties, geographical and industry segments. These risks are monitored regularly and the limits reviewed annually or sooner depending on changing market and economic conditions.

The credit risk exposure for derivative and loans, advances and financing books is managed as part of the overall lending limits with customers together with potential exposure from market movements.

Collateral

Credits are established against borrower’s capacity to repay rather than rely solely on security. However, collateral may be taken to mitigate credit risk. The main collateral types accepted and given value by the Bank are:

• Mortgagesoverresidentialproperties;

• Chargesovercommercialrealestateorvehiclesfinanced;

• Chargesoverbusinessassetssuchasbusinesspremises,inventoryandaccountreceivables;and

• Chargesoverfinancialinstrumentssuchasmarketablesecurities

Credit related commitments

Commitment to extend credit represents unutilised portion of approved credit in the form of loans, advances and financing, guarantees or letters of credit. In terms of credit risk, the Bank is potentially exposed to loss in an amount equal to the total unutilised commitments. However, the potential amount of loss is less than the total unutilised commitments, as most commitments to extend credit are contingent upon customers maintaining specific minimum credit standards.

The Bank monitors the term to maturity of credit commitments because longer-term commitments generally have a greater degree of credit risk than short-term commitments.

Refer to Appendix IV (a) to (b).

5.5 Credit risk monitoring

Corporate credits and large individual accounts are reviewed by the Business Units at least once a year using updated financial and other relevant information. This is to ensure that the credit grades remain appropriate and any signs of weaknesses or deterioration in the credit quality are detected. Remedial action is taken where evidence of deterioration emanates.

Retail credits are actively monitored and managed on a portfolio basis by product type. A collection management system is in place to promptly identify, monitor and manage delinquent accounts at early stages of delinquency.

An Early Alert Process is adopted to pro-actively identify, report, and manage warning signs of potential credit deterioration. Watchlist accounts are closely reviewed and monitored with corrective measures initiated to prevent them from turning impaired. As a rule, watchlist accounts are either worked up or worked out within a period of twelve months.

Active portfolio monitoring as well as exceptions reporting is in place to manage the overall risk profile, identify, analyse and mitigate adverse trends or specific areas of risk concerns.

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5 CREDIT RISK

5.6 Impairment provisioning

Individual impairment provisioning

All significant loans, advances and financing exposures, with or without past due status, are subject to individual assessment for impairment when an evidence of impairment surfaces, or at the very least once annually during the Annual Review process.

If impaired, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate/rate of return (i.e. the effective interest rate/rate of return computed at initial recognition). The level of impairment allowance on loans, advances and financing is to be reviewed at least quarterly, and more frequently when individual circumstances require. The review covers the collateral held (including reconfirmation of its enforceability) and an assessment of actual and expected receipts.

All significant loans, advances and financing which are deemed not impaired after individual assessment and all loans, advances and financing which are deemed impaired but do not result in impairment allowance after individual assessment are included in the collective impairment assessment.

Significant loans that are deemed not impaired after individual assessment are included in a group of loans with similar characteristics and collectively assessed for impairment.

Collective impairment provisioning

All loans, advances and financing are grouped in respective business segments according to similar credit risk characteristics and is generally based on industry, asset or collateral type, credit grade and past due status.

Collective assessment for impairment allowance is conducted in accordance with the impairment methodologies approved by the Board for all loans, advances and financing not covered under the individual impairment assessment.

Impairment allowance will be determined for each segment based on its respective loss probabilities (history) and other information relevant to estimation of the future cash flows.

The Bank is required to maintain, in aggregate, collective impairment allowances and regulatory reserves of no less than 1.2% of total outstanding loans/financing (excluding loans/financing with explicit guarantee from Government of Malaysia), net of individual impairment.

Total loans, advances and financing - credit quality

Allloans,advancesandfinancingarecategorisedinto“neitherpastduenorimpaired”,“pastduebutnotimpaired”and“impaired”.

Past due loans refer to loans, advances and financing that are overdue by one day or more.

Loans, advances and financing are classified impaired when they fulfill any of the following criteria:

i) the principal or interest/profit or both is past due more than 90 days or 3 months from the first day of default

ii) where the account is in arrears for less than 90 days or 3 months, there is evidence of impairment to indicate that the borrower/customeris“unlikelytorepay”itscreditobligations

iii) the loan/financing is classified as rescheduled and restructured in Central Credit Reference Information System (CCRIS).


