CONTENTS
2
Corporate Information
32
Directors’ Report
3
Chairman’s Statement
35
Statement by Directors
4
CEO’s Statement
36
Statutory Declaration
9
Board of Directors
37
Shariah Committee‘s Report
10
Board of Directors - Profile
38
Independent Auditors’ Report
14
Statement of Corporate Governance
39
Statements of Financial Position
19
Risk Management
40
Statements of Comprehensive Income
20
Statement of Internal Audit and
41
Statements of Changes in Equity
42
Statements of Cash Flows
44
Notes to the Financial Statements
Internal Control
21
Management Reports
22
Shariah Committee
24
Ratings Statement
25
Awards & Accolades
26
Corporate Citizenship at Citi
29
Valuing Our People
CORPORATE
INFORMATION
Registered office
45th Floor
Menara Citibank
165 Jalan Ampang
50450 Kuala Lumpur
Date of
incorporation
22 April 1994
Auditors
KPMG
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CHAIRMAN’S
STATEMENT
It is my pleasure to present the Bank's annual report for the
financial year ending 31 December 2011. I would like to thank
the members of the board and staff of Citibank for their
commitment and support as we further strengthen our
position as a leading financial institution in Malaysia. We can
look back on 20 11 and be proud of a number of achievements.
Our parent company Citigroup reported net income of $1 1 .1
billion for the full year 2011, an increase of 4% over 20 1 0. It
was a solid full-year performance despite a very challenging
fourth quarter due to depressed global market conditions.
In Asia Pacific, our operational model has weathered tough
times to deliver revenues of over $ 15 billion and net income
of $4 billion for 2011. Our revenue was up by 5% over 20 1 0
and we remained the largest regional contributor to global
revenue outside North America.
In Malaysia, we operated under stable economic conditions
as the fourth quarter of 2011 exceeded our expectations
with 5. 2 % year-on-year GDP growth. Fiscal spending
provided an effective buffer against the export slowdown
and external supply disruptions. Government consumption
growth accelerated to a 12-year high, private consumption
remained buoyant and fixed investments growth continued
to accelerate, driven by private sector and non-financial
public enterprise capital spending.
It is with great sadness that I report we lost one of our
longest-serving directors of Citibank Berhad, Allahyarham
YBhg Dato’ Haji Syed Sidi Idid who passed away in February
2012. Allahyarham joined Citibank Berhad in 2000 and was
also the chairman of the Audit Committee and a member of the
Risk Management and Nominating Committees. Apart from his
outstanding work with Citibank Berhad, he also proudly worked
in the civil service of Malaysia. On behalf of Citibank Berhad,
we express our deepest sympathies and sincere condolences to
YBhg Datin Noorashikin Abdullah and her family.
In 20 1 2 , the Malaysian Government looks set to continue
focusing on domestic demand and spending to maintain
economic growth momentum and rebalance risk in response
to an uncertain global economy.
One significant development is Bank Negara Malaysia’s
Guidelines on Responsible Financing. The Guidelines came
into effect on 1 January to promote prudent, responsible and
transparent retail financing practices, to ensure the credit
market remains resilient, and to curb household debt.
Measures include pegging loans to people's disposable net
(instead of gross) income and limiting the tenure of car loans.
These measures will likely cause the consumer loans sector
slowdown to continue as Malaysians adjust their spending
habits on big ticket items such as property and cars.
20 1 2 marks Citi's 200th anniversary. This milestone is our
golden opportunity to further build trust and confidence in
Citi's proud legacy and core principles that have stood us in
good stead through two centuries. We will continue to drive
excellence by being the bank that connects better - bringing
people the best ideas and resources anywhere in an
increasingly dynamic world. This means strengthening client
relationships, reducing costs while remaining productive and
efficient, and delivering the earnings that contribute to our
capital strength.
With our world-class team of employees and the right
controls in place to protect our brand and reputation, I am
confident we will deliver on our goals.
Jonathan Christian Larsen
Chairman
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CEO’S
STATEMENT
Overview
In 20 11, the Malaysian Government responded to the
deteriorating external outlook by supporting domestic demand
with fiscal policy, with a renewed focus on consumer spending.
Bank Negara Malaysia (BNM) took prudent pre-emptive
measures to tighten mortgage lending to curb speculative
property purchases and risky lending by banks. It also signalled
BNM’s concerns over the country’s high household debt. New
credit card rules also came into effect for lower-income earners.
The local banking sector demonstrated continued profitability,
high levels of capitalisation and healthy growth in the loans
sector. Overall, the industry remained relatively unscathed
by the global financial crisis and widespread recession due
to the strong fundamentals already in place.
The Year in Review
Citibank registered a positive performance in 2011. The Bank’s
strong performance was contributed by high levels of
capital, liquidity and operating cash flows.
For the financial year ended 31 December 2011, the Bank
registered a pre-tax profit of RM855 million, compared with
RM834 million achieved the previous year. We focused our
initiatives mainly on investing in infrastructure, growing talent
and building our brand.
Total net income was RM1.89 billion in 2011, a marginal increase
from 2010. The Bank's return on equity before tax decreased to
22.4% for the financial period ended 31 December 20 1 1
compared with 24.2% in 2010. Our liquidity continues to be
exceptionally strong, with cash and short-term funds and
placements with financial institutions in excess of RM13.5 billion.
The bank's risk weighted capital adequacy ratio stood at a
comfortable 15.3% (before dividend), based on its audited
capital base as at 31 December 20 1 1 . The Bank's net interest
income was RM1.20 billion in 20 1 1 while non-interest income
increased to RM659 million in 20 1 1 from RM573 million in 2010.
Business Highlights in 20 11
Citibank achieved many business successes in 20 11 despite
increased competition following the introduction of more
liberalisation measures in the financial industry in 2010.
We continued our relentless drive to implement major
innovation and campaigns across our different product lines
and financial services that cemented our position as one of
the leading foreign banks in the country.
Citi acted as the joint book runner for the multiple award
winning Wakala Global Sukuk issued by Government of
Malaysia. With a total issuance size of USD 2.0 billion in two
separate tranches, the Wakala Global Sukuk is the largest
sovereign Sukuk ever issued.
Citibank went live on the Malaysian Electronic Payment System
Sdn Bhd (MEPS) network for the first time in February. In
addition to 1 .9 million Citibank and Visa ATMs in over 200
countries, customers now enjoy added convenience through
access to over 1 1 ,000 ATMs nationwide through 20 MEPS
member banks covering 2,000 locations nationwide. This
completed the process started in 2005 when Citibank
became the first foreign bank in Malaysia to gain complete
access to the MEPS Interbank GIRO.
We continued to strengthen the Citibank brand reputation
for innovation in customer service with the launch of our
first state-of-the-art Smart Banking branch, underlining our
commitment to customers and its continued investments in
Malaysia. The Citibank Smart Banking branch in Malaysia is
also Citi’s largest smart banking branch in the region.
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C E O ’ S S TAT E M E N T
For more than 50 years, we have retained our position as one of
the leading foreign banks in Malaysia by engaging and listening
to our customers and bringing unparalleled value to our
Malaysian clients. As a franchise, we strategically leverage on
our global reach, expertise and capabilities to adapt, innovate
and provide best-in-class financial solutions and services.
We retained our leadership positions in credit cards, FX
Options, Government Bond Trading, Securities Clearing &
Settlement, and Cash Management. We are also amongst the
top three in the Wealth Management segment.
Consumer Banking
Credit Cards
Citibank Credit Cards maintained its leadership position in
cards usage by enhancing its value proposition in two ways:
introducing new products in line with the impact of the
economic realities on our customers, and improving existing
products to help them get more out of their credit card.
Based on customers’ expectations and needs, we increased
our value proposition with the introduction of two timely
and relevant market leading products: the Shell Citibank
Gold Credit Card and the Giant-Citibank Credit Card. These
products have been designed to meet our customers’
increasing price sensitivity and demand for value for money
in their shopping habits.
With petrol being a compulsory item in most household
budgets, our new Shell Citibank Gold Credit Card helped
customers save and stretch their monthly budgets by offering
the highest fuel rebate in the market. Malaysian drivers using
the card could accumulate up to 8% rebate in savings on
Shell fuels and all purchases in Shell Select or Kedai.
We targeted the impact of rising food prices with the launch
of the Giant-Citibank Credit Card which set new industry
benchmarks with the highest rebates for daily grocery
purchases in the market. By consolidating their monthly
spend on the Giant-Citibank Credit Card, customers earned
up to 5% rebate on purchases made at Giant stores and up
to 2% rebate on selected utilities and dining spending.
Additional benefits include exclusive member prices, extra
rebates during special occasions, festive seasons and new
store openings; and discounts and privileges at over 40,000
local and global merchant partners’ outlets.
10 pairs of flight tickets with Premium Flatbeds to Korea.
Another 10 members won Sen Heng vouchers worth a total
of RM2,000 while another 10 card members were given
300,000 AirAsia-Citibank Rewards Points.
We kept the benefits our customers expect as part of the
Citibank lifestyle coming, starting with giving a pair of exclusive
backstage passes each to 4 winners of the Citibank “Meet
Maroon 5 Backstage” contest. In Johor Baru, 2 customers won
a pair of tickets each to Seoul, Korea as part of the “Citibank
Credit Card JB City Square Shopping Campaign Contest”. We
partnered with MPH Group Malaysia to offer exclusive deals to
our customers at the MPH 20 1 1 Carnival. We also collaborated
with group-discount website, “I Love Discounts” on the
three-month “Big Deals Thursday” campaign aimed at our
customers and Facebook fans.
Launched in conjunction with the year-end holidays and
festivities, Citi’s “Year End Rewards” campaign marked the
first time Citibank was concurrently present in 9 of the
country’s biggest shopping malls in one campaign. Treats
included premium gifts; instant redemption of gifts at
Citibank booths with discounts of up to 55% at KLCC Suria
and Queensbay Mall; and shopping, dining and entertainment
offers at over 1 , 360 outlets nationwide. Customers with
insufficient Rewards Points could charge the remaining
balance to their credit cards to save on cash towards their
holiday purchases. New customers who signed up during the
campaign collected their card within an hour of application.
They also enjoyed a RM150 cash back offer if they signed up
for Citibank PremierMiles, Platinum, Cash Back Platinum or
Shell Citibank Gold Credit Card.
In recognition of our initiatives and performance in 2011,
Citibank credit cards won 4 awards in the Visa Malaysia Bank
Awards. Awards included excellence and innovation in launching
new Visa products, effective marketing programmes and
campaigns, highest purchase volume growth for both credit
and debit products and best Visa programme innovation.
Along with all the business improvements to its customer
value proposition, the entire Cards industry had to adapt to
significant changes as a result of new regulatory guidelines
issued by the central bank. Majority of the changes have
already been implemented, and the business is managing the
policy changes while ensuring business growth momentum.
Our ongoing leadership position can be attributed to our
comprehensive range of payment product suite, innovative
value propositions, compelling promotions and discounts,
exemplary service, solid brand, strong and talented people
as well as our global and regional presence.
Citibank also continued our commitment to building lasting
credit card partnerships with major Malaysian brands. We
started the year by strengthening our long-running
partnership with Sen Heng, Malaysia’s leading consumer
electrical and electronics retail chain store, with the Sen
Heng Double Awards promotion. Through this promotion,
Citibank card customers earned 2 to 3 times the number of
Rewards Points which helped them obtain other products
without spending additional cash.
Retail Banking
In May, we celebrated the third anniversary of the
AirAsia-Citibank credit card by presenting 10 winners with
We increased our revenue and client base by double digits,
which helped further strengthen our market share and
In an increasingly competitive market, we have consistently
stayed one step ahead of our competitors through our
unparalleled expertise in and commitment to understanding
customers’ needs and matching our products to their needs.
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ranking in the Wealth Management industry. We remain the
market leader for unit trust among the institutional unit
trust agents in the country and we continue to take steps to
enhance our Global Banking capabilities through services
including Global View of Accounts (“GVA”) and Citi Global
Transfer (“CGT”) in order to continue meeting our clients’
needs in this area.
In July, Citigroup First Investment Management Ltd. and
HwangDBS Investment Management Bhd. launched the
HwangDBS China Select Fund. This first-of-its-kind feeder fund
allowed qualified Malaysian investors who were risk tolerant,
seek capital appreciation and have a long-term investment
horizon, to benefit from the expertise of China’s leading asset
management company and the growth opportunities of China
companies listed locally and globally. The HwangDBS China
Select Fund was exclusively distributed by Citibank Berhad
during the initial offer period from 11 July to 31 July.
Our first Smart Banking branch at Menara Citibank redefined
the way we interact with our clients, aligned with our
commitment to be at forefront of innovation leveraging new
technologies to make banking simpler, more informative and
readily accessible when and where customer need or want it.
The Smart Banking branch is equipped with cutting edge
facilities such as the Citi Interactive Media Wall that displays
a diverse range of information; the Citi Work Bench that
allows customers to conduct certain banking transactions
independently; and Citi video conferencing facility that
customers can use to obtain expert opinion from Citibank
specialists. We also built a state-of-the-art Citigold centre with 17
private consultation rooms and dedicated tellers to exclusively
service the wealth management needs of Citigold clients.
Mortgage
Bank Negara’s 20 10 introduction of measures to regulate
the mortgage industry with new regulations such as Product
Transparency guidelines and LTV controls to ensure the
mortgage industry stayed relatively healthy, stable and fair.
As the regulators become more conscious about household
debt, we observe prudent lending guidelines slowly being
introduced to the market.
In 20 11, we continued our strategy to focus on cross-selling
of Mortgages into our existing customer base, building
relationship with prime developers, improving the value-added
proposition of our mortgage products and sustaining a high
performing direct sales force.
In October, we celebrated the first anniversary of “LifeStyle”, a
unique value proposition to our Citibank Home Loan customers
that gives home owners opportunities to save, enjoy, meet,
learn, access and manage funds between accounts effectively.
We will continue leveraging on LifeStyle to build customer
loyalty, satisfaction and line usage.
Institutional Clients Group
Global Transaction Services
Treasury and Trade Solutions
Citi’s corporate clients continued to benefit from the
operational efficiency, control and security offered by our cash
management platforms and solutions. Momentum remained
strong and we leveraged our global network and ongoing
investment in technology to build and deepen our wallet share
across a broad segment of clients including local corporate,
multinational corporations and financial institutions. Citi
continued to play an important role in the drive to migrate to
electronic payment channels, launching new services for
SOCSO and Lembaga Hasil Dalam Negeri statutory payments.
Citi experienced significant growth in trade financing volume
by facilitating intra-Asia trade for our clients. Citi was able to
offer our corporate clients innovative, end-to-end trade
solutions which enabled our clients to expand their own sales
network and better manage their working capital cycles.
The bank once again won accolades for “Best Foreign Cash
Management Bank in Malaysia” by Asiamoney and “Best
Domestic Trade Finance Bank” by Euromoney in industry polls
conducted by these publications respectively.
Securities Services
Citi’s Securities and Fund Services (SFS) experienced strong
growth in both Asset Under Custody (AUC) and transaction
volumes with improved market condition and various local
mandates won. SFS continued its success in the public sector
which saw 2 more significant deals implemented, elevating
Citi’s standing as the preferred custodian in this category.
During the year Citi participated actively in the development of
a number of market initiatives, including the Central Matching
Facility and Securities Borrowing and Lending Negotiated
Transaction program.
On the client service front, Citi was top-rated in the 2011 Global
Custodian Emerging Markets survey. Citi was the only
Malaysian custodian to achieve top scores in all the client
segments (Leading Clients, Cross Border Clients and Domestic
Clients) in the survey.
Securities and Banking
Global Markets
The markets business continued to deliver strong revenues on
the back of trade and capital flows in 2011. Market conditions
were challenging with the frequent risk-off sentiment
triggered by the unravelling of further contagion with the
European nations. Local conditions fortunately were for the
most part unfazed by the European debt episode and with
BNM continued to hike with a 0.25% increase in the OPR rate.
FX & bond trading revenues enjoyed the lift from significant
foreign portfolio inflows into the Malaysian bond markets, but
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our investment book was affected by further narrowing the
interest-carry returns for MYR bonds. The bank continued its
focus on providing innovative, leading-edge solutions to its
clients, both for investments and hedging, resulting in
continued healthy growth in derivatives and structured
investments.
Notable progress was made in 2011 on structured credit
investments, namely credit linked notes which saw
promising demand from our institutional investor clients.
We continued to help customers in various services and
industries manage commodity, FX and interest rate risks
through the volatilities and event driven risk that was
evident in much of 20 11. Our efforts also entailed affording
unparalleled access to our clients to leverage our unique
global footprint and harness the prowess of our network
and various product platforms as clients considered
investment opportunities around the globe across various
product classes. Our preeminent position in government
bonds and FX services was also reaffirmed by our clients in
industry surveys.
Islamic Banking Division
In 2011, Citi acted as the joint book runner for the multiple
award winning Wakala Global Sukuk issued by Government
of Malaysia. With a total issuance size of USD 2.0 billion in
two separate tranches, the Wakala Global Sukuk is the largest
sovereign Sukuk ever issued. The offering was well subscribed
by investors globally, providing the Government of Malaysia
with a diversified and attractive source of funding.
For Global Transaction Services, Citi successfully inducted
its first client for its Shariah compliant Custody and Fund
Administration Services. It also successfully completed the
implementation of a multi country Shariah compliant cash
management solution for a Malaysian financial institution,
further complementing the Government’s effort to make
Malaysia an international centre for Islamic Finance by
providing critical support infrastructure to its participants.
Significant Events & Accolades
The bank achieved several ‘firsts’ and a list of accolades,
which is mentioned later in this report on page 25.
The Community We Work and Live In
• Introduce 540 high school students from Kuala Lumpur
and Penang to the basics of stock market and raise their
financial management capabilities along side with
investment knowledge through the Citi Stock Challenge.
• Equip low-income families living in poor housing in Kuala
Lumpur with practical financial knowledge as part of a
home improvement initiative led by Habitat for Humanity.
Our People
Our work would not be possible without the strength of a
diverse and skilled workforce. Citibank ensures that our
people are equipped with the support systems needed to
realise their professional growth, make meaningful
contributions and develop pride in their work.
Throughout the year, we made good progress on delivering
“The Citibanker Differencer” for our employees. The Leadership
Enhancement & Accelerated Development (L.E.A.D) programme
provided accelerated career development opportunities for 169
top-of-class employees across the board whose performance
ranks in the 95th percentile. We hired 14 Management
Associates and 27 Graduate Executives as part of our ongoing
goal to attract the very best talent. Both mandatory functional
and technical training was conducted totalling more than
23,000 training hours for 1,328 employees achieved.
Apart from formal professional development, the success of
the VOE programmes held throughout the year led to
improvements across the franchise from 77% to 79%.
The distinct perspectives of our employees all bring added
value to our clients and customers, and with Citibank’s strong
tradition of employee volunteerism ensures that our collective
passion and talents are put to use outside the workplace as well.
Key Business Priorities for 20 12
Our key business priorities are as follows:
• Ensure diligent risk management practices with continuous
emphasis on asset quality.
• Focus our investments on driving innovations and relevant
value propositions for our customers.
A large aspect of our corporate citizenship in Malaysia
focuses on helping consumers build their own financial
capability by pairing financial education with access to
appropriate products and services so they can save, wisely
manage their money and weather setbacks.
• Drive operational efficiencies.
We received an investment in excess of USD200,000 from
Citi Foundation and worked with partners to:
• Strengthen our leadership positions in credit cards, and the
affluent segment.
• Educate 24 million Malaysians through our Stretching
Your Ringgit series of financial infomercials on ASTRO.
In addition, we expanded this programme to include
workshops on basic financial education for over 500
kindergarten children.
• Build our brand strategy to present our company in a
powerful, consistent way and enhance customer delivery,
satisfaction and retention.
• Leverage our competitive advantage in global and emerging
markets by providing intraregional connectivity through
treasury, transactions services and wealth management.
• Continue to identify, build and develop talent.
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Outlook for 20 1 2
Strong domestic demand, increased government spending
and major projects will be the growth drivers for Malaysia’s
economy this year. This is similar to the last three years
where the economy had been driven by domestic demand.
Malaysia has not been spared by global developments,
especially those in Europe and the US, but with more than
50% of the country’s trade is with Asia, its export demand has
been somewhat sustained. Household debt seems to be a
more important factor driving rate decisions, as policymakers
reiterate that macro-prudential measures will be ineffective if
interest rates are not normalised. While headline inflation is
expected to moderate in 2012, there is still upside risks to
inflation emerging from supply disruptions as well as higher
energy and commodity prices.
Private consumption will be supported by stable employment
conditions, income growth and public sector measures.
Investment activity will be supported by the domestic-oriented
industries, the commodity sector and the public sector.
Citi is well-positioned to seize the opportunities rising from
the market trends for our client’s benefit and for the overall
Malaysian economy. We will continue to maximise the value
we already have – such as our unmatched global presence –
and by creating new value through investments in people,
technology and services.
Sanjeev Nanavati
Chief Executive Officer
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BOARD OF DIRECTORS
From left to right - Ms. Khairatul Ilyana Kamaruddin (Company Secretary), Ms. Tang Wan Chee (Company Secretary),
Mr. Terence Kent Cuddyre, Tan Sri Dato’ Hj Omar B. Ibrahim, Mr. Sanjeev Nanavati, Mr. Jonathan Christian Larsen,
Ms. Agnes Liew Yun Chong, Dato’ Siow Kim Lun and Ms. Ho Li Chin (Company Secretary)
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Board of Directors - Profile
Mr. Jonathan Larsen is Citi’s Head of Consumer Banking for
Asia Pacific. Citibank is Asia Pacific's pre-eminent retail bank
and credit card issuer with over 32 million customer accounts
and close to 700 branches in Asia Pacific in 14 countries.
In 2011, Citibank reported revenues in its Asia Pacific Consumer
Business of US$8 billion, accounting for close to 25% of Citi’s
consumer banking revenues globally. Net income was US$1.9
billion, representing over 30% of Citibank’s Consumer Banking
net income globally.
Citibank is the leading financial services brand in Asia. It has
industry leading positions in credit cards and personal wealth
management across the region. Mr Larsen also has oversight
of Citi's Local Commercial Banking business covering the
small and medium enterprises across Asia Pacific with sales
of up to US$500 million. Appointed to his current role in October
2009, Mr Larsen is a member of Citi's Asia Pacific Executive
Committee and Citi’s Global Consumer Management Committee.
Before joining Citi, Mr. Larsen was a Principal in the Financial
Services Group of global management consultancy firm Booz,
Allen & Hamilton (now Booz & Co). Mr Larsen spent eight years
with Booz, Allen, advising major financial institutions across
Asia, Europe and the United States and was a recipient of the
firm’s Professional Excellence Award. Mr. Larsen began his
career at the insurance and banking operations of the National
Mutual Group in Australia and New Zealand (now part of AXA).
Mr. Larsen is Chairman of Citibank Berhad in Malaysia and a
Director of Citibank Singapore Limited. He has also served as
a member of the Advisory Board of the National University of
Singapore Business School. In 2011 Mr Larsen was named by
The Asian Banker magazine as Retail Banker of the Year for
Asia Pacific.
Mr. Larsen holds a Bachelor of Arts with Honours (First Class)
from the University of Melbourne where he was awarded the
Enid Derham Prize for 1987.
Mr. Larsen joined Citi in 1998 and has held various leadership
roles across Asia Pacific. Prior to his current role, Mr Larsen
was the Country Head and Citi Country Officer for Singapore
and CEO of Citibank Singapore Limited, with oversight of the
Institutional Clients Group, Consumer Banking and Global
Wealth Management businesses. He assumed this role in
September 2008, and concurrently held the position of
Product Head for Consumer Banking in the ASEAN region.
Under Mr Larsen’s leadership, Citi was named the Best Bank in
Singapore by Euromoney in 2007 and 2009. During his tenure,
Citi in Singapore also won the Best Bank Award from The Asset,
the Best Foreign Commercial Bank Award from FinanceAsia and
the Best Retail Bank Award from The Asian Banker.
He was appointed in April 2005 as the Country Business
Manager and CEO for Citibank Singapore Ltd. In this role, he
was instrumental in transforming Citibank’s presence from
five customer touch points to over 800 and repositioning
Citibank as a mainstream retail bank in Singapore. From
August 2007, he assumed the additional role of Head of Citi’s
Global Consumer Business across South East Asia. Prior to
these roles, he was Head of Retail Banking in Asia Pacific and
Head of Business Development. In this latter role he led a
number of M&A transactions to expand Citi's business in
Korea (acquisition of Koram Bank in 2004), China (investment
in and strategic alliance with the Shanghai Pudong
Development Bank in 2002) and Japan (acquisition of Diners
Club Japan, 2000).
Mr. Jonathan
Christian Larsen
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Board of Directors - Profile
Mr. Sanjeev Nanavati was appointed the Bank’s Chief Executive
Officer on 5 October 2007. He is responsible for Citi’s retail
banking, credit cards, corporate banking, investment banking,
global transaction services, equities, fixed income and treasury
activities in Malaysia. Prior to this appointment, he was Citi
Malaysia’s Country Head for its Institutional Clients Group
since 2005.
Before moving to Malaysia, he was Managing Director and
Global Head of Citigroup Depository Receipt Services based in
New York and Hong Kong, responsible for all aspects of the
ADR/GDR product offering globally. Mr. Nanavati joined the
Citigroup Depository Receipt Services Management team in
July 2001 and strategically repositioned the business, creating
a differentiated value proposition for clients.
Prior to joining Citigroup, he was the Head of Corporate and
Investment Banking for 6 years at one of the largest
international banks in India and prior to that worked for 12
years with a major U.S. bank in M&A and Capital Markets,
working in the United States and Hong Kong. Mr. Nanavati’s
product experience extends across debt and equity capital
markets; M&A and advisory; lending, cash management and
trade; and more recently securities services.
Mr. Nanavati holds an MBA Degree from Syracuse University in
the United States.
At present, he is the President for the American Malaysian
Chamber of Commerce and also a Council member of the
Association of Banks in Malaysia.
Mr. Sanjeev
Nanavati
Tan Sri Dato' Hj Omar joined the Bank on 3 May 2000 as an
Independent Non Executive Director. He serves as the Chairman
of the Nominating Committee and the Audit Committee, and a
member of the Risk Management Committee of the Bank.
He is a Non-Executive Director of UEM Group Berhad and UEM
Builders Berhad and also serves as a Non-Executive Director
on the Board of KLCC (Holdings) Sdn Bhd, Cyberview Sdn Bhd,
PNB Commercial Sdn Bhd and Selia Senggara Sdn Bhd.
He has spent more than three decades serving the government
as a civil engineer in the Public Works Department (PWD) of
Malaysia and during this long tenure, he held many positions
in the department, culminating in the position of PWD's
Director-General from 1 9 96 to 1 9 9 9.
Tan Sri Dato' Hj Omar has particular expertise in structural
engineering and water supply engineering, his professional
work experience has been varied though, including design
assignments as well as project management to general
management.
He has been the President of The Board of Engineers Malaysia,
The Malaysian Water Association and Malaysian Structural
Steel Association at various times between 1988 and 1999.
Tan Sri Dato' Hj Omar holds a Master of Science from the
University of Southampton and a Bachelor of Engineering from
the University of Malaya.
He is a Fellow of the Institution of Engineers Malaysia and a
professional engineer registered with the Board of Engineers
Malaysia.
Tan Sri Dato’
Hj Omar B. Ibrahim
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Board of Directors - Profile
Dato’ Siow Kim Lun
Dato’ Siow Kim Lun is currently a board member of Kumpulan
Wang Persaraan, UMW Holdings Berhad, W Z Steel Berhad, Eita
Resources Berhad, Hong Leong Assurance Berhad and
MainStreet Advisers Sdn Bhd. He is also a member of the Land
Public Transport Commission.
From 1993 to 2006, Dato’ Siow was with the Securities
Commission (SC), where he has served as the Director of its
Issues and Investment Division and the Director of its Market
Supervision Division. He has also served as a member of the
Listing Committee of Bursa Malaysia Securities Berhad from
May 2007 to May 2009. Prior to joining the SC, Dato’ Siow has
worked in the investment banking and financial services
industry in Malaysia for over 12 years.
Dato’ Siow holds an MBA from the Catholic University of
Leuven, Belgium and a Bachelor of Economics (Hons) from the
National University of Malaysia. He has also attended the
Advanced Management Program at Harvard Business School.
Dato’ Siow has been a director of Citibank Berhad since April
2007. He is presently the Chairman of the Bank’s Risk
Management Committee and a member of the Nominating
Committee and Audit Committee.
Ms. Agnes
Liew Yun Chong
Ms. Agnes Liew Yun Chong was appointed as the Bank’s Non
Independent Non Executive Director on 1 November 2010. She
is also a member of the Risk Management Committee and
Nominating Committee of Citibank Berhad.
Ms. Agnes Liew is responsible for the Corporate Bank in Asia
Pacific (excluding Japan and India). The Asia Pacific Corporate
Bank is the coverage organization that delivers the full
spectrum of product solutions and Citi’s extensive global
network that spans over 100 countries, to institutional clients in
Asia, including large public and private corporations.
Ms. Agnes Liew joined Citi as a Management Associate in 1982
and during her career with Citi, has held a number of diverse
key management positions in Risk and Banking in Asia Pacific.