210


5 CREDIT RISK

5.6 Impairment provisioning (continued)

Analysed by economic sectors

The Group The Bank 2016 2015 2016 2015 Past due loans RM’000 RM’000 RM’000 RM’000



Manufacturing 40,385 45,369 38,086 43,470

Electricity, gas and water supply 974 1,140 438 497

Construction 106,594 168,155 85,530 142,659

Real estate 119,137 276,752 98,494 275,737




Education, health and others 22,641 83,093 14,081 64,689

Household 1,874,177 1,828,209 1,302,114 1,361,693

2,536,214 2,654,372 1,890,088 2,126,743

The Group The Bank 2016 2015 2016 2015 Individual impairment RM’000 RM’000 RM’000 RM’000

Primary agriculture 197 426 197 426

Manufacturing 8,698 13,821 8,684 13,821

Construction 26,001 45,659 25,867 45,659

Real estate 18,998 35,032 1,585 43


Transport, storage and communication - 610 - 610


Education, health and others - 1,926 - 1,926

Household 13,627 9,420 13,186 6,969

149,499 270,137 131,497 231,621

211

ANNUAL REPORT 2016


5 CREDIT RISK


Analysed by economic sectors (continued)

The Group The Bank 2016 2015 2016 2015 Individual impairment charged RM’000 RM’000 RM’000 RM’000

Primary agriculture 1 321 1 321

Manufacturing 2,584 8,267 2,272 8,242

Electricity, gas and water supply 942 - 942 -

Construction 26,361 54,171 26,226 54,171

Real estate 19,396 768 2,280 768


Transport, storage and communication 58 104 58 104


Education, health and others - 2,922 - 2,922

Household 13,376 11,389 12,069 9,016

81,349 257,645 62,010 254,086

The Group The Bank 2016 2015 2016 2015 Individual impairment written-off RM’000 RM’000 RM’000 RM’000

Primary agriculture - 2,227 - 2,227

Manufacturing - 11,793 - 9,411

Construction 37,007 148,771 37,007 148,771


Transport, storage and communication 668 - 668 -


Household 2,605 850 - 850

132,589 192,965 128,440 190,583


212


5 CREDIT RISK


Analysed by economic sectors (continued)

The Group The Bank 2016 2015 2016 2015 Collective impairment RM’000 RM’000 RM’000 RM’000



Manufacturing 8,592 9,406 8,017 8,312

Electricity, gas and water supply 635 545 325 379

Construction 21,289 23,183 18,681 20,718

Real estate 22,381 20,165 19,988 18,524




Education, health and others 7,132 7,368 4,247 4,931

Household 136,336 133,132 104,591 107,469

234,631 229,461 189,637 192,790

Analysed by geographical area

The Group The Bank 2016 2015 2016 2015 Past due loans RM’000 RM’000 RM’000 RM’000

Perlis 4,573 4,178 2,965 3,335

Kedah 118,870 122,883 70,337 80,482

Pulau Pinang 117,259 97,462 95,865 82,776

Perak 126,871 127,279 67,975 70,476

Selangor 724,499 768,553 523,592 614,302


Negeri Sembilan 111,709 104,328 73,443 77,869

Melaka 94,182 96,081 75,000 83,208

Johor 242,796 262,571 191,625 230,486

Pahang 61,984 69,963 42,208 48,519

Terengganu 66,538 60,213 3,882 4,617

Kelantan 29,392 32,780 6,719 7,053

Sarawak 151,651 155,101 149,113 152,260

Sabah 236,484 297,380 231,080 291,889

Labuan - 73 - 73

Outside Malaysia 230 - 133 -

2,536,214 2,654,372 1,890,088 2,126,743

213

ANNUAL REPORT 2016


5 CREDIT RISK


Analysed by geographical area (continued)

The Group The Bank 2016 2015 2016 2015 Individual impairment RM’000 RM’000 RM’000 RM’000

Kedah 949 1,484 927 1,484

Pulau Pinang 14,020 12,386 14,020 12,386

Perak 1,436 59 1,436 59

Selangor 76,241 181,327 75,786 178,904


Negeri Sembilan 2,174 - 2,174 -

Melaka 140 - 140 -

Johor 4,650 1,533 4,650 1,533

Pahang 72 38 72 38

Kelantan 3 - 3 -

Sarawak 229 - - -

Sabah 8,207 9,944 8,207 9,944

Outside Malaysia 17,296 34,988 - -

149,499 270,137 131,497 231,621

The Group The Bank 2016 2015 2016 2015 Collective impairment RM’000 RM’000 RM’000 RM’000

Perlis 861 901 475 492

Kedah 10,167 10,201 7,371 8,315

Pulau Pinang 11,069 9,670 9,703 8,722

Perak 12,576 12,685 8,565 8,976

Selangor 73,047 70,220 58,803 58,436


Negeri Sembilan 8,892 7,814 6,991 6,570

Melaka 6,503 7,594 5,720 7,093

Johor 20,785 21,283 18,325 19,524

Pahang 5,043 6,352 3,553 4,830

Terengganu 5,577 4,718 1,486 1,652

Kelantan 3,373 3,733 839 642

Sarawak 9,973 9,280 9,531 9,009

Sabah 18,932 15,966 18,630 15,689

Labuan 1,188 1,504 994 1,504

Outside Malaysia 76 556 3 496

234,631 229,461 189,637 192,790


214


6 MARKET RISK

6.1 Market risk management objectives and policies

Market risk is the risk of losses in on and off-balance-sheet positions arising from movements in market prices. The Bank’s exposure to market risk results largely from interest rate and foreign exchange rate risks.