Between 2000 and 2003, she was the Corporate Bank Head of
Singapore. In 2003, she was appointed Country Risk Manager
of the Corporate and Investment Bank, Citi Taiwan. She
subsequently moved into the Regional Risk Management Office
in Asia Pacific and assumed the role of Head of Risk, ASEAN,
Corporate and Investment Bank in 2005.
Between 2007 and 2010, Ms. Agnes Liew led Global
Subsidiaries Group in Asia Pacific (excluding Japan) and was
responsible for the relationship coverage of global multinational
subsidiaries across 16 markets. Under her leadership, the Global
Subsidiaries Group in Asia has grown to be a significant pillar of
the Global Banking franchise. During that time, she was also the
Global Banking Head of ASEAN (ex Singapore), responsible for
the relationship coverage of large corporate clients, including
financial institutions.
Ms. Agnes Liew holds an LL.B (Hons) from the University of
Singapore and is a member of the Supreme Court of Singapore.
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Board of Directors - Profile
Mr. Terence Cuddyre joined the Bank on 14 December 201 0
as a Non Independent Non Executive Director. He serves on
the Audit Committee and Risk Management Committee of
the Bank.
He is currently Citigroup Country Officer for Brunei, a
position which he assumed on 1 July 2009 and cluster
head for Bangladesh, Sri Lanka and Brunei. Prior to that,
he spent 4 years as the Head of Training for the Asia
Pacific region (Citi Centre for Advanced Learning). He has
also served as Citigroup Country Officer for Thailand
(2002 – 2005) and was North Asia Regional Risk Officer
(2000 – 2001 ).
Mr. Cuddyre joined Citigroup in 2000 after 23 years with
Bank of America. He held numerous international roles
including Country Head of Ireland, Korea, Hong Kong and
China. He also held several risk position in North America
and Asia.
He has also been active in the American Chamber of
Commerce, serving on the boards in Hong Kong, Korea and
China. In Thailand, he served as Chairman.
Mr. Cuddyre holds a B.A. in Economics from University of
California, Santa Barbara and a MBA from the Wharton
Business School, University of Pennsylvania.
Mr. Terence
Kent Cuddyre
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Statement of Corporate Governance
Statement of Corporate Governance
Roles and Responsibilities
The Bank aspires to achieve the highest standards in ethical
conduct by delivering our promise to clients, reporting our
financial results accurately and transparently and maintaining
full compliance with all laws, rules and regulations governing
the Bank's business operations.
The primary responsibility of the Board of Directors is to
provide effective governance in terms of the Bank's affairs for
the benefit of all shareholders and also to balance the interests
of different constituencies such as customers, employees,
suppliers and the local community.
The Bank has also taken the necessary steps to ensure
conformity with Bank Negara Malaysia's (BNM) Guidelines
on Corporate Governance for Licensed Institutions (Revised
BNM/GP1).
Board Composition
The Board comprises six members.
The following is the board line-up:
• Mr. Jonathan Christian Larsen
Non-Independent Non-Executive Director/Chairman
• Mr. Sanjeev Nanavati
Non-Independent Executive Director/Chief Executive Officer
• Tan Sri Dato' Hj Omar B. Ibrahim
Independent Non-Executive Director
• Dato' Siow Kim Lun
Independent Non-Executive Director
• Ms. Agnes Liew Yun Chong
Non-Independent Non-Executive Director
• Mr. Terence Kent Cuddyre
Non-Independent Non-Executive Director
The individual profiles of the above mentioned directors are
set out on pages 10 to 13 of this report.
The composition of the Bank's Board of Directors is in
compliance with the Revised BNM/GP1, which requires at least
one-third of the board members to be independent directors.
The presence of three non-independent non-executive
directors and two independent non-executive directors
enables the Bank to view all relevant issues objectively and in
a balanced manner. This further enhances the accountability
of the decision making process within Citibank Berhad.
The presence of the non-executive directors is also beneficial
as it provides room for new perspectives and ideas that could
help improve the effectiveness and efficiency of the Board on
the whole.
The revised BNM/GP1 guideline stipulates the need for a
maximum of one Executive Director in the Bank's Board of
Directors line-up.
Among other things, the Board also reviews and approves
the Bank's strategic business plans annually, oversees the
management of the business and monitors the Bank's actual
performance against projections.
The Board also ensures that the infrastructure, internal controls
and risk management processes within the Bank remain robust
and are implemented in a consistent and timely manner.
In addition, the Board carries out various other functions and
responsibilities as stipulated in the guidelines and directives
issued by BNM from time to time.
In relation to the requirements stated under the revised
BNM/GP1, the Bank has submitted an application to BNM for
deviation of Principle 10 (shareholders should be entirely
independent of the management and that the CEO should
derive authority only from the Board) and Principle 12 (regular
communication to be held with shareholders).
On 3 May 2006, BNM approved the Bank’s official request for
the above-mentioned deviations.
As the Bank falls under the global structure of Citi, the Board
also ensures that the Bank adopts applicable Citi policies in
relation to credit approval processes and operational manuals.
As a mean to ensure the Bank has a beneficial influence on
the economy of the local community, the Directors have a
continuous responsibility to provide banking services and
facilities that are conducive to a well-balanced economic growth.
Frequency and Conduct of
Board Meetings and Attendance
The Board of Directors meet at least six times a year in order
to effectively discharge their duties as well as to comply with
the revised BNM/GP1 guideline requirements.
During Board meetings, the Directors are provided with an
agenda, papers on the Bank's most recent financial
performance, risk management reports, budgets, new business
initiatives or product launches, Board committees meetings'
minutes and updates on industry regulations or policy
changes. The Board also receives business presentations on
topical matters, subject to such requests.
The Board meeting agenda and papers are distributed to all
Directors prior to the scheduled meetings so as to grant them
sufficient time to review all materials/issues that will be
discussed during the actual meeting. This procedure goes a
long way in ensuring that all Board meeting discussions as well
as decisions made/taken, are meaningful and based on
accurate facts and figures.
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The proceedings of all Board meetings are also taken down as
official minutes and such minutes are later circulated for the
Directors' perusal prior to confirmation during the following
meetings.
The attendance record for each of the Board member for the
financial year ended 31 December 2011 is as shown below:
Number of Meetings
Name of Audit Committee Member
Held
Attended
(Appointed as Chairman of Audit Committee
on 1 March 20 12 )
5
5
Dato’ Siow Kim Lun
5
5
4*
3
5
5
5
4
Tan Sri Dato’Hj Omar B. Ibrahim (Chairman)
Mr. Terence Kent Cuddyre
(Appointed as Audit Committee member on 1 March 20 11)
Number of Board Meetings
Name of Director
Held
Attended
Mr. Jonathan Christian Larsen
6
6
Mr. Sanjeev Nanavati
6
6
Tan Sri Dato' Hj Omar B. Ibrahim
6
6
Dato’ Siow Kim Lun
6
6
Ms. Agnes Liew Yun Chong
6
4
Mr. Terence Kent Cuddyre
6
6
6
5
Mr. Jonathan Christian Larsen
(Resigned as Audit Committee member
on 28 February 20 12 )
Dato’ Syed Sidi Idid B. Syed Abdullah Idid
(Deceased on 2 February 20 12 )
* Reflects the number of meetings held during the time the Director held office
All the Audit Committee members are non-executive directors
of the Bank.
Dato' Syed Sidi Idid B. Syed Abdullah Idid
(Deceased on 2 February 2012 )
Board Committees
The Board of Directors established several ‘Board Committees’
to assist them in the overall management and supervision of
the Bank's business operations.
The committee members shall be appointed by the Board upon
recommendation of the Nominating Committee.
Terms of Reference
The Board has approved the terms of reference for the Audit
Committee.
The main objective of the Audit Committee is to review the
financial position of Citibank Berhad, its internal controls,
performance and findings of the internal and external auditors
as well as to recommend appropriate remedial action (if
necessary).
The Audit Committee's main responsibilities are as follows:
Each committee has its own written charter, clearly outlining
the mission and responsibilities of the respective committee as
well as well-defined terms of reference approved by the Board.
Pursuant to the revised BNM/GP1 guideline, the Board is also
required to establish the following additional committees
besides the existing Audit Committee then:
•
Nominating Committee
•
Remuneration Committee
•
Risk Management Committee
The Bank has since set up the Nominating Committee and Risk
Management Committee.
The Bank submitted an application to BNM for a waiver from
establishing the Remuneration Committee. On 3 May 2006,
BNM granted the Bank approval on the above application.
Audit Committee
Composition and Frequency of Meetings
The Audit Committee was established in 1994.
The attendance record for each Audit Committee member for
the financial year ended 31 December 2011 is as shown below:
a. Ensure that the financial accounts are prepared in a timely
and accurate manner with frequent reviews on the
adequacy of provisions for contingencies, and bad and
doubtful debts.
b. Review the balance sheet and profit and loss account for
submission to the Board of Directors and ensure the
prompt publication of annual accounts.
c. Review the annual financial statements before submission
to the Board, focusing on:
1.
Compliance with accounting standards and other legal
requirements
2.
Changes in accounting policies and practices
3.
Significant issues and unusual events arising from the
audit
4.
Going concern assumption
5.
Major judgemental areas
d. Conduct a complete review prior to publishing the annual
report to ensure compliance with regulatory requirements.
e. Review the effectiveness of internal controls, including the
scope of the internal audit programme, its role, resources
of the internal audit functions and ensure it has the
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necessary authority to carry out its work, internal audit
findings as well as recommend action to be taken by
management, whenever necessary. The reports of internal
auditors and the Audit Committee should not be subject to
the clearance of the Board of Directors.
f.
Evaluate appointment, performance and provide appraisal
and feedback on the remuneration package offered to the
chief internal auditor.
Number of Meetings
Name of Nominating Committee Member
Held
Tan Sri Dato’Hj Omar B. Ibrahim (Chairman)
2
2
Mr. Jonathan Christian Larsen
2
2
Mr Sanjeev Nanavati
2
2
Dato’ Siow Kim Lun
2
2
Ms. Agnes Liew Yun Chong
2
2
2
2
Dato’ Syed Sidi Idid B. Syed Abdullah Idid
(Deceased on 2 February 20 12 )
g. Leverage on the Bank’s performance management and
talent inventory development process in overseeing the
performance evaluation of the internal auditors.
h. Review with the external auditors, the scope of their
audit plan, internal accounting controls, audit reports,
assistance given by the management and its staff to the
auditors as well as their findings and recommended
action(s) to be taken. Select and recommend external
auditors for appointment by the Board annually.
i.
Discuss problems and reservations arising from the
interim and final external audits, including any matters the
external auditors may wish to deliberate (in the absence of
management, where necessary).
j.
Review external auditor’s letter to management and the
latter’s response to the same.
k. Review related party transactions and identify any
potential conflict of interest situation(s) that may arise
within the Bank including any transactions, procedure or
course of conduct which questions the integrity of the
management.
l.
Review resignation letters from the external auditors of
Citibank Berhad.
m. Select external auditors to be appointed by the Board,
unless otherwise advised (such as not suitable for
re-appointment supported by valid justifications/grounds).
n. Review any external expert’s terms and scope of
engagement, working arrangement with the internal
auditors and reporting requirements to ensure these are
clearly established.
o. Leverage on the oversight provided by Regional
Compliance Control or engage any external party to
perform assessment on the continuing effectiveness of
the internal audit function
Nominating Committee
Composition and Frequency of Meetings
The Nominating Committee was established in 2006.
The attendance record for each Nominating Committee
member for the financial year ended 31 December 2011 is as
shown below:
Attended
The constitution of the Nominating Committee comprises four
non-executive directors and one executive director.
Terms of Reference
The Board has approved the terms of reference for the
Nominating Committee.
The main objective of the Nominating Committee is to provide
a formal and transparent procedure for the appointment of
directors as well as assessing the effectiveness of individual
directors, the Board as a whole and also the performance of
the CEO along with other key senior management staff.
The Nominating Committee’s main responsibilities are as
follows:
a. Review and assess the adequacy of the Bank’s Code of
Conduct and other internal policies and guidelines and
monitor that the principles described therein are being
incorporated into the Bank’s culture and business practices.
b. Establish minimum requirements for the Board, i.e.
required mix of skills, experience, qualification and other
core competencies required of a director. The Committee is
also responsible for establishing minimum requirements
for the CEO. The requirements and criteria should be
approved by the full Board.
c. Review the appropriateness of the size of the Board
relative to its various responsibilities. Review the overall
composition of the Board, taking into consideration factors
such as business experience and specific areas of expertise
of each Board member and make recommendations to the
Board as necessary.
d. Review and assess that the directors do not have any
directorship(s) which could potentially result in conflict of
interest(s).
e. Recommend to the Board the number of committees
required, identify their respective responsibilities, propose
a suitable Chairperson as well as suggest ordinary
members for the different committees. This includes
advising the Board on committee member appointments
and removal of such members from the relevant
committees or from the Board, rotation of the committee
members and Chairperson as well as proposals on
individual committee structures and operations.
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f.
g.
Assist the Board in developing criteria to identify and
select qualified individuals who may be nominated for
election to the Board, which shall reflect, at a minimum, all
applicable laws, rules and governing regulations. This
includes assessing directors for re-appointment before an
application for approval is submitted to BNM. The actual
decision as to who shall be nominated should be the
responsibility of the full Board.
Recommend to the Board qualified individuals to become
members of the Board.
h. Review and recommend periodically to the Board, the
compensation structure for non-executive directors.
i.
j.
Recommend to the Board the removal of a director/CEO
from the Board/Management, if the director/CEO is
ineffective, errant and negligent in discharging his
responsibilities.
Assess annually the effectiveness of the Board as a whole
in meeting its responsibilities and the contribution of each
director to the effectiveness of the Board, contribution of
the Board’s various committees and the performance of
the CEO.
k. Report annually to the Board with an assessment of the
Board’s performance and such assessment is conducted
based on an objective performance criteria. Such
performance criteria to be approved by the full Board.
l.
Leveraging on the Bank’s Performance Management and
Talent Inventory development process in overseeing the
appointment, management succession planning and
performance evaluation of key senior management staff,
except that (as recommended by Bank Negara Malaysia)
the Committee shall play an active role in reviewing and
recommending the nominees for the position of Chief
Executive Officer, Chief Financial Officer and Chief Risk
Officer.
m. Assess annually to ensure the directors and key senior
management staff are not disqualified under section 56 of
the Banking and Financial Institution Act 1989 (BAFIA).
n. Plan and ensure all directors receive appropriate and
continuous training program in order to keep abreast with
the latest developments in the industry.
o. Conduct an annual review of the Committee’s performance
and report the results to the Board periodically, assess the
adequacy of its charter and recommend changes to the
Board as needed.
p. Report regularly to the Board on the Committee’s activities.
q. Perform any other duties and responsibilities expressly
delegated to the Committee by the Board from time to time.
Risk Management Committee
Composition and Frequency of Meetings
The Risk Management Committee was established in 2006.
The attendance record for each Risk Management Committee
member for the financial year ended 31 December 2011 is as
shown below:
Number of Meetings
Name of Risk Management Committee Member
Held
Attended
Dato’ Siow Kim Lun (Chairman)
4
4
Tan Sri Dato’Hj Omar B. Ibrahim
4
4
Ms. Agnes Liew Yun Chong
4
3
3*
3
4
3
Mr. Terence Kent Cuddyre
(Appointed as Audit Committee member
on 1 March 20 11)
Dato’ Syed Sidi Idid B. Syed Abdullah Idid
(Deceased on 2 February 20 12 )
* Reflects the number of meetings held during the time the Director held office
All the Risk Management Committee
non-executive directors of the Bank.
members
are
Terms of Reference
The Board has approved the terms of reference for the Risk
Management Committee.
The main objective of the Risk Management Committee is to
oversee the senior management’s activities in managing
credit, market, liquidity, operational, legal and other risk(s)
while ensuring proper risk management process is properly in
place and functioning well.
The Risk Management Committee’s main responsibilities are as
follows:
a. Ratify the adoption of Citi risk management strategies,
policies, and risk tolerance; and recommend the same for
the Board’s approval.
b. Discuss with Management the Bank’s major credit, market,
liquidity and operational risk exposures and steps that the
Management has taken to monitor and control such
exposures, including the Bank’s risk assessment and risk
management policies.
c. Assess the adequacy of risk management policies and
framework in identifying, measuring, monitoring and
controlling risks and the extent to which these are
operating effectively.
d. Ensure appropriate infrastructure, resources and systems
are in place for actual risk management implementation,
i.e. ensure staff responsible for implementing the risk
management system perform their duties independently
of the Bank’s risk taking activities.
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e. Periodically review management reports on risk exposure,
risk portfolio, composition and other risk management
activities.
f.
Review periodically with management, including
independent Risk Officer, Head of Compliance and Legal
Counsel, any correspondence(s) with or action by,
regulators or governmental agencies, any material legal
affairs of the Bank and the Bank’s compliance with
applicable laws and regulations.
g. Report regularly to the Board on the Committee’s activities.
h. Review annually and report to the Board on its own
performance.
i.
Review and assess the adequacy of its charter annually and
recommend any proposed changes to the Board for
approval.
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Please refer to Pillar 3 disclosure.
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Statement of Internal Audit and Internal Control
Citibank Berhad's Board of Directors is responsible to
establish and maintain adequate internal control over
financial reporting standards and related issues.
The Bank's internal control system is designed to provide
reasonable assurance to the company's management and
Board of Directors regarding the preparation and fair
presentation of published financial statements in
accordance with the provisions under the Companies Act
1965 and other applicable approved standards in Malaysia.
Liability Committee, Country Legal and Compliance Committee
and Management Committee as part of its monitoring function
to ensure effective management and supervision of the areas
under the respective Committee's purview.
Citibank Berhad has also adopted the Citi Code of Conduct
which expresses the values that each employee is expected
to appreciate and apply in their respective working life.
All internal control systems no matter how well designed
and implemented have inherent limitations.
Ethics hotlines are made available to employees who wish to
voice concerns about suspected violations of law or industry
regulation as well as actions that may fail to live up to the
Bank's high standards of ethical conduct.
In view of the limitations, therefore, even the best of systems
determined to be effective can only provide a reasonable
assurance in relation to the preparation and presentation of
financial statements.
The Bank has an internal policy prohibiting retaliatory actions
against any individual for raising legitimate concerns or
questions regarding ethical matters, or for reporting suspected
violations.
A comprehensive system of controls is maintained to ensure
that all transactions are executed in accordance with the
management's authorization, assets are safeguarded and
that the financial records are reliable.
The management also takes relevant steps to see that
information and communication flows are effective and
monitor the performance of internal control procedures.
Citibank Berhad's risk management policies, procedures and
practices set out the foundation to the risk architecture
governing its business activities.
The management conducts business monitoring initiatives
and periodic self-assessment in accordance with the Risk
and Control Self-Assessment/Operational Risk policy for all
applicable businesses.
Control system weaknesses resulting in corrective actions
will be documented and escalated to the management for
tracking purposes.
Citibank Berhad's Internal Audit reports to the Audit
Committee. It performs regular reviews of the business
processes to assess the effectiveness of the control
environment and highlights significant risks affecting the
company.
The scope of the audit activities are reviewed and endorsed
by the Audit Committee while audits are carried out on a
risk-based approach, to provide an independent and
objective report on operational and management activities.
The Audit Committee regularly reviews and deliberates with
management on the actions taken on internal control issues
identified in reports prepared by Internal Audit, the external
auditors, regulatory authorities and the management
themselves.
The management of Citibank Berhad has also set up a Country
Coordinating Committee, Business Risk Compliance and
Control Committee, Legal Vehicle Committee, Asset and
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Management Reports
The pre-set agenda, management reports and other ad-hoc
proposals or applications are circulated to the Directors
prior to the actual Board meetings.
This enables the Board of Directors to assess the overall
performance of the Bank and make sound management
decisions.
Management reports presented to the Board comprise the
following:
Economic Updates
Business Plans
Year to date Financial Performance Report
Financial performance by major business segments
Quarterly Performance Scorecard
Comparative analysis of banks
Semi-annual BNM Stress Tests Results
Credit Risk Management Report
Liquidity & Market Risk Management Report
Quarterly Derivative Outstanding Report
Minutes of Audit Committee meetings
Minutes of Risk Management Committee meetings
Minutes of Nominating Committee meetings
Minutes of Shariah Committee meetings
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Shariah Committee
Citibank Berhad's Shariah Committee is responsible for the
provision of Shariah oversight in relation to Citibank Berhad’s
Islamic Banking business operations and activities.
Al-Hadith, capital adequacy standard for Islamic Banks, and the
workings of monetary policy in a dual banking system.
He holds a Ph.D from the University of Southampton, England.
For the year 20 11, the Shariah Committee met nine times.
Additionally, individual Shariah Committee members participated
in various business discussions where Shariah advice was
required prior to full submission to the Shariah Committee.
Professor Dr. Norhashimah Mohd Yasin
During the year, the Shariah Committee was expanded to 5
members in order to comply with the requirement of Bank
Negara Malaysia’s new Shariah Governance Framework for
Islamic Financial Institutions. The Shariah Committee also
approved a new Shariah Control Manual in order to incorporate
additional requirements of the new framework for Shariah
governance.
She regularly lectures, researches and presents papers at local
and international seminars and conferences on the areas of
Islamic Banking, Islamic insurance (Takaful), money laundering
and terrorism financing.
With regards to Shariah compliance review, Citibank Berhad’s
Islamic Banking Division was subjected to a full Shariah audit
conducted jointly by Citibank Berhad’s Country Compliance
and Control unit together with the Citi’s Global Islamic Control
unit. The Shariah Committee reviewed the findings of the
Shariah audit and was satisfied with the report and its
findings. No major compliance issues were identified.
Citibank Berhad’s Shariah Committee effective from 1 June
20 1 1 included the following distinguished members:
Dr. Norhashimah Mohd Yasin is a Professor of Comparative
Banking Law at the Civil Law department, Ahmad Ibrahim
Kulliyah of Law, International Islamic University of Malaysia.
She has published articles in national and international
journals. Her articles on Islamic Banking have also appeared in
a book edited by Dato’ Syed Idid called Judicial Decisions
Affecting Bankers and Financiers (published by the Malayan Law
Journal). She is the author of two books, Legal Aspects of Money
Laundering from the Common Law Perspective (published in
2007 by LexisNexis) and Islamisation/Malaynisation: The Role of
Islamic Law in the Economic Development of Malaysia (published
in 1996 by A.S. Noordeen). She is a contributing editor of the
Annotated Statute on Anti-Money Laundering and Anti-Terrorism
Financing Act 2001 and the Takaful Act 1984.
Professor Dr. Abdul Ghafar Ismail/Chairman
Dr. Abd Ghafar Ismail has been a Professor in the Banking and
Finance faculty of Universiti Kebangsaan Malaysia (UKM) since
2003. He is currently the Head of the Research Center for
Islamic Economics and Finance and AmBank Group Resident
Fellow for Perdana Leadership Foundation.
A lecturer since 1987, he has vast experience in teaching
Islamic economics courses such as Islamic banking; risk
management in Islamic banking; financial economics; advanced
macroeconomics; money, Zakat and real economy; money and
capital market in Islam; Islamic economic system; Islamic
economic analysis; and deposits and the financing operations
of Islamic banking institutions.
His work has been extensively published in several referred
journals, among others, Review of Islamic Economics, Journal
of Islamic Economics, Banking and Finance, Humanomics,
“International Journal of Islamic and Middle Eastern Finance
and Management”, “Journal of Financial Services Marketing”,
“International Research Journal of Finance and Economics” and
“Qualitative Research in Financial Markets”. His most recent book
is Money, Islamic Banks and Real Economy, published by Cengage
Learning.
His papers have been presented in many international and
local conferences including the International Seminar on
Islamic Economics and Finance, IRTI International Conference
and Malaysia Finance Association Conference.
Professor Dr. Abdul Ghafar Ismail’s research interests include
the learning process and growth theory, inter-temporal
allocation of resources, learning economics from Al-Quran and
She is a member of the Advocates and Solicitors Disciplinary
Board and also sits on the Board of Trustees for Yayasan
Asnita, a Non Governmental Organisation. She also conducts
training for Bank Negara Malaysia, Labuan Financial Services
Authority, commercial banks, developing financial institutions,
insurance companies and legal firms in Malaysia and Brunei
Darussalam.
Professor Dr. Norhashimah holds a Ph.D in Law from the
University of Warwick, England, and is a qualified Advocate and
Solicitor of the High Court of Malaysia. She is also a certified
legal translator.
Associate Professor Dr. Shofian bin Ahmad
Dr. Shofian bin Ahmad is currently an Associate Professor with
the Shariah Department at Universiti Kebangsaan Malaysia
(UKM) where he specialises in Islamic transactions (Muamalat)
and the Islamic economy. He is the Head of the Department of
Shariah at the Faculty of Islamic Studies and has served in
various administrative positions at the faculty since 1994.
He supervises Ph.D. and Masters candidates at UKM and
conducts doctoral and Masters level thesis assessments. He is
also actively involved in research and is a Research Fellow at
UKM’s Institut Kajian Rantau Asia Barat. He is also extensively
involved in publications as an article assessor for several
academic journals.
Associate Professor Dr. Shofian holds a Ph.D in Shariah and
Law from the University of Malaya, Kuala Lumpur.
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Mat Noor Mat Zain
Mat Noor Mat Zain is a member of the Citibank Berhad’s
Shariah Committee where he has contributed his specialist
knowledge of Fiqh Muamalah, Islamic contract law and Islamic
family law and extensive research experience in the area of
Islamic finance since May 2011. He is also a consultant for the
Pakarunding initiative at Universiti Kebangsaan Malaysia
(UKM) and an expert consultant for the Malaysian
Government’s JAWHAR programmes related to the provision
of Fidyah and Kafarah manuals.
He has presented numerous papers related to Islamic
Banking and finance at both domestic and international
levels and has been appointed consulting editor for The
Journal Of Muamalat And Islamic Finance Research published
by the Islamic Science University of Malaysia.
In addition to his consulting and editorial work, he is a lecturer
at the Department of Shariah at UKM’s Faculty of Islamic
Studies. He teaches several courses related to Muamalah and
Islamic jurisprudence including “Fiqh Muamalat”, “Islamic
Finance”, and “The Principles of Islamic Jurisprudence”.
He has a Bachelor’s degree in Shariah Studies from the Islamic
University of Medina, Saudi Arabia as well as a Masters in
Islamic Studies (specialising in Muamalat) from the Faculty of
Islamic Studies at UKM. He is currently pursuing his studies in
the field of Islamic Contracts and is researching topics
including “Instruments of Islamic Hedging” and “Terms and
Conditions in Standard Form Contracts”.
Nik Abdul Rahim bin Nik Abdul Ghani
Nik Abdul Rahim Nik Abdul Ghani is a lecturer and former tutor
at Universiti Kebangsaan Malaysia (UKM)’s Department of
Shariah at the Faculty of Islamic Studies. He is an expert
consultant and speaker for the UKM’s Centre for Islam and
UKM’s Islamic law-related training programmes. He is also a
member of the committee of Klinik Hukum Syarak and Guaman
Syarie, Department of Shariah.
He is a member of the Research Center for Islamic Economics
and Finance and has written in-depth research papers and
articles on Shariah issues arising in Islamic Banking and
finance. He is a published author featured in national and
international journals, seminar proceedings and books. His
most recent article, “Maslahah as a Source of Islamic
Transactions (Muamalat)” has been recently published in
UKM’s Journal of Islamiyyat. He has written books on Islamic
teaching and motivation and is a regular columnist for the
popular magazine “SOLUSI” by Telaga Biru for which he writes
the “Maqasid Syariah” (Objectives of Islamic Law) column.
Apart from teaching, research and writing, he is actively
involved in religious and academic activities, especially those
related to economics and Islamic law, He participates in
seminars and discussions conducted by Government agencies
and Non Governmental Organisations (NGOs), gives religious
speeches in the state of Selangor and appears on religious
television programmes by major Malaysian broadcast
networks including RTM, Media Prima and ASTRO. He is also a
regular speaker for “Renungan”, a religious programme that
airs on THR Gegar radio.
Fluent in Arabic, Nik Abdul Rahim bin Nik Abdul Ghani holds a
Masters Degree in Shariah from UKM and a B.A (Hons) in
Shariah from the Islamic University of Medina, Saudi Arabia. He
is currently a doctoral candidate in the field of Islamic Finance
at INCEIF.
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Ratings Statement
RAM Rating Services Berhad (RAM) has, on 13 February
20 1 2, reaffirmed Citibank Berhad’s respective long and
short term financial institution ratings of AAA and P1 with
an outlook on the long term ratings remaining stable.
Citibank Berhad’s ratings are premised on its entrenched
market position in the consumer banking arena, strong
funding and liquidity profile, sturdy profitability, and
healthy capitalization.
Bank Rating Symbols and Definitions:
AAA
A financial institution rated AAA has a superior
capacity to meet its financial obligations. This is the
highest long-term FIR assigned by RAM Ratings.
P1
A financial institution rated P1 has a strong capacity
to meet its short-term financial obligations. This is
the highest short-term FIR assigned by RAM
Ratings.
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Awa r d s a n d Ac c o l a d e s
The following is a list of accolades received by the Bank throughout 20 1 1 :
Banking & Payments Asia Trailblazer Awards 2011
Product Excellence Awards (Citibank Premier Miles Credit Card)
Trade Finance
Best International Trade Bank in Malaysia (Highly Commended)
Readers’ Digest
Readers’ Digest Trusted Brands Award (Cards)
Visa Malaysia Bank Awards 2011
Largest
Largest
Highest
Highest
Payment Volume – Visa Consumer Credit
Payment Volume – Visa Platinum
Purchase Volume Growth – Visa Platinum
Purchase Volume Growth – Visa Super Premium
Asiamoney Cash Management Poll
Best Foreign Cash Management Bank for Small Corporates
Best Foreign Cash Management Bank for Medium Corporates
Best Foreign Cash Management Bank for Large Corporates
Asiamoney FX Poll
Best
Best
Best
Best
for Overall FX Services
for Innovative FX Products & Structured Ideas
FX Prime Broking Services
Single-Bank Electronic Trading Platform
Contact Centre Association of Malaysia & Frost & Sullivan
Best People Contact Centre (Gold Award)
Best Contact Centre Professional (CPO Aria Putera Kamal)
Best In-House Inbound Contact Centre above 100 seats (Silver Award)
Euromoney Trade Finance Survey
Best Domestic Trade Finance Provider (Malaysia)
20 1 1 Global Custodian Agent Banks in Emerging Markets Survey
Top Rated in all 3 client segments (Leading, Cross-Border/Non-Affiliated and Domestic)
Islamic Finance News Award 2011
Malaysia Deal of The Year- Wakalah Global Sukuk
Sovereign Deal of The Year-Wakalah Global Sukuk
IFR Asia
Islamic Deal of The Year Award 2011
Finance Asia
Finance Asia’s Best Islamic Financing Award 2011
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Corporate Citizenship at Citi
Managing money and using financial services can be complex and confusing for the average person because people have
different financial priorities at different stages of their lives. Nevertheless, financial planning is essential for people who wish to
remain financially stable and to build their assets.
As a long-established advocate and practitioner of financial capability programmes, Citibank Berhad’s priorities balance the
interests of our stakeholders with the risks and opportunities that affect our business. We continually engage with our
stakeholders to keep abreast with their changing needs while keeping a constant watch on local and global economic conditions
and concerns. We also collaborate with local partners to design relevant, timely and actionable programmes that offer support
and accountability for consumers working towards their financial goals.
In 2011, Citibank Malaysia received a philanthropic investment of US$210,000 from Citi Foundation to continue our efforts to
provide free financial education for Malaysians. Our financial education programmes enable Malaysians to make the right
financial decisions and develop effective financial habits to maintain and improve their standard of living and the future of their
families in the face of rising costs of living.
Stretching Your Ringgit (Season 3)
In 2009, Citi launched our flagship financial education
programme, ‘Stretching Your Ringgit’ in collaboration with ERA
Consumer Malaysia, “Stretching Your Ringgit is a series of
financial infomercials aired on national TV and radio stations
which is now in its fourth season.
2011 saw the third season of ‘Stretching Your Ringgit’ focusing
on strengthening consumer financial literacy in line with the
current global and national economic realities of rising costs of
living in relation to stagnated incomes. It covered the basics of
smart money management which audiences of previous years
identified as priorities.
A series of financial infomercials was aired on ASTRO
television stations. Topics included Making do in-between
Paychecks, Household Budgeting, Other
Ways to Earn and
Retirement Planning.
These episodes were
aired for a total of
122 times across
eight major channels
from August to the
end of October to
coincide with two
festivals - Ramadhan
leading up to Hari
Raya and Deepavali. The radio infomercials covering Educating
Children About Money, Keeping Credit in Check and Making
Your Financial Plan were also broadcasted for a total of 164
times on three ASTRO radio channels. In total, ‘Stretching Your
Ringgit’ reached nearly 24 million Malaysians in 2011.
A pre and post evaluation survey was conducted. On average, the
survey showed an increase of 27.3% in participants’ recognition
of the importance of, intent to take action, or positive
behavioural change related to the 4 financial topics. Focus group
discussions were conducted in several states in Peninsular
Malaysia and participants agreed on the importance of financial
education and improving their financial knowledge. The issues
varied according to demographic groups. For housewives, their
priority was inculcating financial literacy in their children. Young
workers, on the other hand, worry about the increase in debt and
have admitted to spending beyond their means.
This year’s programme also expanded beyond the media
campaign to include two additional components aimed at
reaching the younger generation. One component was the
pilot run of the “My First Ringgit” workshops which provided
financial education classes for 598 kindergarten children.
After the workshops, the kindergarten teachers facilitated
conversations with parents to gauge improvements in their
children’s financial behaviour. The post survey showed a
40.5% increase in children's ability to demonstrate basic
financial knowledge. 31% of parents also reported an example
of their children's improved financial behaviour such as the
willingness to start saving.
The second component was aimed at young workers. ERA
conducted a baseline survey targeted at 1,002 young working
adults to gain insight into the current status of financial literacy
and behaviour which may lead them into bankruptcy. The
survey results enabled stakeholders to identify opportunities
and develop financial literacy programmes targeted at this
segment. These programmes will be implemented in 2012.
The survey data showed that many young workers were making
choices that led them into financial problems. Some of the key
findings from the survey indicated that 30 % of the respondents
did not save regularly, 70 % of the respondents could only
sustain for 4 months with their savings if they had to stop
working, 37% never thought of retirement, more than 50 % of
the respondents are not familiar with Credit Counselling and
Debt Management Agency (AKPK), Central Bank’s website, and
the Financial Mediation Bureau, 47% of the respondents can be
considered as in serious debt and only 1 1 % of the respondents
acquired financial knowledge from the education system.
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Corporate Citizenship at Citi
Citi Stock Challenge
The Citi Stock Challenge programme is designed to introduce
high school students in Malaysia to stock market
fundamentals and to increase their financial literacy and
investment knowledge. Every year, the Citi Stock Challenge
provides hundreds of 16-year-old students with a golden
opportunity to role-play as stockbrokers after learning the
fundamentals of trading, market trends, and taking positions
on counters. Teams of students form ‘brokerage houses’ which
use RM1,000 in ‘seed money’ to trade in a simulated stock
market comprising 20 stocks in the energy, manufacturing,
trade, communications and hospitality sectors.
Sekolah Menengah Kebangsaan Pusat Bandar Puchong from
Kuala Lumpur, and Chung Ling High School and Sekolah
Menengah Jenis Kebangsaan Convent Datuk Keramat from
Penang emerged as the winners of the annual Citi Stock
Challenge 2011. The three winning teams out-invested 33
schools and 540 students who participated in this year’s
six-day programme held in Kuala Lumpur and Penang.
70% of the 250 students surveyed through the pre and post
surveys demonstrated a significant increase in skills and
knowledge on how a company operates and provides shares
for public purchase, how stock prices change, the impact of
news events and business trends on stock prices and the
ability to analyse and interpret information when making
investment decisions.
Since the launch of Citi Stock Challenge in 2004, over 2,000
students from all over Malaysia have taken part in this
challenge. The programme partner was Learning Society, a
local non-profit organisation that promotes active learning.
We would also like to thank American Chamber of Commerce
for assisting us in the enrolment of the schools under their
Young Enterprise programme.
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Corporate Citizenship at Citi
The Habitat for Humanity Family Financial Education Programme
Habitat for Humanity Malaysia (HFH Malaysia) has been developing their Family Financial Education programme in partnership with
Citi Foundation since 2010. This programme is designed to equip low-income Malaysian families with practical financial knowledge to
help improve their home finances.
The goal of HFH Malaysia’s programme is to inculcate two distinct financial capabilities in their target demographic. The first is the
ability create and utilise a family and home improvement budget. The second is the ability to plan, save and use credit responsibly.
Results from the impact assessment should see a 70% increase in the number of families utilising a family budget and demonstrating
a commitment to saving part of their income.
To achieve this goal, HFH Malaysia is leveraging on Citi Foundation’s expertise and guidance to develop a core financial curriculum that
is tailor-made for the low-income Malaysian family. HFH Malaysia will then deliver this financial education curriculum to beneficiaries
in partner communities.
HFH Malaysia aims to roll out the Family Financial Education programme to their targeted households by the end of 2012. At present,
a needs-based assessment is being conducted. A pilot test for a total of 50 families seeking housing improvement in the Klang Valley
is also currently underway.
Global Community Day
More than 500 Citi Volunteers went out on streets to feed over 800 homeless citizens around the country in conjunction with Global
Community Day on October 21, 2011. In their effort of feeding the poor, our Citi Volunteers together with our community partner
Pertiwi collected donations for used clothes to be distributed to the homeless. They were fed hot meals, drinks, snacks and even
provided with toiletries and medicine.
Despite the heavy downpour of rain, it was a real eye-opener for the Citi Volunteers as they made way to reach out to the elderly, drug
users and even children.
Citi Volunteers from Penang branch partnered with KAWAN that was set up as a drop in center in 2007 to address the pressing needs
of the homeless street based community.
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Va l u i n g O u r P e o p l e
Best in Talent, Culture of Innovation, Attractive Rewards,
Unparalleled Opportunities and Leading Edge Training – these
are the five distinct advantages of “The Citibanker Difference”
that have made Citi the Employer of Choice for the best and
the brightest. Throughout 2011, we continued our focus on
delivering “The Citibanker Difference” for our employees.
tailored to the needs of our people. This strategy saw employee
turnover in our Cards division decrease in 20 1 1 as a result of
an enhanced focus on employee value proposition, hiring,
on-boarding and development. 20 1 1 was also the first year
non-sales employees at levels G1 3, Q and R levels received
bonuses through the newly implemented Success Sharing plan.
Now in its third year, the Leadership Enhancement &
Accelerated Development (L.E.A.D) programme provided
accelerated career development opportunities for 169
top-of-class employees across the board whose performance
ranks in the 95th percentile. We help these star performers
reach their fullest potential by providing unfettered access to
mentors, cutting-edge training and development, networking
opportunities, cross-functional/cross-business team challenges
and personalised guidance from management.
At Citi, our key strengths are our global reach and diversity of
businesses. Citibankers have unparalleled opportunities to
hone their skills and talents within diverse international
settings, making them some of the most versatile and
well-rounded professionals in the world. To date, over 500
Malaysian Citibankers have pursued (or are currently pursuing)
their careers overseas in various businesses and functions
within the Citi world.
Our Management Associate (MA) and Graduate Executive
(GE) programmes, which are designed to build general
management and functional leadership pipelines, continue
to attract the best talent in the market. This is due to their
distinctive edge in ensuring that high potential hires have
access to the best-in-class learning opportunities and
development. In 20 11, we hired 14 Management Associates
and 27 Graduate Executives. The Graduate Executives joined
Citibank divisions as diverse as Cards, Customer Experience &
Quality, Finance, Marketing, Operations & Technology, Retail
Banking and Risk Management.
As a genuine meritocracy, our reward and recognition structure
is competitive, transparent, tied to quality of performance and
In 2011, there were approximately 150 internal employee moves
under Citi’s 2+3 policy. Of these moves, one Malaysian
Citibanker was placed in Thailand for 6 months in the Mortgage
division; Another moved to The Philippines for 6 months to
train under the Risk Management division. We also successfully
placed two candidates in Operations & Technology’s Leadership
Development Program in Dalian, China for their first-year
assignment, followed by a move to Singapore for their second
assignment. At present, overseas assignments are ongoing for
eXcel, Fast-Trax and Tiger programme candidates in Hong Kong
and Singapore.
Investing in learning has always been the cornerstone of Citi’s
approach to talent development. Citi’s consistent approach to
training and development across the company ensures that we
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have a unified culture and set of standards that transcend
business and product lines. Our developmental framework is
driven by 3 core strategies:
i.
ii.
On-the-Job experiences (70% of learning occurs by doing);
Learning from others (20% learning occurs through
relationships/exposure); and
iii. Training programs (10% of learning occurs through formal
education)
Citibankers are also encouraged to identify areas for their
personal career development through a structured Individual
Development Planning (IDP) process. Citi also holds career
events such as Career Week which provide information to
Citibankers to help them to make informed decisions about
their career with us. Citibankers are then furnished with
customised training and opportunities in line with their
professional needs under Citi’s human resource development
framework. In 2011, Citi’s Human Resource department
facilitated 102 training programmes totalling 23,448 training
hours for 1,328 employees. This is over and above the
mandatory functional and technical training that we already
provide for all employees.
Apart from formal professional development, Citi culture is
about working hard and playing hard. Throughout the year, a
committee of dedicated Citibankers, many of whom are
“Voice of Employee” (VOE) champions, organise employee
engagement activities that strengthen the spirit of camaraderie
amongst Citibankers. The popularity of the VOE programme of
events is seen as VOE event attendance and involvement
improved across the franchise from 77% to 79%.
The 2011 events organised by the VOE were balanced between
charitable efforts and social events. Charity projects included
The Chariton initiative raised RM25,000 for Down Syndrome
kids and Citi’s Breast Cancer Awareness Week raised more than
RM10,000 for PRIDE, a NGO campaigning against breast
cancer. Social events where Citibankers had the opportunity to
show our care and support for each other in a relaxed and fun
environment included Staff Appreciation Week, the Sports
Carnival and the Treasure Hunt.
At Citi, we do not simply settle for the best. We aim to make the
best better.
FINANCIAL STATEMENT
CONTENTS
32
Directors’ Report
35
Statement by Directors
36
Statutory Declaration
37
Shariah Committee‘s Report
38
Independent Auditors’ Report
39
Statements of Financial Position
40
Statements of Comprehensive Income
41
Statements of Changes in Equity
42
Statements of Cash Flows
44
Notes to the Financial Statements
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Directors’ Report
for the year ended 31 December 2011
The Directors have pleasure in submitting their report and
the audited financial statements of the Group and the Bank
for the year ended 31 December 2011.
Principal activities
The Bank is principally engaged in banking and related
financial services that also include Islamic Banking business
whilst the principal activities of the subsidiaries are stated
in Note 12 to the financial statements. There has been no
significant change in the nature of these activities during
the financial year.
Results
Group and Bank
RM’000
Profit before taxation
Taxation
Profit after taxation
855,193
(165,330)
689,863
Current assets
Before the financial statements of the Group and the Bank
were made out, the Directors took reasonable steps to
ascertain that the value of any current assets, other than
debts and financing, which were unlikely to be realised in the
ordinary course of business, as shown in the accounting
records of the Group and the Bank, have been written down
to an amount which they might be expected 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 would render
adherence to the existing methods of valuation of assets or
liabilities in the financial statements of the Group and the
Bank misleading or inappropriate.
Contingent and other liabilities
Reserves and provisions
There were no material transfers to or from reserves and
provisions during the year under review except as disclosed
in the financial statements.
Dividends
Since the end of the previous financial year, the Bank paid a
final ordinary dividend of 329 sen per ordinary share less
tax at 25% totaling RM300 million (247 sen net per ordinary
share) in respect of the year ended 31 December 2010 on 28
June 20 11.
The final ordinary dividend recommended by the Directors
in respect of the year ended 31 December 2011 is 329 sen
per ordinary share less tax at 25% totaling RM300 million
(247 sen net per ordinary share).
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 actions had been taken in relation to the
writing off of bad debts and financing and the making of
provisions for impaired loans and financing, and satisfied
themselves that all known bad debts and financing had been
written off and adequate provisions made for impaired
loans, advances 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 provision
for impaired loans, advances and financing, in the financial
statements of the Group and the Bank inadequate to any
substantial extent.
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 and
which secures the liabilities of any other person, or
(b)
any contingent liabilities in respect of the Group or of
the Bank that has arisen since the end of the financial
year other than in the ordinary course of business.
No contingent or other liability of the Group and the Bank
have become enforceable, or is likely to become enforceable
within the period of twelve months after the end of the
financial year which, in the opinion of the Directors, will or
may substantially affect the ability of the Group and the
Bank to meet their obligations as and when they fall due.
Change of circumstances
At the date of this report, the Directors are not aware of any
circumstances, not otherwise dealt with in this report or the
financial statements of the Group and 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 for
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 and the Bank for the
current financial year in which this report is made.
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Directors’ Report
for the year ended 31 December 201 1
Compliance with Bank Negara Malaysia’s
expectations on financial reporting
Directors of the Bank
Directors who served since the date of the last report are:
In the preparation of the financial statements, the Directors
have taken reasonable steps to ensure that Bank Negara
Malaysia’s expectations on financial reporting have been
complied with, including those as set out in the Guidelines
on Financial Reporting for Financial Institutions and the
Guidelines on Classification and Impairment Provisions for
Loans/Financing.
•
•
•
•
•
•
•
Jonathan Christian Larsen
Sanjeev Nanavati
Tan Sri Dato’ Hj. Omar Bin Ibrahim
Dato’ Siow Kim Lun @ Siow Kim Lin
Agnes Liew Yun Chong
Terence Kent Cuddyre
Dato’ Syed Sidi Idid Bin Syed Abdullah Idid
(Deceased on 2 February 20 1 2 )
Directors’ interests in shares
The interests in the ordinary shares and options over shares of the Bank and of its related corporations of those who were
Directors at year end as recorded in the Register of Directors’ Shareholdings are as follows:
Number of ordinary shares of USD1 each
At
At
1 .1 . 20 1 1 *
Bought
Sold
31.12.2011
Shares in Citigroup Inc.
Direct interests
Sanjeev Nanavati
Jonathan Christian Larsen
Dato’ Siow Kim Lun @ Siow Kim Lin
Agnes Liew Yun Chong
Terence Kent Cuddyre
13,664
23,172 **
900
8,576
1,786 **
Deemed interests
Jonathan Christian Larsen
38,792
8,561
17,516
1,536
199
6,730
29
22,225
33,958
900
10,112
1,956
6,730
-
45,522
Number of ordinary shares of USD1 each
At
1.1.2011*
Granted
Vested
At
31.12.2011
4,376
5,644
193
6,972
9,833
1,007
(8,561)
(1,536)
114
2,787
13,941
1,086
Capital Accumulation Program/
Supplementary CAP/SEA in Citigroup Inc.
Sanjeev Nanavati
Agnes Liew Yun Chong
Terence Kent Cuddyre
Number of options over ordinary shares
of USD1 each
At
1.1.2011/
date of
appointment*
Granted
Forfeited
At
31.12.2011
-
268
(295)
797
6,727
41,082
3,879
2,281
Stock Option Plan in Citigroup Inc.
Sanjeev Nanavati
Jonathan Christian Larsen
Agnes Liew Yun Chong
Terence Kent Cuddyre
6,995
41,082
4,174
3,078
None of the other Directors holding office at 31 December 20 1 1 had any interest in the ordinary shares and options over
shares of the Bank and of its related corporations during the financial year.
* Reverse stock split in May 2011, share numbers divided by 1 0.
** Opening balance has been restated
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Directors’ Report
for the year ended 31 December 2011
Directors’ benefits
Since the end of the previous financial year, no Director of the Bank has received nor become entitled to receive any benefit
(other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in
the financial statements or the fixed salary of a full time employee of the Bank) by reason of a contract made by the Bank or a
related company with the Director or with a firm of which the Director is a member, or with a company in which the Director has
a substantial financial interest.
There were no arrangements during and at the end of the financial year which had the object of enabling Directors of the Bank
to acquire benefits by means of the acquisition of shares in or debentures of the Bank or any other body corporate apart from
the Directors above who were granted options to subscribe for shares in the ultimate holding company under various stock
incentive and purchase schemes where the price and terms are as determined by the said schemes.
Issue of shares and debentures
There were no changes in the issued and paid-up capital of the Bank during the financial year.
There were no debentures issued during the financial year.
Options granted over unissued shares
No options were granted to any person to take up unissued shares of the Bank during the financial year.
Auditors
The auditors, Messrs KPMG, have indicated their willingness to accept re-appointment.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Sanjeev Nanavati
Tan Sri Dato’ Hj. Omar Bin Ibrahim
Kuala Lumpur
Date: 1 March 2012
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Statement By Directors
pursuant to Section 1 69 ( 1 5 ) of the Companies Act, 1965
In the opinion of the Directors, the financial statements set out on pages 39 to 133 are drawn up in accordance with the
Companies Act, 1965 in Malaysia and Financial Reporting Standards issued by the Malaysian Accounting Standards Board as
modified by Bank Negara Malaysia Guidelines so as to give a true and fair view of the financial position of the Group and the Bank
at 31 December 2011 and of their financial performance and cash flows for the year then ended on that date.
Signed on behalf of the Board of Directors in accordance with a resolution of the Directors:
Sanjeev Nanavati
Tan Sri Dato’ Hj. Omar Bin Ibrahim
Kuala Lumpur
Date: 1 March 2012
035
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Declaration Pursuant
to Section 169 ( 16 ) of the Companies Act, 1965
I, Tang Wan Chee, the officer primarily responsible for the financial management of Citibank Berhad, do solemnly and sincerely
declare that the financial statements set out on pages 39 to 133 are, to the best of my knowledge and belief, correct and I make
this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory
Declarations Act, 1960.
Subscribed and solemnly declared by the above named in Kuala Lumpur on 1 March 2012.
Tang Wan Chee
Before me:
Commissioner for Oaths
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S h a r i a h Co m m i tte e’s Re p o r t
In the name of Allah, the Beneficent, the Merciful
In compliance with the letter of appointment, we are required to submit the following report:
We have reviewed the principles and the contracts relating to the transactions and applications introduced by Citibank Berhad’s
Islamic Banking Division during the year ended 31 December 20 1 1 . We have also conducted our review to form an opinion as to
whether the Citibank Berhad’s Islamic Banking Division has complied with the Shariah principles and with the Shariah rulings
issued by the Shariah Advisory Council of Bank Negara Malaysia, as well as Shariah decisions made by us.
The management of Citibank Berhad’s Islamic Banking Division is responsible for ensuring that the financial institution conducts
its business in accordance with Shariah principles. It is our responsibility to form an independent opinion, based on our review of
the operations of the Citibank Berhad’s Islamic Banking Division, and to report to you.
We have assessed the work carried out by Shariah review and Shariah audit which included examining, on a test basis, each type
of transaction, the relevant documentation and procedures adopted by the Citibank Berhad’s Islamic Banking Division.
We planned and performed our review so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the Citibank Berhad’s Islamic Banking Division has
not violated the Shariah principles.
In our opinion:
1.
the contracts, transactions and dealings entered into by the Citibank Berhad’s Islamic Banking Division during the year
ended 31 December 2011 that we have reviewed are in compliance with the Shariah principles;
2.
the allocation of profit and charging of losses relating to investment accounts conform to the basis that had been approved
by us in accordance with Shariah principles;
We, the members of the Shariah Committee of Citibank Berhad’s Islamic Banking Division, do hereby confirm that the operations
of the Citibank Berhad’s Islamic Banking Division for the year ended 31 December 20 1 1 have been conducted in conformity with
the Shariah principles.
On behalf of the Shariah Committee
Chairman of the Shariah Committee:
Professor Dr. Abdul Ghafar Ismail
Kuala Lumpur
Date: 1 March 2012
037
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Independent Auditors’ Report
to the members of Citibank Berhad
Report on the Financial Statements
We have audited the financial statements of Citibank
Berhad, which comprise the statements of financial position
as at 31 December 20 11 of the Group and the Bank, and the
statements of comprehensive income, statements of
changes in equity and statements of cash flows of the Group
and the Bank for the year then ended, and a summary of
significant accounting policies and other explanatory notes,
as set out on pages 39 to 133.
Directors’ Responsibility for the Financial Statements
The Directors of the Bank are responsible for the
preparation of these financial statements that give a true
and fair view in accordance with the Companies Act, 1965
and Financial Reporting Standards in Malaysia as modified
by Bank Negara Malaysia Guidelines, and for such internal
control as the Directors determine is necessary to enable
the preparation relevant to the preparation of financial
statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in
accordance with approved standards on auditing in
Malaysia. Those standards require that we comply with
ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit
evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on our
judgment, including the assessment of risks of material
misstatement of the financial statements, whether due to
fraud or error. In making those risk assessments, we
consider internal control relevant to the entity’s preparation
of the financial statements that give a true and fair view in
order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control.
An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as
evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Opinion
In our opinion, the financial statements have been properly
drawn up in accordance with the Companies Act, 1965 and
Financial Reporting Standards in Malaysia as modified by
Bank Negara Malaysia Guidelines so as to give a true and fair
view of the financial position of the Group and the Bank as
of 31 December 2011 and of their financial performance and
cash flows for the year then ended.
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 accounts 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 audit reports on the accounts of the subsidiaries
did not contain any qualification or any adverse
comment made under Section 1 74(3) of the Act.
Other Matters
This report is made solely to the members of the Bank, as a
body, in accordance with Section 1 74 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.
KPMG
Firm Number: AF 0758
Chartered Accountants
Petaling Jaya, Malaysia
Date: 1 March 2012
Ahmad Nasri bin Abdul Wahab
Approval Number: 2919/03/12(J)
Chartered Accountant
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Statements Of Financial Position
as at 31 December 2011
Group
Bank
20 1 1
20 1 0
20 1 1
2010
N ote
RM’000
RM’000
RM’000
RM’000
Cash and short term funds
3
11,968,440
10,481,033
11,968,420
10,481,013
Deposits and placements with
banks and other financial institutions
4
1,516,673
811,660
1,516,673
811,660
1,218,993
404,417
1,218,993
404,417
Assets
Securities purchased under resale agreements
Financial assets held-for-trading
5
2,336,849
1,852,463
2,336,849
1,852,463
Financial investments available-for-sale
6
5,225,508
3,105,488
5,225,508
3,105,488
Loans, advances and financing
7
20,357,257
19,480,745
20,357,257
19,480,745
Other assets
9
1,306,012
1,317,760
1,306,012
1,317,760
Statutory deposits with Bank Negara Malaysia
10
398,080
-
398,080
-
Deferred tax assets
11
796
59,300
796
59,300
Investments in subsidiary companies
12
-
-
20
20
Plant and equipment
13
120,905
108,781
120,905
108,781
44,449,513
37,621,647
44,449,513
37,621,647
Total assets
Liabilities
Deposits from customers
14
30,051,586
28,788,863
30,051,586
28,788,863
Deposits and placements of banks
and other financial institutions
15
7,777,097
2,322,925
7,777,097
2,322,925
63,761
47,982
63,761
47,982
2,537,714
2,846,402
2,537,714
2,846,402
40,430,158
34,006,172
40,430,158
34,006,172
Bills and acceptances payable
Other liabilities
16
Total liabilities
Equity
Share capital
17
121,697
121,697
121,697
121,697
Reserves
18
3,897,658
3,493,778
3,897,658
3,493,778
4,019,355
3,615,475
4,019,355
3,615,475
44,449,513
37,621,647
44,449,513
37,621,647
79,632,078
81,239,637
79,632,078
81,239,637
Total equity attributable to
equity holder of the Bank
Total liabilities and equity
Off-balance sheet exposures
36
The notes on pages 44 to 133 are an integral part of these financial statements.
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Statements Of Comprehensive Income
for the financial year ended 31 December 2011
Group and Bank
20 1 1
2010
Note
RM’000
RM’000
2(b)
2,402,424
2,184,681
Interest income
20
1,713,571
1,575,460
Interest expense
21
(514,644)
(391,890)
1,198,927
1,183,570
37(o)
29,670
35,991
22
659,183
573,230
1,887,780
1,792,791
(887,846)
(758,190)
999,934
1,034,601
24
(144,741)
(200,995)
855,193
833,606
25
(165,330)
(194,353)
689,863
639,253
14,017
(16,110)
14,017
(16,110)
703,880
623,143
689,863
639,253
703,880
623,143
566
525
Revenue
Net interest income
Net income from Islamic banking operations
Other operating income
Total net income
Other operating expenses
23
Operating profit
Allowance for loans, advances and financing
Profit before taxation
Tax expense
Profit for the year
Other comprehensive expense, net of income tax
Net profit/(loss) on revaluation of financial investments available-for-sale
Other comprehensive income/(expense) for the year, net of income tax
Total comprehensive income for the year
Profit for the year attributable to:
Owner of the Bank
Total comprehensive income attributable to:
Owner of the Bank
Earnings per share - basic (sen)
The notes on pages 44 to 133 are an integral part of these financial statements.
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Statements Of Changes In Equity
for the financial year ended 31 December 2011
Attributable to owner of the Bank
Non-distributable
Share
Note
Share
Distributable
Statutory Fair Value
Retained
Total
Capital
Premium
Reserve
Reserve
Profits
Reserves
Total
Group and Bank
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
At 1 January 20 1 0
121,697
380,303
121,697
9,480
2,609,155
3,120,635
3,242,332
Fair value of available-for-sale
financial assets
-
-
-
(16,110)
-
(16,110)
(16,110)
Total other comprehensive
expense for the year
-
-
-
(16,110)
-
(16,110)
(16,110)
Profit for the year
-
-
-
-
639,253
639,253
639,253
Total comprehensive (expense)/
income for the year
-
-
-
(16,110)
639,253
623,143
623,143
-
-
-
-
(250,000)
(250,000)
(250,000)
-
-
-
-
(250,000)
(250,000)
(250,000)
At 31 December 20 1 0
121,697
380,303
121,697
(6,630)
2,998,408
3,493,778
3,615,475
At 1 January 20 1 1
121,697
380,303
121,697
(6,630)
2,998,408
3,493,778
3,615,475
Fair value of available-for-sale
financial assets
-
-
-
14,017
-
14,017
14,017
Total other comprehensive
income for the year
-
-
-
14,017
-
14,017
14,017
Profit for the year
-
-
-
-
689,863
689,863
689,863
14,017
689,863
703,880
703,880
-
-
-
-
(300,000)
(300,000)
(300,000)
-
-
-
-
(300,000)
(300,000)
(300,000)
121,697
380,303
121,697
7,387
3,388,271
3,897,658
4,019,355
Dividends to owner of the Bank
27
Total contribution to owner
Total comprehensive income
for the year
Dividends to owner of the Bank
Total contribution to owner
At 31 December 20 1 1
27
Note 17
The notes on pages 44 to 133 are an integral part of these financial statements.