The Market Risk Management Framework governs the market risk activities of the Bank which is supported by a set of approved market risk management policies, guidelines and procedures.

Risk control parameters are established based on risk appetite, market liquidity and business strategies as well as macroeconomic conditions. These parameters are reviewed at least annually.


Interest rate risk is quantified by analyzing the mismatches in timing repricing of the rate sensitive assets and rate sensitive liabilities. Earnings-at-Risk (‘EaR’) or Net Interest Income simulation is conducted to assess the variation in short term earnings under various rates scenarios. The potential long term effect of the overall exposure is tracked by assessing the impact on Economic Value of Equity (‘EVE’), also known as Economic Value-at-Risk (‘EVaR’). Thresholds are set for EaR and EVaR as management triggers.

Periodic stress tests are conducted to quantify market risk arising from probability of abnormal market movements.

6.2 Application of Standardised Approach for market risk

The Bank adopts the Standardised Approach for the purpose of calculating the capital requirement for market risk.

Refer to Appendix I.

6.3 Market risk measurement, control and monitoring

The Bank’s market risk management control parameters are established based on its risk appetite, market liquidity and business strategies as well as macroeconomic conditions. These parameters are reviewed at least on an annual basis.


The Bank quantifies interest rate risk by analyzing the mismatches in timing repricing of the rate sensitive assets and rate sensitive liabilities. Earnings-at-Risk (‘EaR’) or Net Interest Income simulation is conducted to assess the variation in short term earnings under various rates scenarios. The potential long term effect of the overall exposure is tracked by assessing the impact on Economic Value of Equity (‘EVE’), also known as Economic Value-at-Risk (‘EVaR’). Thresholds are set for EaR and EVaR as management triggers.

In addition, periodic stress tests are conducted to quantify market risk arising from probability of abnormal market movements.

The GALCO and BRMC are regularly kept informed of the Bank’s risk profile and positions.

215

ANNUAL REPORT 2016


6 MARKET RISK

6.4 Value-at-Risk (‘VaR’)

Value-at-Risk (‘VaR’) is used to compute the maximum potential loss amount over a specified holding period of the Trading portfolio.

It measures the risk of losses arising from potential adverse movements in interest rates and foreign exchange rates that could affect values of financial instruments.

The Bank adopts Historical Pricing Simulation Method (‘HPS’) to compute potential loss or Value-at-Risk (‘VaR’) amount. The HPS Method uses the relative change of historical prices to estimate future potential changes in the market value of outstanding positions. The Bank currently adopts 250 simulated business days for its HPS VaR computation. After applying these price changes to the outstanding portfolios, 250 simulated market values for the portfolio are generated and the change in the day-to-day market value is taken as simulated Profit & Loss (‘P&L’) for the portfolio. As VaR calculates the worst expected loss over a given day horizon and confidence level under normal market condition, the 250 values are sorted from the lowest to the highest simulated P&L. The VaR focuses on the tail of the distribution (i.e. the loss figures) at the 99th percentile.

Backtesting of the VaR computation system is conducted regularly to gauge the accuracy of the risk measurement system.

Other risk measures include the following:

(i) Mark-to-market valuation tracks the current market value of the outstanding financial instruments.

(ii) Stress tests are conducted to attempt to quantify market risk arising from abnormal market movements. Stress tests measure the changes in values arising from extreme movements in interest rates and foreign exchange rates based on past experiences and simulated stress scenarios.

6.5 Foreign exchange risk

The Bank is exposed to the effects of fluctuations in the prevailing foreign currency exchange rates on its financial position and cash flows. The risk of fluctuations in foreign currency exchange rates is managed via setting of thresholds on the level of exposure by currency and in aggregate for both overnight and intra-day positions, which are monitored daily.

7 LIQUIDITY RISK

7.1 Liquidity risk management objectives and policies

Liquidity risk is the risk of inability of a bank to fund increases in assets and meet obligations as they come due, without incurring unacceptable losses. Liquidity risk includes the inability to manage sudden decreases or changes in funding sources. Liquidity risk also arises from the failure to recognise changes in market conditions that affect the ability to liquidate assets quickly and with minimal loss in value.

The Liquidity Risk Management Framework governs the liquidity risk management activities of the Bank. The objective of liquidity risk management is to ensure that there are sufficient funds to meet contractual and regulatory obligations without incurring unacceptable losses as well as to undertake new transactions. The Bank’s liquidity management process involves establishing liquidity risk management policies and prudential thresholds, liquidity risk threshold monitoring, stress testing and establishing contingency funding plans. These building blocks of liquidity risk management are subject to regular reviews to ensure relevance in the context of prevailing market conditions.