Note 18
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Statements Of Cash Flows
for the financial year ended 31 December 2011
Group
Bank
20 1 1
20 1 0
20 1 1
2010
RM’000
RM’000
RM’000
RM’000
855,193
833,606
855,193
833,606
(3,047)
(2,095)
(3,047)
(2,095)
144,741
200,995
144,741
200,995
3,204
9,164
3,204
9,164
35,713
32,775
35,713
32,775
(28)
(58)
(28)
(58)
(977)
(917)
(977)
(917)
(13,063)
(58,470)
(13,063)
(58,470)
1,023
178
1,023
178
1,022,759
1,015,178
1,022,759
1,015,178
Cash flows from operating activities
Profit before taxation
Adjustments for:
Amortisation of premium less accretion
of discount of financial investments
available-for-sale
Allowance for bad and doubtful debts
(net of write-back)
Profit equalisation reserve
Depreciation
Dividends from unquoted investment securities
Unrealised gain from revaluation of
financial assets held-for-trading
Gain from disposal of financial investments
available-for-sale
Loss on disposal of plant and equipment
Operating profit before working capital changes
Changes in working capital:
Deposits and placements with banks
and other financial institutions
(705,013)
516,792
(705,013)
516,792
Securities purchased under resale agreements
(814,576)
(404,417)
(814,576)
(404,417)
Financial assets held-for-trading
Loans, advances and financing
Other assets
(483,409)
475,226
(483,409)
475,226
(1,021,253)
(1,235,317)
(1,021,253)
(1,235,317)
70,252
(251,758)
70,252
(251,758)
Statutory deposits with Bank Negara Malaysia
(398,080)
5,200
(398,080)
5,200
Deposits from customers
1,262,723
(1,040,220)
1,262,723
(1,040,220)
Deposits and placements of banks and
other financial institutions
5,454,172
(1,371,985)
5,454,172
(1,371,985)
Bills and acceptances payable
Other liabilities
15,779
(28)
15,779
(28)
(314,601)
716,483
(314,601)
716,483
Cash generated from/(used in)
operating activities
4,088,753
(1,574,846)
4,088,753
(1,574,846)
Income taxes paid
(162,621)
(222,611)
(162,621)
(222,611)
Net cash generated from/(used in)
operating activities
3,926,132
(1,797,457)
3,926,132
(1,797,457)
The notes on pages 44 to 133 are an integral part of these financial statements.
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Statements Of Cash Flows
for the financial year ended 31 December 201 1
Group
Bank
20 1 1
20 1 0
20 1 1
2010
RM’000
RM’000
RM’000
RM’000
28
58
28
58
(49,183)
(79,781)
(49,183)
(79,781)
324
711
324
711
(7,311,535)
(7,068,298)
(7,311,535)
(7,068,298)
Cash flows from investing activities
Dividend from investment securities
Purchase of plant and equipment
Proceeds from disposal of plant
and equipment
Purchase of financial investments
available-for-sale
Redemption of financial investments
available-for-sale
499,387
-
499,387
-
Proceeds from disposal of financial
investments available-for-sale
4,722,254
9,361,821
4,722,254
9,361,821
Net cash (used in)/generated from
investing activities
(2,138,725)
2,214,511
(2,138,725)
2,214,511
(300,000)
(250,000)
(300,000)
(250,000)
-
(400,000)
-
(400,000)
(300,000)
(650,000)
(300,000)
(650,000)
1,487,407
(232,946)
1,487,407
(232,946)
10,481,033
10,713,979
10,481,013
10,713,959
11,968,440
10,481,033
11,968,420
10,481,013
Cash flows from financing activities
Dividend paid to owner
Repayment of subordinated loan
Net cash used in financing activities
Net increase/(decrease) in cash and
cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at
31 December (Note 3)
The notes on pages 44 to 133 are an integral part of these financial statements.
044
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N o t e s To T h e F i n a n c i a l S t a t e m e n t s
Citibank Berhad is a public limited liability company,
incorporated and domiciled in Malaysia. The address of both
its principal place of business and registered office of the
Bank is as follows:
• Amendments to FRS 7, Financial Instruments:
Disclosures – Transfers of Financial Assets
• Amendments to FRS 1 1 2 , Income Taxes –
Deferred Tax: Recovery of Underlying Assets
45th Floor, Menara Citibank
1 65 Jalan Ampang
50450 Kuala Lumpur
FRSs, Interpretations and amendments effective for
annual periods beginning on or after 1 July 20 12
• Amendments to FRS 101, Presentation of
Financial Statements – Presentation of Items of
Other Comprehensive Income
The consolidated financial statements of the Bank as at and
for the year ended 31 December 2011 comprise the Bank
and its subsidiaries (together referred to as the “Group”).
FRSs, Interpretations and amendments effective for
annual periods beginning on or after 1 January 20 13
• FRS 10, Consolidated Financial Statements
• FRS 11, Joint Arrangements
• FRS 12, Disclosure of Interests in Other Entities
• FRS 13, Fair Value Measurement
• FRS 119, Employee Benefits (2011)
• FRS 127, Separate Financial Statements (2011)
• FRS 128, Investments in Associates and Joint
Ventures (2011)
• IC Interpretation 20, Stripping Costs in the
Production Phase of a Surface Mine
• Amendments to FRS 7, Financial Instruments:
Disclosures – Offsetting Financial Assets and
Financial Liabilities
• Amendments to FRS 7, Financial Instruments:
Disclosures – Mandatory Date of FRS 9 and
Transition Disclosures
The Bank is principally engaged in banking and related
financial services that also include Islamic Banking business
whilst the principal activities of the subsidiaries are as
stated in Note 12 to the financial statements.
The immediate holding company is Citigroup Holdings
(Singapore) Pte. Ltd., a company incorporated in Singapore
and the ultimate holding company is Citigroup Inc., a
company incorporated in the United States of America.
The financial statements were authorised for issue by the
Board of Directors on 1 March 2012.
1. Basis of preparation
A.
Statement of compliance
The financial statements of the Group and the Bank
have been prepared in accordance with Financial
Reporting Standards (FRS) as modified by Bank
Negara Malaysia Guidelines, accounting principles
generally accepted and the Companies Act, 1965 in
Malaysia. The financial statements also incorporate
those activities relating to Islamic Banking which
have been undertaken by the Bank. Islamic Banking
refers generally to the acceptance of deposits and
granting of financing under the Shariah principles.
FRSs, Interpretations and amendments effective for
annual periods beginning on or after 1 January 20 14
• Amendments to FRS 132, Financial Instruments:
Presentation – Offsetting Financial Assets and
Financial Liabilities
FRSs, Interpretations and amendments effective for
annual periods beginning on or after 1 January 20 15
• FRS 9, Financial Instruments (2009)
• FRS 9, Financial Instruments (2010)
The Group’s and the Bank’s financial statements for
annual period beginning on 1 January 2012 will be
prepared in accordance with the Malaysian
Financial Reporting Standards (MFRSs) issued by
the MASB and International Financial Reporting
Standards (IFRSs). As a result, the Group and the
Bank will not be adopting the above FRSs,
Interpretations and amendments.
The Group and the Bank have not applied the
following accounting standards, amendments and
interpretations that have been issued by the
Malaysian Accounting Standards Board (MASB) but
are not yet effective for the Group and the Bank:
FRSs, Interpretations and amendments effective
for annual periods beginning on or after 1 July 20 1 1
• IC Interpretation 19, Extinguishing Financial
Liabilities with Equity Instruments
• Amendments to IC Interpretation 14, Prepayments
of a Minimum Funding Requirement
FRSs, Interpretations and amendments effective for
annual periods beginning on or after 1 January 2012
• FRS 124, Related Party Disclosures (revised)
• Amendments to FRS 1, First-time Adoption of
Financial Reporting Standards – Severe
Hyperinflation and Removal of Fixed Dates for
First-time Adopters
B.
Basis of measurement
The financial statements have been prepared on the
historical cost basis except as mentioned in the
respective accounting policies notes.
C.
Functional and presentation of currency
The financial statements are presented in Ringgit
Malaysia (RM), which is the Group’s and the Bank’s
functional currency. All financial information is
presented in RM and has been rounded to the
nearest thousand, unless otherwise stated.
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N o t e s To T h e F i n a n c i a l S t a t e m e n t s
1.
Basis of preparation (continued)
D.
Use of estimates and judgements
The preparation of financial statements in
conformity with the FRSs requires management to
make judgements, estimates and assumptions that
affect the application of accounting policies and
the reported amounts of assets, liabilities, income
and expense. Actual results may differ from these
estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the period
in which the estimates are revised and in any future
periods affected.
There are no significant areas of estimation
uncertainty and critical judgements in applying
accounting policies that have significant effect on
the amounts recognised in the financial statements
other than those disclosed in the following notes:
• Note 2(g) - Impairment losses on loans, advances
and financing
Collective impairment allowance for loan losses
represents management's estimate of probable
losses inherent in the portfolio. The allowance is
available to absorb probable loan losses inherent in
the overall portfolio.
The allowance attributed to these loans is
established via a process that estimates the
probable losses inherent in the portfolio based
upon various analysis. These include migration
analysis, in which historical delinquency and credit
loss experience is applied to the current aging of
the portfolio, together with analysis that reflect
current trends and conditions.
• Note 2(f) - Fair value estimation for financial
assets and liabilities
The determination of fair value for financial assets
and liabilities for which there is no observable
market price that requires the use of valuation
techniques as described in accounting policy in
Note 2(f)(vi).
• Note 19 - Actuarial valuation for employee benefits
The liability for the defined benefit plan is
recognised as the present value of the defined
benefit obligation less the fair value of the Plan’s
assets, plus unrecognised actuarial gain, less
unrecognised past service cost and unrecognised
actuarial losses as described in Note 2(o)(iii).
2. Significant accounting policies
The accounting policies set out below have been applied
consistently to the periods presented in the financial
statements, and have been applied consistently by the
Group and the Bank, unless otherwise stated.
A.
Basis of consolidation
i. Subsidiaries
Subsidiaries are entities, including unincorporated
entities, controlled by the Group and the Bank.
Control exists when the Group and the Bank have
the ability to exercise its power to govern the
financial and operating policies of an entity so as to
obtain benefits from its activities. In assessing
control, potential voting rights that presently are
exercisable are taken into account.
Investments in subsidiaries are measured in the
Company’s statements of financial position at
cost less any impairment losses, unless the
investment is held for sale or distribution. The
cost of investments includes transaction costs.
The accounting policies of subsidiaries are
changed when necessary to align them with the
policies adopted by the Group and the Bank.
ii. Accounting for business combinations
Business combinations are accounted for using
the acquisition method from the acquisition
date, which is the date on which control is
transferred to the Group and the Bank.
The Group and the Bank have changed its
accounting policy with respect to accounting for
business combinations.
From 1 January 20 1 1 the Group and the Bank have
applied FRS 3, Business Combinations (revised) in
accounting for business combinations. The change
in accounting policy has been applied prospectively
in accordance with the transitional provisions
provided by the standard and does not have impact
on earnings per share.
Acquisitions on or after 1 January 20 11
For acquisitions on or after 1 January 2011, the
Group and the Bank measure goodwill at the
acquisition date as:
• The fair value of the consideration transferred;
plus
• The recognised amount of any non-controlling
interests in the acquiree; plus
• If the business combination is achieved in
stages, the fair value of the existing equity
interest in the acquiree; plus
• The net recognised amount (generally fair
value) of the identifiable assets acquired and
liabilities assumed.
045
046
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2. Significant accounting policies (continued)
A.
iii. Transactions eliminated on consolidation
Intra-group balances and transactions, and any
unrealised income and expenses arising from
intra-group transactions, are eliminated in
preparing the consolidated financial statements.
Basis of consolidation (continued)
ii. Accounting for business combinations (continued)
When the excess is negative, a bargain purchase
gain is recognised immediately in profit or loss.
The consideration transferred does not include
amounts related to the settlement of pre-existing
relationships. Such amounts are generally recognised
in profit or loss.
B.
Revenue comprises of gross interest income,
commission and other income derived from banking
operations.
C.
Costs related to the acquisition, other than those
associated with the issue of debt or equity securities,
that the Group and the Bank incur in connection with
a business combination are expensed as incurred.
The calculation of the effective interest rate includes
all fees and points paid or received, transaction costs,
and discounts or premiums that are an integral part of
the effective interest rate. Transaction costs are
incremental costs that are directly attributable to the
acquisition, issue or disposal of a financial asset or
liability.
When share-based payment awards (replacement
awards) are required to be exchanged for rewards
held by the acquiree’s employees (acquiree’s
awards) and relate to past services, then all or a
portion of the amount of the acquirer’s repayment
awards is included in measuring the consideration
transferred in the business combination. The
determination is based on the market-based value
of the replacement awards compared with the
market-based value of the acquiree’s awards and
the extent to which the replacement awards relate
to past and/or future service.
Transaction costs, other than those associated
with the issue of debt or equity securities, that the
Group and the Bank incurred in connection with
business combinations were capitalised as part of
the cost of the acquisition.
Acquisitions prior to 1 January 2006
For acquisitions prior to 1 January 2006, goodwill
represents the excess of the costs of the acquisition
over the Group’s and the Bank’s interest in the fair
values of the net identifiable assets and liabilities.
Interest and financing income and expense
Interest income and expense are recognised in the
profit or loss using the effective interest method. The
effective interest rate is the rate that exactly
discounts the estimated future cash payments and
receipts through the expected life of the financial
asset or liability (or, where appropriate, a shorter
period) to the carrying amount of the financial asset
or liability. The effective interest rate is established on
initial recognition of the financial asset and liability
and is not revised subsequently.
Any contingent consideration payable is recognised
at fair value at the acquisition date. If the
contingent consideration is classified as equity, it is
not remeasured and settlement is accounted for
within equity. Otherwise, subsequent changes to
the fair value of the contingent consideration are
recognised in profit or loss.
Acquisitions between 1 January 2006 and
1 January 2011
For acquisitions between 1 January 2006 and
1 January 2011, goodwill represents the excess
of the cost of the acquisition over the Group’s and
the Bank’s interest in the recognised amount
(generally fair value) of the identifiable assets,
liabilities and contingent liabilities of the acquiree.
When the excess was negative, a bargain purchase
gain was recognised immediately in profit or loss.
Revenue
Interest income and expense presented in the
statements of comprehensive income include:
• Interest on financial assets and liabilities at
amortised cost on an effective interest rate basis
• Interest on available-for-sale investment securities
on an effective interest rate basis
D.
Fee and commission income
Fee and commission income and expenses that are
integral to the effective interest rate on a financial
asset or liability are included in the measurement of
the effective interest rate.
Other fees and commission income, including
placement fees, account servicing fees, investment
management fees, sales commission, are recognised
as the related services are performed. When a loan
commitment is not expected to result in the draw-down
of a loan, loan commitment fees are recognised on a
straight-line basis over the commitment period. When
it is probable that a loan commitment will result in a
specific lending arrangement, commitment fees are
included in the measurement of the effective interest
rate.
Other fees and commission expense relates mainly to
management and service fees, which are expensed as
the services are received.
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2. Significant accounting policies (continued)
E.
Net trading income
Net trading income comprises gains less losses
related to trading assets and liabilities, and includes
all realised and unrealised fair value changes,
interest, dividends and foreign exchange differences.
F.
Financial assets categorised as held-to-maturity
investments are subsequently measured at
amortised cost using the effective interest
method.
c.
Financial assets and liabilities
Financial assets categorised as loans and
receivables are subsequently measured at
amortised cost using the effective interest
method.
i. Initial recognition and measurement
A financial instrument is recognised in the
statements of financial position when, and only
when, the Group or the Bank becomes a party to
the contractual provisions of the instrument.
A financial instrument is recognised initially, at its
fair value plus, in the case of a financial instrument
not at fair value through profit or loss, transaction
costs that are directly attributable to the
acquisition or issue of the financial instrument.
An embedded derivative is recognised separately
from the host contract and accounted for as a
derivative if, and only if, it is not closely related to
the economic characteristics and risks of the host
contract and the host contract is not categorised
at fair value through profit or loss. The host
contract, in the event an embedded derivative is
recognised separately, is accounted for in
accordance with policy applicable to the nature of
the host contract.
ii. Financial
instrument
subsequent measurement
categories
and
The Group and the Bank categorise financial
instruments as follows:
Financial assets
a.
Financial assets at fair value through profit
or loss
Fair value through profit or loss category
comprises financial assets that are held for
trading, including derivatives or financial
assets that are specifically designated into
this category upon initial recognition.
Financial assets categorised as fair value
through profit or loss are subsequently
measured at their fair values with the gain or
loss recognised in profit or loss.
b.
Held-to-maturity investments
Held-to-maturity
investments
category
comprises debt instruments that are quoted
in an active market and the Group or the Bank
has the positive intention and ability to hold
them to maturity.
Loans and receivables
Loans and receivables category comprises
debt instruments that are not quoted in an
active market.
d.
Available-for-sale financial assets
Available-for-sale category comprises investment
in equity and debt securities instruments that
are not held for trading.
Investments in equity instruments that do not
have a quoted market price in an active market
and whose fair value cannot be reliably
measured are measured at cost. Other financial
assets categorised as available-for-sale are
subsequently measured at their fair values
with the gain or loss recognised in other
comprehensive income, except for impairment
losses, foreign exchange gains and losses
arising from monetary items which are
recognised in profit or loss. On derecognition,
the cumulative gain or loss recognised in other
comprehensive income is reclassified from
equity into profit or loss. Interest calculated for
a debt instrument using the effective interest
method is recognised in profit or loss.
All financial assets, except for those measured
at fair value through profit or loss, are subject
to review for impairment (see Note 2(g)).
Financial liabilities
All financial liabilities are subsequently
measured at amortised cost other than those
categorised as fair value through profit or loss.
Fair value through profit or loss category
comprises financial liabilities that are held for
trading, derivatives or financial liabilities that
are specifically designated into this category
upon initial recognition.
Financial liabilities categorised as fair value
through profit or loss are subsequently
measured at their fair value with the gain or
loss recognised in profit or loss.
047
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2. Significant accounting policies (continued)
F.
Financial assets and liabilities (continued)
iii. Regular way purchase or sale of financial assets
A regular way purchase or sale is a purchase or
sale of a financial asset under a contract whose
terms require delivery of the asset within the time
frame established generally by regulation or
convention in the marketplace concerned.
A regular way purchase or sale of financial assets
is recognised and derecognised, as applicable,
using trade date accounting. Trade date accounting
refers to:
a.
the recognition of an asset to be received and
the liability to pay for it on the trade date, and
b.
derecognition of an asset that is sold,
recognition of any gain or loss on disposal and
the recognition of a receivable from the buyer
for payment on the trade date.
iv. Derecognition
The Group and the Bank derecognise a financial
asset when the contractual rights to the cash flows
from the financial assets expire, or when they
transfer the financial asset in a transaction in
which substantially all the risks and rewards of
ownership of the financial asset are transferred or
in which the Group and the Bank neither transfer
nor retain substantially all the risks and rewards of
ownership and they do not retain control of the
financial asset. Any interest in transferred financial
assets that qualify for derecognition that is created
or retained by the Group and the Bank are
recognised as a separate asset or liability in the
statements of financial position. On derecognition
of a financial asset, the difference between the
carrying amount of the asset (or the carrying
amount allocated to the portion of the asset
transferred), and the sum of the consideration
received (including any new asset obtained less
any new liability assumed) and any cumulative gain
or loss that had been recognised in equity is
recognised in profit or loss.
The Group and the Bank derecognise a financial
liability when the contractual obligation is
discharged or cancelled or expired. On
derecognition of a financial liability, the difference
between the carrying amount of the financial
liability extinguished or transferred to another
party and the consideration paid, including any
non-cash assets transferred or liabilities assumed,
is recognised in profit or loss.
v. Offsetting
Financial assets and liabilities are offset and the
net amount reported in the statements of financial
position when, and only when, the Group and the
Bank have a legal right to set off the amounts and
intend either to settle on a net basis or to realise
the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis
only when permitted by the accounting standards,
or for gains and losses arising from a group of
similar transactions such as in the Group’s and the
Bank’s trading activity.
vi. Fair value measurement
Fair value is the amount for which an asset could
be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length
transaction on the measurement date.
The determination of fair values of financial assets
and financial liabilities is based on quoted market
prices or dealer price quotation, for financial
instruments traded in active markets without any
deduction for transaction cost. The Group and the
Bank also use widely recognised valuation models
for determining the fair value of common and
simpler financial instruments such as options and
interest rate and currency swaps. For these
financial instruments, inputs into models are
market observable.
The Group and the Bank use valuation techniques
to determine the fair value of financial assets and
liabilities where quoted prices in an active market
are not available. The valuation techniques used
for different financial instruments are selected to
reflect how the market would be expected to price
the instruments, using inputs that reasonably
reflect risk-return factors inherent in the
instruments. Depending upon the characteristics
of the financial instruments, observable market
factors are available for use in most valuations,
while other valuations may involve a greater
degree of judgement and estimation.
The value produced by a model or other valuation
technique is adjusted to allow for a number of
factors as appropriate, because valuation
techniques cannot appropriately reflect all factors
market participants take into account when
entering into a transaction. Valuation adjustments
are recorded to allow for model risks, bid-ask
spreads, liquidity risks, as well as other factors.
Management believes that these valuation
adjustments are necessary and appropriate to
fairly state financial instruments carried at fair
value on the statements of financial position.
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2. Significant accounting policies (continued)
G.
Impairment
i. Financial assets (excluding
subsidiary companies)
investment
in
At each reporting date, the Group and the Bank
assess whether there is objective evidence that
financial assets not carried at fair value through
profit or loss are impaired. Financial assets
categorised as held to maturity and loans and
receivables are impaired when objective evidence
demonstrates that a loss event has occurred after
the initial recognition of the asset, and that the
loss event has an impact on the future cash flows
on the asset that can be estimated reliably.
Impairment losses are measured as the difference
between the carrying amount of the financial
assets and the present value of estimated cash
flows discounted at the assets’ original effective
interest rate.
The Group and the Bank assess whether objective
evidence of impairment exists individually for
financial assets that are individually significant.
For financial assets that are not individually
significant, assessment of objective evidence of
impairment is done individually or/and collectively.
Objective evidence that a loan or a loan portfolio is
impaired includes observable data that could
include the following loss events:
•
•
•
•
•
significant financial difficulty of the issuer or
obligor;
a breach of contract, such as a default or
delinquency in interest or principal payments;
it becomes probable that the borrower will
enter bankruptcy or other financial
reorganisation;
observable data relating to a portfolio of
financial assets such as:
i) adverse changes in the payment status of
borrowers in the portfolio; and
ii) national or local economic conditions that
correlate with defaults on the assets in the
portfolio.
the disappearance of an active market for a
security.
If the Group and the Bank determine that no
objective evidence of impairment exists for an
individually assessed financial asset, whether
significant or not, it includes the asset in a group
of financial assets with similar credit risk
characteristics and collectively assesses them for
impairment. Assets that are individually assessed
for impairment and for which an impairment loss is
or continues to be recognised are not included in a
separate collective assessment of impairment.
For the purposes of the collective evaluation of
impairment, financial assets are grouped on the
basis of similar credit risk characteristics by using
a grading process that considers obligor type,
industry, geographical location, collateral type,
past-due status and other relevant factors. These
characteristics are relevant to the estimation of
future cash flows for groups of such assets by
being indicative of the likelihood of receiving all
amounts due under a facility according to the
contractual terms of the assets being evaluated.
In assessing the collective impairment, the Group
and the Bank use methods as listed below
depending on the loan portfolio:i)
Statistical modeling of historical trends of the
probability of default, timing of recoveries and
the amount of loss incurred, adjusted for
management’s judgement as to whether the
current economic and credit conditions are
such that the actual losses incurred are likely
to be greater or less than suggested historical
modeling. Default rates, loss rates and
expected timing of future recoveries are
regularly
benchmarked
against
actual
outcomes to ensure they remain appropriate;
ii)
Based upon historical delinquency flow rates,
charge-off statistics and loss severity, adjusted
for management’s judgement as to whether
current economic and credit conditions are
such that actual losses are likely to be greater
or less than suggested by historical modeling.
Losses are recognised in the profit or loss and
reflected in an allowance account against loans
and advances.
Under the revised policy issued by BNM on
Classification and Impairment Provisions for Loan
Financing, if the repayment conduct of the loan is
past due for more than 90 days of either principal,
interest or both, the loan shall be classified as
impaired. The Group and the Bank apply this
policy in addition to the above when determining
if a loan is impaired.
An impairment loss in respect of financial
investments available-for-sale is recognised in
profit or loss and is measured as the difference
between the asset’s acquisition cost (net of any
principal repayment and amortisation) and the
asset’s current fair value, less any impairment loss
previously recognised. Where a decline in the fair
value of an available-for-sale financial asset has
been recognised in the other comprehensive
income,
the
cumulative
loss
in
other
comprehensive income is reclassified from equity
and recognised to profit or loss.
049
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2. Significant accounting policies (continued)
G.
losses recognised in prior periods are assessed at
the end of each reporting period for any
indications that the loss has decreased or no
longer exists. An impairment loss is reversed if
there has been a change in the estimates used to
determine the recoverable amount since the last
impairment loss was recognised. An impairment
loss is reversed only to the extent that the asset’s
carrying amount does not exceed the carrying
amount that would have been determined, net of
depreciation or amortisation, if no impairment loss
had been recognised. Reversals of impairment
losses are credited to profit or loss in the year in
which the reversals are recognised.
Impairment (continued)
i. Financial assets (excluding investment in subsidiary
companies) (continued)
An impairment loss in respect of unquoted equity
instrument that is carried at cost is recognised in
profit or loss and is measured as the difference
between the asset’s carrying amount and the
present value of estimated future cash flows
discounted at the current market rate of return
for a similar financial asset.
Impairment losses recognised in profit or loss for
an investment in an equity instrument is not
reversed through profit or loss.
H.
Securities purchased under resale agreements are
securities which the Group and the Bank had
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.
If, in a subsequent period, the fair value of a debt
instrument increases and the increase can be
objectively related to an event occurring after the
impairment loss was recognised in profit or loss,
the impairment loss is reversed, to the extent that
the asset’s carrying amount does not exceed
what the carrying amount would have been had
the impairment not been recognised at the date
the impairment is reversed. The amount of the
reversal is recognised in profit or loss.
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 transactions and the obligations to
repurchase the securities in its entirety are reflected
as a liability on the statements of financial position.
The securities sold under repurchase agreements are
treated as pledged assets and continue to be recognised
as assets in the statements of financial position.
ii. Other assets
The carrying amounts of other assets (except for
deferred tax asset and assets arising from
employee benefits) are reviewed at the end of
each reporting period to determine whether
there is any indication of impairment. If any such
indication exists, then the asset’s recoverable
amount is estimated.
I.
An impairment loss is recognised if the carrying
amount of an asset or its cash-generating unit
exceeds its recoverable amount.
Impairment losses are recognised in the profit or
loss. Impairment losses recognised in respect of
cash-generating units are allocated to reduce the
carrying amount of the other assets in the unit
(groups of units) on a prorata basis. Impairment
Cash and cash equivalents
Cash and cash equivalents consist of cash and bank
balances and short term funds that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of change in value,
with original maturity within one month.
For the purpose of impairment testing, assets are
grouped together into the smallest group of
assets that generates cash inflows from
continuing use that are largely independent of
the cash inflows of other assets or groups of
assets (the “cash-generating unit”).
The recoverable amount of an asset or
cash-generating unit is the greater of its value in
use and its fair value less costs to sell. In
assessing value in use, the estimated future cash
flows are discounted to their present value using
a pre-tax discount rate that reflects current
market assessments of the time value of money
and the risks specific to the asset.
Repurchase and resale agreement
Cash and cash equivalents are categorised and
measured as loans and receivables in accordance
with policy Note 2(f) and carried at amortised cost in
the statements of financial position.
J.
Plant and equipment
i. Recognition and measurement
Items of plant and equipment are stated at cost
less accumulated depreciation and accumulated
impairment losses.
Cost includes expenditures that are directly
attributable to the acquisition of the asset and
any other costs directly attributable to bringing
the asset to its location and working condition
for its intended use, and the costs of dismantling
and removing the assets and restoring the site
on which the assets are located. Purchased
software that is integral to the functionality of
the related equipment is capitalised as part of
that equipment.
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2. Significant accounting policies (continued)
J.