216


7 LIQUIDITY RISK

7.2 Liquidity risk measurement, control and monitoring

The Bank’s short term liquidity risk management is premised on BNM’s Liquidity Coverage Ratio (‘LCR’) final standards. The LCR is a quantitative requirement which seeks to ensure that the Bank holds sufficient high-quality liquid assets (‘HQLA’) to withstand a significant liquidity stress scenario over a 30-day horizon. Long term liquidity risk profile is assessed via the Net Stable Funding Ratio (‘NSFR’) which promotes resilience over a longer time horizon for the Bank to fund its activities with more stable sources of funding on an ongoing basis.

The LCR and NSFR are tracked to assess the short term and long term liquidity risk profile of the Bank, in line with BNM’s Liquidity Coverage Ratio (‘LCR’) final standards re-issued on 25th August 2016 as well as BNM’s revised Basel III Observation Period reporting for Net Stable Funding Ratio (‘NSFR’) and Leverage Ratio (‘LR’) issued on 7th August 2015.

The Bank also employs a set of liquidity risk indicators as an early alert of any structural change for liquidity risk management. The liquidity risk indicators include internal and external qualitative as well as quantitative indicators.

Liquidity stress tests are conducted periodically and on ad-hoc basis to gauge the Group’s resilience in the event of a liquidity disruption.

The Contingency Funding Plan provides a systematic approach in handling liquidity disruption. The document encompasses strategies, decision-making authorities, and courses of action to be taken in the event of liquidity crisis and emergencies, enabling the Group to respond to an unexpected liquidity disruption in an effective and efficient manner.

The Board Risk Management Committee (‘BRMC’) is responsible for the Bank’s liquidity policy and the strategic management of liquidity has been delegated to the Group Asset Liability Management Committee (‘GALCO’). The Liquidity Management Committee (‘LMC’), which is a sub-committee of GALCO, augments the functions of GALCO by directing its focus specifically to liquidity issues. The BRMC is informed regularly on the liquidity position of the Bank.

8 OPERATIONAL RISK

8.1 Operational risk management objectives and policies

Operational risk is defined as the risk of direct or indirect loss resulting from inadequate or failed internal processes, people and systems or external events. The definition includes legal risk, and exposure to litigation from all aspects of the Bank’s activities, but excludes strategic business, reputational and systemic risks.

The Group Operational Risk Management Framework governs the management of operational risk across the Group.

BRMC approves all policies/policy changes relating to operational risk. GORMC supports BRMC in the review and monitoring of operational risk and provides the forum to discuss and manage all aspects of operational risk including control lapses.

The operational risk management (‘ORM’) function within GRM operates in independent capacity to manage the risks in activities associated with the operational function of the Bank.

8.2 Application of Basic Indicator Approach for operational risk

The Bank adopts the Basic Indicator Approach for the purpose of calculating the capital requirement for operational risk. The capital requirement is calculated by taking 15% of the Bank’s average annual gross income over the previous three years.

217

ANNUAL REPORT 2016


8 OPERATIONAL RISK

8.3 Operational risk measurement, control and monitoring

Operational risks are managed daily through established systems and processes to ensure compliance with policies, guidelines and control procedures.

To identify and assess operational risk issues and exposure, the following tools are employed:

• RiskControlSelfAssessment(‘RCSA’)

• KeyControlStandards(‘KCS’)

• KeyRiskIndicator(‘KRI’)

• LossEventDatabase(‘LED’)

Information Technology (‘IT’) and cyber risks are managed as part of the operational risk activities. The IT systems and processes are assessed and tested regularly for resilience and continuity, and that they are secure from internal and external threats.

Introduction of new products or services are evaluated to assess suitability, potential risks and operational readiness.

Operational Risk Coordinators (‘ORC’) are appointed at business and support units as champions of ORM activities within respective units. The ORC is responsible for the reporting of ORM activities and to liaise with Group Operational Risk Management on all operational defects and results.

8.4 Certification

As an internal requirement, all Operational Risk Coordinators must satisfy an Internal Operational Risk (including business continuity management) Certification Program. These coordinators will first go through an on-line self learning exercise before attempting on-line assessments to measure their skills and knowledge level. This will enable Group Risk Management to prescribe appropriate training and development activities for the coordinators

9 SHARIAH NON-COMPLIANCE RISK

9.1 Shariah non-compliance risk objectives and policies

Shariah non-compliance is the risk of failure to comply with the Shariah rules and principles as determined by SC and/or any other relevant bodies, such as BNM Shariah Advisory Council.

The Shariah Governance Framework for Islamic Financial Institutions issued by BNM is the main reference for the Shariah governance process and oversight within AiBB.

Shariah Committee (‘SC’) is established to deliberate on Shariah issues and provide resolution as well as guidance. GORMC together with BRMC assist in the overall oversight of Shariah risk management of the Group.

Shariah Risk Management is part of an integrated risk management control function to identify all possible risks of Shariah non-compliance and where appropriate, to provide mitigating measures that need to be taken to reduce the risk. The scope covers overall business activities and operations, commencing from Islamic product origination until maturity.

9.2 Shariah non-compliance risk measurement, control and monitoring

Each business and support unit is responsible to identify and assess potential Shariah Non-Compliance Risk using the RCSA process. Half yearly RCSA checklist is performed to gauge the level of Shariah compliance.

All Islamic products, services and strategies related matters must be approved by the SC.

Shariah Resolutions/Circulars are issued and training on Shariah Compliance is conducted by the Shariah Review Team on a regular basis.

Shariah non-compliance reports are regularly submitted for further deliberation, decision and remedial action.


218


10 BUSINESS CONTINUITY RISK

10.1 Business continuity risk management objectives and policies

Business continuity risk is the risk of losses in assets, revenue, reputation and stakeholder/customer confidence due to the discontinuation of services in both business and technology operations.

The Business Continuity Management Framework governs the management of business continuity issues, in line with BNM Guidelines on Business Continuity Management (‘BCM’).

BRMC approves all policies and its changes relating to business continuity management. It also reviews, monitors and discusses business continuity management reports tabled at its meetings. GORMC supports BRMC in the review and monitoring of Business Continuity Risk and provides the forum to discuss and manage all aspects of operational risk including control lapses.

The BCM function is an independent body overseeing the management of the overall business continuity risk.

10.2 Business continuity risk measurement, control and monitoring

Annual Risk Assessment and Business Impact Analysis are made compulsory for each business and support unit in the Bank to undertake. The outcome of this assessment will translate into a risks listing that require business and support units to derive action plans to address the risks.

Risk control is established through adherence with established BCM guidelines and standards throughout the implementation of BCM programs. Rigorous testing on business continuity and disaster recovery plans are diligently performed to ensure effective and smooth execution of the plan for resumption and recovery of disrupted business.

Policies and processes are in place to support the monitoring and reporting of business continuity risks.

219

ANNUAL REPORT 2016

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371

,580

2

9,72

7 R

esid

entia

l Mor

tgag

es 5

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4

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1

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1

,929

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1

54,3

18

Hig

her

Ris

k A

sset

s 1

97,9

93

197

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2

96,9

90

296

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2

3,75

9 E

quity

Exp

osur

e 2

3,43

9 2

3,43

9 2

3,43

9 2

3,43

9 1

,875

D

efau

lted

Exp

osur

es 1

,276

,975

1

,255

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1

,765

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1

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1

41,2

68

Tota

l for

On-

Bal

ance

She

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xpos

ures

59,

664,

847

58,

555,

025

36,

080,

190

36,

080,

190

2,8

86,4

16

Off

Bal

ance

She

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ures

Off

Bal

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She

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oth

er th

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r cr

edit

deriv

ativ

es 4

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4

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3

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3

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2

89,3

52

Def

aulte

d E

xpos

ures

50,

013

46,

171

68,

976

68,

976

5,5

18

Tota

l for

Off-

Bal

ance

She

et E

xpos

ures

4,3

24,0

60

4,1

37,9

40

3,6

85,8

82

3,6

85,8

82

294

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Tota

l for

On

and

Off-

Bal

ance

She

et E

xpos

ures

63,

988,

907

62,

692,

965

39,

766,

072

39,

766,

072

3,1

81,2

86

2M

AR

KE

T R

ISK

Lon

g P

ositi

on

Sho

rt P

ositi

on

Inte

rest

Rat

e R

isk

9,9

25,7

78

10,

011,

694

(85,

916)

274

,432

-

2

1,95

5 Fo

reig

n C

urre

ncy

Ris

k 2

9,62

0 4

3,39

9 (1

3,78

0) 4

6,72

6 -

3

,738

O

ptio

n R

isk

1,4

28

1,4

40

(12)

6,3

46

-

508

3

OP

ER

ATIO

NA

L R

ISK

Ope

ratio

nal R

isk

2,3

55,2

61

188

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Tota

l RW

A a

nd C

apita

l Req

uire

men

ts 4

2,44

8,83

7 3

9,76

6,07

2 3

,395

,908



App

endi

x I

221

ANNUAL REPORT 2016

Dis

clo

sure

on

Cap

ital

Ad

equa

cy u

nder

the

Sta

ndar

dis

ed A

pp

roac

h (R

M’0

00) (

cont

inue

d)