Minimum lease payments made under finance
leases are apportioned between the finance
expense and the reduction of the outstanding
liability. The finance expense is allocated to each
period during the lease term so as to produce a
constant periodic rate of interest on the remaining
balance of the liability. Contingent lease payments
are accounted for by revising the minimum lease
payments over the remaining term of the lease
when the lease adjustment is confirmed.
Plant and equipment (continued)
i. Recognition and measurement (continued)
When significant parts of an item of plant and
equipment have different useful lives, they are
accounted for as separate items (major
components) of plant and equipment.
Gains and losses on disposal of an item of plant
and equipment are determined by comparing the
proceeds from disposal with the carrying amount
of plant and equipment and are recognised net
within “other income” or “other operating
expenses” respectively in the profit or loss.
ii. Operating lease
Leases, where the Group or the Bank does not
assume substantially all the risks and rewards of
the ownership are classified as operating leases
and, the leased assets are not recognised on
statements of financial position.
ii. Subsequent costs
The cost of replacing part of an item of plant and
equipment is recognised in the carrying amount of
the item if it is probable that the future economic
benefits embodied within the part will flow to the
Group and the Bank and its cost can be measured
reliably. The carrying amount of the replaced part
is derecognised to profit or loss. The costs of the
day-to-day servicing of plant and equipment are
recognised in the profit or loss as incurred.
Payments made under operating leases are
recognised in profit or loss on a straight-line basis
over the term of the lease unless another
systematic basis is more representative of the time
pattern in which economic benefits from the leased
asset are consumed. Lease incentives received are
recognised in profit or loss as an integral part of
the total lease expense, over the term of the lease.
Contingent rentals are charged to profit or loss in
the reporting period in which they are incurred.
iii. Depreciation
Depreciation is calculated on the depreciable
amount, which is the cost of an asset, or other
amount substituted for cost, less its residual value.
Depreciation is recognised in profit or loss on a
straight-line basis over the estimated useful lives
of each part of an item of plant and equipment.
Leased assets are depreciated over the shorter of
the lease term and their useful lives unless it is
reasonably certain that the Group and the Bank
will obtain ownership by the end of the lease term.
The estimated useful lives for the current and
comparative periods are as follows:
•
building
40 years - 50 years
•
installations
8 years - 14 years
•
furniture and equipment 2 years - 10 years
Depreciation methods, useful lives and residual
values are reviewed, and adjusted as appropriate
at end of the reporting period.
K.
Assets under lease
i. Finance lease
Leases in terms of which the Group or the Bank
assumes substantially all the risks and rewards of
ownership are classified as finance leases. On
initial recognition the leased asset is measured at
an amount equal to the lower of its fair value and
the present value of the minimum lease
payments. Subsequent to initial recognition, the
asset is accounted for in accordance with the
accounting policy applicable to that asset.
L.
Bills and acceptances payable
Bills and acceptances payable represent the Group’s
and the Bank's own bills and acceptances
rediscounted and outstanding in the market.
M. Foreign currency
Transactions in foreign currencies are translated to
the respective functional currencies of the Group
entities at exchange rates at the date of the
transactions.
Monetary assets and liabilities denominated in
foreign currencies at reporting period are
retranslated to the functional currency at the
exchange rate at that date.
Non-monetary assets and liabilities denominated in
foreign currencies are not retranslated at the end of
the reporting date except for those that are
measured at fair value are retranslated to the
functional currency at the exchange rate at the date
that the fair value was determined.
Foreign currency differences arising on retranslation
are recognised in profit or loss, except for differences
arising on the retranslation of available-for-sale
equity instruments, which are recognised in other
comprehensive income.
051
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2. Significant accounting policies (continued)
N.
Income tax
Income tax expense comprises current and
deferred tax. Current tax and deferred tax are
recognised in the profit or loss except to the extent
that it relates to items recognised directly in equity
or other comprehensive income.
Current tax is the expected tax payable or receivable
on the taxable income or loss for the year, using tax
rates enacted or substantively enacted by the end of
the reporting period, and any adjustment to tax
payable in respect of previous years.
Deferred tax is recognised using the liability method,
providing for temporary differences between the
carrying amounts of assets and liabilities in the
statements of financial position and their tax bases.
Deferred tax is measured at the tax rates that are
expected to apply to the temporary differences
when they reverse, based on the laws that have been
enacted or substantively enacted by the end of the
reporting period.
Deferred tax assets and liabilities are offset if
there is a legally enforceable right to offset current
tax liabilities and assets, and they relate to income
taxes levied by the same tax authority on the same
taxable entity, or on different tax entities, but they
intend to settle current tax liabilities and assets on
a net basis or their tax assets and liabilities will be
realised simultaneously.
A deferred tax asset is recognised to the extent
that it is probable that future taxable profits will be
available against which temporary difference can
be utilised. Deferred tax assets are reviewed at the
end of each reporting period and are reduced to
the extent that it is no longer probable that the
related tax benefit will be realised.
A tax incentive that is not a tax base of an asset is
recognised as a reduction of the expense in profit or
loss as and when it is granted or claimed. Any
unutilised portion of the tax incentive is recognised as
a deferred tax asset to the extent that it is probable
that future taxable profits will be available against
which the unutilised tax incentive can be utilised.
O.
Employee benefits
i. Short-term employee benefits
Short-term employee benefit obligations in
respect of salaries, annual bonuses, paid annual
leave and sick leave are measured on an
undiscounted basis and are expensed as the
related service is provided.
A liability is recognised for the amount expected to
be paid under short-term cash bonus or profit
sharing plans if the Group and the Bank have a
present legal or constructive obligation to pay this
amount as a result of past service provided by the
employee and the obligation can be estimated
reliably.
The Group and the Bank contribute to the
Employees Provident Fund (“EPF”) for eligible
employees on a monthly basis. Obligations for
contributions to EPF are recognised as an expense
in the statements of comprehensive income in the
year to which they relate. Once the contributions
have been paid, the Group and the Bank have no
further payment obligations.
ii. Defined contribution plan
In addition to the contribution requirement by law,
the Group and the Bank are contributing additional
amounts for those employees eligible under the
defined contribution plan. The contribution is
made to Citibank Malaysia Official Staff
Retirement Plan ("the Plan") and is recognised as
an expense in the statements of comprehensive
income as incurred.
iii. Defined benefit plan
The Bank and certain related companies
contribute to the Citibank Malaysia Official Staff
Retirement Plan ("the Plan") for eligible officers.
Contributions are made based on an external
actuarial report to the Plan, which is a defined
benefit scheme and defined contribution scheme
(as explained in item (ii) above), and is funded to
the extent permitted by tax allowable Bank
contributions.
The amount recognised in the statements of
financial position represents the present value of
the defined benefit obligations adjusted for
unrecognised actuarial gains and losses and
unrecognised past service costs, and reduced by
the fair value of the Plan’s assets. The benefit is
calculated using the Projected Unit Credit Method
in order to determine its present value. Any asset
resulting from this calculation is limited to the net
total of any unrecognised actuarial losses and past
service costs, and the present value to any
economic benefits in the form of refunds or
reductions in future contributions to the fund.
Amortisation of unrecognised gains or losses are
included as a component of the annual expense for
a year if, as of the beginning of the year, that
cumulative net unrecognised gains or losses
exceeds 10% of the greater of the Plan’s liability or
value of the Plan’s assets. If amortisation is
required, the amortisation is that excess divided
by the expected average remaining working lives
of the employees participating in the Plan.
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2. Significant accounting policies (continued)
O.
P.
Foreclosed properties are those acquired in full or
partial satisfaction of debts, are stated at cost less
accumulated impairment losses.
Employee benefits (continued)
iii. Defined benefit plan (continued)
When the benefits of the Plan are improved, the
portion of the increased benefit relating to past
service by employees is recognised as an expense
in the profit or loss on a straight-line basis over the
average period until the benefits become vested.
To the extent that the benefit vests immediately,
the expense is recognised in profit or loss.
Q.
The total amount to be expensed over the vesting
period is determined by reference to the fair value
of the options granted, excluding the impact of
any non-market vesting conditions. Non-market
vesting conditions are included in assumptions
about the number of options that are expected to
vest. At each reporting date, the Group and the
Bank revise its estimates of the number of options
that are expected to vest. It recognises the impact
of the revision of original estimates, if any, in the
profit or loss.
Provisions
A provision is recognised if, as a result of a past event,
the Group and the Bank have a present legal or
constructive obligation that can be estimated reliably,
and it is probable that an outflow of economic benefits
will be required to settle the obligation. Provisions are
determined by discounting the expected future cash
flows at a pre-tax rate that reflects current market
assessments of the time value of money and the risks
specific to the liability. The unwinding of the discount
is recognised as finance cost.
iv. Share-based compensation
The Group and the Bank participate in
equity-settled and cash-settled share based
compensation plan for the employees that is
offered by the ultimate holding company, Citigroup
Inc.. The fair value of the services received in
exchange for the grant of the options is recognised
as an expense in the profit or loss over the vesting
periods of the grant
Foreclosed properties
R.
Deposits from customers and deposits and
placements of banks and financial institutions
Deposits from customers are stated at placement
values and adjusted for accrued interest. Deposits
and placements of banks and financial institutions
are stated at placement values.
S.
Profit equalisation reserves (“PER”)
PER is the amount appropriated out of the total
Islamic Banking gross income in order to maintain a
certain level of return to depositors which is as
stipulated by Bank Negara Malaysia Circular on “The
Framework of the Rate of Return”. PER is deducted
from the total Islamic Banking gross income in
deriving the net distributable gross income. The
amount appropriated is shared by the depositors and
the Group or the Bank.
3. Cash and short term funds
Group
Cash and balances with banks
and other financial institutions
Money at call and deposit
placements maturing within one month
Bank
20 1 1
20 1 0
20 1 1
2010
RM’000
RM’000
RM’000
RM’000
61,830
61,683
61,810
61,663
11,906,610
10,419,350
11,906,610
10,419,350
11,968,440
10,481,033
11,968,420
10,481,013
4. Deposits and placements with banks and other financial institutions
Group and Bank
Licensed banks
2011
2010
RM’000
RM’000
1,516,673
811,660
054
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5. Financial assets held-for-trading
Group and Bank
20 1 1
2010
At fair value
RM’000
RM’000
Malaysian Government Treasury Bills
101,468
101,520
1,004,580
130,739
13,572
136,604
1,217,229
1,468,506
-
15,094
2,336,849
1,852,463
Malaysian Government Securities
Malaysian Government Investment Issues
Bank Negara Malaysia Bills/Notes
Corporate Notes/Private debt securities
6. Financial investments available-for-sale
Group and Bank
At fair value
Malaysian Government Treasury Bills/Securities*
Bank Negara Malaysia Bills
Malaysian Government Investment Issues
Yankee bonds/US bonds
2011
2010
RM’000
RM’000
3,368,908
2,202,157
-
227,218
1,849,101
537,506
-
131,108
5,218,009
3,097,989
7,499
7,499
5,225,508
3,105,488
At cost
Unquoted securities
*
Malaysian Government Securities of the Group and the Bank amounting to RM130 million at 31 December 20 1 0 was utilised
to meet the Statutory Reserve Requirement as further explained in Note 1 0.
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7. Loans, advances and financing
i.
By type
Group and Bank
Overdrafts
Term loans/financing
- housing loans/financing
- hire purchase receivables
- lease receivables
- other term loans/financing
Bills receivable
Trust receipts
Claims on customers under acceptance credits
Staff loans
20 1 1
2010
RM’000
RM’000
298,496
243,261
9,192,709
9,827,111
1,592
3,175
698
3,678
1,474,378
1,266,750
954,240
458,410
15,671
14,147
1,125,751
1,111,455
94,091
101,585
182,814
189,523
Credit cards receivables
5,951,843
5,702,121
Revolving credit
1,676,429
1,197,043
3,491
-
20,972,203
20,118,259
(30,185)
(38,615)
20,942,018
20,079,644
- Collective assessment allowance
(365,325)
(369,357)
- Individual assessment allowance
(219,436)
(229,542)
20,357,257
19,480,745
649,573
299,856
Share margin financing
Other loans
Unearned interest and income
Gross loans, advances and financing
Less:
Allowance for impaired loans, advances and financing
Net loans, advances and financing
ii. By type of customer
Domestic non-bank financial institutions
- others
Domestic business enterprises
- small and medium enterprises
454,908
408,123
- others
3,662,378
2,727,556
Individuals
15,958,134
16,365,585
217,025
278,524
20,942,018
20,079,644
Foreign entities
056
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7. Loans, advances and financing (continued)
iii. By interest/profit rate sensitivity
Group and Bank
20 1 1
2010
RM’000
RM’000
823,612
887,577
Fixed rate
Housing loans/financing
Hire purchase receivables
1,592
3,175
10,028,423
8,977,936
BLR plus
9,229,388
9,825,153
Cost plus
859,003
385,803
20,942,018
20,079,644
105,178
35,022
18,991
7,708
2,409,876
1,710,646
Electricity, gas and water
86,890
32,295
Construction
45,704
46,104
Other fixed rate loans/financing
Variable rate
iv. By sector
Primary agriculture
Mining and quarrying
Manufacturing (including agriculture based)
Wholesale, retail trade, restaurants and hotels
921,901
840,970
Transport, storage and communication
301,573
137,600
Finance, insurance, real estate and business services
800,246
512,027
16,160
19,933
- consumption credit
6,501,532
6,246,231
- residential
Education, health and others
Household
v.
9,001,842
9,623,221
- purchase of securities
182,813
189,523
- others
271,947
306,610
Other sectors
277,365
371,754
20,942,018
20,079,644
182,813
189,523
9,584,491
10,243,017
5,406
9,545
By purpose
Purchase of securities
Purchase of landed property
Purchase of fixed assets excluding land and building
Personal use
Credit card
Construction
660,946
698,800
5,951,859
5,702,122
22,009
8,562
Working capital
4,446,136
3,214,786
Other purposes
88,358
13,289
20,942,018
20,079,644
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7. Loans, advances and financing (continued)
vi. Residual contractual maturity
Group and Bank
Maturing within one year
One to five years
Over 5 years
20 1 1
2010
RM’000
RM’000
10,620,013
6,711,434
714,320
3,099,068
9,607,685
10,269,142
20,942,018
20,079,644
20,942,018
20,079,644
vii. By geographical distribution
Within Malaysia
8. Impaired loans, advances and financing
i.
Movements in impaired loans, advances and financing are as follows:
Group and Bank
At 1 January
Classified as impaired during the year
20 1 1
2010
RM’000
RM’000
540,814
491,317
727,676
724,457
Reclassified as performing during the year
(384,262)
(325,418)
Amount recovered
(231,379)
(178,916)
Amount written off
(162,312)
(170,626)
At 31 December
Individual assessment allowance
Net impaired loans, advances and financing
490,537
540,814
(219,436)
(229,542)
271,101
311,272
1.31%
1.57%
Ratio of net impaired loans and financing to gross loans and
financing less individual assessment allowance
058
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8. Impaired loans, advances and financing (continued)
ii.
Movements in impairment provisions for loans, advances and financing are as follows (continued):
Group and Bank
20 1 1
2010
RM’000
RM’000
369,357
360,407
(4,032)
8,950
365,325
369,357
1.76%
1.86%
229,542
221,588
Collective assessment allowance
At 1 January
(Written back)/Allowance made during the year, net
At 31 December
As % of gross loans, advances and financing
less individual assessment allowance
Individual assessment allowance
At 1 January
Allowance made during the period
16,888
34,644
(19,418)
(12,984)
(7,576)
(13,706)
219,436
229,542
7,328
8,937
373
-
Manufacturing (including agriculture based)
32,041
36,178
Construction
14,934
17,026
Wholesale, retail trade, restaurants and hotels
18,082
20,070
84
104
9,970
12,081
Written back during the year
Written off during the year
At 31 December
iii. Impaired loans, advances and financing by sector
Primary agriculture
Mining and quarrying
Transport, storage and communication
Finance, insurance, real estate and business services
Household
- consumption credit
- residential
- purchase of securities
Other purposes
86,539
116,112
299,025
307,265
20,475
20,795
1,686
2,246
490,537
540,814
490,537
540,814
iv. Impaired loans, advances and financing by
geographical distribution
Within Malaysia
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9. Other assets
Group and Bank
Interest/Income receivable
20 1 1
2010
RM’000
RM’000
66,174
45,880
Other debtors, deposits and prepayments
414,094
264,640
Derivative assets (Note 30)
820,647
1,007,240
5,097
-
1,306,012
1,317,760
Tax recoverable
10. Statutory deposits with Bank Negara Malaysia
The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia (“BNM”) in compliance with Section
37(1)(c) of the Central Bank of Malaysia Act 1958 (revised - 1994) to satisfy the Statutory Reserve Requirement (“SRR”), the
amount of which is determined as a set percentage of total eligible liabilities.
In accordance with BNM’s circular titled “Regulatory Treatment related to the Statutory Reserve Requirement Incentive for
Principal Dealers and Islamic Principal Dealers” issued on 10 July 2009, the Bank being a principal dealer appointed by BNM,
is allowed to utilise Malaysia Government Securities (“MGS”) holdings to meet the SRR. As at 31 December 2010, MGS of the
Group and the Bank with nominal amount of RM130 million are utilised for SRR determination purposes. These securities are
classified under financial investments available-for-sale (Note 6).
11. Deferred tax assets
Deferred tax assets and liabilities are attributable to the followings:
At 1 January 2010
Recognised in profit or loss
Recognised in other comprehensive income
At 31 December 2010
Plant and
equipment Capital
allowances
Provisions
Reserves
- Available
-for-sale
securities
Total
RM’000
RM’000
RM’000
RM’000
(8,539)
66,830
(3,149)
55,142
(11,055)
9,586
-
(1,469)
-
-
5,627
5,627
(19,594)
76,416
2,478
59,300
060
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11. Deferred tax assets (continued)
Plant and
equipment Capital
allowances
Provisions
Reserves
- Available
-for-sale
securities
RM’000
Total
RM’000
RM’000
RM’000
At 1 January 2011
Recognised in profit or loss
Recognised in other comprehensive income
(19,594)
(260)
-
76,416
(53,304)
-
2,478
(4,940)
59,300
(53,564)
(4,940)
At 31 December 2011
(19,854)
23,112
(2,462)
796
Deferred tax assets and liabilities are offset above as there is a legally enforceable right to set off current tax assets against
current tax liabilities.
The recognised deferred tax assets and liabilities are as follows:
Group and Bank
Plant and equipment
- capital allowances
Provisions
Fair value of available-for-sale securities
20 1 1
2010
RM’000
RM’000
(19,854)
23,112
(2,462)
(19,594)
76,416
2,478
796
59,300
12. Investments in subsidiary companies
Bank
Unquoted shares at cost – in Malaysia
20 1 1
2010
RM’000
RM’000
20
20
Details of the wholly owned subsidiaries are as follows:
Name of subsidiary
Citigroup Nominee
(Malaysia) Sdn. Bhd.
Citigroup Nominees
(Tempatan) Sdn. Bhd.*
Citigroup Nominees
(Asing) Sdn. Bhd.*
Principal activity
Effective
Ownership
Interest
Country of
incorporation
20 1 1
2010
Nominee company
Malaysia
100%
100%
Nominee company
Malaysia
100%
100%
Nominee company
Malaysia
100%
100%
* Wholly owned by Citigroup Nominee (Malaysia) Sdn. Bhd.
All income and expenditure arising from the activities of the subsidiaries have been recognised in the Bank’s statement of
comprehensive income.
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13. Plant and equipment
Installations
Furniture
and
equipment
Total
RM’000
RM’000
RM’000
RM’000
5,877
88,041
247,073
340,991
Additions
357
9,427
69,997
79,781
Disposals
-
(142)
(3,502)
(3,644)
Write offs
-
(56)
-
(56)
Reclassification
-
(133)
133
-
6,234
97,137
313,701
417,072
Group and Bank
Cost
At 1 January 20 10
At 31 December 2010/1 January 2011
Building on
leasehold
land
Additions
347
22,489
26,347
49,183
Disposals
-
(5,499)
(9,261)
(14,760)
Write offs
-
-
(843)
(843)
6,581
114,127
329,944
450,652
3,644
79,696
194,987
278,327
367
5,420
26,988
32,775
Disposals
-
(112)
(2,643)
(2,755)
Written offs
-
(56)
-
(56)
Reclassification
-
(35)
35
-
4,011
84,913
219,367
308,291
462
6,490
28,761
35,713
Disposals
-
(5,412)
(8,002)
(13,414)
Written offs
-
-
(843)
(843)
4,473
85,991
239,283
329,747
At 1 January 2010
2,233
8,345
52,086
62,664
At 31 December 2010/1 January 2011
2,223
12,224
94,334
108,781
At 31 December 2011
2,108
28,166
90,631
120,905
At 31 December 2011
Depreciation
At 1 January 2010
Charge for the year
At 31 December 2010/1 January 2011
Charge for the year
At 31 December 2011
Carrying amounts
062
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14. Deposits from customers
i.
By type of deposit
Group and Bank
20 1 1
2010
RM’000
RM’000
10,026,162
9,869,460
935,372
837,370
Fixed deposits
9,559,230
11,583,915
Other deposits
9,444,737
6,393,953
Negotiable instruments of deposit
75,917
80,002
Others - cash collateral
10,168
24,163
30,051,586
28,788,863
Demand deposits
Saving deposits
ii. Maturity structure of fixed deposits, other deposits and negotiable instruments of deposit are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
Due within six months
15,085,525
13,005,161
Six months to one year
3,395,429
4,412,942
One year to three years
372,522
338,543
Three years to five years
226,408
101,224
-
200,000
19,079,884
18,057,870
Over five years
iii. By type of customer
Group and Bank
Government and statutory bodies
20 1 1
2010
RM’000
RM’000
177,664
27,368
17,418,167
15,065,326
Individuals
9,795,376
10,241,578
Others
2,660,379
3,454,591
30,051,586
28,788,863
Business enterprises
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15. Deposits and placements of banks and other financial institutions
Group and Bank
Licensed banks
Licensed finance companies
20 1 1
2010
RM’000
RM’000
7,777,097
2,046,727
-
276,198
7,777,097
2,322,925
16. Other liabilities
Group and Bank
Interest/Profit payable
Other creditors and accruals
Provision for retirement benefits (Note 19)
Profit Equalisation Reserve (Note 37(l))
20 1 1
2010
RM’000
RM’000
81,090
106,294
1,673,582
1,640,664
701
372
12,391
9,187
-
45,765
769,950
1,044,120
2,537,714
2,846,402
Group and Bank
Number
of shares
Amount
Number
of shares
Taxation
Derivative liabilities (Note 30)
17. Share capital
Amount
20 1 1
20 1 1
20 1 0
2010
RM’000
’000
RM’000
’000
Authorised
500,000
500,000
500,000
500,000
Issued and fully paid
121,697
121,697
121,697
121,697
Ordinary shares of RM1 each:
18. Reserves
Group and Bank
20 1 1
2010
RM’000
RM’000
Share premium
380,303
380,303
Statutory reserve
121,697
121,697
Fair value reserve
7,387
(6,630)
3,388,271
2,998,408
3,897,658
3,493,778
Retained profits
064
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18. Reserves (continued)
The share premium arose from the issuance of 12 1,696 ,972 ordinary shares of RM1 each at an issue price of RM4.125 per share.
The statutory reserve is maintained in compliance with Section 36 of the Banking and Financial Institutions Act 1989 and is
not distributable as cash dividends. No transfers were made to the statutory reserve during the year as the Bank has met the
reserve requirements.
The fair value reserve is in respect of unrealised fair value gains and losses on financial investments available-for-sale.
Subject to agreement by the Inland Revenue Board, the Bank has Section 1 08 tax credit and tax exempt income to frank
approximately RM1.66 billion of its distributable reserves at 31 December 20 1 1 if paid out as dividends.
The Finance Act 2007 introduced a single tier company income tax system with effect from year of assessment 2008. As
such, the Section 108 tax credit balance as at 31 December 2007 will be available to the Bank until such time the credit is
fully utilised or upon expiry of the six-year transitional period on 31 December 2013, whichever is earlier.
19. Employee benefits
i.
Retirement benefits
The amounts recognised in the statements of financial position are as follows:
Group and Bank
Present value of the funded obligation
Fair value of plan assets
Unrecognised past service costs
Unrecognised actuarial gains
Liability recognised in statements of financial position
20 1 1
2010
RM’000
RM’000
35,439
34,633
(37,343)
(37,488)
(1,904)
(2,855)
(12)
(20)
2,617
3,247
701
372
The Group and the Bank make contributions to a fully funded defined benefit scheme for its employees. Contributions to
the fund are made to a separately administered fund. Under the fund, eligible employees are entitled to one and a half
month of the final/last drawn salary multiplied by the Plan service not in excess of 40 upon attainment of the retirement
age of 55. For employees who leave before the attainment of the retirement age, the retirement benefit will be computed
based on the scale rate stipulated in the rules of the Fund.
On 1 January 2007, majority of the Plan members’ benefits accrued under the Defined Benefit Plan were converted to
the new Defined Contribution Plan. Only those staff who satisfied the criteria below, will continue to be maintained
under the Defined Benefit Plan.
a.
Age as at 31 December 2006: at least 40 years
b.
Years of service as at 31 December 2006: at least 5 years
c.
Sum of age and years of service as at 31 December 2006: at least 55 years
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19. Employee benefits (continued)
i.
Retirement benefits (continued)
Plan assets comprise:
Group and Bank
20 1 1
2010
RM’000
RM’000
Equities
9,709
10,984
Property
15,796
15,782
Securities
9,971
9,597
Others
1,867
1,125
37,343
37,488
Movement in the present value of the defined benefit obligations:
Group and Bank
20 1 1
2010
RM’000
RM’000
Defined benefit obligations at 1 January
34,633
34,093
Benefits paid by the plan
(2,315)
(2,002)
Current service costs and interest
3,323
3,376
Actuarial gains
(202)
(834)
35,439
34,633
Defined benefit obligations at 31 December
Movement in the fair value of plan assets:
Group and Bank
Fair value of plan assets at 1 January
Contributions paid into the plan
Benefits paid by the plan
20 1 1
2010
RM’000
RM’000
37,488
25,972
426
2,151
(2,315)
(2,002)
Expected return on plan assets
2,577
1,765
Actuarial (losses)/gains
(833)
9,602
37,343
37,488
Fair value of plan assets at 31 December
066
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19. Employee benefits (continued)
i.
Retirement benefits (continued)
The amounts recognised in the statements of comprehensive income are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
1,559
1,764
1,583
1,793
(2,577)
(1,765)
Net actuarial loss recognised in the year
-
618
Prior service costs
9
11
755
2,240
1,745
11,367
Current service costs
Interest cost
Expected return on plan assets
Amount included under “personnel costs”
Actual return on plan assets
Movement in the net liability recognised in the statements of financial position are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
372
283
Opening net liability as at 1 January
Recommended expenses as above
Contributions paid
755
2,240
(426)
(2,151)
701
372
The latest valuation of the Defined Benefit Plan as at 31 December 2011 was conducted by Towers Watson (Malaysia) Sdn.
Bhd.. The unfunded portion of the total liability will continue to be borne by Citibank Berhad. Projected unit credit
method is used to calculate the actuarial present value of promised retirement benefits.
Principal actuarial assumptions used at the reporting date (expressed as weighted averages):
Group and Bank
20 1 1
2010
Discount rate
5.00%
5.25%
Rate of increase in salary levels
7.00%
7.00%
Expected long-term rate of return on plan assets
6.50%
7.00%
Price inflation
3.50%
3.50%
Assumptions regarding future mortality are based on published statistics and mortality tables. The average life
expectancy of an individual retiring is at the age of 55 years.
The overall expected long-term rate of return on assets is 6.5% per annum. The expected long-term rate of return is
based on the portfolio as a whole and not on the sum of the returns on individual asset categories. The return is based
exclusively on historical returns, without adjustments.
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19. Employee benefits (continued)
i.
Retirement benefits (continued)
Historical information
Group and Bank
Present value of the defined
benefit obligation
Fair value of plan assets
(Surplus)/Deficit in the plan
Experience adjustments
arising on plan assets
- losses/(gains)
Experience adjustments
arising on plan liabilities
- (gains)/losses
Assumption adjustment on
plan liabilities - losses
20 1 1
20 1 0
20 0 9
20 0 8
2007
RM’000
RM’000
RM’000
RM’000
RM’000
35,439
34,633
34,093
26,926
25,282
(37,343)
(37,488)
(25,972)
(18,991)
(21,295)
(1,904)
(2,855)
8,121
7,935
3,987
833
(9,602)
(2,127)
2,774
(1,132)
(686)
(1,342)
4,850
36
1,037
484
508
566
1,262
1,251
The Group and the Bank expected RM865,040 contribution to be paid to the funded defined benefit plan in year 2012.
ii. Share option plan
The Group and the Bank have a number of stock option programmes for its officers and employees as part of a
discretionary award package. Options are granted on Citigroup Inc. stock at the market value denominated in US dollar
at the time of grant. Option granted in October 2011 has a six year term and will vest 33% each year over a three years
period, provided the staff remains continuously employed in the Group and the Bank.