Ban

k20

16

Exp

osu

re C

lass

Gro

ss

Exp

osu

res/

E

AD

bef

ore

C

RM

Net

E

xpo

sure

s/

EA

D a

fter

C

RM

Ris

k W

eig

hted

A

sset

s

To

tal R

isk

Wei

ght

ed

Ass

ets

afte

r E

ffec

ts o

f P

SIA

Min

imum

C

apit

al

Req

uire

men

ts

at 8

%

1C

RE

DIT

RIS

KO

n B

alan

ce S

heet

Exp

osur

esC

orpo

rate

s 2

0,51

7,21

7 1

9,59

6,67

1 1

6,37

0,19

4 1

6,37

0,19

4 1

,309

,616

R

egul

ator

y R

etai

l 1

0,06

9,03

3 9

,856

,100

7

,418

,580

7

,418

,580

5

93,4

86

Oth

er A

sset

s 2

,572

,816

2

,572

,816

7

51,5

52

751

,552

6

0,12

4 S

over

eign

s/C

entr

al B

anks

5,3

34,6

82

5,3

34,6

82

-

-

-

Ban

ks, D

evel

opm

ent F

inan

cial

Inst

itutio

ns &

MD

Bs

3,8

66,9

95

3,8

66,9

95

1,1

21,2

37

1,1

21,2

37

89,

699

Insu

ranc

e C

ompa

nies

, Sec

uriti

es F

irms

& F

und

Man

ager

s 3

11,8

66

311

,866

2

88,0

89

288

,089

2

3,04

7 R

esid

entia

l Mor

tgag

es 3

,111

,099

3

,089

,793

1

,216

,333

1

,216

,333

9

7,30

7 H

ighe

r R

isk

Ass

ets

188

,984

1

88,9

84

283

,476

2

83,4

76

22,

678

Equ

ity E

xpos

ure

19,

902

19,

902

19,

902

19,

902

1,5

92

Def

aulte

d E

xpos

ures

1,5

09,6

18

1,4

79,1

44

2,1

42,7

46

2,1

42,7

46

171

,420

To

tal f

or

On-

Bal

ance

She

et E

xpo

sure

s 4

7,50

2,21

2 4

6,31

6,95

3 2

9,61

2,10

9 2

9,61

2,10

9 2

,368

,969

Off

Bal

ance

She

et E

xpos

ures

Off

Bal

ance

She

et E

xpos

ures

oth

er th

an O

TC d

eriv

ativ

es o

r cr

edit

deriv

ativ

es 3

,629

,653

3

,472

,360

3

,187

,997

3

,187

,997

2

55,0

40

Def

aulte

d E

xpos

ures

31,

882

25,

764

38,

417

38,

417

3,0

73

Tota

l fo

r O

ff-B

alan

ce S

heet

Exp

osu

res

3,6

61,5

35

3,4

98,1

24

3,2

26,4

14

3,2

26,4

14

258

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Tota

l fo

r O

n an

d O

ff-B

alan

ce S

heet

Exp

osu

res

51,

163,

747

49,

815,

077

32,

838,

523

32,

838,

523

2,6

27,0

82

2M

AR

KE

T R

ISK

Lo

ng P

osi

tio

n S

hort

Po

siti

on

Inte

rest

Rat

e R

isk

10,

354,

955

10,

646,

498

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) 2

25,6

17

-

18,

049

Fore

ign

Cur

renc

y R

isk

5,6

17

70,

574

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958)

70,

574

-

5,6

46

3O

PE

RA

TIO

NA

L R

ISK

Ope

ratio

nal R

isk

1,9

56,4

81

156

,518

Tota

l RW

A a

nd C

apit

al R

equi

rem

ents

35,

091,

195

32,

838,

523

2,8

07,2

95



Bas

el II

Pill

ar 3

Dis

clos

ures

as a

t 31

Dec

embe

r 201

6A

ppen

dix

I


222

Dis

clo

sure

on

Cap

ital

Ad

equa

cy u

nder

the

Sta

ndar

dis

ed A

pp

roac

h (R

M’0

00) (

cont

inue

d)

Ban

k20

15 E

xpos

ure

Cla

ssG

ross

E

xpos

ures

/ E

AD

bef

ore

CR

M

Net

E

xpos

ures

/ E

AD

afte

r C

RM

Ris

k W

eigh

ted

Ass

ets

Tot

al R

isk

Wei

ghte

d A

sset

s af

ter

Effe

cts

of P

SIA

Min

imum

C

apita

l R

equi

rem

ents

at

8%

1

CR

ED

IT R

ISK

On

Bal

ance

She

et E

xpos

ures

Cor

pora

tes

22,

142,

913

21,

505,

321

16,

922,

764

16,

922,

764

1,3

53,8

21

Reg

ulat

ory

Ret

ail

10,

589,

267

10,

448,

661

7,8

58,2

88

7,8

58,2

88

628

,663

O

ther

Ass

ets

3,0

16,7

51

3,0

16,7

51

795

,251

7

95,2

51

63,

620

Sov

erei

gns/

Cen

tral

Ban

ks 3

,560

,909

3

,560

,909

4

,116

4

,116

3

29

Ban

ks, D

evel

opm

ent F

inan

cial

Inst

itutio

ns &

MD

Bs

3,7

39,8

99

3,7

39,8

99

1,2

19,2

37

1,2

19,2

37

97,

539

Insu

ranc

e C

ompa

nies

, Sec

uriti

es F

irms

& F

und

Man

ager

s 3

95,2

68

395

,268

3

71,5

81

371

,581

2

9,72

6 R

esid

entia

l Mor

tgag

es 3

,040

,556

3

,022

,893

1

,129

,760

1

,129

,760

9

0,38

1 H

ighe

r R

isk

Ass

ets

191

,648

1

91,6

48

287

,472

2

87,4

72

22,

998

Equ

ity E

xpos

ure

23,

439

23,

439

23,

439

23,

439

1,8

75

Def

aulte

d E

xpos

ures

1,1

98,6

72

1,1

77,5

95

1,6

62,6

61

1,6

62,6

61

133

,013

To

tal f

or O

n-B

alan

ce S

heet

Exp

osur

es 4

7,89

9,32

2 4

7,08

2,38

4 3

0,27

4,56

9 3

0,27

4,56

9 2

,421

,965

Off

Bal

ance

She

et E

xpos

ures

Off

Bal

ance

She

et E

xpos

ures

oth

er th

an O

TC d

eriv

ativ

es o

r cr

edit

deriv

ativ

es 3

,674

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3

,508

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3

,169

,145

3

,169

,145

2

53,5

32

Def

aulte

d E

xpos

ures

40,

347

36,

505

54,

513

54,

513

4,3

61

Tota

l for

Off-

Bal

ance

She

et E

xpos

ures

3,7

14,4

14

3,5

45,3

02

3,2

23,6

58

3,2

23,6

58

257

,893

Tota

l for

On

and

Off-

Bal

ance

She

et E

xpos

ures

51,

613,

736

50,

627,

686

33,

498,

227

33,

498,

227

2,6

79,8

58

2M

AR

KE

T R

ISK

Lon

g P

ositi

on

Sho

rt P

ositi

on

Inte

rest

Rat

e R

isk

9,8

75,0

89

9,9

60,8

00

(85,

711)

274

,110

-

2

1,92

9 Fo

reig

n C

urre

ncy

Ris

k 2

6,29

2 4

3,39

9 (1

7,10

7) 4

3,39

9 -

3

,472

O

ptio

n R

isk

1,4

28

1,4

40

(12)

6,3

46

-

508

3

OP

ER

ATIO

NA

L R

ISK

Ope

ratio

nal R

isk

1,9

51,2

19

156

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Tota

l RW

A a

nd C

apita

l Req

uire

men

ts 3

5,77

3,30

1 3

3,49

8,22

7 2

,861

,865



Bas

el II

Pill

ar 3

Dis

clos

ures

as a

t 31

Dec

embe

r 201

6A

ppen

dix

I223

ANNUAL REPORT 2016


Disclosure on Capital Adequacy under the Standardised Approach (continued)

Market risk is defined as the risk of losses in on and off-balance sheet positions arising from movements in market prices. The Bank’s Capital-at-Risk (‘CaR’) is defined as the amount of the Bank’s capital that is exposed to the risk of unexpected losses arising particularly from movements in interest and foreign exchange rates. A CaR reference threshold is set as a management trigger to ensure that the Bank’s capital adequacy is not impinged upon in the event of adverse market movements. The Bank currently adopts BNM’s Standardised Approach for the computation of market risk capital charges. The market risk capital charge addresses among others, capital requirement for market risk which includes the interest rate risk in the Bank’s Trading Book as well as foreign exchange risk in the Trading and Banking Books.

The computation of market risk capital charge covers the following outstanding financial instruments:

a) Foreign Exchange (‘FX’)

b) Interest Rate Swap (‘IRS’)

c) Cross Currency Swap (‘CCS’)

d) Fixed Income Instruments (i.e. Corporate Bonds / Sukuk and Government Securities)

e) FX Options

The Bank’s Trading Book Policy Statement stipulates the policies and procedures for including or excluding exposures from the Trading Book for the purpose of calculating regulatory market risk capital.

Appendix I


224

Dis

clo

sure

on

Cre

dit

Ris

k: D

iscl

osu

res

on

Ris

k W

eig

hts

und

er t

he S

tand

ard

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Ap

pro

ach

(RM

’000

)