Group and Bank
Outstanding at 1 January
Granted
Exercised
Transfer in/(out)
20 1 1
2010
677,773
763,500
-
-
(393)
-
21,388
(17,956)
Lapsed/Cancelled
(36,833)
(67,771)
Outstanding at 31 December
661,935
677,773
068
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19. Employee benefits (continued)
ii.
Share option plan (continued)
Details of share options granted during the year:
Group and Bank
20 1 1
2010
Expiry dates
-
-
Average grant price per ordinary share (RM)
-
-
Aggregated proceeds if shares are issued (RM’000)
-
-
Details of share options exercised during the year:
Year of expiry
Average exercise price per ordinary share (RM)
Aggregated issue proceeds (RM’000)
Fair value at date of vesting (RM’000)
2014
-
12.97
-
5
-
2,399
-
Terms of the options outstanding at 31 December:
Group and Bank
20 1 1
2010
Exercise price
RM 152.78
-
26,401
Aug 2011
RM 136.32
-
2,681
Jan 2012
RM 155.47
415
-
Jan 2012
RM 150.84
-
414
Feb 2012
RM 133.82
26,980
-
Feb 2012
RM 144.33
1,839
-
Feb 2012
RM 129.19
-
1,839
Feb 2012
RM 129.85
-
28,220
Aug 2012
RM 107.74
750
-
Jan 2013
RM 167.68
-
635
Jan 2013
RM 172.82
635
-
Jan 2014
RM 75.39
-
11,992
Jan 2014
RM 77.70
11,188
-
Oct 2015
RM 12.58
-
605,591
Oct 2015
RM 12.97
620,128
-
661,935
677,773
Expiry dates
Jan 2011
iii. Share capital accumulation plan (CAP)
The Group and the Bank have a number of capital accumulation programmes for its officers and employees. The Core CAP is
a discretionary award of restricted shares. The number of CAP shares in a Core CAP award is calculated using a 25% discount
from the market price of Citigroup common stock. Supplemental CAP is a discretionary retention award programme
composed of an award of CAP shares. The difference between Supplemental CAP award and a Core CAP award is that
generally, a Supplementary CAP is given in addition to the discretionary award package and the number of shares awarded
will not be based on a discount from the market price of Citigroup common stock. CAP granted in 2011 typically vest 25% each
year for four years, with the first vesting date occurring 12 months after the grant date. Shares acquired upon exercise of a
CAP option generally may not be sold for two years following the exercise date.
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19. Employee benefits (continued)
iii. Share capital accumulation plan (CAP) (continued)
Group and Bank
20 1 1
2010
Outstanding at 1 January
606,369
445,663
Granted
297,605
460,841
Vested
20,438
8,299
Lapsed/cancelled
(220,324)
(303,233)
Net transferred out
(218,563)
(5,201)
485,525
606,369
Outstanding at 31 December
Details of CAP granted during the year:
Group and Bank
20 1 1
2010
Jan 17, 2015
Oct 19, 2014
Average grant price per ordinary share (RM)
15.95
12.54
Aggregated proceeds if shares are issued (RM’000)
4,748
5,781
Expiry dates
Details of CAP vested during the year:
Average exercise price per ordinary share (RM)
25.02
13.44
Aggregated issue proceeds (RM’000)
6,171
10,629
Fair value at date of vesting (RM’000)
2,745
4,076
Terms of the CAP outstanding at 31 December:
Group and Bank
Year of expiry
20 1 1
2010
Grant price
Jan 2011
RM 167.93
-
41,071
Jan 2012
RM 62.76
19,602
-
Jan 2012
RM 83.68
7,004
-
Jan 2012
RM 81.19
-
133,553
Oct 2012
RM 47.96
497
-
Oct 2012
RM 46.53
-
1,990
Jan 2013
RM 14.85
94,804
-
Jan 2013
RM 14.41
-
194,155
Jan 2014
RM 11.17
140,932
-
Jan 2014
RM 10.84
-
209,405
Jan 2015
RM 15.95
222,686
-
Jan 2015
RM 12.86
-
26,195
485,525
606,369
070
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20. Interest income
Group and Bank
20 1 1
2010
RM’000
RM’000
1,217,598
1,209,905
45,277
36,087
247,359
158,914
Loans and advances
- Interest income other than recoveries from impaired loans
- Recoveries from impaired loans
Money at call and deposit placements with financial institutions
Financial assets held-for-trading
50,702
39,944
Financial investments available-for-sale
84,187
109,320
Securities purchased under resale agreements
28,367
2,138
1,673,490
1,556,308
Accretion of discount
40,081
19,152
Total interest income
1,713,571
1,575,460
21. Interest expense
Group and Bank
Deposits and placements of banks and other financial institutions
Deposits from customers
Others
20 1 1
2010
RM’000
RM’000
31,535
25,592
478,134
350,546
4,975
15,752
514,644
391,890
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a
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2
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1
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071
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N o t e s To T h e F i n a n c i a l S t a t e m e n t s
22. Other operating income
Group and Bank
20 1 1
2010
RM’000
RM’000
138,542
177,756
15,202
3,428
Fee income:
Commission
Service charges and fees
Guarantee fees
6,698
7,267
167,817
143,294
Insurance premium and referral
19,578
16,290
Other fee income
36,995
24,464
384,832
372,499
977
917
27,571
16,989
7,332
58,470
28
58
35,908
76,434
161,916
112,533
30,393
33,224
Gain/(Loss) from derivatives
47,157
(21,282)
Loss on disposal of plant and equipment
(1,023)
(178)
238,443
124,297
659,183
573,230
Bankcard fees
Trading income:
Unrealised gain from revaluation of financial
assets held-for-trading
Net gain from sales of securities
- Financial assets held-for-trading
- Financial investments available-for-sale
Gross dividends from financial investments available-for-sale
Other income:
Foreign exchange profit
- unrealised gain
- realised gain
072
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23. Other operating expenses
Group and Bank
20 1 1
2010
RM’000
RM’000
323,600
235,173
- Contributions to Employees Provident Fund
37,592
33,648
- Staff benefits and other compensations
41,300
86,950
6,927
9,985
409,419
365,756
- Depreciation
35,713
32,775
- Rental of premises
21,526
9,530
- Hire of equipments
2,603
25,583
- Utilities
6,677
5,593
- Others
18,436
3,398
84,955
76,879
44,560
42,641
1,518
1,744
46,078
44,385
179,803
81,215
346
338
Personnel costs
- Salaries, allowances and bonuses
- Others
Establishment costs
Marketing expenses
- Advertisement and promotional expenses
- Others
Administrative and general expenses
- Processing cost
- Auditors’ remuneration
- Statutory audit
- Other services
191
182
- Stationeries and supplies
6,748
6,049
- Communication expenses
16,055
17,058
4,385
3,641
139,866
162,687
347,394
271,170
887,846
758,190
- Maintenance of office equipment
- Others
Total other operating expenses
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23. Other operating expenses (continued)
Group and Bank
20 1 1
2010
RM’000
RM’000
i. CEO and Directors’ remuneration
Executive Directors (including CEO)
Salary and other remuneration, including meeting allowances
2,314
2,114
Bonuses
971
2,315
Benefits-in-kind
392
318
Share-based payment
830
(489)
300
225
4,807
4,483
3,144
3,534
Non-executive Directors Fees
ii. Other key management personnel:
- short-term employee benefits
Salary
and others
remunerations
Bonuses
Benefitsinkind
Fees
RM’000
RM’000
Total
RM’000
RM’000
RM’000
2,314
-
971
392
3,677
Jonathan Christian Larsen
-
-
-
-
-
Tan Sri Dato’ Hj Omar Ibrahim
-
100
-
-
100
Dato’ Syed Sidi Idid Bin Syed Abdullah Idid
-
100
-
-
100
Dato’ Siow Kim Lun @ Siow Kim Lin
-
100
-
-
100
Agnes Liew Yun Chong
-
-
-
-
-
Terence Kent Cuddyre
-
-
-
-
-
2,314
300
971
392
3,977
Executive Directors and CEO
Sanjeev Nanavati
Non-executive Directors
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24. Allowance for loans, advances and financing
Group and Bank
20 1 1
2010
RM’000
RM’000
Allowance for loans, advances and financing:
Individual assessment
- allowance made during the year
16,888
34,644
(19,418)
(12,984)
(4,032)
8,950
- written back
(79,678)
(68,042)
- written off
230,981
238,427
144,741
200,995
- written back
Collective assessment
- (written back)/allowance made during the financial year, net
Impaired loans, advances and financing
25. Taxation
Group and Bank
20 1 1
2010
RM’000
RM’000
Malaysian income tax
- current year
- prior year over provision
220,302
207,671
(108,536)
(14,787)
111,766
192,884
(13,956)
1,469
67,520
-
165,330
194,353
Deferred tax expense
- Origination and reversal of temporary differences
- Prior year over provision
A reconciliation of the income tax expense between the statutory tax expense and effective tax expense is as follows:Group and Bank
20 1 1
2010
RM’000
RM’000
Profit before taxation
855,193
833,606
Income tax using Malaysian tax rate of 25%
213,798
208,402
431
715
(7,883)
23
Non-deductible expenses
Others
Over provision in prior year
206,346
209,140
(41,016)
(14,787)
165,330
194,353
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26. Earnings per share
The earnings per ordinary share has been calculated based on the net profit after taxation of RM6 89, 86 3,0 0 0 (2010 RM6 39, 253,000) divided by the number of ordinary shares of RM 1 each in issue during the year of 1 2 1 , 696 ,972.
27. Dividends
Dividends recognised in the current year by the Bank are:
Sen
per share
(net of tax)
Total
amount
RM’000
Date of
payment
20 11
Final 2010 ordinary
247
300,000
28 June 2011
20 10
Final 2009 ordinary
205
250,000
25 June 2010
After the reporting period, the following dividend was proposed by the Directors. This dividend will be recognised in
subsequent financial period upon approval by the equity holder of the Bank.
Final ordinary - 31 December 2011
Sen
per share
(net of tax)
Total
amount
RM’000
247
300,000
28. Significant related party transactions and balances
For the purpose of these financial statements, parties are considered to be related to the Group or the Bank if the Group
or the Bank has the ability, directly or indirectly, to control the party or exercise significant influence over the party in
making financial and operating decisions, or vice versa, or where the Group or the Bank and the party are subject to
common control or common significant influence. Related parties may be individuals or other entities.
The related parties of the Group and the Bank are:
(i)
Parent companies
Parent companies of the Group and the Bank are Citigroup Holdings (Singapore) Pte. Ltd. and Citigroup Inc.
(ii)
Other related companies
Entities which are related by virtue of having Citigroup Holdings (Singapore) Pte. Ltd. or Citibank Overseas Investment
Corporation as the holding companies and having Citigroup Inc. as the ultimate holding company.
(iii) Key management personnel
Key management personnel are defined as those persons having authority and responsibility for planning, directing
and controlling the activities of the Group or the Bank either directly or indirectly. The key management personnel of
the Group or the Bank includes all the Directors and certain members of senior management of the Group or the Bank.
Key management personnel compensation is disclosed in Note 23.
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28. Significant related party transactions and balances (continued)
Transactions and balances with parent companies and other related companies
Group and Bank
Group and Bank
20 1 1
20 1 0
RM’000
RM’000
RM’000
RM’000
Parent
companies
Other related
companies
Parent
companies
Other related
companies
Interest on interest bearing deposits
66,901
49,251
48,733
70,600
Other income
24,042
348,784
17,824
185,027
90,943
398,035
66,557
255,627
Income
Expenditure
Interest on interest bearing deposits
-
27,803
-
14,785
14,309
559,225
39,640
305,173
14,309
587,028
39,640
319,958
Interest bearing deposits
-
7,542,592
-
4,876,540
Current account balances
-
1,522,230
-
641,124
124,982
1,059,365
126,092
242,572
124,982
10,124,187
126,092
5,760,236
7,531,210
-
180,915
Other expenses
Amount due from
Other balances
Amount due to
Interest bearing deposits
-
Current account balances
147,870
248,537
279,177
236,308
Other balances
134,169
250,231
151,790
1,630,408
282,039
8,029,978
430,967
2,047,631
All related party transactions are conducted at arm’s length basis and on normal commercial terms which are not more
favourable than those generally available to public.
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29. Credit transactions and exposures with connected parties
Group and Bank
20 1 1
2010
RM’000
RM’000
2,438,114
1,224,100
-
-
68,594,284
60,288,251
3.55%
2.03%
57.20%
32.20%
0.00%
0.00%
Outstanding credit exposures with connected
parties of which:
Total credit exposure which is non-performing
or in default
Total credit exposures
Percentage of outstanding credit exposures to
connected parties
- as a proportion of total credit exposures
- as a proportion of capital base
- which is non-performing or in default
The disclosure on Credit Transactions and Exposures with Connected Parties above are presented in accordance with para
9.1 of Bank Negara Malaysia’s revised Guidelines on Credit Transactions and Exposures with Connected Parties, which
became effective on 1 January 2008.
Based on these guidelines, a connected party refers to the following:
i.
Directors of the Bank and their close relatives;
ii.
Controlling shareholder and his close relatives;
iii.
Executive Officer, being a member of management having authority and responsibility for planning, directing and/or
controlling the activities of the Bank, and his close relatives;
iv.
Officers who are responsible for or have the authority to appraise and/or approve credit transactions or review the
status of existing credit transactions, either as a member of a committee or individually, and their close relatives;
v.
Firms, partnerships, companies or any legal entities which control, or are controlled by any person listed in (i) to (iv)
above, or in which they have an interest, as a director, partner, executive officer, agent or guarantor, and their
subsidiaries or entities controlled by them;
vi.
Any person for whom the persons listed in (i) to (iv) above is a guarantor; and
vii.
Subsidiary of or an entity controlled by the Bank and its connected parties.
Credit transactions and exposures to connected parties as disclosed above include the extension of credit facilities and/or
off-balance sheet credit exposures such as guarantees, trade-related facilities and loan commitments. They also include
holdings of equities and private debt securities issued by the connected parties.
The credit transactions with connected parties above are all transacted on an arm’s length basis and on terms and
conditions no more favourable than those entered into with other counterparties with similar circumstances and
creditworthiness. Due care has been taken to ensure that the creditworthiness of the connected party is not less than that
normally required of other persons.
078
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30. Derivative financial instruments
2011
2010
Contract
amount
Positive
fair
value
Negative
fair
value
Contract
amount
Positive
fair
value
Negative
fair
value
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Foreign exchange
related contracts:
- Forwards
44,501,232
202,448
96,410
44,990,550
264,681
310,204
- Cross currency
interest rate swaps
5,212,667
294,397
294,535
6,948,760
423,054
311,223
- Options
2,034,702
9,026
2,956
703,871
3,205
3,213
Interest rate contracts:
- Futures
3,915,000
-
-
7,384,086
-
-
- Swaps
22,286,981
298,967
351,462
28,199,721
281,970
372,410
- Options
474,793
397
2,494
1,082,406
2,026
5,275
Equity related
contracts
178,235
7,893
7,893
1,321,876
14,927
14,956
Others
785,672
7,519
14,200
731,077
17,377
26,839
79,389,282
820,647
769,950
91,362,347
1,007,240
1,044,120
Note 9
Note 16
Note 9
Note 16
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31. Financial risk management
The Group’s and the Bank’s risk management framework are designed to monitor, evaluate and manage the principal risk
they assume in conducting its activities. These risks include the following:
•
credit risk
•
market risk
•
operational risk
1.
Credit Risk
Credit risk is the potential for financial loss resulting from the failure of a borrower or counter party to honour its
financial or contractual obligations. Credit arises in lending, trading, and derivatives transactions, securities
transactions, settlement and when the Bank acts as an intermediary on behalf of its clients and other third parties.
The credit risk management process of the Bank relies on corporate-wide standards to ensure consistency and
integrity, with business-specific policies and practices to ensure applicability and ownership. While business managers
and independent risk management are jointly responsible for managing risk/return trade offs as well as establishing
limits and risk management practices, the origination and approval roles are clearly defined and segregated. In
addition to conforming to established corporate standards, independent credit risk management is responsible for
establishing policies that comply with local regulations and any other relevant legal requirements.
Independent credit risk management is also responsible for implementing portfolio limits, including obligor limits
through risk rating, maturity and business segments limits to ensure diversification of portfolios, monitoring business
risk management performance, providing on-going assessment of portfolio credit risk and approving new products.
Continuous monitoring of credit behaviour aided by sophisticated scoring modules, plus portfolio delinquency
performance allows independent credit risk management to constantly assess the health of the credit portfolio.
The Group and the Bank secure various forms of collateral to mitigate credit risk exposures.
The main types of collateral obtained by the Group and the Bank to mitigate credit risk are as follows:
o
for residential mortgages - charges over residential properties
o
for commercial property loans - charges over the properties being financed
o
for share margin financing - pledges over quoted securities
o
for other loans - charges over business assets such as premises, inventories, trade receivable or deposits
079
080
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31. Financial risk management (continued)
A.
Credit risk exposures and credit risk concentration
The following tables present the Group’s maximum exposure to credit risk of its on and off balance sheet financial
instruments at 31 December 2011, by industry and geographical analysis, before taking into account collateral held or
other credit enhancements.
i.
By Industry analysis
Group
2011
Financial
Services,
Wholesale
Government
Insurance,
Electricity,
& Retail
and
House- Real Estate
Gas &
Trade,
Transport,
Social &
Central
hold & Business Services, Mining &
Water
Restaurants Storage & Community Other
Banks
Loans
Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Total
RM’000 RM’000 RM’000
On-Balance Sheet
Cash and short term funds
2,141,000
-
9,827,440
-
-
-
-
-
-
-
-
-
11,968,440
Deposits and placements
with bank and other
financial institutions
-
-
1,516,673
-
-
-
-
-
-
-
-
-
1,516,673
Securities purchased for
resale agreements
1,218,993
-
-
-
-
-
-
-
-
-
-
-
1,218,993
Financial assets heldfor-trading
2,336,849
-
-
-
-
-
-
-
-
-
-
-
2,336,849
Financial investments
available-for-sale
5,218,009
7,499
5,225,508
-
-
-
-
-
-
-
-
-
-
Loans, advances
and financing
- 15,958,134
800,246
105,178
18,991
2,409,876
86,890
45,704
921,901
301,573
16,160
Other assets
-
-
947,626
10,816
747
67,573
835
20
14,156
5,997
-
258,242
1,306,012
398,080
-
-
-
-
-
-
-
-
-
-
-
398,080
11,312,931 15,958,134 13,091,985
115,994
19,738
2,477,449
87,725
45,724
936,057
307,570
16,160
Statutory deposits with
Bank Negara Malaysia
277,365 20,942,018
543,106 44,912,573
Contingent liabilities
-
-
2,267,554
-
-
-
-
-
-
-
-
-
Commitments
- 21,974,557
2,822,702
-
-
-
-
-
-
-
-
- 24,797,259
11,312,931 37,932,691 18,182,241
115,994
19,738
2,477,449
87,725
45,724
936,057
307,570
16,160
543,106 71,977,386
Total Credit Exposures
2,267,554
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31. Financial risk management (continued)
A.
Credit risk exposures and credit risk concentration (continued)
i.
By Industry analysis (continued)
Group
2010
Financial
Services,
Wholesale
Government
Insurance,
Electricity,
& Retail
and
House- Real Estate
Gas &
Trade,
Transport,
Social &
Central
hold & Business Services, Mining &
Water
Restaurants Storage & Community Other
Banks
Loans
Services Agriculture Quarrying Manufacturing Supply Construction & Hotels Communication Services Sectors
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Total
RM’000 RM’000 RM’000
On-Balance Sheet
Cash and short term funds
4,576,600
-
5,904,433
-
-
-
-
-
-
-
-
-
10,481,033
Deposits and placements
with bank and other
financial institutions
-
-
811,660
-
-
-
-
-
-
-
-
-
811,660
Securities purchased for
resale agreements
404,417
-
-
-
-
-
-
-
-
-
-
-
404,417
Financial assets heldfor-trading
1,837,368
-
-
-
-
-
10,095
-
5,000
-
-
-
1,852,463
Financial investments
available-for-sale
3,097,989
-
-
-
-
-
-
-
-
-
-
7,499
3,105,488
Loans, advances
and financing
-
16,365,585
512,027
35,022
7,708
1,710,646
32,295
46,104
840,970
137,600
19,933
371,754
20,079,644
Other assets
-
-
624,296
1,802
2,042
87,229
173
21
13,674
17,822
3
570,698
1,317,760
9,916,374
16,365,585
7,852,416
36,824
9,750
1,797,875
42,563
46,125
859,644
155,422
19,936
949,951
38,052,465
617
-
2,307,478
-
-
-
-
-
1,114
-
-
-
2,309,209
-
21,912,163
1,632,020
-
-
-
-
-
-
-
-
-
23,544,183
9,916,991
38,277,748
11,791,914
36,824
9,750
1,797,875
42,563
46,125
860,758
155,422
19,936
949,951
63,905,857
Contingent liabilities
Commitments
Total Credit Exposures
082
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31. Financial risk management (continued)
A.
Credit risk exposures and credit risk concentration (continued)
ii.
By Geographical analysis
Group
Malaysia
Hong Kong &
Singapore China PRC Japan
Australasia
North
America
2011
RM’000
RM’000
RM’000
Cash and short term funds
5,232,143
3,902,079
Deposits and placements
with banks and other
financial institutions
1,251,495
Securities purchased
for resale agreements
United
Other
Kingdom countries
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
144,827
6,436
12,527
702,090
444,941
1,523,397
11,968,440
106,278
-
158,900
-
-
-
-
1,516,673
1,218,993
-
-
-
-
-
-
-
1,218,993
Financial assets heldfor-trading
2,336,849
-
-
-
-
-
-
-
2,336,849
Financial investments
available-for-sale
5,225,508
-
-
-
-
-
-
-
5,225,508
Loans, advances and
financing
20,942,018
-
-
-
-
-
-
-
20,942,018
Other assets
758,583
14,533
681
4,904
1,520
126,964
240,823
158,004
1,306,012
Statutory deposits with
Bank Negara Malaysia
398,080
-
-
-
-
-
-
-
398,080
37,363,669
4,022,890
145,508
170,240
14,047
829,054
685,764
1,681,401
44,912,573
1,627,769
19,180
469,849
-
1,624
63,232
36,688
49,212
2,267,554
Commitments
24,797,259
-
-
-
-
-
-
-
24,797,259
Total Credit Exposures
63,788,697
4,042,070
615,357
170,240
15,671
892,286
722,452
1,730,613
71,977,386
Total
On-Balance Sheet
Contingent liabilities
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31. Financial risk management (continued)
A.
Credit risk exposures and credit risk concentration (continued)
ii.
By Geographical analysis (continued)
Group
Malaysia
Hong Kong &
Singapore China PRC Japan
Australasia
North
America
2010
RM’000
RM’000
RM’000
6,884,986
3,113,155
495,159
United
Other
Kingdom countries
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
8,654
48,309
61,220
13,639
76,082
274,988
10,481,033
162,326
-
154,175
-
-
-
-
811,660
404,417
-
-
-
-
-
-
-
404,417
1,847,463
-
-
5,000
-
-
-
-
1,852,463
2,974,380
-
-
-
-
131,108
-
-
3,105,488
20,079,644
-
-
-
-
-
-
-
20,079,644
792,891
12,958
277
20,162
513
126,856
208,795
155,308
1,317,760
33,478,940
3,288,439
8,931
227,646
61,733
271,603
284,877
430,296
38,052,465
1,742,225
29,560
285,447
-
2,653
67,602
33,459
148,263
2,309,209
Commitments
23,544,183
-
-
-
-
-
-
-
23,544,183
Total Credit Exposures
58,765,348
3,317,999
294,378
227,646
64,386
339,205
318,336
578,559
63,905,857
Total
On-Balance Sheet
Cash and short term funds
Deposits and placements
with banks and other
financial institutions
Securities purchased
for resale agreements
Financial assets heldfor-trading
Financial investments
available-for-sale
Loans, advances and
financing
Other assets
Contingent liabilities
The disclosures represented the Bank’s exposures except for RM20,000 cash and cash equivalents being deposited by the
subsidiaries were eliminated in the above tables.
084
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31. Financial risk management (continued)
B.
Deposits and placements with banks and other financial institutions
i.
Deposits and placements with banks and other financial institutions analysis by credit rating
Group and Bank
AAA
AA to AA-
ii.
20 1 1
2010
RM’000
RM’000
320,000
300,000
-
100,000
A+ to A-
1,196,673
316,501
Unrated
-
95,159
1,516,673
811,660
Deposits and placements with banks and other financial institutions analysis by geographical location where
the credit risk of issuers reside, regardless of where the assets are booked, is as follows:
Group and Bank
Malaysia
Other
C.
20 1 1
2010
RM’000
RM’000
1,251,495
495,159
265,178
316,501
1,516,673
811,660
Other securities
Group and Bank
20 1 1
2010
RM’000
RM’000
Financial assets held-for-trading
2,336,849
1,852,463
Financial investments available-for-sale
5,225,508
3,105,488
7,562,357
4,957,951
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31. Financial risk management (continued)
C.
Other securities (continued)
i.
Other securities analysis by credit rating
At the reporting date, the credit quality of investment in other securities by designation of an external credit
assessment institution is as follows:Group and Bank
20 1 1
2010
RM’000
RM’000
6,500
11,500
A+ to A-
4,427,380
4,804,249
Unrated
3,128,477
142,202
7,562,357
4,957,951
AAA
ii.
Other securities analysis by geographical location where the credit risk of issuers reside, regardless of where
the assets are booked, is as follows:
Group and Bank
Malaysia
Other
20 1 1
2010
RM’000
RM’000
7,562,357
4,821,844
-
136,107
7,562,357
4,957,951
086
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31. Financial risk management (continued)
D.
Credit quality of Loans, advances and financing
Group and Bank
20 1 1
2010
RM’000
RM’000
18,732,135
17,498,466
1,719,346
2,040,363
490,537
540,815
Loans, advances and financing
- neither past due nor impaired
- past due but not impaired
- impaired
Gross amount
20,942,018
20,079,644
Individual assessment allowance
(219,436)
(229,542)
Collective assessment allowance
(365,325)
(369,357)
20,357,257
19,480,745
Carrying amount
Neither past due nor impaired
Included in the total loans, advances and financing neither past due nor impaired are renegotiated loans. The analysis
below represents the carrying amount of loans that would otherwise be past due or impaired if their terms had not
been renegotiated. These renegotiated loans are considered neither past due not impaired after they have been
monitored as impaired loans until a minimum number of payments have been received under the new terms.
Group and Bank
Renegotiated loans
20 1 1
2010
RM’000
RM’000
876,855
846,099
Past due but not impaired
Analysis of loans, advances and financing to customers that are past due but not impaired analysed based on aging
are as follows:
Group and Bank
1 - 29 dpd
20 1 1
2010
RM’000
RM’000
1,228,861
1,419,750
30 - 59 dpd
331,993
437,370
60 - 89 dpd
158,492
183,243
90 - 119 dpd
-
-
120 - 118 dpd
-
-
>180 dpd
-
-
1,719,346
2,040,363
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31. Financial risk management (continued)
D.
Credit quality of Loans, advances and financing (continued)
Impaired
Loans and advances are classified as impaired when they meet one of the following criteria:
i.
principal or interest or both are past due for three (3) months or more;
ii.
where there is an individual impairment provision on the loan;
iii.
impaired loans that have been rescheduled or restructured that have not met the continuous repayment
behavior based on the revised rescheduled and/or restructured terms over the observation period.
Loans and advances to customers that are individually impaired analysed by age are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
10,957
15,786
8,319
13,959
30 - 59 dpd
12,305
12,688
60 - 89 dpd
31,738
34,317
Current
1 - 29 dpd
90 - 119 dpd
74,426
57,572
120 - 180 dpd
104,047
118,518
>1 80 dpd
248,745
287,975
490,537
540,815
Estimated value of collaterals against past due but not impaired and impaired loans are RM76 6 ,0 45,0 0 0 (2010 RM7 11, 249,000).
088
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31. Financial risk management (continued)
2.
Market Risk
Market risk encompasses price risk and liquidity risk, both arising in the normal course of business operations of the
Group and the Bank. The objective of market risk management is to manage and control market risk exposures within
acceptable parameters while optimising the return on risk.
Market risk in the Group and the Bank are managed through corporate-wide standards and business-specific policies
and procedures with the help of responsible personnel and committees delegated by the Board of Directors such as
the Risk Management Committee, Asset and Liability Committee and Market Risk Management. The business is
required to establish risk measures, limits and controls, clearly defining approved risk profiles within the parameters
of the Group and the Bank’s overall risk appetite and for operating within the established market risk limit framework.
Independent market risk management establishes policies and procedures, approves limits and monitors exposures
against limits.
Price Risk
Price risk is the risk associated to earnings arising from changes in interest rate, foreign exchange rates, equity and
commodity prices and in their implied volatilities. Price risk arises in non-trading as well as trading portfolios. Price
risk in non-trading portfolio is measured predominantly through earnings-at-risk and factor sensitivities
supplemented with additional tools such as stress testing and cost-to-close analysis. Price risk in trading portfolios is
measured through tools such as factor sensitivities, value-at-risk and stress testing.
Interest rate risk primarily results from the timing differences in the repricing of interest bearing assets, liabilities and
commitments. It is also related to positions from non-interest bearing liabilities including shareholders’ funds and
current accounts, as well as from certain fixed rate loans and liabilities.
The Group and the Bank are exposed to such risks associated with the effects of the fluctuations in the prevailing
market interest rates on its financial positions and cash flows.
Factor sensitivities are expressed as the change in the value of a position for a defined change in a market risk factor.
For the sensitivity analysis provided in this section, the Group and the Bank have used a 100 basis points movement
for interest rates and a 6% movement in foreign exchange rates to measure the impact of these market risk
movements on the Group and the Bank.
Interest rate risk – Sensitivity analysis
At 31 December 2011, it is estimated that a general increase of 100 basis points in interest rate, with all other variables
held constant, would decrease the Bank’s profit before tax by approximately RM1 1 7, 588,1 1 5 whereas a general
decrease of 100 basis points in interest rate, with all other variables held constant, would have an equal but opposite effect.
The sensitivity analysis above has been determined assuming that the change in interest rates had occurred at the
reporting date and had been applied to the exposure to interest rate risk for both derivative and non-derivative
financial instruments in existence at that date and that all other variables, in particular foreign exchange rates,
remain constant. The above basis point increase or decrease represents management’s assessment of a reasonably
possible change in interest rates over the period until the next annual reporting date.
Foreign currency risk – Sensitivity analysis
As at 31 December 2011, it is estimated that a movement of 6% in Ringgit Malaysia (RM) against foreign currencies,
with all other variables held constant, would result in maximum loss of approximately RM2,276,286.
The sensitivity analysis has been determined assuming that the change in foreign exchange rates had occurred at the
reporting date and had been applied to the Group’s and the Bank’s exposure to currency risk for both derivative and
non-derivative financial instruments in existence at that date, and that all other variables, in particular interest rate,
remains constant. The sensitivity analysis includes balances where the denomination of the balances is in a currency
other than the Ringgit Malaysia (RM).
The stated changes represent management’s assessment of reasonably possible changes in foreign exchange rates
over the period until the next annual reporting date. Results of the analysis represent an aggregation of the effects
on the Group’s and the Bank’s profit before tax measured in the respective functional currencies, translated into
Ringgit Malaysia (RM) at the exchange rate ruling at the balance sheet date for presentation purposes.
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31. Financial risk management (continued)
2.
Market Risk (continued)
Liquidity Risk
Liquidity risk is the risk that the Group and the Bank will not be able to meet its financial commitments when due.
Under the Group’s and the Bank’s internal liquidity risk management policy, there is a set of standards for the
measurement of liquidity risk in order to ensure consistency, stability in methodologies and transparency of risk.
Management of liquidity is performed on a daily basis and is monitored by the Treasurer. The Asset and Liability
Committee and the Treasurer undertake the joint responsibility of overall liquidity risk management which covers
establishing and endorsing the annual funding and liquidity plan, liquidity limits, liquidity ratios, market triggers and
periodic stress tests.
The Group and the Bank include the net cash flow position for derivatives as part of their daily liquidity reports under
off balance sheet items, which are consolidated together with the on balance sheet items to monitor the overall
liquidity position of the Group and the Bank. The daily report prepared to monitor the daily liquidity position is known
as the Market Access Report (“MAR”). It is prepared by major currencies and it has maturity analysis ranging from
overnight to more than 2 years and limits are set for each tenor bucket. Maturity mismatches are monitored through
the daily MAR report for necessary treasury actions on funding and gapping.
Limits are determined by the ultimate holding company and are reviewed as often as on a quarterly basis and is done
in conjunction with the liquidity stress testing.
The following table indicates the effective interest rate at the balance sheet date and periods in which the financial
instruments reprice or mature, whichever is earlier.
i.
Interest/profit rate risk
Group
Up to 1
month
>1-3
months
> 3 - 12
months
>1-5
years
Over 5
years
Non-interest
sensitive
Trading
book
Total
Effective
interest
rate
2011
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
%
Assets
Cash and short term funds
10,324,608
-
-
-
-
1,643,832
-
11,968,440
1.55%
-
733,854
619,328
163,491
-
-
-
1,516,673
2.67%
1,218,993
-
-
-
-
-
-
1,218,993
2.10%
-
-
-
-
2,336,849
2,336,849
3.04%
1,436,145 2,807,965
673,760
-
-
5,225,508
2.78%
6.60%
Deposits and placements with
banks and other financials
institutions
Securities purchased under
resale agreements
Financial assets held-for-trading
-
-
Financial investments
available-for-sale
-
307,638
1,725,044
1,422,520
6,993,639
632,761
9,677,517
(365,325)
-
20,086,156
- impaired
-
-
-
-
-
271,101
-
271,101
Other assets
-
-
-
-
-
485,360
820,652
1,306,012
Statutory deposits with
Bank Negara Malaysia
-
-
-
-
-
398,080
-
398,080
Loans, advances and financing
- performing
Deferred tax assets
-
-
-
-
-
796
-
796
Plant and equipment
-
-
-
-
-
120,905
-
120,905
13,268,645
2,464,012
9,049,112 3,604,217 10,351,277
2,554,749
3,157,501
44,449,513
Total assets
090
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31. Financial risk management (continued)
i.
Interest/profit rate risk (continued)
Group
Up to 1
month
>1-3
months
> 3 - 12
months
>1-5
years
Over 5
years
Non-interest
sensitive
Trading
book
Total
Effective
interest
rate
2011
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
%
1,485,000 3,956,486
598,930
-
-
-
30,051,586
1.66%
3,365,590
3,485,651
802,972
122,884
-
-
-
7,777,097
0.40%
Bills and acceptances payable
-
-
-
-
-
63,761
-
63,761
Other liabilities
-
-
-
-
-
1,767,764
769,950
2,537,714
Total liabilities
27,376,760
4,970,651 4,759,458
721,814
-
1,831,525
769,950
40,430,158
-
-
-
4,019,355
-
4,019,355
4,970,651 4,759,458
721,814
-
5,850,880
769,950
44,449,513
Liabilities and
Shareholders’ equity
24,011,170
Deposits from customers
Deposits and placements of
banks and other financial
institutions
Shareholders’ equity
Total liabilities and
shareholders' equity
On-balance sheet interest
sensitivity gap
Off-balance sheet interest
sensitivity gap
-
27,376,760
-
(14,108,115) (2,506,639) 4,289,654 2,882,403 10,351,277 (3,296,131) 2,387,551
(223,464)
(467,705)
811,510
92,589
95,340
-
-
(14,331,579) (2,974,344) 5,101,164 2,974,992 10,446,617 (3,296,131) 2,387,551
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31. Financial risk management (continued)
i.
Interest/profit rate risk (continued)
Group
Up to 1
month
>1-3
months
> 3 - 12
months
>1-5
years
Over 5
years
Non-interest
sensitive
Trading
book
Total
Effective
interest
rate
2010
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
%
Assets
Cash and short term funds
9,763,380
-
-
-
-
717,653
-
10,481,033
1.50%
-
578,355
51,793
181,512
-
-
-
811,660
4.29%
404,417
-
-
-
-
-
-
404,417
1.35%
Financial assets held-for-trading
-
-
-
-
-
-
1,852,463
1,852,463
2.69%
Financial investments
available-for-sale
-
-
277,443 2,719,300
108,745
-
-
3,105,488
3.39%
1,385,476
975,383
6,324,229
246,547 10,607,195
(369,357)
-
19,169,473
6.71%
- impaired
-
-
-
-
-
311,272
-
311,272
Other assets
-
-
-
-
-
310,520
1,007,240
1,317,760
Deferred tax assets
-
-
-
-
-
59,300
-
59,300
Plant and equipment
-
-
-
-
-
108,781
-
108,781
11,553,273
1,553,738
6,653,465 3,147,359 10,715,940
1,138,169
2,859,703
37,621,647
Deposits and placements with
banks and other financial
institutions
Securities purchased under
resale agreements
Loans, advances and financing
- performing
Total assets
092
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31. Financial risk management (continued)
i.
Interest/profit rate risk (continued)
Group
Up to 1
month
>1-3
months
> 3 - 12
months
>1-5
years
Over 5
years
Non-interest
sensitive
Trading
book
Total
Effective
interest
rate
2010
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
%
Liabilities and
Shareholders’ equity
Deposits from customers
19,323,608
2,472,684
6,352,805
639,766
-
-
-
28,788,863
1.27%
512,996
1,438,808
256,016
115,105
-
-
-
2,322,925
0.89%
Bills and acceptances payable
-
-
-
-
-
47,982
-
47,982
Other liabilities
-
-
-
-
-
1,802,282
1,044,120
2,846,402
Total liabilities
19,836,604
3,911,492
6,608,821
754,871
-
1,850,264
1,044,120
34,006,172
-
-
-
-
-
3,615,475
-
3,615,475
Total liabilities and
Shareholders' equity
19,836,604
3,911,492
6,608,821
754,871
-
5,465,739
1,044,120
37,621,647
On-balance sheet interest
sensitivity gap
(8,283,331) (2,357,754)
44,644 2,392,488 10,715,940
(4,327,570)
1,815,583
(61,670)
-
-
48,713 3,236,838 10,654,270
(4,327,570)
1,815,583
Deposits and placements of
banks and other financial
institutions
Shareholders’ equity
Off-balance sheet interest
sensitivity gap
(21,735)
(666,608)
(8,305,066) (3,024,362)
4,069
844,350
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31. Financial risk management (continued)
ii.
Foreign currency risk
Foreign currency risk results in the Group's exposure to the effects of fluctuations in the prevailing foreign currency
exchange rates on its financial position and cash flows. The tables below summarise the RM equivalent amount of the
Group's exposure to foreign currency exchange rate risk as at reporting date:
MYR
USD
JPY
Others
20 1 1
20 1 1
20 1 1
20 1 1
Total
RM’000
RM’000
RM’000
RM’000
RM’000
2,980,351
6,930,088
170,487
1,887,514
11,968,440
Deposits and placements
with banks and other
financial institutions
505,000
742,652
167,942
101,079
1,516,673
Securities purchased
under resale agreements
1,218,993
-
-
-
1,218,993
Financial assets heldfor-trading
2,336,849
-
-
-
2,336,849
Financial investments
available-for-sale
5,225,508
-
-
-
5,225,508
Loans, advances and financing
18,652,984
1,537,447
156,882
9,944
20,357,257
Other assets
(3,083,640)
4,901,670
868,509
(1,380,527)
1,306,012
Group
20 1 1
Assets
Cash and short term funds
Statutory Deposits with
Bank Negara Malaysia
Deferred tax assets
Plant and equipment
Total assets
398,080
-
-
796
-
-
-
398,080
796
120,905
-
-
-
120,905
28,355,826
14,111,857
1,363,820
618,010
44,449,513
24,420,783
4,054,517
38,882
1,537,404
30,051,586
187,698
7,138,063
438,673
12,663
7,777,097
Liabilities
Deposits from customers
Deposits and placements of
banks and other financial
institutions
Bills and acceptances payable
Other liabilities
Total liabilities
Shareholder’s equity
Total liabilities and
Shareholder’s equity
913
57,499
2,372
2,977
63,761
(530,137)
3,382,608
885,192
(1,199,949)
2,537,714
24,079,257
14,632,687
1,365,119
353,095
40,430,158
4,019,355
-
-
-
4,019,355
28,098,612
14,632,687
1,365,119
353,095
44,449,513
094
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31. Financial risk management (continued)
ii.
Foreign currency risk (continued)
Foreign currency risk results in the Group's exposure to the effects of fluctuations in the prevailing foreign currency
exchange rates on its financial position and cash flows. The tables below summarise the RM equivalent amount of the
Group's exposure to foreign currency exchange rate risk as at reporting date:
MYR
USD
JPY
Others
Group
20 1 0
20 1 0
20 1 0
20 1 0
Total
20 1 0
RM’000
RM’000
RM’000
RM’000
RM’000
5,175,951
4,275,961
165,662
863,459
10,481,033
Deposits and placements
with banks and other
financial institutions
400,000
214,965
56,762
139,933
811,660
Securities purchased
under resale agreements
Assets
Cash and short term funds
404,417
-
-
-
404,417
Financial assets heldfor-trading
1,852,463
-
-
-
1,852,463
Financial investments
available-for-sale
2,974,380
-
-
3,105,488
Loans, advances and
financing
18,793,386
500,705
165,477
21,177
19,480,745
9,906,252
(9,071,471)
985,692
(502,713)
1,317,760
Other assets
Deferred tax assets
Plant and equipment
Total assets
131,108
59,300
-
-
-
59,300
108,781
-
-
-
108,781
39,674,930
(3,948,732)
1,373,593
521,856
37,621,647
22,095,674
5,676,701
28,576
987,912
28,788,863
539,841
1,499,724
273,162
10,198
2,322,925
Liabilities
Deposits from customers
Deposits and placements of
banks and other financial
institutions
Bills and acceptances payable
911
31,405
2,706
12,960
47,982
Other liabilities
12,317,226
(10,018,370)
1,064,106
(516,560)
2,846,402
Total liabilities
34,953,652
(2,810,540)
1,368,550
494,510
34,006,172
3,615,475
-
-
-
3,615,475
38,569,127
(2,810,540)
1,368,550
494,510
37,621,647
Shareholder’s equity
Total liabilities and
Shareholder’s equity
t
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
A
n
n
u
a
l
R
e
p
o
r
095
t
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
31. Financial risk management (continued)
iii.
Analysis of assets and liabilities by remaining maturity
The following maturity profile is based on the remaining period at the balance sheet date to the contractual maturity.
Less than
7 days
7 days to
1 month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 3
years
3 to 5
years
Over
5 years
No
specific
maturity
Total
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
6,423,830
3,900,778
-
-
-
-
-
Deposits and placements
with banks and other
financial institutions
-
-
733,854
354,781
264,547
162,597
894
-
-
1,516,673
Securities purchased
under resale
agreements
-
1,218,993
-
-
-
-
-
-
-
1,218,993
Financial assets
held-for-trading
-
127,356 1,098,792
293,885
390,371
446,387
(97,677)
77,735
-
2,336,849
Financial investments
available-for-sale
-
811,937
624,208 1,759,444
1,048,521
673,760
-
5,225,508
2011
Assets
Cash and short
term funds
-
307,638
- 1,643,832 11,968,440
Loans, advances and
financing
372,100
Other assets
476,993
87,648
75,400
92,727
35,722
315,181
56,571
100,344
65,426
1,306,012
Statutory Deposits with
Bank Negara Malaysia
-
-
-
-
-
-
-
-
398,080
398,080
Deferred tax assets
-
-
-
-
-
-
-
-
796
796
Plant and equipment
-
-
-
-
-
-
-
-
120,905
120,905
Total assets
7,272,923
1,372,220 1,466,563 1,130,554 6,070,508
323,064
6,706,995 3,682,247 2,683,884 7,385,356 3,006,673
404,260 9,731,856 (513,868) 20,357,257
1,412,569 10,583,695 1,715,171 44,449,513
096
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
A
n
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u
a
l
R
e
p
o
r
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
31. Financial risk management (continued)
iii.
Analysis of assets and liabilities by remaining maturity (continued)
Less than
7 days
7 days to
1 month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 3
years
3 to 5
years
Over
5 years
No
specific
maturity
Total
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
Deposits from customers
14,856,097
9,155,073
1,485,000
561,057
3,395,429
372,522
226,408
-
-
30,051,586
Deposits and placements
of banks and other
financial institutions
1,432,250
1,933,340
3,485,651
638,927
164,045
122,884
-
-
-
7,777,097
Bills and acceptances
payable
1,016,844
(250,384)
(366,546)
(336,153)
-
-
-
-
-
63,761
Other liabilities
1,773,033
51,804
43,039
44,453
20,287
384,451
84,553
93,170
42,924
2,537,714
Total liabilities
19,078,224
10,889,833
4,647,144
908,284
3,579,761
879,857
310,961
93,170
42,924
40,430,158
Share capital
-
-
-
-
-
-
-
-
121,697
121,697
Reserves
-
-
-
-
-
-
-
- 3,897,658
3,897,658
Total equity attributable to
equity holder of the bank
-
-
-
-
-
-
-
- 4,019,355
4,019,355
19,078,224
10,889,833
4,647,144
908,284
3,579,761
879,857
310,961
93,170 4,062,279
44,449,513
2011
Liabilities and
Shareholders’ funds
Total liabilities and equity
t
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
A
n
n
u
a
l
R
e
p
o
r
097
t
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
31. Financial risk management (continued)
iii.
Analysis of assets and liabilities by remaining maturity
The following maturity profile is based on the remaining period at the balance sheet date to the contractual maturity.
2010
Less than
7 days
7 days to
1 month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 3
years
3 to 5
years
Over
5 years
No
specific
maturity
Total
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
Assets
Cash and short
term funds
8,557,099
1,018,710
-
-
-
-
-
-
Deposits and placements
with banks and other
financial institutions
-
-
578,355
19,707
32,085
178,875
2,638
-
-
811,660
Securities purchased
under resale
agreements
-
404,417
-
-
-
-
-
-
-
404,417
Financial assets
held-for-trading
-
20,329
666,005
546,891
388,186
192,269
193,534
(154,751)
-
1,852,463
Financial investments
available-for-sale
-
-
-
49,986
227,458 2,009,960
709,339
108,745
-
3,105,488
Loans, advances and
financing
205,476
Other assets
323,798
72,516
Deferred tax assets
-
Plant and equipment
-
Total assets
9,086,373
971,738 1,022,388
905,224 10,481,033
452,409 6,093,780
119,013
369,641 10,352,473 (106,173) 19,480,745
138,915
230,998
32,102
283,367
107,563
69,729
58,772
1,317,760
-
-
-
-
-
-
-
59,300
59,300
-
-
-
-
-
-
-
108,781
108,781
2,487,710 2,405,663 1,299,991 6,773,611 2,783,484
1,382,715 10,376,196 1,025,904 37,621,647
098
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
A
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u
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e
p
o
r
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
31. Financial risk management (continued)
iii.
Analysis of assets and liabilities by remaining maturity (continued)
Less than
7 days
7 days to
1 month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 3
years
3 to 5
years
Over
5 years
No
specific
maturity
Total
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
RM'000
Deposits from customers
11,988,182
7,335,425
2,472,684
1,928,144
4,424,662
368,565
271,201
-
-
28,788,863
Deposits and placements
of banks and other
financial institutions
303,475
209,521
1,438,808
226,531
29,484
1,582
113,524
-
-
2,322,925
Bills and acceptances
payable
1,019,456
(289,259)
(497,553)
(184,662)
-
-
-
-
-
47,982
Other liabilities
1,835,756
75,224
154,836
94,731
84,948
275,760
197,010
60,481
67,656
2,846,402
Total liabilities
15,146,869
7,330,911
3,568,775
2,064,744 4,539,094
645,907
581,735
60,481
67,656
34,006,172
Share capital
-
-
-
-
-
-
-
-
121,697
121,697
Reserves
-
-
-
-
-
-
-
- 3,493,778
3,493,778
Total equity attributable to
equity holder of the bank
-
-
-
-
-
-
-
- 3,615,475
3,615,475
15,146,869
7,330,911
3,568,775
2,064,744
4,539,094
645,907
581,735
60,481 3,683,131
37,621,647
2010
Liabilities and
Shareholders’ funds
Total liabilities and equity
t
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
A
n
n
u
a
l
R
e
p
o
r
099
t
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
31. Financial risk management (continued)
iv.
Analysis of financial liabilities by contractual undiscounted cash flows
The table below details the remaining contractual maturities at the balance sheet date of the Group’s financial
liabilities, which are based on contractual undiscounted cash flows (including interest payments computed using
contractual rates or if floating, based on rates current at the balance sheet date) and the earliest date the Group can
be required to pay.
Group
Carrying
Amount
Total
contractual
undiscounted
cash flows
1 month
or less
Over 1
month to
3 months
Over 3
months to
1 year
Over
1 year to
5 years
Over
5 years
2011
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Financial liabilities
Deposits from customers
30,051,586
30,207,246
24,131,510
1,405,722
4,060,241
609,773
-
Deposits and placements
of banks and other
financial institutions
7,777,097
7,781,241
3,365,836
3,487,778
804,141
123,486
-
Bills and acceptances payable
Other liabilities
Total
63,761
63,761
756,769
(359,864)
(333,144)
-
-
2,537,714
2,537,714
1,847,240
50,237
72,927
472,592
94,718
40,430,158
40,589,962
30,101,355
4,583,873
4,604,165
1,205,851
94,718
Group
Carrying
Amount
Total
contractual
undiscounted
cash flows
1 month
or less
Over 1
month to
3 months
Over 3
months to
1 year
Over
1 year to
5 years
Over
5 years
2010
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Financial liabilities
Deposits from customers
28,788,863
28,932,550
21,242,320
1,512,703
5,523,671
623,834
30,022
Deposits and placements
of banks and other
financial institutions
2,322,925
2,323,975
2,164,426
605
42,985
115,959
-
47,982
47,982
730,196
(497,553)
(184,661)
-
-
2,846,402
2,846,402
1,978,637
154,835
179,679
472,770
60,481
34,006,172
34,150,909
26,115,579
1,170,590
5,561,674
1,212,563
90,503
Bills and acceptances payable
Other liabilities
Total
100
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
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u
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p
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r
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
31. Financial risk management (continued)
3.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or from
external events. It includes reputation and franchise risk associated with business practices or market conduct that
the Group and the Bank may undertake and includes the risk of failing to comply with applicable laws, regulations and
Citigroup policies.
Operational risk is inherent in the Group’s and the Bank’s business activities and is managed through an overall
framework with checks and balances that include recognised ownership of the risk by businesses and independent
risk management oversight. The Group and the Bank mitigate their operational risk by setting up its key controls and
assessments according to Citigroup’s and Regulators’ standards. They are also evaluated, monitored, and managed by
its sound governance structure.
The Group and the Bank’s Self Assessments and Operational Risk Framework include the Risk and Control
Self-Assessment and the Operational Risk Policy, and define the Group’s and the Bank’s approach to operational risk
management. The objective of the policy is to establish a consistent approach to assessing relevant risks and the
overall control environment across the Group and the Bank, to facilitate adherence to regulatory requirements and
other corporate initiatives.
32. Financial assets and liabilities
32.1 Categories of financial instruments
The table below provides an analysis of financial instruments categorised as follows:
a.
b.
Loans and receivables (“L&R”);
Fair value through profit or loss (“FVTPL”):
- Held for trading (“HFT”);
c.
Available-for-sale financial assets (“AFS”);
d.
Other liabilities (“OL”).
t
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
A
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p
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r
101
t
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
32. Financial assets and liabilities (continued)
32.1 Categories of financial instruments (continued)
Group
Carrying
L&R/
FVTPL
amount
(OL)
-HFT
AFS
RM’000
RM’000
RM’000
RM’000
11,968,440
11,968,440
-
-
1,516,673
1,516,673
-
-
1,218,993
1,218,993
-
-
2,336,849
-
2,336,849
-
5,225,508
-
-
5,225,508
20,357,257
20,357,257
-
-
2011
Financial Assets
Cash and short-term funds
Deposits and placements
with banks and other
financial institutions
Securities purchased under
resale agreements
Financial assets held-for-trading
Financial investments available-for-sale
Loans, advances and financing
Derivatives financial assets
820,647
-
820,647
-
Interest/Income receivable
66,174
66,174
-
-
43,510,541
35,127,537
3,157,496
5,225,508
30,051,586
30,051,586
-
-
7,777,097
7,777,097
-
-
63,761
63,761
-
-
769,950
-
769,950
-
81,090
81,090
-
-
38,743,484
37,973,534
769,950
-
Total financial assets
Financial Liabilities
Deposits from customers
Deposits and placements
of banks and other
financial institutions
Bills and acceptances payable
Derivatives financial
liabilities
Interest/Profit payable
Total financial liabilities
102
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
A
n
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u
a
l
R
e
p
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t
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
32. Financial assets and liabilities (continued)
32.1 Categories of financial instruments (continued)
Carrying
L&R/
FVTPL
amount
(OL)
-HFT
AFS
RM’000
RM’000
RM’000
RM’000
Cash and short-term funds
10,481,033
10,481,033
-
-
Deposits and placements
with banks and other
financial institutions
811,660
811,660
-
-
404,417
404,417
-
-
1,852,463
-
1,852,463
-
3,105,488
-
-
3,105,48
19,480,745
19,480,745
-
-
Group
2010
Financial Assets
Securities purchased under
resale agreements
Financial assets held-for-trading
Financial investments available-for-sale
Loans, advances and financing
Derivatives financial assets
1,007,240
-
1,007,240
-
Interest/Income receivable
45,880
45,880
-
-
37,188,926
31,223,735
2,859,703
28,788,863
28,788,863
-
-
2,322,925
2,322,925
-
-
47,982
47,982
-
-
1,044,120
-
1,044,120
-
106,294
106,294
-
-
32,310,184
31,266,064
1,044,120
-
Total financial assets
3,105,488
Financial Liabilities
Deposits from customers
Deposits and placements
of banks and other
financial institutions
Bills and acceptances payable
Derivatives financial
liabilities
Interest/Profit payable
Total financial liabilities
C
i
t
i
b
a
n
k
B
e
r
h
a
d
l
2
0
1
1
A
n
n
u
a
l
R
e
p
o
r
103
t
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
32. Financial assets and liabilities (continued)
32.2 Fair value of financial instruments
The following table summarises the fair values of the financial assets and liabilities carried on the statements of
financial position as at 31 December of the Group.
Group
Carrying
Fair
Carrying
Fair
value
value
value
value
2011
2011
2010
2010
RM’000
RM’000
RM’000
RM’000
11,968,440
11,968,440
10,481,033
10,481,033
Deposits and placements with
banks and other financial institutions
1,516,673
1,516,534
811,660
822,904
Securities purchased under resale
agreements
1,218,993
1,218,993
404,417
404,417
Financial assets held-for-trading
2,336,849
2,336,849
1,852,463
1,852,463
Financial investments available-for-sale
5,225,508
5,225,508
3,105,488
3,105,488
20,357,257
20,234,356
19,850,102
19,018,880
1,306,012
1,306,012
1,317,760
1,317,760
30,051,586
30,051,442
28,788,863
28,790,690
7,777,097
7,777,097
2,322,925
2,322,930
63,761
63,761
47,982
47,982
2,537,714
2,537,714
2,846,402
2,846,402
Cash and short term funds
Loans, advances and financing
Other assets
Deposits from customers
Deposits and placements of
banks and other financial institutions
Bills and acceptances payable
Other liabilities
The methods and assumptions used in estimating the fair values of financial instruments are as follows:
a.
Cash and Short Term Funds, and Securities Purchased under Resale Agreements
The carrying amounts are a reasonable estimate of the fair values because of their short-term nature.
b.
Deposits and Placements with Financial Institutions
The fair values of deposits and placements with remaining maturities less than one year are estimated to
approximate their carrying values. For deposits and placements with maturities of more than one year, the fair
values are estimated based on discounted cash flows using the prevailing market rates of similar remaining
maturities.
c.
Financial Assets Held-for-Trading, Financial Investments Available-for-Sale and Financial Investments
Held-to-Maturity
The fair values are estimated based on quoted or observable market prices as at statements of financial position
date. Where such quoted or observable market prices are not available, the fair values are estimated using
pricing models or discounted cash flow techniques. Where discounted cash flow technique is used, the expected
future cash flows are discounted using prevailing market rates for similar instruments as at statements of
financial position date.
104
C
i
t
i
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a
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e
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N o t e s To T h e F i n a n c i a l S t a t e m e n t s
32. Financial assets and liabilities (continued)
32.2 Fair value of financial instruments (continued)
d.
Loans, Advances and Financing
The fair values of fixed rate loans with remaining maturity of less than one year and variable rate loans are
estimated to approximate their carrying values. For fixed rate loans and Islamic loans with maturities of more
than one year, the fair values are estimated based on expected future cash flows of contractual instalment
payments and discounted at prevailing rates at statements of financial position date offered for similar loans to
new borrowers with similar credit profiles, where applicable. In respect of impaired loans, the fair values are
deemed to approximate the carrying values, net of individual assessment allowance for bad and doubtful debts
and financing. Collective assessment allowance is excluded from the carrying value.
e.
Deposits from Customers and Deposits and Placements of Banks and Other Financial Institutions
The fair values for deposit liabilities payable on demand (demand and savings deposits) or with remaining
maturities of less than one year are estimated to approximate their carrying values at statements of financial
position date. The fair values of fixed deposits with remaining maturities of more than one year are estimated
based on discounted cash flows using rates currently offered for deposits of similar remaining maturities. The fair
values of Islamic deposits are deemed to approximate their carrying values as at statements of financial position
date as the profit rates are determined at the end of their holding periods based on the profit generated from the
assets invested. For negotiable instrument of deposits, the estimated fair values are based on quoted or
observable market prices at the statements of financial position date. Where such quoted or observable market
prices are not available, the fair values of negotiable instruments of deposits are estimated using discounted
cash flow techniques.
f.
Bills and Acceptances Payable
The carrying amounts are a reasonable estimate of their fair values because of their short-term nature.
g.
Subordinated Loan
The carrying amount of the subordinated loan approximates fair value due to its variable interest rate.
h.
Other Assets and Other Liabilities
The fair values of other assets and other liabilities are assumed to approximate their carrying values due to the
short term nature of these financial instruments or the fact that they are derived by using the market rates at
reporting date.