Gro

up20

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posu

res

afte

r Net

ting

and

Cred

it Ri

sk M

itiga

tion

Risk

W

eigh

ts

Sove

reig

ns

& C

entr

al

Bank

s PS

Es

Bank

s,

MDB

s an

d FD

Is

Insu

ranc

e Co

mpa

nies

, Se

curit

ies

Firm

s &

Fun

d M

anag

ers

Corp

orat

es

Regu

lato

ry

Reta

il Re

side

ntia

l M

ortg

ages

High

er

Risk

As

sets

Ot

her

Asse

ts

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ialis

ed

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ncin

g /

Inve

stm

ent

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ritis

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n Eq

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l Ex

posu

re

afte

r Ne

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sk

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eigh

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0%7,

339,

819

-

213

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2,

204,

247

-

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1,91

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0 -

-

-

11

,671

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-

10

%-

-

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-

-

-

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-

-

-

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20%

51,

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10

2,58

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2 2

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2 2,

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675

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-

-

18

1,10

9 -

-

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5,

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132

1,03

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6 35

% -

-

-

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4,

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5 1,

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-

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8 -

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56,8

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551

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9

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-

-

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659

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9 75

% -

-

-

-

-

13

,429

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1

3,86

5 -

-

-

-

-

13

,443

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10

,082

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% -

-

-

-

-

-

-

-

-

-

-

-

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-

6

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3

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-

757

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-

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1

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2 24

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-

-

-

-

-

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-

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-

-

-

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-

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4

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1,

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1

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207

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-

-

-

-

1,

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2,57

1,49

2 27

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-

-

-

-

-

-

-

-

-

-

-

-

-

35

0% -

-

-

-

-

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-

-

-

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40

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-

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-

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62

5% -

-

-

-

-

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-

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93

8% -

-

-

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-

-

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-

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50%

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rag

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-

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fro

m

Cap

ital

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ase

-

-

-

-

-

-

-

-

-

-

-

-

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PSE“PublicSectorEntities”

MDB“MultilateralDevelopmentBanks”

FDI“FinancialDevelopmentInstitutions”

Bas

el II

Pill

ar 3

Dis

clos

ures

as a

t 31

Dec

embe

r 201

6A

ppen

dix

II225

ANNUAL REPORT 2016

Dis

clo

sure

on

Cre

dit

Ris

k: D

iscl

osu

res

on

Ris

k W

eig

hts

und

er t

he S

tand

ard

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Ap

pro

ach

(RM

’000

) (co

ntin

ued

)

Gro

up20

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posu

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afte

r Net

ting

and

Cred

it Ri

sk M

itiga

tion

Risk

Wei

ghts

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reig

ns

& Ce

ntra

l Ba

nks

PSEs

Ba

nks,

MDB

s an

d FD

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Insu

ranc

e Co

mpa

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, Se

curit

ies

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s &

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anag

ers

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side

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k As

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ialis

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it Ri

sk

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gatio

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l Ris

k W

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0% 6

,335

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-

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53

-

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54,9

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-

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-

10%

-

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20%

80,

265

1,6

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760

-

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5

92,1

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-

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5,9

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1,1

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-

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-

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4,4

28,9

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-

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4,4

28,9

37

1,5

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50%

-

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1,8

13,8

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-

747

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2

,230

3

54,5

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-

-

-

-

-

2,9

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1,4

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75%

-

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-

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13,4

98,3

51

10,

106

-

-

-

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13,5

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57

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90%

-

-

-

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-

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k/R

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of

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k in

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king

Bo

ok

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ate

risk

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isk

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arni

ngs

and

capi

tal a

risin

g fro

m e

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to a

dver

se m

ovem

ents

in in

tere

st r

ates

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nly

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ism

atch

es in

tim

ing

repr

icin

g of

ass

ets

and

liabi

litie

s.

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e m

ism

atch

es a

re a

ctiv

ely

man

aged

from

an

earn

ings

and

eco

nom

ic v

alue

per

spec

tive.

Th

e ob

ject

ive

of in

tere

st r

ate

risk

man

agem

ent i

s to

ach

ieve

a s

tabl

e an

d su

stai

nabl

e ne

t int

eres

t inc

ome

from

the

follo

win

g pe

rspe

ctiv

es:

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t 12

mon

ths’

Ear

ning

s -

Inte

rest

rat

e ris

k fro

m t

he e

arni

ngs

pers

pect

ive

is t

he im

pact

bas

ed o

n ch

ange

s to

the

net

inte

rest

inco

me

(‘NII’

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r th

e ne

xt 1

2 m

onth

s. T

his

risk

is

mea

sure

d th

roug

h se

nsiti

vity

ana

lysi

s in

clud

ing

the

appl

icat

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of a

n in

stan

tane

ous

100

basi

s po

int p

aral

lel s

hock

in in

tere

st r

ates

acr

oss

the

yiel

d cu

rve.

(2

) E

cono

mic

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ue -

Mea

surin

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e ch

ange

in t

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cono

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val

ue o

f eq

uity

(‘E

VE

’) is

an

asse

ssm

ent

of t

he lo

ng t

erm

impa

ct t

o th

e B

ank’

s ca

pita

l. Th

is is

ass

esse

d th

roug

h th

e ap

plic

atio

n of

rele

vant

dur

atio

n fa

ctor

s to

cap

ture

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net e

cono

mic

val

ue im

pact

ove

r th

e lo

ng te

rm o

r to

tal l

ife o

f all

bala

nce

shee

t ass

ets

and

liabi

litie

s to

adv

erse

cha

nges

in in

tere

st

rate

s.

In

tere

st r

ate

risk

thre

shol

ds a

re e

stab

lishe

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line

with

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Gro

up’s

str

ateg

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d ris

k ap

petit

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thr

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reg

ular

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sure

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text

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Dis

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6A

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IV


244

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