C
i
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i
b
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k
B
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p
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105
t
N o t e s To T h e F i n a n c i a l S t a t e m e n t s
32. Financial assets and liabilities (continued)
32.3 Fair value hierarchy
Comparative figures have not been presented for 31 December 2010 by virtue of paragraph 44G of FRS 7.
The table below analyses financial instruments carried at fair value by valuation method. The different levels have
been defined as follows:
•
Level 1:
Quoted prices (unadjusted) in active markets for identical assets or liabilities.
•
Level 2:
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,
either directly (i.e. as prices) or indirectly (i.e. derived from prices).
•
Level 3:
Inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Level 1
Level 2
Level 3
Total
RM’000
RM’000
RM’000
RM’000
Financial investments available-for-sale
5,218,009
-
-
5,218,009
Financial assets held-for-trading
2,336,849
-
-
2,336,849
-
830,208
11,392
841,600
7,554,858
830,208
11,392
8,396,458
-
1,404,357
10,006
1,414,363
-
1,404,357
10,006
1,414,363
Group and Bank
2011
Financial assets
Derivative financial assets
Financial liabilities
Derivative financial liabilities
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32. Financial assets and liabilities (continued)
32.3 Fair value hierarchy (continued)
The following table shows a reconciliation from the beginning balances to the ending balances for fair value
measurements in Level 3 of the fair value hierarchy:
Group and Bank
2011
RM’000
Financial assets
Balance at 1 January
Total lossed recognised in profit or loss:
Attributable to losses relating to assets or liabilities that:
- have not been realised
Balance at 31 December
14,148
(2,756)
11,392
Group and Bank
2011
RM’000
Financial liabilities
Balance at 1 January
2,850
Total gains recognised in profit or loss:
Attributable to gains relating to assets or liabilities that:
- have not been realised
7,156
Balance at 31 December
10,006
The unrealised gains/(losses) have been recognised in other operating income/expenses in profit or loss.
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.
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33. Lease commitments
The Group and the Bank have lease commitments in respect of rented premises and equipment for hire, all of which are
classified as operating leases. A summary of the non-cancellable long term commitments, net of sub leases are as follows:
Group and Bank
Within 1 year
Between 1 and 5 years
20 1 1
2010
RM’000
RM’000
25,953
24,355
6,199
27,570
34. Capital commitments
Group and Bank
20 1 1
2010
RM’000
RM’000
21,181
49,627
Capital expenditures:
Authorised and contracted for
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35. Capital adequacy
A.
The capital adequacy ratios are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
22,272,830
19,954,371
Computation of Total Risk Weighted Assets
(“RWA”)
Total credit RWA
Total market RWA
2,019,640
2,398,682
Total operational RWA
3,525,964
3,550,272
27,818,434
25,903,325
Total Risk Weighted Assets
Computation of Capital Ratios
Tier 1 Capital
4,008,709
3,565,282
Capital Base*
4,262,475
3,801,235
Core capital ratio
14.41%
13.76%
Risk weighted capital ratio
15.32%
14.67%
Core capital ratio
13.33%
12.61%
Risk weighted capital ratio
14.24%
13.52%
Before deducting proposed dividends:
After deducting proposed dividends:
*
In arriving at the capital base used in the ratio calculations of the Group and the Bank, the proposed dividends
were not deducted.
Detailed information on the risk exposures above are disclosed in the Pillar 3 disclosures of the annual report as
prescribed under BNM’s Risk Weighted Capital Adequacy Framework (Basel II) – Disclosures requirements (Pillar 3).
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35. Capital adequacy (continued)
With effect from 1 January 2010, the capital adequacy ratios of the Group and the Bank are computed in accordance with
Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II). The Group and the Bank have
adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic Indicator Approach for Operational Risk.
The minimum regulatory capital adequacy requirement is 8% for the risk-weighted capital ratio.
B.
The components of Tier I and Tier II Capital are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
Tier I Capital
Paid up ordinary share capital
121,697
121,697
Share premium
380,303
380,303
3,388,271
2,998,408
121,697
121,697
(3,259)
(56,823)
4,008,709
3,565,282
Collective assessment allowance*
253,786
235,973
Total Tier II Capital
253,786
235,973
Total Eligible Tier II
253,786
235,973
(20)
(20)
4,262,475
3,801,235
Retained profits
Other reserves
Less: Deferred tax assets
Total Tier I Capital (Core Capital)
Tier II Capital
Less: Investments in subsidiary companies
Capital Base
*
Excludes collective assessment allowance on impaired loans restricted from Tier II Capital by BNM of RM1 11.5 million
(20 10: RM133.4 million).
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36. Off-balance sheet exposures
The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows:
20 1 1
Group and Bank
Nature of item
Direct credit substitutes
Principal
amount
Credit
equivalent
amount
Risk
weighted
assets
RM’000
RM’000
RM’000
1,707,320
1,707,320
1,410,933
Transaction related contingent items
399,731
199,865
158,071
Short term self liquidating trade related
contingencies
148,283
29,657
22,854
12,220
12,220
6,110
24,279,480
568,900
387,454
4,180,829
532,616
322,054
91,650
18,855
18,855
6,343,210
18,265
7,496
14,940,969
474,983
158,715
2,342,535
248,393
110,993
54,639
4,577
1,648
123,596
16,482
8,593
-
-
-
-
3,687
1,843
210,358
27,579
23,095
-
-
-
Other commitments, such as formal standby
facilities and credit lines, with an
original maturity up to one year
990,462
198,092
198,092
Other commitments, such as formal standby
facilities and credit lines, with an
original maturity of over one year
598,618
299,309
227,000
Forward asset purchases
Foreign exchange related contracts:
One year or less
Over one year to five years
Over five years
Interest/Profit rate related contracts:
One year or less
Over one year to five years
Over five years
Equity related contracts:
One year or less
Over one year to five years
Over five years
Debt security contracts and other
commodity contracts:
One year or less
Over one year to five years
Over five years
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
5,376,095
-
-
Unutilised credit card lines
17,832,083
3,566,418
2,677,910
Total
79,632,078
7,927,218
5,741,716
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36. Off-balance sheet exposures (continued)
The Off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank are as follows:
(continued)
2010
Group and Bank
Principal
amount
Credit
equivalent
amount
Risk
weighted
assets
RM’000
RM’000
RM’000
1,489,992
1,489,992
1,288,190
Transaction related contingent items
395,970
197,985
180,418
Short term self liquidating trade related
contingencies
422,631
84,526
127,781
617
617
-
24,729,003
758,795
561,289
3,637,939
539,734
321,023
-
-
-
Nature of item
Direct credit substitutes
Forward asset purchases
Foreign exchange related contracts:
One year or less
Over one year to five years
Over five years
Interest/Profit rate related contracts:
One year or less
Over one year to five years
Over five years
7,896,887
37,105
13,589
16,604,797
586,871
255,311
1,800,014
191,416
64,169
388,457
Equity related contracts:
One year or less
Over one year to five years
Over five years
25,785
12,867
153,686
24,797
12,399
-
-
-
Debt security contracts and other
commodity contracts:
One year or less
175,461
34,810
32,976
Over one year to five years
-
-
-
Over five years
-
-
-
421,905
210,952
158,455
5,014,737
-
-
Unutilised credit card lines
18,107,541
3,621,508
2,722,693
Total
81,239,637
7,804,893
5,751,160
Other commitments, such as formal standby
facilities and credit lines, with an
original maturity of over one year
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
112
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37. The operations of Islamic Banking
Statements of financial position as at 31 December 201 1
Group and Bank
20 1 1
2010
RM’000
RM’000
68,863
394,301
Assets
Cash and short term funds
(a)
Financial assets held-for-trading
(b)
-
343,179
Financial investments available-for-sale
(c)
431,792
271,553
Financing, advances and other loans
(d)
444,160
500,800
239
1,142
15,593
164,651
960,647
1,675,626
(g)
649,448
1,089,505
-
-
(h)
85,107
382,071
734,555
1,471,576
226,092
204,050
960,647
1,675,626
658,992
1,534,730
Deferred tax assets
Other assets
(f)
Total assets
Liabilities
Deposits from customers
Deferred tax liabilities
Other liabilities
Total liabilities
Islamic banking funds
(i)
Total liabilities and Islamic banking funds
Off-balance sheet exposures
The notes on pages 116 to 133 are an integral part of these financial statements.
(s)
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37. The operations of Islamic Banking (continued)
Statements of comprehensive income for financial year ended 31 December 201 1
Group and Bank
20 1 1
2010
RM’000
RM’000
Income derived from investment of depositors’
funds and others
(j)
41,732
41,197
Provision for financing, advances and other loans
(k)
822
309
Transfer to Profit Equalisation Reserve
(l)
(3,204)
(9,164)
39,350
32,342
(14,240)
(8,461)
25,110
23,881
5,382
12,419
30,492
36,300
(2,857)
(4,696)
27,635
31,604
(6,799)
(8,212)
20,836
23,392
Other comprehensive income/(loss), net of income tax
Net gain/(loss) on revaluation of financial investments
available-for-sale
1,206
(1,549)
Other comprehensive income/(loss) for the year,
net of income tax
1,206
(1,549)
22,042
21,843
20,836
23,392
22,042
21,843
Total attributable income
Income attributable to depositors
(m)
Total attributable to the Bank
Income derived from investment of Islamic
Banking Capital Funds
(n)
Total net income
Other operating expenses
(p)
Profit before taxation
Tax expense
Profit for the year
Total comprehensive income for the year
(q)
Profit for the year attributable to:
Equity holder of the Bank
Total comprehensive income attributable to:
Equity holder of the Bank
The notes on pages 116 to 133 are an integral part of these financial statements.
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37. The operations of Islamic Banking (continued)
Statements of changes in Islamic Banking Funds for the year ended 31 December 201 1
Group and Bank
Capital
Fair value
Retained
funds
reserve
profits
Total
RM’000
RM’000
RM’000
RM’000
20,000
885
161,322
182,207
Fair value of available-for-sale
financial assets
-
(1,549)
-
(1,549)
Total other comprehensive expense
for the year
-
(1,549)
-
(1,549)
Profit for the year
-
-
23,392
23,392
Total comprehensive (expense)/
income for the year
-
(1,549)
23,392
21,843
20,000
(664)
184,714
204,050
Fair value of available-for-sale
financial assets
-
1,206
-
1,206
Total other comprehensive income
for the year
-
-
1,206
Profit for the year
-
-
20,836
20,836
Total comprehensive income for the year
-
1,206
20,836
22,042
20,000
542
205,550
226,092
At 1 January 2010
At 31 December 2010/ 1 January 2011
At 31 December 2011
1,206
Note 37(i)
The notes on pages 116 to 133 are an integral part of these financial statements.
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37. The operations of Islamic Banking (continued)
Statements of cash flows for financial year ended 31 December 2011
Group and Bank
20 1 1
2010
RM’000
RM’000
27,635
31,604
491
208
Cash flows from operating activities
Profit before taxation
Adjustments for:
Amortisation of premium less accretion of
discount of investment securities
Allowance for bad and doubtful debts (net of write-back)
(822)
(309)
Profit Equalisation Reserve
3,204
9,164
Gain from disposal of financial investments available-for-sale
(945)
(996)
(88)
(2,654)
29,475
37,017
343,267
(275,128)
Mark-to-market gain on financial assets held-for-trading
Operating profit before working capital changes
Changes in working capital:
Financial assets held-for-trading
Financing, advances and other loans
57,462
26,511
149,058
(72,935)
Deposits from customers
(440,057)
(542,911)
Other liabilities
(298,864)
222,917
(159,659)
(604,529)
(8,994)
(8,212)
(168,653)
(612,741)
(424,780)
(273,805)
267,995
402,387
Net cash (used in)/from investing activities
(156,785)
128,582
Net decrease in cash and cash equivalents
(325,438)
(484,159)
394,301
878,460
68,863
394,301
Other assets
Cash used in operating activities
Income taxes paid
Net cash used in operating activities
Cash flows from investing activities
Purchase of financial investments available-for-sale
Proceeds from disposal of financial investments available-for-sale
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December (Note 37(a))
The notes on pages 116 to 133 are an integral part of these financial statements.
116
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37. The operations of Islamic Banking (continued)
a.
Cash and short term funds
Group and Bank
Cash and balances with banks and other
financial institutions
Money at call and deposit placements
maturing within one month
b.
20 1 1
2010
RM’000
RM’000
2,863
4,301
66,000
390,000
68,863
394,301
Financial assets held-for-trading
Group and Bank
20 1 1
2010
RM’000
RM’000
Bank Negara Malaysia Islamic Bills
-
336,868
Malaysian Government Treasury Bills
-
6,311
-
343,179
At fair value
c.
Financial investments available-for-sale
Group and Bank
20 1 1
2010
RM’000
RM’000
431,792
271,553
431,792
271,553
At fair value
Malaysian Government Investment Issues
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37. The operations of Islamic Banking (continued)
d.
Financing, advances and other loans
i.
By type
Group and Bank
20 1 1
2010
RM’000
RM’000
475,960
536,474
1,592
3,175
631
2,878
-
42
Term financing
- Housing loans/financing
- Hire purchase receivables
- Lease receivables
- Other term loans/financing
478,183
542,569
Unearned income
(25,140)
(32,059)
Gross financing, advances and other loans
453,043
510,510
- Collective assessment allowance
(6,764)
(7,626)
- Individual assessment allowance
(2,119)
(2,084)
444,160
500,800
34,701
42,101
Less:
Allowance for impaired financing,
advances and other loans
Total net financing, advances and other loans
ii.
By contract
Bai’Bithamin Ajil
Ijarah Muntahia Bittamilik
Diminishing Musharakah
2,223
6,095
416,119
462,314
453,043
510,510
2,206
5,812
iii. By type of customer
Domestic business enterprises
- Small and medium enterprises
- Others
Individuals
2,419
2,829
448,418
501,869
453,043
510,510
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37. The operations of Islamic Banking (continued)
d.
Financing, advances and other loans (continued)
iv.
By profit rate sensitivity
Group and Bank
20 1 1
2010
RM’000
RM’000
450,820
504,416
- Hire purchase receivables
1,592
3,174
- Other fixed rate/financing
631
2,920
453,043
510,510
2,156
3,923
-
98
67
2,040
-
33
448,418
501,869
2,402
2,547
453,043
510,510
450,820
504,416
2,223
6,094
453,043
510,510
Fixed rate
- Housing loans/financing
v.
By sector
Manufacturing (including agriculture based)
Wholesale, retail trade, restaurants and hotels
Transport, storage and communication
Finance, insurance, real estate and business services
Household - residential
Other sectors
vi.
By purpose
Purchase of landed property
Purchase of fixed assets excluding land and building
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37. The operations of Islamic Banking (continued)
e.
Impaired financing, advances and other loans
i.
Movements in impaired financing, advances and other loans are as follows:
Group and Bank
At 1 January
Classified as impaired during the year
2010
RM’000
RM’000
13,257
10,215
57
8,987
Amount recovered
(3,685)
(3,200)
Amount written off
-
(2,745)
At 31 December
Individual assessment allowance
Net impaired financing, advances and other loans
Ratio of net impaired financing, advances and
other loans to total gross financing,
advances and other loans less individual
assessment allowance
ii.
20 1 1
9,629
13,257
(2,119)
(2,084)
7,510
11,173
1.67%
2.20%
Movements in impaired financing, advances and other loans are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
At 1 January
7,626
8,026
Allowance written back during the year
(862)
(400)
At 31 December
6,764
7,626
1.50%
1.50%
Collective assessment allowance
As % of gross financing, advances and other
loans less individual assessment allowance
120
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37. The operations of Islamic Banking (continued)
e.
Impaired financing, advances and other loans (continued)
ii.
Movements in impaired financing, advances and other loans are as follows (continued):
Group and Bank
20 1 1
2010
RM’000
RM’000
2,084
4,743
40
203
Individual assessment allowance
At 1 January
Allowance made during the year
Amount recovered
-
(117)
Amount written off
(6)
(2,745)
2,118
2,084
At 31 December
iii. Impaired financing, advances and other loans by sector
Group and Bank
f.
20 1 1
2010
RM’000
RM’000
Manufacturing (including agriculture based)
1,380
1,446
Household - residential
8,249
11,811
9,629
13,257
Other assets
Group and Bank
20 1 1
2010
RM’000
RM’000
Profit receivables
4,440
3,666
Other debtors, deposits and prepayments
8,529
14,760
Revaluation gain on profit rate undertaking contracts
(Note 37(t))
2,624
146,225
15,593
164,651
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b
a
n
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37. The operations of Islamic Banking (continued)
g.
Deposits from customers
i.
By type of deposit
Group and Bank
20 1 1
2010
RM’000
RM’000
495,235
878,181
Non-Mudharabah Fund
Demand deposits
Saving deposits
69,912
69,203
Other deposits
48,247
104,349
36,054
37,772
649,448
1,089,505
Mudharabah Fund
General investment deposits
ii.
By type of customer
Group and Bank
Government and statutory bodies
20 1 1
2010
RM’000
RM’000
8,339
24
Business enterprises
208,987
642,811
Individuals
333,959
302,084
98,163
144,586
649,448
1,089,505
Others
122
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37. The operations of Islamic Banking (continued)
h.
Other liabilities
Group and Bank
20 1 1
2010
RM’000
RM’000
8,846
11,783
Other creditors and accruals
61,246
214,876
Profit Equalisation Reserve (see Note 37(l))
12,391
9,187
Revaluation loss on profit rate undertaking
contracts (Note 37(t))
2,624
146,225
85,107
382,071
Profit payable
i.
Islamic banking funds
Group and Bank
Fund allocated
j.
20 1 1
2010
RM’000
RM’000
20,000
20,000
Fair value reserve
542
(664)
Retained earnings
205,550
184,714
226,092
204,050
Income derived from investment of depositors’ funds and others
Group and Bank
20 1 1
2010
RM’000
RM’000
39,397
36,582
2,335
4,615
41,732
41,197
Income derived from investment of:
(i)
General investment deposits
(ii) Other deposits
t
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37. The operations of Islamic Banking (continued)
j.
Income derived from investment of depositors’ funds and others (continued)
i.
Income derived from investment of general deposits
Group and Bank
20 1 1
2010
RM’000
RM’000
18,916
18,120
8,245
5,217
10,046
9,205
37,207
32,542
1,966
3,010
39,173
35,552
224
1,030
39,397
36,582
Finance income and hibah
Financing, advances and other loans
Money at call and placements with financial institutions
Income from financial investments available- for-sale
Accretion of discount less amortisation of premium
Total finance income and hibah
Other operating income
Fee income
Income from general investment deposits
124
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37. The operations of Islamic Banking (continued)
j.
Income derived from investment of depositors’ funds and others (continued)
ii.
Income derived from investment of other deposits
Group and Bank
20 1 1
2010
RM’000
RM’000
Finance income and hibah
Financing, advances and other loans
1,121
2,286
Money at call and placements with financial institutions
489
658
Income from financial investments available- for-sale
596
1,161
2,206
4,105
116
380
2,322
4,485
13
130
2,335
4,615
Accretion of discount less amortisation of premium
Total finance income and hibah
Other operating income
Fee income
Income from investment of other deposits
k.
Provision for financing, advances and other loans
Provision for financing, advances and other loans:
Individual assessment allowance
- made in the financial year
- written back
179
203
(138)
(117)
(863)
(400)
-
5
(822)
(309)
Collective assessment allowance
- reversal during the year
Impaired financing, advances and other loans
- written off
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37. The operations of Islamic Banking (continued)
l.
Profit Equalisation Reserve
The movement in Profit Equalisation Reserve is as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
At 1 January
9,187
23
Movement in the financial year
3,204
9,164
12,391
9,187
At 31 December
m.
Income attributable to depositors
Group and Bank
20 1 1
2010
RM’000
RM’000
11,272
4,902
2,887
3,224
Deposits from customers
- Mudharabah Fund
- Non-Mudharabah Fund
Deposits and placements of banks and other financial institutions
- Non-Mudharabah Fund
Others
n.
24
66
57
269
14,240
8,461
Income derived from investment of Islamic Banking Capital Funds
Group and Bank
20 1 1
2010
RM’000
RM’000
Financing, advances and other loans
2,386
2,194
Money at call and placements with financial institutions
1,040
632
Income from financial investments available-for-sale
1,267
1,115
4,693
3,941
Accretion of discount less amortisation of premium
(235)
324
Total finance income and hibah
4,458
4,265
126
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37. The operations of Islamic Banking (continued)
n.
Income derived from investment of Islamic Banking Capital Funds (continued)
Group and Bank
20 1 1
2010
RM’000
RM’000
Other operating income
Gain/(Loss) from financial assets held-for-trading
88
(91)
Gain from financial investments available-for-sale
945
2,690
Fee income
(Loss)/Income from trading activities
Income from Islamic Banking Capital Funds
o.
1,628
877
(1,737)
4,678
924
8,154
5,382
12,419
Income from Islamic banking operations
For consolidation with the conventional operations, income from Islamic banking operations comprises the following:
Group and Bank
Note
20 1 1
2010
RM’000
RM’000
Income derived from investment of depositors’
funds and others
(j)
41,732
41,197
Profit Equalisation Reserve
(l)
(3,204)
(9,164)
Income attributable to depositors
(m)
(14,240)
(8,461)
Income derived from investment of Islamic
Banking Capital Funds
(n)
5,382
12,419
29,670
35,991
t
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37. The operations of Islamic Banking (continued)
p.
Other operating expenses
Group and Bank
20 1 1
2010
RM’000
RM’000
Personnel costs
- Salaries, allowances and bonuses
222
951
- Contributions to Employees Provident Fund
23
23
- Staff benefits and other compensations
14
14
1
30
- Depreciation
1
1
- Rental
-
3
2,596
3,674
2,857
4,696
- Others
Establishment costs
Administrative and general expenses
- Others
Included in other operating expenses is the Syariah Committee’s remuneration of RM139,000 (2010 - RM108,000).
q.
Taxation
Group and Bank
Current tax expense
Deferred tax expense
20 1 1
2010
RM’000
RM’000
9,884
7,161
(3,085)
1,051
6,799
8,212
128
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37. The operations of Islamic Banking (continued)
r.
Capital adequacy
i.
The capital adequacy ratios are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
Total credit RWA
199,050
436,946
Total market RWA
20,319
79,687
Total operational RWA
84,785
92,001
304,154
608,634
Computation of Total Risk Weighted Assets (“RWA”)
Total Risk Weighted Assets
Computation of Capital Ratios
Tier 1 Capital
225,131
203,761
Capital Base
231,517
210,955
Core capital ratio
74.02%
33.48%
Risk weighted capital ratio
76.12%
34.66%
With effect from 1 January 2010, the capital adequacy ratios of the Group and the Bank are computed in
accordance with Bank Negara Malaysia’s revised Risk-Weighted Capital Adequacy Framework (RWCAF-Basel II).
The Group and the Bank have adopted the Standardised Approach for Credit Risk and Market Risk, and the Basic
Indicator Approach for Operational Risk. The minimum regulatory capital adequacy requirement is 8% for the
risk-weighted capital ratio.
ii.
The components of Tier I and Tier II Capital are as follows:
Group and Bank
20 1 1
2010
RM’000
RM’000
20,000
20,000
205,550
184,714
(419)
(953)
225,131
203,761
Tier I Capital
Fund allocated
Retained earnings
Less: Deferred tax assets
Total Tier I Capital (Core Capital)
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37. The operations of Islamic Banking (continued)
r.
Capital adequacy (continued)
Group and Bank
20 1 1
2010
RM’000
RM’000
6,386
7,194
231,517
210,955
Tier II Capital
Collective assessment allowance*
Capital Base
*
s.
Excludes collective assessment allowance on impaired loans restricted from Tier II Capital by BNM of RM378,000
(2010 - RM432,000).
Off-balance sheet exposures
The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank of the current
year are as follows:
2011
Group and Bank
Nature of item
Principal
amount
Credit
equivalent
amount
Risk
weighted
assets
RM’000
RM’000
RM’000
-
-
-
Interest/Profit rate related contracts:
One year or less
Over one year to five years
350,000
9,000
4,200
Over five years
300,000
19,721
11,144
Other commitments, such
as formal standby facilities and credit lines,
with an original maturity of up to one year
158
32
32
Other commitments, such
as formal standby facilities and credit lines
with an original maturity of over one year
8,834
4,416
3,275
658,992
33,169
18,651
Total
130
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37. The operations of Islamic Banking (continued)
s.
Off-balance sheet exposures (continued)
The off-balance sheet exposures and their related counterparty credit risk of the Group and the Bank for previous
year were as follows:
2010
Group and Bank
Principal
amount
Credit
equivalent
amount
Risk
weighted
assets
RM’000
RM’000
RM’000
828,235
152,975
152,975
Over one year to five years
-
-
-
Over five years
-
-
-
One year or less
138,758
139
139
Over one year to five years
550,000
20,842
14,546
-
-
-
16,736
8,341
3,312
1,001
-
-
1,534,730
182,297
170,972
Nature of item
Foreign exchange related contracts:
One year or less
Interest/Profit rate related contracts:
Over five years
Other commitments, such
as formal standby facilities and credit lines,
with an original maturity of over one year
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
Total
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37. The operations of Islamic Banking (continued)
t.
Derivative financial instruments
2011
2010
Contract
Amount
Positive
fair
value
Negative
fair
value
Contract
amount
Positive
fair
value
Negative
fair
value
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
-
-
-
1,521,749
139,724
139,724
Foreign exchange related contracts:
- Cross currency Islamic
profit rate undertaking
Others
- Islamic profit rate undertaking
u.
800,000
2,624
2,624
927,515
6,501
6,501
800,000
2,624
2,624
2,449,264
146,225
146,225
Note 37(f)
Note 37(h)
Note 37(f)
Note 37(h)
Profit rate risk
Effective
Group and Bank
2011
Assets
Cash and short term funds
Financial investments
available-for-sale
Financing, advances and
other loans
- performing
- impaired
Deferred tax assets
Others assets
Total assets
Up To 1
>1-3
> 3 - 12
>1-5
Over 5 Non-interest Trading
Month
Months
Months
Years
Years
Sensitive
Book
Total
Interest
Rate
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
%
66,000
-
-
-
-
2,863
-
68,863
2.82%
-
-
80,000
351,792
-
-
-
431,792
2.81%
1,446
-
-
422
-
2,065
-
439,481
-
(6,764)
7,510
239
12,969
2,624
436,650
7,510
239
15,593
4.80%
67,446
-
80,422
353,857
439,481
16,817
2,624
960,647
132
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37. The operations of Islamic Banking (continued)
u.
Profit rate risk (continued)
Effective
Group and Bank
2011
Up To 1
>1-3
> 3 - 12
>1-5
Over 5 Non-interest Trading
Month
Months
Months
Years
Years
Sensitive
Book
Total
Interest
Rate
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
%
Liabilities and
Islamic Banking Funds
Deposits from customers
592,768
-
8,432
48,248
-
-
-
649,448
Deferred tax liability
-
-
-
-
-
-
-
-
Other liabilities
-
-
-
-
-
82,483
2,624
85,107
Total liabilities
592,768
-
8,432
48,248
-
82,483
2,624
734,555
-
-
-
-
-
226,092
-
226,092
592,768
-
8,432
48,248
-
308,575
2,624
960,647
(525,322)
-
71,990
305,609
439,981 (291,758)
-
Islamic Banking Funds
Total liabilities and
Islamic Banking Funds
On-balance sheet profit
sensitivity gap
1.53%
Effective
Group and Bank
2010
Assets
Cash and short term funds
Financial assets
held-for-trading
Financial investments
available-for-sale
Financing, advances
and other loans
- performing
- impaired
Deferred tax assets
Others assets
Total assets
Up To 1
>1-3
> 3 - 12
>1-5
Over 5 Non-interest Trading
Month
Months
Months
Years
Years
Sensitive
Book
Total
Interest
Rate
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
%
390,000
-
-
-
-
4,301
-
394,301
2.12%
-
-
-
-
-
-
343,179
343,179
13.98%
-
-
-
271,553
-
-
-
271,553
10.57%
214
-
210
-
1,598
-
1,215
-
494,016
-
(7,626)
11,173
1,142
18,426
146,225
489,627
11,173
1,142
164,651
4.36%
390,214
210
1,598
272,768
494,016
27,416
489,404 1,675,626
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37. The operations of Islamic Banking (continued)
u.
Profit rate risk (continued)
Effective
Group And Bank
2010
Up To 1
>1-3
> 3 - 12
>1-5
Over 5 Non-interest Trading
Month
Months
Months
Years
Years
Sensitive
Book
Total
Interest
Rate
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
%
Liabilities and
Islamic Banking Funds
Deposits from customers
Other liabilities
973,532
-
5,567
-
49,057
-
61,349
-
-
235,846
- 1,089,505
146,225 382,071
Total liabilities
Islamic Banking Funds
973,532
-
5,567
-
49,057
-
61,349
-
-
235,846
204,050
146,225 1,471,576
- 204,050
Total liabilities and
Islamic Banking Funds
973,532
5,567
49,057
61,349
-
439,896
146,225 1,675,626
(583,318)
(5,357)
(47,459)
211,419
On-balance sheet profit
sensitivity gap
494,016 (412,480)
343,179
0.76%